Globalization of Ethical Decision Making

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C H A P T E R 10

• Globalization of Ethical Decision Making

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Chapter Objectives

• To understand the role of capitalism and
  economics as factors in business ethics
• To discuss global values, goals, and business
  practices within ethics
• To explore and question common global business
  practices
• To gain awareness of global ethical issues

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Chapter Objectives (cont.)

• To assess the role of the international monetary
  fund
• To assess the role of the world trade
  organization in business ethics
• To assess the role of multinational corporations
  in business ethics

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Chapter Outline

• Capitalism, Economics, and Business Ethics
• Common Values, Goals, and Business Practices
• Global Business Practices
• Sustainable Development
• International Monetary Fund (IMF)
• World Trade Organization (WTO)
• The Multinational Corporation (MNC)

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Capitalism, Economics and Business Ethics

• The first decade of the 21st century was a
  turbulent one
• Ethical misconduct and excessive risk-taking
  seemed rampant
• Many stakeholders lost confidence in businesses
• Lack of fairness, trust and honesty made
  stakeholders question the stability of major
  institutions, as well as the intentions of
  executives
• Even the competence of governmental regulatory
  institutions was called into question

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Key Figures in Modern Economics

• Adam Smith
• John Maynard Keynes
• Milton Friedman

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Capitalism, Economics and Business Ethics

• Socialism Advocates that wealth and power be
  shared equally across society based on the amount
  of work expended in production
• Social democracy formed in the 1940s as an
  offshoot of socialism
• Current global economic system has created
  bimodal wealth distribution The middle class
  shrinks so that there are many poor and a few
  very wealthy

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Common Values, Goals, and Business Practices

• Global common values Shared across most cultures
• Country cultural values Specific to certain
  groups that express actions, behavior and intent
• Culture Everything in our surroundings that is
  made by people

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Global 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

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Cultural Relativism

• The concept that morality varies from one culture
  to another
• There is a continuum of cultural relativism

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Sustainable Development

• Is a systematic approach to achieving development
  in such a way that the earths resources are
  preserved for future generations
• Some companies conduct their own sustainability
  performance reports

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The International Monetary Fund

• The IMF emerged from the Bretton Woods agreement
  of 1944
• The IMF assumed a major role in the 1980s in the
  management of the less developed countries (LDC)
  debt crisis
• An ethical issue surrounding the IMF has to do
  with the increased inequality in LDCs

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The World Trade Organization

• The WTO was established in 1995 and now includes
  133 member nations and 33 others with observer
  status
• Administers its own trade agreements, facilitates
  future trading negotiations, settles trade
  disputes and monitors the trade policies of
  member nations

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The Multinational Corporation

• Are public companies that operate on a global
  scale without significant ties to any one nation
  or region
• MNCs are subject to ethical criticism over their
  impact on the countries in which they do business
• Because of increased scrutiny and pressure to be
  socially responsible, many corporations belong to
  Business for Social Responsibility