Exploring the Idea of a Self-Regulating Corporation
Chapter 3: Exploring the idea of a self-regulating corporation
What is the most appropriate way to deal with corporate malfeasance? Governments invariably use the threat of hefty fines and incarceration of senior managers in order to deter criminal behaviour. The failure of Bernard Madoff’s Ponzi scheme means he will never be released from jail, and the suicide of his son two years after Madoff was sentenced suggests that individuals who defraud investors pay an inordinately high price for their crimes. These cases are relatively clear cut. Madoff simply pleaded guilty to defrauding his clients. But what about the times when things are less clear cut? These are the ethical ‘hard cases’, where it is often difficult to prove wrongful behaviour or to decide whether wilful negligence, inadvertent misfortune or outright criminality is the root cause of a crisis. An MNC may simply overlook issues of public concern. Schwartz and Gibb’s (1999: 59) notion of MNCs operating in the ‘gray area’ is a fitting description of the difficulties facing global MNCs today. They may, or may not, fully comprehend the consequences of their conduct while they are single-mindedly focused on their business activities. But how are MNCs to be judged under these circumstances? How should they be sanctioned, and what is the best way to ensure they behave ethically in the future? The issue here is to determine the most suitable form of regulation to ensure that MNCs remain profitable while acting in a socially responsible manner.
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