Transcript Ethical Issues in International Business

250-759 Social Responsibility
of Business
Prepared by W. L. Dougan
Lecture 6
© Prentice Hall, 2001
Ethical Theory and Business, 8th Edition
Tom L. Beauchamp & Norman E. Bowie
Chapter Nine
Ethical Issues in
International Business
© Prentice Hall, 2001
Topics for Chapter 9
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Ethical Principles for Multinationals
Ethical Relativism
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Alternative Standards of
Conduct
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Norms of home country
Norms of host country
Profitable choice
Morally appropriate choice
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“Relativism and the Moral Obligations
of Multinational Corporations”
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Norman Bowie
General multinational corporation
obligations
Distinctive obligations
Relativism
Morality of the marketplace
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When in Rome do as the
Romans do?
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Norman Bowie
Only guide is what is legal and appropriate in
that country
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Justification: In some instances, laws and
regulations may be stricter (e.g., Europe have
stricter environmental laws)
If things are sufficiently different, then it is
(maybe) necessary to apply different standards
(e.g., US companies complied with Arab firms not
to post women for fear of losing lucrative
contracts)
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Is the adage wholly justified?
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No – because a country permits bribery,
unsafe working conditions, and violation
of human rights does not mean that
these practices are acceptable
How can one justify the wages paid by
multinationals to less developed
countries when these wages are a
fraction of what is paid at home
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Are there some universal
standards?
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Yes – most cultures value
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A document on global ethics produced by two
religious leaders cites two universal principles
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Human dignity, economic well-being, truthfulness,
sense of justice and fairness
Every human being must be treated humanely
What you do not wish to be done to yourself, do
not do to others
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DeGeorge – developed 7
principles
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Multinationals (MNCs) should do no harm
MNCs should produce more good than bad for the host
country
MNCs should contribute by their activities to the host
country’s development
MNCs should respect the right of their employees
MNCs should pay their fair share of taxes
To the extent that the local culture does not violate moral
norms, MNCs should respect these norms
MNCs should cooperate with the local governments in the
development and enforcement of background institutions
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Donaldson – Minimal duties of
MNCs
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MNCs have an obligation to respect
fundamental international rights
Negative harm principle – MNCs have
an obligation not to add to deprivation
or suffering
Rational empathy test – put yourself in
the shoes of the foreigner
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International standards for
behavior
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Agreement already exists
Standards are necessary for society and
exchange
Business activity presupposes some
moral standards anyway
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Are international norms
appropriate?
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Standards might destroy culture
Moral free space is available for
difference
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Denis Arnold
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“The Human Rights Obligations of
Multinational Corporations”
Defends a Kantian view of the human
rights obligations of corporations
Defends Kantian view against criticism
Criticizes one recent effort by the
United Nations to identify the human
rights obligations of corporations
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Human Rights Principle
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Human rights are different from legal
rights in that they do not depend upon
state sanction for their legitimacy
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United Nations positions on
human rights
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The Universal Declaration of Human Rights
(1948) is aimed at states, not corporations
Draft Norms on the Responsibilities of
Corporations and Other Business
Enterprises with Respect to Human Rights
(2003) is aimed at corporations.
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They are too wide and imprecise
They fail to distinguish between basic obligations and
those actions that are good to perform but not
mandatory.
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Basic rights
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Are inalienable
Are attributable to persons
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Kantian basis for rights
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Entails negative duties such as avoiding
physical force or coercion
Entails positive obligations like ensuring
positive well-being
Freedom: Individuals should be free to
as much freedom as is compatible with
a like freedom for all.
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Kantian basis for rights (cont.)
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Human capabilities necessary to function well: life, physical
health, freedom of thought and expression, and the ability
to pursue one’s conception of the good.
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The right to physical security and freedom of movement.
The right to non-discrimination on the basis of arbitrary
characteristics such as race, sex, religion, ethnicity, and sexual
orientation.
The right to freedom of association and collective bargaining.
The right to fair treatment.
The right to subsistence
The right to develop basic human capabilities.
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Universality of rights concepts
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Human rights are not merely a Western
concept.
There are diverse Asian societies which,
embrace human rights language and
arguments.
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Ex. - India
Even if all Asian nations denied the
validity of human rights arguments, this
would not entail that they were correct.
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Patricia H. Werhane
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“Exporting Mental Models: Global Capitalism
in the Twenty-First Century”
Argues for caution in extending Western style
capitalism abroad
Provides several examples of where the
unreflective extension of Western style
capitalism has led to bad outcomes
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Mental Models
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Mental representations, cognitive
frames, or mental pictures that frame
and organize human experience
Mechanisms whereby humans are able
to generate descriptions of system
purpose and form
Explanations of system functioning and
observed system states
Predictions of future system states. 21
Patricia H. Werhane
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Many possible ways to organize
economic activity
Our assumption in the US is that we
have extraordinary success, and that
others will be improved if we offer
assistance in doing things our way
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Patricia H. Werhane
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American models of free enterprise and
property cannot be transferred uniformly
throughout the world without unforseen
consequences.
Analogous to biological transfer from one
context to another
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Euclyptus trees
Dandelion
Doesn’t mean that it cannot be transferred at
all
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Patricia H. Werhane
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We must seek some moral minimums
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to remove human suffering, abject
poverty, preventable disease, high
mortality and violence
We must tread lightly and carefully
when we act in alien cultures
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David Hess &
Thomas Dunfee
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“Taking Responsibility for Bribery:
The Multinational Corporation’s
Role in Combating Corruption”
Describe the harm cause to local
communities by corruption,
Discuss international treaties banning
bribery
Highlight the efforts of Shell to abolish
slavery
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OECD Convention on Combating
Bribery of Foreign Public Officials
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Ratified by 34 countries
Makes it illegal to bribe abroad
Transparency International Reports that
only 19% of executives knew about the
convention
Just 27% reported reduced corruption
after the convention
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Foreign Corrupt Practices Act
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U.S. law that went into effect in the U.S. in
1977
Currently U.S. corporations are the 9th
most likely to bribe foreign officials (out of
21)
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C2 Principles
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Adapted by the Caux Roundtable
Three themes:
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Policies
Procedures
Publication
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Shell’s Anti-Corruption Policies
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Studied best practices at 15 companies
Put in place a no-bribes policy
Promulgates and educates within the
organization
Defines bribery
Terminates and prosecutes employees
that pay bribes
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Supreme Court of Texas, Dow Chemical
Company and Shell Oil Company v. Domingo
Castro Alfaro et al.
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Concerns the question of whether or not a
Texas based corporation can be held
accountable in Texas courts for harmful
actions conducted abroad, or whether this is
inconvenient for such corporations and thus
should not be allowed
The majority of the court found that
corporations should be held accountable for
overseas activities in Texas courts.
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United States Court of Appeals
for the Ninth Circuit, Doe 1 vs.
Unocal
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Concerns Unocal’s involvement with
forced labor and human rights abuses
in Myanmar (Burma).
Court found that Unocal could be held
liable for complicity with such practices
in U.S. courts
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