Starbucks is an interesting example of the role that modern corporate social responsibility can play in the reputation of a company. CSR has taken a turn from being solely an ethical consideration, to being somewhat essential to the success of many companies, especially those such as Starbucks who have intentionally put it at the forefront of their reputation, but also in the case of companies who are forced into adhering to CSR policies in order to appease their customer base. Prior to the 1970’s, companies appeared to have little ethical consideration for what their actions might do, as long as it would result in profit. Or, if they did take ethical considerations it was likely actually out of the goodness of the CEO’s heart, because there was little to be gained from it other than a clean conscience. In the 70’s, this changed. Consumers were demanding more from MNCs. More transparency, more ethical conduct, and more positive impact on the communities they operate in.

The interesting shift has been from the begrudging acceptance of CSR reform by MNCs to MNCs like Starbucks fully embracing CSR and going to great lengths to not only do no harm, but to do good in the world. If you walk into a Starbucks today you are craftily bombarded by signs of the company’s positive influence in the world. They make you, as a consumer, feel good about buying their product because by supporting Starbucks you are, in turn, supporting all the good work that they are doing. Their marketing strategists have perfected manipulating consumer emotion to convince them to pay a premium for their product because it makes them feel better to spend $2 extra than to purchase coffee beans harvested under unethical circumstances. Conveniently, the consumer also loves Starbucks coffee. Starbucks has effectively taken CSR to a new extreme and made it a motivator and a standard for consumers, so that it is not enough for other companies to claim that they have fair-trade beans, but they must also be socially progressive, even at a cost to their own profit. What Starbucks has gotten right is that it does not mean a cost to their profit. By closing for half a day to do mandatory racism training, they lose half a day’s profits but they will easily make that back by retaining customers who may have left due to their initial bad publicity, and even gaining customers who appreciate the company’s social awareness.

While reading the Hofferberth et. al article about constructivism and CSR, I was considering the Starbucks case and how it might fit into the paradigm of reasoning they describe. Yes, Starbucks is reacting to a a general trend towards CSR from before its time, but now it is setting a new standard for CSR in its industry which may even seep into others. However, their interest in raising the standard is profit. It appears to be a risk calculation in which they expect, rightfully so, the outcomes to be highly in their favor and keep them at the top of their contenders. In this light they are acting from the realist perspective, but the reaction they will induce in the long run seems more constructivist in that other actors will accept the norm and begin to do the same because it will then be what is appropriate.

One of the most fascinating subjects that the course has dealt with is the idea of corporate social responsibility. More specifically, how multinational corporations are engaging in the subject so as to preserve their most valuable commodity which is their overall brand image. One of the most infamous cases that was discussed was that of Nestle, and their motivation for marketing infant formula in the developing world. In summarization, “illiteracy, poverty, contaminated water, and the absence of facilities to sterilize and refrigerate transformed a product relatively safe in the First World into a potentially hazardous substance in the Third” (Sikkink, 1986, p.820). Backlash ensued with a boycott of Nestle products put into place. This task was made easier due to the fact that Nestle clearly branded all of their products with their logo (Crawford, 2019). This case was a landmark in that it created the desire for accountability, which is practiced today and can be seen through a MNC like Starbucks.

I bring up Starbucks as, throughout the semester, discussion has been centred around their sustainable initiatives and also due to the fact that the majority of society, especially millennials, enjoy their coffee. Where people remain undecided regarding Starbucks is the overall perception of the brand. I would argue that Starbucks is making positive strides in regards to maintaining a positive public perception among their most loyal customers, and in regards to overall sustainable measures. The case portrays how and why consumer perceptions are crucial and why discussion must continue to be held about CSR. Starbucks, realizing that millennials make up a large portion of their clientele, would inevitably also realize that they perceive sustainable measures to be vitally important. As such, Starbucks must continue to promote and strive for the best sustainable practices so as to keep their product enticing.

It would be wrong to simply ignore the critics of such companies like Starbucks. However, I believe that even if they face criticism in the form of initiatives simply being a front with no true inclination for publication other than perception, the policies can still be viewed as positive. Consumers force companies to create initiatives that otherwise would not have been present. This coercion into at least prioritizing “good behaviour” is one that cannot be overlooked.

References

Crawford, R. (2019, March 5). MNCs and Security. Retrieved from Political Science 372A. 

Sikkink, K. (1986). Codes of Conduct for TNCs: The Case of the WHO/UNICEF Code. International Organization, 40(4), 815-840. 

One of the many lessons that has been entrenched over the course of the semester is that the discourse surrounding multinational corporations is changing. One of the themes highlighted regarding this change is how they are emerging as contributors in global governance, which can be defined as “the long history of attempts to shape and regulate an otherwise anarchic international system” (Heng and McDonagh, 2009, p.37). Understanding the concept of risk in relation to global governance provides another mechanism in dissecting why MNCs would concern themselves with such a phenomenon. MNCs, as has been previously discussed, tend to prioritize maximizing benefits for themselves. This takes priority above all other aspects of their dealings, which sometimes concern an appreciation for human rights. This mindset can be seen as beneficial when their interests overlap with that of states. Historically, a key event can help to portray this idea, which occurred on September 11, 2001.

There is no denying that the terrorist attacks on that day made America and the rest of the world uneasy. It also provided an opportunity to discuss the lingering effects and the subsequent aftermath. The concept of “risk” is a troubling one for any citizen in any society, but it is even more worrisome for MNCs. Within the discourse, “one often finds references to “governing by risk and governing terrorism through risk. Clearly, the implication is that risk can bring about new forms of governance, oriented towards reducing vulnerabilities and averting an uncertain future” (Heng and McDonagh, 2009, p.37). In lecture, an example was used in describing how the events of 9/11 set in motion a willingness for MNCs to work with governments. This example, though briefly touched on, still is crucial in modern society as the effect has remained the same. There remains an emphasis on partnership between business and governments in regards to sharing their skills, while the language of stability has transformed into a language of a need among states and MNCs and other actors to avoid “systemic discontinuities” (Crawford, 2019). The promotion of world peace is an interest that overlaps between both governments and non-state actors.

In the world today, this aspect of the course material can still be seen in one of the more complex cases of the current President of the United States being a MNC himself. Society now sees this phenomenon in their everyday life, even considering how certain MNCs (Bechtel) are comprised of political elites.

References

Crawford, R. (2019, January 29). US Power and Multinational Corporations. Retrieved from Political Science 372A: https://blogs.ubc.ca/a12012/files/2019/03/POLI-372A-Lecture-Week-5.pdf 

Heng, Y.K. and Mcdonagh, K. (2009). Risk, Global Governance and Security. In Risk, Global Governance and Security: The Other War on Terror. London: Routledge. 

Throughout the whole term, we’ve been talking religiously on what MNCs were and how they started, and what they’re doing to the world. Multinational corporations are not just private business actors, but also became a big part of overall global governance. This has resulted in making them not only economic actors, but also political. (1). We seem to have this understanding that for most multinational corporations, profit is the main motive and key, and so putting business stakeholders first. However, it is important to understand that this expectation we have of MNCs are “socially shared expectations” (11). However, with CSR, new expectations have risen, leading to my thoughts about the article. To be fair, before reading this article, the opinion that has been formed in my head was that MNCs only care about profit, and nothing else.

The authors of the article, however, have concluded a different argument. Instead of thinking of corporations in this rational way, why not think there is more to them than profit and selfish behaviour, stating that “MNEs are influenced by emerging norms as ideational aspects of social interaction instead of static rationality” (20). What they mean by this is that CSR practices are, in fact, taken seriously within corporations, and that includes the social responsibility being given to them through the emergence of norms, and basic social interaction.

I would be lying if I said this article did not – slightly – change my mind on motives of CSR practices within MNCs. It still baffles me how MNCs in this capitalist, globalized world, would care about anything else other than the profit they get out of consumerist practices. But I guess as Political Science and IR students, we should keep our minds open, and maybe welcome other ideas. The article was very well put, because it did outline some different arguments that could appear, and their answer to it, such as the public relations idea mentioned. For an MNC to fully announce that they will be involved in CSR practices comes great responsibility, and so if they do not follow this statement, they will receive backlash.

With that being said, I still believe that MNCs have a long way to go when it comes to bettering their practices, and making them more ethical. There are problems and scandals that arise daily from companies being caught being unethical (after claiming they were). I’m keeping an open mind, and I believe there is hope. But there is also a long road ahead for the authors’ arguments to be 100% true.

References:

Matthias Hofferberth et. al. (2011)“Multinational Enterprises as “Social Actors”—Constructivist Explanations for Corporate Social Responsibility”Global Society25, 2: 205-226

It is not so often news surrounding Canadian politics manage to outshine the proverbial black hole known as the US political news cycle. The still growing SNC-Lavalin scandal is one of the few Canadian news items that seem to have enough staying power to overcome what can sometimes feel like an American monopoly of our news cycles. As this not SNC’s time in the spotlight, one begins to wonder why it is so adept seemingly at attracting the wrong sort of publicity.

To give some context to SNC-Lavalin, it is prudent to understand what SNC does in  in operational terms besides bribing the sons of Libyan dictators with lavish Toronto condo renovations and attempting to influence the highest levels of Canadian government. SNC-Lavalin’s core lies in its engineering procurement and project management business. In total SNC has over 50,000 employees spread over offices in 50 countries and further operations in 160 total countries, making it a true MNC as defined in this class. This scale of operations makes SNC one of the largest engineering/construction firms in the world, rivaling giants like the infamous Bechtel corporation.

Both Bechtel and SNC are infamous for their roles in many different scandals, so the question must be asked, is there something about the engineering/construction management sectors that makes them so prone to scandalous behaviour? Perhaps something in regards to the nature of FDI within this sector causes these continuous problems. When one analyzes the types of projects that these firms are bidding on, it is often large public sector projects in LDC’s. LDC’s are often more vulnerable to corruption and bribery and as such it is not necessarily a leap why these firms could get used to operating in ways that their home countries see as antithetical to good business practices. SNC for example, has bid and and won a sizable number of construction projects in India and Libya stretching back from the early 1990s till around 2014. many of these projects were later accused of involving bribery, infamously in regards to their attempts to woo Muammar Gaddafi’s son through, among other things, the aforementioned renovations of his downtown Toronto condo, were valued at over $200,000.

Anecdotally, the business practices that became successful for these firms overseas and then later or perhaps unilaterally with the home nation-state, resulted in the accusations of corporate misconduct. While much more evidence is needed, perhaps the poor track record especially of SNC-Lavalin could be explained by a very different operational environment abroad when it was conducting FDI and other forms of international business. The business may have correctly adapted to a very different method of doing business where there is less oversight and the state’s are more vulnerable. SNC may then have begun to use the same rulebook in places where oversight was stronger and the state’s more able tolerate corporation’s allure, as in the case of its home market of Canada.

Sources:

STEAMROLLED: A Special Investigation into the Diplomacy of Doing Business Abroad.