Ethics for International Business

Decision-Making in a Global Political Economy

John Kline

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781135837914
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Business takes place in an increasingly global environment, crossing political and cultural boundaries that challenge corporate values. The central focus of this successful and innovative text lies in how to make and explain 'best choice' judgments when confronting ethical dilemmas in international business situations.The newly-updated version of this groundbreaking textbook continues to provide a topical and relevant analysis of the ethical dimensions of conducting business in a global political economy. From a starting point of applied ethics, the book introduces a common set of normative terms and analytical tools for examining and discussing real case scenarios. Extensive real-world examples, presented in the form of exhibits, cover issues including:

• foreign production, including sweatshops
• export of hazardous products
• testing and pricing of HIV-AIDS drugs
• advertising tobacco, alcoholic beverages and infant formula
• deceptive marketing techniques and bribery
• religious and social discrimination
• cultural impacts from 'music, movies and malls'
• environmental issues, including oil spills, rain forest preservation, global warming and genetically modified foods
• fair trade certification and consumer boycotts
• oil investments in the Sudan, Burma and Nigeria.

To keep pace with the changing landscape of global business, this new edition features:

• updated exhibits that introduce new issues, including internet censorship and privacy, marketing and obesity, dumping electronic waste in Ghana, the costs of bottled water, and Wal-Mart's supplier code in China
• increased coverage of issues arising in emerging markets
• updated descriptions and assessments of relevant international agreements
• seventeen new photographs that were chosen to accompany cases designed for classroom discussion
• "framing questions" to guide discussion of issues in topical chapters
• three additional figures that help depict the ethical analysis process.

The continued globalization of business increases the relevance of this textbook and its unique focus on specifically international ethical challenges faced by business, where governments and civil society groups play an active role. While most business ethics texts continue to focus heavily on ethical theory, this textbook condenses ethical theory into applied decision-making concepts, emphasizing practical applications to real world dilemmas.
Anyone with an interest in the ethical implications of international business, or the business implications of corporate responsibility in the global market, will find this book a thought-provoking yet balanced analysis. Clearly written, this has become the textbook of choice in this increasingly important field.

1
THE VALUE FOUNDATION FOR A GLOBAL SOCIETY

INTRODUCTION

Global economic interdependence surged over the past quarter-century, significantly reshaping business strategies while exerting a powerful influence on international politics. The impact on business and politics is now widely recognized and generally assumed to be irreversible. Corporations adapt research, production, marketing and service strategies in an effort to “think global, act local.”¹ National governments grudgingly accept growing constraints on their sovereign scope for unilateral action even as they maneuver for competitive gains from global commerce. These changes supply both the building blocks and much of the driving force behind the emergence of “globalization” as a contemporary phenomenon. Less well recognized among the effects of global interdependence is the way traditional boundaries between business and politics can become blurred, particularly where the growing impact of “foreign” ideas and products raises normative issues in diverse societies around the world.

Does the advent of globalization portend the formation of a global society? Societies develop on a foundation of shared values that shape the structure and supply the bonds necessary for collective human interaction. The nation-state system imposes political boundaries on populations around the globe, dictating with varying degrees of success the rules that organize behavior within national borders. Societies may be coterminous with these national boundaries, but they can also be subnational or supranational in scope.

Accelerating the pace of global change, modern international business techniques are quickly outdistancing the ability of traditional political mechanisms to control external impacts on national populations. Economic, social and cultural patterns are being altered by global commerce, often without the considered assent or even the conscious recognition of the people most affected. Who is deciding the direction of these changes and what values are guiding the objectives?

This book uses applied ethical reasoning to explore many of the normative issues posed by the contemporary interplay of international business and political activities. The central focus is on business operations but recognizing that international enterprises operate within a distinctly global political economy. The normative dimension of globalization often appears in the form of protests against the power and impact of international business, generally represented by multinational enterprises (MNEs). Frequently the standards used to reject or affirm MNE actions lack clarity in terms of their origin, rationale and breadth of support. Identifying and evaluating the normative debate over globalization and MNE impacts can help gauge whether a sufficient consensus is developing on core values to support the emergence of a truly global society with commonly accepted rules and objectives to guide international business.

WHY ETHICS MATTERS

As pursued in this book, ethics deals with the identification, assessment and selection of values to be used as standards for judgment and guidelines for action. Values lie at the heart of all decisions, providing the normative basis for choosing among alternative conclusions and courses of action. As a term, “ethics” is commonly misused to signify some ideal but unrealistic standard that bears little relationship to practical daily decisions. In reality, ethical analysis offers a way to examine the values that do guide daily decisions in all aspects of human life. Decisions involve choice, and choice is guided by values. Ethics matters because its methodologies offer a way to identify, understand and consciously choose among the values embodied in different judgments and actions. The fundamental importance of ethics stems from the belief that intentional, informed choice produces the best decisions and outcomes.

Explicit considerations of ethical choice often appear absent from many discussions of politics, economics and business. Yet decisions made in these fields inherently involve choices among competing and sometimes conflicting values. When the political system exacts retribution for actions adjudged wrong, some value standard determines what punishment a person justly deserves, and why. When economics traces the flow of scarce resources, some value standard determines the allocation of those resources among individuals based on distributive justice choices such as equality, contribution, effort or need. When business seeks to obtain or retain a public charter to operate within a host country, some value standard determines whether those operations offer sufficient public good to merit approval by the sanctioning authorities.

The important role of ethical choice often escapes notice because the common use of instrumental terms can obscure the value standards that actually guide political, economic and business decisions. For example, nation-state actions typically find justification in the pursuit or preservation of the “national interest,” but the exact nature of that interest, or what values are sacrificed on its behalf, are seldom specifically identified and evaluated in public debate. Economics may focus on the pursuit of efficiency, assuming the term functions in a value-neutral fashion while demurring on the choice of which ends are served by enhancing efficiency. Business operations can define goals in terms of maximizing profits, ignoring broader impacts and disregarding the instrumental nature of profits as a means to some end that is decided by whoever receives the distributed profits. Ethical analysis helps strip away the instrumental terms that obstruct a clear view of the underlying values, baring them for a conscious assessment and informed, intentional choice.

Globalization fosters an array of complex ethical dilemmas where clear assessments and informed choice become difficult. Yet choices are being made, by default if not intention. The motivation for studying the possible value foundation for a global society springs from the fact that economic and political interdependence, facilitated by MNE business activities, forge patterns of global interaction that reflect embedded values. Globalization as a process is happening anyway. Whether or not that process leads toward a global society bound together by shared fundamental values is still an open question. The decisions and actions taken by business, government and civil society leaders will help determine the outcome of this process. Explicit attention to ethical analysis and decision making can increase the potential for “best choice” results for a global community.

STUDYING ETHICS FOR INTERNATIONAL BUSINESS

This book differs in several respects from standard business ethics texts. First, only an introductory summary is offered to some basic philosophical concepts that provide both the foundation and the tools for ethical reasoning. Excellent books on philosophical ethics are available from many authors, including some with an orientation toward business applications.² The assumption here is that readers are either already generally familiar with this material or else can gain easy access to it if more in-depth explanations are needed. This restriction permits broader coverage of more business issues while still retaining the framework of ethical reasoning necessary for the examination of applied cases.

A second difference stems from the specific concentration on international business ethics. Since the mid 1970s, business schools (especially in the United States) have introduced or expanded offerings on business ethics, usually as separate classes on corporate social responsibility or, less frequently, as integrated components in traditional courses in accounting, finance, marketing or management. However, just as most US schools were tardy in adapting courses to reflect the increased importance of international business operations, so too have approaches to teaching business ethics been slow to address the complex and demanding task of applying ethical business principles in diverse countries and cultures around the globe.

This book provides extensive and varied coverage of ethical issues raised by international business operations. The purpose is to complement, rather than substitute for, offerings already available, with an emphasis on examining the particularities of international business situations. This textbook is also intended for use outside business schools, especially as an encouragement for schools of international affairs and departments with political economy majors to integrate the study of international business ethics into their curriculum. Global corporations are recognized by political scientists as important international actors, but few programs incorporate the study of how businesses should respond to differing international, intercultural situations, or how political and business actors might best interact on such issues.

Explicit attention to the political economy context for international business ethics constitutes the third major distinction of this book’s approach. In the academic community, politics, economics and business exist as largely separate fields, even though an increasing number of interdisciplinary bridges are being constructed. In the “real world,” academic field distinctions hold little meaning, particularly for businesspeople who must operate in a global economy that is continually influenced by political authorities. In applying ethical analysis to international business situations, it is both reasonable and realistic to pose questions that explicitly examine the comparative role responsibilities of both business and political actors. An important objective of the case analyses presented in this book is to consider the factors or circumstances that might lead to assigning greater levels of ethical responsibility to various societal actors (political, business or others). This approach may also prove useful in Business and Society courses.

Finally, the book uses a case analysis methodology based on real-life scenarios, often utilizing actual news stories. The incorporation of news articles replicates the type of information initially available in many new situations and is designed to practice techniques for applied ethical reasoning rather than to argue for particular conclusions in any individual case. Readers are encouraged to distinguish the factors in each case that: (1) establish the normative importance of the issue; (2) determine the comparative degree of responsibility for relevant actors; (3) identify appropriate actions; and (4) suggest possible guidelines for managing future situations with similar conditions. Although most case scenarios are recent, some older articles are used where ethical dilemmas are especially well illustrated and the scenarios still reflect contemporary value choices.

The case scenarios depict factual circumstances at a particular point in time and challenge the reader to consider “best choice” decisions for relevant actors, specifying the normative rationale and criteria used for the selected choice. In most case scenarios subsequent developments are not discussed in the text, to avoid prejudicing discussion about what “should” happen with the knowledge of what “did” happen. Although this approach may frustrate some readers, the technique keeps a focus on ethical analysis and prescriptive decision making rather than on factual knowledge of descriptive events. Independent research can satisfy the desire for follow-up information on any particular case.

ORGANIZATION OF THE BOOK

Drawing on framework concepts from ethical theory, Chapter 2 provides normative language and analytical tools to help examine, understand and evaluate situations that raise important but difficult value choices. The selective summary offers useful terminology and possible criteria for assessing the factors presented in ethical dilemmas. Setting out the context of a global political economy, the discussion differentiates legal and social norms while comparing the roles and functions of governments, businesses and other non-governmental actors. The chapter concludes with an illustration of the case scenario methodology, employing the suggested tools of ethical analysis to examine a controversy over a proposed MNE mining investment in Peru.

Chapter 3 considers the concept of human rights as a recognized expression of international principles that might provide a value foundation for a global society. After examining the content and interpretation of the United Nations Universal Declaration of Human Rights, the narrative offers case scenarios that test how such principles might apply to international trade rules and economic transactions. The specific relationship of international corporations to human rights principles also receives attention, considering how responsibilities to respect and promote such values might influence MNE actions, including issues surrounding expanded internet access in China.

The next six chapters survey a broad range of ethical issues raised by the operations of contemporary international enterprises. Each chapter examines a related set of issues, with a central “framing question” offered in the Introduction to provide a general context and guide subsequent analysis of the issues and case examples. The discussion uses normative terminology and analytical tools to explore the nature of relevant ethical questions, the relative role responsibilities of governments, MNEs and other non-governmental actors, and alternative “best choice” decisions for responsible actions. Discussion incorporates various normative criteria that might be employed in ethical analysis as well as identifying the status of international agreements or other emerging global standards relevant to those issues.

These chapters focus on ethical dilemmas, i.e. situations marked by several contrasting but ethically reasonable arguments supporting different courses of action. By omission, little attention is paid to studying clearly wrong actions by international business. Although such examples certainly exist, this text eschews the goal of convincing readers not to do something they likely already know would be unethical. Instead, the objective seeks to enhance analytical skills that can help identify the best available decision when confronting difficult ethical choices.

The penultimate chapter reviews various mechanisms used to control or guide international business activities. In addition to governmental mandates, an array of market-based instruments can influence corporate actions, as illustrated by increasingly organized and active civil society groups that seek to alter the nature, scope or impact of international business operations. These instruments can be employed to move business actions in the direction of “best choice” normative outcomes.

The concluding chapter presents a broad appraisal of contemporary trends shaping the global community, summarizing areas of both consensus and disagreement on important value principles. After surveying the types of ethical issues analyzed in the previous chapters, the narrative considers the extent to which common morality standards are emerging that could support a global society. The assessment considers the practical challenges MNEs confront when business operations must span the current diverse array of political, economic and sociocultural environments. MNE activities, and the value decisions that guide those actions, will play an important role in determining globa...