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Globalization- Process by which an activity or undertaking becomes global in scope Fall of trade barriers in the globalizing scenario led companies to operate with global group of stake holders Cross border trade and investment differs from Domestic Business Companies involved in International Trade find themselves in new and diverse cultures
Countries differ in their cultures, socio-economic and political systems, legal systems and levels of economic development Differences in moral values being practiced The differences in values of countries pose many ethical challenges to International Business Need for a new moral consensus within the global society Acceptance and practice of minimum human values and standards
Ethics is the moral principle that individuals inject into their decision making process and that helps temper the last outcome to conform to the norms of their society Universal Values : Values that a great many human beings in the vast majority of places and situations, at almost all times, do in fact hold in common The basic values which underlie all other values are:
HUMANITY : Every human being must be treated humanely RECIPROCITY: What you do not wish done to yourself, do not do to others
The 272 participants represented 40 countries and more than 50 different faith communities. The same three values were within each respondents top five in almost 60% of cases. These are Truth (169 votes) Compassion (153 votes) Responsibility (147 votes)
Derived core values : Respect for life Non-violence Solidarity Justice Tolerance Truthfulness Equality Shared Responsibility Respect for environment Reciprocity
For the Global Ethical Issues, decision-making process can be influenced by many ethical approaches: Normative (prescriptive) Deontological Theory Teleological Theory
Descriptive (positive)
Helps us to solve ethical dilemmas and seek for the common good of all the nations
In a survey of 300 multinational corporations, 80 percent agreed with seven items being ethical issues for International business: Environmental issues Unauthorized payments Child labor Inappropriate gifts to corporate personnel Affirmative action Employee privacy
In some countries bribery is acceptable While some other countries consider it as a serious issue and it is not accepted In International Trade ,Dilemma raises whether to follow home country or foreign country practices International bribery assumes many guises, but wherever the practice occurs, it inhibits economic development and distorts competition
Siemens Bribery Scandal Pseudo-Utilitarian Theory Utilitarian Approach for the case: Immediate economic benefit seems to be significantly less than the long-term benefits Impact on the society Adopting Universal Values-Social Justice, Shared Responsibility
Many international businesses confront issues of child labor in their own operations and those of suppliers in their value chain Poverty is one of the key drivers of child labor From an employer's perspective, child labor may initially seem to offer many advantages It affects growth of parent country and host country
Nestle child labor case Utilitarian approach Kantian Theory Value Driven Management Universal Values-Humanity Society should value children as rational beings with rights, not merely as a means to greater profits
Globalization and International Trade leaves disastrous effects on the environment if unregulated Mexico oil spill case BP s Responsibility Effect on the environment Stake holder Approach Universal Values-Reciprocity, Respect for the nature
Outsourcing is the delegation of tasks or jobs from internal production to an external entity Inevitable response to globalization--international trade Is it beneficial for both the countries in the long run? Job loss-Developed countries Relaxation of labor laws and worker rightsDeveloping Countries Competition among developing countries making the economy weaker Long run benefits outweigh the short term benefits
Contribute by their activity to the host country development Respect the human rights of their employees Respect the local culture and work with and not against it
The Caux Round Table (CRT) Principles for Responsible Business set forth ethical norms for acceptable businesses behavior The CRT Principles for Responsible Business are :
1) Respect stake holders beyond share holders 2) Contribute to economic, social and Environmental development 3) Build trust by going beyond the letter of the law 4) Respect rules and conventions 5) Support responsible globalization 6) Respect the environment 7) Avoid illicit activities
Expansion of global entities lead to the inevitable conclusion that ethical issues facing business entities assume global dimensions. So global solution is required All business firms that desire to compete successfully in international environment should oblige to common good of all parties involved. Universal Values and theories help to solve the ethical dilemmas faced by the companies in the international trade and seek for the common good of the Global Economy
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