Within a fierce competition in a business, a company is determined to make a huge profit to stay exist. Many times, they are found to conduct unfair practice as a part of their efforts to sustain their business growth. In the most recent perspective, one argues that corporations should be considered as social institution because individuals come together to achieve several objectives related to the provision of goods and services.
Under these circumstances, since the end of 20th, many corporations pay attention to the execution of corporate social responsibility (CSR) program, which aims at reducing negative side effects such as the case of Wal-Mart that is found guilty to employ children in their labor force. Another practice that violates the good practices of CSR is the manufacturing process that causes the increased level of air and water pollution. This could happen due to the process leaves much hazardous exploration waste. Moreover, in marketing case, the violation could be in the form of inappropriate marketing campaign. For example, there is misconduct and misperception that customers perceive such as the hidden message that smoking is not dangerous for health. Interestingly, the corporate social responsibility (CSR) program is viewed to be a media to promote a company good business practice and enhanced their image as a corporate that is socially responsible.
Concerning the corporate social responsibility (CSR) program, this paper will elaborate two strategic issues that international firms perceive as important factors (e.g. economic, social, cultural, legal and technological) in addressing corporate social responsibility issues and evaluate them from various theoretical perspectives. The chosen company for this case is McDonald’s, a well known fast food chain that shows a great participation in several CSR initiatives and the two selected factors are social and cultural.
Theory of CSR
In the definition of CSR that vary from one scholars to another, it is found that each provide different view about what companies especially multinational corporations should do in order to display several considerations according to Bucholtz (1991) as following:
- Enterprises are responsible of going beyond merely the manufacturing of products and services for getting profits
- Enterprises or corporations are responsible of solving social problems in local countries, especially those directly relate to the companies operation
- Enterprises have wider constituency than stockholders
- Enterprises or corporations may present serious impact beyond merely marketplace transactions
- Enterprises or corporations have and provide various value to customers and society more than just economic factors
Considering the importance of corporate social responsibility (CSR), many companies today incorporate the CSR program into their strategic plan in order to attract professionals to work for the companies. This situation marks a trend among jobseekers that only want to work for a company that emphasize CSR (McGlone, Spain, McGlone, 2011). The consideration may vary from one company to another as each has different corporate objective underlying their CSR initiatives. In the following discussion, we may find that a multinational restaurant chain like McDonald’s also consider some factors when executing their CSR initiatives.
This most recent perspective argues that corporations should be considered as social institution because individuals come together to achieve several objectives related to the provision of goods and services. Furthermore, it argues that amoral view is an incomplete vision of a corporation, which neglected any other aspects beside economic factors (Sexty, 2004).
Within the Globalize business world, the widely accepted and developing perspective is the Social View. Nevertheless, despite the statement of many global CEOs that CSR is vital for globalization, many still believe in the original concept of corporations as Amoral organizations. Latter, in modern theory -the Social Contract Theory- believes that companies have ethical responsibilities to all members of society. In addition, this social view of conducting a corporate social responsibility (CSR) program originates from the fact that the effectiveness of corporations in contributing to social cohesion that include the way corporations generate revenue and profits, create jobs, treat shareholders, hire/promote/fire employees, and contribute to communities (Visser, 2008). Figure 1 shows the typical classification of CSR program in which social factor is among the factors of CSR by content theme.
Source: Visser, 2008
This is also a question for the giant fast-food chain like McDonald’s that is under constant fire for its products, which are considered as junk food. However, during the courses of business, every single company is required to spend a portion of their profits to engage in any CSR program. This is valid for McDonald’s that have tens of thousands of outlets all over the world with annual revenue over $41 billion (Figure 2). Currently, McDonald's is the world’s leading food service retailer with more than 30,000 restaurants in 119 countries serving 47 million customers each day” (“McDonald’s Corporation” 2005).
In addition, McDonald’s says, “Success for McDonald’s Corporation flows from the success of its business partners. The business partners are not only the franchisees but also owners/ operators, suppliers, and employees (“McDonald’s Corporation” 2005). This represents that in conducting the CSR program, McDonald’s is hand-in-hand with their business partners to promote the CSR initiatives. The two important factors that underlie McDonald’s CSR initiatives are: social and cultural factors.
In response to the view that a company that their natural business infringe the wellness, Kathleen Bannan, Senior Manager for Corporate Social Responsibility asserts that “CSR is everybody’s business.” The main point of CSR program, according to her view, is to integrate McDonald’s corporate philosophy -to be friendly with its customers and to give back to the communities it serves- in the corporate day-to-day campaign (Singh, 2010).
In response to this view, Kathleen Bannan, Senior Manager for Corporate Social Responsibility asserts that “CSR is everybody’s business.” The main point of CSR program, according to her view, is to integrate McDonald’s corporate philosophy -to be friendly with its customers and to give back to the communities it serves- in the corporate day-to-day campaign (Singh, 2010).
The main social issues that McDonald’s address in their CSR initiatives as mentioned in McDonald’s CSR Report for 2008, titled: Responsible Food for a Sustainable Future are:
- “Continue to enhance our employment value proposition to drive employee engagement
- Continue to integrate McDonald’s values into people programs, from hiring to training to career development” (Singh, 2010).
In addition, from cultural point of view, McDonalds also set focus of their CSR initiatives to address this issue. There are five CSR programs; they are Nutrition & Well-Being, Sustainable Supply Chain, Environmental Responsibility, Employee Experience, and Community.
Figure 3 shows the sustainability report of McDonald’s that highlight their serious commitment to comply with the CSR program in order to achieve the improvement in five key programs. To represent their global reach, McDonald’s Global Sustainability Scorecard also reports on our top nine markets: Australia, Brazil, Canada, China, France, Germany, Japan, the United Kingdom and the United States (McDonald’s, 2012).
In addition, there are some characteristics that also underlie the social and cultural factor of CSR program especially in developing countries that represent the lucrative markets for McDonald’s expansion:
- Developing countries have the fastest growth in terms of economies that provide the lucrative markets for multinational companies (IMF, 2006). This should influence the companies to take care of social issues when expanding into the market as they are the concerns of communities.
- The fast growing economies in the developing countries also suggest that the massive economic growth, vast investment, and intense business activity are likely to cause the social and environmental impacts (both positive and negative) (World Bank, 2006).
This paper has elaborated the implementation of corporate social responsibility (CSR) program in a multinational restaurant chain, McDonald’s. Basically there are four strategic issues that international firms perceive as important factors (e.g. economic, social, cultural, legal and technological) in addressing corporate social responsibility. However, this paper selects the two factors: social and cultural issues.
The social factor that drives a company to conduct CSR program is based on the effectiveness of corporations in contributing to social cohesion that include the way corporations generate revenue and profits, create jobs, treat shareholders, hire/promote/fire employees, and contribute to communities. At McDonald’s, the CSR program is set in their philosophy to be friendly with its customers and to give back to the communities it serves, which broadcasted in the corporate day-to-day campaign.
Meanwhile, concerning the cultural factors, McDonalds also set focus of their CSR initiatives to address the five CSR programs; they are Nutrition & Well-Being, Sustainable Supply Chain, Environmental Responsibility, Employee Experience, and Community.