2. 4-2
Удиртгал
Ёс з йү – мэргэжлийн х м с, байгууллагын йл ажиллагаа зэрэгү үү ү
х ний йл ажиллагааг удирддаг з в, буруугийн талаарх х лээнү ү ө ү
з вш р гдс н зарчмуудө өө ө ө
Бизнесийн ёс з йү нь бизнес эрхлэгчдийн йл ажиллагаагааү
явуулах з в, буруугийн талаарх х лээн з вш р гдс н зарчмуудө ү ө өө ө ө
Ёс з йн стратегиү нь х лээн з вш р гдс н зарчмуудыг йлү ө өө ө ө ү
ажиллагаагаараа з рчихг й байх стратеги юмө ү
15. 4-15
Байгууллагын соёл
Бизнесийн ёс з йг чухалчилдагг йү ү байгууллагын
соёлтой /байгууллагын ажилчдын дунд тархсан
нэлэмж ба хэм хэмжээ/ компаниудад ёс з йг й занү ү ү
т л в оршин байдагө ө
нэлэмж ба хэм хэмжээ нь компаний соёлыгҮ
хэлбэрш лж, соёл нь шийдвэр гаргалтадүү
н л лд гө өө ө
16. 4-16
Г йцэтгэлийн бодит бус х лээлтү ү
Г йцэтгэлийн зорилтыг хангах эцэг компаний шахалтү
дарамт нь ёс з йг й йлдлээр л х рч болох тиймү ү ү ү
бодитой бус байх нь ёс з йг й зан т л вийн шалтгаанү ү ө ө
болдог
17. 4-17
Манлайлал
Хэрэв компаний удирдлагууд ёс з йтэй ажиллахг йү ү
бол бусад ажилчид ч ёс з йтэй ажиллахг й юмү ү
йлдэл гнээс ил х чтэйҮ ү үү ү
18. 4-18
Ёс з йн философийн чиг хандлагаү
Бизнесийн ёс з йн хэд хэдэн хандлагууд байдагү
С р г х м сө ө ү үү
Фрийдманы сургааль
Соёлын харилцан хамаарал
З в шударга нд р ёс суртахуунтай х нө ө ө ү
Гэнэн ёс суртахуунг й х нү ү
Ютилитари болон Кантын ёс з йү
Эрхийн онолууд
Шударга ёсны онолууд
19. 4-19
С р г х м сө ө ү үү
С р г х ний хандлагыг ндэстэн дамнасанө ө ү ү
корпорацид зохисг й ёс з йн шийдвэр гаргалтынү ү
удирдамжийг санал болгож болохыг батлан харуулах
зорилгоор бизнесийн ёс з йн эрдэмтэд гаргаж ирсэнү
байна
Д рв н ийм хандлага байдаг ньө ө
Фрийдманы сургааль
Соёлын харилцан хамаарал
З в шударга нд р ёс суртахуунтай х нө ө ө ү
Гэнэн ёс суртахуунг й х нү ү
20. 4-20
С рлэн х нү ү
Фрийдманы сургааль – бизнесийн нийгмийн
хариуцлага нь з вх н ашгийг сг х явдал б г дө ө ө ө ө өө
иймээс компани урт хугацаанд эрх з йн х рээндү ү
ажилладаг
Компаниуд хуулиар оногдсон, бизнесээ р ашигтайү
эрхлэхэд шаардлагатай зардлаас бусдыг рэх ёсг йүү ү
Соёлын харилцан хамаарал – компаниуд йлү
ажиллагаа явуулж буй соёлынхоо ёс з йг дэмжихү
хэрэгтэй гэсэн соёлоор тодорхойлогддог ёс з йн итгэлү
“Ромд байгаа бол Ромчууд шиг хий” р р хэлбэлөө өө
“Усыг нь уувал, ёсыг нь дага”
21. 4-21
С р г х м сө ө ү үү
З в шударга нд р ёс суртахуунт х нө ө ө ү – ндэстэнү
дамнасан корпорациудын эзэн улсын ёс з йн стандартү
нь компаниудын гадаадын улс орнуудад м рдв лө ө
зохих ганц з йл юмү
Уг хандлага нь х гжинг й орнуудынө ү
менежер дийн дунд нийтлэг байдагүү
Гэнэн ёс суртахуунг й х нү ү – хэрэв ДК-ийн менежерҮ
бусад орнуудын компаниуд х лээн авагч улсад ёс з йнү ү
хэм хэмжээг дагаж м рд хг й байна гэж звэлө ө ү ү
менежер ч дагах ёсг й гэж здэгү ү
Хэрэв х н б р ижил з йл хийж байгаа бол йлү ү ү ү
ажиллагаа нь ёс з йн ндэслэлтэй байнаү ү
22. 4-22
Ютилитари болон Кантын ёс з йү
Ютилитари хандлага нь йл ажиллагааны ёсү
суртахууны нэ цэнэ нь р дагавараарааү ү
тодорхойлогддог гэж здэг ёс з йү ү
йл ажиллагаа олон р дагавартай байж болно,Ү ү
зарим нь сайн, зарим нь тийм биш
Муу болон сайн р дагаварын хамгийн боломжитү
сайн тэнцвэрт х ргэдэг бол йл ажиллагааг з в гэжү ү ө
знэү
Уг хандлагын асуудлууд нь
йл ажиллагааны ашиг тус, зардал, эрсдлийгҮ
тооцох
Философи шударга ёсыг олж чадахг й байхү
23. 4-23
Ютилитари болон Кантын ёс з йү
Кантын ёс з йү – х м с хувь х н гэдгээрээ нэлэгдэхү үү ү ү
ёстой гэж здэг Иммануэл Кантын философи дээрү
ндэслэдэгү
Х м с нэр т ртэй байж х м ст х ндлэгдэхү үү ө ү үү ү
хэрэгтэй, тэд машин биш
24. 4-24
Эрхийн онолууд
Эрхийн онолууд – х н т р лхтний оршин буй ньү ө ө
ндэсний хил хязгаар болон соёлоос хальсан ндсэнү ү
эрхтэй байх явдал юм
Х ний ндсэн эрх нь менежер д шийдвэрү ү үү
гаргахдаа ёс з йтэй байхад чигл лдэг ёс з йнү үү ү
луужингийн ндсийг бий болгосонү
Зарим ндсэн эрх ндэсний хил хязгаар, соёлоосү ү
хальдаг гэсэн санаа нь Н Б-ынҮ Х ний эрхийн т гээмэлү ү
тунхаглалын цаад санаа байсан (бизнес хийж буй хэн
нэгэн соёлоос л хамааран ргэлж баримтлах ёстойү ү
ндсэн зарчмуудыг тодорхойлсонү )
25. 4-25
Шударга ёсны онолууд
Шударга ёсны онол нь эдийн засгийн бараа
йлчилгээнийү хуваарилалтын т вшиндү (шударга, эрх
тэгш гэж здэгү ) анхаардаг
John Rawls – б хий л эдийн засгийн барааү
йлчилгээний хувьд тэгш бус хуваарилалт нь х н б ртү ү ү
давуу талтай байхаас бусад тохиолдолд тэгш
хуваарилагдах ёстой
Шударга байдал х шигний цаанаө нуугдаж байдаг
(х н б р рийн тодорхой шинж чанарыг мэдэхг йү ү өө ү
байхаар т с лд гө өө ө )
26. 4-26
Шударга ёсны онолууд
Асуулт: Х м с х шигний цаад амьдралд ямарү үү ө
системийг зохиох вэ?
Хариулт:
Х н б р ндсэн эрх ч л ний дээд хэмжээ нь бусдынү ү ү ө өө
ижил эрх ч л тэй нийцэж байхыг з вш рд г ардө өө ө өө ө
т мэнтэй системү
Тэгш ндсэн эрх ч л баталгаажсан болү ө өө , нийгмийн
барааны тэгш бус байдал нь х н болгонд ашиг тустайү
байх ед л х лээн з вш р гд нү ү ө өө ө ө ө
Ялгааны зарчим нь давуу тал багатай х нд ашигү
тустай ед тэгш бус байдал нь ндэслэлтэй болохыгү ү
харуулдаг
27. 4-27
Менежер дэд учрах р дагаварүү ү
Асуулт: Менежер д бизнесийн шийдвэртээ ёс з йн асуудлыгүү ү
хэрхэн тусгах вэ?
Хариулт:
Менежер д дараахыг хийх хэрэгтэйүү
Хувийн ёс з йн мэдрэмж сайтай х м сийг ажилд авч, дэмжихийгү ү үү
эрхэмлэх
Ёс з йн нд р нэ цэнийг бий болгох байгууллагын соёлыгү ө ө ү
б тээхү
Бизнесийн удирдагчид ёс з йн талаар гоё г г лэх бус, гоёү ү ө үү
сайхан гтэйгээ нийц лж ажиллаж байна уу гэдгийг шалгаж зэхү үү ү
Х м с шийдвэр гаргах йл явцдаа бизнесийн шийдвэрийн ёсү үү ү
з йн хэм хэмжээг авч зэж байхыг шаардахү ү
Ёс суртахууны эр зоригийг х гж лэхө үү
28. 4-28
Ажилд авах ба дэмжих
Аж ахуйн нэгж д хувийн ёс з йн нд р мэдрэмжтэйүү ү ө ө
х м сийг тодорхойлж ажилд авахыг хичээх хэрэгтэйү үү
Ирээд йн ажилтнууд нь байгууллагын ёс з йн уурү ү
амьсгалын талаар аль болох их мэдээлэл олж байх
ёстой
29. 4-29
Байгууллагын соёл ба манлайлал
Аж ахуйн нэгж д ёс з йн нд р нэ цэнэ бий болгохүү ү ө ө ү
байгууллагын соёлыг б тээх хэрэгтэйү
Аж ахуйн нэгж д ёс з йд маш их анхаарч нэүү ү ү
цэнийг тодорхойлох ёстой
Ёс з йн кодү – бизнесийн баримтлах эн тэрг нийүү
ёс з йн албан ёсны байр суурьү
Бизнесийн удирдагчид ёс з йн кодын ачү
холбогдлыг дахин дахин онцолж, т н дээрээүү
ажиллаж, т нд утга оноож, хэрэгж лэх хэрэгтэйүү үү
Бизнес нь ёс з йг сахисан х м сийг урамшуулж,ү ү үү
сахиулааг й х м сийг шийтгэдэг шагналү ү үү
урамшууллын тогтолцоог бий болгох хэрэгтэй
30. 4-30
Шийдвэр гаргах йл явцү
Ёс суртахууны луужин нь шийдвэр ёс з йтэй эсэхийгү
тодорхойлоход тусалдаг
Хэрэв менежер дараах асуултуудад “тийм” гэж
хариулвал шийдвэр ёс з йн хувьд х лээнү ү
з вш р гд нө өө ө ө ө
Миний шийдвэр байгууллагын орчинд нийтлэг
хэрэглэгддэг х лээн з вш рд гс н нэ цэнэ б хийү ө өө ө ө ү ү
стандартуудын х рээнд байна ууү ?
Би шийдвэрт н л л х б хий л оролцогч талуудтайө өө ө ү
холбоотойгоор шийдвэрээ харахад бэлэн байна уу?
Миний чухал хувийн харилцаатай х м сү үү
шийдвэрийг дэмжиж байна уу?
31. 4-31
Шийдвэр гаргах йл явцү
Менежер дийн ёс з йн асуудлын тухай бодолдүү ү
туслах 5 алхамт йл явцү
1. Шийдвэр оролцогч талуудад хэрхэн н л л х вэө өө ө –
компаний йл ажиллагаа болон б хий л г йцэтгэлдү ү ү
ашиг сонирхлын холбоотой хувь х н болон б лэгү ү
х м сү үү
Дотоод оролцогч талууд – ажилчид, захирлуудын
з вл л, хувьцаа эзэмшигчид зэрэг бизнестө ө
ажиллаж буй болон бизнесийг эзэмшиж буй
х м сү үү .
Гадаад оролцогч талууд – хэрэглэгчид, бэлтгэн
нийл лэгчид, йлдвэрчний эвлэл зэрэг зарим эрхүү ү
б хий хувь х н болон б лг дү ү ү үү
32. 4-32
Шийдвэр гаргах йл явцү
2. Менежер дийн санал болгож буй шийдвэр нь ямарүү
нэг оролцогч талуудын ндсэн эрхийг з рчс нү ө ө
эсэхийг тодорхойлох хэрэгтэй
3. Менежер дүү ёс з йн зорилгыгү бий болгох хэрэгтэй –
бизнест оролцогч талуудын ндсэн эрх болон гол ёсү
суртахууны зарчмууд з рчигдс н эсэх ёс з йнө ө ү
асуудлыг бусад асуудлаас т р нд шийдвэрлэх ёстойү үү
4. Компани ёс з йн асуудлуудад оролцох хэрэгтэйү
5. Бизнесийн байгууллагын шийдвэр нь ёс з йн зарчимдү
нийцэж байгаа эсэхийг хянаж байх ёстой
33. 4-33
Ёс з йн ажилтнуудү
Бизнесийн ёс з йг сахиулахын тулд олон тооныү
компаниуд ёс з йн ажилтнуудтай болсон байнаү
Ёс з йн ажилтнууд дараахад итгэлтэй байх ёстойү
Ажилчид ёс з йн мэдлэгт суралцсан байхү
Ёс з йн асуудлууд шийдвэр гаргалтад орж байгааү
Компаний ёс з йн д рэм м рд гд ж байгааү ү ө ө ө
34. 4-34
Ёс суртахууны зориг
Олон улсын бизнест ажилчдад тодорхой ёс суртахууны
зориг хэрэгтэй
Менежер д ашигтай боловч ёс з йг й шийдвэрээсүү ү ү
хол байх
Ажилчид ёс з йг й йлдэлд г й гэж хариулахү ү ү ү ү
боломжтой байх ёстой
35. 4-35
Шийдвэр гаргах алхамуудын д гнэлтү
Олон улсын бизнес д ньүү
Г йцэтгэлийн бусад хэмжигдэх нээс ил тэй ёсү үү үү
з йн асуудлуудад суурилан х м сийг ажилд авч,ү ү үү
дэмждэг байхыг хичээх хэрэгтэй
Байгууллага дотор ёс з йн соёлыг бий болгохү
Ёс з йн ажилтан томилохү
Ёс з йн зоригтой байх орчинг б рд лэхү ү үү
Б х ёс з йн диллема нь тодорхой шийдэлтэйү ү
байдагг йг х лээн з вш р х нь чухал юмү ү ө өө ө
36. 4-36
Classroom Performance System
Multinational companies are concerned with ethics is all of
the following areas except
a) Employment practices
b) Human rights
c) Environmental regulations
d) Trade regulations
37. 4-37
Classroom Performance System
Which of the following does not contribute to unethical
behavior by managers?
a) Unrealistic performance goals
b) Leadership
c) Organizational culture
d) Restrictions on bribes
38. 4-38
Classroom Performance System
Which philosophy claims that a company’s home-country
standards of ethics are the appropriate ones to follow in
foreign countries?
a) Cultural relativism
b) Righteous moralist
c) Friedman doctrine
d) Naïve immoralist
39. 4-39
Classroom Performance System
A company’s formal statement of ethical priorities is called its
a) Mission statement
b) Code of ethics
c) Code of values
d) Organizational culture
Editor's Notes
Chapter 4: Ethics in International Business
Suppose you’ve been assigned responsibility for hiring people to work in your company’s new factory in Guatemala. Wages in Guatemala are considerably lower compared to your country, and you don’t have to pay benefits either. You’re beginning to wonder if your company is taking advantage of the situation. What should you do?
You might respond that you should talk to your superiors about providing a more generous compensation package that would still be much lower than what you’d pay in your home country. But, you might be worried that this could jeopardize your new position. So, you might decide just to follow orders, even if you’re not really comfortable with them. This is an example of an ethical dilemma. People involved in business run into ethical situations daily. In international business, they are often magnified because of differences in legal systems, political systems, economic systems, culture, and so on.
Ethics refers to the accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization. Business ethics are the accepted principles of right or wrong governing the conduct of business people. An ethical strategy then, is a course of action that doesn’t violate these principles.
You might think that well-known companies don’t violate ethical standards, but you would be wrong! The Opening Case in your text explores the working conditions in two factories that supply Dell, Hewlett Packard, Lenovo, and Microsoft.
As we saw in this case, it’s always tempting for companies to adopt a “when in Rome” approach when dealing with corrupt regimes, even if it violates corporate ethics. But, doing so can damage the reputation of a company. You might remember the situation with Nike in the mid-1990s, when Nike was accused of allowing its suppliers to violate basic human rights in their factories. While Nike itself wasn’t directly violating human rights, the fact that it was purchasing its products from suppliers who were, generated considerable negative press for the company. Television host Kathie Lee Gifford found herself in a similar position when it was revealed in 1996 that clothing made under her label was made in factories that operated under sweatshop conditions.
Keep in mind that as we discuss ethics in this chapter, that there may be no right or wrong response, and so in some cases, we may raise more questions that we actually answer.
So, what are the most common ethics issues for companies? We usually think of issues that involve employment practices, human rights, environmental regulations, corruption, and the moral obligations of companies. Let’s talk about each of these, beginning with employment practices.
Employment practices are a frequent source of ethical dilemma for companies. Suppose, as we suggested earlier, work conditions in a host country are inferior to those in the home country. Which standards should you apply--the home country standards or the host country standards? Is it ok to employ minors to work a 50 hour week if it doesn’t violate local laws? Do you have to supply safety gear to employees if it’s not required by law?
Nike, as we mentioned, found itself in the midst of a huge controversy in the mid-1990s when it was reported that the working conditions at some of its sub-contractors were poor. While neither the subcontractor, nor Nike were actually breaking the law, there was strong reason to suspect that workers were being exploited. For example, in one factory in Vietnam, women were paid just 20 cents an hour, well below the living wage of $3 per day, to work with toxic materials six days a week. Nike was forced by public pressure to establish a code of conduct for all of its subcontractors, and implement a monitoring system to ensure that the code was followed.
Remember, while we can say that Nike may have violated basic ethical principles, the company didn’t actually break the law. So, our question remains, which standards, those of the home country or those of the host country, should be applied? Levi’s believes that it’s important to maintain standards that preserve the basic rights and dignity of employees. So, when it discovered that one of its suppliers was forcing women to work more than 70 hours a week in guarded compounds, the company ended its relationship with the supplier.
Apple found itself in the middle of a similar type of controversy when a supplier making the iPod was accused of labor abuses. You can learn more about the situation and Apple’s response in the Management Focus in your text.
You may not think much about your human rights—things like freedom of association, freedom of speech, freedom of assembly, and so on are often taken for granted in developed countries. But, it’s important to remember that these freedoms are not respected in many countries. Think about the apartheid system that denied basic political rights to blacks in South Africa, for example, or the ongoing situation in the Darfur region of western Sudan where the Sudanese government has been accused of genocide by the U.S. and other countries.
Should companies do business in countries with repressive regimes? Some people argue that the presence of multinational companies actually helps bring change to these countries. Some people believe that change is occurring in China for example, because investments by multinationals are helping to raise living standards. Others, however, argue that some countries like Myanmar, which has one of the worst human rights records in the world, are so brutally repressive that no investment can be justified. In fact, many companies left the country in the mid-1990s because of its dismal human rights. Even so, some companies, like Unocal, ignore these issues as the Management Focus in your text outlines.
We hear a lot about the environment today, and in particular, the irreversible damage that manmade pollution is causing. Many countries are establishing strong environmental regulations to try to limit further damage, forcing companies to adopt new measures that can be quite costly, to abide by the laws.
So, new regulations are forcing your company to take costly steps to stay within the law. You know that these regulations haven’t been imposed in some other countries, particularly those that are lesser developed. Should you shift your production to another country where the laws don’t exist, or are only loosely enforced?
Your first response might be that the moral and ethical thing to do is to stay home and adopt the costly compliance measures. But, you might worry that competitors that don’t take the high road will have an advantage. This brings up a phenomenon called the tragedy of the commons. It occurs when a resource held in common by everyone, like the ocean or the atmosphere, is overused by individuals, and degraded. What are the social consequences of this? If everyone else is pumping pollutants into the ocean, should you do otherwise?
BP has been widely criticized for its slow response to the leak at its facilities in the Gulf of Mexico near Louisiana. In fact, some people have suggested that BP didn’t follow proper safety procedures when it built its pump and that the leak was a result of that failure. While it’s too soon to know whether BP actually violated any laws, the controversy will surely impact the company in the future.
Suppose you are dealing with a corrupt government. Should you still try to act in an ethical manner? Corrupt governments have always been around, and it’s important for international companies to consider their effect on company strategies. At what point does “gift giving” become bribery for example?
Well, from a government perspective, bribery shouldn’t be allowed. In the U.S., the Foreign Corrupt Practices Act, which was passed in 1977, outlaws the paying of bribes to foreign government officials in order to gain business. The act does allow for facilitating or grease payments which are basically payments that are made to speed up standard procedures. The Organization for Cooperation and Development, or OECD, passed a similar measure in 1997, which obligates member states to make bribery of foreign public officials a criminal offense.
However, some economists believe that in some cases speed payments, or payments made to speed up approval for business investments, can be justified if they enhance public welfare by creating jobs, and so on. Others argue however, that corruption is a little like gambling—it’s hard to stop! If you do it once, you’re likely to do it again. BP believes this to be true and maintains a strict no bribery policy, regardless of the implications.
So, what are the moral obligations of companies? Do companies have a responsibility to take into account the social consequences of their actions when they make business decisions? Should companies always choose the path that has both good economic and good social consequences?
You might answer yes--firms have a social responsibility simply because it’s the right way to operate. Many people believe that companies need to recognize their noblesse oblige and give something back to the societies that have made their success possible. BP supports this notion, and has made it company policy to give back to the community. So, in Algeria for example, the company built two desalination plants to provide drinking water to residents in Salah.
Other companies, however, don’t share this view. As the Management Focus in your text points out, Robert Murdoch, founder and CEO of News Corporation probably used the power of his company to gain access to the Chinese market, and acted in an unethical way in doing so. As part of the deal, News Corporation suppressed media content that was critical of China. Google has been accused of chosing a similar path in China, much to the annoyance of some of its stakeholders.
You’ve probably realized by now, that it can very difficult for companies to decide how to behave in some situations. Managers will be influenced by their personal ethics, and cultural perspective, which may or may not be appropriate in a given situation. So, while gift giving in many Asian countries is considered proper behavior, some Western countries see it as a form of bribery. So, should you forgo the practice even if you offend your host? Similarly, while child labor may violate your corporate policies, it may be acceptable by law in some countries. Does this mean your company should immediately fire all employees who are minors? Perhaps, but what if the minor is the main bread winner for the family?
These are examples of ethical dilemmas, or situations in which none of the available alternatives seems ethically acceptable. Doing the right thing, or even knowing what it is, can be difficult!
So, why do managers act in ways that are unethical? The answer to this question is complex, but we can make some generalizations. Ethical behavior is determined by several factors including an individual’s personal ethics, the company’s culture, unrealistic performance expectations, leadership issues, and decision making processes. Let’s look at each of these.
Here you can see the various factors influence ethical behavior.
An individual’s personal ethics will influence the decisions she makes on the job. Personal ethics are derived from parents, from schools, from religion, from the media, and so on. So, when a person has strong personal ethics, she is likely to have strong business ethics.
What happens though, when you take a manager out of his environment? Expatriate managers, or managers who are working abroad, often face pressure to violate their personal ethics. Imagine that you’re surrounded with people who hold to a different set of values. You may be encouraged to adopt a behavior that you otherwise wouldn’t. For example, if bribery is common, you might feel that in order to meet performance goals, it’s acceptable for you to use bribery as well, even though you’d never consider bribery at home. Some managers at Siemens evidently had this mindset as you’ll see in the Closing Case.
Sometimes, you get so caught up in what you’re doing that you forget to ask whether a decision or action is unethical. So, when Nike made the decision to purchase from certain suppliers, it probably only looked at the bottom line. That made sense, and so the decision to move forward was made. Only after the consequences of the decision were revealed did the company stop to explore the ethics of the situation.
The big pharmaceutical company, Pfizer failed to ask relevant questions when it made the decision to run experimental drug trials on children in Nigeria. The company was trying to get a new drug to market, but first needed a large sample of sick children to test it on. When an epidemic hit Nigeria, Pfizer saw its chance. Only later did it question whether it was right to test an experimental drug on children whose parents probably didn’t realize what was going on, or who didn’t have alternative treatment options.
A firm’s organizational culture refers to the values and norms that are shared among its employees. If ethical behavior is promoted like it has traditionally been at BP, the company is likely to act in an ethically responsible way. On the other hand, organizational cultures like the one at Enron, which was fraught with deception and greed, can ultimately lead to a company’s demise!
Sometimes, companies unwittingly promote unethical behavior by setting unrealistic performance expectations. Companies that do this may push employees to cut corners or act in other unethical ways. Think again, about the decisions made at Pfizer because of the push to get the new drug to market for example, or the recent accusations of improper practices at BP.
Finally, regardless of any policies a company might maintain, actions speak louder than words. A company’s leaders must set an example by demonstrating strong ethics. You already know that Kenneth lay, former CEO of Enron, did just the opposite, and in fact promoted unethical behavior within his organization.
Now that we’ve talked about different types of unethical behavior and why it occurs, let’s move on to explore some of the philosophical approaches to business ethics.
We’ll start with what we call straw men approaches which are approaches to business ethics that are raised by business scholars mainly to demonstrate that they offer inappropriate guidelines for ethical decision making in multinational firms. There four straw men approaches: the Friedman doctrine, cultural relativism, the righteous moralist, and the naïve immoralist.
The Friedman doctrine, as you might guess, was developed by economist Milton Friedman, who argued that the only responsibility of business was to increase profits. Friedman claimed that as long as the firm stayed within the letter of the law, ethics didn’t enter the equation. So, in other words he would argue that it’s not the responsibility of a company to take on social expenditures beyond what’s mandated by law, and what’s required to run a business efficiently. So, Friedman would advocate the use of child labor, as long as it wasn’t prohibited by law. Similarly, he would argue that a company could dump pollutants into a river, again as long as there wasn’t a law against it. Friedman did suggest that companies stay away from fraud and deception though.
The second straw man approach, cultural relativism, is the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate. In other words, when in Rome, do as the Romans do. So, if a culture supports slavery, the approach would suggest that companies adopt slavery, too. Most people would agree however, that it’s appropriate to follow certain business practices in some cases. For example, remember that the Foreign Corrupt Practices Act was amended to allow for facilitating payments.
The third approach, the righteous moralist, takes the opposite perspective from cultural relativism, and claims that a multinational’s home country standards of ethics are the appropriate ones for companies to follow in foreign countries. While initially you may think this is the right approach, following it can create problems. For example, suppose you decided that since you pay your employees $15 per hour at home, you should pay employees the same wage to do the job wherever they may be located. Well, you’ve just eliminated a key reason for making an investment in a developing country—lower wages! If you don’t make the investment because it doesn’t save you money, then you won’t bring new jobs to the developing country, jobs that could be very beneficial to the country!
Finally, the naïve immoralist argues that if a manager of a multinational company sees that firms from other countries are not following ethical norms in a host country, that manager should ignore the norms as well. You might think back to your elementary playground and the old adage that two wrongs don’t make a right. Just because another country is paying off drug lords doesn’t mean you should do it, too!
In contrast to the straw men approaches, the utilitarian and Kantian approaches to ethics are seen as being valuable. The utilitarian approach holds that the moral worth of actions or practices is determined by their consequences. In other words, you should carefully weigh all of the social benefits and costs of a business decision, and only pursue those choices where the benefits clearly outweigh the costs.
Many companies use this notion when they develop cost-benefit analyses and risk assessments before making decisions. So, rather than simply looking at the additional profits drilling for oil in Alaska might bring, a company would also consider the damage that would occur to the eco-system.
Keep in mind that it can be difficult to measure future costs, benefits, and risks. In addition, this philosophy doesn’t consider justice. A decision that’s made because it’s beneficial for many, could result in unjustified treatment of a minority.
Kantian ethics suggests that people should be treated as ends, and never as means to the ends of others. What does this mean? It means that people shouldn’t be employed in sweatshops because that’s essentially treating people as cogs in a machine, rather than as conscious moral beings who have dignity.
Now, let’s move on to rights theories, which recognize that human beings have fundamental rights and privileges that transcend national boundaries and culture. According to this approach, managers are compelled to respect these rights when they make decisions. The UN has legitimized this idea with its Universal Declaration of Human Rights which specifies the principles that should always be adhered to regardless of the culture in which one is doing business.
So, this approach would argue that it’s unethical to employ child labor in sweatshop factories, or pay less than subsistence wages.
Justice theories focus on the attainment of a just distribution of economic goods and services, where a just distribution is one that is considered to be fair and equitable.
John Rawls is credited with arguing that economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage. He argued that impartiality is guaranteed by the veil of ignorance where everyone is imagined to be ignorant of all of his particular characteristics, and that inequalities are justified only if they benefit the least advantaged person.
So, from a business perspective, managers might ask whether their policies in foreign markets would be considered just. Would they, for example, adopt a policy of paying subsistence wages to employees working in sweatshop factories where they were exposed to toxic materials? Probably not! So, if a decision seems unjust, it’s probably unethical.
So, how can managers be sure they’re operating in an appropriate and ethical manner? The answer is that sometimes it can be hard to figure out what’s right. However, there are five things that managers can do to be sure that ethical issues are considered when decisions are made.
First, firms should favor hiring and promoting people with well grounded personal ethics. Second, firms should try to build an organizational culture that places a high value on ethical behavior. Third, firms should make sure that leaders articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric. Fourth, firms should put decision making processes in place that require people to consider the ethical dimension of business decisions. Finally, firms should encourage the development of moral courage. Let’s talk about each of these steps.
While it may seem obvious that you should hire people with a strong sense of business ethics, it can be hard to know whether a person fits this category. So, businesses often require references, or give prospective employees tests as a way of finding out more about individuals.
It’s also important for individuals to find out about the ethics of a prospective employer. So, you might ask whether a firm has a formal code of ethics, or how senior managers are viewed, and so on.
An organizational culture that supports strong ethical values is also important to promoting ethical behavior. To develop this, firms need to articulate values that place a strong emphasis on ethical behavior like BP has done. Some firms do this by establishing a formal code of ethics.
Once a code has been developed, leaders need to emphasize it and act on it. Companies can encourage employees to adopt the code by offering incentives and rewards to employees that behave in an ethical manner.
How can ethics be incorporated into decision making processes? One way is to use a moral compass. So, for example, if a manager can answer “yes” to any of the following questions, the decision would be consider ethical.
One, does my decision fall within the accepted values of standards that typically apply in the organizational environment? Two, am I willing to see the decision communicated to all stakeholders affected by it? Three, would the people with whom I have significant personal relationships approve of the decision?
There’s also a five step process that managers can use to think through ethical issues. The first step requires managers to identify which stakeholders a decision would affect and in what ways. Stakeholders are individuals or groups that have an interest in the actions and overall performance of a company. They include internal stakeholders who are the people that work for or who own the business like employees, the board of directors, and stockholders, and external stakeholders or the individuals or groups that have some claim of the firm such as customers, suppliers, and unions.
Next, managers need to determine whether a proposed decision would violate the fundamental human rights of any stakeholders. Then, managers must establish moral intent. So, firms have to place moral concerns ahead of other concerns when the fundamental rights of stakeholders or key moral principles have been violated. In step four, managers engage in ethical behavior. Finally, the business audits its decisions, and reviews them to be sure they’re consistent with ethical principles.
Another way to promote ethical behavior is to hire an ethics officer to oversee ethical issues. This type of person might be responsible for training employees to be aware of ethical issues, or for auditing decisions that have already been made.
Finally, it’s important to recognize that employees may need significant moral courage. This will empower employees to say no to superiors who ask employees to take actions that are unethical, or to blow the whistle on unethical behavior.
So, all of these steps can help foster an ethically responsible firm. But remember, as we’ve mentioned before, sometimes there are no good answers to an issue. Managers must simply try to make sense of the situation and make a balanced decision.
Now, let’s see how well you understand the material in this chapter. I’ll ask you a few questions. See if you can get them right. Ready?
Question 1: Multinational companies are concerned with ethics in all of the following areas except
Employment practices
Human rights
Environmental regulations
Trade regulations
If you picked D, you’re right!
Question 2: Which of the following does not contribute to unethical behavior by managers?
Unrealistic performance goals
Leadership
Organizational culture
Resections on bribes
If you picked D, you’re correct!
Question 3: Which philosophy claims that a company’s home country standards of ethics are the appropriate ones to follow in foreign countries?
Cultural relativism
Righteous moralist
Friedman doctrine
Naïve immoralist
The correct answer is B. Did you get it right?
Question 4: A company’s formal statement of ethical priorities is called its
Mission statement
Code of ethics
Code of values
Organizational culture
Did you pick B? I hope so!
