Multinational Corporations in Political Environments: Ethics, Values and Strategies

By Tripses, Jenny | Global Virtue Ethics Review, January 1, 2004 | Go to article overview

Multinational Corporations in Political Environments: Ethics, Values and Strategies


Tripses, Jenny, Global Virtue Ethics Review


Multinational Corporations in Political Environments: Ethics, Values and Strategies Usha V. Haley August 1999, Riverhead Books, New York $13.00, paperback

What can be done to curb unethical behavior by governments? One traditional answer has been for stakeholders to exert pressure on multinationals through regulations, sanctions and divestitures in the hope that this will induce multinationals to leave the offending nation. Usha V. Haley's book on multinational corporations provides a conceptual foundation for understanding factors that influence decisions of multinationals to leave host countries. The author uses the metaphor of chameleons to illustrate the relationships between multinationals and host countries. Like chameleons, multinationals adapt to their external environments, but their capabilities to adjust are limited. The book guides readers towards a clearer understanding of the impact of stakeholder sanctions upon company decisions by focusing on the conflict between the values of top managers and those of other stakeholders, including governments, consumers, and stockholders. The book also gives insight into the efficacy of sanctions. Included in this understanding are ways that management transforms apparent victories of sanctioning parties into "business as usual".

The first section of the book is taken from the author's doctoral dissertation published in 1990. The dissertation sought to explain the circumstances around which multinationals left a host country using South Africa under apartheid as a case study. The purpose of that particular study was to determine if stakeholder sanctions prolonged or accelerated the demise of apartheid. Related is the question of the impact of political pressures exerted on the multinationals, in the US and elsewhere, to withdraw or modify their South African operations.

The study confirmed the important effects of social legitimacy, profits and some competition upon multinationals' strategic behaviors. In periods of no government regulation, more symbolic actions, higher profits, and lower order backlogs influenced decisions to remain in South Africa. In periods of government regulation, greater advertising and less product diversification influenced decision to remain. Also included in the stud}' were factors that made sanctions effective or ineffective. In most cases, stakeholder regulations, sanctions, and divestitures either had no effect on the decision to remain in South Africa or the results differed from the original intentions of stakeholders. One example given was the case where multinationals engaged in deception in the form of trusts to stave off stakeholder pressure for human rights in the political arena.

The second section of the book looks at applications of the findings from multinational corporations' experiences in South Africa to the situation in Myanmar, which has been hailed as the new South Africa The governments of the United States and Europe have shunned Myanmar's ruling military regime for harsh treatment of the pro-democracy opposition of the regime and its poor humanrights record. …

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