The Idea in Tangible
Any business can become more ethical irrelevant of the industry sector, its size or any other characteristics. The end goal is to create a company that not only contributes more to society but also enhances competitiveness, helps to build greater trust in brand and means their business is better prepared for the future.
For example, Levi Strauss & Co is a typical ethical multinational company. It can be seen from their manufacturing process and workers rights.
Levi Strauss & Co is the first company in their industry to establish global guidelines for water quality standards for their suppliers. In order to protect water resources by water reclamation, water efficiency and reuse.
And Levi Strauss & Co promotes energy efficiency, encourages energy and climate innovation, and reduces overall greenhouse gas emissions. Levi Strauss & Co declares and implements that they will not allow the chemicals be used in their products or in the production process due to their potential impact on consumers, workers and the environment.
Perhaps in your opinion, Levi Strauss & Co protects water resources, reduces greenhouse gas emission and forbids chemicals be used in products that just do what it should do. More generally, the question remains, should a multinational feel free to pollute by its subsidiary in a developing nation? Is it ethical? Actually no, such actions seem to observe the basic societal notions of ethics and social responsibility. Ethics is more than legality, which the standards of moral behavior. Although following the law is an important first step, ethical behavior requires more than that.
Moreover, Levi Strauss & Co always looks for new ways to reduce waste by reusing materials in their stores or by extending the lives of their products. For example, Levi Strauss & Co encourages reuse. In 2009, it launched the Care Tag for Our Planet in cooperation with Goodwill. The tag on their products not only instructs consumers on how to clean their clothes with less environmental impact; it also encourages them to donate used jeans to Goodwill rather than throwing them out. Reduce, reuse and recycle are the business concept of Levi Strauss & Co in their manufacturing process.
In addition, the way Levi Strauss & Co care for their workers extends well beyond the factory. By providing grants through the Levi Strauss Foundation, they seek to ensure that workers have the training and tools they need to stay healthy outside the workplace, reducing absenteeism and lost wages and increasing productivity. They also support innovative local, regional and global nonprofit organizations that encourage enforcement of labor laws, increase awareness of healthcare issues and promote access to asset-building and life skills training for employees, contractors and their families.
Levi Strauss & Co has the success not only come from their outstanding products but also come from their ethics conducts. Multinational companies follow the ethical principles; especially apply in its subsidiaries in developing countries which is a good method to enhance the multinational companies’ reputation.
An ethical multinational company wins praise. Those unethical multinational companies should be condemned.
Nike, the world’s largest athletic shoe company, has been accused by human rights and labor groups of treating it workers poorly at many of its subcontractors while lavishing millions of dollars on star athletes to endorse it products. An Ernst & Young report on Nike’s operations in Asian Vietnam (a multinational’s home nation) indicated that thousands of young women labored over 12 hours workdays, six days a week, in excessive heat, noise, and foul air working condition, extremely low pay. The report also found that workers with skin or breathing problems caused by the factory conditions had not been transferred to departments free of chemicals. More than half the workers who dealt with dangerous chemicals did not wear protective masks or gloves. After the report exposed the scandal, Nike had been opposed of demonstrations and consumer boycotts.
Nike and its subcontractors were not breaking any laws, but Nike focus on low costs causes poor working condition in its subcontractors in some developing nations which is an unethical behavior. As the Nike case demonstrates that it is bad for a multinational company be reported of unfairly treatment their employees in subsidiary. Especially, accusations of sweatshop conditions and negligible pay were made by a number of journalists.
The payoff
As easy to know, Multinational companies should be managed ethically for many reasons: to maintain a strong reputation in all their markets; to increased employee loyalty and reduce employee turnover; to garner advantages in attracting and retaining customers; to avoid lawsuits and government intervention; and to please society and simply to do right things.
The roots of unethical behavior include personal ethics, business decision-making processes, organization culture, unrealistic performance expectations, and leadership. In the case at Nike, the managers don’t incorporate ethical considerations into business decisions making. Subcontractors were probably considerate based on business variables such as cost, delivery, and product quality and the key managers simply failed to ask, “How does this subcontractor treat its workforce?” if they thought about the question at all, they probably don’t put their employees in sweatshop conditions in subsidiary.
As much as possible, companies need to take a local approach when conveying the importance of ethics and compliance. Some multinational companies form a corporate-wide ethics and compliance committee whose members are the heads of the global business units, each tasked with the ethics and compliance oversight in their location.
According to the 2008 LRN ethics and compliance risk management practices study, companies with global operations faced more challenges in controlling their international locations than at their headquarters. As a result of what is considered normal practice in one nation may be considered unethical in another.
Specific finding included: 1. Companies rated themselves as performing better in headquarters than in their international locations. When asked about the timeliness of their ability to manage ethics and compliance risk, the average self-rating for companies was 7.60 for headquarters versus 6.69 for their international operations. 2. When asked about challenges of doing an ethics and compliance risk assessment, 34 percent of respondents identified "difficulty of doing a global assessment." 3. Educating specific types of employees also varied greatly between headquarters and international locations. For example, 96 percent of companies educate both "supervisors/mangers" and "senior executives" in headquarters, the numbers drop to 84 percent and 83 percent respectively in their international operations.
Figure 1:
This figure suggests that multinational companies need to strengthen efforts to equalize their ethics and compliance management process throughout their international operations.
Conclusion
In this era of rapid change and globalization, multinational companies should observe ethics principle toward achieving global standards. There are some reasons that show why ethics principle is important to multinational companies. Firstly, it makes multinational companies accountable during their engagement. Secondly, it shows multinational companies' character and reputation to be more sound and marketable, and desire to develop long-term relationships. Thirdly, it provides multinational companies with a leadership role in the global community.
Learning global ethics and standards is another approach to moving from the old way of doing business to developing a new structure. As global consumers, investors, employees and other stakeholders make fewer distinctions between ethical and socially responsible conduct, they will have increasing expectations that companies will consistently aim to do the right thing, no matter where in the world they do business. Managers can adopt to make sure that ethical considerations are incorporated into decision making in an international business firm.
References
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Gould, Carol C., The New Global Ethics and Its Three Faces in an Era of Globalization, Aldershot, Ashgate, 2008
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Hill, C.W.L. & Hernandez-Requejo, w. (2011). Global Business Today, McGraw Hill. P156-P169
- Levi Strauss & Co., sustainability, planet of energy/water/chemicals/materials reported at http://www.levistrauss.com/sustainability/planet
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Reder, Alan. In Pursuit of Principle and Profit: Business Success Through Social Responsibility. G.P. Putnam's Sons
- Fandray, Dayton. "The Ethical Company." Workforce. December 2000.
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Boroughs, Don L. "The Bottom Line on Ethics." U.S. News and World Report. March 20, 1995.
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Nickels, W. G., Understanding Business (7th), McGraw Hill. P68-P86
10. David, Fred. Strategic Management (12th), Pearson College Div.
