Institutional Voids and the Philanthropization of CSR Practices: Insights from Developing Economies

Abstract

Corporate social responsibility (CSR) practices and conceptions vary across sectors and nations. However, there is a general tendency among academics and practitioners to present CSR in Africa as activities characterized by philanthropy due to the existence of institutional voids. This review of the current literature demonstrates that weak institutions lead to weaker bargaining powers designed through the historical and geopolitical institutional frameworks of international business and global governance systems. Accordingly, multinational corporations (MNCs) take advantage of such weaknesses to define CSR on their own terms by replacing the ideal responsible and sustainable innovations with ad hoc philanthropy that diverts the attention from the negative consequences of neoliberal 'structures of accumulation'. This is akin to aid that hardly contributes to structural changes, but rather leads to complacency, corruption, dependency, boutique projects, disguised exploitation, and the misuse of corporate political power to achieve corporate bottom lines. The implications of the results are vast, and they are generalizable to all weaker institutional settings. Thus, weaker institutions create the necessary regulatory, political, economic, and governance climate that perpetuates a pattern of abuses and ethical violations that are then masked with philanthropy. It is argued that the fundamental institutional and geopolitical contexts within which MNCs interact with nation states cannot be ignored in any comprehensive analysis that seeks to meaningfully shed light on the comparative differences of CSR practices. The neglect of the web of contextual, historical, and geopolitical issues in which CSR is entrenched and framed diverts attention from the origins of the socio-economic and environmental questions to philanthropy as a final solution, which has hitherto been perpetuated with undesirable outcomes.

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

“…Corporate philanthropy may vary depending on the sector of activity of the company (Ahen & Amankwah-Amoah, 2018;Beschorner & Hajduk, 2017;Kamasak, James, & Yavuz, 2019). In this sense, philanthropic actions occur more frequently in the most environmentally and socially sensitive industries, where legitimacy is more critical (Cha & Abebe, 2014;Gómez-Bezares et al, 2017;Yu et al, 2017), and in those most sectors exposed to demands from certain stakeholders, such as SRI investors, NGOs, and government institutions (Gao & Hafsi, 2017;Riedl & Smeets, 2017;Sethi et al, 2017a).…”

Business Ethics in Africa: The Role of Institutional Context, Social Relevance, and Development Challenges

“…Arguably, large parts of Africa are characterised by weak institutions (Ahen and Amankwah-Amoah, 2018;Amaeshi et al 2016;Luiz et al 2019). They are weak institutions because they lack the essential elements of strong institutional and good governance contexts: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption (Kaufmann et al 2008).…”

Institutional permissiveness in the context of government-business relations

“…Deploying the extreme case framework, our research design captures the interplay between the different institutions and actors that intervene in a process of institutional disturbance in order to forge change or maintain institutional continuity (e.g. Ahen & Amankwah-Amoah, 2018;Amaeshi et al, 2016). To analyze the dynamics of institutional disturbance and negotiation linked to environmental management, we evaluate how institutional actors drive, resist or react to challenges to accepted institutional constructs.…”

“…We adopt narrative analysis to explore meaning-based constructs and the process-based research questions we are asking. Our narrative approach relies upon a longitudinal research design that is capable of identifying the temporal interrelatedness of different episodes and the temporal and spatial, and not just structural embeddedness of conflict situations (Ahen & Amankwah-Amoah, 2018).…”