International Business: A Managerial

Perspective
Ninth Edition, Global Edition

Chapter 5

Ethics and Social

Responsibility in
International Business

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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 （规范）
• 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 and firing practices
• Career Development
• Compensation and Benefits
• Workers’ Rights and Dignity
• Employee privacy and respect

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Ethics in Cross-Cultural and International Contexts:
How Employees Treat the Organization
• Conflict of Interest
 when a decision potentially benefits the individual to the
possible detriment ( 损害 ) of the organization
• Secrecy and Confidentiality
 Divulging ( 泄露 ) company secrets is viewed as unethical
in some countries, but not in others

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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
 detail how employees are to treat suppliers, customers,
competitors, and other stakeholders.
• Formal Codes of Ethics
 written statements of the values and ethical standards that
guide the firms’ actions
• Organizational Practices
• Corporate Cultures

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Managing Ethical Behavior Across
Borders: Ethics Training
Some MNCs address ethical issues proactively, by offering
employees training in how to cope with ethical dilemmas
• Tailored to local contexts
• Globally consistent
• Localized ： most multinationals provide expatriates with
localized ethics training

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Managing Ethical Behavior Across Borders:
Organizational Practices and the Corporate Culture
• Management of Ethical Behavior
• Organizational Practices AND Corporate Culture
 Top leaders in a firm behave in an ethical manner ?
 violations of ethical standards are promptly and
appropriately addressed?

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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
• ESG:stands for Environmental, Social, and Governance.
Investors are increasingly applying these non-financial
• 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
 maximize the after-tax present discounted value of the
profits flowing over time to shareholders
• Stakeholder Model
– Primary Stakeholders:individuals and organizations
directly affected by the practices of the organization
and that have an economic stake in its performance
– Secondary Stakeholders:individuals or groups that may
be affected by corporate decisions but are not directly
engaged in economic transactions with the firm

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Social Responsibility in Cross-Cultural and International
Contexts: Sustainability and the Natural Environment
• Enforcing Environmental Laws
 Most nations have laws striving to protect and improve the
quality of their waters, lands, and air
 In some countries, enforcement of these laws is
unfortunately weak or lacking
• Corporate Efforts
 In many instances companies have become more socially
responsible in their treatment of the environment

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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: Approaches to Social Responsibility
• Obstructionist stance :Organizations do as little as possible
to address social or environmental problems.
• Defensive stance:an organization will do everything that is
required of it legally but nothing more.
• Accommodative stance: Firms meet its legal and ethical
requirements but may also go beyond these requirements
in selected cases.
• Proactive stance:take to heart the arguments in favor of
social responsibility. They view themselves as citizens in a
society and proactively seek opportunities to contribute.

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Difficulties of Managing CSR Across Borders
• Actors in the policy formulation process
– The State:passes and enforces laws
– The Market:utilizes inputs and allocates outputs
– Civil Society:churches, charitable orgs, unions, NGOs
• Stereotypical behaviors in 3 regions of the world
– The Anglo-Saxon Approach:view the three actors as
separate, competitive, and antagonistic
– The Asian Approach: rely on close cooperation
between the private sector and the government
– The Continental European Approach:three actors have
much more cooperative ways.

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