A corporate policies and procedures manual (so-called corporate code of conduct in this writing) is a document that presents all the organization’s policies, its procedures to implement those policies, and the organization’s forms to be used for specific personnel transactions. Corporate code of conducts are tools designed to acquaint managers and supervisors with the organization’s policies and procedures and to assist them in carrying out their day-to-day responsibilities.
Corporate codes of conduct as policy statements that define ethical standards for companies, originated in the early 1970s when TNCs were criticized for their behavior in developing countries. Since that time, codes of conduct have been voluntarily developed by TNCs and TNCs, often with the help of NGOs, to inform customers about the principles they follow in the production of their goods and services. Even though several hundred codes of practice exist and there is no standard for their contents.
Mandatory vs. voluntary
Determining whether the code should be mandatory or voluntary in nature depends upon various factors and specific jurisdictions. These factors range from the content of the Code to the attitude of the affected countries and governments to the urgency of implementation and expected or anticipated acceptance of a code. Concerning uniformity and compliance, it generally seems that mandatory codes of conduct are the more promising form of establishing the necessary norms and provisions to ensure sustainable, fair and responsible behavior of TNCs.
A mandatory code which includes all standards in a state is compulsory. The strongest rationale in favor of such a position is that only a mandatory code can effectively mitigate the power of TNCs. A voluntary code refers to the discretionary application of all regulations to contracting states and TNCs, which is relatively easy for states to reach agreement on such a code. Also, because voluntary codes are not legally binding, specific provisions are more attainable and subsequent modification is easier.
Concerns of developing countries
Host governments frequently stress that TNCs fail to operate in harmony with local economic, social, and political objectives. Because each unit of a TNC network is nominally subject to the laws of the country or region in which it is established, no single authority can exercise control over the network as such and its global operations. Thus, the global context in which TNCs operate necessarily limits national and regional efforts at controlling or even monitoring their activities.
The host countries are specifically concerned about the following matters:
a) the undermining of national sovereignty through the extraterritorial application of home country laws;
b) TNC interference in internal political affairs through bribery and illegal contributions;
c) the conflicts between national goals, economic and otherwise, and the profit-making and growth goals of TNCs;
d) TNC manipulation of natural resources via control over production;
e) decision-making by TNC management in or from a few industrialized countries controlling the allocation of resources of TNC subsidiaries, affiliates, and branches operating in host countries; and
f) the extent, cost, or appropriateness of technology transfers.
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