1. ©2004 Prentice Hall5-1
Chapter 5:
Ethics and
Social
Responsibility
in International
Business
International Business, 4th
Edition
Griffin & Pustay
By Mahsina, SE., MSIBy Mahsina, SE., MSI
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2. ©2004 Prentice Hall5-2
Chapter Objectives_1
 Describe the nature of ethics
 Discuss ethics in cross-cultural and
international contexts
 Identify the key elements in managing
ethical behavior across borders
 Discuss social responsibility in cross-
cultural and international contexts

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Chapter Objectives_2
 Identify and summarize the basic areas
of social responsibility
 Discuss how organizations manage
social responsibility across borders
 Identify and summarize the key
regulations governing international
ethics and social responsibility

4. ©2004 Prentice Hall5-4
Exporting Jobs or Abusing People?
 “Made in USA” – American Samoa
and Saipan
 NAFTA – low wages in Mexico
 Walmart & More
 South African miners
 Canada and drug prices

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Ethical Behavior
Ethical behavior usually refers to behavior
that conforms to generally accepted
social norms.

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Ethical Generalizations
 Individuals have their own personal belief
systems
 People from the same cultural context will
tend to hold similar beliefs
 Behaviors can be rationalized
 Circumstances affect adherence to belief
systems
 National culture is intertwined with ethics

7. ©2004 Prentice Hall5-7
Figure 5.1 Ethics in a
Cross-Cultural Context
Cultural
Context
Behavior of Organization
Toward Employees
Behavior of Employees
Toward Organization
Behavior of Employees
and Organization
Toward Other Economic Agents

8. ©2004 Prentice Hall5-8
Spectrum of Effects
Free Trade No Trade
•Jobs migrate
•Low wages
•Poor conditions
•Fewer jobs in
developing countries
•Higher prices
•Fewer products
Trade with Social
Responsibility
How? Code of Ethics

9. ©2004 Prentice Hall5-9
Guidelines and Codes of Ethics
 Written statements of the values and
ethical standards that guide the firm’s
actions
 Examples
– Johnson & Johnson -- IBEI
– General Mills -- Lilly

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What do you do…
when the country in which you are
doing business does not have a
code of ethics compatible with your
own?
Gao Feng in China Case.

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Acceptability of Bribery
 Acceptable
– Russia
– China
– Taiwan
– South Korea
 Unacceptable
– Australia
– Sweden
– Switzerland
– Austria
The U.S., Japan, and Italy fell between the two extremes.

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Areas of Social Responsibility
 Organizational stakeholders
 Natural environment
 General social welfare

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Corporate Excellence
 L.L. Bean
 Toyota
 Lands’ End
 Dell Computer
 DaimlerChrysler
 BP

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A joint venture
between Anglo-
American and
the Zambian
government
seeks to mine
copper while
minimizing
harm to the
environment

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Map 5.1 Social Responsibility Hot Spots

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Figure 5.3 Approaches to Social
Responsibility
Least
Responsible
Most
Responsible
Obstructionist Defensive Accommodative Proactive

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Obstructionist Stance
 Do as little as possible to address social
or environmental problems
 Deny or avoid responsibility
 Examples
– Astra
– Nestle
– Danone

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Defensive Stance
 Do what is required legally, but
nothing more
 Corporate responsibility is to generate
profits
 Example
– Philip Morris

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Accommodative Stance
 Meet ethical and legal requirements
and more
 Agree to participate in social programs
 Match contributions by employees
 Respond to requests from non-profits
 No proactive behavior to seek such
opportunities

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Proactive Stance
 Strong support of social responsibility
 Viewed as citizens of society
 Seek opportunities to contribute
 Examples
– McDonald’s
– The Body Shop
– Ben & Jerry’s

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Managing Social Responsibility
Planning
Decision Making
Consideration
Evaluation

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Implementing Social Responsibility
 Legal Compliance
 Ethical Compliance
 Philanthropic Giving

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Informal Dimensions of Social
Responsibility
 Leadership
 Organizational culture
 Whistle-blowing

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Corporate Social Audit
 Tool for the evaluation of social
responsibility effectiveness
 Formal and thorough analysis
 Conducted by task force

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Steps in Corporate Social Audit
Define social goals
Analyze resources devoted
to each goal
Determine degree of
achievement for each goal
Make recommendations

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Regulating International Ethics and
Social Responsibility
 Foreign Corrupt Practices Act (FCPA)
 Alien Tort Claims Act
 Anti-Bribery Convention of the
Organization for Economic
Cooperation and Development
 International Labor Organization (ILO)