Business – 6.1 External influences – International | e-Consult
6.1 External influences – International (1 questions)
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Conflicts often stem from:
- Regulatory divergence: An MNC may face stricter environmental or labour standards in one country compared to another, leading to accusations of “regulatory arbitrage” and uneven competitive conditions.
- Corporate social responsibility expectations: Stakeholders in host countries may demand higher ethical standards than those required by the MNC’s home jurisdiction, creating tension over community impact and brand reputation.
Governments can mitigate such conflicts through:
- Harmonisation of standards: Engaging in international agreements or adopting globally recognised frameworks (e.g., ISO, UN Guiding Principles) to create a baseline that all operating firms must meet, reducing the incentive for “forum shopping”.
- Enforcement of “home‑country” liability: Implementing legislation that holds MNCs accountable to the stricter standards of their country of origin when operating abroad, thereby discouraging the exploitation of lax host‑country regulations.
These strategies promote a more level playing field and encourage MNCs to adopt consistent, high‑quality practices across all markets.