MultinationalCorporations (MNCs) have a history of engaging in unethical practicesin order to maximize profits. The developing world is usually theirtarget destination as these countries have fewer regulationsconcerning business operations. The main reason why the developingcountries have fewer regulations is to attract investment, henceprovide employment to its population, increase revenue and generallyimprove the standards of living of its people. Multinationalsalthough being based in developed world where stringent regulationson conducting business ethically exist, take advantage of lenientlaws in developing countries. This behavior can be viewed indifferent ethical perspectives.
Deontologyis an ethical perspective that determines whether an action isethically or morally right based on the adherence of the action torule or rules. In the context of MNCs performing business incountries with fewer regulations and adhering to these rules, thentheir actions can be termed as ethical. When GAP involves in businessthat appears as oppressive in the United States, in the developingcountries, this is seen as helpful as they offer employment to needypeople, hence improve their living standards.
Utilitarianperspective of ethics on the other hand Utilitarianism is aconsequential form of ethics which focuses on the outcome that anaction has to determine its ethical value. When MNCs engage inactivities that has no concern about the environment, as well asemployees safety and welfare, the outcome is usually detrimental.Poor working conditions in sweatshop companies such as GAP affectsthe employees negatively. The companies also have no regard for theenvironment which contributes to serious environmental issues such aspollution and the greater global warming.
Similarly,in the view of utilitarianism, MNCs make huge profits for theshareholders. The responsibility of the business according toFriedman is to make profits. When they increase profits throughoperations in the developing countries, the business meet theirstakeholders’ interest.
Thereare two views of corporate social responsibility. The narrow view byMilton Friedman stipulates that, the social responsibility of abusiness is to make more profits. It is also known as shareholders’view, since it considers the business as obligated to meetingshareholders’ needs-to make more money. According to Friedman, aslong as the business is carrying out business within the confinementof the law, it has no other responsibility other than to maximizeprofits.
EdFreeman is of a different view called the wide view. In Freeman’sview, corporate have a responsibility to stakeholders in general.Stakeholders here include customers, employees, and the communitywhere they operate. As such, businesses have corporate socialresponsibility. In this view, the law or regulations are not enoughin guiding business operations. Corporations have a greater role toexercise ethical practices that will see the interest of thestakeholders. When GAP engages child labor in production of sportswear it is violating its responsibilities to stakeholders.
Thesolution to the exploitation and the impoverishment of the locals bymultinationals is a bit complex. The OECD guidelines that have beenput in appear ineffective since they are not legally enforceable. Inaddition, individual governments are free to make policies toregulate multinational operations. Further, Maitland believes thatit’s upon the society or the government to set standards to befollowed by multinationals. He argues that, offering cheap labor isthe advantage that developing countries have to improve theireconomies. Developing countries are reluctant to set high standardsfor fear of pushing away investors. With this countries having anobligation to provide employment and improve the standards of livingof its people, regulating multinationals becomes difficult. However,Arnold proposes a human rights approach to this problem. Arnoldargues for human rights as providing the foundation for the basicethical obligation to which multinationals should adhere. These humanrights are based on the fact that we are humans. As an individual,one is able to reflect upon him or her desires at a secondary orderlevel and must be in a position to act in a manner consistent withhis or her perceived preferences. As such, multinationals have a dutyto respect people with whom they associate. This approach is a moralobligation for companies to act ethically. OECD regulations togetherwith human rights can help address this issue.