Ethical Responsibilities in International Business: Globalization's Impact, Summaries of Business Economics

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Adam, an executive with a multinational company, starts a manufacturing unit in a poor country where child labor is very prominent. However, his native country treats child labor as a punishable offense. In this scenario, which of the following should be adopted by Adam to conform to the local practice of child labor? Ethical relativism True or false: The fact that culture have different values is referred to as ethical relativism. Reason: This is false. The fact that cultures have different values is referred to as cultural relativism, whereas conflicting values is referred to as ethical relativism. Corruption scandals that toppled governments in Japan and Italy show that . acceptance of bribery and kickbacks in those countries was not as widespread as some would have thought True or false: Excusing unethical behavior is the same as justifying it. Reason: This is false. Excusing unethical behavior is not the same as justifying it. An international company set up a factory in a developing country where the working conditions are unhealthy and the wages are extremely low. Identify a true statement about this scenario. These conditions are not ethically justified although they are accepted by the workers. It is tempting for business to take the step from as significant financial benefits can result from following local ethical practices. cultural relativism to ethical relativism A person's own integrity would require that , even in cases in which a local culture holds values different from one's own. one's personal values not be abandoned The fact that cultures have different values does not by itself imply that. there are no objective standards for deciding between conflicting values The fact that political and economic elites tolerate corrupt and unethical conduct, especially in cases where they are the very ones to benefit from that conduct, is hardly evidence to support the claim that. what one takes as unethical is ethically acceptable in other countries In many discussions of cultural relativism in international business, the values that are taken as. unethical are those of the other culture

universal rights would seem more appropriately to belong to a. According to Tom Donaldson, which of the given statements is true about the maximalist approach? Maximalists hold that they have a responsibility to provide positive benefits and support for the communities in which they operate. Identify the philosopher who has suggested ten ethical guidelines that can be applied cross-culturally. Richard DeGeorge In many discussions of cultural relativism in international business, the values that are taken as. unethical are those of the other culture seems to work for several more specific international responsibilities for business. The maximalist approach In 2005, the U.N. Commission created a group to "identify and clarify standards of corporate responsibility and accountability for transnational corporations and other business enterprises with regard to human rights." This study led to the emergence of the. Ruggie Framework A multinational business enters a foreign country only if. it believes that it will reap a net benefit from such a move, and host countries are convinced of a similar expectation Identify an argument raised by Tom Donaldson on business strategies. Fundamental human rights can provide the basis for a list of international responsibilities for business. The traditional understanding of international relations was solely in terms of relations between.

states

Identify a major challenge to the minimalist approach explained by Tom Donaldson. It does not seem to explain why the responsibilities correlated with the universal rights should fall on the shoulders of multinational business. In the view of some critics, decisions made by unelected corporate officials motivated by profit and self-interest have. replaced the decisions made by political officials who should be motivated by the best interests of their citizens. Identify some of the ethical guidelines for ●^ Respect^ the^ human^ rights^ of^ their

multinational corporations suggested by Richard DeGeorge that can be applied cross- culturally. (Check all that apply.) employees. ● Produce more good than harm for the host country. ● Pay their fair share of taxes. ● Respect the local culture and work with and not against it. Match the strategy (in the left column) with its description (in the right column). The minimalist strategy- Outlines general rights and responsibilities maximalist strategy- Specifies in more detail the implications that the general rights and duties have for businesses operating internationally Identify the international trade agreements that opened borders to freer trade. (Check all that apply.) The North American Free Trade Agreement (NAFTA) The General Agreement on Tariffs and Trade (GATT) An interpretation of the responsibilities understands them being derived from an implicit social contract between multinational businesses and the host countries. maximalist Allocating resources to the most highly valued uses and distributing those resources in ways that will produce the greatest good for the greatest number of people will be done by . the pursuit of profit within social and economic arrangements that secure free and open competition Identify the subjects with which international relations was traditionally believed to be related. (Check all that apply.) Macroeconomics Political science Identify the most effective way to improve the well-being of the most impoverished people in the world according to defenders of globalization. The economic growth and development that flows from more free and open trade Identify a true statement about decisions made within businesses. They can have as great an influence on international affairs as those made within government. Globalization is seen as a major step in . reducing worldwide poverty Advocates from organized labor, environmentalism, human rights groups, and pro-democracy organizations argue that globalization. undermines rather than supports equal rights and self-determination

Identify the most effective way to improve the well-being of the most impoverished people in the world according to defenders of globalization. The economic growth and development that flows from more free and open trade Ethical responsibilities of market economies in poor countries require that businesses that seek to benefit from growth. not do so by exploiting the human and natural resources of host countries Identify a criticism made against free trade. Many exported jobs pay bare subsistence wages and create sweatshop conditions. While freer trade and greater international economic integration can improve the economic well-being of any nation that adopts free trade and free market policies,. it does not follow that these policies can improve the economic well-being of all countries If wages and benefits are very similar in the host countries, there will be no incentive to export jobs Identify a context in which a "race to the bottom" of regulation occurs. When countries possess strong incentives to be the first to offer multinational corporations less regulation and restrictions If an international business wants to benefit from less costly local labor, they should . take full and direct responsibility for how those workers are treated create an incentive for a business to move jobs out of the United States to countries without such protections as those required by OSHA. Workplace health and safety regulations required by OSHA that raise the costs of doing business in the United States According to defenders of globalization, what is an essential step in worldwide economic growth? International economic integration The United States appealed the decision of the European Union to ban imports of hormone-treated beef to the WTO, claiming it was an unfair barrier to free trade. This is an example of. how environmental regulations create barriers to free trade have the potential to create tremendous economic growth in poor countries. Market economies Identify the major engines working against local environmental, labor, and consumer regulation. Free trade agreements and the WTO

True or false: If any poor country can improve its economy through exports, all poor countries can improve economically through exports. Reason: This is false. It does not follow that if any poor country can improve its economy through exports, all poor countries can improve economically through exports. Freer trade and economic integration generates incentives to weaken or do away with environmental, labor, health, and safety regulations. These regulations constitute what is known as. barriers to trade Identify a true statement about local regulations. They are a barrier to the ability of local businesses to compete in world trade. Identify the extensive background conditions that markets require in theory. (Check all that apply.) ● Legally enforceable and tradable property rights ● Free and open competition ● Perfect information ● Rationally self-interested agents The WTO prohibited the United States from enforcing a law that prohibited the sale of tuna that was not harvested by methods that protected dolphins in 1999 because. it created an unfair barrier to tuna imports As globalization was just beginning to grow, the trend over recent decades is that environmental, workplace, and consumer regulation has been. increasing rather than decreasing in both wealthy and poor countries Nongovernmental agencies such as the World Bank, the WTO, and the IMF, and the governments that support them, must acknowledge that. free markets and free trade must be regulated by considerations of fairness and social justice Freer trade and economic integration creates incentives to. do away with environmental, labor, health, and safety regulations Society should through its political institutions. set the ethical and legal guidelines under which business is allowed to operate True or false: Economic markets exist in a vacuum. Reason: This is false. No economic market exists in a vacuum. seeking to expand worldwide markets for their products creates a cultural homogenization that threatens local cultures and traditions. Global market capitalism fueled by multinational corporations The United States appealed the decision of the European Union to ban imports of how environmental regulations create barriers to free trade

True or false: Political regulation for such goals as environmental, worker, and consumer protection seems to decrease rather than increase in industrialized countries. Reason: This is false. Political regulation for such goals as environmental, worker, and consumer protection seems to increase rather than decrease in industrialized countries. Society should through its political institutions. set the ethical and legal guidelines under which business is allowed to operate Identify a country that currently prevents its citizens from choosing with their feet which political and economic arrangements they prefer. North Korea According to some critics, the World Bank, the IMF, and the WTO are themselves undemocratic because decisions are made by . unelected bureaucrats Institutions such as the World Bank, the IMF, and the WTO exist and have authority only because. nations have agreed to have them exist with authority If poor nations reject the Golden Straitjacket policies, they. cannot reasonably expect that economic prosperity will follow from alternative policies Defenders of globalization remind one that historically have been the most likely ones to shun free market policies. authoritarian governments In organizations such as the World Bank and WTO, decisions are typically made. behind closed doors According to history, tend to favor freer markets and freer trade. democratic countries By considering judiciary as the proper model for institutions such as the World Bank and WTO,. privacy and secrecy often make it easier to reach mutually acceptable decisions Identify a true statement about the Golden Straitjacket as described by Thomas Friedman. It does impose sometimes undesired restrictions on sovereign nations. Defenders of globalization point out that all the institutions, such as the World Bank, the IMF, and the WTO, were created by, and owe their continued existence to, decisions made by. individual nations

If a nation does not have in place policies that make an investment financially sound,. it cannot expect any foreign investment Identify a fundamental requirement of fairness, as argued by John McCall, needed in the decisions made by organizations such as the World Bank and WTO. A right to participate in these decisions for anyone affected by them Identify the policies supported by the World Bank, the IMF, and the WTO. (Check all that apply.) Free trade Foreign investment in local economies Stable currencies Defenders of institutions such as the World Bank and WTO argue that the proper model for these institutions is a(n). judiciary The groups that are favored by the Golden Straitjacket policies seem to impose to be the social structures that threatens the integrity of many indigenous cultures and practices. market capitalism and consumerism Institutions such as the World Bank, the IMF, and the WTO exist and have authority only because. nations have agreed to have them exist with authority Defenders of the Golden Straitjacket policies, such as Thomas Friedman, argue that. these policies are simply rational requirements if a nation chooses prosperity over poverty The policies of the World Bank, the IMF, and the WTO perceive that is the path to stable self-sufficiency. economic growth By considering judiciary as the proper model for institutions such as the World Bank and WTO,. privacy and secrecy often make it easier to reach mutually acceptable decisions What are the arguments against stopping global economic integration of businesses? (Check all that apply.) ● It argues that this policy will raise prices and therefore reduce overall happiness. ● It questions how a company is to know what a particular country demands of it. Identify an argument against stopping global economic integration of businesses. Global economic integration will raise prices and therefore reduce overall happiness as goods and services become more expensive than before.