The role of the corporation in fostering sustainable peace.

• Author: Fort, Timothy L.

ABSTRACT

This Article demonstrates that there is a plausible, conceptual relationship among corporate governance, business ethics, and sustainable peace. First, the Authors begin by outlining the benefits of and protests against globalization and the reciprocal benefits between geopolitical entities and economic activity. The Article then details specific historical events that foreshadow patterns in the relationship between business and sustainable peace. In looking more closely at those patterns, the Authors argue that through economic progress and mitigation of rivalries in the workplace, multinational corporations can contribute to sustainable peace. Thus, if this argument is correct, the stakes increase dramatically for corporations to consider these issues in their governance practices and for governments to create legislative frameworks to encourage such responsible practices. The Authors propose that incorporating attributes of peaceful societies with current successful corporate governance regimes will help to achieve both economic progress and social harmony. The Article concludes that the future will offer increasingly precise corporate models that contribute to the reduction of bloodshed.

1. INTRODUCTION

   On May 20, 2001, a front page New York Times news story reported that Hindus in scattered areas of the world are protesting McDonald's decision to cook its french fries in beef fat, although in 1990 it had announced that it would cook its fries only in vegetable oil. (1) As a result, "[T]he news ricocheted to India, where restaurant windows were smashed, statues of Ronald McDonald were smeared with cow dung, and Hindu nationalist politicians called for the chain to be evicted from the country." (2) The controversy is not the first McDonald's has faced. A well-toned Prince Philip of England stated, "You people [McDonald's] are destroying the rainforests of the world by grazing your cheap cattle." (3) And even as McDonald's CEO, Jack Greenberg, acknowledged and defended McDonald's record, the company is challenged on issues from undermining local farmers, threatening local culture, using genetically modified organisms in its food, relying on hormonally treated beef, opposing local unionization, distributing unsafe toys to children, and employing child labor. (4) Such a seemingly ubiquitous problem-causing image may be why another journal not known for its left-leaning views, The Economist, jokingly began a recent story with "Scientists at the McDonald's Centre for Obesity Research suggest that eating a hamburger a day actually reduces cholesterol levels." (5) This appeared in a story suggesting that the scientific community is beholden to the corporations funding its research. (6)

   On the other hand, in addition to the employment McDonald's brings to local areas, its influence on economic affairs and perhaps even peace, has been trumpeted as well. In a more serious vein--at least somewhat so--The Economist uses the price of a McDonald's hamburger in different countries as a way to assess distortions in the exchange rate of currencies. (7) Thomas Friedman, the National Book Award-winning New York Times columnist, has advanced a theory called "The Golden Arches Theory of Conflict Prevention," claiming "no two countries that both had McDonald's had fought a war against each other since each got its McDonald's." (8) Friedman amended this theory slightly in light of the 1999 conflict between NATO and Yugoslavia, where all countries had McDonald's. Indeed, he contended the turning point of that conflict occurred when NATO bombed the power grids and, therefore, eliminated the benefits of a networked global economy for the people, including the convenience of consuming a Big Mac. (9) Thus, although there is now, according to Friedman, an exception to the Golden Arches Theory, the power of globalization works to mitigate the extent of conflict. (10)

   These examples illustrate the complexity involved in assessing the ways multinational corporations may or may not foster beneficial relationships with the people they encounter. From these limited comments regarding McDonald's, one could hypothesize several potential theories.

   1. Multinational corporations cause unrest, protest, and bitterness;

   2. Multinational corporations are convenient scapegoats because of their power and their facelessness;

   3. The influence of multinational corporations is so fundamental that they undermine even seemingly objective analyses of contemporary issues (such as scientific analysis);

   4. The influence of multinational corporations is so fundamental that they have the potential to build a Pax E-Commercia (11) that philosophers such as Kant (12) only hoped to realize.

   In short, the relationship between corporate action and an ideal such as sustainable peace seems to be ambiguous. Within the ambiguity, however, there may lay patterns of relationships that can be elucidated. To date, very little attention has been devoted to this topic. (13) It is hoped that this Article will begin a dialogue on these issues in light of the following observations.

   First, as demonstrated below, there is a plausible, conceptual relationship among corporate governance, business ethics, and sustainable peace. Accordingly, Part II is concerned with developing this connection in terms of recognizing the protests against as well as the benefits of globalization, the reciprocal benefits between stable geopolitical entities and economic activity, and specific historical events that collectively add to the ambiguity, but which may also foreshadow patterns to be illuminated.

   Part III looks more deeply at those patterns. In this section, it is argued that the contribution multinational corporations make to sustainable peace is more likely felt in the mitigation of internal violence rather than the elimination of wars between sovereign nations. There are exceptions. Sometimes, economic exchange may reduce the likelihood of warfare between countries. The downing of the U.S. spy-plane in China may well have had a different outcome if the economic exchanges between the two countries were not already so great (14) and the potential for increase so large. (15) Nevertheless, the more promising area for corporate contributions to peace may lie in the way corporations do their work in countries through economic progress in general, and through the mitigation of existing rivalries in the workplace. The way in which corporations are governed may make a difference in this regard. This governance question revisits the assumptions underlying the reasons for which corporations are established.

   Finally, this Article concludes with the observation that enough evidence exists to move beyond being content with a plausible relationship among governance, ethics, and peace, and suggests that future work may uncover increasingly precise corporate models that contribute to the reduction of bloodshed. If this argument is true, of course, the stakes for corporations to practice ethically responsible governance increase dramatically, as does the pressure on governments to create legislative frameworks to encourage responsible governance practices.

2. THE PLAUSIBILITY OF CONNECTING GOVERNANCE, ETHICS, AND PEACE: THE IMPORTANCE OF TRANSPARENCY

   The first question to be asked is whether there is a plausible connection among corporate governance, ethics, and peace. As demonstrated below, the answer to that question is yes, both empirically and conceptually.

   1. An Initial Empirical Connection

      Transparency International (TI) is a non-governmental organization which attempts to document the level of corruption that exists within countries today. (16) As its chairman, Peter Eigen, states, "[T]he scale of bribe-paying in international corporations in the developing countries of the world is massive ... [and] ... the results include growing poverty in poor countries, persistent undermining of the institutions of democracy, and mounting distortions in fair international commerce." (17) In attempting to determine perceptions of the level of corruption in countries, TI conducted 779 interviews with representatives of companies doing business in emerging markets. (18) In conjunction with this index devoted specifically to bribe-taking, TI also utilized other indices to create a "Corruption Perceptions Index." (19) The rankings of these ninety countries provide an indication of levels of corruption that exist today. The chart is reproduced below:

      The 2000 Corruption Perceptions Index (20) 2000 Country CPI Surveys Standard High-Low Rank Country Score Used Deviation Range 1 Finland 10.0 8 0.6 9.0 - 10.4 2 Denmark 9.8 9 0.8 8.6 - 10.6 3 New Zealand 9.4 8 0.8 8.1 - 10.2 Sweden 9.4 9 0.7 8.1 - 9.9 5 Canada 9.2 9 0.7 8.1 - 9.9 6 Iceland 9.1 7 1.1 7.3 - 9.9 Norway 9.1 8 0.7 7.6 - 9.5 Singapore 9.1 11 1.0 6.2 - 9.7 9 Netherlands 8.9 9 0.6 8.1 - 9.9 10 United Kingdom 8.7 9 0.6 7.3 - 9.7 11 Luxembourg 8.6 7 0.7 7.4 - 9.3 Switzerland 8.6 8 0.3 8.1 - 9.1 13 Australia 8.3 10 1.0 6.7 - 9.3 14 USA 7.8 10 0.8 6.2 - 9.2 15 Austria 7.7 8 0.7 6.2 - 8.5 Hong Kong 7.7 11 1.2 4.3 - 8.6 17 Germany 7.6 8 0.8 6.2 - 8.4 18 Chile 7.4 8 0.9 5.7 - 8.4 19 Ireland 7.2 8 1.9 2.5 - 8.5 20 Spain 7.0 8 0.7 5.9 - 8.0 21 France 6.7 9 1.0 4.3 - 7.7 22 Israel 6.6 8 1.3 4.3 - 7.9 23 Japan 6.4 11 1.3 4.3 - 7.8 Portugal 6.4 9 0.9 5.3 - 8.1 25 Belgium 6.1 9 1.3 4.3 - 8.8 26 Botswana 6.0 4 1.6 4.3 - 8.2 27 Estonia 5.7 4 1.6 4.4 - 8.1 28 Slovenia 5.5 6 1.1 4.1 - 7.3 Taiwan 5.5 11 1.4 2.5 - 7.2 30 Costa Rica 5.4 4 1.9 3.8 - 8.1 Namibia 5.4 4 0.8 4.3 - 6.1 32 Hungary 5.2 10 1.2 3.9 - 8.1 Tunisia 5.2 4 1.5 3.8 - 7.1 34 South Africa 5.0 10 0.9 3.8 - 6.6 35 Greece 4.9 8 1.7 3.7 - 8.1 36 Malaysia 4.8 11 0.6 3.8 - 5.9 37 Mauritius 4.7 5 0.8 3.9 - 5.6 Morocco 4.7 4 0.7 4.2 - 5.6 39 Italy 4.6 8 0.6 4.0 - 5.6 Jordan 4.6 5 0.8 3.8 - 5.7 41 Peru 4.4 5 0.5 3.8 - 5.0 42 Czech Republic 4.3 10 0.9 3.3 - 6.2 43 Belarus 4.1 3 0.8 3.4 - 4.9 El Salvador 4.1 4...