FACTA UNIVERSITATIS

Series: Economics and Organization Vol. 6, No 2, 2009, pp. 89 - 104

CORPORATE SOCIAL RESPONSIBILITY

IN THE GLOBALIZATION ERA ∗
UDC 005.35:330.342

Goran Milovanović, Nada Barac, Aleksandra Andjelković

Faculty of Economics, University of Niš, 18000 Niš, Serbia

[email protected]; [email protected]; [email protected]

Abstract. The authors of this paper point out that the implementation of the concept of
Corporate Social Responsibility (CSR) allows companies to position their brands
stronger, to strengthen their image, increase market share and increase their ability to
attract and retain employees. An important argument for increased social responsibility of
Serbian companies is that they can thus achieve the benefits of globalization, privatization
and deregulation, as well as to relieve the negative impact of international trade flows
and international investment.
In general, the paper consists of three parts. First, the authors are going to examine the
drivers for complex CSR phenomenon. Further, in the second part, they will take an in-
depth look at some global companies, which have been under fire for some of their
corporate, social, and environmental practices. Finally, the authors will provide an
overview of CSR's impact on social development with special emphasis on Serbia.
Key Words: Corporate social responsibility.(CRS); Drivers for CRS; Criticism of CRS;
CSR in Serbia.

1. INTRODUCTION
Organizations of the 21st century can no longer limit themselves to producing and
marketing products or services without any concerns for the impact they have on society.
If they want to be trusted by their customers, employees and the public at large, they have
to be more socially responsible. One key issue of Corporate Social Responsibility (CSR),
which needs to be addressed, is the integration of ethnic minorities in the workplace and
the community.

Received Novembar 9, 2009

∗
This paper is a part of research project titled "Developing a Competitive Advantage of Serbian Enterprises in the
Conditions of European Integrations", Number 140052, financed by the Ministry of Science of the Republic of Serbia
90 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

As corporations pursue growth through globalization, they have encountered new

challenges that impose limits to their growth and potential profits. Government regula-
tions, tariffs, environmental restrictions and varying standards of what constitutes labour
exploitation are problems that can cost organizations millions of dollars. Some view ethi-
cal issues as simply a costly hindrance. Some companies use CSR methodologies as a
strategic tactic to gain public support for their presence in global markets, helping them
sustain a competitive advantage by using their social contributions to provide a subcon-
scious level of advertising [7, 94-106]. Global competition places particular pressure on
multinational corporations to examine not only their own labour practices, but also those
of their entire supply chain, from a CSR perspective.
The World Business Council for Sustainable De-
velopment in its publication "Making Good Busi-
ness Sense" by Lord Holme and Richard Watts, used
the following definition. "Corporate Social Respon-
sibility is the continuing commitment by business
to behave ethically and contribute to economic
development while improving the quality of life of
the workforce and their families as well as of the
local community and society at large".
Corporate Social Responsibility (CSR) is be-
coming an increasingly important activity to busi-
nesses. It has become a public relation tool of global
Fig. 1 The business in society [17] corporations to convince consumers it is OK to keep
buying. As globalisation accelerates, large corporations have progressively recognised the
benefits of providing CSR programs in their various locations. CSR activities are now
being undertaken throughout the globe.
Everyone judges companies. Whether you invest in them, buy from them, work for
them, or just live near them, it is difficult not to form an opinion. The most visceral of all
judgments pertain to the firm's moral actions. Had a company placed greater emphasis on
its treatment of employees, it would have likely seen larger gains in its CSR ratings.
The movement towards SCR has not been without criticism. Many people have criti-
cised companies for using CSR as a gimmick to attract employees or media attention.
Some companies have been criticised for claiming to be committed to sustainable devel-
opment whilst simultaneously engaging in harmful business practices. Also, corporations
have been criticised for damaging the environment and using child labor. This means that
corporations have to deal with many ethical issues.
Today more and more of the global corporations issue corporate responsibility re-
ports, and the public expects visible CSR initiatives from businesses of all sizes. Many
companies use CSR as a way to burnish their image, generate brand equity, increase em-
ployee loyalty, promote wide-ranging policies, and labor rights. But is CSR really a win-
win situation - as its promoters claim - for both corporations and the public? Serbian
managers struggle with determining to whom their social responsibilities extend: to share-
holders, employees, local communities, the environment, humanity as a whole, future
generations?
 Corporate Social Responsibility in the Globalization Era 91

2. CORPORATE SOCIAL RESPONSIBILITY AND ITS KEY DRIVERS

The rise in anti-corporate activism over environmental and human rights issues made a
shift in corporate attitudes towards social and environmental aspects essential. The 70s
and 80s saw major international boycotts of companies investing in South Africa, notably
the Nestlé boycott over the company's aggressive milk formula marketing strategies in the
global South. The 1992 Earth Summit in Rio was a key moment in the evolution of CSR
as corporate involvement succeeded in impeding the Summit's ambitious task to ‘find
ways to halt the destruction of irreplaceable natural resources and pollution of the planet.'
Proposals put forward by Sweden and Norway for regulation of multinationals were
crushed in favour of voluntary corporate environmentalism [20].
Companies are recognizing that every customer is part of the community and its social
responsibility is not an optional activity. Advocates of CSR hold that the corporation must
focus not just on shareholders, but on "stakeholders' as well. Stakeholders include cus-
tomers, employees, vendors and shareholders.
Corporate social responsibility, also known as corporate responsibility, corporate
citizenship, responsible business, sustainable responsible business, or corporate social
performance, can be defined as the "economic, legal, ethical, and discretionary expecta-
tions that society has of organizations at a given point in time" [5, p. 36]. The economic
responsibilities refer to society's expectation that organizations will produce goods and
services that are needed and desired by customers and sell those goods and services at a
reasonable price. The legal responsibilities relate to the expectation that organizations
will comply with the laws set down by society to govern competition in the marketplace.
Organizations have thousands of legal responsibilities governing almost every aspect of
their operations, including consumer and product laws, environmental laws, and employ-
ment laws. Regulation in itself is unable to arrange every aspect of a corporation's opera-
tions. The ethical responsibilities concern societal expectations that go beyond the law,
such as the expectation that organizations will conduct their affairs in a fair and just way.
The rise of ethics training inside corporations, some of it required by government regula-
tion, is a driver credited with changing the behavior and culture of corporations. Finally,
the discretionary responsibilities of corporations refer to society's expectation that or-
ganizations be good citizens.
A traditional view of the corporation suggests that its primary responsibility is to its
owners, or stockholders. However, CSR requires companies to accept a broader view of
its responsibilities that includes not only stockholders, but many other stakeholders as
well, such as employees, suppliers, customers, the local community, state, and federal
governments, environmental groups, etc.
Corporate social responsibility is related to, but not identical with, business ethics.
Business ethics usually focuses on the moral judgments and behavior of individuals and
groups within organizations.
The rationale for CSR has been articulated in a number of ways. In essence it is about
building sustainable businesses, which need healthy economies, markets and communities.
The key drivers for CSR are:
ƒ Ethical consumerism - over the last two decades can be linked to the rise of CSR
[8]. Industrialization in many developing countries is booming as a result of tech-
nology and globalization. Consumers are becoming more aware of the environ-
92 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

mental and social implications of their day-to-day consumer decisions and are be-
ginning to make purchasing decisions related to their environmental and ethical con-
cerns.
ƒ Transparency and trust - business has low ratings of trust in public perception.
There is increasing expectation that companies will be more open, more accountable
and be prepared to report publicly on their performance in social and environmental
arenas.
ƒ Increased public expectations of business - globally companies are expected to do
more than merely provide jobs and contribute to the economy through taxes and em-
ployment. As corporations pursue growth through globalization, they have encoun-
tered new challenges that impose limits to their growth and potential profits. Global
competition forces multinational corporations to examine not only their own labour
practices, but those of their entire supply chain, from a CSR perspective.
ƒ Employee motivation. A KPMG survey of 1600 of the world's largest companies
across 16 industrialized countries, including Australia, examined why they are com-
mitted to corporate responsibility and what influenced the content of the reports. By
the survey almost half of the world's largest companies believe employee motivation
is a key driver when it comes to corporate social responsibility [15].
ƒ Laws and regulation - independent mediators, particularly the government, ensur-
ing that corporations are prevented from harming the broader social good, including
people and the environment. Governments should set the agenda for social responsi-
bility by the way of laws and regulation that will allow a business to conduct them-
selves responsibly.
ƒ Crises and their consequences. Often it takes a crisis to precipitate attention to
CSR. One of the most active stands against environmental management is the
CERES Principles that resulted after the Exxon Valdez incident in Alaska in 1989
[8]. Other examples include the lead poisoning paint used by toy giant Mattel, which
required a recall of millions of toys globally and caused the company to initiate new
risk management.
ƒ Stakeholder priorities. Increasingly, corporations are motivated to become more
socially responsible because their key stakeholders expect them to understand and
address the social and community issues that are important to them.
Companies have their own ideas about corporate social responsibility - and how much
of a commitment they make to it. It can range from "going green" to supporting local
charities. But one thing is increasingly clear. It is not a choice any longer. CSR extends to
the bottom line. Corporate Social Responsibility is no longer optional.

3. CORPORATE SOCIAL RESPONSIBILITY - CRITICISM FOR GLOBAL COMPANIES

Debates over corporate social responsibility have taken place around the world. There
is a fundamental disagreement between free trade advocates and CSR activists about the
nature of corporate social responsibility. By CSR activists, while profit is important, there
has to be a higher purpose to corporate existence just as there is to that of humanity. CSR
activists ask corporations to adopt socially responsible policies on labor, environmental
and human rights issues, but there may also be special interest demands, e.g., animal
 Corporate Social Responsibility in the Globalization Era 93

rights, women's rights, technology transfer, rainforest conservation, etc., that a company
may be called upon to address. By free trade advocates, the social responsibility of busi-
ness is simply to maximize the rate of return to the general shareholders, consistent with
the law. Free market economists frequently argue that global environmental and social
standards do not address local differences between countries, and may in fact interfere
with the development of poorer countries.
Today's manager must be a proactive steward of the reputation of the company he
is leading. This requires responding to the concerns and interests of a variety of
stakeholders. A stakeholder is any group or individual that is affected by, or takes an
interest in, the policies and practices adopted by an organization. Top management,
employees, customers, persons or institutions that own the company's stock, and
suppliers constitute a company's primary shareholders. Secondary shareholders in-
clude the media, the general business community, local community groups, and non-
governmental organizations.
One of the forces restraining the growth of global business is resistance to glob-
alization. The anti-globalization movement takes a variety of forms and finds expres-
sion in various ways. In developed countries, the movement's concerns and agenda
include cultural imperialism (e.g., the French backlash against McDonald's), the loss
of jobs due to off shoring and outsourcing (e.g., the furniture industry in the United
States), and a distrust of global institutions (e.g., anti-WTO protesters in Hong
Kong). In developing countries, globalization's opponents accuse companies of un-
dermining local cultures, placing intellectual property rights ahead of human rights,
promoting unhealthy diets and unsafe food technologies, and pursuing unsustainable
consumption. Environmental degradation and labor exploitation are also key issues.
For a global company, the issue of corporate social responsibility becomes com-
plicated. When the chief executive of a global company in a developed country or
government policy makes an attempt to act in "society's best interests," the question
arises: which society? That of the home-country market? Other developed countries?
Developing countries? For example, in the late 1990s, in an effort to address the is-
sue of child labor, the U.S. government threatened trade sanctions against the gar-
ment industry in Bangladesh [25, p. 559]. However, some argue that if industrial child
labor is legally forbidden, then many children are relegated to working in more dangerous
black market occupations such as prostitution. [24] After the Child Labor Deterrence Act
was introduced in the U.S., an estimated 50,000 children in Bangladesh had turned out
into the street, leaving many to resort to jobs such as "stone-crushing, street hustling, and
prostitution". Also UNICEF study found that 5,000 to 7,000 Nepalese children turned to
prostitution after the United States banned that country's carpet exports in the 1990s.
Therefore, after thousand of child workers lost their jobs, their plight worsened.
Whose interests were served by this turn of events?
Companies that do business worldwide may be in different stages of evolution.
Thus, a multinational firm may rely on individual country managers to address CSR
issues on an ad hoc basis, while a global or transnational may create a policy at
headquarters. During the last decades, some multinational companies were widely criti-
cized for their behavior in global market. Consider the following: General Electric,
Coca-Cola, Nike, Royal Dutch Shell, BP, Nestlé, Richmond, Samsung, and Wal-
Mart and Merck.
94 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

General Electric. General Electric (GE) is one of the American companies of-
fering training programs that specifically address ethics issues. It is interesting that
Jack Welch, the former CEO of GE, challenged his employees to take an informal
"mirror test." The challenge: "Can you look in the mirror every day and feel proud of
what you're doing?" [23]. Today, GE uses more formal approaches to ethics and
compliance. GE has produced training videos, instituted an online training program,
and provides employees with a guide to ethical conduct titled Spirit and Letter [31]
and published in 30 languages. However, GE has failed to clean up the Hudson River
after contaminating it with organic pollutants. The company continues to argue via the
legal process on assignment of liability, while the cleanup remains stagnant (Sullivan &
Schiafo 2005) [21].
Coca-Cola. Over the recent years, labour unions and student activists accused
Coca-Cola of ignoring social problems. For example, in 2006, anti-Coca-Cola cam-
paigns have spread across more than 100 university campuses throughout the US,
Canada and Europe, including the UK, where activists were pushing for a nationwide
student boycott. In January 2006 the University of Michigan became the 10th US
college to ban Coke products from its premises, following similar decisions by New
York University and Rutgers University.
There is no doubt that Coca-Cola is particularly vulnerable to attack over its ethical
standards because its success has been built on positive perceptions surrounding its fa-
mous brand. Coca-Cola's brand remains the most valuable in the world, ahead of Micro-
soft, valued at $67.5bn, according to an annual survey by Interbrand, a brand consultancy.
But its value has been edging down in recent years, following a series of blows to its
reputation. Coca-Cola has become a whipping boy for globalization, just as Nike and
McDonald's have been for years. Coca-Cola is particularly vulnerable to attack over its
ethical standards because its success has been built on positive perceptions surrounding
its famous brand [2].
In Europe, the company's image was dented by a contamination scare at a bottling
plant in Belgium and the botched UK launch of Dasani bottled water, which was re-
vealed to be recycled tap water containing excessive levels of a dangerous ingredients.
But perhaps the biggest threat to Coca-Cola's image is growing consumer concern about
the role sugary fizzy drinks play in the obesity epidemic sweeping the developed world.
US soft drink producers agreed to voluntary restrictions on sales in schools in response to
mounting pressure on the industry from state governments, parents and health activists.
By some analysts, Coca-Cola hopes that a new global advertising campaign launched
in the U.S. in March 2006 - with the slogan "Welcome to the Coke Side of Life" - helped
to generate a more positive feelings towards the brand i.e. it tried to 'correct mispercep-
tions' about the brand and increase flagging sales [28]. It is a simple idea, really. Drinking
Coke makes people happy. It tastes good. And it is an invitation to live on the positive
side of life. The new campaign is been developed by Wieden & Kennedy to replace the
current "real" campaign.
In addition to alleged labour abuses in Colombia, activists accused Coca-Cola of
damaging the environment in India by exploiting and polluting scarce water re-
sources around its bottling plants. Coca-Cola has resisted an independent investigation,
arguing it could prejudice an ongoing lawsuit against its Colombian bottling partner in a
Miami court.
 Corporate Social Responsibility in the Globalization Era 95

As the summer of 2009 approaches, the village of Kala Dera in north India is bracing
itself for yet another season of acute water shortages - thanks largely to Coca-Cola. It was
malfeasance on the part of Coca-Cola to locate its plant in such a water-deficit area, and
it was a grave mistake on the part of the Indian government to allow the plant to be lo-
cated in Kala Dera. In the year 2000, Coca-Cola started its bottling plant in Kala Dera.
Groundwater levels dropped dramatically, and wells ran dry, farmers did not have enough
water to have successful crop yields, and women now had to walk miles longer just to
access potable water. Over 60 villages in the vicinity of the Coca-Cola bottling plant felt
the dramatic impacts once Coca-Cola started its operations in Kala Dera [1]. And to add
insult to injury, Coca-Cola extracts the vast majority of the water in the summer months -
exactly when the water shortages are the most acute for the villagers, even without Coca-
Cola.
On June 11th 2009, Venezuela's socialist government stepped up its attack on private
enterprise this week by targeting Coca-Cola, one of the most potent symbols of global
capitalism, by banning the sale of Coke Zero on unspecified health concerns [4]. Coca-
Cola agreed to remove the drink from supermarket shelves pending the results of the gov-
ernment's investigation. In April 2009, Coca-Cola's local bottling company, Mexico's
Coca-Cola Femsa, first began to distribute the product.

Fig. 2 The Campaign to Stop Killer Coke [37]

Campaign to Stop Killer Coke has started on April 20th, 2009. It begun with protest
activities and a mobile billboard truck, which traveled throughout the Atlanta, Georgia,
highlighting Coke's labor, human rights and environmental abuses. One of the billboards,
illustrated the abuses and promoted the http://www.killercoke.org/ website. Figure 2 de-
picts one of the tree billboards i.e. a vending machine with the words "Killer-Cola: The
Drink that Represses!" and satirizes Coke's Coca-Cola Zero ad campaign by stating "Don't
Drink Killer Coke Zero: Zero Ethics! Zero Justice! Zero Health!". Also, there is a picture of
a Killer-Cola can and words "Unthinkable! Undrinkable! Murders in Colombia, Child Labor
in El Salvador, Stealing and Polluting Water in India, El Salvador and Mexico."
Nike. Nike, the world's largest sneaker and sportswear maker, has been criticized for
the practices in its third-world factories. Nike, by contracting with factories employing
more than a half-million workers in 55 countries, is running one of the world's most ex-
tensive international development programs. Most of the factories are located in Asia,
including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and
Malaysia [33]. Nike has contracted with more than 700 shops around the world.
96 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

Nike is one of the largest companies that use sweatshops and child slave labor. Nike
has sweatshops all over the world. Sweatshops are workplaces where the work is very
hard and the place is not safe to work in. Many sweatshops are in rich countries but
sweatshops are found in Export Processing Zones (EPZ) within third world countries.
Critics of Nike are weakening its brand and raising its cost of doing business. Well-
meaning customers, upset by stories of sweatshops and happy to save money, may skip
the Nikes and buy off brands. However, these cheaper no-name sneakers were probably
made under worse conditions.
During the 1990s, Nike faced criticism for use of child labor in Cambodia and
Pakistan in factories it contracted to manufacture soccer balls. Although Nike took ac-
tion to curb or at least reduce the practice of child labor, they continue to contract their
production to companies that operate in areas where inadequate regulation and monitoring
make it hard to ensure that child labor is not being used [14].
Nike has been criticized about ads which referred to
empowering women in the U.S. while engaging in prac-
tices in East Asian factories which some felt disempow-
ered women [9]. Campaigns have been taken up by many
colleges and universities, especially anti-globalization
groups as well as several anti-sweatshop groups such as
the United Students Against Sweatshops [35]. Despite
these campaigns, however, Nike's annual revenues have
increased from $6.4 billion in 1996 to nearly $17 billion
in 2007.
Nike pays the employees at the sweatshops only a
couple of dollars for a full day of physical work. In the
first picture we see an original Nike billboard that says
"You're quicker than you think" changed to "It was
Fig. 3 A typical Nike cheaper than you think" because of their production value
sweatshop worker and what they actually cost in retail stores. Usually a pair
of Nike shoes can cost over $100.

Fig. 4 Billboards from "You are faster than you think" campaign by Taxi Toronto for Nike [27]

With this ad for Nike TAXI Toronto won the London International Awards in the
category "Billboard advertising". An eight-foot extension of Canadian hurdler Perdita
Felicien was attached to the top of the billboard.
 Corporate Social Responsibility in the Globalization Era 97

Nike has some 180 manufacturers and about 210,000 employees in China [13]. While
the legal working age in China is 16, Nike's code of conduct states that its contractors do
not "employ any person below the age of 18 to produce footwear." Regardless, many of
the workers from China are female, and are under the age of 18 [34]. Problems the ath-
letic footwear and apparel giant listed in its first corporate responsibility report to focus
solely on China include inadequate management, excessive overtime and workers using
false documents to get jobs. China is crucial to Nike: Roughly one in three pairs of Nike
shoes are made there. Nike still positions itself heavily in countries where workers do not
or cannot unionize or managers will not bargain to meet worker needs. But labor concerns
will remain serious in China for some time. However, after years of foreign pressure on
China to improve its labor legislation, the country passed two new laws in 2007 that are
intended to improve worker rights.
A July 2008 investigation by Australian Channel 7 News found a large number of
cases involving forced labour in one of the biggest Nike apparel factories. The factory
located in Malaysia was filmed by an undercover crew who found instances of squalid
living conditions and forced labour. Nike has since stated that they will take corrective
action to ensure the continued abuse does not occur [38].
Royal Dutch Shell and British Petrol (BP). The UK's Advertising Standards Author-
ity (ASA) has in 2008 ruled that Royal Dutch Shell violated advertising rules by claiming
in a newspaper ad that two oil projects in Canada and the U.S. involved sustainable forms
of energy. The advertisement focused on two of Shell's projects. One involves exploration
in Canada's oil sands where bitumen, a tar-like form of petroleum, can be extracted and
upgraded to synthetic crude oil. The ad also mentioned Shell's plan to build one of the
United States' largest oil refineries in Texas. The ASA ruled that the ad was misleading,
failing on substantiation, truthfulness, and environmental claims. According to the ruling,
the ad must not appear again in its current form [29].
Also, as retail gasoline prices increased in the United States following the dev-
astation of Hurricane Katrina, Royal Dutch Shell, BP, and other companies were ac-
cused of gouging. The American Petroleum Institute, the industry's trade group,
launched a national TV advertising campaign aimed at explaining its business and
urging conservations [19, p. 1, 56].
Nestlé. Although it was one of the most successful companies in the world, it was fre-
quently criticized for using unethical marketing practices to promote the sales of some of its
products. The company was severely condemned by health agencies around the world for its
marketing of infant formula in developing countries, by conveying the message that the for-
mula was better for babies than mothers' milk.
There were demands on the company
to stop purchasing cocoa from the Ivory
Coast, where bonded labor and children
were used on plantations to harvest co-
coa beans. Nestlé was also criticized for
selling genetically modified food in some
Asian countries without labeling them
explicitly. Pure Life, the mineral water
brand the company launched in some
Asian countries, was also criticized for
being too high priced. Fig. 5 Water - Pure Life
98 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

Richmond. The nation's top distributor of clove cigarettes is offering fans a new way
to get their fix after the spice-flavored cigarettes are banned later this year - cigars.
Cloves: Also known as kreteks (pronounced "cree-techs"), the cigarettes contain tobacco
blended with cloves. They originated in the 1880s in Indonesia and are a staple of the
Indonesian smoking culture — so much so that companies like Philip Morris International
Inc. have created their own blends of clove cigarette bearing the famous Marlboro name
in Indonesia and India. The company also has a controlling interest in Sampoerna, another
Indonesian maker of clove cigarettes. Indonesia exports more than $500 million worth of
the product per year, with about a fifth of the shipments coming to the U.S. The industry
employs about 11 million Indonesian workers. The new filtered cigars - close to the size
of a cigarette and flavored with clove, vanilla and cherry - allow Moorpark-based Kretek
International Inc., which imports Djarum-brand tobacco products from Indonesia, to
avoid new federal laws banning flavored cigarettes other than menthol.

Fig. 6 Djarum Black Clove Cigars

The ban on flavored cigarettes, which critics say appeal to teenagers, goes into effect
at the end of September 2009. It does not include cigars. The ban is one of the first visible
effects of a new law signed by President Barack Obama in June that gives the Food and
Drug Administration wide-ranging authority to regulate tobacco, though it cannot ban
nicotine or tobacco outright [36].
Samsung. It has been criticized in 2008 for Lack of Recycling Programs. The
Electronics TakeBack Coalition has launched a marketing campaign attacking Samsung
for not taking environmental responsibility to recycle old electronics that may contain
toxic metals. The campaign aims to make consumers aware of toxic metals used to manu-
facture TVs and other electronic devices before 2005, and to point consumers to the fact
that Samsung has been spending millions on ad campaigns during the Olympic instead of
funding a take-back program for potentially toxic components in older TVs [30].
The "Take Back My TV" campaign is on the coalition's site, Metal Mania; a spoof of
Samsung's site Medal Mania. The Electronics TakeBack Coalition has launched a market-
ing campaign attacking Samsung for what it considers a weak stance on environmental
protection and electronics recycling. The "Take Back My TV" campaign aims to make
consumers aware of toxic metals used to manufacture TVs and other electronic devices
prior to 2005 (Figure 7).
"Medal Mania" launched on July 24th 2008 and it lasted until the closing ceremonies
of the Beijing 2008 Olympic games on August 24th. Samsung Mobile has included a few
FM sites (roadblocks on Bleacher Report, sponsorship of Watercooler's Olympics Face-
 Corporate Social Responsibility in the Globalization Era 99

book app, etc.) in their "Medal Mania" treasure hunt campaign, where registered players
get email hints telling them where to find Samsung Easter-egg ads at various sites across
the web. Players rack up "medals" for each click and improve their odds at winning
$100,000 (the grand prize) or Samsung phones, flat panel TVs and other home entertain-
ment goodies.

Fig. 7 The Electronics TakeBack Coalition's marketing campaign against Samsung

Both sites allow consumers to hunt for gold. But on the coalition's site, consumers find
toxic metals mercury and cadmium instead of the gold and prizes found on Samsung's
site. In response Samsung said in a statement that it is piloting a TV take-back and
recycling programs in 14 U.S. states, and that it also "has numerous take-back and recycle
initiatives throughout the company."
Wal-Mart. It has been criticized specifically for its extensive foreign product sourc-
ing, low rates of employee health insurance enrollment, resistance to union representa-
tion and sexism. Conversely, others point out that Wal-Mart's rapid growth and logistical
efficiency has enabled it to bring lower prices to consumers and more low paying jobs and
new small businesses to the communities in which it operates.
Wal-Mart's product selection has been criticized by some groups in the past, primarily
as viewed as a promotion of a particular ideology or as a response to its original rural,
religious target market. In 2003, Wal-Mart removed certain men's magazines from its
shelves, such as Maxim, FHM, and Stuff, because the retail chain has received complaints
from customers about their racy content [39]. Later that year, it decided to partly obscure
the covers of Cosmopolitan, Marie Claire and Redbook on store shelves due to "customer
concerns", and refused to stock an issue of Sports Illustrated's swimsuit special because it
took exception to one photograph. In 2004, Wal-Mart carried the anti-Semitic forgery
[32] The Protocols of the Elders of Zion in its online catalogue and Wal-Mart's online
product description suggested the text might be genuine. The Jewish civil rights organiza-
tion- the Anti-Defamation League- wrote to the President of Wal-Mart in September 2004
noting the text, "has been the major weapon in the arsenals of anti-Semites around the
world," and called on Wal-Mart to, "unequivocally state the nature of the book and to
disassociate itself from any endorsement of it." [26]. Wal-Mart stopped selling the book
shortly thereafter.
100 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

Wal-Mart has been accused of allowing illegal immigrants to work in its stores. On
October 23rd, 2003, Federal officials raided Wal-Mart stores across the United States,
arresting about 250 illegal immigrants working on cleaning crews at 61 stores in 21 states.
It was about undocumented workers from Mexico, Eastern Europe and other countries
who were employed by several contractors used by the world's largest retailer. Many of
those arrested in the crackdown, which officials called "Operation Rollback," were com-
ing off night cleaning shifts at various Wal-Mart stores [11]. Following the arrests, a
grand jury convened to consider charging Wal-Mart executives with labor racketeering
crimes for knowingly allowing illegal immigrants to work at their stores. In November
2005, 125 alleged undocumented immigrants were arrested while working on construction
of a new Wal-Mart distribution center in eastern Pennsylvania [12]. The workers were
employees of Wal-Mart's construction subcontractor.
In 2005, well-publicized lawsuit put the company's compensation policies in the
public spotlight. A documentary film The High Cost of Low Prices examined the so-
cial repercussions of the retailer's presence in American communities.
Also, Wal-Mart has been accused of destroying of small communities by putting small
retailers out of business. However, Wal-Mart is estimated to have lost about 8 percent of
its market share because of reactions to such practices from consumers. Maclean's maga-
zine published findings by Jantzi Research, one of Canada's leading CSR research firms,
that gave the retail giant only a "C+" on its social responsibility report card [6]. The Gap,
on the other hand, has taken the opposite approach, earning an "A" in the Maclean's re-
port. This retailer has been applauded for its corporate citizenship, through such actions
as supporting African women and children with HIV/AIDS, monitoring the labour stan-
dards in its suppliers' factories, and adopting progressive social and environmental initia-
tives including the donation of damaged clothing to hospitals [22].
Wal-Mart's CSR picture, however, may not be all that bleak. Lee Scott, Wal-Mart's
CEO, is committed to ambitious environmental goals, including zero waste, 100% renewable
energy, and environmentally friendly products. In 2007, the company released its first Sus-
tainability Report and soon expects to launch a Supply Chain Sustainability Scorecard.
Merck & Co., Inc. is a global research driven pharmaceutical company that discovers,
develops, manufactures and markets a broad range of innovative medicines and vaccines
to address unmet medical needs. Merck operates as Merck Sharp & Dohme (MSD) in
most countries outside the United States. Because of what we do, we recognize that we
have special obligations to society [18].
Merck's stated mission is to provide society with superior products and services by
developing innovations and solutions that improve the quality of life and satisfy customer
needs, to provide employees with meaningful work and advancement opportunities, and
investors with a superior rate of return. Company mission and values are reflected in CR
approach, which clearly sets out how they see responsibilities in terms of global health
and access to medicines, ethical and sustainable business practices, contribution to scien-
tific advancement, good employee relations and returning value to shareholders. They
seek to maintain high ethical standards and a culture that values honesty, integrity and
transparency in all that we do. Company decisions are driven by what is right for patients.
Merck's core business is to discover and develop new medicines and vaccines that
make a difference in people's lives. Their commitment to Corporate Responsibility ex-
tends to how we achieve this goal:
 Corporate Social Responsibility in the Globalization Era 101

ƒ By conducting business with high ethical standards

ƒ By engaging in activities to expand access to quality health care around the world
ƒ By making a positive and sustainable impact on the communities and societies where
we live and work
ƒ By meeting the needs of our employees in a fair and just manner.

4. THE PRACTICE OF CSR IN SERBIA

The idea of corporate social responsibility is new to Serbia. Because Serbia imple-
mented its political and socio-economic transition later than many other countries, many
companies still have little awareness of the benefits of socially responsible practices, and
many ordinary citizens do not take CSR into account when making purchases or going
about their lives.
In order to promote CSR, the Business Leaders Forum was established in 2008 [16].
The Business Leaders Forum was organized by Smart Collective with support from the
Institute for Sustainable Communities and USAID. The forum is Serbia's first coalition of
socially responsible companies with a goal of promoting CSR and operating in a sustain-
able way to benefit the interests of the whole community. All its members have volun-
teered to incorporate social, ethical, and ecological concerns into their work, and to coop-
erate with non-profit organizations, state institutions and other interested parties for the
improvement of society. The Business Leaders Forum stimulates positive changes and
promotes the best practice in the improvement of business environment in society.
In June 2009, Smart Collective/Business Leaders Forum organized "Our Belgrade", a
day of volunteer actions around the city. Hundreds of volunteers from the forum's member
companies came together for projects such as fixing up the building and grounds of a day
care center/painting workshop for children with Down syndrome, working at a chess club
for blind children, or taking Roma and other at-risk children to the zoo. Others took boats
out to Great War Island in the Sava River where they cleaned up the heaps of trash that
had accumulated on the shore, and recycled plastic bottles.
Nevertheless, the state of CSR in Serbia is still at its early stages, but Serbian firms are
becoming increasingly aware that they are required to balance the social, economic and
environmental aspects of their business, while building shareholder value. Enterprises and
government are the two main promoters of CSR where enterprises determine the success
of CSR and government promulgates policies, supervises the enforcement of regulations
and provides information on CSR issues.
The key challenge is to raise the level of awareness of CSR since Serbian consumers
have limited appreciation of CSR and fail to associate it in their choice of products (or
services) to buy and do not relate CSR with social concerns. The promotion of CSR has
been marked with various initiatives in the government sector, business sector and even
by some NGOs.
Market forces have been the major drivers of CSR behavior with corporations and pri-
vate institutions organizing and involving themselves in CSR activities not only as tactical
responses to potential crises but also in acknowledgment of the fact that businesses could not
possibly thrive in an environment where the majority of the population have low income.
102 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

The initiation of a "CSR Award" is a natural continuation of previous CSR activities in

Serbia. These activities have been realized by implementing the regional program "Estab-
lishing the Corporate Social Responsibility in South East Europe" in cooperating with Ger-
man institutions and organizations. The purpose of CSR Award was to introduce and estab-
lish CSR in a larger number of companies in Serbia above all in SMEs. In 2008, only about
200 companies are recognized to be active in the field of CSR in Serbia (compared to a total
of about 104,000 firms that exist in the country) [10]. During 2007 and 2008, a CSR project
team consisted of six members was in charge within the SCC - so there is human resource,
logistics and operational background in place to continue working in that direction.
Finally, the practice of CSR in Serbia tends to have the following patterns: a) manag-
ers play a significant role in strengthening CSR commitment within a company and they
are the principal agents for the CSR promotion activities, b) profitable business climate is
a necessary precondition to initiate CSR, c) CSR in Serbia is still commonly recognized
as charity [3, p. 8] and, d) CSR requires a larger legal framework that promotes partner-
ships, and openness.

5. CONCLUSION
Corporate social responsibility (CSR) can be defined as a company's obligation to
pursue goals and policies that are in society's best interests. A socially responsible
company conducts business in an ethical manner. In many companies, a formal
statement or code of ethics summarizes corporate values, and expectations. The prac-
tical need for CSR comes from changing social expectations, affluence, and globalization.
Many companies have earned benefits from engaging in CSR activities. These include
stronger brand positioning, corporate image, market share and sales. It also increased
their ability to attract and retain employees.
The practice of CSR is not free from controversy and criticism. Mostly, CSR is often
criticized because it is believed that the first and foremost responsibility of a company is
its financial responsibility to its shareholders. Companies have been criticized for labor
rights abuses, using child labor, forced labor, sweatshops, environmental abuses in host
countries, increasing use of outsourcing to lower cost countries, massive layoffs and un-
employment as a result of plant relocation.
One argument for increased social responsibility on the Serbian companies is that be-
cause these companies have reaped the benefits of globalization, including privatization,
deregulation, and freeing of international trade and investment flows, they should assume
more of the burdens of social responsibility. However, in Serbia the practice of CSR is in
an early stage of development. The government-centric approach influences CSR ap-
proaches with much emphasis on compliance with legislative requirements as a means of
regulating socially responsible behavior. The full integration of CSR at the strategic level is
not yet widely evident reflecting both an insufficient commitment to the concept on the part
of top management and a general perception that CSR is primarily business philanthropy.
With consumers and the general public becoming increasingly sensitive to social and
environmental issues, corporations will have to take a serious look at their role within the
society as expectations of them increase. In the long run, this will perhaps increase their
goodwill within society and reduce the need for strict government regulations.
 Corporate Social Responsibility in the Globalization Era 103

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104 G. MILOVANOVIĆ, N. BARAC, A. ANDJELKOVIĆ

KORPORATIVNA DRUŠTVENA ODGOVORNOST

U ERI GLOBALIZACIJE
Goran Milovanović, Nada Barac, Aleksandra Andjelković
Autori rada ukazuju da implementacija koncepta društveno odgovornog poslovanja (DOP)
omogućava kompanijama da jače pozicioniraju svoje marke, da ojačaju svoj imidž, da povećaju udeo
na tržištu kao i da povećaju svoju sposobnost da privuku i zadrže zaposlene. Važan argument za
povećanje socijalne odgovornosti srpskih kompanija je to što mogu time ostvariti koristi od
globalizacije, privatizacije i deregulacije, kao i da se oslobode negativnih uticaja tokova međunarodne
trgovine i međunarodnih investicija.
Rad se sastoji iz tri dela. .Autori najpre imaju nameru da analiziraju pokretače kompleksnog
fenomena društveno odgovornog poslovanja. Nadanje, u drugom delu oni će dati osvrt na neke
globalne komapnije, čija je korporativna, društvena i ekološka praksa pod lupom javnosti. Konačno,
autori će dati pregled uticaja DOP-a na društveni razvoj sa posebnim osvrtom na Srbiju.
Ključne reči: Društveno odgovorno poslovanje (DOP); faktori DOP-a; kritika DOP-a, DOP
u Srbiji.