The statement has been made that ethics has no place in business” and the implications of this statement and its characteristics provide a complex issue in the operation of national and multinational corporations. Because ethical decision-making is often not as profitable as choices that do not embrace ethical elements, the perspective has emerged that the nature of an effective business mindset inherently brings about unethical behavior. In order to consider this statement and its implications, it is necessary to recognize the ethical decision-making processes of a number of companies and reflect upon the fiscal, organizational, and operational implications of ethical choices. Then, relate this process to the perceived outcomes if the opposite choices were made.
As an element of this evaluation, it is necessary to consider the nature of morality and the progression of moral underpinnings for business operations and the implications as companies expand into multinational arenas. Ethics can be described as the activity of examining one’s moral standards or the moral standards of a society and asking how these standards apply to our lives” (11). The application of ethics in business is generally perceived as the evaluation of individual and collective moral standards, a reflection of societal morality, and then the determination of business decisions that are not only based on the efficacy of business operations but also on these moral standards. The problem that many corporations perceive when pursuing the application of ethics in business is that ethical choices are not always the most sound business decisions. For example, when the pharmaceutical corporation Merck discovered that they could research and develop a drug that would end river blindness in millions of people worldwide but that there would be no financial benefit and high costs involved with this process, especially because those who need the treatment are members of the poorest communities in the world, the ethical choice to pursue this drug had clear implications in terms of business efficacy (3).
But unlike many corporations, Merck recognized a moral obligation to reduce the suffering of millions of people. As a result, they made a costly but ethically sound decision to pursue research, development, production, and distribution of the drug. Many business theorists would argue that Merck’s choice may have been ethically sound, but it did not reflect appropriate business acumen. The choice was costly and impacted competitiveness for the company at a time when risking declining sales was not in their best interest. It also put the company at risk of liability (4). However, the company had an obligation to their shareholders to make business decisions that represented their best interests. The conflict between the interests of those outside of the corporate structure and the shareholders, employees, and administrators of the company demonstrates the reason that ethical choices are not applied more freely in the business arena. It can also be argued that by making ethical decisions in favor of drug development, Merck was inherently making unethical decisions in terms of their obligation to the shareholders and the standards of behavior based on their agreed contractual relationship.
Because corporations are primarily economic institutions, the question of whether they can be expected to apply moral standards that risk their economic viability underscores what some have argued is the oxymoronic element of business.” This perspective has come into greater focus as companies turn to multinational expansion and enter into communities with different standards for business operation and differing moral standards that determine ethical behavior in general. For example, the standards embraced in the United States in terms of child labor laws may not have the same implication in other countries, and the question of child labor and its use has reflected conflicting perspectives in terms of business ethics in the multinational firm. Is it more unethical to use child laborers in countries where this is an expected and accepted practice, and where children can assist in feeding their families, or is it more unethical to deny them employment from the application of American visions of morality and standards for ethics? As more and more companies pursue multinational expansion as a means of reducing their overall costs, utilizing cheap labor forces and less stringent legal requirements, the question of the decline of business ethics and the application of an American notion of morality is clearly problematic to the argument at hand.
Multinational corporations often make the determination for expansion into other countries because they can take advantage of lower taxes, fewer legal and social constraints, and favorable environments. Companies often enter international development without a concern for ethical determinations in their business operations. It has been argued that the moral difference between countries inherently maintains the ethical process for companies as they relate to the.