Ethical Issues in Business

 

National and Multinational Corporations are spread across the globe, but
their operations vary from one
another. Therefore it is imperative to know the ethical issues that governed
their businesses. This is because domestic business is not the same as international business. Thus, the ethics that governed domestic businesses are
quite different from that of international businesses. 

Ethical issues arise
because of the differences in economic development, politics, legal systems and
culture. The term ethics refers to accepted principles of right or wrong that
governed the conduct of a person, the members of a profession, or the actions of
an organization. Business ethics are the accepted principles of right or wrong
governing the conduct of business people. This article examines ethical issues as
they affect business activities.

Ethical issues in Business

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Most of the ethical issues in businesses are rooted in the fact that
political systems, laws, economic
development and culture vary significantly from nation to nation.

What is considered normal practice in
one nation may be considered unethical in another. Because they work for an
institution that transcends national borders and culture, managers, especially
for international firms need to be particularly sensitive to these
differences. Some of these ethical issues are thus briefly discussed below:

Employment Practice

Working conditions vary from one
nation to another, from one firm to another. This therefore raise some
questions such as when work conditions in a host nation are clearly inferior to
those in multinationals home nation, what standards should be applied? Those of
the home nation or those of the host nation may apply something in between.

While some people may support that pay and work conditions should be the same
across the nation, how much divergence is acceptable? For example, Nigeria operates
eight hours of daily work, while some nations such as Britain operate twelve
hours of daily work. Also per day or hourly pay vary among nations of the world. For instance Nigeria is
considered as one of the least pay country, hence, it is extremely
difficult to suggest standards that should be applied.

However,
international business managers should endeavour to study employment practices
as they apply to those host countries of their business.

Human Rights

Questions of human rights
can arise in international business and as well as on domestic business. Some
basic human rights are not respected in some nations, especially by the
developing countries. For instance, rights that we take for granted in
developing nations, such as freedom of association, freedom of speech, freedom
of assembly, freedom of movement, freedom from political repression and so on, are
by no means universally accepted. 

For example, during days of apartheid system
in South-Africa, blacks were not permitted to participate in socio-economic
activities which were dominated by the whites. But after the independence, this
practice was abolished. In addition, during military regime in Nigeria, many
citizens including journalists and human right activists were wrongfully
detained. However, Nigeria operates multi-party systems as a means of
challenging the wrongs of the government in power. As business man you should
understand politic- business relationship, this is because the effects on party
in power may affect business activities either positively or negatively.

The issue of foreign multinational
firms doing business abroad violates human rights is critical in international business. For example,
Nigeria is a country where serious questions have arisen over the extent
to which foreign multinationals doing business in the country have contributed
to human rights violation? For instance, the largest foreign oil producer in
the country -Royal Dutch Shell has been criticized in Niger Delta over
environmental pollution. Recently, Jonathan’s administration ordered Shell
Company should bear some environmental costs of their operations in Niger delta. Notwithstanding, as business
managers, issues of human rights should be critical studied and apply
accordingly.

Environmental Pollution

Ethical issues arise when environmental regulations in host nations are
inferior to those in the home
nation. For instance, many developed nations have substantial regulations
governing the emission of pollutions, the dumping of toxic chemicals and so on.
Some of these regulations are often lacking in developing nations, such like
Nigeria. For example, according to a 1992 report prepared by environmental activists
in Nigeria in Niger Delta region, it state that

Apart from air pollution from the oil industry’s emissions
Flares day and night. Producing poisonous gases that are silently and
systematically wiping out vulnerable air­borne biota and endangering the life
of plants, game and man himself, we have widespread water pollution and
Soil/land pollution that results in the death of most aquatic eggs and Juvenile
stages of the life of finfish and shellfish on the other hand, whilst, on the
other hand, agricultural land contaminated with oil spills, becomes dangers for
farming, even when…

The implication of
this is that pollution controls applied by foreign companies in Nigeria were
much lesser than those in developed nations, such like UK and USA. Therefore,
should a multinational feel free to pollute the developing nations? Is there a
danger that a moral management might move production to a developing nation
because costly pollution controls are not required, and the company is
therefore free to despoil the environment and perhaps endanger local people in
its quest to lower production costs and gain a competitive advantage?

These questions take on added
importance because some parts of the environment are a public good that
no one owns but anyone can despoil. No one owns the atmosphere or the oceans,
but polluting both, no matter where the pollution originates, harm all. 

The atmosphere and oceans can be viewed
as a global commons from which everyone benefits but for which no one is
specifically responsible. In such cases, a phenomenon known as the tragedy of
the commons becomes applicable. The tragedy of the commons occurs when
individuals overuse a resources held in common by all, but owned by no one,
resulting in its degradation. The phenomenon was first named by Garrett Hardin
when describing a particular problem in six-tenth century in England.

Corruption

Corruption has been a
problem in almost every society in history and it continues to be one today.
There are always have been and always will be corrupt government officials.
Some businesses managers have taken advantage of this ill practice by making
payments to these officials. For example, Carl Kotchian, the president of
Lockheed, made a $12.5 million payment to Japanese agents and government
officials to secure a large order for Lockheed’s TriStar Jet from Nippon Air. 

When the payments were discovered, US officials charged Lockheed with
falsification of its records and tax violations. Although such payments were supposed
to be an accepted business practice in Japan, the recreations created a scandal
there too. The government ministers in question were criminally charged, one
committed suicide, the government fell in disgrace and the Japanese people were
outraged. Apparently, such a payment was not an accepted way of doing business
in Japan. The payment was officials, to secure a large order that might
otherwise have gone to another manufacturer, such as ‘Boeing’. This case took
place in the 1970s.

Recently, the Senate
Committee on Sale of Government Properties in Nigeria ordered the Bureau for Public
Properties (BPP) for a public hearing over the sale of government properties
during Obasanjo’s administration. During the public hearing, the civil
servants, and the communities where these properties were situated alleged that
they were not carried along, and the money collected from such sales was not
remitted to government accounts. 

It was revealed also during the public hearing
that the foreigners who claimed to have bought these properties
especially hotels, corporations, estates, etc, did not pay the actual money
bidding for these properties, and they have overused such properties without
remittance to the government of Nigeria. The senate frown that this is an
illegal act in Nigeria and thus the concerned victims are being prosecuted
appropriately.

Similarly in the Oil industry, some acts are considered lawful and unlawful
in some nations. For instance, oil buckury and subsidy payments are considered
lawful, hence Nigeria government paid oil marketers these subsidies, and
illegal buckers are not always persecuted. Where attempts are made in
persecuting the actors and actresses, some of these cases are not always
conclusive in Nigeria. Whereas in advanced nations, such like UK and Canada,
such acts are considered unlawful, and the actors and actresses are persecuted accordingly in relations to
the laws of the country.

Research revealed that corruption reduces the returns on business
investment and leads to low economic growth. In a country, where corruption is
common, unproductive
bureaucrats who demand side payments for granting the enterprise permission
to operate may siphon off the profits fro a business activity. This reduces
business incentives to invest and may retard a country’s economic growth rate.

There are
countless examples that could be sited, nevertheless, the message here is that business investors should know
each country business practice, especially where he/she wish to do
business.

Moral Obligation

Multinationals have the power
to control their resources and to move production from country to country.
Nevertheless, this power is constrained not only by laws and regulations, but
also by the discipline of the market and the competitive process. Some moral
philosophers argued that multinationals should give back something to the
society where they derived profits. This refers to social responsibility 

The concept of social responsibility
refers to the idea that business people should consider the social consequences
of economic actions when making business decisions and that there should be a
presumption in favour of decisions that have both good economic and
social consequences. Advocates of this approach argued that businesses,
particularly big successful businesses, such as Shell, Mobil, Total, etc need
to recognise their noble obligations and should give something back to the
societies that made them in their business activities

On the contrary, there are examples of multinationals in Niger Delta of
Nigeria, such Shell, Mobil, etc that have abused their power by neglecting
social responsibilities. Most often, the areas of operations by these companies
have been polluted. But,
companies such as MTN, GLO, Airtel, etc in Nigeria have acknowledged a
moral obligation to use their powers to enhance social welfare in the
communities where they do business, by building schools, building hospitals,
offering scholarships, etc.

In conclusion, as business managers, it is pertinent to
critically study the ethics of the countries you wish to do business
with and the policies that governed such business activities.