Chapter Seven
The Global Environment,
Stakeholder Management,
And Multinational
Corporations
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Chapter Topics
1. The connected global economy and
globalization
2. Capitalism: One system with different
faces
3. Multinational enterprises as
stakeholders
4. MNE guidelines for managing morality
5. Stakeholder management: Ethical
decision-making methods
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The Connected Global
Economy And Globalization
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The global economy consists of a dynamic
set of relationships among companies,
financial markets, culture, political
ideologies, government policies, laws,
technologies, and numerous stakeholder
interests.
Globalization involves the integration of
technology, markets, politics, cultures, labor,
production, and commerce.
The most recent threat to economic stability
and growth is global terrorism.
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The Connected Global
Economy And Globalization
 Some of the forces that have
accelerated globalization include:
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The end of communism
Information technologies
Entrepreneurships and entrepreneurs
Free-trade and trading agreements
The IMF and World Bank
Growth of transnational firms
A shift to service economies
Global political forces
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The Connected Global
Economy And Globalization
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Some of the major competitive success
factors driving firms in the global
economy include:
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The best talent is recruited
High-quality, innovative products
Just-in-time manufacturing
Web-based technologies
New product patents and innovation
Mergers, acquisition, and strategic
alliances
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The Connected Global
Economy And Globalization
 Survey results showed that the
most admired companies:
 Set more challenging goals
 Link executive compensation more
closely to the completion of goals
 More oriented toward long-term
performance
 Broader return-based methods of
measurement
 Senior leaders are more involved
 Charts the progress of its people
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The Connected Global
Economy And Globalization
 The “dark side” of globalization
includes:
Crime and corruption
Drug consumption
Massive layoffs
Decreases in wages
Erosion of individual nations’
sovereignty
 Westernization
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Capitalism: One System With
Many Faces
 Capitalism can be defined as an
economic system whose major portion
of production and distribution is in
private hands, operating under what is
termed a profit or market system.
 Components and features of
capitalism include:
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Companies
Profit motive
Competition
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Capitalism: One System With
Many Faces
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The “four faces of capitalism” include:
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Consumer capitalism
Frontier capitalism
Producer capitalism
Family capitalism
Metacapitalism is a concept that applies to the
massive business and economic transformation
resulting from the exponential growth of several
factors:
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Business-to-consumer
E-business
Use of the Internet
Globalization of the world economy
Reliance on technology
Restructuring of companies
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Capitalism: One System With
Many Faces
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American capitalism and management
involves and includes:
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Cultural context
Sociopolitical and government context
U.S. capitalism
U.S. management practices
Competitive practices have changed and
been accelerated by the following:
 Information technologies
 Communities of creation
 Alliances
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Multinational Enterprises As
Stakeholders
 Multinational enterprises (MNEs)
are corporations that “own or
control production or service
facilities outside the country in
which they are based.”
 Common characteristics of MNEs
include:
 Operating in at least two countries
 Earning an estimated 25 to 45 percent
of revenue from foreign markets
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Multinational Enterprises As
Stakeholders
 Critics have raised international
concern over the ethical conduct of
MNEs in host countries:
 Not being forthright
 Not fulfilling their part of the implicit
social contract
 Not paying taxes
 Harm to physical environment
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Multinational Enterprises As
Stakeholders
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The companies benefit their host
countries by:
Hire local labor
Create new jobs
Co-venture with local entrepreneurs and
companies
 Attract local capital to projects
 Technology transfer
 Provide business skills and learning
 Increase industrial output
 Intensify competition
 Help decrease debt and improve standard of
living
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Multinational Enterprises As
Stakeholders
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Six criticisms of the presence and practices
of MNEs in host and other foreign locations
include:
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Dominate and protect their core technology
Destabilize national sovereignty
Create a “brain drain”
Create an imbalance of capital outflows over
inflows
Disturb local government economic planning
Destroy, pollute, and endanger host-country
and LDC environments
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MNE Guidelines For
Managing Morality
 The following categories have
summaries of guidelines for MNEs:
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Employment practices and policies
Consumer protection
Environmental protection
Political payments and involvement
Basic human rights and fundamental
freedoms
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Stakeholder Management:
Ethical International DecisionMaking Methods
 DeGeorge offers five broad
“lessons” about business ethics:
 Business ethics is here to stay
 Ethical people are necessary but not
sufficient
 Ethical structures count
 Ethical problems are industry wide
 Industry and company legal and
ethical self-regulation is necessary
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Stakeholder Management:
Ethical International DecisionMaking Methods
 Numerous international groups that
work with and monitor MNEs
regarding human rights include:
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Amnesty International
OECD
International Labor Organization
NGOs
Transparency International
Apparel Industry Partnership
The Round Table
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Stakeholder Management:
Ethical International DecisionMaking Methods
George Enderle identified four distinctive
international ethical decision making styles
that companies often use when making
decisions abroad:
 Foreign country style
 Empire style
 Interconnection style
 Global style
 Hypernorms are principles so fundamental that
they serve to evaluate lower-order norms,
reaching to the root of what is ethical for
humanity.
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