American companies lose billions of dollars from complyingd.i)Giving other countries a competitive advantage121)Grease Payments – small bribes paid to government officials to facilitate routine bureaucratic decisionsa)In many cases these small bribes are condoned by government officials122)Multi-National Company (MNC)– one that operates in more than one countrya)Usually has a parent company and component company which operate in different countriesb)Cultural Differences b.i)Methods of payment – some countries it is acceptable to take bribesb.ii)Employment practices – and acceptable to employ children123)American Businesses – in foreign countries are subject to American anti-corruption and anti-terrorism lawsa)One of the most common mistakes of American businesses operating internationally is following the local custom of paying under the table bribes124)EU Convention on Corruption passed in 1997 – makes it a criminal act to pay bribes inside and outside the European Uniona)Civil servants from the EU can be prosecuted for bribery under this legislation125)Bribes vs Grease Paymentsa)Bribe – to pay a large amount of money to get a friend out of jailb)Grease payment – to pay a small amount of money to speed up your visa126)Union Carbide – Pesticide Plant in Bhopal India – in 1984 – exposed over 500,000 to a deadly poison gas which leaked from the plant127)Integrative Social Contract Theory – (ISCT) - theory of business ethics by Donaldson and Dunfee and concerns cross national cultural differencesa)ISCT consist of 4 categories of normsa.i)Hypernorms – values acceptable to all cultures and organizations, (i.e.: against murder, theft, rape etc.)a.ii)Consistent Norms – most codes of ethics fall under this category – cannot conflict with hypernorms, more culturally specifica.iii)Moral free space – allows managers to adapt where the norms of a country conflict with consistent norms in the home country(a.iii.1)Freedom to join communities and to act jointly to establish moral rules which apply to community membersa.iv)Illegitimate norms – incompatible with hypernorms - lack moral authority, exposing workers to deadly chemicals 128)Sweatshops – low pay, poor working conditions, safety and health violations, child labora)Often found in Pakistan, Vietnam, Thailand, Honduras, Indonesia and Philippines129)SA8000 Initiative– approved a set of labor standards that include the right to safe working environment, a moratorium on child labor, a living wage, the right for workers to unionize, and a 48 hour work week
a)Companies that want to comply with the SA8000 standards apply for certification through an outside auditor130)Transnational Organization – successfully manages both local and global concerns in an integrated plan that offers them the most flexibilitya)Cultural differences exist between countries that create barriers that impede effective bargaining
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