1. Chapter 10 Globalization of Ethical Decision-Making

2. Learning Objectives
Discuss global values, goals, and business practices within ethics
Understand the role of capitalism and economics as factors in business ethics
Assess the role of multinational corporations in business ethics
Assess the role of the International Monetary Fund in business ethics

3. Learning Objectives (continued)
Assess the role of the United Nations Global Compact in business ethics
Assess the role of the World Trade Organization in business ethics
Explore and discuss common global business practices
Gain awareness of global ethical issues

4. Global Culture, Values, and Practices
Individuals encounter cultures that may diverge from their own national culture when they engage in international business
Hofstede’s cultural dimensions that impact business environment
Individualism/collectivism
Power distance
Uncertainty avoidance
Masculinity/femininity

5. Global Culture, Values, and Practices (continued)
Self-reference criterion: Unconscious reference to one’s own cultural values, experiences, and knowledge
Cultural relativism: Idea that morality varies from one culture to another
Global common values are shared across most cultures
Help form better relationships with individuals and organizations

6. Takeaways from the Previous Economic Recession
Firms were taking extreme risks, bending rules, and engaging in unethical activity
The global financial market lacked transparency in decision making, accountability, and accounting methods
Risk compartmentalization: Occurs when profit centers within corporations are unaware of the consequences of their actions on the firm as a whole

7. Economic Systems Capitalist views
Adam Smith provided the idea of laissez-faire
John Maynard Keynes believed that the state can stimulate economic growth and improve stability in the private sector through government policies
Milton Friedman believed that deregulation could reach equilibrium without government intervention

8. Economic Systems (continued)
Socialism: Economic system where wealth and power are shared and distributed evenly based on the amount of work expended in production
Social democracy: Allows private ownership of property
Features a large government that offers education and health care services to its citizens
Bimodal wealth distribution is prevalent in most economies

9. Rational versus Behavioral Economics
Rational economics: Assumes that people are predictable and maximize the utility of their choices based on their needs and wants
Act independently on the basis of full and relevant information
Behavioral economics: Assumes that economic decisions are influenced by human behaviour
Humans are assumed to act irrationally due to genetics, emotions, learned behavior, and heuristics

10. Figure 10.3 - The Economic Capitalism Country Differential

11. Multinational Corporations
Public companies that operate on a global scale and are not limited to any one nation or region
Criticisms
Misusing and misallocating scarce resources
Exploiting labor markets of the host country
Issues of unfair competition
Failing to carry an appropriate share of the cost of social development

12. Multinational Corporations (continued)
Companies now support Business for Social Responsibility (BSR), which:
Tracks emerging issues and trends
Provides information on corporate leadership and best practices
Conducts educational workshops and training
Assists organizations in developing practical business ethics tools

13. International Monetary Fund and World Trade Organization
International Monetary Fund (IMF)
Regulates monetary relationships between national economies
Promotes responsible global business conduct
World Trade Organization (WTO)
Provides legally binding ground rules for international commerce and trade policy
Facilitates trade negotiations and settles trade disputes

14. Table 10.2 - United Nations Global Compact
Source: “The Ten Principles,” United Nations Global Compact, (accessed March 31, 2015).

15. Global Ethics Issues Global ethical risks Bribery Antitrust activity
Corruption, variations in international regulations, and supply chain issues
Bribery
Antitrust activity
Vertical system: System where a business channel member has control of the entire business system, via ownership or contract, or through its purchasing ability

16. Global Ethics Issues (continued 1)
Internet security and privacy
Human rights
Health care
Labor and the right to work
Gender pay inequality
Right to work and join trade unions

17. Global Ethics Issues (continued 2)
Compensation
Living wage
Executive compensation
Consumerism
Consumer choices are straining the environment
Made-to-break or planned obsolescence

18. Importance of Ethical Decision Making in Global Business
Companies should:
Incorporate global and domestic ethical issues in their risk management strategies
Formulate their own global ethical codes
Appoint ethics officers or committees to oversee and handle global compliance issues
Provide extensive training to its employees