Corporate Social Responsibility (Dissertation Introduction Sample)

Whether there should be mandatory disclosure of Corporate Social Responsibility in Multinational Enterprises in developing countries like China
1.0. Introduction 3000
1.1 Research Background (Research Area)
Corporate social responsibility (CSR) is increasing popularity with the emergence of globalization. (Liangrong, 2009) Globalization has led to companies competing globally, hence the name, Multinational Enterprises (MNEs) (Mallin, 2009). These companies were darling to the western countries, but the focus has since shifted to developing countries such as China and the African continent. The multinational companies are focusing on these companies because of the numbers in such economies and the promising economy. China is of the nations regarded to have the highest population, attracting hundreds of multinational companies (Jingchen, 2014). China opened opportunities to more Multinational Enterprises in 2011, after it successfully negotiated its way into World Trade organization for over 13 years (Dara, 2004).
World Trade Organization agreement with China in 2011 and the preceding reforms in 1970’s led to increased economic growth rate of 9%. The world corporate social responsibility was not in existence in the developing countries, but the corporate social responsibility work was taking course (Liangrong, 2009). A good example is in China where the term was introduced by the Multinational Enterprises, even though the actual work was taking place even before its introduction. China had introduced a couple of laws and guidelines that would lead all the Multinational Enterprises into doing extra activities, initiatives and programs besides their plan (Dara, 2004).
Some of the laws are Environmental Protection Law of 1989, Trade Union Law of 1992, Environmental Protection law of 1994, Consumer Protection Law of 1994, and Labor law of 1995. These laws imposed guidelines to companies, for the general good of the environment and the workers (Dara, 2004).
Immediately after China signing an agreement with WTO, CSR becomes the theme of the day, both in the corporate and academic world. Scholars did more research and made more publications regarding the subject area of CSR (Jingchen, 2014). Joining WTO meant that China would have more clear and transparent rules, laws, and regulations on how to conduct business. That is the result why they developed internal rules and laws regarding the provinces in their country. The provinces observe different rules, because they are under different management and operate differently from each other. All multinational coming to operate in any of the provinces had to observe these laws if at all they were to operate without any disturbances (Mallin, 2009).
A while after the signing of an agreement between China and WTO, the general public, understood what CSR was all about (Dara, 2004). In 2006, the government had no choice other than to develop a framework that the increased MNEs in the country were to abide with. The government introduced the framework, "CSR Guidelines for foreign-invested Companies" which was a directive covering three aspects which include: Compliance with regulations and laws; protection of the environment; and protection of legal rights.
1.2 Research Motivation
World Bank associates CSR with potential benefits to the developing countries is such as China, something which led them to investigate whether CSR reporting by organizations would be important to governments of such countries (Jingchen, 2014). In the early 1900’s most organizations did not bother to give an explanation on the no financial aspect when reporting. The scenario can be best explained by evolution that took place in the early 1990’s. It brought in systems that would show the consumers what an organization had done from them apart from accumulating wealth from them. The aim of introducing such systems was to protect the consumers from exploitation, eradicating corruption and for the general safety of the public (Dara, 2004). This revolution was a result of NGO’s, consumers, Investors, government, communities and the competition resultant from the companies themselves (Liangrong, 2009).
However, there are businesses that do not adhere to these systems. The report by World Bank indicates that their countries which have made stringent rules regarding the CSR. Some of these governments require the organizations to present non-financial report (CSR) when handing in the financial report. The information is helpful to the government as well as to the general public in making decisions. The non-financial report is necessary because it is considered in performance of businesses in this competitive edge, especially in the developing countries. There are other governments which are doing this to experiment to know if it works for them (Dara, 2004).
Report by World Bank indicates that, there is a percentage increase in the non-financial reporting over the years. The results from the research indicate that, there were 45% of the Multinational Enterprises reported on non-financial performance as compared to 35-% and 13% in 1999 and 1993 respectively. The percentages are indicators that there is a growing concern on the importance or the role the report has to the public, investors as well as to the government (Dara, 2004).
The research motivation focus is on the questions, whether the current CSR reporting systems are having any impact, and if so, should they be made compulsory? The impact that is under question is whether the customers get information which inform their decisions on what and where to buy, whether they investor gets information which informs their decisions on where to invest, whether the government on the policies to make, and whether it helps other organizations in making proper decisions. The research is meant to find out answers to all these questions, and if the results have any positive correlation with the questions (Liangrong, 2009; Mallin, 2009).
There are organizations which do not indicate their non-financial performance; this would be the best basis for determining if they do so because of an existing relationship, or if they do so out of a will. The report from the findings will best explain if the information is essential for governments, consumers, firms, investors and other entities in making informed decisions. They will indicate whether to make it mandatory for the organizations to report or to leave it open for voluntary publishing (Jingchen, 2014).
1.3 Research Objective & Question
The objectives of this research are threefold. The first-research objective is to investigate effects that corporate social responsibility has to the government, firm, consumers, and investors. The second is to investigate the differences between corporate social responsibilities in developed countries with the developing ones. The last objective is to establish if there is any need to disclose corporate social responsibility to the public in the developing countries. The objectives above are the ones informing the research question, "Whether there should be mandatory disclosure of Corporate Social Responsibility in Multinational Enterprises in developing countries like China.”
The effects that the MNEs have, if any, they are important in helping the key stakeholders to make decisions. Some of the key stakeholders are the government, the consumers, the investors, as well as the firm itself. The government will be in a position to know what kind of policies to make in order to make. The government may decide to be stringent to the MNEs entry into the market, or operational policies based on the results of corporate social responsibility. The consumers will make better judgment whether to buy the products of the MNE or that of a different company. The investors will get better idea of whether to invest in the company or another, based on the results, and the forecast. The last party is the MNE, is to check whether it will be able to lead to a better performance in case that they fear competition or they will have improved reputation out of it.
The differences between MNEs in the developed countries and developing countries will help to bridge the gap in the developing countries. The above will apply, if only if the differences are found to have an impact in either of the economies.
The need for disclosure of corporate social responsibility in developing countries such as China should be identified. Disclosure can be left open or made compulsory. However, before deciding on either of the two, is an explanation for the same. Will disclosure be helpful to the third parties? If it will be helpful to the third parties, does it have a negative effect to the organization ion? Are the organizations giving the corporate social report without being forced to do so? Will forcing them to do so be the solution? That is what the third-research objective seeks to answer.
China is categorised among the fastest economic growth rate, since the time it became member country to WTO. Its population is another factor that has led to high economic growth rate. The high numbers of a population in this country have led to cheap labor.
The study of China will be underscored, as a perfect statistic for other developing countries.The other developing countries face the same challenges, and so, most of the findings in this research will be able to cut across in most of the developing countries. In general, the study of the effects of the effects CSR has to the stakeholders in developing countries, and the differences of the CSR in developed and developing countries will help in attaining the third objective. The third of objective of which is to determine whether CSR reporting should be made compulsory.
1.4 Research methodology
1.4.1 Hypothesis