Introduction
Globalization has indelibly changed how multinational corporations (MNCs) work and their responsibilities. With the companies growing their operations out of their homeland borders, they find themselves working in diverse socio-cultural, economic, and environmental landscapes, which brings them to the need to re-assess their CSR responsibilities (Raimi et al., 2021). Currently, the core features of globalization include increased cross-border trade, investments, and integration of markets, which enable MNCs to reach out to many consumers across the globe. Expanding borders not only brings forth the social and environmental dimension of corporate activities but also takes the brand into emerging countries’ markets (Nsalu & Msolla, 2021). Companies come to deal with deeply embedded diversities in several regulatory frameworks and local cultural norms, operating in different jurisdictions, which affect different societal standards as well. That is why they need help between profit maximization and ethical considerations.
Considering the relationship between the CEO’s values of an organization and society, foreign subsidiaries of multinational organizations stand at the frontline of such a dynamic environment, acting as corporate ambassadors in host countries. Such businesses are not only about local peculiarities, but, at the same time, they are expected to adhere to the CSR principles of the parent company (Ivanova et al., 2022). In terms of promoting ethical labour practices and environmental sustainability alongside leading community development initiatives, the foreign subsidiaries have their hands full, ensuring that business objectives are implemented in a way that meets the real needs and expectations of the host country (Motilewa & World, 2019). For example, multinationals in developing countries are usually questioned about their labour, environment, and contribution to the economies of the countries they are based. As a result, companies like Unilever are active and work on projects to choose sustainable sources of raw materials, with the local communities involved in the value chain employment and investments in healthcare and education infrastructure (Motilewa & World, 2019). Such activities manifest an organization’s intent to follow CSR principles; moreover, they assist in establishing firm ties with stakeholders and improving the company’s image.
Problem Statement
The explosion of multinational corporations (MNCs) in third-world countries raises interminable issues of ethics. While MNCs operate through different socio-demographical, economic and legal contexts, they face challenges in upholding ethical standards and the necessary integrity on top of their revenue. Some MNCs may outsource their base to developing countries to reduce production costs. MNCs adopting globalization tend to source a part of their operations in developing countries where they would enjoy cheap labour and reduced compliance costs. Though this form of outsourcing helps reduce costs in the host countries, the ethical concerns of the labourers and environmental sustainability are affected (Beddewela & Fairbrass, 2021). In the meantime, such local contractors may often use this knowledge to mistreat the workers they hire by paying them below minimum wage or forcing them to work in unsafe conditions.
In this regard, this situation may become a substantial ethical dilemma for the MNCs. On one hand, the corporation may seek to maximize profits by reducing production costs through outsourcing. On the other hand, it has a responsibility to ensure fair and ethical treatment of workers throughout its supply chain. Also, a company may be under much pressure from stakeholders, which includes consumers, NGOs, and regulatory authorities, to solve these ethical issues and maintain well-functioning labour standards. To solve this dilemma, the corporation should consider the possible results of its sourcing decisions. Employing workers in cheap labour factories is a complex issue.
On the one hand, the short-term financial benefits are very appealing; on the other, there are long-term ethical and reputational ramifications. If MNCs pay attention to supply chain management implementation and put auditing processes for their suppliers in order, they will control ethical labour standards in the whole supply chain. This paper will take a theoretical approach to answer this question by connecting CSR and globalization concepts and giving insights from the existing framework. While this paper investigates the interplay between CSR and globalization and the relevant conceptual approaches and empirical aspects, it only does so for their internal inter-correlation.
Research Objectives
Assessing the Impact of Globalization on CSR Practices: This objective is to consider how the MNCs’ local subsidiaries influence globalization and whether this affects their implementation of CSR strategies. By assessing the dynamics of globalization, such as cross-border trade, investment, and market integration, it would be clear what mechanisms impact CSR activities within multinationals.
Understanding Stakeholder Engagement in Global CSR Initiatives: This aims to research stakeholder theory to enable MNCs to understand and successfully interact with many stakeholders under different cultural and regulatory contexts. This research analyzes how multinational companies deal with stakeholders in the context of globalization factors. According to this research, best practices of transparent and ethical relationships with government agencies, NGOs, and other interested parties will be offered.
Evaluating the Influence of Institutional Factors on CSR Implementation: The study’s goal would be to review the role of institutional Theory in crafting and implementing CSR policies by MNCs being run in numerous global scenarios. The report will draw attention to how MNCs’ asset regulatory frameworks, social contexts, or cultural expectations of different regions play a part in determining institutional arrangements and barriers for CSR decision-making processes.
Developing Strategies for Integrating CSR into Global Operations: The aim is to create an action plan that presents the best and well-thought frameworks for integrating CSR approaches at both the corporate level of MNCs and their strategically positioned subsidiaries. By blending different conceptual frameworks into the genesis of corporate citizenship theory and legitimacy theory, this study offers actionable recommendations for MNCs to align their grand strategies for host countries’ social, environmental, and economic needs and balance their outlook for global business.
Literature Review
The literature review explores the relationship between the globalization of businesses and their adoption of CSR across industries. The literature points to the globalization of business as one of the driving forces that promote entrepreneurship at the community level, maintain brand image, and ensure the health and safety of workers at the workplace. It analyzes the different approaches to CSR underpinning them. This cultural factor influences the social responsibility practices of multinational organizations and global governance frameworks for implementing CSR at a global level.
Raimi et al. (2022) regard CSR as an essential tool for enterprise cultivation in the telecommunication industry. The author’s research demonstrates that Telecommunications companies contribute to fulfilling CSR and encourage the environment to create entrepreneurship by giving Internet access in places without the Internet. This strategic market approach entices socially aware business frontrunners and partners, adding to the sector’s growth and innovation. Contrary to that, Msalu & Msolla (2021) are more specific on the financial sector, which they do by disclosing CSR practice as one of the elements that affect the performance of financial institutions. According to their study, companies implementing CSR activities first encounter several advantages that contribute to their performance. For example, organizations can become more socially responsible by investing in community development programs such as projects that improve living conditions or organizing charity events. These activities will help build a more favourable brand reputation and image.
According to Motilewa and Worlu (2019), CSR provides a sustainable competitive benefit to an organization. Their study underlines the role of CSR in enriching brand reputation and placing firms in an excellent competitive advantage. The authors note that businesses can capitalize on their commitment to social and environmental considerations to develop brand goodwill and a competitive position. On the contrary, Ivanova et al. (2022) contribute to the literature, focusing on CSR practices performed in the context of Russia, in which cultural and institutional factors together form the primary factor that determines the success of a company. The study’s findings reiterate the importance of considering each country’s unique socio-cultural and regulatory environment when developing collaborative RSE strategies and providing guidelines and support structures.
Workplace health and safety are essential components of corporate social responsibility because they are one of the techniques organizations use to safeguard the lives of their employees (Carson, 2020). Through his article, Carson (2020) delved deep into how MNCs, through CSR programs, have affected different WHS scenarios across their globally shaped operations. As Carson indicates, MNCs often deal with high complexity regarding WHS standards consistent across diverse geographical locations because of modern regulations, infrastructural differences, and cultural diversity in the regions where the regulations are in place. Consequently, Mäkelä & Näsi (2021) have the same position. According to them, companies can not only control risks and support their workers and fans’ trust but also improve the well-being of employees by consistently considering WHS in CSR. For instance, according to Benkarim & Imbeau (2022), Toyota Company put forth integrated WHS programs that, apart from conforming to the local regulations, comply with internationally acceptable best practices, employee training and risk management audits.
Corporative governance is characterized by focusing on the role of the management board and effective governance structures in forming CSR practices in the context of globalization. Some authors, like Caputo et al. (2021), have also thoroughly investigated the setting of the global governance frameworks for CSR implementation, holding that a fair and open reporting and certification system is needed. The authors, Caputo et al. (2021), demonstrate how global CSR reporting and certification standards are evolving with their focus shifting to transparency, accountability, and stakeholder engagement as elements of CSR discloser. They point out that the frameworks not only assist MNCs in publicising their CSR program but also reveal how they deploy their contribution between different stakeholders, such as investors, consumers, administrators, and civic organizations. Also, the study by Beddewela and Fairbrass (2021) focuses on the institutional challenges that MNCs face in attaining legitimacy through CSR and the function of the governance mechanism of aligning CRS with international norms. Their study shows that governance is a cardinal element in realizing goals that promote compliance with international norms and prescribed standards.
4.1Impact of Cultural Differences on Corporate Responsibility in Multinational Organizations
A case study by Chua et al. (2021) showed how Coca-Cola’s water governance implementation in India, a country plagued by water scarcity, posed challenging cultural shifts. Coca-Cola was introduced in the area, with profits being its direct priority. Hence, water extraction for profit-making clashed with local culture and thus led to community opposition and the brand was injured from a reputational standpoint. Then, revising the strategy, Coca-Cola built regional connections, collaborated with NGOs, and reinforced water preservation initiatives, showing cultural awareness and joining corporate conduct with local culture. The case proves the point that understanding cultural differences matters in designing corporate responsibility initiatives.
According to a case study by Kolhe (2023). The author explains the issue of uniformity in nutrition policies at McDonald’s. From multifaceted cultural codes of food choice, perception of health and behaviour of food consumption, the company adopted a thorough approach to CSR. Hence, the organization introduced various healthier options and shunned transparency in their nutritional aspects to cover people’s health concerns, which are still growing in that environment. By contrast, in low-indulgence countries like Japan, where Japanese people are attached and used to their certain traditional dietary habits, McDonald’s adapted their menu supply to meet local consumption standards and stay nutrition-oriented. This context points out the immense value of having cultural values in the formation of corporate responsibility practice.
Discussion
5.1 Theoretical Perspectives on Globalization and CSR
Based on extant research on the theories of institutional Theory, legitimacy theory, corporate citizenship theory, and stakeholder theory (SHT), it can be inferred that these theories offer theoretical frameworks that link globalization and CSR. According to these views, globalization and CSR may be complementary tactics since there is evidence for both dual causality—that is, the idea that globalization influences CSR and vice versa.
Institutional Theory concerns how external organizations and legal frameworks influence an organization’s legitimacy and conduct. MNCs doing business across the world’s economies grapple with the complexity of different institutional environments and adjust their company’s CSR strategies to conform to local law, culture, and stakeholders’ expectations. Institutional Theory highlights that the legitimacy of any organization creates the ability for the organization to access the most important markets, talent, and resources (Zhang et al., 2022; Mahmud, 2020). The main advantage of Institutional Theory is that it provides attention to the importance of the external factors in line with the shaping of CSR practices, taking into account the impact of such broader societal forces on the behaviour of companies. Nevertheless, a significant dilemma is the difficulty of finding a balance when two institutional demands clash, leading CSR performance inconsistencies to emerge across different contexts.
The stakeholder theory recognizes the interests of various parties and stakeholders at different levels, from local communities to international NGOs, who all can be affected in one way or another, hence all calling for businesses to be in good relationships with all of these stakeholders along with ethical dealings and transparency. In a world of globalization, corporations extend easily beyond borders, leaving different communities and ecosystems under their impact. The Theory gives a platform or frame to handle/manage these impacts by engaging stakeholders in dialogue, accountability, and collaboration (Raimi et al., 2022). While several concerns exist regarding whom to involve and how to prioritize, as these differ from community to community, where power relations and differences in cultural habits determine relationships between players, these still exist.
Looking at corporate citizenship theory, this Theory posits that businesses have a dual role: to pursue economic interests while advancing society’s collective welfare (Pope & Lim (2020). Nevertheless, conflicts constantly evolve between business needs and community interests, particularly in environments with distinctive regulatory frames and traditional values. This Theory underscores the imperative factor that MNCs are so devoid of legitimacy that they would instead value social license to operate and address societal needs (Pope & Lim, 2020). Corporate Citizenship Theory acknowledges the appearance of positive input from MNCs regarding social awareness due to their responsibilities in the business. On the other hand, some find that the MNCs prioritize profits, and it turns out that they care less about long-term social and environmental concerns.
Legitimacy Theory contends that enterprises adopt CSR to fit their standards of conduct with societal norms, and they desire to stay within the boundaries of people’s expectations. In terms of globalization, MNCs feel pressure to demonstrate their commitment to social and environmental issues in order to gain trust and credibility in diverse markets. This Theory further emphasizes the role of CSR in enabling the MNCs to deal with the complexities of the regulatory environment, cultural norms and even social values (Beddewela & Fairbrass, 2021). Legitimacy Theory’s strength lies in acknowledging that in CSR activities, the leading role is to produce a positive reputation and maintain healthy relationships with stakeholders. Critics them to CSR activities not giving genuine concern for public health. They say that, sometimes, some CSR is driven by the desire only to get good social awareness.
5.2. Factors Affecting the Relationship between CSR and Globalization
In particular, multinational enterprises (MNEs) that operate in culturally diverse marketplaces strive to enhance their social performance for several reasons:
5.2.1 Higher Visibility
International businesses are subject to increased scrutiny from stakeholders. Due to increased public awareness of their activities, giant firms are far more susceptible to public opinion. They are more likely to damage their company’s reputation due to their activities (Khojastehpour & Saleh, 2020). Sang et al. (2022) claim that stakeholders in the areas where multinational firms operate exert significant pressure on them to adopt socially responsible behaviour and provide positive social results. An institution’s improved performance in social or environmental activities strengthens its links to the surrounding society. However, given that social and ecological challenges are only sometimes equally relevant everywhere, this element may differ significantly depending on the nation where the institution works (Ahmad et al., 2024). Consequently, the company may behave in two different ways depending on the country in which it operates. According to Alsayed et al. (2020), the corporation can use nations with laxer regulations to act opportunistically or venture into new markets to acquire insights, enhance credibility, and establish transparency, all of which can be advantageous in the long run. The firm can establish a competitive edge by satisfying all pertinent interest groups. Therefore, a foreign business that achieves this competitive edge through excellent CSR will raise customer trust and organizational credibility in the destination nation (Sang et al., 2022) and set itself apart from rivals.
5.2.2. Risk Mitigation
Given that globalization may create significant uncertainty, CSR helps businesses establish credibility and strengthen their competitive edge internationally while reducing the danger of rejection in a new nation.
According to Amis et al. (2020), while examining MNEs, we assume that the globalization phase occurs first, followed by the need to blend in with the target country, which inspires the development of a CSR plan. Multinational companies (MNEs) can reduce some risks by adapting to social requirements. A successfully implemented CSR plan would boost customer confidence and enhance business performance. Furthermore, companies should consider international cultural perspectives when creating their CSR plans. If they do not, this could lead to errors in the CSR practices of both the home and destination markets, increasing the risk to the organization (Samantara & Dhawan, 2020).
5.2.3 Availability of Funds
The quest for new sources of income brought about by globalization makes it possible to create resources continually. Multinational corporations (MNEs) operating in culturally diverse markets may allocate the expenses and benefits of their CSR investments across their subsidiaries to enhance their CSR (Gulema & Roba, 2021). As a result of the globalization strategy, this type of company gains a great deal from risk diversification. Owing to the company’s diverse range of markets, a decline in one may be offset by an increase in another, enabling the organization to attain a reasonably stable financial standing and cash flow, as well as the capacity to carry out social and environmental projects within the markets it serves (Vigneau, 2020). If MNEs display a commitment to the host nation and provide benefits to both the community and the business, the locals will be more likely to trust them.
5.2.4. Expectations of the Stakeholders
Dmytriyev et al. (2021) assume that insufficient information about different market destinations can prevent the competence and knowledge transfer between a parent company and its subsidiary, and the opposite way. A firm that pursues an effective response and adaptation by way of CSR needs a comprehensive understanding of the market and its stakeholders’ cultural values. The sole way of proper communication with the public is to implement the strategy, which not only improves the effectiveness of the process but also makes a group more internationally recognized, transparent, efficient, and highly productive. Thus, the strategic functioning of MNEs in varied cultural contexts assists them in implementing their global understanding and gaining local expertise in the global markets (Khojastehpour & Saleh, 2020). Sangs and other researchers suggested that a diversified market might lead to an environmental approach from the company that allows the recognition and introduction of significant innovations in environmental management
Conclusion
The research gives complete information on what CSR entails and the corresponding ethical issues that are related to globalization, especially in dealing with multinational corporations’ (MNCs’) operations in different societies while at the same time addressing CSR considerations. With the help of diverse theoretical ideas of stakeholder theory, human capital theory, corporate citizenship theory, legitimacy theory, and institutional Theory, the study aims to unravel the multiplicity of processes determining relationships between CSR and internationalization. Indeed, the paper begins with a point that CSR is one of the most significant factors for improving MNCs’ legitimacy and image in global markets. While they come under such CSR activities as ethical labour conduct, environmental sustainability, and community development, MNCs will be able to improve their relations with stakeholders further, which, in the long run, will lead to a favourable image. As a result, it gains consumer goodwill and protects the risk of any reputational damage, which can have meaningful implications for the firms expanding their sites within the territory.
In addition, the study identified risk management related to globalization as the most critical effect of CSR. When MNCs expand and have their operations in countries to tap into new markets, they can be viewed as the business of the socio-cultural, economic, and regulatory challenges. Through CSR programs in their international operations, MNCs may show their support for the principles of ethical entrepreneurship, which can help them gain the trust and approbation of the local communities and the authorities. This way, they can balance obstacles such as regulation inspection, personal protests, and their calibre reputation that may affect their business ventures.
Besides this, the research demonstrates CR’s strategic value in gaining a foothold in new markets and boosting competitiveness. The era of higher consumer sensitivity and activism favours CSR businesses that focus on and identify with the environment and social development. Brcas CSR programs would work more effectively if matched to companies’ business goals. This would also enable MNCs to have higher loyalty from consumers who appreciate responsible companies, and eventually, they would take a more significant market share. On top of that, CSR can become a vital tool in market penetration into new economies where companies are commonly conceptualized in terms of social well-being and environment friendliness.
The paper also pointed out those issues and barriers that may relate to the process of CSR, which takes place globally—a significant hurdle results in a dilemma between generating profits and meeting society’s welfare. MNCs are frequently caught in a position where they are simultaneously judged by profits and CSR performance, which, in turn, becomes a conflicting interest. Besides, the varied cultures, laws, and competing stakeholders across different markets make it incredibly difficult for MNCs to generalize their CSR strategy and develop specific programs that are useful and suitable for the particular markets. Given the mentioned obstacles’ impact on MNCs trying to embrace CSR elements in their operations worldwide, the following recommendations are proposed. In this regard, the approach proposes a holistic approach to CSR that encompasses suggested philanthropic activities and emphasizes ethical standards of labour practices, environmental sustainability, and community engagement. MNCs must consider that CSR strategies should proceed from the central business, values, and principles based on a single corporate image.
Additionally, this research calls upon MNCs to have an approach to CSR sensitive to the local environment and stakeholders, bearing in mind the diverse cultural, regulatory, and stakeholder landscapes across markets. The principles of CSR are general and can be applied globally, but the implementation of CSR projects must be done according to the specific regions. This shall imply further research, risk assessment, involvement in positive dialogue with stakeholders, and consequent redesigning of CSR practice.
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