1. Introduction

"The Gordian knot of international business ethics is formed around the vexing question, how should a company behave when the standards followed in the host country are lower than those followed in the home country?" [1].

Since the 1970s, globalization, deregulation and technological change triggered a rapid expansion of multinational corporations (MNCs) to every corner of the planet. By the year 2000, some 63,000 multinational companies with more than 690,000 foreign affiliates accounted for 25% of world production [2]. These "new Leviathans" became increasingly powerful and

> © 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

nation states lost their capacity to regulate them [3, 4]. Corporations took advantage of regulatory arbitrage, relocating to low tax jurisdictions and lax regulations on labor and environment. Multinationals structured global value chains by relocating purchase, sales, support and product development activities to locations where they could be done better, faster or cheaper [5].

strict worker safety norms had a cost of \$100 million. The company decided to outsource the job in Turkey, where the cost was only \$2 million. Since finally the Turkish authorities would not allow it for fear that workers would get cancer, the ship was towed to the Russian port of Sevastopol, where asbestos were removed for even less, thanks to even lower standards in

The Moral Dilemmas of Global Business http://dx.doi.org/10.5772/intechopen.74833 105

Technological progress triggered exponential growth in human ability to alter the environment. While this has countless benefits, it also raises a number of dilemmas about the use of

Texaco was accused of making irreversible damage to the Ecuador rainforest because of the use of low standards in the 1970s and 1980s. A similar case happened in southern Argentina's shale gas field of Vaca Muerta. Protests have arisen against the activities of oil companies YPF

In the late 1990s, the Finnish company Botnia planned the construction of a pulp mill in the city of Fray Bentos (Uruguay), on the shores of the Uruguay River near the border with Argentina. The project was heavily resisted by environmental advocacy groups. Botnia was accused of making extra profits by following lower environmental standards than in the home

Another frequent international environmental dilemma is related to toxic waste. It is estimated that a considerable part of China's arable land is polluted with lead, zinc and other heavy metals exported from developed economies. Old computers that are discarded in the United States usually end up in China, where the cost of disposal is 90% lower [14]. Some emerging economies have sought to attract foreign direct investment by lowering environmental standards, in a phenomenon known as "race to the bottom" and the creation of countries that work

Corporations sometimes face dilemmas linked to operations in countries with governments

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

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

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

natural resources in societies with poor environmental regulations [12].

and Chevron for using allegedly low environmental standards in fracking [13].

worker safety.

country.

as "pollution havens".

accused of violating human rights.

management of extermination camps [15].

rights perpetrated by the government.

2.3. Human rights

2.2. Environmental standards

In domestic business environments, national laws and traditions establish a shared ethical framework on what businesses can and cannot do. A French company operating in France knows that it must comply with well-established labor, environmental and governance rules backed by reliable enforcement mechanisms. However, in its overseas operations, the company often faces substandard regulatory frameworks and weak enforcement mechanisms, which present the opportunity of obtaining benefits through practices that would be unacceptable at home. Many dilemmas arise about the moral legitimacy of capturing such benefits.

In this chapter, I review the challenges that economic globalization and technological change are posing to multinational corporations (MNCs).

First, I will present the new set of moral dilemmas that arise in labor standards, marketing practices, environment, corruption and human rights, as companies operate across diverse cultural and legal frameworks. Second, I will review the answers that governments, corporations and civil society actors have developed to assist managers in international decision making. Third, I will review how business ethicists have adapted moral frameworks such as libertarianism, utilitarianism, deontology and virtue ethics to address the specific challenges of global business.
