international management ethics / social responsibility
TRANSCRIPT
International Management
Ethics / Social Responsibility
Ethics / Soc. Resp. Sites
•http://www.wto.org/english/tratop_e/devel_e/d1who_e.htm (WTO guidelines for developing countries)
•http://www.unctad.org/Templates/Page.asp?intItemID=3073&lang=1
(United Nations listing of least developed countries)
•www.transparency.de/ (European perspective)
•www.cceia.org/ (Carnegie Council on Ethics)
•www.globalethics.org (Ethical dilemnas)
•http://www.business-ethics.org/
•http://management.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.islamist.org%2Fimages%2Fethicshm.pdf
•http://www.iit.edu/departments/csep/PublicWWW/codes/
Ethics Around the World
Ethics -the study of morality and standards of conduct– Unethical Business Practices
Insider Trading ScandalsBribes“Mad” Syndrome
– mergers, acquisitions, divestitures
The Opaque IndexMeasures the effect of unclear legal systems
and regulations0 20 40 60 80 100
ChinaRussia
IndonesiaTurkey
South KoreaCzech Republic
RomaniaKenya
EcuadorThailand
GuatemalaIndia
PolandVenezuelaPakistan
ArgentinaBrazil
Taiwan
ColumbiaJapan
South AfricaEgypt
LithuaniaPeru
GreeceIsrael
UruguayHungary
ItalyMexico
Hong KongBritainChile
United StatesSingapore
0 20 40 60 80 100
Current Index?
Regulating Foreign Investment
Regulation of Acquisitions– MNC’s must obtain host government
clearance prior to establishing new operations or purchasing ongoing businessesPurpose: To control own
economies and gain independence from foreign companies
Examples of unethical conduct Parmelat – Falsifying records and documents to conceal
losses and to funnel money privately (up to $8 Billion) The Recruit company - allowed politicians and influential
business people to buy cut-rate stock Honda of America- settled a $6 million discrimination pay
back to 370 African American women EEOC filed sexual harassment lawsuit against Mitsubishi on
behalf of 300 women Enron…. Arthur Anderson…(sophisticated accounting
manipulation) Adelphia – Diverting corporate funds to private (family) use,
and using off-book financing of $3.5 Billion) Global Crossings – falsifying marketing and cost information Etc.. Etc..
Regulating Foreign Investment
Ethical concerns about the reciprocity of the relationship between the home country of the MNC and the host country
Regulation of Acquisitions– The U.S. regulates the acquisition of
domestic companies by foreign investors Other countries are following the U.S.’s lead
– EU regulations making it more difficult for non-European companies to do business in Europe
– Nonreciprocal trade partners Nations that sell (export) goods to other countries
but do not buy (import) from them
Reciprocity– Is their an ethical and social responsibility
to engage in reciprocal trade? Example: obligations to maintain an
import/export balance with trading partner?– retaliation?
• ongoing issue between Japan and the U.S.
Ethics and Social Responsibility Around the World
Ethics– Vital role of ethics in conduct of business
Sarbanes-Oxley Act (2002)– CEO and CFO required to approve and declare
accurate all financial statements provided to SEC for publication
– Ensure transparency of all disclosures– Make content appropriately accessible for audit and
verification
– MNCs face difficulty because of differing standards between countries where they operate
Ethics and Social Responsibility Around the World
Political and business scandals– Japanese cabinet member forced to resign for receiving
over $2 million from Japanese corporations– Failure of banking system to take corrective action
regarding Japan’s recession– Concealing customer complaints– Failure to inform car owners about possible auto defects
and maintenance of two sets of customer complaint records
– Encouraging employees to mislead government inspectors
Ethical Problems and Concerns
Japan
Ethics and Social Responsibility Around the World
Hostile work environment– Cultural expectations
Traditional role of females and female employees Sexual harassment may not be considered a moral issue
Equal opportunity issues– Refusal to hire women or promote them into
management positions– Mitsubishi sued by U.S. EEOC
Social Responsibility/Lobbying
Ethical Problems and Concerns
Japan
Ethics and Social Responsibility Around the World
Survey of 124 U.S., 72 French, and 70 German managers responding to five ethical vignettes – In most cases, the U.S. managers’ responses were quite
different from those of their European counterparts U.S. managers more concerned with ethical and legal questions French and German managers more concerned with maintaining
a successful business posture
Reasons for difference between countries
Ethical Problems and Concerns
Europe
Culture Personal valuesIncentives Legal restrictions
Ethics and Social Responsibility Around the World
Status of women managers in Europe– France
Proportion of women in the labor force trendsGlass ceilingFrench law guarantees equal treatment and
professional opportunitiesEnforcement is weak
Ethical Problems and Concerns
Europe
Status of women managers in Europe
Ethical Problems and Concerns
Europe
Germany Remaining differences between East and West
Germany Proportion of females in higher positions Professional qualifications relate inversely to
hierarchical position Lack of objective criteria for selection to higher
positions
Has mandated equal opportunity throughout the public sector
Ethics and Social Responsibility Around the World
Status of women managers in Europe
Ethical Problems and Concerns
Europe
Great Britain 45 percent of workforce is female Not well represented at higher levels Women creating associations for networking and
lobbying Women’s Engineering Society The 300 Group
Some companies becoming proactive in women’s work rights
Discrimination lawsuits becoming more commonplace
Ethics and Social Responsibility Around the World
Ethical issues– Workers not well paid (often work 12
hours a day, 7 days a week)– Piracy of intellectual property,
counterfeiting, and industrial spying Human rights violations
Use of prisoner and child labor
Ethical Problems and Concerns
China
Ethics and Social Responsibility Around the World
Corporate Social ResponsibilityCorporate social responsibility (CSR)
– Actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm
– Pressure for greater attention to CSR Civil society Nongovernmental organizations (private, not-for-profits that
focus on social, political and economic issues)
– CSR concerns Working conditions in factories and service centers Environmental impacts of corporate activities
Trust in Leaders(Percentage saying “A Lot,” or “some”
trust)
0 10 20 30 40 50 60
Average Across All 15 Countries Surveyed
NGO leaders
Leaders at the U.N.
Spiritual/religious leaders
Leaders of Western Europe
Managers of the global economy
Managers of the national economy
Executives of MNCs
Leaders of the U.S.A.
52
42
41
36
36
35
33
27
Adapted from Figure 3-1: Trust in Leaders: Percentage Saying “A Lot” and “Some Trust”
Rise of Civil Society and NGOs Emergence of organized civil society and
NGOs altered– Business environment globally– Role of MNC within global business environment
NGOs in the U.S. and globally– Save the Children– Oxfam– CARE– World Wildlife Fund– Conservation International
Rise of Civil Society and NGOsCorporations receiving heavy criticism
– Nike– Levi’s– Chiquita
Major criticisms– Exploitation of low-wage workers– Environmental abuses– Intolerable workplace standards
Response to social obligations– Agreements and codes of conduct– Maintenance of standards in domestic and global operations– Cooperation with NGOs regarding certain social issues
Response to Social Obligations
Human RightsPrinciple 1: Support and respect the protection of international human rights within their sphere of influence.
Principle 2: Make sure their own corporations are not complicit in human rights abuses.
Table 3-1Principles of the Global Compact
Adapted from Table 3-1: Principles of the Global Compact
Response to Social Obligations
LaborPrinciple 3: 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.
Principle 6: The elimination of discrimination with respect to employment and occupation.
Table 3-1Principles of the Global Compact
Adapted from Table 3-1: Principles of the Global Compact
Response to Social Obligations
EnvironmentPrinciple 7: Support a precautionary approach to environmental challenges.Principle 8: Undertake initiatives to promote greater environmental responsibility.Principle 9: Encourage the development and diffusion of environmentally friendly technologies.Anti-CorruptionPrinciple 10: Business should work against all forms of corruption, including extortion and bribery.
Table 3-1Principles of the Global Compact
Adapted from Table 3-1: Principles of the Global Compact
Corporate Governance
Corporate Governance
Structure
Corporate Governance
Structure
Distribution of rights and
responsibilities
Distribution of rights and
responsibilities
Stakeholders• Board• Managers• shareholders
Stakeholders• Board• Managers• shareholders
Spells out the rules and
procedures
Spells out the rules and
procedures
Making decisions
Making decisions
• Setting objectives• Means of attaining
objectives• Monitoring performance
• Setting objectives• Means of attaining
objectives• Monitoring performance
The system by which business corporations are directed and controlled
Corporate Governance Rules and regulations differ among countries
and regions– U.K. and U. S. systems are “outsider” systems
Dispersed ownership of equity Large number of outside investors
– Many continental European countries are “insider” systems Ownership more concentrates Shares owned by holding companies, families or banks
Other effects on corporate governance include– Differences in legal systems– Responsiveness and accountability of corporate managers to
stakeholders
Corruption and Foreign Corrupt Practices
ActForeign Corrupt Practices Act (FCPA)
– Illegal for U.S. firms and their managers to attempt to influence foreign officials through personal payments of political contributions, including such tactics as “Entertainment” expenses “Consulting” fees
– Some evidence that discontinuing bribes does not reduce sales of the firm’s products or services in that country
– Some evidence that firms from other countries continue to win business through corrupt practices such as bribery
– Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials
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Corruption Index
Adapted from Figure 3–2: Corruption Index: Ranking of Least Corrupt to Most
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TPI-Corruption Index
Corruption and Foreign Corrupt Practices Act(s)
Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials– Organization for Economic Cooperation and
Development– 29 members plus several other countries have
signed on– Fails to outlaw most payments to political party
leaders.– Does indicate growing support for anti-bribery
initiatives
International Assistance
Governments and corporations increase collaboration to provide assistance to communities and locales through global partnerships
Best “investments”– Controlling and preventing AIDS– Fighting malnutrition– Reducing subsidies and trade restrictions– Controlling malaria
International AssistanceInternational Assistance
Project rating Challenge Opportunity
Very good
Table 3-2Copenhagen Consensus Development Priorities
1 Diseases Control of HIV/AIDS2 Malnutrition Providing micro
nutrients3 Subsidies and trade Trade liberalization4 Diseases Control of malaria5 Malnutrition Development of new
agricultural technologies6 Sanitation and water Small-scale water
technology for livelihoods7 Sanitation and water community-managed
water supply and sanitation
Adapted from: Table 3.2: Copenhagen Consensus Development Priorities
Good
Ethics From a Global Perspective
Universality of ethical guidelines / principles– Background (shapes the foreground)– Procedural knowledge (communication)
E.g., reciprocity, fairnessSocialization processes
– Attitudes– Theories (believe systems) = Major
principles = institutional rules = actions
Principles for Universal Morality
1. Ethical Egoism2. Utilitarianism3. Natural Rights Theory4. Social Contract Theory5. Kantian Duty Ethics6. Discourse Ethics
What are some facets?
SocialEconomic
– Formal and informal economiesEnvironmental Institutional
– Policy and capacity issues
Differences Economic System
– Market vs. command Free-Market (voluntary)
– Tradition-based society– Lockean Rights (Life, liberty, property)– Smith’s (competition advances welfare,
government intervention does not.)– Say’s law: All resources used, demand will always
expand to absorb available supply– Social Darwinism: Economic competition produces
human progress (survival of fittest)– Naturalistic fallacy: Assumption that naturally is
best– Alienation (depriving working class of full potential)
Government RoleEconomic substructure
– Materials and social controlsSocial Superstructure
– Ideologies, governmentForces of production
– Resource controlsRelations of productions
– Social controls (organization of workers)
Philosophical
Possibility of “Universality?”
1. Respect for core human values• Determines the absolute moral threshold
for business activities• http://www.hrweb.org/legal/undocs.html#UDHR
2. Respect for local traditions3. Recognizing that context influences the
determination of what is “right” or “wrong”
4. Communication• Do more than “post” codes of conduct