Business Ethics

New Challenges in a Globalized World

by Janet Morrison The Global Business Environment 3e International Business


Click on the letter links below to access definitions of all key terms from the textbook.

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Agency costs: in agency theory, the costs incurred by a person (the principal) in hiring an agent to carry out a task on the principal’s behalf, arising, in particular, because the agent is inclined to behave opportunistically rather than in the interest of the principal

Alien Tort Claims Act (ATCA): in the US, a statute of 1789, which allows foreign plaintiffs to bring claims in US courts for breaches of international law

Alienation: concept whereby the worker sees both the product of his work and the process of production as externalized, or standing outside himself like hostile forces

Annual general meeting (AGM): in a company, a formal meeting of shareholders, legally required to take place annually under national law

Anthropocentric: view that the interests of human beings are the only interests that matter

Arbitration: means of settling a dispute by bringing the parties together through the offices of a third party

Authority: the rightful exercise of power; can apply to a group, organization or the state

Authoritarian: rule which is unaccountable to the governed; usually involves a repressive regime and few civil liberties

Autocracy: rule by a leader unaccountable to those ruled; usually involves personalized rule and authoritarian means


Barter: transaction in which goods are exchanged for other goods

Basic sustainable development: view that intergenerational equity can be met by more efficient use of resources, the discovery of new resources and technological innovation

Benefit corporation: a company established for social purposes, which can be registered in 19 states in the US

Bilateral trade agreement: a treaty between two countries on the subject of trade and related issues

Branch office: in relation to a company, an office in a different location from the company’s headquarters, from which it operates in that location; the branch office does not constitute a separate legal entity, in contrast to the subsidiary company

BRICs: reference to the loose grouping of Brazil, Russia, India and China, which are all emerging economies business – all types of economic activity carried out commercially, including agriculture, manufacturing, energy industries, trade and financial services

Business ethics: the study of ethics as applied to business

‘business judgment rule’: in the US, rule which holds that company directors are entitled to use their own best judgment in deciding what is best for the company


Capitalism: economic system based on market principles, entailing an exchange of something of value, such as labour, for something else, typically a ‘price’ in the form of wages

Casino capitalism: likening companies in the financial sector, especially global banks, with gambling; stems from the trend towards increased risk-taking and increased financial rewards for leading players

Categorical imperative: principle associated with Kant which holds that each person should always treat other people as ends in themselves and never as means

Checks and balances: in political systems, institutions which are designed to achieve a balance between the different branches of government

Chief Executive Officer (CEO): a company’s highest executive officer, accountable to the board of directors for the management of the company

Child labour: employment of children between 5 and 17 in an environment such as a factory or farm, for hours equivalent to those an adult would work, leading to detrimental effects on the child’s education

Citizenship: legal status which connects a person to a particular country, involving rights and duties

Civil law: system of law based on legal codes handed down by the sovereign

Civil society: the multiplicity of associations which people are free to join in a society, including interest groups, trade unions, religious groups and political parties

Class action: lawsuit in which one or more persons brings a claim on behalf of a larger group of people with similar claims

Climate change: any change in climate over time, whether from natural causes or human activity; usually refers to a rise in the earth’s temperature, or global warming

‘co-determination’: principle of corporate governance which holds that employees should have a say at the highest levels of decision making in the company, along with shareholders

Colonialism: expansionist rule by a stronger power, usually a state, over a weaker power; often involves taking over the territory and government of the weaker power

Common law: legal system based on judge-made law, that is, decisions handed down by judges in dealing with the cases that come before them

Company: legal entity which is an artificial person with separate legal existence from the people who form it and own it; also known as a ‘corporation’

Competition law: body of law designed to curtail monopolies and restrictive business practices; called ‘antitrust’ law in the US

Competitive advantage: concept that economic advantages flow from competitive strategies; often used with reference to countries competing to attract foreign investment

Compulsory licence: in patent law, awarding a firm the right to produce a medicine although it is under patent to another firm; awarded to resolve a public health need in a particular country

Consequentialism: principle associated with the utilitarians, which holds that whether an action is good or not depends on the consequences

‘constituency statutes’: statute laws in states of the US which provide that, in corporate decision-making, directors can take into account other stakeholders besides shareholders, including employees, customers and suppliers

Constitution: the basic law of a state, setting out rules on how the system of government should function, and including rights and duties of both rulers and ruled

Contract law: the area of law that covers most business transactions, such as buying and selling, employment and insurance

Convention on Contracts for the International Sale of Goods (CISG): convention of 1980 which aims to harmonize contract law among differing legal systems

Conventions: in international law, multilateral treaties, usually agreed through UN sponsorship

Copyright: type of intellectual property which comes into existence automatically on creation of the original work, such as a literary or musical work

Core values: in a company, the values which are central to the company’s purpose, guiding its activities and culture

Corporate bonds: fixed-term debt instruments which pay investors a fixed rate of return

Corporate citizenship: view that a company is a member of society in a way analogous to the individual citizen

Corporate governance: a company’s structures and processes for decision-making at the highest level

Corporate Social Performance (CSP): concept associated with CSR, which focuses social responses in practice, bringing in all the ways in which a firm goes about meeting challenges for business in society

Corporate Social Responsibility (CSR): concept that the company as part of society has a broader range of roles and responsibilities than merely economic ones, notably including ethical responsibilities

Cosmopolitanism: in international relations, an approach which envisages a global community and global institutions, in which state actors have receded into the background

Cronyism: networks of personal relations and economic ties between political and business leaders; tends to be associated with corruption

Cultural relativism: approach to ethics which holds that the moral values in any culture are as valid as those in any other, and refrains from making any ethical judgments among different cultures

Customary law: type of law that draws on cultural values and norms in the community for maintaining continuity and social cohesion


Debtholder: person or organization that has lent money to an organization

De-industrialization: decline in manufacturing in a country, which occurs as a result of companies shifting operations to more advantageous locations, especially to countries with lower labour costs

Democracy: political system which recognizes accountability of governments to the people, through free and fair elections, backed by civil liberties

Democratization: building democratic institutions in countries with an authoritarian past

Deontology: philosophical tradition which focuses on the intrinsic nature of right and wrong

Derivatives: financial instruments that depend on the value of another asset; involves risk in that the other asset can be difficult to measure

Developed economies: economies which have reached high income levels, usually through industrialization

Developing economies: economies which, starting from low income levels, are pursuing economic growth, usually through industrialization and exploitation of natural resources

Direct democracy: political institutions in which people participate directly in governance

Directive: type of EU law which obliges member states to incorporate it in domestic law

Directors: in companies, the highest decision-makers in corporate governance structures, entrusted with safeguarding the best interests of the company as a whole

Dividend: in companies, authorized payouts to shareholders from profits, which must be declared by the board of directors

Due process: aspect of the rule of law, by which all people are entitled to fair, unbiased judicial proceedings

Dumping: sale of goods in foreign markets at below the price charged for comparable goods in the producing country


Economic freedom: freedom defined specifically as the maximum scope to pursue economic goals

Economic responsibilities: in relation to for-profit companies, responsibilities of generating profits, maintaining a strong competitive position and maintaining a high level of efficiency

Egoistic hedonism: view of human nature associated with Hobbes, which holds that people pursue self-interested goals, and desire a maximum amount of freedom in which to do so

Emerging economies: term used loosely to describe developing countries with relatively strong economic growth, rising incomes and growing consumer markets

Energy security: policy that a country should have either its own accessible energy reserves for the foreseeable future, or have access to stable supplies from other regions of the world

Enlightened shareholder value: in corporate governance, concept that shareholder value includes the interests of other stakeholders and also the reputation of the company

Equity: in companies, the share capital; shares (stocks) are sometimes called ‘equities’

Ethical absolutism: philosophical position which holds that human nature is universal, and that there exist ethical rules which apply universally

Ethical investing: an approach to investment which weighs ethical concerns about the target company more heavily than monetary returns; often called ‘socially responsible’ investing

Ethical responsibilities: in relation to companies, responsibilities to adhere to ethical principles of right and wrong, despite possible economic costs

Ethics: the study of basic concepts of good and bad, right and wrong, which relate to all people as human beings

Exports: products sold in countries other than the one in which they were made


Fairtrade International: a non-profit organization, which has as its primary purpose a fair deal for poor agricultural producers

Federalism: constitutional arrangement by which regions or other units have some autonomy under a central government which has ultimate control

Filial piety: notion of loyalty of the child to parents, associated with Confucius, which became a metaphor for rule by any superior over subordinates

Finance: business function which involves money transactions and arrangements; includes buying, selling, lending, investing and also arrangements such as tax planning

Financial globalization: increasing interconnectedness between financial markets, facilitated by advances in IT and communications

Foreign Direct Investment (FDI): acquisition, usually by a company, of productive assets in a foreign country, with a view to gaining operational control

Foreign Investment Promotion and Protection Agreement (FIPA): bilateral or multilateral treaty under which foreign investors from one member country can have recourse to an arbitration tribunal to settle disputes in another member country

For-profit enterprise: business that aims to make money, allowing the gains to be used as owners desire

Fracking: method used for extracting oil and gas deep beneath the earth’s surface by hydraulic fracturing, which involves injecting chemicals through high-pressure horizontal drilling

Fragile state: any state which struggles to carry out basic governance functions and whose governance is characterized by weak relations within society

Fundamentalists: usually in relation to a religion, believers who practise strict adherence to rules, beliefs and practices, and tend to be hostile to more relaxed adherents within the same religion


G20: group of 20 developed, developing and emerging economies, brought together by the IMF in 1999, which meets regularly, focusing mainly on financial stability

GATT (the General Agreement on Tariffs and Trade): series of post-war trade agreements which aimed to reduce trade barriers; culminated in the Doha round, concluded in 2013

General will: in democratic thought, a focus on the common good of society, which is higher than the particular wills of individuals; associated with Rousseau

Generic medicines: medicines whose patents have expired, leaving manufacturers other than the patentholder free to produce them for markets

Genetically modified (GM): with reference to crops, plants altered by genetic engineering, to adapt them for specific purposes, such as making them resistant to pesticides, able to withstand drought or increasing their nutrient values

Global Compact: UN initiative which brings together companies, governments and NGOs to promote basic principles in four key areas: human rights, labour, environment and anti-corruption

Global warming: a general rise in the earth’s temperature, caused by the build-up of heat-trapping gases, or ‘greenhouse gases’, in the earth’s atmosphere

Globalization: the lowering of barriers to the movement of people, financial flows, goods, services and information around the world

Golden rule: maxim that people should treat others as they would wish to be treated themselves

Governance: in general, processes by which rule-governed behaviour takes place; can apply to organizations, communities, states and in the international sphere

Government: in the political sphere, the institutions by which rule is exercised, usually including lawmaking bodies and an executive branch to administer the law

Greenfield investment: type of foreign direct investment which involves setting up operations from scratch in the host country

Gross Domestic Product (GDP): the value of the total economic activity produced within an economy in a year

Guanxi: a Chinese cultural approach which values interpersonal relations

Guiding Principles on Human Rights (UNGPHR): UN guidelines for companies in respect of human rights; issued in 2011


Hazardous work: in relation to child labour, work involving dangerous machinery or dangerous substances, that adversely affects the child’s safety, health and moral development

Hedge funds: investment funds that generally have a shortterm investment horizon, and whose managers are noted for their aggressive investment strategies

Hegemony: the existence of a dominant power in international relations

Human development: a view of improvement in human well-being which comprises health, education and standard of living; used as an indicator by the UN

Human dignity: notion that human beings uniquely possess rationality, freedom and moral capacity

Human rights: rights people hold by virtue of their inherent human dignity

Human well-being: broad view of what contributes to a meaningful life, which includes material aspects of a decent life and capacity for moral development

Hypernorms: principles so fundamental to human existence that they serve as a guide in evaluating moral norms of different cultures


Imperialism: the domination and exploitation of a weaker state by a stronger one

Imports: products entering a country from abroad

Independent trade union: an organization of workers that is not under the control of the employer or any connected entity such as a government department

Individualism: concept that moral value resides in the individual human being, rather than in a collectivity

Inequality: in economic terms, the gap between rich and poor within a country or other area, usually measured in terms of income

Inhuman treatment: term used in UN human rights conventions which covers torture (both physical and mental), physical assaults, humiliating or degrading treatment

Initial Public Offering (IPO): the first offering of a public company’s shares to potential investors on a stock exchange

Insider dealing or trading: in the trading of shares in public companies, the use of information not available publicly to gain a financial advantage over others in the market

Intellectual Property (IP): property rights in intangible assets, that is, products of human mind rather than physical property; includes patents, copyright and trade marks

Integrated social contracts theory: a normative approach to business ethics which focuses on ethical principles as well as the role played by local community norms in business relations; devised by Donaldson and Dunfee

Intergenerational equity: principle that the current generation should behave in ways that enable future generations to live as well as they do themselves

Intergenerational justice: fair system of co-operation over time between generations

Intergovernmental Panel on Climate Change (IPCC): UN body which brings together research on climate change and makes recommendations for action by member states

International Bill of Human Rights: common collective reference to the three leading UN documents on human rights: the universal declaration of human rights; the covenant on civil and political rights; and the covenant on economic, social and cultural rights

International Covenant on Civil and Political Rights (ICCPR): UN human rights convention dating from 1976, ratified by 167 states

International Covenant on Economic, Social and Cultural Rights (ICESCR): UN human rights convention dating from 1976, ratified by 160 states

International Labour Organization (ILO): UN agency which brings together member states to agree, implement and apply international conventions on labour standards and human rights; it has 185 member states

Internationalism: in international relations, the predominance of state institutions, but with a role for international law, influencing the direction of national law and constituting moral standards against which national law is assessed

Internationalization: strategy of companies to expand into other countries, usually through export or foreign investment

Islamic finance: area of finance designed to comply with Islamic law, through the application of specific rules to commercial transactions

Islamic law: the law which guides followers of Islam, known as Sharia law and based on the Qur’an


Joint-stock company: historically, the corporate form which allowed people to come together as investors, each owning shares or stock in the company; now simply referred to as a ‘company’ or ‘corporation’

Justice: in ethics, the concept which focuses on the value of each individual human being, implying that all in society are morally equal; in law, justice refers to fairness and procedural correctness in applying laws


Kyoto Protocol: UN convention which committed developed countries that ratified the treaty to reduce carbon emissions 5% below 1990 levels by 2012


Laissez-faire capitalism: model of capitalism in which there is a maximum of enterprise freedom and minimum of government intervention

Law: rule or body of rules perceived as binding because it emanates from the state’s sovereign authority

Leftwing political parties: parties whose political beliefs rest on social priorities, usually involving a pivotal role of government in social spending

Legal responsibilities: in CSR theory, a broad duty to comply with relevant national and international law

Legal rights: rights recognized in law, often called ‘positive’ rights, such as the right to own property or to vote

Legitimacy: in the political sphere, a government which is perceived as having authority to govern, usually through democratic institutions

Lex mercatoria: body of law based on custom and practice among traders engaged in commercial activities across national boundaries; dates from the medieval period

Liberal democracy: democratic system based on individual freedoms such as freedom of expression and association, which support free and fair elections; also includes respect for majority rule and minority rights

Liberal market economy: type of market economy which balances individual freedom and the need for government intervention to promote public goods

Liberalism: focus on individual rights in economic, political and social thinking (but note, in American political terminology, tends to have the opposite meaning, that is, a focus on social justice)

Liberty: derived from the notion of human dignity, the capacity of people to pursue goals and achieve personal moral fulfilment; combines ‘negative’ freedoms such as freedom of movement, and ‘positive’ freedoms such as individual self-determination

Limited liability: in companies, the principle that a shareholder is liable only for the amount invested in the company, and not liable for debts incurred by the company (as the company is a separate legal entity); also pertains to limited partnerships

Lobbying: activities of businesses and other interest groups to influence politicians and political decision-making

Localization: for international business, the strategy of seeking particular advantages presented by one location over another

Location advantages: in international business, the advantages, such as low-cost labour and access to resources, which distinguish one country or region from another


Malnutrition: condition of consuming insufficient nutrients to sustain a person’s life; can be caused by hunger or by obesity

Managers: employees responsible for day-to-day running of an organization’s activities; in a company, they are accountable to the CEO and board of directors

Market: bringing together of buyers and sellers in exchange transactions, in either regulated or unregulated settings

Mercantilism: in international trade, the approach of a country which sees trade mainly as promoting its own economic gains; associated with high tariff barriers on imports and also, historically, colonialism

Merger and acquisition: in relation to corporate control, the coming together of two or more companies, either as equals (merger) or as a purchase of one by the other (takeover)

Microfinance: sector which encompasses a variety of nonprofit and social enterprises offering financial services to poor people who fall outside mainstream banking

Mixed economy: an economy with elements of both open markets and state direction or ownership

Monopoly: domination by one firm in the market for particular goods or services, enabling that firm to determine prices and supply

Moral hazard: in decision-making, a sense of freedom from responsibility which encourages a person to take risks, knowing that others will have to bear any losses

Moral self-realization: view of human dignity which is associated with Kant and the positive concept of liberty

Morality: rules and norms of behaviour derived from cultural values

Multilateral agreements: in international law, treaties to which there are many ratifying parties

Multinational Enterprise (MNE):a company which owns or controls other business entities and co-ordinates activities across national borders

Multipolar: reference to the shift from American hegemony towards a global environment in which there are numerous powerful players, notably including the large emerging countries

Mutual fund: a type of investment which consists of a bundle of investments managed by fund managers


NAFTA (North America Free Trade Agreement): regional trade agreement between the US, Canada and Mexico

National culture: distinctive set of values and norms by which a nation or people feel a sense of identity and cohesion

Nationalism: political thinking based on a national culture which sees itself as superior to others; can be the basis of political parties

Natural law: universal rules which are binding on all people as rational beings

Natural rights: rights that all people are said to have by nature; associated with natural law theories and the political thought of Locke

Negligence: in the law of tort, breach of a duty to take reasonable care, which causes injury or other harm to others

Neoclassical school of economics: influential school of economic thought based on values of laissez-faire capitalism, including economic freedom and limited government interference

Non-executive: in a company, part-time directors who take no part in the day-to-day running of the company, but nonetheless have legal responsibilities as directors

Non-Governmental Organizations (NGOs): voluntary organization formed by private individuals for a particular shared purpose

Not-for-profit organization: organization such as a charity, which exists for the purpose of promoting a good cause rather than to make a profit

Non-tariff barriers: in trade policy, barriers to imports, such as safety requirements, which do not involve import duties

‘nudging’: measures used by governments to persuade businesses to adopt more ethical behaviour voluntarily


Obesity: condition of having excess body fat to an extent that becomes harmful to a person’s health and life expectancy

OECD (Organisation for Economic Co-operation and Development): organization of the world’s main developed economies

Organic production: agriculture which does not rely on synthetic fertilizers or pesticides

Outsourcing: in business operations, shifting an operation or an entire production process, such as manufacturing, to another company and, often, another location, usually for reasons of cost savings


Partnership: people entering business together for common gain; the partnership is not a separate legal entity like a company; partners share liabilities, except in the case of a limited liability partnership

Patent: type of intellectual property which covers inventions, giving the owner extensive rights over the exploitation of the invention for a specified duration of time

Philanthropic responsibilities: in CSR theory, the discretionary spending by a company on good causes, such as donations to charity or the setting up of charitable foundations

Pluralism: the multiplicity of groups and interests in society, which is grounded in freedom of association and is central to democracy

Plurilateral trade agreement: treaty among a number of countries on trade and related issues

Polis: in ancient Greek ethical theory, a political association, such as the Greek city state; more akin to ‘society’ in modern contexts

Political power: the exercise of power over others in the political sphere, usually connected with offices of state

Politics: processes of allocating power in any social group or organization, but used most commonly in relation to power wielded in public life, as in a state

Portfolio investment: type of investment in international business which focuses on financial investment and returns, rather than ownership and control of foreign assets

Positive law: law, often termed ‘written’ law, enacted by state law-making authorities; can be contrasted with natural law, conceived as a higher moral law

Primary stakeholders: stakeholders directly involved in a firm’s business

Principal–agent model: in a company, a model of corporate governance which holds that the shareholders are the principal and managers are agents; although legally flawed, the model has been highly influential

Private company: registered company, usually with limited liability, in which owners are not allowed to offer shares to the investing public

Private law: body of law concerning families and individuals; includes property law and the law of obligations, covering contracts and torts

Privatization: the conversion of state-owned entities into listed companies which offer a portion shares to private investors, although the state often retains a controlling stake

Property theory: in relation to a company, an approach to corporate governance which holds that the shareholders as owners have rights analogous to owners of other types of property; although a flawed analogy, it has become highly influential

Protectionism: government trade policy of favouring home producers and discouraging imports

Public benefit corporation: in the US, registered public company which is legally committed to act in a socially responsible and sustainable manner

Public Limited Company (PLC): registered company which offers a portion of shares to investors through a listing on a stock exchange, and whose shares are then traded on that exchange; the PLC is a private-sector company, although in some cases the state owns a significant stake

Public–Private Partnership (PPP): contractual arrangement between a public-sector authority and a private-sector company (which can be a PLC) to provide a service such as healthcare or prisons, which had previously been a purely public-sector service; also used for capital investment projects such as hospitals


Rational choice theory: the approach to human behaviour, derived ultimately from utilitarian thinking, which assumes all people seek always to maximize benefits to themselves and minimize costs; central to neoclassical economic thinking

Rationality: in philosophy, autonomy of will which distinguishes human beings from other living creatures; in economics, associated with self-seeking behaviour as in rational choice theory

Regional trade agreement: multilateral trade agreement by countries in roughly the same geographical region

Regulation: in general, rules backed by state authority, often in the form of enacted laws, which govern the conduct of business activities, such as finance; in EU law, enacted laws directly applicable in member states

Religious law: body of law pertaining to a particular religion, derived from sacred documents and interpreted by jurists steeped in the relevant religious tradition

Renewable energy: creating energy from sources which do not become depleted over time; examples are wind turbines, solar panels and hydro-electric power generation

Rent-seeking: making a gain, such as a financial gain or political benefit, at the expense of someone else; rentseeking is considered exploitative behaviour in that the benefit, such as a payment, is in excess of what is needed in the circumstances

Representative democracy: indirect democracy whereby electors vote for office holders to represent them in assemblies which have lawmaking authority

Research and Development (R&D): in business, seeking new knowledge and applications which can lead to new and improved products or processes

Rights-based theories: ethical theories that adopt a view of individual human dignity as their starting point; often referred to as theories of natural rights

Rightwing political parties: political parties which, in economic terms, tend to favour greater economic freedom, lower taxes and lower social spending; often labelled ‘conservative’, but the ‘right’ can also refer to religious-based parties and nationalist parties

Rule of law: principle of the supremacy of the law over both ruler and ruled; entails equality before the law and an independent judiciary


‘say on pay’: in relation to corporate governance, the requirement, notably in the US, that shareholders in the AGM have a right to vote on executive remuneration, although the vote is not binding

Secondary stakeholders: stakeholders indirectly involved in a firm’s business, in contrast to the direct influence exerted by primary stakeholders

Shareholder primacy model: in relation to for-profit companies, model which holds that the sole purpose of the company is maximizing returns to shareholders as owners; also called the ‘economic model’ of the company

Shareholders: investors in a company, who acquire an ownership stake in it and are known legally as ‘members’ of the company; also known as ‘stockholders’ in America

Small-to-Medium-size Enterprises (SMEs): businesses ranging in size from micro-enterprises of one person to firms with up to 249 employees

Social contract: in political theory, an agreement among free people to engage in social relations and to set up a government which is accountable to them

Social democracy: political system which combines socialist ideals, such as equality and solidarity, with democratic government

Social enterprise: business established mainly for a social purpose; lies between a for-profit business and a charity

Social justice: concept of inherent duties towards others in society to act in a way that reflects basic human dignity

Social market economy: economic system which sees a positive role for the state in fostering social goals within a market economy

Social responsiveness: element of theories of corporate social performance, whereby the company engages with social issues and stakeholder concerns

Socialism: economic model which rests on the belief that societal goals rather than private profit should be the basis of the economy

Sovereign debt: the accumulated national debt of a country

Sovereign wealth fund: in finance, an entity owned by the state or an arm of the state, whose main activity is investing and managing funds on behalf of the owners

Sovereignty: supreme legal authority in a state, under which laws are made and institutions are set up to administer and enforce the laws, backed up by coercive force

Stakeholders: a wide range of groups, individuals and interests which interact with a company and exert influence on it

State capitalism: economic system where the state is the main economic actor in the country, either through direct ownership or indirect control

State-Owned Enterprise (SOE): entity established for economic purposes which is owned or controlled by the state; can be a listed company

State-planned economy: economic system run by the state, including collectivization of production and collectivized farms; the antithesis of capitalism

Statism: in international relations, an approach based exclusively on state sovereignty

Strong sustainable development: view that that patterns of consumption, as well as innovations and efficiencies in production, need to change substantially, in order to meet goals of sustainability in society

Subsidiary: a registered company which is wholly or majority owned by another company, known as the parent company; usually treated in law as a separate company from the parent

Supervisory board: in two-tier boards of directors, the higher of the two boards, which takes the major strategic decisions of the company

Supply chain: production process broken up into separate stages, co-ordinated by a lead company; can involve numerous different companies located in different countries

Sustainability: the principle of taking into account the needs of today’s inhabitants of the planet in ways which do not constitute a detriment to the ability of future generations to do the same

Sustainable banking: approach to banking as a business model based on ethically sustainable principles of serving society

Sustainable development: view of economic development involving continuing investment for future generations, taking into account the long-term viability of industries, both in terms of human values and environmental protection

Sustainable diet: a diet which has low environmental impact, offers nutritional security and fosters a healthy life for present and future generations


Tariffs: taxes imposed by governments on traded goods, usually imports

Tax avoidance: arranging financial affairs to reduce tax liabilities, which is considered legal

Tax evasion: financial arrangements which have as their only purpose the avoidance or reduction of tax liabilities; can be treated as a breach of taxation laws

Tax havens: locations, usually small offshore jurisdictions, which have low or no taxation and seek to attract individuals and companies wishing to avoid the higher taxation and greater disclosure rules which characterize most countries

Theocracy: legal and political system in which sovereignty rests in religious rule, and laws are based on religious law

Tort: in countries within the common law tradition, the area of law which covers obligations owed by individuals and organizations in society not to harm others

Trade: exchange transaction whereby goods or services are sold for some price, although not necessarily money; international trade is between a buyer and seller in different countries

Trade deficit: in a national economy, the importation of more goods and services than the country exports

Trade-related Aspects of Intellectual Property Rights (TRIPS): multilateral treaty which aims to achieve harmony among states in the legal protection of intellectual property; involves the raising of legal protection in developing countries to the level of developed countries

Trade surplus: in a national economy, a surplus of exports over imports

Trademark: a type of intellectual property consisting of a logo or name which identifies a brand; it can be registered under national law in each market

Transfer pricing: in international business, the arrangement of transactions by an MNE among its units in different countries to suit its tax objectives

Transition economies: economies making the transition from state-planned to market-based economies, along with supporting institutions; also often refers to political transition to democracy

Treaty: in international law, an agreement between sovereign states which obliges state parties to implement its provisions in their territories

‘triad’ countries: advanced economies of North America, Europe and Japan

Triple bottom line reporting: company reporting which takes in financial, social and environmental performance

Trust: in interpersonal relations, the belief or expectation that another person will act in a morally responsible way


UNIDROIT Principles of International Commercial Contracts: UN-sponsored statement of principles of international contracts which has facilitated international transactions

United Nations (UN): intergovernmental organization to which most of the world’s countries belong, and whose authoritative instruments are a source of international law

UN Convention on the Rights of the Child: UN human rights convention which covers a wide range of rights regarding children, including civil, social, health and cultural rights; took effect in 1990 and has been ratified by 193 countries

UN Millennium Development Goals (MDGs): devised in 2000, eight goals representing a broad view of human well-being, including meeting basic human needs and environmental goals

Universal Declaration of Human Rights (UDHR): the UN’s landmark statement of human rights in 1948, which has been followed up in later human rights conventions

Universalist: ethical perspective based on principles which transcend differing cultures

Universalizability: precept that a person’s moral decisionmaking and actions should always accord with the principle that they could become universal law

Utilitarians: broad grouping of theorists who are noted for a view of human nature based on the self-interested pursuit of pleasure and avoidance of pain, along with a view that morality of an action depends on its consequences

Utility: the principle that government should seek the greatest happiness of the greatest number within the population


‘veil of incorporation’: the legal divide between the individual member of a company and the company itself; in cases of suspected misdeeds or misuse of the corporate form, courts can ‘lift the veil’, holding owners personally liable

Virtue: quality of goodness in the human being, which, for Aristotle, includes human achievement of any kind, as well as upright behaviour

Virtue ethics: ethical focus on the qualities of virtue in the
person, rather than simply on ethical actions


WTO (World Trade Organization): successor organization to the GATT, which took over the oversight of multilateral agreements and also established a trade dispute resolution procedure; it has 159 member states


‘zero hours’ contract: a device used in employment by which the worker is required to be available for work, but the employer is not required to provide either regular work or stable income