Should Global Rules Have Legal Teeth? Policing (WHO Framework Convention on Tobacco Control) vs. Good Citizenship (UN Global Compact)

ABSTRACT This study examines two multilateral initiatives, the World Health Organization's Framework Convention on Tobacco Control (FCTC) and the United Nations Secretary-General's Global Compact. These are two efforts to engage transnational corporations in the development process and in the articulation of a set of multilateral rules of engagement regarding good corporate behavior. The FCTC is more stringent and proscriptive, seeking to regulate corporate behavior. The second is an invitation to transnational corporations (TNCs) to cooperate voluntarily. The relative success of the two approaches is contingent on meeting seven parameters of legitimacy, and ultimately on the legal standing of the mechanism. JEL: E6, F0, F1, F2, F4, G3, H7, H8, I0, I1, I2, I3, K2, K3, K4, L1, L2, L4, L5, L6, M1, O1 Keywords: Globalization; Trade; Multinational (Transnational) corporation; International business; Marketing; Global corporate strategy; Economic growth; Government policy; Public health; International law; Illegal behavior and the enforcement of law; Antitrust policy and public enterprises; Tobacco; Corporate culture; Corporate social responsibility; Codes of conduct; United Nations; UN global compact; World Health Organization; Framework convention on tobacco control; Master settlement I. INTRODUCTION The literature on global strategy is generally silent or contradictory regarding the juxtaposition of corporate strategy and national policy (cf. Porter, 1985; Vernon-Wortzel, 1997; and Bartlett, Ghoshal, and Berkenshaw, 2004). Such scholarly work deals largely with corporate aspects, relegating the role of the external environment, and particularly government, to a secondary position (1). However, there is now on the policy plane a plethora of new initiatives at sub-national, national and international levels, and firms must take these into consideration when designing and implementing their corporate strategy. Navigating these national and international crosscurrents requires knowledge and a sense of responsibility on the part of firms and all stakeholders, including national policy makers and international organizations. One approach is the control by governmental bodies of tobacco's harmful effects. Spectacular successes have been achieved, thanks to the dogged determination of public officials in the United States--surgeons-general, state attorneys-general, and private attorneys. The story of how tobacco companies were called to task, how some came tumbling down, and how others survived and continue to prosper in a hostile environment makes a legendary chronicle. This paper suggests that the encounter between "big tobacco", governments, and international organizations, primarily the World Health Organization (WHO), is a triad within which groundwork for policy and strategy is laid. A second approach to resolving multilateral public policy problems is via appeal to voluntary corporate social responsibility. Over the past thirty years, myriad policy schemes have been proposed and promulgated with a view to enhancing global corporate compliance with laws, customs, standards and preferences of countries in which transnational corporations (TNCs) operate. These have ranged from corporate codes of conduct to industry standards, regional proclamations and international codes and guidelines. (2) The United Nations Secretary-General Kofi Annan's 1999 Global Compact stands at the pinnacle of these efforts due, in part, to his position as Secretary-General. II. THE CONCEPTUAL FRAMEWORK This is a comparative case study of two distinct UN policy initiatives--the World Health Organization's Framework Convention on Tobacco Control (FCTC) and the UN Secretary-General's Global Compact. Following Perlmutter and Sagafi-nejad (1981) and Sagafi-nejad and Perlmutter (2001) the seven "parameters of legitimacy" are used to assess the relative viability of the two approaches: 1) Desirability of the approach; 2) its feasibility; 3) intra-stakeholder consensus; 4) clarity of perception between stakeholders; 5) trust between stakeholders; 6) role legitimacy; and 7) legal status of the instrument. …