houghts on Richard T. DeGeorge’s essay: Ethical Dilemmas for multinational Business.”

“Thoughts on Richard T. DeGeorge’s essay: Ethical Dilemmas for multinational Business.”

Global Corporations have consistently been and are at present now under a brutal ethical analysis. They are chiefly denounced for abusing assets and laborers of underdeveloped nations, removing occupations from the US business, and obliterating neighborhood societies. In spite of the existence of a global partnership, additional positives exist due to adherence to moral principles. Global companies, through subsidiaries, broad give occupations to the individuals of a nation where the business operates, improving the way of life, and moves innovation through Corporate Social Responsibility (CSR). Richard T. De George clarifies principle models, in five essential propositions, that multinational organizations should hold fast to keep up corporate morals.

First Thesis

Richard T. De George, in his first thesis, holds the position that by applying the United States standards as the acceptable moral standards, Multinational corporations are faced with false dilemmas. According to Richard T. De George, MNC’s find themselves in ethical dilemmas due to adherence to the set standards. Critics to MNC’s take the argumentative position that such corporations must operate with the US set standards irrespective of the geographical location they operate within. Ethical standards include business, living, and social, moral positions. The corporations must indeed set high standards throughout their operations. Irrespective of this being commendable for all MNCs, it is not a moral requirement. De George’s first thesis is valid since morals are part of human being’s welfare. Americans’ have higher ethical standards than other countries. As Giant corporations open subsidiaries in other countries, the firms should be allowed to operate with the host’s ethical standards. The MNCs should only be allowed to perform with different moral standards, given that their activities do not cause harm to human life. MNCs should be allowed to perform within third world countries using the countries’ moral standards. However, the first thesis should not apply to corporations dealing with food and drugs as their primary products.

Due to the sensitivity of their products, such corporations must operate under the rules of America’s government agencies such as FDA and OSHA standards. De George notes that “with respect to hazardous occupations with respect to pay, with respect to internalizing the costs of externalities, and with respect to corrupt foreign practices.” (De George 264). He takes this position since products such as drugs and food directly affect human welfare. Sometimes, the corporations might compromise their qualities within the host countries, thus endangering the citizen’s wellbeing. As such, MNCs dealing with products that might directly influence human welfare should operate within the standards set by the United States governing agencies.

Second Thesis

De George’s second thesis explains seven moral values that can be used to control MNCs’ behavior. The norms are applicable for every corporation irrespective of existing disparities between values and cultures. The ethical standards ensure that all MNCs carry out their activities ethically. The first Value proposed is that the MNCs should ensure that their business activities do not intentionally harm people. A business should not put themselves in situations where they intentionally harm human beings, whether in the US or any other host country. The second principle is proposed to ensure that the MNCs’ business activities benefit both the corporation and the host country. This principle postulates that if a firm does not contribute to the development of a host country, the MNC is taking advantage of the country. The third principle De George, suggests a utilitarian principle that assumes that all MNCs should serve more good than bad. The third norm ensures that corporations participate in activities that benefit the host country more than they harm the country. The fourth ethical norm is that the MNCs should show the utmost respect to their employees. This fourth principle must be in place irrespective of whether other local businesses show respect to the employees or not. Employee welfare is an essential factor for all domestic and international corporations (De George 265). The MNCs should, however, follow international business ethics standards, which held that employees must be treated with respect. The fifth principle is that MNCs should diligently pay taxes to both the host country and parent country. This position holds the moral ground for MNCs that making business operations overseas to evade taxes is immoral.

Although critics argue that tax evasion is a necessary business practice, it remains immoral and unethical — some MNCs open subsidiaries to take advantage and enjoy tax breaks. The sixth norm is that MNCs should incorporate the host countries’ culture. This norm insists that MNCs must respect and work with the host country’s culture. Working against a host country’s culture is not morally correct, thus disrupts the country’s moral foundation. Lastly, the MNCs should work closely with the local government agencies to ensure the continuous growth of social amenities that support health and safety standards. These institutions are essential for the growth of any country, thus benefiting both the MNC and the host country. When all these principles are put together, the multinational corporations will not face criticism and accusations of taking advantage of the host country. The principles protect the host country from exploitation, thus ensuring that they benefit from the MNCs.

Third Thesis

The third thesis is put in place to advise on how critics are supposed to critique multinational corporations. The thesis proposes that when the critics are carrying out a case-by-case study analysis, they should apply the seven moral norms as their guiding principle. The thesis is based on the assumption that every corporation operates differently from any other firm. As such, any analysis of MNCs’ activities should be based purely on individual practices. When critics use the seven norms to judge an MNC, the results are precise and reliable.

The thesis acknowledges that there are five different types of businesses that operate with distinct laws. He states that companies manufacture and sell drugs, agricultural products, financial companies, extractive corporations, and other firms engaging in manufacturing business operate under different ethical issues. It is true considering that a corporate face distinct moral issues depending on the products they manufacture or sell. Each industry is unique, which explains the different moral and operational issues each one faces (De George 266). For this reason, MNC’s should not be classified as one common unit, but rather they should be treated individually. When the MNC is grouped as a unit, it is then judged regarding the seven moral principles as postulated by De George.

Fourth Thesis

The fourth thesis suggested by De George place places multinational companies in an important position, given the fact that third world countries have insufficient just organizations. Due to the lacuna created by the limited justice and fairness, multinational corporations must step up and ensure that every citizen receives equal opportunity. The thesis introduces the concept of shared Value as a corporation actively participates in building society. Shared Value does not include the sharing of Value that has already been generated. This mainly may include company profits, which, as in the case of CSR are the ones used to cater to CSR activities by the company. On the contrary, Shared Value seeks to gain Value for a company through the involvement of society. Instead of it being a spending spree, it, in fact, becomes a way to make ore value foe a company, while at the same time benefiting the community (De George 268). Contrary to CSR, Shared Value is not affiliated to any strong personal values one may have but is instead purely a business strategy that is not based on any moral grounds.

Fifth Thesis

The fifth principle places the host government, together with MNCs operating in the country in a partnership. The thesis insists on the position that the host government is not exonerated from social responsibility bestowed upon them by the electorate. De George suggests that if an MCN takes part in social responsibility, then the local government should support instead of shielding themselves from accountability. The host governments should cooperate with the MNCs to control tax avoidance. De George views tax avoidance as a massive barrier to globalization. When corporations avoid tax, the trend is networked to other firms who also avoid paying taxes. This results in a huge number of international companies that do not pay their taxes as they should. He argues that there will be global economic consequences due to tax avoidance. Multinational companies have devised ways of avoiding tax through legal means. Political economy is the major contributor to tax avoidance (De George 269). Free-markets offer a platform for firms to achieve tax avoidance. When the host government partner with the corporations, they can achieve better social responsibility within society.

Opinion

There has been a continuous growth in corporate social responsibility over the years. Corporate Social Responsibility (CSR) has been encouraged by official development agencies though growing firms have opposed voluntary corporate initiatives. De George notes the growth of CSR mostly focuses on globalization through MNCs. CSR is given more emphasis by the United Nations, bilateral agencies, and multilateral agencies. The CSR benefits foreign direct investment but is, however, inadequate in poverty reduction. CSR proponents that CSR is essential in reducing poverty in developing countries. CSR can only be4 effective if the multinational corporations offer support to the legal institutions within the host country. Giant organizations must, in the first line to support morality and ethics within the community by helping employees and ensuring that their activities are morally acceptable within the host country.

Corporate social responsibility and tax avoidance argue that there has been a little attention paid to the practice of tax avoidance by companies which has a significant impact on the life of people. There have been great discrepancies in what the companies promise in their corporate social responsibility talks with the actions they do.  Persistence of this organized tax avoidance practices in organizations serves as a major threat to the organization itself. Big companies continue to make promises of socially responsible conduct while there is a reported increase in their tax avoidance practices. Multinational organizations should ensure that they participate in CSR practices since it is not only their ethical position but also the best activities for the growth of their operations.