CSR in Developing Countries

CSR and Developing Countries

• CSR examines business's role in society and maximizing positive outcomes
• Developed countries' concerns drive much of business activity
• Middle and low-income nations increasingly adopt developed-country CSR agendas through engagement
• CSR movements and initiatives have emerged in China, India, South Africa, Philippines, and Brazil
• A "one-size fits all" approach to CSR globally is ineffective in developing countries

Justifications for CSR

• Defensive: It minimizes potential adverse effects on local communities, environments, and markets when imposed internationally through supply chains and investment.
• Proactive: It increases domestic public benefits in economic, social, and environmental terms.

Potential Roles of Government in the CSR Agenda

• It spans social, economic, and environmental issues like corruption, poverty reduction, and human rights
• It likely differs from country to country

A Multiplicity of Policy Instruments

• It defines 5 roles for public sector engagement: Regulation, Facilitation, Partnership, Endorsement, Demonstration
• Policy instruments vary widely, reflecting different approaches and economic conditions
• Social and environmental legislation expresses public sector engagement with CSR.

Different Ranges of Application for CSR in International Perspective

• Sustainable Development and Environment: There is to promote a new economic model that secures the needs of the current generation
• Human Labor Rights: Corporations need to be consistent with fairness and respect for basic rights
• The Entrepreneurial strategy of large enterprises: Be Compliant and Be Consistent

Local Economy and Society

• Large international enterprises significantly impact less-developed countries
• Stakeholders should be involved in decisions that aid host country development
• "CSR in Action" initiatives can include infrastructure projects and community support.

Transparency

• It is a managerial initiative enhancing public access to corporate information, involving openness, communication, and accountability
• Corporate measure success is tied to accountability, indicating a commitment to its objectives and achieved results

Legality & Consumers

• Adhering to laws is the minimum for CSR.
• It contributes to fair and sustainable development by going beyond legal requirements
• Enterprises need to reject unfair competition, corruption, and tax evasion
• Consumer commitment determines enterprises' reputation and success

Supply Chains

• Complex supply chains outsourced to countries with lax human rights or environmental protection need responsible conduct
• Ethical control lacks in supply chains, becoming a financial and commercial risk

Globalization of Corruption

• Corruption varies from bribery to personal wealth accumulation through embezzlement
• Bribery enables MNCs to gain contracts or concessions.

Exporting Corruption and Hiding the Loot

• Increasing Debt: Bribes inflate project costs and external debt
• Illicitly benefitting the Company, : Bribing high-level officials ensures profits over benefiting the country
• Western banks and offshore financial centers act as major recipients for bribes and corrupt money
• Offshore banking is used for confidential services
• Private banking is used for $17 trillion that experiences phenomenal growth

Blacklisting Companies

• The World Bank has a Sanctions Committee (1998) to investigate and debar corrupt companies
• The World Bank listed 54 ineligible firms, 36 of which are British (as of May 2000)

Government Action

• All governments must act in an environment where donors avoid over-hasty policy changes
• It requires engaging In social, economic decision-making
• International agencies should not add to incentives for corruption
• Anti-corruption programs should be built nationally, in local contexts, with full government employee support

Resistance

• Mobilize Ordinary People: Civil society can confront governments innovatively
• Push for Freedom of Information: Citizens can hold governments accountable
• Help Increase Citizen Participation in Decision-Making involves citizens monitoring public expenditure

Corporate Governance

• The allocation of corporate resources maximizes value for all stakeholders
• Transparency, inclusivity, equity, and responsibility needs to be evaluated
• Processes, customs, policies, laws, and institutions impact corporations

Types of Institutional Investors

• Hedge Funds: It is an investment account for specific investors with wide investment and trading activities
• Investment Banking: It refers to helps corporations and governments raise capital by underwriting
• Investment Trust. It refers to investors pool money together from a fixed number of shares

Motives for Cross-Listing

• Improve Liquidity and Share Price: Cross-listing improves existing share liquidity by mispricing in capital market
• Increase Visibility: Cross-listing enhances corporate image and is more familiar with the financial community
• Support Takeover Bids creates secondary market shares for acquiring companies
• To Support the Share and Options Plan, it can compensate less management and employees in foreign subsidiaries

Role of Institutional Investors in Governance

• Monitoring: It helps in close monitoring of corporate performance
• Driver of Agent's Performance: valued investor can demand performance
• Good Activist: It helps to be the fearless fiscalizers of corporate policies.