Chap-3-4 For Exams

Chapter 4 Ethics in International Business
Ethics defines the acceptance of principles of right or wrong that govern the conduct of a
person, profession and organization. Business ethics are the acceptance of principles of right
or wrong. Ethical strategy is a course of action that does not violate the accepted principles.
Ethical Issues in International Business is involve: Employment practices, human rights,
environmental regulations, corruption and the moral obligation of multinational companies.
Employment Practices: If working conditions of a host nation are inferior comparatively to a
multinational’s home nation, in such case companies should apply: home country standards,
host country standards or something in between of the stated options.
Human Rights: The basic human rights of the developed countries such as: freedom of
association, freedom of speech, freedom of assembly, freedom of movement; are taken for
granted. In other countries where these rights may not exist.
Environmental Pollution: Ethical issues arise when environmental regulations in host nations
are far inferior than the home nation. Environmental questions take on added importance
because some parts of the environment are a public good that no one owns, but anyone can
spoil.
Corruption: The U.S. Foreign Corrupt Practices Act outlawed the practice of paying bribes to
foreign government officials in order to gain business.
Moral Obligations: Social responsibility refers to the idea that business people should take
the social consequences of economic actions into account when making business decisions.
There should be a presumption in favor of decisions that have both good economic and
good social consequences.
Ethical Dilemmas: Ethical dilemmas are situations in which none of the available alternatives
seems ethically acceptable. The ethical obligations of a multinational corporation are not
always clear cut: Employment conditions, Human rights, Corruption, Environmental
pollution.
The Roots of Unethical Behavior: There is no clear cut reason why managers behave
unethically. Expatriates are constantly dealing with the differences between countries.
When do they become decisions of ethics? The Roots of Unethical Behavior Determinants of
Ethical Behavior.
Personal Ethics: Expatriates may face pressure to violate their personal ethics because they
are away from their ordinary social context and supporting culture. They are psychologically
and geographically distant from the parent company. People may behave unethically
because they rely on economic analysis when making decisions and fail to ask the relevant
question: Is this decision or action ethical?
Organizational Culture: Organization culture refers to the values and norms that are shared
among employees of an organization. In firms with an organization culture that does not
emphasize business culture, unethical behavior may exist. Global and Local can be different.
Unrealistic Performance Expectations: When the parent company sets unrealistic
performance goals, managers may cut corners or act in an unethical manner. Organizational
culture can legitimize unethical behavior or reinforce the need for ethical behavior.
Leadership: Leaders help to establish the culture of an organization, and set the example
that others follow. When leaders act unethically, subordinates may act unethically, too.
Organization Culture and Leadership: To foster ethical behavior, businesses need to build a
culture: Establish a code of ethics Leaders in the business give life and meaning to the code
of ethics by repeatedly emphasizing their importance, and then acting on them. The
business puts in place a system of incentives and consequences that recognize people who
engage in ethical behavior and sanction those who do not. To determine if a decision is
ethical, managers should ask: Does my decision fall within the accepted values of standards
that typically apply in the organizational environment? Am I willing to see the decision
communicated to all stakeholders affected by it? Would the people with whom I have
significant personal relationships approve of the decision? Am I personally comfortable with
the decision?
Ethics Officers: Ensures all employees are trained in ethics. Ethics is considered in the
decision-making process. The company’s code of conduct is followed.
Moral courage: Enables managers to walk away from a decision that is profitable, but
unethical gives an employee the strength to say no to a superior who instructs to pursue
actions that are unethical. It gives employees the integrity to go public to the media and
blow the whistle on persistent. Unethical behavior in a company does not come easily and
employees have lost their jobs when acting on this courage.
Chapter 3 differences in culture
This chapter discusses the essence of the social culture and draws some of the business
practice implications. Culture is that complex whole which includes culture, values, art,
morality, law, customs and other skills that people learn as members of society.
Values and norms are the cornerstones of a society. Values are abstract concepts of what a
culture feels is fair, right and desirable. Norms are social rules and guidelines which
recommend suitable behavior in specific situations. Political and economic ideology, social
structure, religion, language, and education all shape values and norms.
A society's social structure is a guide to its basic social organization. The human dimension-
group and the dimension of stratification-are two main dimensions in which social
structures differ. The person is the basic building block of social organization, in certain
societies. These cultures rely above all else on individual accomplishments. Community is
the basic building block of social organization, among many cultures. Such groups primarily
emphasize group membership and group accomplishments. Each society is stratified into
various groups. Limited social mobility and a high degree of stratification are characteristics
of class-conscious societies.
Religion can be described as a system of shared creeds and rituals associated with the
sacred realm. Ethical structure refers to a collection of moral concepts or standards used for
controlling and influencing behavior. Christianity, Islam, Hinduism and Buddhism are major
religions in the world. While not a religion, Confucianism has as profound an effect on
behavior as that of other religions. The moral structure of different religious and ethical
systems has varying consequences for business practice.
Language is one distinguishing aspect of a society. It has both a spoken aspect and an
unspoken one. We prefer to find only one culture in other countries with more than one
spoken language.
Formal education is the process in which individuals develop competences and are
socialized through society's ideals and norms. Education plays an important role in
determining a competitive advantage for the nation.
Geert Hofstede researched the manner in which culture contributes to workplace interest.
He identified four dimensions which he thought were summarizing various cultures:
detachment from power, ambiguity, and evasion, individualism versus collectivism and
masculinity versus femininity. Culture is not constant; it's changing over time. Economic
growth and globalization tend to be two powerful engines of change in culture.
One danger facing a business which first goes abroad is being misinformed. International
companies need to recruit host-country citizens, create a network of cosmopolitan
executives and protect against the danger of ethnocentric actions in order to improve cross-
cultural literacy. The country's value system and norms will impact the cost of doing
business in the country.

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Chapter 4 Ethics in International Business

Chapter 3 differences in culture

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