Discuss the Ethical Dilemmas Faced by Foxconn

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Word Account: 2005

Discuss the ethical dilemmas faced by Foxconn Company

with special reference to cross-cultural settings

As the economic globalization advances, there are an increasing number of multinational corporations in the global range. Indeed, multinational corporations involve more attention on cross culture in the operation process. Therefore, it is highly required that multinational corporations should organize the specific culture within the company well. As Schneider and Barsoux (2003) indicate, cultural difference is not solely nation-based; rather, it also comprises departments or functions in organizations. Hence, it is considerably possible that companies may face ethical dilemmas when they fail to manage relationship among different departments reasonably.

Foxconn serves as a typical example of Multinational Corporation that encountered ethical dilemma. Specifically, Foxconn, the manufacturing company founded in Taiwan, is the second largest private employer worldwide. As a famous Multinational Corporation in China, it has around 1.4 million workers in Chinese subsidiaries alone (Perlin, 2013). However, the image of Foxconn was impacted by the horrifying cluster suicide in one of its factories situated in Shenzhen. There were 14 occurrences of employees jumping off the factory buildings within one year in Foxconn, which resulted in 12 deaths. Especially during the first 5 months in 2010, 12 suicides happened. This shocking event significantly jeopardised the image of Foxconn in the public (Xu and Li, 2012).

This essay will be divided into two parts, discussing Foxconn’s ethical dilemma in cross-cultural context. The first section will focus on analysing the reasons why Foxconn adopted different approaches for business stakeholders that got the corporation stuck in ethical dilemma. Particularly, the company holds positive attitudes toward business partners and local government, which is indeed effective for gaining support from stakeholders. In stark contrast to this, Foxconn assumed negative attitudes towards public media and its employees, which triggered the same shocking tragedies subsequently. Secondly, the essay will compare different reports from diverse cultural background and then discuss the possible explanations of disparities embedded in the press, such as the contrast between Chinese newspaper report and US journal report. Finally, the conclusion is composed of the evaluation of Foxconn’s ethical dilemma and tentative suggestions for managing these sensational issues.

As Shaw and Barry (1992) suggest, business ethics concerns research exploring whether the behaviour of corporation is appropriate or incorrect contextualized in business environment, which consists of profit maximisation and well-being of society. In terms of Foxconn, the company has good performance in maximising the profit, because it implements efficient methods to reduce the cost of manufacturing process in order to achieve high profit returning to the shareholders and provide high production of electronic devices to business partners. For example, based on Perlin (2013), the major labour of Foxconn is from Mainland China, where no national wage floor is required. Undoubtedly, minimum wage rate implies that cheap labour in developing countries can effectively minimise the cost of production. Moreover, the considerable number of floating population in coastal cities can satisfy the high requirement of handing manufacturing. Additionally, in order to enhance the production, the company provides the closed dormitory for employees to concentrate the labour and maximise the working time (Xu and Li, 2012).

Therefore, it is indisputable that Foxconn plays a crucial role in managing the relationship between shareholders and business partners by successfully minimising the cost of production while providing the high quantity and quality of goods for business partners. Apparently, such established relationship facilitates Foxconn to acquire business partners’ support in the cases of its suicide dilemma. Ironically, the Apple CEO Steven Jobs, one of Foxconn’s business partners, announced that Foxconn factory’s system is quite organized so it could not be labelled as sweatshop (Xu and Li, 2012). Additionally, although other cooperation organizations such as Dell and Hewlett-Packard did not express their attitudes toward Foxconn explicitly in public, they conducted some closed investigation into Foxconn instead, which was due to the pressure of media and public. In terms of shareholders, albeit Foxconn attempted to cut some interest from shareholders to increase the wage of workers, the principal purpose of the company was solely to inhibit the suicide issue continuance and to ensure the company would maintain the positive image and maximum profit in the long term. Overall, regarding shareholders and business partners, Foxconn holds positive attitudes toward them, aiming to manage the relationship with them and make a good performance in maximising profit aspects.

With reference to the well-being of society, especially for other stakeholders, such as employees and social media, Foxconn’s neglect was self-evident in this ethical issue. The main reason is that Foxconn failed to recognize the employees are also important stakeholder (Xu and Li, 2012: 371). According to Perlin (2013), the low average wage of workers is from $1 to $2 per hour in Foxconn, which attracted more rural labour force receiving low income to work here. Moreover, Fifty-hour work weeks and twelve-hour shifts are common phenomena in Foxconn. Remarkably, the work time ever reached up to one-hundred-hour week in peak production, exceeding China’s legal maximum duration of forty-nine hours per week. Additionally, as Xu and Li (2012) indicate, Foxconn also uses isolation strategy to decrease the workers’ social network in order to make them focus more on work. For example, the employees from the same city are not allowed to live in the same dormitory. Indeed, these rigid rules generate the unfortunate occurrence that the employees with low wages and less personal space in their lives work like robots. Consequently, the employees’ feelings of upset and even inclination to suicide were triggered.

Furthermore, the corporation also denied the responsibility of suicide and even converted the responsibility to victims in the cluster suicide issue (Xu and Li, 2012; Guo et al., 2012). It is unconceivable that Foxconn never attempts to make any official responses to the suicide issue from the first incident to the tenth case; rather, the corporate feels excessively confident for its own management system. For example, after the eighth suicide, Foxconn invited monks to conduct a religious ceremony to eliminate the misfortune rather than blame for its own management system (Xu and Li, 2012). Then, after the tenth suicide, Foxconn forces workers to sign contract of ‘no suicide agreement’ in order to refrain itself from assuming the responsibility of its own employees’ suicide.