978-1259929441 Chapter 5 Part 1

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Chapter 05 – Ethics, Corporate Social Responsibility, and Sustainability

5-1

Ethics, Corporate Social Responsibility,

and Sustainability

Learning objectives

• Understand the ethical issues faced

• Identify the causes of unethical

behavior by managers.

• Explain how managers can

incorporate ethical considerations

This chapter looks at ethics in international

business. Ethics becomes an issue across nations

because of differing political systems, economic

First, the chapter explores some of the more

common areas where ethical issues arise in

international business, such as employment

of ethical and unethical decision-making. Next, the

text examines basic philosophical theories that

offer a foundation for ethical decision-making.

The opening case explores Woolworth’s Corporate

Responsibility Strategy 2020 is composed of

strategic initiatives in three areas: People, Planet,

and Prosperity. The Australian conglomerate

believes that success in these areas provides the

toward a common vision.

Chapter 05 – Ethical Issues in International Business

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OUTLINE OF CHAPTER 5: ETHICS, CORPORATE SOCIAL

RESPONSIBILITY, AND SUSTAINABILITY

Human Rights

Environmental Pollution

Corruption

Ethical Dilemmas

Roots of Unethical Behavior

Societal Culture

Philosophical Approaches to Ethics

Straw Men

Utilitarian and Kantian Ethics

Rights Theories

Ethics Officers

Moral Courage

Corporate Social Responsibility

Management Focus: Corporate Social Responsibility at Stora Enso

Sustainability

Chapter 05 – Ethical Issues in International Business

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CLASSROOM DISCUSSION POINT

Create a hypothetical business scenario, then ask students to consider the ethics involved.

For example, suppose a British manager pays a Saudi prince 1 percent of the contract he

helps negotiate in the Kingdom of Saudi Arabia.

Ask students whether the British manager acted ethically. Jot student responses on the

board according to whether students believe the action was ethical or unethical, and their

reasoning behind the argument.

Now, ask students about the following scenario. A U.S. law firm has box seats at all the

major professional games (baseball, hockey, basketball) and season tickets to the nearest

Big-10 conference university games. The partners take their prospective clients to these

games, wine and dine them, and play golf together at the firm’s expense at posh courses.

In ethical terms, what are the differences in these behaviors?

Do cultural differences influence responses?

OPENING CASE: Woolworths Group’s Corporate Responsibility Strategy

2020

Summary

The opening case explores corporate social responsibility at Woolworths Group. The

Australian conglomerate has set 2020 as the deadline to achieve goals across three areas

that comprise its Corporate Social Responsibility Strategy 2020. Woolworths believes

that it needs to be socially responsible across multiple areas within the framework of

People, Planet, and Prosperity. Because the focus in each of these areas is unique,

specialized strategic initiatives have been developed for each focus. The focus on People

is about encouraging diversity, Planet focuses on the environment, and Prosperity focuses

on trusted relationships. Discussion of the case can begin with the following questions:

QUESTION 1: Discuss social responsibility at Woolworths. What makes the People,

Planet, and Prosperity framework so appealing to the company?

ANSWER 1: Woolworths Group’s Corporate Social Responsibility Strategy 2020 is built

on a framework composed of three main focus areas: People, Planet, and Prosperity. In

QUESTION 2: Woolworths Group has interests across multiple industry sectors and

Chapter 05 – Ethical Issues in International Business

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across multiple countries. Rather than following norms of corporate behavior in each

market, Woolworths has chosen to set its own initiatives to follow in each market. What

can other firms learn from this approach?

ANSWER 2: Students will probably recognize that Woolworths’ approach of setting and

adhering to a single corporate-wide strategy to achieve corporate social responsibility

will probably mean that in some markets, it will exceed local regulations and norms,

QUESTION 3: Some 80 percent of Woolworths’ suppliers have partnered with the

organization for more than a decade. Discuss the importance of relationships like to

Woolworths’ competitive advantage. How can firms encourage this type of loyalty?

ANSWER 3: Three core businesses, more than 200,000 employees, and 13 business

subsidiaries organized across multiple countries comprise the complex organization

called Woolworths Group. Despite this complexity, Woolworths had developed close and

LECTURE OUTLINE

Chapter 05 – Ethical Issues in International Business

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ethical strategy is a strategy, or course of action, that does not violate these accepted

principles.

• Corruption

• The moral obligations of multinational companies

Another Perspective: The Carnegie Council on Ethics and International Affairs maintains

a substantive and thought-provoking website at {http://www.carnegiecouncil.org/}. This

site contains publications that comment on many of the ethical issues that surround

for employees, performing regular audits to ensure those standards are being met, and

taking corrective actions as necessary.

The idea of what constitutes human rights varies considerably across national borders.

How can the tensions that this reality fosters be reconciled?

Basic rights, often taken for granted in developed countries, are not universally available.

by no one, is overused by individuals, resulting in its degradation.

Another Perspective: Consumers International {http://www.consumersinternational.org/}

is dedicated to protecting the rights of consumers worldwide. In doing so, it promotes

ethical behavior on the part of companies. Go to the site and explore some of the

organization’s current efforts.

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The Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions obliges member states and other signatories to make the bribery

human rights, corruption, environmental pollution, and the use of power are not always

clear cut.

Slides 5-15 ‒ 5-20 The Roots of Unethical Behavior

The causes of unethical behavior are complex and reflect:

• Personal ethics

Business ethics reflect personal ethics (the generally accepted principles of right and

wrong governing the conduct of individuals). The personal ethical code that guides our

behavior comes from a number of sources, including our parents, our schools, our

religion, and the media.

Home country managers working abroad in multinational firms may experience more

The term organization culture refers to the values and norms that are shared among

employees of an organization.

In a company with an organizational culture that de-emphasizes business ethics, all

decisions are reduced to the purely economic.

When there is pressure from the parent company to meet performance goals that are

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Slides 5-21 ‒ 5-27 Philosophical Approaches to Ethics

There are several philosophical approaches to ethics including the straw men approach—

are the Friedman doctrine, cultural relativism, the righteous moralist, and the naïve

immoralist.

In contrast to the straw men, most moral philosophers see value in utilitarian and

Kantian approaches to business ethics. The utilitarian approach to business ethics dates

back to philosophers such as David Hume, Jeremy Bentham, and John Stuart Mill.

rights form the basis for the moral compass that managers should use to navigate when

making decisions that have an ethical component.

Justice theories focus on the attainment of a just distribution of economic goods and

services. A just distribution is one that is considered fair and equitable. There is no one

theory of justice, and several theories of justice conflict with each other in important

considered in a business decision are:

(1) Hire and promote people with a well-grounded sense of personal ethics.

(2) Build an organizational culture that places a high value on ethical behavior.

(3) Make sure that leaders within the business not only articulate the rhetoric of

ethical behavior, but also act in manner that is consistent with that rhetoric.

Not only should businesses strive to identify and hire people with a strong sense of

personal ethics, but it is also in the interests of prospective employees to find out as much

as they can about the ethical climate in an organization.