copyright © 2015 pearson education, inc.11-1 international business environments & operations...

Copyright © 2015 Pearson Education, Inc. 11-1

International Business

Environments & Operations

15e

Daniels ● Radebaugh ● Sullivan


Chapter 11

Globalization and Society


Learning Objectives Examine the broad foundations of ethical

behavior Demonstrate the cultural and legal foundations of

ethical behavior Discuss the importance of social responsibility

when operating internationally, especially in the areas of sustainability

Discuss key issues in the social activities and consequences of globalized business

Examine corporate responses to globalization in the form of codes of conduct, among other things


Foundations of Ethical Behavior

Individuals and companies must behave responsibly, based on certain ethical codes of conduct (what is right or wrong)

Our moral reasoning guiding our decisions and actions can be…. Teleological-decisions are based on the

consequences of the action Utilitarianism-an action is right if produces

greatest amount of good Deontological-moral reasoning occurs per se,

independently, consequence is not an issue


Cultural Foundations of Ethical Behavior

Cultural relativism holds that ethical truths depend upon the groups subscribing to them; thus, intervention by outsiders is unethical.

Cultural normativism holds that there are universal standards of behavior that all cultures should follow


Legal Foundations of Ethical Behavior

Law is a good basis for ethical behavior. It is an embodiment of local cultural values. But everything that is legal is not necessarily ethical.

Why and when the laws of the land can be perceived as inadequate? Arguments for and against. Definition-moral concepts may not defined

properly Time-it takes time to develop a law Application-how court interprets law Bias-could be majority biased


Extraterritoriality Extraterritoriality

imposing domestic legal and ethical practices on the foreign subsidiaries of companies headquartered in their jurisdictions

Foreign Corrupt Practices Act 1977


Corruption and Bribery Corruption

the misuse of entrusted power for private gain Bribes

payments or promises to pay cash or anything of value. Occurs to obtain government contracts or to get public officials to do what they should be doing anyway

Impact of corruption on economic development, wellbeing of the people, business performance


Corruption and BriberyWhere Bribes Are (and Are Not) Business As Usual


Corruption and Bribery International accords to stop bribery

OECD Anti-Bribery Convention ICC code of rules UN Convention against Corruption

Regional initiatives include EU efforts U.S. Foreign Corrupt Practices Act and

Sarbanes-Oxley legislation Industry initiatives include

2005 World Economic Forum zero tolerance pact


Ethics and Environment Companies compromise the environment

contamination of air, soil, or water during manufacturing

producing products that emit fossil-fuel contaminants

Effect of natural resource extraction renewable versus non-renewable

Sustainability-meeting the needs of the present without compromising the ability of future generations to meet their own needs


Global Warming, Kyoto Protocol

Kyoto Protocol (1997) signed to require countries to cut greenhouse

gas emissions to 5.2% below 1990 levels between 2008 and 2012

Some countries have adopted stricter requirements others have not ratified the agreement

including the U.S., China, India


Ethical Dimensions of Labor Conditions

Labor issues include: Wages, Child labor, Working conditions, Working hours, Freedom of association

Child labor – ILO estimates 250 million children aged 5–17 years work

Some companies avoid operating in countries where child labor is common. IKEA has responsible policies.

Some companies refuse to hire individuals who want to work long hours.


Corporate Codes of Ethics

How should a company behave? The UN Global Compact establishes

guidelines for appropriate behavior in human rights labor the environment anti-corruption

Social Media is playing a constructive role in guiding the corporations

The Pyramid of Corporate Social Responsibility

Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” adaptation of Figure 3, p. 42. Reprinted from Business Horizons, July/Aug. 1991. Copyright © 1991 by the Foundation

for the School of Business at Indiana University. Reprinted with permission.


Motivations for Corporate Responsibility

Unethical and irresponsible behavior could result in legal sanctions result in consumer boycotts lower employee morale cost sales because of bad publicity

A code of conduct sets global policy that must be complied with communicates the code to employees,

suppliers, and subcontractors ensures that policies are carried out reports results to external stakeholders

17

Chapter 11: Discussion Questions1. Discuss the three approaches in moral

reasoning. Which appeals to you most and why? 2. Define cultural relativism and normativism.

Explain how the concept can be used by the multinationals in a foreign country.

3. What is corruption? What can we do to combat corruption? Explain.

4. Discuss the legal and ethical dimension of Corporate Social Responsibility in a globalized world.


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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