Look around Grenada, Carriacou, and Petit Martinique and you see programs and projects of corporate social responsibility (CSR) everywhere. Examples are Grenlec community initiatives, Digicel computer donations, and Lime’s sports sponsorships.
What is difficult, even impossible, to find anywhere is evidence of corporate economic responsibility (CER). Blind-sided by its ubiquitous presence dominating the landscape, most people mistake CSR for CER but there are fundamental differences.
In business jargon a corporation is a “fictitious person” with a social conscience created by law. The good corporate citizen exhibits responsible and caring business behaviour to societies and people it serves. And nowadays this constitutes fulfilling a whole litany of obligations above and beyond legal mandates.
In essence, CSR are philanthropic and humanitarian – benefits corporations provide countries through volunteer work, donations, and social welfare. In production the corporation has zero tolerance for corrupt practices, child/slave labour, and defective products. It creates a platform for sustainable development conscious of the negative fallout of its “carbon footprint” on the environment.
Some call it “giving back” in reciprocity for customer patronage, concessions, and exorbitant profits received from the home country.
Others pretend it is a free gift we should be thankful for but it is really debt dutifully repaid. Sometimes, just equating CSR contributions with opportunity costs of concessions granted leaves nothing.
“Corporate psychopaths” are the bad guys who reject social responsibility as an obligation. Their mantra is profit maximisation and social and environmental degradation are just collateral damage.
They give symbolic tidbits with much fanfare, ostentatious promotion gimmicks, and media hype, only to create a “window dressing” façade that mask their rapacious nature and build a false image.
CSR initiatives do not stimulate economic growth and development and that was never the purpose. Their function is providing public goods and services for “missing markets” in capitalist economies. Within this parameter, performance indicators of ethical norms measure how well corporations treat people and society in doing business.
Not long ago, Trade Minister Oliver Joseph intimated that some corporations defraud the country of millions exploiting loopholes in exchange controls and tax laws. In international collusion they engage in rampant profit repatriation sucking away the lifeblood of the economy. Hence, control measures are imperative to stem the massive foreign exchange leakage and try to level the corporate playing field.
Developing countries like Grenada attract multinational corporations to pursue goals of development, not to under-develop their country.
Therefore, this writer advocates a higher duty standard for corporations, a standard much higher than the symbolic “chicken feed” they give back in the name of corporate social responsibility. This standard would hold the corporation to an economic responsibility.
Specifically, corporate economic responsibility would make big corporations duty-bound by contract to invest a minimum percentage of their gross profit margins in the economic development of the host economy. Dividend reinvestment would be compulsory, separate, and differentiated from voluntary contributions of social responsibility.
It would be a quantum leap in direct foreign participation in the development of the economy.
Corporate economic responsibility has great potential for systemic economic restructurings and for building a new mind construct and capacities that internationalise the ways we do things. It would have a manifold positive impact on productive growth sectors like the renewable energy industry, the agriculture industry, tourism, manufacturing, and fishery. It would be a great equalizer for long-standing, North-South development disparities.
Science and Technology (ST) would be central to everything.
Information and Communication Technologies (ICT) would be enhanced to facilitate an enabling environment of global connectivity in business, trade, and production.
Domestic industries would enjoy the sophisticated research and development (R & D) capabilities of global corporations. From joint ventures and partnerships new product innovations and process innovations would be driven by advanced technologies. The “trickledown” from new know-how and technology transfer would have a multiplier effect on the whole economy.
Multinational corporations possess superior marketing capabilities to build country profile in global markets and bring the world to your doorstep. The home country, its product, and services get enormous exposure and access to global financial markets becomes much easier.
Corporate economic responsibility subsumes corporate social responsibility since CER requires a framework of functioning social institutions and physical infrastructure to complement it. Standing alone corporate social responsibility has little relevance for development.
The institutionalisation of corporate economic responsibility triggers a “domino effect” as other multinationals follow the leaders.
Overtime, as the new measure takes effect the balance of payment (BOP) position stabilises from trade flows, new capital streams, and foreign direct investment (FDI).
The fiscal gap closes and national debt becomes manageable.
Productivity rises and with it employment, disposable income, tax revenue, and gross domestic product (GDP) in tandem.
Therefore, applying the concept of corporate economic responsibility, truly responsible corporations invest in economies and contribute to sustainable growth and development across value chains nationally.
Empowering economies empowers customers and empowering customers empowers business. In this scenario all stakeholders are winners.