4.4.2: International business ethics

ethics

ethics

• principles and norms governing behaviour

• international level - ethics not necessarily regulated in law

• companies work within institutional framework of home country and host country

• code of conduct

stakeholder conflicts

for those with an interest or right associated with the business

1. consumers:

   • conflict of interest - when one person or organisation has two roles and is unable to treat them both fairly at the same time

   • product safety

   • misleading advertising

2. employees:

   • employee safety and health

   • employee redundancies

   • pay and conditions

3. shareholders

   • conflict of interest between management and shareholders

   • short term vs long term return on shares

     • retained profit vs. dividends

4. countries or communities

   • safety

   • environmental concerns

   • resource depletion

environmental considerations

• pressure from stakeholders

• minimise damage of activities inflicting harm

1. emissions:

   • legislation governing environmental output for businesses

   • reporting greenhouse gas emissions

   • doesn’t always exist in developing nations - manufacturing base for MNCs

   • causes air pollution and waste disposal issues

2. waste disposal:

   • legislation regarding disposal of waste

   • missing or not enforced in LEDCs

   • barriers to effective waste disposal in LEDCs i.e. poor infrastucture,

3. sustainability:

   • operating without negatively affecting the ability of future generations to meet their needs

   • implementing environmental preservation policies

   • resource usage for future generations

   • addresses economic efficiency, social equity and environmental accountability

   • needs to adopt production methods that:

     • avoid use of large quantities of non renewable resources

     • use more recycled materials

     • reduce or eliminate waste and pollution

     • positively impact the environment

   • forces businesses beyond short term gains

   • green credentials

supply chain considerations

• global business = global supply chains

• ethical issues in global sourcing and logistics

• key supply chain issues:

  • pay and working conditions

    • working conditions of employees and pay

    • laws covering pay and working conditions

    • employee protection laws and work rights

    • developing economy = cheap labour

      • don’t have same level of legislation to protect employees

      • low working standards

      • may not be paid living wage

      • sweatshops

      • may not occur in countries with tight controls on work environments

    • MNCs practice offering wages below living to remain competitive

      • low wages = less investment = inc profit

      • less prevalent due to international protext

  • exploitation of labour:

    • bonded labour

      • forces worker to stay with employer until debt + interest is paid

    • businesses try keeping products free from exploited labour

      • guidelines for banning bonded labour + minimum working conditions

  • child labour:

    • businesses who outsource production overseas rely on local suppliers

    • local suppliers don’t always comply to the standard practice or regulations in the country of origin

    • stopping child labour in developing countries can be damaging to families

      • child’s source of earnings

      • lack of formal education system

      • kids take up more exploitative roles

    • MNCs can choose to locate elsewhere in places where child labour is not acceptable

marketing considerations

• misleading product labelling:

  • ensure product labels are not misleading

  • consumers can make an informed choice about buying the product and how to use them

  • legislation stating exactly what businesses should include in labelling

  • labels must be accurate and avoid false information and explain if the product is hazardous

  • businesses have to be aware of local legislation and compliance when exporting

  • ECOSOC guidance on food labelling

    • false labelling impermissible

    • difficulty distinguishing between truthful and non-misleading or truthful but misleading labels

• inappropriate marketing activities:

  • advertising, publicity and direct marketing

  • may be illegal or offensive

  • cultural aspects as part of business context in a global environment