Legal framework

can act as translators and support the adaptation process of local subsidiaries. This means that it is not simply the written text that should be translated but also the behavior and practices (Ciuk & James, 2014). Expatriates most often act as mediators balancing cultural differences of headquarters and subsidiaries or even between headquarters and suppliers. The role of a mediator is strengthened when he/she can speak the languages of the conflicting parties (Helin & Babri, 2015), especially when countries of low and high context communication patterns are affected. A low context language, which is used e. g.

in Germany and the US, is direct and the message itself is very important. On the contrary, a high context language, which is used e. g. in China and Japan, uses an indirect communication and emphasizes the surrounding, not the message itself (Hall, 1959, 1981;

Hall & Hall, 1990). These differences can lead to misunderstandings and create potential conflicts. Therefore, a mediator who is fluent in both languages is needed (Helin & Babri, 2015). Thus, written and oral translation, plays a crucial role in the transfer process and can strengthen the embeddedness of the code within the subsidiary and within the organization in general. It also affects the effectiveness of a COC, and the integration of a sophisticated translation process can result in a positive outcome regarding the code’s implementation (Tréguer-Felten, 2017).

Culture plays a crucial role in transferring knowledge and practices within MNEs. While it is mostly discussed on a national level, the emphasis should go beyond the local culture.

Additionally, it should involve a wider spectrum of culture, namely the company’s corporate culture in order to profoundly analyze the total process of knowledge and practice transfer within a MNE (Gertsen & Zølner, 2012).

Although organizational structures and translation of the COC can become main challenges within the transfer process, such challenges can partly be related to the content of a COC.

COCs provide potential to deregulate labor standards internationally. However, emphasis should be put on local and international laws, as COCs have proven to be ineffective partly due to their voluntary application (Yu, 2008). Therefore, the content of the COC is vital.

While some behavior might be permitted in one country, it might be prohibited in another country. While the US does not cover rights and liabilities of employees within national laws and thus implemented COCs, in other countries, especially in European, these topics are covered separately under civil law. In case of contradictions regarding an internal COC and national law, the COC becomes invalid. Thus, the evidence from earlier analyses, in Chapters 3.2. and 3.3. of implementing a COC and its effectiveness, is crucial to overcome such challenges (Barmeyer & Davoine, 2011a).

Furthermore, an earlier analysis of the receiving country’s legal system is crucial to avoid double stated guidelines. In other words, the US suffered from major financial scandals partly due to bribery. By explicitly stating the rejection of bribery in a COC, the company aims at securing the organization from future scandals due to a lack of explicit laws in that field. However, it should be considered that other countries already have national laws that explicitly state the illegality of bribery. Therefore, it is questionable whether such guidelines have to be mentioned separately with a COC, as this can lead to rejection among the subsidiaries where such rules are anchored within the national legal framework. Furthermore, it might signal mistrust of the headquarters and weaken the headquarters-subsidiary relationship (Helin & Sandström, 2008).

Some countries lack legal requirements. In this case, the organization’s long-term strategy should contain introducing or even exceeding organizational internal best practices to these subsidiaries in order to ensure ethical practices throughout the entire organization (Sethi, 2002)

The case of a US-headquarters reveals the COC’s ineffectiveness overseas if no adaptations to national laws are being made (Helin & Sandström, 2008). Within a company, sanctions of misbehavior include the dismissal of the employee in the worst-case scenario. Nevertheless, according to French law, for instance, it is impossible to fire an employee only based on an internal COC. Consequently, the validation of the content by local HR or legal managers and, if applicable, the adaptation of content to local law, may be an approach to overcome such challenge. This was proven by French and German managers. The text above the signature line of the COC was changed to “been

informed” instead of “being committed”. Unfortunately, that change was not accepted by the US headquarters resulting in an invalid COC (Barmeyer & Davoine, 2011a).

Obviously, US headquarters do not welcome local adaptations of COCs and strictly transfer US values globally (Helin & Sandström, 2008). Nevertheless, this is a strong argument. It is doubtful that this statement can be generalized, as it may depend on more factors. Nevertheless, considering the afore-mentioned challenges and issues when transferring a COC, it is doubtful if this strategy is effective. The reason why US companies refuse adaptations to COCs can be linked to the Anglo-Saxon model of capitalism that is predominant in the US. Within this model, the embeddedness, such as the cohesion of institutions and organizations, is low compared to other countries, e. g. Germany. This means that strategies are introduced more aggressively without focusing on local norms and traditions (Geppert & Williams, 2006).

From this point of view translation plays a crucial role within the legal framework of COCs.

Some parts of the COC cannot be translated into an individual language, since the legal system differs. While a US COC might require the external consultants to sign the company’s COC, this is prohibited by e. g. Swedish law, thus making this rule invalid in a Swedish subsidiary. It also increases the risk of employees not taking the code seriously.

This leads to an overall invalidity of the code (Helin & Sandström, 2008).

Another challenge regarding the legal framework is the creation of new national laws by the government. Countries may introduce new laws or guidelines. Depending on the implementation of these laws, it can weaken the original purpose of the COC guideline.

This is especially the case with FoA in Asian non-democratic countries. The purpose of FoA is to form free unions. This is a sensitive topic, especially in China. Certainly, culture influences this case, since hierarchy and power distance is strongly presented in many Asian countries, such as China. Research shows that it is mandatory to be a member of the trade union, e. g. in China. Interestingly, these unions are regulated by the government. The subsidiary may act in conformity with the COC. However, the original purpose of FoA disappears in this case and renders the COC guidelines meaningless (Helin & Babri, 2015).

In summary, it is challenging to transfer a standardized document to several subsidiaries in distinct countries, as the cultural and legal framework influences the acceptance and consequently the effectiveness of such documents (Barmeyer & Davoine, 2011a).