Escolar Documentos
Profissional Documentos
Cultura Documentos
International University in
Geneva
Master of Business
Administration
By Arzoo F. Syeddah
Supervisor: Professor K. Raphael
January/ 2011
2 | Page
Abstract:
Corporate Social Responsibility (CSR) is based on the notion that
businesses are interlinked with interests- social, economic, cultural,
environmental and social systems because business activities affect and
are affected by such interests in society. This paper will seek to evaluate
and explain this relationship in the context of Emerging Market Economies
an under researched and undervalued subject within the discipline of
CSR. The piece will examine the phenomenon of CSR in three emerging
markets representing the regions of Asia, Africa and Latin America. During
the course of the analysis the author will focus on three main dimensions of
CSR. First if indeed CSR is taking place within the emerging markets;
secondly what are the various context specific socio-cultural indicators
manipulating the perception, adoption, management and implementation
of CSR and lastly if this had led to the emergence of an indigenous version
of CSR found in emerging markets reflecting their respective local realities
and priorities.
The case studiesNigeria, Mexico and Malaysia share a common thread
of having CSR that is more local in its flavor rather than global.
Nonetheless the author will argue that even with the local construction of
CSR in these countries, there are global dimensions that cannot be ignored,
due to the increasing international part being played by these emerging
actors. Hence this hybridization of CSR (local +global) is a new
development within CSR itself. Consequently the analysis will illustrate that
CSR in emerging economies is indeed occurring; socio-cultural dimensions
play a strategic part; and that local CSR patterns have led to the creation of
home grown forms of CSR.
3 | Page
Statement of Authenticity
Date: 15/1/2011
4 | Page
5 | Page
Acknowledgment
I would like to thank Almighty Allah for giving me the fortitude and
opportunity to pursue this degree and complete this thesis.
I would like to thank my parents for their undying support and
encouragement in my academic endeavors. Thank you for believing in me.
Last of all I would like to show
supervisor Prof Raphael for
throughout this thesis. I greatly
this all possible. It would not
contribution.
6 | Page
Table of Contents
INTRODUCTION AND RESEARCH HYPOTHESIS
LITERATURE REVIEW 14
CSR IN LATIN
AMERICA
.30
MEXICO
.32
CSR IN
AFRICA
..37
NIGERIA
40
CSR IN
ASIA
43
MALAYSIA
45
24
RESEARCH
METHODOLOGY
.48
RESULTS: EMERGING MARKETS VS. MATURE MARKETS: A
COMPARATIVE STUDY....51
RESULTS: CASE
STUDIES
....66
ANALYSIS
.72
7 | Page
CONCLUSION AND
RECOMMENDATIONS
.76
List of Tables:
economies.
Table 2: Percentage of Companies with environment policies and EMS
List of Figures:
Figure
Figure
Figure
Figure
Figure
8 | Page
environmental policies/EMS
Figure 9: High Impact Companies with substantial policies/EMS in place
Figure 10: Percentage of women on company boards
Figure 11: Percentage of Companies reporting on OHS
Figure 12: Percentage of High risk Companies reporting on OHS
9 | Page
INTRODUCTION
With the advent of globalization and its subsequent rapid expansion, the
leading emerging market economies are an increasingly dominant force in
global economic affairs. In simpler terms the rise of the rest has
restructured
the
worlds
(www.money.cnn.com/2010/07/07).
Emerging
economic
market
landscape
economies
(EMEs)
represent the worlds largest potential markets, the source of both much of
the worlds natural and human resources and of major sustainability
challenges, and increasingly the home of leading global brands and
innovation. Therefore, the focus of the authors thesis is emerging markets
and their relevance and importance towards Corporate Social Responsibility
(CSR). In this thesis the writer would like to look at the role of indigenous
firms in emerging markets; and see how and if they perform differently from
their mature market counterparts. According to Fortune Magazine, amongst
the 500 top global companies in 2009, seventy five are from emerging
economies, compared to 47 in 2007 (www.forbes.com)
The reason for choosing emerging economies as the subject of this thesis lies
in a variety of factors. Political analyst and author Fareed Zakaria (2008, pg
18) in his book the Post American World sums it up best:
10 | P a g e
11 | P a g e
12 | P a g e
a global outlook and local out-reach perceive and implement CSR in the
same volatile circumstances. Is it any different or more difficult for
indigenous firms in comparison to their foreign equivalents? Does the
concept of CSR take on a special profile when observed by indigenous firms?
Additionally, it compares the structured CSR rules and norms of the Western
world with the more fluid and localized expressions of CSR found in EMEs.
The focus will be on Africa, Latin America and Asia, regions that contain the
majority of the worlds emerging market economies. Due to their different
cultures, traditions and indigenous interpretation of CSR these regions
provide a fascinating comparison to a more structured CSR developed in the
Western world.
As CSR in emerging markets has expanded both in scale and scope, the
research has become sophisticated such as to what extent (if any) CSR is
occurring in EMEs and does a combination of forces produce a certain kind of
CSR; do MNCs operating in EMEs affect how CSR is understood and adopted
by them; and finally why CSR is viewed as a local concept by local firms.
These issues are the main research hypotheses underlying the thesis.
Chapter II will concern with the literature review which in turn is divided into
three main parts. The first one provides a thematic analysis on the important
and groundbreaking publications, research and key concepts of CSR. The
areas touched upon include the philosophical background of CSR as a
concept; the numerous contested definitions that have evolved due to
competing influences (economic and ethical approaches) on understanding
CSR; the main traits reflected in both Western and local MNCs -such as
strategic CSR and the role of national and industry factors; development and
relevance of previous comparative studies to this paper; and, finally, the
relatively nascent research on CSR in EMEs. The second part of the literature
13 | P a g e
14 | P a g e
RESEARCH HYPOTHESES:
The three related research hypotheses are concerned with the comparison of
CSR in the West (so-called the Western model of CSR) to CSR in EMEs with a
specific focus on three countries. The analysis will endeavor to answer:
15 | P a g e
ethnic influences?
Lastly, why CSR in EMEs is seen as a local concept rather than one
homogenous model applicable globally. Experts argue and studies
show that CSR applied in each country produces different reactions
determined by the local norms, culture and national distinctiveness.
This gives rise to specific CSR priorities and issues related to each
area. In short CSR may change in different circumstances with different
consequences dependent on the country. Do these set of distinctive
circumstance produce a local brand of CSR or is it just an imitation of
Western influences. In other words how do indigenous firms perceive
and practice CSR and do any Nigerian, Malaysian or Mexican forms of
CSR exist?
LITERATURE REVIEW
Amongst the many dramatic changes that have taken place in the business
world since the 1990s, the rise of the CSR agenda is certainly one of the
most noteworthy. As a recent special report in The Economist notes, 'doing
well by doing good has become a popular business mantrathe idea that
16 | P a g e
17 | P a g e
This paper uses corporate social responsibility (CSR) and adopts the
acronym CSR because it is the more widely accepted term in academic and
business literature. Other terms that are in use are corporate citizenship and
social responsibility.
CSR is a term that defies precise definition- as it can be perceived both in a
broad and narrow sense. There are numerous definitions on the concept
encompassing economic, social, environmental, stakeholder and ethical
dimensions. Some academics (Dahlsrud; Visser 2007) have gone as far to
say We have looked for a definition and basically there isnt one. The author
believes that it is not so much the confusion with explaining the term but as
to how CSR is socially constructed in a specific context. Overall the different
definitions imply the same message; CSR may change in different
circumstances with different consequences.
Nearly all CSR experts can agree that CSR is about the business contribution
to sustainable developmenthow business can take into account the
economic, social and environmental impact their operations will have on
society. Below are some of the prominent and widely used definitions of CSR
involving both think tanks/organizations and CSR academia.
McWilliams.et al (2006) define CSR as situations where the firm goes beyond
compliance and engages in actions that appear to further some social good,
beyond the interests of the firm and that which is required by law. The
Centre for Business and Government of the Kennedy School of Government
at Harvard University (2008) defines it as:
Corporate social responsibility encompasses not only what companies
do with their profits, but also how they make them. It goes beyond
philanthropy and compliance and addresses how companies manage their
economic, social, and environmental impacts, as well as their relationships in
18 | P a g e
all key spheres of influence: the workplace, the marketplace, the supply
chain, the community, and the public policy realm.
The World Business Council for Sustainable Development chooses to define
CSR (2008) as 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 community and society
at large
Finally, the EU Green paper (2002) on CSR defined it 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.
Hence, CSR exhorts firms to diverge from their sole aim of maximizing profits
and to lay more importance on improving the economics and social
standards of the community in their countries of operation. Moreover CSR
has been explained as the additional commitment by businesses to improve
the social and economic status of numerous stakeholders involved while
having to comply with all legal and economic requirements.
Visser (2008b) emphasizes that presuming CSR is the same the world over is
one of many popular misconceptions about CSR. CSR should be seen as a
local, not a universal, conceptwith no particular size that fits all. The
historical and national context of communities, especially their corporate and
societal governance frameworks and business-society relations, impact on
how CSR is practiced in these areas.
Theoretical Approach to CSR:
A theoretical introduction on the concept of CSR will be provided to show the
philosophical influences on the theory, such as ethical, social and economic
19 | P a g e
approaches. Also how these different factors, have contributed to CSR being
regarded as a concept with a myriad of definitions.
CSR may remain an embryonic and contestable subject even today but over
the years the discipline has formulated a theoretical foundation to provide a
philosophical perspective on the concept. According to Windsor (2006) the
developmental history of relevant literature indicates a market place of
three competing approaches- ethical responsibility, economic responsibility
and corporate citizenship. Furthermore, the three theories reflect the difficult
balances confronted by CSR, between private conduct and public policy, and
between economics and ethics (Windsor, pg 94). Ethical responsibility
advocates strong corporate self restraint and altruistic duties and expansive
public policy focuses on stakeholder rights. Meanwhile, economic
responsibility deals with market wealth creation subject to only minimalist
public policy and, to a certain extent, usual business ethics. Finally, corporate
citizenship offers two conflicting interpretations. The first one, instrumental
citizenship, expands philanthropy as a strategic tool for increasing corporate
reputation and market opportunities (pg. 93). The other one, called ideal
citizenship, encompasses ethical responsibility to allow the influence of
managerial discretion upon human rights. Corporate citizenship is typically
related to MNCs operating across multiple legal jurisdictions and a
management focus on strategically building political influence and company
reputation (pg.97). Windsor in his study explains how there exists a constant
tension between economics and ethical perspectives --competing moral and
political forces when defining CSR. While the two approaches are polar
opposite of the conceptual framework, corporate citizenship (containing both
economic and ethical elements) falls in between the two, acting as a middle
ground between the two diverging theories. Windsor believes that these
conflicting conceptual dimensions of each theory are what make CSR an
intricate concept.
20 | P a g e
The majority of CSR literature has tended to focus on Western markets and
their understanding and perception of CSR from Western MNCs (operating
domestically and globally) point of view. The material on CSR is vast and the
author will focus on important pieces that shed light on CSR in relation to
MNCs not only from the West but also originating and operating in EMEs.
Strategic and Altruistic CSR
The following section looks at two styles of CSR: strategic and altruistic that
seems to be a prevalent feature in Western and EME MNCs, respectively.
Instrumental Citizenship
Windsor in his work (2006) has mentioned instrumental citizenship2 where
activities of companies were driven by strategic goals. This type of strategic
CSR is a common feature among Western MNCs operating both in the home
country and in host countries. One piece that extensively elaborates and
explains the importance of strategic CSR for MNCs and its positioning within
the overall concept of CSR is by Lantos (2001). His study provides a glimpse
into the nature and limitations of strategy driven CSR. Similar to Windsor he
also presents three types of CSR: ethical, altruistic
(humanitarian/philanthropy) and strategic. The economic aspect of CSR is
combined with the strategic option. According to Lantos (pg.605) strategic
CSR is the fulfillment of a firms social welfare responsibilities and creates a
win-win situation in which both the corporation and the stakeholder groups
benefit. In other words, this type of CSR is instrumented in a way to provide
mutual benefit to both the company and the stakeholders. Lantos suggests
that most Western MNCSs tend to practice this type of strategic
philanthropy. This type of company strategy is done to accomplish strategic
2 Instrumental Citizenship is mostly retaining the managerial discretion explicitly
criticized in economic CSR.
21 | P a g e
business goals and good deeds are believed to be good for business as well
as society (Caroll, 2001, p. 200). Hence, companies give back to society only
because they believe it to be in their best financial interests to do so. In
simpler words this is philanthropy aligned with profits (Lantos, pg. 618).
Lantos further points out that (in agreement with Friedman) altruistic CSR
going beyond ethics to somehow making the world a better place by helping
to solve social problems, lies outside of the firms proper scope of activities.
Due to this reason Lantos concludes that this type of CSR is rare to find and
is considered not a legitimate role of business (Lantos, pg.623).
Earlier work by Baron (1995) stresses the same point as Lantos. Focusing on
the importance of a market strategy he adds that in order for an MNC to
succeed its market approach cannot ignore the non-market conditions such
as market environment if value is to be created by economic performance. In
his view strategic CSR is a part of non-market component consisting of
social, political and legal arrangements that structure the firms interactions
outside of, and in conjunction with markets (pg. 48)3. Non -market assets are
utilized by companies to add value and can take a number of forms such as
having expertise and competency in dealing with government, interest
groups and the public. Hence, in this case CSR of a strategic nature can be
adopted by companies to add value to their reputation. As reputations can
be easily destroyed or established by actions, corporations invest
strategically in their reputation for service and quality (pg.62). Finally,
Baron highlights that for MNCs who operate in various countries the nonmarket component is very crucial, especially when the opportunities of a firm
are challenged by public pressure such as in developing markets.
3 Market components include those interactions between the firm and other parties
that are intermediated by markets or private agreements. These interactions are
typically voluntary and involve economic transactions and exchange of property.
22 | P a g e
Furthermore, if firms adopt a strategic vision for CSR, a vision that recognizes
the interdependence between business and society, then it becomes clear
that CSR can both help companies make money and promote societal
welfare and sustainable development. Strategic CSR realizes the dynamic
interdependence and the importance of forming a community of interests
amongst the firm and its various stakeholders in society. Conceived in this
way, Porter and Kramer (2006) suggest CSR can be much more than a cost,
a constraint, or a charitable deedit can be a source of opportunity,
innovation, and competitive advantage.
Wayne Visser, of CSR International (a think-tank organization),has called for
a renaissance in CSR for a new model, which has been dubbed Radical
CSR or CSR 2.0, where CSR stands for Corporate Sustainability and
Responsibility and is based on five fundamental principles: Creativity,
Scalability, Responsiveness, Glocality4 (thinking globally and acting locally)
and Circularity (closed-loop thinking and business processes). In other words
have an innovative understanding and application of CSR where the
responsibility has a more long-term sustainable approach for the concerned
stakeholders.
beginning to see) is a more intelligent, evolved form of CSR that uses the
power of collaborative networks to scale up solutions to our global
challenges (Visser 2008a)
National and Industry Factors
4 The term glocalisation comes from the Japanese word dochakuka, which simply means
global localization.
5 The basic message of CSR 2.0 is that corporate social responsibility needs to
adapt or die. The problems society faces are far too serious and urgent to be left to
the incremental improvement sideshow that has been CSR for the past 50 years.
23 | P a g e
24 | P a g e
25 | P a g e
leading firms to CSR through their written policies (Welford, pg. 45). In Asia
debates over CSR tend to follow developments in the West. While both
regions share the basic context of environmental management, CSR and
sustainable development, priorities varied according to countries norms,
values and economic development (pg 41). Welford agreed with
Chambers.et al (2003) that although Asia lags behind best practices in
comparison to countries like the UK and the Scandinavian region there was
definitely a new Asian interest in CSR reflected in leading companies in the
area.
Subsequently, Baskin (2006) enhanced these prior works and expanded his
study to include all EMEs globally comparing their CSR practices against
OECD countries. His study showed that CSR in some emerging markets such
as Brazil, India and South Africa is more developed than commonly thought,
often exceeding standards in some OECD countries, indicating that EMEs are
making great progress in the undertaking of CSR practices. The study has
provided a solid foundation for the new academic direction of CSR in
emerging markets within the discipline of CSR studies itself.
The research by Baskin was undertaken to test the assumption that interest
in, take up and reporting of corporate responsibility in EME companies was
likely to be significantly lower than among companies from the OECD region
(Baskin, 2005, pg .31). Baskin in his study looked at two set of indicators;
first were the globally recognized generic indicators (broadly known as tools
of CSR climate) such as GRI, DJSI and ISO 14001 certification to determine
what was the status of CSR uptake in OECD and EMEs (Baskin 2006, pg 33).
The second group consisted of various criterions to measure a companys
performance such as business ethics, corporate social investment (CSI) and
environment. Therefore, what was the reasoning and importance behind
Baskin specifically choosing these process indicators?
26 | P a g e
27 | P a g e
the community and the amount of resources (time and money) it is willing to
inject (CSR Europe Report, 2007 pg 51).
The major social performance indicators include the welfare of the key
stakeholders in the business, especially employees (Sowden, 2005). Thus,
occupational safety and health (OHS) forms an integral part of CSR and this
is confirmed by its inclusion in all the major measurement and reporting
guidelines and tools developed for CSR by MNCs. The aim is for MNCs to
continuously improve all aspects of the working environment that result in a
workforce that is happy, healthy and here (Sowden, 2005 pg 22). Women in
managerial positions is another crucial social indicator to show gender
diversity within the company and how open is the workplace climate in terms
of skilled employees regardless of gender or race. These two performance
indicators seek to combine employee performance with business
performance, enhancing the companys progress and reputation (Sowden,
2005 pg 33).
Finally, business ethics includes bribery and corruption and ethical conduct.
This performance indicator is most sensitive in nature as it deals with
accountability, transparency and reporting of a company. In other words
ethics requires businesses to be good responsible citizens who are
transparent and open in their dealing with society and accountable for any of
their activities. Ethical issues are far-ranging and inclusive of programs,
policies and procedures that impact every aspect of the company, from
hiring practices to media relationships, government affairs and visible
community involvement and financial support (CSR Europe Report, 2007 pg
53)
28 | P a g e
COPORATE
SOCIAL
RESPONSIBILITY
IN
EMERGING
MARKET
ECONOMIES
Before discussing the area of CSR within emerging market economies it is
imperative that the nexus of this thesis i.e. emerging economies be defined
and explained. Coined in 1981 by Antoine W. Van Agtmael of the
International Finance Corporation of the World Bank it has come to describe a
fairly narrow list of middle-to-higher income economies--21 to be exact
according to Dow Jones of 2008- among developing countries, with stock
markets in which foreigners could buy securities (Financial Times, 2008). In
other words, is defined as an economy with low to middle per capita income.
The terms meaning has since been expanded to include more or less all
developing countries at present (Investopedia 2005). But even within
emerging markets there are levels of emergence based on the progress of
their rapid growth and industrializationthe two categories that countries
are divided in are advanced emerging economies and secondary emerging
economies. Other terms such as BRIC and BEM have materialized on to the
scene to describe the largest developing countries with-in the group such as
Brazil, India, China, Mexico, Russia and South Africa, Turkey, Egypt, Indonesia
and Pakistan.6 Figure 1 depicts the map with the emerging economies
highlighted in green to provide a clear picture of the countries considered
part of the group.
6 Created by the FTSE group the ranking of the 21 emerging economies is based on
their national income and the development of their market infrastructure. The
Advanced Emerging markets are classified as such because they are Upper Middle
Income GNI countries with advanced market infrastructures or High Income GNI
countries with lesser developed market infrastructures.
29 | P a g e
Although the term emerging market is loosely defined, countries that fall
into this category, varying from very large to very small, are usually
considered emerging because of their overall development and reform
process. Hence, even though India is deemed one of the world's economic
powerhouses, it is lumped into the category alongside much smaller
economies with a great deal fewer resources, for example Tunisia, Pakistan
and Chile. All of these countries belong to this grouping because they have
embarked on economic expansion and reform programs, and have begun to
open up their markets and "emerge" onto the global scene. EMEs are
considered to be the fastest-growing economies rapidly changing and
restructuring the global economic landscape (Investopedia 2005).
Among the many salient features of EMEs the most prominent are featured
below:
30 | P a g e
Secondly, an EME will also reform its exchange rate system because a
stable local currency builds confidence in an economy, especially when
foreigners are considering investing. Exchange rate reforms also
reduce the desire for local investors to send their capital abroad
(capital flight). Besides implementing reforms, an EME is also most
likely to receive aid and guidance from large donor countries and/or
world organizations such as the World Bank and IMF.
31 | P a g e
32 | P a g e
For a long time the concept of CSR has been questioned in terms of its
validity and usefulness for profit-making companies. Milton Friedman (1996),
for example, famously asserted that the social responsibility of business is
to increase its profits. Although one can occasionally hear the business of
business is business type of argument from supporters of CSR driven by
economic factors, the question for today is no longer whether companies
should practice CSR, but what, specifically, and how. Ultimately, the concept
of CSR itself may disappear, as a corporate social agenda will be an integral
part of business strategy in the 21st century (Zhang, 2008).
EMEs presents both opportunities and risks for the growing discipline of CSR.
With the rise of such non-Western economies and skepticism about the
western paradigm there is an agreement among academics, public and
private organization that a new paradigm should evolve (Visser & Tolhurst
33 | P a g e
34 | P a g e
for all companies. Yet, the validity, feasibility, and usefulness of the attempts
to create certain universal standards must be critically examined against
local contexts. There is the all important question of whether such standards
can ever usefully be applied. But even if they can, the question of
implementation still remains (Zhang, 2008, pg. 5).
35 | P a g e
36 | P a g e
37 | P a g e
Mexico was chosen due to its reputation as one of the big players in the
region, which is spearheading many CSR practices domestically. After Brazil
-dubbed the CSR powerhouse- Mexico is the second most promising
emerging market in the region due to development of its indigenous CSR
culture (Schmidheiny, 2006, pg. 22). The case study will elaborate on the
fact that approaches to CSR displayed by large indigenous firms are based
on the content of Mexicos rich history and culturethe socio-cultural
dimension of CSR.
The analysis of a local firm will contend that three myths about Mexican CSR
influence the perceptions of outsiders to Mexicos economy and society. The
first myth is that CSR in Mexico is new; the second one implies it is an
imported concept brought by US firms to Mexico; and thirdly CSR as
practiced by Mexican local firms is simply a reflection of CSR patterns and
activities of US firms. Research indicates that is not the case on all three
accounts: CSR in Mexico is not a new phenomenon, the concept is not
imported but has home grown roots, and finally Mexican CSR is not identical
to CSR patterns in the US because the Mexican context is completely
different.
Evidence by Logsdon, Thomas and Van Buren (2006) suggests that the
drivers of CSR in Mexico are best understood by considering the role of the
countrys political and social history in shaping the complex relationships
among the private sector, civil society and the government actors. A key
theme is that as the Mexican culture expects business to work towards the
achievement of public purposes and with institutional voids in place on
government level, CSR in Mexico tends to focus on interacting with workers
and direct community requirements and facilitating economic development.
As a result, CSR expectations faced by firms are formed through direct
interaction with particular stakeholders (such as the least favored segments)
rather than mediated by the state or civil society (Weyzig 2006).
38 | P a g e
39 | P a g e
have looked towards business leaders to tackle social problems through their
firms CSR initiatives (Logsdon, Thomas & Van Buren 2006, pg.54).
The Mexican constitution in 1917 formalized a paternalistic set of policies for
companies with subsequent legislation requiring firms to provide benefits to
employees such as on-site meals and health clinics. Under the dominance of
the Institutional Revolutionary Party (PRI) Mexico implemented a strong
import-substitution policy.11 In short the state played a leading role in setting
industrial policy until the 1980s when a major shift to expand the role of the
private sector surfaced. Since the 1980s Mexico has pursued an aggressive
economic policy to integrate into the global economy, both by opening its
borders and foreign direct investment and by stimulating growth of the local
private sector especially through privatization. Exports from Mexico
increased from US $26.8 billion in 1990 to US $170.5 billion by the end of
2006 (Logsdon, Thomas and Van Buren 2006).12 Additionally the number of
state owned enterprises decreased from 1,155 in 1982 to 160 by the end of
2000 as found in the study by Logsdon, Thomas & Van Buren (2006, pg 53).
The Mexican corporate sector has long been dominated by family owned,
highly diversified conglomerates known as grupos. One of the ironies of
Mexican politics has been that the state has been concurrently strong and
weak. Its political history is dotted with corruption leading to a weakened
and illegitimate state- particularly with regard to central regulation of
business.13 Due to these institutional gaps Logsdon, Thomas & Van Buren
(2006, pg. 54) suggest that business leaders and their firms have assumed
11 This was done in order to reduce dependence on foreign imports of technology
and other goods and services and to create an indigenous industrialized state. Even
after the 1980s the national government still plays an important role in sensitive
economic sectors such as oil production.
12 Much of this is related to the signing of NAFTA as almost 90% of the exports go
to United States.
40 | P a g e
13For more information of corporate governance in Mexico please refer to Husted, B. &
Serrano, C. Corporate Governance in Mexico, Journal of Business Ethics, 2002. 37: 337348.
41 | P a g e
receive the ESR seal for five consecutive years.14 Grupo Bimbo describes its
approach to CSR as enlightening as it has pioneered the practice of social
commitment. The companys mission rests on the belief that its existence
is related to advancing society in exchange for the right to earn profits. This
responsibility includes treating everyone with justice, affection, respect and
trust (www.grupo-bimbo.com.mx.2010). It is interesting to note that Grupo
Bimbo is quite explicit about the social contract that it believes it has with
society.
The conglomerate supports long-term education programs by contributing to
three educational institutions. Furthermore the group has been involved in
the environment (a relatively new addition to CSR activities in the region).
For instance it started to contribute to reforestation efforts in the 1980s and
helped create a non-governmental organization focused on the issue in 2002.
The socially responsible aspect of Grupo Bimbo extends also to its business
operations. It established an alliance with the Multilateral Investment Fund
(MIF) to create a micro-finance organization called Fin-Comun. This
partnership provides micro-loans to the many local shops from which 80% of
Bimbos income is derived (Peinado-Vara and Vives, pg.44).
All of these activities within and outside the business have a single source
linked to the top management and the companys corporate culture. The
founder of Grupo Bimbo, Lorenzo Servitje, is a well known philanthropist
known for his social commitment. He created the company on the belief that
the company had a personal responsibility to provide social welfare as well
as earn profits. His personal doctrine has its roots in the Catholic social
14 The ESR (socially responsible enterprise) seal is a good indicator of CSR presence
in Mexican firms. The Mexican Centre for Philanthropy and Alliance for Corporate
Social Responsibility award this seal to local firms that are exemplary in their CSR
activities. Annually awarded the seal evaluates four areas of CSR activity: quality of
work environment, ethics and governance, links with the community and care and
preservation of the natural environment.
42 | P a g e
values and this has continued to influence the companys practices. In 1995
Lorenzo Servitje was the recipient of the Eugenio Garza Sada Award for social
commitment indicating business personalities who believe giving back to
society is essential. The Grupos four core commitments provide great insight
into the companys socially responsible stance:
43 | P a g e
Mexico exemplifies why CSR is important in the developing world not only
from a business point of view, as well as a social point of view.
CSR IN AFRICA
In the vast majority of Africas 53 countries, CSR is still in its infancy. At
worst, it is regarded with suspicion as a plan of the North imposed on
countries of the South. At best, it is embedded within the African context and
used (by local CSR practitioners and businesses) to address the continents
economic, social and sustainable developmental challenges (Klins and Smit,
2010 pg. 3). Some African academics like Ameashi and Van Niekerk argue it
is the latter case as Africas collective approach to problem-solving and the
impact of the extended-family system, reinforced by the strong village
community mindset and belief, all in fact point to an inherently socially
responsible race of people. Foluso Phillips (2006) of Phillips Consulting Group
in Nigeria states being socially responsible has been a way of life for Africa
long before the Western world exported a much more formalized and
corporate approach to CSR issues.
The past ten years have seen immense changes sweep through the
continent of Africa from governance and democracy paving the way in some
countries to genocide occurring in others. Globalization has not also
overlooked Africa with the fate of many businesses, including some of the
worlds largest multinationals and local firms, now inextricably linked with
the fate of Africa.15 Hence, CSR is enmeshed in the debate about Africas
future. Arguably, Africa is the continent where the social needs are the
15 Africa is also the continent that can claim to have benefited least from globalization thus
far. Indeed, many critics of globalization claim that Africa has been actively excluded,
historically exploited and unfairly discriminated against. Hence there is the possibility of
Africa becoming a rallying point in the campaign of those who oppose the spread of neoliberalism in developing countries.
44 | P a g e
45 | P a g e
Africa, they are [in-yourface] issues that are a daily reality, an unavoidable
part of doing business on this continent.16
CSR discourse in Africa focuses on ethics, anti-corruption measures and
counteracting weak public delivery in key priority sectors such as health and
education. This is usually combined with Africas rich and diverse cultural
context- another imperative factor in defining CSR. The collective-(measured at
purchasing-power parity)
NIGERIA
46 | P a g e
17
Nigeria
47 | P a g e
one can ask how indigenous Nigerian firms perceive and apply CSR. In other
words, is there a local Nigerian brand of CSR or it is an imitation of Western
style of CSR? Due to globalization Nigerian firms are not impervious to multiexternal influences; nonetheless this case study focuses on the
manifestations of such influences through a local lens. The term indigenous
for Nigeria implies insider knowledge that is local approaches to
management that reflect knowledge of the local context and local
communities. It is the understanding of the local by local people who know
what will work and what will not work (Amaeshi, et al. pg 84).
Additionally Nigeria is a classic case of hybridization of firms practicing CSR
in the global economy. This idea of CSR with global and indigenous
dimensions (an emerging markets phenomenon) indicates a new shift for
the discipline for CSR and its future. Nigerian local firms are products of their
socio-economic environment (which in turn shapes their CSR activities).
Nigerian firms are a combination of colonial imperialism and modernization;
and therefore have always been susceptible to crossbreeding of different
ways of doing business (Ahunwan, 2002, pg. 273). Nowadays, it is the
adoption of certain Western CSR practices into companies to enhance
productivity and be responsible citizens.
Dependence on oil revenues (95% of the export revenues of the mono
economy) has remained more of a curse then a blessing for Nigeria. The
politics of oil opened a Pandoras Box of political corruption, ethnic tensions,
social failure, and government incompetence (Ite 2004). 18 All of these
created severe impediments for business- local and foreign- to operate in
Nigeria. These factors have deterred many foreign entrepreneurs from
investing in Nigeria and induced many Nigerians to take their money and
18 A good subject for CSR literature is the plight of the Ogoni people in the Niger delta
region. The case is rampant with tribal politicking and ethnic tensions due to the corrupt
behavior of Nigerian government and MNCs operating in the region.
48 | P a g e
skills abroad (Amaeshi, et al. pg 88). The history of organized CSR in Nigeria
has been due to the activities of Western MNCs driven by personal
motivations (the popularity of the contemporary usage of the term CSR in
Nigeria can be linked to the renewed surge of economic activities after the
1999 return of political democracy in the country. The same cannot be said of
hybrid indigenous firms as not many of them have global operations, are
mostly small medium enterprises (SMEs), privately held and family owned
and operated (Amaeshi, et al. pg 89).
Additionally, it is in SMEs that some traditional/indigenous values can be
glimpsed in the midst of colonial influences. Ethnicity, language and religion
are the three major circumstances shaping Nigerian practices. A common
thread that binds them is the collective philosophy of life and concern for the
less privileged. This tendency is rooted in the concept of extended kinship
which is common to all groups (Amaeshi, et al. pg 89). The family structure
is very important in Nigerian society and it is widely believed that individual
responsibility extends beyond the boundaries of immediate kin. This practice
has sometimes been referred to as Nigerias form of social security. For
instance, a family head in establishing a firm not only represents the
company but also his family. In fact, his business judgment balances the
demands of business along with the individual obligation he has towards his
family, which sometimes encompasses the whole community. According to
Limbs and Fort (2006, pg 173), the family owned nature of most private
business and cultural notions of extended kinship suggest a propensity
toward communitarian identity.
Amaeshi.et al (2006) in their study decided to focus on the role of indigenous
firms in relation to CSR in Nigeria. The aim was to see how local firms
perceive and practice CSR and examine local approaches to management
that reflect knowledge of the local context and local communities (pg.85).
The results of this particular case study which focuses on the financial sector
49 | P a g e
CSR IN ASIA
Asia faces many critical issues in the context of globalization, varying from
regional conflicts and terrorism, corruption, growing gaps between the rich
and the poor and access to infrastructure and basic health services to name
a few. Many of the academics (Birch 2003; Iu and Batten 2001) dealing with
CSR in Asia contend that just like in Latin America and Africa, companies can
play key roles as corporate citizens in contributing their share towards these
problems. Some argue like Robert Davies (2002) of The Prince of Wales
International Business Leaders Forum that the smart [local] companies are
those that will take a proactive approach and see CSR as feature of
mainstream business practice, employee management and a competitive
advantage.
Asian countries are slowly recognizing that CSR is becoming of a greater
meaning due to increased levels of globalized trade and greater integration
of economies. Like its emerging markets regional counterparts Latin America
and Africa, CSR is still very much in the initial stages (Birch & Moon 2004). A
common thread that binds the emerging economies of Asia is that effective
50 | P a g e
CSR in Asia requires companies to behave responsibly at both the global and
local level (as many of the indigenous Asian firms have global outreach and
contact), to sustain core values in traditional cultures in order to create
sustainable employment, to handle externalities responsibly and to create a
sustainable development environment. Jeremy Moon (2003, pg 11) of the
international Centre for CSR stresses that globalization will enhance such
national CSR systems in Asia (due to the activities of local firms) and in the
process will be a driver for new CSR developments in the region.
Like Africa, the continent of Asia has been a fertile ground for different
religions and customs (due to different ethnicities) that have naturally
translated into how businesses carry out their activities. From Islamic
inspired practices in Malaysia and Indonesia to Buddhist and Confucian
influences in Singapore and China, have provided a unique flavor to the
Asian way of doing business. Some of specific cultural examples of such
traditions are:
51 | P a g e
ethical mandate that the greatest good is for the community. (Alfonso
and Roman, 2010)
Business culture and local definitions of CSR are not separate from the local
context due to the rich heritage of the Asian emerging markets. Robert
Davies (2002) adds,
in most parts of Asia bonds of family and friendship in economic relations
generally account for far more than in the Western world where the
professionalism of business, the separation of ownership and control or
impact of mobility have diminished the significance of the bonds of
friendship and community (Birch and Moon, 2004 pg 21).
Therefore courtesy and respect, whether for age, wisdom, leadership,
neighbors, and customs throughout Asia are still very striking in comparison.
Asias long tradition of philanthropy through implicit obligations is seen in
business practices and institutional frameworks. Furthermore, these
responsibilities lay with the owner of the firm, and do not imply the creation
of a distinct and separate organizational mechanism. For example in Japan,
shonindo the way of the merchantmeans that work needs to be honest,
disciplined and efficient in providing service to society and leading to a
business culture of benevolent responsibility towards direct
stakeholders(Alfonso and Roman, pg 16).
As in Latin America and Africa, two-thirds of the listed companies and a
considerable number of private companies in Asia are family controlled and
managed. For instance the top 15 groupings in Indonesia, holding 62% of all
listed assets, comprise 21.5% of the countrys GDP (Alfonso and Roman, pg
15). In Hong Kong, the top 15 family groupings hold 34% of all listed assets
and comprise 84% of the countrys GDP (Alfonso and Roman, pg 15). Thus,
52 | P a g e
MALAYSIA
The author has chosen Malaysia due to the fact that it in this country religion
(Islam) and local traditions provide interesting elements for the integration of
CSR practices in business.
The development of CSR in Malaysia has, over time, moved to higher levels
and Malaysia is now recognized as being among the most active emerging
economies in relation to corporate social responsibility(Zulkfi and Amran
2006). The emergence of non-governmental organizations such as the
Consumer Association of Penang contributes extensively to the social and
environmental awareness. However there is no statutory requirement in
Malaysia for publicly-held companies to disclose information relating to their
CSR activity. This void of reporting is a striking feature within local Malaysian
firms and is closely tied to the overall CSR activities of the organizations.
Some positive steps have been taken to amend this. For instance, the
53 | P a g e
54 | P a g e
sports and cultural events but refuse to disclose it. The preference is direct
interaction with stakeholders rather than issuing reports to the public.
Keeping in mind the multi-cultural make up of Malaysia, religion has a strong
influence in the perception and practice of CSR. As the main religion (56% of
the population is Muslim) Islam has enabled its society to preserve many
traditional values while managing its transition to an industrial society19.
Concepts such as the four ideals of Islamic social practice: Free will, Unity,
Responsibility and Equilibrium, are the defining factors in economic activity.
As Malcolm Cone (2003, pg 62) adds it is clear that Muslims see business
activity as being embedded in the social world and, as a result, have
expectations that business activities will reflect the value orientations of the
surrounding social environment. From this perspective ones accountability
to Allah also encompasses ones accountability to society and therefore may
be interpreted as promoting social justice and social responsibility.
Consequently, indigenous firms (referred to as Bumiputra) in an Islamic
environment are expected to be conscious of the impact of their activities on
the community. For instance, some local firms have been known to pay Zakat
(Islamic tax) annually. Others do not engage in tobacco, alcohol or gambling,
instead practicing good corporate governance by being environmentally
friendly (Cone 2003).
Usually activities pertaining to CSR in Malaysia are seasonal. Festive
seasons, for example Eid al-Fitr20 and the Chinese New Year, are the active
seasons when many indigenous firms display their generosity by giving out
donations to the old, poor people and orphans. As most of these functions
19 Islamic banking refers to a system of banking or banking activity that is
consistent with the principles of Islamic law (Sharia) and its practical application
through the development of Islamic economics. Shari prohibits the payment or
acceptance of interest fees for loans of money (Riba, usury), for specific terms, as
well as investing in businesses that provide goods or services considered contrary
to its principles (Haraam, forbidden).
55 | P a g e
are made public through the media, it can be deduced that that the purpose
of CSR in Malaysia (apart from the religious reason) is to preserve and
elevate a companys image and the argument can be made that local
companies follow CSR practices if they get something in return.
This implies that local firms are strategic in planning their individual CSR
activities, while the reasons for that may vary from company to company. In
contrast to Western countries philanthropic giving is considered a key
characteristic of a Malaysian company behaving responsibly. Ethnic and
religious attitudes appear to be the driving factor.
This is just a broad view of local firms involved in philanthropic activities as
their way of giving back to society. But if one became sector specific results
would vary. Zulkifli & Amran (2006) in their study explore and examine the
accounting sector in Malaysia which highlights the culture of lack of CSR
reporting in the country (Bebbington.et al 1994). The results of the study can
be seen further on in the paper.
In conclusion it can be assumed that CSR in Malaysia is framed by distinct
cultural and social aspects but one aspect of CSR-- social reporting- in itself is
still relatively haphazard and unplanned.
RESEARCH METHODOLGY:
The author is very much interested in CSR as a concept and process due to
various reasons. Earlier studies on CSR dealt with the activities of a business
and their balancing act between profiteering and being good corporate
citizens. Due to the forces of globalization and deregulation the concept of
20 A celebration by Muslims worldwide after the holy month of Ramadan, a month
dedicated to fasting from sunrise to sunset.
56 | P a g e
what really constitutes as CSR has been evolving. This constant changing of
CSR is significant. Furthermore, it is not a concept bound by a specific region
or a certain business structure anymore. The rise of EMEs has questioned
that and raised thought provoking issues not only on the definition of CSR
itself but the future of it. Secondly, how do local forces such as traditions and
culture react with global ones like globalization concerning CSR. And finally
what lessons can be learnt from the CSR experience in EMEs. How will CSR
be regarded in the future after the input from EMEs?
The idea of writing a paper on CSR from a Western point of view did not
really appeal as a lot has been written on the subject. Keeping in mind the
prominent rise of emerging powers, the author believes analyzing the
progression of CSR in EMEs would be an interesting exercise. Furthermore,
due to the complex socio-economic and political structure of such societies
the results of CSR application would be different from that of Western
countries. However, the results might even vary among the emerging
markets themselves negating the preconceived notion, that one CSR model
could be applied for all of them. Hence the three countries (Nigeria, Malaysia
and Mexico) were chosen from the three regions with EMEs providing an
analysis from each area highlighting not only their similarities but also
differences that sets them apart as CSR case studies.
Due to the focus of the topic (which is more theoretical in nature) and the
inability of the author to travel to emerging market economies to collect data
the thesis is mainly based on secondary data. In terms of getting research
material for the paper, the author first relied on online leads and articles on
CSR in general and then narrowed her focus to EMEs. There is material
available on EMEs in general but finding online sources that specifically
dealt with CSR was difficult. Some articles briefly mentioned CSR policies
being adopted by EME firms but the emphasis was more on the economic
and political development and financial standing of the EMEs. The author
57 | P a g e
58 | P a g e
59 | P a g e
22 Companies from the following countries were analyzed: Argentina, Brazil, China,
Chile, Columbia, Czech Republic, Egypt, Hungry, India, Indonesia, Malaysia,
Morocco, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Thailand
and Turkey.
23 Generalizations were made with a strong caveat that each region is large and
contains a variety of countries, histories and experiences.
60 | P a g e
Region
Threat of regulation
interest.
Key drivers
Influence of corporate
governance code.
Regulatory pressures.
Global pressures
Asia
CSR.
Pockets of interest elsewhere.
advantage
interest in corporate
of CSR.
61 | P a g e
24
Of the 614
companies that registered with GRI as of 2006, 12.4% are based in emerging
economies (Baskin, pg 32). Certainly some of the shine can be removed
from this figure since a considerable portion of that 12.4% are either
subsidiaries or closely associated with parent firms in the developed world.
62 | P a g e
By excluding the subsidiaries, this still leaves 7.2% of GRI companies based
in emerging economies (Baskin, pg 32).
The last indicator is ISO 14001, the global standard for environmental
management systems. The past five years have seen a significant increase
in the uptake of ISO 14001 certification. Figure 2 below shows how
certifications in high-income OECD countries have increased more than
fourfold over this period while in emerging markets there has been a
significant sevenfold increase. This could be due to two factors; first
emerging markets are growing from a lower base; and secondly this reflects
the growing interdependence of the world economy. It is understood that
many of the emerging market firms want to have globally recognized
management systems, so they can be regarded as global players. Possibly
they depend on export markets and they know that internationally
recognized certified systems boost their ability to access these markets.
Nevertheless, whatever the motives of emerging market firms the increase in
the adoption of ISO 14001 certifications can be viewed as a major
development in emerging markets because the figures reflect the
importance placed by companies towards environmental management
systems as criteria of CSR.
63 | P a g e
25 This index has been calculated since 31 December 1986, originally as the FTActuaries World Indices. FTSE took exclusive rights to integrate the Baring Emerging
Markets data series with its existing FTSE World Index series. This resulted in the
creation of the FTSE All-World Index series on June 30, 2000.
26 All of the companies on the FTSE AW can be regarded as substantial in size. All
are publicly traded companies hence meaning that unlisted private companies are
not included.
64 | P a g e
covered in the FTSE AWI are essentially those with more substantial
economies and with listed firms likely to be of interest to global investors.
By analyzing publicly available information (websites, annual reports and
corporate responsibility reports) the quality and extent of reported CSR
practice (in EMEs only) across a range of factors was established. Figure 3
presents a breakdown by economic sector of the emerging-market
companies inspected come from four sectors: financial, resources,
telecommunications and basic industries.
.
Figure 3 emerging market economies analyzed by economic group (Baskin, 2006, pg. 34).
Reporting on CSR
The research by Baskin showed that over two-thirds of emerging markets
in the sample either produce a corporate sustainability (that includes
information on environmental issues for a firm) report or have a specific
section on their website or in their annual report covering CSR. Social
reporting is an integral part of CSR with which companies can ensure
transparency by keeping shareholder and stakeholders informed of their
business activities of being social responsible. This is a high figure for
EMEs suggesting that firms do not see CSR as the preserve of companies
in mature markets only. It is expected that companies in emerging
65 | P a g e
markets would be less willing to report on their CSR activities publicly, due
to the low level of transparency culture that exists. However it appears
that companies in EMEs are readily and eagerly adopting social reporting
and giving their own spin on the concept. It is noteworthy that among the
EMEs some report more than others. However, only one out of the 16
South African companies analyzed had a particular CSR website. Figure 4
indicates that in the form of the chart Africa (mainly South Africa) takes
the lead followed closely behind by Latin America.
66 | P a g e
Business Ethics
Due to the rapid expansion of CSR in the last decade or so, there have been
changes in the corporate governance environment as well. This has also had
an impact on the field of business ethics such as the well-known Sarbanes-
67 | P a g e
Oxley Act in the United States27. Only a quarter (25.2%) of firms has an
extensive ethics policy, with noticeable regional differences. Latin American
and South Africa companies have done the most in developing codes of
ethical practice while their Asian counterparts lag far behind. The same can
be said of their high-income Asian colleagues such as Japan, Singapore,
Korea and Hong Kong (Welford, 2005).
An effective ethics policy needs appropriate management systems to ensure
compliance and therefore, in addition to the published codes/policies, ethics
management systems were also taken into account in this study. As Figure 7
shows few companies have such systems. This contrasts with the numbers in
Figure 6 that show in OECD North America there exists an extensive level of
published code ethics but when it comes to extent of management systems
to ensure compliance the level is low. Hence the material is present but
conformity lacking in organizations.
27Sarbanes-Oxley Act is a United States federal law enacted on July 30, 2002, which set new
or enhanced standards for all U.S. public company boards, management and public
accounting firms. The bill was enacted as a reaction to a number of major corporate and
accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine
Systems and WorldCom. These scandals, which cost investors billions of dollars when the
share prices of affected companies collapsed, shook public confidence in the
nation's securities markets.
68 | P a g e
28
The same is true for all regions examined including the emerging
markets. To sum it up, ethics policies are not being matched by
equivalent management systemsthe companies create policies but
this does not guarantee implementation within the corporation.
(Baskin, 2005, pg.37)
Looking at firms reporting any ethics management system, however
partial, 79% of OECD companies could report something, while only
34% of emerging economies could do so. (Baskin, 2005, pg.37)
Finally of the 21 emerging economies studied, in relation to business
ethics, those whose companies showed least evidence of addressing
the ethics issue were Turkey, Egypt, Malaysia and China. (Baskin,
2005, pg38)
28 Ethical policies imply that companies have a published set of codes and rules
dealing with business ethics in the organization. Ethical systems is the next step in
the process, meaning that codes need to be implemented or put into action in the
organization to produce results required. While many companies in OECD countries
have the policies comprising of codes there is an absence of any mechanism that
would put them into use.
69 | P a g e
Many firms based in emerging markets avoid the issue of business ethics as
local regulation rarely requires it. However, emerging-market regulators and
companies are increasingly awaredue to the vital part being played by
emerging economies in the global economy- that business ethics is often a
reliable alternative both for sound corporate governance and for
management accountability to shareholders.
29
29 The total output of emerging markets now exceeds more than half of the total
world GDP (measured at purchasing-power parity). The Economist forecasts that by
2025 the share of EMEs in the global GDP will rise to 68%
(www.economist.com/2008/thenew titans)
70 | P a g e
as oil and gas and finance where it is hard to implement and follow up on
business ethics (Baskin, 2006, pg 38).
Environment
On the issue of environment about 53% of EMEs companies in the Baskin
research publish details of their environmental policies (52%) and
environmental management systems (53.5%). This is not substantially lower
than the average for high-income OECD countries of about 59% (Baskins, pg.
39). Indeed Figure 8 demonstrates EME firms in each of the regions perform
better than their North American colleagues, although significantly below the
standards of Western Europe and Japanese firms.
71 | P a g e
Table2 Percentage of companies with environmental policies and EMS i.e. larger emerging
markets (Baskins 2006, pg.40)
While leading Brazilian, Indian and South African companies have high levels
of reporting on the issue in accordance to global standards, Chinese and
Malaysian firms pay far less attention to the issue. Another assumption is
that Chinese and Malaysian companies are active in the area but choose not
to make their activities public by using channels of websites, investor
relations officer or annual reports.30 Hence both Figure 8 set a very low
threshold for inclusion and certainly does not imply that the companies
mentioned have well-built or efficient systems on environmental
management in place.
As more and more CSR is being linked with sustainability (finding long term
solutions to developmental challenges faced by society), it is especially
important to know what percentages of firms with substantial environmental
impact also have a substantial policy and management that is working. 31
From this perspective Figure 9 and Table 2 provide a less optimistic outlook:
30 This is at odds, even within the region with countries such as Japan where
leading companies usually pay great attention to environmental management
systems.
31
72 | P a g e
Figure 9 High impact companies with substantial policies/EMS in place (Baskin 2006,
pg.41).
Table 3 Number of companies with substantial environmental policies (Baskin 2006, pg.41)
73 | P a g e
If the focus is shifted to larger EMEs then the situation becomes more
pronounced in Brazil, India and South Africa. China is the only
exception.
A prominent feature is that EME firms rarely report substantial yearon-year environmental performance data. Only 18% of the EME
companies had any sort of important reporting in comparison to 27%
of their high-income peers.
74 | P a g e
75 | P a g e
It appears that some sectors are more exposed than others in relation to
health and safety. Of the EME companies assessed, 29.2% are in the
following sectors: construction, forestry and paper, mining, oil and gas, and
steel and other metals. Of these the higher-risk firms, 13.5% provide partial
details and almost two thirds or 62.2% publicly report at the more extensive
level.
Nonetheless, one quarter (24.3%) do not mention the issue at on all on their
websites. The extreme example is China where six out of seven Chinese
companies in these sectors make no mention whatsoever of health and
safety, despite having commonly publicized problems in some of these
sectors e.g. mining sector.
Figure 12 demonstrates that the overall record of EMEs studied, in respect to
reporting on OHS is stronger and extensive than compared to high-income
OECD countries.
76 | P a g e
Figure 12 Percentage of High Risk companies reporting on OHS (Baskin 2006, pg.45).
77 | P a g e
78 | P a g e
NIGERIA
Research carried out by Amaeshi, et al. (2006, pg 89-93) explored the extent
to which the meaning and practice of CSR was present in Nigeria. Focus was
on the financial sector because it is about 90% owned and run by local
entrepreneurs. The financial sector that is one of three major sectors of the
economy (along with telecommunications and oil and gas) in 2005
underwent a consolidation exercise especially in the banking industry
(Amaeshi and Ogbechie, 2010 pg. 277). Hence it was thought that this sector
would provide a more pure and succinct overview of CSR in Nigeria. The
majority of business leaders gave the impression that the meaning of CSR
was largely framed to reflect local realities. In their eyes CSR was perceived
from a philanthropic perspective. One senior executive of a bank added that
CSR is a way of saying thank you to the environment in which they operate
and a way of also showing a sense of belonging to the society at large
(Amaeshi, et al. pg91). Table 3 illustrates CSR awareness in Nigeria. It shows
Nigerian firms are engaged in at least one CSR activity. Table 4 and 5 reflect
the top 5 issues being addressed by Nigerian firms and priority issues that
need addressing in the future.
Level of
Characteristic of level
awareness
Low
Almost no awareness
7.7
Medium
85
High
7.7
79 | P a g e
Education
46
Healthcare
38
Infrastructure development
Sports/arts and culture
31
23
Poverty alleviation
Table 5 Current CSR waves in Nigeria (Amaeshi, et al. 2006, pg 92)
Education
85
Healthcare
62
Infrastructure development
Poverty alleviation
Security
Table 6 CSR priority issues in Nigeria (Amaeshi, et al. 2006, pg 93)
54
31
23
MALAYSIA
Zulkifli & Amran (2006) explore and examine the accounting sector in
Malaysia which highlights the culture of lack of CSR reporting in the country.
Despite the development of the CSR movement in Malaysia over the past
80 | P a g e
two decades, lack of reporting has kept most of the public ignorant of the
contributions made (Bebbington.et al 1994). The study provided interesting
answers on the understanding and awareness of CSR. The majority of the
findings demonstrated that accounting professionals had a low level of CSR.32
One interviewee mentioned we do not do CSR in a conscious manner
(Zulkfli and Amran, pg 108). Others professed to having heard about CSR for
the first time when contacted for the survey. There seemed to be a
disconnect between this low level of awareness and the favorable state of
CSR actions by Malaysian companies discussed above. On a deeper level it
appears that the low level of understanding may not necessarily mean that
their companies are not acting responsibly towards society. In other words, it
may imply that their lack of knowledge on CSR and social reporting has led
them to disregard the reporting aspect of social activities that have been in
fact carried out by the companies (Zulkfli and Amran, pg 109).
This coincides with the earlier information provided in the literature review,
that the level of social involvement by local companies does not correlate
with the status of their reporting. Hence it can be assumed in Malaysia that
on the whole, while the awareness of CSR is high, the concept of corporate
social reporting is low.
The general view among the interviewees was that accounting professionals
should be engaged more in CSR and start thinking about social and
environmental impacts in the companys book. While the professionals
realize the vital role of social reporting there exist various issues that hamper
their involvement with CSR in Malaysia. Findings by Adams (2002) shed some
light on the peculiar attitude of accountants vis--vis CSR. The findings
indicate that the company of origin, corporate size and company culture are
likely to have an impact on CSR. It appears that the culture at Malaysian
32 Fourteen individuals from the accounting profession were interviewed in 2006 in
Malaysia.
81 | P a g e
Finally, the research results for all three case studies suggest through their
findings and analysis that a certain type of CSR appears to be the common
result between them. That certain type of CSR is altruistic in nature, driven
by philanthropy and charitable activities of the local MNCs.
Altruistic or philanthropic CSR as we know is the interest in doing good for
society regardless of its impact on the bottom line (Lantos, 2001, pg 600).
The local companies and business sectors looked at in the three case studies
all show that they want to do well towards society regardless of profit
sometimes. The firms believe for instance in the case of Mexico that they
have a distinct responsibility towards society by being conscientious
corporate citizens. This outlook on CSR affects the actions of such
33 Throughout 2005 cases featuring environmental issues as opposed to social
attracted most attention in the local media. Such issues included illegal logging, hill
cutting, river pollution and marine pollution to name a few.
82 | P a g e
ANALYSIS
The salient features that have emerged during the discussion of the
literature review and comparative studies are mentioned below:
Literature Review:
The meaning and practice of CSR in all three regions shows that the
CSR movement is still very much in its formative years. It is growing at
a determined pace in the emerging markets and interestingly enough
these markets already have started manifesting their own indigenous
versions of CSR that stand apart from the widely understood Western
rules and norms of CSR.
83 | P a g e
CSR patterns are firmly grounded in the cultural and traditional context
of a particular country, addressing socio-economic needs reflecting
local realities and priorities through a local business lens. In short,
context matters greatly. For instance, context can be perceived as
levels of political and economic development and their social
consequences in different countries. What is the countrys level of
modernization and economic development? Latin America has severe
social problems of poverty, poor education and health issues. The more
developed a society is, the more prominent corporate responsibility
discourse tends to be. Hence, as EMEs are not fully developed as
societies the discourses of CSR are inconspicuous. Diverse problems
that are perceived to be in particular need of addressingpriority
issues that cannot be overlooked-- will affect the understanding and
expectation of CSR in different countries.
84 | P a g e
Comparitive Studies:
Results:
85 | P a g e
Case studies:
86 | P a g e
alleviating poverty.
The meaning and practice of CSR in Nigeria is an intricate mixture of
some multi-external factors and lots of indigenous influences. The
conception of CSR within the Nigerian context is heavily prevailed by
philanthropic tendencies due to the traditional family concept of
kinship and contributing back to society (this would include the
immediate family and the larger tribal community). Hence the agrarian
mode of livelihood (that was present before colonization) is still
prevalent among the organizations of local firms. Thus, Nigeria has
characterized its own brand of CSR through a blend of philanthropy
87 | P a g e
CONCLUSION
Recommendations
1. A novel approach to CSR: There needs to be a creation of a new CSR
business model as suggested by Wisser (2010) for EMEs to better
describe the process within their own specific national context. It
seems that the Western paradigm which is more structured in nature
concerning CSR norms and rules does not explain the phenomenon in
EMEs, where it takes a more fluid form (due to domestic forces). The
pragmatic approach, when contemplating such a model, is to
understand that globalization does not erode CSR by undermining
these national systems and accept that instead globalization is a driver
for new CSR developments.
2. Focus on local: While the CSR movement has been inspired by Western
norms and standards, the application of the concept globally has
produced different local expressions and understanding. The local
factor should never be overlooked when recalling that there is no one
single formula for CSR globally. Context matters when analyzing CSR
practices- adoption, understanding and implementation in each place.
88 | P a g e
be
an
interesting
issue
to
develop
looking
into
the
89 | P a g e
applicable and relevant to the altruistic CSR seen in EMEs. Hence, more
needs to be developed on this issue from an emerging market perspective.
Comparative Study:
Looking at the results of Baskins study we find a high level of compatibility
between emerging and mature markets, at least for the major leading
companies. Furthermore we see that leading emerging markets-- the big
players-- often have more in common with each other than with other
countries in their own region. For instance Brazil, South Africa and India
share a lot more CSR traits with each other. It is reasonable to conclude that
overall there is not really a vast difference in the approach to reported CSR
between leading firms in high-income OECD countries and EMEs. However,
CSR in emerging economies is less embedded in corporate strategies, less
persuasive and less politically rooted than in most high income countries. In
simpler terms CSR practices in these markets are more socially in tune with a
high dosage of cultural influence.
The criterion used by Baskin provides an insight into how CSR can be
measured in EMEs, but what the comparative studies fail to point out is what
type of CSR- altruistic or strategic- occurs in these markets. In other words do
different combinations of measuring factors lead to a certain type of CSR in
EMEs. This an area that needs further study.
Case Studies
The following sections dealt with the case studies chosen for this thesis
representing three regions of emerging markets; Latin America, Asia and
90 | P a g e
Africa. A common strand that runs through the case studies suggests that
the meaning and practice of CSR is socio-culturally embedded, providing
each of them a unique and personal twist of the process. While popular
Western standards and expectations of CSR contain issues such as fair trade,
consumer protection or green marketing, in emerging economies CSR is
driven by socio-cultural influences (charity or ethnic religious beliefs)
addressing socio-economic tribulations facing the country (poverty, access to
health care or corruption).
The majority of current literature on CSR in EMEs mainly focuses on the
three popular case studies- India, Brazil and South Africa- all of them with
extensive CSR norms and rules. This has in turn led to other EMEs being
overlooked by CSR academics and researchers. For instance, material exists
on EMEs with CSR forces such as Nigeria or Mexico but the author believes
they are overshadowed by their well known counterparts. Additional
extensive research needs to be done focusing on the rest of EMEs.
Concluding Remarks:
CSR is still very much a contested subject with unclear boundaries and
debatable legitimacy (Baron 2001). Meanings of CSR, defined by culture,
geography, social and economic factors are legion, making theoretical
development and measurement difficult. Carrolls 1970 (pg.500) definition
sums it best for this paper that social responsibility of business
encompasses the economic, legal, ethical, and discretionary expectations
that society has of organizations at a given point in time. This study has
tried to show that social responsibility is a balancing act: business must
balance economic performance, ethical performance and social performance.
And, this balance must be achieved among various stakeholders. The focus
here has been how indigenous firms maintain this balance within their
national spheres combining both local and global CSR dimensions. Although
91 | P a g e
92 | P a g e
BIBLIOGRAPHY:
Internet:
The Centre for Business and Government of the Kennedy School of
Government: http://www.ksg.harvard.edu/m-rcbg/CSRI/init_define.html
(accessed Jan 13th 2010).
World Business Council for Sustainable Development:
http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?
type=p&MenuId=MTEzOA&doOpen=1&ClickMenu=LeftMenu (accessed
on Jan 13th 2010).
European Union:
http://www.eurofound.europa.eu/emcc/content/source/eu02002s.htm?
p1=topic&p2=Corporate_Social_Responsibility (accessed on Jan 14th
2010).
http://www.lse.co.uk/FinanceNews.asp?
ArticleCode=giwjrmxmtdfqgwg&ArticleHeadline=Nigeria_oil_reform_bill
_to_pass_by_end_Aug_minister Retrieved on 26th August 2010.
93 | P a g e
Christian Aid, 2004 Behind the mask: The Real Face of Corporate
Social Responsibility, [Online] retrieved on 26th May 2010. Available
at: www.christian-aid.org.uk/indepth/0401csr/index.htm.
CSR Asia, 2008, CSR Asia Business Barometer: The State of CSR
Disclosure in Asia October 2008, [online] retrieved on 15th June
94 | P a g e
Journals:
22.
Phillips, F. 2006, Turning Point: Corporate Social Responsibility
in an African Context, Journal of Corporate Citizenship: Corporate
Social Responsibility in Emerging Economies, Special Issue. 24, pp. 23-
27.
Baskin, J. 2006, Corporate Social Responsibility in Emerging
Economies, Journal of Corporate Citizenship: Corporate Social
95 | P a g e
20.
Visser,W. 2005, Corporate Citizenship in South Africa: A Review
of Progress since Democracy, Journal of Corporate Citizenship:
pp. 31-47.
Ramasamy, B. & Ting, H. 2004, A Comparative Analysis of
Corporate Social Responsibility Awareness: Malaysian and
Singaporean Firms, Journal of Corporate Citizenship: Corporate
pp. 125-136.
Journal of Corporate Citizenship, Special Issue 21. Spring 2006.
Corporate Citizenship in Latin America: New Challenges for
Business.
96 | P a g e
69.
Journal of Corporate Citizenship, Issue 9. Spring 2003. Corporate
Citizenship: The Role of Commercial Organizations in an
Islamic Society.
Ahunwan, B. 2002, Corporate Governance in Nigeria, Journal of
97 | P a g e
104.
Dobers, P & Halme, M. 2009, Corporate Social Responsibility in
Developing Countries, Corporate Social Responsibility and
98 | P a g e
477.
Hammer, N. (2005) International Framework Agreements ,
Reports:
Klins and Smit. 2010, Africa: Regional Profile, ed. W Visser &
99 | P a g e
Publishing, U.K
Hong, R. 2010, Malaysia, ed. W Visser & N.Tolhurst, Greenleaf
Publishing, U.K
Amaeshi, K and Ogbechie, C. 2010, Nigeria, ed. W Visser &
N.Tolhurst, Greenleaf Publishing, U.K
Books:
Corporate governance, 3rd edition. 2004. Robert Monks & Nell Minow.
The Market for Virtue: The Potential and Limits of Corporate
( Geneva: WBCSD)
WBCSD (World Business Council for Sustainable Development), 2002,
Corporate Social Responsibility: The WBCSDs Journey (Geneva:
WBCSD).
Porter, M & Kramer R.M. 2006 Strategy & Society: The Link
between Competitive Advantage and Corporate Social
100 | P a g e
Boston.
Moon, J. 2002 Corporate Social Responsibility: An Overview,
International Directory of Corporate Philanthropy, London,
Europa: 3-14.
Visser, W & Tolhurst, N. (eds) 2010, The World Guide to CSR: A
Country by Country Analysis of Corporate Sustainability and
Responsibility, Greenleaf Publishing Limited, Sheffield.