International Business Ethics by hcj


									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
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
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

§   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.
  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.
 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, 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
§     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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