mpeskin csr essay

8/2/2019 MPeskin CSR Essay

1/5

Corporate Social Responsibility in Russia:

A matter of tangible value

(An analysis of CSR in the case of Yota)

An essay for Global Citizenship and Corporate Social

Responsibility course (Module B)

By Maxim Peskin

MIB, Greenwich cohort

Hult International Business School

London, UK


2/5

While corporate social responsibility (CSR) has become a global imperative for every business, developing nations

frequently display patterns of CSR initiatives and strategies which are significantly different from those of the

Western world (Jamali & Neville, 2011). Given their abundance, variety and complexity, emerging economies'

approaches to CSR cannot always be effectively analysed or assessed from the solitary standpoint of established

business cultures, such as the Anglo-American or Rhineland ethical systems (United Nations, 2007: 2).

Instead, a locally focused and culturally and institutionally sensitive view is increasingly being called for; however,

moral relativism remains a crucial hazard associated with this perspective (Donaldson, 1996). On the other hand,

recent research suggests that businesses in developing economies are more willing to disclose their CSR activities

and provide reports conforming to emerging global standards than companies operating in developed countries

(Baskin, 2006, as cited in Visser, 2008). Although the sheer desire to report is obviously not a measure of actual

commitment to CSR, nor of the efficiency of CSR initiatives the companies undertake, this evidence apparently

implies that finding a balance between local considerations and global demands is quite feasible in practice.

The concept of balance is central to this essay. It pursues a double purpose: first, to provide some insight into what

the structure of this balance might be, specifically in the case of CSR in Russia; second, to employ these balanced

optics to analyse the actions of Yota, which provide a prominent example of CSR activities of a Russian business.

Tumultuous economic development of the 1990s and early 2000s prompted most Russian companies to favour

straightforward strategies like expansive growth or import substitution; arguably, this led to a certain degree of

disregard towards complex business intangibles like ethics or long-term partnerships. Other notable factors that

have shaped the business climate include a peculiar and deep-rooted moral system (for example, the notions of

responsibility and obligation in Russian business admittedly mirror those of the mafia discourse), outdated

business legislation and almost non-existent, completely corrupt enforcement (see the article by Shleifer and

Treisman (2005), the paper by Fey and Shekshnia (2010) and the guidelines by the Independent Directors

Association (2004) for starkly contrasting views of these issues). As a result, little attention has been paid to CSR

until very recently; even the basic ideas still remain largely misunderstood. Three misconceptions about CSR

appear to be most popular with the business public: it is regarded as an additional local or regional tax, as a variety

ofbribery or greasing certain officials or simply as a synonym for corporate philanthropy or sponsorship.


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The first two attitudes are typically engrained into the cultural perspective of Russian SMEs; these approaches are

often regarded by entrepreneurs as well as the society at large as a significant improvement over more candid

corruption practices of the previous decade (Paneyakh, 2008). More the point, the distinction between bribery and

sponsorship might become hazy in Russia, as evidenced by the Transneft case. In the first half of 2011, Transneft,

the state-owned oil transportation monopolist, transferred over 80 million US dollars, or roughly 80% of its total

CSR spending during that period, to an obscure charity directed by the head of the Department of Presidential

Affairs (a structural unit of the Administration of the President of Russia). Moreover, this information was not

disclosed by the company willingly but only following a direct ruling of the court; the standard practice before that,

at least for Transneft, was to only release the total sum spent on CSR this year (Gavshina, 2011). Transneft case is

by no means unique or exceptional for Russian business context, which suggests that to properly assess CSR

initiatives and practices of Russian companies one should inexorably dissect the general ethics of the companys

behaviour and also carefully examine whether a particular CSR initiative creates actual value for the society and/or

community. Both aspects are considered in detail in a model developed by Porter and Kramer (2006). The authors

of this model assert a strategic viewpoint focusing on interdependencies between the business and society and the

need for business to maintain a long-term dynamic perspective; this adds further value to the model in this

particular case since most Russian companies manifest a narrow, short-term, tactical outlook in their CSR activities,

even if they claim to be development-oriented and socially concerned (Gontmacher, 2004).

Nevertheless, the concept of corporate social responsibility as an integral part of business strategy, related both to

core values of the company and its patterns of execution, is gaining more and more followers among Russian

businesses. A notable case is presented by Yota, a regional wireless broadband network operator headquartered in

Saint Petersburg. Founded in 2008, the company became the nations first WiMax operator; in late 2011 the first

commercial LTE network in Russia was launched (Yota, 2011), strengthening Yotas position as core innovator in 4G

mobile communication technologies. Although the company does not provide detailed financial information, their

current customer base of 700,000 (Yota, 2012) suggests a rough estimate of 80 to 120 million US dollars in annual

revenue. As a minor player in burgeoning telecom market and a successful innovative start-up, highly dependent

on capabilities in both technology and design, Yota identifies its key stakeholders to be the state, competitors and

substitute service providers (i.e. mobile network and broadband operators), service users and members of the

general public who share the companys passion about combining modern design and technology.


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The relationship with the latter groups is crucial for Yota since they represent existing and prospective customers,

possible brand network agents or ambassadors, potential partners or employees who share primary values of the

company and last but not least a rich and diverse source of creative ideas. As a start-up, Yota also identifies that

managing complex breakthrough information and transforming it into knowledge is one of its core competencies.

The challenge therefore is to link the two in a strategic and meaningful way, forging a sustainable and valuable CSR

initiative. In 2010, similar reasoning prompted Yota to support the creation and become a principal partner of

Strelka Institute for Media, Architecture and Design an educational facility in Moscow which is dedicated to

developing new perspectives on critical issues in contemporary Russia (Strelka Institute, 2011a). This vision

translates into full- and part-time postgraduate programs as well as hosting numerous open lectures, debates and

other public events chiefly devoted to modern design, urban studies, technology development and social problems

of the digital age. Strelka Institute played a fundamental role in making public lectures fashionable in Moscow: a

trend that has by now evolved into a massive self-sustaining subculture, with thousands of young creative people

regularly attending lectures and workshops both related to their sphere of work and addressing some totally

different subject. Strelka Institute graduates have suggested a wide range of innovative solutions in such areas as

public space, design, energy efficiency and so on (Strelka Institute, 2011b); with the actual discourse in constant

flux, this years programs are focused on urban culture, regional development, sensory strategies for the city, etc.

Yota is indeed committed to its partnership with Strelka Institute: not only is the project endorsed fully by the

corporate board, but also the founder of Yota, Mr Adonyev, is a member of Strelka Institutes board of trustees

(steering committee). This strategic relationship is truly mutual: another founding member of Strelka Institute (and

also a trustee), the editor-in-chief ofRussias leading entertainment magazine Afisha, Mr Oskolkov-Tsentsiper,

has been appointed VP Strategic Communication and Brand Development of Yota in 2011 (Strelka Institute, 2012).

The intensity and fruitfulness of interaction between Yota and Strelka Institute is probably not unprecedented

even in the context of modern Russian business, let alone on the global CSR stage. However, this case remains a

rare example of a sustainable partnership between business and society that seeks integration and value not just

responsibility and atonement. By combining competencies and values with a pragmatic strategic approach, both

parties have gained substantial tangible benefits. It can be concluded that Yotas social strategy is a clear indication

that CSR can be implemented into corporate strategy: a case worth studying further, and in much bigger detail.


5/5

References:

Baskin, J. (2006) Corporate Responsibility in Emerging Markets.Journal of Corporate Citizenship 24 (1): 29-47

Donaldson, T. (1996) Values in Tension: Ethics Away From Home. Harvard Business Review74 (5): 48-62

Fey, C. & Shekshnia, S. (2010) Ten Key Commandments for Doing Business in Russia [online]

http://www.sseru.org/materials/articles/key%20commandments%2024.pdf[accessed 19 January 2012]

Gavshina, O. (2011) [No secrets] [online] [Vedomosti] 27 July 2011

http://www.vedomosti.ru/newspaper/article/264577/nikakih_sekretov [accessed 22 January 2012]Gontmacher, E. (2004) [Social responsibility of business] [online]

[Strategy of Russia] 1 (3)

http://sr.fondedin.ru/new/fullnews_arch_to.php?subaction=showfull&id=1078958256&archive=1078960200&star

t_from=&ucat=14& [accessed 22 January 2012]

Independent Directors Association and The Russian Institute of Directors (2004) Business Ethics: Guidelines for

Russian Companies [online] http://www.ita.doc.gov/goodgovernance/adobe/IDARIDBusEthicsGuidelinesEng.pdf

[accessed 19 January 2012]

Jamali, D. & Neville, B. (2011) Convergence Versus Divergence of CSR in Developing Countries: An Embedded

Multi-layered Institutional Lens.Journal of Business Ethics 102 (4): 599-621

Paneyakh, E. (2008) [The Rules of the Game for a Russian

Entrepreneur]. KoLibri

Porter, M. & Kramer, M. (2006) Strategy and Society. Harvard Business Review84(12): 56-68Shleifer, A. & Treisman, D. (2005) A Normal Country: Russia After Communism.Journal of Economic Perspectives

19(1): 151-174

Strelka Institute for Media, Architecture and Design (2011a) Vision [online]

http://strelkainstitute.com/en/#url=/en/idea [accessed 22 January 2012]

Strelka Institute for Media, Architecture and Design (2011b)Alumni[online]

http://strelkainstitute.com/en/#url=/en/alumni [accessed 23 January 2012]

Strelka Institute for Media, Architecture and Design (2012) Trustees [online]

http://strelkainstitute.com/en/#url=/en/idea/steering-committee [accessed 23 January 2012]

United Nations (2007) CSR and Developing Countries: What Scope for Government Action? [online] Sustainable

Development Innovation Briefs 1http://www.un.org/esa/sustdev/publications/innovationbriefs/no1.pdf[accessed

19 January 2012]

Visser, W. (2008) Corporate Social Responsibility in Developing Countries. In: Crane, A., McWilliams, A., Matten, D.,Moon, J. & Siegel, D. (eds.) The Oxford Handbook of Corporate Social Responsibility. Oxford University Press, 473-

499

Yota (2011) Yota LTE[Yota Launched the First LTE Network in Russia] [online]

http://www.yota.ru/ru/info/news/details/?ID=363361 [accessed 22 January 2012]

Yota (2012) [About us] [online] http://www.yota.ru/ru/info/main/ [accessed 22 January 2012]
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mpeskin csr essay

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