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GlobalBusinessToday7e,byCharlesW.L.Hill,Chapter4,EthicsinInternationalBusiness,Introduction,Ethics-acceptedprinciplesofrightorwrongthatgoverntheconductofaperson,themembersofaprofession,ortheactionsofanorganizationBusinessethicsaretheacceptedprinciplesofrightorwronggoverningtheconductofbusinesspeopleEthicalstrategyisastrategy,orcourseofaction,thatdoesnotviolatetheseacceptedprinciples,EthicalIssuesinInternationalBusiness,Themostcommonethicalissuesinbusinessinvolveemploymentpracticeshumanrightsenvironmentalregulationscorruptionthemoralobligationofmultinationalcompanies,EmploymentPractices,Question:Whenworkconditionsinahostnationsareclearlyinferiortothoseinamultinationalshomenation,whatstandardsshouldbeapplied?Thestandardsofthehomenation?Thestandardsofthehostnation?Somethinginbetween?,HumanRights,Question:Whatistheresponsibilityofaforeignmultinationalwhenoperatinginacountrywherebasichumanrightsarenotrespected?Basichumanrightstakenforgrantedinthedevelopedworldsuchasfreedomofassociation,freedomofspeech,freedomofassembly,freedomofmovement,andsoon,arenotuniversallyaccepted,EnvironmentalPollution,Question:Shouldamultinationalfeelfreetopolluteinadevelopingnationifdoingsodoesnotviolatelaws?Answer:Whenenvironmentalregulationsinhostnationsarefarinferiortothoseinthehomenation,ethicalissuesariseThetragedyofthecommonsoccurswhenaresourceheldincommonbyall,butownedbynoone,isoverusedbyindividualsresultinginitsdegradation,Corruption,Question:Isitethicaltomakepaymentstogovernmentofficialstosecurebusiness?Answer:IntheUnitedStates,theForeignCorruptPracticesActoutlawedthepracticeofpayingbribestoforeigngovernmentofficialsinordertogainbusinessTheConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactionsadoptedbytheOrganizationforEconomicCooperationandDevelopment(OECD)obligesmemberstatestomakethebriberyofforeignpublicofficialsacriminaloffense,Corruption,SomeeconomistssuggestthatthepracticeofgivingbribesmightbethepricethatmustbepaidtodoagreatergoodIncountrieswherepreexistingpoliticalstructuresdistortorlimittheworkingsofthemarketmechanism,corruptionintheformofblack-marketeering,smuggling,andsidepaymentstogovernmentbureaucratsto“speedup”approvalforbusinessinvestmentsmayactuallyenhancewelfareHowever,othereconomistshavearguedthatcorruptionreducesthereturnsonbusinessinvestmentandleadstoloweconomicgrowth,MoralObligations,Question:Domultinationalshavearesponsibilitytogivebacktothesocietiesthatenablethemtogrowandprosper?Answer:Socialresponsibility-theideathatbusinesspeopleshouldtakethesocialconsequencesofeconomicactionsintoaccountwhenmakingbusinessdecisions,andthatthereshouldbeapresumptioninfavorofdecisionsthathavebothgoodeconomicandgoodsocialconsequences,EthicalDilemmas,ManagersoftenfacesituationswheretheappropriatecourseofactionisnotclearEthicaldilemmas-situationsinwhichnoneoftheavailablealternativesseemsethicallyacceptabletheyexistbecauserealworlddecisionsarecomplex,difficulttoframe,andinvolvevariousconsequencesthataredifficulttoquantify,TheRootsofUnethicalBehavior,Question:Whydomanagersbehaveinanunethicalmanner?Answer:ManagerialbehaviorisinfluencedbyPersonalethicsDecisionmakingprocessesOrganizationalcultureUnrealisticperformanceexpectationsLeadership,TheRootsofUnethicalBehavior,Figure4.1:DeterminantsofEthicalBehavior,PersonalEthics,Businessethicsreflectpersonalethics(thegenerallyacceptedprinciplesofrightandwronggoverningtheconductofindividuals)Expatriatesmayfacepressuretoviolatetheirpersonalethicsbecausetheyareawayfromtheirordinarysocialcontextandsupportingculturetheyarepsychologicallyandgeographicallydistantfromtheparentcompany,DecisionMakingProcesses,Studiesshowthatbusinesspeoplemaybehaveunethicallybecausetheyfailtoasktherelevantquestionisthisdecisionoractionethical?decisionsaremadebasedoneconomiclogic,withoutconsiderationforethics,OrganizationalCulture,Unethicalbehaviormayexistinfirmswithanorganizationculture-thevaluesandnormsthataresharedamongemployeesofanorganization-thatdoesnotemphasizebusinessethicsValuesandnormsshapethecultureofafirm,andthatcultureinfluencesdecisionmaking,UnrealisticPerformanceExpectations,Pressurefromtheparentcompanytomeetperformancegoalsthatareunrealistic,andcanonlybeattainedbycuttingcornersoractinginanunethicalmannercancauseunethicalbehavior,Leadership,Ifafirmsleadersfailtoactinanethicalmanner,otheremployeesmaynotactethicallyactionsspeaklouderthanwords,PhilosophicalApproachestoEthics,ThereareseveralapproachestobusinessethicsincludingStrawmentheFriedmandoctrineculturalrelativismtherighteousmoralistthenaveimmoralistUtilitarianandKantianRightstheoriesJusticeTheories,StrawMen,StrawmenapproachesareraisedbybusinessethicsscholarsprimarilyforthepurposeofdemonstratingthattheyofferinappropriateguidelinesforethicaldecisionmakinginamultinationalenterpriseFoursuchapproachesaretheFriedmandoctrineculturalrelativismtherighteousmoralistthenaveimmoralist,StrawMen,FriedmanDoctrine-theonlysocialresponsibilityofbusinessistoincreaseprofits,solongasthecompanystayswithintherulesoflawcompaniesshouldnotundertakeexpendituresbeyondthosemandatedbylawandthoserequiredfortheefficientrunningofabusinessCulturalRelativism-thebeliefthatethicsareculturallydeterminedandthatfirmsshouldadopttheethicsoftheculturesinwhichtheyoperate“wheninRome,doastheRomansdo”,StrawMen,RighteousMoralist-amultinationalshomecountrystandardsofethicsaretheappropriateonesforcompaniestofollowinforeigncountriesapproachiscommonamongmanagersfromdevelopedcountriesNaveImmoralist-ifamanagerofamultinationalseesthatfirmsfromothernationsarenotfollowingethicalnormsinahostnation,thatmanagershouldnoteitheractionsareethicallyjustifiedifeveryoneelseisdoingthesamething,UtilitarianandKantianEthics,Utilitarianapproachestoethicsholdthatthemoralworthofactionsorpracticesisdeterminedbytheirconsequencesactionshavemultipleconsequences,somegood,somenotactionsaredesirableiftheyleadstothebestpossiblebalanceofgoodconsequencesoverbadconsequencesProblemswiththisapproachmeasuringthebenefits,costs,andrisksofacourseofactionthephilosophyfailstoconsiderjustice,UtilitarianandKantianEthics,Kantianethics-basedonthephilosophyofImmanuelKantwhoarguedthatpeopleshouldbetreatedasendsandneverpurelyasmeanstotheendsofotherspeoplehavedignityandneedtoberespected,theyarenotmachines,RightsTheories,Rightstheories-humanbeingshavefundamentalrightsandprivilegesthattranscendnationalboundariesandculturefundamentalhumanrightsformthebasisforthemoralcompassthatmanagersshouldnavigatebywhenmakingdecisionsthathaveanethicalcomponentTheideathatsomefundamentalrightstranscendnationalbordersandcultureswastheunderlyingmotivationfortheUNsUniversalDeclarationofHumanRights(specifiesthebasicprinciplesthatshouldalwaysbeadheredtoirrespectiveofthecultureinwhichoneisdoingbusiness),JusticeTheories,Justicetheoriesfocusontheattainmentofajustdistribution(onethatisconsideredfairandequitable)ofeconomicgoodsandservicesJohnRawls-alleconomicgoodsandservicesshouldbedistributedequallyexceptwhenanunequaldistributionwouldworktoeveryonesadvantageImpartialityisguaranteedbytheveilofignorance(everyoneisimaginedtobeignorantofallhisorherparticularcharacteristics),JusticeTheories,Question:Whatsystemwouldpeopledesignunderaveilofignorance?Answer:AsystemwherepeoplewouldagreethateachpersonispermittedthemaximumamountofbasiclibertycompatiblewithasimilarlibertyforothersOnceequalbasiclibertyisassured,inequalityinbasicgoodssocialgoodsaretobeallowedonlyiftheybenefiteveryonethedifferenceprinciplesuggeststhatinequalitiesarejustifiediftheybenefitthepositionoftheleastadvantagedperson,ImplicationsforManagers,Question:Howcanmanagersensurethatethicalissuesareconsideredinbusinessdecisions?Answer:Managersshouldfavorhiringandpromotingpeoplewithawellgroundedsenseofpersonalethicsbuildanorganizationalculturethatplacesahighvalueonethicalbehaviormakesurethatleaderswithinthebusinessnotonlyarticulatetherhetoricofethicalbehavior,butalsoactinmannerthatisconsistentwiththatrhetoricputdecisionmakingprocessesinplacethatrequirepeopletoconsidertheethicaldimensionofbusinessdecisionsdevelopmoralcourage,HiringandPromotion,BusinessesshouldstrivetoidentifyandhirepeoplewithastrongsenseofpersonalethicsProspectiveemployeesshouldfindoutasmuchastheycanabouttheethicalclimateinanorganization,OrganizationCultureandLeadership,Businessesneedtobuildanorganizationculturethatplacesahighvalueonethicalbehaviorthebusinessmustexplicitlyarticulatevaluesthatplaceastrongemphasisonethicalbehaviorcodeofethics-aformalstatementoftheethicalprioritiesabusinessadherestoleadersinthebusinessshouldgivelifeandmeaningtothecodeofethicsbyrepeatedlyemphasizingtheirimportance,andthenactingonthemthebusinessshouldputinplaceasystemofincentivesandrewardsthatrecognizepeoplewhoengageinethicalbehaviorandsanctionthosewhodonot,Decision-MakingProcesses,Amoralcompasscanhelpdeterminewhetheradecisionisethical.Ifamanagercananswer“yes”tothefollowingquestions,thedecisionisethicallyacceptabledoesmydecisionfallwithintheacceptedvaluesofstandardsthattypicallyapplyintheorganizationalenvironment?amIwillingtoseethedecisioncommunicatedtoallstakeholdersaffectedbyit?wouldthepeoplewithwhomIhavesignificantpersonalrelationshipsapproveofthedecision?,Decision-MakingProcesses,Afive-stepprocesscanalsohelpmanagersthinkthroughethicalissues1.Howwouldadecisionaffectstakeholders-theindividualsorgroupswhohaveaninterest,stake,orclaimintheactionsandoverallperformanceofacompanyInternalstakeholders-peoplewhoworkfororwhoownthebusinesssuchasemployees,theboardofdirectors,andstockholders.Externalstakeholders-theindividualsorgroupswhohavesomeclaimonafirmsuchascustomers,suppliers,andunions,Decision-MakingProcesses,2.Managersneedtodeterminewhetheraproposeddecisionwouldviolatethefundamentalrightsofanystakeholders3.Managersneedtoestablishmoralintent-thebusinessmustresolvetoplacemoralconcernsaheadofotherconcernsincaseswhereeitherthefundamentalrightsofstakeholdersorkeymoralprincipleshavebeenviolated4.Thecompanyshouldthenengageinethicalbehavior5.Thebusinessmustaudititsdecisions,reviewingthemtomakesurethattheywereconsistentwithethicalprinciples,EthicsOfficers,Toencourageethicalbehaviorinabusiness,anumberoffirmsnowhaveethicsofficersEthicsofficersensurethatemployeesaretrainedtobeethicallyawareethicalconsiderationsenterdecision-makingthecompanyscodeofethicsisfollowed,MoralCourage,Employeesinaninternationalbusinessmayneedsignificantmoralcouragemanagersneedtob
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