For the Nestl Corporation of Switzerland. its 2001 moral dilemma regarding distribution of its baby formula in Africa was an ironic turnaround from its 1981 dilemma. Then, a seven-year boycott of Nestl baby products and a United Nations code on selling baby formula in LDCs pressured Nestl to change its marketing strategy for Similac baby formula. Nestl had promoted Similac in LDCs as a replacement for breast milk, giving out free samples of the baby formula without proper instructions for preparing it. Public outcry arose over the massive number of infant deaths that resulted primarily from the lack of information about sterilizing the bottles and the water to mix with the formula and from the lack of facilities to do so. In addition, poverty-stricken mothers resorted to overdiluting the formula or not buying any more when the samples ran out; meanwhile, they found that their own breast milk had stopped flowing from lack of use.1 Nestl agreed to a voluntary marketing code and agreed not to distribute free or low-cost formula.
In 2001, however, many thought that UNICEF should reconsider that code because of the modern scourge of AIDS in Africa. The problem is that mothers infected with the AIDS virus are transmitting it to their babies through breast-feeding, with estimates of infected babies well over a million.2 And, while Nestl has volunteered to donate free formula to HIVinfected women, UNICEF still refuses to endorse the $3 billion infant-formula industry. So, even though the situation has changed, unless UNICEF also changes the requirements, Nestl does not want to go against the code and risk a repeat of the situation twenty years ago.3
Global interdependence is a compelling dimension of the global business environment, creating demands on international managers to take a positive stance on issues of social responsibility and ethical behavior, economic development in host countries, and ecological protection around the world.
Managers today are usually quite sensitive to issues of social responsibility and ethical behavior because of pressures from the public, from interest groups, from legal and governmental concerns, and from media coverage. It is less clear where to draw the line between socially responsible behavior and the corporation's other concerns, or between the conflicting expectations of ethical behavior among different countries. In the domestic arena, managers are faced with numerous ethical complexities. In the global arena, such concerns are compounded by the larger numbers of stakeholders involved, including customers, communities, and owners in various countries.
Our discussion will focus separately on issues of social responsibility and ethical behavior, but there is considerable overlap between them. The difference A Thr is a matter of scope and degree. Whereas ethics deals with decisions and inter- P actions on an individual level, decisions about social responsibility are broader in scope, tend to be made at a higher level, affect more people, and reflect a general stance taken by a company or a number of decision makers.
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