The world is changing rapidly, and international business must change with it. Two major concerns in recent times have been this planet’s environment and the rights of the people who occupy it. The business has a rather dismal record concerning both of these important issues. However, the power on this planet is shifting from governments to markets, and that is bringing change. There is fierce competition on the international front for resources, including human resources.
Countries with abundant or rare natural resources or populations available for work have room to bargain. Moving large installations once the local environment is destroyed has become a very expensive proposition, and the place available to which they can move have become fewer. Jobs that require no training are becoming rare, so companies must invest in the workforce. In addition, companies that already have foreign installations have found that their workforce has also become their customers, so it begins to make sense to protect that workforce even more. International multi-corporations realize that it is good business to take care of the environment where they manufacture and treat their workforce well in order to retain trained people.
The functionalist view of society states that society will develop to fill its needs. It also says that governments and institutions will change to accommodate the needs of society. Wiarda finds it much more widespread than Wallerstein.
“Regarding the debate over the appropriateness of the functionalist approach, I would suggest merely that functionalism was never a comprehensive and closed theory but rather a loose set of guidelines.” (1991, p. 38)
The functionalist view of social development promotes the idea that when social institutions and governments can no longer make things run smoothly, the populations will insist upon change. Currently, governments and international organizations, such as the WTO, no longer make all the rules. “The global financial marketplace created by globalization has moved beyond the control of any government or regulator.” (Romano, 2000, p. 91) Governments don’t usually lead based upon the needs of their society, but rather they follow some ideology. Businesses, in contrast, generally base their decision upon whether or not they are profitable. Sometimes they take a short-term view and ignore the environment, but more and more, the long-term view begins to look profitable, especially as things now change faster than they used to.
So the most strategic businesses are looking for ways to promote sustainable development, which is actually cheaper than the destroy and move strategy of the past. The WTO, which is now a stronger influence than the UN, creates and enforces rules for countries and corporations engaged in international trade in order to keep business running smoothly. This organization tries to promote fair competition in spite of its large American influence.
Governments put up tariff barriers to protect domestic businesses when they should find ways to help those businesses change with the times. Subsidizing businesses that are not indigenous to the country and which are not really profitable is just not practical. Instead, adjustments through international trade can be good to help businesses to survive and help unprofitable businesses to change.
Currently, China engages in trade with other WTO member nations. China has agreed to abide by the WTO rules concerning fair trade, ethical practices, and environmental protection and reporting. China has a really big workforce, and companies are want to take advantage of it. China favors joint ventures because it benefits their companies also. Because of the WTO rules, work environments and wages have improved for these Chinese workers.
China’s greatest resource is its workforce. Because of better conditions and wages for workers, it is also becoming an excellent market. China needs technology that can be offered by the West and has the technology it can market to underdeveloped nations, like those in Africa.
“The entry of Chinese interests into the Nigerian market, however, brings Asian companies into more direct competition with the established order. Abuja is likely to welcome the strategic move, partly because of the new investment but also because it should signal increased competition for Nigerian acreage.” (“China, India Boost African,” 2006) Africa has raw materials that China desperately needs for manufacturing. Competition forces China to offer a better deal to African countries with natural resources to trade.
Romano says corporations are forced by economics to comply with sustainable development practices. “MNCs compromise their own future by unsustainable development practices.” (Romano, 2000, p. 91) Most government and trade organization rules make companies report how they treat employees, what they do for local communities and how they affect the environment. Some conditions in factories in Mexico are now getting better because of fines based upon this reporting. Most people know that the natural environment is in trouble, and local governments need to please their people, so they try to get better treatment for them.
In addition, companies have begun to understand the profitability of community development. “It is important to recognize that no country since 1950 has been able to sustain the development of any sort without prudently managing the macroeconomic policy or maintaining macroeconomic stability.” (Weaver, Rock & Kusterer, 1997, p. 99) Romano suggests that the same forces used in ISO 9000/9001 can be used to promote the SA 8000 for social accountability and the ISO 14000 standards for environmental responsibility. (Romano, 2000, p. 91)
Dove soap and skin products are using models of all shapes and sizes and ethnic origins in order to appeal to people who care about ethics, equality, and the planet. Starbucks opened outlets in France in 2005 and made sure that they were complementary to the French cafés. Companies are finding that they must respect the cultural values of their markets.
Company image has become an even more marketable asset. Therefore, companies who do not care about or contribute to community improvement, environmentally friendly practices, and ethical behavior, including fair treatment of employees, are not popular. Sustainable development is popular and more companies are paying attention.
Clearly, the Evidence Is Persuasive that political stability and good governance are essential prerequisites for development. Without them, development of any kind is impossible. But these necessary conditions are not sufficient conditions. In addition, macroeconomic policies play an important role in achieving broad-based sustainable development (BBSD). (Weaver, Rock & Kusterer, 1997, p. 98)
Globalization has brought change as international trade organizations have replaced nation-states as diplomatic entities formally making agreements between interested parties. While the laws and treaties of nation-states influence trade, the major impact is the business members of the global economy. The greatest controlling force is economics. It is simply becoming a better world because companies see it as profitable to take care of their people, their communities, and the planet. Rising standards of living worldwide are creating new markets based on different value systems. The consumer is king. So I am really optimistic about the future for business and the planet.
References
(1991). New Directions in Comparative Politics (H. J. Wiarda, Ed.) (Revised ed.). Boulder, CO: Westview Press. Web.
Calhoun, Craig. “functionalism, “Dictionary of the Social Sciences, 2002.© Dictionary of the Social Sciences 2002, originally published by Oxford University Press 2002. Web.
China, India Boost African Status: The Bullish Entry of China and India in the African Oil Industry Is Changing the Traditional Relationship between Africa and the West. It Gives Africa a Powerful Platform from Which to Negotiate. (2006). African Business 30+. Web.
Lipke, David, 2006, Adages 50 years of image-making; evolving from the rational pitch to glossy lifestyle campaigns, men’s fashion advertising over the past half-century is a window on culture and society. Daily News-Record.
Romano, P. (2000). Sustainable Development: A Strategy That Reflects the Effects of Globalization on the International Power Structure. Houston Journal of International Law, 23(1), 91. Web.
Weaver, J. H., Rock, M. T., & Kusterer, K. (1997). Achieving Broad-Based Sustainable Development: Governance, Environment, and Growth with Equity. West Hartford, CT: Kumarian Press. Web.