Should Ethical Principles be Applied by Multi-National Companies Essay Example

Should Ethical Principles be Applied by Multi Should Ethical Principles be Applied by Multi-National Companies Essay Should Ethical Principles be Applied by Multi-National Companies Essay The question ‘Should Ethical Principles be applied by Multi-National Companies definitely deserves serious answer as this question deals with the economic condition of employees and workers. Also, these multi- National companies played an important economic role in the host country not only in the form of government taxes but in the employment of hundreds if not thousands of workers, which in turn, their families economic needs depends on their take home pay.Winkler and Remisova in their paper defined business ethics as â€Å"an official document of a company that specifies ethical norms, principles, values and ideals† (par. 1).   This definition tried to explain that these codes will serve as guidelines for the employees to behave ethically towards external groups, and that the companies set and apply these ethical principles in order to â€Å"achieve different objectives among others the prevention of incidents caused by ethical misbehavior, better fulfillment of st akeholders’ needs, enhancement of stakeholders’ trust in the company, as well as protection against control and punishment by external authorities (Kaptein as cited by Winkler and Remisova, par. 1).In the paper written by Ingo Winkler and Anna Remisova entitled ‘Do Corporate Codes of Ethics Reflect Issues of Societal Transformation,’ presented the different approaches of the Western German and Slovak companies in the application of ethical principles.   The paper presented that the corporate codes of ethics from these two great enterprises differ as they face ethical situations; the Slovak companies usually â€Å"mirror the specific transformational circumstances in the country† while the German companies â€Å"experience a broader range of relevant ethical problems and codes are internally oriented† (Winkler and Remisova, abstract).   This only indicates that ethical principles applied usually based on the cultural orientation of the com pany as it relates to the environment.   The authors added that the â€Å"negative experiences within the past process of transformation and in part the socialist heritage are the main reasons for the differences between the two samples† (abstract).Most companies exist having written policy with the purpose of integrating company values and ethical principles and help organize and control employee for the sake of the company.   Herbert W. Lovelace stated that these companies have these written policies that require ethical behavior but in many cases, managers live only by the words and not by practice (Lovelace, summary, par. 1).   The emphasis of the statement of Lovelace is the gap going on between the practice and the principles especially in the presence of personal gain and the value of treating people fairly.   The author cited the case wherein the company in order to cut expenses, they need sometimes to demote or fire employees in form of reorganization (Lovela ce, par. 3).This fact about principles and practice of ethics in the business has been supported by Eleanor O’Higgins as she discussed why many companies especially multinational companies are fell behind of the supposed to be backbone of the company.   She said that â€Å"principles can easily fall by the wayside under pressure; pressure can emanate from outside forces, like competition or regulation or from within the organization itself† (O’Higgins, par. 2).   She explained further that out of those temptations in the company, employees usually coerced to behave contrary to their own principles and the company’s principles until this behavior became commonplace in an organization.   She emphasized that there is not organization that is exempted from temptation (par. 3), and this is more common in companies with highly competitive environments, highly diversified, complex organizations with far-flung geographical operations; business that rely on government contracts, businesses with products or services that my impact on public health and safety; competing for high stakes; weak corporate governance structures and processes; and, principled people, especially leaders really count but can be hard to find.   One of the consequences according to O’Higgins is that these companies will find difficulty controlling business units and subsidiaries that are â€Å"subject to different industry and political, social and cultural environment and competitive pressures† (par. 9).Worse is, according to O’Higgins, those who made it to the top are those personalities characterized as powerful in decision-making, egocentric, insincere, dishonesty, corrupt, and sometimes â€Å"ruthless murderous hostility towards anyone who threatens their position† (par. 25).The Significance of Ethical PrinciplesDespite substandard society due to lack of ethical principles, moral upgrading is still very significant for many reaso ns.   In the article written by Sven Helin and Johan Sandstrom, they explained that more and more corporations worldwide are â€Å"developing and implementing corporate code of ethics that consists of moral standards that is used to guide employee or corporate behavior† (p. 1).   The idea of a code according to Graves as cited by Helin and Sandstrom, is not a â€Å"cure-all, and it possesses no magic powers by which it can change moral darkness into light† (p. 1).   The author further stated that despite that, it is an effective instrument†¦ that can contribute much to the cause of truth and honor to business relationship† (par. 1).Applying ethical principles globally by these Multi-National companies will surely positively affects the condition of these workers; perhaps their take home pay will become a little bit more uplifting economically. But what is this global ethical principle?John Eade and Darren O’Byrne pointed out that global ethics i s new term which has come into use in the last few decades. They noted that it signifies â€Å"something increasingly important in how we construct and address questions concerning how we ought to live in the global context† (p. 74). Multi-National companies must recognize this global ethics and obliged to commits themselves to apply global ethical principles in their global business operation. How ever, there is a problem as there seems to have no clear consensus on how the frameworks of these ethical principles should be constructed.However, many multinational corporation begin to acknowledge the importance of ethics in the business; profits should be earned upon an ethical foundation for they go hand in hand which must be done strategically.   Findings have showed that companies that hold on ethical principles have increased remarkably its profit and developed further stronger relations with clientele and even shareholders.   Ethical principles also helped to lessen co nflicts between differing interests of people in the company from the owner down to community.Ethics in Business as a Social ResponsibilitySocial responsibility is regarded by many social analysts as an area of business ethics in which it emphasizes every company’s obligation to society and humanity.  Ã‚   Business therefore must help cultivate and maintain ethical principles and practices and at the same time maintaining the business to grow higher.According to John Kirton and Michael Trebilcock, There is now a wide spread agreement that multi-national companies â€Å"do have responsibilities that extend their share holder to their stake holders the values and principles on which regulatory frame work should be constructed and a supportive foundations of dialogue and debate with in and across the government, private, and voluntary sector† (p. 18). Kirton and Trebilcock pointed out that the problem is how the general principles should be interpreted and applied, who should be involved in the interpretive enterprise and how responsibility for ensuring respect and compliance be assigned† (p. 18).   These questions are fundamental because most of these multinational companies protect their profit and they may not initiate such commitments.   Harbhajan Kehal and Vaninder Singh noted that defining code of ethics which would be acceptable to all business organization in all cultures â€Å"has been said to be an impossible task† (p. 12).But they pointed out that since there are some ethical values that can do cross cultural boundaries, then, it could be possible to choose a set of ethical values and construct a set of guiding principles that would be universally acceptable.   They cited current efforts on the international scene which is â€Å"considering the programs that encourage a culture of mutual respect in which everyone understands and values the similarities and differences among employees, customers, communities, and othe r stakeholders.   Kehal and Singh pointed out that besides these global ethics issues, there are some more ethic issues that â€Å"should be the core for any particular company’s code of ethics.†Ã‚   These are follows: diversity, equal opportunity and respect in the work place, environment, health and safety, financial integrity, and accurate company records.   Ethical principles are significant to be applied globally by multinational companies even though they are moral responsibilities that pose threat to their commercial goals and profits.Michael Santoro emphasized that corporate executives and human rights advocates alike need to understand that when it comes to human rights, the world is   entitled to expect multinational corporations to their fair share† (p. 158).   In other words, applying ethical principles globally should not be an option for these multinational companies but an obligation to get huge profit from the skills and work effort of the workers.   This obligation must be based from a framework of moral duties about a minimum standard that should be expected of all.Santoro pointed out some questions such as: (1) What in particular situations should a company fulfill its moral duties while minimizing the possibility of economic loss? (2) What significance should the potential of economic loss have in assessing moral responsibility for human rights that would help multinational companies construct ethical principles they could apply in their global operation (p. 96), given the fact that there can be no unified ethical principles that apply to every business situation, as ethical practices differ in different cultures.Another paragraph most authors argued that there are practical difficulties in selecting particular ethical principles that could be universally applied.   R.G. Frey and Christopher Heath Wellman pointed out that this is because â€Å"background institutions such as socialism, capitalism and cultura l and religious mores confound cross-cultural operations† (p. 546).   Frey and Heath Wellman noted that â€Å"these background institutions create different ethical points of view, and because of their endemic nature, they are difficult for a corporation to confront† (p. 546).Towards Executive ExcellenceNo one in the world of business is excused from becoming morally upright.   As George Ritcheske pointed out in his article that, â€Å"abuses of power and a lack of integrity among business leaders are seemingly rampant† (Ritcheske, abstract par. 1).   Yet, he emphasized that people need to â€Å"run business in accordance with timeless principles.†Ã‚   This could be a difficult battle but if someone aims for a stronger foundation and a successful business, he or she has to be morally upright.   In his article, he presented four principles that a company must take hold on to in order to be ethically principled.   He enumerated them as follows: (1) Do what is right and tell the truth, (2) Trust is a must, (3) Recognize and build people, (4) Respect the importance of balance (Ritcheske, abstract, par.1).   He further emphasized that when a leader begin with honesty, trust, recognition and balance, they can build an organization that â€Å"offers products and services, treats its employees as essential for success, and rises above the competition† (par. 9).Llewellyn E. Piper stated in her article entitled ‘Ethics: The Evidence of Leadership’ that â€Å"†¦leaders must have the ability to make decisions based on ethics† (par. 1).   The reason for this according to her is that, leadership must have values grounded on ethical principles â€Å"to ensure the survivability of an organization† (abstract, par. 1).   She made this idea because in her observations, there are many organizations today that do not give much emphasis on a culture of ethics and because of that, many leaders face eth ical problems and issues.   In the same way, philosophy is encouraged to learn again as it provides definitions, guidelines and models that could assist everyone in pursuing ethical principles in the company.ConclusionI believe that multinational companies can apply ethical principles at least in their own global operations if only they would wish to do so.   It is quite clear that there is certainly no unified ethical principle for these multinational companies particularly because they operate on different countries with each differing cultural backgrounds and social orientation and educational and religious orientation.   However, since the issue of ethical principle is global and that there are widely accepted ethical principles such as, we ought to respect one another’s right, fairness and so forth, there is really a strong ground that these multinational companies should apply ethical principle.As most literature has pointed out, multinational companies have moral responsibilities in the host country, as well as in the condition of their workers.   Many multinational companies tend to exploit the host countries’ weakness by offering minimal per day wages as compared to other country with relatively strong economic condition.   Others however merely exploit the mineral resources of the host country such as mining in most African countries by European multinational companies.   In Angola for example, most Angolans denounced the system which these multinational companies employed.   These companies hired overseas workers and pay them relatively higher than local Angolan workers.   Much worse is that these locals are given the difficult work assignment with very low wages while their own country’s minimal resources are being shipped out of their country.   Thus, despite of their diamonds and other mineral deposits, most of the African countries live in extreme poverty.Kirton and Trebilcock pointed out a similar case of a Canadian corporation in Southern Sudan.   Kirton and Trebilcock noted that nearly two million people in Sudan have been killed since Civil War broke out in 1983, and more than 4.5 million people have internally affected and displaced.   Kirton and Trebilcock noted that this Canadian firm, Talisman energy which is engaged in oil operations â€Å"have focused on its contribution to the massive displacement of people on and around the drilling site, and the millions of dollars in oil revenues going to the central government from the sale of its oil that has increased the regime’s capacity to wage civil war and reduced its incentives to negotiate in good faith with opposition interest† (p. 18).They further noted that despite of Talisman’s endorsement of the international code of ethics for Canadian business and its commitment to issuing an annual corporate social responsibility report, they find that Talisman’s interests and authority are such that â₠¬Å"its activities necessarily undermine international human rights in Sudan† (p. 18).These particular instances are global concerns especially pertaining to human rights that must be addressed to.   Thus, ethical principles are not only applied within business relations but also international relations of countries.   Ethical principles do not simply guide behavior of staff and employees but also an obligation to humanity.   Through which, multinational companies must endeavor to establish a company founded on ethical principles.