1. SOCIAL RESPONSIBILITY CHANGES MULTINATIONAL COMPANIES
CHAPTER 4
MANAGING ETHICAL
AND
SOCIAL RESPONSIBILITY CHANGES IN
MULTINATIONAL COMPANIES

2. INTRODUCTION Multinational managers face complex ethical issues
With an understanding of key ethical problems in multinational management, managers can make more informed ethical judgments

3. BUSINESS ETHICS
Ethics - the rules and values that determine what goals and actions people follow when dealing with other human beings
Business ethics: all business decisions with ethical consequences

4. INTERNATIONAL BUSINESS ETHICS
The unique ethical problems faced by managers conducting business operations across national boundaries

5. SOCIAL RESPONSIBILITY
The responsibility businesses have to society beyond making profits
Often reflects the ethical values and decisions of the top management team
Ethics and social responsibility- not easily distinguished in practice

6. Excepts from Exhibit 4.1 show examples of ethical/social responsibility issues faced by MNCs

8. ETHICAL PHILOSOPHY

9. TRADITIONAL VIEWS Two basic systems of ethical reasoning Deontological
Teleological

10. DEONTOLOGICAL THEORIES
Actions have a good or bad morality regardless of the outcomes they produce

11. TELEOLOCIAL
Morality from the consequences of an act
utilitarianism

12. MORAL LANGUAGES
Basic ways that people use to make ethical decisions and explain ethical choices
a contemporary view

13. SIX BASIC ETHICAL LANGUAGES
Virtue and vice
Self control
Maximize human welfare
Avoiding harm
Rights/duties
Social contract

14. NATIONAL DIFFERENCES
National culture and social institutions affect ethical behavior/social responsibility

16. EX 4.3 ETHICAL ISSUES IDENTIFIED BY SENIOR U.S. AND EUROPEAN MANAGERS

17. EX 4.4 THE MANAGEMENT OF KEY ETHICAL ISSUES

18. EX 4.5 BELIEFS REGARDING ETHICAL CODES

19. 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
See Exhibit 4.7

20. 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

21. EFFECTS OF THE “ETHICS GAP”
FCPA and proliferation of ethical codes in US are creating and ethics gap
FCPA blocked some gains in export market share and FDI
Pressure on other countries to follow US rules

22. TOWARD TRANSNATIONAL ETHICS

23. ETHICAL CONVERGENCE
In spite of wide differences in cultures and social institutions, growing pressures for multinationals to follow same rules

24. PRESSURES FOR ETHICAL CONVERGENCE
Growth of international trade
creates pressures for uniformity
Increased cross national imitation
Mixed cultural background employees

25. PRESCRIPTIVE ETHICS FOR THE MULTINATIONAL
Donaldson suggests
guides based on the moral languages of avoiding harm, right/duties, and the social contract
specified in contracts and international laws

26. INTERNATIONAL CODES OF CONDUCT
For moral language to work, there must be codes of conduct
Current codes exist based on codes from international governing bodies (UN, ILO) and international agreements (Exhibit 4.8)

27. MULTINATIONALS DO NOT ALWAYS FOLLOW ETHICAL AGREEMENTS
Governments make agreements
Compliance voluntary
Not all governments subscribe
Each guide is an incomplete moral guide

28. HOW SHOULD THE MANAGER DECIDE?

29. ETHICAL RELATIVISM VS ETHICAL UNIVERSALISM
Ethical relativism - each society's view of ethics considered legitimate and ethical
Ethical universalism - basic moral principles transcend cultural/national boundaries

30. PRACTICAL PROBLEMS OF FOLLOWING EITHER
Convenient relativism - companies use ethical relativism to behave any way they please
Cultural imperialism with ethical universalism

31. BALANCING THE NEEDS OF THE COMPANY WITH ETHICAL CONSEQUENCES
Managers must weigh and balance the economic, legal, and ethical consequences of their decisions

32. FORMS OF ANALYSES
Economic
Legal
Ethical

34. CONCLUSIONS
Multinational managers face ethical challenges magnified by the international context
Need to understand home ethical codes and impact on ethics of foreign culture/social institutions