CSR

in
International Business
 Key drivers of CSR
• Ethical consumerism
• Transparency and trust
• Increased public expectations of business
• Employee motivation
• Laws and regulation
• Stakeholder priorities
• Crises and their consequences.

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1 Ethical Consumerism

Consumers are becoming more aware of the

environmental and social implications of their day-
to-day consumer decisions and are beginning to
make purchasing decisions related to their
environmental and ethical concerns
 Transparency and Trust
2 There is increasing expectation that companies
will be more open, more accountable and be
prepared to report publicly on their
performance in social and environmental
arenas.
 Increased Public Expectation of
3 Business
As corporations pursue growth through
globalization, they have encountered new
challenges that impose limits to their growth
and potential profits. Global competition forces
multinational corporations to examine not only
their own labour practices, but those of their
entire supply chain, from a CSR perspective.
4 Employee Motivation
 Laws and regulation
5 Governments should set the agenda for
social responsibility by the way of laws
and regulation that will allow a business
to conduct themselves responsibly.
6 Crises and their consequences
 Stakeholder priorities.
7 Increasingly, corporations are motivated to
become more socially responsible because
their key stakeholders expect them to
understand and address the social and
community issues that are important to
them.
 International Business
◇ International business consists of all commercial
transactions—including sales, investments, and
transportation—that take place between two or more
countries
◇ Increasingly foreign countries are a source of both
production and sales for domestic companies

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Studying International Business
is Important
 Most companies are either international or compete
with international companies
 Modes of operations may differ from those used
domestically
 The best way of conducting business may differ by
country
 An understanding helps you make better career
decisions
 An understanding helps you decide what
government policies to support
 Factors Contributing to Fast Growth
of International Business
1. Increase in and expansion of technology.
2. Development of services that support international
business.
3. Growing consumer pressures.
4. Increased global competition.
5. Changing political situations.
6. Expanded cross-national cooperation.

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 Reasons Why Companies
Engage in
International Business
◇ To Expand Sales: pursuing international sales increases
the potential market and potential profits
◇ To Acquire Resources: may give companies lower costs,
new and better products, additional operating knowledge
◇ To Diversify or Reduce Risks: international operations may
reduce operating risk by smoothing sales and profits,
preventing competitors from gaining advantage

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 Harmful effects of not practicing CSR in
International business operations.

 Domestic Damage  Foreign Damage

• Loss of sales. • Loss of sales.
• Tarnished reputation.
• Tarnished reputation.
• Employee retention and
• Harm relationship with the foreign
recruiting.
country.
• Rise in sabotaging
behavior. • Lowered productivity.

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 Approaches of International Business
Ethnocentric Approach

Polycentric Approach

Regiocentric Approach

Geocentric Approach

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ETHNOCENTRIC APPROACH
• The domestic companies view foreign
markets as an extension to domestic
markets.
• Excessive production will export due to
change in customer taste and preferences.

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 Figure 1. Organizational Structure of Ethnocentric Company

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polycentric APPROACH

• The companies establish foreign subsidiary

and empowers its executives.
• The companies customizes the marketing
mix to meet the taste, performance and needs
of the customers of each international
market.

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 Figure 3. Organizational Structure of Polycentric Company

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geocentric APPROACH
• They select the employees from the entire globe and
operate with a number of subsidiaries. The
headquarters coordinate the activities of the
subsidiaries. Each subsidiary functions like an
independent and autonomous company in
formulating policies, strategies, product design,
human resource policies, operations, etc.

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 Figure 4. Organizational Structure of Geocentric Company

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regiocentric APPROACH
• The company operating successfully in a
foreign country thinks of exporting other
neighboring countries of the host country.
• The concerned subsidiary considers the
regional environment (such as laws, culture,
policies, etc.) for formulating the policies and
strategies.

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 Figure 3. Organizational Structure of Regiocentric Company

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 Relevance of CSR in
International Business
• Balances corporate power with
responsibility.
• Promotes long-term profits for business.
• Improves business value and reputation.
• Corrects social problems caused by
business.
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References:
◇ https://www.triplepundit.com/csrdrivingforces
◇ Pearsoneducation2011. pdf
◇ Corporate social responsibility in the globalization
era.pdf (Goran Milovanović, Nada Barac, Aleksandra
Andjelković)

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