1. Ethics in IB B&W or Grayscale World?

2. University of Texas at Austin Importance of Ethics Many ethical issues arise while doing business in LA Moral implications Legal implications Business implications LA’s scandals

3. University of Texas at Austin Ethics in the international context How ethics are defined? –Attitudes, beliefs, values, laws, judicial procedures. In international business common ground in these elements of ethics are quite different. Two opposite ways to solve this question are cultural relativism and ethical imperialism (Donaldson 1996).

4. University of Texas at Austin Two answers “When in Rome…”. No international rights or wrongs. Morally blind –Unethical companies might use this perspective as an excuse. Absolutism Same behavior all over the world Cultural differences are not respected It doesn’t regard the context Cultural Relativism Ethical Imperialism

5. University of Texas at Austin Three guiding principles Respect for core human values Respect for local traditions The belief that context matters

6. University of Texas at Austin Core values Respect for human dignity –Workers, employees, consumers and other stakeholders are human beings. Respect for basic rights –People all over the world have the right to: Good health: Health defined as social well-being. Economic advancement Reciprocity Good citizenship –Improve the institutions on which the community depends

7. University of Texas at Austin How to have a code of conduct that works Treat corporate values and formal standards of conduct as absolutes Design and implement conditions of engagement for suppliers and customers. Allow foreign business units to help formulate ethical standards and interpret ethical issues. In host countries, support efforts to decrease institutional corruption. Exercise moral imagination.

8. University of Texas at Austin Practical guides Economic development rule of thumb. –Would the practice be acceptable at home if my country were in a similar stage of economic development? Code of conduct –Motorola, J&J, Lockheed Martin, Texas Instrument. Legal advice and current laws

9. University of Texas at Austin Bribery Facilitating bribes –Tips vs mordidas Middleman commissions –More than a reasonable charge might be considered bribery. Political contributions –Pasando la charola Cash disbursements –Slush funds Gifts?

10. University of Texas at Austin Foreign Corrupt Practices Act Since 1977 the FCPA is an unique law in the world. The FCPA –Prohibits bribery All US companies –Record and accounting systems that prevent the creation of slush funds. All companies that are registered at the Security and Exchange Commission (SEC)

11. University of Texas at Austin FCPA (cont) The FCPA is a United States law that prohibits corruptly giving, offering or promising anything of value to foreign officials or foreign political parties, officials or candidates, for the purpose of influencing them to misuse their official capacity to obtain, keep, or direct business or to gain any improper advantage In addition, the FCPA prohibits knowingly falsifying a company's books and records or knowingly circumventing or failing to implement accounting controls. (Lockheed Martin’s Code of Ethics).

12. University of Texas at Austin FCPA (cont) Exceptions: Payments which purpose is to expedite or secure the performance of a routine governmental action. What about subsidiaries? –The parent company is innocent of any wrongdoing if: It owns 50% or less of a foreign firm, and It influences the foreign subsidiary or affiliate to make and keep accurate books and records and a system of internal accounting controls. Enforcers of the FCPA –SEC and Department of Justice

13. University of Texas at Austin Final word At the end of the day, it is going to be your decision, so –Be prepared to be flexible –Know who you can talk to –Don’t fall into the trap of the extremes –Remember that practice helps you deal with difficult situations –“Trust the eyes of your loved ones”.

14. University of Texas at Austin Short cases (Austin) Relativist Imperialist 1.Pay the generalAB 2.Hire the speakerCD 3.Hire the VP’s brotherEF 4.The luggage clerkGH 5.The immigration officialsIJ 6.The tax collectorKL 7.Rule evasionMN 8.RansomOP

15. University of Texas at Austin Crisis in Caribia What are the problems? –Strike:A, E, I, L, M, –Villafranca:C, G, J, K, N, –Road :B, D, F, H, O, P, What are the sources of these problems? Who are the players? What are some of the Deming’s options What would you do?