Ethics and International Affairs - Case Study Example

? Human Rights and Labor Practices in Foreign Countries: Is a Business Morally or Ethically Obligated to Uphold Them? Research Paper Date of Submission Name of University Introduction From the point of view of business ethics, multinational corporations (MNCs), or businesses operating in foreign countries, becomes a focus of analysis by academic professionals who study the moral and ethical obligations of businesses to the society. There are several moral dilemmas and issues that surround business practices. As an outcome of this academic interest, a field of business ethics has been developed wherein the moral or ethical obligations of businesses and the ethics of global business activities are integral. This field has been named international corporate responsibility (ICR) (Brenkert & Beauchamp, 2009). ICR examines whether global business practices have been mindful of and have respected the rights and wellbeing of various stakeholders, and their obligations to them. Issues that ICR may focus on include whether MNCs or global businesses have carefully scrutinized their labor practices, valued fundamental human rights, and respected the interests and rights of local communities (Sullivan, 2003). This essay tries to answer the question, are businesses morally or ethically obligated to uphold human rights and labor practices in foreign countries? Ethical issues are at the heart of disagreements and conflicts about global labor practices and human rights. Several advocates accuse multinational businesses of unfair and inhumane treatment of employees in foreign countries. Economists answered that gratifying these advocates’ demands will lead to lower employment rate in developing countries, thus weakening social welfare (Cahn & Holeman, 1999). Therefore, in order to accurately determine the merits and flaws of these opposing arguments, it is important to analyze the moral or ethical obligations of businesses with regard to human rights and global labor practices. Human rights, which is a set of ethical guidelines, is a major attribute of current public dialogue, particularly as it relates to global issues. The proclamation of the United Nations Universal Declaration of Human Rights, alongside the support of agencies like Human Rights Watch and Amnesty International, has resulted in a worldwide recognition of human rights as an integral instrument of moral assessment by people of broadly differing religious and political values (Hartman, Arnold, & Wokutch, 2003). The principle of human rights is now an important aspect of discussions concerning international labor practices. Moral principle, or ethics, denotes what is right. Issues regarding integrity, justice, and respect occur often in people’s personal and professional lives. Nevertheless, the responsibilities of a business are markedly different from the obligations of an individual. For instance, a business has an obligation to its shareholders. Particularly, the specific ethical responsibilities of businesses are based on the specific functions managers serve in business organizations. Peter Drucker presents a concise description of the functions of managers today (Hartman et al., 2003, 78): When I first began to study management, during and immediately after World War II, a manager was defined as “someone who is responsible for the work of subordinates.” A manager in other words was a “boss,” and management was rank and power. This is probably still the definition a good many people have in mind when they speak of “managers” and “management.” But by the early 1950s, the definition of a manager had already changed to one who “is responsible for the performance of people.” Today, we know that is also too narrow a definition. The right definition of a manager is one who “is responsible for the application and performance of knowledge.” In each of these functions, managers have specific responsibilities. As much as they benefit from authority and influence within the organization, managers exercise considerable authority over corporate practices and processes; the higher the position of the manager the larger the authority to bring about favorable, or unfavorable, ethical transformation (Deva, 2012). Managers are morally responsible for the efficiency and wellbeing of the people who work for them. One aspect of the specialized knowledge accountable to managers involves the moral attributes of the duties with which they and the people they manage are responsible for. Similarly, one aspect of the general knowledge accountable to managers involves the ethical practices and norms of the organization (Deva, 2012). An ingenious manager has the ability to establish new practices, processes, or knowledge. A morally ingenious manager therefore has the ability to establish new practices, processes, or knowledge of a particularly moral character. The main moral responsibility of managers of business organizations is to meet the demands and gratify the interests of their shareholders by contributing to the production and selling of products and/or services (Hartman et al., 2003). On the other hand, this is not the sole responsibility of a manager. Managers should harmonize this responsibility with other responsibilities like valuing traditional practices and valuing the law. Managers should harmonize their agreed obligation to the shareholders of their organization with their moral obligations to their stakeholders. But what are the definite obligations of global businesses as regards the welfare and freedom of workers, and how are these responsibilities to be harmonized with the duties of managers to their shareholders? Because welfare and freedom are fundamental human rights, the duty to value these rights are similarly fundamental. Thus, no labor practices could be carried out that will go against an employee’s rights to welfare and freedom. Global businesses have the moral obligation to make sure that fundamental rights are upheld in the organization. As stated by the United Nations, “Society no longer accepts the view that the conduct of global corporations is bounded only by the laws of the country they operate in. By virtue of their global influence and power, they must accept responsibility and be accountable for upholding high human rights standards” (Sullivan, 2003, 75). MNCs usually have clearly delineated internal decision processes that produce an internal system for implementing human rights norms. Therefore, morally ingenious managers are ideally positioned to serve a useful function in guaranteeing that the rights of employees in foreign countries are valued. Global business managers should consider valuing their workers’ rights to welfare and freedom as limitations on the operations they carry out for their shareholders (Li, 2011). Nevertheless, the rights to welfare and freedom are quite broad. Further specificity about the nature and substance of these rights should be given. The rights a person have as a human being should also be subjected to some restraints. This means that a person is not allowed to exercise all of his/her rights under any given situation. Justifiable restraints may be enforced on the exercise of a person’s rights by public and private institutions. For instance, it is not an illegal violation of a person’s right to freedom of expression and belief if a business organization forbids indoctrination while at work (Brenkert & Beauchamp, 2009). This kind of action is normally disrupting and by itself mismatched with the reasons for which workers are employed. Moreover, workers have the freedom to take part in such actions when they are not at work. Prohibiting this kind of action within the organization does not violate a worker’s dignity as a human. Nevertheless, there are particular restraints on workers’ freedom that constantly defy human dignity because they view workers as objects rather than as human beings. A number of international conventions and codes are provided for MNCs looking for special assistance as regards their labor practices in foreign countries. The Articles of the United Nations Universal Declaration of Human Rights, for instance, presents particular illustrations of what valuing workers’ right to freedom means (Cahn & Holeman, 1999). Articles 3, 4, and 5 lay out guidelines for the outlawing of all forms of indentured servitude, forced labor, severely dangerous working conditions, and corporeal punishment of workers (Hartman et al., 2003, 92). Likewise, global business managers have a duty to make sure that workers’ right to basic goods is valued within their organization. By making sure that these integral needs are satisfied, managers will perform their moral responsibility to endow their workers with the capacity to function or act efficiently. The Articles of the United Nations Universal Declaration of Human Rights offer a useful manual for identifying what valuing workers’ right to welfare means. Article 23, section 2, offers a guideline for the outlawing of racial or sex discrimination; article 25, section 1, offers a guideline for compensating workers that are in harmony with dignified living (Hartman et al., 2003, 92-94). They also lay out groundwork for the notion that it is the obligation of businesses to make sure that social security and other forms of taxes are given to designated public servants (Weissbrodt, 2006, 135). To the extent that managers, in their efforts to meet their moral obligations, are subjected to company-wide directives directing acceptable employment terms and conditions, selection, hiring, and promotion, freedom of contract is likely to be limited. An array of equally beneficial agreements may be ruled out (Sullivan, 2003, 78). Not merely will this imposed standardization of practices be likely to increase business costs, but also it hampers the free functioning of labor markets, and thus divests common people of prospects to achieve a better life. Ian Maitland argues that “attempts to improve on market outcomes may have unforeseen tragic consequences” (Sullivan, 2003, 78) for employees in developing economies. The central idea of Maitland, as it concerns employees in the formal sector in developing countries, is that the enforcement of labor principles or wage standards higher than what the market requires will elevate costs, and that this will unavoidably result in lower employment rate and fewer jobs (Deva, 2012). But is this assumption credible? To prove that improving the working conditions and wages of workers will not certainly result in the ‘tragic consequences’ that Maitland foresees, it is important to take into account the following cases. As regards the lowest-paid workers in the formal sector in developing economies, the idea that efficiency is not affected by wage rates is flawed. Obviously, employees whose essential nonfood requirements are satisfied and who have their minimum daily dietary needs satisfied will have greater vigor and more positive behavior and outlooks at work; and are not likely to be truant (Sullivan, 2003, 78-79). Employees are hence likely to be more efficient and committed. Greater efficiency stemming from greater employee commitment and improved nutrition may compensate for the cost of bigger wages. Moreover, it is economically viable for global business to enhance working conditions and increase wages in factories in developing countries without contributing to the growth in rates of unemployment. MNCs may decide to enhance working conditions and raise wages while sustaining current employment rates (Palthe, 2008). Profit margins differ among products and/or services. For the producers of branded products, a substantial rise in labor expenses may be simply taken up as an operating cost. In fact, the cost may be counteracted by the value added to the product and/or service to the extent that consumers show an inclination toward goods manufactured under circumstances in which workers’ rights are valued. Ultimately, there could be instances wherein higher labor costs are not counteracted by higher efficiency and wherein the rise in expenses cannot be easily taken up as an operating cost (Duke, 2000). For instance, producers of nonspecific or basic products with low profit margins may have problems taking in the cost of higher labor expenditures. In these instances, the additional labor expense could be equalized by internal cost-cutting strategies; or it could increase prices or lower return on equity (Sullivan, 2003). Most employees in many developing countries work at the outer or marginal domain of the formal employment sector. As the number of workers in the formal sector grows in these countries, global businesses that value workers’ rights can possess the power to shape the local standards directing labor practices unequal with the number of employee that they really hire (Martin-Ortega, 2008). This is due to the fact that they, alongside with morally ingenious local businesses, will be establishing the norms against which other businesses should be assessed. The outcome will be a significantly enhanced standard of living for the increasing number of employees in the forma sector. In the same way, morally ingenious MNCs and their providers can be expected to benefit from the most efficient and committed local employees since they will be classified alongside the most sought-after businesses (Martin-Ortega, 2008). Moreover, as a growing population of employees abandons the informal sector in search for greener pastures in the formal sector, fewer demands will burden the inadequate resources of the informal sector. This must enable a higher quality of life for those staying in the informal sector (Cahn & Holeman, 1999). As such, welfare and freedom are rights that all human beings have, and that global businesses have a duty to make sure that these rights are appropriately valued in their organizations. Even though the discourse on human rights has largely focused on the protection of human beings from governmental exploitations, businesses have lately been subjected to the same human rights scrutiny. This inquiry is necessary because businesses nowadays can have as much impact on individual wellbeing and frequently as much influence or effect as governments. Inspection of businesses has usually emanated from internationally esteemed agencies like Amnesty International and Human Rights Watch (Brenkert & Beauchamp, 2009). Their purpose is not to disparage capitalism or to put down the objectives of global businesses. These agencies aim to rectify business practices that defy or disrespect human rights. For instance, Human Rights Watch condemned several oil corporations in Nigeria, including Mobil and Shell, for conspiracy with the government to hold back political opposition (Brenkert & Beauchamp, 2009, 252). Similarly, Texaco has been condemned for exploiting the poor human rights performance of the Ecuadorian government, which traditionally neglected the rights of local communities. Texaco was heavily criticized for ignoring these human rights problems while going against the human rights of the people of Ecuador to a healthy and sanitary environment. The accusations were grounded on the drilling practices of the company, building of new highways, deforestation, demolition of ancestral lands, poor waste disposal, and so on (Brenkert & Beauchamp, 2009, 252). Without any respect for their moral obligations to human rights and labor practices in foreign countries, businesses will continue to destroy, not just the rights of individuals to dignified living, but the environment as well. Conclusions As global businesses have further enlarged their operations, at times with manipulative and exploitative purposes, inspection of human rights and labor practices has grown. Specifically, rigorous inspection has been carried out on operations supporting the government that abuse human rights, operations that destroy the environment, and failures to provide a safe and dignified working conditions for employees. Even though businesses may have no legal responsibilities to meet human rights guidelines, there is a wide-ranging understanding in most countries that businesses will experience significant decline in reputation if they fail to follow human rights standards. The objective of protecting their images has driven businesses to concur that they should not defy human rights. However, the absence of legal obligation does not necessarily imply the absence of moral obligation to human rights and just labor practices. Businesses, more particularly managers, as argued by Peter Drucker, have the moral obligation to respect the basic human rights of workers. References Brenkert, G. & Beauchamp, T. (2009). The Oxford Handbook of Business Ethics. New York: Oxford Handbooks Online. Cahn, D. & Holeman, T. (1999). Business and Human Rights. Forum for Applied Research and Public Policy, 14(1), 52+ Deva, S. (2012). Regulating Corporate Human Rights Violation: Humanizing Business. London: Routledge. Duke, J. (2000). Enforcement of Human Rights on Multi-National Corporations: Global Climate, Strategies and Trends for Compliance. Denver Journal of International Law and Policy, 28(4), 339. Hartman, L., Arnold, D., & Wokutch, R. (2003). Rising Above Sweatshops: Innovative Approaches to Global Labor Challenges. Westport, CT: Praeger. Li, W. (2011). Developmental State, Human Rights and Migrant Workers. Development and Society, 40(1), 139+ Martin-Ortega, O. (2008). Business and Human Rights in Conflict. Ethics and International Affairs, 22(3), 273+ Palthe, J. (2008). Managing Human Rights and Human Resources: The Dual Responsibility of Global Corporations. Forum on Public Policy: A Journal of the Oxford Round Table, 1+ Sullivan, R. (2003). Business and Human Rights: Dilemmas and Solutions. UK: Greenleaf Publishing. Weissbrodt, D. (2006). UN Perspectives on ‘Business and Humanitarian and Human Rights Obligations’. Proceedings of the Annual Meeting-American Society of International Law, 100, 135+ Read More