Holistic CSR Approach for IHRM

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The International Organisation for Standardisation (ISO) 26000, defines social responsibility as ‘the actions of an organisation to take responsibility for the impacts of its activities on society and the environment, where these actions: (a) are consistent with the interests of society and sustainable development; (b) are based on ethical behaviour, compliance with applicable law and international instruments; and (c) are integrated into the ongoing activities of the organisation’ (Bowens, 2007). This very definition alone presents a number of challenges for International Human Resource Management (IHRM). Firstly, for IHRM to identify, measure and address the full scope and impact, both tangible and intangible, on global stakeholders, secondly, in protecting and applying a uniform corporate identity that aligns to the interests and ethics of a global society that is composed of unequal, unique and fragmented cultures, and finally for IHRM to be compliant and kept abreast of international law and instruments which may conflict with corporate policy, workplace practices and standards. To help meet these challenges, Porter and Kramer provide a holistic CSR approach for IHRM. The ‘inside-out’ approach maps the social impact of the HR activities value chain to identify positive and negative social impacts. The ‘outside-in’ approach diagnoses the social dimensions of a company’s competitive context to identify both CSR risks and opportunities. Additionally, by understanding cross-cultural nuances, alongside catering functional HRM activities to a global context, IHRM is able to form an integrated and strategic partnership between society and business to provide a unique value proposition to all stakeholders. Thereby, strategic CSR can be a powerful and invaluable tool for IHRM to create rewarding organisational and global opportunities.

CSR first emerged in the eighteenth century, interestingly by Adam Smith who formed the basis of free-market economies but expressed the importance of actors behaving honestly and justly so the ideals of the free-market could be sustained. During the industrial revolution when organisations became more powerful and dominant, ‘social darwinism’ (i.e. business survival of the fittest) formed, justifying cutthroat and brutal, competitive strategies with minimal concern to the impact on society (Hopkins, 2003 p11). During the wake of numerous hostile takeovers in 1980s, societal backlash arose. Big business was criticized for being too powerful, for practicing antisocial and anticompetitive practices and using a ‘shareholder primacy’ approach for corporate conduct and decision making. As globalisation opened up new markets and expanded the role and influence of major corporations on government decision making and policy, concerns of child labour, exploitation and corruption increased, sparking demands of higher social and environmental standards. Reports of abusive labor practices resulted in consumer boycotts of Nike products, Greenpeace protests in 1995 made international headlines when Shell decided to sink an obsolete oil rig (Porter & Kramer, 2006 p3). Fastfood and packaged food companies held responsible for obesity and poor nutrition and even pharmaceutical companies expected to respond to the African AIDS pandemic even though their primary product lines and markets have little to no association (p3).

Add to the complexity of IHRM understanding and managing stakeholder perceptions of what a company should be responsible for is the added issue of not knowing the organisation’s impact on society over time (e.g. Asbestos, thought to be safe in the early 1900s given the scientific knowledge then available). Ignoring CSR, can negatively impact a companies reputation, finances, ability to attract good employees, diversion of management attention away from core activities, restrictions on operations, obstacles in raising finance and insurance and difficulties with life cycle (customers...
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