Bus 187: Chapt 4

Introduction

Ethics refers to 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 are the accepted principles of right or wrong governing the conduct of business peop

Ethical Issues In International Business

The most common ethical issues in business involve:
employment practices
human rights
environmental regulations
corruption
the moral obligation of multinational companies

Employment Practices

If work conditions in a host nation are clearly inferior to those in a multinational's home nation, should companies apply:
home country standards
host country standards
something in between

Human Rights

In developed countries, basic human rights such as freedom of association, freedom of speech, freedom of assembly, and freedom of movement, are taken for granted
In other countries, these rights may not exist

Environmental Pollution

Ethical issues arise when environmental regulations in host nations are far inferior to those in the home nation
Environmental questions take on added importance because some parts of the environment are a public good that no one owns, but anyone can desp

Corruption (1/2)

The U.S. Foreign Corrupt Practices Act outlawed the practice of paying bribes to foreign government officials in order to gain business
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions adopted by the O

Corruption (2/2)

Some economists believe that in a country where preexisting political structures distort or limit the workings of the market mechanism, corruption in the form of black-marketeering, smuggling, and side payments to government bureaucrats to "speed up" appr

Moral Obligations

Social responsibility refers to the idea that business people should take the social consequences of economic actions into account when making business decisions, and that there should be a presumption in favor of decisions that have both good economic an

Which is not an area where multinational firms are concerned about ethics?

a) Human rights
** Trade regulations
c) Environmental regulations
d) Corruption

Ethical Dilemmas

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable
The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, environmental pollution, and the use of p

The Roots Of Unethical Behavior

There is no clear cut reason why managers behave unethically
The causes of unethical behavior are complex and reflect:
Personal ethics
Decision-making processes
Leadership
Unrealistic performance expectations
Organizational culture

All of the following except ____ contribute to unethical behavior by international managers.

a) Decision-making processes
b) Leadership
c) Personal ethics
** National culture

Personal Ethics

Personal ethics (the generally accepted principles of right and wrong governing the conduct of individuals) influence business ethics
Expatriates may face pressure to violate their personal ethics because they are away from their ordinary social context a

Decision Making Processes

People may behave unethically because they rely on economic analysis when making decisions and fail to ask the relevant question:
Is this decision or action ethical?

Organizational Culture

Organization culture refers to the values and norms that are shared among employees of an organization
In firms with an organization culture that does not emphasize business culture, unethical behavior may exist

Unrealistic Performance Expectations

When the parent company sets unrealistic performance goals, managers may cut corners or act in an unethical manner
Organizational culture can legitimize unethical behavior or reinforce the need for ethical behavior

Leadership

Leaders help to establish the culture of an organization, and set the example that others follow
When leaders act unethically, subordinates may act unethically, too

Philosophical Approaches To Ethics

There are several different approaches to business ethics
Some approaches deny the value of business ethics or apply the concept in an unsatisfactory way
Others are favored by moral philosophers and are the basis for current models of ethical behavior

Straw Men

Straw men approaches offer inappropriate guidelines for ethical decision making in a multinational enterprise
There are four common straw men approaches:
The Friedman doctrine suggests that the only social responsibility of business is to increase profits

According to ________, a company's home-country standards of ethics are the appropriate ones to follow in foreign countries.

**the righteous moralist
b) the na�ve immoralist
c) the Friedman doctrine
d) cultural relativism

Utilitarian And Kantian Ethics

Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences
Actions are desirable if they lead to the best possible balance of good consequences over bad consequences
Problems with utilitarianism

Rights Theories (1/2)

Rights theories recognize that human beings have fundamental rights and privileges which transcend national boundaries and cultures
Rights theories establish a minimum level of morally acceptable behavior
Moral theorists argue that fundamental human right

Rights Theories (2/2)

The Universal Declaration of Human Rights specifies the basic principles that should always be adhered to irrespective of the culture in which one is doing business
The declaration was prompted by the idea that some fundamental rights transcend national b

________ recognize that human beings have fundamental rights and privileges which transcend national boundaries and cultures.

a) Kantian ethics
b) Utilitarian approaches
c) Straw men
** Rights theories

Justice Theories (1/2)

Justice theories focus on the attainment of a just distribution of economic goods and services
A just distribution is one that is considered fair and equitable
One theory of justice that is particularly important was proposed by John Rawls who argued that

Justice Theories (2/2)

According to Rawls, impartiality is guaranteed by the veil of ignorance (everyone is imagined to be ignorant of all his or her particular characteristics)
When these conditions exist:
each person is permitted the maximum amount of basic liberty compatible

Ethical Decision Making

To ensure ethical issues are considered in business decisions, firms should:
favor hiring and promoting people with a well grounded sense of personal ethics
build an organizational culture that places a high value on ethical behavior
makes sure that leade

Hiring And Promotion

Businesses should strive to identify and hire people with a strong sense of personal ethics
Companies should refrain from promoting individuals who have acted unethically
Prospective employees should find out as much as they can about the ethical climate

Organization Culture And Leadership

To foster ethical behavior, businesses need to build an organization culture where:
the business explicitly articulates values that place a strong emphasis on ethical behavior, perhaps using a code of ethics (a formal statement of the ethical priorities a

What is a company's formal statement of ethical priorities called?

a) Mission statement
** Code of ethics
c) Code of values
d) Organizational culture

Decision-Making Process (1/3)

To determine if a decision is ethical, managers can ask:
Does my decision fall within the accepted values of standards that typically apply in the organizational environment?
Am I willing to see the decision communicated to all stakeholders affected by it

Decision-Making Process (2/3)

Managers can also use a five step process to think through ethical problems:
Step1: Managers identify which stakeholders (the individuals or groups who have an interest, stake, or claim in the actions and overall performance of a company) a decision would

Decision-Making Process (3/3)

Step 3: Managers establish moral intent (the business must resolves to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated)
Step 4: The company engages in eth

Ethics Officers

To ensure ethical behavior in a business, a number of firms now have ethics officers
Ethics officers ensure:
all employees are trained in ethics
ethics is considered in the decision-making process
the company's code of conduct is followed

Moral Courage

Moral courage:
enables managers to walk away from a decision that is profitable, but unethical
gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical
gives employees the integrity to go public to the

Summary of Decision-Making Steps

In the end, there are clearly things that an international business should do, and there are things that an international business should not do
But, not all ethical dilemmas have a clean and obvious solution