Ethical Issues Associated With Multinational Corporations and other kinds of academic papers in our essays database at Many Essays. While the breadth or depth of these values could differ from society to society, the core values themselves are still present. Do you have a 2:1 degree or higher? Wal-Mart needed to scrutinize their pay practices and double checking to see that every employee is paid for every single minute worked for. Using Kohls and Bullerâs continuum concept, the four specified and named levels of behavior are merely points of a continuous whole as shown in Figure 1. . To encourage adherence to ethics codes, MNCs first must institutionalize adherence into the employee performance reward system. In a business that competes mainly in global markets, multinational companies (MNCs) operate in different social, cultural and ethical environments. Emotionally manipulating and exploiting vulnerable people. As can be seen through a review of Exhibit I, the values, combined with the standards of behavior, can easily and reasonably be used in the development of international standards of ethics. There should be more job opportunities for women to grow and climb up the ladder as there are in many other organisations. One Looking for a flexible role? The conditions in a host country may be much inferior to those in a multinationalâs home nation. Is it fine for a multinational to fall prey to the same practice w⦠these charges were denied by Wal-Mart denied. These organisations must be aware of and must conform to the host countryâs domestic laws. Getz (1990) came up with a list of Multinational organisations, how they were interrelated and their rights as well as their duties. It is Wal-Martâs moral responsibility to provide employeeâs with health care that they could afford so that they do not wait for the state to rectify their problems for them. 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. Ethical Problems in MNC by Khurram Zafar Ethical Issues in MNCs , âWal-Martâs ultimate defence is that it offers lower prices and somehow that justifies all sins.â (www.usatoday.com) .Wal-Mart also has got an expensive health insurance care and again Wal-Mart employees cannot manage to pay for its health insurance. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. No plagiarism, guaranteed! Registered Data Controller No: Z1821391. Wal-Mart reacted to this situation by offering discounts on health care coverage. The theoretical standard of behavior reflects the highest potential for good, reflecting the spirit of morality. Corporate codes of ethics can have reverse effects and mask anomalies or social evils in operations outsourced to low-wage countries. Global corporations must recognize the need for a uniform code of business ethics for protecting their citizens, their national interests, and the global environment. Trust could be embraced when these values are maintained. As an organisation, Wal-Mart needs to avoid certain unlawful situations such as making employees free to talk to union representatives. It takes a long time for company to build a reputable name, so care should be taken to abide by cooperate social responsibility. There has been an example of women who has been deprived of promotion and training opportunities that have been put forward to men. Discuss the ethical issues associated with multinational corporations. Additionally, codes should be positive in tone. Vines and Napier (1992) define culture as â. 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. Companies may buy products from factories employing children.Eg. multinational companies (MNCs) might be pursuing profit at the expense of vulnerable workforces, the environment and so on. They are mainly condemned for exploiting resources and workers of third world countries, taking jobs away from the US industry, and destroying local cultures. 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. Some people think itâ s better to be unethical Other people donâ t know how to make sense of their ethical choices. Hence it was unethical for Wal-Mart to have bribed employees as this supports fraudulent behaviours. Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. 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. ETHICAL ISSUES IN MULTINATIONAL CORPORATIONS Introduction A multinational is defined as an enterprise operating in several countries but managed from its home country. There is always a tendency for ethical issues to arise in a global market and multinational organisations are no exceptions. 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). According to the Times, the audit, âpointed to extensive violations, of child-labor laws and state regulations requiring time for breaks and meals,â including 1,371 instances of minors working too late, during school hours, or for too. There was a complaint filed from United Food and Commercial Workers Union filed a complaint with the National Labour Relations Board against Wal-Mart. Business ethics is the study and evaluation of decision-making by ⦠Wal-Mart has created fourteen maintainable value networks made up of suppliersâ employees and environmentalists. Multinational organisations have the ability to move about a massive amount of resources globally. If you continue browsing the site, you agree to the use of cookies on this website. Looks like youâve clipped this slide to already. Organization of MNE. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. (dictionary.com). Child and/or Forced Labor "MNCs may directly employ children (legally or illegally) and theyare usually employed in labor-intensive low-skill jobs. Presented By: Saurabh Negi 014-I-150 MULTINATIONAL ENTERPRISE SAURABH NEGI 014-I-150 2. Arise when a manager makes decisions consistent with differing national environments Political systems Legal systems Economic development levels Culture What is ethical and normal in one environment may not be so in another February 20, 2016. Human rights responsibilities require that MNCs not discriminate on the basis of religion, gender or race and that these organisations respect the cultural and social objectives, traditions and values of the countries in which they function (Getz, 1990), The relationship between MNCs and the public has two major categories: technology transfer and environmental protection issues (Getz, 1990). If you need assistance with writing your essay, our professional essay writing service is here to help! These standards are combined with four values (integrity, justice, competence, and utility) that should be considered core, regardless of the society in which the MNC operates. Or is it strictly businesses that would benefit the organisation alone? 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. It is said to be a system that rules and governs the body, a science with rules governing itâs principles whether good or bad, rules in practice of human actions. Cite this chapter as: Dhanarajan S. (2002) Multinational Companies and Ethical Issues. This is an unethical practice that Wal-Mart has been accused of getting away with. 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 companyâs obligation. Labour Union Opposition: Wal-Mart is an organisation without unions. Ethics is one of those terms when mentions, a lot of things come to mind so as a result, Ethics could be define in various ways. A lot of Wal-Mart employees are therefore not able to make ends meet. The ethical responsibility of a stakeholder is to make known his or her preferences to the companies he or she purchases from or relies on. A lot of things that could limit profit could be worked around if things like environmental standards, production costs, taxes, safety at the work place, production costs (Desjardins and McCall, 1990). 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. This is not an example of the work produced by our Essay Writing Service. The unprecedented globalisation that has taken place over the past century has spurred a massive increase in FDI via 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. ⦠Wal-Mart intends to keep its prices low as it hopes to sell carbon dioxide credits for millions of dollars in a bid to save energy to companies other companies that canât. With regard to technology. As Wal-Mart faces unethical business practices, they have also been said to have encouraged goods produced outside the U.S. (www.pbs.org). SO âin February 2004, a federal judge ruled that Wal-Mart should pay workers for overtime hoursâ (Hooverâs 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. They claim that ethics should be based on character or behaviour. The need for a complete, consistent, and general code of conduct for MNCs, as well as smaller organisations undertaking business globally, is paramount. Reasons for establishment of MNE. Wal-Martâs unethical business practices have caused them a huge damage and have hindered the reputation of the organisation. For example, Social ethics, political ethics. Not neglecting trade organisations such as United Nations as well as international agreement between companies. Apart from protecting the image of the company, it is a multinational organisation and so should live up to standard and expectation. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. *You can also browse our support articles here >. See our Privacy Policy and User Agreement for details. 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. It claims that the policy to a certain extent helps terminate unwanted non complaint. George Ritzer Host country may get heavily depend on MNCs for its economic growth. 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 organizationsâ need to understand trends. (www.brainyquote.com) Authors from different parts of the world have also defined ethics in a lot of different ways. The boost of world trade in the midst of global partners and the rise of foreign direct investment mandate that everyone works in the direction of a better understanding and a regular ground of precepts upon which to base choices can help promote and advance a number of businesses and social contacts worldwide. 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. 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. And activity data to personalize ads and to provide you with your university studies not!, minimal pay, and duly qualified Greenberger, 1995 ) issues be! 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