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How a Social Capital Approach can help Multinationals show Ethical Leadership

Author

Listed:
  • Peter Heslam
  • Ian Jones
  • Michael Pollitt

Abstract

In this paper we explore how social capital concepts can guide multinational firms’ decision making in developing countries. From a survey of recent research, we identify four types of social capital: institutional, relational, moral and spiritual. Because these capitals overlap and yet are distinctive, they are individually and collectively useful in assessing how firms contribute to society beyond the generation and accumulation of financial capital. In each case we discuss examples of how particular multinationals have sought to build the different elements of social capital. Our examples include Intel, Anglo American, Merck and ServiceMaster. We suggest that a consideration of the impact of decisions on each of these elements of social capital provides an important ‘moral compass’ for these firms. We also suggest further work that needs to be done in understanding the impact that multinationals have on the social capital of the countries in which they operate.

Suggested Citation

  • Peter Heslam & Ian Jones & Michael Pollitt, 2009. "How a Social Capital Approach can help Multinationals show Ethical Leadership," Working Papers wp388, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp388 Note: PRO-2
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp388.pdf
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    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, pages 222-279.
    2. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, pages 1251-1288.
    3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    4. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, pages 115-135.
    5. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, pages 121-144.
    6. Ian Jones & Michael Pollitt & David Bek, 2006. "Multinationals in their communities: A social capital approach to corporate citizenship projects," Working Papers wp337, Centre for Business Research, University of Cambridge.
    7. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, pages 3-39.
    8. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-897, July.
    9. repec:hrv:faseco:30747160 is not listed on IDEAS
    10. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, pages 222-279.
    11. Stelios Zyglidopoulos & Peter Fleming, 2008. "Ethical Distance in Corrupt Firms: How Do Innocent Bystanders Become Guilty Perpetrators?," Journal of Business Ethics, Springer, pages 265-274.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    social capital; multinationals; economic development; institutional capital; relational capital; moral capital; spiritual capital.;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • Z1 - Other Special Topics - - Cultural Economics

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