Taking Harmonious Society to Africa
A Chinese Challenge to American CSR?
An Exploratory Study
Master thesis Political Science
International Relations
University of Amsterdam
Supervisor: dr. Luc Fransen
Second reader: drs. Farid Boussaid
Sofie Hees, June 2015
2 Chapter list
List of tables and figures ... 4
List of abbreviations ... 5
1. Introduction ... 6
2. Theoretical framework ... 9
2.1 The concept of corporate social responsibility (CSR) ... 9
2.1.1 Shareholders and stakeholders ... 9
2.1.2 Context: different levels of regulation... 9
2.1.3 Assessing CSR ... 10
2.1.4 Comparing CSR: national variations ... 11
2.1.5 Chinese CSR: An alternative CSR?... 12
2.2 Establishing the Chinese institutional context ... 12
2.2.1 Business-government dynamics ... 12
2.2.2 Business-society dynamics ... 14
2.2.3 International position ... 15
2.2.4 Chinese culture and harmony ... 16
2.3 Expectations from theory ... 17
3. Case selection ... 20
3.1 Chinese economic presence in Africa ... 21
3.1.1 Chinese economic presence in Africa: how ... 21
3.1.2 Chinese economic presence in Africa: where ... 22
3.1.3 Chinese economic presence in Africa: identifying key sectors ... 23
3.2 Comparing U.S. to Chinese economic presence in Africa ... 24
3.3 Case selection ... 27
3.4 Generalizability of case selection ... 31
4. Analytical approach ... 32
4.1 Data, operationalization, and coding ... 32
4.1.1 CSR components: environment, labor standards, human rights, and other ... 32
4.1.2 CSR layers: economic, legal, ethical, and philanthropic ... 33
4.2 Reliability and validity of analytical approach ... 34
5. Initial observations and analysis ... 35
3
5.2 Analysis per sector ... 41
6. Second-phase observations and analysis ... 44
7. Conclusions and discussion ... 50
7.1 Conclusions ... 50
7.2 Implications for theory and society ... 51
7.3 Discussion ... 52
4 List of tables and figures
Title page: “At an oil-drilling site in Sudan in 2008, a Chinese employee teaches Sudanese workers to read Chinese characters for “Hello China, we are friends””
(Hu Qingming/ImagineChina, in New York Times, 2014).
Figure 1: “China, US, Europe: Total financial flows to Africa 2007”. ... 26
Figure 2: Map of selected paired cases ... 28
Figure 3: Sinopec’s “Seven Remembers and Seven Don’ts” ... 46
Table 1: Overview of findings, 2015, per home country ... 40
Table 2: Overview of findings, 2015, per sector ... 43 Table 3: CSR at the three major Chinese oil companies active in Nigeria, 2015 ...4948-49
5 List of abbreviations
ACFTU All-China Federation of Trade Unions
AGOA African Growth and Opportunity Act (of the United States)
CADF China-Africa Development Fund (of the China Development Bank)
China ExIm China Export-Import Bank
CMC China National Machinery Import and Export Corporation
CNOOC China National Offshore Oil Corporation
CNPC China National Petroleum Corporation
CSR corporate social responsibility
DAC Development Assistance Committee (of the OECD)
FOCAC Forum on China-Africa Cooperation
GDP gross domestic product
ILO International Labor Organization
IMF International Monetary Fund
ISO International Organization for Standardization
MDGs Millennium Development Goals (of the United Nations)
NGO non-governmental organization
ODA official development aid (definition by DAC)
OECD Organization for Economic Cooperation and Development
OOF other official flows (definition by DAC)
PVH Phillips-Van Heusen
SEZ special economic zone
SOE state-owned enterprise
UDHR Universal Declaration of Human Rights (of the United Nations)
6 1. Introduction
In 2006, the Chinese government issued a white paper announcing its new official foreign policy for Africa with the aim of developing “a new type of strategic partnership with Africa, [based on] political equality and mutual trust, economic win-win cooperation and cultural exchange” (Chinese Government, 2006). An important platform for realizing cooperation between the Chinese and African governments is the Forum on China-Africa Cooperation (FOCAC), which was established in 2000 and has since organized multilateral ministerial summits every three years.
These foreign policy initiatives with a focus on mutual economic benefit can be seen
as tokens of China’s rise as a superpower challenging the economic hegemony of the United States, in a time when China and the U.S. are vying for the top position in official GDP rankings. Interestingly, it is not only for the financial value of its economy that China is a challenge to American prevalence, but for the nature of its economic policies as well. It has both famously and notoriously been suggested that the Chinese subscribe to an alternative logic as regards international economic affairs, thereby “reshaping the international order by introducing a new physics of development and power” (Ramo, 2004: 2). Africa is a region where this clearly shows.
In its foreign economic policies, China typically builds on the principles of
non-interference and non-conditionality with respect to the domestic affairs of its economic partner states – except for respecting the One China policy which comes down to not recognizing Taiwan as an independently governed state. Chinese investors appear eager to engage in any African project that comes with economic benefit. This is in stark contrast with the economic involvement in Africa by traditional donors from the West, which can hardly be viewed in isolation from their highly political historical contexts of European colonialism and American Cold War geopolitics. Over the past decades, Western economic involvement with the African continent has typically taken the shape of structural adjustment programs, which ask for liberal reforms in return for loans, largely via big multilateral institutions such as the International Monetary Fund (IMF) and the World Bank.
Among the most eye-catching Chinese economic activities in Africa are the
large-scale infrastructure construction projects, typically financed directly through resource exports from Africa. The Chinese have been criticized by their European and American competitors for taking from Africa what they need without worrying about the consequences of their actions for the people on-site. China itself is known for its own quick post-Communist
7 economic development through economically favorable, low-cost production circumstances. This often went at the expense of wages, working conditions and the environment, creating a luring ‘race to the bottom’. The environmental and social standards upheld within the
Chinese borders have naturally existed within the domain of Chinese sovereign authority, although some standards came to be required from them by their Western buyers (Wang & Juslin, 2009). The conditions under which Chinese projects are carried out on the African continent, however, inevitably also involve the African host countries as well as that of the Western actors that are active there.
Recently, the Chinese government has shown to care more about the environmental
and social consequences of the behavior of its businesses by adopting policies of Corporate Social Responsibility (CSR) as part of the national guiding concept of ‘Harmonious Society’ (Alden & Hughes, 2009: 576; Guérin, 2008: 10). The paradox that is the motivation behind the writing of this thesis is that CSR as a concept and a practice originated in the U.S., and that there traditionally is a strong American taste to it. If the Chinese are now such a serious challenge to both the size and nature of American economic hegemony, is the Chinese embracement of CSR best interpreted as a sign of a convergence of ideas? Or is CSR hereby yet another platform on which Sino-American rivalry takes place? From the above follows what is the central question of this thesis:
How different are CSR strategies employed by Chinese businesses that operate in African countries from those upheld by their American competitors in the region?
The following four sub questions have been identified in order to be able to formulate a more systematic answer to this question:
- How different is the salience of specific CSR elements in Chinese companies that operate in Africa, compared to their American competitors in the region?
- How different is the way in which Chinese companies incorporate these CSR elements into their business activities, compared to how their American competitors do this?
- How similar are these Chinese CSR strategies across sectors?
8 The remainder of this thesis will be structured as follows. Chapter 2 discusses the academic relevance of the central research question by embedding it in the existing literature on what CSR is, how CSR can be assessed, and how multiple manifestations of CSR can be
compared, focusing on the (inter)national institutional frameworks within which they exist.
The following analysis of Chinese and American CSR will be done in two phases.
Chapters 3, 4 and 5 deal with the initial analysis, of which the aim is to explore general patterns in Chinese CSR compared to American CSR. A discussion of how these sectors relate to the bigger picture, and which cases are representative of these sectors, is provided in the third chapter. The fourth chapter elaborates on which data are used and how these are analyzed. The fifth chapter is dedicated to the actual analysis, in two parts. First, the selected cases are compared on the basis of a distinction between their home countries, i.e. either China or the U.S. Then, a second analysis is conducted to take into account the possibility that the perceived variance in CSR strategies is not only shaped by a difference in home country, but also by a difference in sectors.
Chapter 6 deals with the second phase of the analysis, in which one sector is
investigated in more detail in order to see whether the findings presented in the previous chapter hold.
Chapter 7 draws conclusions on the basis of the findings presented in the previous
chapters. It also discusses how these conclusions relate to the theoretical debate on CSR, and what can be the meaning of these conclusions for society. The final section reflects on the research done, and how it might be continued or improved in the future.
9 2. Theoretical framework
2.1 The concept of corporate social responsibility (CSR)
2.1.1 Shareholders and stakeholders
The notion of corporate social responsibility (CSR) challenges the understanding that the sole objective of corporations is to make profit. The latter idea has been justified from an
interpretation that focuses on a corporation’s narrow responsibility toward its shareholders – that is, the parties that own a share of the business in financial terms and thus have a direct interest in the company maximizing its profits. An important advocate of this view is Milton Friedman (1970), in line of whose thinking Crane & Matten (2005: 39) speculate that
“[corporate managers] acting for any other purpose [than making profit] constitutes a betrayal of their special responsibility to shareholders and thus essentially represents a ‘theft’ from shareholders’ pockets.”
The view arose, however, that corporations do not only have to deal with their
shareholders but with multiple other parties as well, such as employees, customers, civil society, and the government. In other words, corporations have responsibilities toward multiple stakeholders, of which the shareholders are only one type. This view is
systematically brought forward in Edward Freeman’s 1984 ‘stakeholder theory of the firm’ (in Crane & Matten, 2005: 50 – 53).
Taking into account other stakeholders than just shareholders might just as well go
hand in hand with increasing profits, for instance through achieving a better reputation among consumers and higher employee satisfaction. Nonetheless, the stakeholder view diverges from the former in that a corporation’s responsibilities are no longer interpreted in terms of its shareholders purely financial interest only. It could thus also be the case that a corporate manager’s policies are financially suboptimal as they incorporate pressures from external parties that do not translate directly into financial gain.
2.1.2 Context: different levels of regulation
The notion of corporate social responsibility as described above arose in the 1980s, which was a decade in which many governments withdrew from the economic domain and left things over to market forces in waves of deregulation and liberalization (Jenkins, 2001; Fransen, 2012). Djelic and Sahlin-Andersson (2006) prefer to call this a period of
re-10 regulation. In their view, the processes of marketization have changed the traditional role of national governments not by wiping them out altogether and leaving lawless hiatuses, but rather by transforming them into just one of many actor types in a more transnational context of governance and regulation. It is within this context that corporations have to an increasing degree engaged in affairs that were traditionally seen as reserved to national governments.
This transfer of regulatory power from national governments to the corporate realm
originated in modernized Anglo-Saxon countries, but its spread into other parts of the world has widely been promoted by the institutions that emerged with the post-World War II Bretton Woods system: the World Bank and the International Monetary Fund (IMF). The development agenda carried out by these institutions has characteristically taken the shape of providing loans to developing countries via structural adjustment programs, which set conditions for those countries to open up their markets to the world economy, hence
integrating them into the same economic and regulatory logic. This has increasingly allowed foreign capital to cross borders, and has caused “the organization of production [to] become geographically dispersed and functionally disintegrated” (Fransen, 2012: 5).
It is within this context that players within the corporate realm started to develop their
own codes of conduct, which flourished in the 1990s, in an effort to regulate their behavior with respect to the environment, labor standards, and human rights (Jenkins, 2001). It have often been big corporations that took the lead here, as they struggled most with negative publicity if scandalous practices had come to the surface because they were most visible. Corporations have often been put under pressure by NGOs and trade unions, which were motivated by worries that corporations, if less regulated by the government, would be free to do anything they liked (Jenkins, 2001).
2.1.3 Assessing CSR
A widely used analytical framework for comparing different CSR practices across firms, nations or traditions is provided by Carroll (1991), who takes as a starting point the
assumption that there are more parties involved that lay claims on a corporation than just its shareholders who are interested in profits. He divides society’s expectations from a firm’s behavior into an economic, legal, ethical and philanthropic layer – in which the economic layer, which involves efficiency and making profits, is but one.
Carroll does picture the layers, however, as ranging from ‘required’ to ‘expected’ and ‘desired,’ respectively – thus from basic to more luxurious. According to Carroll the first and foremost responsibility of a corporation toward society is its economic responsibility, which
11 is to be profitable, and which is the basic foundation upon which all the other layers rest. The second layer, which can in Carroll’s view barely be seen apart from the economic layer, is the legal one. When the two are combined this means that a corporation has the responsibility to be profitable, within the laws and regulations it is bound to. The third layer is viewed not as required for a corporation in order to be able to survive, but rather expected from the various stakeholders it has to deal with on the basis of their respective moral rights. This is the ethical layer. The fourth layer, then, is the philanthropic layer, covering activities the stakeholders cannot necessarily expect from a corporation, and have no guarantee for, but which they do greatly welcome and appreciate. If a corporation engages in such activities, this is no longer about achieving a certain minimum standard, but about discretionary possibilities, often in the shape of “contributions to the arts, education, or the community” (Carroll, 1991: 42).
Across these layers, a distinction that is often made within CSR is between the aspects
of environmental standards, labor standards, and human rights (Jenkins, 2001). These are most famously anchored in the non-binding United Nations Global Compact, which was launched in 2000, has a significantly large number of corporate and non-corporate partners, and lists ten allegedly universal principles for good corporate behavior – the tenth of which, under the separate heading of ‘anti-corruption,’ was added later, in 2004 (United Nations Global Compact, 2000, 2004).
2.1.4 Comparing CSR: national variations
Crane & Matten (2005: 46) argue that the concept of CSR as it has been set out above “has been particularly strong […] in the USA, from where much of the authors, literature, and conceptualizations have emerged.” Thinking along the same lines, and drawing on observations made by other authors as well, Matten & Moon (2008: 406) say:
The recent worldwide adoption of CSR policies and strategies can be understood as part of the global spread of management concepts, ideologies, and technologies (Guler, Guillén, &
McPherson, 2002) resulting in some sort of “Americanization” of management practices (Djelic, 1998). Nonetheless, the assumption of social responsibility by corporations remains
contextualized by national institutional frameworks and therefore differs among countries.
In the comparative CSR literature, it is often studied how European CSR relates to American CSR. Crane & Matten (2005) for example hold that in European countries, the different aspects of CSR from Carroll’s pyramid are generally prioritized in a different way than in the U.S. According to Wang & Juslin (2009), the U.S., U.K., and Japan have mainly been
12 shaping our thinking about CSR. In addition, they observe that many standards for measuring CSR performance, such as ISO (International Organization for Standardization) standards, originated in the West. In short, comparative CSR research has often focused on how different national institutional frameworks produce marginally different variations on the American example.
2.1.5 Chinese CSR: An alternative CSR?
Tan-Mullins & Hofman (2014: 3) say that “In a Western context, the rationale for CSR has been explained as a result of interactions between business, government and society where institutional pressures that develop from these interactions lead to certain expectations regarding the nature of business practices.” Within a Chinese context, however, it has been observed that “Western standards are problematic and difficult to manage for Chinese
corporations, many of them not according with Chinese reality” (Wang & Juslin, 2009: 434). What, then, is Chinese reality? And how is this expected to influence Chinese CSR? This will be discussed in the next section.
2.2 Establishing the Chinese institutional context
An assessment of what distinguishes the Chinese context for CSR can be made on the basis of a distinction made by Tan-Mullins & Hofman (2014: 4) between business-government dynamics, business-society dynamics, and international position. A fourth parameter, Chinese ‘harmonious’ culture, is added, inspired by Wang & Juslin (2009), who go so far as to call this the primary reason for the Chinese to engage in CSR.
Applying this framework to the Chinese institutional situation will show that there are
several reasons why the Chinese institutional framework for CSR is significantly different from that of the United States and one could expect Chinese CSR to be significantly different as well.
2.2.1 Business-government dynamics
In China, the government has recently played a prominent role in proactively promoting the adoption of CSR policies, most notably through guidelines of the ‘Scientific Development’ and ‘Harmonious Society’ for sustainable development, which were introduced in the early
13 2000s under the leadership of then-President Hu Jintao.1 These centrally coordinated grand visions flowed into more concrete CSR strategies such as the guidelines drawn up by the State-Owned Assets Supervision and Administration Commission (SASAC) in January 2008 and government encouragement for businesses to join the UN Global Compact (Tan-Mullins & Hofman, 2014: 7).
Combined with China’s post-Cold War grand strategy of ‘going out’ (Friedberg,
2006), a related encouragement for adopting CSR driven by the government applies to Chinese businesses operating outside the borders of China, for instance in Africa. As Whitehead (2014: 48) says, “Chinese firms’ “going out” is firmly couched within a state-driven, corporatist framework, with a significant guiding role assumed by China’s “policy banks” such as the Export Import Bank of China (China ExIm Bank) and the China Development Bank.” Most financial resources flowing to Africa come from the China Export-Import Bank (China ExIm), which is heavily supported by the Chinese government (Bräutigam, 2009).
When comparing this government guidance in the adoption of CSR to the voluntary
codes of conduct drawn up by many Western firms, which is typically understood as a transfer of regulatory power from the realm of the government to the realm of private
corporations (Jenkins, 2001), a clear institutional distinction between American and Chinese CSR becomes clear. First, this is because the adoption of CSR policies is so proactively encouraged by the Chinese government. As Moon & Shen (2010: 615) say, “CSR in China could be considered doubly oxymoronic in that the concept traditionally associated with discretionary activity beyond that required by the government, is now endorsed and encouraged by a government.”
Second, and related to that, the companies that are encouraged by the Chinese
government to adopt more CSR strategies, are often also either owned by the government (state-owned enterprises, SOEs), or at least heavily supported with public money. Thinking back of the stakeholder theory of corporate social responsibility, Chinese managers can thus be said to be sensitive mainly to their national government, which is both their most
important stakeholder and shareholder at the same time. This means that they operate within an entirely different system, basically absent from market competition, whereas Western
1 Scientific Development and Harmonious Society are two related concepts introduced under Hu Jintao’s
leadership as a vision for China’s socioeconomic development in the future, against the backdrop of the negative social and environmental consequences of China’s quick economic development (Chan, 2009). Nonetheless, the core component of these strategies is still rapid further economic development, from which possibilities for development in other domains should flow (China Daily, 2007).
14 companies are often motivated to act more responsibly because they seek to avoid negative publicity, or even consider CSR as a potential competitive advantage (Jenkins, 2001).
Moreover, an integral part of the Scientific Development and Harmonious Society concepts is the government’s central role in taking care of social security, culture, education, and
healthcare (Chan, 2009). These themes are thus not typically transferred to the business sphere in the Chinese situation.
2.2.2 Business-society dynamics
Jenkins (2001) has observed that NGOs and trade unions play an important role in putting American corporations under pressure to behave more responsibly where the state doesn’t. The power of such civil society organizations is that they can threaten to harm businesses’ public reputations or organize strikes. They thereby have the ability to trouble a business’s sales figures if its management fails to meet their expectations.
In China, it is relatively hard for civil society groups to organize themselves and exert
pressure on decision-making (Tan-Mullins & Hofman, 2014: 9). Non-governmental
organizations (NGOs) motivated in their actions by representing particular groups in society or getting involved in politically sensitive domains find difficulties registering with the Chinese government, which is demanded from them if they wish to be allowed to exert any formal influence. Civil society groups trying to voice themselves through NGOs are also troubled by the restrictions put on their ability to raise funds and to formally organize themselves.
Exceptions to this are NGOs concerned with the environment, as the government
openly committed itself to ensuring better environmental regulations (Tan-Mullins &
Hofman, 2014). This is in large part because China is now receiving the environmental bill of its own quick industrialization and urbanization over the past decades, which includes serious water and air pollution and water and energy shortages (Wang & Juslin, 2009).
With respect to Africa, the 2006 official Chinese policy for Africa says: “China will
actively promote China-Africa cooperation in climate change, water resources conservation, anti-desertification, bio-diversity and other areas of environmental protection by facilitating technological exchanges” (Chinese Government, 2006). Moreover, it should be noted that the Chinese civil society network shows signs of expansion in general, which according to
Whitehead (2014: 43) can “be seen as a “withdrawal” of state involvement in certain domains of governance.”
15
As regards trade unions, China knows only one that is officially recognized and
allowed, the All-China Federation of Trade Unions (ACFTU). The ACFTU is so closely associated with the Chinese government and the Communist Party that it is arguably not a real union but rather a state organ, and hardly voices the interests of the workers (Taylor & Li, 2007).
2.2.3 International position
As Whitehead (2014: 48) says, “Chinese overseas firms have faced unique CSR challenges when investing abroad, either because they find themselves exposed to an unfamiliar regulatory framework in the host country […], or because they are unprepared for the scrutiny from global civil society.” There has been pressure, whether implicit or explicit, from the international community to make China adopt internationally shared standards for the responsible behavior of corporations.
A problem here is that China is often not a participant in the global fora via which
these norms and standards are shared. Many investment projects in Africa are financed by China ExIm Bank, and this bank, “like other Chinese lending, does not come with the
political, environmental, or human rights conditions often attached to Western agency funds” (Moss & Rose, 2006: 2) – causing China to “operate outside the export credit rules agreed by other countries” (Moss & Rose, 2006: 1). “China is not part of the OECD efforts to require environmental impact assessment on projects supported by export credit, nor have Chinese banks signed up to the Equator Principles which set voluntary environmental and social standards for banks on lending […]” (Moss & Rose, 2006: 3).
Also important is that China typically does not set any political conditions for its
partner states other than respecting the One China policy (Bräutigam, 2009). The result of this is that the Chinese have no reason not to do business with African regimes of what Western countries would denounce as ‘rogue states’.
On the one hand, the fact that China, together with some other emerging powerful
economies, does often not subscribe to the Western norms set for businesses could mean the advent of a new, alternative way of looking at CSR. On the other hand, it has been observed that “the Chinese government is showing progress and aligning its corporate behavior with global norms” (Tan-Mullins, 2014: 32), for instance by joining the World Trade Organization (WTO) in 2001. Nonetheless, Chinese adoption of such global standards is often done by specific agents in specific sectors, rather than holistically (Tan-Mullins, 2014: 28). Also,
16 there are examples of international codes of conduct that have a special version adapted to the Chinese situation (Wang & Juslin, 2009). A lot of internationally shared standards put a high focus on transparency and accountability, which has appeared not to be the focus typical for Chinese businesses. Tan-Mullins (2014: 34) suggests that a multi-stakeholder debate, if welcoming countries like China, “will allow the emerging economies to take charge and eradicate the possible North-South divide or Western hegemony debate on international standards.”
2.2.4 Chinese culture and harmony
Chinese culture constitutes an aspect of the Chinese context for CSR that is not explicitly dealt with by Tan-Mullins & Hofman (2014). Wang & Juslin (2009), however, typify it as the primary driver behind the formation of Chinese CSR. The Chinese cultural context for CSR, they contend, is strongly shaped by the values of “Confucian interpersonal harmony and Taoist harmony between man and nature” (2009: 433).
‘Confucian interpersonal harmony’ is a concept that proposes a balance in society that
is based not on everyone’s absolute equal position, but rather on everyone’s relative position in society. Each position comes with respect for others, family, loyalty, and duty. An integral part of this is the concept of a son’s respect for his father, or a citizen’s respect for its
government (Wang & Juslin, 2009). Confucian interpersonal harmony allegedly manifests itself in a typical work ethic that is strongly shaped by an original Confucian morale, wherein the employer could be seen as the father, and the employee as the son.
In more general literature on work ethic, it is argued that the Confucian Work Ethic,
as opposed to the American-European Protestant Work Ethic, highly values hard work and thrift not as part of a pursuit of individual potential, but in connection with strict compliance to the rules set by superiors (Lim, 2002; Lim & Lay, 2003). As early as in 1985,
anthropologist Stevan Harrell wrote an article titled “Why Do The Chinese Work So Hard?” He quotes from a work that goes back to 1894 called Chinese Characteristics, in which it is observed that the value of diligence is widespread within Chinese society; it “is not
characteristic of a single group within Chinese society, but applies to all residents of the empire, from the wealthy businessmen […] to the scholars […] to the farmers” (Smith, 1894, in Harrell, 1985: 204).
17 2.3 Expectations from theory
As has been described above, the Chinese institutional context for CSR structurally differs from the American context from which CSR originated on at least four main points. From this exploration of Chinese institutional conditions, in combination with CSR concepts taken from the traditional CSR literature, several expectations can be deducted as regards
distinguishing Chinese CSR in Africa from American-inspired CSR in the region. These expectations cannot automatically be seen in terms of a causal relation. Rather, they identify and flag key elements that are expected to be relevant to this research.
First, the adoption of CSR policies is fervently encouraged by the Chinese
government as part of the Scientific Development and Harmonious Society guidelines, which means that Chinese CSR cannot automatically be seen in terms of the transfer of regulatory power from the state level to the corporate realm that is so characteristic to American-style CSR. Related to that, many companies operating both within and outside the borders of China are owned or financially supported by the Chinese state, and therefore cannot be said to operate within a market-competitive system. This probably changes the meaning given to the foundation layer of Carroll’s pyramid for CSR, which holds that a corporation’s basic, though not only, responsibility is its economic responsibility to be profitable.
It is yet to be seen, however, how this works out for Chinese businesses’ working
conditions, human rights, and environmental standards in Africa. On the one hand, if a
business does not rely on the maximization of its profits for its survival in a market context, it could be reasoned that there is less impetus for a ‘race to the bottom,’ and thus less incentive to save on the social and environmental aspects of doing business. On the other hand, CSR policies can also be viewed as a competitive asset, as it often goes hand in hand with the protection or even positive improvement of a company’s public reputation. What is also important is that the Chinese government assumes a central role in taking care of social security, education, culture, and healthcare for its people as part of the Scientific
Development and Harmonious Society concepts. These might thus be themes that are not left to the Chines business sphere. In other words, these elements might not be very salient in Chinese companies’ CSR strategies.
More concrete indications may lie in the second aspect of the Chinese institutional
context identified above, as Chinese civil society is hardly allowed, let alone empowered, to exert influence on the decision-making process regarding the responsible behavior of companies through NGOs, and there is only one formally allowed trade union, which is
18 closely intertwined with the government. The potential power of civil society organizations is more severely restricted for labor issues and human rights than for the environment, as the latter is a theme also increasingly promoted by the Chinese government. It can thus be
expected that Chinese CSR policies score significantly better on environmental than on social responsibilities.
Third, whereas China is represented in the United Nations, and more recently also
joined the WTO, it is often no participant in international initiatives to harmonize or
universalize CSR standards, such as those of the Organization for Economic Cooperation and Development (OECD). It can therefore be expected that Chinese CSR strategies are less focused on openly complying with international standards, and less transparent, than CSR policies of the American style. In addition, Chinese CSR might be characterized by a different approach to human rights, as these are often conceived of as universal and
campaigned as such by international organizations of which China may not be a participant.
Fourth, Chinese culture and the concept of harmony, which is also the value central to
the Chinese government’s guiding concept of Harmonious Society, suggest two possible features of Chinese CSR. The Taoist principle of respect for nature suggests that Chinese businesses will value the environmental sustainability of their actions. This can be seen in connection with the second expectation introduced above; the expectation that Chinese companies may do relatively well on environmental CSR.
As regards the relationship between employees and their employers, the pattern of the
‘Confucian Work Ethic,’ which values hard work and compliance to rules and balance in society rather than absolute equality and the realization of individual potential, suggests that Chinese employees might tend not to ask for an improvement in their working conditions, and that these working conditions might be below the standards that are normal in the U.S., or have a different character, as a result.
The suggestions that have been described above can be reformulated into the following set of expectations:
1. Chinese companies may interpret their economic responsibility differently. This could
either mean that there is no incentive to save on the social and environmental aspects
of doing business in a ‘race to the bottom,’ or the exact opposite: that there is no
19
2. Chinese companies may score significantly better on environmental than on social
CSR.
3. Chinese companies may be less focused on openly complying with international CSR
regulations than are their American competitors, and related to that, Chinese
companies may be less transparent.
4. Chinese companies may have a different approach to human rights, as these are often
seen as ‘universal’ through their standard-setting conventions and the Chinese do not
always participate in the same international agreements.
5. Chinese companies’ treatment of their employees may be characterized more by the
value of hard work, harmony, and compliance with rules, than by the employer’s
potential role in the pursuit of individual employees’ personal objectives.
20 3. Case selection
As has been discussed in more detail and grounded in theory in the previous chapter, the aim of this paper is to explore how Chinese CSR deviates from largely U.S.-dominated Western CSR. This question has been based on the observation that the institutional context for Chinese CSR structurally differs on various points from the American context for CSR, which has been the context within which CSR originally emerged and flourished as a concept and as a practice.
The concrete ambition of this thesis is to compare the CSR policies of Chinese
businesses in Africa with those of their American competitors in the region. It has been a deliberate choice to specifically examine American, rather than generally ‘Western’ businesses. After all, the broader aim of this thesis is to engage in a debate on competing superpowers: on the Chinese challenging American hegemony in the global economy. In addition, and as has been established in the previous chapter, CSR policies in other Western countries can generally be seen as true but marginal variations on the American example, whereas the Chinese institutional context for CSR is significantly different to an extent that it can be expected to produce an alternative for, rather than a variation on established,
internationally shared CSR.
The side note should be made that this is no reason to assume that the American and
the Chinese are the only foreign powers that matter on the African continent. Major players that are left out of the analysis include the European countries, which are geographically closest to the region and have undeniably shared a long and complex history with it.
The African continent is taken as a geographic specification because one of the
societal motivations for the writing of this thesis is that the Chinese are currently often depicted in the media as reckless robbers of African riches, failing to take responsibility for the social and environmental consequences of their actions. CSR policies are a key
instrument to assess the responsibility of an economic actor’s behavior, and thus it is relevant to study Chinese CSR policies in Africa – and compare them to those of the actors that claim to be more responsible. A great analytical benefit of choosing the African continent is that both American and Chinese businesses are guests there, and none of them can lay a claim on their own sovereignty. Both are bound to deal with the same national regulations of their shared host countries.
21 and American economic policies for Africa are very similar. The next section of this chapter will therefore discuss the economic presence of both the Chinese and the Americans in Africa. The remainder of the chapter will then be dedicated to a selection of the paired cases on the basis of which the initial research that follows will be conducted, accompanied by a discussion of the generalizability of this case selection.
3.1 Chinese economic presence in Africa
3.1.1 Chinese economic presence in Africa: how
In the 1980s, as part of the efforts to loosen the strictly planned economy of the Mao Zedong years, the Chinese government under Deng Xiaoping initiated a range of liberal economic reforms to pave the way for China’s rise as a mature economic power on the world stage. Following this course, in the late 1990s China launched its ‘Going Out’ strategy, which included a new approach to Africa with the prime motive of doing business. As Sun (2014: 2) says, “the relation of [modern] Sino-African ties is largely transactional and reciprocal.” In the background, the Chinese policy for Africa also appears shaped by the political
considerations of securing support for the One China policy, i.e. recognizing Taiwan as a part of China, as well as acquiring more leverage within international organizations such as the U.N. (Sun, 2014).
As has been touched upon before, the two leading institutions in financing Chinese
project in African countries are the Chinese Export-Import Bank (China ExIm Bank) and to a lesser extent also the China Development Bank, which were both established in 1994 as policy instruments of the state in a time that was otherwise characterized by liberalization reforms. The bigger part of China ExIm Bank’s financing goes to export credits, which are either “preferential loans for Chinese companies operating abroad” (export seller’s credits) or “credits issued to importers of Chinese goods or services” (export buyer’s credits)(Bräutigam, 2009: 112). As China ExIm Bank is a government tool, it heavily relies on government support and does not necessarily have to worry about maximizing its profits.
The China Development Bank works differently. The projects it will give loans to are
selected on the basis of market principles, i.e. on their estimated risks and benefits. In 2007, the China Development Bank established the China-Africa Development Fund (CADF), which is an equity fund that encourages “joint projects between state-owned or private Chinese firms, and African (or other nationality) companies” (Bräutigam, 2009: 94). This
22 creates the option for multiple investors to share the risks.
In recent years, China ExIm Bank also increased its modest granting of concessional
loans (Bräutigam, 2009: 114). These concessional loans are often backed directly by African natural resources, and they therefore have the benefit of applying to African states that would otherwise not be creditworthy (Sun, 2014: 8). Whereas the larger part of loans and credits given by China ExIm Bank and the China Development Bank are tied to market principles, ExIm Bank’s concessional loans can actually be counted as official development assistance in Western terms (Bräutigam, 2009: 161).
3.1.2 Chinese economic presence in Africa: where
FOCAC (the Forum on China-Africa Cooperation), the central intergovernmental platform for economic cooperation between China and Africa, has 49 member states listed on its official website, next to China and one international organization, the African Union (FOCAC ABC, 2013). These include all countries on the African continent and African island-states except for Gambia, Burkina Faso, São Tomé and Principe, and Swaziland. The latter three maintain diplomatic ties with Taiwan, the abstention from which is the only official political condition China sets for its African economic partner states as part of the One China policy. Gambia has been switching back and forth between China and Taiwan (Sun, 2014).
The territories of Western Sahara and Somaliland also have no confirmed economic
ties with China, but these are not universally recognized by the U.N. as independent nation states either. The country list on the FOCAC website also includes one Sudan, rather than Sudan and South Sudan, but other sources prove that China is in fact relatively active in South Sudan, which gained independence in 2011 (see e.g. China AidData, 2014; Bräutigam, 2009).
In 2006, the Chinese government announced via FOCAC that it had plans to create
overseas special economic zones (SEZs) in Africa as part of the ‘Going Out’ strategy (Bräutigam & Xiaoyang, 2011). The specific African countries in which these have so far been established are Algeria, Egypt, Ethiopia, Mauritius, Nigeria (x 2), and Zambia. The selection of these locations and the details of the business sectors have largely been left to Chinese contractors and the affiliated African governments. These SEZs do thus not automatically receive direct financial support from China ExIm Bank or the China
23 and they are in favorable positions for receiving loans in general (Bräutigam, 2009). Whereas the creation of these SEZs potentially provides an interesting specification of where in Africa the Chinese are particularly active, it should also be said that the SEZs are largely still in their initial stages.
3.1.3 Chinese economic presence in Africa: identifying key sectors
In its key FOCAC announcement made in 2006, the Chinese government expressed that it “encourages and supports Chinese enterprises’ investment and business in Africa, and will continue to provide preferential loans and export buyers credits to this end” (Chinese
Government, 2006). In the same announcement, three branches of business were treated with particular salience. These are infrastructure, resource extraction, and agriculture. An aspect that is not given much attention to in this particular policy document, but that is pointed at in other literature, is manufacturing (e.g. Bräutigam, 2009). Especially the more mature, better developed manufacturing companies are encouraged by the Chinese government to move abroad to open overseas factories, thereby becoming true Chinese-based multinationals.
Because the whole financial structure behind a Chinese project in Africa can be quite
complex, as has shortly been discussed in the previous sector, added to the fact that the Chinese do not publish regular, open data about their investments in Africa, it is not easy to map and compare specific Chinese projects in specific African countries. Therefore, several data sources have been combined below, in order to be able to give an overall impression of where Chinese money goes in Africa. It should be noted that not all adhere to the same categories, nor do they all provide data from exactly the same time span.
Infrastructure
As regards infrastructure, Gutman, Sy, and Chattopadhyay (2015) report that the African countries that received most Chinese financing in recent years have been Ghana and Ethiopia,
followed by Cameroon and Zambia2. Within the infrastructure branch, China has recently
invested most in railways and roads, and even more recently in hydropower (Gutman, Sy, and Chattopadhyay, 2015). This largely corresponds with the map from Business Insider (2013), which reveals highest Chinese expenditures on railways and roads in Ghana, Nigeria,
Ethiopia, Chad, and Tanzania, and the high-profile building of hydroelectric dams in Ghana,
24 Ethiopia, and Zambia.3 Substantial spending on ‘transportation’ and ‘energy’ is once again
confirmed for Nigeria and Ethiopia by The China Global Investment Tracker (2014).4
Resource extraction
As regards resource extraction, Business Insider (2013) shows China most heavily investing in the oil and natural gases of Ghana and Nigeria, Tanzania and Madagascar coming third and fourth. The winning of iron ore and copper is mostly concentrated in Zambia, while ‘other mining’ is done in Zambia, but in neighboring countries Tanzania, Mozambique, and
Zimbabwe as well – and in South Africa. The China Global Investment Tracker (2014) does not make a distinction between energy from hydroelectric power stations and energy from oil and gas, but Nigeria definitely scores highest in the category ‘energy’.
Agriculture
Securing food supplies is a national security issue for China, which has to feed a considerable part of the world’s population (Bräutigam, 2009). After the FOCAC meeting of 2006, the Chinese government established fourteen ‘agrotechnology demonstration centers,’ situated in Benin, Cameroon, Congo Brazzaville, Ethiopia, Liberia, Mozambique, Rwanda, South Africa, Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe (Bräutigam, 2009). The China Global Investment Tracker (2014) shows relatively high figures for Sudan, Ethiopia, and Congo-Brazzaville. China AidData (2014) gives the highest scores in the category ‘agriculture, forestry, and fishing’ to Zimbabwe, Sierra Leone, and Rwanda – followed by Ethiopia and Sudan.
Manufacturing
Business Insider (2013) shows manufacturing investments are highest in Nigeria, Ethiopia, and South Africa. Ethiopia is also home to one of the seven SEZs. The SEZ near the
Ethiopian capital Addis Ababa is specialized in textile manufacturing (China AidData, 2014).
3.2 Comparing U.S. to Chinese economic presence in Africa
Bräutigam (2009: 162) states that comparing Chinese and American aid to Africa is like
3
These data cover the period of 2010 – 2012.
25 “comparing apples and lychees.” The key reason for this is that the larger part of financial flows going from China to Africa does not internationally qualify as official aid under the definition formulated by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). Under the category of Official
Development Aid (ODA) fall, says the DAC (as from 1972):
those flows to countries and territories from the DAC List of ODA recipients and to multilateral institutions which are:
i. provided by official agencies, including state and local governments, or by their executive
agencies; and
ii. each transaction of which:
a) is administered with the promotion of the economic development and welfare
of developing countries as its main objective; and
b) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent)
As has been discussed in the preceding section 3.1.1 of this chapter, the Chinese government interprets its economic ties with Africa much more in terms of trade and business than in granting aid, even though development assistance to developing countries is in fact an integral aspect of this. The official financial flows going from China to Africa via China ExIm Bank and the China Development Bank primarily consist of export credits and
business-oriented loans, and would therefore qualify as Other Official Flows (OOF) in DAC terms.
As is shown in figure 1 on page 26, taken from Bräutigam (2009: 184), Chinese and
American financial flows to Africa have very different natures. Whereas financial flows from the U.S. to China consist of half official aid, almost half private flows, and a slight share for other official flows, those coming from China are mostly classified as other financial flows, and only a small part as official aid. According to Bräutigam (2009), China ExIm Bank is the largest export credit agency in the world. Naturally, these are differences that should be taken into account when analyzing (the respective CSR policies of) Chinese and American
businesses active on the African continent.
26 Figure 1: “China, US, Europe: Total financial flows to Africa 2007,”
from Bräutigam (2009: 184).
However, the United States has recently shown signs of mirroring China’s active promotion of exports to Africa. At the first U.S.-Africa Business Forum summit in Washington on August 5, 2014, U.S. President Barack Obama announced that a special sum of money would be reserved for Africa “aimed at shifting U.S. ties with Africa beyond humanitarian aid and toward more equal economic partnerships” (Associated Press, 2014). Among the participants were almost all African heads of state, as well as representatives of 90 American multinationals. According to its own website, the “areas of focus” of the forum are finance and capital investment, infrastructure, power and energy, agriculture, consumer goods, and ICT.
Official development aid from countries like the U.S., on the other hand, has largely shifted from infrastructure and agriculture to poverty eradication, health and education improvement, and gender equality promotion in light of the U.N. Millennium Development Goals (MDGs), a set of internationally agreed ambitions that was launched in the year 2000. Bräutigam (2009) observes that both actors from the private sector and the official aid from Western countries has largely retreated from industry and manufacturing. The Chinese show a tendency to jump into sectors that traditional donors have moved away from (Bräutigam, 2009; Gutman, Sy, and Chattopadhyay, 2015).
27
Finally, Western donations to the African continent have typically been channeled via
the big multilateral development institutions of the International Monetary Fund (IMF) and the World Bank, which used to be known for their approach of structural adjustment, i.e. setting conditions for liberalization policies in return for loans. The U.S. government has made a substantial effort to encourage African countries to open up their economies, for instance through the 2000 African Growth and Opportunity Act (AGOA). This has
influenced the selection of states which they enthusiastically cooperated with and those they were not so eager for, whereas the Chinese have typically not set any other condition than respecting the One China Policy, and, of course, potential economic benefits.
3.3 Case selection
The previous sections of this chapter have sought to explain why selecting cases for this research is more complex than randomly picking a Chinese and an American trade or
investment project in Africa and compare their respective CSR strategies. First, as regards the how, there are large differences in the financial structures behind both countries’ business activities in Africa. Whereas American financial flows to Africa largely consist of private activities and official development aid, Chinese financial flows to Africa mostly take the shape of government-backed export credits. Second, as regards the where, the Chinese typically respect their African partner countries’ sovereignty as long as they respect theirs, which has as its result that the Chinese can do business with African regimes of what Western countries would denounce as ‘rogue states,’ such as Zimbabwe and Sudan (Moss & Rose, 2006). Third, as regards the sectors, traditional Western donors to the African continent have largely moved away from infrastructure and refrained from manufacturing, now generally focusing the U.N. Millennium Development Goals (MDGs). The Chinese have typically shown eager to jump in where the others left. These differences have recently been tempered a bit in light of the new American Doing Business in Africa Initiative and the U.S.-Africa Business Forum, which also focus more on exports and also has a more transactional character.
For the sake of comparison, this paper aims to analyze Chinese and American cases
that share as similar as possible as regards financial backing, African host countries, and sector specifications. The cases that have been selected for the upcoming analysis are: for infrastructure, Chinese China National Machinery Import and Export Corporation (CMC)
28 and American Conti Group in Ghana, for resource extraction, Chinese China National
Offshore Oil Corporation (CNOOC) and American Chevron in Nigeria, for agriculture, Chinese Wanbao Grain & Oils and American Cargill in Mozambique, and for manufacturing, Chinese Huajian Shoes in and American Phillips-Van Heusen (PVH) in Ethiopia. The
selected paired cases are visualized in the map below (figure 2).
29 Infrastructure
China: China National Machinery Import and Export Corporation (CMC) railway construction in Ghana
In 2010, the government of Ghana signed a U.S.D. 6 billion contract with China National Machinery Import and Export Corporation (CMC) to expand Ghana’s railway network with a new track crossing the country from South to North. The new railway would connect the Southern city of Kumasi to Paga at the Northern border with Burkina Faso (Bloomberg, 2010).
This investment has also been reported by the China AidData (2014) Tracking
Chinese Development Finance project. CMC is a subsidiary of China General Technology Group, a state-owned enterprise. It was established in the Chinese city of Tianjin in the early 1950s. Today it is not only active in Asia, but in essentially all parts of the world.
U.S.: The Conti Group drainage project in Accra, Ghana
In 2013, various media sources reported on the launch of a drainage and sewage
improvement project in Accra, the capital of Ghana. The project is financially supported by the U.S. Export-Import Bank, and its main contractor is the New Jersey-based Conti Group, an American energy and infrastructure developer (Accra Times, 2013; Embassy of the United States in Accra, Ghana, 2013).
Resource extraction
China: China National Offshore Oil Corporation (CNOOC) exploiting the Akpo oil field in Nigeria
In 2006, the China National Offshore Oil Corporation (CNOOC) signed a deal for extracting oil from the deep sea Akpo oil field off the coast of the Nigerian city of Port Harcourt. CNOOC is a state-owned enterprise (China Daily, 2006). CNOOC is one of the three key Chinese state-owned oil giants, currently present in Asia, Africa, Oceania, North America, South America, and Europe.
30 U.S.: Chevron exploiting the Agbami oil field in Nigeria
Chevron operates the Agbami oil field in Nigeria. Chevron is one of the world’s largest oil companies, originally based in California, U.S. It was also a participant of the 2014 U.S.-Africa Business Forum, thereby affiliating with a government-supported initiative for encouraging American businesses to invest in Africa.
Agriculture
China: Wanbao Grain & Oils Corporation rice farms in Mozambique
Mozambique is the host country of one of the fourteen Chinese agricultural demonstration centers in Africa, which are part of a government-supported initiative aimed at educating local African farmers on Chinese farming techniques (Ukaejiofo, 2014). In 2008, the Chinese firm Lianfeng Overseas Agricultural Development Co., Ltd. reopened an old rice farm near Xai Xai, a city in the Southern coastal region of Mozambique, as its Mozambican
demonstration center. In 2011, the Xai Xai rice farm was taken over by Wanbao Grains & Oils Co., Ltd., a company that expanded the project with another large investment.
This investment has also been reported by China AidData (2014). It has often been
negatively featured in the media in connection with ‘land grabbing,’ a condemning term used to refer to large-scale land acquisition in developing countries (e.g. The Ecologist, 2013).
U.S.: Cargill farming in Mozambique
Cargill is a food processing multinational based in Minnesota, U.S.. Reuters (2012) reported that the company engaged in “two projects in Mozambique focused on increasing grain yields for small farmers and on training and education in farm communities,” as part of a general U.S. investment initiative for African agriculture announced by President Obama.
Manufacturing
China: Huajian shoe factory in Ethiopia
Huajian is a Chinese shoe manufacturer that receives financial support from the China Development Bank via the China-Africa Development Fund (CADF). It opened a shoe
31 factory near Addis Ababa, the capital of Ethiopia, in 2012, and aspires large-scale expansion by building a “shoe city,” covering a new shoe supply chain in its entirety (The Guardian, 2013; Bloomberg, 2014; China Daily, 2014).
U.S: Phillips-Van Heusen looking for factories in Ethiopia
Phillips-Van Heusen (PVH) is a large American apparel company that owns luxury brands like Tommy Hilfiger and Calvin Klein. It has recently shown its interest in investing in factories in the Ethiopian Bole Lemi Industrial Zone (Addis Fortune, 2014).
3.4 Generalizability of case selection
This chapter has aimed to show that the cases selected here have been chosen very carefully. The Chinese case selection presented above covers the four key sectors within which the Chinese operate in Africa, and should therefore be reasonably representative of Chinese economic engagement with the African continent. For the sake of comparison, the chosen four Chinese companies have been matched with American competitors that are active in the same African host countries in the same sectors. Because the Chinese companies have been taken as a starting point, the selection of American companies might be a little more
problematic when it comes to generalization, if the aim of such a generalization is to acquire a thorough impression of U.S. economic engagement with Africa. As has been discussed above, especially the infrastructure sector is typically one that the Americans refrain from, and the Chinese engage in. However, the American cases chosen here do indeed form an integral part of the bigger story.
The downside of taking into account various sectors with this small total number of
cases is that every sector has hitherto been represented solely by one company. Whether a single national case per sector provides sufficient information to justify generalizations about each sector as a whole is questionable. Therefore, a second-phase analysis investigating the CSR strategies of one selected sector in more detail will be provided in chapter 6.
32 4. Analytical approach
4.1 Data, operationalization, and coding
As this paper is about differences in CSR strategies, the data gathered for this research have been taken directly from the respective companies’ websites. All relevant content – that is, explicit CSR policies, but also all statements dealing with the companies’ values,
certifications, partnerships, missions and visions, rankings and awards, and press releases posted on their own website – have been considered ‘text’ and were closely scrutinized with the ambition of detecting patterns.
The relevant texts have been categorized by means of two analytical axes, both with
their own range of categorical labels. First, text parts were labeled according to the specific components of CSR that they deal with, as inspired by the United Nations Global Compact – that is, distinguishing between the environment, labor standards, and human rights. Second, text parts were labeled according to the position that these specific component of CSR had in the respective companies’ business plans against the backdrop of Carroll’s CSR pyramid (1991) – that is, whether these policies were treated as part of the companies’ economic, legal, ethical, or philanthropic responsibilities.
It is important to be aware of the relativity that comes with weighing the scores on the
multiple categories, as some websites and CSR policies were very elaborate, and others were concise or even sparse.
4.1.1 CSR components: environment, labor standards, human rights, and other
The conceptualization of CSR as having the three distinguishable components5 of
environment, labor standards, and human rights is laid down in the United Nations Global Compact. In line with the Compact, the label of ‘environment’ has been given to those elements that had to do with 1) “supporting a precautionary approach to environmental challenges,” 2) undertaking initiatives to promote greater environmental responsibility,” and/or 3) “encouraging the development and diffusion of environmentally friendly technologies.”
The label ‘labor standards’ applied to those CSR elements that had to do with 1)
5
In fact, the U.N. Global Compact currently has four components, ‘anti-corruption’ having been added later, in in 2004, on the basis of the 2003 United Nations Convention against Corruption (UNCAC).
33 “upholding the freedom of association and the effective recognition of the right to collective bargaining,” 2) “eliminating all forms of forced and compulsory labor,” 3) effectively abolishing child labor,” and/or 4) “eliminating discrimination in respect of employment and occupation.” The distinction between ‘labor standards’ and ‘human rights,’ the next category, is not always clear. In this paper, some elements have been taken from the United Nations Universal Declaration of Human Rights (UDHR), under the condition that they directly related to the workplace. These were “just and favorable remuneration” (UDHR Article 23 (3)) and “reasonable limitation of working hours and periodic holidays with pay” (UDHR Article 24). CSR elements dealing with workplace safety have also been classified as ‘labor standards.’
The label ‘human rights’ was given to those CSR elements that had to do with 1)
“supporting and respecting the protection of internationally proclaimed human rights,” and 2) “making sure not to be complicit in human rights abuses.” This part of the Compact is based on the Universal Declaration of Human Rights (UDHR). The UDHR has some natural overlap with the previous category, labor standards, most explicitly with the principles of non-discrimination and free association. In order to clearly demarcate the category of ‘human rights’ for the analysis conducted in this paper, it has been decided that this category covers the latter part of the UDHR. This includes the right to “rest and leisure” (UDHR, Article 24), “health and well-being,” including “food, clothing, housing, and medical care” (UDHR, Article 25), the right to education (UDHR, Article 26), the right to cultural life (UDHR, Article 27), and the right to personal development (UDHR, Article 29). This category also includes other references to human rights, if not explicitly related to the workplace.
A fourth label ‘other’ was added to cover all policies and strategies that do not fall
into the other categories, but that nonetheless have to do with achieving a certain level required or a certain standard set keeping in mind other motives than just doing business. Measures for anti-corruption, a tenth principle that was added to the U.N. Global Compact in 2004, also falls into this category.
4.1.2 CSR layers: economic, legal, ethical, and philanthropic
In line with Carroll’s CSR pyramid as it has been discussed in the theoretical framework chapter earlier in this thesis, specific elements of CSR were categorized as ‘economic’ when they were directly linked to a company’s business goal of surviving as an economic actor, often accompanied by making profit. The label ‘legal’ was given to the references that were
34 made to binding regulations. This primarily entails national laws explicitly referred to, but other, international, private, and/or voluntary regulations also fall into this category, as long as the company commits itself to such a regulation (whether or not in coordination with an international organization, an NGO, a supplier, or another company). The category ‘ethical’ covers those CSR elements that are not required for a company to survive as an economic actor, but rather expected from the various stakeholders (e.g. employees, local communities at sites of operation) involved. Finally, the optional, discretionary activities that companies engage in not because it is expected by their stakeholders, but with the ambition of doing good and meeting society’s possible desires, were classified as ‘philanthropic.’
4.2 Reliability and validity of analytical approach
Because the coding of the data has been performed as systematically as possible, the method applied here is in potential sufficiently reliable to be applied to additional cases if this research were to be expanded. Some room for interpretation has been left, however, in order to be able to also deal with more implicit information that was nonetheless deemed relevant, such as patterns of salience and the particular order in which CSR components were featured. This should be done cautiously to prevent an exceeding personal influence from the
researcher on the results.
The validity of this methodological approach is sufficient in that sense that the aim of
this research explicitly was to explore American and Chinese official approaches to CSR, and that is what is measured here. However, the misleading thing about CSR is that it is often used by a company as part of its PR strategy. In other words, a company’s official statements on CSR might not tell that much about how this company really practices CSR, and whether what it claims to represent on its website is perceived in the same way by other stakeholders. In future research, it would be interesting to find a way to include other aspects, such as media reports, external auditing reports, and possible lawsuits the company has been involved in. An additional evaluation of the research conducted in this thesis can be found in the discussion section in chapter 7.
