Transcript Ethics in International Business

Chapter 4
Ethics in International
Business
4-3
Ethics in International Business
• Objectives
-
Source of ethical challenges in IB
Effect of ethical challenges on decisions in IB
Causes of poor ethical decisions in IB
Different conceptual underpinnings for ethical
decisions in IB
- What managers can do to
• Promote an awareness of ethical issues
throughout the organization
• Ensure that ethical considerations enter into
decision making
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Ethical Issues in International
Business
• Arise when a manager makes decisions
consistent with differing national environments
-
Political systems
Legal systems
Economic development levels
Culture
• What is ethical and “normal” in one
environment may not be so in another
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Ethical Issues in International
Business
• Arise most often in the context of:
-
Employment practices
Human rights
Environmental policy
Corruption
An MNC’s perceived moral obligations to
society
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Employment Practices
• What standards should be applied?
- Home nation’s
- Host nation’s
- Other
• Should the MNC adapt its policies? Standardize?
• Hiring practices, labor relations, diversity issues,
employment conditions are some specific issues
that require careful thought
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Human Rights
• A manager can assume as universal her/his views
on freedom of:
- Association
- Speech
- Assembly
- Movement
- Political repression
• What is the responsibility of an MNC to uphold
different standards of human rights?
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Repressive Regimes
• Is it ethical for MNCs to operate in countries
with repressive regimes?
- Is inward investment an agent for change?
- What is the limit beyond which inward
investment would not be justified under all
circumstances?
- What if competitors from other nations invest
and you don’t?
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Environmental Policies
• Locally mandated environmental standards may
be inferior to those an MNC knows it can achieve
• Tragedy of the commons: a resource held in
common by all, but owned by no one, is overused
by some, resulting in degradation.
• If a decision is legal but unethical, should it be
taken?
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Corruption
• Government officials may ask for bribes for an MNC to “get
things done”
- Is an MNC’s manager who agrees a corrupt manager?
- Should an MNC ever accede to bribery demands?
• Foreign corrupt practices act (USA)
• Convention on Combating Bribery of Foreign Officials in
International Business Transactions (OECD)
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MNC Power and
Moral Decisions
• MNCs have power over a host country
- They can move production away
- Along with power arise obligations (?)
• Power is morally neutral
- How it is used is what matters
- Perceptions of how it should be used and of its impact
vary
• Company view
• Host country view
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MNC and Social
Responsibility
• Social responsibility: business decisions
should be made after consideration of
social consequences of economic actions
- Noblesse oblige: honorable and
benevolent behavior is the responsibility
of those in power
- Benevolent behavior responsibility of
only successful business?
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Determinants of Ethical Behavior
• Organization culture
• Personal ethics
• Decision making processes
• Leadership
• Unrealistic / realistic performance goals
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer
inappropriate guidelines for MNC
behavior
- Friedman doctrine: only responsibility is
to max. profits within the rules and
regulations. However, he does not say
whose laws should be abided with, home
or host? Child labor and pollution laws
are not the same across the borders.
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer
inappropriate guidelines for MNC
behavior
- Righteous moralist: Home country’s laws
must be followed everywhere. How far do
we need to follow home country’s
standards? Pay workers (wages and
benefits) according to American
standards? If so, what happens to the
incentives to go abroad?
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer
inappropriate guidelines for MNC
behavior
- Naïve immoralist: “In Rome do what
Romans do.” Again, is child labor,
bribery, and pollution acceptable?
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer inappropriate guidelines
for MNC behavior
• Utilitarian Ethics: moral worth of actions or practices is
determined by their consequences as measured by social
cost- social benefit analysis. One problem is how to
measure cost and benefits, e.g., cost of a person’s life,
consequences of genetically altered food, harm to
ecosystem from an oil spill. Would you want to reduce
your health insurance cost by denying health insurance
to inflicted by HIV?
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer
inappropriate guidelines for MNC
behavior:
• Kantian Ethics: people should be treated
as ends and never purely as means to the
ends of others. People have dignity and
must be treated as such in all aspects of
life.
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer inappropriate
guidelines for MNC behavior
• Rights theories: Individuals have fundamental
rights and privileges that transcend national
boundaries and cultures.
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer inappropriate
guidelines for MNC behavior
• Justice theories: A just distribution of economic
goods and services. John Rawls argues that all
goods and services must be distributed equally
except when it would work to everyone’s
advantage.
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer inappropriate guidelines
for MNC behavior
• Rawls Justice theory is based on:
• Veil of ignorance: If everyone ignores his/her
distinguishing characteristics, race, gender, etc., what
system of would they design? Under the veil of
ignorance, he argues, everyone would choose:
- Maximum individual liberties (speech, assembly,
conscience, though, property, and freedom from
arbitrary arrest and seizure) similar to others.
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Philosophical Approaches to Ethics
• Straw men: often adopted, offer inappropriate guidelines for MNC
behavior
• Veil of ignorance: If everyone ignores his/her distinguishing characteristics, race, gender, etc., what
system of would they design? Under the veil of ignorance, he argues, everyone would choose:
- Maximum individual liberties (speech, assembly, conscience, though, property, and freedom from arbitrary
arrest and seizure) similar to others.
- Once liberty is established, inequality in basic social goods
(income and wealth) is to be allowed if the system that
produced inequality is to the advantages of everyone (the
difference principle: inequality is to be allowed if it is to the
benefit of the least advantaged in the society). Well regulated
market system can help the disadvantaged under equal
conditions (high tide lifts all boats), i.e., international trade and
growth benefits everyone, therefore, this inequality is just.
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