Globalization and Corporate Social Responsibility Issues

This paper analyzes the corporate social responsibility issues faced by business firms in the context of globalization and the challenges they face for mitigation.

Running head: MANAGING INTERNATIONAL BUSINESS RESPONSIBLY
Globalization and Corporate Social Responsibility Issues
Name of the Student:
Name of the University:
Author’s Note:

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Introduction
As opined by Hopkins (2016), the process of globalization or internationalization is
often considered to be one of the single most important factors which had drastically changed
the nature of the contemporary business world. Albuquerque, Koskinen and Zhang (2018) are
of the viewpoint that the process of globalization had converted the entire world into a global
village wherein business firms from all over the world conduct trade activities regardless of
the nation or the region to which they belong. However, at the same time it needs to be said
that although globalization had greatly facilitated trade and commerce yet at the same time it
had significantly enhanced the business competition faced by the different business firms
(Dyck et al. 2018). More importantly, this had proved to be a boon for the customers because
of the increased number of choices or opportunities that they are having presently yet when
considered from the perspective of the business firms it proves otherwise.
Gupta, Briscoe and Hambrick (2017) have articulated the viewpoint that the business
firms in order to effectively address the plethora of problems that they face because of the
process of globalization are increasingly resorting to the usage of different kinds of
innovative strategies. One of the most important measures used by the contemporary business
firms in this regard is the construct of corporate social responsibility which not only offers
the opportunity to the business firms to improve their brand image but at the same contribute
in a responsible manner towards the planet (Frynas and Yamahaki 2016). This paper will
analyze the corporate social responsibility issues faced by the business firms in the particular
context of globalization and also the challenges that they face for the mitigation of these
issues.
The paper begins by providing an overview of the concept of CSR and its importance
within the framework of the contemporary business world. The paper next analyses the

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different CSR issues that the business firms in the wake of globalization and the issue of
‘labor rights’ had been selected for the purpose of analysis. A justification for the selection of
this issue and its prominence as well as relevance in the Australian business world had also
been offered. Next the paper undertakes an analysis of the key challenges that the firms face
for the resolution of this issues and also the key stakeholders who are involved in the process
have been discussed. Lastly, the paper concludes by offering some recommendations that the
firms can follow for the effective resolution of this issue.
Issue Analysis
Corporate Social Responsibility (CSR) and its importance
Wang, Dou and Jia (2016) have noted that the one of the most important trends seen
within the framework of the contemporary business world is the fact that the business firms
are required to take responsibility for the damage that they are causing towards the
environment and also to the stakeholders who are associated to them. In this regard, it needs
to be said that the resources of the earth are fast depleting and there is a high probability that
the resources which are available to the present generation might not be able to the future
generation (Jamali and Karam 2018). More importantly, it is often seen that the business
firms in their bid to earn a higher amount of profitability often comprise on the aspect of
quality and this in turn adversely affects the stakeholders as well as customers of the
concerned firms because of the usage of these comprised products or services (Harjoto,
Laksmana and Lee 2015). In addition to these, the environmental or the planetary damage
that the business firms are causing through their business operations like environmental
pollution, deforestation, fast depletion of the natural resources and others can in no way be
relegated to the background (Chernev and Blair 2015). In the light of these factors, the notion
that the business firms are not only required to take responsibility for their actions but at the

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same time contribute in an effective manner towards the cause of the environment and the
society had gained popularity in the recent times.
Ioannou and Serafeim (2015) have articulated the viewpoint that the construct of CSR
is a self-regulating business model which enables the business firms to be socially
accountable to the environment or the planet, its customers, stakeholders and other entities
which are related to it. In this regard, it needs to be said that over the years the construct of
CSR had undergone a substantial amount of change keeping in pace with the changes brought
on by the process of globalization. For example, in the earlier times the narrow view of CSR
which stated that the sole responsibility of the business firms is to make profit and thereby
contribute towards the economic development of the nations in which they were operational
(Petrenko et al. 2016). However, at the same time it was seen that the business firms in order
to maximize the amount of revenue or profit earned by them often took the help of means or
business practices which were not only unethical but also proved to be detrimental for the
interests of these firms in the longer run. This is precisely the reason why the broad view of
CSR which requires the business firms to contribute in an effective manner towards the
social, economic as well as environmental development of the nations in which they are
operational had gained prominence in the contemporary times (Kang, Germann and Grewal
2016).
As opined by Shamir (2017), because of the large number of options or choices which
are available to the customers in the wake of globalization the buying behavior of the
customers had undergone a significant amount of change. In this regard, it needs to be said
that the quality or the cost of the products or services are no longer the sole deciding
parameters on the basis of which the customers decide whether to opt for a particular service
or product or not. The brand or the market image of the business firms also play a key factor
in the decision of the customers regarding their purchasing decisions (Flammer 2015). This is

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perhaps one of the major reasons why the contemporary business firms are increasingly
resorting to the usage of diverse measure like CSR policies and others not only for the
improvement of their brand or market image but at the same time for influencing the buying
behavior of the customers as well. The different initiatives undertaken by the contemporary
business firms for the resolution of the diverse wicked problems like unemployment, gender
inequality, poverty, labor rights and others can be explained on the basis of these aspects
(Jamali and Karam 2018).
CSR issues faced by the organizations in the wake of globalization
According to Saeidi et al. (2015), there are various CSR related issues or challenges
that the business firms are facing currently on the score of the usage of plethora of CSR
policies or activities in the wake of globalization. Some of the most important ones in this
regard are the ones related to women empowerment, unemployment, labor rights, climate
change and others (Lins, Servaes and Tamayo 2017). However, at the same time it needs to
be said that one of the most important ones in this regard is the issue of labor rights since in
the contemporary times it is seen that the majority of the private firms as well as the national
government al authorities are increasingly violating the diverse rights given to the labors or
the employees (Grayson and Hodges 2017). This can be explained on the basis of the fact that
as per the narrow view of CSR one of the most important functions or the roles of the
business firms is to make profit and thereby contribute economically towards the nations or
the regions in which they are operational. However, at the same time it is seen that the
different firms in order to maximize their profitability and also to enhance the performance of
the workers or the employees who are associated with them take the help of different kinds of
coercive measures which are not only detrimental for the interests of these individuals but
also in utter disregard of the labor rights. The prominence gained by this CSR issue can be
explained on the basis of the fact that they not only deprive the individuals of their basic

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labor rights but at the same time hinder the effective fulfillment of their basic psychosocial
needs.
Justification for the selection of the ‘labor rights issue’
The CSR issue of ‘labor rights’ had been selected for discussion because of the fact
that this is perhaps one of the most important wicked problems or challenges that the majority
of the working individuals are facing in the contemporary times. In this regard, it needs to be
said that 82% of the ‘Top 100 Australian Companies” follow one form of CSR policy or the
other for contributing in an effective manner towards the cause of the environment, society
and the Australian economy (Forbes.com 2019). In addition to this, it is seen that the
Australian retail firms like Woolworths, Kmart, Target and others end up spending more than
19.34% of their annual profit on different kinds of CSR activities for addressing different
kinds of wicked problems and also for the enhancement of the prospects of their business
(Forbes.com 2019). However, at the same time it needs to be said that the majority of these
firms either address only a small section of the issues covered by the problem of labor rights
issues which are convenient for them or completely disregard them. In addition to these, it is
seen that even in the 21st century people are made to do bonded labor and thereby pay the
debts of their ancestors and also the evils of gender inequality, gender pay gap, inequality of
wages and other are predominant in the workplaces of the different firms.
This is a CSR issue not only because of the fact that it is one of the most important
wicked problems that the world is facing presently but also because of the fact that it is
directly related to the quality of life that the individuals lead (Lins, Servaes and Tamayo
2017). Furthermore, the prominence held by this issue can be explained on the basis of the
fact is directly related to the other rights or others which are being offered to the individuals

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by the national governments and also the international authorities like United Nations and
others. In addition to these, within the framework of the different business firms itself it is
seen that these rights of the employees are being disregarded or followed partially as per the
convenience or the needs of the firm. Thus, it can be said that the business firms before
contributing in an effective manner towards the improvement of the economy, society and the
environment would have to undertake an improvement of the conditions within their own
firms. On the score of these facts, it can be said that the CSR issue under discussion here, that
is, labor rights, is one of the most important ones within the framework of the contemporary
world which needs to be addressed on an urgent basis.
Labor Rights issue and its relevance
Schrempf-Stirling, Palazzo and Phillips (2016) have articulated the viewpoint that one
of the most important trends which is being seen within the framework of the contemporary
business world is the fact that the business firms are using the CSR activities or measures as a
form of business strategy for the attainment of a larger level of growth. According to
Crowther and Seifi (2018), three of the most important approaches followed by the
contemporary business firms for taking responsibility for their actions are CSR, stakeholder
theory and triple-bottom line approach to sustainability. In this regard, it needs to be said that
organizations like Woolworths Limited are taking the help of the CSR policies to resolve the
issue of gender inequality within its workplace, offering equal opportunities to the indigenous
people of Australia, mitigating the problem posed by food wastage and others (Forbes.com
2019). More importantly, it is seen that the majority of the CSR policies followed by the
organization under discussion here are intended to enhance the job-satisfaction level of their
employees by way of reducing gender inequality within their workplace, gender pay gap,
enhancing diversity and others which are directly related to the labor rights issue and thereby
to improve the brand or the market image of the organization (Csr.woolworthsgroup.com.au

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2019). In this regard, mention needs to be made of the initiative of the concerned firm
through which it is presently offering 40% of the executive and management designations to
the women employees of the firm (Csr.woolworthsgroup.com.au 2019). In addition to this,
the firm is also following the “equal Federal Government Employment Parity contract” given
by the Australian government and thus more than 2% of the employees of the firm belong to
the category of indigenous workers (Csr.woolworthsgroup.com.au 2019). More importantly,
it is seen that the organization under discussion takes the help of the triple-bottom approach
to sustainability for the purpose of contributing in a sustainable manner towards the nation of
Australia and also for the purpose of attaining sustainability as well
(Csr.woolworthsgroup.com.au 2019). For example, taking the help of this construct the
organization had made it a point to contribute in an effective manner towards the
improvement of the economy, environmental conditions as well as the society of Australia.
This becomes evident from the effective pursuit of the labor rights given by the Australian
government and also the attempts that the firm is making towards the resolution of the issue
of labor rights issues.
It is seen that the organization Wesfarmers is focusing on the issues of gender
discrimination, diversity, supply chain management and others as part of their CSR program
(Sustainability.wesfarmers.com.au 2019). In addition to these, it is seen that in the year 2018
the organization under discussion here allocated more than $86.6 million for addressing
different kinds of wicked problems faced by the local communities of Australia
(Sustainability.wesfarmers.com.au 2019). More importantly, it is seen that the organization is
taking the help of the stakeholder theory had not only been able to maintain an effective
relationship with the different stakeholders but cater to their needs or requirements in an
effective manner. More importantly, it is seen that the firm also had undertaken various kinds
of initiatives for addressing the problem of gender pay gap, gender inequality and others

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which existed within its framework in the earlier times. Moreover, the firm in order to fulfill
the basic psychosocial needs of the employees is presently offering paid maternity leaves
(upto a period of 18 weeks), paid recuperation leaves (upto a period of 12 weeks) and others
which are in synchronicity with the labor rights given to the working individuals by the
Australian government and also by the UN. Furthermore, it is seen that the extensive focus of
the concerned organization on addressing this CSR issue had enabled it to enhance its
customer base and thereby earn a higher amount of profitability but also to become the
largest retail organization of Australia as well (Forbes.com 2019).
The above analysis of the CSR policies followed by the two organizations
Woolworths Limited and Wesfarmers makes it clear that these organizations are investing a
significant amount of their financial and other resources for the resolution of this CSR issue.
However, at the same time it needs to be said that apart from these two organizations there
are very few business firms in the nation of Australia or for that matter on a global basis
which are trying to resolve or mitigate these issues in an effective manner (Gupta, Briscoe
and Hambrick 2017). In this regard, it needs to be said that the failure of the business firms to
effective resolve these human labor rights issues is taking a toll on the performance or the
productivity of their firms. For example, the issues of gender inequality, gender pay gap,
inadequate leaves and others are directly related to the morale as well as the job satisfaction
level of the employees or the workers. These in turn are directly related to their productivity
or the performance since it is seen that satisfied as well as motivated employees are being
able to perform in a much better manner than the dissatisfied or the demotivated employees.
More importantly, the disregard of this issue by the firms is also affecting their brand or
market image which in turn is a taking a toll on their profitability. From the perspective of the
individuals as well these are equally important since these deter them from the fulfillment of
their basic psychosocial needs and also the opportunity to maximize the full potential of their

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lives. In addition to these, in some of the severe cases, it is seen that the disregard of these
issues also begin to take a toll on the mental as well as the physical health of the individuals
as well. Thus, it can be said that this CSR issue is a completely relevant one from the
perspective of not only the contemporary business world but at the same time from the
perspective of the present society as well.
Key challenges faced by business in addressing this issue
Kang, Germann and Grewal (2016) have noted that the success or the failure attained
by a business firm greatly depends on the efficiency or the effectiveness with which it is
being able to resolve or mitigate the different issues or challenges that it is facing. In the
particular context of the CSR issue which had been selected it can be said that there are
various challenges that the organizations face for its mitigation or resolution. Harjoto,
Laksmana and Lee (2015) have articulated the viewpoint that one of the biggest challenges
that the firms face for the resolution of the CSR issue under discussion here is their inability
to determine the exact amount of financial and other resources that they need to invest for
undertaking different kinds of CSR activities. This can be explained on the basis of the fact
that although the process of globalization had greatly mobilized international trade and
commerce yet at the same time it seen that the amount of resources or capital which are
available to the firms for investing in CSR and other kinds of welfare activities are often
limited in nature (Petrenko et al. 2016). Thus, the firms are faced with the dire decision of
determining the amount of capital and resources that they need to invest in different kinds of
CSR activities.
Another key challenge that the firms face related to this CSR issue is to determine the
exact nature of the benefits or rewards that they need to offer to the employees for the

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resolution of the labor rights issues faced by them (Shamir 2017). In this regard, it needs to
be said that the contemporary research works have suggested that offering too many benefits
or rewards to the employees often makes them complacent and thereby shifts their focus from
the aspect of performance or productivity (Flammer 2015). Thus, it often becomes very
difficult for the organizations to determine the exact policies or activities that they need to
use for the resolution or the mitigation of the CSR issue under discussion here. Therefore, in
the absence of any particular measuring tool the firms are often unable to determine whether
they should take the help of a particular policy related to the improvement of the working
condition of the employees or not. In addition to these, it is also seen that the lack of effective
support that the private firms get from the national government for the formulation or the
implementation of these policies is another factor which deters them from using them.
Another important challenge that the firms face for the resolution of this issue is related to the
fact that the primary interest of the Board of Directors, Investors and others related to any
firm is to gain the highest amount of profit possible. Thus, the investments that the firms
make for these policies is often considered to be a financial burden by them which in turn
deters the middle-management team from taking the help of these policies and also to resolve
these labor rights issues. These in short are some of major challenges that the different
business firms face for addressing the CSR issue under discussion here.
Main stakeholders and their interests
In the majority of the contemporary business firms it is seen that there are two kinds
of stakeholders associated with them, namely, the internal and the external stakeholders. As
opined by Hopkins (2016), a common factor among both of these types of stakeholders is the
fact that they try to derive the maximum amount of benefits or rewards from the firms
through their association with it. However, the benefits or rewards that the stakeholders
expect from the firms are different in nature because of the differences in interests. For

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example, the primary interest of the employees is a congenial workplace wherein they would
be able to perform in an effective manner and also the kind of organizational policies which
will enable them to fulfill their psychosocial needs (Grayson and Hodges 2017). In addition
to this, another important interest of the employees is the fact that they need the kind of
workplace wherein they will not have to different labor rights issues like gender inequality,
gender pay gap, discrimination and others. On the other hand, the primary interest of the
external stakeholders is to maximize their profitability from the concerned firm (Schrempf-
Stirling, Palazzo and Phillips 2016). In addition to these, there are other stakeholders as well
whose primary interest is to improve the quality of society and also to contribute in a
sustainable manner towards the environment, economy and the society (Chernev and Blair
2015). It is pertinent to note that all these interests are directly related to the CSR policies and
also the effectiveness with which they are being pursued. However, at the same time it needs
to be said that the challenges that the firms face related to the CSR policies also affects the
interests of the stakeholders who are associated with them.
Figure 1: Archie Carroll’s “Pyramid of Corporate Social Responsibility”

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Source: Carroll 1996
An analysis of the CSR issue under discussion here and also the issues faced by the
firms for the resolution of this issue on the basis of Archie Carroll’s “Pyramid of Corporate
Social Responsibility” would reveal insightful information. As per the model under
discussion here, economic responsibility forms the bottom of the pyramid and thus the firms
are required to resolve the CSR issues like the labor rights issues because of the fact that the
resolution of this issue would enable the firms to enhance the performance of the employees
through the resolution of the labor rights issues that they are facing. This in turn would enable
them to contribute in an effective manner towards the economic development of the nation in
which they are operational. In addition to this, the effective consideration of the legal
responsibilities would need help the firms to take into account the precepts of the labor rights
of the Australian national government and thereby make a positive contribution towards the
resolution of the issue. Thirdly, it can be said that the issue that under discussion here is not
only unethical but at the same time immoral as well and thus the firms by resolving this issue
would be able to fulfill their ethical responsibilities in an effective manner. Lastly, the firms
through the resolution of this issue would also be able to fulfill their philanthropic
responsibility towards the planet and thereby contribute in an effective manner towards the
improvement of the quality of the lives of the people.
Recommendations
There are various measures through which the business firms can resolve the CSR
issue under discussion here-
 Use of effective labor policies: The firms in order to resolve the issue under
discussion here can take the help of different kinds of policies like equal pay,
maternity leaves, giving equal preference to women during promotions and others so

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that they are being able to take into effective account the labor rights of the different
workers.
 Use of regulatory measures: The firms also need to take the help of different kinds
of regulatory as well a control measures for the resolution of the issue under
discussion here. In this regard, it needs to be said that the mere implementation of
different kinds of policies is not enough the firms also need to ensure that they have
effective regulatory or monitoring measures in place for the adequate usage of these
policies.
Conclusion
To conclude, the construct of CSR had emerged as one of the most important ones
within the framework of the contemporary business world because of the plethora of benefits
that it offers to the firms and also the stakeholders. For example, the CSR policies or
activities not only help the firms to improve their brand or market image but at the same time
to address the different wicked problems that the world is facing. More importantly, the
effective usage of the construct of CSR also enables the firms to attain sustainability as well.
At the same time it needs to be said that there are various wicked problems that the world is
presently facing and one of the most important ones in this regard is the human rights issue.
However, there are various challenges that the firms face for the resolution of this CSR issue
and also the stakeholders who are associated with these firms are not always very keen to
help in the same. These aspects become apparent from the above analysis of the CSR issue
under discussion here.

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