ly discussed the extent of corporate obligations of MNCs through a presentation of traditional theories popularized by Adam Smith (Theory of Moral Sentiments), Bentham and Mill (concept of utilitarianism), Smith’s ethical nature of political economy, and Milton Friedman’s minimalist approach to corporate obligations. According the Friedman, the only social responsibility of a business is to enhance the wealth of the firms stockholders (1962). However, Cobb concluded that “while there is no firm agreement on the extent of corporate responsibility, most discussions move beyond this minimalist approach” (2000, 2).
The model which examines corporate responsibility is the stakeholder model which was defined as “firm managers must recognize the legitimate rights of the firms claimants in making decisions. The claimants include not only stockholders and employees but also others who can influence or are influenced by the decisions of a firm (Pearce & Robinson, 1982). Claimants commonly include customers, suppliers, governments, financial institutions, unions, competitors, local communities, and the general public.” (Cobb, 2000, 3) As stakeholders increase in number and become more diverse due to globalization, the more those cultural and ethical norms should be incorporated in international transactions.
A discussion on the moral philosophy delved into identifying its three parts: value, the good and duty; and different societies view moral philosophy differently. Likewise, Cobb emphasized that “cultures are constantly evolving and the ethical and cultural norms of a society will change over time” (2000, 4).
Trade, on the other hand, has an effect in adapting the cultural and ethical norms of MNCs. Cobb clearly explained that “when there is a long history of peaceful coexistence between countries, social interaction will develop, and some cultural norms of the countries will be accepted by the other country. Along with the acceptance of the cultural