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Introduction
One of the major questions that most international organizations and corporations tend to ask is whether multinational corporations have moral duties to uphold ethical values and global corporate responsibility in their conduct, activities and daily decision-making processes.
The recent disaster at Rana Plaza in Bangladesh where over a thousand workers died is an example of the consequences of ignoring ethical values and principles as well as corporate responsibilities that guide actions of corporations operating not only in developing countries but also all over the world.
The shocking conditions under which workers in the clothing industry are forced to endure in developing countries, the relaxed labour laws and the low wages paid predominantly to the young and underage women workers should inform the basis of whether multinational corporations should observe ethical values and act responsibly.
In fact, multinational corporations are flooding developing countries to take advantage of low wages and relaxed labour laws to manufacture products at reduced cost in order to appeal to the consumers in developed countries and reap huge gains.
Bowie, (1990) asserts that the effect of such actions is the abuse of workers’ rights and exploitation of resources in expense of majorities living in these countries.
Under such circumstances, the roles of businesses in terms of ethical values and human rights, as well as constructs that guide these firms’ decision-making processes, are questioned.
The question that normally arises as to whether multinational corporations should consider some of the societal problems out of their ethical obligation or such efforts is just instances of corporate benevolence (Bowie, 1990).
Actions based on universal core principles
The presentation argues that multinational corporations have the moral obligations to ensure that their actions, conduct as well as decisions benefit the whole society.
In addition, governments, international organizations as well as corporations have moral duty to build a just and fair global society. Based on the universal core ethical values, businesses are obligated to avoid causing or contributing to immoral impacts through their actions.
In addition, businesses are obligated to mitigate adverse impacts that are directly related to their operations, services and products through corporate social responsibilities (Carey, 2013).
The fundamental rationalization of this restriction against being unethical is for the benefit of businesses as well as the society. In other words, behaving unethically will have undesirable economic consequences on the organization.
The universal core ethical principles including honesty, justice, accountability, consideration, reverence and citizenship should form a framework through which businesses operate. Indeed, organizations manufacturing goods and services possess indirect convention with society.
Similarly, firms have the moral duty to be socially responsible, which encompasses honouring the fundamental human rights, caring for the environment and producing standard goods and services for the benefit of all human consumption (Hayes & Walker, 2005).
Actions and decisions making processes based on the universal core principles will often foster the growth and development of firms.
Universal ethics is a global moral framework for not only multinational corporations but also large organization operating within the international arena.
Though global organizations are required to behave ethically, no company has attained the desired ethical standards, particularly where dissimilar stages of development and diverse cultures are involved (Rendtorff, 2009).
The case of companies making huge profits in expense of ethical values is a question most corporations, particularly with subsidiaries in the least developing countries, have grappled with.
In fact, cases, where multinational corporations continue making huge profits in expense of ethical principles in developing countries, is not new and is understood clearly by the stakeholders in the international arena.
Whereas gains in form of profits are the ultimate goal of most of business organizations, it should be attained in a manner that upholds ethical standards and social responsibilities (Prasad, 2008).
Actions based on ethical and social constructs
Ethical conduct is concerned with distinct values that uphold the rights of individuals, the masses as well as the notion of distributive justice. The principles tend to emphasize the benefits of individuals as well as the society attain from certain actions.
In principle, firms should be engaged in actions that benefit the whole society. However, most multinational corporations operating in the Less Developed Countries (LDCs) always apply the principle of utilitarianism in their actions (Brenkert & Beauchamp, 2012).
Further, Brenkert & Beauchamp (2012) assert that ethical standards under the utilitarianism principles are that rights of certain individuals have to be sacrificed in order to benefit others.
Drawing from the case, the rights of workers from poor nations are sacrificed in expense of consumers from rich nations.
Essentially, the question of whether consumers in developed countries should continue to benefit or buy products manufactured under deplorable conditions in the developing countries could best be explained using the utilitarian principles.
In fact, over the years, multinational corporations have constantly violated the rights of workers in developing economies to manufacture products that benefit consumers in the rich economies through reduced prices (Motial, 2011).
Through the application of principles of consumerism, capitalism, utilitarianism, multinational organizations have consistently exploited workers from poor nations despite call for ethical standards to be upheld.
Whether actions of the multinational corporations are right based on this perspective, depending on individual point of view.
Nonetheless, ethical standards are critical for the well-being of the organizations. In other words, organizations’ behaviour should be acceptable to all. Moreover, firms must operate within suitable parameters that uphold both individual and societal moral values (Donaldson, 1989).
In a broader perspective, firms should be seen as socially responsible through the application of actions that result in universally acceptable outcome.
Even though Australian firms operating in Bangladesh end up manufacturing cheap products and benefit Australian consumers and gain huge profits, their actions do not benefit the whole society.
Such Australian multinational organization should observe the labour regulations as well as improve the working conditions in order to be socially responsible.
With the new trends in consumerism where awareness have changed the manner in which products are consumed or bought from the shelves, firms should understand that social responsibility is critical for their success (Fisher & Lovell, 2009).
The moral duties of organizations must be guided by their willingness and desires to do good to the society.
Even though the greatest goal is to make more profit for their shareholders, the actions towards attaining the major goal must also be guided by the capability of managing their resources in a way that benefit the whole society (Lundi, 2011).
Individual liking should not drive ethical responsibilities; rather reason should guide the actions undertaken by the firms. As indicated by Lundi (2011), social justice should be the ultimate goals in case there is need to build a just and fair global society.
In essence, multinational corporations should base their actions on the universal principles and the ultimate goal is the benefit that all people derive from such actions (Lundi, 2011).
The moral minimum in corporate responsibility
Even though it may be argued from some quarters that businesses have no moral obligation to assist in the problems that afflict the society, it is also be understood that under certain circumstances, businesses have the compelling reasons to assist.
For instance, the businesses through their financial capabilities have an obligation to assist during natural disasters as well as during public health emergencies (Arnold et al., 2013). However, if such actions are understood from dissenting viewpoint, the moral responsibilities for businesses are lost.
The reason is that assistances during natural disasters and emergencies are only temporary yet ethical conducts should be grounded on governing principles guiding daily activities and decision-making processes of the firm (Bowie, 1990).
Multinational corporations have the moral duty to advance and protect not only the workers’ rights but also other basic human rights in all the circumstances. Such moral duties are critical in preventing incidences and disasters such as the one observed in Rana Plaza.
In fact, the moral values advocated for in this case are formulated from the ‘Kew Gardens Principles’ where firms are obligated to assist when need arises and have knowledge concerning the problem.
In addition, firms have a duty to offer assistance when the concerned parties have no capability or potential to avert the problem and are the last resort to provide the required assistance (Carroll, 2000). The needs in the principle are relative and take variety of forms in the case of poor nations.
Similarly, proximity is spatial but based on the awareness of the problem. In other words, firms have a series of social expectations originating from various roles and capacities. The firms’ moral responsibilities to take actions are derived from these social expectations (Fisher & Lovell, 2009).
Moreover, firms have either to utilize their capabilities technically or financially to ameliorate the pending problems. Further, firms are the last resort in ameliorating the societal situations because of their capabilities.
The ‘Kew Gardens Principles’ provides an explicit explanation as well as arguments that multinational corporations have the moral responsibilities to uphold ethical standards at all levels in their operations.
In fact, upholding ethical standards ranging from respecting human rights to social responsibilities is critical in protecting the reputation of the firm, safeguard the social authorization to operate and in most cases promote the brand of the company (Prasad, 2008).
In essence, observing ethical standards and promoting social responsibilities are the foundations of the moral obligations of multinational corporations to avert situations that are often observed in developing nations.
Whereas making the case for the observation as well as upholding ethical standards and social responsibility may seem critical in persuading leaders of various organizations, lack of any explicit moral obligation may result in puzzling global disasters.
Ethical standards have an instrumental and intrinsic moral value and not only used to advance the interest of the firm but also that of society (Hollenbach, 2008).
De George’s five guidelines for multinational corporations
From the discussion, the question on the way firms should uphold ethical standards arises. De George provides explanations for five basic moral standards that global corporations have to observe in order to sustain their ethical values.
De George argues that there is no set of moral standards for multinational corporations rather they have to stick to what is morally right depending on the situations on the developing countries in which they operate (Cohen, 2010).
In fact, it is from the argument where De George founded the five moral guidelines that multinational corporations should apply to govern their conducts and decision-making processes while operating in developing countries.
De George argues that despite cultural variations and values, there exist certain moral norms applicable to the multinational corporations to ensure ethical conduct and operations.
The first guideline is that multinational corporations are obligated not to inflict intentional and direct harm to individuals, organizations or countries in which they operate.
Secondly, the multinational corporations must apply the principles of utilitarianism to produce better results for the host countries.
Third, the multinational corporations must utilize a share of their proceeds to help the host country and not to be perceived as benefitting their mother country or themselves (McDonald, 2009).
Fourth, global corporations must respect the basic human rights in their host countries, particularly the rights of workers even if the local mechanisms do not provide for such moral obligations.
Finally, multinational corporations should support the host country development through fair share of taxes and are obligated to abide by basic institutional standards.
For instance, ensuring that health and safety standards are observed as well as rules and obligations governing labour conducts (McDonald, 2009).
In addition, large corporations with subsidiaries in developing countries are expected to respect the local cultures and their operations must concur with cultural obligations of the host countries.
In fact, global organizations have the obligations to abide by the moral guidelines to behave ethically and responsibly.
Codes of conduct and global business organizations
Business operations and decisions should be grounded on code of business conduct based on universal values. Moreover, an affirmative moral minimum of corporate responsibility should provide the way forward for doing international business with integrity.
In fact, the past decade has seen an increase of ideas concerning roles and responsibilities of multinational corporations towards the societies in which they are operating (Brenkert & Beauchamp, 2012).
Questions have been arising on the manner global corporations are dealing with environmental hazards, unfair treatment of workers as well as production of faulty goods and services that pose great danger to the consumers.
The increased concern over these issues, especially mistreatments of workers in developing countries have raised the sensibility issues concerned with ethics among individuals and corporations from developed countries.
However, increased competition and pressure for increased revenues from shareholders prevent organizations from taking necessary actions that uphold ethical values.
Essentially, benefits in terms of increased income tend to determine actions of firms whether such actions benefit the society or not (Stuart et al., 2007).
The explanations provide reasons why businesses especially the multinational corporations, should adopt codes of conducts based on universal values and affirmative moral minimum of corporate responsibility to continue doing international business with integrity.
The current awareness on how goods and services are produced have placed firms operating in poor countries on the receiving end. In fact, as awareness on corporate ethics and social responsibility increases, firms have no choice but to uphold ethical standards.
In other words, it would mandatory for firms to operate within suitable parameters that uphold both individual and societal moral values. In a broader view, firms must be perceived as socially responsible through the application of actions that result in universally acceptable outcome.
As such, the ethical conducts of multinational corporations must be guided by their willingness and desires to do good to the society. In addition, the actions of global firms must also be guided by the capability of managing their resources in a way that benefit the whole society.
Moreover, social justice should be the ultimate goals to build a just and fair global society. In essence, multinational corporations should base their actions on the universal principles and the ultimate goal is the benefit that all people derive from such actions.
Conclusion
The question of whether multinational corporations have moral duties to uphold ethical values and global corporate responsibility in their conduct, activities and daily decision-making processes is examined and understood clearly in the discussion.
The answer is that do not only multinational corporations have that obligation but also international organizations, countries as well as consumers from the developed countries.
Moreover, the universal core ethical principles including honesty, justice, accountability, consideration, reverence and citizenship should provide a framework through which businesses operate.
Essentially, actions of multinational corporations towards developing countries should be based on ethical conducts founded on the universal ethical core values.
As indicated, the fundamental rationalization of this restriction against being unethical is for the benefit of businesses as well as the society. Business behaving unethically always have undesirable economic outcome.
Besides, it is now clear that upholding ethical standards ranging from respecting human rights to social responsibilities is critical in protecting the reputation of the firm, safeguarding the social authorization to operate and most importantly promote the brand of the company.
References
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Bowie, N. E. (1990). Relativism and the moral obligations of multinational. corporations. New York, NY: Springer Publishing.
Brenkert, G. G. & Beauchamp, T. L. (2012). The Oxford handbook of business ethics. Oxford, UK: Oxford University Publishing.
Carey, L. E. (2013). Business ethics managing values and corporate responsibility. Frenchs Forrest, Sydney: Pearson.
Carroll, A. B. (2000). A commentary and an overview of key questions on corporate social performance measurement. Business and Society, 39(4), 466-479
Cohen, M. A. (2010). The narrow application of Rawls in business ethics: a political conception of both stakeholder theory and the morality of markets. Journal of Business Ethics, 97(5), 63-579.
Donaldson, T. (1989). Moral minimums for multinationals. Ethics and International Affairs, 3(1), 163-182.
Fisher, C. & Lovell, A. (2009). Business ethics and values: individual, corporate and international perspectives. Essex, UK: Pearson Ltd.
Hayes, B. & Walker, B. (2005). Corporate responsibility or core competence. London, Uk: Routledge.
Hollenbach, D. (2008). Refugee ethics: ethics, advocacy and Africa. Washington, DC: Georgetown University Press.
Lundi, C. (2011). Social work, social justice and human rights: a structural approach to practice, Toronto, CA: University of Toronto Press, Inc.
McDonald, G. (2009). Ethical relativism vs absolutism: research implications. European Business Review, 22(4), 446-464.
Motial, S. (2011). Applied ethics and human rights: conceptual analysis and contextual applications. New Delhi, IN: Anthem Press.
Prasad, A. (2008). Towards a system of global ethics in international business: a Rawlsian manifesto. Management Decision, 46(8), 116-1174.
Rendtorff, C. (2009). Responsibility, ethics and the legitimacy of corporations. Copenhagen: Copenhagen Business School Book Press,
Stuart, B. E., Sarow, M. S. & Stuart, L. 2007. Integrated business communication: in a global marketplace. New York, NY: John Wiley & Sons.
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