TitleABC123 Version X1Comparison MatrixISCOM370 Ve.docx
1. Title
ABC/123 Version X
1
Comparison Matrix
ISCOM/370 Version 5
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University of Phoenix Material
Comparision Matrix
Proposed Improvements
1.
Similarities
Similarities
Similarities
10. rather to the approach taken by those who do business ethics in
the United States.
What characterizes the American approach is not that it uses a
special ethics or
a national ethics, but that it is concerned with certain problems
that are embed?
ded in the American socio-economic-political system and faced
by American
business.1 German or Japanese business ethics differs from
American business
ethics in the cases and topics it deals with, in the different set
of background
institutions it takes for granted or investigates, and in the
different culture,
history, and social setting in which business operates.2
The same is true of what is often called international business
ethics insofar as
we can distinguish American, German, Japanese approaches to
it. International
business ethics might refer simply to the comparison of business
practices and
their ethical evaluation in different countries; it might
investigate whether there
are in fact ethical norms commonly recognized in all countries
that should
11. govern international business and economic transactions, and if
there are vari?
ations in ethical norms, whether multinational firms are bound
by the ethical
norms of their mother country, by the ethical norms of their
host countries, by
either, by both, or by neither. International business ethics
might involve broad
issues about the economic inequality of nations, the justice of
the present inter?
national economic order, the ethical status and justifiability of
such organiza?
tions as the World Bank and the International Monetary Fund
and of their
structures and practices, as well as the ethical dimensions of
international debt,
and the claimed economic dependence of some countries on
others, or such
global issues as the role of industry in the depletion of the
ozone level.3
The development of an American approach to international
business ethics can
be traced back to a number of factors in America's historical
and social develop?
ment. After the Second World War the United States was the
dominant figure on
the international scene. Europe, the Eastern Bloc, and Japan
12. were all in the
process of recovery and rebuilding. That position of prominence
was a new one
for the United States, and American business used it to good
advantage. Lacking
?1994. Business Ethics Quarterly, Volume 4, Issue 1. ISSN
1052-150X. 0001-0009.
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2 BUSINESS ETHICS QUARTERLY
colonies and the experience that goes with them, the United
States had devel?
oped no clear guidelines for companies operating abroad.
American companies
pursued their interests without any concomitant concept of
noblesse oblige.
The American involvement in Viet Nam produced a generation
of critics who
attacked not only the government's pursuit of the war but the
military-industrial
complex. The step from that critique to a critique of American
business practices
abroad was a small one, and one that not a few critics took
13. easily and with a
vengeance. The attacks on American multinationals were many
and varied.
Europe and Japan had recovered sufficiently to develop as
competitors to Ameri?
can industry. From an ethical point of view trade with them
posed few problems,
since they were able to operate from a position of equality and
were able to
defend their own interests. However, there were exceptions,
such as the Lock?
heed scandal involving the paying of twelve million dollars to
Japanese agents
and government officials for a Tri-Star contract.4 This and
similar scandals led
to Congress's passing the Foreign Corrupt Practices Act, which
is probably the
single most important piece of American legislation regulating
international
business ethics for American firms.
The underdeveloped nations, many of which had just recently
emerged from
colonial status, were clearly not America's economic equals.
Critics focused
their attention on the many issues that arose in these countries.
14. American multinationals were accused, often justifiably, of
exploiting the less
developed nations in a variety of ways.5 One was by paying
workers as little as
possible, sometimes less than a living wage. The fact that the
pay was the same
as that offered by local businesses was held to be beside the
point. Ironically,
when American companies paid more than the going rate, then
were accused of
drawing off the best workers and so undermining local industry.
American fruit
and produce companies were accused of buying off the best
land, using it for
export crops, and indirectly causing malnutrition or starvation
among the local
population whose members could no longer grow enough on the
remaining land
to feed themselves.
Exploitation was not limited to people but also to the raw
materials of the less
developed countries. American MNCs were accused of buying
raw materials
cheaply, and selling manufactured goods dearly. In these
15. operations they were
frequently accused of dealing with corrupt elites or rulers, who
were more
interested in their own personal gain than the good of the people
of the country.
The American firms sought stable governments, and, fearing
nationalization,
understandably often operated in countries ruled by rightist
rather than by leftist
governments. The charge of consorting with dictators was not
always misplaced.
Americans have prided themselves on respect for human rights.
The civil
rights movement brought to their consciousness the long
violation of human
rights of American blacks; the feminist movement made them
conscious of the
economic equality of women. The result of this increased
perception was pro?
jected onto the activities of American multinationals abroad.
The poignant plight
ofthe South African Blacks struck American sensitivity in a
special way and led
to a call for business to respect the human rights of the Blacks
in South Africa,
to the adoption of the Sullivan Principles, and to calls for
divestment and
16. disinvestment.6
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INTERNATIONAL BUSINESS ETHICS 3
The disaster at Bhopal, India, involving a Union Carbide plant
owned 50.9%
by the American parent company, fueled attacks on and concern
with potentially
dangerous high technology American business operations
abroad.7 It also led to
emphasis on discussions of "appropriate" technology and to
increased concern
for the negative impact of high technology on less developed
countries.
This broad brush picture of events since the Second World War
forms the
background of American interest in international business ethics
and to some
extent explains how it developed. The particular issues that
comprise the Ameri?
17. can literature on international business ethics is in some ways
idiosyncratic. The
literature has focused primarily on American multinationals.
Since ethics is universal and the same for all, American
companies should
obey the same ethical rules abroad that they do at home. They
should respect the
rights of workers, should not engage in bribery, should not
undermine the local
culture, or impose American norms?both of which are
considered a form of
cultural imperialism and unethical.
The development of the American approach to international
business ethics in
many ways parallels the development of the American approach
to business
ethics in general. Although some of those in the field have
argued that there are
three levels of analysis appropriate to business ethics?that of
the system of
American free enterprise as such, that ofthe corporation, and
that ofthe individ?
ual within the corporation8?the major focus has been on
corporations and cor?
18. porate managers.9 The difference is that there has been much
less written about
corporate and managerial ethics on the international level than
on the national
level.
If the picture I have painted is essentially accurate, then it is
understandable
that American international business ethics may be different
from international
business ethics in other parts ofthe world. The American focus
has been primar?
ily on American MNCs, even though the Nestle boycott had as
its focus the
Swiss parent company. The ethics of the international economic
order has re?
ceived much more attention in South America, for instance, than
in the United
States. The ILO is much stronger in Europe than in the United
States.
What ofthe future? Since an American international normative
business ethics
is a contradiction in terms, one might argue for the development
of a truly
international normative ethics for business that is or would be
19. widely, if not
universally, acknowledged. Clearly any such ethic cannot
simply be the imposi?
tion by one nation of its values on the world, even though some
Americans and
American companies seem to be engaged in such an attempt. A
starting point is
those basic ethical norms on which all or the overwhelming
majority of people
agree. For instance, there is such agreement on the prima facie
immorality of
slavery and of killing innocent people. There are also basic
norms necessary for
the conduct of business such as keeping promises, honoring
contracts, telling the
truth, and respecting the lives and integrity of those with whom
one engages in
business. Even on issues of extortion and gross bribery there is
general consen?
sus that these are wrong, even though prevalent and tolerated in
some countries.
Mores and customs obviously vary from country to country. An
internationally
acknowledged normative ethics does not require a single culture
or similar
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4 BUSINESS ETHICS QUARTERLY
customs and mores in all countries. But even if most people
agree that there is
only one ethics which is the same for all, differences in what is
claimed to be
ethical must be adjudicated. Justice presents us with a prime
example. Justice is
a central concept in business ethics and in international
business ethics as well.
Yet we know that there are many conceptions of justice, and
that though all may
agree that justice should be done, there are divergent views
about what consti?
tutes justice in a particular case or on the international scene.
When nations differ about what is just, or whether a particular
practice is just,
then none of the participants should simply assert and impose
their view, even if
they are able to do so. Nor need they all agree on a single
21. theory of justice.
Developing an international business ethics in this case involves
taking into
account divergent interpretations of justice, different claims,
and possibly op-
posing points of view. No side can ethically be forced to agree
to a compromise
that it considers unethical; but in many cases compromise does
not mean giving
up one's principles but enlarging one's scope to include other
perspectives and
agreeing perhaps to less than one thinks one deserves.
This does not imply that one must give up one's own ethics.
Rather integrity
requires that one have developed ethical views to which one
adheres. The notion
of negotiating just agreements requires that each party to the
agreement ap?
proach it from a developed point of view and with an ethical
theory from which
they can judge whether the agreement is just. To say that a
practice or agreement
is just in this context is to say that all the parties accept it as
just and do so freely
and with knowledge of the pertinent facts. The agreement is
stable if the parties
22. over time continue to accept it as just.
Operationally, the development of an international business
ethics involves as
well the development of a background of accepted customs,
laws, and institu?
tions on the international level. In a developed society ethics
functions against
such a background. On the international level this background is
insufficiently
developed, though arguably even more important. Without it,
international ethi?
cal norms must do more work but yet paradoxically are less
clear. The UN and
a variety of church-related groups have proposed codes of
conduct for multina?
tionals. These are a start. Multinationals whose interest is at
stake should have a
voice in the development of such codes; but clearly they should
not have the only
voice, since they are not the only ones affected. Governments,
international
groups and bodies, and interested individuals are also
appropriate sources to be
tapped.
International rules and guidelines are necessary in order to
23. protect those un?
able adequately to protect themselves, given disparities of
power among nations,
and in order to keep competition fair. Clearly guidelines and
rules are most
urgent in those areas in which the harm being done is most
serious. The devel?
opment of international guidelines for the sale of infant formula
is an example
of a guideline that was developed in response to what many
critics felt was a
pressing need. A political fact of international as of national
life is that those
issues which have the most vocal champions tend to get the
greatest attention,
even if the ills to be addressed are not the most pressing.
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INTERNATIONAL BUSINESS ETHICS 5
The need to keep competition fair presupposes a competitive
international
24. environment. A complaint from many American multinationals
in response to the
Foreign Corrupt Practices Act which precluded the paying of
bribes by Ameri-
can-controlled companies was that it put them at a competitive
disadvantage
vis-a-vis multinationals from European or Japanese companies
which were not
constrained by their parent-country laws to act similarly.10 The
argument raised
by American corporations was not that bribery was ethical in
some parts of the
world, but that it was practiced in some parts of the world and
was the only
effective way to do business in those areas. From a utilitarian
perspective they
argue that harm is done American business because it cannot
compete in certain
areas while the envisaged good is never achieved; harm done
from bribery is not
prevented because others engage in it. This is not an adequate
ethical defense;
but it does raise a legitimate concern. In actual fact since 1977
when the Act was
passed, statistics fail to show that American companies have
been seriously
harmed.11 They seem to be able to compete despite not being
25. allowed to pay
bribes. But if one's competitors are allowed to engage in
practices that give them
a competitive advantage, then the disadvantaged business has
some ground for
complaint.
The optimal solution consists not in allowing the firms of all
countries to
engage in bribery, but in precluding the firms of all countries
from so acting.
This may be done in a variety of ways. The neatest is by
international agreement
and agreed upon guidelines. In the absence of such guidelines
multinational
agreements can be effective. If all the producers of airplanes
agreed among
themselves that they would not pay bribes, then those countries
that demanded
bribes would be forced to change their way of doing business or
go without
airplanes.
Important to notice in this discussion is the claim that
demanding or paying
bribes is unethical. But no country openly justifies such
payments as ethical, and
if some country openly requires such payments they are no
longer bribes but are
part of the cost of doing business in that country which every
26. supplier must pay
to operate there. There is a difference between a practice being
ethical and its
being a common practice. If there actually is a disagreement
about whether a
practice is ethical or not, then that demands discussion and, if
ethically possible,
compromise rather than unilateral action.
The international legitimate drug industry also exemplifies the
need for inter?
national norms. U.S. drug manufacturers are restricted by U.S.
law from selling
certain drugs and from making others available without a
prescription. Are they
ethically allowed to sell those drugs abroad if the local laws do
not prohibit their
doing so? To answer in the negative is to make U.S. regulations
ethically build?
ing universally. But that is more than the regulators claim to do
when imposing
their regulations. Great Britain, Germany, and other advanced
industrial nations
have regulations that differ in many ways from those adopted by
the U.S. There
is no reason to believe that any one country's set of regulations
are ethically
mandatory. Some less developed countries that do not have the
money to monitor
and test the many new and old drugs available have simply
adopted U.S. stand?
ards. Where this is the case, for a drug company to try to
27. circumvent the intent
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6 BUSINESS ETHICS QUARTERLY
of those countries by marketing possibly harmful drugs that
technically are not
captured by their rules is clearly unethical. But it would not be
unethical for U.S.
drug companies to market drugs that are not marketable in the
U.S. if there were
good reason to do so in countries that allowed the sale of those
drugs.12 If there
were international standards, the drug companies would have
clear guidelines
and at least many of the possible ethical difficulties could be
avoided.
Ethical issues that involve more than one country are the most
obvious candi-
dates for agreement and negotiation. Pollution is a prime
example of an issue
that is not only national but also international. As such it is an
obvious candidate
28. for such international negotiation and is one on which a good
many countries
already have bilateral and multilateral agreements. The
agreements are usually
legal in nature; but there is no reason why there cannot be
negotiation on the
ethically permissible levels of pollution, with legal negotiations
solving the
problem of how to achieve that level. The depletion ofthe ozone
level is an issue
of great concern globally and clearly an ethical issue because of
the threatened
serious harm. International guidelines are necessary, since no
one country is
responsible for or can alone remedy the situation. Other areas
include the treat?
ment and rights of migrant workers across borders, international
unions, the
dumping of goods by one country in another, questions of trade
barriers and free
trade, the possible international trade in human organs and
tissues, and similar
issues. These are pressing and form the topic of international
negotiation. But
29. they all have a clearly ethical dimension that deserves more
open discussion.
Agreement about justice and fairness on such issues will both
set the stage and
provide some of the background institutions necessary for a
truly international
ethics of business to develop, be recognized, and hence provide
guidelines that
can be invoked and form the basis for moral pressure to be
applied to those who
violate them.
Business ethics is still a young field, and its international
dimensions have
scarcely been raised, much less adequately addressed. They
cannot be satisfac-
torily addressed unilaterally by any one nation or national
group. A necessary
first step is greater articulation of the many divergent
perspectives that must be
reconciled. The six papers that follow make a start in this
direction and represent
views from seven different countries: Russia, Mexico, the
United States, Eng?
land, South Africa, Japan, and the Netherlands.
30. In the first, Alexander Filatov, a Russian professor of
economics and one of
the emerging Russian entrepreneurs, argues that the existing
economic struc?
tures in Russia today are fundamentally unethical and are
skewed in favor of
state enterprises. Within such a context, those who wish to
engage in business as
individual entrepreneurs have no alternatives but to act in a way
that in many
other countries would be considered unethical?and in fact may
be unethical.
For instance, given the unfair system for allocating goods,
bribery is necessary.
While multinationals may of course choose not to locate in such
an environment,
Russians who wish to start a business in contemporary Russia
cannot operate
without paying bribes. Small entrepreneurs are not the ones who
initiate the
bribes or establish the system; they simply operate within a pre-
existing, eco?
nomically distorted, and unethically structured system. Would it
be better for
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INTERNATIONAL BUSINESS ETHICS 7
them or for Russia if they did not develop private enterprises
given the system
and the unethical practices it involves? Whatever moral
assessment one makes
of the situation, the claims of Filatov must be taken seriously.
Bryan Husted, writing from Mexico, presents a transaction-cost
interpretation
of corruption in less developed countries. The perspective he
develops is not a
moralistic approach typical of the treatment of bribery in the
United States or of
bribery by American companies. His article ends with some
suggestions to
which his analysis leads with respect to policy making, and it
also suggests some
empirical research that the analysis suggests. In the latter way
the paper serves
as an important reminder that international business ethics, just
like business
ethics on the national level, must be informed by a good deal of
empirical
research if it is to prove useful.
32. The article by Karen Paul, Simon Pak, and John Zdanowicz of
the United
States and Peter Curwan of England, provides just such
empirical research. It is
not a paper in normative ethics. Rather it presents a concrete
tool for helping
identify possible legal and ethical breaches in international
transactions. It help-
fully shows how governments might track violations of their
laws and regula?
tions, and it also suggests how those who take part in
international transactions
can tell what a fair market price is for many goods. The same
technique can be
used by a multinational to determine what the price of an "arms-
length transac?
tion" would be for goods produced in another country by its
own subsidiary, and
for third parties to monitor that price. Business ethics in the
United States is
often abstract and normative; more is being written that is
directly applicable in
implementing norms, and this article exemplifies that important
and still under-
33. developed aspect of business ethics.
How ethics operates in corrupt environments?or how it fails to
operate
therein?is an important theme that has received too little
attention. Yet it is
central to any discussion of international business ethics, since
so many coun?
tries of the world suffer from corruption of various types. The
contribution by
G. J. Rossouw, who writes from South Africa, describes
business ethics in devel?
oping countries. Professor Rossouw's analysis takes us one step
beyond the
situation in Russia. But he argues, in a way somewhat similar to
Filatov, that
certain preconditions have to be met before business ethics can
flourish.
The fifth paper, by Iwao Taka, concerns not a developing
country but one of
the leading industrial countries of the world. The view of ethics
that informs
business decisions in Japan is not one that grows out of the
Christian tradition
or out of Western ethical theory. Understanding how Japanese
make ethical
decisions requires understanding the ethical framework and
beliefs within which
34. those decisions are made. The Japanese approach to ethics, and
so to business
ethics, is different from the American. This underlines the fact
that international
business ethics cannot be developed from any single national
perspective or
view of ethics. Taka's article presents a Japanese view of
business ethics. He
explains and develops the normative context in which Japanese
business oper?
ates. The difference between the Japanese approach to issues
and the American
approach become evident as he explains the importance ofthe
group, the ties that
bind firms within a "family," and the long-term commitments of
one firm to
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8 BUSINESS ETHICS QUARTERLY
another that seem from the American perspective to lead to
unfair treatment of
American firms by restricting competition and closing markets.
The difference
between the American and the Japanese perspective of what
constitutes fair trade
35. practices is a continuing issue of negotiation between the two
countries. Only by
each side's appreciating the other's point of view and value
system is negotiation
likely to lead to acceptable and stable practices.
Henk van Luijk, a professor at the Netherlands Business School
and one ofthe
founders of the European Business Ethics Network,
appropriately represents the
continental European approach to business ethics. Although
many of the issues
that business faces in Western Europe resemble those in the
United States, the
cultural heritage and social structures of the two diverge to
some extent. While
American approaches to business ethics are typically focused on
particular cases
or issues, much of the work in Western Europe has taken a
broader and more
theoretical approach to business ethics. Professor van Luijk
goes beyond what
he calls "recognitional ethics" to call attention for the need to
attend to transac?
tional ethics and market morality and to participatory ethics,
which he adum-
brates with respect to civil society, a term well-known and
developed in the
Continental philosophical and socio-economic literature, but
little used in the
36. American context.
The set of papers illustrates that business ethics on the
international level
requires not only a unilateral discussion of how American or
other multination?
als should operate abroad, but also the development of a broad
set of guidelines
and agreements that can be accepted by all those affected, no
matter what the set
of ethical beliefs from which they operate. If this is true, then a
workable set of
such background institutions is more valuable and more likely
to be achieved
than is agreement on an overarching set of ethical norms or
principles upon
which all people from all nations must agree. International
business ethics would
then have as its primary object not an international ethical
theory, but the devel?
opment and promotion of a set of international practices that all
can agree to as
ethical, no matter what ethical perspective they hold. This too,
however, is a goal
and an ideal, and it is a goal and ideal that will require a great
deal of work?
empirical and normative, individual and collaborative.
Notes
37. 1 What I am calling the American approach to business ethics
can be found in the American
textbooks on business ethics, in the discussions of business
ethics in the media, and in many
of the ethical codes adopted by American corporations.
2
Although business ethics as an academic subject started first in
the United States, it is
well established in Europe and has taken hold in Australia,
Brazil, Hong Kong, and Japan,
among other countries. As people in these countries started
using the American texts and
other materials they saw the need for developing their own
materials. For more on this issue
see, for example, Jack Mahoney, Teaching Business Ethics in
the UK, Europe and the USA:
A Comparative Study, London: The Athlone Press, 1990; and
the journal, Business Ethics:
A European Review.
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INTERNATIONAL BUSINESS ETHICS 9
3Two books by Americans that deal with international business
ethics and attempt to map
out some of the issues are: Richard T. De George, Competing
38. With Integrity in International
Business, New York: Oxford University Press, 1993; and
Thomas Donaldson, The Ethics of
International Business, New York: Oxford University Press,
1989. In addition there have
been a number of conferences dealing with issues in
international business. See, for example,
Ethics and the Multinational Enterprise, ed. by W. M. Hoffman,
A. E. Lange, and D. A. Fedo,
Lanham: University Press of America, 1986.
4For two accounts see Carl A. Kotchian, "The Payoff:
Lockheed's 70-Day Mission to
Tokyo," Saturday Review, July 9, 1977, pp. 7-16; and Robert
Shaplen, "Annals of Crime:
The Lockheed Incident," New Yorker, 53 (January 23 and 30,
1978).
5One of the early books castigating American multinationals
was Richard J. Bamet and
Ronald E. Muller, Global Reach, New York: Simon & Schuster,
1974. See also, among
others, Pierre Jalee, The Pillage ofthe Third World, New York:
Modern Reader Paperbacks,
1968.
6For an account of apartheid in South Africa, and for a list of
the Sullivan Principles, see
Oliver F. Williams, The Apartheid Crisis: How We Can Do
Justice in a Land of Violence,
San Francisco: Harper & Row, 1986.
7Among the book-length studies of the disaster see Larry
Everest, Behind the Poison
39. Cloud: Union Carbide's Bhopal Massacre, Chicago: Banner
Press, 1985; and Paul Shrivas-
tava, Bhopal: Anatomy of a Crisis, Cambridge, MA: Ballinger
Publishing, 1987.
?See, for example, Richard T. De George, Business Ethics, 3rd
ed., New York: Macmillan,
1990.
9Most of the American texts in the field do not call into
question the justifiability of the
American system of capitalism, which they take for granted.
10For a discussion of the Act and the 1988 Amendments, see
Bartley A. Brennan, "The
Foreign Corrupt Practices Act Amendments of 1988: 'Death' of
a Law," North Carolina
Journal of International Law and Commercial Regulation, 15
(1990), pp. 229-47; and Bill
Shaw, "Foreign Corrupt Practices Act Amendment of 1988,"
Maryland Journal of Interna?
tional Law and Trade, 14 (1990), pp. 161-74.
nU.S. General Accounting Office, Report to the Congress: "The
Impact of the FCPA on
U.S. Business," March 4, 1981; Paul J. Beck, Michael W.
Maher, Adrian E. Tschoegl, "The
Impact of the Foreign Corrupt Practices Act on U.S. Exports,"
Managerial and Decision
Economics, 12 (August 1991), pp. 295-303.
lzFor a development of the argument supporting this claim, see
De George, Business
Ethics, Chapter 19.
40. )1994. Business Ethics Quarterly, Volume 4, Issue 1. ISSN
1052-150X. 0001-0009.
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Contentsp. [1]p. 2p. 3p. 4p. 5p. 6p. 7p. 8p. 9Issue Table of
ContentsBusiness Ethics Quarterly, Vol. 4, No. 1 (Jan., 1994),
pp. 1-110Front MatterInternational Business Ethics [pp. 1-
9]Unethical Business Behavior in Post-Communist Russia:
Origins and Trends [pp. 11-15]Honor among Thieves: A
Transaction-Cost Interpretation of Corruption in Third World
Countries [pp. 17-27]The Ethics of International Trade: Use of
Deviation from Average World Price to Indicate Possible
Wrongdoing [pp. 29-41]Business Ethics in Developing
Countries [pp. 43-51]Business Ethics: A Japanese View [pp. 53-
78]Rights and Interests in a Participatory Market Society [pp.
79-96]Review ArticleReview: Corporate Responsibility and
Hazardous Products [pp. 97-110]Back Matter