1. Business Ethics in a Global Economy
University of Bahrain
College of Business Administration
MGT 437 Business Ethics
Chapter 10
Business Ethics in a Global Economy
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2. Ethical Perceptions and International Business
When businesspeople travel abroad, they sometimes perceive different modes of operation.
Research shows that American companies feel they are different from many foreign companies.
“We” versus “them” is referred to as self-reference criterion— unconscious reference to one’s own culture values, experiences, and knowledge.
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3. Ethical Perceptions and International Business
Dumping—the practice of charging high prices for products sold in domestic markets while selling the same products in foreign markets at low prices, often below the costs of exporting them
The United States has a number of anti-dumping laws.
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4. Culture as a Factor in Business
Culture is everything in our surroundings made by people—both tangible and intangible concepts and values.
Each nation has a distinctive culture and beliefs about acceptable or unethical activities.
Citizens of different cultures vary based on their religious beliefs, perceptions of time, and body language.
The key question: Whose values and ethical standards take precedence internationally?
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Cultural Relativism
The concept that morality varies from one culture to another and business practices are therefore differentially defined as right or wrong by particular cultures
Ethical relativism—one culture defines ethical behavior for the whole globe, no exceptions
Business relativist—there may be no ethical standards except for the one in the transaction culture
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Global Values
A set of global or universal ethical standards, such as Michael Josephson’s:
Trustworthiness – Responsibility
Honesty – Fairness
Integrity – Caring
Promise keeping – Citizenship
Loyalty
Respect for others
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7. Multinational Corporations
Public companies operating on a global scale without significant ties to any one nation/region
Perceived to be unfair for MNCs to transfer jobs abroad where wage rates are lower
Have been accused of increasing the gap between the rich and poor nations
Have been accused of exploiting natural and human resources
Have been accused of engaging in unfair competition
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8. Multinational Corporations
Nike
Cisco Systems
Monsanto
Shell
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Global Ethical Issues
Sexual and racial discrimination
Human rights
Price discrimination
Bribery
Harmful products
Pollution and the natural environment
Telecommunications issues
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10. Sexual and Racial Discrimination
U.S. and European laws prohibit businesses from discriminating on the basis of sex, race, religion or disabilities in their hiring, firing and promotion decisions.
Discrimination is sometimes justified on the basis of cultural norms and values.
For example, businesswomen are rare in the Middle East.
Discrimination remains one of the more prevalent concerns in international business.
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11. How Companies Might Address Discrimination Issues
Develop a company policy on discrimination
Communicate the policy internally and externally
Determine benchmarks for activities in which discrimination can arise
Determine indicators of possible noncompliance
Establish methods to identifying noncompliance
Develop a plan and implement the plan
Source: “Discrimination,” Business for Social Responsibility,
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Human Rights
Opportunistic use of child labor, payment of low wages, and abuses in foreign factories are a few of the concerns.
Relationships with subcontractors have proven problematic for some firms.
MNCs should view the law as a floor of acceptable behavior and strive for greater improvements in workers’ quality of life.
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13. Advancing Human Rights
Engage in an open dialog with workers and management.
Be aware of human rights issues and concerns in each country in which the company engages in business.
Adopt the prevailing legal standard, but seek to embrace a “best practices” approach and standard.
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Price Discrimination
Occurs when a firm charges different prices to different groups of consumers
Allowable if justified, based on costs
Price gouging—a price increase exceeding the costs of additional expenses (taxes, etc.)
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15. Bribery and the Foreign Corrupt Practices Act
Bribes and facilitating payments are acceptable in many cultures.
The U.S. Foreign Corrupt Practices Act prohibits American corporations from offering or providing payments to officials of foreign governments for the purpose of obtaining or retaining business abroad.
This may place U.S. businesses at a disadvantage.
This has been supported through global treaties.
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16. Consumer Experience with Bribery by Country
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Harmful Products
Products banned in many industrial nations, considered harmful, are sold in other countries where they are still legal.
Dumping of hazardous waste materials in less developed countries is a related issue.
Some products that are not harmful in some countries may be so in others because of issues related to literacy, unsanitary conditions, and cultural values.
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18. Pollution and the Natural Environment
Many countries are working together to create alliances and standards for environmental responsibility to minimize the negative effects of pollution.
Some countries are taking legal action against polluting firms in an effort to defend air and water quality.
Reasonable global emission standards must be established.
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19. Telecommunications Issues
Satellites, , and the Internet bring ease of information access with resulting ethical issues.
A few of the ethical issues include:
Counterfeiting
Knockoffs
Day trading
Money laundering
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20. Intellectual Property Protection
Intellectual property refers to ideas and creative materials people develop to solve problems, carry out applications, educate, and entertain others.
Patents
Legal document issued to an inventor that grants the right to exclude others from using or selling the product for a period of time
Copyrights
Protection that covers published and unpublished literary, scientific and artistic works
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21. World Trade Organization
The WTO administers its own trade agreements, facilitates future trading negotiations, settles trade disputes and monitors the trade policies of member nations.
Addresses economic and social issues involving agriculture, textiles, banking, telecommunications, government purchases, industrial standards, food sanitation regulations, services and intellectual property
The WTO was established in 1995 and now includes over 133 member nations.
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