Welcome

Corruption, Child labor

and International Business

Dr. Satyendra Singh

Director, Centre for Emerging Markets

Professor, Marketing and International Business

Editor, International Journal of Business and Emerging Markets

University of Winnipeg

CANADA

Outline

The ethical issues The premiseThe moral philosophiesCorruption and Child laborHow to deal with these issues

Macro, micro and personal levelsQ & A

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The Ethical Issues

CorruptionChild laborHuman rightsEnvironmentHiring practicesGlobalization…

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The Basic Premise

CorruptionChild labor

Symptoms vs. problem (Einstein)

Morally wrongUnethicalPhilosophically

(Poverty, Lack of education,…)f

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The Moral Philosophies…

Ethics moral principles or valuesEthical Fundamentalism

Search outside source ethical rules, butCannot decide right/wrong themselvesEg. drining alcohol

UtalitarianismMaximum good to society, butWhat is goodE.g. Governments – left vs right

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The Moral Philosophies

Kantian Ethics – duty, deontologicalRule – consistency & reversibilityWhat is rule if exception becomes rule!

Rawls’s Social Justice TheoryFairness, peace and harmonySocial contract – a bit ideal -- Bhutan

Ethical Relativism – feelings, no ruleIndividual moral standard – debatable

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Corruption

Pay to get work doneCaused by usually poverty, greed…

Salary lasts for 3 weeks only…?Survival vs. meeting basic needs

For Tax, commission, compensationAgainst morally wrong and illegal

Compromise personal beliefs Promotes and creates dependence on it Benefits recipients; deceives stakeholders

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Kinds of Corruption

Corrupt IndividualIndividual primary beneficiary at the

cost of organizationCorrupt organization – even country!

SelectionSocialization

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Child Labor (300m)

Poverty—survival urbanizationIf outlaw (Harkin Bill) short- and long-term

↓ Family income ↓labor supply↑ Adult wage children go to school↑ skills ↑ productive ↑ wages↑ family welfare if demand persists

But, ↑ wages ↓ # of jobsEffective only if children go to school

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How to deal with these issues

CorruptionChild labor

Acceptable child work

Vs. objectionable child labor

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Trends Against Corruption and Child Labor

Transparency InternationalForeign Corrupt Practices Act (US)

Corruption of Foreign Public officials (Canada)

OECD Anti-bribery InitiativesHarkin Bill – Trade BanILO Convention on Minimum Age138UN Global Compact (UNGC 2007)

HR(2), Labor (4), Environment (3), Anticorruption (1)

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UN Global Compact…

1.Support, respect and protect HR2.No HR abuses in businesses3.Freedom of association and right to

collective bargaining4. No forced/compulsory labor5. No child labor 6.No discrimination in employment

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UN Global Compact

7.Support precautionary approach to environment challenges

8.Promote environmental responsibility 9.Development and diffusion of

environmentally friendly technologies10.Work against all forms of corruption

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UN Global Compact -- 5

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• Abolition of child labor – ILO conventions Minimum Age Convention No. 138– Minimum age for admission to employment or work

• Developed countries Developing countries• Light Work 13 Years Light Work 12 Years• Regular Work 15 YearsRegular Work 14 Years• Hazardous Work 18 Years Hazardous Work 18 Years

– Children have distinct rights• Child labour is damaging to a child’s physical, social,

mental, psychological and spiritual development • Deprives them of childhood, dignity; separates from families

• ILO Convention 182 worst form of child labor – no ratification

UN Global Compact -- 10

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• Work against all forms of corruption – Corruption

• the abuse of entrusted power for private gain

– Extortion• When asking or demand is accompanied by threats that

endanger the personal integrity or the life of the person

– Bribery, Transparency International• gift, loan, fee, reward… from a person to do something

dishonest, illegal or a breach of trust

– Steps to fight corruption• Internal: Anti-corruption policies within organizations• External: Report corruption in the annual Communication• Collective: Join forces with industry peers, stakeholders…

At Macro Level

Education – compulsory- national strategy E.g., India, Ghana, Kenya

Ethics - required course – mustAwareness – landmines – Pr. Diana

Experiential, application-oriented educationE.g., build capability

Governments enforce moral guidelinesGovernment policies for fair trade

E.g., GM Food, Subsidies, Cocoa price…

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At Micro Level

Strategic — MNCs (Mobil/GM/Wal-Mart/Toyota) have power -- >$200B-300BSchool and day care for childrenUN Global Compact implementationContribution to country’s development

Mode of entryIJV vs. Wholly-owned subsidiary

Ethics OfficerPay fair taxes, reduce transfer pricing

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At Personal Level…

Personal moral compassOrganizational Culture

Whistle-blower legislation(Un)realistic performance goalsVolunteer for social cause

E.g., Scotia Bank Winnipeg Public Library Board

Win-win situation

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Conclusion

MNCs have power, and thus can↑ Education↓ Poverty↓ Corruption↓ Child labor

Trade ban only may not workTreat problems, not symptomsFair trade is needed, so is political will

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References

Bachman, S.L. (2000), “The political economy of child labor and its impacts on international business,” Business Economics, July: 30-41

Pinto, J., Leana C.R. and Pil F.K. (2008), “Corrupt organization or organizations of corrupt individuals?” Academy of Management Review, 33(3): 685-709.

UNGC (2007), http://www.unglobalcompact.org/AboutTheGC/Global_Compact_Logo/GC_Logo_Policy.html

Singh (2010), UNGC slides

www.uwinnipeg.ca/~ssingh5/Em/em-human-rights.ppt

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Questions?

Thank you

for gracing the talk