Cross cultural management 3e by cullen ch15

Learning Objectives• Know the definitions of international business ethics and social responsibility • Understand some basic principles of ethical philosophy relevant to business ethics

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Learning Objectives

• Know the definitions of international business ethics

and social responsibility

• Understand some basic principles of ethical philosophy relevant to business ethics

• Understand how social institutions and national culture affect ethical decision making and management

• Know the definitions of international business ethics

and social responsibility

• Understand some basic principles of ethical philosophy relevant to business ethics

• Understand how social institutions and national culture affect ethical decision making and management

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• Understand how international agreements affect

international business ethics

• Understand the implications of using ethical relativism and ethical universalism

• Identify the basic principles and consequences of the

U.S Foreign Corrupt Practices Act

• Understand how international agreements affect

international business ethics

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Learning Objectives

• Understand the differences among economic, legal,

and ethical analyses of business problems

• Develop skills in international decision making with

ethical consequences

• Understand the differences among economic, legal,

and ethical analyses of business problems

• Develop skills in international decision making with

ethical consequences

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International Business Ethics

• Ethics deal with the “oughts” of life

• International business ethics: unique ethical problems faced by managers operating across national

boundaries

• More complex as different cultures do not agree on what one “ought” to do

• Ethics deal with the “oughts” of life

• International business ethics: unique ethical problems faced by managers operating across national

boundaries

• More complex as different cultures do not agree on what one “ought” to do

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Social Responsibility

• Idea that businesses have a responsibility to society

beyond making profits

• Closely related to business ethics

• Must take into account the welfare of other

constituents in addition to stockholders

• Idea that businesses have a responsibility to society

beyond making profits

• Closely related to business ethics

• Must take into account the welfare of other

constituents in addition to stockholders

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Exhibit 15.1: Areas of Ethical and

Social Responsibility Concerns for the

Multinational Company

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Exhibit 15.1: Areas of Ethical and

Social Responsibility Concerns for the

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Ethical Philosophy

• Two ways to consider ethical decision making

• Traditional ethical philosophy

• Contemporary philosophy

• Two ways to consider ethical decision making

• Traditional ethical philosophy

• Contemporary philosophy

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Basic Systems of Ethical Reasoning

• Teleological ethical theory

• Morality of an act or practice comes from its

consequences

• Utilitarianism: what is good and moral comes from

acts that produce the greatest good for the greatest number of people

• Teleological ethical theory

• Morality of an act or practice comes from its

consequences

• Utilitarianism: what is good and moral comes from

acts that produce the greatest good for the greatest number of people

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Deontological Ethical Theory

• Actions have a good or bad morality regardless of the outcomes they produce

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Moral Languages

• Basic ways that people use to make ethical decisions

and to explain their ethical choices

• Six basic ethical languages

• Virtue and vice

• Basic ways that people use to make ethical decisions

and to explain their ethical choices

• Six basic ethical languages

• Virtue and vice

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National Differences in Business Ethics and Social Responsibility

• National culture and social institutions affect ethical

behavior and social responsibility

• National culture and social institutions affect ethical

behavior and social responsibility

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Messner and Rosenfeld

• Argue that specific national culture and social

institutions affect ethics

• National cultures: high achievement, high

individualism, high universalism, high materialism

are all related to higher deviance

• Social institutions: high industrialization, capitalist

systems, lower family breakdown and highly

accessible educational systems should all

encourage deviance

• Argue that specific national culture and social

institutions affect ethics

• National cultures: high achievement, high

individualism, high universalism, high materialism

are all related to higher deviance

• Social institutions: high industrialization, capitalist

systems, lower family breakdown and highly

accessible educational systems should all

encourage deviance

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Exhibit 15.2: A Model of Institutional

and Cultural Effects on Business

Ethics Issues and Management

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Exhibit 15.3: Comparison of Key

Ethical Issues Identified by Senior U.S

and EU Managers

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Exhibit 15.4: Management of Key

Ethical Issues in U.S and European

Companies

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Exhibit 15.5: National Differences in

Beliefs Regarding Ethical Codes

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Questionable Payments and U.S Foreign Practices Act

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Exhibit 15.6: Bribe Payers Index

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U.S Foreign Corrupt Practices Act (FCPA)

• Forbids illegal payments or gifts to officials of foreign

governments for the sake of getting or retaining

business

• Forbids illegal payments or gifts to officials of foreign

governments for the sake of getting or retaining

business

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Exhibit 15.7: Excerpts from the Foreign

Corrupt Practices Act and Fines

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U.S Foreign Corrupt Practices Act (FCPA)

• Does not prohibit some forms of payments that may

occur in international business

• Payments made under duress to avoid injury or

violence are acceptable

• Tricky component is the reason-to-know component

• Firms are liable for bribes even if bribes are made

by agents of company

• Does not prohibit some forms of payments that may

occur in international business

• Payments made under duress to avoid injury or

violence are acceptable

• Tricky component is the reason-to-know component

• Firms are liable for bribes even if bribes are made

by agents of company

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Ethics Gap

• More coercive and normative pressure for U.S

businesses to follow ethical standards

• Recent evidence suggests that FCPA has not

necessarily caused U.S business to fall behind

• More coercive and normative pressure for U.S

businesses to follow ethical standards

• Recent evidence suggests that FCPA has not

necessarily caused U.S business to fall behind

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Toward Transnational Ethics

• Ethical convergence: growing pressure to follow the

same rules in managing ethical behavior and social

responsibility

• Ethical convergence: growing pressure to follow the

same rules in managing ethical behavior and social

responsibility

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Four Basic Reasons for Ethical Convergence

1 The growth of international trade and trading blocks

2 Increased pressures to imitate business practices

3 Varied cultural background employees require

common standards

4 An increasing number of business watchdogs

1 The growth of international trade and trading blocks

2 Increased pressures to imitate business practices

3 Varied cultural background employees require

common standards

4 An increasing number of business watchdogs

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International Ethics Guideline Sources

• The United Nations Universal Declaration of Human

Rights

• The United Nations Code of Conduct on Transnational Corporations

• The European Convention on Human Rights

• The International Chamber of Commerce Guidelines

for International Investment

• The United Nations Universal Declaration of Human

Rights

• The United Nations Code of Conduct on Transnational Corporations

• The European Convention on Human Rights

• The International Chamber of Commerce Guidelines

for International Investment

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International Ethics Guideline Sources

• The Organization for Economic Cooperation and

Development Guidelines for Multinational Enterprises

• The Helsinki Final Act

• The International Labor Office Tripartite Declarations of Principles Concerning Multinational Enterprises and

Social Policy

• The Organization for Economic Cooperation and

Development Guidelines for Multinational Enterprises

• The Helsinki Final Act

• The International Labor Office Tripartite Declarations of Principles Concerning Multinational Enterprises and

Social Policy

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Exhibit 15.8: A Code of Conduct for the

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Two Basic Rationales for the Code of Conduct for the

• However, despite the existence of extensive

agreements, multinationals may not always follow

• However, despite the existence of extensive

agreements, multinationals may not always follow

ethical principles

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Why Multinationals Might Not Follow Ethical Principles

• Governments make agreements

• The agreements have only voluntary compliance

• Not all governments subscribe to the agreements

• Each agreement is an incomplete moral guide to the

company

• The agreements have only voluntary compliance

• Not all governments subscribe to the agreements

• Each agreement is an incomplete moral guide to the

company

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“Best Practices” Steps

• Leading by example

• Making ethics part of the corporate culture

• Involving employees at all levels

• Setting and monitoring goals

• Leading by example

• Making ethics part of the corporate culture

• Involving employees at all levels

• Setting and monitoring goals

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“Best Practices” Steps

• Effective integration in business processes

• Open discussion of ethics and other ethical issues

• Effective integration in business processes

• Open discussion of ethics and other ethical issues

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The Ethical Dilemma in Multinational Management:

How Will You Decide?

• Ethical relativism vs Ethical universalism

• Ethical relativism: each society’s view of ethics must

be considered legitimate and ethical

• Ethical universalism: basic moral principles that

transcend cultural and national boundaries

• Difficulty in following either ethical relativism or

universalism

• Ethical relativism vs Ethical universalism

• Ethical relativism: each society’s view of ethics must

be considered legitimate and ethical

• Ethical universalism: basic moral principles that

transcend cultural and national boundaries

• Difficulty in following either ethical relativism or

universalism

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Convenient Relativism

• Companies have a higher responsibility than ethical

relativism

• However, some companies use the logic of ethical

relativism to behave any way they please

• Use the excuse of differences in cultures

• Companies have a higher responsibility than ethical

relativism

• However, some companies use the logic of ethical

relativism to behave any way they please

• Use the excuse of differences in cultures

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Individual Ethical Decision Making for the Multinational Manager

• Forms of analyses

• Economic analysis: focuses on what is the best

decision for a company’s profits

• Legal analysis: focuses on only meeting legal

requirements of host and parent countries

• Ethical analysis: goes beyond focusing on profit

goals and legal regulations

• Forms of analyses

• Economic analysis: focuses on what is the best

decision for a company’s profits

• Legal analysis: focuses on only meeting legal

requirements of host and parent countries

• Ethical analysis: goes beyond focusing on profit

goals and legal regulations

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Exhibit 15.9: Decision Points of Ethical

Decision Making in Multinational

Management

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Exhibit 15.9: Decision Points of Ethical

Decision Making in Multinational

Management

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Individual Ethical Decision Making

• Purely ethical issues must be weighed against

economic and legal analyses

• However, multinational managers are guests in other nations

• Ethical decision making must go beyond legal

constraints

• Purely ethical issues must be weighed against

economic and legal analyses

• However, multinational managers are guests in other

nations

• Ethical decision making must go beyond legal

constraints

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Individual Ethical Decision Making

• There is no single accepted ethical theory that

managers can use

• There are generally accepted theories that can be

used as guides, however

• Such ethical analyses can help raise managers’

awareness of ethical issues