Imperial College London

CSR: A moral obligation or source of competitive advantage to the Multinational Corporation?

Multinational firms are known to operate largely in accordance to economic principles which, apart from non-profit organisations, primarily seeks the maximisation of profit.
Increasingly, firms, especially Multinational Corporations are being pressured by stakeholders and the society in general to exhibit more responsibility, accountability and transparency in their activities.
The decision to heed or ignore these calls may have implications for the firm in terms of stakeholder satisfaction, consumer perception of the brand/ firm, employee motivation and government legislation; all factors that can affect a firms� competitive advantage.
Firms that have come under attack in recent years for their perceived poor corporate social responsibility policies include Coca-Cola over the alleged use of pesticide residue in its soft drinks manufacturing in India and Nestle for its promotion of infant formula to gullible women in Africa, leading to a long-running call for the boycott of all Nestle products.
There are also other firms that have been condemned in the past and have revised their policies to become more ethically-minded such as Nike in the 1990s over the sweatshop conditions of its overseas suppliers� facilities.
It is both interesting and useful to gain a deeper insight into the role of ethics in today�s MNCs and what implications this may have on their strategy formulation.