The concept of corporate social responsibility (CSR) implies that multinational companies play an essential role in eliminating poverty and supporting sustainable development. This is also beneficial for businesses themselves, as stronger economies and stable societies create enormous opportunities for growth in new markets. Moreover, according to Kao et al. (2016), CSR pro-poor measures contribute to the improvement of corporate image and marketing efficiency among consumers. In addition, the impoverished segments of the population may provide considerable human resources for business. It should be noted that multinational companies can achieve poverty alleviation both through direct CSR practices and indirect social and structural impacts.
One of the main activities in this regard is to analyze the company’s operations and reduce its adverse social consequences. Researchers state that “preventing and managing the negative impacts of the core business on the poor” are essential indicators of the social responsibility of the company (Medina‐Munoz & Medina‐Munoz, 2020, p. 8). For example, multinational clothing companies may purchase products for further sale from distributors who use low-cost labor of disadvantaged people in developing economies. Corporations that seek to meet standards of sustainability and responsibility interrupt business relationships with counterparties that maintain low levels of compensation and labor protection.
In addition to preventing negative impacts, companies can also contribute directly to poverty alleviation. Medina‐Munoz and Medina‐Munoz (2020) state that, in some instances, companies may provide affordable products and services to low-income segments of the market. Thus, business, firstly, performs the social function of facilitating access to certain goods for all segments of the population, and secondly, receives a large number of new customers. For example, companies that specialize in food products often create a new brand that distributes cheaper and more available products.
There are also CSR practices that are not aimed at supporting low-income people, but at contributing to their labor competences development, thus resolving the root of the problem. According to Kao et al. (2016), the significant “element of corporate assistance in poverty reduction is to provide personal empowerment with vocational education and skills training” (p. 142). Moreover, multinational companies with a highly qualified and well-established internal training system can obtain access to talented employees who could not otherwise represent themselves due to economic reasons. Given that corporate education is application-oriented and focuses on the rapid implementation of skills acquired, the business can, to a certain extent, perform educational functions for a specific part of the poor population. It should also be considered that companies perform an important function in creating job opportunities. The researchers note that CSR trends are particularly focused on meeting specific standards for working environment and compensation (Kao et al., 2016). It should be mentioned that the social benefit packages, which include health insurance, are especially valuable for low-income people.
Another significant element of the CSR is maintaining communication with pro-poor entities. Medina‐Munoz and Medina‐Munoz (2020) emphasize that “public administrations, trade unions, chambers of commerce, NGOs, community leaders are quite knowledgeable about the conditions of the poor and the causes of poverty” (p. 8). In this way, companies can take more appropriate and effective measures in this regard and have access to relevant information on the social agenda. Thus, the CSR consists of the analysis of the company’s activities, social protection of the employees, and the implementation of active and direct measures to reduce poverty.
References
Kao, T. Y., Chen, J. C., Wu, J. T. B., & Yang, M. H. (2016). Poverty reduction through empowerment for sustainable development: A proactive strategy of corporate social responsibility. Corporate Social Responsibility and Environmental Management, 23(3), 140-149.
Medina‐Munoz, R. D., & Medina‐Munoz, D. R. (2020). Corporate social responsibility for poverty alleviation: An integrated research framework. Business Ethics: A European Review, 29(1), 3-19.