Development-Oriented Corporate Social Responsibility: Volume 2

Locally Led Initiatives in Developing Economies

Dima Jamali, Charlotte Karam, Michael Blowfield

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781783534814
• eBook ISBN: 9781351284349
• Topic: Business
• Subtopic: Business General
• Index: Business

This volume provides a platform for localized perspectives on CSR in developing countries across the globe. The chapters bring local context and business to the forefront and highlight the efforts spearheaded by indigenous actors from within the developing world. They present insights from developing countries through successful and less successful examples of locally-led CSR efforts. Together, these perspectives capture the complex paradoxes of CSR in developing countries and highlight common features in national institutions across the developing world, such as weak political and regulatory institutions, that shape local CSR initiatives and often limit its developmental impact.The editors argue the need to embrace partnership models that leverage the strengths of different actors to promote effective development and tackle the complex challenges facing the developing world. This important series will be the reference source for academics, practitioners, policy-makers and NGOs involved in development-oriented CSR.

1
Rediscovering divergence in developing countries’ CSR

Natalya Turkina and Benjamin A. Neville

Faculty of Business and Economics, University of Melbourne, Australia

Sara Bice

Melbourne School of Government, University of Melbourne, Australia

National institutional contexts of developing countries differ and so do corporate social responsibility (CSR) practices of companies operating in these contexts. Prior research in cross-national comparative CSR has explored divergence in CSR across countries, but these studies have mainly focused upon developed countries. This has resulted in largely homogenous perspectives on CSR in developing countries. We begin to address this shortcoming by drawing upon two distinctive models of national business states relevant to developing country contexts. We theorize how divergence in CSR approaches across these states can be attributed to the differences in their national institutional settings and local levels of corruption. We illustrate our theorization through contrasting the employee and community relations cases of two companies originating from and operating in Botswana and Russia. We further argue that peculiarities and quality (i.e. corruption) of national institutional settings can have either a facilitating or hindering effect on developmental CSR outcomes in developing countries.

The relationship between corporate social responsibility (CSR) and development in developing countries¹ is complex (Idemudia, 2008, p. 95; Michael, 2003). Just as developing countries differ markedly amongst each other, so do the social and environmental activities of corporations operating in these environments. Corporate behaviour in developing countries can aid development through programs aimed at infrastructure development, improving labour standards, tackling HIV/AIDS or poverty alleviation (Visser, 2008). Equally, it may hamper development through social misconduct resulting in community protests, unwillingness to engage labour unions or involvement in corrupt practices (Osuji, 2011; Zhao et al., 2014). The range of CSR approaches adopted by corporations can be partly attributed to the variety of economic, cultural and political systems specific to each developing country.

Researchers have sought to understand how and why CSR differs across countries by analysing the variation in national institutional configurations through comparative capitalism frameworks (e.g. Jackson and Apostolakou, 2010; Kang and Moon, 2012; Matten and Moon, 2008). For example, Matten and Moon (2008) contrasted the liberal market economies (LMEs), such as those in the Anglo-American countries, with the coordinated market economies (CMEs) found in continental European countries, to highlight the distinction between explicit and implicit forms of CSR. Kang and Moon (2012) then added a third model of capitalism—state-led market economies (SLMEs)—to propose three foci of CSR—competitive, cohesive and developmental CSR.

Kang and Moon (2012) suggested that the SLME model was the most appropriate to represent developing countries, yet admitted that this classification provides an overly homogenous grouping for the substantial variety that can be observed amongst developing country national institutional contexts. Developing countries vary widely not only in terms of their level of economic development, but also in terms of their levels of literacy and education, institutions of justice and the rule of law (Witt and Redding, 2013), cultural attitudes towards business and entrepreneurialism (e.g. Casero et al., 2013) and the extent to which corruption is embedded in political and business sectors (Otusanya, 2011), to name just a few. Understanding the role of CSR in the development of developing countries, therefore, requires a more nuanced and complex representation of this institutional heterogeneity (Idemudia, 2008; Michael, 2003).

In this chapter, we begin to extrapolate cross-national variety amongst developing countries through drawing upon a more detailed capitalism classification offered by Whitley (2003, 2007). We draw upon two models of capitalism, which can be relevant to developing countries—the Business Corporatist State (BCS) and the Dominant Developmental State (DDS). Our theoretical distinction leads us to propose two further foci of CSR in developing countries—pro-state and pro-business developmental CSR—presented in mixed explicit and implicit forms of CSR.

Furthermore, we suggest that the inclusion of corruption into comparative CSR frameworks is necessary to strengthen their explanatory power, especially in a developing country context. While remaining on the rise in developing countries (Leiken, 1996, 1997; Lambsdorff, 2006), corruption significantly undermines social welfare and represents an obstacle to development (Amundsen, 2006; Bakre, 2007; Sikka, 2008). Corruption is a particularly topical issue in contexts of nations rich in natural resources often marked by misuse of the justice system, arbitrary enforcement of law or degraded governing systems (Dobers and Halme, 2009; Polishchuk, 2008).

We illustrate our theorizing through the cases of two companies of the highly concentrated and globalized diamond mining industry originating from and operating in two developing countries—Debswana in Botswana and ALROSA in Russia. Through recounting contrasting cases of employee and community relations, which feature the different levels of corruption in the two countries, we demonstrate how distinguishing between DDS and BCS can provide a better explanation of the variety of CSR practices—pro-state and pro-business developmental CSR—found in these two developing countries.

In the next sections, we first briefly outline the importance of context in the CSR-development nexus, whereupon we review the relevant aspects of comparative capitalism and comparative CSR literatures. We then develop our theorizing about distinctive types of developmental CSR and present two illustrative cases. We conclude by discussing the implications of our contribution to comparative institutional studies on CSR and outlining future research opportunities.

1.1 Context in the CSR–development relationship

Theorization of the relationship between CSR and development is complicated by the circumstance that both CSR and development are “open to different interpretations” (Idemudia, 2008, p. 95; Michael, 2003). CSR is an umbrella term, which overlaps with other concepts of business-society relations, and a dynamic phenomenon which cannot be defined outside a given context and time (Farmer and Hogue, 1973; Matten and Moon, 2008).

CSR is usually viewed as a product of voluntary corporate self-regulation. Yet, this understanding of CSR misses other social and environmental activities that are expected of corporations but are not typically labelled as CSR. Moreover, it omits those CSR activities, which, instead of being discrete corporate practices, represent legal requirements. For instance, in many developing countries, particular ideas of corporate responsibility are culturally embedded, such as ideas of African humanism (ubuntu) in South Africa, or harmonious society (xiaokang) in China (Visser, 2008). In other instances corporate responsibilities are formalized in legislation, such as the mandatory philanthropic CSR payments by companies with a particular level of income or profit in India (The Gazette of India Extraordinary, 2013).

Similarly, development represents a non-holistic and hard-to-measure concept (Idemudia, 2008). Whereas in the context of developing countries development may comprise such issues as capacity building, poverty reduction and community empowerment; in developed countries development is associated with economic growth and sustainability.

Consequently, understanding the role of CSR in national development is complex and contentious (Idemudia, 2008; Michael, 2003). CSR defined as self-regulation might best contribute to development when it takes the form of voluntary corporate initiatives (Grayson and Hodges, 2001). Yet, opponents of this idea suggest that CSR should be enforced by legislation (Welford, 2002; Utting, 2002; Blowfield and Frynas, 2005). Those who doubt the efficiency of legal enforcement, especially in weak institutional contexts of developing countries, on the contrary, emphasize the importance of civil society pressures as a prerequisite for better CSR-development outcomes (Utting, 2003; Fox, 2004; Fox et al., 2002).

The above definitional and conceptual variety is supported by empirical studies that demonstrate considerable heterogeneity in the ways that corporations act on social and environmental issues, as well as the ways that corporations and stakeholders view these actions as CSR (Chen and Bouvain, 2009; Gjolberg, 2009; Jackson and Apostolakou, 2010; Kang and Moon, 2012; Matten and Moon, 2008). From this, the diversity of CSR approaches—varying from voluntary approaches to those culturally embedded or legally regulated—has been attributed to sundry institutional configurations of national economies.

Despite the growing penetration of multinational corporations (MNCs) into emerging economies, there has been a lack of studies on how CSR is embedded in developing country contexts. Hence, identifying and understanding possible institutional factors influencing diverse types of CSR in developing countries would allow for a better theorizing of CSR and its development outcomes in the developing world (Utting, 2003; Fox, 2004). We now review previous cross-national comparative studies on CSR and their conceptualization of CSR in developing countries.

1.2 Comparative capitalism in CSR research

A number of scholars have addressed cross-national divergence in CSR practices by deploying a comparative institutional analysis. This research attempts to explain how CSR practices are embedded in institutional contexts of different types of capitalist economies (Blasco and Zolner, 2010; Gjolberg, 2009; Jackson and Apostolakou, 2010; Kang and Moon, 2012; Matten and Moon, 2008). These studies generally categorize countries using national business system (NBS) frameworks (e.g. Haake, 2002; Whitley, 1999), varieties of capitalism (VoC) (Hall and Soskice, 2001) or other capitalism class...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of figures and tables
• Acknowledgements
• Abbreviations
• Introduction. Corporate social responsibility in developing countries: a development-oriented approach
• 1 Rediscovering divergence in developing countries’ CSR
• 2 Pharma SMEs and development-oriented CR
• 3 CSR in Afghanistan
• 4 Strategic approaches to corporate social responsibility: A comparative study of India and the Arab world
• 5 Avenues of rethinking CSR in development
• 6 Policy discourse and mandatory CSR in India
• 7 CSR in emerging economies and fragile states: Why it is different from CSR in developed countries
• 8 Integrating and implementing CSR: A case of CONCOR (Container Corporation of India) in India
• 9 CSR and NGO engagement in Indian public sector mining companies
• 10 When microfinance meets CSR
• 11 Migrant workers and China’s development: A critical social responsibility perspective
• 12 A spiritual corporate awakening: Transcending beyond traditional corporate philanthropy with design thinking
• 13 Accounting education and CSR in developing countries—the case of India
• About the editors and contributors
• Index