Introduction
Corporations initiate corporate social responsibility (CSR) program to assess and cater for the social wellbeing and environmental effects. This act is also called the corporate citizenship and involves firms incurring costs which are short-term and does not give immediate financial feedback (Droppert & Bennett, 2015). The interests pursued by many organizations often harm and have some negative impacts on the local communities. Destruction of environment usually goes hand in hand with causing harm to the vulnerable populations around an entity.
A company can choose to invest in the local communities for them to offset any negative impacts that its operations might cause (McWilliams, 2000). There are various motivational factors which drive firms to participate in CSR programs. When undertaking this service, there are numerous challenges that the companies encounter. It is therefore imperative for businesses to carry out an analysis to ascertain the limitations expected in the process. Consequently, it merits a study conducted on this issue and hence resulting in the research question; what are the challenges of implementing CSR in international businesses?
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An international business conducts its trade-in and investments in local as well as foreign markets. It has outlets in different countries which do not have similar cultural practices and hence have different views on CSR. Businesses have financial and non-financial goals. Most of them are profit driven in nature and aim at maximizing on the revenues that it generates. Additionally, there are various stakeholders in an international business of which the company targets at achieving their desired needs. For instance, the shareholders want to earn maximum returns on their investments. When a corporation chooses to undertake corporate social responsibilities, it creates an opportunity cost by using funds meant for business purposes. It can, therefore, result in a conflict of interest since if appropriately invented, it generates profit. An organization should, thus, conduct a critical analysis of the advantages and limitations of participating in CSR before deciding to partake in one. Since CSR cuts across three aspects, social, economic and environmental, an interdisciplinary approach to handling this issue is more beneficial as it will cut across different industries and fields.
Literature Review
Before a firm engages in corporate social responsibility, they have to consider various factors that show its capabilities to undertake the function. For instance, the organization has to ensure that it has sufficient resources required. Lack of resources is a big challenge that faces the implementation of this program in some of the international business (McWilliams, 2000). An organization can decide to use its reserved capital or any other funds from the company to set up a project in the local communities. Since an international firm operates in different countries, it will have to undertake many projects. The organization is likely to face a problem of lack of enough resources such as capital to complete all its intended CSR programs (Yuen & Lim, 2016; McWilliams, 2000). Additionally, different foreign markets have varying regulations regarding implementing CSR. Some being very high standards that the companies operating in the global market find them difficult to comply. A significant effort is driven towards adhering to these rules rather than meeting the expectations of the beneficiaries of the CSR.
Concerning the shipping industry which operates internationally, the regulations imposed on them by the various governing bodies poses a lot of difficulties for these companies to undertake and implement CSR programs. Moreover, there are barriers depicted which affect this process. For instance, these firms are willing to participate in CSR but do not have a clear and a well laid out strategic vision on what they desire to achieve in future. They also lack measurement tools that are used to gauge the level of performance of their projects. For an entity to consider itself to undertake an active CSR program, its outcomes should have touched on various aspects. These facets are the social, economic and environmental (Yuen & Lim, 2016).
Different sectors can accomplish multiple results concerning the three elements and not all at once. For example, most medical institutions perform exemplary in the social responsibility but undertake little to achieve any environmental upkeep. These pharmaceutical companies are attributed to be socially responsible because they have professional employees and emphasizes on having excellent customer relations as part of their business values. Firms that deal with food and real estate are however cautious in protecting the environment. It is a challenge for many organizations to balance these three aspects in the implementation of CSR (Jamali et al., 2006).
Many firms currently engage in CSR as a result of pressure from different activist groups who believe that it is the duties and responsibilities of organizations to give back to the local communities by being concerned with their social and environmental welfare. The financial goal is shared amongst many international businesses which strive to succeed in the foreign market and hence practice economic responsibility by default (Ismail, 2009). These firms are however hesitant in accomplishing the social and environmental accountability due to lack of direct financial gains. It is consequently a limitation to the implementation of CSR. Balancing of these three aspects is referred in this study as the Triple Bottom Line integration (Hailu & Nigatu, 2015). A firm will have an internal conflict on the benefits of undertaking the program and its disadvantages.
In the tourism and hospitality industry, gender equality is an issue that is high of concern that relates to social welfare. The firms in this field have put in the effort of ensuring they are socially responsible by promoting gender equality. In the traditional society, women only secured the lower work positions in firms. Therefore, by promoting equality in the recruitment process and giving promotions where due is a form of social responsibility. However, these businesses are reluctant in supporting the environmental aspect of corporate social responsibility (Hailu & Nigatu, 2015).
Under the sociology field, a business engages in this program for various reasons and is also able to accrue some advantages. CSR supports the wellbeing of the society in which the firm operates and also promotes sustainability of the business itself. In the industrialization process, the community benefits from the benefits that the firm attracts (Ismail, 2009). There is a mutual benefit between the company and the community through its participation in CSR.
The relationship between these two parties can significantly contribute to the success of failure of the entity. Some of the potential clients to the business are from the community in which it is situated. CSR promotes a healthy relationship that is likely to see that company attracting large customers who are beneficiaries of the program. Moreover, it is evident from the study that an organization which participates in CSR is likely to perform well in economic hardships and have a conducive business environment (Ismail, 2009).
Despite the challenges that organizations face in implementing CSR, various vital drivers that motivate firms to undertake this program in the society. Nowadays investors and other stakeholders in enterprises use CSR as a measure of performance of businesses. They make a decision on the foundation of the assumptions that firms which can set aside funds used for these activities are more responsible for their management and have enough sources of cash inflows (Jamali et al., 2006). It is, therefore, an assurance that they will earn returns on their investments.
Another advantage accrued from practicing CSR is that since international businesses operate in an extensive market, they can attract cultural diversity in their workforce and have the ability to attract and to retain qualified employees. Workers are currently checking beyond paychecks and other forms of compensations. They are seeking employers whose operational practices match with that of their principles and values. Firms that are socially responsible provide a conducive working environment for its workers (Droppert & Bennett, 2015). The need for closure of companies by its stakeholders also acts as a critical motivator towards undertaking CSR.
Summary and Conclusion
From the analysis of the various literature materials, it is evident that an organization that desires to pursue CSR will face many challenges in implementing the problem. Firms that are in different line of businesses may experience similar or varying difficulties. However, despite the limitations, some companies put more emphasis on the benefits that they will accrue in this practice. Since an international business may have branches in different countries, it is subjected to various rules and regulations which also affect the implementation of these projects in the local communities. Cultural diversity is also a determinant to the successful implementation of the programs (Hailu & Nigatu, 2015).
The studies indicate that firms which participate in CSR are more likely to triumph during economic difficulties. From the three aspects that encompass the program, that is the social, economic and environmental responsibilities; it is difficult for firms to strike a balance to be accountable in all the three areas. From carrying out the research, various beneficiaries of these studies will get answers to the research question. One can identify the numerous challenges that international business face in implementing CSR and get explanations using different discipline scenarios.
References
Droppert, H. & Bennett, S. (2015). Corporate social responsibility in global health: An exploratory study of multinational pharmaceutical firms. Global Health, 11 (15), DOI: 10.1186/s12992-015-0100-5
Frynas, J. G. (2009). Beyond corporate social responsibility. Oil Multinationals and Social Challenges .
Hailu, F. K. & Nigatu, T. F. (2015). Practices and challenges of corporate social responsibility in the hospitality industry: The case of first level hotels and lodges in Gondar City, Ethiopia. Tourism and Hospitality, 4 (5), 1-10.
Ismail, M. (2009). Corporate social responsibility and its role in community development: An international perspective. The Journal of International Social Research, 2 (9), 1-11.
Jamali, D., Mezher, T. & Bitar, H. (2006). Corporate social responsibility and the challenge of triple bottom line integration: insights from the Lebanese context. International Journal of Environment and Sustainable Development, 5 (4), 395-414.
McWilliams, A. (2000). Corporate social responsibility. Wiley Encyclopedia of Management .
Yuen, K. F. & Lim, J. M. (2016). Barriers to the implementation of strategic corporate social responsibility in shipping. The Asian Journal of Shipping and Logistics, 32 (1), 49-57. https://doi.org/10.1016/j.ajsl.2016.03.006
