Source: www.asiaecon.org |

Corporate Social Responsibility: The Asian Impact

Over the years, Asian companies have begun to realize the significant effects that corporate social responsibility can have on businesses, employees and stakeholders alike. The move towards building more socially responsible enterprises has been gradually gaining momentum across the region. In recent years, many Asian governments have initiated a series…

Over the years, Asian companies have begun to realize the significant effects that corporate social responsibility can have on businesses, employees and stakeholders alike. The move towards building more socially responsible enterprises has been gradually gaining momentum across the region. In recent years, many Asian governments have initiated a series of measures aimed at encouraging private organizations to participate more effectively in community development projects.(1) This, they believe, will not only help raise the economic welfare of the local populace but also result in a more equitable distribution of domestic economic resources. Such steps are critical if the end goal of preventing the lopsided concentration of economic power in the region and ultimately promoting social stability are to be achieved in the near future.

CSR: The story so far

Corporate social responsibility (CSR) is not an entirely unknown concept in the Asian region. In the past, national leaders like Indira Gandhi of India and Lee Kuan Yew of Singapore, have stressed that local businesses should act with a greater sense of responsibility and consider the social, moral and environmental consequences of their enterprises and their resultant effects on the safety and well-being of the communities which they serve (2). However, the overall record of many countries on the ethical business front has been disappointing. This has been attributed to factors like poor work conditions prevalent in many factories existing in the low-cost manufacturing hubs of the region and the lack of concerted efforts on the part of local governments to enforce stricter compliance standards for both domestic and foreign companies. In recent years, much criticism has been directed toward developed countries for using developing nations as a dumping ground for “e-waste” and other environmentally hazardous materials. There has been a spike in the number of mass protests and demonstrations being staged by international and local human rights groups to highlight the abysmal work conditions and massive exploitation of human labor being carried out in particular countries. Also, certain organizations like India’s ICICI (Industrial Credit and Investment Corporation of India) are already leading the way in terms of incorporating more employee-centric policies and promoting a greater degree of transparency in their financial reporting and public accountability standards (3). These organizations clearly believe that the private sector should play a greater role in improving infrastructure, health and safety standards in the local economies and act as a catalyst in the broader economic development process. Even corporate heavyweights like Nike have started implementing better corporate standards in Indonesia after the backlash they received in the international news media over the unfair labor standards.

Future of CSR in the region

Despite all the above measures, the overall success on the CSR front remains largely limited. There are several corporations who believe that advancing the greater common good and realizing bigger profits are mutually exclusive goals. Also, questions have been raised about the efficacy of the CSR initiatives undertaken by the companies in the region. It is believed that the kind of CSR that merely goes through the motions, delivering no new resources to worthy causes gives the firm’s workers or customers no good reason to think more highly of it (perhaps the opposite) and may ultimately involve a net loss of welfare.(4) This occurs when the costs of enforcing the requisite CSR measures outweigh the overall social welfare gains realized.(5)  Therefore, organizations that desperately want to be perceived in a flattering light by the general public must rationally consider the potential costs and resultant benefits arising from the various socially responsible initiatives that are implemented. Only then can corporate social responsibility truly fulfill its role of achieving a fairer distribution of resources, thereby disseminating the benefits of social welfare across the various strata of society across the Asian region.

Source: www.asiaecon.org |