Profit-Seeking Corporate Social Responsibility in Developing Countries: The Risk of Conflating CSR and R&D

Authors

  • Helena Barnard Past Vice-President, Academy of International Business; University of Pretoria South Africa
  • Katherina Glac Pattit University of St Thomas

DOI:

https://doi.org/10.55482/jcim.2022.32901

Abstract

Strategic corporate social responsibility (CSR) has drawn praise for representing the "sweet spot" between communities’ needs and firms’ resources, capabilities and efforts. But what if the concept is pushed to its limits? A firm can initiate CSR projects not just to help communities, but to directly realize profit from them. In this conceptual paper, we ask how CSR is understood and functions when the intent of CSR projects is to conduct a form of research and development (R&D). The intended innovations are not science-based, but socially oriented; they seek to determine how to profitably meet the needs of poor people in developing countries. We develop our argument from conversations with managers and teaching cases that explain how executives believe CSR helps firms (learn how) to profitably serve new potential customers – whether through developing new markets or new products and services with a social purpose. Using CSR as a form of "living R&D" allows firms to make mistakes and to avoid short-term shareholder pressures. But there are very real risks to what in essence is unregulated experimentation on poor people, and we highlight some of them. Our argument highlights the ways in which such innovation and profit-oriented CSR challenge thinking on both CSR and R&D, and we make practical recommendations for how to ensure that intended beneficiaries are not harmed, but can instead benefit.

Author Biographies

Helena Barnard, Past Vice-President, Academy of International Business; University of Pretoria South Africa

Helena Barnard (PhD, Rutgers University) is Professor at the Gordon Institute of Business Science (GIBS) of the University of Pretoria. She was the Academy of International Business (AIB) Vice President for Administration and is currently the founding chairperson of the Emerging Markets Special Interest Group of AIB. From 2018 to 2019, she was the John Dunning Fellow at the University of Reading. Helena Barnard has published numerous papers in leading journals including in the Journal of ManagementJournal of International Business StudiesResearch Policy, Journal of World Business. Prof Barnard is an area editor for the Journal of International Business Policy and Africa Journal of Management. 

Katherina Glac Pattit, University of St Thomas

Katherina Pattit (PhD, Wharton School, University of Pennsylvania) is Dean of the Herberger Business School at University of St Thomas (Minnesota). Her research interests cover a variety of subject areas including corporate social responsibility, responsible growth, investor decision making and corporate governance. Currently, Pattit is studying how companies manage their boundaries in the social media space and how that affects employee privacy. She is also collaborating on a project on how corporate social initiatives are perceived by the recipient communities in South Africa.

 

References

Aguinis, H., & Glavas, A. (2012). What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of Management, 38(4), 932-968.

Altman, D. G., Rego, L., & Ross, P. (2009). Expanding opportunity at the base of the pyramid. People and Strategy, 32(2), 46.

Anderson, J., & Markides, C. (2007). Strategic innovation at the base of the pyramid. MIT Sloan Management Review, 49(1), 83.

Aragón-Correa, J. A., Martín-Tapia, I., & Hurtado-Torres, N. E. (2013). Proactive environmental strategies and employee inclusion: The positive effects of information sharing and promoting collaboration and the influence of uncertainty. Organization & Environment, 26(2), 139-161.

Arnold, D. G., & Valentin, A. (2013). Corporate social responsibility at the base of the pyramid. Journal of Business Research, 66(10), 1904-1914.

Austin, G., Dávila, C., & Jones, G. (2017). The alternative business history: Business in emerging markets. Business History Review, 91(3), 537-569.

Bansal, P., & Song, H. C. (2017). Similar but not the same: Differentiating corporate sustainability from corporate responsibility. Academy of Management Annals, 11(1), 105-149.

Barki, E., & Parente, J. (2010). Consumer Behaviour of the Base of the Pyramid Market in Barnard, H. & Marks, J. (2014) Corporate Entrepreneurship and Innovation at Microsoft

South Africa: Addressing both business and societal goals. Ivey Cases, Ontario. Product code: 9B14M161Brazil. Greener Management International, (56).

Bénabou, R., & Tirole, J. (2010). Individual and corporate social responsibility. Economica, 77(305), 1-19.

Brik, B.A., Rettab, B., & Mellahi, K. (2011). Market orientation, corporate social responsibility, and business performance. Journal of Business Ethics, 99(3), 307-324.

Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business & society, 38(3), 268-295.

Carroll, A. B. (2008). A history of corporate social responsibility: Concepts and practices. The Oxford handbook of corporate social responsibility, 1.

Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the value of "creating shared value". California Management Review, 56(2), 130-153.

Journal of Comparative International Management H. Barnard and K. Pattit Vol. 25, No, 1, 58-81 (2022)

Cooper, R. G. (2019). The drivers of success in new-product development. Industrial Marketing Management, 76, 36-47.

Darnall, N., & Carmin, J. (2005). Greener and cleaner? The signaling accuracy of US voluntary environmental programs. Policy Sciences, 38(2), 71-90.

De Bettignies, J. E., & Robinson, D. T. (2018). When is social responsibility socially desirable? Journal of Labor Economics, 36(4), 1023-1072.

Delmas, M., Hoffmann, V. H., & Kuss, M. (2011). Under the tip of the iceberg: Absorptive capacity, environmental strategy, and competitive advantage. Business & Society, 50(1) 116-154.

Dionisio, M., & de Vargas, E. R. (2020). Corporate social innovation: A systematic literature review. International Business Review, 29(2), 101641.

Dixon-Fowler, H. R., Slater, D. J., Johnson, J. L., Ellstrand, A. E., & Romi, A. M. (2013). Beyond “does it pay to be green?" A meta-analysis of moderators of the CEP–CFP relationship. Journal of Business Ethics, 112(2), 353-366.

Doh, J., Husted, B. W., & Marano, V. (2018). Corporate social responsibility in emerging markets. In The Oxford Handbook of Corporate Social Responsibility.

Dolan, C., & Scott, L. (2009). Lipstick evangelism: Avon trading circles and gender empowerment in South Africa. Gender & Development, 17(2), 203-218.

Du, S., Bhattacharya, C. B., & Sen, S. (2011). Corporate social responsibility and competitive advantage: Overcoming the trust barrier. Management Science, 57(9), 1528-1545.

Faivre-Tavignot, B., & Dalsace, F. (2014). Combining business and societal objectives at Danone. HEC Paris Case Collections, 314.

Finney, A., & Davies, S. (2020). From headline statistics to lived experiences: a new approach to measuring the poverty premium. Social Research Practice, 9, 4-16.

Flammer, C., & Kacperczyk, A. (2019). Corporate social responsibility as a defense against knowledge spillovers: Evidence from the inevitable disclosure doctrine. Strategic Management Journal, 40(8), 1243-1267.

Fox, T. (2004), Corporate Social Responsibility and Development, Development 47(3), 29–36.

Freeman, E.: 1984, Strategic Management: A Stakeholder Approach Pitman Publishing Inc, Boston.

Frederick, W. C. (1994). From CSR1 to CSR2: The maturing of business-and-society thought. Business & Society, 33(2), 150-164.

Frynas, J. G.: 2005, The False Developmental Promise of Corporate Social Responsibility: Evidence from Multinational Oil Companies, International Affairs, 81(3), 581–598

Garriga, E., & Melé, D. (2004). Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics, 53(1), 51-71.

Gemser, G., & Perks, H. (2015). Co‐creation with customers: An evolving innovation research field. Journal of Product Innovation Management, 32(5), 660-665.

Hall, B., & Van Reenen, J. (2000). How effective are fiscal incentives for R&D? A review of the evidence. Research Policy, 29(4-5), 449-469.

Hahn, R. (2009). The ethical rational of business for the poor–integrating the concepts bottom of the pyramid, sustainable development, and corporate citizenship. Journal of business ethics, 84(3), 313-324.

Halme, M., Lindeman, S., & Linna, P. (2012). Innovation for inclusive business: Intrapreneurial bricolage in multinational corporations. Journal of Management Studies, 49(4), 743-784.

Hart, S. L., & Christensen, C. M. (2002). The great leap: Driving innovation from the base of the pyramid. MIT Sloan Management Review, 44(1), 51.

Hart, S. L., & Sharma, S. (2004). Engaging fringe stakeholders for competitive imagination. Academy of Management Perspectives, 18(1), 7-18.

Hawarden, V., & Barnard, H. (2010). Danimal in South Africa: Management innovation at the bottom of the pyramid. Ivey Cases, Ontario. Product code: 910M99.

Heidenreich, S., Wittkowski, K., Handrich, M., & Falk, T. (2015). The dark side of customer co-creation: exploring the consequences of failed co-created services. Journal of the Academy of Marketing Science, 43(3), 279-296.

Hess, D., Rogovsky, N., & Dunfee, T. W. (2002). The next wave of corporate community involvement: Corporate social initiatives. California Management Review, 44(2), 110-125.

Hooli, L., Jauhiainen, J. S., & Lähde, K. (2016). Living labs and knowledge creation in developing countries: Living labs as a tool for socio-economic resilience in Tanzania. African Journal of Science, Technology, Innovation and Development, 8(1), 61-70.

Husted, B. W., Montiel, I., & Christmann, P. (2016). Effects of local legitimacy on certification decisions to global and national CSR standards by multinational subsidiaries and domestic firms. Journal of International Business Studies, 47(3), 382-397.

Ismail, T., Kleyn, N., & Ansell, G. (2012). New markets, new mindsets: Creating wealth with South Africa's low-income communities through partnership and innovation. Jacana Media.

Jenkins, H., & Obara, L. (2006, September). Corporate Social Responsibility (CSR) in the mining industry–the risk of community dependency. In Corporate Responsibility Research Conference, Dublin.

Kanter, R. M. (1999). From spare change to real change: The social sector as beta site for business innovation. Harvard Business Review, 77(3), 122-32.

King, A., & Lenox, M. (2002). Exploring the locus of profitable pollution reduction. Management Science, 48(2), 289-299.

Kolk, A., Rivera-Santos, M., & Rufín, C. (2014). Reviewing a decade of research on the “base/bottom of the pyramid" (BOP) concept. Business & Society, 53(3), 338-377.

London, T., Anupindi, R., & Sheth, S. (2010). Creating mutual value: Lessons learned from ventures serving base of the pyramid producers. Journal of Business Research, 63(6), 582-594.

McNamara, P., & Baden-Fuller, C. (2007). Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms. Research Policy, 36(4), 548-565.

Marano, V., Tashman, P., & Kostova, T. (2017). Escaping the iron cage: Liabilities of origin and CSR reporting of emerging market multinational enterprises. Journal of International Business Studies, 48(3), 386-408.

Marshall, A. (2018). The lose-lose ethics of testing self-driving cars in public. Wired, 3.23.18, https://www.wired.com/story/lose-lose-ethics-self-driving-public/

Matten, D., & Moon, J. (2004). Corporate social responsibility. Journal of Business Ethics, 54(4), 323-337.

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1), 117-127.

Méndez, M., Flores-Haro, G., & Zucker, L. (2020). The (in)visible victims of disaster: Understanding the vulnerability of undocumented Latino/a and indigenous immigrants. Geoforum, 116, 50-62.

Mio, C., Panfilo, S., & Blundo, B. (2020). Sustainable development goals and the strategic role of business: A systematic literature review. Business Strategy and the Environment, 29(8), 3220-3245.

Mowery, D. C. (2009). Plus ça change: Industrial R&D in the "third industrial revolution". Industrial and corporate change, 18(1), 1-50.

Murmann, J. P. (2003). Knowledge and competitive advantage: The coevolution of firms, technology, and national institutions. Cambridge University Press.

Muthuri, J. N., Chapple, W., & Moon, J. (2009). An Integrated Approach to Implementing Community Participation’ in Corporate Community Involvement: Lessons from Magadi Soda Company in Kenya. Journal of Business Ethics, 85(2), 431-444.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.

Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.

Prahalad, C. K. (2006). The Fortune at the Bottom of the Pyramid. Pearson Education India.

Rajak, D. (2006). The Gift of CSR: Power and the Pursuit of Responsibility in the Mining Industry, in Visser, W. et al. (eds.), Corporate Citizenship in Africa: Lessons from the Past; Paths to the Future. Greenleaf Publishing, Sheffield.

Reilly, G., Souder, D., & Ranucci, R. (2016). Time horizon of investments in the resource allocation process: Review and framework for next steps. Journal of Management, 42(5), 1169-1194.

Schneider, A. (2020). Bound to fail? Exploring the systemic pathologies of CSR and their implications for CSR research. Business & Society, 59(7), 1303-1338.

Schwab, K. (2008). Global corporate citizenship: Working with governments and civil society. Foreign Affairs, 107-118.

Sibly, P.G. & Walker, A.C. (1977). Structural accidents and their causes. Proceedings of the Institution of Civil Engineers, Part 1, 62: 191-208.

Simanis, E. & Hart, S. L. (2009). Innovation from the Inside Out. MIT Sloan Management Review, 50(4), 77-86.

Singh, R., Bakshi, M., & Mishra, P. (2015). Corporate social responsibility: Linking bottom of the pyramid to market development? Journal of Business Ethics, 131(2), 361-373.

Tasavori, M., Ghauri, P. N., & Zaefarian, R. (2016). Entering the base of the pyramid market in India: A corporate social entrepreneurship perspective. International Marketing Review, 33(4), 555-579.

Tencati, A., Russo, A., & Quaglia, V. (2008). Unintended consequences of CSR: protectionism and collateral damage in global supply chains: the case of Vietnam. Corporate Governance: The International Journal of Business in Society, 8(4), 518-531.

Utting, P. (2007). CSR and Equality. Third World Quarterly, 28(4), 697-712.

Van Zanten, J. A., & Van Tulder, R. (2018). Multinational enterprises and the Sustainable Development Goals: An institutional approach to corporate engagement. Journal of International Business Policy, 1(3), 208-233.

Vishvanathan, P., van Oosterhout, H., Heugens, P. P., Duran, P., & Van Essen, M. (2020). Strategic CSR: A concept building meta‐analysis. Journal of Management Studies, 57(2), 314-350.

Wang, T. & Bansal, P. (2012). Social responsibility in new ventures: Profiting from a long-term orientation. Strategic Management Journal, 33, 1135–53.

Wang, H., Tong, L., Takeuchi, R., & George, G. (2016). Corporate social responsibility: An overview and new research directions: Thematic issue on corporate social responsibility. Academy of Management Journal, 59(2), 534-544.

Wei, S., Ang, T., & Anaza, N. A. (2019). Recovering co-created service failures: the missing link of perceived justice and ethicalness. Journal of Services Marketing. 33(7), 921-935

Windsor, D. (2001). Corporate Social Responsibility: A Theory of the Firm Perspective: Some Comments. Academy of Management Review, 502-504

Published

2022-06-30

How to Cite

Barnard, H., & Pattit, K. (2022). Profit-Seeking Corporate Social Responsibility in Developing Countries: The Risk of Conflating CSR and R&D. Journal of Comparative International Management, 25(1), 61–83. https://doi.org/10.55482/jcim.2022.32901

Issue

Section

Research Articles