Question 1

Responsive MNEs act in a way that is sensitive and responsive to the needs of all its immediate stakeholders.

Accepted Answer

Responsive MNEs are those that are aware of and sensitive to the needs of their stakeholders, including employees, customers, suppliers, local communities, and governments. They take steps to understand the concerns and expectations of these groups and engage with them in a constructive, respectful manner. This approach can help ensure long-term sustainability and success for the MNE.

Question 2

Which, if any, of the following business activities are likely to be acceptable to business ethicists:
A) following local custom and paying bribes to local government officials to secure legal concessions and subsidies.
B) negotiating aggressively with suppliers to secure low input costs.
C) relentlessly pursuing low-cost labor by investing in countries with weaker labor regulations and standards.
D) seeking market expansion, regardless of the likely resulting economic, social or cultural damage.

Accepted Answer

(Global exploitation is often manifest in activities such as bribery and corruption (regardless of the amount paid and regardless of local custom), as well as the abuse of under-developed labor standards in foreign markets. While businesses have an obligation to their stakeholders to generate returns (which envisions negotiating effectively with suppliers and customers), pursuing growth without regard for the economic, social and cultural damage attendant with the firm's business activities would not be deemed acceptable by business ethicists).

Question 3

Exploitive MNEs are often able to extract substantial concessions from host country governments because host countries are eager to secure which of the following in connection with new investments made by MNEs:
A) access to the MNEs' sources of international commercial credit.
B) employment and increased tax bases.
C) business intelligence pertaining to the nature of concessions being offered by other host countries.
D) complex financial instruments developed in first-world financial markets.

Accepted Answer

(Understanding that because most countries are actively working to develop employment, increase their tax base and capture spin-off benefits from new investments, the exploitive MNE will not hesitate to play countries against one another, demanding more and more concessions to guarantee their investment).

Question 4

Transformative MNEs are sensitive and responsive to the problems and the needs of the developing world but the freedom of these MNEs to lead broad-scale efforts to deal with their root causes is often limited by governance issues and the need to generate profits.

Accepted Answer

(Notwithstanding the significant financial commitment required, many pioneering transformative MNEs are leading major initiatives to help deal with the root causes of problems facing the developing world. Initiatives undertaken by Unilever, Heineken and Merck provide several examples).

Question 5

The World Bank estimates that approximately one-third of the world's population subsists on less than $2 per day.

Accepted Answer

(Approximately 2.47 billion of the world's 7 billion people live on less than $2 per day, down from 2.59 billion in 1981. The World Bank estimates that more than a third of the world's population is living in extreme poverty).

Question 6

Some transformative MNEs go beyond commercial relationships with their consumers and offer their products and services to those who most desperately need them, regardless of their ability to pay.

Accepted Answer

(A prominent example of this phenomenon is Merck's free distribution of a drug that prevents river blindness to more than 18 million victims of the disease in developing countries who could not afford the treatment. This effort has been estimated to prevent 40,000 cases of blindness each year. Similarly, in July 2010, Ivey Publishing announced that it would make its case collection available at no cost to business schools in the 39 countries with per capita income of less than $2,000/year).

Question 7

The relationship between transactional MNEs and non-governmental organizations (NGOs) is frequently characterized by confrontation and accusation.

Accepted Answer

(Although not always enthusiastically embracing each other, this relationship has become based more on monitoring and challenging than on confrontation and accusation. While NGOs might agree that "doing no harm" is a positive characteristic, they also challenge companies to consider whether that is a sufficient goal for the MNE in the 21^st century).

Question 8

Excessive pressure from all of the following groups has caused exploitive MNEs to close down manufacturing operations and move to a new location, except:
A) governments.
B) non-unionized employee interest groups.
C) nongovernmental organizations (NGOs).
D) supranational agencies.

Accepted Answer

(Exploitive MNEs have been widely documented as having taken steps to close down and move factories to alternate jurisdictions when the pressure from governments, nongovernmental organizations (NGOs) and supranational agencies becomes too great).

Question 9

The primary difference between transactional MNEs and exploitive MNEs is that the former employs an approach that tends to be legally compliant and non-oppressive in its emerging market dealings.

Accepted Answer

(Conversely, exploitive MNEs are renowned for their willingness to ignore the welfare of their end consumers and employees, collude with political elites, violate environmental norms and expose emerging market communities to potential harm).

Question 10

Transformative MNEs commit to leading initiatives to bring life-enhancing changes to their home countries.

Accepted Answer

(Rather than committing to leading initiatives to bring life-enhancing changes to their home countries, transformative MNEs commit to leading initiatives to bring life-enhancing changes to the broader society).

Question 11

Experience has shown that encouraging foreign direct investment by MNEs in developing economies has been less effective than government-funded aid programs in efforts to reduce global poverty.

Accepted Answer

(In what the World Bank calls "the greatest poverty reduction program in human history," hundreds of millions of people have moved out of poverty during the past 25 years, in large part due to the investment efforts of MNEs in developing countries such as China and India)

Question 12

MNEs that internationalize in developing countries have encountered all of the following differences pertaining to the labor force, except:
A) lower wages and fewer restrictions on living standards.
B) greater number of hours worked per week.
C) higher standards with respect to working conditions.
D) lower standards for human rights.

Accepted Answer

(Higher standards with respect to working conditions are rarely, if ever, encountered by MNEs that internationalize in developing countries).

Question 13

To buttress the arguments of activists who have demonstrated against increasing globalization, a former chief economist at the World Bank has argued that the actions and policies of all the following groups have often damaged developing countries' economies more than they have helped them, except:
A) the International Monetary Fund (IMF).
B) the United Nations Global Compact (UNGC).
C) the World Trade Organization (WTO).
D) the World Bank.

Accepted Answer

(In his book Globalization and Its Discontents, Nobel Laureate Joseph Stiglitz suggests that the previous actions of the WTO, IMF and the World Bank had often damaged developing countries' economies more than they had helped them).

Question 14

Progress in reducing global poverty has been observed to be more closely associated with investments by MNEs than it has with the foreign aid efforts of national governments and non-governmental organizations that have historically demonstrated a lack of business experience.

Accepted Answer

(In fact, in light of the growing recognition of the link between poverty reduction and MNE investment, the eyes of many in the international community have turned toward MNEs to provide at least part of the solution that has proven to be so intractable in so many poor countries. The World Bank estimates that the flow of foreign direct investment into developing countries in 2010 was about $416 billion, more than four times the amount of foreign aid and development funding flowing into that same group of countries).

Question 15

The exploitive approach to managing MNEs is now considered to be a relic from the past and has been essentially non-existent since the late 1980s.

Accepted Answer

(Although a few firms have remained stuck in an exploitive mode, most have adopted, at a minimum, a transactional approach. With the growing influence of public, government and NGO demands, and rising shareholder expectations, the trend is clearly moving toward responsive and even transformative models).

Question 16

Which of the following four adjectives are not typically used to describe the manner in which MNEs might respond to developing world needs:
A) transformative.
B) transactional.
C) exploitive.
D) compensatory.

Accepted Answer

(While "compensatory" is not typically an adjective used to describe the manner in which MNEs might respond to developing world needs, responsive is more commonly used, along with transformative, transactional and exploitive).

Question 17

Government-funded aid programs flowing between developed and developing countries have failed to reduce global poverty primarily due to the creation of overly-detailed accountability systems and the excessive volume of feedback.

Accepted Answer

(In fact, a large portion of foreign aid takes a paternalistic view, in that it defines both the problems and the solutions and provides for neither accountability, nor feedback).

Question 18

MNEs have successfully insulated themselves from the accusations associated with entering regulatory environments that permit sweatshops by outsourcing manufacturing to arm's-length suppliers.

Accepted Answer

(In widely publicized investigative media reporting, high profile companies such as Nike and Wal-Mart have learned that tactics such as outsourcing to arm's-length suppliers are no longer effective in insulating the MNE from taking responsibility).

Question 19

In the past, many MNEs exhibited behaviour that was significantly exploitive or transactional.

Accepted Answer

(Coinciding with the growing attention being given to the concept of "sustainability", MNE managers have increasingly acknowledged the need to articulate a corporate philosophy and strategy that reflects their companies' long-term viability as key participants in the broader social and economic environment. An increasing number of responsive MNEs have begun to emerge and have undertaken efforts to be more than mere law-abiding entities, instead, making conscious commitments to be contributing corporate citizens in all the environments in which they operate).

Question 20

In the 1970s, Nobel economist Milton Friedman advocated all of the following behaviours by MNEs, $\underline{except:}$
A) focusing only on the interests of shareholders.
B) avoiding pollution.
C) maximizing profits.
D) leveraging cross-country differences in wages.

Accepted Answer

(In addition to advocating companies' efforts to maximize profits and to focus solely on the interests of shareholders, economist Milton Friedman once argued that "[those who believe that] business….takes seriously its responsibilities for…..avoiding pollution….are preaching pure and unadulterated socialism").

Quiz 8: The Future of the Transnational: An Evolving Global Role

Responsive MNEs act in a way that is sensitive and responsive to the needs of all its immediate stakeholders.

Which, if any, of the following business activities are likely to be acceptable to business ethicists:

Exploitive MNEs are often able to extract substantial concessions from host country governments because host countries are eager to secure which of the following in connection with new investments made by MNEs:

Transformative MNEs are sensitive and responsive to the problems and the needs of the developing world but the freedom of these MNEs to lead broad-scale efforts to deal with their root causes is often limited by governance issues and the need to generate profits.

The World Bank estimates that approximately one-third of the world's population subsists on less than $2 per day.

Some transformative MNEs go beyond commercial relationships with their consumers and offer their products and services to those who most desperately need them, regardless of their ability to pay.

The relationship between transactional MNEs and non-governmental organizations (NGOs) is frequently characterized by confrontation and accusation.

Excessive pressure from all of the following groups has caused exploitive MNEs to close down manufacturing operations and move to a new location, except:

The primary difference between transactional MNEs and exploitive MNEs is that the former employs an approach that tends to be legally compliant and non-oppressive in its emerging market dealings.

Transformative MNEs commit to leading initiatives to bring life-enhancing changes to their home countries.

Experience has shown that encouraging foreign direct investment by MNEs in developing economies has been less effective than government-funded aid programs in efforts to reduce global poverty.

MNEs that internationalize in developing countries have encountered all of the following differences pertaining to the labor force, except:

To buttress the arguments of activists who have demonstrated against increasing globalization, a former chief economist at the World Bank has argued that the actions and policies of all the following groups have often damaged developing countries' economies more than they have helped them, except:

Progress in reducing global poverty has been observed to be more closely associated with investments by MNEs than it has with the foreign aid efforts of national governments and non-governmental organizations that have historically demonstrated a lack of business experience.

The exploitive approach to managing MNEs is now considered to be a relic from the past and has been essentially non-existent since the late 1980s.

Which of the following four adjectives are not typically used to describe the manner in which MNEs might respond to developing world needs:

Government-funded aid programs flowing between developed and developing countries have failed to reduce global poverty primarily due to the creation of overly-detailed accountability systems and the excessive volume of feedback.

MNEs have successfully insulated themselves from the accusations associated with entering regulatory environments that permit sweatshops by outsourcing manufacturing to arm's-length suppliers.

In the past, many MNEs exhibited behaviour that was significantly exploitive or transactional.

In the 1970s, Nobel economist Milton Friedman advocated all of the following behaviours by MNEs, except:‾\underline{except:}except:​

In the 1970s, Nobel economist Milton Friedman advocated all of the following behaviours by MNEs, $\underline{except:}$