Every company doing business abroad faces numerous legal and ethical issues. The multinational corporation (MNC) faces legal issues raised by “home country” laws, “host country” laws, regional regulations or directives, bilateral and multilateral treaties, and international standards and certifications. Ethical issues become entwined in various legal options, and local customs and norms add another layer of complexity to the question of how to act both legally and ethically in an unfamiliar environment. This chapter offers general guidance on these complexities. We contend that MNCs are wise to focus on four kinds of ethical challenges: these are (1) bribery, competition, cronyism and public governance as they relate to supporting competitive market capitalism; (2) human rights issues; (3) environmental issues; and (4) social equity issues. While failure to focus on these can result in significant legal and reputational consequences, paying proper attention to them can improve corporate performance and enhance the functioning of economies that embrace capitalism. After a brief summary of international law and the market system, this chapter reviews the four main ethical challenge areas for MNCs. Each challenge area should receive careful deliberation by multinational managers who wish to maintain a company’s legal and reputational balance.
This paper draws on the social construction perspective and on social learning theory to examine the cross-cultural influences on organizational learning in MNCs. Social learning theory suggests that constructive engagement and member solidarity are key constituents of organization-based collective learning. Literature suggests, however, that cross-cultural differences in assumptions about social participation by organization members may impair organizational learning. The paper also reports a qualitative study, conducted at five Japanese-invested manufacturing companies in the Pearl River Delta, China. The research found that managers perceived Chinese frontline workers as lacking constructive engagement and member solidarity as compared with their Japanese counterparts, thus limiting organizational learning, and attributed these perceived differences to deep-seated cultural values. Attempts in two of the companies to ‘Japanize’ the workforces were reported to have had some impact, but appeared not to have substantially changed this picture. Urging caution regarding cross-cultural stereotyping and home country bias, we consider the implications for organizations with international manufacturing operations.
Multinational corporations are marked with inconsistencies and conflict given their exposure
to diverse institutional settings. Within comparative capitalism literature such inconsistencies
are seen as a source of experimentation or innovation. Similarly, in the international
management literature, it has been stressed that multinationals engage in direct political
pressure to change institutions or combine practices from different institutional contexts by
transplantation. There is relatively little attention paid to the conditions under which agency
takes place within the institutionally-embedded multinational corporation context. In order to
address this gap, the study draws on systematic comparative case studies of two large MNCs,
headquartered in Germany and the UK. It contends that agency assumes significance where
inconsistencies between different institutional settings are incumbent upon particular
coordination structures. Agency in the form of proactive orientation is likely where the
combination of home country institutional characteristics and multinational corporation
coordination structure is compatible rather than inconsistent with situational demands at the
subsidiary. In the absence of this compatibility, actors assume a reactive orientation.
Every company doing business abroad faces numerous legal and ethical issues. The multinational corporation (MNC) faces legal issues raised by “home country” laws, “host country” laws, regional regulations or directives, bilateral and multilateral treaties, and international standards and certifications. Ethical issues become entwined in various legal options, and local customs and norms add another layer of complexity to the question of how to act both legally and ethically in an unfamiliar environment. This chapter offers general guidance on these complexities. We contend that MNCs are wise to focus on four kinds of ethical challenges: these are (1) bribery, competition, cronyism and public governance as they relate to supporting competitive market capitalism; (2) human rights issues; (3) environmental issues; and (4) social equity issues. While failure to focus on these can result in significant legal and reputational consequences, paying proper attention to them can improve corporate performance and enhance the functioning of economies that embrace capitalism. After a brief summary of international law and the market system, this chapter reviews the four main ethical challenge areas for MNCs. Each challenge area should receive careful deliberation by multinational managers who wish to maintain a company’s legal and reputational balance.This paper draws on the social construction perspective and on social learning theory to examine the cross-cultural influences on organizational learning in MNCs. Social learning theory suggests that constructive engagement and member solidarity are key constituents of organization-based collective learning. Literature suggests, however, that cross-cultural differences in assumptions about social participation by organization members may impair organizational learning. The paper also reports a qualitative study, conducted at five Japanese-invested manufacturing companies in the Pearl River Delta, China. The research found that managers perceived Chinese frontline workers as lacking constructive engagement and member solidarity as compared with their Japanese counterparts, thus limiting organizational learning, and attributed these perceived differences to deep-seated cultural values. Attempts in two of the companies to ‘Japanize’ the workforces were reported to have had some impact, but appeared not to have substantially changed this picture. Urging caution regarding cross-cultural stereotyping and home country bias, we consider the implications for organizations with international manufacturing operations.Multinational corporations are marked with inconsistencies and conflict given their exposureto diverse institutional settings. Within comparative capitalism literature such inconsistenciesare seen as a source of experimentation or innovation. Similarly, in the international
management literature, it has been stressed that multinationals engage in direct political
pressure to change institutions or combine practices from different institutional contexts by
transplantation. There is relatively little attention paid to the conditions under which agency
takes place within the institutionally-embedded multinational corporation context. In order to
address this gap, the study draws on systematic comparative case studies of two large MNCs,
headquartered in Germany and the UK. It contends that agency assumes significance where
inconsistencies between different institutional settings are incumbent upon particular
coordination structures. Agency in the form of proactive orientation is likely where the
combination of home country institutional characteristics and multinational corporation
coordination structure is compatible rather than inconsistent with situational demands at the
subsidiary. In the absence of this compatibility, actors assume a reactive orientation.
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