Corporate Obligation to Poverty Stricken People

Running head: CORPORATE OBLIGATION TO POVERTY STRICKEN PEOPLE
CORPORATE OBLIGATION TO POVERTY STRICKEN PEOPLE
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CORPORATE OBLIGATION TO POVERTY STRICKEN PEOPLE
Introduction
“Multinational companies have an obligation to assist the citizens in poverty-stricken countries
in which they do business (Knowledge.wharton.upenn.edu, 2018).”
The above quote implies that multinational organizations have the obligatory duty to help
citizens in countries struck with poverty where they operate. However, debates have occurred
across the globe regarding the obligatory boundary of such organizations in helping the people or
the community in need (Hah & Freeman, 2014).
The primary aim of this essay is to present a detailed argument on the above quote. It will
begin with the background of the argument followed by the ethical issues surrounding it. Further,
the essay will present arguments in favor of the point succeeded by arguments against it.
Multinational organizations earn huge profits doing business in countries with poverty-
stricken population. It is therefore logical to assert that these organizations must endeavor to help
citizens of these countries. The essay will provide arguments that prove the obligation of
multinational organizations towards poverty-stricken nations.
Background
At the World Economic Forum held at Davos, Switzerland in 2005, the topic gained
unexpectedly strong support from the members (Knowledge.wharton.upenn.edu, 2018). The
topic was directed majorly at corporations the resources of whom are seen as essential to address
specific issues like the AIDS crisis in Africa or the lack of vaccines for children across the
developing nations. Nien-he-Hsieh, a Wharton professor of legal studies made a good point

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CORPORATE OBLIGATION TO POVERTY STRICKEN PEOPLE
regarding the social responsibility of multinational corporations. Hsieh put forth two principles –
rescue and fairness – that supposedly justify the CSR in certain situations.
Hsieh further points out that manager at MNCs often face the dilemma of either assisting
people in distress or maintaining the for-profit nature of the company. In this dilemma, it
becomes difficult to heed calls for help without undermining the interest of the business. The
professor provided three instances of pharmaceutical companies helping people in trouble across
countries. Pfizer distributed Diflucan, the antifungal medicine to HIV/AIDS infected citizens in
nations where the prevalence of the illness is one percent or higher. GlaxoSmithKline
collaborated with Center for African Family Studies that aimed at increasing involvement of
persons with HIV/AIDS in policy discussions at national and international level. Merck donated
50 million dollars through distribution of Cirxivan and Stocrin in Botswana by collaborating
with Gates Foundation. These instances comply with the rescue principle discussed by Hsieh. In
all these cases, the corporations inflicted upon themselves a minor damage of finance in order to
assist the greater community.
The principle of fairness as described by Hsieh does not involve rescuing by
corporations. He provided the instance of Ikea’s establishment of hundred “bridge schools” in
India enabling children in remote areas to be involved in the mainstream education. The
assistance was given because Ikea sources its carpets from India. This instance clearly shows the
case of fairness as a principle of corporate social responsibility.
Ethical Issue
When a company indulges in business with citizens of another country, it focuses mainly
on providing services or products in exchange of revenue and profit. The firm does not hold any