Issues for management of CSR in global business environment

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Corporate social responsibility is a concept existed for the solution of market failure and closely related to the ethics of management. What is corporate social responsibility? The expression of the answer to this question are quite different by different scholars around world. There are no unified definition until now. The most popular definition was stated by SAI(Social Accountability International): Corporate social responsibility is different from corporate business responsibility. It means that corporation should not only responsible for shareholder--which means creating wealth, but also responsible for the society.

Corporate social responsibility 's first entering public was due to the pressure came from market environment under globalization and customers. In 1995, global group of energy and petrochemicals companies Shell conflicted fiercely with Greenpeace International about dumping the ritired oil reservation equipment in north sea. In 1996, Nike's scandal that violation of minimum wage and overtime law in Vietnan met with attack and boycott by public voice from labor organization, human right organization and news media in European and North America. Nike was also accused by labor organization. This scandal make Nike this famous brand suffered huge loss. It lost large amount of market quota and sank into up to 10 years' crisis. To alleviate the tension between corporation and public and avoid crisis, large amount of multi-national company began to announce their business rules and ethical standard to manage their organization's social responsibility. They also announce their factories' name and address to receive supervision from public. For unifying corporate social responsibility standard, Social Accountability Accreditation Services (SAAS) in United Stated announced first version social responsibility standard SA8000(Social Accoutability 8000)in October of 1997. Their aim is to ensure that all the products suppliers supplied are comply with the requirement of social responsibility standard.

In World Economic Forum in January of 1999, Annan--secretary general of United Nation first put forward Global Compact into business world. Annan pointed out that globalization brings unbalance among economic, social and political issues when it brings development to human beings. He thought that a set of principles should be made to promote multinational companies to strengthen their social responsibility in doing their business globally. Annan hoped multinational companies to make choice from three aspects: Which kind of market we need? A globalized market which is oriented by short-term interest or a humanistic globalized market? Which kind of society we need? A society that 1/4 people are doomed to be hungry and poor or a society could provide everyone with wealthy and healthy living environment. Which kind of future we need? A selfish future or a responsible future. In July of 2000, United Nation Global Compact officially launched. Global Compact includes ten principles in four areas: human rights, labour, the environment and anti-corruption. Global Compact is a new idea for people to solve problems brought by globalization-using the power of multinational companies in globalization to make them to be active power. It is a mile stone of multinational companies increasing notion of social responsibility.

From corporate social responsibility development history, we could see that it is the outcome of the deeper development of economic globalization. Promoting social responsibility is the need for development trend. In this essay, we will identify issues in the management of corporate social responsibility in a global business environment and evaluate some main issues--why these issues important and provide some probable solution.

Issues in CSR management

Corporate social responsibility means company promises to confirm ethical standard, contribute to economic development and increase living quality of employee,their family ,community and entire region. Apparently, philosophy of CSR is the core value of the corporation. Practically, it means things like engagement of stakeholders, environment protection and corporation transparency. Charity is also a way to implement CSR but it is not main discussed issue globally. CSR have to fit the operations strategy of the corporation and conform the values of the corporation. Then the companies will be able to manage it well in globalization environment. Nowadays, World Business Council for Sustainable Development (WBCSD,2000)catergorized CSR issues into seven aspects:

Human right:Corporation have to support human right publicly and give employees instruction about this.

Employee benefits:Corporation have to respect custom in other countries or areas.Corporation should know the diversity in business environment(such as culture and sex) to support employee well.

Environment protection:Corporation have to protect environment around their supply-chain.

Society engagement:Corporation have to pay attention to the interaction with local community. Donation to charity is preferred.

Relationship with suppliers:Build good relationship with direct, indirect supplier.

Public supervision(transparency) :Corporations should appraise their performance with valuable indicators and announce their result to public regularly to get supervision from the society.

Stakeholders right:Stakeholders include employees,customers, suppliers,community.All these stakeholders' right should be respected.

Main issues in a global business environment

In business environment under globalization, I think human right, employee benefits and environment protection are three main issues. I will discuss why these issues are important and provide some probable solution in the following part.

3.1 Human right

Companies running in global business environment especially multinational companies should support human right responsibility. It means they should action according to international law and give their action more consideration in human right.With the develpment in economy and society,many multinational companies use their advantages in monopony and competition to do a lot of actions that violate human right in economical, social and cultural areas. For example,Bhopal gas tragedy in 1984 in India let many people lose their lives and cause tremendous environmental pollution that will be harmful to up to ten thousands Indian people's health. Nike and some other famous brand use Sweat Shop in developing countries to get rich interest. What's more serious,some multinational companies involved in war just because they want to get benefits.In U.S-Iraq war,Halliburton and Bechtel took part in the carving up of the trophy. These examples are evidence that multinational companies's violation of human right.In global business environment, more and more multinational companies are founded. Human right issues in their business activities couldn't be ignored.

After the end of 90s of 20th century, international organization began to pay more attention to the human right responsibility of multinational companies.WTO and IMF oppose the action that violate human right in many conferences.Some non-government organization such as amnastary International and Human Right Watch(HRW) also began to focus on multinational companies' human right issue. Greenpeace did a lot of compaign to promote corporate human right responsibility.Global Compact which was lauched in 2000 require multinational companies regard human right to surmount the negative effects brought by globalization. Customers also get together to boycott the famous brand product which are producted in sweat shop in the third world. Pressure came from customers make multinational companies have to take practical action to ameliorate workers' human right condition to guarantee their basic right. They gradually admit that only focus on profit maximization is meaningless.

Many people may thought that human right is a political concept. However, in the background of corporate social responsibility, business broaden the range of human right. In corporate social responsibility, human right is not only exist between citizen and sovereign state, but also exist between natural man and business entity. It concerns about whether business entity respect the basic right and dignity of natural man. From this side,human right in corporate social responsibility contains a lot of content. When the stakeholder is employee, human right will cover discrimination problem in selection, Is that duress in working, overload in working and whether employees have freedom of forming association. When the stakeholder is the local people in community, human right in corporate social responsibility concerns about whether local people's land have been encroached for building factory. Because of the wide range of human right in corporate social responsibility company have to make all- round rules and practical supervision methods when manage this issue.

To guarantee human right in corporate social responsibility, here are something companies can do:

Companies should obey the rules in United Nation Global Compact. They have to make sure that no discrimination to female and handicap in selection,no child labor and duress in working. Companies should respect people's religion and sex preference. Absolutely put an end to action that violate human right happen.

Companies should carry out human right education to all the stakeholders.It will popularize human right notion.

Keep stable employment, no sudden redundancy.

3.2 Employee benefits

After mid-term of 50s of 20th century, discussion about corporate social responsibility is always a hot topic among western economics and management researchers.The core of their debate is two questions: 1.Why corporation need to bear social responsibility? 2.How much social responsibility corporation need to bear? In more than half century, different answers to these two questions formed two kind of viewpoint--classical view and socioeconomic view. Classical view consider corporations' biggest contribution to the society is making as much profit as they can for their shareholders. At the same time,they needn't concentrate on other stakeholders.Typical academian who hold this view is Friedman. He hold that managers have to be responsible for shareholders who want to make more interest. Therefore,the only mission managers have is to achieve this target. Too much attention paid to social responsibility will cause the company lose their orientation.Socioeconomic view think that all companies couldn't develop without the engagement and devotion of stakeholders.They should persue all the stakeholders' benefits. Companies should responsible for their stakeholders in economical,legal,ethical and charity aspects.

Although socioeconomic view gained advantage in the debate between academicians but in the real economy especially in some developing countries classic view affect manager's adminiatration value in larger extent.Affected by classic view, manager's only target is profit maximization.They refuse all the action that will cause the increase of cost. At this situation, employees' benefit are hard to be guaranteed.

Just as Douglas McGregor said there are always an assumption about human nature and human behavior after every managerial decision. Adam Smith pointed out that all the people are struggling for the best use of the capital they can control.He sees all economic pheonomenon as the action of "economic man".Taylor's scientific management theory is in accordance with this notion about human natue.Taylor's scientific management theory is the beginning of research management scientifically.His theory became the starting line of managerial studies."Economic Man" hypothesis still have a lot of impact on contemporary corporation.Many managers stand in the direction of "Eonomic Man" hypothesis think that employees work for satisfying their individual economic desire.Majority people are lazy and avoid work as they can. People work for their basic natural need and safe need. Holding this view,their management emphasized on making a lot of scientific operating rules to strengthen the control of employees to ensure they could achieve the production target. At the same time, they paid inadequate attention to employees' psychological and emotional need and ethical responsibility."Eonomic Man" hypothesis is contradict with company's social responsibility of ensuring employee benefits."Eonomic Man" hypothesis doesn't take the impact of working environment to employees (such as load, nerve tension,noise, temperature, working time and monotony)into account.

As we know there are many labor standard have been made to protect empployees' benefits legally and officially.However, under globalization labor standard sometimes is distorted by actions of government and some other organizations. Because of the need for economic development, government usually welcome foreign investment. At the same time,foreign investment is based on investor's need for cheaper resource and labor force. Some governments lose fair standpoint when they want to attract investment.

Overall,employees' benefits are very hard to be guqranteed because of manager's out-of-date notion and inadequate implementation of labor standard.To ameliorate these situation,managers could start with these aspects below:

Shift "Economic man" hypothesis to "Social man"

Managers in global business environment should respect all employees especially when they are managing employees overseas.

Employees are not "economic man"or "robot". Their biggest motivation is social needs.A manager could get best result of motivation after satisfying employees' social needs and establishing good relationship with them. Myao got a conclusion that workers are complicate social system member after his 10 years' studies in Hawthorne factory.From Hawthorne studies,he advanced "Social Man" hypothesis. "Social Man" hypothesis thought that monetory benefit are not most meaningful for motivating people. Human's biggest motivation is social needs.This managerial notion solved theoretical problem in establishing "employee oriented" principle. It lead managers to respect their employees.

2.Unify efficiency principle and humanization principle

Efficiency principle pays attention to use smallest investment to acquire biggest production.High efficiency in production benefits corporation to realize profit maximization.That's why corporation always adopt all possible ways to increase efficiency. Humanization principle emphasized on "human centered". Its target is let the human nature to be developed perfectly.It emphasized that managers should respect people,care people, rely on people, develop people and cultivate people's potential and creativity in the working process.It seeems that efficiency principle and humanization principle always contradict but it is possible to unify these two principles.

First,managers should create atomosphere of equity in the corporation. Managers need to know how to use corporate values and philosophy to realize "soft control" of employees. Equal, free and relax atmosphere allowed employees to deal with problems occured in their working independently. Given employees opportunities to share their opinion of management could bring them sense of belonging.