How Consumers Influence the Behavior of U.S. Multinational Companies

As stakeholders, consumers have an interest in the behavior of U.S. companies operating in Mexico and how these companies conduct their multinational operations. Generally speaking, consumers do not wish to support what they believe to be unethical behavior. That being the case, it is in the interest of consumers to learn the ethics held by these companies, and through the use of purchase power and other means, ensure that these companies behave ethically.

Environmental Responsibility and Treatment of Workers

The environment is of particular interest to consumers today. For example, consumers do not want automobile manufacturers to increase air pollution in the United States due to the manufacturing process. However, moving all or part of the operations to Mexico does not mean that the concern regarding air pollution no longer exists. Consumers will have the same concerns regarding water pollution and disposal of waste; they will want to be sure that the manufacturer still respects the environment in the host country. If consumers discover that a particular company does not respect the environment in Mexico, they will likely develop negative feelings about the company, and those feelings will influence their buying habits. In the past, "environmental disasters...led to ceaseless bad publicity for the corporations involved and continue to serve as a reminder of the long-term cost in consumer approval of ignoring environmental...concerns" (Thomson Gale, 2006).

Another concern that consumers may have is the treatment of Mexican workers. Most American consumers will realize that one reason companies move part of or all of their operations to Mexico is to reap the benefit of cheaper labor. While many consumers may be upset by this, thinking that Americans are losing jobs to Mexicans, they still want to be sure that the company is treating the workers well. As members of a free country, Americans believe that humans have rights and will want to ensure that businesses are not limiting those rights or exploiting the Mexican workers. Multinational corporations are often "viewed as being exploitative of both their workers and the local environment, given their relative lack of association with any given locality" (Thomson Gale, 2006). Companies must keep this in mind while conducting operations in Mexico.

Government and Political Issues

Consumers may also be concerned that multinational businesses are supporting governments with politics contrary to their beliefs or the beliefs of the U.S. Sales of products will decline if consumers believe a company is supporting governments that they view negatively, and consumers may actively petition against such behavior. "Examples of consumer reaction to unpopular action by multinationals are plentiful, and include...activism against operations by the Shell Oil Company in Nigeria and PepsiCo in Myanmar (formerly Burma) due to the repressive nature of the governments in those countries" (Thomson Gale, 2006).

Concerns that multinational corporations obtain excessive domestic political power are also increasing among consumers. "Corporations are able to influence public policy to some degree by threatening to move jobs overseas" (Thomson Gale, 2006). However, this is usually kept in check by the need for workers that are highly trained, which are rarely found in low-wage countries. Companies would be wise to steer clear of attempts to gain this type of domestic political power in order to "secure favorable regulation and legislation" (Thomson Gale, 2006).

Conclusion

Multinational companies should consider developing a formal code of ethics or code of conduct. This will help them ensure that the issues affecting consumers as stakeholders are addressed. The importance of this cannot be stressed enough, as consumer buying power can have serious detrimental effects if a company is perceived as behaving unethically. "Increased consumer awareness of environmental and social issues and the impact of commercial activity on social welfare and environmental quality have greatly influenced the actions of all corporations in recent years, and this trend shows every sign of continuing" (Thomson Gale, 2006).

References

Thomson Gale. (2006). "Multinational corporations." Reference for Business website. URL: http://www.referenceforbusiness.com/management/Mar-No/Multinational-Corporations.htm