1. Cross-cultural Study of MNEs’ Policy Positions - Beyond Ethics
Lecture VIII
Cross-cultural Study of MNEs’ Policy Positions - Beyond Ethics

2. MNEs approaches in dealing with ethically related issues
Compliance Approach
Conformity with externally imposed Standards
Integrity Approach [Paine, 1994]
Self-governance to chosen standards

3. Self-interests
Companies are becoming more socially responsible because they know long-term profits will be greater if they act responsibly.
( evidenced in R. Wang’s 2006 study)

4. Culture and Ethics
Studies of impacts of national cultures on ethical decision making
[Donaldson 1989, Rest 1986, Wines/Napier 1992, Robertson 1995, Robertson/Hoffman/Herrmann 1999]

5. Hofstede [1984] 4 cultural dimensions: individualism / collectivism
power distance
uncertainty avoidance
masculinity / femininity

6. Roberston’s research [1999]
“Individualist societies are less ethical “

7. This Study exams
If a company adopts Local Standards/Domestic Standards/Best practices on wage rates, benefits, health insurance, safety, and environmental pollution policy
Likert-scale measurements of company’s attitude toward doing “what is right”, “what is legally right”, and other ethically related issues
Company characteristics 
Type of industry
Size
Degree of internationalization
Importance of the overseas market

8. This Study exams (Contd..)
Company characteristics 
Type of industry
Size
Degree of internationalization
Importance of the overseas market

9. Methodology
200 questionnaires to US subsidiaries in Taiwan, and Taiwanese companies with DFI overseas
Overall Sample 
Taiwan firms and 17 US firms responded
Codes of Conduct/Policies/Standards
US – 94%
Taiwan – 46%

10. Methodology
Strong correlation between firms with commitments to the integrity approach and having developed codes/policies/standards
Businesses from the individualistic cultures are not necessarily less ethical.
Prompted by self-interests, corporations will develop policies to ensure better international business practices

11. Degree of internationalization matters
Table 1 Company Characteristics and Decisions on Overseas Facilities (Statistical Significance of the Correlation Analysis)
No. of Foreign Subsidiaries
Years of International Operations
% of Overseas Sales
Health Insurance NS
.024
Environmental Control
.029
Code on Ethical Conduct
.009
.007

12. Degree of internationalization matters
Table 2 Compliance Strategy vs. Integrity Strategy
Local Standards (Compliance)
Best Practices (Integrity)
Wage
76.7%
18.6%
Benefits
69.8%
27.9%
Health
74.4%
Safety
41.9%
44.2%
Environment

13. Degree of internationalization matters
Table 3 Compliance vs. Integrity Strategy with or without Established Code of Conduct, Policy and Standards
With Code
Without Code
Local Standards (Compliance)
Best Practices (Integrity)
Wage
79%
18%
73%
20%
Benefits
71%
25%
66%
33%
Health
64%
93% 7%
Safety
35%
50%
53%
Environment
43%
46%
47%
40%

14. Degree of internationalization matters
Table 4 Compliance vs. Integrity Strategy of the US and Taiwan Firms
Taiwan US
Local Standards (Compliance)
Best Practices (Integrity)
Wage
87%
11%
65%
29%
Benefits
67%
27%
70%
30%
Health
88% 8%
53%
35%
Safety
58%
31%
18%
Environment
23%
59%