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Sonali Sengupta

BA.LLB
20120296
CSR research paper

Title of the Paper: CSR in developing Countries

Abstract

The concept of corporate social responsibility (CSR) has gained a major significance
in contemporary business in the past few years. While globalization has become a
major concern for environmental degradation and the growing social inequality have
triggered CSR on the global agenda. This paper is going to focus on how CSR is
impacting the developing countries and also how certain institutional variables have
been shaping and molding CSR practices and expressions in developing countries.
Further, I will be discussing the implications of CSR approaches for developing
countries. Lastly, I would conclude by stating the need for the governments of the
developing countries to be interested in CSR.

Keywords: Corporate Social Responsibility, Globalization, Environmental


Degradation, and Developing Countries.

Introduction

CSR has taken a very significant position in the business environment over the past
few years. The growing global expectations that a firm needs to show more active
participation in the society they function in. As globalization has come into the
picture, CSR has started gaining more power and importance in the developing
countries too. Nowadays the over all performance of a company is judged along with
social, environmental, and economic impacts. Although there has been a rather slow
and limited research on CSR in the developing countries, CSR has appeared to have
unmistakable components or distinctiveness in the developing era. CSR in this
connection has been described as more extensive in its scope, less installed in

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Sonali Sengupta
BA.LLB
20120296
CSR research paper
corporate methodologies, and less politically established than in most high income
nations. 1A recent research in the African connection focuses on grass root level

understanding of CSR whereby local firms are relied upon to effectively help their
surrounding groups. CSR action in developing nations is in this way depicted as
continuous and broad, despite the fact that it has a tendency to be less formalized,
more depressed, and more humanitarian in nature. It additionally draws on profoundly
engrained social/religious values and is fundamentally situated towards neighborhood
groups.

The Rise Of Corporate Social Responsibility

Institutional variables consist of social and religious frameworks, the nature of


political frameworks, the nature of financial frameworks and main concerns, and the
institutional pressure applied by other institutional actors, comprehensive of
development and welfare organizations, exchange unions, business affiliations, and
civil society associations. National institutional environments, for example, powerless
and contracted governments, disparities in the public governance and transparency,
arbitrary authorization of rules, regulations and policies and low levels of security and
work models influence how CSR is imagined and practiced in developing nations.
Subsequently, CSR keeps on being compared with philanthropy in the developing
world and fruitful engagement with CSR is thus an exception and not the norm.

The justification for stressing upon CSR in developing countries as separate from
CSR in the developed world is fourfold developing nations portray to the most
quickly expanding economies, and thus the most lucrative development markets for
business developing nations are where the social and ecological emergencies are
typically most intensely felt on the planet. Developing nations are the place where
globalization, financial development, speculation, and business action are liable to
have the most intense social and ecological effects be it positive or negative according

1Corporate Social Responsibility In Developing Countries: an institutional analysis, Alberto


Willi

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Sonali Sengupta
BA.LLB
20120296
CSR research paper
to the World Bank and developing countries introduce an unmistakable arrangement
of CSR motivation challenges which are by and large entirely diverse to those
confronted in the developed world.

Effectiveness of CSR Activities

The main concern for CSR in developing countries is surrounded by a vision that was
refined in 2000 into the Millennium Development Goals—'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 '.
Tragically, these worldwide desires stay a long way from being met in numerous
developing nations today. Considering the adequacy of CSR exercises, researchers
contend that critical developmental issues are disregarded by the CSR motivation and
IOCs (international association of classification societies) CSR activities, and
therewith incapable to cultivate development. 2Growing criticism emerges that the
standard CSR plan is to a great extent commanded and molded by the North,
boycotting logical agendas of the South. In the South what's not viewed as the
standard CSR plan is condemned for suffering from "particular amnesia", where
issues of underdevelopment, for example, poverty reduction, tax evasion, and
unsustainable ventures are not tended. Rather, other socially dependable ventures are
made.

It has been pointed that the inclination of worldwide oil organizations working in
Nigeria, to put resources into the social foundation of the region, for example, streets,
community centers, and clinics, as their CSR engagement. At the same time, in any
case they disregard the genuine issues of this region, for example, corruption,
environmental degradation, and the agricultural sector. Accordingly, numerous
researchers contend that the standard CSR motivation is not conformed to the
necessities and substances in developing nations, and thus incapable to foster

2 https://sustainabledevelopment.un.org/content/documents/no1.pdf

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Sonali Sengupta
BA.LLB
20120296
CSR research paper
development. A significantly more basic case with regards to this is that not only local
but as well as worldwide realities are not tended to by IOC's CSR exercises. The
greatest "blindspot" of CSR practice and research contend that, they are unlawful
capital flows from poor, developing nations to Western nations. Why this issue is
considered is because organizations taking into account the fact that 60% of unlawful
cash transfers is tax avoidance do a CSR issue.3

Critique
A noteworthy criticism of the standard CSR agenda in developing nations is that CSR
instruments and guidelines may harm the integrity of developing nations. Scholars
highlight that; instruments of the Northern CSR plan are not in accordance with the
requirements of influenced stakeholders in developing nations. Despite what might be
expected, instruments, for example, implicit rules, production chain rules and audits,
can be especially hurtful, as they can reject makers in developing nations from
profitable markets. Organizations in the South as of now fall flat executing these
principles, in light of the absence of money related and asset influence. Formal
frameworks to control, measure, and record their effects frequently don't exist, or too
excessive to actualize. Unmistakably, in order for IOCs4 to have a socially and
ecologically amended inventory network, assessments and confirmations are essential
and requested from Southern producers. The issue in question however is that the
expenses for the appropriation of these CSR measures are pushed to the monetarily
less competent producers in the South, which researchers see as a disparity in the
force connection between MNCs from the North and producers from the South.
Makers are frequently feeble against the requests of MNCs, on the grounds that they
are reliant upon the working relationship that gives them benefits, occupations and
thus livelihoods.

3 Corporate Social Responsibility, Chapter 21, Wayne Visser.

4 Dima Jamali (2014), CSR in Developing Countries through an Institutional Lens, in Gabriel
Eweje (ed.)Corporate Social Responsibility and Sustainability: Emerging Trends in Developing
Economies (Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume
8) Emerald Group Publishing Limited, pp.21 - 44

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Sonali Sengupta
BA.LLB
20120296
CSR research paper

Different CSR practices and motivations

In reality, a huge part of the business movement that has so far been named as CSR
has been driven by the concerns of investors, organizations, campaign groups and
consumers situated on the planet's wealthiest nations. The outcome has been that CSR
practices that are to a great extent encircled in rich nations, then internationalized and
exchanged to different organizations and social settings through international trade,
investment, and development assistance. This is not to say that CSR has not existed in
different nations previously. Or maybe, national CSR agendas in low-income nations
have internationally been seen less, and have regularly not been marked CSR. In the
course of recent years, legislatures, organizations and NGOs in numerous middle and-
low-income nations have triggered a procedure of alteration in the OECD-driven
5
CSR motivation through more prominent and direct engagement. CSR developments
and activities have risen in nations, for example, China, India, South Africa, the
Philippines and Brazil, among others. Much of the time these have based on long-
standing conventions of philanthropy and concern towards social equity.
Governments of a few middle-income nations confronting real social difficulties have
unequivocally looked to connect with business in meeting those difficulties, as with
Black Economic Empowerment in South Africa, or Presidential support of business
endeavors to handle poverty in the Philippines.6

The Importance of SMEs in Development

CSR is unmistakably influencing SMEs in developing nations through direct


production network connections, and also the improvement in law, and worldwide
institutionalization and certification. CSR shows not only a change to the business
environment in which individual SMEs work additionally but also considered as far
as its net impact on society. In the event that CSR, as a few commentators accept,

5 OECD. (2001). The OECD guidelines and other corporate responsibility instruments: a comparison.

6 Corporate Social Responsibility and Development in Developing Countries, Deschna Afram

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Sonali Sengupta
BA.LLB
20120296
CSR research paper

presents social and ecological provisos bringing about protectionism by the indirect
access, forces unseemly social principles or nonsensically bureaucratic monitoring
requests on small organizations, the net impact on the groups concerned would reduce
welfare. Then again, CSR offers open doors for more prominent business sector
access, cost investment funds, efficiency and advancement to SMEs, and more
extensive social advantages, for example, training and group improvement. Along
these lines the association amongst CSR and SMEs in developing nations is an
imperative issue, not just for the SMEs and those supporting their improvement,
additionally for every one who is helping in driving CSR forward7.

It is a raising consciousness amongst the business environment these days that CSR is
an important business issue and is of relevance to SMEs. A lot of CSR issues which
are deemed to be important are especially concerning environmental issues like
pollution and waste, as these both are the major out product of any business activity
and seek accountability and transparency on the part of the business enterprises. All
the more, the awareness towards the new and emerging international initiatives
adopted by UN is still left unknown to a great population. These days the national
government is also taking up such matters with great consideration, and are thus,
coming up with certain codes of conduct which would be mandatory for the business
enterprises to follow and abide by to continue and follow their business activities.

There has been a rather disturbing discussion that, the above laid policies and
initiatives concerning CSR may be discovered as threats or barriers to markets and
monitoring of business environment, hence compliance of these guidelines would lead
to disturbances in the working culture. But assessing to the positive part which CSR
would bring along with it, like access to markets and better alignment to consumer
concerns are few important and considerate advantages which shall be enjoyed by all.
Thus, it can be perceived that CSR comes with both positive and negative obligations

7Tom Fox, Small and Medium-Sized Enterprises (SMEs) and Corporate Social Responsibility: A
Discussion Paper, IIED, 2005

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Sonali Sengupta
BA.LLB
20120296
CSR research paper
of its own, and calls for awareness and a cautious management within industry
associations and individual companies.

Considering the growth and dependence of CSR in the developing nations, there lies
an urgent need to come up with a systematic assessment which would strengthen the
CSR values amongst the companies to follow and abide by it, also it is called for that
the business institutions should no more lay emphasis on the rhetoric and
legitimization of business engagements, instead move ahead and consider making
changes in them. One more aspect to it is looking on to the practical guidelines, which
would make all actions of the business enterprise more strategic and developmental in
approach.8

Conclusion

Public Governance is one more aspect to the successful implication of CSR. It has
been observed that there lies a need in the successful implication of CSR by a more
locally owned system within the developing nations of specifically middle income
category, where they have designed there public policies in a way which would
enforce engagement and would also lead the way. Taking in to consideration the
middle and low-income countries, there are two relevant justifications, which can be
supported to engage with CSR, i.e. (i) defensive and (ii) proactive. 9These two sets are
somewhere related to each other, these policies are crafted in a way that in the initial
stage holds a defensive justification, which would lead to be a part of the proactive
strategy of engagement. Thus, would lead to minimization of the plausible adverse
effects of CSR on the local communities and upon the markets when it is imposed
through international supply chains and investments10. Few middle- income nations

8Mehra, M. 2006. Corporate Social Responsibility in Emerging Economies. The Journal of Corporate
Social Citizenship, Winter(24): 20-22.

9Mehra, M. 2006. Corporate Social Responsibility in Emerging Economies. The Journal of Corporate
Social Citizenship, Winter(24): 20-22.

10 https://sustainabledevelopment.un.org/content/documents/no1.pdf

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Sonali Sengupta
BA.LLB
20120296
CSR research paper

like China, which is an economic powerhouse have adopted numerous ways to ensure
that the CSR policies practiced in their respective countries do render towards the
growth and development, in both social and economic sectors. Therefore, I believe
that the governments of the developing countries should take more interest in CSR.

References

1. Corporate Social Responsibility and Development in Developing Countries, Deschna Afram

2. Corporate Social Responsibility In Developing Countries: an institutional analysis, Alberto


Willi

3. Corporate Social Responsibility, Chapter 21, Wayne Visser.

4. Corporate Social Responsibility: Implications for Small and Medium Enterprises in


Developing Countries, United Nations Industrial Development Organization Vienna, 2002

5. Dima Jamali (2014), CSR in Developing Countries through an Institutional Lens, in Gabriel
Eweje (ed.)Corporate Social Responsibility and Sustainability: Emerging Trends in
Developing Economies (Critical Studies on Corporate Responsibility, Governance and
Sustainability, Volume 8) Emerald Group Publishing Limited, pp.21 - 44

6. https://sustainabledevelopment.un.org/content/documents/no1.pdf

7. Mehra, M. 2006. Corporate Social Responsibility in Emerging Economies. The Journal of


Corporate Social Citizenship, Winter(24): 20-22.

8. OECD. (2001). The OECD guidelines and other corporate responsibility instruments: a
comparison.
9. Paris: OECD Working Papers on International Investment.

10. Tom Fox, Small and Medium-Sized Enterprises (SMEs) and Corporate Social Responsibility:
A Discussion Paper, IIED, 2005