Answer the following questions: (long answers)
1-What are the common unethical issues faced by international
companies?
2-Discuss the international manager techniques for making ethical
decisions?
Chapter 5
Ethics, Corporate Social
Responsibility, and Sustainability
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Learning Objectives
LO 5-1 Understand the ethical issues faced by
international businesses.
LO 5-2 Recognize an ethical dilemma.
LO 5-3 Identify the causes of unethical behavior by
managers.
LO 5-4 Describe the different philosophical approaches to
ethics.
LO 5-5 Explain how managers can incorporate ethical
considerations into their decision making.
©McGraw-Hill Education.
Introduction
Ethics
• Accepted principles of right or wrong that govern
• The conduct of a person
• The members of a profession
• The actions of an organization
• Business ethics
• Ethical strategy
©McGraw-Hill Education.
Ethics and International Business 1 of 9
Learning Objective 5-1 Understand the ethical issues faced by international
business.
The most common ethical issues in international
business involve
• Employment practices
• Human rights
• Environmental regulations
• Corruption
• Moral obligations of multination corporations
©McGraw-Hill Education.
Ethics and International Business 2 of 9
Employment Practices
• Suppose work conditions in a host nation are inferior
to those in a multinational’s home nation
• Which standards should apply?
• Home or host nation or something between?
• Nike case
• Nike did not break the law, but the case raised questions
regarding the ethics of using sweatshop labor
©McGraw-Hill Education.
Ethics and International Business 3 of 9
Employment Practices continued
• To guard against ethical abuses, firms should
• Establish minimal acceptable standards that safeguard the
basic rights and dignity of employees
• Audit foreign subsidies and contractors regularly to ensure
standards are being met
• Take corrective action as necessary
©McGraw-Hill Education.
Ethics and International Business 4 of 9
Human Rights
• Basic human rights found in developed nations are
not universally accepted worldwide
• Freedom of association
• Freedom of speech
• Freedom of assembly
• Freedom of movement
• Freedom from political repression
©McGraw-Hill Education.
Ethics and International Business 5 of 9
Human Rights continued
• Apartheid system in South Africa
• Mandated segregation and prohibited blacks from managing
whites
• Some businesses from developed countries questioned the
ethics of doing business in the country
• United Nation’s Sustainable Development Goals 2030
• General Motors case
• Sullivan principles
• Many companies divested operations in South Africa
• Economic sanctions from the United States
©McGraw-Hill Education.
Ethics and International Business 6 of 9
Human Rights continued
• Repressive regimes still exist in the world
• Is it ethical for multinational corporations to do business with
repressive regimes?
• Does multinational investment bring change to these regimes
and foster economic growth and raise living standards?
• Are some regimes so repressive that investment cannot be
justified on ethical grounds?
©McGraw-Hill Education.
Environmental Pollution
The Chinese capital of Beijing is considered one of the
worst cities in the world for smog, with residents often
forced to wear masks outdoors.
©McGraw-Hill Education.
©VCG/Visual China Group/Getty Images
Ethics and International Business 7 of 9
Environmental Pollution
• Problems when environmental regulations differ
between host nations and home nation
• Tragedy of the commons
• Global tragedy of the commons
• Is it ethical for a company to escape regulations by
moving production to a nation with lax regulations?
©McGraw-Hill Education.
Ethics and International Business 8 of 9
Corruption
• Corruption has been a problem in almost every
society in history and continues to be one today
• U.S. Foreign Corrupt Practices Act (FCPA)
• Amended to allow for “facilitating payments”
• The Convention on Combating Bribery of Foreign
Public Official in International Business
Transactions
©McGraw-Hill Education.
Ethics and International Business 9 of 9
Corruption continued
• Ethical implications of corruption
• Are bribes the price to pay to do a greater good?
• Do bribes reduce businesses’ incentive to invest?
• Some multinationals adopting a zero-tolerance policy
• BP
• Dow Corning
©McGraw-Hill Education.
Ethical Dilemmas
Learning Objective 5-2 Recognize an ethical dilemma.
Ethical obligations of multinational corporations are
not always clear-cut
• How should corporations handle ethical dilemmas
regarding employment, human rights, corruption, and
environmental pollution?
• Pressure from customers and stakeholders to be
transparent in ethical decision making
• No universal worldwide agreement about what
constitutes accepted ethical principles
• This is the nature of ethical dilemmas
©McGraw-Hill Education.
Figure 5.1 Determinants of Ethical Behavior
Jump to long image description in appendix
©McGraw-Hill Education.
Roots of Unethical Behavior 1 of 5
Learning Objective 5-3 Identify the causes of unethical behavior by managers.
Why do managers behave unethically?
• Six determinants of ethical behavior
• Personal ethics
• Decision-making processes
• Organizational culture
• Unrealistic performance goals
• Leadership
• Societal culture
©McGraw-Hill Education.
Roots of Unethical Behavior 2 of 5
Personal Ethics
• Formation of ethics is guided by our parents, our
schools, our religion, and the media
• Expatriate managers may face pressure to violate
their personal ethics because they are away from
their ordinary social context and culture
• Parent company may pressure managers to meet
unrealistic goals that can only be fulfilled by acting
unethically
©McGraw-Hill Education.
Roots of Unethical Behavior 3 of 5
Decision-Making Processes
• Businesspeople may act unethically when they fail to
ask “Is this decision or action ethical?”
• Problems arise in processes that do not incorporate
ethical considerations into business decision making
• Need to better understand how individuals make
decisions that are ethical or unethical in an
organizational environment
©McGraw-Hill Education.
Roots of Unethical Behavior 4 of 5
Organizational Culture
• Culture in some organizations does not encourage
people to think through ethical consequences of
decisions
Unrealistic Performance Goals
• Pressure from parent company to meet unrealistic
performance goals by cutting corners or acting
unethically
©McGraw-Hill Education.
Roots of Unethical Behavior 5 of 5
Leadership
• Helps to establish the culture of an organization and
set the examples that others follow
• Employees often take their cue from business leaders
Societal Culture
• Cultures that emphasize individualism and uncertainty
avoidance are more likely to stress ethical behavior
than cultures where masculinity and power distance
are emphasized
©McGraw-Hill Education.
Philosophical Approaches to Ethics 1 of 7
Learning Objective 5-4 Describe the different philosophical approaches to
ethics.
Straw Men
• Offer inappropriate guidelines for ethical decision
making
• The Friedman Doctrine – “the social responsibility of
business is to increase profits,” so long as the company
stays within the rules of law
• Cultural relativism – ethics are a reflection of culture
• When in Rome, do as the Romans
©McGraw-Hill Education.
Philosophical Approaches to Ethics 2 of 7
Straw Men continued

Righteous moralist―home-country standards of ethics
should be followed in foreign countries

Typically associated with managers from developed nations

Naïve immoralist―if a manager of a multinational sees
that firms from other nations are not following ethical
norms in a host nation, that manager should not either
©McGraw-Hill Education.
Philosophical Approaches to Ethics 3 of 7
Utilitarian and Kantian Ethics
• Utilitarian approaches to ethics
• Philosophers David Hume, Jeremy Bentham, and John
Stuart Mill
• Actions are desirable if they lead to the best possible balance
of good consequences over bad consequences
• Best decisions are those that produce the greatest good for
the greatest number of people
• Drawbacks
• Difficult to measure benefits, costs, and risks of an action
• It fails to consider justice
©McGraw-Hill Education.
Philosophical Approaches to Ethics 4 of 7
Utilitarian and Kantian Ethics continued
• Kantian ethics
• Based on the philosophy of Immanuel Kant
• People should be treated as ends and never as purely
means to the ends of others
• People have dignity and need to be respected
• Contemporary moral philosophers view Kantian ethics as
incomplete
• System has no place for moral sentiments such as
sympathy or caring
©McGraw-Hill Education.
Philosophical Approaches to Ethics 5 of 7
Rights Theories
• Rights establish a minimum level of morally
acceptable behavior
• Moral theorists argue that fundamental human rights form the
basis for a moral compass that managers can use in ethical
decision making
• Universal Declaration of Human Rights
• Article 1
• Article 23
©McGraw-Hill Education.
Philosophical Approaches to Ethics 6 of 7
Rights Theories continued
• Along with rights come obligations
• Article 29 of the Universal Declaration of Human Rights
• Obligations fall on more than one class of moral agents – any
person or institution that is capable of moral action
• A government
• A corporation
©McGraw-Hill Education.
Philosophical Approaches to Ethics 7 of 7
Justice Theories
• Focus on the attainment of a just distribution of
economic goods and services
• John Rawls argued that all economic goods and services
should be distributed equally except when an unequal
distribution would work to everyone’s advantage
• Veil of ignorance
• Difference principle
©McGraw-Hill Education.
Making Ethical Decisions Internationally 1 of 9
Learning Objective 5-5 Explain how managers can incorporate ethical
considerations into their decision making.
How can managers make ethical decisions?
1. Hire and promote people with a well-grounded
sense of personal ethics
©McGraw-Hill Education.

Refrain from promoting individuals who have acted
unethically

Try to hire only people with strong ethics

Prospective employees should find out as much as they
can about the ethical climate in an organization prior to
taking a position
Making Ethical Decisions Internationally 2 of 9
How can managers make ethical decisions?
continued
2. Build an organizational culture that places a high
value on ethical behavior
©McGraw-Hill Education.

Articulate values that place a strong emphasis on ethical
behavior

Emphasize the importance of a code of ethics

Implement a system of incentives and rewards that recognize
people who engage in ethical behavior and sanction those
who do not
Making Ethical Decisions Internationally 3 of 9
How can managers make ethical decisions?
continued
3. Put decision-making processes in place that require
people to consider the ethical dimension of business
decisions
©McGraw-Hill Education.

Does the decision fall within the accepted values of
standards that typically apply in the organizational
environment?

Is there a willingness to see the decision communicated to
all stakeholders affected by it?

Would people close to me (family members, friends,
colleagues) approve of the decision?
Making Ethical Decisions Internationally 4 of 9
How can managers make ethical decisions?
continued
• Managers can also use a five-step process to think
through ethical problems


©McGraw-Hill Education.
Step 1: Identify which stakeholders a decision would affect
and in what ways.

Internal stakeholders

External stakeholders
Stakeholder analysis involves moral imagination – standing in
the shoes of the stakeholder and asking how a proposed
decision might impact that stakeholder
Making Ethical Decisions Internationally 5 of 9
How can managers make ethical decisions?
continued
• Managers can also use a five-step process to think
through ethical problems continued
• Step 2: Determine whether a proposed decision would
violate the fundamental rights of any stakeholders
• Step 3: Establish moral intent – place moral concerns
ahead of other concerns in cases where either the
fundamental rights of stakeholders or key moral
principles have been violated
• Step 4: Engage in ethical behavior
• Step 5: Audit decisions to make sure they are consistent
with ethical principles
©McGraw-Hill Education.
Making Ethical Decisions Internationally 6 of 9
How can managers make ethical decisions?
continued
4. Institute ethical officers to
©McGraw-Hill Education.

Assess the needs and risks that an ethics program must
address

Develop and distribute a code of ethics

Conduct training programs for employees

Establish and maintain confidentiality of employees

Comply with government laws and regulations

Monitor and audit ethical conduct

Take action, where appropriate

Periodically reviewing and updating the code of ethics
Making Ethical Decisions Internationally 7 of 9
How can managers make ethical decisions?
continued
5. Develop moral courage
©McGraw-Hill Education.

Enables managers to walk away from a decision that is
profitable but unethical

Gives an employee the strength to say no to a superior who
instructs employee to pursue actions that are unethical

Gives employees the integrity to go public to the media and
blow the whistle on persistent unethical behavior in a
company
Making Ethical Decisions Internationally 8 of 9
How can managers make ethical decisions?
continued
6. Make corporate social responsibility a cornerstone
enterprise policy
©McGraw-Hill Education.

Advocates argue that businesses need to recognize their
noblesse oblige and give something back to the societies that
have made their success possible.

Power can be used in a positive way to increase social
welfare, which is ethical, or used in a manner that is ethically
and morally suspect.
Making Ethical Decisions Internationally 9 of 9
How can managers make ethical decisions?
continued
7. Pursue sustainable strategies
©McGraw-Hill Education.

Core idea is that an organization’s actions do not exert a
negative impact on the ability of future generations to meet
their own economic needs

Actions impart long-run economic and social benefits on
stakeholders
Appendix of Image Long
Descriptions
©McGraw-Hill Education.
Appendix 1 Figure 5.1 Determinants of
Ethical Behavior
The six determinants are: personal ethics, decision-making
processes, organizational culture, unrealistic performance
goals, leadership, and societal culture.
Return to original slide
©McGraw-Hill Education.

Purchase answer to see full
attachment




Why Choose Us

  • 100% non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How it Works

  • Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.