Multinationals as global institution: Power, authority and relative autonomy
This article aims to inform the long‐standing and unresolved debate between voluntary corporate social responsibility and initiatives to impose binding legal obligations on multinational enterprises. The two approaches share a common feature: neither can fully specify its own scope conditions, that is, how much of the people and planet agenda either can expect to deliver. The reason they share this feature is also the same: neither is based on a foundational political analysis of the multinational enterprise in the context of global governance. Such an analysis is essential for providing background to and perspective on what either approach can hope to achieve, and how. This article begins to bridge the gap by illustrating aspects of the political power, authority, and relative autonomy of the contemporary multinational enterprise. The conclusion spells out some implications for the debate itself, and for further research.
According to a leading handbook, the “phenomenal rise” of corporate social responsibility (CSR) reflects a journey “that is almost unique in the pantheon of ideas in the management literature” (Crane et al. 2008, p. 3). Precise definitional issues are still debated if not contested. But in a lengthy etymological and philosophical discussion Sheehy (2015, p. 625)… concludes that CSR is best understood as “international private business self‐regulation,” where private may include a role for non‐governmental organizations (NGOs). In short, Sheehy affirms, CSR falls onto the voluntary side of the regulatory scale.
There is also broad consensus that “global CSR” differs from its counterpart at national levels. As Scherer and Palazzo note, national‐level CSR is “based on the assumption that responsible firms operate within a more or less properly working political framework of rules and regulations which are defined by governmental authorities” (2008, p. 414). This condition, however, does not hold globally: “The global framework of rules is fragile and incomplete” (Scherer & Palazzo 2008, p. 414). Globally, there is no central regulator and national laws where multinationals operate may be weak, poorly enforced, or simply do not exist. Therefore, they propose a new paradigm, one in which the firm is drawn into greater political roles, performing tasks that we traditionally associate with the state. These include elements of regulatory functions and the production of public goods (also Scherer & Palazzo 2011; Scherer et al. 2016).