ETHICS & INTERNATIONAL BUSINESS


Ethic Norms vary across cultures

Broad ethical norms are shared around the wold. The major religions all condemn murder, theft, lying. However, the practical implications are far more controversial.


I - INTRODUCTION

The problems of deciding what behavior is ethical are further complicated when values seem to change across time.

Ex: Thirty years ago few people thought of cigarette smoking as an ethical problem. Medical dangers of "passively inhaling smoke from another person's cigarette.

Forces in the "External Environment"played a role in a society reordering its ethical priorities. Needs to gain international credibility.

A- Extreme versus non-extreme positions

B - Definite benefits in enforcing some sort of ethical framework.

Ex: Nike, BMW

C - A reputation for ethical behavior is profitable.

Redefine unethical behavior

Companies are increasingly aware of their dependence upon the social environment. Customers and suppliers prefer to deal with companies that have a good record on social issues and employees to work for them.

Ex:
a) Levi-Strauss developed a program to address the problem of AIDS in the workplace

b) BMW building a new plant that reutilizes parts, recycling used parts


II - BRIBERY IN INTERNATIONAL BUSINESS

It has been against the law since the SEC act of 1934 to offer questionable or illegal payments to foreign officials. However, the 1934 law was bypassed so often that the government enacted the Foreign Corrupt Practices Act of 1977 (FCPA) regarding to international business bribery and fraud.

Under the SEC act only individuals in publicly-held firms were liable. The 1977 act extended to individuals, and other private companies the jurisdiction of the government

In 1988 - the government made it legal to pay foreign officials in order to facilitate or expedite permits, licenses, other approvals.

Thus, it made easier for U.S. companies to make payments to facilitate customs procedures, and in addition firms may not be liable for under the table payments made by their reps, unless the company knew about them

The bribery issue is more prevalent in some nations more than in others (See ranking)

Most likely targets: defense contracts, large construction projects, turnkey projects.


III - THE COST OF BRIBERY

a) The company sets a precedent
b) The organization may start believing that bribery is a standard operating procedure
c) Bribery may be used to dismiss faux pas, failures, and other mistakes

d) Jail sentences, loss of a job

e) Increases cost of international business operations

f) Damages firm's domestic and international reputation


What to do:

a) Call Fraud Section Criminal Division U.S. department of Justice (202) 514-0651

b) Call or contact the Office of the Chief Counsel of International Commerce, U.S. Department of Commerce: (202) 377-0937.


IV - GIFTS

Legal and Illegal Gifts and Practices


Chapter 12

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