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When this happens, the standard of living and income levels will remain stagnant. (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27)
Moreover, corruption will increase the costs of doing business inside a particular area. This is troubling, as it will lead to less employers relocating to the region. Instead, they will seek out locations where there are lower amounts of corruption. This is a part of an effort to keep their costs as low as possible so that they can increase their overall returns and remain competitive in the global marketplace. For the region, this will result in less high paying jobs (which helps contribute to an increase in the unemployment rate). (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27) (Heineman, 2006, pp. 75 -- 86)
How can MNCs deal effectively with these problems?
The ways that MNCs are able to deal with these challenges include: effectively lobbying and making larger commitments to governments that have strong anti-corruption practices. Lobbying is an important tool, in helping these firms to let officials know: who they are and what they stand for. This builds a relationship between the firm and the local government that is based upon mutual trust. At the heart of this trust, is letting the other parties know that various acts of corruption will not be tolerated.
While making larger commitments to regions...
This will help an area to receive larger amounts of foreign direct investment capital and to spur economic development. If these two practices are used in conjunction with each other, they will tell government officials that: corruption is unacceptable and the kinds of rewards they will receive if they move away from these practices. This is when there will slowly be transformation in society with corruption becoming less of an influence over the course of time. (Heineman, 2006, pp. 75 -- 86) (Cazurra, 2008, pp. 12 -- 27)
Conclusion
Clearly, corruption is major issues that all corporations must address. The best approach for dealing with these challenges is to utilize effective lobbying and make larger commitments to governments that support anti-corruption efforts. Over the course of time, this will create a way of rewarding those countries that embrace these practices. This is when there will be more of an effort to change based on the benefits that can be received in the future.
References
Berg, N. (2004). How Multi-National Corporations Deal with their Social Political Stakeholders. Asian Business and Management, 3 (3), 299 -- 313.
Bhargava, V. (2006). Global Issues. Washington DC: World Bank.
Cazurra, a. (2008). The Types of Corruption and FDI in Transition Economies. Journal of International
Management, 14 (1), 12-27
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