Part 1: Environmental foundation

Chapter 3: Ethics, social

responsibility and sustainability

MSc. Pham Ha Trang

 Course schedule
Week Part Lecture content
Chapter 1: Globalization and international linkages
1 1 - Environmental
Chapter 2: The political, legal, and technological environment
foundation
2 Chapter 3: Ethics, social responsibility and sustainability
3 Chapter 3: Managing across cultures
4 2 – The role of Chapter 4: Organizational culture and diversity
5 culture Chapter 5: Cross-culture communication and negotiation
6 Mid-term assessment 1
7 3 – International Chapter 6: Strategy formulation and implementation
8 strategic Chapter 7: Entry strategies and organizational structures
9 management Chapter 8: Management decision and control
10 Chapter 9: Motivation across cultures
4–
11 Chapter 10: Leadership across cultures
Organizational
Chapter 11: Human resource selection and development across
12 and HRM
cultures
13, 14,
Group presentation
15
Chapter content

1. Ethics and social responsibility

1.1. Ethics and social responsibility in IM
1.2. Ethics theories and philosophy
2. Human rights
2.1. Labor, Employment, and Business Practices
2.2. Environmental Protection and Development
3. Globalization and Ethical Obligations of MNCs
3.1. Reconciling Ethical Differences across Cultures
3.2. Corporate Social Responsibility and Sustainability
3.3. Corporate Governance
3.4. Corruption
3.5. International Assistance
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM

Ethics is the study of morality and standards of

conduct.

Corporate social responsibility (CSR) is closely related

to ethics but it involves taking action.

Ethical scandals and questionable business practices

have received considerable media attention.
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM

‘We’re the part of the community that you’re in when

you’re not at the office and you’re not at home’
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM
Community
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM
Workplace
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM
1. Ethics and social responsibility
1.2. Ethics theories and philosophy

There are a range of ethical theories and approaches around the world, many
emanating from religious and cultural traditions:

• Kantian: individuals (and organizations) have responsibilities based on

moral principles that go beyond self-interest

• Aristotelian (Ethics of virtue): virtue ethics focus on core, individual

behaviors and actions and how they express and form individual character

• Utilitarianism: favors the greatest good for the greatest number of people
under a given set of constraints

• Eastern philosophy: tends to view the individual as part of, rather than
separate from, nature

In IM, executives may rely upon one or more of these perspectives

when confronted with decisions that involve ethics or morality
1. Ethics and social responsibility
1.1. Ethics and social responsibility in IM
 2. Human rights
2.1. Labor, Employment, and Business Practices
• Political, economic, and cultural differences make it difficult to
agree on universal employment practices.

• Working conditions, expected work hours, and labor regulations

also create challenges in deciding appropriate employment
practices.
• Child labor initially invokes negative associations and is
considered an unethical employment practice.
• The reality is that of the 152 million children ages 5–17 working
globally in 2018—most worked to help support their families.

• In early 2010, low wages paid by Chinese subcontractors made

headlines after suicides by workers at factories run by Foxconn.
Opening case
Discussion (Movie)
 Discussion

Real-life interview of a child and forced labour survivor

https://www.youtube.com/watch?v
=956WWBGN5bc
 2. Human rights
2.2. Environmental Protection and Development

Many poor, developing countries are more

concerned with improving the quality of life for their The environmental Kuznet Curve
citizens than about endangered species or air or
water quality

Recent progress includes the Paris Agreement with

194 signatories as of 2019. However, many
companies continue to violate laws and/or
jeopardize safety and environmental concerns in
their operations.
2. Human rights
2.2. Environmental Protection and Development
3. Globalization and Ethical Obligations of MNCs
3.1. Reconciling Ethical Differences across Cultures
Ethical issue: Most MNCs seek to adhere to a code of ethical
conduct while doing business around the world, yet must make some
adjustments to respond to local norms and values.

“Integrative Social Contracts Theory” (ISCT): Stresses the

importance of studying the rules of smaller communities along with the
larger social contracts made in states (such as Colorado or California)
and nation-states (such as the United States or Germany).

ISCT is designed to provide international managers with a framework

when confronted with a substantial gap between the apparent moral
and ethical values in the country in which the MNC is headquartered
and the many countries in which it does business.
3. Globalization and Ethical Obligations of MNCs
3.2. Corporate Social Responsibility and Sustainability

Corporate social responsibility (CSR) is the actions of a firm to benefit society beyond
legal requirements and the direct interests of the firm

Pressure for greater CSR stems from a range of stakeholders, including

nongovernmental organizations (NGOs)

Some now regard NGOs as a counterweight to business and global capitalism

NGO criticism has been sharp in relation to the activities of MNCs

Many NGOs recognize that MNCs can transfer “best practices” from their home to host
countries’ markets

In some instances, MNCs and NGOs collaborate

3. Globalization and Ethical Obligations of MNCs
3.2. Corporate Social Responsibility and Sustainability
Public’s trust in each of the four institutions in 2016
3. Globalization and Ethical Obligations of MNCs
3.2. Corporate Social Responsibility and Sustainability

“At Unilever, we believe in a world where there’s enough food for everyone and no child should ever go to
bed hungry. Our brands like, Lipton, Knorr, Flora, and Magnum, are continually driving positive change
and encouraging others to do the same. We have partnered with Oxfam GB and Feeding America and
have helped feed millions of families in need. Going forward hand-in-hand with you and our partners,
together we can create a sustainable supply of food for all and a #brightfuture for generations to come.”

https://www.youtube.com/watch?v=FhEwxxs_Gxk
3. Globalization and Ethical Obligations of MNCs
3.2. Corporate Social Responsibility and Sustainability

Response to Social and Organizational Obligations

One response is the agreements and codes of conduct in which MNCs commit to
maintain standards in their domestic and global operations:
• The U.N. Global Compact.
• The Global Reporting Initiative.
• The social accountability “SA8000” standards.
• The ISO 14000 environmental quality standards
• Fair trade is an organized social movement and market-based approach that aims to
help producers in developing countries obtain better trading conditions and promote
sustainability.
3. Globalization and Ethical Obligations of MNCs
3.2. Corporate Social Responsibility and Sustainability

Companies realize loss

of resources will
eventually halt
production.
The term sustainability Increased pressures
is no longer tied to fiscal from NGOs also play a
results. Sustainability part.

Corporations are now Walmart and GE each

looking to be leaders in have their own “green”
the “green” movement. initiatives.
3. Globalization and Ethical Obligations of MNCs
3.3. Corporate Governance

Corporate governance is the system by which business corporations are directed and
controlled.
• It encompasses the relationships between a company's management, its board of
directors, shareholders, and other stakeholders.
• It provides the structure through which objectives are set and the means of attaining
those objectives and monitoring performance
• Governance rules and regulations differ among countries and regions
Þ Effective corporate governance ensures that a company operates transparently,
ethically, and in the best interests of all stakeholders, aiming to balance the interests
of shareholders with the responsibilities to employees, customers, and the broader
community
3. Globalization and Ethical Obligations of MNCs
3.4. Corruption

Government corruption is a pervasive element in the

international business environment.

• The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S.
companies/managers to attempt to influence foreign officials through personal
payments or political contributions.
• The Transparent Agents Against Contracting Entities (TRACE) standard was
developed after a review of the practices of 34 companies—applies to business
intermediaries.
3. Globalization and Ethical Obligations of MNCs
3.4. Corruption
Corruption perceptions index

Source: Transparency international

 3. Globalization and Ethical Obligations of MNCs
3.5. International Assistance
Governments and corporations are increasingly collaborating to
provide assistance to communities around the world through
global partnerships.
• Fighting malnutrition, controlling malaria, and immunizing
children are identified as the best investments.

• At the United Nations, world leaders placed development at the

heart of the global agenda by adopting the Sustainable
Development Goals.
• The 17 goals are an ambitious agenda to improve the human
condition by 2030.
• The Global Fund to Fight AIDS, Tuberculosis, and Malaria, has
committed over US$38 billion in grants to over 151 countries.