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Batch: 2014-2016
Question2.
(a) Discuss various social responsibilities of a global firm.
(b) What are different ethical issues involved in context of international business.
Answer 2.
(a) Discuss various social responsibilities of a global firm.
Employees may stay longer, reducing the costs and disruption of recruitment
and retraining.
tenable and whose production, use and disposal is environmentally sustainable. CSR
regulation by government may come in the form of requiring that Environmental
Impact Assessment report be produced before any development that would have a
major impact on the environment and communities around it is carried out detailing
measures that would be taken to mitigate its adverse effects. This is a means of
anticipating the effects of negative externalities of business. This law would have a far
reaching effect on global airline companies who ply the European route as they would
have to compulsorily contribute to making the air cleaner in Europe. Already, China,
India and the United States have made bold protests as an affront to the new law and
have threatened reciprocal action as well as boycott of European routes. This would be
of grave concern in international business as easy travel to various global destinations
may be impeded as a result.
In Nigeria however, a bill to make companies dedicate 3.5 per cent of their profits to
CSR ventures is currently before the countrys legislature for deliberation and passage.
The bill which was brought before the parliament by the countrys government seeks to
make it mandatory for companies to engage in CSR initiatives. This would make
Nigeria the first country to legislate on CSR. Taxes, however, do not fall under the
remit of CSR as they are the responsibility of government. The law would apply to both
local and multinational companies operating in the country. This law, however, would
have several controversial areas as it requires 3.5 per cent of profit before tax as a
blanket requirement for all companies, whether large ones or SMEs. This could
discourage SMEs, who are already stretched for profit and lack the encouragement to
continue in difficult economic times. The law however would ensure that companies
engage in CSR, as a commission would be established to monitor and regulate it. Yet, it
is likely that many nations are watching Nigeria, and waiting to find out if the CSR law
works. If this law does work, it is likely that many other countries might find similar
laws proposed and implemented over time.
CONCLUSION
As CSR becomes more and more popular, it has increasingly become a must do
rather than a nice to do. Companies across the globe, from large brands as Coca
Cola, MacDonalds and IBM to smaller ones doing business across boundaries are
reaping the returns of improved visibility, positioning and rebuilding brand image and
customer perception; talent acquisition and retention; and helping communities help
businesses. CSR as a corporate strategy is indeed expedient for businesses, and more
so MNCs, in the 21st century.
more complex when you realise that it is far from illegal in some countries and can
even be part of the business culture. International organisations are encouraged to not
participate in such business practices. Any payments made should be within the law of
both the local country and the home country and should be fully disclosed to the
public.
Employment practices
Human rights
Environmental regulations
Corruption
1. Employment Practices
Or something in between?
Firms should establish minimal acceptable standards that safeguard the basic rights
and dignity of employees and audit the foreign subsidiaries and subcontractors on a
regular basis.
2.Human Rights
Basic human rights taken for granted in the developed world such as freedom of
association, freedom of speech, freedom of assembly, freedom of movement, and so
on, are by no means universally accepted .Basic human rights are still not respected
in many nations
Many rights are not universally accepted such as freedom of:
association
speech
assembly
movement
political expression
It is often argued that inward investment by a multinational firm can be a force for
economic, political, and social progress that ultimately improves the rights of people .
But there is a limit to this argument because some governments are so repressive that
investment cannot be justified on ethical grounds
4.Environmental Pollution
When environmental regulations in host nations are far inferior to those in the home
nation, ethical issues arise:
The tragedy of the commons occurs when a resource held in common by all,
but owned by no one, is overused by individuals resulting in its degradation .
5.Corruption
In the United States, the Foreign Corrupt Practices Act outlawed the practice of
paying bribes to foreign government officials in order to gain business . The
Organization for Economic Cooperation and Development (OECD) adopted a
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions in 1997 which obliges member states to make the bribery of
foreign public officials a criminal offense .Some economists suggest that the practice
of giving bribes might be the price that must be paid to do a greater good. These
economists believe that in a country where preexisting political structures distort or
limit the workings of the market mechanism, corruption in the form of blackmarketeering, smuggling, and side payments to government bureaucrats to speed up
approval for business investments may actually enhance welfare . Other economists
have argued that corruption reduces the returns on business investment and leads to
low economic growth .Corruption has a been a problem in almost every society in
history and it continues to be one today.
Some international businesses can and have gained economic advantages by making
payments to government officials
Two laws addresses this issue :
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