Issues in Law, Ethics and Corporate Governance: A Case Study of PharmaCARE’s Activities in Colberia
Issues in Law, Ethics and Corporate Governance: A Case Study of PharmaCARE’s Activities in Colberia
As the PharmaCARE case scenario reveals, a number of multinational companies have more often than not found themselves being heavily vilified globally for their failure in social responsibilities, corporate governance and ethics. This has particularly been the case with mining companies in oil and other mineral rich countries in Africa whereby these companies have exploited the vulnerability of the local populations to their business advantage. Their business activities have led to serious environmental destruction and pollution, raising major concerns about the health and safety of locals and their own employees who work in such mines and industries. An example of such a multinational company which will be used as a yardstick in this essay is Shell and its activities in Nigeria. Another instance of a situation in which legal, ethical and corporate issues was at play in the operations or a business activity of a multinational as presented by Anderson (2000) is the case of a California-based oil company, Unocal, in Burma 1993.
Stakeholders are generally all those persons, whether natural or legal, that have a stake or interest in a company or organization and its operations and the manner in which the company is governed. They have invested some capital in the company and are therefore to an extent members of the company. According to West (2009), the stakeholder approach to corporate governance in multinational companies is one that emphasizes on company responsibilities to its stakeholders and promotes the engagement of stakeholders in the decision making process and activities. The major stakeholders within the PharamaCARE scenario include its employees and the executives. Moreover, the New Jersey-based firm and its subsidiary manufacturing plant in the African nation of Colberia are all stakeholders in the company. The key features of the company’s stakeholders include lack of business ethics, lack of humanity for exploiting the Colberians and lack of social responsibility for their actions. They are not socially responsive to the needs of their employees and the local surrounding communities. While a majority of the company’s executives wallow in luxury, almost all their African employees are wallowing in poverty and living in poor conditions. This indicates that the company is not committed to its corporate social responsibility objectives. According to Yin, Rothlin, Li and Caccamo (2013), incorporating the stakeholder perspective theory in the business operations of a multinational should involve the company balancing between generations of value for its stakeholders and being socially responsive to the society.
Human Rights Issues Raised
The manner in which PharmaCARE treats its executives and the indigenous population in Colberia presents a number of serious human rights issues. Firstly, it presents the issue of the right to equal treatment and equal remuneration. While the members of the local population do most of the work in searching for herbs for the company, its executives do very little. They do not appreciate the Colberians by compensating them with appropriate remunerations since the 1$ they are paid can rarely sustain them and their families in a day while the company benefits a lot. Moreover, the manner differential treatment raises the issue of violation of the right to decent housing, development and standards of living. Whereas the company’s executives live in luxury suits with swimming pools, the local indigenous population are living in primitive huts with no electricity and running water. Further, there could also be an issue of forced and inhuman labor when the indigenous community members are forces to walk for long distances to fetch the herbs for PharmaCARE and then get paid peanuts. Additionally, there is an issue of the right of a people to self-determination and to exploit or use their own natural resources for their own benefits. . Moreover, as Dimitriades (2007) argues, multinational companies in the 21 century should proactively seek to honor and abide by their moral and ethical obligations to the societies in which they operate in order to leverage their business goals.
An Assessment of PharaCARE’s Environmental Initiatives
Against the backdrop of its anti-environmental lobbying efforts and Colberian activities, PharmaCARE’s environmental initiatives may be assessed from the perspective of its international responsibilities and business ethics. According to the case study, the company has launched an initiative labelled “We CARE about YOUR World” that pledges commitment to the environmental protection. However, at the same time, its lobbying efforts have been successful in watering down the environmental laws and regulations. Hence, it may be argued that the company is no longer responsive to the environment and therefore this initiative may be mere public relations stunt meant to influence consumers to buy its products. Further, given that the prevailing environmental laws and regulations may not be expected to be tighter than those in the US under the CERCLA, it is apparent that this company’s activities in Colberia are under regulated and hence may have various serious implications on the environment in Colberia
PharmaCARE’s Actions and/Against Ethical Theories
Utilitarianism
Utilitarianism as a normative ethical theory is based on the aspect of utility. According to this theory, an action that maximizes utility, wellbeing or social welfare or pleasure and minimizes pain or self-interest is the best moral action. Accordingly, under this theory, what is ethical, that is right or wrong, is to be determined not by its consequences or motive but rather by the ability of one’s act to produce the best possible consequences. As espoused by Mill and Bentham, a utilitarian believe that happiness is the sole end of all human actions and the extent to which a conduct promotes happiness should be the threshold for judging the morality or ethics of that conduct. Utilitarianism involves doing the greatest good for the greatest number of people possible. Based on this theory, PharmaCARE’a actions with respect to the indigenous people of Colberia would not be ethical at all since its actions do not seek to promote the general good, pleasure or interests of the Colberians, but rather that of the company and its executives. The consequences of its actions produce pain to the Colberians rather than pleasure.
Deontology
Deontological ethics theory is a normative ethical theory with which the morality or ethics of an action is judged based on whether or not the conduct adheres to a set of rules, laws and regulations. It is a theory of ethics that is the idea of the existence of a rule, obligation or duty that binds our actions and determines their morality and ethical dimensions. It is a duty-based ethics theory. Hence, based on this ethical theory, PharmaCARE’s actions in relation to the indigenous Colbrians would be unethical since they violate the company’s moral and legal obligations under international and national environmental law to abide by environmental laws. Moreover, they go against its duty to promote the social welfare of the Colberians since, as Staveren (2007) argues, deontology ethics is all about dignity and equality.
Virtue Ethics
Unlike the deontological normative ethical theory that emphasizes rules, duties and obligations as the bases of ethics, virtue ethics theory lays emphasis on moral character values or virtues of human actions. It is thus a character-based ethics and is not based on an action but rather on an individual person. Therefore, using this theory against the PharmaCARE’s actions in Colberia, it is argued that the actions of the individual CEOs and executives of the company fall foul of virtue ethics since they are contrary to humanity or human values of being mindful of the welfare of others.
My Own Moral/Ethical Compass
The company’s actions with respect to the indigenous people of Colberia would, based on my own ethical dimensions, be unethical since they violate fundamental human values of equality and responsible business activities.
Comparison between PharmaCARE’s Actions with Shell Oil
Shell is an international oil company whose actions among the Ogoni people in Nigeria and the impacts of its activities on the local environment attracted international attention and criticism thus leading to negative publicity and losses in 1995. The company’s activities raised a number of ethical and environmental issues and consequently led to financial losses when the company was sued by the indigenous Ogoni tribe and forced to pay compensations and discontinue operations. The major similarity between PharmaCARE and Shell Oil Company is that in both cases, the management of the company paid lip service to environmental safety laws and regulations and put the lives and limbs of the local population at risk. Moreover, the two are similar in that in both cases, ethical issues were raised with regards to the manner in which the company executives responded to the needs and social welfare of the indigenous population. Additionally, in both cases, the companies used their financial strength and power to dilute the environmental laws through lobbying. In the Nigerian Shell case, the company executives colluded with the local Nigerian government officials to ensure the impacts of their company on the local environment was not addressed. However, the major difference between the two situations is that in the present scenario, PharmCARE’s actions have not actually had serious environmental implications on the indigenous tribes as was the case in the Shell Oil case. Also, the two scenarios differ in that whereas PharmaCARE is involved in the exploitation of traditional herbs in Colberia without an implicit permit, Shell Corporation was licensed to carry out oil exploration.
References
Anderson, J. C. (2000). Respecting human rights:Multinational corporations strike out. U.PA. Journal of Labor and Employment Law, 2(3), 463-506.
Dimitriades, Z.S. (2007). Business ethics and corporate social responsibility in the e-economy: A commentary. Electronic Journal of Business Ethics and Organization Studies, 12(2), 1-20.
Staveren, I. V. (2007). Beyond utilitarianism and deontology: Ethics in economics. Review of Political Economy, 19(1), 21-35.
West, A. (2009). The ethics of corporate governance. International Journal of Law and Management, 51(1), 10-16. Retrieved May 28, 2016, from http://dx.doi.org/10.1108/17542430910936637
Yin, J., Rothlin, S., Li, X., & Caccamo, M. (2013). Stakeholder perspectives on corporate social responsibility(CSR) of multinational companies in China. Journal of International Business Ethics, 6(1-2), 57-71.
