Social Impacts of Multinational Corporations - Example

Social Impacts of Multinational Corporations Name Institution Course Date Table of Contents Table of Contents 2 Introduction 3 Secondary Research 3 Purpose and Design of Survey 4 Results 4 Discussion 7 Conclusion 8 References 9 Appendix A: Survey questions (screenshots from Survey Monkey) 10 Introduction Although the government plays a crucial role in the development and implementation of social policy in improving the general quality of life of people, multinational corporations should play a significant role in the improvement of living standards for the global citizens. Typically, the debate about the need for multinational corporations to focus beyond their profit motives has continued over the years. Multinational corporations have social duties towards the government and the citizens and their operations tend to have social impacts. The multinational corporation working condition survey was designed to collect information and data on the social impacts of the multinational corporations. Secondary Research Multinational Corporations are believed to have economic and human rights impacts on the countries they are situated in. According to Khahid, (2006), multinational corporations have the responsibilities including creating a good relationship with the community, offering quality products, carry out social responsibility initiatives, considering the stakeholders in every decision made and conduct a transparent business. Khahid, (2006) argue that multinational corporations undermine human rights and negatively impact the development of the economy. They do this by having interest in maintaining their international power and in doing so, the companies keep down the social segment in order to preserve cheap labour and low expenditure. According to (Ahiakpor, 2015), governments are competing for multinational corporations due to the advantages they have on the economy. Khahid, 2006 detail out that MNCs often tend to prioritize their economic goals over other social responsibilities that they are expected to adhere to. Debate on the social impacts of the multinational corporations is rife with both positive responses and critical ones. With regard to the optimistic views, MNCs contribute to increased GDP; improve living standards of citizens, and have higher respects for human rights (Jabaar, 2004). Bennet, (2002) stated that MNCs have more positive social impacts on society as they incorporate social responsibility to their operations. Social responsibilities at the long run can be profitable and at the same time help the society at large. Purpose and Design of Survey The main purpose of the multinational corporations’ working conditions survey was aimed at exploring the social impacts of these corporations to the community at large. A survey instrument known as the Survey Monkey was used as a proper and convenient data collection tool. In addition, a set of ten questions were used to assist in gathering information. The questions requested participants to: identify their gender; identify the companies to which some provided logos belong to; give their perceptions about the companies in terms of their success; identify the country that benefit more from MNCs; give their understanding of MNCs working condition; rank some factors of MNCs; estimate the average wage of an Apple’s worker; estimate the taxes Apple escape annually and highlight whether it has impacts on the government or the citizens at large. Results 17 people took part in the survey and answered the 10 questions provided. 2-5 people ‘skipped many of the provided questions but generally more than 90% answered all the questions. This report will evaluate and analyse significant data from question 3. In question 3, participants were asked to give their perception about multinational corporations such as Apple in terms of their success. The responses were divided into three categories as seen in the appendix. Generally, with regard to question 3, thirteen respondents believed that the companies given are successful in their area of operation and win many reputation, 3 believed that the companies are successful in their area and only one individual had no idea. In question 4, respondent were asked to provide a country they think will benefit from multinational companies. The responses were divided into three general categories. 52.94% of the respondents believed that countries where the MNC was established benefit more from the corporations, 17.65% believed that countries where factories of the MNC was situated benefit more while only 29.41% believed that countries with MNC’s retail stores and where customers can buy their products benefit more. Table 1: showing answers to question 4 regarding the countries that will benefit from MNCs Question 6 required the respondent to rank some factors of a MNC from most significant. There were four factors to be considered; quality of products, price, corporate social responsibility and warranty of products. The results can be seen in table 2. Table 2: results of the answers of question 6 on the basis of the factors of a multinational company from the most important to the least important In question 7, the participants were required to provide an average wage of an Apple’s workers. The results given were different ganging from few dollars to thousand dollars. Fourteen of the participants responded to the question and three skipped the question. Question 8 and 9 were based on taxes regarding to Multinational corporations. The participants were required to estimate the amount of taxes Apple escaped every years and the party by which the escaped taxes affects; either the government or the citizens. The responses given with regard to the amount of taxes escaped by Apple ranged from thousands of dollars to billion of dollars. In addition, most of the participants had no idea of who is affected by MNCs escaping taxes. A good number of participants based their answers on the government as the party affected by the escaped taxes by the multinational corporations. Discussion Generally, the survey results showed a lack of knowledge in the social impacts of Multinational Corporation by the respondents. When it came to estimating the average wage of an Apple’s worker, the answers differed from each other significantly indicating the lack of knowledge regarding the company. In addition, the estimate of the amount of taxes escaped by Apple every year was out of context. Apple uses a number of tax avoidance strategies. They make use of offshore structures to shift billions from the country to Ireland. Ireland calculates Apple’s taxable income in a way that yield an effective rate and it has always been 2% or less. Every day, Apple is able to avoid approximately $17 million in taxes. In addition, avoidance of taxes by Multinational Corporation can have an impact of government revenues. Also, the provision of government revenues is required to enhance societal infrastructure. To add to this, not all companies can escape taxes. Evasion of taxes is possible for the companies that operate internationally (multinational corporation). The ability of some corporations to avoid taxes creates a market distortion and hurts local companies. When the respondents were told to rank the important factors of a multinational company, quality of products and price of products were voted to have the highest priority. Corporate social responsibility and warranty of the products was ranked to having the least priorities. According to Tatum (2010), multinational corporations tend to offer higher salaries and good working environment to the employees as compared to domestic companies. However, presence of multinational corporations may lead to the reduction of salaries paid by the domestic companies as a result of poaching of the best employees from the domestic corporations. Many corporations have neglected their responsibility of attending to the needs of the society and are more focussed on their own interests. Although Multinational Corporations have proven to have positive impacts on the society, there are critical perceptions that question the capacity of these companies to advance societal obligations. The answers given by the respondents who participated in the survey suggested that more education is required about the social impacts of Multinational Corporation. Conclusion To sum it up, according to a number of literatures reviewed in this report, multinational corporations have economic and social impacts on the countries they are situated in. Multinational Corporation increases the living standards of people and has high respect for human rights. With regard to the survey, countries where the Multinational corporations are established benefit more from it. However, the answers to the survey questions showed that many people lack interest and knowledge on the social impacts of the multinational corporation. In addition, the government is impacted by the ability of multinational companies to escape taxes. One conclusion could be that multinational companies have both positive and negative social impacts. References Ahiakpor C.W. (2015) Multinational Corporations in the Third World: Predators or Allies in the Economic Development? Retrieved from http://www.acton.org/pub/religion-liberty/volume-2-number-5/multinational-corporations-third-world-predators-o Bennet Juliette, 2002. Multinational Corporation, Social Responsibility and Conflict (Economic and Social Implications). Retrived from https://www.questia.com/library/journal/1G1-87029944/multinational-corporations-social-responsibility Jaabar J., Jawad M., and Siddiqui H., 2004. Impact of Multinational Companies in Developing Countries, Retrived from http://www.uniassignment.com/essay-samples/economics/impact-of-multinational-companies-in-developing-countries-economics-essay.php Khahid Rahman, (2006). MNCs and TNCs: Thier Role and Socioeconomic impacts on Host Societies, Vol 4, No. 2, Retrived from http://www.ips.org.pk/globalization/1007-mncs-and-tncs-their-role-and-socioeconomic-impact-on-host-societies Tatum, M. (2010). “The Activities of Multinational Corporations”. Retrived from: www.wisegeek.com/what-is-a-multinationalcorporation.htm Appendix A: Survey questions (screenshots from Survey Monkey) Read More