Business Law and Social Responsibility - Essay Example

College: Business Law and Social Responsibility in International Business Operations Introduction International business operations have attracted different view points due to their ethical requirements and this have led to the formulation of international business laws in different nations and social responsibility requirements to ensure that their operations are environmentally, socially, and economically friendly. Corporate social responsibility (CSR) is defined by Carroll and Buchholtz as the legal, ethical, discretionary, and economic expectations, which a society has towards businesses at a specific period in time (36). Business law and CSR concept implies that firms have ethical, moral, as well as philanthropic responsibilities besides their responsibilities of earning the investors a fair return and complying with the law. Traditionally, the primary responsibility of the corporation is towards its stockholders or owners (Karake 18). However, international business law and CSR requires firms to adopt a wider perspective of its responsibilities, which includes the stockholders/owners, as well as the various other constituencies including the suppliers, employees, the local community, customers, environmental groups, other special interest groups, as well as the state, local, or federal governments (Lozano 66). The purpose of this paper is to examine the business law observance and CSR in international business operations. Issues in Global Business Law and Social Responsibility In the present day trade, corporations increasingly operate within a global environment with business globalization appearing as an irreversible trend though there are numerous opponents towards it (Dlabay, Scott & Scott 87). Critics argue that globalization facilitates the annihilation of the environment, exploitation of the developing countries and workers, as well as increase in human rights abuses. Moreover, they suggest that globalization principally benefits the wealthy as well as broadens the gap between rich and poor individuals (Lozano 66). The globalization proponents suggest that open markets enhance higher wages for the worldwide workers, increase in living standards for everyone, as well as economic development in the impoverished countries (Trevino & Nelson 399). Majority of the large corporations tend to have a multinational scope and thus will continue facing social, ethical, and legal issues brought about by the increasing business globalization. Whether an individual is a proponent or an opponent of globalization does not alter the fact that firms operating globally encounter daunting social and legal issues. Perhaps labor standards are the most critical issue in most nations across the globe. Many multinational firms have been pinched by the revelations that their subsidiaries and plants across the globe were “sweatshops” or even employed underage children (Fernando 126). This issue is so complex since the societal expectations and standards concerning working conditions and children employment differ quite significantly across the globe. As such, firms must decide the most responsible option: imposition of a common worldwide standard or adoption of standards of the nations they are operating in. Another hot issue is about the safety conditions of plants and pollution across the world (Schaffer, Agusti & Earle 72). International trade is also faced by the goods and services marketing issue in international marketplace. For instance, some US firms have marketed goods in other nations after banning of such goods/products in the US. Responsibility of the Multinational Companies in the Host and Home Nations The diverse political environments in the areas in which firms operate can influence international business operations. Corporations will often have varied perceptions concerning their responsibilities towards the home and host nations. A host nation is the nation in which multinational corporations (MNCs) are guests. The MNCs fulfill several positive roles within the host nations while operating within prevailing social, legal, and economic environment (Trevino & Nelson 399). They are hailed for stimulating economic activity in such nations. Whenever feasible, the MNCs purchase goods, services, and land locally; provide employment for the host nations’ citizenry; and pioneer more advanced technologies, which assist in the host country’s economic development. Such roles are part of the social responsibility initiatives of the MNCs. The host nations expect the MNCs to comply with the societal standards and expectations. As such, social responsibility is core towards successfulness or failure of such MNCs (Dlabay et al 88). Social responsibility is viewed as the process in which individuals and firms function as excellent citizens as well as with sensitivity towards their surroundings. For instance, a MNCs polluting environment in the host nation’s environment is operating in a socially irresponsible manner (Fernando 126). Such a firm is failing to comply with the set standards concerning the environment in such a host nation and amounts to breach of the international business law. The firm also harms the environment as well as its inhabitants and this amounts to breach of CSR practices in business operations. A MNC must substantially benefit its host nation in order to gain access within such a country. The firm must have the capacity of documenting that all its operations comply with the local legal and social standards fully. In case a MNC fails to meet such obligations, then the host nation may deny or restrict its right of conducting business within its borders. In some rare cases in which the odious actions are serious or long-standing, the host nation’s government might seize the MNC’s assets (Schaffer et al 71). Besides being a recommendable guest in its international operations, a MNC has responsibilities within its home nation- headquarters. The MNC must comply with the social, legal, and economic mandates of its home nation as a demonstration of its social responsibility. Such firms must comply with the societal standards and expectations and meet the spirit and letter of their home nation’s laws (Schaffer et al 71). Improper operations could jeopardize the continuous business operations and may be end up being subjected to sanctions, fines, or other legal actions. The MNC could also be curbed from conducting business within the home nation if the case becomes more serious (Fernando 126). Conclusion In conclusion, this paper has established that international business operations in the increased globalised world need regulation to ensure that they are socially sustainable and responsible towards the environment and/or other stakeholders. International firms cannot operate fully-freely to avoid abusing the environment and the markets they are operating in and this has led to the development of international business laws, which may differ from one nation to another depending on the social, legal, and economic obligations of the international societies. Thus, MNCs should observe the laws and CSR principles not only in their host nations but also in their home countries. Works Cited Carroll, Archie B. and Buchholtz, Ann K. Business and Society: Ethics and Stakeholder Management. 5th ed. Australia: Thomson South-Western, 2003. Print. Dlabay, Les R., Scott Jim and Scott, James C. International Business. Mason, OH: South-Western Cengage Learning, 2011. Print. Fernando, A.C. Business Ethics: An Indian Perspective. Prentice Hall, 2009. Print. Karake, Zeinab A. Organizational Downsizing, Discrimination, and Corporate Social Responsibility. Westport, Conn. [u.a.]: Quorum Books, 1999. Print. Lozano, Joseph M. Ethics and Organizations: Understanding Business Ethics as a Learning Process. Dordrecht [u.a.]: Kluwer, 2001. Print. Schaffer, Richard, Filiberto Agusti, and Beverley Earle. International Business Law and Its Environment. Mason, OH: South-Western Cengage Learning, 2009. Print. Treviño, Linda K. and Katherine A. Nelson. Managing Business Ethics: Straight Talk About How to Do It Right. New York: John Wiley, 2011. Print. Read More