International Business Ethics

BMJN 5402

Why International Business?

Economic growth from more free & open trade : thought to be most effective to improve well being of impoverished people

Economic integration prevents wars

Ethical Issue & Relativism

Business must often choose between obeying home country or following local rules

• Diverse culture diverse ethical value• Ethical principles vs. application• Virtue of integrity

Cultures have different values does not imply ethical relativism

Some Alternatives

Conforming with local values extreme ethical relativism

Moral rigorism extreme attachment to home countries’ values

Naïve immoralism

Some Alternatives

Conforming with local values extreme ethical relativism

Moral rigorism extreme attachment to home countries’ values

Naïve immoralism

None is perfectly acceptable

Other Alternatives

The Sullivan Principles

• Conforming to local values as long as it does not violate general ethics• Lobbying local regulators to eliminate unethical regulations

Lobby for establishment of inter-country agreements for “moral minimum” to operate in every countries

• Example : Montreal Protocol, Kyoto Agreement

Cross Cultural Values & International Rights

Minimalist approach meeting minimal moral rights

Maximalist approach MNCs are responsible to provide benefit &

support for communities

Universal Rights (Donaldson)

Freedom of physical movement

Ownership of property

Freedom from torture

Fair trial

Nondiscriminatory treatment

Physical security

Freedom of speech & association

Minimal education

Political participation

Subsistence

Cross-Cultural Ethical Guidelines (De George)Do no intentional direct harm

Produce more good than harm for host country

Contribute by their activity to host country’s development

Respect human rights of employees

Respect local culture & work with and not against it

Pay their share of taxes

Cooperate with local govn’t in developing & enforcing just background institutionsRecognize that majority control of a firm carries with it the ethical responsibility for actions & failures of the firm

Make sure that hazardous plants are safe & run safely

Ensure proper re-designing of hazardous technology for transfer to less developed country

International Issues in Bribery

US Foreign Corrupt Practices Act (1977)

• Forbid US companies to pay bribes outside US• Amended in 1988 to allow facilitating payment

Why is bribery unethical?

• Promote unfair competition• Compensation for those who do not deserve• Unfair allocation• Promote other unethical and illegal act

Issues in International Biz

• Low wages• Outsourcing

Extortion & exploitation of workers in poorer countries

• Effort to lobby for deregulation

Race to the Bottom

• MNCs replacing legitimate government• Cultural homogenization threatens local culture &

traditions

Compromising democracy, cultural integrity & human right

Dumping

Defining Fair Wages

1 •Does not mean the same with wages of labors in MNC’s home countries

2 •Means that MNC must pay the similar responsibilities to employees at host countries with those in home countries

3 •Use of economic indicator (i.e. GDP, inflation rate) to define fair wages•Other approach : comparing labors’ quality of life

DumpingSell products below the market price or even production cost

• Against free market ethics

Why unethical?

“Against dumping” policy can’t be used to protect local market

• Unfair wages• Exclusion of depreciation

Dumping includes :

Thank You