Download MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

INTRODUCTION
• Multinational managers face
complex ethical issues
• With an understanding of key
ethical problems in multinational
management, managers can make
more informed ethical judgments
BUSINESS ETHICS
• Ethics - the rules and values that
determine what goals and actions
people follow when dealing with
other human beings
• Business ethics: all business
decisions with ethical
consequences
INTERNATIONAL
BUSINESS ETHICS
• The unique ethical problems
faced by managers conducting
business operations across
national boundaries
SOCIAL
RESPONSIBILITY
• The responsibility businesses have
to society beyond making profits
• Often reflects the ethical values
and decisions of the top
management team
• Ethics and social responsibilitynot easily distinguished in practice
Excepts from Exhibit 4.1
show examples of
ethical/social responsibility
issues faced by MNCs
Stakeholder
Affected
Customer
Stockholders
Employees
Host Country
Society in
General
Ethical/Social
Responsibility
Issue
Example Problem For the
MNC
Product safety
Should an MNC delete safety
features to make a product
more affordable for people
in a poorer nation?
Fair return on
investment
If a product is banned
because it is unsafe in one
country, should it be sold in
country where it is not
banned to maintain profit
margins?
Should an MNC use child
Child Labor
labor if it is legal in the
country of their location?
Should an MNC follow local
Following Local laws that violate home
Laws
country laws against
discrimination?
Protection of
the
Environment
Is an MNC obligated to
control its hazardous waste
to a degree higher than local
laws require?
ETHICAL PHILOSOPHY
TRADITIONAL
VIEWS
• Two basic systems of ethical
reasoning
– Deontological
– Teleological
DEONTOLOGICAL
THEORIES
• Actions have a good or bad morality
regardless of the outcomes they
produce
TELEOLOCIAL
• Morality from the consequences
of an act
– utilitarianism
MORAL LANGUAGES
• Basic ways that people use to
make ethical decisions and
explain ethical choices
– a contemporary view
SIX BASIC ETHICAL
LANGUAGES
•
•
•
•
•
•
Virtue and vice
Self control
Maximize human welfare
Avoiding harm
Rights/duties
Social contract
NATIONAL
DIFFERENCES
• National culture and social
institutions affect ethical
behavior/social responsibility
EX 4.2 INSTITUTIONAL AND CULTURAL
EFFECTS ON BUSINESS ETHICS ISSUES AND
MANAGEMENT
KEY SOCIAL
INSTITUTIONS
Religion
Laws and Legal
System
MANAGEMENT
PRACTICES TO
MONITOR AND
CONTROL ETHICAL
BEHAVIOR IN
ORGANIZATIONS
(e.g., codes of ethics)
IMPORTANT ETHICAL
ISSUES FOR
BUSINESS
(e.g., equal rights for
women)
CULTURAL
NORMS AND
VALUES
(e.g., norms for
gift giving)
EX 4.3 ETHICAL
ISSUES IDENTIFIED BY
SENIOR U.S. AND
EUROPEAN MANAGERS
an
y/
Au
st
U.
ria
K.
Political and
Local
Involvement
.
Use of
Information
U.
S
G
er
m
Personnel
Issues
-100
-50
0
50
Relative Frequency of Concern
0 = mean
U
.S
.
G
er
m
an
y/
A
us
U
tr
.K
ia
.
EX 4.4 THE
MANAGEMENT OF
KEY ETHICAL ISSUES
-15
-10
-5
0
5
Ethical Issues Addressed in Training
Ethical Issues Addressed in Written Policies
0 = Mean
EX 4.5 BELIEFS
REGARDING ETHICAL
CODES
Violate if not Detected
Define Limits
Aid to Refuse
Raise Ethical Level
0
French
German
1
U.S.
2
3
5=Agree
3=Neutral
1=Disagree
4
FOREIGN CORRUPT
PRACTICES ACT
• Forbids U.S. companies to make
or offer payments or gifts to
foreign government officials to
get or retain business
– “Reason to know" provision
• See Exhibit 4.7
• FCPA does not prohibit some forms
of payments that may occur in
international business
– payments made under duress to
avoid injury or violence are
acceptable
EFFECTS OF THE
“ETHICS GAP”
• FCPA and proliferation of ethical
codes in US are creating and ethics
gap
• FCPA blocked some gains in export
market share and FDI
• Pressure on other countries to follow
US rules
TOWARD
TRANSNATIONAL
ETHICS
ETHICAL
CONVERGENCE
• In spite of wide differences in
cultures and social institutions,
growing pressures for multinationals
to follow same rules
PRESSURES FOR
ETHICAL
CONVERGENCE
• Growth of international trade
– creates pressures for
uniformity
• Increased cross national imitation
• Mixed cultural background
employees
PRESCRIPTIVE
ETHICS FOR THE
MULTINATIONAL
• Donaldson suggests
– guides based on the moral
languages of avoiding harm,
right/duties, and the social
contract
– specified in contracts and
international laws
INTERNATIONAL
CODES OF CONDUCT
• For moral language to work, there
must be codes of conduct
• Current codes exist based on
codes from international
governing bodies (UN, ILO) and
international agreements (Exhibit
4.8)
MULTINATIONALS
DO NOT ALWAYS
FOLLOW ETHICAL
AGREEMENTS
•
•
•
•
Governments make agreements
Compliance voluntary
Not all governments subscribe
Each guide is an incomplete moral
guide
HOW SHOULD THE
MANAGER DECIDE?
ETHICAL
RELATIVISM VS
ETHICAL
UNIVERSALISM
• Ethical relativism - each society's
view of ethics considered
legitimate and ethical
• Ethical universalism - basic moral
principles transcend
cultural/national boundaries
PRACTICAL
PROBLEMS OF
FOLLOWING
EITHER
• Convenient relativism - companies
use ethical relativism to behave
any way they please
• Cultural imperialism with ethical
universalism
BALANCING THE
NEEDS OF THE
COMPANY WITH
ETHICAL
CONSEQUENCES
• Managers must weigh and balance
the economic, legal, and ethical
consequences of their decisions
FORMS OF ANALYSES
• Economic
• Legal
• Ethical
IS THE BEHAVIOR OR ITS CONSEQUENCE:
Violates Host
or Home
Country
Laws?
Legal
Analysis
Yes
STOP!
Yes
STOP!
No
Violates
MNC's Code
of Conduct?
No
Organizational
Ethical
Analysis
In
Violation of
the Company's
Ethical Code?
Yes
STOP!
No
STOP!
No
STOP!
No
STOP!
No
Consistent
with Company
Culture?
Yes
Cultural Sensitivity
Ethical Analysis
Consistent
with Local
Cultural
Norms?
Yes
Personal Ethical Analysis
Do It!
Yes
Consistent
with Personal
Moral Beliefs?
CONCLUSIONS
• Multinational managers face ethical
challenges magnified by the
international context
• Need to understand home ethical
codes and impact on ethics of foreign
culture/social institutions