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1、International Business Chapter Five Globalization and SocietyInternational BusinessChapter FiveGlobalization and SocietyChapter ObjectivesTo identify problems in evaluating the activities of MNEs To evaluate the major economic impacts of MNEs on home and host countriesTo establish the foundations fo
2、r responsible behaviorTo discuss some key issues of globalization and societyethics and bribery, the environ-ment, pharmaceuticals, and labor issuesTo examine corporate responses to globalizationIntroduction Multinational enterprises (MNEs) have their greatest impact on countries when they engage in
3、 foreign direct investment (FDI) via wholly-owned subsidiaries and/or joint ventures1.Although not all MNEs are huge, the sheer size of many troubles their critics.The global orientation of MNEs causes many to believe that they are insensitive to national (local) concerns. Fig. 5.1: Home and Host Co
4、untry Influences on Companies Use of FDITrade-offs among ConstituenciesStakeholders, i.e., the collection of constituencies that an organization must satisfy to survive in the long run, include:shareholdersemployeescustomerssupplierssocietyIn the long run, the aims of all stakeholders must be adequa
5、tely met or none will be attained.continuedAdvocates of corporate social responsibility (CSR) believe that capitalism fails to serve the public interest and that managers must be pressured to act responsibly. Others argue that:managers are best equipped to serve the interests of their shareholders a
6、nd governments should deal with social issues and externalities whenever private sector benefits and costs differ significantly from public sector benefits and costs Fig. 5.2: Resources and Possible Contributions of MNEsBalance-of-Payments Effects of FDIA country must compensate for a long-term trad
7、e deficit by:-reducing its capital reserves -attracting an influx of capital via the receipt of foreign direct investment -the purchase of public or private debt by foreign governments or individuals -the receipt of unilateral transfers (e.g., foreign aid) Ultimately, one countrys deficit is another
8、 countrys surplus. Calculating the Balance-of-Payments Effects B = (m m1) + (x x1) + (c c1) whereB = balance-of-payments effectm = import displacement m1 = import stimulusx = export stimulusx1 = export reductionc = capital inflow for other than import and export paymentsc1 = capital outflow for othe
9、r than import and export paymentsHost Country BOP EffectsThe net import effect (m m1) is positive if the FDI results in the substitution of local production for imported products and is negative if it results in an increase in imports. The marginal propensity to import represents the fraction of an
10、increase in imports that are due to an increase in income. The net export effect (x x1) is positive if the FDI results in the generation of exports but negative if it results in a decline. FDI may also stimulate home country exports of complementary products to the host country. continuedNet capital
11、 flows (c c1) are difficult to assess because of the time lag between (i) the outward flow of investment funds and (ii) the subsequent inward flow of remitted earnings from that investment. Although initial capital flows to the host country are positive, they may be negative in the long run if capit
12、al outflows eventually exceed the value of the investment. Selected Economic Growth and Employment Effects of FDIHome Country LossesFDI outflows may create jobs abroad at the expense of jobs in the home country. Host Country GainsFDI inflows may result in the transfer of capital, technology, and/or
13、managerial expertise, and well as the creation of new jobs. Host Country LossesFDI inflows may: cream off premium resourcesdrive up local labor costsdisplace domestic investmentdisadvantage local competitorsdestroy local entrepreneurshipCultural Foundations of Ethical Corporate BehaviorCultural rela
14、tivism holds that ethical truths depend upon the groups subscribing to them; thus, intervention in local issues and traditions by outsiders is clearly unethical. Cultural normativism holds that there are universal standards of behavior that everyone should follow; thus, non-intervention in local vio
15、lations of global standards is clearly unethical. While many actions elicit universal agreement on what is clearly right and wrong, others are less clear. The Effects of NGOs and Multilateral Agreements on Corporate BehaviorNon-governmental organizations (NGOs) actively monitor and publicize corporate practices in order to: educate managers about the environmental and economic consequences of corporat
