CSR and pro-poor development: What is the future?

Satnam Kaur Nanda-Jørgensen

Student thesis: Master thesis

Abstract

Globalisation has led to corporations working in developing countries. With a rise in the gap between the rich and the poor, corporations are increasingly being criticized for not making a difference. They are pressured to legitimise their business in developing countries. CSR has emerged as “the best way” for corporations to engage in activities, which can benefit developing countries. However, this project states, that CSR has a lot of shortcomings, in relation to the development debate, and in particular, its ability to address pro-poor development; something which is much needed to prevent the rise in future inequalities between rich and poor. Therefore, this project argues that there is a need to alter the concept of CSR, in order for it to address pro-poor development. In this project, pro-poor development refers to activities and/or strategies, where the aim is to create development, that is targeted towards and beneficial to the poor. The focus is on Sen’s capability approach and the reduction of multidimensional poverty, which encompasses economical, political, protective, socio-cultural, human, gender and environmental poverty dimensions. The different limitations identified of CSR concerning the development debate are: corporations’ role in development, developing country’s context, impact assessment, power and participation, and CSR and poverty. After reviewing the relevance of the different limitations, in relation to the project’s aim to alter CSR and address pro-poor development, the limitations of power and participation have been chosen as the two most relevant and essential limitations to structure the analysis. The limitation of the corporation’s role in development is addressed, via the level of analysis, which is the relationship between the corporation and the poor. Moreover, power and participation are analysed and linked throughout the project to capabilities and their ability to reduce multidimensional poverty, thus addressing the limitations of CSR and poverty. Developing country’s context is a given for the creation of the new concept. Lastly, impact assessment is the only limitation that is not addressed, neither implicitly or explicitly, given that it does not correlate with the project’s aim and focus. Power and participation are put forward, as a manner by which, the corporation can address the relationship between itself and the poor, and truly create CSR activities that address pro-poor development. Power and participation are interconnected and rely on each other for successful propoor development. The underlying results in connection with power are, that the corporation needs to simultaneously adapt a middle-ground view of power, as well as a normative stakeholder theory perspective, to enable pro-poor development. Moreover, economic empowerment and an empowering approach are important for the corporation to engage in, in order to reduce different dimensions of poverty, via an enhancement of the poor’s capabilities. The results for participation refer to the corporation truly listening to the poor’s needs and having them involved in the whole CSR process, rather than merely mobilizing them. Hence, participation as an end is mostly focused upon. Different participation types like direct, representational, information-based and citizen control are important for the corporation to focus upon. This ensures a real bottom-up approach, where the poor are included and participate. This also gives them a certain degree of power, that can result in the improvement of their capabilities, and thus the reduction of different dimensions of poverty, like political, socio-cultural and economical. This is linked to the need to create local ownership. Moreover, various tools like accessible tools, the participatory methods: key characteristics and tools model and the integrated participatory action learning process model should be used by the corporation, when engaging in participation. It is argued that the corporation lacks expertise in the development field, which necessitates engaging in a partnership with an experienced organisation. All of these results point to the creation of a new concept that can better address pro-poor development. After careful discussion of the different components of the current concept of CSR in relation to pro-poor development and the findings, it is argued that the component of Corporate (C) should remain, but that Social (S) and Responsibility (R) should respectively be replaced by Poverty (P) and Accountability (A) to better address pro-poor development. Consequently, the new concept is called CPA, Corporate Poverty Accountability. This new concept can better address pro-poor development by the means of the chosen elements of power and participation. It is assumed that CPA can provide economic, financial and reputational benefits to the corporation, which motivates the corporation to engage in CPA and pro-poor development. The new concept of CPA can result in the enhancement of the poor’s capabilities that lead to the reduction of multidimensional poverty and hence a decrease in the gap between rich and poor. The concept of CPA is embedded in sustainability and an understanding of the importance of context. It has a double focus on poverty, looking at preventive methods to limit people falling into poverty, and reactive methods to get people out of poverty. This ensures the right mindset to undertake CPA in relations to pro-poor development. Additionally, the focus should be on the process of CPA, but also on its outcomes and impact. CPA should be used as a basis for a new understanding and perspective of CSR in developing countries that is more effective and useful for both society and the corporation.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2009
Number of pages92