2.3. Human rights

Corporations sometimes face dilemmas linked to operations in countries with governments accused of violating human rights.

A high-profile case was IBM scandal of doing business with the Nazis. In the 1930s and 1940s, IBM provided Hollerith punch cards to the Third Reich, which were used in the operational management of extermination camps [15].

In the 1970s, Polaroid stopped selling equipment to the government in apartheid South Africa when it learned that cameras were used to make IDs for the surveillance of dissidents. In 1993, Levi Strauss and Co. canceled contracts in China due to the systematic violation of human rights perpetrated by the government.

More recently, Google accepted the Chinese government's request to censor keywords like Tiananmen Square and Dalai Lama in its search engine. The CEO Eric Schmidt stated: "I think it is arrogant to enter a country where we are starting our operations and tell the country how to govern itself" [16].

2.5. Corruption

the size of Walmart? [23].

Chinese market [24, 25].

a response.

3.1. Governments

Corruption is a concept that agglomerates practices ranging from multi-million dollar payments to high government officials to a few dollars bribe to a low-level bureaucrat. It is estimated that over \$1 trillion are paid in bribes annually, which squanders public resources and deprives

The Moral Dilemmas of Global Business http://dx.doi.org/10.5772/intechopen.74833 107

Bribery in foreign operations was not always considered morally wrong. Some even saw it as a normal operating expense when doing business in emerging economies. German corporate law, while severely punishing bribery at home, considered foreign bribes as tax deductible expenses [20]. Attitudes toward bribery changed in the late 1970s after the US Congress passed the Foreign Corrupt Practices Act which outlawed paying bribes abroad for American companies. It is beyond doubt that bribing foreign officials to win a contract is immoral. However, less clarity exists in other situations. For example, is it acceptable to bribe a low-level bureaucrat to speed up a procedure he is supposed to do anyway? Small payments are tolerated in some countries and even rationalized by the need to supplement the meager salaries earned by public officials [21, 22]. It is not always clear, however, what should count as a "small payment". In April 2012, it was reported that Walmart paid more than \$24 million to Mexican officials to speed up permits to open new branches. Payments were made to expedite a process that officials should have executed anyway. Is \$24 million a "small payment" for a company

In some cases, cultural differences exist in the appropriate relationship between a company and its stakeholders. Following China's integration in the global economy, scholars became interested by the ethical status of guanxi, informal networks of favor exchange between companies and public officials. Since it is not a specific payment for a particular service, guanxi does not fit into the conventional definition of bribery. Advocates of guanxi argue that the definition of bribery is based on a Western concept of impartiality that is not necessarily shared by all cultures. Critics contend that guanxi is similar to Western mafia practices of "today you scratch my back and tomorrow I will scratch yours". It is unclear whether these exchanges of favors constitute a form of corruption or whether it is a legitimate way of doing business in the

3. The response from governments, civil society and corporations

As ethical dilemmas in international business became more widespread and complex, governments, civil society associations and corporations began to develop policies and agreements as

The response of governments to the new scenario of international business was an attempt to

manage the globalization process by creating transnational norms for corporations.

millions of food, education and other government services to which they are entitled.

#### 2.4. Cultural diversity

Principles of international law hold that corporations ought to respect the customs and culture of the communities where they operate [17]. Traditional values can be lost to the homogenizing trends introduced by globally integrated production processes and product promotion. Some amount of change is inevitable and certain local practices may not deserve protection if they violate important minimum global norms. However, when should a norm be respected because of cultural diversity considerations and when should it be ignored because it violates a global minimum?

A paradigmatic case occurs with gender equality. It is frequent that anti-discrimination standards clash with traditional customs or religious practice. Western corporations, which typically promote gender equality at home, often find themselves operating in societies intolerant against women. In Saudi Arabia, for example, gender separation is almost total and women are forbidden by law to practice many professions.

While companies usually justify discriminatory practices out of respect for local traditions, these arguments can be problematic: "As in Saudi Arabia today, South Africa maintained a system where a broad segment of society was discriminated against in all walks of life and under the authority of men without any fear of being considered responsible for their actions. The only difference was that the victims in South Africa were black; In Saudi Arabia, are women" [18].

In some cases, softer ways of discrimination exist. While Mexico does not have formal restrictions against women in the labor market, a widespread macho culture often operates as a glass ceiling [19]. Corporations face an unwritten rule that holds that women should not be in charge of a male team. Using the gender equality standard of the home country (not considering gender as relevant for defining team leadership) could be costly for the company, as employees may not perceive a female boss as a legitimate authority. However, respecting local traditions and denying promotion to a talented executive solely because of gender considerations would seem a violation of the principle of equal opportunity.

Sometimes, cultural diversity dilemmas manifest themselves in marketing decisions. Developed countries usually have strict regulations against dangerous substances such as tobacco. As change in customer preferences and health laws generated a decline in cigarette consumption in developed economies, tobacco companies shifted their attention and marketing dollars to emerging markets with different regulatory standards.

For example, US tobacco executives had to decide how to market tobacco in Egypt, where the minimum legal age to buy cigarettes is 14. Should the company use the home standard (abstain from marketing tobacco to people under 18) or the host standard? Is the 14-year-old threshold from Egypt below some global minimum or the result of cultural preferences about the age at which people should be responsible for choosing whether to smoke or not?

#### 2.5. Corruption

it is arrogant to enter a country where we are starting our operations and tell the country how

Principles of international law hold that corporations ought to respect the customs and culture of the communities where they operate [17]. Traditional values can be lost to the homogenizing trends introduced by globally integrated production processes and product promotion. Some amount of change is inevitable and certain local practices may not deserve protection if they violate important minimum global norms. However, when should a norm be respected because of cultural diversity considerations and when should it be ignored because it violates

A paradigmatic case occurs with gender equality. It is frequent that anti-discrimination standards clash with traditional customs or religious practice. Western corporations, which typically promote gender equality at home, often find themselves operating in societies intolerant against women. In Saudi Arabia, for example, gender separation is almost total and women

While companies usually justify discriminatory practices out of respect for local traditions, these arguments can be problematic: "As in Saudi Arabia today, South Africa maintained a system where a broad segment of society was discriminated against in all walks of life and under the authority of men without any fear of being considered responsible for their actions. The only difference was that the victims in South Africa were black; In Saudi Arabia, are

In some cases, softer ways of discrimination exist. While Mexico does not have formal restrictions against women in the labor market, a widespread macho culture often operates as a glass ceiling [19]. Corporations face an unwritten rule that holds that women should not be in charge of a male team. Using the gender equality standard of the home country (not considering gender as relevant for defining team leadership) could be costly for the company, as employees may not perceive a female boss as a legitimate authority. However, respecting local traditions and denying promotion to a talented executive solely because of gender consider-

Sometimes, cultural diversity dilemmas manifest themselves in marketing decisions. Developed countries usually have strict regulations against dangerous substances such as tobacco. As change in customer preferences and health laws generated a decline in cigarette consumption in developed economies, tobacco companies shifted their attention and marketing dollars

For example, US tobacco executives had to decide how to market tobacco in Egypt, where the minimum legal age to buy cigarettes is 14. Should the company use the home standard (abstain from marketing tobacco to people under 18) or the host standard? Is the 14-year-old threshold from Egypt below some global minimum or the result of cultural preferences about

the age at which people should be responsible for choosing whether to smoke or not?

ations would seem a violation of the principle of equal opportunity.

to emerging markets with different regulatory standards.

to govern itself" [16].

106 Globalization

2.4. Cultural diversity

a global minimum?

women" [18].

are forbidden by law to practice many professions.

Corruption is a concept that agglomerates practices ranging from multi-million dollar payments to high government officials to a few dollars bribe to a low-level bureaucrat. It is estimated that over \$1 trillion are paid in bribes annually, which squanders public resources and deprives millions of food, education and other government services to which they are entitled.

Bribery in foreign operations was not always considered morally wrong. Some even saw it as a normal operating expense when doing business in emerging economies. German corporate law, while severely punishing bribery at home, considered foreign bribes as tax deductible expenses [20]. Attitudes toward bribery changed in the late 1970s after the US Congress passed the Foreign Corrupt Practices Act which outlawed paying bribes abroad for American companies.

It is beyond doubt that bribing foreign officials to win a contract is immoral. However, less clarity exists in other situations. For example, is it acceptable to bribe a low-level bureaucrat to speed up a procedure he is supposed to do anyway? Small payments are tolerated in some countries and even rationalized by the need to supplement the meager salaries earned by public officials [21, 22]. It is not always clear, however, what should count as a "small payment". In April 2012, it was reported that Walmart paid more than \$24 million to Mexican officials to speed up permits to open new branches. Payments were made to expedite a process that officials should have executed anyway. Is \$24 million a "small payment" for a company the size of Walmart? [23].

In some cases, cultural differences exist in the appropriate relationship between a company and its stakeholders. Following China's integration in the global economy, scholars became interested by the ethical status of guanxi, informal networks of favor exchange between companies and public officials. Since it is not a specific payment for a particular service, guanxi does not fit into the conventional definition of bribery. Advocates of guanxi argue that the definition of bribery is based on a Western concept of impartiality that is not necessarily shared by all cultures. Critics contend that guanxi is similar to Western mafia practices of "today you scratch my back and tomorrow I will scratch yours". It is unclear whether these exchanges of favors constitute a form of corruption or whether it is a legitimate way of doing business in the Chinese market [24, 25].
