SOCIAL RESPONSIBILITY OF MULTINATIONALS. EVIDENCE FROM ROMANIA. Carmen Nistor, PhD. Student, Alexandru Ioan Cuza University of Iasi

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1 SOCIAL RESPONSIBILITY OF MULTINATIONALS. EVIDENCE FROM ROMANIA Carmen Nistor, PhD. Student, Alexandru Ioan Cuza University of Iasi Abstract: With the rise of multinationals, corporate social responsibility (CSR) has become a new business philosophy of companies that aims to satisfy, besides customers in order to maximize their profits, other stakeholders involved. The purpose of this attitude consists in minimizing the negative impact of multinationals on the environment or society, in general. Taking into consideration the large scale adoption of this concept, our study is focused on analyzing, both theoretical and practical, the existent CSR practices in Romania. On one hand, we reviewed the national literature studies in order to compare the Romanian approach of CSR with those abroad, and, on the other hand, we analyzed the CSR reports issued by multinationals operating in Romania. The results of our study indicate a growth interest on CSR in Romanian, both from the literature and from the multinationals as well. Keywords: corporate social responsibility, multinationals company, stakeholders, social contributions, CSR practices Introduction Nowadays a company's image, culture and values have become fundamental. The involvement and support of social areas is necessary to ensure commercial success because along with that comes the respect of the community to the companies. To achieve these objectives, companies provide donations and sponsorships and are involved in corporate volunteering, foundations and established extensive marketing campaigns, all falling within the scope of social responsibilities. Most companies, mostly multinational, recognize that with the possible profits of the business, they should distribute some to the community in order to maintain the continuity of sustainable development and increase positive image among consumers. This concept is known as corporate social responsibility (CSR) that has been adopted since the 70 by US multinational. 1. Review of the international CSR literature The basis for understanding the meaning of corporate social responsibility lays in the study of Steiner (1972) which considers that at any time, in any society there is a set of generally accepted relationships, obligations and duties between the major institutions and the people Philosophers and political theorists have called this set of common understandings the social contract (Steiner, 1972). Later, Davis et. all. (1984) note that in the United States the trend since the 1960s has been toward more social involvement by business. The public expects business to be part of the community and to act responsibly therein. This trend does not change the basic economic mission of business, because society still expects business to provide economic goods and services efficiently (Davis et. all., 1984). Furthermore, Robin & Reidenbach (1987) have reviewed the concepts of social responsibility and business ethics, dividing the exiting studies in: general conceptual presentations (Baumhart 1961; Brenner and Molander 1977; Cavanaugh, Moberg, and Velazquez 1981; Clasen 1967; Gross and Verma 1977; Lavidge 1970; McMahon 1968; Newstrom and Rush 1975; Sturdivant and Cocanougher 1973); special-topic conceptual 90

2 discussions including such areas as purchasing (Cummings 1979; Davis, Rudelius, and Buchholz 1979; Mayer 1970), field sales personnel (e.g., Dubinsky, Berkowitz, and Rudelius 1980), marketing research (e.g., Blankenship 1964; Tybout and Zaltman 1974), new product development (e.g., Varble 1972), and international marketing (e.g., Kaikati and Label 1980); model- or theory-based conceptual pre.sentations (Ferrell and Gresham 1985; Hunt and Vitell 1986; Laczniak 1983); and surveybased empirical investigations (Chonko and Hunt 1985; Crawford 1970; Ferrell and Weaver 1978; Ferrell, Zey-Ferrell, and Krugman 1983; Hunt, Chonko, and Wilcox 1984; Krugman and Ferrell 1981; Laczniak, Lusch, and Strang 1981; Ricklefs 1983; Zey-Ferrell and Ferrell 1982; Zey-Ferrell, Weaver, and Ferrell 1979). 2. Approaches in the Romanian literature on the corporate social responsibility concept The existing Romanian articles focused on different aspects of corporate social responsibility. Korka (2004) discusses the CSR experience in Romania, especially on the motives that led to a difficult development of this concept. Tiriteu et. all. (1998) notice the impact of multinational on the development of CSR in Romania. Nemoianu (2010) links corporate social responsibility with the misunderstanding by Romanian managers of existing links between ethics and success. Bibu et. all. (2010) have identified several opinions of companies managers in Romania regarding CSR. The results of their study show that the importance of CSR is given by the fact that voluntary involvement in social situations brings the company an important benefit of its visibility in the community. Simultaneously, 90% of the respondents from their study revealed that they want to become partners of social communities by engaging in CSR. Non-involvement in social activities or social irresponsibility will have negative consequences primarily on the company's image but also on other like credibility, human resources and opportunities business. Another result of the study shows that 84% of managers surveyed believe that adopting CSR programs by more and more companies can help economic and social revitalization of Romania. Being socially responsible to all audiences with whom they come into contact, both internally and externally (community, employees, customers and partners etc.) companies will demonstrate that share with them the desire for integration into a balanced community. Ciupercă (2011) analyzes CSR-related discrepancies between managers of companies and real activity statements reported by various forums International and Global CSR Resources approved. The author concludes that, although attitudes and statements are quite a few managers, Romania is a early implementation of the process of corporate social responsibility. Although the process is approved in the management of companies modalities and implementation of practical features are not well internalized by business. Vuţă et. all. (2007) discuss the corporate social responsibility in Romania in the context of sustainable development principles, while Stancu and Olteanu (2008) approached CSR from a EU perspective. 3. Discussion on the content of CSR Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or sustainable responsible business/ Responsible Business) is a form of corporate 91

3 self-regulation integrated into a business model (Wood, 1991). CSR policy functions as a selfregulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law (McWilliams and Siegel, 2001). CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. The term "corporate social responsibility" became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed. Common CSR actions include: 1. Environmental sustainability: recycling, waste management, water management, renewable energy, reusable materials, 'greener' supply chains, reducing paper use and adopting Leadership in Energy and Environmental Design (LEED) buildind standards. 2. Community involvement: This can include raising money for local charities, providing volunteers, sponsoring local events, employing local workers, supporting local economic growth, engaging in fair trade practices, etc. 3. Ethical marketing: Companies that ethically market to consumers are placing a higher value on their customers and respecting them as people who are ends in themselves. They do not try to manipulate or falsely advertise to potential consumers. This is important for companies that want to be viewed as ethical. Figure 1. Common CSR actions Source: McWilliams, A., Siegel, D. (2001), Corporate social responsibility: A theory of the firm perspective, Academy of Management Review, Vol. 26, pp , doi: /amr

4 Figure 2. CSR approaches 4. CSR practices of multinationals operating in Romania Ilieş study in 2011 on preoccupations regarding social corporate responsibility in Romania show that there are some specific areas of interest for social corporate responsibility among companies in Romania: education, social activities, environment, culture, sports, human rights, health care. Taking into consideration the number of companies (48) included in their study (Romanian and multinationals operating in Romania as well), our study focused only on the multinational operating in Romania. In order to identify the main areas of social corporate responsibility of these firms we reviewed their statements and reports regarding social corporate responsibility. We studied 30 multinationals operating in Romania and studied their reports issued between The results are as followed: Table 1. CSR areas in which multinationals operate in Romania education 10 companies social activities 12 companies environment 15 companies culture 8 companies sports 13 companies human rights 9 companies health care 11 companies Source: author s projection based on analysed CSR reports of multinationals operating in Romania between

5 Comparing the results of our study with those of Ilieş we can notice that the number of CSR domains of companies has increased. This trend is consistent with the international approach, which demonstrates that corporate social responsibility begins to increase in Romania. Conclusions Anselmsson and Johansson (2007) assessed three areas of CSR performance: human responsibility, product responsibility and environmental responsibility. Martinuzzi et al. described the terms, writing that human responsibility is the company deals with suppliers who adhere to principles of natural and good breeding and farming of animals, and also maintains fair and positive working conditions and work-place environments for their own employees. Product responsibility means that all products come with a full and complete list of content, that country of origin is stated, that the company will uphold its declarations of intent and assume liability for its products. Environmental responsibility means that a company is perceived to produce environmental-friendly, ecological, and non-harmful products. Jones et al. (2005) found that environmental issues are the most commonly reported CSR programs among top retailers. The results of our study are consistent with those of Jones, proving that environment it is the main preoccupation of multinational in Romania. REFERENCES: Anselmsson, Johan; Ulf Johansson (2007), Corporate social responsibility and the positioning of grocery brands: an exploratory study of retailer and manufacturer brands at point of purchase, International Journal of Retail & Distribution Management, Vol. 10, pp Bibu, N., Năstate, M., Gligor, D.C. (2010), The Perception Over Corporate Social Responsability in Romania, Review of International Comparative Management, Vol 11, Issue 5. Ciupercă, E.M. (2011), An Explanatory Model of Corporate Social Responsibility Implementation in Romania, 2011 International Conference on Social Science and Humanity IPEDR, vol 5, IACSIT Press Singapore. Davis. S.M., Rudelius, W., Buchholz, R.A. (1979), Ethical Problems of Purchasing Managers. Harvard Business Review. Vol. 57, No. 8, pp Korka, M. (2004), Experiencing Corporate Social Responsibility in Romania, The Romanian Economic Journal, Year VII, No. 14, 2004, p. 7. Jones, P., Comfort, D., Hillier, D. (2005), Corporate social responsibility and the UK's top ten retailers, International Journal of Retail & Distribution Management, Issue 33 (12), pp , doi: / Martinuzzi, André; Robert Kudlak; Claus Faber; Adele Wiman (2011). "CSR Activities and Impacts of the Retail Sector". RIMAS Working Papers No.4: 2. McWilliams, A., Siegel, D. (2001), Corporate social responsibility: A theory of the firm perspective, Academy of Management Review, Vol. 26, pp , 94

6 doi: /amr Nemoianu. E.L. (2010), Corporate Social Responsibility in Romania: between PR tactics and Sustainable Strategy, Academic Public Administration Studies Archive, p. 5. Robin, D.P., Reidenbach, R.E. (1987), Social Responsibility, Ethics, and Marketing Strategy: Closing the Gap between Concept and Application, Journal of Marketing, Vol. 5I, pp Stancu, A., Chelcea, L., Baleanu, T.E. (2011), Representing Corporate Social Responsibility. A Case Study of Romania s Top 100 companies, African Journal of Business Management, Vol. 5 (6). Steiner, George A. (1972), Social Policies for Business, California Management Review (Winter), pp Tiriteu, D.L., Ettkin, L.P., Helms, M.M. (1998), Romania: ready for US business investment, European Business Review, Vol. 98, No. 5, 1998, p Vuţă, M, et. all. (2007), Corporate social responsability în Romania in the context of sustainable development principles, The 47th Congress of European Regional Science Association, ERSA, Retrieved from Wood, D.J. (1991), Corporate Social Performance Revisited, The Academy of Management Review, Vol. 16, No. 4, pp Acknowledgments This research was supported by the project Minerva Cooperation for an elite career in doctoral and postdoctoral research, co-founded from the European Social Fund through the Development of Human Resources Operational Programme , contract no. POSDRU/159/1.5/S/