Social Responsibilities of Multinational Corporations - Essay Example

Social Responsibilities of Multinational Corporations The process of globalization today is surrounded by different controversies. These controversies have resulted in concerns that most multinational companies (MNCs) could be getting profits while neglecting their workforce, as well as contributing to the degradation of the environment. Different scholars have argued about the role of corporations in complying with host country laws and promotion of their human rights. While others feel the corporations have failed, others fell that corporations are doing all they can to fulfil their social responsibility. In order to prove themselves right, and cover up their flaws in living up to their social responsibility, a few multinational companies have taken different steps that reflect adherence to their social responsibility. In this paper, I will argue that most multinational companies have disregarded their obligations to respect human rights of their host countries, and have continued to violate human rights indirectly, as they capitalize on the weaknesses in their host’s government systems, and lack of standard rights, while earning big profits in their host countries. Multinational corporations extend their production and marketing processes into different world regions. In the new business environment, these multinationals have a great political and economic influence on the host countries. These exploit the resources and labour in these countries with an aim of making more profits. It has been argued that the multinational corporations in the developing countries do more harm than good and function there without a social conscience. Most multinationals have chosen to operate in more developing countries because the business standards and restrictions there are less tight as compared to those in the West (Arnold 156). Some scholars have argued that multinational corporations play an important role in the modernization and globalization processes. This argument bases on the fact that these introduce new technology and capital market in the host countries. If the host countries are developing nations, they benefit from all the western assets that the multinational corporations come with. Although the multinational corporations might appear capitalistic, these serve the needs of the society, while pursuing their own interests. These corporations make maximum use of efficiency and productivity, with global operations, and help in the distribution of goods around the world. Some analysts have therefore argued that since the multinational corporations have a great impact in the world, their activities, links to the governments, and their general influence on the international system needs to be known (Arnold 156). Trends in human rights continue to change today, and human rights issues have ceased to become matters of the state only. There are more multinational corporations today, and some of the concerns raised about human rights issues come from these corporations. Today, different multinational corporations have been involved in a number of cases concerning their violation of human rights in the host countries. This is not a new happening, as human rights violations by multinational corporations can be traced back to the eighteenth century. The non-governmental organizations today accuse multinational corporations of causing environmental degradation in the host countries, exploitation of offshore factory workers, and the denying employees their right to association and free speech. However, the multinationals argue that they have a right to influence the public policy of their host country. However, these have a negative influence on the country’s public policy, therefore, failing to fulfil their social responsibility (Arnold 155). According to Donaldson, the rights people take for granted in the United States are greatly violated in some countries, and citizens are denied these rights. For instance, results of an interview conducted in Central America in 1987, showed that most people started working while they were between ages 12 and 14. In other countries, there are no rights to free speech, basic education, basic nutrition, and freedom from torture (499). The multinationals operating in these countries have a role in play, as far as the human rights issue is concerned. Multinationals are thus, expected to show honour and protect the human rights of their host countries. Donaldson gives an example of a multinational operating in a country where there is rampant malnutrition, yet one of their human rights is the right everyone to food. If a multinational in this country buys large tracks of land and plants cash crops such as coffee, then this automatically becomes a violation of human rights in this country. This company will not be promoting the rights of the people, as these are in need of staple food, and not commercial crops. By planting coffee, this company will be serving its own interests at the expense of the starving people in its host country (499). In the context of human rights and the responsibility of multinational corporations, it is worth noting that the corporations are required to perform at least the minimal duties, while the maximal responsibilities should be performed by the state itself. However, it is unfortunate that some multinationals corporations have failed to perform these minimal duties, which are the basics. Although adhering to the minimal duties may slightly affect the company’s profits, it is ethical that multinational corporations put the human rights needs of their host countries first, and not their interests in profit making. Human rights are an entitlement of people, thus, a responsibility of multinational corporations. These rights therefore, apply to the employees of multinational corporations too. However, various moral agents should perform the moral duties involved in human rights protection. The state itself should therefore, be ready to protect the human rights of its citizens. This can be through the condemnation of any attempt by the multinational corporations in the country to compromise the human rights of the citizens in any way whatsoever. However, sometimes this has not been the case, as states and multinationals, have together compromised the rights of citizens, because of different reasons, which are money-oriented. Donaldson gives examples of situations when multinational corporations defied the human rights issue in most developing countries, for their own benefits. In the year 1988, western countries had put strict measures on dumping by companies, and this had become expensive. Therefore, the companies sought for alternative solutions to their dumping needs. These companies resorted to dumping their toxic wastes in the developing countries of West Africa such as Nigeria, Guinea Bissau, among others. These paid the countries for them to dump, and most of these countries did not object. However, Nigeria had not been told about the toxic wastes, as these companies used sophisticated scientific language, which the Nigerians could not easily comprehend. This later called for the removal of the wastes from the country. Toxic wastes are an environmental threat that has a long-term effect on people. Therefore, both the state and the companies compromised the health of people by collaboratively working together to facilitate the dumping of wastes in the countries. In this case, the responsibility to safeguard people’s rights is the collective role of the multinational corporations, the companies in the host country and their officials, governments of the host countries, corporate executives, and the international non-governmental organizations (500). Most importantly, the state government plays the most important role in ensuring that the rights of its citizens are not violated. However, some states have failed in their performance of this responsibility, as they have deliberately allowed multinational corporations to violate these rights in different ways. For instance, when the government in Guinea Bissau accepted to be paid $120 million for toxic wastes to be buried in its land, it readily compromised the human rights of its citizens. Therefore, if the state is rigid on its stand on human rights, the multinational corporations will not have the opportunity to violate human rights in any way. Therefore, corrupt governments, especially in the developing countries are the enemies to their own people, when they compromise their people’s rights for the sake of having fuller bank accounts abroad (Donaldson 505). Multinational corporations always rely on the nature of the host government in fulfilling their social responsibility. If the government is lenient or corrupt, these multinationals will capitalize on this to maximize profits in the country. A case in point is the government of Ecuador, which had failed to grant the marginalized groups and the indigenous Indians their human rights. This negligence made the Texaco Company to use it for its own benefits. The company capitalized on this and exploited Oriente’s oil reserves. However, this company spilled and dumped many barrels of oil in Orients, leading to massive pollution of the area, which is expected to affect future human generations that will settle in the area. This company therefore, failed to offer the Ecuador citizens their human right to a clean and healthy environment. Unfortunately, this company argued out its innocence, and because of lack of a standard procedure for international rights and sanctions, this company did not face any sanctions, despite the huge mess it has caused the environment around the Amazon (Arnold 164). Multinational corporations are expected to respect international rights and basic rights, as they apply in the host country. Donaldson argues that in order for multinational corporations to achieve this, they must avoid deprivation of any kind. As we saw in the case of minimal and maximal duties, corporations are not expected to observe the responsibilities of the state or individual. These therefore, are not ranked on the standards of the state or individual in the course of their social responsibilities. Governments are charged with protecting the liberties of citizens and improving welfare, while corporations are meant to achieve their economic goals and since, these are moral actors, they must exhibit a narrow personality. Multinational corporations must therefore ensure that their goods distribution and other of their business activities in the country meet the standards of the welfare of the host country (Donaldson 505). Multinational corporations have a variety of social responsibilities to perform, with regard to human rights protection. Corporations must protect against discrimination. This duty also affects the government. This right influences most multinationals’ activities. Employees working for these companies must not be discriminated against based on race, gender, class, or caste, among others. These corporations must develop procedures such as policies, to enhance this right. Multinational corporations must also observe the right to physical security. For instance, multinationals dealing with production of metalwork, need to provide workers with hand gloves, for their own physical security. Chemical companies too must provide goggles, gloves, and other protective items to the employees to protect them from physical harm, which they are exposed to. However, most companies have not lived up to this, as today; there are still cases of discrimination of employees in multinationals. According to Donaldson (507), multinational corporations must fulfil the right to free speech and association. These should therefore, not forbid employees from forming their own associations. They should condemn any government policies in the host country, which deny citizens their right to speech and association. In addition, these multinationals must respect the right of citizens to minimal education. This is one of the rights, which most multinationals have failed to fulfil in the past. By respecting minimal education, corporations must not hire children, or those individuals who have not attained the appropriate age to work. This denies them the opportunity to go to school and get an education, as they will spend all their time working. Multinational corporations must also grant political participation of citizens. Fortunately, most organizations have observed this right; as such direct cases are unheard of today. However, a few multinationals violate this right indirectly by bribing public officials in order to gain different favours. An example is the Lockheed Corporation in Japan, which bribed the Prime Minister $7 million, in order to get the Tri-Star jet contract. This undermined democracy in the country, since a prime minister is elected by the public, and therefore, must serve public interests. Finally, multinational corporations must respect the people’s right to subsistence. Any involvement in the country’s subsistence system by the multinationals should bring positive results. For instance, if a multinational buys land from a poor country, land that was previously used to grow food crops, the company must not grow cash crops for export such as tea, as this will deprive the citizens of their staple food, and increase rate of hunger in the country (Donaldson 508). Conclusively, multinational corporations have a great influence on their host countries. These affect their host countries in both negative and positive ways. Although these contribute to the economic progress of a country, most of them have disregarded their social responsibility, which mainly benefits the host country. Since most multinationals are hungry for huge profits, adhering to the social responsibility requirements will cost them, and therefore, they look for ways of compromising their social responsibility, to maintain their profits. Social responsibility includes human rights, environmental conservation, among others. With regard to human rights, multinationals have responsibilities to adhere to the set human rights in their host country, as well as the international rights. Most have failed to fulfil this and end up collaborating with the corrupt government systems of the host countries, to evade this responsibility. Others capitalize on the weak government systems and weak laws in most developing countries to violate the human rights. Nonetheless, the lack of standardized mechanisms of imposing human rights on multinational corporations has been the cause of most cases of human rights violations by multinationals. In most cases, these go scot-free due to the lack of a clear framework upon which they can be sanctioned. The case of Texaco Company is the best illustration of this, as even after causing immense environmental degradation, the company was not subjected to any sanctions, as there lacked a standard framework of doing that. Therefore, a lot needs to be done, as far as human rights protection and multinational corporations are concerned. Works Cited Arnold, Denis. “Libertarian Theories of the Corporation and Global Capitalism.” Journal of Business Ethics. 48: 155-173, 2003. Print. Donaldson, Thomas. “The Ethics of International Business.” London: Oxford University Press, 1989. Read More