Codes of Conduct for MNCs and Governments in ASEAN

Abstract

There are several possible definitions of multinational corporations (MNCs) or transnational corporations (TNCs) as they are increasingly called nowadays. The broadest definition of an MNC is a corporation with operations in two or more countries. Such a definition would include many of the family enterprises in the ASEAN (Association of Southeast Asian Nations) region, which have corporate networks beyond one or two countries. However, many of the issues associated with MNCs are typified by corporations of a different type. These are corporations whose corporate activities extend beyond the national boundaries of several sovereign states, and whose global corporate strategy and large economic resources make them extremely efficient capitalist institutions as well as private institutions with tremendous economic, and possibly political, influence. The last few decades have seen a rapid rise in the activities of MNCs all over the world, and particularly in the developing countries. The growth of MNC activities has raised a number of issues for both home and host countries, mainly because of two unique characteristics of these activities. Firstly, MNC investment decisions are made in the context of an overall investment strategy aimed at maximizing the cor poration's global profit and other objectives. As such, the earnings from the operation of an affiliate in a host developing country may not be the prime consideration in the investment decision. In contrast, the local investor's decision is largely determined by his national environ ment and the profitability of the particular operation envisaged. Secondly, the parent company or head-office has control over the con duct of the affiliate's business, the degree of control varying with cor porations. Thus, a decision made faraway at headquarters may have a