Transcript Next Generation (East vs West Perspectives) – What our

The Globalization and Corporate
Social Responsibilities
Prof. Stephen Cheung
Department of Economics and Finance
City University of Hong Kong
Globalization
“Since 2001 the pay of the typical worker in the United
States has been stuck, with real wages growing less
than half as fast as productivity.….. If you look back 20
years, the total pay of the typical top American manager
has increased from roughly 40 times the average--the
level for four decades--to 110 times the average now.…
In China each person now produces four times as much
as in the early 1990s. Having joined the global labour
force, hundreds of millions of people in developing
countries have won the chance to escape poverty.
Hundreds of millions more stand to join them.… But in
the rich world labour's share of GDP has fallen to historic
lows, while profits are soaring.” (Economist, 2007)
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Contents
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Globalization
Importance of partnerships
What is corporate social responsibility (CSR)?
CSR in Hong Kong
Drivers for Organizations
Obstacles in running socially responsible
businesses
• Role of Government
• Incentives
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Globalization
• Increase competition
– Encourage specialization
– Consumers gain from lower prices and
greater variety
• Increase in trade and investments
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World Trade
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Source: 2005 Annual Report, Federal Reserve Bank of Dallas
Assets Aboard
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Source: 2005 Annual Report, Federal Reserve Bank of Dallas
Globalization
• Price stability
– Lower inflation
– Seven largest developed nations: U.S., U.K.,
Canada, Italy, Germany, France and Japan
– Average annual inflation
• 10.2% (During 1973-1893)
• 1.8% (Since 1995)
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GDP per Capita
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Source: IMF, Morgan Stanley Research
Shares of National Income:
G7+ Economies
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Source: National Sources, Morgan Stanley Research
Participation in the Global Economy Importance of Partnership
• The Government
– Competitive and flexible workforce
– Redistribution
– Education and Retraining
• Industrial Corporations
– Technical and managerial skills
– Aspects of international best practices
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Participation in the Global Economy -
Importance of Partnership
• Civil Society Organizations
– Ensure proper investments
• Research Institute
– Provide technical training and diagnostic
studies
• Multinational Organizations
– Policy advocacy
– Watchdog
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What is Corporate Social
Responsibility (CSR)
• Old ideas of doing business
– Profit maximization
– Concern on shareholders interest
• Today’s new standard
– NOT only pay tax and comply with national
regulations
– Sustainable development
– Consider interest of all stakeholders and are expected
to take greater responsibilities in running a business
– Corporate social responsibilities (CSR)
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What is Corporate Social
Responsibility (CSR)?
• Major trends in international business in recent
years
• Business’s contribution to sustainable
development
• Related to basic business activities
• Impacts on stakeholders:
– Social;
– Economic; and
– Environmental
• Create additional value and strategic advantage
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McDonald’s –
A Case on Child Labor
• “City Toys Ltd in Shajing, Shenzhen, employs children as
young as 14 who work from 7am until as late as midnight for
24 yuan (about HK$23) a day, packing toys for McDonald's.”
• “The minimum wage was on the basis that a worker does
eight hours a day, five days a week.”
• "All people aged under 16 are forbidden to work in China."
South China Morning Post, 28 August 2000
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How to Measure?
Four possible indicators
• Dow Jones Sustainability Index (DJSI)
• Global Reporting Initiative (GRI)
• Carbon Disclosure Project (CDP)
• ISO 14001 Certifications
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CSR in Hong Kong
Corporate Governance Scorecard Project
• Survey results based on publicly available information
• HSI, HSHKCI, HSCCI, and HSCEI constituent stocks
• 2002: 168 companies are covered
• 2005: 174 companies are covered
Section/ Year
Role of Stakeholders in
Corporate Governance
2005 Mean
2002 Mean
40.21
54.32
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Drivers for Organizations
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Enhance image and reputation
Increase shareholders value
Reduce business risk
Legislative requirements
Customer loyalty
Employee loyalty
Improve business operation
Control of legal risks
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Obstacles in Running Socially
Responsible Businesses
• Management practice
• Increasing cost?
• Monitoring and enforcement
• Sustainable development
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Role of Government
• Enforcement strategies and legal and
regulatory risk management
• Tax initiatives
• Contribution to compliance expertise
• Moral suasion
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Incentives
• CSR index
– Brand name
• CSR investment fund
– Investment communities
• Education
→發財立品
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Thank You!
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