Ethical Effect to Mns's

Topics: Business ethics, Ethics, Corporation Pages: 6 (2008 words) Published: May 14, 2013
Comparative issues in international management

Business entities have adopted globalization in conformity with modern trends. In view of businesses becoming global entities, it is imperative that aspects of business ethics and social responsibility be incorporated into the organizational structures of multinational corporations. Multinational companies are being put on the spotlight over the positive and the negative effects of their activities. Aware of this fact, MNCs are getting involved in activities that are inclined to benefit the society and give them a competitive advantage over local firms. The involvement is gauged using the society laws of interdependence and the laid out human rights and standards of living. This paper explores the social responsibility practices of MNCs when they operate in foreign countries and highlights the extent that their code of conduct mirrors their home country’s' institutional characteristics in the foreign lands (Amaeshi, 2008). It looks at the globalization aspects of these companies’ activities and their impacts to a country’s culture, belief system, people skills, the impact on employment practices, and the effect on the environmental in the given countries. Multinational companies are defined as any enterprise comprising of entities in two or three countries regardless of the legal form and fields of activities they are involved in (Zentes, 2010). According to strategic international management (2010), a subsidiary is taken as any unit under the control of a multinational corporation (MNC) that is located in another country. With the melting down of international boundaries in business, MNCs have ventured to developing countries in a step aimed at broadening the scopes of their markets. This has not been without consequences. Such strategic expansions by global corporations have had both positive and negative impacts in the targeted markets. Consequently, it is now becoming a requirement in business for every business corporation to be responsible for any social and environmental effects they create to the society in their pursuit for business excellence and higher margins of profits (Zentes, 2010). Social responsibility is an initiative taken by a firm to further a social cause as dictated by the law, ethics, and social norms. It is a deliberate inclusion of public interests into corporate decision making and the honoring of the triple bottom line-people, planet, and profit. Enforcing acceptable business ethics is in response to the various standards and core business practices that MNCs are expected to meet internationally. MNCs find themselves sand witched between the interest of their home country and those of their host countries and the general business practices in the two countries which are at most times very different. They also have to contend with the interest of consumers, buyers, governments, their own policies, and expectations. In addition, they play a role in improving the standards of living, prompting global interdependence, enhancing utility of sustainable resources, and showing concern for the global environment. Business ethics refers to business conduct or morals of MNCs in their relationship with individuals (employees) and other entities as well as the generally accepted ways of doing business (Robbins, 2008). It focuses on what is right and what is wrong in business decisions and undertakings. Business ethics can be understood by using three defining characteristics which would include consequences, duties, obligations or principles, and integrity. With the globalization of management, it has proved difficult to reconcile acceptable behavior and ethical practices around the world and people’s perception in reference to what is right or wrong. The four accepted concepts of ethics are egoism, relativism, deontologist and utilitarianism. The proposed SA8000 global standards are used to constitute human rights which prevent MNCs...
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