Summary of CSR in Developing Countries

(By Wayne Visser)

NAME:

Warda Khawar

ROLL NUMBER:

048

CLASS:

MBO-3

SUBMITTED TO:

Sir Uzair Farooq

SUBMITTED ON:

24thth May, 2012

COMSATS Institute of Information and Technology , Lahore

Wayne Visser talks about the CSR in the developing countries in this paper. The reason the developing countries are selected particularly is that the CSR is interpreted and practiced differently in the developing countries. The reasons for a different CSR in developing countries from the developed countries are as follows: Developing countries are the most rapidly expanding economies and the most lucrative growth market for the business Developing countries face severe social and environmental crisis Developing countries face the most striking (both the positive and negative) social and environmental impact resulting from the business activities, globalization, investment etc CSR challenges faced in the developing countries are different from those faced by the developed countries

CSR literature in the developing countries is classified as: Content theme: CSR studies focused on four different themes namely social, environmental, ethics and stakeholder. Most of the studies on the developing countries however focused on the social theme. Knowledge Type: In the theoretical research, both the normative and the nonnormative perspective are adopted. Whereas, the empirical research in the developing countries consisted mostly of the qualitative research. The reason for a little percentage of quantitative research is that the developing economies are not well documented and authentic data about CSR is scarce. Analysis Level: CSR in the developing countries has been studies on global, regional and then the country, sector and individual levels. CSR at a global level is more generic and talks about CSR in a global context. On the regional level, Asia has been covered the most by literature. South Africa has been studied the most in Africa. Business ethics had been the focus of researchers in this region. Latin America is the least covered region when it comes to the CSR studies of the developing countries.

According to Wayne Visser, the drivers that drive the CSR in the developing countries can be classified as internal (pressures from within the country) or external (that has global origin). These drivers are as follows: Cultural tradition: Different cultural traditions guide the kind of CSR activities that will be adopted by the businesses in a particular region or country. Regions religious beliefs also lay the foundation for the CSR activities. Another aspect that contributes to this driver is the value based traditional philosophy. The political reforms brought about (and the improved corporate governance) is also the driver of CSR in any country. Through these reforms, the businesses willingly take greater responsibility for the social and environmental issues. Socio-economic priorities also drive the CSR efforts in the developing countries as the businesses try to respond to the socio-economic concerns of the particular country they are operating in by solving their social, economic and environmental problems.

Governance gaps left by the weak or incapable governments of the developing countries also drive the CSR activities in those countries. This happens when the businesses fill in the gaps left by the governments by taking up the various responsibilities and providing various services which the government is supposed to provide. Crisis response is yet another driver. This is dominantly a philanthropic approach as was seen in many catastrophic events in the history but it includes some other CSR activities as well. CSR is also adopted by those companies and the businesses in the developing countries that want an access to the international markets. This is done to meet the international stock market listing requirements. CSR codes and standards also drive the activities of the businesses that want to become socially responsible in the developing countries. This is because they guide the business processes and lead them to be environment friendly. The investment incentive is hence another driver of CSR activities in developing countries as only the businesses whose investments are socially responsible are appreciated to invest in a country. This is gradually becoming a pre-requisite for investments over time. Another important driver of CSR in developing countries is the stakeholder activism. When the governments lack control over the practices of the businesses, the stakeholder groups step-in through various forums and ask the companies to be socially responsible. Supply chain screening mechanisms and standards introduced also drive the CSR activities in the developing countries. Adopting the relevant standards and screening mechanism reduces the unethical practices of businesses like the child labor and human rights abuses.

Based on the Carroll's CSR pyramid, a CSR pyramid is suggested for the developing countries. Economic responsibilities are considered very important for the businesses in developing countries. By their economic contribution the businesses improve the economic conditions of the country which helps in attracting the foreign direct investment in the country which again is the source of economic development. Philanthropic responsibilities are the next one in priority. Philanthropy is adopted where the businesses cannot contribute directly by themselves e.g. in case of HIV/AIDS and where there is a trend of philanthropic contributions by the businesses. Next are the legal responsibilities. The legal infrastructure of the developing countries is not very much developed. So the compliance to the laws is not like that of the developed countries. The companies can however be socially responsible by fulfilling the legal responsibilities. Ethical responsibilities are the least focused and required in the developing countries. This aspect is however gaining importance now. There is a shift from shareholder focus to stakeholders focus in businesses and business accountability. According to the author, an ideal CSR pyramid for the developing countries should assign the highest priority to the ethical responsibilities.