Ch05_D270_2025_Spring_LN_-_Tagged

Chapter 5: Globalization and Society

• U Kelley School of BusinessIndiana University

Where are we now?

• Key Areas of Focus:

  1. Globalization and IB

  2. Cultural Environment

  3. Political & Legal Environment

  4. Economic Environment

  5. Government Influence on Trade

  6. Globalization & Society

Overview

• Key Elements to Explore:

  1. Key Drivers of Societal Views in International Business

  2. The Conflicting Stakeholder Perspective

  3. The Balance of Payments Cycle

  4. Corruption and Moral Mazes in International Management

  5. Strategic Responses to Negative Societal Views

How did we get here?

• Chapter Insights:

  • Ch. 1: Globalization & IB

    • Criticisms: Loss of sovereignty, local objectives, xenophobia, income inequality.

    • Environmental stress.

  • Ch. 2: Cultural Environment

    • Ethnocentric perspectives; MNCs represent home cultures abroad.

  • Ch. 3: Political and Legal Environment

    • Political systems may discriminate against foreign MNCs; instability leads to pressure for change.

  • Ch. 4: Economic Environment

    • Varying opportunities; economic conditions influence local reactions to foreign firms.

  • Ch. 7: Government Influence in IB

    • Governments maintain control and face stakeholder demands that may conflict.

Key Topics in Globalization & Society

• Common Societal Perspectives:

  • Conflicting demands and dual impacts of MNCs

  • Balance of Payments Effects

  • Ethical dilemmas and company responses

• Operational Environment Factors:

  • Institutional and physical factors

  • Cultural, political, legal, and economic factors

  • Government involvement in globalization

Understanding Societal Views

• Images/Media Impact:

  • Issues affecting societal views based on representation in media and public opinion through images/videos.

Common Societal Perspectives

1. Criticism of Globalization:

   • E.g., Perspectives on "MADE IN CHINA" products and anti-globalization sentiments.

2. Collective Organization:

   • Internet facilitating global anti-globalization demonstrations.

3. Cultural Responses:

   • Mixed sentiments through visual satire, e.g., pro- and anti-globalization opinions.

4. Political Accountability:

   • Nationalistic outbursts amid globalization crises and resultant socio-political sentiments.

5. Globalization Impact on Corporations:

   • Reactions to globalization and cultural adaptation, e.g., the backlash against American brands.

6. Societal Shifts Over Time:

   • Changing views towards MNCs and their influence.

Drivers of Societal Views Toward IB

• Key Influencing Factors:

  • Historical conflicts, trade policies, economic conditions, and environmental concerns.

  • Perceptions of globalization, nationalism, and ethnocentrism.

  • Media's targeted influence.

MNC Stakeholders

• Key Stakeholders:

  • Various actors interested in an MNC's operational and ethical conduct, including NGOs, local communities, employees, and customers.

Trade-offs Among Constituencies

• Stakeholder Demands:

  • Importance of balancing demands of shareholders, employees, customers, suppliers, and government entities for MNC survival.

Societal Reaction to FDI

• Balance of Payments (BOP) Effects:

  • Positive or negative impacts on imports, exports, and capital flows based on FDI scenarios.

Contributions of MNEs

• Positive Impacts:

  1. Increased productivity and efficiency.

  2. Job creation and skills training.

  3. Technology transfer and trade expansion.

  4. Environmental improvements through clean technologies.

Criticisms of MNEs

• Negative Impacts:

  • Exploitation of labor, negative effects on local businesses, and environmental degradation.

U.S. Trade Balances

• Trade Statistics:

  • Overview of trade balances with significant trading partners, highlighting deficits and surpluses.

Factors Determining Societal Views

• Key Factors:

  • Historical events, globalization perceptions, economic policy, nationalism, and media influence.

Corruption and Bribery in IB

• Corruption Issues:

  • Issues related to bribery, governance, and perceived integrity in international operations.

Efforts to Control Corruption

• Anti-corruption Measures:

  • Initiatives by organizations like Transparency International, OECD, UN, and local government policies aimed at improving governance.

Responsible Responses by Managers and MNCs

• Best Practices:

  • Adhering to local and international laws, establishing corporate codes of conduct, social responsibility, and partnerships aimed at sustainable development.

MNC Approaches to Global Business

• Ethical Perspectives:

  • Views range from exploitative to transformative, depending on the MNC's strategy and stakeholder engagement.

Conclusion

• Key Takeaways for Future Managers:

  • Understanding of societal impacts on globalization, FDI implications, stakeholder communication, and the importance of ethical practices in diverse environments.

Chapter 5: Globalization and Society

U Kelley School of Business Indiana University

Where are we now?

Key Areas of Focus:

• Globalization and International Business (IB)

• Cultural Environment

• Political & Legal Environment

• Economic Environment

• Government Influence on Trade

• Globalization & Society

Overview

Key Elements to Explore:

• Key Drivers of Societal Views in International Business: These include historical contexts, economic disparities, and media portrayal that shape how societies perceive foreign investments and multinational corporations (MNCs).

• The Conflicting Stakeholder Perspective: Stakeholders such as governments, local businesses, and communities may have opposing interests, creating challenges in MNC operations.

• The Balance of Payments Cycle: Understanding how foreign direct investment (FDI) affects a country's balance of payments by influencing capital flows and international trade.

• Corruption and Moral Mazes in International Management: Examining the ethical dilemmas faced by managers in regions with high corruption levels and the impact on corporate governance.

• Strategic Responses to Negative Societal Views: How MNCs adapt their strategies to counteract societal backlash or negative media portrayals.

How did we get here?

Chapter Insights:

• Ch. 1: Globalization & IBCriticisms: The rise of globalization has brought concerns such as loss of national sovereignty, backlash against foreign entities, xenophobia, and widening income inequality. Environmental degradation has also become a significant criticism associated with globalization.

• Ch. 2: Cultural EnvironmentHighlights the ethnocentric perspectives common among MNCs, who often project their home cultures onto foreign markets, sometimes causing cultural insensitivity or backlash.

• Ch. 3: Political and Legal EnvironmentDiscusses how political systems can create barriers for foreign MNCs and how political instability can drive forces for reform and change within host countries.

• Ch. 4: Economic EnvironmentFocuses on diverse economic conditions that shape local reactions to foreign investments, providing varying levels of support or opposition based on local economic needs and contexts.

• Ch. 7: Government Influence in IBGovernments play a crucial role in regulating international business operations, often balancing conflicting stakeholder demands that can impact their ability to attract FDI.

Key Topics in Globalization & Society

Common Societal Perspectives:

• Conflicting demands arise from MNC operations, leading to dual impacts on local communities, economies, and environments.

• Understanding the ethical dilemmas MNCs face and their responses plays a vital role in shaping international business practices.

Operational Environment Factors:

Conduct thorough analysis of institutional, physical, cultural, political, legal, and economic factors that contribute to the operational challenges in globalization.

• Government involvement in globalization is critical, as regulatory frameworks can significantly affect international trade dynamics.

Understanding Societal Views

Images/Media Impact:Analyze how representation in media shapes public perception, influencing societal views about globalization and foreign products, and how images or videos can evoke emotions or reactions.

Criticism of Globalization:For example, the perception of "MADE IN CHINA" products often evokes mixed sentiments, sparking anti-globalization movements focused on local economic protectionism.

Collective Organization:The internet has become a powerful tool for mobilizing anti-globalization protests and collective action against perceived threats to local identity and employment.

Cultural Responses:Visual satire and commentary often reflect public opinion on globalization, with mixed sentiments encouraging dialogue about its pros and cons.

Political Accountability:Nationalistic responses often surface during globalization crises, revealing underlying socio-political tensions and the push for accountability for local issues.

Globalization Impact on Corporations:Businesses are forced to react to anti-globalization sentiments by adapting their branding and operational strategies to align closer with local values and conditions.

Societal Shifts Over Time:Examine how views toward MNCs shift over decades, influenced by economic changes, cultural integration, and evolving societal norms.

Drivers of Societal Views Toward IB

Key Influencing Factors:Evaluating historical conflicts, local trade policies, prevailing economic conditions, and environmental concerns provides insights into societal attitudes towards international business investments.

• Furthermore, the popularity of nationalism and ethnocentrism affects trust in foreign companies and their acceptance in local societies.

• The media plays an active role in shaping public perception and can either foster positive or negative views of international business practices depending on the narratives presented.

MNC Stakeholders

Key Stakeholders:Engagement with various stakeholders, including non-governmental organizations (NGOs), local communities, employees, and consumers, is vital in understanding the ethical and operational landscape for MNCs.

Trade-offs Among Constituencies

Stakeholder Demands:MNCs must navigate the demands of different constituencies, including shareholders, employees, customers, suppliers, and government entities, which can often be conflicting. Effective management of these interests is key to sustaining operations amidst complex global challenges.

Societal Reaction to FDI

Balance of Payments (BOP) Effects:Foreign investments can have both positive and negative effects on a nation’s BOP, influencing imports, exports, and capital flows based on specific FDI conditions and the nature of business transactions.

Contributions of MNEs

Positive Impacts:The presence of Multinational Enterprises (MNEs) can lead to increased productivity, job creation, skills enhancement, technology transfer, and environmental improvements through sustainable practices and clean technologies.

Criticisms of MNEs:However, MNEs are often criticized for labor exploitation, adverse effects on local businesses, and environmental harm, which can create significant backlash against their operations.

U.S. Trade Balances

Trade Statistics:An overview of trade balances with major trading partners reveals the dynamics of deficits and surpluses, reflecting the broader economic relationships that impact globalization trends.

Factors Determining Societal Views

Key Factors:Historical legacies, evolving perceptions of globalization, economic policies, rising nationalism, and media influence collectively mold societal views and reactions to international business practices.

Corruption and Bribery in IB

Corruption Issues:Examining issues related to bribery and governance reveals challenges MNCs face in maintaining integrity and ethical standards in regions marked by corruption.

Efforts to Control Corruption:Organizations like Transparency International and OECD implement initiatives to improve governance and reduce corruption through standards and practices aimed at transparency and accountability.

Responsible Responses by Managers and MNCs:MNCs are encouraged to adopt best practices such as adhering to local and international laws, establishing corporate codes of conduct, committing to corporate social responsibility, and fostering partnerships for sustainable development initiatives.

MNC Approaches to Global Business

Ethical Perspectives:MNCs approach ethical considerations in various ways, ranging from exploitative strategies to transformative practices that aim to create positive societal impacts while engaging with stakeholders effectively.

Conclusion

Key Takeaways for Future Managers:Future managers must cultivate an understanding of diverse societal impacts on globalization, implications of FDI, the importance of stakeholder communication, and adherence to ethical practices within multifaceted international environments.