Corporate Social Responsibility

Course Presented by: James F.
Tobrazune
CSR
© iccdcanada.org. All rights reserved.

Contents
Introduction to Corporate Social Responsibility (CSR)
Perspectives on CSR
CSR and Competiveness
Conceptualizing and development debate
Understanding local values, culture and traditions
Corporate culture and CSR
Managing CSR
CSR in global context
Criticisms and concerns

Introduction
Corporate Social Responsibility

(CSR) as an analytical tool can be
used in the field of Business
Management to facilitate
different business practices from
both an ethical angle and a
utilitarian perspective. Business
Managers should try to entrench
networks of trust, loyalty and
cooperation within and without
their organizations. This also
makes good business sense in
terms of rational choice theory

CSR key benefits and findings
• Good business is also about establishing

customer-friendly images in a manner that
highlights values such as reliability,
trustworthiness, quality, economy and
durability. These values evolve our time and
COPORATE
are underpinned by a sustained relationship
RESPONSIBILITY
of confidence
• Brand equity and positioning so generally

depend upon the successful merchandizing of
products and their images

CSR key benefits and findings
• The problematique of this edited anthology on CSR

is structured around the polemic of civil societal
institutions (networks and embedding) and
democratic governance (including growth and
participating development) among other critical
COPORATE areas of social scientific research
RESPONSIBILITY
• The line of theoretical research is expected to
contribute new knowledge and facilitate innovative
research to better understand the interactions and
interplay between in their institutions

Dynamics of Trust
A perspective analysis of the

dynamics of trust in any business
organization happens to be a most
problematique exercise that has to
be carried out over a period of
time and that involves multiple
stakeholders as well

Dynamics of Trust
Why should one trust his/her peers,

These are rather disquieting questions
superiors and subordinates?
with no unlinear answers. Business
leaders have to realize that the
Is trust a construct of culture
specifics?
pedagogics of trust and resilience of
professional relationships can only be
Can trust be equated with the given tested against either hypothetical or
socio-politico-economic realities of real life situations, where the actual
any spatiotemporal context? motivations, aspirations, perceptions,
preferences and culture root
Can trust be learned or emulated? paradigms of individuals or groups, are
explicitly exposed in the given content
Can trust be analyzed in terms of cost- of their informed self-interest
benefit calculations?

The Relationship
Why should one cooperate with another?
Is it a learnt reflex or is it based on

enlightened self-knowledge and self-
interest? Would cooperation lead to
intense creativity, new images, different
ideas and better emotional and stress
management?
Relationships can be built upon
cooperation, competition and conflict.
Each such mode will explore new models
of interface and would finally lead to an
inchoate world of new possibilities where
men and women in the industry would
steadily learn how best to unlearn past
lessons and deschool themselves from the
cultural baggage handed down the
generations

Management of choices
The issue of CSR is all about the

management of choices in the social work
place
Why should workers obey the management?
What are the concerns of the management

that are reflected in its style of leadership?
Is loyalty related to motivation? Or is loyalty

a function of the chain of command?
What are the effective outputs of the

hierarchy?

The management and workers have to mutually entrench an

ethos of cooperation that would both create and sustain the
values of ownership/trusteeship in their given organization
The very fact that targets have to be achieved and new

targets innovated point to the fact that the organizational
health of any given industry is sound. The point of saturation
has to be ably and creatively transformed into an arena of
new possibilities that lead to new challenges and innovative
gestures
Achievement of targets is critically dependent on team

performance, and so the team players have to share
different degrees of responsibilities and have to be
burdened with different measures of failures and successes

The most important consideration at this point is to

determine who can shoulder what amount of burden. So the
question of authoritative allocation of values has also be
pondered upon actively by the management concerned
The issue of ownership/Trusteeship is also organically

related to the issue of institutions. Each business
organization in sociological terms, is an institution replete
with history of evolution, work culture, trade union ethics
and typical management practices. So the study of business
organizations as dynamic institutions of Power, Authority,
Repression, Obedience, Reward and Punishment may lead
to an ulterior understanding of CSR

Contents
Perspectives on CSR
Managing CSR

Approaches of Corporate Social Responsibility
The most common approach is “Philanthropy”, which includes

donations and aid to local organizations and backward
communities. This approach was not liked by few organizations
since there was no development of skills of the people, whereas
community-based development generally leads to more
sustainable development. Another approach to CSR is to
incorporate the CSR strategy directly into the business strategy
of an organization. Another approach is garnering increasing
corporate responsibility interest. This is called Creating Shared
Value, or CSV. The shared value model is based on the idea that
corporate success and social welfare are interdependent.

Benefits of Corporate Social Responsibility
The benefits of CSR in an organization will likely rest on any of the following
HUMAN RISK MANAGE- BRAND

RESOURCE MENT DIFFEREN- LICENSE TO
TIATION OPERATE
A CSR program can Managing risk is a CSR can play a role Corporations are
be an aid to central part of many in building customer keen to avoid
recruitment and corporate strategies. loyalty based on interference in their
retention. Poten-tial Reputations can be distinctive ethical business through
recruits often ask ruined in hours values. taxation or
about a firm's CSR through incidents regulations. By
policy during an such as corruption taking substantive
interview, and scandals or voluntary steps, they
having a environmental can persuade
comprehensive accidents. governments and
policy can give the wider public that
an advantage. they are taking
issues such as health
and safety.

History of Corporate Social Responsibility (CSR)
Though the roots of the concept that we

know today as Corporate Social
Responsibility have a long and wide-
ranging history, it is most a product of
the 20th century. Inspite of its recent
growth and popularity, one can trace for
centuries evidence of the business
community’s concern for society.
Though it is possible to see evidence of
CSR throughout the world, mostly in
developed countries, most early writings
have been most obvious in the U.S.

Social initiatives and practices
In the mid-to-late 1800s, it is apparent that emerging businesses

were especially concerned with employees and how to make
them more productive. Now, it is difficult to find out what the
organization is doing for business reasons and what the
organization is doing for social reasons. In addition to concern
for ‘employees philanthropy’ was appearing on the scene in
late 1800s, but it was difficult to analyze whether it was
‘individual philanthropy’ or ‘business philanthropy’. During the
period 1918-29, Heald has suggested that the ‘community chest
movement’ also helped to shape business views of
philanthropy, one of the earliest forms of CSR. As business
executives came into contact with social workers, new views of
corporate responsibility began to emerge.

CSR takes shape in the 1950s
Patrick Murphy, University of Michigan, classified as 4 CSR eras.

Murphy argued that the period up to the 1950s was the
‘Philanthropy era’ in which organizations donated to charities. From
1953 to 1967, it is ‘awareness era’, in which there became more
recognition of the overall responsibility of business and its
involvement in community affairs. The period 1968-73 was termed
as ‘issue era’ where companies began focusing on specific issues
such as urban decay, racial discrimination and pollution problems.
Finally, in the ‘responsiveness era’, 1974-8, and continuing beyond,
companies began taking serious management and organizational
actions to address CSR issues. The decade of the 1950s was of more
‘talk’ than ‘action’ with respect to CSR. It was a period of changing
attitudes, with business executives learning to get confortable with
CSR talk. There was very few corporate actions, beyond
philanthropy, to report that stood out in terms of accommodating
this new theme.

Refinement
By the 2000s, the emphasis on “theoretical” contribution

to the concept and meaning of CSR had given way to
empirical research on the topic and a splintering of
interest away from CSR and into related topics such as
stakeholder theory, business ethics, sustainability and
corporate citizenship. Some development and empirical
research continued on the CSR construct.

Drivers
It is important to address the central

question of what makes CSR in developing
countries different from its typical
manifestation in the developed world, as
defined by America and Europe. One
powerful way to do this is by examining the
various drivers for CSR in developing
countries. Although they are not all unique
to developing countries, together they
build up a distinctive picture of how CSR is
conceived, incentivized, and practiced in
emerging economies.

Corporate Social Responsibility Theories
Corporate Social Performance (CSP)

CSP theory has evolved from several
previous notions and approaches.
CSP is understood as ‘the
configuration in the business
organization of principles of social
responsibility, processes of response
to social requirements, and policies,
programs and tangible results the
company’s relations with society.
This theory maintains that business,
apart from wealth creations, also
has responsibilities for social
problems created by business or by
other causes beyond its economic
and legal responsibility.

Shareholder Value Theory (SVT)
This theory holds that only social This approach, which currently is
responsibility of business is presented as ‘shareholder value-
making profits and, as the oriented’, usually takes
supreme goal, increasing the shareholder value maximization
economic value of the company as the supreme reference for
for its shareholders. Other corporate governance and
social activities that companies business management.
could engage in would only be Generally ‘share holder value-
acceptable if there are oriented’ goes along with the
prescribed by law or if they Agency theory, which has been
contribute to the maximization dominant in many schools. In
of shareholders value. This the theory, owners are the
theory underlies neoclassical principal and managers are the
economic theory, primarily agents.
concerned with shareholders
utility maximization.

Stakeholder Theory
In contrast to the ‘shareholder theory’ the ‘stakeholder

theory’ takes into account the individual or groups with a
stake in or claim on the company.
In general sense, stakeholders are groups and individuals

who benefit from or are harmed by corporate actions.
Stakeholder theory was first presented as managerial

theory.
‘The stakeholder concept’ provides a new way of thinking

about strategic management – that is, how a corporation
can and should set and implement direction.
By paying attention to strategic management, executives

can begin to put a corporation back on the road to success.

Corporate citizenship
The term “Corporate Citizenship” was introduced For decades, business leaders have been involving
in the 1980s into the business and society their companies in philanthropic activities and
relationship mainly through practitioners. donations to the community where business
operated.
This has been understood as an expression of According to Carroll, ‘be a good corporate citizen’
good corporate citizenship. includes ‘actively engaging in acts or programs to
promote human welfare or goodwill and ‘be a good
global corporate citizen’ is related to philanthropic
responsibility which reflects society’s expectations
that business will engage in social activities that are
not mandated by law nor generally expected of
business in an ethical sense.

Contents
Perspectives on CSR
Managing CSR

Definition
Corporate Social Responsibility (CSR) is a concept

whereby organizations consider the interests of society
by taking responsibility for the impact of their activities
on customers, employees, shareholders, communities
and the environment in all aspects of their operations

Accountability
Companies have to be accountable for
Does the case for Corporate Social

Responsibility apply to all kinds of
company?
Can benefits aggregate across an economy

or is it a zero-sum game?
Does it introduce inefficiency when scales

up to the level of the economy as a whole,
as classical economics would argue?

What does it ask for?
Corporations are human endeavors,

and all human endeavors should
benefit our society and reflect our
morals. They should provide more
than just investor return

What does it ask for?
There are many ways that Corporations do benefit to society
They provide jobs They produce goods and They provide return to
services that people want investors
But . . .
Corporations in addition meet a higher moral standard:

• To minimize activities that harm life or the environment
• To be truthful
• To bring joy to life and reduce suffering, even if in very small and mundane ways
• To stop encouraging people’s craving and addiction
Five maturity stages of CSR
Promote broad industry Deny practices, outcomes

participation in or responsibilities
Corporate DEFENSIVE “It’s not our job to fix that”
Responsibility
“We need to make sure
everybody does it”
CIVIL
COMPLIANCE
5 MATURITY
STAGESOF CSR
Adopt a policy-based
compliance approach as a
cost of doing business
“We’ll do just as much as
we have to”
Integrate the societal
issue into core STRATEGIC MANAGERIAL Embed the societal issue
businesses processes into core management
“It gives us a processes.
competitive edge” “It’s the business”
Why to study?
• Study reveals Corporate Responsibility

is growing in decision-making. After the
accounting scandals, governments have
introduced new legislation new codes of
conduct have been developed and
corporate boards have been ‘re-
balanced’ to include more independent
members
• The over-riding goal in every case have
been to restore investor confidence.
However, these changes have also
brought with them the realization that
good governance is a key topic not only
for shareholders but also for a much
broader set of stakeholders, including
customers, employees, suppliers and
the wider community

Why to study?
• That in turn made the term Corporate

Responsibility (CR) much more
familiar than ever before in board
rooms across the globe. The line is far
from solid, but CR can be seen as the
extension of governance beyond
simple compliance to embrace
broader social values
• A recent survey from the economist
intelligence unit, produced in
cooperation with Oracle Corporation,
rveals that more business executives
and corporate investors are factoring
corporate responsibility into their
decision-making

Contents
Perspectives on CSR
Managing CSR

Factors responsible for CSR-development relationships
Awareness of uneven spread of

the benefits and costs of
globalization reinvigorated the
debate about the role of MNCs, in
developing countries for
sustainable development. The
debate as highlighted above has
often been acerbic and an
emotionally charged, and tends to
be driven by and concentrate on
sensational and high profile cases
with limited analysis of common
themes and possible solutions

Factors responsible for CSR-development relationships
A careful review of the literature reveals that there are at least three inter-related factors that
have been responsible for this situation
The complexity and absence of

con-sensual definitions for the
concepts of ‘CSR’ and
‘development’
The-over
emphasis
of corporate
responsibility
Limited
to the detriment
analytical focus
of reciprocal
in the research
responsibility
agenda
and the
importance
of context

The complexity and absence of consensual definition
The concepts of “CSR’ and

‘Development’ are both
complex and difficult to
concensually define, and are,
therefore, open to different
interpretations. The inability to
secure a common definition of
CSR is said to restrict its
usefulness as an analytical tool
and a guide to decision makers

Over-emphasis on Corporate Responsibility
Emphasis on whether CSR does or does

not contribute to development has led to
a lack of reflexity in the analysis of CSR-
development nexus. Analyses very often
fail to problematize adequately the
specific contect of developing countries
and ascertain how this affects what
constitutes corporate responsibilities and
the impact of Corporate CSR initiatives on
development

Limited analytical focus in the research agenda
Another shortcoming of existing

analyses has been the tendency to
focus too much an ‘outcome’
almost to the detriment of
‘processes’ and impact.
It is as if in their rush to findout

whether or not CSR meets its
advertised objectives, academics
feel they can afford to treat as
insignificant the question of how
business tries to neet these
objectives

Strengthening the critical perspective of the CSR-development cycle
The foregoing analytical short

comings are by no means be only
challenges confronting the discourse
on CSR development linkage. The
issues are highlighted here largely
because they are crucial for the
advancement of theoritical
development on the field of
Corporate Social Responsibility. It is
important because the most serious
problem with Social Responsibility
doctrine is still at the level of theory
rathen than practice

Managing the problem of conceptual complexity
While the lack of common CSR

definition contraints the
conceptual usefulness of CSR as
an analytical concepts this should
not be exaggerated. Few will
deny that conceptual specificity
and clarity will facilitate
intellectual thought and
communication. A number of
frequently used conceots are
intrinsically abstract and,
therefire, inevitably subject to
diverse interpretation

The need of focus on reciprocal responsibility
CSR practices do not take place in

vacuum. Such initiatives are often
under taken within certain social,
economic and cultural context
with diverse actors seeking to
leverage their interest. There is,
therefore, the need for this
complexity to be appreciated not
only during data collection in the
field but also in the analysis of
CSR-development linkage

A change research focus in analyzing the CSR-development
Corporate
Social
Responsibility
So far emphasis on whether CSR contributes to

development says little about the impact of CSR
on society. Besides the issue of analytical
oversight, business impact on development is
difficult to measure. If the impacts of corporate
activity are difficult to assess at local level, then IMPACT ON
these difficulties are compounded at larger SOCIETY
scales of analysis

The implications of emerging issues and conclusions
There are two main emerging issues with regard to the critical
challenges facing CSR-development relationships
1 The first is how to identify the appropriate balance of

responsibilities between the different actors and how they could
beat the combined to maximize the different actors and how they
could best be combined to maximize the contribution of business
to sustainable development
2 Similarly, by distinguishing between negative injunction and

affirmative duties, the business case argument ceases to be the
corner stone of the argument that drives CSR practices, especially
as it relates to negative injunction duties

Contents
Perspectives on CSR
Managing CSR

Abstract
Cultural values, traditions and

local knowledge are always have
been central to development, but
frequently overlooked. To some
extent the role of cultures in
development is already
centralized, but there is a
dilemma over proclaiming what
is appropriate and inappropriate
culture for responsible
development objectives

Quote
“. . . unless economic development

has a cultural basis it can never lead
to truly lasting development. Culture
is ‘not’ something ‘to be taken into
consideration’. It is fundamental . . .
– UNESCO 1995:1

The synergy
Cultural values, Rural livelihoods

traditions and
knowledge
Synergy
Exploring synergy between cultures, traditional values and livelihoods

Conceptualizing culture and livelihoods – analytical framework
Cultural norms, customs, behaviors and

attitudes are as they are elusive and
dynamic. Therefore, conceptualizing
culture has proven notoriously a
difficult task
“Culture consists of patterns, explicit and

implicit, of and for behavior acquired and
transmitted by symbols, constituting the
”Everything
distinctive should be of
achievements made
humanas simple as
groups,
possible,
including theirbut not simpler”in artefacts; the
embodiments
essential core of culture of ‘traditional’ ideas
Albert Einstein
and especially their attached values; culture
systems may, on the one hand, be considered
as products of action, on the other hand as
conditioning elements of further action”

Conceptualizing culture and livelihoods – analytical framework
As a concept, livelihood has been particularly

useful in the field of development, both
analytically and practically. Like culture, livelihood
is also a complex and all-encompassing concept
that is not restricted to the ecological, economic
or productive aspects of life
“Livelihood is never just a matter of finding or making

shelter, transacting
”Everything shouldmoney, getting
be made foodas
as simple topossible,
put on the
family
buttable or to exchange in the market place. It is
not simpler”
equally a matter of ownership and circulation
Albertof
Einstein
information, the management of skills and
relationships”

Contents
Perspectives on CSR
Managing CSR

The pyramid of CSR
PHILANTHROPIC
RESPONSIBILITIES
Be a good corporate citizen
ITY
IBIL
ETHICAL RESPONSIBILITY
NS
Be Ethical. Do what is right.

PO
Avoid harm
RES
IA L
OC
LEGAL RESPONSIBILITY
ES
RAT
Obey the law

POR
CO
ECONOMIC RESPONSIBILITY
Be profitable

CSR five areas
The company is accountable to shareholders, government,
employees, customers and community. The hard part:
This covers all sorts of areas setting targets that would make it accountable to all these
including meaningful Corporate stakeholders
volunteering programs, staff governance and
This takes in a huge area including greenhouse
lending their skills to the accountability gas emissions, water, paper, degradation,
boards of non-profit
supply chain impact, green investment,
organizations and
salinity and agricultural practices and cultural
philanthropy
heritage
Community Sustainability
involvement and
environment
CSR
This covers areas like fair pay and

conditions, women and minorities
in management roles, maternity
leave and re-entry, people with
disabilities, mature aged workers,
disadvantaged youth, long term
Takes in supply chain issues, unemployed and indigenous
fair trading, alliances and communities. It also includes
partnerships with certain Human Workforce occupational health and safety,
governments and the impact rights training and work-life balance
of products

Five key issues that need to be addressed
Companies need to demonstrate CSR as a value
proposition to the board
They need to find ways of getting support from

shareholders and consumers
It is absolutely critical for the organization to develop

CSR audit tools so that they can place a dollar value
and conduct a cost-benefit analysis of all their CSR
expenditure
They need to approach it in a business-like way. Good

CSR should be good business
The CSR programs need to be run at a senior level.

There is no point fobbing it off on to the corporate
affairs or marketing departments because all that
does is create silos and prevent any impact on the
corporate culture
If organizations fail to do all of these, it becomes a meaningless exercise

CSR business responsibilities
Demonstrate that the company can make more money by doing the
right thing
Share benefits of company activities with key stakeholders as well as

with shareholders
Insulate society from the negative impacts of company operations,

products and services
Demonstrates a commitment to society’s value and contribute to

society’s social, environmental, and economic goals through action

Corporate Social Responsibility – Arguments For
Arguments For
• Addresses social issues business caused and allows

business to be part of the solution
• Protects business self-interest
• Limits future government intervention
• Addresses issues by using business resources and

expertise
• Addresses issues by being proactive

Corporate Social Responsibility – Arguments Against
Arguments
Against
• Restricts the free market goal of profit

maximization
• Business is not equipped to handle social
activities
• Dilutes the primary aim of business
• Limits the ability to compete in a global
market place

Contents
Perspectives on CSR
Managing CSR

Corporate Governance and CSR
The wave of corporate scandals that ushered in the 21st century represented a complete failure
of the checks and balances that good corporate governance is intended to provide. This failure
of corporate governance affected more than the shareholders of the companies involved.
Employees not only in the firms involved, but of others in the value chains found that their work
was either curtailed or disappeared. Charities that relied or corporate philanthropy had their
budgets reduced dramatically and local governments founds their tax bases eroded, leadership
to deep cuts in the services upon which community residents depend. The Board of Directors is
charged with the ultimate responsibility for corporate governance.
They are tasked with designing mechanisms that protect shareholder interests and putting
those mechanisms into the place. Board composition is an area of corporate governance that
receives attention for the role of composition in providing governance guidelines, as well for its
role in firm financial and social performance.

Corporate Democracy
Despite their heterogeneity in expectation, shareholders have much in

common. They are the owners of the company, and, as such, they have
ultimate control over the corporations. This control carries with it the right
to select the Board of Directors and to voice concerns over corporate
governance. The board then is charged with the response for ascertaining
that managers act in the best interest of the shareholders.
Boards are charged with being accountable to shareholders.

Accountability is the answerability for one’s actions or behaviors
and it involves both process and outcome accountability. The
recent rash of corporate scandals involved not only lack of
transparency, which would be bad enough, but also a conscious
decisions to deceive.
Another obstacle on the road to corporate

democracy is the issue of classified boards. With a
classified board, only a fraction of board members
are elected in any given years.

Responsibility in the Supply Chain
While companies are able to
maintain and extend their economic
At the same time supply control over supply chains, Such governance structures
networks have been outsourcing devolves the legal may become essential as
substituted for markets as obligations for social and buyers become increasingly
much of the world trade in environmental impacts from the involved in product
labor-intensive products. lead company to suppliers. specification in the supplier.
Firms have consistently The substitution of supply On the other hand the substitution
sought to reduce costs and networks for markets and of supply network for market
increase strategic flexibility hierarchies has profound provides lead companies with
by outsourcing non-core implications for Corporate opportunities for control and
activities replacing Social Responsibility. influence which would not have
hierarchies with networks. been present within market
relationship.

Contents
Perspectives on CSR
Managing CSR

What is Globalization?
“Globalization” refers to the Globalization is a process of interaction This current wave of globalization
relationship of culture, people and integration among the people, has been driven by policies that
and economic activity in a global companies, and governments of have opened economies
scenario. Globalization may different nations. This process is driven domestically and internationally.
contribute to economic growth by inter-national trade and investment. Technology has been the other
in developed and developing Globalization has impact on economic principal driver of globalization.
countries through increased development, culture, environment, Advances in information
specialization. political systems and human physical technology, in particular, have
well being in societies. dramatically transformed economic
life.

Traditional paradigm of Corporate Social Responsibility
In 1993, Shell was confronted with a massive but non-violent protest by

the Ogoni people in Nigeria. Led by the writer Ken Saro Wiwa, the Ogoni
protested against the fact that the money for oil extracted from their land
disappeared into the pockets of corrupt Nigerian Military junta while for
them there was nothing left but a wasted and highly polluted region.
When Saro Wiwa was arrested as a rebellion leader, human rights groups
urged Shell to use its influence on the Nigerian government to prevent
COPORATE them from executing him. At that time, Shell Group chairman
RESPONSI- Henkstroten argued that the corporation as an economic actor had no
BILITY license to interfere with political processes and Shell preferred to remain
politically neutral.
Whatever the scope of corporate responsibility in management theory

and practice, it implicitly builds upon the neoclassical concept of a strict
division of labor between political and economic actors and domains.
The corporation as a private sector should focus on profit seeking and
public problems should be dealt with by state and its institutions.

Towards a new paradigm
Current theories in CSR is still dominated by economic view of the firm and an instrumental
view of CSR projects.
The stakeholder management approach as well as widely accepted attempt to justify CSR with
an empirical argument that social performance contributes to financial performance.
We have seen, in a globalized world the capacity of the state to regulate economic behavior
and to set the conditions for market exchange is in decline.
We see failures by state apparatus of all sorts. In addition, due to the individualization and
pluralization of values in social communities, the moral standards get fuzzy and lose their
power.
Therefore we have to consider the new form of political regulation above and beyond the
nation-state in order to re-establish the political order and circumscribe economic rationality by
new means of democratic institutions and procedures.
CSR in developing countries
The rationale for focusing on CSR in developing countries

as distinct from CSR in the developed world is fourfold:
Developing countries represent the Developing countries are where

most rapidly expanding economies, the social and environmental
and hence the most lucrative crises are usually most acutely felt
growth markets for business. in the world.
Developing countries are where Developing countries present a

globalization, economic growth, distinctive set of CSR agenda
investment, and business activity challenges which are collectively
are likely to have the most quite different to those faced in the
dramatic social and developed world.
environmental impacts.

Drivers of CSR in developing countries
INTERNAL
DRIVERS
Political Crisis
reform response
Cultural Socio-economic Governance Market

tradition priorities gaps access
International Supply chain

standardization
Investment Stakeholder
incentives activism
EXTERNALDRI
VERS

CSR in developing countries cannot be divorced from the socio-

POLITICAL
political reform process, which often drives business behavior
REFORM
towards integrating social and ethical issues.
SOCIO- There is a powerful argument that CSR in developing countries

ECONOMIC is most directly shaped by the socio-economic environment in
PRIORITIES which firms operate and the development priorities this
creates.
A particular relevance for developing countries is the fact that

GOVER- CSR is often seen as a way to plug the ‘governance gaps’ left by
NANCE GAPS weak, corrupt, or under-resourced governments that fail to
adequately provide various social services

Various kinds of crises associated with developing countries

CRISIS often have the effect of catalyzing CSR responses. These crises
RESPONSE can be economic, social, environmental, health-related, or
industrial.
The flipside of the socio-economic priorities driver is to see

MARKET these unfulfilled human needs as an untapped market. CSR
ACCESS may also be seen as an enabler for companies in developing
countries trying to access markets in the developed world.
Despite the debate about the Western imposition of CSR

INTER- approaches on the global South, there is ample evidence that
NATIONAL CSR codes and standards are a key driver for CSR in developing
STANDARDI- countries. Often, CSR is driven by standardization imposed by
ZATION multinationals striving to achieve global consistency among its
subsidiaries and operations in developing countries.
The belief that multinational investment is inextricably linked with

the social welfare of developing countries is not a new
INVESTMENT phenomenon. However, increasingly these investments are being
INCENTIVES screened for CSR performance. Hence, socially responsible
investment (SRI) is becoming another driver for CSR in developing
countries.
In the absence of strong governmental controls over the social, ethical,

and environmental performance of companies in developing countries,
STAKE-HOLDER
activism by stakeholder groups has become another critical driver for
ACTIVISM
CSR. In developing countries, four stakeholder groups emerge as the
most powerful activists for CSR, namely development agencies, trade
unions, international NGOs, and business associations.
Another significant driver for CSR in developing countries, especially

among small and medium-sized companies, is the requirements that
SUPPLY CHAIN are being imposed by multinationals on their supply chains. This trend
began with various ethical trading initiatives, which led to the growth
of fair trade auditing and labeling schemes for agricultural products
sourced in developing countries
While many believe CSR is a Western invention (and this may be largely
true in its modern conception), there is ample evidence that CSR in
CULTURAL developing countries draws strongly on deep-rooted indigenous cultural
traditions of philanthropy, business ethics, and community
TRADITION embeddedness. Indeed, some of these traditions
go back to ancient times.

CSR pyramid for developing countries
ETHICAL Adopt voluntary codes of

RESPONSI- governance and ethics
BILITIES
LEGAL RESPONSIBILITIES Ensure good relations with

government officials
PHILANTHROPIC Set aside funds for corporate

RESPONSIBILITIES social/community projects
ECONOMIC Private investment, create jobs

RESPONSIBILITIES and pay taxes

An ideal CSR pyramid
If we work toward
s an ideal Hence, embracing more
CSR Pyramid for CS
R in transparent, ethical
developing countr
ies, governance practices should
improved ethical
responsibilities, inc form the foundation of CSR
orporating practice in developing
good governance,
should be countries, which in turn will
assigned the highe
st CSR provide the enabling
priority in develop
ing environment for more
countries. Governa
nce reform widespread responsible
holds the key to im
provements business.
in all the other dim
ensions,
including economic
development, rule
of law, and
voluntary action.

CSR in various regions – Asia
In a survey of CSR reporting in Asia, nearly three quarters of

large companies in India present themselves as having CSR
policies and practices versus only a quarter in Indonesia.
Falling somewhere between these two extremes are
Thailand (42%), Malaysia (32%), and the Philippines (30%).
They also infer from the research that the evolution of CSR
in Asia tends to occur in three waves, with community
involvement being the most established form of CSR,
following by successive second and third waves of socially
responsible production processes and employee relations.

CSR in various regions – Africa
The literature on CSR in Africa is heavily dominated by

South Africa while other pockets of research exist for Côte
D’Ivoire (e.g. Schrage and Kenya, Tanzania, and Mali and
Zambia. The other themes, such as stakeholder
engagement, social responsibility, and health (including
HIV/AIDS) will move up the agenda as CSR increasingly
addresses these issues in an African context. In practice,
however, it is likely that the economic and philanthropic
aspects of CSR (rather than the legal and ethical
responsibilities) will continue to dominate CSR
conceptualization and practice in Africa.

CSR in various regions – Latin America
CSR in Latin America is the least covered of the developing country regions,
with the focus mainly on Argentina, Brazil and Mexico, although Nicaragua
and Venezuela also feature. The trend towards increasing CSR in the region
has been generally upward. De Oliveira (2006) notes that the CSR agenda in
Latin America has been heavily
shaped by socio-economic and political conditions, which have tended to
aggravate many environmental and social problems such as deforestation,
unemployment, inequality, and crime. Schmidheiny (2006) frames this in a
constructive way, claiming that CSR is seen by many Latin Americans as the
hope for positive change in the
face of persistent poverty, environmental degradation, corruption, and
economic stagnation. Araya’s (2006) survey of CSR reporting among the top
250 companies in Latin America also gives some indication of practices in the
region. Overall, 34% of the top companies publish sustainability information
in a separate report, the annual report, or both, mostly from the energy and
natural resources sectors.

Contents
Perspectives on CSR
Managing CSR

Nature of business
Critics of CSR debate a number of concerns related to it. These include CSR's
relationship to the fundamental purpose and nature of business and questionable
motives for engaging in CSR, including concerns about insincerity and hypocrisy. The
objective of a corporation is to maximize their returns to the shareholders. Miton
Friedman had argued that since people can have social responsibilities, corporations
are only responsible to shareholders. Although there is an acceptance that the
corporations should obey the laws of the country whether they operate, they assert
that they have no other obligation to society. Some people perceive CSR as in-
congruent with the very nature and purpose of business, and indeed a hindrance to
free trade. Critics of this argument perceive the free market as opposed to the well-
being of society and a hindrance to human freedom. They ascertain that the type of
capitalism practiced in many countries is a form of economic and cultural imperialism.
A wide variety of individuals and organizations operate in between these poles. CSR
proponents point out that CSR can significantly improve long-term corporate
profitability because it reduces risks and inefficiencies while offering a host of potential
benefits such as enhanced brand reputation and employee engagement.

Motives
Some companies like British Petroleum, McDonald's and British American Tobacco started CSR programs.
They argue that the main objective of starting these programs for commercial benefit by building a good
rapport with the government and public. They suggest that corporations which exist solely to maximize profits
are unable to advance the interests of society as a whole.
Another concern is that sometimes companies claim to promote CSR but simultaneously engage in harmful
business practices. For example, since the 1970s, the McDonald's Corporation's association with Ronald
McDonald House has been viewed as CSR and relationship marketing. More recently, as CSR has become
mainstream, the company has beefed up its CSR programs related to its labor, environmental and other
practices.
Similarly, in McDonald's Restaurants v Morris & Steel, Lord Justices Pill, May and Keane ruled that it was fair
comment to say that McDonald's employees worldwide 'do badly in terms of pay and conditions and true that if
one eats enough McDonald's food, one's diet may well become high in fat etc., with the very real risk of heart
disease. According to critics, better governmental and international regulation is necessary to make the
companies behave in socially responsible manner.

Ethical consumerism
The rise of CSR is because of the popularity of

Ethical consumerism. When the global population
increase the demand for natural resources also
increases proportionately. Because of
improvement in technology and globalization,
industrialization is also booming. Consumers are
also becoming more aware of the social and
environmental implications and they make
purchasing decisions related to ethical concerns.

Globalization and market forces
Whenever corporations grow through the process of

globalization, they have to deal with various problems and
challenges that limits their growth and profits. Government
regulations, political influence, tariffs, and environmental
restrictions are various barriers which cost the corporations
million of dollars. The ethical issues are simply a costly
hindrance, while some companies use CSR methodologies as a
strategic tactic to gain public support for their presence in
global markets, helping them sustain a competitive advantage
by using their social contributions to provide a subconscious
level of advertising.

Social awareness and education
Shareholders and investors themselves, through investing

are exerting pressure on corporations to behave responsibly.
Non-governmental organizations are also taking an

increasing role, leveraging the power of the media and the
Internet to increase their scrutiny and collective activism
around corporate behavior.

Ethics training
The need for ethics training in the

organization, required by the govern-
ment regulations, is an important
driver for changing the company’s
behavior and culture of the
organizations.
Organizations also see secondary It helps the employees to take

benefit in increasing employee loyalty ethical decisions when the answer is
and pride in the organization. unclear. The important advantage is
Caterpillar and Best Buy are reducing the likelihood of "dirty
examples of organizations that have hands", fines and damaged
taken such steps. reputations for breaching laws or
moral norms.

Laws and regulations
The government and other mediators have to ensure that the

corporations do not harm the economy as a whole. There are
several issues surrounding government regulation. Regulation
in itself is unable to cover every aspect in detail of a
corporation's operations. Another issue is the financial burden
that regulation can place on a nation's economy.
Australian federal government's actions to avoid compliance

with the Kyoto Protocol in 1997, on the concerns of economic
loss and national interest. The Australian government took the
position that signing the Kyoto Pact would have caused more
significant economic losses for Australia than for any other
OECD nation.

Crisis and their consequences
• Often it takes a crisis to precipitate attention to CSR.

• One of the most active stands against environmental management is the
CERES Principles that resulted after the Exxon Valdez incident in Alaska in
1989).
• Other examples include the lead poisoning paint used by toy giant Mattel,
which required a recall of millions of toys globally and caused the
company to initiate new risk management and quality control processes.
• In another example, Magellan Metals in the West Australian town of
Esperance was responsible for lead contamination killing thousands of
birds in the area.
• The company had to cease business immediately and work with
independent regulatory bodies to execute a cleanup.

Stakeholder priorities
The stakeholders expect the corporation to

address the social and community issues which are
related to them. The first priority is interrelated
business benefits that can be derived from
increased employee engagement (i.e. more loyalty,
improved recruitment, increased retention, higher
productivity, and so on). Key external stakeholders
include customers, consumers, investors
(particularly institutional investors), communities
in the areas where the corporation operates its
facilities, regulators, academics, and the media.

Corporate Social Responsibility

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Social Responsibility

Uploaded by

Copyright:

Available Formats

Course Presented by: James F.

© iccdcanada.org. All rights reserved.

Introduction to Corporate Social Responsibility (CSR)

CSR and Competiveness

Conceptualizing and development debate

Understanding local values, culture and traditions

Corporate culture and CSR

CSR in global context

Criticisms and concerns