3.3. Corporations

In 1977, the Foreign Corrupt Practices Act was an early example of national regulation with international reach, since it affected the activities of American companies abroad. Enacted in the aftermath of the Enron and Worldcom frauds, the 2002 Sarbanes-Oxley Act established a set of ethical standards to be followed by every firm doing business in the USA. Because of the sheer size of the US economy, American regulators are in position of influencing corporate behavior around the world. Smaller societies, however, are vulnerable. Tight labor or environ-

Over the years, there has been growing awareness of the difficulties for nation states to solve a problem that is essentially global. This is why governments have sought regional and global agreements such as the Declaration on International Investment and Multinational Enterprises

In 1999, UN Secretary General Kofi Annan launched the Global Compact, establishing a set of principles on human rights, labor, environment and corruption taken from commitments made by governments at different UN pacts, such as the Universal Declaration (1948), the Rio Declaration on Environment and Development (1992), the International Labor Organization's Fundamental Principles and Rights at Work (1998) and the UN Convention Against Corrup-

In general, these initiatives only achieved limited results because no body exists with transnational political authority and enforcement capability. The difficulty of finding common intercultural values and the pressures of special interests to keep global economy free of regulation

On September 2015, a number of countries adopted the sustainable development goals (SDGs), a set of 17 global goals which cover a broad range of social issues like poverty, hunger, health, education, climate change, gender equality and social justice to be achieved by 2030. The SDGs are likely to become an important source of guidelines for the behavior of multinational

Global civil society actors have had some success in enforcing sanctions on companies engaging in unethical behavior, mostly through activism against abusive practices. Soft law influences corporate behavior, not through legal sanctions, but through awareness campaigns and

Nike faced international scandal when it was reported that its clothing was manufactured through a network of abusive contractors in Southeast Asia. After a 9-year boycott by the Rainforest Action Network (RAN), in 1998 Mitsubishi agreed to replace wood-based paper

In addition to boycotts triggered by specific situations, the global civil society has developed more formal attempts to create socially responsible standards. The fair trade movement created a fair trade certificate that guarantees that a product was not produced under abusive

also affected the efficacy of government initiatives to influence corporate behavior [29].

mental regulations may lead to capital flight to countries with lower standards.

[26] and the Declaration of Fundamental Principles and Rights at Work [27].

tion (2003) [28].

108 Globalization

3.2. Civil society

boycotts [31].

corporations in years to come [30].

with an eco-friendly one [32].

conditions and that a fair price was paid for raw materials.

While philanthropy and charity were always present in the business world, the idea that corporations have a moral obligation toward stakeholders beyond shareholders is quite recent. Corporate leaders began paying attention to corporate citizenship in the late 1990s, following waves of anti-globalization protests.

The main response of corporations to the moral challenges of globalization has been the development of global codes of ethics. The majority of individual company codes and industry-wide standards emerged after the mid-1970s. In the US, many came as a response to foreign bribery scandals while others reacted to broadly calls for greater social responsibility.

Codes of conduct help clarify internal policies and procedures, promote a common company identity among a diverse international workforce and communicate standards to external stakeholders. Voluntary codes can help encourage appropriate conduct and reduce pressures for mandatory government action.

Enderle developed a taxonomy of four typical philosophies that guide policy when domestic and foreign standards differ [34].

The Foreign Type adapts the practices of the subsidiaries to the laws and customs of the host country under the notion of "when in Rome, do as the Romans". The Imperial Type keeps home standards virtually unchanged. In the Interconnected Type, the company does not consider itself as being of a particular nationality but of a certain region, such as the European Union. In its foreign operations, it uses the region's standards. Finally, Global Type companies do not believe that belonging to a country is relevant for the practice of international business. These companies consider the fact that the parent company is, say, in the USA does not

influence, awareness increased about the risks posed by their activities on the environment, consumers and workers. Bowie argues that the field was born in November 1974, when the first business ethics conference was held at the University of Kansas [36]. In that context, business schools developed their first programs in ethics and social responsibility, generally

The Moral Dilemmas of Global Business http://dx.doi.org/10.5772/intechopen.74833 111

In the early 1970s, philosophical ethics entered business schools and concepts such as utilitarianism, deontology and virtue ethics started to be applied to corporate behavior. The pioneers, in general, faced a cold reception in the academy. Colleagues in philosophy departments did not perceive business as a philosophically interesting activity. Colleagues in business schools were skeptical about what a moral philosopher could bring to the moral common sense of

The relevance of business ethics was helped by the publication of John Rawls' A Theory of Justice in 1971 [37]. The book introduced distributive justice concerns into mainstream philosophical debate which included moral reflections on the role of multinational corporations [38, 39].

Management scholars started to address these issues in the 1980s with the seminal book Strategic Management: A Stakeholder Approach (1984) where Edward Freeman introduced stakeholder theory. This theory emphasized the moral and socio-political dimensions of decision making, in particular the consideration of the rights and interests of the different stakeholders of an organization, and not only the shareholders [40]. This movement was connected

The deepening of globalization and the international expansion of corporations generated moral dilemmas of increasing complexity. The common sense of executives became insufficient to make complex decisions about gender discrimination in foreign cultures or about drug

The first book to offer a systematic treatment of such issues was The Ethics of International Business [41] which uses a social contract device to elucidate the rules that a socially responsible multinational should follow. In Competing with Integrity in International Business, De George presents 10 moral principles that every company must meet anywhere in the world, including respect for human rights, local cultures and cooperation with government [42].

International business ethics research was deeply influenced by stakeholder theory [43]. This requires answering a series of questions about who the stakeholders are, what interests should be considered, and the nature of the balance to be reached. All this was conceptualized

According to this model, a multinational has four types of global responsibilities toward their

First, to generate economic performance. Companies are expected to produce goods and

Second, they have the responsibility of following the law in countries where they operate.

focused on the study of interactions between laws and business.

to the rise of corporate social responsibility among practitioners.

through the Pyramid of Corporate Social Responsibility [44–46].

services on a global scale and to sell them globally for a profit.

testing in developing countries.

stakeholders.

executives.

Figure 1. Answers from practitioners to the moral dilemmas of global business. Source: Own Elaboration.

generate any obligation to abide to US standards. An American company could use European standards on environmental issues and other rules for labor issues.

In addition to individual codes of ethics, corporations also developed voluntary agreements on standards for international business. In 1978, a group of US companies adhered to the Sullivan Principles for their operations in South Africa. They agreed not to respect the discriminatory labor laws of apartheid and to put pressure on the South African government for their abolition. The Sullivan Principles were a model for other voluntary codes such as the Caux Round Table, created in 1986 by former executives of multinational corporations in the USA, Europe and Japan.

In 1994, this organization proposed an international code of ethics based on principles of search for the common good and human dignity. It offers behavioral guidelines for consumers, employees, investors, suppliers, competitors and local communities (Figure 1) [35].
