Impact of Globalization on Business Ethics - PowerPoint

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					 BA 385:       What MNCs Owe Society

Concepts of Global Business


Eras of Internationalization
   1945-55             The Post-World War II Decade

   A period of reconstruction dominated by the United States

   1955-70                    The Growth Years
  Japanese and European firms recover and the first U.S.-based
  international firms become multinational

   1970-80                   The Troubled Years
  A U.S. balance of payments deficit and worldwide oil crisis
  have a negative impact
Eras of Internationalization
  1980-2001             The New International Order
  Though the U.S. role in the world economy is diminished,
  it is pressured to be a world leader in the ethics arena

  1999-now                  The New, New World
  A backlash against globalism began. In the early 2000’s the US
  lost the leadership role in ethics due to war against Iraq and
  scandalous business behavior.
Pros and Cons of Globalization
                           Globalists                   Antiglobalists
I Consumers        Free trade promotes lower      Benefits the wealth at the
                   costs, etc.                    expense of the poor
  Employees        Faster economic growth         Places profits above people
P                  promotes
                   Higher wages, etc.
  Environment      Creates resources needed to    Exploits and destroys
C                  address the issue              ecosystems
    Developing     Promotes national economic     World financial institutions
                   development, higher standard   conspire to keep poor nations
                   of living, etc.                in debt
    Human Rights Creates cultures that support    Corporations pursing profits
                   law and free expression        ignore human rights violations
MNC’s and the Global
Changed scope and nature of U.S.-based multinationals
Underlying challenges of operating in new world of business
Corporate legitimacy
MNC and host country philosophy
MNC and host country challenges
      Cultural differences
      Business and government differences
      Management and control of global operations
      Exploration of global markets
  The Dilemma of the
  Multinational Corporation
     Home Country                                Host Country
 Stakeholder Pressures                       Stakeholder Pressures

Standards                The Multinational                 Standards
Practices                  Corporation                      Practices
Ethics                                                         Ethics
Laws                                                            Laws
Culture                                                       Culture
Customs                                                     Customs
System of                                                   System of
Government                                                Government
Socioeconomic                                          Socioeconomic
System                                                        System
   Ethical Issues in Global
                           Product safety

                             Plant safety

                       Advertising practices

                  Human resource management

                     Environmental problems
Social Accountability 8000
Child labor
Forced labor
Health and safety
Freedom of association and
   Right to Collective Bargaining
Working Hours
Management Systems
 Arguments For and Against
                            Against Bribery
    For Bribery
Necessary to do
business               Compromise personal beliefs
Common practice        Promotes government
Accepted practice      corruption
Form of commission,    Once started, never stops
tax, or compensation   Prohibits taking a stand for
                       honesty, morality, ethics
                       Benefits recipient only
                       Creates dependence on
                       Deceives stockholders
Trends Against Bribery
       Foreign Corrupt Practices Act

        Transparency International

        OECD Antibribery Initiatives

       Individual Country Initiatives
Bribes versus Grease Payments
            Relatively small sums of money given
  Grease    for the purpose of getting minor officials to:
            • Do what they are supposed to be doing
 Payments   • Do what they are supposed to be doing faster
            • Do what they are supposed to be doing better

            Relatively large amounts of money given far the
            purpose of influencing officials to make decisions
  Bribes    or take actions that they otherwise might not
            take. If the officials considered the merits of the
            situation only, they might take same other action.
Improving Global Business
Ethics     The Dilemma
            of the Multinational Corporation

                        The Multinational
    Home Country                                Host Country
Stakeholder Pressures                       Stakeholder Pressures
Ethical Choices in Home versus
Host Country Situations
                            International Law
                         Global Codes of Conduct

     ETHICAL                                        CULTURAL
   IMPERIALISM                                      RELATIVISM
       Home                    MIDDLE                  Host
      Country                  GROUND                 Country

  • Cultural standards                             • Cultural standards
                           Mix of Home and Host
  • Ethical/moral           Country Standards      • Ethical/moral
    standards of home                                standards of host
    country                                          country

                             Application of
                            Ethical Principles
Ethical Choices in Home versus
Host Country Situations
       Questions to be Resolved by Management:
            Which ethical standards will be used?
 Which ethical standards will transcend national boundaries?
        Worker and product safety? Fair treatment?
     Health? Discrimination? Freedom? Minimum pay?
        Consumer rights? Environmental Protection?

  What constitutes moral minimums in each category?
Actions for Improving
International Business Ethics

Create global codes of conduct
   Corporate global codes and standards
   International organization global codes
     and standards
Integrate ethics into a global strategy
Suspend activities in host country
Create ethical impact statements
Global Standards from
International Organizations (see p. 324 in text)
      Caux Principles

      Global Reporting Initiative

      Global Sullivan Principles

      OECD Guidelines for Multinational Enterprises

      Principles for Global Corporate Responsibility:

      UN Global Compact
Fundamental International
                            The right to physical
The right to physical
                            The right to freedom of
The right to ownership of
                                speech and
The right to freedom
                            The right to minimal
    from torture
The right to a fair trial
                            The right to political
The right to                    participation
                            The right to subsistence
Seven Moral Guidelines for
Inflict no intentional or   Pay their fair share of
direct harm                 taxes
Produce more good           Respect local cultural
than bad for the host       beliefs that do not
                            violate moral norms
Contribute to host
country’s development       Cooperate with the
Respect the human           government to develop
rights of their             and enforce background
employees                   institutions

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