As income polarization in Korea, stacked heavily in favor of the large corporate sector, has become increasingly acute after two unprecedented external financial shocks over the past 15 years, issues relating to corporate social responsibility (CSR) are frequently raised to embrace popular social demand for a welfare state.
When irregularities and unethical, greedy behavior of chaebol corporations make the headlines, demands for CSR are clearly audible.
It is often suggested that CSR should be aggressively pursued in response to rising anti-corporate business sentiments among the general public as the nation stands at a critical juncture of its economic development.
CSR is also referred to as corporate conscience, corporate citizenship or sustainable responsible business, according to Wikipedia. CSR typically describes an organization’s mission and is a guide as to what the company stands for.
Depending on the history and mode of capitalist market development, there are various approaches to CSR. A common approach is philanthropy, giving monetary donations to impoverished communities.
Another approach is to incorporate CSR directly into corporate business strategies. An emerging approach to CSR in recent shared and inclusive growth doctrines involves a shared value model incorporating the concept that a corporation’s sustainable business success and social welfare are interdependent.
Given the diversities of CSR, there are also varied CSR assessment views. One positive view is that corporations make more long-term profits by operating under CSR. The other view is that CSR distracts from the basic economic role of businesses and is merely window-dressing.
In the case of Korea, CSR must involve enterprises’ active compliance within the spirit of the law, ethical standards and international norms. Companies should address concrete actions in promoting positive impact on the environment, consumers, employees, communities and wide-ranging stakeholders.
For example, if a chaebol family member gets involved in the bakery business to deliver products to the family’s hotels and restaurants, intra-firm transactions between the mother and subsidiary companies including spinoffs thereafter often prove not to be based on fair and transparent trade practices.
Even the UN stresses that CSR adheres to basic ethical principles and responsible investment, but without any act of formal legislation.
Some years ago, Jack Welch, the legendary CEO of GE, was asked about CSR at the World Knowledge Forum, organized by the Maeil Business Newspaper. His reply was clear-cut.
The primary responsibility of any corporation is to build a robust and sustainable entity that continues to provide jobs for society, and to not be engulfed by the risk of bankruptcy. If mismanaged and in need of public funds to survive, it should be viewed as committing inexcusable crimes against society.
Given the alarming degree of social disintegration underway in Korea due to income inequality and massive youth unemployment, some CSR action programs that offer sustainable growth are highly desirable.
For example, one chaebol and its subsidiaries created a variety of initiatives in the social sphere, initially in Korea and then internationally as the company expanded. Its foundation, a substantial percent of stock from its subsidiary companies, subsidizes healthcare services in Korea primarily through its medical center and hospitals.
The foundation has also sponsored conferences on academic research on traditional Korean culture. Some companies have established a foundation to provide unconditional scholarships to students admitted to globally renowned higher learning institutions.
It would be ideal if more big businesses in Korea would voluntarily incorporate CSR activities as part of their internal programs in order to build robust and sustainable business entities.
For any market economy to thrive, profitable and competitive businesses must be nurtured and widely supported to create jobs, income, pay tax revenue and pursue opportunities for philanthropy.
Despite increasing demand for an expanded welfare state facing the upcoming presidential elections, Koreans should view CSR as a voluntary built-in and self-regulating mechanism that can further be integrated into a sustainable business model.
Furthermore, business people and the general public should remember that the word “corporation” derives from the Latin word “corpus,” which means “body” or “body of people.”
In other words, whether it’s between big and small companies or between firms and stakeholders, the essence of “corporation” is “cooperation.”