Journal of Business Ethics

, Volume 106, Issue 3, pp 267–282 | Cite as

Foreign Investment and Ethics: How to Contribute to Social Responsibility by Doing Business in Less-Developed Countries

  • Roland Bardy
  • Stephen Drew
  • Tumenta F. Kennedy


Do foreign direct investment (FDI) and international business ventures promote positive social and economic development in emerging nations? This question will always prove contentious. First, the impacts differ according to context. Second, the social consequences and spillover effects of knowledge diffusion and technology-sharing may be limited and hard to measure. Third, contributions to enhancing social responsibility and improving living standards in host countries are delayed in effect, causally complex, and also hard to measure. Outcomes often critically depend on collaboration of governments, international institutions, the business world, and non-governmental organizations (NGOs). Research in this area is challenging and requires interdisciplinary collaboration between economists, financial experts, sociologists, ethicists, and other specialists. This paper explores: (1) the evidence to support the proposition that FDI and international business improve social conditions in less-developed countries, and: (2) how these improvements are linked to strategies of corporate social responsibility (CSR) and ethical business practice. The paper draws insights from development, FDI, poverty alleviation, and bottom-of-the-pyramid (BOP) literature. Applications are demonstrated using examples from poverty-stricken areas of Sub-Saharan Africa. The paper attempts not only to argue theoretically but also to provide practical evidence. The approach is simultaneously descriptive, analytical, and prescriptive in order to address a wide audience. It also highlights issues and trends for further academic research and presents the viewpoint that some limitations lie in the nature of ethics frameworks widely referenced in business and that these often fail to consider the compatibility of ethical constructs with relevant incentives. In this vein, we explore the application of Homann’s framework for advantage and incentive-based ethics.


Foreign direct investment Corporate responsibility Transition economies Bottom of the pyramid Lecturing business ethics Sub-Saharan Africa 


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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  • Roland Bardy
    • 1
    • 2
  • Stephen Drew
    • 3
  • Tumenta F. Kennedy
    • 4
    • 5
  1. 1.BardyConsultMannheimGermany
  2. 2.Florida Gulf Coast UniversityFort MyersUSA
  3. 3.Center for Leadership and Innovation, Lutgert College of BusinessFlorida Gulf Coast UniversityFort MyersUSA
  4. 4.Wittenberg Center for Global EthicsWittenbergGermany
  5. 5.African Business Information BankBerlinGermany

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