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October 24, 2002 Global business ethics: Researchers find there's no quick fix



by Eleanor Brown

Sylvie Babarik wants to be sure that her T-shirt was made by an employee who was never physically assaulted at the sewing machine by an angry boss.

“Were your jeans made quickly because someone wasn’t allowed to take a bathroom break? I would say that I don’t know [about my own wardrobe],” the Concordia University student said ruefully.

She was addressing a group of academics who assembled this month to discuss case studies on business ethics around the world at the third annual meeting on Global Responsibilities and the Practices of International Businesses in Developing Areas, convened by Concordia professor Frederick Bird, and held Oct. 17 to 19.

Although actual assault is not common, it can still happen in the dozens of factories located in developing countries around the world, where little effort is put into employee comfort. But overtime is often a job requirement, pay cheques may not reflect the hours worked, and there may be no work breaks. Employees may be yelled at by their supervisors, and all the doors, including the emergency exits, may be locked.

Even the multinational company that sews its brand name onto the clothing may not know what’s happening in its factories, located thousands of miles away from the head office. It’s expensive to hire private accountants and monitors to find out, and many executives would rather not know.

Of course, some are concerned by bad publicity, and others do worry about business ethics. Babarik is working on a report for a church group that visits factories in Guatemala for concerned foreign investors, on the cheap.

“In this case, the brand name pressured one of its main suppliers to allow people to come in,” Babarik said. “They are allowed to speak to the workers on their lunch breaks, they observe, they have access to the books. They write up what they’ve seen, and send it to the brand name.” If there are violations of local law or international treaties, “they hope the brand name will then intervene.”

Guatemala is a popular locale for international investors in the textile trade, yet it has only nine labour inspectors for the whole country, meaning many of the sub-contracted factory operators rarely see one.

Babarik presented the draft of her paper as a bit of an accident. She went to Guatemala on her own just over a year ago, and helped with writing up the project when she met up with some Canadian Presbyterians.

In September, she started an MA in Religious Studies at Concordia, and met Dr. Bird, an ethicist in the department and one of the principal researchers on this project, which will culminate in a series of books on business ethics around the world. The project itself is mainly funded by a small SSHRC grant, with each academic involved — there are more than two dozen — picking a country and a handful of businesses within it.

Corporate responsibility

Bird wants to study what makes for good corporate responsibility, and how and why it should be done. Is community development the responsibility of a business that sells its products elsewhere?

Businesses in the developing world must “abide by some standards developed by Europeans,” Bird said, “but are these the terms that those countries choose? Or are they getting in the way, causing conflict and inequality?”

Cultural differences are real, but Bird also doesn’t want people to shrug and adopt a cultural relativism to the detriment of others. “What minimal standards must exist in order to arrive at common goals?”

Bird has lots of questions, and there may be no hard and fast answers. “We’re not here to praise or to blame, but to learn.”

He does admit to an agenda, however: “We are interested in reducing poverty.” As a result, the case studies look at whether companies build social infrastructure, and analyze business strategy. Many corporations are obsessed with making short-term cash when their long-term survival and profits might benefit from different decisions. “Asset development” can be seen to include employees and whole neighbourhoods.

Bird’s group is always inviting more academics to keep them up to date on the hundreds of countries around the world that fall under their mandate.

Brock University political science professor Hevina Dashwood is one-third of the way into her own three-year project on corporate responsibility in Canada’s mining sector, looking at what factors have motivated firms to adopt policies. Globalization has brought on a new set of rules, from local to country-wide, and a dizzying array of international treaties.

“They’re not cohesively put together,” she said. Companies are also increasingly making their own rules about ethical behaviour. “We’re seeing a shifting locus of authority between the private and the public. The whole privatization of standardization shows a shift of the knowledge base.”

Should governments be devolving their power? Université de Montréal business school student Rabia Naguib presented the economic vision of Malaysia’s prime-minister-for-life, Dr. Mahathir Mohamad. He has been in office since 1981, and has significantly transformed his country, cutting poverty, focussing on huge public works projects and creating a “smart partnership” program that mixes public and private, and the local with the international.

On the other hand, the structure of “smart partnership” allows for corruption and the occasional boondoggle, and human rights abuses abound. Still, the prime minister is popular for taking on the rest of the world. “He is an acerbic badboy, who will say aloud what other people are thinking,” Naguib said.

The prime minister says the international community tries to “beggar thy neighbour. . . . We have developed ourselves by doing the opposite of what the [financial] wizards told us we should do. But you don’t like us to have big ideas — it’s not proper.”

Others have been in on the project a bit longer, like McGill University doctoral student Farzad R. Khan. He presented a look at the international panic over child-labour used in making soccer balls in Pakistan.

“The charges of abusive child labour practices leveled against them in a 1996 child labour campaign were simply unfounded. Children were simply helping the family wax threads or perforate holes for panels,” he concluded. “Working part-time at their own family pace is a safe, clean, non-hazardous process.”

To solve the public relations crisis caused by the rumours of child abuse, the industry was completely upended. Factories were built, taking parents out of their homes and causing social upheaval. As a result, many workers lost the piecework and part-time jobs that had sustained their families.

Other researchers at the workshop reported on case studies of business practices in Uganda, Ghana, Nigeria, South Africa, South Korea, China, Vietnam, Northern Quebec, Fiji and Costa Rica.