Chapter 4 Overview.
Management must be vigilant and proactive regarding the various ethical
challenges that may confront the firm, such as corruption, bribery, unethical
management practices, harmful global sourcing, illicit products and
marketing, and intellectual property infringement.
Understanding the differences in the perception of what is right and wrong
across borders, managers must learn to recognize and manage ethical
problems, proactively anticipate, confront and scan for ethical challenges in
all sourcing countries and potential partners, address commercial
environments, labor conditions, customers expectations, accounting
practices, natural environmental conditions, sourcing, production,
marketing, and distribution.
Components of ethical behavior and their importance
in international business
• Ethics
o moral principles and values
o govern the behavior of people, firms, and governments,
o regarding right and wrong.
• Corruption
o abuse of power to achieve illegitimate personal gain.
o severe concern in the global activities of many MNEs.
• Bribery
o may take the form of grease payments,
o intended to expedite decisions and transactions, or
•
o gain favors.
•
• The Value of Ethical Behavior
• Ethical behavior: the right thing to do.
• Often prescribed within laws and regulations.
• Demanded by customers, governments, and the news media. Unethical
firms risk attracting unwanted attention.
• Ethical behavior:
•
o good business,
o enhances corporate image and selling prospects.
o A strong reputation: Competitive advantage
•
o
o in hiring and motivating employees,
o partnering,
o dealing with foreign governments.
.
Ethical challenges in international business
• Improper Ethical Behavior May Result When:
• Goals and incentives aimed at promoting good outcomes (e.g., profits)
that encourage bad behaviors.
• Employees overlook unethical behavior in others because of peer
pressure or self-interest.
• Managers tolerate lower ethical standards in value-chain activities
performed by suppliers or third-party firms.
• Unethical practices can accumulate in the firm slowly over time.
• Bad means are justified by good ends.
• Variation in Ethical Standards
• Ethical standards vary from country to country
• Relativism
•
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