The leverage of foreigners: Multinationals in South Africa

Politics & Society, 2003

This article examines the construction and implementation of the Sullivan Principles, a two-decade effort to use corporate codes of conduct to improve the behavior of multinational corporations in South Africa under apartheid. Without organized social movement pressure, corporations would not have agreed to adopt the code, and corporate compliance required sustained pressure from the anti-apartheid movement. The system's independent monitoring process was problematic, and managers' definitions of “good corporate citizenship” were more guided by monitors'emphases than by substantive concerns. Based on the historic case, the article raises questions about the voluntaristic, stateless character of transnational corporate codes of conduct and questions whether such codes offer a viable strategy for improving working conditions.

In 2014 a group of plaintiffs in the U.S. brought a lawsuit against U.S. corporations that had had business investments in South Africa during the apartheid era from the 1960s to the 1990s, on the grounds that their investments had provided material support for race-based human rights abuses in that country. This lawsuit, which was presented before a U.S. District Judge in Manhattan, Shira Scheindlin, was reviving a 12-year old case that sought to hold U.S. corporations liable for aiding and abetting the apartheid regime in perpetrating abuses, such as killings and torture. The plaintiffs contended that by supplying military vehicles and computers to the South African security forces, the U.S. companies had violated international law by encouraging human rights abuses (Sunday News Business, April, 2014). They argued that the U.S. companies had reinforced the apartheid regime materially by providing much-needed capital, technology and trade contacts which were critical to regime maintenance. This paper explores the long and chequered history of this controversy that began in the 1960s that provides the background for this litigation that now seeks compensation for apartheid era human rights violations, with potential damages in billions of dollars. It reviews this controversy by making a critical examination of the ‘progressive force’ argument that was proffered by U.S. corporations between 1960 and 1994 as a justification for investment in South Africa; against the argument presented by churches and civic society for disinvestment and withdrawal. It explores issues related to corporate social responsibility and social policy, and interrogates the U.S. companies’ economic thesis that the introduction of business reforms at the corporations’ South African plants would ultimately undermine racial segregation, and destroy apartheid, through an improvement in the contractual status of blacks in the labour force.

We examine the responses of South African multinational enterprises (MNEs) to corruption in African markets in the context of institutional voids. Corruption is a source of uncertainty and additional transactional costs for MNEs and it necessitates a strategic response. The research employs a qualitative study of a sample of MNEs with experience in internationalising into Africa. The results indicate that corruption in African markets is pervasive and closely associated with the institutional voids in these countries. MNEs see themselves as 'institution takers' responding to countries' institutional makeup at the organisational and individual level but fail to fully appreciate their impact on institutions both positively and negatively. Rather MNEs focus on strategic responses at the organisational level to address corruption operationally in the host country. We add to the existing literature by providing a dynamic framework of the complex webs of association between institutions, MNEs and corruption in conditions of economic underdevelopment. The research suggests that MNEs do not need to get caught in a vicious cycle whereby they perpetuate corruption in conditions of underdevelopment and institutional voids but instead can contribute towards a virtuous cycle through which they institutionalise ethical foundations.

Journal of Business Ethics, 1997

ABSTRACT. This study examines the issues associ-ated with the disinvestment of US interests from South Africa that took place in the mid-80s from the perspective of three dominant moral theories: utility, rights, and justice. By examining the issues in light of these three theories, ...

Journal of Business Ethics, 2013

We examine the responses of South African multinational enterprises (MNEs) to corruption in African markets in the context of institutional voids. Corruption is a source of uncertainty and additional transactional costs for MNEs and it necessitates a strategic response. The research employs a qualitative study of a sample of MNEs with experience in internationalising into Africa. The results indicate that corruption in African markets is pervasive and closely associated with the institutional voids in these countries. MNEs see themselves as 'institution takers' responding to countries' institutional makeup at the organisational and individual level but fail to fully appreciate their impact on institutions both positively and negatively. Rather MNEs focus on strategic responses at the organisational level to address corruption operationally in the host country. We add to the existing literature by providing a dynamic framework of the complex webs of association between institutions, MNEs and corruption in conditions of economic underdevelopment. The research suggests that MNEs do not need to get caught in a vicious cycle whereby they perpetuate corruption in conditions of underdevelopment and institutional voids but instead can contribute towards a virtuous cycle through which they institutionalise ethical foundations.

African Journal of Business Management

It has been observed that the pressures of globalisation and the lure for increased profitability have continued to motivate South African multinational companies (MNCs) to invest across international borders, especially in the Southern African Development Community (SADC). Furthermore, the deliberate policy to integrate the region has necessitated most of the governments of the SADC to encourage their largest companies to invest within the region, in order to tap from improved incentives created by the regional economic integration arrangement. Using both aggregate and firm level dataset from various sources between the period 1980 and 2011 in various econometric estimations, this study uncovers that there is correlation between the value of South African MNCs' contribution to regional economic development and investment in the SADC. The main results from this study shows that South African MNCs contributes positively to regional economic development and investment in the region. Similarly, the findings of this study indicate that South Africa-originated MNCs operation within the region triggers the growth of the cumulative GDP of this region. The causality test affirmed the statistical significance of these relationships, and also ensured that spurious correlations did not impede the econometric estimation procedure.

Journal of African Foreign Affairs

MNCs" activities in Africa have dominated academic discussions from the 1970s till date. Their corporate social responsibility (CSR), in the form of bringing development to areas of their operations, has received mixed reactions. While some believe that MNCs are sources of economic development, employment opportunities, and general development to the host communities, others hold a view that the reverse is the case. Supports received from home governments because of their economic development in the form of profit repatriation to the tune of almost 100% as well as the creation of employment through outsourcing for the citizens of their home countries explain why their philanthropic activities are questionable. It is the intention of this paper to examine their activities in Africa. In doing this, issues of mal-development, deindustrialisation, unemployment, and environmental crises are to receive academic interrogation. Employing critical theory, qualitative analysis and secondary data collection, the paper concludes that CSR hardly brings development to Africa. Therefore, there is a need to look for African solution to Africa problems.

Insight on Africa, 2017

Since March 2016, the subject of South African state capture has received much attention from the political, business and scholarly community in the country and beyond. The vibrancy of this public and scholarly discourse was reignited by the claims by some politicians from the ruling party, the African National Congress (ANC), that in the recent past, they were approached by the Gupta family (business moguls) for consideration in ministerial appointments. These revelations have since produced a dominant perception that the Gupta family wields an undue influence over the President of the Republic and by extension, the entire state machinery. This extends to the family and friends as well. While the Guptas 'capture' the state, ministers and premiers are not directly accountable to them by protocol, but only to the President as a constitutional prerogative to do so. The view on state capture is not uniformly accepted. One notes the discourse is dominated by Euro-American perspectives, purporting to create a misunderstanding of the current trajectory of business-state relations in South Africa. As a theoretical framework, Afrocentricity is adopted and used in this article to answer the following two central questions: (i) Is it a myth or reality that the Gupta family has captured the South African state? (ii) At which point should corporate influence in state affairs be considered as illegal? Methodologically, this is achieved through thematic content analysis on conversations and the prevailing discourses circulating within South Africa.

Nordic Journal of African Studies, 2005

This article provides a critical analysis of the strategic importance of Southern African countries to economic and trade interests of South African companies in the post-apartheid era. The success of South African companies in achieving their economic and trade interests in Southern Africa as well as their intensified expansion into the region are situated within the position of South Africa in a hierarchy of economic, political, financial, technological, trade and military international power relations which extend from the USA at the centre of capitalism to the African continent and its Southern African region at the periphery of capitalism. South Africa's intermediate position in international power relations helps to explain why South Africa's trade and economic relations with the rest of Southern Africa and Africa are increasingly in favour of South Africa. Successful economic and trade strategies of South African companies in achieving their economic and trade interests are the product of this position. Discussing the strategic importance of other Southern African countries to economic and trade interests of South African companies, our paper also discusses the reality that socio-political and economic policies of other African countries, particularly those of Southern Africa, enabled South African companies to achieve their economic and trade objectives throughout the region. It concludes by providing enormous privileges and advantages South African companies enjoy in its economic and trade relations with the rest of Africa.

International Organization, 1987