International Business Ethics International Business Ethics • International business ethics emerged quite late globally compared to the business ethics that came up in 1970’s. • It was only in late 1990’s that the international business ethics came to the fore especially so after the economic developments that occurred on a global scale. International Business Ethics • In 1990’s many businesses from the developing countries expanded their operations and became multinational. • The transactions between businesses and the governments increased as a result, which gave rise to many practical issues. • Culture and its relativity was one factor more prominent than the others. • Other ethical issues in the context of international business are generally dealt with the laws of the land; although all of them fall within the ambit of international business ethics. International Business Ethics • Globalization diminished the barriers between countries on the globe and also called for universalization of values for trade to occur smoothly. • Universal values were perceived to control the behavior in the commercial space. • This lead to ethical issues in the international business perspective, those that were unknown till date. International Business Ethics • Other theoretical issues arise from the diversity of business ethical traditions in various countries across the globe. • In addition, comparisons made on the basis of corruption rankings of a certain state or on the basis of gross domestic product of a certain economy also lead to ethical issues in the international arena. International Business Ethics • Since religion brings in a wholly different perspective to the way we look upon things; the comparison of ethical traditions from the perspective of the latter also gives birth to ethical problems. • For example, trade in Christian dominated countries is different from the trade in Islamic countries. • Again depending upon how strong or profound the impact of the religion is, business practices are influenced proportionally. International Business Ethics • In the international business arena, ethical problems also arise out mere international business transactions. • Fair trade movement, transfer pricing, bio prospecting and bio piracy are examples of transactions that fall within the ambit of international business ethics. • Similarly, issues like child labor and cultural imperialism are controversial enough to call upon the attention of international business ethics. International Business Ethics • Yet another arena for strong requirement of ethics would be when multinationals bargain to take advantage of international differences; For example when rich nations outsource their services to poor and developing nations at cheaper cost. • Western nations were up till recently outsourcing many of services to third world nations where they could hire manpower for the cheapest prices. • This led to severe competition between developing nations with each one offering cheaper labor than the other. International Business Ethics • Dumping is yet another way by which large companies are trying to kill the domestic players. • Foreign players often sell goods and services at a cheaper price making it hard for the small players to survive the competition. • Consumer durables and FMCG are biggest examples of such practices. The bigger threat here is the resulting monopoly which places the customer in a losing position. • The international trade commission began for its search of its anti dumping laws from the year 2009. International Business Ethics • All these are ways in which business at the international level can lead to ethical dilemmas. • In absence of international business ethics it may become almost impossible to regulate business and create winning situations for people in the market place. http://www.managementstudyguide.com/int ernational-business-ethics.htm Corporate Ethics International § Corporate Ethics International is well known in the North American NGO corporate campaign community. § We are the organization that major foundations have asked to launch campaigns to change the practices of core industries and our staff have the intensive experience of being at the center of campaigns against corporations such as Mitsubishi, The Home Depot, Staples, Wal -Mart, and most recently BP, Shell, Exxon. Corporate Ethics International § CEI founded the Business Ethics Network; a network that is now comprised of more than 150 corporate campaign organizations who lead in the corporate social responsibility movement (CSR). § Nike, Dell, Microsoft, Lowe’s, Victoria Secrets, and many other corporations have been transformed by the members of this network. § BEN is the professional association where organizations can share experiences, find collaborative partners, sharpen campaign skills, discuss emerging issues, and celebrate their victories with the Benny Awards. Corporate Ethics International § CEI was funded to research and organize the International Tar Sands Oil Campaign. § This multi-million dollar, multi-year effort aimed at stopping the expansion of what has been labeled "the most destructive energy project on earth" moved forward by working closely with nearly 100 different organizations in Canada, Europe and the US. Corporate Ethics International § Corporate Ethics International supervised dozens of contract individuals and organizations who support the campaign, and they coordinated strategy, specific sub- campaigns, like Re-Think Alberta or No Keystone XL Pipeline, and a large portion of the fundraising and grants to network members of the campaign. § Tar Sands are the poster child for why the US needs to end its addiction to oil, and this campaign represents the foundation for the movement that will ultimately achieve that goal. Tar Sands Campaign § There are many organizations in the United States, Canada and Europe engaged in the campaign to mitigate the damage and stop the expansion of the tar sands. § Corporate Ethics is one of them. While their individual organizational goals may vary, most of these organizations hope to accelerate the transition to clean and sustainable energy economy by slowing the expansion of the tar sands. Why Alberta’s Tar Sands? § The escalating production and consumption of tar sands oil, along with the threat of dozens of new coal-fired power plants, pose the greatest threats to a clean energy future for North America. § Tar sands oil and coal constitute the dirtiest, most carbon intensive forms of fossil fuel, yet the federal governments of Canada and US continue to promote them and carbon capture and sequestration as the solution to US “energy security.” § Public policy that would bring emissions under control, increase fuel efficiency, and promote development of clean energy technology continues to occupy the second tier of public policy priorities. § We are at a critical crossroad for global warming: unless civil society effectively blocks the road to an even dirtier fossil fuel future, we will not achieve the carbon reductions necessary to stave off global environmental catastrophe. Corporate Ethics International § CEI is an agile organization; we work through powerful networks. § They design, organize, and coordinate some of the largest collaborative campaigns in North America. § This is who they are and they are very proud to work with the thousands of smart, passionate dedicated activists who are changing the nature of business, and hopefully preserving the miracle of creation for future generations. http://corpethics.org/index.php How to Address Differences in Ethical Standards and International Businesses § Ethical decision-making can be more challenging for international businesses than local operations. § Culture-driven codes of ethics vary between countries, making it difficult for managers to adhere to a strict code of ethics in each market. § The textbook ethical dilemma for international businesspeople occurs when a manager must decide whether to commit an act that is unacceptable in the home country, but expected and necessary in the host country. § Because of this, international business owners must know how to address differences in ethical standards around the world. by David Ingram, Demand Media. http://smallbusiness.chron.com/address-differences-ethical-standards- international-businesses-5254.html How to Address Differences in Ethical Standards and International Businesses § Step 1 § Keep the unique ethical climate of each market in mind when crafting your code of ethics to ensure that it is relevant to the international arena. § Make adherence to the code a priority among executives and management to set an example for the rest of the organization. § Post the code of ethics in high-traffic areas at the home office, branch offices and foreign subsidiaries. How to Address Differences in Ethical Standards and International Businesses § Step 1 § Ask managers to justify their ethical decisions in foreign markets according to the code of ethics to ensure that managers take it seriously.. § According to business-ethics.org, it is important to include international employees in the process of creating your ethics program. § This will help to make your ethics programs as relevant as possible in foreign markets How to Address Differences in Ethical Standards and International Businesses § Step 2 § Follow local customs and traditions at your discretion. Decide on a case-by-case basis which local customs to follow and which to avoid when it comes to victimless issues. § Use your code of ethics when dealing with humanitarian and environmental issues, such as child labor or deforestation, and use your discretion in issues such as bribery or wage considerations. § You may, for example, decide to offer cash gifts to government officials in a country where there is no other reasonable way to gain a foothold in the market, but you may decide not to enter a country if raw materials must be gained through suppliers who use indentured labor. How to Address Differences in Ethical Standards and International Businesses § Step 3 § Apply your standards equally in all markets, and among all subsidiaries. Stick to your standards, whatever they are. If you have a policy of following your home country's ethical standards around the world, be prepared to turn down opportunities in markets with unfavorable ethical climates. § Respond courteously and respectfully if you do have to turn down an opportunity. § Do not act superior or derisive when turning down unethical opportunities; simply explain that your company's code of ethics forbids you to engage in that type of behavior, and that you would like to keep the business relationship intact for future opportunities. How to Address Differences in Ethical Standards and International Businesses § Step 3 § If your policy is to take local customs into consideration when making ethical decisions, do not shun a country immediately because of differences from your home country. § Make sure that all managers and decision-makers understand your commitment to ethical standards. How to Address Differences in Ethical Standards and International Businesses § Step 4 § Make company-wide ethics training a regular activity, in addition to administering comprehensive ethics training programs for new hires. § Use training sessions to highlight actual areas of concern in your organization, citing specific examples as often as possible.
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