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Ethical Issues in International BusinessMost Common Ethical Issues

Employment practices

Human rights

Environmental regulations

Corruption

Moral obligation of multinational firmsEmployment PracticesWh en wo rk co n d i t io n s in a h o s t n a t io n a re c l ea r ly in fe r io r to th o se in

a multinationals home nation, companies must decide which standards should beapplied,

those of the home nation, those of the host nation, or something in between

When work conditions in a host nation are clearly inferior to those in amultinational's home nation,what standards should be applied?

Those of the home nation?

Those of the host nation?

Or something in between?

Firms should establish minimal acceptable standards that safeguard thebasic rights and dignity of

employees and audit the foreign subsidiaries andsubcontractors on a regular basisHuman Rights

B a s i c h u m a n r i g h t s t a k e n f o r g r a n t e d i n t h e d e v e l o p e d w o r l d s u c h a s

f r ee do m of association, freedom of speech, freedom of assembly, freedom of movement,

andso on, are by no means universally accepted

Basic human rights are still not respected in many nations

Many rights are not universally accepted such as freedom of:

association

speech

assembly

movement

political expressionRole of the Multinational Firm

It is often argued that inward investment by a multinational firm can be aforce for economic, political,

and social progress that ultimately improves therights of people

But there is a limit to this argument because some governments are sorepressive that investment

cannot be justified on ethical groundsEnvironmental Pollution

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When environmental regulations in host nations are far inferior to those in

thehome nation, ethical issues arise T h e

tragedy of the commonsoccurs when a resource held in common by all, butowned by no one, is overused by

individuals resulting in its degradation

Ethical issues arise when environmental regulations and/or enforcement areinferior to those in thehome nation

This might result in higher levels of pollution from the operations of multinationals than would be

allowed at home

Should a multinational feel free to pollute in a developing nation and is it theright and moral thing to

do?Corruption

I n t h e U n i t e d S t a t e s , t h e

Foreign Corrupt Practices Act

outlawed the practiceof paying bribes to foreign government officials in order to gain

business T h e O r g a n i z a t i o n f o r E c o n o m i c C o o p e r a t i o n a n d D e v e l o p m e n t( O E C D ) a d o p t e d a

Convention on Combating Bribery of Foreign Public Officials inInternational Business Transactionsin 1997 which obliges member states tomake the bribery of foreign public officials a criminal

offenseSome economists suggest that the practice of giving bribes might be

the pr ice thatmust be paid to do a greater good These economists believe that in a

coun try where preexis ting pol itical structuresdistort or limit the workings of the

market mechanism, corruption in the form of black-marketeering, smuggling, and side

payments to governmentbureaucrats tospeed up approval for business investments may

actually enhance welfare