A Moral Conundrum: How American Business Money Changes the International Landscape

The world’s largest capitalist society is expanding, dominating industry and innovation and inspiring awe for its economic prowess. Capitalist America’s journey into 21st century business is accompanied by an expansion of the scope of business itself—into international markets and politics. American business money, as much as federal money, floods international markets and thereby guides the international dialogue on business values, social norms, and government relations.
U.S. technology-based firms have been at the forefront of this change. In May, the news fixated on Jamal Ibrahim for famously naming his daughter “Facebook” in honor of Facebook’s role in toppling Egyptian dictator Hosni Mubarak from power. Within half a decade, Facebook exploded from a college phenomenon to a worldwide network that interconnects 750 million users. Facebook threw together social cliques and generations that wouldn’t usually interact and supplied a unique platform for expression.
The “Arab spring”—a movement sparked by the January 2011 deposition of President Zine El Abdine Ben Ali in Tunisia and which swept through Egypt and much of the Middle East—owes much of its success to Facebook. The political dissatisfaction of the ‘Facebook generation’ ignited the formation of virtual ‘groups’ and ‘events’ capacitating dialogue and planning. Once the virtual numbers swelled to a critical mass, old-fashioned sticks-and-signs protests erupted in Arab streets, made up of both members and non-members of the social network.
Ahmed Shihab-Eldin, an Aljazeera journalist, enthused that Facebook accelerated and amplified change by allowing dissenters to organize and mobilize. Online expression of political dissent is not new, but Facebook is much more complex and accessible than blogs and forums. Moreover, its comprehensive privacy policy protects users from authorities better than other sites such as Twitter. “It’s much harder to organize around one goal in real life because of the differences between people,” says Shihab-Eldin, “but online, it’s much easier to put those differences aside and unite around a common goal.”
Facebook’s capacity for social change took root beyond the Middle East and Africa. In Nepal, Facebook reeled in its target demographic, which in turn created major protest groups to expedite a constitution-making process. Some developing countries have criticized Facebook’s role in political change. Whereas internet access is widespread in wealthier nations, computer and web users are limited to the middle class and higher in the rest of the world. A ‘Facebook revolution,’ then, may potentially serve the interests of only a select few. Considering Facebook’s distinct appeal to a younger age group in developing nations, the limitation is even more pronounced.
Another example of an American technology firm challenging a foreign nation’s culture is exemplified by the subtle face-off between the Chinese government and Google. Google, a search engine based in California, expanded its operations to China in 2006 to create a “google.cn” domain—a Chinese version of google.com that self-censored results. China already filtered out pornographic and politically sensitive results from Google’s main site through its “Golden Shield” (colloquially called “the Great Firewall of China”), one of the strongest firewall systems in the world, without telling users that the material was censored. Google argued that their approach would increase transparency. But even this constricted access rankled authorities; in the next four years, China banned access to YouTube and Picasa, the Google-owned video and picture-sharing sites, after a recorded assault of Tibetian monks was released through these sites. It simultaneously tightened free speech restrictions and accused google.cn, among other search engines, of providing pornographic links to users. China also regularly blocked Blogger—the Google weblog publishing site—and accused Google Books of violating several Chinese copyright laws. In March 2010, Google stopped filtering its Chinese domain and redirected visitors to the less restrictive google.com.hk site, provoking authorities to temporarily ban and block all Google services.
In a 2010 interview entitled “Looking Behind Google’s Stand in China,” John Quelch, a former professor at the Harvard Business School, argues that government relations is much more important in emerging economies such as China. He emphasizes that companies must either “operate on a ‘when in Rome do as the Romans do’ policy,” or keep a central value system and preclude an exploitation of certain domains. A whirlwind attempt to dominate the Chinese search-engine market taught Google an important lesson: unrestricted dissemination of information, prized in the United States, is not welcome everywhere. In China, it was a flagrant violation of rules and norms.
A Moral Conundrum in International Business
The quandaries of Facebook and Google pose a fascinating and modern question to the American business world. The extent to which American companies ought to conform to other countries’  norms or bow to extremist laws like censorship becomes a moral conundrum. When American companies immerse themselves in the global information market, they face an exacting choice between adhering to American values and bearing the consequences or eschewing those values for business success. When faced with this choice, Google first chose to bow to Chinese interests before eventually returning to its commitment to free information.
In dealing with international laws and values, US companies have reinforced American policy, but they have also run counter to it. Companies have been commended, but they have also been censured. And where they have upheld free-speech values, they have also capacitated their own degradation.
While Google struggled to abide by China’s web censorship policy, another American firm—Cisco Systems—was selling China the equipment needed to censor internet content. In the 2004 book “Losing the New China: A Story of American Commerce, Desire and Betrayal,” Ethan Gutmann exposed Cisco Systems’ sales of surveillance and censorship-accommodating equipment to the Chinese government. In 2008, a leaked company presentation exposed Cisco’s marketing of equipment to bolster the Golden Shield and apprehend dissident groups such as the suppressed spiritual movement Falun Gong.
Critics whined over Google’s initial compromise, and they wailed over Cisco’s contribution to China’s oppressive regime. A slightly altered debate ensued: are American companies ethically obliged to uphold American values despite host laws? To what extent should American corporations ‘adjust’ to foreign laws? Cisco violated no concrete laws, yet its transgressions drew furor from western human rights and free speech advocates. Cisco’s conduct also ran counter to US foreign policy; Hillary Clinton reinforced this in January of 2010 when she fiercely criticized internet censorship, clearly a sensitive topic in China. Companies like Cisco face a challenging quandary; whereas Google’s line of work allows it to take a mid-line approach, Cisco would be effectively aiding censorship by merely selling standard equipment, precluding it from tapping into the enormous Chinese market.
International Business and American Foreign Policy
Non-tech companies have also had more than their fair share of controversy. The Monitor group, a Cambridge-based consulting firm founded in 1983, was beset with accusations beginning in 2009 for its ties with Libya’s leader, Colonel Muammar Gadaffi. Between 2006 and 2008, it received over $3 million for its work with the Libyan regime. Hammered by the media for undertaking a project to rehabilitate the dictator’s image in the west, Monitor pleaded guilty, yet maintained that it only had Libya’s best interests in mind. Monitor later wrote that it was attempting to “encourage accelerated modernization and increased openness of government institutions.” Chief among its so-called transgressions was a proposed book to pin Gadaffi as a “man of action and a man of ideas.”
This incident highlights the public relations roadblocks these businesses face from domestic critics when plunging into international markets. Stepping out of line with American foreign policy and public perception yields endless criticism and in the case of Monitor Group, a full-fledged media tribunal. Monitor’s Libyan endeavor quickly turned into a scandal involving America’s intellectual high-brass, forcing Joseph Nye, a Harvard Business School professor and one of the consultants in the Gaddafi case, to issue public apologies for misconduct.
But widespread controversy is not always the rule. Caterpillar Inc.’s Israeli army links—in particular, its export of the Caterpillar D9 and D10 bulldozers used by forces to demolish Palestinian homes and uproot trees—prompted outrage from activists. Yet public reaction was largely hushed despite the US’ official opposition to settlement expansion. Recently, the Israeli Knesset passed a law forcing Palestinians to compensate the Israeli government for the cost of demolishing their own homes. Caterpillar, along with other business enterprises that furthered the Israeli occupation, soured American-Arab relations, undermined UN regulations, and compromised Palestinian rights.
Weapons manufacturers also face the moral conundrum of pursuing fiscal profit or bowing to international law. US foreign policy is highly concerned with the weapons trade. Although manufacture and trade is largely a private undertaking, transactions require government sanction, and the transfer of American arms and armaments has often, for better or worse, piggybacked on political agenda. The delicate tripartite liaison between China, the US, and Taiwan has been repeatedly shaken by the American sale of weapons to Taiwan. For decades, Taiwan— considered a renegade area by Beijing—has defended its weapons purchases by citing a need to secure itself, and the US has reciprocated those concerns and emphasized stability as the underlying motive for the sales.
In 2001, an $18 billion aid package was agreed upon with Taiwan, considerably bolstering its arsenal; China found the agreement provocative. The US, under President Bush, stated that it wanted to “help Taiwan defend itself” but also keep it a Chinese subordinate. In 2010, China attacked the US over a new $6.4 billions weapons deal with Taiwan. China enforced sanctions on US companies and suspended military exchanges with the US, as Deputy Foreign Minister He Yafei asserted the deal would have a “serious negative impact” on China-US co-operation. The exaggerated response was a deterrent to further US sales, including upgrades and more advanced weapons that Taiwan had been requesting since 2006. In August 2011, America tilted foreign policy to China’s favor and refused sale of the long-awaited F-16 fighter jets to Taiwan.
American business money changes the international dialogue as American firms attempt to open markets. These examples only begin to illustrate the concrete link between American industry, global politics, and foreign policy, and the struggles—at home and abroad—facing American business expansion. As American enterprises permeate through borders and cross oceans, their progress is punctuated by far more than an imperialist struggle for corporate strength. Businesses today, more than ever, shape the social and political dynamic of their proximate constituents. Their influence is immense, and as the recent past has illuminated, American businesses have the power to either enhance or hinder America’s standing in the international conscience.
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