International Business Ethics

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1 Stephan Rothlin Dennis McCann International Business Ethics Focus on China Springer

2 Contents 1 Becoming a Top-Notch Player Prelude Case Study: Can Football Be Fixed? Sportsmanship and the Culture of Corruption Abstract Keywords In the Name of the Game Betting on "a Sure Thing" Attempts at Whistleblowing Steps to Curb Corruption But There's More to the Story Summary Case Study Discussion Ethical Reflection Conclusion 17 References 18 Part I Mapping the Field 2 The Natural Priority of Moral Virtue Prelude Case Study: A Junzi Now Living in Hong Kong? Abstract Keywords Can Virtue Be Taught Nowadays? "A Sense of Sharing Displaces the Effects of Selfishness and Materialism" Organizing Credit Unions in Hong Kong Guiding Principles Leading Practices 28 xi

3 xii Contents "Devotion to Public Duty Leaves NoRoomforldleness..." "When the Perfect Order Prevails, the World Is Like a Home Shared by All..." Case Study Discussion Ethical Reflection Confucian Virtues Western Virtues Mozi's Unclaimed Legacy Conclusion: A Virtuous Life in Business? 44 References 44 3 Business Ethics and the Sciences Prelude Case Study: Sanlu's Tainted Infant Formula Abstract Keywords Sanlu The 2008 Milk Scandal Cover-Up Allegations A Debated Trial Uncompensated Claims Case Study Discussion Ethical Reflections The Role of Science in Business Ethics Business Ethics as "Science" Conclusion: Between Ethics and Morality 61 References 61 4 Moral Decision-Making in Business Prelude Case Study: Pepsi Sichuan, "A Marriage too Good to be True"? Abstract Keywords How and Why Pepsi First Came to China "The Hu Factor" in the JV's Initial Success and Early Signs of Trouble The "Factory Gate" Incident Pepsi's Response: What to Do with Mr. Hu? Pepsi's Business Model at the Core of the Conflict Hopes Dashed for Saving Pepsi Sichuan Conclusion Case Study Discussion 76

4 Contents xiii 4.4 Ethical Reflection From Role Models to Moral Decision-Making Models The Deontological, or Duty-Based, Method The Utilitarian Method The Method of Applying Justice Conclusion: Moral Decision-Making in the Pepsi Sichuan Case 85 References 88 5 Free and Fair Competition in Business Prelude Case Study: Mengniu vs. Yili, What to Do with Unfair Competition? Abstract Keywords Bitter Rivalry in the China Dairy Market Mengniu vs. Yili: A War of Words? Clever Marketing Strategy or Predatory Behavior? Case Study Discussion Ethical Reflection What Is Commutative Justice? Commutative Justice and Fair Competition in Business Conclusion 105 References 105 Part II Areas of Stakeholder Responsibility 6 Customers: Consumer Rights and Responsibilities Prelude Case Study: Mattel "An Ounce of Prevention Is Worth a Pound of Cure" Abstract Keywords Mattel's Own Globalization The Supply Chain at Mattel Product Safety Scandal Case Study Discussion Ethical Reflection Transparency for Accountability Hong Kong's "Guide to Consumer Rights and Responsibilities" Conclusion 126 References 127

5 xiv Contents 7 Customers: Marketing Ethics Prelude Case Study: Financial Marketing the Bear Stearns Way Abstract Keywords Bear Stearns: Victim or Perpetrator in the Financial Crisis? Bear Stearns and the Securitization of Home Ownership Mortgage Loans Become a Commodity to be Traded like Pork Bellies Bear Stearns' Corporate Culture: Root of the Crisis? BSAM's Hedge Funds: A Cautionary Tale The Everquest IPO: Robbing Peter to Pay Paul? Conclusion: Bear Stearns' Demise Case Study Discussion Ethical Reflection Fiduciary Responsibility Fiduciary Duties in China's Companies Law of Conclusion: Overcoming "Marketing Myopia" in Investment Banking 153 References Employees: Dignity and Workers'Rights Prelude Case Study: Who Cares About Foxconn and Its Employees' Health and Safety? Abstract Keywords Introducing Foxconn The Sweatshop Scandal The Foxconn Suicides ( ) Summary Case Study Discussion Ethical Reflection On Human Dignity: Catholic Perspective On Human Dignity: Confucian Perspective Human Dignity and the UN's Universal Declaration of Human Rights China's Labor Contract Law Conclusion 174 References 175

6 Contents xv 9 Employees: Discrimination and Sexual Harassment Prelude Case Study: A Rising Star Falls to Earth: Moral Leadership and Sexual Harassment Abstract Keywords/Phrases Icarus Soars at the IMF Icarus Falls from the Sky Moral Leadership and Its Exercise at the IMF Institutional Failure at the IMF? New Directions: Recovering the Right to Lead Summary Case Study Discussion Ethical Reflection An Assault Upon Human Rights and Dignity Sexual Discrimination and Harassment in Hong Kong Legal Protections for the Rights and Interests of Women in China Conclusion 197 References Employees: Whistle-Blowing Prelude Case Study: Tokyo Electric Power Company and the Fukushima Disaster Abstract Keywords Unforeseen Catastrophe, Disastrous Responses Blowing the Whistle on the Nuclear Power Industry A Man-Made Disaster? Playing Games with Japan's "Heavenly Descendants" Saving Face or Rebuilding Trust? Conclusion Case Study Discussion Ethical Reflection The Ethics of Whistle-Blowing Whistle-Blowing and the Just War Tradition Conclusion: Beyond Whistle-Blowing 219 References 221

7 xvi Contents 11 Investors: Ethics and Finance Prelude Case Study: Investors and Bankers Respond to Calls for Financial Reform Abstract Keywords Occupy Wall Street and the Prospects for Financial Reform Ten Practical Proposais Toward an Investor Bill of Rights (IBOR) Ethical Banks and Their Best Practices Ethical Banking Practices in Asia Conclusion Case Study Discussion Ethical Reflection Financial Markets and Gambling Casinos: Is There a Difference? Private Transactions and Responsibility for the Common Good Conclusion 245 References Investors: Investment, Ethics, and Corporate Responsibility Prelude Case Study: Infosys' Investment in Corporate Social Responsibility Abstract Keywords The Beginning of the Infosys Saga An Indian Perspective on CSR Values at Infosys Implementing C-LIFE Principles: Infosys' Social Contract A Family Business Empowering India An Uncertain Future Conclusion Case Study Discussion Ethical Reflection The Ethical Basis for CSR Milton Friedman's Critique of CSR A CSR Pyramid Conclusion 268 References 268

8 Contents XVII 13 Competitors: Intellectual Property Rights Prelude Case Study: TRIPS and AIDS Medicine: Compulsory Licensing in Thailand Abstract Keywords Merck TRIPS Thailand, Compulsory Licenses Humanitarianism or Opportunism? International Perception of Thai TRIPS Case Industry Reaction Summary Case Study Discussion Ethical Reflection The Concept of Intellectual Property Forms of Intellectual Property and Their Claims to Protection Intellectual Property in Chinese Moral Philosophy IPR Regulation in Today's China Conclusion 290 References Competitors: Fighting Corruption in the Marketplace Prelude Case Study: The High Cost of Corruption, Siemens Bribery Scandal Abstract Keywords An Unexpected Monster Institutionalized Corruption The High Cost of Bribery Culturally Corrupt? The Economics of Crime Recovery Summary Case Study Discussion Ethical Reflection What's Wrong with Commercial Bribery? An Emerging Global Consensus How Can Corruption Be Diminished? Hong Kong's Independent Commission Against Corruption (ICAC) Conclusion 317 References 317

9 xviii Contents 15 The Social Environment: Business Etiquette and Cultural Sensitivity Prelude Case Study: Schindler's Apology Abstract Keywords One Tragic Summer Evening Fast Excuses, Late Apologies Countering the Panic, Investigating the Causes Mapping a New Way Forward Conclusion: Unanswered Questions Update Case Study Discussion Ethical Reflection Apologies in Business Ethics: Western Perspectives Apologies in Business Ethics: Japanese Perspective Converging Perspectives Pinpoint the Challenge for Schindler in Japan Conclusion 337 References The Social Environment: Ethics and Information Technology Prelude Case Study: End of the World Phone-Hacking Scandal Shuts Down Murdoch's News of the World After 168 Years Abstract Keywords A Good Story Goes Bad and a Bad Story Gets Worse "Dark Arts" or "Good Magic"? Business Uses of Technology Murdoch's Mass-Media Monster Summary Case Study Discussion Ethical Reflection Privacy: A Human Right Inherent in Human Dignity Legal Protection for the Right to Privacy Privacy in Hong Kong and the People's Republic of China Conclusion 360 References 361

10 Contents *ix 17 The Social Environment: Philanthropy Prelude Case Study: Tata Group: Philanthropy with Purpose Abstract Keywords The Tata Group Modern Day Advancements The Tata Philosophy in Action The Organization of Corporate Philanthropy Light and Shadows A Promising Future? Summary Case Study Discussion Ethical Reflection Corporate Philanthropy: Andrew Carnegie's Gospel of Wealth Corporate Philanthropy: Mahatma Gandhi's Concept of Trusteeship Conclusion 384 References The Social Environment: Weifare and Corporate Social Responsibility Prelude Case Study: Prato Meets China, in Search of the Common Good Abstract Keywords Prato The Arrival of the Chinese Takeover or Revitalization? Social Transformation Summary Case Study Discussion Ethical Reflection Modeling Catholic Social Teaching in Prato The Enduring Relevance of Pope Leo XIII's Rerum novarum Catholic Social Teaching on Immigration and Globalization Conclusion 410 References 411

11 xx Contents 19 The Natural Environment: Ethics and the Environment Prelude Case Study: Pollution, Politics, and Prevention Lessons from the Songhua River Catastrophe Abstract Keywords Water of Life Explosion and Contamination Flowing Across Borders No More Cover-Ups Cleaning Up the Songhua River Basin Short-Term Punishments, Long-Term Consequences Conclusion Case Study Discussion Ethical Reflection The Silent Stakeholder Management, Stewardship, and Sustainability Stewardship as Corporate Social Responsibility Exercising the Principle of Subsidiarity in and for the Environment Conclusion 435 References Toward a New Paradigm of Business Economics Prelude Case Study: Credit Unions and Credit Cooperatives in the Philippines Abstract Keywords A Success Story in Plaridel Credit Unions and Cooperatives: An Innovation in Microfinance? How Credit Unions and Cooperatives Work Credit Unions in the Philippines Obstacles to Credit Union Development Summary Case Study Discussion Ethical Reflection Human Dignity and Solidarity: Core Concepts in Catholic Social Teaching The Common Good and the Cultivation of Moral Virtue 456

12 Contents xxi Credit Unions and the Creation of "Social Capital" Toward a Business Economy Based on "Mutualist Principles" Conclusion 460 References 461 Glossary of Terms for International Business Ethics: Focus on China 465

Corporate Governance

Corporate Governance Principles, Policies, and Practices SECOND EDITION Bob Trlcker OXFORD UNIVERSITY PRESS Contents List of Case Studies List of Boxes List of Figures List of Tables xvi xviii XX xxi Introduction