Business Ethics and Corporate Social Responsibility - An International Perspective
- In a diverse world, there are few consistent guidelines to help companies or managers.
- Ethics and Social Responsibility
- Dealing with ethical issues
- Ethics across cultures
- Social Responsibility
- Ethics and CSR programs
- Implications for managers
- Concerned with what is right or wrong
- Reflects established customs, morals and fundamental human relationships that may vary throughout the world
- The term ‘business ethics’ is concerned with the personal behavior of individuals who are responsible for decisions that affect the welfare of others with whom they do business
The moral principles and standards that guide behavior in the world of business
(Ferrell and Fraedrich 1991, p5.)
- Brady (1990)
- Managerial decisions affect people’s lives and well-being
- Managers should distribute organizational resources fairly
- Managers create rules and policies
- Managerial decision-making tests ones personal values
Mahoney (1990) Ethics should be incorporated into business school teaching programs - not as a separate subject.
McDonald and Zepp (1989) Ethical awareness programs
- It isn’t really illegal or immoral.
- This is in the organization's best interest.
- It will never be found out.
- The organization will overlook it because it helps the company.
When an individual reports alleged organizational misconduct to the public
Exposes organizational wrongdoing to preserve ethical standards
Ethics Across Cultures
- Danger of over-generalizing
- Approaches to bribery and corruption
- Inter-personal relationships as ethical issues
- Home country versus host country influence
- Effect of the FCPA on US companies
Ethics Around the World
Ethics -the study of morality and standards of conduct
- Unethical Business Practices
- Insider Trading Scandals
- “Mad” Syndrome
- mergers, acquisitions, divestitures
Ethical Concerns in Japan
- Political and Business Scandals
- Changing Social Climate
- Prejudice and Discrimination
- Social responsibility Implications from Lobbying
- Status of women managers
Ethical Concerns in Europe
The Status of Women Managers
has introduced laws that mandate equal opportunity positions throughout the public sector
legislation hard to enforce
- women are underrepresented in the corporate management
- glass ceiling
- enforcement of equal opportunity is weak
Examples of unethical conduct
- The Recruit company - allowed politicians and influential business people to buy cut-rate stock
- Honda of America- settled a $6 million discrimination pay back to 370 African American women
- EEOC filed sexual harassment lawsuit against Mitsubishi on behalf of 300 women
women are still not well represented at the highest levels of most organizations
- legislation is weak
- women’s associations are being established to increase political power
- British companies are proactively trying to recruit and promote more women
Ethical Concerns in China
- Piracy, Industrial Spying, and Counterfeit Problems
- Chinese backed industrial spying has increased against u.s. businesses
- illegal production of counterfeit cd-roms, music -cd’s, and video-cd’s
- patent violations
Ethical Concerns in China
- Cultural stereotypes, restricted opportunities, and discrimination limit women managers in China
Code of Ethics
A description of an organization's value system, ethical principles and specific ethical rules that it tries to apply to encourage ethical business behavior.
Techniques for Raising Ethical Standards - McDonald and Zepp 1989
- ethical awareness programs
- developing an appreciation of individual differences
- group seminars
- establishing an ethical committee and ombundsman
- reassessing performance and reward schemes so that ethical behavior is rewarded and unethical behavior is not.
- fostering an ethical corporate culture
Regulating Foreign Investment
Regulation of Acquisitions
- MNC’s must obtain host government clearance prior to establishing new operations or purchasing ongoing businesses
- Purpose: To control own economies and gain independence from foreign companies
- Is their an ethical and social responsibility to engage in reciprocal trade?
- Example: obligations to maintain an import/export balance with trading partner?
- ongoing issue between Japan and the U.S.
Should corporate actions benefit society or merely not harm society?
Social responsibility is the interaction between the business pursuing its own interests and the social environment in which it exists
Response to Social Obligations
Foreign Corrupt Practices Act (1977)
- makes it illegal to influence foreign officials through personal payment or campaign contributions
- Provides assistance such as food, machinery, and equipment to underdeveloped countries helps to stimulate economies
Why Multinations Do Not Always Follow Ethical Rules?
- Governments make agreements
- Compliance voluntary
- Not all governments subscribe
- Each guide is an incomplete moral guide
Foreign Corrupt Practices Act
- Forbids U.S. companies to make or offer payments or gifts to foreign government officials to get or retain business
- “Reason to know" provision
- FCPA does not prohibit some forms of payments that may occur in international business
- Payments made under duress to avoid injury or violence are acceptable
The perspectives of Social Responsibility
- The responsibility of business is to make a profit ‘within the rules of the game’.
- Organizations cannot be moral agents - only individuals can serve as moral agents. Otherwise they violate their commitment to shareholders
- Public responsibility
- Business can act in a way that is consistent with society’s view of responsible behavior as well as with established laws and policy
The perspectives of Social Responsibility - 2
- Business should proactively seek to contribute to society in a positive way. Social responsibility is not simply an obligation.
- Organizations should develop an internal environment that encourages and supports ethical behavior at an individual level
- Wartick and Cochran (1985) The evolution of the corporate social performance model. Academy of Management Review 10, 764.
||Ethical/Social Responsibility Issue
||Example Problem For the MNC
||Should an MNC delete safety features to make a product more affordable for people in a poorer nation?
||Fair return on investment
||If a product is banned because it is unsafe in one country, should it be sold in country where it is not banned to maintain profit margins?
||Should an MNC use child labor if it is legal in the country of their location?
||Following local laws
||Should an MNC follow local laws that violate home country laws against discrimination?
Is an MNC obligated to control its hazardous waste to a degree higher than local laws require?
Ethical Implications for Tomorrow’s Managers
- Explore the ways the organization can be more ethical
- Recognize the effect of actions on stakeholders
- Create an environment for employees to commit to behaving ethically
- Make sure that a code of ethics is in place and followed
- Ensure that a whistleblower and an ethical concerns procedure is established for internal problem solving.
- Involve line and staff employees in the identification of ethical issues to help them gain understanding and resolve issues
Ethical Implications for Tomorrow’s Managers - 2
Determine the links between departments and issues impacting the company and make them known to employees
Integrate ethical decision making into the performance appraisal process
Publicize executive priorities and efforts related to ethical issues
Implications for Managers
Control of ethical behavior
Increasing public awareness
Balancing the different perspectives around the world
Flexibility in international management