Multinational enterprises and the challenge of sustainable development

vContents List of fi gures vii List of tables viii List of contributors ix Introduction xv Acknowledgments xxvi PART I CORPORATE GOVERNANCE FRAMEWORKS 1 Multinational enterprises and su

of Sustainable Development

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Edward Elgar Publishing, Inc.

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USA

A catalogue record for this book

is available from the British Library

Library of Congress Control Number: 2009936229

ISBN 978 1 84844 413 3

Printed and bound by MPG Books Group, UK

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v

Contents

List of fi gures vii List of tables viii List of contributors ix Introduction xv Acknowledgments xxvi

PART I CORPORATE GOVERNANCE FRAMEWORKS

1 Multinational enterprises and sustainable development: a

review of strategy process research 3

Vera Ivanaj and John R McIntyre

2 The UN galaxy, transnational corporations and sustainable

development 28

3 Are multinational corporations compatible with sustainable

development? The experience of developing countries 50

4 Sustainable development and resource-based foreign direct

investment in developing economies: models of corporate

Kofi Afriyie

5 Of butterfl ies and hummingbirds: industrial ecology ‘on the

wing’ 85

Van V Miller and Charles T Crespy

6 Multinationals and the challenge of sustainable development: knowledge in cooperative networks 104

Mohamed Bayad, Michặl Bénédic, Malek Bourguiba and

PART II STRATEGIC IMPLICATIONS AND ASSESSMENT

8 Multinationals’ sustainable supply chains and infl uence on

suppliers inside and outside the USA: a comparative

PART III DISCOURSE AND BEST PRACTICES

11 Understanding the self-regulation potential of voluntary

international initiatives for corporate conduct: the role of

Glen Taylor and Petra Christmann

12 Sustainable development and corporate social responsibility

of multinational enterprises in China 230

Maria Lai-Ling Lam

13 The discourses and practices of corporate social responsibility

as a new component of the strategies of multinational

companies: an illustration with French multinational

companies 245

Pierre Bardelli and Manuela Pastore-Chaverot

14 International supply chain management: lever for sustainable development? An analysis of discourses and applications 261

15 The search for a sustainable approach to traditional French

wine production in the face of competition from multinational companies 283

Index 295

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vii

Figures

1.1 The dimensions of empirical research in the context of

SD/CSR strategic decision-making processes 6 2.1 The UN galaxy: the institutional constellation of organs

relevant to FDI/TNCs 29 4.1 Evolution of international business, stage one – export trade 76 4.2 Evolution of international business, stage two – multinational production 77 4.3 Evolution of international business, stage three – global

practices 171 9.3 Hypothesized infl uence diagram for impact of unsustainable practices 172 9.4 The relationship between CSCI and SCPPI 179 9.5 The relationship between CSCI and cost deviation 180 9.6 The relationship between SCPPI and cost deviation 180 9.7 The relationship between CSCI and schedule deviation 181 9.8 The relationship between SCPPI and schedule deviation 18113.1 Theoretical and empirical results 256

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viii

Tables

5.1 Sustainability pillars 965.2 Linking exchanges with fl ows 988.1 Common points and differences between SD and CSR 1458.2 Müller and Seuring’s (2006, 2008) literature review fi ndings relevant to our research issue 1498.3 Country-specifi c ecological involvement levels regarding

three supply chain relationship items 1518.4 A comparison of ecological infl uence exertion mechanisms

8.5 Min and Galle’s (2001) fi ndings relevant to our research

issue 1558.6 Murphy and Poist’s (2003) fi ndings relevant to our research issue 1578.7 Synopsis of our fi ndings 1589.1 Descriptive statistics 1789.2 Data analysis summary 17910.1 Corporate sustainability assessment criteria 18810.2 Types and ranking of sustainability reports published 18910.3 Economic indicator rates 19010.4 Environmental indicator rates 19010.5 Social indicator rates 19110.6 The DJ EURO STOXX 50 businesses in the main SRI

indexes at June 2006 19510.7 French SRI funds with at least one title in the DJ EURO

10.8 French SRI funds titles and number of titles in the fund 19811.1 Typology and design of voluntary international initiatives

(VIIs) 22414.1 Main strategies of sustainable development (environment

axis) 26814.2 Main strategies of sustainable development (CSR axis) 27114.3 Occurrence rates of company C 27314.4 Occurrence rates of company L 273

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ix

Contributors

Abdulai Abdul-Gafaru obtained his fi rst-class Honors Bachelor’s degree

in Political Science at the University of Ghana He has been a doctoral teaching assistant in the Political Science Department at the University of Cambridge, UK He taught courses in ‘Politics in Developing Countries’ and ‘Local Government Administration in Ghana’, carrying on independ-ent research on the achievements and challenges of parliamentary democ-racy in Ghana He received his MPhil at the University of Cambridge, UK and is pursuing his PhD there

Kofi Afriyie is Associate Professor of Management and International

Business in the Global MBA program at Kean University He received a PhD and MBA from the University of California, Los Angeles (UCLA) and a BSc from the University of Ghana His research interests focus

on patterns of foreign direct investment and sustainability in emerging markets and developing economies, international strategic alliances and political risk factors in global business Dr Afriyie is a member of several scholarly organizations, including the Academy of International Business and the International Academy of African Business and Development He served as Vice Chair of the Academy of International Business (Northeast chapter) between 2003 and 2006 From 1995 to 1999, Dr Afriyie was a business planning manager at Dow Jones and Company and a senior analyst at Deloitte and Touche He has been a consultant to several organizations, including the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group, where he worked on a project on foreign direct investment in Africa

Marie-Pierre Arzelier holds a Doctorate in Economic Sciences She is

an associate professor in Management, and a member of two French research centers: CEREFIGE (Centre Européen de Recherche en Economie Financière et Gestion des Entreprises), Metz, and PRATIC (Pratiques agro-alimentaires et théorie de l’internationalisation du com-merce), Avignon Her research interests focus on international trade and economics

Pierre Bardelli is a university professor at the University of Metz, France

He received his PhD in Economics in 1978 and has taught monetary

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economics, industrial economics, theory of the fi rm, production ment and strategy He has served as an academic administrator in numer-ous positions: director of a management research center; president of the University of Nancy 2, among others He has also been chief executive offi cer of a university-based technology incubator park Founder of a Moscow-based management center, he is Doctor Honoris Causa of the National Academy for Economics of the Government of the Russian Federation His expertise ranges from an assessment of fi rms’ value and performance as a court expert His recent research interests focus on pro-duction agility and corporate social responsibility.

manage-Mohamed Bayad is Professor of Management and Director of the Institute

of Enterprise Administration (IAE), University of Nancy 2 He has been in charge of the research team at CEREFIGE, specializing in human resources and organization His research interests focus on the strategic aspect of human resources He has published extensively on these topical areas

Salwa M Beheiry is Assistant Professor of Civil Engineering at the

American University of Sharjah, UAE She obtained her PhD in Civil Engineering from the University of Texas at Austin in May 2005 She

is a recipient of various honors and awards throughout her academic and industrial career Before starting her doctoral program, she worked

as project and program analyst/consultant with Independent Project Analysis Inc in Ashburn, Virginia, focusing on industrial, building and infrastructure projects Dr Beheiry earned a Master of Science in Project Management degree from the George Washington University in 1998 and

a First Class Honors Bachelors of Science degree from the University of Reading in 1994

Michặl Bénédic is PhD candidate and teaching assistant at the Institute

of Enterprises Administration (IAE), University of Nancy 2, France His research interests focus on knowledge management in cooperative networks, and on the evaluation and design of indicators of these net-works He is a member of the research team in Human Resources and Organization at the CEREFIGE research center

Malek Bourguiba received her PhD from University of Nancy 2, France

Her research interests focus on national culture and entrepreneurship Her research is related to cognitive aspects in international management She

is a member of research teams in entrepreneurial processes and in Human Resources and Organization at the CEREFIGE research center

Charles T Crespy received his PhD in International Business from

the University of New Mexico He spent a number of years at Miami

University of Ohio, where he taught, researched and published For many

years he held university leadership positions and is now a full-time faculty

member again His research interests focus on NGO legitimacy

Petra Christmann is Associate Professor of Management & Global

Business at Rutgers University, Rutgers Business School, Newark & New

Brunswick, USA She received her PhD in Strategy and International

Business from the Anderson Graduate School of Management at

UCLA Before joining Rutgers she taught at the Darden School at the

University of Virginia, the University of Minnesota and the University

of Southern California Her research interests are in the areas of strategic

management and international business, with a focus on environmental

management, fi rm self-regulation in the global economy, emergence of

global standards and their effects on fi rm strategies, and international

diffusion of management practices Her award-winning articles have

been published in several academic journals, including the Academy of

Management Journal, the Journal of International Business Studies, the

Academy of Management Executive, and the Journal of International

Management.

Silvester Ivanaj is Associate Professor of Information Systems at ICN

Business School, Nancy, France He received his PhD in Applied

Electrochemistry from the Institut National Polytechnique de Lorraine

(INPL), France Before joining the ICN Business School, he was an

envi-ronmental consultant His research interests focus on information systems

and sustainability assessments methods

Vera Ivanaj is Associate Professor of Management Science in the Chemical

Engineering School (ENSIC) of the Institut National Polytechnique de

Lorraine (INPL), University of Nancy, France She received her PhD

in Management Science from the University of Nancy 2 Her current

research interests include strategic decision-making processes, sustainable

development, logistics outsourcing, entrepreneurship and management

education, coaching, teambuilding and diversity Dr Ivanaj is a member

of AIMS (Association Internationale de Management Stratégique) and

AGRH (Association Francophone de Gestion des Ressources Humaines),

two of the most important francophone scientifi c conferences on strategic

management and human resources management

Jacky Koehl is University Senior Lecturer at the University of Nancy 2

and at the ICN Business School, Nancy, France He teaches Financial

Management, Portfolio Assessment and Management and Corporate

Strategy at Master’s level

Maria Lai-Ling Lam is Associate Professor of Business Administration

at Malone College, Ohio She holds a BBA, an MBA and an MA in Religious Studies from the Chinese University of Hong Kong, and a PhD

in Business Administration from the George Washington University, Washington, DC She has more than 20 years of professional experience in marketing and organization behavior in Chinese business She is a Fellow

of the International Academy of Intercultural Research and a member

of various professional bodies She has published one book and several articles Her research interest is corporate social responsibility in China, cross-cultural negotiation and business education

Jonathan Lefevre is currently working as a consultant in Strategy and

Operations at Deloitte Mexico and has had experience working as a porate governance consultant and research assistant in applied psychology for a Mexican NGO Jonathan’s main research interests are sustainable development and corporate strategy and governance

cor-Yvette Masson-Franzil is contractual research Professor of Strategy and

Supply Chain Management at University Paul Verlaine, Metz, France She received her PhD in 2005 from University Paul Verlaine Franzil’s main research interests include logistics, logistics outsourcing, networks and sustainable development She is member of the Centre Européen

de Recherche en Economie Financière et Gestion des Entreprises (CEREFIGE), Nancy–Metz, France (a multi-university European busi-ness research consortium) For over ten years she headed the legal depart-ment of an important French agricultural company

John R McIntyre is Professor of International Management

and International Affairs with joint appointments in the College of Management and the Sam Nunn School of International Affairs of the Georgia Institute of Technology, Atlanta, Georgia, USA He is the founding director of the Georgia Tech Center for International Business Education and Research (CIBER), a US national center of excellence He received his graduate education at McGill, Strasbourg and Northeastern universities, obtaining his PhD at the University of Georgia McIntyre has had work experience with multinational fi rms in the UK and Italy

He is an elected member of the Board of Advisors, World Trade Center, Atlanta, Georgia He is a consultant to international companies focusing

on trade and investment strategies

Van V Miller received his BA in Philosophy and Political Science from

the University of Kansas in 1970 and earned an MBA from the University

of Missouri in 1975 Additional studies at the University of New Mexico resulted in an MA in Latin American Studies in 1981 and a PhD in

International Business in 1984 During 1988, he was awarded a Fulbright

Research Fellowship to Central America, where he studied the business

strategies of both large and small fi rms during a period of volatility In

2006, he was appointed to the board of the International Sustainable

Development Research Society Miller’s efforts in the private sector have

been mostly in the construction industry, which has allowed him the

opportunity to design and build in New Mexico a log cabin utilizing

sus-tainable development principles

Manuela Pastore-Chaverot is a PhD candidate in Management Sciences

at University Paul Verlaine, Metz, France Her present work is mainly

focused on the study of factors explaining the choices made, as far as

corporate social responsibility is concerned, by big companies of the CAC

40 through the discourses they display She is also teaching assistant in

Operational Marketing and Strategy

Sandrine Peney is Associate Professor at the ICN Business School,

where she is the Head of Department of Finance and Strategy She

received her fi rst degree in Economic Sciences from the University of

Nancy Her research interests focus on the notion of event in

economet-ric models applied to fi nance, and to individual behavior In her position

at the ICN Business School, she is special option leader for Audit and

Finance

Bernd Philipp is senior lecturer and research fellow in Marketing and

Logistics at Amiens Business School, Picardie, France He received his

PhD in Management from Aix–Marseille 2 University He also holds

an MS in Industrial Engineering and Management from Karlsruhe

University (Germany) His research interests focus on the cross-section of

sustainable development and channel-oriented issues: sustainable supply

chains, environmental logistics management, reverse distribution and

vertical eco-marketing Philipp also taught at Le Havre Business School,

Avignon University and Aix–Marseille 2 University

Tagi Sagafi -nejad is the Radcliffe Killam Distinguished Professor of

International Business, and director of the PhD Program in International

Business at Texas A&M International University He is also Professor

Emeritus of International Business and former Chair of the Department

of Management and International Business at the Sellinger School of

Business and Management at Loyola College in Maryland Extensive

pub-lications on international business include a trilogy on technology transfer

published by Pergamon Press, and publications on Iran, Egypt, Syria,

Middle East political economy, Mexico, People’s Republic of China,

Taiwan, the USA, Europe and Japan

Christophe Schmitt is Associate Professor of Management at the Institut

National Polytechnique de Lorraine (INPL), University of Nancy, France

He is currently teaching at the National Graduate School of Agronomy and Food Industries (ENSAIA) He is in charge of the research team in entrepreneurship studies He has been a visiting professor at the University

of Québec Trois-Rivières and previously worked on the creation of value

in networks between multinational companies and SMEs (small and medium-sized enterprises) His research interests focus on organizational design He has published several papers on this topic

E Günter Schumacher holds a PhD in Economic and Social Sciences from

the University of Cologne, Germany, and a DEA from the same sity He is Head of the Department of Legal and Economic Environment

univer-at the ICN Business School, Nancy, France He is a member of the European Association for Evolutionary Political Economy (EAEPE) and

of the ICN Business School think-tank for sustainable development Since

1999 he has been leading a Franco-German academic network looking at the future of Europe As his recent article underlines, Dr Schumacher is committed to creating a European economic ethic

Gabriele Suder is Professor of International Business at the CERAM

Business School, Nice–Sophia Antipolis, Paris and Sozhou She is also Visiting Professor at the Helsinki School of Economics and other top business schools around the world, and a business consultant Gabriele’s main expertise focuses on corporate strategy in the context of diversity and globalization

Glen Taylor is an associate professor at the College of Business and

Economics, California State University East Bay Before joining Cal State, Dr Taylor served as the director of the Center for Innovation and Knowledge Management at the College of Business, University of Tampa His PhD is from York University in Canada, where he served as associate director of the Ontario Center for International Business He served as director of APEC’s global supply chain program and as the strategic man-agement academic track leader for the World Resources Institute’s MBA sustainability work in China

xv

Introduction

John R McIntyre, Silvester Ivanaj and Vera Ivanaj

This book is a by-product of a three-day research colloquium national Enterprises and Sustainable Development – MESD 2006), held

(Multi-at the Georgia Institute of Technology campus, on selected sustainable development practices of multinational corporations (MNCs) as tools

to achieve global competitive gains It was co-organized by the Georgia Tech Center for International Business Education and Research (GT CIBER), the Institute of Sustainable Technology and Development, Georgia Institute of Technology, Atlanta, USA, in partnership with ICN Business School, Nancy, France and the Centre Européen de Recherche

en Economie Financière et Gestion des Entreprises (CEREFIGE), Nancy–Metz, France (a multi-university European business research consortium), both long-term partners of Georgia Tech Lorraine (GTL) Georgia Tech Lorraine is the overseas extension graduate and research campus of Georgia Tech, created in 1989, and located in the linchpin region of Lorraine, at the heart of Europe, in the Metz 2000 Technology Park This text refl ects a long-term research priority of GT CIBER as well as European partners (ICN Business School and CEREFIGE) to contribute to an evolving analytical framework, supported by a body

of literature, to describe and understand the dynamic process through which international fi rms evolve full-fl edged global programs of socially and ecologically responsive and responsible policies and best practices.The book raises a central question concerning the role that multina-tional businesses play in the conception, diffusion and consolidation of the concept and best or better practices of sustainable development in the context of globalization It explores the complex and dynamic social phe-nomena in which economic, political, cultural and legal aspects interact and infl uence each other as they shape the sustainable development debate

in the corporate transborder context Understanding this dynamic process implies studying the practices and organizational behavior of multination-als in sustainable development These practices and behaviors are infl u-enced, though not wholly determined, by many micro- and macroeconomic factors of an environmental, organizational and decisional nature These factors shape the conditions for success and continuity The consolidation

and diffusion of sustainable development practices are directly determined

by the anticipated impacts (economic, political and social) that the tinationals seek to achieve Besides the strategic position and economic power that multinationals wield on the international scene, their strategic preferences and choices must be elucidated Multinationals could be con-sidered as ‘active actors’ or catalysts in the implementation of sustainable development, but they could also derail the process

mul-The 1990s were marked by a heated debate in fi elds related to the study

of business, society and environment as to ‘whether it pays to be green’,

in the wake of the watershed Bruntland Commission Report of 1987 This corporate and societal debate rages on; witness former US Vice President Albert Gore’s 2007 Nobel Prize award The policy area has taken on an intensely international and cross-national dimension for large-scale cor-porations, as sustainable development becomes one of the bases for the next generation of competitive gains for large-scale enterprises and nation-states No issue (one is tempted to use the French word ‘problematique’)

is more clearly global in scope and scale than the management of mental risk, broadly defi ned, through sustainable development policies and practices by corporations operating in an interlinked world economic system And in spite of the promise held out by green technologies and the emergence of ecologically driven start-up enterprises, no cross-sectoral, cross-national, cross-disciplinary issue area is more lacking global govern-ance at this juncture

environ-The theme of the book is the role that transnational corporations play in the design, diffusion and consolidation of sustainable development in the context of globalization The book explores complex and dynamic phe-nomena in which economical, political, cultural and legal aspects interact and infl uence each other In order to understand this dynamic, the book deals with some practices and organizational behaviors evinced by multi-nationals in regard to sustainable development It also explores multina-tionals’ conception of sustainable development and their related strategies and organizational practices (human resource development, marketing, supply chain, information technology, law, communications, etc.) It seeks

to describe, understand and assess the factors leading to multinational corporate decisions in this issue area

Topical coverage is organized in three main parts, each of which deals with a specifi c aspect of multinational enterprise sustainable development:

I Corporate Governance Frameworks

II Strategic Implications and Assessment

III Discourse and Best Practices

The growing belief that private corporations should not only earn

rea-sonable profi ts and provide fair returns to shareholders but also operate

as good corporate citizens has spread to multinational corporations The

topical area has generated a growing body of research literature in article

and report form, particularly in the EU but also recently in the USA In

addressing these topics, clustered around the globalization of principles

and practices of multinational corporations, we have solicited expert and

scholar authors from our sister institutions in the EU

PART I: CORPORATE GOVERNANCE

FRAMEWORKS

Part I carries out a deep review of research on the strategy process of

multinational enterprises (MNEs) regarding sustainable development

(SD) in order to highlight some of the main theoretical and

methodologi-cal choices made by researchers so far, and their impact on the process of

knowledge development in this fi eld

The contributions all seek to answer the following questions: how are

sustainable development strategies formulated in MNEs? Which factors

infl uence these strategies? What do they result in?

The fi rst chapter, by Ivanaj and McIntyre, reviews criteria applied

to sort out relevant published works and enables us to appraise general

research trends, egregious research gaps, and diffi culties encountered in

performing cross-national research The meta-analysis of the works is

carried out within an integrative framework linked to evolving literature

reviews as well as theoretical and empirical research fi ndings The analysis

focuses on two levels: (1) theoretical paradigms and perspectives selected

to address relevant research questions; and (2) methods employed to

address units and levels of analysis, samples and data-collecting methods

This critical meta-analysis leads to recommendations for future research

paths and heuristic insights in gauging implications for theory

develop-ment and research methodology

The second chapter, by Tagi Sagafi -nejad, is an overview of the

supra-national framework, the UN institutional constellation of entities seeking

to provide a forum and framework for transnational corporations as they

engage with issues of sustainable development Sagafi -nejad offers an

exhaustive review and analysis of the key UN organizations that

inter-face with transnational corporations Special emphasis is placed on the

role of the International Labor Organization (ILO), the World Health

Organization (WHO) and the World Intellectual Property Organization

(WIPO) In addition, the UN Global Compact Initiative is presented as

a boundary-shaping voluntary self-reporting system, one of several that have subsequently emerged through private sector initiatives UN agen-cies have historically played a major role in establishing rules that defi ne a normative framework for countries and transnational corporations The relationships between UN organizations and nation-states as they interact

in framing sustainable development, following Sagafi ’s understanding, evolve along three main parameters: stakeholders, issues and historical cycle Each UN agency deals with a set of these issues and requires the involvement of certain stakeholders such as NGOs, accredited bodies, and a variable geometry of stakeholders as an issue evolves along the UN agenda Concerning the historical cycle, the author concludes that the UN

is at a crossroads, and its liberal economic premises are being challenged The author raises a crucial question: can the system serve as a catalyst in the process of norm-setting for the activities of TNCs?

Chapter 3, by Abdulai Abdul-Gafaru, asks whether multinational porations (MNCs) are a force for environmental sustainability in develop-ing countries The chapter argues that although MNCs have the potential

cor-to contribute cor-to sustainable development, their actual environmental impact largely depends upon the degree to which host countries keep their environmental abuses in check Given the profi t-minded nature of MNCs and the huge environmental control costs, industry self-regulation

is unlikely to be effective where it confl icts with the primary objectives of multinationals The chapter takes a critical look at potential environmen-tal polluters such as MNCs, which are often the generator of rules apply-ing to themselves in this geographic setting and effectively act as judge when their operations in host countries, lacking local institutions, violate

recognized standards, Thus, to the extent that the raison d’être of

busi-ness is to maximize profi t rather than promote development, the author remains cautiously optimistic that MNCs can (voluntarily) contribute to sustainable development in developing countries To enhance and incen-tivize MNEs’ policies and sustainable development choices, there is a need

to move beyond conventional notions of corporate social responsibility (CSR), characterized by the adoption of voluntary codes, to more regula-tory, legally binding measures at both national and international level

In Chapter 4, Kofi Afriyie, using the concept of evolutionary sion of foreign direct investment (FDI) and global production, seeks to explain why resource-rich host economies appear to capture scant or no signifi cant value from the worldwide operations of multinational enter-prises (MNEs) Afriyie argues that the choices made by an MNE as it evolved globalized activities largely determines whether a host developing country is likely to benefi t from the fi rm’s production activities within it The chapter considers the spillover effects at each stage of the worldwide

expan-production expansion process This approach allows researchers and

policy makers to examine the likely effects of foreign direct investment,

and the potential horizontal and vertical sustainable development

link-ages in MNEs seeking to invest in host economies Afriyie concludes with

proposals and alternative lines of inquiry on the public policy implications

of MNE’s production strategies

In line with Chapter 2, van Miller and Crespy in Chapter 5 discuss

how transnational corporations pursue their own economic interests via

trade agreements and migrate to niches where labor and environmental

costs are lower From a sustainable development viewpoint, each of the

three pillars (economic, labor and environmental) should receive equal

weight, in their argument In constructing a roadmap for the selection of a

regional production fl ow in North America, the fi rst choice is: NAFTA or

CAFTA? To facilitate this choice, both transformation (labor, resources/

materials and environment) and transaction (tariffs, taxes, transportation)

costs must be analyzed Economic, labor and environmental outcomes

fl owing from NAFTA and CAFTA undertakings should lead to

improve-ment on the metrics utilized for evaluating each pillar and to a balance

in the resource allocation among pillars Multinational corporations can

now readily operate ‘on the wing’ within Northern America in the wake

of the NAFTA and CAFTA schemes These two agreements provide

ample encouragement and protection for commercial transactions seeking

economic sustenance Nevertheless, for the other two pillars of social

and ecological responsibility, the normative dictate that economic, labor

(working conditions) and environmental interests ought to be balanced

and harmonized as envisioned by industrial ecology (IE) appears woefully

lacking at this time

In Chapter 6, Bayad et al discuss the multinational enterprise as a

knowledge network and its capabilities in coping with the challenges of

sustainable development The traditional models of growth and

develop-ment of multinational corporations have been called into question on two

fronts in the past 20 years This can fi rst be explained by the emergence of

the knowledge-based economy, which makes knowledge a fundamental

resource for maintaining competitive advantage From this perspective,

multinational corporations have adopted forms of cooperative

organiza-tion to foster the exchange and creaorganiza-tion of these resources Second, the

imperative for sustainable development, via the adoption of long-term

resource conservation as a priority, has provided another reason to

ques-tion the strategic decisions of multinaques-tional corporaques-tions This chapter

examines the possible link between these two new organizational modes for

multinationals: cooperative knowledge networks and sustainable

develop-ment The fi rst section shows that considering the intangible dimension of

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resources sheds light on that connection The second section is dedicated to the challenges related to knowledge management that must be taken up by the multinationals By working within these key ideas, the authors look at management approaches that yield enhanced participation of multination-als’ cooperative knowledge networks in sustainable development.

In Chapter 7, Lefevre and Suder focus on the future of sustainable development and MNEs Sustainable development can be viewed through

a lens, in the same way as other intellectual innovations In this chapter, the diffusion mechanisms of sustainable development are examined in order to learn from them, understand how they evolve and propose alter-native paths for the future of community and corporate value-creation in this context

After a brief review of sustainable development and its penetration

of the corporate world and its practices, the authors propose a sion model to match the sustainable development paradigms applying to multinational corporations They then explore previous diffusion studies and propose the concept of command as a motivational aspect of innova-tion Finally, they proceed to position sustainable development within the proposed framework In the last section, the implications of this frame-work are discussed, viewing sustainable development as an extension of (or departure from) shareholder value Bearing this in mind, the authors analyze pressures and sustainable development commands (imperatives)

diffu-on MNEs that impel the fi rm to decide diffu-on an advantageous strategic tioning To conclude, they discuss how a shift in the carrying capacity of the proposed command and pressure structure would affect the diffusion

posi-of sustainable development paradigms

PART II: STRATEGIC IMPLICATIONS AND

ASSESSMENT

Part II considers business and corporate strategy and assessment issues arising in part out of Part I, and focusing on: (1) a specifi c business process (supply chain management); (2) a specifi c region and regional grouping, the EU; and (3) the generic approaches governing sustainable development metrics and measurement of performance and implementa-tion These three approaches illustrate how sustainable development cuts across business processes, is differentially addressed in different countries and/or regional contexts, and how complex is measuring implementation success across global corporate networks Part II moves the discussion to implementation issues, leaving behind the more theoretical considerations

of Part I

In Chapter 8, Philipp considers how multinational enterprises’ (MNEs’)

sustainable supply chains can act as a key contributing factor for

sustainability/corporate social responsibility, both conceptually and from

a praxis standpoint (e.g relevant codes of conduct) Philipp examines

how MNEs’ means of infl uence are exerted upon their suppliers to

guar-antee ‘upstream repercussions’ (a cascading chain of impacts) for

sus-tainable requirements In this context, research articles are analyzed in

order to reveal similarities or differences between US and non-US MNEs’

practices

Beheiry’s research, presented in Chapter 9, has been geared towards

studying the relationship between corporate commitment to the three

pillars of sustainability and capital project performance To achieve this

objective, two comprehensive sustainability indices, CSCI (Corporate

Sustainability Commitment Index) and SCPPI (Sustainability Component

of Project Planning Index), were created to measure the level of corporate

sustainability commitment and the sustainability component of capital

project planning, respectively The two indices were then used to

statis-tically relate corporate commitment to sustainability with sustainable

capital project planning Capital project planning has been shown to

impact capital project performance in terms of cost, schedule and

oper-ability, including design changes and safety compliance Using this linked

relationship between the two indices and capital project performance as

a theoretical backdrop, data were collected from 17 Fortune 100-owned

organizations These data suggested that increasing commitment to

sus-tainability tends to lead to enhancing sustainable project planning, and

may lead to better cost and schedule performance in large capital projects

It was clear from the data that the relationship between the two indices

existed and there are strong grounds supporting further development of

such indices

In Chapter 10, Ivanaj et al seek to assess the sustainable development

commitment of European MNEs They examine the sustainable

devel-opment dimension of European MNEs, centering on the assessment of

their SD policies Such policies are presented as the result of moral

com-mitments, beyond legal or economic imperatives The chapter combines

empirical research on the 50 biggest European multinational enterprises

composing the DJ EURO STOXX 50 considered ethical companies

Three fi elds of commitment indicators are examined: the reporting system,

the organizational structure of the companies; and the ethical investment

market The research yields expected results but also some surprises The

fact that the reporting refers predominantly to topics that are imposed by

the legal framework and that environmental indicators are present in the

different reports confi rms the expectations of the researchers The surprise

comes from the observation of the market for ethical investment, where one can observe that SRI fund managers do not take SRI indexes into con-sideration in their daily decisions The place of sustainable development within the organizational structure of the 50 European MNEs is obviously not seen in the same way everywhere Many companies give sustainable development management a project character; some have created a spe-cifi c structure; and other MNEs have integrated it more fully into func-tional managerial areas Interpreting the results by maintaining a link to the moral sustainable development commitment of the MNEs is possible within a descriptive ethics approach, showing different paths to establish

if the moral sustainable development commitment of the European MNEs

is consequential or not

PART III: DISCOURSE AND BEST PRACTICES

Part III illustrates the structure of argumentation for sustainable ment within the fi rm and how fi rm behavior seeks to bridge gaps between rhetoric and practice This section is especially important as the corporate world seeks to convince its stakeholders of the competitive gains fl owing from a sustainable development paradigm in the search for global profi ts, innovation and survival The question for standards of behavior is salient

develop-in Part III and the persistent gaps between rhetoric and praxis come out sharply, particularly in an older traditional sector such as wine-making The term ‘discourse’ is, as used in this part, favored among European scholars, who view it as containing both the argument and the evolving practice, and study this discursive dimension of the issue area to gain a deeper understanding of what is often only apprehended as an evolving surface phenomenon This part makes full use of this analytical concept.Chapter 11, by Taylor and Christmann, focuses on understanding the self-regulation potential of voluntary international initiatives for corporate conduct and the role of sponsor goals Globalization has led to concerns that fi rms will take advantage of cross-country differences in environ-mental regulations by locating polluting activities to countries with low levels of environmental regulation Certifi able environmental standards such as the ISO 14001 environmental management system standards have been proposed as a tool for fi rm self-regulation in the global economy These standards set requirements that exceed regulatory requirements

in low-regulation countries, which results in a more level international playing fi eld Firms voluntarily implement these standards and they can obtain certifi cation of their adherence to a standard by passing an audit

by independent third-party auditors While initial research on certifi able

standards has aimed at identifying reasons for fi rm certifi cation and

stand-ard diffusion, more recent research has examined the implementation of

such standards within fi rms To serve as an effective tool for fi rm

regulation, standards not only need to be widely adopted and diffused;

they also need to be properly implemented by certifi ed fi rms In many

industries the importance of ISO 14001 as a criterion for supplier

selec-tion provides incentives for fi rms in low-regulaselec-tion countries to obtain the

certifi cation to meet minimum requirements of potential customers from

developed countries, but at the same time weaknesses and confl icts of

interest in the for-profi t monitoring industry do not assure that these

certi-fi ed certi-fi rms actually meet the standard requirements Finally, the authors

discuss the prospects and limits of certifi able environmental standards as

tools for fi rm self-regulation in the global economy

In Chapter 12, Lai-Ling Lam explores corporate social

responsibil-ity and sustainable development of multinational enterprises in China

Multinational enterprises (MNEs) can be effective vehicles in boosting

awareness of corporate social responsibility (CSR) and improving related

practices of their affi liated companies and suppliers in China Recently,

the question has shifted from whether or not to make a commitment to

CSR to how to make a substantial commitment This chapter examines

the perceptions of Chinese executives about CSR and explores possible

strategies for MNEs to successfully handle the topic and practice

sustain-able development in China Chinese executives and expatriates have to be

integrated and display internal consistency with MNE parents and

accom-modate distinctive Chinese business environments in their day-to-day

operations The research questions are: what are the opinions of Chinese

executives about their multinational enterprises’ social responsibility and

what are Chinese executives’ perceptions of the problems and the

oppor-tunities for implementing CSR in China?

Chapter 13, co-authored by Bardelli and Pastore-Chaverot, deals with

the discourse and practices of corporate social responsibility (DP-CSR),

new components of multinational companies’ strategies and elements

of micro-regularities in the post-Fordist model They use French

multi-national companies to illustrate their insights and fi ndings Sustainable

development, an established concept, is nowadays in the heart of several

academic debates in management science It is also in the center of the

companies’ concerns, especially multinationals These companies, with

their power, their size and their planetary presence, are deeply concerned

with their economic, social, cultural and ecological environment Their

activities have signifi cant effects on the ecological environment, society

and economy The chapter investigates the topic through the annual

reports of large French companies quoted on the CAC 40 at the Paris

Stock Exchange The content analysis of these reports, made with a sample of ten companies, enables us to check the existence of a common basis concerning the DP-CSR of the various companies and their regula-tive capacity on their economic environment This research stream has also sharpened interest in exploring new leads, such as the sectoral-specifi c issues and broader or interactive cultural infl uences on the content of DP-CSR.

In line with Chapter 13’s discursive approach, Franzil in Chapter 14 also focuses on the analysis of the sustainable development discourse and its applications to international supply chain management as a lever for goal implementation After defi ning concepts and reviewing the literature, the author highlights opportunities of sustainable action in supply chain man-agement These actions are indexed on two dimensions: the environmental axis and the CSR axis Then, in a second phase, having circumscribed the SD-oriented procedures, the author studies the 2005 SD reports of two multinational companies (distribution and sports products manufactur-ing) The methodology is inspired by the lexical and content analysis The results suggest that sustainable supply chain management (SSCM) is only

in its initial stage in international companies and that there is an able gap between commitment and practice The opportunities offered by the SD procedures in these two case studies, namely the marketing strat-egy of differentiation and public image concern with stakeholders, were brought out These fi ndings reveal that a company is not philanthropic but on the contrary pursues its capitalistic aims This chapter presents tele-ological lessons through an inventory of the possible SSCM actions.Arzelier, in Chapter 15, uses a different sustainable development angle

undeni-to focus on related issues: what the author terms a ‘productive logic’ and land or territorial use as applied to multinational companies’ operation

in the wine production network in France This chapter aims at fi nding a theoretical basis for strategy development by wine producers, by compar-ing MNEs from North America to small-sized French companies Current market structures (small French companies often face larger multination-als) allow limited room for strategic maneuvering However, although wine is classifi ed as a food, related values in France indicate a cultural dimension associated with a more subjective image of good corporate behavior, authentic production and product, tending to the world of con-viviality and ‘partying’ This pattern is laden with cultural symbolisms, part of a complex discourse: love of the soil, of work well done, secrets linked to the wine-making process, respect for the cycles of nature: all are elements to consider in order to grasp the choices made by producers and

to explain how they address the paradigm of sustainable development It

is as if a unique product had to be saved from ‘taste conformism’ and to

be shielded from the threat of the disappearance of a way of life tied to

the product and process French vintners think in terms of global public

goods, which reveals their implicit commitment to long-lasting (and hence

sustainable) development This comparative approach also highlights the

importance of cooperative relationships This sector-specifi c insight is

equivalent to (re-)introducing the notion of collective interest behavior

to the ‘free enterprise’ or liberal (as it is often termed in Europe) market

However, current political preferences in the industry do not so far seem

to have evolved, the author maintains, a sustainable development-friendly

internal logic: the interest of the consumer, as understood by different

scale fi rms, leads to paradoxes not yet resolved by the stakeholders in this

market space

CONCLUSIONS

This volume has the merit of illustrating how researchers approach and

treat the complex and multidimensional issue area of sustainable

develop-ment, writing from a European, American or emerging-market

perspec-tive In essence, the authors make use of different conceptual frameworks,

or paradigms, and value a different way of probing the various dimensions

of these multidisciplinary issues as they take shape in the world of

multi-national enterprise behavior The use of the qualitative approach is more

prevalent among European researchers, as is refl ected in this volume The

lack of common analytical frameworks also emerges from the diversity of

contributions, regardless of country or regional perspective But, at the

time, a consensus on which are the key variables seems to emerge, without

a good grasp of how to piece together the component parts of this evolving

paradigmatic shift in global management thinking Sustainable

develop-ment is now on the lips of all corporations and it has become a key success

factor for a rapidly growing number of multinational enterprises

xxvi

Acknowledgments

The organizers of the research conference, editors and authors of this follow-up research volume have incurred some not insignifi cant debts of gratitude to a number of individuals, colleagues and organizations whom they wish to acknowledge This volume is a direct offshoot of the 18–19 October 2006 colloquium titled ‘Multinational Enterprises and Sustainable Development: Strategic Tool for Competitiveness’ (MESD 2006), held at the Georgia Institute of Technology in the Georgia Centers for Advanced Telecommunication Technologies conference center We wish to acknowl-edge the support of the Coca-Cola Company, Inc., the CIBER Centers program through its Georgia Tech Center for International Business Education and Research; the Georgia Tech College of Management and Dean Steven Salbu; the Georgia Tech Institute of Sustainable Technology and Development; the ICN Business School and its administration; the Centre Européen de Recherche en Economie Financière et Gestion des Entreprises (CEREFIGE), Nancy–Metz, France, which mobilized its extensive regional research network on the European side We are grateful

to the UN CIFAL Center (UNITAR network), Atlanta, the Coca-Cola

Company Inc., Air Liquide, the Conseillers du Commerce Exterieur de la France (Section Sud-Est des Etats-Unis) for their guidance and support in mounting the original event

All the authors included in this volume have worked long and hard in preparing their chapters, and 23 reviewers were involved in two rounds of paper selection and revision We wish to single out the late Dr Dennis A Rondinelli, the Terry Sanford Institute of Public Policy, Duke University, our keynote speaker; Professor John Dunning, Reading University, UK; Professor Pierre Bardelli, past president, University of Nancy, France; Mr Jeff Seabright of the Coca-Cola Company; Mr David H Gustashaw of Interface Inc.; and Ms Brenda D Pulley, Novelis Inc – all of whom were most helpful in their personal support and guidance

A special word of thanks to the Georgia Tech CIBER Center staff, who provided logistical support for the original October 2006 event and the subsequent research work

We look forward to the second conference (MESD 2009) to be held in Nancy, France in November 2009 It is co-organized by ICN Business School and CEREFIGE in partnership with Georgia Tech Center for

International Business Education and Research (GT CIBER), Georgia

Institute of Technology, Atlanta, USA

John R McIntyreSilvester IvanajVera Ivanaj

Corporate Governance Frameworks

3

1 Multinational enterprises and

sustainable development: a review

of strategy process research

Vera Ivanaj and John R McIntyre

1 INTRODUCTION

Sustainable development (SD) and, more broadly, corporate social ponsibility (CSR) cannot be ignored in current research on management science and management theory (Gladwin et al., 1995) In the fi eld of stra-tegic management, concerns regarding SD are even more acute due to its integration into the general design of overall company policy Indeed, the development of such a strategy is incomplete if social and environmental responsibility is not taken into account as a crucial element of a company’s decision-making process (Carroll and Hoy, 1984; Hart, 1997; Martinet and Reynaud, 2004, McGee, 1998; Reynaud and Joff re, 2004) Therefore, owing to the impact of strategy on the economic performance of the fi rm, the process of designing and enforcing SD/CSR strategies has become a major focus of empirical investigation and theoretical refl ection

res-Over the last few years, the number of articles and research projects exploring the global implications of SD/CSR has dramatically increased

(Banerjee, 2002) Prestigious journals, including the Academy of

Management Review, the Academy of Management Journal, Academy of Management Executive, the Strategic Management Journal, the Journal

of Business Ethics and Long Range Planning, have published numerous

such articles At the same time, several journals dedicated to SD/CSR

have been created, such as the Journal of Environmental Assessment Policy

and Management, Environmental Science and Technology, Corporate Environmental Strategy, Environmental Quality Management, the Journal

of Environmental Planning and Management and the International Journal

of Sustainable Development, Business and Society The so-called ‘triple

bottom line’ approach to SD/CSR strategies is often adopted, in so far as companies focus on the economic, social and environmental dimensions

of SD

As the number of scientifi c studies increases, discussions abound among the main players in the economy, that is, multinational enterprises (MNEs) Because these entities operate globally and are strongly com-mitted to direct investment abroad (Dunning, 1996), MNEs play a major role in the design and spread of SD/CSR strategies As Carroll (2004: 114) highlights, ‘the explosive growth of MNCs has set the stage for global business ethics to be one of the highest priorities over the coming decades’ MNEs enforce dynamic and complex strategic processes that integrate social phenomena in such a way that economic, social, cultural and legal aspects of such phenomena overlap and infl uence each other.

To understand this dynamic requires that we study the strategic tices of MNEs with regard to SD/CSR These practices are infl uenced by various factors, including macro- and microeconomic, environmental, organizational and decision-making factors These determine the success and quality of their associated practices Moreover, the consolidation and spread of SD/CSR practices are directly determined by the indirect and direct economic, political and social spillovers that MNEs may expect from their commitment to such practices The economic positioning as well as the power of MNEs endows them with a certain strategic position

prac-at the internprac-ational level with regard to the emergence, spread and dation of SD/CSR practices MNEs can thus be seen as an active player; however, they can also serve as obstacles to SD/CSR developments.Due to the fast and slightly chaotic increase of knowledge regarding SD/CSR strategies and the growing importance of MNEs, a review of research progress over the last few years is necessary While the SD/CSR phenomenon has been studied at the level of local companies or intra-country entities, few studies have been conducted at the cross-national level (Arthaud-Day, 2005) Yet, in an increasingly global context, MNEs must confront very complex and sometimes contradictory social expecta-tions Our goal is to understand these issues

consoli-For the sake of consistency as well as for practical reasons, we have limited our fi eld of investigation to empirical works that deal with SD/CSR strategic decision-making processes in the context of MNEs In this way, our approach integrates the separation between content and process that is commonly accepted in the fi eld of strategy (Huff and Reger, 1987; Chakravarthy and Doz, 1992; Rajagopalan et al., 1993) Research on content tends to focus on strategic decision making, while research on process is mainly focused on the actions that lead to and support certain strategies The fi eld of process research is also much wider It requires

a range of methods, including questionnaire surveys, fi eld studies and research-action (Chakravarthy and Doz, 1992: 5–7) This analysis focuses

on fi rst-hand data

The selected works answer various questions: how are SD strategies expressed in MNEs? Which factors are infl uential? What are the likely results? We also review research into the enforcement process We con-ducted our analysis by systematically searching online bibliographic data-bases (e.g Proquest, Business Source Premier, Econlit) using the following keywords: sustainable development, corporate social responsibility, sus-tainability, strategic process, business strategy, green strategy, strategic decision making, social responsibility of business, business ethics, multi-national corporations, international business enterprises, multinational

fi rms, multinational enterprises, multinational companies, transnational corporations and international business

In order to categorize the various publications, we used inductive logic In doing so, we discovered a classifi cation frame We used the same approach as Huff and Reger (1987) and Schwenk (1995) in their state-of-the-art research on strategic decision making

We divided bibliographic references according to the issues covered in each article The fi rst category relates to dominating theoretical paradigms regarding strategic processes, namely ‘rationality and limited rational-ity’ and ‘politics and power’ These two paradigms are now recognized

by strategy researchers They have been used as classifi cation criteria in several scientifi c journals (Hart, 1992; Huff and Reger, 1987)

The second category was inspired by reviews of literature presented

by both Rajagopalan et al (1993) and Schwenk (1995) that underline two general theoretical perspectives in the analysis of strategic decision-making processes The fi rst includes an organizational perspective that assumes that reference theories are organizational models of decision making This category would include the rational theories like agency theory and conventions theory; sociopolitical theories like corporate governance, institutional and neo-institutional theories; and contingent theories including the theory of dependence on resources and stakeholder theory Second, there is the individual perspective, which is founded on the cognitive and psychological theories of individual decision making (Axelrod, 1976; Kahneman et al., 1982; Bateman and Zeithaml, 1989) and group decision making (Gladstein and Reilly, 1985)

The third category relates to the defi nition of decision making off ered

by Van de Ven (1992): the decision-making process is a ‘sequence of oped events’, with process acting as a conceptual category The fi rst defi ni-tion implies that the decision-making process is made up of several distinct

devel-stages that follow each other over time In the fi eld of strategic decision making, the three-stage empirical model in Mintzberg et al (1976) is often cited – it includes ‘identifi cation’, ‘development’ and ‘selection’ The second defi nition implies that the decision-making process comprises several main characteristics that are operationalized as research constructs and are measured using set entities (or variables), often on numeric scales Concepts include rationality, politics, incrementalism, participation, infl u-ence, confl ict and consensus.

The application of these classifi cation criteria to the empirical studies covered in this review made it possible to deduct the crucial dimensions

of empirical research into SD/CSR strategic processes, as shown in Figure 1.1

Within the three divisions, six main research themes can be identifi ed: (1) process model, (2) process characteristics, (3) types of processes, (4) contextual infl uences, (5) impacts on the organizational results and (6) role

of the MNEs These themes make it possible to draw a fi rst general picture

of the emerging main ideas in this body of empirical research However, they do not allow us to classify every work defi nitively, since one study may fi t in several cells

Once research studies were categorized, we summarized the main tions, methodologies and results Several signifi cant research papers are cited with regard to each theme Moreover, this analysis enabled us to propose several potential paths for future research

ques-Purpose

Describe Explain

Process models

Contextual influences Process

characteristics

Organizational advantages

Role of MNEs

Rationality and limited rationality Politics and power

Dominating theoretical paradigms

Organizational perspective Individual perspective

Theoretical perspectives Figure 1.1 The dimensions of empirical research in the context of SD/

CSR strategic decision-making processes

3 THE SIX MAIN THEMES OF SD/CSR RESEARCH

3.1 The Process Model

The publications related to this theme deal with ‘how’ the designing pro cess and strategy enforcement work They aim mainly to describe the organizational processes that lead to the expression, enforcement and assessment of SD/CSR strategies Most of these empirical studies stem from theoretical models of CSR as developed in the literature For example, Carroll’s (1979) model includes four categories of social respon-sibility (economic, legal, ethical and discretionary) as well as a decision-making process that follows from reaction to proaction through phases

of defense and adaptation Wood’s (1991) model involves three processes (environmental assessment, stakeholder management and social stakes management) and three logic contexts (institutional, organizational and individual) Other models have been off ered, such as the stakeholder model (Clarkson, 1995; Sharma, 2001), agency theory (Jensen and Meckling,

1976, 1994), conventions theory, legitimating theory (Dowling and Pfeff er, 1975; Lindblom, 1994), the theory of dependence on resources (Pfeff er and Salancik, 1978) and various neo-institutional theories (DiMaggio and Powell, 1983)

The empirical works related to this theme aim mainly to confi rm cally one or more of the theoretical models mentioned above (Attarça and Jacquot, 2005; Bécheur and Bensebaa, 2004; Bowen and Heath, 2005; David and Koleva, 2005; Houze, 2004; Krupicka and Dreveton, 2005; Mathieu, 2005; Monnet, 2005; Stephany, 2005; Valiorgue, 2005) The main question relates to whether the strategic practices of MNEs correspond to these theoretical models For instance, Valiorgue (2005) empirically tests four theoretical models regarding the formation of CSR

empiri-as it relates to corporate strategy: (1) the bottom-up or rhetorical process (Martinet, 1983); (2) the deliberate process (Carroll, 1979; Clarkson, 1995; Sharma, 2001); (3) the emerging process (Nonaka, 1988; Mintzberg and Waters, 1985); and (4) the discretionary process (Alter, 1990; Burgelman, 1985) Valiorgue also explores the phases through which the decision-making process moves and the role played by three categories of actors, namely leaders, middle managers and operational managers The results

of his research show that the formation process of CSR does not follow a sequential logic but rather an evolutionary one The process is divided into three stages: (1) ‘variation’, which corresponds to the birth of the strategic process; (2) ‘selection’, which leads to project formalization through the discussion and assessment of ideas; and (3) ‘retention’, which corresponds

to the strategic project following an organizational agenda in a way that

defi nes the people and resources necessary for its enforcement The results show that leaders have no major role; rather, they only collaborate with mid-level and operational managers As for the decision-making process mentioned above, the author confi rms that they coexist within one and the same organization Thus the author confi rms the multidimensional aspect

of the CSR formation process

Similarly, Mathieu (2005) tries to understand how fi rms can integrate the diff erent theoretical and philosophical conceptions of SD while operat-ing their day-to-day activities Two corporate-ethical positions are empiri-cally analyzed: (1) the utilitarian perspective, which stems from the strictly economic vision of the fi rm and aims to identify a substantial rationality that maximizes fi nancial results; (2) the ‘deontological’ process, in which the company looks for some arbitration regarding economic, social and environmental responsibility through a negotiation process with diff er-ent stakeholders Using a survey that explored French MNEs such as Air Liquide, Sodexho, ADP and Rodhia, Mathieu (2005) shows that the formation of an SD policy is a long and complex process of arbitration between two main logical contexts: (1) the enforcement of a coercive system that aims to abide by the law and encourages conformity through the internalization of SD constraints; and (2) the enforcement of a man-agement system that aims at the adherence of the stakeholders, both exter-nal and internal, to the objectives and values of the organization Most of the companies studied seem to adopt a rather hybrid strategic position; that is, they focus on long-term global and environmental concerns in order to improve their fi nancial earnings Bowen and Heath (2005) have highlighted the need for a compromise between legal and ethical decision-making principles Using Enron as a point of departure, the two authors recommend a deontological approach based on Kantian moral standards and behavioral principles

The articles mentioned above study the general process of SD/CSR strategy formation by looking at MNEs However, other researchers have dealt with the strategy formulation process by looking at diff er-ent domains of activity Here we can mention Guillon’s (2005) study of communication, Vernier’s (2005) study on marketing, Morana’s (2005) study on logistics, Hall and Vredenburg’s (2003) study on innovation and Schmidt’s (2001) study on products and services The questions and theo-ries considered by these studies are similar to those in studies regarding the general process of strategy formulation The main diff erence lies in how SD/CSR principles are translated and adapted in each function We note various specifi cities of communication and marketing strategies in which the manipulative dimension of strategic actions is much more striking than

in other functions, such as production or fi nance

As we can see, the theoretical models relating to the formation process

of SD/CSR strategy are numerous and examples of empirical confi rmation abound Some models are considered repeatedly, such as those related

to stakeholder theory However, we regret the lack of empirical works comparing these diff erent theoretical models with regard to the decision-making process Moreover, the array of theoretical models is very wide: stakeholder theory, conventions theory, agency theory, institutional and neo-institutional theories, organizational learning theory, change theory and the theory of dependence on resources We may then wonder which models best explain the decision-making process Comparative empirical research involving larger samples as well as analyses of SD/CSR strategy formulations in diff erent contexts are necessary; this may include a com-parison of the models in the context of diff erent economic, cultural and political environments

3.2 Process Characteristics

Empirical research related to this theme aims to study one or more acteristics of the SD/CSR process in MNEs Certain characteristics are often studied: SD/CSR behavior, the development of behavior codes, the development of several decision support tools, such as the societal report (Gray et al., 1995) and social rating, among others The study of these characteristics makes it possible to understand how SD/CSR principles materialize in MNEs

char-Concerning ‘socially responsible behavior’, researchers are mostly ested in exploring how MNEs understand this concept A typical example

inter-is Snider et al.’s (2003) study, which answers thinter-is question through a qualitative study of legal, ethical and moral statements on the websites of

Forbes magazine’s top 50 US and top 50 multinational fi rms.

Other studies have focused on the formation and distribution process

of business conduct codes (Levis, 2006; Kolk, 2005; Logsdon and Wood, 2005; Mamic, 2005; Sethi, 2005) Through the codes of conduct, MNEs assert the strength of their commitment to SD/CSR processes For example, Logsdon and Wood (2005) analyze the code of business conduct

in six global petroleum companies The development of such codes requires the integration of several essential fi rm and stakeholder value expectations That is, a fi rm must constantly examine to what extent its codes match the stakeholders’ expectations Logsdon and Wood (2005) underline three crucial characteristics of codes of conduct: orientation, implementation and accountability Kolk (2005) also deals with codes of conduct in the coff ee trade This sector is dominated by the activity of large MNEs, such as Sara Lee, Douwe Egberts, Nestlé and Kraft The author

analyzes the SD/CSR change dynamics that have taken place over the last few years in these companies under pressure from various stakeholders This dynamic resulted in the development of several codes of conduct that materialized as the ‘Common Code for the Coff ee Community’ Finally, Mamic (2005) carried out a study on the enforcement process of the codes

of conduct in the fi elds of sports footwear, apparel and retail The results show that this process is complex and requires the design of a management system that includes the following elements: the creation of a vision, the development of understanding and ability, integration into operations and feedback and improvement and remediation

The development of tools to assess or measure the socially ble behavior of MNEs is also an issue in the SD/CSR research agenda (Hopkins, 2005) We have found several empirical studies in this fi eld (Black and Härtel, 2004; Snider et al., 2003; Xhaufl air and Zune, 2004) For instance, Black and Härtel (2004) raise questions about the capacities that the fi rm must possess in order to be socially responsible They intro-duce a model called ‘corporate social responsibility management capacity’ that takes into account the dynamic relationship between a fi rm and its stakeholder This model measures two concepts: the fi rm’s CSR orienta-tion and the fi rm’s PR orientation Each orientation is made up of three elements: goals, transactions and behavior For a company to be consid-ered socially responsible, it must have fi ve capacities: stakeholder engage-ment, value-attuned public relations, dialogue, ethical business behavior and accountability The model is inspired by four theoretical focus areas in the analysis of CSR: strategic management, social responsiveness, public relations and marketing The model was empirically tested using a case study of three Australian MNEs

responsi-The issue of social reporting has also become an important topic for empirical research (Grafé-Buckens and Jankowska, 2001) There are various forms of reporting: societal reports, environmental reports, sus-tainable development reports, annual reports and so on The societal report was defi ned by Capron and Quairel-Lanoizelée (2004: 188) as ‘the publication by the fi rm of information about the way it deals with the environmental and social impacts of its activity’ These reports present useful communication intended to build trust and facilitate relationships between the fi rm and its stakeholders, including personnel, customers, investors and bankers However, what about an MNE’s practices? What

is the role of SD/CSR reports in the strategic management of a given fi rm? Persais’s (2003) study sheds new light on this topic The author fi rst argues that the SD report represents a crucial element in a fi rm’s decision-making processes, since this document makes it possible to record and integrate stakeholder interests The report enables the stakeholders to assess the

importance given to their interests in decision-making processes It thus

represents a critical tool for strategic management Firms can redefi ne

their strategies regarding stakeholders via the report document As for the

practice of societal reporting, Persais’s analysis is supported by analyses

of reports published since 1999 by seven MNEs, namely Vancity, Ford,

Danone, Lafarge, Cooperative Bank, Camelot and Nike The author

defi nes seven themes useful to understanding the content and the process

of report design: report orientation, leadership commitment, chosen

approach, means used, use of Global Reporting Initiative (GRI)

stand-ards, performance improvements and confi rmation approach

Except for societal reporting and the rating process, other tools useful

in SD/CSR strategy decision making have been studied with respect to

MNEs, including the ‘Strategic Environmental Assessment’ (Nilsson

and Dalkmann, 2001), ‘Environmental Management Practices’ (Sroufe

et al., 2002) and the ‘Sustainability Balanced Scorecard’ (Möller and

Schaltegger, 2005) These global environmental management system tools

stress the necessity of taking into account decision-making characteristics

according to the context, and aim to facilitate the integration of SD/CSR

matters into fi rm decision-making processes

3.3 Types of Process

Corporate strategic behavior with regard to SD/CSR can be seen as a

multidimensional phenomenon that might involve several successive and/

or simultaneous logic contexts (Carroll, 1979) The behavior may vary

from responding to societal requests with mistrust to the anticipation of

these requests with proactive, adaptive behavior (Olivier, 1991) In the

wide fi eld of corporate strategy, several researchers have drawn up

typolo-gies of the SD/CSR strategic process (Olivier, 1991; Capron and

Quairel-Lanoizelée, 2004; Carroll, 1979; Hart, 1995; Martinet and Reynaud,

2004; Metrot, 2005) For instance, Olivier (1991) identifi es fi ve potential

strategies to respond to CSR-related questions: mistrust, avoidance,

com-promise, acceptance and/or manipulation Capron and Quairel-Lanoizelée

(2004) distinguish two types of strategies: substantial and symbolic The

former leads companies to modify their objectives and business methods

and therefore actually respond to social demand That is, the fi rm seeks to

reconcile its interests with those of the stakeholders, whether proactively

or reactively Symbolic strategy refl ects an opportunistic type of behavior

in so far as the fi rm appropriates the CSR concept for the sake of image or

reputation without necessarily expressing its objectives regarding

develop-ment, products or profi tability In the fi eld of environmental strategies,

the three-type typology proposed by Hart (1995) includes: (1) strategies of