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