A Research on CSR Regimes in East-Asia

Growing Towards Another Crisis?

1. Introduction

The growth in Asia has been a phenomenon that can not be ignored. On the contrary, many studies have been devoted to analyze this particular episode. However, the Asian financial crisis of 1997-1998 confirmed doubts about the sustainability of East Asian’s impressive growth in terms of financial and economic management (Bloch and KanTang, 2001).

At present, almost a decade after the crisis, Asian economies seem to rebound –some faster than the others (Ahn, 2001). Still, this deduction remains in the context of economic indicators and putting the social implications from the economic activities aside.

With the growing body of research dedicated to the social implications of businesses as the main economic engine, it is crucial to assess Asian businesses in such perspective. Especially since the assertions made on Asian businesses are discomforting. The leading concept that entails the role of businesses to societal life is Corporate Social Responsibility (CSR).

Van Tulder with van der Zwart (2006) pointed out Asian CSR regime as weak, inactive and corporate-statist (pp. 228-229). CSR also does not feature strongly in the agenda of Asian executives (Lines, 2004) and a study by Chapple and Moon (2005) seems to concur this. It has even been suggested that most CSR initiatives in an East Asian country such as Indonesia are simply cosmetic (Kemp, 2001).

These propositions are deeply worrying in the sense that they indicate that (again) the growth in Asia is not supported with a sound foundation for sustainability in the longer term. The concern in this research is more to the social sustainability of the growth as an impact of the businesses.

Is it still the case that the current growth in Asia not a sustainable one? Could Asia face another (social) crisis because of the behavior of Corporate Asia?

2. Selection of Countries

The World Bank in its East Asian Miracle Report (1993) identifies China, Hong Kong, Indonesia, Japan, (South) Korea, Malaysia, Singapore, Taiwan, and Thailand as the fastest growing Asian countries. In short, the high growth was attributed for getting the basics right. Assessments used in the report were mainly economic indicators e.g. investment, trade and capital flow, savings rate, and productivity. Very little attention was given on the social aspects of the growth. Although public policy implications were reasonably covered, discussions on corporate policy implications were barely existent.

Obviously in hindsight of the Asian financial crisis, Stiglitz and Yusuf (2001) on a publication of the World Bank “rethink” that particular “miracle” and acknowledge with some merit evidences contradicting the East Asian Miracle Report released in 1993. Even so, they conclude that despite the slowdown, prospects for continued robust growth are still at place. This deduction is still based on merely economic indicators but it is also recognized with caution that conservative economic growth (e.g. GDP) is just a means to broader mandate such that of sustainable development (Stiglitz and Yusuf, 2001: pp.523-525).

The ongoing potential growth for East Asian countries is recently confirmed by the International Monetary Fund (IMF, 2005). World Economic Outlook 2005 classifies Japan as an advanced economy; Korea, Singapore, Taiwan, and Hong Kong as Newly Industrialized Economies (NIEs); and ASEAN-4 (Indonesia, Malaysia, Philippines, Thailand) along with China as the leading emerging Asian countries (IMF, 2005).

As far as the businesses are concerned, the World Economic Forum (2005) includes Japan, Singapore, Hong Kong, Taiwan, Malaysia, Korea, Thailand, Indonesia, and China respectively in the top-fifty of Business Competitiveness Index ranking. Transnational companies based in these countries also account for more than three-quarter of the Top 50 non-financial TNCs from developing economies (UNCTAD, 2005: p.270).

It is therefore sound to conduct a selection of countries based on their constant reoccurrences in the above references (thus the Philippine does not apply). Hong Kong, Singapore and Taiwan, however, will be excluded from this research due to their specific political position (Taiwan and Hong Kong) and minute city-states status (Singapore, Hong Kong) (van Tulder with van der Zwart, 2006: p.33) that are less applicable for analytical comparison with other developing economies (Ahn, 2001: p.424).

To sum up, the countries dealt with in this research consequently are China, Indonesia, Japan, Malaysia, South Korea, and Thailand.

3. Regional Growth and CSR

One of the prominent theories explaining the rapid economic growth in East Asia has been the “flying geese” model (Kojima, 2000). The model intends to describe the catching-up process of industrialization in the developing economies by following the path of a leader economy. Kojima (2000) explicitly maps a leading goose i.e. Japan and the following geese (NIEs, ASEAN-4, China) (p.376) –which actually fits well with the country selection of this research.

Ito summarizes this flying geese pattern as spillovers to subsequent sequential industrialization layers in the region (Stiglitz and Yusuf, 2001: pp.61-64). He argues that Asian countries pass comparative advantages in manufacturing from leaders to followers as leaders move on to the next stage of industrialization –hence forming a passing pattern of competence from leader to follower to follower’s follower and so on.

However, scholars such as Reynolds (2001) challenge the flying geese model. He argues instead the growth in Asia is a direct effect of transnational companies and the global business growth. There is no contagion effect in the region, but combinations and interactions of exogenous and endogenous factors (Reynolds, 2001).

The debates in development theories e.g. flying geese can be relevant to analyze CSR regimes in a particular (developing) country with the assumption that CSR regimes nurture from economic growth and industrialization stages. Kemp (2001) concludes that CSR may not even be relevant in less developed economies as it distributes cake while what is truly needed are bread (p.33).

Several questions then arise: are there patterns of CSR regimes in Asia similar to the flying geese with a country as the leader and the rest follow? If it is the case, than it should be noticeable that Asian countries with more advanced economies to have more advanced CSR regimes and passing their (previous) CSR values to the follower economies.

Or, are the CSR regimes in Asia influenced more by domestic themes (van Tulder, 2005)? After all, the social aspects of CSR are linked heavily with the norms and values of each society which are different even across East Asian countries. This implies that an ‘Asian CSR regime’ can still be distinguished in spite of global business trends and their stages of economic / industrial development.

4. Largest Asian home-firms

Whilst most researches in CSR evolve around practices in United States and European countries, some were conducted on Asian and emerging economies with various methods (Al-Khater and Naser, 2003; Chapple and Moon, 2005; Fukukawa and Moon, 2004; Lines, 2004; Sagar and Singla, 2004; Thompson and Zakaria, 2004), though mostly includes host / foreign companies but none discuss exclusively the largest home-based corporations. The largest home companies in fact could reflect more of the local attitudes towards CSR vis-à-vis the mostly western-minded multinational corporations.

Not only that, but as Porter suggested that foreign multinationals should not be taken as a main component of a developing economies, instead the focus should shift to indigenous companies (Parayil, 2005) –which is exactly what this study is aiming for.

It is therefore the objective of this research to establish empirical evidence and discussion on CSR regimes in East Asia based on their own largest companies.

Forbes Global 2000 list of world’s largest companies will be used as the basic reference of the companies. It already ranks companies on a composite assessment of sales, profits, assets, and market value (Forbes, 2005). Out of the list, eight top companies or core companies of China, Indonesia, Japan, Malaysia, South Korea, and Thailand will be taken. Many of the companies also appear to be government-owned –what implications will this bring to the national CSR regime?

5. Hypothesis and Theoretical Framework

The framework adopts the line of thoughts proposed by van Tulder with van der Zwart (2006) that the CSR regime in Asia is inactive. Thus, this research intends to explore the interactions between the behavior of core companies and the CSR regime by questioning:

Hypothesis 1:
Do the elements of CSR regime in country X correspond to the behavior of the core companies?

Hypothesis 2:
Does the behavior of core companies construct a generalized CSR regime of the country?

However, following Reynolds (2001) that the growth in Asia has been a direct effect of global business trends and van Tulder (2005) that dependencies between CSR regimes may exist in linked economies, it is important to question:

Hypothesis 3:
Do more internationalized core firms share less of the qualities of the national CSR regime?

Literature List

Ahn, C.Y. (2001) ‘A Search for robust East Asian development models after the financial crisis: mutual learning from East Asian experiences’, Journal of Asian Economics, 12: 419-443.

Al-Khater, K. & K. Masser (2003), ‘Users’ Perceptions of Corporate Social Responsibility & Accountability: Evidence from an Emerging Economy’, Managerial Auditing Journal, 18(6/7), pg. 538-548.

Bloch, Harry and Sam Hak KanTang (2001) ‘The Role of Technical Change and Productivity Growth in East Asian Economic Growth’, Progress in Development Studies, 1/4: 329-336.

Chaple, W. & Moon, J. (2005), ‘Corporate Social Responsibility (CSR) in Asia’, Business & Society, 44 (4), pg. 415-441.

Forbes (2005), Forbes Global 2000, http://www.forbes.com/free_forbes/2005/0418/066.html

Fukukawa, K. & J. Moon (2004), ‘A Japanese Model of Corporate Social Responsibility? A Study of Website Reporting’, The Journal of Corporate Citizenship, 16, pg. 45-59.

IMF (2005) World Economic Outlook 2005 – Building Institutions, Washington: International Monetary Fund.

Kemp, M. (2001), ‘Corporate Social Responsibility in Indonesia: Quixotic Dream or Confident Expectation?’, Technology, Business and Society Program Paper #6, United Nations Research Institute for Social Development.

Kojima, K. (2000) ‘The “Flying Geese” Model of Asian Economic Development: origin, theoretical extensions, and regional policy implications’, Journal of Asian Economics, 11: 375-401.

Kolk, A. and R. van Tulder (2003) International Codes of Conduct – Trends, Sectors, Issues and Effectiveness, Rotterdam: Erasmus University.

Lines, V. (2004), ‘Corporate Reputation in Asia: Looking Beyond Bottom-Line Performance’, Journal of Communication Management, 8(3), pg. 233-245.

OECD (2005) Annual Report on the OECD Guidelines for Multinational Enterprises – Corporate Responsibility in the Developing World, Organisation for Economic Co-operation and Development.

Parayil, Govindan (2005) ‘From “Silicon Island” to “Biopolis of Asia”: Innovation Policy and Shifting Competitive Strategy in Singapore’, California Management Review, 47/2.

Reynolds, C. (2001) ‘A Conceptual Model of Global Business Growth in Southeast Asia’, Journal of the Asia Pacific Economy, 6(1): 76-98.

Sagar, P. & A. Singla (2004), ‘Trust and Corporate Social Responsibility: Lessons from Inda’, Journal of Communication Management, 8(3), pg. 282-290.

Stiglitz, J. and S. Yusuf (ed.) (2001) Rethinking the East Asia Miracle, Oxford and Washington: Oxford University Press and IBRD/World Bank.

Thompson, P. & Z. Zakaria (2004), ‘Corporate Social Responsibility Reporting in Malaysia – Progress and Prospects’, The Journal of Corporate Citizenship, pg. 125-136.

van Tulder, R., D. van den Berghe and A. Muller (2001) Erasmus (S)coreboard of Core Companies – The World’s Largest Firms and Internationalization, Rotterdam: Erasmus University.

van Tulder, R. (2005) Dossier: Rival CSR Regimes, www.ib-sm.org/national%20csr%20regimes%20dossier.pdf.

van Tulder, R. with A. van der Zwart (2006) International Business-Society Management, London and New York: Routledge.

UNCTAD (2005) World Investment Report 2005: Transnational Corporations and the Internationalization of R&D, New York and Geneva: United Nations.

World Bank (1993) The East Asian Miracle: Economic Growth and Public Policy – A World Bank Policy Research Report, Oxford: Oxford University Press.

World Bank (2005) World Development Indicators Database, http://devdata.worldbank.org/external/CPProfile.asp?CCODE=TCD&PTYPE=CP

World Economic Forum (2005) The Global Competitiveness Report 2005-2006, http://www.weforum.org/pdf/Global_Competitiveness_Reports/Reports/GCR_05_06/Business_%20Competitiveness_Index.pdf .

For more information and methodology of this research, please contact secretary@michaelputra.com.

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