ETHICS & SOCIAL RESPONSIBILITY

TODAYS PLANTOPIC: Ethics & Social ResponsibilitySocial Responsibility & the CorporationCultural relativism & ethical imperialism? CORRUPTIONCaseletsDiscussion

WHEN IS DIFFERENT JUST DIFFERENT, & WHEN IS DIFFERENT WRONG?

GUIDELINES THAT HAVE BEEN USEDCultural relativismNo cultures ethics are better than any others (no international rights & wrongs)Ethical imperialismDo everywhere exactly as they do at homeTheory behind cultural imperialism: absolutismSingle list of truthsCan only be expressed with one set of conceptsCall for the same behavior around the world.

BALANCING THE EXTREMES: THREE GUIDING PRINCIPLESRespect for core human values, which determine the absolute moral threshold for all business activitiesRespect for local traditionsThe belief that context matters when deciding what is right & what is wrong

GUIDELINES FOR ETHICAL LEADERSHIPTreat corporate values & formal standards of conduct as absolutesDesign & implement conditions of engagement for suppliers & customersAllow foreign business units to help formulate ethical standards & interpret ethical issuesIn host countries, support efforts to decrease institutional corruptionExercise moral imagination

ADVERTISING & FREE SPEECH? THE CASE OF NIKE & HUMAN RIGHTSIdentify the ethical issues faced by MNCs in their treatment of foreign workers that could bring allegations of misconduct in their operations?Would the use of third party independent contractors alleviate or insulate MNCs from being attached, and would such use be a good defensive shield against charges of abuse of their employees?Are statements by companies that show good social and moral conduct in the treatment of their workers part of the image they create therefore part of their advertising message?Are statements by companies that show good social and moral conduct in the treatment of their workers part of the image they create therefore part of their advertising message? Do consumers judge companies and make their buying decision based on their perceptions of corporate behavior and values they exhibit? Is the historic made in question (e.g. Made in the USA) now being replaced by the made by inquiry (e.g. Made by Company X or for Company X by Company Y)? Given the principles noted in the case, how can companies comment on their positive actions to promote human rights so consumers will think well of them? What would propose a company do (a) nothing? (b) construct a corporate code of ethics? (c) align with some of the universal covenants or compacts prepared by international agencies?

CASELETS ON CORRUPTIONDivide into groupsDecide what you should do in each case if you were the decision-makerClass discussion

BRIBERY & CORRUPTIONCorruption: abuse of public office for private gainCorruption is both an ethical matter & an economic matter (large costsConsidered by many to be the key reason for the lack of progress in economic reform in non-Western countries.

CORRUPTIONCausal factorsInterdependence of the economic & political spheresTypes of corruptionPetty GrandHow do you draw the line between legitimate & illegitimate interactions between the private sector & politicians is more difficult to draw

WHERE DOES CORRUPTION OCCUR?Most of the corrupt countries are developing countriesCorruption also varies across sectors and activitiesHighest in the public works, construction, & defense sectorsLowest in banking & agricultureIn terms of government activities, most prone are: tax departments, police departments, customs agencies, procurement & distribution of international aid

THE COSTS OF CORRUPTIONCorruption is associated with a range of negative macroeconomic effectsReduced investment & GDP growth, reductions in the flow of foreign direct investment, income inequality, & misallocation of government resourcesFor managers engaged in international business, corruption has become a major concernPrediction that half of the worlds GDP growth will occur in non-OECD countries & those countries rank high in corruption

ECONOMIC COST OF CORRUPTION

THE CANADIAN SITUATION BUSINESS ACTIVITY: International Code of Ethics for Canadian Business (1997)GOVERNMENT ACTIVITIES:OECD Guidelines for Multinational Enterprises (Canada obliged to established a National Contact Point to promote the guidelinesOECD Analytical Work on Corporate CodesCorruption Convention of the OECEDCorruption of Foreign Public Officials Act passed by Parliament in 2/1999

EFFORTS BY INTERNATIONAL DEVELOPMENT ORGANIZATIONS: THE WORLD BANKWorld BankSince 1996, Bank launched more than 600 anti-corruption programs in nearly 100 countries (including loans)Institutionalized efforts: Department of Institutional Integrity to investigate claims of fraud & corruption & a Sanctions Committee to adjudicate cases & assess penaltiesMore than 180 companies & individuals debarred from doing business with the Bank

EFFORTS BY INTERNATIONAL DEVELOPMENT ORGANIZATIONS: REGIONAL DEVELOPMENT ORGANIZATIONSThe Inter-American, European, & Asian Development Banks followed World Banks leadIMF has suspended aid to some countries because they did not combat corruptionSuggestion that anti-corruption requirements be placed in the conditionality agreements

PRIVATE EFFORTS: TRANSPARENCY INTERNATIONALFounded in 1994 in Berlin active in more than 70 countries72 national chapters, source book of best practices & started several innovative pilot projects.Lobby governments, inform media & bring together people concerned with corruptionAnnual corruption Perception Index (measures perception of corruption in 85 countries)

2006 BRIBE PAYERS INDEX

2006 CORRUPTION PERCEPTIONS INDEX

CORPORATE TRANSPARENCYRole of codes of conductLarge accounting firms have forensic accounting expertsCollective action several industry groups developed sector-specific guidelines on tackling corruption & promoting access to information.Whistleblowers importance of giving these individuals protection Importance of tightening up financial reporting & maintaining the independence of auditors

BRIBERY IN BUSINESS SECTORSPublic works/constructionArms & defenseOil & gasReal estate/propertyPower generation/transmission & telecommunicationsMiningPharmaceuticals/medical care & transportation & storageHeavy manufacturingBanking & financeCivilian aerospaceIT & forestryAgriculture, light manufacturing, fishery

RELATIONSHIP BETWEEN GNP & PROPENSITY FOR BRIBERY

ASSIGNMENT FOR 25/1/2007CASE: Conocos Green Oil StrategyDivision of the class into four groups: Read both the main case & your caseFirst part of class: work in groups: Ecuadorian government, indigenous peoples, environmental groups, managementSecond part: negotiation (2 representatives per side)

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