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Ethical Issues in Global Business. Marketing and safety practices – Nestle: the Baby Killers; Union Carbide: Bhopal Sweatshop and labour abuse - Wal-Mart’s Kathy Lee collection (20 hrs/day @ $0.20hr) Corruption and bribery

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ethical issues in global business
Ethical Issues in Global Business
  • Marketing and safety practices

– Nestle: the Baby Killers; Union Carbide: Bhopal

  • Sweatshop and labour abuse

- Wal-Mart’s Kathy Lee collection (20 hrs/day @ $0.20hr)

  • Corruption and bribery

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

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.

Bribes vs. Grease Payments
the moral philosophy framework
The Moral Philosophy Framework
  • Cultural Relativism:
  • Cultural theories
  • Situational ethics
  • “When in Rome…do as the Romans do.”
  • Limitation:
  • Which Romans?
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

Arguments For and Against Bribery
improving global business ethics
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
using isct the case of bribery
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
Trends Against Bribery
  • Foreign Corrupt Practices Act enacted
  • Transparency International developed
  • OCED Antibribery Initiatives launched
  • #10 on UN Global Compact
improving global business ethics8
The right to physical movement

The right to ownership of property

The right to freedom from torture

The right to a fair trial

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

Improving Global Business Ethics

Fundamental International Rights

improving global business ethics9

Host Country Stakeholder Pressures

Home Country Stakeholder Pressures

Improving Global Business Ethics

The Dilemma

of the Multinational Corporation

The Multinational Corp.

no win situations for mnc s
No-win situations for MNC’s
  • Labour-saving technology vs. employment motives
  • Take the money and run vs. spreading $$ to gain more power
  • Local wage rates = exploitation vs. higher rates = creaming market
improving global business ethics11

International LawGlobal Codes of Conduct

ETHICAL IMPERIALISM

BroadMiddle Ground

CULTURAL RELATIVISM

Home Country

Host Country

Mix of Home and Host Country Standards

  • Cultural standards
  • Ethical & moral standards of home country
  • Cultural standards
  • Ethical & moral standards of host country

Application of Ethical Principles

Improving Global Business Ethics

Ethical Choices in Home vs. Host Country Situations

improving global business ethics12
Improving Global Business Ethics

Typology of Global Types

  • Foreign type
  • Empire type
  • Interconnection type
  • Global type
improving global business ethics13
Inflict no intentional or direct harm

Produce more good than bad for the host country

Contribute to host country’s 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

Improving Global Business Ethics

Seven Moral Guidelines for MNCs

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