Skip to main content

Advertisement

SpringerLink
Log in

Multinational Corporations and Governance Effectiveness: Toward a More Integrative Board

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

Multinational corporations (MNCs) dominate the global business arena, but new expectations for MNC boards call to question how they might effectively manage global stakeholder relationships in this new era of accountability. Uniting political behavior theory, which describes a board’s international political orientation, and global operating governance systems outlining a set of board behaviors, we develop a typology of four types of boards. We then provide recommendations for the development of an integrative governance structure, taking into account the mechanisms, structure, endorsements, and codes of conduct that MNCs can use to promote ethical behavior across MNC horizons.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Nye Jr. and Welch’s (2012) framework cites three orientations: skeptics, state moralists, and cosmopolitans. The “skeptics” category is outside of the boundaries of our analysis, as it suggests that there are no moral rights and duties because there are no institutions to provide order or a sense of community. Therefore, in the framework of MNC boards, we focus on the latter two categories.

References

  • Aguilera, R. V., & Cuervo-Cazurra, A. (2004). Codes of good governance worldwide: What is the trigger? Organization Studies, 25, 415–443.

    Article  Google Scholar 

  • Aguilera, R. V., Filatotchev, I., Gospel, H., & Jackson, G. (2008). An organizational approach to comparative corporate governance: Costs, contingencies, and complementarities. Organization Science, 19(3), 475–492.

    Article  Google Scholar 

  • Aguilera, R. V., & Jackson, G. (2003). The cross-national diversity of corporate governance: Dimensions and determinants. Academy of Management Review, 28(3), 447–465.

    Google Scholar 

  • Aguilera, R. V., & Jackson, G. (2010). Comparative and international governance. Academy of Management Annals, 4(1), 485–556.

    Article  Google Scholar 

  • Ambrose, M. L., Arnaud, A., & Schminke, M. (2008). Individual moral development and ethical climate: The influence of person–organization fit on job attitudes. Journal of Business Ethics, 77(3), 323–333.

    Article  Google Scholar 

  • Aoki, M. (2001). Towards a comparative analysis. Cambridge, MA: MIT Press.

    Google Scholar 

  • Arnaud, A., & Schminke, M. (2012). The ethical climate and context of organizations: A comprehensive model. Organization Science, 23(6), 1767–1780.

    Article  Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. (1999). Managing across borders: The transnational solution (Vol. 2). Boston: Harvard Business School Press.

    Google Scholar 

  • Beauchamp, T. L., Bowie, N., & Arnold, D. (Eds.). (2008). Ethical theory and business. Englewood Cliffs, NJ: Pearson/Prentice Hall.

    Google Scholar 

  • Beck, U. (2000). What is globalization?. Cambridge, MA: Polity Press.

    Google Scholar 

  • Bok, S. (2002). Common values. Columbia, MO: University of Missouri Press.

    Google Scholar 

  • Bowie, N. (1999). Business ethics: A Kantian perspective. Oxford: Blackwell.

    Google Scholar 

  • Carroll, A. B., & Buchholtz, A. K. (2012). Business & society: Ethics and stakeholder management (8th ed.). Mason, OH: South-Western Cengage Learning.

    Google Scholar 

  • Chandler, A. D., & Mazlish, B. (Eds.). (2005). Leviathans: Multinational corporations and the new global history. Cambridge, MA: Cambridge University Press.

    Google Scholar 

  • Chatterji, A., & Levine, D. (2006). Breaking down the wall of codes: Evaluating non-financial performance measurement. California Management Journal, 4, 29–51.

    Article  Google Scholar 

  • Dalton, D. R., Hitt, M. A., Certo, S. T., & Dalton, C. M. (2007). The fundamental agency problem and its mitigation: Independence, equity, and the market for corporate control. Academy of Management Annals, 1, 1–64.

    Article  Google Scholar 

  • De Bakker, F. G. A., & den Hond, F. (2008). Introducing the politics of stakeholder influence. Business and Society, 47, 8–20.

    Article  Google Scholar 

  • Doh, J., Husted, B., Matten, D., & Santoro, M. (2010). Ahoy there! Toward greater congruence and synergy between international business and business ethics theory and research. Business Ethics Quarterly, 20(3), 481–502.

    Article  Google Scholar 

  • Donaldson, T. (1996). Values in tension: Ethics away from home. Harvard Business Review, 74(5), 48–62.

    Google Scholar 

  • Egels-Zandén, N. (2014). Revisiting supplier compliance with MNC codes of conduct: Recoupling policy and practice at Chinese toy suppliers. Journal of Business Ethics, 119, 59–75.

    Article  Google Scholar 

  • Eisenhardt, K. M. (1985). Control: Organizational and economic approaches. Management Science, 31, 134–149.

    Article  Google Scholar 

  • Erwin, P. M. (2011). Corporate codes of conduct: The effects of code content and quality on ethical performance. Journal of Business Ethics, 99(4), 535–548.

    Article  Google Scholar 

  • Fiss, P. C. (2008). Institutions and corporate governance. In R. Greenwood, C. Oliver, K. Sahlin, & R. Suddaby (Eds.), Handbook of organizational institutionalism (pp. 389–410). Thousand Oaks, CA: Sage.

    Chapter  Google Scholar 

  • Fiss, P. C. (2011). Building better causal theories: A fuzzy set approach to typologies in organization research. Academy of Management Journal, 54(2), 393–420.

    Article  Google Scholar 

  • Frederick, R. E. (2002). An outline of ethical relativism and ethical absolutism. In R. E. Frederick (Ed.), A companion to business ethics (pp. 65–80). Oxford: Blackwell.

    Chapter  Google Scholar 

  • Freeman, R. E., & Reed, D. L. (1983). Stockholders and stakeholders: A new perspective on corporate governance. California Management Review, 25(3), 88–106.

    Article  Google Scholar 

  • Gardberg, N. A., & Fombrum, C. J. (2006). Corporate citizenship: Creating intangible assets across institutional environments. Academy of Management Review, 31(2), 329–346.

    Article  Google Scholar 

  • George, B. (2008). Ethics must be global, not local. BloombergBusinessweek/Companies & Industries, February 12. http://www.businessweek.com/stories/2008-02-12/ethics-must-be-global-not-localbusinessweek-businessnews-stock-market-and-financial-advice. Accessed June 2014.

  • Gowans, C. (2012). Moral relativism. In E. N. Zalta (Ed.), The Stanford encyclopedia of philosophy. Retrieved April 2, 2014, from http://plato.stanford.edu/entries/moral-relativism/.

  • Hall, P. A., & Soskice, D. W. (2001). Varieties of capitalism: The institutional foundations of comparative advantage (pp. 1–70). Oxford: Oxford University Press.

    Book  Google Scholar 

  • Hess, D. (2007). Social reporting and new governance regulations: The prospects of achieving corporate accountability transparency. Business Ethics Quarterly, 17(3), 453–476.

    Article  Google Scholar 

  • Jenkins, R. (2001). Corporate codes of conduct: Self regulation in a global economy (pp. 1–35). Geneva: United Nations Research Institute for Social Development.

    Google Scholar 

  • Jensen, M. (2002). Value maximization, stakeholder theory, in the corporate objective function. Business Ethics Quarterly, 12(2), 235–256.

    Article  Google Scholar 

  • Jensen, M., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

    Article  Google Scholar 

  • Jhingran, S. (2001). Ethical relativism and universalism. New Delhi: Motilal Banarsidass Publishers.

    Google Scholar 

  • Kaptein, M. (2004). Business codes of multinational firms: What do they say? Journal of Business Ethics, 50, 13–31.

    Article  Google Scholar 

  • Kaptein, M., & Schwartz, M. S. (2008). The effectiveness of business codes: A critical examination of existing studies and the development of an integrated research model. Journal of Business Ethics, 77(2), 111–127.

    Article  Google Scholar 

  • Kim, B., Prescott, J. E., & Kim, S. M. (2005). Differentiated governance of foreign subsidiaries in transnational corporations: An agency perspective. Journal of International Management, 11(1), 43–66.

    Article  Google Scholar 

  • Kleingeld, P. (2012). Kant and cosmopolitanism: The philosophical ideal of world citizenship. Cambridge, MA: Cambridge University Press.

    Google Scholar 

  • Koehn, D. (2013). East meets west: Toward a universal ethic of virtue for global business. Journal of Business Ethics, 116, 703–715.

    Article  Google Scholar 

  • Kostova, T. (1999). Transnational transfer of strategic organizational practices: A contextual perspective. Academy of Management Review, 24, 308–324.

    Google Scholar 

  • Krausz, M. (Ed.). (1989). Relativism. Interpretation and confrontation. Notre Dame, IN: Notre Dame University Press.

    Google Scholar 

  • LaPorta, R., López-de-Silanes, F., Shleifer, A., & Vishny, R. (1998). Law and finance. Journal of Political Economy, 106, 1113–1155.

    Article  Google Scholar 

  • Logsdon, J. M., & Wood, D. J. (2002). Business citizenship: From domestic to global level of analysis. Business Ethics Quarterly, 12(2), 155–187.

    Article  Google Scholar 

  • Logue, N. (2005). Cultural relativism or ethical imperialism? Dealing with bribery across cultures. Wenham, MA: Gordon College Working Paper.

  • Lubatkin, M., Lane, P. J., Collins, S., & Very, P. (2007). An embeddedness framing of governance and opportunism: Towards a cross-nationally accommodating theory of agency. Journal of Organizational Behavior, 28, 43–58.

    Article  Google Scholar 

  • Lund-Thomsen, P., & Lindgreen, A. (2013). Corporate social responsibility in global value chains: Where are we now and where are we going? Journal of Business Ethics,. doi:10.1007/s10551-013-1796-x.

    Google Scholar 

  • Luo, Y. (2004). An organizational perspective of corruption. Management and Organization Review, 1(1), 119–154.

    Article  Google Scholar 

  • Luo, Y. (2005). Corporate governance and accountability in multinational enterprises: Concepts and agenda. Journal of International Management, 11, 1–18.

    Article  Google Scholar 

  • Luo, Y. (2006). Political behavior, social responsibility, and perceived corruption: A structuration perspective. Journal of International Business Studies, 37, 747–766.

    Article  Google Scholar 

  • Martin, K. D., & Cullen, J. B. (2006). Continuities and extensions of ethical climate theory: A meta-analytic review. Journal of Business Ethics, 69(2), 175–194.

    Article  Google Scholar 

  • Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review, 30(1), 166–179.

    Article  Google Scholar 

  • Mele, D., & Sanchez-Runde, C. (2013). Cultural diversity and universal ethics in a global world. Journal of Business Ethics, 116, 681–687.

    Article  Google Scholar 

  • Meyer, A. D., Tsui, A. S., & Hinings, C. R. (1993). Configurational approaches to organizational analysis. Academy of Management Journal, 36(6), 1175–1195.

    Article  Google Scholar 

  • Nye, J. S., Jr., & Welch, D. A. (2012). Understanding global conflict and cooperation. Upper Saddle River, NJ: Pearson.

    Google Scholar 

  • Payne, D., Raiborn, C., & Askvik, J. (1997). A global code of business ethics. Journal of Business Ethics, 16(16), 1727–1735.

    Article  Google Scholar 

  • Poruthiyil, P. V. (2013). Weaning business ethics from strategic economism: The development ethics perspective. Journal of Business Ethics, 116, 735–749.

    Article  Google Scholar 

  • PwC. (2012). Cleaning up corruption: Why anti-corruption compliance is now on the C-Suite Radar. New York: PwC. Retrieved May, 2013, from http://www.pwc.com/us/en/forensic-services/pub-home.jhtml.

  • Raiborn, C. A., & Payne, D. (1990). Corporate codes of conduct: A collective conscience and continuum. Journal of Business Ethics, 9(11), 879–889.

    Article  Google Scholar 

  • Rasche, A. (2009). Toward a model to compare and analyze accountability standards: The case of the UN Global Compact. Corporate Social Responsibility and Environmental Management, 16, 192–205.

    Article  Google Scholar 

  • Roe, M. J. (1994). Strong managers, weak owners. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Rose-Ackerman, S. (2001). Trust, honesty, and corruption: Reflection on the state-building process. European Journal of Sociology, 42, 27–71.

    Article  Google Scholar 

  • Sama, L. M. (2006). Interactive effects of external environmental conditions and internal firm characteristics on MNEs’ choice of strategy in the development of a code of conduct. Business Ethics Quarterly, 16(2), 137–165.

    Article  Google Scholar 

  • Scherer, A. G., & Palazzo, G. (2007). Toward a political conception of corporate responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review, 32, 1096–1120.

    Article  Google Scholar 

  • Scherer, A. G., Palazzo, G., & Matten, D. (2009). Introduction to the special issue: Globalization as a challenge for business responsibilities. Business Ethics Quarterly, 19, 327–347.

    Article  Google Scholar 

  • Scherer, A. G., & Smid, M. (2000). The downward spiral of the US model principles: Why MNEs should take responsibility for the improvement of worldwide social and environmental conditions. Management International Review, 40, 351–371.

    Google Scholar 

  • Schwartz, M. (2001). The nature of the relationship between corporate codes of ethics and behaviour. Journal of Business Ethics, 32(3), 247–262.

    Article  Google Scholar 

  • SEC. (2013). U.S. Securities and Exchange Commission Office of Investor Education and Advocacy. Investor bulletin: The foreign corrupt practices act—Prohibition of the payment of bribes to foreign officials. Retrieved December, 2013, from http://www.sec.gov/investor/alerts/fcpa.pdf.

  • Snow, C. C., & Ketchen, D. J., Jr. (2014). Typology-driven theorizing: A response to Delbridge and Fiss. Academy of Management Review, 39, 231–233.

    Article  Google Scholar 

  • Somers, M. J. (2001). Ethical codes of conduct and organizational context: A study of the relationship between codes of conduct, employee behavior and organizational values. Journal of Business Ethics, 30(2), 185–195.

  • Sorge, A. (2005). The global and the local: Understanding the dialectics of business systems. Oxford: Oxford University Press.

    Book  Google Scholar 

  • Starbuck, W. H. (2014). Why governance deserves serious and creative thought. Academy of Management Perspectives, 28(1), 15–21.

    Article  Google Scholar 

  • Sundaram, A. K., & Inkpen, A. C. (2004). The corporate objective revisited. Organization Science, 15, 3503–3563.

    Google Scholar 

  • Van Tulder, R., & Kolk, A. (2001). Multinationality and corporate ethics: Codes of conduct in the sporting goods industry. Journal of International Business Studies, 32(2), 267–283.

    Article  Google Scholar 

  • Weaver, G. R. (2001). Ethics programs in global businesses: Culture's role in managing ethics. Journal of Business Ethics, 30(1), 3–15.

  • Williamson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics, 22(2), 233–261.

    Article  Google Scholar 

  • Yaziji, M., & Doh, J. (2009). NGOs and corporations: Conflict and collaboration. New York: Cambridge University Press.

    Book  Google Scholar 

  • Zeitoun, H., Osterloh, M., & Frey, B. S. (2014). Learning from ancient Athens: Demarchy and corporate governance. Academy of Management Perspectives, 28(1), 1–14.

    Article  Google Scholar 

  • Zhou, X. Y., Han, Y., & Wang, R. (2013). An empirical investigation on firms’ proactive and passive motivation for bribery. Journal of Business Ethics, 118, 461–472.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Management, Bentley University, Waltham, MA, 02452, USA

    Cynthia Clark & Jill A. Brown

Authors
  1. Cynthia Clark
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jill A. Brown
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Cynthia Clark.

Additional information

Paper given at the 20th Annual International Business Ethics Conference.

October 2013.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Clark, C., Brown, J.A. Multinational Corporations and Governance Effectiveness: Toward a More Integrative Board. J Bus Ethics 132, 565–577 (2015). https://doi.org/10.1007/s10551-014-2358-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-014-2358-6

Keywords

Search

Navigation