International Environments of Business Contents

• L1 Globalisation and International Business

• L2 Political Environment: Understanding Institutions
• L3 Political Environment: Country Risk?
• L4 Global Economic Environment
• L5 Social-Cultural Environment
• L6 Global Corporate Social-Responsibility and Sustainability
• L7 Technology and Innovation: A Global Perspective
• L8 International Trade Policy
• L9 Going Global: Part ONE
• L10 Going Global: Part TWO
• L11A Review of Global Business Environment & Revision 1
Global Corporate
Social Responsibility
& Sustainability
INTERNATIONAL ENVIRONMENTS OF BUSINESS
3
 Utilitarianism

RIGHT
relativism
Ethical relativism
Contextualism
WRONG

Normativism

4
 The point is, ladies and gentleman, that greed -- for lack of
Greed is Good a better word -- is good.

Greed is right.
Greed works.

Greed clarifies, cuts through, and captures the essence of

the evolutionary spirit.

Greed, in all of its forms -- greed for life, for money, for
love, knowledge -- has marked the upward surge of
mankind.

And greed -- you mark my words -- will not only save

Teldar Paper, but that other malfunctioning corporation
called the USA.
https://www.youtube.com/watch?v=VVxYOQS6ggk Thank you very much

5
 Corporate Social
power expectation
With great
Power comes
great
responsibility
Acceptance Ethics in
of risk business

6
What is Corporate Social Responsibility
(CSR)?
Interest in CSR at the beginning 2000s (Wagner, Lutz, & Weitz, 2009)
Long recognise the complex relationship between international business (multinational enterprises, MNEs)
and society (Rodriguez, 2006)
European Commission
“the responsibility of enterprises for their impacts on society”. To fully meet their social
responsibility, enterprises “should have in place a process to integrate social,
environmental, ethical human rights and consumer concerns into their business
operations and core strategy in close collaboration with their stakeholders”.

http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/

7
Theories of CSR
o A weak theory of CSR focuses on philanthropic contributions as an
add-on to business activities
Associated with the concept of corporate citizenship, which
emphasizes minimal legal obligations - obey the law and pay
taxes
o Carroll’s model of CSR – recognizes four levels of CSR:
Economic, legal, ethical and philanthropic
Focuses on stakeholder interests as the social dimension
o Stakeholder theory
Focuses on the many groups and interests that affect the
company
Four levels of Responsibility
Base on Carroll (1979), ‘A Three-Dimensional Conceptual Model of Corporate Performance’, The Academy of Management Review
4(4), 497–505)

9
Management view of CSR
concepts
Instrumental approach/ Classic CSR
◦ CSR should be the concern of managers only if it
makes economic sense, while governments should be
allowed to take care of general welfare (Levitt, 1958)
◦ Philanthropic contributions – corporate citizen
Milton Friedman’s (1962) and Jensen’s (2008)
view on CSR - base on Agency Theory
◦ “Business has one purpose- making money for the
shareholders/owners. Taking on social responsibility
takes away from that purpose. Social responsibility
is the task of elected politicians”

10
 Stakeholder management theories – R.
Edward Freeman, 1984.
“Companies are under an obligation not to violate the rights
of others but responsible to their own actions on others.”
Stakeholder theory, articulated by R. Edward Freeman (1984) in his
seminal book, Strategic Management: A Stakeholder Approach.
Three criteria by which the firm can evaluate and compare
stakeholder impacts: (Mitchell et al., 1997)
Power, legitimacy and urgency (stakeholder salience)
- according to the STRENGTH of their influence on the Details of Stakeholder theory see
company, such as a strong trade union https://www.cambridge.org/core/elements/
stakeholder-
- according to HOW Critical they are to the company’s theory/1D970D2659D47C2FB7BCBAA7ADB6
1285
operations, such as the sole supplier of a key raw material
11
Who is a Stakeholder? Limitation: business has unlimited
responsibilities to an infinite number of
claimants also the rank of priority varies
in different country and context
Indirectly connected
Primary stakeholders are
directly involved in the
value-creating processes of
Directly connected with the company the firm. This gives them an
economic stake. (e.g. banks
–repayment)

Secondary stakeholders
typically have what might be
called an “influencer” stake in
the firm (Freeman, 1984). This
means they are not engaged
directly in value-
creating processes, but they
do have a legitimate interest
in what the firm does.

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 So now, why do we want to do
this? Well if I’m talking to the
Why CSR? finance director it’s because it’s
cheaper and if I’m talking to
Institutional pressures in particular Stakeholders force Firms [professors of business ethics], it’s
engage in CSR because it’s the right thing for RT1
Three main motives for pressuring firms to engage in CSR (Aguilera to do. So what drives us is a
et al., 2007) : combination of the two of those
◦ (1) instrumental (i.e., self-interest driven), things. (CSR manager cited Bondy et al., 2012,
◦ (2) relational (i.e., based on a concern with relationships among group
p293)

members), and
◦ (3) moral (i.e., based on a concern with ethical standards and moral
principles).
Stakeholders apply pressure primarily through
◦ impacting potential revenues, resources, and the reputation of the firm.
Regulation, standards and certification affect the extent of and
types of CSR actions and policies
◦ Signs of Institution of CSR eg. ISO certificate, Codification into law (Climate
change Act)
Pressure from competition – not fall behind the competition

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Good news...’there is a positive
association between corporate social
performance and social financial
performance across industries and
across study contexts.’ (Orlitzky et al., 2003:
423)
ORLITZKY, M., SCHMIDT, F. L., RYNES, S. L. (2003). CORPORATE
SOCIAL AND FINANCIAL PERFORMANCE: A META -ANALYSIS.
ORGANIZATION STUDIES, 24, 403–441.

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 Ethical
dimensions of
international
business
(MNEs)

© JANET MORRISON, THE GLOBAL BUSINESS ENVIRONMENT, 5TH EDITION, 2020 15

Would an international
operationalization of CSR be ever
possible? (Arthaud-Day, 2005)
Adopt the same ethical standards
wherever it operates in the world?

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International Standards/guidelines
OECD Guidelines for MNEs – latest revision 2011
◦ Highlights MNE role in supply chains
◦ Addresses human rights
◦ Environmental issues, such as ‘green growth’,
sustainability
◦ Increasing roles of National Contact Points (NCPs)
◦ Stronger NCPs mean better business conduct
UNIDO – United Nations Industrial Development
Organization
UN Global Compact – Between governments,
corporations and NGOs
The Global Goals For sustainable development
ILO Principles
International organisation for standardization (ISO)
e.g. ISO 26000 standard on CSR

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Your view: Cross-culture ethic issue
You are a manager of Ben & Jerry’s in Russia. One day you discover
that the most senior officer of your company’s Russian joint venture
has been “borrowing” equipment from the company and using it in
his other business ventures. When you confront him, the Russian
partner defends his actions. After all, as a part owner of both
companies, isn’t he entitled to share in the equipment (Puffer &
McCarthy, 1995 in Donald & Dunfee, 1999)?

18
19
When in
Rome, do
as the
Romans do

20
 Balancing and Reconciling the Ethics Traditions of Home
and Host Countries (see also Enderle, 2015)

Georges Enderle (1995) identified four types of approach

Foreign Empire Inter- Global

Country type connection type
type
type

Local Superior Acknowledging Rigid

adaptation differences

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Based on Barlett &
Ghoshal, (1989) (see Arthaud-
Day, 2005)

Strategic orientation: Multinational (multi-domestic), global,

international, transnational
Multinational: emphasizes the need for sensitivity and
flexibility (Solomon 1996) in business in different contexts.
Multi-domestic: No “universally accepted code of ethical
standards”
◦ - Develop unique approaches to CSR for every society (business)

Global: “real ethical solid building blocks or principles of most

cultures are the same” (Solomon 1996:94)
◦ Universal codes of conduct – UN Global Compact

International: export domestic CSR philosophies and practices

– Empire type
Transnational: basic universal standard + local adaptation

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 Corporate Social Responsibility strategy (Barlett
and Ghoshal model – see Arthaud-Day 2005: 4-11)
Four strategic orientations: Multinational, global, international, transnational
Multinational: emphasizes the need for sensitivity and flexibility (Solomon 1996) when
conducting business in different contexts.
Multinational
“Each society has different values, grounded in culture and religion, which must be respected and
accommodated.”: (9)
Companies that implement a multinational approach to CSR thus seek to behave in a socially
desirable manner as defined by the local majority for each country where they have operations
(Naor 1982).
Why multinational approach because …
in practical, it is very difficult to create and apply any form of a “universally accepted code of
ethical standards”.
MNEs should develop unique approaches to CSR for every society (business) in which they are
engaged (p. 9)
 CSR approach based on Barlett &
Ghoshal, (1998)
Global – “real ethical solid building blocks or principles of most cultures are the same”
(Solomon 1996:94)
Common ethical foundation can be utilized to prescribe corporate behaviour, across all
regions.
Companies that follow global CSR approach tend to establish universal codes of
conduct, and apply them in every cultural context in which they do business
Universal codes of conduct – UN Global Compact: a series of nine CSR principles
organized around the three domains of human rights, labor, and the environment.
Business leaders were asked to incorporate these nine “universally agreed values and
principles” into their corporate practices – “on the global scale, to underpin the new
global economy”
CSR approach based on Barlett & Ghoshal,
(1998)
International: export domestic CSR philosophies and practices without modification and
without concern for the consequences.
The firm “knows better” sharing its vision regarding appropriate social behaviour with the less
advanced or less advantaged. (p.10)
The approach is favoured by fewer and fewer firms, difficult to advocate such moral
imperialism
Transnational: basic universal standard + local adaptation
Global and local approached to CSR may not be mutually exclusive
Concessions that global codes may be enacted in different ways, and acknowledgements that
agreement on the "fundamentals" of CSR does not preclude multinational adaptation
Guiding businesses away from both self-serving cultural relativity and blanket intolerance for
cultural diversity.
Corporate Social Responsibility in the Multinational Corporation

Bondy and Starkey (2014) The Dilemmas of Internationalization: Corporate Social Responsibility in the Multinational Corporation, British Journal of
Management, 25:4-22.

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If a legal system accepts
certain unethical
behaviour i.e. acting
legally but not necessarily
mean acting morally. Will
you follow the local law?

27
Can you help?
While you are talking and sharing a bottle of beer with a friend who was
officially on duty as a safety inspector in the company you both work for, an
accident occurs, injuring a shit worker. The national safety commission launches
an investigation and you are asked for your evidence. There are other witnesses.
What right has your friend to expect you to protect him?
The choices offered as answers to the question were these:
1.A definite right?
94 percent US managers and 91 percent
2.Some right?
Austrian managers answered “no right”,
3.No right? whereas 53 percent of French and 59 percent
of Singaporean managers did.

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CSR strategy different among different countries because …
Moon and Matten (2008) suggested differences CSR among different countries are due to a
variety of long-standing, historically entrenched institutions
◦ Political systems
◦ Financial systems
◦ Education and labor systems
◦ Culture system
◦ Nature of the firm
◦ Organization of market processes
◦ Coordination and control systems

◦ CSR is more “explicit” in America whereas it is more “implicit” in Europe (ibid). Explicit CSR would typically
consist of voluntary, self-interest driven policies characterized by those in the United States. But in Europe,
CSR would be more “implicit” or understood, in that it is infused more into the culture, wherein some
aspects of CSR are decreed or imposed by institutions, such as government.
◦ “one size fits all” model of CSR clearly does not work at the global level (Carroll, 2021).

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Research on CSR and
International Business
WHAT WE KNOW SO FAR?

30
Factors affect CSR and International Business
Institutional factors and cultural factors affect CSR
◦ Economic freedom (institutional factor) and Long-term orientation (cultural factors) positively influence
CSR practices (panel data, 5023 companies from 41 countries) (Graafland and Noorderhaven, 2020)

Cultural factors and leadership style affect CSR

◦ Collectivism and power distance (GLOBE model) predict social responsibility values on the part of top
management team members. CEO visionary leadership and integrity were also uniquely predictive of
such values (561 firms located in 15 countries) (Waldman, et al., 2006).

Strategic or Institutional approaches (Husted and Allen, 2006)

◦ Institution factors as mediator factor (apply Barlett and Ghoshal typology)
◦ Base on the survey data in Mexico all MNEs types place similar importance on global CSR
◦ Institutional pressure, not the strategic analysis of social issues and stakeholders, guiding decision-
making with resect to CSR

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CSR in host countries: Does distance matter?
CSR in host countries: Does distance matter? Campbell et al., 2012 182 foreign bank affiliates
from 32 countries in US over 1990-2007
◦ Institution theory claims the importance of legitimacy
◦ Distance is an obstacle and costs of obtaining social legitimacy
◦ Costs vary based on the distance between home and host countries, discourage engaging in CSR
◦ LoF – social legitimacy at subsidiary level (higher unfamiliarity and discriminatory hazards)

Outcomes
◦ CSR demonstrate social commitment – overcome social legitimacy
◦ Positive relationship between distance and foreign-affiliate CSR
◦ Foreign affiliate’s CSR reputation have a positive impact on engaging in overseas CSR
◦ Negative affects
◦ Less willing to engage in overseas CSR – less able to identify with or feel empathetic towards host-country constituents
◦ See low return on overseas CSR activities

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 What types of stakeholders positively influence
CSR activities in IJVs? A study of the emerging
economy (Park & Cave 2018). Apply stakeholder theory and institutional theory,
Study 322 MNE subsidiaries, 204 WOS and 118 IJV
located in South Korea, the result shows

1. Consumers, Competitors, NGO have significant influence on IJV CSR

2. IJV managers and employees and local community have partially influence on
IJV.
3. Local community may see IJV a small organisation and less important to other
large organisation.
4. Government from emerging economies tend to have low or little enforcement of CSR
laws.
5. Suppliers and investors focus on profit generation and not CSR.
6. Media play little effect on IJV CSR.
7. Similar to Campbell’s study once the foreign subsidiary become a wholly owned
subsidiary they tend to engage CSR to earn their social legitimacy.
Responsible FDI is no longer optional. Nieuwenkamp (2018)

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From CSR to
Sustainability

34
Triple bottom line (TBL, 3BL)

Triple bottom lines

(TBL – UN - 2007) –
Profit (economic/
finance), Social and
Environmental (John
Elkington, 1994) –
accounting
framework/report

HBR: 25 years Ago I

Coined the Phrase
“Triple Bottom Line.”
Here’s Why Its Time to
Rethink It. John
Elkington, 2018

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✓ The goal of ESG is to capture all the
non-financial risks and opportunities
inherent to a company's day to day
activities.

✓ The 2 most commonly used reporting

frameworks are the Global Reporting
Initiative (GRI) and the Sustainable
Accounting Standards Board’s
standards (SASB).

✓ More and more investors are

incorporating ESG elements into their
investment decision making process,
making ESG increasingly important
from the perspective of securing
capital, both debt and equity.

✓ Hungarian Stock Exchange (BÉT)

required all issuers develop an ESG
reporting roadmap.

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37
In contrast to the custodian agencies, however, and contrary
to hope and expectations, research indicates that the private
sector – and MNEs in particular – have been slow in adopting
the SDGs, let alone in promoting them. Thus, paradoxically,
although businesses recognize that adopting the SDGs is the
right thing to do, efforts to internalize the SDGs framework in
business practice
Whose and business-related research on a wide
scale are still incipient (Mio et al., 2020). The role of MNEs in
responsibility?
the process of global legitimation and application of the SDGs
still remainsYou or the
a largely unfulfilled promise and opportunity.
Corporate?
(Tulder, Rodrigues, Mirza and Sexsmith, 2021)
See Kole et al., (2017) on what other MNEs
engagement in SDGs

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“Companies should not wait for
governments to pass laws
before they pay a decent wage
or agree not to pollute the
environment … If companies
lead by example, the
governments may wake up and
make laws to formalize these
practices” (New York Times, 27 July
2000) commented by former UN General
Secretary, Kofi Annan

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CAN WE DO MORE?
“It is not good enough to do what the law says. We need to be in
the forefront of these [social responsibility] issues.”
- Anders Dahlvig, CEO of IKEA (FT.com, Oct 22 2020)

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41
Learning Objectives
1. Gain an overview of the foundations of ethical
principles and how they are applied in
international business contexts
2. Examine the elements of corporate social
responsibility in theory and practice in cross-
border setting
3. Review the implication of sustainability on
international business (multinational enterprises)

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References
Morrison (2023) Ch 11
** A review of the development of CSR from 1950-2020. Carroll, A. B. (2021)
Corporate Social Responsibility: Perspectives on the CSR Construct’s Development
and Future, Business and Society, 00(0):1-21.
https://doi.org/10.1177/00076503211001765
Bondy, K., Moon, J. & Matten, D. J, (2012) An Institution of Corporate Social
Responsibility (CSR) in Multi-National Corporations (MNCs): Form and Implications
Business Ethics , 111(2): 281-299.
Campbell, J T., Eden, L. and Miller, S. R. (2012) ‘Multinationals and corporate social
responsibility in host countries: Does distance matter?, Journal of International
Business Studies, Vol. 43, pp. 84-106
Donaldson, T., and Dunfee T. W. (1999) "When Ethics Travel: The Promise and Peril
of Global Business Ethics.“ California Management Review 41 (4): 45-63.

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Next Week …
Lecture: Technology and Innovation: A Global Perspective
Seminar: Global Corporate Social Responsibility and Sustainability
Reading: Park, B. I. and Cave, A. H. (2018) ‘Corporate social responsibility in
international joint ventures: Empirical examinations in South Korea’,
International Business Review, 27(6): 1213–1228. doi:
10.1016/j.ibusrev.2018.05.003.
Supplementary Readings
Kolk, A. (2016) The social responsibility of international business: From ethics
and the environment to CSR and sustainable development, Journal of World
Business, 51(1): 23-34. https://doi.org/10.1016/j.jwb.2015.08.010.

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