Ethical Issues in Global Business

1
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 _at_
  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)

2
The Moral Philosophy Framework

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

3
Bribes vs. Grease Payments

• Definitions
• Grease PaymentsMoney 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.

4
Arguments For and Against Bribery

• For
• A necessary tool
• Accepted practice
• Form of commission, tax, or compensation

• Against
• Wrong/illegal
• Compromise personal beliefs
• Promotes government corruption
• Benefits recipient only
• Creates dependence on corruption
• Deceives stockholders

5
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

6
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

• The right to physical security
• The right to freedom of speech and association
• The right to minimal education
• The right to political participation
• The right to subsistence

7
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

8
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

9
Improving Global Business Ethics

The Dilemma of the Multinational Corporation
The Multinational Corp.
10
Improving Global Business Ethics

Ethical Choices in Home vs. Host Country
Situations
11
Improving Global Business Ethics

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

12
Improving Global Business Ethics
Seven Moral Guidelines for MNCs

• 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

• 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