Summary and Overview
In the modern world, businesses and corporations face a range of ethical, social, and sustainability issues in their operations. While countries do have regulations guiding corporate behavior, ethics in international business are often based on cultural and geographical differences; a normal practice in one nation is illegal in another. In the modern world of transparency and public perception, companies have adopted a range of ‘doing good practices and attempting to reduce negative impacts on society (Hill, 2020). It is driven at least in part by public pressure in Western countries where the major corporations are often headquartered and generate most investments and sales. These practices are most seen through sustainability measures or social diversity policies. These practices are known as corporate social responsibility (CSR).
Perspectives on the Issue
The article by Kilfoyle (2022) notes that CSR reporting is nearly mandatory at this point for major publicly traded companies. However, it also has its flaws, such as reporting ‘best-in-class’ metrics or positioning achievements in extraordinary ways, or sometimes simply presenting marketed PR statements on CSR; there are no inherent laws or standardized metrics to force these companies to report. At the same time, there are constructive benefits and results. A range of companies, such as Starbucks, Apple, and Disney has added a range of environmental and workplace targets to their CSR objectives. Not only are they reporting significant figures and key policies such as removing waste-creating packaging from their products, but also trying executive pay to achieve these objectives, with over 20% of top companies in the world adopting the practice (Temple-West, 2022). Furthermore, as highlighted by Peters (2022), CSR can take on forms of political and social boycott when it comes to ethics, such as companies pulling out products produced in Uyghur territories in China or refusing to work in Russia – generating public awareness and support for ethical, socio-political issues while creating pressures on certain markets for change.
Explicit and Implicit Issues
The explicit issue with corporate responsibility is that it is counterintuitive to the primary purpose of business which is to maximize returns to shareholders. That is not to say that corporations should engage in highly unethical behavior, but as highlighted, different countries have different perceptions and practices. Furthermore, a major criticism is that the CSR activities are, in reality, nothing more than PR stunts and corporate ‘greenwashing’ (Lumen, n.d.). An implicit issue is that the cost of CSR actually falls more on smaller businesses. While major corporations have the budget to dedicate to CSR practices, SMEs do not, and even if they are operating within normal parameters, they face public pressure to participate in some form of CSR, potentially at a tremendous loss for them.
Recommendations for Conduction International Business
Research generally suggests that corporations invest in CSR while conducting international business. Kim and Lee (2020) found that CSR activities, particularly fitting for the company, significantly increased the public’s and consumers’ brand awareness, authenticity, and attitudes. Meanwhile, Seok et al. (2020) determined that when CSR activities are given public recognition through aspects such as news or word of mouth, the brand and firm value increase and generate interest in the company.
Questions
After exploring the issue, one of the primary questions is whether CSR remains purely a theoretical and PR concept or does it have a real-world impact that is beneficial to communities and the world. Information on this can be found by potentially exploring the CSR efforts of any large corporation in greater detail and following through to determine if their stated efforts and achievements are having an effect on the ground and are necessarily based on expert opinion. Another question to explore is if CSR potentially has a double-sided effect. For example, when Nike faced public pressure to withdraw production from countries like Bangladesh due to child labor and work environment concerns, it also removed a significant source of income from that community, creating more poverty and greater potential for exploitation. The answer to this question can be found in exploring concrete examples and studying statistics.
References
Hill, C.W. L. (2020). International business: Competing in the global marketplace (13th Edition). McGraw-Hill Higher Education (US).
Kilfoyle, M. (2022). Mandatory corporate reporting on sustainability: what is the likely impact? Economics Observatory. Web.
Kim, S., & Lee, H. (2019). The effect of CSR Fit and CSR authenticity on the brand attitude. Sustainability, 12(1), 275. Web.
Lumen. (n.d.). Controversies surrounding CSR. Web.
Peters, A. (2022). The case for more companies to keep pulling out of Russia. FastCompany. Web.
Seok, J., Lee, Y., & Kim, B.-D. (2020). Impact of CSR news reports on firm value. Asia Pacific Journal of Marketing and Logistics, 32(3), 644–663. Web.
Temple-West, P. (2022). US companies add environmental and social targets to executive bonuses. Financial Times. Web.