4. Ethics in international business

Personal ethics

-business ethics reflect personal ethics -expatriates may face pressure to violate their personal ethics- are away from ordinary social context and culture-are psychologically and geographically distant from parent company

Environmental pollution

-should a multinational feel free to pollute in a developing nation if doing so does not violate laws?

Issues with employment practices and human rights

-what practices should be used when work conditions are inferior in the host nation? like the sweatshops that produce iphones -should multinationals invest in countries that violate human rights? -what is the responsibility of a foreign multinational when operating in a country where basic human rights are not represented?

tragedy of the commons

a resource help in common by all, but owned by no one, is overused, resulting in its degradation -nobody really policing pollution How do we manage resources that seem to belong to everyone? Natural food reserves, energy resources like fossil fuels, a clean environment, with clean air, water and soil belong to everyone and yet are protected by no one.

ethics

accepted principles of right or wrong that govern the conduct of a person

Righteous Moralist

an MNEs home country standard of ethics should be followed in foreign countries

Ethical dilemmas

are situations in which none of the available alternatives seems ethically acceptable. -basically what we illustrated in the cards before: ethical obligations of multinational corps toward employment conditions, human rights, corruption, pollutions, and use of power are not always clear cut

business ethics

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

John Rawls

argues that economic goods and services should be distributed equally except when al unequal distribution would work to everyones advantage -veil of ignorance- impartiality (equal treatment) is guaranteed by the veil of ignorance when everyone is imagined to be ingnorant of his or her particular characteristics

Kantian ethics

based on the pilosophy of immanuel kant who argued people should be treated as ends and never means to an end -people have dignity and need to be respected, they are not machines to do your bidding

decision-making process

business people may behave unethically because they fail to ask the relevant questions -decisions made based on economic logic without ethical considerations

Leadership

employees often take cues from business leaders- if the leader tends to be unethical, you might be urged to do so or fall victim to coersion

Social culture

ethical policies differ by country MNEs headquartered in individualistic cultures and strong uncertainty avoidance are more likely to emphasize ethical behavior MNEs hqd in cultures with high masculinity and high power distance are less likely to promote ethical behavior

Cultural relativism

ethics are culturally determined and firms should adopt the ethics of the cultures in which they operate "When in rome"

To ensure ethical issues are considered in business decisions you should:

favor hiring and promoting well grounded sense of personal ethics people -build org culture that places high value on ethics -

Justice theories

focus on the attainment of just distribution of economic goods and services

Universal Declaration of Human Rights

from the UN, specifies the basic principles that should always be adhered to irrespective of the culture in which one is doing business

moral compass

fundamental human rights form the basis for the moral compass

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

Corruption

is it ethical to make payments to govt officials to secure business?

Foreign Corrupt Practices Act

makes it illegal for US firms and their representatives to engage in corrupt practices overseas

Utilitarian

moral worth of actions or practices is determined by their consequences- MOST OVERALL UTILITY

Ethical strategy

one that does not violate accepted ethical principles

just distribution

one that is considered fair and equitable

unrealistic performance goals

pressure from parent company to meet goals that are unrealistic and can only be attained by acting in an unethical manner

Rights theories

recognize that human beings have fundamental rights and privileges which TRANSCEND national boundaries and cultures -there is a minimum level of morally acceptable behavior -fundamental human rights form the basis for the MORAL COMPASS that managers should navigate by when making decisions

Determinants of ethical behavior

societal culture, decision-making process, leadership, unrealistic performance goals, organizational culture, personal ethics

Friedman doctin

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

Straw men

these approaches offer inappropriate guidelines for ethical decision making in a multinational enterprise

organizational culture

unethical behavior may exist in firms with an organizational culture that does not EMPHASIZE BUSINESS ETHICS -values and norms shape culture of firm, and that culture influences decision making

4 common straw men approaches

Friedman doctrine Cultural relativism Righteous moralist Naive immoralist

OECD

Convention on Combating Bribery of Foreign Public officials in international business transactions