*
Chapter 2
Chapter 2
1

Chapter 2
* The Social Responsibility of MNCs
* Ethics in Global Management
* Managing Interdependence
*
2

Chapter 2
Home Country
Owners
Customers
Employees
Unions
Suppliers
Distributors
Strategic allies
Community
Economy
Government
MNC Stakeholders
(Exhibit 2-2)
MNC
Society in General
(global interdependence/ standard of living)
Global environment and ecology
Sustainable resources
Population standard of living
Host Country
Economy
Employees
Community
Host government
Consumers
Strategic allies
Suppliers
Distributors
3

Chapter 2
*
* The term international business
ethics refers to the business conduct or morals of MNCs in their relationships with individuals and entities.
4

Chapter 2
Country Rank
1
2
3
4
10
11
12
8
9
6
7
*
Country CPI Score
Finland 9.9
Denmark
New Zealand
Iceland
Singapore
Sweden
Canada
Netherlands
Luxembourg
Norway
Australia
8.6
8.5
Switzerland 8.4
9.0
8.9
8.8
8.7
9.5
9.4
9.2
9.2
5

*
Chapter 2
Country Rank
13
14
15
16
18
20
21
22
23
24
Country
United Kingdom
Hong Kong
Austria
Israel
USA
Chile
Ireland
Germany
Japan
Spain
France
Belgium
6
CPI Score
8.3
7.9
7.8
7.6
7.6
7.5
7.5
7.4
7.1
7.0
6.7
6.6

Chapter 2
*
* The Foreign Corrupt Practices Act
(FCPA), enacted in 1977, prohibits
U.S. companies from making illegal payments or other gifts or political contributions to foreign government officials for the purposes of influencing them in business transactions.
7

Chapter 2
*
* Is it legal?
*
Does it work (in the long run)?
* Can it be talked about?
8

*
Chapter 2
* Develop worldwide codes of ethics
* Consider ethical issues in strategy development
* Given major, unsolvable, ethical problems, consider withdrawal from the problem market
* Develop periodic “ethical impact” statements
9

*
Chapter 2
* Benefits
•
Broader access to outside capital
• Foreign-exchange earnings
•
Import substitution effects allow governments to save foreign exchange for priority projects
• Risk sharing
*
Costs
• Increased competition for local scarce capital
•
Increased interest rates as supply of local capital decreases
• Capital service effects of balance of payments
10

*
Chapter 2
* Benefits
• Access to new technology and R&D developments
• Infrastructure development and support
•
Export diversification
*
Costs
• Technology is not always appropriate
•
Plants are often for assembly and can be dismantled
• Government infrastructure investment is higher than expected benefits
11

*
Chapter 2
*
Benefits
* Direct creation of new jobs
* Opportunities for indigenous management development
* Income multiplier effects on local community business
*
Costs
* Limited skill development and creation
* Competition for scarce skills
*
Low percentage of managerial jobs for local people
*
Employment instability because of ability to move production operations freely to other countries
12