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
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Topics for Chapter 9

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Ethical Principles for Multinationals

Ethical Relativism

Alternative Standards of
Conduct

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Norms of home country

Norms of host country
Profitable choice
Morally appropriate choice

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

When in Rome do as the

Romans do?

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?

Yes most cultures value

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

DeGeorge developed 7
principles
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 countrys 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
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2001

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

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.)

Human capabilities necessary to function well: life,

physical health, freedom of thought and expression,
and the ability to pursue ones conception of the good.

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

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.
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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

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

Doesnt mean that it cannot be

transferred at all
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Patricia H. Werhane

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 Corporations 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

Adapted by the Caux Roundtable

Three themes:

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Policies
Procedures
Publication

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Shells 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
Castrothe
Alfaro
et al. of whether or not a
Concerns
question

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,
Concerns
Doe
1 vs. Unocals
Unocalinvolvement

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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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