4. Globalisation of ethical decision making

Critical Approach & Business Ethics - Globalization of Ethical Decision Making

• Globalization is characterized by increasing economic interdependence, leading to a convergence of values (freedom, equality, etc.).
• However, recent trends show a decrease in global trade relative to GDP, due to trade barriers and geopolitical shifts toward regional blocs.
• Globalization is not ending, but changing, with a stabilization and slow-down in trends, ongoing FDI and exports.
• Developments like on-shoring and energy transitions are creating new interdependencies.
• There's a shift from global supply chains to regionalization and diversification.
• Competing policy frameworks (productivism vs. geopolitical realism) are in play.

Ethical Considerations in a Globalized World

• Cross-cultural ethical issues arise from differing values and principles (e.g., women's equality, bribery, environmental norms).
• Businesses must adapt ethical frameworks to diverse values within their wider principles.
• Cross-cultural considerations involve ethical relativism (varying standards across cultures) and universalism (universal ethical principles).
• Social and political considerations highlight ethical issues in a business's economic, political, and cultural impacts on other cultures and countries.

The End of History? A Changing Landscape

• Globalization's underlying assumption was the 'universalization' of Western liberal democracy (Fukuyama).
• However, human behavior is often driven by deeper needs like belonging, recognition, and appreciation.

The Ethics of Cross-Cultural Differences

• Different cultures prioritize different ethical principles (e.g., women's equality, bribery).
• Businesses should adapt to cultural differences in their ethical frameworks while maintaining core values.
• Cross-cultural ethical questions involve debates between cultural relativism (ethical standards vary) and universalism (universal principles).
• Ethical issues are complex and involve multiple stakeholders and diverse interests.

Ethics of Rights

• Human beings have inherent rights (life, freedom, property).
• The concept of rights implies a duty from others to respect them.
• Rights theories underlie constitutional rights and treaties like the Universal Declaration of Human Rights.

Human Rights: Universalism vs. Relativism

• Cultural relativism argues that universal human rights may be biased towards Western values, undermining state sovereignty.
• Universalism advocates for inherent human dignity and universal rights protecting individuals from abuse.

Against Cultural Relativism

• Many moral values are shared across cultures based on common human needs and interests.
• Human beings share common cognitive and perceptual traits.
• Ethical violations do not imply cultural acceptance.

Cultural Dimensions

• Hofstede's cultural dimensions theory explores cultural variations in power distance, individualism-collectivism, uncertainty avoidance, masculinity-femininity, long-term orientation, and indulgence.
• These dimensions help explain different ethical perspectives across cultures.

Gift-Giving & Bribery

• Gift-giving in different cultures can be morally ambiguous.
• Bribery is ethically unacceptable in most situations, regardless of local customs

Child Labor

• Child labor may be a cultural norm in some regions, but in many situations, it is an abuse of power.

Marketing & Local Norms

• Businesses should understand local norms and adapt to cultural values when marketing internationally.

Responsibilities: Negative and Positive Duties

• Minimalist approach: businesses are only responsible for avoiding causing harm.
• Maximalist approach: businesses have a responsibility to provide positive benefits and support to communities.
• Both views acknowledge the need for ethical standards across cultures.

The Ruggie Principles

• The United Nations Guiding Principles on Business and Human Rights (UNGPs) provide standards for preventing and addressing negative impacts on human rights.
• UNGPs promote human rights due diligence that mandates businesses to prevent, mitigate, address or account for their impacts.
• Key pillars: state duty to protect, corporate responsibility to respect, access to remedy.

Human Rights Due Diligence (in action)

• Legal case illustrations highlight the challenges and complexities of enforcing human rights in the multinational context.
• Lack of international legislative power hampers effective enforcement.

The UN Global Compact

• The UN Global Compact provides ten principles regarding human rights, labor, the environment, and anti-corruption.
• Participation is voluntary.
• Companies are expected to report on their progress on the ten principles annually.

Globalization: Shifting Power Balance

• Globalization combined with privatization and deregulation promotes a power shift from national governments to multinational corporations.
• The race to the bottom leads to tax havens and special economic zones.

Special Economic Zones (SEZs)

• SEZs are areas with differing business and trade laws than the rest of the country.
• Characteristics often include preferential tax rates, relaxed regulations, reduced labor standards.
• Promoters cite effective development tools, while critics highlight land expropriation, poor labor conditions, and revenue losses.

Investments at the Expense of Labor Rights

• Ethical considerations of governments may compromise labor standards in a race for foreign direct investment.

Tax Havens

• Tax havens are locations with extremely low or non-existent tax rates for non-residents that facilitate off-shoring of revenue by multinational corporations.

The Corporation as a Geopolitical Actor

• Corporations are increasingly involved in geopolitical decisions and dynamics.
• Corporations face increasing pressure to choose sides in conflicts (politics, military, trade disputes).
• Corporations bear increasing responsibility for managing national security risks in supplying goods and services.

Reality Check: Doing Business in Russia

• Ethical considerations related to continuing business activity in Russia in face of sanctions.
• Minimalist approach or maximalist approach to ethical considerations.

Explore the complexities of ethical decision-making in the context of globalization. This quiz addresses how cultural differences impact business ethics and the ongoing evolution of global trade. Understand the implications of regionalization and various policy frameworks on ethical considerations.