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Published by Achyutsingh D. Naik

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Published by: Achyutsingh D. Naik on Feb 09, 2011
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Corporate Social Responsibility as a determinant of market success:An exploratory analysis with special reference to MNCs in emergingmarkets
Sandeep K. Krishnan Rakesh BalachandranDoctoral Student, Student, Post Graduate ProgrammeIndian Institute of Management Indian Institute of ManagementAhmedabad AhmedabadVastrapur VastrapurGujarat –380015,INDIA Gujarat 380015,INDIAPh: +91-79-26327816 +91-79-26327705Email: sandeepk@iimahd.ernet.in Email: 3rakesh@iimahd.ernet.in
Marketing Strategies for Firms in Emerging MarketsIIM K – NASMEI International Conference
In the last twenty years, there has been a sea change in the nature of the triangularrelationship between companies, the state and the society. No longer can firmscontinue to act as independent entities regardless of the interest of the general public.The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interestof all the stakeholders is gaining paramount importance. Companies are beginning torealise the fact that in order to gain strategic initiative and to ensure continuedexistence, business practises may have to be moulded from the normal practise of solely focussing on profits to factor in public goodwill and responsible businessetiquettes(Reynard and Forstater, 2002). An examination of some of the factors whichhave led to the development of the concept of corporate social responsibility (CSR)would be ideal starting ground for the conceptual development of suitable corporatebusiness practises for emerging markets.The business environment has undergone vast changes in the recent years in terms of both the nature of competition and the wave of globalization that has been sweepingacross markets. Companies are expanding their boundaries from the country of theirorigin to the evolving markets in the developing countries which have beensometimes referred to as emerging markets. The current trend of globalization hasbrought a realisation among the firms that in order to compete effectively in acompetitive environment; they need clearly defined business practises with a soundfocus on the public interest in the markets (Gray, 2001). The increase in competitionamong the multinational companies to gain first mover advantage in variousdeveloping countries by establishing goodwill relationships with both the state and thecivil society is ample testimony to this transformation. Secondly, in most of theemerging markets, the state still holds the key to business success because of theexistence of trade and business regulations restricting the freedom of multinationalcompanies to incorporate their previously successful business doctrines which havebeen tried and tested in the developed nations. The state with its duty of protecting theinterests of the general public would naturally be inclined to give preference tocompanies which take care of the interests of all the stakeholders. Thirdly, emergingmarkets have been identified as a source of immense talent with the rising levels of education. For example, the expertise of India in churning out software professionals2
and China in manufacturing has now become internationally renowned. In order todraw from this vast talent pool coming up in developing countries, companies need togain a foothold in these markets by establishing sound business practices addressingsocial and cultural concerns of the people. It has been observed that consumersconsider switching to another company's products and services, speak out against thecompany to family/friends, refuse to invest in that company's stock, refuse to work atthe company and boycott the company's products and services in case of negativecorporate citizenship behaviours (Edenkamp, 2002).Last but not the least, firms all over the world are beginning to grasp the importanceof intangible assets, be it brand name or employee morale. Only firms that havegained the goodwill of the general public and are ideal corporate citizens will be todevelop these intangible assets into strategic advantages. The cumulative contributionof all the above mentioned factors can be summarized by Figure 1.3

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