بسم الله الرحمن الرحيم

International Management

  Ethics and Social  Responsibility

Ethics and Social Responsibility Around the World

n      Ethics

n      Study of morality and standards of conduct

n      Vital role of ethics in conduct of business

n      CEO and CFO required to approve and declare accurate all financial statements provided to SEC for publication

n      Ensure transparency of all disclosures

n      Make content appropriately accessible for audit and verification

n      MNCs face difficulty because of differing standards between countries where they operate

 The chief financial officer (CFO) of a company or public agency is the corporate officer primarily responsible for managing the financial risks of the business or agency. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management. (In recent years, however, the role has expanded to encompass communicating financial performance and forecasts to the analyst community.) The title is equivalent to finance director, a common title in the United Kingdom. The CFO typically reports to the chief executive officer, and is frequently a member of the board of directors.

Securities And Exchange Commission : A government commission created by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers in the U.S. The SEC is composed of five commissioners appointed by the U.S. President and approved by the Senate. The statutes administered by the SEC are designed to promote full public disclosure and to protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce, through the mail or on the internet must be registered with the SEC.

 Ethics and Social Responsibility Around the World

Ethical Problems and Concerns : Japan

n      Political  and business scandals

n      Japanese cabinet member forced to resign for receiving over  $2 million from Japanese corporations

n      Failure of banking system to take corrective action regarding Japan’s recession 

n      Concealing customer complaints

n      Failure to inform car owners about possible auto defects and maintenance of two sets of customer complaint records

n      Encouraging employees to mislead government inspectors

n      Hostile work environment

n      Cultural  expectations

n      Traditional role of females and female employees

n      Sexual harassment may not be considered a moral issue

n      Equal opportunity issues

n      Refusal to hire women or promote them into management positions

n      Mitsubishi sued by U.S. EEOC

n      Social Responsibility/Lobbying

Ethical Problems and Concerns : Europe

n      Survey of 124 U.S., 72 French, and 70 German managers responding to five ethical vignettes  

n      In most cases, the U.S. managers’ responses were quite different from those of their European counterparts

n      U.S. managers more concerned with ethical and legal questions

n      French and German managers more concerned with maintaining a successful business posture  )

n      Reasons for difference between countries

Culture         Personal values

            Incentives     Legal restrictions

n      Status of women managers in Europe

n      France

n      Proportion of women in the labor force trends

n      Glass ceiling

n      French law guarantees equal treatment and professional opportunities

n      Enforcement is weak

n      Germany

n      Remaining differences between East and West Germany

n      Proportion of females in higher positions

n      Professional qualifications relate inversely to hierarchical position

n      Lack of objective criteria for selection to higher positions

n      Has mandated equal opportunity throughout the public sector

n      Great Britain

n      45 percent of workforce is female

n      Not well represented at higher levels

n      Women creating associations for networking and lobbying

n      Women’s Engineering Society

n      The 300 Group

n      Some companies becoming proactive in women’s work rights

n      Discrimination lawsuits becoming more commonplace

Ethical Problems and Concerns : China

n      Ethical issues

n      Workers not well paid (often work 12 hours a day, 7 days a week)

n      Piracy of intellectual property, counterfeiting, and industrial spying

n      Human rights violations

n      Use of prisoner and child labor

Corporate Social Responsibility

n      Corporate social responsibility (CSR)

n      Actions  of a firm to benefit society beyond the requirements of the law and the direct interests of the firm

n      Pressure for greater attention to CSR

n      Civil society

n      Nongovernmental organizations (private, not-for-profits that focus on social, political and economic issues)

n      CSR concerns

n      Working conditions in factories and service centers

n      Environmental impacts of corporate activities

 Rise of Civil Society and NGOs

n      Emergence of organized civil society and NGOs altered :

n      Business environment globally

n      Role of MNC within global business environment

n      NGOs in the U.S. and globally :

n      Save the Children

n      Oxfam

n      CARE

n      World Wildlife Fund

n      Conservation International

n      Corporations receiving heavy criticism :

n      Nike

n      Levi’s

n      Chiquita

n      Major criticisms :

n      Exploitation of low-wage workers

n      Environmental abuses 

n      Intolerable workplace standards

n      Response to social obligations : 

n      Agreements and codes of conduct

n      Maintenance of standards in domestic and global operations

n      Cooperation with NGOs regarding certain social issues

Response to Social Obligations

Principles of the Global Compact

1. Human Rights

Principle 1: Support and respect the protection of international human rights within their sphere of influence.

Principle 2: Make sure their own corporations are not complicit in human rights abuses.

2.  Labor

Principle 3: Freedom of association and the effective recognition of the right to collective bargaining.

Principle 4: The elimination of all forms of forced and compulsory labor.

Principle 5: The effective abolition of child labor.

Principle 6: The elimination of discrimination with respect to employment and occupation.

3. Environment

Principle 7: Support a precautionary approach to environmental challenges.

Principle 8: Undertake initiatives to promote greater environmental responsibility.

Principle 9: Encourage the development and diffusion of environmentally friendly technologies.

4. Anti-Corruption

Principle 10: Business should work against all forms of corruption, including extortion (الابتزاز) and bribery (الرشوة).

Corporate Governance

n      Rules and regulations differ among countries and regions

n      U.K. and U. S. systems are “outsider” systems

n      Dispersed ownership of equity

n      Large number of outside investors

n      Many continental European countries are “insider” systems

n      Ownership more concentrates

n      Shares owned by holding companies, families or banks

n      Other effects on corporate governance include

n      Differences in legal systems

n      Responsiveness and accountability of corporate managers to stakeholders

Corruption and Foreign Corrupt Practices Act

n      Foreign Corrupt Practices Act (FCPA)

n      Illegal for U.S. firms and their managers to attempt to influence foreign officials through personal payments of political contributions, including such tactics as :

n      “Entertainment” expenses

n      “Consulting” fees

n      Some evidence that discontinuing bribes does not reduce sales of the firm’s products or services in that country

n      Some evidence that firms from other countries continue to win business through corrupt practices such as bribery

n      Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials :

n      Organization for Economic Cooperation and Development

n      29 members plus several other countries have signed on

n      Fails to outlaw most payments to political party leaders.

n      Does indicate growing support for anti-bribery initiatives

International Assistance

n      Governments and corporations increase collaboration to provide assistance to communities and locales through global partnerships

n      Best “investments” :

n      Controlling and preventing AIDS

n      Fighting malnutrition

n      Reducing subsidies and trade restrictions

n      Controlling malaria

Millennium Development Goals

Goal 1: Eradicate extreme poverty and hunger.

Goal 2: Achieve universal primary education.

Goal 3: Promote gender equality and empower women.

Goal 4: Reduce child mortality.

Goal 5: Improve maternal health.

Goal 6: Combat HIV/AIDS, malaria, and other diseases.

Goal 7: Ensure environmental sustainability.

Goal 8: Develop a Global Partnership for Development.