Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 5-1 International Business Environments & Operations 14e Daniels ● Radebaugh ● Sullivan

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

5-1

International Business

Environments & Operations

14e

Daniels ● Radebaugh ● Sullivan


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Chapter 5

Globalization and Society


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Learning Objectives To examine the broad foundation of ethical

behavior To demonstrate the cultural and legal foundations

of ethical behavior To discuss the importance of social responsibility

when operating internationally, especially in the areas of sustainability

To discuss some key issues in the social activities and consequences of globalized business

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


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Introduction Companies must satisfy stakeholders

Shareholders Employees Customers Society


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Foundations of Ethical Behavior

Learning Objective 1: To examine the broad foundation of ethical behavior.


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Three levels of moral development1. Preconventional2. Conventional3. Postconventional, autonomous,

principled


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Teleological approach decisions are based on the

consequences of the action Utilitarianism

an action is right if it produces the greatest amount of good

Deontological approach moral judgments are made and moral

reasoning occurs independently of consequences


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Why Do Companies Care? Ethical behavior can help a company

develop a competitive advantage avoid being perceived as irresponsible


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The Cultural and Legal Foundations of Ethical

BehaviorLearning Objective 2: To demonstrate the cultural and legal foundations of ethical behavior


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Relativism versus Normativism

Relativism ethical truths depend on the groups holding

them Normativism

there are universal standards of behavior that all cultures should follow


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Legal Justification: Pro and Con

The law is inadequate because Some things that are unethical are not illegal Laws are slow to develop in emerging areas of

concern Laws may be based on imprecisely defined

moral concepts The law often needs to undergo scrutiny by the

courts The law is not very efficient


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Legal Justification: Pro and Con

Legal justification is appropriate because The law embodies many of a country’s moral

principles The law provides a clearly defined set of rules The law contains enforceable rules that apply

to everyone The law reflects careful and wide-ranging

discussions


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Extraterritoriality Extraterritoriality

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


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Ethics and Corporate Bribery

Regardless of the reasons for not using the law as a starting point for ethical behavior, it remains a good starting point

Countries looking for solutions to common problems take similar legal steps Consider

activities that affect the well-being of people activities that affect the environment


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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 to get public officials to do what they should

be doing anyway


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Corruption and BriberyWhere Bribes Are Business As Usual


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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


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Ethics and the Environment

Learning Objective 3: To discuss the importance of social responsibility when operating internationally, especially in the areas of sustainability


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Ethics and the 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


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What is Sustainability? Sustainability

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

Is sustainability good business practice? yes


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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


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Ethical Dilemmas and Other Business PracticesLearning Objective 4:To discuss some key issues in the social activities and consequences of globalized business


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Ethical Dilemmas in the Pharmaceutical Industry

Tiered pricing and other price-related issues reverse engineering

WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) generic drugs

R&D and the Bottom Line India


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Ethical Dimensions of Labor Conditions

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


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Sources of Worker-Related Pressures in the Global Supply Chain


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

Some companies avoid operating in countries where child labor is common or establish responsible policies in those

countries - IKEA Some companies refuse to hire individuals

who want to work long hours concerned about exploitation


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Corporate Codes of Ethics

Learning Objective 5: To examine corporate responses to globalization in the form of codes of conduct, among other things


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Corporate Codes of Ethics

How should companies behave? The UN Global Compact establishes

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


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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


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Corporate Ethics in The Future

Two trends: There will be greater convergence of proper

ethical conduct Individuals will develop skills to address ethical

issues Impact of social media Impact of future business and government

leaders


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Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 5-1 International Business Environments & Operations 14e Daniels ● Radebaugh ● Sullivan