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S I X T H E D I T I O N

BUSINESS AND ITS


ENVIRONMENT

David R Baron
Stanford University

PEARSON

Pearson Education International


Contents

List of Cases xvi


Preface xix

PART I: STRATEGY AND THE NONMARKET ENVIRONMENT 1


CHAPTER 1 Market and Nonmarket Environments 1
Introduction 1
The Environment of Business 2
The Role of Management 3
Market and Nonmarket Environments 4
Analysis of the Nonmarket Environment: The Four I's 5
The Nonmarket Environment of the Automobile Industry 5
Issues 5 • Interests 8 • Institutions 9 • Information 10
Change in the Nonmarket Environment 11
Anticipating Change in the Nonmarket Environment 13
The Nonmarket Issue Life Cycle 13
EXAMPLE: GRADUATION CARDS 14
Summary 16
Cases 17
The Nonmarket Environment of the Pharmaceutical Industry 17
The Nonmarket Environment of McDonald's 20
The Nonmarket Environment of Google 25
CHAPTER 2 Integrated Strategy 33
Introduction 33
Strategy in the Nonmarket Environment 33
The Importance of Nonmarket Strategy 33 • Competition and Change in the Nonmarket Environment 35
• Strategy and the Nonmarket Issue Life Cycle 36 • Strategies and Borders 36
Integrated Strategy 37
Google and the Spectrum Auction 38
EXAMPLE: DIRECT-TO-CONSUMER ADVERTISING AND INTEGRATED STRATEGY IN THE
PHARMACEUTICAL INDUSTRY 40
Approaches to Integrating Market and Nonmarket Strategies 41
Nonmarket Positioning 42
Nonmarket Positioning and Market Strategies 43
EXAMPLE: EBAY'S POSITIONING IN LEGAL SPACE 44
Positioning Spaces 46 • The Perils of Positioning 47
Nonmarket Capabilities and Reputation 48
A Framework for the Analysis of Nonmarket Issues 49
EXAMPLE: CITIBANK AND CREDIT CARDS FOR UNDERGRADUATES 51
Organization of the Nonmarket Strategy Function 52
Summary 53
Cases 54
Exclusive Resorts: Entrepreneurial Positioning and Nonmarket Defense 54
Envirotest Systems Corporation (A) 57
Molecular Insight Pharmaceuticals: Integrated Strategy for a Development Stage Molecular
Medicine Company 61
vi Contents

CHAPTER 3 The News Media and Nonmarket Issues 66


Introduction 66
The Role of the News Media in Nonmarket Issues 66
Messages and Their Interpretation 68
A Theory of News Media Coverage and Treatment 69
Intrinsic Audience Interest 69 • Societal Significance 70 • Combining the Perspectives 70
Extending the Theory 72
Newsworthiness 72 • The Cost of Coverage 73 • Balance and Fairness 73
The Nature of the News Media 74
News Organizations as Businesses 74 • The Profession 74 • Does the News Media Treat Issues Selectively? 75
• Bias, Accuracy, and Fairness 76 • The Internet and Citizen Journalism 77
Business Interactions with the News Media 78
The Need for Information 78 • Media Strategies 78 • Responses and Media Vacuums 79
• Media Interviews 79 • Anticipating Issues 80 • Unanticipated Events 81
Recourse in Disputes with the Media 81
Private Recourse 81
EXAMPLE: PROCTER & GAMBLE AND NEIGHBOR TO NEIGHBOR 82
Recourse to the Law: Defamation and Libel 83 • Political Recourse 84
Summary 85
Cases 86
General Motors: Like a Rock? (A) 86
Illinois Power Company (A) 88

CHAPTER 4 Private Politics 90


Introduction 90
Campaigns 91
EXAMPLE: PIZZA HUT AND HEALTH INSURANCE REFORM 93
Private or Public Politics? 95
Activist Strategies 96
Advocacy Science 98 • Target Selection 98
EXAMPLE: FISH FARM ACTIVISM 99
A Generic Strategy of Activists 100
Activist Organizations 101 0
Activists and Their Organizations 101 • Greenpeace 102
Interacting with Activist Organizations 103
Assessment 103 • Strategy and Negotiations 104
EXAMPLE: NEGOTIATING WITH ACTIVISTS: ONBANK 106
Challenging the Activists 106
Summary 107
Cases 109
Shell, Greenpeace, and Brent Spar 109
Nike in Southeast Asia 112
Anatomy of a Corporate Campaign: Rainforest Action Network and Citigroup (A) 115
Anatomy of a Corporate Campaign: Rainforest Action Network and Citigroup (B) 118

CHAPTER 5 Crisis Management 120


Introduction 120
The Nature and Causes of Crises 120
The Pattern of Crisis Development 121
EXAMPLE: PEPSICO AND THE SYRINGE EPISODE 124
Components of a Crisis Management Program 125
Avoidance 126 • Crisis Preparedness 127 • Root Cause Analysis 128 • Response 129 • Resolution 132
Summary 133
Contents vii

Cases 135
Buffalo Savings Bank (A) 135
Mattel: Crisis Management or Management Crisis 136
Merck and Vioxx 140
PART I Integrative Case: Wal-Mart: Nonmarket Pressure and Reputation Risk (A) 144

PART II: PUBLIC POLITICS AND NONMARKET STRATEGY 153


CHAPTER 6 Nonmarket Analysis for Business 153
Introduction 153
A Framework for the Analysis of Nonmarket Action in Public Politics 154
Interests and Interest Groups 154 • The Amount of Nonmarket Action 155 • The Demand for
Nonmarket Action 155 • The Costs and Effectiveness of Nonmarket Action 156
• The Distributive Politics Spreadsheet 158
The Nature of Political Competition 159
EXAMPLE: INTERNET WINE SALES 161
Institutions and Institutional Officeholders 162
Moral Determinants of Collective Action 162
Boeing in a Pickle 162
Analysis of Boeing in a Pickle 164
The Nonmarket Issue 164 • Distributive Consequences 165 • Boeing's Nonmarket Agenda and
Objectives 166 • The Nature of the Politics 167 • Interests and the Demand for Nonmarket Action 167
• The Supply Side 167 • The Distributive Politics Spreadsheet 168 • Institutions and Institutional
Officeholders 168 • Nonmarket Strategy Formulation 170 • The Outcome 171
Summary 171
Appendix A: Nonmarket Action and the Free-Rider Problem 173
Appendix B: The Organization of Congress 175
Cases 181
Tobacco Politics 181
Scrubbers and Environmental Politics 183
Repeal of the Luxury Tax 184

CHAPTER 7 Nonmarket Strategies for Government Arenas 185


Introduction 185
Responsible Nonmarket Action 186
Criticisms of Business Nonmarket Action 186
Nonmarket Strategy Formulation 189
Managers and Nonmarket Strategies 189 • Implementation 194
Understanding Outcomes 195
Generic Nonmarket Strategies 196
Representation Strategies 196
EXAMPLE: TOSHIBA AND TRADE SANCTIONS 197
Majority-Building Strategies 199 • Informational Strategies 202 • Public Officeholders as Targets of
Nonmarket Strategies 203
EXAMPLE: CHINA AND MOST FAVORED NATION STATUS 204
Institutions, Interests, and Strategy Choice 205
Institutions and Responsiveness 205 • Interests: Client and Interest Group Politics 205
Summary 206
Appendix: The Politics of the Extension of Daylight Saving Time 208
Cases 212
Federal Express and Labor Organization 212
Carried Interest Taxation 213
Wal-Mart and Its Urban Expansion Strategy 217
• viii Contents

CHAPTER 8 Implementing Nonmarket Strategies in Government Arenas 220


Introduction 220
Lobbying 220
EXAMPLE: PACIFICARE'S NONMARKET PORTFOLIO 221
The Nature of Lobbying 222 • Technical and Political Information 223 • Credibility and
Relevance of Information 224 • Access 225 • Timing and Focus 226 • Government
Allies 226 • Controls on Lobbying 226
Electoral Support 227
Myths and Realities of Campaign Financing 228 • Election Financing Laws 228 • The Pattern of
Campaign Contributions 229 • Purposes of Campaign Contributions 230
Grassroots and Constituency Campaigns 231
Mobilization 231 • Business Grassroots Campaigns 232 • The Effectiveness of Grassroots Programs 232
Coalition Building 233
Peak Associations 233 • Trade Associations 234 • Ad Hoc Coalitions 235
• Coalitions and Consensus 235
EXAMPLE: PHARMACEUTICAL POLITICS 236
Testimony 236
Public Advocacy 237
Judicial Actions 238
Organizing for Nonmarket Effectiveness 239
Developing Nonmarket Capabilities 239
Summary 240
Cases 242
Responsible Lobbying? 242
Internet Taxation 247
Pharmaceutical Switching 252
PARTII Integrative Case:FuelEconomy Standards2007 259

PART III: GOVERNMENT AND MARKETS 265


CHAPTER 9 Antitrust: Economics, Law, and Politics 265
Introduction 265
Antitrust Law 267
The Antitrust Statutes 267
EXAMPLE: MONOPOLY 269
Exemptions 269
Enforcement of the Antitrust Laws 270
Government Enforcement 270 • Private Enforcement 272 • Per Se Violations and the Rule of Reason 273
Antitrust Thought 274
The Structural Approach 275 • The Chicago School 277 • The New IO Approach 278
Examples of the Differences in Antitrust Thought 280
Vertical Arrangements 280 • Predatory Pricing and Entry Deterrence 282 • Collusion and
Price-Fixing 283 • Mergers and Merger Guidelines 284
Compliance 286
The Politics of Antitrust 287
Summary 288
Cases 289
Price Fixing in the Airways 289
The Staples-Office Depot Merger? 290
The Microsoft Antitrust Case 294
CHAPTER 10 Regulation: Law, Economics, and Politics 302
Introduction 302
Periods of Regulatory Change 303
Contents ix

The Constitutional Basis for Regulation 304


Regulatory Commissions and Agencies 305
Delegation, Rule Making, Due Process, and Discretion 306
The Nonmarket Environment of Regulatory Agencies 307
EXAMPLE: REGULATORY RULE MAKING IN THE BUSH ADMINISTRATION 309
Explanations for Regulation 310
Market Imperfections 310
Natural Monopoly 310 • Externalities 312 • Public Goods 313 • Asymmetric Information 313
• Moral Hazard 314 • Government Imperfections 315
The Political Economy of Regulation 316
Capture and Rent-Seeking Theories 316 • Fairness 316 • Other Public Purposes: Media Ownership
Rules 317 • Preemption 318
A Nonmarket Theory of Regulation 318
EXAMPLE: THE POLITICAL ECONOMY OF REGULATION: ATVS 319
Redistribution and Cross-Subsidization 320
Cost-of-Service Regulation 320
Deregulation 321
Telecommunications 321 • Electric Power 323 • Auctions 324
Summary 325
Cases 326
The FCC and Broadband Regulation 326
Enron Power Marketing, Inc., and the California Market 330
The FCC Media Ownership Rules 332

CHAPTER 11 Environmental Management and Sustainability 337


Introduction 337 ;
The Environment and Sustainability 337
Goals and Actions 337 • Global Climate Change 338 • Policy 338 • Tradeoffs 339
Socially Efficient Control of Externalities 340
The Coase Theorem 340
EXAMPLE: THE COASE THEOREM 342
Transactions Costs and the Limits of the Coase Theorem 343
Cap-and-Trade Systems 344 • >
Cap-and-Trade Systems to Address Acid Rain 345
Global Climate Change and Emissions Trading Systems 346
The United States and Carbon Emissions 347 • Emissions Trading in the European Union 347
• Emissions Trading Within BP pic (British Petroleum) 348
Regulation as Opportunity 348
Government Policy: The EPA 349
Enforcement 350 • Standards Setting and Engineering Controls 351 • Incentive Approaches 351
EXAMPLE: INTEL AND THE PROJECT XL 352
Superfund 352 • State Policy Initiatives 353
The Political Economy of Environmental Protection 353
The Nature of Environmental Politics 353 • Judicial Politics 354 • Advocacy Science 354
• Distributive Politics 355 • Private and Public Politics 356
EXAMPLE: THE EQUATOR PRINCIPLES 357
NIMBY and Private Politics 358
Management of Environmental Protection Issues 359
EXAMPLE: DOW CHEMICAL AND LOCAL ENVIRONMENTALISTS 361 •
EXAMPLE: MCDONALD'S AND WASTE REDUCTION 362
EXAMPLE: ENVIRONMENTAL ACTIVISM AT HOME DEPOT 363
Voluntary Collective Environmental Programs 364
Summary 365
• X Contents

Cases 366
Regulation as Opportunity: Cummins Inc. 366
Emerging Nanotechnology Regulation: Samsung's SilverCare Washing Machine 368
Environmental Justice and Pollution Credits Trading Systems 370

CHAPTER 12 Law and Markets 374


Introduction 374
The Common Law 375
Property 376
Bargaining 376 • Incentives and Appropriability 377
Intellectual Property 377
Intellectual Property Protection 378
EXAMPLE: INTELLECTUAL PROPERTY ENFORCEMENT AND DIGITAL PIRACY 379
EXAMPLE: MICKEY MOUSE POLITICS AND LAW 381
Contracts 383
EXAMPLE: GENENTECH AND CITY OF HOPE 384
Enforceability 385 • Breach 385 • Remedies 385
Torts 386
The Product Safety Problem and Social Efficiency 387
Entitlements, Liability, and Social Efficiency 389
Entitlements and Their Protection 389 • The Assignment of Social Costs and the Choice Between Liability
and Regulation 391
Products Liability 392
The Development of Products Liability Law 392 • Allowable Defenses Under Strict Liability 395
• Preemption 396 • Damages 397 • The Politics of Products Liability 398
Imperfections in the Liability System 399
EXAMPLE: SILICONE BREAST IMPLANTS 401
Summary 403
Cases 404
California Space Heaters, Inc. 404
Patent Games: Plavix 406
Obesity and McLawsuits 408

CHAPTER 13 Information Industries and Nonmarket Issues 413


Introduction 413
The Economics of Online Markets 414
Internet Privacy 417
EXAMPLE: GOOGLE: GMAIL AND PRIVACY 419
The Internet and Tax Policy 423
Online Communities 425
Summary 427
Cases 428
DoubleClick and Internet Privacy 428
eBay and Database Protection 433
eBay: Private Ordering for an Online Community 438

PART III Integrative Case: Credit Card Regulation 445

PART IV: GLOBAL NONMARKET STRATEGY 451


CHAPTER 14 The Political Economy of Japan 451
Introduction 451
Issues 452
Interests 454
Contents xi •

Institutions 455
The Diet 455 • Political Parties and the Electoral System 456 • The Bureaucracy 458
• Political Reform 460
The Judicial System and the Antimonopoly Law 462
Cultural Foundations 462
Tying the Components Together: A Framework of Political Exchange 464
Political Exchange 464
Characteristics of Business 466
Business-Government Interactions 467
The Organization of Business for Nonmarket Action 467 • Nonmarket Strategies 468
• Relationships with the Bureaucracy 469 • Lobbying and Points of Access 470
• Information 471 • Corporate Nonmarket Styles 471
Summary 472
Cases 474
The Breakup of Nippon Telephone and Telegraph? 474
The Privatization of Japan Post 476
Uniqlo: Success Breeds Nonmarket Challenges 479
CHAPTER 15 The Political Economy of the European Union 481
Introduction 481
The European Union 481
The Single European Act 482 • The Maastricht Treaty 483
The Institutions of the European Union 484
The European Commission 484 • The Council of Ministers 485 • The European Parliament 486
• The Court of Justice 487 • The European Economic and Social Committee 487 • The EU Legislative
Process 488 • Economic and Monetary Union 488 • The EU Constitutional
Treaty 490 • Competition Policy 490
EXAMPLE: MICROSOFT ANI> EU COMPETITION POLICY 493
State Aids and the Common Agricultural Policy 494 • The Social Charter, Social Democracy, and Labor
Markets 494
Nonmarket Issues 496
Interests and Their Organization 498
Nonmarket Strategies in the European Union 499
EXAMPLE: PRONUPTIA AND FRANCHISING 504
Summary 505 •
Cases 506
The European Union Carbon Tax 506
The European Union Data Protection Directive 509
Aldeasa and the EU Duty Free Abolition (A) 511
CHAPTER 16 China: History, Culture, and Political Economy 517
Introduction 517
Historical Background 518
Pre-Republican 518 • The Communist Era 520 • The Reform Era 521
Confucianism and Social Explanations 523
Applications in Society, Politics, and Business 525
The Nonmarket Environment and the Four Fs 527
Institutions and Government 528 • State Institutions 530 • Provincial and Local Governments 531
Business: State-Owned Enterprises, Foreign Direct Investment, and International Trade 532
State-Owned Enterprises 532 • Foreign Direct Investment 533 • International Trade Policy and
WTO Membership 534 • Regulation 535
Continuing Issues 535
Human Rights 535
EXAMPLE: AN INTELLECTUAL PROPERTY CHALLENGE 537
Energy and the Environment 539
• xii Contents

Summary 540
Cases 541
Wugang and the Reform of State-Owned Enterprises 541
Direct Selling in China 543
Google in China 545
CHAPTER 17 Emerging Markets 549
Introduction 549
Country Assessment 549
Individual Freedoms 550 • Economic Freedom 550 • Corruption 550 • Political Risk 551
• Competitiveness 551 • Culture 551
Opportunities 551
EXAMPLE: INDIA 552
Opportunity at the Bottom of the Pyramid? 553 • River Blindness 553 • Fair Trade 554
• Microfinance 556 • Underdeveloped Markets and Business Groups 557
Risk Assessment 558
Causes and Types of Risks 559
Management in the Nonmarket Environment 562
Summary 563
Cases 564
Tesco PLC in India? 564
Social Entrepreneurship: Banco Compartamos 567
Social Entrepreneurship: Kiva 568
MTN Group Limited 570
CHAPTER 18 The Political Economy of International Trade Policy 574
Introduction 574
The Economics of International Trade 575
Competitive Theory 575 • Strategic Trade Theory 578
The Political Economy of International Trade Policy 579
The Dual Nature of the Politics of International Trade 579 • Asymmetries in the Politics 580
International Trade Agreements 581
The World Trade Organization 581 • General Agreement on Trade in Services (GATS) 582 • Trade-
Related Aspects of Intellectual Property Rights (TRIPS) 582 • Agriculture 583 • Government
Procurement 584 • Antidumping, Countervailing Duties, and Safeguards 584 • Dispute Settlement 584
• The Doha Round of WTO Negotiations 587 • Other Trade Agreements 588
U.S. Trade Policy 588
The Structure of U.S. Trade Policy 588 • U.S. Trade Law and Its Administration 589
The Political Economy of Protectionism 590
Formal Policies 590 • Channels of Protection 591
EXAMPLE: STEEL IMPORTS AND THE NONMARKET CAMPAIGN 592
The Political Economy of Market Opening 594
The North American Free Trade Agreement 594 • Market Opening Under the Threat of Retaliation 595
Summary 596
Cases 597
Cemex and Antidumping 597
Compulsory Licensing, Thailand, and Abbott Laboratories 602
Sophis Networks and Encryption Export Controls (A) 607
PART IV Integrative Case: Toys 'JP Us and Globalization 614

PART V: ETHICS AND CORPORATE SOCIAL RESPONSIBILITY 619


CHAPTER 19 Corporate Social Responsibility 619
Introduction 619
The Trust Gap 620
Contents xiii •

What Is Corporate Social Responsibility? 621


Milton Friedman's Profit Maximization 621
Compliance with the Law 625
Stakeholder Theory 626
The Business Roundtable Statement on Social Responsibility 628
Discussion 629
Corporate Social Responsibility and Corporate Social Performance 630
EXAMPLE: TUNA AND DOLPHINS 631
A Framework for Corporate Social Performance 632
Terminology 632 • The Setting 632 • Motivations for CSP 633 • Rewards 634
• Summary 635 • Empirical Research 635
Corporate Governance 637
Social Accountability 637 • The Duties of Boards of Directors 638 • Sarbanes-Oxley 639
• The Market for Control 640
Summary 641
Cases 642
The Collapse of Enron: Governance and Responsibility 642
Wal-Mart: Nonmarket Pressure and Reputation Risk (B):A New Nonmarket
Strategy 647
Playing by the Rules? 650

CHAPTER 20 Ethics Systems: Utilitarianism 653


Introduction 653
The Managerial Role of Ethics 653
What Ethics Is and Is Not 654
Personal and Business Ethics 655
Ethics and Private Interests 655
Ethics, Politics, and Change 655
Casuistry 656
EXAMPLE: SAVING THE DIVISION 657
The Methodology of Ethics 657
The Relationships Among Moral Philosophy, Ethics, and Political Philosophy 659
Utilitarianism: A Consequentialist System 660
Utilitarianism and Self-interest 661 • Aligning Self-interest with Societal Well-Being 661 • Utilitarianism,
Distribution, and Altruism 662 • Summary of the Components of Utilitarianism 662
Utilitarian Duty and the Calabresi and Melamed Principles 662
Act and Rule Utilitarianism 664
Jointly Determined Consequences 665 • Decision Making in the Face of a Moral Transgression 666
Utilitarianism and Rights 666
Criticisms of Utilitarianism 667
Philosophical Criticisms 667 • Interpersonal Comparisons of Utility 668 • Identifying Costs and
Benefits 668 • The Measurement Problem 668 • The Information Problem 669
Utilitarianism in Application 670
Categories of Situations 670 • Methodology 670
EXAMPLE: LIVING BENEFITS 671
EXAMPLE: INTEGRITY TESTS 672
EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 673
EXAMPLE: REDLINING 673
Summary 674
Cases 675
Pricing the Norplant System 675
Tax Shelters 677
Pfizer and Celebrex 679
XIV Contents

CHAPTER 21 Ethics Systems: Rights and Justice 681


Introduction 681
Classification of Ethics Systems 681
Classes of Rights 682
Kantian Maxims or Moral Rules 683
EXAMPLE: LIVING BENEFITS 684
The Relationship between Maxims and Rights 684 • Intrinsic and Instrumental Rights 685
• Criticisms of Kantian Rights 687
EXAMPLE: PRIVACY 688
Applied Rights Analysis 689
Claimed and Granted Rights 689
EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 691
A Methodology for Rights Analysis 691
Conflicts Among Rights 691
Rights and Interests 692 • Prioritization 692
EXAMPLE: INTEGRITY TESTS 693
Equal Employment Opportunity 694
Disabilities and Rights 696
Neoclassical Liberalism 697
Categories of Justice Theories 698
Distributive Justice 698 • Compensatory Justice 699 • Injustice 700
Rawls 's Theory of Justice 700
The Framework for Justice as Fairness 700 • The Principles of Justice 702 • The Role of
Incentives 703
EXAMPLE: LIVING BENEFITS 704
Duty in Rawls's Theory 704
EXAMPLE: CLINICAL TRIAL OBLIGATIONS 705
Criticisms of Rawls's Theory 705 • Applying the Principles of Justice 706
EXAMPLE: AFFIRMATIVE ACTION 707
EXAMPLE: INTEGRITY TESTS 709
EXAMPLE: REDLINING 709
EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 710
Higher Order Standards for Evaluating Ethics Systems 710
Summary 710 r
Cases 712
Genetic Testing in the Workplace 712
Citigroup and Subprime Lending 714
Consumer Awareness or Disease Mongering? GlaxoSmithKline and the Restless Legs Syndrome 716

CHAPTER 22 Implementing Ethics Systems 720


Introduction 720
EXAMPLE: LEVI STRAUSS & COMPANY AND GLOBAL SOURCING 721
Moral Determinants of Nonmarket Action 722
EXAMPLE: CIRCLE K'S HEALTH CARE POLICY 723
The Challenge of Corporate Social Responsibility 724
Corporate Social Responsibility and Ethics in Practice 726
EXAMPLE: UNOCAL CORPORATION AND THE DIRTY CAR BOUNTY 726
EXAMPLE: SOUTH SHORE BANK AND COMMUNITY DEVELOPMENT 727
EXAMPLE: BP AND SOCIAL RESPONSIBILITY 727
EXAMPLE: WAL-MART REPUTATION AND STAKEHOLDER MANAGEMENT 728
EXAMPLE: CITIGROUP: RESPONSIBILITY UNDER FIRE? 730
EXAMPLE: JOHNSON & JOHNSON'S "OUR CREDO" 731
Core Principles and Their Evolution 731 • The Body Shop and the Social Audit 732 • Codes of
Conduct 733 • Competitive and Proprietary Information 734 • Principles and Reasoning 734
Contents XV

Tensions in the Implementation of Ethic Principles 735


Paternalism 735 • Nonmarket Action and Restraint 736
Sources of Unethical Behavior 738
Summary 739
Cases 740
Denny's and Customer Service 740
Gilead Sciences (A): The Gilead Access Program for HIV Drugs 742
Advanced Technology Laboratories, Inc. 746
CHAPTER 23 Ethics Issues in International Business 749
Introduction 749
International Law and Institutions 750
Cultural Relativism 751
Human Rights and Justice 754
Slave Labor in Saipan? 754
Operating in Developing Countries 755
AIDS and Developing Countries 756
EXAMPLE: GLAXOSMITHKLINE AND NONMARKET SPILLOVERS 757
Responsibility for Working Conditions in Suppliers' Factories 758
Sweatshops 758 • Private Governance and Self-Regulation: The Fair Labor Association 759
• Company Responses 759
International Codes 761
Questionable Foreign Payments and Corruption 761
Questionable Payments and Ethics Principles 762 • The Lockheed Case 763 • A Utilitarian Analysis
of Bribery 764 • The Foreign Corrupt Practices Act 766 • Company Codes 767 • Cummins's
Practice 768 • The OECD Anti-Bribery Convention 769
Summary 770
Cases 772
Complications in Marnera 772
De Beers and Conflict Diamonds 773
. Siemens: Anatomy of Bribery 774
PART V Integrative Case: GlaxoSmithKline and AIDS Drugs Policy 778
References 784
• 0

Index 796