International Corporate Responsibility Series

This study examines the degrees of corporate disclosure and transparency of publicly listed companies in two emerging markets and analyzes corporatedisclosure practices as a function of specific firm characteristics. The analysis uses the disclosure and transparency scores extracted from a survey instrument designed to rate disclosure practices of publicly listed companies by using the OECD Corporate Governance Principles as an implicit benchmark. Empirical results show that financial characteristics explain some of the variation in the degrees of corporate disclosure for firms in Hong Kong but not for firms in Thailand. Further, corporate governance characteristics, such as board size and board composition, show more significant associations with the degrees of corporate disclosure inThailand than in Hong Kong. The results are broadly consistent with the notion that good corporate governance leads to better corporate disclosure and transparency in less developed markets.

The study is designed to examine the perceptions of Chinese executives of corporate social responsibility (CSR) and to explore possible strategies by which well-established foreign multinational enterprises can carry out their CSR in China. The interviewees’ interpretation of CSR is found to be oriented toward internal operations of the Chinese subsidiaries and economic responsibility. Many interviewees have the classical view of CSR, while headquarters has the modern view. The main problems of implementing CSR are: specific Chinese business culture, intellectual property rights, internal due process, and insufficient Chinese government support. It is recommended that socialization of Chinese executives about CSR be accomplished through personnel transfer among various functional areas in the corporate system, the development of a just organizational culture in the Chinese subsidiaries, and collaboration with external partnersthat advocate CSR.

Despite the attention given to China’s rising importance in the international marketplace, I argue that corresponding attention has not been given to the sustainability dimensions—the social and environmental dimensions of this economic development trajectory. Specifically, what type of business strategy can and will best serve the economic, environmental, and social needs of China, and what role, if any, can the private sector play to facilitate the development of such a strategy? In exploring this question, I first examine the evolving relationship between business and sustainable development. I then outline the sustainability challenge within the regional context in the Asia-Pacific region. Finally, I analyze sustainability challenges posed by China’s rise in the global economy and assess the impacts of these challenges on current and future business strategies.

In this paper, we analyze the impact of interaction between corporate social responsibility (CSR) and corporate social capital on corporate competitiveadvantage in a transitional context. Using survey data of Chinese companies, we examine the theoretical relationship empirically. Results show that CSR has no direct association with corporate financial performance or organizational reputation. However, corporate social capital can very much magnify the impact of CSR in a transitional context. Specifically, the social responsibility of a firm with higher social capital is more positively related to organizational reputation than that of a firm with lower social capital, and this expands the theory of CSR. We present the strategic implication that the interaction between CSR and social capital improves corporate sustainable advantage.

Rwanda is recovering from the trauma of the 1994 war and genocide but continues to have a weak corporate and industrial infrastructure. Against this background, the present study was undertaken with the aim of tracing to what extent Rwandan enterprises are geared for the fulfillment of social responsibility within a strained socioeconomic milieu. The objectives of the study are to review the concept of corporate governance and its relation to corporate social responsibility (CSR), to describe the current state of corporate governance in Rwanda, to establish the relationship between corporate governance and CSR and standard ethical practice, and to suggest solutions for problems encountered in the system.

In this paper it is argued that no CSR program can be successful in a development context in general, and in South Africa in particular, unless skills development and therefore empowerment is integrated in every part of the program. The Chinese proverb, “give a man a fish and he will eat for a day; teach him to fish and he will eat for a lifetime,” is the theme of this paper. While it is good to provide people with financial and other means in order to help them, sustainable development cannot be achieved if people are not equipped with the necessary skills to use these means, and thereby empowered to provide for themselves and others in the future.

We argue that Corporate Social Responsibility (CSR), particularly corporate codes of conduct, has been one of global business’s preferred strategies for quelling popular discontent with corporate power. By “business strategy” we mean organized responses, through organizations like the International Chamber of Commerce (ICC), to the threat that public regulation poses to business’s collective self-interest. Attention to CSR’s historical development reveals it has flourished as discourse and practice at times when corporations became subject to intense public scrutiny. In this essay we outline two periods of corporate crisis, and account for the role codes have played in quieting public concern over increasing corporate power: 1) When developing countries along with Western unions and social activists were calling for a “New International Economic Order” that would more tightly regulate the activity of Transnational Corporations (1960–1976); and 2) When mass anti-globalization demonstrations and high profile corporate scandals areincreasing the demand for regulation (1998–Present).

A moral core places ethical considerations superior to business interest. This core must include voluntary prescriptions in various forms to “buy higher, sell lower.” International business ethics must somehow address the tradeoff between corporate financial and stakeholder interests. Corporation codes of conduct generally do not define a moral core. Corporate citizenship is typically strategic investment in markets and reputation. There are two practical paths for formulating a moral core. One path is civil lawsuits against multinationals that, successful or not, increase corporate moral sensitivity. The other path is evolution of multilateral codes of conductembedding negotiated norms for guidance of corporate behavior. Four key cases illustrate: (1) World Bank approach for combating corruption in Chad; (2) a lawsuit against Unocal alleging human rights abuses by Myanmar; (3) a lawsuit against ChevronTexaco alleging environmental and community damages in Ecuadorian Amazonia; and (4) demand by developing countries for relaxing intellectual property rights.

What are international codes of conduct for? The broad support for such codes masks fundamental differences about their purpose. Corporations see codes of conduct as regimes for regulating their relations with their suppliers in developing countries and—not least—to counter negative publicity. For labor and human rights activists, on the other hand, codes of conduct are levers for forcing positive change in global labor and environmental standards. Here I consider two areas typically covered by codes of conduct—wages and child labor—and identify some of the dangers of using codes to force change. If low wages or child labor are the result of poverty, and can’t be fixed by enlightened corporate policies, then codes will at best leave the underlying problems untouched and at worst will aggravate them. I conclude that we should be cautious about using codes to force higher standards.

The financial services sector has the potential to be an important driver for improved corporate social and environmental responsibility through its control over corporate financing. But, so far, only ad hoc policy initiatives have arisen in the European Union and other countries. Because the financial services sector is where wholesale decisions regarding future development, and thus pressures on the environment, arise, the reform of investment and banking services to promote long term investment and better consideration of environmental impacts may be an effective way to promote sustainable development. Reforms such as corporate environmental reporting requirements and lender liability for borrowers’ environmental harm, are some of the ways by which an institutional framework for mobilising financial organizations as instruments of environmental regulation could be constructed.

This paper examines the rise of socially responsible investment (SRI) as a sustainable finance mechanism and discusses the potential of SRI in steering the banking and financial services industry toward a more socially responsible and environmentally sound model of commerce. I argue in this paper that the potential of SRI to serve as a sustainable business mechanism to steer the global financial market toward a new ethical architecture depends on two related factors: (a) continuing institutional and social pressures forgreater corporate transparency, and (b) the ability of SRI to become a viable financial instrument outside its traditional markets in emerging and developing economies.

This study examines the three major Japanese multinational corporate governance cases of the past decade: Sumitomo Copper, Daiwa Bank, and Mitsubishi Motors. The analysis focuses on three particular matters: Does senior management and the board exhibit a form of “disaster myopia”? Were there clear signs of the impending problems that were ignored? Is there anything distinctive that makes these cases Japanese in character? The first two questions are answered in the affirmative for all three firms, but only the Mitsubishi case exhibits a peculiarly Japanese characteristic.

A good reputation is one of the most valuable assets a company can have. A problematic reputation can hinder companies in their performance. In competitive markets where products differ little in price, technology, or availability, reputation can make a difference. Petroleum companies are frequently associated with environmental issues such as oil spills and climate change. Since environmental performance rankings remain inconclusive due to methodological shortcomings, those issues may affect the sector’s reputation. This paper examines whether the observation of a problematic reputation for multinationals in the petroleum sector is sustained by empirical data for the period 1990–2002. Taking in account methodological limitations, the analysis shows two downward trends for all companies, indicating a common reputation effect. The effect of catalyst events is observed for individual companies. However, the contribution of the paper is not only empirical. Conceptually, the results show the complexity of measuring the multidimensional concept of reputation, as well as the importance of the reputation commons, catalyst events, and a reputation mechanism.

The United States, Europe and Japan provide farm subsidies at a rate of one billion USD per day. The bulk of this is captured by large corporate entities. Damage to less developed countries is extensive and deep. Besides the farmers who are harmed because of the resulting lower agricultural prices, these negative effects ripple through the rest of the economy, due to the central importance of the agricultural sector for developing nations. Besides being direct beneficiaries of these subsidies, farming corporations, including their ancillary support industries, have lobbied heavily to resist the growing international clamor to remove or at least substantially alter thesesubsidies. This paper examines the economics and ethics of international corporate responsibility on the issue of farm subsidies.

The growth of popularity of International Corporate Responsibility (ICR) has brought several international organizations into the ICR “industry”—notably the World Bank. The World Bank sees its ICR activities as public goods which make up for under-provision by the market due to market externalities. Yet, ICR also benefits the Bank. The optimal level of World Bank involvement will depend on the degree to which it provides public goods and increases the quality of non-perfectly competitive markets where ICR activities may be under-provided. The optimal level of World Bank ICR project provision is discussed and policy issues are raised.

Climate change is one of the environmental issues that has increasingly attracted business attention in the course of the 1990s. Multinationals have developed different strategies over the years, initially more political, nonmarket in nature, but currently also market-oriented. This article examines the evolution of multinationals’ responses to climate change, paying attention to both market and non-market components. It first gives an overview of the main policy developments, followed by a characterisation of non-marketand market responses, based on a survey among the largest multinationals worldwide. The chapter also reflects on overall corporate responses to climate change, paying attention to the influence of the policy contexts on emergent market strategies, and taking respondent characteristics regarding country of origin and sector into account.

The firm has an overwhelming role in sustainable development, and this paper identifies what influences a firm’s management of the business-environment interface. This is done through an in-depth case study of the environmental behavior of Tata Steel, India’s largest and oldest integrated steel plant. The Indian regulatory environment is one of strict (and sometimes contradictory) laws and slack enforcement. This paper examines the inclination of a firm in this context to commit to pollution abatement and honor its commitment by achieving long-run improvement in its environmental performance. Environmental responses studied include compliance withexisting norms, involvement in voluntary schemes, and implementation of environmental management programs. Other responses examined are investment in pollution prevention strategies, adoption of cleaner technologies, taking adversarial positions against regulators vs. working with them to develop regulations, influencing environmental policy, and meeting and/or exceeding stakeholder expectations. This paper analyzes Tata Steel’s reactive and proactive responses and generalizes some of its conclusions to firms indeveloping countries.

Although there is substantial literature examining the flow of foreign investments into various regions of the world, there is still a lack of research about joint ventures and foreign investment activities in the Middle East and North Africa (MENA). One objective of this paper is to remedy this neglect and extend previous empirical work by focusing on foreign investments in the MENA region. The second objective is to focus on non-traditional determinants that have tended to be overlooked or underestimated in previous research. The increasing globalization has led to a reconfiguration of the ways in which multinationals pursue various types of foreign investments,and changed the motives for and the determinants of FDI. This has prompted some to suggest that non traditional determinants have become more important. In view of that, the paper will focus on factors such as governance, legal environment, and economic freedom and examine their impact on foreign investment activities in the MENA region.

This study looks into the factors that foster the use of contingent employment in the Philippines, and its consequences. It also explores the relationship between corporate social performance and the nature of contingent employment. Results indicate an inverse relationship between levels of social performance and utilization of contingent employment. There is a direct relationship between the size and intensity of utilization of temporary employees and the combined effects of unionization and total employment size. Publicly listed companies exhibit higher utilization of temporary employees. However, factors that foster the use of project employees need tobe explored further. Benefits are influenced by the intensity of utilization of contingent employees. Formalization of the use of contingent employees tends to blur the difference between casual and regular employees. The use of subcontracting positively influences the number of benefits provided and diminishes the differential benefits between regular and project employees. Unionization, however, tends to increase the differential benefits between regular employees and project employees.