Stakeholder Perspectives on Corporate Social Responsibility (Csr) of Multinational Companies in China

Article excerpt

Abstract:

With the advent of globalization, the track record of multinational companies (MNCs) has been vague in relation to their corporate social responsibility (CSR) in developing countries. What is even lacking is a better understanding of what exactly is required of today's MNCs to simultaneously generate profits for shareholders and satisfy the legitimate demands from the multiple stakeholders in the countries where they operate. Adopting the stakeholder theory framework and using a two-stage interview method, this study explores the CSR understanding and practices of MNCs considered as active in CSR. The findings reveal some interesting CSR practices by 11 MNCs in China. We discuss implications of the stakeholder approaches to CSR of MNCs generally and peculiarities in developing countries more specifically.

Keywords: corporate social responsibility, stakeholder theory, multinational companies, China

Introduction

Research on corporate social responsibility (CSR) has focused on the social responsiveness and social performance of companies in the developed economies (Margolis & Walsh, 2003; Orlitzky, Schmidt & Rynes, 2003). With the growing presence of multinational companies (MNCs) in the emerging countries, it is likely that MNC subsidiaries from developed country contexts, such as the United States or Europe, will find themselves embedded in a situation in which CSR conception and practices are different than what are prevailing in their home markets. It presents both a theoretical and practical question regarding how MNC subsidiaries approach CSR in emerging markets and whether or not they face particular challenges in aligning their CSR with local practices or expectations (Hou, Fu & Li, 2010). Yet, there is limited literature on multinational companies and their corporate social responsibility in emerging economies.

Our study is to gain a preliminary understanding of this issue and is structured around the stakeholder theory (Freeman, 1984), which views a business as a set of interwoven relationships among groups that either affect or are affected by the activities of that business. From the perspective of stakeholder theory, a business is considered successful only insofar as it can effectively balance and generate value for its stakeholders, especially stakeholders beyond the shareholders.

Our study aims to explore the following questions: 1) How do MNCs define CSR in China? 2) What are the key stakeholders for MNCs in China, and how do MNCs attribute importance to each stakeholder? 3) What are the most common CSR practices towards each stakeholder group? To address these questions, we first review the literature on CSR and stakeholder theory, followed by the presentation of our research study, including data collection and analysis. Then we present our findings based on interviews with top leaders or CSR managers from 11 multinational companies considered active in CSR activities. We conclude by discussing the implications of our preliminary study to both theory and practice.

Study Background

Over the past decades, corporate social responsibility has acquired a new resonance in the global economy. While the conceptualizations and practices of CSR have been typically developed in the context of nation-states, the process of globalization is bringing a "paradigm shift" as local, national, regional, multinational, and global corporations are subject to a new economic, political and social framework that is both global and fragmented (Scherer & Palazzo, 2008). With the accelerated global expansion of multinationals, as well as their rising economic and political power, more attention has been paid to the CSR issues of multinationals in the emerging economies characterized by unclear property rights, ineffective legal framework, and lax monitoring force (Tan, 2009). Moreover, the expanding reach of media coupled with advances in information technology, such as the Internet, has allowed immediate and widespread exposure of corporate activities in even the most remote comers of the world. …