International Business Risk Management and the Emerging Market Crises as Challenges for the UN Global Compact

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. ABSTRACTPurpose À The UN Global Compact promotes values of precautionary approach to environmental changes and business sustainability, which are eagerly embraced by MNCs; however the recognized emerging country risks pose a challenge for continuous commitment to those principles in the subsidiaries. Especially political and currency risks are considered significant in the subsidiaries located in the emerging markets. Therefore, those risks are often shifted to the local partners as the pursued core principle of the risk management strategies. The objective of MNCs is in fact to limit MNCs responsibility for the liabilities and losses in the emerging markets in case of market downturns, and in effect the advocated risk management practices exacerbate the severity of the emerging market crises.Methodology/approach À The chapter explores those corporate practices on the examples of numerous major international market players in case of several historical, but recent examples of the emerging market currency crises.Findings À The concerns addressed in the chapter include: the preference for local financing exposing at risk local banking sectors in the emerging markets, excessive liquidity and minimal capital commitments and investments leading to weaker currency fluctuations and resulting in private capital speculations and capital flight (to safety or to quality). The intensified global competition for international investments in form of FDIs resulted in the erosion of the capital requirements, reduced social and business infrastructure commitments requested, limited currency controls, and other components of the regulatory framework easing in the emerging markets. Other identified in the research key components of the risk management strategies applied by MNCs, destabilizing the emerging markets in financial (both fiscal and currency) crises include: intercompany payments and financing such as: transfer pricing, local sourcing and reimbursements for both tangible and intangible assets transfer.Implications À Demonstrated approach of MNCs appears ethically questionable and reflects the disparity of the bargaining powers. It also undermines the intentions of the Ten Principles of the UN G...

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“…Most of the companies had bonds and mortgages from internal investors to fund the companies' projects while there were customers who enrolled through mortgage plans to finance projects to be handed over to them upon completion. The findings compare with those by Starnawska (2015) who established that through intracompany loans, most of the FDIs were able to successfully establish themselves in foreign countries and deliver key projects. There are internal notes payable on short term in our company 3.75 1.12…”

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Intra-Company Loans in Foreign Direct Investment and Performance of Real Estate Development Projects in Kenya

“…Most of the companies had bonds and mortgages from internal investors to fund the companies' projects while there were customers who enrolled through mortgage plans to finance projects to be handed over to them upon completion. The findings compare with those by Starnawska (2015) who established that through intra-company loans, most of the FDIs were able to successfully establish themselves in foreign countries and deliver key projects. There are internal notes payable on short term in our company 3.75 1.12 The internal notes payable are significant in running the projects of our company into success 3.76 1.12…”

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