Challenges of Multinational Corporations in Managing the Corporate Social Responsibilities - Assignment Example

Business Essay Table of Contents Business Essay Table of Contents 2 Introduction 3 References 12 Introduction Corporate social responsibility hasbeen emerged as one of the significant and tremendous manner of promoting and enhancing corporate acceptance of companies in the global society. The corporate social responsibility involves some social oriented activities or philanthropic exercises on the part of companies in an attempt to gain social acceptance and public recognition. The business entities are being considered as an integral and significant component of society and procure various resources from society in order to function and operate effectively in the market place (Barth and Wolff 2009). This dependency of business organisations on society outlines and highlights its responsibilities towards society. The expectation on the part of business organisations towards society has been identified and termed as corporate social responsibility in present world. Corporate social responsibility determines and governs the sustainability position of business organisations to a wide extent. The higher orientation of business organisations towards philanthropic and social cause improves sustainability and growth possibilities of business firms. Corporate social responsibility (CSR) is also being termed as corporate conscience (CC). The philosophy of CSR indicates that business organisations need to develop and implement policies capable of fostering developmental cohabitation to society. The CSR initiatives and projects aimed at promoting social and public interest through implementing social welfare programs and themes (Blanpain 2011). However, business organisations are also facing some challenges and issues in discharging their social responsibilities and obligations in an effective manner. The underlying business essay aims at identifying challenges and issues arising in the path of companies preventing them in discharging and fulfilling their social responsibilities in an effective manner. Challenges faced by Multinationals in managing corporate social responsibility The main challenges and issues faced by the multinationals in managing and fulfilling their corporate social responsibility are as follow: Prevalence of regional asymmetries and ‘digital divide’: The challenge and issue of regional asymmetries and digital divide has been intensified in the recent years. The pace of globalisation and liberalisation has provided new dimension to the issue of regional asymmetries. The policy of globalisation and liberalisation has facilitated and paved the path of global reach and expansion for multinationals. Multinationals can easily expand their business operations in other countries in order to widen their global reach and market share. The global reach and expansion to other countries enhanced market share of multinationals on one hand and also invited challenges in their existing framework of CSR (Crane 2008). The issue of regional asymmetries and digital divide has been visualised and faced primarily by IT companies. The IT companies are advancing their path towards developing and under-develop nations in order to gain operational and cost advantage. IT companies are benefited in terms of operating and financial cost factors on one hand and process of facilitating business operations in developing countries adds new framework and height to their CSR philosophies on other hand. The IT giants like IBM, Microsoft, etc are strived towards developing reliable communication infrastructure and software for people of developing nations. The companies intend to connect and integrate communities and people of developing nations having diverse religious, social, cultural and ethnic backgrounds. For this purpose, Microsoft has initiated project Shiksha in developing nations like India aimed to educate the concepts of information technology among students and teachers. The company visualised that proper knowledge and awareness about information technology will enable the people of developing nations to harness the benefits of technological advancements taking place around the world (Dobson 2007). The philanthropic purpose of educating teachers and students of Microsoft has faced the challenge of digital divide and regional asymmetries prevailing among the different regions of developing nations. The prevalence of regional asymmetries demand the company to introduce and launch tailor made education service packages for different regions of developing nations. The company realised that tailor made education packages that suits with the varied needs and preferences of regional communities is necessary in order to reap the benefits of CSR projects. The task of tailor made education packages will entail significant cost for company, thus preventing from implementing CSR projects. Governmental and financial barriers The various studies have evidenced that multinationals are facing wide number of governmental, financial, technological, social and cultural barriers. The governmental barriers arise on account of differences in the type and form of political structures prevailing in different countries. The political regime of some countries was marked by excessive and stringent regulatory frameworks creating difficulty for the multinationals for undertake their CSR projects. The good governance and high political will are some necessary condition for carrying out CSR activities. The lack or absence of good political governance and requisite political will act as barrier and discourages multinationals from initiating CSR activities (Hoivik 2004). For instance, domestic legislation of many developing countries like China usually does not contain provisions on minimum wage, health and safety issues, workplace safety, etc. The lack of inadequacy of provisions led the companies to face issue of labour exploitation in their operating and functioning phenomena. The US based footwear company Reebok International Limited faced several allegations and criticism on account of human violations happened in the Chinese factories. The technological barriers are another major challenges faced by business organisations in fulfilling and discharging their CSR responsibilities. The CSR activities of the business organisations are determined and governed by the level of financial resources available in respective countries. The lack of adequate financial resources creates difficulty for business firms in availing cost effective technologies in order to run their business operations. The difficulties in accessing cost-benefit technologies deter or discourage the multinationals in setting and conducting their business operations in financial weak countries. This situation creates negative impact on the proposed CSR activities likely to be undertaken by business firms (May, Cheney and Roper 2007). For instance, Samsung, Korean consumer durable company hesitate in internalising CSR into their corporate strategy and core business philosophy due to the lack of adequate and sustainable technological facilities in financial weak countries. Employee engagement The employee engagement has been considered as a strategic imperative for fulfilling CSR activities. The companies have figure out employee engagement as a necessary and essential condition for fulfilling obligations and duties under CSR in an effective manner. The employees engagement act as a rubric for multinationals to accomplish their stated CSR goals and objectives. The employees act as internal customers for companies playing crucial role in determining successful accomplishment of any business initiatives (Pogutz and Tencati 2006). The companies can succeed in meeting customers need and expectations through viewing and recognising their employees as internal customers. The company need to strive towards fulfilling the needs of employees through offering a complete and integrate menu of job products outlining benefits, packages and responsibilities. The complete and integrate job products motivates and encourages employees towards employee retention, involvement and higher productivity. In this regard, managers and strategic personnel of the companies assume the duty and responsibility of integrating diversified need of employees into CSR framework. Employees of multinationals business firms pursue varied needs, preferences and attitudes. Job package seems effective and lucrative for one set of employees might seem ineffective for other one. The variation in employees need, preference and attitude create difficulty for managers in integrating and retaining employees with companies. The integration and incorporation of employees needs into with the overall philosophy of business firms is being emerged as a complicated task for managers now-a-days (Wrether and chandler 2010). The issue of employee engagement as a major challenge in managing CSR and other social welfare projects has been witnessed and faced by many blue chip companies like Cisco Systems, General Electric and IBM. The task of incorporating and integrating CSR philosophy into corporate strategies demand the managers of blue chip companies to offer job packages suitable with the needs and preferences of employees (Pfeifer 2002). This task further needs understanding of needs and preferences of employees and prepared job packages accordingly. Each and every employee pose difference set of skills and attitude and thus the study of their needs and skills is quite difficult and challenging task for managers. It entails large amount of time and cost in understanding and analysing employee needs and preferences.Such challenges prevent the blue chip companies from fostering tailor made job packages to their employees. This practice and behaviour of companies develop a sense of reluctance and hesitation among employees in participating business activities and corporate affairs. In this way, employee engagement has been emerged as one of the significant challenge and demanding issue for some reputed business firms in fulfilling and discharging their CSR activities and projects (Hopkins 2007). Lack of commitment and consensus in implementing CSR activities The successful implementation of CSR activities demands high level of commitment and consensus among all internal and external stakeholders of business organisations. The task of gaining commitment and consensus from all stakeholders has been emerged as one of the most significant challenge for business organisations (Hugos 2011). The external and internal stakeholders hold divergent views and opinions on corporate actions and activities likely to be undertaken by the business organisations.The divergent views and opinions of external and internal stakeholders prevent business managers from arriving at a mutual agreed decision. The commitment and consensus among internal and external stakeholders is also necessary as they provide necessary resources and support for implementing any corporate projects (Corporate social responsibility 2011). For instance, senior executive of company might be satisfies and contended with CSR engagement and philosophies. However, it is very difficult for the company to grasp the specificity of CSR programs hold by the external and internal stakeholders. The internal and external stakeholder might perceive and evaluate the corporate philanthropic exercises and social work differently which ultimately affect commitment and consensus among them. The differences in the perception can be evidenced and understood through an example. For example, a company operates in dental health engaged in some corporate philanthropy or social good activities of providing money or charity to the American Dental Association. The corporate philanthropic purpose was being marketed by the company through advertising that a percentage of toothpaste purchase will be provided to the American Dental Association. The company also organised social marketing programs like opening dental clinics in cities in order to train and educate children about better dental health practices. These activities and social activities on the part of company has being viewed and valued differently by the different group of employees and stakeholders (Belkin and Gabbay 2000). Some group of stakeholders might hold positive perception regarding company’s CSR activities and accord favourable response. On the other hand, some other group of stakeholders and employees might perceive the above stated social activities as inappropriate and wastage of time and effort. They might accord negative response and were not agreed with the social activities undertaken by the company. This difference in opinion and perception among group of employees hampered their commitment and consensus level regarding CSR activities. Issue of transparency The issue of lack of transparency is another challenge faced by companies in implementing and discharging responsibilities arising under CSR programs and initiatives. It is often argued that companies lack transparency in developing and implementing their CSR strategies. The CSR programs, policies, impact of CSR programs and manner of utilisation of funds, etc are not being properly disclosed and revealed to the employees and other business personnel. The lack of transparency and improper disclosures negatively affected trust and confidence level of local communities and employees at all levels which in turn pose threat on the success of CSR initiatives (Kurten 2007). The maximum employee involvement and informing employees about CSR activities in a detailed manner is necessary for successful implementation of CSR initiatives. The employees need to have concrete, cohesive and consistent information regarding CSR initiatives likely to be undertaken by the company. The companies should inform the employees about the specifics of CSR initiatives, their operations, resources allocated and challenges likely to incur in the implementation in the proposed CSR projects. The complete information enables the employees and business personnel to be aware of their duties and responsibilities arising in the CSR projects and will be motivated to discharge them effectively. The IT giant, IBM has faced employees criticism on account of lack of transparency and incomplete information available to the employees. The information provided by the companies appeared incredible to employees. The company preferred and adopted online communities like On Demand Community in order to provide credible and reliable information to the employees and related person. The company believed that online demand community can play a significant role in inspiring and encouraging employees in involving CSR programs and initiatives and made them to feel that they are part of great social cause (Bueble 2009). Environmental challenges Multinationals also face various kinds of environmental challenges in expanding their global presence. The environmental challenges pose threat on the CSR activities and thereby impacting public image of the company. Wal-Mart, world largest retailer has faced various kinds of environmental challenges in CSR projects. The retail group operates in many developed and developing countries enjoying remarkable public presence and recognition in the global market place. However, the international CSR activities undertaken by the company in developing nations faced criticism from environmentalist, economist and politicians. The company faced issue of selling inorganic and unhygienic food products and usage of chemicals and antibiotics to make food products fresh and durable for long time which has created negative impact on the environmental sustainability issue. The chemically poisoned food products were against the ecological and environmental initiatives undertaken by the government of developing nations. Some economist and traders also argued that company is not engaged in recycling waste initiatives which led to the more trash like cups, bags, and other plastic items on the streets of nations. Experts argued that Wal-Mart need to offer health care benefits and ensure compliance with environmental sustainable activities in order to enjoy dominance and market leadership position (Paetzold 2010). Likewise, Kimberly-Clark Corporation, an international paper based consumer good giant was also being criticised on account of destroying and clearing forests for manufacturing purpose, recycling few proportionate of materials, etc. The issue created negative impact on the energy conservation programs, child labour and other human rights programs carried out by the company. Conclusion The discussion and analysis of the challenges and issues emerging in the path of managing and discharging social responsibilities by multinationals led to the conclusion that CSR is not an easy task. It entails lot of complications and difficulties preventing multinationals in completing CSR projects successfully. The major challenges confronted by the multinationals in the path of CSR involve lack of transparency, employee engagement, commitment and consensus issues among employees and managers, regional asymmetries and many more. The identification of above stated challenges and issues also throws light on the manner and ways impacting negatively on the CSR projects and initiatives. The companies need to conduct study and research on such issues that can potentially affect the successful accomplishment of CSR activities. The prior study and identification of factors that can act as challenges and issues for companies can increase the chance of meeting social obligations in an effective manner. Moreover, prior knowledge and study of all such variables also minimises time and effort likely to incur in proposed initiatives and results in optimal performance. 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