University of Vaasa - Vaasan yliopisto

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The role of CSR in the relationship between business and development is to link
these two issues: CSR may be described as a bridge connecting the arenas of
business and development. CSR is proposed as benefiting both companies and the
societies in which they operate and it is recommended as a positive factor to both the
North and the South, contributing simultaneously to universal human rights, equity,
environmental protection and economic growth (Blowfield & Frynas 2005).
Nevertheless it is important not to forget that even though the presence or absence of
international companies in a country can affect its development, such companies
engage with developing economies for commercial reasons, not for developmental
ones. “Although there may be areas of overlap between development and business
goals, it is important to understand where there are gaps and contradictions.”
(Blowfield 2005: 518). For this reason important long-terms tests for CSR are (I)
whether it can help companies redefine the meaning of good business practice in the
interests of the poor and marginalized; and (II) whether it helps development
practitioners manage the possibilities and consequences of global capitalism for poor
countries more effectively.
From the corporate perspective, over the past decade CSR in developing countries
has come to encompass not only what companies do with their profits, but also how
they make them. In other words, with respect to development promotion, CSR has
moved from a defensive to a proactive approach. At a minimum, in fact, effective
CSR calls for a defensive do not harm approach, or, in other words, is aimed at
protecting existing market and social value by calling for compliance with
regulations and voluntary norms, principles and codes, as well as adopting a risk
management mindset focused on controlling risks, negative impacts, liabilities and
costs that may arise from company’s activities. More ambitiously, and where leading
companies are increasingly focusing attention, CSR aims to do positive good through
a proactive approach, creating new value for the company and for the society. This
may be achieved by harnessing the resources, competencies and networks of the
company’s core business operations or through strategic social investments, that aim
to create direct or indirect value for the business, while also directly addressing
economic, social or environmental challenges (UNIDO 2007).
The UNIDO (2007) address four strategies that firms may pursue in order to
contribute to development (see Figure 1.):
i. Compliance. In addition to ensuring compliance with
national laws, a growing number of companies are signing
up to voluntary international or sector-specific principles,
norms and standards.
ii. Control of risks, liabilities and negative impacts. Going
beyond compliance, companies can also implement
systems to ensure that they identify, manage, and where
necessary ameliorate, social and environmental risks, in
addition to more familiar market, financial, operational
and political risks.
iii. Charity and community investment. Moving from value
protection to value creation, companies can create social