1. Law vs.- Ethics International Business Strategy 5136 Ram Mudambi ISEA, Bocconi University

2. © Ram Mudambi, Temple University, 20062 Law and ethics Legal dictates can –‘What can be done’ Ethical dictates should –‘What should be done’

3. © Ram Mudambi, Temple University, 20063 Law vs. ethics ETHICAL YESNO LEGAL YES NO Humanitarian aid in a civil war Cooperating with a government’s policies that we view as unethical No problem

4. © Ram Mudambi, Temple University, 20064 Digging deeper - legality HOMELAWS YESNO HOST YES LAWS NO No problem

5. © Ram Mudambi, Temple University, 20065 Digging deeper - ethicality HOMECOUNTRY YESNO HOST YES COUNTRY NO No problem E.g., The US, Italy E.g., Vietnam, Pakistan Nike’s problem: child labor, minimum wages

6. © Ram Mudambi, Temple University, 20066 Nike’s problem – Real or PR? The legal issues: Firms using child labor were not contracted by Nike – they were sub-contractors The PR issue –The ethics of child labor

7. © Ram Mudambi, Temple University, 20067 The PR issue – the ethics of child labor Development chronology –Currently advanced countries used child labor at lower levels of income Coal mines in Wales, West Virginia The counter-factual –What is the alternative to labor in a factory? Is it worse?

8. © Ram Mudambi, Temple University, 20068 The bottom line Legal contradictions can be resolved through international treaties Ethical issues emerge from –Differing levels of development –Cultural differences Neither a purely global (home-based) nor a purely local (host-based) approach is likely to be ideal The need for managerial judgment