International Business Environments and Operations, 13/e Part Two Comparative Environmental Frameworks 5-1 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Chapter Five Globalization and Society 5-2 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Chapter Objectives • To identify problems in evaluating the activities of multinational enterprises (MNEs) • To evaluate the major economic effects of MNEs on home and host countries • To understand the foundations of responsible corporate behavior in the international sphere • To discuss some key issues in the social activities and consequences of globalized business • To examine corporate responses to globalization 5-3 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Evaluating the Impact of FDI • FDI is Foreign Direct Investment • The large size of some MNEs causes concern for some countries • MNEs and countries need to understand the impact of FDI in home and host countries 5-4 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall What MNEs Have To Offer 5-5 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Considering the Logic of FDI • Need to consider relationship between those who make foreign investments (MNEs) and possible effects on receiving countries • Areas to consider: Stakeholder trade-offs Cause-and-effect relationships Individual and aggregate effects 5-6 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall The Economic Impact of the MNE • Balance-of-Payments effects: Net import effect Net capital flow • Growth and Employment effects: Home-country losses Host-country gains Host-country losses 5-7 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Why Companies Care About Ethical Behavior • Instrumental in achieving two objectives: To develop competitive advantage To avoid being perceived as irresponsible 5-8 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall The Cultural Foundations of Ethical Behavior • Relativism vs Normativism: truths depend on the values of the groups or are there universal standards • Negotiating between evils 5-9 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall The Legal Foundations of Ethical Behavior • Legal justification for ethical behavior may not be sufficient because not everything that is unethical is illegal • The law is a good basis because it embodies local cultural values • As countries tackle similar ethical issues, laws will become more similar 5-10 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Ethics and Bribery • Bribes are payments or promises to pay cash or anything of value • Bribes are used to get government contracts or to get officials to what they should be doing anyway • Problems with bribery: Affects performance of company & country Erodes government authority Damages reputations when disclosed Increases cost of doing business 5-11 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Where Bribes Are (and Are Not) Business as Usual 5-12 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall What’s Being Done About Corruption? • Cross-National Accords: The OECD, the ICC, and the UN • The U.S Foreign Corrupt Properties Act • Industry Initiatives • Relativism, the Rule of Law, and Responsibility 5-13 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Ethics and the Environment • Sustainability • Global Warming and The Kyoto Protocol National and Regional Initiatives Company-Specific Initiatives 5-14 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Future: How to See the Trees in the Rain Forest • The Amazon rain forest accounts for 1/3 of the world’s remaining tropical forest • Kyoto Protocol proposes reforestation to reduce greenhouse emissions • Major Challenge: protect global environment while preserving Brazil’s sovereignty over resources 5-15 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Ethical Dilemmas and the Pharmaceutical Industry • Tiered pricing and other price-related issues • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) • R&D and the Bottom Line 5-16 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Ethical Dimensions of Labor Conditions • Ethical Trading Initiative • The Problem of Child Labor • What MNEs Can and Can’t Do 5-17 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Sources of Worker-Related Pressures in the Global Supply Chain 5-18 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Corporate Codes of Ethics • Motivations for Corporate Responsibility • Developing a Good Code of Conduct 5-19 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America 5-20 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall ... Increases cost of doing business 5-11 Copyright © 2011 Pearson Education, Inc publishing as Prentice Hall Where Bribes Are (and Are Not) Business as Usual 5-12 Copyright © 2011 Pearson Education,... Hall Ethics and the Environment • Sustainability • Global Warming and The Kyoto Protocol National and Regional Initiatives Company-Specific Initiatives 5-14 Copyright © 2011 Pearson Education,... MNEs causes concern for some countries • MNEs and countries need to understand the impact of FDI in home and host countries 5-4 Copyright © 2011 Pearson Education, Inc publishing as Prentice