1. © 2008 Pearson Prentice Hall 2-1 Chapter 2: Managing Interdependence: Social Responsibility and Ethics PowerPoint by Hettie A. Richardson Louisiana State University

2. © 2008 Pearson Prentice Hall 2-2 Opening Profile: The Enron Case Illustrates how questionable actions by a company can be harmful to both stakeholders and the company itself—even if the actions are profitable in the short-term Enron is a symbol of an “era of management practice” (James Post), but is it the end of the era?

3. © 2008 Pearson Prentice Hall 2-3 The Social Responsibility of MNCs Corporate social responsibility (CSR) Profit is MNCs’ only goal MNCs should anticipate and solve social needs

4. © 2008 Pearson Prentice Hall 2-4 Global Consensus or Regional Variation? Global corporate culture Example of regional variation: The US focuses on following basic business obligations, Europe focuses on serving broader social aims

5. © 2008 Pearson Prentice Hall 2-5 Three Approaches to International Morality and Ethics Moral universalism Ethnocentrism Ethical relativism

6. © 2008 Pearson Prentice Hall 2-6 MNCs and Human Rights The Sweatshop Code of Conduct The Electronic Industry Code of Conduct (EICC) Social Accountability 8000 (SA8000)

7. © 2008 Pearson Prentice Hall 2-7 Comparative Management in Focus: Doing Business in China The attraction of doing business in China: Cheap labor rates A large market A growing economy

8. © 2008 Pearson Prentice Hall 2-8 Comparative Management in Focus: Doing Business in China The human rights challenge: Potentially rampant violations of workers’ rights Repression of free-speech Difficulty monitoring/correcting violations

9. © 2008 Pearson Prentice Hall 2-9 Comparative Management in Focus: Doing Business in China Examples of recent human rights issues in China: Nike Governmental crackdown on “propaganda” Google, Microsoft, Yahoo

10. © 2008 Pearson Prentice Hall 2-10 International Business Ethics The business conduct or morals of MNCs in their relationships with individuals and entities Ethics vary based on the cultural value system in each country or society

11. © 2008 Pearson Prentice Hall 2-11 Global Corruption Barometer Business/ Private Sector Asia3.3 Africa3.1 Western Europe3.3 Central & Eastern Europe3.7 Latin America & Caribbean3.5 USA3.2

12. © 2008 Pearson Prentice Hall 2-12 Is it bribery? Questionable Payments Paying mail carriers in Mexico to prevent them from “losing” mail Paying $100 to get a computer picked up from a rainy dock Gift-giving to bond social ties

13. © 2008 Pearson Prentice Hall 2-13 Legal Approaches to Bribery Foreign Corrupt Practices Act (FCPA) Organization for Economic Co-operation and Development convention on bribery

14. © 2008 Pearson Prentice Hall 2-14 Three Tests of Ethical Corporate Actions Is it legal? Does it work in the long run? Can it be talked about?

15. © 2008 Pearson Prentice Hall 2-15 What is the “right” decision? Consult home/host country laws Consult International Codes of Conduct for MNCs Consult the company’s code of conduct

16. © 2008 Pearson Prentice Hall 2-16 What is the “right” decision? Consult your superiors Fall back on your own moral code of ethics

17. © 2008 Pearson Prentice Hall 2-17 Management Focus: A CEO Speaks Out Richards Rhoades of Architectural Stone Emphasizes respect for cultural differences, while not violating personal ethical standards Business black and white Moral black and white

18. © 2008 Pearson Prentice Hall 2-18 Foreign Subsidiaries in the US Foreign direct investment (FDI) in the US is often greater than US investment outward Example: Japanese companies in the US

19. © 2008 Pearson Prentice Hall 2-19 Managing Subsidiary—Host-Country Interdependence Requires managers to go beyond issues of CSR to deal with specific concerns of the MNC—host-country relationship MNCs must learn to accommodate the needs of other organizations and countries

20. © 2008 Pearson Prentice Hall 2-20 MNC Benefits & Costs to Host Countries BenefitsCosts Access to outside capitalCompetition for capital Foreign-exchange earnings Increased interest rates Access to technologyInappropriate technology Infrastructure development Development investment exceeds benefits Creation of new jobsLimited skill development Local management development Few managerial jobs for locals

21. © 2008 Pearson Prentice Hall 2-21 The Risks of Interdependence for MNCs Nationalism Protectionism Example: Japan’s tariffs Governmentalism Example: Britain’s privatized telephone system

22. © 2008 Pearson Prentice Hall 2-22 Issues in Managing Environmental Interdependence The dumping of 8000 drums of toxic waste in Koko, Nigeria. The export of US pesticides Industrial ecology