Korean study suggests two contrasting faces of CSR

The interests of employees can take a back seat when firms mobilize resources for CSR, write two leading Korean academics in Seoul, Heung-Jun Jung and Dong-One Kim. Dong-One Kim is dean and professor at Korea University Business School, while Heung-Jun Jung is research professor, also at the Business School.

According to the two, as firms encounter intensive pressure from consumers, community groups and NGOs - while simultaneously facing heightened competition in the global economy — they are increasingly compelled to acknowledge the demands for CSR.

According to a paper published by the two professors, (Good Neighbours but Bad Employers: Two Faces of Corporate Social Responsibility Programs, published in the Journal of Business Ethics, 2015.) It has become standard to assess the link between socially responsible actions and employment relations as positive. However, there are questions about whether it is possible to balance the interests of all stakeholders, given limited resources.

How does CSR benefit employees ask the two? Some scholars have treated it as part of a corporate propaganda strategy that can easily ignore the interests of the workforce. But an important point here is not the nature of social responsibility itself but the allocation of resources for CSR action, say the authors.

Based on studies in Korea, CSR commitment to social issues seems to impose additional costs. In response, firms with limited means appear to mobilize resources even by undermining the interests of internal stakeholders such as employees.

Major findings are that CSR involvement: (1) facilitates employer tendency to use performance-based pay and efficiency-based work practices; (2) has a negative association with employment growth; and (3) shows a positive relationship with increased labour flexibility through restructuring.

The professors say their study tends to suggest two contrasting faces of CSR. At the same time that management attempts to project an image of “a good neighbour” by committing to socially desirable behaviour, it appears to be “a bad employer” by undermining the job security of its own staff.