International Political Economy the Issue Research Paper

  • Length: 20 pages
  • Sources: 20
  • Subject: Business
  • Type: Research Paper
  • Paper: #71633555

Excerpt from Research Paper :

They are used to the existing state-based system of commercial regulation, and there are several reasons why they might wish to maintain it. The advantage of using this system is that the MNCs know the system well, and the system uses effective tools for managing and currently provides them with significant leverage. They have proved adept at using leverage: globalization has forced firms to raise efficiency and adopt cost-minimization strategies that both raise sustainability questions and arouse the ire of the NGO community. A growing number of MNCs acknowledge the need for sustainable production practices, but face considerable practical problems in implementing them." (Detomasi, 2006)

Multinational Corporations (MNCs) have been extended a large responsibility as well as authority as a matter of correction with regard to the responsibility and capacity these organizations hold to handle environmental issues and assist to combat the social problems inherently produced by neglecting environmental degradation.

"One issue which links strategy scholars, institutional researchers and business ethicists concern is whether MNCs should follow local practices or act according to global standards. In terms of the identity literature, the issue becomes: Will MNCs develop multiple identities in their different markets or rely on one single identity in guiding their CSR practices? Multiple identities could help firms to cope with location-specific demands and appeal to a heterogeneous set of stakeholders. On the other hand, multiple identities could result in stakeholder confusion and loss of legitimacy." (Huemer, 2010) "Key hallmarks of the modern economy are the continuing expansion and increasing significance of multinational corporations. Furthermore, multinational corporations already account for a sizable portion of world output and trade." (Costello, 2010)

Corporate Social Responsibility (CSR) is at the core of the environmental sustainability movement. Without the collaborative effort of an organizational CSR plan to engage the environmental standard put forth by globalization policies, the CSR effort stands to lose ground and return inefficient with regard to the cost/benefit. "The increasing awareness, by the public, of environmental issues and global warming, does present a considerable opportunity for shopping centers and retailers to attain a competitive advantage while differentiating themselves in the marketplace. The development and implementation of appropriate environmental policies can be a major market differentiator, as well as being commercially advantageous." (Walker, 2008)

MNCs are forced to determine the level of environmental impact to which they are able to contribute through sustainability policies and programs. "In addressing environmental issues, the retail industry needs to develop an understanding of what it means to the shopping center environment, and that values and culture, which it will require to adopt. The role of appropriate environmental management is to promote compliance beyond the requirements of legal compliance, involving areas such as health and safety, emissions, energy use and waste management" (Langston and Ding, 2001). (Walker, 2008)

Many companies hold the following belief in environmental sustainability practices. "Our vision is this: we will build environmental sustainability into everything we do so that our profitable growth helps restore our environment. So we wanted to link the environment through our guided market process and we also want to tie it to profitable growth," says Anderson." (Walker, 2008) "Business leaders must now get actively involved in defining and managing the process of environmental communications. Failure to do so will increasingly pose the risk of their companies' real present (and potential future) value being challenged; their position as a responsible corporate citizen being undermined; and competitive advantage draining away as customers and consumers turn to others who are -- or are seen to be more environmentally responsible" (Elkington, 1994, p. 97). (Levy, 1997)

When multinational corporations decide to not engage in environmental sustainability, then environmental degradation, in some form, is likely to occur. "For an illustration on how environmental degradation fosters rural to urban migration, consider the following anecdotal evidence. Agreements reached in the late 1980s among the Hun Sen government of Cambodia, the Thai military, and private timber corporations have led to uncontrolled pillaging of Cambodia's forests (Hong 2001).

Environmental concerns as a function of polluting water bodies including oceans and the contamination of land resources including depositing industrial waste such as chemicals into the ecology is at the forefront of many burgeoning communities throughout the world. In countries like Nigeria on continents such as Africa, the level of environmental degradation due to mining and exploitative efforts used to harness the resources from the land has rendered the society as well as the environmental base as compromised.

"In assessing the performance of both Shell and the Nigerian government in the Niger Delta, it can be argued that since 1995 Shell has increasingly assumed more of the government's role in the development of the Niger Delta (Ite, unpublished workshop report; Ite, 2002). On the other hand, it can be argued that the increased level of Shell's community development activities is a reflection of the fact that MNCs face levels of environmental and social responsibility higher than their national counterparts, because of the mechanisms of international reputation side effects and foreign stakeholder salience" (Zyglidopoulos, 2002). (Ite, 2004)

Furthermore, environmental responsibility is detailed by Liu (2010). "The effects of the environmental destruction are getting worse increasingly. The corporations want a strong economic development, and they are aware that many of the environmental policies are in conflict with their economic growth. Corporation need to find a way to promote both economic growth and environmental protection. On one side, governments could played major roles in controlling and supervising the environmental issues. On the other side, corporations could improve the environment and quality of life by adopting the application of innovative technology and the strategic environmental management. Because multinational corporations run their businesses around the world, they especially need to recognize ecological ethics and social responsibilities in order to solve the near- and long-term problems of environmental pollution. By enhancing corporate environmental responsibilities and ethics, both the healthy environment and the strong economic development could be achieved optimistically and effectively." (Liu, 2010)

Government appears to be the mitigating factor across the globe in environmental politics to ensure that multinationals are investing into sustainable ecological practices even at the multinationals economic expense. The review of literature thus far has pointed out that management at multinationals are capable of finding methods to incorporate the environmental sustainability practices whilst engaging in a growing economic engine to grow revenue and subsequently grow profits. "The environmental issues have generated the public's attention leading to heated disputes. Questions such as those regarding the seriousness of environmental issues; the petition to those who seem responsible for taking action to reduce the adverse effects of pollution; and the preservation of endangered species, have arisen with the resurgence of environmentalism. However, the viewpoints tend to polarize into the following two views: the optimistic and pessimistic perspectives." (Liu, 2010)

Additional concerns with environmental degradation due to globalization are expressed by d Aquino (1996), "There are other problems associated with globalization and they are gaining more and more public attention in both the developed and developing world. While it can be argued that the effects of economic liberalization over three decades have been largely positive, concerns are rising in capitals throughout the world that accelerating change is carrying an increasingly high price in terms of unemployment, social dislocation, income disparities, the exploitation of workers and environmental degradation." (d Aquino, 1996)

The act of globalization and environmental degradation has become a theme in the multinational corporate attempt to spread operations across the world. The problems with environmental concern are described by Strannegard. "Environmental concern will require the greatest fundamental strategic change in the modern industrial society. Therefore we at Multicorp have to take environmental issues into consideration in every single activity. But our environmental activities have to make business sense, and therefore they have to be business driven. Environmental concern is one of the key words in the corporation's document Vision and Vaues, and the management states that the organization shall be positioned as environmentally aware. This is to be accomplished while being as or more profitable than before. Why is this? In Multicorp's internal documents from the late 1970s and early 1980s, the environment is not an apparent business issue." (Strannegard, 2000)

Multicorp's business decision to indicate the environment is not a big deal reflects the valuation of assets during that period. Goodwill did not take into consideration the level of investment regarding environmental and social sustainability in the manner that modern accounting methods do. Under GAAP and the IFRS, Goodwill is a function of the benefit generated by the organization for the development and sustainability of the environment.

"The long-term aim of every environmental activity in Multicorp was to assess whether or not it contributed to shareholder value. An initiative that did not contribute to shareholder value was not undertaken. In this the environmental specialists conformed to a basic expectation: that the legitimacy of a business organization derives from its success in business." (Strannegard, 2000)

Environmental sustainability measures in fact do provide shareholder benefit…

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