1. International Business Ethics BMJN 5402

2. Why International Business? Economic growth from more free & open trade : thought to be most effective to improve well being of impoverished people Economic integration prevents wars

4. Ethical Issue & Relativism Business must often choose between obeying home country or following local rules Diverse culture  diverse ethical value Ethical principles vs. application Virtue of integrity Cultures have different values  does not imply ethical relativism

5. Some Alternatives Conforming with local values  extreme ethical relativism Moral rigorism  extreme attachment to home countries’ values Naïve immoralism

6. Some Alternatives Conforming with local values  extreme ethical relativism Moral rigorism  extreme attachment to home countries’ values Naïve immoralism None is perfectly acceptable

7. Other Alternatives The Sullivan Principles Conforming to local values as long as it does not violate general ethics Lobbying local regulators to eliminate unethical regulations Lobby for establishment of inter-country agreements for “moral minimum” to operate in every countries Example : Montreal Protocol, Kyoto Agreement

8. Cross Cultural Values & International Rights Minimalist approach  meeting minimal moral rights Maximalist approach  MNCs are responsible to provide benefit & support for communities

9. Universal Rights (Donaldson) Freedom of physical movementOwnership of propertyFreedom from torture Fair trialNondiscriminatory treatmentPhysical security Freedom of speech & associationMinimal education Political participation Subsistence

10. Cross-Cultural Ethical Guidelines (De George) Do no intentional direct harmProduce more good than harm for host countryContribute by their activity to host country’s developmentRespect human rights of employeesRespect local culture & work with and not against itPay their share of taxes Cooperate with local govn’t in developing & enforcing just background institutions Recognize that majority control of a firm carries with it the ethical responsibility for actions & failures of the firm Make sure that hazardous plants are safe & run safely Ensure proper re-designing of hazardous technology for transfer to less developed country

11. International Issues in Bribery US Foreign Corrupt Practices Act (1977) Forbid US companies to pay bribes outside US Amended in 1988 to allow facilitating payment Why is bribery unethical? Promote unfair competition Compensation for those who do not deserve Unfair allocation Promote other unethical and illegal act

12. Issues in International Biz Low wages Outsourcing Extortion & exploitation of workers in poorer countries Effort to lobby for deregulation Race to the Bottom MNCs replacing legitimate government Cultural homogenization threatens local culture & traditions Organizations such as World Bank & WTO are secretive & undemocratic Compromising democracy, cultural integrity & human right Dumping

13. Defining Fair Wages 1 Does not mean the same with wages of labors in MNC’s home countries 2 Means that MNC must pay the similar responsibilities to employees at host countries with those in home countries 3 Use of economic indicator (i.e. GDP, inflation rate) to define fair wages Other approach : comparing labors’ quality of life

14. Dumping Sell products below the market price or even production cost Against free market ethics Why unethical? “Against dumping” policy can’t be used to protect local market Unfair wages Exclusion of depreciation Dumping includes :

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