1. ©2004 Prentice Hall5-1 Chapter 5: Ethics and Social Responsibility in International Business International Business, 4 th Edition Griffin & Pustay

2. ©2004 Prentice Hall5-2 Chapter Objectives_1  Describe the nature of ethics  Discuss ethics in cross-cultural and international contexts  Identify the key elements in managing ethical behavior across borders  Discuss social responsibility in cross- cultural and international contexts

3. ©2004 Prentice Hall5-3 Chapter Objectives_2  Identify and summarize the basic areas of social responsibility  Discuss how organizations manage social responsibility across borders  Identify and summarize the key regulations governing international ethics and social responsibility

4. ©2004 Prentice Hall5-4 Exporting Jobs or Abusing People?  Minute Maid  Tropicana  Nestle  Nike

5. ©2004 Prentice Hall5-5 Ethical Behavior Ethical behavior usually refers to behavior that conforms to generally accepted social norms.

6. ©2004 Prentice Hall5-6 Ethical Generalizations  Individuals have their own personal belief systems  People from the same cultural context will tend to hold similar beliefs  Behaviors can be rationalized  Circumstances affect adherence to belief systems  National culture is intertwined with ethics

7. ©2004 Prentice Hall5-7 Figure 5.1 Ethics in a Cross-Cultural Context Cultural Context Behavior of Organization Toward Employees Behavior of Employees Toward Organization Behavior of Employees and Organization Toward Other Economic Agents

8. ©2004 Prentice Hall5-8 How an organization treats its employees Hiring and firing practices Wages and working conditions Employee privacy and respect

9. ©2004 Prentice Hall5-9 Many safety and health hazards exist in this Siberian aluminum smelter.

10. ©2004 Prentice Hall5-10 How employees treat the organization Conflicts of interest Secrecy and confidentiality honesty

11. ©2004 Prentice Hall5-11 How employees and the organization treat other economic agents Customers Competitors Stockholders Suppliers Dealers Labor unions

12. ©2004 Prentice Hall5-12 Managing ethical behavior Guidelines and codes of ethics Ethics training Organizational practices and corporate culture

13. ©2004 Prentice Hall5-13 Guidelines and Codes of Ethics  Written statements of the values and ethical standards that guide the firm’s actions  Examples –Johnson & Johnson –Toyota –General Mills

14. ©2004 Prentice Hall5-14 Acceptability of Bribery  Acceptable –Russia –China –Taiwan –South Korea  Unacceptable –Australia –Sweden –Switzerland –Austria The U.S., Japan, and Italy fell between the two extremes.

15. ©2004 Prentice Hall5-15 Areas of Social Responsibility  Organizational stakeholders  Natural environment  General social welfare

16. ©2004 Prentice Hall5-16 Corporate Excellence  L.L. Bean  Toyota  Lands’ End  Dell Computer  DaimlerChrysler  BP

17. ©2004 Prentice Hall5-17 A joint venture between Anglo- American and the Zambian government seeks to mine copper while minimizing harm to the environment

18. ©2004 Prentice Hall5-18 Map 5.1 Social Responsibility Hot Spots

19. ©2004 Prentice Hall5-19 Figure 5.3 Approaches to Social Responsibility Least Responsible Most Responsible Obstructionist Defensive Accommodative Proactive

20. ©2004 Prentice Hall5-20 Obstructionist Stance  Do as little as possible to address social or environmental problems  Deny or avoid responsibility  Examples –Astra –Nestle –Danone

21. ©2004 Prentice Hall5-21 Defensive Stance  Do what is required legally, but nothing more  Corporate responsibility is to generate profits  Example –Philip Morris

22. ©2004 Prentice Hall5-22 Accommodative Stance  Meet ethical and legal requirements and more  Agree to participate in social programs  Match contributions by employees  Respond to requests from non-profits  No proactive behavior to seek such opportunities

23. ©2004 Prentice Hall5-23 Proactive Stance  Strong support of social responsibility  Viewed as citizens of society  Seek opportunities to contribute  Examples –McDonald’s –The Body Shop –Ben & Jerry’s

24. ©2004 Prentice Hall5-24 Managing Social Responsibility Planning Decision Making Consideration Evaluation

25. ©2004 Prentice Hall5-25 Implementing Social Responsibility Formal organizational dimensions:  Legal Compliance  Ethical Compliance  Philanthropic Giving

26. ©2004 Prentice Hall5-26 Informal Dimensions of Social Responsibility  Leadership  Organizational culture  Whistle-blowing

27. ©2004 Prentice Hall5-27 Corporate Social Audit  Tool for the evaluation of social responsibility effectiveness  Formal and thorough analysis of the firm’s social performance  Conducted by task force of high-level managers

28. ©2004 Prentice Hall5-28 Steps in Corporate Social Audit Define social goals Analyze resources devoted to each goal Determine degree of achievement for each goal Make recommendations

29. ©2004 Prentice Hall5-29 Regulating International Ethics and Social Responsibility  Foreign Corrupt Practices Act (FCPA)  Alien Tort Claims Act  Anti-Bribery Convention of the Organization for Economic Cooperation and Development  International Labor Organization (ILO)