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Corporate social responsibility not limited to developed markets

Corporate social responsibility (CSR) is a set of behaviors most often ascribed to established firms based in wealthy nations such as the United States and members of European Union. But what about the developing world, where pragmatic necessities of survival and growth are thought to trump the loftier ethics that drive CSR?

Systematic CSR does exist in the developing world, according to research by Alan Muller of the University of Washington Foster School of Business and Ans Kolk of the University of Amsterdam. But its existence owes more to the commitment of local managers than to external pressures applied by governments, non-profit watchdogs or even the powerful companies at the purchasing end of global supply chains.

“Extrinsic pressures that push firms toward being more socially responsible are important,” says Muller, a senior lecturer in international business at the Foster School. “But they fall on deaf ears if management of a supplier firm is not committed to ethical behavior.”

People over pressure

For the studies, Muller and Kolk analyzed 121 firms operating in the auto parts industry of Mexico, an emerging market tied to the powerful US automotive industry. They considered CSR performance in a variety of behaviors across three dimensions: environmental, labor and community. Their measures reflected standards of CSR practice in developed markets.

What the authors found in Mexico was an integrated approach to CSR that captured performance in multiple areas; for instance, in dealing with employees, in managing waste removal, and in relations with the neighboring population. In the second study, they found that intrinsic drivers of CSR—managers’ commitment to ethics—outweighed extrinsic drivers—regulation, societal and supply chain pressures.

The bottom line: “If you are a multinational interested in achieving high CSR performance from suppliers in the developing world, setting standards and expectations is not enough,” says Muller. “You’re efforts are going to bear more fruit if you socialize management, inculcate supplier leadership with those values you think are important.

“It means shifting away from impersonal external pressures toward putting management—people—center stage and fostering a morality-based commitment to ethics. That’s what really matters.”

CSR Performance in Emerging Markets: Evidence from Mexico” is published in the April 2009 Journal of Business Ethics. “Extrinsic and Intrinsic Drivers of Corporate Social Performance: Evidence from Foreign and Domestic Firms in Mexico” is published in the January 2010 Journal of Management Studies.