intern

ation

al bu

siness, 5

th edition

chapter 5ethics and social responsibility in international business

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Chapter Objectives 1

• Describe the nature of ethics

• Discuss ethics in cross-cultural and international contexts

• Identify the key elements in managing ethical behavior across borders

• Discuss social responsibility in cross-cultural and international contexts

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Chapter Objectives 2

• Identify and summarize the basic areas of social responsibility

• Discuss how organizations manage social responsibility across borders

• Identify and summarize the key regulations governing international ethics and social responsibility

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Exporting Jobs or Abusing People?

• Minute Maid

• Tropicana

• Nestle

• Nike

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Ethics

Ethics is an individual's personal beliefs about whether a

decision, behavior, or action is right or wrong.

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Ethical Generalizations

• Individuals have their own personal belief systems

• People from the same cultural context will tend to hold similar beliefs

• Behaviors can be rationalized

• Circumstances affect adherence to belief systems

• National culture is intertwined with ethics

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Figure 5.1 Ethics in a Cross-Cultural Context

Cultural Context

Behavior of Organization

Toward Employees

Behavior of Employees

Toward Organization

Behavior of Employees and Organization

Toward Other Economic Agents

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How Organizations Treat Employees

Some businesses in Africa have taken steps to educate their employees about how AIDS is contracted.

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Acceptability of Bribery

• Acceptable

– Russia

– China

– Taiwan

– South Korea

• Unacceptable

– Australia

– Sweden

– Switzerland

– Austria

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Managing Ethical Behavior Across Borders

Guidelines or codes

Organizational practices

Corporate culture

Ethics training

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Corporate Social Responsibility

Corporate social responsibility is the set of obligations an organization undertakes to protect and enhance

the society in which it functions.

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Areas of Social Responsibility

Organizationalstakeholders

General socialwelfare

Natural environment

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Examples of Companies with a Commitment to CSR

• L.L. Bean

• Toyota

• Lands’ End

• 3M

• Dell Computer

• DaimlerChrysler

• BP

• Honda

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Map 5.1 Social Responsibility Hot Spots

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Approaches to Social Responsibility

Obstructionist

Defensive

Accommodative

Proactive

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Figure 5.3 Approaches to Social Responsibility

LeastResponsible

MostResponsible

Obstructionist Defensive Accommodative Proactive

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Obstructionist Stance

• Do as little as possible to address social or environmental problems

• Deny or avoid responsibility

• Examples

– Astra

– Nestle

– Danone

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Defensive Stance

• Do what is required legally, but nothing more

• Corporate responsibility is to generate profits

• Example

– Philip Morris

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Accommodative Stance

• Meet ethical and legal requirements and more

• Agree to participate in social programs

• Match contributions by employees

• Respond to requests from nonprofits

• No proactive behavior to seek such opportunities

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Proactive Stance

• Strong support of social responsibility

• Viewed as citizens of society

• Seek opportunities to contribute

• Examples

– McDonald’s

– The Body Shop

– Ben & Jerry’s

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Managing Compliance Formally

Legal compliance

Philanthropic givingEthical compliance

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Managing Compliance Informally

Leadership

Whistle-blowingOrganizational

culture

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Evaluating Social Responsibility

A corporate social audit is a formal and thorough analysis of the

effectiveness of the firm’s social performance.

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Steps in Corporate Social Audit

Define social goals

Analyze resources devoted to each goal

Determine degree of achievement for each goal

Make recommendations

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Actors in Policy Formulation Process

The state

Civil societyThe market

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Regional Stereotypes

Anglo-Saxonapproach

Continental European approach

Asianapproach

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Regulating International Ethics and Social Responsibility

• Foreign Corrupt Practices Act (FCPA)

• Alien Tort Claims Act

• Anti-Bribery Convention of the Organization for Economic Cooperation and Development

• International Labor Organization (ILO)