Lowering Ethical Standards in Overseas Operations: a Necessary Evil?

Lowering Ethical Standards in Overseas Operations: a Necessary Evil?

A known fact; multinational companies make certain compromises when it comes to their operations overseas. The extent of these “compromises” to the companies’ moral code varies from one host country to another; more compromises are usually practiced if the host country is a developing or a third world country. The reason behind that is because these developing countries are in need of Foreign Direct Investment which will in turn create job opportunities and increase employment levels and total output, increasing average national income leading to both economic growth and development, that is why we find that developing countries are more vulnerable and subject to corruption. Globalization, recent world economic integration and emerging markets have given rise to Multinational Corporations, which as their name suggests are companies operating in multiple nations. The need to expand their operations to different countries comes from the fact that these companies are producing at a very large scale and are catering to massive and expanding markets. The choice of where to expand depends on the political and economic stability of the host country, the resource endowment, and availability of cheap labor, infrastructure, lower corporate taxes, and minimal wages and sometimes availability of subsidizing schemes. The governing factor would however be whether the hosting government is an oppressive or regressive: the more regressive a government is; the more appealing it is for foreign direct investment and multinationals because of more political stability. Almost all of the above factors match the profile of developing third world countries which are aiming at increasing their economic growth rates and thereby achieving the main macroeconomic objective of lowering unemployment, the reason why developing countries allow or deliberately disregard multinationals misconduct and at times unethical...