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Ethics in
International Business
Learning Objectives
Understanding the ethical issues faced by international
businesses
Recognize an ethical dilemma
Identify the causes of unethical behavior by managers (roots of
unethical behavior)
Describe the different philosophical approaches to ethics
Explain how managers can incorporate ethical considerations
into their decision making
4-2
Content
Ethical issues in IB
Roots of unethical behavior
Philosophical approaches to ethics
Implications for managers
4-3
Ethics
Ethics - accepted principles of right or wrong that
govern the conduct of a person, the members of a
profession, or the actions of an organization
Business ethics - accepted principles of right or wrong
governing the conduct of business people
Ethical strategy - a strategy, or course of action, that
does not violate these accepted principles
How are accepted principles defined? Who decides
what is acceptable?
4-4
Ethical Issues in IB
Most common ethical issues:
Employment practices
Human rights
Environmental regulations
Corruption
Moral obligation of multinational companies
4-5
Employment Practices
When work conditions in a host country are
clearly inferior to those in a multinationals
home country, which standards should the
company apply?
Home country?
Host country?
Something in between?
4-6
Human Rights
Universal Declaration of Human rights: (Article 23)
Everyone has the right to work, to free choice of
employment, to just and favorable conditions of work, and to
protection against unemployment
Everyone, without any discrimination, has the right to equal
pay for equal work
Everyone has the right to form and to join labor union or
trade union for the protection of his interests.
Everyone who works has the right to just and favorable
renumeration ensuring for himself and his family, by different
means of social protection
4-7
Environmental Pollution
Disparities in environmental regulations (and their
4-8
Corruption
Corruption - Abuse of power for private advantage
(Transparency International)
Main form of corruption: Bribery
Foreign Corrupt Practices Act (U.S.) - outlawed the
practice of paying bribes to foreign government officials
in order to gain business
Convention on Combating Bribery of Foreign
Public Officials in International Business
Transactions (adopted by the OECD in 1997) - obliges
member states to make the bribery of foreign public
officials a criminal offense
4-9
Moral Obligations
4 - 10
Personal Ethics
Business ethics reflects personal ethics (the generally
accepted principles of right and wrong governing the
conduct of individuals)
Why do expatriate managers sometimes change their
personal ethics?
- Different social context
- Lack of a supporting local culture
- Psychologically and geographically distant from the parent
company
4 - 12
Organizational Factors
Organization Culture
Companies that view decisions in purely economic terms can
create a climate that leads to unethical behavior
Leadership
If leaders are not acting ethically, other employees may not act
ethically
4 - 13
Philosophical Approaches
to Ethics: Straw Men
Friedman doctrine
Cultural relativism
Righteous moralist
Nave immoralist
These types of approaches offer inadequate guidelines
for ethical decision making in a multinational enterprise
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Cultural Relativism
Belief that ethics are culturally determined and that firms
should adopt the ethics of the cultures in which they operate, or
in other words, when in Rome, do as the Romans do
4 - 15
Nave Immoralist
The nave immoralist asserts that 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
4 - 16
Moral Philosophies:
Utilitarian Ethics
Utilitarian approaches to ethics hold that the moral
worth of actions or practices is determined by their
consequences
An action is judged to be desirable if it leads to the
best possible balance of good consequences over bad
consequences
Problems with this approach:
-
Moral Philosophies:
Rights Theories
Recognition that human beings have fundamental
Moral Philosophies:
Justice Theories
Focus of justice theories is on the attainment of a just
4 - 19
Application of
Moral Philosophies
How would you evaluate the global issue of people
working in sweatshops using each of the moral
philosophies?
Nike in Vietnam
Pfizer in Nigeria
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4 - 23
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