Racing to the Bottom?: The Effects of Globalization on Global Ethics

Racing to the Bottom?: The Effects of Globalization on Global Ethics

Barbara A. Ritter (Coastal Carolina University, USA)
DOI: 10.4018/978-1-61350-332-4.ch004

Abstract

The argument of this chapter will depend on two main precepts: (1) large corporations remain largely in control of the globalization process, and (2) the process of globalization is very unlikely to occur ethically if large corporations remain in control. Several facets of these precepts will be considered and argued for. Evidence will be considered supporting the contention that large corporations drive the main markers of globalization. After arguing for these precepts the characteristics and ethical ramifications of corporate-centered globalization will be considered. This final section will answer several questions that emerge from the chapter’s argued for precepts. These questions will include: What needs to be done to be at the forefront of moral global policy? What ethical standards are key? Do MNCs have a moral duty to account for the effects of the race to the bottom? How do we compensate globalization’s losers? What would an ethical business model look like? With an analysis of possible alternatives, an action plan to make change on a global scale emphasizing regulation, transparency, and accountability will be developed.
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Ldcs And The Race To The Bottom

The American business model has dominated the globalization trends of the last several decades (Cappelli, 2009; Stiglitz, 2003; 2004). This model is based upon equity ownership, incentive-based executive pay, and lack of regulation (Cappelli, 2009; O’Toole & Lawler, 2006). The combination of these factors has resulted in an increasing focus on short-term profits. Many argue that seeking short-term profits at any cost has led to a worldwide race to the bottom (Anderson & Cavanagh, 2004; Bigelow, 2002; Daly, 2001; Roach, 2005). The race to the bottom is aptly named as such as it describes the phenomenon by which LDCs compete for the global pool of capital made available by the increasing mobility of organizations. MNCs, with the power of the capital behind them (looking to compete in an environment of increased competition and short term pressures), may sacrifice a number of ethical principles such as human and environmental rights in order to positively impact the bottom line.

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