Business Ethics #5 Flashcards
Multi-National Corporations (MNCs) must do no direct, intentional harm
- MNCs must not market or sell products in foreign nations that are illegal to market or sell in the US.
- MNC operations must be done in an environmentally sound manner, without excessive pollution or damage. MNCS must not “export” pollution to other nations, particularly relevant when MNCs are seeking to circumvent US/Western pollution regulations.
- MNCs must not seek to acquire land or other resources to be used for exports when the land or resources are essential for meeting local needs.
- In the MNCs home nation …
• ethics of outsourcing of jobs to developing nations
• ethics of hiring illegal immigrant workers
The MNC’s business activity must benefit the host country.
- The MNCs operations should benefit the common good by seeking to raise the local standard of living in the host country. This can be done in part by (a) providing employment opportunities to the local populations (b) transferring organizational knowledge and production techniques in order to aid the ongoing development efforts of the host nation, and (c) paying appropriate taxes.
- MNCs should, when possible, reinvest profits in the host nation, not simply transfer all profits back to the home nation.
- MNCs should seek to overcome (or at least not contribute to) anthropological or cultural poverty, the sense of inferiority prevalent in many developing nations.
- MNC operations should benefit all people in the host nation, not simply the ruling elites.
MNCs must promote the development of just background institutions both within the host nation itself, and on the international level.
- MNCs must support the “rule of law” (law applies equally to all people) in developing nations and help to establish a functioning judiciary. The “rule of law” is necessary so that contracts will be upheld and disputes can be resolved fairly
- MNCs must not participate in the imposition of economic policies that are detrimental to the sustainable development of developing nations.
- MNCS must promote a just system of international trade, one where companies in all nations are able to do business in the international markets.
MNCs must respect the human rights of workers, consumers, and all other stakeholders in the host country.
- MNCs must not exploit for their own gain the poor or those who cannot speak for themselves, particularly children. They must pay a just or living wage, and offer appropriate benefits (health care, retirement, profit sharing, etc.) to their overseas suppliers. This duty extends to contract suppliers as well.
- MNCs should, as much as possible, offer employment and management opportunities to locals in developing nations.
MNCs must respect the culture and values of the host country, provided that these cultures and values do not promote human rights violations or impose immoral laws.
- Examples of human rights violations and/or immoral laws
• Apartheid in the former South Africa
• Middle East => no business activity with Jewish people
• Far East => expectation of bribery as a condition for doing business - MNCs should not support governments that blatantly violate human rights.
International Codes of Ethics for Multinational Corporations:
Summary of Common Elements
Employment Practices and Policies Consumer Protection Environmental Protection Political Issues Basic Rights and Freedoms
Employment Practices and Policies
- Respect the host country’s labor standards and improve local workforce through training.
- Promote favorable working conditions through limited hours, paid holidays, and unemployment protection.
- Promote job stability and security, avoid arbitrary dismissal, and provide severance pay when dismissal is necessary.
- Pay a basic living/just wage.
- Do not discriminate in employment and pay equal wages for equal work.
- Adopt adequate health and safety standards and inform worker of any job-related hazards.
- Respect the right of employees to join or form a union and to bargain collectively.
Consumer Protection
- Respect host nations’ laws and policies concerning consumer protection.
- Safeguard consumer health and safety through appropriate disclosure, safe packaging, proper labeling, and proper advertising
Environmental Protection
- Respect host nation’s laws and policies concerning the environment.
- Preserve ecological balance, adopt procedures that prevent environmental harm, correct damage done to the environment through operations.
Political Issues
- Do not pay bribes or make other improper payments to public officials.
- Refrain from improper or illegal involvement and interference in the internal politics of the host nation.
- Avoid improper interference in the relations between national governments.
Basic Rights and Freedoms
- Respect the right of all people to life, liberty, security, equal protection under the law.
- Respect the right of all people to freedom of thought and expression, assembly and association, residence and movement, religion
- Promote a standard of living that supports the heath and well being workers and their families, giving special attention to mothers and children.
Contract Theory of the Business’ Duties to Consumers
• When customers purchase a manufacturer’s product, they enter into a sales contract with the manufacturer. (A contract is a free agreement between two or more parties that imposes on the parties the basic duty of complying with the terms of the agreement). There are reciprocal (manufacturer customer) moral duties created by this contractual relationship.
- The manufacturer freely and knowingly agrees to offer the consumer a product with specified characteristics.
- The consumer freely and knowingly agrees to pay a specified amount for the product.
- After finalizing the contract …
a. Manufacturer has the duty to provide a product with the specified characteristics, and the right to receive payment.
b. Consumer has a right to receive a product with the specified characteristics, and a duty to make payment.
Moral Duties Associated with Contract Theory
Duty to Comply
Duty of Disclosure
Duty to Not Misrepresent
Duty to Not Coerce
Duty to Comply
Manufacturers have a duty to provide customers with a product/service that lives up to the explicit claims the manufacturer makes about it as well as any implied claims it knowingly makes. These claims form the customer’s understanding of what he/she is purchasing and lead them to freely enter into the sales contract.
1. Express warranty
• States the specific obligations that the seller accepts concerning the product’s performance.
• Includes promotional warranties, “10 year/100,000 mile”
2. Implied warranty
• Indicates that the good or service is “worthy of sale,” and that it is“fit for the ordinary purpose for which the good/service is used.”
• In Common Law, there are certain minimum product performance expectations that the seller can never legally avoid; for example, that the product will perform safely.
Duty of Disclosure
The seller has a duty to …
• Disclose to the buyer exactly what the buyer is purchasing
• Disclose the terms of sale
• Inform the buyer of any information concerning the product that would affect the buyer’s decision to purchase it.
Duty to Not Misrepresent
• The seller must not present the product in a way that intentionally deceives the buyer into thinking something about the product that seller knows to be false.
Duty to Not Coerce
- Entry into a sales contract requires free consent. Thus, the seller must not exploit emotional states (fear, guilt, sorrow, etc.) that may cause the buyer to act irrationally or against his/her own interests.
- The seller also has the duty not to take advantage of gullibility, immaturity, ignorance, or any other factor that reduces or eliminates the buyer’s ability to make a free, rational choice about whether or not to purchase the product.
Due Care Theory
- The rationale for this duty to exercise due care is the “ethic of care,” the belief that we have a special responsibility for the well-being of those with whom we are in close relationship.
- Duty of manufacturers …
• As manufacturers are in a privileged position than customers concerning knowledge of their products, they have a moral duty to take special care to assure that their customers (and their customers’ interests) are not harmed by the products sold to them.
• Because consumers must rely on the greater knowledge and expertise of the manufacturer, manufacturers must take whatever steps are necessary to ensure that their products are as safe as possible. Customers have a right to this assurance. - Exercising sufficient due care
• Manufacturers exercise sufficient due care when they take adequate steps to prevent whatever injurious effects they can reasonably foresee from their products after determining from customers how these products will be used.
• Exercising sufficient due care also includes anticipating possible misuses of the product. - The manufacturer’s responsibility to exercise due care extends to:
• Product design
• Materials - up to industry/government standards
• Production process - issues in the production process that might compromise safety
• Quality control – inspecting products
• Labels and warnings - information about possible dangers with the product
• Notification and recalls
