©2004 Prentice Hall5-1

Chapter 5:Ethics and Social Responsibility in International Business

International Business, 4th EditionGriffin & Pustay

By Mahsina, SE., MSIBy Mahsina, SE., MSIFB: mahsina seFB: mahsina se

Follow me et: mahsina_seFollow me et: mahsina_seEmail: Email: mahsina_se@hotmail.commahsina_se@hotmail.com

Download this file et: Download this file et: http://mahsina.wordpress.comhttp://mahsina.wordpress.com

©2004 Prentice Hall5-2

Chapter Objectives_1

Describe the nature of ethics Discuss ethics in cross-cultural and

international contexts Identify the key elements in managing

ethical behavior across borders Discuss social responsibility in cross-

cultural and international contexts

©2004 Prentice Hall5-3

Chapter Objectives_2

Identify and summarize the basic areas of social responsibility

Discuss how organizations manage social responsibility across borders

Identify and summarize the key regulations governing international ethics and social responsibility

©2004 Prentice Hall5-4

Exporting Jobs or Abusing People?

“Made in USA” – American Samoa and Saipan

NAFTA – low wages in Mexico Walmart & More South African miners Canada and drug prices

©2004 Prentice Hall5-5

Ethical Behavior

Ethical behavior usually refers to behavior that conforms to generally accepted

social norms.

©2004 Prentice Hall5-6

Ethical Generalizations

Individuals have their own personal belief systems

People from the same cultural context will tend to hold similar beliefs

Behaviors can be rationalized Circumstances affect adherence to belief

systems National culture is intertwined with ethics

©2004 Prentice Hall5-7

Figure 5.1 Ethics in a Cross-Cultural Context

Cultural Context

Behavior of Organization Toward Employees

Behavior of EmployeesToward Organization

Behavior of Employees and Organization

Toward Other Economic Agents

©2004 Prentice Hall5-8

Spectrum of Effects

Free Trade No Trade•Jobs migrate

•Low wages

•Poor conditions

•Fewer jobs in developing countries

•Higher prices

•Fewer products

Trade with Social Responsibility

How? Code of Ethics

©2004 Prentice Hall5-9

Guidelines and Codes of Ethics

Written statements of the values and ethical standards that guide the firm’s actions

Examples– Johnson & Johnson -- IBEI– General Mills -- Lilly

©2004 Prentice Hall5-10

What do you do…

when the country in which you are doing business does not have a code of ethics compatible with your own?

Gao Feng in China Case.

©2004 Prentice Hall5-11

Acceptability of Bribery

Acceptable– Russia– China– Taiwan– South Korea

Unacceptable– Australia– Sweden– Switzerland– Austria

The U.S., Japan, and Italy fell between the two extremes.

©2004 Prentice Hall5-12

Areas of Social Responsibility

Organizational stakeholders Natural environment General social welfare

©2004 Prentice Hall5-13

Corporate Excellence

L.L. Bean Toyota Lands’ End Dell Computer DaimlerChrysler BP

©2004 Prentice Hall5-14

A joint venture between Anglo-American and the Zambian government

seeks to mine copper while minimizing harm to the environment

©2004 Prentice Hall5-15

Map 5.1 Social Responsibility Hot Spots

©2004 Prentice Hall5-16

Figure 5.3 Approaches to Social Responsibility

LeastResponsible

MostResponsible

Obstructionist Defensive Accommodative Proactive

©2004 Prentice Hall5-17

Obstructionist Stance

Do as little as possible to address social or environmental problems

Deny or avoid responsibility Examples

– Astra– Nestle– Danone

©2004 Prentice Hall5-18

Defensive Stance

Do what is required legally, but nothing more

Corporate responsibility is to generate profits

Example– Philip Morris

©2004 Prentice Hall5-19

Accommodative Stance

Meet ethical and legal requirements and more

Agree to participate in social programs Match contributions by employees Respond to requests from non-profits No proactive behavior to seek such

opportunities

©2004 Prentice Hall5-20

Proactive Stance

Strong support of social responsibility Viewed as citizens of society Seek opportunities to contribute Examples

– McDonald’s– The Body Shop– Ben & Jerry’s

©2004 Prentice Hall5-21

Managing Social Responsibility

Planning

Decision Making

Consideration

Evaluation

©2004 Prentice Hall5-22

Implementing Social Responsibility

Legal Compliance Ethical Compliance Philanthropic Giving

©2004 Prentice Hall5-23

Informal Dimensions of Social Responsibility

Leadership Organizational culture Whistle-blowing

©2004 Prentice Hall5-24

Corporate Social Audit

Tool for the evaluation of social responsibility effectiveness

Formal and thorough analysis Conducted by task force

©2004 Prentice Hall5-25

Steps in Corporate Social Audit

Define social goals

Analyze resources devoted to each goal

Determine degree of achievement for each goal

Make recommendations

©2004 Prentice Hall5-26

Regulating International Ethics and Social Responsibility

Foreign Corrupt Practices Act (FCPA) Alien Tort Claims Act Anti-Bribery Convention of the

Organization for Economic Cooperation and Development

International Labor Organization (ILO)