Home Articles Multinational Corporations and Social Responsibilities: Let’s Eradicate Poverty

Multinational Corporations and Social Responsibilities: Let’s Eradicate Poverty

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Multinational corporations (MNCs) have a pivotal role to play in promoting well-being and equity in our society. There are several types of ‘role’ and ‘scope’ that MNCs can play in conjunction with various local and international organisations such as local government, the UN agencies and NGOs in the host countries, and local social groups. One of the most prominent contributions from MNCs to the host countries is corporate social responsibility (CSR).

CSR is more than a series of ‘feel-good’ activities that MNCs organise for the local community and subsequently promote them in the media. We are familiar with the concept of donating money, building schools, or planting trees in front of the cameramen of the influential media. Those days are gone. There is a lot to explore and be creative when it comes to CSR.

CSR has tended to deal with a handful of common social issues, while marginalizing other challenges. Developmental concerns of poorer countries are often left unaddressed, including issues such as “the cost and impact of CSR initiatives and instruments on smaller enterprises, the situation of informal sector workers and whether [transnational corporations] or large retailers cut and run when their suppliers come under the CSR spotlight.” (Utting 2007)

Although CSR from MNCs in developing countries is increasingly gaining attention, issues of particular concern to activists in developed countries, such as child labour, environmental degradation and sweatshops, are those which dominate the CSR agenda.

A notable omission in the CSR debate is the role of business in contributing to global poverty. “Words such as ‘poverty’, ‘engagement’ or ‘development’ are used in the CSR discourse, but they remain undefined. There is, in fact, a tendency to view poverty as an individual and a local problem, and marginality as a residual effect that businesses can attempt to mitigate.” (Merino & Valor 2011, p. 164)

An overall reluctance to engage with the roots of poverty and the role of business in perpetuating these structural issues has caused CSR to manifest as programmatic, micro-level initiatives targeted at very specific and selective social goals, thereby limiting the attainment of broader sustainable development outcomes.

My main argument is that most MNCs fail to deliver the long-term prospect to eliminate poverty in the host countries. Those who can deliver and keep their promises will be positively responded by the locals.

In my current research project, I am exploring the nature of CSR from Australian subsidies in Thailand and Laos.

One case I found from a gold mining company, ‘Akara Mining’ (a Thai-Australian subsidy), is quite innovative. From the series of interview with various stakeholders in the Pijit province where the mine is located, I found that poverty eradication was not a direct CSR objective of the organisation. However, most of their CSR activities seem to focus on long-term benefits of economic and well-being development, which will indirectly improve the condition of poverty in the area.

Apart from supporting the community through social and cultural activities, their CSR strategies seem to focus on (1) income generation and (2) sustain educational development.

The income generation scheme has been implemented in conjunction with the local council in Pijit. Villagers were contacted by the company CSR team to participate in this scheme. In this case, the mechanism of the local governance helps the company to choose those who are considered ‘poor’ and ‘lacking in skills’. The next step is to provide options for their potential career.

Some villagers chose to join the pig farms project and some chose to join the agricultural demonstration project. With the ongoing technical and financial supports from the company, villagers started to see the positive roles of the organisation. Obviously, the long-term plan and responsibilities from this organisation are key for success.

The second story that confirms my argument was a story from SIEMENS, a gigantic conglomerate from Germany. After a series of interview with their CSR team in Thailand, I have noticed similar pattern to the previous case. Although they do not perceive poverty as a direct threat, they have been working on this issue indirectly.

Most of their CSR activities focus on long-term education development. The organisation promotes various activities such as ongoing donation to various libraries in rural schools, creating educational schemes that support the work of science teachers and students in rural Thailand, and promoting career in science and technology with people from low socio-economic background.

SIEMENS understands that, as an MNCs, it is important for them to work through the mechanism of the local government to achieve long-term skill development to eradicate poverty in the country.

The stories from two MNCs from Australia and Germany locating in Thailand confirm that MNCs have to demonstrate their continuous efforts to support the locals. Corporate engagement requires time and resources from their headquarters.

However, engagement with the locals is compelling. All ‘decent’ MNCs must look carefully at how their organisations are engaged, consider what more they can do to eradicate poverty, and act. As suggested by the United Nations, we can end poverty (by 2015), MNCs in developing nations must work together with the local governments to make this issue a reality.

References:

Merino, A & Valor, C 2011, ‘The Potential of Corporate Social Responsibility to Eradicate Poverty: An Ongoing Debate’, Development in Practice, vol. 21, no. 2.

Utting, P 2007, ‘CSR and Equality’, Third World Quarterly, vol. 28, no. 4, pp. 697-712.

Dr.Nattavud Pimpa is a senior lecturer in international business at the school of management, RMIT University.

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