IBUS7302 Chap.6 Ethics, Legitimacy and MNE Responses
Ethics, Legitimacy and MNE Responses
Make ethical reasoning auditable
Cross-border operations can expose gaps between local legality, stakeholder expectations and the firm’s commitments. Define the decision, benefits, burdens, rights and uncertainty before evaluating options through consequences, duties, rights and justice.
Compliance is important but does not by itself resolve every ethical question.
Match the response to the legitimacy gap
Legitimacy concerns acceptance by a relevant audience for a particular reason. An information gap may need disclosure, a voice gap may need participation, a competence gap may need capability or assurance, and harmful conduct requires operational change and remedy.
Implementation needs ownership, evidence, escalation and outcome measures rather than a symbolic promise.
What this chapter covers
- 01
Ethical issue framing
- 02
Stakeholder effects
- 03
Consequences and duties
- 04
Legitimacy audiences
- 05
Substantive responses
- 06
Controls and remedy
Worked example · free
Move from permit to legitimate operation
- 2Identify stakeholders, standards and the legitimacy gap.
- 2Separate symbolic communication from substantive action.
- 3Specify control, evidence and escalation.
Key terms
- Stakeholder
- A person or group affected by, able to affect or holding a legitimate interest in a decision.
- Legitimacy
- Perceived appropriateness or acceptance granted by a relevant audience.
- Remedy
- Action that repairs, compensates for or otherwise addresses harm after it occurs.
- Independent Assurance
- Review or verification performed by a party sufficiently separate from the activity assessed.
Ethics, Legitimacy and MNE Responses FAQ
Is a legal action automatically ethical?
No. Law establishes enforceable requirements, but it may leave stakeholder harms, rights or distributional concerns unresolved. Identify applicable law, then evaluate consequences, duties, rights and fairness. Do not assume that different local practice is unethical without evidence and a relevant standard.
What is the difference between reputation and legitimacy?
Reputation is a broader judgment about qualities or performance. Legitimacy concerns whether an organisation or action is accepted as appropriate under an audience’s expectations. A publicity campaign can influence reputation, but legitimacy often requires participation, competence, conduct change or remedy.
What makes an ethics recommendation implementable?
It names the owner, standard, control, evidence, reporting channel, escalation and remedy. Training or a policy may support the response but rarely completes it. Use outcome measures such as incidents, complaints, audit closure, retaliation signals or remedy time rather than paperwork alone.
Exam move
Select three cross-border dilemmas and write the decision, affected stakeholders, benefit, burden, rights and uncertainty for each. Evaluate every option through consequences, duties, rights and justice, noting where the lenses agree and where a trade-off remains. Then identify the audience whose legitimacy matters and classify the gap as information, voice, competence or conduct.
Match the response accordingly: disclosure, participation, assurance, operational change or remedy. For implementation, create a control chain with owner, standard, evidence, reporting route, escalation and outcome measure. Test whether a symbolic communication could be removed without changing the real response; if it could not, the plan may be relying too heavily on appearance.
Practise cases where home, host and international expectations differ, seeking a lawful practice that protects the underlying principle. Finish by writing a bounded recommendation and a breach scenario that shows what happens when the control fails. Add a power map that compares who receives benefits, bears harm, controls information and can stop the decision.
Use it to identify voices missing from the current evidence and a credible way to include them. For legitimacy practice, take one contested operation and write separate expectations for regulators, workers, customers and communities. Decide whether each gap concerns information, voice, competence or conduct, then select a response with observable evidence.
Build a breach protocol that separates immediate protection, investigation, corrective action, remedy and prevention. Assign escalation outside the target-owning manager where conflict could compromise the control. Review outcome measures critically: a low complaint count can reflect safety or a reporting channel people distrust, so pair lagging incidents with awareness, access and retaliation indicators.
Close by explaining why a lawful permit, positive reputation and stakeholder legitimacy are related but not interchangeable forms of approval. Run a symbolic-versus-substantive test on the recommendation. Remove publicity and ask whether conduct, participation, assurance or remedy still changes. If nothing material remains, redesign the response.
Next, identify the evidence the affected audience can independently inspect and the consequence when a threshold is breached. This makes accountability credible. End by writing one sentence that states the unresolved ethical trade-off honestly rather than claiming every stakeholder wins.
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