Chapter 5: Ethics

environmental pollution

Ethical issues arise when environmental regulations in host nations are inferior to those in the home nation. Many developed nations have substantial regulations governing emissions, dumping of chemicals, etc.

hiring and promotion

Making Ethical Decisions Internationally ____________________________ Businesses should strive to identify and hire people with a strong sense of personal ethics Prospective employees should find out as much as they can about the ethical climate in an organization

organizational culture and leadership

Making Ethical Decisions Internationally ___________________________________________ Articulate values that emphasize ethical behavior, emphasize their importance, provide incentives and rewards Develop a code of ethics may outline the mission and values of the business or organization, how professionals are supposed to approach problems

utilitarian approach

Philosophical Approaches to Ethics, (continued) this approach holds that the moral worth of actions or practices is determined by their consequences. An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences. committed to the maximization of good and the minimization of harm.

united nations conference on trade and development

Sustainable Development Goals Each goal has a set of specific targets to be achieved in the 15 years that follow. Importantly, the idea is that for the 17 goals to be achieved in this time frame, everyone needs to participate. Governments, the private sector of businesses, civil society—are all stakeholders.

cultural relativism

The belief that 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"

greatest good for the greatest number of people

The best decisions, from a utilitarian perspective, are those that produce...

ethics

(also known as moral philosophy) is a branch of philosophy which seeks to address questions about morality; that is, about concepts such as good and bad, the noble and the ignoble, right and wrong, justice, and virtue.

global tragedy of the commons

can contribute to _____________________________ by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons.

sustainability

does not exert a negative impact on the ability of future generations to meet their own economic needs and that its actions impart long-run economic and social benefits on stakeholders. Can be good for shareholders, the environment, local communities, employees, and customers as the triple bottom line considers "people, profits, and planet."

naive immoralist

if a manager of an MNE sees that firms from other nations are not following ethical norms in a host nation, that manager should not either Actions are ethically justified if everyone else is doing the same thing

corruption

is the misuse of power for private gain. Is it ethical to make payments to government officials to secure business? Foreign Corrupt Practices Act and Convention on Combating Bribery of Foreign Public Officials in International Business Transactions prohibit this Facilitating payments/speed money excluded

tragedy of the commons

occurs when a resource held in common by all but owned by no one is overused by individuals, resulting in its degradation.

utilitarianism

recognizes that actions have multiple consequences, some of which are good in a social sense and some of which are harmful

corporate social responsibility

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 Decisions are complex, difficult to frame, and involve various consequences difficult to quantify

ethics

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

united nations conference on trade and development

was established in 1964 to promote development-friendly integration of countries into the world economy. In 2015, many countries adopted the "2030 Agenda for Sustainable Development" and its 17 "Sustainable Development Goals" (SDGs).

sustainable strategies

we refer to strategies that not only help the multinational firm make good profits, but that also do so without harming the environment while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its stakeholders.

business ethics

accepted principles of right or wrong governing the conduct of business people

stakeholders, moral, audit

A five-step process can also help managers think through ethical issues... How would a decision affect _______________? Would the proposed decision violate any stakeholders fundamental rights? Establish ___________ intent—place moral concerns ahead of other concerns. Step four requires the company to engage in ethical behavior. ___________ decisions, reviewing them to make sure that they were consistent with ethical principles.

ethics officers

Assess the needs and risks an ethics program must address Develop and distribute a code of ethics Conduct training programs for employees Establish confidential service for (un)ethical behavior Ensure compliance with laws and regulations Monitor and audit ethical conduct Take action on ethics violations Review and update the code of ethics

justice theories

Focus on the attainment of a just distribution (one that is considered fair and equitable) of economic goods and services Philosopher John Rawls - all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage Impartiality is guaranteed by the veil of ignorance - everyone is imagined to be ignorant of all his or her particular characteristics

falsify, bribes, abuse, advertising, pricing

For example, firms may project improper ethical behavior by doing these things: ________ or misrepresent contracts or official documents. Pay or accept ________, kickbacks, or inappropriate gifts. Tolerate sweatshop conditions or __________ employees. Do false _______________ or other deceptive marketing. Engage in deceptive or discriminatory _________. Deceive or abuse intermediaries in the channel. Undertake activities that harm the natural environment.

rights theories

Human beings have fundamental rights and privileges that transcend national boundaries and culture A moral compass that managers should navigate by when making decisions that have an ethical component Idea some fundamental rights transcend national borders and cultures

moral courage

Important to recognize employees in IB may need significant what? This allows managers to walk away from decisions that may be profitable but unethical Also gives employees strength to say no to a superior Gives employees the integrity to go public to the media and blow the whistle on unethical behavior

bad, peer pressure, good ends

Improper Ethical Behavior May Result When: Top management sets goals and incentives aimed at promoting good outcomes (e.g., profits) that instead encourage ___________ behaviors. Employees overlook unethical behavior in others because of __________ ______________ or self-interest. Managers tolerate lower ethical standards in value-chain activities performed by suppliers or third-party firms. Unethical practices are allowed to accumulate in the firm slowly over time. Bad means are justified by _________ _________.

employment practices, human rights, environmental regulation, corruption, and moral obligations.

In the international business setting, the most common ethical issues involve...

yes

Making Ethical Decisions Internationally If a manager can answer "yes" to the following questions, the decision is ethically acceptable Does my decision fall within the accepted values of standards that typically apply in the organizational environment? Am I willing to see the decision communicated to all stakeholders affected by it? Would the people with whom I have significant personal relationships approve of the decision?

personal, officers, courage,

Making Ethical Decisions Internationally Actions managers can take to ensure ethics are considered: Favor hiring and promoting people with a well grounded sense of ____________ ethics Build an organizational culture that places a high value on ethical behavior Put decision making processes in place that require people to consider the ethical dimension of business decisions Institute ethical _____________ in the organization Develop moral __________ Make corporate social responsibility a cornerstone of the enterprise policy Pursue strategies that are sustainable

personal ethics, decision making processes, organization culture, social culture, unrealistic performance goals, leadership

Managerial behavior is influenced by:

Friedman Doctrine

Philosophical Approaches to Ethics Straw-person, or Inappropriate Guidelines _________________________________ Cultural Relativism The Righteous Moralist The Naïve Immoralist

kantian ethics

Philosophical Approaches to Ethics, (continued) holds that people should be treated as ends and never purely as means to the ends of others. People are not instruments, like a machine. People have dignity and need to be respected as such. Employing people in sweatshops, making them work long hours for low pay in poor working conditions, is a violation of ethics, because it treats people as mere cogs in a machine and not as conscious moral beings that have dignity.

righteous moralist

an MNE's home country standards of ethics are the appropriate ones for companies to follow in foreign countries Approach is common among managers from developed countries

leadership

Root of Unethical Behavior: Employees often take cues from business leaders Actions speak louder than words

unrealistic performance goals

Root of Unethical Behavior: Pressure from parent company to meet goals that are unrealistic and can only be attained by acting in an unethical manner

social culture

Root of Unethical Behavior: Societal Culture Ethical policies differ by country MNEs located in countries where individualism and uncertainty avoidance are strong are more likely to emphasize ethical behavior MNEs located in countries with high masculinity and high power distance are less likely to promote ethical behavior

personal ethics

Root of Unethical Behavior: They are away from their ordinary social context and supporting culture They are psychologically and geographically distant from the parent company

organizational culture

Root of Unethical Behavior: Values and norms shape the culture of a firm, and that culture influences decision making

Decision-Making Processes

Root of Unethical Behavior: May behave unethically because of failure to ask the relevant questions, "Is this decision or action ethical?" Decisions may be made based on good economic logic (yet omit some ethical calculus)

corruption

Some argue that paying bribes might be the price of doing a greater good Where preexisting political structures distort or limit the workings of the market mechanism, side payments to government bureaucrats to "speed up" approval for business investments - may actually enhance welfare Others argue that _______________ reduces the returns on business investment and leads to low economic growth

ethics, corporate social responsibility, sustainability

What are the 3 elements of corporate governance

corporate social responsibility, ethical behavior, complying with laws and regulations

What are the levels of the CSR Pyramid?

identify problem, determine the facts, create alternatives, implement course of action, evaluate results

What are the steps of ethical framework for making decisions?

human rights

What is the responsibility of a foreign multinational when operating in a country where basic human rights are not respected? (e.g., South Africa during apartheid) The global Sullivan principles were designed to increase the active participation of corporations in the advancement of human rights and social justice at the international level.

employment practices

When work conditions in a host nation are clearly inferior to those in a multinational's home nation, which standards should be applied? Those of the home nation, those of the host nation, or something in between? Few would suggest that pay and work conditions should be the same across nations, how much divergence is acceptable?

ethical strategy

a course of action that does not violate a company's business ethics