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Multi-National Corporations
“It is Easier to Cope With a Bad Conscience
Than With a Bad Reputation”


by Negin Nazi


Part 2 continued

Guyana Journal, December 2011



RESOURCE ADVANTAGES
Evidently, MNCs have resource advantages because they represent a third of the world's largest economic entities. Thus, access to endless resources allows corporations to influence individual governments, and shape issues that ultimately affect policy negotiations. MNCs are known to influence individual governments to achieve optimal conditions for their operations. Governments and international businessmen engage in covert practices that are unbeknown to the greater population. The U.S. led CIA coup ended a functioning democracy to benefit the United Fruit Company. It is hard to ignore realities of historical evidence. The conquest of the Mayans destroyed their civilization, and now, killing of protesters are valid reasons why locals fear MNCs which they believe influence governments.

Indigenous communities are reluctant to allow operations like the Marlin Project to become successful because they are familiar with devastating consequences. Earlier generations have experienced inequalities imposed by dominant intervention. The 1954 coup led by the CIA, removed a functioning democratic administration under the pretext of communism.
17 The Arbenz government was not communist, but rather a democratic one and provided landless farmers an opportunity to create a viable life for themselves and opportunities to terminate absolute poverty. The CIA engineered coup was directly connected to United Fruit Corporation. The company believed Arbenz's attempt to nationalize Guatemalan land would hinder their ability to continue exerting power on the powerless. Thus, historical evidence proves that MNCs have the capacity to influence governments to have parallel interpretations of success and also shape issues to affect agendas.

SHAPING AGENDAS
MNCs can effectively influence agendas by shaping issues with the support of members of communities. They have a consortium of policy networks: politicians, media, interest groups, technical experts, and, most importantly, academics and think tanks that validate corporate interests. Think tanks provide an intellectual cover for MNCs to further enforce issues most conducive to their agendas. A nonprofit investigative magazine, The Mother Jones, reveals a complicated relationship between a MNC, think tanks, and an inter-governmental forum.

An article distributed in May 2005, tallied 40 organizations that had two things in common: they received large donations from Exxon-Mobile and opposed scientific consensus that global warming is man-made.
18 The Arctic Climate Impact Assessment (ACIA) is an international study conducted in 2004 by 300 scientists over the span of four years. The ACIA based on scientific studies concluded, “The Arctic is warming at almost twice the rate as that of the rest of the world. Early impacts of climate change, such as melting sea ice and glaciers, are already apparent and will drastically shrink marine habitat.”19 Frenzy donations were made by Exxon-Mobile in response to a Senate hearing called after ACIA released its reports. Exxon-Mobil donated $75,000 to the Cato Institute, $40,000 to the Advancement of Sound Science Center and $50,000 to the Free Enterprise Action Institute.20 These organizations operate under the auspices of Fox News columnist and corporate advocate Steven Milloy who is known to regularly discredit global warming concerns. The Fraser Institute along with the Competitive Enterprise Institute issued a press release: “the Arctic warming report is an excellent example of the favored scare technique of the anti-energy activists: pumping largely unjustifiable assumptions about the future into simplified computer models to conjure up a laundry list of scary projections.”21 The press release was intended to influence public opinion by depicting the ACIA as the antagonist that wants to instill fear. Both institutes make hard accusations based on a premise that the ACIA is an anti-energy activist. This is a fallacy. The ACIA does not mention energy or other factors that could contribute to climate change, but in support of empirical data, make a claim that global warming is not a hoax but a reality. Exxon-Mobile also donated $60,000 to the Fraser Institute which later in the same year declared 2004 as one of the coolest years in recent history.22 Ironically, the United Nations World Meteorological Organization pronounced 2004 to be “the fourth warmest year in the temperature record since 1861.”23 Clearly, think tanks provide intellectual covers for MNC, indirectly influencing opinion and promoting agendas. Policymakers also utilize reports conducted by think tanks to support their interests that usually coincide with the interests of MNCs. Thus, governments and consumers worldwide are ambivalent of MNCs as these continue to acquire more political and economic power.

MNCs VISIBILITY RISE
Their prevailing presence and overwhelming access to resources oblige corporations to assume some sort of social responsibility. As their power and influence continue to grow so does their visibility. Indeed, they are viewed suspiciously as large enterprises that disregard the social well being of communities. But, the continuation of their success is contingent upon public perception. In short, MNCs are suitable actors for creating sustainable livelihoods, not only because they are a third of the world's largest economic entities or have the ability to influence governments and policies, but also because they care about their reputation.

Reputation is the determining factor that makes MNCs the most effective actor when compared to other business operations, like transnational corporations (TNC). Forsyth asserts, “TNC has little interest on other aspects of local population, finish products are sold abroad, with a considerable portion of the profits going to the governmental elite.”
24 TNCs do not have a market where their products are produced. For that reason, there are no direct payoffs to invest in the communities or be concerned with how their operation is perceived locally. MNCs have more at stake than other organizational operations because, as suggested earlier, MNCs do not make a distinction between foreign or domestic markets. Equally important, they do not differentiate locations of production or distribution. MNCs do not make distinctions among such factors because everyone is essentially a stakeholder; consumers, employees, suppliers, communities, and investors.

The concept that everyone is a stakeholder and could affect public perception is a convincing argument for MNCs to be sensitive to externalities. For instance, Wal-Mart has 60,000 suppliers and receives thousands of proposals from manufacturers who wish to work with the MNC.
25 Gib Carey, a partner at Bain & Co., who led a yearlong study of how to do business with Wal-Mart, claims, “the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart.”26 His study proves that Wal-Mart is an essential retailer and clients will take extreme measures to have their products on Wal-Mart's shelves. For that reason, Wal-Mart has the capacity to enforce stringent guidelines of best practices for suppliers who wish to work with the MNC. By doing so, Wal-Mart can ensure that stakeholders perception will not be negatively affected by externalities. As global enterprises with international brands, it is strategically conducive for MNCs to have good reputations. It also makes the corporation more attractive to consumers since increase sales benefits shareholders. However, MNCs need to do more than image-enhancement. In the same way they have financial responsibilities to shareholders, they must also accept responsibilities to their neighboring communities. According to Monshipouri, “there is an increasing realization among executives of large MNC that in order for their companies to thrive, the communities in which they do business must prosper as well.”27 It is advantageous for MNCs to be perceived positively, but more importantly is to have a good reputation as a result of good corporate citizenship.

CORPORATE SOCIAL RESPONSIBILITY

Practicing corporate social responsibility (CSR) is indeed a strategy, apparently a broad one. As a result of conducting many literature reviews, I concluded that a definitive description of CSR does not exist. Different interpretations of CSR derive from three emerging perspectives: reputational capital, eco-social, and rights-based.
28 Scholars have presented various concepts like social responsibility of businessmen, ecological responsibility, responsible business and sustainable responsible business to formulate what is expected from corporations. Compared to other concepts, CSR is most conducive, but inherently vague because the terminology reflects an encompassing, indefinite mission. The term “social” is ubiquitous and attributes to anything affecting society or its organization. Philip Kotler explains, “Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources.”29 Kotlers' understanding of CSR as a “discretionary business practice”, explains why many critics are skeptical of self-proclaimed good corporate citizens and advocate structural changes to ensure best practices.

END-OF-PIPE APPROACH
Discretionary practices permit MNCs to address issues with an “end-of-pipe” approach, that is, dealing with a problem when it arises rather than address the source of the problem. Due to self implemented practices, MNCs can choose what issues to address and ignore. A short film entitled “The Corporation” explains why this occurs. “The corporation, as the dominant institution of our time, works to shape not just individual preferences, but also how individuals perceive success and failures, good and bad, right and wrong.”
30 The film entails that peoples' perceptions are just a product of a dominant institution. Friedrich Nietzsche, a famous German Philosopher explains the basis of motivation. In his concept “Will to Power” he writes, “It is easier to cope with a bad conscience than with a bad reputation.”31 I believe this paradigm fundamentally explains why MNCs are motivated to maintain the status quo of international frameworks that permit self ascribed expectations.

By prescribing what to address, MNCs shape public perception. When problems arise, they take an “end-of-pipe” approach. They are worried that if they shed light on the root of the problem it will create a bad reputation for them. It is easier to cope with a bad conscience because it is not visible to public perception. Coping with a bad conscience and intentionally ignoring the root cause of the problem, is how they effectively champion themselves as successful, good and right.

This metaphysical paradigm can be applied to colonial experiences of the past and inequalities it has created in the present. Foreign elites migrated from the motherland to establish colonies for usually two intentions. As the article on “Sociology of Development” details, “colonies established for settlers of motherland and colonies procured for the enrichment of the motherland.”
32 Either way, colonialism consists of political domination of a nation and exploitation of their economic resources. Not only are producers owned and exploited but they have no power over the commodities they produce. Green believes the root cause of modern disparities amongst the global north and south is a result of the colonial system for creating a dichotomy between those who own land and those who have no ownership. The inequality of unequal land distribution still exists when small farmers are forced to abandon everything they know to work in the maquiladora factories.

Foreign operations, like the maquiladoras, operate under the guise of promoting development by bringing money through employment and investment. This is an “end-of-pipe” approach to a problem that has historical explanations of underdevelopment. Some criticize that maquiladoras were created as a “means to an end” for core countries to grow from regional power to global primacy, comparable to the colonies procured for the enrichment of the motherland or similarly the international growth of American corporations that led to the rise of US to become a superpower. The fruits of an “end-of-pipe” approach are visible as surveys and researchers have examined the global inequalities among nation states. “The amount of money that the richest 1% of world's people make each day equals what the poorest 57% make each year.”
33 Thus, the approach to promote development through foreign investment consequently attributes to further problems, because the root cause of the problem is kept within the conscience. For instance, the UN Committee on Trade and Development describes anecdotes of development failures, “coke is available in poor rural areas but not clean water, mines create jobs but despoil the land and water that is central to the livelihood of poor communities, corporations push countries to grow luxury crops for consumption abroad, not staples to feed the hungry at home.”34 Anecdotes prove that failures in implementing comprehensive commitments attribute to greater problems, creating worse conditions for stakeholders. Some corporations subject their commitments to the UN Global Compact to ensure their practices meet not only their needs but also the stakeholders. Some MNCs have accepted that their existence depends on the condition of societies.


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