Ethical Relativism in Multinational Corporations

Ethical Relativism and MNC1

Ethical Relativism in Multinational Corporations

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Introduction

There is no objective, approved way to prove that some countries or cultures are correct regarding proper business ethics. Concepts of right and wrong are always relative to a culture’sestablished values and beliefs. It is not up to individualmultinational corporations (MNC) to define and implement its own ethical principles of right and wrong. Believing in ethical relativism has nothing to do with whether it exists or not; reality demonstrates that it is a factor for any MNC. This can be problematic with industries that adhere to strict standards for judging the ethics and the quality of business behaviors in their industries. Concepts of right and wrong vary in any given society, colture, country, or marketcircumstances. Surprizingly, diversity is evident even on those matters of morality where we would expect to agree. Attitudes may vary from celebration of an action in one place to condemnation for the same action in another place. How then, in this environment of globalization can MNCs flourish outside their ethical comfort zone?

Ethical relativism is the position that there is no one universal business standard or set of standards by which to judge the virtueof an action. Some successful insensitive or self-centered large companies “assert that universal moral standards can exist even if some moral practices and beliefs vary among cultures” (Velasquez et al, 1992) in defense of bringing in new ethics and ignoring those in existence. An ethical relativist attitude may believe the same act to be morally right for one society, but morally wrong for another. Simply acknowledging the ethical cultural differences does not simplify or resolve opposing business beliefs. Even within the same society, circumstances may define an act as moral or immoral. Situational ethics often overlaps ethical relativism. The problem with ethical relativism in the business world is when one industry insists all members of that industry uphold the same ethics. One approach is to adopt an attitude of polycentric ethics or tolerance and appreciation for cultures alien to one's own when incorporating ethical relativism. It is often disastrously difficult to follow the ethics of a culture different from one’s own such as paying and accepting bribes to put in an infrastructure in another country.

Although there is no one way to adopt a compliance mode when ethics collide, there are a few steps a company can take to make sure that their employees are aware of what is expected from a workers point of view. The companies code of ethics should be available in employee manuals, visible in creative signs posted around a plant or office, and talked about in regular trainings. Appointing an ethics officer who can provide guidance on ethical matters, and investigate any possible ethical improprieties. Company awards can be given for “ethics above and beyond the call” to encourage a solid company ethical climate. It is important that the officers of the company adhere to company ethics within the company in an effort to let the employees “do as they do and not as they say.” Local hires may find this difficult if their ethics are diametrically opposed to the company ethics. Things such as showing up to work on time or facing consequences may vary in some cultures. Trainings for local hires on the company ethics must be done. Often in countries that are accustomed to MNCs, the government provides local training officers for the local hires. Employees cannot be held responsible for ethics their culture does not have if they are not informed and trained.

Trying to smooth out the cultural ethical dilemmas may not be possible. Ethical relativism may leave us with the “notion that there are no moral absolutes or no moral rights and wrongs. Instead, right and wrong are based on social norms” (Putnam, 2014) or whatever the prevailing society or culture says is right or wrong. Multinational Corporations should look carefully at what they consider to be their business ethics and determine if these ethics are morally necessary, and begin again determining the company’s ethics.

The primary ethical consideration for MNCs is not only to do no harm to the host country, but to contribute to the improvement of the host country whenever possible. Without this attribute, MNCs can be “charged with exploitation, or using the host country for its own purposes at the expense of the host country” (Shaw & Barry, 2016, p. 259) which in and of itself is ethically immoral. There are certain moral norms which should be applied to employees as well as to the population. Primary of these would be to “respect the human rights of their employees” (Shaw & Barry, 2016, p. 259) and the residents of the host country. Another would be to pay their fair share, not allowing the host country to provide benefits not offered to local companies, even if the ethical culture dictates this to be a welcoming gesture. Lastly, it is possible to adjust the MNCs operating procedures, plant operation and other actions which are the norm in their country of origin so as not to offend local customs or requirements.

For MNCs, “the paradigm of modern technological innovation is rapidly changing…It is increasingly market driven rather than technology driven” (National Research Council, 1998, p. 95). It is no longer a method of getting ahead of the competition, or looking for inexpensive labor. Today, the multinational corporations are being forced to locate in other areas of the world in order to continue. Strategic alliances across borders are being formed, and globalization has improved conditions so that political pressures or ethical concerns can stand in the way of such alliances. Born out of need, this increase in international collaboration will eventually overcome the global environmental problems that have resulted from a world population increase. The future of the human race as well as the concern over the health of our planet needs new technologies and evolutionary processes for energy conservation and reduction of pollution. It is time for MNCs to overcome issues such as ethical relativism and work together. It is not always too complex or massively challenging to operate in other host countries. In order for MNCs to operate successfully in the new global climate, the principle of ethical relativism must be integrated with forethought, planning, education, and consideration.

In the end, it comes down to a belief system, are business ethics so different between cultures that it forces one to unsatisfactorily alter their ethics beyond what is comfortable, or is the relativism of business ethics in different cultures non-existent? In the United States we have many standards that are called ethics delivered by various agencies. There is the old example of the bank manager who moved to Italy and was told to underreport the earnings of the bank. Shocked, he refused to do so, saying it was unethical. As a matter of course, in the Italian system (at that time), all companies underrepresented their earnings, and the government returns their forms, bumping up the numbers by exactly the amount that was underreported. Needless to say, the ethical American bank manager ended up costing the bank a great deal of money. This process was “doing business as usual” to the Italians. His belief that it was unethical did not include the balancing part the government played so that the numbers were correct. Hard to fathom the reasoning behind this, but that is the way it was. Perhaps the extra work was written in as an acceptable business expense. Things that look to be unethical need to be examined more fully.

Finally, the personal ethics of management that established their business in the first place are not damaged by including the ethics of another culture. In many cultures, bribery is considered to be legal. In this way, other underfunded governmental departments are able to maintain a decent budget. It is then up to the departments to be certain that the contributions (bribes) are received and placed in the department budget and not in the pockets of those who receive the bribes. We tend to define bribery in American terms, reflecting upon stories of protection money gathered from storeowners to keep their stores safe. It is certainly illegal here, but the idealism of the method is businesses pay for protection as a business expense. Sadly it has not always worked out this way, and paying bribes in this fashion is illegal here. But, if we are to look at this through a different culture’s eyes, it may not be.

References

National Research Council (1998). Global Economy, Global Technology, Global Corporations: Reports of a Joint Task Force of the National Research Council and the Japan Society for the Promotion of Science on the Rights and Responsibilities of Multinational Corporations in an Age of Technological Interdependence. The National Academies Press. Retrieved from

Putnam, M. (2014). Absolutes and Ethical Relativism in the Workplace. Retrieved from

Shaw, W. & Barry, V. (2016). Moral Issues in Business, 13th Ed., Boston, MA: Cengage Learning

Velasquez, M., Andre, C., Shanks, T. & Meyer, M. (1992). Ethical Relativism. Retrieved from