Ethics in International Business

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Literature Review

The corporate social responsibility of Friedman (1970) may have generated provocative and academic debate, but the reality of business ethics has been the inclusion of stakeholders, responding to sustainability issues, aligning ethics with human rights and proactively pursuing policies friendly to sustainability to build their trade names.

Berle and Means (1932) mentioned the stakeholder in business literature as early as in 1932 and need for a greater transparency and accountability after The Great Depression 1929. It was Free who pioneered the theory of stakeholder in strategic management by positing the idea of the firm’s responsibility to the supplier, customer, employees and society to make the capitalism click (Freeman, 2010). Thereafter, the stakeholders view has been visibly pronounced in business ethics as well. Even firms have responded to the pressure of stakeholders in order to avoid bad publicity. Shell had to accommodate the Greenpeace view not to decommission a rig in the sea though scientifically Shell’s argument was correct on benign scientific implications whereas Greenpeace’s stance was scientifically incorrect (Bowie and Dunfie, 2002).

In 1989, after an oil spill in Alaska, people were shocked to see the scale of environmental disaster that resulted in the emergence of the Valdez Principles (Exhibit 1) a voluntary compliance to environmental standards, later titled as Ceres Principles on the lines of Sullivan Principles (Exhibit 2), which was a response to racial abuses in workplace (Nevis and Sanyal, 1991). Organizations, like Marks & Spencer (M&S), have taken a proactive role in this area by introducing Plan A to minimize the negative environmental implications. M&S has set the goal of achieving 180 commitments to address the environment issues (Marks and Spencer, 2013). The idea is based on the notion that there is no alternative or Plan B to save the earth; therefore efficient use of resources with minimal environmental implications has been introduced in the manufacturing processes. This proactive approach is reflective of reaching modern day customers who are more concerned about ecological degradation. LAUNCH is another innovative initiative where Nike, NASA, USAID and State Department are collaborating to for sustainable future of the world (LAUNCH, 2013).

The Body Shop and Ben & Jerry’s are using their ethical credentials to sell their products and likewise firms have increasingly used ethical, social and environmental standings to reinforce their product sales (Crane, 2001). Moreover, companies are moving towards more environment-friendly practices by reducing their negative impacts on the environment. Best Buy is launching an initiative to buy back its electronic products; Ford is on the roadmap to achieve 30% carbon reduction by 2020, and more than 1800 firms are using the Global Reporting Initiative standards for their economic, social and environmental reporting in order to conduct transparent and efficient businesses (Ceres, 2013).

In addition to this businesses are aligning their corporate ethics to international organization such as United Nations. For instance Bristol-Myer Squib Foundation commits itself to well-being of women, and providing donations for pharmaceutical products in countries faced with natural disasters and civil unrest (Hill, Martin, Snider, 2003).

Another aspect of business ethics and CSR is the emergent literature for the need to build on an international code of business ethics. ‘Grease’ and ‘Speed’ payment practices are necessary evils on the premise that ethics have relative value and implementation of universal ethics will result in the decline of sales and increase in business hardships. These arguments have proven to be erroneous as in the aftermath of Foreign Corrupt Practices Act rise in sales was reported by American firms (Jennings and Smeltzer 1998). The concept of international ethics has become...
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