International Business: A Managerial

Perspective
Ninth Edition, Global Edition

Chapter 5

Ethics and Social

Responsibility in
International Business

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Learning Objectives
5.1 Describe the nature of ethics.
5.2 Discuss ethics in cross-cultural and international contexts.
5.3 Identify the key elements in managing ethical behavior across
borders.
5.4 Discuss social responsibility in cross-cultural and international
contexts.
5.5 Identify and summarize the basic areas of social responsibility.
5.6 Discuss how organizations manage social responsibility across
borders.
5.7 Identify and summarize the key regulations governing international
ethics and social responsibility.

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Ethics & Social Responsibility:
Definitions
• Ethics: an individual’s personal beliefs about whether a
decision, behavior, or action is right or wrong
• Ethical behavior: behavior that conforms to generally
accepted social norms
• Unethical behavior: behavior that does not conform to
generally accepted social norms

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Ethics & Social Responsibility:
Generalizations
• Individuals have their own personal belief system about
what constitutes ethical and unethical behavior
• People from the same cultural contexts are likely to hold
similar beliefs as to what constitutes ethical and unethical
behavior
• Individuals may be able to rationalize behaviors based on
circumstances
• Individuals may deviate from their own belief systems
based on circumstances
• Ethical values are strongly affected by national cultures
and customs
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Figure 5.1 Ethics in Cross-Cultural
and International Contexts

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Ethics in Cross-Cultural and International Contexts:
How an Organization Treats Its Employees
• Hiring Practices
• Career Development
• Compensation and Benefits
• Workers’ Rights and Dignity

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Ethics in Cross-Cultural and International Contexts:
How Employees Treat the Organization
• Conflict of Interest
• Secrecy and Confidentiality
• Honesty

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Ethics in Cross-Cultural and International Contexts:
Employees, the Organization, & Other Economic Agents
• Customers
• Competitors
• Stockholders
• Suppliers
• Dealers
• Labor unions

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Managing Ethical Behavior Across Borders:
Guidelines and Code of Ethics
• Written Guidelines
• Formal Codes of Ethics
• Organizational Practices
• Corporate Cultures

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Managing Ethical Behavior Across
Borders: Ethics Training
• Globally consistent
• Tailored to local contexts
• Localized

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Managing Ethical Behavior Across Borders:
Organizational Practices and the Corporate Culture
• Management of Ethical Behavior
• Organizational Practices
• Corporate Culture

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Social Responsibility in Cross-Cultural
and International Contexts
• Corporate social responsibility (CSR): the set of
obligations a corporation undertakes to protect and
enhance the society in which it functions
• The Triple Bottom Line:
– The Economic Mission
– The Natural Environment
– General Social Welfare

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Social Responsibility in Cross-Cultural and
International Contexts: The Economic Mission
• Shareholder Model
• Stakeholder Model
– Primary Stakeholders
– Secondary Stakeholders

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Social Responsibility in Cross-Cultural and International
Contexts: Sustainability and the Natural Environment
• Enforcing Environmental Laws
• Corporate Efforts

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Social Responsibility in Cross-Cultural and
International Contexts: General Social Welfare
• Making Charitable Contributions
• Supporting the Arts and Museums
• Funding Public Health and Education
• Confronting Political and Social Issues

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Managing Social Responsibilities Across
Borders: Approaches to Social Responsibility
Figure 5.2 Approaches to Social Responsibility

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Managing Social Responsibilities Across
Borders: Managing Compliance
• Formal Dimensions
– Legal Compliance
– Ethical Compliance
– Philanthropic Compliance

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Managing Social Responsibilities Across
Borders: Informal Dimensions
• Informal Dimensions
– Leadership
– Organization Culture
– Response to Whistle-Blowers

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Managing Social Responsibilities Across
Borders: Evaluating Social Responsibility
• Ensure efforts are producing desired benefits
• Apply the concept of control to social responsibility
• Evaluate response to instances of questionable legal or
ethical conduct

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Difficulties of Managing CSR Across
Borders
• Actors in the policy formulation process
– The State
– The Market
– Civil Society
• Stereotypical behaviors in 3 regions of the world
– The Anglo-Saxon Approach
– The Asian Approach
– The Continental European Approach

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Regulating International Ethics and
Social Responsibility
• The Foreign Corrupt Practices Act
• The Bribery Act
• The Alien Tort Claims Act
• The Anti-Bribery Convention of the Organization for
Economic Cooperation and Development
• The International Labor Organization

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Review Questions (1 of 2)
• What are values in relation to business?
• Distinguish between ethical and unethical behavior.
• Do national environments shape the ethical orientation of a
firm?
• How do organizations attempt to manage ethical behavior
across borders?
• What is social responsibility?
• What is the difference between primary and secondary
stakeholders?

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Review Questions (2 of 2)
• Distinguish between legal and ethical compliance.
• Do sustainable ethical businesses exist? Give an example.
• What is a whistle-blower?
• Identify and briefly summarize representative laws and
regulations that attempt to address international ethics and
social responsibility.

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