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Ethics are the behavioral standards determined by
society that stipulate/specify how its members should
act in a moral manner
Disregarding an ethical code/system may result in
sanctions
Laws are codes of conduct stipulating how members of
a society are required to act and are enforced by
relevant
Breaking the law carries penalties, governance agencies
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What is perceived as unethical may also be illegal
What is perceived as unethical may still be legal
What is in fact illegal may still be perceived as ethical
When the legal system does not cover all situations
regarding corporate ‘rights’ and ‘wrongs,’ an ethical
code must be referenced.
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Figure 16-1
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The multinational corporation has economic, ethical,
legal and social responsibility to its stakeholders.
MNCs must integrate ethical and social responsibility
values and goals into its management process.
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CSR assumes that businesses should contribute to the
welfare of all stakeholders beyond providing
employment and making a profit
And, profits should be shared by the community in which
the firm operates
CSR is practiced globally, but less so in developed
nations
Some adoption of CSR activities in
less developed countries is attributed to NGOs such as
the Global Reporting Initiative
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Brazil
Two-thirds of the 445,000 firms surveyed had invested
in social programs, while half intended to increase their
involvement, fueled by
A desire to gain legitimacy /legality and customer loyalty
The rise of global codes
Russia
Businesses realize that CSR is crucial to their
sustainability, but most efforts are by large companies.
Adoption of CSR is constrained by:
Lack of transparency
Misunderstanding of the nature of CSR
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China
CSR is a new concept in China, not actively promoted by
the government
Large government bureaucracy hinders efforts
Intellectual property issues abound
Recent improvements to laws and supervision
Guidelines that address social and environmental issues are
not common
India
CSR is linked to Indian culture and religion
Corporate philanthropy is part of normal business operations
(See Table 16-3 following)
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The answer would seem to be ‘no.’
Several studies affirm that:
In the UK, firms with an ethics code financially
outperformed those without
There is a correlation between a reputation for integrity
and the growth of long term shareholder value as noted
by a U.S. study
Some research indicates that CSR’s impact on
performance is long term rather than short term
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Two instigators of corruption and bribery:
monetary gain
weak governance
NGOs monitor this activity
Transparency International publishes surveys that rank
corruption and bribery
The OECD (Organization for Economic Co-operation and Development)
Bribery Convention sets legally binding standards that
criminalize bribery of public officials in global business
transactions.
The UN Convention Against Corruption prohibits
corruption in both the public and private sectors
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U.S. Foreign Corrupt Practices Act
Two provisions
Bribery of foreign officials is illegal
Companies must maintain accurate and fair financial and
transaction records
Sarbanes-Oxley Act of 2002 mandates greater control and
management accountability
The UK Bribery Bill
Bribery, and failure to prevent it, is illegal
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An ethics code is a set of guidelines that stipulates a set
of acceptable behaviors.
A written code is not sufficient unless it includes a
mechanism for enforcement.
An ombudsman(official Auditor) must have the
responsibility for coordinating ethics policy and
advocating for employees who are involved in an ethics
issue
Attempts have also been made to motivate ethical
behavior in a company’s supply chain(system to supply
services/products to end user)
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Firms can promote basic, universal human principles
Physical security
Education
Decent working conditions and wages
by practicing them in the workplace
This task can be supported by adhering to universal
codes of behavior
Ethical and social responsibility must both be
encompassed
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1. The responsibilities of businesses: Beyond
shareholders toward stakeholders
2. The economic and social impact of business:
Toward innovation, justice and world community
3. Business behavior: Beyond the letter of the law
toward a spirit of trust’
4. Respect for rules
5. Support for multilateral trade
6. Respect for the environment
7. ‘Avoidance of illicit operations
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The dilemma/problem: how to act in a situation
where what you consider being unethical at home is
acceptable elsewhere
“Moral free space” in which there are no right or wrong
answers and core moral values must be recognized
Conflict of relative development
What would you do if your country were in a similar stage of
development (or lack of development)?
Conflict of tradition
Gift-giving in Asia: bribe, or common courtesy?
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