The paper "Ethical Issues Are Imperative to the Success of International Businesses" is an outstanding example of business coursework. Ethics in international business is superlatively important. These ethical issues are rooted in the fact that economics, laws, cultures and political systems vary from one country to another. In addition, new issue and trends arising every day are creating a constant need for proper ethical behavior within business organizations. This is a preventative measure against possible lawsuits that have faced several multinational companies in the past. These events are direct results of public scandals caused by misleading practices and corporate malfeasance and they have detrimental effects on the image of an organization.
The tremendous expansion of businesses into the global market and the recent fall of worldwide trade barriers are factors that have further underscored interest in the areas of social responsibility and ethical behavior (Gangone, 2010). As multinational organizations enter foreign markets and expand globally, ethical conduct of their employees should be an essential consideration since such expansion comes along with cultural diversity which may undermine expected results if not properly handled. According to Jennings (2012), concerns about the inappropriate ethical behavior of corporations in foreign countries are usually manifested in legislation such as the Sarbane Oxley Act of 2002 and The Foreign Corrupt Practices Act of 1977.
This essay seeks to discuss major legal and ethical issues facing the international business. The most common ethical issues affecting Multinational Corporations are employment practices, environmental regulations, human rights, moral obligations and corruption. Although many scholars and economists have suggested that employment terms and conditions should be the same across nations this is a rare phenomenon as countries are bordered by differences in legislation.
Inferior employment conditions in the host country place a multinational organization in a dilemma concerning the kind of legislation that should be applied. The concern is whether to follow those of the host country, those of its home nation or seek other alternatives. For instance in developing nations, workers are subject to many working hours, mostly 12 hours with extremely understated payments and lack protection against harmful substances used in factories. Besides that, they have deprived enjoyment of social security services such as the National Social Security Fund, Hospital Insurance Fund and Retirement Insurance Funds. A recent case is that of Nike when the media revealed poor working conditions at many of its subcontractors.
The report showed women in a Vietnamese subcontractor who worked for about six days in a week under hazardous environments. Their basic salary was about $3 per day and they were forced to work for unpaid overtime. Therefore, it is a primary obligation for managers in multinational corporations to establish standards that are menially acceptable in order to safeguard the dignity and the basic rights of employees in their foreign subsidiaries.
Confidence of employees who are subordinated to the managers can only be built if their rights are adequately respected. They become certain about their work status with regard to intimacy, liberty and fair salary consequently becoming devoted to their respective tasks. Successful attainment of the organization’ s strategic goals is the end result in this cycle. Human rights are another ethical dilemma faced by many multinational corporations. According to the Universal Declaration of Human Rights, respect for human rights is an unavoidable and fundamental part of any responsible business.
As a matter of fact, more and more businesses have come to the light of this fact are integrating considerations of human rights into their mainstream business operations. However, several other companies have been caught up in activist campaigns, lawsuits, public scandals and consumer boycotts over allegations of human rights abuses. Across the diverse business sector, leading companies are incorporating mechanisms aimed at addressing issues of human rights including improved workplace conditions; racial, gender and religious equality; eliminating child labor; freedom of association; avoiding compulsory or forced labor; supplying essential needs to workers living in poverty; ensuring the security of workers; and engaging the government and other stakeholders in the promotion of human rights.
Gangone, A. (2010). Ethical issues in international business. The Annals of The "Ştefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration, Volume 10, Special Number.
Hestad, I. (2007). Corporate responsibility of multinational corporations. CMI brief, Volume 6, Issue 2, p. 1-5.
Hoffman, W. and McNulty, R. (2009). International business, Human rights and moral complicity: A call for declaration on the universal rights and duties of business. Business and society review, Volume 114, Issue 4, p. 541-570.
Jennings, M. (2012). Business: its legal, ethical and global environment. Mason: South-Western Cengage.
Hoffman, W. and McNulty, R. (2009). Corporate Crime. New Brunswick: Transaction Publishers.
Ruggie, J. (2007). Business and human rights. Corporate social responsibility initiative, working paper no. 38.
Walker, J. (2000). Environmental Ethics. London: Hodder & Stoughton.