MGT 302 - Exam 1

Triple Bottom Line (TBL):

An accounting framework with three parts: social, environmental (or ecological) and financial. Three pillars of sustainability: Profit, People, Planet

Language of space

Office placement, personal space Middle East and Latin America- over crowding

spoken language

a socially acquired system of sound patterns with meanings agreed on by the members of a group

Ethical Strategy

a strategy, or course of action, that does not violate these accepted principles

Economic Systems

organized way a society provides for the wants and needs of its people

Protection of Intellectual Property

patents, copyrights, trademarks

Property rights

refer to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource

Integrated reporting/ Social Accounting:

seeks to concisely communicate a firm's social value that integrates financial and non-financial information about social and environmental metrics using quantitative and qualitative measures.

Caste System

social position is determined by the family

Utilitarian ethics

the moral worth of actions or practices is determined by their consequences • actions are desirable if they lead to the best possible balance of good consequences over bad consequences • but it is difficult to measure the benefits, costs, and risks of an action

Hofstede's Dimensions

Long-term vs. Short-term orientation Uncertainty avoidance Masculinity vs. Femininity Individualism vs. Collectivism Power distance

Language of things

Materialism English (UK) - dependability and respectability (old fashioned) Common practice in the US to buy loyalties with high salaries which doesn't equate globally

NGO: non-governmental organization

NGOs vary significantly in their structure and in the nature of their operations What has changed? decline in government resources the explosion of innovation and entrepreneurship demand for nonprofits to show demonstrable results

Market Economy

all productive activities are privately owned, and production is determined by the interaction of supply and demand

Social turmoil

an inevitable outcome of cultural change - as countries become economically stronger, cultural change is particularly common - economic progress encourages a shift from collectivism to individualism

Cross-Cultural literacy

an understanding of how cultural differences across and within nations can affect the way in which business is practiced

Pseudo-Democracies

authoritarian elements have captured some of the machinery of state and use this in an attempt to deny basic political and civil liberties - example, Vladamir Putin in Russia

Common Law

based on tradition, precedent and custom, a system that evolved from England

Mixed Economy

certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning

convergence hypothesis

cultures move toward universally accepted values and norms

corruption

dishonest or fraudulent conduct by those in power, typically involving bribery.

Unrealistic performance goals

encourage managers to cut corners or act in an unethical manner

Traditional business (ends and means)

ends: Profit Maximization means: Self-sustainable

Social Business (ends and means)

ends: Social Maximization means: Self-sustainable

Non-Profit Business

ends: Social Maximization means: donation financed

Cultural Relativism

ethics are culturally determined, and firms should adopt the ethics of the cultures in which they operate - Ethics are culturally determined - "when in Rome, do as the Romans do" - A belief that there is no moral truth that applies to all people at all times.

Societal Culture

firms headquartered in cultures where individualism and uncertainty avoidance are strong are more likely to stress ethical behavior than firms headquartered in cultures where masculinity and power distance rank high

Language of time

form of communication USA - Utilization of time is a sign of urgency Japan - leverage urgency "You Americans have one terrible weakness. If we make you wait long enough, you will agree to anything"

Democracy

government is by the people, exercised either directly or through elected representatives

Command Economy

government plans the goods and services that a country produces, the quantity that is produced, and the prices as which they are sold

Totalitarianism

government which one person or political party exercises absolute control

Leadership

helps establish the culture of an organization, and set the examples that others follow - when leaders act unethically, subordinates may act unethically, too

Noblisse Oblige

honorable and benevolent behavior that is the responsibility of successful companies

Power distance

how a society deals with the fact that people are unequal in physical and intellectual ca-pabilities - embraces hierarchy

Indulgence

how society suppresses gratification of needs and regulates by means of strict social norms - enjoying life, having fun - happiness is good

Rights theories

human beings have fundamental rights and privileges that transcend national boundaries and cultures Minimal level of morally acceptable behavior

The naive immoralist

if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either

product liability

involves holding a firm and its officers responsible when a product causes injury, death, or damage

Theocratic Law

law is based on religious teaching - Islamic law found in Pakistan, Egypt, Malaysia and Iran

Collateral of Grameen Bank

mutual trust, accountability, participation and creativity

Venture philanthropy - Philanthro-capitalism:

new model - donor as investor - greater emphasis and precision around goals attainment and measurable outcomes.

Organizational culture

organization culture can legitimize unethical behavior or reinforce the need for ethical behavior

Kantian ethics - (Immanuel Kant)

people should be treated as ends and never purely as means to the ends of others - people have dignity and need to be respected - people are not machines

Class System

position a person has at birth can be changed

Individualism

refers to philosophy that an individual should have freedom in his own economic and political pursuits - implies democratic political systems and free market economies individual diversity and private ownership are desirable individual economic and political freedoms are the ground rules on which a society should be based

Corporate Social Responsibility (CSR)

refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences

Ethical Dilemmas

situations in which none of the available alternatives seems ethically acceptable - real-world decisions are complex, difficult to frame, and involve consequences that are difficult to quantify - the ethical obligations of an MNE (multi-national enterprise) toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear cut

Norms

social rules and guidelines that prescribe appropriate behavior

Communism

socialism can only be achieved through violent revolution and totalitarian dictatorship - in retreat worldwide by mid-1990s

Social Democrats

socialism is achieved through democratic means - retreating as many countries move toward free market economies - state-owned enterprises have been privatized - Social democrat parties - Australia, Germany, Great Britain

Collectivism

stresses the primacy of collective goals over individual goals - advocate state ownership of the basic means of production, distribution, and exchange - manage to benefit society as a whole, rather than individual capitalists

Civil Law

system is based on a very detailed set of laws organized into codes courts interpret civil law - reliance of legal codes - example Germany, France, Japan, Russia

Social Structure

the basic social organization of a society

Individualism versus collectivism

the extent to which different cultures socialize their members into ac-cepting ambiguous situations and tolerating ambiguity

Personal Ethics

the generally accepted principles of right and wrong governing the conduct of individuals - expatriates may face pressure to violate their personal ethics because they are away from their ordinary social context and supporting culture - managers fail to question whether a decision or action is ethical, and instead rely on economic analysis when making decisions

Microcredit

the lending of small amounts of money at low interest to new businesses in the developing world

The Friedman Doctrine

the only social responsibility of business is to increase profits, so long as the company stays with-in the rules of law. -Focus on shareholders

Masculinity versus femininity

the relationship between gender and work roles (tough/power vs. tender/ nurture)

Legal Systems

the rules that regulate behavior along with the processes by which the laws are en-forced and through which redress for grievances is obtained

Political Systems

the system of government in a nation - Who is in charge?

Decision-Making processes

the values and norms that are shared among employees of an organization

Cross-cultural literacy

understanding of how cultural differences across and within nations can affect the way business is practiced

Grameen Bank 2017

• 8.92 million customers • $2.92 Billion in loans - an increase of 25% from 2016 • 2006 Muhammed Yunus won the Nobel Peace Prize

Is it profitable to be socially focused?

• Firms of endearment - beat S & P 500 by 10.5X's from 1996 - 2011 • Nielsen's global survey of CSR and Sustainability from 60 countries in 2015 found the 66% of consumers would pay more for a product if the business supported social and environmental causes

UN Global Compact Principles:

• Human Rights: • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights and • Principle 2: make sure that they are not complicit in human rights abuses • Labor: • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining • Principle 4: the elimination of all forms of forced and compulsory labor • Principle 5: the effective abolition of child labor and • Principle 6: the elimination of discrimination in respect of employment and occupation • Environment: • Principle 7: Businesses should support a precautionary approach to environmental challenges • Principle 8: undertake initiatives to promote greater environmental responsibility and • Principle 9: encourage the development and diffusion of environmentally friendly technologies. • Anti-corruption: • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Roots of Unethical Behavior

- Personal Ethics - Decision-Making Processes - Organization Culture - Unrealistic Performance Expectations - Leadership - Societal Culture

Philosophical Approaches to Ethics

- Straw men, - utilitarian and kantian ethics - rights theories - justice theories

Which standards should apply?

- home country standards - host country standards - something in between is best

Determinants of Culture

- religion - political philosophy - economic philosophy - education - language - social structure ^all impact culture norms and value systems

Universal Declaration of Human Rights (1948)

- right to work, just and favorable conditions, protection from unemployment - Without discrimination - equal pay - Remuneration commiserate with an existence of human dignity and protection - Right to form trade unions

Asian Societies

COLLECTIVISTS - Discourages job switching - Cooperation in solving business problems - May suppress individual creativity and initiative

Conscious Capitalism:

"Enhancing corporate performance while simultaneously continuing to advance the quality of life for billions of people." Trust Authenticity Transparency Care and love

Founding Principles of Grameen Bank

"Loans are better than charity to interrupt poverty"

1974 Bangladesh Famine

"What good were all my complex theories when people were dying of starvation on the sidewalks and porches across from my lecture hall?" Muhammad Yunus - Chittagong University

social stratification

a system by which a society ranks categories of people in a hierarchy

Religion

a system of shared beliefs and rituals that are concerned with the realm of the sacred - Relationship among religion, ethics and society is subtle and complex

culture

a system of values and norms that are shared among a group of people and that when taken together constitute a design for living Understanding and adapting to the local cultural is important international companies "that complex whole which includes knowledge, belief, art, morals, law, custom and other capabilities acquired by man as a member of society"

Values

abstract ideas of what is believed to be good, right and desirable

Long -term orientation

accept delayed gratification of their material, social, and emotional needs

Business ethics

accepted principles of right or wrong governing the conduct of businesspeople

Ethics

accepted principles of right or wrong that govern - the conduct of a person - the members of a profession the actions of an organization

Contract Law

body of law that governs contract enforcement

Benefits to Integrated Reporting:

1) Greater understanding of value creation which leads to better decision making Value creation for customers which helps market and sell goods/ services "New voice" in decision making 2) Supports learning and innovation 3) Critical communication with stakeholders - provides better understanding/ confidence 4) Allows different departments and divisions to work collaboratively on socially focused strategies and initiatives 5) "What is measured, gets done"

Social Enterprise:

1) Investors do not receive monetary profits. 2) Profits are re-invested to expand the company and social impacts (recycling money) 3) Dividends in the form of social change 4) Enormous power in creating jobs since ROI is zero

Ethics and International Business: Ethical issues

1. Employment Practices Ex. 12-hour workday (Nike), child labor, working conditions 2. Human Rights Ex.- South Africa - Apartheid still lingers 3. Environmental Pollution Ex. host country regulations are inferior - one of the perspectives on why globalization is unsavory 4. Corruption Ex. is it ok to do a little evil in order to do a greater good?

Making ethical decisions internationally

7 actions that an international business and its managers can take to make sure ethical issues are consid-ered in business decisions: 1. Hiring and Promotion 2. Organizational culture and leadership 3. Decision-making processes 4. Ethics officers 5. Moral courage 6. Corporate social responsibility 7. Sustainability

CSR vs. Social Change

Corporate Social Responsibility (CSR) - Depends on the company's willingness and ability to sustain involvement at the discretion of managers with the strong influence of shareholders Social Business - Woven into the fabric of the business

Justice theories

Rawl's "veil of ignorance" - all people are biased by their situation. We sit behind a veil of ignorance that keeps us from knowing who we are and identifying with our personal circumstances Fairness is Justice Maximum amount of basic liberties - political, freedom of speech, freedom of assembly, right to own property, etc. In equalities are justified if they benefit the position of the least-advantaged person

Unspoken Language

Silent language of business - Language of time - Language of space - Language of things - Language of friendship

Hybrid Business Formation:

Spectrum from social returns to financial returns Non Profit > Non Profit with Income > Social Enterprise > Business with CSR > Conventional Business

Product Safety

The degree to which a product is safe from undergoing or causing hurt, injury, or loss; governed by the Consumer Product Safety Commission

Grameen Bank

The bank, established by Professor Muhammad Yunus, that provides microloans to primarily women in developing countries, who are more likely to use the money for productive uses, despite no credit history.

Sharing Economies

The currency of the new economy is TRUST Extended to the entire world - potential for consumers Regulations may be stifling growth - Will policy makers evolve? example: Uber, Lyft, etc

Language of friendship

US - quick to form friendships and acquaintances Latin America and Middle East - Friends sense your feelings

International Movements:

United Nations Global Compact - World's largest corporate sustainability initiative 13,000 corporations 170 countries

Contract

a document that specifies the conditions under which an exchange is to occur and de-tails the rights and obligations of the parties

Loan Shark

a moneylender who charges extremely high interest rates often-times under illegal conditions such as threats of violence

The righteous moralist

a multinational's home country standards of ethics should be followed in foreign countries - complexities of rules

Uncertainty avoidance

a premium on job security, career patterns, retirement benefits - comfortable with ambiguity vs anxious about change

Microfinance

a source of financial services for entrepreneurs and small businesses lacking access to banking and related services