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INTRODUCTION

This article explores the complex ethical issues faced by multinational managers and the importance of understanding key ethical problems in making informed judgments. It discusses business ethics, international business ethics, social responsibility, ethical philosophy, national differences, ethical relativism, ethical universalism, practical problems of following either, pressures for ethical convergence, the Foreign Corrupt Practices Act, and prescriptive ethics for multinational companies.

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INTRODUCTION

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  1. INTRODUCTION • Multinational managers face complex ethical issues • With an understanding of key ethical problems in multinational management, managers can make more informed ethical judgments

  2. 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

  3. INTERNATIONAL BUSINESS ETHICS • The unique ethical problems faced by managers conducting business operations across national boundaries

  4. SOCIAL RESPONSIBILITY • The responsibility businesses to society beyond making profits • Often reflect the ethical values and decisions of the top management team • Ethics and social responsibility not easily distinguished in practice

  5. Excepts from Exhibit 15.1 show examples of ethical/social responsibility issues faced by MNCs

  6. EX 15.1

  7. BALANCING THE NEEDS OF THE COMPANY WITH ETHICAL CONSEQUENCES • Managers must weigh and balance the economic, legal, and ethical consequences of their decisions

  8. FORMS OF ANALYSES • Economic • Legal • Ethical

  9. ETHICAL PHILOSOPHY

  10. TRADITIONAL VIEWS • Two basic systems of ethical reasoning • Deontological • Teleological

  11. DEOLONTOLOGICAL THEORIES • Actions have a good or bad morality regardless of the outcomes they produce

  12. TELEOLOCIAL • Morality from the consequences of an act • Utilitarianism

  13. MORAL LANGUAGES • A contemporary view • Basic ways that people use to make ethical decisions and explain ethical choices

  14. SIX BASIC ETHICAL LANGUAGES • Virtue and vice • Self control • Maximize human welfare • Avoiding harm • Rights/duties • Social contract

  15. NATIONAL DIFFERENCES • National culture and social institutions affect ethical behavior/social responsibility • See Exhibits 15.2-15.5

  16. EX 15.3 ETHICAL ISSUES IDENTIFIED BY SENIOR U.S. AND EUROPEAN MANAGERS

  17. EX 15.4 THE MANAGEMENT OF KEY ETHICAL ISSUES

  18. EX 15.5 BELIEFS REGARDING ETHICAL CODES

  19. 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

  20. PRACTICAL PROBLEMS OF FOLLOWING EITHER • Convenient relativism - companies use ethical relativism to behave any way they please • Cultural imperialism with ethical universalism

  21. ETHICAL CONVERGENCE • In spite of wide differences in cultures and social institutions, growing pressures for multinationals to follow same rules

  22. PRESSURES FOR ETHICAL CONVERGENCE • Growth of international trade • Creates pressures for uniformity • Increased cross national imitation • Mixed cultural background employees

  23. 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 15.6

  24. 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

  25. 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

  26. 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

  27. CODE 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

  28. WHY MULTINATIONALS DO NOT ALWAYS FOLLOW ETHICAL PRINCIPLES? • Governments make agreements • Compliance voluntary • Not all governments subscribe • Each guide is an incomplete moral guide

  29. HOW SHOULD THE MANAGER DECIDE? • Consider whether the action makes business sense • Conduct and ethical analysis • See Exhibit 15.8 next

  30. 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

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