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Lecture 21

GEB 3373 Lecture Notes - Lecture 21: Chaebol, Johnson & Johnson, Corporate Social Responsibility


Department
Business Administration - General
Course Code
GEB 3373
Professor
Phalin Amanda
Lecture
21

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GEB 3773 – Chapter 5 Notes
The Nature of Ethics & Social Responsibility in International Business
Ethics & Behavior
- Ethics: in context of an individual, not organization:
> Focuses on individuals in organization, not organization itself
- Social Responsibility: in context of relationship between an organization and its overall
environment
> Natural, social, political, etc.
- Ethics: An individual’s personal beliefs about whether a decision, behavior, or action is right or
wrong
> Varies person to person
> Determined by interactions with parents, other adults, peers; everyday occurrences;
religious training; personal values
- Ethical Behavior: Behavior that conforms to generally accepted social norms
> A society’s formal laws tend to reflect those norms
- Unethical Behavior: Behavior that does not conform to generally accepted norms
> Definition is not exact
> Slavery once accepted as a social norm, but definitely not ethical
> Ethical can vary across locations and vary over time
Ethics in Cross-Cultural and International Contexts
- 3 General Areas:
> How an organization treats it employees
> How employees treat the organization
> How the organization and its employees treat other economic agents
How an Organization Treats Its Employees
1. Hiring Practices
2. Career Development
3. Compensation & Benefits
4. Workers’ Rights & Dignity
> Issues can be both country-specific and international
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- Views differ on central issues across cultures
> Conflict of interest: Decision benefits individual but hurts organization
- Are gifts/exchanges of favors acceptable/expected? (Guanxi in China)
> Guanxi:
- Book: Based on reciprocal exchanges of favors
- Online: relationship, mutual-back scratching
- Web: connections, a Chinese social concept based on the exchange of
favors, in which personal relationships are considered more important than laws and
written agreements, the system of social networks & influential relationships that facilitate
business & other dealings
> Revealing company secrets
- Not considered as problematic in others cultures (China/IPRs)
> General honesty
-Padding expense accounts, using business phone for long-distance calls, taking office
supplies, etc.
Employees, the Organizations, & Other Economic Agents
- Standards & expectations may vary across cultures
> Customers: Truth ads, safe products?
> Competitors: Bribes, stealing ideas?
> Stockholders: Honest financial disclosure?
> Suppliers: Ethical subcontractors?
> Dealers: Fair relationship?
> Labor Unions: Good worker conditions?
Managing Ethical Behavior across Borders
Management Methods
- Written Guidelines: Rules detailing how to treat suppliers, customers, competitors, other
stakeholders
> Toyota, Siemens, General Mills, Johnson & Johnson
- Code of Ethics: Written statement of firm’s guiding values and ethical standards; code doesn’t
equal ethical behavior
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> Nissan, Daewoo, Whirlpool, HP
- How will they be applied?
> Uniform code/guidelines for all global units, or tailored to each local context?
> Must subsidiaries abide by code/guidelines?
- Ethics Training: Globally consistent or tailored to localities?
> Regardless, training needed to understand local business culture
> Even if Guanxi banned, important to understand it succeeds in China
- Organizational Practices/ Corporate Culture: Modeling acceptable behavior from top down
> Are bribes acceptable? What constitutes bribe?
> By country:
- YES: Russia, China, Taiwan, South Korea
- NO: Australia, Sweden, Switzerland, Austria, Canada
- IN THE MIDDLE: Italy, Japan, US
- Most Ethical Companies
> Not American companies, L’Oreal (France),
Corporate Social Responsibility in Cross-Cultural & International Contexts
Corporate Social Responsibility
- Relationship b/w and organization & its environment
> Natural, Social, Political = CSR
> Set of obligations an organization undertakes to protect & enhance society in which it
functions
- Firms must balance global stance on CSR against local market conditions; may result in
different policies & approaches in different markets
Social Media & CSR
- Social media is driving CSR by increasing transparency
> Can get lots of info; anyone can start a movement
- Companies don’t have a choice but to be more socially responsible
> People can now affect bottom lines of bad companies
- Perfection is not the ultimate goal. Trying & transparency are the most important things
- Examples:
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