Globalization and Corporate Social Responsibility - Research Paper Example

Globalization and Corporate Social Responsibility Globalization is the process that integrates international views, products, ideas, and cultural aspects of people across the world. This process can be understood effectively using three major dimensions theory by Manfred Steger which entails economic, ecological, and cultural dimensions. Economically, globalization has intensified and stretched interrelationships between countries across the world. This has led to emergence of new trade blocks, international trade and finance, and economic institutions (Steger 2013). In the Tanzania case study, globalization has changed the economic aspect of the country through exposing the economy to competitive companies which plays a very minimal role in payment of taxes and improvement of the living standards of the people. Ecologically, globalization has led to a reduction in biodiversity and widening of the gap between the rich and poor in the society (Mullerat 2010). In Tanzanian case, the collapse of the textile industry due to the influx of secondhand clothes has increased the level of unemployment in the country, an aspect that has increased the poverty levels among the local population. Culturally, globalization has led to the exchange of cultural aspects among the global citizens. This has played a significant role in changing the consumption behavior of the local population. The integration of economies has had a major impact on economies of developing countries. Initially, these countries had tariffs which protected the interests of the local businesses. This is through limiting the amount and the quality of the products that were entering their economies. However, integration of economies has exposed these countries to intensive competition from developed countries. These are countries that have invested heavily in the modern technologies in order to reduce the costs of production. As a result, they are able to produce high quality products at very low costs. In the Tanzania case study, the integration of economies has made it hard for the government to control the influx of cheap clothes from developed countries. Initially, laws limited these clothes to only charity groups. However, with the increasing levels of globalization, the government is losing revenue which is directed towards developed countries. This is created unbalanced trade in the world. With the increasing levels of liberalization of markets, the local companies are unable to compete with multinational companies. These global firms have diversified their operations to different parts of the world. In addition, they have invested heavily on improving efficiency, an aspect that has enabled them to produce cheap products. Moreover, they have accumulated huge amounts of money which enables them to segment the market, attract the customer loyalty towards their products, and position their products strategically in the market. This explains the reason why the Tanzanian textile industry could not compete with products that were imported into the country. Besides killing the local industries, this aspect has increased poverty levels at the expense of the developed countries. This is because revenues collected by these companies are transferred to their parent countries. This is making developing countries to continue recording economic growth while developing countries continue to struggle because they cannot support the surging population levels. Companies have a role of setting up a certain amount of the profit that has been collected from the society towards improving on the social welfare of the people. However, with the liberalization of markets, companies no longer have to interact with the local people. This is because they are under no pressure to set up subsidiaries in these markets (Idowu & Leal 2009). Instead, they use intermediaries such as wholesalers and retailers in order to reach the target market. Therefore, they feel that they are not obliged to participate in CSR despite increasing the poverty levels through killing companies that had employed thousands of local people. Therefore, globalization has watered down the spirit of corporate social responsibility by creating virtual companies which rarely interacts with the end consumers. Initially, governments were setting measures to ensure that international businesses participated in improving the welfare of the societies (Segerlund 2010). This is through setting up laws to compel these companies to participate in activities that will improve the lives of the people or the environment. However, with the increasing level of globalization, the governments have been forced to reverse these laws in order to attract foreign investors in their countries. Therefore, companies are no longer under any form of obligation to participate in corporate social responsibility (Aras & Crowther 2010). Instead, they have shifted their attention towards profit making. This explains the reason why Tanzania faced tough economic times in the hands of multinational companies but had no other option rather than changing its legal processes despite the impact it had to the local people. According to four dimension theory by Manfred Steger, globalization has exposed the local people to western cultural aspects, an aspect that has affected their consumption behaviors. In Tanzania, people were used to local Khangas as their traditional attire. However, with the liberalization of the media industry, people have lost their original culture. This is because new television channels which rely heavily on the foreign films and programs have exposed the local people to western cultures. The most affected people are young generation. The companies that have benefitted from this shift have a mandate of ensuring that the local culture is preserved. This is through engaging with the local communities and enlightening them on importance of maintaining their cultural practices. This can be achieved through sponsoring cultural festivals to sensitize the community on different aspects that are dear to them. However, globalization has increased the level of competition in the local and international markets (Caliyurt & Crowther 2006). As a result, companies are focused on making immense profits, an aspect that will enable them to be competitive. Therefore, they are unable to support corporate social responsibility activities. This has escalated the rate at which the people of Tanzania are losing their culture. The government has a responsibility of protecting the local people against the consequences of globalization. In Tanzania case, the textile industry which is on the edge of collapsing is failing to observe ethical standards basing its argument on lack of the necessary resources to enhance its working environment. However, the government has a mandate of ensuring that people are protected from any form of exploitation (Katamba 2012). For instance, in the case study, the textile industry was characterized by constant disputes over the organization and human rights issues. These are aspect that have resulted from the inability of the companies to provide the employees with the necessary benefits and working conditions. This is due to competition from products by multinational companies. The opposition group has a responsibility of putting pressure on government to ensure that it puts the necessary measures to protect the people from risks and uncertainties associated with globalization. In the case study, the government has made little effort to support the textile industry in order for it to continue with its operations. The opposition groups should therefore, take the mandate of engaging the government in order for it to subsidize some of the costs in order to safeguard the local population which depends immensely on the companies (Mühle 2010). This would be significant in preventing people from losing their source of income. The community has a role of ensuring that the local population is loyal to products that have been produced locally. Currently, the young people have turned to the west in terms of culture and their product of choice. As a result, the imports surpass the export in Tanzania. The country’s economy has not been diversified. As a result, the imports are weakening the country’s economy. However, if the community rally behind their products, the amount of products that are imported in the country will decrease tremendously. In addition, the outflow of the foreign currency will reduce (Amaeshi, Nnodim, & Osuji 2013). This will strengthen the economy of the country. Furthermore, it will revive the local companies which are likely to participate in corporate social responsibility because they understand the needs of the people. Although multinational companies have been using corporate social responsibility as a way of improving their reputation in the market, the largest beneficiaries of these activities are located in competitive markets in Europe, Asia, and America. However, in developing countries, little effect is being felt on the ground. Instead, the companies are recovering the money spent on CSR activities in these markets (Amao 2011). This is through exploiting the local population because there are few but weak competitors in these markets. This is having a major impact on the economies of these countries. Therefore, CRS has changed from being an intervention towards improving the welfare of the society to a reputation improving strategy. In conclusion, through this study, I have learnt that globalization has changed the initial noble course of corporate social responsibility. This is shifting the attention of the multinational companies from helping the society to penetrating new markets with the aim of creating a barrier of entry for other interested investors. As a result, global firms are doing little in areas where the help is needed most. This is because the levels of competition in these markets are very low therefore; there is no need to build a reputation because the locals have no other substitutes to select from. This is having a major impact on the economy, living standards of the people, and the consumption behavior of the local population. References Amaeshi, K., Nnodim, P., & Osuji, O. (2013). Corporate social responsibility, entrepreneurship, and innovation. New York: Routledge. Amao, O. (2011). Corporate social responsibility, human rights, and the law: Multinational corporations in developing countries. Milton Park, Abingdon: Routledge. Aras, G., & Crowther, D. (2010). A handbook of corporate governance and social responsibility. Farnham, Surrey: Ashgate. Caliyurt, K. T., & Crowther, D. (2006). Globalization and Social Responsibility. Newcastle upon Tyne: Cambridge Scholars Publishing. Idowu, S. O., & Leal, F. W. (2009). Global practices of corporate social responsibility. New York: Springer. Katamba, D. (2012). Principles of Corporate Social Responsibility (CSR): A guide for students and practicing managers in developing and emerging countries. Cork: Publish on Demand Global LLC. Mullerat, R. (2010). International corporate social responsibility: The role of corporations in the economic order of the 21st century. Austin: Wolters Kluwer Law & Business. Mühle, U. (2010). The politics of corporate social responsibility: The rise of a global business norm. Frankfurt am Main: Campus Verlag. Segerlund, L. (2010). Making corporate social responsibility a global concern: Norm construction in a globalizing world. Farnham, Surrey: Ashgate. Steger, M. B. (2013). Globalization: A very short introduction. Oxford University Press. Read More