Multinationals and Development Research Paper

Pages: 5 (1936 words)  ·  Style: MLA  ·  Bibliography Sources: 5  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

Multinationals and Development

One of the key changes of the late 20th century, certainly enhanced in the early 21st, is that of the economic, political, and cultural movements that broadly speaking, move the various countries of the world closer together. This new paradigm combines multidisciplinary theories that show just how interconnected the world is -- politically, socially, economically, environmentally. After the Cold War, tensions between countries diminished and a number of trade agreements and economic incentives were ratified. This, combined with increased communication and technology via the Internet, literally shrank the world. The rapid growth of the global economy profoundly effects modern economic development and stability, labor, and, most particularly, the way humans are able to interact with one another (Nye).

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Based on different cultural paradigms, technical resources and maturity, and economic experience, the multinational economy is divergent with expectations and behaviors that challenge business models and cultural experiences. The global economy brings both practical and ethical issues to the forefront surrounding the host country, the developing corporation, and the cultures being affected. Globalism has also engendered the massive development of corporations registered in more than one country, or those that operate in more than one country -- known as the multinational. This is nothing new historically, The British East India Company founded in 1600 and the Dutch East India Company founded in 1602 became the largest companies in the world for almost two centuries. However, the manner of doing business and the expectations of stakeholders have drastically changed in the post-Cold War era (Pitelis and Sugden 22-9).

Research Paper on Multinationals and Development One of Assignment

Issues revolving around what the United States, Canadian, British and Australian governments call "bribery" in some countries are part of doing business, yet cause us to ask: "Is it moral or not, when trading in a foreign country, to participate in immoral actions to survive"? Morality is typically the standard that a group has about what is right and wrong -- good and evil -- permissible or unacceptable. The more trade barriers fall globally, the more developing countries are sometimes at risk for immoral behavior from multinationals. These issues tend to center around human rights, political issues, environmental conservation, sustainability, and the manner in which the corporations work with the government to either provide increased benefits for the populace or revert to an outdated model of more colonial psychology regarding resource management (Deming 34-9).

Because ethics and morality are so closely linked under the rubric of International business, most countries believe that they are part of the social "requirement" of both national and international business. Multinationals, however, have not only the responsibility to increase profits for their shareholders, but to provide increased benefits for all stakeholders -- which also includes customers and the indigenous populations of countries in which they operate (Cruver). Changes in the media, changes in social attitudes, and above all, changes in the perceived use of utilitarian ethnics have caused many multinational companies to revise their views on their responsibility to the planet as well as stakeholders. While it remains difficult to look at situations that occur, especially those during a crisis, in a logical framework, the modern business and social climate require that more than just profit and loss be figured into business equations. Too, there is a clear expectation that modern multinationals will act in a positive, moral manner -- setting the bar or example for globalism (Savage and McElroy).

There is a presumption that the modern world is a natural part of the evolution of culture -- new is better. Multinationals are key drivers within this modernization model, since they make it possible to transfer knowledge and technology from the developed to the developing world. In fact, modernization theory is also sometimes referred to as the developmental doctrine, a paradigm spurred on particularly after World War II when the United States formed its Cold War policy and understood that it had obligations to the developing world (e.g. unindustrialized or newly independent post-colonial nations). Modernization and the multinational corporation are often synomomous, since it is the multinational corporation that has the capacity to build, rebuild, and change developing countries (Jensen 74-8). Modernization can thus be an evolutionary movement of technological progress or a reaction to the past and a new template for the future. However, we must understand that it is both a continuous, and open-ended, process. It is not the type of social change in which there is a clear beginning, middle and end; but rather a movement towards equilibrium on a scale that is constantly changing. Historians, for instance, tend to link modernization to the process of urbanization and industrialization, as well as the spread of compulsory education throughout a population (Croucher 19-26). In this view, humans come together in cities for a variety of reasons: safety, job specialization, etc. And then move technologically forward until much of their society is mechanized and there is then ample opportunity for even more specialization and adaptation through education. In critical sociological theory, modernization is linked more to the more cognitive process of rationalization. This process holds that as modernization (especially technical acuity) increases within a society, the role of the individual begins to take on far more importance, and eventually replaces the family, the extended family, and even the community as the fundamental change agent for society (Ehtridge and Handleman 408-12)

As one primary example, we focus on Shell Corporation. Shell Corporation is a group of energy and petrochemicals companies, which are operating in more than 140 countries and territories. Shell employs more than 112,000 people in more than 140 countries. The "Royal Dutch/Shell Group," commonly known as Shell, is an amalgam of over 1,700 companies all over the world. Having worked in congruence since 1903, 60% of the Group is owned by Royal Dutch of the Netherlands, and 40% is owned by the Shell Transport and Trading Group of Great Britain. Shell includes companies like Shell Petroleum of the U.S.A. (which wholly owns Shell Oil of the U.S.A. And many subsidiaries), Shell Nigeria, Shell Argentina, Shell South Africa, and other individual subsidiaries. Shell's parent, Royal Dutch/Shell Group is the world's second largest private sector energy corporation in the world, behind Exxon/Mobil and ahead of British Petroleum. The Royal Dutch/Shell group has proved reserves of 14.4 billion barrels of oil, but is actively involved in a renewable energy sector developing wind, hydrogen and solar power opportunities. The company's headquarters are in The Hague, Netherlands with a registered office in London. The Royal Dutch/Shell Group had sales of $467 billion, Operating income of $47 billion, and $26.5 billion in profits for 2008. Shell's vision is to engage efficiently, responsibly, and profitably in oil, oil products, gas, chemicals and other selected business that foster energy development and the meeting of customer needs and the global demand for more energy. All this must be done with a code of ethics and conduct that support diversity, show respect and protection of the environment, and establish a global presence in which each part of the company supports the overall code of conduct for the Shell General Business Plan (Shell Global).

Shell uses an ends-driven ethical theory, also known as teleological ethics, often placed into the Mill and Bentham style of utilitarianism. Actions have quantitative outcomes and the ethical choices that lead to the "greatest good for the greatest number" are the appropriate decisions, even if that means subsuming the rights of certain individuals (Troyer 256-52). It is considered to be a consequential outlook in the sense that while outcomes cannot be predicted the judgment of an action is based on the outcome -- or, "the ends justify the means" (Robinson and Groves 44-52, 69-79). This is not as cynical as it sounds, for in global business, any organization must look at not only the benefits to the stakeholders (Directors, Stockholders, Employees, etc.) but what serves the greatest need for the most people. Since Shell is an energy company, this type of utilitarianism would fit with environmental stewardship (reducing risk of oil spills, etc.) as well as finding new forms of energy to help globalization and the developing world.

Because of its longevity and global reach, there are a number of cases in which Shell has understandably been involved in accidents and international issues. The company defines itself with the aim to "meet the energy needs of society in ways that are economically, socially, and environmentally viable, now and in the future." Shell was one of the pioneers in the movement for Corporate Social Responsibility. The company says it is committed to sustainable development and human rights: "Our core values of honesty, integrity and respect for people define how we work. These values have been embodied for more than 25 years in our Business Principles, which since 1997 have included a commitment to support human rights and to contribute to sustainable development" (Shell).

Stakeholders are quite powerful in the 21st century. Not only has the Internet and media communication enhanced the attributes of globalization, it has brought the realities of doing business in… [END OF PREVIEW] . . . READ MORE

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APA Style

Multinationals and Development.  (2013, November 11).  Retrieved July 14, 2020, from

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"Multinationals and Development."  11 November 2013.  Web.  14 July 2020. <>.

Chicago Style

"Multinationals and Development."  November 11, 2013.  Accessed July 14, 2020.