Chapter 5: Ethics and Social Responsibility in International Business

1. Chapter 5:Ethics and Social Responsibility in International Business International Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall

2. Chapter Objectives_1 • Describe the nature of ethics • Discuss ethics in cross-cultural and international contexts • Identify the key elements in managing ethical behavior across borders • Discuss social responsibility in cross-cultural and international contexts ©2004 Prentice Hall

3. Chapter Objectives_2 • Identify and summarize the basic areas of social responsibility • Discuss how organizations manage social responsibility across borders • Identify and summarize the key regulations governing international ethics and social responsibility ©2004 Prentice Hall

4. Exporting Jobs or Abusing People? • “Made in USA” – American Samoa and Saipan • NAFTA – low wages in Mexico • Walmart & More • South African miners • Canada and drug prices ©2004 Prentice Hall

5. Ethical Behavior Ethical behavior usually refers to behavior that conforms to generally accepted social norms. ©2004 Prentice Hall

6. Ethical Generalizations • Individuals have their own personal belief systems • People from the same cultural context will tend to hold similar beliefs • Behaviors can be rationalized • Circumstances affect adherence to belief systems • National culture is intertwined with ethics ©2004 Prentice Hall

7. Figure 5.1 Ethics in a Cross-Cultural Context Behavior of Organization Toward Employees Behavior of Employees Toward Organization Cultural Context Behavior of Employees and Organization Toward Other Economic Agents ©2004 Prentice Hall

8. Spectrum of Effects Free Trade No Trade • Fewer jobs in developing countries • Higher prices • Fewer products • Jobs migrate • Low wages • Poor conditions Trade with Social Responsibility How? Code of Ethics ©2004 Prentice Hall

9. Guidelines and Codes of Ethics • Written statements of the values and ethical standards that guide the firm’s actions • Examples • Johnson & Johnson -- IBEI • General Mills -- Lilly ©2004 Prentice Hall

10. What do you do… when the country in which you are doing business does not have a code of ethics compatible with your own? Gao Feng in China Case. ©2004 Prentice Hall

11. Acceptable Russia China Taiwan South Korea Unacceptable Australia Sweden Switzerland Austria Acceptability of Bribery The U.S., Japan, and Italy fell between the two extremes. ©2004 Prentice Hall

12. Areas of Social Responsibility • Organizational stakeholders • Natural environment • General social welfare ©2004 Prentice Hall

13. Corporate Excellence • L.L. Bean • Toyota • Lands’ End • Dell Computer • DaimlerChrysler • BP ©2004 Prentice Hall

14. A joint venture between Anglo-American and the Zambian government seeks to mine copper while minimizing harm to the environment ©2004 Prentice Hall

15. Map 5.1 Social Responsibility Hot Spots ©2004 Prentice Hall

16. Figure 5.3 Approaches to Social Responsibility Most Responsible Least Responsible Obstructionist Defensive Accommodative Proactive ©2004 Prentice Hall

17. Obstructionist Stance • Do as little as possible to address social or environmental problems • Deny or avoid responsibility • Examples • Astra • Nestle • Danone ©2004 Prentice Hall

18. Defensive Stance • Do what is required legally, but nothing more • Corporate responsibility is to generate profits • Example • Philip Morris ©2004 Prentice Hall

19. Accommodative Stance • Meet ethical and legal requirements and more • Agree to participate in social programs • Match contributions by employees • Respond to requests from non-profits • No proactive behavior to seek such opportunities ©2004 Prentice Hall

20. Proactive Stance • Strong support of social responsibility • Viewed as citizens of society • Seek opportunities to contribute • Examples • McDonald’s • The Body Shop • Ben & Jerry’s ©2004 Prentice Hall

21. Managing Social Responsibility Planning Decision Making Consideration Evaluation ©2004 Prentice Hall

22. Implementing Social Responsibility • Legal Compliance • Ethical Compliance • Philanthropic Giving ©2004 Prentice Hall

23. Informal Dimensions of Social Responsibility • Leadership • Organizational culture • Whistle-blowing ©2004 Prentice Hall

24. Corporate Social Audit • Tool for the evaluation of social responsibility effectiveness • Formal and thorough analysis • Conducted by task force ©2004 Prentice Hall

25. Steps in Corporate Social Audit Define social goals Analyze resources devoted to each goal Determine degree of achievement for each goal Make recommendations ©2004 Prentice Hall

26. Regulating International Ethics and Social Responsibility • Foreign Corrupt Practices Act (FCPA) • Alien Tort Claims Act • Anti-Bribery Convention of the Organization for Economic Cooperation and Development • International Labor Organization (ILO) ©2004 Prentice Hall