Corporate Social Responsibility & International Development
In general terms, "development" refers to the increasing qualitative and quantitative structures or the improvement of life. These normally include the rule of law, infrastructure, independent courts, access to necessities, affordable medical care and education. In the developing world, much of this is not taken for granted. If, as author Michael Hopkins claims, the United Nations and kindred organizations have failed in helping to develop the globe, then corporate investment might be the last remaining hope.
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Investment and Development
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In the typical definitions of "development," the basic needs and requirements of a productive life are continually expanded. From the point of view of the corporation investing abroad, this can only benefit them: the better the local quality of life, the more the local market can develop and support foreign investment. The firm, especially if it is seeking to expand its own market reach, has everything to gain by local development.
Markets and Development
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When speaking of "market development," all aspects of a thriving civil society are present. To have a strong and dynamic local market, the population must have increasing amounts of disposable income, regular employment, access to education and legal representation while enjoying the benefits of basic freedom and the rule of law. If any one of these things is lacking, then the market cannot function, and investment from abroad has little to expand into. The development of markets, in other words, is not only in the interest of corporate capital, but also implies the expanding of the quality of life at the local level.
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Three Approaches to Corporate Responsibility
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A corporate investor benefits from local increases in general well being. From the free market point of view, a solid investment decision will have the automatic effect of assisting development -- capital will earn profit because it is invested where it is needed. On the other hand, the "demand side" approach stresses the fact that wealthier localities have more money to spend on foreign goods. The third approach stresses power, the fact that "well being" might be something not agreed to by all, and, as a result, defined and manipulated by the firms involved. In other words, the critical or "power" approach to development suggests that well being is defined by foreign capital in precisely those ways that benefit it.
Risk Avoidance
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Economist Ramon Mullerat says that the most "self-interested" form of corporate responsibility are development projects initiated purely from the corporate desire to avoid irritating the local population. Even at this self-interested level, however, the intrinsic connection between investment and responsibility is implied. Risk-avoidance motivation serves to do more than "buy off" the local population. It can improve relations with government, impress the more idealistic shareholders, improve the international image of the firm and motivate, retain and recruit the best employees. What might begin as corporate self-interest in sponsoring local development might become some of the most sound investment decisions the firm has ever made.
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