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Ethical Issues in Global Business - PowerPoint PPT Presentation

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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)

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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)

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The Moral Philosophy Framework

  • Cultural Relativism:

  • Cultural theories

  • Situational ethics

  • “When in Rome…do as the Romans do.”

  • Limitation:

  • Which Romans?

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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.


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

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A necessary tool

Accepted practice

Form of commission, tax, or compensation



Compromise personal beliefs

Promotes government corruption

Benefits recipient only

Creates dependence on corruption

Deceives stockholders

Arguments For and Against ‘Bribery’

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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

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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

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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

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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

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Host Country Stakeholder Pressures

Home Country Stakeholder Pressures

Improving Global Business Ethics

The Dilemma

of the Multinational Corporation

The Multinational Corp.

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International LawGlobal Codes of Conduct


BroadMiddle Ground


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

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Improving Global Business Ethics

Typology of Global Types

  • Foreign type

  • Empire type

  • Interconnection type

  • Global type

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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