Resolving Ethical Business Challenges

Resolving Ethical Business Challenges – CornCoRead the CornCo scenario on pp. 304-305. Pay particular attention to the global issues and the fact that law is not necessarily a static concept in business because it varies across nations. Answer the following:1) What should George do? Identify the relevant issues that affect your decision, along with an ethical interpretation of those issues. This question needs to be answered with at least 250 words with references and intext citations. I have included the book, and you can include at least 1 outside sources. Please make sure you include the book Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases [9th edition]. Mason, OH: Cengage Learning. I am here if you have questions. This question will probably benefit from outside sources. Thank you in advance.
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CHAPTER 10
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DECISION-MAKING
© Paul Aniszewski, Shutterstock
GLOBALIZATION OF
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ETHICAL
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Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER OBJECTIVES
CHAPTER OUTLINE
t To discuss global values, goals, and
Global Culture, Values, and Practices
business practices within ethics
Economic Foundations of Business Ethics
Economic Systems
t To understand the role of capitalism and
economics as factors in business ethics
Multinational Corporations
Global Cooperation to Support Responsible
Business
International Monetary Fund (IMF)
t To assess the role of multinational
corporations in business ethics
t To assess the role of the International
Monetary Fund in business ethics
t To assess the role of the United Nations
Global Compact in business ethics
t To assess the role of the World Trade
Organization in business ethics
t To explore and discuss common global
business practices
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t To gain awareness of global ethical issues
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AN ETHICAL DILEMMA*
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At the Dun and Ready (D&R) Company, Sid was
responsible for monitoring the Japanese stock
market to determine patterns and identify stocks
that could become active. One of 10 company
representatives in Japan, Sid, who was of Japanese
descent and fluent in the language, had been
assigned to Tokyo. Being relatively new to the firm,
he was told to gather information for his boss,
Glenna. Glenna had been with D&R for 10 years,
but because of the cultural barriers, she was not
United Nations Global Compact
World Trade Organization (WTO)
Global Ethics Issues
Global Ethical Risks
Bribery
Foreign Corrupt Practices Act
U.K. Antibribery Act
Antitrust Activity
Internet Security and Privacy
Human Rights
Health Care
Labor and Right to Work
Compensation
A Living Wage
Executive Compensation
Consumerism
The Importance of Ethical Decision Making
in Global Business
enthusiastic about her Tokyo assignment. Glenna
encouraged Sid to get to know the Japanese
brokers, traders, and other key people in the
business. Thanks to his background, he found that
he blended easily into the culture.
In Japan, ceremony and giving favors is a way of
life. Sid learned that, by observing Japanese customs
and perfecting his Japanese, he became not only an
information resource on the Japanese stock market
and its players for his company but also a resource
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
274
Part 4: Implementing Business Ethics in a Global Economy
for the Japanese who wanted to invest in the U.S.
market. He found that the locals would talk to him
about important investments rather than coming into
the office to see Glenna.
Sid’s duties included taking key customers
to bars, restaurants, and vacation spots for
entertainment. One day a government official in the
group that Sid was entertaining hinted that he and
the others would like to play golf on some famous
U.S. courses. Sid understood what the government
official wanted and relayed the request to Glenna,
who told him that granting a favor of this kind would
normally be against policy, but because such favors
seemed to be the custom in Japan, they could do
some “creative bookkeeping.” “When in Rome,
right, Sid?” was Glenna’s response to the whole
situation. By pulling some strings, Glenna managed
to enable these officials to play at 10 of the most
exclusive U.S. golf courses. Later, several officials
passed the word to people in Japan’s elite financial
circle about Sid’s helpfulness.
Six months later, Glenna was transferred back
to the States. Rumor had it that expenses were too
high and revenue too low. Her replacement, Ron,
didn’t like being sent to Japan either. In his first
week on the job, he told the staff that he would
shorten his tour in Tokyo by slashing expenses
and increasing productivity. Ron was a “by-thebook” person. Unfortunately, company rules
had not caught up with the realities of cultural
differences. After two months with Ron, seven of
the original 10 company representatives had quit
or been fired.
Sid was barely surviving. Then one of his
contacts in the government repaid a favor by
recommending several stocks to buy and sell.
The information paid off, and Sid gained some
breathing room from Ron. Around the same time,
some of Sid’s Japanese clients lost a considerable
amount of money in the U.S. markets and wanted a
“discount”—the term used for the practice in some
large Japanese brokerage houses of informally
paying off part of their best clients’ losses. When
Glenna was still in Tokyo, she had dipped into
the company’s assets several times to fund such
discounts. Because everything required Ron’s
approval, Sid and his colleagues believed that this
practice would not be tolerated. However, late one
afternoon Sid and a few others provided the proper
forms, and Ron signed them without realizing what
he had done.
Several months passed, and the three survivors
resorted to lowering their expenses by using their
own funds. This in turn led to Sid “churning”
some of his accounts; that is, he bought and sold
stocks for the express purpose of increasing his
own revenues. Churning was tolerated in Japan,
along with other practices that would be deemed
questionable in the United States. Ron was oblivious
H Sid was doing because his focus was on
to what
reducing
O expenses.
The previous month, a group of important
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D&R clients had thrown a party for a few of their
favorite
K brokers at one of their local haunts. After the
customary toasts and small talk, it was suggested
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to Sid that a Japanese cartel might be interested
, Sid was cautious and nothing else was
in D&R.
mentioned. Several weeks later at another party,
Sid and the two remaining D&R people were told
thatAa takeover was imminent. But to make the
takeover
L painless, the cartel needed certain sensitive
information. Sid’s reward for providing it would be a
Tposition in the new, reorganized company and a
high
“wink/nod”
agreement that he could go anywhere in
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the world for his next assignment.
EThat week Ron announced that headquarters
wasApleased with the productivity of the Tokyo group.
“It’s only a matter of time before I get transferred, and
I want out of Tokyo,” he told them. The office knew
that5if Ron succeeded, his next position would be that
of vice president. Ron also informed the group that
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corporate representatives would be coming to Tokyo
the2following week.
0“It seems they’ve heard rumors of a possible
hostile takeover attempt on D&R from someone in
B and they want us to check it out,” Ron said,
Japan,
with a tight smile. “There will be some changes next
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week.”
Sid suspected that this meant there would be
even fewer people working even harder. It might
also mean, however, that someone knew that Sid
and the other two representatives had been talking
to the wrong people. Or maybe one of the three
had sold out the other two. If Sid was to gather the
information sought by the cartel, he would have to
act quickly.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 10: Globalization of Ethical Decision-Making
QUESTIONS | EXERCISES
1. What are the ethical issues in this situation?
2. Identify the pressures that have caused the ethical
issues to develop.
275
3. Discuss the advantages and disadvantages of
each decision that Sid could make.
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
A
dvances in communication, technology, and transportation have minimized the
world’s borders, creating a new global economy in which more and more countries are industrializing and competing internationally. These transactions across
national boundaries define global business, a practice
H that brings together people from
countries that have different cultures, values, laws, and ethical standards. Therefore, the inO the values, culture, and ethical stanternational businessperson must not only understand
dards of his or her own country, but must also beO
sensitive to those of other countries.
In this chapter, we explore the ethical complexities and challenges facing businesses
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that operate internationally. We try to help you understand
how global business ethics has
more complexity than business in a domestic context.
S The global business environment, if
not understood, can destroy the trust companies need to be successful. To transition from
, arena requires additional knowledge.
one well-understood culture or country to the global
Our goal in this chapter is to help you avoid, or at least become aware of, the many ethical quagmires that lurk in this domain. To help you become more ethically sensitive to the
A
global environment of business ethics, we start with the basics, discussing global values and
L to help modify their business practices
cultural dimensions that can be used by companies
to different countries. Next, we examine the economic foundations of business ethics. In adT
dition, we help you understand that there are global entities that do not necessarily conform
to your country’s view of the world or the way to H
do business. In this chapter we also examine multinational corporations and the ethical problems
they face. We move on to discuss
E
the International Monetary Fund, the United Nations Global Compact, and the World Trade
A and future ethical problems facing
Organization. We conclude with an analysis of current
global businesses, including global ethical risks, bribery, antitrust activity, Internet security
and privacy, human rights, health care, labor and right to work issues, compensation, and
consumerism. Our goal is to help you understand5how international business activities can
create ethical conflicts and help you improve your8ethical decision-making ability.
2
0 AND PRACTICES
GLOBAL CULTURE,VALUES,
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Country cultural values are subjective, are based on the
U social environment, and are used to de-
velop norms that are socially and legally enforced. These values can be specific to countries,
regions, sects, or groups. National culture is a much broader concept than organizational culture.
It includes everything in our surroundings that are made by people—both tangible items, such
as artifacts, and intangible entities, such as concepts and values. Language, law, politics, technology, education, social organizations, general values, and ethical standards are all included
within this definition. Each nation contains unique cultures and, consequently, distinctive beliefs about what business activities are acceptable or unethical. Subcultures can also be found
within many nations, ethnic groups, and religious groups. Therefore, when transacting international business, individuals encounter values, beliefs, and ideas that may diverge from their own
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
276
Part 4: Implementing Business Ethics in a Global Economy
because of cultural differences. When someone from another culture mentions “integrity” or
“democracy,” most Americans might feel reassured that these are familiar concepts. However,
these concepts mean different things to different people, depending on their culture. Moreover,
you must keep in mind that organizational culture is different from national culture, though
often organizational cultures are derived from—and influenced by—national cultures.
Most cultures need auditors, directors, or other entities associated with corporate governance to provide independent oversight of the operations of an organization. In the Japanese banking system, the concept of “independent oversight” has been blurred by the fact
that retired Japanese bureaucrats often become auditors and directors. They are trusted simply because of their status. When those providing oversight also have relationships within
and/or a vested interest in the success of the company, a truly independent relationship does
H or corporate governance oversight failure.
not exist and there could be conflicts of interest
Different cultural values and how theyOaffect business have intrigued management experts for years. Many have developed frameworks for classifying cultural behavior patterns
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that can help businesspeople who work in different countries. One of the most well-known
K
frameworks was proposed by Dutch management
professor Geert Hofstede. Hofstede identified four cultural dimensions that can have a profound impact on the business environS
ment: individualism/collectivism, power distance, uncertainty avoidance, and masculinity/
femininity.1 We will discuss the first three ,in the following paragraphs.
The individualism/collectivism dimension of culture refers to how self-oriented members of a culture are in their behavior. Individualist cultures place a high value on individual
achievement and self-interest. The United A
States is an example of an individualistic culture.
Collectivist cultures value working towardL
collective goals and group harmony. Mexico and
several countries in Asia adhere to more collectivistic principles. Collectivist cultures tend to
T 2 In Thailand, for instance, negatives such as
avoid public confrontations and disagreements.
“no” tend to be avoided in business settings.
HBy understanding this cultural dimension, you
will be more likely to maneuver correctly within different cultural business settings.
The power distance dimension refersEto the power inequality between superiors and
subordinates. The United States has some
Aelements of both a higher and a lower power
distance culture. Over the years, the U.S. business environment has adopted forms of management, such as participative management, that place supervisors and subordinates on a
more equal footing. In some businesses, 5
employees address their superiors by their first
names and have the power to make decisions that are normally reserved for management.
8
Arab countries score higher on the power distance dimension. Cultures with high power
2 for (or fear of) supervisors may be so great
distance tend to be more hierarchal, and respect
that managerial misconduct could become0hard to pinpoint.3
Uncertainty avoidance refers to how members of a society respond to uncertainty or
ambiguity. Cultures that score high on theB
uncertainty avoidance dimension, such as Great
Britain, tend to want to avoid risk-taking.UOrganizations within these cultures may have
more rules in place to ensure that employees do not deviate from accepted standards.
Cultures with less uncertainty avoidance, such as Canada, believe that risk-taking and innovation are important in achieving successful outcomes.4 Businesses from either culture
will need to be aware of how a particular culture views uncertainty avoidance. For instance,
if a businessperson from the United States is giving a sales presentation to a business in
Uruguay—a culture with higher uncertainty avoidance—the American businessperson
might try to reassure the Uruguayan company by attempting to mitigate the risks involved.
As Hofstede’s dimensions suggest, businesspeople who travel to other countries quickly
perceive that other business cultures have different modes of operation. The perception
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 10: Globalization of Ethical Decision-Making
277
exists that American companies are different from those in other countries, and some people perceive U.S. companies as being superior to their foreign counterparts. This implied
perspective of ethical superiority—“us” versus “them”—is also common in other countries.
Figure 10.1 indicates the countries that businesspeople, risk analysts, and the general public have perceived as the most and least corrupt.
In business, the idea that “we” differ from “them” is called the self-reference criterion
(SRC). The SRC is the unconscious reference to one’s own cultural values, experiences, and
knowledge. When confronted with a situation, we react on the basis of knowledge we have
accumulated over a lifetime, which usually is grounded in our culture of origin. Our reactions are based on meanings, values, and symbols that relate in a certain way to our culture
but may not have the same relevance to people of other cultures.
H of how the SRC can cause problems.
Walmart’s foray into Germany is one example
A German labor court ruled that parts of the ethics
O code of Walmart Stores, Inc., including a ban on relationships between employees, violate German law. The same court also
O
ruled against a proposed hotline for employees to report on colleagues’ violations of the
K German Walmart stores sued the retail
code of conduct. Labor representatives from the 91
giant over the code after it was introduced without their prior approval. Under German law,
S
employee–management councils must sign off on a wide range of workplace conditions.5
,
These, as well as other cultural differences, led Walmart
to close its German stores. Walmart
FIGURE 10.1 Transparency International’s Corruption Index Rankings by Country.
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The 2010 Corruption Perceptions Index measures the perceived levels of public-sector corruption
in 178 countries around the world.
Very Clean
9.0 – 10
8.0 – 8.9
7.0 – 7.9
6.0 – 6.9
5.0 – 5.9
4.0 – 4.9
3.0 – 3.9
2.0 – 2.9
1.0 – 1.9
0 – 0.9
No Data
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Highly Corrupt
Source: Reprinted from Corruption Perceptions Index 2010. Copyright 2010 Transparency International: the global coalition against corruption.
Used with permission. For more information, visit http://www.transparency.org.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially a …
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