Academy of Management Executive, 2004, Vol. 18, No. 2
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Managing ethically with global stakeholders: A present and future challenge
Archie B. Carroll
In the early 2000s, the era of corporate fraud and corruption defined by the ethical wrongdoing of Enron, WorldCom, Tyco, Arthur Andersen, and HealthSouth captured the world’s attention as never before. It soon became clear, however, that the U. S. had not cornered the market on questionable ethics. The Dutch firm Ahold and Italy’s Parmalat quickly shared center stage ...view middle of the document...
shows that of the 100 largest “economies” in the world, only 47 of them are nation states. The other 53 are MNCs. Exxon Mobil Corporation, for example, has annual revenues that exceed the GDP of all but 20 of the world’s 220 nations.1 Clearly, then, the MNCs’ operations throughout the world will constitute a primary arena for business ethics thinking and applications. The focus in this discussion will be on how businesses and managers can deal with the topic of business ethics vis-a-vis their global stakeholders. ` As Princeton professor of bioethics Peter Singer recently said, “How well we come through the era of globalization will depend on how we respond ethically to the idea that we live in one world.”2 Business’s major stakeholders include consumers, employees, owners, the community, government, competitors, and the natural environment. There are many others, but we will focus primarily on the community and government. In the context of global ethics, the community is the community of host nations in which the firm is doing business, and the government represents all the separate sovereign nations that serve as “hosts” to investing MNCs. This makes for a much more complex situation than, for example, a U.S. MNC doing business in the U. S. It also represents a most-likely scenario in world affairs that doing business in others’ countries will become more of the norm. It is estimated, for example, that while the economies of China and India are much smaller than that of the U. S. now, China is likely to overtake and India to equal the U.S. economy in size by 2050. The world’s economic center of gravity is shifting toward Asia, and U.S. preeminence will undoubtedly diminish though its participation in the global economy is expected to grow. The current controversy over the outsourcing of U. S. jobs is one of the latest debate points in the trend.
Some Current Knowledge about Global Ethics We know so little for sure about global business ethics. Even so, a number of experts testify to its importance. Tichy and McGill declare that “it is difficult to think of a more important basic business ethical commitment than to be a good citizen in the world of your business—with real involvement of your people, as well as your money.”3 As a practical matter, Sir Philip Watts, the chairman of Royal Dutch/Shell, recently has worked hard to recast his once reviled company as a compassionate corporate citizen.4 We do know that there is a pressing need for more empirical research on global business ethics, but most of the work to date has been quite contingent. Much business ethics research depends upon many factors, including the ubiquitous issue of culture. The extension of business ethics concepts and thinking to the global arena has probably raised more questions than it has answered. Though textbooks have been available for years on the subject of international business ethics,5 we are still in the...