CH 17

Chapter 17
Managing Corporate Social

Responsibility Globally
Peng, Global Business, 4th Edition. © 2017 Cengage. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
LEARNING OBJECTIVES
After studying this chapter, you should be able to:

• 17-1 articulate what is a stakeholder view of the firm.
• 17-2 apply the institution-based and resource-based views to analyze
corporate social responsibility (CSR).
• 17-3 participate in two leading debates concerning CSR.
• 17-4 draw implications for action.
CORPORATE SOCIAL RESPONSIBILITY
corporate social responsibility (CSR) – consideration of, and response to,

issues beyond the narrow economic, technical, and legal requirements of the
firm to accomplish social benefits along with traditional economic gains which
the firm seeks
stakeholder – any group or individual who can affect or is affected by the
achievement of the organization’s objectives
A STAKEHOLDER VIEW OF THE FIRM
stakeholder – any group or individual who can affect or is affected by the

achievement of the organization’s objectives
Figure 17.1: A Stakeholder View of the Firm
Source: Adapted from T. Donaldson & L. Preston, 19 95, The stakeholder theory of the corporation: Concepts, evidence, and implications (p. 69), Academy of
Management Review, 20: 65–91.
A BIG PICTURE PERSPECTIVE
global sustainability – the ability to meet the needs of the present without
compromising the ability of future generations to meet their needs around the
world
Table 17.1: Corporate Social Responsibilities for Multinational Enterprises
(MNEs) Recommended by International Organizations (1 of 2)
MNEs and Host Governments MNEs and Environmental Protection

• Should not interfere in the internal political affairs of • Should respect the host country laws and regulations
the host country (OECD, U N) concerning environmental protection (OECD, U N)
• Should consult governmental authorities and national • Should supply to host governments information concerning
employers’ and workers’ organizations to ensure that the environmental impact of M NE activities (ICC, UN)
their investments conform to the economic and social
development policies of the host country (I CC, ILO, MNEs and consumer Protection
OECD, UN) • Should preserve the safety and health of consumers by
• Should reinvest some profits in the host country (I CC) disclosing appropriate information, labeling correctly, and
advertising accurately (UN)
MNEs and laws, regulations, and Politics
MNEs and Employment Practices
• Should respect the right of every country to exercise
control over its natural resources (U N) • Should cooperate with host governments to create jobs in
certain locations (ICC)
• Should refrain from improper or illegal involvement in
local politics (OECD) • Should give advance notice of plant closures and mitigate
the adverse effects (I CC, OECD)
• Should not pay bribes or render improper benefits to
public servants (OECD, U N) • Should respect the rights for employees to engage in
collective bargaining (I LO, OECD)
Table 17.1: Corporate Social Responsibilities for Multinational Enterprises
(MNEs) Recommended by International Organizations (2 of 2)
MNEs and technology transfer MNEs and Human rights

• Should develop and adapt technologies to the needs of • Should respect human rights and fundamental
host countries (ICC, ILO, OECD) freedoms in host countries (U N)
• Should provide reasonable terms and conditions when
granting licenses for industrial property rights (I CC,
OECD)
Sources: Based on (1) I CC: The International Chamber of Commerce Guidelines for International Investment (www.iccwbo.org); (2) ILO:
The International Labor Office Tripartite Declarations of Principles Concerning Multinational Enterprises and Social Policy (ilo.org); (3)
OECD: The Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises (oecd.org); (4) UN: The
United Nations Code of Conduct on Transnational Corporations (un.org).
PRIMARY AND SECONDARY STAKEHOLDER
GROUPS (1 of 2)
primary stakeholder group – constituent on which the firm relies for its
continuous survival and prosperity
secondary stakeholder group – those who influence or affect, or are
influenced or affected by, the firm but are not engaged in transactions with the
firm and are not essential for its survival
PRIMARY AND SECONDARY STAKEHOLDER
GROUPS (2 of 2)
triple bottom line – economic, social, and environmental performance that
simultaneously satisfies the demands of all stakeholder groups
A FUNDAMENTAL DEBATE
• Free market advocates argue that if firms attempt to attain social goals, such
as providing employment and social welfare, managers will lose their focus
on profit maximization
• CSR advocates argue that a free market system that takes the pursuit of
self-interest and profit as its guiding light may breed greed, excesses, and
abuses
Figure 17.3: Institutions, Resources, and Corporate
Social Responsibility
STRATEGIC RESPONSE FRAMEWORK
reactive strategy – a strategy that only responds to CSR causes when

required by disasters and outcries
defensive strategy – a strategy that focuses on regulatory compliance but
with little actual commitment to CSR by top management
accommodative strategy – a strategy characterized by some support from
top managers, who may view CSR as a worthwhile endeavor
proactive strategy – a strategy that endeavors to do more than is required in
CSR
Table 17.2: The US Chemical Industry Responds
to Environmental Pressures
Representative statements from the industry’s trade journal, chemical
Phase Strategic response
week
1962–70 Reactive Denied the severity of environmental problems and argued that these problems
could be solved independently through the industry’s technological prowess.
1971–82 Defensive “Congress seems determined to add one more regulation to the already 27
health and safety regulations we must answer to. This will make the E PA
[Environmental Protection Agency] a chemical czar. No agency in a democracy
should have that authority” (19 75).
1983–88 Accommodative “The EPA has been criticized for going too slow. . . . Still, we think that it is doing
a good job” (1982). “Critics expect an overnight fix. The E PA deserves credit for
its pace and accomplishments” (19 82).
1989–present Proactive “Green line equals bottom line—The Clean Air Act (C AA) equals efficiency.
Everything you hear about the ‘costs’ of complying with the C AA is probably
wrong … Wiser competitors will rush to exploit the Green Revolution” (19 90).
Sources: Extracted from text from A. Hoffman, 19 99, Institutional evolution and change: Environmentalism and the US chemical industry,
Academy of Management Journal, 42: 351–371. Hoffman’s last phase ended in 19 93. Its extension to the present is done by the present
author.
RESOURCES AND CSR (1 of 2)
CSR-related resources can include tangible technologies and processes as

well as intangible skills and attitudes
RESOURCES AND CSR (2 of 2)
social issue participation – firms’ participation in social causes not directly

related to the management of primary stakeholders
RACE TO THE BOTTOM (“POLLUTION HAVEN”)
VERSUS RACE TO THE TOP
• One side of the debate argues that because of heavier environmental
regulation in developed economies, MNEs may have an incentive to shift
pollution-intensive production to developing countries with lower
environmental standards
• To attract investment, these developing countries may enter a “race to the
bottom” by lowering environmental standards, and some may become “pollution
havens”
• The other side argues that globalization does not necessarily have negative
effects on the environment in developing countries to the extent suggested
by the “pollution haven” hypothesis
ACTIVE VERSUS INACTIVE C SR ENGAGEMENT
OVERSEAS
• Active CSR engagement is now expected of MNEs
• However, calls for greater CSR engagement are in direct conflict with a
longstanding principle governing the relationship between MNEs and host
countries: non-intervention in local affairs
Table 17.4: Implications for Action
• Understand the rules of the game, anticipate changes, and seek to shape
and influence such changes.
• Pick your CSR battles carefully—don’t blindly imitate other firms’ CSR
activities.
• Integrate CSR as part of the core activities and processes of the firm—faking
a
it doesn’t last very long.

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Chapter 17

Managing Corporate Social

After studying this chapter, you should be able to:

corporate social responsibility (CSR) – consideration of, and response to,

stakeholder – any group or individual who can affect or is affected by the

MNEs and Host Governments MNEs and Environmental Protection

MNEs and technology transfer MNEs and Human rights

reactive strategy – a strategy that only responds to CSR causes when

CSR-related resources can include tangible technologies and processes as

social issue participation – firms’ participation in social causes not directly

it doesn’t last very long.

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