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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 • Examples
– Grease Payments—Money – Money given to minor
given for the purpose of officials (clerks, attendants,
getting minor officials to do customs inspectors) for the
what they are supposed to purpose of expediting a
be doing. project

– Bribes—Relatively large
amounts of money given far – Money given, often to high-
the purpose of influencing ranking officials. Purpose is
officials to make decisions often to get these persons to
or take actions that they purchase goods or services
otherwise might not take. 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 ownership 7. The right to freedom of
of property speech and association
3. The right to freedom 8. The right to minimal
from torture education
4. The right to a fair trial 9. The right to political
5. The right to participation
nondiscrimination 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 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

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