IB Ch 5

This outlawed the practice of paying bribes to foreign govt officials to gain business

Foreign Corrupt Practices Act

the only social responsibility of business is to increase profits, so long as the company stays within the rules of law

Friedman

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

Naive Moralist

Why Do Managers Behave Unethically

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 Decision-making processes - the values and norms that are shared among employees of an organization organization culture that does not emphasize business culture encourages unethical behavior Organization culture - organization culture can legitimize unethical behavior or reinforce the need for ethical behavior Unrealistic performance expectations - encourage managers to cut corners or act in an unethical manner. There is tremendous pressure to "make the numbers". Leadership - helps establish the culture of an organization, and set the examples that others follow when leaders act unethically, subordinates may act unethically, too 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

Many firms now have ethics officers to ensure

all employees are trained in ethics ethics is considered in the decision-making process the company's code of conduct is followed

Advocates argue that businesses need to recognize their noblesse oblige

honorable and benevolent behavior that is the responsibility of successful companies give something back to the societies that have made their success possible

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

Righteous Moralist

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 toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear cut the right course of action is not always clear

Ethical dilemmas

These are often called grease payments and are used for smaller needs. They are legal and tax deductible in the US.

Facilitating Payments

How Can Managers Make Ethical Decisions?

1.Hire and promote people with a well- grounded sense of personal ethics refrain from promoting individuals who have acted unethically try to hire only people with strong ethics prospective employees should find out as much as they can about the ethical climate in an organization prior to taking a position 2. Build an organizational culture that places a high value on ethical behavior articulate values that place a strong emphasis on ethical behavior emphasize the importance of a code of ethics - formal statement of the ethical priorities a business adheres to implement a system of incentives and rewards that recognize people who engage in ethical behavior and sanction those who do not 3. Make sure that leaders within the business articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric give life and meaning to words make sure that leaders emphasize the importance of ethics verbally and through their actions 4. Put decision-making processes in place that require people to consider the ethical dimensions of business decisions Ask whether decisions fall within the accepted values of standards that typically apply in the organizational environment decisions can be communicated to all stakeholders affected by it if colleagues would approve of decisions 5. Develop moral courage enables managers to walk away from a decision that is profitable, but unethical gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical gives employees the integrity to go public to the media and blow the whistle on persistent unethical behavior in a company

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

Corporate Responsibility

ethics are culturally determined and firms should adopt the ethics of the cultures in which they operate "when in Rome, do as the Romans do"

Cultural Relativism

This bribery includes more serious bribes to influence a result. This bribery is illegal.

Speed Money

Managers can also use a five-step process to think through ethical problems:

Step1: Identify which stakeholders (the individuals or groups who have an interest, stake, or claim in the actions and overall performance of a company) a decision would affect and in what ways Step 2: Determine whether a proposed decision would violate the fundamental rights of any stakeholders Step 3: Establish moral intent - place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated Step 4: Engage in ethical behavior Step 5: Audit decisions and review them to make sure that they are consistent with ethical principles this step is often overlooked even though it is critical to finding out whether a decision process is working

Foreign Corrupt Practices Act

The FCPA provides for a so-called "safe harbor". Under this law an American company can pay facilitating or grease payments. An example would be to get a container out of a port where port and customs authorities demand a bribe Where routine administrative needs like drivers licenses or work permits are needed The need to clear customs in a country when carrying sales samples, etc.

occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. For example, a company moves manufacturing to a country with lax environmental laws which aren't broken, but is it ethical?

Tragedy of the commons