Beyond cops and robbers: The contextual challenge driving the multinational corporation public crisis in China and Russia
Entering the new century, foreign Fortune 500 companies operating in China and Russia have encountered an increasing number of public crises concerning various social and environmental issues. The public crisis refers to an unexpected, non-routine, and media-exposed event in which affected stakeholders (e.g., community members, employees, customers) charge that a company has compromised their interests. Although many of these crises involved the misdeeds of multinational corporations (MNCs), the story is beyond catching baddies. Instead, there are contextual challenges rooted in the social, political, and market environments of China and Russia that drive the occurrence of the public crisis regardless of MNC misdeeds. Considering the institutional change and stakeholder growth in these countries, it is increasingly important for MNCs to understand and effectively deal with these challenges. This article provides insights to MNCs and researchers in three ways. First, the article reveals the patterns of MNC crises in the two countries from 2000 to 2011 and presents the variation between the two countries. Second, the article identifies four types of contextual challenges, including the global-national challenge, the social-trust challenge, the institutional-voids challenge, and the normalized-misdeed challenge. Finally, the article discusses the managerial implications of these challenges and recommends tackling strategies.
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- Chuck C Y Kwok & Solomon Tadesse, 2006. "The MNC as an agent of change for host-country institutions: FDI and corruption," Journal of International Business Studies, Palgrave Macmillan, vol. 37(6), pages 767-785, November.
- Justin Tan, 2009. "Institutional Structure and Firm Social Performance in Transitional Economies: Evidence of Multinational Corporations in China," Journal of Business Ethics, Springer, vol. 86(2), pages 171-189, March.
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