Question

To what degree should MNEs apply their own ethical values to subsidiaries?

Answer 1

MNEs should apply their own ethical values to the subsidiaries only in a limited manner because different countries have different types of ethical values and morals and the subsidiary would have to follow those. Thus, both the ethical values can conflict with each other if the enterprise applies its own ethical values to the subsidiaries in a very extreme and strict manner.

However, those ethical values and morals are also necessary to be applied in the subsidiary in order to work in an effective and efficient manner by following the standards and norms which are prescribed by the company on its subsidiaries.

various norms and ethics related to the employee's relationship with its employer and other matters are also required in order to avoid any kind of conflict within the subsidiary.

The subsidiaries may start pursuing immoral activities that can affect the goodwill and reputation of the MNE. They may start pursuing black marketing, adulteration or any other type of immoral activities that would affect the brand image of the MNE.

These are also required to maintain the quality standards of its product which are to be transferred to the customers by subsidiary carrying the brand name of the MNE. Moreover in order to maintain the performance of subsidiary, and to ensure that they fulfill all the kinds of responsibilities,, they have like corporate social responsibilities, etc., the Application of such business ethics by the company to its subsidiaries is also important.

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