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The Moral Authority of Transnational Corporate Codes

Author(s): William C. Frederick

Source: Journal of Business Ethics, Vol. 10, No. 3 (Mar., 1991), pp. 165-177
Published by: Springer
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The Moral Authority of Transnational
WilliamC. Frederick

ABSTRACT. Ethical guidelines for multinational corpora a universal or transcultural standard of corporate
tions are included in several international accords ethical behavior. this remarkable
adopted Although develop
during the past four decades. These guidelines attempt to ment has not run its full course and therefore is not
influence the of multinational in such it is well its
practices enterprises
yet all-embracing, enough along for
areas as relations, consumer envi
employment protection, main outlines to be evident and its central normative
ronmental political participation, and basic
pollution, to be clear.
human moral authority rests upon the significance
rights. Their
competing principles of national sovereignty, social equity,
market integrity, and human rights. Both deontological
and value and
Landmark multilateral compacts
principles experience-based systems undergird
as the fundamental
justify the primacy of human rights
moral of these transnational and transcultural The four decades betewen 1948 and 1988 have been
compacts. Although difficulties and obstacles abound in remarkable the proliferation
for of intergovern

gaining operational acceptance of such codes of conduct, it is mental agreements, compacts, accords, and declara
argue that their
betoken the emer tions that have been intended to put on the public
a transcultural sets of
gence of corporate ethic. record various the
principles regulating
activities of governments, groups, and individuals.
The core concerns of these compacts have
Moral for corporations be found from military to economic and social devel
guidelines may security
embedded in several multilateral compacts adopted opment, from the protection of national sovereignty
since the end of the Second World to actions
by governments specifying acceptable by multinational
War. Taken as a whole, these normative from condemnations of genocide and
guides enterprises,
a framework for the essential to the of capital flows and the
comprise identifying slavery regulation
moral behaviors expected of multinational corpora transfer of technology, from the political rights of
tions. Corporate actions that transgress these prin women to the movements of refugees and stateless
are understood to be some cases and many others too numerous to list here.
ciples defacto, and in persons,
de jure, unethical and immoral. This set of normative They reflect the many kinds of problems and issues
and proscriptions embodies a moral that have confronted in the last half of
prescriptions governments
authority that transcends national boundaries and the 20th century (United Nations, 1983).
societal differences, thereby invoking
or This paper focuses on six of these intergovern
mental compacts, which by their nature, purpose,
William C. Frederick is Professor of Business Administration,
and comprehensiveness might well be considered
be the most or of such agree
Graduate School of Business, University of Pittsburgh.He is generic archetypal
ments. the basic outlines
President (l 990) of theSocietyfor Business Ethics,former chairof Collectively they proclaim
the Social Issues inManagement division of The Academy of of a transcultural corporate ethic. This ethic effec
and was the Charles Dirksen Business tively lays down specific guidelines for the formula
Management, Professor of
Ethics at Santa Clara in 1980?81. He is coauthor tion of multinational corporate policies and prac
University of
Business and Society: Corporate tices. These six compacts and their respective dates
Strategy, Public Policy,
Ethics (McGraw-Hill, 1988). of promulgation are:

Journal ofBusiness Ethics 10: 165-177, 1991.

O 1991Kluwer Academic Publishers.Printed in theNetherlands.
166 C. Frederick

0 The United Nations Universal Declaration of to trade unions and to collec

join bargain
Human Rights (1948) [AbbreviatedasUDHR] tively. [ILO;OECD; UDHR]
? The Convention on Human ? MNCs should develop nondiscriminatory em
European Rights
(1950)[ECHR] ployment policies promote equal job
o The Helsinki FinalAct
(1975) [Helsinki] opportunities. [ILO;OECD; UDHR]
? The OECD Guidelines for Multinational ? MNCs should pay for
provide equal equal
Enterprises (1976) [OECD] work. [ILO;UDHR]
? The International Labor Office ? MNCs should advance notice
of changes
Tripartite give
Declaration of Principles Multi in and
Concerning operations, especially plant closings,
national Enterprises and Social Policy (1977) mitigate the adverse effects of these changes.
? The United Nations Code of Conduct on ? MNCs should favorable work condi
Transnational com tions, limited hours, holidays with
Corporations (Not yet working
nor but in pay, and protection against unemployment.
pleted promulgated originating
1972.) [TNCCode]1 [UDHR]
? MNCs should promote job stability and job
The first two compacts are normative in
clearly security, avoiding arbitrary dismissals and pro
focus and intention, emphasizing human but severance pay for those unemployed.
rights, viding
are not addressed to multinational
they specifically UDHR]
? MNCs
enterprises. The principal emphasis of the Helsinki should respect local host-country job
Final Act is the national and political security of the standards and upgrade the local labor force
this accord and its
signatory governments, although through training. [ILO;OECD]
successor 0 MNCs should health and
protocols carry strong messages concerning adopt adequate
human and environmental protections, which and grant them
rights safety standards for employees
do concern business operations. The last three the right to know about job-related health
compacts are aimed and at the hazards. [ILO]
primarily explicitly
of multinational across a wide o MNCs should, basic
practices enterprises minimally, pay living
range of issues and problems. While three of the wages to
employees. [ILO; UDHR]
six accords issue primarily from European-North o MNCs' should benefit lower-income
American governments, the other three represent groups of the host nation. [ILO]
the views of a much wider, even o MNCs
global, range of should balance job opportunities, work
conditions, training, and living conditions
governments. job
among migrant workers and host-country
nationals. [Helsinki]
Normative corporate guidelines

By careful of these six intergovernmental Consumer protection

compacts, one can derive a set of norma
tive for the policies, decisions, and operations o MNCs should laws and
guides respect host-country
refer the protection of consumers.
of multinational corporations. These guidelines policies regarding
to normal business operations,
as well as more
human o MNCs should the health and safety
fundamental responsibilities regarding basic safeguard
of consumers by various disclosures, safe pack
and accurate advertis
aging, proper labelling,
ing. [TNCCode]
and policies
Employment practices

0 MNCs should not contravene the manpower Environmental protection

policies of host nations. [ILO]
? MNCs should the right of employees o MNCs should laws,
respect respect host-country
Transnational Corporate Codes 167

and priorities of within each state. ECHR; Helsinki;

goals, concerning protection [UDHR;
the environment. [OECD;TNCCode;Helsinki] ILO;TNC Code]
? MNCs should ? MNCs should promote a standard of to
preserve ecological balance, living
the environment, support the health and well-being of workers
protect adopt preventive
measures to avoid environmental harm, and and their families. [UDHR; Helsinki; ILO;
rehabilitate environments damaged by opera
TNC Code]
tions. [OECD;TNC Code; Helsinki] ? MNCs should promote care and assist
? MNCs ance to motherhood and childhood.
should disclose likely environmental [UDHR;
harms and minimize risks of accidents that Helsinki; ILO;TNC Code]
could cause environmental [OECD;
TNC Code] These should be viewed as a collective
? MNCs should the development of since all of them do not appear in each
promote phenomenon
international environmental standards. of the six compacts. Table I reveals that the OECD
Code; Helsinki] compact and the propased TNC CODE provide the
? MNCs should control that most coverage of the guideline cate
specific operations comprehensive
in the ECHR
contribute to
pollution of air, water, and soils. gories. The relative lack of guidelines
compact may be attributable to the considerable
? MNCs should develop and use technology that with the for
membership overlap Organization
can monitor, and enhance the envi Economic Cooperation and Development whose
ronment. [OECD;Helsinki] members subscribe to the OECD standards for
multinationals. Human con
rights and employment
ditions are clearly the leading guideline categories,
while consumer and corporate political
Political payments and involvement protection
Table 1 suggests that
activity appear infrequently.
the respective compacts have in dif
0 MNCs not nor make im "specialized"
should pay bribes ferent types of normative issues involving corporate
proper payments public officials. [OECD; most obvious
TNC Code] practices, the example being the ILO's
on issues. The argument of
? MNCs should avoid or in emphasis employment
improper illegal this paper is that the collective of the
volvement or interference in the internal weight guide
lines ismore important than the absence of
some of
politics of host countries. [OECD;TNC Code] them from
? MNCs should not interfere in intergovern specific international agreements. Clearly
their inclusion across the board would
mental relations. strengthen
[TNC Code] the case for a
normative system intended to
guide corporate practices.
These normative guidelines have direct implica
Basic human rights andfundamental freedoms tions for a wide range of
specific corporate programs
and policies. They include policies regarding child
? MNCs should the rights of all persons care, minimum hours of work,
respect wages, employee
to life, and adequate housing and health
liberty, security of person, and privacy. training education,
[UDHR;ECHR;Helsinki; ILO;TNC Code]2 care, pollution control efforts, advertising and mar
? MNCs severance
shouldrespect the rights of all persons keting activities, pay, privacy of employees
to of the law, work, choice of and consumers, information
equal protection concerning on-the-job
and favorable work conditions, and hazards, and, especially for those companies with
job, just
protection and dis operations in South Africa, such additional matters
against unemployment
crimination. [UDHR; Helsinki; ILO; TNC as the
place of residence and free movement of
Quite the are not
Code] employees. clearly, guidelines
o MNCs should all persons' freedom of intended to be, nor do act as, mere rhetoric.
respect they
and Nor do matters.
thought, conscience,
religion, opinion they deal with peripheral They have
direct applicability to many of the central
expression, communication, peaceful assembly operations
and association, and movement and residence and policies of multinational enterprises.
168 C. Frederick

Number of MNC normative for six multilateral
guidelines by category compacts


- - -* 4
6 20 10

? ? ?
Consumer 1?2 3

? ? ?44 5
Environmental 13

- - -
Political 5

Human Rights 5 2 -
522 5
11 2
TOTAL 10 11 15 63 14

It is but is not a that the Transnational Code of Conduct will into its
expected, foregone certainty, Corporate incorporate
provisions regarding employment practices the bulk and central meaning of those set forth in the ILO Tripartite Declaration.
Hence, their omission in this Table should not be construed to mean that have been or overlooked the drafters
they ignored by
of the TNC Code.

The normative of the guidelines Social equity is another normative basis underlying
some of the
specific corporate guidelines. Pay scales
These for the practices and policies of multi are to be established in ways that will insure equity
national companies
seem to rest upon and be
justi between men and women, racial and ethnic groups,
fied by four normative orientations. Given sets of the professional and occupational groups, host-country
can be tied to one or more of nationals and parent-country
guidelines directly expatriates, indigenous
these moral sources.
employees and migrant workers, and those well-off
and those least-advantaged. The same
equity prin
one such source. All six com
National sovereignty is ciple is advocated for job opportunities, job training,
pacts invoke the inviolability of national sovereignty. treatment of the unemployed, and the provision of
In on the each nation is other work-related benefits and services.
acting compacts' principles,
to take care not to on the
infringe sovereignty of its
of a nation's integrity source
neighbors. Hence, preservation Market integrity is yet another of moral
and self-interest appears to be one of the moral authority and justification for some of the guidelines
foundations on which such multilateral accords rest. identified above, as well as for a
large number
Multinational are to respect the other in other agreements that
enterprises urged guidelines specified
aims, goals, and directions of a host-country's eco are not treated here which have to do with restrictive
nomic and social development and its cultural and business practices, the transnational flow of capital
historical traditions. Companies' the repatriation of profits, the rights of
plans and goals investments,
should not contravene these components of a ownership, and similar matters. Among the norma
nation's and sovereignty. Nor should tive corporate guidelines listed earlier, those tinged
being they
interfere in the internal
political affairs of host with the notion of market integrity include restric
countries activities, polit tions on political payments and bribes that might
through improper political
ical bribes, or questionable of any kind non-market considerations into business
payments inject
made to political candidates or a of private collective bar
public officials. transactions, recognition
Transnational Corporate Codes 169

than as a in another as a means to one's own

gaining (rather government mandates) using promote
for establishing pay scales, ends and purposes, absent a freely-given informed
preferred technique
conditions, and benefits for employees, and consent. Hence, a
working deceptively simple algorithm
some not of the consumer based on and duties sets the stage for the
(but all) protections rights
in the accords. specification of normative rules of conduct for
far the most fundamental, governments, groups, individuals, and ? for present
By comprehensive,
source of moral ? multinational
widely acknowledged, and pervasive purposes enterprises.3
is human As and compelling as the human
authority for the corporate guidelines rights powerful rights
and fundamental This is given principle is, it does compete with the other three
freedoms. concept
in the UN Universal Declara normative sources ? national social
eloquent expression sovereignty,
tion of Human
It is then picked up and equity, and market integrity. This that human
the framers of four of the other five are conditioned social, and eco
adopted by rights by political,
accords in this paper. the OECD nomic values. Rights do not stand alone or outside
analyzed Only
Guidelines for Multinational fail to the normal range of human institutions, diverse as
invoke the specific or the basic of those institutions are around the and from
language meaning globe
as to nation remains a sacred
and fundamental freedoms the society society. The
normative on which these accords are repository of group allegiance and fierce loyalty, an
erected, although the OECD Guidelines institution whose leaders at times are fully capable of
some of these as their own citizens and others of funda
rights and freedoms specific duties depriving
and obligations of multinationals. As mental rights. Witness South Africa's apartheid
noted, a number of OECD members are
signatories system, China's brutal suppression of the student-led
to the Convention on Human democracy movement, and the totalitarian excesses
European Rights,
to the basic of the of Romania's communist leaders. In all three cases,
thereby subscribing principles
Universal Declaration of Human Rights. the state and nation were invoked as ultimate criteria
the Declaration of Human the denial of human
Essentially, Rights justifying rights.
the existence of a whole host of human Moreover, societies erect systems of
proclaims everywhere
are inherent in social status and class, instilling notions of "just
and freedoms, saying that they
the human condition. "All human are born claims" and insisting that most people should "know
free and equal in dignity and and their place." For example, women around the
rights." "Equal globe
are find their rights and their life opportunities restricted
inalienable rights" possessed by "all members of
the human family" who also manifest an "inherent by male-dominated economic and political systems.
The same can be said of the widest variety of ethnic,
Other language speaks of "fundamental
human rights," "the dignity and worth of the human religious, and racial groups throughout the world,
men and and whose fundamental and freedoms are often
person," "the equal rights of women," rights
"fundamental freedoms." These rights and freedoms sacrificed on the altar of "social equity" as defined by
exist "without distinction of any kind." They are dominant and competing groups.
understood as a common of humankind, Few economic institutions in modern times have
not on in any particular more than markets, whether
dependent membership appealed powerfully
nation, or directed decentralized economic actors or
group, organization, society. by by
This invocation of human rights, as a philosophi centralized states. Those who safeguard the integrity
owes much to Immanuel Kant. In for high
cal principle, of markets, including officials responsible
effect, the Declaration of Human the level or corporate
Rights posits governmental policies, frequently
Kantian person as the fundament of closing a
of moral authority. accept the "market necessity" plant,
The human is said to possess an inherent to areas, or
person shifting operations lower-wage "busting"
worth and dignity, as well as inalienable and equal a trade union ? all in the interest of "allow
and freedoms. This being true of all human to work" or and
rights ing the market "enhancing national
correlative duties and obligations are so may
beings, thereby corporate productivity." Doing deprive
on everyone to respect and not to interfere of retirement
imposed employees jobs, living wages, security,
with the rights of others. No one person iswarranted and other workplace rights.
William C. Frederick

mon Market
Hence, in these several ways,
rights everywhere emerge. Economic systems based on the
are in market bear the marks
hedged by such political, social, and economic principle of their national
features of human society. The behavioral parent's political and ideological institutions. The
for multinational seem to have been freer markets that have
corporations relatively emerged during
not from a the 1980s in the Soviet Union, Eastern Europe, and
woven, single philosophic principle but
a normative At China are conditioned
by blending of threads. the pattern's heavily by the prevailing
center stand human and fundamental free of the coun
rights governmental philosophies respective
doms, for in the international compacts reference is tries, and their is not to contra
operation permitted
most to vene the state. The same may
found frequently this normative marker. But perceived needs of the
the strands of national
sovereignty, social equity, and be said of markets in the United States, as one
market are woven into the overall pattern, observes the that accompany
integrity ideological swings
and form to the successive
coloring giving expression of human presidential administrations, legislative
are and judicial decisions. United States gov
rights. Thus human rights conditioned by elections,
societal factors. ernment-imposed commercial sanctions against
One trait is for the norma South Africa, the Soviet Union, Poland, Cuba,
important responsible
tive dominance of the human and other nations reveal the
rights principle. The Nicaragua, Libya,
human of in the Universal Declaration nation-bound character of market operations.
rights spoken
of Human are transcultural. As a Except for the human all other
Rights principle, rights principle,
human normative sources that undergird the multinational
rights span and disregard cultural and
national boundaries, class systems, ethnic corporate guidelines are thus culture bound, unable
economic levels, and other human to break out of their societal contexts. By
arrangements respective
which for a variety of reasons differentiate between contrast, human are seen to be transcultural.
individuals and groups. Human are ? are the or the that holds the
rights just that They glue linchpin
human. inhere in all humans, entire normative in a coherent in
They regardless of system together
ternational whole. While conditioned by desires for
imposed societal classifications and exclusions. They
can be defined, or violated but they national social equity,
disregarded, (or socio-ethnic) sovereignty,
cannot be eradicated. and market ? thus their opera
integrity finding
A transcultural character cannot be claimed for tional meaning within a societal context ? human
the other three normative sources. National sover
rights express attitudes, yearnings, and beliefs com
bound to and expressive of mon to all humankind. In that sense,
eignty is by definition the they form the
nation. If "nation" is understood to embrace, not core of a whose normative aim is to
global system
the nation-state but also identification with and regulate the practices of multinational corporations.
to an ethnic then it be This normative system finds
allegiance grouping, might rights-based justifi
more accurate to of as the cation in two ways. One is
speak "socio-ethnicity" through deontological
kind of sovereignty whose is In in human the
protection sought. obligations implicit rights. Here,
event, neither "nation-state" nor "socio-ethnic to us. The other is
any philosopher speaks justification
is or can be transcultural. more the form of lessons
group" directly operational, taking
Similarly, social equity meanings if ever learned from human experience about the formation
span cultural boundaries, in spite of Marxist class and sustenance of human values. These lessons are
to the contrary or even the
theory mightiest efforts taught by social scientists. Each of these rationales
of Third World nations to see and them calls for further elaboration.
selves as the world's exploited underclass. That they
are z underclass, mistreated, and denied many
more Rationale I: Deontological norms
opportunities by their prosperous neighbors
has not yet bound them into a solid bloc
that could be called transcultural. The normative corporate guidelines may be seen as
Market remains tied to nation extensions and manifestations of broad deontologi
integrity firmly
states, even as interstate markets such as the cal, i.e., of human conduct.
regional duty-based, principles
These a basis for
European Common Market and the Andean Com principles provide philosophic
Transnational Corporate Codes 171

as this, the Universal Declaration

defining the duties and obligations of multinational of Human Rights
serves as the fount, the moral funda
enterprises. deontological
The in the several com ment, that defines a corporation's basic duties and
concurring governments,
are to multinational toward others. The Declaration's moral
pacts mentioned here, saying obligations
to many if not most
enterprises: principles have been extended
of the multilateral compacts of the past 40 years,
? Because have to work,
your employees rights of whose take the form of
to to freedom to many specific provisions
security, of association,
normative for corporate actions across a
healthful and safe work to a guides large
conditions, pay
at a range of issues. So goes the moral logic of the accords
scale that sustains them and their families
and compacts.
level of subsistence, to and
dignified privacy, This is compelling and
to be free from discrimination at work, the philosophic position
convincing. However, the case for a transcultural
managers of multinational incur
corporations ethic neednot rest on
to such to corporate philosophical
duties and obligations respect rights,
arguments or,
alone, more the deonto
them where and when possible, and positively,
promote can be enriched and
to avoid actions that would logical position considerably
taking deny these the role of human
to the and strengthened by considering
rights corporation's employees as a creator of human values.
other stakeholders.
? Because humans and their communities have
to to health, and to the oppor
rights security, Rationale U: Experience-based values
to themselves to their fullest
tunity develop
potentials, corporations have an obligation to
Respect for persons, respect for community integ
avoid harming the ecological balance on
rity, respect for balance, and respect for
which human life and health ecological
community tested human experience in many can
a to promote spheres of life
depend and positive duty envi
be understood both deontologically and as adaptive
ronmental conditions conducive to the pursuit human value orientations. As value phenomena,
and protection of human rights. they
o Because consumers have rights to safe and compatible with the needs and experiences of the
world's peoples in a era. The need to
effective products and to know the quality and technological
proclaim many of the that appear in the
traits of the products and services they need to rights
Universal Declaration of Human Rights grew directly
sustain life, companies are i.e., they
obligated, out of the gross violations of human
have a duty, to offer such products for sale rights during
the pre-war and war periods of the 1930s and 1940s.
under that permit a free, uncoerced
Those most of the world's
choice for the consumer. experiences inspired
governments to take collective action, in the form of
o Because human can to a set of
beings lay claim a to define an
human and fundamental freedoms proclamation, acceptable number of
rights such rights and to urge all to nourish and safeguard
enumerated in the Universal
Declaration of
Human multinational are
Rights, corporations Since that rime, societies around the globe have
to promote, protect, and preserve
duty-bound felt the bite and seen the promise of technology
those and freedoms and to avoid
rights and applied by multinational
on them spawned corporations
trampling through corporate opera and governments. the bene
tions. The corporations' Kantian im They have experienced
duty is
fits, and have often borne the costs, of business
plied in theKantian rightsheld by all. undertaken without much
operations regard for
A moral is thus on corpora environmental, human, and interests.
imperative imposed community
tions. The source of this is These experiences have been as if not as
deontological imperative compelling,
the rights and freedoms that inhere in all human traumatic, as those of the pre-war and war years
is bound, by this moral when human were have
persons. The corporation rights trampled. They
to respect all persons within the purview of its agreement and belief in a
logic, generated widespread
decisions, policies, and actions. In some such fashion network of experienced-based values that sustain the
William C. Frederick

lives of individuals, their communities, and their milieu; and, second, that such a code, whether for the

societies.It is these values that have found their way individual or for interstate relations, offers the frame
into the several multilateral of common ideas that can the diversity of cultures,
compacts and accords span

are not standards, and and economic

discussed here. Corporations to religions, living political
urged, just
to create a common nexus of humane
tend to their duties but also to sup systems practice
deontological for an emergent world
port, and not to override, the values that have been
found to human
through experience undergird This view is echoed by Richard Falk (1980: 67, 108):
in for
Speaking of the role played by experience To think of human
in the world as a whole ... is
value standards,
mulating sociologist Robin Williams itself a reflection of the emergence, however weakly,
of a
22, reminds us that on the notion that persons
(1979: 45) planetary perspective
. . warrant
. our normative attention.
. . . values are learned. This means that are devel
some kind of .... Similar re
oped through experience Nor is there is any reason to restrict this "frame of
ideas" ? this morality of the commons ?
and are often characteristic
peated pervasive experiences common
of numbers of persons situated in
large similarly society; to multinational enterprises alone. It would apply
such are described, discussed, and
experiences appraised with force to domestic and multinational
the persons involved. The communication of common equal
companies. Where nations have been able to identify
builds value standards, which often
appraisals eventually
and agree upon common ethical and
become across
many social and cultural principles
widely accepted
boundaries.. . . common values that reflect the experience of even
the most diverse cultures, a moral minimum has
. . . value and
orientations, repeatedly experienced been established. It remains within the power of
reformulated numbers of persons over extended
by large some governments and their citizens and businesses
will become intellectualized as com
periods, eventually to exceed this minimum, while other governments'
ponents of a world view.
comprehensive dedicated to meet even
powers may be insufficiently
the minimum moral standards. But this minimum
The of such experience-derived
gathering together the international common the "common
values the human condition has pro morality,
concerning nexus of humane
duced "a world view" of what is practice," the planetary perspective
comprehensive -- stands as a benchmark to be striven for. While it
to be
thought acceptable behavior by multi
morally or multinational,
exists, no corporation, domestic
national enterprises. The specific "components" of
can claim the right to operate without
that world view are the normative legitimately
corporate guide its policies and practices to this basic moral
lines described earlier. Humankind is referring
speaking here, this morality of the commons that has
known the standard,
making basic, minimum, socially accept been writ large upon the global scene.
able conditions for the conduct of economic enter
It is a voice that speaks the language of
and duties, as well as
philosophically inspired rights Reservations and
the language of a social-scientific of qualifications
experienced-based, adaptive human values. The
Four be raised to the derivation of
outcome in both cases is movement toward a objections might
these normative corporate guidelines.
transcultural corporate ethic, which ismanifested in
six multilateral or First, it can rightly be said that the six compacts
the compacts codes of conduct
discussed here. agreements among governments (except the ILO
whose members also include enterprises and em
Another observer (Dilloway, 1986a: 427) reveals
Multinational enterprises them
the transcultural moral of such inter ployee associations).
potential selves are not parties to these accords and thereby are
national accords:
not terms and
directly bound by their principles.
The final justification, therefore, for a code of rights is, three of the compacts, namely, the OECD
first, that it defines the conditions in which human Guidelines, the ILO Tripartite Declaration, and the
can develop are to
potential peacefully in an interdependent UN TNC Code, directed explicitly the
Transnational Corporate Codes 173

activities of multinational an of all six compacts, having to

enterprises. Therefore, governments agreed
to the intention and purposes of the abide by the spirit of the proclamations, hold the
attempt expand
other three accords ? the Declaration of Human authority within their own jurisdictions to enact
on Human at on own soil. So
the European Convention Rights, legislation aimed compliance their
and the Helsinki Final Act ? to cover the affairs of it cannot be said without some
qualification that the
multinationals seem to be unwarranted. In accords, though couched in terms of non
might voluntary,
other words, the multinationals were not the authors enforced are left to
agreements, entirely police
of these did not agree to
themselves themselves.
them, and did not pledge to honor
them in practice. More than these formal pressures to
This objection, while fair and as conform to the is the manner in
logical enough agreed principles
far as it goes, can be offset by noting that all persons, which normative, ethical, and moral forces exert
into the sovereign their influence on human perceptions and actions.
groups, and organizations falling
of the are Human
compliance with moral standards is a subtle
jurisdiction concurring governments
bound also by the agreements made by their govern and complex matter that may include, but need not
ments. Such governments are within their justifiable be limited to, reliance on police power.
and to enter into and con Awareness of others' values and others' attitudes
powers responsibilities
toward ethical issues own values
clude agreements that bind their citizens, both helps shape one's
natural persons and entities (such as corpora and attitudes.
Compliance with moral standards
occurs most there is self-awareness
courses of action. For that reason, frequently when
when a itself to promote of what others believe to be correct. Re
government pledges any morally
set of behavioral for its citizens and search has shown that most an
given guidelines people register
business firms, it has pari passu defined a desirable apparent desire to hold values, and to be seen as
course of action for them to follow, and it may that are consistent with others' values
holding values,
enact com and with one's own behavior
subsequently specific laws that mandate (Rokeach, 1973, 1979).
In this sense, it does not matter that the Studies of moral development by Lawrence Kohl
are and not enter and his associates also support the idea that
signatory parties governments berg
The are to the laws and value commitments and various types of moral
prises. enterprises subject
agreements of the respective governments in whose reasoning strongly influenced by social inter
territories actions and social
they conduct business. Beyond legal
these learning experiences (Kohlberg,
considerations, it also should be noted that the UN 1981).
Universal Declaration of Human Rights asserts that Without this
and socially induced
individual and every organ of society," should strain toward moral consistency, it is unlikely that
and secure the human coercion itself would be able to
promote rights proclaimed by governmental by
the Declaration. The of secure with moral
phrase, "every organ society," compliance socially acceptable
is obviously broad to encompass business standards. This is what is usually meant by those
who say that "Morals cannot be legislated." Moral
A second that some in this sense must on volun
difficulty might be raised by compliance rely largely
on of the core ideas
is that all six accords rely voluntary compliance tary acceptance expressed by such
since there is no standards. Compliance is more a matter of social
by the signatories, all-embracing
international to enforce the and an of the worthwhile
legal authority principles learning understanding
ness and
enunciated. Their provisions and principles are serviceability of given moral standards than
and not of an acceptance forced by an authoritarian source.
recommendatory expectational, obligational,
in character. It is true that the European Convention Frequently, people accept moral channeling because
on Human established a commission to it makes sense to them and because it reflects their
own in
receive complaints and a court to
actions experience coping with knotty moral issues.
to be inconsistent with the principles pro Hence, the widespread declaration of moral prin
claimed, and these have functioned as a founded on acceptance may sym
organs ciples voluntary
sanctioned bolize a type of moral commitment that is conceiv
type of legally enforcement machinery
more than the use of
(Robertson, 1977). It is
true also that the
concurring ably stronger and effective
William C. Frederick

costs in multilateral
government police power
to secure
compliance with
and of joining with others
moral directives. A somewhat related view has been compacts, more international collaboration might be

expressed by Ronald Dworkin (1977). forthcoming (Windsor Preston, 1988). and The
A third difficulty arises when that nor outcome then be a of
arguing might gradual lessening
mative corporate form the core of a substantive differences and a drawing of the
guidelines together
transcultural corporate ethic. The
are not negotiating parties. Robin Williams (1979: 30)
to and even some of explains how this process works:
subscribed by all governments,
the signatory governments may override or
ignore . . . of interests and among individ
opposition struggles
them in some circumstances. Thus, it may be a
uals and collectivities within continuing polity and
that the guidelines fall considerably short of can to the
charged societal system actually
contribute establish
a universal world view of what multi ment and elaboration of values and
representing generalized symbols.
national corporations should do. Three of the accords ... If successive contests and conflicts are then success

are a
clearly product of North American-European fully resolved without repudiation of the values which
concerns and issues, while at least one other, the ILO legitimate
conflict-resolving process
or mechanisms,

Declaration, tends to express the views of the more highly generalized values will come more and
more to be as axiomatic or
employee representatives from industrial nations. regarded unchallengable.

the UN Universal Declaration of Human Although the specific social implications of the general
value principle will be changed through successive
Rights and the UN Code of Conduct for Trans
occasions, nevertheless, all parties come to have a stake in
national Corporations a more or less
speak with the value referent as a resource for
maintaining complex
voice, and the last of these two accords has not
global the future.
yet actually come into existence.
is and must be This outcome is also to be
This sceptical view compelling process-based thought
as true. The world is not yet at a point a factor the UN Centre on Transnational Cor
accepted by
where it can claim to have formulated or a 1988: 361):
projected porations (United Nations,
set of normative corporate guidelines that are uni
. . . certain substantive are known and rela
or principles
versally globally accepted
and observed. Very real in . . . there exists a
tively undisputed practice today large
difficulties and genuine controversies have accom ?
of authoritative material declara
body agreements,
panied efforts
forge multilateral compacts that are tions, statements, etc. ? on the issues at hand.
to all As noted earlier, the general not . . but
acceptable parties. all identical, of course,. there is also consider
absence of effective enforcement mechanisms able coincidence of views.
weakens these intergovernmental efforts. Sharp dif
. . .Even where are not created,
and trade unions binding legal obligations
ferences between multinationals
be established as to the
legitimate expectations may
have been prominent (Rowan and Campbell, 1983). of standards within reasonable
application corresponding
The sometimes muted between Third
struggle bounds.
World nations and their richer industrial neighbors
is always there as a factor conditioning It isworth that corporations remain
background remembering
Social ethnicity and diverse attuned to of their
negotiations. religious remarkably public perceptions
an often
affiliations become stumbling blocks to consensus. images and reputations, displaying surpris
and real frus to criticism of their policies
Geopolitical rivalry politik frequently ing sensitivity public
trate the best efforts to reach multilateral accord. and actions. The reasons are frequently self protec
Such obstacles are seen by many to be the essence of tive, rather than stemming from altruistic or
the international scene, putting the creation of a responsible motives. Even so, the hovering presence
universal code of conduct beyond reach (Feld, 1980; and repeated of moral seem
expression principles
Waldman, 1980;Wallace, 1982;Windsor and Pres by large public blocs and their
ingly accepted
ton, 1988). governments may influence corporate behavior
However, a modicum of hope may exist in the toward voluntary compliance with these normative

very process of trying

to achieve consensus, prickly as standards.

it often is. If nations can on rules A fourth is that the normative

agree procedural difficulty guide
for determining a fair distribution of the benefits lines are an set of moral
obviously incomplete
Transnational Corporate Codes 175

instructions to
enterprises. They do not cover many their governments, are
capable of setting standards
matters and issues related to multi intended to and policies
important guide corporate practices
national corporate operations. None of the five into morally desirable channels. As noted, there
shown in Table I contains an exhaustive continues to be much
categories disagreement among govern
list of all possible guidelines. One
issues and needed ments about many of these issues, but failure to
easily identify other
categories and types of agree on everything should not be allowed to cloak
issues relevant to multinational business that appar an achieved consensus on many other issues.
not found into this particular Wise leaders will be able to interpret
ently have their way corporate
group of compacts. this consensus as a framework of public expectations
In on which the policies of their own companies can be
spite of the relatively limited moral compass of
these six accords, an impressively diverse range of based. Global stakeholders have set out their posi
issues has been evident in several other multilateral tions on a of and issues that
large range problems
conventions, codes, and treaties enacted and promul matter to them. In effect, are
corporations being
the 1970s and 1980s, which are not offered an opportunity to match their own opera
gated during
discussed here. These accords attempt to establish tions to these public expectations. The best ones will

product of do so. The others may wish they had if, in failing to
guidelines concerning liability, safety
consumer of and heed the normative messages, encounter
products, protection privacy per they rising
sonal data, transnational movement of hazardous and increased intervention in
hostility governmental
waste materials, distribution and use of pesticides, their affairs.
business in South Africa, elimination of For public policy makers, these agreements be
various forms of discrimination, of em token a consensus among the world's
protection growing
hazards, and reduction and is to be desir
ployees from workplace peoples about what thought morally
elimination of chlorofluorocarbons. Were these to able action by governments. It would be as
be added to the normative
already iden for politicalleaders to ignore this rising tide of
tified earlier, the entire set of normative instructions as for corporate makers to
global agreement policy
to multinationals would more turn their backs upon it. The authority and
be much larger and legiti
macy of these central economic and political institu
The argument of this paper does not require that tions are
at risk, as illustrated so dramati
all possible issues be included nor that all parties cally in Eastern Europe in 1989 and 1990. Therefore,

accept all of the provisions of the compacts. It is not it willbe vitally important for those charged with
we are more to
claimed that witnessing than the bare making
institutional policies guide their respec
of a globally oriented to their citizens.
beginnings system of norma tive societies inways acceptable
tive principles behavior. The to promote this normative consensus can
governing corporate Acting
is that the of if makers understand both the
only claim being made general outlines be encouraged policy
such a are now discernible and roots and the values
system partially philosophic experienced-based
from which these international agreements draw
their meaning and strength. The philosophic concept
of the human person that one finds in these multi
Lessons for policy makers lateral compacts, and the human and humane values
that grow out of shared global experiences, are no
set for public or private mere a
Those who policies, whether passing fancy of planetary people. Building
can find some on these twin foundations will
institutions, important lessons in these policy bring govern
multinational codes of conduct. ment and business into with the deep
The most lesson is that highly diverse structure of human
compelling aspirations.
governments and societies have been able to reach a
workable consensus about some core normative
directives for multinational enterprises. That should multinationals: The culture of ethics
send a strong message
to corporate leaders every
where that the world's The transcultural corporate ethic described here is
peoples, speaking through
176 C. Frederick

one part of a much more Health

International Code on the
only comprehensive,
are of Breast-milk Substitutes (1981), the European Economic
universal moral order whose shadowy outlines
"culture of Community's Code of Conduct for Companies with
only partially apparent. This broader
Interests in South Africa (1977), and The Sullivan Principles
ethics" includes all of those fundamental values and
U.S. corporate in South Africa
moral orientations that have been concerning operations (1977).
proven through The normative on which these three documents
to contribute to the sustenance and principles
long experience are based are consistent with those found in the six
of human persons within their commu
flourishing compacts that are the focus of this paper. Hence, the case
nities (Frederick, 1986). It will be important, and
made here for the emergence of a normative system of
that all economic is predictably stronger than the evidence
increasingly apparent, enterprises, global dimensions
public and private, domestic and multinational, adduced.
bound to the moral force of this 2 The Helsinki Final Act, the ILO Tripartite Declaration,
culture of ethics and to shape their policies and and the UN Code for Transnational Corporations

This "moral dimension" of a statement the UN Universal

practices accordingly. porate general accepting
economic Declaration of Human each of these accords is
analysis and corporate decision making Rights; hence,

can no or shown as those that are derived from

be set aside treated as a peripheral expressing guidelines
the UN Declaration.
matter As human societies are drawn
(Etzioni, 1988).
Of the numerous human rights and freedoms identified
ever and other tech
together by electronic
in the UN those are included here whose
Declaration, only
and as face the threats posed
nologies, they multiple observance or violation
would be most tied to
use closely
of these devices, it
by the unwise and heedless
and freedoms with a
corporate operations. Many rights
will become ever more necessary to reach agreement content are not it
treated here,
"political'' thereby although
on the core values and ethical that permit on
principles could be further
that corporate influence the
a humane life to be lived by all. Such planetary exerts
public policies and political processes of host nations
is now visible, feeble in its both direct and indirect effect on such rights and freedoms.
agreement though yet
rudiments. This broadscale culture of ethics draws It also should be noted that the UN Universal Declara

and philosophical tion of Human takes the form of a resolution of the

upon many societal, religious, Rights
sources. It is a great chorus of human voices, human General and is not a convention, or accord
Assembly treaty,
out of to which affix their
aspirations, and human experiences, arising government representatives signatures.
Therefore, it is not correct to refer to the
societal and cultural and individual diversity, that technically
of the Universal Declaration. Where that usage
expresses the collective normative needs of a global "signatories"
is employed here, it should be understood as meaning only
people. that the members of the General
then-voting Assembly
to the Declaration's central
agreed message.
3 The is "deceptively to
algorithm simple" by seeming
Notes overlook the enormous volume of
argumentation, qualifica
tions, and to Kant's views that has been
exceptions produced
The successor attached to some of of Extended discus
protocols subsequently by succeeding generations philosophers.
these are not treated here, so sion of theories of human rights may be found in Shue
compacts although doing

(1980) and Nickel (1987). Thomas Donaldson (1989) has

would the Of
strengthen paper's argument. particular

are the International Covenant on Economic, a far more sophisticated view of ethical algo
Social, and Cultural Rights; the International Covenant on rithms than the one offered here, and I am indebted to him
Civil and Political Rights; and the Optional Protocol to the for both the concept and the phrase itself.
International Covenant on Civil and Political Rights. These
three instruments, which were adopted by the United
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in 1966, transformed the
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