Ethical Issues in Global

Business
• Marketing and safety practices
• - Nestle: Baby Killers; Union Carbide: Bhopal

• Sweatshop and labour abuse

• - Wal-Mart’s 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 Rome…do
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.
– Bribes—Relatively 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
• Form of beliefs
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 6. The right to physical
movement security
2. The right to 7. The right to freedom
ownership of of speech and
property association
3. The right to freedom 8. The right to minimal
from torture education
4. The right to a fair 9. The right to political
trial participation
5. The right to 10.The right to
nondiscrimination 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
• Antibribery Initiatives launched
• #10 on UN Global Compact
 Improving Global Business
Ethics
The Dilemma
of the Multinational Corporation

Home Country The Host Country

Stakeholder Multinational Stakeholder
Pressures Corp. Pressures
 Improving Global Business
Ethics
Ethical Choices in Home vs. Host Country Situations
International Law
Global Codes of Conduct

ETHICAL CULTURAL
IMPERIALISM RELATIVISM
Broad
Home Country Middle Ground Host Country

• Cultural Mix of Home and Host • Cultural

standards Country Standards standards
• Ethical & • Ethical &
moral moral
Application of Ethical Principles
standards of standards of
home host
country country
 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 • Pay their fair share of
direct harm taxes
• Produce more good • Respect local cultural
than bad for the host beliefs that do not
country violate moral norms
• Contribute to host
• Cooperate with the
country’s development
government to develop
• Respect the human
and enforce
rights of their
employees background institutions