Social Ethical and Environmental Issues

There are several social, ethical and environmental issues confronting international business.

• While the genuine issues should be appreciated and attended to, the unfortunate thing, however, is that at times these issues are raised deliberately to harass certain firms or countries that do not toe the line of the importers or host countries. They are also used as non-tariff barriers to business, particularly by developed countries against developing countries.

• One of the important social issues in the developed countries in respect of business with the developing countries pertains to treatment of labour and children. Child labour used in the manufacture of products exported from the developing countries is widely criticised by many in the developed countries. There is a protest against this in the developing countries too.

• For example, it is alleged that child labour is used by the carpet industry in India and some other countries and social activists in the developed nations demand ban on the import of goods employing child labour. Consumers are called upon to boycott such goods.

• A similar issue is the sweat labour. The argument here is that goods manufactured by labour working in inhuman/ unhealthy working conditions and not getting fair wages should be banned or boycotted. Certain important developing countries exports, like garments, are alleged to be suffering from such a problem.

• Some multinationals are criticised for sourcing products from developing countries benefiting from sweat labour. While some of the criticisms may be valid, it is also a fact that the enterprises in the developed countries, which are adversely affected by the cheap imports from developing countries, blow up the issues to serve their vested interests. A very complex and controversial issue is that of ethics.

• The varying ethical norms and social values many a time make the business environment very intricate and perplexing in international business. The term business ethics refers to the system of moral principles and rules of conduct applied to business. That there should be business ethics means business should be conducted according to certain self-recognised moral standards. There is, however, no unanimity of opinion regarding what constitutes business ethics.

• An international marketer often finds that the norms of ethics vary from country to country. What is ethically wrong or condemned in one nation may not be so in another. In this connection, Peter Drucker very appropriately remarks “There is neither a separate ethics of business, nor is one needed. For, men and women do not acquire exemption from ordinary rules of personal behaviour because of their work or job.

• However, do they cease to be human beings when appointed vice president, city’ manager, or college dean, And there have always been a number of people who cheat, steal, lie, bribe or take bribes, The problem is one of moral values and moral education of the individual, of the family, of the school.” Bribery pay offs or kickbacks are common in business in many countries. However, the extent and intensity of it vary from country to country. In some countries there may be a common practice with government officials and other employees. The law in respect of such practices also varies among countries.

• According to regulations in some countries, while bribing is; illegal within the country, bribing by that nation’s firms in foreign markets to get or conduct business is not illegal because of the feeling that bribing is inevitable in some markets.

• The position appears to be that “morality only exists within a culture. And it is not for us to say what is moral in someone else’s culture”, Several West European countries either condone bribery or look the other way – such expenses are tax deductable upto a certain amount in some countries.

• However, the US Foreign Corrupt Practices Act of 1977 prohibits a firm from making or authorising payments, offers, promises, or gifts for the purpose of corruptly influencing action by governments or their officials in order to obtain or retain orders for a company. American businessmen complain that they are severely handicapped because of the legislation when they have to compete with those who are not so regulated.

• Whatever may be the legal position regarding bribing, it is basically a question of moral values and self-regulation. Some people, who hold that bribing politicians and/or officials to get business is unethical, feel that paying the lower levels is not unfair if the papers don’t move normally otherwise.

• Environmental issues have been engaging increasing discussion in the international business horizon. As in the case of the social issues, the environmental issues that are raised are mostly those which disadvantage the developing countries, ignoring or relegating to the background several serious issues for which the developed nations and firms from such nations can be held guilty.

• Some countries prohibit import of goods which cause ecological damage. For example, the USA has banned the import of shrimp harvested without turtle excluder device because of its concern for the endangered sea turtles. There are other instances of developed countries insisting on use of biologically degradable material for packaging, use of vegetable dyes for printing etc. Countries like India are affected by it.

• Developing countries are affected by the relocation of polluting industries from the developed to the developing ones. Similarly, several products which are banned in the developed nations are marketed in the underdeveloped world.

• The dumping of nuclear and hazardous wastes in developing countries and the shifting of polluting industries to the developing countries impose heavy social costs on them. The indiscriminate exploitation of the natural resources of the developing countries to satisfy global demand also causes ecological problems.

• When the multinationals employ, in the developing nations, polluting technologies which are not allowed in the developed countries or do not care for the ecology as much as they do in their own nations, it becomes essentially a question of ethics. Another problem is that sometimes environmental issues are used mainly as a trade barrier or a coercive measure by the developed countries rather than for genuine reasons.

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