Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-1 BA Business Environment Chapter 9 Ethical Issues in the Global Arena BA Business Environment Week 4 ~ Part 2

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-2 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Agenda Chapter 9 intro Current Event Presentations

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-3 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Chapter 9 The New, New World of International Business Multinational Corporations (MNCs) and the Global Environment Ethical Issues in the Global Business Environment Improving Global Ethics Search the Web An excellent listing of global principles and codes for ethics may be found at:

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-4 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Eras of Internationalization The Post-World War II Decade The Growth Years The Troubled YearsA U The New International Order The New, New World

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-5 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Concepts of Global Business Internationalization vs. Globalization

Pros and Cons of Globalization IMPACTONIMPACTON GlobalistsAntiglobalists Consumers Free trade promotes lower costs, etc. Benefits the wealth at the expense of the poor Employees Faster economic growth promotes Higher wages, etc. Places profits above people Environment Creates resources needed to address the issue Exploits and destroys ecosystems Developing Nations Promotes national economic development, higher standard of living, etc. World financial institutions conspire to keep poor nations in debt Human Rights Creates cultures that support law and free expression Corporations pursing profits ignore human rights violations 9-8

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-7 BA Business Environment Chapter 9 Ethical Issues in the Global Arena MNCs and the Global Environment Change scope and nature of U.S.-based multinationals Face challenges of operating in new world of business –Corporate legitimacy –MNC and host country philosophy –MNC and host country challenges Cultural differences Business and government differences

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-8 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Ethical Issues in Global Business Questionable marketing and safety practices Sweatshop and labor abuse Corruption, bribery, and questionable payments Hot Issue: “Offshoring” jobs Protectionism vs. free trade? Search the Web For student activists interested in sweatshop practices, visit

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-9 BA Business Environment Chapter 9 Ethical Issues in the Global Arena Issues of Bribery For Necessary to do business Common practice Accepted practice Form of commission, tax, or compensation Against Wrong Illegal Compromise personal beliefs Promotes government corruption Slippery slope Prohibits taking a stand for honesty, etc. Benefits recipient only Creates dependence on corruption Deceives stockholders

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Trends Against Bribery Foreign Corrupt Practices Act Transparency International launched OCED Antibribery Initiatives

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Bribes vs. Grease Payments DefinitionsDefinitions –Grease Payments—Relatively small sums of money given for the purpose of getting minor officials to: Do what they are supposed to be doing anyway Same but faster or sooner. Same but better than they would otherwise. –Bribes—Relatively large amounts of money given far the purpose of influencing officials to make decisions or take actions that they otherwise might not take. ExamplesExamples –Money given to minor officials (clerks, attendants, customs inspectors) for the purpose of expediting. This form of payment helps get goods or services through red tape or administrative bureaucracies. –Money given, often to high-ranking officials. Purpose is often to get these persons to purchase goods or services from the bribing firm. May also be users to avoid taxes, forestall unfavorable government intervention, secure favorable treatment, etc.

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena The Dilemma of the Multinational Corporation The Multinational Corp. Home Country Stakeholder Pressures Host Country Stakeholder Pressures

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Ethical Choices in Home vs. Host Country Situations Broad Middle Ground Mix of Home and Host Country Standards Home Country ETHICAL IMPERIALISM Host Country CULTURAL RELATIVISM Application of Ethical Principles (see notes) International Law Global Codes of Conduct Cultural standards Ethical/moral standards of home country Cultural standards Ethical/moral standards of host country

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Global Types Foreign type Empire type Interconnection type Global type

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Integrative Social Contract Theory (ISCT) Hypernorms consist of transcultural values including fundamental human rights Consistent norms consist of norms that are culturally specific, but consistent with hypernorms Moral free space norms consist of strongly held cultural beliefs in particular countries that are in tension with hypernorms Illegitimate norms consist of norms that are incompatible with hypernorms

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Four Actions for Improving International Business Ethics Create global codes of conduct –Global codes and standards set by corporations –Global Codes and standards set by international organizations Integrate ethics into a global strategy Suspend activities in host country Create ethical impact statements

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Global Codes and Standards Developed by International Organizations Caux Principles Global Reporting Initiative Global Sullivan Principles OECD Guidelines for Multinational Enterprises Principles for Global Corporate Responsibility: Benchmarks UN Global Compact

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Fundamental International Rights 1.The right to physical movement 2.The right to ownership of property 3.The right to freedom from torture 4.The right to a fair trial 5.The right to nondiscriminatory treatment 6.The right to physical security 7.The right to freedom of speech and association 8.The right to minimal education 9.The right to political participation 10.The right to subsistence

Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved BA Business Environment Chapter 9 Ethical Issues in the Global Arena Seven Moral Guidelines for MNCs Inflict no intentional or direct harm Produce more good than bad for the host country Contribute to host country’s development Respect the human rights of their employees Pay their fair share of taxes Respect local cultural beliefs that do not violate moral norms Cooperate with the government to develop and enforce background institutions