The Political Dimension of Doing Good: Managing the state through CSR in Russia and China

Doing good does have potential to serve the business interest. The political dimension of this process in China and Russia is particularly important. The government in China and Russia control crucial resources for the business, used to intervene in the business operation and maintain a regulatory system full of uncertainty. How companies build, maintain and strengthen the relationship with the state concern their survival and growth. CSR in this context could be a useful tool for companies to access political resources and reduce political risks. The new SIEMS survey tries to answer two questions. How do Chinese and Russian companies deal with the state through CSR? How do their approaches compare to multinational corporations (MNCs) from OECD countries?

A political dimension of doing socially and environmentally good highlights a company’s strategic role of using corporate social responsibility (CSR) to deal with the state. This article discusses an idea of “CSR-based state management strategy”. It refers to the strategic action (not subject to the state’s regulation or administrative request) that a company takes to influence the state’s agenda or seek various forms of resources from the state through the social-environmental practice.

This research found four distinctive strategies companies use to handle the state relationship through social-environmental activities. They include state policy exploration, state policy exploitation, state capacity exploration, and state capacity exploitation. Meanwhile, these strategies present a systematic variation between Chinese companies, Russian companies and OECD MNCs.

The key results from the report include:

• CSR plays four distinctive roles in the company’s agenda to influence the state and obtain state resources. Companies can employ CSR to change the policy and competition environment, appropriate business benefits from the existing policy arrangement, create new state capacities of addressing social-environmental problems, or simply seek the state’s trust and support by doing good in ways that cater to the state’s existing public management capacity.
• The CSR-based state management strategy suggests that CSR is not simply a spectrum ranging from a philanthropic end to a strategic end. The form of using CSR to benefit the business varies across political contexts. Philanthropic activities seemingly unrelated to the business value chain could actually play a crucial role in mobilizing state resources.
• While OECD MNCs tend to act as rule changer and capacity builder to pursue long term returns from the state through CSR, the role of Chinese and Russian companies resembles business partner and resource trader who use CSR to secure a license of growth from the state.
• In a global sense, Chinese and Russian companies are lagging behind in contributing to the global and regional standard setting and the state capacity building on social-environmental issues.