Academic journal article International Journal of Management

The Perceived Social Role of Multinational Corporations: A Study in the United States and Saudi Arabia

Academic journal article International Journal of Management

The Perceived Social Role of Multinational Corporations: A Study in the United States and Saudi Arabia

Article excerpt

This study compares the perceptions of United States and Saudi Arabian students of the social roles of multinational corporations (MNCs). The 450 U.S. students and 348 Saudi students rated the extent to which MNCs should follow or pursue seven different roles in society (e.g. serving the public interest, concern for the welfare of others, private goals like maximizing profits). There were significant differences in the perceptions of the two samples as measured by the same 23-item scale. The Saudi students believed that MNCs have a more important public role than did the U.S. students, but both believed this role to be important for MNCs. Results are discussed in terms of the competing claims made on MNCs in the world today.

I. Introduction

There has been very little research which attempts to identify and compare the perceptions of the various claims on multinational corporations (MNCs) in developed and less-developed countries. This study provides evidence in this area and offers a basis for future research. The rise of international business has created the need for comparative or cross-cultural studies. Such studies could be useful to better understand the various claims made on multinational corporations in different countries. This research paper has value (as a cross-cultural study) which breaks new ground in an area in which there is little previous empirical research. What is really crucial in cross-cultural research is not merely showing differences between groups, but offering an interpretation of these differences (Malpass, 1977). Cross-cultural research is about the explanation of similarities and differences of people from different countries (Malpass and Poortinga, 1986).

Berry et al. (1992) present several ways to make cross-cultural findings more interpretable. They argue for testing based on cultural dimensions, which they claim is analogous to describing organizations on structural dimensions, such as concentration of authority and structuring of authority. (Au, 1997). The literature on the various claims on multinational corporations highlights the importance of their contribution in countries where they are located around the globe. The contributions of multinational corporations (MNCs) can be characterized as social responsibility, international jobs, building plants, moral responsibilities, investment in communities, exchange of innovations, and technology transfer (Blond, 1978; Ali and Al-Shakhis, 1990; Anderson, 1985, and Maghrabi, 2006).

II. Literature Review

Much of the literature in this area has focused on the benefits to the countries where MNCs are based throughout the globe and their involvement in local needs and interests. Other work has considered the role of globalization strategies in influencing social issues and the organization of work within branch plants. Sethi (1987) argues that MNCs should provide jobs, build plants, sell products, conduct employment training, provide support for people with disabilities, assist young people, and develop industry-education partnerships. MNCs whose subsidiaries are concentrated in manufacturing activities are playing an increasingly important role in the economic life of many developing countries (Blond, 1978). The role of MNCs since the 1960s in shaping the world economy, particularly in less developed parts of the globe, has been closely scrutinized (Blond, 1978). MNCs will continue to be controversial in their roles, emphases, directions and priorities so long as they constitute the dominant force in international business. This new century has brought new trends which have posed great challenges for MNCs as they interact with different cultures.

For this reason, MNCs have been an interest of the popular media. Their role in developing countries should remain the focus because the aspirations and expectations of developing countries are important for peace and stability (Ali, and Al-Shakhis 1990). In addition, MNCs whose subsidiaries are concentrated in manufacturing activities are playing an increasingly important role in the economic life of many developing countries (Blond, 1978). …

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