Global Ethics and International Borders

Global Business and Ethics across Borders

Cross-border trade represents the interaction and integration of companies, people and governments of differing nations. This process termed globalization, is driven by international trade and investment and may have far-reaching effects and consequences on the environment, on governments, on the development and sustainment of economies, and on the human element of societies around the world (The Levin Institute, n.d.). As American businesses engage in globalization, many factors are relevant to multinational operations and ethics. Participation by American companies in the world-wide economic system is not based solely upon American standards and the framework of existing background institutions. The international stage is represented by many differing ethical values, customs, ways of living and systems of law, and presents a challenge to multinationals for behaviors that are inconsistent with exploitation, unfair competition and impoverishment (De George, 2006). This paper will discuss Nike and the multinationals exploitation of child labor in lesser developed countries, compare the ethical perceptions of this behavior across cultures, and address the risks and consequences associated with this type of ethical dilemma.

Nike and Child Labor

Nike is a multinational company employing over 550,000 people in contract factories at any given time in about 52 countries worldwide. Nike controls over 49% of the sports shoe market and also produces apparel and sports related equipment and accessories for worldwide distribution. Of the over 800 contracted suppliers utilized by Nike, nearly 400 operate in Asia (Trevino & Nelson, 2007). In 1996 several incidents of exploitation of child labor by Nike where highlighted by Life magazine and the CBS news program 48 Hours. These disclosures produced evidence of widespread labor exploitation and abuses in overseas manufacturing plants. Workers in Pakistan, Indonesia, Thailand and other countries were complaining of child labor exploitation, 77 hour work weeks, bans on unionization and hazardous and unsafe working conditions. Nike's multinational operations and millions in profit were centered on "back of the sweetshop" tactics in lesser developed countries (Firth, 2005). Nike's ethical behavior by American standards was taking backstage to the exploitation of the vast disparities that existed in lesser develop countries systems of laws, economic structures and human needs.

Ethical Perceptions across Borders

In the worldwide arena, ethical business practices are held to no perceived or written norm. American multinationals such as Nike; by outsourcing and off shoring, seek greater value from corporate expenditures and move to lesser developed countries for the sake of leveraging the comparative advantage of cheap labor. Viewed as unethical and condemned by many on the grounds of lost jobs for America, outsourcing poses no unethical judgment from the corporate standpoint. Nike was fulfilling a responsibility to stockholders by creating greater value to investment. The reported injustices were occurring in lesser developed countries with historical systems of corruption, cheap labor and lax law enforcement. A "norm" for business in the global arena, and considered a condition of multinational operations. In addition, the factories in question were subcontractors and not owned by Nike. Nike rationalized that by using contract factories they were indirectly involved and simply operating within the customs, ways of living and systems of law existing and functioning in the specific countries in question.

A utilitarian view places Nikes ethical perception on the consequences of its actions. Nike, by outsourcing is creating value for stakeholders and the consequence of utilizing labor in lesser developed countries is an existing condition of the market. Child labor is a critical source of income for families in developing countries and to that end Nike was causing no further harm. Also, it is not the inherent responsibility of the free enterprise system to enact benevolent practices that may inadvertently create consequences that are damaging to the culture, the economy and the overall system of governance of the lesser developed country. Westernization can shift the effective and long term improvement of a countries culture and economy off course and actually create more harm than good.

A deontological view places Nikes ethical perceptions misaligned with the moral beliefs and reasoning of western culture. The duty of helping others and fulfilling the