ETHICS

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ETHICS SOCIAL RESPONSIBILITY
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TODAYS PLAN

• TOPIC Ethics Social Responsibility
• Social Responsibility the Corporation
• Cultural relativism ethical imperialism?
• CORRUPTION
• Caselets
• Discussion

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WHEN IS DIFFERENT JUST DIFFERENT, WHEN IS
DIFFERENT WRONG?
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GUIDELINES THAT HAVE BEEN USED

• Cultural relativism
• No cultures ethics are better than any others
  (no international rights wrongs)
• Ethical imperialism
• Do everywhere exactly as they do at home
• Theory behind cultural imperialism absolutism
• Single list of truths
• Can only be expressed with one set of concepts
• Call for the same behavior around the world.

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BALANCING THE EXTREMES THREE GUIDING PRINCIPLES

• Respect for core human values, which determine
  the absolute moral threshold for all business
  activities
• Respect for local traditions
• The belief that context matters when deciding
  what is right what is wrong

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GUIDELINES FOR ETHICAL LEADERSHIP

• Treat corporate values formal standards of
  conduct as absolutes
• Design implement conditions of engagement for
  suppliers customers
• Allow foreign business units to help formulate
  ethical standards interpret ethical issues
• In host countries, support efforts to decrease
  institutional corruption
• Exercise moral imagination

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ADVERTISING FREE SPEECH? THE CASE OF NIKE
HUMAN RIGHTS

• Identify the ethical issues faced by MNCs in
  their treatment of foreign workers that could
  bring allegations of misconduct in their
  operations?
• Would the use of third party independent
  contractors alleviate or insulate MNCs from being
  attached, and would such use be a good defensive
  shield against charges of abuse of their
  employees?
• Are statements by companies that show good social
  and moral conduct in the treatment of their
  workers part of the image they create therefore
  part of their advertising message?
• Are statements by companies that show good social
  and moral conduct in the treatment of their
  workers part of the image they create therefore
  part of their advertising message? Do consumers
  judge companies and make their buying decision
  based on their perceptions of corporate behavior
  and values they exhibit? Is the historic made
  in question (e.g. Made in the USA) now being
  replaced by the made by inquiry (e.g. Made by
  Company X or for Company X by Company Y)?
• Given the principles noted in the case, how can
  companies comment on their positive actions to
  promote human rights so consumers will think well
  of them? What would propose a company do (a)
  nothing? (b) construct a corporate code of
  ethics? (c) align with some of the universal
  covenants or compacts prepared by international
  agencies?

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CASELETS ON CORRUPTION

• Divide into groups
• Decide what you should do in each case if you
  were the decision-maker
• Class discussion

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BRIBERY CORRUPTION

• Corruption abuse of public office for private
  gain
• Corruption is both an ethical matter an
  economic matter (large costs
• Considered by many to be the key reason for the
  lack of progress in economic reform in
  non-Western countries.

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CORRUPTION

• Causal factors
• Interdependence of the economic political
  spheres
• Types of corruption
• Petty
• Grand
• How do you draw the line between legitimate
  illegitimate interactions between the private
  sector politicians is more difficult to draw

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WHERE DOES CORRUPTION OCCUR?

• Most of the corrupt countries are developing
  countries
• Corruption also varies across sectors and
  activities
• Highest in the public works, construction,
  defense sectors
• Lowest in banking agriculture
• In terms of government activities, most prone
  are tax departments, police departments, customs
  agencies, procurement distribution of
  international aid

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THE COSTS OF CORRUPTION

• Corruption is associated with a range of negative
  macroeconomic effects
• Reduced investment GDP growth, reductions in
  the flow of foreign direct investment, income
  inequality, misallocation of government
  resources
• For managers engaged in international business,
  corruption has become a major concern
• Prediction that half of the worlds GDP growth
  will occur in non-OECD countries those
  countries rank high in corruption

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ECONOMIC COST OF CORRUPTION
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THE CANADIAN SITUATION

• BUSINESS ACTIVITY International Code of Ethics
  for Canadian Business (1997)
• GOVERNMENT ACTIVITIES
• OECD Guidelines for Multinational Enterprises (
• Canada obliged to established a National
  Contact Point to promote the guidelines
• OECD Analytical Work on Corporate Codes
• Corruption Convention of the OECED
• Corruption of Foreign Public Officials Act passed
  by Parliament in 2/1999

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EFFORTS BY INTERNATIONAL DEVELOPMENT
ORGANIZATIONS THE WORLD BANK

• World Bank
• Since 1996, Bank launched more than 600
  anti-corruption programs in nearly 100 countries
  (including loans)
• Institutionalized efforts Department of
  Institutional Integrity to investigate claims of
  fraud corruption a Sanctions Committee to
  adjudicate cases assess penalties
• More than 180 companies individuals debarred
  from doing business with the Bank

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EFFORTS BY INTERNATIONAL DEVELOPMENT
ORGANIZATIONS REGIONAL DEVELOPMENT ORGANIZATIONS

• The Inter-American, European, Asian Development
  Banks followed World Banks lead
• IMF has suspended aid to some countries because
  they did not combat corruption
• Suggestion that anti-corruption requirements be
  placed in the conditionality agreements

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PRIVATE EFFORTS TRANSPARENCY INTERNATIONAL

• Founded in 1994 in Berlin active in more than
  70 countries
• 72 national chapters, source book of best
  practices started several innovative pilot
  projects.
• Lobby governments, inform media bring together
  people concerned with corruption
• Annual corruption Perception Index (measures
  perception of corruption in 85 countries)

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2006 BRIBE PAYERS INDEX
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2006 CORRUPTION PERCEPTIONS INDEX
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CORPORATE TRANSPARENCY

• Role of codes of conduct
• Large accounting firms have forensic accounting
  experts
• Collective action several industry groups
  developed sector-specific guidelines on tackling
  corruption promoting access to information.
• Whistleblowers importance of giving these
  individuals protection
• Importance of tightening up financial reporting
  maintaining the independence of auditors

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BRIBERY IN BUSINESS SECTORS

• Public works/construction
• Arms defense
• Oil gas
• Real estate/property
• Power generation/transmission
  telecommunications
• Mining
• Pharmaceuticals/medical care transportation
  storage
• Heavy manufacturing
• Banking finance
• Civilian aerospace
• IT forestry
• Agriculture, light manufacturing, fishery

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RELATIONSHIP BETWEEN GNP PROPENSITY FOR BRIBERY
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ASSIGNMENT FOR 25/1/2007

• CASE Conocos Green Oil Strategy
• Division of the class into four groups
• Read both the main case your case
• First part of class work in groups Ecuadorian
  government, indigenous peoples, environmental
  groups, management
• Second part negotiation (2 representatives per
  side)