The Ethics of Global Business

Chapter OneEthics and Transnational Companies

Companies confront challenges to their legitimacy based on activities such as human rights violations, bribery, the exploitation of impoverished workers and consumers, and negative environmental externalities. Typically such cases involve publicly held companies, based in industrialized “home” nations, operating in a developing “host” nations with limited institutional resources for regulating and policing the practices of corporations and their contractors. Critical attention has also been paid to the social and environmental practices of companies based in advanced developing nations, such as Russia or China, operating in Africa and other less‐developed regions. The prevalence of these cases is one indication of the fact that we live and work in an era of economic globalization. While trade among nations has been an important feature of the global economy for centuries, there has been a rapid increase in international trade since 1990. The substantial increase in foreign direct investment (FDI) is one indicator of the steadily growing economic and political influence of corporations operating internationally.

Transnational companies (TNCs) operate in a multitude of political jurisdictions and so are subject to a multitude of legal frameworks. Laws regarding such matters as the treatment of customers, the treatment of employees, and environmental protection vary significantly in different host nations. In the case of developing ...