Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 05 – Ethical Issues in International Business
5-8
To foster ethical behavior, businesses need to build an organizational culture that places a
high value on ethical behavior. A code of ethics provides a formal statement of ethical
priorities.
Business people need a moral compass to help determine whether a decision is ethical.
It is important to recognize that employees in an international business may need
significant moral courage.
Managers can also use a five-step process to think through ethical problems. The first
step is to consider the impact of a decision on internal and external stakeholders.
To ensure ethical behavior in a business, a number of firms now have ethics officers.
Having moral courage, the courage to walk away from a decision that is profitable, but
unethical, is also important.
Some moral philosophers argue that with power comes the social responsibility for
multinationals to give something back to the societies that enable them to prosper and
grow. The concept of corporate social responsibility (CSR) refers to the idea that
businesspeople should consider the social consequences of economic actions when
making business decisions and that there should be a presumption in favor of decisions
that have both good economic and social consequences.
Many companies today are pursuing strategies that are viewed as sustainable. By
sustainable strategies, we refer to strategies that not only help the multinational firm
make good profits, but that also do so without harming the environment while
simultaneously ensuring that the corporation acts in a socially responsible manner with
regard to its stakeholders.
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: A visiting American executive finds that a foreign subsidiary in a poor
nation has hired a 12-year-old girl to work on a factory floor, in violation of the
company’s child labor prohibition. He tells the local manager to replace the child and tell
her to go back to school. The local manager tells the American executive that the child is
an orphan with no other means of support, and she will probably become a street child if
she is denied work. What should the American executive do?
ANSWER 1: This question, which illustrates a potentially very real ethical dilemma
facing managers working in foreign subsidiaries, is designed to stimulate class
Chapter 05 – Ethical Issues in International Business
5-9
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
end, many students may agree that allowing the child to continue to work in the factory is
the lesser of two evils.
QUESTION 2: Drawing upon John Rawls’s concept of the veil of ignorance, develop an
ethical code that will (a) guide the decisions of a large oil multinational toward
environmental protection, and (b) influence the policies of a clothing company in the
potential decision of outsourcing its manufacturing operations.
ANSWER 2: John Rawls suggests that a decision is just and ethical if people would
allow for it when designing a social system under a veil of ignorance. Rawls’s veil of
QUESTION 3: Under what conditions is it ethically defensible to outsource production to
the developing world where labor costs are lower when such actions also involve laying
off long-term employees in the firm’s home country?
ANSWER 3: This question is likely to stimulate some lively discussion, particularly if
students have personally felt the impact of this practice. Many U.S. companies are
outsourcing not only blue-collar work, but also white-collar positions to the developing
QUESTION 4: Do you think facilitating payments (speed payments) should be ethical?
Does it matter in which country, or part of the world, such payments are made?
ANSWER 4: Students will probably be divided on this question, and a lively debate
QUESTION 5: A manager from a developing country is overseeing a multinational’s
operations in a country where drug trafficking and lawlessness are rife. One day, a
representative of a local “big man” approaches the manager and asks for a “donation” to
help the big man provide housing for the poor. The representative tells the manager that
in return for the donation, the big man will make sure that the manager has a productive
stay in his country. No threats are made, but the manager is well aware that the big man
heads a criminal organization that is engaged in drug trafficking. He also knows that the
big man does indeed help the poor in the rundown neighborhood of the city where he was
born. What should the manager do?
Chapter 05 – Ethical Issues in International Business
5-10
ANSWER 5: Students will probably approach this question in very different ways. Some
QUESTION 6: Milton Friedman stated in his famous article in the New York Times in
1970 that “the social responsibility of business is to increase profits.” Do you agree? If
not, do you prefer that multinational corporations adopt a focus on corporate social
responsibility or sustainability practices?
ANSWER 6: Student responses will vary. Friedman’s argument, also known as the
Friedman doctrine, is that a corporation’s sole responsibility is to increase profits for its
QUESTION 7: Can a company be good at corporate social responsibility but not be
sustainability oriented? Is it possible to focus on sustainability but not corporate social
responsibility? Based on reading the section on Implications for Business Practice,
discuss how much CSR and sustainability are related and how much the concepts differ
from each other.
ANSWER 7: A firm pursuing a sustainable strategy focuses on making profits but doing
so in a way so that the environment is not harmed and at the same time ensuring that it
CLOSING CASE: UNCTAD Sustainable Development Goals
Summary
The closing case describes the efforts by the United Nations Conference on Trade and
Development to promote sustainable development. The United Nations’ Sustainable
Development Goals (SDG) is a set of 17 goals designed to end poverty, protect the
planet, and ensure prosperity for all countries by 2030. Specifically, the United Nations
Chapter 05 – Ethical Issues in International Business
5-11
has focused on (1) no poverty; (2) zero hunger; (3) good health and well-being; (4)
quality education; (5) gender equality; (6) clean water and sanitation; (7) affordable and
clean energy; (8) decent work and economic growth; (9) industry, innovation, and
infrastructure; (10) reduced inequalities; (11) sustainable cities and communities; (12)
responsible consumption and production; (13) climate action; (14) life below water; (15)
life on land; (16) peace, justice, and strong institutions; and (17) partnerships for the
goals. The United Nations anticipates that achieving these goals will require
governments, business, and people to work together toward a shared vision. Discussion
of the case can begin with the following questions.
QUESTION 1: In the most recent ranking of how countries are doing in implementing
the UN’s Sustainable Development Goals, Sweden ranked first in the world, followed by
several other countries in Scandinavia. However, even Sweden had only achieved an 85
percent success rate, meaning the country has another 15 percent remaining to be fully
compliant with the SDG initiative. What is the chance that all countries will achieve 100
percent compliance by the year 2030?
ANSWER 1: In 2015, the United Nations released its Sustainable Development Goals
noting that governments, people, and business will need to work together toward a target
QUESTION 2: Some would argue that the Sustainable Development Goals is not
something that should be mandated on countries to achieve by 2030 or any other year.
Countries should be free to set their own sustainability goals. What do you think?
ANSWER 2: Responses to this question will vary by students. Most students will
probably recognize that because we share the planet’s resources like air and water, it is
QUESTION 3: Seventeen Sustainable Development Goals is a large set of goals for the
world’s 260 countries and territories to achieve. Would it be better to focus on a smaller
set of goals, or are the Sustainable Development Goals integrated enough that countries
can tackle all of them at the same time?
ANSWER 3: Students will have varying opinions on whether a smaller set of initiatives
would make more sense than the 17 laid out by the United Nations. Many students will
Chapter 05 – Ethical Issues in International Business
5-12
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
multiple initiatives simultaneously is essential. Other students will contend that a series
of smaller, less daunting goals might be appropriate, at least to start the ball rolling.
Another Perspective: To learn more about the United Nations’ Sustainable Development
Goals, go to {https://sustainabledevelopment.un.org/post2015/transformingourworld}.
MHE INTERNATIONAL BUSINESS VIDEO LIBRARY
Please click here to visit our International Business Video Library which provides an
ongoing stream of updated video suggestions correlated by key concept and major topic.
Every new clip posted is supported by teaching notes and discussion questions. Please
feel free to leave comments in the library that you feel might be helpful to your
colleagues.
INCORPORATING globalEDGE™ EXERCISES
Use the globalEDGE™ site {http://globalEDGE.msu.edu/} to complete the following
exercises:
Exercise 1
Promoting respect for universal human rights is a central dimension of many countries’
foreign policy. As history has shown, human rights abuses are an important concern
worldwide. Some countries are more ready to work with other governments and civil
society organizations to prevent abuses of power. Begun in 1977, the annual Country
Reports on Human Rights Practices are designed to assess the state of democracy and
human rights around the world, call attention to violations, and—where needed—prompt
needed changes in U.S. policies toward particular countries. Find the latest annual
Country Reports on Human Right Practices for the BRIC countries (Brazil, Russia, India,
and China), and create a table to compare the findings under the “Workers Rights”
sections. What commonalities do you see? What differences are there?
Exercise 2
The use of bribery in the business setting is an important ethical dilemma many
companies face both domestically and abroad. The Bribe Payers Index is a study
published every three years to assess the likelihood of firms from 28 leading economies
to win business overseas by offering bribes. It also ranks industry sectors based on the
prevalence of bribery. Compare the five industries thought to have the largest problems
with bribery with those five that have the least problems. What patterns do you see? What
factors make some industries more conducive to bribery than others?
Answers to Exercises
Chapter 05 – Ethical Issues in International Business
5-13
Exercise 1 Answer
rights practices of each country in the world.
Exercise 2 Answer
Search phrase: Bribe Payers Index
