Business Repression: A Shareholder Directive?May 14th, 2006 | Posted by in Business Ethics | China | Corporate Governance | Corporate Social Responsibility | Miscellaneous
Over the past few months, I have been mulling over the various stories regarding Google, Yahoo!, Cisco, and other companies about how they have aided China’s government in suppressing her people. The facts of the stories as well as the corporations’ responses to criticism have always bothered me. I have a very firm set of morals with which I do my best to guide my daily actions, and accordingly, nearly every element of the various news stories mentioned is in conflict with my view of “right” and “wrong.” (If it is not clear, my intention is to establish that my morals work for me, but I don’t expect everyone to agree with them.)
I made a comment on the China Blog for my MBA program in relation to the issue and think it sums up fairly concisely many of the issues I have been grappling with. Following is a portion of my post (the remainder isn’t relevant to this topic):
“…While the public and the press may put a great deal of effort into deriding US multinationals for subjugating to the Chinese government, presumably in an effort to increase profit and shareholder wealth, corporations at the focal point of the issue routinely offer the same justification: they are subject to and must abide by the laws of the country within which they operate.
“While this ‘canned’ corporate response has begun to lose its staying power, the response is valid nonetheless. Indeed, corporations are subject to the laws of the countries within which they operate.
“But isn’t such response a bit of a cop out? Is anyone forcing Google, Yahoo!, Cisco, and others to do business in China? One could always argue (and I’m sure many executives have used such a justification) that shareholders, in their demand for ever-increasing profits and wealth, essentially force the corporation to seek out markets where such issues come into play. …’Don’t blame us, our shareholders demand growth and an astronomical return on their investment! China’s our only option!’
“I’m being a bit sarcastic here, but truthfully, if there is blame to pass around, I believe the bulk of it rests with shareholders, then consumers, and then executives. If the masses truly cared about human rights and freedom of the press in China, they would immediately stop using Yahoo! and Google, and force the company to act. Similarly, if shareholders truly cared about such issues, they would communicate as much to the Board of Directors, even if it meant a decrease in the value of their shares. A corporation’s leadership, at least in theory, is simply following the directives of its owners.
“That said, I firmly believe that everyone has a responsibility to stand up for their personal convictions, even if they are in direct conflict with the company they work for, the government that protects them, or the society within which they live. I imagine such brashness is a product of having never been politically repressed, and perhaps a bit naïve, but that is simply the way I choose to live my life. Is it appropriate to not speak out when your company aids a foreign government in the persecution of an individual, simply because they are critical of the government’s policies? If we will not tolerate such injustices within our own borders, what reasonable logic can justify operating in such a manner abroad? I hesitate to draw correlations between this type of behavior and more reprehensible instances of oppression (Stanley Milgram…) but if simplified to a base level, there isn’t much difference.”
I welcome your comments.
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