Why do we define CSR as the strategy for operating in high-risk conflict environments? To me that signals it not embedded in corporate strategy, or essential to the effectiveness of the firm.
Perhaps I am concentrating too much on our use of CSR, but it makes me uncomfortable, especially when we talk about conflict zones. The very cSR strategies used by corporations can undermine governance in the developing world, because they inhibit the dialogue that ultimately must occur to stimulate effective governance. Here’s why. Multinational CSR strategies are a response to inadequate governance. Firms adopt CSR initiatives in countries such as Nigeria or China to ensure fair working conditions or to provide access to public goods such as roads, medicines or education. Effective governments can generally provide such regulations or public services, but in the developing world many countries lack the will, funds, or expertise to do so. Moreover, citizens often lack the education, rights, or ability to influence government. Policymakers are often corrupt or unresponsive. Citizens in developing countries thus, often turn to multinationals to provide these public services or human rights. And many people think that’s a good thing, because at least some people are getting the services or goods they need. But over the long run, this is problematic. On the supply (corporate side) Investors can be fickle, Firms often move from country to country depending on business conditions. Moreover, CSR strategies are expensive. Firms may abandon their voluntary initiatives when times are tough. Most importantly in my view, CSR strategies can create a moral hazard problem. CSR initiatives may undermine the feedback loop policymakers need to learn how to govern equitably and efficiently. If citizens can’t provide feedback, or policymakers don’t learn how to respond to such feedback, governance won’t be effective or equitable. Policymakers need time, and they need to learn from their mistakes. CSR strategies can thwart this learning, particularly in the area of human rights. Also, corporations can be easily manipulated by activist stakeholder groups that may or may not represent the public. We see this in Nigeria…I hope that we can evolve a new more enlightened approach to management that is embeded in the corporation, built on both ethics and strategic management.
Recently, I read an article about mining gold in conflict zones such as Congo, which has high pollution and many human rights problems. Since many conflict zones still have a very poor human rights record and their laws and regulations are very weak, the mining companies in conflict zones have used forced labor in their attempt to control the gold mining trade, and the local people have not received much compensation. Moreover, some companies pollute the water sources in conflict areas, and people are foreced to drink this water which could cause many health problems. Even though human rights groups have tried to protect human rights in these countries, it has been difficult to improve the living conditions of people affected by the mining, because the mining laws in conflict zones are still designed to attract only foreign investors, not to protect the local people’s rights. Moreover, I strongly believe that CSR in these areas is needed to protect their human rights. Practicing CSR will be beneficial to these mining companies in social and commercial ways because they not only could have a better public image, but could be more profitable in the long run.
I believe the issue of CSR during an era where the effects of globalization are becoming increasingly standardized touches upon the larger issue of learning organizations within the corporate world. I completely agree that companies should move away from traditional CSR practices due to the fact that they are not seen as profitable in the direct sense and are often times alienated due to the risks that they carry. Creative CSR must start with an innate change within management organizations. The old models must be thrown out and the learning organization, a type of organizational structure that relies heavily on innovation and systemic thinking, must be put into place. The current mental models that many businesses desperately hold on to label CSR practices as unprofitable, risky ventures that apply only to companies whose consumers demand it. Starbucks for example utilizes their CSR efforts as a strong marketing tool appealing to environmentally conscious consumers. This in effect for them is a revenue generator with the added benefit of social goodwill. Companies must veer away from the idea that there are only a few channels with which to implement successful CSR policies. And this change must occur from within the very framework of the organization itself.
This article offers some interesting points about businesses becoming involved in the government role in conflict areas. It seems that the question is not only how businesses can avoid becoming involved, but more when they become involved how will they ever get out? The community can become dependent on the actions of the business and consequently the business becomes stuck. So how can a businesses do good with an option to leave?
Combining this question with your previous question, I would like to have my say on the topic.
Firstly, I believe defining CSR as part of the strategy and in fact trying to bring the understanding CSR to conflict environments can be labeled as the first steps of a paradigm shift. How we name the new paradigm changes. Walter Robb on the first week’s discussion used the term ecological capitalism, Charles Koerber sees the new paradigm as part of the (new) code of conducts. At the end of the day, business is expected to take care of its social environment, too.
I will try to object to your point about CSR undermining the governance in conflict areas because of the contextual difference. In my humble opinion, - as you mentioned - when there is a corrupt, inexperienced, inadequate government and uneducated publics, multi-national companies with a CSR understanding can also lead the way for a better governance. They will be setting an example, for instance as Charles Koerber introduces the understanding of transparency as part of their code of conduct. With the financial and infrastructural improvements that come along with the business volume, I believe a way to better governance is paved rather than undermining the governance. - Though this is only my personal opinion.
Another point is I believe CSR should not be discussed in a cost/benefit analysis understanding though obviously sometimes corporations are in a situation to do so. I tried to summarize what I think about CSR in conflict areas above, thus I would bluntly claim that these attempts will be beneficial for business as they aim to normalize the conflict area, mitigating any possible costs/risks.
And finally thank you very much for this incredible discussion. I wasn’t able to contribute to the discussion before, however reading through all these great views and posts was a great pleasure!
Efe
Or perhaps they could transition from serving as a replacement to government to working with government and providing needed goods and services. As Jennifer and Kathy note in their work sometimes the investment is so great and long-term the option of leaving isn’t on the table. Many are nervous with the thought of businesses helping build capacity and background institutions but with the right partnerships and collaboration (and in the absence of an organic local effort) I’m not sure this is the worst alternative.
Interesting and important points. How we define CSR is important. I would be interested in hearing more about the difference between CSR and a more enlightened approach as you see it. Take corporate initiatives such as the building of water systems and pipes, providing medical care to workers and their families, and providing education to communities in countries and regions where these are lacking. Are these CSR activities? Are they strategic and crucial to the firm’s operations (e.g., the need for water for irrigation, the need for healthy workers)? Or are they result of firms attempting to fulfill what they see as their ethical duty to help when they see suffering and have the ability to help? You mention similar projects near the top of your comments and suggest they are problematic. But wouldn’t they also fall under the enlightened approach to management that you suggest based on ethics and strategic management?
- Resposne to question can be found collectively in Kathleen and Jenniffer’s work and the video discussion presentation.
The question itself however, is too generic to lend itself to a set of specific response(s). For example High/low risk defined
As indicated by kathy “Conflict environments” vary depending on the stagge of the conflict, duration and level/intensity of it
In my view (Without significant emperical evidence) at this time , firm risk management in conflict zones is tied to industry
As literature review/references cited in Kathy and Jenniffer’s work indicate the nature of the activity of firms is of relevance - It depends on the firm adding value to its stakeholder while at the same time managing and promoting peace in a region
- It is unreasonable to expect “Corporations” to include peace making in to their performance agenda.They lack experties
Thanks for the opprtunity to participate in the discussion to benefit greatly from the contributions made by all include Liesl.
Would be interested in your thoughts.
masoud
Looking at the posts it is apparent that many people agree it could be beneficial for companies to invest in and practice CSR in high-risk environments. Being that this sort of investment brings with it a much higher risk, do you think that there is something that the US government could do (for US MNC’s) to encourage investment and CSR in high conflict areas?
I agree with Hassan. A point I would like to add on is that these companies in many of these impoverished and conflict areas are not ruining a healthy environment through their business operations to begin with. Most of these countries lack the initial infrastructure needed for clean drinking water, etc - so you cannot place the blame solely on corporations. These governments cannot provide a healthy environment nor jobs needed to support their countries - so we should be a bit more lenient on corporations who are trying to solve at least some of the problems.
I do not think we define CSR primarily as the “strategy” for operating in high risk environments so much as well incorporate as the corse of many firms’ strategy in unfamiliar competitive landscape. CSR can play an integral role in both ingratiating a firm into a specific market and cultivating the workforce and community to play a vital role in the ultimate success of the company. Whether or not it is embedded in corporate strategy - to me - remains unclear.
Scott
One fo the questions that may need to be addressed is whether developing countries with impoverished populations should be using their very limited resources to promote CSR?
Hello Derrick,
You raise some excellent questions. Our survey was not able to capture those issues though. Hopefully we can find out more about how the public views firm involvement int he future.
I definitely think that firms will avoid countries characterized by conflict but I don’t think that is always possible. Either because firms cannot always anticipate such things, especially for long-term investments, and because some firms need access to unique resources or markets that are only available in certain parts of the world.
These videos made it very clear that pressure from stakeholders can impact an organization’s response. Well I’m wondering are they typically collaborative responses as outlined in the second dimension of the two-by-two typology?
Dear Alex,
Thank you very much for your observations.I have been very busy and finding time to respond was difficult for me.However, i want to say that i would broadly share and concur with your concerns.
With regard to Blackwater Security compony and others, i did not imply that they don’t respect CSR principles.Rather my concern was that the bar is set too low when it ought to be too high in a conflict zone.This is purely for purposes of improving the accoutability regime.Of course the war itself was not legal and very few querrel with that contention.Therefore to compensate for that legal deficiency, the CSR bar ought to be substantially elevated for a place like Iraq or Afghanistan.Even if it would be justified in some sense to allow the contaractors some flexibility of action considering the extra ordinarily dangerous conditions in which they operate, then a countervailing mechanism say in the US should have been instituted to deal with excesses.What should be unavailable to everybody, in all fairness, is blanket impunity.
I of course also share your concerns about their personal physical safety.I recall the 4 contractors who were brutally murdered in Fallujah,Iraq in March, 2004 and their shredded bodies hang on a bridge! That was awful to the extreme.Any compony that subjects its employees to that kind of condition without safeguards is obviously irresponsible and in fact that would be criminal dereliction of employee standards and welfare.Thats a legitimate CSR concern.
But my bigger concern is what precedent it would set if some people are exempted from the law. To address that is to make sure terms of engagement are clearly spelt out and maybe an even bigger blitz mounted to ensure that the public hearts and minds are won over and iam happy that has been happening.
All security componies or even MNCs operating in conflict zones ought to go an extra mile without sacrifising the interests of their employees to ensure that at all times a positive image of the compony is always projected.As for the terrorists and so called “innocent civilians” the law is very clear on how they can best be handled including the dangerous suicide bombers.
Thanks again,
Solomon.
In regards to CSR and its link to promoting peace, I feel as though companies with operations in foreign countries have a moral obligation to use their resources (financial, human, etc.) in order to help those in need. Not only will this benefit the citizens of the country but it benefit the country as a whole, and possibly set an example for the government to change its ways (should the running of the government be unethical). Moreover, initiatives taken on by the foreign company can help to promote peace by eliminating issues of concern in the country that could be the root cause of the violence.
Dear Eric;
Your thoughts and insighs while noble have an inbeded assumption that MNC’s interference is welcomed.
In light of the recent US financial firms fiasco and total diregard for CSR we might want to start at home. If we are talking about US MNCs the “moral obligation” must be considered at the source state.
It is good to have high expectations and standards.A large number of MNCs have a poor record in LDC
Thanks,
Masoud
Companies certainly need to be realistic about making change in a high-conflict zone. In my opinion, and this is sort of a “Hierarchy of Needs” argument, areas of high conflict have less of an expectation of CSR. Stakeholders in such zones have more to worry about and do not get to enjoy what I would consider the comfortable expectation of CSR that is growing in the US. That said, I think it is a wonderful thing that the US is at such a place where we can move toward self-actualization and demand CSR from our companies. Additionally, investors that do not reside in the conflict zone see little of the one the ground operations of the company in such a zone. Therefore, they cannot hold the company as accountable for its operations as one could in the US.
However, US investors are holding companies more responsible for their actions outside of the US and also the actions of their suppliers. Nike is a perfect illustration of making a failing argument that they are not responsible for the use of sweatshop labor by their suppliers. Americans did not accept this denial of responsibility.
I agree. I remember reading about Chinese miners who were trapped in an illegal mine. It also reminds me of the situation of the mine that collapsed in American not too long ago. The fact is, and perhaps it is cynical or perhaps it is realistic, that some people will always be inherently greedy. It costs money to comply with mining laws, to control pollution, and to practice sustainable efforts. Even the more perfect laws will always be skirted by some unscrupulous individuals. However, I am encouraged by the activity in this conference, in the activities and accomplishments of human right activists, and the trend of the markets to reward good behavior. Maybe the banks will learn their lessons this time, but I also do believe that people have incredibly short memories.
In conclusion, altruism will never beat out economic incentives for responsible behavior. Hopefully the markets will evolve in such a way that irresponsible companies are punished more by the markets than they would gain from short sighted, irresponsible profits.