Ethics is said to be “that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions”. Wal-Marts vice president for communications responded that company auditors had, determined that the methodology used was flawed, and the company “did not respond to it in any way internally.”. They have noticed that by selling trash that has been recycled, millions could be saved, costs wise like transportation costs etc (www.usatoday.com) Wal-Mart is said to be fully promoting the group of companies that want to trade carbon dioxide credits. Wal-Mart has created fourteen maintainable value networks made up of suppliers’ employees and environmentalists. Culture, according to Hofstede is a combination of mental programming that differentiates various groups from others that is seen in the beliefs and values of a society (Hofstede, 1980). It is said to be a system that rules and governs the body, a science with rules governing it’s principles whether good or bad, rules in practice of human actions. There is always the question of what the ultimate structure of an organisation would be, this is vital as it would help aid the smooth running in the production of goods and services. Information personal to customers should be kept sacred and not be used for personal gain. The difficulty with any code of ethics, whether organizational or international, is enforcement. There should be a vast opening for fair employee opportunities in training and promotion, timely payment of salaries and a decent working environment. Situation allows MNCs to control and influence local governments. According to PBS, “Wal-Mart employs more people than any other company in the United States outside of the Federal government, yet the majority of its employees with children live below the poverty line.”(www.pbs.org), They have also added that the company claims to sell goods manufactured in the U.S only but their products are goods and serviced produced abroad or in overseas and at debated workshops. George Ritzer Host country may get heavily depend on MNCs for its economic growth. “Members can save as much as 50% on services not normally covered by medical insurance.” (www.ufcw324.org). MNC wields in a given locale. There is always a tendency for ethical issues to arise in a global market and multinational organisations are no exceptions. Vines and Napier (1992) define culture as “. As this help the safeguard of money movements and interests accrued over time are expected on time. Clipping is a handy way to collect important slides you want to go back to later. It cannot be expected that all multinational corporations would have the same standard of behavior for each of the issues nor that a single MNC would have the same standard of behaviour in different locales. ethics in organizations, and conceptual aspects addressed by some field specialists, at the end of the paper we presented a study conducted to identify specific issues of ethics in multinational organizations. This would reduce the allegations laid against the company as a whole. Global corporations must recognize the need for a uniform code of business ethics for protecting their citizens, their national interests, and the global environment. Not neglecting trade organisations such as United Nations as well as international agreement between companies. . Ethical Dilemmas for Multinational Enterprise: A Philosophical Overview Part One: Review Question #1 Multinational Corporations have always been and are currently now under harsh criticism. Apart from protecting the image of the company, it is a multinational organisation and so should live up to standard and expectation. There was a complaint filed from United Food and Commercial Workers Union filed a complaint with the National Labour Relations Board against Wal-Mart. They are mainly condemned for exploiting resources and workers of third world countries, taking jobs away from the US industry, and destroying local cultures. This is especially the case (as the previous link argues) when it is multinational companies going into poorer countries to do business. Downloadable! Ethical Issues in MNCs. Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. Reference this. ETHICAL ISSUES IN MULTINATIONAL CORPORATIONS Introduction A multinational is defined as an enterprise operating in several countries but managed from its home country. Raiborn and Payne developed a model code of ethics that, at the time, was not specifically envisioned as being applicable for nondomestic as well as domestic operations. PBS states that the open door policy operated by the Wal-Mart management does little or nothing to help employees in a difficult situation. Wal-Mart has accused a different body for this alleged allegation as it maintains the contractors who were given the job to hire employees on behalf of the company did not do their home work properly before employing. Differences would probably be most pronounced between operations in developed and developing countries as well as being dependent on the degree of power the. The massive differences in culture generate a lot of managerial issues and ethical problems, are no exceptions. Some people think itâ s better to be unethical Other people donâ t know how to make sense of their ethical choices. Cite this chapter as: Dhanarajan S. (2002) Multinational Companies and Ethical Issues. Discuss the ethical issues associated with multinational corporations. Multinational companies are sometimes faced with issues that tend to present challenge to them between balancing their interest in profit-making and expectations and interests … What are the objections to bringing ethics into business? Wal-Mart, a gigantic company retain a lot of customers, both home and away are widely known for their enormous variety of goods and services at low prices. Grosse and Kojawa (1992) define culture as the result or outcome in a given situation accepted by people in terms of observing and the responses accordingly. MNCs should value consumer laws of protection and preserve the safety and health of consumers through accurate advertising and appropriate labelling. Every company has got problems and the companies that thrive are usually organisations that detect ethical problems early enough and create a solution for them. Source of cheap, unskilled, and not-demanding labor. “The complaint, filed with the National Labour Relations Board, alleges that Wal-Mart violated federal labour law by “bribing” employees to report on co-workers who favoured a union.” (www.washingtonpost.com). Wal-Mart is an organisation that should take sole responsibility of their ethical status. Such issues include transfer, promotions, employment of new staff, the environment and labour issues. The size of a multinational organisation and power could play a huge impact on the policy issues in a nation, such issues would be felt more by relationships with developing nations as supposed to developed nations. Getz (1990) came up with a list of Multinational organisations, how they were interrelated and their rights as well as their duties. If the country is a developing country, it could be helpful if some research is carried out by the host country and it would save a lot of costs as well if local personnel are and local resources to every reasonable extent. Multinational managers need to be sensitive to these varying differences and able to choose an ethical action accordingly. Many may suggest that pay and work conditions need to be similar across nations, but no one actually cares about the quantum of this divergence. Wal-Mart therefore, has been accused of gross negligence on behalf of the country in whole and these various policy misconducts have affected Wal-Mart as a company and a lot of work has to be done to improve the company’s integrity in other to stop bad press. Organisations that have made a cautious effort to be truly ethical must evaluate and measure the rules and regulations governing the countries in which businesses are carried out. We're here to answer any questions you have about our services. Do you have a 2:1 degree or higher? If you continue browsing the site, you agree to the use of cookies on this website. SO “in February 2004, a federal judge ruled that Wal-Mart should pay workers for overtime hours” (Hoover’s Handbook) the case was pending for a while but then Wal-Mart then maintained their policy was against such work, hence, managers who were involved in such atrocity were punished by getting fired. There has been an example of women who has been deprived of promotion and training opportunities that have been put forward to men. (www.usatoday.com), In January 2004, The New York Times reported on an internal Wal-Mart audit conducted in July 2000, which examined one week’s time-clock records for roughly, 25,000 employees. MNE in India. Which side is more persuasive? multinational companies (MNCs) might be pursuing profit at the expense of vulnerable workforces, the environment and so on. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. In regards to the challenges of multinational organisations, does it matter if employees are motivated to contribute to an organisation in a society? Ethical relativism means that doing business in a country by following strictly to its culture or ethics for example if bribery is a culture or ethics of doing business in a specific host country then in order to survive the multinational companies have to follow the local culture or ethics for example if a company wants to do business in a Muslim entry then the business they do must be hall. The question is how have they figured this? They claim that ethics should be based on character or behaviour. History and Evolution of MNE MNE Structure. It is wise to handle all issues in an ethical manner. In the area of environmental protection, MNCs should collaborate with the host country in producing and increasing national and international environmental security standards, as well as notifying the host of any possible environmental impact of the goods manufactured, services executed, and/or processes made use of. Special Ethical Issues Facing Multinational Corporations: Appropriate Responses. A lot of Wal-Mart employees are therefore not able to make ends meet. Free resources to assist you with your university studies! Ability to mislead and confuse a sister firm or company or even the general public. Wal- Mart failed to offer equal employment opportunity to women, even though there are more than seventy percent of women working at Wal-Mart, only a few of these women are mangers, as a result the men are on the frontline within the company. Wal-Mart has been accused of being very selfish as the organisation has claimed that they were worried that they would have more than enough product for customers in the future but it was discovered that it was for their own bias interest as they claimed it was something they did as company’s obligation. This is an unethical practice that Wal-Mart has been accused of getting away with. Corporations must not seek to selfishly influence the policy making process at whatever cost as long as such policies are aimed at the good of all people and the environment in general. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. In addition, Wal-Mart likes to portray itself as a seller of U.S. manufactured goods but in reality the company has products on its shelves made in foreign countries and at questionable workshops. Now customize the name of a clipboard to store your clips. According to the Times, the audit, “pointed to extensive violations, of child-labor laws and state regulations requiring time for breaks and meals,” including 1,371 instances of minors working too late, during school hours, or for too. With regard to technology. There should be more job opportunities for women to grow and climb up the ladder as there are in many other organisations. The paper "Legal and Ethical Issues Affecting Multinational Corporations in East Asia" states that emergence of East Asia as a centre for international trade establishes the region as a centre of interest for multinational corporations and the organizations’ need to understand trends. the money offs are usually not enough. Also the company need to manage its employees in a rather decent way in other to avoid law suits from them as well. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Multinational Corporations (MNCs), have raised questions about the role of business in global governance. No business is protected or has a barrier to problems, the earlier these problems are detected, the better for the organisation. Ethical Issues Associated With Multinational Corporations and other kinds of academic papers in our essays database at Many Essays. Justice reflects impartiality, sound reason, correctness, conscientiousness, and good faith. It would then be up to each MNC’s management team to seek to move closer to the upper end of the ethical continuum. The unprecedented globalisation that has taken place over the past century has spurred a massive increase in FDI via They are trying seriously to prove that they are a green organisation as when strawberries are purchased from Wal-Mart, they are despatched in plastic packages. Ethical Issues Associated with Multinational Corporations Navigating the boundaries between right and wrong can prove tricky for companies that operate in several nations and across cultures. Wal-Mart disallows employees from discussing with union representatives. This poses significant ethical dilemmas over MNCs. Using Kohls and Buller’s continuum concept, the four specified and named levels of behavior are merely points of a continuous whole as shown in Figure 1. 17th Sep 2020 The “perfect” code, to be applicable to any business and in any country or culture, should consider ethical, cultural, and managerial issues. The theoretical standard of behavior reflects the highest potential for good, reflecting the spirit of morality. So, men are holding more management positions than women. Lot of organizations implement the code of ethics in their company polices, which they implement during induction and regular training. Registered Data Controller No: Z1821391. It is corrupt for Wal-Mart to ban employees to talk to union representatives given that according to the National Labour Relations Act, employers should not be allowed to put off employees from creating a union for it is their right and should be enforced if need be. According to Hill (2014) a multinational corporation (MNC) can be defined as a firm that engages in foreign direct investment (FDI). The sample consisted of 335 subsidiaries of large multinational companies with more than 50 employees and an annual turnover of more than 30 million CZK (1.2 mil. Acting in accordance with ethical and cultural values is crucial for a multinational company to win clients’ support and business and to achieve a competitive advantage in a particular market. Industries that exhibit a huge pollution should comply with the governments’ rules and regulations regarding water, air and noise pollution. The practical standard represents an extreme diligence toward moral behavior. Advantage and Disadvantage of MNE Criticism of MNE. As an organisation, Wal-Mart needs to avoid certain unlawful situations such as making employees free to talk to union representatives. Encouraging ethical behaviour in multinational corporations. Disclaimer: This work has been submitted by a university student. Integrity means to be of sound moral principle, to have1732 Dinah Payne et al.the characteristics of honesty, sincerity, and candor. The Ethical Issues Facing Multinational Corporations Corporate managers are typically expected to maximize the returns of the investors while at the same time augmenting a firm’s reputational capital, circumventing agent-principal conflict of interest and abiding by regulatory standards. Laws governing certain businesses within an organisation in an individual country could have its variances and inconsistencies, nevertheless when other counties are internationally concerned, the intensity of inconsistency is even more diverse. Employees rendering over time services to the company have not enjoyed the fruit of their labour as they were not paid for their overtime services rendered. The MNC is not above the regulations, laws and jurisdiction of the host and should use suitable international disagreement resolution mechanisms when necessary. and Values IAp a military ethical climate and discuss strategies to mniplfment the elements. There is always a tendency for ethical issues to arise in a global market and multinational organisations are no exceptions. Wal-Mart’s unethical business practices have caused them a huge damage and have hindered the reputation of the organisation. Trust could be embraced when these values are maintained. Given these fundamental standards, a code of ethics should address the following five major issues, consolidated from the various international codes previously discussed organizational relations (including competition, strategic alliances, and local sourcing), economic relations (including financing, taxation, transfer prices, local reinvestment, equity participation, and fiscal policies), employee relations (including compensation, safety, human rights, non-discrimination, collective bargaining, whistleblowing, training, and sexual harassment), customer relations (including pricing, quality, and advertising), industrial relations (including technology transfer, research and development, infrastructure development, an organizational stability/longevity), and political relations (including legal compliance, bribery and other corrupt activities, subsidies, tax incentives, environmental protection, and political involvement). Ethical Problems in MNC by Khurram Zafar Ethical Issues in MNCs Multinational organisations have the ability to move about a massive amount of resources globally. All work is written to order. Business ethics is the study and evaluation of decision-making by … There are procedural and substantive aspects of building such a code. The open door policy actually helps employees experiencing problems within the organisation to go beyond management. It is believed to be largest company in the United States of America. Multinational corporations (MNCs) have provoked considerable debate about the issues of "efficiency" and "social justice." As part of our 25th Birthday celebrations Ethical Consumer asked its readers to vote for who they thought was the least ethical company over the last 25 years.. Nestlé 'won' with 15% of the vote, finishing just above Monsanto (14%) and the UK's number one tax avoider Amazon (12%). (dictionary.com). The requirements in these areas consist of (but are not restricted to) providing local, raw materials, equity participation, preferential treatment to local sources. The Multinational organisation that would be discussed in the course of this essay would be Wal-Mart. For Wal-Mart to survive, they would have to prove that they care about their employees by treating every employee ethically right, this would help control and probably stop the criticism and encourage even more customers globally. These standards reflect Donaldson’s languages of avoidance of human harm, rights/duties, and the social contract in that the standards encompass not only minimal responsibilities owed by MNCs and compliance to legal constraints, but also mutual agreement between the MNC and societal concerns. They have created a policy that states that the less packaged as these could be recycled and also could save more. Utility indicates the quality of being useful and, philosophically, providing the greatest good for the greatest number (or the least harm for the greatest number) (Raiborn and Payne, 1990). Wal-Mart has recognized that a lot of money could be made by selling goods that are friendly environmentally. Getz suggests that control of the host is the basic right that must be recognized and respected by the MNC. Actually, “Wal-Mart recently introduced workplace diversity initiatives, intended to prevent further gender bias.”( usgovinfo.about.com). Is the prisoner's dilemma relevant to business ethics… Multinational Enterprises 1. However, by acknowledging that the lowest end of the continuum is adherence to the letter of the law, MNCs would agree to accept a defined minimal ethical stance. The conditions in a host country may be much inferior to those in a multinational’s home nation. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. The United States has made it unlawful to bribe high level foreign officials to acquire or retain businesses in overseas. (www.brainyquote.com) Authors from different parts of the world have also defined ethics in a lot of different ways. Ethics deal with “what that ought to be”. Businesses should practice building an honest reputation to endeavourer that there is the constant smooth running in an organization. On the contrary, the positive ethical practices of an organisation are highly important (Etzioni, 1988 Kotter and Heskett, 1992) this would normally boost the image of such an organisation as they tend to have an edge over others in a very competitive market. It is Wal-Mart’s moral responsibility to provide employee’s with health care that they could afford so that they do not wait for the state to rectify their problems for them. Falsifying documents to indicate or prove increased profit. The main argument of the survey is the fact that in the scientific approaches How should they, and society, respond to these issues? Finally, the relationship between MNCs and people rotates around consumer guidance, human rights issues and employment practices. Resistance to investigation as well as lack of transparency. Getz (1990) classified Multinational organisations into three categories: Multinationals must think about its responsibilities in relation to a number of other things such as political engagements, regulations and laws, developmental and economic policies. Globalization, Multinational Corporations, and Corruption. these charges were denied by Wal-Mart denied. *You can also browse our support articles here >. There has been a serious allegation of Wal-Mart discriminating against women within its organisation. A company operating in the international business arena is subject to a multiplicity of ethics codes. MNC should also endorse a non-discriminatory employment policy, provide sufficient training for local employees, value workers’ rights to organize for collective bargaining, discuss with with workers’ representatives on labour matters, and have an objective of stable employment. Euro). . Moving things from one location to the other would be the least of its problems. Emotionally manipulating and exploiting vulnerable people. Ethical Values and Business Ethics in Multinational Companies in India in Context of Globalization: An Empirical Study Hardeep Singh1+ and Bikram Pal Singh 2 1 Ferozepur College of Engineering and Technology (FCET), Ferozepur (Punjab) INDIA 2 Global Institutes, Amritsar (Punjab) INDIA Abstract. Government Rules and regulations in regards to duties, taxes restrictive and monopolistic trade practices and unlawful activities like bribing and corruption should be adhered to. It should be: clear and understandable to the average person; comprehensive in indicating the extent of its provisions; and enforceable by specifying the ramifications of improper actions (Raiborn and Payne, 1990). Business organisations management and operations in a difficult situation of their ethical choices challenges. Our support articles here > several countries but managed from its home country situations as. That ethics should be more job opportunities for women to grow and climb up the as. Were 60,767 missed breaks and 15,705 lost meal times endeavourer that there is the duty of the multinational organisation would. Made it unlawful to bribe high level foreign officials to acquire or retain businesses in overseas fourteen maintainable value made... 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Bid to keep operating costs down, employees’ wages can only be so much are,.