Week 6: National Differences: Ethics, Corporate Social Responsibility, and Sustainability

Question 1

Ethics

Answer 1

accepted principles of right or wrong that
govern conduct of a person, members of a profession,
or actions of an organization

Question 2

Two types of ethics

Answer 2

1) Business ethics

2) Ethical strategy

Question 3

1) Business ethics

Answer 3

accepted principles of right or wrong

governing conduct of business people

Question 4

2) Ethical strategy

Answer 4

strategy, or course of action, that does

not violate these accepted principles

Question 5

Ethics, corporate social responsibility, and sustainability are intertwined issues facing
countries, companies, and societies.

Answer 5

These “social” issues arise frequently in
international business, often because business practices and regulations differ from
nation to nation

Question 6

Ethics and International Business 1

Answer 6

Most common ethical issues in business involve:
• Employment practices
• Human rights
• Environmental regulations
• Corruption
• Moral obligations

Question 7

Ethics and International Business 2

Answer 7

Employment Practices
• What practices should be used when work conditions are inferior in host nation?

Human Rights
• What is the responsibility of a foreign multinational when operating in a country where basic human rights are not respected?
• South Africa and apartheid
• Sullivan principles adopted by GM

Question 8

Ethics and International Business 3

Answer 8

Environmental Pollution
• Should a multinational feel free to pollute in a developing nation if doing so does not violate laws?
• Tragedy of the commons

Corruption
• Is it ethical to make payments to government officials to secure business?
• Foreign Corrupt Practices Act (FCPA)
• Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
• Facilitating payments, or speed money, excluded

Question 9

The atmosphere and oceans can be viewed as a global commons from which everyone benefits but for which no one is specifically responsible

Answer 9

In such cases, a phenomenon known as the tragedy of the commons becomes applicable. The tragedy of the commons occurs when a resource held in common by all but owned by no one is overused by individuals, resulting in its degradation.

Question 10

Ethics and International Business 4

Answer 10

Corruption continued
• Some argue paying bribes might be price of doing greater good
• When preexisting political structures distort or
limit the market mechanism, corruption may
enhance welfare
• Includes marketeering, smuggling, and side
payments to government bureaucrats to “speed
up” approval for business investments

• Others argue that corruption reduces returns on business investment and leads to low economic growth
• Many multinationals have adopted a zero-tolerance policy

Question 11

Moral Obligation

Answer 11

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Go to slide 17 to see this

Question 12

Ethical Dilemmas

Answer 12

Managers often face situations where appropriate
course of action is not clear

Ethical dilemmas: situations in which no available
alternatives seems ethically acceptable
• Exist because real world decisions are complex,
difficult to frame, and involve various consequences
that are difficult to quantify

Question 13

Child Labor

Answer 13

Child labor still exists in some foreign countries.

Question 14

Roots of Unethical Behavior 1

Answer 14

Managerial behavior is influenced by:
• Personal ethics
• Decision-making processes
• Organizational culture
• Unrealistic performance goals
• Leadership
• Societal culture

Question 15

Figure 5.1 Determinants of Ethical Behavior

Answer 15

Societal culture 
Decision-making process
Leadership
Unrealistic performance Goals
Organizational Culture
Personal Ethics

Question 16

Roots of Unethical Behavior 2

Answer 16

Personal Ethics
• Business ethics reflect personal ethics
• Expatriates may face pressure to violate personal ethics
• Away from ordinary social context and supporting
culture
• Psychologically and geographically distant from
parent company

Decision-Making Processes
• Business people may behave unethically because
they fail to ask relevant questions, e.g., “how does
this subcontractor treat its workforce?”
• Decisions made based on economic logic

Question 17

Personal ethics

Answer 17

refer to the generally accepted principles of right and wrong governing the conduct of individuals.

Question 18

To improve ethical decision making in a multinational firm, the best starting point is to better understand how individuals make decisions that can be considered ethical
or unethical in an organizational environment. Two assumptions must be taken into account

Answer 18

First, too often it is assumed that individuals in the workplace make ethical decisions in the same way as they would if they were home.

Second, too often it is assumed that people from different cultures make ethical decisions following a
similar process

Question 19

From the card above ^^

Both of these assumptions are problematic.

Answer 19

First, within an organization, there are very few individuals who have the freedom (e.g., power) to decide ethical issues independent of pressures that may exist in an organizational setting (e.g., should
we make a facilitating payment or resort to bribery?).

Second, while the process for making an ethical decision may largely be the same in many countries, the relative emphasis on certain issues is unlikely to be the same

Question 20

Roots of Unethical Behavior 3

Answer 20

Organizational Culture
• Unethical behavior may exist in firms with an
organizational culture that does not emphasize business ethics

The term organizational culture refers to the values and norms that are shared among employees of an organization.

• Values and norms shape culture of a firm, and that culture influences decision making

Unrealistic Performance Goals
• Pressure from parent company to meet goals that are
unrealistic and can only be attained by acting in an
unethical manner

Question 21

Roots of Unethical Behavior 4

Answer 21

Leadership
• Employees often take cues from business leaders
• Actions speak louder than words

Societal Culture
• Ethical policies differ by country
• Multinational enterprises (MNEs) located in countries
with strong individualism and uncertainty avoidance are
more likely to emphasize ethical behavior
• MNEs located in countries with high masculinity and high power distance are less likely to promote ethical behavior

Question 22

Focus on Managerial Implications 1

Answer 22

Making Ethical Decisions Internationally
• Actions managers can take to ensure ethics are considered:
1. Favor hiring and promoting people with well-grounded sense of personal ethics

2. Build organizational culture that places high value on ethical behavior
3. Put decision making processes in place that require people to consider ethical dimensions of business decisions
4. Institute ethical officers in organization
5. Develop moral courage
6. Make corporate social responsibility cornerstone of enterprise policy
7. Pursue sustainable strategies

Question 23

Focus on Managerial Implications 2

Answer 23

Making Ethical Decisions Internationally continued
• Hiring and Promotion
• Businesses should strive to identify and hire people with strong sense of personal ethics
• Prospective employees should find out about ethical climate in an organization

Organizational Culture and Leadership
• Code of ethics: a formal statement of the ethical priorities a business adheres to.
• Articulate values that emphasize ethical behavior, repeatedly emphasize their importance, and then act on them
• Provide incentives and rewards to those who engage in ethical behavior

Question 24

Focus on Managerial Implications 3

Answer 24

Making Ethical Decisions Internationally continued

Decision-Making Processes
• If manager answers “yes” to following questions, the decision is ethically acceptable:
• Does my decision fall within the accepted values or
standards that typically apply in the organizational
environment (as articulated in a code of ethics or
some other corporate statement)?
• Am I willing to see the decision communicated to all
stakeholders affected by it—for example, by having it
reported in newspapers, on television, or via social
media?
• Would the people with whom I have a significant
personal relationship, such as family members,
friends, or even managers in other businesses,
approve of the decision?

Question 25

Focus on Managerial Implications 4

Decision-Making Processes continued

Answer 25

Five-step process helps managers think through ethical
issues

1. How would a decision affect stakeholders?

• Internal stakeholders: people who work for or who own the business such as employees, board of directors, and stockholders
• External stakeholders: individuals or groups who have some claim on a firm such as customers, suppliers, and unions

Question 26

Focus on Managerial Implications 5

Decision-Making Processes continued

Answer 26

2. Judge ethics of proposed strategic decision
   • Determine if proposed decision violates fundamental rights of any stakeholders
3. Establish moral intent: the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated
4. Engage in ethical behavior
5. Audit decisions
   • Review to make sure they were consistent with ethical principles

Question 27

Focus on Managerial Implications 6

Answer 27

Ethics officers
• To encourage ethical behavior in a business, firms now
have ethics officers

• Act as an internal ombudsperson: An Ombudsman/Ombudsperson assists with the fair and expeditious resolution of complaints in an impartial, confidential and independent manner.

Moral courage
• Managers must walk away from decisions that are
profitable but unethical
• Requires moral courage

Question 28

It is the jobs of the ethics officer to:

Answer 28

• Assess needs and risks that ethics program must
address
• Develop and distribute code of ethics
• Conduct training programs
• Establish confidential service to address employee
questions
• Make sure company in compliance with laws
• Monitor and audit ethical conduct
• Take action on possible violations
• Review and update code of ethics periodically

Question 29

Focus on Managerial Implications 7

Answer 29

Corporate social responsibility (CSR)
• Multinationals need to give something back to the
societies that enable them to prosper and grow

• Businesses should consider social consequences of
economic actions

• There should be a presumption in favor of decisions that have both good economic and good social consequences

Question 30

Focus on Managerial Implications 8

Answer 30

Sustainability
• Sustainable strategies: strategies that help MNCs make profits without harming environment and while ensuring company operates in a socially responsible manner with regard to its stakeholders

• Good for shareholders, environment, local communities, employees, and customers

Question 31

Did You Know?

corporate social
responsibility is not as
new as it seems?

Answer 31

10/10 this video will be quizzed on for the assignment

Question 32

Is Sustainability Bad for Profits?

Answer 32

Most customers prefer that the companies they buy products and services from engage in business-focused sustainability practices. Eighty-three
percent of the respondents in the Public Opinion Survey on Sustainability said that they think companies should try to accomplish their performance goals
while also trying to improve society and the environment. At the same time, multinational firms are overwhelmed about the varied stakeholder needs they face. And, the Global Reporting Initiative, with its some 80 equally important sustainability indicators, is not giving companies a clear set of sustainability proprieties. Meanwhile, sustainability executives in companies have not exactly been elevated to the importance levels of other top managers.