Towards strategic CSR in
multinational corporations
Mai S. Linneberg and Line Thorup-Jensen
Abstract
CSR is a context-specific phenomenon, which makes working strategically with
CSR particularly challenging for a multinational corporation as it must allow
for the various contexts of operation. Based on the extant literature, this article
provides a conceptual presentation of an MNC’s opportunities to work with CSR
acknowledging and taking into account the context embeddedness of CSR. We
propose that MNCs consider four key decision areas when developing strategic
CSR. Furthermore, we present a framework model for CSR that takes into account
the MNC’s need to consider both a local and a global CSR approach.
Introduction
What does it actually mean to work with Corporate Social Responsibility (CSR) in
a multinational corporation – and what are the challenges of strategic CSR?
Working with CSR poses a series of challenges for any company. CSR cannot
be perceived as a company-internal process. A broader scope is needed, including CSR partnerships with the company’s stakeholders and, in some cases, with
their stakeholders. In addition, stakeholder demands constantly change and have
therefore – with good reason – been termed moving targets by Morsing & Schultz
(2006). Furthermore, CSR depends on perception (Carroll, 1991; Sharma, 1997)
as individual, cultural and moral structures influence how CSR is approached by
each manager and employee (Guvenli & Sanyal, 2002). Moreover, CSR is seen as a
cross-functional practice, which potentially pervades all departments and organisational levels of the company – at least if its implementation is taken seriously.
CSR work is therefore a challenging task for companies both with regard to its
contents and its organisational implications.
If these challenges are considered in the perspective of a multinational company
(MNC), the level of complication increases as the legal entities of MNCs are, by
definition, based in various countries (Bartlett & Ghoshal, 1989). An MNC’s multiple and diverse contexts add considerably to the challenges associated with managing and operating CSR compared to the national corporation. As a result, MNCs
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Danish Journal of Management & Business nr. 02 | 2014
are exposed to multiple and at times conflicting demands from their internal
and external stakeholders (Logsdon & Wood, 2005; Arthaud-Day, 2005) making it
harder for companies to establish a clear-cut CSR profile (Guvenli & Sanyal, 2002;
Kolk & Pinkse, 2010). Internally, an MNC will harbour at least as many approaches
to what CSR is, what it should include, and how it should be implemented, as are
found in the contexts in which the MNC is embedded (cf. Barnett & Burgelman,
1996; Christmann & Taylor, 2002; Angus-Leppan et al., 2009; Matten & Moon,
2008; Gjølberg, 2009; Naor, 1982; Logsdon & Wood, 2005). Due to the high degree
of globalisation, there are many examples illustrating that a behaviour which is
ethically uncontroversial in one subsidiary may very well cause ethical conflict in
the context of another subsidiary or of the head office. This illustrates that there is
considerable risk of so-called negative legitimacy spillover across the various units
of an MNC (Kostova & Zaheer, 1999). This risk makes it important for the MNC
to ensure a measure of coherence in the company’s ethical and social behaviour,
which constitutes an additional challenge to the general managerial challenges associated with CSR work.
CSR is a broad concept, and it has therefore been broken down into various forms
(Carroll, 1979; 1991; Lantos, 2001). Lantos thus refers to ethical, altruistic and
strategic CSR where ethical CSR includes Carroll’s (1979; 1991) economic, legal
and ethical responsibilities (Jamali and Sidani, 2007). Behaviour is here guided by
what is considered correct not just in pursuance of current legislation but owing
to a moral sense of responsibility. Altruistic CSR builds on and adds to ethical
CSR: it is humanitarian or philanthropic; companies go further than required by
their moral responsibilities. Adding to this, strategic CSR includes a requirement
that the contents of CSR must lead to value creation. Thus strategic CSR, which
forms the basis of the present paper, is defined as »…the effective alignment of
philanthropic contributions with business goals and strategies, thus allowing the
reconciliation of social and economic benefits« (Jamali, 2007: 8). Social responsibility then should not be perceived as being incompatible with profitability or be
decoupled from the company’s overall strategy (Drucker, 1984; Lantos, 2001; Porter
& Kramer, 2003). CSR is frequently considered an economically demanding activity (Christmann & Taylor, 2002; Detomasi, 2007; Logsdon & Wood, 2002; Logsdon
& Wood, 2005), but the costs of strategic CSR are typically considered a long-term
investment (cf. Vaughn, 1999). In other words, CSR contributes to long-term value
creation in line with other functions performed by the company (Carroll, 1991;
Hart, 1995; Lantos, 2001; Nidumolu, Prahalad & Rangaswami, 2009). Specifically,
CSR may add to value creation through differentiation which allows the company
to hold a given position in the market (Paine, 2002) or through reputation control
(Graafland et al., 2012). In practice, philanthropic or ethical CSR seems to be the
most widespread form of CSR (cf. Lantos, 2001). This paper nevertheless focuses
on strategic CSR because this perspective represents a more viable role for CSR.
When companies adopt strategic CSR, the CSR activities fuse with company objectives and become an integral part of company modus operandi: »CSR is not about
being seen to ‘do good’, but can only be meaningful when it is part of the ‘DNA’ of
an organization« (Hingley, 2010: 116).
38
Towards strategic CSR in multinational corporations
Even though the extant literature considers various elements of CSR management,
no holistic model or framework for the management of strategic CSR in MNCs
exists (Arthaud-Day, 2005). From this basis, this article seeks to determine how an
MNC’s need to work both locally and globally defines how it works with strategic
CSR. The objective is to provide an overall recommendation pinpointing the decision areas that managements should work with to create a strategic approach to
CSR, and to describe how these areas may be adapted to accommodate both local
requirements for flexibility and global demands for efficiency. The conclusions
made here are primarily based on MNC strategy literature and literature focusing
on how to organise a company’s CSR work.
The article comprises two main sections and a conclusion. In the section below,
we map out the central decision areas that the company must focus on to create
strategic CSR. The next section explores a model allowing an MNC to differentiate
these decision areas in its CSR strategy.
Central CSR decision areas
In this section, we outline four interconnected decision areas which each contribute to strategic CSR management. A review of the CSR literature allowed us to
identify at least four questions that a company needs to answer to create strategic
and operational CSR:
•
•
•
•
Why are we doing it (link to our objectives)
Who are we doing it with/for (stakeholders)
What do we do (CSR topics)
How do we present our efforts (reporting tools).
The four decision areas are interconnected and affect each other. Therefore, the
areas require constant adaptation to keep them in sync, but also to ensure that the
initiatives taken constitute a current, up-to-date concerted effort across various
contexts.
Objectives and CSR activities
The strong focus on how CSR may contribute to the economy of a company is
closely related to its ability to achieve coherence between its business objectives
and its CSR strategy.
Strategy has been described as the decision pattern that reflects a company’s objectives and purpose (Mintzberg & Lampel, 1999). Additionally, the strategy serves
to position the company vis-à-vis other companies in the industry (Porter, 1996)
to achieve competitive advantages (Prahalad & Hamel, 1994; Eisenhardt & Martin,
2000). Numerous studies have pointed out that CSR activities may contribute to
the achievement of competitive advantages (Husted & Allen, 2006; Hart, 1995;
Carroll & Shabana, 2010). Competitive advantage is achieved through a company’s
internal resources and its capacity to develop and employ unique combinations of
resources. This means that the creation of resource combinations that are valuable,
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Danish Journal of Management & Business nr. 02 | 2014
rare, inimitable and specific to the organisation (VRIO) (Barney, 1991) is a prerequisite for achieving competitive advantages. The combination of CSR resources
and other resources can yield VRIO competences.
Hart (1995) employs the resource-based perspective in the field of CSR in an approach coined The Natural Resource Based View (NRBV). The NRBV view argues
that companies can build unique internal resources by adopting a CSR perspective; and taking CSR as a starting point will, in turn, allow the company to differentiate and develop its business activities. If CSR activities are to contribute to a
company’s strategy, they must be aligned with its objectives (see also Christmann
& Taylor, 2002) the argument being that for CSR to contribute as a resource, it
must take the form of proactive handling of social issues and hence serve a strategic CSR purpose (Mischalisin & Stichfield, 2010; Sharma, 1997; Sharma & Vredenburg, 1998).1
Stakeholder management
When a company selects its CSR activities, it consequently chooses the stakeholder groups it wants to focus on (Russo & Perrini, 2010; Carriga & Melé, 2004;
Carroll, 1991). Actively involving stakeholders may leverage the communication
of a company’s CSR if the stakeholders’ acknowledgement of the CSR efforts is
exploited actively (Morsing & Schultz, 2006). Furthermore, studies have argued
that efficient stakeholder management may generate considerable resources by
providing access to technologies or knowledge and by boosting corporate legitimacy (Naor, 1982; Epstein, 1989; Morsing & Schultz, 2006; Detomasi, 2007; PerezAleman & Sandilands, 2008; Jamali, 2010; Tipuric & Lovrincevic, 2011). Therefore,
strategic CSR involves targeted stakeholder selection based on these stakeholder
groups’ potential influence on company activities.
Several models have been developed which map stakeholders’ impact on companies. Strategic influence may be defined as the stakeholders’ influence on a company’s ability to fulfil its objectives (Husted & Allen, 2006). Strategic stakeholder
management can be facilitated by prioritising stakeholders based on two considerations: stakeholder »outside-in« impact on a company’s competitiveness and the
company’s ability to impact stakeholders »inside-out« (Porter & Kramer, 2006). In
the classic philanthropic view on CSR, stakeholders are prioritised according to
the legitimacy of their demands. The strategic viewpoint, which is gaining an ever
stronger foothold, calls for an assessment of the total joint value associated with
demand accommodation (Carroll 1991). However, the possibility that CSR strategy
may reverse the causality may be worth considering. In other words, the selection
of a particular CSR strategy will define the strategic importance of various global
and local requirements because they support the choice of strategy (Christmann,
2004). Therefore, it is important to integrate internal as well as external stakeholders to ensure that the CSR strategy is not based exclusively on the parent company’s perception of the relative importance of CSR areas, but that it also takes into
account subsidiaries’ and external stakeholders’ points of view.
40
Towards strategic CSR in multinational corporations
MNC stakeholder management is complicated due to the many and potentially
conflicting environments which require different CSR approaches (Cheng & Ahmad, 2010). The relative importance of stakeholders’ demands will also influence if
CSR should be managed more or less globally (Chaudhri, 2006; Christmann, 2004;
Steger, Ionescu-Somer & Salzmann 2007). It has been recommended that a global
strategy be employed when stakeholders of strategic importance expect an MNC
to uphold certain universal standards (Guvenli & Sanyal, 2002; Carriga & Melé,
2004). If local stakeholders have a strategic influence on a company’s possibility
to operate locally, a local CSR strategy must be employed to accommodate local
interests (Christmann, 2004; Delmas, 2002).
Selection of topics
A conscious and targeted selection of CSR topics is a fundamental element in strategic CSR management. For CSR activities to be considered strategic, they should
both contribute to improving social welfare, broadly speaking, and serve the company’s objectives (Husted, 2003; Carroll & Shabana, 2010; Christmann & Taylor,
2002). Relevant topics therefore may also stem from the company’s values; PerezAleman and Sandilands (2008) argue in favour of working towards a joint set of
values in collaboration with the company’s stakeholders. The strategic approach to
CSR is thus naturally a proactive approach as opposed to »CSR budding« relating
to CSR initiatives of varying importance.
As the legal, social and economic conditions of individual countries affect which
CSR topics are relevant (Baughn, Body & McIntosh, 2007), a company may decide
whether it wants to focus on universal topics or if each subsidiary should be left
to adopt a local focus in which case the choice between local and global management will depend on the strategic importance of the topic locally (cf. Husted &
Allen, 2006).
Furthermore, when selecting CSR topics, it is essential to assess if the company
has the necessary resources to influence and manage the selected topic, otherwise
it will not have strategic impact (Christmann & Taylor, 2002; Runhaar & Lafferty,
2009). However, experience in the field of CSR may increase a company’s ability
to acquire new CSR resources more rapidly. Highly experienced companies may
therefore potentially develop competences allowing them to implement CSR activities beyond the scope of their existing CSR resources (Cramer, 2005).
Selecting reporting tools and policies
A CSR reporting tool and policy (below also simply tool) is defined as the structure which enables a company’s implementation and organisation of CSR activities. Such tools include certifications, standards and guidelines. A review of the
extant literature shows that the company should ensure that the CSR management
tools used support the company’s CSR objectives. We have identified four elements that are essential to ensure that CSR management and CSR objectives are
well aligned and that the chosen tools work as levers of CSR.
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Danish Journal of Management & Business nr. 02 | 2014
i) The choice of more or less explicit reporting tools impact how the tool will
support a CSR strategy. Explicit tools include formalised descriptions of how CSR
should be handled, whereas an implicit tool relies more on socialisation and tends
to be rooted in company values (Matten & Moon, 2008; Angus-Leppan et al. 2009).
The explicit approach is easier to verify, but it may limit the company’s leeway for
adjusting the tool in response to context-specific challenges (Christmann & Taylor,
2002; Russo & Harrison, 2005). An implicit approach is easier to adapt to local
needs (Watson & Weaver, 2003). Socialisation, however, is difficult to manage,
and implicit approaches therefore leave the company’s CSR profile more open to
interpretation across operations. This approach was therefore criticised seeing that
it may not lead to a root-and-branch implementation of CSR (Cramer, 2005). However, examples of decoupling of explicit guidelines, e.g. management standards,
are abundant. A company may employ a mix of the explicit and implicit approach
to CSR on an issue-to-issue basis (Angus-Leppan et al., 2009).
ii) The literature distinguishes between process and performance-related tools.
Process-related tools are requirements concerning the manner in which CSR
should be implemented. Performance-related tools require companies to implement CSR performance standards, whereas the operationalization and implementation is left in the hands of the individual manager (Gjølberg, 2009; Cramer,
2005). The two approaches impact CSR behaviour differently. Process-oriented tool
standardises CSR management across the company only if the guidelines provided
are very specific; thus this may pave the way for centralised CSR management. On
the other hand, a focus on performance-measurement typically calls for the design
and implementation of a management system to measure CSR behaviour, which
may then be compared across the company (Gjølberg, 2009). It should be noted
that performance tools are based on a simplified understanding of CSR; these
tools are thus only recommended for CSR areas in which measurements are easily
made, as the development of standards for more intangible areas is complicated
(Carroll, 1991; Watson & Weaver, 2003).
iii) Reporting tools may be either internally or externally authored. Although a
tool is externally authored, the content can be influenced by other stakeholders
who may participate in their making (Christmann & Taylor, 2002). The participation of a large number of stakeholders may improve the legitimacy of the tool, but
the number of compromises involved in broad multi-stakeholder initiatives may
also water down the contents (Runhaar & Lafferty, 2009; Frandsen & Kolk, 2007),
which, in turn, may leave more decisions to those who implement the systems. Externally developed standards allow companies to engage in benchmarking against
the competition; and if standards become widely used within an industry/market,
they may serve as a quality parameter (Detomasi, 2007; Cramer, 2005).
Companies with limited CSR experience may gain from implementing externally
authored tools (Runhaar & Lafferty, 2009), which may provide access to CSR
resources and knowledge through networks of tool users (Christmann & Taylor,
2002; Detomasi, 2007). However, an internally developed tool allows the company
42
Towards strategic CSR in multinational corporations
to tailor its practices to specific strategic objectives (Christmann & Taylor, 2002;
Runhaar & Lafferty, 2009). One solution may be to implement open/broad external
tools using an internal tool offering the company the combined advantage of both
types of tools (Runhaar & Lafferty, 2009).
iiii) The complexity of a reporting tool should match the resources allocated to
the reporting activities. The more complex the tool, the more resource-intensive
its development, implementation and management (Delmas & Montiel, 2008). This
applies to resources in the form of capital as well as experience working with CSR
(Runhaar & Lafferty, 2009). The level of resources allocated also affects the relation
between the local and the global element of the CSR strategy. It has been proposed
that once implemented in the MNC, a multinational CSR strategy will provide
more control and ease coordination (Delmas, 2002; Smith & Scaricz, 2011). Therefore, a company which employs a generic, low-cost management strategy will also
integrate CSR globally to achieve efficiency and reduce CSR management costs
(Dong, Zou & Taylor, 2008). Transnational management structures will be formed
through local and global CSR departments as well as knowledge exchange between
these and other functions of the company (Cruz et al., 2010).
The four decisions areas presented in this section are relevant to any company
working with CSR. In the second half of the article, we present a simple strategic
framework that takes into account the four areas and that also allows for a multinational corporation’s need to work with both a local and a global approach to
CSR.
CSR strategy in a multinational corporation
CSR work can largely be understood as a reflection and translation of a company’s
understanding of the demands placed on its activities by its surroundings. Also
the strategy of an MNC reflects its ability to adapt to demands from its surroundings and its strategic room for manoeuvre is based on the MNC’s capacity
for global efficiency and local adaptation as well as its ability to simultaneously
accommodate these contradictory requirements (Bartlett & Ghoshal, 1989). Depending on the relative force of these two pressures, there are three archetypical
strategies, which are presented below in table 1.
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Danish Journal of Management & Business nr. 02 | 2014
Table 1. Characteristics of three MNC strategies
Multinational strategy
Global strategy
Transnational strategy
Strategic focus
Adaptation to local contexts
(optimisation country by
country)
Global optimisation (economics of scale)
Local adaptation and global
integration (stimulant)
Production
Adaptation to local
needs
Standardisation
Both adaptation and
standardisation
Structure
Decentralisation
Centralisation
Networks
Communication
Limited between
parent company and
subsidiaries
From parent
company to
subsidiaries
Between all units.
Some informal
communication
Global division of
work
Horizontal integration
Vertical integration
Subsidiaries have an independent role
Development of
knowledge
Is developed and stays in
the subsidiaries
Is developed and stays in
the parent company
Is developed in all units and
exchanged between units
Source: Pedersen (2005).
The extant MNC strategy and structure influence the perception of the strategic
relevance of local and global CSR pressures, respectively. Thus, the current MNC’s
strategy may influence the approach towards CSR to resemble the overall strategy.
This is particularly relevant when CSR is integrated with the company’s other
functions, at least if the functional structures are of strategic importance. For
instance, global standardisation of other MNC functions will increase the pressure
to adopt global CSR (Christmann, 2004). Similarly, local CSR topics are considered
more important in companies adopting a multinational strategy than in companies adopting a global strategy (Husted & Allen, 2006). A multinational strategy
will lead to a focus on the individual subsidiaries’ CSR strategies, which, in turn,
will produce local activities, policies and management (Logsdon & Wood, 2002;
Chaudhri, 2006; Husted & Allen, 2006). As a result, CSR efforts will focus on local
adaptation of the CSR strategy to the contexts in question (Chaudhri, 2006). Such
a strategy may be developed completely »by the book« in a partnership with the
stakeholders that are most important to the company in question, and it should
provide a greater sense of ownership and leeway to implement the strategy locally.
Creating a clear-cut CSR identity across the whole company, however, may prove
to be a challenge. In a global strategy, the company employs a globally embedded CSR strategy demanding standardised implementation including consistent
process and performance requirements based on universal »hyper standards«
(Arthaud-Day, 2005; Logsdon & Wood, 2002; Jamali, 2010). This type of strategy
allows the company to adopt a clear-cut and unambiguous CSR identity, which
is – however – bound to be challenged whenever local adaptation pressures arise.
A company may implement global standards allowing local management adaptation of CSR in areas where the global standards are at variance with local requirements, but only where they do not run counter to the global standard (Logsdon &
Wood, 2002). In the transnational strategy, the global and local CSR approaches
are not considered mutually exclusive (Arthaud-Day, 2005). Broad performance objectives are rather developed across the MNC and then implemented locally to ensure that they match local requirements. As a result the CSR approach is adjusted
44
Towards strategic CSR in multinational corporations
globally, but it remains flexible and capable of adaptation to local contexts, which
may lead to best practices being shared across the organisation (Logsdon & Wood,
2002; Husted & Allen, 2006). »Duplication« in Figure 1 is not a direct reflection of
a generic MNC strategy; rather it includes transfer of locally developed CSR to the
global context by adopting the use of locally successful CSR in other areas of the
company (Chaudhri, 2006) as may be the case for a Centre of Excellence. Figure 1
summarises the four approaches to CSR strategy in the MNC.
Figure 1: Typology of CSR strategies. Source: Adapted from Chaudhri (2006)
Implementation
Local Global
CSR topic
Global Local
Globally
integrated
Duplication
Global/
hybrid
Local
adaption
Opposed to an approach that directly translates the generic strategies of MNCs to
the CSR strategy and choosing between the four typologies in figure 1, Chaudhri
proposes a diversified operationalisation of CSR (2006; Logsdon & Wood, 2002).
In a topic-by-topic approach, the company combines a host of its CSR management strategies depending on the relative pressure for global standardisation and
local adaptation of the implementation of each CSR topic (e.g. human rights).
Some CSR topics may best be solved globally, whereas others require local adaptation. When determining its CSR strategy, an MNC continuously has to scrutinize
existing and potential pressures to decide their relevance to company objectives
and strategy in order to decide the strategic approach t. In this manner, a decentralised company strategy may be an asset when local factors are of strategic importance to an MNC as this requires a certain amount of local adaptation (Gupta &
Govindarajan, 1991; Christmann & Taylor, 2002; Detomasi, 2007).
In accordance with the identified demand concerning adaptation of CSR and
company objectives, the company’s strategy influences the management of CSR.
When an MNC adopts a global strategy to CSR, CSR is certain to be fully aligned
with the company’s objectives (Delmas, 2002). However, due to the differences
in subsidiaries’ strategic importance and the mutual resource dependence2 of the
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Danish Journal of Management & Business nr. 02 | 2014
subsidiaries and the parent company, it may be argued that CSR strategy will also
depend on the strategic importance of the resources in the subsidiary in question.
CSR strategy: CSR topics and subsidiary role
Taking point of departure in the above review we suggest a combination of the
MNC strategy approach and the topic-by-topic approach. The following simple
model (Table 2) combines these two approaches allowing the decision-maker to
take into account both the fact that CSR is context-specific and therefore should
potentially be implemented differently in different markets, and the fact that subsidiaries are different and may therefore play different roles for the strategy of the
multinational corporation.
Table 2. Model for diversification of CSR strategy
Topic
Subsidiary
CSR topic 1
CSR topic 2
A
Is there a need for differentiation in:
1) the topic
2) the subsidiary’s role
Is there a need for differentiation in:
1) the topic
2) the subsidiary’s role
B
Is there a need for differentiation in:
1) the topic
2) the subsidiary’s role
Is there a need for differentiation in:
1) the topic
2) the subsidiary’s role
The model ensures the adoption a systematic approach to both aspects of strategic
management of CSR. Two of the four decision areas concerning CSR in an MNC,
namely »who are we doing it for« and »what do we«, are represented directly in the
model. Whereas the relation between CSR topics and the company’s objectives (why
are we doing it) is a prerequisite of each selected topic and the choice of reporting
tool forms part of the implementation and is therefore not included in the model.
The choice of CSR topic is closely associated with the company’s stakeholders. If
a stakeholder has the potential to influence the company heavily, it will choose
to work with the topics relating to that stakeholder. The need for differentiation
with regard to topic therefore relates to both stakeholder management and topic
characteristics.
The above model is application-oriented and should be developed in cooperation
with a specific company where relevant CSR topics should be added.
To clarify its practical use, the below figure (Figure 2) provides an example of
limited implementation of the model. The company’s starting point is a global
strategy, and it therefore also adopts a global CSR strategy from the outset. The
company prioritises CSR in Denmark, and the Danish subsidiary will therefore
serve as a Centre of Excellence for the other company units. The model illustrates
a reciprocal relationship between the parent company and its subsidiary. If CSR
requirements arise from a subsidiary’s context, the company needs to decide if
these requirements should only be honoured locally or implemented globally even
though the stakeholder dialogue is limited to the subsidiary’s market.
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Towards strategic CSR in multinational corporations
Figure 2: Model for diversification of CSR strategy
A Danish MNC with three subsidiaries. One in Denmark, another in the UK and, finally, one in India.
The company markets an industrial product and its R&D department makes use of animal tesng.
All subsidiaries contribute to the producon which is scale based. The company has a global
strategy and adopts an overall CSR strategy. The example illustrates how the company works with a
diversified CSR strategy based on the organisaonal units and CSR topics.
Topic
Human rights
Animal welfare
Role of subsidiary
Denmark
(producon, R&D)
Topic: No need for differenaon
from parent company
Topic: No need for differenaon
from parent company
Role: CoE on CSR and therefore
proacve CSR here
Role: CoE on CSR and therefore
proacve CSR
Topic: No need for differenaon.
Topic: Local pressure. Focus area.
Animal welfare stakeholders given
high priority
Role: No need for special role.
Role: Contributes with knowledge
about the specific handling of the
topic.
Topic: Strong focus on providers with
regard to human rights.
Topic: No specific challenges.
Role: Main producon scale-based
Parcular aenon to challenges
associated with scale-based
producon in developing countries
(e.g. working condions and
minimum wages).
Role: No need for special role.
United Kingdom
(producon)
India
(producon)
Conclusion and discussion
Based on the CSR literature, this article generated four questions representing the
decision areas which form the starting point for strategic CSR work: i) why are we
doing it (adapting business objectives and implementing CSR); ii) who are we doing it with/for (stakeholder management); iii) what do we do (selection of topics);
and iiii) how do we show it (choice of reporting tool). We embedded these decision areas in a single model that combines the context-dependence of CSR topics,
which are potentially different from one market to the next, with the individual
subsidiary’s strategic role. The model ensures that the company can adopt a systematic approach to CSR differentiation while taking into account specific topics
and characteristics of the subsidiary. Keeping an eye on both local and global pressures, the company can thus adopt a strategic approach to CSR which accommodates the contextual diversity of real-world companies.
The review brought together a number of relevant elements for a company’s
decision to take up strategic CSR. The primary challenge is the MNC’s contextual
diversity which calls for more/less standardisation/adaptation depending on the
strategic importance of each CSR topic for each subsidiary. The literature review
identified a wide range of complexities and potential challenges associated with
the strategic CSR decision process in the MNC. One primary contribution for sub47
Danish Journal of Management & Business nr. 02 | 2014
sequent empirical analysis is that contextual impact must be identified and understood in order to achieve strategic CSR in an MNC. This discussion indicates that
CSR strategies would vary from one CSR area to the next and potentially from one
subsidiary to the next. Furthermore, the review demonstrated a need to involve
numerous stakeholders to determine how to implement strategic CSR. The importance of broad participation is underpinned by the existence of limited rationality
that also characterises CSR management.
The development of strategic objectives outlined and choice of activities / stakeholders and reporting tools based on the strategic strengths of global and local
management will serve to establish a snapshot of CSR management strategy for an
MNC. CSR focus areas are dynamic as are the competitive conditions in markets.
An MNC, therefore, needs to continually revise its CSR strategy to ensure that
it remains relevant and adds value to the MNC’s business; this constant adaptation calls for co-called »dynamic capacities« (Eisenhardt & Martin, 2000). Therefore, strategic CSR management like strategic management is an ongoing process
(Markides, 2001; Léon-Soriano, Munoz-Torres & Chalmeta-Rosalen, 2010).
It is impossible to assess the impact of CSR strategies before their implementation, and it is next to impossible to isolate these from other performance variables
after their implementation (Runhaar & Lafferty, 2009; Schaefer, 2004; Husted & Allen, 2006; Guvenli & Sanyal, 2002). Therefore, lacking information and limited rationality should be considered inherent conditions of CSR management decisions.
This may possibly explain why the literature has considered CSR management to
be heavily method dependent (Husted & Allen, 2006; Hussey, 2001; Angus-Leppan,
2009).
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Notes
1. The studies mentioned above indicate that CSR may add value by formation of resources, but do
not isolate the direct impact that specific CSR methods have on company performance. And none
of the studies were carried out in an MNC.
2. Resource dependence is defined as the belief that one unit is based on and depends on support
from another unit which supports it by making substantial resources available to it (Kostova & Roth,
2002). Extant literature on MNC management has described the importance of local resources for
an MNC’s management of its subsidiaries (Gupta & Govindarajan 1991).
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