ETHICS

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ETHICS

• MSA 515
• GLOBAL STRATEGY AND INTERNATIONAL MANAGEMENT

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Moral Philosophies of Relevance to Business Ethics

• Teleology an action or behavior is acceptable or
  right if it is responsible for producing the
  desired outcomes. Two key teleological precepts
  that serve as guides for managerial
  decision-making are
• Egoism it evaluates how right or acceptable a
  behavior is depending upon its consequences on
  the person
• Utilitarianism it holds that actions should be
  judged by their consequences however, unlike
  egoists, utilitarians claim that behaviors that
  are moral produce the greatest good for the
  greatest number of people

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Moral Philosophies of Relevance to Business
Ethics (contd.)

• Deontology an ethical theory holding that acting
  from a sense of duty rather than concern for
  consequences is the basis for establishing our
  moral obligation
• The Theory of Justice there are three
  fundamental guidelines that the theory of justice
  provides to managers in their decision-making
• Be equitable
• Be fair
• Be impartial

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CULTURAL ABSOLUTISM This is the view that
there is a single set of universal ethical
principles which apply at all times in all
circumstances, in all cultures.
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COSMOPOLITANISM A METHOD BY WHICH A UNIQUE
RESPONSE TO A CROSS CULTURAL DILEMNA IS
DEVELOPED, ONE THAT TRIES TO FIND A COMMON
GROUND AMONG DISPARATE MORAL VIEWS
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A Decision Tree Incorporating Ethics in
International Decision Making
Does the International Business Decision (IBD)
create the greatest benefit for everyone
affected? (Teleology)
Are there overriding factors that justify the
suboptimization of the greatest benefits for
everyone affected?
No YES NO YES NO YES NO
NO
Does the IBD respect the rights of all persons
affected? (Deontology)
Are there overriding factors that justify the
abrogation of a right?
NO
Does the IBD respect the canons of
justice? (Theory of Justice)
Are there overriding factors that justify the
violation of a canon of justice?
NO
Does the IBD respect the cultural norms of
affected parties, both in home and host
countries? (Cultural Relativism)
Are there overriding factors that justify
ignoring the cultural norms of the affected
parties?
NO
Reject the IBD
Accept the IBD
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Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 (FCPA)
(15 U.S.C. 78dd-1, et seq.) is a United States
federal law known primarily for two of its main
provisions, one that addresses accounting
transparency requirements under the Securities
Exchange Act of 1934 and another concerning
bribery of foreign officials.1
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The anti-bribery provisions of the FCPA
prohibit Issuers, domestic concerns, and any
person from making use of interstate commerce
corruptly, in furtherance of an offer or payment
of anything of value to a foreign official,
foreign political party, or candidate for
political office, for the purpose of influencing
any act of that foreign official in violation of
the duty of that official, or to secure any
improper advantage in order to obtain or retain
business. Persons subject to the FCPA Issuers
Includes any U.S. or foreign corporation that has
a class of securities registered, or that is
required to file reports under the Securities and
Exchange Act of 1934 Domestic concerns Refers to
any individual who is a citizen, national, or
resident of the United States and any corporation
and other business entity organized under the
laws of the United States or having its principal
place of business in the United States Any
person covers both enterprises and individuals
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Least Corrupt Countries Worldwide
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Corruption in Western and Eastern Europe
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Corruption in North, Central, and South America
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Corruption in Middle East and Asia
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Corruption in Northern and Southern Africa
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Worst Bribe Payer Countries
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Factors Responsible for Bribes
Home Country Factors Host Country Factors
Competitors are giving bribes to obtain business Host government has control over business activities, permits and licenses. Government officials are required to conduct normal business functions
There is constant pressure for higher levels of performance by top management and shareholders Government officials are poorly paid and use bribes to supplement salary
This is an accepted practice in the host country. Cannot expect to get any business without conforming Bureaucratic delays can be costly for business (e.g., clear products through customs on time to meet delivery schedules)
Tax laws of the country encourage bribery (e.g., some bribes can be written off as a business expense in Germany but not in the U.S.) Political pressures exists from to make contributions to political parties or favorite political organizations or causes
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Social Responsibility
Economic Only that which is required by law
return to stockholders, pay taxes, meet
payroll Socially Responsible - Beyond law
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Equator Principles
A voluntary set of standards for determining,
assessing, and managing social and Environmental
risk in project financing People, Planet, and
Profit
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Sustainable Development
A pattern of resource use that aims to meet
human needs while preserving the environment so
that these needs can be met not only in the
present, but also for future generations. meets
the needs of the present without
compromising the ability of future generations to
meet their own needs Brundtland Commission
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Indicates how economy and society are constrained
by environment (2003
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Sustainable Development at the Confluence of
Three Sustainable Parts (2006)
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Consumption of renewable resources State of environment Sustainability
More than nature's ability to replenish Environmental degradation Not sustainable
Equal to nature's ability to replenish Environmental equilibrium Steady state economy
Less than nature's ability to replenish Environmental renewal Environmentally sustainable