To keep up with the ever-changing and fast-paced competitive market, firms undertake international ventures in order to increase competitive advantage. Thus, multinational managers are used to carry out the company’s business objectives overseas. Therefore, a multinational manager will have different tasks and handle different situations that a local manager would not have to tackle.
For multinational managers, the main factors that determine their management objectives and procedures are culture and social institutions. Culture is important as every country has a distinctly different beliefs, values and attitudes. Social Institutions play an equally important role in influencing behaviour as it performs the role of moderator in the business environment.
Ethical behaviour, thus, has become an integral issue in international management today. As seen in the behaviour of Nike in Southeast Asia, they came under negative criticism by several international regulatory bodies for being oppurtunistic. Thus, ethical behaviour is an important issue, which is greatly influenced by culture and social institutions, which multinational managers consider always at present times.
In today’s ever-changing and fast-paced business environment, companies have started focusing their organizational efforts and resources overseas in order to gain competitive advantage over rival firms. These firms are aptly called Multinational Corporations or MNCs. Examples of which are MNCs such as Dell Computer, IBM and BP Amoco PLC to name but a few (Hodgetts and Luthans, 2003). To illustrate the tremendous growth of MNCs, a recent study showed that of the 100 “largest economies” in the world, 53 are MNCs, whilst remaining 47 are nation states (Carroll, 2004).
As the focus of the company shifts to the global environment, managers would have to play a vital and immensely important role in the facilitation of its core values and business objectives overseas (Kedia and Mukherji, 1999). However, it must be stated that multinational managers face a much complex scenario than that of domestic managers. First of, Bates (1973) states that multinational managers have to take into consideration the wide range of political, economic, social and technological factors that influences the host country’s business environment. Furthermore, the complex scenario of the manager is further magnified by the difficulty of forecasting future developments of the various influential factors and the distance of the operations from the host country to the main headquarters which may entail discrepancies in the decision making process (Bates, 1973).
As more companies join the foray of doing business abroad, the issue of ethics is constantly brought up. Behaving ethically is an important characteristic that MNCs are now adopting and implementing due to the increased awareness of the society worldwide (Carroll, 2004).
The aim of this essay is to discuss the role of multinational managers and to analyse the implications of social institutions and local culture towards the social and ethical behaviour of MNCs.
Factors that influence ethical behaviour
A) Impacts of Culture
First of, culture is defined as “the collection of values, beliefs, behaviours customs, and attitude that distinguish one society from another” (Griffin and Putsay, 2005).
Due to the existence of different cultures, multinational managers must be aware of the individual behaviour of the host country. The differences of the general behaviour between the host country employees and the multinational managers results from societal and socio-cultural variables of culture religion and language (Deresky, 2006). Deresky (2006) further adds that the differences in the economic, legal and political factors that comprise the national variable of the host country which are different. With this, an individual’s cultural values and attitudes are differ...