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The Moral Authority of Transnational
WilliamC. Frederick
CorporateCodes
ABSTRACT. Ethical guidelines for multinational corpora a universal or transcultural standard of corporate
tions are included in several international accords ethical behavior. this remarkable
adopted Although develop
during the past four decades. These guidelines attempt to ment has not run its full course and therefore is not
influence the of multinational in such it is well its
practices enterprises
yet all-embracing, enough along for
areas as relations, consumer envi
employment protection, main outlines to be evident and its central normative
ronmental political participation, and basic
pollution, to be clear.
human moral authority rests upon the significance
rights. Their
competing principles of national sovereignty, social equity,
market integrity, and human rights. Both deontological
and value and
Landmark multilateral compacts
principles experience-based systems undergird
as the fundamental
justify the primacy of human rights
moral of these transnational and transcultural The four decades betewen 1948 and 1988 have been
authority
compacts. Although difficulties and obstacles abound in remarkable the proliferation
for of intergovern
gaining operational acceptance of such codes of conduct, it is mental agreements, compacts, accords, and declara
possible
to
argue that their
guidelines
betoken the emer tions that have been intended to put on the public
a transcultural sets of
gence of corporate ethic. record various the
principles regulating
activities of governments, groups, and individuals.
The core concerns of these compacts have
ranged
Moral for corporations be found from military to economic and social devel
guidelines may security
embedded in several multilateral compacts adopted opment, from the protection of national sovereignty
since the end of the Second World to actions
by governments specifying acceptable by multinational
War. Taken as a whole, these normative from condemnations of genocide and
guides enterprises,
a framework for the essential to the of capital flows and the
comprise identifying slavery regulation
moral behaviors expected of multinational corpora transfer of technology, from the political rights of
tions. Corporate actions that transgress these prin women to the movements of refugees and stateless
are understood to be some cases and many others too numerous to list here.
ciples defacto, and in persons,
de jure, unethical and immoral. This set of normative They reflect the many kinds of problems and issues
and proscriptions embodies a moral that have confronted in the last half of
prescriptions governments
authority that transcends national boundaries and the 20th century (United Nations, 1983).
societal differences, thereby invoking
or This paper focuses on six of these intergovern
manifesting
mental compacts, which by their nature, purpose,
to
William C. Frederick is Professor of Business Administration,
and comprehensiveness might well be considered
be the most or of such agree
Graduate School of Business, University of Pittsburgh.He is generic archetypal
ments. the basic outlines
President (l 990) of theSocietyfor Business Ethics,former chairof Collectively they proclaim
the Social Issues inManagement division of The Academy of of a transcultural corporate ethic. This ethic effec
and was the Charles Dirksen Business tively lays down specific guidelines for the formula
Management, Professor of
Ethics at Santa Clara in 1980?81. He is coauthor tion of multinational corporate policies and prac
University of
Business and Society: Corporate tices. These six compacts and their respective dates
Strategy, Public Policy,
Ethics (McGraw-Hill, 1988). of promulgation are:
TABLE I
Number of MNC normative for six multilateral
guidelines by category compacts
- - -* 4
6 20 10
Employment
Practices
? ? ?
Consumer 1?2 3
Protection
? ? ?44 5
Environmental 13
Protection
- - -
Political 5
2-3
Activity
Human Rights 5 2 -
522 5
(re:work)
11 2
TOTAL 10 11 15 63 14
*
It is but is not a that the Transnational Code of Conduct will into its
expected, foregone certainty, Corporate incorporate
provisions regarding employment practices the bulk and central meaning of those set forth in the ILO Tripartite Declaration.
Hence, their omission in this Table should not be construed to mean that have been or overlooked the drafters
they ignored by
of the TNC Code.
sources
The normative of the guidelines Social equity is another normative basis underlying
some of the
specific corporate guidelines. Pay scales
These for the practices and policies of multi are to be established in ways that will insure equity
guides
national companies
seem to rest upon and be
justi between men and women, racial and ethnic groups,
fied by four normative orientations. Given sets of the professional and occupational groups, host-country
can be tied to one or more of nationals and parent-country
guidelines directly expatriates, indigenous
these moral sources.
employees and migrant workers, and those well-off
and those least-advantaged. The same
equity prin
one such source. All six com
National sovereignty is ciple is advocated for job opportunities, job training,
pacts invoke the inviolability of national sovereignty. treatment of the unemployed, and the provision of
In on the each nation is other work-related benefits and services.
acting compacts' principles,
to take care not to on the
infringe sovereignty of its
of a nation's integrity source
neighbors. Hence, preservation Market integrity is yet another of moral
and self-interest appears to be one of the moral authority and justification for some of the guidelines
foundations on which such multilateral accords rest. identified above, as well as for a
large number
of
Multinational are to respect the other in other agreements that
enterprises urged guidelines specified
aims, goals, and directions of a host-country's eco are not treated here which have to do with restrictive
nomic and social development and its cultural and business practices, the transnational flow of capital
historical traditions. Companies' the repatriation of profits, the rights of
plans and goals investments,
should not contravene these components of a ownership, and similar matters. Among the norma
nation's and sovereignty. Nor should tive corporate guidelines listed earlier, those tinged
being they
interfere in the internal
political affairs of host with the notion of market integrity include restric
countries activities, polit tions on political payments and bribes that might
through improper political
ical bribes, or questionable of any kind non-market considerations into business
payments inject
made to political candidates or a of private collective bar
public officials. transactions, recognition
Transnational Corporate Codes 169
mon Market
Hence, in these several ways,
rights everywhere emerge. Economic systems based on the
are in market bear the marks
hedged by such political, social, and economic principle of their national
features of human society. The behavioral parent's political and ideological institutions. The
guidelines
for multinational seem to have been freer markets that have
corporations relatively emerged during
not from a the 1980s in the Soviet Union, Eastern Europe, and
woven, single philosophic principle but
a normative At China are conditioned
by blending of threads. the pattern's heavily by the prevailing
center stand human and fundamental free of the coun
rights governmental philosophies respective
doms, for in the international compacts reference is tries, and their is not to contra
operation permitted
most to vene the state. The same may
found frequently this normative marker. But perceived needs of the
the strands of national
sovereignty, social equity, and be said of markets in the United States, as one
market are woven into the overall pattern, observes the that accompany
integrity ideological swings
and form to the successive
coloring giving expression of human presidential administrations, legislative
are and judicial decisions. United States gov
rights. Thus human rights conditioned by elections,
societal factors. ernment-imposed commercial sanctions against
One trait is for the norma South Africa, the Soviet Union, Poland, Cuba,
important responsible
tive dominance of the human and other nations reveal the
rights principle. The Nicaragua, Libya,
human of in the Universal Declaration nation-bound character of market operations.
rights spoken
of Human are transcultural. As a Except for the human all other
Rights principle, rights principle,
human normative sources that undergird the multinational
rights span and disregard cultural and
national boundaries, class systems, ethnic corporate guidelines are thus culture bound, unable
groupings,
economic levels, and other human to break out of their societal contexts. By
arrangements respective
which for a variety of reasons differentiate between contrast, human are seen to be transcultural.
rights
individuals and groups. Human are ? are the or the that holds the
rights just that They glue linchpin
human. inhere in all humans, entire normative in a coherent in
They regardless of system together
ternational whole. While conditioned by desires for
imposed societal classifications and exclusions. They
can be defined, or violated but they national social equity,
disregarded, (or socio-ethnic) sovereignty,
cannot be eradicated. and market ? thus their opera
integrity finding
A transcultural character cannot be claimed for tional meaning within a societal context ? human
the other three normative sources. National sover
rights express attitudes, yearnings, and beliefs com
bound to and expressive of mon to all humankind. In that sense,
eignty is by definition the they form the
nation. If "nation" is understood to embrace, not core of a whose normative aim is to
global system
the nation-state but also identification with and regulate the practices of multinational corporations.
only
to an ethnic then it be This normative system finds
allegiance grouping, might rights-based justifi
more accurate to of as the cation in two ways. One is
speak "socio-ethnicity" through deontological
kind of sovereignty whose is In in human the
protection sought. obligations implicit rights. Here,
event, neither "nation-state" nor "socio-ethnic to us. The other is
any philosopher speaks justification
is or can be transcultural. more the form of lessons
group" directly operational, taking
Similarly, social equity meanings if ever learned from human experience about the formation
rarely
span cultural boundaries, in spite of Marxist class and sustenance of human values. These lessons are
to the contrary or even the
theory mightiest efforts taught by social scientists. Each of these rationales
of Third World nations to see and them calls for further elaboration.
organize
selves as the world's exploited underclass. That they
are z underclass, mistreated, and denied many
global
more Rationale I: Deontological norms
opportunities by their prosperous neighbors
has not yet bound them into a solid bloc
together
that could be called transcultural. The normative corporate guidelines may be seen as
Market remains tied to nation extensions and manifestations of broad deontologi
integrity firmly
states, even as interstate markets such as the cal, i.e., of human conduct.
regional duty-based, principles
These a basis for
European Common Market and the Andean Com principles provide philosophic
Transnational Corporate Codes 171
lives of individuals, their communities, and their milieu; and, second, that such a code, whether for the
societies.It is these values that have found their way individual or for interstate relations, offers the frame
only
into the several multilateral of common ideas that can the diversity of cultures,
compacts and accords span
costs in multilateral
government police power
to secure
compliance with
and of joining with others
moral directives. A somewhat related view has been compacts, more international collaboration might be
expressed by Ronald Dworkin (1977). forthcoming (Windsor Preston, 1988). and The
A third difficulty arises when that nor outcome then be a of
arguing might gradual lessening
mative corporate form the core of a substantive differences and a drawing of the
guidelines together
transcultural corporate ethic. The
guidelines
are not negotiating parties. Robin Williams (1979: 30)
to and even some of explains how this process works:
subscribed by all governments,
the signatory governments may override or
ignore . . . of interests and among individ
opposition struggles
them in some circumstances. Thus, it may be a
uals and collectivities within continuing polity and
that the guidelines fall considerably short of can to the
charged societal system actually
contribute establish
a universal world view of what multi ment and elaboration of values and
representing generalized symbols.
national corporations should do. Three of the accords ... If successive contests and conflicts are then success
are a
clearly product of North American-European fully resolved without repudiation of the values which
concerns and issues, while at least one other, the ILO legitimate
the
conflict-resolving process
or mechanisms,
Declaration, tends to express the views of the more highly generalized values will come more and
Tripartite
more to be as axiomatic or
employee representatives from industrial nations. regarded unchallengable.
the UN Universal Declaration of Human Although the specific social implications of the general
Only
value principle will be changed through successive
Rights and the UN Code of Conduct for Trans
occasions, nevertheless, all parties come to have a stake in
national Corporations a more or less
speak with the value referent as a resource for
maintaining complex
voice, and the last of these two accords has not
global the future.
yet actually come into existence.
is and must be This outcome is also to be
This sceptical view compelling process-based thought
as true. The world is not yet at a point a factor the UN Centre on Transnational Cor
accepted by
where it can claim to have formulated or a 1988: 361):
projected porations (United Nations,
set of normative corporate guidelines that are uni
. . . certain substantive are known and rela
or principles
versally globally accepted
and observed. Very real in . . . there exists a
tively undisputed practice today large
difficulties and genuine controversies have accom ?
of authoritative material declara
body agreements,
panied efforts
to
forge multilateral compacts that are tions, statements, etc. ? on the issues at hand.
They
are
to all As noted earlier, the general not . . but
acceptable parties. all identical, of course,. there is also consider
absence of effective enforcement mechanisms able coincidence of views.
legal
weakens these intergovernmental efforts. Sharp dif
. . .Even where are not created,
and trade unions binding legal obligations
ferences between multinationals
be established as to the
legitimate expectations may
have been prominent (Rowan and Campbell, 1983). of standards within reasonable
application corresponding
The sometimes muted between Third
struggle bounds.
World nations and their richer industrial neighbors
is always there as a factor conditioning It isworth that corporations remain
background remembering
Social ethnicity and diverse attuned to of their
negotiations. religious remarkably public perceptions
an often
affiliations become stumbling blocks to consensus. images and reputations, displaying surpris
and real frus to criticism of their policies
Geopolitical rivalry politik frequently ing sensitivity public
trate the best efforts to reach multilateral accord. and actions. The reasons are frequently self protec
Such obstacles are seen by many to be the essence of tive, rather than stemming from altruistic or
socially
the international scene, putting the creation of a responsible motives. Even so, the hovering presence
universal code of conduct beyond reach (Feld, 1980; and repeated of moral seem
expression principles
Waldman, 1980;Wallace, 1982;Windsor and Pres by large public blocs and their
ingly accepted
ton, 1988). governments may influence corporate behavior
However, a modicum of hope may exist in the toward voluntary compliance with these normative
instructions to
enterprises. They do not cover many their governments, are
capable of setting standards
matters and issues related to multi intended to and policies
important guide corporate practices
national corporate operations. None of the five into morally desirable channels. As noted, there
shown in Table I contains an exhaustive continues to be much
categories disagreement among govern
list of all possible guidelines. One
issues and needed ments about many of these issues, but failure to
can
easily identify other
categories and types of agree on everything should not be allowed to cloak
issues relevant to multinational business that appar an achieved consensus on many other issues.
not found into this particular Wise leaders will be able to interpret
ently have their way corporate
group of compacts. this consensus as a framework of public expectations
In on which the policies of their own companies can be
spite of the relatively limited moral compass of
these six accords, an impressively diverse range of based. Global stakeholders have set out their posi
issues has been evident in several other multilateral tions on a of and issues that
large range problems
conventions, codes, and treaties enacted and promul matter to them. In effect, are
corporations being
the 1970s and 1980s, which are not offered an opportunity to match their own opera
gated during
discussed here. These accords attempt to establish tions to these public expectations. The best ones will
product of do so. The others may wish they had if, in failing to
guidelines concerning liability, safety
consumer of and heed the normative messages, encounter
products, protection privacy per they rising
sonal data, transnational movement of hazardous and increased intervention in
hostility governmental
waste materials, distribution and use of pesticides, their affairs.
business in South Africa, elimination of For public policy makers, these agreements be
operations
various forms of discrimination, of em token a consensus among the world's
protection growing
hazards, and reduction and is to be desir
ployees from workplace peoples about what thought morally
elimination of chlorofluorocarbons. Were these to able action by governments. It would be as
perilous
be added to the normative
already iden for politicalleaders to ignore this rising tide of
guidelines
tified earlier, the entire set of normative instructions as for corporate makers to
global agreement policy
to multinationals would more turn their backs upon it. The authority and
be much larger and legiti
macy of these central economic and political institu
complete.
The argument of this paper does not require that tions are
frequently
at risk, as illustrated so dramati
all possible issues be included nor that all parties cally in Eastern Europe in 1989 and 1990. Therefore,
accept all of the provisions of the compacts. It is not it willbe vitally important for those charged with
we are more to
claimed that witnessing than the bare making
institutional policies guide their respec
of a globally oriented to their citizens.
beginnings system of norma tive societies inways acceptable
tive principles behavior. The to promote this normative consensus can
governing corporate Acting
is that the of if makers understand both the
only claim being made general outlines be encouraged policy
such a are now discernible and roots and the values
system partially philosophic experienced-based
from which these international agreements draw
operational.
their meaning and strength. The philosophic concept
of the human person that one finds in these multi
Lessons for policy makers lateral compacts, and the human and humane values
that grow out of shared global experiences, are no
set for public or private mere a
Those who policies, whether passing fancy of planetary people. Building
can find some on these twin foundations will
institutions, important lessons in these policy bring govern
multinational codes of conduct. ment and business into with the deep
alignment
The most lesson is that highly diverse structure of human
compelling aspirations.
governments and societies have been able to reach a
workable consensus about some core normative
directives for multinational enterprises. That should multinationals: The culture of ethics
Beyond
send a strong message
to corporate leaders every
where that the world's The transcultural corporate ethic described here is
peoples, speaking through
William
176 C. Frederick
importance
are the International Covenant on Economic, a far more sophisticated view of ethical algo
developed
Social, and Cultural Rights; the International Covenant on rithms than the one offered here, and I am indebted to him
Civil and Political Rights; and the Optional Protocol to the for both the concept and the phrase itself.
International Covenant on Civil and Political Rights. These
three instruments, which were adopted by the United
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Assembly
in 1966, transformed the
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