CSR END TERM

Question 3.
Business requires innovation to sustain. Examine a business model which is based on
innovation and development and creates opportunities for entrepreneurs and buying
capacities for consumers.

During the first decade of the twenty-first century, we noticed a distinct relationship between
a company's corporate social responsibility practises and its ability to incite innovation and
sustainable development.The model proposed by professor CK Prahalad 1 the business has to
define its strategic intent of organisation and the importance of the “Fortune at the bottom of
the Pyramid” which means that the global poor are an underserved market in which a huge
market exists for the responsible and sustainable businesses. The approach helps businesses
understand the demands of the bottom of the pyramid while being price sensitive. This can
help the poor to improve the quality of their life and adopt technologies quickly while the
business model takes advantage of scale and can operate on a lower margin than its
competitor. This can be seen in the adoption of mobile internet by the bottom section after the
sector was disrupted by Reliance Jio where an earlier untapped customer base was found and
the people was also digitally empowered. As international corporations step up their efforts to
reach the Bottom of the Pyramid , they may find themselves creating new distribution
channels as a result of the process. Occasionally, this will result in unquestionable advantages
being provided to the impoverished. Poor, rural Indian women are trained to distribute and
sell consumer goods products to hard-to-reach villages through Project Shakti, the name
given to Hindustan Lever's innovative channel of distribution. This adaptation of the age-old
travelling salesman model allows villagers to gain access to essential products that would
otherwise be completely unavailable.

Among all of the ethical considerations, it is the vulnerability of BOP consumers that is the
most difficult to deal with. The companies have to procced with caution and good faith as
there have been cases of detrimental effects in some communities. Nestle was widely
chastised in the late 1970s for marketing infant formula to impoverished mothers in
developing nations who lacked the financial means and knowledge to properly use the
product. Nestle implied in its advertising that its infant formula was the modern, Western way
to feed new-borns, offering out free samples without first ensuring that there would be
enough drinkable water to combine the powder with. Mothers were not warned that their own
milk, which contains vital antigens, would dry up after a few days of using the formula, nor
were they smart enough to consider if they could afford to buy the product for an extended
period once the free samples were gone. To impart an impression of medical professionalism
to the marketing endeavour, saleswomen were dressed in nurse uniforms. This shows the that
the BOP business model has both positives and negatives and should be implemented with
caution2. The BOP model can be combined with Corporate Social Responsibility such that
the communities of poor consumers benefit from the business activity.

1
Prahalad, Coimbatore & Hart, Stuart. (2002). The Fortune at the Bottom of the Pyramid. Strategy+ Business.
26. 54-67.
2
Davison Kirk, Ethical Concerns At The Bottom Of The Pyramid: Where CSR Meets BOP, Journal of International
Business Ethics, Vol.2 No.1 2009.
When firms enter new markets in developing countries, they often encounter a number of
problems, including the need to adapt their business models to the economic, cultural,
institutional, and geographic characteristics of the local market, among other things. When
multinational corporations (MNCs) lack the tangible resources or intangible expertise
necessary to handle these local difficulties, they turn to nongovernmental organisations
(NGOs) for assistance in developing a new business model that would generate value for the
community. Businesses employ these partnerships as a component of their corporate social
responsibility programmes. Businesses participate in CSR for a variety of reasons, including
strategic, altruistic, and defensive objectives. As a result of these partnerships, both parties
share their complementary capabilities at each stage of the value chain to create products or
services that neither of them could have produced on their own, thereby creating and
delivering value in novel ways while also minimising the costs and risks associated with the
partnership structure. Such cross-sector collaborations aid in the creation of both economic
and social value, which is mutually reinforcing in its effect.

A partnership between a corporation and a non-governmental organisation (NGO) can yield

significant environmental and business benefits, such as reduced risk, lower costs, new
market development, and increased brand reputation, in addition to reduced environmental
harmful effects in the company's product line, operations, and supply chain.

environmental operations are being held to a higher standard- The innovations that come out
of these cross-sector alliances help corporations gain a competitive edge while also
establishing a new standard of environmental excellence for competitors to build on in order
to stay competitive.

Skills and perspectives are being utilised to assist the organisation in dealing with difficulties
that the company may not have the necessary skills, experience or resources to deal with on
its own. Furthermore, non-governmental organisations (NGOs) provide an useful outsider's
perspective that is beneficial to innovation and development.

Building reputation and credibility- When a cooperation between a business organisation and
a trusted non-governmental organisation (NGO) produces respectable outcomes, it results in
an improvement in the reputation and credibility of both parties involved.

In addition, an NGO can provide legal independent "third party" confirmation of a business's
claim of social and environmental benefits deriving from the company's initiatives. This is
known as "third party validation."

Contributing to the achievement of a long-term vision.- In order to survive, a business must

fulfil its long-term objectives. However, it is common to find that organisations are
preoccupied with meeting their short-term, day-to-day objectives. A relationship with an
NGO, therefore, provides an external push to the business in order for it to achieve its long-
term objectives and be viable in the long run.

The primary goal of non-governmental organisations (NGOs) is not to increase the social
acceptability of business organisations, but rather to improve the living conditions of people
who do not have access to essential goods and services. NGOs are organised to accomplish
this goal in a variety of ways. While partnering with business giants makes sense in order to
reach out to a broad population swiftly and effectively, it only makes sense when it has a
beneficial influence on the lives of the poor and needy.
Question 4
Many countries across the world has been facing crisis in their governance system, either due
to corruption or lack of resources or unwillingness to do good to its own people. In such
situations how can business play an active role to deal with such crisis.

Businesses have played an important part in dealing with the crisis situations in the countries
in which they operate. CSR efforts have an important role in improving the governance,
social, environmental, and ethical conditions of the countries in which they operate, while
keeping sensitive to the society's cultural, religious, and historical settings. Because of its
high corporate ethics, Corporate Social Responsibility, which originated in the West, is
becoming increasingly popular in developing countries with limited resources and bad
governance. CSR refers to a company's responsibility to and for society 3 . It is a complete
definition that states that a corporation must be accountable to society, compensate for its
own negative affects as well as the negative effects of other society stakeholders, and
contribute to environmental and societal wellbeing. David Baron claims that CSR refers to a
company's profit-maximizing strategy that can also be viewed as socially responsible activity.
However, it has been shown in many countries that sociopolitical demand, rather than
financial interests of firms, plays a larger role in the adoption of CSR practises. Companies'
CSR initiatives are now focusing on filling in the gaps that were previously left open, such as
assisting the government in filling governance gaps in regulating business by pressuring the
sovereign to formulate anti-discrimination measures, labour rights, or laws relating to
increasing transparency in their businesses and government bodies. Standardization is
typically imposed by MNCs in order to ensure international consistency among their
operations and subsidiaries in emerging nations, resulting in businesses meeting international
governance norms. By implementing appropriate measures, these methods relieve public
misery while also guiding the country toward sustainable growth. Scholars have also
proposed that CSR practises have a positive multiplier effect in society, resulting in increased
employment, employee earnings, and the implementation of acceptable workplace safety
norms. As a result, corporate social responsibility (CSR) can help to counteract the negative
effects of capitalism.
As a result of the country's socio-political context, CSR business activities are shaped, and
company conduct is driven toward incorporating social and ethical issues. For example, since
the 1980s, changes in Latin America's social, political, and economic conditions, such as
liberalisation, democratisation, and privatisation, have resulted in a shift in the role of
businesses operating in the country, assigning them responsibility for social and
environmental issues and holding them accountable for their actions. The aim was to address
with local sociological and environmental problems like deforestation, income inequality,
unemployment, and crime that the government had failed to resolve in Latin America's CSR
activities, rather than western approaches and notions like tax evasion. As a result, these
corporate strategies prioritise serving the people and resolving any local difficulties that may
occur owing to a lack of resources or government unwillingness.

3
Moon, J. (2014). Corporate Social Responsibility: A Very Short Introduction. Oxford University Press.
The political shift toward democracy in South Africa, as well as the need to address the
injustices faced by black people, drove businesses to implement CSR initiatives aimed at
social upliftment through collective business efforts, economic empowerment of the black
community, and improved corporate governance and business ethics.

CSR business practises also assist in filling the "governance gaps" created by under-
resourced, weak, or corrupt governments that have failed to deliver fundamental social
services such as healthcare, housing, education, roads, and power, among other things. This
has been the case in many developing countries, particularly where ineffective, weak, and
corrupt governments with weak institutions and poor governance delegate their responsibility
for providing social services to the private sector, which was previously the government's
primary responsibility. Scholars such as Blowfield and Frynas have suggested that in
situations where a country's government has failed or is hesitant to provide basic services to
its population, corporate entities might legitimately assume this job of governance. To
address these governance gaps in the public interest, businesses stand up for the public and
take on the role of an alternative government. The Ghanaian people characterised CSR as
"developing local capacity" and "stepping in where government falls short" in a poll done by
the World Business Council for Sustainable Development (WBCSD 2000)4.

In times of crisis, business assumes the role of governance, signalling a political shift in
modern times toward new governance approaches in which the sovereign seeks to share or
delegate responsibility to private players, resulting in the development of a new model of
society operation that can be attributed to the government's overload or unwillingness to
work. As a result, in these times of crisis, business becomes the public's saviour, and it
emerges in a Civic Republican form. In the absence of government regulation, businesses
have begun to develop code of ethics and laws for the entire industry, such as the ISO26000
standard, to address issues such as safe and auditable workplace conditions, equal pay for
equal work, minimum wage standards, and funding the education of child labourers, among
other things. CSR may also be viewed as a partnership method that aids a firm in expanding
its market by socially and economically elevating the underprivileged and downtrodden and
converting them into future clients. Businesses have begun to devote a significant portion of
their CSR operations to the upliftment of rural and underdeveloped communities, which
suffer from a lack of resources and bad governance. In this regard, the ABB firm gives a
great example, having entered into a partnership for rural electrification and the development
of Tanzania's first electric rail link in order to fulfil its CSR commitment.

Any serious economic, social, industrial, health-related, or environmental catastrophe has the
impact of increasing the number of businesses participating in CSR efforts. Catastrophic
disasters that represent a big threat to society frequently result in firms' altruistic CSR
programmes being fuelled. For example, following Argentina's 2001-02 economic crisis,
business initiatives played a significant role in poverty alleviation. The massive donations
made by Indian corporate houses like TATA and Wipro during the covid-19 pandemic are
another example of a situation where the government lacked resources to cope with a
pandemic and businesses stepped in to save the day.

4
Utting, Peter. (2000). Business Responsibility for Sustainable Development.
When the government lacks jurisdiction over a company's social, ethical, or environmental
operations, stakeholder involvement becomes a critical force in ensuring that CSR
programmes are properly implemented. In times of crisis, stakeholders such as trade unions,
business groups, and international non-governmental organisations (NGOs) exert political
and economic pressure to advocate for CSR activities. Businesses are regulated by civil
society through these stakeholder groups, which provides a new avenue for the general public
to hold businesses accountable, democratising the economy directly.