June 23, 2009

More on CSR When Doing Business in China

The NYT just printed another interesting article on this issue, which seems to be getting more attention, namely, what responsibility (if any) does a multinational corporation (MNC) have to work for democratic social change when operating in China? Michael Santoro, Professor of business ethics at Rutgers, has just written a book about it and is quoted in the NYT piece, saying:

“Multinational corporations do possess great power, wealth, and influence, and therefore they do have a responsibility to help to shoulder the burdens of enforcing human rights,” he writes.

Speaking to executives at a forum in Beijing to introduce his book, Dr. Santoro said they needed to show “backbone and courage.”

“It is unacceptable that no major business has initiated a court action against any level of Chinese government for anything,” he said.

“It’s also dangerous to your future economic well-being. That is not the kind of country that you want to be investing large sums of money in, because the future, without a settled rule of law, is very uncertain,” he said.

In making a legal call to arms, Dr. Santoro wants Western businesses to reconsider some of their “shortsighted and self-defeating presuppositions” about the best way of promoting their interests in China. But some people on the ground feel that it is a confrontation in court that would be self-defeating. Clare Pearson, who runs ethicaledge, a consultancy in Beijing, said Dr. Santoro was wearing cultural blinders.

“Companies aren’t the new missionaries,” Ms. Pearson said. “The last thing you want to do is to get somebody to lose face in public,” she said, advising, “Get close before you get critical.”

It's an interesting argument. And I don't see that there is much disagreement necessarily between Santoro and Pearson here. It sounds like Santoro might concede that as far as doing business in China goes, yes, do get close before you get critical. But once you are close--don't forget the second part, which should at least sometimes include court actions on such issues as internet freedom and judicial independence. Perhaps we'll start to see some of that now. Of course just getting close might already require making significant ethical concessions as the Dell and HP case presents in my post below. It would be interesting to know what Santoro would say about that.

My own recent book includes a chapter by Duane Windsor, professor of business ethics at Rice, on the duty of MNCs to provide basic health services, i.e., to help erradicate epidemics, in developing countries in which they operate. He argues that when it can be done relatively easily and at low cost it must be, for it is both a "moral obligation and a strategic necessity."

June 9, 2009

Should Dell & HP Agree to Install Censorship Software in Chinese Computers?

An interesting problem of global business ethics. The New York Times seems to have broken the story yesterday, reporting the Chinese government has just announced that after July 1, all PCs sold in China will have to include "Green Dam" software that will allow the government to prevent users from accessing any sites the government deems "unclean," including everything from political dissidence to pornography.

I'm inclined to think that these companies should lobby the U.S. government to apply political pressure on China. Unfortunately, since China is our largest creditor right now, we don't have much political power there these days. Ultimately however, we need to find a way to credibly threaten stronger enforcement of Chinese patent and copyright violations, which are notoriously widespread.

So long as the Chinese government continues forcing American companies to facilitate censorship, this gives us that much more moral ground to stand on the intellectual property issue, which robs the U.S. economy of billions in annual GDP. This approach to corporate social responsibility whereby companies strive to progressively shape public policy on the global stage is persuasively defended by David Vogel in his excellent book, The Market for Virtue.