Behavior Of Multinational Corporations Research Articles

Characteristics, Causes, and Countermeasures of Bribes Offered by Multinational Corporations in China

The bribery behavior of multinational corporations in China is characterized by the fact that the subjects of bribery are mostly world-renowned multinational corporations, and the objects of bribery gradually penetrate government officials. The means of bribery are more covert and more difficult to be detected and handled, and bribery involves the key fields of medicine, energy equipment, telecommunication, and finance. The reasons for the occurrence of bribery by Multinational corporations in China include the imperfect legal system, the punitive measures of giving bribes lightly and receiving bribes heavily, and the cultural system differences. In order to effectively strengthen the governance of the problem of active bribery of multinational corporations, it is necessary to strengthen theoretical legal research, analyze in depth the characteristics of the law of bribery crimes, amend and improve criminal laws in a timely manner, increase the efforts to combat the crime of active bribery. And strengthen international cooperation in combating the problem of active bribery of multinational corporations. Therefore, this paper identifies common multinational corporations’ behavioral tactics characteristics as well as feasible measures by examining the issue of multinational corporations’ bribery.

Protecting Animals Within and Across Borders: Extraterritorial Jurisdiction and the Challenges of Globalization

Protecting Animals Within and Across Borders: Extraterritorial Jurisdiction and the Challenges of Globalization

Determinants of Staff Localization in Headquarters-Subsidiary-Subsidiary Relationships

This paper investigates how cultural distance, the local experience of a foreign subsidiary, and the intensity of local competition jointly affect the staff localization of MNEs’ subsidiaries. While previous studies on the effects of cultural distance have mainly focused on the gap between home and host countries, we extend the existing “home-host” country perspective to the home-intermediary-host country relationship. This study regards Korea as an intermediary country and utilizes 520 observations from a unique survey conducted by the Export-Import Bank of Korea from 2006 to 2013. The results suggest that the impact of cultural distance on staff localization is a function of local experience and competitive environment in the home-intermediate-host relationship structure. This paper makes a theoretical contribution to our understanding of the behavior of multinational corporations by expanding the cultural distance perspective between the home and host countries explored in previous research to the home-subsidiary-subsidiary structure.

Tax avoidance regulations and stock market responses

In this paper, we examine the impact of tax avoidance regulations on the stock market behavior of multinational corporations (MNCs). We use the introduction of the worldwide debt cap reform in 2010 in the UK that limited the extent of profit shifting for a group of multinational firms as a quasi-natural experiment. We find that MNCs affected by the reform have higher stock market returns than unaffected MNCs after the reform. The results are driven by firms with lower quality of corporate governance and firms with access to tax haven affiliates. Further, the affected MNCs also see extremely negative returns less frequently than before the reform. Our findings are consistent with the notion that anti-tax avoidance regulation is perceived by investors as a tool to help curb aggressive tax planning and improve information transparency, especially in environments where this transparency is lower.

Corporate Income Shifting in an Era of Tax Multilateralism: The Impact of Exchange-of-Information Agreements

Using data from the annual reports of over 100,000 subsidiaries of multinational enterprises (MNEs) from 55 countries between 2003 and 2012, the authors of this article investigate the impact of exchange-of-information agreements ("EOI agreements") on tax-motivated income shifting. Transparency created by the signing of EOI agreements is expected to reduce the tax-motivated shifting of income by multinational corporations. Whether such agreements affect the income-shifting behaviour of multinational corporations is an unanswered question. The authors find evidence that, on average, EOI agreements do have an impact on tax-motivated income shifting. Additionally, they find that more advanced, modern EOI agreements are associated with a larger decrease in tax-motivated income shifting compared to the impact of early EOI agreements. This evidence challenges the prevalent assumption in empirical studies that EOI agreements are homogeneous. Supplemental analyses suggest that factors that affect the information asymmetry between MNEs and tax authorities, such as corporations with high levels of intangibles and tax authorities with strong transfer-pricing rules and enforcement, can diminish or enhance the effectiveness of EOI agreements in moderating tax-motivated income shifting. The evidence provided by this study shows that consideration of the tax authorities' information environment and the substance of an EOI agreement is essential when assessing the impact of such an agreement on the tax behaviour of sophisticated taxpayers such as multinational corporations.

Bridging the widening riot and civil disorder protection gap in the global insurance industry

This article explores adjustments to the traditional political risk management practices followed by Multinational Corporations (MNCs) in their international operations to incorporate an increasingly concerning risk arising from the more frequent imposition of economic sanctions on developing countries over the last ten years for political purposes. In order to identify the main determinants of this risk and its consequences, a literature review is conducted, highlighting the models proposed by Tsebelis (1990) and Kakutami (2017) as the main frameworks to understand the dynamics for sanctions impositions, their frequency and the management of this risk by traditional MNCs from developed countries. Kakutami’s model is further enhanced in this article with a game theoretical model to understand the dynamic behavior of MNCs under this context, considering evidences of a growing presence in international markets of MNCs from developing countries, whose motivations for their expansion ar...

Political risk management practices of Multinational Corporations: their approaches to deal with developing countries under economic sanctions

This article explores adjustments to the traditional political risk management practices followed by Multinational Corporations (MNCs) in their international operations to incorporate an increasingly concerning risk arising from the more frequent imposition of economic sanctions on developing countries over the last ten years for political purposes. In order to identify the main determinants of this risk and its consequences, a literature review is conducted, highlighting the models proposed by Tsebelis (1990) and Kakutami (2017) as the main frameworks to understand the dynamics for sanctions impositions, their frequency and the management of this risk by traditional MNCs from developed countries. Kakutami’s model is further enhanced in this article with a game theoretical model to understand the dynamic behavior of MNCs under this context, considering evidences of a growing presence in international markets of MNCs from developing countries, whose motivations for their expansion are explored. Finally, different political risk mitigating strategies are reviewed to explore their suitability to MNCs, with particular emphasis on the use of insurance to cover this risk and its effects on MNCs’ willingness to engage with sanctioned countries. As a general finding, from a reputational point of view, MNCs should take a more active role in their network analysis to identify their direct and indirect exposure to this risk, given the more frequent imposition of sanctions with an extraterritorial reach.

Multinational Corporations and Civil Society: A case study Comparison of H&M and Hoang Anh Gia Lai Group in Cambodia


 This paper examines the impact both positive, and negative of two multinational corporations (MNCs), H&M and Hoang Ahn Gia Lai Group both of whom operate extensively in Cambodia. It examines the important role domestic civil society plays in resisting the worst predatory tendencies in MNCs, and how the capacity to resist may be curbed by authoritarian regimes. Furthermore, the essay examines the role of international groups as well as consumer society on holding MNCs accountable for their actions. Particular attention is paid to the impact these multinational corporations have on women and indigenous communities, who are in the Cambodia context two of the most vulnerable groups in society. Moreover, it is suggested that while multinational corporations may ameliorate their practices in some areas, this often requires sustained pressure from a variety of actors, with this being especially true when governments cannot or are unwilling to regulate the behaviour of corporations. Lastly, it is suggested that civil society in the host state is the most important actor for bringing pressure to bear on MNCs, they must be supported by either international actors, or the domestic government to truly reign in the most predatory behaviour of MNCs.

State Governance Beyond the ‘Shadow of Hierarchy’: A social mechanisms perspective on governmental CSR policies

The extent to which state authorities can regulate the externalities and the behaviour of multinational corporations (MNCs) is limited. This is especially true when MNCs operate in or do business with fragile states that lack the willingness and/or resources to effectively and legitimately regulate businesses. However, MNCs often engage in private regulation to remedy some of the problems that unregulated business behaviour creates. In this article we examine what limits the effectiveness and legitimacy of the contributions made by MNCs to global governance. We explore the mechanisms that state authorities in functioning states can use to overcome these barriers as well as the boundary conditions of these mechanisms at both company and government levels. We provide a framework for governmental CSR policies and describe the ways in which functioning states engage in governance beyond the ‘shadow of hierarchy’ and directly or indirectly influence business conduct beyond the territory in which their legal regulations can be enforced.

US Multinationals and Human Rights: A Theoretical and Empirical Assessment of Extractive vs. Non-Extractive Sectors

The consequences of multinational corporations (MNCs) for human rights protection are poorly understood. We propose that the motives and behaviour of MNCs vary across industries. Extractive firms go where the resources are, which creates a status quo bias among them when it comes to supporting repressive rulers. Moreover, low skills levels, environmental pollution and exploitative motives can fuel tensions which are subsequently suppressed by governments. The same is not true for non-extractive MNCs, which are less controversial and can exit more easily. Using US foreign direct investment (FDI) broken up into extractive and non-extractive in 114 host countries (1999–2009), we find support for these propositions. Extractive FDI is associated with negative effects on rights, but non-extractive FDI is positive after controlling for a host of relevant factors, including endogeneity. Our results are robust to the use of Extreme Bounds Analysis (EBA) and alternative sample sizes.

The Geography of NGO Activism against Multinational Corporations

AbstractTo what extent do Non-Governmental Organizations (NGOs) monitor global value chains? While NGOs regularly denounce the behavior of multinational corporations throughout the world, their motivations for choosing campaign targets remain largely unknown. Using a new dataset on activists’ campaigns toward multinational firms, we estimate a triadic gravity equation for campaigns, involving the NGO, firm, and action countries. Our results point to a strong proximity bias in NGO activity: Distance, national borders, and lack of a common language all contribute to impede the intensity of campaigns. We estimate the distance elasticity of campaigns to be −0.2 and further document that NGOs strongly bias their actions toward home firms or foreign firms with home actions. A domestic firm is 3.45 times more likely to be attacked than a foreign one. Foreign firms headquartered in common language countries draw 1.63 times more campaigns. Overall, campaigns seem to be designed so as to include at least one element of proximity drawing the attention of consumers. This pattern questions the role of NGOs in the monitoring of multinational production operated in remote, unfamiliar locations.

The cul-de-sac of foreign industrial investments to Russia

The aim of this article is to determine the rationale for the ‘irrational’ investment behaviour of multinational corporations (MNCs) in Russia. During the on-going recession in a number of major sectors, MNCs have undertaken only a very limited number of divestments and, instead, have commissioned a record number of new manufacturing facilities (by opening new plants and expanding the capacities of existing plants). To explain this phenomenon, we first provide an overview of existing theoretical and empirical studies on investments in difficult locations and divestments of foreign subsidiaries, and identify the major weaknesses of the prevailing approaches and underlying assumptions of such studies. Next, we present a detailed picture of both industrial investments and divestments in Russia from January 2015 to March 2017. Finally, we indicate how a combination of systemic and contingent factors (pressure from the host country’s government, subsidiaries’ orientation towards the host country’s markets, and the absence of potential local and international acquirers for existing Russian manufacturing facilities of Western MNCs) has created ‘cul-de-sac’ conditions for foreign-owned industrial assets in Russia.

The Scope of Codes of Conduct for corporate environmental responsibility

Multinational corporations (MNCs) have emerged as major actors in the global economy and international society is becoming increasingly concerned about their impact on the population and the environment. At present no global regulatory regime is in place to ensure that corporations act in an environmentally responsible manner, especially in host developing countries. All efforts at regulation have been voluntary initiatives from intergovernmental organizations, and, in particular, international and regional codes of conduct that focus on the impact of business in two main areas: social conditions and the environment. These codes are voluntary in nature and have no enforcement mechanism. This note examines the environmental approaches of these instruments. The guiding question is whether environmental provisions included in international codes of conduct fall within international environmental law principles and whether they influence the environmental behavior of MNCs.

The Scope of Codes of Conduct for corporate environmental responsibility

Multinational corporations (MNCs) have emerged as major actors in the global economy and international society is becoming increasingly concerned about their impact on the population and the environment. At present no global regulatory regime is in place to ensure that corporations act in an environmentally responsible manner, especially in host developing countries. All efforts at regulation have been voluntary initiatives from intergovernmental organizations, and, in particular, international and regional codes of conduct that focus on the impact of business in two main areas: social conditions and the environment. These codes are voluntary in nature and have no enforcement mechanism. This note examines the environmental approaches of these instruments. The guiding question is whether environmental provisions included in international codes of conduct fall within international environmental law principles and whether they influence the environmental behavior of MNCs.

The Strategic Manipulation of Transnational Temporalities

While it is now widely recognized that globalization is socially constructed, time is often still seen as a natural unalterable force. Drawing on the literature on the social construction of time, we explore the role of human agency in the interaction of time and globalization by developing the concept of temporal systems. These systems are assemblages that bring together temporal artefacts such as clocks and schedules, the temporalities of the natural world and the body, and social practices involving agency, power, and organization. We then explore, through four illustrative examples, how such systems interact with and constitute globalization. These examples are: the initial emergence and contemporary operation of world standard time; the manipulation of the future and speed in global financial markets; the rise of informal international organizations in global governance; and the role of temporality in the strategic behaviour of multinational corporations.

Internal mimetic behavior of MNCs with respect to foreign subsidiary staffing

Purpose – The purpose of this paper is to fill the following research gaps. First, few studies have examined isomorphic behavior of multinational corporations (MNCs) with respect to foreign subsidiary staffing. Second, the adoption by an MNC of its internally preferable practices, which is referred to as internal mimetic behavior, has been less extensively investigated when compared with the imitation of practices adopted by a large number of peer firms. Lastly, factors that facilitate internal mimetic behavior have not been extensively explored. Design/methodology/approach – This study hypothesizes that internal mimetic behavior is affected by both formal and informal institutional distance. The hypotheses are tested using the panel data set that consists of 3,981 foreign subsidiaries of Japanese MNCs. Findings – This study finds that as the formal institutional distance between the host country and the home country increases, MNCs are more likely to adopt internal mimetic behavior. Furthermore, it demonstrates that as the informal institutional distance increases, the likelihood that MNCs adopt internal mimetic behavior decreases. Practical implications – This study suggests that MNCs need to consider the consequences of internal mimetic behavior when they adopt it without having economic rationale. It also suggests that when uncertainty can be mitigated, MNCs should avoid internal mimetic behavior. Originality/value – This study fills the aforementioned research gaps by examining what factors facilitate internal mimetic behavior. It suggests that both economic rationale and isomorphic behavior need to be considered to advance an understanding of foreign subsidiary staffing.

Impact of Corporate Social Responsibility on the Competitiveness of Multinational Corporations

Current development trends, at the global level, caused fundamental transformation in doing business in modern economy, and at the same time, set a request to change the dominant business strategies and policies by which companies achieve their goals. The liberalization of international trade and investment flows has contributed to the spread of the effects of technological progress and influenced development in many countries, but also raised a number of limitations in opportunities for achieving sustainable development. Decade of the nineties of the twentieth century can be characterized as a period of increasing pressure on the environment, the direct recipient of pollutants, resulting from the use of dirty manufacturing processes and production techniques, as well as the space through which manufactured products are distributed, used and postponed. The uncontrolled use of natural resources, especially non-renewable, has led to the endangerment of existential prerequisite for the maintenance of a healthy environment, as well as deterioration of environmental quality and escalating environmental problems on a global level.Under pressure from institutional factors, multinational corporations (MNCs), as motor of developments in the world economy, today pay more attention to the integration of the dimensions of sustainability in its own operations. Involving aspects of managing the impacts of corporate activities on social development and the environment is in the function of sustainable business. Development of key competences in the area of addressing social and environmental issues is a prerequisite of achieving and sustaining competitive advantage of MNCs in the modern market. In addition, long-term negligence of the non-financial aspects of the business can make multiple negative effects on the financial performance and the reduction of corporate reputation among key stakeholders, thereby reducing its competitive advantage.Great impact on the rise of social-economic consciousness of MNCs was made by a bulk of problems caused by negative consequences of their activities, which gave rise to boycott of consumers and other stakeholders. This resulted in the decrease of enterprise credibility, ruin of their reputation, built in years, and failure in competitiveness. An MNC management team has realized that un-responsible behavior towards environment could have a “boomerang effect” to it. On the other hand, responsible behavior of enterprises towards stakeholders, society, and environment could contribute to achievement of competitive advantage. For example, by ensuring good working conditions to employees, by instigation of non-discrimination, by respecting of human rights, and by offering a possibility of advancement, MNC become attractive for new employees, especially most talented people. By insuring transparency towards shareholders, and respect of their rights, by continuous reporting, and risk management, MNC become attractive for new investments. By offering quality, healthy, and safe products, and by performing promises about after-sale services, enterprises become attractive for consumers. Talented employees, substantial capital, and safe market are the key conditions for achieving MNC competitive advantage. Hence, it is obvious that social responsible behavior of MNC becomes important factor of their survival and success. By explaining the impact of corporate social responsibility on the competitiveness of MNCs, the aim of this paper is to highlight the importance of such practice for the competitiveness of MNCs.

Sustainability Reporting by Outdoor Equipment Vendors

Supply chains for various goods span across multiple nations. Often, lower developed countries are involved in which no adequate background institutions have been established. Consequently, sustainable behavior of multinational corporations is important. To make companies’ performance regarding sustainability more transparent, various international institutions developed guidelines for sustainability reporting. Based on the predominant Global Reporting Initiative (GRI) framework, they have analyzed the reports of two outdoor equipment vendors, namely Timberland LLC and The North Face. Consumers of outdoor products are expected to be more aware of the impact their purchases have. The authors briefly introduce the GRI framework and the concerned sector. The two companies’ actions are compared in detail and their actions assessed based on theories of ethical business operation. Afterwards implications of the findings are discussed. The authors’ results suggest that companies in this sector are conscious about sustainability but individual performance greatly differs.

Avoiding the Spotlight: Human Rights Shaming and Foreign Direct Investment1

Nonstate actors, such as international non-governmental organizations (INGOs) and multinational corporations (MNCs), have attained an increasingly prominent role in modern world affairs. While previous research has focused on these actors� respective interactions with states, little attention has been paid to their interactions with each other. In this paper, we examine the extent to which the decisions of private actors seeking to invest abroad are affected by the reputational costs of doing business in countries publicly targeted by human rights activists. We find that ��naming and shaming�� by human rights INGOs tends to reduce the amount of foreign direct investment received by developing states, providing evidence that INGO activities affect the behavior of MNCs. An additional implication of our findings is that shaming by INGOs can impose real costs on targeted states in the form of lost investment.

FDI, Export, and Capital Structure

This study investigates the impact of foreign direct investment (FDI) and export on capital structure for firms in emerging economies. The hypotheses are developed based on an agency theory perspective and are tested using a sample of 566 Taiwanese firms. We find that the behavior of multinational corporations (MNCs) with a high debt ratio is in line with agency theory predictions. Our findings show that: (1) MNCs in emerging economies, defined as those firms with at least one foreign subsidiary or some extent of FDI, have a higher level of debt than non-MNCs, which contrasts with the findings for MNCs based in developed countries; and (2) export intensity leads to a lower debt ratio, which has not received much attention in previous studies. We propose several factors related to the context of emerging economies to explain these contradictory findings. We also explore the interaction effect of the extent of FDI and export intensity on the capital structure of MNCs, and find that the impact is negative, which implies that both monitoring costs and agency costs rise dramatically for creditors when firms’ international operations become overly complicated.