The state has instrumental reasons to promote CSR policies, which could be conducive to competing with other countries for foreign direct investment, enhancing the domestic companies’ international competitiveness, as well as maintaining social stability. Depending on strength of pressure that the companies were under, a nature of relations between business and the state has been changing from period to period.
In a new SIEMS research report "The Political dimension of doing good: managing the state through CSR in Russia and China" you will find management strategies for relations of Russian and Chinese companies with the state through CSR. In this brief review we will give key statements, analytical results and SIEMS experts’ conclusions.
The political dimension of this process in China and Russia is particularly important. States in China and Russia control crucial resources for the business, used to intervene in the business operation and maintain a regulatory system full of uncertainty. In this context CSR could be a useful tool for companies to access political resources and reduce political risks.
Below we give different ways of using CSR to meet demands on managing relations with the state, and show how CSR active Chinese and Russian companies gain state resources through CSR.
A typology of CSR-based state management strategies
A systematic content analysis of a majority of publicly available CSR-related reports from China and Russia as well as all Chinese and Russian reports issued by foreign Multinational Corporations (MNCs) in the 2010 Fortune Global 500 was conducted.
Foreign MNCs in this report come from six OECD (Organization for Economic Cooperation and Development) countries (France, Germany, Japan, South Korea, the UK and the US), which all rank similarly high in their income and their human development indices in contrast to China and Russia.
Two bases were also used to analyze the interaction of business and the state. We based our first framework on our observation that when companies interact with the state through CSR, they either limit themselves within or try to break through the boundary of the formal policy arrangement and the public management capacity of the state. The second basis allows analyzing organization strategies.
Through a content analysis, we identified four types of CSR-based state management strategies. They are state policy exploration, state policy exploitation, state capacity exploration and state capacity exploitation. Each type of interaction had several components. A detailed table with analysis results is given in a complete version of the report.
How political contexts influence companies’ state management strategies
State policy exploration. OECD MNCs are significantly more likely to explore policy boundaries of social-environmental issues than Chinese companies, whereas Russian companies explore policy boundaries about as much as OECD MNCs do.
Russian companies actively exercise this strategy as well. RAO UES of Russia, SUEK, Rosatom and some other energy companies are involved in the environmental legislation of the industry.
The state policy exploration is alien to most CSR active Chinese companies, although they use political efforts to assist macroeconomic progress.
State policy exploitation. Russian companies and Chinese SOEs are far more actively appropriating existing policy domains that contain social-environmental implications than OECD MNCs. Russian companies and Chinese SOEs hold more extensive discussions about their businesses or project relationships with the state. Policy exploitation seems to be a much more popular state interaction strategy for Russian companies than for OECD MNCs, regardless of their ownership type.
State capacity exploration. OECD MNCs are far more active than Chinese and Russian companies in utilizing their business or technological expertise to develop innovative CSR projects. Companies adopting this strategy offer new solutions through technological or mechanism innovation for important public policy fields, such as education or public health.
State capacity exploitation. Compared to OECD MNCs, Chinese and Russian companies operate in a context where the state has extensive control over domestic economic life and the level of uncertainty in the implementation and enforcement of laws is comparatively high. These companies often need to secure business survival or reduce regulatory uncertainty by accessing tangible or intangible state resources.
The research gives a detailed description of all management strategies for relations between business and the state through CSR and shows that a political context can influence what is considered a field of social and environmental responsiveness for companies.
Read the full text of SIEMS research report here.