Lecture 5: International business ethics Flashcards
What happened in the Mattel case?
- Toy producer: sought low wage labour in devolving countries, including China
- Mattel vendors were only permitted to source paint from pre-approved suppliers, however one of the suppliers ran short of yellow paint, and sourced yellow paint online
- The vendor did not test for lead
- Another vendor, Early Light, used a contractor however did not disclose this to Mattel, which is against the company rules
- Mattel stopped all production in china until source of problem discovered
- Mattel stepped up enforcement of rules, with three point saftey check for each batch of paint used by a vendor
- Mattel responded to issues of employee abuse through Global Manufacturing Principles, however did not address the problems in relation to employee abuse
- Mattel eventually took full responsibility for the recall of toys with magnetissues, and admitted that some of the toys had been withdrawn had low levels of lead
What happened in the Nike sweatshop case?
- Initially, company produced in Japan, and as wages rose, led production to Korea and Taiwan, and further wage increments led production to Vietnam and China
- Production lines in Southeast Asia, where workers were in crowded, poorly ventilated spaces, surrounded by machinery and toxic chemicals.
- Minimum wage was $1.22 per 7 hour day, Nike paid $1.24
- Initially, Nike denied any wrongdoing and believed they were doing good by giving jobs to thousands of people
- $2m paid to Michael Jordan was greater than the payroll of the year in Indonesia
What were the conditions under which Nike contractors were employed? Ok
- Offered a job, had to pay an upfront free (go into debt) and passports taken
- Forced to sign a contract in another language
- Paid so little they would never be able to afford to repay their upfront fee, or buy back their passport
- Eventually nike workers were free after channel 7 uncovered the abuse
What is direct foreign investment?
Where controlling ownership in a business enterprise in one country, by an entity based in another country
What are the key issues in relation to foreign investment?
1) Companies adopting double standards
2) Many unethical practices in a home country are legal, and even ethical within another less developed countyr
What are the two positions in relation to ethics and DFI?
1) Relativism: “When in rome, do as the romans would do” - do what is ethical in the country where you are operating
2) Absolutism: “When in rome, do as you would at home” - single code of ethics for all countries
What are the argument for relativism?
1) Morally relevant differences
2) Variety of ethical outlooks
- Impacted by social and cultural situations: e.g. gifts in the US as part of business are bribes, while in Japan and Asia are accepted and expected as part of business
3) Right of people to decide
- ethical imperialism: imposing the standards of a developed country on one that is less developed is critiqued
4) Required conditions for doing business
- MNCs may have little choice but to adapt to local conditions
What is ethical imperialism?
Imposing the standards of a developed country on one that is less developed
What are the three aspects of guidance for MNCs?
1) Rights
2) Welfare
3) Justice
What does Donaldson say in relation to international human rights?
What are the four aspects of rights developed by Donaldson?
Cooperation a have the obligation to respect certain rights, namely fundamental international human rights
1) Maximal and minimal duties
2) Fundamental international rights
3) Negative harm principal
4) Rational empathy test
What are maximal and minimal duties. How do these impact an organisations responsibilities?
Maximal duty: performance of this duty is praiseworthy, but not mandatory
Minimal duty: Failure of duty would deprive corporation of its moral right to exist
Firms are only bound by minimal duties
What does the negative harm principle state?
MNCs should not add to the depreviation and suffering of people, and should not expose people to risk without their consent
What is the rational empathy test?
Putting yourself in the shoes of others and considering how the people affected would evaluate the benefits and harms
Example: if in home country, same situation and economic experience, would this be ethical?
What are the seven guidelines of welfare developed by DeGeorge?
1) Do no intentional harm
2) Produce more good than harm for the host country
3) Contribute by their activity to the host country’s developed
4) Respect human rights of their employees
5) Respect local culture and work with it
6) Pay their fare share of taxes
7) Corporate with local government
What does the justice view state in relation to conducting business?
Firms should weigh the benefits against the wrongs (e.g. substandard working conditions, child labour, association with repressive regimes)
