Chapter 5:
Ethics and
Social
Responsibility
in International
Business
International Business, 4th Edition
Griffin & Pustay
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Chapter Objectives_1
 Describe the nature of ethics
 Discuss ethics in cross-cultural and
international contexts
 Identify the key elements in managing
ethical behavior across borders
 Discuss social responsibility in crosscultural and international contexts
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Chapter Objectives_2
 Identify and summarize the basic areas
of social responsibility
 Discuss how organizations manage
social responsibility across borders
 Identify and summarize the key
regulations governing international
ethics and social responsibility
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Exporting Jobs or Abusing People?
 Minute Maid
 Tropicana
 Nestle
 Nike
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Ethical Behavior
Ethical behavior usually refers to behavior
that conforms to generally accepted
social norms.
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Ethical Generalizations
 Individuals have their own personal belief
systems
 People from the same cultural context will
tend to hold similar beliefs
 Behaviors can be rationalized
 Circumstances affect adherence to belief
systems
 National culture is intertwined with ethics
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Figure 5.1 Ethics in a
Cross-Cultural Context
Behavior of Organization
Toward Employees
Behavior of Employees
Toward Organization
Cultural
Context
Behavior of Employees
and Organization
Toward Other Economic Agents
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How an organization treats
its employees
Hiring and firing practices
Wages and working conditions
Employee privacy and respect
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Many safety
and health
hazards exist
in this
Siberian
aluminum
smelter.
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How employees treat the organization
Conflicts of interest
Secrecy and confidentiality
honesty
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How employees and the organization treat
other economic agents
Customers
Competitors
Stockholders
Suppliers
Dealers
Labor unions
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Managing ethical behavior
Guidelines and codes of ethics
Ethics training
Organizational practices and corporate
culture
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Guidelines and Codes of Ethics
 Written statements of the values and
ethical standards that guide the firm’s
actions
 Examples
– Johnson & Johnson
– Toyota
– General Mills
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Acceptability of Bribery
 Acceptable
–
–
–
–
Russia
China
Taiwan
South Korea
 Unacceptable
–
–
–
–
Australia
Sweden
Switzerland
Austria
The U.S., Japan, and Italy fell between the two extremes.
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Areas of Social Responsibility
 Organizational stakeholders
 Natural environment
 General social welfare
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Corporate Excellence
 L.L. Bean
 Toyota
 Lands’ End
 Dell Computer
 DaimlerChrysler
 BP
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A joint venture
between AngloAmerican and
the Zambian
government
seeks to mine
copper while
minimizing
harm to the
environment
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Map 5.1 Social Responsibility Hot Spots
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Figure 5.3 Approaches to Social
Responsibility
Most
Responsible
Least
Responsible
Obstructionist
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Defensive
Accommodative
Proactive
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Obstructionist Stance
 Do as little as possible to address
social or environmental problems
 Deny or avoid responsibility
 Examples
– Astra
– Nestle
– Danone
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Defensive Stance
 Do what is required legally, but
nothing more
 Corporate responsibility is to generate
profits
 Example
– Philip Morris
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Accommodative Stance
 Meet ethical and legal requirements
and more
 Agree to participate in social programs
 Match contributions by employees
 Respond to requests from non-profits
 No proactive behavior to seek such
opportunities
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Proactive Stance
 Strong support of social responsibility
 Viewed as citizens of society
 Seek opportunities to contribute
 Examples
– McDonald’s
– The Body Shop
– Ben & Jerry’s
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Managing Social Responsibility
Planning
Decision Making
Consideration
Evaluation
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Implementing Social Responsibility
Formal organizational dimensions:
 Legal Compliance
 Ethical Compliance
 Philanthropic Giving
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Informal Dimensions of Social
Responsibility
 Leadership
 Organizational culture
 Whistle-blowing
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Corporate Social Audit
 Tool for the evaluation of social
responsibility effectiveness
 Formal and thorough analysis of the
firm’s social performance
 Conducted by task force of high-level
managers
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Steps in Corporate Social Audit
Define social goals
Analyze resources devoted
to each goal
Determine degree of
achievement for each goal
Make recommendations
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Regulating International Ethics and
Social Responsibility
 Foreign Corrupt Practices Act (FCPA)
 Alien Tort Claims Act
 Anti-Bribery Convention of the
Organization for Economic
Cooperation and Development
 International Labor Organization (ILO)
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