Thursday, June 9, 2011

A Case for Strengthening CSR in Emerging Markets

The nongovernmental group World Growth recently released a report entitled "Corporate Social Responsibility: How Global Business is Getting it Wrong in Emerging Markets." The report examines the corporate social responsibility (CSR) policies of nine major international corporations including Nestle, P&G and Unilever. According to the report, the CSR policies of these corporations are disproportionately influenced by developed-world NGOs, such as the World Wide Fund for Nature (WWF). As a result, their policies often hurt low-income producers, are misaligned with emerging market national development objectives, and promote causes of little value to local people in emerging markets. 

CSR may have once been understood as philanthropy. However, many firms are realizing that giving away a product or service to communities that need them is often a short-term solution to a long-term problem and are examining other models for social and economic development. Companies like Novartis have encouraged supply chain innovation to create profitable new business models that better serve emerging markets in a sustainable manner. Pharmaceutical giant Novo Nordisk recognized how epidemic diseases strain national health systems in markets where it operates. Together with Oxford University, the World Health Organization and Yale University, the pharmaceutical firm spearheaded an international healthcare campaign focused on improving diets and encouraging exercise to fight chronic diseases that it stands to profit from. Rather than giving drugs away, GlaxoSmithKline cut the cost of its products in its poorest markets by providing regulatory and technical support to establish production facilities with local third-party contractors. 

As the above cases demonstrate, CSR efforts in emerging markets can be executed in a profitable and sustainable manner. Firms seeking to improve their CSR programs in emerging markets can focus on improving the delivery of their products or services to make them more accessible, affordable and usable. In addition to discovering new business models, firms seeking to address local problems can engage in partnerships with experts who understand these environments and the needs of customers within them. Mutually beneficial strategic partnerships can also help multinational firms leverage partner core competencies to help gain access to local markets and support operations. When firms consider the impact of their activities from the vantage point of potential emerging market customers and governments, they are better positioned to discover new business models and capture new sources of revenues. 

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