A Multinational Enterprise

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A multinational enterprise (MNE) is a company that has an integrated global philosophy

encompassing both domestic and overseas operations. Discuss the ethical and social impact of the

MNE, and consider the economic, political, and legal implications on domestic as well as foreign

countries. Evaluate the ethical implications of issues, such as b usiness strategies, control, and

other variables.

Abstract

As more organizations engage in international trade, firms will be faced with an increasingly

complex business environment. One important facet of conducting business as a multinational

enterprise is understanding the ethical significance of various issues. This study analyzes the

economic, political, and legal implications on domestic as well as foreign countries. Specific issues

examined are corporate responsibility, the introduction of the Caux principles, and business

strategy. The implications of common multinational ethics dilemmas, such as social pressures,

economic impacts, control, external and domestic factors, and illicit operations are discussed.

Introduction ―A multinational enterprise (MNE) is defined as a company that has an integrated global philosophy

encompassing both domestic and overseas operations; sometimes used synonymously with

Multinational Corporation or transnational corporation‖ (Daniels & Radebaugh, 1998, p. G-9). To

analyze the ethical and social impact of the MNE, one must consider the economic, political, and

legal implications on domestic as well as foreign countries. Multinationals must also consider

business strategy, control, and the ethical implications of such issues.

Current literature suggests that business ethical issues are multiplied for MNEs because they

function in many different environments. An ethical issue exists any time someone needs to make

a decision. Ethical issues arise when a person, in pursuit of his or her goal, engages in behavior

that affects the ability of another person to pursue his or her goal. The same concept would apply

to an organization. If the effect of the behavior is unjust, then the behavior is considered unethical.

Some MNE ethical issues include: social pressures, economic impacts, control, external and

domestic factors, and illicit operations. The literature suggests that a consistent, conscientious legal and ethical framework be imposed to

guide multinationals, for example, the CauxRoundTable Principles of Business Ethics. The purpose

of the principles would encourage businesses to contribute to the social improvement of countrieswhere they operate, as well as the world at large. The principles are also concerned with human

rights, education, and welfare.

In an MNE environment, one must remember that stakeholders are pushing companies to respond

more responsibly to the numerous pressures that today’s organizations face. Haley (2002) and

Clarkson (1995) note that primary stakeholders, such as owners, employees, customers, and

suppliers, who are viewed as being on the ―inside‖ of the company, are one source of pressure.

Another source of pressure is secondary stakeholders, including nongovernmental organizations

(NGOs), activists, communities, and governments that are also seeking greater corporate

responsibility.



Waddock, Bodwell, and Graves (2002) indicate that a third source of pressure is general social

trends and institutional expectations, reflected in the proliferation of ―best of‖ rankings. Other

pressures include: the steady emergence of global principles and standards that define expected

levels of corporate responsibility and new initiatives to publicly report the triple bottom lines for

measuring economic, social, and environmental performance. Companies respond to the demands

by accepting greater corporate responsibility and by developing systemic approaches to balance

their liabilities.

Numerous exposés of exploitative labor practices in global supply chains compelled multinational

brands and retailers to adopt corporate codes of conduct. Stakeholder demands—and

social-institution expectations—increased further, driving firms to not only introduce codes of

conduct, but also to pressure their suppliers to adopt these codes. The pressures have increased

with the recent fall of Enron and renewed calls for greater corporate integrity (Waddock et al.,

2002). Because of the pressures and the current attention to corporate integrity, many companies find

that being recognized for responsible business practices is profitable. Social change, therefore,

becomes the new business imperative. Multinationals observe that socially responsible

management is a significant source of competitive advantage for companies taking the lead

(Waddock et al., 2002).

(NGOs) Kapstein (2001) observes that, around the world, corporate codes of conduct on human rights,

labor standards, and environmental performance are growing. The codes reflect the growing

demands being placed on firms by NGOs, activist shareholders, and the portfolio managers of

―socially responsible‖ investment funds. A type of corporate ethics crusade has been launched and

has been successful in encouraging executives to consider its concerns.

Some apprehension about this movement exists, however, because MNEs and NGOs in

industrialized nations are beginning to form relationships that could actually harm the least

powerful members of the world economy. They include: developing countries, small- and

medium-sized enterprises, and the poor ( Kapstein, 2001). Consider the connection of labor and environmental standards to multilateral trade agreements.

Improving working conditions and air and water quality are praiseworthy goals, and firms shoulddo so whenever it is economically and technically feasible. NGOs add to that process by providing

governments and firms with information, advice, and policy alternatives. Nevertheless, forcing the

standards of industrialized nations on developing countries and the firms that operate in them

could backfire by reducing investment and job creation. Most likely, more workers would be chased

into the informal economy, which has even lower standards ( Kapstein, 2001). Kapstein (2001) also notes that activists who wish to establish ethical codes need to reconcile their

aspirations with the fact that most nations do not generally share common laws or regulations on

labor rights and the environment. Differing levels of wealth explain much of this difference, but the

individuality of political systems and social organizations has left its mark. The ethics crusaderepresents, in effect, an attempt by one group to impose its values on other groups. Far from



making economic relations more harmonious, that effort could lead to greater conflict, which could

actually hurt those it intends to help. The primary criticism is that MNEs are inadequately concerned about national societal interests

because of their global bases of operations. Further, the sheer size of many of these companies

alarms the countries where they do business. For example, the sales of General Motors (GM),

Exxon, and Mitsubishi exceed the gross national product (GNP) of such medium-sized economies

as those of Argentina, Indonesia, Poland, and South Africa. Large firms have considerable power in

negotiating business arrangements with governments, and outcomes are sometimes of greater

consequence than are many treaties among countries. In fact, the executives of multinationals

frequently deal directly with heads of state when negotiating the terms under which their

companies may operate (Daniels & Radebaugh, 1998). Under such circumstances, an MNE may

have a powerful impact on a nationnegative or positive. The actions of even small multinationals

influence the economies of their nation and host countries.

Ethical Implications of the Economic Impact of the Multinational Enterprise Carlson and Blodgett (1997) found that t he North American Free Trade Agreement (NAFTA)

provides guidance for the analysis of international trade issues, because it addresses issues

concerning employment, intellectual property, and trade. These provisions are included in NAFTA

for their trade implications and, in effect, encompass ethical concerns that belong in corporate

codes of ethics. While NAFTA’s provisions deal with some of the issues within the global

environment, Carlson and Blodgett note the international interest found in the CauxRoundTable

Principles of Business Ethics.

Caux Round Table Principles of Business Ethics Simultaneous with the implementation of the multilateral NAFTA among the United States, Canada,

and Mexicoto promote free trade by eliminating tariff and nontariff barrierswas the creation of

the CauxRoundTable Principles of Business Ethics (also known as CRP or Caux). Considered the

first international code of ethics for business, the Caux originated at a meeting of international

business leaders in Caux , Switzerland. These businesspeople represented the United States,

Europe, and Japan. The Caux principles are based on the Minnesota principles, which originated

from the Minnesota Center for Corporate Responsibility (MCCR), affiliated with the University of St.

Thomas in the Twin Cities, Minnesota (Carlson & Blodgett, 1997).

The Caux principles are an effort to set forth universal moral values that are correct for all cultures,

independent of what a culture assumes. The principles represent an ethical universalism. Caux

affirms the necessity for moral values in business decision making. Beauchamp (2001) suggests

that, without moral values, ―stable business relationships and a sustainable world community are

impossible‖ (p. 624). The Caux Round Table (2003) general principles include: 1. Responsibilities of businesses: beyond shareholders toward stakeholders.

2. Economic and social impact of business: toward innovation, justice, and world community.



3. Business behavior: beyond the letter of law toward a spirit of trust.

4. Respect for rules. 5. Support for multilateral trade. 6. Respect for the environment. 7. Avoidance of illicit operations.

Ethical Implications and Social Impact of the Multinational Enterprise The concern that even the actions of a small multinational corporation will affect the economies of

its own nation and its host countries ties in with Principle 2 of the Caux Round Table (2003): The

economic and social impact of business: toward innovation, justice, and world communitywhich

concludes that business has a responsibility to help the community where it resides. Utilitarian theory (Utilitarianism, 2003) applies to this thinking and is consistent with the greatest

good for the greatest number of people. This principle means that businesses set up in foreign

countries to develop, produce, or sell should also contribute to the social advancement of those

countries by generating productive employment and helping raise the purchasing power of their

citizens. This concurs with ethical relativism, which asserts that what is good for the country where

the business operates will, ultimately, be good for the business. The country and the business are

able to benefit from each other. People are able to improve their well-being and support their

families.

Economic Factors of the Multinational Enterprise The harsh realities of balance-of-payment effects are that one country’s surplus is another’s deficit.

Each country, therefore, ―attempts to regulate trade and investment movements and the capital

flows that parallel those movements‖ (Daniels & Radebaugh, 1998, p. 441). Countries do this

through incentives, prohibitions, and other types of government intervention.

Multinationals are concerned about how to satisfy the various interests of each organization with

which they have contact. Most MNEs have global objectives, but the host countries are usually

interested in national priorities only. That leaves the MNE to interpret conflicting interests and to

handle cross-national controversies in a way that will serve their own global business objectives

(Daniels & Radebaugh, 1998). Acquisitions and mergers are two examples of this type of economic activity. In both, there are

agreements that have to be worked out that affect companies both domestically and

internationally.

In Table 1, Daniels and Radebaugh’s graph shows many of the impacts that an MNE can have on

an economy (1998, p. 452).

Table 1. Economic impact of MNEs.

Investment Human Resources Technology Trade Environment



Linkages to

local

companies Training R & D Export

Expansion Access to clean

technologies

Increased productivity Employment

Industrial

Upgrading Lower-cost

Imports Polution

abatement

skills Improved

efficiency Managerial

Skills New Capital

Equipment Company-wide

Standards

Capital

information

Learning

Effects Other economic factors include, but are not limited to, effects of Foreign Direct Investment (FDI),

growth, employment effects, home-country gains/losses, and host-country gains/losses.

Economic factors tie in to the idea that there are universal principles or moral standards that

should be followed by all MNEs, because ethical or unethical actions will influence the

organization’s growth. Beauchamp and Bowie (2001) note that cultural relativism is true when

applied to surface ethical principles only. An example is when

U. S. companies do business internationally; their ethics codes need to address different

international ethics standards, because the failure to recognize these differences could be

devastating to the organization.

The Caux Round Table Principles for Business Ethics (2003) seek to establish a worldwide standard

for ethical and responsible corporate behavior. Principle 1: The responsibilities of businesses:

beyond shareholders toward stakeholders focuses on the classical dispute of corporate

responsibility. Opposing the Friedman or the stockholder view, Principle 1 reinforces the

stakeholder theory that a company is responsible to all involved, including employees, customers,

suppliers, competitors, shareholders, and the community at large. This principle has a

universalism viewpoint that a company has an inherent responsibility to all and a role in shaping

the future of the communities where it operates (Beauchamp, 2001). However, to what degree is this true? Where is the balance between maximizing shareholder profit

and the concentration on stakeholders, which may make the most of profits above the level of

shareholder focus? Many argue that stakeholder interests are not equal, and because of the

obligation to shareholders, there should be no other consideration (Beauchamp, 2001).

The Clarkson Principles of Stakeholder Management cite weighty dependence on the

communication, consultation, acknowledgment, and cooperation of managers and stakeholders

(Clarkson, 2002). The Global Sullivan Principles also strongly hold up stakeholder consideration for

human rights, employee rights, fair competition, and adequate compensation (Sullivan, 1997).

These stakeholder advocates support a balance from shareholders to stakeholders, while

recognizing the need for companies to make money. This exemplifies the character of Principle 1,

which supports corporate responsibility to both shareholders and stakeholders, with a prominence

on stakeholders.



The first principle addresses the main question of the function of an MNE. The matter of whether

stockholder or stakeholder interests should prevail in a business is a controversial subject in the

realm of business ethics. The first principle’s declaration that ―businesses have a role to play in

improving the lives of all their customers, employees, and shareholders by sharing with them the

wealth they have created‖ (Beauchamp & Bowie, 2001, p. 624) is consistent with the stakeholder

rights theory.

Szwajkowski (2000) notes: ―The more it can be shown that the stakeholder environment parallels

that of the shareholder environment, in both operation and consequences, the easier it is to make

a case for stakeholder management‖ (p. 379). Szwajkowski’s research found that employee

relations, product quality, and safety are the most significant and reliable predictors of company

reputation. He noted that these qualities best forecasted financial performance, whereas some

stakeholder issues, such as diversity, environmental responsibility, and community relations,

potentially limit financial performance. Swift (2001), citing studies by numerous ethicists, claims

that the fundamental premise of organizational accountability is to stakeholders and to society.

Political and Legal Impact of the Multinational Enterprise Multinational extraterritoriality exists when governments apply their laws to a company’s foreign

operations. This results in a situation in which the home country and the host country have

conflicting laws. Taxes placed on foreign income create the same problem. The company loses

control and is in the middle of two nations (Daniels & Radebaugh, 1998).

Trade restrictions come about through political motives and hurt or limit a multinational’s control

to trade or to do business with certain areas of the world. Boycotts and secondary boycotts are

restrictive and can do much damage to an MNE’s ability to trade (Daniels & Radebaugh, 1998).

Principle 5: Support for multilateral trade (Caux, 2003) is a principle that both MNEs and

governments need to adopt.

Antitrust laws, especially those of the United States, come under criticism because they prevent or

delay the acquisition of foreign facilities. Such laws have forced U. S. companies to sell their

interests in foreign operations and have restricted the entry of goods from foreign countries, even

though those goods were produced partly by American enterprises (Daniels & Radebaugh, 1998).

Political concerns drive the business sector and vice versa. Key sector control and state-owned

enterprises are two areas where politicslocal, national, and international exert considerableinfluence. ―Closely related to the extraterritoriality issue is the fear that, if foreign ownership

dominates key industries, then decisions made outside the country may have adverse effects on

the local economy or may exert an influence on local politics‖ (Daniels & Radebaugh, 1998, p.

462).

State-owned enterprises are more prone to favor the home country; however, state-owned

enterprises, in the end, tend to hinder the economy, especially as policy makers change policies,

many times leaving the company at a loss. These factors raise issues that an MNE must consider

when entering a host country or working within the home country (Daniels & Radebaugh, 1998). Multinational independence (Daniels & Radebaugh, 1998) occurs when MNEs play one country

against another. An example of this is the auto manufacturing corporation BMW, which used this



tactic with the UK. BMW threatened to close its Rover Longbridge plant, if the British government

did not help financially (Milberg, 1999).

As companies increase their commitments to international business operations, it is not clear-cut

that their strategies toward governmental trade policies change as their levels of commitment

change. Rather, companies’ attitudes toward trade policies differ, depending on how well they

think they compete for each product from each of their production locations: with or without trade

restrictions. Therefore, international companies should develop business strategies that consider

the following factors of trade performance.

The external factors are access to foreign markets, capital inflows, fluctuations in world interest

rates on outstanding debt, cyclical changes in demand for their products, declines in prices that

can affect the rate of growth or trade, and so forth. Internal or domestic factors include trade

policies and participation in the World Trade Organization (WTO), export concentration,

macroeconomic policies, transportation, storage facilities, and telecommunications. In addition, a

lack of a transparent, legal, and regulatory framework, including company and bankruptcy laws

and investment codes, are important issues. Shortages of capital are also vital to discern. Firms

should also consider the ethical and social responsibilities that coincide with their business

strategies (Daniels & Radebaugh, 1998).

Access to foreign markets. It is imperative that MNEs understand the barriers to entry in certain

sectors, as well as preference erosion, tariff escalation, and custom unions (World Trade

Organization, 2003).

Capital inflows. The MNE has many offers of capital or government aid. To use public capital, as

well as private capital, is a choice that has many implications (World Trade Organization, 2003).

Other external factors. Fluctuations in world interest rates on outstanding debt, cyclical changes in

demand for their products, and declines in prices can affect the rate of growth or trade (World

Trade Organization, 2003).

Trade policies and participation in the WTO. Most of the time, a strong correlation exists between

high levels of protection and stagnant exports. Most MNEs are aware of this trade factor as they

deal with mainly WTO members.

Export concentration. Commodity-dependent countries are probably better suited for production

than other economies because labor is cheaper. High-tech divisions of some MNEs need economies

with more highly educated workers (World Trade Organization, 2003).

Macroeconomic policies. Stable policies, structural reforms, and outward-oriented trade and

investment regimes go a long way to provide economic stability (World Trade Organization, 2003).

Other Domestic Factors Other domestic factors include transportation, storage facilities, telecommunications, and

shortages of capital. In addition, a lack of a transparent, legal, and regulatory framework,

including company and bankruptcy laws and investment codes, are important issues (World Trade

Organization, 2003).



Interaction among External and Domestic Factors The many external and domestic factors that determine a country’s export performance and the

pace of its integration into the global economy do not operate independently of each other. A

complex interaction occurs, both positive and negative; a factor in one category can interact with

others in the category; and developments in external factors can improve or worsen the effects of

domestic factors, and vice versa (World Trade Organization, 2003). The interaction of external and domestic factors also includes specific ethical and social issues. The

MNE that adopts the Caux Round Table Principles will have fewer negative effects of such issues as

access to foreign markets, capital inflows, trade policies, macroeconomic policies, or other

domestic factors. The principles support businesses playing a role in the social improvement of

countries where they function, in areas such as human rights, education, and safety. Firms help

the social improvement of their host countries by contributing resources, participating in fair

competition, and emphasizing innovation (Caux Round Table, 2002).

This position strongly replicates utilitarian theory (Utilitarianism, 2003) in its expectation that the

best and most moral practices for firms operating globally are to provide the greatest good to the

greatest number of people in specific countries as well as the world in general. Although most

MNEs adopt policies that are in their interest, an ethical universalistic viewpoint requires

companies to set aside parochial business or financial perspectives in favor of a moral set of laws

to be used wherever a multinational does business.

The principles are founded in the rights theory that recognizes a firm’s obligation to observe certain

human and governmental rights (Beauchamp & Bowie, 2001). The Kantian theory recognizes

people as ―ends‖ and not just as ―means‖ and MNEs’ responsibility to act morally. The Draft (2002),

UN Human Rights Principles, and Responsibilities for Transnational Corporations and Other

Business Enterprises highlight transnational corporations’ obligation to promote human rights,

equal treatment, security, safe working conditions, respect for national sovereignty, and consumer

and environmental protection. Companies are obligated to justly treat foreign business

environments and leave the environment better off than when the company arrived. The Caux

principles, as well as the UN human rights principles, reverse the model of historical imperialism

where empires entered a country or region, used all of its natural resources and assets, and then

moved on to the next. Therefore, according to the Caux and UN human rights principles,

developing countries that offer cheap labor, plentiful resources, or other advantages, can turn

those advantages into economic and social development.

International companies have a wide variety of strategies as well as approaches for implementing

those strategies. Nevertheless, many of the problems they face are very similar. Concerns are

shared by all international companies: which objectives to pursue, where decisions should be

made, how foreign operations should report to headquarters, and how to ensure that global goals

are met. Behind each of these concerns is a more essential onethat of control (Daniels &

Radebaugh, 1998). Principle 4: Respect for rules (Caux, 1997) states that businesses should respect international and

domestic rules. Although this principle has a universalism perspective in the background, it is more

of a relativism viewpoint because it implies that there needs to be recognition by businesses of the



different rules that exist in different cultures. This ensures that global objectives are met, while

retaining strategic control and maintaining ethical considerations of the multinational and of the

host country. The principle also states that, although some actions are illegal, they may still

produce adverse consequences. The primary intent of this principle is to promote fair and equitable

trade, fair competition, intellectual property rights, and copyright and trademark issues. Principle 4, Respect for rules, takes its theoretical foundation from the common morality theory,

which contends that all people share a common morality (Beauchamp, 2001). This basic common

foundation forms the basis for fair business trade, consumer protection, stakeholder protection,

and equal treatment. The Caux Round Table connects this to the current corporate governance

issues of bribery, corruption, and distorting fair competition: false reporting (Caux, 1997). An important feature of Principle 3: Business behavior: beyond the letter of law toward a spirit of

trust (Caux, 2003) is not just about following the rules but following the spirit of the rules. This

means not doing something even though it is ―legal,‖ if it has other adverse consequences.

Principles 3 and 4 focus on respect for rules, not merely observing the rules (Caux, 1997). These

principles help multinationals create a culture of control founded in ethical and societal

responsibility.

Furthermore, Barker (2000) observes that it is difficult to quantify the costs and benefits of

considering ethical and cultural differences between the home country and the host country. The

literature suggests that the consideration is necessary, and the MNE must accommodate the

differences when developing a code of ethical standards that will apply to business practices at

home and abroad. Society today is becoming more aware of how a firm operates, in addition to

how it provides a product or a service.

Society is also demanding that businesses become more ethical in their operations. Recent

examples range from consumers refusing to buy apparel produced using questionable labor

practices to retirement funds that refuse to hold stock in companies that are not perceived to

adhere to community standards. The labor issues include complaints about the manufacturing of

products in countries that use prison or child labor and have substandard working conditions. The

reasons given for the sale of stock include the promotion of cigarette and alcohol use and, more

recently, concerns over the promotion of sex and violence in film or made-for-TV movies (Barker,

2000). Jackson (1997) observes that MNEs ―face an intricate multilayered array of cultural, ethical, and

legal norms. The norms subsist at local, national, regional, international, and global levels, and the

presence of such normative complexity and depth signals the need for ethics programs that

assimilate such characteristics‖ (p. 1128). He also suggests a number of pragmatic steps toward

building a ―cosmopolitan‖ culture of ethical awareness in the multinational.

This cosmopolitan culture is one that is neither relativistic nor absolutist but one that is sensitive to

cross-cultural differences regarding ethics. Such a culture goes beyond simple rule formulations or

ethical rules. It lives by a higher level of moral sensitivity, based on ongoing education and

teamwork among decision makers across cultures (Jackson, 1997). This notion of a cosmopolitan

culture is similar to Vega’s (1997) concept of ―common norming,‖ in which conflicting parties

attempt to find the common moral ground through ongoing dialogue.



Buller and McEvoy (1997) note that making appropriate ethical decisions in a multinational is a

complex process. Although situations exist in which the MNE can rightfully insist on universal moral

principles, there may be other times when the firm should adopt the local ethical norms. Situations

also exist in which the multinational is obliged, through collaboration and/or imagination, to

develop a distinctive response to a cross-cultural ethical dilemma, a response that attempts to find

the common ground among contrasting moral views. Ethical Implications of Illicit Operations Principle 7: Avoidance of illicit operations (Caux Round Table, 2003) addresses a classic challenge

of ethical relativism in seeking to eliminate such practices as bribery, money laundering, terrorist

activities, drug trafficking, organized crime, or corrupt business practices. The whole subject is

controversial and confusing because so many cross-national differences exist in the rules

governing payments, or the fear of nonpayment. Also, many differences exist in what is allowed to

occur, what is considered acceptable, and what is not.

Many illicit operations are defended as the cost of doing business in other countries. Considered a

type of tax, a relativist would say that these customs are justified because one must act according

to local custom, for not to do so one risks losing one’s business or imposes a moralist viewpoint on

another culture (Kay, 1997). A universal viewpoint (Kay, 1997) is that certain standards be adopted internationally that

denounce illicit behaviors, and that avoidance of such is necessary. For example, Donaldson and

Dunfee (2001) make a case that bribery is a universal standard that affects the worldwide

community, and thus a business is morally obligated to not bribe.

However, in today’s international society this is a hard principle to follow because the enticements

for these types of conventions are high and because of the increased profits that illegal actions or

practices bring to a firm. This corresponds with egoistic theory (Kay, 1997) in which individuals

engage in illegal behavior for their own interests, knowing that the practices are illegal or unethical.

This represents ethical relativism, in which the behavior is done wholly for self-interest.

Egoism states that when working with certain economic or sociological models, one may frequently

assume that people will act in such a way so as to promote their own interests. This type of belief

system appears to correspond to individuals or corporations that show no remorse and use others

for profit or some advantage. In dealing with this type of individual or business, the individual orbusiness seems to support the rationale that, if one does not do the behavior, someone else will,

so why shouldn’t former have some ―share of the pie.‖ The individual or organization also seems to

believe in being the exceptionthat it can get away with the behavior (Kay, 1997). Nevertheless, the Caux Round Table (2002) suggests that successful organizations exercise a high

degree of corporate responsibility and ethical behavior. Strong organizations universalize these

responsibilities with a focus on global accountability. Successful markets flourish on trust and

confidence. Because single firms cannot thrive unless they buy and sell in thriving markets, each

firm has a duty to society to improve the trust and confidence associated with the marketplace for

capital, for labor, and for goods and services.

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Multinational enterprises need to create strategies and controls to fulfill their objectives by using

the best resources available to them and to consider the economic, political, and legal factors in

both host and home countries. Multinational enterprises must also realize that successful

organizations exercise a high level of corporate responsibility and ethical behavior. Those firms perceived to act ethically position themselves to attract more customers, and this

gives the firm an opportunity to increase earnings. This also applies when operations are

established in other countries.

As the world moves toward a global society, a paradigm shift occurs from thinking and acting

locally to thinking and acting globally as well as ethically. Firms that are able to make this shift will

find their credibility enhanced in host countries. This will increase the MNEs’ competitiveness and

lead to greater profits for the organization. References

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A Multinational Enterprise