SOCIAL AND ETHICAL ISSUES

IN INTERNATIONAL BUSINESS

PRESENTED BY:
Palashi Borah
Kanta Roy
 ETHICS
Moral standards, not governed by law, that
focus on the human consequences of actions
 BUSINESS ETHICS
A form of applied Ethics or professional ethics that
examines ethical principles and moral or ethical
problems that arises in a business environment.

Sources:
Religion
Cultural Experience
Legal system
 IMPORTANCE OF ETHICS
• Ethics corresponds to basic human needs
• Values create credibility with the public
• Values give management credibility with
Employees
• Values help better decision making
• Ethics and Profits
• Law can’t protect society, Ethics can
 SOCIAL RESPONSIBILITY AND
INTERNATIONAL BUSINESS(Challenges)
• Managing the type of the Government
obtaining in a host country where subsidiary
of MNC is located.
• Relationship between home country and host
country.
• Host Government’s attitude towards foreign
investment
 CONTD….
• Social problems of host country.
• International laws is weak in addressing social
effects in Business.
 Who are effected by ethical issues??
• Customers: Product safety, fair price, proper
disclosures, information.
• Stockholders: Fair return on Investment
• Employees: Fair wages, Safety of working
conditions, child labor, discrimination by sex,
race, color, creed.
• Host Country: Impact on local economies,
following local laws, impact on local social
institutions.
• Society in general: Environmental protection, raw
material depletion.
 INTERNATIONAL BUSINESS AND
ETHICS
 Bribery and Corruption-
Bribery: a deliberate attempt to persuade
someone to act improperly in favor of briber
by offering money of gifts or any other
material gain.
Corruption: is abusing public office for
private gain.
 Work Practices and Work remunerations-
The ethical dilemma facing an International
firm is what type of technology it should
employ in the host country.

Due to cultural differences an International

firm may vary its work practices to suit the
local culture and avoid ethnocentrism.
 OTHER ISSUES
 Employment Practices: Working conditions
like hot weather, around toxic chemicals for
long hours and less wage and salaries in
developing countries.
 Environmental pollution: The emission of
pollutants, dumping of toxic chemicals into
the environment.
 RELATIVISM Vs. UNIVERSALISM
• Individual ethical relativism
No absolute principle of right and wrong, good or
bad, in any social situation.
• Cultural ethical relativism
What is right or wrong, good or bad, depends on
one's culture.
• Ethical universalism
Universal and objective ethical rules located deep
within a culture that also apply across societies.
 Ethical and Legal Distinctions in International
Management

China
United States Alcohol Consumption
Yes Usury
Yes A Women Drivers
Alcohol Consumption
Usury
Child Labor
Women Drivers Legal Facilitating Payments
Legal
Prayer at Work
Child Labor No
Prayer at Work
Facilitating Payments
No
B No Ethical Yes
No Ethical Yes
Islamic Countries
Yes Facilitating Payments
Child Labor
Prayer at Work

Legal
Alcohol Consumption
Usury
Women Drivers
No

No Ethical Yes

17-12
Pressures for Ethical Convergence.
• growth of international trade and trading blocks,
such as NAFTA and the EU, creates pressures to
have common ethical practices that transcend
national cultures and institutional differences.
• Interactions between trading create pressures for
imitating the business practices of other
countries
• MNCs that do business across the world have
employees from varied cultural backgrounds who
need common standards and rules regarding how
to behave.
 Employment Practices and Policies (selected)

Policy Organization

MNCs should not contravene the manpower policies of host nations ILO

MNCs should respect the right of employees to join trade unions and to ILO; OECD;
bargain collectively UDHR

MNCs should develop nondiscriminatory employment policies and ILO; OECD;

promote equal job opportunities UDHR

MNCs should provide equal pay for equal work ILO; UDHR

MNCs should give advance notice of changes in operations, especially ILO; OECD
plant closings, and mitigate the adverse effects of these changes

MNCs should, minimally, pay basic living wages to employees ILO; UDHR

MNCs operations should benefit lower-income groups of the host nation ILO
17-14
 Consumer Protection

Policy Organization
MNCs should respect host-country laws and policies regarding the OECD; TNC
protection of consumers Code
MNCs should safeguard the health and safety of consumers by various TNC Code
disclosures, safe packaging, proper labeling, and accurate advertising

17-15
 Basic Human Rights and Fundamental Freedoms

Policy Organization
MNCs should respect the rights of all persons to life, liberty, security of UDHR; ECHR;
Helsinki; ILO;
person, and privacy TNC Code

MNCs should respect the rights of all persons to equal protection of the UDHR; Helsinki;
ILO; TNC Code
law, work, choice of job, just and favorable working conditions, and
protection against unemployment and discrimination
MNCs should respect all persons’ freedom of thought, conscience, UDHR; ECHR;
Helsinki; ILO;
religion, opinion and expression, communication, peaceful assembly and TNC Code
association, and movement and residence within each state
MNCs should promote a standard of living to support the health and well- UDHR; Helsinki;
ILO; TNC Code
being of workers and their families
MNCs should promote special care and assistance to motherhood and UDHR; Helsinki;
ILO; TNC Code
childhood

17-16
 Ex. 17-1: Least Corrupt Countries Worldwide

9.7
9.7

9.6

9.5 9.5
9.5

9.4
10 = Least
9.4
Corrupt

9.3
9.3

9.2

9.1
Finland Denmark New Zealand Iceland Singapore

17-17
 Ex. 17-2: Corruption in Western and Eastern
Europe

9.7
10

7
6
6
5.2
10=Least
5
Corrupt

3
2.1

0
Finland Italy Slovenia Moldova

17-18
Ex. 17-3: Corruption in North, Central, and South
America
9
9

8 7.7
7.5

5
10=Least 4.5
Corrupt
4
3.6

3
2.5

2 1.7

0
Canada USA Mexico Costa Rica Nicaragua Chile Paraguay

17-19
 Ex. 17-5: Corruption in Northern and Southern
Africa

7
6.4

4.8
5

4
3.4
10=Least
Corrupt
3

2 1.6

0
Tunisia Egypt Botswana Nigeria

17-20
 Ex. 17-6: Worst Bribe Payer Countries

4.5
4.1
3.9
4 3.8

3.5
3.5
3.2

2.5
10=Least
Corrupt
2

1.5

0.5

0
Russia China Taiwan South Korea Italy

17-21
What Companies Can Do to Integrate Ethics and
Business Conduct
1. The top management must be committed to the company’s
ethics program
2. A written company code that clearly communicates
management’s expectations must be developed
3. Provide an organizational identity to the ethics program
4. A formal program must be in place to implement the ethics
code
5. The line managers, not consultants, do training in ethics
6. Strict enforcement of codes is essential
7. Actions speak louder than words

17-22
 Implications for Managers
• Develop a Framework for Evaluating
Ethical Codes and Determining
Personal Ethics
• Understand Behaviors and Ethics of
Other Societies
• Consider Approaches to Resolving
Cross-Cultural Ethical Conflicts