Ethical Theory and Business, 6th Edition

Tom L. Beauchamp & Norman E. Bowie

Chapter Eight

Ethical Issues in
International Business

© Prentice Hall, 2001

 Objectives

٠ After studying this chapter the student should

be able to:
– Describe problems encountered by multinational
corporations when conducting business with other
countries.
– Contrast the transcendental normative environment
and the group normative environment.
– Analyze the ethical issues of the Japanese
business community.

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 Objectives

– Discuss the concept of reciprocity as it applies to

the Chinese culture.
– Explain the guidelines for conducting business with
Chinese businesspeople.
– Contrast gift giving, bribery, and corruption.
– Define the term sweatshop.
– Discuss the development of the campus anti-
sweatshop movement.
– Discuss possible standards for appropriate wages
and labor standards in international sweatshops.

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 Objectives

– Discuss the potential economic problems that may

occur if current sweatshop practices are changed.

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 Overview

٠ Multinational Corporations
٠ Bribery
٠ Sweatshops

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 Norman Bowie

٠ “Relativism and the Moral Obligations of

Multinational Corporations”
٠ General multinational corporation obligations
٠ Distinctive obligations
٠ Relativism
٠ Morality of the marketplace

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 Daryl Koehn

٠ “What Can Eastern Philosophy Teach Us

About Business Ethics?”
٠ Cullen Chair of Business Ethics, University of
St. Thomas in Houston
٠ Do Asian values exist?
٠ Watsuji Tetsuro and Confucius
– Meaning of trust
– Relations are for life
– Ethics beyond rights

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 Iwao Taka

٠ “Business Ethics: A Japanese View”

٠ Religious dimension
– Transcendental normative environment
• Numen – Soul, spirit, or spiritual energy.
• Transcendentalism – The philosophy that every
phenomenon is an expression of the great life force and is
ultimately connected with the numen of the universe.
– Japanese meaning of work
– Group normative environment

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 Iwao Taka

٠ Living between the group and individual

environments
٠ Social dimension
– Concentric circles of corporations
• Family, fellows, Japan, and world
– Dynamics of the concentric circles
• The individuals
• The contextuals
– Group environment and concentric circles

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 Iwao Taka

٠ Japanese recognition of the American

business community
– Job description and the transcendental logic
– Employees’ interest and the group logic
– Claims against the Japanese market and the
concentric circles’ ethics

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 Iwao Taka

٠ Ethical Issues of the Japanese business

community
– Discrimination and transcendental logic
• Transcendental logic has favored the male society.
• Transcendental logic has been used to accuse certain
workers of laziness.
– Employees’ dependency and the group logic
– Exclusiveness of the concentric circles

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 Patricia H. Werhane

٠ “Exporting Mental Models: Global Capitalism in

the Twenty-First Century”
٠ Ruffin Professor of Business Ethics, University
of Virginia
٠ Mental models - The mechanisms whereby
humans are able to generate descriptions of
system purpose and form; explanations of
system functioning and observed system
states; and predictions of future system states.

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 Patricia H. Werhane

٠ This article examines the possibilities of using

an American free enterprise capitalist model
for conducting business in a global arena.

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 P. Steidlmeier

٠ “Gift Giving, Bribery, and Corruption: Ethical

Management of Business Relationships in
China”
٠ Associate Professor School of Management,
Binghamton University
٠ Developing a cultural framework for reciprocity
– Artifacts
– Social knowledge
– Cultural logic

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 P. Steidlmeier

٠ Interacting with others in China

٠ Moral analysis of reciprocity
٠ Guidelines for doing business right in China
– Investigate the backgrounds of local executives you
place in charge of company matters.
– Ensure no one individual has total control over
company matters.
– Treat remarks such as “China is different” and “You
shouldn’t get involved” as red flags.

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 P. Steidlmeier

– Establish regular and detailed auditing systems to

ensure transparency.
– Be aware of the political standing of your
counterparts and do not get caught in the cross fire
of Chinese power struggles.
– Explain your difficulties to the Chinese side and
offer alternatives that are legitimate.
– As much as possible, use Chinese sources
themselves as the basis for your unwillingness to
do corrupt deals.

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 P. Steidlmeier

– Rather than becoming entangled in a specific minor

bribe, place the whole matter in a broader context
of negotiation.

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 Thomas Donaldson and Thomas
W. Dunfee
٠ “When Ethics Travel: The Promise and Peril of
Global Business Ethics”
٠ ISCT Core norms
– Hypernorms
– Consistent norms
– Moral free space
– Illegitimate norms
٠ Navigating the ISCT map

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 Richard Applebaum and Peter
Dreier
٠ “The Campus Anti-Sweatshop Movement”
٠ The global sweatshop
– Sweatshop – A process where profits are sweated
out of workers by forcing them to work longer and
faster.
٠ Kathie Lee
٠ Robert Reich

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 Richard Applebaum and Peter
Dreier
٠ A “sweat-free” campus
– Began at Duke University, Fall 1997
– Required manufacturers of items with the Duke
label to sign a pledge that they would not use
sweatshop labor
– Quickly spread to other U.S. universities/colleges
– United Students Against Sweatshops (USAS)
formed Summer 1998
٠ The industry’s new clothes

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 Ian Maitland

٠ “The Great Non-Debate Over International

Sweatshops”
٠ Carlson School of Management, University of
Minnesota
٠ International sweatshop labor standards
– Home-country standard
– Living wage standard
– Classical liberal standard

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 Ian Maitland

٠ Charges against sweatshops

– Unconscionable wages
– Immiserization thesis
– Widening gap between rich and poor
– Collusion with repressive regimes
٠ Labor standards in international sweatshops:
painful tradeoffs

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