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How a Social Capital Approach can help Multinationals show Ethical Leadership

  • Peter Heslam
  • Ian Jones
  • Michael Pollitt

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.

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Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp388.

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Date of creation: Jun 2009
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Handle: RePEc:cbr:cbrwps:wp388
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Contact details of provider: Web page: http://www.cbr.cam.ac.uk/

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  1. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
  2. Narayan, Deepa & Pritchett, Lant, 1997. "Cents and sociability : household income and social capital in rural Tanzania," Policy Research Working Paper Series 1796, The World Bank.
  3. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
  4. Ian Jones & Michael Pollitt & David Bek, 2006. "Multinationals in their communities: A social capital approach to corporate citizenship projects," ESRC Centre for Business Research - Working Papers wp337, ESRC Centre for Business Research.
  5. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  6. Stelios Zyglidopoulos & Peter Fleming, 2008. "Ethical Distance in Corrupt Firms: How Do Innocent Bystanders Become Guilty Perpetrators?," Journal of Business Ethics, Springer, vol. 78(1), pages 265-274, March.
  7. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
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