Chapter 12 - Ethics and Multinational Corporations
Amultinational corporation (MNC) or enterprise (MNE), is a corporation or an enterprise that
manages production or delivers services in more than one country. It can also be referred to as an
international corporation. The International Labor Organization (ILO) has defined an MNC as a
corporation that has its management headquarters in one country, known as the home country,
and operates in several other countries, known as host countries.
Some multinational corporations are very big, with budgets that exceed some nations' GDPs.
Multinational corporations can have a powerful influence in local economies, and even the world
economy, and play an important role in international relations and globalization.
Businesses look to go global for a variety of reasons including cheaper labor and low costs on
health and safety standards. This ensures them higher profits and a higher competitive edge
against their competitors.
It also helps them provide goods to their consumers (in NorthAmerica and beyond) at cheaper
Global trade encourages specialization and trade, which helps under-developed and/or
developing countries grow and progress.
Ethics and Relativism
Many MNCs have a proven record of lowering ethical business standards in other countries in
order to maximize profits. Many corporations have been accused to sex violations, child labor,
improper working conditions, assassinations (Coca Cola), long working hours and employee
exploitation in other countries.
From a relativist point of view, any immoral behaviour conducted by companies outside of
Canada would be considered ethical. Relativists ask us to measure and perform our ethical
standards in conjunction with the standards accepted in the country that we are conducting
As a result, a relativist would approve any action committed by a MNC as long as it is approved
by the local regulatory body in that country.
However, according to the course material and Shaw, we are expected to take a non-relativist
approach to business outside NorthAmerica.As managers doing business globally, we are
expected to abide by the moral standards we use in Canada and stick to them when we go global.
From a utilitarian point of view, Global trade would be considered good as i