Wednesday, 20 October 2010

CSR and the Global Market

The market has become increasingly globalised, in the sense that product and services are bought and sold in a global context. As value chains span over border, often several borders, regulating it becomes more difficult and a single state is not enough to ensure responsible business practise. This shows a need for other actors to help promote CSR, in the form of companies or international organisations,. Thus CSR work is perhaps even more important in the globalised world of today.

However, some countries with developing economies are critical to international CSR standards, for example India. In this case CSR is considered a concept developed and defined by developed countries and not fit for developing countries. In the global market place developing countries generally have their main advantage based on the low costs of labour, and by implementing a CSR standard this advantage is believed to diminish due to the cost of CSR. Therefore a standard giving companies importing from developing countries incentives to choose suppliers that are compliant with the standard, could give developing countries a disadvantage, at least at first. If this would force business out of the developing countries, investments would decrease and the standard of life would likely decrease; what would be beneficial for workers on the surface, could lead to adverse effects.

The (economic) reasons for CSR work are often stated by a few assumptions:
• Customers favour product and services by responsible companies
• Investors favour investments in responsible companies
• Potential employees would rather work in a responsible company
• Engaging the stakeholders of the business leads to larger opportunities for innovation
• Reduction of risks in regard to environment, labour and society

However, according to Knox and Maklan these assumptions seem to be hard to measure and the results so far seem to be ambiguous at best. To get a clear idea on the relationship between CSR and beneficial results further research is needed, in doing so new ways to measure and explore this issues need to be developed.

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