Introduction
Scientific inventions and innovations have resulted in better transport and communication systems; the improved systems have resulted to social, economic, and political ideologies integration. The integrations have seen the development of multinationals. When operation across the board, decisions made by the multinationals should be acceptable and ethical in the eyes of the host country and the international community; they should work towards maintaining international values and virtues.
Despite the recognized needs that multinationals should maintain international values and ethical behavior, what is ethical vary among different communities and countries, the challenge comes when a managers of multinationals come from a different social background thus having an ethical algorithm that is accepted in how country and host country becomes a challenge.
This paper compares three articles that address the issue of ethical behavior of multinationals; when comparing the materials, the paper will elaborate on the ideas that are commensurate and any differences in views. In the discussion part, the paper will give the writer’s contribution to the matter.
Literature review
According to Thomas Donaldson in the article “Rights in the Global Market”, 1990 businesses operate in environments where they benefit from communities around and far away from the point of business of the company; the success of a business is dependent on how well it is performing in its operating environment.
The article suggest that when operating in a different country, there are laws, legislation, and business expectations that the host country expect to be done, for example in the United States, child labor is highly protected and this is supported by international labor laws, the age limit for the country ranges from 16 years.
In other countries, emphasis on child labor may not be as much and their focus is in other areas like dumping. In the article the writer is of the opinion that when operating in international market, the company should invest in knowing the legal, social, and economic frameworks that operate in the country (Donaldson, 1990).
In the article “Decision Making Reconciling International Values”, Thomas Donaldson echoes the word in the article “Rights in the Global Market”, but from a different angle; in this article the writer looks at an international environment where issues and matters are controlled by international norms and values addressed by international conventions, protocols, and agreements.
The focus on the article is that multinationals when making decisions have to consider their operating environment and create a situation of mutual benefit among them economy of operation and the multinational.
The article advocate for observation of business values, and corporate citizenship; corporate citizenship is concerned with truth, Consultants fairness and justice and accounting ethics pertains to the code that guides the professional conduct of aspects such as the expectations of society and customers, social responsibility, consumer autonomy and corporate behavior in the home country as well as abroad (Donaldson, 1985).
According to Nien-he-Hsieh first and second half articles called “Does Business Have A Responsibility To Promote Just Institutions” , the writer is of the opinion that multinationals gets their profits from businesses secured from the external environments; it is thus ethical to give back to the society; giving back creates a close relationship between customers and business. On pages 259-262, the writer acknowledges that in every institution, there is a certain system of operation which is controlled by institutions.
From the onset, a family is seen as the smallest institution in an economy and other institutions comes from the small unit other institutions operating in the economy emerge. With the understanding of the institutions, multinationals should be able to make decisions that rhythm with the expectations of different institutions. They should look into legal, political and social aspects that prevail in the economy.
In pages 265-267, the writer suggest that to facilitate the growth of good relations, multinationals should embrace corporate citizenship actions like social corporate responsibilities: social corporate responsibilities are policies enacted by an organization for the benefit of the society; thought they are strategic marketing tools, the main concern of managers when undertaking the exercise is to benefit and improve the welfare of the communities; in this context, community members include business customers among other societal members (Nien-hê, 2009).
Similarities of the writer’s observations
Although the writers have taken different approaches in discussing the topic, they seem to have a number of similarities; both the writers acknowledge that different countries have their way of living, thus there is need for multinationals not to challenge the system but to work to be in harmony with the system.
Secondly, both the writers feel that there is need for multinationals to observe professionalism and good motive; when they venture in a country, they should not get to the market with the intention of ruining the economy or self benefit; they need to understand there should be mutual benefit of the parties involved.
Globalization has brought issues of political and social dimensions in decision-making; when managers are making decisions, they have been forced to consider the effects that the decision will have on the social, political and environmental dimensions of the global population.
For example, when selling in international market, managers should have culture intelligence tools and use it when making decisions. When the world has joined efforts, then there are changes in the business world. The business environment created by globalization call for managers to have a wide knowledge of current business trends; they should consider things from a global perspective when making business decisions.
Both writers accept that cultural influences and way of life have an effect on multinational decision making; what is ethical is defined by the culture that exists in a certain area. If somebody or a company is doing something, then the entire population needs to be comfortable with the actions/decisions and the outcomes of the decisions made.
No part of the larger population that should be injured at the expense of another; the notion follows the norm theory perspective. This theory places some relevance to the culture that a certain society holds; the business should be in line with the culture of the society. This will determine the success of the business. The set of beliefs and the way people do things is of importance to the entire performance of the business.
If the society believes that doing something is right, then a wise investor is the one who does things in line with this belief. He should at all times ensure that the business is in line with the culture. Other than culture, religion is another aspect that an ethically conducted business should consider; at-least an investor should be aware of the level of influence that he is going to get from the business environs.
If religion influences the action of a society, the best way to conduct business is in line with the culture and religion. For example if an investor wants to set up a pork butchery and goes ahead to start one in a Muslim society, the business is more likely to fail. This is because the norm of the religion, which happens to go in line with their culture, does not consider the business as ethical. What is ethical is sometimes defined by the people themselves.
Differences of the writer’s observations
As much as the writers are discussing and supporting the same ideology, there are some perceived differences in their approach. Thomas Donaldson seems to be more concerned on how managers (expatriates) should understand the environment they are operating on to facilitate making effective decisions.
On the other hand, Nien-he-Hsieh seems to respect the institutions made by a community and tends to advocate that despite using expatriates, there is need to have locals as part of the management as they are more likely to offer sound advice to facilitate better decision making.
Nien-he-Hsieh observes that people have built their institutions for a long period thus an outsider can get it wrong when making decisions aimed at going well with the institutions framework. However, Thomas Donaldson calls for prior knowledge and doing things in line with international standards of acceptable behavior.
Recommendations and writers contributions
The pace of globalization and the benefits it has brought in the international community supports that it will continue to prevail; international trade as a pillar of globalization need to be managed effectively for economic social, and political well being of nations. With multinationals operating in different countries, there is need for developing international ethical standards and codes to be applicable to all companies in the world.
With advances in information communication technology, it will be easy to internationalize and communicate these standards and codes. There is a precedent to go by, The International Accounting Standards Board, has been able to develop international financial preparation and reporting standards that are being used all over the world today in preparing financial statements by companies worldwide.
They were previously not applicable in American companies, but since the recent corporate sea is, the Securities and Exchange Commission (SEC) is requiring that they be made applicable to American companies too. With globalization, information can be shared and dispersed easily among nations. Innovators get a platform for borrowing ideas to assist them in their inventions. This can be from previous records where they are able to analysis them and extra the useful ones.
Multinationals are frameworks through which resources utilization and globalization trade on; they have opened countries to trade together. Multinationals should understand that globalization has enabled people to know their rights; people are aware of the quality that they should be getting for a certain product. The rights of human beings have been protected by globalization and thus businesses are compelled to act ethically in this effect.
There are some set rules that are followed by trading countries; this is rules that protect and set the way of doing business. There are some set rules that affect the way a certain business was conducted and thus unethical issues that had been practiced by some companies come out. An example of this is the way products are marketed, the way products are advertised and issues about pollution. It is after globalization was taken into place that a meeting was conducted Copenhagen to discus about atmospheric pollution.
Many companies have been polluting the environment but the case came out clear after the meeting although it was not come out with successful solutions. Equity distribution; with globalization every country was able to understand how it resources were to be distributed. This was not the case initially and thus with the globalization it came clear of the oppression of that colonists have had on the less developed.
Other than looking things from an international angle, management of multinationals have some part to play when making decisions as well as maintaining international values, they should understand the environment they are orating on and make decisions that rhythm with the demands of the particular environment. They are the drivers of the multinationals thus they have the role of bridging the gap to attain corporate citizenship (Nien-hê, 2009).
Conclusion
Thomas Donaldson and Nien-he-Hsieh in their articles of multinationals decision making are of the opinion that multinational leaders should make decisions that reinforce values, norms, and ethics. The writers acknowledge that different societies have different values and norms, thus they advice leaders to be aware of the values and forge their decisions to fit the values and norms. However, the leaders should ensure that they don’t confront international human rights and fundamental freedoms.
References
Donaldson, T. (1985). Multinational Decision-Making: Reconciling International values. Journal of Business Ethics, 4 (4):357 – 366.
Donaldson, T. (1991). Rights in the global market. New York: Oxford University press.
Nien-hê, H. (2009). Does Global Business Have a Responsibility to Promote Just Institutions?, Business Ethics Quarterly, 19(2): 251-273.