1.

Neoliberalism and the Variegated Capitalism Debate:

1. Once the Soviet Union and communism collapsed in the late 1980s, capitalism had no serious
opposing ideological or economic challenger.
2. The fall of communism, allowed neoliberal ideas to come to the fore and gain dominant status
which has led to the expansion of capitalism and the liberalisation of markets in most locations
round the globe.
3. The liberalisation of markets refers to the opening up of business and markets to free competition
unencumbered by state regulation such as standards and regulations on risk and activities in the
financial markets, legislation on labour rights, minimum wage rates, taxes on personal and corporate
earnings, protectionist trade tariffs.

4. However despite there being no strong alternative after the fall of communism, capitalism did not
develop in a uniform manner across the globe despite earlier predictions of standardisation such
as Thomas L.Friedmans (2005) projection of a flat world of the future with globally uniform
standards, cultural norms and values influenced by a common model of capitalist development.
5. Instead, we see considerable variation in the exact form modern day capitalism takes in relation
to its location and setting. History, geography, institutions and culture all combine to influence the

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context within which capitalism operates.

6. The arguments by academic analysts over the degree of variation in forms of late capitalism and
the reasons why this occurred became known as the Varieties of Capitalism debate. In the early
stages of the Varieties of Capitalism debate, academics and analysts suggested there were just two
competing forms or models of capitalism:
- The first model was based on short term, shareholder focused pursuit of profit through a
reliance on the free operation of the market as the best means of distributing resources in
society, with a strong attachment to the ideal of individualism. Individualism basically
referred to the degree to which an individual is seen as having responsibilities and obligations
for their own welfare and progression through life, as opposed to a more collective approach to
societal responsibilities and welfare. From the neoliberal perspective, individual freedom and
choice is best delivered by competition and the free operation of the market, which is ultimately
regarded as the most efficient and fairest means of distributing resources in society. The role of
the state is only to provide a stable environment within which the market can function, and
beyond this state involvement in the business sector is seen as undesirable. An example of this
form of capitalism can be seen in the USA and was described as the Liberal Market Economy
model (LME). This form of capitalism was also associated with financialisation where the
pursuit of increased shareholder value acquired prime importance as a driver of economic
growth.
- The second model (the Rhinish Model) Here, state regulation was designed to ensure checks
and balances (on all actors in society) were built in to the system. The market was not seen as
the prime means of coordinating or distributing resources, rather there was a role for nonmarket forces like the state to legislate for basic standards, to establish frameworks for
decision making and establish norms of how things should be done. This became known as the
Co-ordinated Market Economy (CME). For example in Germany, the state laid down fiscal
policies, common rules for businesses on wage policies, training and skills provision.
Shareholder value did not have the premier status it had in LMEs and the market is not given
free rein. Regulation is used to constrain free market forces.
7. Subsequently however, academic analysts found that the evidence from around the world,
suggested that the LME and CME models alone simply did not adequately describe the degree of
variation that could be seen in the way capitalism was operating in different settings. It was clear
that there was a great deal of variation in the role adopted by the state and its institutions and
laws.
8. This led to a refinement of the varieties of capitalism debate and an acknowledgement that perhaps
a better way to understand capitalism was to see it as variegated, in other words, subject to a
range of socio-economic, national, cultural and political influences and institutional contexts,
which influenced the degree to which the neo-liberal model was relied upon as the best model to
live by.

9. Dicken (2011) summarises four examples of variegated capitalisms in todays international

business environment which, he emphasises, continue to be in states of evolution:
Neo-liberal market capitalism Liberal market economies where (allowing for some form of
social welfare provision intended for the most vulnerable) primacy is given to shareholder
interests and the free operation of competition and market forces as the ideal distributor of
resources in society. Typical LMEs are the US, UK, Canada, Australia.
Social market capitalism coordinated market economies, subject to a network of state
regulation on minimum standards, for example on issues like training, skills provision, labour
rights and finance. Typical CMEs are Germany, the Netherlands, Scandinavia.
Developmental capitalism social and economic goals are integrated and linked to industrial
strategy by state influence, through regulation. Typical developmental capitalisms are Japan,
Taiwan, Singapore, South Korea.
Authoritarian capitalism strong central political and economic control with increasingly
open capitalist market, though this adoption of capitalism may be focused in particular
locations and spaces such as Special Economic Zones or industrial cities. Typical
authoritarian capitalisms are China, Russia.
(very important)
10. These definitions of variegated capitalism will be in a constant state of evolution and change, and
it will be difficult to find an absolute or perfect example of the typologies in the real world. India
and Brazil for example are not listed in the above categories. Although India and Brazil have been
hugely influenced by neoliberal models of economic development, their distinctive institutional
frameworks of regulation persist to some degree.
11. This is why some academics avoid using the varieties / variegated capitalism classifications
altogether preferring to explain economic/political developments as part of a general evolution of
global capitalism.
12. However shortcomings aide, the variegated capitalism debate:
- helps us to recognise the need to take account of the whole of the national context, and the role
of state intervention and regulation in understanding what difference and variegation of
capitalism looks like in any country.
- prompts us to focus on our need to understand the nature of regulation, law and enforcement of
rules in any given location, as a framework for the way business is able to operate.
- helps us to think about what international influences and political and economic pressure may
be brought to bear upon different countries to change their regulation and systems of
government in order to promote capitalist development. (For eg. international diplomatic pressure
from powerful states, or supranational bodies such as the EU, the IMF or the World Bank. or the power
of the corporate lobby and transnational corporations, with their considerable economic resources to
influence state legislation and secure incentives and freedom from regulation in particular settings).

13. Thus while the model of variegated capitalism may not offer us a straightforward or uncontested
explanation of reality, it may be a useful analytical tool in helping us towards a deeper
understanding of the way that capitalism operates in any location.

2. Neoliberalism, Financialisation, The Financial Crisis, Firm Structure and Globalisation

1. Financialisation is a term used to describe the pursuit of increasing shareholder value as a
primary objective for business, and the placing of the financial markets at the very centre of
national and international economic growth.
2. The neoliberal policies of 1980s governments, in the US and the UK in particular, promoted a new
financial growth model which used tax cuts to stimulate the economy and promoted privatisation and

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3. This led to the governments of many countries around the world, led by the example of the US and
the UK, making complex adjustments to regulations affecting the financial sector.

deregulation of the private sector, particularly the financial sector and enlisted the financial sector as the
most important driver of growth and completion in the economy.

4. The objective was to free up the financial markets from laws and regulations which at the time
were seen as anti-competitive regulatory constraints on traders innovation and ingenuity in
finding new ways to spread risk and generate growth in shareholder value.
5. One of the associated ambitions of this financial growth model, was to make all citizens and
organisations financial subjects by encouraging both personal and corporate shareholding. (In
1980s Britain, for example, government policy (in line with neoliberal principles) led to the privatisation of
Utilities formerly held in public ownership, and shares in the newly formed privatised electricity, gas and
water companies were offered for sale at affordable prices, so that many more ordinary British citizens
became individual shareholders.)

6. However, it became clear that this was not to be the era of the small individual investor. Rather,
nature of ownership and shareholding became dominated by large corporate investors, and
today the majority of shareholdings are in the possession of institutions rather than individuals:
(insurance funds, pension funds, hedge funds, and so on, are the main holders of shares, rather than
individual, small investors.)

7. What are the implications of this quest for increased shareholder value for the life of the ordinary
citizen? In this financial model of growth, the increase in shareholder value was predicated on the
exercise of leverage in the financial markets. Gamble defines leverage as the process whereby a
trader would use existing assets as security (collaterali) against which to make further borrowings
of funds, which would then be reinvested in assets/shares promising a higher return to the
shareholder.
8. The process of leverage is considerably reliant on traders confidence in the sale value of a
portfolio of shares, quite as much as it relates to the actual value of the shares. Once we realise
that traders are actually trading in optimism and confidence above all else, it is easy to see that
this type of transaction has the potential to become detached from the real, material assets behind
the share packages and portfolios. Thus, in 2008, when confidence in the value of shares began to be
shaken by the knock-on effects of the failure of the sub-prime mortgage market in the US, apparent in the
bankruptcy of several leading mortgage lending firms, followed by the collapse of Lehman Brothers
investment bank, the financial markets began a journey towards the global financial crisis which we are still
dealing with today (Gamble).

9. What are the implications of financialisation and the pursuit of increasing shareholder value for
real people and businesses in the world that most of us inhabit, outside the trading rooms? What
are the implications for business strategy?
10. In those economies most closely identified with neo-liberal market capitalism, the language of
shareholder value has exerted considerable pressure on managers to create good returns for
shareholders. Hedge funds, insurance funds and the like, hold portfolios of shares in a range of
business ventures and the people delegated with the task of managing these funds are very likely to
be incentivised and rewarded on the basis of relatively short term performance. The period for
which a fund may hold a package portfolio of investments may well be short term, while the interests of
other stakeholders in those investments, namely the workers, managers, customers, suppliers in the
businesses making up the portfolio of shareholdings, are likely to be dominated by hopes for personal
stability, employment, longevity and sustainability. The way the financialised stock market works, though,
distances stakeholders from the shareholder, for whom they are likely to be very much of secondary
importance compared with their quest for shareholder value through higher dividends or forecasts of share
price. The pressure to pay short-term high dividends and satisfy the shareholder, is closely

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The pressures on fund managers to deliver increased shareholder value feed down into actual businesses
themselves, where operational managers are incentivised to focus on cost-cutting and efficiency targets that
are linked with their own success or survival in their jobs and careers. Typical strategies for cost cutting
involve among others, for example, minimising manpower costs, automation of costly production processes,

identified with the neoliberal market capitalism of so-called Liberal Market Economies (LMEs).

stripping out layers of unnecessary or unproductive management and bureaucracy, using flexible forms of
employment, and using outsourcing and off-shoring to minimise overall costs along the supply chain. The
environment provided by the financial sector has material effects on the structures of firms, processes of
outsourcing and managerial strategies at the level of the business itself.

11. In more co-ordinated market economies (CMEs) like Germany, for example, the pressures to
deliver quick, high value returns to shareholders on the capital markets are dampened by laws
and regulation supporting longer term shareholding strategies by banks and other corporations.
This is why the German system is sometimes referred to as being reliant on more patient capital. Despite
some erosion, social market capitalism, exemplified by Germany, still affords relatively more protection
from pure market forces.

12. It is important to appreciate that the activities of financial markets and the ideas which underpin
political and economic choices have concrete effects on the lives of ordinary people.
13. The contested neoliberal principle is that an increase in the size of an economy must eventually
benefit all stakeholders in society as wealth trickles down. However, although the pursuit of
shareholder value through financial markets has certainly created wealth, but the processes have
also created instability and increased the wealth gap.
14. When considering these issues in the context of the activities of transnational firms, we must
remember that they are themselves powerful economic and political actors, who not only respond
but also influence the financial and regulatory context within which they are operating.
15. What is the relevance of these issues for ethics, labour conditions and corporate social
responsibility in the international business environment, in the context of processes of global
shift, and the activities of global production networks directed at maximising productivity while
minimising cost.

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3. Social and Cultural Change in the International Business Environment.

1. In his book entitled The World is Flat, Thomas L. Friedman (2005) outlined a thesis that had been
becoming increasingly popular with some analysts of globalisation, which proposed that as the
forces of globalisation and digital technology advanced, the world was becoming more open,
communication between countries and peoples was becoming more accessible and business
models (under the influence of neoliberal ideas) were becoming more alike.
2. This, argued Friedman and other commentators of the same persuasion, was evidence of
convergence, in other words, everywhere around the world was becoming more alike.
3. At the same time, some analysts looking at the activities of transnational corporations, argued that
the world was becoming borderless, in the sense that these transnational giant firms crossed
international boundaries and manipulated geo-political borders to their own advantage, making
the state largely irrelevant in the modern age.
4. The arguments were powerfully made, and achieved a certain degree of acceptance in some
quarters, but were always criticised for over estimating the effects of globalisation. In reality, the
evidence shows us that difference persists between and within countries, and as Dicken says, the
state and its different rules, laws and institutions, really does still matter. The world is not flat at
all, but retains its regional and national characteristics.
5. The ideas (embodied in neoliberalism) have influenced and underpinned the liberalisation of
markets and growth of capitalism in recent decades. The structure of capitalism, which is
influenced by these ideas, is embodied in the 'institutions, conventions and rules of the capitalist
market system' (Dicken). These rules and laws are generally set at a national level, although there
are powerful international bodies like the IMF and the World Bank, and supranational
governmental bodies like the EU, for example. Transnational corporations and their global

The above notes show you the influence of national institutions and regulation for the way capitalism is
experienced. You should be able to see links between what happens in international financial markets with
conditions on the ground.

production networks criss-cross geo-political boundaries and different sets of nationally based
rules, and may indeed manipulate them, but they do not eradicate difference. Today, as ever
before, history and geography matter, and nowhere is this more evident than in the social and
cultural norms which influence what is acceptable in a given context, many of which may be given
legal status in the rules and regulations which govern society.
6. Some analysts, such as Hofstede (1980) have attempted to classify cultural dimensions and
characteristics. Hofstedes original study was based on a survey of 100,000 workers for IBM in 50
different countries, and he identified four main dimensions of culture in societies:
1. Individualism versus collectivism the extent to which a society focuses on the individual
being responsible for their own welfare and interests and where ties between individuals are
loose, as opposed to taking a more collectivist (family / community) approach to societal
values.
2. Large or small power distance the extent to which inequalities in power, wealth, authority,
hierarchy and so on, are accepted by a society. The degree to which large power distance is
accepted, would, for example, determine to what extent authoritarian leadership styles might be
tolerated in organisations and society more generally.
3. Strong or weak uncertainty avoidance the degree to which a society tries to put institutions
(laws, rules, regulations) in place to minimise risk and avoid uncertainty. For example,
regulations might be put in place to control markets, with the aim of minimising the risks and
potential instabilities of capitalism.
4. Masculinity versus femininity the extent to which the distinction between male and female
roles is drawn in different societies.
(important)
7. Hofstedes went on to identify certain dimensions with particular regions and countries of the
world. Despite criticisms of his work, the main point we can take from Hofstedes work and indeed
that of his critics, and that is, quite simply, that cultural differences exist and persist in todays
international business environment.
8. We need to recognise social and cultural differences as products of human interaction and choice,
and as such, they can be adapted and changed when society is ready to make different choices.
9. The changing role of women in British society as an example of how norms and standards of
behaviour can be changed as economic and political choices dictate. In todays international
business environment, as industrialisation has shifted across the globe, the role of women is
changing in many different societies as increasing numbers of women are being drawn into paid
work and roles outside the home.
10. Transnational corporations through global production networks are locating units or securing
suppliers in a range of new locations. In many of these locations, women's societal status is not
high and they form an important constituency of relatively cheaper labour, in many instances. The
quality of work that women do is of importance to their societal status, as low paid low skilled work offers
little hope of an escape from poverty (women dominate the percentage of the world's population afflicted by
grinding poverty). However, the very fact that women may be drawn, for the first time, into paid work
outside the domestic setting may be a form of emancipation, which will shift (however slightly) their roles
within the home environment and eventually may lead to higher status in society. This may not be - indeed
it is unlikely to be - a quick process. The rules and conventions which govern the way our societies

function are socially constructed products of complex webs of social, cultural, religious,
traditional norms, which are not going to be changed overnight. Economic activity - can open up

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11. Cultural change applies not only to the role of women in contemporary society, but also to
practically every aspect of human existence. The changes experienced by women in their different
societies through different times, is simply an example we can use to think about other aspects of
social and cultural change in the modern world. Change can apply yo any set of cultural standards
and norms, but the process is likely to be incremental and a context of poverty or a lack of political

different possibilities for women and economically active women may be somewhat liberated from total
dependence on male relatives for their economic well-being and may gradually have greater autonomy and
independence. The role of women in British society over the last century shows how change can come
through women being seen and experiencing different roles in society and, ultimately, making their own
demands for change.

power is likely to make the struggle for change to established values a long one. For example,
most societies have cultural norms and standards associated with freedom, equality and
opportunity (or the lack of freedom, equality and opportunity) in matters affecting:
Sexuality
Race and ethnicity
Religion
Freedom of speech
Collective organisation and civil protest
12. The wealth gap is associated with a power gap, and when it comes to changing societal norms,
those at the bottom of societys hierarchy are usually political outsiders who have to agitate long
and hard for small changes in the condition of society.
13. Todays processes of industrialisation and global shift may introduce more people to new ideas,
and social and cultural change may well be underway, but we need to see this as a long term
process and one which may be bitterly contested as tradition gives way to new ways of doing
things.
- Nowhere is this more evident than in the case of womens condition in countries around the
world where, even in industrialising regions where they are being drawn into paid work,
women remain in the poorest sections of society.
- The limitations on their advancement in terms of social status and rights relates in no small
part to their concentration in poor quality jobs, which are low skilled and low paid (Dicken,
Standing).
- While new forms of work opportunity and participation in some of the largest global production
networks is seeing women in new roles in the international business environment, factors such
as poverty, and their low socio-economic status and limited access to education, continue to
hinder womens access to political power.
- This in turn contributes to their relatively lower significance for policy makers with power to
effect positive societal change..
- When we look at the changing role of women, we need to recognise issues of wider
significance which allow us to use this example to help us to consider societal change more
broadly, and identify the conditions which have to exist to support / promote / deliver change.
The world remains a diverse place, with many cultural differences to celebrate, and many
aspects of socio-economic deprivation still to be challenged.
4. Technology and Globalisation
1. Technological change is right at the centre of economic development and is associated with
distinct eras in the history of capitalism.
2. Technology influences the way things are produced and information is communicated and
analysed, and has a major influence on the ways we as human beings experience our world, from
the work we are involved in to the way our environment evolves.
3. The choices we make about how we use technology are human choices with social consequences,
and we surround the use and advance of technological research with institutions, in the form of
laws and regulatory bodies. For example, the technology relating to nuclear power and nuclear weapons
is highly regulated and choices over its use are firmly located in the political domain.

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technology, biotechnology, energy technology and so on,

Paradigmatic change, by which we mean large scale, revolutionary changes which have wide
reaching effects on the economy and the technology system as a whole. Paradigmatic change is

4. Technology is an enabling or facilitating mechanism which makes certain things possible, but in
and of itself it is not deterministic,
5. Technological change can be:
Incremental, through small progressive innovations,
Radical, in the form of a single, discontinuous but highly significant technical innovation,
Extensive, in the form of changes to the technology system perhaps a new field emerging
which has wide-reaching effects of other aspects of technology. Examples would be space

frequently the product of a critical mass of incremental and radical technological innovations
which cluster and combine together to deliver a significant and all-encompassing technological
shift. An example of such a paradigm change in our own time would be digital technology and
the world-wide web.
6. Paradigmatic technological advances have been associated with the Kondratieff analysis of
cycles of economic growth and decline.
- Capitalism is an inherently unstable system which is subject to cycles of boom and bust.
- In the nineteenth century, the process of boom and bust was estimated to follow a ten year
cycle, but in the 1920s a Russian economist, Kondratieff, proposed a new analysis which
involved longer cycles or waves of economic growth and decline.
- In Kondratieffs analysis, Long Waves were estimated to last between fifty to sixty years, and
might contain within that period shorter, smaller cycles as part of the overall process of
economic growth and decline.
- Despite criticisms of the theory, Long Wave theory can be used to recognise the existence of
cycles of boom and bust over comparatively lengthy periods of time, and to focus our minds
on what part technology plays in driving or facilitating economic growth. Indeed, a key
element of long wave theory was the influence of significant periods technological
innovation.
7. To date, there have been five identifiable Kondratieff long waves.
- The relationship of technology to these waves, (or cycles) of growth, begins with the first
Kondratieff Long Waves association with early mechanization.
- The second wave was associated the steam power and the development of the railways.
- The third wave was associated with electrical and heavy engineering
- The fourth was associated with Fordist models of mass production and consumption.
- In recent decades technological advances have moved quickly with the dawn of the digital
age, and these paradigmatic changes have been associated with globalisation. In this context,
the fifth Kondratieff Long Wave has been identified as our own, digital information
technology age, associated as it is with developments in travel and information processing
technologies
8. The current neoliberal environment for the expansion of capitalism presents a particular context
for technological advancement in that competition is regarded as a driver of the quest for new
technologies and new products (Harvey)
9. Communication technologies which transmit information have combined with computer
technologies which can analyse and process information in a very powerful new digital age.
10. Although technology did not cause globalisation, it would be difficult to see how international
supply chains could function effectively without the technological advancements that have
occurred in recent times. Information technologies taken together with transport technologies, in the form
of air transport and containerisation in sea travel, make global production networks more and more possible
without sacrificing speed of response to customer needs.

11. Technology and ease of communication is said to have contributed to a shrinking world,
increasing the mobility of capital and facilitating its ability to locate anywhere and pushing
forward globalisation, in theory at least.
12. However, while technological innovation has undoubtedly facilitated global shift in manufacturing
and service provision, there is a very uneven geography of access to services like the internet and
other forms of technology.
13. The wealth gap which exists both within and between countries. This is reflected in the access to
technology which also varies widely within and between countries. [Urban areas are generally more

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social and political institutions and the infrastructure which supports not only technological
research and development but also funds the dissemination of information and ease of access to
developments like the internet.

likely to enjoy greatest access to technological tools like the internet, but as in the case of wealth and power,
global inequalities persist. As Dicken notes, two-thirds of all registered domain names on the internet are in
just three countries, namely the US, Germany and the UK.] These inequalities relate back to economic,

14. This raises ethical issues about the cost of technological innovation and where responsibility for
research is situated in the hands of corporations answerable to shareholders, and / or state
governments who in theory at least are accountable to their populace?
15. If corporations drive technological research as part of their personal programme of corporate
growth in a globalised world constantly on the look-out for new products and lucrative
innovations, should they be able to patent products and claim ownership of scientific developments
that might be seen as being of universal benefit to mankind?
16. There is also the issue of which countries / bodies in the world have the capacity to fund pure
science, which may have no direct, immediately apparent utilityi, but may lead to major scientific
discoveries as yet unimaginable. An example would be the space program.
17. In summary, technological advance is an important aspect of economic growth and is at the heart
of our internationalised, globalised world. The geography and distribution of access to technology
is uneven and the human decisions which have to be made about the use and application of
technological innovations are complex and fraught with ethical questions and socio-economicpolitical choices.
5. Ethics and Corporate Social Responsibility
1. The international business environment is beset by the full range of ethical dilemmas.
2. The consequentialist (teleological) approach to ethical decision making is where the outcomes of
an action are taken into account to consider whether a particular ethical choice can be justified on
the grounds that it delivers the greatest good for the greatest number where the end justifies
the means.
3. The alternative to this approach is the non-consequentialist (deontological) approach to ethical
decision making, where choices are seen in absolute terms an action is either morally justifiable
or not, irrespective of the outcome. Thus there would be some actions which should never be
taken, no matter what.
4. This leads us into considering whether there are absolute moral choices which apply in all
contexts are there ethical choices we can all agree on, in all societies. For example, can we all
agree, the world over, that children should have their childhood and an education and should not be forced to
engage in work? Even this simple question throws up many different considerations in different socioeconomic contexts around the globe, and highlights issues of ethical relativism, where ethical norms may
vary in different settings.

5. Perhaps the most pressing issue for us today is the increased influence of giant corporations and
their transnational activities through global production networks, particularly where practices in
some parts of the global production network would not be tolerated in another.
6. The image of capital as mobile, in the sense that today corporations have access to finance and
technology which can increase their ability to move around the globe wherever conditions are
most favourable for profit maximisation, gives giant firms leverage over governments eager to
attract their investment. As Crouch (2011) points out so well, this doesnt necessarily mean that

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7. These factors are brought into sharp focus when we consider different attitudes towards business
ethics.
8. The neoliberal context for our current phase of capitalist development puts forward a strong case
for businesses being free of political interference. Neoliberal theory sees the state as an
anticompetitive and potentially corrupt interference in the market. Neoliberal principles are
therefore founded on the benefits of private enterprise and the free operation of the forces of
supply and demand (competitive markets) in delivering the best economic outcome. An increase in
the size of the economy is seen as a benefit for all, as the creation of wealth, even if concentrated
in the hands of an elite, will eventually trickle down to all levels of society. To what extent is this

corporations will behave badly or engage in a general lowering of standards frequently termed the race
to the bottom in terms of their policies and practices, but it does give them a privileged position in setting
the rules of the race. The underlying reason for giant firms privileged position as powerful political actors
is that it is their market strategy that determines (or at least strongly affects) whether particular government
policies will be rewarded with investment or not, whether these are policies for making available a
population to work at low wages or one with high skills and secure lives (Crouch2011).

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6. Geography, History and Inequality in the International Business Environment

1. As neoliberal ideas acquire dominant status, the processes of global shift have seen the
restructuring and relocation of industry around the globe.

theory is supported by concrete evidence, in a world where the wealth gap appears to be
increasing everywhere.
9. When considering issues of ethics and corporate responsibility, we need to keep in mind the
potential for transnational corporations to use their economic strength to access political power.
10. While the world retains its social and cultural diversity, the absence of powerful international or
global regulatory bodies with power to enforce rules and regulations means that it is possible for
transnational organisations to manipulate standards for rule making and enforcement of legal
regulation across geopolitical borders. Hence it is very possible for there to be widely varying
standards of practice within a global production network and perhaps most crucially, while
corporations want politics to stay out of its affairs, the business lobby is itself a very powerful
actor.
11. In the case of ethics and corporate social responsibility, the desire by corporations to avoid state
regulation throws up some inconsistencies as we look at corporate attitudes towards social
responsibility. The basic neoliberal position on social responsibility, most notably expressed by
Milton Friedman, is that the corporations only responsibility is to its shareholders. Beyond that
responsibility, the corporations only moral / ethical responsibility is to abide by the law of the
setting in which it is located. From this perspective, the responsibility to ensure specific minimum
standards of social and environmental practice lies with the state, by establishing good legal
provisions, and any additional social responsibility undertakings by the firm could only be justified
if they benefit the shareholder.
12. Many firms have engaged with their own corporate social responsibility agenda, perhaps through
a non-consequentialist approach to their ethical position, or perhaps in response to advancements
in information technologies that have led to consumers of goods being made aware of unethical
practices within global production networks,
13. In line with the neoliberal hostility to government regulation, firms generally promote their own
voluntary codes of social responsibility as superior to legal regulation.
14. The key word here is voluntary, and the key issue is how/ when/ whether voluntary codes are
audited. If firms employ their own auditors, there may by major conflicts of interest and we need
to pay attention to who is doing the monitoring, where their loyalties lie, and what their interests
are (Soule).
15. There is some evidence of the effectiveness of consumer campaigns and also shareholder
campaigns in improving corporate ethics inside firms and along their supply chains. Indeed, some
firms have taken up the banner of ethical behaviour as a key feature of their corporate image, as a
positive marketing strategy. The overall picture, however, is a highly contested and inconsistent,
where neither legal regulation nor voluntary codes of socially responsible practice prevent abuse
and exploitation in the international business environment.
16. The voices of the people most disadvantaged by unethical behaviour workers, communities, the
natural world struggle to be heard against the power and hostility of commercial interests and
the corporation, and indeed, corrupt governments and state officials who collude in unethical
behaviour for personal gain (Crouch, 2011; Munck, 2002).
17. Thus we are left with a muddled picture of what corporate social responsibility (CSR) actually
delivers. Clearly, it would be a mistake to believe that CSR initiatives solve all ethical problems in
the international business environment. Having said this, as Crouch (2011) points out, it is rare to
find completely overt cynicism in the field of social responsibility and we should be ready to give
corporations, and indeed governments, credit for the good efforts that they do make.
18. The big questions relate to whether or not corporations have social responsibilities, and to what
extent they are able to influence the rules and ethical standards they have to abide by. The answers
are complex and as in other aspects of our studies, the role of economic power and political
influence in determining the rules of the game are closely related.

2. The chapter by Dicken (2011) published in the module reading materials, summarises the general
trends in globalisation and points out that history and geography really do still matter to the
individuals experience of their world. The wealth gap persists and grows, both within and
between countries.
3. Markets create wealth but also create inequalities and we see the evidence everywhere we look in
the international business environment.
4. For example, today we see that economic growth is centred in urban areas, but so too is some of the greatest
evidence of deprivation, and there are whole regions of the world which are marginalised from the benefits
of international trade and economic growth associated with globalisation.

5. In this context, poorer regions or countries keen for inward investment, may be persuaded, for
example, to engage in exploitative labour practices or allow environmentally damaging industrial
processes in their borders.
6. The fact that technological advance has allowed capital to be more geographically mobile has not
necessarily taken wealth to all the worlds citizens, even where new forms of industrialisation take
root.
7. Inequality is not the preserve of the worlds poorer countries, but is rather a universal feature
across the world, in mature capitalist settings as well as newly industrialising regions.
8. Limitations, often related to poverty, may affect an individuals access to education and hence
access to opportunity in the labour market. These factors can have lifelong impact and may confine
certain categories of workers in low skilled, low paid work that embeds them (and very possibly their
children and grandchildren) in poverty, rather than enriching them to any significant degree.

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9. Chief among the more vulnerable in society are women, the young, migrant labour, and ethnic
minorities, in any particular context. These are the types of people most likely to be disadvantaged
in society and to be found in poor quality jobs within the labour market.
10. There are thus a range of interdependent socio-economic, cultural and political factors to be taken
into account when considering wealth, inequality and disadvantage in todays international
business environment.
11. Should know about Disparities in wealth and opportunity on the global stage. [Your core text
book, Harrison (2010), is a good general source text, as is Dicken (2011), and it is relatively easy
to find statistical evidence from various UN data sets as well as on the ILO website.]