Chapter 9

Business Ethics in a Global Economy

Ethical Perspectives in International Business

when businesspeople travel abroad, they sometimes perceived different modes of operation

research shows that American companies feel they are different from may foreign companies

“we” versus “them” is referred to as self-reference criterion-unconscious reference to one’s own cultural values, experiences, & knowledge

Culture as a Factor in International Business

culture is everything in our surroundings made by people-both tangible and intangible concepts & values– each nation has a distinctive culture & beliefs about

acceptable or unethical activities

citizens of different cultures vary based on their religious beliefs as well as perceptions of time

the key question: whose values & ethical standards take precedence

Cultural Relativism...

the concept that morality varies from one culture to the next since business practices are defined as right or wrong by the particular culture– ethical relativism-one culture defines ethical

behavior for the whole globe, no exceptions– business relativist-there may be no ethical standards

except for the one in the transaction culture

Multinational Corporations...

operate on a global scale without significant ties to any one nation or region– perceived to be unfair for MNCs to transfer jobs

abroad where wage rates are lower– have been accused of increasing the gap between

the rich & poor nations– have been accused of exploiting natural & human

resources– have been accused of engaging in unfair competition

Global Ethical Issues

sexual & racial discrimination

human rights

price discrimination

bribery

harmful products

pollution

telecommunications

Sexual & Racial Discrimination

U.S. laws prohibit U.S. businesses from discriminating on the basis of race, color, sex, religion & ability

discrimination is often justified on the basis of cultural norms & values

discrimination remains one of the more prevalent concerns in international business

Human Rights

opportunistic use of child labor, payment of low wages, abuses in foreign factories are a few of the concerns

relationships with subcontractors have proved problematic for some firms

MNCs should view the law as a floor of acceptable behavior & strive for greater improvements in workers’ quality of life

Advancing Human Rights...

engage in an open dialog with workers & management

be aware of human rights issues & concerns in each country in which they engage in business

adopt the prevailing legal standard, but seek to embrace a ‘best practices’ approach and standard

Price Discrimination

occurs when a firm charges different prices to different groups of consumers– allowable if justified based on costs

price gouging-a price increase exceeding the costs of additional expenses (taxes, etc.)

dumping-charging high prices for products sold in the home market and low prices that do not cover costs in foreign markets (considered illegal under many international laws)

Bribery & the Foreign Corrupt Practices Act...

bribes & facilitating payments are acceptable in many cultures

the U.S. Foreign Corrupt Practices Act prohibits American corporations from offering or providing payments to officials of foreign governments for the purpose of obtaining or retaining business abroad– may place U.S. businesses at a disadvantage– has been supported through global treaties

Harmful Products

product banned in many industrial nations, considered harmful, are sold in other countries where they are still legal

dumping of hazardous waste materials in less developed countries is a related issue

some products that are not harmful in some countries may be so in others because of issues related to: literacy, unsanitary conditions, & cultural values

Pollution

many countries are working together to create alliances & standards for environmental responsibility to minimize the negative effects of pollution

some countries are taking legal action against polluting firms in an effort to defend air & water quality

reasonable global emission standards must be established

Telecommunications

satellites, e-mail & the Internet bring a ease of information access with resulting ethical issues

a few of the ethical issues include:– counterfeiting– knockoffs– money laundering