International Management #10 Introduction to Law & Ethics

[samvara]

Home sick, but slides were interesting.

- Discussion of Text pages 423 – 443 (assigned reading)
- Group Case Study – Text case 10 – NES China (assigned reading)
(Management Allsorts readings –

• Lila: an Enquiry into Morals: page 361
• Bribery or Facilitation: page 166
• Values in Tension: page 369 – be prepared to discuss this article
• Brief Introduction to Law and Ethics: page 376)

Law and Ethics - Differences

• Law - sum of rules and regulations developed by a country to enforce methods and standards of behaviour by applying formal/official sanctions for non-compliance
• Ethics is the study of morality and the setting of standards of conduct. Behaviour is judged as ethical or not ethical depending on adherence or not to the standards set and accepted by a society - sanctions are informal and socially based
• Business ethics = business moral standards (is business ethics an oxymoron?)
• Law tends to be objective, pragmatic, fully documented, readily identified and enforceable - “Must not” or “Must”
• Ethics - subjective and philosophical and therefore verycomplex, diverse and debatable. What is “right” or“wrong”? “Should not” or “Should”
• Sanctions for ethical misbehaviour society based, largely unwritten except for standards encoded in religious terms.
• In both cases, getting caught is a necessary precursor tothe application of a sanction (NB – laws can be administered unethically!)
• The ethical - illegal, unethical - legal dilemma

Areas of Business Law

• Laws for different countries can differ widely in nature and application (e.g. Sharia Law) - as they can from region to region in any one country! While law maybe in place, enforcement may be lax and court system questionable – could be misrule of law rather than rule of law
• Business law areas include - business formation, taxation, exchange controls, trade restrictions, contract enforcement, intellectual property, industrial relations, environment, transfer pricing

Ethical Theory (Western View)

• Considered as branch of philosophy called axiology
• Consequential theory - focuses on outcomes or results of decisions and behaviour and advocates doing best for most people (utilitarian approach)
• Rule based theory focuses on duty, obligations and rights - the universal shoulds and should nots of existence (religious/ Kantian approach)
• Cultural relativism assumes that there is no one right way - when in Rome do as the Romans do! (or as the better Romans do)
• When considering everyday social behaviour (greetings, eating, social protocols) the term cultural relativism makes sense, but not when considering ethical behaviour
• Cultural relativism, when used as a term that includes ethics, denies any universals such as human rights and employment practices
• BUT – there are UN Declarations of Human Rights and Political Rights as well as similar Islamic Declarations
• I suspect that these rights are often more honoured in the breach than the application
• My view is that a better approach is : cultural (social) relativity but ethical compromise to the extent that what we do would stand up to scrutiny at home when judged by our peers
• If we do not accept a modicum of ethical compromise then we should not be working in a country with different ethical standards to our own

Practical Aspects of Ethics

• An ethical perspective requires one to extend consideration beyond one’s self interest or that of the Company - behaving according to what would be considered better or higher standards of conduct, not necessarily the minimum required by law for example
• Ethical compromise means accepting a halfway house between radical ethical universalism and radical ethical relativity
• We can compromise but still work towards influencing people to accept the universal standards
• Be prepared for ethical dilemmas – financial (bribery), political, managerial (discrimination, harassment)
• The role and usefulness of a Code of Ethics.
• Resolve any differences between your standards and those of the Company
• Would your actions look OK in light of day
• Ethical values should permeate the Company

Social Responsibility

• Refers to the obligations of business towards society (at home and abroad) - CSR
• Environmental and consumer protection, employee welfare for example
• Rationale - moral and economic.
• Role of - OECD, ILO, UN

(See Readings 9, 10, 11 and 12 in edition 5 of text)

The ethical and responsibility “red flags”:

• Country is high risk - see TI Index
• Bona fides of proposed partner suspect
• Exorbitant fees - not justifiable
• Request to disregard environmental issues
• Pressure to “do things the local way”
• Pressure to “turn a blind eye”
• Undue secrecy
• Request payments to “overseas account”
• •UWA Business School •10

Key Issues/Questions

• Bribery - whose problem is it? (Scale/Level) (Reading 10 in edition 5 of text relevant here)
• What is best balance between self regulation and legislation to ensure ethically and socially responsible business behaviour?
• How are Codes of Ethics best compiled and used?
• Do MNC’s have special obligations towards developing countries and their people?
• Is education in better corporate governance the answer?
• Australia’s Corrupt Practices Act (OECD guidelines) - will it work?(2011,1st charges)
• Bribery versus facilitation?
• What guidance should be given to staff in relations to ethics - how much responsibility do staff have in this area?
• How much social responsibility is enough? Responsibility to shareholders?
• Can ethics be taught in business schools? Now on the agenda!!!

The recap in the following lecture was very valuable to me for catching up.