Business Ethics II

• What are privacy rights for employees and what are some general ways that most firms try to preserve them?

1. Can my employer listen to my phone calls at work?---In most instances, yes. 2. Computer Monitoring 3. Electronic Mail, Voice Mail and Postal MailIs electronic mail private? What about voice mail? In most cases, no. 4. Social Media Monitoring Can I be fired over what I post on social media sites? It depends on the policies your employer has in place and your State law. 5. Workplace Privacy Protections

• Who is Richard De George and what are his principles of doing business globally?

1. Do no direct intentional harm 2. Produce more good than harm. 3. Contribute to host country development. 4. Respect human rights. 5. Respect local culture. 6. Pay fair share of taxes. 7. Develop "just" background institutions

What is conflict of interest? And what are the four major types of conflict of interest as discussed in class and indicated on one of the slides?

A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation. • Biased judgment • Direct competition • Misuse of position • Violation of confidentiality

• What advantages do multinational corporations bring to developing nations and what sometimes goes wrong?

Advantages: •Improving the balance of payments- inward investment will usually help a country's balance of payments situation. •Providing employment •Source of tax revenue profits of multinationals will be subject to local taxes in most cases, which will provide a valuable source of revenue for the domestic government. •Technology transfer •Increasing choice •National reputation Disadvantages: •Environmental impact •Access to natural resources •Uncertainty •Increased competition •Crowding out - if overseas firms borrow in the domestic economy this may reduce access to funds and increase interest rates. •Influence and political pressure •Transfer pricing - multinationals will always aim to reduce their tax liability to a minimum. One way of doing this is through transfer pricing. •Low-skilled employment •Health and safety •Export of Profits •Cultural and social impact - large numbers of foreign businesses can dilute local customs and traditional cultures. For example, the sociologist George Ritzer coined the term McDonaldization to describe the process by which more and more sectors of American society as well as of the rest of the world take on the characteristics of a fast-food restaurant, such as increasing standardisation and the movement away from traditional business approaches.

• Who supports this concept of doing business and for what reasons?

Archie Carroll's "Pyramid of Corporate Social Responsibility." In this Pyramid a corporation has four types of responsibilities. • The first and most obvious is the economic responsibility to be profitable. • The second is the legal responsibility to obey the laws set forth by society. • The third, which is closely linked to the second, is the ethical responsibility. That is to do what is right even when business is not compelled to do so by law. • The fourth is the philanthropic responsibility. Also called the discretionary responsibility, it is best described by the resources contributed by corporations toward social, educational, recreational and/or cultural purposes.

Who is Tom Donaldson and what does he have to say about doing business globally? What is his Test of Rational Empathy?

Arguments for not saying - if a practice is not moral/permissible in the host country, it should not be done. 1. We can't literally translate some of what we say is right. IE - the wage rate in the US can't just be adjusted for the currency and standard of living. To do so would freeze the foreign workers out of the job market. 2. So we need to seek out responsibilities we hold as minimums - versus enlightened ones. Minimum duties are required for the continued existence of the company; enlightened ones are very nice if they can occur but not required. 3. Rights are requirements that impose minimum behaviors on others. The Rational Empathy Test Consider actions from the viewpoint of the people affected - what would we think is right if we were in their position? The idea is to take different cultural traditions and economic circumstances into account This is obviously very hard to do without special knowledge and training

• What is bribery and how is it perceived in different nations of the world?

Bribery is an act of giving money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined byBlack's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty. The bribe is the gift bestowed to influence the recipient's conduct. It may be any money,good,right in action,property,preferment,privilege,emolument, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.

Corporate Social Responsibility: What is the definition of this term and by what other terms is it known?

Corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare. The term generally applies to company efforts that go beyond what may be required by regulators or environmental protection groups. Corporate social responsibility may also be referred to as "corporate citizenship" corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business

• What are some usual policies by which firms try to protect themselves on social networking sites as they align their policies with Federal Trade Commission guidelines?

The DuPont Code of Conduct provides information: •To guide employees so that their business conduct is consistent with the company's ethical standards. •To improve the understanding of the company's ethical standards among customers, suppliers and others outside the company. Whenever you have questions or concerns regarding an ethical situation, you are encouraged to discuss these concerns with local line management. If you do not feel comfortable discussing the concerns face-to-face, you can call the DuPont Ethics and Compliance Hotline. Such situations may include: • Theft or fraud • Accounting or Auditing issues • Conflicts of Interest • Inappropriate business gifts • Safety, Health, or Environmental Issues • Misuse of company assets • Non-compliance with laws Social Contract: The idea of the social contract is one of the foundations of the American political system. This is the belief that the state only exists to serve the will of the people, and they are the source of all political power enjoyed by the state. They can choose to give or withhold this power. When posting information to a social network, a user probably expects authorized contacts to be able to view it. But who else can see it, and what exactly is visible? Entities that collect personal information for legal purposes include: •Advertisers interested in personal information so they can better target their ads to those most likely to be interested in the product •Third-party software developers who incorporate information to personalize applications, such as an online games that interact with the social network Entities that collect personal information for illegal purposes include: •Identity thieves who obtain personal information either based on information a user posts or that others post about the user. •Other online criminals, such as people planning to scam or harass individuals, or infect computers with malware (malicious software placed on a computer without the knowledge of the owner). To ensure that products and services are described truthfully online and that consumers get what they pay for, the FTC will continue to enforce its consumer protection laws. Most of the general principles of advertising law apply to online ads, but new issues arise almost as fast as technology develops.

What is the US Foreign Corrupt Practices Act and what does it prohibit? What does it allow?

The two major parts of the FCPA are the anti-bribery provisions and the record-keeping and internal accounting control provisions. • The FCPA makes it a crime to (1) make a payment of, offer or promise to pay, or authorize a payment of money or anything of value, directly or indirectly; (2) to any foreign official, politician, party official, candidate for office, or to an intermediary who knows that the payment will go to any of the aforementioned people; (3) with a corrupt motive; (4) for the purpose of influencing one of these person's official acts or decisions in violation of his or her lawful duty; (5) in order to assist in obtaining or retaining business. What is excluded? Reasonable expenditures for legitimate expenses, such as entertaining Any payments permitted or required by the law of the host country Facilitating or "grease" payments Facilitating payments seem problematic They do not cause a violation of a trust, but they might be illegal in the host country

What is the key point that Porter and Kramer, Harvard University professors, made with regard to CSR in each of their two Harvard Business Review articles discussed in class?

• 'Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility' in 2006) is that firms should identify issues containing both economic and social goals, and then utilize their expertise to generate market-based solutions. In this way, both economic value and social value are maximized. • e.g IBM: giving computing equipment to public schools in communities where IBM is located Microsoft: giving software to community colleges/ • 2011 : "Shared Value " • e.g Pursuing - for profit- the solution of societal issues • Examples: GE - energy savings products IBM- "smart cities" initiative Tata- cheap water purif. systems

What are the ways that employee can manage conflict of interest in order to stay out of difficulty?

• Disclose all potential conflicts of interest. • Identify factors that may mitigate the likelihood of actual conflicts of interest. • Implement effective management strategies to minimize development of actual conflicts of interest. • Carefully review sponsorship and license terms.

What general differences in culture and perception exist across the major cultures of the world as discussed in class?

• Laws in US vs. Japan on Nepotism & Favoritism • Max Clarkson on Cultural Value Systems in North America, Asia, Middle East, Europe: • North Americas value system is rights-based with the primary considerations being: rights, justice and utility. • Sino-Confucian areas, on the other hand, have value systems based on the primacy of duty. In China this duty is owed particularly to family, with the aged being accorded more respect. In Japan, loyalty to the company has replaced the primacy of the family. • Middle Eastern values systems are also duty-based, but here the primary obligation is to ones Saviour - and of course Saviours differ somewhat. • European value systems are probably closer to those in North America, but with important differences in that higher priorities are attributed to quality- and pace-of-life issues, environmental protection, and longer term pay-offs, to name a few.

Who opposes this concept of doing business and for what reasons?

• Milton Friedman's well-known response is: "a corporation's responsibility is to make as much money for the stockholders as possible." In [a free economy] there is one and only one social responsibility of business―to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game." • Jay Barney : The theory shows that managers in publicly traded firms might fund socially responsible activities that do not maximize the present value of its future cash flows yet still maximize the market value of their firm. • Fred Smith: CSR blurs those distinctions, transforming wealth-creating firms into wealth redistributing rent seekers. The doctrine of CSR fails to recognize the ways in which the corporation already contributes to the values of our democracy. CSR, by imposing a whole array of "social" mandates on the firm, diverts focus from this wealth creation role to othernon-profit relevant goals, and, thus, weakens the firm's ability to create wealth. Moreover, CSR is non-democratic, shifting power from the many in the populace to the few in top corporate management. CSR reduces the ability of individuals to advance their own individual goals.Instead, CSR allows top corporate managers—influenced by powerful political and ideological interests—to determine which values will be championed, and which ones ignored.

• What is Stakeholder Theory? What does the term "stake" refer to?

• Stakeholder management supports an organization's strategic objectives by interpreting and influencing both the external and internal environments and by creating positive relationships with stakeholders through the appropriate management of their expectations and agreed objectives. Stakeholder management is a process and control that must be planned and guided by underlying principles. • A stakeholder is anyone who is: • managing the programme of work; • working within the programme of work; • directly or indirectly contributing to the programme of work; • affected by the programme of work or its outcomes. Agency Theory Milton Friedman