This issue of Business Ethics Quarterly offers a special forum incorporating a select group of papers that were presented at the First International Conference on “Voluntary Codes of Conduct for Multinational Corporations: Promises and Challenges,” held at the Zicklin School of Business, Baruch College, City University of New York, on May 12–15, 2004. The conference was organized by the International Center for Corporate Accountability (ICCA), Inc., and was co-sponsored by the Zicklin Center for Business Ethics Research of The Wharton School, University of Pennsylvania, and the World Bank’s World Bank Institute. Additional support was provided by a number of major corporations, academic institutions, and nongovernment organizations.

This paper examines the extent to which the voluntary adoption of codes of conduct by multinational corporations (MNCs) renders MNCs accountable for the performance of actions specified in a code of conduct. In particular, the paper examines the ways in which codes of conduct coordinate the expectations of relevant parties with regard to the provision of assistance by MNCs on grounds of rescue or justice. The paper argues that this coordinative role of codes of conduct renders MNCs more accountable for the performance of actions specified in a code of conduct than they would be without a code of conduct. This interpretation of the significance of codes of conduct is contrasted with the view that codes of conduct render MNCs accountable for performing actions specified in a code of conduct by grounding contractual obligations for the performance of such actions.

Effects of globalization have amplified the magnitude and frequency of corporate abuses, particularly in developing economies where weak or absent rules undermine social norms and principles. Improving multinational enterprises’ (MNEs) ethical conduct is a factor of both the ability of firms to change behaviors in the direction of the moral good, and their willingness to do so. Constraints and enablers of a firm’s ability to act ethically emanate from the external environment, including the industry environment of which the firm is a resident, and the host country environment in which it operates. A firm’s willingness to engage in ethical conduct is determined by the effective bundling of internal resources and the commitment of those resources to social ends. The interaction of external and internal conditions carves out categories of expected firm behaviors and suggests interventions that would push these behaviors in a more positive ethical direction. With reference to integrative social contracts theory (ISCT), these categories of firms are examined, and a conceptual model for analysis is developed to explain the drivers of corporate choices in the adoption and implementation of codes of conduct, and the relative power of relevant communities to the process.

Labour and employment law no longer has a monopoly on regulating labour relations and is facing a crisis as its effectiveness is questioned. Codes of conduct adopted by companies to recognise their social responsibility for the global supply chain are instruments that can usefully complement labour and employment law. The aim of this paper is to analyse in depth the legal nature of codes of conduct and their impact on labour and employment law. Will the use of codes of conduct reinforce the crisis of labour and employment law in the era of globalisation or will these codes be part of a solution to this crisis? Do we have to consider codes of conduct as competitors to labour and employment law or as an opportunity for rethinking the way that labour and employment law norms should be produced and applied?

Firms possessing a unique competency to rescue the victims of a human catastrophe have a minimum moral obligation to devote substantial resources toward best efforts to aid the victims. The minimum amount that firms should devote to rescue is the largest sum of their most recent year’s investment in social initiatives, their five-year trend, their industry’s average, or the national average. Financial exigency may justify a lower level of investment. Alternative social investments may be continued if they have an equally compelling rationale. These duties apply to the global pharmaceutical companies in the context of the AIDS pandemic in sub-Saharan Africa.

Firms and industries increasingly subscribe to voluntary codes of conduct. These self-regulatory governance systems can be effective in establishing a more sustainable and inclusive global economy. However, these codes can also be largely symbolic, reactive measures to quell public criticism. Cross-sector alliances (between for-profit and nonprofit actors) present a learning platform for infusing participants with greater incentives to be socially responsible. They can provide multinationals new capabilities that allow them to more closely ally social responsibility with economic performance. This paper examines learning facilitators in cross-sector alliances that enrich corporate understanding of stakeholder concerns. It suggests that these organizational learning experiments can translate into globally responsible practices and processes that improve the content and effectiveness of voluntary corporate codes.

The systemic role of corruption and its link to low human development is explored. The extractive resource industry is presented as an arena where conditions for corruption—monopoly and discretion without accountability—are especially intense. Corruption is maintained by a self-reinforcing cycle. Multiple stakeholders are involved in the maintenance of and/or opposition to the cycle: investing corporations, host country regimes and officials, inter-governmental bodies like the OECD, industry associations, non-governmental organization (NGO) watchdogs like Transparency International, and international agencies facilitating global investment like the World Bank. Complementarity of interests between the demand and supply sides provides strong incentives for entrenched players to maintain corruptive relationships, to protect past gains and sustain current ones. Compulsory international regulation, maximum transparency, effective detection, and enforcement are recommended to enhance accountability, thereby reversing the cycle. It is also necessary to create a corporate culture built on integrity, if regulation itself is to succeed.

The criticism that voluntary codes of conduct are ineffective can be met by giving greater centrality to human rights in such codes. Provided the human rights obligations of multinational corporations are interpreted as moral obligations specifically tailored to the situation of multinational corporations, this could serve to bring powerful moral force to bear on MNCs and could provide a legitimating basis for NGO monitoring and persuasion. Approached in this way the human rights obligations of MNCs can be taken to include support for political as well as economic rights. This will go some way towards filling the regulatory gap created by the difficulty of controlling the activities of corporations operating globally. However, such a proposal will require a measure of ‘meta-regulation’ whereby the operations of MNCs are legally required to be sufficiently transparent to create the conditions for effective external moral scrutiny

A strong argument can be made that globalization and the unrestricted flow of capital, goods, and services leads to the creation of wealth and prosperity among participating nations. Comparative advantage allows both the industrially advanced nations and developing countries to maximize their gains from trade and investments. The current wave of globalization is not the first, nor is it likely to be the last. There have been waves of globalization in the past: in the United States (1870–1890 and circa 1970), Western Europe (1890–1913 and 1950–1992), and Japan (1913–1938). They all eventually petered out because of their adverse impact on the social infrastructure of the countries involved.

Assume that I am starting a business in Madison, Wisconsin, producing desks for professors,” I tell my students at the beginning of a lecture about Marxism. “I ask the Business School dean how much he paid for his current inventory of worn-out desks. The actual price was $500. How much does he tell me?”

“Four hundred fifty dollars!” a student shouts from the back of the room.