BA 385 - Business Environment

1. BA 385 - Business Environment Week 4 ~ Part 2

2. Agenda • Chapter 9 intro • Current Event Presentations

3. Search the Web An excellent listing of global principles and codes for ethics may be found at: www.goodmoney.com/directry_codes.htm Chapter 9 • The New, New World of International Business • Multinational Corporations (MNCs) and the Global Environment • Ethical Issues in the Global Business Environment • Improving Global Ethics

4. Eras of Internationalization • 1945-55 The Post-World War II Decade • 1955-70 The Growth Years • 1970-80 The Troubled YearsA U. • 1980 + The New International Order • 1999 + The New, New World

5. Concepts of Global Business Internationalization vs. Globalization

6. Pros and Cons of Globalization 9-8

7. MNCs and the Global Environment • Change scope and nature of U.S.-based multinationals • Face challenges of operating in new world of business • Corporate legitimacy • MNC and host country philosophy • MNC and host country challenges • Cultural differences • Business and government differences

8. Search the Web For student activists interested in sweatshop practices, visit http://www.usasnet.org/ Ethical Issues in Global Business • Questionable marketing and safety practices • Sweatshop and labor abuse • Corruption, bribery, and questionable payments • Hot Issue: “Offshoring” jobs • Protectionism vs. free trade?

9. For Necessary to do business Common practice Accepted practice Form of commission, tax, or compensation Against Wrong Illegal Compromise personal beliefs Promotes government corruption Slippery slope Prohibits taking a stand for honesty, etc. Benefits recipient only Creates dependence on corruption Deceives stockholders Issues of Bribery

10. Trends Against Bribery • Foreign Corrupt Practices Act • Transparency International launched • OCED Antibribery Initiatives

11. Definitions Grease Payments—Relatively small sums of money given for the purpose of getting minor officials to: Do what they are supposed to be doing anyway Same but faster or sooner. Same but better than they would otherwise. Bribes—Relatively large amounts of money given far the purpose of influencing officials to make decisions or take actions that they otherwise might not take. Examples Money given to minor officials (clerks, attendants, customs inspectors) for the purpose of expediting. This form of payment helps get goods or services through red tape or administrative bureaucracies. Money given, often to high-ranking officials. Purpose is often to get these persons to purchase goods or services from the bribing firm. May also be users to avoid taxes, forestall unfavorable government intervention, secure favorable treatment, etc. Bribes vs. Grease Payments

12. The Dilemma of the Multinational Corporation The Multinational Corp. Home Country Stakeholder Pressures Host Country Stakeholder Pressures

13. International LawGlobal Codes of Conduct ETHICAL IMPERIALISM BroadMiddle Ground CULTURAL RELATIVISM Home Country Host Country Mix of Home and Host Country Standards • Cultural standards • Ethical/moral standards of home country • Cultural standards • Ethical/moral standards of host country Application of Ethical Principles(see notes) Ethical Choices in Home vs. Host Country Situations

14. Global Types • Foreign type • Empire type • Interconnection type • Global type

15. Integrative Social Contract Theory (ISCT) • Hypernorms consist of transcultural values including fundamental human rights • Consistent norms consist of norms that are culturally specific, but consistent with hypernorms • Moral free space norms consist of strongly held cultural beliefs in particular countries that are in tension with hypernorms • Illegitimate norms consist of norms that are incompatible with hypernorms

16. Four Actions for Improving International Business Ethics • Create global codes of conduct • Global codes and standards set by corporations • Global Codes and standards set by international organizations • Integrate ethics into a global strategy • Suspend activities in host country • Create ethical impact statements

17. Global Codes and Standards Developed by International Organizations • Caux Principles • Global Reporting Initiative • Global Sullivan Principles • OECD Guidelines for Multinational Enterprises • Principles for Global Corporate Responsibility: Benchmarks • UN Global Compact

18. The right to physical movement The right to ownership of property The right to freedom from torture The right to a fair trial The right to nondiscriminatory treatment The right to physical security The right to freedom of speech and association The right to minimal education The right to political participation The right to subsistence Fundamental International Rights

19. Inflict no intentional or direct harm Produce more good than bad for the host country Contribute to host country’s development Respect the human rights of their employees Pay their fair share of taxes Respect local cultural beliefs that do not violate moral norms Cooperate with the government to develop and enforce background institutions Seven Moral Guidelines for MNCs