This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
“CRITICAL PERSPECTIVES ON CSR AND DEVELOPMENT: WHAT WE KNOW, WHAT WE DON'T KNOW, AND WHAT WE NEED TO KNOW”
In the past, Multinational Corporations never used to contribute to the development of their host communities. This may have been attributed to the little awareness of Corporate Social Responsibility, or lack the thereof. In more recent times however, corporate organisations have increasingly adopted CSR initiatives in their corporate policies mostly in order to maintain good reputation.
The creation of the Global Compact by the United Nations in 2000 is an evidence of just how crucial the issue of Corporate Social Responsibility has become especially in the last few decades. The topic is being constantly critiqued by researchers and in effect the general public. Communities in which Multinational Corporations have established subsidiaries are more or less key players in CSR debates.
Blowfield and Frynas (2005) established the fact the concept of CSR is often interpreted differently by different people. Significant issues such as environmental management, corporate governance, community development and labour rights are often mentioned interchangeably while discussing the issue of CSR in relation to development. CSR is being described from various perspectives in the bid to give us an insight as to what CSR means to the different stakeholders involved.
* CSR as an alternative to government
* CSR as culture
* CSR as an umbrella term
In the article on Critical Perspectives on CSR, Prieto-Carron et al (2006) quoted a green paper in the definition of CSR. It is defined as a ‘concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis' (Prieto-Carron, 2006). The decision to inculcate ‘corporate citizenship' by companies according to Sagar and Singla (2004) usually stems from the need to be seen as having and maintaining good reputation in the communities in which they operate. Some MNCs in the developing world make huge contributions to the society in form of community development projects (as in the case of Tata Steel Company in India), educational funding and scholarships, infrastructural developments etc. It is however not unusual for governments to reward such companies with tax-cuts and other monetary incentives.
In some other parts of the world, the contribution of MNCs to CSR transcends the accountability of corporate organisations to the societies in which they operate. A notable example is the contribution of American MNCs in ending apartheid in South Africa. Hamman and Acut (2003) in their report stated that American companies required signatories of the Sullivan Principles (a voluntary code of conduct) to maintain non-segregated workplace facilities, train black staff into higher positions and contribute to better housing and services for their staff. This in created more awareness and in effect a positive inclination towards better corporate behaviour.
The importance of CSR in MNCS cannot be over-emphasised. Their contribution terms of growth and development in the society has been increasingly laudable. Nevertheless, some critiques have proposed that corporate organisations - more often than not- have an agenda which is not always sincere when introducing CSR initiatives. It is important to ask ourselves whether the community in question is interested in the sincerity on the initiatives, perhaps they just have a need certain basic facilities that would cushion their effect of poverty irrespective of the intentions of the givers of these facilities. In the Niger Delta region of Nigeria, the communities are constantly asking for basic infrastructure such as passable roads, potable water, and good health facilities etc. Ite (2004) acknowledges that after the mid-nineties Shell's CSR strategy in Nigeria started to emphasise corporate philanthropy. Their CSR initiatives were widely publicised. Health care, education and agriculture among others are some areas that Shell indicated interest in improving for their host communities. To a great extent, they have been able to achieve these developmental goals.
Prieto-Carron et al (2006) made a note-worthy point in their critique of CSR initiatives, which suggest that more often than not the CSR initiatives of corporate entities are qualified based on face value. They suggest that CSR initiatives may have agendas that we on the outside are not completely aware of. Their research goes on to suggest some important issues that should be investigated. Issues such as the following;
* CSR issues that have been strategically added or subtracted from debates to suit certain purposes
* Equal opportunities for all workers irrespective of gender, sex or race
* Adherence to codes of ethical practices; and
* Importance of health and safety principles in work places
CSR initiatives most times give the general public the illusion of positive impacts such as environmental concerns and poverty eradication. True, many CSR initiatives have positively and permanently changed the lives of people. Communities which were hitherto ignored by the federal government started getting recognition as well as development as a result of the presence of corporate organisations. Shell in the Niger-Delta region of Nigeria and Tata Steel Company in India are good examples. However, what happens when the presence of an MNC considerably endangers the lives of people through their outright disregard for corporate guidance codes or labour rights. In the 1950s there was the case of Axis in Alabama where emissions from chemical plants increased the cancer mortality rate in the community. More recently, the oil spillages in oil producing countries in the global South have encountered serious health environmental problems. Developing countries have suffered disproportionately more than developed countries from oil-related pollution (Frynas, 2005).
There is no doubt that MNCs have health and safety standards, it is the actual implementation of these standards that is of major concern to CSR critics. This is the point that Prieto-Carron et al (2006) tried to bring to the limelight in their article on Critical Perspectives of CSR. In Nicaragua, women have to work incredibly long hours in banana plantations and so cannot properly cater to their children (Prieto-Carron et al, 2006). It was insisted that the long term effects of CSR initiatives of CSR be analysed rather than focusing only the immediate benefits.
Some companies have responded to the negative publicity surrounding their practices by adopting codes of conduct. Levi Strauss (of the popular Levi's Jeans) was one of the first companies to do so, adopting its Business Partner Terms of Engagement in 1992 after its overseas contractors were accused of treating their workers as indentured slaves (Rhys Jenkins, 2005). Other companies have adopted a more geocentric approach to recruitment like Shell in Nigeria which employs more than 10,000 people of which 4,000 are full-time staff and Nigerians account for 95% of the full-time staff (Ite, 2004).
It is not unusual for the community to start to pressure these MNCs instead of the government in terms of the provision of amenities. A likely resultant effect of the expected over-indulgence of MNCs is the tendency towards shouldering development projects which should be otherwise under-taken by the government. The umbrella term ‘CSR' is used to embrace a wide spectrum of activities which should have been done irrespective of whether the company is established in that community or not.
In Nigeria, the communities have placed sole responsibility of their livelihood on the oil and gas producing companies like Shell, Chevron etc. Ite (2004) stresses the fact that as a result of virtual reliance on Shell, the communities became perceived as helpless victims of circumstances rather than capable actors in the development process. The MNCs are constantly being critiqued for not doing enough in respect of CSR and development. The focus of the MNCs then starts to shift from their initial corporate strategy of profit-making to CSR. According to Sagar and Singlar (2003), there exists an inextricable connection between CSR and the reputation that the community perceives the company as having. The government in India offers private sector companies fiscal incentives when they set-up water purification projects.
One question that comes to mind is ‘where should MNCs draw the line between discretionary and obligatory contributions to development?' A conflict of interests will no doubt arise if MNCs are constantly expected to undertake developmental roles in the society rather than the government. Perhaps, what is necessary or MNCs to achieve sustainable development is an ‘enabling environment'. Fox et al (2002) in their research described an ‘enabling environment' as;
“A policy environment that encourages (or mandates) business activity that minimises environmental and/or costs and impacts while at the same time maintaining or maximizing economic gains”.
In conclusion, it is important to point out that the fact remains that companies establish subsidiaries in developing countries for the sole purpose of exploiting the market and exploring opportunities to obtain economic gains. Market saturation in home countries is usually the push force that leads companies to establish subsidiaries in foreign developing countries in order to sustain profits. Many of these developing countries provide a positive business environment in terms of the absence of industry competition. Suffice it to point out that the MNCs are in these developing countries to make money not necessarily improve the lives of the people. The concept of CSR has been seen by many critiques as an unreserved deflection from the original business strategy of corporate bodies. Whether or not all the variables i.e. community development and profit-making can be jointly achieved by MNCs is probably the topic for a future research. Perhaps a little more thought should be given to the exclamation of the American economist Milton Friedman who said that ‘the business of business is business'.
Blowfield, M. & Frynas, J. G. (2005), “Setting New Agendas: Critical Perspectives on Corporate Social Responsibility in the Developing World”, International Affairs, 81(3): 499-513
Fox, T. , Ward, H. & Howard, B. (2002), “Public Sector Roles in Strengthening Corporate Social Responsibility: A Baseline Study”, World Bank.
Frynas, J. G. (2005), “The False Developmental Promise of Corporate Social Responsibility: Evidence from Multinational Oil Companies”, International Affairs, 81(3): 581-598
Hamman, R. & Acut, N. (2003), “How Should Civil Society (and the Government) Respond to ‘Corporate Social Responsibility'? A Critique of Business Motivations and the Potential for Partnerships”, Development Southern Africa, 20(2): 258
Ite, U. (2004), “Multinationals and Corporate Social Responsibility in Developing Countries: A Case Study of Nigeria”, Corporate Social Responsibility and Environmental Management, 11: 1-11
Jenkins, R. (2005), “Globalization, Corporate Social Responsibility and Poverty”, International Affairs, 81(3): 525-540
Prieto-Carron, M. , Lund-Thomsen, P. , Chan, A. , Muro, A. & Bhushan, C. (2006), “Critical Perspectives on CSR and Development: What We Know, What We Don't Know, and What We Need To Know”, International Affairs, 82(5): 977-987
Sagar, P. & Singla, A. (2003), “Trust and Corporate Social Responsibility: Lessons from India”, Journal of Communication Management, 8(3): 282-290