Analysis of Corporate Social Responsibility Training Initiatives in

Multinational Enterprises:

The challenge of localizing CSR

“The central challenge we face today is to ensure that globalization becomes a positive

force for the entire world’s people, instead of leaving billions of them behind in squalor.

Inclusive globalization must be built on the great enabling force of the market, but market

forces alone will not achieve it. It requires a broader effort to create a shared future, based

upon our common humanity in all its diversity”.

Kofi Annan, the UN Millennium Forum, Summit and Assembly, September 2002

Florencia Roitstein

February 2005

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Introduction

This paper presents and discusses the range of contributions that multinational enterprises

(MNEs) have made towards the creation of human capital development through corporate

social responsibility (CSR) related training initiatives in developing countries1. The

document takes a comprehensive view of the complex linkages between MNEs CSR

strategies’ training initiatives and human capital creation. In doing so, general trends and

best practices are presented and policy recommendations are suggested to mobilize the

MNEs sector towards a deeper and long lasting engagement in human capital development2

in the emerging markets.

It is almost common place at present that business organizations are expected to exhibit

ethical behavior and moral management. However, the social expectations have increased

repeatedly over the past decades. Nowadays firms are not only expected to pay attention to

the social impact of their activities’ “negative externalities” (Frank, 1999), they are also

asked to be virtuous and to behave as a moral and ethical corporate citizen to stay in

business. As Peter Drucker states: “In the next society, the biggest challenge for the large

company -especially the multinational- may be its social legitimacy” (Drucker, 2001).

In surfing the waves of international business, we have to face cultural differences as a

powerful force, which affects attitudes and behaviors towards social legitimacy and ethics.

We go even further by questioning whether it is best to adapt local country business ethics

or to impose a company’s ethical standards abroad. In addressing these business

1 The author has been involved in the development of various MNE’s CSR related strategies and is currently

part of a research team studying the understanding of CSR among leading MNEs. Therefore, some of the data

and information that will be presented in this paper reflects the numerous interviews completed during the last

years in different MNEs operating in the developing world. When data relates to desk research, the

corresponding reference will be cited.

2 The author understands CSR related training initiatives as a mean for achieving human capital development

in a way that contributes to equity and social value creation. Social value creation is defined as the value that a

firm can offer and transfer to society through its interactions and activities towards economic and civic

capability development. Some of the social values created by firms consist of contributing to progress,

improving the quality of national programs (i.e. education, health), creating new entrepreneurs, motivating

innovation, among others.

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challenging questions, companies seem to look for solutions by getting involved in defining

their role as citizens of the world through their CSR behavior.

The UN Global Compact3 and the World Business Council for Sustainable Development4

are illustrative examples of the efforts that MNEs are making to reach a culturally shared

understanding for corporate responsibility.

In this paper, we shall adopt the definition proposed by the World Bank 2003 conference on

“Public Policy for Corporate Social Responsibility” in which corporate social responsibility

is defined as “the business commitment to contribute to sustainable economic

development5, working with employees, their families, the local community and society at

large to improve their quality of life, in ways that are both good for business and good for

development”.

After years of enthusiasm and debate on CSR, voices are coming up to question the real

output on innovation, social value creation and social progress (Pendelton, 2004). This

disillusionment is also associated with the fact that even though the business case for CSR

is rather evident6, firms do not seem to integrate it into their business practices7. In addition,

3 The Global Compact is a programme launched by the U.N. in July 2000 upon the direct initiative of

Secretary General Kofi Annan (2002). It aims to involve the business community in a new kind of cooperation

with the United Nations through the acceptance of the nine universal principles in the areas of human rights,

the defense of labor and environmental protection. Today more than 1500 firms have joined the UN Global

Compact.

4 The World Business Council for Sustainable Development is a coalition of 170 international companies

united by a shared commitment to sustainable development via economic growth, ecological balance and

social progress.

5 The concept “Sustainable Development” (SD) is defined as “the development that meets the needs of the

present generation without compromising the ability of future generations to meet their needs” (UNEP, 1987).

Even if the term SD was launched almost 20 years ago, (Brundtland Report, 1987), its conceptualization

varies worldwide, depending on what type of world policymakers and practitioners think is needed creating

for future generations to inherit.

6More and more investors are putting their money into socially responsible mutual funds. According to the

Social Investment forum, the assets in these funds grew 40% faster than other assets from 1995 to 2003. (Jan

Chong, in Stanford Social Innovation Review, Fall 2004).

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as the recent report published by Christian Aid illustrates, even though companies are more

and more engaged in CSR related behavior, the efficacy of the strategies, the genuine

change and the tangible improvement in communities’ every day life remains rather poor.

(“Behind the mask: the real face of corporate social responsibility,” Christian Aid Report,

2004). Other critical voices towards CSR have been raised for some time. Milton Friedman

for example, is convinced that corporations are good for society but he strongly opposed the

idea that corporations should try to do good for society. “A corporation is the property of its

stockholders; its interests are the interests of its stockholders. Now, beyond that should it

spend the stockholders’ money for purposes which it regards as socially responsible but

which it can not connect to its bottom line? The answer is no”. The only social

responsibility of corporate executives, Friedman believes, is to make as much money as

possible for their shareholders while obeying the law. However, globalization is making

this simple statement complicate. Whose laws shall MNEs obey? Local laws or firm’s

homeland laws? It may be that because of the impact of the globalization imperative, the

rules of the game need to be the same for all players in different industries and different

regions? Today most MNEs business practices in emerging economies show otherwise8.

David Henderson (2001), for instance, proclaims that:

…good corporate citizenship not only does not come cheap for the corporation but in addition, it is not firms’ role in society. Social, economic and environmental goals are the job for governments, which remain competent to do it if they choose.

Although the CSR perspective is seen as moral9 and ineffective for authors like Friedman or

Henderson, others see CSR as an approach to overcome the limitations of national

jurisdiction and deal with the global impact of business in societies (Lunheim, 2004). While

7 Recent research from the Institute for Social and Ethical Accountability shows that among 35 listed

companies with considerable risk from rogue behavior in their supply chain, only seven had dedicated

managers whose primary responsibility includes suppliers’ labor standards. The study shows “a significant

disjoint” between board-level policy commitments and their integration into standard management practices

(Ethical Performance Newsletter, June 2004, p.3).

8 This is particular clear on the financial industry. It started with scandals in the US: Bank Boston for

laundering money, Citibank for parking funds off shore in the Caribbean.

9 Friedman believes that corporate executives who choose social and environmental goals over profits are, in

fact, immoral.

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the debate among scholars on the role of business in society has reached its peak,

companies seem to be trying hard to find out their way to respond to societal expectations.

In fact, the review carried out on MNEs’ CSR related behavior suggests that the main driver

for firms to get involved on CSR initiatives is the understanding that to achieve sustainable

business development, they have to commit themselves to contribute to social development.

Constant social development is needed not only for equity and social peace, but also for

sustainable growth. Investment and transfer of corporate know-how to society (in areas

such as health, education, human capital accumulation and professional development) is

crucial for raising productivity and business opportunities. The strategic management of

stakeholders’10 expectations (Freeman, 1984) for reducing social and political risk has

become a major issue in the globalization era.

Most probably, because of the different understanding of the reason for “why firms exist”11

the concept of CSR remains a fuzzy one, with unclear boundaries. Carroll and Buchholtz

(1999) note: “What is particularly paradoxical is that large numbers of business people have

enthusiastically embraced the concept of corporate social responsibility during the past

three decades, but only limited consensus has emerged about what corporate social

responsibility really means”.

Some of the leading MNEs reflect a long-term commitment to developing business while

contributing to society, following somehow the definition of CSR proposed by the World

Bank. Moreover, these MNEs have identified CSR related training initiatives as their main

focus of engagement in order to contribute in a sustainable manner to society and business

development. These leading companies seem to have long realized that a key element for

their business’ long term success is to integrate in their global business strategies

10 The strategic management of stakeholders’ expectations is the capacity of the firm to deal and prioritize the

different and sometimes conflicting demands coming from the social players that are affected or that affect the

operations of the corporation (suppliers, government, customers, employees, etc.). Social risk reduction is

defined as the exposure to possible loss resulting from normative delegitimation challenges by critical social

players (Yaziji, 2004). Some of these losses include: costs associated with changes to the regulatory

environment, reduced market size and market share, diminished brand value, shareholder constraints on

behavior, lower employee moral, etc.

11 Differences in western and Asian cultures on the role of business in society, just to mention an example

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stakeholders expectations and local needs. To do so, these companies have engaged on

effective partnership at the global and local level with a variety of relevant stakeholders12.

This paper is organized as follows: the Introduction is dedicated to presenting the current

debate on CSR. Section 1 gives a summary of the methodology used to review the existent

literature on MNEs involvement in CSR related training activities. Section 2 is devoted to

characterizing the CSR initiatives engaged by MNEs. Section 3 presents the analysis and

directions for further research. Finally, Section 4 provides recommendations for private and

public decision makers interested in finding effective ways to inspire and engage MNEs in

successful partnerships to develop human capital and social value in emerging countries.

1. Methodology

For the time being, little evidence is available to make a quantitative analysis of MNEs

contribution to human capital development and value creation through their CSR training

initiatives. In the years to come, more MNEs training initiatives will be implemented and

evaluation of impact and comparisons between initiatives could be possible.

Thus, at this stage of MNEs engagement evolution on CSR training initiatives, we consider

relevant to identify prominent MNEs carrying “good CSR practices”. Two rationales

motivate this choice. On one hand, prominent MNEs have a very high degree of capillarity.

On the other, they have a high level of visibility. Therefore, the impact these MNEs can

have in modeling other MNEs behavior in same and different industry sectors is quite

significant. As shown by C. Argyris’ (1982) research on business behavior, “Adaptive

learning”, coping-solving problems, is the most current way of doing business. On the other

hand, “Generative learning”, focuses on creating-continuous experimentation and feedback

12 Stakeholders refer to those who have an interest in a particular decision, either as individuals or as

representatives of a group. This includes people who influence a decision, or who can potentially influence it,

as well as those affected by such decision; such as host governments, local suppliers, social players, firm

employees. (www.earthsummit2002.org/ic/process/stakeholders.htm)

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in an on-going analysis to define and solve problems. It involves questioning the

assumptions about the way we work, a characteristic usually found in leading companies.

We shall adopt as criteria for ‘good CSR practices’ that of Michael Porter’s (Porter and

Kramer, 2002) model:

“Today’s companies ought to invest in CSR as part of their business

strategy to become more competitive. Corporate success depends on the

local environment and appropriate infrastructure, the right types and

quality of education to future employees, cooperation with local

suppliers, quality of institutions, local legislation and so on. In this

corporate competitiveness context, the company’s social initiatives can

have a great impact, not only for companies but also for the local society”

Table 1 shows MNE’s websites researched to gather data for this work, in five industry

sectors.

Table 1. List of MNEs websites researched

Industry Firms

Consumer Goods Unilever, Arcor, Danone, Nestle.

Gas & Oil Shell, Repsol, Total Elf Fina, Exxon.

Pharmaceutical Astra Zeneca, Aventis, Johnson & Johnson, Roche.

Semiconductors + IT IBM, Intel, Microsoft, SAP.

Textile C&A, Levi’s, Puma, The Gap.

Among the 30 MNEs researched, one MNE by industry sector was identified (see Table 2)

because of having developed CSR training initiative most relevant to contributing to the

societal fabric of capability building; so-called hereby “Good CSR training practices”

As this work is of a qualitative nature, we shall present examples of the initiatives carried

out by the multinationals with the purpose of illustrating the potential contribution that

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“Good CSR training practices” might have to human capital development and social value

creation.

Table 2. “Good CSR training practices”

MNEs Industry

Intel Semiconductors

Johnson & Johnson Pharmaceutical

Levi’s Textile

Shell Gas & Oil

Unilever Consumer Goods

2. Understanding MNEs’ engagement in CSR

Unilever Indonesia13 has a factory in Surabaya at Rangkut, five kilometers from the

Brantas River. The factory uses treated water from the Brantas to manufacture soap,

toothpaste and shampoo, all of which require clean water to be used, so it is in

Unilever’s commercial interest to improve water quality in Indonesia. It is also part

of its social and environmental responsibility as a local corporate citizen. In 2001

Unilever Indonesia approached the Environment Ministry offering support for its

Clean River program. Unilever recognized this was not solely an environmental

problem that could be solved simply by organizing a clean up of the river. To have a

sustainable impact a holistic solution was required involving and training everybody

who is living along the river. “What we needed was not just a change in people’s

personal habits but a wholly different attitude towards the river; otherwise any short

term improvement would soon disappear”. Silvi Tirawaty, Unilever project

manager.

13 Source: Corporate Relations Unilever, London UK.

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In consultation with the local government, Unilever agreed to adopt four villages

along four kilometers and to work with the villagers and other stakeholders to come

up with a solution that, if successful, could be applied in other communities.

Unilever offered to provide management expertise, training on different issues

(environmental protection, prevention of river pollution, waste treatment, etc.),

voluntary help and equipment, to encourage the villagers to develop and sustain a

self-help approach. “I never though I would farm fish in this river. It was too

polluted. Now, I make a living from it” Suyatno, a full time fish farmer in the

Brantas River.

As Henry Ford II pointed out years ago, “The terms of the contract between industry and

society are changing... Now we are being asked to serve a wider range of human values and

to accept an obligation to members of the public with whom we have no commercial

transactions”.

The motives why MNEs need to accept an obligation towards members of society remains

at the core of today’s CSR debate (The Economist, January 2005). Many pressing questions

can be posed: Is primary green-washing and window dressing? Is it mostly a license to

operate? Is it to reduce the social risk MNEs are facing as a consequence of globalization? Is

it the pursuing of legitimacy and reputation? Or it may be the understanding that firms need

to find the best way to capture the moral and ethical imagination of the voting and/or buying

public/society? What really drives CSR behavior: true concern for society or another way to

increase corporate profit? Do firm’s motives matter? Could CSR initiatives intend to raise

profits as well as do good?

There are companies that make it their business to be socially responsible. These companies

take seriously their role in improving society and providing benefit to multiple stakeholders,

not just shareholders. The initiatives of the “good CSR practices”; Intel, Shell, Unilever,

Levi’s and Johnson & Johnson that we will present along this paper illustrate well this

corporate perspective.

MNEs training initiatives contributing to human capital development are present in “good

CSR practices”. These types of initiatives, focus of the present paper, are considered central

for sustainable development and social value creation. Based on data collection and field

work experience we argue that MNEs actually get involved on CSR training initiatives due

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to a variety of reasons, however, it is also usually the case that the initiation of the actions

follows a specific triggering event14.

2.1. The business motivation to engage in CSR training initiatives

The main types of motivations can be grouped in three kinds:

2.1.a. Ethics as serious business : a feeling of doing what one think is right.

2.1.b. Altruistic – Humanitarian, good corporate citizenship: the will to be and do

good, to give back to society because that is part of the values and culture of the

corporation.

2.1.c. Strategic decision making: the reduction of social and political risks and

development of market opportunities.

Tables 5.1 to 5.5 in Annex 1, show in detail researched firms’ CSR Training Initiatives vis-

a-vis training domains and motivations by Industry sector in each of five sectors covered by

this paper. Table 6 shows the overall ranking of firms by motivation.

2.1.a. Ethics as serious business

Ethical behavior derives its source of authority from religious convictions, moral traditions,

human principles and (or) human rights commitments (Novak, 1996). Ethical behavior

overcomes legal obligations. They entail being moral, doing what is right for the

community, respecting peoples’ moral rights and avoiding harm or social injury as well as

preventing harm caused by others (Smith and Quelch, 1993). Ethical responsibilities are

those practices that are either expected (positive duties) or prohibited (negative duties) by

members of society, although they are not necessarily codified into law (Carroll and

Buchholtz, 2000).

Today, due to negative public opinion, questions about ethics are increasingly being taken as

a serious business problem. Virtually all members of business systems agree, at least in

14 As happened with Nike, Shell and others

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principle, with the fact that they have to behave in an ethical manner towards society and the

communities where the companies operate and make their business successful. Moreover, in

most companies, a corporate ethics officer position has become familiar. A 1999 Conference

Board study of 124 companies in 22 countries found that 78 percent of the companies have

ethics policies as compared to 21% in 1987.

Concern for ethics has stimulated activity in several levels. The Shell “Statement of General

Business Principles” makes explicit its intent “Upholding the Shell reputation is paramount.

We are judged by how we act. Shell Canada's reputation will be upheld if we act with

honesty and integrity in all our dealings and we do what we believe to be right at all times

within the legitimate role of business”

Shell recognizes the importance of retaining the trust and confidence of its shareholders,

employees, customers, and others with whom it does business, as well as the communities

in which Shell conducts business. This trust must be merited by conduct in alignment with

Shell's Business Principles and Code of Ethics, which form the foundation for the conduct

expected of every employee in Shell's business dealings. “We must strive to maintain

consistent conduct of the highest ethical standard; the cornerstone for Shell's success and

the success of Shell employees” (Shell website, 2005).

At the supranational level, the UN Global Compact has developed guidelines to protect the

environment and to instill ethical values.

Today, the most relevant and common example of CSR ethical training initiatives are the

“Codes of conduct”. They are usually the result of a strong engagement and discussion

process among top managers on the way in which business should be carried out. They

consist of a set of rules that must be accomplished by all members of the firm, across

business and countries. Codes of conduct have been defined as a statement setting down

corporate principles, ethics, and rules of conducts, code of practices or company philosophy

concerning responsibilities to employees, shareholders, consumers, the environment or any

other aspects of society external to the company.

For instance, at Johnson & Johnson, instead of a mission statement, during 60 years, a one-

page document -“Our Credo”- has guided their actions and value system in 36 languages in

Africa, Asia/Pacific, Eastern Europe, Europe, North & Latin America, and the Middle East.

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The motivation for ethical behavior has become a relevant issue for multinational business.

To ensure the appropriate implementation of a firm’s code of conducts requires a consistent

and long lasting effort to raise awareness, among employees and suppliers, about improving

corporate ethical behavior and the prevention of corruption. Moreover, codes of conducts

are very significant tools for improving the labor conditions of employees, especially in

countries where governmental legislation is weak or ineffective. These initiatives are very

well aligned with the strong demands and expectations of stakeholders for MNEs to become

more transparent and accountable in its relationship with society.

The potential impact that these MNEs can have in improving local firms’ ethical behavior

and preventing corruption in the developing world is very important. The respect and

promotion of Code of Conducts and other ethical initiatives have the potential to establish a

set of standards for corporate behavior in developing countries, and by doing that,

encouraging other firms willing to do business with them to incorporate this set of values to

their day to day business behavior. Thus, MNEs taking ethics as a serious business can

contribute to human capital development and social value creation.

2.1.b. Altruistic – Humanitarian, good corporate citizenship

Altruistic CSR behavior involves contributing to the common good through poverty-focused

social investment and philanthropy programs at possible business expense. Humanitarian

CSR makes firms go beyond preventing or rectifying harms they have done (“negative

externalities”) to assuming liability for public welfare deficiencies they have not caused. In

this context, firms give mainly grants and donations to communities and/or NGOs to

overcome specific groups’ needs. The humanitarian perspective, when relating to CSR

training initiatives is focused on MNEs investing their resources on responding to social

needs not related to their business competences or strategy.

A good example is Shell’s response to the Tsunami disaster in Asia:

Shell’s primary objective has been to focus on providing immediate local support on

the ground to local communities through Shell operations in affected countries. This

includes the provision of fuel for transport rescue in Thailand and the supply of

water tanks in Sri Lanka. In addition, Shell is donating $3 million to disaster relief

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efforts in the region. $2 million will be donated locally, and distributed through their

operating companies in Indonesia, Sri Lanka, India, Thailand, and Malaysia for

relief funds. They expect other local Shell schemes around the world to deliver a

further $1m, such as the donation to relief funds of 5 cents for every liter of petrol

and diesel sold in Singapore during one week. In many countries, such contributions

are being matched by individual Shell staff. (Shell web page, December 2004)

While this example of good corporate citizenship serves a very valid social cause and

intends to meet the real needs of the target population, it goes beyond the corporations’

responsibilities, competencies and core business. We can still argue that it is a model of

"branded philanthropy" that contributes to build brand reputation and legitimacy; which

both are essential for business marketing and differentiation strategies. However, the

likelihood of effectiveness on the fabric of human capital development is quite dubious.

2.1.c. Strategic decision making:

Strategic responsibility or strategic philanthropy (Carroll, 1999) is done to accomplish

strategic business goals through engagement in public policy dialogues and institutional

building. In this case, the fulfillment of a firm’s social welfare responsibilities creates a win-

win situation in which both the corporation and one or more of the stakeholders groups get

clear benefits. In this framework, cooperation gives back to their constituencies because it is

believed to be in their best financial and performance interests to do so. In this case,

expenditures are perceived as investments in a “goodwill bank” (Vaughn, 1999), which

yields financial returns (McWilliams and Siegel, 2001). These long term benefits might not

immediately show up on a firm’s financial statements, as is true for most marketing

activities. A company is wise to make “deposits” in this bank of goodwill in order to

develop a differential social identity and a long-term social contract to avoid and prevent

potential future crisis.

Levi Strauss AIDS Prevention and Awareness in South Africa

South African pop-culture icons have joined the Treatment Action Campaign (TAC)

and the Levi Strauss Company in a campaign to prevent the spread of HIV/AIDS

among youth. As the details of the Red for Life campaign were released, Zackie

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Achmat from TAC said that Levi's fair labor practices had encouraged them to

partner a commercial firm for the first time. TAC and Levi hope to increase

awareness and distribute information among all youth. It is important to stress all

forms of prevention, including a "condoms everywhere" said Mike Joubert, the

Managing Director of Levi Strauss - South Africa.

The consideration of local context, as Levi’s example shows, is not only a good practice but

moreover a good business. “It is in the interest of MNEs to pay greater attention to the social

and political context in which they do business [to mitigate] localized outbreaks of hostility

and tension” (Litvin, 2003). In other words, the consideration to the local expectations and

demands enhances the operational capabilities of the firm, opens new relationships and

potential markets; and reduces considerably the risks for protest and boycotts (defensive

corporate behavior). As an illustration, Europe’s leading companies collaborate strongly to

promote engagement on CSR issues so to reduce growing mistrust and to increase

stakeholder confidence in MNEs behavior.

Launch of the European Academy of Business in Society

Europe's leading companies’ teamed up with business schools and universities to

launch largest-ever research and teaching project on the business case for CSR.

Their joint research project, the European Academy of Business in Society, EABIS,

represents a unique and pioneering alliance between European leading business

academia and over a dozen major multinational companies (including Shell,

Johnson & Johnson, Levi's). The Academy's mission is to be a world-class reference

point to drive CSR into the mainstream of business practice, theory and education,

and to enhance models for sustainable business success.

Within the strategic CSR, an even more challenging and affirmative approach is the one

identified as “strategic innovation” (Moss Kanter, 1999). This perspective is based in certain

companies’ perception of communities’ needs, as opportunities to develop new ideas, serve

underdeveloped markets or even create new ones so to solve long-standing business

problems. These companies are viewing social problems as economical problems and

therefore they apply their energies to solve social sector’s chronic problems to stimulating

their own business development. They view today’s better-educated children as tomorrow’s

knowledgeable workers and consider that lower unemployment in the city means higher

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consumption. For the time being, few MNEs have based their CSR training strategy in this

approach; Coca Cola, Roche and Intel, as it will be illustrated, are some of the very few

examples.

Prahalad & Hart (2001) analysis shares this vision: “nurture local markets and cultures,

leverage local solutions, and generate wealth at the lowest level of the pyramid. Producing,

rather than extracting, wealth will be the guiding principle” as the one companies should

have. Their research results definitely contribute to the understanding of the local impacts of

business strategy for sustainable development and social value creation.

The case of Intel in Costa Rica

In Costa Rica, Intel Education Initiatives span all grades and socioeconomic levels.

Intel works in partnership with the Costa Rican Ministry of Education and higher

education institutions to bring innovation and Information technology skills to all

existing classrooms in the country’s Public Educational System. The Robotics

Program, the Science Fairs, the Intel Computer Clubhouse Network and the Intel®

Teach to the Future are amongst the most innovative CSR educational programs led

by Intel in Costa Rica.

The robotics program enables Costa Rican students at the high school level to

experience contemporary manufacturing and automation technology while building

mathematics and technical skills. In 2001, Intel donated and distributed 33 industrial

robots to public technical high schools, scientific high schools, and higher education

institutions and has since organized an annual 20-hour training workshop for

teachers from across the country to update teaching skills and share successful unit

plans and projects.

Science Fairs Intel has supported the National Science and Technology Fair

program, supporting 20 regional science fairs throughout the country, and in just

four years, K-12 student participation increased ten-folds to 400,000 nationwide.

More than 30 Intel employees volunteer their time, playing an important role as

judges in the Regional and National fairs. Student winners of the National Science

and Technology Fair participate in the Intel International Science and Engineering

Fair in the USA.

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Intel's first Computer Clubhouse in Latin America was inaugurated in Costa Rica

in the town of Alajuelita in April 2002 by Intel's Chief Operating Officer and the

President of Costa Rica. This Clubhouse was developed in collaboration with the

Salesian Center for Development and Education CEDES-Don Bosco, and hosts

about 800 adolescents every week. It has become the center of all technology-

related activities in the Alajuelita community, helping young people learn new ways

to express themselves through projects such as a local radio to communicate their

art and discuss community needs. Intel employees volunteer time as mentors to help

youth in the use of the latest technology in creating their projects.

The Intel Teach to the Future teacher training program has extended reaching

some of the most rural areas of Costa Rica. Intel provides intensive training and

computers, printers, and microscopes to 28 one-room schoolhouse teachers. The

one-room schoolhouse combines students from first to sixth grade in one classroom.

In more urban, populated areas, where schools did not have access to computers,

Intel has initiated a mobile classroom model in 14 schools. Teachers in these

schools can share available computer equipment using wireless technology, while

integrating technology in the basic studies curriculum.

Intel’s CSR related training initiatives shows that CSR entails firms to be responsive to

society’s long term needs and expectations, optimizing the positive effects of its actions on

society. Through these projects, Intel is contributing to build effective local capacities in a

large scale at the same time that stronger legitimacy and building long term license to

operate. Moreover, Intel identifies their engagement as a mean to build not only social and

political capital but also as a way to identify new business and marketing opportunities.

To recapitulate, in this section we have argued about three different motivations: Ethics,

Humanitarian, and Strategic reasons that mobilize MNEs engagement in CSR training

initiatives and we presented examples of good CSR educational initiatives that MNEs have

developed in order to honor their responsibility. We have also seen that MNEs having “good

CSR behavior” have developed CSR related training initiatives as a response to different

business drivers, as shown in Tables.

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Table 3: CSR training domains & motivation of the “Good CSR Practitioners”

Firm’s Social Responsibility Training Initiatives Motivation CSR Training

domains Intel Johnson & Johnson

Levi’s Shell Unilever

Standards of ethical conduct

x x x x x

Employee health, safety & well-being

x x x x x

Human resource policies

x x x x x

Ethics

Suppliers x x x x x Humanitarian Volunteer Community

Activities x x x x

x

CSR leadership & advocacy

x x x x x

CSR awareness x x x x x Access to education .x x x x x Engagement with stakeholders

x x x x x

Strategic

Environment x x x x x Source : Author, based on companies Websites.

Table 4. Ranking of motives for “Good CSR practices”

Ranking of Motives-Drivers MNEs

Ethical Humanitarian Strategic

IBM 1 1 1

Intel 1 1 1

J&J 1 1 1

Levi’s 1 1 1

Shell 1 1 1

The illustrations presented in this paper show that these MNEs have learnt to adapt their

initiatives according to the different situations emerging from the context of countries and

cultures where they operate. Thus, a combination of a reactive and defensive logic and an

affirmative and proactive logic are present in their CSR training initiatives. For instance,

while Intel has an affirmative CSR educational strategy aiming at technological education in

Costa Rica (Mary Bialas, personal communication, 2005), they also have a community

18

educational program focused on responding to the specific needs arising from the nearby

community where the plant is located (ethical and/or humanitarian approach).

The capacity of these MNEs to have the flexibility to articulate community based

educational strategy with national, large scale CSR training initiatives are clear evidence

that the high performance companies considered in this work have already made the leap

from high awareness state to a role of leadership. These MNEs are showing through their

corporate strategies and field initiatives, in-depth understanding of CSR related issues and

expertise for embedding CSR into the business decision-making process.

This scenario can be qualitatively described and visualized with the following three-

dimensional graph.

The graph contains three axes that correspond to the three dimensions described above,

namely, awareness, management of social expectation and leadership. These are three

independent aspects that allow gauging the degree of CSR commitment of a given

enterprise. The further from the origin that a company can be placed, the higher its degree of

commitment would be. As this can be measured along three different directions, it implies

lag lead

advanced

immature

low

awarenes

high

awarenes

MNE’s

awareness of

social

expectations

Choice of social role

Social expectations

19

that the highest possible degree of commitment would be for a company that is placed at the

outermost end of the three axes, thus would correspond to the position of the gray circle in

the graph.

The five multinational enterprises chosen in this paper to illustrate good CSR training

practices can be situated in the neighborhood towards the gray circle.

4. Analysis

The analyses of the selected MNEs differentiate between those training activities that are

CSR motivated and those which are not CSR motivated. While the first are aimed at

improving organizational skills to meet the challenges of corporate social behavior, the last

ones are focused on the specific trainings that workers receive to improve performance and

productivity. Therefore, while CSR motivated training initiatives are focused on the overall

corporate business performance and its targets can be employees, suppliers, clients and

society at large, the non-CSR motivated training is concentrated on specific skill

development for profit maximization.

For the case of CSR motivated training initiatives we defined a classification based on the

proximity between the training carried out and the MNE core business. Thus, we identified

two main categories: Unfocused Training (UFT) and Focused Training (FT). UFT addresses

educational initiatives aiming at responding to social needs and expectations that are not

related to the corporation core business competencies. It also aims at responding to the

symptoms of society dysfunctions by implementing educational activities that will

contribute towards the solution of the problem. These trainings initiatives are characterized

as responses to social issues on which corporations lack the internal skills and competences

to effectively deal with. Thus, corporate engagement is usually limited and activities are

typically carried out by a third party (NGO, consultants, universities, etc.) The above

described interactions are generally based on a humanitarian approach towards society.

On the other hand, the CSR Focused Training (FT) initiatives are aimed at attacking

structural societal problems by using firm’s core competencies. In this case, companies

concentrate in transferring their know-how to the community, thus they are in a better

20

position to innovate and identify new opportunities for social and business development.

The main purpose of CSR FT initiatives is to find synergies between social needs and

company’s core business operations. This type of initiative has the potential to deliver

higher socio-economic value for communities while opening new avenues of growth for the

company. (Moss Kanter, 1999).

In summary, while the Unfocused Training approach is about corporations responding and

reacting to specific societal demands, the Focused Training is a proactive and affirmative

approach aiming at revisiting the firm’s role on the fabric of social value creation and

sustainable development.

In our study, from the MNEs surveyed (see Annex 1 for details), only five MNEs rated as

“good CSR”. Those were the sole MNEs to have realized that in order to have a sustained

and significant impact on value creation; their CSR related training initiatives need to be

strongly aligned and responsive to business strategic needs as well as local stakeholders’

concerns. To achieve that, these MNEs have engaged in partnership development to make

sure their initiatives respond to society expectations and needs; and they are implementing

jointly such initiatives. Partnership building between these multinational firms and the

relevant social actors has achieved success when it resulted from the identification of a

common agenda for jointly resolving long lasting society problems that benefit both: the

corporation and society at large; as shown for instance in the Unilever’s Brantas River

project (see Section 2).

Thus, the partnership with key social players ensures the relevance and the legitimacy of the

corporate actions, in the sense that social players represent the expectations and needs of the

society. Well-established partnerships will not only ensure a common agenda, but also a

reciprocal engagement that will contribute to assure the success of the initiative and the long

term benefits for all. (Moss Kanter, 1999).

The analysis of the “good CSR practices” permitted to identify the following common

characteristics among the MNEs with more systemic CSR strategies:

1. Comprehension. These MNEs have a clear understanding of their relevant

role as key social player. They have considered their specific capabilities as a

21

valuable leverage factor for transferring know-how to host countries. They

have portrayed themselves as strong capability developers, able and willing

to transfer organizational competences and to become a pivotal actor for

sustainable economic development.

2. Creation of win-win initiatives models These MNEs have focused to meet

the needs of the population with the core business competencies and strategic

goals. They showed the ability to integrate social expectations into the

business strategic vision and decision-making processes. In this respect, firms

have effectively integrated CSR training initiatives not only to solve society

structural weaknesses but also to develop strategies for improving business

performance.

3. Collaboration. These firms showed the capacity for effective partnership

building and cooperation with the public and social sector, especially with

the government. The challenge for these firms was to focus on areas

overlapping with public policy that leverage private sector contributions

without distorting the public goods goals.

4. Creativity These MNEs have been thinking beyond conventional wisdom

and have stimulated social and business innovation.

5. Commitment. These companies have demonstrated a sustained involvement

for social improvement through time. They have invested time and effort in

building capacity at the local level. They have established CSR at the heart of

their business by developing new management perspectives.

A final important point to make is that the challenge that remains ahead is to find out

effective ways to promote the engagement of a large majority of MNEs into pursuing

“strategic CSR”. Therefore, in the following final section we shall present a set of

recommendations intended to be a contribution towards this goal.

22

5. Recommendations

It has been argued that there are considerable evidence and significant opportunities for the

multinationals to contribute in a sustainable manner to social value creation through CSR

related training initiatives in developing countries.

Through the present paper, and taking into account the experiences of some of the leading

MNEs, we consider that we have identified some working avenues that international

organizations, state governments, or both working together, could undertake with the goal of

inspiring and orienting the challenge of localizing MNEs CSR training initiatives.

Localizing the remaining MNEs to engage in CSR training initiatives requires a local

representing voice (to address culture-specificity) to lead the mapping of the relevant

national needs with the business strategies and competences. Only then, can we consider the

possibility of arriving at a shared understanding and agreement on the way in which the non-

leading MNEs can contribute to social value creation through business development.

In this context, one option would be setting a CSR agency, which can support and encourage

the development of a CSR leading entity at national level: “localizing CSR”, integrating

government, private sector and civil society organizations. There is a need to fill the gap for

addressing initiatives to further and optimize the CSR advantages. Among them:

1. Raising awareness of the role of MNEs in human capital development. Work to

advance the concept of CSR as a “social value creation” strategy for MNEs, national

enterprises and the society at large (as opposed to the concept of risk management).

For instance, promoting commitment and long term vision for meeting education

needs, such as technology centers.

2. Promoting focus on MNEs core competencies. Companies have to concentrate on

their core competencies to be better able to innovate on their initiatives. This helps to

ensure consistency between the company’s portfolio of activities and the

engagement on CSR.

3. Mobilizing new resources and partnerships. Sustainable training initiatives demand

new financial and institutional resources. Public-private partnerships involving

different stakeholders that share similar goals shall be developed in order to exploit

23

any opportunity offered by markets. Thinking across sectors might lead to innovative

partnership involving companies from different industries, addressing holistically

human capital development needs.

4. Localize interventions. Identify the educational needs and expectations of local

stakeholders. Articulate the Corporate’ vision and global goals with real needs of

local society.

5. Regional integration. Define an agenda for regional educational priority issues and

develop a network of governments, business and civil society organizations with the

goal of promoting CSR training initiatives at the regional level. This network will

disseminate among governments and MNEs the experience of successful stories and

lessons learned. Regional integration runs parallel to globalization but at the same

time it accommodates sentiments of national identity.

To enlarge MNEs commitment towards human capital development through CSR training

related initiatives would require a more coherent approach to emphasize the quantitative and

qualitative benefits for both, companies and society at large. It is crucial to build on existing

successful initiatives, capacities and skills to serve as a model for promoting the legitimacy

of this endeavor.

Thus, the challenge, i.e. for a CSR Agency, is to identify the priorities and incentives that are

meaningful not only to MNEs but also to the specific social context in which MNEs operate.

Finally, the opportunity to further engage MNEs in CSR training related strategies with an

impact on social value creation is significant, and, as this report demonstrates, there are

already good corporate examples worth emulating, which rather than focusing only in

maximizing business performance, have engaged in becoming good global citizens through

contributing to sustainable economic development and benefiting society at large.

Annex 1.

Table 5: CSR training domains & motivations by Industry

5.1. Major Consumer Goods Firms

Firm’s Social Responsibility Training Initiatives Motivation Training

domains

&beneficiaries

Arcor Coca Cola Danone Unilever

Standards of ethical conduct

x x x x

Employee health, safety & well-being

x x x x

Human resource policies

x x x x

Ethics

Suppliers x x x x Humanitarian Volunteer

Community Activities

x x x x

CSR leadership & advocacy

x x x x

CSR internal awareness

x x x x

Access to education

.x x x x

Engagement with stakeholders

x x x x

Strategic

Environment x x x x

(Source : Author, based on company Websites)

25

5.2. Major Gas & Oil Firms

Firm’s Social Responsibility Training Initiatives Motivation Training

domains

&beneficiaries

Exxon Mobil

Repsol YPF

Shell Total Elf Fina

Standards of ethical conduct

x x x x

Employee health, safety & well-being

x x x

Human resource policies

x x

Ethics

Suppliers x x x x Humanitarian Volunteer

Community Activities

x x x x

CSR leadership & advocacy

x x x

CSR internal awareness

x x

Access to education

. x x x

Engagement with stakeholders

x x x x

Strategic

Environment x x x x

(Source : Author, based on company Websites)

26

5.3. Major Pharmaceutical Firms

Firm’s Social Responsibility Training Initiatives Motivation Training

domains

&beneficiaries

Astra Zeneca

Aventis J&J Roche

Standards of ethical conduct

x x x x

Employee health, safety & well-being

x x x x

Human resource policies

x x x

Ethics

Suppliers x x x x Humanitarian Volunteer

Community Activities

x x x x

CSR leadership & advocacy

x

CSR internal awareness

x

Access to education

.x x x x

Engagement with stakeholders

x

Strategic

Environment x

(Source : Author, based on company Websites)

27

5.4. Major Semiconductors and Information Technology Firms

Firm’s Social Responsibility Training Initiatives Motivation Training

domains

&beneficiaries

IBM Intel Microsoft SAP

Standards of ethical conduct

x x x x

Employee health, safety & well-being

x x x x

Human resource policies

Ethics

Suppliers x x Humanitarian Volunteer

Community Activities

x x x x

CSR leadership & advocacy

x x x

CSR internal awareness

x x x

Access to education

.x x x x

Engagement with stakeholders

x x x x

Strategic

Environment x x x

(Source : Author, based on company Websites)

28

5.5. Major Textiles Firms

Firm’s Social Responsibility Training Initiatives Motivation Training

domains

&beneficiaries

C&A Levi’s Puma The Gap

Standards of ethical conduct

x x x x

Employee health, safety & well-being

x x x x

Human resource policies

x

Ethics

Suppliers x Humanitarian Volunteer

Community Activities

x x x x

CSR leadership & advocacy

x

CSR internal awareness

x

Access to education

.x x x x

Engagement with stakeholders

x x x

Strategic

Environment

(Source : Author, based on company Websites)

29

Table 6. Ranking of motives by Industry. General trends

Ranking of Motives-Drivers Industry

Ethical Humanitarian Strategic

Consumer Goods 1 3 2

Gas & Oil 2 3 1

Pharmaceutical 1 2 3

Semiconductors + IT 2 3 1

Textile 2 3 1

(Source : Author, based on company Websites)

30

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