InternationalBusiness7e

byCharlesW.L.HillMcGraw-Hill/Irwin Copyright?2009byTheMcGraw-HillCompanies,Inc.Allrightsreserved.Chapter4

EthicsinInternationalBusinessLearningobjectivesBefamiliarwiththeethicalissuesfacedbyinternationalbusiness.Recognizeanethicaldilemma.DiscussthecausesofunethicalbehaviorbymanagersBefamiliarwiththedifferentphilosophicalapproachestoethics.Knowwhatmanagerscandotoincorporateethicalconsiderationsintoherdecisionmaking.IntroductionEthics

referstoacceptedprinciplesofrightorwrongthatgoverntheconductofaperson,themembersofaprofession,ortheactionsofanorganizationBusinessethicsaretheacceptedprinciplesofrightorwronggoverningtheconductofbusinesspeopleEthicalstrategyisastrategy,orcourseofaction,thatdoesnotviolatetheseacceptedprinciplesEthicalIssuesIn

InternationalBusinessThemostcommonethicalissuesinbusinessinvolve:employmentpracticeshumanrightsenvironmentalregulationscorruptionthemoralobligationofmultinationalcompaniesEmploymentPracticesIfworkconditionsinahostnationareclearlyinferiortothoseinamultinational’shomenation,shouldcompaniesapply:homecountrystandardshostcountrystandardssomethinginbetweenHumanRightsIndevelopedcountries,basichumanrightssuchasfreedomofassociation,freedomofspeech,freedomofassembly,andfreedomofmovement,aretakenforgrantedInothercountries,theserightsmaynotexistEnvironmentalPollutionEthicalissuesarisewhenenvironmentalregulationsinhostnationsarefarinferiortothoseinthehomenationEnvironmentalquestionstakeonaddedimportancebecausesomepartsoftheenvironmentareapublicgoodthatnooneowns,butanyonecandespoilThetragedyofthecommonsoccurswhenaresourceheldincommonbyall,butownedbynoone,isoverusedbyindividuals,resultinginitsdegradationCorruptionTheU.S.ForeignCorruptPracticesActoutlawedthepracticeofpayingbribestoforeigngovernmentofficialsinordertogainbusinessTheConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactionsadoptedbytheOrganizationforEconomicCooperationandDevelopment(OECD),obligesmemberstatestomakethebriberyofforeignpublicofficialsacriminaloffenseCorruptionSomeeconomistsbelievethatinacountrywherepreexistingpoliticalstructuresdistortorlimittheworkingsofthemarketmechanism,corruptionintheformofblack-marketeering,smuggling,andsidepaymentstogovernmentbureaucratsto“speedup”approvalforbusinessinvestmentsmayactuallyenhancewelfareOthereconomistshavearguedthatcorruptionreducesthereturnsonbusinessinvestmentandleadstoloweconomicgrowthMoralObligationsSocialresponsibilityreferstotheideathatbusinesspeopleshouldtakethesocialconsequencesofeconomicactionsintoaccountwhenmakingbusinessdecisions,andthatthereshouldbeapresumptioninfavorofdecisionsthathavebothgoodeconomicandgoodsocialconsequencesSocialresponsibilitycanbesupportedforitsownsakesimplybecauseitistherightwayforabusinesstobehaveAdvocatesarguethatbusinessesneedtorecognizetheirnoblesseoblige(honorableandbenevolentbehaviorthatistheresponsibilityofsuccessfulcompanies)andgivesomethingbacktothesocietiesthathavemadetheirsuccesspossibleClassroomPerformanceSystemWhichisnotanareawheremultinationalfirmsareconcernedaboutethics?a)Humanrightsb)Traderegulationsc)Environmentalregulationsd)CorruptionEthicalDilemmasEthicaldilemmasaresituationsinwhichnoneoftheavailablealternativesseemsethicallyacceptableTheethicalobligationsofamultinationalcorporationtowardemploymentconditions,humanrights,corruption,environmentalpollution,andtheuseofpowerarenotalwaysclearcutTheRootsOfUnethicalBehaviorThereisnoclearcutreasonwhymanagersbehaveunethicallyThecausesofunethicalbehaviorarecomplexandreflect:PersonalethicsDecision-makingprocessesLeadershipUnrealisticperformanceexpectationsOrganizationalcultureTheRootsOfUnethicalBehaviorFigure4.1:DeterminantsofEthicalBehaviorClassroomPerformanceSystemAllofthefollowingexcept____contributetounethicalbehaviorbyinternationalmanagers.a)Decision-makingprocessesb)Leadershipc)Personalethicsd)NationalculturePersonalEthicsPersonalethics(thegenerallyacceptedprinciplesofrightandwronggoverningtheconductofindividuals)influencebusinessethicsExpatriatesmayfacepressuretoviolatetheirpersonalethicsbecausetheyareawayfromtheirordinarysocialcontextandsupportingculture,andtheyarepsychologicallyandgeographicallydistantfromtheparentcompanyDecisionMakingProcessesPeoplemaybehaveunethicallybecausetheyrelyoneconomicanalysiswhenmakingdecisionsandfailtoasktherelevantquestion:Isthisdecisionoractionethical?OrganizationalCultureOrganizationculturerefersto

thevaluesandnormsthataresharedamongemployeesofanorganizationInfirmswithanorganizationculture

thatdoesnotemphasizebusinessculture,unethicalbehaviormayexistUnrealisticPerformanceExpectationsWhentheparentcompanysetsunrealisticperformancegoals,managersmaycutcornersoractinanunethicalmannerOrganizationalculturecanlegitimizeunethicalbehaviororreinforcetheneedforethicalbehaviorLeadershipLeadershelptoestablishthecultureofanorganization,andsettheexamplethatothersfollowWhenleadersactunethically,subordinatesmayactunethically,tooPhilosophicalApproachesToEthicsThereareseveraldifferentapproachestobusinessethicsSomeapproachesdenythevalueofbusinessethicsorapplytheconceptinanunsatisfactorywayOthersarefavoredbymoralphilosophersandarethebasisforcurrentmodelsofethicalbehaviorStrawMenStrawmenapproachesofferinappropriateguidelinesforethicaldecisionmakinginamultinationalenterpriseTherearefourcommonstrawmenapproaches:TheFriedmandoctrine

suggeststhattheonlysocialresponsibilityofbusinessistoincreaseprofits,solongasthecompanystayswithintherulesoflawCulturalrelativism

arguesthatethicsareculturallydeterminedandthatfirmsshouldadopttheethicsoftheculturesinwhichtheyoperate,orinotherwords,“wheninRome,doastheRomansdo”Therighteousmoralistapproachclaimsthatamultinational’shomecountrystandardsofethicsshouldbefollowedinforeigncountriesThena?veimmoralistassertsthatifamanagerofamultinationalseesthatfirmsfromothernationsarenotfollowingethicalnormsinahostnation,thatmanagershouldnoteither

ClassroomPerformanceSystemAccordingto________,acompany’shome-countrystandardsofethicsaretheappropriateonestofollowinforeigncountries.a)therighteousmoralistb)thena?veimmoralistc)theFriedmandoctrined)culturalrelativism

UtilitarianAndKantianEthicsUtilitarianapproachestoethicsholdthatthemoralworthofactionsorpracticesisdeterminedbytheirconsequencesActionsaredesirableiftheyleadtothebestpossiblebalanceofgoodconsequencesoverbadconsequencesProblemswithutilitarianismincludemeasuringthebenefits,costs,andrisksofanaction,andthefactthattheapproachfailstoconsiderjusticeKantianethicsarebasedonthephilosophyofImmanuelKantwhoarguedthatpeopleshouldbetreatedasendsandneverpurelyasmeanstotheendsofothersRightsTheoriesRightstheories

recognizethathumanbeingshavefundamentalrightsandprivilegeswhichtranscendnationalboundariesandculturesRightstheoriesestablishaminimumlevelofmorallyacceptablebehaviorMoraltheoristsarguethatfundamentalhumanrightsformthebasisforthemoralcompassthatmanagersshouldnavigatebywhenmakingdecisionswhichhaveanethicalcomponentRightsTheoriesThe

UniversalDeclarationofHumanRights

specifiesthebasicprinciplesthatshouldalwaysbeadheredtoirrespectiveofthecultureinwhichoneisdoingbusinessThedeclarationwaspromptedbytheideathatsomefundamentalrightstranscendnationalbordersandculturesClassroomPerformanceSystem________recognizethathumanbeingshavefundamentalrightsandprivilegeswhichtranscendnationalboundariesandcultures.a)Kantianethicsb)Utilitarianapproachesc)Strawmend)RightstheoriesJusticeTheoriesJusticetheoriesfocusontheattainmentofajustdistributionofeconomicgoodsandservicesAjustdistribution

isonethatisconsideredfairandequitableOnetheoryofjusticethatisparticularlyimportantwasproposedbyJohnRawlswhoarguedthatalleconomicgoodsandservicesshouldbedistributedequallyexceptwhenanunequaldistributionwouldworktoeveryone’sadvantage

JusticeTheoriesValidprinciplesofjusticearethosewithwhichallpersonswouldagreeiftheycouldfreelyandimpartiallyconsiderthesituation.AccordingtoRawls,validprinciplesofjusticearethosewithwhichallpersonswouldagreeiftheycouldfreelyandimpartiallyconsiderthesituation,impartialityisguaranteedbytheveilofignorance(everyoneisimaginedtobeignorantofallhisorherparticularcharacteristics)Whentheseconditionsexist,peopleagreeontwofundamentalpricinplesofjustice:eachpersonispermittedthemaximumamountofbasiclibertycompatiblewithasimilarlibertyforothersonceequalbasiclibertyisassured,inequalityinbasicgoodssocialgoodsaretobeallowedonlyiftheybenefiteveryoneClassroomPerformanceSystemThe_____suggeststhateveryoneisimaginedtobeignorantofallhisorherparticularcharacteristics.a)tragedyofthecommonsb)veilofignorancec)codeofethicsd)theUniversalDeclarationofHumanRightsEthicalDecisionMakingToensureethicalissuesareconsideredinbusinessdecisions,firmsshould:favorhiringandpromotingpeoplewithawellgroundedsenseofpersonalethicsbuildanorganizationalculturethatplacesahighvalueonethicalbehaviormakessurethatleaderswithinthebusinessnotonlyarticulatetherhetoricofethicalbehavior,butalsoactinmannerthatisconsistentwiththatrhetoricputdecisionmakingprocessesinplacethatrequirepeopletoconsidertheethicaldimensionofbusinessdecisionsdevelopmoralcourageHiringAndPromotionBusinessesshouldstrivetoidentifyandhirepeoplewithastrongsenseofpersonalethicsCompaniesshouldrefrainfrompromotingindividualswhohaveactedunethicallyProspectiveemployeesshouldfindoutasmuchastheycanabouttheethicalclimateinanorganizationpriortotakingapositionOrganizationCultureAndLeadershipTofosterethicalbehavior,businessesneedtobuildanorganizationculturewhere:thebusinessexplicitlyarticulatesvaluesthatplaceastrongemphasisonethicalbehavior,perhapsusingacodeofethics(aformalstatementoftheethicalprioritiesabusinessadheresto)leadersinthebusinessgivelifeandmeaningtothecodeofethicsbyrepeatedlyemphasizingtheirimportance,andthenactingonthemthebusinessputsinplaceasystemofincentivesandrewardsthatrecognizepeoplewhoengageinethicalbehaviorandsanctionthosewhodonotClassroomPerformanceSystemWhatisacompany’sformalstatementofethicalprioritiescalled?a)Missionstatementb)Codeofethicsc)Codeofvaluesd)OrganizationalcultureDecision-MakingProcessTodetermineifadecisionisethical,managerscanask:Doesmydecisionfallwithintheacceptedvaluesofstandardsthattypicallyapplyintheorganizationalenvironment?AmIwillingtoseethedecisioncommunicatedtoallstakeholdersaffectedbyit?WouldthepeoplewithwhomIhavesignificantpersonalrelationshipsapproveofthedecision?

Decision-MakingProcessManagerscanalsouseafivestepprocesstothinkthroughethicalproblems:Step1:Managersidentifywhichstakeholders(theindividualsorgroupswhohaveaninterest,stake,orclaimintheactionsandoverallperformanceofacompany)adecisionwouldaffectandinwhatwaysInternalstakeholdersarepeoplewhoworkfororwhoownthebusinesssuchasemployees,theboardofdirectors,andstockholdersExternalstakeholdersaretheindividualsorgroupswhohavesomeclaimonafirmsuchascustomers,suppliers,andunionsStep2:ManagersdeterminewhetheraproposeddecisionwouldviolatethefundamentalrightsofanystakeholdersDecision-MakingProcessStep3:Managersestablishmoralintent(thebusinessmus