Ethical Issues in Multinational Organizations - Literature review Example

?ETHICAL ISSUES IN MULTINATIONAL ORGANIZATIONS By Introduction Multinational organizations face a collection of problems and issues in their operations. The problems are even more complicated and varied given the different countries of operation and the cultures exhibited. This literature is based on ethical issues in organizations and will broadly look at ethical issues and the different stakeholders associated with these issues in the different capacities. It is based on the key thesis discussion question; “Do ethical issues affect the running of multinational organizations?” In the same context, the paper therefore seeks to establish the different ethical issues that may affect the running of a multinational company. This is important because the success of human resource management of any company is highly dependent on ethical issues put in place by the entire management board. According to Trevino and Nelson (2012, p.215), ethical issues regardless of the cultural situation are defined by primary and secondary stakeholders. The paper will therefore bring into view the different ethical issues as indicated by the Abraham’s Stakeholder model and try to figure out the strength of these ethical issues as would determine the success of human resource management and progressive development in a company operating multi-nationally. Stakeholders That Determine Company Ethics Business partners Partnership in a business can be a much polarised issue when unethical business actions are put in place by one organization. According to Pige (2002, p.4), a business will run effectively if the business partners perceive it as being beneficial to them. In this case, they are bound to support each other in their various capacities and the various business entities. For instance, if Western Airlines is a company that benefits the economy of a non-western nation like China, the business partners in China will support its operations there. However, if there is suspicion of market dominance by the Chinese partners, there is bound to be creation of unethical business acts to scare away the market from the Western Airlines. This creates a very complicated system in the management of the foreign company as unethical acts may require a lot of public relations to regain the diminishing glory (Phillips, 2011, p. 81). In this case, the issue of “who or what counts” come in and there is a high level misunderstanding. However, if these two companies have a sound business partnership, there will be a high level ethical business partnership and ability to create good public relations to each other (Kardys, 2012, p. 2). Customers These are the modest reasons for the existence of any company. From a background perspective, Regelbrugge (1998, p.3) indicates that any business must do all it takes to create a high level market for its products. This is in line with expansion of the customers and rendering their needs to their satisfaction. Any unethical act that hurts the customers goes a long way in alienating a company from a market. Multinational companies in the same way face a very tricky situation in trying to maintain the same in the wake of the unethical issue. A recent article by Soni (2009, p.4) maintained the same idea by insisting that if company staffs mishandle a customer, it may go a long way in becoming unethical in the entire customer society. The business will therefore lose a high level customer base to its competitors who are always at standby to initiate these into their company products. Employees Ethics inside an organization has not been a recent issue. As indicated earlier, the motivation to work effectively is levelled towards the beneficial factors that can be realised at the end of the whole process. Employees always have competing goals. According to Maslow’s hierarchy of needs, there is always a need to be happy and the need for satisfaction comes in. The management levels in all organizations however are never the same. Some are horizontal while others are vertical yet some accumulate a combination of both these. Reid-Cunningham (2008, p.73) noted that these desires to work at comfortable levels create a misunderstanding between two or more people in any organization. This may lead back to the competitive levels of the same trend leading to the employees failing to commit themselves to the company. When employees feel discriminated against, they will create side deals in the name of the company for their own benefits. Other unethical issues such as gross negligence will follow and the end company products are bound to lack the original quality that the company may be known for. This view is supported by Connor (2007, p. 2) in which he stipulates that company properties are not supposed to be used for personal reasons. In case however the top management approves use by a certain faction of the employees, there will always be a consequential activity from the other employees. This comes to a critical ethical issue. Opinion Formers and the Authorities Authorities form the basis upon which all business organizations operate. The opinion formers are the informers who make knowledge of available markets accessible to investors. In the work cited by Kardys (2011, p. 5), ethics of influence can be destructive to a very large extent. Authorities are supposed to remain neutral in their design and influence. There have however been so many disengagements as far as becoming impartial are concerned. The authorities have the power to create a very positive or negative issue trying to regulate businesses in an area. In the instance where the business is a multinational, there can be a very big difference in the cultural beliefs making the authorities make a difference in the operation licence allocation. On many occasions, companies operating in foreign nations have been unethically coerced to operate below certain levels to the benefit of local industries. On this issue, Zakhem, Palmer and Stoll (2008) were of the opinion that all the laws and conditions are supposed to be based on conditional agreement. If the opinion formers give out false information attracting a foreign company top a market, it is upon the authorities to understand the situation and create a mutual consent in terms of operation (Vestberg, 2012, p. 5). This is supposed to be implemented to prevent future misunderstandings between the government and the foreign company. If wrong information is given by the opinion formers, then it becomes unethical; to victimize the company in case there is an issue of breach of some of the rules (Bonnafous-Boucher & Pesqueux, 2005, p. 45). Community The community creates the market. International companies have the highest challenge in creating a unified community of all stakeholders to operate in their companies. Community however, according to management scholars refer mostly to the immediate business environment that the business is related with (Trevino & Nelson, 2010, p. 224). The business is socially responsible to the environment it operates in. it is unethical to for instance carelessly dispose of untreated effluent to the environment without taking into consideration the repercussions. Rivera and Delmas (2004, p. 230) reveals that efficient environment and conservation by the surrounding human life creates friendliness between the two. This is true especially in the wake of operating a business. In the multinational context, it is therefore very important to note that there are some end products that are acceptable in some countries and restricted in others. Therefore, it would be unethical for any business to dispose these restricted products in the immediate environment (Rivera & Delmas, 2004, p. 230). Critical Evaluation and Created Gap In the work cited by Robert A. Phillips (2011, p.81), Charles Blattberg criticises the relationship between the different stakeholders and ethics in a business. The only solution to the ethical dilemmas and the unethical issues seen is compromise. When there is any form of conflict, the emphasis in all the findings above is based on negotiation which has failed in practical circumstances in many parts of the world and business. It is possible to accept negotiation as a way of perfecting ethics in a multinational company. However, this has in most cases taken a political dimension and therefore undermines most of the principles upon which international market economy are based (Harrison & Wicks, 2010, p. 33). There is therefore no clear evidence here that involvement of the different stakeholders pose a solution to the different ethical mishaps. What is also ethically right in one culture may not be acceptable to the other (Pige, 2002, p. 13). On the other hand, the elements of ethical organizations, which are four in number, are quite critical in uniting the stakeholders in an international business unit; code of ethics and standards, training all stakeholders on ethics, available advice on situations leaning on ethical side and development of systems that would require grouping that is confidential (Shaw, 2010, p. 78). It is therefore acceptable that the works of these scholars is also valid in making us understand the scope of ethics in an organization. Good management always strive to create ethical situations to all stakeholders and shareholders in the company as well as rebuilding one where it never existed. Conclusion Human resource management and the entire running of any business are based on sound business ethics created between the business and the different stakeholders as seen above (Harmeling, Sarasvathy, & Freeman, 2009, p. 21). For a multinational organization, the business may adversely be affected especially if there is little knowledge of the different practices that may be considered ethical in the different parts of the world. The political systems determine the business environments of the different parts and it is understood that different political regimes are present in the different party of the world (Dew & Sarasvathy, 2007, p. 45). This paper has presented ethical issues and their sources. The source has been referred to as the stakeholders to the business. In view of this, business partners, customers, employees, authorities and the community were discussed. A critical review of the validity of the different scholars on the topic was also discussed which brought out the idea that there are some missing links in the study since it was found that the presented issues could not stand fully for a multinational company. References Bonnafous-Boucher, M., & Pesqueux, Y. (2005). Stakeholder Theory: A European Perspective. CAlifornia: Palgrave. Connor, W. E. (2007). Employee Code of Ethics. New York: William E. Connor & Associates Limited. Dew, N., & Sarasvathy, S. D. (2007). Innovations, Stakeholders & Entrepreneurship. Journal of Business Ethics, 74, 267–283. Harmeling, S. S., Sarasvathy, S. D., & Freeman, R. E. (2009). Related Debates in Ethics and. Journal of Business Ethics, 84, 341-362. Harrison, J. S., & Wicks, A. C. (2010). Stakeholder Theory: The State of the Art. Cambridge: Cambridge University Press. Kardys, D. (2012, 6 9). The Ethics of Influence and Manipulation. Retrieved 11 1, 2013, from Ethics & the Web Design: http://www.robotregime.com/index.php/articles/view/influence/ Phillips, R. A. (2011). Stakeholder Theory. New York: Edward Elgar Publishing. Pige, B. (2002). Stakeholder Theory and Corporate Governance. Journal of Management, 7(1), 13. Regelbrugge, L. (1998). A FRAMEWORK FOR UNDERSTANDING ETHICAL ISSUES IN PARTNERSHIPS. Washington: Bureau of Humanitarian Response. Reid-Cunningham, A. R. (2008). Maslow’s Theory of Motivation and Hierarchy of Human Needs. California: University of California. Rivera, J., & Delmas, M. (2004). Business and Environmental Protection: An Introduction. Journal of Human Ecology Review, 11(3), 230-231. Shaw, W. H. (2010). Business Ethics: A Textbook With Cases.: A Textbook with Cases. New York: Cengage Learning. Soni, R. (2009, 2 19). Stakeholder Theory and Ethics 209. Retrieved 11 1, 2013, from Stakehoplders, Managers and Ethics: http://www.slideshare.net/ravi.iitd/stakeholder-theory-ethics-209 Trevino, L. K., & Nelson, K. A. (2010). Managing Business Ethics. New Jersey: John Wiley. Vestberg, H. (2012). Code of Business Ethics. Stocholm: Erikson. Zakhem, A. J., Palmer, D. E., & Stoll, M. L. (2008). Stakeholder Theory: Essential Readings in Ethical Leadership and Management. California: Prometheus Books. Read More