La machine infernale, Jean Cocteau

Resource dependence and institutional theory perspectives on drivers for CSR in Africa

Slamani Hind

Business School

University of International Business and Economics (UIBE)

Introduction

Expectations related to Corporate Social Responsibility (CSR) have evolved over the past decades by governments, investors, consumers and local communities. Businesses, particularly Multinational Corporations (MNCs) are facing global pressures for managing their responsibilities to stakeholders and the natural environment, given the impact of their decisions and their ability to act. (Maya, F., Simon, Z., Yang, G., Kelly, Y., Chen, X. H., and Mark, 2010).

A recent survey of business CEOs internationally found that globally 93% of CEOs surveyed believe that CSR issues will be critical to the future success of their business, 98% in Asia Pacific, and 97% in Africa. (Maya, F., Simon, Z., Yang, G., Kelly, Y., Chen, X. H., and Mark, 2010).
MNCs cannot ignore the fact that they have a significant social and environmental impact. These companies are expected to demonstrate that their operations provide a beneficial impact, especially in african countries, where MNCs, particularly mining, oil and gas companies have often more capacity than local government to induce change. (Sandra, W., Charles, B., and Samuel, B. G, 2002; Meridian Group International, 2006). Many MNCs are now seen as sources of solutions to some of the pressing problems facing the people in african countries. (Anna, C, 2013).

On their side, many Western and Non-Western MNCs operating in Africa, such as Shell, AREVA, Sinopec and others are already engaged in socially responsible activities and working hard to establish various programs and strategies that can balance both areas of profitability and social responsibility. (Youssoufou, H. D, 2014).

However, there are claims that MNCs operating in African countries may be lax on their social, and ecological responsibilities as in most African countries legislation and enforcement are poor, mechanisms or policies to demand and uphold CSR as well as civil society scrutiny are largely absent and consumer activism for responsibly-produced products is also relatively weak.

Nevertheless, the purpose of this paper it is not about how well MNCs are doing CSR in Africa. It is, rather, about the drivers for CSR in Africa, why is the trend of MNCs (operating in Africa) engaging in socially responsible activities increasing ? in simple words why are MNCs doing CSR in Africa?

This paper attempts to explain the drivers for Corporate Social Responsibility in Africa based on resource dependence theory and institutional theory arguments and proceeds as follows:

The first section provides a brief overview of the literature on CSR strategies of mining, oil and gas MNCs operating in Africa. Section 2 before the conclusion presents and develops resource dependency and institutional theory arguments to explain the drivers for CSR in Africa.

Literature review

‘‘We know that the profitable growth of our company depends on the economic, environmental, and social sustainability of our communities across the world. And we know it is in our best interests to contribute to the sustainability of those communities’’

Travis Engen, CEO, Alcan

It was also evident from the literature review that social involvement dominates MNCs CSR practices. Judy., N. M. (2012) in his review of the CSR literature on Africa between 1995 and 2005 reached the same conclusion. He found that MNCs prioritize the following CSR issues: poverty reduction, community development, education and training, economic and enterprise development, Health and HIV/AIDS, Environment, Sports, Human Rights, Corruption, Governance and Accountability. Most CSR efforts seems to be oriented toward local communities and tailored to address national concerns such as HIV/AIDs, health, education, water management, recycling, and pollution being very popular, which reflect the socio-economic conditions in african countries.

The study conducted by (Kenneth, M., Amaeshi., Bongo, O., Olufemi, O. A., 2006) gives also some indications of CSR practice in Africa. The study confirmed that the understanding and practice of CSR in Nigeria is still largely philanthropic and altruistic. And most people think that CSR is one of the many ways companies can plough back a portion of their profit to their immediate environment.

Through his study that examined the CSR performance of eight MNCs operating in Nigeria for period not less than 15 years Ango, N.A (2012) confirmed that the emphasis is more on community involvement, less on socially responsible employee relations.

Resource dependence and institutional theory perspectives

Both resource dependance theory and institutional theory can be applied to explain the drivers for CSR in Africa as theories are concerned with the relationship between an organization and a set of actors in the environment. Furthermore, both theories assume that organizational decisions are shaped by external pressures and explain how organizations face those pressures and build legitimacy and acceptance vis-à-vis external stakeholders. (Hessels, J., Terjesen, S., 2010).

However, the two theories propose different explanations and arguments to why organizations may be impacted by other actors. While resource dependence theory argues that dependence on other actors is related to need for access the resources required to maintain the business and the organization existence, institutional theory posits that organizations see themselves as part of a global organization field and are inclined to adopt the behavior norms that provide legitimacy within that field.

Thus, we expect these theories to be particularly relevant in explaining the drivers for CSR in Africa First, due to the nature of their activity, mining, oil and gas MNCs are particularly dependent on other actors in the environment for obtaining resources and the social license to operate. Second, as the MNCs’ African subsidiaries have linkages with the parent companies, the subsidiaries are strongly influenced by their behaviors and Strategies, including the CSR behavior. The MNCs’ African subsidiaries are also influenced by the behavior of others actors both locals and internationals operating in the same sector of activity and have to follow the trend of MNCs (operating in Africa) engaging in socially responsible activities which is increasing and participate on building a good image, and enhance the reputation of parent companies.

Resource

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