Internal Codes of Conduct by Multinational Enterprises - Essay Example

? THE VALUE AND BINDING EFFECT OF INTERNAL S OF CONDUCTBY MULTINATIONAL ENTERPRISES Law: The Value and Binding Effect of Internal Codes of Conduct by Multinational Enterprises Introduction Many multinational companies have realized the significance of developing guidelines or codes of conduct that can help them to achieve their business goals in the global competitive market. Codes of conducts are effective policies or guidelines developed by a company and these guidelines defines or provides ethical standards that the company may follow in order to operate effectively in the global business market1. The fact that codes of conducts are externally established standards that MNCs should follow, other corporate codes of conducts are internally formulated to enable the company to run their business practices efficiently. Therefore, many of MNCs have developed internal programmes, guidance and management systems, which underpin their commitment to good corporate citizenship, good practices, good business conduct and employee conduct with an aim of achieving successful business performance in the global competitive market. These guidelines employed by MNCs aims to promote the positive values and contributions such as economic, environmental and social advancement in an economy, as well as, enabling companies to achieve appropriate business conduct for efficient business operations. This has been brought forth by the numerous technological as well as operational development that have been realized in the field making the organizations more competitive in a bid to maintain a competitive edge. This research seeks to evaluate the Value and Binding Effect of Internal Codes of Conduct by Multinational Enterprises. The Value and Binding Effect of Internal Codes of Conduct A broad range of factors are nowadays influencing companies to adopt codes of conduct some of which are viewed as valuable for enlightening self-interest of the company while others are necessary for risk management. This has been as a result of the changes evident in operation as well as structures of the organizations as well as the market in which they operate. Proper interaction between the organization and its environment is vital in ensuring that trust levels are enhanced as well as loyalty is being maintained. Corporate codes of conducts have been established and they exist in many MNCs in order to guide the company on the way they operate; thus enabling them to achieve successful business performance in the global competitive market2.The recent study that was carried out by the OECD concluded that most MNCs codes of conduct tend to be highly specific and they deal with the peculiarities of a certain project, location or specific company3. There are different codes of conducts designed to deal with different issues such as industry-specific corporate codes and these guidelines deals with environment; thus labor issues tend to be the most common issues which is being focused under this code of conduct. For instance, many multinational companies in U.S.A such as footwear companies, hardware companies, personal beauty care companies and electronic companies have adopted corporate code of conduct in order to enable them perform their business activities successfully. Multinational companies such as MacDonald stores generally support the idea of codes of conduct that standardize rules of corporate behaviors across the industries because it contributes to successful business performance across the globe. Many multinational companies have developed guidelines that help them in effective business operations. OECD countries have established deliberate standards and principles that are accountable for efficient business performance in diverse key areas including industrial relation, workforce, human rights and environmental areas4. The motivation behind adopting these guidelines can be quite complex but MacDonald Inch adopts codes of conduct due to the need of carrying out effective business practices. This is because the company manager believes that codes of conduct represent good business practices that can enable the company to achieve successful business performance in the global competitive market. Therefore, MacDonald desire national conducts as a basis for investment agreement but they are highly concerned with one agreement, which could be applied globally despite the disparities for economic conditions, customs, customs or local business practices. Multinational enterprises have implemented codes of conducts that underpin their commitment to good corporate citizenship, good business practices and codes of conduct. The aim behind this is to enhance successfully business growth in the global business world. The competitive forces in the contemporary business world have become intense and MNCs face diverse legal, social and regulatory challenges in the business settings5. Therefore, multinational companies such as food chain industries like MacDonald, Wal-Mart and many others are forced to execute suitable principles and codes of conduct in an endeavor to attain competitive advantage. Although there are varied business codes of conduct or guidelines available publicly in the contemporary society, the guidelines are only multilaterally endorsed by the government; thus other companies have begun to implement internal programmes that focused on the good business practices and employment conduct within the organisation. These guidelines are valuable because they intend to promote the constructive contributions that international companies can make to social, environmental and economic growth. Blanpain asserts that industry-specific codes of conduct are extensive and they take into considerations labor and environmental issues in a specific industry6. Labor and environmental issues are the most common covered areas in the codes of conduct that are taken into considerations because of the value they have in an industry. For instance, the environmental standards often compromise commitments from companies to be open to the concerns of the communities in which they locate. 7Labor codes are also the common guidelines and they focus on the commitment of the company to offer a reasonable working environment, commitment to obey child labor laws, employee compensation, provisions against discrimination and better health and safety working environment. For instance, many organisations such as labor union, Child Labor and International Labor Organisation have been formed and employed by companies such as sportswear industries like Nike Company in order to offer effective business performance. Managers are usually quite sensitive to issues of social responsibility and ethical behaviors in the workplace; thus taking legal concerns is vital. Many MNCs have continued to be the centre of debate concerning on the benefits and damage caused by their actions across the globe because of their magnitude and economic power8. The MNCs are held to a higher level of performance; thus there is a need to balance the interest of varied stakeholder through employing effective code of conducts that the stakeholders should take into consideration to enable efficient operations of the company. Issues of social responsibility continue to deal with areas such as the environment, workforce, customers, poverty and lack of equal opportunities globally. MNCs companies comprise an influential presence in the global economy and often have more authorities and capacity to induce transformation than any other government body. 9Mehalu argues that the superlative opportunity to gain ground on human rights globally is for the big international companies and governments to take an integrated standpoint10. Many companies have established business codes of conduct for their suppliers, contractors, customers and they have even established stringent guidelines for assessing their import activities. This is vital because codes of conducts can enable the company to anticipate social needs and solve them, as well as, also capitalize on operation successfully in the global competitive business world; thus maximizing profits. A substantial number of MNCs have instituted their own guidelines and some have gone as far as grouping themselves together while others have established code of conducts in order to advance the quality of life for workforce globally. The value of binding effect of internal codes of conduct is to meet the expectations and moral codes of the society and contribute to the betterment of the company, as well as, further their own interests. The MNCs have developed internal programmes, guidance and management systems that will enable them to achieve good business practices; thus achieving successful business performance. The OECD provides clear guidelines that aim to guarantee that the MNCs operations are in accord with government policies to reinforce the basis of mutual assurance between the MNCs and the societies where they operate11. This guidelines offer voluntary principles responsible for business conduct with applicable laws and international recognized standards vital for enabling multinational enterprises to achieve their business objectives successfully. However, the states adhering to the codes of conduct are supposed to make a binding obligation to institute necessary policies in accordance with the OECD’s decision on issues concerning guidelines necessary for international companies12. The matters included in the codes of conduct in a company may also be the subject matter of state law and international commitments. The nature and scope of economic changes, as well as, increased technology advancement have presented new strategic challenges for MNCs and their stakeholders; thus, many companies are nowadays developing internal programmes underpinning good business practices vital for successful business performance. 13MNCs have opportunities of implementing internal best business practice guidelines or policies that seek to ensure coherence between social, economic and environmental objectives. The ability of the MNCs to promote sustainable development, which seeks to ensure coherence between social, economic and environmental objectives, depends upon the clear guidelines employed by multinational enterprises. Therefore, these aspects can be enhanced when MNCs conduct trade and investments in a contest of open, competitive and appropriate regulated markets where there are clear guidelines set to enable the business to achieve success. Many businesses have implemented codes of conduct in order to advance their business activities and also to achieve competitive business activities in the global business world. Many MNCs have attempted to take action to the public issues by executing internal programmes, regulation and management systems that underpin their dedication to superior corporate citizenship, superior business practices and employee conduct14. For instance, chemical companies such as Chevron industries have made significant efforts of consulting, auditing and contributing to the accumulation expertise in these areas in order to achieve better business performance. They have also encouraged social debate on what constitutes conscientious business code of conducts; thus, many corporations have worked with stakeholders in the milieu of multi-stakeholder initiatives in order to establish guidance for responsible business conduct. The guiding principles that have been implemented by many multinational enterprises have attempted to simplify the shared expectations for business conduct and presenting a point of an allusion for business and for other stakeholders. According to the 15British Association of Social Workers research study report, the code of conduct is binding on all social workers in all roles, sectors and settings in the United Kingdom. Therefore, social workers have a role of promoting and working to the code of ethics employed in the state in carrying out their obligations as the required set of standards. The code of ethics is implemented by the British Association to enable social workers and all employers in the United Kingdom to work efficiently; thus achieving organizational objectives effectively. Ethical awareness is imperative to the professional practice of social workers; thus, their capability and obligation to act morally is a crucial facet of the quality of services offered to them. Therefore, the code of ethics comprises statements of values and ethical principles to human rights, professional integrity and social justice, which should be followed by guidelines or codes of conduct indicating on the way ethical principles, should be applied in the business practice16. Although, the code of ethics are not designed to offer a comprehensive set of rules about the way social workers should work in particular situations, it should sketch the general ethical principles vital for enabling social workforce to act in harmony with the their professional values. Reamer argues that globalization has contributed to varied changes in the contemporary business world; thus, many multinational enterprises have now begun to implement internal programmes for risk management17. The actors and the government involved in the interests of the MNCs have now united together to reinforce the domestic legal and policy agenda for successful business performance. The process of implementing codes of conduct can be traced from the laws of International Labor Organisations, which started earlier in the 20th century. The collective affirmation of Human Rights that was implemented by the United Nation in the year 1948 also marked as another milestone incident18. These events were followed by the current ongoing establishments of relevant codes of conduct for many areas of responsible business practices. These practices have continued to be practiced in the contemporary business world; thus, the OECD has contributed in significant ways to this process through the implementation of standards, which covers areas such as social, economic and environmental aspects. The standards or policies implemented are vital because they help in fighting corruption, ensuring effective cooperate governance and also meeting the interests of consumers, as well as, protecting the rights of social workers. Varied aspects have spurred national and international corporations such as petroleum manufacturing industries to adopt diverse approaches in order to promote international rules on foreign investment. One of the effective approaches that have employed is the negotiation of the legally binding agreements that focuses on imposing a set of standards that the MNCs should follow. For instance, the United States of America adopted the FCPA (Foreign Corrupt Practices Act) policy and it is supported efforts within the OECD to adopt and combat bribery or corruption in foreign public officials. The convention entered force on 1999 and they have passed national legislation that has been adopted in 40 countries. These industries have adopted comprehensive international agreements, which focus on the bilateral investment treaties containing code of business conduct. These codes of conduct are legally binding and best practices that attempts to bring greater conformity in the treatment of foreign investment through prescription changes in state laws governing foreign investments. Godiwalla point out that the guidelines or ethical principles that employed by international corporations are jointly addressed by governments to the MNCs19. Therefore, they offer standards of good organizational practices, which are consistent with applicable laws and internationally recognized codes of conduct. The major aspect of adhering to the code of conducts by international enterprises is to make constructive contributions to economic, social and environmental growth and to lessen the challenges that may take place from diverse operations. Therefore, the government has made significant efforts of achieving this goal by partnering with varied multinational companies, non-governmental organisations and trade unions to enable multinational enterprises to operate their business activities successfully. Brian asserts that many companies operating their business in the international markets have made significant efforts of employing codes of conducts that can enable companies to achieve successful business operations20. The government has also provided effective domestic policy frameworks which include stable macroeconomic policies, non-discriminatory and appropriate regulations vital for enabling multinational enterprises to conduct their business efficiently in the global market21. Therefore, the government adhering to these guidelines is committed to continuous advancement of both domestic and international business regulations in order to improve the welfare and living standards of people globally. The MNCs activities are among the significant ways through which investments are directed and their advancement have reflected broader economic growth in OECD economies22. The increased consumption of services and technology industries into the international market has contributed to varied changes in the business operation process. The international investments lead the globalization course; thereby escalating and intensifying the international tines that connects many regions mutually across the globe23. Multinational companies such as the automotive manufacturing companies such as Toyota, Detroit, Chrysler, General Motors and many others have continued to dominate in the international markets; thus implementing code of conducts on the way these companies are supposed to operate their business in the global market is vital. The increased technology advancement has contributed to the increased business diversity and the complexity, as well as, the speed of economic transactions24. This has encouraged firms operating in the international markets to heighten the value of transparency in their business activities. This is through employing effective codes of conducts to guide the way companies are supposed to carry effective business operation in the global markets. Due to operation across diverse cultures, the presence of a global code of conduct for multinational companies is both challenging and rewarding. The implementation of a code of conduct is not an easy task as adherence to the stipulated guidelines by the various stakeholders counts for the overall success of the program. In this regard, various factors need to be critically evaluated to ensure that the intended goals and objectives are met. Firstly, there should be a clear understanding for the legitimate context and grounds on which the code is implemented. This ensures that the implementation process is not challenging and that upholding the code among the stakeholders is not challenging. Secondly, the presence of an effective and committed leaders is vital is essential in ensuring that the stipulated guidelines are adhered to the letter. Thirdly, while implementing the code, it is necessary to have sound framework through which the its enhancement can be made; the enhancement may be brought forth by the ever-changing global context. Fourthly, since every member of the organization plays a significant role in the overall success in effective implementation and observance of the code of conduct, they should be encouraged to participate and dialogue on various aspects of the code. Despite this, there should be displinary measures through which punishment to those who may try to water down the code are punished. Conclusion The project provided critical analysis on the value and binding effect of internal codes of conduct. The project focused on the ways MNCs have made significant efforts of establishing internal programmes that underpin their commitment to useful business operation and employee conduct in the global business market. The research study indicated that the guidelines employed by MNCs aims to promote the positive values and contributions such as economic, social, environmental progression in an economy, as well as, enabling companies to achieve proper conduct for efficient business operations. Many multinational companies have realized the significant of implementing internally programmes underpinning their commitment to commitment to good corporate citizenship, good business practices and codes of conduct. They generally support the idea of codes of conduct that standardize rules of corporate behaviors across the industries because it contributes to successful business performance globally; thus enabling multinational companies to sustain their business in the global competitive market. Bibliography Blanpain, R. "Multinational Enterprises and Codes of Conduct: The OECD Guidelines for MNES in Perspective." Comparative Labour Law and Industrial Relations in Industrialized Market Economies. 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