Irwin/McGraw-Hill [Modified by EvS]

Mgt 470-4-1

Mgt 470Chapter 4

Ethics and Social Responsibility

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Ethics / Soc. Resp. Sites

•www.transparency.de/ (European perspective)

•www.cceia.org/ (Carnegie Council on Ethics)

•www.globalethics.org (Ethical dilemnas)

•http://www.business-ethics.org/

•http://management.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.islamist.org%2Fimages%2Fethicshm.pdf

•http://www.iit.edu/departments/csep/PublicWWW/codes/

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Ethics Around the World

Ethics -the study of morality and standards of conduct– Unethical Business Practices

Insider Trading Scandals Bribes “Mad” Syndrome

– mergers, acquisitions, divestitures

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Ethical Concerns in Japan

Political and Business Scandals Changing Social Climate Prejudice and Discrimination Social responsibility Implications from Lobbying Status of women managers

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Examples of unethical conduct

The Recruit company - allowed politicians and influential business people to buy cut-rate stock

Honda of America- settled a $6 million discrimination pay back to 370 African American women

EEOC filed sexual harassment lawsuit against Mitsubishi on behalf of 300 women

Enron…. Arthur Anderson… Adelphia Global Crossings Etc.. Etc..

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Ethical Concerns in EuropeThe Status of Women Managers

– France women are underrepresented in the corporate

management– glass ceiling– enforcement of equal opportunity is weak

– Germany has introduced laws that mandate equal opportunity

positions throughout the public sector– legislation hard to enforce

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– Great Britain women are still not well represented at the

highest levels of most organizations – legislation is weak– women’s associations are being established to

increase political power– British companies are proactively trying to recruit and

promote more women

Great Britain

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Ethics Around the World (cont.) Ethical Problems and Concerns in China

– Human rights violations trouble MNCs contemplating doing business in China

– Piracy, Counterfeiting, and Industrial Spying Problems U.S. taking hard line against Chinese piracy of intellectual

property Chinese government has closed down some factories

and offered rewards for information about piracy Opaque index

– Measures the effect of unclear legal systems and regulations– China’s system is the most opaque

Chinese-sponsored spying on foreign MNCs has increased

Chinese partners in joint ventures may break the agreement and walk off with patents and/or capital

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Figure 4-1 - The Opaque Index0 20 40 60 80 100

ChinaRussia

IndonesiaTurkey

South KoreaCzech Republic

RomaniaKenya

EcuadorThailand

GuatemalaIndia

PolandVenezuelaPakistan

ArgentinaBrazil

Taiwan

ColumbiaJapan

South AfricaEgypt

LithuaniaPeru

GreeceIsrael

UruguayHungary

ItalyMexico

Hong KongBritainChile

United StatesSingapore

0 20 40 60 80 100

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Ethics Around the World (cont.)

Ethical problems and Concerns in China (cont.)– Status of Women Managers in China

Women managers confront a “glass ceiling” due to:– Cultural stereotypes– Restricted opportunities– Discrimination that is both blatant and subtle

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Ethical Concerns in China

Piracy, Industrial Spying, and Counterfeit Problems– Chinese backed industrial spying has

increased against u.s. businesses– illegal production of counterfeit cd-roms,

music -cd’s, and video-cd’s– patent violations

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Women managers– Cultural stereotypes,

restricted opportunities, and discrimination limit women managers in China

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Regulating Foreign InvestmentRegulation of Acquisitions

– MNC’s must obtain host government clearance prior to establishing new operations or purchasing ongoing businessesPurpose: To control own economies

and gain independence from foreign companies

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Regulating Foreign Investment

Ethical concerns about the reciprocity of the relationship between the home country of the MNC and the host country

Regulation of Acquisitions– The U.S. regulates the acquisition of domestic

companies by foreign investors Other countries are following the U.S.’s lead

– EU regulations making it more difficult for non-European companies to do business in Europe

– Nonreciprocal trade partners Nations that sell (export) goods to other countries but do

not buy (import) from them

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Reciprocity– Is their an ethical and social responsibility

to engage in reciprocal trade? Example: obligations to maintain an

import/export balance with trading partner?– retaliation?

• ongoing issue between Japan and the U.S.

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The Corruption Index (fig. 4-2)0 2 4 6 8 10 0 2 4 6 8 10

Finland

Singapore

Hong Kong

United States

Germany

Japan

Taiwan

Italy

South Africa

South Korea

1

4

14

16

20

21

27

29

38

42 Nigeria

Brazil

Mexico

Argentina

China

Thailand

Philippines

India

Russia

Indonesia

46

51

57

57

61

65

71

79

88

90

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Response to Social Obligations

Foreign Corrupt Practices Act (1977)

makes it illegal to influence foreign officials through personal payment or campaign contributions

International Assistance

Provides assistance such as food, machinery, and equipment to underdeveloped countries helps to stimulate economies