Do Multinational Corporations Have an Ethical Obligation to Assist Those in Need?

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Introduction

Corporations have a social responsibility to use some of its resources to assist those in need. The assistance provided by these corporations is often out of the ordinary scope of their operations. By doing this, the corporations are good corporate citizens who are giving back to the society. Corporate responsibility is crucial in building and maintaining a corporation’s reputation, which is considered important in the strategic position of the company. This essay will argue for the position that multinational companies have an obligation to assist the citizens in poverty-stricken countries in which they do business ([email protected], 2018). This essay will look at the need for multinational companies to provide assistance to the needy in the countries they work in. In doing this, the paper will look at the need at the need for the corporations to provide the assistance as well as arguments to justify the provision of this assistance.

Multinational corporations often operate in countries facing poverty. The question is whether these corporations can assist those in need without undermining their objective of profit making. Calls for MNCs to assist those in need results from several factors that make them well placed to provide this assistance. These calls are widespread and include those from activists who advocate world economic reform. For example, calls made on pharmaceutical companies required a reduction in the prices of anti-HIV/AIDS drugs to levels that are reasonable for people in developing countries. In addition to activities by activists, there are also efforts by the United Nations to persuade leaders to prompted human rights, labor and the environment (Hsieh, 2004).

Multinational companies have an obligation to assist citizens in poverty-stricken countries in which they work. This need is even greater for corporations whose activities are seen as necessary in addressing specific problems such as the AIDS crisis in Africa and the lack of vaccines for children. The impact of multinational companies on people in poor countries is huge. Apart from contributing to economic development, creating jobs and paying taxes, these companies can make important contributions in tackling poverty. There are, however, critics who argue that the main duty of a company is towards its shareholders and not to the larger society. This view holds that the obligation of the company is to pay its shareholder and let them decide what to do with the money. Corporate social responsibility can be justified by two circumstances, which are rescue and fairness ([email protected], 2005).

Activities such as donation of drugs to treat opportunistic disease in people living with HIV/AIDS, partnerships with local partners to increase participation of people living with HIV/AIDS in policy discussions and donations can be aligned with the profit-making objective of pharmaceutical companies. The rescue principle can be used to address the managerial challenge that arises due to the obligation of MNCs provide assistance. The rescue principle provides that corporations who are in a position to provide assistance should do so even if it means incurring a reasonable cost. The principle is based on the idea that if one is confronted with an opportunity where they can prevent harm from occurring, but with a little inconvenience, then they have a moral obligation to prevent the harm from happening (Hsieh, 2004).

The rescue principle directs that there is a moral obligation for an individual to save a child who is drowning in a shallow pool even if it means getting wet.  The provision of assistance by the pharmaceutical companies can be justified by the rescue principle. The plight resulting from the HIV/AIDS crisis requires swift action and the pharmaceutical companies are in a position to alleviate the plight while incurring moderate costs. Justifying the need to provide assistance by using the rescue principle reflects the notion that companies can prioritize rather than balance their call to provide assistance to those in need. While balancing requires weighing the interests of different stakeholders, prioritizing involves considering requests for assistance successively. Prioritizing protects the interests of the corporation as there is a limit to the amount of assistance and the corporation is not required to alter its purposes (Snider, Hill & Martin, 2003).

The rescue principle raises questions as to whether it applies to corporations and manager. Challenges include arguments that a corporation is not a passer-by and that the owners of the firm and not the firm have an obligation to assist. The argument is that the case of an individual providing assistance is different from that of corporations providing assistance to those in need. In addressing this question, it is important to add a distinction to the example of an individual providing assistance to reflect the situation of a corporation or a manager. The question then is whether the individual would still have an obligation if it meant that they would be late for work ([email protected], 2005).

Another example is whether a cab driver has a moral obligation to stop his cab and assist someone in need even if he does not own the taxi. The question, in this case, would be whether the obligation to rescue extends to the cab owner and the driver. The shareholders would have an obligation to assist and because the managers are acting as their agents, the obligation extends to them (Husted & Allen, 2006).

There are cases where the call for assistance does not involve rescue. An example of such a call is the provision of education to children in disadvantaged areas. These cases involve the principle of a minimally fair benefit, which provides that in an exchange where one party is above the threshold of well-being there is an obligation for that party to provide assistance so that the other party can come closer to the threshold. If lack of education, for example, places one party below the minimal threshold, then the obligation to provide assistance can be justified by the principle of fairness. In such cases, the challenge is not whether there is an obligation to provide assistance, but to determine parties are above a minimal threshold and the steps that can be taken to bring the parties closer to the threshold but within the limits of the exchange. This approach requires locating managerial responsibility to provide assistance within a broader framework of moral responsibility. The approach does not mandate corporations to do more, but broadens the justification for corporations to provide assistance in ways that are appropriate and in line with the primary objective of the corporation ([email protected], 2005).

Conclusion

Multinational companies have an obligation to use some of its resources to assist those in need. This obligation is not mandatory and although it goes beyond the company’s main objective of profit making, it is important in its strategic position. This essay has argued that multinational companies have an obligation have an obligation to assist the citizens in poverty-stricken countries in which they do business. This obligation is a result of factors that make these companies well placed to provide the assistance. These factors include their position within the society and their desire to give back to the society. The first justification for assisting those in need arises from the principle of rescue. This principle provides that companies who are in a position to assist the needy should do so even if it means that they will incur reasonable costs. The second justification stems from the principle of responsibility, which provides that the management of these companies have an obligation, which extends from the shareholders of the company. The third justification is based on the principle of fairness, which provides that companies, which engage with parties who are below the minimal threshold, have an obligation to assist those parties to come closer to the minimal threshold.

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  1. Hsieh, N. H. (2004). The obligations of transnational corporations: Rawlsian justice and the duty of assistance. Business Ethics Quarterly, 14(4), 643-661.
  2. Husted, B. W., & Allen, D. B. (2006). Corporate social responsibility in the multinational enterprise: Strategic and institutional approaches. Journal of international business studies, 37(6), 838-849.
  3. [email protected] (2018). Do Multinational Corporations Have an Ethical Obligation to Assist Those in Need? [email protected]
  4. Snider, J., Hill, R. P., & Martin, D. (2003). Corporate social responsibility in the 21st century: A view from the world’s most successful firms. Journal of Business ethics, 48(2), 175-187.
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