Value added tax (VAT) : levied on each party that adds value to a product throughout its production and distribution. 1. Antitrust Regulations: Antitrust (antimonopoly) laws are designed to prevent companies from fixing prices, sharing markets, and gaining unfair monopoly advantages. Such laws help ensure a wide variety of products at fair prices. In strict antitrust countries, companies see a disadvantage against competitors whose home countries condone market sharing , whereby competitors agree to serve only designated market segments. ETHICS AND SOCIAL RESPONSIBILITY: International managers are exposed to different conceptions of ethical behavior and guidelines for socially responsible behavior. Child labor, human rights, the environment, and plant closings are the heart of debates over impact of multinationals. Ethical Behavior : personal behavior in accordance with guidelines for good conduct or morality. No right or wrong decisions, but alternatives, each of which may be equally va lid depending on one’s perspective. Corporate Social Responsibility : practice of companies going beyond legal obligations to actively balance commitments to investors, customers, other companies, and communities. Three layers of CSR activity: (1) company works toward a specific social cause; (2) company follows a code of conduct and operates with greater transparency; and (3) company builds social responsibility into its core operations to create value and build competitive advantage. Philosophies of Ethics and Social Responsibility 1. Friedman View : company’s sole responsibility is to maximize profits for its owners (or shareholders) while operating within the law. Example: managers would applaud a company moving pollution-generating operations from a strict country to a lax country. Many disagree with this argument against socially responsible activities. Today the discussion is not whether a company has CSR obligations, but how it will fulfill them. 2. Cultural Relativist View : company should adopt local ethics wherever it operates because all belief systems are determined within a cultural context. Sees truth, itself, as relative and argues that right and wrong are determined within a specific situation. “When in Rome, do as the Romans do” captures the essen ce of cultural relativism. 3. Righteous Moralist View : company should maintain its home-country ethics wherever it operates because the home- country’s view of ethics and responsibility is superior to others’ views. Example: company headquarters instructs subsidiary managers to refrain from bribing local officials and, thereby, imposes its righteous moralist view on local managers. 4. Utilitarian View : company should behave in a way that maximizes “good” outcomes and minimizes “bad” outcomes wherever it operates. A utilitarian manager asks the question “What outcome should I aim for?” and answers, “That which produces the best outcome for all affected parties.” Example: manager pays a bribe based on calculations that more people will benefit than will be harmed by the outcome.
CSR Issues 1. Bribery and Corruption: Corruption leads to the misallocation of resources, hurts economic development, distorts public policy, and damages the integrity of “the system.” In 2002, Congress passed the Sarbanes
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- Fall '07