Business Ethics in a Global Economy

Business Ethics in a Global Economy

Ethical Perceptions and International Business

•      When businesspeople travel abroad, they sometimes perceive different modes of operation.

•      Research shows that American companies feel they are different from many foreign companies.

•      “We” versus “them” is referred to                                          as self-reference criterion—                               unconscious reference to one’s                                         own culture values, experiences,                           and knowledge.

Ethical Perceptions and International Business

•      Dumping—the practice of charging high prices for products sold in domestic markets while selling the same products in foreign markets at low prices, often below the costs of exporting them

•      The United States has a number of anti-dumping laws.

Culture as a Factor in Business

•       Culture is everything in our surroundings made by people—both tangible and intangible concepts and values.

–    Each nation has a distinctive culture and beliefs about acceptable or unethical activities.

•       Citizens of different cultures vary based on their religious beliefs, perceptions of time, and body language.

•       The key question: Whose values and ethical standards take precedence internationally?

Cultural Relativism

•      The concept that morality varies from one culture to another and business practices are therefore differentially defined as right or wrong by particular cultures

–   Ethical relativism—one culture defines
ethical behavior for the whole globe, no

–   Business relativist—there may be no ethical standards except for the one in the transaction culture

Global Values

•      A set of global or universal ethical standards, such as Michael Josephson’s:

–   Trustworthiness           – Responsibility

–   Honesty                                   – Fairness

–   Integrity                         – Caring

–   Promise keeping         – Citizenship

–   Loyalty

–   Respect for others

Multinational Corporations

•       Public companies operating on a global scale without significant ties to any one nation/region

–    Perceived to be unfair for MNCs to transfer jobs abroad where wage rates are lower

–    Have been accused of increasing the gap between the rich and poor nations

–    Have been accused of exploiting natural and human resources

–    Have been accused of engaging in unfair competition

Multinational Corporations

•     Nike

•     Cisco Systems

•     Monsanto

•     Shell

Global Ethical Issues

•      Sexual and racial discrimination

•      Human rights

•      Price discrimination

•      Bribery

•      Harmful products

•      Pollution and the natural environment

•      Telecommunications issues

Sexual and Racial Discrimination

•      U.S. and European laws prohibit businesses from discriminating on the basis of sex, race, religion or disabilities in their hiring, firing and promotion decisions.

•      Discrimination is sometimes justified on the basis of cultural norms and values.

–    For example, businesswomen are rare in the Middle East.

•      Discrimination remains one of the more prevalent concerns in international business.

How Companies Might Address Discrimination Issues

•      Develop a company policy on discrimination

•      Communicate the policy internally and externally

•      Determine benchmarks for activities in which discrimination can arise

•      Determine indicators of possible noncompliance

•      Establish methods to identifying noncompliance

•      Develop a plan and implement the plan

Human Rights

•      Opportunistic use of child labor, payment of low wages, and abuses in foreign factories are a few of the concerns.

•      Relationships with subcontractors have proven problematic for some firms.

•      MNCs should view the law as a floor of acceptable behavior and strive for greater improvements in workers’ quality of life.

Advancing Human Rights

•      Engage in an open dialog with workers and management.

•      Be aware of human rights issues and concerns in each country in which the company engages in business.

•      Adopt the prevailing legal standard,                             but seek to embrace a “best                             practices” approach and standard.

Price Discrimination

•      Occurs when a firm charges different prices to different groups of consumers

–   Allowable if justified, based on costs

•      Price gouging—a                                                            price increase exceeding                                           the costs of additional                                             expenses (taxes, etc.)

Bribery and the Foreign Corrupt Practices Act

•      Bribes and facilitating payments are acceptable            in many cultures.

•      The U.S. Foreign Corrupt Practices Act prohibits American corporations from offering or providing payments to officials of foreign governments for the purpose of obtaining or retaining business abroad.

–   This may place U.S. businesses at a disadvantage.

–   This has been supported through global treaties.

Consumer Experience with
Bribery by Country

Harmful Products

•      Products banned in many industrial nations, considered harmful, are sold in other countries where they are still legal.

•      Dumping of hazardous waste materials in less developed countries is a related issue.

•      Some products that are not harmful in some countries may be so in others because of issues related to literacy, unsanitary conditions, and cultural values.

Pollution and the Natural Environment

•      Many countries are working together to create alliances and standards for environmental responsibility to minimize the negative effects of pollution.

•      Some countries are taking legal action against polluting firms in an effort to                                                                   defend air and water quality.

•      Reasonable global emission                                                 standards must be                                           established.

Telecommunications Issues

•      Satellites, e-mail, and the Internet bring ease of information access with resulting ethical issues.

•      A few of the ethical issues include:

–   Counterfeiting

–   Knockoffs

–   Day trading

–   Money laundering

Intellectual Property Protection

Intellectual property refers to ideas and creative materials people develop to solve problems, carry out applications, educate, and entertain others.

•       Patents

–    Legal document issued to an inventor that                                           grants the right to exclude others from                                        using or selling the product for a period                                      of time

•       Copyrights

–    Protection that covers published and unpublished literary, scientific and artistic works

World Trade Organization

•      The WTO administers its own trade agreements, facilitates future trading negotiations, settles trade disputes and monitors the trade policies of member nations.

–    Addresses economic and social issues involving agriculture, textiles, banking, telecommunications, government purchases, industrial standards, food sanitation regulations, services and intellectual property

•      The WTO was established in 1995 and now includes over 133 member nations.