On April 3, 2019, Australia passed a legislation that “threatens huge fines for social media companies and jail for their executives if they fail to rapidly remove ‘abhorrent violent material’ from their platforms” (Cave, 2019). This came after a gunman distributed a hate-filled manifesto online and then used Facebook to livestream the massacre of fifty people at two mosques in Christchurch, New Zealand on March 15, 2019. The tech and media industry opposes this legislation, claiming that (1) this can lead to the censorship of legitimate speech; (2) damage Australia’s relations with other countries because it would require surveillance of all users around the world; and (3) does not address the Islamophobic motivations of the terrorist attack.

Social media companies are currently at the forefront at the issue of the spread of hate and misinformation through the internet. They present an interesting challenge in regards to culpability whenever something bad happens that involves people using it as a platform to spread hate and violence. Are social media companies responsible for how people use their platforms? To what extent? Who polices the internet? How does one effectively police the internet, when it transcends national borders? How are states involved in all of this? In an increasingly globalized world, this is an issue that must be addressed.

Sometimes, I like to think of social media platforms as like knives: they were not intended to cause harm, but there’s no avoiding the fact that it can be used in that way. Knife companies are not held responsible for murders committed by its products, therefore social media companies should not be held responsible by states for any harm that came about because its users decided to use the platform in a harmful manner. The onus to use social media responsibly is on its users. However, the nature of social media means it can facilitate a large amount of harm with little effort. With one click of a button, it can spread a lot of hate to a lot of people in a short amount of time. So, here, the knife metaphor isn’t sufficient anymore. After all, it is hard to take away an idea once it’s in someone’s head, and the spread of ideas is social media’s bread and butter. In this case, some sort of regulation is probably needed. Social media companies definitely need to be involved in this regulation, but how about states? Social media transcends national boundaries: how is social media regulated between states? What if one state wants to pass a law regarding social media that may have implications beyond its boundaries (like Australia)? This sounds a lot like concerns about MNCs and FDIs. Here, I think IGOs and NGOs would be useful. An organization can draft a set of principles or guidelines that can codify the responsibilities of a social media company, and give social media companies the opportunity to agree to these guidelines. It can give them something to strive for, something to improve on. It may not solve all problems, but it can give companies a direction and go from there.

References

Cave, Damien. (2019, April 3). Australia Passes Law to Punish Social Media Companies for Violent Posts. The New York Times. Retrieved from https://www.nytimes.com/2019/04/03/world/australia/social-media-law.html.

Corporate Social Responsibility has come a long way. Gerard Costa writes on Forbes that, for multinational corporations (MNCs), there is no other option but corporate social responsibility (CSR). He describes a manager of a major consumer goods MNC talking to a group of future graduates who claims that “CSR is our only strategy” (2019). The manager is appealing to the relatively high social awareness of these future workers. These future workers are more conscious of social issues such as human rights, labour rights, and climate change that previous generations. Indeed, one study notes that younger workers favour companies that incorporates CSR into their business strategy, perhaps due to increased volunteering among younger people for extra credit and to improve their resumes (McGlone et al., 2011).

Organizations that take part in the socialization of the next generation through volunteerism play roles in the increasing acceptable of CSR as a norm within the business community. This shift in the expected corporate norms by the next generation of workers, Generation Z (born in the mid-1990s, the latest generation to enter the workforce) gives MNCs incentives to incorporate CSR into their business strategy from the educated labour side of the workforce. Costa’s article mention “purpose brands”: brands that tell clients that they fulfill a social purpose (2019). If a company disingenuously cultivates this brand without fulfilling the social purpose, and people find out about it, there will be consequences: Workers who thought they were doing good by working for a company that they thought had a good human rights record will feel betrayed and lied to. In addition, consumers, especially “belief-driven buyers” who are loyal to brands that stand for something, do not like it when they find out that companies that they thought to be socially responsible are taking part in human rights abuses. In other words, bluewashing is not sustainable in the long run—looking like socially responsible companies without actually being one are only temporary solutions, given the prevalence of media and the speed of information.

MNCs need to have good CSR strategies that conform to the new emerging culture within the business community, or else fall behind and be damned by bad PR.

References

Costa, Gerard. (2019, March 13). Corporate Social Responsibility, Purpose Brands And Gen-Z. Forbes. Retrieved from https://www.forbes.com/sites/esade/2019/03/13/csr-purpose-brands-and-gen-z/#409049215849.

McGlone, T., Spain, J., & McGlone, V. (2011). Corporate Social Responsibility and the Millennials. Journal of Education for Business, 86(4), 195–200.

In this world where we see MNCs as “Social Actors” there has been a growing need for Corporate Social Responsibility as they are not just economic actors but also “bear a responsibility” to social stakeholders (Hofferberth, 2011). However, in modern times more often than not it seems to be uses as a marketing strategy for greater commercial profit from the poor sucker consumers trying to do the right thing. This was best seen in the VW scandal.

In 2015 Volkswagen was caught up in an emission scandal that shocked the world not only because an MNC did something they shouldn’t have but due to the blatant violation of the tenants of Corporate Social Responsibility. The company had pledged under CSR to “go Green” to save the world selling cars under the disguise of being the designer of cheap environmentally friendly diesel engines. However, the company deliberately set out to circumvent emissions control with the aim of giving the company an unfair advantage over its competitors that made it the world’s number one car maker at the expense of the environment. It wasn’t just a single engineer who made this decision but everyone from the CEO down knew what was happening. The head of CSR instead of challenging the fake “cheat devices” turned a blind eye to the issue. The command chain that led to the development of certain lines of software that could put an engine into to test mode and then return it to “dirty mode” is on record, all the testing that was done is documented. Consumers on finding out not just the lie but the extent to which VW went to hide the lie shocked a massive worldwide recall and a massive hit to VW share. However, the reality was that VW, while definitely taking a hit, was still ok as people showcased that while the environment is important, a reliable fast car is more what they want. VW is still the number one world’s largest car manufacturer in 2018 regardless of the scandal and their head of CSR remains in his position. More work needs to be done to ensure CSR is taken seriously as while we claim in theory that CSR is the right solution for companies, the reality remains that until a regulatory body of CSR is established companies will always put CSR second to economic profit.

Citation:

Matthias Hofferberth et. al. (2011) “Multinational Enterprises as “Social Actors”—Constructivist Explanations for Corporate Social Responsibility” Global Society 25, 2: 205-226

Theo Legett (2018). How VW covered up their scandal. BBC News.

The Santa Clara County vs. Southern Pacific Railroad (1886) Supreme Court case in the United States established the legal personhood of corporations and paved the way for a friendly environment in which MNCs emerged over the next century plus. That has led to a United States where corporations have great influence in society and face little accountability – only buoyed by another Supreme Court case, Citizens United vs. F.E.C. (2010) which allowed for virtually limitless corporation spending in elections based on the freedoms they enjoy as “people”.

This offers much to discuss, but I want to focus on another element of corporate personhood. That is, the tendency by MNCs displayed en masse to attempt to “humanize” themselves. This tendency is further perpetuated by the Internet age where social media and popularity of “viral” videos permeate society. Examples of MNCs operating in this field can be observed in how MNCs choose to participate in holidays like the very recent April Fool’s Day and in the way their social media presence has developed and evolved. Each year, countless MNCs engage in April Fool’s gags often involving the unveiling of a fake new product and marketing campaign to come with it. The real marketing comes from the viral potential of these pranks that garners attention and – as the MNCs hope – good will from the public. While these attempts often backfire, it is clear the idea behind participating in April Fool’s Day is a bid to foster a more personal relationship between company and consumer. The same can be said when considering how MNCs have trended in their social media presence. Especially on Twitter, there has been a trend for MNCs with an account to adopt a humanized persona when tweeting. Rather than using “we”, the first-person “I” is being used more often as accounts attempt to strike a similar tone to individual Twitter users. Wendy’s and Netflix consistently achieve viral moments through this new approach to MNC social media presence.

While these accounts are certainly amusing at times, it is important to understand the real intention behind them. As we know, MNCs bottom line is about profit – and how to maximize it. This approach to marketing is an attempt to blur the lines between company and consumer. If we see Wendy’s as the funny and relatable Twitter account rather than the huge fast food corporation it really is (and all the unseemly activities that come with that distinction), we are likely more inclined to frequent Wendy’s. We should thus view these tactics with skepticism and consider how appropriate engaging with MNCs online is when it is clear the sole purpose is to get us to spend more money and continue to act as loyal consumers.

The issue I want to address comes in the recommendations made in the State of the Union address delivered by President of the European Commission Jean Claude Juncker addressing the need for an increase in FDI into Africa. The reason for this analysis is to understand the motivations behind EU sudden interest in providing more FDI leading to viewing Africa as a mutual business partner in light of the signing of a new deal between the two unions of the EU and AU. (Stopford, 1998).

Juncker calls Africa, Europe’s twin continent and discusses the need to invest in a mutual partnership (Juncker, 2018). He states that Africa is no longer a continent just meant to be looked at through the prism of development aid but now as a mutual business partner. It is worth noting that during the early twentieth century most of Africa had been colonized by Europe draining it of its resources and primary raw materials and was effectively used as a pawn by the European Nations in their quest for dominance. A century later, Africa once again seems to be used as a pawn to satisfy the European agenda to act as a “global player” under the disguise of mutual economic growth (Juncker, 2018). The timing also seems very suspicious that Europe has decided on “more private investment and trade with the African Union” (Juncker, 2018) as between 2000 and 2017 China has been loaning Africa nearly $143 billion dollars in loans to various governments which many scholars speculate as debt traps used by China to exert dominance over a region (CARI, 2018).

The pros to such a suggestion would be creating jobs within the African Union leading to less migration to Europe in the hope for employment. The standard of living in Africa could improve based of the increase in investment in development projects.  There would also be an increase in GDP per capita and the spending power of African nations. Europe could also challenge China by making Africa self-sustainable and providing them with the wherewithal to pay off the outstanding and ever increased loans, freeing them from the immediate threat of external influence.

The cons to such a mutual partnership is the lack of mutual respect between the nations. It is plausible that Europe could be using this deal to get a foothold into Africa and control over its decisions regarding Foreign Direct Investment as well as a governing authority on “sovereign decisions” (Juncker, 2018). The statements used by Juncker do not specify who would be receiving this funding and how it would be distributed within the African Nations. Who would benefit more and who would get less? There is also the possibility for repercussions to nations who do not sign on as seen in the previous AU-EU deal where Kenya refused to sign and was subject to heavy import tariffs.

In conclusion, is the purpose of this FDI meant to purely altruistic or is the true purpose supposed to be vested in self-interest? Am I being too skeptical in not buying into Junker’s “brother country” mentality when it comes to EU- AU relations?

Citations:

• Cini, M. (2016). European union politics. Oxford University Press.
• Jean Claude Junker (2018). State of the Union 2018: The hour of European sovereignty.
• John Stopford (1999) “Multinational Corporations,” Foreign Policy, 113

Corporate Social Responsibility, a concept that is widely regarded as a company’s efforts to improve and maintain the quality of livelihood of any society has been a center of focus for multinational corporations within their day-to-day operations and engagement in international trade. Earlier this year, Forbes reported that CEO of foods company KIND Snacks, Daniel Lybetzky has announced to make a difference by achieving mass distribution and making their company’s product healthier. Another example would be Microsoft’s strategy to come up with a partnership with a non-profit IT company NETHope, which aims to create IT related apprentices in Kenya. All these sorts of actions, at a glance, might indicate a sense of goodwill coming from multinational corporations in an attempt to actually achieve a better world and community. But in fact, several scholars have disputed this voluntary action and attributed this movement to the increasing demand by investors and employees for their own sake of sustainability, and most importantly, for the promotion and preservation of their public image through exhibiting their commitment in making a social impact.

However, it is quite rare that we see emerging multinationals from developing and underdeveloped countries engaging in these sort of movements. Start-up from these areas, I would like to assume, are mostly fighting for survivability to ensure their long lasting operations and their rise to the international market. Despite several startups actually engaging in CSR, Tarun Khanna, a professor at Harvard have pointed out that emerging MNCs need to be more attuned to social purposes, simply because in developing nations, governments often fail to provide effective means of a public good, and emphasizing the importance of a privately run sector entity to overcome these issues (Global Focus, 2015). With this argument in mind, it is also important to consider the importance of the sovereign of states and its changing landscapes thanks to globalization. In my other blog article, I have outlined that with globalization, there is an increasingly high risk of external shocks that could be experienced by many countries, which could turn out bad for developing/underdeveloped nations as they go through industrializing their economy. Governments are now required to pay more attention to the international realm and not just matters within their domestic border. With this, they would have to divide their attention to both sides of the fence and its diplomacy as well, which would make complete sense of why maintaining public good could be a difficult process nowadays.

Khanna further emphasized the possibility of acquiring a win-win situation for emerging MNCs. When an issue from a community is resolved through CSR, it would not only build a better livelihood for the people living in that particular community, but it also builds relations with these people which reduces the likelihood of protest coming from them and aggressive regulation from governments. Other than that, I would argue that companies should, in fact, realize the value they could put in for the company and the corporate benefits that would drive shareholder values and dividends. These days, I argue that public image and activity contributes to the forecast of its future prospect, and when companies indicate that they are engaging in positive activities through CSR, it would fuel up the positivity and trust they would have with many communities.

Additional sources:

Nov 12, 2015, Global Focus. “How Emerging Multinationals Are Embracing Social Responsibility.” Knowledge@Wharton, knowledge.wharton.upenn.edu/article/why-emerging-multinationals-are-embracing-social-responsibility/.

The Trudeau government has found itself in a very uncomfortable position which has led to the questioning of the Canadian government’s ideals. The SNC-Lavalin debacle has escalated to the point Prime Minister Trudeau has a record low Ipsos poll approval rating that comes in even worse than Donald Trump’s.[1]  A common occurrence that was blown out of proportion? Maybe. However, that does not make it any better. As a country that prides itself on the Rule of Law, there must be, and under the constitution is, a clear division between the legislative and legal branches.

To me, I think this case is the perfect example of the influence multinational corporations can have on legislative procedures. Gilpin’s discussion of the phenomenon that political and corporate leaders tend to share overlapping intersects and perspectives is genuinely demonstrated in this case. With a federal election approaching, SNC-Lavalin recognized that due to the mobile nature of their business, they could threaten to leave if the Canadian government did not interfere in the legal proceedings against SNC. Universally, it seems there is no doubt that multinational corporations are not afraid to exercise their power to coerce the government into doing their dirty work. It becomes increasingly evident that major corporations in Canada may have too much power and control over institutional outcomes.

Although unlikely, hopefully through regulatory means, a division between overbearing MNCs and their institutional access will be installed. Through means of preventing campaign finances or tough market, exit barriers can help mitigate against collusion.

[1]Kalvapalle, Rahul. “Trudeau Now Has a Lower Approval Rating than Trump, with Tories Way Ahead: Ipsos Poll.” Global News, 28 Mar. 2019, globalnews.ca/news/5103763/trudeau-approval-rating-snc-lavalin-budget/.

Under the current global economic system, it would be impossible to achieve sustainability because of the reliance on fossil fuels and the influence of massive energy companies. Companies must govern themselves and embrace corporate social responsibility fully if the world has any chance of cutting emissions to the levels laid out in the most recent IPCC report. According to the report, there are about 12 years left for emissions to be cut by at least 50% across the board before the damage done to the global ecosystem is irreversible.

In order to reach this goal companies and specifically energy giants operating around the world must focus on the long term ramifications of resource extraction and make major shifts in how they operate. They must work with governments and figure out how to shift the economy away from fossil fuels without causing too much damage to their bottom line. This has been difficult and emissions have remained steady or risen in many places because governments and corporations alike are interested in the economic value of fossil fuels rather than looking further down the line at effects of carbon emissions.

The approval of the Kinder Morgan Pipeline and the Dakota Keystone Pipeline show that even though governments are aware of the risks, they are still willing to put unsustainable energy sources above economic losses. If governments continue to act in the interests of energy companies and energy companies fail to regulate themselves, the world has a very low chance of cutting emissions to the necessary level.

MNCs operating within the energy sector must engage with environmental NGOs and take into account the wishes of civil society. In order to save the environment from irreversible damage corporations must work with all aspects of society and come to solutions that do not include the construction of new pipelines or other methods of fossil fuel extraction. That being said, governments must also make compromises and provide economic and scientific aid to those corporations whose bottom line is dependent on the use and sale of oil and other fossil fuels.

Naming and shaming can only make so much of an impact and in order to create a tangible change and significant reduction in global emissions, MNCs and domestic governing bodies must work with civil society. There has to be an effort by the companies involved, the governments reaping economic benefits and the people looking for change. MNCs are political actors and they have a large influence over how the global economy operates and how it evolves to fit the times.

IPCC, 2018: Summary for Policymakers. In: Global warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [V. Masson-Delmotte, P. Zhai, H. O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J. B. R. Matthews, Y. Chen, X. Zhou, M. I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, T. Waterfield (eds.)]. World Meteorological Organization, Geneva, Switzerland, 32 pp.

Nord, James. “South Dakota Panel Endorses Bills Aimed at Possible Keystone XL Pipeline Protests.” Global News, 7 Mar. 2019, globalnews.ca/news/5029630/south-dakota-panel-pipeline-protest-bill-keystone/.

Ruggie, John Gerard. Just Business: Multinational Corporations and Human Rights. First edition. New York: W. W. Norton & Company, 2013

As the world has become more and more globalized, so too have multinational corporations. They are loyal to themselves as companies rather than to the countries that play home or host to them. MNCs have the ability to operate in their own self interest and have continuously become less reliant on national ties and affiliations. Nowhere is this more clear than in the behavior of corporations following the Brexit Referendum.

The uncertainty of what will happen to the UK when they leave and if they will leave with or without a deal with the EU has caused hundreds of companies to relocate. As a no-deal Brexit becomes more probable and the deadline to withdraw from the EU looms closer, companies continue to leave the UK in favor of locations with more certainty. This is one of the driving forces of MNC decision making when it comes to Brexit. There is no certainty about what kind of trade deal the UK will get or if they will get one at all which has made companies reevaluate their operation there. Even if there was a comprehensive trade deal lined up with the EU, companies are unwilling to take on the potential costs of basing their operations outside of the EU. Moving operations out of British borders is a cost many companies with rather incur than staying in the UK and waiting to see how Brexit plays out.

Although it’s not quite the same, this pattern of MNC behavior follows the logic of the Ownership, Location, Internalization Theory. Companies foresee raised costs in Great Britain and so they have chosen to move their operations to another location. By moving, they can avoid the long term costs of operating in Europe but outside of the EU and give themselves greater certainty in the wake of Brexit.

Even when the deadline was far off and the thought of a no-deal Brexit was far from likely, companies were fleeing the UK and setting up operations throughout the EU. One of the most popular destinations for these companies has been the Netherlands. Rather than wait and see how the final result plays out, MNCs have strategically acted in their own interests and at the cost of the British economy. Not only are companies such as Sony and Barclays deciding to move their headquarters out of the UK, many are moving manufacturing operations elsewhere as well. This will result in a significant loss of British jobs and a blow to the national economy. However, in the globalized world, this is not an issue for MNCs. They would rather see their own operations running smoothly than be responsible for the economic well-being of just one country. Remaining in the UK means taking a risk that they could lose access to the EU market and the behavior of MNCs has shown that that is not a risk many are willing to take.

Stone, Jon. “Dutch Government Says over 250 Companies in Talks about Relocating to Netherlands Because of Brexit.” The Independent, Independent Digital News and Media, 24 Jan. 2019, www.independent.co.uk/news/uk/politics/brexit-netherlands-sony-company-relocating-ema-trade-investment-eu-a8742756.html.