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Social responsibilities of multinational corporations - Essay Example

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[Instructor Name] Social Responsibilities of Multinational Corporations A multinational corporation or MNC is an enterprise which exists in more than one country with registration and it also operates in many countries. It is usually large in size and does production and selling of goods and services in many countries…
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Social responsibilities of multinational corporations
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Social responsibilities of multinational corporations

Over the years, MNCs have been criticized for various reasons despite their many advantages. It is believed that they pay less regard to human rights and the environment. Criticisms also include the fact that MNCs have resulted in huge conglomerates in different countries, which overall reduces competition and violates the concept of free market economy. They are believed to raise money in the host countries of the MNC and then ship the profits back to that country, but at the same time using the other country’s labor, resources, cultures etc. In short, MNCs are believed to exploit human beings from all over the world apart from the host country. However MNCs also have certain advantages both for the host and the home country. The standard of living of the countries will increase regardless because investment and employment increase and people have greater purchasing power parity. The host country usually gets free flow of information and technology through this institution as well as expertise which may not be available in their own country. Domestic business also gets greater competition and business due to functioning of MNCs. Those who support MNCs believe it doesn’t reduce competitiveness but actually increases it, due to the breaking of local monopolies. Host country can also reduce their imports and export the goods produced by MNCs to improve their balance of payment accounts. Lastly, home countries can also benefit from the cultural diversity in the formation of MNCs worldwide. Under the topic of MNCs, there has been a great deal of debate among professionals about the social responsibilities of an MNC in operating globally. Some believe that MNCs have limited responsibility, usually depending on the laws of the host country. Others believe that they have the duty to fulfill the negative rights of human beings, and some believe that MNCs have a duty to fulfill both positive and negative rights of individuals. MNCs have always assumed to be self-interested organizations, with the only aim to make profit and pay no regard to the people of developing economies or the environment. They seem to take on social responsibility, only if need be, and because recent studies show that ethical practices and social justice leads to profits in the long run. They seem to follow the principle-agent assumptions and MNCs are the agent because they seem to have no moral obligations to carry out honest behavior for socially responsible outcomes. Also, they seem to exploit host nations and their people because it is easier to do so; in developed countries there are several laws and institutions are tighter thus protecting people and firms from harm, however developing economies don’t have such laws so companies operating in them need to be even more socially responsible for the outcomes. Certain conditions prevail in a developing economy that makes MNCs more accountable with regards to social responsibility: Cultural practices in developing countries may allow for practices which violate human rights basic or advanced, and in accordance with gender, or politics etc. Most of these cultural practices have been eliminated in advanced countries but seem to be a problem in developing countries. The legal framework in developing economies may not insulate the country and its people from harm which is why MNCs have to be responsible. Corruption reigns supreme, therefore even in places where a ... Read More
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