Analysis of “Moral Minimums for Multinationals” by Thomas Donaldson

 In “Moral Minimums for Multinationals” Thomas Donaldson addressed an issue, which often escapes attention of moral philosophers. The article deals with a rather special ethical aspect of international business relations: relations between people of various cultures inside multinational corporations. This problem appears to be of paramount importance for the author, providing data about expansion of corporations “devised for colonizing the future”. Manufacturers from India, managers from USA, experts from Japan, employees from the Philippines and directors from Germany – they are all bearers of quite different cultural and ethical traditions, which need to be reconciled inside an international firm.

The problem becomes more complicated considering existence of universal standards for business and business conduct, which are most often based on the values of Western civilization. Should managers always insist on the same standards of conduct for all, or should they verify their demands considering particular traditions? In case the code of conduct of a company creates more severe limitations of behavior than the law and customs of the country in which the company acts, should this code of conduct prevail? Thomas Donaldson attempts to answer this and other questions in his work.

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Donaldson starts from assertion, that although the multinational corporations are not a wholly new phenomenon, their history in a modern understanding starts after World War II, when the growing demand of products, new transport facilities, differences in economic and financial situations in different countries resulted in internationalization of business.

Consequently, standards of those companies started to expand. And the multinational corporations faced conflict between their home practices and practices in other countries, especially concerning labor conditions, working hours, age of employees, sums of salary and other issues.

Other matters are related to distribution of their products and standards of quality for such products: for example, can a corporation sell pharmaceuticals which do not correspond to the standards of their  home country in other countries, where there are not such standards?

Donaldson introduces several universal concepts for solving those problems. He starts with a concept of human right. Rights “establish minimum levels of morally acceptable behavior” being a kind of bottom line for the corporations, which can not be crossed, a minimum set of responsibilities for a corporation. Those responsibilities of the corporation are at the same time rights of its employees, trade partners and all those individuals which are influenced by the company’s activities.

However, there is a problem of control. Who should monitor the observation of those rights and duties: the company itself or its home country, or a country which is influenced by the company’s activities? And where can such minimum standards be found at all. Some response is given by universal human rights instruments such as the Universal Declaration of Human Rights or the UN Charter. However, those instruments include very little of welfare rights, which are of paramount importance for international corporations. Donaldson criticizes the traditional distinction between positive and negative rights, asserting, that often observation of negative rights requires states and individuals to act positively and vice versa.

For example, preservation of right to life means also necessity to create sufficient working and environmental conditions. So what rights related to international corporations should be endorsed on international level? Donaldson proposes the following criteria for definition of such rights: “1) the right must protect something of very great importance; 2) the right must be subject to substantial and recurrent threats; and 3) the obligations or burdens imposed by the right must satisfy a fairness-affordability test”.

For Donaldson there are several rights that correspond these criteria: “1) the right to freedom of physical movement; 2) the right to ownership of property; 3) the right to freedom from torture; 4) the right to a fair trial; 5) the right to nondiscriminatory treatment (e.g., freedom from discrimination on the basis of such characteristics as race or sex); 6) the right to physical security; 7) the right to freedom of speech and association; 8) the right to minimal education;

9) the right to political participation; and 10) the right to subsistence”. For Donaldson this is a minimal list, which can be extended. He notices, that the international companies are able to observe, or at least pretend that they are observing most of the mentioned rights, but the situation is much more dramatic in cases when companies deprive people from opportunities to enjoy their rights. That’s where we once more face the problem of monitoring. Which of the rights should be guaranteed by the corporations and which by the governments?

Here Donaldson states, that a corporation is not an institution which is designed to observe human rights, because it’s aim is only profit-making. They are undemocratic institutions by the nature. They strive to maximize their income and actually don’t care of anyone’s rights. Their minimal obligations under Donaldson are related to avoidance of deprivation of others of their rights. For example, the right of physical security includes the company’s obligation to physically protect it’s workers. In turn the right for political participation for the corporations is limited by their duty to respect democratic institutions in other countries.

Donaldson proposes to develop test, which would demonstrate whether the actions of the company deprive anyone of his or her rights or not. If the actions of the company would finally result in violations of anyone’s crucial rights, they should be morally inacceptable, whether they are formally rightful or not. For Donaldson “nothing less than a general moral theory working in tandem with an analysis of the foundations of corporate existence is needed”. Donaldson introduces two types of ethical conflicts for multinational corporations. In the “type A” conflicts, the conduct of a company would contradict the legal and ethical norms of a country where the company holds business, and in the “type B” conflicts, the conduct of a company contradicts the laws of its home country.

In order to reconcile the aims of the company to generate profit and obligation to act ethically, Donaldson supposes, that in case a particular practice does not violate considerable human rights and it is impossible to carry on business without such slightly unethical practice, a company may sometimes accept such practice (for example to bribe the officials, if this is a condition for further legal operations). Further development of ethical test would, under Donaldson, help to create ethical standards for multinational corporations in the changing global business environment.

Donaldson’s article leaves a controversial impression of     incompleteness. It looks rather like a draft of an article, but not an article itself. The author does not propose any single problem or thesis, or his problem is unreasonably broad for such a small piece of text. At the beginning Donaldson speaks of the moral problems of interaction between bearers of different cultural traditions, but later he does not develop the idea, turning to ethical problems, which are actually typical for any business – not only international one.

Any company seeks to improve its performance at all costs. Any company is willing to have more money and less responsibility. Any company has to face a moral choice between ethical and legal conduct and temptation to slightly violate accepted norms. The company does not need to be international to face this, therefore, the name and the thesis of Donaldson’s article are hardly related to its content.

Talking of employment standards, which can be really interesting when investigating ethical matters connected to international business, we should notice, that they are not limited exclusively to international human rights instruments, as Donaldson asserts. Acts of the United Nations (especially of Economic and Social Council) as well as acts of International Labor Organization do include numerous requirements and recommendations of both legal and ethical nature. It would be wise to consider them when talking of ethical moments in international business. On the other hand Donaldson does not consider numerous business codes of conduct, which do include a number of ethical provisions. So, Donaldson’s article is rather a set of ideas and reasoning about some situations, than a systematic study of multinational business ethics.

So, do we need multinational corporations to behave ethically? Obviously, yes. Do we need to develop any new ethical standards? Yes, but we need to be aware of those, which already exist. The situation is not so dramatic, as Donaldson presents. Ethical norms already exist, we just need to correctly apply them and reconcile moral requirements in various countries. Considering that most of the paramount ethical values are somehow reflected in the international law, or recognized universally, this task appears to be not so complicated. Here it is possible to speak of globalization of ethical imperatives, which is a part of globalization processes as a whole. International business act both as agents and objects of such globalization, which is already inconvertible.