The Downward Spiral and the U.S. Model Business Principles - Why MNEs Should Take Responsibility for the Improvement of World-Wide Social and Environmental Conditions
Management International Review (MIR), Vol. 40, No. 4, pp. 351-371, 2000
25 Pages Posted: 23 Mar 2007 Last revised: 30 Oct 2010
- The process of globalization enables multinational enterprises to source, produce and sell on a world-wide basis. In many cases multinational companies operate in countries with poor social and environmental conditions.
- The power of individual nation states to establish and control the rules of the economic system is fading, both in the industrialized and in the developing countries. Instead, there is a downward spiral of social and environmental standards. At the same time, the efforts of intergovernmental organizations to create a new world order have not made much progress.
- Under these conditions, the multinational firm must fill the gap between economic possibilities and ethical requirements, i.e. the multinational firm must behave as a moral actor. The economic power of multinational firms should be used to define and to enforce humane working conditions world-wide.
- The U.S. Model Business Principles are based on this idea. However, their legitimacy can be questioned. Therefore, one has to consider their underlying philosophical grounding and has to reconsider the economic motivations for multinational firms to conduct themselves in an efficient and ethically sound way.
- For maintaining global peace and stability the confidence of people in the fairness of global competition is necessary. In order to preserve this confidence, joint efforts by governments, MNEs, intergovernmental organizations, and NGOs are necessary. Today, MNEs are key actors in this endeavor.
Keywords: MNE, downward spiral, social, environmental conditions, responsibility, U.S. model business principles
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