The international context

1. The international context • Firms need to work globally to survive and prosper. • 9/11 as an attack on global capitalism? • Trend of outsourcing of jobs to less developed countries. • ‘At best, business ethics is difficult when we are dealing with one culture. Once we bring two or more cultures into consideration, it gets extremely complex.’ Buchholtz and Carroll page 392

2. Growth years 1955-70 • Troubled years 1970-80 • New International Order 1980- • World becomes ‘flat’ through shrinkage of distance , from Thomas Friedman • 1999: massive demonstrations against World Trade Organization at Seattle and elsewhere later

3. US and China 2007 • Import of dangerous products to US from China, pet food into US. Other cases which will lead to imports not continuing from China. Is this view too nationalistic and unfair? • Another backlash possible on safety grounds

4. Concepts of global business • Internationalization: conduct with firms from other countries. Examples are joint ventures overseas and exports • Globalization: ‘global economic integration of many former national economies into one global economy’ quote on page 394 • This means the ending of national boundaries for economic purposes. Many meanings such as expanded trade or factories shifting around the world

5. Backlash • Outsourcing - manufacturing and now white collar jobs. This process is seen to be bad for the American economy • In US North American Free Trade Association: US Canada and Mexico. Loss of US manufacturing jobs in those countries and China. • Clash between globalists and antiglobalists. • So is globalisation a negative force?

6. The multinational corporation • American MNCs no longer dominant 185 out of largest 500 EU with 126 Japan with 108 • ExxonMobil has annual revenues that exceed the GDP of all but 20 of the world’s 220 nations. • Operating in developing nations where there are charges of exploitation and abuse of power MNCs are open to charges of ‘capitalist imperialism’

7. Challenges for a MNC • Corporate legitimacy in host country, to fulfil its social responsibilities. So economic legal ethical and philanthropic responsibilities. • Cultures of different countries matter : US in Canada easy in Saudi Arabia hard. • Conflicting needs between host country seeking to optimize locally and MNC to operate globally. Clash of lifestyle values

8. Differing philosophies between MNC and host countries • Profits repatriation • MNC is exploitative and continues the dependency of poorer nation • See Buchholtz and Carroll figure 10.2 for tensions between country and company; tensions for Standards, Practices, Ethics Laws Culture Customs System of Government Socioeconomic System

9. Broader challenges • Business and government differences regulation and deregulation links of government to involvement with business: EU different from America (p402) • Structures to conform to host country HR home versus host country nationals • MNC cuts corners on safety? • Impact of products labour saving not important Nestle and baby milk scandal

10. Famous cases • Infant formula controversy – unethical marketing…Nestle kills babies… But AIDS an extra dimension. See separate case study • Plant safety and Bhopal: whose responsibility for safety and problem of ownership when local governments insist on equal or more shareholding??

11. Sweatshops human rights + labour abuses • Sweatshops : child labour low pay poor working conditions health and safety violations • Nike ‘A lightning rod for social activists’ extensive endorsement by superstars at vast cost against labourers wages • But MNCs will pay a much better labour rate than other local employers. • Companies aid and abet human rights abuses??

12. Corruption bribery questionable payments • Lockheed giving $12.5 million re $430 million of Tristar planes to Japan. Lockheed did not offer a bribe but Japanese official demanded it . • Improper enrichment • What are the arguments for and against bribery?

13. Globalisation and csr, a very brief view • A few slides from Sherer and Smid in Corporate Social Responsibility, Readings and cases in a global context, 2008, ed Crane Matten and Spence, Routledge,474 -495

14. Globalisation and csr. Responses and failures • Capitalism goes for cheapest production. • Multinational enterprises (MNEs) are ‘distancing themselves from the regulatory limits of individual nation states’ • Textile steel shipbuilding computer industries have gone out of the industrialised world. • Emergent and developing nations have less concern for health and safety at work

15. Nation states less and less powerful against this background. • Intergovernmental organisations like International Labor Organisation have little success on business to enforce social and environmental standards. • Leads to lower wages and working conditions • MNEs have flexibility to take advantages of different legal systems. • MNEs with higher gross national product than many nation states. • Banks bonuses and bankers?

16. Many states try to attract capital by watering down standards??? • Poor human rights records. • Nation states and MNEs are affected by world wide competition. Ruinous competition? • Various organisations such as ILO and UN, GATT WTO, and OECD for rising standard of living aspirations. • Non governmental organisations like Greenpeace to mobilize people with boycotts, such as Nestle. Sweatshops highlighted