accordingly. Any adjustmentWrst requires some assessment or estimation of the
loss in proWts due to forgone sales, productivity, and needed capital attributable to
the MNC’s poor CSR reputation. Against that loss in proWts and seeking to act
rationally, MNCs can be expected to take actions to eliminate their losses. Here we
Wnd that many MNCs (especially in the clothing manufacturing and retail sector)
have attempted to protect or improve their brand reputations, as evidenced by a
proliferation of ‘company codes of conduct.’
As reviewed in some detail by Tsogas ( 1999 ), these codes range considerably in
their content. At a minimum, codes of conduct express the value and principles
guiding the MNC in its endeavor to act socially responsibly. For those that go
beyond these general statements, the types of global HR provisions covered
typically include (a) prohibitions against various forms of discrimination, child
labor, and harsh discipline and (b) guidelines laying out minimum workplace
conditions and policies. These codes apply not only to how the MNC manages
its own operations but often how the MNC expects suppliers to manage their
operations. A central criticism levied against these codes of conduct is that MNCs
fail to monitor and enforce compliance with them, a criticism or concern that has
led some MNCs to either contract with independent organizations or develop their
own internal capacity to monitor compliance (see e.g. Frenkel and Scott 2002 ).
The level at which MNCs set global employment and workplace standards and
the degree to which they ensure that their own operations and those of suppliers
comply with those standards is bound to vary widely. That variance would appear
to hinge on the damage to reputations and consequent loss in proWts attributable
to the reactions of customers, employees, and investors responding to public media
exposure of MNCs’ tolerances of socially substandard practices. Thus, the greater
the costs incurred for acting socially irresponsibly in regard to labor standards, the
higher the standards set and the more stringent the compliance with those stand-
ards. In developing global HR strategies, therefore, MNCs that invest in and/or
outsource to low-wage countries would rationally take into account assessments of
the demand for CSR. In turn, MNCs would set HRM policies and practices
governing their own foreign operations and those of foreign suppliers, as well as
set policies governing reductions-in-force in their domestic operations, that opti-
mize proWtability.
- 5 Aligning Global HR and Business Strategies
As synthesized by Boxall (this Handbook, Ch. 3 ), the strategic HRM literature
generally has held that to optimize the net gain derivable from HRM, policies
and practices underpinning HRM systems need to be well aligned and these
HRM systems, in turn, need to be eVectively aligned with broader business and
organizational strategies. As synthesized by Allen and Wright (this Handbook,
global human resource strategy 499