Report-5

Submitted ByShaina Shriamb

Corporate Social Responsibility and International Development: Critical Assessment

By following socially responsible practices, the growth generated by the private sector can be more inclusive, equitable and poverty reducing. The firms are not only expected to act responsibly but also develop goals which are significant to development of society. Development of society, in addition to basic needs, also includes broad goals such as income distribution or value creation. What critics the positive contribution of CSR on international development 1. Lack of empirical evidence 2. Analytical limitations of CSR 3. The business case for CSR 4. Unresolved governance questions

A.

Lack of empirical evidence

While many examples of supposedly good outcomes have been cited, CSR still lacks the broad-based empirical evidence to support them. Also, the examples cited tend to fail to use any systematic methodologies from development studies to investigate the real-world impacts of those initiatives. What is needed now is balanced assessment of the impact of firms on development, taking into account both positive and negative effects and gauging the full developmental contribution of firms to society. If the purpose of CSR is to contribute to long term profitability of a firm, current system is adequate, however, if it is desired that CSR encompasses developmental goals, then methodologies are required that systematically investigate the societal benefits that private sector development include.

B.

Analytical limitations of CSR

The CSR also has Analytical Limitations. CSR remains a confusing field that fails to ask important questions about the nature of corporate activities and social institutions surrounding them. There is no accepted theoretical perspective or research methodology for making sense of CSR activities. There is no agreement on how CSR should be studied and analyzed. Rather than helping to understand the complexity of the use of CSR for successful development, the current practices of CSR has so far strengthened the belief that for every complex problem, there is a simple solution- use of CSR.

C.

The business case for CSR

This deals with the use of CSR initiatives for attaining corporate objectives. Managers are advised only to consider a group as a stakeholder if they depend on its resources. However, other issues also affect a business, like- social, economic or environmental. These business cases can also be negatively used. For instance, funding a government cause or donation in new country can also be taken as an attempt to influence and impress the local government. Business case for CSR may set limits on the effectiveness of corporate development schemes.

D.

Unresolved governance questions

The call for companies to play a role in development raises serious governance issues, both in terms of corporate governance and societal governance. If the companies are asked to beyond profit-maximization and make developmental contributions to society, there is a potential conflict of interest with the basic corporate governance that a corporation should run according to shareholder interests. If CSR is used to advance public objectives and to fill in for government shortcomings, it becomes important in societal governance.