Globalization Effects upon Power and Responsibility of Firms - Essay Example

? Globalization Effects upon Power and Responsibility of Firms Introduction Globalization refers to the integration of regional economies, societies and cultures in to global exchange network. The term is used to refer the economic exchange process backed by information and communication technology advancements that result in the transformational of national economies in to the international economies (Torres, 2002, p363). Globalization has drawn manifest impacts upon different aspect of businesses and many philosophies and phenomenon exists within the business world got new directions in the era of globalization. The emergence of globalization has also evolved the debate about the power and responsibilities of the companies in the globalized era. This debate is often concluded with the explanation of the phenomenon of Corporate Social Responsibility (CSR) .The notion of Corporate Social Responsibility has also changed significantly due to the emergence of globalization. (Collins, 2003, p143) The following essay aims to discuss the impact of globalization upon the power and responsibilities of the companies and businesses. The essay discusses the emergence of CSR in the context of globalization and discusses some important managerial and environmental issues that drastically need to be addressed through the CSR plans of the companies (Hutton and Giddens, 2001, p312). Globalization effects upon Power and responsibilities of the firms Globalization has altered the traditional patterns of conducting businesses and the firms of the modern era have become significantly different from the firms of the past. In the wake of globalization the firms are provided with wide variety of opportunities for the development and expansion of their businesses however, at the same time their powers and responsibilities are also affected in the changing business scenario. The effects of globalization upon the power and responsibilities of the firms have appeared to be very important point of discourse for the social scientists, experts and theorists and there have been many approaches divulged by the researchers to identify the core benefits and setbacks of globalization in terms of determining the new dimensions of power and responsibilities of the firms in the era of globalization (Collins, 200, p395). The analysis of the emerging business scenario altered by globalization unfolds some important aspects regarding the effects of globalization upon the powers of the firms. It appears that globalization has main added to the power of the firms by providing them opportunities to easily manage their operations all over the world. The business scenario has also changed a lot in the emergence of globalization that also strongly affects the power and responsibilities of the firms in the modern era. International trade is going through revolutionary changes in the modern world as the technological advancement has changes the traditional ways of doing trade and now the countries are adopting modern ways to conduct their trade operations. The advancement in technology has revolutionized the international trading activities as well. Computers and internet have drawn strong impacts on the trading, investment and other business related activities. For example the advancement in transportation has enabled the traders to transfer goods and services in short time of period to a far distant place and the communication technology allows the traders of different countries to keep in instant contact with each other with the help of mobile phone and internet (Rodrik, 1997, p68). The firms operating at different scales are now able to easily get involved in the international trade operations because it has also become simple, less expensive and secure with the advancement in technology. The traditional trading system involves a multitude of complicated steps and documents but E-commerce has simplified the process of the international trade and offered a unique ability to reduce the complexities of the system. Now the computer to computer operation system has enabled the original producer of the product to transfer the responsibility of distribution to any appropriate and specialized organization. In this way the process is become simple, convenient and at the same time it generates more employment opportunities in different sectors (Hutton and Giddens, 2001, p312). From this perspective it could be said that globalization has significantly added to the powers of the firms because now the companies are able to manage their cross border business operations more conveniently and frequently due to the increased trend of international business activities. The ease of building business relations across the globe is no longer a difficult task for the companies and along with the multinational companies (MNCs) several small scale firms are enabled to create their business links outside the country with the help of the latest technology tools. In this way, globalization has increased the powers of the large scale companies as well as small scale business firms by providing certain options for the growth and expansion of their business in different countries of the world. Globalization Effects and Corporate Social Responsibility Globalization is found having very strong and significant effects upon the power of the firms. At the same time, the effects of globalization upon the responsibilities of the firms are also an important issue that could be understood in the context of corporate social responsibility. Globalization has also drawn manifest impacts upon different aspect of businesses and many philosophies and phenomenon exists within the business world got new meanings and dimensions in the era of globalization. The notion of Corporate Social Responsibility (CSR) has also changed significantly due to the emergence of globalization that traditionally enjoys the attention of the business management however; the recent business world’s modifications have positioned CSR as a strategic decision making tool of the organizations(Hutton and Giddens, 2001, p312). Globalization has provided considerable expansion to the concept of Corporate Social Responsibility that is an evolving phenomenon refers to the commitment of the businesses towards making significant contributions to the sustainable economic development and improvement of life quality. It is set of management practice that consents to the business meeting the legal, ethical, commercial and public expectations of the society (McWilliams and Siegal, 2001, p117). All around the globe, the business sectors currently witness transformational changes in their working patterns as their operators are supposed to give due attention to assure the fulfilment of corporate social responsibility principles. CSR in the era of globalization has bestowed new directions to business functions like production process, supply chain management, human resource management and waste management etc. With no exception, all the industry and business sectors are encompassing the broader implications for globalization backed CSR phenomenon (Fontana et al, 2002, p143). The increased global activities and operations of multinational corporations (MNCs) have evolved the CSR debate that assumes MNCs and other large private companies formulating formal CSR guideline to address certain areas and issues of business operations (McWilliams and Siegel, 2001, p117) Experts believe that proliferation of cross border trade operations backed by globalization have foster the awareness regarding the practice of CSR and the businesses are required to focus upon variety of issues that directly don’t lie within their conglomerate boundaries. Such issues include human rights, anti-corruption measures, public health safety and environmental protection etc. The international organizations like UN and ILO are also playing important role in the scenario by formulating and implementing certain policies, declarations and principles to guide countries in treating these issues however, the main responsibilities lie upon the shoulders of the firms to assure that they will manage their business operations around the globe with complete responsibility and exactitude without getting involved in any controversial issue regarding the violation of any business ethic and rule (Dickson and Eckman, 2006, p178) The process of development, production and distribution within different manufacturing companies is now commonly conducted cross border due to the emergence of interconnected global economy that has an obvious impact upon the process of chain management of apparel industry. The companies operating in different sector have to pay attention towards certain ethical issues in order to remain aligned with the CRS principles (Sajhau, 1998, p8). The structure of the international business industry is also transformed through different trade agreements that have made some regulatory changes in the industry. These agreements are formulated and enacted by different international trade bodies like WTO, NAFTA and EU. Globalization provides certain opportunities to the different industry regarding cross border management of their production chain. There are some important ethical implications that arise during this process and the apparel companies have to formulate appropriate strategies to comply with the requirements of these ethical issues. When the companies manage their production chain cross border, they mostly look towards under developing countries where the production cost tends to be low due to cheap labour (Fontana et al, 2002, p143). The manufacturing companies operating across the borders now commonly manage the manufacturing of their products in these countries by contracting with the local companies that hire staff and conduct the manufacturing work on behalf of international companies. During this process, the international company doesn’t directly interact with the staff however, these companies are supposed to be completely liable for any problem associated with the workers of under developing countries engaged in manufacturing of their products. For instance, an important international sports apparel manufacturing company Nike is alleged that the working conditions at many of the Nike factories does not meet international labour standards. The issues of child labour, under waged labour and the exploitation of the women workers in the factories of Nike in Latin America and Asia have appeared as the most challenging ethical issue for Nike. In order to address the issue, Nike made some major changes in its labour practice like the regular audit of complaining factories and to oblige these factories adopting the Nike Code of Conduct (Bale and Maguire, 2004, p87). The case of Nike exemplifies that the management of cross border production chain of apparel companies also evolved certain ethical issues like forced child labour and cultural and gender discrimination within the employment process. The case also shows that the responsibilities of the companies increase a lot in the wake of globalization and they are required to look at certain important issues while managing their business operations across the globe. There are certain other important ethical considerations that the firms have to consider while managing their business operations across the border of their own country. For instance, an important responsibility of the firms is the assurance of environmental sustainability. The companies have also to look towards the matters of environment sustainability and social aspects of workforce management especially when they get involved in the process of outsourcing of the human resource. The human resource outsourcing is a common activity of the firms now and international operations have allows the international outsourcing of labour. However, the firms have to face outsourcing as challenging issue in terms of unemployment and exploitation of home country labour. As the liberalization of international trade promotes the international outsourcing of labour in apparel industry; the developed countries like US and UK use to outsource in China, Hong Kong, Taiwan, South Korea and India (Collins, 2003, p143). Along with certain benefits, this outsourcing also brings an important disadvantage to the workforce of the country because the employment rate of the home country considerably drops due to outsourcing of human resource. The situation demands the developed countries to adopt such measures and policies that safeguard the interests of their home labour as well. In addition, child labour and protection of women labour rights are very critical issue for the operators of the apparel industry. These issues are frequently raised by the social advocates and professional organizations. The CSR principles guided the firms and they are expected to justifiably arrange the work distribution and hours between the male and female labours. The issue of under waged female workers is an important social dilemma that calls for justified salaries’ specifications. The firms also have the responsibility to raise voice against the forces child labour in the factories and manufacturing units in several developing countries. Children are generally compelled to work and complete different tasks of the unskilled labour like sewing buttons, cutting and trimming threads, folding, moving and packing of the products etc. and this practice is still going despite the condemnation of child labour at international level. These social issues possess great important for the firm operating at international level and they have to make plans to confront these issues in order to responsibility operate across the globe. Conclusion The above discussion unfolded some important aspects regarding the power and responsibilities of the firms in the era of globalization. It is found that in the globalized business world the firms are facing entirely different scenario as compared with the past business scene. Globalization has provided the firms great opportunities and has increased their power by allowing them to maintain and expand their business operations all over the globe. On one hand, the powers of the firms are significantly increased affecting from globalization and on the other hand, the responsibilities of the firms have also considerable increased because globalization has evolved numerous important issues that the firms have to deal during their business operations inside or outside the countries. It has been unveiled from the discussion that the firms now face some very critical issues in the context of corporate social responsibility like human resource management, labour outsourcing, environment sustainability, child labour and effective strategies to cope up with the problems of workplace discrimination and workplace abuse etc. These are the critical issues that have greatly added to the responsibilities of the firms. Hence, it could be said that globalization has not only bestowed powers to the firms but at the same time it has also added lot of responsibilities that the firms have to necessarily fulfil in order to comply with the principles of corporate social responsibility that has become an essential feature of the businesses in globalization era. References Bale, J. and Maguire, J. (Eds.) (2004). The global sports arena: Athletic talent migration in an interdependent world. London: Frank Cass Collins, J. (2007). “The Rise of a Global Garment Industry and the Reimagination of Worker Solidarity”, Critique of Anthropology, Volume 27(4) 395–409, London: SAGE Publications Dickson, M. A. and Eckman M (2006). “Social Responsibility: The Concept as Defined by Apparel and Textile Scholars”, Clothing and Textiles Research Journal, 24; p178 Fontana, Marzia, Susan Joekes and Tachel Masika (2002). Global Trade Expansion and Liberalization: Gender Issues and Impacts. London: DFID. Hutton, W. and Giddens, A. (2001). On the Edge - Living with global capitalism, London: Vintage McWilliams, A., & Siegel, D. (2001). “Corporate social responsibility: A theory of the firm perspective”, Academy of Management Review, 26(1), 117-127 Rodrik, D. (1997). Has Globalization Gone Too Far? Washington, D.C.: Institute for International Economics. Torres, C. A. (2002). “Globalization, education, and citizenship: Solidarity versus markets?” American Educational Research Journal, 39(2), 363-378 Read More