Ethics and CSR in
International Business
• The Nature of Ethics and CSR: Cross
cultural and international contexts
• Managing CSR across Borders
• Regulating International Ethics
• The accepted principles of right or
wrong governing the conduct of
business people.
• Ethical Strategy: A course of action,
that does not violate ethical
Business principles
• “when in Rome” principle?
Ethics • Sullivan Principles: A twofold
approach to doing business in
apartheid South Africa, comprising
passive resistance to apartheid laws
and attempts to influence the
abolition of apartheid laws.
Case-study: Iraq and oil price
Oil-for-Food Program Corruption
Illegal Payments
$1.8 billion in kickbacks
Illicit Surcharge
$229 million from oil surcharge
Disguised Kickbacks
$1.6 billion in fake fees
UN Approval
Inflated prices approved by UN
Navigating Ethical Dilemmas in International Business
Economic Legal Systems Corruption
Development Diverse legal Widespread bribery
frameworks and and kickbacks
Differences in
regulations
economic progress
Political Cultural When in Rome"
Systems Differences Principle
Varied political Contrasting societal Adopting local
structures and norms and values corrupt practices
ideologies
Ethical Issues in International Business
Environmental
Employment Practices
Regulations
Inferior Work
Lax Standards
Conditions
Tragedy of the
Low Pay
Commons
Ethical Dilemmas in
Global Operations
Lack of Basic Rights Unethical Practices
Repressive Regimes Bribery
Human Rights Corruption
Moral Obligation and Social
Responsibility
• Social Responsibility: The idea that business people should
consider the social consequences of economic actions and give
preference to outcomes with positive social and economic
consequences when making business decisions.
• Noblesse Oblige: A French term referring to the honorable and
benevolent behavior required of persons of noble birth.
Ethical Dilemma: A situation in which none of the available
alternatives seems ethically acceptable
The The
Determinants of Ethical Behavior
Roots of Unethical Behavior
Philosophical Approaches to Ethics
• STRAW MEN Approaches: Primarily to
demonstrate that they offer inappropriate
guidelines for ethical decision making in a
multinational enterprise.
• Four such approaches to business ethics are
commonly discussed in the literature.
- Friedman Doctrine
- Cultural Relativism
- Righteous Moralism
- Naive Immoralism
Friedman Doctrine
& Cultural Relativism
• Friedman’s basic position is that the only social
responsibility of business is to increase profits, so long
as the company stays within the rules of law. He
explicitly rejects the idea that businesses should
undertake social expenditures beyond those mandated
by the law and required for the efficient running of a
business. (Rule of the game policy)
• Cultural Relativism: The belief that ethics are nothing
more than a reflection of a culture and that firms should
simply adopt the ethics of the cultures in which they
operate. (BP’s role in Vietnam in 2002)
Righteous Moralism and Naive Immoralism
• Righteous Moralism: The belief that a multinational’s
home country standards of ethics are the appropriate
ones for companies to follow in foreign countries.
(American bank manger in Italian tax issue)
• Naive Immoralism: The belief that if a manager of a
multinational sees that firms from other nations are not
following ethical norms in a host nation, that manager
should not either. (Colombian drug lord problem)
UTILITARIAN ETHICS
• Hold that the moral worth of actions or practices is
determined by their consequences.
• An action is judged desirable if it leads to the best
possible balance of good consequences over bad
consequences.
• Utilitarianism is committed to the maximization of
good and the minimization of harm. Utilitarianism
recognizes that actions have multiple consequences,
some of which are good in a social sense and some of
which are harmful.
• It is related to cost-benefit and risk assessment analysis
Kantian Ethics
• Kantian Ethics: The belief that people should
be treated as ends and never as means to the
ends of others.
Rights theories
• Rights theories recognize that human beings have
fundamental rights and privileges that transcend national
boundaries and cultures. Rights establish a minimum level
of morally acceptable behavior. One well-known definition
of a fundamental right construes it as something that takes
precedence over, or “trumps,” a collective good.
• Universal Declaration of Human Rights A UN document
inspired by Kantian and rights theories and ratified by
almost every country on the planet; it lays down basic
principles that should always be adhered to, irrespective of
the culture in which one is doing business.
JUSTICE THEORIES
• 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 ways.
• Here we shall focus on one particular theory of
justice that is both very influential and has important
ethical implications.