Impact of CSR on Economies with Weak Governance

At present, in the least developed countries and in a number of developing countries, one can notice weak public and organizational governance. Economies characterized by weak public and organizational governance are those economies in which governments do not wish or are unable to fulfil their responsibilities. Public authorities do not make efforts to protect the rights (including property rights) or to provide basic public services in good conditions (such as social programs, programs for infrastructure development, prudential supervision of various economic sectors). These “governmental failures” lead to failures on a large scale in relation to political, economic and civic institutions. Unlike economies characterized by a strong organizational and public governance, in the societies with a weak governance, the impact of CSR programs is not visible for civil society is disorganized, various agencies that are focused on regulating the activities in various economic sectors are either ineffective, or corrupted, and the media and non-governmental organizations do not publicize and do not reflect correctly CSR activities. Therefore, the chapter will focus on presenting the capacity of individual organizations and of business sector as a whole, seen as major actors of economies with weak governance, to support these economies in the process of institutional reform. This due to the fact that the roles of companies in this field are not always well defined, and there may be possible risks regarding involvement in politics of those states. In particular, multinational companies may be relatively strong actors in the economies with weak governance, with a stronger influence over political factors than citizens or companies in the host state, being able to promote through CSR better and more accurate program policies and practices both in the public and private sectors. In achieving the CSR objectives, multinational companies may carry on their activities in partnership with the business environment, professional associations, trade unions, and civil society organizations in the host country.