THE IMPORTANCE OF ETHICS AND SOCIAL RESPONSIBILITY IN INTERNATIONAL BUSINESS

Abstract—  Ethics is defined as a person's beliefs about whether certain decisions, behaviors, or actions are right or wrong. Therefore what determines ethical behavior differs from one person to another. For example, someone who finds money on the floor of an empty house may believe it's perfectly fine to pick it up, while another may feel obligated to return it to the lost items section. The concept of ethical behavior usually refers to behavior that is accepted by general social norms. Unethical behavior is behavior that is not in accordance with general social norms. Ethical behavior in business is something that is important for the survival of the business itself. Businesses that do not have ethical behavior will be detrimental to the business itself, especially when viewed from a long-term perspective. A healthy business is not only a profitable business, but a healthy and good business is that in addition to being a profitable business, it is also a business that is morally good and has a sense of responsibility that can be implemented. Keywords: Business Ethics, Social Responsibility, International Business

Risky Business

This article is part of an exchange including Anthony Alfieri and William Simon in the Georgetown Law Journal on the implications of law firms\u27 increasing reliance on the concept of risk management as the focus of efforts to ensure ethical conduct by lawyers. A risk management program involves the adoption of various policies and procedures designed to minimize conduct that may lead to individual and firm liability. Conflicts checking procedures, standard terms in engagement letters, and the requirement of a second signature by a disinterested partner on legal opinions are but a few of such measures. On one hand, the risk management paradigm reflects appreciation of the importance of situational incentives and pressures in shaping behavior in organizational settings. This is an advance over conceptions of legal ethics that assume that behavior is principally a function of individual character. Law firms are now major business enterprises, and their systems of rewards and sanctions, as well as their cultures, necessarily influence the conduct of those who work in them. Attending to the ways in which these influences can reinforce or discourage certain types of behavior can help firms establish and maintain environments that enhance the likelihood that lawyers will act ethically. On the other hand, a risk management approach risks inculcating an instrumental view of legal and ethical provisions. To the extent that it conceptualizes ethics as a matter of avoiding liability, risk management may foster the attitude of Holmes\u27s bad man, who cares only for the material consequences which . . . knowledge [of the law] enables him to predict. The bad man wants to avoid punishment, but has no commitment to legal compliance as a good in itself. This can lead to an impoverished view of law and ethics, in which the choice of behavior is contingent on the costs and benefits of a given course of action. This tension in the risk management model has been examined in the context of corporate legal compliance programs, and law firms may draw useful lessons from that research. Social psychologists and management theorists have identified complex connections among program characteristics, group dynamics, individual perceptions and motives, and employee behavior in the business setting. In particular, they have suggested that instrumental and values-based programs proceed on different premises and contribute to compliance in different ways. Instrumental programs can be effective by affecting employee cost-benefit calculations, while values-based programs can foster appropriate behavior because the employee identifies with the values that this behavior expresses. Scholars suggest that compliance programs with both dimensions generally are necessary, but integrating them into a single program requires careful consideration of how they may interact. The article closes by suggesting that this research on corporate programs may offer useful insights for law firms. It cautions, however, that applying this research will need to take account of the ways in which law firms both resemble and are different from typical business corporations

Religion, Work Ethics, and Business Attitude: a Case Study on the Meaning of Business Behavior of Madurese Fruits Traders in Malang

Islam is a source of motivation to build work ethics and direct the behavior of businessmen. Madurese people are recognized as one of the wandering. ethnics. They are usually good adherence of Islam and tough traders. However, they are often regarded as people who do not really care of ethical values. Based on such characteristics, this dissertation examines their business behavior according to the ethical norms in Malang. There are three aspects that will be explored in this dissertation: (1) the meaning of business ethics, (2) how the traders construct the ethics, and (3) how the traders implement ethics in business activities. Qualitative approach is used to understand this phenomenon. In-depth interview, participatory observation, and documentation were employed to obtain the data. The data were analyzed and interpreted by using social construct analysis. The study shows that pancengan (honest) traders argued that ethical values should be maintained and respected but does not need to be involved in the area of business. For those who do not want to be involved in pancengan, however, ethics was an impoitant requirement in order to obtain the wealth blessed by God. Thus, ethics and business are inseparable. The meaning of ethics was produced from dialectical conditions between their culture and Islamic religious values. How to implement? lt can be understood that the relationship among traders was built because of their feelings of being together, caring, and less competitive. This is induced by the fact that some of them were relatives, or coming from the same place. The traders with pancengan principle tend to be involved in manipulation. For non-pancengan traders, however, they attempt to minimize dishonesty. Both of the groups have positive concern toward their environment; this attitude seems to be influenced by religious values and the government regulation

Pengaruh Mekanisme Tadbir Urus Korporat Terhadap Kualiti Data Industri Perkilangan di Sumatera Utara, Indonesia

The purpose of this study was to examine: (1) the direct influence of corporate governance mechanisms on the data quality; (2) the direct influence ethical behavior and organizational commitment to data quality; (3) the direct influence of corporate governance mechanisms on ethical behavior and organizational commitment. Governance mechanisms studied were internal auditors, executive compensation and organizational culture. This study used questionnaires. The internal audit questionnaires are items from Goodwin and Kent (2004), executive compensation questionnaires are items developed by Murphy (2000), questionnaire organizational culture and organizational commitment are items developed by Boon and Arumugam (2006), and questionnaires for ethical behavior from Tang (2003). The questionnomaire for data quality, on the other hand, are items from Lee (2003). The sample for this study is 145 companies manufacturing industry in North Sumatera, Indonesia, which is obtained through the use of Convenience Sampling. By using the technique of Maximum Likelihood Estimation of the anticipated regression weights showed: (1)there is a direct influence of the internal auditors to ethical behavior, (2)the direct influence of organizational culture on the organizational commitment, and (3)the direct influence of the internal auditors, organizational culture and organizational commitment on the quality data. The study also shows that there are: (1) indirect influence of executive compensation to ethical behavior, and (2)indirect influence of executive compensation and ethical behavior on the data quality. This study extend the theory from previous studies while in practice, this study suggested that the National Committee Good Governance Indonesia will upgrade the existing general guidelines on corporate governance. Other institutions such as banks and Chamber of Commerce and Industry is required to give their contribution in controlling the activities of the company in Indonesia

Many Layers of Values-Based Leadership

Our common recognition of leaders and leadership reveals an assortment of men and women, some who are who predisposed to service, some who are humble but forthright, and others who exert narcissistic tendencies coupled with authoritarian attitudes. All of these have been and are called “leaders.” Hence, to unearth what is meant by “moral leadership” or “values-based leadership” (VBL) strains our understanding as many layers of value expose the diversity implied by the moniker “values-based.

Corporate social responsibility and stock price crash risk

This study investigates whether corporate social responsibility (CSR) mitigates or contributes to stock price crash risk. Crash risk, defined as the conditional skewness of return distribution, captures asymmetry in risk and is important for investment decisions and risk management. If socially responsible firms commit to a high standard of transparency and engage in less bad news hoarding, they would have lower crash risk. However, if managers engage in CSR to cover up bad news and divert shareholder scrutiny, CSR would be associated with higher crash risk. Our findings support the mitigating effect of CSR on crash risk. We find that firms\u27 CSR performance is negatively associated with future crash risk after controlling for other predictors of crash risk. The result holds after we account for potential endogeneity. Moreover, the mitigating effect of CSR on crash risk is more pronounced when firms have less effective corporate governance or a lower level of institutional ownership. The results are consistent with the notion that firms that actively engage in CSR also refrain from bad news hoarding behavior and thus reducing crash risk. This role of CSR is particularly important when governance mechanisms, such as monitoring by boards or institutional investors, are weak. JEL classification: G14; G30; M14; M4