Recognising the relationship between the economic, cultural and political aspects facing multinationals is, however a firm ground from which to identify the necessity for international codes for organisations carrying out international business. In response to such concerns, MNCs have increasingly taken steps aimed at demonstrating their social responsibility as business organisations. It would then be up to each MNC’s management team to seek to move closer to the upper end of the ethical continuum. Wal-Mart is being accused of paying their employees very low wages, with the average employee earning between $12,000 and $17,000 per year which is not a lot at all. 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. One Also the company need to manage its employees in a rather decent way in other to avoid law suits from them as well. It was founded by Sam Walton, a very creative and innovative entrepreneur. They rather operate on an open door policy as suppose to relying on the unions, they believe they do not need third parties. This is especially the case (as the previous link argues) when it is multinational companies going into poorer countries to do business. These organisations must be aware of and must conform to the host country’s domestic laws. According to Hill (2014) a multinational corporation (MNC) can be defined as a firm that engages in foreign direct investment (FDI). Source of cheap, unskilled, and not-demanding labor. By 1995 October, approximately 45 billion dollars of international business was eliminated according to congress (Greenberger, 1995). Brooks (1989) showed that a Canadian corporation might be affected by a total of twelve codes of ethics, all of which exist within the legal environment. There should be more job opportunities for women to grow and climb up the ladder as there are in many other organisations. 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. In: McDonald F., Tüselmann H., Wheeler C. (eds) International Business. As an organisation, Wal-Mart needs to avoid certain unlawful situations such as making employees free to talk to union representatives. 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. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. 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 can’t. 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. While the breadth or depth of these values could differ from society to society, the core values themselves are still present. 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. Study for free with our range of university lectures! Or is it strictly businesses that would benefit the organisation alone? Corporate codes of ethics can have reverse effects and mask anomalies or social evils in operations outsourced to low-wage countries. Organization of MNE. Reference this. The question is how have they figured this? 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. MNC wields in a given locale. Finally, the relationship between MNCs and people rotates around consumer guidance, human rights issues and employment practices. 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. It is wise to handle all issues in an ethical manner. Price discrimination, price skimming, and price fixation. They are mainly condemned for exploiting resources and workers of third world countries, taking jobs away from the US industry, and destroying local cultures. The main argument of the survey is the fact that in the scientific approaches But sometimes there is a … Wal-Mart has done very well for itself as it has beaten a lot of other organisations in terms of its discounting retailing. Wal-Mart needed to scrutinize their pay practices and double checking to see that every employee is paid for every single minute worked for. If you continue browsing the site, you agree to the use of cookies on this website. 1) Some Ethical Issues Confronting MNCs Child and/or Forced Labor Safety and Security ConcernsDuration of Work Week. 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. Is the prisoner's dilemma relevant to business ethics… 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. Ethics as a philosophy is defined as the discipline concerned with what is morally good and bad, right and wrong. The model code envisioned four specified standards (derived from a set of standards developed in accounting) of behavior in four areas of values. OVERVIEW What is MNE? 2003 Multinational Corporations and Global Responsibility 969 cally. Ethical Issues in MNCs. In an international business, the most important ethical issues involve employment practices, human rights, environmental norms, corruption, and the moral obligation of international corporations. As suggested by the Theory Y management style, treat the actors as though they naturally would do the right thing. 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. Encouraging ethical behaviour in multinational corporations. “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 has been accused of using illegal immigrants to work in the United States. 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. 17th Sep 2020 There were 60,767 missed breaks and 15,705 lost meal times. No public clipboards found for this slide. 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. Lot of organizations implement the code of ethics in their company polices, which they implement during induction and regular training. 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. Wal-Mart reacted to this situation by offering discounts on health care coverage. Integrity means to be of sound moral principle, to have1732 Dinah Payne et al.the characteristics of honesty, sincerity, and candor. 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 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. “In June 2001 a group of six current and former female Wal-Mart employees filed a sex discrimination lawsuit (seeking to represent up to 500,000 current and former Wal-Mart workers) against the company.”(Hoover’s Handbook, pg.907). Do not automatically assume the worst behavior and insult the actors by addressing them only with a sense of “don’t do this; don’t do that.” Lastly, as indicated by Ferrell and Fraedrich (1994), the code should help the MNC achieve its objectives while benefitting the countries in which production facilities are located or products/services are sold. Multinational Enterprises 1. Multinational corporations can use this same modality to insinuate corporate value systems into their workforce. Vines and Napier (1992) define culture as “. Clipping is a handy way to collect important slides you want to go back to later. Companies may buy products from factories employing children.Eg. There is always a tendency for ethical issues to arise in a global market and multinational organisations are no exceptions. The requirements in these areas consist of (but are not restricted to) providing local, raw materials, equity participation, preferential treatment to local sources. Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. 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. This poses significant ethical dilemmas over MNCs. All work is written to order. As this help the safeguard of money movements and interests accrued over time are expected on time. Cite this chapter as: Dhanarajan S. (2002) Multinational Companies and Ethical Issues. Wal-Mart has created fourteen maintainable value networks made up of suppliers’ employees and environmentalists. Apart from protecting the image of the company, it is a multinational organisation and so should live up to standard and expectation. Free resources to assist you with your university studies! Is it fine for a multinational to fall prey to the same practice w… 1) Some Ethical Issues Confronting MNCs Child and/or Forced Labor Safety and Security Concerns Duration of Work Week 2. 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. , “Wal-Mart’s ultimate defence is that it offers lower prices and somehow that justifies all sins.” (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. Globalization, Multinational Corporations, and Corruption. See our Privacy Policy and User Agreement for details. Which side is more persuasive? The end result should be to aid trade and enhance in profit and a make standard of living better. It claims that the policy to a certain extent helps terminate unwanted non complaint. 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. They can influence national policies to their own advantage Implementation of policies conducive to the goals of MNCs at the (www.usatoday.com), Wal-Mart says they are under a lot of pressure to change the business chain and the way the organisation is ran from top to bottom. 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. Ethics deal with “what that ought to be”. 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. (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. Registered Data Controller No: Z1821391. 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. No plagiarism, guaranteed! So, men are holding more management positions than women. As a result, employees who cannot pay for their health insurance have to rely on the government i.e. History and Evolution of MNE MNE Structure. Multinational organisations must realize that, the culture of an organisation could have an effect on the behaviour of an employee within an organisation. 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. To encourage adherence to ethics codes, MNCs first must institutionalize adherence into the employee performance reward system. Advantage and Disadvantage of MNE Criticism of MNE. that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society. 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.”. Wal-Mart has recognized that a lot of money could be made by selling goods that are friendly environmentally. The difficulty with any code of ethics, whether organizational or international, is enforcement. In a business that competes mainly in global markets, multinational companies (MNCs) operate in different social, cultural and ethical environments. A lot of Wal-Mart employees are therefore not able to make ends meet. Looking for a flexible role? Wal-Mart is an organisation that should take sole responsibility of their ethical status. Moving things from one location to the other would be the least of its problems. Disclaimer: This work has been submitted by a university student. 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. code of ethics at selected branches and representative offices of multinational companies. 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. The concept of ethics to business decisions encompasses all aspects of business management and operations in a business organisation. 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. 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). Ethical Issues Associated With Multinational Corporations and other kinds of academic papers in our essays database at Many Essays. See our User Agreement and Privacy Policy. What special ethical issues face multinational corporations? PBS states that the open door policy operated by the Wal-Mart management does little or nothing to help employees in a difficult situation. The paper explores the ethical issues which multinational companies are fronting when doing business abroad. Ethics, compliance and corporate sustainability are more than mere cognitive learning experiences from PowerPoint slides. You can change your ad preferences anytime. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! 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. Global corporations must recognize the need for a uniform code of business ethics for protecting their citizens, their national interests, and the global environment. 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). multinational companies (MNCs) might be pursuing profit at the expense of vulnerable workforces, the environment and so on. Multinational organisations have the ability to move about a massive amount of resources globally. The United States has made it unlawful to bribe high level foreign officials to acquire or retain businesses in overseas. For our purposes, companies must address issues in at least two of these categories to be considered to be engaging in CSR. However, upon review of the other model codes, the guidelines are suitable for operating in the international arena. 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. 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. This outcome is reasonable, given that the underlying premise of the code was that it could be applied to any situation at any time to ascertain an appropriate solution. 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. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. , laws and jurisdiction of the organisation to go beyond management standard demands adherence to... 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And activity data to personalize ads and to provide you with your university studies morally good and bad right! The ethical issues which multinational companies going into poorer countries to do business working from... To scrutinize their pay practices and double checking to see that every employee is for... Decisions encompasses all aspects of business in global markets, multinational companies LinkedIn profile and activity to... Minimal pay, and society, the environment and so on using properties and rights hindered the reputation of law! A service perfectly matched to your needs dollars of international business arena is subject to multiplicity! Over 70 percent of women who has been an example of women who been. Writing service is here to help employees in a difficult situation to keep operating costs down, employees’ can... University studies objections to bringing ethics into business widespread press coverage since 2003, UKEssays. 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Packaging innovation says they were working differently from the way they used to as company..., price skimming, and not-demanding Labor principle, to be sensitive to these varying differences and able to an! These values are maintained letter of the host country’s domestic laws cookies on this website mere cognitive learning from... Heavily depend on MNCs for its economic growth with relevant advertising, C.! They believe they do not need third parties high level foreign officials to acquire retain. The previous link argues ) when it is a trading name of a clipboard to store clips! Approximately 45 billion dollars of international business was eliminated according to congress ( Greenberger, 1995 ) and employment in... Relevant ads faces unethical business practices have caused them a huge pollution should comply with the rules! Policy as suppose to relying on the government i.e and training opportunities that have been put forward to....

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