February 10, 2022

Advertising or Free Speech? The Case of Nike and Human Rights This weeks discussion is about Corporate Social Responsibilit

Advertising or Free Speech? The Case of Nike and Human Rights
This week’s discussion is about Corporate Social Responsibility (CSR), focusing on the brief case study about Nike (p.101 in the textbook).
Nike pioneered offshore manufacturing by hiring third-party contractors in developing nations to work in its company-owned plants. Among other workers, the contractors hired minors at low pay in” sweatshops.” When the news became public in 1996, Nike faced negative public opinion, and then it established a Corporate Responsibility and Sustainability Committee to ensure that labor practices were ethical across its supply chain.
After that, Nike was sued for allegedly knowingly making false and misleading statements in denying its direct participation in the abusive labor conditions abroad in manufacturing its products. The case was dismissed for procedural issues by the U.S. Supreme Court. Thereafter, Nike has worked on building its CSR profile through relief efforts and advocating fair wages and employment practices in its outsourced operations.
Thinking about Nike’s corporate practices, if you were to start a company that outsourced labor in order to reduce manufacturing costs, what decisions would you make to combine commercial objectives with social goals to improve the impact of corporate social responsibility efforts? How might the two conflict?
Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.

Required:

Review Chapters 2 & 3 in International Management: Culture, Strategy, and Behavior

Chapter 3 PowerPoint slides Chapter 3 PowerPoint slides – Alternative Formats in International Management: Culture, Strategy, and Behavior

“Brief Integrative Case 1.1: Advertising or Free Speech? The Case of Nike and Human Rights” (p. 101), in International Management: Culture, Strategy, and Behavior.

Beumer, C., Figge, L., & Elliott, J. (2018). The sustainability of globalisation: Including the ‘social robustness criterion ’. Journal of Cleaner Production, 179, 704-715.

Christ, K., & Schaltegger, S. (2020). Multinational enterprise strategies for addressing sustainability: The need for consolidation. Journal of Business Ethics, 1-22.

Richter, U., & Arndt, F. (2018). Cognitive processes in the CSR decision-making process: A sensemaking perspective. Journal of Business Ethics, 148(3), 587-602.

Recommended:

Al-Malkawi, H. (2018). Corporate social responsibility and financial performance in Saudi Arabia. Managerial Finance, 44(6), 648-664.

Alnajdi, O., Calautit, J., & Wu, Y. (2019). Development of a multi-criteria decision making approach for sustainable seawater desalination technologies of medium and large-scale plants: a case study for Saudi Arabia’s vision 2030. Energy Procedia, 158, 4274-4279.

Das, M., Rangarajan, K., and Dutta, G. (2020). Corporate Sustainability in SME’s: Asian Culture. Journal of Asia Business Studies, 14 (1), 109-138.

Murphy, M., Macdonald, J., Antoine, G., & Smolarski, J. (2019). Exploring Muslim attitudes towards corporate social responsibility: Are Saudi business students different? Journal of Business Ethics, 154(4), 1103-1118.

SEU_MGT672_Module03_PPT_Ch03.pptx

International Management

© 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 3

Ethics, Social Responsibility, and Sustainability

Insert Photo Credit Here

Learning Objectives

Examine ethics in international management and some of the major ethical issues and problems confronting MNCs

Discuss some of the pressures on and actions being taken by selected industrialized countries and companies to be more socially and environmentally responsive to world problems

Learning Objectives (continued)

Explain some of the initiatives to bring greater accountability to corporate conduct and limit the impact of corruption around the world

Sustaining Sustainable Companies

Shift in focus from traditional market-responsive strategies to broader approaches

Help incorporate business and social or environmental goals

Triple bottom line approach

Simultaneously considers social, environmental, and economic sustainability

Could help harness business and managerial skills to impact human and environmental conditions

Ethics

Study of morality and standards of conduct

Victim of subjectivity as it yields to the will of cultural relativism

Cultural relativism – Belief that:

Ethical standard of a country is based on the culture that created it

Moral concepts lack universal application

Ethical Dilemmas

Dilemmas arising from conflicts between ethical standards of a country and business ethics are most evident in:

Employment and business practices

Recognition of human rights, including women in the workplace

Corruption

Corporate Social Responsibility (CSR) versus Ethics

CSR

Actions taken by a firm to benefit society beyond the requirements of the law and the direct interests of the firm

Based more on voluntary actions

Ethics

Study of or the learning process involved in understanding morality

Area of ethics has a lawful component and implies right and wrong in a legal sense

Ethical Theories and Philosophy

Kantian philosophical traditions

Aristotelian virtue ethics

Utilitarianism

Eastern philosophy

Kantian Philosophical Traditions

Entities have responsibilities based on a core set of moral principles that go beyond those of narrow self-interest

Reject consequences as morally irrelevant when evaluating the choice of an agent

Ask one to consider choices as implying a general rule, or maxim

Must be evaluated for its consistency as a universal law

Aristotelian Virtue Ethics

Focus on core, individual behaviors and actions and how they express and form individual character

Consider social and institutional arrangements and practices in terms of their contribution to the formation of good character in individuals

For Aristotle, moral success and failure largely come down to a matter of right desire, or appetite

Aristotelian Virtue Ethics (continued)

Virtue theory

States that one’s formation is a social process

Relies heavily on existing practices to provide an account of:

What is good

What character traits contribute to pursuing and realizing the good in concrete ways

Utilitarianism

Form of consequentialism

Favors the greatest good for the greatest number of people under a given set of constraints

Acts are morally correct if they maximize utility

Attained when the ratio of benefit to harm is greater than the ratio resulting from an alternative act

Eastern Philosophy

Broadly includes various philosophies of Asia

Indian philosophy, Chinese philosophy, Iranian philosophy, Japanese philosophy, and Korean philosophy

Holds that:

People are an intrinsic and inseparable part of the universe

Attempts to discuss the universe from an objective viewpoint are inherently absurd

Human Rights Issues

Present challenges for MNCs

Absence of universally adopted standards of what constitutes acceptable behavior

Basic rights

Life, freedom from slavery or torture, freedom of opinion and expression, and a general ambiance of nondiscriminatory practices

Women’s rights and gender equity can be considered a subset of human rights

Issues Faced by Women in the Workplace

Most still experience the effects of a glass ceiling

Lack of promotions to upper management positions

Partially due to social factors and perceived levels of opportunity or lack thereof

Pervasive throughout the world

Issues Faced by Women in the Workplace – Examples

Japan

Women employees are subject to sexual harassment, two-track recruiting processes, and unequal opportunities for growth

France, Germany, and Great Britain

Witnessed an increase in the number of women in managerial positions but only in low-level managerial positions

Labor Policy Issues

Political, economic, and cultural differences interfere with the establishment of a universal foundation for employment practices

Difficulty in deciding working conditions, expected consecutive work hours, and labor regulations

Frequent offshoring due to differences in labor costs

Ensuring that all contractors along the global supply chain are compliant with company standards

Labor, Employment, and Business Practices in China

Workers are not paid well

Forced to work 12-hour days, seven days a week to meet demand

Some cases involve the usage of child labor

Example – Foxconn

2010 – Issue of low wages headlined after a number of workers committed suicide

Environmental Protection and Development

Poor countries are more focused on improving the welfare of their citizens

Environmental Kuznets Curve (EKC)

Relationship between per capita income and the use of natural resources and/or the emission of wastes has an inverted U-shape

Environmental Kuznets Curve (EKC)

Reasons behind the inverted U-shape of the EKC

Composition of production and/or consumption

Preference for environmental quality

Institutions that are needed to internalize externalities

Increasing returns to scale associated with pollution abatement

Figure 3.1 – Environmental Kuznets Curve

Environmental Protection and Development (continued)

United Nations Climate Change Conference, 2015

Tried to achieve an international consensus on environmental reform

Adopted the Paris Agreement

Phenomena in Response to Globalization

Difficulty in attempts to balance organizational and cultural roots

Offshoring low-cost labor-intensive practices

Transferring a large percentage of current employees of all types to foreign locations

Creates issues related to corporate citizenship

Reconciling Ethical Differences across Cultures

Integrative Social Contracts Theory (ISCT)

Attempts to navigate a moral position that does not force decision makers to engage exclusively in relativism versus absolutism

Offers one framework to help reconcile fundamental contradictions in international business ethics between home and host countries

Corporate Social Responsibility (CSR)

Social, economic, and environmental expectations of each company are based on the desires of the stakeholders

Pressurize MNCs to pay greater attention to CSR

Nongovernmental organizations (NGO)

Private, not-for-profit organizations

Seek to serve society’s interests by focusing on social, political, and economic issues

Nongovernmental Organizations

Urge MNCs to be more responsive to a range of social needs in developing countries

Activism has helped generate substantial changes in corporate management, strategy, and governance

Regarded as counterweights to business and global capitalism

Nongovernmental Organizations (continued)

Collaborate with MNCs on social and environmental projects

Contribute to the well-being of the community and to the reputation of the MNC

Responses to Social and Organizational Obligations

MNCs follow codes of conduct, including the U.N. Global Compact, the Global Reporting Initiative, and “SA8000” standards

Commit to maintain certain standards in their domestic and global operations

Help offset the concern that companies move jobs to avoid higher labor or environmental standards

Contribute to raising the standards in the developing world

Responses to Social and Organizational Obligations (continued)

Fair trade

Organized social movement and market-based approach

Aims to help producers in developing nations obtain better trading conditions and promote sustainability

Sustainability

Development that meets humanity’s needs without harming future generations

Helps companies recognize that dwindling resources will eventually halt productivity

World Economic Forum, Davos, Switzerland

Focused on how sustainable consumption can be used to ease problems related to the need for rapid business scaling

Corporate Governance

System by which businesses are directed and controlled

Specifies distribution of rights and responsibilities among stakeholders

Spells out rules and procedures for corporate decision-making

Provides the structure for setting company objectives and means for attaining those objectives and maintaining performance

Corporate Governance (continued)

Rules and regulations differ among countries and regions

The UK and U.S. systems are outsider systems because of dispersed ownership of equity among a large number of outside investors

Many continental European countries are insider systems in which ownership is more concentrated

Differences in legal systems affect shareholders’ and other stakeholders' rights

Corporate Governance: Crony Capitalism

Occurs in nations with:

Less well-developed legal and institutional protections

Poor property rights

Emerges where weak corporate governance and government interference can lead to:

Poor performance

Risky financing patterns

Macroeconomic crises

Foreign Corrupt Practices Act (FCPA)

Makes it illegal for U.S. companies and their managers to attempt to influence foreign officials through:

Personal payments

Political contributions

In complying with the provisions, U.S. firms must be aware of changes in the law

Makes FCPA violators subject to Federal Sentencing Guidelines

Other Anticorruption Measures

Formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials

Includes nations that belong to the Organization for Economic Cooperation and Development (OECD)

Fails to outlaw most payments to political party leaders but does indicate growing support for antibribery initiatives

Other Anticorruption Measures (continued)

Organization of American States (OAS) Inter-American Convention Against Corruption

Established by Latin American countries

Transparent Agents Against Contracting Entities (TRACE) standard

Developed as a means of preventing the shift of corrupt practices to suppliers and intermediaries

International Assistance

Governments and corporations are collaborating to provide assistance to locales through global partnerships

Recent study identified the top priorities around the world for development assistance

Uses a cost-benefit analysis of where investments would have the greatest impact

Table 3.3 – Copenhagen Consensus Development Priorities

Source: Copenhagen Consensus 2012.

U.N. Sustainable Development Goals

Poverty – End poverty in all its forms everywhere

Food – End hunger, achieve food security and improved nutrition, and promote sustainable agriculture

Health – Ensure healthy lives and promote well-being for all at all ages

U.N. Sustainable Development Goals (continued 1)

Education – Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Women – Achieve gender equality and empower all women and girls

Water – Ensure availability and sustainable management of water and sanitation for all

U.N. Sustainable Development Goals (continued 2)

Energy – Ensure access to affordable, reliable, sustainable, and modern energy for all

Economy – Promote sustained, inclusive, and sustainable economic growth; full and productive employment; and decent work for all

Infrastructure – Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation

U.N. Sustainable Development Goals (continued 3)

Inequality – Reduce inequality within and among countries

Habitation – Make cities and human settlements inclusive, safe, resilient, and sustainable

Consumption – Ensure sustainable consumption and production patterns

Climate – Take urgent action to combat climate change and its impacts

U.N. Sustainable Development Goals (continued 4)

Marine ecosystems – Conserve and sustainably use the oceans, seas, and marine resources for sustainable development

Ecosystems – Protect, restore, and promote sustainable use of terrestrial ecosystems; sustainably manage forests; combat desertification; halt and reverse land degradation; and halt biodiversity loss

U.N. Sustainable Development Goals (continued 5)

Institutions – Promote peaceful and inclusive societies for sustainable development; provide access to justice for all; and build effective, accountable, and inclusive institutions at all levels

Sustainability – Strengthen the means of implementation and revitalize the global partnership for sustainable development

In the International Spotlight – Cuba

Would you advise a company to become an early investor in Cuba?

Do you think Airbnb’s investment in Cuba will eventually see success and become a reliable profit stream?

Do you think Cuba will ultimately become an attractive long-term tourist destination for Americans?

Review and Discuss

How might different ethical philosophies influence how managers make decisions when it comes to offshoring of jobs?

What lessons can U.S. multinationals learn from the political and bribery scandals in recent years, such as those affecting contractors doing business in Iraq (Halliburton) as well as large MNCs such as Siemens, HP, and others? Discuss two

Review and Discuss (continued 1)

In recent years, rules have tightened such that those who work for the U.S. government in trade negotiations are now restricted from working for lobbyists for foreign firms

Is this a good idea? Why or why not?

Review and Discuss (continued 2)

What are some strategies for overcoming the impact of counterfeiting?

Which strategies work best for discretionary (for instance, movies) versus nondiscretionary (pharmaceutical) goods?

Review and Discuss (continued 3)

Why are MNCs getting involved in corporate social responsibility?

Are they displaying a sense of social responsibility, or is this merely a matter of good business? Defend your answer

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Advertising or Free Speech? The Case of Nike and Human Rights This weeks discussion is about Corporate Social Responsibilit

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