12.2 Globalization

Globalization

The final topic we will deal with in our practical approach to business ethics is globalization. Globalization refers to the processes by which businesses, technologies, cultures, and economies become interconnected and interdependent across national borders. Globalization creates a more integrated world, as people, ideas, and goods can be shared more easily and can reach almost anywhere on earth. These processes involve sharing those things as well as many others from country to country and across the world.

Some forms of globalization have been around for a long time, as when early civilizations began to trade goods and services outside of their regions. But the globalization we’re talking about here is much larger and involves many more people and possibilities. This sort of globalization is possible only because of technological advances in transportation and computers, which allow for the faster transport of goods, people, and ideas.

What does globalization have to do with business ethics? A lot, in fact, and in some previous case studies we’ve already seen some of the ethical issues raised by globalization. The cases on Justine Sacco (chapter 2), Activision Blizzard (chapter 3), baby formula (chapter 4), Sci-Hub (chapter 7), the Boeing 737 MAX aircraft (chapter 10), and others all concern globalization issues. In the Activision Blizzard example, a competitive video gamer expressed a view about certain international events, and the company sponsoring the gaming competition didn’t like that view. They took action to punish the player, apparently to salvage their company’s reputation in China, even though many in the gaming community agreed with what the player had said. In various ways, the other cases mentioned in this paragraph all raise related ethical issues.

So while globalization has been a good thing in many ways, it’s also created ethical problems that couldn’t have existed among previous generations. Many of these problems have to do with businesses, since businesses are frequently the driving force behind globalization: in efforts to reach new audiences with their products, businesses push beyond their borders—first local, then regional, and then finally international. Businesses that go global carry with them not only their products but also unspoken assumptions about how they ought to operate, and implicit values about what they will pursue.

These unspoken assumptions and implicit values from one place may conflict with those in another place. These sites of conflict are often the source of ethical issues for business and globalization, as we’ll discuss next.

Global Textiles Inc. (GTI), a mid-sized American apparel company, has recently expanded its operations into Wayanika, a developing nation known for its rich cultural traditions and low labor costs. The decision to open a manufacturing plant in Wayanika was driven by GTI’s goals of reducing production costs and tapping into a growing international workforce.

Shortly after beginning operations, GTI’s leadership team encountered several cultural and ethical challenges. In Wayanika, it is customary for workers to work six days a week, often exceeding ten hours a day, with only short breaks. The local government has minimal labor laws, and while such working conditions are culturally accepted, they starkly contrast with the labor standards upheld in the United States. Additionally, Wayanika’s cultural norms discourage women from holding leadership roles in the workplace. While women can work in the factory, they are rarely promoted to supervisory positions, a practice at odds with GTI’s commitment to gender equality.

Another challenge arose when GTI’s leaders were advised to provide cash payments directly to local officials to expedite necessary permits and approvals. In Wayanika, such payments are considered a normal part of conducting business and are not viewed as unethical or illegal. However, in the United States, such actions would be considered bribery and could lead to severe legal consequences under the Foreign Corrupt Practices Act (FCPA). GTI’s leadership team is now debating whether adhering to U.S. anti-corruption standards might hinder their ability to operate effectively in Wayanika or whether adopting local practices could harm the company’s reputation and expose it to legal risks.

GTI’s leadership team faces a series of dilemmas. Should they impose their own ethical standards on business practices in Wayanika, potentially being accused of cultural imperialism? Or should they adapt to local norms, even if those norms conflict with their company’s ethical principles? Additionally, how can they navigate the tension between respecting cultural relativism and maintaining their own ethical integrity?

GTI’s executives understand that their decisions will have far-reaching consequences. Imposing stricter ethical standards could improve transparency and set a positive example, but it could also increase operational costs and slow down progress on key initiatives. Conversely, continuing to operate under local norms may damage the company’s reputation among American consumers and advocacy groups.

Should GTI adhere to its own ethical standards or adapt to the cultural norms of Wayanika? Why?
How can GTI balance respect for cultural relativism with its commitment to universal ethical principles, such as transparency and anti-corruption?
To what extent might enforcing American ethical standards in Wayanika constitute cultural imperialism? How can GTI avoid this perception?
What strategies could GTI employ to improve ethical practices in Wayanika without alienating the local workforce or community?
What role do consumers, stakeholders, and advocacy groups in the U.S. play in influencing GTI’s decisions? Should their opinions weigh more heavily than local cultural practices?
Is there a way for GTI to turn these challenges into an opportunity to lead by example in ethical business practices? If so, how?

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