Multinational institutions and CSR

Multinational institutions and CSR


Multinational organizations play a big role in the implementation of sustainable development goals. the SDGS can be categorized to poverty and inequality; energy and climate change and peace. there are various CSR theories that can be applied to ensure that the corporations meet the corporate social and responsibility requirements. Multinational organizations are faced with the impact of investing in foreign countries where they have to be properly aligned to meet the legal and statutory requirements of the host country. The sustainable development goals are made of 17 goals set by the united nations to be achieved by 2030. The goals mainly address the social, economic and environmental measures to ensure sustainable development. Organizations are faced with various challenges such as the immigration issue, famine and drought, security concerns and climate change which negatively impact on production and the market. Developing countries are considered emerging markets whereby international organizations invest in education in a bid to build their reputation. Education is considered a “grand social challenge” in emerging markets, hence international invest in their CSR and for-profit activities to attain meet the challenge. By improving education and other social challenges, the international firms build a good reputation which will allow them to have a good reputation and attract the attention of stakeholders.

Lack of universal quality education is the major barrier to economic growth in emerging markets. The lack of education addresses one of the SDGS which deals with poverty and inequality. The SDG addresses on trade and inequality, multinational enterprise operation in developing countries, business at the base of the pyramid and microfinance. International trade is responsible for social impacts such as the development of economic ties and addressing critical global problems. The main contributor to the development of multinational enterprise in developing markets is because of increasing consumer demand, technological innovation, globalization of labor markets and the increased accessibility to information and knowledge. There are various CSR theories which can be applied by firms to ensure that the corporate social and responsibility objectives are met. Corporate social and responsibility theory is concerned with the need of organizations to make profits and ensure ethical interaction with surrounding communities.  It also involves attainment of profits by corporations while paying attention to the welfare of the community.  The theory is mainly composed of four obligations: the first one is the economic responsibility which requires companies to make profits to ensure their survival in the market. Nonprofit organizations also make profits from their own activities and through donations and grants. Failure of a company to make profits contributes to its decline. The absence of profits means no business and no business ethics. The second obligation is the legal responsibility of organizations to follow the laws and rules that are set. Organizations which are responsible follow the rules for social good, the laws and rules also stipulate the limits to be maintained.  CSR envisions that firms will follow the limits set without considering the fines that will be paid when the rules are broken. The third obligation is on ethical responsibility which requires corporations to do what is right even when not stipulated in the law. It mainly depends on corporate culture to view the business as a citizen in society.  An example of the application of this responsibility is the control of poisonous waste by the corporate organization.  It involves enclosing the waste in double-encased, leak-proof barrels and ensuring that contamination will be safely contained.  The action is done not because it is stipulated in the law but because it is socially right. The fourth obligation of the theory is the philanthropic responsibility to contribute to society’s projects even when they are independent of the operation of the business.  An example of such initiatives includes the creation of dams by a chemical company in the society to cater for the needs of the society not because it will benefit the company in any way but because it is the right thing to do.  It portrays the need for business to care for the welfare of the surrounding community. The responsibilities are ordered in the hierarchy of importance, and the achievement of one leads to the need to achieve the next one.

Another theory is the triple bottom line theory which is a form of corporate social responsibility, which requires the company to not only concentrate on the revenue but also the environmental and social perspective. The key areas to the success of this theory are the identification of three responsibilities and keeping them separately to respond to their results independently. And another way is to ensure that the company provides sustainable results in the selected three responsibilities.  Sustainability refers to the long term maintenance of balance. To achieve sustainability economically, socially and environmentally the following issues have to be addressed: economic sustainability which concentrates on long term financial solidity over short term profits. The triple bottom line model stipulates that large corporations have a responsibility to create business plans which allow stable prolonged actions. Sustainability in business plans means ensuring that the plans do not anticipate on quick profits, but it ensures that the organization will not collapse. An example is companies who pollute the environment by releasing waste without effectively controlling the impacts will gain profits within a short term because of their failure to spend of safe disposal mechanism. However, the company will be in high risk of being shut down after the concentration of the waste has gone up and they will be heavily fined to account for the damage they have caused to the environment. Social sustainability in the model values the balance in people’s lives and the way we live. The aspect of social sustainability calls for equal distribution of resources whereby the rich share with the poor to reduce resistance and revolutions which may be witnessed as a result of extreme poverty by some population in the society. To achieve this, there is a need to practice fair trade movement which is an ethical imperative to ensure shared opportunity and wealth. The movement calls upon developed countries and well-financed organizations to pay suppliers heavily from impoverished nations without considering what the laws stipulate on compensation.  It also applies to the service offered and the goods obtained from the struggling countries. To ensure peace in the equal world distribution of resources should be ensured to limit anger and envy. Social responsibility also calls for organizations to respect the employees in the organization by giving breaks and compensating them well. Europe is known to undermine human dignity by firing and hiring people without considering their needs.  Also, corporations should ensure that there is a healthy relationship between them and the surrounding community. The third sustainability construct in the model in environmental sustainability.  It concentrates on natural resources, clean air, and clean water.

Corporate reputation is the collective assessment of a company’s attractiveness to a specific group of stakeholders when related to the companies which they compete for resources. Companies reputation has an impact on brand equity, export competitiveness, international expansion and impact on the framework of the country.  Depending on the audience companies can leverage multiple reputations basing on the government, competitors customers and the public. Stakeholder engagement is essential for the success of CSR programs in corporations. Stakeholder theory is responsible for outlining the corporate social responsibility. Stakeholder theory outlines individual who will directly affect the operations of the organization and those who will be affected by operations of the organization. When setting up operations, the stakeholder theory insists on business ethics which considers the right to clean air and clean water by those living in the around the company. Hence the surrounding community is considered as a stakeholder not because they own any stock but because they can alter the decision-making process of the organization.  Some of the stakeholders in an organization include; company owners, company workers, customers, and potential customers, suppliers, individuals living around the organization, creditors and government entities.  In this approach, the main profit of the organization is not viewed in money but in human welfare.  Managing experiences impressions and beliefs of stakeholders are essential in determining the success or f failure of an organization by the reputation created.

CSR initiatives need to involve community leaders, activist, regulators, and legislators not only customers. The main contribution to the failure of CSR initiatives in most organizations is because of limited planning. The limited planning involves narrowing of focus by an organization to selected external stakeholders. An effective CSR should address stakeholders even those who are not in the immediate operations. The disconnected strategy is the main contributor to the failure of stakeholder involvement by an organization. The elimination of CSR from traditional business strategic planning  has led to the limitation in access to knowledge in the organization. The disconnect between CSR and strategic planning contributes to the failure of the organization which reduces buy-ins. To effectively address the disconnection there is need to ensure stakeholder engagement in the organization. The  first move is finding the stakeholders companies need to establish tools to find relevant stakeholders and determine when and where they engage them. Stakeholders should not only be limited to those who are directly involved in the operation of the organizations but also the surrounding community. The second move is ensuring that there is connection between the organization and the stakeholders; this is ensured by encouraging dialogue and communication with the stakeholders. The CSR model of engagement should be different from the standard model by demonstrating responsibility within the business rather than creating an image of responsibility.  The transparency in the organization will contribute to high buy-ins and valuation by the stakeholders. There is need to embed external engagement to the culture of the organization. An organization cannot be transparent to external stakeholders without exercising transparency among employees and other internal stakeholders. Engagement should not be seen as a propaganda but as an essential aspect in decision making in the organization. Every decision made should be weighed on the impacts to the general society. The fourth requirement in ensuring stakeholder engagement is the development of performance measurement.  The measurements are to act as standard indicators which enable benchmarking and evaluating effectiveness in initiatives.  A performance measurements ensures that all internal stakeholders are well informed on the importance of engagement and the expectations of the engagement initiatives. The last step in ensuring stakeholder engagement is ensuring that the engagement is a continuous process. Improved reputations provides the organizations with a defensive and offensive ways to operate in their business environments. In emerging markets a company’s trustworthiness enables the company to gain a competitive advantage and reduce uncertainty. Companies can partner with third-party endorsers who have a good reputation to enhance them to be in control of their own image. Use of marketing campaigns and testimonials together with association with third parties who have good reputation are the endorsement strategies that can be used.

Following decolonization and deglobalization after the Second World War, emerging economies such as those in Asia, Africa, and Latin America experienced strict government regulations including nationalization and abolition of the capitalist system.  Capitalism was associated with colonialism, and there was need to build consensus among the indigenous people. Nationalization after the liberalization made it difficult for companies to invest in other countries. An example is the Turkish Mv holding whereby its founder stated that the main problem with most countries was that they did not want to open up. Also, CEO of Africa Investconsult stipulated that most African countries were against private sector companies because they were owned by rich individuals who are hard to control. The developing countries transitioned to market economies in 1980s and 1990s, and they were faced with various challenges especially the public sector. Issues of corruption, poor intermediaries and inefficient labor were some of the challenges.  It was at this point that corporations saw the opportunity to expand their scope. To boost their reputations companies used three approaches which included partnership with other companies, filling the institutional voids that had been identified in the public sector and serendipity which is the casual circumstance to help a company rise to spotlight. Corporate social responsibility initiative addresses the grand social challenges to help in enhancing firm’s image by portraying it as an honest assigning high quality to their products. By engaging in societal projects, the corporate firms are able to gain a higher bargaining power against nationalization by addressing social challenges such as education and health.

Education has been used as the grand challenge by most corporations to gain competitive advantage and build their reputation. The emerging markets include countries in middle east, sub-Saharan Africa, and the southeast Asia and central and South America.  Due to the economic status in the territories, the citizens in the countries of the above regions are low-income earners. The main contributing factor to the low income is because of lack of basic education which prevents long term development. Improved literacy and improved numeracy contributes to economic outcomes such as investment and increasing the income levels by improving on other social factors such as nutrition and health. Education promotes human capital development which promotes economic advancement and modernization. Better education creates a better business environment by yielding better employees and consumers. Murat Vargi outlined that increasing education budget in a state contributes to the GNP per capital which also contributes to the country’s development. Dr. Tahir head of Indonesian conglomerate Mayapada Group outlined that for business to be conducted there is need for the people in the lower level of the pyramid to upgrade. The social problem contributes to the low buying power and distribution problems. In the emerging economies, resources have not been allocated to the education sector contributing to the larger population of illiterate individuals. Compared to Europe and America  Africa Asia and late America has the highest population of illiterate people. India and middle east, for example, had below 10% of population who were literate by the middle of the twentieth century while in Sweden 89% of the population were literate by 1690s. education is a grand challenge and to effectively address it there is need to include multiple stakeholders to improve the literacy standards of most part of population especially in Africa.

Provision of universal quality education in emerging markets is faced with a lot of complexities because of the high number of stakeholders involved. The different stakeholders have different strategies to address the issue which makes it difficult to come to a common ground. The stakeholders involved include UNCTAD, UNICEF, local governments and teachers unions. To effectively address the paradigm of social responsibility of business is profit there was need to encourage privatization of most public organization sand encouraging foreign capitalist by reducing tariffs and other barriers. The business sector in most emerging countries has been involved in education projects be it higher education such as secondary education and university education and also primary education. By concentrating on higher education, public resources can be allocated to cater for primary education which in turns improves the literacy levels of the people in the society. Trade liberalization is the main catalyst which contributed to most private sector organization to invest in education which in turn improves the literacy levels of the people. Business leaders outline that education helps people in making informed decisions in terms of credit and consumption. The encouragement of foreign investors contributed to high foreign capital which encouraged public spending and govern aids from the foreign countries. CSR strategies in emerging markets mainly concentrate on education at all levels to boost the literacy levels which in turn creates a good business environment. The main aspect that contributed to the focus on education by most corporates is because it is a popular cause among the public. Also when compared to other social problems such as healthcare it is cheap which leverages government spending. The provision of education by corporate bodies builds their reputation and acts as a way of giving back to the society by the various organizations. To ensure that the grand challenges are addressed there is need for the private, public and civil societies to come together and provide the needed resources. When companies invest in education they create trustworthiness among the general public which is essential for their long terms survival.

Companies can mobilize their resources to boost their reputation through various strategies. The strategies include; the development of educational projects at different levels; the construction of alliances and collaborations and creation of foundations to support education initiatives. Companies and business leaders mobilize various stakeholders by engaging in educational projects at various levels.  Improvement of primary education helps with employee relations with local constituencies. Primary education is essential in ensuring long-term growth and a possibility of better life to the local communities. An example of a project which aimed to address primary education is that of Fernando Merril the founder of MFJ Group in Siri Lanka who vowed to take responsibility of the children of his employees throughout from primary to university level. He did it by providing clothes, textbooks, shoes and stationery to the children.

Focus on university education is another education project which can be established by companies to build their reputations. The initiatives are mainly targeted towards the elites in the community. An example is Guillermo Murchison who was a former CEO of a shipping and logistics in Argentina who started a university with the aim of reducing brain drain because large number of high school graduates had to go to united states to pursue their university education. Hence he was involved in establishment of Universidad San Andres in Buenos. Unlike primary education, university projects have a medium-term outcome, and it is mainly centered to a given group of the population. When companies forms collaborations with other actors in the delivering of education projects, it gains reputation benefits and prominence. This contributes to their strong relationship and their role as local stakeholders in providing resources for education purposes. Strong business networks are formed which help in addressing risks and increasing influence in the education sector.

There are several studies which have been done which address the SDG on trade and inequality. It uses an institutional approach by looking at the national level analysis the operation of multinational enterprises in developing countries has several impacts such as employee compensation, development of infrastructure and recruitment of local talent. Good reputation is essential for the operation of multinational enterprises in developing countries to aid in gaining competitiveness and trustworthiness among the locals. There are some negative consequences that multinational enterprises can impact on the society and firms by investing in developing countries. When firms with high reputation invest in least developed countries, they may be required to poach talent from local companies. The main reason behind this is the fact that when compared to the local companies the MNEs offer high employee compensation. Also, the technological innovation used by MNEs in least developed countries make it to be more competitive than the local companies. Various strategies can be used by multinational enterprises to boost the low-income environments who are in the base of the pyramid.  The strategies should focus on the strengths of local market conditions such as use of non-traditional partners, co-inventing custom solutions and building local capacity. Microfinance is a poverty reduction, and it is among the themes on trade and inequality which aims to offer loans to individuals to help in self-development. The loans are given at a lower rate, and they target the most vulnerable groups in the developing countries such as women and the youth. The funds are given to the individuals to enable them to start their own investments which will reduce dependence on aids and help in poverty reduction in the society. There is need to use such strategies especially in developing countries in Africa where job opportunities for women and the youth are limited.

Energy and climate change is an important SDG which is addressed by the multinational enterprises as they have to meet both home and host country environmental requirements (Kolk et al. 2017). Climate change is the main concern in most industries and companies which produce harmful gases and substances. There is need for the companies to ensure that the waste products are effectively contained to reduce the health impacts that are likely to be caused by their release to the environment. Energy and climate change is a societal concern of the companies because it deals with the lives of the general community living around the company. The release of poisonous substances cause defects especially on young children and the elderly in the society.


CSR initiatives are mainly concerned with the alignment of activities of the multinational organizations to ensure that they are more concerned with the stakeholders who are directly and indirectly impacted by the operations of the organization. Education is a grand challenge which should be effectively addressed by multinational corporations to ensure that they have a good business environment. Universal education equality is very essential in improving consumer consumption behavior and purchasing power. The CSR theories on the need for multinational organization to not only concentrate on their economic benefits but also the welfare of the surrounding society.