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Critical Perspectives On CSR And Development: What We Know, What We Don't Know, And What We Need To Know
Corporate social responsibility is a process through which the companies manage their business processes to produce an overall positive impact on the environment, marketplace, workplace and community. It could be seen that a general question being raised by the different sections of the society regarding its effectiveness i.e. whether corporate social responsibility is a stalking horse for an anti corporate agenda or is it done for an overall positive impact on the society. Blofield and frynas in the first article of the “special issue of international affairs” (volume.8i no.3) asserted the need for a special and new agenda for providing a critical research on corporate social responsibility. This attempt on providing a new and improved critical review on CSR fell short of giving an alternative research agenda beyond the current practices. This resulted in finding a new or deeper critical analysis of CSR and this formed the base of the article.
What Is Corporate Social Responsibility?
The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holmes and Richard Watts used the following definition."Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large". CSR is about capacity building for a sustainable livelihood. It respects the cultural differences and finds the business opportunities in building the skills of employees, the community and the government. On the other hand, the European Commission hedges its bets with two definitions wrapped into one:"A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby, companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis".
Scope Of Corporate Social Responsibility
The scope of CSR in the present world is not just confined to the corporate conduct on social, environmental and human right issues but is also concerned with the role of businesses in reducing the level of poverty specially in an economy which is developing or underdeveloped. The term CSR was previously confined with the northern perspective of American and European multinational companies, governments, trade unions, NGO's and trade unions. According to Tom Fox the present scenario shows that the concept of CSR is not just confined to the north but also to the south which reflects the real time experience of developing economies.
Concept Of Voluntary Or Mandatory
The operations of CSR with their stakeholders are on a voluntary basis. But in reality the distinction between the concept of whether it is voluntary or mandatory is not so clear in the developing countries. This is because of the reason as pointed out by Graham and Woods “voluntary initiatives may have mandatory aspects and national regulatory framework may incorporate the use of voluntary instruments” which sometimes make's the concept voluntary to be mandatory. It can be proved with the cases of countries like India and Pakistan. In these countries the social setup of business is based on the underlining factor like respect to human rights, customer service, environment protection, fair trade practices, payment of taxes and corruption. So to achieve CSR in these developing countries can be achieved through compliance of good manufacturing practices (CGMS)
Aim Of The Article
The main aim of this article is to find a suitable alternative critical research agenda. For this purpose the potential benefits and limitations of CSR is assessed. It is also made sure that the benefits of CSR should not just be confined to the company's benefits but it should also benefit the workers and communities socially and environmentally. Another key factor which needs to be identified is to know the general principles of CSR.
So the main key factors which formed part of this research are of four types
- The relationship between business and poverty reduction
- The impact of CSR initiatives
- Power and participation in CSR
- Governance dimensions of CSR
The Business Poverty Relationship
Formerly, the concept of business and poverty was like two sides of a coin. But the present scenario has changed completely. At present business is considered as the remedy for poverty reduction. This is due to the promotion of free trade zones and open market operations and also through the incorporation of small and medium sized enterprises in the global supply chain. These concepts and policies are supported and aided by international aid agencies such as United Nations Commission on the private sector and development and business organisations such as the world business council for sustainable development, have played a central role in shifting the terms of the debate on the relationship between business and poverty to a positive manner.
The main two problems faced by the concept of business and poverty is that
- The term poverty and development are frequently used but rarely defined
- Relationship between business, economic growth and living standards have been largely overlooked
The best example is about Bangladesh women are asked to work for longer hours to bring development to the company but little development to themselves they are paid very less. The similar kind of situations exists in most of the developing countries like India, Pakistan etc. But there are lots of other positive examples of it too. Ashoka and Avina Foundations, Gas Natural Ban in Argentina are companies in alliance with other NGO's are working with the public sector in establishing a model of social management.
So according to me the business poverty link differs from different country, firm and industry and CSR has its own benefits as well as demerits and it could be sorted out by a combined and systematic research by all the stake holders of the company as well as the society.
The Impact Of CSR Initiatives
The effectiveness of CSR initiatives is an important argument which has been going on in relation to its potential benefits accruing to company's workers and community. It could be seen that different qualitative studies have been carried on regarding its effectiveness. For example the cases of international oil industry and its efforts in countries like Nigeria, Peru and Sudan in reducing child labour, maintaining labour rights and reducing the negative environmental impacts. But an in-depth quantitative study regarding the effects on a community or worker is not identified or measured. This could be solved only through the effective implementation of a well-elaborated methodology to assess procedural compliance and to assess the impact on such codes of conduct on poverty reduction, improving working condition and reducing environmental pollution.
The implementation of such CSR models bring great improvements in the working condition of the workers but in countries like Indian and China the impact still cannot be brought down. These factors shows how broad are the structural and contextual factors that affect the CSR. Utting (CSR and development) argues that it is not taking into consideration some of the important factors labour flexibilization, and economic liberation, unsustainable investment and consumption patterns and perverse fiscal and pricing practices.
So, according to my point of view a more in-depth and systematic review of the various factors affecting the CSR should be done so as to make a quantitative assessment of the impact of CSR on the workers and also the impact of such models of a particular company on a particular community.
Power And Participation In CSR
The power and participation are two key issues concerning CSR. It refers to the impact of various actors and social groups in the decision making function of a concern. Often the matter of power and domination is not taken into consideration while determining the effectiveness of CSR. The power management is considered to be the management of different stakeholders ranging from the
producers to the retailers. According to freeman and reed “if the task of stakeholder management is done properly, much of the air is let out of critics who argue that the corporation must be democratised in terms of direct increased citizen participation”. But often this cannot be achieved quiet easily. One of the reasons cited for this is the unequal power structure of retailers, wholesalers and suppliers. It also suffers from a technical issue of whether the corporations are technically equipped to take on ‘such soft social science skills'.
So, it could be said that a genuine human-centred approach to CSR is needed so as to take care of the weaker parts of the stakeholders as well as workers.
Governance Dimensions Of CSR
Governance here refers to “sustaining co-ordinating and coherence among a wide variety of actors with different purposes and objectives, such as political actors and institutions, corporate interest, civil society and transnational organisations. The increase in the political power and the institutional capability has caused an accelerating convergence between business and civil society, thereby actively setting regulatory frameworks in economic development. But this has not always been a positive factor. The large institutional players tend to regulate the economy for their economic and social performance; thereby making their suppliers to sell their products at very low price and also engage in tax avoidance and lobbing government to resist social and environmental regulations. This is also52 evident in the acting of UN at various points in favour of the representatives of private companies rather than on the public interest.
In the given article it could be seen that CSR has its own advantages as well as disadvantages. It could be brought into an active effect only through an effective examination of potentials and limitations of CSR. According to my point of view a more grass route study is required to tackle this complex issue. In many developing countries CSR is something in the very distant future. In these countries the government and the business entities ignore the presence of CSR in their struggle for having a sustainable growth in the long run.
1) In developing countries like India and Pakistan the voluntary participation of concerns on a fair trade policy and compliance of good manufacturing practices (CGMS) would definitely improve the situation.
2) It could also be noted that a good participation from the international financial institutions can also bring a positive impact on the practice of corporate governance.
3) Putting a more humanly approach to the issue could also improve the situation
4) Implementation of CSR should be regulated or monitored by active regulations of state as well as international institutions
5) A better understanding of the concept of CSR in poverty reduction and development