What is the Corporate social responsibility in emerging markets?
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Corporate Social Responsibility in Emerging Markets
Introduction to CSR in Emerging Markets
Corporate Social Responsibility (CSR) has become a significant focus for companies operating in emerging markets. The concept involves businesses taking responsibility for their impact on society, including social, environmental, and economic aspects. In emerging markets, CSR practices are influenced by unique challenges and opportunities that differ from those in developed economies.
Strategic CSR by Multinational Companies
Multinational companies (MNCs) play a crucial role in shaping CSR practices in emerging markets. In China, for instance, MNC subsidiaries engage in strategic CSR by developing relationships with non-traditional stakeholders, co-inventing social solutions, and building local capacity and infrastructure. These strategies help reconcile social and economic value creation, addressing both shareholder profits and stakeholder demands. Similarly, Spanish MNCs in Latin America use CSR initiatives as strategic tools to achieve economic objectives, enhance financial performance, and strengthen their reputation.
Impact of CSR on SMEs' Performance
Small and medium-sized enterprises (SMEs) in emerging markets also benefit from CSR practices. In Southern Vietnam, CSR positively impacts firms' performance through the mediating roles of corporate reputation and customers' purchasing intention. This suggests that CSR can be a valuable strategy for SMEs to gain a sustainable competitive advantage.
Empirical Research on CSR in Emerging Economies
A systematic review of empirical research on CSR in emerging economies highlights three principal themes: the effects of CSR, the drivers of CSR, and the challenges of CSR. The review indicates that CSR can mitigate developmental challenges and stimulate economic growth, emphasizing the need for government and organizational partnerships to promote CSR integration in business plans.
CSR in Asian Emerging Markets
In Asian emerging markets, CSR practices are positively related to market valuation. Firms that improve their CSR practices are rewarded by the market, indicating that CSR is not only a moral obligation but also a strategic financial decision. Additionally, CSR practices in these markets signal superior capabilities to investors, particularly in less developed capital markets with low information diffusion.
CSR Amid the COVID-19 Crisis
The COVID-19 pandemic has brought new dimensions to CSR in emerging markets. In BRICS countries, CSR practices have adapted to the crisis by promoting remote work and online services, reflecting a shift in corporate management. This adaptation highlights the role of CSR in crisis management and its potential to enhance business competitiveness and quality of life.
Corporate Social Performance Assessment
Assessing corporate social performance (CSP) in emerging markets involves understanding the priorities and behaviors of large companies. A study identified six behavioral patterns in CSR practices, ranging from "lethargic" to "performer," indicating the complexity and strategic importance of CSR in company development.
Conclusion
CSR in emerging markets is a multifaceted and evolving practice that offers significant benefits for both businesses and society. MNCs and SMEs alike can leverage CSR to enhance their reputation, financial performance, and competitive advantage. As emerging markets continue to develop, the role of CSR will likely become even more critical in addressing social and economic challenges.
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