Integrating global and local values in CSR: A multinational company’s challenge

December 9, 2015

By Gregoria A. Yudarwati, Universitas Atma Jaya Yogyakarta, Indonesia)
and Marianne D. Sison, RMIT University, Australia

Over the last couple decades, the number of multinational corporations (MNCs) operating in developing countries has dramatically increased. In spite of this, MNCs, have been criticised for pursuing profit in developing countries at the expense of susceptible workforces and the environment. In response to such concerns, MNCs have increasingly taken initiatives aimed at demonstrating their social responsibility through their CSR policies.

It has been argued that MNCs’ commitment in CSR activities has generally been reactive in developing countries. These activities are a result of public pressures from host and home countries as well as international publics. Debates continue on whether a global CSR approach or a decentralized and differentiated local CSR approach would be more appropriate.

The diversity of the communities combined with the wide array of company types in each country present challenges in the development of CSR policies, which are often drawn from Western perspectives and global standards. If a company follows a global CSR strategy and applies it to its foreign subsidiaries, this may cause conflicts of interest between the home and the host countries, especially when they have a different level of development. However, if a company is responsive to local demands, then it is likely that this strategy tends to be a reactive strategy and is aimed at the minimum level required by the local law.

What the debate implies is that universal codes – the “one-size-fits-all” approach – may not provide the answer. A company needs to consider different societal and governmental pressures in home versus host countries and to develop strategies to address cross-cultural diversity and conflicts. Based on a case study of Australia MNCs that operate in Indonesia, our study examines how CSR policymakers of MNCs understand, consult, negotiate, and integrate local values of their host countries into their CSR policies and implementations.

This study is funded by the Page Legacy Scholar Grant from the Arthur W. Page Center and aims to contribute to a group of studies on Global Public Relations: CSR and Public Diplomacy across Cultures.