New Horizons in International Business series
Edited by Subhash C. Jain and Ben L. Kedia
Chapter 4: Institutions, MNEs, and Sustainable Development
Ben L. Kedia, Jack Clampit and Nolan Gaffney INTRODUCTION In 1983, Norwegian Prime Minister Gro Harlem Brundtland chaired the World Commission on Environment and Development. Gathered to study links between economic growth, poverty alleviation, and environmental degradation, it coined the term ‘sustainable development’. Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: ● ● the concept of needs, in particular the essential needs of the world’s poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs. (WCED, 1987: 43) MNEs, and the institutional frameworks that guide them, play a key role in determining the likely success or failure of sustainable developmentrelated goals. Critics sometimes claim that MNEs exploit workers and harm the environment, and some fear that the goals of development and environmental stewardship are contradictory. While more optimistic, this chapter is not overly normative regarding the link between economic development and environmental performance, and the role played by MNEs. Our primary goal, rather, is to study the rich, interrelated nature of institutions, MNEs, development, and the environment, focusing on developmental antecedents and environmental implications supported by the literature. Regarding institutions, this chapter adopts North’s definition of institutions as ‘the humanly devised constraints that structure human interaction’ via ‘formal constraints (rules, laws, constitutions), informal constraints (norms of behavior, conventions,...
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