To Legislate or Not: That Is the Question—Comparing CSR Intent and Effects in Economies with Voluntary CSR and Legislated CSR

Abstract

Multinational companies (MNCs) often debate whether or not corporate social responsibility (CSR) is worthwhile pursuing, whether it is a cost for mere window dressing or whether it is an investment with promising and interesting outcomes. On the other hand, governments debate whether CSR should be legislated or voluntary. Hence, while some MNCs engage in CSR voluntarily pursuing the benefits, other MNCs are ‘forced’ to engage in CSR—regardless if they believe in the concept or not. There are various examples and approaches. Among developed economies, for example, we find Sweden who does not have CSR legislation (yet the majority of Swedish MNCs are highly active in voluntary CSR) and Denmark, Germany and Canada with various degrees of industry-specific legislation. In emerging economies, we find, for instance, Mauritius, Indonesia and India legislated CSR to cover precise monetary contributions towards the social, economic and environmental development of these countries. Whether the global economy gravitates towards some degree of responsible capitalism or not, the discussion and arguments for and against mandatory CSR is likely to increase in the near future. To contribute to the debate, this chapter describes the differences between CSR among MNCs in Sweden (a developed economy believing in voluntary CSR) and India (an emerging economy) where CSR is mandatory by law. Our research indicates that MNCs in both economies (with voluntary or legislative CSR) strategically benefits from CSR and that CSR legislation positively affects MNCs in at least one emerging economy (India).