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

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

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

SOCIAL RESPONSIBILITY F The responsibility businesses to society beyond making profits F Often reflect the ethical values and decisions of the top management team F Ethics and social responsibility not easily distinguished in practice

Excepts from Exhibit 15.1 show examples of ethical/social responsibility issues faced by MNCs

EX 15.1

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

F Economic F Legal F Ethical FORMS OF ANALYSES

ETHICAL PHILOSOPHY

TRADITIONAL VIEWS F Two basic systems of ethical reasoning – Deontological – Teleological

DEOLONTOLOGICAL THEORIES F Actions have a good or bad morality regardless of the outcomes they produce

TELEOLOCIAL F Morality from the consequences of an act F Utilitarianism

MORAL LANGUAGES F A contemporary view F Basic ways that people use to make ethical decisions and explain ethical choices

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

NATIONAL DIFFERENCES F National culture and social institutions affect ethical behavior/social responsibility F See Exhibits

EX 15.3 ETHICAL ISSUES IDENTIFIED BY SENIOR U.S. AND EUROPEAN MANAGERS

EX 15.4 THE MANAGEMENT OF KEY ETHICAL ISSUES

EX 15.5 BELIEFS REGARDING ETHICAL CODES

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

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

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

PRESSURES FOR ETHICAL CONVERGENCE F Growth of international trade – Creates pressures for uniformity F Increased cross national imitation F Mixed cultural background employees

FOREIGN CORRUPT PRACTICES ACT F Forbids U.S. companies to make or offer payments or gifts to foreign government officials to get or retain business F “Reason to know" provision F See Exhibit 15.6

F 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

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

PRESCRIPTIVE ETHICS FOR THE MULTINATIONAL F Donaldson suggests – Guides based on the moral languages of avoiding harm, right/duties, and the social contract – Specified in contracts and international laws

CODE OF CONDUCT F For moral language to work, there must be codes of conduct F Current codes exist based on codes from international governing bodies (UN, ILO) and international agreements

WHY MULTINATIONALS DO NOT ALWAYS FOLLOW ETHICAL PRINCIPLES? F Governments make agreements F Compliance voluntary F Not all governments subscribe F Each guide is an incomplete moral guide

HOW SHOULD THE MANAGER DECIDE? F Consider whether the action makes business sense F Conduct and ethical analysis – See Exhibit 15.8 next

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