Global challenges, sustainable development, and their implications for

organization performance

Busaya Virakul, Ph.D., Associate ProfessorSchool of Human Resource Development (HRD),

National Institute of Development Administration (NIDA)

2nd Global Risk Forum (GRF) One Health Summit 2013One Health - One Planet - One Future: Risks and Opportunities

17 - 20 November 2013 in Davos, Switzerland

Objectives

• This paper presents an overview model of organization performance which embeds corporate social responsibility (CSR), corporate governance (CG), and sustainability concepts at the strategic level.

Key words: Global challenges

• … any major trend, shock, or development that has the potential for serious global impacts (OCHA-PDSB, 2010, p. 4)

Source: Geldorf, K. (2010, January). Global challenges and their impact on international humanitarian action. Retrieved, 20 October 2013, from

https://docs.unocha.org/sites/dms/Documents/Global_Challenges_Policy_Brief_Jan10.pdf [UN Office for the Coordination of Humanitarian Affairs (OCHA)- Policy Development and

Studies Branch (PDSB)]

15 Global ChallengesThe 15 Global Challenges provide a framework to assess the global and

local prospects for humanity. Source: The Millennium Project. (2010). Retrieved, 2 December 2012, from http://www.millennium-project.org/millennium/challenges.html

Key words: Sustainable development

• Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (UNWCED,1987; the Brundtland Commission’s report - Our Common Future)

Source: United Nations World Commission on Environment and Development (UNWCED). (1987). Our common future. Oxford, UK: Oxford University Press.

Key words: Corporate social responsibility (CSR)

• The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large (WBCSD, 2013, p. 3)

Source: World Business Council for Sustainable Development (WBCSD), The. (2013). Corporate Social Responsibility: Making good business sense. Retrieved, 15 April

2013, from http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-

responsibility.aspx

Business and stakeholder relationships

Business

Government

Employees

Community

Owner

Consumers

LocalState

Federal

Unions

Women

Minorities

Older employees

Civil liberties activists

Product liability threatsConsumer activists

Corporate raiders

Private citizens

Institutional investors

General publics

Environmental groups

Source: Carroll, A. B., & Buchholtz, A. K. (2006). Business & society: Ethics and stakeholder management. Mason, OH: Thomson-South Western. (p. 9)

Key words: Corporate governance (CG) or Good governance (GG)

• The formal system of oversight, accountability, and control for organizational decisions and resources (Ferrell, Thorne, & Ferrell, 2011, p. 89);

• Corporate governance deals with the rights and responsibilities of a company’s management, its board, shareholders and various stakeholders(OECD, 2013).

Source: (a) Ferrell, O. C., Thorne, D. M., & Ferrell, L. (2011). Social responsibility business. Singapore: Cengage Learning. (b) Organization for Economic Co-operation and

Development, The (OECD). (2013). Corporate governance principles. http://www.oecd.org/daf/ca/corporategovernanceprinciples/frequentlyaskedquestionsabouttheoecdprinciplesofcorporategovernance.htm

(Retrieved, 15 April 2013)

Key words: Sustainability of organization

• An approach to business that considers economic, environmental, and social issues in balanced, holistic, and long-term ways that benefit current and future generations of concerned stakeholders (De Lange, Busch, & Delgado-Ceballos, 2012, p. 151; Elkington, 1999; UNWCED, 1987)

• Profits, Planet, and People – The Triple Ps

Source: De Lange, D. E., Busch, T., & Delgado-Ceballos, J..(2012, October). Sustaining sustainability in organizations. Journal of Business Ethics, 110(2), pp. 151-156. DOI

10.1007/s10551-012-1425-0

Research framework• Capitalism and consumerism are the current

socioeconomic forces.• The world has finite resources. We have already

used up 30%-50% of natural resources belonged to our younger generations’.

• If business companies emphasize capitalism and consumerism to the fullest, the world may face many global challenges ahead.

Research framework

• Business has enormous power in either promoting or reducing people’s well being.

• Including interests of every stakeholder in a balancing way is a key approach for future business.

• Business organizations which practice such approach could sustain their existence in the long run.

The organization of the paper

• Global challenges as external factors impacting organizations

• Sustainable development: An approach to rectify major global problems

• Some selected cases pertaining to global challenges • CSR, CG, and sustainability: The elements of an

organization’s strategic plan• A model of an organization’s performance

embedding CSR, CG, and sustainability at the strategic level

Some selected cases

• Map Ta Phut Port/Industrial Zone• Dawei Project • Xaiyaburi Dam in Loas• The Melamine Scandal in China in 2008 • Extraction of natural resources in developing

countries – Thailand, India, Myanmar, Indonesia, etc.

• The global financial crisis of 2008 and the Barclays scandal in 2012

Source: http://www.aljazeera.com/programmes/101east/2010/04/20104219545638882.html

ALJAZEERA“Toxic Thailand”

Industrial pollution in Thailand can be deadly, but a new court ruling which has suspended 76 polluting projects is costing jobs and billions in lost revenue. On this episode of 101 East, we ask if Thailand can strike a balance between big business and the environment.Last Modified: 24 Apr 2010 11:55 GMTAccessed: 6 July 2013

Source: Thai Universities for Healthy Public Policies (TUHPP). (2011b). Map Ta Phut Episode 1: Map Ta Phut: A Blessing for All? Retrieved, 30 December 2012, from http://www.tuhpp.net/files/E1.pdf

Map Ta Phut: A Blessing for All?

Protests against building Xaiyaburi dam and other dams along the Mekong River

“China 'sorry' after milk crisis”

BBC News, Last Updated: Saturday October 18 2008 17:59 GMT; http://news.bbc.co.uk/cbbcnews/hi/newsid_7670000/newsid_7677900/7677990.stm

http://news.bbc.co.uk/cbbcnews/hi/newsid_7630000/newsid_7632000/7632039.stmChina's government has apologized after more than

50,000 children got sick from drinking milk that had chemicals in it.

The Melamine Crisis, 2008

Melamine in the milk formula can damage kidneys

Tesco have taken a brand of Chinese sweets off their shelves because of fears they could have a poisonous chemical in them.

Factors affecting the morality of managers

Individual

Peers

Policy

Superior Organization’s moral climate

Industry’s moral climateBusiness’ moral climateSociety’s moral climate

International moral climate

Source: Adapted from Carroll, A. B., & Buchholtz, A.K. (2009). Business and society. Cincinnati, OH: South-Western College Publishing. (p. 311)

Source: Mondy, R. W., & Noe, R. M. (2005). Human resource management. Upper Saddle River, NJ: Pearson Education International. (p. 8)

Human resource

management

External environment

Internal environmentLegal considerations

Labour force

Th

e

Eco

nom

yTe

chnolo

gy

Customers

Competition Shareholders

Unions

Socie

ty

Employee and labour relations

Staffi

ngSafety and

Health

Compensation

and Benefits

Human

resource

development

Marketing Operations

FinanceOther

functional areas

Th

e E

nvir

on

men

t of

Hu

man

Resou

rce M

an

ag

em

en

t

Strategic business plan for CSR

Surrounding factors• Globalization• Technological changes• Local/International laws and regulations• Business competition• Natural resource conditions• Stakeholders‘ expectations

Organizational factors• Moral motivation by CEO/ top management • Financial/Performance motivation• Stakeholders’ expectations

CSR framework• Employees• Customers• Stockholders• Environment• Business colleagues (Suppliers, partners)• Communities• Society

Outcomes• Stakeholders’ trusts• Organization’s reputation/Rewards• Financial benefits• Competitive advantages• Business leadership• Community growth

CSR activities• Operation work - Employee welfares - Customer welfares• Philanthropic work - Education - Arts & Culture - Sports - Environment - Public welfares

Source: Virakul, B., Koonmee, K. & McLean, G. N. (2008). CSR activities in the award-winning Thai companies. (a) Paper presented at 7th International Conference on Corporate Social Responsibility, 3-5 September 2008, Durham Business School, England. (b) Social Responsibility Journal, 5(2), pp.178-199.

Strategic business plan contains 4 elements: Business, CSR, CG, & Sustainability --->

to formulate Vision, Mission, Direction, and

Business goals

External factors• Globalization/Global challenges• Technological changes• Local/International laws and regulations• Business competition• Natural resources• Stakeholders’ expectations

Internal factors• Leadership of CEO/Top management • Financial/Performance motivation• Stakeholders’ expectations• Organization’s resources

Business activities embedding CSR, CG, & sustainability concepts

• Production, Sales, Finance, Marketing, Quality control• Organizational management and development • Monitoring & Evaluating performance• Research and development• Others.

Outcomes • Sustainable organization• Stakeholders’ trusts• Organization’s reputation• Financial benefits• Competitive advantages• Business leadership• Community growth

Evaluation and Reporting

• Business domain• CSR domain• CG domain• Sustainability domain

A model of business performance embedding CSR, CG, and sustainability at the stretegic level

Future research

• Appropriate indicators of organization’s performance having CSR, CG, and sustainability elements embedded at a strategic level.

• Approaches to enhancing employees’ understanding of embedding business, CSR, GG, and sustainability of organization at a strategic level.

• The relationships between organization’s performance and such practices.

• Critical issues in embedding business, CSR, GG, and sustainability of organization at a strategic level.

• Case studies of organizations practicing such approaches.