Ethics & Social Responsibility

International ManagementMGMT 2420

KEY CONCEPTS1. Bribery/Gift giving2. Foreign Corrupt Practices Act3. Intellectual Property Rights4. Ethical Marketing Tactics5. Disposal of Toxic Waste6. Anti-boycott Legislation7. Outsourcing jobs

ETHICS

►An individual’s or firm’s beliefs, principles, standards and norms of conduct governing a decision, behaviour or action

►Therefore: ethical beliefs and behaviours that flow from them vary by person or firm.

►In societies there are generally accepted norms = ETHICAL BEHAVIOUR

CULTURAL FOUNDATIONS OF ETHICAL BEHAVIOUR

►Relativism vs. Normativism (imperialism)

►Relativism: ethical truths depend on the values of the groups espousing them. “When in Rome, do as the Romans do” (St.

Ambrose)

►Normativism: there are universal standards of behaviour and they should be accepted by people everywhere

►A fine line

ETHICS AND LAWS

►Many laws are based on prevailing ethical standards and beliefs

►Beliefs and ethics are based on cultural values

►Values are often based on time, age, status, education

►Culture has a direct impact on the value system of members

ETHICS AND ORGANIZATIONS►Organization’s treatment of

employees Applicants/candidates Hiring/firing criteria Compensation/benefits Career development Outsourcing jobs?

ETHICS AND ORGANIZATIONS

►Employees’ treatment of the organizationConflicts of interestSecrecyConfidentiality/Non-disclosure

ETHICS AND ORGANIZATIONS

►Treatment of “other economic agents” Customers Competitors Stockholders Suppliers Dealers Unions

MANAGING ETHICS ACROSS BORDERS

►Codes of Ethics/Conduct: a set of guidelines for making ethical decisions

►Ethics Training►Top down organizational practices►Bribery

REGULATIONS►Foreign Corrupt Practices Act (FCPA):

1977 Prohibits the offer or payment of bribes to

any FOREIGN GOVERNMENT official to influence actions or policies to gain or retain business

Does not apply to “expediting normal commercial transactions”, e.g. permits, customs, inspection, police services

►Alien Tort Claims Act: 1789re benefiting from foreign government’s human rights abuses

REGULATIONS

►Anti-Bribery Convention of the OECD: Ratified by 37 countries Attempt to eliminate bribery

►U.K. Bribery Act: 2010, in effect 2011. Outlaws active, passive, bribery of foreign officials & failure to prevent (corp. offence)

►International Labor Organization: Inspects and monitors working conditions

CORPORATE SOCIAL RESPONSIBILITY

►Obligations that the organization undertakes to protect and enhance society

►World Business Council for Sustainable Development (www.WBCSD.org) Business Role – Case Studies

CORPORATE SOCIAL RESPONSIBILITY

►Targets: Stakeholders Natural Environment General social welfare

CORPORATE SOCIAL RESPONSIBILITY

►Organizational Stakeholders: Customers Employees Investors

CORPORATE SOCIAL RESPONSIBILITY

►Natural Environment Global warming Clean air Clean water Sustainability Disposal of toxic waste

CORPORATE SOCIAL RESPONSIBILITY

►General Social Welfare Contributions to non-profits, museums,

symphonies, etc. Correct political/social ills

CORPORATE SOCIAL RESPONSIBILITY

YES OR NO?►OBSTRUCTIONIST STANCE: Ford

Pinto fire (1970’s)

►DEFENSIVE STANCE: Nike sweatshops (1990’s)

►ACCOMODATIVE STANCE: Explorer rollovers (speedy recall 2000’s)

►PROACTIVE STANCE: BMW recycling (1990)

CSR – IBM Study

►http://www.youtube.com/watch?v=PdkYieDuVvY

CSR Policy Formulation►Three main players:

1. The state2. The market3. Civil society

► Anglo-Saxon Approach: groups are separate and competitive

► Asian Approach: close cooperation between public & private sectors

► Continental European: cooperation among all three

Intellectual Property Rights

►Trademarks, brand names, patents, copyrights

►Must be respected►There are international conventions

that some countries have not signed

MANAGING ETHICS INTERNATIONALLY

►Three “middle-of-the-road” approaches1. Respect for human dignity and basic

rights2. Respect for local traditions3. Respect for institutional context:

understanding of local institutions