S I X T H E D I T I O N

BUSINESS AND ITSENVIRONMENT

David R Baron

Stanford University

PEARSON

Pearson Education International

Contents

List of Cases xvi

Preface xix

PART I: STRATEGY AND THE NONMARKET ENVIRONMENT 1CHAPTER 1 Market and Nonmarket Environments 1

Introduction 1

The Environment of Business 2

The Role of Management 3Market and Nonmarket Environments 4

Analysis of the Nonmarket Environment: The Four I's 5The Nonmarket Environment of the Automobile Industry 5

Issues 5 • Interests 8 • Institutions 9 • Information 10Change in the Nonmarket Environment 11Anticipating Change in the Nonmarket Environment 13The Nonmarket Issue Life Cycle 13

EXAMPLE: GRADUATION CARDS 14

Summary 16Cases 17

The Nonmarket Environment of the Pharmaceutical Industry 17The Nonmarket Environment of McDonald's 20The Nonmarket Environment of Google 25

CHAPTER 2 Integrated Strategy 33Introduction 33

Strategy in the Nonmarket Environment 33The Importance of Nonmarket Strategy 33 • Competition and Change in the Nonmarket Environment 35• Strategy and the Nonmarket Issue Life Cycle 36 • Strategies and Borders 36

Integrated Strategy 37Google and the Spectrum Auction 38EXAMPLE: DIRECT-TO-CONSUMER ADVERTISING AND INTEGRATED STRATEGY IN THE

PHARMACEUTICAL INDUSTRY 40

Approaches to Integrating Market and Nonmarket Strategies 41

Nonmarket Positioning 42Nonmarket Positioning and Market Strategies 43EXAMPLE: EBAY'S POSITIONING IN LEGAL SPACE 44

Positioning Spaces 46 • The Perils of Positioning 47Nonmarket Capabilities and Reputation 48A Framework for the Analysis of Nonmarket Issues 49

EXAMPLE: CITIBANK AND CREDIT CARDS FOR UNDERGRADUATES 51

Organization of the Nonmarket Strategy Function 52Summary 53Cases 54

Exclusive Resorts: Entrepreneurial Positioning and Nonmarket Defense 54Envirotest Systems Corporation (A) 57Molecular Insight Pharmaceuticals: Integrated Strategy for a Development Stage Molecular

Medicine Company 61

vi Contents

CHAPTER 3 The News Media and Nonmarket Issues 66Introduction 66The Role of the News Media in Nonmarket Issues 66Messages and Their Interpretation 68A Theory of News Media Coverage and Treatment 69

Intrinsic Audience Interest 69 • Societal Significance 70 • Combining the Perspectives 70

Extending the Theory 72Newsworthiness 72 • The Cost of Coverage 73 • Balance and Fairness 73

The Nature of the News Media 74News Organizations as Businesses 74 • The Profession 74 • Does the News Media Treat Issues Selectively? 75• Bias, Accuracy, and Fairness 76 • The Internet and Citizen Journalism 77

Business Interactions with the News Media 78The Need for Information 78 • Media Strategies 78 • Responses and Media Vacuums 79• Media Interviews 79 • Anticipating Issues 80 • Unanticipated Events 81

Recourse in Disputes with the Media 81Private Recourse 81EXAMPLE: PROCTER & GAMBLE AND NEIGHBOR TO NEIGHBOR 82

Recourse to the Law: Defamation and Libel 83 • Political Recourse 84Summary 85Cases 86

General Motors: Like a Rock? (A) 86Illinois Power Company (A) 88

CHAPTER 4 Private Politics 90Introduction 90Campaigns 91

EXAMPLE: PIZZA HUT AND HEALTH INSURANCE REFORM 93

Private or Public Politics? 95Activist Strategies 96

Advocacy Science 98 • Target Selection 98EXAMPLE: FISH FARM ACTIVISM 99

A Generic Strategy of Activists 100Activist Organizations 101 0

Activists and Their Organizations 101 • Greenpeace 102Interacting with Activist Organizations 103

Assessment 103 • Strategy and Negotiations 104EXAMPLE: NEGOTIATING WITH ACTIVISTS: ONBANK 106

Challenging the Activists 106Summary 107Cases 109

Shell, Greenpeace, and Brent Spar 109Nike in Southeast Asia 112Anatomy of a Corporate Campaign: Rainforest Action Network and Citigroup (A) 115Anatomy of a Corporate Campaign: Rainforest Action Network and Citigroup (B) 118

CHAPTER 5 Crisis Management 120Introduction 120

The Nature and Causes of Crises 120

The Pattern of Crisis Development 121

EXAMPLE: PEPSICO AND THE SYRINGE EPISODE 124

Components of a Crisis Management Program 125Avoidance 126 • Crisis Preparedness 127 • Root Cause Analysis 128 • Response 129 • Resolution 132

Summary 133

Contents vii

Cases 135Buffalo Savings Bank (A) 135Mattel: Crisis Management or Management Crisis 136Merck and Vioxx 140

PART I Integrative Case: Wal-Mart: Nonmarket Pressure and Reputation Risk (A) 144

PART II: PUBLIC POLITICS AND NONMARKET STRATEGY 153CHAPTER 6 Nonmarket Analysis for Business 153

Introduction 153A Framework for the Analysis of Nonmarket Action in Public Politics 154

Interests and Interest Groups 154 • The Amount of Nonmarket Action 155 • The Demand forNonmarket Action 155 • The Costs and Effectiveness of Nonmarket Action 156• The Distributive Politics Spreadsheet 158

The Nature of Political Competition 159EXAMPLE: INTERNET WINE SALES 161

Institutions and Institutional Officeholders 162Moral Determinants of Collective Action 162Boeing in a Pickle 162Analysis of Boeing in a Pickle 164

The Nonmarket Issue 164 • Distributive Consequences 165 • Boeing's Nonmarket Agenda andObjectives 166 • The Nature of the Politics 167 • Interests and the Demand for Nonmarket Action 167• The Supply Side 167 • The Distributive Politics Spreadsheet 168 • Institutions and InstitutionalOfficeholders 168 • Nonmarket Strategy Formulation 170 • The Outcome 171

Summary 171

Appendix A: Nonmarket Action and the Free-Rider Problem 173

Appendix B: The Organization of Congress 175Cases 181

Tobacco Politics 181Scrubbers and Environmental Politics 183Repeal of the Luxury Tax 184

CHAPTER 7 Nonmarket Strategies for Government Arenas 185Introduction 185Responsible Nonmarket Action 186

Criticisms of Business Nonmarket Action 186Nonmarket Strategy Formulation 189

Managers and Nonmarket Strategies 189 • Implementation 194Understanding Outcomes 195Generic Nonmarket Strategies 196

Representation Strategies 196EXAMPLE: TOSHIBA AND TRADE SANCTIONS 197

Majority-Building Strategies 199 • Informational Strategies 202 • Public Officeholders as Targets ofNonmarket Strategies 203EXAMPLE: CHINA AND MOST FAVORED NATION STATUS 204

Institutions, Interests, and Strategy Choice 205Institutions and Responsiveness 205 • Interests: Client and Interest Group Politics 205

Summary 206Appendix: The Politics of the Extension of Daylight Saving Time 208Cases 212

Federal Express and Labor Organization 212Carried Interest Taxation 213Wal-Mart and Its Urban Expansion Strategy 217

• vi i i Contents

CHAPTER 8 Implementing Nonmarket Strategies in Government Arenas 220Introduction 220Lobbying 220

EXAMPLE: PACIFICARE'S NONMARKET PORTFOLIO 221

The Nature of Lobbying 222 • Technical and Political Information 223 • Credibility andRelevance of Information 224 • Access 225 • Timing and Focus 226 • GovernmentAllies 226 • Controls on Lobbying 226

Electoral Support 227Myths and Realities of Campaign Financing 228 • Election Financing Laws 228 • The Pattern ofCampaign Contributions 229 • Purposes of Campaign Contributions 230

Grassroots and Constituency Campaigns 231Mobilization 231 • Business Grassroots Campaigns 232 • The Effectiveness of Grassroots Programs 232

Coalition Building 233Peak Associations 233 • Trade Associations 234 • Ad Hoc Coalitions 235• Coalitions and Consensus 235EXAMPLE: PHARMACEUTICAL POLITICS 236

Testimony 236Public Advocacy 237Judicial Actions 238Organizing for Nonmarket Effectiveness 239Developing Nonmarket Capabilities 239Summary 240Cases 242

Responsible Lobbying? 242Internet Taxation 247Pharmaceutical Switching 252

PARTII Integrative Case:FuelEconomy Standards2007 259

PART III: GOVERNMENT AND MARKETS 265CHAPTER 9 Antitrust: Economics, Law, and Politics 265

Introduction 265

Antitrust Law 267The Antitrust Statutes 267EXAMPLE: MONOPOLY 269

Exemptions 269Enforcement of the Antitrust Laws 270

Government Enforcement 270 • Private Enforcement 272 • Per Se Violations and the Rule of Reason 273Antitrust Thought 274

The Structural Approach 275 • The Chicago School 277 • The New IO Approach 278Examples of the Differences in Antitrust Thought 280

Vertical Arrangements 280 • Predatory Pricing and Entry Deterrence 282 • Collusion andPrice-Fixing 283 • Mergers and Merger Guidelines 284

Compliance 286The Politics of Antitrust 287Summary 288Cases 289

Price Fixing in the Airways 289The Staples-Office Depot Merger? 290The Microsoft Antitrust Case 294

CHAPTER 10 Regulation: Law, Economics, and Politics 302Introduction 302Periods of Regulatory Change 303

Contents ix

The Constitutional Basis for Regulation 304Regulatory Commissions and Agencies 305Delegation, Rule Making, Due Process, and Discretion 306The Nonmarket Environment of Regulatory Agencies 307

EXAMPLE: REGULATORY RULE MAKING IN THE BUSH ADMINISTRATION 309

Explanations for Regulation 310

Market Imperfections 310Natural Monopoly 310 • Externalities 312 • Public Goods 313 • Asymmetric Information 313• Moral Hazard 314 • Government Imperfections 315

The Political Economy of Regulation 316Capture and Rent-Seeking Theories 316 • Fairness 316 • Other Public Purposes: Media OwnershipRules 317 • Preemption 318

A Nonmarket Theory of Regulation 318EXAMPLE: THE POLITICAL ECONOMY OF REGULATION: ATVS 319

Redistribution and Cross-Subsidization 320Cost-of-Service Regulation 320Deregulation 321

Telecommunications 321 • Electric Power 323 • Auctions 324Summary 325Cases 326

The FCC and Broadband Regulation 326Enron Power Marketing, Inc., and the California Market 330The FCC Media Ownership Rules 332

CHAPTER 11 Environmental Management and Sustainability 337Introduction 337 ;

The Environment and Sustainability 337

Goals and Actions 337 • Global Climate Change 338 • Policy 338 • Tradeoffs 339

Socially Efficient Control of Externalities 340The Coase Theorem 340EXAMPLE: THE COASE THEOREM 342

Transactions Costs and the Limits of the Coase Theorem 343

Cap-and-Trade Systems 344 • >

Cap-and-Trade Systems to Address Acid Rain 345Global Climate Change and Emissions Trading Systems 346

The United States and Carbon Emissions 347 • Emissions Trading in the European Union 347• Emissions Trading Within BP pic (British Petroleum) 348

Regulation as Opportunity 348Government Policy: The EPA 349

Enforcement 350 • Standards Setting and Engineering Controls 351 • Incentive Approaches 351EXAMPLE: INTEL AND THE PROJECT XL 352

Superfund 352 • State Policy Initiatives 353

The Political Economy of Environmental Protection 353The Nature of Environmental Politics 353 • Judicial Politics 354 • Advocacy Science 354• Distributive Politics 355 • Private and Public Politics 356EXAMPLE: THE EQUATOR PRINCIPLES 357

NIMBY and Private Politics 358

Management of Environmental Protection Issues 359EXAMPLE: DOW CHEMICAL AND LOCAL ENVIRONMENTALISTS 361 •EXAMPLE: MCDONALD'S AND WASTE REDUCTION 362

EXAMPLE: ENVIRONMENTAL ACTIVISM AT HOME DEPOT 363

Voluntary Collective Environmental Programs 364Summary 365

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Cases 366Regulation as Opportunity: Cummins Inc. 366Emerging Nanotechnology Regulation: Samsung's SilverCare Washing Machine 368Environmental Justice and Pollution Credits Trading Systems 370

CHAPTER 12 Law and Markets 374Introduction 374The Common Law 375Property 376

Bargaining 376 • Incentives and Appropriability 377Intellectual Property 377

Intellectual Property Protection 378EXAMPLE: INTELLECTUAL PROPERTY ENFORCEMENT AND DIGITAL PIRACY 379

EXAMPLE: MICKEY MOUSE POLITICS AND LAW 381

Contracts 383EXAMPLE: GENENTECH AND CITY OF HOPE 384

Enforceability 385 • Breach 385 • Remedies 385Torts 386The Product Safety Problem and Social Efficiency 387Entitlements, Liability, and Social Efficiency 389

Entitlements and Their Protection 389 • The Assignment of Social Costs and the Choice Between Liabilityand Regulation 391

Products Liability 392The Development of Products Liability Law 392 • Allowable Defenses Under Strict Liability 395• Preemption 396 • Damages 397 • The Politics of Products Liability 398

Imperfections in the Liability System 399EXAMPLE: SILICONE BREAST IMPLANTS 401

Summary 403Cases 404

California Space Heaters, Inc. 404Patent Games: Plavix 406Obesity and McLawsuits 408

CHAPTER 13 Information Industries and Nonmarket Issues 413Introduction 413The Economics of Online Markets 414Internet Privacy 417

EXAMPLE: GOOGLE: GMAIL AND PRIVACY 419

The Internet and Tax Policy 423Online Communities 425Summary 427Cases 428

DoubleClick and Internet Privacy 428eBay and Database Protection 433eBay: Private Ordering for an Online Community 438

PART III Integrative Case: Credit Card Regulation 445

PART IV: GLOBAL NONMARKET STRATEGY 451CHAPTER 14 The Political Economy of Japan 451

Introduction 451Issues 452Interests 454

Contents xi •

Institutions 455The Diet 455 • Political Parties and the Electoral System 456 • The Bureaucracy 458• Political Reform 460

The Judicial System and the Antimonopoly Law 462Cultural Foundations 462Tying the Components Together: A Framework of Political Exchange 464

Political Exchange 464Characteristics of Business 466Business-Government Interactions 467

The Organization of Business for Nonmarket Action 467 • Nonmarket Strategies 468• Relationships with the Bureaucracy 469 • Lobbying and Points of Access 470• Information 471 • Corporate Nonmarket Styles 471

Summary 472Cases 474

The Breakup of Nippon Telephone and Telegraph? 474The Privatization of Japan Post 476Uniqlo: Success Breeds Nonmarket Challenges 479

CHAPTER 15 The Political Economy of the European Union 481Introduction 481The European Union 481

The Single European Act 482 • The Maastricht Treaty 483The Institutions of the European Union 484

The European Commission 484 • The Council of Ministers 485 • The European Parliament 486• The Court of Justice 487 • The European Economic and Social Committee 487 • The EU LegislativeProcess 488 • Economic and Monetary Union 488 • The EU ConstitutionalTreaty 490 • Competition Policy 490EXAMPLE: MICROSOFT ANI> EU COMPETITION POLICY 493

State Aids and the Common Agricultural Policy 494 • The Social Charter, Social Democracy, and LaborMarkets 494

Nonmarket Issues 496Interests and Their Organization 498Nonmarket Strategies in the European Union 499

EXAMPLE: PRONUPTIA AND FRANCHISING 504

Summary 505 •

Cases 506The European Union Carbon Tax 506The European Union Data Protection Directive 509Aldeasa and the EU Duty Free Abolition (A) 511

CHAPTER 16 China: History, Culture, and Political Economy 517Introduction 517Historical Background 518

Pre-Republican 518 • The Communist Era 520 • The Reform Era 521

Confucianism and Social Explanations 523Applications in Society, Politics, and Business 525

The Nonmarket Environment and the Four Fs 527Institutions and Government 528 • State Institutions 530 • Provincial and Local Governments 531

Business: State-Owned Enterprises, Foreign Direct Investment, and International Trade 532State-Owned Enterprises 532 • Foreign Direct Investment 533 • International Trade Policy andWTO Membership 534 • Regulation 535

Continuing Issues 535Human Rights 535EXAMPLE: AN INTELLECTUAL PROPERTY CHALLENGE 537

Energy and the Environment 539

• xi i Contents

Summary 540Cases 541

Wugang and the Reform of State-Owned Enterprises 541Direct Selling in China 543Google in China 545

CHAPTER 17 Emerging Markets 549Introduction 549

Country Assessment 549Individual Freedoms 550 • Economic Freedom 550 • Corruption 550 • Political Risk 551• Competitiveness 551 • Culture 551

Opportunities 551EXAMPLE: INDIA 552

Opportunity at the Bottom of the Pyramid? 553 • River Blindness 553 • Fair Trade 554• Microfinance 556 • Underdeveloped Markets and Business Groups 557

Risk Assessment 558Causes and Types of Risks 559

Management in the Nonmarket Environment 562Summary 563Cases 564

Tesco PLC in India? 564Social Entrepreneurship: Banco Compartamos 567Social Entrepreneurship: Kiva 568MTN Group Limited 570

CHAPTER 18 The Political Economy of International Trade Policy 574Introduction 574

The Economics of International Trade 575Competitive Theory 575 • Strategic Trade Theory 578

The Political Economy of International Trade Policy 579The Dual Nature of the Politics of International Trade 579 • Asymmetries in the Politics 580

International Trade Agreements 581The World Trade Organization 581 • General Agreement on Trade in Services (GATS) 582 • Trade-Related Aspects of Intellectual Property Rights (TRIPS) 582 • Agriculture 583 • GovernmentProcurement 584 • Antidumping, Countervailing Duties, and Safeguards 584 • Dispute Settlement 584• The Doha Round of WTO Negotiations 587 • Other Trade Agreements 588

U.S. Trade Policy 588The Structure of U.S. Trade Policy 588 • U.S. Trade Law and Its Administration 589

The Political Economy of Protectionism 590Formal Policies 590 • Channels of Protection 591EXAMPLE: STEEL IMPORTS AND THE NONMARKET CAMPAIGN 592

The Political Economy of Market Opening 594The North American Free Trade Agreement 594 • Market Opening Under the Threat of Retaliation 595

Summary 596Cases 597

Cemex and Antidumping 597Compulsory Licensing, Thailand, and Abbott Laboratories 602Sophis Networks and Encryption Export Controls (A) 607

PART IV Integrative Case: Toys 'JP Us and Globalization 614

PART V: ETHICS AND CORPORATE SOCIAL RESPONSIBILITY 619CHAPTER 19 Corporate Social Responsibility 619

Introduction 619The Trust Gap 620

Contents xi i i •

What Is Corporate Social Responsibility? 621Milton Friedman's Profit Maximization 621

Compliance with the Law 625Stakeholder Theory 626The Business Roundtable Statement on Social Responsibility 628

Discussion 629

Corporate Social Responsibility and Corporate Social Performance 630EXAMPLE: TUNA AND DOLPHINS 631

A Framework for Corporate Social Performance 632Terminology 632 • The Setting 632 • Motivations for CSP 633 • Rewards 634• Summary 635 • Empirical Research 635

Corporate Governance 637Social Accountability 637 • The Duties of Boards of Directors 638 • Sarbanes-Oxley 639• The Market for Control 640

Summary 641Cases 642

The Collapse of Enron: Governance and Responsibility 642Wal-Mart: Nonmarket Pressure and Reputation Risk (B):A New Nonmarket

Strategy 647Playing by the Rules? 650

CHAPTER 20 Ethics Systems: Utilitarianism 653Introduction 653The Managerial Role of Ethics 653What Ethics Is and Is Not 654

Personal and Business Ethics 655Ethics and Private Interests 655Ethics, Politics, and Change 655Casuistry 656

EXAMPLE: SAVING THE DIVISION 657

The Methodology of Ethics 657The Relationships Among Moral Philosophy, Ethics, and Political Philosophy 659Utilitarianism: A Consequentialist System 660

Utilitarianism and Self-interest 661 • Aligning Self-interest with Societal Well-Being 661 • Utilitarianism,Distribution, and Altruism 662 • Summary of the Components of Utilitarianism 662

Utilitarian Duty and the Calabresi and Melamed Principles 662Act and Rule Utilitarianism 664

Jointly Determined Consequences 665 • Decision Making in the Face of a Moral Transgression 666Utilitarianism and Rights 666Criticisms of Utilitarianism 667

Philosophical Criticisms 667 • Interpersonal Comparisons of Utility 668 • Identifying Costs andBenefits 668 • The Measurement Problem 668 • The Information Problem 669

Utilitarianism in Application 670Categories of Situations 670 • Methodology 670EXAMPLE: LIVING BENEFITS 671

EXAMPLE: INTEGRITY TESTS 672

EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 673

EXAMPLE: REDLINING 673

Summary 674Cases 675

Pricing the Norplant System 675Tax Shelters 677Pfizer and Celebrex 679

XIV Contents

CHAPTER 21 Ethics Systems: Rights and Justice 681Introduction 681Classification of Ethics Systems 681Classes of Rights 682Kantian Maxims or Moral Rules 683

EXAMPLE: LIVING BENEFITS 684

The Relationship between Maxims and Rights 684 • Intrinsic and Instrumental Rights 685• Criticisms of Kantian Rights 687EXAMPLE: PRIVACY 688

Applied Rights Analysis 689Claimed and Granted Rights 689EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 691

A Methodology for Rights Analysis 691

Conflicts Among Rights 691Rights and Interests 692 • Prioritization 692EXAMPLE: INTEGRITY TESTS 693

Equal Employment Opportunity 694Disabilities and Rights 696Neoclassical Liberalism 697Categories of Justice Theories 698

Distributive Justice 698 • Compensatory Justice 699 • Injustice 700Rawls 's Theory of Justice 700

The Framework for Justice as Fairness 700 • The Principles of Justice 702 • The Role ofIncentives 703EXAMPLE: LIVING BENEFITS 704

Duty in Rawls's Theory 704EXAMPLE: CLINICAL TRIAL OBLIGATIONS 705

Criticisms of Rawls's Theory 705 • Applying the Principles of Justice 706EXAMPLE: AFFIRMATIVE ACTION 707

EXAMPLE: INTEGRITY TESTS 709

EXAMPLE: REDLINING 709

EXAMPLE: LIFE INSURANCE SCREENING FOR PREEXISTING CONDITIONS 710

Higher Order Standards for Evaluating Ethics Systems 710Summary 710 rCases 712

Genetic Testing in the Workplace 712Citigroup and Subprime Lending 714Consumer Awareness or Disease Mongering? GlaxoSmithKline and the Restless Legs Syndrome 716

CHAPTER 22 Implementing Ethics Systems 720Introduction 720

EXAMPLE: LEVI STRAUSS & COMPANY AND GLOBAL SOURCING 721

Moral Determinants of Nonmarket Action 722EXAMPLE: CIRCLE K'S HEALTH CARE POLICY 723

The Challenge of Corporate Social Responsibility 724Corporate Social Responsibility and Ethics in Practice 726

EXAMPLE: UNOCAL CORPORATION AND THE DIRTY CAR BOUNTY 726

EXAMPLE: SOUTH SHORE BANK AND COMMUNITY DEVELOPMENT 727

EXAMPLE: BP AND SOCIAL RESPONSIBILITY 727

EXAMPLE: WAL-MART REPUTATION AND STAKEHOLDER MANAGEMENT 728

EXAMPLE: CITIGROUP: RESPONSIBILITY UNDER FIRE? 730

EXAMPLE: JOHNSON & JOHNSON'S "OUR CREDO" 731

Core Principles and Their Evolution 731 • The Body Shop and the Social Audit 732 • Codes ofConduct 733 • Competitive and Proprietary Information 734 • Principles and Reasoning 734

Contents XV

Tensions in the Implementation of Ethic Principles 735Paternalism 735 • Nonmarket Action and Restraint 736

Sources of Unethical Behavior 738Summary 739Cases 740

Denny's and Customer Service 740Gilead Sciences (A): The Gilead Access Program for HIV Drugs 742Advanced Technology Laboratories, Inc. 746

CHAPTER 23 Ethics Issues in International Business 749Introduction 749International Law and Institutions 750Cultural Relativism 751Human Rights and Justice 754

Slave Labor in Saipan? 754Operating in Developing Countries 755AIDS and Developing Countries 756

EXAMPLE: GLAXOSMITHKLINE AND NONMARKET SPILLOVERS 757

Responsibility for Working Conditions in Suppliers' Factories 758Sweatshops 758 • Private Governance and Self-Regulation: The Fair Labor Association 759• Company Responses 759

International Codes 761Questionable Foreign Payments and Corruption 761

Questionable Payments and Ethics Principles 762 • The Lockheed Case 763 • A Utilitarian Analysisof Bribery 764 • The Foreign Corrupt Practices Act 766 • Company Codes 767 • Cummins'sPractice 768 • The OECD Anti-Bribery Convention 769

Summary 770

Cases 772Complications in Marnera 772De Beers and Conflict Diamonds 773

. Siemens: Anatomy of Bribery 774

PART V Integrative Case: GlaxoSmithKline and AIDS Drugs Policy 778

References 784• 0

Index 796