The responsibility paradox: multinational firms and global corporate social responsibility

This paper examines the impact of multinational firms’ increasingly blurred geographical and institutional boundaries on the nature and definition of Corporate Social Responsibility (CSR). It begins with a brief history of CSR and describes changes in the global corporation and the pressures impinging on it over the past 25 years It hen analyses the resulting mismatch between the contemporary corporation and traditional concepts of CSR.

The paper then dissects some of the issues raised by this new concept of global CSR. It also speculates on future trajectories for CSR in multinational corporations as globalisation continues to exert pressure for convergence of national standards into a more universal definition of Global CSR (GCSR).

The overall proposition that emerges from the discussion is that social and regulatory pressures are drivers of GCSR, but that cost-driven processes of standardisation within companies will tend to lead the tightest standards to prevail.

The authors then seek to place this speculation in the broader debates around globalisation. The note that scholars have sought to find a discernible path in globalisation that often seems elusive. Many have deduced a race to the bottom in labor and environmental standards, in which producers chase the lowest-cost labor housed in the most lax regulatory environment. Others have argued that a quest for shareholder value and industry dominance leads global corporations to list their shares in the US and thus conform to tight standards of transparency and accountability in corporate governance in order to raise capital.

The authors say that the evidence for both is hardly conclusive. Research suggests that global firms spread their standards outside their corporate boundaries, either unwittingly, by setting examples for local competitors, or by evangelism of suppliers and partners. Ironically, then, globalisation is accompanied both by a race for lowest production costs and increasing demands for corporate social responsibility.

In sum, pressures for global convergence of CSR standards are strong, but the paths by which this process proceeds are neither linear nor smooth.