Chapter 11

There are truths on this side of the Pyrenees that are falsehoods on the other. -- Blaise Pascal 17th Century philosopher, France 2 (p. 364)

The computer is on the dock, it’s raining, and you have to pay a bribe to get it picked up and delivered. -- William Norris Founder, Control Date Corporation, USA 3 (p. 364)

Opening question: Pascal and Norris both raise questions about the absolute nature of truth and ethical behavior. How can we know what is morally and ethically correct in international management, and are there times when we can or must compromise on our principles? 4

Consider: Halliburton in Nigeria 1.Does Halliburton illustrate an example of an unethical company or a company trying to navigate between two different ethical worlds? 2.What could Halliburton have done differently without losing access to local business opportunities? 3.Should Halliburton have walked away from this opportunity if they could not pursue it using U.S. ethical guidelines? 5 (p. 364)

Topic for today: Managing in an imperfect world Rules of the game Bases of cross-cultural conflict Ethics, laws, and social control: A model Ethical conflicts and challenges Institutional conflicts and challenges 6

Rules of the game: Some initial thoughts Why is greed and corruption so prevalent around the globe—including in prosperous nations? Are the challenges of managing in ethical and socially responsible ways getting easier or more difficult? Is it a company’s responsibility to protect the local environment if the local government fails to do so? Should global managers play by local ethical rules or the rules of their homeland? 7 (pp )

Sources of cross-cultural conflict Acceptance or rejection of different tastes and preferences. Preference for ethical imperatives or legal requirements. Tolerance or intolerance of different beliefs and values. (p. 369)

Sources of cross cultural conflict (p. 369)

Types of conflict: Ethical and institutional 1.Ethical conflicts: Disagreements over what is morally or philosophically correct (right vs. wrong) 2.Institutional conflicts: Disagreements over what is legal or consistent with legitimately determined public policy (legal vs. illegal). 10 (pp )

Normative beliefs, institutional requirements, and social control Institutional requirements (laws and regulations) (p. 374)

1. Ethical conflicts and challenges Issues: Core beliefs: Universalism vs. particularism. What is “truth?” At what level do we evaluate or try to understand conflict? 12 (pp )

Core beliefs: Universalism vs. particularism Consider: Is democracy a universal or particularistic principle? Why? Is gender equality a universal or particularistic principle? Why? Is protecting the environment a universal or particularistic principle? Why? How do you know you are right about this?

Level of understanding of cross- cultural ethical conflicts Level 3: Ethical conflicts both within and between organizations Level 2: Relationships between principle and practices Level 1: Meaning of “universal” values (p. 377)

Universalism, particularism, and truthfulness (p. 380)

2. Institutional conflicts and challenges Laws and guidelines governing ethical and socially responsible behavior: Foreign corrupt practices act (US) OECD guidelines (OECD members) 16

OECD Guidelines for ethical managerial behavior (see Appendix B)

OECD guidelines Three examples: Bribery and corruption Employment relations Environmental stewardship 18 (pp. 387)

Corruption index (p. 388)

Consider: Is it easy, difficult, or nearly impossible for managers to consistently act in ethical ways when working across cultures? Why?... Use force field analysis? 20

Force field analysis: OECD bribery and corruption guidelines (p. 390)

Consider: China’s consumer market 1.What can a manager do when his or her sense of ethical responsibility is at odds with that of both his company and local market conditions? 2.What would you do in this case? (p. 390)

Force field analysis: OECD employment relations guidelines (p. 392)

Consider: Samsung Electronics 1.How did Samsung and Sony approach employee relations in Thailand? 2.Why did the two companies take different approaches? 3.Was there a clear right way to do this? Why or why not? (p. 392)

Force field analysis : OECD environmental stewardship guidelines (p. 394)

Consider: Tata Motors 1.Do you agree with the way Tata Motors resolved their conflict with local farmers in West Bengal? 2.Who were the losers—and who were the winners—in Tata’s change in plant locations? (p )

MANAGER’S NOTEBOOK: Managing within ethical and moral constraints 1.Understand the core values of the firm. 2.Understand the limits of universalism. 3.Understand the cultural contexts underlying agreements. 4.Understand the roles and backgrounds of the parties to a dispute. 5.Understand the context or basis of the conflict. 6.Understand different types of cultural conflicts. 27

MANAGER’S NOTEBOOK: Managing within legal and institutional constraints 1.Understand the role of institutional guidelines. 2.Understand the limitations of institutional guidelines. 3.Understand the controversies underlying institutional guidelines. 4.Understand the tension created by forces both for and against “doing the right thing.” 5.Understand where conflicts need to be settled. 6.Understand the lack of education or awareness of institutional guidelines in the training of managers. 28

Application: Ethical behavior at work 1.Identify one ethical or moral issue that can be found in the workplace that your group feels strongly about (e.g. bribery, nepotism, child labor, sexual harassment, etc.). 2.What is the basis of your objection to this practice? 3.How do you know your beliefs are correct and contrary beliefs are wrong? 4.If you find yourself working aboard where this practice is relatively commonplace, what would you do as a manager? What would you do as an individual? Why? 29

Think about it: Shopping money You company is currently negotiating with three local companies to help supply your foreign operations. During a meeting with your leading candidate, your host hands you an envelop containing two hundred euros and suggests you use it to go shopping this afternoon since his superiors are unavailable to meet and it’s a sunny day. 1.Is two hundred euros a bribe or a gesture of friendship? 2.What would accept or reject the envelop? Why? 30