The role of ethics in international business practices cannot be overstated. Ethical behavior combines professionalism with skills to facilitate long-term sustainable development as opposed to short-term benefits. It creates a positive climate that allows parties involved in the deal-making process to feel comfortable during their engagements. Ethics emphasizes the importance of moral values when dealing with situations that affect the running of international businesses (Halinen & Jokela, 2016). Ethical issues in international business are usually centered on corruption, the moral obligation of multinationals, employment practices, environmental practices, and human rights.
In the case study, Colossal Corporation is facing an ethical dilemma. The company has some of its operations based in Serafini, an Eastern European country. The firm’s executive board has seven expatriates and three local employees. Elena and Viktor, who are part of the local executives, believe that the company discriminates against them as they have lesser salaries and remunerations compared to their colleagues with whom they share similar qualifications. They threaten the company with legal action if the issue cannot be resolved amicably. However, the company hires two expatriates to replace them and issue them with termination notices. However, the proposed replacement cannot occur due to bureaucratic practices and discrimination in the labor office and a stalemate ensues.
From the case, it is evident that Serafini does not have equal-pay laws, nor is it a democratic country. As such, Elena and Viktor do not have a voice that works in their favor. Similarly, their incoming replacements cannot lodge a legal complaint regarding their delayed approvals. While the United States employment practices may be implemented given that the company is Serafini is a US subsidiary, it may come into conflict with Serafini laws. Women in the country are denied work permits, and Beth, one of the proposed replacements, is likely to have a similar case. Similarly, Michael cannot be granted a work permit as he is above 65 years of age, which is the retirement age in Serafini.
Ethically, Max should retain the services of both Elena and Viktor as board members. Firing the two locals with go against the moral obligations of the organization and would set the tone for future discriminative practices in the company (Sison, Beabout, & Ferrero, 2017). Should the organization decide to terminate their contracts, it would be morally obligated to find replacements locally. It is in the interests of the company to retain an international and local outlook. Failure to replace them with local executives is also likely to cause upheaval among employees who may feel that their fellow countrymen are under-valued.
If the company retains Elena and Viktor, it is ethically obligated to review their salaries. From the case study, it is evident that some expatriates have similar qualifications to the two executives but with better wages and remunerations. In doing so, the company will create an equal-pay and opportunity platform for all employees. Such a move would set the tone for competitive appraisals and motivate other employees to work even harder. Dismissing, the two also has social consequences for the business as the local communities might boycott their products. As such, the company’s best bet is retaining the duo and negotiating favorable terms with them to maintain their good economic standing.
Most private companies in the United States, such as NBD, operate under the employment-at-will policy. As such, they can hire and terminate the contracts of their employees without justification unless in situations where discrimination was a cause for firing (Bales, 2019). In the case of Viktor and Elena, it was evident that their termination was discriminatory. The two sought to know why they were underpaid relative to some of their colleagues with whom they had similar qualifications. They believe that they were underpaid based on their racial background and not their experience, skill-set, and academic requirements (Jacoby, 2018). As such, they would have a solid case against their employers at the Equal Employment Opportunity Commission (EEOC).
Both Michael and Beth have their rights protected by the United States Constitution had they been engaged by NBD in the United States. The Civil Rights Act (1964) highlights that it is illegal for any individual or company to discriminate based on their national origin, color, religion, or gender (Bales, 2019). In Serafini, Beth’s work permits were delayed by the labor office because she was a woman. However, that is not the case in the United States as Beth would have been issued with a work permit so long as she was qualified. Serafini has a mandatory retirement age of 65 years. As such, 66-year old Michael was denied a work permit based on the law. However, the Age Discrimination in Employment Act (1967), which applies to individuals above the age of 40, would have guaranteed him a work permit so long as he met the qualifications (Jacoby, 2018). All four individuals had equal opportunities based on United States labor laws.
As aforementioned, Serafini is not a democratic country, and the labor office in the nation frustrates women from landing plum positions in multinationals. In the United States, Michael is protected by the Age Discrimination in Employment Act (1967), which allows him to work beyond his current age. However, Serafini has a strict retirement age of 65 years. As such, he cannot be granted a work permit regardless of the situation. The Labor office in Serafini, on the other hand, is adamant about issuing Beth with a work permit as the country’s laws are not keen on empowering women. As such, she is likely to be frustrated until her interest in the position flags down. As for Viktor and Elena, it may depend on the goodwill of the government. Since the state is not democratic, it may force the multinational company to retain the two employees or face sanctions. Conversely, non-democratic nations are prone to corruption. If someone influential at the multinational chooses to bribe Serafini government officials, the two natives might find themselves out of employment.
The company is in dire need of a solution based on the above stalemate presented in the case study. Bringing in two expatriates as board members is likely to destabilize the harmony among other board members as well as the other employees. The other board members may also feel their positions are not safe. Such changes need to be justifiable. In the case presented, there is no legitimate cause to terminate the contracts of Elena and Viktor as they are merely fighting for their rights. Therefore, the human resources team should discuss with the pair on how to improve their terms to match those with similar qualifications as them. Such a move would be ideal for the company’s social and economic image.
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