Effectiveness of executing Corporate Social Investment (CSI) strategies in large firms in South Africa
Date
2012-10-05
Authors
Mokulubete, Mafriti Queen
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Abstract
Since 1994, the new South African government has taken giant leaps on the path towards development, mainly focusing on correcting the disparities of the apartheid era and building a better future for all the people of South Africa. The most pressing problems facing South Africa today is the absence of sustained economic growth and job creation, and these are essential to reduce poverty and improve living conditions. The transition to a multi-racial democracy in 1994 posed difficult political, social, and economic challenges, and South Africa‟s noteworthy achievements in surmounting these challenges have been widely recognized. But the events of the last few years demonstrate clearly that the challenge(s) did not end with the transition of power to a new government. A daunting task still lies ahead for South Africa: promoting sustainable livelihoods, improving social conditions, and alleviating poverty At the top of the government‟s agenda is Social Services, which includes Education, Welfare and Health, for those in the population who rely heavily on public services. These take up the largest part of the national budget – and this in itself is unmistakeable proof that South Africa is making an effort to invest in its people. Education is the largest item on the budget, and the second item is Social Welfare. The government makes efforts and aspires for all South Africans to have: Freedom from poverty Freedom from need Freedom to exercise their talents and thrive as individuals Freedom to work together as communities, as organised social formations, as business enterprises, as a proud and forward–looking nations.
The private sector is required to participate in these efforts. It has become imperative for firms to demonstrate greater social participation and create valuable change in the communities in which they operate. Years back, firms used to be coerced into social responsibility and projects of such a nature. Historically, the Since 1994, the new South African government has taken giant leaps on the path towards development, mainly focusing on correcting the disparities of the apartheid era and building a better future for all the people of South Africa. The most pressing problems facing South Africa today is the absence of sustained economic growth and job creation, and these are essential to reduce poverty and improve living conditions. The transition to a multi-racial democracy in 1994 posed difficult political, social, and economic challenges, and South Africa‟s noteworthy achievements in surmounting these challenges have been widely recognized. But the events of the last few years demonstrate clearly that the challenge(s) did not end with the transition of power to a new government. A daunting task still lies ahead for South Africa: promoting sustainable livelihoods, improving social conditions, and alleviating poverty At the top of the government‟s agenda is Social Services, which includes Education, Welfare and Health, for those in the population who rely heavily on public services. These take up the largest part of the national budget – and this in itself is unmistakeable proof that South Africa is making an effort to invest in its people. Education is the largest item on the budget, and the second item is Social Welfare. The government makes efforts and aspires for all South Africans to have: Freedom from poverty Freedom from need Freedom to exercise their talents and thrive as individuals Freedom to work together as communities, as organised social formations, as business enterprises, as a proud and forward–looking nations.
The private sector is required to participate in these efforts. It has become imperative for firms to demonstrate greater social participation and create valuable change in the communities in which they operate. Years back, firms used to be coerced into social responsibility and projects of such a nature. Historically, the firms thought that social responsibility „issues‟ were such that one could make them disappear by throwing money at the issues. More recently, firms have started to adopt a more strategic approach to these responsibilities, for the longevity of their investments, their businesses, as well as for the country. Increasingly, more firms are now viewing Corporate Social Investment (CSI) as a vehicle to drive both profits and meaningful social development. The South African legislation on Corporate Governance has, to a large extent, ensured that the firms recognize the need for CSI. Since 1994 there has been a plethora of new policies that have required that firms operating in South Africa reconsider their strategies. The environment has become such that corporate survival requires that businesses at the very least, appear to be concerned with community issues in areas in which they operate in. However, the growing availability of corporate capital for social development has not necessarily resulted in these funds finding projects to effectively support the set CSI strategy(ies) being executed effectively. The main goal of this research is to investigate the factors influencing the effectiveness of executing corporate social investment (CSI) strategies in large firms in South Africa. Employing qualitative methods, using interviews and relying on published annual sustainability reports, this research report investigated what South African firms understand as the differences between corporate social responsibility (CSR) and CSI. CSR is defined as overarching value-based framework, which encompasses all aspects of business operations to ensure that business is conducted in a socially responsible manner. CSI is defined a firm‟s financial and non-cash contributions (beyond the firm‟s commercial operations) to the disadvantaged communities and individuals for the purposes of social upliftment and welfare. The findings revealed that both CSR and CSI are well defined by the firms and that firms had similar understandings of the terms. CSI, in most cases, was the preferred term, rather than CSR - in terms of choice of words.
In order to interrogate the CSI strategies that the firms adopt, their CSI practices (in terms of CSI goals and objectives) were studied. The findings highlight that four main focus areas are preferred and the most popular focus area appears to be Education. The other three relate to projects related to Entrepreneurial strategies, Environmental strategies, Primary Health Care and HIV&AIDS. The findings revealed that these participating firms faced challenges in executing their CSI strategies and a number of factors were identified for these challenges: setting too high expectations, lack of internal support, lack of understanding of the needs of the community, insufficient external communication, insufficient resources, and no collaboration within the firms. The leading challenges of effective CSI strategy execution, were identified and there are a number of commonalities between the findings and the literature. Recommendations for the firms included, channelling expertise, constant strategy refinement, collaboration, and involvement of business schools.
Description
MBA Thesis - WBS
Keywords
Corporate social investment