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CHAPTER 6:
Social Responsibility and NGOs
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Key Terms
▪ corporate social
responsibility (CSR)
▪ business ethics
▪ ethical imperialism
▪ cultural relativism
▪ pollution
▪ resource depletion
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
▪ sweatshops
▪ corporate corruption
▪ dumping
▪ predatory dumping
▪ microcredit
▪ non-governmental
organizations (NGOs)
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Chapter Objectives
By the time you finish this chapter, you should be able to:
▪ Assess positive and negative effects of MNCs on
the countries in which they operate, including the
impact on the norms and practices of local and
indigenous cultures
▪ Evaluate the ethical issues that arise for companies
competing internationally in relation to the following
groups: consumers, stakeholders, employees, the
host country, and society as a whole
▪ Analyze the way in which international development
agencies and NGOs promote economic progress in
developing countries
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Chapter Objectives
▪
▪
▪
Compare Canada with other countries with
respect to cultural theories and viewpoints, as
they relate to ethics in international business
Describe working conditions in various
international markets
Explain how globalization creates the need for
standardization of products, services, and
processes
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
What is Corporate Social Responsibility?
Corporate social responsibility
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The duty of a company’s management to work in the
best interests of the society it relies on for its resources
(human, material, and environmental), to advance the
welfare of society, and to act as a good global citizen
through its policies.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
What is Corporate Social Responsibility?
Corporate social responsibility can take many forms, including:
▪
▪
▪
▪
▪
▪
Making charitable donations
Treating employees ethically
Being environmentally conscious
Ensuring safe working environments
Sponsoring local sports teams
Creating and promoting diverse workplaces
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
What is Corporate Social Responsibility?
Benefits of CSR
Criticisms of CSR
▪ Can be used as a
marketing tool
▪ Dissuades governments
from implementing
regulations that could
interfere with business
▪ Helps companies attract
and retain excellent
employees
▪ Costs money, detracts
from profits
▪ Uses employees’ time
and energy
▪ Can distract customers
from problems a
company creates
▪ A company may act
ethically in one country,
but not in another
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
What is Corporate Social Responsibility?
Stakeholder Analysis
▪ Used to determine which group’s interests are
most important when a company is faced with an
ethical dilemma
▪ Primary stakeholders directly affect the company
and its profitability
▪ Secondary stakeholders have an impact on the
company, but do not directly influence its success
or contribute to profitability
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
What is Corporate Social Responsibility?
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Ethics
Business ethics
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A set of rules or guidelines that management or
individuals follow when making decisions facing
their company.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Ethics
The guidelines used when making decisions
include:
▪ Domestic and international laws
▪ The company’s code of ethics and corporate
governance
▪ The personal values of the individual making the
decision
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Ethics
Decision makers can use the test of disclosure method
to solve ethical dilemmas:
“How would we feel if everyone knew about the
decision we made?”
If they are not concerned, they have likely made an
ethical choice. If they are, they have probably not made
the right decision.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Ethics
There are two methods of thinking about ethical
issues in a global context:
Ethical imperialism
A view of culture based on the idea that there are
certain universal truths or values that are standard
across all cultures; if something is wrong in one
country, it is wrong in all countries.
Cultural relativism
A view of culture based on the idea that a culture’s
different values should be respected, as the ethics of
one culture are not better than those of another.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Business Ethics
Ethical Imperialism
Cultural Relativism
One set of values for all
cultures
Values are dependent on
the culture
Right and wrong are the
same in all cultures
Right and wrong depend
on local values
A person’s ethics are not
situational
When in Rome, do as the
Romans do
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Ethical issues in international business arise in
the following areas:
▪ Environmental issues
▪ Sweatshops
▪ Corporate corruption
▪ Dumping
▪ Poverty
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Environmental issues
▪ Sustainable development—the ability to meet
human consumption while maintaining the
environment—is a critical issue for businesses
▪ Many companies have been responsible for
pollution and resource depletion
▪ Companies and governments often resist
environmental plans that will impede economic
growth
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Sweatshops
Factories in underdeveloped and developing countries in
which employees work in unsafe environments, are treated
unfairly, and have no chance to address those conditions.
Why do sweatshops exist?
Global competitiveness, corporate greed, and consumer
expectations of low prices.
Companies that own factories in developing nations must
ensure that workers are paid a living wage and are able to
speak up against abuses.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business?
Corporate corruption
The involvement in illegal activities, such as bribery
and fraud, to further one’s business interests.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Dumping
Selling products in a foreign country below the cost
of production or below the price in the home country.
Predatory dumping
An anti-competitive business practice in which
foreign companies price their products below market
value to increase sales and force domestic
competition out of business, then raise their prices.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Poverty
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▪ Over one-quarter of the world’s population lives in
intense poverty—accompanied by hunger, lack of
shelter and medical care, limited access to
education, high rates of disease, etc.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Ethical Issues in International Business
Microcredit
▪ Microcredit—the granting of very small loans to
spur entrepreneurship—is one way that poverty is
being addressed
▪ Microcredit loans are mainly granted to women,
who use the loans to start small businesses and
their earnings to support their families
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Photo: Used under license from Shutterstock, Inc.
Ethical Issues in International Business
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.
Non-Governmental Organizations (NGOs)
Non-governmental organizations (NGOs)
Non-profit organizations with a service and
development focus that are composed mostly of
volunteers, and are predominantly funded through
charitable contributions.
NGOs may centre on trade, education, youth, improving
the environment, human rights, or other issues.
Chapter 6:
SOCIAL RESPONSIBILITY AND NGOs
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.