A selection of interesting research and articles we found recently on multinational perspectives in ethics.
Multiculturalism and national competitiveness in Canada and Australia
Eddy Ng and Isabel Metz propose that multiculturalism can serve as an effective public policy tool to enhance a nation’s competitiveness, in an era characterized by financial crises, globalization, immigration, and changing demographics. Specifically, Ng and Metz articulate how multiculturalism and strategic tolerance of differences can promote socioeconomic mobility for individuals, and act as the “glue” that binds immigrants and host country nationals together.
They also demonstrate how multiculturalism can attract skilled talents necessary for nation building. Immigrants who retain their ties with their countries of origin (home countries) can serve as natural trade links for their countries of residence (host country) and contribute to a reverse “brain flow” rather than a brain gain/drain for the countries of residence/origin. They conclude by explicating that immigrants can be a source of competitive advantage for countries when a multiculturalism policy is in place.
Further details are at: Eddy S. Ng and Isabel Metz. 2015. Multiculturalism as a Strategy for National Competitiveness: The Case for Canada and Australia.
Journal of Business Ethics, 128(2), 253-266.
Political CSR and the multinational corporation
David Detomasi argues that the literature examining the role that MNCs play in ‘political CSR’—an emerging area of management research concern—can be enhanced by more a fulsome examination of the ‘varieties of capitalism’ that currently exist in the global economy. He argues that the willingness and capacity of a particular MNC to participate in governance activity—which he broadly equates to political CSR—are contingent, at least in part, upon the national systems of government-business relations present in its home market. He argues that the decisions MNCs make in terms of whether and how to participate in governance are predicated in part on the domestic system of business-government relations out of which they emerge.
The paper then asserts that our current conceptions of political CSR are limited, because they do not take fully into account the increasingly important corporate form of statism, in which home governments maintain a large ownership position in the country’s MNCs, even as they expand abroad. He posits that a key question this reality poses is whether such companies will reinforce established patterns of ‘political CSR’, whether they will challenge those established patterns, or whether some mutual adaptation will occur. He concludes the article with some suggestions for how this question might be explored in future work by interested scholars.
For the full article, see: David Detomasi. 2015. The Multinational Corporation as a Political Actor: ‘Varieties of Capitalism’ Revisited.
Journal of Business Ethics, 128(3), 685-700.
Does culture explain how non-domestic companies listed in the UK may not comply with accepted norms and principles of good corporate governance?
Non-domestic companies are increasingly present on the London Stock Exchange. Such companies have specific governance requirements. They may seek to access capital in a more liquid market and to diversify ownership. The reputational ‘bonding’ (Coffee, Northwest Univ Law Rev 93:641–708, 1999; Columbia Law Rev 102:1757–1831, 2002) to a prestigious exchange should be a statement to the market of a propensity to disclosure and a willingness to protect minority shareholders. Yet, many non-domestic companies retain tightly controlled shareholding structures and are based in emerging regions where national culture norms differ to the UK.
Peter Rejchrt and Malcolm Higgs hypothesise that non-domestic companies are likely to be less compliant with the principles of the UK Corporate Governance Code and suggest a correlation between lower levels of compliance and non-domestic companies from countries that demonstrate high power distance in the Hofstede (Culture’s consequences: International differences in work-related values, 1980a) cultural value framework. They find some encouraging signs of compliance with the reigning governance code principles in Board structures, however, only partial compliance in leadership and Board effectiveness measures in those companies from cultures high on the power-distance scale. Further, the paper includes analysis into ownership characteristics and finds companies from emerging markets are dominated by a single or controlling group of shareholders, which is likely to impact on attitudes to compliance and is particularly evidenced in terms of Board structures with no executive directors or led by an executive Chairman.
Much of the prior research effort into the levels of compliance with the UK’s ‘comply-or-explain’ approach to governance has produced mixed results and focused on all companies. In an exploratory approach to analysing only the non-domestic subsample, the authors report some evidence linking cultural distance to lower levels of compliance with the UK standards. They develop a framework to guide future research into the context and cultural underpinnings of this sub-sample of companies, hypothesising that frequent market capitalisation-induced index changes may divert attention away from any potential compliance issues.
On the one hand, the evidence is encouraging for governance regimes based on voluntary compliance disclosures such as the UK and similar European and international markets, as the researchers report partial compliance with the principles of the current governance code. They point out that their research may, however, be helpful in guiding future versions of the UK governance framework and other international governance regimes adopting the ‘comply-or-explain’ approach and in setting policy to improve disclosure. It contributes to the understanding of the specific context of non-domestic companies and any cultural tendencies to non-compliance. By demonstrating evidence of lower levels of compliance with key principles of the Code by non-domestic companies, they present a framework enabling lawmakers to further improve corporate governance codes.
Read further at: Peter Rejchrt and Malcolm Higgs. 2015. When in Rome: How Non-domestic Companies Listed in the UK May Not Comply with Accepted Norms and Principles of Good Corporate Governance. Does Home Market Culture Explain These Corporate Behaviours and Attitudes to Compliance?
Journal of Business Ethics, 129(1), 131-159.
LMX in the Chinese context and the ethical challenge of guanxi
The leader–member relationship has been identified as a key determinant of successful working relationships and business outcomes in China. A high-quality leader–member relationship helps managers and employees to meet the demands they face and gives them the opportunity to develop socially, emotionally and morally. Such relationships form the basis of the overall well-being and success of the organisation. This article contributes to relationally oriented leadership theories and more specifically to the leader–member exchange (LMX) theory by examining the theory in the context of Western expatriate managers and Chinese employees in China.
The first aim of the study is to analyse the similarities and differences between the LMX theory, which owes its origins to Western corporate experience, and the social and moral norms of guanxi, a crucial element in the Chinese value system. Since Westerners and Chinese people can give different interpretations to guanxi, the second aim of the article is to discuss the ethical challenges to the Western manager arising from guanxi. The findings of this study have implications not only for China, but also for other Chinese communities (Macau, Taiwan, Hong Kong, the Philippines and Singapore) where guanxi is endorsed and practised.
Further details are at: Dan Nie and Anna-Maija Lämsä. 2015. The Leader–Member Exchange Theory in the Chinese Context and the Ethical Challenge of Guanxi.
Journal of Business Ethics, 128(4), 851-861.