Chapter 5 - Ethics, CSR, & Sustainability

Business Ethics

Accepted principles of right or wrong governing the conduct of business people

Ethical Strategy

Strategy or course of action that does not violate accepted principles

Ethical Dilemmas

Situations in which none of the available alternatives seems ethically acceptable

Corruption

Common ethical issue

Gaining benefit by making payments to government officials or using a power advantage

Anti-Corruption Measures

US Foreign Corrupt Practices Act (1977)

• later amended to allow ‘facilitating payments’

• OECD Convention on Combating Bribery of Foreign Public Offices in International Transactions (1997)

Facilitating Payment (Grease)

Small, unofficial payment made to a low-level public official to speed up a routine, non-discretionary governmental action they are already legally required to perform

Tragedy of the Commons

Resource held by all, but owned by no one, and is overused by individuals resulting in degradation

• Countries have differences in regulatory regimes for environment

Human Rights

Often not protected, including

• All freedoms (political, speech, movement, protest)

• Working conditions

• Wages

• Forced or child labor

Unethical Behavior Root Causes

Can include personal ethics (might be pressured), decision-making, unrealistic performance goals, organization culture and leadership

Corporate Social Responsibility (CSR)

With power comes the social responsibility to give something back to the societies that enable them to grow.

• Managers should consider the social and environmental consequences of economic actions when making business decisions

Triple Bottom Line

Decisions that have good economic, social, and environmental consequences

• A good ‘global corporate citizen’

Sustainability

Meeting current needs without harming the ability of future generations to meet theirs, while creating long-term economic and social benefits.

Sustainable Strategies

Help the multinational firm make good profits in a way that is socially responsible to stakeholders and does not harm the environment