In the wake of advancing globalization and the evolving dynamics of international markets, most multinational enterprises (MNEs) are intensifying their commitment to corporate social responsibility (CSR). By leveraging their technological innovation capabilities, unique business strengths, and financial resources, these MNEs address pressing social and environmental challenges. Engaging proactively in CSR not only enhances their brand image, fostering consumer loyalty, but also cultivates a robust internal corporate culture. To actualize these objectives and ensure the effective implementation of CSR initiatives, international human resource management stands as a pivotal force. It provides crucial guidance and oversight in the design and execution of CSR activities for MNEs.
Main Drivers
The pursuit of a favorable brand image is a primary motivator for MNEs to engage in CSR activities. For MNEs with innovative technologies or substantial capital, while their products and services may already be recognized, the public holds greater expectations regarding their commitment to corporate social responsibility. In today’s rapidly evolving digital era, consumers have broader access to corporate information, increasingly factoring in a company’s CSR endeavors when evaluating products. Brands that position themselves on a CSR platform and weave CSR strategies into their business fabric often realize enhanced consumer loyalty (Du et al., 2007). This is particularly evident in the FMCG industry where consumers weigh CSR considerations significantly during purchase decisions. Companies actively participating in CSR initiatives, such as those in the FMCG sector, often enjoy heightened consumer trust and preference (Das, 2022). Hence, it’s strategic for MNEs to anchor their brand strategies in CSR to resonate more profoundly with the public.
Moreover, fostering an inclusive internal corporate culture serves as another catalyst for MNEs’ CSR involvement. Rooted in the social identity theory, individuals derive satisfaction from affiliating with organizations that maintain stellar reputations (Tajfel & Turner, 1986). By aligning with such organizations, employees seek to bolster their self-worth. Empirical studies indicate that companies that proactively uphold their social responsibilities often instill a profound sense of belonging and pride among their workforce (Sen et al., 2006). Given that MNEs operate across diverse geographies, their CSR initiatives play a pivotal role in bridging cultural divides, fostering a universally resonant ethos of mutual respect (Song, 2022). Take Microsoft, for instance. Its top brass champions a CSR agenda that emphasizes the symbiosis of diverse backgrounds and perspectives. This entails recognizing employees’ efforts, fostering a culture of respect and innovation, and spearheading global employee exchange programs. Such endeavors have culminated in a universally acknowledged Microsoft corporate culture and set of values (Isac, Dobrin, Raphalalani, & Sonko, 2021). This inclusive ethos, shaped by robust CSR practices, has positioned Microsoft as a revered multinational entity. Employees, recognizing their organization’s unwavering commitment to social responsibility, tend to be more engaged, willingly invest additional effort, and are predisposed to contribute toward elevating organizational performance.
International Human Resource Management Involvement
IHRM plays a pivotal role in executing the CSR activities of multinational enterprises (MNEs). By integrating CSR into the core strategies and daily operations of an organization, IHRM can proactively align the needs of both businesses and communities (Horak & Paik, 2022). IHRM practices, being specifically tailored to serve such global contexts, provide MNEs the latitude to pursue Sustainable Development Goals (SDGs) that emphasize workplace security, family social protection, and personal development (Song, 2022). Concrete implementations might encompass facilities for employees and their families, continuous educational and training opportunities, expatriate exchanges to bolster cultural integration, and community welfare initiatives.
Furthermore, IHRM can foster cross-sector collaborations. An illustrative example might be the HR department partnering with local non-profit organizations and academic institutions, thereby facilitating internships for students, enhancing skill acquisition, and reinforcing company-community ties.
In the realm of promoting CSR, IHRM champions employee-centric practices, emphasizing active participation in decision-making processes and fostering freedom of association and collective bargaining (Song, 2022). This can manifest in a myriad of ways, from encouraging employees to engage in company governance to tailoring CSR strategies to local contexts. By addressing critical challenges like turnover rates, recruitment costs, and talent acquisition across diverse geographies, IHRM ensures alignment with global objectives and local nuances.
Oversight and Audits:
A critical facet of IHRM’s purview lies in its oversight and audit responsibilities. MNEs often rely on internal teams for monitoring adherence to codes of conduct (Horak & Paik, 2022). IHRM’s role, therefore, is to assess the evolving CSR needs of stakeholders, ensuring compliance with employee-centric laws and regulations across various countries. Regular audits encompassing wages, benefits, labor protections, and social insurance schemes of branch companies become imperative (Kemper et al., 2018). The aim is to perpetually align the company’s CSR activities with stakeholder expectations, contributing to the sustainability of CSR initiatives.
Challenges and Future Directions:
While the significance of IHRM is undeniable, the evolving landscape presents challenges. A salient issue is the variability of CSR definitions across countries. The U.S., for instance, leans towards an institutional framework, Europe mandates formalized rules, while many developing nations are still formulating their stance (Song, 2022; Maier & Gilbert, 2022). Navigating these variances, especially when considering the rights and ethical considerations of MNE employees in global value chains, poses a formidable challenge. Furthermore, while IHRM roles have diversified into areas like Electronic Data Interchange (EDI) and Green HRM, robust support from MNEs is often lacking (Song, 2022; Rao-Nicholson & Liou, 2022). This underscores the need for IHRM to further evolve, ensuring ethical corporate behaviors across countries and linking CSR initiatives to a broader spectrum of SDGs.
References
- Chakraborty, M., & Das, S. K. (2022). Impact of CSR in Brand Equity as a Marketing Tool: A Study on Registered Medium Enterprises of Consumer Durables in Kolkata, West Bengal. In Finance, Law, and the Crisis of COVID-19 (pp. 77-87). Springer, Cham.
- Du, S., Bhattacharya, C. B., & Sen, S. (2007). Reaping relational rewards from corporate social responsibility: The role of competitive positioning. International journal of research in marketing, 24(3), 224-241.
- Edwards, T., Almond, P., Murray, G., & Tregaskis, O. (2022). International human resource management in multinational companies: Global norm making within strategic action fields. Human Resource Management Journal, 32(3), 683-697.
- Isac, N., Dobrin, C., Raphalalani, L. P., & Sonko, M. (2021). Does organizational culture influence job satisfaction? A comparative analysis of two multinational companies. Revista de Management Comparat International, 22(2), 138-157.
- Kostova, T., Nell, P. C., & Hoenen, A. K. (2018). Understanding agency problems in headquarters-subsidiary relationships in multinational corporations: A contextualized model. Journal of Management, 44(7), 2611-2637.
- Learn.https://www.learn.ed.ac.uk/ultra/courses/_100105_1/cl/outline
- Lee, J. M., Paik, Y., Horak, S., & Yang, I. (2022). Turning a liability into an asset of foreignness: Managing informal networks in Korea. Business Horizons, 65(3), 351-364.
- Maier, A. L., & Gilbert, D. U. (2022). Deliberating with the Autocrats? A Case Study on the Limitations and Potential of Political CSR in a Non-Democratic Context. Journal of Business Ethics, 1-22.
- Rao-Nicholson, R., & Liou, R. S. (2022). The Cultural Mosaic of Corporate Social Responsibility: MNEs’ Role in Attaining Sustainable Development Goals. The New Frontiers of International Business, 345-359.
- Sen, S., Bhattacharya, C. B., & Korschun, D. (2006). The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing science, 34(2), 158-166.
- Song, J. W. (2022a). Week 3: Global staffing and International assignment [PowerPSoint slides]. Blackboard Learn. https://www.learn.ed.ac.uk/ultra/courses/_100105_1/cl/outline
- Song, J. W. (2022b). Culture and International HRM/ Cross-culture management [PowerPoint slides]. Blackboard Learn. https://www.learn.ed.ac.uk/ultra/courses/_100105_1/cl/outline
- Song, J. W. (2022c). Week 5:HRM practice transfer and implementation in MNEs [PowerPoint slides]. Blackboard
- Turner, J. C., & Oakes, P. J. (1986). The significance of the social identity concept for social psychology with reference to individualism, interactionism and social influence. British Journal of Social Psychology, 25(3), 237-252.