Chapter 2: Corporate Social Responsibility: A literature review
2.4. Developing countries, their priorities and the nature of CSR
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suggest that because CSR strategies may be industry and context specific, this makes the operationalisation of the concept rather difficult. According to the findings by O’Connor and Shumate (2010:530) CSR activities vary depending on the industry’s position in the value chain. Workers' safety, ethical business practices, and the protection of the environment are the key concerns in mining and other industries which are farther up the value chain. Industries that are closer to consumers on the other hand, tend to concentrate more on philanthropic and educational CSR practices.
Furthermore, as business practices and performances have improved over time, so too have social standards and expectations and this too has had an impact on CSR practices and consequently, its definition. As communities have evolved, so too have their understanding of their rights. Their values, attitudes, expectations and interests have changed, and this has led to a different approach as regards their engagement with business. Steiner (1972:18) agrees, stating that organisations exist to serve a certain social purpose, and that as that society matures, so too should the organisations' activities. Evolving stakeholder engagement means that organisations face increasing pressure to play a role in the social welfare of the communities in which they operate. The advent of globalisation and technology has helped to spread social and environmental consciousness. Tanimoto (2004:153) asserts that this has led to communities demanding more socially responsible actions from organisations in the form of safer products, better employment practices, increased environmental management awareness as well fairer engagement with developing nations. It is expected that society's expectations will evolve due to underlying forces such as changing social values and global movements.
Despite this, it is important to understand that organisations have a responsibility beyond their economic mandate and that business needs a well-operating community so as to function and succeed. Inevitably, the relationship between business and the community becomes intertwined and co-reliant. Consequently, the most appropriate definition of CSR for the purpose of this research is presented by McWilliams and Siegel (2001:117) who identify CSR as “actions that appear to further some social good, beyond the interests of the firm and that which is required by law”. This definition demonstrates the importance of appealing to the organisation's investors whilst recognising its legal and social responsibilities. Morris (2015:2) adds that social good is an intentional action undertaken with the purpose of benefiting society's environmental, social, and economic well-being. Put simply, the organisation needs to establish shareholder value, fulfil legal obligations such as paying tax as well as cater for the welfare of the community in which it operates. From this, CSR is identified as a beneficial practice for both business and society.
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programs such as Zimbabwe's Indigenisation and Economic Empowerment Policy. To do so, it is necessary to establish an understanding of developing countries and more specifically, look at their priorities and needs. This will assist in understanding the CSR strategies that are developed in response, not only to the legal obligations, but also global and local expectations.
For one to contextualise the role of business in developing nations, it is important to define the term developing countries and differentiate countries from those that are recognised as developed.
Mullerat (2010:182) defines developing countries as those countries that are in the process of industrialisation and have less financial and infrastructural resources needed to address social, economic and environmental challenges such as poverty, unemployment, lack of health and sanitation as well as inadequate housing. These countries are characterised by low levels of industrialisation, personal incomes, education and health standards. In comparison to other countries, a developed country, as defined by the United Nations Developed Country List (2020), has an advanced economy and technologically sophisticated infrastructure as well as political stability, high per capita incomes, guaranteed security, high innovation and a higher level of exports than imports.
A more economic classification would be one that measures countries by capita gross national income (GNI) thereby grouping countries as high income, upper middle income, low middle income and low income. For example, countries with less than $1005 GNI per capita are regarded as low- income countries, while countries with a GNI per capita that is between $1006 and $3975, are considered lower middle-income countries.
The United Nations Department of Economic and Social Affairs (2020:164) states that on the recommendation of the UN's Committee for Development Policy, the Economic and Social Council determines the categorisation of the least developed countries (LDCs), which is then confirmed by the UN's General Assembly. This list includes countries that have a GNI of less than $1005 (Low- income countries) and Heavily Indebted Poor Countries (HIPC) as determined by the World Bank and International Monetary Fund.
Table 2.1 provides a list of countries that have been classified as developing countries by the United Nations based on the aforementioned criteria. Relevant to this study is the inclusion of Zimbabwe amongst the list of developing economies as illustrated below. These countries continue an uphill struggle to improve the lives of their citizens but often face what often seem like insurmountable challenges that hinder socio-economic progress.
38 Table 2.1. Developing economies by regions
Source: United Nations Department of Economic and Social Affairs (2020:166)
From an investment perspective, organisations are attracted to these developing countries because of the vast untapped natural resources, the rapidly expanding markets as well as the low cost of
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operations found in these areas (Ajayi, 2006:15; Goulbourne, 2003:4). MNCs operating in these countries quickly become significant conduits of socio-economic development as their investments are expected to improve the livelihoods of citizens. These organisations are expected to become partners of the country’s governments in the developmental agenda.
Visser (2009:474) states that developing nations offer a distinct set of challenges that need to be addressed by organisations operating in them. These are distinctly different to the challenges faced by developed nations because of the glaring socioeconomic disparities. Developmental challenges form an integral part of the former as their priorities are focused more on social, economic and environmental matters.