Week FOUR: Globalisation of Ethical Decision-Making Flashcards
What is cultural relativism and self-reference criterion?
Cultural Relativism
- Concept that morality varies from one culture to another
- > Believes right and wrong is defined differently by each culture
- > Can be a rationalisation for straying from one’s cultural values
Self-Reference Criterion
- The unconscious reference to one’s own cultural values, experiences and knowledge
- Idea that ‘we’ differ from ‘them’
- Common in international business
- React based on our knowledge:
- > Accumulated over a lifetime
- > Grounded in culture of origin
Explain the economic systems -> rational and behavioural
Rational Economics: assumes that people are predictable and maximise the utility of their choices based on their needs and wants (act independently on the basis of full and relevant information
Behavioural Economics: assumes that economic decisions are influenced by human behaviour (humans are assumed to act irrationally due to genetics, emotions, learned behaviour and heuristics
What are some of the issues arising from multinational corporations and what are they doing to promote social responsibility?
Potential criticims include;
- Misusing and misallocating scarce resources
- Exploiting labor markets of the host country
- Issues of unfair competition
- Failing to carry an appropriate share of the cost of social development
Companies now support business for social responsibility which;
- Tracks emerging issues and trends
- Provides information on corporate leadership and best practices
- Conducts educational workshops and training
- Assists organisations in developing practical business ethics tools
Outline the role of the following organisations:
- International Monetary Fund
- World Trade Organisation
- United Nations Global Compact
International Monetary Fund
- regulates monetary relationships between national economies
- promotes responsible global business conduct
World Trade Organisation
- provides legally binding ground rules for international commerce and trade policy
- facilitates trade negotiations and settles trade disputes
United Nations Global Compact
- sets out specific principles based around the environment, human rights, labor and anti-corruption that CEOs should make a committment to upholding
Outline some of the key global ethical issues?
Bribery
- Acceptance varies by country (challenging to determine what a bribe is)
- US Foreign Corrupt Practices Act prohibits companies from paying foreign officials to keep/obtain business (with exceptions)
- Most developed countries recognise bribery as not conducive to business
Internet security and privacy
- Serious internet crimes have garnered public attention eg. cyber hacking, malware
- Privacy violations incl tracking through phone apps and company use of personal information
Human rights
- Opportunistic use of child labor, payment of low wages, abuse in foreign factories
- Relationships with subcontractors have proven problematic
- MNCs should view the law as a baseline for acceptable behaviour and strive for greater improvements in workers quality of life
Health care
- Major global human rights issue
- a billion people lack access to healthcare globally
- Patents assign rights to companies who charge what they wish
- Some companies are dropping costly employee insurance plans, leaving more without affordable insurance
Labor and right to work
- Many people work outside their homeland
- International firms today have many global ethical concerns relating to labor (eg. gender pay equality, right to join unions, standard of living)
Compensation
- Living wage: minimum wage that workers require to meet basic needs - some MNCs choose to outsource to countries that do not have
- Executive compensation: growing global demand for alignment between managerial performance and compensation
Consumerism
- Belief that consumers should dictate the economic structure of society
- States consuming goods at an increasing rate is desirable
- Equates personal happiness with purchasing and consuming products
- Made to break (planned obsolescence): encourages consumers to buy more items
- Meeting with backlash from stakeholders who do not believe consumerism leads to happiness -> not sustainable as resources diminish
Antitrust activity
- Meant to encourage fair competition
- Countries have differing levels of protection - create difficulties in international business
- Vertical system = channel member controls entire business system, occurs when MNCs are allowed to grow unchecked and create monopoly, reduces competition and can put small out of business
What are some steps businesses can take to ensure ethical decision making?
- Incorporate global and domestic ethical issues in their risk management strategies
- Forumlate their own global ethical codes
- Appoint ethics officers or committees to oversee and handle global compliance issues
- Provide extensive training to employees
Businesses can respond to sustainability issues in a number of ways.
Outline the following:
- Triple Bottom Line Approach
- Green marketing vs Greenwashing
- Strategic implementation of environmental responsibility
Triple bottom line approach
- Considers social and environmental performance and economic performance
- Better environmental performance reduces costs by
- Improving risk management and stakeholder relationships
- Reduces the amount of materials and energy used
- Reduce capital and labor costs
Green marketing:
- using stakeholder assessment to create long-term relationships with customers while maintaining, supporting and enhancing the natural environment
Greenwashing:
- misleading consumer into thinking a good/service is more environmentally friendly than it really is
- Negatively relates to financial performance
Strategic implementation of environmental responsibility
- Recycling
- Stakeholder assessment
- Risk analysis
- Strategic sustainability environmental audit
