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CSR and Development Panel

Ian Jones

Project Leader and Research AssociateCentre for Business Research

University of Cambridge

Visiting Academic Fellow, Henley Business School

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A Social Capital approach to MNEs to developing country engagement

• Social capital in developing countries– ‘features of social organisation, such as trust, norms and

networks, that can improve the efficiency of society by facilitating co-ordinated actions.’ Robert Putnam (1993)

– Social relationships are key to facilitating successful development. Michael Woodcock (2000)

• Typology of external relationships– Scope – Person to person, vertical, institutional– Structure (Form): Networks, boundary crossing– Cognitive(Form): Cognitive: Competence/Goodwill

• Studied MNE best practice corporate citizenship projects

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High Social and Environmental Impact Projects

Youth Business International (Diageo)International partnership programme for funding and mentoring young entrepreneurs

Anglo-Zimele (Anglo American)Funding, mentoring and sourcing from Black Economic Empowerment SMEs

Love –Life (Anglo American)Collaborative programme providing HIV/AIDS treatment for employees & communities

Lymphatic Filariasis LF (GSK)World wide programme to eliminate third world disease with albendazole

Community phone shops (Vodafone)Supplying subsidised secure converted container mobile phone shops in poor communities

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How MNE projects can have high social and environmental impact

• Create an extensive, diverse, and lasting institutional network that delivers

• Strengthens local communities (relationships and learning)

• Relevant to company, relevant to community. • Meets needs in ways that draw on the company and

community interests• MNE and other partnerships contribute their distinctive

expertise to ADD VALUE

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These are the few ‘flagship’ projects

• Typically a solvable problem seeking a donor, or arising from a business dilemma, not part of a programme

• Receive the same quality professional management as a normal investment project

• Limited to health, employment, generation, and entrepreneurship?

• International transfer of learning• Legacy network and learning should inspire new projects

or even ‘bottom of pyramid’ products/services• Educate politicians to define impactful ‘licence to

operate’ demands

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Most CSR Projects fail to make a lasting and sustainable impact

• Tommorrow’s People (Diageo)– UK project helping unemployed into work

• Earthwatch (Diageo)– Employees volunteer for conservation research

• Projeto Bartender (Diageo)– Trains young unemployed as bartenders

• Opportunity international (Vodafone)– Developing software and equipping micro-finance loan officers with Personal Digital

Assistants –Providing software development

• TSF (Vodafone)– Providing financial support after 2004 Tsunami

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The majority weak cases

• Unambitious projects, often donor looking for a problem• Too trivial to get into the ‘blood stream’ of the company• Either unrelated philanthropy or surrogate commercial

acitivities – strategically irrelevant or unimpressive• For an activity that is usually overseen by a board

committee, the management is remarkably inconsistent• Glossy social reports including anything remotely

relevant adds to the impression of a cynical, cosmetic and uncommitted policy

• No legacy of network or learning to transform community or management when philanthropy is exhausted

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Under what conditions can MNEs contribute to sustainable development?

• MNE’s Strategic appreciation of power of external relationships and joint value added creation

• MNEs, NGOs, Governments learning how to work together, Overcome climate of suspicion and mistrust.

• Government to setting more stringent ‘license to operate’ conditions, but guided by MNEs

• Philanthropic pump priming leading to ‘shared’ commercial projects

• A major environmental disaster – a wake up call• Higher auditing standards taking a more critical view of

information provided by management• An impact metric to convince investment community