Ch05 ethics-social-responsibilityinib

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Chapter 5:Ethics and Social Responsibility in International Business

International Business, 4th EditionGriffin & Pustay

By Mahsina, SE., MSIBy Mahsina, SE., MSIFB: mahsina seFB: mahsina se

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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?

“Made in USA” – American Samoa and Saipan

NAFTA – low wages in Mexico Walmart & More South African miners Canada and drug prices

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Ethical Behavior

Ethical behavior usually refers to behavior that conforms to generally accepted

social norms.

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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 EmployeesToward Organization

Behavior of Employees and Organization

Toward Other Economic Agents

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Spectrum of Effects

Free Trade No Trade•Jobs migrate

•Low wages

•Poor conditions

•Fewer jobs in developing countries

•Higher prices

•Fewer products

Trade with Social Responsibility

How? Code of Ethics

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Guidelines and Codes of Ethics

Written statements of the values and ethical standards that guide the firm’s actions

Examples– Johnson & Johnson -- IBEI– General Mills -- Lilly

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What do you do…

when the country in which you are doing business does not have a code of ethics compatible with your own?

Gao Feng in China Case.

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Acceptability of Bribery

Acceptable– Russia– China– Taiwan– South Korea

Unacceptable– Australia– Sweden– Switzerland– Austria

The U.S., Japan, and Italy fell between the two extremes.

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Areas of Social Responsibility

Organizational stakeholders Natural environment General social welfare

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Corporate Excellence

L.L. Bean Toyota Lands’ End Dell Computer DaimlerChrysler BP

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A joint venture between Anglo-American and the Zambian government

seeks to mine copper while minimizing harm to the environment

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Map 5.1 Social Responsibility Hot Spots

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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 non-profits 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 Social Responsibility

Planning

Decision Making

Consideration

Evaluation

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Implementing Social Responsibility

Legal Compliance Ethical Compliance Philanthropic Giving

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Informal Dimensions of Social Responsibility

Leadership Organizational culture Whistle-blowing

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Corporate Social Audit

Tool for the evaluation of social responsibility effectiveness

Formal and thorough analysis Conducted by task force

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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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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)