Ethics and Social Responsibility

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Ethics and Social Responsibility
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Ethics Around the World

• Ethics
• The study of morality and standards of conduct
• Growing number of MNCs have prepared codes of
  ethics
• Ethical behavior in one country is sometimes
  viewed as unethical behavior in other countries
• Ethical Problems and Concerns in Japan
• Political and Business Scandals
• Forced resignations of politicians for assisting
  private corporations
• Failure of banking system to take steps to end
  the recession
• Relationship of politicians to organized crime
• Business firms engaged in unethical and illegal
  practices

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Ethics Around the World (cont.)

• Ethical Problems and Concerns in Japan (cont.)
• Hostile Work Environment Issues
• Sexual harassment
• Equal Opportunity Issues
• Gender discrimination
• Creates problems for Japanese firms operating in
  the U.S
• Social Responsibility Implication from Lobbying
• Some Americans are concerned because Japan spends
  more money than other countries on lobbying in
  the U.S.
• Ethical Problems and Concerns in Europe
• Europeans differ from U.S. and Japan in some
  respects
• French and German managers concerned about
  maintaining a successful business posture

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Ethics Around the World (cont.)

• Status of Women Managers in Europe
• Integration of women into the workforce is a
  critical goal
• France
• Although French women are making strides in the
  management ranks, they still are underrepresented
  in corporate management
• French law guarantees equal treatment and equal
  professional opportunities
• Enforcement of these laws is fairly weak
• Germany
• Women underrepresented in high-level management
• Has introduced laws mandating equal opportunity
• Laws have had a greater impact on employment in
  the public sector
• Need for competent managers should increase the
  number of women in managerial jobs

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Ethics Around the World (cont.)

• Status of Women Managers in Europe (cont.)
• Great Britain
• Women not well represented in high-level
  managerial positions
• Women establishing associations to develop
  networking and increase lobbying power
• Growing number of British companies proactively
  trying to recruit and promote women
• Discrimination lawsuits becoming more common
• Some companies trying to avoid potential
  litigation by attempting to create diversity in
  their workforces

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Ethics Around the World (cont.)

• Ethical Problems and Concerns in China
• Human rights violations trouble MNCs
  contemplating doing business in China
• Piracy, Counterfeiting, and Industrial Spying
  Problems
• U.S. taking hard line against Chinese piracy of
  intellectual property
• Chinese government has closed down some factories
  and offered rewards for information about piracy
• Opaque index
• Measures the effect of unclear legal systems and
  regulations
• Chinas system is the most opaque
• Chinese-sponsored spying on foreign MNCs has
  increased
• Chinese partners in joint ventures may break the
  agreement and walk off with patents and/or
  capital

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Figure 4-1 The Opaque Index
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Ethics Around the World (cont.)

• Ethical problems and Concerns in China (cont.)
• Status of Women Managers in China
• Women managers confront a glass ceiling due to
• Cultural stereotypes
• Restricted opportunities
• Discrimination that is both blatant and subtle

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Regulating Foreign Investment

• Ethical concerns about the reciprocity of the
  relationship between the home country of the MNC
  and the host country
• Regulation of Acquisitions
• The U.S. regulates the acquisition of domestic
  companies by foreign investors
• Other countries are following the U.S.s lead
• EU regulations making it more difficult for
  non-European companies to do business in Europe
• Nonreciprocal trade partners
• Nations that sell (export) goods to other
  countries but do not buy (import) from them

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Regulating Foreign Investment (cont.)

• Implications of Reciprocity
• International meetings being held to discuss the
  ethical and social responsibility to engage in
  reciprocal trade
• Concerns about countries with massive trade
  surpluses
• U.S. has targeted relations with Japan, China,
  and Brazil
• retaliation considered as a means to force
  reciprocity
• EU disagrees with the use of sanctions

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Response to Social Obligations

• Foreign Corrupt Practices Act (FCPA) Revisited
• Makes it illegal for U.S. companies to attempt to
  influence foreign officials through personal
  payments or political contributions
• Internal Revenue Service audits the expenses of
  MNCs to make sure that there are no deductions
  for illegal activities
• Benefits of the FCPA outweigh its costs
• Forced to conclude that bribery has not played a
  major role in foreign business conducted by U.S.
  companies
• Bribery and corruption still exist, however

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Figure 4-2 The Corruption Index
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Response to Social Obligation (cont.)

• Foreign Corrupt Practices Act Revisited (cont.)
• More efforts to force compliance
• FCPA violators now subject to Federal Sentencing
  Guidelines
• Agreement recently signed by 29 members of the
  Organization for Economic Cooperation and
  Development (OECD)
• Prohibits the practice of bribing foreign
  government officials
• Does not outlaw payments to political party
  leaders
• U.S. wants to expand the scope of the agreement

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Response to Social Obligation (cont.)

• International Assistance
• Governments of developed countries display social
  responsibility when providing assistance to
  underdeveloped countries
• Assistance has taken the form of
• Gifts of food, machinery, and equipment
• Forgiving foreign debts
• MNCs do not provide foreign aid to countries
• Some play philanthropic role in local communities
• This strategy serves to protect the MNCs foreign
  investment