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

Examples

Grease Payments
Money given for the
purpose of getting minor
officials to do what they
are supposed to be doing.

Money given to minor

officials (clerks,
attendants, customs
inspectors) for the purpose
of expediting a project

BribesRelatively large
amounts of money given
far the purpose of
influencing officials to
make decisions or take
actions that they otherwise
might not take.

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

Improving Global Business

Ethics

Ethical Choices in Home vs. Host Country Situations

International Law
Global Codes of Conduct

ETHICAL
IMPERIALISM

Home Country
Cultural
standards
Ethical &
moral
standards of
home
country

CULTURAL
RELATIVISM

Broad
Middle Ground

Mix of Home and Host

Country Standards
Application of Ethical Principles

Host Country
Cultural
standards
Ethical &
moral
standards of
host
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
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