Theorists have identified four broad areas of strategic corporate responsibility that a MNC adopts, economic, legal, moral, and social. The main premise of the four areas is found in the basic nature of the corporation, which is a privately based, economic entity whose members are expected to make decisions that possesses a significant impact on a number of constituents (Brummer, 1991). Later MNCs realize that a corporation has not always all four responsibilities.
When it came to the adoption of SCSR, global MNCs failed to respond effectively to the significant issues of their countries (Logsdon & Wood, 2005). It would not be wrong to say that multinational companies (MNCs) while responding to concerns like downsizing and environmental degradation took initiatives to demonstrate their social responsibility (Edwards et al, Feb 2007). This way the MNCs actually adopted SCSR to reduce their workforce through either voluntary or involuntary means or a combination of both. In other words, MNCs in order to defend themselves tend to adopt SCSR but with some concerns of which the most significant is the corporate downsizing in privately and publicly owned firms in recent years.
The notion that MNCs have failed to adopt SCSR is depicted from some well-known examples. MNCs failure could be analysed by those protests and consumer boycotts that Nestle has experienced recently in selling its various products in Africa (Husted & Allen, 2006). Same is the case Nike has experienced as a result of child labour abuse in outsourcing in Asia. The global MNCs are unable to consider the cause of their failure which refers to those corporate strategies which are adopted in their local market units in situations where they have limited functions with small staffs and then find themselves unable to monitor and respond successfully to CSR issues.
Why MNCs fail to implement SCSR
While adopting SCSR an organization's ethical duty to suppliers arises out of the market relationship that exists between them, as they are both partners and adversaries. MNCs must understand the relation that they are partners in the sense that the quality of suppliers' parts affects the quality of a company's product and in the sense that their businesses are connected. On the contrary MNCs must realize that they are adversaries in the sense that the supplier wants the highest price and profit it can get while the buyer wants a cheaper price, better quality, and speedier service. Therefore an organization confronts several ethical issues in its supplier relationships. There is a need for the MNCs to analyse that is it ethical to purchase goods from foreign suppliers who employ child labour, pay substandard wages, or have sweatshop working conditions in their facilities There is a need for the MNCs to assess that is it ethical to threaten to cease doing business with a supplier unless the supplier agrees not to do business with key competitors
In order to implement strategies, MNCs must consider issues that arise from ethical, economic or moral