Ethics in International Business

Reference: International Business: The New Realities. 4th Edition; S.
Tamer
Cavusgil; Gary Knight; John Riesenberger.
International Business
“Ethics and International Business”
Reference: International Business: The New Realities. 4th Edition; S. Tamer
Unit 5.1: Corruption and ethics in International Business

• Ethics: moral principles that govern a person's behavior or the conducting of an

activity.
• Corruption. The abuse of power in order to achieve illegitimate personal or
business gain.
• Corruption Perceptions Index. Compiled by Transparency International;
measures the perceived levels of public sector corruption in countries around the world
by surveying analysts, businesspeople and experts.
https://www.transparency.org/en/cpi/2019/r
esults/pak
Corruption in International Business (cont’d)
• Foreign Corrupt Practices Act. Enacted in 1977 by US Government;

makes it illegal for individuals and firms to make payments to foreign government
officials to assist in obtaining or retaining business.
• Organization for Economic Cooperation and Development
(OECD)
• Adopted the Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997).
• Convention treats the bribery of foreign public officials as a criminal offence.
https://nation.com.pk/23-Jan-2017/massive-corruption-by-oil-gas-companies-unearthed
https://www.pakistantoday.com.pk/2019/12/08/were-all
-paying-a-high-price-for-corporate-corruption/
http://dx.doi.org/10.1787/9789264226616-en
http://dx.doi.org/10.1787/9789264226616-en
• 2011 Bribe Payers Index. Published by Transparency International;

ranks 28 of the world’s largest economies according to the perceived
likelihood of companies from these countries to pay bribes in foreign
markets.
• Russian and Chinese companies more likely to pay bribes.
• Dutch and Swiss companies least likely to pay bribes.
CORRUPTION PERCEPTIONS INDEX 2019
https://www.transparency.org/en/
cpi/2019/results
Unit 5.2: Corporate Social Responsibility initiatives abroad

• Corporate social responsibility (CSR) refers to operating a business in a

manner that meets or exceeds the ethical, legal, and commercial expectations
of customers, shareholders, employees, and the communities where the firm
does business.
• Environmentally friendly policies are an important part of most corporate
social responsibility programs. Accepting computers and parts for recycling
is an example of CSR initiatives at companies such as Acer and Apple.
• Firms that practice CSR behave ethically and support a voluntary, self-
regulated business model.
Global Corporate Social Responsibility Rises to the
Top of the MNE Agenda
• Global corporate social responsibility addresses issues such as workers’
rights, workers’ pay compared to a reasonable living standard, company
activities that disrupt traditional communities and lifestyles, and environmental
damage.
• A study by McKinsey & Co. found that executives worldwide overwhelmingly
embrace the idea that firms have societal and environmental obligations in
addition to ensuring profitability.
• Example: IKEA (www.ikea.com) proactively promotes social and
environmental responsibility.
Sources: Pete Engardio, “Beyond the Green Corporation,” Business Week, January 29, 2007, pp. 50–64; Fisk
Johnson, “How I Did It: SC Johnson’s CEO on Doing the Right Thing, Even When It Hurts Business,” Harvard
Business Review, April, 2015, pp. 33–36; Kasturi Rangan, Lisa Chase, and Sohel Karim, “The Truth about
CSR,” Harvard Business Review, January/February, 2015, pp. 40–49.
Unit 5.3: Role of Sustainability in International Operations &

Preserving natural environment and guilt free consumption
Role of Sustainability in International Operations

• Sustainability implies the development and execution of company practices
that avoid harming the ability of future generations to meet their needs. It is
endorsed by economic development experts, environmentalists, and human
rights activists.
• The sustainable firm carries out value chain activities in ways that protect and
preserve economic, social, and natural environments.
• MNEs are among the most important stewards of the environment through
skillful use of innovative technologies, improved water productivity,
management of shortages in vulnerable areas, and planning that
incorporates sustainability practices.
• For example, sustainable firms pay fair wages, ensure worker safety, and
avoid emitting toxic waste.
Preserving natural environment and guilt free consumption

• Leading firms view sustainability as an opportunity for resource efficiency,
cost effectiveness, reduced waste, and increased competitive advantage.
• Firms consume vast quantities of water resources, contributing to the creation

or expansion of deserts (desertification) and loss of important ecosystems
around the world. For example, Brazil recently has endured a drought of
historic proportions, and some experts believe loss of Amazon rain
forest is an important cause.
• The most advanced companies monitor suppliers to ensure that they use
sustainable practices. For example, following charges that some of its
Indian subcontractors were using forced child labor, GAP withdrew a line of
children’s wear from its clothing stores worldwide.
• BMW is introducing a series of electric cars to serve the firm’s sustainability

goals. The cars will have carbon-fiber bodies to reduce weight and save fuel.
Recycled aluminum is used in the chassis, and interior panels and seats are
made of hemp fibers and recycled water bottles.
Thank you

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Reference: International Business: The New Realities. 4th Edition; S.

Unit 5.1: Corruption and ethics in International Business

• Ethics: moral principles that govern a person's behavior or the conducting of an

Corruption in International Business (cont’d)

• Foreign Corrupt Practices Act. Enacted in 1977 by US Government;

Corruption in International Business (cont’d)

Corruption in International Business (cont’d)

• 2011 Bribe Payers Index. Published by Transparency International;

CORRUPTION PERCEPTIONS INDEX 2019

Unit 5.2: Corporate Social Responsibility initiatives abroad

• Corporate social responsibility (CSR) refers to operating a business in a

Unit 5.3: Role of Sustainability in International Operations &

Role of Sustainability in International Operations

Preserving natural environment and guilt free consumption

• Firms consume vast quantities of water resources, contributing to the creation

• BMW is introducing a series of electric cars to serve the firm’s sustainability

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