5. Ethics, Corporate Social Responsibility, and Sustainability

ethical dilemma

Situation in which there is no ethically acceptable solution.

ethics

Accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization.

business ethics

Accepted principles of right and wrong governing the conduct of businesspeople.

ethical strategy

Course of action that does not violate a company’s business ethics.

Foreign Corrupt Practices Act (FCPA)

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

OECD convention that establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective.

organizational culture

Values and norms shared among an organization’s employees.

cultural relativism

Belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate.

righteous moralist

One who claims that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

naive immoralist

One who asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

utilitarian approaches to ethics

These hold that the moral worth of actions or practices is determined by their consequences.

Kantian ethics

Belief that people should be treated as ends and never as means to the ends of others.

rights theories

Twentieth-century theories that recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

Universal Declaration of Human Rights

United Nations document that lays down the basic principles of human rights that should be adhered to.

just distribution

Distribution of goods and services that is considered fair and equitable.

code of ethics

A business’s formal statement of ethical priorities

stakeholders

Individuals or groups who have an interest, stake, or claim in the actions and overall performance of a company.

internal stakeholders

People who work for or own the business such as employees, directors, and stockholders.

external stakeholders

Individuals or groups that have some claim on a firm such as customers, suppliers, and unions.

corporate social responsibility (CSR)

Idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences.

sustainable strategies

Strategies that not only help the multinational firm make good profits but that do so without harming the environment, while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its multiple stakeholders.

precautionary principle

States that when scientific knowledge regarding the impact of a course of action is insufficient, inconclusive, or uncertain and preliminary scientific evaluation indicates that there are reasonable grounds for concern that the action may have potentially dangerous effects on the environment, human, animal, or plant health, then that action should not be pursued or postponed until our knowledge improves