MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

slipalaskaManagement

Nov 20, 2013 (3 years and 11 months ago)

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CHAPTER 4

MANAGING
ETHICAL

AND

SOCIAL
RESPONSIBILITY
CHANGES

IN

MULTINATIONAL
COMPANIES

INTRODUCTION


Multinational managers face
complex ethical issues


With an understanding of key
ethical problems in multinational
management, managers can make
more informed ethical judgments

BUSINESS ETHICS


Ethics
-

the rules and values that
determine what goals and actions
people follow when dealing with
other human beings



Business ethics: all business
decisions with ethical
consequences


The unique ethical problems
faced by managers conducting
business operations across
national boundaries


INTERNATIONAL
BUSINESS ETHICS

SOCIAL
RESPONSIBILITY


The responsibility businesses have
to society beyond making profits



Often reflects the ethical values
and decisions of the top
management team


Ethics and social responsibility
-

not easily distinguished in practice

Excepts from Exhibit 4.1
show examples of
ethical/social responsibility
issues faced by MNCs

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ETHICAL PHILOSOPHY

TRADITIONAL
VIEWS



Two basic systems of ethical
reasoning


Deontological


Teleological

DEONTOLOGICAL
THEORIES



Actions have a good or bad morality
regardless of the outcomes they
produce

TELEOLOCIAL


Morality from the consequences
of an act


utilitarianism

MORAL LANGUAGES



Basic ways that people use to
make ethical decisions and
explain ethical choices



a contemporary view


Virtue and vice


Self control




Maximize human welfare



Avoiding harm



Rights/duties



Social contract

SIX BASIC ETHICAL
LANGUAGES

NATIONAL
DIFFERENCES


National culture and social
institutions affect ethical
behavior/social responsibility

MANAGEMENT
PRACTICES TO
MONITOR AND
CONTROL ETHICAL
BEHAVIOR IN
ORGANIZATIONS
(e.g., codes of ethics)
KEY SOCIAL
INSTITUTIONS
Religion
Laws and Legal
System
IMPORTANT ETHICAL
ISSUES FOR
BUSINESS
(e.g., equal rights for
women)
CULTURAL
NORMS AND
VALUES
(e.g., norms for
gift giving)
EX 4.2 INSTITUTIONAL AND CULTURAL
EFFECTS ON BUSINESS ETHICS ISSUES AND
MANAGEMENT
EX 4.3 ETHICAL
ISSUES IDENTIFIED BY
SENIOR U.S. AND
EUROPEAN MANAGERS

-100
-50
0
50
Relative Frequency of Concern
0 = mean
U.S.
U.K.
Germany/Austria
Political and
Local
Involvement
Personnel
Issues
Use of
Information
EX 4.4 THE
MANAGEMENT OF
KEY ETHICAL ISSUES

-15
-10
-5
0
5
0 = Mean
U.S.
U.K.
Germany/Austria
Ethical Issues Addressed in Training
Ethical Issues Addressed in Written Policies
EX 4.5 BELIEFS
REGARDING ETHICAL
CODES

0
1
2
3
4
5=Agree
3=Neutral
1=Disagree
Raise Ethical Level
Aid to Refuse
Define Limits
Violate if not Detected
French
German
U.S.
FOREIGN CORRUPT
PRACTICES ACT


Forbids U.S. companies to make
or offer payments or gifts to
foreign government officials to
get or retain business


“Reason to know" provision


See Exhibit 4.7


FCPA does not prohibit some forms
of payments that may occur in
international business


payments made under duress to
avoid injury or violence are
acceptable

EFFECTS OF THE
“ETHICS GAP”


FCPA and proliferation of ethical
codes in US are creating and ethics
gap


FCPA blocked some gains in export
market share and FDI


Pressure on other countries to follow
US rules

TOWARD
TRANSNATIONAL
ETHICS

ETHICAL
CONVERGENCE


In spite of wide differences in
cultures and social institutions,
growing pressures for multinationals
to follow same rules

PRESSURES FOR
ETHICAL
CONVERGENCE


Growth of international trade


creates pressures for
uniformity


Increased cross national imitation


Mixed cultural background
employees

PRESCRIPTIVE
ETHICS FOR THE
MULTINATIONAL


Donaldson suggests


guides based on the moral
languages of avoiding harm,
right/duties, and the social
contract


specified in contracts and
international laws

INTERNATIONAL
CODES OF CONDUCT


For moral language to work, there
must be codes of conduct


Current codes exist based on
codes from international
governing bodies (UN, ILO) and
international agreements (Exhibit
4.8)

MULTINATIONALS
DO NOT ALWAYS
FOLLOW ETHICAL
AGREEMENTS



Governments make agreements


Compliance voluntary


Not all governments subscribe


Each guide is an incomplete moral
guide

HOW SHOULD THE
MANAGER DECIDE?

ETHICAL
RELATIVISM VS
ETHICAL
UNIVERSALISM


Ethical relativism
-

each society's
view of ethics considered
legitimate and ethical


Ethical universalism
-

basic moral
principles transcend
cultural/national boundaries

PRACTICAL
PROBLEMS OF
FOLLOWING
EITHER


Convenient relativism
-

companies
use ethical relativism to behave
any way they please


Cultural imperialism with ethical
universalism

BALANCING THE
NEEDS OF THE
COMPANY WITH
ETHICAL
CONSEQUENCES


Managers must weigh and balance
the economic, legal, and ethical
consequences of their decisions


Economic


Legal


Ethical

FORMS OF ANALYSES

IS THE BEHAVIOR OR ITS CONSEQUENCE:
No
No
No
No
Yes
Yes
Yes
Yes
Yes
No
Do It!
Legal
Analysis
Organizational
Ethical
Analysis
Cultural Sensitivity
Ethical Analysis
Personal Ethical Analysis
No
Violates Host
or Home
Country
Laws?
Violates
MNC's Code
of Conduct?
In
Violation of
the Company's
Ethical Code?
Consistent
with Company
Culture?
Consistent
with Local
Cultural
Norms?
Consistent
with Personal
Moral Beliefs?
STOP!
STOP!
STOP!
STOP!
STOP!
STOP!
Yes
CONCLUSIONS


Multinational managers face ethical
challenges magnified by the
international context


Need to understand home ethical
codes and impact on ethics of foreign
culture/social institutions