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Benjamin W. Heineman, Jr.
Legal Scholar

Benjamin W. Heineman, Jr.

Business ethics expert; senior fellow at Harvard’s schools of law and government; former General Counsel for General Electric; former assistant secretary for policy at the U.S. Department of Health, Education and Welfare (now Health and Human Services.)

Competitors, take note

Q. With Google ending self-censorship in China, the company stands to lose significant market-share in an enormous and growing market. Does it make sense for even the biggest firms to challenge political systems? When is it right for leaders to put a principled stand on human rights in front of their organization's self-interest?

Global companies are committed to compliance with the law of each nation where they do business. But many multi-nationals also have global ethical standards---no bribery, world-class environmental protection, ethical sourcing---beyond what national law requires.

A recurrent dilemma is when national law and global ethics collide---for example, when the law of China (state censorship) is in conflict with a Google's global standards (no censorship).

Resolving this dilemma is not easy--nor is the solution uniform. It depends on the corporation's values and the views of important stakeholders, including shareholders, creditors, employees, customers and suppliers.

History illuminates different approaches to this collision between law and ethics. At one extreme is the complicity of major American companies (such as IBM, Kodak, GE, DuPont, GM and Ford), which operated in Germany from 1933 to 1939, either in their own name or through controlled subsidiaries. They ignored the impact of increasing discrimination in law and in enforcement against religious and ethnic groups and against political dissidents. One plausible explanation: their inaction resulted from their profitability and their weak ethical standards combined with either unawareness or indifference in the United States itself to Hitler's rising power and inhumane policies.

At the other extreme were the practices of many American companies during the 1980s in South Africa. They publicly opposed apartheid due, in important part, to the civil rights revolution of the 1960s in the U.S. and to the broadly shared view among many corporate stakeholders that state-sanctioned racial separation and discrimination were morally wrong and commercially intolerable. Many companies adopted the Sullivan principles or similar precepts that, contrary to South African Law, required non-segregation and equal treatment in the workplace. After the U.S. and European governments enacted tough economic sanctions against South Africa, many international business stopped doing business there.

In 2006 when it entered China, Google compromised its global ethical standards against internet political censorship and complied with the state regime controlling information. (Entering "Tiananmen Square" in Google's U.S. search engine brought up 1989 and pictures of tanks; entering that phrase in Google's China search engine brought up gauzy, anodyne pictures of landmarks). It did so in the hope that even censored information was important to the Chinese people -- sophisticated users could find uncensored work-arounds -- and that, over time, the Chinese government would relax its limits on information.

Google's decision this year was due to a worsening of censorship. But it was also due to hacking into Google's Gmail to identify dissidents and others at risk of government law enforcement. Although not proven, there were suspicions that the government was behind this intrusion. This risk to dissidents was as important a factor as worsening censorship. (Several years ago Yahoo was pilloried by the U.S. media and public officials for helping Chinese police identify a journalist who allegedly revealed a secret government order and who was subsequently sentenced to 10 years in prison.)

Google had been sharply criticized in the internet world, if not the business community, for agreeing to the censorship compromise in 2006, despite its "do no evil" motto. Its decision to withdraw from China today is based both on deeply held values---Google founder Sergey Brin is an emigre from Russia who is genuinely sympathetic to the plight of dissidents and the importance of free speech---and the strongly held views of global stakeholders who share an "open web" position. Chinese revenues are a small fraction of Google's global business and, although it is apparently foregoing current search engine activity in a huge, growing market, it is hard to predict where China may be five or ten years from now on this issue.

Google is not the first company to resolve the conflict between country law and company ethics in favor of ethics. But its highly publicized decision will make companies operating around the globe sensitive to the importance of seeing clearly, before others do, the potential collision of law and ethics and of thinking ahead about how to resolve them in light of company values and stakeholder -- not just shareholder -- pressures.

It will also spotlight companies operating in China and other countries with repressive regimes that take the opposite tack: allowing national law to override the companies' global ethical standards. One example could be Microsoft, whose small search engine, Bing, is trying to gain a foothold in China. Bill Gates is quoted as saying that Microsoft observes the law of nations where it operates. If so, he hasn't addressed the other side of the equation: important company ethics and values that can trump national law.

By Benjamin W. Heineman, Jr.

 |  March 25, 2010; 6:20 AM ET
Category:  Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Short answer: Never | Next: 'Do no evil'


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"At one extreme is the complicity of major American companies (such as IBM, Kodak, GE, DuPont, GM and Ford), which operated in Germany from 1933 to 1939,"

And shareholder values have changed not a bit since.

Let's not pretend Steve Ballmer's going to do anything but lick communist boot for money.

Posted by: Nymous | March 28, 2010 8:21 AM
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Well, the Jew Media has been meticulous about NOT telling us just what the Chinese want to keep from their People.

One of your slimy commentators managed to slip Tianamen Square into the debate without, as usual, telling us why the Chinese don't want their people to hear your vague but unspecific allusions to what happened there.

Perhaps the JM might have noticed the open MSM threats against the President to keep him from investigating the manifold atrocities and crimes of the most corrupt President in the History of the Nation? A President who had the temerity to appoint, as Attorney General, a man up to his Kiester in the Cover Up of the Embassy and WTCI Bombings and invited by the MSM to repeatedly warn the President how dangereous it will be to allow the Guantanamo POWs to tell their Tales. Perhaps you might even have noticed the allusions ala Tianamen Square the JM makes in which the Marines, CIA and Blackwater Contractors, Bush Militias and assorted Racist Commentors can fill in their own fanciful opinions like "Obama took his good old time sending reinforcements" and "is denying the Marines their own Close Air Support and the poor Guys are being slaughtered in Afghanistan."

No doubt, there is another psychopathic piece of Oswald-like Marine and a Zionist Jew- Jack Rubenstein practicing up to save the Nation from the Socialists and Anti-Semites.

Google exhibits the usual hypocrisy. When the Jews, who had thought the Anti Islamic cartoons were just too, too funny and why were the Muslims so touchy, discovered the cartoon showing one of the most cowardly and brutal beasts of the modern world eating Arab infants, they were outraged? Then, when I recaptioned that cartoon with a humorous comment, Google blocked my site for months, even though there were Tens of Thousands of copies of the cartoon circulating on the Net.

Now they are tabulating search statistics on use of the word "Jew" as opposed to "Jewish Person", the unadorned "Jew" being indicative of an Anti Semite attitude.

The Post has engaged in outright Censorship in cleansing its Archive (ala 1984) of the Crimes of 3 Generations of a certain Dynasty.

Perhaps Google can help me learn the truths in an extensive list of Topics I have wondered about for so long, that is, if they aren't too busy protecting Human Rights in China.

Or Perhaps I might apply for a Neiman Fellowship to document the MSM's "Self Censorship" of its Archives.

Monte Haun mchaun@hotmail.com

Posted by: mchaun | March 27, 2010 9:14 PM
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Exactly how creative can a society be when it issues memos on how to deal with Google's departure in public fora in minute detail? As a scientist, I think this will be an interesting question. I read about China's investments in science and technology. I'm just curious to find out if people with genuine talent can actually blinker themselves so completely. Is material prosperity worth so much?

Posted by: instanton | March 25, 2010 8:28 AM
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Google abandoned its 125 million Chinese search users. Those users staked themselves on Google over the home team entry, Baidu.

Google's pride was stung when renegade students hacked its site, so they pulled out of China. While wrapping themselves in the American flag they've turned tail and retreated from the difficult work of building a better tomorrow. American capitalism was once more diligent and courageous, but when did anyone associated with the Google brand ever struggle?

Don't Be Cowardly.

Posted by: blasmaic | March 25, 2010 6:55 AM
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