Introduction
Multi-national companies operate in different countries around the world. Several factors have informed their decision to operate in different localities and especially moving into the less developed countries. Their movement into and operation in those countries has raised several ethical issues related to their impact on environment, culture issues, labour relations, and quality production.
The management of such companies are experiencing difficult situations due to increased ethical awareness in the less developed countries. This paper seeks to look at ethical issues that face multi-national companies in less developed countries.
Corporate Ethics
Ethics refers to tenets that assist rational beings to choose between what is right or wrong and as such, an ethical behaviour gets universal acceptance in a particular community (Yuksel & Guven, 2001). Ethics refers to “the set of standards used to judge the rightness or wrongness of a person’s interaction with others in terms of truth and justice” (Yuksel & Guven, 2001).
This definition implies a code that people consult to judge the actions of a person in a given society. Further, corporate ethics, inferring from individual ethics, refers to regulations that regulates business operations and the behaviour of employees as well as the corporation (Yuksel & Guven, 2001).
Corporate ethics and ethics in general concern moral issues of both an individual employee and of the corporation at large. When businesses operate within given laws and regulations, they are termed ethical. Over and above, ethics extends to the expectation of the community.
The community expects the corporation to be ethical and in addition, be able to assist them in ways outside the corporation’s core business of the company. This is where ethics goes beyond normal operations to taking care of the surrounding community in a concept known as corporate social responsibility (Yuksel & Guven, 2001).
The development of multi-national corporations has necessitated the development of global ethics, which have become a way of enhancing a corporation’s competitive advantage (Yuksel & Guven, 2001). (Sengenberger & Wilkinson, 1995).
As such, ethics becomes an added capability that compliments the strategic, technological, financial and organizational capabilities of an organization . However, global ethics is a product of negotiations between different stakeholders in a particular business environment and as such, it is neither absolute nor relative but consensus based ethics .
This does not mean that broad tenets do not exist where global ethics is concerned. Generally, “respect for human dignity, respect for basic rights and good citizenship” inform global ethics .
Globalisation
Globalisation is multifaceted concept that not only encompasses liberalisation of business practices but also includes the transfer of labour, capital, technology and capital (Mirwoba, 2009). Globalisation exhibits in the inventions related to communication (Mirwoba, 2009).
The internet is a clear example of the high levels that globalisation has climbed and made it easier to communicate from and to any part of the world (Mirwoba, 2009). Globalisation has resulted in the integration of the global economy and with it, the emergence of related ethical issues (Mirwoba, 2009).
Ethical Issues
The culture of any community includes ethics. Culture is a people’s way of living or better still, “the collective programming of the mind that distinguishes the members of one group or category of people from another” . In this regard, therefore, “ethics is subject to cultural values and norms (Yuksel & Guven, 2001).
Every multi-national company that wishes to thrive in the less developed countries must understand the culture of the society they operate in and avoid practices that go against the accepted practices of that community
Inherent illegal but almost accepted practices exist in a society. For instance, bribery is culture in most of African countries while in the US, and UK, bribery is pure corruption, which can lead to termination of business (Enderle, 2001). Less developed countries have sunk into corruption, which manifests through bribery, and appears as part of normal business procedure (Enderle, 2001).
Multi-national corporations must deal with this issue decisively as it can break their business. To avoid such a practice, it is advisable that multi-national companies pay their staff well. As such, employees will not tolerate any compromise but will instead stick to business ethics (Enderle, 2001).
As such, multi-nationals must reject negative cultural practices like corruption in whatever form and embrace positive cultural practices.
Labour is another critical ethical issues that multi-national corporations must deal with and affirm this by applying global labour principles which to some extent are human rights on their own (Yuksel & Guven, 2001). Child labour is a very critical ethical issue and as such, corporations that engage in such practice are bound to lose their standing. It is against the rights of children (Yuksel & Guven, 2001).
Poor working conditions are a common practice by multi-national corporations in the less developed countries. The Export Processing Zones in Kenya are a clear example where workers get inhuman treatment.
The workers must meet production quotas everyday while the pay is so poor that it is only for sustenance and must therefore (IRIN, 2013) work for long hours. The employers fail to grant maternity leave and sick offs and this goes against the rights of employees (IRIN, 2013).
However, where child labour is concerned, the corporation can apply the principle of lesser evil if and only if, sending such children away is worse than engaging them.
This must involve dialogue with all stakeholders so that family welfare does not go down the drain in cases where such children have taken up guardian roles in the absence of their parents. In other words, applying absolute labour standards could be more detrimental to a particular society
Environmental degradation has arisen as another ethical issue. Corporations need to embrace practices that conserve the environment at all times; they should have sustainable business practices regarding the environment (Freeman, York, & Stewart, 2008).
Such practices as releasing effluence to rivers or use of hydrocarbons are not ethical if possible, stopped. Meeting the legal requirements on environmental conservation is not enough; the corporation should be on the forefront in the efforts to minimize global warming at all times (Yuksel & Guven, 2001).
Some corporations engage in the local politics raising some ethical considerations. This happens by ways of influencing policymaking and legislature in general through bribery of lawmakers in the less developed countries especially when a particular bill is not in their favour (Freeman, York, & Stewart, 2008).
For instance, tobacco companies may influence bills that seek to regularize smoking and imposition of strict rules on the corporations.
Others may seek to oppose regulations concerning environmental degradation especially if their activities contribute to pollution of the environment through emissions or disposal of waste to local rivers (Enderle, 2001).
It is unethical to influence such laws or oppose them when their aim is to conserve the global climate. Corporations would rather support such legislations that aim at promoting sustainable development (Freeman, York, & Stewart, 2008).
Conclusion
Globalisation is an ever-growing and irreversible phenomenon. The less developed countries are part of the global economy and host numerous multi-national corporations. They benefit due to transfer of capital, technology and communication.
However, there is an inherent risk of questionable ethical practices courtesy of the multi-national corporations. It is prudent that such corporations operate ethically with or without established regulations in the less developed countries. This will lead to increased competitive advantage for such corporations and good reputation to boot.
Having ethical codes in place is just a step towards being ethical. The management and the staff must have the capability, morale and corporate backing in order to execute the established code of ethics. It is wise to handle all issues in an ethical manner. Such issues include transfer, promotions, employment of new staff, the environment and labour issues.
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. Where necessary, the corporations can dialogue with the relevant stakeholder to bend absolute regulations like those pertaining to child labour. The lesser evil carries the day.
Globalisation should remain beneficial to the corporations and the less developed countries as it is in the developed countries. Mutual benefits must accrue to all stakeholders at all times.
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