The reasons why MNCs are getting involved in corporate

social responsibility and sustainable business practice

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Executive summary

This report consists of four major sections. The initial section outlines the purpose of
the report and introduces the main discussed issues. Based on this, the following
section presents the corporate social responsibility and sustainable business practices
of MCNs. The third section analyzes why MCNs are getting involved in these
practices, finding that they both display a sense of social responsibility and treat this
as a necessary way to run a good business. The fourth section recommends some
actions MCNs and governments can take. Finally, the fifth section summarises the key
findings from the previous discussions.
Table of contents
1. Introduction................................................................................................................4

2. CSR and sustainable business practices of MCNs.....................................................4

3. The reasons why MCNs attach importance to CSR and sustainability......................5

3.1 A sense of social responsibility........................................................................5

3.1.1 Corporate culture...................................................................................5

3.1.2 Supervision by international organizations...........................................6

3.2 A matter of good business................................................................................6

3.2.1 Government management.....................................................................6

3.2.2 Public recognition.................................................................................6

4. Recommendations......................................................................................................7

4.1 The government plays an effective role...........................................................7

4.2 MCNs enhance their internal sense of responsibility.......................................7

4.3 MCNs actively assume the responsibilities of stakeholders............................7

5. Conclusion..................................................................................................................8
1. Introduction

In the 1980s, the increasingly prominent issue of labor rights and interests made
corporate social responsibility (CSR) gradually enter the social vision and expand
worldwide as MCNs developed. After that, severe social problems such as child labor
abuse, ecological damage, and the gap between rich and poor have also attracted more
attention from all walks of life in the international community. Against this
background, that society emphasizes that MCNs should take social responsibility in
practice. This report explains why more and more MCNs are getting involved in CSR
and sustainable business practices nowadays. However, due to the limitation of time
and academic level, the examples used are not comprehensive enough, and there are
still some deficiencies in the depth of demonstration.

2. CSR and sustainable business practices of MCNs

The social responsibility of MCNs has different contents in different countries and
regions during different periods. From the perspective of stakeholder theory, the
content of social responsibility of MCNs mainly includes being responsible for
employees, investors, consumers, shareholders, governments, and local communities
(Naik and Chetty, 2020).

In the early days, the concept of corporate social responsibility only refers to the
moral obligation of enterprises to carry out charitable activities and other social
welfare activities. However, with the emergence of MCNs and their increasing
influence on society, people pay more and more attention to social problems.

The environment is one of the most concerning issues in the world. The concept of
sustainability emphasizes the necessity of protecting the environment in the process of
economic development. As a result, sustainable development has become the driving
force to promote scientific and technological progress and the common goal of
humankind (Andersson, Shivarajan and Blau, 2005). For MCNs, sustainable
development is an orientation to pursue long-term growth.

3. The reasons why MCNs attach importance to CSR and sustainability

3.1 A sense of social responsibility

3.1.1 Corporate culture

Some MCNs insist on a corporate culture that is relevant to CSR. Their vision and
mission statement reflects their commitment to taking social responsibility.

For example, Charoen Pokphand Group, the first MCN to invest in China after
China's reform and opening up, has integrated CSR into its corporate culture. Since its
establishment 40 years ago, it has always followed the vision of "living right, living
well, living together". There are nearly 500 stores in China with a total investment of
more than 100 billion dollars. In the eyes of Chinese consumers, Charoen Pokphand is
a trusted brand committed to driving society towards sustainability. When social
problems occurred, no matter the SARS virus, Wenchuan earthquake, avian influenza
or the country's poverty alleviation campaign, Charoen Pokphand was always able to
implement CSR actively. When the COVID-19 pandemic broke out, the company
donated sixty million yuan to China. It also invested three million dollars in building
new mask factories and give out free masks to people.

Moreover, the company's "Zhengda Plaza" adopted the strategy of rent-free and
promotion fee-free. At the same time, the company promised employees not to lay off
staff, paying wages in full and on time to promote all employees to participate in
COVID-19 prevention actively (Charoen Pokphand Group, n.d.). Thus, although
giving up numerous profits, they have maintained their reliable and responsible
corporate image in the hearts of Chinese consumers, further improved their corporate
reputation, and won recognition from local government departments.
3.1.2 Supervision by international organizations

With the integration of the world economy and the internationalization of

environmental affairs, international organizations are more influential in supervising
large MCNs and encouraging them to take social responsibility and operate
sustainably (Van et al., 2021). For example, some international industry organizations
have formulated and promoted environmental principles, standards, and regulations
for the development of the industry. Urging and helping MCNs to follow the
environmental criteria plays a role beyond the reach of the government and have
objectively managed the ecological behavior of MCNs to a certain extent.

3.2 A matter of good business

From the long-term development strategy of MCNs, the principle of CSR and
sustainable development is consistent with its business purpose.

3.2.1 Government management

Suppose an MCN has severely negatively impacted the host country's environment
and society. In that case, it will trigger the host government to control the MCN in
various forms, putting limitations to its development or even issuing a cease-and-
desist order, contrary to the long-term interests of the MCN (Calvano, 2008).
Therefore, MCNs must continually examine their behavior and follow the local
restrictions.

3.2.2 Public recognition

MCNs must establish a good reputation and be recognized by the local community to
achieve long-term goals (Hashmi, Damanhouri, and Rana). For example, PwC is one
of the four most well-known accounting firms in the world. Its service quality and
business philosophy have always been talked about by customers all over the world.
However, after operating in China for years, a series of strikes and slowdowns
occurred due to employees' dissatisfaction with unfair salaries, inhuman management,
and perennial overtime. Therefore, MCNs can be more easily obtain social
recognition and finally receive rich profit returns if they take CSR seriously.

4. Recommendations

4.1 The government plays an effective role

The government represents the interests of the public, manages public social affairs,
and plays an essential guiding role in promoting the implementation of CSR.
Therefore, the government should actively play a comprehensive guiding role and
create a conducive environment for social responsibility performance. Improving the
legal supervision system and providing appropriate policy preferences and financial
support can guarantee MCNs to fulfill their CSR.

4.2 MCNs enhance their internal sense of responsibility

MCNs should establish an internal long-term social responsibility mechanism

according to their characteristics and global business strategic objectives. They can
combine CSR with corporate culture and establish a diversified management system
based on the actual situation of the host country to obtain more economical and social
benefits.

4.3 MCNs actively assume the responsibilities of stakeholders

First, pay attention to the accumulation of human capital in terms of employee

responsibility. The quality of employees is influential to the company's development,
and they should be treated fairly and nicely. MCNs should realize that the relationship
with employees is more like partners, and they can create more possibilities for
development by stimulating the employees' talents and wisdom.

Moreover, in terms of consumer responsibility, MCNs should pay attention to

providing high-quality products and services and protecting consumers' benefits.
Strengthening the awareness of product quality and service can MCNs be recognized
by consumers in the fierce international market competition and have more market
share.

Additionally, develop environment-friendly awareness in terms of environmental

responsibility. MCNs should raise environmental protection to the level of the
company's development strategy, formulate environmental policies, issue
environmental statements for sustainable development, and take various actions to
ensure the implementation of environmental policies.

Finally, actively participate in social public welfare undertakings in terms of social

responsibility. As the main force of social and economic development, MCNs have
the strength to repay society, which can help them form a good relationship with the
public and establish a good corporate image.

5. Conclusion

With the rapid development of the global economy, CSR is getting more significant.
In the new world competitive environment, MCNs should consider not only obtaining
the economic profits but also the responsibilities they should take. At the same time,
establishing a reasonable evaluation system and further combining CSR with
corporate culture can obtain more competitive advantages than other competitors to
be invincible in the international market.

In addition, the government should improve the supervision system and provide
appropriate policy care to create a suitable environment for the development of
MCNs. Therefore, they can guide the MCNs to take CRS better and enhance their
competitiveness compared to other international competitors.
Reference list

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in the MNC: A Test of an Adapted Value-Belief-Norm Framework. Journal of
Business Ethics, 59, p. 295–305.

Calvano, L. (2008). Multinational Corporations and Local Communities: A Critical

Analysis of Conflict. Journal of Business Ethics, 82, p. 793–805.

Charoen Pokphand Group. (n.d.) Charoen Pokphand Group: Sustainability. Available

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Hashmi, M.A., Damanhouri, A. & Rana, D. (2015). Evaluation of Sustainability

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Naik, S. and Chetty, P. (2020). The stakeholder theory of Corporate Social

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