Harnessing The Effect of Globalization On The Bottom Line: Why
A Feminine Form Of Leadership Is Best
SEMINAR 900
WOMEN, LAW AND THE GLOBAL ECONOMY
Professor Elvia R. Arriola
Fall 2009
December 16, 2009
Eric D. Leninger
RTDriver0217@yahoo.com
(630) 742-9355
IN COMPLETION OF THE
GRADUATION WRITING REQUIREMENT
NORTHERN ILLINOIS UNIVERSITY
COLLEGE OF LAW
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Part I: Introduction
“The point I’m trying to make – you’ve got to give more than you take.”1
The bottom line…how much is too much? As current students and future workers of
America, we have been taught that the most important thing is results. We are pushed to achieve
more and more. If result “X” is the goal, then result “X+1” is always better. In the business
world, the focus on results is shaped in the form of company profits. Bottom-line profits have
become the only goal, and many companies believe that there is no such thing as ‘too much’
profit. This intense focus on profits has led many companies to neglect the well being of their
employees, and even to endure the negative effects of legal and political backlash.
To succeed in the competitive business world, companies are expecting increased
production from their workers, while providing fewer benefits. In purely economic terms this
policy makes sense: the two ways to increase profit are to either decrease costs or increase
revenue. But herein is one of the most negative consequences of a globalized economy: the loss
of human compassion. Corporate executives often choose company policies that exploit workers
solely in the name of reducing costs. Globalization facilitates this process by drastically
increasing the supply of workers who need a job, thus permitting companies to offer lower
compensation and treat their employees in a substandard manner. This is especially true where
companies exploit the workers of a developing country because even the meager compensation
offered for slaving in a factory puts them in a far better position than the average standard of
living in their country. The production benefits of globalization have contributed to companies
forgetting that in order to prosper; sometimes it is necessary to give more to their employees
instead of always looking to take.
1
VAN HALEN, WITHOUT YOU (Warner Bros. Records, 1997).
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In a globalized economy, a company can be both successful and profitable by scrapping
the purely bottom-line analysis, refraining from the exploitation of its workers, and instead
utilizing a workplace environment that is based on interpersonal values. Bottom-line profits are
essential for a company in the globalized economy; however, they are not the only essential
element and should not be acquired at all costs. Instead, a company should build their
foundation of their success based on a workplace environment that values interpersonal
relationships. As stated from the work of Carol Gilligan, this is a model that defines success in
the terms of how it affects one’s relationship with others and is based on values found in the
feminine personality. This type of environment that values interpersonal relationships in the
workplace can effectively be accomplished whether a company has a female or male chief
executive officer (CEO).
This paper will explain why, in a globalized economy, a more feminine-based approach
to business that focuses on interpersonal relationships and the proper treatment of a company’s
workers is both more important and more profitable than the masculine counterpart that focuses
strictly on bottom-line profits and often neglects workers as a result. First, this paper will define
globalization, and explain how a globalized economy has led to deteriorating working conditions
for many employees. Then, stemming from the work of Carol Gilligan, the differences between
masculine and feminine personalities will be examined. The traits of a hard-charging, resultsorientated masculine personality will be compared to the traits of a more caring and interpersonal
relationship orientated feminine personality. These traits will then be examined within the
context of company leadership. The company of Wal-Mart will be discussed as a specific
example describing how globalization has increased focus on the bottom line, and therefore has
often led to the exploitation of workers. Then C2 Technologies and Berkshire Hathaway will be
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discussed as global entities, with a female and male CEO respectively, that utilize business
methods differing from those of Wal-Mart. The policies utilized by the CEOs of C2
Technologies and Berkshire Hathaway will illustrate how a company can remain successful in a
global economy without exploiting their workers. Finally, a brief discussion of legal and
political consequences will be presented, exemplifying negative events that may result if a
company becomes too focused only on bottom-line profits.
Part II: Globalization
In today’s economy, workers cannot escape the effects of globalization. Employees of
large and small companies from across the globe are experiencing a change in their respective
workplace environments as both production processes and labor are reorganized and shifted to
different parts of the world. Dictionary.com states that to globalize is “to extend to other or all
parts of the globe; make worldwide.”2 Thomas Friedman has identified four subparts to define
globalization, each based on a different historical time period, and differentiating sizes of the
world.3 In the realm of economics, Joseph Stiglitz has defined globalization as “the removal of
barriers to free trade and the closer integration of national economies.”4 In terms of human and
natural resources, Vandana Shiva states that globalization transforms all beings and resources
into commodities.5
Based on these definitions, it should be noted that depending on the context one wishes to
discuss globalization, the appropriate definition can change. For the context of this paper,
globalization should be understood almost as a paradox: a simultaneous shrinking and enlarging
2
Dictionary.com, globalization, http://dictionary.reference.com/browse/globalization (last visited 11/03/2009).
THOMAS FRIEDMAN, THE WORLD IS FLAT: A BRIEF HISTORY OF THE TWENTY-FIRST CENTURY 9-12 (Further
Updated and Expanded Picador 2007) (2005) [hereinafter FRIEDMAN].
4
JOSEPH STIGLITZ, GLOBALIZATION AND ITS DISCONTENTS ix (W.W. Norton & Company 2003) (2002) [hereinafter
STIGLITZ].
5
VANDANA SHIVA, EARTH DEMOCRACY: JUSTICE, SUSTAINABILITY, AND PEACE 2 (South End Press 2005).
3
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of the world. A prime example of this shrinking of the world is the elimination of trade barriers
between Western and European countries.6 Free trade allows each country to pass along their
comparative advantage of specialization in a certain product via a single, global market instead
of merely trading in a regional market. Globalization also has vastly expanded the production
resources available to companies. A prime example of this global expansion was examined by
Thomas Friedman with regards to Boeing’s production process of airplanes. The comparative
advantages of Boeing’s production plants in Russia were utilized while simultaneously having
the effect of working around the clock.7 This was achieved by allowing both the Russian and
American production plants to work on the same subject material at the same time. The stopping
point of production after the work day in the United States would become the starting point of
production for the work day in Russia, and vice-versa.8 Thus advances in technology allowed
Boeing to globalize and work towards producing airplanes virtually twenty-four hours a day,
everyday.
Regardless of the definition one chooses to use to describe globalization, the key is to
objectively analyze the effects globalization has on the world. As one would expect from such a
controversial topic, globalization has been avidly been supported and criticized. Critics have
noted that globalization has the potential to positively impact the world, but that global policies
currently in effect need to be rethought.9 Supporters of globalization have embraced its benefits
to the global economy and merely accepted the unfortunate side-effects as a mere calling-to-arms
for the workforces of countries such as the United States.10 It is precisely within these contexts
that the positive and negative effects of globalization need to be closely analyzed. The benefits
6
STIGLITZ, supra note 4, at 6.
FRIEDMAN, supra note 3 at 226-228.
8
Id. at 226-228.
9
STIGLITZ, supra note 4 at ix.
10
FRIEDMAN, supra note 3 at 278-280.
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of outsourcing and off-shoring have been documented for cutting production costs and yielding
immense gains in productivity.11 However, while a supporter of globalization like Thomas
Friedman notes the money saved in streamlining the production process, he seems merely to
glance-over the harmful effects felt by employees of global entities. Global corporations can
successfully exploit Indian workers for pennies on the dollar merely because the standard of
living in India is so incredibly low. At the same time the outsourcing of jobs to India causes
Americans in the United States to lose jobs.12 Friedman properly sums-up the pressures upon
companies to slash production costs by any means by stating if you fail to do so, your
competitors will.13
This allowable exploitation of workers in third-world countries has led to the demise of
working conditions for the employees of many global companies. The questions are: how does a
company remain profitable and competitive without resorting to the tactics of exploiting cheap
labor or neglecting workers, and how much profit is too much?
Part III: Foundations of Leadership in a Globalized Economy
The first step toward running a profitable company is for the company to have a steadfast
leader. Without a passionately committed leader, the workers of a company cannot be expected
to follow.14 Next, the leader must value and build a company atmosphere centered upon
important interpersonal relationships. According to Bill Pollard, Chairman and CEO of
ServiceMaster, helping employees to find meaning and purpose in their work, no matter how
11
FRIEDMAN, supra note 3 at 130-132; 137-140. {Outsourcing involves the process of a company exporting a
limited aspect of their business to a foreign country (i.e. moving a customer-support call center to India); while offshoring involves the process of moving an entire production factory to a foreign country.}
12
Id. at 130-142, 146.
13
Id. at 153.
14
LAURIE BETH JONES, JESUS, CEO: USING ANCIENT WISDOM FOR VISIONARY LEADERSHIP 51 (Hyperion 1995)
[hereinafter JONES].
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menial the task, is a key component to a successful company.15 An employee that finds a higher
purpose in her work, besides merely earning a paycheck, is what can make a company really
profitable.16 Finally, the leader must also lead by example, and show through her actions that the
well-being of the company’s individual workers is important. Jeffrey H. Coors, former President
of Adolph Coors Brewing Company, has stated that a company motto or statement of values
demonstrating the company’s commitment to its workers is very successful in boosting employee
morale.17
The examples noted above were each mentioned from the perspective of a male company
executive; however, it is interesting to note that through the work of Carol Gilligan, the values
placed on interpersonal relationships as described above have been noted as traditional traits of
the feminine personality. Could there be a fundamental difference between the traits of
masculinity and femininity with regards to corporate leadership in the global economy?
Part IV: Feminine and Masculine Personalities: The Ethic of Care and the Logic of Justice
Through her studies, Carol Gilligan has become an influential pioneer in the study of
psychological theory and women’s development. Prior to Gilligan’s work, little thought was
given to the possibility that males and females socially interact with themselves and others in
totally different ways. As her studies progressed, Gilligan noted that women often define and
describe their social interactions in ways that are different from men.18 Women tended to view
themselves in terms of their relationships with others, and this realization spawned an entire new
field of research delving into women’s development and social interactions. One of the most
LARRY JULIAN, GOD IS MY CEO: FOLLOWING GOD’S PRINCIPLES IN A BOTTOM-LINE WORLD 14 (Adams Media
2002) (2001) [hereinafter JULIAN].
16
JULIAN, supra note 15 at 19.
17
Id. at 97-98.
18
CAROL GILLIGAN, IN A DIFFERENT VOICE 7-8 (Harvard University Press 1993) (1982) [hereinafter GILLIGAN].
15
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influential studies conducted by Carol Gilligan was named the rights and responsibilities study.19
In this study, Gilligan analyzed the different responses given by male and female participants
when they were presented with a difficult moral dilemma. The dilemma was one originally used
by psychologist Lawrence Kohlberg and it consisted of a man who had a seriously-ill wife that
would soon die if she did not receive a certain medication. The man could not afford the
medication, and the pharmacist refused to lower his price to one that the man could afford. The
man was left with the difficult decision of whether to steal the drug and save his wife, or to
helplessly obey the law and watch his wife die.20 Gilligan presented this moral dilemma to
males and females of all ages, and she noted that by age eleven, vast differences were present in
the analysis of the problem between males and females.21
When presented with the dilemma, an eleven-year-old boy seemed to analyze the
problem in terms of financial costs and logical conclusions.22 The boy mechanically focused on
the bottom line: because the life of the man’s wife had a greater financial value than the profitmargin earned from the sale of the drug, the man would be justified in stealing the drug for his
wife.23 When faced with the legal consequences of stealing the drug, the boy responded by
saying that a judge would understand that stealing was right in this case and that laws cannot
adequately govern all situations.24 The boy’s response was undoubtedly grounded in the views
of math and logic. While the sale of the drug had a limited quantifiable value, the value of life
had an unlimited price tag. Further, the boy seemed to assume a judge would know that stealing
was the ‘correct thing to do’, and rested his logic on a universal recognition of correct moral
19
GILLIGAN, supra note 18 at 3.
Id. at 25.
21
Id. at 25.
22
Id. at 26.
23
Id. at 26.
24
Id. at 26.
20
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behavior.25 The boy utilized a mechanical, problem-solving approach for solving the moral
dilemma that failed to recognize any interpersonal relationships. Instead of analyzing the man’s
actions in terms of how they would affect relationships with others, the boy reasoned that anyone
in this position should steal the drug because it should be universally accepted as the correct
solution to this dilemma.26
In stark contrast to the boy’s mechanical approach, the eleven-year-old girl utilized a
fluid system of connected interpersonal relationships to reason her way through the dilemma.27
Choosing to focus more on the continued interactions between the man, the pharmacist, and the
man’s wife, the young girl reasoned that stealing the drug would not be the best approach
because the short-term benefits of stealing would be outweighed by the long-term detriments to
the characters’ respective relationships with each other.28 The young girl reasoned that the longterm love and support from the relationship with her husband as more important than the shortterm treatment of the drug. If the man was incarcerated for stealing the drug, his wife would
ultimately be hurt due to the loss of his companionship.29 Further, if the man stole the drug, the
couple’s relationship with the pharmacist would be permanently severed. Instead, the young girl
reasoned that all parties would be better off if the man acquired a loan to purchase the drug, or
pleaded with the pharmacist to lower the price. Contrary to the boy’s mathematical approach,
the girl suggested that the pharmacist would recognize the need to help the man’s wife instead of
merely looking to secure a sale of the drug.30 The girl believed that the pharmacist’s relationship
with the man and his wife was more important than the financial sale, and thus the pharmacist
25
GILLIGAN, supra note 18 at 26.
Id. at 27.
27
Id. at 28.
28
Id. at 28.
29
Id. at 28.
30
Id. at 28.
26
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should be willing to negotiate some kind of deal so the man could secure the drug for his wife.31
When analyzed in terms of Kohlberg’s stages of moral development, the boy’s actions
are viewed as a full-stage more advanced than that of the girl’s.32 While the girl’s analysis
seemed to mirror Kohlberg’s stage 3 (interpersonal accord and conformity), the boy’s analysis
seemed to mirror Kohlberg’s stage 4 (Maintaining social-order and authority).33 Instead of
merely referring to the young boy’s thought processes as more advanced, Gilligan offered an
alternative: what if the way women analyze and solve a problem is merely fundamentally
different from men? In her own words, Gilligan labeled the boy’s reasoning as stemming from
the masculine-based logic of justice, and the girl’s reasoning as stemming from the femininebased ethic of care.34
Gilligan notes that women often alter their social behavior in order to preserve
relationships, while men often abide by social standards, at the risk of losing relationships,
because they view interpersonal relationships as easily replaceable.35 Gilligan argues that the
logic of justice is a masculine personality theme, often possessed by males, that drives their
behavior in social interactions. Males tend to view dilemmas impersonally; relying on
universally accepted principles of logic to reason through dilemmas.36 Males would tend to
believe that the correct answer to a problem is a universal one that is available for all individuals
31
GILLIGAN, supra note 18 at 28.
Id. at 28.
33
Wikipedia.org, Kohlberg’s Stages of Moral Development,
Http://en.wikipedia.org/wiki/Kohlberg’s_stages_of_moral_development (last visited on 11/18/2009). (Kohlberg
devised a 6-stage theory of moral development. One is deemed to progress through the stages based on their social
development. The stages are: 1. Obedience and punishment orientation; 2. Self-interest orientation; 3. Interpersonal
accord and conformity; 4. Authority and social-order maintaining orientation; 5. Social contract orientation; 6.
Universal ethical principles).
34
GILLIGAN, supra note 18 at 30. (Throughout the remainder of this paper, traditional masculine-based personality
traits will be referred to as the logic of justice and traditional feminine-based personality traits will be referred to as
the ethic of care. Both the logic of justice and the ethic of care are personality traits that can be exhibited by
individuals of either gender).
35
Id. at 44.
36
Id. at 29.
32
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to attain without examining their relationships with others. According to the logic of justice, one
strives for the best end-result, regardless of its effects on the individual’s interpersonal
relationships.
Fundamentally differing from the impersonal views of the male, Gilligan offers the
perspective that females tend to define their social interactions in terms of their relationships
with others.37 Instead of believing in a universal correct answer, females would tend to believe
that the best way to solve a problem would be through a network of communication.38 The
female believes that the correct solution is one where all social interactions are in harmony.
Even if a particular decision leads to a favorable result for the individual, the ethic of care
regards that decision as inferior if it harmfully affects the individual’s interpersonal relationships.
Thus at the heart of Gilligan’s work is a theme that masculine and feminine personalities
each have their own way of defining and solving social problems. The impersonal traits of the
male and the interpersonal traits of the female can be found even at a young age of development.
Even though the approaches are different, it does not mean that one is necessarily more advanced
than the other. Historically, masculine personality traits stemming from the logic of justice have
been considered the social norm while feminine personality traits stemming from the ethic of
care have been considered a deviation from the norm.39 Even today the dominance of the
masculine personality has been readily apparent in the business world. As of 2009, only fifteen
Fortune 500 companies were headed by female CEOs.40
The feminine personality traits stemming from the ethic of care are those that should be
utilized by every corporate CEO. The interpersonal relationship-orientated views foster not only
37
GILLIGAN, supra note 18 at 29.
Id. at 29.
39
Id. at 14.
40
CNNMoney.com, Fortune 500-Women CEOs,
http://money.cnn.com/magazines/fortune/fortune500/2009/womenceos/ (last visited 11/03/2009).
38
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views of compassion, but also a productive globalized economy. Companies with leadership
governed by the ethic of care value the interpersonal relationships with their workers and realize
that bottom-line profits should not be attained at all costs. These companies also recognize that
there is such a thing as “too much” profit.
Part V: Globalization and the Logic of Justice
“Greed is good. Greed is right. Greed works. Greed clarifies, cuts-through, and captures the essence of the
evolutionary spirit.”41
As described above, the masculine-orientated logic of justice is driven primarily by a
mechanical approach to achieve the best results, regardless of the effect on others.
Unfortunately, globalization has led to an increased use of the logic of justice in the business
world. Globalization fosters competition because through the use of technology both individual
producers and markets as a whole are able to offer their products to the entire world instead of
merely trading in a secular economy.42 Thomas Friedman has referred to this process as the idea
of ‘flattening’ world. The idea of the flat-world has been embraced because of its benefits to
streamlining production and passing lower production costs on to consumers.43 However,
through omission or oversight, Friedman has neglected to mention one of the greatest negative
effects of globalization: the diminishing importance placed on the ethic of care.
In an increasingly globalized economy, companies often choose policies that slash
production costs in any way possible in order to undercut the competition’s prices and maximize
their profits. As Friedman has stated, if one company fails to take advantage of a low-cost
production method, the next company will. The desire of companies to slash the costs of
41
WALL STREET (Twentieth Century Fox, 1987). (In the film Gordon Gekko is a wealthy businessman and corporate
raider who, at the end of the day, focuses only on his earnings. He did not care who was impacted by his decisions
so long as he made money for himself. His business practices were often both illegal and immoral, and at the end of
the film he was about to be federally charged with violating insider-trading laws).
42
FRIEDMAN, supra note 3 at 10-11.
43
Id. at 127.
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production in any way possible mirrors many of the attributes utilized by the young boy in
Gilligan’s rights and responsibilities study. While the boy determined the wife’s life was worth
more than the sale of the drug, global companies determine that profits are more important than
the interpersonal relationships with their workers. While the boy’s logic rested on universally
accepted moral principles of ‘what was right’, companies make decisions based on the universal
principle that profit is good, but more profit is even better. While the boy determined that
stealing the drug was the correct thing to do regardless of how it affected the man’s interpersonal
relationships, companies are deciding that cost-cutting policies are the correct way to run a
company regardless of how they affect the company’s own workers.
In today’s global economy, one of the prime examples of a company utilizing the logic of
justice in a mechanical cost-cutting method is the case of Wal-Mart. Wal-Mart Stores, Inc. is a
publicly-traded corporation that was founded in 1962 and is based in Arkansas. Wal-Mart
employs roughly 2,100,000 workers, and generates roughly 400-billion dollars in annual
revenue.44 Wal-Mart’s most prominent advertisement slogan is “Save money, live better, WalMart.”45 Wal-Mart uses this slogan to attract customers by claiming that they will live better by
shopping at Wal-Mart because of all the money they will be saving by purchasing their
necessities from Wal-Mart. By saving money on necessities, Wal-Mart claims their customers
can ‘live better’ by either saving or spending elsewhere the money saved by shopping in their
stores. At this juncture the consumer must analyze: who is living better due to the price-cutting
policies of Wal-Mart? One thing is for certain, it is not Wal-Mart’s employees that are living
better.46
44
Wikipedia.org, Wal-Mart, http://en.wikipedia.org/wiki/Wal_mart#Wal-Mart_Stores_U.S (last visited on
11/25/2009).
45
Wal-Mart, http://www.walmart.com (last visited on 11/19/2009).
46
See infra notes 51-53 at pp. 14.
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Thomas Friedman has noted that Wal-Mart’s profitability stems from its ability to operate
one of the most efficient supply-chains in the world.47 Advances in technology have allowed
Wal-Mart to cut costs in transporting its goods and also allowed for an extremely efficient
method of monitoring and updating inventory statuses for each of its stores.48 However, WalMart’s real breakthrough has been its niche in the business world: Wal-Mart distributes
everything, but produces nothing.49 Wal-Mart has capitalized on its business strategy of limiting
its activities to what it is really good at and stated that making innovative uses of new technology
is what allows a company to be profitable in the globalized ‘flat’ world.50
However, after praising Wal-Mart’s innovative business strategies, Friedman only gives a
glancing look at the terrible treatment and exploitation of Wal-Mart’s employees. Wal-Mart has
created a certain degree of ruthlessness with its business practices and unfortunately not enough
attention is given to the fact that exploitation of employees is a large part of the reason why WalMart is such a profitable company. Lawsuits have been filed against Wal-Mart for locking
overnight workers into their stores and hiring illegal immigrants to save on costs.51 The industry
competitors of Wal-Mart have also been forced into many of the same ruthless practices that
Wal-Mart has pioneered. Creating entirely new, lower-class wage tiers and drastically cutting
health-care benefits are just two examples of how other companies have tried to cut costs in
order to remain competitive with Wal-Mart.52 Because of Wal-Mart’s large demand for
products, it has a leverage that enables the company to “grind-down” the prices of their suppliers
by margins as small as a fraction of a penny.53 This leads Wal-Mart’s suppliers to be forced into
47
FRIEDMAN, supra note 3 at 152.
Id. at 160.
49
Id. at 160.
50
Id. at 162.
51
Id. at 163.
52
Id. at 163.
53
Id. at 163.
48
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a similar cost-cutting regime and these suppliers in turn have to drastically limit the amount of
benefits they offer to their respective employees as a manner of cost-cutting.
The corporate policies of Wal-Mart that allow workers to be treated in such a manner as
described above largely resemble the values described by the logic of justice. Wal-Mart utilizes
a results-orientated business approach that is focused only on the bottom-line: company profits.
Wal-Mart values the prospect of additional profits far more than the interpersonal relationships
of its workers. Wal-Mart endlessly works to achieve the greatest amount of profit possible
because there is no such thing as too much profit. The practice of hiring illegal immigrants to
save on costs exemplifies the utmost importance Wal-Mart places on generating profits, and the
practice of locking workers into stores overnight illustrates just how far Wal-Mart is willing to
go in order to generate every last extra bit of profit. The true innovative ‘genius’ of Wal-Mart is
not its use of technology, but rather its abuse of workers. By hiring illegal workers, Wal-Mart is
able to pay them wages that are below the legal wage limit while simultaneously working them
above the legal time limit.
Just as Gordon Gekko commented that greed captures the essence of the evolutionary
spirit, Wal-Mart seemingly has captured the contemporary essence of the globalization spirit:
cost-effectiveness in the realm of maximizing profit is the most important, and sometimes the
only goal of business. Globalization has facilitated the practices of Wal-Mart in two main areas:
the availability of workers and advances in global production. Globalization has increased the
ability to travel, and hence workers from less-developed countries have been able to travel to the
United States to seek employment opportunities. Globalization has also led to vast advances in
production. The practices of outsourcing and off-shoring have allowed companies to produce
goods all over the world instead of only from a home-base factory. Advances in technology
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have led to a globally-producing world where producers now have the ability to seek-out and
exploit the cheapest labor they can find.54 Wal-Mart has utilized this practice in dealing with the
individual producers of the goods it sells. As noted above, Wal-Mart does not produce anything;
it merely sells goods that have already been produced. As part of its greed-desired, cost-cutting
method, Wal-Mart ruthlessly plays suppliers against each other in a ‘drive-prices to the ground’
bout.55 This price-war practice of Wal-Mart has a very negative effect on the global economy:
removing jobs from the United States in order to exploit cheap labor in countries such as China.
Thomas Friedman has noted that companies need to utilize China as a source of
producing goods in order to remain competitive in the global economy.56 The attractiveness of
production in China is that factories in China can produce more while charging less. The low
costs of labor and abundant supply of workers means that a purely Western manufacturer of
basic commodity items needs to develop an entirely new business plan, one that involves
producing in China.57 It is theorized that China will soon be setting a standard – a global floor –
for wages, labor laws, and workplace standards.58 This standard will be called ‘The China Price’
and will reflect the reduced cost of producing in China in comparison to producing in other parts
of the world.
During 2004, Wal-Mart acquired 18-billion dollars of goods to sell from Chinese
suppliers.59 While Friedman applauds Wal-Mart’s use of China as a source for goods to sell,
even David Glass, former CEO of Wal-Mart, said he was not found of the idea. David Glass
noted that Wal-Mart would be much better off if it could purchase merchandise made in the
54
FRIEDMAN, supra note 3 at 141.
Id. at 163.
56
Id. at 140.
57
Id. at 141.
58
Id. at 141.
59
Id. at 163.
55
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United States because it would create American jobs and improve the quality of life for
American citizens.60 Glass expressed his concern about the increase of Chinese manufacturing
when he stated: “One of my concerns is that, with the manufacturing out of this country, one day
we’ll all be selling hamburgers to each other.”61 Glass’ comment deserves some examination.
In a globalized economy with Chinese workers willing to work for wages far below what it
would cost to hire an American worker to perform the same job, companies that are focused
squarely on bottom-line profits are left with only one decision: outsource and off-shore to China.
As an increasing number of formerly American jobs are shipped-off to China, American workers
with three alternatives: unemployment, choosing to perform their work for a price that is
comparable to the wage paid in China, or accepting a lower-skilled job, such as flipping
hamburgers. So while utilizing Chinese labor is cost-beneficial for individual companies in the
short run, in the long run the entire globalized world is worse off because skilled workers in
developed countries are laid-off and unskilled workers are exploited and abused in currentlydeveloping countries.
Thus after an analysis, the ‘save money, live better’ theme of Wal-Mart fails to live-up to
its claim. It is true that Wal-Mart saves on costs by purchasing goods that are produced in China
and in turn passes-along some of the savings to customers in the form of lower prices. However,
aside from the corporate executives and customers of Wal-Mart, everyone else is actually living
worse. The employees of Wal-Mart are exploited in order to save costs. Wal-Mart also causes
American citizens to lose jobs because most of the products they purchase to re-sell later have
been produced by cheap foreign laborers in China. Further, the money saved by paying ‘the
60
61
FRIEDMAN, supra note 3 at 164.
Id. at 164.
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China Price’ does nothing to improve the standard of life for the Chinese citizens.62 Due to lax
labor laws in China, Chinese workers are paid only a fraction of what it would cost to produce
the same good in the United States. A prime example is that the average monthly salary of a
machinist in America is between $3,000.00 and $4,000.00 per month, while the average monthly
salary of a machinist in China is a mere $150.00 per month.63 Hence the true result of WalMart’s practices is more like the result of the young boy’s reasoning based on the logic of justice
in the moral dilemma. Wal-Mart uses a mechanical scheme to cut costs and achieve a universal
goal: maximized profits. However, Wal-Mart does this without regard for the way it affects
others in the world. In Wal-Mart’s eyes the bottom line is what matters and profits need to be
maximized in any way possible, regardless of the consequences.
Part VI: Globalization and the Ethic of Care
“In a situation of social interaction, something is morally wrong where the individual ends up screwing a
lot of people. It is morally right when everyone comes out better off.”64
Fundamentally differing from masculine values driving the logic of justice, the feminine
values driving the ethic of care are characterized by a desire to facilitate and maintain
interpersonal relationships. As Gilligan noted in her studies, one who makes decisions based on
the ethic of care is more concerned with how the decision affects others around them, rather than
focusing on a mechanical goal. In a globalized economy, a corporate executive should strive to
create a workplace environment for employees that is based on the ethic of care because all
parties involved will reap a greater benefit in comparison to a company that is merely focused on
bottom-line profits. As globalization continues to shrink the world in terms of production, the
importance of utilizing the ethic of care for corporate executives becomes even more important.
62
FRIEDMAN, supra note 3 at 142.
Id. at 147.
64
GILLIGAN, supra note 18 at 64.
63
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Unlike Gordon Gekko’s greed-based view of business grounded in the logic of justice, both male
and female chief executive officers have built successful companies that utilize a company motto
based on the ethic of care. In today’s globalized economy, two of the best examples of
companies that have become successful because of their use of the ethic of care are C2
Technologies and Berkshire Hathaway, Inc.
A.) C2 Technologies: The Ethic of Care Utilized by a Female CEO
C2 Technologies was founded in 1989 by current CEO Dolly Oberoi.65 C2 is currently
based in Washington, D.C. and employs over three-hundred workers in twenty-six different
locations throughout the United States. C2 specializes and has been nationally recognized in the
areas of performance improvement and improving the effectiveness of productivity-driven
organizations.66 The company’s website states that successful companies are characterized by an
unrelenting focus on their people, processes, and technology.67
From the beginning of C2, Dolly Oberoi has aimed to create a workplace environment
based on trust and emotional consideration.68 A specific example of this emotional consideration
was when Oberoi donated some of her personal sick-time to a contractor who had to request
additional time-off from work because her child was diagnosed with a terminal illness.69 Instead
of scolding the employee because her vacation time had almost been exhausted, Oberoi gave to
her employee with the hopes that the employee would repay her with excellent service in the
future to the company. When employees know they are a consideration in the minds of
corporate executives, they are more willing to consider what is best for the company when
65
ANGELA WALZ, OH, DOLLY! LEADERSHIP LESSONS FROM A FEMALE CEO 36 (Kokopelli Publishing Company
2009) [hereinafter WALZ].
66
C2 Technologies, http://www.c2ti.com/company/company_overview.htm (Last visited on 11/25/2009).
67
Id.
68
WALZ, supra note 65 at 36.
69
Id. at 28.
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making their own personal decisions.70 Trust is a significant factor in facilitating a successful
company. Without trust, a company cannot make efficient or even correct decisions.71
Oberoi also stresses the importance of maintaining high employee motivation. Not only
should a worker receive fair wage compensation, but appropriate fringe benefits should be
passed-along as well.72 C2 Technologies has a low attrition rate of employees because, for the
most part, the employees of C2 are happy due to their adequate compensation. Disgruntled
employees lack the motivation necessary to perform their job with outstanding service; however,
the employees of C2 often perform their jobs with above-average enthusiasm and care.73 In turn,
both Oberoi and the employees of C2 reap the benefits of a workplace environment that is based
on interpersonal values. C2 Technologies has grown into successful business entity, and both the
employees and clients of C2 are left with a pleasant feeling after conducting business with each
other.74 What is most impressive about Oberi’s leadership is that she defines the success of C2
Technologies both in terms of profits, and in terms of happiness of the companies’ employees.75
Dolly Oberoi’s leadership is a wonderful example of how the road to success is not paved with
the money saved by exploiting cheap labor and unfairly under-compensating employees, but
instead it is paved with the foundations of trust and consideration that are found in the feminine
values taken from the ethic of care.
B.) Berkshire Hathaway: The Ethic of Care Utilized by a Male CEO
A company does not have to employ a female CEO in order to build a successful
company based on the feminine-orientated ethic of care; a male CEO can effectively accomplish
70
WALZ, supra note 65 at 36.
Id. at 36.
72
Id. at 49.
73
Id. at 50.
74
Id. at 50.
75
Id. at 50.
71
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the same task. A second company in today’s globalized economy that has found success by
utilizing the ethic of care is the Nebraska-based conglomerate Berkshire Hathaway, Inc.
Berkshire’s current chairman and CEO is Warren Buffett. Buffett first took control of Berkshire
in the 1960s, and has helped turn the company into the global powerhouse that it is today. As of
2008, Berkshire Hathaway employed roughly 246,000 employees and earned revenue exceeding
107 billion dollars.76 In personal terms, Buffett has an astronomical net-worth exceeding thirtybillion dollars, and is considered to be one of the richest men in the United States.77
Contrary to his current status, Buffett was not always a wealthy individual. While earning
his way to the top of the financial world, Buffett has always utilized the ethic of care in both the
business and personal aspects of his life. As a child, Buffett started creating businesses at a
young age in the form of collecting/re-selling golf balls and furnishing pinball machines to local
establishments.78 Even at a young age Buffett always maintained a policy of honest business
dealings, and he showed concern for others around him beyond the scope of his individual
businesses.79 Those who interacted with Buffett never questioned his desire to become a wealthy
businessman, but they also realized that the most important aspect for Buffett was to be an
honest businessman.
As Buffett’s business career has progressed, he has continued to conduct himself in a
manner consistent with the ethic of care. Buffett has used his wealth to create the “Buffett
Foundation” which provides multiple academic scholarships each year for students.80 As a
corporate leader at Berkshire Hathaway, Buffett has been openly opposed to using stock-options
76
Wikipedia.org, Berkshire Hathaway, http://en.wikipedia.org/wiki/Berkshire_Hathaway#History (Last visited
11/25/2009).
77
Id.
78
ROGER LOWENSTEIN, BUFFETT: THE MAKING OF AN AMERICAN CAPITALIST 24-26 (Random House Trade
Paperbacks 2008) (1995) [hereinafter LOWENSTEIN].
79
LOWENSTEIN, supra note 78 at 27.
80
Id. at 143.
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as compensation for CEOs and corporate executives because he felt that the options give an
unfair free ride of profit to the CEO without exposing him to the same investment risk as the
common shareholders of the company.81 Buffett feels that the CEO of a company should not
reap financial benefits while the shareholders are exposed to risk and loss of capital. Buffett also
refrains from the life of gluttony that many corporate CEOs enjoy. Buffett refuses to charge
extravagant meals on the company tab, and decided to purchase a corporate jet with company
funds only when it became absolutely necessary for business travels.82 Buffett would rather
invest his shareholders’ funds in a ‘good stock’ than a ‘good jet.’83 Buffett also believes in
modest CEO compensation; he earns a fixed annual compensation from Berkshire Hathaway of
$100,000.00.84 The personal wealth Buffett has amassed has not been from reaping large
corporate salaries, but instead from his profitable choices of investments. It should be noted that
Buffett personally invests in the same securities that he invests the funds of Berkshire Hathaway.
Aside from Buffett’s lack of corporate greed, he also strives to treat his company
managers with respect and dignity. One manager has stated that Buffett creates a strong sense of
personal responsibility, and that he felt like a kid bringing home poor grades to his parents if he
ever had to submit bad news to Buffett.85 Buffett would much rather motivate an employee than
fire an employee, and he is very much against a ‘screw-up, get fired’ business philosophy.86 In
hiring managers, Buffett has strived to hire workers that treat the funds of Berkshire Hathaway
81
LOWENSTEIN, supra note 78 at 131. (An option is a contract that allows one to purchase/sell a stock at a specified
price without actually owning the stock. Thus if the stock performs well, the option-owner can elect to purchase the
stock to realize a profit, but if the stock performs poorly, the option-holder can simply let the option expire without
exposure to a loss-in-value due to declining stock prices).
82
Id. at 268, 287.
83
Id. at 296.
84
Id. at 289.
85
Id. at 289.
86
Id. at 290.
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with ‘owner-like care and thoughtfulness.’87
The actions and business policies of Warren Buffett are one of the most moving examples
of how one can become extremely successful in today’s globalized economy while utilizing the
ethic of care. Buffett’s leadership as CEO of Berkshire Hathaway demonstrates his commitment
on an individual level to employees and their well being. Buffett has found that personally
motivating an employee can lead to more successful results for Berkshire Hathaway than
threatening to fire an employee at the first opportunity. Buffett also recognizes how much profit
is enough. His leadership and ability to generate profits for Berkshire Hathaway would easily
command a salary exceeding his modest $100,000.00 per year; however, Buffett analyzes the
importance of his salary within the context of how it affects others. Buffett obviously has earned
substantial income from his own personal investments, so to accept a large corporate salary from
Berkshire Hathaway would pose little benefit to him while harming the overall company and its
shareholders. The shareholders are the true owners of a corporation, and Buffett recognizes that
the extra money that could have been paid to him as salary better serves the shareholders by
being re-invested to earn additional profits.
In choosing to focus on the interpersonal relationships of their employees, the business
leaders who become successful while utilizing the ethic of care are the true innovators. Both
Dolly Oberoi and Warren Buffett have recognized that the benefits yielded to their respective
companies by fostering strong interpersonal relationships among their workers are not always
apparent in the short-term, but in the long-term employees are better-off and the company has the
potential for greater profitability. Keeping employees happy with generous compensation
packages may cost a little extra, but the potential benefits to the company of increased
productivity and increased profits in the long-run make the trade-off more than worth it.
87
LOWENSTEIN, supra note 78 at 131.
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Part VII: Consequences That May Arise From Focusing Too Much On the Bottom Line
A.) Enron: Focusing on the Bottom Line Led To Disaster and Legal Consequences
Possibly the most shocking example of personal, professional, and legal tragedy resulting
from a company that behaved in a manner similar to the logic of justice is the case of Enron
Corporation. Enron was a Nebraska-based corporation that was founded in 1985 and became
defunct in 2001 due to a scandal regarding the company’s accounting habits.88 In the year 2000,
Enron generated over 100-billion dollars of revenue and employed roughly 22,000 employees.89
During the 1990s and 2000, Enron became the pinnacle example of both a successful business
and a wealth-generating investment.90 One of the chief driving forces behind Enron’s business
policies was to maximize the value of their stock, and so Enron executives chose to artificially
raise Enron’s stock price by engaging in an intricate design of fraudulent and illegal accounting
policies.91 Sadly, Enron’s motivations for increasing the value of their stock were not grounded
in the desire to generate wealth for their investors, but instead to increase bonus payouts to the
top executives.92 When these fraudulent and illegal accounting policies eventually unraveled and
revealed that Enron had virtually no cash reserves, one of the largest American corporations was
forced to file for bankruptcy. All of the previously employed Enron workers were left jobless
and suffered enormous losses in their company-based 401(k) retirement plans.93
A brief analysis of Enron’s accounting practices highlights its focus on the reporting of
the bottom-line. Enron strived to produce visually-pleasing financial statements with impressive
numbers of profit and return on investment, and it did this partially by covering-up accounting
88
Wikipedia.org, Enron, http://en.wikipedia.org/wiki/Enron (Last visited 12/06/2009).
Id.
90
BETHANY MCLEAN & PETER ELKIND, THE SMARTEST GUYS IN THE ROOM: THE AMAZING RISE AND SCANDALOUS
FALL OF ENRON 229, 313 (Penguin Group 2004) (2003) [hereinafter MCLEAN & ELKIND].
91
MCLEAN & ELKIND, supra note 90 at 229, 242.
92
Id. at 313.
93
Id. at 401.
89
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shortfalls in obscure footnotes.94 Enron’s other fraudulent technique in financial reporting was
the creation of separate legal entities called “raptors.”95 In 2000, Enron created four raptors that
served as a means of economic disposal for Enron’s underperforming assets.96 The raptors were
created because Enron’s executives wanted to do the impossible: report accounting gains while
hiding actual losses.97 Enron’s use of the raptors led to consequences that largely mirror the
logic of justice. Enron’s top executives reaped large salary payouts and bonuses in the shortterm, but in the long term the lives of Enron’s employees were selfishly ruined when the
company collapsed. Enron’s executives did not value the well-being of their employees, and
Enron’s CEO even commented that business was not going well unless he was having fun.98
In the end, the selfish, bottom-line orientated policies of Enron led to dire legal
consequences as well. At the time it was filed, Enron’s proceeding was the largest Federal
bankruptcy matter in the history of the United States.99 Numerous legal proceedings followed,
and everyone ranging from top company executives to Enron’s accounting firm, Arthur
Anderson had charges filed against them, and was found guilty of destroying evidence that
furthered Enron’s fraudulent scheme.100 After charges were filed against Clifford Baxter, the
former CEO of Enron North America, he committed suicide.101 The wall-street based
investment firms that did business with Enron were also found guilty of fraud. J.P. Morgan
Chase, Citigroup, and Merrill Lynch were ordered to pay a combined settlement in excess of
94
MCLEAN & ELKIND, supra note 90 at 320-322.
Id. at 305.
96
Id. at 305. (A hedge is a way to guard against investment losses. Enron would purchases a contract from a raptor
that legally bound the raptor to purchase an asset from Enron at a specified price. If the value of the asset fell, the
raptor would report the accounting loss. If the value of the asset rose, Enron would report the accounting gain).
97
Id. at 305-306.
98
Id. at 339.
99
Id. at 405.
100
Id. at 406.
101
Id. at 408.
95
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280-million dollars to Enron shareholders as compensation for their losses.102 Jeffrey Skilling, a
former CEO of Enron is currently in prison due to his activities in the Enron fraud. Kenneth
Lay, another former CEO of Enron would also currently be in prison, but he died of a heart
attack after he was found guilty on all counts of fraud due to his involvement in the Enron
scheme.103
In retrospect one must ask – was it all worth it? Were the corporate perks and reporting
of artificially-inflated share prices and profits worth all the negative consequences? If the
executives of Enron had utilized the ethic of care, these results could have been avoided. If the
Enron executives valued their business in the form of interpersonal relationships as a means to
generate legitimate wealth for investors (as well as themselves), they would not have been driven
to falsify their financial statements. The corporate executives of Enron could have still earned
vast amounts of wealth. Enron employees would still have jobs today and would not have lost
millions of dollars in retirement accounts. Enron could still be a profitable company today, and
the unfortunate legal consequences could have been avoided as well.
B.) Adidas: Focus Solely on the Bottom Line Has Yielded to Political Criticism
While there have not been any lawsuits filed as of the writing of this paper, the athletic
company Adidas has drawn harsh political criticism from a New York senator after announcing
their decision to move the production of jerseys for the National Basketball Association (NBA)
from New York to Thailand.104 After producing NBA jerseys for forty years, the plant in New
York faces closure as Adidas plans to consolidate their supply chain and move production closer
to the source of their materials.
102
MCLEAN & ELKIND, supra note 90 at 409-410.
Id. at 417-422.
104
SAM HANANEL, SENATOR URGES ADIDAS TO KEEP NBA UNIFORMS IN USA, Associated Press, Nov. 24, 2009,
http://www.charter.net/news/read.php?id=16042219&ps=1017&srce=news_class&action=4&lang=en&_LT=UNLC
_NKNWU00L4_UNEWS (Last visited 11/25/2009).
103
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This decision by Adidas to off-shore an entire factory would be applauded by Thomas
Friedman as an opportunity to take advantage of his conceptualized ‘flat’ globalized world, while
David Glass would probably prefer to keep making the NBA jerseys in the United States. Who
really benefits from Adidas’ decision to off-shore an entire factory from New York to Taiwan?
In making their decision to off-shore an entire factory from the United States to Taiwan in order
to take advantage of drastically cheaper labor, Adidas is focusing solely on bottom-line profits in
a manner similar to Wal-Mart. If the factory in New York closes, it will cost roughly onehundred Americans their jobs. However, one needs to realize that the effects of Adidas’ action
to close the New York factory do not stop with the loss of 100 jobs. Each of the 100
unemployed workers also has a family that will incur shortfalls in income. As the income of
each of the 100 families decreases, the amount they each spend on goods and services will also
decrease. This decrease in spending will lead to a decrease in revenue for local businesses,
which might then start examining how to save costs in their production because their revenue
figures are falling short. One must realize that the loss of a job effects more than just the
individual worker; it has a ripple-effect that spreads throughout the entire economy.
While the jobs of American workers are lost, a replacement factory will be opened in
Taiwan that will exploit the cheap labor available due to the lower wage standards for the
workers of Taiwan compared to American workers. At what point is a certain level of profit for
Adidas enough? In the future, will the globalized economy lead to the outsourcing and offshoring of virtually all blue-collar jobs in an effort to save every last penny in production costs?
Part VIII: Conclusion
“Sometimes a Rainbow is better than a pot o’ gold.”105
Globalization has opened the door to business practices that were once impossible. As
105
POISON, CRY TOUGH (Enigma/Capitol Records, 1986).
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the world continues to globalize, businesses and formerly segregated economies are becoming
more intertwined than ever before. In today’s globalized economy, companies need to look more
towards the ethic of care instead of the logic of justice when devising their company motto and
business practices. With more business transactions crossing over both national and
geographical boundaries, strong interpersonal relationships have become even more important.
Certain companies have taken the strictly bottom-line approach. While these companies may
encounter a short-term benefit, the detriment in the long-run to the entire world is enhanced by
the ‘shrinking’ effect of globalization.
While first described as a feminine personality characteristic, the ethic of care has been
successfully used as a profitable business strategy based on interpersonal relationships by both
female and male chief executive officers. Companies that have utilized the ethic of care have
realized that sometimes more is less, and that other times less is more. Focusing only on bottomline profits may save costs in the short term, but could have hazardous effects for the company in
the long run in the forms of disgruntled employees, future lawsuits, and political backlash.
Providing adequate compensation and fringe benefits may not fully minimize a company’s costs,
but they could provide long-term benefits in the forms of satisfied employees, increased
productivity, and pleased customers. By looking to take care of their workers instead of always
taking from them, companies will avoid the unwanted consequences of both legal disputes and
political outcries. Corporate greed may have been a successful business motto in the past, but in
a globalized economy a company is better off when they utilize a method of leadership described
in Gilligan’s ethic of care. After all, an investment in the quality of workers could be a rainbow
leading to the ultimate pot of gold: a financially successful company built on the trusting
relationships of its workers.
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