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.