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Copyright © 2015 Pearson Education, Inc. 11-1
International Business
Environments & Operations
15e
Daniels ● Radebaugh ● Sullivan
Copyright © 2015 Pearson Education, Inc. 11-3
Learning Objectives Examine the broad foundations of ethical
behavior Demonstrate the cultural and legal foundations of
ethical behavior Discuss the importance of social responsibility
when operating internationally, especially in the areas of sustainability
Discuss key issues in the social activities and consequences of globalized business
Examine corporate responses to globalization in the form of codes of conduct, among other things
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Foundations of Ethical Behavior
Individuals and companies must behave responsibly, based on certain ethical codes of conduct (what is right or wrong)
Our moral reasoning guiding our decisions and actions can be…. Teleological-decisions are based on the
consequences of the action Utilitarianism-an action is right if produces
greatest amount of good Deontological-moral reasoning occurs per se,
independently, consequence is not an issue
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Cultural Foundations of Ethical Behavior
Cultural relativism holds that ethical truths depend upon the groups subscribing to them; thus, intervention by outsiders is unethical.
Cultural normativism holds that there are universal standards of behavior that all cultures should follow
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Legal Foundations of Ethical Behavior
Law is a good basis for ethical behavior. It is an embodiment of local cultural values. But everything that is legal is not necessarily ethical.
Why and when the laws of the land can be perceived as inadequate? Arguments for and against. Definition-moral concepts may not defined
properly Time-it takes time to develop a law Application-how court interprets law Bias-could be majority biased
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Extraterritoriality Extraterritoriality
imposing domestic legal and ethical practices on the foreign subsidiaries of companies headquartered in their jurisdictions
Foreign Corrupt Practices Act 1977
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Corruption and Bribery Corruption
the misuse of entrusted power for private gain Bribes
payments or promises to pay cash or anything of value. Occurs to obtain government contracts or to get public officials to do what they should be doing anyway
Impact of corruption on economic development, wellbeing of the people, business performance
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Corruption and BriberyWhere Bribes Are (and Are Not) Business As Usual
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Corruption and Bribery International accords to stop bribery
OECD Anti-Bribery Convention ICC code of rules UN Convention against Corruption
Regional initiatives include EU efforts U.S. Foreign Corrupt Practices Act and
Sarbanes-Oxley legislation Industry initiatives include
2005 World Economic Forum zero tolerance pact
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Ethics and Environment Companies compromise the environment
contamination of air, soil, or water during manufacturing
producing products that emit fossil-fuel contaminants
Effect of natural resource extraction renewable versus non-renewable
Sustainability-meeting the needs of the present without compromising the ability of future generations to meet their own needs
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Global Warming, Kyoto Protocol
Kyoto Protocol (1997) signed to require countries to cut greenhouse
gas emissions to 5.2% below 1990 levels between 2008 and 2012
Some countries have adopted stricter requirements others have not ratified the agreement
including the U.S., China, India
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Ethical Dimensions of Labor Conditions
Labor issues include: Wages, Child labor, Working conditions, Working hours, Freedom of association
Child labor – ILO estimates 250 million children aged 5–17 years work
Some companies avoid operating in countries where child labor is common. IKEA has responsible policies.
Some companies refuse to hire individuals who want to work long hours.
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Corporate Codes of Ethics
How should a company behave? The UN Global Compact establishes
guidelines for appropriate behavior in human rights labor the environment anti-corruption
Social Media is playing a constructive role in guiding the corporations
The Pyramid of Corporate Social Responsibility
Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug. 1991. Copyright © 1991 by the Foundation
for the School of Business at Indiana University. Reprinted with permission.
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Motivations for Corporate Responsibility
Unethical and irresponsible behavior could result in legal sanctions result in consumer boycotts lower employee morale cost sales because of bad publicity
A code of conduct sets global policy that must be complied with communicates the code to employees,
suppliers, and subcontractors ensures that policies are carried out reports results to external stakeholders
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Chapter 11: Discussion Questions1. Discuss the three approaches in moral
reasoning. Which appeals to you most and why? 2. Define cultural relativism and normativism.
Explain how the concept can be used by the multinationals in a foreign country.
3. What is corruption? What can we do to combat corruption? Explain.
4. Discuss the legal and ethical dimension of Corporate Social Responsibility in a globalized world.
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