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((Part 1) Terms of global business



POSTED IN 2 PARTS FOR EASIER DOWNLOADING

Business Ethics Quarterly 

July 1999 

Terms of global business engagement in ethically challenging environments:
Applications
to Burma 

Schermerhorn, John R Jr 

PART 1

Abstract: Today's international business environment is complicated by
human rights abuses and social
and economic repression in various countries. This paper introduces
controversies with foreign
investment in Burma to develop and describe alternative terms of global
business engagement in ethically
challenging settings. Two forms of engagement-unrestricted and
constructive-and two forms of
non-engagement-principled and sanctioned-are discussed. All four
alternatives are examined for their
ethical, social change, and cultural foundations. Additional considerations
are posed in respect to
constructive engagement, moral leadership by global business executives,
needs for model building and
evaluative research, and realities in the ethical context of global business. 

Worldwide repercussions of financial disturbances in Southeast Asia are but
one recent illustration of the
increasing interdependence among nations and businesses in our global
economy. With interdependency
comes the potential for cooperation, synergy, and economic gains, as well
as for competition, cultural
clashes, and economic losses. As international businesses seek markets,
resources, and opportunities in
all diverse ends of the earth, corporate leaders must master difficult
challenges when crossing borders
that are cultural as well as national. Perhaps no challenge is more
significant in business decision making
than one's conduct in ethically challenging environments (Carroll and
Gannon 1997; De George 1990,
1993; Donaldson 1989, 1996; Donaldson and Dunfee 1994). Importantly, Levi
CEO Robert Haas
points out that addressing ethical dilemmas as a corporate executive
"becomes even more difficult when
you overlay the complexities of different cultures and values systems that
exist throughout the world"
(Haas 1994: 509). 

The ways that corporate leaders handle intricate dilemmas of global
business ethics are more and more
open to public scrutiny. Developments in information technology and media
sophistication have
increased the transparency of business and tightened corporate
accountability to multiple and diverse
constituencies. The international dealings of global firms communicate
values and standards to an
audience of governments, consumers, competitors, suppliers, shareholders,
community members,
activist groups, and other stakeholders. Controversial actions are taken at
the risk of alienating
constituents and suffering consequent financial and reputational losses.
Nike, for example, learned from
problems in Asia that a global contractor will be held publicly accountable
for the work standards and
employment practices of its foreign suppliers. Royal Dutch Shell knows from
its experience in Nigeria
that commercial ties to despotic regimes can tarnish a corporate
reputation. And when China's President
Jiang Zemin visited the United States, firms with business interests in the
country found their names
publicized by activist groups protesting the country's record on human
rights abuse, religious
persecution, and use of child and prison labor. 

An inevitable question for global executives is replete with ethical
dilemmas: How should a company
behave when the local situation and culture differ substantially from those
at home? Business ethicists
like De George (1990, 1993) and Donaldson (1989, 1996) suggest that answers
to this question range
along a continuum anchored by relativism at one extreme and absolutism at
the other. Each has
inadequacies. The "rule of relativism," do whatever the local situation
permits, carries the risk of
endorsing "a confusing and corrupt array of incommensurate moral systems
and principles" (Donaldson
and Dunfee 1994: 264). The "rule of absolutism," do only what outside
values and standards prescribe,
carries the risk of imperialism and disrespect for diverse cultural
traditions and values (Donaldson
1996). In between these poles, the moral middle ground of "pluralism"
remains a subject of scholarly
debate and conjecture (De George 1990, 1993). As a likely domain of much
business practice it
deserves further exploration for insights into the ethical challenges of
business operations in a culturally
diverse global economy (Thompson 1997). 

This paper pauses from normative dialogue to engage the world of practice.
The purpose is to
systematically describe actual business behaviors in controversial settings
and bring attention to the need
for experience-driven and testable models that can advance the search for a
compelling international
business ethic (Liedtka 1997; Thompson 1997). The case of foreign
investment in Burma is used to
illustrate complex international business realities and identify
alternative terms of global business
engagement. These terms are examined for their underlying ethical
frameworks, social change strategies,
and cultural orientations. The implications are further considered in
response to calls for more proactivity
in corporate social responsibility (Buller, Kohls, and Anderson 1991;
Makower 1994), for the
development of shared norms of transnational business conduct (Donaldson
and Dunfee 1994;
Donaldson 1996), and for further research of relevance to the practical
needs of global executives and
policy makers (Thompson 1997). 

Foreign Investment in Burma: An Illustrative Case 

Where is the life that late I led? 

-John Flory, in George Orwell's Burmese Days (1934: 157) 

In George Orwell's classic novel, Burmese Days, John Flory struggled to
reconcile the legacies of a
British heritage with the reality of many years working in
turn-of-the-century Burma. One wonders
whether or not Flory's question might still be asked by executives with
business interests in present-day
Burma. John Flory committed suicide after realizing that his Burmese days
would forever deny him a
future with a proper British lady. Will today's investors find it similarly
difficult to balance future goals
and aspirations with present actions? Will this controversial country have
its way with them too? 

Social and Political Context 

The wealth of Burma's natural resources is impressive, but the great
fascination of the country lies in its
many peoples with their colourful and diverse origins and customs. 

-Daw Aung San Suu Kyi, "My country and people" (1991a) 

Called "Myanmar" by its totalitarian rulers, Burma is beset by tragedy,
turmoil, and great controversy.
Although historically rich in culture, natural resources, and vast
agricultural potential, it suffers badly in
the community of nations (Pilger 1995; Fairclough 1996, U.S. Embassy
Rangoon 1996). Only one in
four Burmese children finishes primary school and the country's 45 million
people are among the world's
least educated. With a national income under $ 300, the country's fledgling
market economy suffers
from many problems that limit development prospects. Burma gets the lowest
Freedom House ranking
on economic, political, and civil liberties (Soros 1996). The World Bank
and International Monetary
Fund have refused loans that would otherwise be available to countries
facing such extreme economic
hardships. 

In 1988 Burma's dictator General U Ne Win stepped down after 36 years of
imposing his authoritarian
commitment to socialism. A military junta, the State Law and Order
Restoration Council (SLORC),
seized power and crushed student-led pro-democracy protests. Although
national elections were held in
1990, the SLORC failed to honor results. The National League for Democracy
(NLD), led by Daw
Aung San Suu Kyi (daughter of U Aung San, hero of Burma's postWorld War II
independence
struggle), won some 60 percent of the popular vote and over 80 percent of
government seats. To date,
this elected government has yet to assume office. 

Daw Suu Kyi was placed under house arrest in July 1989, received the Nobel
Peace Prize in 1991, and
was held in detention until 1995. Her movements within the country have
since been restricted; NLD
members have been arrested and jailed on various charges; students
participating in rallies or distributing
leaflets have been arrested and mistreated by the police; large numbers of
ethnic minorities have fled
persecution and involuntary conscription into the military; citizens have
risked being forced to labor in
support of military initiatives against dissidents or to work on
infrastructure projects related to tourism
and business development (Aris 1991; Pilger 1995; Human Rights Watch/Asia
1996 and1997;
Wiedemann 1996; The Economist 1997b). 

The military regime defended these practices as necessary to the processes
of national development,
claiming that Daw Suu Kyi and the elected civilian government would be
unable to hold the country
together during difficult times (Maung 1996; Mydans 1996). Through it all,
the SLORC's harsh
treatment of Daw Suu Kyi, her pro-democracy supporters, and the Burmese
citizenry created
diplomatic and social controversy. The SLORC drew sharp criticism from
governments in North
America and Europe, as well as from human rights groups worldwide. Burma's
admission to the
Association of Southeast Asian Nations (ASEAN), in July 1997, was
controversial. 

In November 1997, the SLORC was replaced by the State Peace and Development
Council (SPDC).
The state-run media announced: "For the emergence and practice of
discipline democracy and for the
emergence of a peaceful and prosperous modern state and in the interest of
the state and the people, the
State Peace and Development Council was formed with immediate effect" (The
Nation 1997). An
anonymous Rangoon analyst described the SPDC, with its top leadership
including former SLORC
generals, as "merely old wine in a new bottle" (The Nation 1997). 

Daw Suu Kyi actively challenged the SPDC to install the parliament that had
been elected in 1990. The
new government responded with more harassment. When her automobile was
blocked on two
occasions while traveling to visit supporters outside of Rangoon, she
staged sit-in protests lasting several
days. Growing concern for an escalation of tensions led the United States,
Australia, and New Zealand,
among other countries, to ask United Nations Secretary General Kofi Annan
for "urgent" intervention to
encourage the SPDC to open dialogue with Daw Suu Kyi and prevent the
escalation of tensions
(Reuters 1998). Daw Suu Kyi remained firm in a long-standing commitment to
democratic
determination of Burma's future, expressed in her essay "In Quest of
Democracy" as "the unhappy
legacies of authoritarianism can be removed only if the concept of absolute
power as the basis of
government is replaced by the concept of confidence as the mainspring of
political authority" (Suu Kyi
1991b: 178). 

Foreign Investment Status Report 

We can't industrialize without the help of the developed countries.... We
need their technology. We
need their capital. That's why we are trying to attract as much foreign
investment as possible 

-Set Maung, Myanmar government advisor (Fairclough 1996: 63) 

Foreign investment is important to Burma's economy, although statistics
vary by source. The government
reports US$ 6.25 billion of current investment by some 260 foreign
companies, with the number of new
investors increasing from 39 in 1995 to 78 in 1996 (Burma News Network
1997). The International
Monetary Fund reports that US$ 3.2 billion has been approved for investment
since 1989 and, of this,
only US$ 1.2 billion was invested by early 1996 (Linter 1997). By country,
the largest investments are
from Singapore, the United Kingdom, France, Thailand, the United States,
and Malaysia (Myanmar
Government 1996), and the largest growth during 1997 was in investments
from the United Kingdom,
Singapore, and Malaysia (Burma Net News 1997). 

The rank order of foreign investments by economic sector is: (1) hotels and
tourism, (2) oil and gas, (3)
mining, (4) manufacturing, and (5) agriculture and fisheries. Investments
in hotels and tourism are
dominated by Asian companies. Singapore (US$ 439 million), Thailand (US$
138 million), Malaysia
(US$ 124 million), Japan (US$ 74 million), and Hong Kong (US$ 43 million)
are the leading investors
in hotels (Hobson and Leung 1997). Western investors dominate the oil and
gas sectors, with European
and American companies among the major players. 

Foreign Investment Controversies 

Under current circumstances, it is not possible to do business without
directly supporting the military
government and its pervasive human rights violations. 

-Levi Strauss and Co., corportate announcement (Billenness 1993) 

Today's operations are not commercially viable, but we believe this country
has big potential. 

-Mike Nagai of Mitsui's Burma office (Fairclough 1996: 66) 

Foreign investment in Burma is controversial, with its most apparent
beneficiaries being persons and
firms with connections to the government and military (Linter 1996).
Substantial activist lobbies pursue
MNCs that do business in the country (IRRC 1997), and Table I shows a
sample of stay-go tendencies
for various companies. Levi Strauss and Co. discontinued outsourcing
contracts in 1992 due to
concerns for Burma's human rights record. Liz Claiborne, J. Crew, Oshkosh
B'Gosh, and Columbia
Sportswear later exited, as have Canada's Seagram and America's Wente
Vineyards. Europe's
Carlsberg canceled a planned joint venture to establish a brewery in the
country, with its decision
preceded by protests by the International Union of Food, Agricultural and
Allied Workers Associations
(The Nation 1996). PepsiCo disengaged after suffering from a campaign to
boycott its products in the
United States and from pressures by shareholder interest groups, among them
the Franklin Research
and Development Corporation and the Maryknoll Fathers and Brothers.
Selective purchasing laws in
several American cities, including Berkeley, California; Madison,
Wisconsin; and Ann Arbor, Michigan,
as well as in the State of Massachusetts, also plagued the company. 

In the oil and gas sector, major controversy surrounds the Total/Unocal-led
Yadana investment project
in the strategic southern Tenasserim region. The US$ 1 billion-plus project
involves a multinational
consortium of Total of France (31+ percent share), Unocal of the United
States (28+ percent share),
PTTEP of Thailand (25+ percent share), and Burma Oil and Gas Enterprise (15
percent share) (Imle
1996). Once called the "only one project that really matters to the
military junta," it has been criticized
for both its potential to financially support the government (estimated to
generate up to $ 400 million
annual income) and the methods by which it is being constructed (The
Economist 1997a; IRRC 1997).
A report by Earthwatch International and the Southeast Asian Information
Network holds the Yadana
business consortium responsible for human rights atrocities committed in
the project's behalf. Charges
include abuse of civilian populations by military personnel providing
security, impression of civilians as
forced labor to build roads and other infrastructure support, and forcible
relocation of civilian
populations along the pipeline route (EAI and SAIN 1996). 

The Yadana consortium has so far held firm in its investment, with Total
claiming that it is victimized by a
disinformation campaign. The firm counts among the benefits of its presence
the comparatively high
wages paid to its Burmese workers, compensation provided for lands
acquired, and a "socioeconomic
programme" funded in support of local populations (The Economist 1997a).
Unocal has justified its
involvement with the statement: "Unocal is a global energy company, not a
political agency. Our
participation in the Yadana project is based on resource potential,
business economics and technical
expertise" (Unocal 1996). The firm further argues that all work on its
project is done by paid labor and
that its local contractors must follow "fair hiring practices" (Holloway
1996; U.S. District Court 1996). 

Sanctions Versus Constructive Engagement Debate 

We always said-very, very clearly-Burma is not ripe for investment. 

-Daw Aung San Suu Kyi (EAI and SAIN 1996: 4) 

How can you influence Burma when you don't have a forum? 

-Malaysian Foreign Minister Abdullah Ahmad Badawi (Reuters 1996) 

Controversies over foreign investment in Burma have largely been framed as
a debate between those
who favor "sanctions" on the one hand-an absolutist position-and those
seeking "constructive
engagement" on the other-tending more toward a relativist position.
Commenting on the situation in
Burma, Archbishop Desmond Tutu of South Africa states the case for
sanctions: "Tough sanctions, not
constructive engagement finally brought the release of Nelson Mandela and
the dawn of a new era in my
country. This is the language that must be spoken with tyrants-for, sadly,
it is the only language they
understand" (Tutu 1993). Daw Suu Kyi agrees, as do most, if not all, of the
activist lobbies rallied
against the military government. They advocate investment prohibitions and
trade boycotts designed to
force the authoritarian government into dialogue with the NLD, and
ultimately bring democratic
government to Burma. 

The call for sanctions has so far failed to gain multilateral backing, and
is unlikely to do so. Governments
inclined in this direction, namely Canada, the European Union countries,
and the United States, have yet
to take definitive action that prohibits their nations' firms from
operating in the country. Australian
Deputy Prime Minister Tim Fischer has spoken against sanctions, saying:
"Sanctions will never work
with regard to Burma. They are not practical with regard to the Burma
situation" (Baker 1996). 

(Table Omitted) 

Captioned as: Table I 

Burma's Southeast Asian neighbors generally prefer a policy of constructive
engagement. In contrast to
confrontational and isolationist sanctions, this approach is supposed to
work through private persuasion
and economic involvement. Malaysian Prime Minister Mahathir Mohamad, for
example, is quoted as
saying: "We believe that the way to bring people around to our way of
thinking is to talk to them, not to
squeeze them or to twist their arms behind their backs" (Jayasankaran
1996). Although the Philippine
and Thai governments have shown recent signs of impatience with
constructive engagement (Chanda
and Islam 1998), regional business support for the policy remains
substantial. A survey of Asian
executives by the Far Eastern Economic Review shows that 69 percent of
respondents believe ASEAN
membership has made Burma a more attractive location for investment
(Review/ABN Poll 1997). 

Constructive engagement in concept seems consistent with Asian cultural
preferences for public
harmony, respect for authority, face and consensus building (Hofstede 1980;
Hofstede and Bond 1988;
Rohwer 1995; Trompenaars 1994). It may also reflect regional geopolitical
realities (Huntington 1996).
China ranked number 3 as an export destination and number 1 as an import
source in Burma's 1996
international trade statistics (IMF 1997), and is a major arms supplier to
the government. China is also
involved in controversial territorial claims with several ASEAN countries
regarding islands in the South
China Sea. Continuing contact with Burma is one way for ASEAN to balance
China's growing regional
influence (Lintner 1997). By dealing with Burma in their own ways,
furthermore, ASEAN governments
also display independence from unwanted Western hegemony. 

In practice, constructive engagement is criticized for encouraging Burma's
government to believe that its
policies are succeeding and to discourage efforts at reform and dialogue
with the democratic opposition
(The Economist 1996). Observers note that the truly "constructive" aspects
of the approach are difficult
to discern and require better explication (Jendrzejczyk and Liddell 1996;
Paribatra 1997; Schermerhorn
1997). 

No one seems to deny the complexity of the situation in Burma and the role
of foreign investment in the
country. As one ASEAN diplomat says: "We agree all is not well in Burma.
The question is how do you
bring about change" (Ching 1996: 36). 

Alternative Terms of Global Business Engagement: A Framework 

When businesses cross national and cultural boundaries their commercial
agendas become associated
with others of social consequence. Those who argue against or for foreign
investment in Burma are
expressing value judgments-in terms of what they believe is right for the
country, and action
preferences-in terms of what they believe should be done about it. Table 2
builds from the sanctions and
constructive engagement debate to more broadly describe four alternative
terms of global business
engagement that can be identified with respect to Burma and that are likely
to apply in other ethically
challenging environments. The framework is designed to benefit interested
researchers and policy
makers alike. It recognizes two forms of "engagement"-unrestricted and
constructive-and two forms of
"non-engagement"-principled and sanctioned. The foundations for each action
alternative are further
identified with implied ethical positions, social change strategies, and
cultural orientations. Likely
outcomes of economic and/or social progress in the host country are also
assessed. 

Unrestricted Engagement 

Unrestricted engagement by foreign investors is described in Table 2 as
business-as-usual behavior. The
underlying ethical framework is individualism, with businesses doing what
is best for their economic
self-interests (De George 1993). The implied social change strategy is one
of natural selection. The
investor's commitment is to economic gain in the local business
environment; it is not guided by
corporate goals for specific economic and/or social contributions to the
host country. The cultural
orientation is relativism, showing a willingness to accept and abide by
local practices in business conduct
(Donaldson 1989). 

The likely outcome of unrestricted business engagement in ethically
challenging environments is limited,
perhaps highly segmented, economic contributions to the host country. In
Burma, the government and its
close associates seem to be the primary beneficiaries of economic gains
from foreign investments in
hotels and other tourism projects. Direct contributions to social progress,
if any, probably trace more to
natural "spill-over" effects than the investors' corporate intentions. 

It is tempting to attribute unrestricted engagement to explicit choices
made by foreign investors in the
context of firm-specific values and self-interests. But in at least some
and perhaps many cases, it may
well emerge as a practice toward which business inevitably drifts when
strong moral leadership or
external regulatory guidance is otherwise lacking. Too many corporate
leaders expect governments to
set moral directions for them. Consider this statement by the president of
Columbia Sportswear: "we
rely on the U.S. government to be the moral equivalent of a watchdog"
(AFL-CIO 1996: 3). The
inherent risk of such reasoning is learned helplessness to make
self-regulating business decisions. With
learned helplessness, unrestricted engagement may become a point of natural
tendency toward which
foreign investors move. 

Constructive Engagement The second form of engagement, constructive
engagement, is described in
Table 2 as purpose-driven behavior in which economic contributions by the
foreign investor also
advance social progress in the host country. The assumption is that with
economic development will
come desirable social development. The ethical foundations of constructive
engagement are utilitarian,
seeking at any given time the greatest good for the greatest number of
people (De George 1993). The
implied social change strategy is shared power, with dialogue between
investors and hosts creating a
basis for the latter to examine and perhaps reconstruct core values. The
underlying cultural orientation
shows tolerance for cultural differences. 

The expected outcomes of constructive engagement are deliberate, perhaps
slow, social progress along
with increasingly universal economic progress. Although the concept is
clear, the practice is hard to
document. In Burma, Total and Unocal seem to consider and would like others
to view their Yadana
investment as constructive engagement (The Economist 1997a; Holloway 1996).
Criticisms of its local
impact, however, make this distinction controversial at the very least (ERI
and SAIN 1996; U.S.
District Court 1996). Any link between constructive engagement as an ASEAN
policy and actual
behavior by Asian investors is also hard to document. U Thein Tun, a
Burmese businessman aligned
with the government knows this only too well. "Pressure may work with
investors from America and the
EU," he says, "but I don't see this kind of problem in countries like
Japan, Korea, Singapore, Hong
Kong, and Thailand" (Fairclough 1996). Businesses may operate under the
self-perceived guise of
constructive engagement even as they employ or drift toward the
unrestricted practices described
earlier. In the absence of clear elucidation of just what makes a business
investment "constructive,"
furthermore, even firms that try to behave in this manner can be criticized
by others as actually following
business-as-usual practices. 

Principled Non-Engagement 

The first of the non-engagement approaches to ethically challenging
environments is described in Table 2
as principled non-engagement. The forces driving this alternative are
internal to the firm. They originate
in leadership and corporate values, and are manifested in specific
decisions either to not invest or to
discontinue investment. Principled non-engagement suggests a virtues
approach to ethics where core
values guide business behavior from one situation to the next. It involves
a rational persuasion strategy of
planned change, with the act of non-engagement serving notice to the
potential host of both the benefits
of change-gaining the investment, and the costs of not changing-continuing
to lose its advantages. The
underlying cultural orientation is rejection, communicating an
unwillingness to work in or become
involved in a country where the cultural values and standards are
inconsistent with one's own. 

The expected outcomes of principled non-engagement are no direct
contribution to local economic
progress and, at best, indirect or long-term contributions to social
progress. Robert Haas's decision to
discontinue Levi's activities in Burma are indicative of this approach.
Specifically he said: "We will not
source in countries where conditions, such as the human rights climate,
would run counter to our values
and have an adverse effect on our global brand image or damage our
corporate reputation" (Haas
1994). As a result, Burma has been denied by Levi any economic advantages
from doing business with
the firm. Whether or not the country benefits socially from this decision
remains an open question. 

Principled non-engagement is anchored in leadership and organizational
values and standards. It results
from moral self-regulation that relies upon value-based decision making to
deliver consistent outcomes
as business investment opportunities are evaluated around the world. At
Levi, foreign investment
decisions are guided by the corporate "Code of Ethics" and a set of
"Ethical Principles." The company
has criteria for both country selection-including criteria of brand image,
health and safety, human rights,
legal requirements, and political or social stability, and business partner
selection-including environmental
requirements, ethical standards, health and safety, legal requirements, and
employment standards (Katz
1996). 

Sanctioned Non-Engagement 

Table 2 describes sanctioned non-engagement as the prohibition of foreign
investment in a given setting.
The ethical foundations are universalist, with the sanctions standing for
core values and basic human
rights that are assumed to apply everywhere. The implied social change
strategy is force-coercion (Chin
and Benne 1969), in which the loss of foreign investment becomes a penalty
that is assessed in a direct
attempt to change the target country's behavior. The underlying cultural
orientation is absolutism
(Donaldson 1989), with the country expected to conform with outside ethical
standards and
expectations. 

(Table Omitted) 

Captioned as: Table 2 

The forces driving sanctioned non-engagement originate external to the
firm, with two distinct forms
possible. Sanctions by government regulation are those that by law forbid
business involvement in
certain settings. For example, the United States Congress authorized the
President to invoke sanctions
to block new private investment by American firms in Burma. Sanctions by
market regulation occur as
pressures by activist lobbies and consumer groups and that threaten a firm
doing business in a targeted
country with loss of customers and sales. This power of the marketplace was
mobilized against
PepsiCo's involvements in Burma and certainly helped bring about the firm's
eventual decision to
withdraw. 

Sanctioned non-engagement is expected to encourage social progress in the
potential host country
while, for the short term, denying any contribution to economic progress.
Those who support sanctions
by government or market regulation with Burma want to deny the SPDC
government all opportunities
for economic progress in the absence of social progress. But the impact of
sanctions is limited when
government-legislated boycotts lack universal appeal and activist and
consumer pressures remain largely
firm-specific. In the absence of internal forces to the contrary,
furthermore, weaknesses in sanctions as
an external form of business regulation encourage business-as-usual
tendencies. Burma, as one case in
point, continues to host and attract foreign investors. 

Considerations and Research Directions 

The many ethical challenges already posed by global cultural diversity are
likely to grow in number and
significance with our passage into the 21st century. The alternative terms
of global business engagement
described in Table 2 introduce a number of questions worthy of
consideration by scholars, corporate
executives, and government policy makers. Although not an exhaustive
listing, the following suggestions
and research directions deserve attention. 

Constructive Engagement 

Among the four alternatives in Table 2, constructive engagement is most
difficult to pinpoint in actual
practice. We need answers to the question: What exactly is constructive
engagement? The concept
needs clarification both as used diplomatically in respect to government
policies, and as implemented
practically in respect to business behaviors. Criteria must be developed to
define when and under what
conditions a business can justifiably claim that its behavior in a given
setting is "constructive." Once the
criteria exist, they can and should be used in social audits of global
business performance. Such audits, if
taken, have the potential to increase the accountability of global firms
for their activities in ethically
challenging settings. 

The clarification of constructive engagement might be pursued through
Donaldson's (1996) notion of
core or threshold values, and Donaldson and Dunfee's (1994) concepts of
macro- and micro-social
contracts. At the level of the macro-social contract, agreement on core
values or "hyper-norms" would
set threshold standards on matters relating to human dignity, basic rights,
and good citizenship. Within
this trans-cultural umbrella, micro-social contracts could then be tailored
to fit specific local and regional
cultural contexts. Such coexistence of macro-social and micro-social
contracts is described in
Donaldson and Dunfee's (1994) use of Integrated Systems Theory. What
remains to be seen is how this
concept can be made operational to guide business behavior in ethically
challenging settings such as
Burma. 

Efforts to develop transnational business guidelines by the United Nations,
Caux Round Tables, and
other global social responsibility forums (United Nations 1990; Makower
1994) are important in the
macro-social context. Further research and development on their behalf
should continue, with the
suggestions in Table 3 perhaps added to the mix of possibilities as applied
to Burma. However, any
"outside-in" or "top-down" approaches to social contracting will have the
tendency to stall in exerting
positive influence at the level of action. At this micro-social level, the
contributions of local and regional
forums are also necessary. They can bring to the contracting process the
"inside-out" or "bottom-up"
perspectives of the local culture, or at least the culture of a
neighborhood. Questions must be asked and
answered in regard to how local and regional social responsibility forums
can be engaged to set local
standards for constructive engagement, serve as exemplars and models, and
through peer pressure
ensure that other investors live up to shared expectations. 

The opportunity exists to test this notion in Burma. The country obviously
needs business partners, and
Asian ones in particular. It is possible for Burma's neighbors to make
those partnerships hard to get and
expensive-not in monetary terms, but in required contributions to
demonstrable social and economic
progress. Ideally, Southeast Asia's respected business leaders would take
the initiative in setting
standards for constructive engagement and providing a model for other
investors to follow when dealing
with their neighbor. The goal would be noble-to commit their names and
corporate reputations to a
statement of principles that would guide foreign investments in Burma
toward truly constructive
outcomes. Precedent for such a step is found in the Sullivan Principles,
which provided business
guidelines for dealing with apartheid South Africa. 

END OF PART 1 
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