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International University in
Geneva
Master of Business
Administration

Corporate Social Responsibility in Emerging Markets: New


Challenges for the Global Business Landscape.

By Arzoo F. Syeddah
Supervisor: Professor K. Raphael

January/ 2011

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Corporate Social Responsibility in Emerging Markets: New


Challenges for the Global Business Landscape.
Arzoo F Syeddah.
International University in Geneva
Master of Business Administration Program
2011

Abstract:
Corporate Social Responsibility (CSR) is based on the notion that
businesses are interlinked with interests- social, economic, cultural,
environmental and social systems because business activities affect and
are affected by such interests in society. This paper will seek to evaluate
and explain this relationship in the context of Emerging Market Economies
an under researched and undervalued subject within the discipline of
CSR. The piece will examine the phenomenon of CSR in three emerging
markets representing the regions of Asia, Africa and Latin America. During
the course of the analysis the author will focus on three main dimensions of
CSR. First if indeed CSR is taking place within the emerging markets;
secondly what are the various context specific socio-cultural indicators
manipulating the perception, adoption, management and implementation
of CSR and lastly if this had led to the emergence of an indigenous version
of CSR found in emerging markets reflecting their respective local realities
and priorities.
The case studiesNigeria, Mexico and Malaysia share a common thread
of having CSR that is more local in its flavor rather than global.
Nonetheless the author will argue that even with the local construction of
CSR in these countries, there are global dimensions that cannot be ignored,
due to the increasing international part being played by these emerging
actors. Hence this hybridization of CSR (local +global) is a new
development within CSR itself. Consequently the analysis will illustrate that
CSR in emerging economies is indeed occurring; socio-cultural dimensions
play a strategic part; and that local CSR patterns have led to the creation of
home grown forms of CSR.

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Statement of Authenticity

I am certifying that my writing, information gathered, research carried out


and results obtained are the sole creation of my own efforts and ideas. I
understand that plagiarism is a crime defined as the use of anothers
words, ideas or expressions without acknowledging their source. I further
understand that plagiarism is grounds for immediate disqualification. I
certify that all statements and information contained herein and in all my
application materials submitted by me are true, correct and accurate to the
best of my knowledge and belief. I further certify that the writing was
written solely by me and is my original work.

Arzoo Fatima Syeddah.


Signature:

Date: 15/1/2011

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Acknowledgment

I would like to thank Almighty Allah for giving me the fortitude and
opportunity to pursue this degree and complete this thesis.
I would like to thank my parents for their undying support and
encouragement in my academic endeavors. Thank you for believing in me.
Last of all I would like to show
supervisor Prof Raphael for
throughout this thesis. I greatly
this all possible. It would not
contribution.

my sincere thanks and appreciation to my


his patience, encouragement and help
value your guidance and advice in making
have been done without your generous

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Table of Contents
INTRODUCTION AND RESEARCH HYPOTHESIS
LITERATURE REVIEW 14

CSR IN EMERGING MARKET ECONOMIES

CSR AS A LOCAL CONCEPT IN EMEs 28

CSR IN LATIN
AMERICA
.30

MEXICO
.32

CSR IN
AFRICA
..37

NIGERIA
40

CSR IN
ASIA
43

MALAYSIA
45

24

RESEARCH
METHODOLOGY
.48
RESULTS: EMERGING MARKETS VS. MATURE MARKETS: A
COMPARATIVE STUDY....51
RESULTS: CASE
STUDIES
....66
ANALYSIS
.72

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CONCLUSION AND
RECOMMENDATIONS
.76

List of Tables:

Table 1: Summary of existing CSR trends in emerging market

economies.
Table 2: Percentage of Companies with environment policies and EMS

(larger emerging markets)


Table 3: Number of Companies with substantial environmental policies
Table 4: Level of CSR awareness in Nigeria
Table 5: Current CSR waves in Nigeria
Table 6: CSR priority issues in Nigeria.

List of Figures:

Figure
Figure
Figure
Figure
Figure

1 : Emerging market economies of the world


2: Growth in ISO 14001 Certification worldwide
3: Emerging market economies analyzed by economic group
4: Companies with public CSR reporting
5: Extent of reported Corporate Social Investment

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Figure 6: Extent of published codes of Business Ethics


Figure 7: Extent of Ethics Management Systems
Figure 8: Percentage of Companies with any evidence of

environmental policies/EMS
Figure 9: High Impact Companies with substantial policies/EMS in place
Figure 10: Percentage of women on company boards
Figure 11: Percentage of Companies reporting on OHS
Figure 12: Percentage of High risk Companies reporting on OHS

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INTRODUCTION

To be a leader, you have to lead human beings with affection


J.R.D Tata (Frynas 2006)

With the advent of globalization and its subsequent rapid expansion, the
leading emerging market economies are an increasingly dominant force in
global economic affairs. In simpler terms the rise of the rest has
restructured

the

worlds

(www.money.cnn.com/2010/07/07).

Emerging

economic
market

landscape

economies

(EMEs)

represent the worlds largest potential markets, the source of both much of
the worlds natural and human resources and of major sustainability
challenges, and increasingly the home of leading global brands and
innovation. Therefore, the focus of the authors thesis is emerging markets
and their relevance and importance towards Corporate Social Responsibility
(CSR). In this thesis the writer would like to look at the role of indigenous
firms in emerging markets; and see how and if they perform differently from
their mature market counterparts. According to Fortune Magazine, amongst
the 500 top global companies in 2009, seventy five are from emerging
economies, compared to 47 in 2007 (www.forbes.com)
The reason for choosing emerging economies as the subject of this thesis lies
in a variety of factors. Political analyst and author Fareed Zakaria (2008, pg
18) in his book the Post American World sums it up best:

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The most immediate effect of global growth is the appearance of new


economic powerhouses on the scene. For the last several centuries, the
richest countries in the world have all been very small in terms of
population. The United States is the biggest of the bunch and has dominated
the advanced industrial world. But now China and India [other BRIC
countries] are on the move and they will have a large footprint on the map of
the future.
As mentioned before, these rising new powers are the next big players on
the global stage- economically, politically and socially. The author, keeping in
the mind the importance of the actors, feels the necessity to provide an
extensive, detailed and up to date study on the evolution of these markets.
The phenomenon of globalization instigated and propelled the processes of
CSR- first among mature markets and now having migrated towards
emerging economies- and the growth of emerging markets i.e. the potential
super powers of the future. This ambitious but much needed paper intends to
combine these two consequences of globalization and argue how they are
reshaping the economic setting for the maximization of personal gain; and
what this all indicates for the future. Furthermore, it will identify what
corporate best practices are being adopted by emerging market firms to
have global recognition and their share of the global market.
The paper has two main focuses to validate: first the results of the
comparison of CSR between OECD (Organization for Economic Corporation
and Development) and EMEs; and secondly the three case studies described
below. The comparative study demonstrates the difficulty of studying EMEs
in a complete vacuum. The considerable literature that already exists,
depicting the experience of mature markets, is relevant in establishing a link
with EMEs and CSR. As well as acting as a starting point for the analysis it
gives us an historical background of CSR and its origins. Furthermore, the
comparative study is significant as it shows the contrast in the interpretation,

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adoption and implementation of CSR in two types of markets in the areas of


business ethics, social reporting, non-discrimination policies and
environment, among others.
Until now CSR research has been carried within mature market firms mainly
from OECD countries. However, there is increasing evidence that emerging
market economies (EME onwards) are rapidly becoming aware of CSR issues
and are taking steps to become good corporate citizens. This thesis intends
to fill that important gap in our knowledge and CSR literature by
investigating and analyzing if there is indeed CSR taking place in a number
of emerging markets; by highlighting three EMEs from Latin America, Africa
and Asia as case studies.
Hence, there is proof suggesting firms in emerging markets are adapting and
reshaping CSR rules and norms, to benefit equally from economic
globalization. Consequently, it is important to ask how deeply rooted the
modern notions of CSR are in emerging economies.CSR policies of many
indigenous firms appear to be not wholly underpinned by structured CSR
(shaped by Western norms and rules) policies. It usually appears that CSR
policies are spearheaded by Western MNCs operating in emerging markets
through their subsidiaries.1 We need to know more about the practice of CSR
by local MNCs and its limitations in emerging economies.
MNCs in this paper are defined as any corporation with operations in more
than one country. It needs to be pointed out that by MNCs may not just
mean Western MNCs but also a growing number of MNCs from emerging
market economies in Asia, Latin America and Africa. This paper focuses on
the activities of Western MNCs as a comparison to how indigenous firms with
1 The author will be using the terms emerging market economies (EMEs), emerging
markets and emerging economies simultaneously throughout the paper. They imply
the same meaning but are different ways of writing the term.

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a global outlook and local out-reach perceive and implement CSR in the
same volatile circumstances. Is it any different or more difficult for
indigenous firms in comparison to their foreign equivalents? Does the
concept of CSR take on a special profile when observed by indigenous firms?
Additionally, it compares the structured CSR rules and norms of the Western
world with the more fluid and localized expressions of CSR found in EMEs.
The focus will be on Africa, Latin America and Asia, regions that contain the
majority of the worlds emerging market economies. Due to their different
cultures, traditions and indigenous interpretation of CSR these regions
provide a fascinating comparison to a more structured CSR developed in the
Western world.

As CSR in emerging markets has expanded both in scale and scope, the
research has become sophisticated such as to what extent (if any) CSR is
occurring in EMEs and does a combination of forces produce a certain kind of
CSR; do MNCs operating in EMEs affect how CSR is understood and adopted
by them; and finally why CSR is viewed as a local concept by local firms.
These issues are the main research hypotheses underlying the thesis.
Chapter II will concern with the literature review which in turn is divided into
three main parts. The first one provides a thematic analysis on the important
and groundbreaking publications, research and key concepts of CSR. The
areas touched upon include the philosophical background of CSR as a
concept; the numerous contested definitions that have evolved due to
competing influences (economic and ethical approaches) on understanding
CSR; the main traits reflected in both Western and local MNCs -such as
strategic CSR and the role of national and industry factors; development and
relevance of previous comparative studies to this paper; and, finally, the
relatively nascent research on CSR in EMEs. The second part of the literature

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review examines what is the prevalent understanding of emerging markets in


terms of CSR and their main traits. Furthermore, views of some leading
experts on CSR in EMEs will be explored. The latter half is dedicated to
introducing the concept of CSR as a local concept stressing that there is no
single CSR template for worldwide usage but is bound by culture and socioeconomic considerations.
The final part of the literature review will look at the three case studies;
Nigeria (Africa), Mexico (Latin America) and Malaysia (Asia) as examples of
emerging markets and their dealings with CSR. Keeping socio-economic and
cultural factors in mind the author shall focus on one aspect of CSR for each
case study. In the case of Mexico three important myths concerning CSR in
Mexico will be challenged: CSR is a new concept, imported, and has similar
patterns to the Western world. The falsity of these presumptions will be
explored by looking at a local firm engaged in specific philanthropic CSR
initiatives. In the case of Nigeria the focus is on the financial sector and their
understanding of what CSR means for Nigeria. The discussion will highlight
the religious/ethnic influences on the Nigerian perception of CSR and that the
term has a strong local taste to it. Finally, the author will look upon Malaysia,
a vibrant emerging economy in the midst of very developed markets such as
Singapore and Hong Kong. The accounting sector will provide the source for
corporate social reporting in the country. The evidence will suggest that the
role of accountants in CSR and/or environmental reporting is limited.
Chapter III specifies the research methodology applied: as to what kind of
research methods (the choice between alternative methodological
approaches) were used by the author and how material was acquired; what
was the purpose of the research and finally how the information obtained
was analyzed.

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Chapter IV will examine the results of a study done by a prominent academic


of CSR Professor Jeremy Baskin from Cambridge University. His detailed
study covers the comparisons between firms based in high-income OECD
countries and emerging markets and the subsequent results provide a clear
picture of how really different CSR reporting is between the two groups. The
second part of Chapter IV will look at specific results of the research carried
out in two case studies: first in Mexico where Logsdon et al (2006) examine
three local MNCs manifesting localized versions of CSR practices and norms.
Secondly, in Malaysia by Zulkifli & Amran (2006) on the lack of social
reporting within the accounting sector and finally in Nigeria by Ameashi.et al
(2006) concerning how local Nigerian firms perceive and implement CSR.
Following the analysis the last chapter shall elaborate on recommendations
and concluding remarks--what do such developments mean for the future of
CSR in EMEs.

RESEARCH HYPOTHESES:
The three related research hypotheses are concerned with the comparison of
CSR in the West (so-called the Western model of CSR) to CSR in EMEs with a
specific focus on three countries. The analysis will endeavor to answer:

First see to what extent if any CSR is indeed occurring in emerging


markets. If it is the case then what forces local (socio-cultural and
economic factors specific to a market) and global (adoption of
international Western CSR standards, changing perspectives on CSR) -are driving them towards the adoption of such practices? Also does the
combination of such forces produce a certain kind of CSR in EMEs

such as ethical, altruistic or strategic?


Does the fact that MNCs operate in EMEs affect how they approach and
adopt CSR? Do local and global forces play a part in determining what
approach they adopt whether it is western, specific to the EME or a

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hybrid? Do they impose a structured Western view of CSR, lean


towards a hybrid version (mixing local traditions with Western ideals)
or tailor a CSR approach specific to the EME heavy on religious and/or

ethnic influences?
Lastly, why CSR in EMEs is seen as a local concept rather than one
homogenous model applicable globally. Experts argue and studies
show that CSR applied in each country produces different reactions
determined by the local norms, culture and national distinctiveness.
This gives rise to specific CSR priorities and issues related to each
area. In short CSR may change in different circumstances with different
consequences dependent on the country. Do these set of distinctive
circumstance produce a local brand of CSR or is it just an imitation of
Western influences. In other words how do indigenous firms perceive
and practice CSR and do any Nigerian, Malaysian or Mexican forms of
CSR exist?

LITERATURE REVIEW
Amongst the many dramatic changes that have taken place in the business
world since the 1990s, the rise of the CSR agenda is certainly one of the
most noteworthy. As a recent special report in The Economist notes, 'doing
well by doing good has become a popular business mantrathe idea that

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firms can be successful by acting in the broader interests of society as a


whole even while they satisfy the narrow interests of shareholders (The
Economist 2008, Jan 19th, pg20).No longer can firms continue to act as
independent entities regardless of the interest of the general public.
Companies are beginning to realize the fact that in order to gain strategic
initiative and to ensure continued existence, business practices may have to
be molded from the normal practice of solely focusing on profits to factor in
public goodwill and responsible business etiquettes (Raynard & Forstater
2002, pg 109).
While the CSR construct is a new coinage, it is certainly not a novel practice.
The historical roots of CSR can be traced back to such examples as the
Quakers in the 17th and 18th centuries whose business philosophy was not
primarily driven by profit maximization but by the need to add value to
society at largebusiness was framed as part of society and not separate
from it. Therefore, given the dominance of the West in shaping the CSR
agenda, the contemporary CSR movement is largely founded on AngloAmerican values, philosophies, experiences and priorities (Chapple & Moon
2005, pg 427). A product of such market economy countries (with strong
institutional environments in which regulation is efficient and fairly enforced),
CSR is therefore typically considered as policies and activities going beyond
the immediate economic and legal requirements (Dobers & Halme 2009, pg
239).
Some CSR experts argue that even though the debate on CSR has increased
at an insane pace over the last twenty years, governments (Western) still
have a narrow view of the idea- best equating it with philanthropy or
community involvement. They believe that despite decades of CSR in
virtually every country, across just about every social, environmental and
ethical indicator, we are still headed in the wrong direction (Visser and
Tolhurst 2010, pg XXVI).

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This paper uses corporate social responsibility (CSR) and adopts the
acronym CSR because it is the more widely accepted term in academic and
business literature. Other terms that are in use are corporate citizenship and
social responsibility.
CSR is a term that defies precise definition- as it can be perceived both in a
broad and narrow sense. There are numerous definitions on the concept
encompassing economic, social, environmental, stakeholder and ethical
dimensions. Some academics (Dahlsrud; Visser 2007) have gone as far to
say We have looked for a definition and basically there isnt one. The author
believes that it is not so much the confusion with explaining the term but as
to how CSR is socially constructed in a specific context. Overall the different
definitions imply the same message; CSR may change in different
circumstances with different consequences.
Nearly all CSR experts can agree that CSR is about the business contribution
to sustainable developmenthow business can take into account the
economic, social and environmental impact their operations will have on
society. Below are some of the prominent and widely used definitions of CSR
involving both think tanks/organizations and CSR academia.
McWilliams.et al (2006) define CSR as situations where the firm goes beyond
compliance and engages in actions that appear to further some social good,
beyond the interests of the firm and that which is required by law. The
Centre for Business and Government of the Kennedy School of Government
at Harvard University (2008) defines it as:
Corporate social responsibility encompasses not only what companies
do with their profits, but also how they make them. It goes beyond
philanthropy and compliance and addresses how companies manage their
economic, social, and environmental impacts, as well as their relationships in

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all key spheres of influence: the workplace, the marketplace, the supply
chain, the community, and the public policy realm.
The World Business Council for Sustainable Development chooses to define
CSR (2008) as the continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life
of the workforce and their families as well as of the community and society
at large
Finally, the EU Green paper (2002) on CSR defined it as a concept whereby
companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary
basis.
Hence, CSR exhorts firms to diverge from their sole aim of maximizing profits
and to lay more importance on improving the economics and social
standards of the community in their countries of operation. Moreover CSR
has been explained as the additional commitment by businesses to improve
the social and economic status of numerous stakeholders involved while
having to comply with all legal and economic requirements.
Visser (2008b) emphasizes that presuming CSR is the same the world over is
one of many popular misconceptions about CSR. CSR should be seen as a
local, not a universal, conceptwith no particular size that fits all. The
historical and national context of communities, especially their corporate and
societal governance frameworks and business-society relations, impact on
how CSR is practiced in these areas.
Theoretical Approach to CSR:
A theoretical introduction on the concept of CSR will be provided to show the
philosophical influences on the theory, such as ethical, social and economic

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approaches. Also how these different factors, have contributed to CSR being
regarded as a concept with a myriad of definitions.
CSR may remain an embryonic and contestable subject even today but over
the years the discipline has formulated a theoretical foundation to provide a
philosophical perspective on the concept. According to Windsor (2006) the
developmental history of relevant literature indicates a market place of
three competing approaches- ethical responsibility, economic responsibility
and corporate citizenship. Furthermore, the three theories reflect the difficult
balances confronted by CSR, between private conduct and public policy, and
between economics and ethics (Windsor, pg 94). Ethical responsibility
advocates strong corporate self restraint and altruistic duties and expansive
public policy focuses on stakeholder rights. Meanwhile, economic
responsibility deals with market wealth creation subject to only minimalist
public policy and, to a certain extent, usual business ethics. Finally, corporate
citizenship offers two conflicting interpretations. The first one, instrumental
citizenship, expands philanthropy as a strategic tool for increasing corporate
reputation and market opportunities (pg. 93). The other one, called ideal
citizenship, encompasses ethical responsibility to allow the influence of
managerial discretion upon human rights. Corporate citizenship is typically
related to MNCs operating across multiple legal jurisdictions and a
management focus on strategically building political influence and company
reputation (pg.97). Windsor in his study explains how there exists a constant
tension between economics and ethical perspectives --competing moral and
political forces when defining CSR. While the two approaches are polar
opposite of the conceptual framework, corporate citizenship (containing both
economic and ethical elements) falls in between the two, acting as a middle
ground between the two diverging theories. Windsor believes that these
conflicting conceptual dimensions of each theory are what make CSR an
intricate concept.

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The majority of CSR literature has tended to focus on Western markets and
their understanding and perception of CSR from Western MNCs (operating
domestically and globally) point of view. The material on CSR is vast and the
author will focus on important pieces that shed light on CSR in relation to
MNCs not only from the West but also originating and operating in EMEs.
Strategic and Altruistic CSR
The following section looks at two styles of CSR: strategic and altruistic that
seems to be a prevalent feature in Western and EME MNCs, respectively.

Instrumental Citizenship
Windsor in his work (2006) has mentioned instrumental citizenship2 where
activities of companies were driven by strategic goals. This type of strategic
CSR is a common feature among Western MNCs operating both in the home
country and in host countries. One piece that extensively elaborates and
explains the importance of strategic CSR for MNCs and its positioning within
the overall concept of CSR is by Lantos (2001). His study provides a glimpse
into the nature and limitations of strategy driven CSR. Similar to Windsor he
also presents three types of CSR: ethical, altruistic
(humanitarian/philanthropy) and strategic. The economic aspect of CSR is
combined with the strategic option. According to Lantos (pg.605) strategic
CSR is the fulfillment of a firms social welfare responsibilities and creates a
win-win situation in which both the corporation and the stakeholder groups
benefit. In other words, this type of CSR is instrumented in a way to provide
mutual benefit to both the company and the stakeholders. Lantos suggests
that most Western MNCSs tend to practice this type of strategic
philanthropy. This type of company strategy is done to accomplish strategic
2 Instrumental Citizenship is mostly retaining the managerial discretion explicitly
criticized in economic CSR.

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business goals and good deeds are believed to be good for business as well
as society (Caroll, 2001, p. 200). Hence, companies give back to society only
because they believe it to be in their best financial interests to do so. In
simpler words this is philanthropy aligned with profits (Lantos, pg. 618).
Lantos further points out that (in agreement with Friedman) altruistic CSR
going beyond ethics to somehow making the world a better place by helping
to solve social problems, lies outside of the firms proper scope of activities.
Due to this reason Lantos concludes that this type of CSR is rare to find and
is considered not a legitimate role of business (Lantos, pg.623).
Earlier work by Baron (1995) stresses the same point as Lantos. Focusing on
the importance of a market strategy he adds that in order for an MNC to
succeed its market approach cannot ignore the non-market conditions such
as market environment if value is to be created by economic performance. In
his view strategic CSR is a part of non-market component consisting of
social, political and legal arrangements that structure the firms interactions
outside of, and in conjunction with markets (pg. 48)3. Non -market assets are
utilized by companies to add value and can take a number of forms such as
having expertise and competency in dealing with government, interest
groups and the public. Hence, in this case CSR of a strategic nature can be
adopted by companies to add value to their reputation. As reputations can
be easily destroyed or established by actions, corporations invest
strategically in their reputation for service and quality (pg.62). Finally,
Baron highlights that for MNCs who operate in various countries the nonmarket component is very crucial, especially when the opportunities of a firm
are challenged by public pressure such as in developing markets.

3 Market components include those interactions between the firm and other parties
that are intermediated by markets or private agreements. These interactions are
typically voluntary and involve economic transactions and exchange of property.

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Furthermore, if firms adopt a strategic vision for CSR, a vision that recognizes
the interdependence between business and society, then it becomes clear
that CSR can both help companies make money and promote societal
welfare and sustainable development. Strategic CSR realizes the dynamic
interdependence and the importance of forming a community of interests
amongst the firm and its various stakeholders in society. Conceived in this
way, Porter and Kramer (2006) suggest CSR can be much more than a cost,
a constraint, or a charitable deedit can be a source of opportunity,
innovation, and competitive advantage.
Wayne Visser, of CSR International (a think-tank organization),has called for
a renaissance in CSR for a new model, which has been dubbed Radical
CSR or CSR 2.0, where CSR stands for Corporate Sustainability and
Responsibility and is based on five fundamental principles: Creativity,
Scalability, Responsiveness, Glocality4 (thinking globally and acting locally)
and Circularity (closed-loop thinking and business processes). In other words
have an innovative understanding and application of CSR where the
responsibility has a more long-term sustainable approach for the concerned
stakeholders.

In the words of Dr Visser, what we need (and are just

beginning to see) is a more intelligent, evolved form of CSR that uses the
power of collaborative networks to scale up solutions to our global
challenges (Visser 2008a)
National and Industry Factors

4 The term glocalisation comes from the Japanese word dochakuka, which simply means
global localization.

5 The basic message of CSR 2.0 is that corporate social responsibility needs to
adapt or die. The problems society faces are far too serious and urgent to be left to
the incremental improvement sideshow that has been CSR for the past 50 years.

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An important feature found in literature on MNCs is the role played by


national factors. Both Jones (1999) and Van Tulder and Kolk (2002) argue that
the CSR practices of MNCs ,whether operating on their home soil or in a
foreign market, reflect the systems of their country of origin.
Furthermore, Jones (1999) in his work adds that industry culture can also be
a major detriment of the awareness of and orientation to CSR within the firm.
This is due to the fact that an industrys culture will influence the specific
organizational culture of member corporations. Hence, MNCs will act and
operate reflecting the culture of their respective industry to which they
belong as well as in relation to national factors. For instance, a Dutch oil firm
will reflect the Dutch perception of CSR practices for companies, in addition
to how CSR is perceived within the oil industry in general. An industrys
culture is historically determined, depending on when and where, and how
the industry developed. Hence, national factors and origins of industry both
play an important in defining the activities of MNCs.
Tulder and Kolk (2001) imply that while the internationalization of business
has occurred, it has also been accompanied by the persistence of national
traditions, culture and regulatory practices both by MNCs and local firms in
domestic markets. In their study they looked at six top athletic firms in the
sporting goods industry (Nike, Adidas, Reebok, Puma, Asics and Mizuno) and
found that, except for Mizuno and Asics, the rest of the MNCs referred to
home country standards in areas of social and environmental factors--such
as labor relations, CSR and stakeholder relations (pg. 274).The two
exceptions referred to a combination of host-home standards. This finding
adds to the arguments that most MNCs, even when operating overseas,
prefer and tend to adopt and implement their home country norms and rules
in their CSR practices. Furthermore, Bondy .et al (2004 .pg 463) stress that
such corporations as national institutions of economic coordination are

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inherently embedded in their culture and their success depends on


remaining a part of this network of national institutions.
Comparative Studies
The comparative analyses indicate that EMEs cannot be studied in a
complete vacuum. The comparative studies show the contrast in the
interpretation and adoption of CSR in two very different market conditions.
Furthermore, it shows what studies have been carried out on CSR to date and
which regions have been compared with each other.
One of the most prominent comparative studies regularly referred to in CSR
literature is by Chambers. et al (2003). This study looked at CSR in Asia only
focusing on seven countries and their CSR website reporting activities.
Specifically, the paper investigated the penetration of CSR reporting within
countries; the extent of CSR reporting within companies and the waves of
CSR engaged in. Furthermore it evaluated the relative extents of
homogeneity and national distinctiveness in CSR across the countries. This
was in response to the hypothesis that there is a single regional CSR model
for all seven countries.Chambers.et al reached the conclusion in their paper
that CSR levels in Asia lag behind those in the West; but accepted the theory
that Asian countries have developed their own distinctive systems of CSR
product of specific national norms and priorities (pg.25). Finally, they
rejected the perception that globalization erodes CSR by undermining
national systems and instead argued that globalization is a driver for new
CSR developments.
Welford (2004) carried out another comparative study on CSR between
Europe (mature markets) and Asia (emerging markets). He highlighted the
critical elements and best practices on CSR policies in leading companies in
both regions. The aim of the research was to examine the commitment of

25 | P a g e

leading firms to CSR through their written policies (Welford, pg. 45). In Asia
debates over CSR tend to follow developments in the West. While both
regions share the basic context of environmental management, CSR and
sustainable development, priorities varied according to countries norms,
values and economic development (pg 41). Welford agreed with
Chambers.et al (2003) that although Asia lags behind best practices in
comparison to countries like the UK and the Scandinavian region there was
definitely a new Asian interest in CSR reflected in leading companies in the
area.
Subsequently, Baskin (2006) enhanced these prior works and expanded his
study to include all EMEs globally comparing their CSR practices against
OECD countries. His study showed that CSR in some emerging markets such
as Brazil, India and South Africa is more developed than commonly thought,
often exceeding standards in some OECD countries, indicating that EMEs are
making great progress in the undertaking of CSR practices. The study has
provided a solid foundation for the new academic direction of CSR in
emerging markets within the discipline of CSR studies itself.
The research by Baskin was undertaken to test the assumption that interest
in, take up and reporting of corporate responsibility in EME companies was
likely to be significantly lower than among companies from the OECD region
(Baskin, 2005, pg .31). Baskin in his study looked at two set of indicators;
first were the globally recognized generic indicators (broadly known as tools
of CSR climate) such as GRI, DJSI and ISO 14001 certification to determine
what was the status of CSR uptake in OECD and EMEs (Baskin 2006, pg 33).
The second group consisted of various criterions to measure a companys
performance such as business ethics, corporate social investment (CSI) and
environment. Therefore, what was the reasoning and importance behind
Baskin specifically choosing these process indicators?

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As already pointed out by Baskin in the introduction of his study, he relied


extensively on the material found on the corporate websites and annual of
the 127 MNCs belonging from EMEs to provide an insight into how CSR
policies were formulated, what aspects of CSR were deemed to be necessary,
how they could communicate the CSR activities of those MNCs to the public
and therefore enhance performance. He then compared the results with
existing data on OECD MNCs, to which he had access. The result that
emerged from the comparison showed that MNCs in both regions shared a
set of common CSR aspects. Additionally, the shared company performance
measurement tools linked both distinct groups (with distinct histories and
corporate cultures) in terms of transparency, reporting and accountability
(CSR Europe Report, 2007)
The collective CSR aspects that Baskin focused on were CSI, environment,
business ethics, women on corporate boards and occupational health and
safety; a set of standards to take into account the direct and indirect, short
and long-term effects of a companys activities (CSR Europe Report, 2007 pg
46). These CSR aspects reflected how companies viewed CSR; what
indicators according to them could be used to measure CSR performance;
and what the most used performance indicators were.
In the case of the environment, companies are employing extensive
indicators such as green activities and waste management to measure the
quantity of natural resources consumed, the emissions produced by their
activities and how they recycle their waste. Several MNCs adopt
environmental indicators to measure the impact of the activities they
develop, to raise awareness about environmental issues (CSR Europe Report,
2007 pg 50). CSI falls under community development, representing the longterm effects and benefits of companies investments in society. In other
words CSI is a good indicator to show how much the company cares about

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the community and the amount of resources (time and money) it is willing to
inject (CSR Europe Report, 2007 pg 51).
The major social performance indicators include the welfare of the key
stakeholders in the business, especially employees (Sowden, 2005). Thus,
occupational safety and health (OHS) forms an integral part of CSR and this
is confirmed by its inclusion in all the major measurement and reporting
guidelines and tools developed for CSR by MNCs. The aim is for MNCs to
continuously improve all aspects of the working environment that result in a
workforce that is happy, healthy and here (Sowden, 2005 pg 22). Women in
managerial positions is another crucial social indicator to show gender
diversity within the company and how open is the workplace climate in terms
of skilled employees regardless of gender or race. These two performance
indicators seek to combine employee performance with business
performance, enhancing the companys progress and reputation (Sowden,
2005 pg 33).
Finally, business ethics includes bribery and corruption and ethical conduct.
This performance indicator is most sensitive in nature as it deals with
accountability, transparency and reporting of a company. In other words
ethics requires businesses to be good responsible citizens who are
transparent and open in their dealing with society and accountable for any of
their activities. Ethical issues are far-ranging and inclusive of programs,
policies and procedures that impact every aspect of the company, from
hiring practices to media relationships, government affairs and visible
community involvement and financial support (CSR Europe Report, 2007 pg
53)

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COPORATE

SOCIAL

RESPONSIBILITY

IN

EMERGING

MARKET

ECONOMIES
Before discussing the area of CSR within emerging market economies it is
imperative that the nexus of this thesis i.e. emerging economies be defined
and explained. Coined in 1981 by Antoine W. Van Agtmael of the
International Finance Corporation of the World Bank it has come to describe a
fairly narrow list of middle-to-higher income economies--21 to be exact
according to Dow Jones of 2008- among developing countries, with stock
markets in which foreigners could buy securities (Financial Times, 2008). In
other words, is defined as an economy with low to middle per capita income.
The terms meaning has since been expanded to include more or less all
developing countries at present (Investopedia 2005). But even within
emerging markets there are levels of emergence based on the progress of
their rapid growth and industrializationthe two categories that countries
are divided in are advanced emerging economies and secondary emerging
economies. Other terms such as BRIC and BEM have materialized on to the
scene to describe the largest developing countries with-in the group such as
Brazil, India, China, Mexico, Russia and South Africa, Turkey, Egypt, Indonesia
and Pakistan.6 Figure 1 depicts the map with the emerging economies
highlighted in green to provide a clear picture of the countries considered
part of the group.

6 Created by the FTSE group the ranking of the 21 emerging economies is based on
their national income and the development of their market infrastructure. The
Advanced Emerging markets are classified as such because they are Upper Middle
Income GNI countries with advanced market infrastructures or High Income GNI
countries with lesser developed market infrastructures.

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Figure 1 Emerging Market Economies of the World (www.lagodaxnian.wordpress.com)

Although the term emerging market is loosely defined, countries that fall
into this category, varying from very large to very small, are usually
considered emerging because of their overall development and reform
process. Hence, even though India is deemed one of the world's economic
powerhouses, it is lumped into the category alongside much smaller
economies with a great deal fewer resources, for example Tunisia, Pakistan
and Chile. All of these countries belong to this grouping because they have
embarked on economic expansion and reform programs, and have begun to
open up their markets and "emerge" onto the global scene. EMEs are
considered to be the fastest-growing economies rapidly changing and
restructuring the global economic landscape (Investopedia 2005).
Among the many salient features of EMEs the most prominent are featured
below:

EMEs are characterized as transitional, meaning they are in the


process of moving from a closed economy to an open market economy
while building accountability within the system such as the former
Soviet Union. As an emerging market, a country is embarking on an
economic reform program that will lead it to stronger and more

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responsible economic performance levels, as well as transparency and


efficiency in the capital market.

Secondly, an EME will also reform its exchange rate system because a
stable local currency builds confidence in an economy, especially when
foreigners are considering investing. Exchange rate reforms also
reduce the desire for local investors to send their capital abroad
(capital flight). Besides implementing reforms, an EME is also most
likely to receive aid and guidance from large donor countries and/or
world organizations such as the World Bank and IMF.

Another key characteristic of an EME is an increase in both local and


foreign investment. A growth in investment in a country often
indicates that the country has been able to build confidence in the
local economy. Moreover, foreign investment is a signal that the world
has begun to take notice of the emerging market, and when
international capital flows are directed towards an EME, the injection of
foreign currency into the local economy adds volume to the country's
stock market and long-term investment to the infrastructure.
(Investopedia 2005)

STATUS OF CSR WITHIN EMEs


So what is exactly the status of the CSR process within emerging markets?
According to Dr Wayne Visser (2008b) of CSR International it is wrongly
presumed that developed markets are leading players on CSR at present. 7 He
7 http://www.csrinternational.org/wpcontent/themes/default/docs/csr_myths_wvisser.pdf

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suggests that it is instead the developing countries, in particular EMEs, that


are spearheading the growth and progression of CSR. There are examples
such as Indonesia, Brazil and South Africa of how emerging markets are
proving themselves highly adept at delivering the so-called triple bottom line
of sustainability, namely balanced and integrated social, economic and
environmental benefits. He argues it is actually not surprising, since in such
markets these three spheres are seldom separable economic development
almost inevitably results in social upliftment and environmental
improvement, and vice versa. His argument establishes that emerging
markets have the necessary tools to pilot the way on CSR. But this does not
provide any indication on the status of CSR itself. Malini Mehra (2006)
founder of the Centre for Social Markets (a think-tank) notes that CSR is a
perceptible, readily identifiable movement in the process of migrating from
the west to the rest. She argues that CSR has gone native --indigenized-as well as being drawn on, and changed by, local cultural norms and
corporate traditions consistent with a more responsive and responsible role
for business in society(Mehra, pg 20). Hence it can be deduced that CSR is
indeed taking place in emerging markets and becoming enmeshed in the
local cultural and social fabric. But does all of this hint towards an evolution
of CSRas a concept-- within the context of emerging markets? Are EMEs
providing the conditions for the development of CSR in a new direction?
While CSR milestones can be identified, such as Brazils adoption of a
national Corporate Sustainability Index in 2002 to profile vanguard firms; or
the Indian Industry Confederation adopting sustainability and integrity as two
of its core themes in 2006, Mehra believes that while the progression trend is
encouraging, the words turning point may as yet be a little too strong in
describing CSR in emerging economies (Mehra pg.22). In short, CSR is still at
a nascent stage in EMEs and a few flock of CSR initiatives, as mentioned
above, do not amount to a movementthere is still much work to be done.
Experts such as Visser (2010), Mehra (2006), Oliveira (2006) and Moon

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(2007) suggest that a smarter approach is needed if one expects CSR to be


fully embodied in emerging markets--for the embedding of CSR norms,
standards and values cannot be taken for granted or left to accident.
Furthermore, if CSR is expected to take off in emerging markets the
ongoing socio-political reality (of negotiating a balance between society,
state and market) cannot be overlooked.
There is no denying among CSR academics that the phenomenon of CSR is
indeed taking place, but they tend to disagree on the pace of it. While some
like Mehra (2006) and Oliveira (2006) propose a cautious approach, others
such as Moon (2002) and Visser (2010) tend to take the swift approach,
saying CSR is taking place at an unprecedented level parallel to the
accelerated growth and development of EMEs.

CSR AS A LOCAL CONCEPT IN EMEs

For a long time the concept of CSR has been questioned in terms of its
validity and usefulness for profit-making companies. Milton Friedman (1996),
for example, famously asserted that the social responsibility of business is
to increase its profits. Although one can occasionally hear the business of
business is business type of argument from supporters of CSR driven by
economic factors, the question for today is no longer whether companies
should practice CSR, but what, specifically, and how. Ultimately, the concept
of CSR itself may disappear, as a corporate social agenda will be an integral
part of business strategy in the 21st century (Zhang, 2008).

EMEs presents both opportunities and risks for the growing discipline of CSR.
With the rise of such non-Western economies and skepticism about the
western paradigm there is an agreement among academics, public and
private organization that a new paradigm should evolve (Visser & Tolhurst

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2010). With regard to ecological sustainability, lifestyles or more recently


financial instability a diversity of ideas and new thinking may well be of vital
importance in dealing with the myriad of challenges our world faces.
Additionally 40% of the worlds consumers in emerging markets represent a
huge market opportunity for MNCs and domestic firms. Indeed, the best way
now to generate both profits and create societal value is to focus on
emerging markets (Zhang, 2008, pg. 4).
MNCs operating in these countries face challenging and difficult security,
environment, health, and other risks. Doing business in emerging markets
appears to be difficult because many of them are characterized by either bad
or weak public governance and administration, lack of public transparency,
high levels of bribery and corruption, poor records on human rights,
inadequate environmental, safety and labor standards and high levels of
poverty and inequality (Zhang, 2008, pg.5).
The context of CSR can be the broad socio-cultural structures that many
emerging markets now embody. Has the country adopted Western-style
capitalism or its variants in Asia, Africa and Latin America? Asian capitalism,
for example, can lead to different discourses of social responsibility from
those in the West.8 What is the impact of the countrys historical and cultural
legacy on its business culture today? The compatibility of a countrys cultural
orientation with the business cultures firms (local and foreign) embody will
influence how easy or how difficult it is for them to practice CSR in that
country. For example, many CSR efforts in the West, particularly those aiming
to create universal standards or codes of conduct, have tried to cultivate a
level playing field in the world where the rules of the game are the same
8 A good case study on a unique style of Asian capitalism is the rise of China while being a
socialist country. For further study refer to Welford, R. Risk in China: An evaluation of
reporting activities of Hong Kong Listed Enterprises, Corporate Social Responsibility
and Environmental Management, 2005. 12.4: 88-104.

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for all companies. Yet, the validity, feasibility, and usefulness of the attempts
to create certain universal standards must be critically examined against
local contexts. There is the all important question of whether such standards
can ever usefully be applied. But even if they can, the question of
implementation still remains (Zhang, 2008, pg. 5).

CSR IN LATIN AMERICA


Businesses-- both local and multinational are facing diverse challenges in
Latin America ranging from free trade treaties, new regulations and offshore
manufacturing (Oliveira, 2006. pg 17). One of the main and newest
challenges facing firms is the demand to be better and responsible citizens,
both in the social and environmental sphere. CSR has become a hot topic for
debate and research in recent years in Latin America among businesses,
academia and civil society. The rise of these issues has been combined with
other dramatic changes sweeping through Latin America in the last two
decades.
Since the 1980s many states have undergone broad processes of social,
economic and political change. Democracy has ousted dictatorships
(Argentina), civil society has become organized and stronger (Chile),
businesses have faced pressures to be more transparent and accountable,
and finally economically many countries have discarded their import
substitution policies in favor of market liberalization and FDI (Mexico).
Governments have also embraced privatization making markets more
cutthroat, in turn making social/environmental duties a point of
competitiveness among firms in booming economies like Brazil and Mexico.

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Unfortunately, large sections of the Latin American economy have lagged


behind parallel to the changes taking place in areas such as education and
eradication of poverty. This has exacerbated social and environmental
problems like unemployment, deforestation, income inequality and crime in
places like Venezuela and Colombia. Due to negligence on part of
governments and lack of resources these problems pose an opportunity for
firms to make a difference in society and improve their image. In fact, the
movement of CSR has a basis in the long history of corporate philanthropy
and social values related to the Catholic tradition of the continent. Thus the
private sector has had a paternalistic view of its role in society (Logsdon,
Thomas and Van Buren III 2006).9 One of the responsibilities of the business
sector has been to bring the poor into the market, enhancing social inclusion
(Peinado-Vara 2006).10
Examination of the literature review reveals that is as difficult to generalize
about CSR in Latin America as it is to take a broad view about anything in
Latin America. Generalizing is quite a feat due to the absence of a generally
agreed definition of CSR and various interpretations within the region itself.
However, if one was to simplify it can be said that CSR in Latin America is
still in its infancy and has always been focused on social issues rather than
on environmental issues, perhaps because social issues have been more
acute (Oliviera, pg 19). In Latin America about 128 million or about a quarter
of the population live on less than two dollars a day, and about 50 million are
considered extremely poor living on less than one dollar a day (Peinado-Vara
9 These practices have emerged in response to economic crises in Argentina and
Peru, and social crises in Columbia and Brazil.
10 Some companies are already doing business with the poor in a sustainable manner and
within a win-win framework of corporate citizenship. This base-of-the-pyramid mode focuses
on meeting the needs of the least favored segments of the market hence strategically
linking responsible actions to the business. One example of this would be changing the
mind-set towards doing business with the traditionally excluded customers for the survival of
the government.

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2006). In the words of Stephan Schmidheiny (2006, pg. 21) wealthy


Northerners look southwards and see rainforests and biodiversity; thoughtful
Southerners look around and see poverty, poor education, bad housing...and
all the rest of that grim list.
In the 1980s and 1990s the CSR movement took off in many Latin American
countries, such as the advent of democracy or emergence of civil society
(and is still growing), incorporating other aspects of CSR such as
transparency and environmental concerns (Oliveira 2006). Nowadays
prominent advanced emerging economies like Brazil, Chile and Mexico have
developed their own culture and tools for dealing with CSR and have strong
CSR movements; the case study on Mexico will further elaborate on that. For
this reason CSR appears to provide hope for positive change in the region to
improve the institutional capacity of governments and civil society, the
investment climate and adapt the CSR agenda to specific characteristics of
each state. Thus, CSR can truly be effective in contributing to a better
society and prosperous private sector that result in economic sustainable
development if it is adapted to the social and economic features of each
particular country (Peinado-Vara, pg. 63).
Responsible companies can indeed make a significant, if not critical
distinction in socio-economic development of the region. Peinado-Vara (2006)
believes that the private sector is not going to solve all social and economic
troubles but it can definitely contribute to prosperity and enhance its own
prosperity in the process. All of this can be best achieved by keeping in mind
the socio-cultural needs of the specific country; and the distinct and
participatory role of the government, private sector and civil society.
MEXICO

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Mexico was chosen due to its reputation as one of the big players in the
region, which is spearheading many CSR practices domestically. After Brazil
-dubbed the CSR powerhouse- Mexico is the second most promising
emerging market in the region due to development of its indigenous CSR
culture (Schmidheiny, 2006, pg. 22). The case study will elaborate on the
fact that approaches to CSR displayed by large indigenous firms are based
on the content of Mexicos rich history and culturethe socio-cultural
dimension of CSR.
The analysis of a local firm will contend that three myths about Mexican CSR
influence the perceptions of outsiders to Mexicos economy and society. The
first myth is that CSR in Mexico is new; the second one implies it is an
imported concept brought by US firms to Mexico; and thirdly CSR as
practiced by Mexican local firms is simply a reflection of CSR patterns and
activities of US firms. Research indicates that is not the case on all three
accounts: CSR in Mexico is not a new phenomenon, the concept is not
imported but has home grown roots, and finally Mexican CSR is not identical
to CSR patterns in the US because the Mexican context is completely
different.
Evidence by Logsdon, Thomas and Van Buren (2006) suggests that the
drivers of CSR in Mexico are best understood by considering the role of the
countrys political and social history in shaping the complex relationships
among the private sector, civil society and the government actors. A key
theme is that as the Mexican culture expects business to work towards the
achievement of public purposes and with institutional voids in place on
government level, CSR in Mexico tends to focus on interacting with workers
and direct community requirements and facilitating economic development.
As a result, CSR expectations faced by firms are formed through direct
interaction with particular stakeholders (such as the least favored segments)
rather than mediated by the state or civil society (Weyzig 2006).

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Mexicos cultural and institutional history is rooted in its colonial past,


reflecting a mistrust of power and institutions while also placing emphasis on
public-interest serving roles of private sector business. During most of the
20th century the state played a crucial role in the Mexican economy Private
corporations have recently emerged as the primary actors in productive
economic and social activities due to deregulation, privatization and increase
in inward- outward trade and investment (Weyzig 2006). As mentioned
earlier, the weakness of Mexicos regulatory systems and a government
infested with corruption have significantly raised social expectations of
indigenous firms.
After the Spanish colonization of Mexico in the 1500s the Catholic Church
played a very prominent role until the mid-1800s as the majority
landownerand generated income to finance schools, hospitals and social
programs in the areas of poverty, health and education of locals according
to Logsdon, Thomas and Van Buren (2006, pg.53). After independence in
1821 the power and wealth of the church led to tensions with the state,
culminating in the nationalization of Church holdings. This marginalization
paved the way for the state to cater to social needs, and the position was
further solidified under the Mexican Revolution. That said, the Catholic
Church continues to play an influential role in Mexican society and among
business leaders (the majority of whom are devout Catholics). The presence
of a stronger state led to its own set of problems such as that polices focused
on needs of the poor and were implemented through large government
agencies responsible for education, health, welfare and housing. The
dominance of these bodies resulted in weak civil society and a paternalistic
culture that produced dependency and little citizen participation (Logsdon,
Thomas & Van Buren 2006, pg.53). This has created a culture of mistrust
towards the corrupt state, and with the Catholic Church sidelined people

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have looked towards business leaders to tackle social problems through their
firms CSR initiatives (Logsdon, Thomas & Van Buren 2006, pg.54).
The Mexican constitution in 1917 formalized a paternalistic set of policies for
companies with subsequent legislation requiring firms to provide benefits to
employees such as on-site meals and health clinics. Under the dominance of
the Institutional Revolutionary Party (PRI) Mexico implemented a strong
import-substitution policy.11 In short the state played a leading role in setting
industrial policy until the 1980s when a major shift to expand the role of the
private sector surfaced. Since the 1980s Mexico has pursued an aggressive
economic policy to integrate into the global economy, both by opening its
borders and foreign direct investment and by stimulating growth of the local
private sector especially through privatization. Exports from Mexico
increased from US $26.8 billion in 1990 to US $170.5 billion by the end of
2006 (Logsdon, Thomas and Van Buren 2006).12 Additionally the number of
state owned enterprises decreased from 1,155 in 1982 to 160 by the end of
2000 as found in the study by Logsdon, Thomas & Van Buren (2006, pg 53).
The Mexican corporate sector has long been dominated by family owned,
highly diversified conglomerates known as grupos. One of the ironies of
Mexican politics has been that the state has been concurrently strong and
weak. Its political history is dotted with corruption leading to a weakened
and illegitimate state- particularly with regard to central regulation of
business.13 Due to these institutional gaps Logsdon, Thomas & Van Buren
(2006, pg. 54) suggest that business leaders and their firms have assumed
11 This was done in order to reduce dependence on foreign imports of technology
and other goods and services and to create an indigenous industrialized state. Even
after the 1980s the national government still plays an important role in sensitive
economic sectors such as oil production.
12 Much of this is related to the signing of NAFTA as almost 90% of the exports go
to United States.

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an increased responsibility to meet social roles as in Mexico and Central


America philanthropic activity has emerged as governments becomes less
effective and support of social needs by churches is not as prevalent
anymore.
As a result, CSR in Mexican firms has unique attributes arising from their
history, values and culture. Local firms have long practiced a form of CSR
rooted in the countrys own ancient history as varied traditions of
community self help and solidarity stretch back to the regions pre-Hispanic
customs, and include the mutual-aid societies and trade unions that
emerged in the 19th and 20th centuries (Logsdon, Thomas & Van Buren, pg.
54). Furthermore, indigenous firms have undertaken a social role for
historical and cultural reasons based on Mexicos religious and political past.
Due to all of this, firms in Mexico are literally treated as real citizens with
concomitant duties that are more obligatory than voluntary in nature
(Weyzig, pg76).
Grupo Bimbo is a good example of reflecting the unique and traditional
features of CSR in large Mexican companies. The conglomerate is the eighth
largest baked goods company in the world and is recognized by numerous
local CSR organizations and throughout Mexico as an exemplary corporate
citizen. The group has 83 plants, five associates and three trading agencies.
The company net sales amounted to $ 6,700 million in 2007, employing over
97,500 people and trading on the Mexican Stock Exchange (Peinado-Vara
and Vives 2010, pg 43). In Mexico and Latin America, the company is the
market share leader, selling over 7,000 products under more than 100
different brands. In 2005 Grupo Bimbo was one of the 12 companies to

13For more information of corporate governance in Mexico please refer to Husted, B. &
Serrano, C. Corporate Governance in Mexico, Journal of Business Ethics, 2002. 37: 337348.

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receive the ESR seal for five consecutive years.14 Grupo Bimbo describes its
approach to CSR as enlightening as it has pioneered the practice of social
commitment. The companys mission rests on the belief that its existence
is related to advancing society in exchange for the right to earn profits. This
responsibility includes treating everyone with justice, affection, respect and
trust (www.grupo-bimbo.com.mx.2010). It is interesting to note that Grupo
Bimbo is quite explicit about the social contract that it believes it has with
society.
The conglomerate supports long-term education programs by contributing to
three educational institutions. Furthermore the group has been involved in
the environment (a relatively new addition to CSR activities in the region).
For instance it started to contribute to reforestation efforts in the 1980s and
helped create a non-governmental organization focused on the issue in 2002.
The socially responsible aspect of Grupo Bimbo extends also to its business
operations. It established an alliance with the Multilateral Investment Fund
(MIF) to create a micro-finance organization called Fin-Comun. This
partnership provides micro-loans to the many local shops from which 80% of
Bimbos income is derived (Peinado-Vara and Vives, pg.44).
All of these activities within and outside the business have a single source
linked to the top management and the companys corporate culture. The
founder of Grupo Bimbo, Lorenzo Servitje, is a well known philanthropist
known for his social commitment. He created the company on the belief that
the company had a personal responsibility to provide social welfare as well
as earn profits. His personal doctrine has its roots in the Catholic social
14 The ESR (socially responsible enterprise) seal is a good indicator of CSR presence
in Mexican firms. The Mexican Centre for Philanthropy and Alliance for Corporate
Social Responsibility award this seal to local firms that are exemplary in their CSR
activities. Annually awarded the seal evaluates four areas of CSR activity: quality of
work environment, ethics and governance, links with the community and care and
preservation of the natural environment.

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values and this has continued to influence the companys practices. In 1995
Lorenzo Servitje was the recipient of the Eugenio Garza Sada Award for social
commitment indicating business personalities who believe giving back to
society is essential. The Grupos four core commitments provide great insight
into the companys socially responsible stance:

To foster respect for the sustainable use of the environment

To cooperate with community programs aimed at social welfare

To promote the welfare of the communities where Grupo Bimbo


operates

To encourage respect and support of family unity and national


traditions. (Logsdon, Thomas and Van Buren, pg 56)

These commitments reflect the indigenous firms unique form of CSR


encompassing traditional, religious, social and business elements. In short
Grupo Bimbo depicts the wider nature of CSR obligations perceived by
Mexican firms, locating them in expectations of communities and the wider
social sphere (Logsdon, Thomas & Van Buren 2006). Nonetheless, CSR in
Mexico is not exclusively shaped by internal sources; MNCs have popularized
certain CSR practices that were not previously well developed in Mexico.
Hence, the global dimension to the local context should not be completely
overlooked (Weyzig.pg 72).
Additionally, Grupo Bimbos activities illustrate the distinctive approaches to
CSR in Mexico. It is easy to fall into the trap of thinking that businesses in
emerging markets not only want to imitate the CSR practices of their
Western counterparts but also should do so because the development of CSR
is much advanced in those countries (Logsdon.et al pg 52). Such a view is
false and patronizing simultaneously, for the reality is much more complex.
When it comes to CSR, context matters (Oliveira 2006). The example of

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Mexico exemplifies why CSR is important in the developing world not only
from a business point of view, as well as a social point of view.

CSR IN AFRICA
In the vast majority of Africas 53 countries, CSR is still in its infancy. At
worst, it is regarded with suspicion as a plan of the North imposed on
countries of the South. At best, it is embedded within the African context and
used (by local CSR practitioners and businesses) to address the continents
economic, social and sustainable developmental challenges (Klins and Smit,
2010 pg. 3). Some African academics like Ameashi and Van Niekerk argue it
is the latter case as Africas collective approach to problem-solving and the
impact of the extended-family system, reinforced by the strong village
community mindset and belief, all in fact point to an inherently socially
responsible race of people. Foluso Phillips (2006) of Phillips Consulting Group
in Nigeria states being socially responsible has been a way of life for Africa
long before the Western world exported a much more formalized and
corporate approach to CSR issues.
The past ten years have seen immense changes sweep through the
continent of Africa from governance and democracy paving the way in some
countries to genocide occurring in others. Globalization has not also
overlooked Africa with the fate of many businesses, including some of the
worlds largest multinationals and local firms, now inextricably linked with
the fate of Africa.15 Hence, CSR is enmeshed in the debate about Africas
future. Arguably, Africa is the continent where the social needs are the
15 Africa is also the continent that can claim to have benefited least from globalization thus
far. Indeed, many critics of globalization claim that Africa has been actively excluded,
historically exploited and unfairly discriminated against. Hence there is the possibility of
Africa becoming a rallying point in the campaign of those who oppose the spread of neoliberalism in developing countries.

44 | P a g e

greatest. The World Bank (2009) gives a glimpse of Africas development


challenges: poverty is the highest among all the worlds regions, with the
largest increase in people living on less than USD1.25/day; only 60% of
children complete primary education (20% less than other regions); 5% of
the adult population is infected with HIV (2007 figures); population growth in
urban and rural areas is the highest in the world; and entrepreneurs face
greater regulatory and administrative burdens than any other region (Klins
and Smit 2010). These socioeconomic realities, combined with generally
weak public administration and service delivery, have had a deep impact on
the drivers, position and purpose of CSR for companies operating in Africa
(Klins and Smit, pg 2).
What makes corporate citizenship in Africa not only fascinating, but also of
critical importance, is that the continent embodies many of the most vexing
dilemmas that business faces in its attempt to be responsible, ethical and
sustainable: when do local cultural traditions take precedence over global
standards and policies? Do global companies have a right to impose Western
ideas of ethics on African societies that have their own, often different, sets
of values?
The motivation for CSR in African countries does not differ greatly from other
emerging markets economies that actually practice it. Driven by
philanthropic reasons, CSR in Africa is fueled by the incompetence of the
governments to do what is their responsibility: cater to the needs of the
people and society in general. Ignored and rejected by the state, people
have lost faith in their governments to help them and hence now look
towards firms- both local and foreign to fill in the shoes and be responsible
citizens (Klins and Smit, pg 4) Therefore, CSR activities of firms aspire to
resolve basic failures faced by communities such as access to HIV/AIDS
medicines or building schools. As Visser and Middleton (2005, pg 19)) add in

45 | P a g e

Africa, they are [in-yourface] issues that are a daily reality, an unavoidable
part of doing business on this continent.16
CSR discourse in Africa focuses on ethics, anti-corruption measures and
counteracting weak public delivery in key priority sectors such as health and
education. This is usually combined with Africas rich and diverse cultural
context- another imperative factor in defining CSR. The collective-(measured at
purchasing-power parity)

based culture is manifested in the following indigenous

concepts that have a significant impact on CSR in Africa:

Harambee embodies and reflects the strong ancient value of mutual


assistance, joint effort, social responsibility and community selfreliance. It is guided by the principle of collective good rather than
individual gain.

Tsekada is about behaving as a righteous person, fulfilling


obligations to society.

Ubuntu in Southern Africa reflects an interdependent, communal,


harmonious, relationship-aware and respectful community culture
meaning each person can only be fully functioning through other
people.

Zekat an Islamic concept can be translated as charity or alms to the


poor. (Klins and Smit, pg 3)

NIGERIA

16 Vissor, W. & Middleton, C. Corporate Citizenship in Africa: An Introduction,


Journal of Corporate Citizenship, 2005. 18, pg.19.

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There is considerable literature on CSR meaning and implementation in


South Africa, the only country in Africa which has made significant strides
towards maturity in CSR practice (Visser and Middleton, pg 36). The author
wanted to shift the focus from the usually discussed case of South Africa to
an oil producing emerging economy like Nigeria and examine the status of
CSR there. Hence for this reason Nigeria was chosen as an African case study
to shed light on CSR practices of indigenous firms.
The advent of democracy in 1990s, has enabled local MNCs to thrive and
embrace CSR practices. This has created interesting results for CSR patterns
within Nigerian firms. Nigeria is the most populous black country (140
million) in the world and is influential both within Sub-Saharan Africa and in
the global economy- not least in the proven capability of its international
events to destabilize the global oil market (Amaeshi, et al. 2006).

17

Nigeria

might be potentially the richest country (natural and human resources) in


Africa and the worlds sixth largest producer of crude oil. But despite all the
crude oil revenues- which finds its way into the pockets of the Nigerian
military and state elite- between 1986 and 2006, the percentage of Nigerians
living in poverty rose from 28% to 68%. Nigeria has per capita income of less
than USD 1,000 per annum and a life expectancy of 45 years for men
(Amaeshi and Ogabechie 2010).Therefore given the scale of needs and
stakeholder expectations and political corruption, it is perhaps not
astonishing that more and more indigenous firms in Nigeria at present are
paying attention to the education, health and economic uplift of the people
through their CSR activities.
There have been a number of studies on CSR (Frynas 2001; Boele et al.
2001) from a Nigerian perspective with a focus on MNC activities. If the CSR
practices of MNCs in Nigeria reflect the values of their home country then
17 In fact incessant political unrest within the country is not unconnected to the
social and environmental concerns that lie at the heart of CSR debates.

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one can ask how indigenous Nigerian firms perceive and apply CSR. In other
words, is there a local Nigerian brand of CSR or it is an imitation of Western
style of CSR? Due to globalization Nigerian firms are not impervious to multiexternal influences; nonetheless this case study focuses on the
manifestations of such influences through a local lens. The term indigenous
for Nigeria implies insider knowledge that is local approaches to
management that reflect knowledge of the local context and local
communities. It is the understanding of the local by local people who know
what will work and what will not work (Amaeshi, et al. pg 84).
Additionally Nigeria is a classic case of hybridization of firms practicing CSR
in the global economy. This idea of CSR with global and indigenous
dimensions (an emerging markets phenomenon) indicates a new shift for
the discipline for CSR and its future. Nigerian local firms are products of their
socio-economic environment (which in turn shapes their CSR activities).
Nigerian firms are a combination of colonial imperialism and modernization;
and therefore have always been susceptible to crossbreeding of different
ways of doing business (Ahunwan, 2002, pg. 273). Nowadays, it is the
adoption of certain Western CSR practices into companies to enhance
productivity and be responsible citizens.
Dependence on oil revenues (95% of the export revenues of the mono
economy) has remained more of a curse then a blessing for Nigeria. The
politics of oil opened a Pandoras Box of political corruption, ethnic tensions,
social failure, and government incompetence (Ite 2004). 18 All of these
created severe impediments for business- local and foreign- to operate in
Nigeria. These factors have deterred many foreign entrepreneurs from
investing in Nigeria and induced many Nigerians to take their money and
18 A good subject for CSR literature is the plight of the Ogoni people in the Niger delta
region. The case is rampant with tribal politicking and ethnic tensions due to the corrupt
behavior of Nigerian government and MNCs operating in the region.

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skills abroad (Amaeshi, et al. pg 88). The history of organized CSR in Nigeria
has been due to the activities of Western MNCs driven by personal
motivations (the popularity of the contemporary usage of the term CSR in
Nigeria can be linked to the renewed surge of economic activities after the
1999 return of political democracy in the country. The same cannot be said of
hybrid indigenous firms as not many of them have global operations, are
mostly small medium enterprises (SMEs), privately held and family owned
and operated (Amaeshi, et al. pg 89).
Additionally, it is in SMEs that some traditional/indigenous values can be
glimpsed in the midst of colonial influences. Ethnicity, language and religion
are the three major circumstances shaping Nigerian practices. A common
thread that binds them is the collective philosophy of life and concern for the
less privileged. This tendency is rooted in the concept of extended kinship
which is common to all groups (Amaeshi, et al. pg 89). The family structure
is very important in Nigerian society and it is widely believed that individual
responsibility extends beyond the boundaries of immediate kin. This practice
has sometimes been referred to as Nigerias form of social security. For
instance, a family head in establishing a firm not only represents the
company but also his family. In fact, his business judgment balances the
demands of business along with the individual obligation he has towards his
family, which sometimes encompasses the whole community. According to
Limbs and Fort (2006, pg 173), the family owned nature of most private
business and cultural notions of extended kinship suggest a propensity
toward communitarian identity.
Amaeshi.et al (2006) in their study decided to focus on the role of indigenous
firms in relation to CSR in Nigeria. The aim was to see how local firms
perceive and practice CSR and examine local approaches to management
that reflect knowledge of the local context and local communities (pg.85).
The results of this particular case study which focuses on the financial sector

49 | P a g e

are discussed further on.


In essence Nigeria demonstrates that the understanding and practice of CSR
is still largely altruistic and heavy on indigenous influences. While hybrid
indigenous firms are involved in this, Western MNCs are more strategic with
their CSR activities being more specific and driven by business motives. CSR
in Nigeria is aimed towards addressing the peculiarity of the socio-economic
development challenges of the country and are informed by socio-cultural
influences (Limbs and Fort, pg 30). The type of CSR activities carried out is
in response to the domestic conditions of Nigerian society.

CSR IN ASIA
Asia faces many critical issues in the context of globalization, varying from
regional conflicts and terrorism, corruption, growing gaps between the rich
and the poor and access to infrastructure and basic health services to name
a few. Many of the academics (Birch 2003; Iu and Batten 2001) dealing with
CSR in Asia contend that just like in Latin America and Africa, companies can
play key roles as corporate citizens in contributing their share towards these
problems. Some argue like Robert Davies (2002) of The Prince of Wales
International Business Leaders Forum that the smart [local] companies are
those that will take a proactive approach and see CSR as feature of
mainstream business practice, employee management and a competitive
advantage.
Asian countries are slowly recognizing that CSR is becoming of a greater
meaning due to increased levels of globalized trade and greater integration
of economies. Like its emerging markets regional counterparts Latin America
and Africa, CSR is still very much in the initial stages (Birch & Moon 2004). A
common thread that binds the emerging economies of Asia is that effective

50 | P a g e

CSR in Asia requires companies to behave responsibly at both the global and
local level (as many of the indigenous Asian firms have global outreach and
contact), to sustain core values in traditional cultures in order to create
sustainable employment, to handle externalities responsibly and to create a
sustainable development environment. Jeremy Moon (2003, pg 11) of the
international Centre for CSR stresses that globalization will enhance such
national CSR systems in Asia (due to the activities of local firms) and in the
process will be a driver for new CSR developments in the region.
Like Africa, the continent of Asia has been a fertile ground for different
religions and customs (due to different ethnicities) that have naturally
translated into how businesses carry out their activities. From Islamic
inspired practices in Malaysia and Indonesia to Buddhist and Confucian
influences in Singapore and China, have provided a unique flavor to the
Asian way of doing business. Some of specific cultural examples of such
traditions are:

Indonesia: There is the concept of gotong royong, which literally


means joint bearing of burdens. This is a local custom of helping out
people in the community by providing assistance to victims of natural
disasters, volunteering for local projects and coming together to help
make an occasion such as a wedding successful.

Philippines: A similar tradition to the one in Indonesia, is called


bayanihanbayan meaning country and bayani meaning hero. The
concept means that individuals and small groups come together in
order to help those in need or to achieve a goal for the larger
community.

Hong Kong: Due to the prevalence of Confucian beliefs there is an


emphasis on social roles for persons towards the collective--with an

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ethical mandate that the greatest good is for the community. (Alfonso
and Roman, 2010)
Business culture and local definitions of CSR are not separate from the local
context due to the rich heritage of the Asian emerging markets. Robert
Davies (2002) adds,
in most parts of Asia bonds of family and friendship in economic relations
generally account for far more than in the Western world where the
professionalism of business, the separation of ownership and control or
impact of mobility have diminished the significance of the bonds of
friendship and community (Birch and Moon, 2004 pg 21).
Therefore courtesy and respect, whether for age, wisdom, leadership,
neighbors, and customs throughout Asia are still very striking in comparison.
Asias long tradition of philanthropy through implicit obligations is seen in
business practices and institutional frameworks. Furthermore, these
responsibilities lay with the owner of the firm, and do not imply the creation
of a distinct and separate organizational mechanism. For example in Japan,
shonindo the way of the merchantmeans that work needs to be honest,
disciplined and efficient in providing service to society and leading to a
business culture of benevolent responsibility towards direct
stakeholders(Alfonso and Roman, pg 16).
As in Latin America and Africa, two-thirds of the listed companies and a
considerable number of private companies in Asia are family controlled and
managed. For instance the top 15 groupings in Indonesia, holding 62% of all
listed assets, comprise 21.5% of the countrys GDP (Alfonso and Roman, pg
15). In Hong Kong, the top 15 family groupings hold 34% of all listed assets
and comprise 84% of the countrys GDP (Alfonso and Roman, pg 15). Thus,

52 | P a g e

CSR in Asia is a natural extension of the family corporation. A failure of the


corporation is seen a failure of the family.
The core values in Japan, China and, to some extent, South Korea are faith
and trust drawn from Buddhism and Confucianism. Meanwhile in South-East
Asia, CSR retains a paternalistic overtone where CSR emanates from
personal responsibility of top management (often owners) rather than
organizational responsibility (Chapple and Moon 2007)
Moreover, there is no single Asian approach to CSR because Asia is so
diverse. This in turn produces CSR that is culturally specific, making the
continent a fascinating study.

MALAYSIA
The author has chosen Malaysia due to the fact that it in this country religion
(Islam) and local traditions provide interesting elements for the integration of
CSR practices in business.
The development of CSR in Malaysia has, over time, moved to higher levels
and Malaysia is now recognized as being among the most active emerging
economies in relation to corporate social responsibility(Zulkfi and Amran
2006). The emergence of non-governmental organizations such as the
Consumer Association of Penang contributes extensively to the social and
environmental awareness. However there is no statutory requirement in
Malaysia for publicly-held companies to disclose information relating to their
CSR activity. This void of reporting is a striking feature within local Malaysian
firms and is closely tied to the overall CSR activities of the organizations.
Some positive steps have been taken to amend this. For instance, the

53 | P a g e

Malaysian Accounting Standards Board has incorporated a new standard


(Malaysian Environmental Reporting Awards -MERA) that makes explicit
reference to environmental reports to encourage companies to present
additional information if the top management believes this will assist users in
making better economic decisions (Thompson and Zakaria 2004).
The Malaysian government has over the years put in legislative devices to
help protect the environment such as the Environmental Impact Assessment
(EIA) along with the adoption of ISO 14001 by numerous local firms.
Malaysian firms have made improvements by expanding their annual reports
beyond the traditional reporting by incorporating some elements of
environmental, social, product and employee information. Human resources
and employee-related activities are usually reported, yet it is still found that
the least reported CSR themes are the environment and energy...making
most disclosures declarative and non-quantitive (Thompson and Zakaria, pg
135). There exists a significant gap where lack of reporting has kept most of
the public ignorant of the contributions made. Surveys carried out by
Association of Chartered Certified Accountants (ACCA) in 2007 indicate that
the nature and extent of reporting is very much conditioned by industry. In
this respect a specific industrial sector may determine the status of reporting
among local firms (Zulkfli and Amran, pg 102).
This aspect of disclosure has mostly been associated to the high costs of
such extensive disclosures. As the finance officer of a local firm explains the
objective is good to have more information but whether at the end of the
day, in terms of the dollar, it will be costly to the firm. Then you have to
weigh the cost of having good CSR against the reader who actually reads
and uses the report (Zulkfli and Amran, pg 108). Malaysian companies may
be environmentally friendly but this is not reflected in their reporting. Many
local firms donate money as part of their charitable giving in promoting

54 | P a g e

sports and cultural events but refuse to disclose it. The preference is direct
interaction with stakeholders rather than issuing reports to the public.
Keeping in mind the multi-cultural make up of Malaysia, religion has a strong
influence in the perception and practice of CSR. As the main religion (56% of
the population is Muslim) Islam has enabled its society to preserve many
traditional values while managing its transition to an industrial society19.
Concepts such as the four ideals of Islamic social practice: Free will, Unity,
Responsibility and Equilibrium, are the defining factors in economic activity.
As Malcolm Cone (2003, pg 62) adds it is clear that Muslims see business
activity as being embedded in the social world and, as a result, have
expectations that business activities will reflect the value orientations of the
surrounding social environment. From this perspective ones accountability
to Allah also encompasses ones accountability to society and therefore may
be interpreted as promoting social justice and social responsibility.
Consequently, indigenous firms (referred to as Bumiputra) in an Islamic
environment are expected to be conscious of the impact of their activities on
the community. For instance, some local firms have been known to pay Zakat
(Islamic tax) annually. Others do not engage in tobacco, alcohol or gambling,
instead practicing good corporate governance by being environmentally
friendly (Cone 2003).
Usually activities pertaining to CSR in Malaysia are seasonal. Festive
seasons, for example Eid al-Fitr20 and the Chinese New Year, are the active
seasons when many indigenous firms display their generosity by giving out
donations to the old, poor people and orphans. As most of these functions
19 Islamic banking refers to a system of banking or banking activity that is
consistent with the principles of Islamic law (Sharia) and its practical application
through the development of Islamic economics. Shari prohibits the payment or
acceptance of interest fees for loans of money (Riba, usury), for specific terms, as
well as investing in businesses that provide goods or services considered contrary
to its principles (Haraam, forbidden).

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are made public through the media, it can be deduced that that the purpose
of CSR in Malaysia (apart from the religious reason) is to preserve and
elevate a companys image and the argument can be made that local
companies follow CSR practices if they get something in return.
This implies that local firms are strategic in planning their individual CSR
activities, while the reasons for that may vary from company to company. In
contrast to Western countries philanthropic giving is considered a key
characteristic of a Malaysian company behaving responsibly. Ethnic and
religious attitudes appear to be the driving factor.
This is just a broad view of local firms involved in philanthropic activities as
their way of giving back to society. But if one became sector specific results
would vary. Zulkifli & Amran (2006) in their study explore and examine the
accounting sector in Malaysia which highlights the culture of lack of CSR
reporting in the country (Bebbington.et al 1994). The results of the study can
be seen further on in the paper.
In conclusion it can be assumed that CSR in Malaysia is framed by distinct
cultural and social aspects but one aspect of CSR-- social reporting- in itself is
still relatively haphazard and unplanned.
RESEARCH METHODOLGY:

The author is very much interested in CSR as a concept and process due to
various reasons. Earlier studies on CSR dealt with the activities of a business
and their balancing act between profiteering and being good corporate
citizens. Due to the forces of globalization and deregulation the concept of
20 A celebration by Muslims worldwide after the holy month of Ramadan, a month
dedicated to fasting from sunrise to sunset.

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what really constitutes as CSR has been evolving. This constant changing of
CSR is significant. Furthermore, it is not a concept bound by a specific region
or a certain business structure anymore. The rise of EMEs has questioned
that and raised thought provoking issues not only on the definition of CSR
itself but the future of it. Secondly, how do local forces such as traditions and
culture react with global ones like globalization concerning CSR. And finally
what lessons can be learnt from the CSR experience in EMEs. How will CSR
be regarded in the future after the input from EMEs?
The idea of writing a paper on CSR from a Western point of view did not
really appeal as a lot has been written on the subject. Keeping in mind the
prominent rise of emerging powers, the author believes analyzing the
progression of CSR in EMEs would be an interesting exercise. Furthermore,
due to the complex socio-economic and political structure of such societies
the results of CSR application would be different from that of Western
countries. However, the results might even vary among the emerging
markets themselves negating the preconceived notion, that one CSR model
could be applied for all of them. Hence the three countries (Nigeria, Malaysia
and Mexico) were chosen from the three regions with EMEs providing an
analysis from each area highlighting not only their similarities but also
differences that sets them apart as CSR case studies.
Due to the focus of the topic (which is more theoretical in nature) and the
inability of the author to travel to emerging market economies to collect data
the thesis is mainly based on secondary data. In terms of getting research
material for the paper, the author first relied on online leads and articles on
CSR in general and then narrowed her focus to EMEs. There is material
available on EMEs in general but finding online sources that specifically
dealt with CSR was difficult. Some articles briefly mentioned CSR policies
being adopted by EME firms but the emphasis was more on the economic
and political development and financial standing of the EMEs. The author

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finally found an excerpt of an article by Melina Mehta (2006) on CSR in


emerging economies published in the Journal of Corporate Citizenship. This
journal was the starting point for the material. Fortunately, the Journal had
done four special issues on CSR in emerging economies starting from
summer 2004 with a special issue on Asia, Africa (Summer 2005), Latin
America (Spring 2006) and finally an overall issue in Winter 2006. As these
Journals are not available online, the author had to order hard copies from
London. The special issues provided with an in-depth and detailed
comparative and case studies on various EMEs. After having decided on
what three countries to focus on the author looked at the sources used in the
journals for case study analysis.
This led to finding additional journals that dealt with CSR extensively but
very few dealt with CSR in EMEs. Apart from the Journal of Corporate
Citizenship, CSR and Environmental Management, Journal of International
Business Studies and Journal of Business Ethics provided excellent sources
on the chosen case studies. The availability of the journals was mixed, some
were accessed online while others required going to University of Londons
archives in person. Few journals (Journal of Management Studies and
Sustainable Development) were also obtained from the extensive archives of
University of Toronto. Additionally in July 2010 the latest book by leading CSR
expert Wayne Visser in collaboration with Nick Tulhorst was released
detailing a country-by-country analysis of CSR in various countries both
mature and emerging markets. All of these have been cited extensively in
the paper.
Finally, research for this thesis was supported from online archives of the
International Center for Corporate Social Responsibility (based in Nottingham
University, UK), University of Cambridge Programme for Sustainability
Leadership UK and the Centre for Corporate Citizenship at Boston College
(USA). Acquiring material brought to into focus the problem that while there

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is a large amount of literature on CSR in Western countries there is not


sufficient material on EMEs. This is a huge gap in the discipline of CSR
studies at present as research on EMEs is still in infancy.

In term of analysis of data, the comparative study by Baskin (2005) is the


leading source for the results section. Although there have been previous
studies the focus was on either on one region, Asia, in the case with
Chamber et.al (2003) or comparison between two regions as carried out by
Welford (2004) between Europe and Asia. There has been no comparative
study dealing with either Africa or Latin America. Asia is the only EME region
that has been studied at present although there have been individual
country studies both from Africa and Latin America. The research by Baskin
is the first and only one of its kind that has an inclusive approach including
all EMEs in relation to the OECD countries. The encompassing method by
Baskin provides a clearer picture and hence was used as the primary source
for the comparative study results.
In Malaysia corporate social reporting is a big issue and the majority of the
material retrieved focused on it. Therefore the author decided to discuss how
social reporting is perceived from the lens of the accounting industry which
has been dealt extensively in the past by CSR academics. Unlike Nigeria and
Mexico where the focus was on local firms and how they perceive and
practice CSR, in the case of Malaysia it was companies belonging to certain
sectors (within the business industry) such as the accounting profession; and
judging their awareness and perception of CSR. In the cases of Nigeria and
Mexico there was one main source of analysis Amaeshi et. al (2006) and
Logsdon et.al (2006) supplemented by additional sources such as Weyzig
(2005) for Mexico and Phillips (2006) for the Nigerian context.

RESULTS: EMERGING MARKET ECONOMIES VS. MATURE MARKETS

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The results of the comparative study by Baskin is significant as it shows the


contrast in the interpretation, adoption and implementation of CSR in two
types of markets in areas of business ethics, social reporting, nondiscrimination policies and environment among others. The study is the
most up-to-date in its findings, investigating the extent of CSR undertaking in
leading emerging markets, and comparing this with the situation in mature
economies. The study was chosen as primary source due to the fact it
compares all EMEs (not just regions) with their OECD counterparts.
The study conducted by Jeremy Baskin (2005) of Cambridge University is
comprised of two parts. The first part looks at a range of generic indicators
such as membership of the Dow Jones Sustainability Index (DJSI), corporate
reporters registered with the Global Reporting Initiative (GRI) and ISO 14001
certification21. The second part looks at the findings of research undertaken
into the state of CSR reporting in emerging markets. Aspects of CSR
explored were social, environmental, and ethical policies, systems and
practices.22 Before delving into the research Table 1 summarizes the current
state of CSR in these emerging markets.23 In this paper the focus will be on
Africa, Latin America and Asia, three regions that contain the majority of the
21 ISO 14001 is part of a family of 16 international ISO 14000 standards designed to assist
companies in reducing their negative impact on the environment. The standard is not an
environmental management system as such and therefore does not dictate absolute
environmental performance requirements (National Academy Press 1999), but serves
instead as a framework to assist organizations in developing their own environmental
management system

22 Companies from the following countries were analyzed: Argentina, Brazil, China,
Chile, Columbia, Czech Republic, Egypt, Hungry, India, Indonesia, Malaysia,
Morocco, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Thailand
and Turkey.
23 Generalizations were made with a strong caveat that each region is large and
contains a variety of countries, histories and experiences.

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worlds emerging market economies. Due to their different cultures,


traditions and indigenous interpretation of CSR, these three regions provide a
fascinating comparison to a more structured CSR developed in the Western
world.

Region

Africa and Middle East

Current state of CSR


South Africa has the most

Domestic pressure for CR

developed CSR situation and SRI

Threat of regulation

interest.

Minimal interest in CSR


elsewhere.
Most activity in Brazil, Mexico,
Latin America

Key drivers

Influence of corporate
governance code.

Chile, Uruguay, Argentina.


Focus is on CSI/philanthropy.

Significant SRI market

Nascent public interest


and domestic inequalities.

Regulatory pressures.

Companies from India and

Global pressures

Malaysia beginning to incorporate

Strategy for competitive

Some SRI funds emerging.

Asia

CSR.
Pockets of interest elsewhere.

advantage

Strong external investor

China has especially low take-up

interest in corporate

of CSR.

governance and SRI in


Asia.

Table 1 Summary of existing CSR trends in emerging market economies


(reproduced above found in Baskin 2006, pg 31)

Analysis of 3 Generic Indicators:


Emerging markets companies make up only 3.8% of the FT 500, the 500
largest globally traded companies (Baskin 2006). Even when using the much
larger Dow Jones Global Index they comprise only 4.6%. The first indicator,

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DJSI, regularly analyses each of the approximately 2,500 companies on the


Dow Jones World Index. By using a relatively demanding sector-based
methodology, it identifies the most sustainable companies on a range of
environmental, social and management/strategic criteria, included under
being responsible corporate citizens. Hence it is approximately 10% of
companies assessed as the most sustainable that make it on to the DJSI. In
other words, it is a best-sector evaluation comparing the largest global
companies in all major areas. It is worth mentioning that while 4.6% of the
eligible companies are from EMEs, only slightly more than half of this
amount-- 2.8% of the 318 companies that make it to DJSI come from
emerging markets (Baskin, pg 32). Therefore, looking at the specific
companies that make it on to the DJSI, one finds that not only are some
emerging market firms taking an active interest in CSR by being present on
the DJSI, but also a number of advanced EMEs (such as in South Africa and
Brazil) are among the global leaders. Furthermore, such companies keen on
improving their image globally as responsible citizens want to demonstrate
by taking CSR issues seriously that they are eager to enhance their presence
on the economic front. They want to be seen as active business players
thanks to their socially responsible initiatives.
The second indicator provides similar findings to the DJSI based on Global
Reporting Initiative (GRI) figures. The GRI asks reporting companies to
register with it when they use GRI indicators in their reporting.

24

Of the 614

companies that registered with GRI as of 2006, 12.4% are based in emerging
economies (Baskin, pg 32). Certainly some of the shine can be removed
from this figure since a considerable portion of that 12.4% are either
subsidiaries or closely associated with parent firms in the developed world.

24 While there is no auditing compliance, it is a useful measure of companies that


are engaged with best-practice goal reporting standards and trends to include
leaders in corporate responsibility.

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By excluding the subsidiaries, this still leaves 7.2% of GRI companies based
in emerging economies (Baskin, pg 32).
The last indicator is ISO 14001, the global standard for environmental
management systems. The past five years have seen a significant increase
in the uptake of ISO 14001 certification. Figure 2 below shows how
certifications in high-income OECD countries have increased more than
fourfold over this period while in emerging markets there has been a
significant sevenfold increase. This could be due to two factors; first
emerging markets are growing from a lower base; and secondly this reflects
the growing interdependence of the world economy. It is understood that
many of the emerging market firms want to have globally recognized
management systems, so they can be regarded as global players. Possibly
they depend on export markets and they know that internationally
recognized certified systems boost their ability to access these markets.
Nevertheless, whatever the motives of emerging market firms the increase in
the adoption of ISO 14001 certifications can be viewed as a major
development in emerging markets because the figures reflect the
importance placed by companies towards environmental management
systems as criteria of CSR.

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Figure 2 Growth in ISO 14001 Certifications worldwide (Baskin, 2006, pg.33)

Investigation of 127 emerging market economies:


For the second half of the research carried out by Baskins, 127 companies
from EMEs were examined based on a number of factors. The descriptions of
the findings provide different results. Companies were picked (the index is
sub-divided in three segments: developed, advanced emerging and
emerging markets) from the FTSE25 All World index and then divided into two
categories.26 First were firms based in high-income OECD countries and the
second consisted of companies based in emerging markets. This comprised
586 companies in 21 EMEs. It is worth mentioning the emerging markets

25 This index has been calculated since 31 December 1986, originally as the FTActuaries World Indices. FTSE took exclusive rights to integrate the Baring Emerging
Markets data series with its existing FTSE World Index series. This resulted in the
creation of the FTSE All-World Index series on June 30, 2000.
26 All of the companies on the FTSE AW can be regarded as substantial in size. All
are publicly traded companies hence meaning that unlisted private companies are
not included.

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covered in the FTSE AWI are essentially those with more substantial
economies and with listed firms likely to be of interest to global investors.
By analyzing publicly available information (websites, annual reports and
corporate responsibility reports) the quality and extent of reported CSR
practice (in EMEs only) across a range of factors was established. Figure 3
presents a breakdown by economic sector of the emerging-market
companies inspected come from four sectors: financial, resources,
telecommunications and basic industries.

.
Figure 3 emerging market economies analyzed by economic group (Baskin, 2006, pg. 34).

Reporting on CSR
The research by Baskin showed that over two-thirds of emerging markets
in the sample either produce a corporate sustainability (that includes
information on environmental issues for a firm) report or have a specific
section on their website or in their annual report covering CSR. Social
reporting is an integral part of CSR with which companies can ensure
transparency by keeping shareholder and stakeholders informed of their
business activities of being social responsible. This is a high figure for
EMEs suggesting that firms do not see CSR as the preserve of companies
in mature markets only. It is expected that companies in emerging

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markets would be less willing to report on their CSR activities publicly, due
to the low level of transparency culture that exists. However it appears
that companies in EMEs are readily and eagerly adopting social reporting
and giving their own spin on the concept. It is noteworthy that among the
EMEs some report more than others. However, only one out of the 16
South African companies analyzed had a particular CSR website. Figure 4
indicates that in the form of the chart Africa (mainly South Africa) takes
the lead followed closely behind by Latin America.

Figure 4 Companies with public CSR reporting (Baskin, 2006, pg 35).

Corporate Social Investment CSI


Corporate Social Investment is a term often used to describe a companys
investment in a range of community activities hence determining their
community involvement (Baskin, pg 35). It includes, but also goes beyond,
corporate philanthropy. Figure 5 shows that emerging markets are almost as
likely as high-income OECD countries to report on their CSI to show what
social initiatives they are concerned with, and are more likely to have
extensive CSI programmes in place as well. This indicates that CSI is

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considered an integral part of an organization by EME firms. By looking at


Figure 5 it can be seen that:
72.8% of OECD companies reported CSI activities, compared with
68.5% of EMEs.
36.4% of OECD companies reported CSI activities that can be
regarded as extensive (see box 1 for definitions) compared with
50.4% for EMEs.
Africa and Latin America were the leading regions of EMEs followed
by Europe.

Figure 5 Extent of reported Corporate Social Investment (Baskin 2006, pg 36).

Business Ethics
Due to the rapid expansion of CSR in the last decade or so, there have been
changes in the corporate governance environment as well. This has also had
an impact on the field of business ethics such as the well-known Sarbanes-

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Oxley Act in the United States27. Only a quarter (25.2%) of firms has an
extensive ethics policy, with noticeable regional differences. Latin American
and South Africa companies have done the most in developing codes of
ethical practice while their Asian counterparts lag far behind. The same can
be said of their high-income Asian colleagues such as Japan, Singapore,
Korea and Hong Kong (Welford, 2005).
An effective ethics policy needs appropriate management systems to ensure
compliance and therefore, in addition to the published codes/policies, ethics
management systems were also taken into account in this study. As Figure 7
shows few companies have such systems. This contrasts with the numbers in
Figure 6 that show in OECD North America there exists an extensive level of
published code ethics but when it comes to extent of management systems
to ensure compliance the level is low. Hence the material is present but
conformity lacking in organizations.

Figure 6 Extent of published codes of business ethics (Baskin 2006, pg.37).

27Sarbanes-Oxley Act is a United States federal law enacted on July 30, 2002, which set new
or enhanced standards for all U.S. public company boards, management and public
accounting firms. The bill was enacted as a reaction to a number of major corporate and
accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine
Systems and WorldCom. These scandals, which cost investors billions of dollars when the
share prices of affected companies collapsed, shook public confidence in the
nation's securities markets.

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While 63% of Western European companies had extensive ethics


policies only 39% could be regarded as having extensive systems.

28

The same is true for all regions examined including the emerging
markets. To sum it up, ethics policies are not being matched by
equivalent management systemsthe companies create policies but
this does not guarantee implementation within the corporation.
(Baskin, 2005, pg.37)
Looking at firms reporting any ethics management system, however
partial, 79% of OECD companies could report something, while only
34% of emerging economies could do so. (Baskin, 2005, pg.37)
Finally of the 21 emerging economies studied, in relation to business
ethics, those whose companies showed least evidence of addressing
the ethics issue were Turkey, Egypt, Malaysia and China. (Baskin,
2005, pg38)

28 Ethical policies imply that companies have a published set of codes and rules
dealing with business ethics in the organization. Ethical systems is the next step in
the process, meaning that codes need to be implemented or put into action in the
organization to produce results required. While many companies in OECD countries
have the policies comprising of codes there is an absence of any mechanism that
would put them into use.

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Figure 7 Extent of ethics management systems (Baskins 2006, pg. 38).

Many firms based in emerging markets avoid the issue of business ethics as
local regulation rarely requires it. However, emerging-market regulators and
companies are increasingly awaredue to the vital part being played by
emerging economies in the global economy- that business ethics is often a
reliable alternative both for sound corporate governance and for
management accountability to shareholders.

29

Furthermore, foreign investors are increasingly putting their focus on


business ethics as emerging regulators further tighten the corporate
governance codes such as ISO 14001 and look for ways to encourage
companies to embed better governance within their management systems
such as social reporting. The study of this factor showed that emerging
market firms perform considerably worse than their OECD counterparts in
respect of ethics management, including especially vulnerable sectors such

29 The total output of emerging markets now exceeds more than half of the total
world GDP (measured at purchasing-power parity). The Economist forecasts that by
2025 the share of EMEs in the global GDP will rise to 68%
(www.economist.com/2008/thenew titans)

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as oil and gas and finance where it is hard to implement and follow up on
business ethics (Baskin, 2006, pg 38).

Environment
On the issue of environment about 53% of EMEs companies in the Baskin
research publish details of their environmental policies (52%) and
environmental management systems (53.5%). This is not substantially lower
than the average for high-income OECD countries of about 59% (Baskins, pg.
39). Indeed Figure 8 demonstrates EME firms in each of the regions perform
better than their North American colleagues, although significantly below the
standards of Western Europe and Japanese firms.

Figure 8 Percentage of companies with any evidence of environmental policies/EMS


(Baskins 2006, pg.40).

A few companies from advanced emerging markets (the rising global


leaders) were evaluated to depict country-specific generalizations. Table 1
shows what the findings are:

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Table2 Percentage of companies with environmental policies and EMS i.e. larger emerging
markets (Baskins 2006, pg.40)

While leading Brazilian, Indian and South African companies have high levels
of reporting on the issue in accordance to global standards, Chinese and
Malaysian firms pay far less attention to the issue. Another assumption is
that Chinese and Malaysian companies are active in the area but choose not
to make their activities public by using channels of websites, investor
relations officer or annual reports.30 Hence both Figure 8 set a very low
threshold for inclusion and certainly does not imply that the companies
mentioned have well-built or efficient systems on environmental
management in place.
As more and more CSR is being linked with sustainability (finding long term
solutions to developmental challenges faced by society), it is especially
important to know what percentages of firms with substantial environmental
impact also have a substantial policy and management that is working. 31
From this perspective Figure 9 and Table 2 provide a less optimistic outlook:
30 This is at odds, even within the region with countries such as Japan where
leading companies usually pay great attention to environmental management
systems.
31

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Figure 9 High impact companies with substantial policies/EMS in place (Baskin 2006,
pg.41).

Table 3 Number of companies with substantial environmental policies (Baskin 2006, pg.41)

A majority of high-impact emerging market firms do not own


substantial policies and systems. The same can be said for their
mature market counterparts in Australasia and North America.

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If the focus is shifted to larger EMEs then the situation becomes more
pronounced in Brazil, India and South Africa. China is the only
exception.
A prominent feature is that EME firms rarely report substantial yearon-year environmental performance data. Only 18% of the EME
companies had any sort of important reporting in comparison to 27%
of their high-income peers.

Women on company boards


The percentage of women sitting on company boards, whether in executive
or non-executive positions, is always a good indication about attitudes
towards discrimination. The common perception is that men are more
competent in making decisions and can think strategically about business
than women (www.entrepreneur.com/2005/july). Previous studies such as
Welford (2005) concerning mature market place Scandinavian countries, as
well as the United States as having the highest percentages of woman on
boardsover 21% in the case of Norway. A recent article in International
Herald Tribune (Jan, 2010) on Norway has suggested the increase in women
rising to executive positions is linked to business performance. The large
number of women into Norways boardrooms has done little to improve
either professional caliber of the boards or to enhance corporate
performance.
At the other extreme are countries like Spain (3.8%) and Portugal (0.8%),
while Japanese boards comprise a dismal 0.4% woman (Baskin, pg.43)

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Figure 10 indicates the percentage of women on company boards. It shows


Latin American companies at levels similar to their Mediterranean
counterparts mentioned above. Furthermore there are low levels of womens
participation in the governance of firms in Asian EMEs. In brief 10.5% women
board members are in Africa, 5.1% in Central and Eastern Europe, 4.4% in
Asian EMEs and 1.9% in Latin America.

Figure 10 Percentage of women on company boards (Baskin 2006, pg.43)

Occupational Health and Safety (OHS)


The laggards in relation to reporting on health and safety are high-income
North Americas and also Asian EMEs. At the other extreme over 70% of
companies in both Western Europe and Africa (mainly South Africa) reported
often providing wide-ranging information (Figure 11).

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Figure 11 Percentage of Companies reporting of OHS (Baskin 2006, pg.44)

It appears that some sectors are more exposed than others in relation to
health and safety. Of the EME companies assessed, 29.2% are in the
following sectors: construction, forestry and paper, mining, oil and gas, and
steel and other metals. Of these the higher-risk firms, 13.5% provide partial
details and almost two thirds or 62.2% publicly report at the more extensive
level.
Nonetheless, one quarter (24.3%) do not mention the issue at on all on their
websites. The extreme example is China where six out of seven Chinese
companies in these sectors make no mention whatsoever of health and
safety, despite having commonly publicized problems in some of these
sectors e.g. mining sector.
Figure 12 demonstrates that the overall record of EMEs studied, in respect to
reporting on OHS is stronger and extensive than compared to high-income
OECD countries.

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Figure 12 Percentage of High Risk companies reporting on OHS (Baskin 2006, pg.45).

RESULTS: CASE STUDIES


MEXICO

In Mexico, the current CSR agenda is mostly associated with philanthropy


(Barkin 2003). This has been attributed to catholic traditions prevalent in the
country. Logsdon.et al (2006) touch upon the issue of CSR in large Mexican
firms exploring the approaches taken by these companies. By using three
local MNCs as case studies, through their investigation they contend that
CSR is very much rooted in local ethnic traditions and not so much influenced
by Western CSR practices. In fact local MNCs have consciously not adopted
outside CSR influences for instance from the US and focused on constructing
a local version of CSR best suited to Mexican society (Logsdon.et al pg 52).
The three companies they looked at are heavily involved in different fields of
CSR activities. The first one Grupo Bimbo, discussed earlier focuses its CSR
initiatives on facilitating sustainable economic development. The second
company Grup Bals philanthropy includes education such as operating and

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owning universities. This is in due, in part, due to a particular institutional


void: under-investment in higher education by the government (Logsdon
et.al , pg 57). Grup Bal owns one of the countrys leading private universities
called Autonomous Technical Institute of Mexico, founded by the companys
founder, Raul Bailleres nearly 60 years ago. Hence this reflects Mexicos
strong historical tradition of private involvement in education. Another
important CSR theme is economic development by the company found in
their mission statement on their website: even though higher education is
the main philanthropic activity, the consortium also supports a variety of
initiatives that reflect the commitment of the Group towards Mexicos
development (www.bal.com.mx). Grupo Bal is contributing to the betterment
of society through education and economic advancement.
The last company Grupo Salinas is involved in providing goods and services
to under-served populations. In a sense these firms view their whole reason
for existence to be helping the poor by making affordable good and services
accessible (Logsdon et.al, pg 57). Two companies Banco Azteca and Group
Elektra, that are part of Salinas specifically target bottom of the pyramid
customers by providing access to credit for the poor. This is Grupo Salinas
way of making a contribution to the countrys economic development. The
Grupos 2003 annual report suggests that corporations have explicit
obligations to serve society (www.gruposalinas.com).
The result therefore, indicates that CSR in Mexico is very much a local
concept based on local ethnic and religious traditions because in fact the
Mexican context is very different. Logsdon.et al add when it comes to CSR,
context matters as it is very much shaped by culture, political and social
history, and religious heritage (pg.59). The important theme that has
emerged from the study is that companies have a responsibility towards
society through its work. Instead, CSR is used as charity tool. Hence, the

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research on the three case studies highlighted the distinctive approaches to


altruistic CSR in Mexico by local MNCs.

NIGERIA
Research carried out by Amaeshi, et al. (2006, pg 89-93) explored the extent
to which the meaning and practice of CSR was present in Nigeria. Focus was
on the financial sector because it is about 90% owned and run by local
entrepreneurs. The financial sector that is one of three major sectors of the
economy (along with telecommunications and oil and gas) in 2005
underwent a consolidation exercise especially in the banking industry
(Amaeshi and Ogbechie, 2010 pg. 277). Hence it was thought that this sector
would provide a more pure and succinct overview of CSR in Nigeria. The
majority of business leaders gave the impression that the meaning of CSR
was largely framed to reflect local realities. In their eyes CSR was perceived
from a philanthropic perspective. One senior executive of a bank added that
CSR is a way of saying thank you to the environment in which they operate
and a way of also showing a sense of belonging to the society at large
(Amaeshi, et al. pg91). Table 3 illustrates CSR awareness in Nigeria. It shows
Nigerian firms are engaged in at least one CSR activity. Table 4 and 5 reflect
the top 5 issues being addressed by Nigerian firms and priority issues that
need addressing in the future.
Level of

Characteristic of level

awareness
Low

Almost no awareness

7.7

Medium

Awareness without significant action

85

High

Awareness with significant action

7.7

Table 4 Level of CSR awareness in Nigeria (Amaeshi, et al.2006, pg 92)

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Current Issues Addressed

Education

46

Healthcare

38

Infrastructure development
Sports/arts and culture

31
23

Poverty alleviation
Table 5 Current CSR waves in Nigeria (Amaeshi, et al. 2006, pg 92)

Expected Priority Issues

Education

85

Healthcare

62

Infrastructure development
Poverty alleviation
Security
Table 6 CSR priority issues in Nigeria (Amaeshi, et al. 2006, pg 93)

54
31
23

This predominant concept of philanthropy is definitely connected to the


traditional socio-cultural heritage of indigenous firms. The kinship pattern of
production is still reflected in the structure of most local firms. In terms of
CSR this model would imply that businesses first serve the interests of the
community as primary members. Philanthropy, goodness to society and
donation are therefore meshed within the moral economy of kind based unity
and reciprocity giving CSR in Nigeria a very altruistic image.

MALAYSIA
Zulkifli & Amran (2006) explore and examine the accounting sector in
Malaysia which highlights the culture of lack of CSR reporting in the country.
Despite the development of the CSR movement in Malaysia over the past

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two decades, lack of reporting has kept most of the public ignorant of the
contributions made (Bebbington.et al 1994). The study provided interesting
answers on the understanding and awareness of CSR. The majority of the
findings demonstrated that accounting professionals had a low level of CSR.32
One interviewee mentioned we do not do CSR in a conscious manner
(Zulkfli and Amran, pg 108). Others professed to having heard about CSR for
the first time when contacted for the survey. There seemed to be a
disconnect between this low level of awareness and the favorable state of
CSR actions by Malaysian companies discussed above. On a deeper level it
appears that the low level of understanding may not necessarily mean that
their companies are not acting responsibly towards society. In other words, it
may imply that their lack of knowledge on CSR and social reporting has led
them to disregard the reporting aspect of social activities that have been in
fact carried out by the companies (Zulkfli and Amran, pg 109).
This coincides with the earlier information provided in the literature review,
that the level of social involvement by local companies does not correlate
with the status of their reporting. Hence it can be assumed in Malaysia that
on the whole, while the awareness of CSR is high, the concept of corporate
social reporting is low.
The general view among the interviewees was that accounting professionals
should be engaged more in CSR and start thinking about social and
environmental impacts in the companys book. While the professionals
realize the vital role of social reporting there exist various issues that hamper
their involvement with CSR in Malaysia. Findings by Adams (2002) shed some
light on the peculiar attitude of accountants vis--vis CSR. The findings
indicate that the company of origin, corporate size and company culture are
likely to have an impact on CSR. It appears that the culture at Malaysian
32 Fourteen individuals from the accounting profession were interviewed in 2006 in
Malaysia.

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firms does not encourage accountants to expand their role on social


reporting as it not considered a part of their job description (Thompson,
2004).
Social reporting has traditionally tended to focus transmitting financial
information to investors (Zulkfli and Amran, pg 111). In doing so it neglects
to inform stakeholders about the impact of the firms activities on society.
The accounting professionals regard the concept of CSR towards society and
environments as natural and appropriate (CSR Asia, 2008). But this requires
a change in thinking of how this can be translated into meaningful actions by
local professionals to bring more attention to social and environmental
issues. One of the ways to deal with this issue is to raise educational
awareness; revising shareholder expectations; encouraging government to
take the initiative; and change the indifferent public attitude towards social
and environmental problems as put forward by Thompson (2004, pg 130). 33

Finally, the research results for all three case studies suggest through their
findings and analysis that a certain type of CSR appears to be the common
result between them. That certain type of CSR is altruistic in nature, driven
by philanthropy and charitable activities of the local MNCs.
Altruistic or philanthropic CSR as we know is the interest in doing good for
society regardless of its impact on the bottom line (Lantos, 2001, pg 600).
The local companies and business sectors looked at in the three case studies
all show that they want to do well towards society regardless of profit
sometimes. The firms believe for instance in the case of Mexico that they
have a distinct responsibility towards society by being conscientious
corporate citizens. This outlook on CSR affects the actions of such
33 Throughout 2005 cases featuring environmental issues as opposed to social
attracted most attention in the local media. Such issues included illegal logging, hill
cutting, river pollution and marine pollution to name a few.

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companies, in other words, philanthropy drives their activities. With


government largely absent from social problems, firms in all three countries
feel the need to fill the gap with their philanthropic initiatives.
Concerning charitable projects, in Malaysia you have companies earmarking
funds as part of their duty for education, religious organizations and
orphanages. For example Genting Berhad, a Malaysian investment holding
and services company annually donates to local orphanages (Zulkifli
&Amran, pg 103). In Mexico, for instance Grupo Salinas specifically targets
selling to the poor, while Grupo Bal focuses on providing education through
its universities and Grupo Bimbo deals with reforestation issues among other
things. Finally Nigerian local firms such as Zenith Bank are heavily involved
in provision of healthcare and infrastructure development (Amaeshi.et al,
2006, pg 92) as part of their philanthropic obligation.

ANALYSIS
The salient features that have emerged during the discussion of the
literature review and comparative studies are mentioned below:
Literature Review:

The meaning and practice of CSR in all three regions shows that the
CSR movement is still very much in its formative years. It is growing at
a determined pace in the emerging markets and interestingly enough
these markets already have started manifesting their own indigenous
versions of CSR that stand apart from the widely understood Western
rules and norms of CSR.

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Nearly all emerging markets MNCs as indicated in the case studies


have a philanthropic aspect to CSRgiving back to society and
contributing towards its sustainability and development.

In numerous emerging markets CSR appears to be home grown (and


not imported) due to religious, ethnic and cultural influences for
instance in Mexico the role played by Catholic concept of charity.
Hence socio-economic factors addressing particular needs play an
integral part.

CSR patterns are firmly grounded in the cultural and traditional context
of a particular country, addressing socio-economic needs reflecting
local realities and priorities through a local business lens. In short,
context matters greatly. For instance, context can be perceived as
levels of political and economic development and their social
consequences in different countries. What is the countrys level of
modernization and economic development? Latin America has severe
social problems of poverty, poor education and health issues. The more
developed a society is, the more prominent corporate responsibility
discourse tends to be. Hence, as EMEs are not fully developed as
societies the discourses of CSR are inconspicuous. Diverse problems
that are perceived to be in particular need of addressingpriority
issues that cannot be overlooked-- will affect the understanding and
expectation of CSR in different countries.

Additionally, these local realities and priorities bound to a specific


emerging market also act as a demarcation between the various
versions of CSR in these countries. Their priorities simultaneously unite
them and set them apart. Some common priorities are access to
health care, education, corruption, and poverty reduction. Particular
ones are, for instance, security due to oil politics in Nigeria, and labor
relations because of protective unionism in Mexico.

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Comparitive Studies:

Western MNCs appear to adopt strategic CSR in terms of perception,

adoption, management and implementation that cuts across both


market and non-market environments of corporate strategy leaving
hardly any room for altruistic driven CSR. Western MNCs, even when
operating in a foreign country such firms focus on either CSR mandates
from their home countries (Dutch firms operating in Nigeria) or
activities that have a direct impact on their business i.e. strategic
CSR. This has led them sometimes ignoring the local construction of

CSR and making local firms taking charge on that issue.


The author agrees with Lantos (2001) that altruistic type of CSR is
indeed rare but, the author also believes, only in Western firms. For
altruistic CSR trends have been spotted in firms operating in EMEs,
where a combination of altruistic (driven by local forces) and strategic
(driven by economic forces) CSR have combined to project a hybrid
version CSR. This has led to what the author refers to as the
hybridization of CSR (local and global forces) particular to emerging
markets, indicating a new trend for the future of CSR.

Results:

Results of Baskins study shows a high level of compatibility between


EMEs and mature markets, concerning major leading companies.
Overall there is not really a huge disparity in the approach to reported
CSR between leading firms in high-income OECD countries and EMEs.
The analysis reveals one trait that stands out is that CSR in EMEs is
less entrenched in business strategies, less persuasive and less

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politically rooted than in most OECD countries. In other words, CSR


practices in EMEs are more socially apt to local factors combined with a
high quantity of cultural influence.

Research results of the case studies implies that MNCs operating in


EMEs are affected by local as well as global contextual factors in how
they approach CSR. Depending on the unique social mix of an
emerging economy a MNC might adopt a hybrid approach such as in
Malaysia and Nigeria or a specific indigenous approach heavily
dependent on Catholic influences as in Mexico. Therefore, altruistic
CSR is very much prevalent in the results. Altruistic CSR in Malaysia
and Nigeria is very much hybrid in nature, while Mexicos version of
philanthropic CSR is defined by religious and ethnic factors.

Case studies:

The majority of indigenous firms involved in CSR in emerging markets


are family controlled and managed more than in the west, as depicted
in all three case studies. The concept of family involved in the business
has become diluted in the West. Therefore the concept of placing the
good of family and larger community over the individual plays a

significant role in the operations of indigenous firms.


The three case studies demonstrate that the failure of governments to
do what is right for its people has led to motivations for CSR to emerge
and blossom. Hence, as indicated above, the private sector remains
one of the best placed institutions to make a significant positive
contribution towards improving social and environmental conditions in
these markets. For instance, in Malaysia the reluctance of the national
government to take the lead on CSR activities has created a vacuum
now filled by large local firms involved in sports, welfare and cultural
initiatives.

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In Mexico indigenous firms involved in CSR are seen as corporate


citizens literally with responsibility towards the people and society. The
society expects local firms to contribute their share to the people by
investing in various areas such as environment, education and

alleviating poverty.
The meaning and practice of CSR in Nigeria is an intricate mixture of
some multi-external factors and lots of indigenous influences. The
conception of CSR within the Nigerian context is heavily prevailed by
philanthropic tendencies due to the traditional family concept of
kinship and contributing back to society (this would include the
immediate family and the larger tribal community). Hence the agrarian
mode of livelihood (that was present before colonization) is still
prevalent among the organizations of local firms. Thus, Nigeria has
characterized its own brand of CSR through a blend of philanthropy

and traditional socio-cultural heritage.


In Malaysia the trait that stands out the most, when looking at CSR
activities, is the strong culture of lack of social reporting on
environmental issues. This lack of CSR reporting has sometimes been
attributed as a regional trait, for usually home grown firms prefer to
have direct dialogue with stakeholders rather than issuing public
reports. Although improvement has been made in the last two decades
or so, there is still work to be done. The degree of social reporting
varies from sector to sector, for instance there is a low level of social
reporting awareness in the Malaysian accounting sector.

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CONCLUSION
Recommendations
1. A novel approach to CSR: There needs to be a creation of a new CSR
business model as suggested by Wisser (2010) for EMEs to better
describe the process within their own specific national context. It
seems that the Western paradigm which is more structured in nature
concerning CSR norms and rules does not explain the phenomenon in
EMEs, where it takes a more fluid form (due to domestic forces). The
pragmatic approach, when contemplating such a model, is to
understand that globalization does not erode CSR by undermining
these national systems and accept that instead globalization is a driver
for new CSR developments.
2. Focus on local: While the CSR movement has been inspired by Western
norms and standards, the application of the concept globally has
produced different local expressions and understanding. The local
factor should never be overlooked when recalling that there is no one
single formula for CSR globally. Context matters when analyzing CSR
practices- adoption, understanding and implementation in each place.

Future areas for research:


Gaps in CSR research exist for EMEs and hold enormous potential for the
literature. A good place to start would be to look deeply into CSR practices in
these emerging markets as the literature at present is meager. The mistake
is to view CSR in EMEs from a Western point of view consisting of structured
norms and rules that had developed due to the Western historical
background. There is a significant literature gap concerning the historical

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analysis of CSR (religious, social, ethnic) in emerging markets. By focusing on


this gap academics will have a better understanding of the localized forms
of CSR that have existed in these markets that predate the arrival of CSR
known today based on Western experiences and principles.
Secondly, the literature that exists is mostly focused on large local
companies and therefore provides a constricted and one dimensional picture
of CSR in emerging markets. There has been insignificant mention of Small
Medium Enterprises and their role concerning CSR in local markets. This
could

be

an

interesting

issue

to

develop

looking

into

the

perception/understanding of CSR held by smaller firms, if and how have they


adopted CSR practices within their organizations and lastly what is their
contribution towards society. Is the phenomenon of altruistic CSR only carried
out by large indigenous firms?
The intricate link between CSR and local philanthropy is an area that also
needs further attention. The author believes that due to the socio-economic
and cultural considerations of EMEs philanthropic CSR is unique and
reflective only of those markets. Until such an altruistic form of CSR has tried
to have been explained by using experiences of mature markets in the west
for instance by Lantos (2001). According to him this type of a CSR is rare as
it requires firms to fulfill altruistic responsibilities, contributing to the
common good at the possible and probable expense of the business. In other
words such CSR is not a legitimate role for business. The author believes that
this type of CSR is indeed rare in the Western world, but altruistic CSR trends
have been spotted in firms operating in EMEs, where a combination of
altruistic (driven by local forces) and strategic (driven by economic forces)
CSR have combined to project a hybrid version CSR.
Lantos study has focused on corporations operating in mature markets or
MNCs from the West operating in developing markets. Such an analysis is not

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applicable and relevant to the altruistic CSR seen in EMEs. Hence, more
needs to be developed on this issue from an emerging market perspective.

Comparative Study:
Looking at the results of Baskins study we find a high level of compatibility
between emerging and mature markets, at least for the major leading
companies. Furthermore we see that leading emerging markets-- the big
players-- often have more in common with each other than with other
countries in their own region. For instance Brazil, South Africa and India
share a lot more CSR traits with each other. It is reasonable to conclude that
overall there is not really a vast difference in the approach to reported CSR
between leading firms in high-income OECD countries and EMEs. However,
CSR in emerging economies is less embedded in corporate strategies, less
persuasive and less politically rooted than in most high income countries. In
simpler terms CSR practices in these markets are more socially in tune with a
high dosage of cultural influence.
The criterion used by Baskin provides an insight into how CSR can be
measured in EMEs, but what the comparative studies fail to point out is what
type of CSR- altruistic or strategic- occurs in these markets. In other words do
different combinations of measuring factors lead to a certain type of CSR in
EMEs. This an area that needs further study.
Case Studies
The following sections dealt with the case studies chosen for this thesis
representing three regions of emerging markets; Latin America, Asia and

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Africa. A common strand that runs through the case studies suggests that
the meaning and practice of CSR is socio-culturally embedded, providing
each of them a unique and personal twist of the process. While popular
Western standards and expectations of CSR contain issues such as fair trade,
consumer protection or green marketing, in emerging economies CSR is
driven by socio-cultural influences (charity or ethnic religious beliefs)
addressing socio-economic tribulations facing the country (poverty, access to
health care or corruption).
The majority of current literature on CSR in EMEs mainly focuses on the
three popular case studies- India, Brazil and South Africa- all of them with
extensive CSR norms and rules. This has in turn led to other EMEs being
overlooked by CSR academics and researchers. For instance, material exists
on EMEs with CSR forces such as Nigeria or Mexico but the author believes
they are overshadowed by their well known counterparts. Additional
extensive research needs to be done focusing on the rest of EMEs.

Concluding Remarks:
CSR is still very much a contested subject with unclear boundaries and
debatable legitimacy (Baron 2001). Meanings of CSR, defined by culture,
geography, social and economic factors are legion, making theoretical
development and measurement difficult. Carrolls 1970 (pg.500) definition
sums it best for this paper that social responsibility of business
encompasses the economic, legal, ethical, and discretionary expectations
that society has of organizations at a given point in time. This study has
tried to show that social responsibility is a balancing act: business must
balance economic performance, ethical performance and social performance.
And, this balance must be achieved among various stakeholders. The focus
here has been how indigenous firms maintain this balance within their
national spheres combining both local and global CSR dimensions. Although

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contemporary CSR is still in a nascent stage in EMEs, the future looks


promising as it is growing at a determined pace.
The paper has demonstrated that there already exists a fluid historical
indigenous form of CSR. Now, it is being merged with the more corporate
and structured form from the West producing dramatic hybrid results for the
concept of CSR. The comparative study by Baskin reflected that point in
relation to its OECD counterparts. Furthermore, CSR in EMEs seemed to be
more socially in-tune with a high dosage of cultural and ethical influences.
This trend is also reflected in how MNCs approach their CSR activities
depending on the type of markets they are operating in. It appears that
results vary among the three emerging markets discussed; local MNCs in
Mexico tend to adopt a more specific CSR approach catered to Mexican
traditions and history. On the other hand, Nigeria and Malaysia MNCs lean
towards a more hybrid approach to CSR concerning their activities.
In Mexico the emphasis is more on local traditions, by firms to create a
Mexican version of CSR that business and people can relate to. The firms
intentionally reject Western influences of CSR hoping to generate CSR that is
more Mexican in nature and complements the local business settings.
Malaysia and Nigeria are more temperate, in that local firms have sought to
combine religious and local traditions with western CSR approaches (hybrid)
that is best suited to their business environment.
CSR is a process driven by globalization, privatization and deregulation.
Emerging economies are proof of the potent combination of these processes.
In the authors view the emerging markets, the global powerhouses of the
tomorrow, can very well provide the ideal laboratory for the experimentation
of what is the future of CSR. From the philanthropic CSR practices in Mexico
to the altruistic traditional impulses in Nigeria, the emerging markets have a
lot to contribute to CSR. The mistake is not to underestimate them. As Visser

92 | P a g e

(2010) suggests it is very likely that the evolution of Corporate Social


Responsibility towards Corporate Sustainability and Responsibility will occur
in these countries. The EMEs response towards corporate responsibility will
have a sustainable aspect to ita long term approach to giving back to
society and improving it. This paper with its analysis hopes to shed more
light on the evolution of this new paradigm.

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