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Markkula Center for Applied Ethics

Business Ethics in a Global World

An Introduction to the Issues

Margaret Steen

Many Westerners may view China and India primarily as a threat to North American and European middle class jobs. But this is a distorted view of these two growing economic powerhouses, said Aron Cramer, president and chief executive officer of Business for Social Responsibility, at the Markkula Center for Applied Ethics’ fourth biennial business ethics conference on March 9. The topic of the conference was Business Ethics in a Global World, with a focus on China and India.

Cramer, who advises companies on issues of corporate social responsibility in today’s complex global economy, noted that how China and India manage their growth will have a huge impact on many countries. “The questions matter for the entire planet,” he said.

Cramer began by defining the aims of corporate social responsibility: to use the market economy to address gaps in income distribution and help pull people out of poverty, as well as to ensure the sustainability of natural resources such as fish stocks and water.

Cramer offered three perspectives on how Chinese and Indian companies apply business ethics.

1. How have Western companies and Western expectations shaped Chinese and Indian views of corporate social responsibility and ethical business? Some people see corporate social responsibility as Western countries trying to impose their own values on other countries. Cramer disagreed, saying that in many disputes about labor standards, for example, the problem is that the local labor laws are not being enforced. Although he noted that there are some cases where the issue is a difference in standards – freedom of association in China, for example – much of this debate would be toned down if more attention were paid to simply enforcing local laws. “CSR is not a foreign import,” Cramer said.

2. How do Chinese and Indian businesses think about ethical behavior on their home turf, in China and India? Cramer noted that in both China and India, the development of business ethics is being shaped by a new generation of business leaders, some of whom have been educated or worked in the West. In India, corporate social responsibility is still seen primarily as an issue of philanthropy – but that is changing. And although China lacks some of the drivers toward business ethics that are common in the West, such as an aggressive press, the country is very aware that it needs to make its economy greener.

3. How are Chinese and Indian companies expressing themselves in third countries, where they’re becoming more and more influential? Many Western companies have made mistakes when they tried to expand into international markets that they didn’t understand, Cramer said, and now this is starting to happen to Chinese and Indian companies as well.

Cramer also offered thoughts on global trends that will shape the continuing debate over corporate social responsibility. First, he said, climate change will continue to be a significant issue. China and India have several advantages in addressing this issue: Both are committed to developing their technological expertise. Both have large domestic markets, which make developing new services easier. And neither has legacy industries – such as an auto industry built on cars that use gasoline – to offer resistance to new technologies.

Cramer also predicted that the fragmentation of power and information would continue. This presents real challenges for both India and China. For example, the Internet is developing differently in China than in the West, because of government restrictions on free expression.

Finally, Cramer noted that companies are starting to see the need for worldwide standards on everything from environmental regulations to labor standards to corporate governance. But it’s not clear how that will happen. “We don’t have global rule-setting for the global economy,” he said.

He added, though, that China has become more engaged in some of the efforts to set global standards, and that some Chinese companies have started issuing reports on corporate social responsibility. Now the question is how open the West will be to Chinese and Indian perspectives on business ethics.

Margaret Steen is a freelance author

March 2007

Mar 1, 2007