International Business: Corporate Social Responsibility

Maintaining the competitive advantage has always been a question of being able to adjust to the changing times. The customers’ and suppliers’ bargaining powers are two vital factors of Porter’s five forces analysis framework, which means that multinational corporations have to align themselves with the target audience’s and suppliers’ outlooks if they are to maintain their loyalty and successfully compete with other businesses.

A major consequence of this is that companies progressively put more effort into achieving high corporate social responsibility (Rugman & Collinson 2012). High levels of corporate social responsibility and transparency generate goodwill, which is an extremely valuable resource in the global market (Zheng, Luo, & Wang 2014). However, there are a lot of critical issues that severely impede the corporations’ ability to fulfill their social responsibility obligations.

A lot of these issues can be united under the umbrella terms of corruption and fraud. Venkatesan groups the actions described by these two concepts into four principle categories of actions that go against corporate ethics (Venkatesan 2014). These categories are bribes, speed money, which are payments meant to enhance the speed of routine services, extortion, and employee fraud. Other examples of how corporations have been found to perform borderline socially irresponsible actions are by using legal loopholes to avoid taxes (Santos, Laczniak, & Facca-Miess 2015)

These issues are very pervasive and set the grounds for further transgressions against the public trust.

But, to better connect with the modern customers and governments, and to maintain the public trust, corporations have been putting increasingly more effort into determining their principle corporate responsibility issues and combating them.

Venkatesan is certain that not only can corporations be made to operate ethically and responsively, but that leadership carries a lot of responsibility for illegal approaches (2014). To assure high levels of internal corporate responsibility, the management needs to maintain a workplace culture that is opposed to corruption and other vices. This can be achieved by encouraging and maintaining competency among employees, and by instituting a formal code of conduct that would regulate interactions between people, promote transparency, and create new channels for generating and processing customer and worker feedback.

Strong local leadership also is an important requirement of a corporation inoculated from issues of corporate social responsibility. Most importantly, the leadership must itself fight the sense of entitlement that often comes with the high positions, and serve as a paragon of regulation compliance, with a zero-tolerance attitude towards misconduct on any level of the company. Finally, one of the reasons why bribes and speed money are so widespread is because they provide shortcuts for businesses. Moving away from questionable practices can cause a backlash effect for the company, putting them at a disadvantage against companies who still use inappropriate tactics, and inducing the ire of corrupt officials.

The only way to successfully oppose this effect is by banding together and setting the standard for the whole global market. This effort was exemplified in the creation of the United Nations Global Compact and similar initiatives. It is a network of businesses and officials from around the world, who pledge to uphold the corporate social responsibility and facilitate communication and consensus on the questions of ethical standards for enterprises. This and other organizations often serve to bridge the gap between the corporations and the governments.

However, even though such initiatives are in place, the question of CSR is still strong, as even member companies, like Shell, have been found guilty of ethical transgressions despite their participation in the organization (Voegtlin & Pless 2014).

References

Rugman, A. & Collinson, S 2012, International Business, New York: Pearson.

Santos, N, Laczniak, G, & Facca-Miess, T 2015, ‘The ‘Integrative Justice Model’ as Transformative Justice for Base-of-the-Pyramid Marketing’, Journal Of Business Ethics, vol. 126, no. 4, pp. 697-707, Philosopher’s Index, EBSCOhost.

Venkatesan, R, 2014, ‘Confronting corruption’, McKinsey Quarterly, no. 4, pp.92-101.

Voegtlin, C. & Pless, N 2014 ‘Global governance: CSR and the role of the UN Global Compact’, Journal of Business Ethics, vol. 122, no. 2, pp.179-191.

Zheng, Q, Luo, Y, & Wang, S 2014, ‘Moral Degradation, Business Ethics, and Corporate Social Responsibility in a Transitional Economy’, Journal Of Business Ethics, vol. 120, no. 3, p. 405-421, Philosopher’s Index, EBSCOhost.