Ethics in Global Business
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Questions and Answers

What ethical challenge may arise when businesses expand into other countries?

  • Adapting solely to their own ethical standards
  • Evaluating local laws instead of moral principles
  • Imposing their cultural values on local businesses
  • Reconciling differing moral standards between nations (correct)

What is a key consideration for businesses when dealing with ethical relativism globally?

  • The universality of their own ethical standards
  • The dominance of local business ethics over global standards
  • The potential for cultural conflicts in moral perceptions (correct)
  • The legal framework of the host country only

What is one of the primary challenges in developing a global code of ethics?

  • Addressing the diversity of ethical practices and beliefs (correct)
  • Incorporating only developed country standards
  • Ensuring stricter regulation than local laws
  • Standardizing ethics without considering local customs

What initiative outlines guidelines for ethical business practices on a global scale?

<p>The UN Global Compact (C)</p> Signup and view all the answers

What is a significance of the OECD Guidelines for multinational enterprises?

<p>They encourage responsible business conduct across borders (A)</p> Signup and view all the answers

What is one responsibility of businesses regarding environmental practices?

<p>They should promote environmentally friendly technologies. (D)</p> Signup and view all the answers

Which principle is included in both the UN Global Compact and OECD guidelines?

<p>Combating bribery. (B)</p> Signup and view all the answers

How is the credibility of the OECD guidelines enhanced?

<p>They are supported by governmental initiatives. (A)</p> Signup and view all the answers

What distinguishes the OECD guidelines from legally binding regulations?

<p>They do not carry any criminal or civil enforcement. (D)</p> Signup and view all the answers

What is a main goal of the UN Global Compact for multinational companies?

<p>To commit to core ethical values. (D)</p> Signup and view all the answers

Which of the following is NOT one of the ten chapters of the OECD guidelines?

<p>International trade agreements (B)</p> Signup and view all the answers

What type of approach does the OECD take regarding issues related to business ethics?

<p>A governmental approach. (B)</p> Signup and view all the answers

What demographic is primarily involved in the Global Compact initiative?

<p>Over 2,000 companies from various countries. (D)</p> Signup and view all the answers

What characterizes a multinational corporation (MNC)?

<p>Headquarters located in one country and activities in two or more countries (C)</p> Signup and view all the answers

What is a potential risk of the 'safety in numbers' approach to ethical decision making?

<p>Submitting to peer pressure to conform (D)</p> Signup and view all the answers

What challenge do multinational corporations face in less developed nations regarding ethical practices?

<p>Comparability of local and Western ethical standards (B)</p> Signup and view all the answers

Which is an argument against globalization?

<p>Promoting the exploitation of developing countries (A)</p> Signup and view all the answers

What does ethical relativism allow for in terms of ethical principles?

<p>Adapting ethical practices based on situational context (A)</p> Signup and view all the answers

In what way might an MNC choose to act in less developed countries when faced with ethical dilemmas?

<p>Engage in bribery to expedite processes (C)</p> Signup and view all the answers

What is a significant advantage of globalization for developing countries?

<p>Increased access to natural resources and investment (B)</p> Signup and view all the answers

Which of the following best describes the 'dark side' of capitalism as mentioned in the context of globalization?

<p>Exploitation of labor and resources in disadvantaged regions (A)</p> Signup and view all the answers

What does the principle of voluntary character emphasize in global ethics?

<p>Willingness of enterprises to adopt ethical practices (D)</p> Signup and view all the answers

Which of the following is specifically recommended under the general policies section?

<p>Provision on human rights (D)</p> Signup and view all the answers

What is encouraged regarding environmental practices?

<p>Protection of the environment and health (C)</p> Signup and view all the answers

What major issue in employment and industrial relations is addressed?

<p>Child and forced labour (B)</p> Signup and view all the answers

How does OECD recommend businesses should handle consumer interests?

<p>Respect customer privacy and provide safe products (B)</p> Signup and view all the answers

What aspect of competition does OECD promote for businesses?

<p>Open and competitive business environment (C)</p> Signup and view all the answers

What do businesses need to disclose according to the OECD guidelines?

<p>Material matters pertaining to performance and ownership (C)</p> Signup and view all the answers

What is emphasized in the combating bribery section of the OECD guidelines?

<p>Addressing bribery in both public and private sectors (A)</p> Signup and view all the answers

What is a primary argument in favor of globalization?

<p>Improves wealth and living standards in less developed countries (A)</p> Signup and view all the answers

What do the OECD Guidelines aim to promote?

<p>Principles of ethical behavior for multinational enterprises (B)</p> Signup and view all the answers

Which of the following is NOT one of Richard DeGeorge's guidelines for multinationals?

<p>Prioritize shareholder profits above all (B)</p> Signup and view all the answers

Which organization is noted for the UN Global Compact initiative?

<p>United Nations (C)</p> Signup and view all the answers

Who played a key role in promoting global ethics within organizations?

<p>Kofi Annan (C)</p> Signup and view all the answers

What is a major criticism of globalization?

<p>Exploits developing countries for cheap labor (B)</p> Signup and view all the answers

What aspect of multinational corporations does Richard DeGeorge emphasize for ethical responsibility?

<p>Majority control and accountability for actions (B)</p> Signup and view all the answers

What is a primary challenge of globalisation concerning ethical standards?

<p>Enforcing a company's culture as the global ethical standard (B)</p> Signup and view all the answers

Which principle is a focus of the UN Global Compact?

<p>Respecting human rights (B)</p> Signup and view all the answers

Why is business ethics easier to understand in a domestic environment compared to a global context?

<p>Local codes of ethics are clearly defined (C)</p> Signup and view all the answers

What is expected of multinational corporations (MNCs) regarding ethics when operating in host countries?

<p>To incorporate local ethical principles into their practices (C)</p> Signup and view all the answers

What misconception is often held by businesses expanding into new markets?

<p>The same ethical practices apply in every culture (C)</p> Signup and view all the answers

How do economic disparities impact the ethical considerations in business transactions?

<p>Developed nations often hold different ethical expectations towards developing nations (D)</p> Signup and view all the answers

What major factor complicates business operations in a global environment?

<p>Cultural differences and languages (A)</p> Signup and view all the answers

What should multinational corporations do to adapt their ethical practices in foreign markets?

<p>Evaluate and modify their code of ethics according to local standards (B)</p> Signup and view all the answers

In the context of globalisation, what is crucial for businesses when they operate internationally?

<p>To engage with local stakeholders and understand their ethical framework (B)</p> Signup and view all the answers

Flashcards

Ethical issues in global business

Difficulties arising when companies operate internationally due to differing cultural and ethical standards.

Ethical challenges in developing nations

Unique ethical problems faced by companies operating in less developed countries, often contrasting with those in more developed nations.

Ethical relativism in global business

The idea that ethical standards vary across cultures, meaning what's considered ethical in one country might not be in another.

Global code of ethics development

Crafting consistent ethical principles for companies operating worldwide, often facing challenges due to varied cultural norms.

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Globalisation impacts on business ethics

Expanding businesses face the challenge of applying their own ethical standards in a diverse global environment.

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Globalisation's impact

National markets are overtaken by regional, and then global trade blocs.

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Ethical challenge (Global)

Companies face conflict between enforcing their culture's ethics and respecting other countries' moral standards.

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Ethical understanding (Domestic)

Applying business ethics is simpler within a single nation's borders

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Global business ethics

Companies must acknowledge and integrate ethical standards of the host country in international transactions.

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MNC responsibility

Multinational corporations are responsible for a wider set of global ethical standards, especially concerning host nations.

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Developed vs. Less Developed

Ethical considerations differ in dealings between developed and less developed countries.

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Cultural/Language variation

Global business crosses different languages and cultures, raising ethical questions.

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Multinational corporation (MNC)

A company operating in multiple countries.

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Multinational Company (MNC)

A company that operates and sells products or services in multiple countries.

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Ethical Relativism

The belief that ethical principles are relative to the specific societal norms, culture, or context.

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Safety in numbers approach

Following the ethical norms of the social group, rather than individual principles.

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Bribery/Corruption

Offering or accepting something of value to influence a decision in a corrupt manner.

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Globalisation

The increasing interconnectedness of countries and economies through trade, investment, and culture.

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MNC & local ethical differences

Challenges faced by MNCs when operating in different regions where local norms differ from the home country’s standards.

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Advantages of Globalization

Increased economic opportunities and standards of living in developing economies, due to global markets.

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Disadvantages of Globalization

Potential exploitation of developing countries' resources and labor, with MNCs prioritizing profitability over local economic stability.

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Globalisation's effects on wealth

Globalization can improve living standards in developing countries, but it's a complicated issue with potential downsides.

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Exploitation of resources

Developing countries' resources and labor may be exploited to benefit multinational corporations (MNCs).

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UN Global Compact

A voluntary corporate citizenship initiative that promotes 10 principles concerning ethical conduct on a global scale.

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OECD Guidelines

Corporate guidelines from the OECD promoting standards of conduct for multinational enterprises.

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Richard DeGeorge's guidelines

Richard DeGeorge suggested guidelines (e.g., do no harm, contribute to development) for MNCs to consider in international operations.

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Global ethical standardisation

International efforts are underway to create unified ethical standards for global business practices.

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MNC's ethical responsibilities

Multinational corporations have a responsibility to avoid causing harm, contribute to development, and respect human rights in host countries, alongside fair taxation.

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Global code of conduct

Shared, standardized guidelines for behaving ethically in international business dealings.

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UN Global Compact

A voluntary initiative where over 2,000 companies worldwide commit to ethical business practices.

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OECD Guidelines

Governmental guidelines, providing ethical standards for business, based on UN Global Compact principles.

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Environmental Responsibility

Businesses should prioritize environmental initiatives and promote eco-friendly technologies.

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Combating Corruption

Businesses must actively oppose corruption, including extortion and bribery.

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Disclosure (in business)

Transparency in business operations is a core principle.

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Employment & Indust. Relations

Fair labor practices, such as equitable wages, are a guiding principle.

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OECD Chapters

The ten chapters outline specific areas of ethical conduct for businesses worldwide.

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Global Ethics

Companies should follow a common set of ethical guidelines in all countries they operate.

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OECD Principles

Guidelines for multinational companies (MNCs) on ethical business conduct, covering various areas like human rights, environment, and bribery.

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Supply Chain Responsibility

Requirement for companies to ensure ethical treatment of workers and environmental protection throughout their supply chains.

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Disclosure Requirements

MNCs should report on their performance, ownership, and sustainability (TBL) relating to their international operations.

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Combating Bribery

OECD guidelines emphasizing the importance of preventing and addressing bribery across all levels of business.

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Fair Business Practices

Guidelines for companies to ensure ethical dealings and honest practices in their customer interactions across various market segments.

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Science and Technology Sharing

Multinational corporations need to share their scientific and technological innovations with nations where they operate.

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Taxation Compliance

Enterprises must conform to local tax laws and laws of the host nations.

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Environmental Protection

Companies have a responsibility to minimize the negative environmental impact of their operations.

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Study Notes

Learning Objectives

  • Understand ethical issues in global business
  • Compare ethical challenges in developed and developing nations
  • Explain ethical relativism in a global context
  • Explain challenges in developing a global code of ethics (including DeGeorge guidelines)
  • Analyze ramifications of the UN Global Compact
  • Explain OECD Guidelines for multinational enterprises

Introduction

  • Expanding firms face ethical issues doing business with foreign customers/firms.
  • Companies often want to apply their own ethical standards universally, but other countries have different moral standards and ethical principles.
  • This creates differences in culture, language, and moral standards.
  • Conflicts can arise in ethical standards.

Ethics and Globalization

  • Businesses expanding globally face new ethical considerations.
  • Businesses may be accustomed to their own culture and practices, but these may not be appropriate globally.
  • Globalization is the expansion of international trade leading to a global market.

Challenge of Globalization

  • Enforcing a company's culture as the universal standard of ethics vs. firms and customers in other countries having their own moral standards and ethical principles.

Ethics and Globalization (continued)

  • Business ethics in domestic environments are clearer and more straightforward.
  • Ethical considerations become more challenging when crossing borders.

Ethics and Globalization (continued)

  • When operating internationally, adherence to the host country's ethical principles and policies is expected.
  • Redefining company code of ethics.
  • Multinational corporations are expected to adopt global ethical standards and responsibility towards host countries.

Ethics and Globalization (continued)

  • The debate on business ethics considers different standards for developed and less-developed nations.
  • Business transactions differ in languages and cultures.
  • Assumptions that "what works here works there" are often incorrect.

Expanding into new Markets

  • Multinational corporation (MNC) definition: Companies operating in multiple countries.
  • MNCs have headquarters in one country and conduct business across multiple countries.
  • MNCs often have productive activities in more countries.
  • Common examples of MNCs: Nike, Reebok, VW

Ethical Relativism

  • Ethical relativism is based on individual opinions, traditions of society, and circumstances.
  • It emphasizes flexibility in ethical standards rather than rigid rules.
  • A safety in numbers approach considers the comfort of being part of the ethical majority, but there is risk of bowing to peer pressure.
  • Decisions driven by local circumstances.

Ethical Relativism (continued)

  • Policies and procedures can be challenging in less-developed nations since those nations often do not have comparable policies to foreign firms.
  • MNCs often face tough decisions about whether to adhere to Western ethical principles or adapt to local practices, potentially including bribery and corruption.

Ethics and Globalization (arguments)

  • Arguments for globalization improve wealth and living standards, provide access to resources, and reduce costs in less-developed nations.
  • Arguments against globalization highlight the exploitation of developing countries, cheap labor, and lack of concern for economic viability of those nations.

Enforcing Global Ethics (UN Global Compact)

  • The UN Global Compact is a voluntary initiative committed to promoting good corporate citizenship.
  • Initiatives were launched in January 1999 and became operational in July 2000.
  • Areas of concern include: human rights, labor standards, environment, and anticorruption.

Enforcing Global Ethics (UN Global Compact) (Continued)

  • The 10 key principles of the UN Global Compact (not listed in the slides): businesses should respect human rights, have no complicity in abuses, uphold freedom of association, eliminate forced labor and child labor, eliminate discrimination, support a precautionary approach to environmental changes, promote responsibility, encourage development and diffusion of environmentally friendly technologies, work against corruption.

Enforcing Global Ethics (OECD)

  • The OECD Guidelines are a governmental initiative that promotes ethical conduct.
  • It provides principles and standards of behavior with more credibility than voluntary standards.
  • However, guidelines for OECD are not legally binding.

Enforcing Global Ethics (OECD) (Continued)

  • Covers 10 chapters including: Concepts and Principles, General Policies, Disclosure, Employment relations, Environment, Combating bribery, Consumer Interests, Science and Technology, Competition, and Taxation.

OECD (Continued)

  • The OECD has ten chapters outlining the guidelines.
  • The guidelines aim to provide principles that form the basis for voluntary conduct and Worldwide application.
  • Reflect good practices for all enterprises.

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Description

This quiz explores the various ethical issues encountered by firms as they expand globally. Participants will analyze the differences in ethical standards across developed and developing nations, and understand the challenges of forming a universal code of ethics. Key concepts include ethical relativism, the UN Global Compact, and OECD guidelines for multinational enterprises.

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