1. PowerPoint slides by R. Dennis Middlemist, Professor of Management, Colorado State University

2. Ethics and Social Responsibility
The specific objectives of this chapter are:
EXAMINE some of the major ethical issues and problems confronting MNCs in selected countries.
DISCUSS some of the pressures on and action being taken by selected industrialized countries and companies to be more socially responsive to world problems.

3. Ethics and Social Responsibility
The specific objectives of this chapter are:
EXPLAIN some of the initiatives to bring greater accountability to corporate conduct and limit the impacts of corruption around the world.

4. Ethics and Social Responsibility Around the World
Study of morality and standards of conduct
Vital role of ethics in conduct of business
Sarbanes-Oxley Act (2002)
CEO and CFO required to approve and declare accurate all financial statements provided to SEC for publication
Ensure transparency of all disclosures
Make content appropriately accessible for audit and verification
MNCs face difficulty because of differing standards between countries where they operate

5. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Japan
Political and business scandals
Japanese cabinet member forced to resign for receiving over $2 million from Japanese corporations
Failure of banking system to take corrective action regarding Japan’s recession
Concealing customer complaints
Failure to inform car owners about possible auto defects and maintenance of two sets of customer complaint records
Encouraging employees to mislead government inspectors

6. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Japan
Hostile work environment
Cultural expectations
Traditional role of females and female employees
Sexual harassment may not be considered a moral issue
Equal opportunity issues
Refusal to hire women or promote them into management positions
Mitsubishi sued by U.S. EEOC
Social Responsibility/Lobbying

7. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Europe
Survey of 124 U.S., 72 French, and 70 German managers responding to five ethical vignettes
In most cases, the U.S. managers’ responses were quite different from those of their European counterparts
U.S. managers more concerned with ethical and legal questions
French and German managers more concerned with maintaining a successful business posture
Reasons for difference between countries
Culture Personal values
Incentives Legal restrictions

8. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Europe
Status of women managers in Europe
France
Proportion of women in the labor force trends
Glass ceiling
French law guarantees equal treatment and professional opportunities
Enforcement is weak

9. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Europe
Status of women managers in Europe
Germany
Remaining differences between East and West Germany
Proportion of females in higher positions
Professional qualifications relate inversely to hierarchical position
Lack of objective criteria for selection to higher positions
Has mandated equal opportunity throughout the public sector

10. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
Europe
Status of women managers in Europe
Great Britain
45 percent of workforce is female
Not well represented at higher levels
Women creating associations for networking and lobbying
Women’s Engineering Society
The 300 Group
Some companies becoming proactive in women’s work rights
Discrimination lawsuits becoming more commonplace

11. Ethics and Social Responsibility Around the World
Ethical Problems and Concerns
China
Ethical issues
Workers not well paid (often work 12 hours a day, 7 days a week)
Piracy of intellectual property, counterfeiting, and industrial spying
Human rights violations
Use of prisoner and child labor

12. Corporate Social Responsibility
Corporate social responsibility (CSR)
Actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm
Pressure for greater attention to CSR
Civil society
Nongovernmental organizations (private, not-for-profits that focus on social, political and economic issues)
CSR concerns
Working conditions in factories and service centers
Environmental impacts of corporate activities

13. Trust in Leaders 10 20 30 40 50 60 NGO leaders 52 Leaders at the U.N.42
Spiritual/religious leaders 41
Leaders of Western Europe 36
Managers of the global economy 36
Managers of the national economy 35
Executives of MNCs 33
Leaders of the U.S.A. 27 10 20 30 40 50 60
Average Across All 15 Countries Surveyed
Adapted from Figure 3-1: Trust in Leaders: Percentage Saying “A Lot” and “Some Trust”

14. Rise of Civil Society and NGOs
Emergence of organized civil society and NGOs altered
Business environment globally
Role of MNC within global business environment
NGOs in the U.S. and globally
Save the Children
Oxfam
CARE
World Wildlife Fund
Conservation International

15. Rise of Civil Society and NGOs
Corporations receiving heavy criticism
Nike
Levi’s
Chiquita
Major criticisms
Exploitation of low-wage workers
Environmental abuses
Intolerable workplace standards
Response to social obligations
Agreements and codes of conduct
Maintenance of standards in domestic and global operations
Cooperation with NGOs regarding certain social issues

16. Response to Social Obligations
Table 3-1
Principles of the Global Compact
Human Rights Principle 1: Support and respect the protection of international human rights within their sphere of influence. Principle 2: Make sure their own corporations are not complicit in human rights abuses.
Adapted from Table 3-1: Principles of the Global Compact

17. Response to Social Obligations
Table 3-1
Principles of the Global Compact
Labor Principle 3: Freedom of association and the effective recognition of the right to collective bargaining. Principle 4: The elimination of all forms of forced and compulsory labor. Principle 5: The effective abolition of child labor. Principle 6: The elimination of discrimination with respect to employment and occupation.
Adapted from Table 3-1: Principles of the Global Compact

18. Response to Social Obligations
Table 3-1
Principles of the Global Compact
Environment Principle 7: Support a precautionary approach to environmental challenges. Principle 8: Undertake initiatives to promote greater environmental responsibility. Principle 9: Encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Business should work against all forms of corruption, including extortion and bribery.
Adapted from Table 3-1: Principles of the Global Compact

19. Corporate Governance
Stakeholders
Board
Managers
shareholders
Corporate Governance Structure
Distribution of rights and responsibilities
The system by which business corporations are directed and controlled
Spells out the rules and procedures
Setting objectives
Means of attaining objectives
Monitoring performance
Making decisions

20. Corporate Governance
Rules and regulations differ among countries and regions
U.K. and U. S. systems are “outsider” systems
Dispersed ownership of equity
Large number of outside investors
Many continental European countries are “insider” systems
Ownership more concentrates
Shares owned by holding companies, families or banks
Other effects on corporate governance include
Differences in legal systems
Responsiveness and accountability of corporate managers to stakeholders

21. Corruption and Foreign Corrupt Practices Act
Foreign Corrupt Practices Act (FCPA)
Illegal for U.S. firms and their managers to attempt to influence foreign officials through personal payments of political contributions, including such tactics as
“Entertainment” expenses
“Consulting” fees
Some evidence that discontinuing bribes does not reduce sales of the firm’s products or services in that country
Some evidence that firms from other countries continue to win business through corrupt practices such as bribery
Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials

22. Corruption Index 20 40 60 80 100 120 140 Corruption Index Chile Italy20 40 60 80
100
120
140
Corruption Index
Chile
Italy
Brazil
China
India
Japan
Finland
Taiwan
Mexico
Russia
Nigeria
Thailand
Singapore
Indonesia
Hong Kong
United States
South Africa
South Korea
Philippines
Adapted from Figure 3–2: Corruption Index: Ranking of Least Corrupt to Most

23. Corruption and Foreign Corrupt Practices Act
Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials
Organization for Economic Cooperation and Development
29 members plus several other countries have signed on
Fails to outlaw most payments to political party leaders.
Does indicate growing support for anti-bribery initiatives

24. International Assistance
Governments and corporations increase collaboration to provide assistance to communities and locales through global partnerships
Best “investments”
Controlling and preventing AIDS
Fighting malnutrition
Reducing subsidies and trade restrictions
Controlling malaria

25. International Assistance
Table 3-2
Copenhagen Consensus Development Priorities
Project rating Challenge Opportunity
Very good
Diseases Control of HIV/AIDS
Malnutrition Providing micro nutrients
Subsidies and trade Trade liberalization
Diseases Control of malaria
Malnutrition Development of new agricultural technologies
Sanitation and water Small-scale water technology for livelihoods
Sanitation and water community-managed water supply and sanitation
Good
Adapted from: Table 3.2: Copenhagen Consensus Development Priorities

26. International Assistance
Table 3-2
Copenhagen Consensus Development Priorities
Project rating Challenge Opportunity
Good
Sanitation and water Research on water productivity in food production
Government Lowering the cost of starting a new business
Migration Lowering barriers to migration for skilled workers
Malnutrition Improving infant and child nutrition
Malnutrition Reducing the prevalence of low birth rate
Fair
Adapted from: Table 3.2: Copenhagen Consensus Development Priorities

27. International Assistance
Table 3-2
Copenhagen Consensus Development Priorities
Project rating Challenge Opportunity
Fair
Diseases Scaled-up basic health services
Migration Guest-worker programs for the unskilled
Climate “Optimal” carbon tax
Climate The Kyoto protocol
Climate Value-at-risk carbon tax
Bad
Source: Copenhagen Consensus
Note: Some of the proposals were not ranked
Adapted from: Table 3.2: Copenhagen Consensus Development Priorities

28. Millennium Development Goals
Table 3-3
The U.N. Millennium Development Goals
Goal 1: Eradicate extreme poverty and hunger.
Goal 2: Achieve universal primary education.
Goal 3: Promote gender equality and empower women.
Goal 4: Reduce child mortality.
Goal 5: Improve maternal health.
Goal 6: Combat HIV/AIDS, malaria, and other diseases.
Goal 7: Ensure environmental sustainability.
Goal 8: Develop a Global Partnership for Development.
Source:
Adapted from: Table 3-3: The U.N. Millennium Development Goals