Chapter 6: SOCIAL RESPONSIBILITY AND NGOs Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. - - - - - - - -

Chapter 6: SOCIAL RESPONSIBILITY AND NGOs

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

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CHAPTER 6:

Social Responsibility and NGOs



Key Terms

corporate social responsibility (CSR)

business ethics ethical imperialism cultural relativism pollution resource depletion

sweatshops corporate corruption dumping predatory dumping microcredit non-governmental

organizations (NGOs)



Chapter Objectives

By the time you finish this chapter, you should be able to:

Assess positive and negative effects of MNCs on the countries in which they operate, including the impact on the norms and practices of local and indigenous cultures

Evaluate the ethical issues that arise for companies competing internationally in relation to the following groups: consumers, stakeholders, employees, the host country, and society as a whole

Analyze the way in which international development agencies and NGOs promote economic progress in developing countries



Chapter Objectives

Compare Canada with other countries with respect to cultural theories and viewpoints, as they relate to ethics in international business

Describe working conditions in various international markets

Explain how globalization creates the need for standardization of products, services, and processes



What is Corporate Social Responsibility?

Corporate social responsibility

The duty of a company’s management to work in the best interests of the society it relies on for its resources (human, material, and environmental), to advance the welfare of society, and to act as a good global citizen through its policies.

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Corporate social responsibility can take many forms, including:

Making charitable donations Treating employees ethically Being environmentally conscious Ensuring safe working environments Sponsoring local sports teams Creating and promoting diverse workplaces




Benefits of CSR Can be used as a

marketing tool Dissuades governments

from implementing regulations that could interfere with business

Helps companies attract and retain excellent employees

Criticisms of CSR Costs money, detracts

from profits Uses employees’ time

and energy Can distract customers

from problems a company creates

A company may act ethically in one country, but not in another




Stakeholder Analysis Used to determine which group’s interests are

most important when a company is faced with an ethical dilemma

Primary stakeholders directly affect the company and its profitability

Secondary stakeholders have an impact on the company, but do not directly influence its success or contribute to profitability






Business Ethics

Business ethics

A set of rules or guidelines that management or individuals follow when making decisions facing their company.

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Business Ethics

The guidelines used when making decisions include:

Domestic and international laws The company’s code of ethics and corporate

governance The personal values of the individual making the

decision



Business Ethics

Decision makers can use the test of disclosure method to solve ethical dilemmas:

“How would we feel if everyone knew about the decision we made?”

If they are not concerned, they have likely made an ethical choice. If they are, they have probably not made the right decision.



Business Ethics

There are two methods of thinking about ethical issues in a global context:

Ethical imperialismA view of culture based on the idea that there are certain universal truths or values that are standard across all cultures; if something is wrong in one country, it is wrong in all countries.

Cultural relativism A view of culture based on the idea that a culture’s different values should be respected, as the ethics of one culture are not better than those of another.



Business Ethics

Ethical Imperialism Cultural Relativism

One set of values for all cultures

Values are dependent on the culture

Right and wrong are the same in all cultures

Right and wrong depend on local values

A person’s ethics are not situational

When in Rome, do as the Romans do



Ethical Issues in International Business

Ethical issues in international business arise in the following areas:

Environmental issues Sweatshops Corporate corruption Dumping Poverty




Environmental issues Sustainable development—the ability to meet

human consumption while maintaining the environment—is a critical issue for businesses

Many companies have been responsible for pollution and resource depletion

Companies and governments often resist environmental plans that will impede economic growth




SweatshopsFactories in underdeveloped and developing countries in which employees work in unsafe environments, are treated unfairly, and have no chance to address those conditions.

Why do sweatshops exist?Global competitiveness, corporate greed, and consumer expectations of low prices.

Companies that own factories in developing nations must ensure that workers are paid a living wage and are able to speak up against abuses.



Ethical Issues in International Business?

Corporate corruption

The involvement in illegal activities, such as bribery

and fraud, to further one’s business interests.




DumpingSelling products in a foreign country below the cost of production or below the price in the home country.

Predatory dumpingAn anti-competitive business practice in which foreign companies price their products below market value to increase sales and force domestic competition out of business, then raise their prices.




Poverty Over one-quarter of the world’s population lives in

intense poverty—accompanied by hunger, lack of shelter and medical care, limited access to education, high rates of disease, etc.

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Microcredit Microcredit—the granting of very small loans to

spur entrepreneurship—is one way that poverty is being addressed

Microcredit loans are mainly granted to women, who use the loans to start small businesses and their earnings to support their families




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Non-Governmental Organizations (NGOs)

Non-governmental organizations (NGOs)Non-profit organizations with a service and development focus that are composed mostly of volunteers, and are predominantly funded through charitable contributions.

NGOs may centre on trade, education, youth, improving the environment, human rights, or other issues.

Documents

Chapter 6: SOCIAL RESPONSIBILITY AND NGOs Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. - - - - - - - -