CSR and realities of developing countries

A world with less poverty, hunger and disease, greater survival prospects for mothers and their infants, better educated children, equal opportunities for women, and a healthier environment (UN, 2006 p. 3). The above quote explicitly presents the UN vision o !"# or $evelopin% countries. &o'ever, (ost o these %oals are still a $rea( in (any $evelopin% countries. The ter( is use$ or countries 'ith relatively lo' per capita inco(e an$ are less in$ustrialise$. This classi ication is consistent 'ith the )orl$ *an+, Unite$ Nations ,evelop(ents -ro%ra( an$ .nternational /onetary 0un$ classi ication1. #esu(in% the ocus on !"# in $evelopin% countries, it is i(portant to recall the proli eration o conte(porary !"# activities in recent ti(es, 'hich 'ere al(ost entirely initiate$ ro( the $evelope$ 'orl$. .n theory an$ in practice, (ost o the business activities that are labelle$ un$er !"#2 concept have been the result o interest an$ concern o sharehol$ers, ca(pai%n %roups, (e$ia, aca$e(ia an$ consu(ers base$ in the $evelope$ 'estern 'orl$. These sta+ehol$er %roups in the 'est are initiators o shapin% the !"#
1

This is consistent 'ith the Unite$ Nations ,evelop(ents -ro%ra(2s (2006) cate%orisation in its su((ary statistics on hu(an $evelop(ent an$ is best represente$ by the )orl$ *an+2s classi ication o lo'er3 an$ (i$$le3inco(e countries. .t shoul$ be note$, ho'ever, that the UN,-2s classi ication o hi%h, (e$iu( an$ lo' $evelop(ent countries pro$uces a sli%htly $i erent picture than the )orl$ *an+2s list o 'hich countries are $evelope$ an$ $evelopin% (4isser 2005 p. 676).

a%en$a an$ its practices. The nu(erous !"# activities that have been initiate$ recently in $evelope$ countries have not been %iven si(ilar attention in the $evelopin% countries (8a(ali, 2007). .n a$$ition, in $evelopin% countries, !"# orientation is $i erent ro( the case in the $evelope$ 'orl$ $ue to unique contextual realities o $evelopin% countries. There ore, it is essential to un$erstan$ contextual realities o $evelopin% countries, 'hich are very $i erent ro( the 'estern 'orl$, in (ore $etail. These contextual realities substantially a ect business environ(ent an$ result in $i erent !"# orientation an$ practices. .n the $evelope$ countries, business operates in a stable an$ stron% regulatory framework, 'hich provi$es a soli$ an$ avourable %roun$ or socially responsible practices. &o'ever, in (any $evelopin% countries, the le%al environ(ent is 'ea+ 'hich consequently creates an un avourable environ(ent or !"# practices. The rule o la' in any %iven country can be $e ine$ as the extent to 'hich people have con i$ence in an$ abi$e by rules2 (9au (ann et al., 2003 p.6). .n the $evelopin% 'orl$, $ue to 'ea+ accountability syste(s an$ the presence o corruption in every aspect o li e, or%anisations an$ in$ivi$uals $o not have con i$ence in the state institutions an$ o ten $o not 'ant to abi$e by the rules an$ re%ulations. :n the other han$, ;overn(ent authorities in $evelopin% countries ar%ue that lac+ o resources, political an$ social constraint result in 'ea+ la' en orce(ent (<=(at an$ "a(aratun%e, 2007). The rule o la' an$ a 'ell3$e ine$ le%al syste( are essential or s(ooth an$ stable business operations ("bra%ia, 2000). .n $evelopin% countries, %enerally, there are no 'ell3establishe$ consu(er protection rules an$ la' en orce(ent

in rastructure. 0or instance, in *an%la$esh, there is no le%al $e inition that explains the ri%hts o the local consu(er. .n a$$ition, in "ri >an+a consu(ers $o not have con i$ence in %overn(ent authorities an$ $o not o icially report any 'ron%$oin% in business (see, or exa(ple, <=(at an$ "a(aratun%e, 2007). "i(ilarly, ine ective an$ ine icient le%islation in < rican countries allo's lar%e co(panies to abuse an$ $a(a%e the natural environ(ent (/bare, 2006). Corruption is a particularly i(portant actor in the context o $evelopin% countries. <lthou%h $i erent $evelopin% countries have (a$e a serious e ort to $eal 'ith this social evil, corruption re(ains the (ost corrosive proble( that threatens socially responsible practices ("a(aratun%e et al., 2005). There ore, an unethical practice li+e corruption is not only part o a ir(2s characteristics but also a part o the overall institutional environ(ent in 'hich the ir( operates (!hen et al., 2007 p. 231). .n other 'or$s, business or%anisations nee$ a corruption3 ree an$ clean environ(ent to per or( responsible business practices, 'hich are %enerally (an$ un ortunately) absent in $evelopin% countries. < consultation 'ith literature clearly su%%ests that in $evelopin% countries o both <sia an$ < rica, 'ea+ i(ple(entation o rules an$ re%ulations an$ the poor unctionin% o the ?u$iciary to%ether $ecrease airness in the society. 0or instance, 9han (1@@5) sho'e$ i(portant $i erences bet'een the !"# practices o *an%la$esh, .n$ia an$ -a+istan. &o'ever, corruption 'as a co((on actor i$enti ie$ as a barrier to responsible business practices in all three countries. /ost <sian $evelopin% countries have ine ective an$ ine icient political, a$(inistrative, le%al

syste( an$ close alliance o these institutions 'ith business or%anisation creates a corruption3 rien$ly environ(ent that o ers bene its an$ privile%es to business or%anisations (/ba+u, 2007, "a(aratun%e et al., 2005). < si(ilar situation exists in other $evelopin% countriesA or instance, 0?el$sta$ et al. (2007) $iscovere$ that in the context o Tan=ania ir(s are involve$ in corruption an$ they use bribes to interact 'ith an$ %et support ro( the local %overn(ent o icials. Thus, this pervasive corruption in the context o $evelopin% countries lea$s to a vicious circle o poor %overnance an$ ulti(ately results in irresponsible business practices. Socio-economic conditions in $evelopin% countries are also very $i erent ro( those o the $evelope$ 'orl$. >iterature su%%ests that the level o social an$ econo(ic $evelop(ent has a $irect i(pact on co(panies2 !"# practices in a speci ic country (see, or exa(ple, ;u%ler an$ "hi, 200@ an$ )el or$, 2006). .n other 'or$s, it can be ar%ue$ that socio3econo(ic con$itions o any country are critical or %oo$ business practices. ;enerally, socio3 econo(ic con$itions in $evelopin% countries are poor an$ hence shape in$ivi$ual an$ or%anisational perceptions an$ behaviour o social responsibility. :ne o co((on exa(ples is 'hen $ue to lo' purchasin% po'er, custo(ers beco(e price conscious an$ o ten i%nore co(panies2 responsible or irresponsible behaviour. "i(ilarly, co(panies in the $evelopin% countries operate in $i icult an$ unstable econo(ic con$itions. ,ue to poor econo(ic situations it beco(es $i icult or co(panies to survive an$ they ocus on short3ter( rather than lon%3ter( pro itability. These econo(ic constraints li(it their co((it(ent to be a socially

responsible or%anisation, an$ they en$ up ocusin% on pro itability ob?ectives an$ co(pro(ise on social issues (;u%ler an$ "hi, 200@). "i(ilar to econo(ic con$itions, cultural conditions in the $evelopin% 'orl$ stron%ly in luence !"# practices. < nu(ber o stu$ies have supporte$ the in luence o culture on in$ivi$uals2 perceptions o business responsibility. 0or instance, 8oyner et al. (2002) hi%hli%hte$ that culture, nor(s, values, ethics an$ !"# are all interrelate$ an$ shoul$ not be ta+en as (utually exclusive. There is consi$erable evi$ence that !"# practices o businesses in $evelopin% countries are e(be$$e$ in culture such as reli%ious belie s ()al$(an et al., 2006). !"# literature also supports the in luence o culture on !"# practices. 0or exa(ple, Bua=i an$ :2*rien2s (2000) su%%este$ that reli%ious belie s have a stron% i(pact on business (ana%ers2 an$ o'ners2 attitu$es to'ar$s social responsibility practices in the context o a $evelopin% country (i.e. *an%la$esh). The stu$y conclu$e$ that (ost o these o'ners an$ (ana%ers conceptualise !"# 'ith philanthropy an$ charity in *an%la$esh $ue to .sla(ic reli%ious belie s. This philanthropic ocus o !"# $ue to culture an$ reli%ion is not unique in other parts o the $evelopin% 'orl$. < stu$y by 9ivuitu et al. (200C) reporte$ that !"# in 9enya an$ Da(bia is o ten associate$ 'ith philanthropy an$ in both countries co(panies are involve$ in charity ocusin% on e$ucation an$ health issues. .n a$$ition to above3(entione$ stu$ies, there are other various e(pirical evi$ences sho'in% in luence o reli%ion an$ culture on the !"# in $evelopin% countries o <sia an$ < rica ( or exa(ple, see <(aeshi et al., 2006, !happle an$ /oon, 2007, 8a(ali 2007).

The si%ni icance o the consumers role and their awareness o the role o business in society are crucial in socially acceptable practices. .n the $evelope$ countries, custo(ers an$ consu(ers are very a'are an$ businesses2 irresponsible practices can a ect corporate pro it (/aloni an$ *ro'n, 2006). .n the context o $evelopin% countries the situation is co(pletely $i erent as consu(ers2 ri%hts are typically not ully protecte$ by la' an$ businesses easily exploit this situation. There is evi$ence in $evelopin% countries 'here $eception on the seller2s part is not consi$ere$ unethical2E rather it is consi$ere$ a %a(e2 (Thorelli, 1@53 p.167). .n $evelopin% countries o ten the (ar+etplace has been a seller2s haven 'here consu(ers have little or no protection, e$ucation, or in or(ation about the (ar+et2 (,arley an$ 8ohnson, 1@@3 p.37). .n a$$ition, in $evelopin% countries, $ue to lo' e$ucation levels, in$ivi$uals are %enerally una'are o their un$a(ental ri%hts an$ particularly their ri%hts as consu(ers. 0or instance, /asa+a2s (2007) 'or+ in the context o a $evelopin% country (Da(bia) reveale$ that business has little concern or consu(ers2 ri%hts. The stu$y reporte$ that business are involve$ in unethical practices o cheatin%, bribery an$ hoar$in% o basic co((o$ities (necessity %oo$s), an$ only ocus on pro itE there ore, local people have lost aith in business. ,ue to these types o business activities there are un air price hi+es, li(ite$ access to necessary in or(ation or consu(ers to (a+e in or(e$ $ecisions, alse an$ $eceptive a$vertisin%, po'er abuse, an$ little a ter3sales service, a(on% others (<=(at an$ "a(aratun%e, 200@). .t is clear ro( the above $iscussion that $i erent sta+ehol$ers

inclu$in% civil society are actively involve$ in shapin% the !"# a%en$a in the $evelope$ 'orl$. !ivil society can in luence %overn(ent policies, create public a'areness an$ expose corruption. There ore, these activities o civil society an$ (e$ia are particularly relevant in the context o $evelopin% econo(ies $ue to prevailin% corruption, poor %overnance, an$ lac+ o accountability an$ transparency. .n$ee$, in (any $evelopin% countries N;:s an$ civil society %roups have starte$ 'or+in% on these issuesE there is consi$erable scope or involvin% the civil society an$ N;:s (.te, 2006, 8a(ali, 2010). )ar$ et al. (2005) su%%est that e ective partnerships bet'een civil society an$ businesses can increase the ri%hts to public participation an$ consequently help to i(prove !"# practices in $evelopin% countries. "i(ilarly, society an$ N;:s %roups can create a'areness o business responsibility, consu(er ri%hts an$ environ(ental issues in $evelopin% countries (>uet+enhorst, 2006). <lthou%h scholars realise$ the i(portance o these civil society %roups, these %roups are not yet (ature enou%h in $evelopin% countries an$ not 'or+in% at their ull potential to pro(ote !"# (<rarat an$ ;oceno%lu, 2006). )ith local civil society %roups, international $onor a%encies such as the )orl$ *an+ an$ the <sian ,evelop(ent *an+ beco(e relevant in $evelopin% countries. These international $onor or%anisations intro$uce$ various re or(s to i(prove !"# in $evelopin% countries. &o'ever, !"# scholars are sceptical about 'hether the role o these or%anisations is e ective. These or not o erin% a clear path or or%anisations are criticise$

assistance to $evise relevant accountability proce$ures to oster socially responsible business practices. .t is urther clai(e$ that their %ui$elines are %enerally super icial an$ little value is %iven

unique to the context o "a(aratun%e, 2007).

$evelopin% countries (<=(at an$