ETHICS
• Introduction
– Ethics and Law Distinguished
– Ethical Schools of Thought
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Utilitarianism
Rights-Duties
Justice-Fairness
Ethics of Care
– Application of Ethical Standards
ETHICS AND LAW
• Law
• Involuntary application of rules and regulation
within jurisdiction of host nation
• Law provides for sanctions and penalties if noncompliance by international corporation
• Ethics
• Voluntary compliance with recommendations from
International Labor Organization or Organization for
Economic Cooperation and Development No legal
penalties for noncompliance
ETHICS AND LAW
• Ethics-continued
– Ethical Relativism• theory that different countries or cultures have
different ethical belief systems there is no
supranational way of determining whether an action
is right or wrong
– Ethical Problems
• Poor ethical decisions can damage corporate profits,
reputation, credibility, public image and lead to poor
public relations.
ETHICS
• Utilitarian-Teleology or consequentialism
looks to the consequences of a decision or
an action to determine if it was ethically
correct.
• Utilitarian Theories
– Egoism
– Benefit Cost Analysis
ETHICS
• Utilitarianism
– Egoism-associated with Adam Smith’s “Wealth
of Nations”. In short, individuals should be
allowed to make decisions based upon their
own rational self interest.
– Benefit Cost Analysis-where one attempts to to
monetize the ethical determination by placing a
dollar value on the benefits and costs of an
action from the narrow perspective of
decisionmaker.
ETHICS
• Utilitarianism-continued
– Criticism of Utilitarianism Theories
• Non-quantifiable variables such as human life or
well being.
• Weighing direct and indirect effects from the
perspectives of all parties or stakeholders.
• Which concerns should be the “dominant concern”
in making ethical decisions.
• What are the distributive effects of a decision
ETHICS
• Rights and Duties-Individual ethical actions
to others.
– Ethical Theories on Rights and Duties
• Enunciated Rights Approach
• Kantian Approach
• Virtue Approach
ETHICS
• Rights and Duties-continued
– Enunciated Rights Approach-individual has a
duty to respect the enunciated rights of others
• John Locke-inalienable rights as enunciated in the
United States in the Bill of Rights, Constitution and
Declaration of Independence-life, liberty and
property.
• French Rights of Man
• United Nations Declaration on Human Rights and
Development-Articles 3 through 25
ETHICS
• Kantian-absolute duty that cannot be
changed because of unattractive
consequences created by such duty
• Categorical Imperative-non-negotiable duties or
laws
• Obedience to the Law-Bhopal Incident
• Virtue Approach-focus is upon the moral
character or motivation of the actor.
• Actor must avoid vices
ETHICS
• Ethics of Care-focuses on the preservation
of relationships. The view is that one owes
an obligation to some rather than to others.
• Milton Friedman-corporation owes a duty to
shareholders and not society.
• John Kenneth Galbraith-corporation has a social
obligation.
• Example would be decision to close a plant that
injures a number of people in the community.
ETHICS
• Ethics of Care-continued
– Organizational Ethics-individuall liability for
violating organizational moral duties.
• Subordinate Responsibility-must think from the
perspective of other persons when acting upon the
other person.
• Caux Round Table Principle for International
Business-combining the Western concept of dignity
of all human beings and the Japanese concept of
Kyosei that a primary value of society is working
together.
ETHICS
• Application of Ethical Standardsenvironment, bribery, standards and
advertising
– Environmental
• Korea-Rapid economic growth lead to
environmental concerns.
• Korea created a number of governmental and nongovernmental agencies to protect the environment.
• Ethical Issue-should foreign firm apply higher
standard or just meet the standards applied by the
Korean government.
ETHICS
• Bribery
– Foreign Correct Practices Act-anti bribery
provision, record keeping provision and
disbursement provision.
– See Comparative Law: Foreign Corrupt
Practices Act
– See Case Lamb v. Phillips
– United States v. Liebo
ETHICS
• Bribery-continued
– Elements of Offense Under Foreign Corrupt
Practices Act
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Who
Corrupt Intent
Corrupt Act
Recipient
Business Purpose
ETHICS
• Bribery-continued
– Organization for Economic Cooperation and
Development
• OECD Convention on Combating Bribery of
Foreign Public Officials in International Business
– Development Centre on Corruption-assist developing
nations combating corruption
– United States is bound by convention. Convention is
similar to FCPA.
ETHICS
• International Standard-international
organizations businesses may consult
– OECD
– International Chamber of Commerce
– International Organization for Standardization
ETHICS
• Advertising
– International Chamber of Commerce has some
standards on advertising. Examine provisions
in insert