Ethical Issues Associated with Multinational Corporations

Ethical Issues Associated with Multinational Corporations

            The ongoing globalization and liberalization as far as world trade is concerned has resulted in many corporations expanding and opening new branches overseas. They expand with an aim of creating new markets and increasing profitability.  The trend has resulted to creation of very large multinational companies which run in several countries. Considering the fact that administrations in those host countries are independent, conflicts in regard to how these foreign corporates are governed has been the order of the day. This is because the host countries define their own regulations, rules and laws in regard to how trades deals should be conducted in the country and which may be very different from the rules which are set by the origin countries of multinational corporations. Skirmishes in ethics have always arisen whenever cultural norms and practices in the host country differ from those that are putative in the home countries. This paper scrutinizes the ethical matters which have been faced by international corporations operational in foreign countries.

Ethical issues faced by multinational corporations

In a case of domestic corporations, operations are solely based in the origin country where there are only one set of legitimate requirements to be met, and even in a multiethnic and multicultural country, the acceptable standards for ethical as well as social behaviors is well defined along with reasonable integrated cultural practices. Alternatively, international corporations usually operate in multiple countries where each has its own culture and laws as well as diversified social norms and ethics.

As such, these corporations most of the times find themselves perplexed by the host country laws, rules and customs in the course of conducting their business activities (Singh &Lakhan, 2014). They end up wondering whether to behave like the locals or imitate the conflicting ethical and cultural norms of their original countries. Considering the fact that what could be ethically approved in one country may be wrong in another country, what is right now depends on the country where a multinational corporation is operating.

Equality in employee compensation has been a common ethical issue which has faced many multinational corporations in their countries of operation. Multinational corporations tend to award their expatriate workers in accordance to the wage scale of their country (usually higher) while awarding those from the host country at a lower rate commensurate with the local terms and conditions (Singh &Lakhan, 2014). This is not only unfair but also unethical considering that the quality or the quantity of work is the same in both cases.

An example of different employee reward has also been witnessed on the basis of whether a worker is a male or female.  These multinational corporations are gender biased whereby; they tend to discriminate their workers on basis of gender (Singh &Lakhan, 2014). They tend to refuse to accept the fact that employees’ economic worth should be determined by his or salary. This has resulted to incomparable wages for male and female workers (Singh &Lakhan, 2014). They usually practice this culture since they know that women have no bargaining power compared to men. This is however unethical.

Basically, all business operating in the same country must uphold the law of that specific country and the law should also be enforced fairly regardless of the nationality. However, most of multinational corporations tend to influence the governments of the host countries to be favored. As far as ethics is concerned, this is not allowed as all the businesses within the industry should be treated the same in order for them to compete fairly (Singh &Lakhan, 2014).

Lastly, multinational corporations have also faced another ethical challenge when it comes to questionable payment. For instance, some countries consider bribing as a social norm or expeditions dealings in a business venture to create favorable business terms (Singh &Lakhan, 2014). This practice is considered wrong and unethical in most of the countries and therefore should not be practiced. For instance, in china businesses thrive under “Quan-xi” notion which basically means that businesses are operated on basis of connections. Those connections are mainly established through bribes and offering gifts. In India also, corruption has been made normal between government officials and businesses.

To sum up, there are many ethical issues faced by multinational corporations while in their course of business activities in foreign countries. This paper has highlighted some of those issues which are being faced in today‘s foreign business environments.

Work cited

Singh, Jang B., and V. Chris Lakhan. “Business ethics and the international trade in hazardous     wastes.” Journal of Business Ethics 8.11 (2014): 889-899.