Corporate Social Responsibility and Globalization - Example

Corporate Social Responsibility and Globalization Name: Institution: Date of Submission: Introduction Corporate Social Responsibility refers to a daily and unending commitment and focus by corporate businessto ensure that they conduct the business activities ethicallyin a way that contributes toeconomic developments. It is also a measure by companies to ensure that their workforce live in a better and improved lifestyles and commit themselves to improving the lives of people in the entire society in which they operate. Going by the recent trends in the global business, corporate social responsibility continues to be a topic of high concern attracting extensive research from scholars across the globe (Wynhoven and Jeff, 2004). Because of these researches and the importance of the matter, many business people, governments, and other agencies keep attributing their support for it. In the present world, multinational companies are taking controls of the society by being more influential unique compared to private enterprises that existed in the last few decades. With this regard, it is evident that the future of humanity will greatly depend on commitment to corporate social responsibility by the multinational companies. In general, according to Carroll and Buchholtz (2003), corporate social responsibility refers to general opportunities presented to the public by corporate companies at any given particular time. The general overview of corporate social responsibility indicates that organizations come up with principles to guide them on how to behave ethically in order to present good reputation to the public. The importance of corporate social responsibility is that it generates a phenomenon for creating and improving a mutual and permanent relationship between business and community, which serve as the two dynamic individuals involved in business. However, according to Davis, Whitman and Zald (2006), proprietors and managers of most multinational organizations over time developed habits that allowed them to involve in activities that we currently term as corporate social responsibilities. The main idea, and up to date is to improve company relationship with stakeholders, improve employee lifestyles, and contribute towards community development. The main driver for corporate social responsibility in global stage today is the NGOs. Therefore, trade unions, consumers, and shareholders in their capacity as players in the multinational business corporations, play an important role in CSR issue. This is because CSR issues keep on taking center stage in multinational companies and hence becomes of much concern (Wynhoven and Jeff, 2004). The implications and focus of such groups in multinational companies majorly tend concentrate on environmental issues such as pollution, improved working conditions, and adherence to human rights and labor laws. Furthermore, multinational companies appreciate the fact that media channels have the potential of exposing their activities to the public. This compels such companies to ensure that they always stick to ethical behavior in the fear that their reputation may suffer a great damage in the event where media reports acts that violate CSR activities. Together, these priorities by organizations to protect their reputations lead to a scenario where multinationals perceive CSR from a negative perspective. However, CSR is important in all that that it advocates for companies to engage in improving environmental issues and fostering community development as well that those activities it discourages companies from doing such asengaging child labor and violation of human rights. Surprisingly, some corporate practices such as transfer pricing, tax avoidance or the abuse of market power does not fall within mainstream CSR activities. Most significantly, CSR fails to advocate or address the devastating impacts of poverty resulting from corporate business activities (Carroll and Buchholtz, 2003). For instance, the recent few decades saw the rise of increased ethical funds yet up to date there are no measures to use poverty reduction as a measure of company’s performance. Furthermore, even the UN Global Compact initiated by the United Nations does not contain or rather appreciate any key development concerns such as poverty reduction or equity as a priority for corporate businesses. Therefore, in general CSR activities in the globalized business world involve conducting business in a moreethical way that serves the interests of every individual in the society. It also entails responding positively to the constantly emerging trends of societal priorities and expectations and thewillingness by corporate companies to act ahead of regulatory confrontation. Finally, CSR involves balancing shareholder interests against the interests of the entire society. Overview of CSR and Globalization Key Issues Developments in infrastructure that entails improved transportation systems, good communication channels, creation free market zones through commercial treaties, and advancements in information and communication technology are among the major drivers for globalization. By this improved technology and infrastructure, most large-scale companies find it easy to transport their products across borders and gain access to instant communication with their established companies across the globe thereby expanding their markets. Around this increasing assumption, the multinational organizations require to adopt extra powerful measures where they alter the insights of developments within their organizations, require catching the spirit of corporate social responsibility, recruit employees in a fair manner, and take care of the environment as well (Meyer, et al, 2007).However, during the process of companies expanding the markets to meet the globalized status, various changes take place at almost all levels. These changes seem to compromise the principles of corporate social responsibility. In at least its name and recognition, CSR is a recent and young phenomenon in the globalized market. However, according to Davis, Whitman, and Zald, (2006), from the time of industrial revolution, organizational owners, and managers kept on engaging themselves in activities currently termed and considered CSRprinciples. Nevertheless, until the 19th century, CSR activities remained solely with philanthropy. After late 19th century, the CSR principles became more expandable and practiced in almost several parts of the globe. Scherer and Palazzo (2007), advocates for the necessity of total global shift towards CSR that is new and politically enlarged. The argument is that globalization is the main factor that weakens the power on national political authorities to regulate the business activities of localcompanies that seek to expand their businesses across boundaries to other foreign nations. For instance, globalization forces national governments into participating in stiff competition and make unjustified and unethical choices in order for them to attract corporate investments in their countries. This makes national governments to perceive corporations as tools both economic and political success without considering ethical factors. Davis, Whitman, and Zald (2006) strongly argue that poor national boundaries that help in distinguishing foreign companies from the domestic ones, is a major factor that brings about confusion of clear distinction between activities and transaction fond inside as opposed to outside a corporate entity. This is indeed another crucial difference of the global competitive environment of the 21st century. Most corporate find themselves in a context of developing useful relationships with their suppliers and stakeholders in the process of moving a substantial part of their operations from the status of in-house activities to the level of purchased goods and services. Combining politicization of civil society as a measure of addressing the smaller influence of national governments and the idea of developing good relationship with suppliers and stakeholders has a higher chance ofresulting in improved CSR practices. However, although CSR practicesmainly arose out of corporations’ dedication to their employees and to society, corporations face the challenge of being accountable for their supply chain.For instance, Locke (2006) gives a vivid example by referring to Nike Corporation. After its consumers went on a boycott following the news that its suppliers practiced child labor exploitation in most developing countries, the corporation hurriedly came up with some considerable measures that included investments aimed at promoting improvements in the working conditions of its suppliers’ factories. Still arguing along this line, Amaeshi et al, (2006) claim that, even though organizations and limited companies enjoy recognition as a legal entity and at the same time having the supply chain as a different and independent entity,it follows that there are no any legal responsibilities for the purchasing firm to shoulder the practices of the organization’s suppliers. With this in mind, it is therefore important for CSR activities to introduce clear limits to responsibility. Firms that occupy controlling positions use their power in a more responsible way. In this way, such firms easily influence the weaker parties in the business field by setting codes of conduct and standards that foster ethical business behavior. This view does not only represent a theoretical change in business activities since an increasing number of companies keep on acting in this direction and line of thought. A typical example of this behavior is Marks and Spencer. The company decided to make an investment of £200 million to take care of social and environmental responsibility through joint efforts with NGOs and suppliers (Gomez-Mejia et al., 2008). Finally, the unilateral influence that exists between globalization and CSR is one thing that is worth pondering over, and, in so doing, considering the recall of Blois’s thought is quite natural. Blois (2007) argued that the modern principlesof CSR resulted in from the self-regulating market experienced in the globalized business today. Initially, nations kept pushing and advocating for some social changes that later became the determining factors for creation of market structures. In this case, the state becomes necessary tool in monitoring CSR and hence protecting the society against any form of negative implicationsthat may result from the existing market economy. Blois calls this process “a double movement”. Furthermore, following Ruggie (2003), it is possible to explain that the role of state is slowly moving towards the jurisdiction of international organizations such as the IMF, World Bank, as well as multinational corporations (MNCs). This idea of transferring state responsibility to other agencies is possible with globalization offering corporations the opportunity to perform such roles. On the other hand, the necessity of a corporate social behavior is necessary for a corporation is to control the societal backlash against this new role. The Global Compact and the Global Reporting Initiative During the World Economic Forum in 1999, the then Secretary General for United Nations, Kofi Annan proposed the UN Global Compact and formally launched it in 2000. The UN GC is a voluntary initiative that calls for corporations to pledge their entire commitment to human and labor rights alongside environmentalism. Later on in 2004, corruption came into the list of what of companies had to pledge (Wyhhoven and Senne 2004). These principles are among the governmental and internationally sanctioned norms. Typically, these norms are not particularly controversial like they may seem. The GC relies heavily on corporations to respect self-reporting principle and voluntary monitoring by civil society actors. In this research paper, it is important to examine endorsement by government officials and corporate participation as the two mostimportant areas of participation in the GC. Primarily, although the GC aims at corporations, it also targets individual countries through a country-level GC mechanism that is typically a high-level event that greatly incorporates government officials, multinational corporations, UN agencies, and trade unions (RING Alliance, 2003). The main purpose of a country-level GC mechanism is to encourage corporate commitment to GC principles. This is possible through demonstration of society’s wide endorsement of the GC principles. In 2001 for instance, Russia saw the launchof its national GC mechanism through members of its Ministry of Foreign Affairs in collaboration with the Russian Union of Industrialists and Entrepreneurs alongside the UN agencies based in Russia. To sustain and maintain the momentum that resulted from the national GC launch, the concerned parties in every country develop Global Compact Local Networks (GCLNs), which involve “clusters of participants who join efforts to advance the GC and its principles at the local level” (UN Global Compact Office 2007). While the composition of stakeholders vary from one country to another, launching the national level GC will always call for a significant level of rigorous activities and evaluations between different organizations and stakeholders. Government’s support in particular is essential in fostering GC principles even if the government is not the determining factor in launching the national level GC program. Thus, we see the launch of the GC in a country as signifying government commitment to endorsing the GC principles while fully appreciating the fact that it represents the result of cooperation between state, NGOs, and nonprofit actors. Precisely speaking, corporations within a given state can join the GC program even if its launch at the national level has not kicked off. Consequently, government endorsement is not a necessity for corporate participation in the GC, but it a factor that encourages further participation. Conclusion A clear analysis of this research paper portrays how globalization over time changed corporate social responsibility. The weak boundaries between local and foreign companies and poor distinction between in-house and outsourced business activities are the main perception of the corporation as both an economic and political players. The result of this perception is that multinational companies remain highly held responsible for their suppliers’ CSR practice by an increasingly politicized society. Additionally, there is a mutual influence between CSR and globalization. In one hand, multinational companies continuously rob states of their responsibilities on CSR and thus they should behave responsibly. On the other hand, a corporate socially responsible behavior is necessary to protect this new role. Some questions however remain unanswered. For example, the question of whether all multinational companies converge to CSR or not does not gain much attention and research as found out in the review. Another question that remains largely unexplored is whether responsible behavior is just a differentiation strategy of CSR or not. The latter view would be useful in explaining why companies, like Wal-Mart remain successful in business despite widespread charge of their irresponsible business practices (UN Global Compact Office, 2007). By charging a lower price, these companies may simply compete differently. Moreover, there is no single universal definition of corporate social responsibility since CSR has local meanings across different cultures and nations. In case of a clash over different local definitions of corporate social responsibility can have practical consequences and it needs further investigation in the form of an extensive research. A good example of this difference in definitions is in the case of Nike Corporation that once got it embroiled in a major scandal by paying very low wages to its workers in its Southeast Asian plants yet the practice still went in accordance with the local customs there (Compel, 2007) The available information about the implementation of CSR in the global business iscontradictory and most of the evidence iscircumstantial. CSR activity still looks relatively unobserved and unevenly distributed, with very few multinational corporations adopting a formal corporate social responsibility agenda that aims at bringing in healthy working conditions and livable communities. CSR remain a growing movement and still in its infancy reflected in many cases as corporate philanthropy. Although there are some interesting signs of increasing awareness and interest in CSR activities, there is still much to do in promoting practical and result oriented implementations and in disseminating the social and economic benefits of CSR practices. While great strides achieved in mapping CSR and establishing concrete measures of accountability for companies and multinational corporations, there is still much that remain a mystery and unknown to many people. To this point, the discussionis the most relevant to multinational companies since most companies know very little about CSR. Therefore, it is necessary to conduct a further research on globalization and corporate social responsibility and this paper may be offer a good basis for such research. Reference Amaeshi, Kenneth M., Osuji, Onyeka, K. and Nnodim, P 2006, Corporate Social Responsibility in Supply Chains of Global Brands: A Boundaryless Responsibility? Clarifications, Exceptions and Implications. Available at SSRN: http://ssrn.com/abstract=947583 Retrieved 24/12/2012 Bloisi, W. et al., 2007, Management and OrganisationalBehaviour, 2nd European edition, New York, McGraw-Hill. Campbell, J 2007, Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility, Academy of Management Review, vol.32, no. 3, p. 23-78. Carroll, A and Buchholtz A 2003, Business and Society: Ethics and Stakeholder Management. 5th ed. Thomson South-Western, Australia. Davis, Gerald F., Whitman, Marina, V and Zald, M 2006, The Responsibility Paradox: Multinational Firms and Global Corporate Social Responsibility. Ross School of Business Paper No. 1031 Available at SSRN: http://ssrn.com/abstract=899112 retrieved 24/12/2012 Gomez-Mejia, L, Balkin, D & Cardy, R 2008, Management: People, Performance, Change, New York, McGraw-Hill-Irvine. Locke, R 2006, Does Monitoring Improve Labor Standards in Nike's Suppliers? The Oxford- Achilles Working Group on Corporate Social Responsibility.Said Business School, Oct. 2006. Retrieved on 24/12/2012 from http://sbscsr.typepad.co.uk/the_oxfordachilles_workin/2007/01/does_monitoring.html Meyer, E & Ashleigh, M., et al., 2007, Contemporary Management (European edition), New York, McGraw-Hill-Irwin. Retrieved 24/12/2012 from http://highered.mcgrawhill.com/sites/007711115x/student_view0/index.html RING Alliance 2003, The development dimensions of the UN Global Compact: final report, report for the Secretariat of the United Nations Global Compact, available at: http://www.ringalliance.orgring_pdf/global_compact.pdf Ruggie, J 2003, Taking Embedded Liberalism Global: The Corporate Connection in Taming Globalization: Frontiers of Governance, edited by David Held and Mathias Koenig-Archibugi, Cambridge Polity Press Scherer, A and Palazzo, G 2008. Globalization and Corporate Social Responsibility. THE OXFORD HANDBOOK OF CORPORATE SOCIAL RESPONSIBILITY, A. Crane, A. McWilliams, D. Matten, J. Moon, D. Siegel, eds., Oxford University Press. Available at SSRN: http://ssrn.com/abstract=989565 UN Global Compact Office 2007, Local Network Report: Deepening the Engagement of All Participants at the Local Level, New York, United Nations Global Compact. Wynhoven, Ursula, and Jeff Senne, eds. 2004, Embedding Human Rights in Business Practice. New York, United Nations Global Compact/Office of the United Nations High Commissioner for Human Rights. Read More