IBUS1101 Lecture Notes - Lecture 4: Global Reporting Initiative, United Nations Global Compact, International Trade
24 Jun 2018
School
Department
Course
Professor
Corporate governance
- Corporate governance involves a set of relationships between a company’s
management. Its board of directors, its
shareholders and other stakeholders
- Corporate governance provides the
structure through which the objectives of
the company are set, and the means of
attaining those objectives and monitoring
performance are determined
- Provides the means through which firms
undertake ethical behavior, CSR and
sustainability
- Implementing appropriate conduct is
challenging for MNEs, especially when
operating in many countries
- A complicating factor is the use of third-
party suppliers and contractors, some of
whom may behave badly
- More firms are now incorporating ethics,
CSR and sustainability into their mission,
planning, strategy and everyday operations
Inappropriate corporate conduct international:
- Falsify or misrepresent contracts or official documents
- Pay or accept bribes, kickback, or inappropriate gifts
- Tolerate sweatshop conditions or abuse employees
- Do false advertising or other deceptive marketing
- Engage in deceptive or discriminatory pricing
- Deceive or abuse intermediaries
- Undertake activities that harm the natural environment
Benefits of good corporate governance:
- Increased employee commitment
- Increased customer loyalty and sales
- Improved reputation and brand image
- Reduced likelihood of government intervention
- Reduced business costs
- Improved financial performance
Ethical behaviour
Ethics: moral principles and values that govern the behaviour of people, firms, and
governments, regarding right and wrong
find more resources at oneclass.com
find more resources at oneclass.com
Corruption: is an extreme form of unethical behaviour eg the abuse of power to achieve
illegitimate personal gain - major concern for MNEs
- Bribery is common and may take the form of ‘grease payments’- small inducements
intended to expedite decisions and transactions, or payments to secure or award
contracts for personal gain
Intellectual property rights and unethical behaviour
- Piracy and counterfeiting
- Is unethical behavior involving the theft of intellectual property rights
- Intellectual property rights
- Are the legal claim through which proprietary assets are protected from
unauthorised use by other parties, via trademarks, brand names, copyrights, and
patents
Piracy and counterfeiting impact
● International trade
○ Exports of legitimate products must compete with trade in counterfeit good
● Direct investment
○ Firms often avoid countries known for widespread intellectual property violations
● Company performance
○ Sales, profits, and strategies and harmed
● Innovation
○ Companies avoid doing research and development where piracy is common
● Tax revenues
○ Pirates usually don’t pay taxes
● Criminal activity
○ Often linked to organised crime
● The natural environment
○ Intellectual property violators disregard environmental standards
● National prosperity and wellbeing
○ Ultimately, job prospects, prosperity, and moral standards in affected national are
harmed
Modern slavery and unethical behaviour
- Modern slavery: situations of exploitation that a person cannot refuse or leave, because
of threats, violence, coercion, abuse of power or deception
- Modern slavery exists because business wants to cuts costs and make higher profits
- In an increasingly global trade system, modern slavery is often hidden within the supply
chains of many large organisations
Improper ethical behaviour may result when
- Top management sets goals and incentives aimed at promoting good business
outcomes that instead encourage bad individual behaviours
- Employees overlook unethical behaviour in other because of peer pressure or self-
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Corporate governance involves a set of relationships between a company"s management. Its board of directors, its shareholders and other stakeholders. Corporate governance provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Provides the means through which firms undertake ethical behavior, csr and sustainability. Implementing appropriate conduct is challenging for mnes, especially when operating in many countries. A complicating factor is the use of third- party suppliers and contractors, some of whom may behave badly. Csr and sustainability into their mission, planning, strategy and everyday operations. Pay or accept bribes, kickback, or inappropriate gifts. Do false advertising or other deceptive marketing. Undertake activities that harm the natural environment. Ethics: moral principles and values that govern the behaviour of people, firms, and governments, regarding right and wrong.
