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Global Marketing Ethics

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Autor:  anton  03 March 2011
Tags:  Global,  Marketing,  Ethics
Words: 4047   |   Pages: 17
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Having informally observed an ongoing dialogue discussing social responsibility in business, it seems that the social responsibility at some point took a backseat to the prospect and mentality of higher profits at any cost (what’s good for GM…). The transition I sense now is a movement toward incorporating social responsibility, which is to say incorporating an ethical code considering extrinsic matters and concerns, fluidly in business models. The revelation that business entities do not operate in a vacuum has led to an incorporation of externalities (e.g. community interests, environmental concerns, etc.) rather than the “bleeding hearts” that are probably most often associated with social responsibility in business. The first portion of this paper seeks to outline the emergence of social responsibility in the context of a continuum of developing business ethoses as well as personal responsibility, which is to say the responsibility of the people within the organization—because despite a cultural recognition of autonomy and separateness in relation to its people, common sense tell us that an organization and its people are inextricable.

Described by Trevor Sargent as “an uneasy combination of two historically separate disciplines” the marriage of ethics and business is recognized by some, including many laissez faire economist types (which is not to suggest that free market endorsement is invariably linked with the mutually exclusive compartmentalization of ethics and business) as an undermining of free society, as Milton Friedman put it (Reasononline).

Nicholas Eberstadt established in his paper that the modern corporate responsibility movement sprung from the Depression. Eberstadt pointed to the Depression as a wakeup call of sorts in public perception of just what a corporation’s role is. Eberstadt cited Ralph Nader to articulate the view that business ‘exists to serve’. Nader extends this line of thinking in calling for accountability of a business’ “action or inaction” and by doing so lays a great deal of responsibility on businesses.

Eberstadt reveals a disruption in the continuum of development toward increased social responsibility by wars and the shift in public priorities that accompany them. The revelation that the corporate responsibility was stymied by decidedly more pressing concerns such as war is of great importance in understanding the psychology of such development. Maslow’s oft-referenced hierarchy of needs illustrates the contingent nature of an individual human’s needs, which applies to corporate responsibility twofold; as it is with individuals, if the lower need is unfulfilled, the higher need cannot be adequately addressed. Likewise, a business is unlikely to concern itself with anything abstract and/or non-immediate such as environmental protection or social welfare in the context of a society focused primarily on survival (i.e. a society at war). Further, the society, in such a preoccupied state, does not expect things like environmental protection efforts from its corporations, and rationally so as it has more pressing concerns.

In 1928—the precipice of the depression—the two hundred largest corporations owned 30 percent of the nations manufacturing assets, today they own almost 60 percent (Eberstadt, 6). With larger scope comes larger influence, which means increased responsibility as well, perhaps why big business has become increasingly expected to be socially responsible in its integration into society’s and their cultures. Eberstadt suggests that as the corporation is institutionalized, it has social obligations to fulfill (6). As businesses become increasingly monolithic, visible and influential, it seems highly reasonable that society at large would place an increasing responsibility on the organizations. With corporations wealthier than some countries, Nader’s call to accountability, of both action and inaction, may well be justified, which is to say nothing of a corporation’s influence on the host country’s culture. Indeed, for some developed countries, consumerism itself has become a staple the culture.

As expressed previously, it is common sense that a corporation—while in some ways legally independent of its employees and even owners—the people behind an organization, collectively and individually, are the organization. So what is the role of the individual within an organization? I spoke of compartmentalization earlier, as business practice and ethical consideration are often unnaturally separated—leaving a sizable gap. Just as business entities often compartmentalize their ethical responsibilities and their business practices (after all, it is “just business”) too often the individuals comprising the business do the same. Trevor Sargent speaks of an extreme example of ethical compartmentalization in the Holocaust, specifically, Sargent references the German bureaucrats’ effort to oversee the “organizational aspects” and the organizational aspects alone of the Holocaust. Likely, these bureaucrats went home at night as a typical person working to provide for their family; each individual was a very minor cog in a larger machine, one may not have been easily recognized from the perspective of the lower-level bureaucrat in the early stages of the Hitler’s reign. Nevertheless, these cogs collectively ensured the ending of millions of lives in Hitler’s larger death machine. Were the bureaucrats who ensured the operation of gas chambers and the logistics of prisoner transportation from one death camp to another morally responsible in any way?

While an extreme example, the case of the Holocaust brings forth an interesting point and that point being, what degree of accountability can be placed on the individual within an organization? Sargent spoke of individual responsibility in a larger sense than one confined only to the business realm, he inadvertently explained how normal people could willingly partake in evil and corruption when associated with a larger organization that encourages or demands it. Instances like the Holocaust stand as testament to the truth that people act as they do as much because of who they are as where they are. Just as all the Nazi’s could not have been inherently evil, all the executives involved in the Enron scandal probably were not inherently inclined to act corruptly any more so than other executives. While the individual does have free choice (as exhibited by individuals leaving their position over principle) and some germans’ disgust with the Nazi party, an organization must be organized and led in such a way as to promote the best ethics and behaviors from its employees if it is to become a benchmark of social responsibility and ethical behavior.

Sargent establishes integrity as the highest level of functioning, by which he is referring to the synthesis of all sides of the self for a consistent self in all roles, the opposite of which, Sargent puts forth, being compartmentalization. According to the psychologist Sargent, the Nazis, executives involved in the Enron scandal, and as he puts it, “Sunday morning Christians”, are operating at a less than optimal level developmentally.

By [compartmentalization] we refer to the remarkable capacity we human beings have to take matters that are properly related to each other and put them in separate, airtight mental compartments where they don't rub up against each other and cause us any pain. An example would be that of the businessman who goes to church on Sunday mornings, believes that he loves God and God's creation and his fellow human beings, and then on Monday morning has no trouble with his company's policy of dumping toxic wastes in a nearby stream (Sargent).

It is important to note that the businessman in Sargent’s example is more than merely pretending as if he loves God and his creation one day while destroying it the next, but actually believing he loves God and his creation while in church, and then working to destroy it the next day. Essentially, on Sunday while at church, the man is a churchman, a man of God. On Monday he is a businessman, a man of money—the two do not cause conflict within him because they are not allowed to even interact, but are instead sealed off and separated from one another. The revelation here stems from the word ‘allowed’ which connotes an effort on the part of the business man to separate his separate roles as a person, which is important because it reveals that indeed the individual within an organization can be held accountable for his role within the organization because if his actions at work are not in accordance with who he is, it is because at some point he consciously separated them from his self.

It appears that social responsibility is permeating the American business world with an ever increasing force, but it is also clear that otherwise good people can do very bad things given the proper context. As such, the importance of business fostering good ethical behavior is paramount; while the individual is always responsible for his or her actions, the institution is critical in promoting positive contributions to society. “The extent to which responsibility and accountability are accepted by or imposed upon corporate capitalism will be the measure of our adjustment to industrial and postindustrial life.” (Eberstadt).

Eberstadt and others are of the school of thought that responsibility to others outside the business is tantamount to good business, but what of the costs associated with doing good? In the second and final section of this paper, the author seeks to narrow social responsibility into a discussion of the corporation’s responsibility to and impact on a developing country. Research conducted by McGuire, et al. is inconclusive in that a correlation between social responsibility and the success of a business varies depending on the measure of success. “Studies examining the relationship between social responsibility and accounting-based performance measures have generally found positive results.” (McGuire, et al., 5). Alternately, using stock-market performance as the metric for financial success, the correlation between social responsibility and success is convoluted—with some firms ranked as having high social responsibility showing above-average financial performance and still other ‘socially conscious’ firms showing below-average financial performance (McGuire, et al., 4).

McGuire et al. admit that the research reported did not account for risk, however, they did report on some risk-inclusive studies and found similarly mixed results.

Spicer (1978) found that firms rated high on social performance, as measured by pollution control activites, had lower total ad systematic risk than less socially responsible firms. Aupperle and colleagues also (1985) found a negative association between corporate social responsibility and accounting-based risk but found that the association between market-based risk and social responsibility was insignificant.

According to McGuire, et al., determining a relationship between social responsibility and success is difficult, if only because the methods for evaluating an abstract concept such as social responsibility are flawed.

Paramount in the discussion of social responsibility within the realm of business is the prospect of marketing to the poor. C.K. Prahalad is a champion of marketing to the poor as a means of improving their financial situation. Zachary G. Pascal addresses famed management guru C.K. Prahalad’s approach to ending poverty through consumerism of the poor. Prahalad believes that the poor should be courted as consumers, like any other market segment, and by corporations doing so, end poverty. While Pascal recognizes Prahalad as a “management expert” and his sizable influence on the business world, Pascal addresses what he perceives to be flaws in Prahalad’s approach to curing poverty.

Pascal suggests that selling to the poor keeps them poor. Pascal claims that offering goods (even at low prices) to the poor can hurt them economically.

the poor can still be poor even if they pay less for certain essential goods. How? To start with, they can be persuaded (by those aggressive corporations suddenly paying attention to them in pursuit of profit) to purchase things they did not formerly need. Prahalad, for instance, repeatedly celebrates the success of Avon in selling cosmetics in the heart of the Amazon without asking who benefits, really, from those purchases.

Common sense suggests that unsophisticated third world citizens and would-be consumers are more sensitive to marketing than ad-savvy first world consumers who are case hardened to marketing tactics, making them inherently skeptical toward new products pitched as being “vital” or even just desirable. Even if the poor are not more susceptible to marketing than the rich, this does not, in and of itself, prove consumerism to be harming the poor. Prahalad, according to Pascal, implies that making low cost goods available to poor people is tantamount to making them richer, while Pascal himself puts forth that buying items they otherwise produced themselves makes them poorer when an opportunity to work rather than produce is non-existent.

The best solution to poverty is, of course, the creation of good jobs--of the sort that changed the life of my Malaysian friend Donald Jagau. And, to be sure, good jobs are of little value if no markets exist to serve these newly enriched consumers. But Prahalad turns this traditional model--first jobs and then markets--on its head. Instead, he argues for elevating the weakest consumers--insisting that the most powerful capitalists ought to take them as seriously as the wealthiest people of the world. In doing so, he presents a seductive alternative reading of the multinational corporation--as an agent of transformation and empowerment, not a force for exploitation and the concentration of wealth. It's no wonder he has inspired the allegiance of the world's CEOs. (Pascal).

Prahalad himself points to examples of successful ventures in selling to the poor, such as the prominence of cell phones in Venezuela and the effective incorporation of iodine in salt in India via Unilever Corp. that can enrich the health of Indian consumers. Prahalad, however, fails to mention the instances of first world products leading to deteriorated health of the sustenance-growing set. Pascal offers the case of Frito-Lay introducing its potato chips to the Thai market. After training Thai farmers to produce potatoes of a certain quality, Frito-Lay laid into the market with chips marketed as having good nutritional qualities, when in reality, potato chips lent themselves to the declining health of Thai people (Pascal). Prahalad et al. defends the introduction of these products into the developing world by suggesting that engaging the poor economically—in any way—is beneficial.

critics sometimes condemn them for preaching the gospel of consumer culture to the poor, for exploiting the poor as cheap labor, and for extracting and despoiling natural resources without fairly compensating locals. In truth, some multinationals have been guilty on all these counts. But the private sector may do more harm by ignoring poor consumers than by engaging them. After all, if the poor can't participate in global markets, they can't benefit from them either.

Engaging the world’s impoverished alone, even if in an exploitative fashion, according to Prahalad et al., is more desirable than simply ignoring poor consumers altogether. While such an argument seems convincing on its face, Prahalad et al. offer examples of successful; third world market penetration without questioning the benefit to the third world consumers themselves. For example, Avon has successfully penetrated India and Brazil with its direct-distribution model (Prahalad, et al. While many of the Avon sellers hired may well have benefited from the employment opportunity, what of the many poor people stretching the budget to afford the make-up products? As the infamous pedialyte example shows, poor people stretch to live beyond their own means, not unlike middle class consumers, but living beyond your means on a dollar a day salary can have dire consequences.

Selling Avon products to the impoverished simply seems backward and exploitative by the nature of Avon products. The products Avon sells are cosmetic, and of little benefit in a culture where no one wears makeup. A culture where women are expected to wear makeup, however, makeup has a much more important role in. If Brazil and India become such cultures where even the poorest women feel they must buy makeup to feel merely as though they look “acceptable” then this would have a net negative impact of coercing already poor people into spending what little they have on fitting cultural norms. Meanwhile, a small percentage of Brazilians and Indians gain employment, but most of the money becomes increased profit for Avon, leaving these countries with a newfound pressure on poor people to spend their precious little money on makeup. Prahalad fails to account for such intangible consequences of consumerism in poor countries.

Terrence H. Witkowski defends marketing to the poor by addressing head on many accusations directed toward globalization supporters by antiglobalists. Witkowski frames the differences between the two schools of thought as one of Marxism versus free market economics, suggesting that antiglobalizationists seek “collectivist solutions” to social problems while marketing stresses individualism. One critique offered by the anti-globalization camp is that marketing works to export more than just products, but the culture itself, a new age colonialism.

…the antiglobal position favors measures that protect local cultures. Remedies for stemming the onslaught of global popular culture can take many forms. Government-imposed trade barriers include (1) censorship, such as Iran's ban on satellite television dishes or China's blocking of Web sites; (2) quotas, such as China's restrictions on the number of U.S. films that can be imported legally each year; and (3) high tariffs and other forms of discriminatory taxation, such as France's surcharge on non-European Union films (Witkowski).

Using these examples, Witkowski aligns the antiglobalists with censorship, and general restriction of choice for consumers; however, the author does acknowledge some examples of success that such protectionism has enjoyed, e.g. the success of Korean cinema in light of the restriction on foreign films implemented by Korea (Witkowski). Witkowski cleverly dodges the difficulties these successes present by suggesting that such selective protectionism tends to serve special interests rather than society at large, which is opposed to promoting diversity, as such protectionists would claim.

By highlighting the use of adaptation in marketing as essential to successful global marketing, Witkowski suggests that marketing, left ungoverned, promotes diversity in and of itself. Witowski offers examples of such adaptive-oriented marketing from large multinationals such as McDonalds, but in the same breath speaks of standardization as a positive for poor consumers, as it leads to lower prices on products that might not have otherwise been afforded.

As mentioned previously, examples of global food offerings deteriorating the diet of indigenous people. According to Witkowski, marketers aggressively pursue “vulnerable” markets with widely available, inexpensive and unhealthy foods, not to mention the assault made on local cultures by introducing new foods. The pro-marketing school of thought, however, suggests that withholding international products, including food, is again depriving people of choice. An interesting point made by free market thinkers is that successful marketers will introduce health-conscious food offerings if such a market exists, not unlike the “diet” food industry in developed counties such as the United States. “The principle of consumer sovereignty once again provides the first line of defense against antiglobal allegations about marketing programs being partly responsible for rising world obesity rates. As rational decision makers, consumers have the right to ingest whatever (legal substance) they choose” (Witkowski). Again the marketing side presents a libertarian view point as their defense, that people are simply responsible for their own actions.

Perhaps the crux of all the antiglobal assertions is that of the allegedly unsustainable consumption/development. Witkowski reports that few can dismiss the environmental damage done by development. The antiglobal position believes in a balance of consumption/environmentalism skewing more toward environmentalism than the marketers would have. Further, antigolobalists stress the lack of regulation in developing countries—as these poor countries develop and its nationals gain purchasing power, the items purchased (e.g. cars, refrigerators, etc.) result in pollution that is proportionally worse than that of developing countries.

Conversely, Witkowski summarizes the marketing rebuttal to environmentalist claims as being divided much more so than on many other points of contention between the two camps. Interestingly, management tends to operate under the ideal of striving to satisfy consumers and their respective demands, regardless of what those demands are; marketing academicians, however, tend to support a more balanced approach to marketing, such as “ecological marketing” which is geared toward sustainability of the environment. One conclusive point is that developed countries take better care of their environments than do developing ones (Witkowski), so it follows that sacrificing some short-term environmental concerns for greater wealth will result in the future ecological gains in the forms of stricter regulations and usage that accompany economic growth. Witkowski concludes with highlighting the common ground between marketing advocates and antiglobalists.

Marketing proponents and antiglobalists mostly agree on the basics of what marketing does in poor countries; they diverge, however, on the issue of what marketing does to poor countries (Witkowski). Aside from conflict over cost/benefit analysis in such cases as the ecological debate, the divide between both schools of thought stems primarily from values—with antiglobalists favoring indigenous culture and marketing proponents valuing choice and development. Ultimately, the discussion of the effects of marketing on developing countries is not one of facts, but one of viewpoints and such a debate is essentially perpetual and inconclusive.

For those who believe that globalization and marketing in developing countries is beneficial, at least economically, for the countries involved, cellular phone adoption among poor consumers is a much-discussed topic. In terms of pursuing poor consumers, as C. K. Prahalad calls for, Cellular phone companies are at the forefront. Great lengths have been taken to incorporate third world consumers into the cell phone market, like the case of Siemens dramatically altering the construction techniques of its towers in order to accommodate the lack of infrastructure that so often blocks commerce entirely (Gohring). On the consumer side, distribution channels exist to sell used handsets for under $10 with service providers taking note and taking steps to ensure their network is compatible with older networks (Gohring). Gohring also mentions cell phone minutes being trades like currency in countries like Kenya, making cellular service even more of an economic staple.

How is such dramatic example of globalization affecting the third world countries involved? A study commissioned by Vodafone established a correlation amongst cellular service and economic development, with 62 percent and 59 percent of consumers reporting increased profits due to the phones in South Africa and Egypt, respectively. (Gohring). Assuming the legitimacy of a report that was commissioned by a company with an obvious vested interest in the results, and assuming that economic development is more important than maintaining tradition (which is entirely subjective in and of itself), then cellular phone service is one gleaming example of globalization improving the daily life of the small guy, something every international marketer wants the public to believe.

Ultimately, the impact of marketing and development as a whole on the developing world is a highly contested one, with a given viewpoint being highly dependent on the interests of the individual in question. The only consistent viewpoint is that the world is ever growing more connected, more intertwined and more interdependent. Cultures are scattered throughout the world—cultures that, in many cases, have been separated and isolated by impenetrable divides of ocean and land for their entire history. As these lines are erased by technology, discomfort due to the change and exposure becomes inevitable. As Neil Postman has said, cultures can, to an extent, control the developments that enter their domain, but once the developments enter, they can never be undone; it is this sentiment of permanence that must rile antiglobalists so deeply, that once these cultures are penetrated, they can never return to the innocence of isolation.

As people’s lives are intimately affected by the developments and technologies introduced into their lives, as ecosystems are irreversibly changed by outside forces that have never experienced the native culture, as entire societies are faced with advancements in technology that present new challenges and conveniences profoundly impacting the deep roots of culture, tensions will mount and rivalries of ideology will be inevitable. The very nature of capitalist multinationals dictates that third world countries, and its nationals will be courted by marketers, either sooner or later. The world will ultimately homogenize more than it is today, although to what extent remains unclear, and the effects of these developments will continue to be contested and discussed passionately.

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