Introduction
With increasing globalization, businesses and corporate bodies find themselves operating in a global business market that is subject to numerous country specific and global factors. In that respect MNE’s face among other issues the CSR demands from diverse stakeholders. In addition, CSR is increasingly becoming not only an avenue of businesses to engage with the communities within which they operate but also a great measure of the whole corporate behavior and conduct. In that respect, this analysis seeks to demonstrate the application of the CSR concept in the global corporate strategies and operations. To achieve that objective, the analysis explains the factors that motivate MNE’s to adopt CSR in their operations in the international strategy and operations. Further, the analysis evaluates how country context influences the types of CSR initiatives that are undertaken. The analysis and evaluations are supported with real world examples and cases to demonstrate the concepts’ operations.
CSR Overview
The CSR concept have several names by which it is referred by including corporate citizenship, corporate ethics, sustainability, corporate accountability and responsible business among others. These terms generally refers to the manner in which businesses integrate environmental, social and economic concerns in their values, decisions, culture operations and strategy in a bid to enhance accountability and transparency all meant to improve society’s welfare. (Dashwood, 2012)
Factors influencing MNE adoption of CSR strategy in international operations
Operations in an international market exposes businesses to several factors hence a need to respond with suitable strategies that are meant to enhance sustainability. In that respect an MNE’s operations in a global arena requires a consideration of several factors that some of which may result into a need to adopt CSR in its strategies and operations. In that respect the factors falls into categories of economic, social, legal, ethical and philanthropy. (Jones, 1999) Therefore, among the specific factors that influence the adoption in a global market include:
- Stakeholders who for a business include among others; communities, customers’ employees, shareholders, governments, international organizations, non-governmental organizations, customers and suppliers. In that respect, and considering the diverse background of each in an international market, an MNE needs to adapt CSR to address diverse needs that should be served for each category of stakeholders. This could include transparency, accountability as well as society focused initiatives. (Lima & Tsutsuia, 2010)
- Government authorities and Intergovernmental bodies increased intervention on various matters calls for MNE’s to adopt CSR practices given involvement of organizations like United nations and International Labor Organization among others who set standards, guidelines and policies to ensure suitable and acceptable corporate conduct. (Susan & David, C. 2011)
- Globalization increases the need for MNE’s to focus on CSR as a result of the increased focus on supply chain and cross border trade involved which calls for more responsibility on part of the business in respect to health & safety, environmental protection and the human resource management practices. (Kotler & Lee 2005)
- Investors and Consumers in the international market are increasingly raising their interest on information regarding businesses conduct in respect to responsible practices. Therefore, as a means of enhancing the capacity to attract investors as well as customers, an MNE would need to adapt CSR strategies in order to position itself suitably in the international market.
- Increased awareness among citizens has increased their demand for responsible business conduct in respect to social and environmental issues irrespective of their geographical location and operations hence a need for MNE’s to adapt CSR in their operations. In that respect, citizens are increasingly becoming aware of the effects that the MNEs’ operations have on various aspects including environment, health and safety. With that, citizens are concerned about MNEs’ concern with socially responsible businesses hence making it paramount for the organizations to adapt the strategies in order to meet citizens needs as key stakeholders in a global market. (Schmidt & Rynes, 2003)
- Increasing corporate ethics breaches some of which are high profile cases in the international market has increased concern and focus on such areas of operations where there is high risk involved hence the need for intervention to reinstall public trust through transparency, corporate governance, ethical governance and accountability. (Tencati, Perrini & Pogutz, 2004)
Risk management’s need among businesses to ensure that they manage and address the CSR issues as a means to enhancing their reputation and taking advantage of opportunities in the market through enhanced brands. In that respect, businesses operating in the international market have adapted socially responsible business practices like environmental friendly production and operations that seek to reduce air pollution hence increasing their reputation among consumers. In addition, as they adapt initiatives that seek to enhance relationships with the communities within which they operate, MNE’s have sought to reduce the risks involved with possible bad relations with the communities as well as conflict with environmental regulation authorities. (Jamali & Mirshak, 2007)
- Communication technology advances have increased reliance on internet and mobile communications through which non-governmental organizations easily use to raise alert on any unsuitable business conduct. In that respect, MNE’s need to adapt CSR as a means of maintaining a favorable brand image and maintain good relations with the stakeholders involved as well as the public. (Carrol & Shabana, 2010)
- Another reason that businesses engage in CSR is the need to take manage risks as well as take advantage of prevalent opportunities with respect to stakeholders engagement and corporate reputation. (Dashwood, 2012)
In respect to some multi-nation studies done on the global perspective of the CSR aspects, it has been noted with an example of the A 2004 Globe-scan CSR study where in 21 nations, over 23000 people suggested that the modern public have greater expectations for businesses and the corporate sector.1 Some of the clear indications of the significance that people place on corporate ethical conduct include: The study also identified that the frequency by which active consumers in the developed economies punished or rewarded companies on an ethical basis ranged from 12% to 30% of the total consumer population . (Windsor, 2001)
In addition, there has been an increasing consensus about connection between business success and CSR with the World Business Council for Sustainable Development having established and noted that corporate social responsibility strategies that are based on
- GlobeScan is an organization that has since 1987 been providing council that is evidence-led for a wide range of companies seeking knowledge on how to engage stakeholders as well as to refine or adopt brand strategies on sustainability and reputation.
sound values, long-term approach as well as integrity have clear cut benefits for businesses in addition to contributing to societal well-being. In that respect, MNE’s have sought to adapt CSR in the bid to take advantage of the councils noted benefits as well as contribute to the society’s well-being. (Wood, D. 1991)
The development of socially responsible investment (SRI) movements has also increased the focus on social responsibility for businesses due to the increasing investors’ awareness at international level that goes beyond evaluation of the traditional financial methods to include social measures in the criteria. Such focus has resulted to establishment of professionals and market indexes that provide information to venture capitals, mutual funds, capital funds, private equity as well as commercial banks regarding a wide range of corporate characteristics that include human resource, environmental, health and safety as well as on community development. Such indexes have been used in international financial markets with an example of the FTSE4 GOOD 100 Index,1 Dow Jones Sustainability index as well as Jantzi Social Index Canada. (Industry Canada, 2013)
How country’s context influences types of CSR initiatives undertaken
CSR activities and operations take the form of different initiatives whose choice depends on several factors among them some which are country specific given global presence of organizations. (Hopkins, 2007) In that respect some of the types of initiatives include commitments and activities by a business which pertain to a number of aspects including
- Supplier relations in international and local supply chains.
- Community development and investments.
- FTSE 100 Index provides a measure of average value of a group of the top 100 UK companies’ shares which are quoted on the London Stock Exchange. The index is a measure of how the businesses are performing and its increase denotes performance improvement and the vice versa.
- Anti-corruption and anti-bribery measures.
- Fair competition.
- Health and safety focus.
- Human rights advocacy.
- Corporate governance. (Carroll, 1979)
- Transparency, performance reporting and accountability.
- Customer satisfaction.
- Human resource management.
- Employee volunteering and corporate philanthropy.
- Aboriginal people’s respects. (Goodpaster, & Matthews, 2003)
All of the above aspects tend to be interconnected and applies to businesses depending on their location in the global market. In addition, the fact that the aspects plays a crucial role in wealth and jobs creation for the society, it has become an issue of great concern to management. (Dashwood, 2012)
A perfect example of CSR initiatives that are influenced by a country’s context include those which seek to address adherence to some set guidelines and standards include the Canadian Pension Plan Investment Board policy that focus on responsible investing. The Canadian pension plan set in 2005 sought to influence disclosure on environmental, governance and social issues as well as encourage enhanced performance given that the investment board has shareholding in over 1800 organizations. (Industry Canada, 2013)
Another perfect example can be that which deals with cultures and communities within certain geographical locations. In that respect, culture, aboriginal peoples’ treaties and rights which are all specific to a country defines to a greater extent the initiatives adopted. An example is the IBM’s announcement in 2004 where it launched a program meant to enhance the economic opportunities for aboriginal people by doing more business in their communities and partnering more with businesses owned by aboriginal people. The company also partners with the government of Manitoba to launch programs that seek to hire aboriginal people in technology based programs. (Industry Canada, 2013)
With globalization, attention has also turned to the environmental, social and corporate finance issues that force MNE’s to focus on non-traditional responsibilities. Among the aspects mainly targeted by corporate social include environment, training, social development, job creation, Health and HIV/Aids, Education, Sports Development, Arts and Culture, safety and security and housing which greatly determines the initiative that is adopted given their differences depending of country’s context of stakeholders, laws and regulation, development stage, community needs as well as CSR awareness level. (Crane, 2008)
Conclusion
The analysis has clearly demonstrated that MNE’s are increasingly facing demanding corporate environment that requires increased consideration of CSR strategy’s adoption with the growing global awareness on the purpose that CSR plays in managing sustainability and risk management. Among the key factors influencing such adoption include technological, social, political, environmental, global as well as legal factors. Finally the analysis has demonstrated that a country’s context has a greater influence on the type of CSR initiatives that organizations undertake given the diverse demands and needs of stakeholders in different countries.
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