Ibus 300 Notes

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Chapter 5: Ethics in International Business

* Opening Case: Exporting used batteries to Mexico
* Business Ethics- accepted principles of right or wrong governing the conduct of businesspeople * Ethical Strategy- a course of action that does not violate a company’s business ethics * Ethical Issues in International Business

* Employment practices
* Nike
* Human rights
* General Motors in South Africa
* Environmental Pollution
* Global tragedy of the commons- when a resource is held in common by all, but owned by no one, and is overused by individuals, resulting in its degradation * Corruption
* Daimler automotive (page 129)
* Foreign Corrupt Practices Act- US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions (Lockheed airplane manufacturing case) * Convention on Combating Bribery of Foreign Public Officials in International Business Transactions- An OECD convention that established legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measure that make this effective * Moral Obligations

* Social responsibility- the idea that business people should consider the social consequences of economic action when making business decisions * Noblesse Oblige- a French term that refers to honorable and benevolent behavior considered the responsibility of people of high birth * Power itself is morally neutral; it’s how power is used that matters * Ethical Dilemma- a situation in which there is no ethically acceptable solution * The Roots of Unethical Behavior

* Personal Ethics- generally accepted principles of right and wrong governing the conduct of individuals * Decision-Making Process
* Several studies of unethical behavior in a business setting have concluded that business people sometimes do not realize that they are behaving unethically, often because they fail to ask “is this decision ethical?” * Organization Culture- the values and norms shared among an organization’s employees (standard business practice that permeated the organization) * Unrealistic Performance Expectations

* Pressure from the parent company to meet unrealistic expectations * Leadership
* Hewlett-Packard example, “the HP way”
* Leaders set an example that others follow
* Societal Culture
* Hofstede’s dimensions of social culture
* Countries that emphasize individualism and uncertainty avoidance are more likely to emphasize the importance of ethical behavior that firms headquartered in cultures where masculinity and bower distance are important cultural attributes * Philosophical Approaches to Ethics

* Straw men- the following four approaches to business ethics have some inherent value but are unsatisfactory in important ways * The Friedman Doctrine- basic position is that the only social responsibility of business is to increase profits so long as the company stays within the rules of law * Rejects that businesses should undertake social projects * “the only social responsibilities of business is to use resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” * Ex. Child labor

* Cultural Relativism- the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate * BP example
* Righteous Moralism- the belief that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries * Typically associated with managers from developed nations * Naïve Immoralism- the belief that if a...
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