Legitimacy as a Key Driver and Determinant of CSR in Developing Countries

Abstract This paper aims to specify the conceptual limits of CSR in a developing country context. Taking organisational legitimacy theory as a departure-point, it is argued that two key shortcomings regarding the contribution of CSR towards development can be identified: First, a multinational company operating in a remote country mainly seeks to gain legitimacy from its primary stakeholders which are typically based in its home market (e.g. customers, media), leading to a bias towards short-term projects with a high visibility rather than longer-term capacity-building initiatives. Second, differing perceptions of legitimacy in the home and the host country can lead to a misjudgement of which kind of initiative would be deemed appropriate in the host country and, subsequently, a misallocation of resources occurs. Implications are presented regarding (a) the strategic alignment of a corporation’s engagement in CSR as well as (b) the conceptual limits of CSR in contributing towards (ecological) sustainability.

[1]  Peter W. Roberts,et al.  Integrating Transaction Cost and Institutional Theories: Toward a Constrained-Efficiency Framework for Understanding Organizational Design Adoption , 1997 .

[2]  G. Hofstede,et al.  Cultures and Organizations: Software of the Mind , 1991 .

[3]  Kimberly D. Elsbach.  MANAGING ORGANIZATIONAL LEGITIMACY IN THE CALIFORNIA CATTLE INDUSTRY - THE CONSTRUCTION AND EFFECTIVENESS OF VERBAL ACCOUNTS , 1994 .

[4]  Jedrzej George Frynas,et al.  Editorial Setting new agendas: critical perspectives on Corporate Social Responsibility in the developing world , 2005 .

[5]  Helge Jörgens,et al.  The diffusion of new environmental policy instruments , 2003 .

[6]  Bryane Michael.  Corporate social responsibility in international development: an overview and critique , 2003 .

[7]  C. K. Lindblom.  The implications of Organizational Legitimacy for Corporate Social Performance and Disclosure , 1994 .

[8]  M. Blowfield,et al.  Corporate Social Responsibility: reinventing the meaning of development? , 2005 .

[9]  P. Newell.  Citizenship, accountability and community: the limits of the CSR agenda , 2005 .

[10]  Deborah Leipziger,et al.  The Corporate Responsibility Code Book , 2003 .

[11]  Jed Greer,et al.  Greenwash: The Reality Behind Corporate Environmentalism , 1996 .

[12]  L. Zucker.  Institutional Theories of Organization , 1987 .

[13]  M. Blowfield.  Corporate Social Responsibility -The Failing Discipline and Why it Matters for International Relations , 2005 .

[14]  Mark C. Suchman.  Managing Legitimacy: Strategic and Institutional Approaches , 1995 .

[15]  Charles Perrow,et al.  THE ANALYSIS OF GOALS IN COMPLEX ORGANIZATIONS , 1961 .

[16]  Dennis M. Patten.  INTRA-INDUSTRY ENVIRONMENTAL DISCLOSURES IN RESPONSE TO THE ALASKAN OIL SPILL: A NOTE ON... , 1992 .

[17]  G. Kell.  The Global Compact Origins, Operations, Progress, Challenges , 2003 .

[18]  Paul DiMaggio.  Interest and Agency in Institutional Theory , 1988 .

[19]  D. Parker.  LIMITS TO PRIVATIZATION: HOW TO AVOID TOO MUCH OF A GOOD THING , 2006 .

[20]  H. Weidner,et al.  Capacity building in national environmental policy : a comparative study of 17 countries , 2002 .

[21]  C. K. Prahalad,et al.  The Fortune at the Bottom of the Pyramid , 2004 .

[22]  A. Rugman,et al.  The end of globalization , 2000 .

[23]  Robert N. Stern,et al.  The External Control of Organizations: A Resource Dependence Perspective. , 1979 .

[24]  C. Bartlett,et al.  Managing across Borders: The Transnational Solution , 1990 .

[25]  M. Clarkson.  A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance , 1995 .

[26]  J. Pfeffer,et al.  Organizational Legitimacy , 1975 .

[27]  G. Kell,et al.  Global Compact , 2004, The Raoul Wallenberg Institute Compilation of Human Rights Instruments.

[28]  John G. Maurer.  Readings in organization theory : open-system approaches , 1971 .

[29]  Frank Biermann,et al.  The global governance project , 2004 .

[30]  A. Carroll.  Corporate Social Responsibility , 1999, The Routledge Companion to Corporate Social Responsibility.

[31]  Jodie Thorpe,et al.  Developing Value: The Business Case for Sustainability in Emerging Markets , 2006 .

[32]  Alfons Trompenaars,et al.  Riding the Waves of Culture: Understanding Diversity in Global Business , 1993 .

[33]  Uwem E. Ite,et al.  Multinationals and corporate social responsibility in developing countries: a case study of Nigeria , 2004 .

[34]  L. Parker,et al.  Corporate Social Reporting: A Rebuttal of Legitimacy Theory , 1989 .

[35]  Monika I. Winn,et al.  Sustainability marketing for the poorest of the poor , 2006 .

[36]  Srilata Zaheer,et al.  Circadian Rhythms: The Effects of Global Market Integration in the Currency Trading Industry , 1995 .

[37]  M. Finger,et al.  Limits to Privatization: How to Avoid Too Much of a Good Thing - A Report to the Club of Rome , 2005 .

[38]  R. Gray,et al.  Corporate social and environmental reporting , 1995 .

[39]  G. Hofstede,et al.  Culture′s Consequences: International Differences in Work-Related Values , 1980 .

[40]  G. Kell.  Selected Experiences and Reflections , 2005 .

[41]  C. Deegan,et al.  An examination of the corporate social and environmental disclosures of BHP from 1983‐1997: A test of legitimacy theory , 2002 .

[42]  T. Kostova,et al.  Organizational Legitimacy Under Conditions of Complexity: The Case of the Multinational Enterprise , 1999 .

[43]  M. Porter.  Competition in Global Industries , 1986 .

[44]  Howard E. Aldrich,et al.  Fools Rush in? The Institutional Context of Industry Creation , 1994 .

[45]  Robert Bacon,et al.  Public policy for the private sector , 1995 .

[46]  Audun Ruud,et al.  Environmental management of transnational corporations in India—are TNCs creating islands of environmental excellence in a sea of dirt? , 2002 .

[47]  L. Timberlake.  Doing business with the poor : a field guide , 2004 .

[48]  S. Ghoshal,et al.  Internal differentiation within multinational corporations , 1989 .

[49]  M. W. Hansen,et al.  Environmental upgrading of Third World enterprises through linkages to transnational corporations. Theoretical perspectives and preliminary evidence , 2004 .

[50]  W. Powell,et al.  The iron cage revisited institutional isomorphism and collective rationality in organizational fields , 1983 .

[51]  A. Webster.  Perspectives from India , 1969 .

[52]  G. Kell.  The Global Compact Selected Experiences and Reflections , 2005 .

[53]  A. Chan,et al.  Critical perspectives on CSR and development: what we know, what we don`t know, and what we need to know , 2006 .

[54]  F. Birkin,et al.  Organizational Legitimacy and Stakeholder Information Provision1 , 1996 .

[55]  Y. Doz,et al.  The Multinational Mission: Balancing Local Demands and Global Vision , 1999 .

[56]  L. Moir.  What do we mean by corporate social responsibility , 2001 .

[57]  Jitendra V. Singh,et al.  Organizational Environments and the Multinational Enterprise , 1991 .

[58]  A. Richardson,et al.  Symbolic and Substantive Legitimation in Professional Practice , 1985 .

[59]  Blake E. Ashforth,et al.  The Double-Edge of Organizational Legitimation , 1990 .

[60]  Jedrzej George Frynas,et al.  The false developmental promise of corporate social responsibility: evidence from multinational oil companies , 2005 .

[61]  T. Fox,et al.  Corporate Social Responsibility and Development: In quest of an agenda , 2004 .

[62]  Peter Utting,et al.  Corporate responsibility and the movement of business , 2005 .