Ethical Challenges Multinational Businesses

Ethical Challenges Faced by Multinational Businesses

Ethical Challenges Faced by Multinational Businesses

I. Introduction: Ethical challenges faced by Multinational businesses

A business organization that expands internationally does not only need to understand the organization’s goals, vision, strategies, policies, or missions but must also take into consideration various ethical and legal issues in the international business (Kline, 2010). Companies that organize for expansion into the foreign markets must also handle severe ethical and moral challenges to ensure success (Gurnani, 2015). The most prevalent concerns in international business include human rights, the political arena, religion, the environment, supervisory oversight, trust and integrity, bribery and corruption, equal opportunity and workplace diversity, outsourcing, child labor, and working standards and conditions.

Cultural consideration also contributes to breaking or building companies’ businesses globally. Every country has its historical culture, traditions, customs, and code of ethics. In some countries where women are not given the same rights as men, gender can be an issue. On the other hand, cultural events and religious holidays can also hinder some businesses’ operations at some point in time (Kline, 2010). Compliance with cultural and ethical values is essential for the multinational corporation to attain a competitive advantage.

II. Working Standards

A. Unrealistic and conflicting goal influence drives managers to overwork without compensation.

Data from the recent surveys in the United States indicate that about 50 percent of multinational company workers presume no ability to determine their working schedule. Due to extreme expectations by most international companies, some workers have to undergo longer working hours that ultimately affect their health due to stress and fatigue (Hill & Hernández-Requejo, 2006). This, in most cases, contributes to low labor productivity below the potential. Overwork can be defined as the increased risk that an employee will feel the signs of work stress and fatigue, which ultimately hinders the long or short-term productivity rate of firms or workers. Studies on the relationship between hours of work and Labour productivity indicate a massive decrease in productivity as the working hours per week increase (Gurnani, 2015). There are several instances in which irregular and long hours of work are linked to a range of mental health, risk of injury, and physical fitness that hampers long-run capacity to be productive at a place of work amongst several multinational businesses.

B. Health and Safety standards do not align with companies’ standards in domestic countries.

For instance, most work conditions in foreign countries are not favorable compared to the United States. Employees usually work for long hours within hazardous and uncomfortable environments. Even though the United States established the Occupational Safety and Health Administration, which has significantly minimalized workplace injuries, it needs money to comply with some regulations and rules (Kline, 2010). As a result, most international companies fail to apply their home Occupational Safety and Health Administration standards and instead accept the poor work conditions of the host country.

Workplace condition has a critical impact on the workers’ health outcomes due to the significant amount of time they spend in workstations. The type of work done and the work environment can expose workers to many hazards (Gurnani, 2015). Such threats include moving parts, cutting tools, and heavy objects, while some include long working hours, high levels of noise, and bacteria. Exposure to hazards can cause disease and occupational injuries affecting social, physical, and mental wellbeing in various levels of severity, from fatality to minor injuries.

III. Workplace diversity and equal opportunity

A. How do cultural differences affect workplace diversity and equal opportunity?

Much progress has been achieved in the United States towards establishing a diverse workforce and equal opportunity for different cultures within the country. The United States has further strives to create a force of different genders, backgrounds, and races. The policy of equal opportunity for anyone who deserves a promotion at a place of work or who wants to earn a raise. However, some foreign states do not mind employee diversity and equal opportunity (Hill & Hernández-Requejo, 2006). As a result, some of the policies brought about by multinational companies in the United States to ensure equal opportunity and recognition of diversity are not well received.

B. How can company policies help in reducing diversity and equal opportunity issues?

Through their practices and policies, multinational companies can enhance equal opportunity in the workplace within the host countries (Kline, 2010). For instance, these companies can directly promote gender equality within the host countries through employment policies in the foreign affiliate and spillovers in labor markets. In Bangladesh, studies have reported downstream business partners of multinationals in the garment and textile industry had over 50 percent of female administrative employees, a unique phenomenon compared to any other local company.

Moreover, it has been evident that most local companies that share suppliers with multinationals hire more women. Multinational companies can influence diversity recognition and equal opportunity enhancement by setting good examples within their host countries. Additionally, promoting equal opportunity for all groups in host countries is key to developing a sustainable and lasting business and is also the right thing (Gurnani, 2015). Based on the businesses’ domestic country’s values and norms and those of the stakeholders and customer base, outcomes in host countries can be positive if the policies are appropriately put in place. Finally, the inclusion of women’s skills, energies, experience, and talents in multinational companies requires the combined effort of all the stakeholders, policymakers, civil society, and the business sector.

IV. Child Labour

A. Why do countries turn a blind eye to child labor?

Due to cutthroat competition, increasing wealth division, and unstrained market forces between countries, over 300 million children are exploited in hazardous working conditions worldwide. According to the report by a representative of Austria, several countries have turned a blind eye to the challenges of child labor (Kline, 2010). Nevertheless, economic progress depends on an educated and well-trained workforce. As a result, governments must ensure that education from the primary level is funded and cut down on military spending. Also, there should be a stoppage to international trade of goods produced through child labor by such measures as boycotts, sanctions, corporate codes of conduct, enhancing consumer awareness, and preferential trade agreements.

On the other hand, some companies claim credit for adhering to child labor policies. For instance, Apple argues that if it finds an underage employee within its supply chain, it safely takes the child home, finances the child’s education, continue paying its wages, and finally offer employment opportunity for such a child upon completing education and doing so is illegal. Samsung also claims that whenever it finds any of its suppliers involved in child labor, such a supplier gets terminated immediately (Kline, 2010). However, according to an Amnesty International report, several cases of child labor have been uncovered in major technology companies like Apple, Microsoft, and Samsung, together with several other automotive companies like Daimler AG and Volkswagen. Amnesty International report also discovered child labor in cobalt mining, an element used to manufacture lithium-ion batteries in several tech devices in the Democratic Republic of Congo.

B. Challenges of traditional responses to child labor in supply chains

Child labor has been a traditional challenge rooted within human history. During various periods, children underwent exploitation to different extents. The challenge of child labor was common and frequent in developing and emerging nations. As a result, child labor used to be part of industrial growth and economic life in the 1800s (Al-Khatib et al. 2005). Children below 14 worked in factories, as street vendors, mining, and in agriculture. Children from low-income families had to work to contribute to the family income and, in some cases, work in hazardous conditions (Gurnani, 2015). Sometimes in the 1900s, many low-income families lost their children due to diseases and death, hindering their extra financial support. Also, male children worked for three shifts in glass factories with extreme heat since the furnace was kept fired throughout to enhance productivity. Sadly, female children were forced into prostitution. Further, according to reports, it is estimated that by 1910, about two million children in the United States were working.

However, with the enhancement of education, labor laws, and improved economy, child labor decreased. Nevertheless, child labor is still a widespread challenge across many parts of the globe, both in developing and developed countries. With the emergence of Agricultural activities, underage children were again into employment to provide labor, majorly by their families and not factories (Van Cranenburgh & Arenas, 2014). In this instance, the primary cause of child labor was poverty and lack of schools.

Finally, child labor is both ethically and morally unacceptable. The United Nations Children’s Fund became the first international body to sign the convention on children’s rights in 1989. After that, children were viewed as humans with special rights other than their parents’ economic tools (Kline, 2010). Child labor was then referred to as the labor that has harmful effects on the child’s health and denies them the right to education. The law does not isolate that work in the families’ farms or businesses.

V. Human Rights

A. Human rights views of corporations

Other than children, adults are also working in deplorable conditions. Most countries across the globe deny citizens the right to collective bargaining, assembly, strike, and even the freedom to negotiate for better working conditions and wages. Such nations have poor or no laws for enforcing workers’ rights, while the employees are provided with limited avenues to address their grievances for poor working conditions. A multinational business faces the dilemma of complying with the work standards of their domestic country and the absence of such rights in the host countries (Gurnani, 2015). As a result, some corporations have attempted to impose their human rights policies in the host countries, while others have had to cope with the deplorable conditions. Accordingly, to create a global standard for human rights associated with business activities, the United Nations developed a guiding principle on human rights and business.

Besides, the international rights treaties do not force direct legal obligations onto corporations. Corporations essentially guided the host’s national law by legal enforcement and liability for violating international human rights. Nevertheless, just like any other state actors, a corporation’s activities can negatively or positively impact the enjoyment of human rights (Kline, 2010). Corporations can influence their employees, workers, and customers’ human rights in their operations’ supply chains. According to earlier studies, corporations usually infringe human rights whenever adequate attention is not given to this risk and how to minimize it.

The core ILO conventions and the International Bill of Human Rights establish primary reference points for developing corporations to understand what human rights entail, ensure they mitigate or prevent risks of serious effects, and how their practices can affect them.

B. How to avoid negative campaigns while maintaining the company’s demand for goods?

Most of the company’s advertisers usually resort to tactical and appealing questionable tastes to attract the public’s attention. Surprisingly, almost more than half of the current advertising in the United States is out of control (Al-Khatib et al. 2005). Social critics have claimed that advertisings are one of the most objectionable components of the consumer economy. Advertisement mechanisms like mailboxes and email accounts being cluttered with direct marketing; billboards that are dense along the highway’s countryside; television shows being disrupted by every minute by multiple adverts, amongst others, have been condemned for being silly, dishonest, intrusive, and offensive.

Nonetheless, each nation has its primary structures of advertising laws. Most advertisements are generally prohibited by law (Gurnani, 2015). However, for those advertisements that are legal, though morally questionable, policies that regulate the advertising sector can be forced to ensure adherence to advertising ethics and self-regulatory marketing codes. The advertising industry has the mandate to establish its committees to monitor questionable advertisements (Kline, 2010). Generally, each country does have at minimum one advertising industry trade association with a committee or self-regulatory panel that receives and reviews complaints from consumers. Upon review of objections raised on a particular advertisement, the panel resolves whether or not to instruct the advertiser to remove the advert (Parboteeah & Cullen, 2004). Even though advertisers are bound by law to comply with such a panel’s decision, they usually do to ensure seamless operation within the industry.

The self-regulatory panels usually rely on ethical principles enlisted within the advertising codes of ethics to make their decisions. The regulations created by the international chamber of commerce are the most influential, followed by the advertising teams in over 30 states across the globe (Kline, 2010). The international chamber of commerce codes is founded on essential principles of decency, truthfulness, honesty, and legality in every marketing communication. The international chamber of commerce further reiterates the need for every marketing communication to be organized with a due sense of professional and social responsibility and must obey the principles of fair competition required in business (Hamilton & Knouse, 2001). Any information that can ruin the public confidence in marketing should not be published.

Besides, self-regulatory codes are intentionally structured in general terms since it can be very hectic to objectively identify what form of advertisements can be treated as decent. Also, there is a presumption that decency standards range differently from one country to the other or from one culture to the other and from time to time (Schermerhorn, 1999). Therefore, the international chamber of commerce code establishes the general guidelines. For example, marketing communications are prohibited from publishing information with audio, statements, or video, which offends the current standards of decency prevailing in the culture concerned or country.

VI. Environmental issues

A. Why do firms export pollution?

Citizens of both emerging economies and rich countries produce unbearable CO2 emissions. Multinational businesses probably spread a considerable portion of such emissions due to their sheer size because multinationals are generally known for a massive share of economic activity (Al-Khatib et al. 2005). For instance, as from international trade literature, multinational businesses dominate external transactions, most of which are within the firm (Kline, 2010). As a result, it cannot be surprising to establish that international companies produce a colossal carbon footprint. However, probably the footprint size is larger than many would preempt. According to López et al. (2019), if United States Multinationals CO2 emissions outside the United States were to be measured in the form of CO2 units, the United States would be ranked as the 12th top emitter within the globe. As a result, united states multinational foreign operations would become a larger CO2 emitter than the whole Australian or United Kingdom economy.