MGT 672 – Global Ethics on Leadership Decision Making

Ethical Dilemma Faced by Middle East Companies

The multinational companies are facing a number of ethical dilemmas as they establish themselves in different nations. Some of the most common experienced ethical dilemmas include labor or employment rights, environmental pollution, as well as corruption and bribery. Corruption is one of the major challenges facing Middle East Multinational Corporation. According to Good Corporation (2014), the traditional techniques of conducting business in Middle East can result to legislative issues from companies founded in Europe and the US. The Middle East nations are used into employing agents to perform business on their behalf. However, there are no strict laws governing this operation, this is different in other countries where there are laws governing agents operations.

The use of agent system in Middle East can therefore create an ethical dilemma to multinational companies originating from countries where only legally recognized agents should operate on the company’s behalf. Offering gifts in a business environment to gain certain favor is highly embraced in Middle East. However, this may be mistaken to briery in other nations especially when given in excess. This can place these companies in vulnerable situation particularly if the company is US based where corruption laws are strictly employed.  US based companies will thus be in an ethical dilemma of whether to engage in such a transaction or not, though it is a normal operation in Middle East (George, 2008). Middle East also employs facilitation payments which are allowed under the FCPA. However, facilitation payments are considered illegal based on the UK law. This makes it hard for UK companies to take a position regarding facilitation payments. What they consider to be normal in their country is regarded to be illegal in other country and this puts most UK based countries in ethical dilemma (Good Corporation, 2014).

Another major ethical challenge faced by Middle East multinational companies is the workforce treatment. Workforce standards in most of Middle East countries fall below the required standards. Racism is practiced at a high rate an aspect that creates a great issue specifically with regard to women treatment and migrant workers. Women treatment significantly differs from one country to another. For instance, in Saudi women highly remain in disadvantaged position when it comes to business. Their negative regard to women and migrants in business make it hard to enhance inclusion and diversity management by multinational companies operating in the region. Multinational companies situated in Middle East face challenges of having women on top position as it is hard for subordinates to respect women in authority. Immigrant workers have also been said to be held hostage in various Middle East countries. There is a high level of discrimination based on age and religion in various parts of Middle East. The employment of human rights and labor laws is quite a high challenge to various Middle East multinational companies. This challenge highly impact Middle East based multinational companies from regions where human rights, anti-discrimination laws and labor laws are highly observed (Good Corporation, 2014).

Modern corporations work in various competitive cultures, environments, societies, and national boundaries. Their ethical standards notion differs across cultures and countries, and thus managers are confronted by a number of ethical dilemmas internationally. Practices which are unethical and certainly illegal in the United States might be tolerable in some other nations. For instance, giving gift is common and may be accepted in the Middle-Eastern, oriental, and Japanese cultures, it is not accepted in the US since it can be interpreted as bribery. While developed countries labor laws guarantee a minimum ethical behavior level toward workers, absence of laws of this kind in developing countries have made multinational companies to embrace sweatshop labor situations, unsafe working conditions, and the employment of child labor to enhance cost efficiencies. In addition, nations that do not have environment safety laws or those who do not legislate find themselves acting as a dumping ground for hazardous or toxic waste by companies following a strict shareholders strategy for wealth maximization, to other objectives exclusion. Thus companies faced with a huge number contextual conditions and strategies that add to their confronting ethical dilemmas (Sage, 2012).

Managers Reaction to Ethical Challenges

Normally, multinational companies are founded on company’s code of conduct that defines the company’s behavior in the entire world. However, their code of conduct is challenged by Middle East business culture, which completely differs from that of most nations from the western world. The best way to handle the situation is to ensure that the manager understand the culture of the country the company intend to venture in. The manager will also need to understand the business laws of a country where the company wishes to venture. The manager should consider adhering to the country’s cultural aspect that may hinder its effective business operation in the region, for instance, offering gifts, and facility payments since the company will basically be operating under the Middle East law. Nevertheless, the company should try to limit such acts and only do them when it is very necessary (Rossouw, 2005). However, the manager should observe the companies ethics with regard to workers treatment. The workers should be treated with the respect they deserve as per the company’s ethical requirements. In this case, the manager should consider introducing the company’s culture of inclusion and diversity management despite of the country’s situation. The company should also consider observing the environmental law for the sake of the company’s believe and respect for clean and healthy environment. This will be specifically done for the sake of the company’s reputation worldwide (George, 2008).  \

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