More fundamentally, however, arbitrage is tolerated because it is a practice that pays off economically: it greases MNEsвЂ™ operations and thus allows for local economic gains in the form of more and better jobs, and economic growth.

However, as widely documented by the business and human rights literature (see Giuliani & Macchi, 2014 for a review), it has proven very hard for MNEs to respect fundamental rights in poorly regulated host countries, where exploitative or otherwise-defined lower standard conduct may not even be considered unlawful or immoral. hypernorms), while otherwise they have warned about the need to find creative ways to adapt to and respect local cultural norms and habits.

Such studies have led to recommendations for managers to find ways to maintain high standards when it comes to fundamental rights, on issues like for instance вЂњchild labor, prison labor, or discriminationвЂќ (p. In this context, international business ethics scholars have warned about the tensions that international managers will have to face when they operate in countries whose cultural or legal standards are different from those of their home country, especially if host countriesвЂ™ legal requirements are loose or poorly enforced (Donaldson & Dunfee, 1999). It is interesting that rather than being condemned, these arbitrage practices are accepted as part of a portfolio of legitimate activities that MNEs can undertake to remain profitable, and which are openly exploited by governments to attract investors. In international business terms, this fragmentation leads to institutional voids which allow companies with an international reach such as multinational enterprises (MNEs) to engage in social or environmental arbitrage practices in order to profit from imperfect global regulatory architectures (Surroca, Tribo & Zahra, 2013). Even in the most successful cases of implementation of global treaties to regulate and fix problems (e.g., the UN Declaration on Universal Human Rights, the Paris Agreement on Climate Change, and the Stockholm Convention on pesticides), not all countries have chosen to ratify these treaties at the same time or to enforce national regulation to ensure their success. As suggested by Eden and Wagstaff ( 2020) these are problems where вЂњpolitics trumps evidence and solutions are never first best or permanentвЂќ. By most accounts, these challenges represent вЂwicked problemsвЂ™ (Rittel & Weber, 1973), which are hard to tackle because they are social systems problems (Churchman, 1967) around which decision-makers have conflicting values and whose complexity requires multi-stakeholder coordination and the involvement of public as well as private actors on a global scale. However, governmentsвЂ™ responses have often been slow, fragmented, and therefore ineffective on a global scale. While diverse in nature, all of these issues are global problems that need global solutions, and are challenges about which scientific research has produced significant knowledge.

Marx vs smith chart