Corporate Social Responsibility Comparative Analysis Business Essay

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It is rare to find comparative studies on Corporate Social Responsibility (CSR) as compared to other related fields like Corporate Governance or Corporate law. This is expected in a stream, CSR, which is still ―emergentâ€- (McWilliams, Siegel and Wright, 2006). The theoretical perspectives on social performance in corporate or stakeholder management have come into relevance over the last two decades.

While theoretical perspectives on corporate social performance or stakeholder management have been existing over the last two decades (Siegel, 2001), it is only in the past decade that businesses have shown some seriousness in exhibiting evidences of CSR in their stakeholder social reporting and strategic management.

CSR, as a field of research has been difficult to evaluate and compare due to lack of consistency in defining it. It is difficult to compare and measure the same because they usually refer to different dimension of CSR. The recent reports of CSR comparisons have focused on consequences CSR implementation, issues aced due to lack of implementation and financial implications with little reference to comparative issues (e.g., Margolis and Walsh, 2003; Barnett and Salomon, 2006).

Overcoming the above difficulties, comparative studies help us illuminate and understand the theories of corporate governance and understanding its dimensions through various view points. The comparative studies are carried out to provide value to the existing framework and encourage further research into the subject matter.

The companies that have been considered for comparative studies for their CSR initiatives are Infosys technologies and General Motors (GM).

Infosys is a global consulting and information technology company with global presence and employing more than 122,000 employees worldwide (Infosys.com, About us, 2011). The company provides end to end business solutions in addition to providing software products for the banking industry and business process

management services (finance.google.com, 2010). The social activity of Infosys is carried out through the Infosys Foundation which is headed by Mrs. Sudha Murthy, one of the founders of Infosys technologies. Infosys foundation started in the year 1996 and primarily works to support the underprivileged in the society (Infosys.com, 2010). Over the years its focus has spread to provide benefits in healthcare, rural development & social rehabilitation, education and arts & culture. The Infosys foundation has received recognition for its work in the social sector (e.g., computer world award, economic times corporate citizenship award).

General Motors is a global automotive company. The company manufacturers trucks, cars and automotive parts globally. It has operations in over 120 countries and additional 87 manufacturing facilities (finance.google.com, 2010). GM's social responsibility initiative has had its focus on the environment, safety initiatives of the products its sells, community development & promotion of education in the society.

General Motors has a wider global presence when compared to Infosys. While General Motors is primarily a manufacturing company, Infosys is a software behemoth which has registered growth religiously over the past decade and a half. Among the several differences that exist between the two companies, the place of origin of the countries would be elaborated in this report. General Motors is a company from a developed economy while Infosys is a company while originates from an emerging economy. The challenge of CSR for these two companies from their place of origin differs and sets a different vision for their social agenda. CSR initiatives of the companies from a particular geography can be influenced from the vision that is distilled by a collective pledge or commitment (UN, 2006:3). One fine example for the same is the vision that was adopted as a challenge for CSR in

developing countries during the year 2000 in the form of Millennium Development Goals - â€-a world with less poverty, hunger and disease, greater survival prospects

For mothers and their infants, better educated children, equal opportunities for

Women, and a healthier environmentâ€- (UN, 2006:3). The issues pertaining to CSR in developing country when compared with that of a developed country is quiet different as social and environmental issues are ―more acutely felt in the worldâ€- (WRI, 2005; UNDP, 2006); developing countries is where globalisation, economic growth and investment is more likely have impact both environmentally and socially. It is also felt that CSR in developing economies are collectively quiet different to those faced in the developed world (Visser, 2005) Before, we get into detailed differences and contrasts between the two companies and their CSR initiatives, it would be ideal for us to first understand the drivers for the CSR initiatives in a developing and a developed economy from where Infosys and General Motors come from.

Developed Economies:

One of the trends that we have seen change in the last decade has been the way CSR has been looked into in a developed economy. CSR today has moved beyond the ―Whyâ€- to the ―Howâ€- stage (Blakeley, Amanda; 2001). Human values have clearly taken the emphasis than impersonal systems and it has been realised that matrices and indicators should be used to help build the case for CSR. As CSR moves into business partnership from philanthropy, companies in the developed economies have realised that for them to have sustainable success they need to have good relationships with consumers, investors, employees, society, environment, governments, communities, NGOs and educational institutions. Apart from this, In United States itself, Global Workforce Study 2008, found that CSR is the third most important driver for

employee engagement, Organisations stature in the community is the second most important driver and company's social reputation is among the ten most important drivers. CSR movement in developed economies like US and EU has created demand for action in the corporate universe and have embarrassed those which have caused offence against the principles of CSR. It has become an industry in its own right. The signs of CSR victory in these economies are not just evident in the speeches of the corporate bosses but the fact that there are big consultancy companies which are providing advice to companies in CSR matters. Increasingly, the businesses are under obligation by the society in which they are based, the people they employ along with the customers, stakeholders and shareholders (Theeconomist.com, 2005).

There are several examples how CSR in United States in particular have helped firms establish their social credentials and understanding these case studies would show jut how certain decision can have a positive impact. A few of the example worth mentioning are as follows:

1) The Colonial Golf Tournament:

Bank of America is the primary sponsor for the PGA tour event, the Colonial at Fort-Worth Texas. It invited Annika Sorenstam, the best LPGA player to participate in the tournament where no female player had competed since 1945. The move significantly raised the interest in the golf tournament nation wide. Many called Bank of America's move as opportunistic but it received acres of positive press coverage for its stand and was widely praised for its progressive approach.

2) Brand insurance - NIKE

NIKE has emerged as a progressive company in terms of being socially responsible as it has been able to learn from the past errors and highlighting certain mistakes from

the NGO's. NIKE was the first company to have an executive member for Corporate Responsibility and publish an annual CSR report. NIKE has done a lot in the past to establish itself as a committed corporate citizen and take effective measures to make sure it doesn't face boycott which it did in 1990's.

3) Crisis management - Johnson & Johnson (J&J)

J & J's handling of the Tylenol brand in the 1980's was heralded as a modern case in crisis management where it recalled medicine worth $100 million because of a certain defect that was suspected. J& J's decision to recall not only saved the Tylenol brand but also it allowed to remain in the market becoming its top revenue generator till date.

The above case studies indicate the positive value certain decision and policies can have and to remain in tune with the community with a strong CSR policy. Given the large amount of money, time and efforts spent along with the awareness that certain decision generates today, a good CSR policy is an effective means of protecting investment and maximizing the impact.

Developing Economies:

CSR drivers in emerging economies are quiet different from the ones in the developed economies. One way of understanding these differences is by examining the various drivers for CSR in developing countries. Some of the key drivers are as follows:

1) Cultural Tradition:

CSR has a deep rooted cultural tradition in developing countries where the some of the traditions of doing well and giving back date back to the ancient times. Visser and Macintosh (1998) recall that condemnation of usurious business practices in developing countries that practice Hinduism, Christianity, Islam and

Buddhism date back thousands of years back. Frynas (2006) noted business practices based on moral principles was advocated by kautalya in his book athashasthra in the year 4 B.C. Religious beliefs have a major role to play in developing economies as it is one of the motivations to do CSR.

2) Socio Economic Priorities:

It is believed that CSR in developing countries is shaped by its socio-economic environment in which firms operate. Amaeshi et. al (2006) has argued that CSR in developing economies is specifically aimed at addressing the socio-economic issues of the country like poverty alleviation, health care provision and infrastructure development.

3) Investment Incentives:

The belief that multinational investment is inextricably linked with the social welfare of developing countries is not a new phenomenon (Gabriel, 1972). These investments are screened for CSR performance. Socially Responsible Investment (SRI) is becoming another driver for CSR in developing economies. Developing countries like South Africa have well documented the SRI trend.

4) Stakeholder Activism:

Due to the absence of strong government forces over social, ethical, environmental performance of companies, stakeholder's activism has come to become a strong force in becoming a driver for CSR in developing economies. Lund-Thomsen (2004) describes this as â€-an outcome of micro-level struggles between companies and Communities over the distribution of social and environmental hazards which are created when global political and economic forces interact with local contexts around the world' (p. 106).

In developing countries, four stakeholder groups emerge as the most powerful activists for CSR, namely development agencies (Jenkins, 2005), trade unions

(Kaufman et al., 2004), international NGOs (Christian Aid, 2005), and business

associations (WBCSD, 2000). These four groups provide a platform of support

for local NGOs, which are not always well developed or adequately resourced to

provide strong advocacy for CSR. The media is also emerging as a key stakeholder for promoting CSR in developing countries (Vivarta and Canela, 2006).

After understanding the key drivers for CSR in developed and developing economies, what becomes certain is that CSR in both the economies is a rich and fascinating area of enquiry and since it is profoundly under researched; it gives a great opportunity to learn and improve our knowledge of understanding CSR.

As we have discussed the key drivers for CSR in two major economies, the focus of this report now shifts to understanding and viewing the CSR initiatives undertaken by General Motors and Infosys.

Though the companies in this report are from different industrial backgrounds, certain focus areas of their CSR goals are common. Infosys' CSR focus is on Environment, Health Care and Education, Arts & Culture, Promoting diversity and encouraging talent (Infosys.com, Diversity, 2011) whereas GM's core CSR focus is on Environmental commitment, developing communities, Promoting education, Diversity & encouraging Safety Initiatives (GM.com, Corporate Responsibility, 2011).

Environment

Globalisation has unleashed far reaching changes in the planet. The biggest beneficiary has been the economies, companies and people. However, development

has come at the cost of the environment. Environment has become a dominant topic of discussion as it has become a major cause of concern. Every company wishes to be recognised as a company which is committed to high standards of environmental management and concern. Infosys runs several initiatives directed towards conserving and protecting the environment, one such initiative being the ―Ozone Initiativeâ€- where certain standards are adhered and conformed to keeping the environment in mind. ―Project Ozoneâ€- campaign being one such initiative focuses on creating awareness about the environment and implementing eco-friendly practices across its development centre and offices (Infosys.com, Environment, 2011). General Motors, being a manufacturing company has a much larger impact on the environment. GM has focussed itself on investing on R & D to produce fuel efficient vehicles. GM has invested heavily on developing advanced internal combustion engine and development of vehicles that can be run on hybrid technology, electricity and hydrogen fuel cell vehicles (GM.com, Environmental Commitment, 2011). The initiative taken by both the companies are meant to effectively address the environmental issue. US already is the largest emitter of the CO2 gas (Nationmaster.com, 2011) while India is estimated to reach among the top 3 largest CO2 emitter. Environment issues are taken seriously in both the countries hence it becomes imperative for both the companies to involve themselves in initiatives which helps them deal with issues responsibly.

Education

India has an illiteracy rate of 39% (Economist, 2010) which is among the highest in the world considering it is a country of 1.3 billion people. Infosys runs several programs to educate the youth of the country. The Infosys fellowship program

instituted supports research work which lead to Ph.D. It also runs a rural education program where Infosys runs a one day program to teach secondary education children basic knowledge of computers. In the year 2010, 7742 students benefited from the program (Infosys.com, Education, 2011). Apart from the above, Infosys runs ―Train the Trainerâ€- program which empowers school faculty about the latest trends in Information Technology which then can be passed over to the students. GM on the other hand GM has a more focussed approach where it encourages your students to take interest in science, math and engineering which would enable GM to acquire exceptional talent for its own benefit. GM promotes this practice through classroom curriculums, experiential activities, mentoring programs and having interactive study sessions (GM.com, Education, 2011). Between the two, Infosys has been meet mass number of targets due its generic nature of knowledge sharing. GM though is more focussed continues to promote bright minds and encourage them to reach greater heights.

Diversity:

Both the companies promote diversity in their working environment. They strive to employ people representing widest variety of nationalities, culture, physical ability and gender identities. Infosys employees people from over 70 nationalities (Infosys.com, Diversity, 2011) with 32% of their workforce constituting to be women (Infosys.com, Diversity, 2011). Infosys' intention to inculcate diversity in its work environment is to drive innovation from people who come from different walks of life. Infosys actively employs people with disability and has been recognised by National Centre for Promotion of Employment for Disabled People (NCPEDP) for two consecutive years 2006 and 2007 (Infosys.com, Diversity, 2011). GM has an

internal team called the diversity initiatives team which acts as a corporate internal consultancy and a resource to GM. The team promotes awareness across departments and service lines and help managers gain the skills needed to add more value as contributors to the workplace. In all, the diversity aspect of GM can be summed up in the Loden & Rosener Diversity Dimension model diagram.

Source: GM.com, Diversity, 2011

Apart from the above, Infosys and GM have other core focus areas in their CSR activities. Infosys promotes arts and culture and helps preserve it by providing financial assistance to the artists, provide monetary support to preserve old monuments and architecture and sponsor cultural programs. Initiative like sponsoring cultural programs provides direct marketing opportunities to thousands of artists and rural artisan communities. GM commits itself to doing community service where it understands the needs and act upon the requirement by initiating action to benefit the community as a whole. Charitable fundraiser, Donations to community centres, providing scholarships, grants to schools and colleges in the community are some of the acitivities through which GM supports the communities where its facilities are based.

Conclusion:

The descriptive approach adopted in this report is to present the actual methodology adopted by the two companies than suggesting how they should go about doing things.

Infosys and GM, though different in their nature of work have the same intention behind their social initiatives. Being a responsible company today not just in the eyes of the shareholders but other stakeholders as well is of tantamount importance.

Extensive research on CSR is relatively underdeveloped as it has heavy reliance on convenience based case studies or descriptive accounts. The focus has always been on ―High Profileâ€- companies from certain developed part of the world. As other countries rise economically and contribute towards meeting the rising aspirations of its people, many companies are benefiting from this change. With change comes

responsibility and today it just not the choice which the companies have but an obligation to give back, some of what they have got from the society.

Infosys & GM are few such companies which have bought about significant change in the lives of the people in the society.

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