1. Business and People Management
INTERNATIONAL MANAGEMENT
GLOBAL
Business and People Management
Professor H. Michael Boyd, Ph.D.

3. Ethics, Social Responsibility, and Sustainability
Chapter 3
Ethics, Social Responsibility, and Sustainability

4. Ethics, Social Responsibility, and Sustainability
The specific objectives of this chapter are to
EXAMINE ethics in international management and some of the major ethical issues and problems confronting MNCs.
DISCUSS some of the pressures on and action being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems.
EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impacts of corruption around the world.

5. Ethics, Social Responsibility, and Sustainability in International Management
Study of morality and standards of conduct.
Dilemmas arising from conflicts between ethical standards of a country and business ethics are most evident in employment and business practices, recognition of human rights, including women in the workplace, and corruption
Inferring right vs. wrong in legal sense

6. Ethics, and Social Responsibility, and Sustainability in International Management
Corporate Social Responsibility (CSR)
Involves the actions of a firm to benefit society beyond requirements of the law and the direct interests of the firm
Closely related to ethics
CSR concerns include working conditions in factories and service centers as well as environmental impacts of corporate activities

7. Ethics Theories and Philosophy
Kantian philosophical traditions
Individuals (and organizations) have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest.
Aristotelian virtue ethics
Focus on core, individual behaviors and actions and how they express and form individual character.
Utilitarianism
Favors the greatest good for the greatest number of people under a given set of constraints.
Eastern philosophy
Views the individual as part of, rather than separate from, nature.

8. Human Rights Human rights issues challenge MNCs
Currently no universally adopted standards of what constitutes acceptable behavior
A great deal of subjectivity and culturally biased viewpoints exist
Some basic rights: life, freedom from slavery or torture, freedom of opinion and expression, general ambiance of nondiscriminatory practices
Human rights violations still rampant globally
China (Tiananmen Square) and Russia
Women’s rights

9. Equal opportunity issues
Ethics, Social Responsibility, and Sustainability Around the World: JAPAN
Equal opportunity issues
Gender-gap hiring: refusal to hire women for more than low-level jobs
Glass ceiling: lack of promotion to management positions
Sexual harassment: hostile work environment

10. Equal employment opportunity
Ethics, Social Responsibility, and Sustainability Around the World: EUROPE
Equal employment opportunity
Glass ceiling pervasive throughout the world
France, Germany, and Great Britain have seen an increase in the number of women in management, but the increases tend to be only at lower levels

11. Labor, Employment, and Business Practices
Difficult to establish a universal foundation of employment practices
Difficult dilemmas in deciding working conditions, expected consecutive work hours, and labor regulations
Frequent offshoring due to differences in labor costs

12. Human rights violations
Ethics, Social Responsibility, and Sustainability Around the World: CHINA
Workers not well paid
Often forced to work 12 hours a day, 7 days a week
2010: Foxconn factory worker suicides
2012: Over 43% of Foxconn workers had seen or been part of a workplace accident.
Human rights violations
Use of child labor

13. Environmental Protection and Development
Countries approach the issue of conservation of natural resources differently
Poor countries are more focused on improving the welfare of their citizens rather than improving the environment
Environmental Kuznets Curve
Many companies violate laws and jeopardize the environment
2010 BP Gulf of Mexico oil rig explosion

14. The Environmental Kuznets Curve

15. Globalization and Ethical Obligations of MNCs
Should the MNC adopt the regulations in the country of origin or those in the country of operation?
“Doing the right thing” is not always easy
Levi Strauss in Bangladesh

16. Reconciling Ethical Differences across Cultures
Integrative Social Contracts Theory
Helps companies avoid relativism versus absolutism
Gives managers a framework to use when they face a gap between the moral and ethical values in the home country and in the host country
Corporate Social Responsibility
Sustainability
Development that meets humanity’s needs without harming future generations

17. Corporate Social Responsibility and Sustainability
Nongovernmental organization (NGO)
Private, not-for-profit organization that seeks to serve society’s interests by focusing on social, political, and economic issues such as poverty, social justice, education, health, and the environment.
NGOs have grown in number, power, and influence
NGOs have urged MNCs to be more responsive to a range of social needs in developing countries
NGO activism has caused major changes in corporate behavior
NGOs have been active in promoting fair trade products

18. Corporate Social Responsibility and Sustainability
Examples of NGOs in the U.S. and globally
Save the Children
Oxfam
CARE
Amnesty International
World Wildlife Fund
Conservation International

19. Corporate Response to Social and Organizational Obligations
Agreements and codes of conduct committing MNCs to maintain certain standards
U.N. Global Compact
Codes help offset real or perceived concern that companies move jobs to avoid higher labor or environmental standards in their home markets
Contribute to raising of standards in developing world by “exporting” higher standard to local firms in these countries

20. Principles of the Global Compact
Human Rights
Labor
Environment
Anticorruption

21. Principles of the Global Compact

22. Corporate Governance Corporate governance
The system by which business corporations are directed and controlled.
Distribution of rights and responsibilities
Stakeholder management
Spells out rules and procedures
Makes decisions
Becoming more important after numerous scandals
Arthur Anderson, Enron, Lehman Brothers

23. Corporate Governance
Many continental European countries are “insider” systems
Ownership more concentrated
Shares owned by holding companies, families, or banks
Rules and regulations differ among countries and regions
U.K. and U.S. systems are “outsider” systems
Dispersed ownership of equity
Large number of outside investors

24. Corruption Corruption
Government corruption is a pervasive element in international business environment
Scandals in Russia, China, Brazil, Pakistan, Lesotho, South Africa, Costa Rica, Egypt, and elsewhere
Some evidence that discontinuing bribes does not reduce sales of the firm’s products or services in that country

25. Transparency International Corruption Perceptions Index Ratings

26. Global Initiatives to Increase Accountability and Limit Corruption
Foreign Corrupt Practices Act
Makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through personal payments or political contributions
“Entertainment” expenses
“Consulting” fees
Organization of American States Inter-American Convention Against Corruption, Foreign Corrupt Practices Act, Transparent Agents Against Contracting Entities

27. Corruption and Foreign Corrupt Practices Act
Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials
Organization for Economic Cooperation and Development
29 member nations; now 34
Fails to outlaw most payments to political party leaders
Does indicate growing support for anti-bribery initiatives

28. International Assistance
Governments and corporations are collaborating to provide assistance to communities and locales through global partnerships
Best “investments”
Controlling and preventing AIDS
Fighting malnutrition
Reducing subsidies and trade restrictions
Controlling malaria

29. Copenhagen Consensus Development Priorities

30. The U.N. Millennium Development Goals

31. Review and Discuss
How might different ethical philosophies influence how managers make decisions when it comes to offshoring of jobs?
What lessons can U.S. multinationals learn from the political and bribery scandals in recent years, such as those affecting contractors doing business in Iraq (Halliburton) as well as large MNCs such as Siemens, HP, and others? Discuss two.
In recent years, rules have tightened such that those who work for the U.S. government in trade negotiations are now restricted from working for lobbyists for foreign firms. Is this a good idea? Why or why not?

32. Review and Discuss
What are some strategies for overcoming the impact of counterfeiting? Which strategies work best for discretionary (for instance, movies) versus nondiscretionary (pharmaceutical) goods?
Why are MNCs getting involved in corporate social responsibility? Are they displaying a sense of social responsibility, or is this merely a matter of good business? Defend your answer.