1.5 Location Choices by MNCs Flashcards
Stakeholder theory
Any individual or group who can affect firm performance or be affected by the firm’s achievement of objects
Shareholders, employees, customers, suppliers, governments, local communities, NGOs, unions, competitors, press
Internal challenges with stakeholders
Adapt management and staffing to local cultures and “rules of the game”
Conflicts of interest (ex. Between employees and owners)
External challenges with stakeholders
Stakeholders are part of the MNC’s external environment, which bears threats and opportunities
Different types of stakeholders
Influencer
Collaborator
Claimant
Recipient
Types of stakeholder: influencer
Critical, explicit, urgent claims
Power to have claims recognized
Ex. Shareholders, suppliers, governments, NGOs
Types of stakeholder: collaborator
Willing to cooperate with MNE
Claims are not urgent
Ex. Universities, standard setting entities
Types of stakeholder: claimant
Claims from moral or social right
MNE not dependent on them, but have moral obligation
Ex. Employees in countries with weak labor laws
Types of stakeholder: recipient
Directly affected by actions of the MNE
Latent claims, lack of power
Ex. Local communities with MNE polluting its environment
Stakeholder analysis
Identify stakeholder, which are relevant
Categories stakeholders (nature of their claims?, backed up?, how powerful are they?)
Prioritize stakeholders (which have the most urgent and explicit claims, who has greatest impact on MNE’s operations)
Develop and implement stakeholder strategy (how to address and manage claims, communication, conflict resolution)
Corporate social responsibility
Responsibility of an organization for the impacts of its decisions and activities on society and the environment through transparent and ethical behavior
Why is CSR important?
MNEs are increasingly involved in developing countries
Extended and complex value chains
Environmental concerns labour issues (most foreign employees not directly employed by MNE)
Why should firms engage in CSR?
CSR and firm performance have a positive relationship
Porter’s value model, aligns objectives for society and the firm
Porter’s value chain primary activities
Inbound logistics (reducing impact of transportation)
Operations (reducing waste)
Outbound logistics (reducing packing, using recycled materials)
Marketing and sales (ethical advertising)
After sales service (end of product life cycle management)
porter’s value chain support activities
Firm infrastructure ( social responsibility reporting)
HRM (safe working conditions)
Technology development (product safety)
Procurement (enforce supply chain practices)
CSR challenges
To what extent are firms responsible for all stakeholders?
Should firms be held accountable for the entire supply chain process?
Conflicting stakeholder interests: low prices vs good working conditions
Different cultures have different opinions on what is ethical
Should MNEs take a proactive or reactive approach, both subject to criticism
