Multinational Marketing
Brian Harvey
Is marketing across national boundaries, often by companies whose manufacturing operations are also multinational. Multinational marketing has generated some specific ethical issues that are represented by well known cases. These cases relate to particular products, such as pesticides, pharmaceuticals, armaments, and infant formula. They also concern the methods used to promote them, ranging from the sales and advertising techniques employed to the extent of the existence of bribery and corruption. The concerns focus especially on the impact of Western multinational corporations on less developed countries and, as a consequence, embrace the role of corporate, industry, home government, and international codes in regulating the process of multinational marketing.
A Western multinational’s marketing and promotion practices in less developed countries were at the heart of the Nestle´ infant formula case. An exhaustive account of the controversy has been given by Prakash Sethi (1994). Critics argued that Nestle´ irresponsibly persuaded poor mothers to buy an artificial food that they could not afford, and that they could not use safely in conditions of low water quality and hygiene. By encouraging a move away from breast feeding, and the use of an infant formula product that was likely to be diluted and contaminated, the critics claimed that the company was adding to the incidence of infant disease and death. The marketing and promotion methods used included direct promotion to mothers, consumer advertising, free samples in hospitals, inducive packaging and labeling, promotion to doctors and other healthcare workers, saleswomen dressed as nurses to ‘‘promote’’ or ‘‘educate’’ mothers of newborn babies in hospitals, and commission based compensation systems (Sethi, 1994: 120)
Nestle´’s position was that the company was a legitimate and accepted participant in the multi national market for a product that was safe and useful, and that they used marketing practices that were both legal and ethical.
The multinational marketing of pharmaceuticals and pesticides presents industrial corporations with some fundamental ethical challenges. A pharmaceutical product may be banned in the home country (for example, the United States), but less developed countries may not have the means to regulate or effectively monitor the pharmaceuticals market. A multinational marketer has the opportunity to exploit the situation by deceptive changes in the product’s formulation, name, or country of origin. But it might be argued that conformity to home country regulations is not an ethical requirement for a corporation in its multi national marketing. For example, the potential net social benefits of a product’s use may be different in the different circumstances of a less developed country; the effectiveness of the pesticide DDT in combatting malaria could well be regarded as outweighing the increased risk of human cancer in a DDT contaminated environment – a consideration that caused it to be banned in some countries. But in what forum can such a decision legitimately be made? The absence of an institutional frame work for making such decisions in the host country, or internationally, means that corporations and industries cannot escape the necessity to confront issues of business ethics and regulate themselves. Richard De George argues ‘‘not to cause direct harm and to produce more good than harm to the host country remain the operating ethical norms, together with the general prohibition against deception and lying’’ (De George, 1993: 62).
De George’s principles might also be applied to the multinational marketing of banking and financial services. Snoy (1989) illustrates the ethical issues in international lending to less developed countries: to what extent should banks accept responsibility, or a share of it, for the social impact of the selection of projects to be funded, or of the efficiency and honesty with which the funds are applied to those projects; and where development projects fail, what rep resents a fair sharing of the burden of financial adjustment? De George quotes the example of the Bank of Commerce and Credit International to epitomize the harm a bank can do: ‘‘Beyond facilitating fraud and embezzlement, it provided a financial conduit for illegal drug and arms traffic, laundered illegally acquired moneys [and] supplied secret accounts for illegal flight capital’’ (De George, 1993: 68).
Bibliography
De George, R. (1993). Competing with Integrity in International Business. New York: Oxford University Press.
Sethi, S. P. (1994). Multinational Corporations and the Impact of Public Advocacy on Corporate Strategy: Nestle´ and the Infant Formula Controversy. Boston, MA: Kluwer.
Snoy, B. (1989). Ethical issues in international lending. Journal of Business Ethics, August, 635 9.