MGT 4114 Management Concepts Theory & Practice1

MGT 4114 Management Concepts Theory & Practice

Customer Inserts His/Her Name

Customer Inserts Grade Course

Customer Inserts Tutor’s Name

Feb 22, 2011

 MGT 4114 Management Concepts Theory & Practice2

Introduction

In association with the corporate conduct and their duty to other stakeholders, organizations

exhibits Corporate Social Responsibility (CSR. While CSR as a phrase is gaining momentum

in recent times, the concept is not new. The debate of CSR largely revolves around the

procedures and behaviors of multinational organizations and other huge private firms, which

due to their mass, have the ability to create a never-ending impact on international and

domestic policy and the community in which these organizations function.

The main focus of CSR’s argument is the apparent flaw of national and international law

solution in business accountability, to be specific, the ability of regulatory bodies in power to

control a corporation’s conduct outside the boundaries of the company’s state of origin.

Supporters of CSR claim that the meaningful working of global markets is highly dependent

on how socially responsible business conduct is. The current factors of CSR debate includes:

• Globalization and the propagation of trade by MNEs across the globe which

ultimately results in a clear awareness about the practices of CSR related to

environmental protection, human rights, anti-corruption and health and safety;

• The UN, Organizations for Economic Co-operation and Development and

International Labour Organization, have formulated and declared clear guidelines,

principles, declarations which outline the norms guaranteeing an acceptable conduct

in the corporate world;

• People are much aware of the facts, as they have access to information and media

now. Through this the corporate activities are better monitored.

• The consumers and investors now additionally interested in supporting those

organizations which have responsible business practices, they are also asking for
 MGT 4114 Management Concepts Theory & Practice3

additional information on how companies create opportunities simultaneously

addressing the risks related to environmental and social issues;

• The hiking awareness among people that current legislations are insufficient for

regulating MNEs and their CSR.

The debate which we can find on globalization is lively and fanatical, but it does take the

shape of violent arguments sometime. Even to date, this debate has grown to an intense

extent. Despite of the ambiguity of whatever is being said about globalization; one still

cannot ignore its significance since the attitudes and views expressed in the debate are likely

to affect the public policy and the issues are critically significant for future economic growth

and wellbeing of all the people around the globe (Fischer, 2003).

A couple of decades ago, social activists were meant for looking after social and

environmental issues. Ten years back, these issues were among the most critical factors

which formed government policy and business strategies. Looking at the events which

happened twenty years back would show that we were a series of national and domestic,

businesses local and state countries which were incompletely linked. Twenty years from now,

in the future, we will be interdependent on a global scale both individually as well as on

organizational level. The investments made by MNEs are central to the globalization of

corporate world, this will ultimately lead to a need for having harmonized laws and reporting

procedures. MNEs are likely to be crucial with respective CSR because of their size and

complexity, and moreover because of the fact that they in more than one country either on

their own or through their subsidiaries and alliances.

The most complex issue arising with respect to the corporate social responsibility of an

organization occurs in a poor country with weak and at times such governments that are

corrupt.
 MGT 4114 Management Concepts Theory & Practice4

A number of multi-national enterprises are larger and economically more noteworthy than the

developing nations in which they have their operations. Possessing the ability to facilitate the

stimulation of the economy of a developing nation, MNES, simultaneously possess the ability

of making abusive use of their power in such countries where the government is either unable

or unwilling to hold them accountable for any misconduct. More attempts to regulate the

CSR have resulted from the efforts of NGOs and public international governing bodies.

Matters related to CSR for instance, bribery, environment and human rights are voluntary and

governments do not bound the organizations to follow the, nevertheless, it may indicate a

subtle diplomacy played by NGOs to further get the governments on a specific consensus,

which may be embodied in universally accepted standards or more specifically in national

legislation, later on (Kercher, 2007).

Researchers claim that in a globalized world, the shift towards a new concept of CSR, a

politically enlarged one, is essential. It is important because as a consequence of globalization

the power of political authorities is getting weaker in regulating the activities of globally

expanding corporations. Therefore, organizations should be considered as both political and

economic actors (Andreas and Guido, 2008).

Other researchers claims that in addition to the demarcation of foreign companies from

domestic companies, the global competitive environment of 21st century have another

significant difference and that is weak peculiarity between transactions and activities

occurring inside the corporate entities rather than outside. When companies are in a process

of transition to make some of their in-house activities to purchased goods and services, they

are also making close relationships with their partners and suppliers (Davis, Whitman and

Zald, 2006). This practice along with the lobbying of civil society because of lesser impact of

domestic governments has led to significant changes in the practice of CSR: now companies

are made responsible for their supply chain. For instance, after facing a huge boycott with the
 MGT 4114 Management Concepts Theory & Practice5

release of the news that Nike has been exploiting child labour in its sweatshops, Nike had to

make substantial alterations in it supplier factories for improving the working conditions

(Locke, 2006).

No matter, if the organization is legally recognized and the supply chain is some other

business from which it is purchasing, so as to remain free any legal responsibilities for the

practices its suppliers so, limits should be put around those responsibilities. It has been argues

by researchers that firms enjoying a superior position have a deontological obligation to make

the correct use of power rather using it for their own goods. This could be done by setting

rules and standards for weaker companies. Marks and Spencer has adopted this strategy and

has invested £200 million for environmental and social responsibilities in association with

suppliers and NGOs.

The supporters of shareholder pre-eminence claims that the mere reason of an organization’s

existence is to maximize the profit for shareholder wealth, perhaps, they also tend to follow

the rules and laws of the specific company in which the company operates.

On the other hand, the supporters of CSR argues that, for a firm to maintain its long term

success and sustainable profits, the management must take the interest of both shareholders as

well as other holders including employees, customers and communities simultaneously. The

current proponents concur with this claiming that there are sufficient evidences available

which shows that organizations who have implemented a relevant and sustainable CSR are

more successful and perform much better which ultimately leads to a competitive advantage

for them.

Despite of these various arguments, the companies have always tried to find out a balance

between satisfying the interests of stakeholders and maximization of shareholder fortune. A

recent survey has indicated that prodigiously, executives clinch to the idea that the role of the

organization should be distinctively not limited to meeting the obligations of their

 MGT 4114 Management Concepts Theory & Practice6

stakeholders. This view holds true by looking at the survey done on global investment

managers. Its result indicates that environmental, social and governance matters may be

critical to the investment performance (McKinsey, 2005).

In the age of globalization, CSR is more than the trepidations of individual countries or firms.

It needs to be analysed on the basis of the social, economic and cultural issues associated

with the increasing scale of corporate globalization.

Despite of the general grounds established for the implementation of CSR every company

does this in its own special way. Here we would take the example country wise, considering

America, Europe and Japan three different regions, it is a common belief that the CSR

concept is same for all these three regions and that is; to play an active part in creating a

sustainable society; to make the commitments on CSR in practice beyond the boundaries of

legal acquiescence rather than being dictated by law; and, to have such concepts and code of

conducts which should be already built in the organizational activities.

American firms are considered to be more inclined towards CSR which deals with corporate

ethics and a commitment to compliance whilst making a positive influence on the society.

Unique from the rest of the world, the American companies tries to get their presence felt in a

different manner, they have done this so far by implementing a number of action

programmes, hoping that the outcomes of their efforts would be anticipated by the

stakeholders, customers markets of a particular field. The business as well as brand strategies

used in the United States differ from other companies with in the country and each company

is thus said to pursue those CSR practices which best matches with their organizational

strategies. The American company CSR practices tend to practically focus in corporate

citizenship activities, which have a contribution in the community of their operations. Thus,

the preference given to national and cultural diversity by American business leaders
 MGT 4114 Management Concepts Theory & Practice7

dominates all the considerations when designing and implementing CSR programmes can be

viewed from this example.

In contrast to this, it is a general observation in Europe that organizations desire to

incorporate CSR elements in the existing laws and regulations of EU, usually dealing with

environmental protection, library practices and public procurement. In comparison with the

American and European business who tend to follow short term profit generation, Japanese

companies have made a breakthrough in managing CSR. They have established separate

departments for CSR that distributes information by issuing reports; they pay great attention

to stakeholders. Such activities might not be called as CSR activities, but this does not means

Japanese are left behind in their socially responsible corporate initiatives. They know how to

make innovations in their handicap resource to make it their competitive advantage; Japanese

companies have been cited as having cutting-edge technology, simultaneously having know-

how about the conservation of energy, environmental protection, and resource conservation,

which is obviously fruitful for the entire world and not just Japan.

Conclusion

The main focus of CSR’s argument is the apparent flaw of national and international law

solution in business accountability, to be specific, the ability of regulatory bodies in power to

control a corporation’s conduct outside the boundaries of the company’s state of origin. The

debate which we can find on globalization is lively and fanatical, but it does take the shape of

violent arguments sometime. Even to date, this debate has grown to an intense extent. The

most complex issue arising with respect to the corporate social responsibility of an

organization occurs in a poor country with weak and at times such governments that are

corrupt. Researchers claim that in a globalized world, the shift towards a new concept of

CSR, a politically enlarged one, is essential. It is important because as a consequence of

globalization the power of political authorities is getting weaker in regulating the activities of
 MGT 4114 Management Concepts Theory & Practice8

globally expanding corporations. Despite of these various arguments, the companies have

always tried to find out a balance between satisfying the interests of stakeholders and

maximization of shareholder fortune.

 MGT 4114 Management Concepts Theory & Practice9

References

Andreas S. and Guido, P. (2008), Globalization and Corporate Social Responsibility, The

Oxford Handbook Of Corporate Social Responsibility, Oxford University Press.

Cambridge Programme for Sustainability Leadership & Visser, W., (2009). Landmarks for

sustainability, Sheffield: Greenleaf.

Crane, A., McWilliams, A., Matten, D., Moon, J. and Siegel, D., (2009), The Oxford

Handbook of Corporate Social Responsibility, Paperback edition, Oxford: OUP.

CSR WeltWeit, (n.d.), The Role of CSR in China, Retrieved, Feb 22, 2011, from,

http://www.csr-weltweit.de/en/laenderprofile/profil/china/index.nc.html

Davis, G., Whitman, M. and Zald, N., (2006), The Responsibility Paradox: Multinational

Firms and Global Corporate Social Responsibility. Ross School of Business Paper No. 1031

Fischers, S. (2003), Ely Lecture (Revised), American Economic Association, Washington,

DC.

Kecher, K. (2007), Corporate Social Responsibility: Impact of globalisation and international

business, Retrieved, Feb 22, 2011, from

http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1003&context=cgej

Locke, R. (2006) "Does Monitoring Improve Labour Standards in Nike's Suppliers?" The

Oxford-Achilles Working Group on Corporate Social Responsibility, Said Business School,

Oxford.

McKinsey, (2005), The McKinsey Global Survey of Business Executives: Business and

Society’, The McKinsey Quarterly.

Skruzmane, L. (2005), Globalization’s New Face – Corporate Social Responsibility,

Retrieved, Feb 22, 2011, from, http://www.jftc.or.jp/discourse/data/second_1.pdf

Visser, W., Matten, D., Pohl, M. and Tolhurst, N., (2010), The A to Z of Corporate Social

Responsibility, 2nd edition (paperback), London: Wiley.

MGT 4114 Management Concepts Theory & Practice10