C H A P T E R 10
Globalization of Ethical
Decision Making
Chapter Objectives
• To understand the role of capitalism and economics
as factors in business ethics
• To discuss global values, goals, and business
practices within ethics
• To explore and question common global business
practices
• To gain awareness of global ethical issues
Chapter Objectives (cont.)
• To assess the role of the international monetary fund
• To assess the role of the world trade organization in
business ethics
• To assess the role of multinational corporations in
business ethics
Chapter Outline
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Capitalism, Economics, and Business Ethics
Common Values, Goals, and Business Practices
Global Business Practices
Sustainable Development
International Monetary Fund (IMF)
World Trade Organization (WTO)
The Multinational Corporation (MNC)
Capitalism, Economics and Business
Ethics
• The first decade of the 21st century was a turbulent
one
– Ethical misconduct and excessive risk-taking
seemed rampant
– Many stakeholders lost confidence in businesses
• Lack of fairness, trust and honesty made
stakeholders question the stability of major
institutions, as well as the intentions of executives
• Even the competence of governmental regulatory
institutions was called into question
Key Figures in Modern Economics
• Adam Smith
• John Maynard Keynes
• Milton Friedman
Capitalism, Economics and Business
Ethics
• Socialism: Advocates that wealth and power be
shared equally across society based on the amount
of work expended in production
• Social democracy formed in the 1940s as an
offshoot of socialism
• Current global economic system has created
bimodal wealth distribution: The middle class
shrinks so that there are many poor and a few very
wealthy
Common Values, Goals, and Business
Practices
• Global common values: Shared across most
cultures
• Country cultural values: Specific to certain groups
that express actions, behavior and intent
• Culture: Everything in our surroundings that is made
by people
Global Business
• Dumping: The practice of charging high prices for
products sold in domestic markets while selling the
same products in foreign markets at low prices, often
below the costs of exporting them
Cultural Relativism
• The concept that morality varies from one culture to
another
• There is a continuum of cultural relativism
Sustainable Development
• Is a systematic approach to achieving development in
such a way that the earth’s resources are preserved
for future generations
• Some companies conduct their own sustainability
performance reports
The International Monetary Fund
• The IMF emerged from the Bretton Woods
agreement of 1944
• The IMF assumed a major role in the 1980s in the
management of the less developed countries (LDC)
debt crisis
• An ethical issue surrounding the IMF has to do with
the increased inequality in LDCs
The World Trade Organization
• The WTO was established in 1995 and now includes
133 member nations and 33 others with observer
status
• Administers its own trade agreements, facilitates
future trading negotiations, settles trade disputes and
monitors the trade policies of member nations
The Multinational Corporation
• Are public companies that operate on a global scale
without significant ties to any one nation or region
• MNCs are subject to ethical criticism over their
impact on the countries in which they do business
• Because of increased scrutiny and pressure to be
socially responsible, many corporations belong to
Business for Social Responsibility