Csr as a Gateway to Asian Markets: Recent Cases and Implications for mncs

Chung Hee Kim

University of Nottingham Business School Malaysia

International Centre for Corporate Social Responsibility (ICCSR)

This developing study explores Asian CSR by employing Western CSR theories and showing empirical evidence of MNCs in Asia. In the wake of the fast emergent growth of Asian economy, there is growing academic, public and business interest in CSR within Asia. However, its disclosure conspicuously absent and less well understood. This study offers a critical account on what we know about CSR from Western perspectives and then challenge the established knowledge by providing inspiring views on how and why the Western discussions have limits in an Asian context. The key findings are: 1) to express CSR as business strategy has limits and may create side effects to gain legitimacy in the Asian market; 2) the stakeholder view is not a new concept in Asia where harmony and balance are traditionally major norms; and 3) linking the human value with CSR is crucial in Asia which has always tracked ‘human value’ throughout history. I conclude by offering contributions, limits and future direction of the study.

“We want to behave CSR and develop the local community, not just giving money like Santa Claus. The company is not Santa Claus. We view it as an investment, not a contribution or good behaviour.”

(Interview with junior manager, UK business in Korea, 2007)

The above idea of a Western MNC is not appreciated in an Asian business context. It is a very dangerous approach in Asia. Historically, moral value has always been at the forefront of economic and monetary values in the business agenda of Asia (Macfarlane, 1987; Chia et al., 2007). According to Confucian tradition, for example, “the gentleman understands righteousness and the petty man understands profit” (The Lun Yu, Ch. 4, v. 16). Dishonour is attached to being too business profit-driven in Asia. So, if Western businesses in Asia mention CSR with much business favour, it should create a side effect on their business results. Likewise, Asia shows a different approach towards human beings, business and profit making and, therefore, corporate social responsibility (CSR), when we compare them with Western approaches. The paper is inspired by the critical observation that MNCs in Asia are suffering from troubles owing to limited understanding of the above factors. I start the argument that CSR needs to be reconsidered by the view from Asia.

Why Asia? Asia is now in the centre of rapid economic development whose CSR are neither fully documented nor quantified. The disclosure of the responsibility of Asian economic power (in relation to CSR) is conspicuously absent and less well understood in both academic and practical discussion. The Asian Development Bank (2011) reports that the economy of Asia comprises more than 4 billion people (60% of the world population) and forecasts that Asia’s GDP would increase from $17 trillion in 2010 to $174 trillion in 2050, or half of global GDP. Responsibility is commensurate with power (Harbaugh, 1961). Accordingly, Asia’s power and impact on global society is bigger than before. To grasp the relativities, the paper investigates Asian CSR which reflects the reality with recent cases of MNCs.

Devinney (2009) argues the idea of CSR can be an oxymoron because of the naturally conflicted nature of the corporation. People fundamentally question the nature of business, especially the bad aspects (e.g., exploitation of nature and people, production of bad things for people - tobacco, drink and unhealthy foods), and argue business cannot advocate social responsibility. However, the discussion on CSR has been continued along with the history of business. Many people express concerns about the disappearance of the CSR theme after the current economic crisis. However, the endeavour of ‘searching for CSR identity’ in current management paradigms, is more serious and severe than before. During the economic crisis, many commentators raise the issue of the superfluous nature of CSR, and are pushing the business sector to cut the budget of CSR (e.g., philanthropy and environment) by arguing that it is little more than a luxury and not helpful to the primary motivations of the business sector. Conversely, we realize that this is the right time for business to pursue a genuine and extraordinary approach towards CSR.

Some scholars argue that CSR is a new concept in Asia, introduced by Western MNCs (e.g., Scherer and Palazzo, 2008; Jamali, 2008). In Asia, however, CSR is not a new concept. Historically, Asia has a reputation for a more ‘moral value’ driven motivation for making profit (Chia et al., 2007). Moral values (e.g., sharing profit, harmony and social contribution) have always come up on the business agenda in Asia, although it is not mentioned with the vocabularies of CSR. In this counterpoint, the paper provides critiques of the Western views of CSR by comparing them with the idea of Asian values.
Challenges facing Western CSR views in Asia

Contemporary business cases show that CSR is clearly linked to business performance in various ways. For example, BP shares have lost more than a third of their value, or about 46 billion pounds ($67 billion), since the Gulf of Mexico oil crisis. The cost of dealing with the crisis now totals $990 million, and is rising (Reuters, 2010.6.1). Nestlé, in Indonesia, had insufficient knowledge of its supply chain and owing to its work with the supplier - palm oil giant Sinar Mas, notorious for destroying Indonesian rainforests - Nestlé had trouble with 200,000 protest e-mails and lost its reputation (Economist, 2010.6.24). These examples clearly show that businesses misunderstanding/misbehaviour can introduce certain bad results for business in the global market.

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  In Asia, people do not accept this idea.
  

Foremost, it is interesting to note that recent academic attention has been directed toward identifying how CSR may be linked with certain competitive advantages of business. CSR has been promoted as having strategic value for firms (Branco and Rodrigues, 2006; Porter and Kramer, 2006; Molteni, 2006), and a case for incorporating an awareness of social and political trends into corporate strategy has become overwhelming. Porter and Kramer (2002, 2006, 2011) argue that CSR is an unavoidable trend to gain social legitimacy and may be linked to the creation of competitive advantage and shared value (CSV).

The discussion regarding CSR competitive advantage is closely related to the corporate dilemma between a moral and business case for CSR, as this involves major challenges with respect to the formulation and implementation of CSR strategy (Smith, 2003). Admittedly, the business case for CSR is still weak, even though prevailing literature on CSR is packed with attempts to uncover it (Kakabadse et al., 2007: 37, Vogel, 2005; Windsor, 2001). It is mainly because of the way corporations overlook the heterogeneity of the business landscape and wide variety of CSR motivation, and scholars’ long-lasting search for a strict division in CSR of two camps between an ethical model (e.g., Carroll, 2003; Windsor, 2001) and an economic model (e.g., Friedman, 1970).

However, it is difficult to explore CSR with this strict division, especially in Asia where business and moral values overlap and even moral/emotional values are ahead of business values. So, CSR in Asia is much more implicit when we view it based on Matten and Moon’s (2008) idea of explicit-implicit CSR, and does (should) not have strong a flavour of business and business strategy (such as shareholder capitalism or investment strategy). Instead, CSR tends to be interpreted as sharing value which business should respect and follow. So, business’ CSR behaviour is not so much appreciated by the people in Asia as it is a ‘nature’ and ‘must’ to do so. In other words, it is the basic responsibility as one of the members of a communitarian society.

Bayer AG, whose trademark is Aspirin, is a global chemical and pharmaceutical enterprise founded in Germany in 1863. The mission “Bayer: Science for a Better Life” represents well the direction of business and towards people around the globe. Bayer’s case of “Food Chain Partnership Vegetables” shows how MNCs create value and leadership in other nations whose cultural and institutional backgrounds are different from the headquarters.

How do they behave and show good management and leadership with money? Bayer uses a more normative approach beyond the business context. Typically, the pharmaceutical industry shares a dilemma between money and life. So, it is highly regulated and social trust is extremely important for their business. If so, how they can gain trust from emerging Asian countries? Bayer uses their competitive advantage – advanced technology. By building better and long-term relationships and trust, Bayer studies the issues and needs of food and nutrition in each nation (e.g., Watermelon project in Malaysia, Mango project in Thailand, Potato project in India). The company works together with local partners to develop solutions for sustainable growing of vegetables through various activities such as sending experts on pests and diseases to local partners, helping local partners to achieve certifications and higher quality products which contribute its export value. The program helps a total of 65,000 farmers grow vegetables in an area of 50,000 hectares in 125 individual projects by the end of 2011.

Bayer, instead of using the words ‘strategy’ or ‘investment’, tries to show their sincerity through the words of ‘partnerships’ and ‘relationships’ – normative approach. The project is interpreted as an appropriate approach towards people in Asia who want to see the trustworthiness and sincerity of business at first before they give the legitimacy to the MNCs in their region.

– In Asia, we already have them!

In Asia, Friedman and Freeman’s idea should be united – at least to be balanced. It is about respect of diversity and harmony. The market environment which Asia has established throughout history is more interconnected with community members. For example, each country in Asia has a similar tradition of cooperation among society members (e.g., Korea – Hyang-yak, Pum-a-si / Indonesia – Gotong Royong / Philippines – Bayanihan). All emphasize the idea of collaboration and balance of each society member – shareholders and stakeholders.

In Asia, business has to concern itself with the significance of the social network within which they are operating. Hence, business involvement with community activities is not an option but a prerequisite for business – survival and gaining legitimacy from the Asian market. It is a crucial business strategy when we link it with Porter and Kramer’s idea (2011) on CSR as corporate strategy and CSV (Creating Shared Value). I argue that Asia has already had the view and context of the stakeholder even though people do not remark on it as CSR. Owing to the intimate relationship between business and members of society, people in this region tend (and try) to view CSR as an issue of society as a whole. In this regard, Asian governments’ endeavour to link CSR with national competitiveness is a relatively easy task as witnessed, currently, by the numerous initiatives of Asian states (e.g., Harmonious Society in China; 2020 Vision in Malaysia).

Marathon Oil Corporation is a MNC in dealing with oil and gas resource developments. The case of Marathon operating in Indonesia shows how MNC can make use of CSR as a new DNA of business. Marathon recognizes that adopting effective approaches toward stakeholders reduces the risk of business disruption, and opens up new opportunities including communication with local government.

Marathon Oil Corporation’s CSR program relies on Community Consultative Forums (CCF), comprising village elders who present ideas for community development, centred on people development. Once an idea has been agreed upon, a community committee (cadre) is formed to participate in the planning, to organize volunteers to work on the project, and to manage the program after it has been completed. Marathon tries to share happiness and problems of the local community, through community engagement such as a fun walk program, health project and building a mobile library.

Fun Walk

CCF’s (Community Consulting Forums)

Health project

CD (Community Development) program



Mobile library

CCF(Community Consulting Forums)



Fun walk

Health project

(Source: Marathon Oil Corporation)
Along with their communication with local partners – by providing financial support and giving authority to local community on deciding-making and spending budget – Marathon could naturally inform their business value and interests. The case gives us good lessons on gaining credibility which is most important in the Asian business context. Marathon realizes that they need stakeholders and community engagement for entering into Asian markets.
Challenge 3: No Human Value in CSR?

– Worthy of particular mention is the human value in Asian CSR

In relation to people management, strong arguments can be made that true CSR needs to be adopted in a more holistic way throughout the members of an organization and a society. CSR is a theme related to stakeholder management, and much contemporary research insists that one of the most important stakeholders is the employee (Jones, 1995; Redington, 2005). If employees are not engaged with their employer’s CSR activities, the projects become in danger of being simply an exercise of public relations (PR) (Mees and Bonham, 2004), and as a result cannot create sustainability and business profit. Likewise, the absence of people’s identity and role for pursuing CSR is completely arbitrary.

While the ‘financial value’ and ‘shareholder return’ is at the centre of Western economic models, businesses have always tracked ‘human value’ throughout history. CSR is about the business struggle to find human value in business activities. Achieving competitive advantage involves people in almost all Asian business (e.g., Samsung’s Talent Management). It entails seeing the workforce as a main asset and a source of strategic advantage, not just as a cost to be minimized or avoided (Pfeffer, 1994). Good people management practices are, in themselves, a key element in responsible business practice and contribute value to business in support of a CSR agenda (Redington, 2005). In this regard, CSR is about business responsibility towards people which is overlooked in Western society so far. So, it is safe to say that there are not many objections to the idea that ultimate business goals are securing viability with adequate returns to shareholders. Nevertheless, in Asia, we need to add one more point – business’s contribution to human value is the subject of such scrutiny.
Case: Danone (CSR as a gateway towards human value)

Danone is a famous French food-products multinational corporation. As a food company, Danone tries to find a way to approach people in local markets. In Indonesia, the company realizes that 37% of children are stunted owing to lack of nutritious yet affordable products designed for children and low levels of knowledge of the mums toward balanced nutrition. Danone launched a new brand called “Gizikita” in order to address the issues on human values.

The topping powder “Gizikita” can be sprinkled on top of any children’s meal or drink. It is very easy to use and cheap (500Rp = 0.05 US$). It contains 50% RDA (recommended daily allowance) of 17 essential vitamins and minerals. In 2011, it is sold at 25,000 outlets and is expected to be seen in 100,000 outlets in 2012. Bayer re-invests the profit for the nutrition education for the mums toward a balanced diet of their children (37,000 mothers reach in 2010).

Bayer realizes that digging into the human values is the way the future lies for multinational companies in Asia by working to help people introduce credibility and, hence, values. As business is run by human beings, it is worth showing commitment towards human values in local markets in order to open the gateway of Asian society.

Currently, researchers try to underline contrasting characteristics of CSR in Asia, but their efforts remain unclear and vague. So, is all the discussion on CSR in Asia delusional or discursive? No. The study contributes to these issues. From a critical approach towards CSR theories from the West and exploring cases from the East, the study reveals divergence towards CSR which cannot be explained from a single-globalized approach. To reiterate, the study is more about exploration of multifaceted CSR according different contexts, not find new theories in Asia.

First of all, the present study views CSR a close link to Asia’s unique context, and suggests future direction for MNCs in Asia. Some Asian management scholars argue CSR as alternatives to solve the problem of capitalism and new liberalism from the West (see Masahiko, 2010). The study shows how CSR is part of the DNA in Asian business, rather than following the perspective of Western CSR. For instance, the stakeholder view has been the norm in the Asian context although it is not expressed in the words of CSR. To consider other members of the community (in West – stakeholders) in order to pursue his/her own purpose (in West – generating profit) is normal in Asia along with the traditional philosophy of harmony and balance. To pursue only personal profit is not accepted as the behaviour of gentlemen; hence Asians always see the symbiotic relationship. The idea of ‘noblesse oblige’ exists in Asia already and has been the backbone of Asian business.

However, in Asia, CSR can be the solution: the solution for business which can efficiently deal with human values. Leading multinational corporations rethink their definition on CSR in Asia such as human well-being, including security and livelihoods. Doing so enables corporations to build legitimacy in Asian markets where human values are most important. This is one of my primary findings on how corporations should translate CSR rhetoric into actions compatible with Asian needs and expectations.

There are limits of Asian CSR which are closely related to the further direction of the research. I explore it two-fold. First, there is low level of awareness and common understanding of CSR in Asia. People tend to place a heavier emphasis on the conceptualization of human relationships, balance with other stakeholders and a normative context rather than in comparison with the West. Likewise, people’s views towards CSR are more complex and diverse and, hence, it is difficult to understand CSR identity in Asia. Diverse country profiles and economic disparities among member states also contribute to this complexity.

Second, I find too much focus on philanthropy in Asian CSR discussion. It is mainly owing to excessive focus on sharing and balance among society members. It is also related to a problematic organizational culture in Asia which excessively stresses harmony. It may introduce the hiding of misconduct of employers and management behaviour and punish/fire whistle blowers under the guise of protecting harmony. We can see the current case of the Olympus scandal in Japan in that Asian business tries to portray misconduct through the name of harmony in organizational culture (Gapper, 2011). Hence, there is a limit to viewing CSR in a holistic way – linked with Sustainability Management.

In conclusion, beyond unveiling the unique approaches towards CSR in Asia, I would like to raise some issues on the future direction of this ongoing research. First, we should clarify the reason for the necessity of Asian CSR investigation – whether to make distinction or to reconcile with other regions. The key direction should be not only how Asian CSR would be but how emerging economic power can contribute to the world’s economy with the views of CSR. Second, there should be expansion of research areas into comparison (on what and why) with other regions such as Anglo-Saxon and African regions in order to have more rigorous and reliable suggestions for MNC practitioners. Finding success and failure business cases would contribute to the dissemination of this research, when the business case for CSR is still weak (Vogel, 2005).

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