Corporate Social Responsibility for Developing Country Multinational Corporations: Lost War in Pertaining Global Competitiveness?

Abstract

This article explores the conceptual and practical gap existing between the developed and developing countries in relation to corporate social responsibility (CSR), or the North-South ‘CSR Divide’, through the analysis of possible impact on the competitiveness of developing countries’ and economies’ SMEs and MNEs in globalization. To do so, this article first reviewed the traditional wisdom on the concept of strategic CSR developed in the North and the role that CSR engagement can play in corporate competitiveness, and compare with the impact on the competitive advantage of the South through the supply chains. It points out that among the many factors that could explain the ‘CSR Divide’, the negative impact of CSR on comparative advantage is the final resort where developing countries are reluctant and defensive toward western-style CSR. It did point out that developing countries are changing their approaches to make CSR work in favor of their competitive position in global trade, such as China who has started to adopt proactive approach by becoming CSR standards-setter. This article concludes with two policy proposals that aim to bridge the CSR gap, the first is to improve CSR standard-setting participation from both sides, and the second to search for solutions in the international investment legal framework which will define corporate obligations in relating to CSR in a more explicit way.