The relationship between corporate social responsibility and competitiveness: proposition of a theoretical model moderated by participation in global value chains.
| Autor | de Melo, Mary Fernanda de Sousa |
1 Introduction
Multinational enterprises from emerging countries (or emerging market multinational enterprises--EMNEs) deal with different institutional contexts and can accelerate or slow down the process of sustainable development both locally and globally (Dunning, 2009; Kolk & Van Tulder, 2010; Sinkovics, Forsgren, Sinkovics, & Holmstrom-Lind, 2017). A key point is that up to 20 years ago, the role of MNEs from developed countries was highlighted as "drivers" of the upgrading of agents from developing countries. In this process, the leading companies shaped the governance structures and the impact of global value chains (Henderson, Dicken, Hess, Coe, & Yeung, 2002; Mudambi, 2008). Nowadays, MNEs from emerging countries have expanded their value chains, and we often see leading companies from emerging countries shaping value chains and being the drivers of change (Pananond, 2015; Ramamurti & Singh, 2009).
By operating in the international market and participating in global value chains, which requires the fulfillment of different socio-environmental requirements, MNEs that have socio-environmentally responsible management see impacts of such performance on their competitiveness (Gomes, Kneipp, da Rosa, Bichueti, & Perlin, 2016). This is seen by companies from emerging countries, such as Brazilian multinationals, as a possibility to improve their performance beyond national borders, thus entering the external market (Cuervo-Cazzura & Narula, 2015; Gomes et al., 2016; Kolk, 2016; Zadek, 2004). therefore, corporate social responsibility (CSR) activities affect the core business, growth, profitability, and survival of firms, and have increasingly taken a place on the strategic agenda of managers, and are ultimately a potential source of competitive advantage (Kolk & Pinkse, 2008; Porter & Kramer, 2006). The CSR concept adopted by this study was proposed by Knorringa and Nadvi (2016), who state that corporate social responsibility is "a process wherein corporate actors integrate economic, social, and environmental concerns into their core business activities [and] also requires a need to recognise the multiple interests of diverse stakeholders that shape this process" (p. 56).
Different studies have analyzed the relationship between CSR and competitiveness in MNEs from developing countries (Chinomona & Omoruyi, 2016; Gugler & Shi, 2009; Husted & Allen, 2009; Husted, Allen, & Rivera, 2010), i.e., by including CSR in strategic business issues (del Valle, 2010). However, the effects on competitiveness have not yet been consolidated in the literature (Brandao, Diogenes, & Abreu, 2017; Kemper, Schilke, Reimann, Wang, & Brettel, 2013; Marin, Rubio, & Maya, 2012). Most of the studies on this theme focus their analysis solely on the environmental dimension of CSR (Cave, 2014; Lundgren & Zhou, 2017; Qi et al., 2014). On this point, we advance the research by considering the social and strategic as well as the environmental aspects of CSR.
Also, the GVC literature, which emerged in the 1990s, is based on the relationship between developed country agents and local agents from developing countries, as well as the effects of developed country companies on local producers in developing countries. In the last twenty years, developing countries' participation in global trade has increased and, consequently, so has the importance of multinational companies from developing countries. In 1990, the Organization for Economic Co-operation and Development (OECD) countries accounted for 62% of the global economy, but by 2010, this percentage had decreased to 50% (Brian, 2012). There are indications that the participation of OECD countries in global GDP will be 43% in 2030 (Brian, 2012).
Considering this, two elements are highlighted in this paper. The first is the issue of EMNEs and their role in global trade. It is also important to be aware of CSR practices and how these practices can affect the competitiveness of EMNEs. In this context, the following research question arises: what is the relationship between CSR and the competitiveness of EMNEs in global value chains? This study aims to propose a model that relates CSR and competitiveness in GVCs. The main dimensions of CSR considered in this model are the environmental, social, and strategic ones. The aim is to contribute to the literature on GVCs by considering new elements of participation in global markets, such as CSR. This model could provide insights regarding the main dimensions to consider in the relationship between social and environmental practices and competitiveness.
This paper has been divided into six chapters. It begins with an introduction. Chapter two deals with CSR and competitiveness. Chapter three begins by laying out the CSR dimensions and develops hypotheses for specific relationships between the CSR dimensions and competitiveness. The fourth chapter presents the hypotheses for moderator variables. The fifth chapter presents the theoretical model developed. Finally, in the last chapter, the discussion of the model and conclusions are presented.
2 Corporate Social Responsibility and Competitiveness
Competitiveness is directly related to performance, which, according to the literature, has two main aspects: financial and non-financial (Haguenauer, 2012). According to Brandao et al. (2017), it is possible to associate financial performance with socio-environmental benefits, using the indicators of financial performance, such as growth, turnover, return on assets, efficiency, and profitability in an analysis of competitiveness (Centenaro & Laimer, 2017; Haguenauer, 2012; Hamel & Prahalad, 1989). Financial performance is thus considered as a proxy for competitive advantage.
The relationship between CSR strategy and its impact on organizational performance, whether financial or not, has been widely discussed in the literature, but still with divergent results (Vilanova, Lozano, & Arenas, 2009; Wang, Lu, Kweh, & Lai, 2014). Different theoretical perspectives have been used to discuss this relationship, such as agency theory, the resource-based view, and stakeholder theory, among others, implying that CSR is seen as an integral part of corporate strategy (Erhemjamts, Li, & Venkateswaran, 2013).
Despite the different motivations and results indicated by the theory and practice, the adoption by companies of a strategy that contemplates socio-environmental practices will only occur with a clear perception of benefits, especially financial and operational benefits (Brito & Berardi, 2010). As examples of these benefits, Aguinis and Glavas (2012) list some corporate results derived from socio-environmentally responsible performance: risk reduction, competitive advantage, attractiveness to investors, capabilities, good management practices, operational efficiencies, product quality, and perceived quality of management, among others.
The first challenge of relating CSR with competitiveness lies in the definition of these terms. As mentioned earlier, there are different definitions for CSR as well as for the term competitiveness. Krugman (1996) stated that "of course competitiveness was the key; the only question was how to achieve it" (p. 17). Competitive strategies are designed with the aim of increasing sales and profit, thus enabling the company to grow (Mulatu, 2016). The intention is to improve performance, which is seen as a business success. However, it is not only the position in the market vis-a-vis competitors that translates into business competitiveness, but also internal characteristics (Kianto, Andreeva, & Pavlov, 2013).
Among the dimensions that categorize competitiveness are financial performance, productivity, quality and innovation of the product/service, and trust in the relationship with stakeholders (Ambastha & Momaya, 2004; Brandao et al., 2017). Maletic, Maletic, and Gomiscek (2018, p. 425) emphasized that "the competitiveness of organizations is dependent upon their approach towards corporate social responsibility", and they considered the business environment to be relevant in this relashionship. Working in a global value chain requires the alignment of all these dimensions with socio-environmentally responsible performance, given the pressures from stakeholders, especially those from developed countries.
The most recent definitions of the term corporate social responsibility emphasize a set of voluntary actions that aim to achieve both social benefits and maintain the company's reputation and competitiveness. It is observed that, with the advancement of the discussion regarding sustainability, the concept of CSR itself has incorporated the term. As the paper by Wesselink, Blok, van Leur, Lans, and Dento (2015) states, "CSR concentrates on the contribution of companies to achieve said sustainability goal, for instance by balancing people, planet, and profit in their business practices" (p. 497).
The presence of the word profit in the definition of CSR reinforces that not only the stakeholders and the environment should be the focus of the company when it adopts a CSR strategy. Keeping the company competitive in its industry must also be considered, so that the company's own benefits from responsible performance are continuous. In a theoretical analysis of the theme, corporate social responsibility broadens the view of the nature and management of multinational companies, and thus requires a new way of thinking about the strategies of multinationals (De Chiara & Spena, 2011).
The theoretical discussion is reflected in the emphasis given to CSR by different industries, where it has been perceived that this strategy improves organizational performance, brand image, reputation, and increases competitive advantage (Barney, 1991; Porter & Kramer, 2006; Wang et al., 2014). therefore, the implementation of CSR involves much more than just talk, and is an important part of business competitiveness. through the positive impact of CSR on...
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