Corporate responsibility and emerging markets

, ,

Corporate Governance

ISSN: 1472-0701

Article publication date: 9 August 2011

Citation

Lenssen, G., Bevan, D. and Blagov, Y. (2011), "Corporate responsibility and emerging markets", Corporate Governance, Vol. 11 No. 4. https://doi.org/10.1108/cg.2011.26811daa.001

Publisher

:

Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited


Corporate responsibility and emerging markets

Article Type: Guest editorial From: Corporate Governance, Volume 11, Issue 4

This issue of Corporate Governance is produced by The Academy of Business in Society (EABIS) in close collaboration with Graduate School of Management, St Petersburg University (GSOM SPbU).

The journal builds on the content and insights from the EABIS 9th Annual Colloquium which was hosted by GSOM SPbU in St Petersburg on 20-21 September 2010 with the support of JSC Severstal and Sakhalin Energy Investment Company Ltd[1]. The colloquium was chaired by SPbU Vice-Rector Professor Valery S. Katkalo and Professor Yury Blagov, Director of the PricewaterhouseCoopers Center for Corporate Social Responsibility at GSOM SPbU. Most articles and papers in this special issue have been presented and discussed at the colloquium.

The theme of the 2010 Colloquium: Emerging Markets

The EABIS Colloquia from 2002 to 2009 have taken disciplinary perspectives on the corporate responsibility (CR) agenda. The first two colloquia explored general knowledge dimensions and societal expectations about the role of business in society. In subsequent years the conference themes have taken on more specific disciplinary approaches (Table I). The colloquia in 2010 and 2011 are more clearly focused around frameworks suggested by contemporary taxonomies of the global economy.

Table I Conference themes

Background and context

The financial crises of 2007-2008 as exemplified in the collapse of Lehman Brothers has undermined confidence in the western-dominated paradigm of economic governance. This has exacerbated the vacuum of authority observed in the post-national constellation in which emerging markets have claimed a greater say in defining global economic governance – witness the shift from G8 to the G20 group.

Even before the crisis, ongoing globalisation was altering the traditional balance of power between “developed” and “emerging” countries. Access to capital, knowledge and talent has appeared to level the global playing fields (Friedman, 2005) on which multinational firms must compete for resources and market share. As a result, businesses from these emerging markets particularly presented by so-called “new” MNCs are vigorously challenging the hegemony of their older rivals.

The growing influence of emerging markets and their leading companies has not come without its consequences. Increases in economic and geopolitical power have been accompanied by a greater burden of responsibility to address complex social, environmental and governance issues in these countries and beyond. For western companies, operating in emerging markets will almost always require strategic alliances, partnerships or joint ventures. A deep understanding, beyond clichés or superficial assumptions about the political, cultural, societal and economic dynamics in these countries will continue to be a prerequisite for success. Responsiveness to societal needs and expectations, beyond extending existing CR strategies, can be critical in creating trust and legitimacy.

Emerging countries have generally adopted free market systems during the last two decades and are enjoying rapid economic growth. There were expectations that the adoption of the western-inspired economic system would work well, albeit with some transition pains at the beginning. This expectation has not materialized symmetrically. Unintended and complex disruptions in the relationships between economy and society may be anticipated with such rapid growth (Beck, 1992). Free market systems need institutional frameworks to function effectively (Posner, 2009). Fast economic growth is causing significant and negative social and environmental externalities for which the institutional governance frameworks are often unprepared and inadequate. Such institutional frameworks will need to include hard or technical dimensions like legal and regulatory structures, but also soft dimensions like codes, standards and norms. Corporate Responsibility itself can play an important role in this soft dimension of institutional governance (Courpasson, 2000, 2006). One could argue that soft institutional governance like CR is of even greater importance in emerging countries than in developed countries, given the relative weaknesses of the hard institutional governance structures. The development of CR in emerging countries is generally in line with the global trend of CR principles being gradually integrated into corporate strategy based on a social investment approach which matches the long-term interests of both society and business (for Russian case see: Blagov et al., 2008). Nevertheless, the development of CR approaches particularly by “new” MNCs from emerging markets demonstrates not only a re-iteration of western approaches but the development of often original approaches designed for domestic and global application.

It is evident that the conditions in countries like, e.g. Brazil, Russia, India and China (the “BRICs”) are very different and cannot be amalgamated in a generic analysis of “emerging markets”. This is one more reason for both “old” and “new” MNCs to take a highly specific CR approach, and one based on analyses specific to each country.

Relevance

The thematic focus on emerging markets is nevertheless and especially relevant due to:

  • the growing importance & geopolitical significance of BRICSA and all emergent countries;

  • the particular dynamics between economic and social development that sets a distinct CR agenda on societal issues in these countries; and

  • the CR and sustainability challenges related to potentially unrestrained industrialization, urbanization and demographic change in emerging markets.

In particular, following issues can be identified at global, national and company level:

  1. 1.

    At the global level:

  2. 2.
    • The changing role of emerging markets as the new key actors in shaping global and regional governance.

    • The role of multi-national companies (MNCs) from these countries as new powerful agents of change in a post-crisis global economy.

    • The impacts of emerging markets on global sustainable development and ecological agendas, keeping in mind that “western” views of sustainable development are not universally shared.

    • The impacts of the current global challenges on the CR agenda in emerging markets and the impacts of emerging markets on the global CR agenda, keeping in mind that the western views on issues like human rights and democracy are not universally shared.

    • The education and development of the “elites” and future leaders in these countries to take on global responsibility in social, economic, environmental and governance issues.

  3. 3.

    At the national level:

  4. 4.
    • The specificities and particularities of the business and society interconnections and the sometimes asymmetrical changes in social contract relations in these societies.

    • The impact of dominant, internationally recognized CR approaches (e.g. UN Global Compact; Global Reporting Initiative; ISO frameworks and technologies, etc.).

    • The role of government, NGOs and other stakeholders in setting the CR agenda and the impact of the crisis on this agenda.

    • Specific issues such as corruption, transparency, poverty, labor and human rights, health and safety, environmental footprints, resource depletion, ecological degradation.

    • Comparative analysis of the state of CR and its drivers.

  5. 5.

    At the company level:

  6. 6.
    • Specific approaches to social responsiveness, the role of strategic stakeholder relationships for reputational and competitive advantages, integration of CR in strategic management, and leadership development.

    • How MNCs develop a better understanding of these societies at large in order to operate optimally, demonstrate and practice integrity in their value proposition and create long-term strategic success.

    • How companies address specific issues like corruption, health and safety, labor and human rights, environmental management, etc. – also as part of global supply chains.

    • How companies use specific tools of impact assessment, reporting and disclosure, stakeholder management.

    • What companies expect from business schools with respect to broader understanding of economy-society issues, sustainable development in degree programs and in executive education.

Selected papers

  • A=Academic paper.

  • C=Consulting paper.

  • P=Practitioner paper.

Overall perspectives

  • “What emerges when a market emerges?, The social context: integral human development and the common good.” Josep M. Lozano, ESADE Business School, Spain (A).

  • “In pursuit of a sustainable global market economy.” Arthur E. Appleton and Jean-Pierre Lehmann, The Evian Group, IMD Lausanne (C).

  • “Stewardship: a new vision for the purpose of business.” Gary L. Karns, Seattle Pacific University, USA (A).

  • “A new era of sustainability in emerging markets? Insights from a Global CEO Study by the United Nations Global Compact and Accenture.” Peter Lacy and Rob Hayward, Accenture (C).

Country perspectives and country cases

  • “Corporate social responsibility and corporate financial performance in China: empirical research from Chinese firms.” Honghui Chen and Xiayang Wang, Lingnan University College, Guangzhou, PR China (A).

  • “CSR priorities of emerging economy firms: is Russia a different shape of BRIC?” Lutz Preuss, Royal Holloway University of London and Ralf Barkemeyer, University of Leeds(A).

  • “Dynamic capabilities, strategic stakeholder alliances and sustainable competitive advantage: evidence from China.” David Hao Jiao, Beijing Normal University andYu Cui, Beijing Information Science and Technology University, PR China (A).

  • “Corporate social responsibility practices in India: approach, drivers, and barriers.” Jorge Arevalo, William Paterson University and Deepa Aravind, City University of New York, USA (A).

  • “Measuring the impacts of partnerships with NGO’s in emerging countries. The corporate and societal benefits of community involvement, with a case study from Thailand.” Erik Hansen, Leuphana University, Lüneburg, Germany and Heiko Spitzeck, Fundação Dom Cabral, Brazil (A).

Dimensions of corporate responsibility

  • “How relevant is corporate governance and corporate responsibility in emerging markets?” Sanjay Peters, IESE Business School, Spain, Mariah Miller, Pensions Investment Research Consultants Ltd, UK and Sophia Kusyk, ESADE, Universidad Ramon Llull, Spain (A).

  • “The strategic relevance of corporate community investments in emerging markets.” Luca Condosta, ABB Italia (P).

  • “Making the most of corporate social responsibility reporting: disclosure structure and its impact on performance”. Clodia Vurro and Francesco Perrini, Bocconi University Milan, Italy (A).

  • “Sustainability assurance and internal auditing in emerging markets”. Jeffrey Ridley, Kenneth D’Silva, London South Bank University, UK and Marta Szombathelyi, Széchenyi István University, Gyr, Hungary (A).

  • “The four pillars of corporate responsibility in emerging markets: ethics, leadership, personal responsibility and trust”. Isaac Mostovicz, Janus Thinking Ltd, Israel, Nada K. Kakabadse, Northampton Business School and Andrew Kakabadse,Cranfield University, UK (A).

  • “CEO perspectives: management education in a changing context”. Matthew Gitsham, Ashridge Business School, UK (C).

Notes

1. More information about the colloquium can be found at www.gsom.spbu.ru/en/eabis2010/

Acknowledgements

The authors would like to acknowledge all those who assisted in preparing the 2010 Colloquium, reviewing the papers and supporting the editorial process, not least those who reviewed the papers.Reviewers for submitted papers were: Arvind Ashta (Groupe ESC Dijon Bourgogne), David Bevan (EABIS and Grenoble Graduate School of Business), Yury Blagov (Graduate School of Management, St Petersburg University), Joan Fontrondona (IESE), Matthew Gitsham (Ashridge Business School), Gilbert Lenssen (EABIS), Céline Louche (Vlerick Leuven Gent Management School), Mario Molteni (ALTIS – Università Cattolica del Sacro Cuore), Antonio Scarafino (EABIS), and André Sobzak (Audencia Nantes).The authors would like to offer their special thanks to Antonio Scarafino, Research Manager at EABIS, for his capable managing of the submissions and his comprehensive support in the editorial processes throughout.

Gilbert Lenssen, David BevanEABIS, Brussels, Belgium.

Yury BlagovSaint Petersburg School of Management, Saint Petersburg, Russia.

About the Guest Editors

Gilbert Lenssen is President of EABIS – The Academy of Business in Society and former professor of International Management at the College of Europe, Oxford University and Leiden University. Currently professor of Strategy and Governance at ENPC Paris and visiting professor at the Universities of Reading and Cranfield. He has widely published on Corporate Responsibility and Strategy. Prior to his academic career, he was a business executive for BP in Belgium, the UK, USA, India, the Middle East, Germany and Spain. As a Christian of Catholic Tradition, became familiar with other religions and traditions during his executive postings (Anglican, Episcopal, Presbyterian, Lutheran, Hindu, Buddhist, Islamic traditions). With Ted Malloch of Yale University and Andrew Kakabadse of Cranfield University, he initiated the project Practical Wisdom for Management for the Religious and Spiritual Traditions.

Yury Blagov is a professor and Director of the PricewaterhouseCoopers Center for Corporate Social Responsibility at the Graduate School of Management, St Petersburg University (GSOM SPbU). He gained his doctoral degree in Economics from the St Petersburg University in 1987. He has been developing and teaching courses on Business Ethics, Corporate Social Responsibility, and Business and Society for BSc and MSc in Management, MBA and Executive MBA programs at GSOM SPbU. He has also had visiting positions at the UC Berkeley, St Mary’s College of California, and Aalto University (Helsinki). He participated in many national and international teaching, research and consulting projects in the field of CSR, including projects with Russian Managers Association, Caux Round Table, JSC Severstal, EADS, European Business Ethics Network (EBEN), and EABIS – The Academy of Business in Society. He is an Editor-in-Chief of the Vestnik of Saint Petersburg University, Management Series, a member of the Editorial boards of the Russian Management Journal and a member of the Editorial Advisory board of Corporate Governance: The international journal of business in society. He is a fellow of Caux Round Table and a member of European Business Ethics Network (EBEN).

David Bevan has been Director of Academic Affairs at EABIS since October 2008. He has a PhD in Management from King’s College London. His research interests are framed within the critical management studies Special Interest Group at the Academy of Management with a particular focus on business ethics and corporate responsibility. Along with this specific focus he is also interested in the related areas of sustainable business management, managerialism and professionalism.

Affiliated to the Grenoble Graduate School of Business as Professor of Applied Ethics and Managing Sustainable Organisations, he is also a member of the Centre for Research into Sustainability at Royal Holloway University of London. He has held visiting positions at a range of institutions: DePaul University (Chicago), Grande Ecole des Hautes Etudes de Commerce (HEC) Paris, School for Professional and Continuing Education (Hong Kong), and King’s College London. He has devised and delivered modules on Sustainable Business Strategy for the MBA courses at HEC Paris and RHUL since 2005. He is a named expert in Sustainability for the University of London at the United Nations and a delegate on the International Labour Office Academic Working Group for Decent Work (2009-2012).

References

Beck, U. (1992), Risk Society: Towards a New Modernity, Sage, London (translated by M. Ritter)

Blagov, Y., Litovchenko, S.E. and Ivanova, E.A. (2008), in Blagov, Y.E., Litovchenko, S.E. and Ivanova, E.A. (Eds), Report on Social Investments in Russia 2008: Integrating CSR Principles into Corporate Strategy, The Russian Managers Association, Moscow

Courpasson, D. (2000/2006), Soft Constraint: Liberal Organizations and Domination, Liber and Copenhagen Business School Press, Copenhagen

Friedman, T.L. (2005), The World Is Flat: A Brief History of the Twenty-First Century, Farrar, Straus and Giroux, New York, NY

Posner, R. (2009), A Failure of Capitalism, Harvard University Press, Cambridge, MA