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Canadian Regulation of Multinational Corporations

Introduction

Purpose and context of the report

The prime principle of globalization is featured by the interconnected holistic phenomenon. Due to globalization, the world has become a village in terms of politics, economic endeavors, and cultural interaction. Understanding the position of globalization in the Canadian society requires critical analysis of cognitive values attached to practices, beliefs, and social dynamics which control and align a society towards astute of simultaneously interacting functions at macro and micro levels (Muldowney, 2015). In the case of the Canadian social and economic environments, the third estate comprising of employees has endured inhuman work environment treatment, unreasonable wages, and abuse of age limit for legal labor provided by some of the international companies that operate in Canada (Caputo 2007).

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In the recent past, there have been issues with regulating the contributions by multinational corporations in the Canadian society and economy due to variances in economic and social aspect of the incorporations. For instance, in the year 2014, there was concern in Canada on how to regulate the international corporations to protect the interest of the customers from unethical business practices, low wages, poor condition of working, and general interference with the Canadian social fabric. For instance, the some of the Chinese oil companies in Canada have been accused of the above unethical practices (Muldowney, 2015).

These companies have been accused of offering very uncompetitive wages besides disrespecting the Canadian labor management laws. As a result, many Canadians have suffered in the hands of these companies, despite operating and generating revenues from the local market. This paper identifies the significance of regulating the international corporations in Canada. This will be followed by the reasons why it is necessary to regulate the contributions of the multinational corporations in Canada. The paper will conclude by offering recommendations on how to sustain the regulation strategies to protect the local consumers in Canada.

Background and rationale of the report

In Canada, the government is proactive in regulating the contributions of the multinational corporations to ensure that the economy and the society are at advantageous position. Specifically, the regulation has been implemented through the stringent requirements on corporate social responsibility, labor laws, and balance between economic and cultural aspects of sustainable business, in all sectors of the economy. With the rise in technology and other competitive forces in the modern global production activities, the government of Canada should introduce more stringent policies to guarantee mutual benefits between the citizens of Canada and the multinational corporations. Thus, the rationale of this report is to present a neo-liberal and social-democratic recommendations on the best way to regulate the contributions of multinational corporations to Canadian society and economy.

Literature review

Existing views and findings

Social Perspective on Globalization

The foundation of globalization in business functions on global integration and its changing patterns that led to the current interdependent and networked of global order. Through the global production, the world is now manifested with the emergence of mass society in terms of social interaction: mass culture, mass welfare, mass consumerism, and mass communication. This institution has promoted cultural interaction and healthy business competition (Muldowney, 2015). The global culture enables mankind to acquire new skills, technology, and appreciate diversity through the global business regulations in different countries such as Canada.

Economic Perspective on Globalization

The concept of development has attracted different reaction since “it can be understood as a process likely to happen with economic growth or it could be understood as a dynamic socio-economic process for empowering poor and excluded people” (Muldowney, 2015, par. 12). Though development is a continuous process, the Third-Way and Neue Mitter models are characterized by the motivation to positively improve the lives of those in the countries where international companies operate in. These models inspire change and betterment of the target groups. Hence, an unlimited access to improved infrastructure has contributed to competitiveness, efficiency, growth, and increased capabilities of the citizens of the global societies (Muldowney, 2015). In the process, the social exclusion and inequality may be reduced.

Hidden face of globalization in Canada

The hidden face of globalization in Canada is suffering and exploitation of the poor factory workers by the successful international companies that make their products in Canada. These companies engage in unethical labor relations practices such as employing underage workers, paying peanuts to workers, and neglecting their social welfare despite the huge profits they generate from these products. Due to the unstructured international relationship between Canada and these international companies, labor laws balance is threatened by sudden changes in the social systems of the Canadian society introduced by the foreign companies (Gebert, 2006). This brings about the question of how the local people need to stay together and to attain their needs equitably, without involving in overindulgence, selfishness, and myopia.

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Many authors have endeavored to comprehend the revolutionary implications of neo-liberalism as it continued to evolve in an ordinary arena of business practices within their territorial borders. For instance, Karl Marx expressed these sentiments on alienation and pain in the lower class workers imprisonment by the companies who have the resources to manipulate and twist social, development, and welfare aspects of the Canadian workers’ society.

In fact, it is apparent that these companies, drawn from the bourgeoisies and the ruling elites in the developed world of the international community, are thriving in discrimination and exploitation of labor supply to satisfy their selfishness (Gebert, 2006). Since they are the masters of labor production tools such as wages, this group, comprising of just a small percent of the society, comfortably sits at the apex of Maslow’s hierarchy of needs pyramid and cannot share the huge profits with the local Canadian laborers who are subjected to harsh working conditions to make designer items for other societies.

Internationalization is vital in business management and operations, especially when a company intends to localize production tools such as labour, distribution, language, ethics, and culture in order to fulfil the ‘absolute advantage’ (Narver, 2009). Often, in the contemporary business environment, managers face challenges in line of duty, especially when the survival of a company is directly affected by unfavourable market swings.

The aspects of internalization, stereotyping, cultural classification, and acculturation of a company are incorporated in various international trade theories (Gebert, 2006). Foresight is very crucial since it gives a business rough perspective and an overview of the future concerning the expected and unexpected changes and challenges in the product life cycle. Therefore, businesses have to carefully examine and evaluate their past and Endeavour to adopt skills that will be relevant for future challenges and responsibilities (Narver, 2009).

The international trade theory provides an overview of literature with relation to their prospective or viewpoints of different market segments. Besides, it authenticates the ability to look forward into the future in an effort to predict and anticipate various developments before they actually take place (Muldowney, 2015). In addressing the theory of factor endowment, foresight facilitates feasibility in production among international quarters engaged in trade, since it focuses on balanced production factors.

In a perfectly skewed labor market, Smith argues that wages are supposed to be determined by the cost of production and total output. Unfortunately, this is not the case. The poorly paid employees of the foreign companies located in Canada are merely spectators of exploitation propagated by the foreign based companies operating within the local market. Despite the fact they are the majority and providers of labor resources, they are unable to unite and move from mere spectators into agents of quantifiable and desirable change they long to witness in their work environment. Interestingly, Locke argues that Canada has the ability to regulate the foreign based companies to minimize the impacts of irregularities in labor management (Muldowney, 2015).

Development and perception of an individual are greatly influenced by events in his or her external environment such as the type of income received against labor given and the social welfare fostered by interaction. At present, these are skewed towards fulfilling selfish ambitions of the selfish and myopic global companies in Canada, that accrues huge profits from poorly treated, underpaid, overworked, and sometimes underage workers in Canada, especially from the Aboriginal community (Gebert, 2006).

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The neoliberalism school of thought opines that absolute gain comes before relative gains in a relationship between two parties. This belief is assimilated in the game theory to explain and extend on the positive and negative influences that these relationships create at the global level. Due to global interrelatedness, the economic meltdown has caused an imaginable damage in the democratic, business, and social segments in Canada. Besides, the mass society has weakened traditional societal values; capitalism revolution weakened aristocratic and traditional values such as socialism and communism in Canada (Muldowney, 2015). This means that the current trend might result in imbalance between the gains from foreign direct investment and sustainability of the local labor as a factor of production.

Discussion

Evaluation of the current findings

Regulation of multinational corporations is significant towards sustaining the social and economic aspects of the Canadian society. Actually, the regulatory authority in Canada is proactive in its activities to ensure that the interests of citizens are protected through enhancing ways by which multinational companies can serve the social and economic pillars as part of the corporate social responsibility. Despite the series of benefits that Canada derives from multinational companies, such as improved skills, taxes, and increased employment, there are demerits of globalization in business.

These demerits include unethical business practices, low wages, poor working conditions, and disturbance of the social fabric of the dynamic society. Apparently, there is a need for the Canadian authority to regulate the multinational corporations’ contributions further through incorporation of business ethics policies and neo-liberal economic intervention by creating regulations that minimize interference with the free economy (Muldowney, 2015).

The first characteristic of the international business system is the existence of different units. In reality, the independent states can be described as autonomous units of business power influence with more or less the same challenges. These units generate the rules of operation since their influence cannot be undermined. The second characteristic of the international system is the unique structure of change systems within each independent unit of influence.

The differences in the change system structures “since the distribution of capabilities across the units” (Rajesh, 2006, par. 9) may not be easy to classify. The unique structure of change systems in the international system explains business alignment and partnerships among the autonomous state units. Personal gain supersedes the global interest. Specifically, “through trade and/or cooperation, the political relationship within a state will limit its cooperation with other states (Thorsen & Lie, 2012, p. 35).

Globalization is a procedure of overseeing economic and social flows leading to economic association within trading corporations across the globe. Capital flows across borders and organizational structures are created in such a way that companies can respond quickly to changing environments. In the past two decades, technology has significantly become sophisticated, making it easier and economical for people to carry out business across the world (Rajesh, 2006).

The driving forces have broken down many physical barriers to worldwide communication which used to limited connectivity between businesses over long distances. Globalization is a multifaceted recognizable reality, encompassing a wider variety of dimensions (economic as well as social); where almost every measure of world markets and commerce-including the flow of foreign direct investment and traditional business culture-has been restructured with remarkable openness of economic and global views towards a barrier free global village (Thorsen & Lie, 2012).

The propelling factors for the increasing interconnectivity and independence of the world’s markets and businesses are availability of low-cost highly skilled human resources especially in less developed countries. Also, increased innovations and development in telecommunications and the microprocessor field have significantly reduced the transaction cost of carrying out businesses where the Information technology is a catalyst (Rajesh, 2006). Thorsen and Lie (2012) pointed out the significance of globalization as free movement of “foreign traded goods and services, capital, technology and labor” (Thorsen & Lie 2012, p. 35).

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Further, “public awareness of issues such as human rights, democracy and gender have increased significantly due to greater access to newspapers, radio, television, telephone, computer and internet. These developments have arguably led to improved allocative efficiency that, in turn, enhances growth and human development” (Rajesh, 2006, p. 51). Thus, there is a need for creation of neo-liberal and social-democratic policies to guarantee proper regulation of the contributions of the multinational corporations to the Canadian society and economy to make the relationship between the state and these businesses sustainable.

Recommendations

Neoliberal approach

Foreign Direct Investment (FDI) is usually a commonly used driving force to attract globalization in Canada. This is for the knowledge that FDI contributes to the creation of employment opportunities and infrastructure development (Rajesh, 2006). The most common strategy used to attract FDI into Canada is to establish a special export processing zones or free trade zones (Muldowney, 2015). Canada is continuously inviting FDI without any study or research thus creating threats to the sustainable development and growth of local industries. Therefore, there is need to regulate the FDIs in Canada to ensure that domestic companies can compete with the multinational corporations. Reflectively, globalization has influenced the dramatic increase of FDI inflow in Canada and accelerated the role of the economic growth. However, the allocations of FDIs are not always smooth in Canada as such FDIs bring hypothetical development rather than real life scenario (Rajesh, 2006). Therefore, regulations of the FDIs will put Canada in a competitive edge.

Social democratic approach

The Canadian government should implement further regulations on the ethical management aspect of globalization to protect its citizens from unethical business practices such as poor working conditions and unstable labor practices. This recommendation will attempt to incorporate a sense of honesty, integrity, and truthfulness in duty performance and embracing the dynamic Canadian culture by multinational corporations (Muldowney, 2015). The proposed change will also guarantee that cultural values and conventional strategies are proactive in facilitating the creation of an imperative environment for interactive business despite differences in business variation and divergent insight (Thorsen & Lie, 2012). Thus, the need for an ethical connection between Canadian cultures and multinational corporations is important to ensure that their contributions to Canadian society and the economy are sustainable.

The need for a strategic compensation plan, as a form of promoting quality and productivity, has made companies across the global village to adopt different incentive plans to give employees an array of benefits. Often, these plans are aimed at enticing the workforce to perform above the normal standards. To increase productive behaviour for all employees, it is vital to create a healthy work environment and personal growth perspectives that apply to all situations. Labour efficiency is a critical element in optimal performance in any organisational environment. Among the merits of incentive plans include minimisation of envy between employees, acquisition of different learning skills from several interacting teams, and collective responsibility in the execution of duties. This translates into better employment terms for the Canadian citizens offering labour services to the foreign owned companies.

References

Caputo, R. (2007). Social theory & its relation to social problems: An essay about theory and research with social justice in mind.” Journal of Sociology & Social Welfare, 34(3), 11-14.

Gebert, D. (2006). Improvement in the context of transformational change: a study of acquisition and privatization in Eastern Europe. Journal of leadership and organizational studies, 12(3), 7-12.

Muldowney, S. (2015). As unethical business practices become more sophisticated, lawmakers face a very difficult challenge. Web.

Narver, D. (2009). Cultural differences: Impacts to international business strategy. Web.

Rajesh, M. (2006). Neoliberalism and economic globalization. Web.

Thorsen, D., & Lie, A. (2012). What is neoliberalism?  Web.

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StudyCorgi. (2020, December 3). Canadian Regulation of Multinational Corporations. Retrieved from https://studycorgi.com/canadian-regulation-of-multinational-corporations/

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StudyCorgi. 2020. "Canadian Regulation of Multinational Corporations." December 3, 2020. https://studycorgi.com/canadian-regulation-of-multinational-corporations/.

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StudyCorgi. (2020) 'Canadian Regulation of Multinational Corporations'. 3 December.

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