Hence, global ethics are expected to continue to be a very crucial concern for almost all MNCs.
Woods claims that roughly 60,000 MNCs are doing business all over the world at present but that most of them are operating in developing countries (Cullen & Parboteeah 126). MNCs have access to massive human, capital, and economic resources, and this access endows influence and authority that restricts the capacity of the governments of developing countries to control these multinationals. In certain instances, these governments are not eager to control because they are taking into consideration the value of foreign investment for their countries (Cullen & Parboteeah 126-7). MNCs are thus being investigated for their capacity to carry out ethical practices when confronted with this kind of power.
Besides the possibility of being condemned for unethical practices and sustaining damage in reputation and loss of public support, new studies confirm that doing business in an ethical way has numerous advantages for multinationals. An evaluation of different studies by researchers reveals that responsible and ethical multinationals have greater advantages in numerous parts, including predicted future financial outcome; stock market returns; stock market value; firm market value; and overall financial performance. Ethical MNCs hence experience more favorable financial outcomes (Kaptein 982).
Corporate social responsibility (CSR) is a concept that is largely related to corporate/organizational ethics. CSR is defined by Trudel and Cotte (2009) as “a decision by the company’s management to consider the impact their decisions will have on their customers, employees, suppliers and communities, as well as their shareholders” (as cited in Babetti 4). Cedillo-Torres and colleagues (2012) argued that CSR involves several interrelated aspects rooted in societal, ethical, legal, and ...