Western values dominate CSR programs of multinational companies

June 19, 2017

By Gregoria Yudarwati, University Atma Jaya Yogyakarta, Indonesia, and Marianne Sison, RMIT University, Melbourne, Australia

Multinational companies (MNCs) develop their corporate social responsibility (CSR) policy based on the values of their home countries with little input from the host countries in which they operate. However, local values are integrated to some extent at the implementation of CSR programs.

In our study, we examined how local culture of host countries might shape and influence CSR policies of MNCs.

In interviews with executives of Australian companies operating in Indonesia, the study revealed that differences in regulatory frameworks and cultural values shaped how CSR was approached and implemented between the home and host country operations.

We found that MNCs undertook various means to gain legitimacy and mitigate risks through CSR. These include social mapping, robust community engagement strategies and negotiation are critical to their "social license to operate."

Social mapping was reported as a means to capture local knowledge about the communities and engendering a level of familiarity and trust. This process helps MNCs implement CSR by aiming to understand the community’s structures, networks and the people’s concerns and issues. Similar to stakeholder analysis, this process also identifies risks and possible disruptions for the corporation to avoid.

Using social mapping, MNCs negotiate their status directly with important legitimating actors in the community. Robust community engagement strategies involve the employment of local people in the company in general and in community relations roles.

However, that MNCs rationalize their presence, and their CSR programs, within the frame of "livelihood" provision.

While MNCs generate employment to local communities and businesses, the framing of their discourse engenders a power dimension between the "employer" and "employee."

In a sense, communities are expected to be "beholden" to the MNCs for choosing their communities as sites of the local operation. Community resistance is often curtailed through the employment of local residents or local NGOs, who are able to negotiate and mediate between the company and the community.

Some scholars have referred to this practice is "co-optation."

Negotiation and dialogic strategies address these power differences between MNCs and local communities. CSR programs tend to become the focus by which international standards and local values are negotiated, and business and social goals are aligned.

While MNCs listen and involve local community members in co-developing local CSR activities, decision-making is still dominated by the MNCs who hold the financial resources. Local community members exercise power to a limited extent and only at very low levels.

We argue that there is still much work in the notion of shared values through CSR particularly within the global-local context. MNCs may need to be more open, and integrate some of their host countries’ values into their own to truly engender two-way shared values in an equitable way.

This project was among six research studies funded by the 2016 Page & Johnson Legacy Scholar Grants. For more information about this work, please email Gregoria Yudarwati at yudarwati@staff.uajy.ac.id.