Ethical Issues in Global Business

Marketing and safety practices

- Nestle: Baby Killers; Union Carbide: Bhopal

Sweatshop and labour abuse

- Wal-Marts Kathy Lee collection (20 hrs/day @ $0.20/hr)

Corruption and bribery

- Gulf Oil: political contributions to Korea ($4.2 million) - Lockheed: bribes to Middle East ($22 mil) and Japan ($12.5 mil)

The Moral Philosophy Framework

Cultural Relativism: Cultural theories Situational ethics When in Romedo as the Romans do. Limitation: Which Romans?

Bribes vs. Grease Payments

Definitions
Grease Payments Money given for the purpose of getting minor officials to do what they are supposed to be doing. BribesRelatively large amounts of money given far the purpose of influencing officials to make decisions or take actions that they otherwise might not take.

Examples
Money given to minor officials (clerks, attendants, customs inspectors) for the purpose of expediting a project

Money given, often to high-ranking officials. Purpose is often to get these persons to purchase goods or services from the bribing firm.

Arguments For and Against Bribery

For Against
A necessary tool Wrong/illegal Accepted practice Compromise personal beliefs Form of commission, tax, or Promotes government compensation corruption Benefits recipient only Creates dependence on corruption Deceives stockholders

Improving Global Business Ethics

Integrative Social Contract Theory (ISCT)
Hypernorms-- transcultural values including fundamental human rights Consistent norms-- norms that are culturally specific, but consistent with hypernorms Moral free space norms-- strongly held cultural beliefs in countries that are in tension with hypernorms Illegitimate norms those norms that are incompatible with hypernorms

Improving Global Business Ethics

Fundamental International Rights
1. The right to physical movement 2. The right to ownership of property 3. The right to freedom from torture 4. The right to a fair trial 5. The right to nondiscrimination 6. The right to physical security 7. The right to freedom of speech and association 8. The right to minimal education 9. The right to political participation 10.The right to subsistence

Using ISCT: The Case of Bribery

Is bribery part of moral free space or is it an illegitimate norm? 1) violates agent / principal contract 2) against law in all countries 3) violates political participation hypernorm 4) violates economic efficiency hypernorm Conclusion: Bribery is an illegitimate norm

Trends Against Bribery

Foreign Corrupt Practices Act (US) Corruption of Foreign Public Officials Act (Canada) Transparency International developed OECD Antibribery Initiatives launched #10 on UN Global Compact

Improving Global Business Ethics

The Dilemma of the Multinational Corporation
Home Country Stakeholder Pressures

The Multinational Corp.

Host Country Stakeholder Pressures

Ethical Choices in Home vs. Host Country Situations

International Law Global Codes of Conduct

Improving Global Business Ethics

ETHICAL IMPERIALISM

CULTURAL RELATIVISM

Home Country Cultural standards Ethical & moral standards of home country

Broad Middle Ground

Host Country Cultural standards Ethical & moral standards of host country

Mix of Home and Host Country Standards Application of Ethical Principles

Improving Global Business Ethics

Typology of Global Types
Foreign type Empire type Interconnection type Global type

Improving Global Business Ethics

Seven Moral Guidelines for MNCs
Inflict no intentional or direct harm Produce more good than bad for the host country Contribute to host countrys development Respect the human rights of their employees
Pay their fair share of taxes Respect local cultural beliefs that do not violate moral norms Cooperate with the government to develop and enforce background institutions