Corporate Social Responsibility (CSR) as Competitive Imperative for Taiwan Companies

1. Corporate Social Responsibility (CSR)as Competitive Imperative for Taiwan Companies Presented by : F. M. Tai

2. Abstract • Technological innovations spur globalization • Corporate practices need a world structure and sustainable development • CSR benefit both shareholders and society in the global economy, creates long-term sustainability for corporate success • Scholars recognize the complex relationship between IB and society and MNEs are responsive to the stakeholders' needs

3. Abstract – continued- • Most Taiwan companies look for change in strategy - mission statement • Failed : Not adequate implementation - difficulties in justifying CSR practices • This paper emphasizes on the creation of a global brands with a responsible MNEs by FDI and show practices how to capitalize further from its real implementation

4. Purpose of the Paper • Aims to FDI by identifying CSR and implementing • To test the proposition, a questionnaire will be assessed if firms can be simultaneously socially responsible and socially irresponsible

5. Research Questions • Has your Citizenship received any investor feedback on its efforts, whether positive or negative? • How has Citizenship been impacted by Eco, Social-Politic (marketing, innovation)? • What percentage of the approach to community contribution will be constituted to effort? • What are the corporate metrics for the CSR effectiveness to FDI?

6. Significance • Research exploring the study mixing CSR, IB and marketing • CSR had not drawn attention or has been much conducted • A little published research in Taiwan

7. The Theory Used • CSR, called corporate citizenship, is a responsibility and obligation to protect, foster, increase and enhance the benefit of stakeholders and social people • Most corporations “establish” code of ethics, Johnson-Johnson - a model/standard

8. Eclectic Paradigm (Dunning) • Dunning’s theory “Eclectic Paradigm of Globalization” Causes globalization • OLI (Ownership-Location-Internalization) • Ownership: firm specific advantage • Core competency of a firm • Patent and Trade Market • Technology • Name recognition • Location: External to the firm • Tariff barriers • Infrastructure • Investment incentive

9. Eclectic Paradigm (Dunning) –Continued- • OLI • Internalization: • Transaction cost benefit • Transfer pricing • Avoiding buyer uncertainty • Eclectic Paradigm • Aadvantages to be gained by combining firm’s unique asset and location advantage

10. OLI Location Advantage: Location Specific factor. These are external, to the firm including factor endowment, transportation cost, government regulation, Infrastructure factors OLI Internalization: Cost advantage from vertical and horizontal integration, due to transaction cost caused by market failure Ownership Advantage: Firm specific factors including technology, , patent, process, name recognition, and other core competencies

11. IB Time Is Coming • Taiwan: developed country, small-medium firms- non advantages of MNEs – supported by the government to FDI • Theory of Wells, L.T. (1977) could be used for small-medium firms to go international business • CSR of the Ownership Advantage can be suggested to apply for Taiwanese corporations when involving IB

12. Why Emphasizing SocialResponsibility • Surveys : “61% of consumers would buy products from a CSR company or switch retailers if cost and quality were equal.” • “Social responsibility” is defined as a framework of measurable corporate policies and procedures and the foremost about obtaining better productivity and creativity returns

13. Global Leader in CSR will Offset Damning Charges against the Company • Positive CSR beliefs by consumers not only greater purchase but also longer-term loyalty and advocacy behaviors • Integrating CSR strategy with core business strategy - more likely than brands that merely engage in CSR to reap a range of CSR-specific benefits in the consumer domain

14. CSR Earned Consumers Attention • Theories of the strategic use of CSR emphasize the role of information asymmetry and how CSR to be incorporated into a firm's product differentiation strategy • Globalization and a call for increased corporate transparency have given rise to CSR • More Businesses use CSR to improve customer satisfaction • Consumers purchases based on companies social and environmental reputation

15. CSR and Marketing • CSR as a moral obligation and a positive financial result for the firms • Three dimensions CSR emerge: (1) purchasing based on firms CSR performance; (2) recycling; (3) avoidance and use reduction of products impact environment • CSR provides marketers strategy - global markets as their workplaces - choose any country to trade - build branches in every country • Important factor for impacting the enterprises : environmental uncertainty. Whenever entering multinational markets, internationally environmental aware and socially responsible

16. The Amazing Rise and Scandalous Fall Enron - doing harm to business ethics • In 2001, Houston natural gas and Power Company, the most innovative and thought to epitomize a great New Economy company, with its skyrocketing profits and share price in the U.S. • With the world's largest Enron ever traded tens of billions of dollars contracts, the corporation's total revenues 100 b. • Enron's rise from obscurity to the top of the business world to disastrous demise - owing to Skilling’s creative bookkeeping invented something falsely upping the stock’s value. Tragedy made thousands of employees lost jobs and life savings; top executives are too inhuman for tragedy and lost the morality in management

17. Victim on Personal Profit Without Regarding Social Public Welfare • Sixty-five percent of 158 experienced top CEO agreed - profit is more important than products safety, allocation of resources is the main reason of ethics problem • Hard for the top executive to choose: to balance their gains and losses within different interest groups for accurately decision making on the basis of ethics

18. How Engage in Social Responsibility (Applicability) • Consumers in the US have placed socialand environmental issues at the top of the agenda, i.e., actions taken by consumers to enforce socialcommitment • Socialresponsibility orientation of firms is related to strategic socialplanning • Positioning is related to value creation for the MNEs • Three principles : 1. awareness of historical and institutional dynamics of local communities; 2. necessity of good communication with local constituencies; 3. degree to which the firm’s operations safeguard and indeed improve the social and economic assets of local communities • The question of adequate compensation for the inevitable disruptions that an internationalbusinessbrings to a local community

19. By Whom • Business leaders integrate an awareness of socio-political issues more explicitly into their strategic decision-making processes • The ethical leadership in professional business will improve understanding of how ethical behavior confers legitimacy and sustainability necessary to achieving the corporation’s goals, and how a leadership approach to ethics can serve as an effective tool for dissemination of moral values in organization.

20. How • The Greening of Management: every country government - all industries emphasized on this kind of management: whole products life cycle from design to waste disposal could match 4R－Reduce, Recycle, Reuse, Regeneration, and 3E－Make use of Economic (resource), Ecological, Equitable • Green Window Dressing • Green Meetings and Events • SocialConsciousness:Wal-Mart's efforts to reduce its packaging materials and operate on renewable energy • Answers to the Trust and Public Image Issues Facing • Concern for Environment • Differentiation Strategy • Ethical Behaviors • Understanding Unethical Sales Behaviors Especially for Sales Managers • Four Practical Approaches • Ethics Ombudsman • Customers-Centered by Technology

21. Implementation Cases of Citizenship • Socially responsible companies add implementation, the ability to generate long term profits - positive • European, Japanese, North American companies, Finland developed advanced human rights policies and equal opportunities for women and their community involvement range from simple donations of money to donations of expertise, time and resources

22. The Charitable Behaviors 2nd biggest Taiwanese Investor • Global brand "Foxconn", 2005 beyond Flextronics, the world's largest electronics manufacturing and services (EMS) companies, original CMM (Component, Module, Move, adding e - The concept of a eCMM) • "design, create two areas, three districts delivery" ambition, the company throughout three continents • Hon Hai Group's total market value of 2.25 trillion Taiwan dollars. Contributions more to China, the past 10 years donated nearly NT$5 billion (NT$32=US$1) • A full support of the local government in Shanxi and no any problem in sources of raw materials of Magnesium Alloys, make international automotive components manufacturing market possible, materials used by laptops were imported from Europe, now Shanxi energy full support • “My dictionary has no such word - management, as I am a responsible man. A man of responsible does not need management; no responsibility for the management of useless” The CEO, Mr. Guo, Ming said

23. Obstacle in Implementation • Cost is the main obstacleof CSR programs • Budget tightened, charitable are restrained • Companies used to support philanthropic work are now limiting on some social projects or coverage and from which get some repay (to contribute money on working-training not on public welfare’s art object to foster better employee and to receive direct benefit)

24. Methodology • Methodology/Approach: The study builds on existing literature and theories on IB, CSR and Marketing, as well as literature on consumers' perceptions of CSR related issues Two parts: • 1. explorative stage on qualitative method, qualitative investigation including identified important society attitude-based attributes of socialresponsibility • 2. quantitative part is based on some examples or surveys describing the performances along these attributes

25. Methodology – Continued - • Validity assured through the literature review and Chinese translation for the questionnaire to assure better understanding by Taiwan participants providing greater reliability and validity of results • To further establish validity and interpretability, the Questionnaire-ChineseVersion was critiqued by three Taiwanese graduate students at the Alliant University, … • Factor analysis discussed in the applicability towards theoretical testing would be instead in order to counteract this effect.

26. Research Limitations/Implications • Dr. Kelly (2008), this is a good topic, which is a study mixing CSR, IB and marketing; also it relates to implementation Resource Allocation & Management • a balanced humanistic/analytic understanding in marketing system, corporation FDI goal/objective, and CSR for the top executives to integrate • decision to rank and place the priority order in considering fulfilling the CSR and the stakeholders benefits • limited resources, how carry out the SCR before the benefit of stakeholders? - conflict between harmony and how to decide the extent? • Is it ethic behavior, if he/she fulfills personal principle by sacrifice the benefit of stakeholders, employee, and corporation? the reason for the top executives to be employed is his/her professional capability not on his/her charity behaviors or notions; • he/she should perform on the employment contract to do the right thing not to avoid the possibility of his/her personal generosity • “A manager’s job should be to take the corporate FDI goals and strategies and redefine them in a way that makes them real for the people in their department

27. Conclusion • strategy formulation - practical; improper implementation prevents strategies from reality. In conceptualizing global CSR, CSR fall along a continuum • provides implications in favor of social responsibility and implementing • perspectives from the definition of marketing and IB, aid proceed smooth and quicker -keenly competition and uncertainty • new competency needs to help Taiwanese enterprises/firms exceed the efficiency • 4R and 3E getting trend and responsible for customer interests: understanding and connecting with customers, innovation through products and services, CSR and marketing strategies, or effective internal marketing organizing • Sanzo Industrial Co., Ltd., launching a positive commitment to social responsibility through its strategic program into its FDI in developing a better ethical and social responsible process

28. Further Research • Future studies could involve validation of factor structure, relationship between CSR and preference, and ability to positioning in another location, perhaps in more mature markets in terms of well-developed structures of CSR and some products