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13EthicsinaGlobalSociety.docx13 Ethics in a Global Society
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· The Dangers of Globalization and the Challenges of Ethical Diversity
· Developing Cross-Cultural Ethical Competence
· Coming to Grips With Ethnocentrism
· Understanding Ethical Diversity
· Resolving Ethical Cross-Cultural Conflicts
Globalization is having a dramatic impact on life in the 21st century. We inhabit a global society knit together by free trade, international travel, immigration, satellite communication systems, and the Internet. In this interconnected world, ethical responsibilities extend beyond national boundaries. Decisions about raw materials, manufacturing, outsourcing, farm subsidies, investments, marketing strategies, suppliers, safety standards, and energy use made in one country have ramifications for residents of other parts of the world. Organizational citizenship is now played out on a global stage. Businesses, in particular, are being urged to take on a larger role in solving the world’s social problems.
To act as ethical global citizens, organizations must confront and master the dangers of globalization and the dilemmas of ethical diversity. In this section, I’ll describe these obstacles and offer tactics for overcoming them.
The Dangers of Globalization and the Challenges of Ethical Diversity
The benefits of living in a global economy are obvious: lower labor costs, higher sales and profits, cheaper goods and services, instant communication to anywhere on Earth, increased information flow, and cross-cultural contact. What’s often hidden is the downside of globalization. Of particular concern is the growing divide between the haves and the have-nots. The richest 10% of the global population controls over 85% of the world’s assets and income, with the top 1% controlling 46% of the wealth. Governments of wealthy nations appear more interested in promoting the sale of their goods (including agricultural products) than in opening up their markets to poor countries.1 Lumber, minerals, and oil are extracted from poor regions and consumed in privileged areas, leaving environmental damage behind. At the same time, the United States sends solid and toxic waste to the developing world.2
Critics also note that global capitalism frequently promotes greed rather than concern for others. Ethical and spiritual values have been shunted aside in favor of the profit motive. Few industrialized countries give even the suggested minimum of.07% of gross national product (70 cents of every $100 produced by the economy) to alleviate global poverty.3 Local cultural traditions are being destroyed in the name of economic progress. As burgers, fries, pizza, and other popular American foods replace local fare, people around the world can expect to suffer the same kinds of chronic health problems as U.S. residents do—type II diabetes, obesity, and heart failure.
The big winners in globalization are multinational corporations. According to one estimate, 44 of the world’s 100 largest economies are corporations. Royal Dutch Shell, for example, has revenues that exceed the gross domestic products of 171 countries.4 Some multinationals have pursued free trade at the cost of human rights and the environment. They have employed sweatshop and slave labor, stood by as repressive regimes tortured their citizens, and plundered local resources.
Along with the potential moral pitfalls of globalization, organizations also face the challenges of ethical diversity.5 Nations, tribes, ethnic groups, and religions approach moral dilemmas differently. What members of one group accept as right may raise serious ethical concerns for another. For example, in Germany contracts are highly detailed and strictly enforced. In Egypt, contracts spell out guidelines for business deals rather than specific requirements. Egyptians expect to renegotiate and revise contracts, and there is no moral stigma attached to violating a signed agreement. In Mexico, honoring a contract is based on the signer’s personal ethics. There is little legal recourse if a contract is violated.
Bribery offers another instance of conflicting moral standards. In South American countries, it is nearly impossible to move goods through customs without making small payments to cut through red tape. At the other extreme, Malaysia executes corporate officials who offer and accept bribes. U.S. corporations and foreign firms listed on a U.S. stock exchange are prevented from exchanging money or goods for favors or services under the Foreign Corrupt Practices Act of 1977. However, in recognition of the fact that petty bribery is common in some parts of the world, small payments to facilitate travel and business are permitted under the statute. Cultures also clash over intellectual property rights (which are strictly enforced in the West but not protected in parts of Southeast Asia) and deception (Americans lie to protect their privacy, whereas Mexicans are more likely to lie to protect the group or family). Another clash of moral standards is described in Case Study 13.1.
The challenges posed by globalization and ethical diversity can undermine ethical decision making. For some organizations, it is business as usual. Interested only in making a profit or expanding their influence, they fail to weigh the possible negative consequences of their choices in the global environment. Leaders faced with ethical diversity sometimes behave as ethical imperialists by imposing their personal moral standards on members of other cultures. Or they may opt for cultural relativism by always following local customs (“When in Rome, do as the Romans do”). Nevertheless, being in a new culture or working with a diverse group of followers doesn’t excuse managers from careful ethical deliberation. Standards from one culture can’t be blindly forced upon another; conversely, just because a culture has adopted a practice doesn’t make it right. For example, trafficking in humans takes place in some parts of the world, but most societies condemn this practice.
Fortunately, you can develop your cross-cultural ethical competence and help your organizations to do the same. To achieve this goal, you must first wrestle with ethnocentrism and consider becoming a world citizen. Next, you have to recognize the value orientations of cultural groups and how these patterns influence ethical decision making. Then, you need to adopt universal moral principles that should govern behavior in every cultural setting and employ guidelines for sorting through conflicts between competing ethical norms.
Developing Cross-Cultural Ethical Competence
Coming to Grips With Ethnocentrism
Overcoming the challenges of globalization and ethical diversity is impossible if we fall victim to ethnocentrism. Ethnocentrism is viewing the world from our cultural group’s point of view, which makes our customs and values the standard by which the rest of the world is judged. Our ways are “right,” while their ways fall short. A certain degree of ethnocentrism is probably inevitable; it can help a group band together and survive in the face of outside threats. Nevertheless, high levels of ethnocentrism can lead to reduced contact with outsiders, racial slurs, insensitivity to strangers, pressure on other groups to conform, justification for violence and war, and other negative outcomes.6
A number of the ethical communication competencies introduced earlier in the text can be used to confront ethnocentrism. Pursue dialogue in cross-cultural conversations by treating members of other cultures as equal partners and by trying to understand their point of view. Mindfulness is particularly important in diverse cultural settings because the scripts we follow in our own groups don’t work when we find ourselves in other cultures. Adopt a pluralistic perspective that acknowledges the legitimacy of other groups and customs in order to avoid moral exclusion. (See the next section for more information on an ethical approach that greatly expands the circle of moral inclusion.)
Personal virtues can help undermine ethnocentric attitudes and at the same time lay the groundwork for meeting the challenges of globalization and ethical diversity. Philosopher and theologian Michael Novak identifies four cardinal or hinge virtues essential to encouraging global cooperation: cultural humility, truth, dignity, and solidarity.7 Cultural humility means acknowledging the shortcomings of our own cultures as well as our personal biases. A commitment to truth allows for reasoned argument based on evidence and logic. Recognition of human dignity forbids using others as a means to an end. Solidarity is being aware that each individual lives in communion with others and has responsibility for their welfare.
Case Study 13.1
The Right to Be Forgotten
Individual privacy is a fundamental right in both the United States and Europe. However, the two regions define this right very differently. In the United States, privacy is “the right to be left alone” and this right is often superseded by free press and free speech rights.1 This view of privacy was illustrated by a California Supreme Court ruling that journalists could publicize the sexual orientation of a gay man who stopped an assassination attempt on former President Gerald Ford. The hero repeatedly asked the press not to reveal this information, which was hidden from his family, but the court ruled that helping to protect the president had made him a public figure. In Europe, dignity underlies privacy concerns. According to Zurich law professor Rolf Weber, Europeans consider “dignity, honor and the right to private life” the most fundamental rights. There is the “right for the [moral and legal] integrity of a person not to be infringed and for a sphere of privacy to be maintained and distinguished.”2 The European Court of Human Rights ruled, for example, that German papers had violated Princess Caroline of Monaco’s privacy rights by publishing photographs of her and her family. The tribunal noted that the pictures were taken in “a climate of continual harassment” and involved “a very strong sense of intrusion into their private life.”3
The European Court of Justice applied the European conception of privacy to the Internet when it ruled that its citizens have the “right to be forgotten.” A Spaniard petitioned the court to force Google to remove information about the auction sale of his repossessed home. He argued that this reference was irrelevant because the matter had been resolved years earlier. He asked Google to remove the pages and to ensure that news of the auction no longer appeared in search results. The Court of Justice agreed, declaring that individuals have a limited right to ask search engines to remove links with personal information if the information is “inaccurate, inadequate, irrelevant or excessive.”4 This judgment applies to all current or future Internet providers operating in Europe.
In response to the ruling, Google, which handles an estimated 85% of Europe’s web traffic, set up a system to handle data removal requests. Applicants fill out an online form that is submitted to a team within Google’s legal department, which weighs the request against the public interest. If the request is approved, the search engine then removes the web link within the 28 nations of the European Union as well as in Iceland, Norway, Switzerland, and Liechtenstein. (The link would still be visible outside the region.) Country data-protection regulators will decide in cases where individuals dispute Google’s decision. Initially 70,000 requests came in to remove personal information. Several links to stories in The Guardian newspaper, including articles about a disgraced soccer referee and the ouster of former Merrill Lynch CEO Stanley O’Neill, were among the first to be removed. Google later restored several of these links after free speech advocates and journalists complained. However, opponents of the right to be forgotten worry that prominent people and corporations will use the system to delete unfavorable information about them.
The European Parliament is expected to pass digital privacy legislation that would expand the right to be forgotten to social media providers like Facebook as well as to e-commerce sites. Some U.S. observers argue that American citizens should have the same right to maintain their electronic dignity as Europeans. They then could petition Google, Bing, Yahoo, and other providers to take down embarrassing personal photos, criminal convictions and mug shots, old bankruptcy filings, caustic blog posts, and other items they would like to leave in their pasts.
Discussion Probes
1. What does the right to privacy mean to you? The right to be left alone or the right to maintain your dignity?
2. What should take precedence—the right of privacy or the right of free speech?
3. What do you think constitutes “inaccurate, inadequate, irrelevant or excessive” information on the Internet? Can you think of any examples?
4. Should American citizens “have the right to be forgotten”?
5. What information should never be deleted from the Internet?
Notes
1. Chow (2013).
2. Learning from Europe’s ‘right to be forgotten’ (2013).
3. Learning from Europe’s ‘right to be forgotten’ (2013).
4. Factsheet on the “Right to be Forgotten’ ruling. (2014, May 13). European Commission. Additional sources for this section are Google restores links to some news articles after outcry (2014); Scott (June 18, 2014; July 5, 2014); Spanier (2014).
Becoming a World Citizen
A number of scholars argue that cosmopolitanism is the best way to meet the ethical challenges of globalization while avoiding ethnocentrism. Since we live in a global society, they argue, we should consider ourselves citizens of the world (cosmopolitans) rather than of one particular nation-state. This approach acts as an “ethics of strangers” in a world where we increasingly interact with those outside our cultural group.8
Cosmopolitanism has a long history in Western philosophy, stretching back to the ancient Greek Stoic philosophers who believed that our responsibilities extend to strangers as well to acquaintances. Immanuel Kant proposed the creation of an international legal authority to regulate relations between nations. He encouraged hospitality toward foreigners.9 Modern cosmopolitans take a humanistic approach to globalization based on the fundamental premise that every human being has dignity and value, regardless of their location, status, or background. They have a strong sense of global justice and work to ensure human rights. Their sense of care or empathy for the needs of others extends well beyond their immediate group to helping the “distant needy”—the less privileged who are often found in the world’s developing nations. Cosmopolitans believe that they have a moral obligation or duty to act on that concern by providing assistance to others around the world. In particular, cosmopolitans argue that affluent businesses and nations have a responsibility to give to less fortunate people and nations.10 Some other values and norms underlying ethical cosmopolitanism include the following:11
1. Limitations on patriotism and the sovereignty of countries
2. Opposition to nationalism
3. Commitment to aid those suffering from natural or human-made disaster, which includes extreme poverty
4. Liberalization of immigration and refugee policies
5. Quest for lasting world peace
6. Prosecution of crimes against humanity
7. Submission to the rule of international law
8. Religious and cultural tolerance
9. Dialogue and communication across cultural and national boundaries
10. Viewing the world as single polity and community
Acting as a global citizen takes certain attitudes and skills, what British political and social theorist William Smith calls cosmopolitan “worldliness.”12 Worldliness means, first off, being self-reflexive. To be self-reflexive, we need to step back from (create distance from) our relationships and culture in order to offer criticism and reform. Next, worldliness involves compassion for the world’s people and working to create institutions and laws that will protect the less fortunate. However, worldliness does not mean feeling pity for others but having a sense of solidarity with them. Third, worldly individuals have the necessary skills to bring about change through setting strategy, persuading others, working with governments and nonprofits to promote global initiatives, and so forth.
Being totally cosmopolitan may be impossible given the fact that, as we noted earlier, humans naturally band together in local groups. And you might take issue with some of the tenets of cosmopolitanism, such as its rejection of patriotism and promotion of a world government. Nevertheless, cosmopolitans offer an attractive normative framework for living ethically in a global society. They encourage us to be altruistic, becoming compassionate citizens of the world who keep the dignity of all human beings in mind. We do need to be able to step back from, and then critique, our cultural norms and values. If we fail to distance ourselves, we blindly follow our cultural programming no matter how unethical our culture’s practices.
Understanding Ethical Diversity
Ethical decisions and practices are shaped by widely held cultural values. Every culture has its own set of ethical priorities; however, researchers have discovered that ethnic groups and nations hold values in common. As a result, cultures can be grouped according to their value orientations. Understanding these orientations helps explain ethical differences and enables us to better predict how members of other societies will respond to moral dilemmas. Three widely used cultural classification systems include Hofstede’s programmed value patterns, the GLOBE studies, and moral foundations theory.
1. Programmed Value Patterns
Geert Hofstede of the Netherlands argues that important values are “programmed” into members of every culture. To uncover these value dimensions, he conducted the first extensive international investigation of cultural value patterns, surveying more than 100,000 IBM employees in 50 countries and three multicountry regions.13 He then checked his findings against those of other researchers who studied the same countries. Four value orientations emerged:
· Power distance. The first category concerns how societies deal with human inequality. While status and power differences are universal, cultures treat them differently. In high–power distance cultures (Malaysia, Guatemala), inequality is accepted as part of the natural order. Leaders are set apart and enjoy special privileges and make no attempt to reduce power differentials. Low–power distance cultures (Israel, Austria), on the other hand, are uneasy with large gaps in wealth, power, privilege, and status. Superiors tend to downplay status and power differentials, and such societies stress equal rights.
· Individualism versus collectivism. This category divides cultures according to their preference for either the individual or the group. Individualistic cultures (the United States, Australia, Great Britain) put the needs and goals of the person and her or his immediate family first. Members of these cultures see themselves as independent actors and believe that everyone should take care of themselves and their immediate family. In contrast, collectivistic cultures give top priority to the desires of the larger group—extended family, tribe, community. Members of these societies (Guatemala, Ecuador, Panama) think in terms of “we,” not “I.” They want to fit into the collective, not stand out. (You can determine your level of individualism and collectivism by completing Self-Assessment 13.1.)
· Masculinity versus femininity. The third dimension reflects attitudes toward the roles of men and women. Highly masculine cultures (Japan, Austria, Saudi Arabia) maintain clearly defined sex roles. Men are expected to be tough and focus on performance; women are to be tender and focus on relationships. Men should be ambitious and assertive, while women are expected to care for the weak. Feminine cultures (Sweden, Norway, Netherlands) blur the differences between the sexes. Both men and women can be competitive and caring, assertive and nurturing. These cultures are more likely to stress cooperation, quality of life, and concern for others.
· Uncertainty avoidance. This dimension describes the way in which cultures respond to uncertainty about the future. Members of high–uncertainty avoidance societies (Greece, Portugal, Uruguay) feel anxious about uncertainty and view it as a threat. They are less likely to break the rules; they value loyalty to the company, accept directives from those in authority, and view outsiders and change as threats. In addition, they are reluctant to change jobs or to express dissatisfaction with their current employers. People who live in low–uncertainty avoidance cultures (Sweden, Denmark, Jamaica) are more comfortable with uncertainty, viewing ambiguity as a fact of life. They experience lower stress and are more likely to pursue their ambitions by, for example, starting a new company or accepting a new job in another part of the country. These people tend to trust their own judgments instead of obeying authority figures. As a result, they are more likely to break rules and regulations.
Hofstede argues that the value patterns he identifies have a significant influence on ethical behavior.14 For instance, countries that are masculine, high–power distance, and high–uncertainty avoidance are generally more corrupt. Masculine European countries give little to international development programs but invest heavily in weapons. Feminine European nations do just the opposite. High–uncertainty avoidance cultures are prone to ethnocentrism and prejudice because they follow the credo “What is different is dangerous.” Low–uncertainty avoidance cultures follow the credo “What is different is curious” and are more tolerant of strangers and new ideas.
Other researchers have also linked Hofstede’s value patterns to ethical attitudes and behavior.15 They have discovered that members of feminine cultures are more sensitive to the presence of moral issues. Consumers from societies characterized by short-term orientation, low power distance, and low uncertainty avoidance generally punish socially irresponsible firms. Corporate governance is better in individualist societies as compared to masculine, high uncertainty societies. Accounting organizations from high individualism/high uncertainty avoidance cultures are less likely to adopt global codes of ethics because they don’t want to submit to the authority of outside, international organizations. Individualistic countries prefer universal ethical standards such as Kant’s categorical imperative. Collectivistic societies take a more utilitarian approach, seeking to generate the greatest good for in-group members.
Individualistic and collectivist societies have different communication patterns, which also shape the ethical behavior of citizens.16 Individualists use low-context communication in which most of the information in the message is embedded in the message itself. In nations like Germany and Switzerland, communicators directly express their thoughts and feelings as clearly as possible and rely heavily on carefully crafted written messages like contracts. To them, conflict should be faced head-on. Collectivists engage in high context communication where most of the information is contained in the situation or context where the message is delivered. Speakers in Japan and other high-context cultures communicate indirectly, rarely expressing direct disagreement, for example. They are more interested in maintaining harmony in the group than in expressing their true thoughts and feelings and often avoid direct confrontation. As a consequence, followers are much less likely to confront unethical superiors or coworkers or to blow the whistle on corporate misbehavior.17 They are more willing to sacrifice the truth to save “face” and to protect their group.
Additional examples of how individualism and collectivism affect ethical decisions are presented in Table 13.1.
Self-Assessment 13.1
Individualism/Collectivism Scale
Instructions: This questionnaire will help you assess your individualistic and collectivistic tendencies. Respond by indicating the degree to which the values reflected in each phrase are important to you: “Opposed to My Values” (answer 1), “Not Important to Me” (answer 2), “Somewhat Important to Me” (answer 3), “Important to Me” (answer 4), or “Very Important to Me” (answer 5).
· _______ 1. Obtaining pleasure or sensuous gratification
· _______ 2. Preserving the welfare of others
· _______ 3. Being successful by demonstrating my individual competency
· _______ 4. Restraining my behavior if it is going to harm others
· _______ 5. Being independent in thought and action
· _______ 6. Having safety and stability of people with whom I identify
· _______ 7. Obtaining status and prestige
· _______ 8. Having harmony in my relations with others
· _______ 9. Having an exciting and challenging life
· _______ 10. Accepting cultural and religious traditions
· _______ 11. Being recognized for my individual work
· _______ 12. Avoiding the violation of social norms
· _______ 13. Leading a comfortable life
· _______ 14. Living in a stable society
· _______ 15. Being logical in my approach to work
· _______ 16. Being polite to others
· _______ 17. Being ambitious
· _______ 18. Being self-controlled
· _______ 19. Being able to choose what I do
· _______ 20. Enhancing the welfare of others
Scoring
To find your individualism score, add your responses to the odd-numbered items. To find your collectivism score, add your responses to the even-numbered items. Both scores will range from 10 to 50. The higher your scores, the more individualistic or collectivistic you are.
SOURCE: Gudykunst, W. B. (2004). Bridging differences: Effective intergroup communication (4th ed.). Thousand Oaks, CA: Sage. Used by permission.
2. Project GLOBE
Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) is an ongoing international effort. To date, 200 researchers from around the world have gathered data from more than 17,000 managers in 62 countries. The goal of the project is to identify the relationship between cultural values and effective leadership behaviors. This information can help managers become more successful in cross-cultural settings. The GLOBE researchers incorporate into their study Hofstede’s dimensions of power distance, uncertainty avoidance, gender differentiation (masculinity and femininity), and individualism versus collectivism. However, they also extend Hofstede’s list by identifying four additional values patterns:18
SOURCE: Carroll, S. J., & Gannon, M. J. (1997). Ethical dimensions of international management. Thousand Oaks, CA: Sage. Copyright © 1996, SAGE Publications, Inc. Used by permission.
· Performance orientation. This is the “extent to which a community encourages and rewards innovation, high standards, and performance improvement.”19 Places such as Hong Kong, Singapore, and the United States are results focused. Citizens value competition and materialism and want to be rewarded for individual achievement. In countries such as Russia, Italy, and Argentina, people put loyalty and belonging ahead of performance. They are uncomfortable with competition and merit pay and put more weight on someone’s seniority, family, and background than on his or her performance.
· Future orientation. This is the extent to which a society fosters and reinforces such future-oriented activities as planning and investing (Singapore, Switzerland, the Netherlands) rather than immediate rewards (Russia, Argentina, Poland).
· Assertiveness. Assertiveness is defined as the extent to which a culture encourages individuals to be tough, confrontational, and competitive, as opposed to modest and tender. Spain and the United States rate high on this dimension; Sweden and New Zealand rate low. Those in highly assertive societies have a take-charge, can-do attitude and value competition. They admire the strong and assertive and are not particularly sympathetic to the weak and less fortunate. Members of less assertive cultures place more value on empathy, loyalty, and solidarity. They have empathy for the weak and want to live in harmony with the environment rather than control it.
· Humane orientation. Humane orientation refers to the extent to which a culture encourages and honors people for being altruistic, caring, kind, fair, and generous. Support for the weak and vulnerable is particularly high in such countries as Malaysia, Ireland, and the Philippines. Members of society care for one another and rely much less on the government. In contrast, power and material possessions are more likely to motivate people in the former West Germany, Spain, and France; self-enhancement takes precedence. Individuals are to solve their own problems, and the state provides more support for the less fortunate.
The GLOBE values dimensions have also been linked to ethical diversity. People oriented toward the future will save and invest. They will condemn those who live in the moment and spend all they earn. Future-oriented organizations are also more likely to engage in practices that benefit society. Competition, direct communication, power, and personal advancement are applauded in assertive, performance-oriented, less humane groups. These elements are undesirable to people who put more value on harmony, cooperation, family, and concern for others. Those living in assertive, performance-oriented cultures are tempted to engage in unethical activities in order to succeed. The businesses they create are more likely to be focused on shareholders, profits, and results instead of on stakeholders and social responsibility (including care for the environment).20 Countries high in uncertainty avoidance and future orientation are more likely to protect intellectual property than cultures high in humane orientation and in-group collectivism.21
3. Moral Foundations Theory
Hofstede and the GLOBE researchers treat ethical diversity as just one of the outcomes of cultural diversity. In contrast, moral foundations theory was developed specifically to account for the ethical differences between cultures. University of Virginia moral psychologist Jonathan Haidt and others believe that to understand ethical diversity we first need to understand the psychological systems or foundations of morality. These mental foundations, which are part of our genetic makeup, enable humans to successfully live together in groups. Cultures shape how these systems are used, emphasizing one or more values over the others. Haidt compares these moral systems to taste buds. Nearly everyone is born with the same set of taste receptors, but each culture develops its own cuisine, which highlights different tastes.
Haidt identifies five foundations for our moral intuitions.22 They include the following:
· Harm/care. All species are sensitive to suffering in their own offspring, but for primates and humans sensitivity to suffering extends beyond the family. We can also feel compassion for outsiders. Attuned to cruelty and harm, we generally approve of those who prevent or alleviate suffering. Kindness and compassion are therefore important human virtues. However, the other moral foundations described below temper the amount of compassion that individuals in different cultures display.
· Fairness/reciprocity. Reciprocity—paying back others—is essential for the formation of alliances between individuals who are not related to each other. As a result, all cultures have virtues related to justice and fairness. Individual rights and equality are highly prized in the West. However, many traditional societies put little value on personal autonomy or equal treatment.
· In-group/loyalty. Trust and cooperation have been critical to human survival. Individuals need to work effectively with others in their group while being wary of outsiders. As a result, they value those who sacrifice on behalf of the in-group while despising members who don’t come to their aid in times of conflict. They are disturbed when fellow citizens challenge symbols of group unity, like the pledge of allegiance to the national flag.
· Authority/respect. Hierarchy is fact of life in primate as well as human groups. Dominant individuals get special perks but are expected to provide services (e.g., protection, food) in return. Primates rely on brute strength to assert their authority; people use such factors as prestige and deference. Followers in many cultures feel respect, awe, and admiration for leaders and expect them to act like wise parents. Many of these same societies make virtues out of duty, obedience, respect, and other subordinate behaviors.
· Purity/sanctity. Only humans appear to feel disgust, which helps to protect the body against the transmission of disease through corpses, feces, vomit, and other possible contaminants. Disgust has a social dimension as well, becoming associated with those who are diseased or deformed or with certain occupations (gravediggers and those who dispose of excrement, for example). Members of most cultural groups admire those who are spiritually minded or pure and disapprove of individuals who seem to be ruled by lust, gluttony, greed, and uncontrolled anger. For example, in the United States, one of the most materialistic societies in the world, most citizens still look down on those who regularly “shop until they drop.”
The United States and many other Western nations largely focus on reducing harm and promoting autonomy. But as Haidt points out, that is not the case in much of the rest of the world. In Brazil, morality is based on loyalty, family, respect, and purity in addition to care. Confucian and Hindu value systems emphasize authority and stability. Muslim societies place a high priority on purity, which is reflected in the segregation of men and women and separation from infidels. Haidt urges us to keep all five moral systems in mind when dealing with diverse groups. Purity and authority may not be important to us, but they are to a great proportion of the world’s population. Our ethical appeals will be most effective if they speak to loyalty, authority, and purity in addition to care and fairness. (Complete Self-Assessment 13.2 to determine which moral intuitions are most important to you.)
Professor Haidt developed his theory to explain moral differences between cultures, but he soon discovered that moral foundations explain the differences between liberals and conservatives in the United States.23 Contrasts between these political philosophies further demonstrate how the moral foundations shape ethical attitudes. Haidt believes that the purity/sanctity dimension is the best predictor of positions on abortion, for example. American liberals who value autonomy want to preserve the woman’s right to choose, and conservatives want to preserve the sanctity of the fetus. Authority predicts competing attitudes toward gay marriage. Liberals believe that individuals have a right to do as they choose if they don’t hurt anyone else. In their minds, opposition to gay marriage is homophobic. Conservatives, on the other hand, see gay marriage as a threat to the family, which serves as the foundation of society. Those on the political left and right are also divided by their attitudes toward loyalty. Liberals believe that citizens can protest against a war while at the same time supporting the soldiers fighting in the conflict. This argument offends conservatives, who believe it is unpatriotic to protest when the country is at war.
Self-Assessment 13.2
Moral Foundations Questionnaire
Part I. Moral Relevance
When you decide whether something is right or wrong, to what extent are the following considerations relevant to your thinking? Please rate each statement using this scale:
0 = not at all relevant, 1 = not very relevant, 2 = slightly relevant, 3 = somewhat relevant, 4 = very relevant, 5 = extremely relevant.
1. Whether or not someone suffered emotionally.
2. Whether or not someone cared for someone weak or vulnerable.
3. Whether or not some people were treated differently from others.
4. Whether or not someone acted unfairly.
5. Whether or not someone’s action showed love for his or her country.
6. Whether or not someone did something to betray his or her group.
7. Whether or not someone showed a lack of respect for authority.
8. Whether or not someone conformed to the traditions of society.
9. Whether or not someone violated standards of purity and decency.
10. Whether or not someone did something disgusting.
· Part II. Moral Judgments
Please read the following sentences and indicate your agreement or disagreement.
0 = strongly disagree, 1 = moderately disagree, 2 = slightly disagree, 3 = slightly agree, 4 = moderately agree, 5 = strongly agree
11. Compassion for those who are suffering is the most crucial virtue.
12. One of the worst things a person could do is hurt a defenseless animal.
13. When the government makes laws, the number one principle should be ensuring that everyone is treated fairly.
14. Justice is the most important requirement for a society.
15. I am proud of my country’s history.
16. People should be loyal to their family members, even when they have done something wrong.
17. Respect for authority is something all children need to learn.
18. Men and women each have different roles to play in society.
19. People should not do things that are disgusting, even if no one is harmed.
20. I would call some acts wrong on the grounds that they are unnatural.
Scoring
Add up the scores on each moral foundation (range 0–20). The higher the score, the more important that foundation is to you.
· Harm: Items 1, 2, 11, 12 ______
· Fairness: Items 3, 4, 13, 14 ________
· Ingroup/Loyalty: Items 5, 6, 15, 16 ______
· Authority: Items 7, 8, 17, 18 ______
· Purity: Items 9, 10, 19, 20 _____
SOURCE: Graham, J., Nosek, B. A., Haidt, J., Iyer, R., Koleva, S., & Ditto, P. H. (2011). Mapping the moral domain. Journal of Personality and Social Psychology, 101, 366–385. Copyright © 2016 by the American Psychological Association. Reproduced with permission.
Finding Moral Common Ground
Some organizations and their members respond to ethical diversity by practicing ethical relativism, which is conformity to local customs. Ethical relativism avoids the problem of ethnocentrism while simplifying the decision-making process. We never have to pass judgment and can concentrate on fitting in with the prevailing culture. However, this approach is fraught with difficulties. Without shared standards, there is little hope that people of the world can come together to tackle global problems. There is no basis upon which to condemn the actions of governments (like Sudan, for example) that are engaged in genocide and torture or to criticize businesses that exploit their employees and the environment. Cultural relativism obligates us to follow (or as least not to protest against) abhorrent local practices like female genital mutilation. Without universal rights and wrongs, we have no grounds for contesting such practices.
There appears to be a growing consensus that ethical common ground can be found. In fact, the existence of common moral standards has enabled the world community to punish crimes against humanity in Germany, Serbia, and Rwanda. Responsible multinational corporations like Starbucks, The Body Shop, and Proctor & Gamble adhere to widely held moral principles as they do business in a variety of cultural settings. Activist groups use these same guidelines to condemn irresponsible firms.
One group of researchers used the “trolley problem” to determine if there are similarities in cross-cultural reasoning.24 In the trolley problem, an out-of-control trolley threatens to kill five people unless immediate action is taken. In one case, the trolley operator is incapacitated, and a passenger has to decide whether or not to throw a switch that will divert the vehicle to safety on a side track (and save the five passengers) but will kill a pedestrian who happens to be standing on the rails. In the other case, someone standing by the tracks must decide whether or not to directly intervene by throwing another bystander into the path of the trolley to slow it down and save the five passengers.
Responses to the trolley problem from 30,000 subjects in 120 countries revealed widespread agreement across all groups, regardless of nationality, educational level, or religion. By a significant margin, participants said it was justified to throw the switch to save the trolley passengers but not to throw someone onto the tracks to accomplish the same goal. Respondents reported that throwing a switch is an impersonal act, and they saw the death of the pedestrian as an unfortunate consequence. On the other hand, throwing a bystander onto the track is a deliberate, highly personal act that makes the victim a means to an end.
The hypothetical trolley problem has parallels in real life. For example, most of us would allow terminally ill patients to refuse treatment and thus die sooner than they would have with the additional care. (This approach is similar to throwing the trolley switch.) However, it is illegal in most states to give a drug overdose to hasten a terminally ill patient’s death (which raises the same concerns as throwing a bystander onto the trolley track).
Universal standards provide additional evidence that members of diverse societies can find moral common ground. Such global standards have enabled members of the world community to punish crimes against humanity and to create the United Nations and its Universal Declaration of Human Rights. I’ll describe three different approaches to universal ethics, any one of which could serve as a worldwide standard. You’ll note a number of similarities between the lists. Decide for yourself which approach or combination of approaches best captures the foundational values of humankind (see Application Project 5 at the end of the chapter).
The United Nations Universal Declaration of Human Rights
Human rights are granted to individuals based solely on their status as persons. Such rights protect the inherent dignity of every individual regardless of background. Rights violations are unethical because they deny human value and potential.25
The most influential list of basic human rights was adopted by the United Nations immediately following World War II, a conflict fought in large part to protect human freedoms. Among the key rights spelled out in the universal declaration are the following:26
Article 4. No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.
Article 5. No one shall be subjected to torture or to cruel, inhuman, or degrading treatment or punishment.
Article 9. No one shall be subjected to arbitrary arrest, detention, or exile.
Article 13. Everyone has the right to freedom of movement and residence.
Article 17. Everyone has the right to own property alone as well as in association with others.
Article 19. Everyone has the right to freedom of thought, conscience, and religion.
Article 25. Everyone has the right to a standard of living adequate for the health and well-being of himself [or herself] and of his [or her] family.
Article 26. Everyone has the right to education.
In 2000, the United Nations launched a program called the Global Compact (GC) to encourage multinational corporations to honor human rights, labor rights, and the environment. Members agree to the principles outlined in Ethics in Action 13.1 and specify how they are complying with these guidelines. Nonprofit watchdog groups meet regularly with corporate representatives to talk about their firms’ performance. Membership in the Global Compact has grown rapidly. It is now the largest voluntary corporate citizen group in the world. However, there is considerable debate about the effectiveness of this organization. Critics argue that the UN leaders have weakened the Compact’s standards in order to attract new members and they claim that there is little evidence that the GC has improved the conduct of member firms. GC staff and supporters argue, on the other hand, that the Global Compact has contributed to growing consensus about moral norms for global business. They point to the contrasting responses of Nike and Apple to mistreatment of overseas workers as evidence of that fact. It took Nike 20 years to take responsibility for the behavior of subcontractors after initial criticism in the 1970s. Apple responded immediately in 2012 to reports that Foxconn, a major contract supplier in China, was forcing employees to work long hours for low wages in unsafe conditions, all while living in overcrowded dormitories. The Global Compact has also sponsored initiatives to reduce bribery in India, Brazil, Nigeria, Egypt, and South Africa.27
Ethics in Action 13.1 United Nations Global Compact: The Ten Principles
Human Rights
· Principle 1: Businesses should support and respect the protection of international human rights within their sphere of influence; and
· Principle 2: make sure that they are not complicit in human rights abuses.
Labour
· Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
· Principle 4: the elimination of all forms of forced and compulsory labour;
· Principle 5: the effective abolition of child labour; and
· Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
· Principle 7: Businesses should support a precautionary approach to environmental challenges;
· Principle 8: undertake initiatives to promote greater environmental responsibility; and
· Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
· Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
SOURCE: United Nations Global Compact: The ten principles. Retrieved from http://unglobalcompact.org.
The Global Business Standards Codex
Harvard business professor Lynn Paine and her colleagues argue that outstanding (“world-class”) corporations base their codes of ethics on a set of eight universal, overarching moral principles.28 Paine’s group came to this conclusion after surveying a variety of global and corporate codes of conduct and government regulations. They offer the following Global Business Standards Codex as a benchmark for those who want to conform to universal standards of corporate conduct.
1. Fiduciary principle. Act on behalf of the company and its investors. Be diligent and loyal in carrying out the firm’s business. As a trustee, be candid (open and honest).
2. Property principle. Respect and protect property and the rights of its owners. Don’t steal or misuse company assets, including information, funds, and equipment. Avoid waste and take care of property entrusted to you.
3. Reliability principle. Honor all commitments. Keep promises and follow through on agreements even when they are not in the form of legally binding contracts.
4. Transparency principle. Do business in a truthful manner. Avoid deceptive acts and practices and keep accurate records. Release information that should be shared in a timely fashion but maintain confidentiality and privacy as necessary.
5. Dignity principle. Respect the dignity of all who come in contact with the corporation, including employees, suppliers, customers, and the public. Protect their health, privacy, and rights. Avoid coercion. Promote human development instead by providing learning and development opportunities.
6. Fairness principle. Deal fairly with everyone. Engage in fair competition, provide just compensation to employees, and be evenhanded in dealings with suppliers and corporate partners. Practice nondiscrimination in both employment and contracting.
7. Citizenship principle. Act as a responsible member of the community by (a) obeying the law, (b) protecting the public good (not engaging in corruption, protecting the environment), (c) cooperating with public authorities, (d) avoiding improper involvement in politics, and (e) contributing to the community (e.g., economic and social development, giving to charitable causes).
8. Responsiveness principle. Engage with groups (neighborhood groups, activists, customers) that may have concerns about the company’s activities. Work with other groups to better society while not usurping the government’s role in protecting the public interest.
The Caux Principles
The Caux Round Table is made up of corporate executives from the United States, Japan, and Europe who meet every year in Caux, Switzerland. Round Table members believe that businesses should improve economic, social, and environmental conditions and hope to set a world standard by which to judge business behavior. Their principles are based on twin ethical ideals. The first is the Japanese concept of kyosei, which refers to living and working together for the common good. The second is the Western notion of human dignity, the sacredness and value of each person as an end rather than as a means to someone else’s end.29 The Caux Principles for Business, perhaps because they were written by corporate executives from around the world, have gained widespread support. Business schools in Latin America, Asia, Europe, and the United States have endorsed them, and a number of international firms have used them as a guide when developing their own mission statements and ethics codes. However, as Case Study 13.2 illustrates, many firms continue to fall short on these standards.
· Principle 1. Respect stakeholders beyond shareholders. 30 Businesses should have goals that extend beyond economic survival. Corporations have a responsibility to improve the lives of everyone they come in contact with, starting with employees, customers, shareholders, and suppliers, and then reaching out to local, national, regional, and global communities.
· Principle 2. Contribute to economic, social, and environmental development. Companies operating in foreign countries not only should create jobs and wealth but should also foster human rights, better education, and social welfare. Multinational corporations have an obligation to enrich the world community through the wise use of resources, fair competition, and innovation.
· Principle 3. Build trust by going beyond the letter of the law. Businesses ought to promote honesty, transparency, integrity, and keeping promises. These behaviors make it easier to conduct international business and to support a global economy.
· Principle 4. Respect rules and conventions. Leaders of international firms must respect both international and local laws in order to reduce trade wars, to ensure fair competition, and to promote the free flow of goods and services. They also need to recognize that some behaviors may be legal but still have damaging consequences.
· Principle 5. Support responsible globalization. Firms should support international trading systems and agreements and eliminate domestic measures that undermine free trade.
· Principle 6. Respect the environment. Corporations ought to protect and, if possible, improve the physical environment through sustainable development and by cutting back on the wasteful use of natural resources.
· Principle 7. Avoid illicit activities. Global business managers must ensure that their organizations aren’t involved in such forbidden activities as bribery, money laundering, supporting terrorism, and drug and arms trafficking.
After spelling out general principles, the Caux accord applies them to important stakeholder groups. Corporations following these standards seek to (1) treat customers and employees with dignity, (2) honor the trust of owners and investors, (3) create relationships with suppliers based on mutual respect, (4) interact fairly with competitors, and (5) work for reform and human rights in host communities. The Caux Round Table has also developed principles for moral governments and nongovernmental organizations (NGOs). Integrity is the fundamental principle for NGOs, which must serve the common good while remaining true to their mission. NGO staff members should not abuse the public trust or use their positions for personal gain. Grounded in integrity, NGOs need to retain their independence, respect international and local laws, take care to be truthful when advocating positions while recognizing the potential impact on governments and corporations, and be accountable by regularly reporting on their activities and finances.31
Resolving Ethical Cross-Cultural Conflicts
So far, we’ve established that (1) there are significant differences between cultures in how they respond to ethical issues, and (2) there are universal moral principles that apply across cultural boundaries. Reconciling these two facts when making ethical decisions is not easy. How do we respect ethical diversity while remaining true to global moral principles, for example? What do we do when two competing ethical perspectives appear to be equally valid? What set of standards should have top priority—those of the host nation or those of the international organization? Business ethicists Thomas Donaldson and Thomas Dunfee developed the integrated social contracts theory (ISCT) to help us answer questions like these.32
ISCT is based on the notion of social contracts, which are agreements that spell out the obligations or duties of institutions, communities, and societies. The model is integrative because it incorporates two kinds of contracts. The first kind of contract (macrosocial) sets the groundwork or standards for social interaction. Examples of ideal contracts include the requirement that governments respect the rights of people and help the poor. The second type of contract (microsocial) governs the relationships between members of particular communities—nations, regions, towns, professions, industries. These contracts are revealed by the norms of the group. Community contracts are considered authentic or binding if (1) members of the group have a voice in the creation of the norms, (2) members can exit the group if they disagree with prevailing norms, and (3) the norms are widely recognized and practiced by group members.
According to ISCT, universal principles (called hypernorms) act as the ultimate ethical standard in making choices. Communities have a great deal of latitude, or moral free space, to create their own rules, however, as long as these local norms do not conflict with hypernorms. Victim compensation provides one example of norms arising out of moral free space. In Japan (where the victim compensation system is unreliable), airline officials go in person to offer compensation to victims’ families after an accident. In the United States (where the compensation system is more reliable), payments are determined through court decisions.
Dunfee and Donaldson offer a number of guidelines for determining which norms should take priority. Three of these rules of thumb are particularly important. One, determine if the local practice is authentic (widely shared) and legitimate (in harmony with hypernorms). If it’s not, it should be rejected. Second, follow the legitimate local customs of the host community whenever possible. To return to our earlier compensation example, a U.S. airline official stationed in Japan should distribute compensation directly to crash victims’ families instead of relying on the Japanese court system. Third, give more weight to norms generated by larger communities. A norm embraced by a nation as a whole, for instance, should generally take precedence over the norm of a region. The U.S. government followed this guideline in overturning laws promoting racial discrimination in the South. A similar argument can be made for choosing the norm of gender equality—which has broad international acceptance—over the norms of a particular nation that discriminates against women. (You can test the ISCT model and the one that follows by applying them to one or more of the scenarios in Case Study 13.3 at the end of the chapter.)
University of Louisiana professors J. Brooke Hamilton, Stephen B. Knouse, and Vanessa Hill offer an alternative strategy for resolving cross-cultural ethical conflicts, one specifically designed for use in multinational enterprises (MNEs).33 They provide six questions (the HKH model) to guide managers in determining whether to follow the values of their firms or to adopt the practices of the host country instead. Decision makers don’t have to completely answer one question before moving onto the next. Instead, they can move ahead, returning to reconsider earlier questions as needed in order to clarify the final course of action.
1. What is the questionable practice (QP) in this situation? The first question identifies the nature of the problem, which may or may not have an ethical component. To qualify as an ethical conflict, the norms and values of the host country and the business must clash. A firm then has to determine whether to comply with local customs or to follow its own standards, which may mean leaving the host country.
2. Does the QP violate any laws that are enforced? Managers need to determine if the contested practice violates either the laws of their home country or the country where they are doing business. For example, the Foreign Corrupt Practices Act prevents U.S. firms from offering bribes anywhere in the world. Refusing to support government Internet censorship violates Chinese law.
3. Is the QP simply a cultural difference, or is it also a potential ethics problem? A questionable practice qualifies as an ethical issue if it seems to cause harm or violates widely accepted ethical principles like justice or human rights. For example, offering small gifts to show respect is standard business procedure in much of Asia. Gift giving doesn’t become an ethical issue unless significant sums are offered to bribe recipients at the expense of other parties.
4. Does the QP violate the firm’s core values or code of conduct, an industrywide or international code to which the firm subscribes, or a firmly established hypernorm? The answer to this question may differ based on whether a company is interested only in complying with the law or is also interested in living up to its values. For a compliance-only company, an action is ethical as long as it is legal. Managers are interested only in avoiding punishment or harm to the company. Corporations seeking both to comply with the law and to live out their values (compliance/integrity firms) follow a higher standard. They recognize that the law doesn’t condemn all forms of unethical behavior, and at the same time they empower their employees to base their decisions on core values. For example, workers at Motorola are encouraged to follow the firm’s guidelines, called “Uncompromising Integrity and Constant Respect for People.” Organizational decision makers can also base their choices on the widely accepted moral standards described earlier in the chapter.
5. Does the firm have leverage (something of value to offer) in the host country that allows the firm to follow its own practices rather than the QP? Companies with leverage have greater freedom to follow their own standards or to adapt their practices in a way that doesn’t violate their central principles. Leverage comes from contributing to the local economy, offering jobs, supplying currency that can be used for international trade, providing training, purchasing local goods and services, transferring technology to the regional economy, and having an ethical reputation. McDonald’s used its leverage to operate in Moscow without engaging in bribery and other forms of corruption endemic to the Russian economy. Of course, compliance-only companies don’t have to worry about using leverage, since they automatically follow local regulations.
6. Will market practices in the host country improve if the firm follows its own practices rather than the QP in the host country marketplace? This question should be considered only after determining the amount of leverage held by the firm. If the company has significant leverage, it has a responsibility to try to change prevailing practices by refusing to engage in the questionable practice. Improving the way business is done (by not offering bribes, for example) may encourage local firms to follow suit, and local residents will benefit as a result.
Chapter Takeaways
· In addition to providing significant benefits, globalization poses a number of ethical dangers, including increasing the gap between the haves and have-nots and promoting greed and corporate power at the expense of individuals.
· Overcome ethnocentrism—the tendency to see the world from your cultural group’s point of view—through dialogue, mindfulness, adoption of a pluralistic perspective, and the practice of personal virtues that promote global cooperation.
· Seeking to be a citizen of the world is one way to address the dangers of globalization while combating ethnocentrism. Cosmopolitanism encourages compassion for those outside our nations to extend aid to the less fortunate no matter how distant from us.
· Understanding the values that ethnic groups and nations hold in common helps explain ethical differences and better equips you to predict how members of other societies will respond to moral dilemmas. Common values orientations include power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance, performance orientation, future orientation, assertiveness, and humane orientation.
· Ethical differences between cultures can also be explained by the emphasis that various groups place on one or more of the following: harm/care, fairness/reciprocity, in-group/loyalty, authority/respect, purity/sanctity.
· Resist the temptation to practice cultural relativism. Instead, look for ethical common ground, found in such universal principles as the UN Universal Declaration of Human Rights, the Global Business Standards Codex, and the Caux Principles for Business.
· When making ethical decisions in global settings, balance universal principles with the need to honor local laws and values. Keep three key decision-making guidelines in mind: local customs must (1) conform to global standards or hypernorms; (2) give priority to the authentic, legitimate norms of the host country; and (3) whenever possible, give more weight to norms generated by larger communities. In cases involving conflicts between your company’s norms and those of the host country (questionable practices), empower employees to decide based on corporate values, and look for ways to leverage your firm’s influence to change local business practices.
Application Projects
1. Do you think the benefits of globalization outweigh its costs? Defend your position.
2. What do you think it means to be a “citizen of the world?” Should you strive to be a cosmopolitan? Why or why not? What would be some of the implications of living as a world citizen? Write up your response.
3. Select a culture, and write an analysis using the Hofstede and GLOBE dimensions. Determine how the culture rates on each dimension, and determine how this cultural profile shapes the ethical attitudes and behaviors of citizens. Write up your findings.
4. Is there a common morality that peoples of all nations can share? Which of the global codes described in the chapter best reflects these shared standards and values? If you were to create your own declaration of global ethics, what would you put in it?
5. What do your scores on Self-Assessment 13.1 and Self-Assessment 13.2 reveal about how your culture has shaped your values and ethical decision making?
6. Develop a case study based on the conflict between the ethical norms of different countries. Identify the values patterns that are contributing to this dilemma. Resolve the conflict using the guidelines provided by integrated social contracts theory or the HKH (questionable practices) model.
7. Create a case study based on a company or other organization that you believe is a good example of a global citizen.
8. Select one of the diversity scenarios in Case Study 13.3, and reach a conclusion based on concepts presented in the chapter.
Case Study 13.2
The High Cost of Cheap Clothes
Bangladesh’s Rana Plaza factory collapse in April 2013 was one of the worst industrial accidents of all time. Over 1,100 workers died and 1,800 more were injured when a nine-story building housing a collection of garment makers fell after support beams gave way. The day before, the building—which was designed for shops and offices and not the weight of heavy machinery—had been evacuated after video footage of cracks in the building was aired on a local television station. The building’s owner then told the media the building was safe and employees returned. (Some workers were threatened with the loss of a month’s pay if they didn’t show up for work.) The building imploded after diesel generators were started the next morning. This disaster came just a few months after a fire killed 112 workers making shorts and sweaters at another Bangladeshi clothing factory. (Another building collapse claimed 64 lives in 2005.)
In the aftermath of the tragedy, a group of clothing manufacturers, led by Primark (which markets Atmosphere and Denim Company brands) and Loblaw (maker of the Joe Fresh brand) created a compensation fund for victims and their families. Said Primark’s general counsel: “When you know where your clothes are made, then you take responsibility for the results of where your clothes are being made.”1 A Loblaw official noted, “We believe we have a moral obligation to support workers who are producing our products.”2 Several large retailers, including Walmart, Sears, The Children’s Place, JC Penney, Benetton, Matlan, and Carrefourt did not contribute to the fund, though Walmart and Children’s Place later relented. Some of the firms who refused to give claimed that they had no products being manufactured at Rana Plaza when the building collapsed. While this may officially be the case, factory owners in Bangladesh often turn to friends in the industry when they receive large orders they cannot fill on their own. As a result, unauthorized subcontractors may have been producing clothing for Walmart, Sears, and JC Penney that day.
Both European and U.S. retailers formed organizations to inspect Bangladeshi garment factories and to close them if they are structurally unsound, have faulty electrical boxes, or lack fire exits and sprinkler systems. However, efforts to even temporarily close unsafe factories have met with stiff resistance. Factory owners, who say they do not have money for repairs, fear they will lose large contracts to other manufacturers or to other countries. Workers fear that they will lose their jobs and not get paid. (Bangladesh has the lowest wage rates in the world, but garment workers still make more than most of their fellow citizens and the garment industry is credited with lifting many out of extreme poverty.) In at least one case, the Bangladeshi government sided with a company that refused to close down, perhaps because the garment industry accounts for 17% of the country’s economy and 75% of its exports. The worst offenders, who make up the vast majority of firms manufacturing for clothing export, are unregulated.
Industrial accidents in Bangladeshi garment factories will always be a significant threat as long as Western consumers continue to look for clothing bargains, paying more attention to the price tag than to where (and how) the garment was made. The demand for low-cost clothing puts pressure on retailers who, in turn, put pressure on their suppliers to keep costs down. According to the executive director of Worker Rights Consortium, little will change unless major retailers are willing to pay more: “The front line responsibility [for improving safety standards] is the government’s, but the real power lies with Western brands and retailers, beginning with the biggest players: Walmart, H & M, Inditex, Gap and others. The price pressure these buyers put on factories undermines any prospect that factories will undertake the costly repairs and renovations that are necessary to make these buildings safe.”3
Discussion Probes
1. How much attention do you pay to where your clothing is made? Have you ever refused to buy clothing manufactured in a certain country?
2. Do you think consumers could change factory conditions in Bangladesh and other developing countries if they agreed to pay more for their clothes? Would you pay more if you knew your garments were made in safer conditions by workers earning higher wages?
3. Should retailers help compensate the Rana Plaza victims even if they did not have contracts with factories operating in the building at the time of the tragedy?
4. Who should pay for factory improvements in Bangladesh—European and U.S. retailers or the garment manufacturers? Why?
5. If manufacturing standards are tightened, what might be some of the negative consequences for Bangladesh’s people, garment industry, and economy? How could some of these costs be reduced?
Notes
1. Greenhouse (2013).
2. Greenhouse (2013).
3. Manik and Yardley (2013). Additional sources for this section are Greenhouse and Manik (2014); Kennedy (2014); O’Connor (2014); Report: A year after Bangladesh disaster, retailers fail to address biggest factory risks (2014).
Case Study 13.3
Scenarios for Analysis
Layoffs in Saudi Arabia
You’re a British consultant sent to Saudi Arabia to have a look at a new joint venture your company has taken a stake in—a family-run, light manufacturing firm with 400 employees. You look at the books and mention that you think the workforce is terribly bloated. Output and revenue per employee are below average. You suggest laying off up to 20% of the workforce. The Saudi owners look at you in horror, saying that layoffs are downright unethical and that there is more to business than maximizing profits. You are equally horrified.
What will you do?
SOURCE: Mitchell (2003), p. 162.
Real Estate Guanxi
You are a licensed realtor who recently helped a family from Hong Kong find a new home in the San Francisco, California, area. Fortunately for you, locating a suitable property for your clients wasn’t hard and didn’t require much effort on your part. (It can be difficult to find reasonably priced housing in the Bay area, which is one of the most expensive regions of the United States.) In two weeks your clients made an offer that was accepted by the seller. At the home closing, after the papers were signed, the father of the family took you aside and gave you $2,000 in cash as a thank you gift. This money is an addition to your commission, which is a percentage of the home’s sale value. You know that gifts are frequently used to cement business relationships in China, part of the practice known as guanxi. However, you don’t believe that your effort on behalf of these clients merits any special consideration and worry that this “gift” could be seen as a “bribe.”
Would you accept the $2,000?
NOTE: For more information on the practice of guanxi, see Langenberg (2013).
The Warlord Tax
You are the CEO of a small international relief agency. Your group’s policy is never to pay bribes in any of the countries in which you operate, no matter how corrupt. The policy has not seriously hampered your operations until now. Severe famine has struck in the Horn of Africa, in an area controlled by armed warlords. In order for food to reach the 100,000 starving residents of the region, you must pay a “tax” to the local military commander in the form of money or foodstuffs. This “tax” is clearly a form of extortion and violates your antibribery policy and possibly U.S. law. Other international relief agencies pay the tax, so you know that food shipments won’t be completely cut off if your organization decides to pull out of the area. On the other hand, stopping shipments would significantly reduce food supplies to the region and could contribute to malnutrition and starvation.
Will you pay the warlord tax and continue the food shipments?
Note: This scenario is loosely based on actual events.
Shutting Down the Internet
You are in charge of Far East operations for a multinational Internet and cell phone company. Your firm recently became the largest provider for a small country in your region. Over the past month thousands of citizens have taken to the street to overthrow this nation’s repressive regime. Antigovernment forces rely heavily on e-mail, Facebook, Twitter, and phone calls to rally their supporters and to pressure government leaders to step down. To cripple the protest movement, the head of the nation’s security forces has demanded that your company shut down all service for a week. You believe the government has the authority to make this request and, if you don’t comply, will cut off service on its own and imprison your local employees. However, shutting off service puts you on the side of an authoritarian government and violates your company’s mission, which is to promote the free flow of information. Based on the response to a similar shutdown during antigovernment protests in Egypt, you expect heavy criticism from international human rights groups if you go along with the current government’s request.
Will you shut down Internet and cell phone service for a week?
NOTE: Thanks to Jonathan Cooley, Concordia University, Portland, Oregon, for bringing my attention to the issues raised in this case.
SOURCES: Beam, C. (2011, January 28). Block like an Egyptian. Slate.com. Garside, J. (2011, July 26). Vodaphone under fire for bowing to Egyptian pressure. The Guardian.
