Corporate Social Corporate Social Responsibility (CSR)Responsibility (CSR)

as Competitive Imperative as Competitive Imperative for Taiwan Companiesfor Taiwan Companies

Presented by : Presented by : F. M. TaiF. M. Tai

AbstractAbstract Technological innovations spur globalizationTechnological innovations spur globalization Corporate practices need a world structure and Corporate practices need a world structure and

sustainable developmentsustainable development CSR benefit both shareholders and society in the CSR benefit both shareholders and society in the

global economy, creates long-term sustainability for global economy, creates long-term sustainability for corporate successcorporate success

Scholars recognize the complex relationship Scholars recognize the complex relationship between IB and society and MNEs are responsive to between IB and society and MNEs are responsive to the stakeholders' needsthe stakeholders' needs

Abstract Abstract – continued-– continued-

Most Taiwan companies look for change in Most Taiwan companies look for change in strategy - mission statementstrategy - mission statement

Failed : Not adequate implementation - Failed : Not adequate implementation - difficulties in justifying CSR practicesdifficulties in justifying CSR practices

This paper emphasizes on the creation of a This paper emphasizes on the creation of a global brands with a responsible MNEs by global brands with a responsible MNEs by FDI and show practices how to capitalize FDI and show practices how to capitalize further from its real implementationfurther from its real implementation

Purpose of the PaperPurpose of the Paper

Aims to FDI by identifying CSR and Aims to FDI by identifying CSR and implementingimplementing

To test the proposition, a questionnaire To test the proposition, a questionnaire will be assessed if firms can be will be assessed if firms can be simultaneously socially responsible and simultaneously socially responsible and socially irresponsible socially irresponsible

Research Questions Research Questions

Has your Citizenship received any investor Has your Citizenship received any investor feedback on its efforts, whether positive or feedback on its efforts, whether positive or negative? negative?

How has Citizenship been impacted by Eco, How has Citizenship been impacted by Eco, Social-Politic (marketing, innovation)?Social-Politic (marketing, innovation)?

What percentage of the approach to community What percentage of the approach to community contribution will be constituted to effort? contribution will be constituted to effort?

What are the corporate metrics for the CSR What are the corporate metrics for the CSR effectiveness to FDI? effectiveness to FDI?

SignificanceSignificance

Research exploring the study mixing Research exploring the study mixing CSR, IB and marketingCSR, IB and marketing

CSR had not drawn attention or has CSR had not drawn attention or has been much conductedbeen much conducted

A little published research in Taiwan A little published research in Taiwan

The Theory UsedThe Theory Used

CSR, called corporate citizenship, is a CSR, called corporate citizenship, is a responsibility and obligation to protect, responsibility and obligation to protect, foster, increase and enhance the benefit of foster, increase and enhance the benefit of stakeholders and social peoplestakeholders and social people

Most corporations “establish” code of Most corporations “establish” code of ethics, Johnson-Johnson - a model/standardethics, Johnson-Johnson - a model/standard

Eclectic Paradigm (Dunning)Eclectic Paradigm (Dunning)

Dunning’s theory “Eclectic Paradigm of Globalization”Dunning’s theory “Eclectic Paradigm of Globalization”

Causes globalizationCauses globalization OLI (Ownership-Location-Internalization)OLI (Ownership-Location-Internalization)

Ownership: firm specific advantageOwnership: firm specific advantage

• Core competency of a firmCore competency of a firm

• Patent and Trade MarketPatent and Trade Market

• TechnologyTechnology

• Name recognitionName recognition Location: External to the firmLocation: External to the firm

• Tariff barriersTariff barriers

• InfrastructureInfrastructure

• Investment incentiveInvestment incentive

Eclectic Paradigm (Dunning) Eclectic Paradigm (Dunning) –Continued-–Continued-

OLIOLI• Internalization:Internalization:

Transaction cost benefitTransaction cost benefit Transfer pricingTransfer pricing Avoiding buyer uncertaintyAvoiding buyer uncertainty

Eclectic ParadigmEclectic Paradigm Aadvantages to be gained by combining Aadvantages to be gained by combining

firm’s unique asset and location advantagefirm’s unique asset and location advantage

OLI

Ownership Advantage:Firm specific factors includingtechnology, , patent, process, name recognition, and other core competencies

Location Advantage:Location Specific factor. These are external, to the firm including factor endowment, transportation cost, government regulation,Infrastructure factors

Internalization:Cost advantage from vertical and horizontal integration, due to transaction cost caused by market failure

OLI

IB Time Is ComingIB Time Is Coming

Taiwan: developed country, small-medium Taiwan: developed country, small-medium firms- non advantages of MNEs – supported firms- non advantages of MNEs – supported by the government to FDIby the government to FDI

Theory of Wells, L.T. (1977) could be used Theory of Wells, L.T. (1977) could be used for small-medium firms to go international for small-medium firms to go international business business

CSR of the Ownership Advantage can be CSR of the Ownership Advantage can be suggested to apply for Taiwanese suggested to apply for Taiwanese corporations when involving IBcorporations when involving IB

Why Emphasizing SocialWhy Emphasizing Social ResponsibilityResponsibility

Surveys : “61% of consumers would buy Surveys : “61% of consumers would buy products from a CSR company or switch products from a CSR company or switch retailers if cost and quality were equal.” retailers if cost and quality were equal.”

““Social responsibility” is defined as a Social responsibility” is defined as a framework of measurable corporate policies framework of measurable corporate policies and procedures and the foremost about and procedures and the foremost about obtaining better productivity and creativity obtaining better productivity and creativity returnsreturns

Global Leader in CSR will Offset Global Leader in CSR will Offset Damning Charges against the CompanyDamning Charges against the Company

Positive CSR beliefs by consumers not only Positive CSR beliefs by consumers not only greater purchase but also longer-term greater purchase but also longer-term loyalty and advocacy behaviors loyalty and advocacy behaviors

Integrating CSR strategy with core business Integrating CSR strategy with core business strategy - more likely than brands that strategy - more likely than brands that merely engage in CSR to reap a range of merely engage in CSR to reap a range of CSR-specific benefits in the consumer CSR-specific benefits in the consumer domaindomain

CSR Earned Consumers AttentionCSR Earned Consumers Attention

Theories of the strategic use of CSR emphasize the role of Theories of the strategic use of CSR emphasize the role of information asymmetry and how CSR to be incorporated information asymmetry and how CSR to be incorporated into a firm's product differentiation strategyinto a firm's product differentiation strategy

Globalization and a call for increased corporate Globalization and a call for increased corporate transparency have given rise to CSRtransparency have given rise to CSR

More Businesses use CSR to improve customer satisfactionMore Businesses use CSR to improve customer satisfaction

Consumers purchases based on companies social and Consumers purchases based on companies social and environmental reputationenvironmental reputation

CSR and MarketingCSR and Marketing CSR as a moral obligation and a positive financial CSR as a moral obligation and a positive financial

result for the firms result for the firms Three dimensions CSR emerge: (1) purchasing based Three dimensions CSR emerge: (1) purchasing based

on firms CSR performance; (2) recycling; (3) on firms CSR performance; (2) recycling; (3) avoidance and use reduction of products impact avoidance and use reduction of products impact environmentenvironment

CSR provides marketers strategy - global markets as CSR provides marketers strategy - global markets as their workplaces - choose any country to trade - build their workplaces - choose any country to trade - build branches in every country branches in every country

Important factor for impacting the enterprises : Important factor for impacting the enterprises : environmental uncertainty. Whenever entering environmental uncertainty. Whenever entering multinational markets, internationally environmental multinational markets, internationally environmental aware and socially responsibleaware and socially responsible

The Amazing Rise and Scandalous Fall The Amazing Rise and Scandalous Fall Enron - doing harm to business ethicsEnron - doing harm to business ethics

In 2001, Houston natural gas and Power Company, the most In 2001, Houston natural gas and Power Company, the most innovative and thought to epitomize a great New Economy innovative and thought to epitomize a great New Economy company, with its skyrocketing profits and share price in the company, with its skyrocketing profits and share price in the U.S. U.S.

With the world's largest Enron ever traded tens of billions of With the world's largest Enron ever traded tens of billions of dollars contracts, the corporation's total revenues 100 b. dollars contracts, the corporation's total revenues 100 b.

Enron's rise from obscurity to the top of the business world to Enron's rise from obscurity to the top of the business world to disastrous demise - owing to Skilling’s creative bookkeeping disastrous demise - owing to Skilling’s creative bookkeeping invented something falsely upping the stock’s value. Tragedy invented something falsely upping the stock’s value. Tragedy made thousands of employees lost jobs and life savings; top made thousands of employees lost jobs and life savings; top executives are too inhuman for tragedy and lost the morality in executives are too inhuman for tragedy and lost the morality in management management

Victim on Personal Profit Without Victim on Personal Profit Without Regarding Social Public WelfareRegarding Social Public Welfare

Sixty-five percent of 158 experienced top Sixty-five percent of 158 experienced top CEO agreed - profit is more important than CEO agreed - profit is more important than products safety, allocation of resources is products safety, allocation of resources is the main reason of ethics problem the main reason of ethics problem

Hard for the top executive to choose: to Hard for the top executive to choose: to balance their gains and losses within balance their gains and losses within different interest groups for accurately different interest groups for accurately decision making on the basis of ethicsdecision making on the basis of ethics

How Engage in Social Responsibility How Engage in Social Responsibility (Applicability)(Applicability)

Consumers in the US have placed socialConsumers in the US have placed social and environmental and environmental issues at the top of the agenda, i.e., actions taken by issues at the top of the agenda, i.e., actions taken by consumers to enforce socialconsumers to enforce social commitmentcommitment

SocialSocial responsibility orientation of firms is related to responsibility orientation of firms is related to strategic socialstrategic social planning planning

Positioning is related to value creation for the MNEsPositioning is related to value creation for the MNEs Three principles : 1. awareness of historical and institutional Three principles : 1. awareness of historical and institutional

dynamics of local communities; 2. necessity of good dynamics of local communities; 2. necessity of good communication with local constituencies; 3. degree to communication with local constituencies; 3. degree to which the firm’s operations safeguard and indeed improve which the firm’s operations safeguard and indeed improve the social and economic assets of local communities the social and economic assets of local communities

The question of adequate compensation for the inevitable The question of adequate compensation for the inevitable disruptions that an internationaldisruptions that an international businessbusiness brings to a local brings to a local community community

By WhomBy Whom

Business leaders integrate an awareness of Business leaders integrate an awareness of socio-political issues more explicitly into their socio-political issues more explicitly into their strategic decision-making processes strategic decision-making processes

The ethical leadership in professional business The ethical leadership in professional business will improve understanding of how ethical will improve understanding of how ethical behavior confers legitimacy and sustainability behavior confers legitimacy and sustainability necessary to achieving the corporation’s goals, necessary to achieving the corporation’s goals, and how a leadership approach to ethics can and how a leadership approach to ethics can serve as an effective tool for dissemination of serve as an effective tool for dissemination of moral values in organization. moral values in organization.

HowHow The Greening of Management: every country government - all industries The Greening of Management: every country government - all industries

emphasized on this kind of management: whole products life cycle from emphasized on this kind of management: whole products life cycle from design to waste disposal could match 4Rdesign to waste disposal could match 4R －－ Reduce, Recycle, Reuse, Reduce, Recycle, Reuse, Regeneration, and 3ERegeneration, and 3E －－ Make use of Economic (resource), Ecological, Make use of Economic (resource), Ecological, EquitableEquitable

Green Window DressingGreen Window Dressing Green Meetings and EventsGreen Meetings and Events SocialSocial Consciousness:Wal-Mart's efforts to reduce its packaging materials Consciousness:Wal-Mart's efforts to reduce its packaging materials

andand operate on renewable energy operate on renewable energy Answers to the Trust and Public Image Issues FacingAnswers to the Trust and Public Image Issues Facing Concern for EnvironmentConcern for Environment Differentiation Strategy Differentiation Strategy Ethical BehaviorsEthical Behaviors Understanding Unethical Sales Behaviors Especially for Sales Managers Understanding Unethical Sales Behaviors Especially for Sales Managers Four Practical ApproachesFour Practical Approaches Ethics OmbudsmanEthics Ombudsman Customers-Centered by Technology Customers-Centered by Technology

Implementation Cases of CitizenshipImplementation Cases of Citizenship

Socially responsible companies add Socially responsible companies add implementation, the ability to generate long term implementation, the ability to generate long term profits - positive profits - positive

European, Japanese, North American companies, European, Japanese, North American companies, Finland developed advanced human rights policies Finland developed advanced human rights policies and equal opportunities for women and their and equal opportunities for women and their community involvement range from simple community involvement range from simple donations of money to donations of expertise, time donations of money to donations of expertise, time and resources and resources

The Charitable BehaviorsThe Charitable Behaviors 2nd biggest Taiwanese Investor 2nd biggest Taiwanese Investor

Global brand "Foxconn", 2005 beyond Flextronics, the world's largest Global brand "Foxconn", 2005 beyond Flextronics, the world's largest electronics manufacturing and services (EMS) companies, original CMM electronics manufacturing and services (EMS) companies, original CMM (Component, Module, Move, adding e - The concept of a eCMM) (Component, Module, Move, adding e - The concept of a eCMM)

"design, create two areas, three districts delivery" ambition, the company "design, create two areas, three districts delivery" ambition, the company throughout three continentsthroughout three continents

Hon Hai Group's total market value of 2.25 trillion Taiwan dollars. Hon Hai Group's total market value of 2.25 trillion Taiwan dollars. Contributions more to China, the past 10 years donated nearly NT$5 Contributions more to China, the past 10 years donated nearly NT$5 billion (NT$32=US$1)billion (NT$32=US$1)

A full support of the local government in Shanxi and no any problem in A full support of the local government in Shanxi and no any problem in sources of raw materials of Magnesium Alloys, make international sources of raw materials of Magnesium Alloys, make international automotive components manufacturing market possible, materials used by automotive components manufacturing market possible, materials used by laptops were imported from Europe, now Shanxi energy full supportlaptops were imported from Europe, now Shanxi energy full support

““My dictionary has no such word - management, as I am a responsible My dictionary has no such word - management, as I am a responsible man. A man of responsible does not need management; no responsibility man. A man of responsible does not need management; no responsibility for the management of useless” The CEO, Mr. Guo, Ming saidfor the management of useless” The CEO, Mr. Guo, Ming said

Obstacle in ImplementationObstacle in Implementation

Cost is the main obstacleCost is the main obstacle of CSR programs of CSR programs

Budget tightened, charitable are restrainedBudget tightened, charitable are restrained

Companies used to support philanthropic work are Companies used to support philanthropic work are now limiting on some social projects or coverage and now limiting on some social projects or coverage and from which get some repay (to contribute money on from which get some repay (to contribute money on working-training not on public welfare’s art object to working-training not on public welfare’s art object to foster better employee and to receive direct benefit) foster better employee and to receive direct benefit)

MethodologyMethodology

Methodology/Approach: The study builds on existing Methodology/Approach: The study builds on existing literature and theories on IB, CSR and Marketing, as literature and theories on IB, CSR and Marketing, as well as literature on consumers' perceptions of CSR well as literature on consumers' perceptions of CSR related issues related issues

Two parts: Two parts: 1. explorative stage on qualitative method, qualitative 1. explorative stage on qualitative method, qualitative

investigation including identified important society investigation including identified important society attitude-based attributes of socialattitude-based attributes of social responsibilityresponsibility

2. quantitative part is based on some examples or 2. quantitative part is based on some examples or surveys describing the performances along these surveys describing the performances along these attributes attributes

Methodology – Continued -Methodology – Continued - Validity assured through the literature review Validity assured through the literature review

and Chinese translation for the questionnaire and Chinese translation for the questionnaire to assure better understanding by Taiwan to assure better understanding by Taiwan participants providing greater reliability and participants providing greater reliability and validity of results validity of results

To further establish validity and To further establish validity and interpretability, the Questionnaire-Chineseinterpretability, the Questionnaire-Chinese Version was critiqued by three Taiwanese Version was critiqued by three Taiwanese graduate students at the Alliant University, …graduate students at the Alliant University, …

Factor analysis discussed in the applicability Factor analysis discussed in the applicability towards theoretical testing would be instead in towards theoretical testing would be instead in order to counteract this effect. order to counteract this effect.

Research Limitations/ImplicationsResearch Limitations/Implications

Dr. Kelly (2008), this is a good topic, which is a study mixing CSR, IB and Dr. Kelly (2008), this is a good topic, which is a study mixing CSR, IB and marketing; also it relates to implementationmarketing; also it relates to implementation

Resource Allocation & ManagementResource Allocation & Management a balanced humanistic/analytic understanding in marketing system, a balanced humanistic/analytic understanding in marketing system,

corporation FDI goal/objective, and CSR for the top executives to integrate corporation FDI goal/objective, and CSR for the top executives to integrate decision to rank and place the priority order in considering fulfilling the CSR decision to rank and place the priority order in considering fulfilling the CSR

and the stakeholders benefitsand the stakeholders benefits limited resources, how carry out the SCR before the benefit of stakeholders? - limited resources, how carry out the SCR before the benefit of stakeholders? -

conflict between harmony and how to decide the extent? conflict between harmony and how to decide the extent? Is it ethic behavior, if he/she fulfills personal principle by sacrifice the benefit Is it ethic behavior, if he/she fulfills personal principle by sacrifice the benefit

of stakeholders, employee, and corporation? the reason for the top executives of stakeholders, employee, and corporation? the reason for the top executives to be employed is his/her professional capability not on his/her charity to be employed is his/her professional capability not on his/her charity behaviors or notions; behaviors or notions;

he/she should perform on the employment contract to do the right thing not to he/she should perform on the employment contract to do the right thing not to avoid the possibility of his/her personal generosityavoid the possibility of his/her personal generosity

““A manager’s job should be to take the corporate FDI goals and strategies and A manager’s job should be to take the corporate FDI goals and strategies and redefine them in a way that makes them real for the people in their department redefine them in a way that makes them real for the people in their department

ConclusionConclusion strategy formulation - practical; improper implementation prevents strategies strategy formulation - practical; improper implementation prevents strategies

from reality. In conceptualizing global CSR, CSR fall along a continuumfrom reality. In conceptualizing global CSR, CSR fall along a continuum

provides implications in favor of social responsibility and implementingprovides implications in favor of social responsibility and implementing perspectives from the definition of marketing and IB, aid proceed smooth and perspectives from the definition of marketing and IB, aid proceed smooth and

quicker -keenly competition and uncertainty quicker -keenly competition and uncertainty

new competency needs to help Taiwanese enterprises/firms exceed the new competency needs to help Taiwanese enterprises/firms exceed the efficiency efficiency

4R and 3E getting trend and responsible for customer interests: 4R and 3E getting trend and responsible for customer interests: understanding and connecting with customers, innovation through products understanding and connecting with customers, innovation through products and services, CSR and marketing strategies, or effective internal marketing and services, CSR and marketing strategies, or effective internal marketing organizing organizing

Sanzo Industrial Co., Ltd., launching a positive commitment to social Sanzo Industrial Co., Ltd., launching a positive commitment to social responsibility through its strategic program into its FDI in developing a better responsibility through its strategic program into its FDI in developing a better ethical and social responsible processethical and social responsible process

Further ResearchFurther Research

Future studies could involve validation of Future studies could involve validation of factor structure, relationship between CSR factor structure, relationship between CSR and preference, and ability to positioning in and preference, and ability to positioning in another location, perhaps in more mature another location, perhaps in more mature markets in terms of well-developed markets in terms of well-developed structures of CSR and some productsstructures of CSR and some products