Show Less
You do not have access to this content

Reputation Risk and Globalisation

Terry O’Callaghan

Recently, multinational corporations have begun to reinvent themselves as socially responsible actors. This is largely in response to activist pressure. These activists have perceptively understood the link between corporate success and corporate behaviour. Corporate self-regulation has emerged as an important mechanism to counter this activist pressure. The author argues that corporations have a capacity for self-regulation because their reputation is critical to their success. As such, reputation is beginning to discipline corporate behaviour. The book first explores the link between corporate reputation, corporate behaviour and self-regulation. The author then compares and contrasts various studies of multinational corporations that have sought to self-regulate.
Show Summary Details
You do not have access to this content

Chapter 3: Exploring the idea of a self-regulating corporation

Terry O’Callaghan


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.1 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. Generally speaking, anti-corporate activists argue that what...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.