Common sense dictates that in order for companies to survive, they must meet the demands of their consumers. As consumer demands increase, corporations aspire to meet those demands. The latest consumer trend seems to be blending social awareness with corporate responsibility. In other words, corporations worldwide are recognizing that by giving back to many of the Third World economies from which they derive many of their raw materials to make their products, they are able to achieve two goals at once: improving the economies in countries lagging far behind and using those efforts to market their products to consumers who are interested in making the world a better place. As this type of social awareness becomes more mainstream, corporations are embracing this win-win concept, and are integrating it into the fabric of their corporate identities.
This business strategy is known as Corporate Social Responsibility (or CSR), and it has become an integral goal for all companies who aspire to find success. When a corporation, regardless of size, enters a country, it has a responsibility to try to impact that society in a positive way. When a large corporation enters a small, developing country, it is often a drain on that country's resources and without allowing its citizens to reap the benefits.
While many corporations recognize the positive impact that social responsibility can have in terms of marketing, there are many other long term financial benefits of CSR. A 2015 study by the Kenexa High Performance Institute in London (a global provider of business solutions for human resources) found that:
“organizations that had a genuine commitment to CSR substantially outperformed those that did not, with an average return on assets 19 times higher.”
Additionally, the study showed that companies who integrated CSR had a higher amount of engaged employees and provided a markedly better standard of customer service.
Despite the clear positive impacts that CSR brings to the corporate world, not all companies engage in CSR for the right reasons. Most businesses admit to adopting CSR to become more marketable, and not necessarily to improve the well-being of the economies from which they derive their resources.
According to a study by researchers at the University of California at Riverside and The London School of Economics:
“Firms that have shown they have high levels of corporate responsibility are actually more likely to engage in irresponsible actions.”
Moreover, it is not uncommon for corporations to lose focus once they have met their CSR obligations and goals.
A developing nation in Southeast Asia, East Timor, has been heavily impacted by CSR. East Timor was recognized as an independent nation in 2002, and it has struggled with an increase of deforestation, government instability, infrastructure issues, and health care problems to name a few. With an abundance of natural resources including their main exports of oil, gas and coffee, East Timor has been able to gain the attention of international corporations such as Starbucks.