Multinational Corporations

A multinational corporation is an enterprise that administers creation of products or delivery of services in more than a single country. A multinational corporation has a managerial headquarters in one country which is referred to as home country and works in several other countries referred to as host countries. Multinational corporations are the key players in the global economy. Multinationals corporations are one of the key channels through which investments are channeled through countries. Currently, multinational corporations are an integrated part of the global economy, as agents for investment flows and for diffusing technology and a crucial source of tax revenues. In the recent past, most multinational corporations have come under analysis regarding their corporate social responsibility. They have received praise as well as criticism in the way they operate and relate with the host countries. They are praised in the way they assist the global economy as well as the economies of their host country, while the criticism in most cases is because their lack of a moral understanding on how they are supposed to act in a global environment. There have been many discussions and debates regarding their moral behavior and responsibility to the market and their host countries. The paper seeks to identify the most superior argument among three arguments concerning their social responsibilities. The three are that they have a mere responsibility of complying with the host countrys regulations that they have a negative obligation to respect human rights and that they have positive obligations of supporting background institutions. In the paper the argument considered superior to the others is the fact that they have a positive obligation in supporting the host country and that they do as much as possible to support them.

A multinational corporation that is out to support the host country wound not exploit its resources and labor. There has been criticism on the way most multinational corporations have been making profits by exploiting workers in the third world countries. Multinational corporations should be in a position to help the workers in the host countries to better their living standards. The OECD reports that multinationals tend to pay better than local companies, even though the difference decreases with local businesses that compete in similar markets. Generally, multinational corporations pay 40 percent higher in mean wages than local companies, and the difference in low-income nations of Asia and Latin America. They tend to pay better than their local competitors because it helps to reduce worker turnover and reduce monitoring costs. However this should not be used as an excuse to exploit the workers by overworking them. To prevent exploitation there are codes of conduct that are implemented from the home country to guide the behavior of multinationals as regards human rights like child labor, employer abuse, safety and health of the workers, discriminating and harassing workers, abuse of their freedom to associate and have collective bargaining power, fair wages, benefits and working hours.

Multinational corporations should seek to understand the basic interests of their host countries so that they can operate in a good environment. They should also understand the basic aspects of business in that country. They should operate in unison with local economic, social and political aspects. Multinational corporations assist the economy of the host countries. They achieve this by creating more job opportunities and improving the standards of living of the locals. Multinational corporations also bring in technological advantages into the host countries. In this era of technological advancement, it is important for all countries to keep at par with the development. Multinational corporations also offer education and training to their staff. In doing so, the expertise and skills are channeled to the host county. Whenever multinational corporations come into a country they bring in machineries. It is their responsibility to the host country to ensure that the machineries are not used for the benefits of their businesses only but that they are introduced to other institutions in the host country. Multinational companies have been able to diffuse knowledge, competence and capabilities through international boarders. Host countries can utilize these resources to better industries in their own countries. In the current age of information, multinational corporations have also enabled free and reliable transfer of information.  

Positive competition is another way in which multinationals help in developing the host countries.  In an environment where there is competition, people are open to many alternatives in business. Local businesses are free to compete and get to face different challenges. They always have to find resolutions to these challenges so that they can survive in the competition. This has made it possible for the businesses to compete on a similar level. This opens more possibilities as they are finding solutions. This opens up more businesses and business opportunities for the locals for the benefit of the host countries. Whenever people have a hand on their own rewards they are motivated to put more effort. This makes their economic status better and raises their living standards. Competition also enables production of better quality goods that are obtainable at low prices. Whenever the consumers are allowed a wide range to select from, they will always choose the products that can offer the better quality for their money. This encourages the companies to further produce more superior and cheaper product.  

As the income rate of the workers from the host countries go up, the income taxes also increase. The host county is able to earn more tax, thus improving other public sectors in the country. Multinationals also provide the host county with foreign exchange. This betters the economy of that country and is also used in providing public amenities, and trading with other countries in a global environment. They also serve to market the country abroad as a way if attracting more investors. Wherever the relationship between multinational corporations and the host countries is good, more investors are attracted. From the political perspective, the host country is able to get more open-minded to the international matters. In order to be in a position to interact with foreign corporations, host countries need to fit into and develop within the global markets so as to communicate well with the multinational corporations. This has enabled more countries to play a role in the global economy.

Multinational corporations assist the host countries to form a relationship with other countries. During this period of globalization, multinational corporations have assisted host countries to join the global arena. Most countries in the third world may not be in a position to produce goods that are capable of competing in the global market. Multinational corporations become crucial here in ensuring that these countries are not left behind in globalization.

In order to attract more investors and more multinational businesses, the host countries need to develop their own environment. In the long run the improved environment benefits not only the investors and multinational companies, but also the businesses in the host countries.

It is immoral on the part of the multinational companies to offer favor to the local politicians in order to be paid back at the expense of the economy of the host countries. There are times when the multinational corporations offer financial support to the politicians in exchange for low taxes on land or reduction of restrictions on environment and other favors. This weakness cannot be blamed on the multinational companies but on the hoist governments poor control and power. If the host government is strong, powerful and provide strong protection to its political system, this kind of exploitation would not be possible. Multinational corporations would not even think of manipulating them. However, it is the moral responsibility of the multinational corporations to genuinely help the host countries without seeking favors.

The multinationals agree that they do all that is in their power to support the host country. This statement is superior to all the others because it is the umbrella to the others. It would be impossible for a multinational corporation to support the host country without respecting the laws of that particular country. For example, it is unethical to perform business in a country without accepting and understanding the local regulations of that country. Multinational corporations should therefore act according to the norms of their host countries. It is by understanding and respecting the laws that a company can operate in harmony and justly in the host country. A multinational will not be in a position to support the host country if it does not perform its negative obligation to the human rights. Where human rights are violated, there is nothing that can be achieved.    

It is a fact that multinational corporations help to support the interests of their host countries. However wherever there are positive effects, the negative ones never lack. This is where it calls for moral responsibility to the host country. Both the host country and the multinational corporation have a responsibility to each other and if the responsibilities are performed effectively, the benefits can be enjoyed by both. Social responsibilities and business ethics are the keys to success in global business.


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