Peter Robinson, CEO of Mountain Equipment Co-op, was correct when he said that “Ethics is the new competitive environment.1” Honesty, integrity, and transparency consistently rank at the top of qualities that employees and the public desire from corporate entities1. Matters of integrity and responsibility in multinational corporations are often complicated and, when poorly implemented, can be potentially damaging to a firm. Practically applying ethics and corporate social responsibility to business practices is a multifaceted challenge that requires both awareness and vigilance. Execution of ethical and responsible business practices necessitates consideration of international standards such as the UN Global Compact as well as structuring of company policy in order to best address the most pressing issues and violations. However, the application of the Compact can often be complicated and confusing. Expectations for firms emphasize attention to four major areas: human rights, the environment, labor practices, and corruption. I will be outlining business’ responsibility in these four areas, as well as analyzing the most important human rights, environmental, labor, and corruption issues and the potential challenges to implementing responsible practices in these areas. In order to look at these theories in practice, I will be considering how these issues apply to the diamond industry. Companies in all places, regardless of their size or sector, have the standard obligation to respect human rights. Respecting human rights is the basis for responsible business practices, and human rights issues affect all other actions taken by firms. The first and second principles of the United Nations Global Compact address human rights... ... middle of paper ... ...o benefit businesses and consumers alike by leading to lower costs. Companies must look for possibilities within their own supply chain to develop cleaner processes. This leads to the last environmental call of the Compact: to develop sustainable technologies. These are technologies that make the business process less polluting, protect the environment, use resources sustainably, recycle more, and produce less and or cleaner waste2. Pursuing sustainable technology can be costly, but it is an investment into the future of the company, giving it a reputation as a company that is innovative in looking for opportunities to better the world around them for future generations. These technologies can also be beneficial to people at the beginning of the supply chain, who benefit economically and health-wise from initiatives to use less pesticides or grow organically6.
Business ethics simply can be defined as the application of business values in the business practice of a company (Seawell 2010, p. 2). For a multinational company, business ethics is one of the critical aspects need to be taken into account in business decision-making processes. Failure to give attention on ethics may bring consequences on company’s reputation (Meyer & Jebe 2010, p. 159). The company is expected not only to pursue its own profits but also contributing to the environmental and social welfare of the community where it operates (Svensson & Wood 2008, p. 308).
The term “ethical business” is seen, by many people, as an oxymoron. This is because a business’s main objective is to make as much money as possible. Making the most money possible, however, can often lead to unethical actions. Companies like Enron, WorldCom, and Satyam have been the posterchildren for how corporations’ greed lead to unethical practices. In recent times however, companies have been accused of being unethical based on, not how they manage their finances, but on how they treat the society that they operate in. People have started to realize that the damage companies have been doing to the world around them is more impactful and far worse than any financial fraud that these companies might be engaging in. Events like the BP oil
In this paper, I will attempt to discuss what should be the norm for international business and optimal resolution for ethical dilemmas that all multinational organizations should adhere to as part of its normal conduct of business. Furthermore, I will discuss how to resolve the dilemma around fair wages paid to its employees, keeping the organization sensitive to various international cultures it operates in and to not let any local corruption and bribery shadow the good efforts and image of the organization.
Kidder, R, M., (2010), Center for corporate Ethics, Institute for Global Ethics, retrieved on August 08,2010 from www.globalethics.org/ reserve reading from ethics news line
There are a number of issues that affect international business ethics. They include employment practices, human rights, environmental regulations, corruption, and moral obligation of multinational companies. Employment practice refers to the working conditions an employee must work under. This can be very difficult to gauge, because many times the working conditions of a host nation are inferior to those in an organizations home nation. Many organizations have had to fight with these regulations. A good example of this in the trouble Nike found themselves in during the 1990s. There were a number of news reports released about the working conditions of most of its subcontractors were very poor . The Nike Company was not breaking any laws but it did bring into question the ethics of using a sweatshop. After this incident it left a number of questions for the international marketplace. In recent years many companies have cut ties with organizations that use unsafe and unfair labor practice.
This article reviews the ethic and social responsibilities of multinational companies and offers a strategic approach for future interaction with other cultures. Not much has been researched or recorded about how multinational managers handle ethical and social responsibilities. The article defines corporate social responsibility as “the firm’s obligation to respond to the externalities created by market action” (Husted & Allen, 2006, p. 839) with externalities further defined as being the reaction to a corporate action. There has not been a theory to distinguish local from global corporate social responsibility and previous discussions regarding ethics or social responsibility centered on social contracts or universal principles. Studies show that there is a difference between universal principles and local norms. Environmental protection and human rights fall into the global social responsibility. By contrast local responsibility is based on needs and circumstances happening locally. Local needs can be the same as global needs such as fighting AIDS or unemployment in South Africa. However, multinational that are not affiliated with South Africa have little incentive to contribute toward South African AIDS and cannot actively affect the unemployment which are local social responsibilities but might fund a global AIDS awareness campaign which is a global social responsibility. Once a firm defines the local needs they must devise a strategy to manage it.
Without doubt the XXI century has changed our priorities, especially when it comes to the way we do business. Popular sustainable business models, as advertised in the media, have evolved into much more than a moral obligation or an external requirement to generate money. Essentially, are forcing companies to reinvent the systems and approaches with which they generate value and profitability to the company.
A plethora of studies have been presented to describe the issues concerned with social ethics in regard to internationalization of business activities. For instance, Lee (2009) indicates that corporate social responsibility (CSR) has increasingly become very concept in many organizations with national or international scope. However, Asia is a region that is huge and assuming that XYZ is focusing on multiple countries as a base of its business expansion, then the complexity of the social ethical conditions become even more complex. Lee (2009) and Steenkamp (2001) posit that some of the most common social and ethical considerations that should be considered by an expanding organization are: human rights, environmental regulations, employment practices and corruption.
Since the adoption of the Universal Declaration of Human Rights (UDHR), the discourse of international human rights and its importance has increasingly become indoctrinated in the international community. In the context of political and economic development, there have been debates on how and which rights should be ordered and protected throughout different cultures and communities. Though there is a general acceptance of international human rights around the globe, there is an approach that divides them into civil and political rights and social and economic rights, which puts emphasis where it need not be.
Business ethics and social responsibility are two concepts many individuals believe go along together for corporations in the business environment. Business ethics are the moral values a company uses to ensure all employees action in a standard manner when completing business functions. Social responsibility is typically a conceptual theory that governments and the general public hold, believing that businesses should not conduct themselves in a manner counter to cultural or societal norms. The connubial of these concepts happens when companies introduce a written code of ethics to demonstrate that the company only acts in its greatest interest so long as it does not damage the company’s social responsibility.
This paper discusses the role of ethics in corporate governance. I seek to show the application of moral and ethical principles in corporate governance. Ethics is a topic that has generated a lot of interest in the last decade especially after high profile scandals. The failures of prominent companies such as WorldCom, Enron, Merrill lynch and Martha Stewart portrays the lack of corporate ethics. The failure of such business has seen an increased pressure to incorporate ethics in corporate governance. The result of corporate scandals has been eroding investor and public confidence. The entire economic system has experienced some form of stress from loss of capital, a falling stock market and business failures.
The sustainability of ecosystems on which the global economy depends must be guaranteed. And the economic partners must be satisfied that the basis of exchange is equitable” (World). This quote demonstrates the complexities of sustainability. Another thing corporations should focus on when trying to be sustainable is their environmental impact. Annie Leonard in her book The Story of Stuff says that companies can significantly reduce their toll on the environment by changing their design. The design determines “the amount of energy used in making and using the product,” “the length of the product’s life span” and “its ability to be recycled” (Leonard). All these things determine the amount of resources a company must use, so simply changing a product’s design is one way a company can have a large impact on the sustainability of the environment in which it operates. One example of this is that “Wal-Mart attributed more that $100 million of its 2009 revenue to a decision to switch to a recyclable variety of cardboard in shipments” which it sells to a recycler instead of paying to send it to a landfill
The role that globalization plays in spreading and promoting human rights and democracy is a subject that is capable spurring great debate. Human rights are to be seen as the standards that gives any human walking the earth regardless of any differences equal privileges. The United Nations goes a step further and defines human rights as,
Ethics is the study of right or wrong and the morality of the choices that individuals make. That basicly means the set of morals or responsibility that a person, group, or field have. Ethics can also be classified as code of morals. In business there are ethics that portray to business. These are called business ethics, business ethics just happen to be the application of ethics, morals, into the business field. Some examples of business ethics are obeying all rules and regulations even when nobody 's looking, which is pretty self explanatory, you shouldn’t be breaking rules. Even if it is as simple as washing your hands after you use the restroom or straight up lying to your customers, they are the ones making you money so if they find out
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.