2. Management 2203, Ch 5

Chapter 5

Ethics, Corporate Social Responsibility, and Sustainability in International Business

Learning Objectives

• Understand ethical, corporate social responsibility, and sustainability issues faced by international businesses.

• Analyze ethical, corporate social responsibility, and/or sustainability dilemmas.

• Identify causes of unethical behavior by managers.

• Explore different philosophical approaches to business ethics that apply globally.

• Incorporate ethical considerations into decision-making, corporate social responsibility, and sustainability initiatives.

Introduction

Definitions

• Ethics: Accepted principles of right or wrong that govern the conduct of a person, a profession, or an organization.

• Business Ethics: Accepted principles governing the conduct of business professionals.

• Ethical Strategy: Course of action that aligns with accepted ethical principles.

Common Ethical Issues in Business

• Employment practices

• Human rights

• Environmental regulations

• Corruption

• Moral obligations

Roots of Unethical Behavior

Influencing Factors

• Societal culture

• Organizational culture

• Personal ethics

• Unrealistic performance goals

• Decision-making processes

• Leadership

Environmental Pollution

• Ethical issues arise when environmental regulations in host nations are significantly lower than those of the home nation.

• Tragedy of the Commons: Overuse of a common resource leads to degradation — a situation that raises the question of responsibility.

Corruption

• Some argue that bribes may be necessary for achieving a greater good.

• Others contend that corruption undermines business investments and stifles economic growth.

Moral Obligations

• Social Responsibility: Business decisions should yield both good economic and social outcomes.

Ethical Dilemmas

• Ethical dilemmas arise in situations where no alternatives seem ethically acceptable.

Roots of Unethical Behavior

Factors Influencing Managerial Behavior

• Personal ethics

• Decision-making processes

• Organizational culture

• Unrealistic performance expectations

• Leadership

• Societal culture

Philosophical Approaches to Ethics

Different Approaches

• Straw man arguments:

  • Friedman doctrine: Obligation is just to adhere to laws.

  • Cultural relativism: Morality should align with local norms.

  • Righteous moralist: Apply home country morals.

  • Naïve immoralist: Follow what others do without question.

• Utilitarian and Kantian Theories

• Rights Theories

• Justice Theories

Ethical Argument and Straw Men

• Straw Men: Inadequate ethical decision-making guidelines used in multinational enterprises include:

  • Friedman doctrine

  • Cultural relativism

  • Righteous moralist

  • Naïve immoralist

Philosophical Approaches Continued

Ethical Theories

• Utilitarian Theory: Maximize positive outcomes for the greatest number.

• Kantian Concepts: Treat individuals as ends, not means, evaluating actions based on universal applicability.

• Rights Theories: Advocate for universal human rights irrespective of cultural context.

• Justice Theories: Emphasize fair and equitable distribution of economic benefits.

Implications for Managers

Ensuring Ethical Considerations

• Favor hiring and promotion of individuals with strong personal ethics.

• Build an organizational culture that emphasizes ethical behavior.

• Leaders must clearly articulate expected ethical behaviors and model such behavior.

• Decision-making processes should include considerations of ethical dimensions.

• Develop moral courage to uphold ethical standards.