Professional Documents
Culture Documents
Justin Logan
8/6/2018
GLOBALIZATION AND STAKEHOLDERS
Introduction
The world of business is forever changing. With new technologies and the ever-
increasing speed of transferring information means that data, money, and other goods can be sent
to someone across the globe faster than ever before, but also slower than the capabilities in the
future (Weiss, 2014). This also means that companies and organizations need to adapt, change,
and grow with these new abilities to maintain relevant and ethical. Businesses are also spreading
out around the world with international dealings and taking advantage of this globalization of
economies. This makes managing the in the international stakeholders and maintaining a
standard of ethical practices very difficult for companies to maintain and execute.
International Business
interconnected than ever before. Weiss (2014) explains that because there are currently
approximately 7 billion people alive, and that number is only growing, and with such an amount
of information and options readily available, individual markets are quickly becoming one large
market. International trade is become easier to achieve and this is causing part of the merging of
markets from different countries. Not only is globalization about these merging markets, but also
about the work force and employment issues. Job availability is much better when considering
that the employee can search for a job in not only their home country, but the whole world.
Trade Agreements
There are a few different groups that have trade agreements in place such as the European
Union, North American Free Trade Agreement, World Trade Organization, etc. Many people
have issues with these kinds of agreements which is why we see the TPP becoming dissolved in
Logan 1
GLOBALIZATION AND STAKEHOLDERS
recent years (Meyer, 2016). President Trump pulled out of the Trans-Pacific Partnership because
of the potential loss of jobs and money to foreign markets. What the TTP essentially was, was a
group of twelve countries coming together to cut tariffs in order to promote easier and cheaper
trade between the member countries. The problem is with this specific partnership, was that even
though this market group is responsible for about 40% of the world market, larger companies
would have an easier time moving their factories to Chili, Singapore, and/or Mexico costing
Stakeholders
Companies that have factories or facilities outside the country in which it is based is
known as an MNE, or a multinational enterprise (Weiss, 2014). There are many reasons that
companies and organizations expand into other countries, most of it being for larger profits. The
phrase ‘sweat-shop’ is thrown around quite a bit because before stricter regulations were
implemented, many companies planted their factories in less fortunate regions of the world in
order to make their products for a fraction of what it would cost to produce in America due to
unions and minimum wage standards. Then the companies would sell it for top dollar in the
United States for the widest profit margin possible. Modern MNEs tend to help economies all
through the process. From stimulating the economy by putting more pocket in the factory
So just who are the stakeholders for MNEs? The same that there are for national
organizations, just a larger group. With facilities in multiple nations and stores along with them,
there are consumers from different cultures with different wants and needs that must be satisfied.
The employees in these countries need to be paid a fair wage when adjusted for exchange rates
and fair wage in that country. Also, internal stakeholders become much more diverse and the
Logan 2
GLOBALIZATION AND STAKEHOLDERS
group becomes much larger when considering regional directors and public relations for new
regions. Different cultures require different managing tactics and different marketing campaigns,
which create more consultant positions and different regional boards. It becomes a more multi-
One interesting addition to the typical stakeholder group is the addition of countries.
Nations involved with these MNEs also have a stake in how a company does because more often
than not, these companies help stimulate economic growth. Anderson (2017) makes the point of
treaties between countries that only allow certain companies and organizations to open new
factories or shops in these places. Likewise, the nation in which the company is based in wants to
ensure that the manufacturing plants remain to continue the growth at ‘home’ instead of cutting
Stakeholder Relations
dilemma. With all these international laws that change with the borders, as well as individual
executives making poor decisions based on personal want and greed instead of the benefit of the
company or the consumer, it is important for an organization to have a set of checks and balances
to remain as ethical as possible. One way to do this is to have a very positive and involved
Voegtlin, Patzer, and Scherer (2011) suggest a few ways to do this. One is to maintain a
level of legitimacy, meaning to establish and secure a set of morals for the company to follow
that transcends national borders. In other words, companies need to have a strong set of mission
and vision statements and believe in it thoroughly. Another way to look at is breaking down
Logan 3
GLOBALIZATION AND STAKEHOLDERS
legitimacy into three smaller sections; pragmatic, moral, and cognitive legitimacy. Pragmatic is
when a company can satisfy their main stakeholders with their beliefs and standards. Moral
legitimacy is what it sounds like, what is the right thing to do for everyone involved. Lastly,
Voegtlin et al. (2012) says this about cognitive legitimacy, “Cognitive legitimacy rests on the
effective of these, according to the study, is moral legitimacy. Stakeholders must be involved in
the decision-making process every time in order to maintain a set of moral guidelines.
Trust
As a leader, it goes without saying that the trust of the employees is not only necessary,
but imperative, but the employees’ trust is not the only trust one needs. A leader of an
organization needs to also have the trust of their superior, inferior, and consumers. The superiors
need to have faith that the leaders they chose can adequately manage their team towards a
common goal, the team needs to trust that their leader can take them to the end goal, and the
consumers need to trust that the company has reputable people in charge.
Dirks and Ferrin (2002), state that there are two different types of trust, one being
relation-based, and the other being character based. Relation-based perspective is more directed
at the ability of two entities, whether individuals or companies, to interact with each other
towards a combined goal or mutual benefit. When these interactions occur positively, more
opportunities like these are bound to occur, thus creating a level of trust. With the character-
based perspective however, a person’s trust factor is decided upon their perceived qualities such
as integrity or fairness. The issues with this sort of trust, is that these factors can be manipulated
to complete an objective, or the person can be masking his or her real personality. Once again,
the way to monitor this is to have active involvement by both external and internal stakeholders.
Logan 4
GLOBALIZATION AND STAKEHOLDERS
Conclusion
Multinational entities need to be able to create, implement and maintain some set moral
and ethical standards more-so than single nation companies. This is because there are many more
people involved throughout the hierarchy of the MNEs than others. Anderson (2017) goes as far
as to say that because of the amount of people, organizations, and governments watching and
scrutinizing these MNEs, the flaws in their ethics are more likely to be exposed.
Companies can ensure a high ethical standard in a few different ways. Mainly this
examining different branches in different countries can also ensure moral and ethical standards
Logan 5
GLOBALIZATION AND STAKEHOLDERS
References
Dirks, K. T., & Ferrin, D. L. (2002). Trust in leadership: Metaanalytic findings and implications
Meyer, T. (2016). Saving the Political Consensus in Favor of Free Trade. SSRN Electronic
Voegtlin, C., Patzer, M., & Scherer, A. G. (2012). Responsible Leadership in Global Business: A
New Approach to Leadership and Its Multi-Level Outcomes. Journal of Business Ethics,
Weiss, J. W. (2014). Business Ethics A Stakeholder and Issues Management Approach (6th ed.).
Logan 6