Multinational Organization Accountability, Research Paper Example

Multinational organizations are growing in popularity in today’s modern business world. The function is to expand business and to capitalize on profit potential. However, with their existence has come a certain amount of concern regarding their accountability. Multinational organizations are required to adhere to all governing laws regarding the method in which they conduct business, but conducting operations within international and domestic ethical norms is optional to some extent. The paper will aim to analyze eight steps of critical thinking and its approach to legal reasoning.

What are the facts?

A multinational organization knows their obligation to adhere to the letter of the law both domestically and internationally. A multinational organization has the option to choose not to conduct their business operations with domestic and international ethical norms. The issue is that the organization must determine how much they can separate their legal and ethical obligations in business.

What is the issue?

There are several issues the organization must consider. Are multinational organizations held accountable for conducting their business with domestic and international ethical norms? Do multinational organizations have the option to separate their legal and ethical responsibilities? What are the possible implications of multinational organizations which choose to only be accountable for complying with the legal obligations?

What are the reasons and conclusion?

Corporate social responsibility is a generic name for any theory of organizations which requires both the responsibility to act ethically in the community and the responsibility to make money. It also is a specific conception of finding a way to make a profit while considering the welfare of the community around them. Corporate social responsibilities include four theories to consider economic responsibility, legal responsibility, ethical responsibility, and philanthropic responsibility.

Economic responsibility – “Required by simple economics, this obligation is the business version of the human survival instinct. Companies that don’t make profits are—in a modern market economy—doomed to perish” (Brusseau, 2011). Multinational organizations have to show a profit, without a profit there would be no need for business ethics or the business in general.

Legal Responsibilities – requires the business to comply all legal obligations set for business operation. “What proponents of CSR argue, however, is that this obligation must be understood as a proactive duty. That is, laws aren’t boundaries that enterprises skirt and cross over if the penalty is low; instead, responsible organizations accept the rules as a social good and make good faith efforts to obey not just the letter but also the spirit of the limits” (Brusseau, 2011). Its sets an organization apart from the others because they are willing to comply with the law because it is their responsibility, not just for fear of the repercussion.

Ethical responsibilities – is to do what right regardless if there is a law enforcing it to be complied with. Multinational organizations must consider the international and domestic ethical norms.

Philanthropic responsibilities – is the theory that an organization needs to contribute to their society even when it is independent of that particular business.

Multinational organizations need to consider their legal and ethical obligations in the communities which they are doing business. Lawrence and Weber (2011) stated that the major reasons why businesses should promote a high level of ethical behavior are 1) to meet demands of business stakeholders, 2) enhance business performance, 3) comply with legal requirements, 4) prevent or minimize harm, and 5) promote personal morality. Failure to comply with both ethical and legal obligations will challenge the success that any organization may have.

What are the relevant rules of law?

There are numerous laws which hold all organizations accountable for conducting business domestically and internationally. These laws often coincide with ethical practices as well. Capitalism comes in many different shapes and sizes.

But in all of its manifestations, some concept of a “free market” stands at the center: that is, individuals and business organizations exchange goods, services, and various forms of payment with minimal government restrictions. Where people freely transact business with adequate information, “the market” is said to deliver an optimal mix of goods and services to society. The ethics of such a system depend on the application of such notions as free will, consent, choice, rationality, competition, merit, and due diligence (Mayer & Jebe, 2010).

The laws create an environment which requires business to comply with no only that of the host country, but also the laws of the home nations. “In addition to the right to make and enforce laws within their territory, all nation-states reserve the right to make and enforce laws that apply to its citizens (or “nationals”), wherever they may be located or do business. For MNCs based in the United States, this means that U.S. antitrust, anti-bribery, and equal employment opportunity laws often apply to their operations abroad” (Mayer & Jebe, 2010). The laws provide a basis for business practices, trades, treaties, and overall regulations for all aspects of business. It is vital for multinational organizations to consider all relevant rules of law when making decisions on their ethical practices.

Does the legal argument contain significant ambiguity?

It is important to consider is legal arguments contain significant ambiguity? International law is vast and can be found in many different sources. There are treaties, customs, judicial decisions of international courts, and international organizations. Multinational organizations cannot overlook patents, trademarks, antitrust laws, taxes, visas, treaties, European Union, North American Free Trade Agreement, and the World Trade Organization. Legal reasoning can be broad, and it can be stretched to fit the best interest of the organization. Therefore legal arguments, much like ethical practices, are subject to interpretation of the organization.

What ethical norms are fundamental to the court’s reasoning?

The ethical norms are fundamental to the court’s reasoning because they are a basis of the legal environment of business. “A norm is a standard of conduct, a set of expectations that we bring to social encounters” (Kubasek et. al, 2012). It is primarily what is considered basic educate in the location of which they are doing business. “Ethical norms are special because they are steps toward achieving what we consider good or virtuous” (Kubasek et. al, 2012). Businesses are expected to operate in a manner that best suits the well-being of the community. Ethics, for example, is where an organization gives back to the community that supports them. There are four primary ethical norms which include stability, freedom, justice, and efficiency. The stability is the likelihood that the business will exist tomorrow and that the methods for which the business operates is as presented to the consumers. The freedom is the ability to act without restrictions and has to capacity to act in the best interest of other if the situation arises. The justice includes the right to profit from the products or services provides. To comply and conduct fair business to all humans regardless of age, gender, race, religions, sexual orientation, and more. Lastly is the efficiency to maximize the wealth to not only the organization but to the community in which it operates. Minimizing cost and maximizing the profitability potential.

How appropriate are the legal analogies?

There are differences between other forms of analysis and legal reasoning which is heavily dependent upon analogies. The legal system in the United States places a significant emphasis on the law, and it can be viewed as an evolution of other decisions. Laws have been established based on an evolutionary process where we learn from other situations and rectify them so they do not occur again. We uses previous experiences to provide a basis for understanding future potential situations. As we use precedents to find conclusion to legal issues, it is also requires the use of analogical reasoning. Analogies are verbal devices which take an understanding of something that we are familiar with and transfer the meaning to something that we do not fully understand. It provides a way for individuals to take the legal reasoning and create a better understanding of legal dispute.

According to Kubasek et al. (2012) they have found the following list of prior decisions:

1. “Professional cheerleaders can be required to smile within reason, if that activity is clearly specified at the time of employment” (Kubasek et al., 2012).
2. “Employees who interact regularly with customers can be required as a condition of employment to wear clothing consistent with practice in the trade” (Kubasek et al., 2012).
3. “Employers may not require employees to lift boxes over 120 pounds without the aid of a mechanical device, under the guidelines of the Employee Health Act” (Kubasek et al., 2012).

The analogies and selection of precedents are shifted through the theory of logic which is most revealing to the situations. Ethical norms, ambiguity, and legal analogies all provide areas of deficiencies, however it is vital to consider these factors in business operations.

Is there relevant missing information?

It is important for businesses to consider that there is a relevant amount of information missing. The use of legal proceedings provide a certain amount of information that is useful for understanding the facts of a case. However is it vital to understand that using previous cases and legal information still provides a reasonable amount of room for dispute and misrepresentation. The more facts we gather the better the potential outcome, however it is often easier to stop researching information and find a way to settle the issues quickly and quietly. “You might not be convinced that the facts we know about a situation are inevitably incomplete; however, consider how we acquire facts. If we gather them ourselves, we run into the limits on our own experience and perceptions” (Kubasek et al., 2012). Multinational organizations often have facts which are highly relevant, but they often ignore them because it is time consuming and it holds a significant amount of room interpretation. It can be assumed that these organizations do not have all of the facts, nor do they have a way to process them. Firms may try to comply with the industry standard and take an ethical position in their business practices, but it is difficult to be able to operate with both. It is difficult to understand the vast amount of ethical norms and to be able to compete with their competitors. The multinational organization has to find the right mix for them and be able to comply legally and ethically with the vast demands of their global markets.

References

Brusseau, James. (2011). The Business Ethics Workshop, v. 1.0. Flat World Knowledge.

Kubasek, Nancy K.; Bartley A. Brennan; & M. Neil Brown. (2012). The Legal Environment of Business, A Critical Thinking Approach 6^th Edition. Pearson Education, Inc.

Lawrence, A. T. & Weber, J. (2011). Business and society: Stakeholders, ethics, public policy (13th ed). New York, NY: McGraw-Hill.

Mayer, Don and Ruth Jebe. (2010). The Legal and Ethical Environment for Multinational Corporations.