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Global Initiatives Symposium in Taiwan 2009 Collective Papers


Global Initiatives Symposium in TAIWAN 2009 Collective Papers *Editor: Department of Art and Design of GIS TAIWAN 2010 Lo, Yi-hua; Su, Pei-Chi; Yang, Pei-Yu; Tsai, Chia-Jeng; Fu, Han

*Publisher: Gis Taiwan 2010 Host team *E-mail: gis-taiwan@gis-taiwan.ntu.edu.tw *Website: http://gis-taiwan.ntu.edu.tw/ 2009/12/31

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Contents

GISTaiwan 2009 Conference Report

09

Subtopic 1:

Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

10

Subtopic 2:

Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

198

Subtopic 3:

Find the Next Wave to Ride On — New Business Strategies in the Changing World

346

Host Team of GIS TAIWAN 2009

514

Organizers

515

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Subtopic 1:

<Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship> *Rethinking of Corporate Social Responsibility(CSR) and Social Entrepreneurship,............................Chakravarti Rishi 12 *On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach..........................................................................................Felipe Valencia-Dongohakravarti Rishi 22 *Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship............................. Hyeyeon Byeon 32 *Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship............................... Lagnajeet Das 38 *Rethinking the role of CSR and social entrepreneurship: A paretoimproving outcome.......................... Peng Yam Koh 44 *Of Responsibility....................................................................................................................................... Tomáš Mudra 50 *Implications from the Global Financial Tsunami........................................................................................... Ziyan Zhao 56 *Desirable forms of Corporate Social Responsibility -Thinking the opportunity cost-,..............................Jungmin Kwon 62 *Quick! Pretend We’re Nice!,.....................................................................................................................Mariel Chavez 66 *Corporate Social Responsibility Defined and Explored............................................................................ Renee Chang 72 *What can CSR be in Taiwan? About most enterprises in Taiwan, and the banks................................ Hsun-Yin Huang 76 *How to Enhance the Importance of the Social Entrepreneurship: *Five Areas of Concern for the Social Enterprises?...............................................................................Dimitar Dimitrov 80 *Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship....................................... Tay Chen 86 *When Corporate Social Responsibility (CSR) confronts with Public Dissatisfaction...............................Xiao-Yun Gong 90 *The Synthesis of Corporation and Society..............................................................................................Dong Gun Yoo 96 *Corporate Social Responsibility and Social Entrepreneurs...................................................................Nguyen Duong 104 *The Call of the Social Entrepreneur: Challenges and Strategies for Developing a Social Entrepreneur Corps..................................................Pin-Quan Ng 110

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Subtopic 1:

<Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship>

*Companies with a Conscience – A Foundation of Sustainability“You must be the Change You Wish to see in the World”................... William Riordan 116 *THE REAISSACE OF THE CORPORATIO..............................................................................................Pablo Crimer 120 *Corporate Social Responsibilities: Problems and Perspective Development.......................................................Li Xu 126 *Corporate Social Responsibility and Social Entrepreneurship.................................................................Jennifer Tran 132 *Corporate Social Responsibility for environmental needs.......................................................................Arisa Tagawa 138 *Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship...............................Dhita Larasati 144 *Providing an EAR to the Problems of Social Enterprises.............................................................Patricia Buensuceso 150 *CSR: Redefining Milton and Adaptability for Global Success..................................................................Yung Terd Lu 154 *Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship..........................Bagiella Santiago 160 *Going Beyond The Grey Hair,............................................................................................................Annabelle Libeau 166 *Rethinking of Corporate Social Responsibility and Social Entrepreneurship....................................Dimithri Jayagoda 172 *Reconciling Economic and Social Imperatives in Corporate Social Responsibility (CSR) and Social Entrepreneurship (SE)...........................................................................................................Tian Boon Law 178 *Tapping India’s Youth Potential: The Grassroutes Movement..................................................................Anurag Dutta 182 *CORPORATE SOCIAL RESPONSIBILITY: EVOLVING A NEW BEGINNING...................Thrivikraman Subramanian 186 *“Co-operate Social Responsibility”.........................................................................................................Aakriti Agarwal 194

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Subtopic 2:

<Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress>

*Call for a global reconsideration................................................................................................................Luca Bagiella 200 *Human Development for Contemporary China...........................................................................................Sixuan Qian 206 *Bhutan: Happiness of the people vs. Wealth of nations.........................................................Napeepat Vorawatpanich 210 *Bliss and misery: the co-development of culture and economic progress.................................................Thijs Velema 216 *Bright side of globalization: culture industry and gender equality in Japan......................................... Pei-Hsuan Chen 222 *BLISS OR MISERY, AFRICAN ECONOMY IN THE GLOBAL ECONOMY TRANSITION,...........................Haddy Bah 226 *On Cultural Diversity..................................................................................................................Manuel Gallego Murcia 230 *Kretek (Indonesia Cloves Cigarettes): Between Culture and Economic............................................Eryan Ramadhani 236 *Contemplating the Engagement of Cultural Forms and Economic Progress: Bliss or Misery?.............. Hui Ting Chen 242 *The model that I would like to introduce to all of you is the European Route of Industrial Heritage (ERIH) ........................................................................................................................................................... Alexander Pfennig 248

*The Digital Divide.......................................................................................................................................Jiaying Shen 252 *Endeavor: fostering entrepreneurship across cultures.............................................................................Luis Gorupicz 258 *GLOBALIZATION ECONOMIC CHALLENGES AND OPPORTUNITIES FOR AFRICA.......................Yahya Sanyang 264 *“Foreign” investment and the absorption capacity of Russian business culture...................................... Andras Szirko 268 *Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress,.................Yi-Ray Wu 274

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Subtopic 2:

<Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress>

*A CASE STUDY ON EDUCATION IN INDIA- SANDWICHED BETWEEN CULTURE AND ECONOMY .........................................................................................................................................................Shailesh Upadhyay 278

*Opportunities and Needs: Engagement of Cultural and Economic Value in Cultural Heritage Tourism........Qiong Wu 284 *Bliss or Misery— Contemplating the Engagement at Cultural Forms and Economic Progress ..................................................................................................................................................................Weichi Jeang 290 *A STUDY OF CULTURAL CONVERGENCE FROM PURCHASING POWER PARITY PERSPECTIVE...... Ming Xia 296 *The financial industry – From Hawaii to somewhere else......................................................................Joao Brandao 306 *CSR (corporate social responsibility) is a Matter of Existence, Not a Matter of Choice......................... Min Hee Han 310 *Bliss or Misery? —Contemplating the Engagement of Cultural Forms and Economic Progress...........Natalia Lopez 314 *Bliss or Misery? — Contemplating the Engagement at Cultural Forms and Economic Progress ................................................................................................................................................ Gantsetseg Byambajav 320 *Downtown, Anywhere: inter-relationships between architecture, culture and the economy, ...........................................................................................................................................................Simrita Shaheed 326 *Can changing the olden consumption culture of Chinese save the economy?......................................... Ka Piu Ku 332 *Global Advertisements Going Glocal – Asia..........................................................................................Jee Won Lee 342

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Subtopic 3:

<Find the Next Wave to Ride On — New Business Strategies in the Changing World>

How will trends affect businesses and how should companies respond to changes in trends?.................. Peter Chen 348 Tide out, head up.......................................................................................................................................Yinwen Jiang 354 Find the Next Wave to Ride On −New Business Strategies in the Changing World...................................Brian Huang 360 Liabilities of Origin to Advantages of Origin - The case of Emerging Economy Multinationals!................Anirudh Popli 366 Find the Next Wave to Ride on — New Business Strategies in the Changing World...........................Sook Ching Voo 374 Crossing Boundaries, Challenging Frontiers................................................................................................Yuxiang Ge 380 FIND THE NEXT WAVE TO RIDE ON – NEWBUSINESS STRATEGIES IN CHANGING WORLD.....Marsya Aderizal 390 EFFECTS OF TREND TO BUSINESS IN GLOBAL ECONOMY AND 3-STEP STRATEGY TO RESPONSE TO THE FLOW OF CHANGE..........................................................................................Nguyen Thai 396 Find the Next Wave to Ride on- New Business Strategies in the Changing World.........................................Ping Chih 402 For a Sustainable Internet..................................................................................................................Stevens Le Blond 414 A Fourth Wave in Green Recovery.................................................................................................................Guo Chen 420 Find the Next Wave to Ride on–Green, Lean, and the New Social Machine.................................................David Lee 428 The Principles of Crafting Successful Business Strategies in the Changing World: Four Combinations.............................................................................................................................................Kai Liu 432 Realize, Respond, Recover and Rise: Four Combinations........................................................................Chen Xiang 438 More than a trend: The national competitiveness of Emerging economies in the face of the financial crisis..........Mohamed El Dahshan 446 Incorporating Sustainable Development into Business..............................................................................Julian Putra 448 Founding World Enterprise Organization: to Achieve Unity of Global Business World.............................Gilbert Chen 452

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Subtopic 3:

<Find the Next Wave to Ride On — New Business Strategies in the Changing World>

“The Logic of Westphal and Post Westphal Systems of International Relations in the Context of Fighting Against the Circumstances of the World Economic Crisis”........................................................................................Denis Maximov 458 *Competition VS. Collaboration -*Strategies in the Generation and Adoption of a Sequence of New Technologies.................................................Mo Li 464 *Find the Next Wave to Ride on—New Business Strategies in the Changing World...................................Anshul Arya 470 *Seeking for the White Goose Nest.........................................................................................................Yu Kyung Choi 474 *Seize the Spring of Hope................................................................................................................................Ziqian Ju 478 *Ways of Surviving in the Fast-shifting Market.....................................................................................Eun Jung Kwack 482 *“The New Business Strategies: Business, open-source and competitive intelligent.............................Yu Chin Cheng 484 *The Paradigm Shift of Business Responsibility under a ew Geopolitical Order......................................Dominic Yang 492 *Trends of Business, What Will It Be?.............................................................................................................Jimin Lee 498 *Succeeding Responsibility, Succeeding Globally................................................................................Emile du Plessis 502 *The Virtue of Business Relations............................................................................................................Rosali Kruger 508

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GISTaiwan 2009 Conference Report Challenges & Opportunities — the Global Economy in the Transition Phase Date: 2009/7/6-7/11 Location: National Taiwan University Subtopics: 1. Rethinking of CSR and Social Entrepreneurship 2. Bliss or Misery? - Contemplating the Engagement of Cultural Forms and Economic progress 3. Find the Next Wave to Ride On-New Business Strategies in the Changing World Published: Department of Publicity, GIS Taiwan 2010

Mission Global Initiatives Symposium in Taiwan (GIS Taiwan) is an international student conference founded in 2008, which is established, organized and executed by college students in Taiwan. Inspired by St. Gallen Symposium in Switzerland, the objective of GIS Taiwan is to provide the future leaders with an interactive platform for in-depth discussions on global issues in East Asia. Through dialogues and interactions, experiences can be shared; effective solutions can thus be generated to address current issues in a feasible manner in the land of Taiwan. GIS Taiwan sincerely hopes to ignite creativity in future leaders, and to initiate possibilities of a better world in the time to come. Topic Essays 1st Place Luca Bagiella, “Call for a Global Reconsideration” 2nd Place Chakravarti Rishi, “The Renaissance of the Corporation” 3rd Place Peter Chen, “Market Trends: Benefits, Dependencies, and Pitfalls.The Case for Businesses to Adopt Sustainable and Sensible Strategies in Response to Market Trend Changes”

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship In the past few years, the relationship between "corporations" and the "society" has transformed significantly. Today, most companies endeavor to involve themselves in philanthropy activities to demonstrate to the public that they indeed care about the society while pursing their primary business goals - profits. A recent survey showed that over 95% of CEOs indicated that the society has higher expectations for the corporations to take on more social responsibilities than it did five years ago. These phenomena seem to point out one changing trend in the business field: that Corporate Social Responsibility, which once seemed only to play a supporting role on the stage, may now be hosting the show in the business world. McKinsey's surveys in 2007, however, revealed that CSR was simply superficial for most companies and proved that CSR was implicitly only a flashing fad. Moreover, Milton Friedman, the Nobel Laureate in Economics Science, in his 1970 article entitled "The Social Responsibility of Business Is to Increase Its Profits" contended that enterprises' managers did not have the right to represent their stockholders to perform excessive social responsibilities. Many of the anti-CSR discussions prompted by the recent global financial crisis might stem from some of these concepts. On the other hand, firms seen excessively carrying out CSR are encouraged, by NGOs and CSR advocates, to take on additional responsibilities that do not agree with the fundamental goals of their businesses. Responding to the trend that more people are concerned about the society, a group of people is now adopting a different measure to realize their view on social responsibility. They are the so-called "social entrepreneurs." They recognize and focus on social issues and apply entrepreneurial principles to organize a venture to solve the social problems they observe. Different from business entrepreneurs, they assess the performance of their approaches in terms of the impact they have on the society. For example, one well-known contemporary social entrepreneur is Muhammad Yunus, who was awarded the Nobel Peace Prize with Grameen Bank, which he founded. However, social entrepreneurs face many potential challenges. They may not obtain enough support to achieve their goals. In addition, they may sometimes make wrong business decisions. This is because there is no supervisory third party to oversee their activities, causing their organizations to become monopolies in certain fields. When such a situation occurs, valuable resources would be wasted. After rethinking the definitions of CSR and social entrepreneurship, please describe a problem that might emerge and elaborate it with possible solutions.

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Best Paper of Subtopic Rethinking of Corporate Social Responsibility(CSR) and Social Entrepreneurship, Chakravarti Rishi

Word Count- 1932/PIN-10437

Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship Introduction

According to the World Bank, Corporate Social Responsibility can be defined as the commitment of business to contribute to sustainable economic development working with employees, their families, the local community, and society at large to improve their quality of life, in ways that are both good for business and good for development. CSR is nothing but voluntary strategies undertaken by companies to address issues perceived as being a part of their social responsibility. It is about corporate management strategies adopted by companies to minimize their negative impact on the environment and society through their production activities and giving back to the society what the corporation takes away from it. This concept is closely associated with the concept of sustainable development which is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The bone of contention:

Many might feel that caring about customers and employees are good for business, but they might have some reservations at believing that a company has any responsibility to its community and environment. They will argue that donating time and capital to philanthropy is a drain from investors. After all, a company’s assets legally do belong to the investors. The management’s duty is to increase shareholder value; therefore any activity which doesn’t maximize shareholder’s value is a violation of this duty. However, I feel that this argument is too narrow even though it may be true.

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

A certain amount of corporate philanthropy is good for business and is beneficial in the long term for investors as well.

Now the question arises, where do we draw the line? If donating 10% of the profit to CSR is good, then 20% would be better still! If we keep thinking this way then why not donate 100% of a company’s profits to CSR activities? It is important to strike a balance between the two as the company has responsibilities towards both the society as well as its shareholders. We cannot arbitrarily point out that 10% or 20% is the “right amount” for CSR donation.

Proposition:

I believe that a donation, of the above kind, by the companies for CSR purposes is not sustainable for the community as well as for the company in the long run. There is a symbiotic relationship between the two. I strongly believe that it is always better for the corporation to help the community help themselves to make the whole CSR process sustainable.

In this essay, I wish to highlight my proposition through a simple case study of one of India’s leading companies and thereby present my model on how the issue of sustainability can be addressed to.

How are Companies Responsible?

Economics studies two forms of externalities- positive and negative. An externality is something that influences the society as a whole while it does not monetarily affect the producer of a good.

A positive externality is something that benefits society, but in such a way that the producer cannot fully profit from the gains made. A negative externality, on the other

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Rethinking of Corporate Social Responsibility(CSR) and Social Entrepreneurship, Chakravarti Rishi

hand, is something that costs the producer nothing, but imposes a cost on society in general.

Pollution is a very common negative externality in production processes. A company that pollutes loses no money in doing so, but society must pay heavily to take care of the problem pollution caused.

The problem this creates is that companies do not fully measure the economic costs of their actions. They do not have to subtract these costs from their revenues, which means that profits inaccurately portray the company's actions as positive. This can lead to inefficiency in the allocation of resources.

This allocation problem can be solved by internalizing the net cost inflicted on the society by the company and through responsible behavior of the companies with respect to the society and the environment. This is termed as ‘Corporate Social Responsibility’ in modern day corporate philosophy.

A Case Study: Indian Tobacco Company Limited- ITC’s e-Choupal Initiative -Helping communities help themselves

An Overview:

ITC’s Agriculture-Business Division, one of India’s largest exporters of agricultural commodities, has conceived e-Choupal as an efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis while still contributing to environmental conservation in the process.

The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure, the involvement of numerous intermediaries and limited knowledge on environmental conservation by farmers.

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

The Plan of Action:

‘e-Choupal’, with its judicious blend of technology and agricultural practices, has installed village internet kiosks which are managed by farmers themselves. This enables the agricultural community to access information in their local language on the weather, market prices, disseminate knowledge on scientific farm practices and risk management, facilitate the sale of farm inputs and purchase farm produce from the farmers’ doorsteps. It also gives the farmers the know-how on environmental protection and resource conservation.

The input provided by ‘e-Choupal’ enhances the ability of farmers to take decisions and align their farm output with market demand and secure quality and productivity. This gives them access to high quality inputs from established and reputed manufacturers at fair prices.

Figure2: Flow Chart Showing ITC’s e-Choupal Initiative. Global Initiatives Symposium in Taiwan

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Rethinking of Corporate Social Responsibility(CSR) and Social Entrepreneurship, Chakravarti Rishi

The Impact

While the farmers benefit through enhanced farm productivity and higher farm-gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value. This outreach of technology in rural India has worked miracles for the poor farming community in many rural villages in India.

This has also resulted in several Self-Help-Groups (SHGs) in rural India. With increased prosperity (due to higher farm-gate prices offered by ITC), the farmers form groups of 615 people in villages, where they pool funds from their savings. With this fund as collateral they are able to access formal bank loans which are certain multiples of this collateral. These SHGs are, thus, able to access more funds from the banks and this money is used for other need based productive purposes for community development (building schools and hospitals for themselves), giving rise to social entrepreneurship. This has helped address several social issues which the local populace take care of by themselves. Thus, the ‘e-Choupal’ initiative has a tremendous domino effect towards community development in rural India.

From this we see that ITC has been able to provide better standards of living for the rural farmers (stakeholders) as well as for its shareholders through increased profitabilityhitting two targets in one shot! The ‘e-Choupal’ initiative also has significant bearing on the environment and resource management like water conservation and check on the use of harmful pesticides.

Present Status:

Launched in June 2000, 'e-Choupal', has already become the largest initiative among all Internet-based interventions in rural India. 'e-Choupal' services today reach out to over 4 million farmers growing a range of crops- soyabean, coffee, wheat, rice, pulses, shrimpin over 40,000 villages.

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

The Model - A push in the right direction

In order to illustrate an idea of companies helping communities help themselves through execution of CSR practices, I propose the following simplistic 3 tier model:

Tier I:

Lay Down Basic Policy Guidelines: The company has to come out openly defining their strategy towards community development and peg it with the growth of the company. Making profit for this representative company is the means of attaining the goal of fulfilling its core business mission. Besides other missions of this model company, it aims at improving the wellbeing of the community; provide meaningful employment opportunities for the youth in the community. The company cannot fulfill this mission unless it is profitable. Profits are necessary to spur growth for the community. Just as people cannot live without eating, similarly a business cannot live without profits. Rational people donâ&#x20AC;&#x2122;t eat to live and so neither must a business operate to make profits.

Identify Key Persons: the execution of the policy effectively is crucial for the success of this model of CSR implementation. The company should identify key players in the community who have significant power for effective implementation of the strategy. For example, it could be the SHGs or social entrepreneurs.

Tier II:

Interacting with stakeholders and identifying their priorities: the company along with the key persons should have a dialogue with the local community members, government and all the stake holders in this business. This will give an idea on the approximate social cost which the company will be imposing on the livelihoods of the people.

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Rethinking of Corporate Social Responsibility(CSR) and Social Entrepreneurship, Chakravarti Rishi

Working on a location specific strategy: After the priorities and requirements of the stakeholders are identified, a strategy should be developed in conformation with the needs of the local community and include it in the business practice of the company. For example, adopting pollution abatement technologies, such as removing particulate matter and sulphur from chimneys with ‘precipitators’, ‘treating’ sewage before releasing it in water bodies and so on. This strategy will depend on the specific region the company is targeting to set up their factory/business.

Training of Employees: The skill generation is necessary for the efficiency of the workforce. Efficiency raises the productivity of the workers.

Tier III:

Laying Down the Measurement Parameters: After interacting with the stakeholders and the employees, the management team should consult the government and decide on the emission parameters of their factories. These standards will reflect the maximum cap on the pollution emission which is absolutely unavoidable.

Evaluation: After a certain period of company operations in the locality, they must let themselves be evaluated on several counts by the community on the benefits which the company promised. In India, research has shown that companies which allow themselves to be evaluated in this manner, which have wide ranging communication with the stakeholders, win the understanding and approval of the market and help change the market’s values. This form of evaluation bridges the gap between the community and the corporation.

Rewards for Achievers: Any long-term solution requires the understanding of the problems at all levels. While things may are relatively easier at the level of the MNCs which are following a consistent code of conduct, the situation gets difficult for those operating at lower levels and facing the pressure from clients whose objectives are not to become good corporate citizens but just to get a lower price. This calls for the

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

establishment of strong rewarding incentives, so that corporations become enticed to provide information on their environmental and social performance. Rewards are essential to make this corporation and the community development sustainable in the long run. The model is summarized below:

LAYDOWN BASIC POLICY GUIDELINES IDENTIFY KEY PERSONS

INTERACT WITH STAKEHOLDERS

LAY DOWN STRATEGY

TRAIN EMPLOYEES

LAY DOWN MEASUREMENT PARAMETERS EVALUATION REWARDS FOR ACHIEVERS

Figure3: The Model structure

Conclusion

â&#x20AC;&#x153;By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends to promote it.â&#x20AC;? -Adam Smith, The Wealth of Nations

CSR lies at the heart of a company's comprehensive activities aimed at maintaining harmony between the corporation, society, and the environment with an eye on sustainable development. Like any other practices- medicine, law- business too, has noble purposes: to provide goods and services that improve its customers' lives, to provide jobs and meaningful work for employees, to create wealth and prosperity for its investors, and to be a responsible and caring citizen benefiting the society.

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I believe that corporations add far more to society by maximizing their business goals than they do by merely donating time and money to charity. It is important that the society benefits and grows along with the company to make the CSR sustainable in the long run.

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References

Books and Articles referred to: •

Asongu, J.J. (Spring 2007), The History of Corporate Social Responsibility, Volume 1, Number 2

Assisi, C. and I. Gupta (January, 2003): “ITC’s Rural Symphony”, Business World, 14-20, 30-37

Basu, Priya: Improving Access to Finance for India’s Rural Poor, 62,63

Milton Friedman (1970), The New York Times Magazine, September 13

Sawhney, M. (2002): “Fields of Online Dreams”, The CIO Magazine, October 15

Websites referred to: •

http://www.i4donline.net/oct05/dgaward.pdf

http://www.worldbank.org/

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On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach.

Felipe Valencia-Dongohakravarti Rishi

Word count- 1,996 /PIN-10083

On Social Entrepreneurship: Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach. (Subtopic: “Rethinking Corporate Social Responsibility (CSR) and Social Entrepreneurship”)

1. Introduction: Why Is Social Entrepreneurship Important? "Don't worry about what anybody else is going to do… The best way to predict the future is to invent it. Really smart people with reasonable funding can do just about anything that doesn't violate too many of Newton's Laws!" Alan Kay – Former member of the Apple R&D division “The first step to become an effective social entrepreneur is to give permission to be one!” Bill Drayton – Founder of Ashoka

We are living in a World of Constant Change (WCC) in which Social entrepreneurs and their Institutions (referred to as “SE”) represent a positive revolution. Relatively new concepts are usually in constant re-definition. Therefore, it would be useful to quote some of the experts in the field. Social entrepreneurs… 

“Are individuals with innovative solutions to society's most pressing social problems.” (Ashoka)1

“Act as the agents of change for society, seizing opportunities others miss in order to improve systems, invent and disseminate new approaches and advance sustainable solutions that create social value.” (PBS New Heroes Program)2

Also, Social Entrepreneurship could be defined as a combination of: Entrepreneurial Principles + Focus on Social Issues = Solving Social Problems Vision: Entrepreneur

Passion: Server

Result: Social Entrepreneur

Institutions like Ashoka3 founded by Bill Drayton and Dr. Yunus’ Grameen Bank4 of Dr. Yunus are concrete examples of the importance of social entrepreneurs. In fact, they play a role as important as that of enterprises or governments. This is one of the reasons they are receiving significant attention. In addition, more people (especially the youth) want to become social entrepreneurs not only because it gives a sense of fulfillment in life5, but because they believe that they can achieve concrete positive changes in the world. 1

Ashoka’s web page. http://www.ashoka.org/social_entrepreneur (Accessed March, 2009) Article “What is a social entrepreneur?” of NOW: Social Entrepreneurs at Work. http://www.pbs.org/now/enterprisingideas/what-is.html (accessed March, 2009). The highlighted part is from the author. 3 More information: www.ashoka.org 4 More information: www.grameenfoundation.org 5 By feeling part of a movement that dreams on building a better world to live for everybody. 2

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Certainly, this topic is very broad and covers many aspects of human and social reality. Therefore, in order to provide interesting and useful recommendations, this essay will focus on one of the main challenges of SE and an innovative “path” to address it. 2. Identifying and understanding the main challenges: Sustainability at stake “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” -Martin Luther King Jr., Strength to Love, 1963

Identifying and understanding challenges is necessary in order to take advantage of opportunities that appear in a World of Constant Change. In that sense, many scholars have written about SE; in fact, questions like this have already been discussed6:  (why) Why do they appear?  (how) How do they work?  (what) What can they succeed? These subjects are of particular importance for the understanding and development of SE. However, transitional periods generate a change of paradigms and force us to rethink concepts, ideas and courses of action. In that sense, judging by: 1) The literature on this subject, 7 2) Consulting different youth leaders and social entrepreneurs from around the world8, and; 3) Our experience engaging for more than three years in social entrepreneurship9 …One of the main challenges that needs to be discussed in this context10 is: How to achieve sustainability over time? One of the main goals of SE is to make an impact. In that sense, the sustainability of its institutions, ideas and projects is essential to guarantee a long term impact and funding in the short term.11 It is also a significant challenge because, as the guide of GIS Taiwan 2009 states, it is important not to waste the valuable resources that SE receives.12 6

Crutchfield, 2008. Elkington and Hartigan, 2008. Wei-Skillern, 2007. Bornstein, 2007. Brooks, 2009. Elkington, 2008. Nicholls (ed.), 2006. 8 They come from different countries, realities and cultures and were met by the author in the different youth meetings he attended around the world (12th World Business Dialogue 2009, Second Iberoamerican Youth Leaders Summit, South American Business Forum 2008 and The Fletcher Summer Institute at Tufts University on Advanced studies in “non-violent conflict”). 9 This experience in SE was acquired by being the former-Director General of a Youth Non-Profit Network in Peru, by attending international youth summits, and by the current work on the creation of a youth public policy network in Latin America. 10 This gains even more relevance in the current “transition period” where one of the things that is at stake is the future of institutions. 11 Nobody wants to invest in something that won’t last. This gains even more relevance in the current “transition period” where one of the subjects that is at stake is the future of institutions. 12 This, in the close future, could decrease because of the economic crisis. 7

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On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach.

Felipe Valencia-Dongohakravarti Rishi

Some concrete reasons why sustainability could be difficult to achieve: - Lack of a concrete objective: If the objective is not clear institutions become unsustainable. Members think differently about the institution and execute different projects and goals. This could lead to the atomization of the institution. - Lose of energy: Many SE rely on the participation and work of young people13. This is a great advantage because youth is innovative and resourceful. However, this energy can be fragile. In many cases, they have to divide their limited time between many responsibilities: studies, work, boyfriend/girlfriend, projects and future plans, etc. - No concrete actions: It is important to have continuous achievements, no matter how small, because it shows that the initiative or project is moving forward. Otherwise, they could lose motivation. There are many other challenges that must be taken into account. This essay does not argue that sustainability is the only challenge but focuses on it because of its importance to the effectiveness and legitimacy of SE. 3. How to transform challenges into opportunities? “Opportunities to find deeper powers within ourselves come when life seems most challenging.” Joseph Campbell (American Author, 1904-1987)

Victor Hugo, the famous French author, used to say that the future has many names. For the weak, it means the unattainable. For the fearful, it means the unknown. For the courageous, it means opportunity. Identifying challenges is important but turning them into opportunities is even more. Thus, a characteristic of SE is courage; when a challenge or a problem appears they look for an opportunity. That is exactly what is happening in this “Global Economy in the Transition Phase”14. I have designed a simple procedure to transform challenges into opportunities: Graphic 1: Triangle of Sustainability (ToS) Transforming Challenges into Opportunities (1) Understand

(2) Adapt

(3) Lead change Source: Self production

This graph may be regarded as an over-simplification but it helps by clearly showing what SE should take into consideration: Understanding the world, the current process of change, the main stakeholders and the core social problems; 13

For example, according to the largest annual survey on social entrepreneur in the United Kingdom: “young people are more likely to be social entrepreneurs than any other age grouping.” PR Newswire www.prnewswire.com (Accessed March, 2009) 14 As GIS Taiwan refers to it on: “Main Topic of GIS Taiwan 2009” http://gistaiwan.ntu.edu.tw/symposium/topic.html (Accessed March, 2009).

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be able to adapt and flexibility to new proposals, cultures, people, markets, ideas and changes; and leading change because SE, in general, are leaders, not followers. It should be noted that this is not an abstract theory but my own appraisal of a leader’s responsibility as gathered from my experience in charge of non-profit organizations. By acting like this, leaders will be prepared to transform challenges into opportunities in an easier way. 4. How to transform opportunities into realities? You see things; and you say, 'Why?' But I dream things that never were; and I say, "Why not?" George Bernard Shaw, Irish dramatist. "Back to Methuselah" (1921) Ashoka’s motto: “Dream it, do it!”

Identifying opportunities is not enough. We have to make them happen!15 It is not just a matter of dreaming but of working to achieve your dreams, aspirations and goals. Graphic 2: On Dream Catching. Transforming Opportunities into Realities (1) Dreaming

(2) Working for our dreams

(3) Achieving them Source: Self production

Because we believe that dreams can come true, I and a group of youth leaders of different countries are building a Latin-American Youth Network that attempts to:  Connect youth leaders from different countries;  Bring them together to analyze and discuss the main challenges of our region;  Give incentives for team-work and information “spillovers”. You dream, you work for your dreams, and once achieved… you keep dreaming and working. 5. The Concrete Sustainability Path of Social Entrepreneurship: A visual approach. In order to summarize the ideas addressed, this visual approach could help highlight the essence of this essay.

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I was once told that I was a “foolish dreamer” because “youth are always dreamers until they get older and realize that their dreams were impossible”… This intrigued me. Why does this happens? Are we “condemned” to realize that dreams are impossible?

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On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach.

Felipe Valencia-Dongohakravarti Rishi

Graphic 3: The Sustainability Path of Social Entrepreneurship

Source: Self Production

Hopefully this “sustainability path” can work for most of the kinds of SE16. However, every country and sector will have to adapt it to their particular situation to take full advantage of it. I encourage all the readers to try to find improvements for better results and applications: keeping in mind that this should be a concrete way of approaching daily challenges to achieve sustainability. 6. The one thing we can never forget: Values, Principles and Essence. “Personal leadership is the process of keeping your vision and values before you and aligning your life to be congruent with them.” Stephen Covey – US Expert on Leadership

After meeting many business and social entrepreneurs, politicians and experienced regional leaders I realized that in every kind of activity it is important to have clear values and principles. Institutions that “forget” their essence or main objective become significantly vulnerable. Any effort made to build a better world is useless or even counter-productive, if it is not based on: - The essence of the institution, project or initiative; - Honesty; - Commitment; - Transparency; - Tolerance; - Integrity; and, - Vocation of Service. 16

Environmentalists, poverty reductions, youth leadership, human rights, gender issues, micro-credits, animal rights, etc.

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7. Getting as concrete as possible: The Peruvian experience on Youth Engagement and Youth Leadership “Youth are uniquely equipped to change the world because they dream. They choose not to accept what is, but to imagine what might be. ” Archbishop Desmond Tutu – Peace Nobel Prize17

All these ideas are based on my experience working as a social entrepreneur in Peru and Latin-America. “Grupo Convergencia” works to turn ideas and youth initiatives into actions. It is a Non Profit Youth Organization that promotes youth leadership and youth participation.18 In that sense, we not only dreamt about a better Peru but we worked for it.19 In the year 2008 I became the Director General. There, I gained experience on youth leadership and entrepreneurship, team work, solving complex problems, taking advantage of opportunities and constant innovation and change making. Some of the achievements include:20  Forums,  Magazines,  Discussion sessions,  Generating work-teams of students from different backgrounds and socio-economical conditions and  Gatherings between students and public figures. Grupo Convergencia earned legitimacy and respect among public figures: “A project in which all Peruvians can recognize themselves, a project in which everybody can identify their dreams, illusions and passions and, also, their commitment to the nation in any task”. Valentín Paniagua Corazao, former-President of Peru, talking about “Grupo Convergencia”

The declarations of other public figures can be found in Appendix 2. These include a former Minister of Economics, the Director of the “Global Competitiveness Leadership Program” at Georgetown University, the President of the Peruvian Central Bank, among others. Therefore this is a concrete example, based on my own experience and that of hundreds of students, on how to manage the challenge of sustainability over time. Every day we take more actions in order to pursue our goals while protecting our sustainability. Grupo Convergencia: …innovative ideas for the problems of “always” (a dream, an idea, a reality)

17

In the foreword to the book of Kindade and Macy, 2005. Composed of young Peruvian student leaders and has been working for 7 years promoting peruvian youth to take an active role. More information: www.grupoconvergencia.org 19 All of this in a creatively, responsible and organized way. Also, being lead entirely by youth entrepreneurs. 20 Appendix 1: “Main Achievements of Grupo Convergencia in Peru” offers further information and details about what the organization has done. 18

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On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach.

Felipe Valencia-Dongohakravarti Rishi

8. Further discussions: What should we care for the future? The “world” of SE is broad and, clearly, this few lines could not cover all of its aspects. Therefore, I briefly propose subjects that could be further studied and some preliminary solutions (in italic) for them:  

 

How to make Effective Social Changes (ESC) in the long term? o Project Continuity, Lucid Idea of the Future, Elaborated Long Term Plan, etc. Connecting youth from around the world in a meeting is vital to foment inter-cultural interactions and exchange of ideas and concrete solutions while creating a trust network. How to make these networks sustainable? o On-line Social networks, Posterior Common Projects, Educating New Young Leaders, etc. Measuring results on non-profit institutions is more difficult than in for-profit ones. How to measure results? o Benchmarking, Development Indicators, Goals vs. Achievements, etc. How to be successful on Growth funding? o Elaborating Business Plan, Connecting with the Right People, Get Educated on Cost/Benefit Skills, etc.

9. Conclusions and Final Reflections A combination of personal experiences, successful initiatives and current literature related to Social Entrepreneurship has yielded feasible and concrete recommendations for entrepreneurs around the world to deal with global challenges. One of the main challenges that SE has to face is achieving sustainability over time. This becomes even more important in a changing global context and an international economic crisis. The current essay proposed feasible recommendations and approaches to achieve sustainability:  “The Sustainability Path of Social Entrepreneurship”: It is based on a successful initiative of a group of Peruvian students. It is explained so as to be useful to other entrepreneurs around the world for the day-to-day work.  Recommendations include: o Transform challenges into opportunities o Transform opportunities into realities. Be able to: understand (the world, changes, main social problems, etc.); to adapt and be flexible (to new proposes, cultures, markets and ideas); and to lead change (entrepreneurs are leaders, not followers); o Remain loyal to your values and principles; any effort made in order to build a better world is useless or contra productive if it doesn’t. o Never “forget” the essence of your initiative or project; the ones that do, become significantly vulnerable. Finally, create value for the future surrounded by talent and creativity; get together with people from other cultures and discuss ideas and initiatives; practice team-work; go after opportunities; take into account the environmental effects of their actions; cultivate human capital; be responsible with the education received; and be entrepreneur as a life attitude: by doing so you will contribute to build a better future for your country and for the world.

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Bibliography 1) Bornstein, David. How to change the World: social entrepreneurs and the power of new ideas. Oxford: Oxford University Press, 2007. 2) Brooks, Arthur C. Social Entrepreneurship: A Modern Approach to Social Value Creation Entrepreneurship Series. Prentice Hall Higher Education, 2009. 3) Crutchfield, Leslie. Forces for Good: The Six Practices of High-Impact Nonprofits. Jossey-Bass, 2008. 4) Elkington, John and Pamela Hartigan. The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Save the World. Harvard Business Press. 2008. 5) Kindade, Sheila and Christina Macy. Our Time is Now: Young People Changing the World. International Youth Foundation (IYF), 2005. 6) Kliksberg, Bernardo. El contexto de la juventud en América Latina y el Caribe: las grandes interrogantes. (The Context of Youth in Latin America and the Caribbean: the Big Questions). W. Kellog Fundation, 2006. 7) Nicholls, Alex, ed. Social Entrepreneurship: New Models of Sustainable Social Change. Oxford: Oxford University Press, 2006. 8) Thompson, Andrés. Asociándose a la juventud para construir el futuro. (Association with Youth to Build the Future) W. Kellog Fundation, 2006. 9) Wei-Skillern, Jane C. Entrepreneurship in the Social Sector. Sage Publications, 2007. Web pages: 10) Ashoka’s web page: www.ashoka.org (Accessed March, 2009) 11) “Grupo Convergencia” web page: www.grupoconvergencia.org (Accessed March, 2009) 12) Interview to David Bornstein (Author of the book: How to change the World: social entrepreneurs and the power of new ideas.) http://blog.futurelab.net/2007/09/social_entrepreneurship_ten_qu.html (Accessed March, 2009). 13) NOW: Social Entrepreneurs at Work. “What is a social entrepreneur?” http://www.pbs.org/now/enterprisingideas/what-is.html. (Accessed March, 2009) 14) PR Newswire. “Young Are Most Socially Minded Among UK Entrepreneurs” http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/06-232006/0004386121&EDATE= (Accessed March, 2009). 15) The Grameen Foundation web page: www.grameenfoundation.org (Accessed March, 2009)

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On Social Entrepreneurship:Transforming Challenges into Opportunities and Opportunities into Realities. A Peruvian Approach.

Felipe Valencia-Dongohakravarti Rishi

Appendix 1 Main Achievements of “Grupo Convergencia” in Peru  Seven years working for the benefit of peruvian youth.  Forums in Arequipa, Cusco and Lima (Peru) with an overwhelming youth participation.  Twelve magazines on economics, development, social issues and leadership published.  Bringing together students from more than 15 private and public universities from Peru  Generating work-teams among students from different social backgrounds and ideologies.  Gatherings between students and public figures such as the Minister of Economics  Virtual bulletins, discussion and integration sessions, capacitation of our members, among others. All the achievements and projects were organized by university students. For more information: www.grupoconvergencia.org

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Appendix 2 Distinguished personalities expressing their opinions about “Grupo Convergencia” The former-Minister of Economics of Peru, Fernando Zavala, said: “Grupo Convergencia has allowed [students] to better understand economic development, enrich national debate and commit our youth to the future of our country.” Ricardo Ernst, Director of the “Global Competitiveness Leadership Program” at Georgetown University: “It reaffirms, once more, that when there is determination and good will of a group that organizes itself, ideas become realities.” Julio Velarde, President of the Peruvian Central Bank: “We have to congratulate Grupo Convergencia for its initiative to promote a space of dialogue with its magazine, forums and discussion sessions”. Gastón Acurio, Cheff and International entrepreneur – Enterpreneur of the year 2006 by “América Económica”: “Some years ago, Grupo Convergencia was a signal of hope for the future of Peru. Nowadays, it’s the confirmation that our youth is the one that will transform it for ever.” Agusto Álvarez Rodrich, former Director of “Perú 21”21, “I’ve always been interested on their effort to bring together enthusiastic young people, coming from different universities and with a solid commitment to the country and its future” And last, but not least, the former-President of Peru, Valentín Paniagua, said about us that: “A project in which all Peruvians can recognize themselves, a project in which everybody can identify their dreams, illusions and passions and, also, their commitment to the nation in any task”. Source: All of these were compiled on the 12th Magazine of “Grupo Convergencia”. Special edition for the 5th anniversary of the Group. Lima – Peru.

21

One of the main Peruvian newspapers.

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Hyeyeon Byeon

Word Count- 1846/PIN-10119

Rethinking of Corporate Social Responsibility and Social Entrepreneurship In the 21st century business industry, the corporationâ&#x20AC;&#x;s social role has been the current issue irrespective of business type and local area. Linkage between the society and business has been more and more tighten and at the same time, corporations get higher expectation for doing business related to the social benefit. Nowadays, the key factor to be successful is mutual management, which means that corporations have to concern and interact with political, legal, cultural circumstances, and even rival within the same industry. Corporations that are only looking for their own benefit will have a hard time to stay in business. That is why, study about CSR (corporate social responsibility) and social entrepreneurship has been developed. There are two main waves of these studies, one is study for the legitimacy, and specifically what the definition is, who serve these concepts and scope of actions. The other is how to implement these two concepts into reality. Carroll (1979) made fundamental study about CSR according to the historical research and presenting four-part definitions. He said â&#x20AC;&#x153;corporations had to be judged not just on their economic success, but also on non-economic criteria.â&#x20AC;? (Geoffrey, 2001) During that period, social entrepreneurship also became an interesting topic to study with CSR. Since, the main actors of CSR are entrepreneurs, and social entrepreneurship has more specified norms that can give actual guide to CSR users. From this ground study, there have been several trials to define CSR and social entrepreneurship, and these concepts have come into widespread. However, so far, CSR has some ambiguity regarding concepts and controversy to the legitimacy, so it still has been modifying. In addition, current global economic-crisis brings up difficult circumstances to concern social goods when corporations manage their own business. This paper is dealing with rethinking the definition of CSR and social entrepreneurship, describing problems that might emerge and elaborating it with possible solutions. It finally will find out barriers about these two concepts and develop proper remedies for that. The definition of CSR is still up to date, as well as, debates and criticisms are going on. 1

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However, trial to arrange the concept based on the last studies about CSR is on progress. Corporate social responsibility has broadly contains what „good‟ or „desirable‟ business behavior is. It plays linkage role between corporations and several complex constituents for sustaining development that has a long-term vision with society. According to Carroll (2000), there are four dimensions to explain CSR: economic, legal, ethical and philanthropic. It seems like CSR‟s development process starts from the basic purpose of corporation is related to the economic responsibility, CSR‟s roles are extended to follow legal duties, legal responsibility and overcoming legal boundaries is ethical responsibility. In the end, it reaches to the philanthropic responsibility, which is included in voluntary sector. This paper indicates that CSR has to contain all these four characteristics, and creating balance between these dimensions is the main task that has to be done by a leader. About the application, CSR has three steps to be implied by corporation: decision, adoption, and commitment. Each step requires appropriate support by a leader. (Nada K, Andrew P, Linda Lee, 2007) The social entrepreneurship is the concept developed from entrepreneur who works with the objective of creating positive social change rather than „mere‟ profit. “Classic entrepreneurship is creating and managing vision and communicating that vision to other people. It is about demonstrating leadership motivating people and being effective in getting people to accept change. Hence, social entrepreneur who serves social entrepreneurship has distinct characteristics from classic entrepreneur. Social entrepreneurs motivate people to maximize social value, do the not-for-profit activity, make organizational form based on egalitarianism, avoid competitive strategy but focused on creating and delivering social value, have broad stakeholders, interact with wide group of parties, finally have altruistic ethical reflection.” (Wickham Philip A, 2006) As compare to classic entrepreneurship, social entrepreneurship is that has more widened scope about non-profit and social sectors. But, it also contains dilemma that how it can satisfy both social and economic goal like CSR. Innately, entrepreneurship does not exist in sector of business. It has more broaden area and mainly included in voluntary works so business entrepreneurship is part of that. Social entrepreneurship is more welfare concept not exactly business idea but, for continuing social entrepreneurship in business world, it cannot ignore economical aspects. Even though, there are some features which are difficult to apply to the business industry; social entrepreneurship is meaningful concept to the CSR, since almost all CSR activities are related 2

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to the top-down management decision and, if we put whole CSR concepts into corporations, it normally brings about overall change for the company such as vision, structure and individual employee‟s behavior. “From initial uncertainty and ambiguity in understanding CSR, to moving forward to a new and concrete reality framed by deliberate leadership action.” (Nada K, Andrew P, Linda Lee, 2007) So, adjust and implementing CSR is the main tasks for leaders as entrepreneurs. GLOBE (global leadership and organizational behavior effective) uses this fact for managing CSR. It is research project, which is developed by leadership perspective. It has helped that companies corporate the CSR agenda into their core values by building personal connections and creating an environment of trust and intimacy among leaders. (Fred Robins, 2008) Therefore, CSR and social entrepreneurship are easily dealt with together. Then, what is it that makes difficult to apply CSR and social entrepreneurship into the real business industry? The problems are divided into external and internal problems. First, external problems are economic circumstances in these days. “CSR activity is not free and that its costs have to be borne by somebody.” (Fred Robins, 2008) Cost aspect is very influential reason that makes decision of the level of CSR activity. There is no doubt that the economic crisis aroused not only from the pervasive speculation in the banking sector but also from an expansion of loans from banks has an impact on the world economy all over the world over the last decade. (Financial times, http://www.ft.com) Due to the financial crisis, more corporations have hovered between the survival and collapse. This situation, in turn, is likely to preventing from companies practicing CSR in terms of the cost, because, as a whole investment additionally apart from activities about the core product or service of the companies has to be always concerned after making sure if the investment can make potential profit, for maintaining the company permanently. However, corporations prefer to put more efforts on acheiving their main purpose of existence under the current situation, so it leads companies to be slow in decsion about the active execution of CSR. Second, for CSR, social entrepreneurship internal problem is unclear definitions, the practical effects from these concepts. And there are no specific guidelines, how these two concepts modified in business work. As ongoing subject, it is hard to distinguish direct result from CSR and social entrepreneurship. CSR and social responsibility ranged over all business 3

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activities. Sometimes, these concepts are more related to the intangible parts like vision, frame, and advertising strategy and those are fussy to compare investment and outcomes. Even though, they are put in tangible project, the effects stretch to the corporation brand image or reliability from then, these effects are hard to measure by figures. And by this time, the study about CSR and social entrepreneurship have been dealt with in top management level, so there are no specific guides how to these concepts performed by middle managers and staffs. Moreover, Fred Robins (2008) proved that “Firm‟s stock performance and its social responsibility has long been the subject of contradictory views.” To overcome obscure model and prove real effects about CSR, social entrepreneurship, this paper will choose „strategy CSR‟ concept. For adapting in business world, social entrepreneurship should modify its norms within strategy CSR scope which balances between economical and social needs as proper level, so strategy CSR can give guideline how CSR and social entrepreneurship are reflected in corporation. “Strategy CSR or strategic philanthropy is done to accomplish strategic business goals – good deeds are believed to be good for business as well as for society.” (Geoffrey P. Lanots, 2001) This concept will bring appropriate scope of CSR definition, which is not too broad or narrow, and deliver new perspective to adjust CSR and social entrepreneurship into reality. Strategy CSR especially emphasizes CSR as a strategy and asset for corporation. For example, as strategy CSR perspective, doing social goods will be brought goodwill. There exists payback, and then CSR does not anymore charity works. Strategy CSR also relies on financial problems, so like in these days, if the economical situation is not going well, it will become secondary matter. For that reason, strategy CSR makes fully investment, when return on investment is ensured. Actually, there are representative example of succeed corporation, which used this strategy, Body Shop and Ben & Jerry‟s. They actually do the social beneficial works but it is possible when these works brings positive effects on their sales. For this kind of results, strategy CSR does not only require duties to corporation, but it also imposes duties to other stakeholders. „Reciprocal stakeholder responsibility‟ means that as social has some expectation to the corporation, at the same time, corporation has expectation to the society. It contains important 4

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Hyeyeon Byeon

ideas that CSR is not for the corporation and it is also for the social parties. Until now, the main stream of CSR studies have been inclined toward corporation side, but this concept also stresses other stakeholder‟s role to complete CSR. For employees, they have to make a commitment to their corporation and try to discover idea about CSR mission and credo. For customers, they do not hesitate to pay more money for socially responsible business products and progressively deliver their opinion to corporation and participate in consumer protection activity. These mutual trials for doing CSR help make general conception to corporation who takes CSR and social entrepreneurship as essential strategy to do business. In conclusion, this paper explored several aspects about CSR and social entrepreneurship, and, finally chose „strategy CSR‟ as the most preferable model to solve CSR and social entrepreneurship‟s external and internal problems. Above all, for adjusting this concept, not only corporation but also several social parties accept CSR and social entrepreneurship and endeavor to spread these concepts. This concept helps CSR and social entrepreneurship to be generalized in business, because it references reciprocally both cost aspects for corporation and voluntary aspects for social parties. Then, CSR and social entrepreneurship are not treated as troublesome work, but valuable strategy.

Reference List A three dimensional model of corporate performance, Carroll A.B., 1979 CSR leaders‟ road-map, Nada K, Andrew P, Linda Lee, 2007 How do I engage employees in the CSR agenda?, Michael R. Kissida, 2007 Strategy entrepreneurship, Wickham Philips A, 2006 Why corporate social responsibility should be popularized but not imposed, Fred Robins, 2008 Financial times, www.ft.com, 2009-03-25 The boundaries of strategic corporate social responsibility, Goefferey P. Lanots, 2001 The four faces of corporate citizenship, Carroll, A.B., 2000

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Lagnajeet Das

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   

 

                                                                 



                

 

                     

 

    

    

 

38

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

    

                                



                                                                      



                     

 

      

   

Global Initiatives Symposium in Taiwan

39


Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Lagnajeet Das

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                                                 

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                                                               

                                 

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                                                                         

40

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                           Step Parameter Penalty Bonus (CoE)

(CoE)

Technical Feasibility

10

2

Environment Friendly

15

3

Design, Modeling and Virtual Analysis

Engineering Details

5

1

Design for Manufacture

Cost Effective

10

2

Rapid Prototyping

5

1

20

4

15

3

____________

15

3

Resource Estimation

5

1

Engg. Operations Planning

5

1

Idea Generation/Idea Selection

Manufacturing Quality Management Regulatory Approval Technical Implementation

___________ Testing



  

Global Initiatives Symposium in Taiwan

41


Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Lagnajeet Das

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                                                                                                                             

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                                                                                                                    

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                                                                            

☺ ☺

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

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Rethinking the role of CSR and social entrepreneurship: A paretoimproving outcome., Peng Yam Koh

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                                                                                                                      1

Some may protest, as a quasiconcave social welfare function values equality more than inequality. In any case, it is the author’s viewpoint that the degree of curvature can be calibrated to the views of the society. As a simple piece of common-sense, the extreme case of full inequality where one individual gets all the allocations is obviously undesired. This suggests some intrinsic level of desired equality (or equivalently, reduction in inequality) 2 There is a whole literature on the role of beliefs affecting the outcomes of economic systems. Schelling (1960) introduced the concept of the focal point. Shell (1977) generalized the intuition further to include the case of incomplete markets. Very loosely, think of beliefs as the uncertainty that is not determined in the economic system, but which affects the outcomes. 3 His key insight is that some types of monopoly are essentially, costly to maintain and transfer, especially if resources are diverted away in the struggle for market power.

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                         4

Very loosely, the claim that such social entrepreneurial organizations are the best outcomes that can be achieved is justified by the sense that the welfare of the borrowers is greater in the presence of these organizations, as the cost of borrowing is lower than the traditional moneylenders and the formal institutions; the welfare of the organizations is also larger than if they had not chosen to participate (presumably, there is no lack of outside opportunities for the funds that they are holding with the financial markets available). It would be interesting to see if this class of mechanisms is unique. 5 There is a second reason for inefficiency as the fear of default frequently leads to amount of funds being loaned out that are less than optimal. This could be problematic in the long run. Intuitively, the no-default constraint is more restrictive, the more risk-loving the borrower is. 6 This may sound controversial, but being a social science there is always the influence of the person’s ideologies on the stands that they propose. The Chicago school’s insistence of free-market policy stands firm even in the face of the current crisis. For a good example, see Cochrane. On the other end of the spectrum, names such as Stiglitz comes to mind for their stance on interventionalism. 7 See Akerlof (1970). 8 The disagreement is not whether such tools exist, but whether the distortion on net is actually smaller than the problems it seeks to address. As will be discussed later, there are intuitive reasons to believe why this is likely to be so. 9 The Lakota fund was established with the aim of transplanting a similar institutional framework to that of the Grameen Bank. Pickering and Mushinki (2001) examines the reasons for its failure which mainly has to do with cultural reasons.

Global Initiatives Symposium in Taiwan

45


Rethinking the role of CSR and social entrepreneurship: A paretoimproving outcome., Peng Yam Koh

                                                                                                                                     

10

Those who are not convinced by this argument can refer to Shapiro and Sitglitz (1984). It was proven that if the workers do not own the firms, then the issue of equity and welfare cannot be separated, contrary to what is suggested by the well-known fundamental welfare theorems. 11 An inverted U-shape curve is found, consistent with the Kuznet’s (1955) hypothesis. To be fair, current methods of cross-sectional regression may not capture structural differences across countries; this point is made very clearly in Banerjee and Duflo (2003). The seemingly contradictory relationship for the upward sloping part of the Kuznet’s curve can be rationalized if one thinks of it as the case whereby the inequality perpetuates due to the small fraction of the population that can undertake sufficiently large loans to undergo production and investment which leads to greater wealth accumulation for these groups. 12 Persson and Tabellini (1994). 13 Koh (1993), Koh (1994) and Koh (2005). The points were made a summary of his results in these 3 papers. His papers employed the project selection framework to analyze optimal decision-making structures. Refer to Stiglitz(1999) for an introduction to this approach.

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                      

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Of course, in this case the beliefs actually improve the pareto efficiency of the economy, meaning that the original economy was inefficient in the first place. This is very intuitive in the absence of perfect information.

Global Initiatives Symposium in Taiwan

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Rethinking the role of CSR and social entrepreneurship: A paretoimproving outcome., Peng Yam Koh

     

                         

48

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                        

Global Initiatives Symposium in Taiwan

49


Of Responsibility, Tomáš Mudra

 

                                

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                  

2 Global Initiatives Symposium in Taiwan

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Of Responsibility, Tomáš Mudra

                                  

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                   4 Global Initiatives Symposium in Taiwan

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Of Responsibility, Tomáš Mudra

                          

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5

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                   

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Implications from the Global Financial Tsunami, Ziyan Zhao

Word count: 1,992/PIN: E10219

Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship Implications from the Global Financial Tsunami Commencing since the second half of 2007, the worldwide Financial Tsunami has tremendously shaken the global economy and affected people’s daily life in all corners of the world. The U.S. subprime mortgage crisis can be seen as the origin of the global financial tsunami. Low interest rates combined with reduced lending standards fuelled property demand, pushing prices to new heights. Yet dissatisfaction for the low rates led to the search for higher yields. This desire could not be met by traditional investment opportunities. Banks started marketing subprime loans aggressively and the success made them relax their lending standards. The incentives for loan originator, brokers and agents—they were paid on the basis of how many loans they could sell without much consideration of future defaults—led to remarkably poor financial practices. Lack of the awareness of social responsibilities can be viewed as one of the major reasons for the misbehavior of financial institutions such as banks and rating agencies, thus resulting in the global financial tsunami. The worldwide disaster is gaining more and more attention from the business, political and public sectors and driving them to start rethinking a fundamental issue--Corporate Social Responsibility (CSR).

Problems of Corporate Social Responsibility Definition of CSR CSR are practices that improve the workplace and benefit society in ways that go above and beyond what companies are legally required to do.1 In traditional term, companies’ social responsibilities include philanthropic contributions to society and integration of social aspects into business operations and decision making. Specifically, the companies can establish scholarships and foundations, donate money or volunteer employee time to charities and community projects, or do anything else that generates good. Win-win Opportunities of CSR The opponents of the CSR argue that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long 1

Vogel gives out the definition is 2005. 1

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

as it stays within the rules of the game.”2 However, the description of the limits of a company’s social responsibility figures at only one point in many pieces about corporate citizenship and is so despised because they are using restrictive, short-time notions of profit. In fact, CSR reveals hidden win-win opportunities to generate profit.  A company nurtures its intangible assets such as the reputation in the community is likely to create tangible commercial advantages; generate goodwill and loyalty from consumers; aid recruitment and retention of employees; and avoid the public relations disasters of corruption scandals and environmental accidents.  Additionally, consumers increasingly assess a company’s broader social performance and the more socially aware they become, the more it might use its credentials as a good ‘corporate citizen’ to carve out a niche for itself in the market. It will spend good money nurturing its brand image if it anticipates this will enable it establish a market position from which to reap even more money in the future.  For example, in January 2007, Marks and Spencer announced a £200 million plan to make its business carbon neutral. Its share price jumped immediately because the market considered this ‘green positioning’ would produce more than enough cachet among consumers to offset the cost of its implementation. Problems in Practicing CSR Having said this, however, the fact is that in most cases, firms that practice CSR have a lower market value than profit-maximizing firms because shareholders are not willing to bear the short-term cost of CSR unless the firm’s stock price is sufficiently low to induce them to do so. This situation gives companies disincentives to practice CSR. A Possible Solution and its Infeasibility Under such circumstances, some CSR advocates suggest to raise certain standards to force all companies in the industry to take their social responsibility. Limitations in the government’s regulatory resources will make the self-regulatory processes inevitable. But, just as traditional political processes exhibit failures, these self-regulatory processes will inevitably fail to incorporate the interests of all affected stakeholders. What’s worse, when an industry’s dominant companies act to raise their standards by colluding with one another to establish an industry norm, the protection secured for the social good may well be anti-competitive; motivated by the desire to make life more difficult for competitors whose goods or services do not comply. In order to keep up with the changing trends that the society has higher expectations for the corporations to take on more social responsibilities while at the same time attract as many investors as possible, most companies now just take superficial CSR practices and CSR is implicitly only a flashing fad. The purpose of this report thus is to find out a true win-win solution for companies to voluntarily take their social responsibilities, while still agree with 2

Friedman 1962: 133 2

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the fundamental goals of profit maximization.

New Form of CSR—Social Entrepreneurship Introduction of Social Entrepreneurship Over the past thirty years, the world has witnessed the emergence of a major new 'sector' - a sector apart from government and business that is comprised of millions of new organizations whose primary purpose is to address the problems that nobody else is addressing, namely Social Entrepreneurship. This sector is altering the way the work of society gets done almost everywhere: It is redefining and sharpening the role of government, shifting practices and attitudes in business and opening up waves of opportunity for people who seek to apply their talents in new, positive ways. Social entrepreneurs are solution-minded pragmatists who are not afraid to tackle some of the world’s biggest problems. They recognize the extraordinary potential in the billions of poor people who inhabit the planet, and they are absolutely committed to helping them use their talents and abilities to achieve their potential. Social entrepreneurs use inspiration, creativity, courage, fortitude and, most importantly, direct action, to create a new reality – a new equilibrium – that results in enduring social benefit and a better future for everyone.

Misunderstanding about Social Entrepreneurship One misunderstanding about social entrepreneurship is that these enterprises must be non-profit making. In fact, social enterprises do not have to earn nothing or even experience financial loss to fulfill its social responsibility. For example, Vikram Akula’s SKS Microfinance is an organization that offers microloans and insurance to poor women in impoverished areas of India. It is one of the largest and fastest-growing organizations in the world, with total disbursements exceeding $500 million to about 2.2 million women. Even though SKS Microfinance is a social enterprise and dedicated to helping poor women from villages, it has made a huge profit with a return on assets of 1.75%.

Social-Business Hybrid Organization Solution to CSR Problem—Social-Business Hybrid Organization My solution to this problem of superficial CSR practice in most of the companies is to combine the traditional profit-maximizing organizations with the social enterprises by incorporating social entrepreneurship into the companies as a department. The for-profit companies can establish a Social Entrepreneurship Department which then cooperates with 3

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

social entrepreneur associations like Ashoka: Innovators for the Public3. The department staff will choose feasible and practicable social entrepreneurship projects from Ashokaâ&#x20AC;&#x2122;s online platform. The companies can provide long-term fund and operational assistance to the innovative social entrepreneurs so that they can achieve both economic and social returns. The marriage between business profit-maximization goal and social responsibility will create a new hybrid social-business organization to deliver education, health care, electricity, legal services, housing, credit, and many other services to billions of people. Benefits of the Hybrid Partnerships We will investigate the benefits brought by the hybrid partnerships both for the supporting companies and the development of social entrepreneurship. Intangibles Values of Incorporating Social Entrepreneurship for Companies Apart from the direct economic value of incorporating social entrepreneurship, this practice will also bring tremendous intangible assets for the companies. Social entrepreneurship incorporates the characteristics of innovation, risk-taking and pro-activeness. The innovation characteristic illustrates the ingenuity required for social entrepreneurship. Risk-taking highlights the significant financial and social boundaries that must be overcome in social entrepreneurship. Pro-activeness emphasizes the trailblazing position of social entrepreneurship, dependent largely on a type of leadership that can navigate change. Innovation, risk-taking and leadership are critical for the companies in order to compete in this ever changing business environment. In business, centuries of experience have demonstrated that the most effective way to promote systematic innovation and adaptation is to foster conditions that encourage entrepreneurship. Indeed, the most powerful thing that can be done today to accelerate innovation and improve problem-solving inside the company is to create a framework of social entrepreneurship, that is, in this situation, to establish a social entrepreneurship department. Companiesâ&#x20AC;&#x2122; Support for Development of Social Entrepreneurship Now we will investigate how the existing companies can better support the further development of social entrepreneurship. First of all, we have to analyze various kinds of difficulties that social entrepreneurs may encounter when they independently develop their businesses and then find out how the for-profit companies can help social entrepreneurs overcome these difficulties. 3

Ashoka's Change-makers "open sourcing social solutions" initiative Change-makers uses an online platform for what it calls collaborative competitions to build communities of practice around pressing issues. Similar organizations include the Skoll Foundation, the Omidyar Network, the Schwab Foundation for Social Entrepreneurship, the Canadian Social Entrepreneurship Foundation,EthiCorp Pte Ltd New Profit Inc. and Echoing Green. 4

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Implications from the Global Financial Tsunami, Ziyan Zhao

 Difficulty 1: Insufficient supporting funds As the number of large-scale social entrepreneurs and local change-makers multiplies, so does the number of support institutions such as foundations and government agency. However, the structure of the government grant agencies and foundations makes it difficult for either institution to serve leading social entrepreneurs. The people try hard, but the structural barriers are formidable and firmly set. What leading social entrepreneurs need and what today’s dominant social financial institutions—governments and foundations –can provide conflicts. Social entrepreneurs need social investors who will value new ideas. The most important innovations cut across the disciplinary and organizational boundaries created to solve old problems. Governments are bound by narrow, rigidly and impermeably bounded “stovepipes” defined by legislation and refined ever more narrowly by the organizations and regulations that follow. Foundations are captive to internally formulated “strategies,” their institutional stovepipes, and staffs who typically follow specialist lateral career paths. The situation is different if the supporting organizations are for-profit companies. They can profitably provide direct investments because they have convincible credit records and can easily borrow fund from the financial institutions. Moreover, social entrepreneurs need medium- to long-term and often substantial investment because they must test and refine an idea and learn how to market it. The long-term funding is almost impossible for governments and foundations guided by their own internal one-year budgeting imperatives that allow them to only provide one-year funding. Companies, however, can easily gain the long-term capital from its shareholders at low cost.  Difficulty 2: Wrong business decisions Social entrepreneurs may be good innovators and leaders, but lack of sufficient business knowledge and real-world experiences may lead to wrong business decisions. By establishing a Social Entrepreneurship Department, managers can choose feasible and practicable social entrepreneurship projects in their familiar industries. In fact, social entrepreneurs serve the same functions as business entrepreneurs: they envision new opportunities, gather resources, build management teams and organizations, overcome resistance and market their ideas. In this respect, the company managers can help the entrepreneurs establish and develop the business with their specialized knowledge and experience to ensure that the entrepreneurs will not make serious mistakes.

Conclusion Corporate Social Responsibility is increasingly being considered as a strategic option in order for the corporation not to lose corporate advantages or not to be seen to have just jumped onto 5

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

the ‘good intentions’ bandwagon, but more to position itself as an informed and involved partner expressing true concern for social problems. However, given the current barriers for companies practicing CSR, we must create a new form of CSR—the Social-Business Hybrid Partnerships—to achieve the real win-win goal for all stakeholders.

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Desirable forms of Corporate Social Responsibility -Thinking the opportunity cost-, Jungmin Kwon

World Count 1755 / PIN- E10283

Desirable forms of Corporate Social Responsibility -Thinking the opportunity costIntroduction Throughout the history of the modern corporate business, the primary goal of management was simply to maximize the wealth of the shareholders. These days, however, this does not seem to be completely true. The bar keeps rising, where making profit no longer suffices to meet the expectations of the society. More active roles, under the name Corporate Social Responsibility (CSR), are expected from companies which involve taking social responsibilities ranging from simple charities to environmental conservation. Such activities, which once were recognized as philanthropic, have now become an essential part of business management. Not only are shareholdersâ&#x20AC;&#x; profits important, but also the demands of various stakeholders involved around the business should be taken care of. Modern entrepreneurs take this challenge seriously, approaching strategically to harmonize the two big goals, namely making financial profit and taking social responsibilities. CSR, however, is criticized by several reasons. The most dominant among these is simply that social activity is a role of the government and not of the cooperation. For example, spending money for charity could be replaced by paying more tax which will in eventually be used for social programs run by the state. Considering that entrepreneurs rack their brains in order to cut even a penny from their tax responsibilities, such charities are often regarded as hypocritical from the public. In order to circumvent those critics, companies need to raise serious questions why they need to take direct actions to the society. Various CSR programs should be evaluated in terms of whether they are really necessary or not. This essay will first start with the topic how corporate businesses benefit the society and suggest several standards which make up a good CSR program. The assertion will be assisted by real CSR cases especially by the ones in Korea. Corporate role in the society and CSR How does a company contribute to the society? This is a crucial question we need to answer before we turn to the question what a desirable CSR is. Primarily, a corporation contributes to the society by producing goods or services which people need. By competing with other competitors, a company does its job in the most efficient manner to create as much profit as it is possible. Such drive towards profit makes the private organization possible to create more than we would get if we had delegated such service to the public domain. Another contribution companies make is by creating jobs and giving wages. The market always creates new needs. Such needs in turn create new opportunities for business and therefore, jobs are created by social demand. In such manner wealth can be distributed approximately proportional to the amount of work each individual has exerted meeting the

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

needs of the society. A third way a company enriches our community is by paying tax. In each country, a fixed rule is set to return a certain proportion of the profit back to the state. Such money is eventually used for common benefit such as building public infrastructures or giving unemployed financial aids. Therefore, a corporation contributes a lot for the society alone by its existence. Then, why should companies do something more for the society, even if they can contribute by concentrating on their own jobs? Shouldn‟t the government take care of the real “social” issues letting the enterprise people focus on running their business? From the perspective of the business, the main reason why they care about social activities is because corporate images have become very important. Contemporary customers are bombarded by information making vague images of a brand the deciding factor of choosing a product. Therefore under the name „Corporate Social Responsibility‟, companies consistently try to show the customers that they really do something for the society. As the inherent contributions of the corporate business are rather indirect and unclear to the public, entrepreneurs intend to expose their good intentions directly to the customers. Samsung spends hundreds of millions of dollars to support charity funds or scholarships whereas General Electric runs its own organization called „Elfun‟ which manages 800 kinds of voluntary work all around the globe. Such efforts are often internally conceived as part of marketing activity. Shareholders, thus approve such spendings, also because those spendings are often compensated by tax cut. However, considering CSR as marketing activity, one could serious raise the question whether or not this money is the right way to spend. In terms of effective values of the whole society, wouldn't it be wiser to spend that money on tax or even as investment on its own business? Scholarship foundations run by enterprise is simply inefficient both because the government could do the job better and also because the corporate wastes precious workforce on tasks of which it doesn't possess any specialty.

Desirable forms of CSR Thinking of the question what a desirable CSR program is, one always has to consider the opportunity cost. The idea that social participations of the business are always good is a naive way of interpretation as the company would benefit us more by doing its own task. Therefore, CSR programs make sense only if the total benefit maintaining such program outstretches the opportunity costs. In which cases does this happen? The best scenario is when social programs can be done more effectively by the company because the program is closely related to the business. Google recently announced they will invest money on green technology, especially to cut the amount of energy they spend to run the huge data centers for their search engine. This itself is great investment, as they can cut their energy cost in the future. Moreover is this a philanthropic act because less energy consumption means less carbon emission to prevent further global warming. Would the government have done a better job by reaping more tax from Google? Not really. The techniques to reduce the amount of energy in such data centers require sophisticated technology which is beyond the knowledge of the people working for 2 Global Initiatives Symposium in Taiwan

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Desirable forms of Corporate Social Responsibility -Thinking the opportunity cost-, Jungmin Kwon

the public service. Therefore, in such situation, it is much wiser of the company to take the role of driving the world for the better. Another situation where CSR makes sense is when there is a possibility of unnecessary collision between the community and the business. For example, imagine a company wishes to build a plant in a new residence. Suppose that from an objective perspective, the plant is proven to be safe regarding any threats against the residents. Initially, however, it is usually expected that the residents would resist because of some vague anxiety that the company could harm themselves. Obviously, such avoidable clash between the enterprise and the inhabitants would result in meaningless waste of energy. The main cause of such collision often comes from the strangeness between the two parties which lead to distrust and doubt against each other. This is the point where CSR can do its job. By giving something the residents might need, the company can attain basic trust and thereby mitigate the doubt which residents often possess. Woongjin Coway, for instance, a Korean household electonics company, continuously puts its effort on participating in diverse green activities such as conserving the river located near their factories. Such efforts, indeed, have great effects to bring the relationship between the local residents and the company closer together. The third way of doing desirable CSR is when a company is committed to contribute for long period of time in a specific field. Yuhan-Kimberly endeavored for more than 20 years to improve the natural environment. Especially under the campaign slogan 'Our Landscape is Greener and Greener', Yuhan-Kimberly carried out various activities related to protecting the forest in Korea. Such a long commitment for philanthropic purposes is a very special one which is rarely found even in public services as people on duty are periodically replaced by other people. Yuhan-Kimberly's lasting project was only possible under a strong leadership of the founder of the company who recognized his lifelong responsibility to protect the green forest of his own country. This kind of program is neither superficial nor hypocritical and can't be mimicked by any other organization without such strong motives. All three ways mentioned above share a common property; namely that the service the companies offer cannot easily be replaced by the state. Therefore, in such cases the opportunity cost of not doing CSR does hardly exceed the social benefit return from such programs. And this in turn justifies the existence of effective CSR programs. Conclusion So far, we have begun to mention the inherent benefits a business corporation brings to the society; a company contributes by offering necessary services the society needs, by creating proper jobs and giving out wages and by paying taxes which is used for common goods. Therefore, simply blaming a company not paying for a charity is a misleading approach because, as active social involvements without careful consideration is, essentially, can lead to a big minus from a higher perspective. Unfortunately, although the situation is getting improved, the dominant form of CSR in Korea is still cash donations (79% in 2002, 64.3% in 2005) where donators often distrust the government and avoid paying taxes. CSR has sometimes even been misused to overcome social criticisms against mistakes companies

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have done in the past. Such forms of CSR are highly undesirable, primary because the purpose is superficial and also is their actual effects on the society. A desirable form of CSR emerges when the total benefit attained by the program is higher than the opportunity cost of not doing it. Three situations have been mentioned to meet this restriction; when the company possesses specialty on the field, when unnecessary collision between the company and the residents are to be avoided and when the enterprise is committed to endeavor in a certain social field for a long period of time. In such cases, CSR programs are well justified against criticisms that CSR is essentially the government's role and not of the company. In order to reinforce the desirable CSR programs and to suppress the undesirable ones, social citizens should distinguish among the various kinds of programs where these days CSR have even becomes a fad. No corporate should be blamed of not doing any active social contributions, nor should any company blindly praised only by the fact of taking social responsibility. Only through thoughtful interest, we can achieve a step forward towards a more healthy relationship between the business and the society.

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Quick! Pretend We’re Nice!, Mariel Chavez

Word Count-1, 769 / PIN-10300

Quick! Pretend We’re Nice! The Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship Adam Smith is an economist made famous by his invisible hand metaphor --selfinterest ultimately leads to greater public welfare. In other words, the pursuit of profit for any private enterprise benefits everyone else. This pursuit of wealth, by the nature of any firm, will always come first; the bottom line will always come first. When a profit-seeking entity then pursues the selfless (and costly) act of Corporate Social Responsibility, which according to the European Commission is ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’, you should worry about where their interest truly lies. When faced with the decision between profits and social benefit, I would argue that the shareholders will always be chosen over the stakeholders, and whether CSR truly provides any tangible benefit to society, is still questionable. I would then argue that there is a need to look after these companies’ actions, in that they pursue and tout Corporate Social Responsibility dutifully. One thing about CSR is that it is open to interpretation and thus, comes in many forms: McDonald’s showcases the social purpose it espouses mainly through its Ronald McDonald House Charities; The Body Shop is known for championing animal rights by not conducting animal testing on their products; Shell Corporation has a comprehensive CSR program that ranges from women’s advancement and education to investments in renewable energy. It is interesting to find out that each of these firms dealt with some bad publicity: McDonald’s has had countless of cases filed against it from food poisoning to alleged responsibility for the obesity of most Americans; The Body Shop has been accused of releasing erroneous figures for its charitable contributions and fabricating the organic claim of its products; and Shell has violated the Clean Air Act according to the Environmental Protection Agency (EPA) of the United States. Efforts from these corporations might be respectable but, are they truly acts of compassion or merely good press to advertise and repackage the brand name?

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At first glance, it does not make sense for any company to buy into CSR. CSR means one thing in the balance sheet: money coming out of the company, a cost to the firm. So why is everyone jumping into the CSR bandwagon? Perhaps to gain a competitive advantage through distinguishing a label by the causes it supports. CSR launders soiled names and convinces employees and investors alike of an image of a principled business. Nobody wants to buy from a company that “destroys the earth” and portraying the company as an ethical one saves it the hassle of public scrutiny and worse, press inquiry. Any company would voluntarily give back to the environment and community if the rewards are as copious as what CSR can offer! Doesn’t it make you feel better to buy petrol products, the bread and butter of petrol companies, when you know that they too try to invest in eco-technologies? However, the problem arises when the companies play the values of people and do not deliver -a betrayal of public trust. A company’s loyalty lies in its shareholders. That is how it was then and that is how it will be. When Shell allotted an estimated $1 billion dollar investment in renewable energy between 2001 and 2005, there is great doubt whether they did it solely out of the kindness of their hearts. Shell, along with other petrol companies, joined forces in marketing their alternative fuels with a £5 billion budget for a 3-year ad campaign, the largest spent for advertising to date. Today, Shell enjoys the reputation of a responsible corporation while continuing to exhume the Earth’s fossil fuels, which is a long way from the sustainable GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

development that CSR champions. All that while benefitting from tax cuts from the bigwigs and dignitaries. Had these companies intended CSR for the sole purpose of benevolence, shouldn’t they have at least spent more on the CSR programs than they did on boasting their causes? Yet, it can’t be too surprising that they publicize their works fervently: revenue is what their shareholders want and please the shareholders, they shall. Some argue that at the very least, CSR is the lesser of two evils. A company that does a little good, no matter whether they gain more from doing so, is better than a company that does not do anything at all. The problem is, apart from ruining the supposed good behind the concept of CSR, companies that hide behind the pretense of social responsibility damage the purpose and therefore, the success of social entrepreneurs, non-government organizations (NGOs) and pro-bono firms that actually care. These individuals and groups thrive mainly through the support they obtain and the attention they engender. They are kept alive through donors and volunteers who support their causes. They need to maintain their clout in the society through the popular votes of the people. This is their way to get involved and be heard. The last thing that we should do is to drown their voices with false compassion and sham grandstanding from profiteering companies. What is then left of these social entrepreneurs and groups when their voices are crowded out? Take the Sierra Club, a stringent environmentalist group that is

known to sue companies that infringe green laws, which endorsed the “ecological” line of products from Clorox Co. While it may have helped the image of Clorox, it undermined the reputation of Sierra Club, which thrives through hard-line environmentalists who felt that what happened was a sellout, a betrayal of what their group stands for. Nevertheless, to discredit or to impose CSR through strict legislation is tantamount to impeding the good that is always possible or forcing a set of morals that is supposedly value judgment. This is why there is no blanket policy that entirely dictates to corporations how to practice CSR. Truly, it is propelled by the greater impetus of sustainable development, which, though not entirely on corporations’ hands, could be more easily attained through their cooperation. The entire negative connotation attached to CSR is caused by the lack of checks and balances. Nothing guarantees that a corporation has to deliver, which allows them to manipulate the concept of CSR to their advantage. The solution to avoid such exploitation is to establish a watchdog organization that could guarantee the public of the genuine intent in a company’s actions and in turn, put credibility to the CSR of a company. Through such a supervisory body, brands and groups that are truly interested in engaging in CSR are sifted from those whose intent is to mislead. This then protects public trust as the interests of all parties involved are likewise safeguarded. Through proper management, the problem of free-riding from CSR can be removed. The creation of such a watchdog agency is not atypical. A great example is the Better Business Bureau (BBB), which is composed of a network of organizations that promotes a fair market to “Start With Trust”. They helped build the credibility of online e-commerce sites, which today have burgeoned into a juggernaut of an industry. The same could be done for CSR where the vigilant public could confirm the validity of company actions, monitor employee welfare standards and ensure transparency in the claims made by the business firms. In turn, firms that perform CSR responsibly enjoy a reputation that the people can believe in. Through a body that can differentiate CSR from customary good acts, the pressure on companies to do something they are not required to is removed and the control of other advocacy groups to pressure companies to abide by their beliefs and own set of morals is eliminated. Undertakings ranging from CSR news dissemination to acting as intermediaries in moot issues Global Initiatives Symposium in Taiwan

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would be under this watchdog group. To be able to deal with issues that vary in every region and to be able to reach out to smaller firms, local boards, which act as branches of the international watchdog body may be formed. Their guidance should not be confined to CSR alone but could also be open to social entrepreneurs, who may face similar issues in their charity foundations and philanthropy. Through a higher organization, social entrepreneurs will be given another perspective in dealing with their endeavors so as to prevent being blind sighted by their objectives. Being a completely independent body, it can help advocate the proper legislations that companies will be constrained by, therefore becoming a beacon to the government itself. Further, it can act as a regulatory body that can assist companies and social entrepreneurs so that they will not be sidetracked from their business goals and thus simultaneously maintain a lucrative enterprise. This is vital because good finances are essential in having an effective CSR program. Moreover, its presence reinforces conscientious business management which, in time, creates more reliable institutions. Through public confidence and governmental support, an overseer body can be the key to CSR’s success as it provides a united front to what is now a bewildered state of Corporate Social Responsibility, social entrepreneurship and what they entail. Ideally, businesses with good CSR practices gain the trust of the public and its employees. Efforts to save the environment through recycling product packaging or using more efficient production processes ultimately helps the firm save on costs, which allows them to have a leverage from the competition by being able to sell the product at a lower price. Unfortunately, the ideal outcome of CSR is often not the case. Taking Shell Corporation as the tieback example, Shell promotes environmental initiatives to repair its image as a brand that destroys Mother Earth. It still provides us the means to clog our atmosphere with billions of tons of greenhouse gases every year as they exploit poor nations for oil because that is where their shareholders’ funds take them. When the economy had a jarring blow, Shell ceased research on most alternative energy sources, citing it as not ‘profitable’. The truth is CSR will only be done if it profits a company. When the money stops flowing, CSR will be the first to go. All the while, we are filled with the delusion that these companies have done good and that they are a good force in the world. And as we admire the tricks of these giants, we forget the smaller groups that truly care, that genuinely hope to change the world. If companies like Shell want to say that they care and that they want to move the future of energy forward, then they better put their money where their mouth is.

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Quick! Pretend Weâ&#x20AC;&#x2122;re Nice!, Mariel Chavez

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Corporate Social Responsibility Defined and Explored, Renee Chang

   

                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility Defined and Explored, Renee Chang

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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 Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                                      

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What can CSR be in Taiwan? About most enterprises in Taiwan, and the banks, Hsun-Yin Huang

Word Count- 1101 /PIN-10321

What can CSR be in Taiwan? About most enterprises in Taiwan, and the banks

Introduction Now the CSR-Corporate Social Responsibility is becoming a slogan in the world, we ask the entrepreneur to do more feed back to the society, including protection of the labors, the sustainable operation of business, more important, to take more responsibility to the society, all those things need more money and to take more efforts to do. Every country has its own limitations and business structures, that we can’t ask the all business do things equally. Today, I’d like to share my thoughts about how can enterprises do the social responsibility in Taiwan. Firstly, I would introduce the characteristics of business structure in Taiwan and what can those enterprises take social responsibility without sacrificing the profit, the second part is about the bank’s social responsibility, and also the most important part is what the government should do. Think globally, act locally The concept of the Corporate Social Responsibility could be separated to 4 layers, first it needs to build the economic responsibility, which the enterprise exists for; the second layer is about the law responsibility, including obeying the law, building the safe industry for workers, etc. After achieving those goals, the third and the forth layers are ethnical and philanthropic responsibility, which are the final goal of corporate social responsibility, the concept includes sustainable development, for example, in order to save the trees, the enterprise advocates “no paper” activity. For most large enterprises, they are more willing to do social responsibility because they can save the cost or even create more profit after 10-20 years, all we know that, it takes some time to enjoy its benefit. Nowadays, the government tries to persuade the enterprises to take more social responsibilities, by doing that, the enterprise can have some advantages, for instance, they can free from the examinations of the Council of Labor affairs, and they can promote their products with the certification, that way they can build better image of the enterprise, and reach the goal of sustainable operation.

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

In Taiwan, the middle and small scale of enterprises are the bone of the business structure, it accounts for 97.8 % of the business and their average sustain year are not over 15 years, I think that is unreasonable for them to donate money and build the green factory, before they can make benefit from it, they may close the enterprise first. So that’s why the small and medium enterprise wouldn’t like to take efforts on it, moreover, it may eliminate their will to invest or run business in Taiwan. With the increasing regulations and costs for running a business, how can we create a win-win situation for tripartite? The labors can work, the enterprise can make profit, and the country will be prosperous. First, the company can lower their cost by sharing the factory and corporate with each other. Secondly, they can build the better image to the society by grouping the trade union. Through grouping the trade union, they can do more things than we can imagine, for example, they can build a small foundation for collecting money from the companies, and they may arrange a new department for handling with the fund, and use it to help and do the social responsibility to the society, or things could be more easier that they can authorize NGOs (non-government organization) or NPOs (non-profit organization) those well-developed institute to do social responsibility to the society. About the bank Bank is the most important institute for normal people like me. After we graduate from school, we begin to work hard to make living, moreover, to settle down in somewhere raising the family and grouping our own new family. If we want to buy a house or do some business, In Taipei, for example, the cheapest price of a 99-square-meter house cost you average 8,000,000-10,000,000, it is less possible for a youth have so much money on hand. The only way is to loan, borrow money from the bank. Even as the interest rate gets lower, the rate of the loan is still over 2.5% a year, for a youth raising a nuclear family, even with 20 years payment, he still need to pay about 34,000 to 42,000 dollars a month, now the average income per person in Taiwan is about 44,000, that we can see how unreasonable for the price of the housing and the rate of the loan. Many persons couldn’t pay the loan so commit suicide, and we may wonder the bank is the saver or the killer? The worse situation, most of people don’t have the immovable property or real states for mortgage, so they turn to the loan shark which lend you money with much higher rate, and violence. Actually, many countries like Singapore, most of Singaporeans live in the Global Initiatives Symposium in Taiwan

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What can CSR be in Taiwan? About most enterprises in Taiwan, and the banks, Hsun-Yin Huang

public housing flats, which were built by the government. This policy does not only decrease the burden of the family but also make them able to have their own sweet home. In Taiwan, most of the prices of houses are controlled by the real estate business, and all they want to do is level up the price. That way, only the rich can buy the house, the poor can’t buy their own house, so they just rent the house from the rich, finally, the rich get richer, the poor get poorer. After all, I think the most important responsibility of the bank is to lower the rate and extend the years of the payment, the government should guarantee it. Just like the winner of Nobel Economic Prize in 2006-Muhammad Yunus, who has built the Grameen Bank running the microcredit for the poor. For the government The government should pursue three kinds of values – justice, fair, and equal. Speaking of the price of the house, the government need to set regulations to control the price, and let anyone can afford to buy a house. Moreover, the government not only encourage the enterprises including bank take more social responsibility to the society, but also need to build more mature and completed social security system in order to protect the minority.

References 1. http://www.sbiac.org.tw/origin.jsp Taiwan small business integrated assistance center 2. http://www.dgbas.gov.tw Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.(Taiwan) 3. http://en.wikipedia.org/wiki/Microcredit Wikipedia- about Microcredit 4. http://www.moeasmea.gov.tw/mp.asp?mp=1 Small and Medium Enterprise Administration, Ministry of Economic Affairs 5. See Carroll, A.B.(1991), “The Pyramid of Corporate Social Responsibility: Toward  the Moral Management of Stakeholder Organization”, Business Horizons,  (July‐August 1991), pp39‐48. 6. http://csr.moea.gov.tw/ Department of Investment Services Ministry of Economics Affairs about the Corporate Social Responsibility

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How to Enhance the Importance of the Social Entrepreneurship: Five Areas of Concern for the Social Enterprises?, Dimitar Dimitrov

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

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How to Enhance the Importance of the Social Entrepreneurship: Five Areas of Concern for the Social Enterprises?, Dimitar Dimitrov

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How to Enhance the Importance of the Social Entrepreneurship: Five Areas of Concern for the Social Enterprises?, Dimitar Dimitrov

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Tay Chen

Word count – 1415 / PIN – 10332

Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship The growing consciousness of the corporation responsibility which has emerged from just “business as usual” in the manner of economist Milton Friedman to the Bowen’s definition of “social responsibilities of business” as the obligation of business to operate their activities in line with the values of society. This might be an impact of the globalization resulting from the declining role of sovereign state and the growing importance of the non-state actors such as United Nation that push for corporate social responsibility and social entrepreneurship. The mainstream of corporate social responsibility can be categorized in two sectors. The “inward looking” is to ensure the welfare and safety of its employees and the “outward looking” would be to entail co-operating with government, non- state actors in order to tackling the problems underlie the society which included the environment problem, human rights and etc. These components are well interpreted by the “World Business Council” that corporate social responsibility as 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 local community and society at large. The rapid growing of population and demand for economic production has given a great opportunity for all the business and at the same time resulted in the severe destruction of the ecosystem. Global warming, climate change, are greatly concern problems as it is too big to lose. In this case, I would like to bring in a CSR theoretical framework shown in figure 1 below taken from Julie Fischer. She made the relational analyses starts with “ business and society” exemplified through the standard circular economic of production and distribution of goods and services. Since the “business and society ” has diversified interests within its own profit perspective, the state is harmonizing mechanism in the relations, hence the triad of “ state – society –business”. On a deeper analyses with the non state actors relations could be multi channeled as “non- state and state” to focus the decentralization of governance and development to local governments. Figure 1 – “Business-Society-State and Non-state” Framework for Corporate Social Responsibility

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

From the above theoretical framework, I would like to draw a conclusion that it is indeed a necessity that all sectors must undertake co-operative efforts in order to provide the responsibility to the society. Without any of the main component, it would just like clapping with one hand. Now there comes the problem. We know that it has been a growing number of corporations giving concern in CSR. However, it is indeed a disappointment when you read the article that stating Nikeâ&#x20AC;&#x2122;s corporate social responsibility efforts falling short. Nike has taken in CSR in order to improve the conditions in their supply chain and try to reduce the environment impact of their product. The company has appointed a well respected senior person in the organization to lead this effort and give her a team of 135 people around the world. Hence, Nike has taken a leading role and they have been very public about their commitment to change. This shown clearly that they are really determined to make their goals successfully! However, conditions in Nike factories havenâ&#x20AC;&#x2122;t improved significantly and some workplace condition is even worse. If it is so hard for a corporation such as Nike , then it might be a really hard issue for others smaller corporation . Company may just made their commitment for CSR but ends up they did nothing! Moreover, another problem that underlying on this issue is the role playing by state. Refer to what I said on the above theoretical framework, all of the major components must put effort together. It is really sad to talk about that the environment problems are still not dealt within all the states. The United nation report has shown that if the global climate change keep worsening, then some of the island like Indonesia, Bali will be flooded due to the effect of melting polar ice and imagine how much people is going to sacrifice. Corporations are over-exploiting the natural resources for their own benefitsă&#x20AC;&#x201A;According to the The US as the world largest emission of greenhouse gases in the world but rejected to sign the Kyoto Protocol, an international environment treaty produced at United Nations aimed to reduce the greenhouse gases. You can feel the terribly heat now or read the news about the unusual climate change everywhere. Do not just blame the corporations for just pouring the carbon dioxide into the atmosphere while at the same time the CEO is sitting on the chair and counting the big fat profit. Blame for the Bush presidency because he refused to

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Tay Chen

sign the treaty, and he has a very simple and clear reason, the sign on the treaty will cut down the country GDP and hence giving a negative impact to the economy, what a great excuse! Since the leadership of the country is not prepared to give effort then how do we expect the corporations to do it?

The worst part of the Bush presidency is the decline of civic duty we have seen over the past eight years and it is time to change! A new generation of change-makers is ready to inherit American spirit of social entrepreneurship, and Barack Obama is the man to lead us. President Obama has a strong stands on creating a new generation of entrepreneurial leaders whose innovations and social enterprises address our worldâ&#x20AC;&#x2122;s major unmet needs. The social entrepreneurship attitude can be taught and it should starts from the public school system. President Obama has been servicing in the community which put the social welfare as their main objectives and hence he knows that what should do in order to provide the opportunities for the teens. His central platform in the campaign is to provide $4000 tuition credit every student, every year, but in exchange for giving something back from students. This gives them the opportunity to serve and the same time pay for their college education. When all of this generation has been educated, then it will be much more easier to take care into the corporate social responsibilities and a greater chance to encourage for more social entrepreneurship. Other countries should take the same action on education as well. Education has always been the most important source in solving problems. In addressing this issue, the accountability of codes and monitoring to workers and communities is also the key. Hence, the non-profit organization play an important role on monitoring the corporations. It is always the United Nations as the leading organization on tackling issues such as human rights, environment, labours and so on. I believe that if they putting more effort and at the same time with the policy of President Obama, there will be a great improvement in the corporate social responsibility. Although the whole world are facing the severe economic downturn due to the US sub-prime crises, major banks in US faced bankruptcy, most of the countries have a negative economic growth. Banks are scared to lend out the money, consumers are reluctant to spent, major companies are cutting down their expenses , unemployment rate is at a scary high level which all seems like a bad situation for CSR. However, Willy Foote, the founder of Root Capital, which provides loans to rural business n Latin America, Africa, and Asia said that the Wall Street meltdown provides a chance to think about how we transition from a financial system that is complex, opaque and anonymous to one that is direct and transparent. A crisis is always a chance to re-evaluate, the collapse of the unhealthy financial system is maybe a time for the growth of the new system that taking care of all the people but not just the big fat cats at wall street. We are still in an early stage of the journey and there is still a long way to go, and it is especially during this hard time when most of the countries facing recession and CSR is easily appeared in the drop off list of corporations. Perhaps corporations think seriously about their future , they might see a silver lining during this economic downturn. If AIG is able to give out millions of dividends even though it is the corporation to receive the US government largest bailout, then what else is impossible ?

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

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When Corporate Social Responsibility (CSR) confronts with Public Dissatisfaction, Xiao-Yun Gong

Word count- 1,784/PIN- E10351

When Corporate Social Responsibility (CSR) confronts with Public Dissatisfaction There was a boycott international company wave in China during the Sichuan earthquake period in May 2008. It started with Procter & Gamble announced to donate a million RMB to disaster area, which had a sharp contrast to another hundred million RMB donation from the local JDB Group. Public blame those international companies lack of Corporate Social Responsibility (CSR), because the amount of donation is disproportionate with their profit in Chinese market. Nowadays, media and public have higher and higher standards and more and more fastidious about company implementing their social responsibility. Theoretically, like this humanitarian assistance to Sichuan earthquake, government should take all the responsibilities for Post-disaster reconstruction. However those problems sometimes are too urgent to wait, therefore public hope corporations can take care of them. Milton Friedman as an American economist devoted his whole life to promote economic freedom theory. From his standpoint, he thinks that there exists a dilemma in CSR: CSR executor has direct responsibility to its employers, which general will be to make as much money as possible. If these social responsibilities are spending company‟s own money, time or energy that is fine, on the contrary, reduce returns to stockholders, raise the price to customers, insofar as his actions lower the wages of some employees that use of the cloak of social responsibility does clearly harm the foundations of a free society. He believes there is one and only one social responsibility of business that is to use it resources and engage in activities designed to increase its profits 1 . Laissez-faire also advocates argue that corporations should only be responsible to obey the law and to maximize shareholder value 2 . There is no such thing as a „good company‟ that is not profitable 3 . Heath and Ryan contrast between three different approaches to setting the social responsibility of the corporation: moral rectitude, image building and public consultation4 . Even though they involve the moral rectitude in, image building and public consultation still have strong profit orientation; they more concern 1 Milton Fried man, The Social Responsibility of Business is to Increase its Profits (The New Yo rk Time Magazine, September 13, 1970). 2 Robert J.Eaton, “In Defense of the CEO”, (Public Relat ions Strategist 2 (2) , Su mmer 1996), pp.6-11 3 Nell M inow, “Downsizing Corporate Responsibility”, (Public Relations Strategist 2 (2), Fall 1996), pp.15-16 4 Robert L.Heath and Michael R.Ryan, “Public Relations Role in Defining Corporate Social Responsibility”, (Journal of Mass Media Ethics 4 (1) , 1989), pp.21-38

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the company but not purely focus on social benefit. Generally, the economists believe that the primary mission for a corporation is making money. However, public do not hold the same opinion with corporations and economists. There was a survey which obtained two different ranking lists by Chinese corporation and public as following. The importance ranking of CSR5 Rank by corporations:

Rank by public

1 Rapid develop ment, keep pro fitable

1 Reduce pollution

2 Donate to society

2 Employee welfare and wo rking environ ment

3 Emp loyee welfare and working environment

3 Product quality and after service

4 Product quality and after service

4 Provid ing employ ment for vulnerab le groups

5 Providing emp loyment fo r vulnerable groups

5 Pay taxes

6 Keep good relationship between other companies

6 Rapid develop ment, keep profitable

7 Pay taxes

7 Donate to society (money and commodit ies)

8 Reduce pollution

8 Keep good relationship between other companies

Apparently, corporations treat CSR more trend to legal aspect, which means keeping company rapidly developing is their primary goal. On the contrary, public more emphasize on the moral aspect, which reflects on the top one - reduce pollution. Since public treat the help for problem outside of company is the meaning of CSR, companies have to have some actions, for instance donate money, build schools and control pollutions in order to establish a positive image to gain more support from public. And then, based on this support they gain loyal customers and get more profit. Therefore, it is hard for public to distinguish the differenc e between do CSR for social reason or for corporationsâ&#x20AC;&#x; own good. This difference is the source of public fastidious on CSR operation, which also makes public expect corporations do more for society when they show better market performance.

5

http://news.sina.com.cn/c/2007-01-04/213411953964.shtml The survey had done by Peking University

Market Economy Academy, Global Entrepreneur and Horizon Research Co mpany, wh ich has 980 companies and 3201 cit izens (who represent the public) part icipated in 2007

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When Corporate Social Responsibility (CSR) confronts with Public Dissatisfaction, Xiao-Yun Gong

Word count- 1,784/PIN- E10351

Corporations want to get high value of their behavior and build positive company image, which all can track by public opinion. Public opinion is a very important component, which is influenced by the effects of information conveying. What is „public opinion‟? It should be explained separately. First the core word ‟opinion‟, in the beginning of this conception was created, it used to point to a judgment which usually refers to facts. And for the word „public‟, this term has two particular means, which are „the people‟ and „public place‟ 6 . Hence, public opinion contains the fact and wildly agreement. Moreover, start from 18th century, begin in Europe, the growth of capitalism and the ascendancy of a European bourgeoisie resulted in a reasoning public sphere. At that time public opinion leaded to discussion and to the free flow of information to reflect common good also representative democracy. 7 Afterward public opinion represents free opinions without supreme power intervention, which can be seen as the real feedback from public. The graph below shows how the public opinion be shaped 8 . Public affairs Mass Media Discussion Public Opinion Follow the frame above, Public Opinion has profoundly influenced by media effects and also, the interpersonal contact (discussion) has consequential power over attitude change and persuasion. Therefore, mass media and interpersonal contact are essential influence factors during CSR implementation procedure. Generally, CSR should be a daily responsibility to fulfill (such as keeping profitable and employee welfare). However, usually the special issues can have attention and then get public opinion as reaction. Since the general publics usually get information from media, draw support from media broadcast is indispensible. Actually, media cannot control the way people think, but it is successful in telling them what to think about, which means media sets their

6

Vincent Price, Public Opinion (Sage Publicat ions, Californ ia Unite states, 1992), P6-7 7 Vincent Price, Public Opinion (Sage Publications, California Unite states , 1992), P9 8 Silvo Lenart, SHAPIN G POLITICSL S TTITUDES – The Impact of Interpersonal Communication and Mass Media (Sage Publications, California Un ited States of America, 1994), P5

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audiences agendas. Media does not have strong influence on shaping audience‟s attitude; however, it can lead the way, showing audience the topics to ponder over. If opposite topics are full of coverage, people will only remind those defects. Under this circumstance, companies should try to make a win-win relationship with media so as to let positive events be exposed. To some extent, running media is also running a business - rating is crucial. Trying to seek an attractive CSR campaign theme to catch public notice is mutual beneficial for both corporation and media. Moreover, media have two functions for their audiences, one is surveillance function the other is correlation function 9 . The information corporations want to transmit to public should be truthful and reliable. And then media collects feedbacks from public, pick some of them return to public try to find the dominant opinion. In this period, corporations have the chance to follow latest public opinion and modify their media strategy to lead public forming the most favorable opinion for corporations. There are three levels of interpersonal influence: Person-to-Person influence, Group level influence and Opinion Climate Influence 10 . Commonsense, it is really hard to control or amend everyone‟s thought, establish proper opinion Climate then penetrate into groups will maximum the effect. Furthermore, individuals fear social isolation, in order to avoid it, they search for the dominant opinion as their own and may even detect minority ones. Therefore, using media to create a favorable opinion climate is vital, corporations should try to let “willing sacrifice for social good” be the opinion climate. Since it is impossible to convey CSR activities to every member in general publics, and based on the susceptibility to persuasion theory, corporation had better win those active public. The term elite is often used to refer to these most active members of the population, which means active public is those opinion leaders. They talk, persuade and influence general publics‟ opinion. Moreover they are the knowledge supplier, which further emphasize the importance of elite in society. Since people learn from experts, the opinion leader ‟s voice is strong, should be fairly utilized. Get support from those leaders or let them be spokesman for company and use attractive points to get public attention, gain high rating and create favorable opinion climate, adjust their prejudices and then make this in a virtuous circle

9

Vincent Price, Public Opinion (Sage Publications, California Un ite states, 1992), P80 Silvo Lenart, SHAPING POLITICSL STTITUDES – The Impact of Interpersonal Communication and Mass Media (Sage Publications, California Un ited States of America, 1994), P18 10

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Besides, group is a network of communication, group members search dependent and share their opinions, attitudes and values. If someone in a group rises an opposite idea may spread widely as this group‟s dominant one and then grow bigger reshaping the whole opinion climate. Hence, the minority demur cannot be ignored. Moreover, if media‟s coverage of corporation‟s CSR campaign makes respondents feel good, and this is associated with a positive effect on preferences for this image, a strong media effect will be made for the affective response that may then change their bias 11 . However, there is a problem that although the content may positive enough to elicit negative projections onto the media, the affective response may simply do the opposite, that of eliciting positive projections. So the guideline for corporation is that does not practice CSR so intentional to stimulate the opposite abomination and constantly prepare crisis control. Back to the moral source of CSR: do things for social, if corporations really mean that, public will feel the sincere and show their positive opinions. To sum up, although economists and public take different thought on importance ranking of corporate social responsibility, they all desire corporations contribute to society. Therefore, do CSR sincerely and attractive, use media to advocate, get opinion leaders‟ support, timely keep adjusting strategy by public feedback. At last, vigilance for potential threat, avoid opposite bias become dominant ones. Since corporations get high valued confirmation from public which directly reflects on high support proportion, they can gain more profit and then contribute more to society, which is an ideal virtuous circle.

11

Silvo Lenart, SHAPING POLITICSL STTITUDES – The Impact of Interpersonal Communication and Mass Media (Sage Publications, California Un ited States of America, 1994), P82

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Reference Milton Friedman, The Social Responsibility of Business is to Increase its Profits (The New York Time Magazine, September 13, 1970). Robert J.Eaton, “In Defense of the CEO”, (Public Relations Strategist 2 (2) , Summer 1996) Nell Minow, “Downsizing Corporate Responsibility”, (Public Relations Strategist 2 (2), Fall 1996) Robert L.Heath and Michael R.Ryan, “Public Relations Role in Defining Corporate Social Responsibility”, (Journal of Mass Media Ethics 4 (1) , 1989) http://news.sina.com.cn/c/2007-01-04/213411953964.shtml Jan. 4th, 2007 Vincent Price, Public Opinion (Sage Publications, California Unite states, 1992) Silvo Lenart, SHAPING POLITICSL STTITUDES – The Impact of Interpersonal Communication and Mass Media (Sage Publications, California United States of America, 1994)

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The Synthesis of Corporation and Society, Dong Gun Yoo

Word Count- 1,763 / PIN – 10362

Rethinking of Corporate Social Responsibility and Social Entrepreneurship The turn of the century has brought with it numerous changes to the world of business management. For one, new trends are arising in consumer society every moment according to which firms must adjust their strategies. One new trend in the business world that has caught the eyes of many is corporate social responsibility (henceforth CSR) and social entrepreneurship. The public is taking ever more interest in the social responsibility of companies. In a study conducted by McKinsey & Company in January 2006, results show that an overwhelming majority of the executives surveyed agree as to the importance of CSR in a company’s management but they also replied that they were nervous as to how they should carry it out. With the way that CSR and social entrepreneurship is defined now, issues concerning their validity are likely to rise. The current viewpoints on CSR and social entrepreneurship are impediments to more benefits that can be achieved through their effective implementation.

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CSR and social entrepreneurship as in the minds of many limit the scope of actions that corporations can take, thereby reducing the potential benefits that the society can gain. Philip Kotler defines CSR to be “a commitment to improve community well-being through discretionary business practices and corporate resources”, and according to Professor Dees social entrepreneurs play the role of change agents in the social sector by: a) adopting a mission to create and sustain social value (not just private value), b) recognizing and relentlessly pursuing new opportunities to serve that mission, c) engaging in a process of continuous innovation, adaptation, and learning, d) acting boldly without being limited by resources currently in hand, and e) exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created. These are along the line of definitions that the general public would have of the two terms, and according to these definitions, one can see that both CSR and social entrepreneurship involve the act of good-will on the behalf of corporations. There are four basic justifications as to why we need CSR in the first place: moral obligation, sustainability, license to operate, and reputation (Porter, 2). To a certain degree, each of these arguments helps the case for the practice of CSR. However, none guides the corporate leaders as to what choices they must make. In his book Capitalism and Freedom, Nobel laureate Milton Friedman states

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

that “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits” (Colorado). In the most basic sense, the social responsibility of corporations is to create goods and services which would satisfy the needs and wants of consumers. However, although what Friedman states is true, we cannot rule out the fact that customers, and hence the society in which the corporations operate, determine whether a company is successful in the end. Hence, the definitions of CSR and social entrepreneurship we have now must be modified in order to bring about the maximum benefits for both the society and the businesses. Problems arise out of CSR due to the two seemingly conflicting desires of companies and consumers. First, we always pit business against society, and second, we consumers force companies to come up with generic, not company-specific, methods of fulfilling CSR (Porter, 1). As such, CSR becomes a cost, a constraint, or a charitable deed, for companies with these views, because they cannot reconcile the differences, and the capacity of corporations to produce more social benefit or profit is greatly reduced. Take the case of General Electric’s program to adopt underperforming public high schools near its major U.S. facilities. In a study of ten schools, nearly all showing significant improvement, with graduation rates in four of five worst-performing schools doubling from an average of 30% to 60% (Porter, 9). However, in order to achieve this, General Electric has had to contribute between $250,000 and $1 million over a five-year period to each school, with no significant benefits for the company itself (Porter, 9). What the General Electric truly needed is to have developed a program that is aligned with its direction of goal and value. Another common implementation of CSR comes as a defense or mitigation of adverse effects from business activities. CSR takes on a passive role in the business management, a problem which must be addressed in order to completely integrate CSR into corporations. In order to solve the problem mentioned, we first need a new measure of CSR or social entrepreneurship and its impact on the consumer society. Porter argues that “measuring and publicizing social performance is a potentially powerful way to influence corporate behavior” (Porter, 3). Many of the rankings used today, such as the Dow Jones Sustainability Index and FTSE4Good Index, are inconsistent in the criteria they use to judge whether a company is socially more responsible than another. The Dow Jones Sustainability Index includes weights customer service almost 50% more heavily than corporate citizenship, whereas FTSE4Goood Index contains no measure of economic performance or customer service (Porter, 3). Some criteria are

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even worth questioning the validity of, such as the size of a companyâ&#x20AC;&#x2122;s board as a measure of community involvement which is a criterion used by the Dow Jones Sustainability Index. When corporations are spitting out CSR reports, it seems that the most common response to the problem of CSR is merely cosmetic, playing its role only in public relations and media campaigns. Of the 250 largest multinational corporations, 64% published CSR reports in 2005, aggregating anecdotes about uncoordinated initiatives (Porter, 2), and in addition, most of these reports put too little emphasis on the actual impact made on the society. With incoherent measuring and ranking of CSR, corporations are left directionless as to how they should go about engaging in socially responsible actions while maintaining their profits, at the least. One solution to solving the problem raised is to devise a new method of measuring CSR of corporations and the impact they make on the society. A second solution to this problem is for companies to redefine CSR such that the definition is situation-specific. Corporations opened their eyes to the idea of CSR only after the public responded to issues the corporations had previously thought unrelated to business management. For example, Nike faced extensive consumer boycott after The New York Times reported abusive labor practices in the early 1990s (Cushman), realizing that they could no longer disregard the social responsibility. So far, corporations have focused, not on the integration of the social values into their mission statements, but on a superficial treatment of what the society wants. In other words, CSR often serves as a method of covering up the wrongdoings of the corporations after they have caused enough damage to bring about public attention. In order to turn CSR so that businesses and entrepreneurs can be more proactive, we need to redefine CSR. Corporations may come to realize that CSR can become a source of tremendous social progress, as the business applies its considerable resources, expertise, and insights to activities that benefit society (Porter, 1). In order to do so, corporations must first realize that corporations and society are interdependent, and do not exist at the cost each other. First, corporations rely on the society for its operations in the normal course of business, and second, external social conditions affect internal corporate management.

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From the fundamental law of economics, a healthy society creates more demand for business as the human needs and aspirations grow along with it, while a healthy society needs successful companies to create jobs, wealth, and innovation. However, entrepreneurs often do not recognize the mutual relationship between a corporation and the society it operates in. They spend too much trying to analyze the friction between the too, and not enough analyzing the shared values. As such, for a

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

more successful implementation of CSR, we can turn to the basic rule of design: satisfy both sides, turn it into a win-win situation. When a company can come up with a strategy that will move beyond good corporate citizenship or mitigating harmful value to initiatives whose social and business benefits are large and distinctive (Porter, 10). For example, Toyota’s Prius, the hybrid vehicle, is a great example of innovative car models that not only produce competitive advantage over rivals but also produce environmental benefits. By emitting as little as 10% of the harmful pollutants or consuming only half the amount of gas when compared with conventional vehicles (Porter, 10), Prius has helped elevate Toyota to a unique position. It is important to note that this practice did not come as a result of a defensive response to public uproar, but as an innovative strategy on the behalf of Toyota to gain competitive advantage over its rivals. It just happens that Prius’s specifications help benefit the society tremendously. Another example of such shared-value opportunity is Microsoft’s Working Connections partnership with the American Association of Community Colleges (AACC) (Microsoft). By investing in community colleges which do not have standardized IT curricula, Microsoft’s $50 million five-year initiative not only had direct impact on the society, but Microsoft also benefitted from the expanded influx of professional IT workers who graduate from the community colleges. The best example is yet to come: Nestlé’s Milk District (Nestlé). Nestlé exemplifies a symbiotic relationship between social progress and competitive advantage. When Nestlé wanted to enter the Indian market in 1962, it received permission to establish a dairy in Moga, a region with severe poverty. Although it was not Nestlé’s intention to carry out philanthropy in Moga, their value depended on obtaining local source of milk from a large base of small farmers. Nestlé’s practices eventually led to Moga having a significantly higher standard of living than other regions in the vicinity (Porter, 11). Hence, we must recognize that CSR can be of tremendous benefit to both players once they learn to build upon their mutual existence and attempt to make the best out of it. CSR and social entrepreneurship are crucial ideas in today’s business world, as a larger majority of the public is coming to the opinion that corporations are no longer exempted from the law. Corporations exist because the society can provide them with the resources they need, and a society is sustained by the operations of corporations. Once we learn to recognize this mutual dependence, we will help solve the problem of fragmented engagement in CSR. CSR is no longer just mitigation for the wrongdoings of corporations. CSR must become an integrated element of business management for the benefit of all. Global Initiatives Symposium in Taiwan

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Reference List 

Cho, Hyungjoon. Corporate Social Responsibility: A Case Analysis of Community Relations in Samsung Group. Thesis. Korea Advanced Institute of Science and Technology, 1997.

 

Cushman, John H. "INTERNATIONAL BUSINESS: Nike Pledges to End Child Labor And Apply U.S. Rules Abroad." The New York Times 13 May 1998, sec. D: 1.

Dees, Gregory J. "The Meaning of "Social Entrepreneurship"" Center for the Advancement of Social Entrepreneurship. 30 May 2001. Duke University: Fuqua School of Business. 1 Apr. 2009 <http://www.caseatduke.org/documents/dees_sedef.pdf>.

Kotler, Philip, and Nancy Lee. Corporate social responsibility doing the most good for your company and your cause. Hoboken, N.J: Wiley, 2005.

"The McKinsey Global Survey of Business Executives: Business and Society." McKinsey Quarterly (2006). The McKinsey Global Survey of Business Executives : Business and Society - The McKinsey Quarterly. Jan. 2006. McKinsey Quarterly. 1 Apr. 2009 <http://www.mckinseyquarterly.com/The_McKinsey_Global_Survey_of_Busine ss_Executives__Business_and_Society_1741>.

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Microsoft Corporation. "Microsoft Announces Working Connections "Class of 2002"" Press release. Microsoft Announces Working Connections "Class of 2002": More Than $2 Million in Grants Support. 26 Jan. 2000. Microsoft. 1 Apr. 2009 <http://www.microsoft.com/Presspass/press/2000/jan00/classof02pr.mspx>.

Nestlé. "Milk collection in Caquetá, Colombia." Press release. Milk collection in Caquetá, Colombia. 1 Apr. 2009 <http://www.nestle.com/SharedValueCSR/FarmersAndAgriculture/Milk/Milk+c ollection+in+Caquet%C3%A1.htm>.

Porter, Michael E., and Mark R. Kramer. "Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility." Harvard

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Business Review 84 (2006): 78-92. ď&#x20AC;

"The Social Responsibility of Business is to Increase its Profits, by Milton Friedman." University of Colorado at Boulder. University of Colorado. 31 Mar. 2009 <http://www.colorado.edu/studentgroups/libertarians/issues/friedmansoc-resp-business.html>.

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Works Cited 

Cho, Hyungjoon. Corporate Social Responsibility: A Case Analysis of Community Relations in Samsung Group. Thesis. Korea Advanced Institute of Science and Technology, 1997.

Cushman, John H. "INTERNATIONAL BUSINESS: Nike Pledges to End Child Labor And Apply U.S. Rules Abroad." The New York Times 13 May 1998, sec. D: 1.

Dees, Gregory J. "The Meaning of "Social Entrepreneurship"" Center for the Advancement of Social Entrepreneurship. 30 May 2001. Duke University: Fuqua School of Business. 1 Apr. 2009 <http://www.caseatduke.org/documents/dees_sedef.pdf>.

Kotler, Philip, and Nancy Lee. Corporate social responsibility doing the most good for your company and your cause. Hoboken, N.J: Wiley, 2005.

"The McKinsey Global Survey of Business Executives: Business and Society." McKinsey Quarterly (2006). The McKinsey Global Survey of Business Executives : Business and Society - The McKinsey Quarterly. Jan. 2006. McKinsey Quarterly. 1 Apr. 2009 <http://www.mckinseyquarterly.com/The_McKinsey_Global_Survey_of_Busin ess_Executives__Business_and_Society_1741>.

Microsoft Corporation. "Microsoft Announces Working Connections "Class of 2002"" Press release. Microsoft Announces Working Connections "Class of 2002": More Than $2 Million in Grants Support. 26 Jan. 2000. Microsoft. 1 Apr. 2009 <http://www.microsoft.com/Presspass/press/2000/jan00/classof02pr.mspx>.

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Nestlé. "Milk collection in Caquetá, Colombia." Press release. Milk collection in

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Caquetá, Colombia. 1 Apr. 2009 <http://www.nestle.com/SharedValueCSR/FarmersAndAgriculture/Milk/Milk+ collection+in+Caquet%C3%A1.htm>. 

Porter, Michael E., and Mark R. Kramer. "Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility." Harvard Business Review 84 (2006): 78-92.

"The Social Responsibility of Business is to Increase its Profits, by Milton Friedman." University of Colorado at Boulder. University of Colorado. 31 Mar. 2009 <http://www.colorado.edu/studentgroups/libertarians/issues/friedmansoc-resp-business.html>.

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Corporate Social Responsibility and Social Entrepreneurs, Nguyen Duong

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Corporate Social Responsibility and Social Entrepreneurs A “Profit making and Social Responsibility” oxymoron is strongly debatable. Profit making is the fundamental dimension for an enterprise to sustain, perform and grow, which means wealth maximization and mobilization; whereas social responsibility is the fundamental accountability of the state that focuses on social enlistment in its totality. There fore, the community is perplexed by a number of opinions turning around the role of Corporate Social Responsibility (CSR) and how to apply CSR to entrepreneur’s business decisions in term of increasing profit as much as possible. The appearance of social entrepreneurs after that seemed to illuminate a new trend of making business along with solving social problems. The important of social entrepreneurs is considered as a crucial contribution for the universal development. The question under this condition is what social entrepreneurs should do to face to a number of potential challenges to carry out this important mission? CSR What is it? The Sanskrit saying, ‘Atithi Devo Bhav’, means – ‘the one who comes to you for being served, should be taken to be as God’, is considered as the highest order of responsibility, be it to individuals or to the society. Thus, the phrase Social Responsibility has its roots in Indian context. This phrase has long been in use with growth of industries and corporate. It not only reflects the ‘passage of time’ in its impact and transformation, but its meaning and understanding has been affected by the growth of society, nations and changes in their appreciation of cultural heritage and background. CSR is also concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsible’ means, treating stakeholders in a manner deemed acceptable in civilized societies. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation. Some companies use the terms “corporate citizenship”, some “the ethical corporation”, while others use “good corporate governance” or “corporate responsibility” What does the CSR gain? 1. It would help to avoid the excessive exploitation of labor, bribery and corruption. 2. Companies would know what is expected of them, thereby promoting a level playing field.

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3. Many aspects of CSR behavior are good for business (such as reputation, human resources, branding and making it easier to locate in new communities) and legislation could help to improve profitability, growth and sustainability. 4. Some areas, such as downsizing, could help to redress the balance between companies and their employees. 5. Rogue companies would find it more difficult to compete through lower standards. The wider community would benefit as companies reach out to the key issue of underdevelopment around the world. In the longer term, richer consumers and improved worldwide income distribution is obviously good for business. But should business be directly involved in these issues, or simply pay taxes and rely on governments and public organizations to use these taxes wisely? In other words, is it simply enough for business to maximize profits in anticipation that this is in the best interests of human development? Social Entrepreneur Who are they? It has been suggested, however, that social entrepreneurs are very distinctive individuals. Attempts to define distinctive features of social entrepreneurs tend to portray a social hero with “entrepreneurial quality.” Dees says: “Social entrepreneurs are one special breed of leaders, and they should be recognized". "We need social entrepreneurs to help us find new avenues toward social improvement as we enter the next century” (Dees, 1998b). Interestingly, some social entrepreneurs do not even know they are “social entrepreneurs” until they receive an award or are recognized by organizations. What is the importance of SE for development? Social Entrepreneurs endeavor to 'create social' value through innovative, entrepreneurial business models. The potential market for these entrepreneurs is huge because of the wide range of social needs that remain unsatisfied by existing markets and institutions. SE is more and more increasingly important for economic (and social) development because it creates social and economic values: 1. Employment Development The first major economic value that social entrepreneurship creates is the most obvious one because it is shared with entrepreneurs and businesses alike: job and employment creation. Estimates ranges from one to seven percent of people employed in the social entrepreneurship sector. Secondly, social enterprises provide employment opportunities and job training to segments of society at an employment disadvantage (long-term unemployed, Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility and Social Entrepreneurs, Nguyen Duong

disabled, homeless, at-risk youth and gender-discriminated women). In the case of Grameen the economic situation of six million disadvantaged women micro-entrepreneurs were improved. 2. Innovation / New Goods and Services Social enterprises develop and apply innovation important to social and economic development and develop new goods and services. Issues addressed include some of the biggest societal problems such as HIV, mental ill-health, illiteracy, crime and drug abuse which, importantly, is confronted in innovative ways. An example showing that these new approaches in some cases are transferable to the public sector is the Brazilian social entrepreneur Veronica Khosa, who developed a home-based care model for AIDS patients which later changed government health policy. 3. Social Capital Next to economic capital one of the most important values created by social entrepreneurship is social capital (usually understood as â&#x20AC;&#x153;the resources which are linked to possession of a durable network of ... relationships of mutual acquaintance and recognition"). Examples are the success of the German and Japanese economies, which have their roots in long-term relationships and the ethics of cooperation, in both essential innovation and industrial development. The World Bank also sees social capital as critical for poverty alleviation and sustainable human and economic development. Investments in social capital can start a virtuous cycle

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4. Equity Promotion Social entrepreneurship fosters a more equitable society by addressing social issues and trying to achieve ongoing sustainable impact through their social mission rather than purely profit-maximization. In Yunus’s example, the Grameen Bank supports disadvantaged women. Another case is the American social entrepreneur J.B. Schramm who has helped thousands of low-income high-school students to get into tertiary education. To sum up, social enterprises should be seen as a positive force, as change agents providing leading-edge innovation to unmet social needs. Social entrepreneurship is not a panacea because it works within the overall social and economic framework, but as it starts at the grassroots level it is often overlooked and deserves much more attention from academic theorists as well as policy makers. This is especially important in developing countries and welfare states facing increasing financial stress. CSR and Social Entrepreneur – Where is the meeting point? Corporate social responsibility represents the response of the business community for the issues of sustainability. It mainly shows the way the business community can address the sustainability concerns of various stakeholder groups through ethical behavior and a commitment to add economic, social and environmental value. Through corporate social responsibility companies address various important issues. For example, within the company corporate social responsibility deals with human resources, health and safety, adaptation to change, management of environmental impacts and natural resources. Issues relating to the company’s relationship with the outside world include local communities, business partners, suppliers and consumers, human rights, and global environmental concerns. On the other hand social entrepreneurship is the work of a social entrepreneur. Asocial entrepreneur is an individual, group, network, organization, or alliance of organizations that recognizes a social problem and uses entrepreneurial principles to organize, create, and manage an enterprise to make social change. The social entrepreneurs’ focus is the pursuit of opportunities to catalyze social change and they also measure their success primarily in terms of social value creation, rather than profit. Among many other things, the language and concept of social entrepreneurship can include innovative not-for-profit ventures, social purpose business enterprises, such as for-profit community development banks, and hybrid organizations mixing not-for-profit and for-profit elements. Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility and Social Entrepreneurs, Nguyen Duong

In spite of the distinction between the actors and the range and complexity of issues they tend to address, corporate social responsibility and social entrepreneurship are strongly linked and they serve the purpose of sustainability. However, unlike business organizations, social entrepreneurs have a lot of constraints which hinder them from the pursuit of creating social value. In contrast to business initiated corporate social responsibility projects, initiatives by social entrepreneurs suffer from lack of key resources including financial, managerial and strategic roadmaps. SE â&#x20AC;&#x201C; What is the way to go? Recognizing the constraints that hinder social entrepreneurs from achieving their goals is the first valuable step in devising the strategy for the required nurturing. Here the following areas of concern are identified: 1. Financial Innovative financial mechanism is important for sustainable development. Social entrepreneurs can originate and developed the idea for socially beneficial ventures. However, most social entrepreneurs depend on the financial assistance of individuals and on private and government foundations to achieve their goals. The availability of financial assistance is a crucial factor for the success of social enterprises in all stages of their life cycle. Therefore assisting organizations should come up with innovative financial mechanisms. In this regard, companies can focus on developing venture capital, microfinance and other financial assistances for social entrepreneurship. 2. Technical Like financial assistance technical assistance is also an important area for nurturing social entrepreneurs. In this regard assisting companies can focus on areas that help social entrepreneurs in their innovative engagements, in improving their organizational capacity and in strengthening their managerial capabilities. 3. Networking The complex and multifaceted nature of sustainable development and the creation of social value requires the input and cooperation of many players from diverse disciplines and sectors. Due to several constraints, social entrepreneurs could not coordinate these important networks. Therefore assisting organizations can focus on creating network platforms where social entrepreneurs can exchange their experiences and learn form one another. 4. Entrepreneurial Education and Training

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By focusing on entrepreneurial education and training, assisting companies can contribute a lot in the development of the field of social entrepreneurship towards knowledge - based professions. For example, social entrepreneurs can benefit from training programmes on: business and project planning, strategy formulation project and venture management, social sector marketing and other related topics. It is not a simple task to identify and handle the problems social entrepreneurs getting involved because they have their own limitations. This essay with the limited knowledge of writer just underlines some points that may help to give an overview of CSR, social entrepreneurs, the inter link between them and how to face to their challenges. Regardless of the mechanism, promoting social entrepreneurship can definitely create new waves of opportunities, strategies, approaches, and impacts in the direction of sustainable development.

References: 1. Er. Manoj Joshi, Asst. Professor, SAMA. Corporate Social Responsibility: Global Perspective, Competitiveness, Social Entrepreneurship & Innovation 2. United Nations Conference on Environment and Development (UNCED) (1992). Agenda 21: Programme of Action for Sustainable Development. New York: United Nations. 3. Mair, J., & Marti, I. (2005). Social Entrepreneurship Research: A Source of Explanation, Prediction, and Delight. Barcelona: IESE Business School. 4. Aron Ghebremariam. Nurturing Social Entrepreneurship through Corporate Social Responsibility 5. The importance of Social Entrepreneurs for Development http://www.business4good.org/ 6. School for Social Entrepreneurs http://socialentrepreneurs.typepad.com/

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The Call of the Social Entrepreneur: Challenges and Strategies for Developing a Social Entrepreneur Corps, Pin-Quan Ng

Word Count – 1,988 /PIN – 10406

Subtopic: Rethinking of Corporate Social Responsibility and Social Entrepreneurship

The Call of the Social Entrepreneur: Challenges and Strategies for Developing a Social Entrepreneur Corps Introduction: Ice Cream and Social Entrepreneurship It was the first time I saw a North Korean child laugh. The ones we passed in Pyongyang were usually filing to school, or perhaps some Youth League rally, in uniform order. They wore red scarves and Great Leader pins, but not smiles. This time, I was standing in line at a soft-serve ice cream stand, and tried to practice my limited Korean with the kids there, asking “masisseoyo?” (맛있어요, is it delicious?) One girl giggled and nodded. Objectively speaking, it wasn’t all that delicious, even compared to the cheap 1 RMB Mengniu (蒙牛) brand popsicles I had just across the Chinese border, and furthermore, there was only one flavor. But she probably never tasted those before. Considering the transport infrastructure for supplying (or smuggling) frozen perishables from across the border, the cost would have been prohibitive for everyone save senior Workers Party cadres. Maybe those popsicles tasted better because of the dairy herders I met in rural Inner Mongolia when surveying microfinance clients, and thinking that my purchase supported their livelihoods. It probably didn’t: Mengniu has the greatest market share in China’s dairy sector, and the combined oligopolistic power of the dairy giants (Yili, Sanlu, Bright etc) sets the price that herders take for their milk. It is that price that often determines if they can seek medical treatment or if their child will stay in school. When the melamine contamination scandal broke later that year, and the demand for both domestic dairy consumption and exports collapsed, so did the price. I wondered how the dairy herders I visited would repay their loans – each dairy cow costs tens of thousands of RMB to purchase and maintain. The activist in me sees poverty and injustice. Yet the businessman in me also sees market opportunities and untapped demand. This is the world of the social entrepreneur: combining social awareness with business pragmatism to create sustainable solutions. Social Entrepreneurship at the Base of the Pyramid Perhaps it is easiest to see social entrepreneurship within the context of extreme underdevelopment. C.K. Prahalad of the Ross School of Business describes the world economy as a pyramid, with a small number of affluent developed-world consumers at the top, and a large base that consists of the poorest of the poor who live on less than a dollar a day 1 . Yet the base of the pyramid (BOP) is a huge and growing market, with more than four billion potential customers, which in purchasing power parity terms is bigger than the combined GDP of the top. Relative to the saturated markets of the developed world, the developing world offers new markets and profit opportunities. 1

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Reducing poverty is a strategic imperative in the BOP. There is no business sense in selling at price points consumers cannot afford, and if you want paying customers, you must address their needs. Consider the Microsoft Classmate laptop, the Asus EEE pc, the Tata Nano car, mobile phone banking, and microfinance. All of these affordable products and services increase productivity, especially where public transport, education, communication, and banking is inadequate. The question is: if there’s a fortune to be made in the BOP, why aren’t corporations there already? Where are all the social entrepreneurs? The Social Entrepreneur’s Toolkit The reality is that it’s not easy to survive in the BOP, let alone profit. The global economy is built on global institutions, from the rule of law, property rights, liberal democracy, liquid capital markets, and an entire ecosystem of businesses, government agencies, civil society actors, and other stakeholders that create these conditions. These institutions are usually weaker or absent at the BOP. A multinational company that has no experience in emerging markets will face severe challenges doing the simplest things, like registering a business or purchasing a site, if they do not understand local institutions. They may face unfair disadvantages against local competitors with strong political connections. They might not even be allowed to operate without local partners and joint ownership. It takes a very special skill set to work in the BOP: One must have business savvy and expertise, but one must also have local knowledge and experience specific to that location, to understand the risks and opportunities out there. Technical skill must be accompanied by social awareness. There is no shortcut to acquiring this awareness. One must often master a new language, form new friendships, and soak in the culture and history of a society firsthand. This is the skill set of the social entrepreneur. Traditionally, firms entering the BOP have taken two approaches to acquiring human capital with this skill set. The first approach is to relocate their existing staff as expatriates. The second approach is to recruit local talent and train them. These are not mutually exclusive, but they do present very different challenges. Expatriate Relocation Multinational corporations have no problem with the first condition. Most of their staff are highly educated or professionally trained in their field of business. But it is hard to attract highly experienced and skilled professionals from the business community to the most undeveloped and dangerous regions, far from the comfort and safety of expatriate gated communities, without significantly higher compensation. For long-term expatriate staff, the firm may also have to support the relocation of the entire family. An alternative is to recruit expatriate staff from international nonprofits that operate in the BOP. These nonprofits have plenty of staff with field experience and language proficiency, Page 2 of 5 Global Initiatives Symposium in Taiwan

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The Call of the Social Entrepreneur: Challenges and Strategies for Developing a Social Entrepreneur Corps, Pin-Quan Ng

tend to have lower compensation requirements, and are already located in the BOP â&#x20AC;&#x201C; no relocation expenses incurred. However, nonprofit staff tend to have limited knowledge and skills applicable to business and industry, and also be unable to integrate themselves into corporate culture and communicate effectively with investors. Local Recruitment If one is looking for social awareness, it should be obvious that the people most aware of their society are the ones that belong to it. Locals have the most local knowledge, are already native speakers of local languages, have well-established ties to local institutions and networks, and understand how things work there. However, education has been the primary barrier to recruiting local staff to management positions. Local recruitment is at the mercy of the local education system, which in some developing countries may or may not provide the level of technical knowledge and skills that a firm may require, or the level of English proficiency needed to integrate into the firm and coordinate with global teams. Many firms from the developed world circumvent problems with the local education system by concentrating their recruitment in their own universities. They specifically target (i) naturalized citizens i.e. those whose families migrated from the BOP country and (ii) foreign nationals i.e. international students. Firms are assured of their English language proficiency and technical competence, and candidates are more likely to have local language proficiency, cultural and personal ties, and are also more likely to accept relocation to the BOP. Developing a Social Entrepreneur Corps If we believe that social entrepreneurs have the unique ability to catalyze social change in sustainable ways, then we may wish to consider how to encourage the development of social entrepreneurs. The experience of multinational firms in recruiting talent to the BOP can be instructive. We want to grow local social entrepreneurs, who know how to help their own communities best, and we also want to encourage social entrepreneurs from around the world to bring their experience and expertise to the places that need it most. Local Leadership The local recruitment strategy, for example, is extremely context-dependent. Consider if the class structure of a society is strongly related to which local university a local candidate attends, or whether he or she can study abroad. It may be that only those in the ruling class can have such opportunities. While these individuals are more likely to be in a capacity to effect change, they also have greater incentives to maintain the status quo. Those of us in the developed world should recognize the ways in which our own universities may perpetuate class structures abroad. It should be obvious to anyone in a top US university that the vast majority of foreign students come from backgrounds of privilege. If they did not, they surely would not be able to afford college tuition, or the private schooling that got them

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admitted in the first place. Those admitted on merit scholarships number only a tiny few. We should make that number much higher. However, we must also remember that firms recruit from foreign students for expatriation (as opposed to recruiting for their home staff) mainly to circumvent the inadequacies of local education systems. Our approach must therefore also be to improve local educational conditions to provide opportunities for a broader segment of society and not just the ruling class. Global Support To do so, we must better understand the nature of the education system in the BOP, and the best way is to experience it firsthand. We should therefore focus on university students and young adults. Without established careers or parental obligations, they face lower opportunity costs to spending time acquiring languages and gaining field experience, through their university coursework, study abroad programs, and internships. For some, traveling to faraway, unconventional places can even be an attraction. Foreign language curricula and subsidies play an important role here. Many universities provide opportunities to learn a second language, but language acquisition is best done through immersion. However, the financial crisis has dramatically cut the amount of grant funding and subsidies available for study abroad, at a time when we need more multilingual young leaders, not less. Furthermore, in the USA, the vast majority of Americans studying foreign languages in university focus on Spanish, French, German, and Italian, but only a tiny percentage study Arabic, Farsi, Russian, Chinese, Korean, and many other BOP languages. Most undergraduates who study abroad choose other English-speaking countries, or at least developed ones. This is understandable. When I told my classmates I was traveling to North Korea, they couldn’t understand why I would ever go there. Some of them belong to families that barely escaped the place. While I pursued fieldwork in the rural north and the southern manufacturing zones, most of my classmates who came to China for the summer chose to remain in the expatriate communities and university campuses of Beijing, Shanghai, and Hong Kong, i.e. the top of the pyramid, not the base. This is the challenge that the social entrepreneur community must address if it wishes to grow. Conclusion: Making Social Entrepreneurship Cool Successfully developing local leadership and encouraging global support needs intangible ‘soft power’ as much as ‘hard’ incentives. While we may not always be able to create financial incentives, such as new scholarships, language programs or exchanges, we can easily create the social incentives and networks to encourage students to explore social entrepreneurship. By celebrating the experiences of young social entrepreneurs, and making them just as prestigious and valued as doctors, lawyers, investment bankers and management consultants, we encourage a new generation of students to take them on as role models.

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The Global Initiatives Symposium is a perfect example of how to catalyze social networks. The conference brings students from the BOP and the developed world together, to discuss the challenges and opportunities of our global economic transition, with a subsidy that ensures fairer representation. The friendships made here could both develop local BOP leadership and attract developed-world interest in social entrepreneurship. â&#x20AC;&#x153;Masisseo,â&#x20AC;? she said, with a smile that haunts me as I left North Korea, and the moment I crossed the Chinese border into Dandong, I bought a Mengniu popsicle. It tasted like freedom. If I can share that taste, and all those experiences, and tell others what the world of the BOP is like, perhaps they will want to see it for themselves. Perhaps they will hear the call of the social entrepreneur.

Works Cited Prahalad, C.K. 2006. The Fortune at the Bottom of the Pyramid. Wharton School Publishing.

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Companies with a Conscience – A Foundation of Sustainability“You must be the Change You Wish to see in the World”,

William Riordan

Word Count – 1,567 / PIN - 10415

Companies with a Conscience – A Foundation of Sustainability “You must be the Change You Wish to see in the World” -Mahatma Ghandi GREEN, sustainable, recyclable, freecyclable, greenhouse effect, global warming, global cooling, peak oil, natural foods, biodegradable, organic, endangered… even localvore (those who grow their own food or eat locally farmed food.) Even as the current economic crisis deepens, these buzzwords are bandied about on a daily basis. One can hear them spewing forth from politicians, large corporations, and the students of the most of the developed world. However, is any of this talk making a difference? It is undeniable that the world is now rapidly coming to an ecological crisis point, and that if current levels of pollution continue there will be severe consequences within the current century. Therefore, buzzwords are important simply because they focus people’s attention; they play a considerable role in increasing awareness among the general populace. However, to make an effective and positive contribution to the pressing issues currently facing the environment, these buzzwords must be brought to life through action. The quickest and most reliable way for this action to occur on a large scale is to make the “green” economy economically viable. The increase in awareness on many levels of society has already made this possible in a large number of westernized countries. Unfortunately, the majority of corporations who do capitalize on the profitability of these words merely engage in “greenwashing” campaigns to increase their bottom line. Two of the most pervasive campaigns currently occurring are BP’s $200 million US “rebranding exercise,” as coined by the New York Times, and Wal-Mart’s “Acres for America” promotion. However, even though millions are spent on these campaigns, BP remains an oil company and Wal-Mart remains a consumer conglomerate, and both continue to contribute more to the problem than the solution. However, the fact that corporations have recognized the profitability of the green economy is a first step, even if the immediate effect is that the majority of these corporations are only contributing to the buzz instead of actually changing their behaviour. Nevertheless, if these words can be transformed into actions and pursued with honest intent, then a transformation for the better can be achieved. The closer global sustainability approaches critical mass, and the more that the citizens around the world become aware, the more profitable a green company can be. However, it is far more difficult for a mature corporation to change than for a start-up to incorporate environmental sustainability into its statement of purpose. The average tenure of a multinational corporation only lasts between 40 and 50 years.1 BusinessWeek based this estimate on surveys of corporate births and deaths. For example, the study points out that one-third of the companies listed in the 1970 Fortune 500 no longer existed by 1983. Therefore, it is imperative that corporations that are born of this current generation take responsibility for the environmental impact they will inevitably make.

1

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

By using the cachet of green to inspire the entrepreneurs responsible for starting the corporations of this generation, it is possible to implement business strategies that from their inception embrace both environmentalism and profitability. This is clearly evidenced by UniMaid Ltd., a company started by the author in the autumn of 2007. UniMaid is attempting to incorporate environmental sustainability on the ground level in a company that will be profitable, and at the same time show its primary market of 18-25 year old students that sustainability and profitability can be partners in this new era. UniMaid is a simple student concierge service designed to combat the sub-standard living conditions prevalent in the majority of university residential halls across the United Kingdom. For many of the students living in the halls, unhealthy living conditions will lead to sickness in a variety of forms, most commonly asthma and insomnia, or for the unlucky few NoroViris (the winter vomiting disease) or even Meningitis as seen at Cambridge University in November of 2007. For others, living in an unclean environment will simply be detrimental to their academic performance and social life. UniMaid is designed to solve these problems. With the tagline of UniMaid – Cleaner Living, the company will initially offer cleaning, laundry, and dry cleaning services. The cleaning services will be offered on a weekly, biweekly, and monthly basis and laundry will be offered as a weekly plan. Additionally, UniMaid will offer dry-cleaning on a one off basis. However, an integral part of the raison d’etre of UniMaid is to take its stand in the ranks of environmentally conscious companies, dedicated to preserving the already ravaged earth. As such, the tagline, UniMaid – Cleaner Living, has a second meaning in that the services offered will not impact the environment. Although UniMaid is only one small company, its clear statement of purpose is a voice in a growing chorus of companies with a conscience. To be able to do this, UniMaid will provide a plan for sustainability in the workplace. This is particularly important because the services that UniMaid provides are traditionally services that are extremely damaging to the environment. For example, UniMaid uses a fleet of vans to operate the business, an action that would normally lead to carbon dioxide pollution. However, UniMaid has addressed this issue by stipulating that all vans operated by the company are powered by BioFuels, a fuel that is not that difficult to come by, particularly in urban areas, and at the same time is reasonably cheap, especially in this era of skyrocketing petrol prices. Traditionally, commercial laundry services use bags made of Gingham, a fabric made of artificially dyed cotton yarn and plastic. However, the laundry bags that UniMaid uses are made from recycled organic matter. The bags also use only a small necessary amount of printing, so that use of artificial dye is limited and the least impact will be made on the environment. A bit of colour may have been sacrificed in this endeavour, but it is certainly worth it as customers are attracted to this image, and in that the earth is also therefore a slightly cleaner place. Furthermore, the actual water service will employ EnergyStar™ rated washing machines along with environmentally friendly detergents. One of the lesser-known impacts to the environment are the strong cleaning fluids used in the majority of households. To combat this pollution, UniMaid will only use certified organic cleaning materials, which is especially important as a large portion of cleaning materials, particularly soaps, are washed into the water system and eventually the oceans. Unfortunately, as of today, there is no regulator for green phraseology in non-edible products, i.e. there is no restriction in either the U.K. or the U.S or most of the rest of the developed world. This means that many suppliers can claim to be green, whether they actually are or not, with little legal Global Initiatives Symposium in Taiwan

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Companies with a Conscience – A Foundation of Sustainability“You must be the Change You Wish to see in the World”,

William Riordan

consequence. Therefore, it is imperative for every business to research potential products to assess their effect on the environment. Altogether, these measures are not particularly expensive to implement, and also give the company an advantage among competitors. Furthermore, UniMaid will not stop at simply using these products, but will also use its access to the 18-25 year old market to educate and encourage. Admittedly, educating a group that has already chosen an environmentally friendly company is substantially easier than a more diverse group, although the effect may not be as large. However, the majority of students that use UniMaid’s services do so not because it is environmentally friendly, but because there is a demand for the service to begin with in the industry. Therefore, it is possible to encourage environmentally conscious behaviour among students, both those who are aware, and those who are unaware of the consequences of their actions on the environment. UniMaid is only one example of what can be done in a small segment of the service industry. Any additional costs that the company incurs are more than compensated for by the additional business that is attracted to the company due to the green policies. Although it can be argued that if this policy is so successful, all companies will become green ending any advantage. However, if this becomes the case, then the effort certainly will have been extremely successful. Furthermore, if more companies do take up this policy, the increase in demand will simply necessitate an increase in supply of green companies, or cause previously ambivalent companies to change their policies. This has a knock-on effect that can be witnessed as UniMaid grows and gains more clients. With this additional clout in the industry, the company will be able to negotiate more effectively with suppliers, and force change in operators who wish to be part of the chain of supply. These green start-ups are going to become even more important in the years coming as developing nations increase their standards of living and reach the threshold of consumer culture. New markets of people interested in the preservation of the earth are opening every day, and throughout the next half century, the number of people able to afford such services will increase greatly if the world economy continues on its projected path. It is also imperative that existing corporations are not ignored. Even in the current recession, as the green movement grows in size, the more mature corporations will have little choice but to join in the march. Essentially, by making green the only viable economic option, this movement will naturally create a better world.

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THE REAISSACE OF THE CORPORATIO, Pablo Crimer

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     

                                                                       

                                                                                                               

 



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GIS Taiwan 2009

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                                                                                                                                                            

         

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Global Initiatives Symposium in Taiwan

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THE REAISSACE OF THE CORPORATIO, Pablo Crimer

                                                                                                                                                                                                       

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                                                                                                      

                             

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Global Initiatives Symposium in Taiwan

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THE REAISSACE OF THE CORPORATIO, Pablo Crimer

                                                                                                                                                             

 

  

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GIS Taiwan 2009

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

 

                                                                                                                 

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Global Initiatives Symposium in Taiwan

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Corporate Social Responsibilities: Problems and Perspective Development, Li Xu

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GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

127


Corporate Social Responsibilities: Problems and Perspective Development, Li Xu

128

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

129


Corporate Social Responsibilities: Problems and Perspective Development, Li Xu

130

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

131


Corporate Social Responsibility and Social Entrepreneurship, Jennifer Tran

132

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility and Social Entrepreneurship, Jennifer Tran

134

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

135


Corporate Social Responsibility and Social Entrepreneurship, Jennifer Tran

136

GIS Taiwan 2009


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility for environmental needs, Arisa Tagawa

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Corporate Social Responsibility for environmental needs With increasing mobility of capital, openness to investment and free trade, corporations today are facing economic challenges that they have never experienced before. Technological change, in particular, the use of electronic media has facilitated international businesses to achieve efficiency and better quality products and services. This has resulted in a never-ending scale of global competition within and between nations. In the globalizing world today, people are becoming conscious and beginning to evaluate the impact that business activities cause to the environment, to consumers, employees, communities and other related actors. Corporations must avoid practices that advance harm to the public and the environment regardless of legality. The image and reputation of a company is the key to growth and long term success in the competitive world of business. Corporations must consider their social responsibilities within civil society and act on them as part of their core business strategy. However, since this is voluntary and because corporations constantly encounter new challenges that impose limits to their goals, this is not an easy task. Corporations must work with public sector organizations that take into action corporate social responsibility (CSR). The first problem we face today is the fact that awareness of CSR issues is limited due to lack of knowledge and recognition by the public. CSR is still unstable as a business strategy because many corporations lack a clearly defined professional team or program for effective functioning. In addition, corporations have different value systems and perspectives on various issues and there are also disparities in opinion among employees and the public. It is questionable whether employees working for corporations have an accurate understanding of the gravity of the negative impacts that their companies are causing to the local community and the environment. Hence, there is often a mismatch between demand and supply; the corporation may have a narrow interest in comparison to the public. In order to resolve the above issues, corporations can create a team that places focus on CSR issues and begin by studying the types of public sector organizations that

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

exist. They can seek for the appropriate organization with specific targets that match their goals and work with them for mutual benefit. If a corporation receives a convincing proposal from the public sector, the corporation will evaluate the organization and will provide if necessary, financial opportunities. The public will recognize the corporation as a supporter for the public sector, which conducts society-friendly activities. In this way, the corporation will gain a better reputation and the public sector will be able to draw attention to their goals and achievements. Secondly, in order to effectively execute CSR, corporations must establish an efficient communication process through which the corporation and the public can agree to a set of shared objectives and ways of achieving them. This will require employees to work with those who are familiar with the local needs, language, society and culture. Through communication, the corporation and the public will be able to peacefully exist together and will result in mutual benefit. There is a need for respect between the two sectors; the corporation must fulfill the interest of the public, while the public must respond to the corporation by purchasing their products and services. Third, employees can learn about the different values held by employees working for different corporations and within their own company by participating in local events and interacting with the local people in the local environment. In this way, workers will come in contact with people of various backgrounds and gain a broader and tolerant understanding of societal issues. This will raise the chance that workers will become aware of their company's CSR from the perspective of the local community. Many corporations have the ability to think globally but the fact is, they must begin by acting locally. Employee engagement in the local community will make values for CSR more meaningful and productive for the workers and the corporation as a whole. "In China, with the recent shift toward greater decentralization, the government has become increasingly aware of, and more receptive to, the creation of new relationships between the corporate sector, the nongovernmental sector, and local communities." (Corporate-NGO partnership in Asia Pacific p.35) The Glorious Cause based in China is a successful partnership that works towards poverty alleviation. It has Global Initiatives Symposium in Taiwan

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Corporate Social Responsibility for environmental needs, Arisa Tagawa

won the appreciation and respect of the government by acting as a bridge between wealthy businesses and those who lagged behind. The Glorious Cause is one example of an organization that has assisted corporations to build on their social responsibilities to the community and society. A second major problem we face today is the fact that waste released into the atmosphere from factories in the process of production and from products designed by corporations while in use by customers have accumulated and are causing negative environmental impacts to society. Lack of consideration for the environment by corporations has resulted in continued emissions of waste gasses such as carbon dioxide into the atmosphere. These emissions have caused the earth's mean temperature to rise and we are currently experiencing global warming. This has lead to problems such as rise in sea levels, loss of habitats, threats to agriculture, desertification, acid rain, and damage to nature, public health and food chains. Environmental change involves our entire society since the effects are spreading in a global scale. What corporations must do is to place more emphasis on conservation, improving durability, reusing and recycling of products. Factories and power plants that produce waste gases are responsible for actively reducing their emissions. Corporations need to consider the effects their products have on the environment, design products that are environmentally friendly and consistently label their energy consumption for customer awareness. Research needs to be conducted on the creation of products that would use minimum amounts of natural resources when they are manufactured. Moreover, products that produce the least amount of waste when it becomes unneeded are equally necessary. An ideal product that is environmentally friendly would be made of resources that would not cause harm to the environment and would return to nature after a period of time. Critics argue that CSR distracts businesses from their fundamental role to be productive and profitable. CSR issues place corporations under pressure from two conflicting sides: the pressure to gain profit, and the viability of non-economic social values. Companies fear that they will lose in business if they spend money and time on research that must take into consideration such social values. However, consumers have

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started choosing products and services provided by corporations that are environmentally friendly. Due to the changing demands of society in a world of globalization, there is a need for corporations to become more responsive. Corporations have no choice but to consider environmental issues for surviving business competition. When Toyota first began making hybrid cars, they were making deficits for every car they sold. They were aware that they were under the risk of making tremendous economic losses from even before they began production. Nevertheless, Toyota executed the manufacture of these hybrid cars that efficiently generate energy using a combination of both gasoline and an electrical system made up of a motor, generator and battery. Hybrid cars are environmentally friendly since they cause less air pollution and consume less gasoline than normal automobiles. It makes efficient use of natural resources while simultaneously decreasing the impacts on the society's environment. Furthermore, hybrid cars provide other advantages for customers to sustaining the environment. For example, they can be driven smoothly and quietly because electric motors do not make as much noise as fuel when they generate energy. Toyota had predicted that the world would become more environmentally conscious and that generating energy while conserving natural resources would be worthy of business. As a result, Toyota has not only overcome their losses but producing hybrid cars have also benefited the industryâ&#x20AC;&#x2122;s reputation as a whole. Consequently, companies ought to take action or support organizations that are conducting research for the creation of new forms of environmentally friendly energy. Preserving forests and focusing on reforestation, is the first step that corporations can take to reduce the effects of global warming. Forests are diminishing in many parts of the world and the reduction of trees is one of the many factors that are causing the accumulation of carbon dioxide in the atmosphere. It is estimated that approximately 20% of the worldâ&#x20AC;&#x2122;s original forest has been lost. If humans continue to cut down trees at the same pace without planting new ones, there will come a time when we will run out of them.

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Corporate Social Responsibility for environmental needs, Arisa Tagawa

Businesses that own factories should make use of alternative ecologically friendly ways of generating electricity. For example, wind and solar power conserves energy by avoiding the use of natural resources: coal, oil and gas. Corporations can attach solar panels to their factories to generate electricity. Moreover, a system that transfers the excess electricity from factories to neighboring homes and facilities will save the cost to deliver electricity through long distances and will benefit the people living close by. There are still many undeveloped methods of generating alternative energy that reduces pollution and prevents damage to the environment. Geothermal energy from underground reservoirs and even the use of magma 10km below the earthâ&#x20AC;&#x2122;s surface is a possible energy source. Heat from the magma that is over 1000 degrees centigrade can be used to transform water into vapor. This water vapor can turn steam turbines to produce electricity, which can then be generated and distributed extensively for heating and cooling buildings. Tidal energy that converts the rise and fall of seashores is a possible source of energy. The action of waves force airflow into a turbine and these turbines drive generators to produce nonpolluting and renewable energy. Yet, these methods are not widely used nor known and they have potential for future electricity generation. Tides are much more predictable in comparison to wind and solar power. Hence, corporations should provide funding for research on new technological progress in the nonpolluting energy resource. The impact of these environmental changes on society depends on how promptly we can adapt to the earthâ&#x20AC;&#x2122;s transformations by finding new sources and ways of generating energy. As the awareness for social responsibility is spreading worldwide, corporations must reconsider CSR issues for the environment and provide full support for organizations that work towards such goals. In order to sustain and prevent further damage to the environment, initiative and cooperation from organizations is in desperate need. Finding new ways of developing energy is a challenge that is costly and time consuming. Until very recently, the United States strongly believed that using technology that saves energy and reduces emissions of greenhouse gasses would be costly and that it would cause damage to their economy. However, withdrawing from the attempt to conserve energy will result in stepping down from becoming a leading

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role in the energy saving technology. Today, there are organizations that promote CSR and provide standards for corporations to adopt sustainable and socially responsible policies for their activities. The United Nations Global Compact states ten principles that businesses can follow and voluntarily report in the format of a Communication on Progress. Corporations must remain broad-minded to present CSR because it concerns the people and society of today. In addition to the development of new energy sources, a possible entrepreneurial activity that has demand for new business is the preservation of water, another precious natural resource. I believe that not only corporations but also in the national, organizational and individual level, developed or developing countries need to engage holistically in corporate social responsibility.

Bibliography Schoenbaum, Thomas International Relations- the path not taken (p. 196-249) Cambridge University Press (2006) Toyota How Hybrid Vehicles Work- Gas and electric combine for incredible mileage http://www.toyota.com/about/environment/technology/2005/hybridwork.html (Sep. 2005) Yamamoto, Tadashi & Ashizawa Kim Corporate-NGO Partnership in Asia Pacific Brookings Institution Press (1999)

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Dhita Larasati

Word Count – 1987/PIN - 10501

Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship The Sustainability of Social Entrepreneurship When I first ran a research about social entrepreneurship, I found so many definitions on the terminology. Each one converges into a pretty much the same thing but none is complete enough to show the barriers of the definition. The word “entrepreneurship” came first to describe the innovative behavior that always characterize the activity. And then people add the word “social” for those activities which result a good social effect. There was a great confusion when social organizations and business ventures started to claim themselves as social entrepreneurs. Boschee and McClurg helped us to clarify the barriers of the definition. Social entrepreneurship is distinguishable to social organizations and business ventures because of its two essentials: selfsufficiency and social mission. Social organizations are not financially independent. They fund their organizations mostly from donors and government aid. They might earn some profit, but it is not their main goal. On the other hand, social entrepreneurs are profit oriented. They have to be able to sustain themselves and become financially independent. Nevertheless, profitability is not their only goal. They have a social goal which also becomes their parameter of success. Even for most social entrepreneurs, their compassion for social issue often became the starting point of their enterprises. This is the point where social entrepreneurs are different from business ventures. In business ventures, there is no greater importance than making profit. They sometimes donate their profit for social purposes, but they just do it in terms of doing a socially responsible business. Now, I will draw one final definition deducted from all those explanations I found. Social entrepreneurship is a sustainable profit-oriented organization which mission is to give solutions

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to a particular social problem with innovative and applicable ways. Further elaboration of social entrepreneurship will be within the scope of this definition. I strongly agree that social entrepreneurship plays an important role in fighting numerous social problems that we face today. The biggest of which being tackled is extreme poverty. Social entrepreneurs particularly help the people who are most in need, the ones who are below the poverty line or just slightly above it. In general, social entrepreneurs help these people by improving their quality of life. In most cases they create a new system that in favor to these people, which then give these people betterment in life. To put it into details, their role could be divided into several parts. Social entrepreneurs are distributors of money. They help to distribute the money from the rich to the poor. In order build a good rail for the distribution, they have to understand the way of thinking of both parties. Rich people do not keep their money. Itâ&#x20AC;&#x2122;s either they spend it for leisure or invest it for more money to come. Meanwhile, poor people tend to think it is best to keep their money. They never think of spending their money for leisure, let alone using it for investment. Social entrepreneurs come at this point and totally change their mindset. They realize that the ability of saving money will not save the poor, but the ability of creating money will. The money is there, but they donâ&#x20AC;&#x2122;t know how to attract it. The next steps taken are usually how to make the poor be able to attract the money from the rich on their own capabilities. They guide them the way and provide them with necessary means. Social entrepreneurs donâ&#x20AC;&#x2122;t deliver them the fish, but they teach them how to fish. After they know how to fish and willing to try it, social entrepreneurs will be ready to rent them the hook and the bait so they can gain profit in the process as well. Social entrepreneurs are providing people with basic needs that regular ventures do not want to get into. As economy improves, demand for other necessary products and services rise, but sometimes it is just not enough to make it lucrative for ventures to open new business to answer this demand. That is why in the poor community there is usually lack of suppliers, which makes them have to get it from other cities or force them to buy it with unreasonable price. Social entrepreneurs are again expected to fill this social gap, especially when it comes to answering the

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demand for education and health. Education is the only way to cut the ‘evil chain’ so that the next generation doesn’t fall to the same pit as their parents have. Therefore, education is highly important in order to fight the succession of poverty. It is important to make education accessible to the poor. Health is also just as important as education, since it will give a better productivity within these people. They can work better and undisturbed when they have good health. In certain cases, increasing productivity might be too lavish for these people. They need health improvement merely to survive day to day from the deadly diseases that often prevail in the poor environments. Thus, it is a social responsibility for all of us to make a good health accessible to these people, and yet, it is another call for social entrepreneurs to answer. Seeing on how many and important the roles a social entrepreneur plays, we should have more reasons to make this thing really work. What bothers me since the very beginning is the sustainability of a social enterprise. Most of them are not prepared with necessary measures since the beginning of the journey. Now I could see only a few social enterprises survive many years of operation. Sustainability of Social Enterprise The fundamental work for most social entrepreneurs are creating a new and better system in the society they want to serve for. The society had their system but somehow the system just didn’t work, which is why they stayed in their situation of poverty. Social entrepreneurs read the whole pictures and map a new way to get out of the cycle by replacing the existing components to different positions. The map leads them to a new cycle, and once they have settled, a new equilibrium is formed. In this new equilibrium, the role of the social enterprise changes. They are no longer facing the society they faced at their first launching, but they are facing a society with different demands and needs. The social enterprise might no longer be needed after that, and therefore they cannot sustain their business, although their social mission might have been accomplished. Other threat for sustainability is that social enterprises are taking profit from the poor; hence they cannot set a high margin for their profit. The only way to make a big profit in their business is increasing the quantity. The more people involved, the more profit they make. The investment is

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set to be for a long term and not expected to payback in the short run. This kind of business is very prone to instability. A small change that happens in the system might end up with a total destruction of the business. It is also sensitive to the emerging competitors. As social entrepreneurship is gaining more attention, I predict there will be more competition in the field. With only a low margin they can take, they are prone to plunge to the red zone of competition. When regular business ventures face a profitability problem, they usually take any necessary means to fix their profit. Social entrepreneurs cannot do the exact same thing because they have other responsibility which sometimes is the hindering factor. A wrong approach to tackle the problem might lead them to a shift in their social mission, and their status as social entrepreneurs will no longer be suitable. The most fragile to get hit by this storm are the new social enterprises. It is not surprising since new players will have to adapt first to the new game and important decisions are usually missed along the way as they learn the correct way of doing social entrepreneurship. The easiest way to prevent destruction is to learn the lesson-learned from the old players. Each enterprise might have different characteristics of problems, but some big lines could be drawn from this bunch of experience. Most of the old players like Grameen Bank and BRAC have a great dynamic in their way of operating their enterprises. They change along with the situation and keep adapting to the new condition. They are not just forcing themselves to adapt, but they also make their clients to adapt to the occurring situation. They usually do this by changing the rules of the game, offering more lucrative packages to make people use more of their products or services. On 2000, Grameen Bank, the most profound social enterprise faced a crisis due to its congestion of repayment. The media said that Grameen Bank had been virtually bankrupt. No publicity explains exactly what happened during the crisis, and how Grameen Bank managed to rise back with a new name, Grameen II, and become a stronger player than ever. Many believe that the founder, Professor Muhammad Yunus had done a remarkable restructuration in the organization. They screened outstanding loans to raise repayment rates, reschedule loans and, when necessary, write-off loans that could not be recovered from borrowers or their centers. And to build a fresh image of the

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bank, they redesigned the Bank’s products, so that they became more profitable and could compete with the many other providers of microfinance in the country. They did the right thing at the perfect moment, and they did it quickly. That’s why they can have a strong rebound after the crisis. One other way to keep surviving when the scenario goes bad is to through financial aid from the government and loyal donors. Being a social entrepreneur doesn’t mean that he has to be totally independent from financial aid, because sometimes this aid could be a run-away mean from the worst terms. In order to have a good financial support, social entrepreneur has to build a strong network from the very beginning. The network needs to be constantly extended over time and the more it involves people the better the chance of survival will be. The network has got to be diverse, not only limited to donors, but could be allies with whom they often cooperate. With a good networking, a social enterprise can rely on his networks to help him when he cannot help himself. As an enterprise with a positive social goal, there will be a lining backups willing to help. Since social entrepreneurs will make a new system and there’s a probability that in that new system new things are required, then from the very beginning social enterprises have to be prepared to expand their organization to meet those new requirements. Social entrepreneurs have to be able to read where the system might go and what shall be prepared beforehand. Recruiting allies could be one effective way to do expansion. This could be a fast way if a social entrepreneur wants to quickly deliver its influence. Different types of social enterprise have different types of allies that should be approached. Alvord, et.al, suggests three types of social enterprises followed with each allies need to be approached. The first one is capacity-building enterprises (empowering local people) which have to emphasize attention to local constituents and resource providers; second is package dissemination enterprises (providing products that help the improvement of people) which have to emphasize attention to package users and disseminators; and the last one is movement-building enterprises (moving people to be able to stand for themselves) which have to emphasize attention to members, allies, and target actors.

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Social enterprises that adaptable to a constant change have a better chance to sustain their business. Change might happen to the system, but the noble social mission has to remain unchanged. At the end of the day, these enterprises might want to ask themselves: Am I still doing any good for the people? ď&#x20AC; Bibliography: 1. Allen, Candace A. The Entrepreneur as Hero. Economic Insights. Retrived by 25th March 2009 from www.dallasfed.org/research/ei/ei9701.html 2. Alvord, Sarah H.,et.al. Social Entrepreneurship: Leadership that facilitates societal transformation â&#x20AC;&#x201C; an exploration study. Retrived by 25th March 2009 from www.gsb.stanford.edu/jacksonlibrary/articles/hottopics/social_entrepreneurship.html 3. Bornstein, David. 2007. How To Change The World. 2nd edition. Oxfor University Press US 4. Boschee, Jur and Jim McClurg. Toward a better understanding of social entrepreneurship: Some important distinctions. Retrieved by 25th March 2009 from www.sealliance.org/better_understanding.pdf 5. Hulme, David. November 2008. The Story of the Grameen Bank: From Subsidised Microcredit to Market-based Microfinance. Retrieved by 25th March 2009 from www.bwpi.manchester.ac.uk/resources/Working-Papers/bwpi-wp-6008.pdf 6. Kohler, Scott. 1976. Grameen Bank. Ford Foundation. Retrived by 25th March 2009 from www.pubpol.duke.edu/dfrp/cases/descriptive/grameen_bank.pdf 7. Santosa, Setyanto P. Peran Sosial Entrepreneurship dalam Pembangunan. Retrived by 25th March

2009

from

kolom.pacific.net.id/ind/setyanto_p._santosa/artikel...p.../peran_social_entrepreneurship_ dalam_pembangunan.html

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Providing an EAR to the Problems of Social Enterprises, Patricia Buensuceso

Word Count: 1830 / PIN:10518

Providing an EAR to the Problems of Social Enterprises Introduction It has been a trend for companies at present to practice corporate social responsibility (CSR). Seldom are there companies - especially the multinationals- that do not engage in CSR in one way or another. Most companies even partner with some charitable institutions or non government organizations to be able to do their CSR activities well as it is, after all, a company’s way of giving back to society at large. People, however, do not see CSR all in the same way. The perception of people about CSR has evolved and changed through the years. While many see it as something good and beneficial to society, others still question the motives of companies engaging in CSR. These companies are, after all, run by business men and not by philanthropists. To address the issue, a new breed of businessmen emerged – those who are called social entrepreneurs. They build social enterprises to better impact the society, prioritizing the social benefits over profits. Though these new breed serve for a cause, still a lot of people doubt the existence of social entrepreneurs and social enterprises. How social enterprises are able to create considerable impact to society is one of the issues social enterprises are faced with. As such, social entrepreneurs face a lot of challenges at present; the most testing perhaps is the conflict of doing business to exist and existing not for business at the same time. Corporate Social Responsibility Milton Friedman was among the firsts who gave meaning to corporate social responsibility back in the 1970s. Friedman (1970) argued that businesses ought “to conduct the business in accord with shareholders’ desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” Friedman, in this exposition, posits that the money made out of businesses will be put to use for good causes to help society. Through the years, CSR has been defined in many different ways by scholars and business people alike. Others define it as a form of self regulation; some as a business model. Dissecting the words, it would also be perhaps easy to grasp what the term means. In a simple sense, CSR is “a voluntary approach that a business enterprise takes to meet or exceed stakeholder expectations by integrating social, ethical, and environmental concerns together with the usual measures of revenue, profit, and legal obligation (BNET Business Dictionary).” Companies conduct CSR in various ways. While some have charities to help, others choose to focus on the environment, support an advocacy or spread awareness about a social issue. Companies employ CSR for different reasons too. While some do it to increase profits, others do it out of plain willingness to give back. The motive behind CSR, however, is unquantifiable and perhaps quite impossible to judge. Only the company knows of its real intentions in engaging in such activity and the people will only have to take its word for it. There are still some, however, who chose to take things with a grain of salt. From Corporate Social Responsibility to Social Entrepreneurship Both disbelief and strong belief in CSR paved the way for the birth of a new group of entrepreneurs – the social entrepreneurs. With a stronger drive to address the issues society is

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faced with, these social entrepreneurs are focused in solving the problems of society through building social enterprises. With social development among communities as its main objective, social enterprises serve communities more for the improvement of social conditions rather than for economic purposes. A social enterprise is “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners (Social Enterprise London).” The social objectives these pursue include job creation, education and provision of local services. Social entrepreneurship, like corporate social responsibility, can take on many forms. It may be in the form of non government organizations, credit cooperatives and microfinance, among others. Despite this clear distinction, however, confusion on the part of the entrepreneur may still arise. Baron (2005) argues that social entrepreneurs are those willing to operate at a financial loss; those who sacrifice financial gains for satisfaction. Though this may be the case, to work for profit may always be a temptation, especially when the profit is necessary to keep the business running. When social enterprises should have a society-over-profit point of view, a major conflict seems to present itself because these social enterprises would not be able to sustain themselves if they do not also push for profit. In other words, social entrepreneurs should drive their enterprises to earn profit to sustain itself and consequently be able to do what they actually exist for in the first place. In this, the essence of social entrepreneurship may also be lost and the values these social enterprises hold be sacrificed. To be able to understand better this particular problem that may arise out of unregulated social enterprises, it would be better to consider one particular form of social enterprise – microfinance. Microfinance as a Social Enterprise One form of social enterprise gaining much attention in recent times is microfinance. Microfinance, commonly known as the lending of small amounts to small people, has found much acceptance and recognition not only in developing countries but in other developed parts of the world as well. Though successful, microfinance still faces a lot of considerable issues. Among the most discussed and studied issues on microfinance is its ability to meet its objectives. As a social enterprise, the main objectives of microfinance are sustainability and outreach. Oftentimes, people question the goal of microfinance. When people do such, people question its effectiveness as a social enterprise translating to its real ability to alleviate poverty and address the concerns of society. Microfinance institutions (MFIs) are designed to help the poor and low income households. It does so through provision of credit in form of small loans. It also provides other financial services to these households, which commercial and formal financial institutions usually neglect. As such microfinance as a social enterprise enables these households to incorporate themselves in the financial system. This aspect of microfinance is what makes it a social enterprise. It helps the poorer households – who form majority of the society in most developing countries – be financially included, which consequently enables them to smoothen consumption and improve their living conditions through time.

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Though microfinance seems to have a noble end, a conflict may still arise with the way the business is structured. With no collateral requirement and high possibility of loan default, microfinance is a high risk venture. As such, there is a need to actually generate profits to be able to sustain the enterprise. Surprisingly though, microfinance has also been proven to be one of the most profitable ventures at present. With no regulation in the industry, a conflict presents itself as some MFI operators may not be able to strike a balance between the need to realize profits for the sustainability of the business but at the same time prioritize its social ends. A threat also poses itself as some may venture into microfinance only for the profits and use the social objective part as a cover. In this, the essence of microfinance as a social enterprise may be lost. Providing an EAR to Microfinance Problems The problems microfinance is faced with may be brought about by two things – the absence of regulation and commercialization. The lack of a regulatory body overseeing microfinance activities poses a threat to the essence of microfinance. Due to lack of regulation, people tend to take advantage of the benefits that they get out of microfinance. The financial gains of microfinance are prioritized over the social gains, leading to another problem – commercialization. While commercializing microfinance may, in some way, be beneficial to financial development and growth, it may also destroy microfinance as a social enterprise. Being commercialized, it may deviate from what it was instituted for, which is really to serve the underprivileged by providing them access to financial services formal financial institutions deprive them of. Commercialized microfinance can also be monopolistic in a sense that these are the only institutions available to provide financial services low income households need. Since too many poor people depend on microfinance, the institutions take advantage of the need and destroy the essence of microfinance as a social enterprise. The threats posed on microfinance may still be prevented if proper action is taken. Provision of an EAR – education, advocacy for awareness, regulation – could perhaps address these issues. These measures can possibly counter the threats microfinance as a social enterprise is faced with. Education may work for the threats faced by MFIs as lack thereof may actually be a cause of the problem. People might not have the right understanding of microfinance, causing deviations from how and why microfinance is practiced. By educating people on the real deal of microfinance, more will be aware of what MFIs exist for. To complement efforts to increase understanding through education and awareness programs, a regulatory body may likewise be formed. This regulatory body should ensure that practices of MFIs are in congruence with its being a social enterprise. It will guide MFIs in working towards their goal as well as in striking the balance between working for profit to sustain its cause and commercialization. There may be other efforts by which these threats faced by social enterprises may be inhibited. Providing an EAR is only one of them. What is important, however, is that immediate action must be made to obliterate disillusion among people involved. Conclusion Microfinance institutions, just like other forms of social enterprises, are established for a purpose- to promote the development of society. With the success of microfinance at present,

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people are encouraged to venture into it. The profits realized out of microfinance, however, sometimes cause disillusion and make people venture into microfinance for the business end rather than the social ends. With this, problems of lack of regulation and commercialization of microfinance may ensue. These problems may destroy the essence of microfinance as a social enterprise. These threats posed on microfinance, however, may still be prevented if proper action is made. Proposed solutions to these threats include education, awareness and regulation (EAR). Education to spread awareness as to the true objectives of microfinance will help people realize the importance of microfinance as a social venture. Regulation will provide checks on MFI operations and ensure honest operations. It may likewise help in the prevention of microfinance commercialization. As how microfinance â&#x20AC;&#x201C; as well as other social enterprises and CSR activities - is able to bring about change in society, it is something that should be promoted and uncompromised. Proper practice of such activities, with regulation to ensure its social objectives, will develop social enterprises and enable them to effect change in the lives of more people.

REFERENCES Aghion, Beatriz and Murdoch, Jonathan. (2005). The Economics of Microfinance.Cambridge: Massachusetts Institute of Technology. Baron, David. (2005). Corporate Social Responsibility and Social Entrepreneurship. Stanford Graduate School of Business Research Paper Series No. 1916, October 2005. BNET Business Dictionary. (Date Accessed: 15 March 2009). URL Available: http://dictionary.bnet.com/ Friedman, Milton. (1970). The Social Responsibility of Business Is to Increase Its Profits. The New York Times Magazine. September 13, 1970: pp. 32-33, 122, 126. Social Enterprise London. (Date Accessed: 15 March 2009). URL Available: http://www.sel.org.uk/

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CSR: Redefining Milton and Adaptability for Global Success, Yung Terd Lu

Word Count: 1964 words

CSR: Redefining Milton and Adaptability for Global Success 1. Introduction In ancient China, the philosopher Confucius, noted that intrinsic motivations that arise from the culture of a society are often of greater importance to the society's moral character, than the extrinsic motivations, such as rules and law. In relation to the theme of Corporate Social Responsibility (CSR), the society (or in this case, corporate) with the foundation in social responsibility best suited to meet the demands of global competition, will prosper and survive in this modern age. This essay will explore the problem of misconception behind the resistance to CSR, and the benefits available from CSR as a possible incentive to attract more participation from corporates. 2. Redefining Milton: The Changing Field of Business “The proper business of business is business. No apology required” - or so claimed by survey by the Economist published in January 2005. One can imagine the picture, which Chicago school economists worldwide rushing for their handkerchiefs, teary eyes upon reading the survey. It may be wise not to be haste. A quick reality check will reveal that such a view had lost the battle for the support of citizens worldwide. A twin survey by McKinsey revealed that 84 percent of executives and 89 percent of consumers believe that corporate obligations to shareholders must be balanced by contributions to the broader public good (McKinsey). Perhaps, the most surprising find is that most executives agree too. Henry Ford had already observed that; “A business that makes nothing but money is a poor kind of business”. What is new here though,

It has been almost forty years since the late Milton Friedman published his influential article about the business responsibility in the New York Times. The article, published in September 1970, stressed the essence of business operation, was to maximize profit for its shareholder. Many CSR critics took this article to heart and regard him as an early advocate against CSR. In my opinion, I believe that Milton Friedman's idea is partially right, but I will take a different interpretation contrary to the usual view CSR critics took. “There is one and only one social responsibility of business -to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” Milton Friedman, New York Times, September 30, 1970 (Friedman 17) His view was for businesses to engage in any profit making activities, as long as they stay within the rules of the game (as indicated in italic above). However, the definition of the rules of the game is no longer as simpler as those during the 1970's. The rules of the game had changed. No longer did the society expect business to only respond for its shareholders, it must also adhere to the welfare of its stakeholders, the population in general. 3. The Need for CSR GROWTH OPPORTUNITIES Comparison of American Performance Indexes, such as S&P 500, and the Domini 400, show that the benchmark performance of Domini 400 are slightly better at 7.88% compared to

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7.24% since inception of the Domini Index on May 1, 1990 (KLD). The recent economic the less-then-spectacular returns usually shown by such companies. However, as global economy is shrinking from the recent credit crisis, the commitment towards CSR by many companies did not waver. Most companies regard CSR as an integral part of their business plan and abandoning it in the short term is to abandon the trust they gained from the society (Holstein). In 1962, Nestle decided to venture its dairy industry into the Indian market, and the company was given permission to set up operation in Moga, a district in Northern India. However, the conditions there was less than satisfactory. There was no electricity, and lack of refrigeration and transportation means the milk could not travel far, and was often contaminated or diluted. Nestle was there to do business, not CSR. But Nestle's operation requires milk from local farmers and hence, Nestle needed to transform the Moga region to be competitive to add value for the production line. The company built refrigerated dairies as collection point in each town and provide experts to help with the locals vet needs. Medicine and nutritional supplements were distributed for the sick animals, and training provided for the farmers. The farmers learned that the cows' diet are important for quality milk production and thus with financial aid from Nestle, dig up previously unaffordable deep bore wells and improved the irrigation. The improved irrigation not only fed the cows through better grass, but also improved crop yields, producing surplus wheat and rice and raising the standard of living. Nestle commitment to working with small farmers is central to its strategy. It enables the company to obtain a supply of high quality commodities without paying for the middleman (Porter & Kramer 11) Although unintentionally, through CSR, as the region grows, so does Nestle operations in India. .

ATTRACTING NEW BLOOD A business is an entity capable of existing for long period of time, given the right governance. CSR is a long term investment for the future. Aside from the external gains CSR may provide to the company, internal motivation is also a good excuse to promote the implementation of such practices. Neville Isdell, Chairman of Coca-Cola summarized this in his report titled “2006 Corporate Responsibility Review”, where he states that committed employees who believe in the company they work for, perform better. Furthermore, these employees who believe in the company’s mission often times have higher levels of employee morale, productivity and ultimately this translates favorably into the company’s brand (Isdell). Also, the CSR aspect of a company has become a major decider to attract new talents. My own conversation with Laura Rasico, a recruiter from PriceWaterhouseCooper in charge of Michigan region, USA, revealed this surprising fact that more interviewees took the company's CSR stand into consideration. She believes that such phenomena will keep on growing in the future, and companies would just have to adapt to a more pro-CSR stance or lose out in the race to attract the best talents tout there (Rasico). So for a company’s corporate social responsibility efforts to have real value, they must have a “line of sight” connection to the business goals. In addition, another survey conducted by Aspen Institute Center for Business Education concluded that business students are thinking more broadly about the primary responsibilities of a company. In addition to citing shareholder maximization and satisfying customer needs, more students are also saying “creating value for the communities in which they operate” should be a primary business responsibility (Aspen). For a company to survive, it needs constant innovation, and often these changes are bought forward by new blood. However, the newer generation is now more concerned with CSR and one of the methods for these multinational companies to attract such talents is by going mainstream with CSR. BRANDING Critics also mentioned that CSR distorts the profit intake and that the resources used for CSR activities could be converted into more financially feasible activities. This statement is true to some

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point. A fault with CSR, one that frustrates economists, is that the outcomes of CSR are unquantifiable. There is no absolute way to measure the impact of any actions the company undertakes as there is no standard way to calculate social gains unlike profit accounting. However, just as investment should be measured only in the long terms, CSR should also be reviewed only after an extended period of time, for at least a few months to see if the investment will give any returns. Investing in CSR means investing in the brand of the company and having a good branding could differentiate between making a profit or suffering backlash from the consumers (Holstein). So, CEOs and managers should shift their traditional viewing from short-term profits and instead, focus on long-term sustainability through CSR. Wal-Mart is the largest private sector employer in the United States and one of the largest around the world. Their core mission was reported to sell products at lower prices. However, its logo and presence are felt both negatively and positively around the country. Even though Wal-Mart provides products to the community at a lower cost, it comes at the expense of the local small business community(Heath & Palenchar 125). The local business cannot compete with Wal-Mart, which commands economy of scale to aid in their profit. Hence, Wal-Mart's reputation took a blow, and news of sweatshops abroad, from which Wal-Mart obtained its products, tarnished its image. (Heath & Palenchar 125).

Wal-Mart needs a makeover for its image. It began a â&#x20AC;&#x153;green revolution,â&#x20AC;? focusing on manufacturing industry, Wal-Mart coerces its product suppliers to improve themselves on the greening section. The producers are required to wrap their products with smaller packages. Incidentally, this benefits Wal-mart too as each product takes less space in the inventory and allows them to store more. However, the greatest influence Wal-Mart has is to encourage the conversion from the incandescent light bulb into the spiral and energy efficient compact fluorescent light bulb. Given Wal-Mart's massive presence, if this move is successful and the general Americans change their light preferences, it could amount to a huge reduction in greenhouse gases released. It is uncertain whether Wal-Mart could salvage its branding from a negative to a positive viewpoint, but one thing is certain, Wal-mart is moving towards adopting CSR practices, along with a growing number of companies elsewhere. PROBLEM WITH COST? Considering the benefit of participating in CSR, many others are still not convinced, citing cost as the problem. Any effort of directing resources into CSR would distort the income flow. However, companies that are already practicing CSR are quick to deny this. Kevin Thompson, Senior Program Manager for Corporate Citizenship at IBM, mentioned that CSR is relatively cheap considering the benefit resulting from CSR. The gains from it could cancel out the cost put into developing the CSR program, especially in case of IBM. What was spent is repaid by the company's good image and access to greater markets. Thompson mentioned how while working under CSR effort in Ghana, Africa, the team developed a good relationship with the local government and the local authorities were impressed with the level of commitment put forward to help out their citizens. In response, they requested IBM to help out with some company instead of losing out (Thompson).

4. Conclusion CSR used to be a path few companies ventured through, but those who did prospered. Although this trend was slow to catch up upon, the momentum kept building and now, most companies realize that their responsibility lies not only towards the shareholders of their companies' stocks, but also to the stakeholders as well, the public. It is no longer a zero sum game in the

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business field where there are losers and winners. Instead, it is a win-win-win situation for the companies, the consumers and the environment in general. CSR opens up opportunities for a brighter future. It is the best viable option for a sustainable development and a chance for the remaining global community to raise their living standards to a higher level. As Confucius said, the extrinsic motivations of exogenous forces cannot truly change the hearts of the people. For the culture of CSR to succeed, it must began from the within. Aspen. “2008 MBA Student Attitutudes About Business & Society” The Aspen Institute Center for Business Education. 20 March 2009. <http://www.aspencbe.org/documents/ExecutiveSummaryMBAStudentAttitudesReport2008.pdf >

Barbado, Michael. “Wal-Mart Puts Some Muscle Behind Power-Sipping Bulbs” New York Times.January 2, 2007

Delevigne, Lawrence. Corporate responsibility is surviving in recession. CNNMoney. 20 January 2009. Accessed 13 March 2009. <http://www.cnnmoney.com/>

Friedman, Milton. “The Social Responsibility of Business is to Increase its Profits.” New York Times, 30 September 1970: 17

Heath, Robert & Palenchar, Michael. Strategic Issues Management: Organizations & Public Policy Changes 2ed. Sage Publication, 2009: 125-126

Holstein, William. Fine-Tuning Corporate Social Responsibility. BusinessWeek. 3 April 2008. Accessed 14 March 2009. <http://www.businessweek.com/managing/content/apr2008/ca2009043_500367.htm>

Isdell, Neville. 2006 Corporate Responsibility Review. Coca-Cola Company. 21 March 2009. <http://www.thecocacolacompany.com/ourcompany/pdf/corporate_responsibility_review2006.pdf>

 KLD Reports January 2009 Index Returns, KLD Indexes, accessed March 27, 2009 <http://www.kld.com/newsletter/archive/press/pdf/20090131_Index_Performance.pdf> Domini Index is the benchmark for measuring the impact of social and environmental screening on investment portfolios.

Mendonca, Lenny T., and Matt Miller..”Exploring business's social contract: An interview with Daniel Yankelovich. “McKinsey Quarterly (June 2007): 64-73

Porter & Kramer “Strategy and Society, The Link Between Competitive Advantage and Corporate Social Responsibility” Harvard Business Review ,December 2006: 11

Rasico, Laura. Personal Interview. 13 March 2009.

Thompson, Kevin. Personal Interview. 13 March 2009.

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The Economist, “Survey: Corporate Social Responsibility”, 20/01/2005. The McKinsey Global Survey pf Business Executives: Business and Society. The McKinsey Quarterly, Web Exclusive, January 2006 and Dec 2005 McKinsey Quarterly

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Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship, Bagiella Santiago

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship People always believe that large business corporations had their own share in the integration of every nation’s society. They believe that these corporations can help in the development of a productive society, a conducible place for the improvement of one man’s life. Truly, these huge business empires can serve as a great key in uplifting the lives of the people around it, or even maybe the state of the whole nation where it belongs. For a very long time, we have seen how these business corporations had rose from being just a part of every community in this world up to where they are now, wherein they are playing a more vital role in shaping not only our social landscape, but also our economic state. Corporations nowadays have already become interactive with the society. From being a private body that exists in our societies, they are now introducing themselves as a social agent of change. We have already seen this scene; several corporations are now engaging themselves in charitable activities, environmental awareness campaigns, and even in alleviating the present conditions of our educational systems, most especially in the developing countries like in Southeast Asia, by providing scholarships to underprivileged students. These altruistic deeds somehow proved to be beneficial to us. Through their continuous generosity to us, we are now having the feeling that, they can help us to achieve a better social status and a better life in this world. True enough, we must admit that we should be thankful to them for their effort in reaching out to our needs, but the question is how far can they go in helping us? Are they willing to push their own limits as a private corporation just to attend to our needs?

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CSR has been the alter ego of private corporations. They showed to us that despite being a privately owned organization, they are proving to us that they can help the public through their social programs that calls for a growth in every aspect of life that a human being needs to grow. With their so-called “social advocacies”, they are promoting themselves not only as a private organization but also as a social organization with a heart that is willing to respond to the call of the society. Several private corporations had engaged themselves in this type of social interaction, conducting different programs that will provide services to the people using the GIS Taiwan 2009


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services or some part of the profit of their businesses. This exercise of power by these privately owned corporations is a good indicator that there is a good relationship between these organizations and the public. If there is a good relationship between the two parties, then we can expect that each of them is open to entertain new concepts or ideas that will promote continuous progression for the benefit of each of them. Corporate Social Responsibility is a good concept in aiding every nation to accommodate fully the needs of its people. We cannot deny the fact that private corporations can be a great help to the government of a nation when it is lacking the ability or unable to suffice the needs of its people. For several years, large corporations are practicing CSR in order to provide continuous development to our society. Those forms of assistance are helpful and we will really benefit from those programs, however, there are still some questions regarding the full potential of the Corporate Social Responsibility. According to T. V. Learson, former president of IBM in the book The Limits of Corporate Responsibility, “Business usually profits best when it serves the public interest within its ability to do so. But we can never loosen ourselves from the iron law of profit which necessarily limits our freedom of action and put bounds on what we can do…If a corporation so diverts its energies and resources as to go broke, there is nothing it can do – nothing at all – even if it claims to have a heart and conscience as big as the world”. He is saying that if a company, however it wants to help its society, if it focused on diverting its resources to perform social activities to improve the lives of other people, the company itself will not be able to survive. Private corporations will not live long in this world if its main purpose of existence will change from gaining profit into allotting their resources to unprofitable and less beneficial activities. Gaining profit is what makes a corporation exists. Profit is the lifeblood of a corporation, it needs to flow within itself, or else it will die, just like the blood of the human being that needs to flow throughout our body in order for us to live. Let us take a private educational institution as our example, say that a private educational institution is strongly campaigning for an advocacy to eliminate the problem of out-of-school youths through giving educational scholarships to them. It is good to hear that they are going to do that to give their contribution in elevating the standard of education, but will it benefit them? How are they going to profit to that kind of action? How can it increase their profit in order for them to continue that scholarship program? Those questions will pop in the minds of the people before applying the CSR to that kind of situation. A private educational institution, which is own and run by a private group of

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people, cannot simply pour out all their school’s profit just to gain the reputation that they are adhering to promote equality to all people by providing free and high quality education even if they really want to. If they will do that, in the end they will be the ones who are going to suffer. If they were going to allot their profit to provide scholarships to as many aspiring students as possible, in where they are going to get their resources to upgrade their educational facilities? Where they will get the money that they will be going to use for the advancement of their teaching staff? Where they will go to get the money to fund their programs that will promote the quality of their teaching competency? We are just discussing here the limits of Corporate Social Responsibility if we are going to apply it in a private corporation, and in this discussion, we gave a privately owned educational institution as our example. We can see that even in the educational aspect, if an institution is own privately, it cannot devote all of its profit simply because if they will are going to do that, they will soon to start digging their own burial place. A private corporation cannot dedicate its full time and resources just to attend to the society’s need that is why there is the government to take that major responsibility. The cost benefit factor is very vital to their every operation so they cannot just engage in any social activities without gaining any benefit from it in the end. Yes, they can help us, but we should not put to our minds that they could be the answer for us to meet our requirements in order to survive in this world. We as members of the society need to survive, and so they are being a part of it. If that is the case, social experts have already found an answer as an alternative of CSR and that is what we known today as Social Entrepreneurship. Social entrepreneurship is not new to us; in fact, it already began flourishing to different countries long ago. It is a practice wherein an organization earns profit in order to continue to its commitment in upholding the social stability of a society. In terms of which of the two has the greater boundless limitations in taking over the social responsibility, the concept of social entrepreneurship will emerge as the winner because it is not bound to gain profit for the sake of its own survival. The role of this social entrepreneurship in the economy and society is very pivotal especially at this point in our time where we are currently going under one of the toughest challenges of the century. It is pivotal because it shows that it is possible to combine the business strategies of a private corporation to make attainable plans in aiding the society’s needs. This approach proved to be more realistic than CSR because its primary concern for survival is to serve as a society’s lifeboat and not to gain profit mainly only for its survival.

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Although social entrepreneurship is showing us a more optimistic view about social

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responsibility, some still found it inaccurate in doing its primary aim because it stands in the middle of the ground. It is not part of a government body so it does not have the power that the government has so it needs to comply with the rules given by the government before they can act freely according to what it wants to. It is not also a part of the corporate world so it does not have the vast resources that private corporations do have like the financial resources. Therefore, in order for these social entrepreneurs to success in promoting their battlecry as a catalyst for social reformation, they will need to start from the beginning to accumulate the resources that the government and the corporate world does have which it will needed to achieve its goal and make a full utilization of its potentialities. After analyzing the capabilities of the Corporate Social Responsibility and Social Entrepreneurship, we can say that they also share some similarities but at the same time, they have their own differences to each other. As their common denominator regarding with social and economic issues is the possibility that they can take a role in hoisting our present social state into a higher level through the application of the principles in which they believed would be helpful to the continuous growth of our global society and economy. Discussing about their strength and weaknesses, both of them showed the both sides, the CSR proves its strength and competitive achievement attitude in attaining a certain goal because of its enormous capability to change the course of the lives of a society using its financial resources and through the application of business principles. The same thing with social entrepreneurship, it does the same thing in order for it to reach out to the needs of the society. However, both also have their own weaknesses, regarding with the CSR, it is their weakness to become fully operational in spending their resources to finance their philanthropic programs because it will greatly affect the stability of their organization because their main goal is to gain profit before anything else, even doing philanthropic activities. In the case of Social Entrepreneurship, it is not limited in aiding the needs of the society but it does not have the individual autonomy which is being enjoyed by large private corporations in doing their business and philanthropic acts. CSR or Social Entrepreneurship, whatever the private corporations and social groups wants to apply in their desire to help us to give the best for our society will not be the main issue here. What important is both options can provide equal opportunity for the society and for the corporate and social entrepreneurs in order to assimilate to themselves the importance of the role being played by each other in establishing a more dynamic and humane society which is responsive to radical changes and is willing to entertain new ideas for the sake of having an essential transition for the amelioration of our society. Global Initiatives Symposium in Taiwan

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Bibliography:

ď&#x20AC;

Chamberlain, Neil. The Limits of Corporate Responsibility. New York: Basic Books Inc., 1973.

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Going Beyond The Grey Hair: How Can Social Entrepreneurship Help To Sustain And Improve Senior Human Resources Management In Western Financial Institutions As Well As The Whole Civil Society? Subtopic 1: Rethinking Entrepreneurship

of

Corporate

Social

Responsibility

(CSR)

and

Social

Even though Western countries are considered as the most advanced economies in all over the world up to now, large Western companies sometimes lack of coherence in the integration of Corporate Social Responsibility (CSR) into their way of doing business. According to the United Nations Environment Programme Finance Initiative (UNEP FI), CSR means “the approach to business which takes into account economic, social, environmental and ethical impacts for a variety of reasons, including mitigating risk, decreasing costs, and improving brand image and competitiveness”. More precisely, there is a crucial social, economic and even ethical issue that Western companies need to cope with since recently. This issue deals with the way large Western companies manage their senior human resources. Indeed, Western developed economies are facing to the ageing of their populations. Adopting a more proactive approach to tackle new demographic challenges could allow large Western companies to work on CSR considerations. Additionally, as major agents of change, social entrepreneurs may also bring innovative solutions to create a new paragon of society that would successfully incorporate its senior population into the overall system instead of marginalizing them. According to the worldwide NGO Ashoka, social entrepreneurs are “individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps”. As strong levers of economic and social growth in market-based economies, financial institutions may set a good example to illustrate how Western companies can manage their senior human resources better not only by improving their existing policies, but also by adopting innovative solutions based on social entrepreneurship, especially through microfinance. Thus, how can social entrepreneurship help to sustain and improve human resources management in Western financial institutions as well as the whole civil society? * * *

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First of all, let us have a closer look at the population-ageing phenomenon that affects Western developed economies nowadays. Demography in Western countries suffers from a steep decline in fertility. By 2050 old people would represent around 10% of the Western countries’ population, which will put pressure on the overall economic system (eg: pension system, change in age pyramid structure in companies, etc.). As a result, we can expect several changes in demographic profile of Western developed markets:  First, in age pyramid structure of large Western companies, senior employees categories (above fifty-year-old people) are growing. Most senior people are born in the fifties and are commonly named the “baby boomers” generation, turning into the “papy boomers” generation from now on  Second, active working population from Western developed countries are too few to supply all labour market needs. Consequently, senior people may work longer than previously expected. Additionally, there is a tendency among Western developed countries to postpone the legal retirement age in order to keep qualified workers active as well as let them contribute longer time to the pension system  Third, the average life expectancy is growing in Western developed countries. Therefore, the elderly are likely to live longer time and could be in better shape than decades ago thanks to medicine improvements All these changes in demographic profile of Western developed countries will undoubtedly have a significant impact not only on the civil society, but also on the business world. Therefore, large Western companies should more attentively consider and even review their senior human resources management in order to better integrate new demographic trends. * * * Adopting a more proactive approach to tackle new demographic challenges could allow large Western companies to work on CSR considerations, and more precisely on social, economic and even ethical aspects within their own business. The first solution that Western financial institutions can implement is a more appropriate human resources management for senior employees. This might mean to improve existing human resources policies and career development for their employees by adapting them to the senior category better. For instance, companies can propose better retirement incentives while a senior employee is about to leave the company after having reached her working-year legal quota. Acting as such is nothing wrong in itself, but today’s reality has repeatedly shown how dramatic a change from a working lifestyle to retirement lifestyle is when it is not prepared long enough. Moreover, the current global crisis has caused situations where workers are abruptly fired because of bankruptcy or economic and financial difficulties. These series of lay-offs will not benefit senior job seekers, who often appear less attractive compared to young workers – a better shape, less expensive and perhaps more flexible work force.

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In a word, the first solution that consists of betting on actual used human resources tools is not fully satisfied.

An additional solution to solve this issue may be social entrepreneurship oriented towards senior workers as well as the elderly. As major actors of change, social entrepreneurs may help senior people in various ways.  First, social entrepreneurs can help senior people to implement new micro-businesses to allow them either to diversify their sources of revenues, or to provide them with an income if they were previously jobless or if they earn small pensions. For instance, a group of senior people specialized in financial analysis could build their own consulting company and offer their services to other companies, individuals or academia. Since social entrepreneurs have already created new innovative project for the benefit of the civil society, they are also able to share their experience and act as coach for people that either may be afraid of starting their own business at 50 or 60 years old, or may not be aware of such possibility.  Second, social entrepreneurs can try to foster synergies between several groups of senior people. Synergies could be based on:  A mutual exchange of knowledge approach. This means that social entrepreneurs can encourage senior people to enhance their professional and personal skills by training each other.  Inter-generational meetings. For instance, young business managers who wish to start their own business may need professional and experienced help to advise them. Senior people could fulfil this need for professional coaching. On the other hand, senior people may need additional training in order to update their knowledge and enhance their professional skills. Meetings with young workers who are willing to share their “fresh” knowledge and experiences with senior people can create new bases on which both young and senior people could rely on.  Third, social entrepreneurs can develop and expand professional networks for senior people. Indeed, in my opinion, Western countries are highly focused on young generations as it comes to work. This could partly be explained by the idea that young people are the future of our modern societies. Therefore, it appears crucial for Western countries to make sure that young generations are well-integrated to educational systems, and then professional life. Even though the current global crisis does not strongly support this idea, it is easily to realize it by some undoubted aspects. One of these aspects is networking. Nowadays, our global economic system strongly rely on networking -academic networks, social networks, professional networks, and so on. One may point out that there are a lot of professional networks dedicated to young professionals, young leaders, young managers, young entrepreneurs, etc. It is obvious that networks for senior professionals do exist, but as far as I know, I believe that they are not so widely developed and not as numerous as those of young workers. Does this mean that there is no such a need for networking within the senior population? Perhaps, it is simply because while getting older, people do not take so much time to expand their networks and create as many new contacts as young people do. It may be normal in a way, as you may have to take care of your family, bring up your children, keep in touch with your closest friends and spend time for yourself. Therefore, priorities change at some point in people’s life. This does not necessarily contribute to expand

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network, but to tighten it. On the contrary, young people are more flexible in their daily life, ready to move quickly from a place to another, happy to meet as many new young people as they can. They are definitively far more in a phase of actively expanding their networks rather than more or less passively keeping their own networks up to date. Social entrepreneurs could implement training programmes specifically dedicated to senior leaders or senior managers in this or that professional field for instance. They may also organize business-oriented meetings where senior workers and retirees could meet, gain new knowledge and do networking. * * * Todayâ&#x20AC;&#x2122;s global economic crisis has strongly questioned the way financial institutions in our global world have done business so far. Financial institutions are more than ever at the heart of the developed economies as well as the economies in transition. Therefore, it is now interesting to emphasize on them and consider how they could stay major both economic and social actors of the global economy differently. Over the last few decades, an increasingly number of booming market-based economies like Bangladesh, India or Poland have asked for small and even micro financing. This new need for micro credits has pushed banks to allocate loans to micro entrepreneurs with atypical profiles. In all over the world, microfinance is probably the most demanding social financial service that most people need in the current global economy. Microfinance brings together two essential elements of any production process, capital and trust. This gives to microfinance the capacity to make the world economy balance right and ensure thousands million people to escape poverty, because microfinance intends to reach not only a financial return, but also a social return. For example, the report â&#x20AC;&#x153;The State of Microfinance in Central and Eastern Europe and the New Independent States producedâ&#x20AC;? by Forster S., Greene S. and Pytkowska J., 2003, relates that after the collapse of the Soviet Union large state-owned companies dominated CEE economies. Workers on the dole try to start activities and generate their own revenues in order to survive. Demand for credit soared and since then, microfinance has expanded all over CEE thanks to international both financial and technical support. Nevertheless, most of the time financial institutions only provide micro-credits, that is to say the financial aspect of microfinance. They do not provide social help to microentrepreneurs to support their projects as microfinance advocates for, that is to say a part of the social aspect that microfinance encompasses. This is precisely in this aspect where senior bankers may find new sense to their professional contribution within the bank they work for. Indeed, as highly skilled professionals, senior bankers could coach one or two micro-entrepreneurs that have received financial support from the bank. This could be not only a fruitful social adventure for both senior bankers and micro-entrepreneurs, but also it could decrease the default risk of the project. Thus, by socially contributed to microprojects financial institutions agree on investing in, they intend to reach both financial and social returns in a potential win-win approach that entirely benefits the civil society. * * * Global Initiatives Symposium in Taiwan

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To conclude, rethinking of CSR and social entrepreneurship in our global in-crisis economy probably means for firms to review their way of doing business. Perhaps should large companies get inspired by social entrepreneurs, who could become strong agents of change. Working on the improvement of existing human resources to tackle demographic challenges is not enough. Western financial institutions should better consider innovative solutions that explore both economic and social considerations, especially through microfinance.

Bibliography:

1. European Commission (2004-2007) â&#x20AC;&#x153;The Lisbon Agendaâ&#x20AC;?, in Eurobarometer Special Surveys, Web link: http://ec.europa.eu/public_opinion/archives/eb_special_en.htm#273 2. UNEP Finance Initiative - The Central and Eastern European Task Force (2004) Finance and Sustainability in Central and Eastern Europe, Web link: http://www.unepfi.org/fileadmin/documents/ceetf_finance_sustainability_2004.pdf 3. FORGE Group (2000) Guidelines on Environmental Management and Reporting for the Financial Services Sector, Web link: http://www.abi.org.uk/forge/ForgeText.htm 4. Ashoka, Web link: http://www.ashoka.org 5. Forster S., Greene S., Pytkowska J. (2003) The State of Microfinance in Central and Eastern Europe and the New Independent States, CGAP Regional Reviews, Web link: http://www.mfc.org.pl/doc/Publication/Mapping/Mapping.pdf

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Rethinking of Corporate Social Responsibility and Social Entrepreneurship, Dimithri Jayagoda



  

                                                                                                                                                                                                     



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GIS Taiwan 2009

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                                                                                                                                                                                                                                                                                         

 Global Initiatives Symposium in Taiwan

173


Rethinking of Corporate Social Responsibility and Social Entrepreneurship, Dimithri Jayagoda

                                                                                                                                                                                               

          

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


Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

                         



 

 



   

                                                                  

 Global Initiatives Symposium in Taiwan

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Rethinking of Corporate Social Responsibility and Social Entrepreneurship, Dimithri Jayagoda

                                                                                                                                                                                

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Global Initiatives Symposium in Taiwan

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Reconciling Economic and Social Imperatives in Corporate Social Responsibility (CSR) and Social Entrepreneurship (SE),

Tian Boon Law

Word Count: 1,873/ PIN: 10627

Reconciling Economic and Social Imperatives in Corporate Social Responsibility (CSR) and Social Entrepreneurship (SE) Introduction Tremendous attention has surrounded the concepts and practices of corporate social responsibility (CSR) and social entrepreneurship (SE) due to a normative dimension in economies at various geographical scales that highlights forms of persistent and episodic marginalization of society by various capitalistic business practices. Some has heralded CSR and SE as the messiah to better business practices that will alleviate problems of marginalization while others have reservations towards these nascent and contested ethical/moral business approaches. This essay adopts a critical approach towards CSR and SE, arguing that one main problem – the inherent tension between economic and social imperatives – continues to challenge the efficacy of both approaches in reconciling business and social objectives as a means of ethical/moral corporate practice. Some conceptual and practical solutions are later suggested. Corporate Social Responsibility and Social Entrepreneurship CSR has its antecedence in corporate social intervention or corporate philanthropy. However, what we are familiar with as CSR today has much more to do with the anti-corporate activism that sought and continues to seek to reveal the ‘atrocities’ of corporate practices and behavior, e.g. labor exploitation in ‘sweat shops’, use of child labor, unethical production processes etc. CSR arose as a response to such conflicts between firms and the society (Sadler, 2004). In today’s business environment, firm success is

as much about a corporation’s ability to build a sense of shared values with key stakeholders as it is about the technical quality of products and services. Corporations that achieve this will extract the maximum premium for their branded, lifestyle products, get the best employees on terms that secure their committed labor to the business, and most effectively offset criticism from increasingly globalised networks of NGOs. (Zadek, 2001: 8; emphasis added) Hence, CSR can be seen as a business approach that addresses issues raised through anti-corporate activism, although the exact motivation(s) behind this practice may vary across corporations and temporal dimensions. Yet CSR as a business practice faces several challenges, especially with regard to conflicting responsibilities towards shareholders and the society. For example, enterprise managers who direct income towards performing ‘social responsibilities’ actually infringe upon stockholders’ share of the firm’s residual income. And in such cases, the managers are actually more inclined to fulfill their responsibility towards stockholders who have provided the capital for business operation in the first place. Yet the negative social impacts of their operations may be undeniable, and this creates a dilemma between two groups of people that managers could feel responsible towards. Moreover, social objectives often clash with economic objectives of the firm (e.g. diverting capital to perform CSR rather than to grow the firm), resulting in superficial practices of CSR that tend to be transient and of low levels of commitment, especially during times of financial difficulties for the firm. Evidently, the challenges faced by CSR practitioners stem mainly from the established ownership structure of stockholders vis-à-vis society that receives the (negative) impacts of business operations. Seen in this light, SE can be said to be an innovative business approach that seeks to reconcile the abovementioned dilemma by starting on a clean slate. SE is about ‘social entrepreneurs’ who identify unmet social needs and seek to meet those needs through an entrepreneurial approach, i.e. starting a business with the purpose of ‘making a difference’ in society. While SE seems to be conceptually more viable in that its primary objective is to meet social needs in a sustainable manner, i.e. through a business model that generates income to tautological and monological. SE is tautological in that while “entrepreneurship” is well defined in most working definitions of SE, the “social” is very much left undefined. Being able, then, only to understand SE as a sustainable business approach to meeting social needs without knowing much about what exactly is ‘social’ about SE, the

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

tautological nature of SE becomes apparent. In addition, it has been argued that SE is monological because “[s]ocial entrepreneurs have their own, divergent, subjective visions for the rest of society and rationally mobilize resources in order to enact their agendas” (Cho, 2006: 46-47; emphasis added), without taking much into account the pluralist nature of society and the multiplicity of visions different segments of the society or even different individuals have for themselves. A Key Problem – The Dialectics between the Economic and the Social From the brief account of CSR and SE above, it is clear that both business approaches face many challenges in their execution. Yet, all these challenges are merely symptoms of a more fundamental problem undergirding the execution of CSR and SE – the inherent tension between economic and social imperatives. There are some ways to resolve this tension. While it is not the intention of the paper to create a utopia or idealized capitalist world dominated by CSR and SE, it is hoped that with the realization of some or all of these proposed solutions the apparent incompatibility between profit maximization and social welfare can be reduced or resolved at best. Two of the possible solutions would be dealt with in detail here: one, strategic alliance and the other, sustainable value. Possible Solutions – Strategic Alliance and Sustainable Value The concept of strategic alliance is not a novelty in the financial sector. One notable example of strategic alliances can be found in the aviation industry, in which corporate alliances between airliner companies such as Star Alliance, SkyTeam, and Oneworld are forged. Adopting the concept in the practices of CSR and SE, alliances between business enterprises (BE) and SEs can be forged as well. In reality, alliances between SEs are common but not those between them and the BEs. The main reason behind the common SE alliances is the ease of receiving state funds. Governments or related agencies of countries such as Egypt, India, and the United States are known to support and finance SE alliances instead of individual SEs (Wei-Skillern, Austin, Leonard, and Stevenson, 2007: 191-201). The formation of alliances between BEs and SEs would serve to incubate the latter. Financially, the SEs can be leveraged and, in the course of being so, possess the initiative and the opportunity to expand its scale and scope. The BEs can share with the SEs their business networks, branding as well as marketing strategies during the latter’s incubation period. It resolves the tension between profit-making and social-involvement by allowing both the BEs and the SEs to focus on their respective missions. The CSR of the BEs is to incubate the SEs, much to the BEs’ own image promotion. The BEs can focus on their profit-making business while incubating the SEs, which in turn would harness their attention and resources on addressing and meeting social needs. The sustainable value framework comprises primarily two main values, namely the stakeholder and the shareholder values. Sustainable value occurs only when a company creates value that is positive for its shareholders and its stakeholders. Sustainable value is not about creating stakeholder value at the expense of shareholder value (Laszlo, 2008). It would be a misconception to think that companies destroy shareholder value when they contribute to society and the environment. With regard to sustainable value, both the BEs and the SEs can create this in their respective company missions. For instance, a positive branding effect or elevation of social responsibility and brand reputation bears a favorable effect on the brand equity of the involved firms and hence an overall increase in business revenues. The importance of brand image to a company should not be undermined. It has led to the concept of brand equity which can be defined as the added value a given brand name gives to a product beyond the functional benefits provided (Keller, 2004). A comparative advantage is provided when the brand name stands for quality, and consumers are often willing to pay a higher price for a product with brand equity. Therefore, although it may cost to attain a social value in operations and production, there are “hidden benefits” to be derived from the deal. For one, Wal Mart has placed its focus on environmental issues and hence manages to claim its fair share of patrons or consumers who are in support of environmentalist movements, but it also faces much criticism on how it has been operating on the exploitation of cheap labor in the developing countries. Other examples include DuPont, The Body Shop, and United Colors of Benetton. In particular, The Body Shop deserves special mention. Initially, The Body Shop refuses to venture into China’s consumer market as China requires all products of any cosmetics companies to practice animal testing before they can be released into the market, very much against its doctrine and mission. However, Loreal bought over The Body Shop and practices animal testing itself, capturing both its traditional market share and a new pool of consumers from the other end of the spectrum. In any case, this justifies the concept of profit-making by incorporating CSR into the company mission and hence eases the seemingly irreconcilable tension between economic and social imperatives for both the BEs and the SEs. A new dimension has to be added, however, if this is to be successful in the long run. Harvesting the social capital involves the attainment of proper recognition of CSR in Global the firm by state-approved Initiatives Symposium inagencies. Taiwan

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Reconciling Economic and Social Imperatives in Corporate Social Responsibility (CSR) and Social Entrepreneurship (SE),

Tian Boon Law

Such agencies would award a license to firms practicing CSR to experience a rise in their social visibility and hence popularity, especially amongst consumers who are concerned with environmental and social issues. A higher demand for their products may result and this creates the bacon or incentive for both BEs and SEs to practice CSR in consideration of commercial motivations and market forces, if CSR alone is not enough to offer it. This is one way of how economic goals can reconcile with social imperatives. Conclusion In short, economic and social values in enterprises are not always antagonistic to each other. It is possible to achieve CSR without compromising the profits required to remain in competition and opposition. It offers not just a risk but an opportunity as well to explore and carve out new market shares while staying socially visible and responsible. Solutions in the form of sound business strategies may well do the trick for firms which are genuinely interested in making profits and enhancing their social role at the same time. The sense of incompatibility and hence the enduring tension between the economic and the social imperatives of firms are built upon the assumption that the BEs practicing CSR and the SEs would fail to generate enough profits to sustain themselves on a long term basis, but such conventional wisdom has to be altered and make way for a more progressive approach in our discussion of business ethics and corporate responsibility. The utopia of a market economy consisting of only SEs would be absurd, but having a higher proportion of them around is realistic and can contribute to the construction and subsequent support of social institutions geared towards the welfare of the marginalized, the stigmatized, and the victimized.

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Reference: 

Cho, A.H.B. (2006). Politics, Values and Social Entrepreneurship: A Critical Appraisal. Social Entrepreneurship. New York: Palgrave Macmillan.

Keller, K.L. (2003). Strategic Brand Management: Building, Measuring and Managing Brand Equity. Upper Saddle River, NJ: Prentice Hall.

Laszlo, C. (2008). Sustainable Value: How the World’s Leading Companies are Doing Well by Doing Good? Stanford, California: Stanford University Press.

Sadler, D. (2004). Anti-corporate Campaigning and Corporate Social Responsibility: Towards Alternative Spaces of Citizenships? Antipode, 36 (5): 851-870.

Wei-Skillern, J., Austin, J.E., Leonard, H., Stevenson, H. (2007). Entrepreneurship in the Social Sector. Los Angeles, California: Sage Publications.

Zadek, S. (2006). The Civil Corporation: The New Economy of Corporate Citizenship. London: Earthscan.

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Tapping India’s Youth Potential: The Grassroutes Movement, Anurag Dutta

Tapping India’s Youth Potential: The Grassroutes Movement I spent the first eighteen years of my life in Tura, a little hilly town nestled in the rainforests of Northeast India. Northeast India is marginalized culturally and geopolitically and I was led to believe that belonging to Northeast India is a disadvantage that would always relegate me a few steps behind mainstream India. As an adolescent, I became very conscious of my non-tribal identity and the fact that I could not take safety for granted in a place rife with ethnic violence, targeted mostly against non-tribals. Growing up here, in the only home I knew, I was always only a partial insider. The boundaries between insurgent organizations, tribal students’ organizations, political organizations were often blurred, as is the case in most parts of Northeast India. Given this state of affairs, I developed an acute resentment against and the need to detach myself from any of these constituencies. I felt a sense of shame for my generation that lacked any purpose or connection, as if we were the middle children of history, suspended in void with no hope for democracy and development. The year 2006 changed it all. With a tinge of guilt around having just followed a herd of Indian students, who fed off the hype created around the hallowed field of engineering, I stepped into BITS Pilani. Things were never quite the same again. I discovered sites of potential and possibility where I thought none existed. The learning curve in the course of my two and a half years at BITS Pilani has been a steep one. In many ways BITS Pilani, the institution, infrastructure and people were a far cry from my Northeast home. The disparate conditions along with interactions with young minds from all over the country provided me with significant insights into structural inequities; the quintessential American dream that we were socialized to pursue was ruptured. Individual ability is not enough to sustain someone across the deep-seated, invisible history of social and economic disparities. As youth who are currently undergraduates in different fields, we were a handful of the privileged among the billion something population of India. It was a humbling experience to realize the infinite ‘unsuccessful’ stories that remain behind the facade of the few ‘success’ stories. We thus owe it to society to utilize our privilege for some sort of social transformation, to make a difference. Over the course of my time at BITS Pilani, I met people whose views resonated with mine, reverberating with the compelling need to ‘do something’. Over countless cups of chai, our conversations often extended into the wee hours of the morning drifting across a spectrum of issues ranging from technology and business to politics and environment. In one of these sessions, just after we had watched a film based on the life of Che Guevara, in an inspired moment, we hit upon the idea of journeying through across the country as means of rousing privileged youth like me from our complacent, individualist consumerism. And so began our own little movement; we called our group the Youth Factor (YoFa) and christened our road trip movement Grassroutes ( www.grassroutes.in ).

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The objective of this movement was to facilitate a process that intimately engages Indian youth with the problems at the grassroots level through the medium of a road trip; and in the process uncover, relate to, navigate and document first hand, life experiences and issues affecting people. Following the trip, the participants will act as social ambassadors for the specific cause/issues they were involved in and eventually serve as advocates for the same. They will also serve as liaison between GIS Taiwan 2009


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stakeholders across different levels. The idea is to inspire a process of community and knowledge building, a process where we learn together the local history of struggle and develop a shared critical perspective around it. We (youth) realize that as a constituency, we need to reposition ourselves as architects of critical social inquiry and social transformation; we need to contest hierarchies and democratize structures and create new spaces rather than trying to squeeze ourselves into existing spaces; and in these ways contribute to local, national and global debates around issues of concern. As the first edition of Grassroutes takes off this winter, three teams will travel to three different places-Chhattisgarh, Andhra Pradesh and Tamil Nadu. As one of participants involved in initiating this movement, I will be a part of the first journey. I will join the team to Tamil Nadu where we will investigate the life conditions of local tribal communities in the wake of the recently passed Forest Rights Act. A multi crore Neutrino Lab is being constructed inside the Mudumulai Tiger Reserve, an act which could have a deep reaching environmental impact. The actual field trip will be preceded by a brief, intense period of preparation where the Grassroutes team will help the groups acquaint themselves with the specific local political, social, cultural and environmental issues. This phase is aimed at helping fellows acquire some knowledge of the situation and equipping them with methodological tools to delve deep into the community, asses the issues and work towards social problem solving in collaboration with the local community. This, then is our way of tapping into the great potential of Indiaâ&#x20AC;&#x2122;s youth. We are inevitably a hybrid generation with diverse technologies at our disposal to publicize a cause, to create the desired awareness and garner resources for intervention. The movement is about utilizing the vast dashboard of social media tools that the emergence of Web 2.0 has put in our hands for social and environmental issues, issues that really matter instead of just networking. And as our movement snowballs into something bigger, we hope to create socially aware youth who will not lose themselves in the tidal wave of consumerism and instead engage in a self conscious process of envisioning where we are headed, as a people. I am more and more convinced that while upholding this spirit in our individual lives is important, of even more critical significance is to network and collaborate with like-minded youth driven by a need to intervene in social injustice. Part of my agenda is to work to create such a critical mass so as to achieve credibility and legitimacy as stakeholders. I recognize though, that networking and creating social awareness is only the beginning of taking our political and social responsibilities seriously. Today, an average youth with the most impeccable credentials shies away from politics because it is considered to be a dirty word. Three months back, along with a few friends, I started an attempt to change this perception in our immediate environment, the college. The general assumption is that politics, even student politics is not something that an honest individual can get into because of numerous enormous entry barriers set up over time by successive students unions. We wanted our fellow students to view politics from an alternative perspective, to demonstrate to the average college goer that an honest candidate can contest an election, fight clean, still win and then contest redundant practices and initiate democratic changes within the institutional context. The battle was more fraught then we had anticipated. In terms of outcome, our candidate could not make it. However, we certainly did not fail. As the haze of the election battles faded, we found that our attempt had inspired many students to be vocal about corrupt practices and to stop avoiding politics. To an extent the actual

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outcome of the elections was immaterial as we found ourselves lending voice to many student concerns. This experience combined with my growing knowledge of resistance movements on local and small scale reinforce my conviction that as participants of Grassroutes, as youth we can act as catalysts for change and binders for these smaller movements, helping to catapult them strategically towards structural change. As I worked towards actualizing Grassroutes with my other team members, I also got involved with other community-based initiatives for social change. I spent last summer interning at an organization called the Grassroots Development Laboratory, which aims at finding scalable local solutions to national problems. I learned that one of the most effective ways to bring about social and economic change is through socially motivated businesses in the context of the task that was assigned to me, that of creating and running a sports rehabilitation camp for poor, young males labelled as ‘anti-socials’. After encountering numerous obstacles while trying to ensure sustainability of the camp, I finally found the solution in a business model, where families pay a token amount for entry to the camp and the camp director draws his salary from this amount. In eliminating the charity factor from the whole equation, this model led to greater community ownership of the camp. Eventually, the camp began to run successfully without any outside support, completely self governed by the village. In the course of my engagement with YoFa, the Grassroots Development Laboratory, the Center for Entrepreneurial Excellence at the college and the Rotaract Club of BITS Pilani, I have come to believe that social entrepreneurship is the need of the hour. As part of the Grassroutes team, I hope to provide a platform for our fellows and their acquaintances (Indian youth from diverse social-economic-cultural backgrounds) to facilitate social entrepreneurship by providing legal support, business plan advice, financial advice, seed funding opportunities and mentoring. In this way we open up opportunities and possibilities for youth who have relatively less access to multiple resources than we are; we capitalize on the multiple resources at our disposal. So here I am, at the threshold of my quest as a social journalist and change facilitator. Along with 16 other young Indians, I am among the first to join ‘Grassroutes’ in its maiden endeavour; to reconnect to and interrogate social structural and environmental problems that plague our country; and to initiate collective envisioning process geared towards social transformation at local, regional and national levels. This will begin with as a ten-day road trip during which I will travel wind in my face and a lot of conversations with the folks who are at the very roots of these problems. Our objective is to document these problems and the radical work that change makers are doing at these flash points, and try and catalyse the resolution of these problems. The movement really begins after the trip. Armed with our documentaries, we will begin a very aggressive campaign in showing the world what’s going wrong in these places, procuring resources that the change makers may be in dire need of, and spreading the word about how, like us, young Indians can join the movement and create a meaningful impact in our society.

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The task before us is daunting at the same time as it is challenging and exciting. I feel empowered as part of this collective, confident in my essential identity as an Indian youth. It is time to reclaim our social responsibility as youth and to nurture hope, bridging social, economic, religious and communal boundaries. GIS Taiwan 2009


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CORPORATE SOCIAL RESPONSIBILITY: EVOLVING A NEW BEGINNING, Thrivikraman Subramanian

Word count: 1,986/PIN: 10729

CORPORATE SOCIAL RESPONSIBILITY: EVOLVING A NEW BEGINNING ‘The social responsibility of business is to increase its profits’ argued Milton Friedman in 1970.1 Readers would perhaps find it amusing that the businessman Henry Ford observed otherwise - ‘A business that makes nothing but money is a poor kind of business.’ With both mindsets reflecting equally valid arguments, it is not straightforward to propose a solution. Solutions are after all framed for problems. And framing a solution to a problem requires an understanding of how the problem came into existence. The Birth of Corporate Conscience “Did you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked? (And by God, it ought to have both!)”. First Baron Thurlow The former Lord Chancellor of England sums up society and governments’ early attitudes to the ‘Corporation’. It is no wonder then that corporations initiated large-scale welfare programs to demonstrate that wealth played an important role in social development. The prime purpose was to indicate the good virtues of the corporation, rather than as a duty or responsibility. Such an approach would typically be exemplified by a Detroit automobile manufacturer making millions in profits, yet suffering because of poor HR practices, yet getting praise for building libraries and schools in South America. Gradually, with the growth of stakeholder theory, corporations began to see themselves as part of a larger social system. Essentially, this recognized corporate performance in non-financial areas like business ethics, governance, workplace issues and reputation capital.2 With the above approaches still in widespread practice, the obvious question arises as to why McKinsey’s 2007 surveys prove that Corporate Social Responsibility is only a flashing fad. A Misunderstood Ideology “I think that today, more so than ever, corporate responsibility is the best strategic as well as financial path that most businesses can follow. Of course, how you define "responsible" is somewhat of a conundrum.” Jeffrey Hollender

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And duly so. A lack of in-depth understanding of corporate social responsibility has meant that few corporations do it well. For some, it is a box-ticking exercise that interferes as little as possible with growth and profit. For others, it remains a public relations extravaganza with grandiose 3000-page reports and 5 star conferences. The common denominator between these approaches is that they re-write CSR in the manner that makes it easiest for them to dismiss. This fast-food approach has created a large gap between the discourse and practice of CSR, resulting in most corporations doing something, ‘anything’ to benefit society. Like the servant Papageno in Mozart’s ‘The Magic Flute’ who subjects himself to a bizarre series of rituals to gain admission to an elite brotherhood, corporate social responsibility today is a fashion parade to win applause for saying the right things in the right reports – almost as if winning the silence of the skeptics matters more than the affirmation of those who can weave it into every day practice. However, this superficial and reactionary approach has seen calls for change. According to a recent report by the International Institute for Sustainable Development, it is already common for Chilean industry leaders to talk of moving from the traditional philanthropy/stakeholder approach to an instrumental version that provides businesses the tools to capture and sustain competitive advantage.3 Further still, a Chatham House report criticizes corporate social investment in South Africa for its bolt-on nature with no relation to the core business.4 This slowly growing movement for a new CSR has occurred because of the corporation’s inability to delineate between social accountability and directing a for-profit business. The fiduciary duty to operate an organization and maintain corporate readiness seems to collide with the suggestion of a corporation’s role with social responsibility.5 Responsibility – A New Deal “These unhappy times call for the building of plans that rest upon the forgotten, the organized but the indispensable units of economic power…. that build from the bottom up and not from the top down, that puts their faith once more in the forgotten man at the bottom of the economic pyramid.” Franklin D. Roosevelt The Forgotten Man. April 7, 1932. Think poverty. A bright eyed child with out-stretched hands appears in the mind. The word “business” when placed next to the word “poverty” turns this mental image off, failing on oxymoronic grounds. Till a decade back, profit and poverty (in all its forms as stated in the Global Initiatives Symposium Pagein2Taiwan of 7

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Global Millennium Development Goals) were mutually exclusive, the stark misery of the latter incompatible with the affluence of the former. True corporate social responsibility born out of Prahalad seminal work on ‘Base of the Economic Pyramid’ changed that view by developing the idea that profitable business with low-income markets is a social good because it engages with poor consumers.6 From cost, constraint and charity; CSR now became a source of opportunity, innovation and competitive advantage. As 175 corporate members of the World Business Council for Sustainable Development put it, CSR essentially came down to ‘business for development and development for business.’7 Not surprisingly then, an ongoing United Nations Development Program project called ‘Global Sustainable Development Facility – 2B2M: 2 Billion to the Market by the Year 2020’ has several multinational companies as project team members.8 With more than 2.630 billion potential consumers in the BRIC countries alone and the popular 4 billion at the Base of the Pyramid; the opportunity for growth is huge, even in these trying times. Naturally, the question then arises as to the progress achieved by this mindset over the 7 years since inception and its ability to deliver in the future. And the answer remains – Questionable. Proponents of this ‘cool version of CSR’ might argue the previous statement quoting single serve sachets, Unilever’s low costs distribution model and Shell Livewire; but the basic truth remains that majority of the corporations still haven’t completed the transition from ‘thinking globally’ to ‘thinking/doing locally’(Remember Monsanto and the failure of its sterilized seeds?). A plausible explanation for this anomaly was given in a recent IBEC policy report which concluded that, despite Ireland being a nation with 98% SME’s (which typically find corporate social responsibility easier), CSR continues to be a challenge in terms of its language, its complexity, its interpretation and its cost.9 One can only imagine the scale of the problem with larger corporations then. The Heart of the Problem “The fundamental test for any company is performance. That is the imperative.” Lord Browne Constrained by the ramifications of the above statement, managers are not naturally excited by challenges with a human dimension, re-affirming Prahalad’s and Lieberthal’s view that there is great difficulty in finding talented managers with the skills necessary for work at the bottom of the pyramid10. Standard issues remain unfamiliar cultures, varied infrastructure, historically different outlooks to business and adjusting approaches to fit local circumstances. A typical example of such an issue is the fact that it takes 289 days and $1231 to register a business in Peru, while the same in the United States requires 10 days and filling an online application!11

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Seeking a straight-forward solution for their BoP woes, corporations have tended to partner with participants in the formal economy, namely government entities or local corporations, evoking as Joseph Stiglitz suggests ‘……dangers of relying on traditional players and their limited views of what is appropriate and effective’.12 In such cases, corporations find themselves selling the right goods to the wrong people. On the other hand, NGO partnerships still have to overcome traditional corporate fears about the lack of transparency and quantifiable metrics. Pushback from NGO’s like demonstrations (Battle for Seattle anyone?) and claims of corporate imperialism haven’t exactly assuaged corporate anxieties about ROI in NGO partnerships. The bottom line is that corporations now face the problem of achieving profits through social good. The True Definition Dawns: Social Entrepreneurship as a Business Paradigm “What does an entrepreneur do? The first thing is they've given themselves is permission to see a problem. Most people don't want to see problems ... Once you see a problem and you keep looking at it you'll find an answer.” Bill Drayton Firstly, to operate in a low income environment, corporations must recognize that the traditional workforce is so rigidly socialized to run a high-cost operation, that without specific training and socialization, they are unlikely to recognize new opportunities. Unilever’s program that requires all executives to spend at least eight weeks living in the villages of India to get a ‘gut-level’ experience of the reality of Indian markets is an ad-hoc solution at best, failing on the grounds of redundancy and scalability. A better solution by Hart’s BoP protocol proposes the implementation of ‘R&D whitespaces’ that allow linkages to corporate resources and capabilities while at the same time maintaining independence from bureaucratic routines and structures.13 These R&D units will serve as early warning systems to detect both risks and opportunities in embryonic markets, thereby signaling emerging opportunity spaces. This means Entrepreneurial Thinking. Secondly, with Oliver Blanchard, Chief Economist of the IMF, expecting ‘….the global economy to come to a virtual halt’; it is essential that businesses access external competencies to create a competitive advantage in the local environment. This requires identifying local partners with context specific knowledge. Ideally, the focus should be on local entrepreneurs capable of providing an economic view of the social, rather than just cause-related marketing benefits. Their business models often mutated to suit local circumstances offer important clues as to how larger mainstream businesses will need to adapt successfully to enter those markets. And if the need is determined, suitable mergers/acquisitions can be arranged. An example of this is Kuwaiti Global Initiatives Symposium in Taiwan Page 4 of 7

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telecom major MTC penetrating the African market through the acquisition of Celtel, a low cost pan-African network spread across Congo, Gabon, Niger, Chad and Burkina Faso. George Kell succinctly noted the purpose of such an endeavor at the 10th International Business Forum ‘…..where business interests increasingly overlap with development objectives’. This means Entrepreneurial Partnerships. Thirdly, with growing interest in the new consumers from BoP markets, there is a need to create products that meet the needs of a human being living on, for example, 59 sq. ft. of land, with a $2/day income and having to walk 3 kilometers to drink a glass of water. Primarily, this requires adding ‘international development’ to traditional product-design principles. This necessitates a whole new classification for products based on the degree of “social embeddedness” achieved during the conceptualization stage. This means Entrepreneurial Product Design. Fourthly, with people dying every second from malnutrition and species becoming extinct every hour, the focus of the new era will be on societal and environmental issues. Therefore, innovation needs to be viewed on a 4-dimensional basis: planet, people, processes and profits; not merely as a means to incorporate desired user functionality. An excellent example of this approach is Interface, the world’s largest commercial carpet manufacturer which uses systemsbased bio-mimicry principles to address environmental degradation and manufacturing costs. The Entropy carpet is now the company’s top-selling line of carpet in the United States.14 Intel has also recently taken a step in this direction, establishing Platform Definition Centers (PDC’s), explicitly directed at generating innovation to serve Base of Pyramid causes. This means Entrepreneurial Innovation Principles. With these principles showing the way, businesses now possess the ability to make a difference in society, effectively and pragmatically. Conclusion “There are common problems and there will either be common solutions or no solution.” Mahatma Gandhi Corporate Social Responsibility, as we know it, stands at the crossroads today. Already, the movement has begun towards a form that is practical, hands on and most importantly, robust in terms of its business case. With the beginnings of the entrepreneurial approach to solving societal issues, the concept of Corporate Social Responsibility itself may disappear, for it will become an integral part of business strategy in the 21st century; forging a partnership between the corporation, the people and the planet. It is then that corporations will complete the transition from institutions of profit to systems of meaning.

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BIBLIOGRAPHY 1. Friedman, Milton. “The Social Responsibility of Business is to Increase its Profits.” The New York Times Magazine, 13 September 1970, p. 32. 2. White, Allen. “New Wine, New Bottles: The Rise of Non-Financial Reporting.” A Business Brief by Business for Social Responsibility, 2005, www.globalreporting.org/NR/rdonlyres/6E229648-DE3E-4043-8CCA451A81777CF5/0/WhiteNewBottlesRiseNonFinancialReporting.pdf (30 March, 2009). 3. International Institute for Sustainable Development, et al. Perceptions and Definitions of Social Responsibility. May 2004. 4. Fig, David. “Manufacturing amnesia: Corporate Social Responsibility.” Chatham House, May (2005). 5. Stoll, M. “Backlash Hits Business Ethics: Finding Effective Strategies for Communicating the Importance of Corporate Social Responsibility.” Journal of Business Ethics 78 (2008): 17-24. 6. Prahalad, C.K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Philadelphia: Wharton School Publishing, 2004. 7. World Business Council for Sustainable Development. Corporate social responsibility: making good business sense. January 2000. 8. Banerjee, S.B. “Who sustains whose development? Sustainable development and the reinvention of nature”. Organization Studies 24 (2003): 143-180. 9. McCoy, Danny. IBEC Policy on Corporate Social Responsibility (CSR). Letter to the Department of Enterprise, Trade & Employment, Dublin. August 2006. 10. Prahalad, C.K. and Stuart Hart. “The Fortune at the Bottom of the Pyramid”. Strategy and Business 26 (2001): 54-67. 11. World Bank and International Finance Corporation. Doing Business in 2005: Removing Obstacles to Growth. World Bank Publications, 2004. 12. Stiglitz, J.E. Globalization and its Discontents. New York: W.W Norton & Company, 2002. 13. Simanis, Eric and Stuart Hart. The Base of the Pyramid Protocol: Towards Next Generation BoP Strategy. Second Edition, 2008. Global Initiatives Symposium Pagein6Taiwan of 7

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14. InterfaceFLOR. “Interface celebrates Ten Years of Sustainability in Action.” 2004, https://www.interfaceflor.eu/internet/webau.nsf/webpages/541_AU.html (30 March, 2009)

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“Co-operate Social Responsibility”, Aakriti Agarwal

Word Count: 1995/PIN: 10742

“Co-operate Social Responsibility” Social entrepreneurship is an innovative, social value-creating activity that can occur within or across the nonprofit, government, or business sectors. While virtually all enterprises, commercial and social, generate social value, fundamental to this definition is that the drive for social entrepreneurship is primarily to create social value, rather than personal or shareholder wealth. In the process of creating this social value, there are many hurdles faced by company leaders. They are confronted by confusing landscape of conflicting demands, rapidly evolving rules, and changing opportunities for finding the resources they need. This can easily lead to "mission creep"—the random accumulation of new goals and tasks as the organization follows funding (rather than its mission)—or to "mission shear"—direct and consistent pressure that pushes the organization systematically away from its mission and toward other interests. This staying on mission and building an effective organization to carry out the mission requires a clear strategic focus and a well-developed strategy backed by well-aligned operations. In order to achieve this clear focus, it is important for nonprofits to be know what they are claiming to accomplish. Externally, it is useful for funders and other constituents to whom the nonprofit is accountable to understand the organization's intentions, so that they can determine in advance whether they want to offer their support, and then assess after the fact whether the organization is making progress to determine whether they want to continue to offer their support. Internally, it is important so that people working within the nonprofit have a clear idea of concrete goals that the organization is saying it will achieve, because this will help them figure out what actions to take, motivate them to make greater effort, and encourage them to find new approaches. It will also allow them to determine which actions they are now taking (or might take) that are not aligned with achieving these goals. The greater the clarity about key goals, the higher the likelihood that the actions we are taking are going to be highly productive, efficient, and on target—and the higher the likelihood that we will be able to learn, over time, how to do better. At the same time, it is observed that one can’t really prepare for turmoil, we just have to adapt to it. This is a tumultuous time, and nonprofits are always embedded in an environment of rapidly evolving challenges and opportunities. So they always need to be adaptive. First and foremost, this means that they need to maintain "situational awareness"—a grasp of the key elements of their environment. Second, it means that they need to rethink their approaches—severing themselves from things that used to work, inventing things that will work now. Third, they have to implement change—constantly. So today's tumultuous world may be a bit more tumultuous than usual, but what nonprofits need to do is what they always need to do: learn and adapt.

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Subtopic 1: Rethinking of Corporate Social Responsibility (CSR) and Social Entrepreneurship

Adding to the above, it can also be observed that with increased standardization of both products and production processes, what is more important is not ―what‖ you do, but ―how‖ you do it. The technology and skills are now available to anyone with enough initiative and start-up capital to produce standardized products. It is therefore no longer the quality or price of a good that will differentiate a producer in the market. A larger premium is now placed on the softer skills of human interaction and personal relations. Responsible conduct is becoming increasingly important, and what is needed is to synthesize, integrate and innovate – and in an original and ethical way. With the above challenges, it is necessary that social entrepreneurship is considered not just a tool to create social change, but there is also a need for innovation. There is a need for development of new conceptual frameworks and strategies tailored specifically to social value creation. So, what kind of entrepreneur will succeed in this new world? I propose that she who excels in this new global world is not a ladder climber – one who understands and manipulates office politics. Rather, it is a connector – one who understands the power of a network. Business ambition, I believe, should not be understood in terms of a hierarchy of command, but in terms of a web. The network has no hierarchy. It has no fixed structure, or rules or way of doing things. It is in constant flux, making it more versatile and adaptable than a fixed structure. In the network it is not possible to coerce; one needs to induce. Some people are able to create more and stronger connections than others. It is in these pockets of dense and strong connections that influence carries the deepest and furthest. Power gravitates to these areas. Moreover, this network approach requires leaders to focus not only on management challenges and opportunities at an organizational level, but also more broadly on how to mobilize resources both within and outside organizational and sectoral boundaries to create social value. So, if a social player needs to be successful she needs to know how to build a strong network around her. This can only be done through truly connecting with others. These connections cannot be faked, when swapping business cards at ―networking events‖. They need to be real. If the link is not based on an authentic connection, the web will break as soon as it needs to be used to induce action. For truly strong, reciprocal bonds to form there needs to be trust between people; and to be trusted one needs to show integrity. In short: the best players in the game of global change need to be really nice guys, able to connect with a diversity of people and who live authentic, value-based lives. Nice guys really do not finish last. The Guide Dogs for the Blind Association (GDBA) chief executive, Geraldine Peacock used an innovative network approach to achieve tremendous mission impact by mobilizing resources and building capacity beyond GDBA's immediate control. The organization worked with other nonprofits, government agencies, and private sector groups as equals, to build a network of longterm, trust-based relationships to deliver on the mission. We can therefore, see that successful networks depend upon a willingness among all participants to invest significant resources (not just financial), relinquish control, and share recognition with their partners to advance the mission, not their organizations. Creating a culture of learning and seeking co-operative advantage 2 Global Initiatives Symposium in Taiwan

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“Co-operate Social Responsibility”, Aakriti Agarwal

Entrepreneurs should use elements of the new ecology—especially connection, multiplication, and reflection—to learn in new ways: from evaluation, from communities, from grantees, from each other, from academic institutions, from the growing industry of professionals with expertise about philanthropy itself, and from other types of information intermediaries. If social change’s core strategic advantages are enduring ones, the new ecology has opened up a new source of advantage that is as important as it is underutilized. Social change works in an increasingly interconnected environment but still conceptualizes its role according to a long history of independent action. That, in fact, is the new paradox of modern society: the scarcity of connections (of many kinds) in a more powerfully connected age. Changing that will require letting go of some of the most precious assumptions of recent years, especially around the meaning of strategy. The strategy literature, borrowed from business and in some cases from the military, has, at its core, the presumption of success in competition. But the entrepreneur’s goal isn’t victory over others, and strategies imported from competitive industries that focus on identifying and exploiting a niche must be adapted to an environment where differentiation may be more of a liability than an advantage. The search or scan that precedes your giving should focus on looking for connections as well as the ―white space‖ or empty arena to occupy. Sometimes it will be best to work to amplify what others are already beginning to do; sometimes it will be best to do the new thing that no one has yet done. It will depend. The default option should be to find, trust, and support the part of the system that holds the most knowledge or is making the most progress in the arena that you care about. If the knowledge or the movement absolutely doesn’t exist in the work of current nonprofits or funders, then create it. In other words, rather than seek competitive advantage, entrepreneurs should develop their cooperative advantage—the advantage that comes uniquely from working in concert with others, developing the capacities to harness resources beyond any single institution, and applying them to complex problems. In the new ecology, it may make as much sense to identify a useful network and join or incubate it, as to seek a distinctive niche and occupy it. Once the challenge or opportunity sits in the middle of your strategic sights, you can begin to see how various actors fit into more sustainable, integrated solutions, rather than focus solely on improving a single organization’s response. To start to find and benefit from seeing and making new connections, review your strategy and consider these questions: Who’s already doing it? In light of the multiplication and diversification in the field, your starting assumption should be that someone is already doing, or has done, whatever you want to do, somewhere, at some time. That means you do not have to make the same discoveries and mistakes that have already been made; you can make new ones. Are there grant making associations, affinity groups, or other infrastructure organizations that you can plug into? It may be that those doing what you want to do are not in your town or region, or that they are using a similar model but not in your subject area. Then the alignment could be around knowledge and learning. But if you are interested in a goal that is already being addressed at the level at which you want to address it, and then consider how to combine or coordinate, not fragment or compete. That cooperation could take a number of forms—and increasingly does—as our seeds of change discussion illustrated. 3

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Who are your allies and who could be your allies? Look for allies in many places, from the most obvious to those that arenâ&#x20AC;&#x2122;t obvious at all. Allies arenâ&#x20AC;&#x2122;t necessarily restricted to funders like yourself. Individual donors, institutional funders, and corporations all can be important potential partners. And with continued reductions in government funding for social issues, state and local governments are likely to be open to partnering with private sources. Where are the intersections? One of the gifts of entrepreneurship can be breaking through the confines that trap most of us in class, discipline, or sector. As you do so, you will find the growing intersections that exist within diversity. Few problems can be solved in isolation, and increasing numbers of issues can only be addressed by reaching across existing boundariesâ&#x20AC;&#x201D;of organization, sector, culture, place, class, race, discipline, and identity. The result would be a truly virtuous circle, in which the more individuals and institutions make good choices and contribute to the health of the whole, the more the health of the whole can support and sustain good choices among the individuals. Conclusion Significant changes are occurring in the field of social enterprise, including major developments in the flow of funding, growing but often untapped philanthropic resources, and a shift in the role of government, as well as new social investment models and impact measurement tools. All of these phenomena are occurring against a larger backdrop of demographic and market change as boundaries blur among the traditional nonprofit, for-profit, and public-sector silos. Currently, the sector remains on the brink of several possible futures, including consolidation, entrepreneurial growth, and expressive experimentation. The scenario that unfolds over the next 20 years will depend largely on the ability of social enterprise leaders to make a leap forward in thought and action to capitalize on the abundant potential for social change.

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Subtopic 2: Bliss or Misery? â&#x20AC;&#x201D; Contemplating the Engagement of Cultural Forms and Economic Progress

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Subtopic 2: Bliss or Misery? â&#x20AC;&#x201D; Contemplating the Engagement of Cultural Forms and Economic Progress The engagement of culture and economic progress has been a rising concern. Increasing interaction and intensifying tension between culture and economic progress, particularly sharpened by globalization, have drawn the attention of many political entities and economic organizations. In the past, economists used to exclude culture from decision making; now many of them address it as an indispensible part of economic policy. In the World Bank and UNESCO, many projects have been developed regarding the beneficial effects of both culture sustainability and economic development. With the global economy in transition, it is crucial to contemplate the engagement of culture and economic progress, as well as its potential risk and opportunity. When considering the relation between culture and economic progress, complex situations and variable opportunities, worthy of further examination and inquiry, exist. For instance, the Cultural and Creative Industry (CCI) is considered a brand-new form for combining culture and economy. By either innovation or refinement, CCI integrates the culture elements into profitable business. Yet, criticisms arise when concerns are voiced by some cultural workers, that the combination of culture with business may smother the creativity and debase the original cultural values. In the case of regional development, for another example, when the utmost priority is economic development, the culture value of a society might be at the same time compromised and thus go through great changes. Changing values, such as the possible negligence on environmental-friendly policy and business ethic, may in turn have negative influences on continuous development. Even on the individual level, rich cultural-economic context may be observed. The development of Internet and new technology fosters an Internet culture which highlights sharing by mouse clicks. Behaviors and ethics online are now getting peopleâ&#x20AC;&#x2122;s attention, as well as to its considerable impact on the economic pattern. Choose a specific case which sheds light on further study to the engagement of culture and economic progress and then analyze it thoroughly and creatively. Whatâ&#x20AC;&#x2122;s the relation between culture and economic progress in the case? Are there any potential risks or possible opportunities? How can one minimize the risks or make the most of the opportunities?

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Best Paper of Subtopic Call for a global reconsideration., Luca Bagiella

Word Count 2’887/ E10001 PIN-10532.

Call for a global reconsideration.vvvvvvvvvvvvvvvvvvvvvvvvvvvv Mister President, First of all, I would like to congratulate you on your election. I will introduce myself briefly : I am a Swiss citizen, a citizen of the world, of 25 years old in my last year studying at the University of Visual Arts of Geneva. I focus my work on reflections destined to think the political and sociological context and its causal impact, in the development of “being in progress”. In parallel to this work I have already started the writing of my first book entitled: “Critic Narcissism, essay of reconsideration” dealing in particular with a critic realization in relation with the pre-established and standardized life a pattern that is implicated by its nature, a unique system of value and nomination. This study begins with a self-critic rapidly leading me to a reconsideration of what makes me what I am in a context, in a society. Structured society leads individuals to choose “a box”, a predefined role in a closed objectal hierarchy. This “chosen” role will become for the normal narcissistic subject their new identity. Knowing not distance between “role identity” and “singular individuality” anymore, the subject influenced and judged by “the context-other” will become the simple definition of their limited image. Becoming completely and profoundly dependent on their “identityother”. The aim of this book is awareness and a detachment from this societal duality by the individual. As well as an opening through a reconsideration of all concepts, theories and closed rationalities. By giving back to all these judgments; values of external objects therefore relative and subjective values. The reconsideration of the bases of the educative system will be a priority of my book. For the kid must, according to me, develop in priority their critical vision and their conscience more than the leveling of their “intelligence” to normative criteria’s. The human must re-appropriate their reality of being particular and recognize their own capacities to make their life, by the individual apprenticeship of their mistakes, the reason of their presence on earth. Before getting to the point I insist that this letter is by choice, by refusal of a leveling to conventions and by conviction to the personal signature: Not-corrected. It is the French version of this letter that is authentic. Their translation is the unique cause of a desire of comprehension. So it is important to consider my non-membership to any group or other organizations of any sort. This is really a discourse from human to human, an independent claim appealing to your human sense, your consciousness and your intuition. Convinced by the importance and the influence of your country, I send you today this letter to share with you my strong perplexity at the hands of the confidence and the absolute power that humans give, despite themselves, to the established social system, in seeing in it their only possibility of life. This letter does not concern the reconsideration of your choices or your political position, but the system that lead you to make this choice.

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

This system of worldwide basis is too simplistic and does not correspond to the complexity of the new being. Whom by the progress of knowledge, their experience of the object and their historical heritage is more or less conscious to get involved against, despite themselves, in the euphoria of image, in a system role, in a lie. Therefore the fact that this system is established by so much rationality stops the natural evolution of the human. Indeed, the omnipresence of such a system does not enable them to be autonomous and to evolve to a “High Consciousness”. What I mean with this term is a waking of individual consciousness enabling the being to live in harmony with what they are, recognizing their value of independence, their singular complex value, their life in progress… The term "system", as I use it, is the evolution of a way of thinking led to extreme consideration of all things living and dead according to an evaluation of higher values in order to streamline into one unit all the complexities of reality. This system brings the individual to think in terms of conventions and norms. My disagreement lies in the fact that this system rationalizes, manages, standardizes, and conditions the development of ideas using deterrence in diverted human values. This diversion is translated by the use of human emotions and is destined to lead the human to self-identification. This phenomenon is omnipresent in the mass-medias. This situation is very serious because the human being is progressing towards their own objectification, leading them, as a model for the other to have to simulate their "pseudo-life". The human being is in perpetual construction, research. I do not think we could define the human with a general term. They are in themselves multiple, complex, it is a unity, values, capacities, possibilities; it is a living in perpetual contradiction… I stop here and ask: Can a “rational system” take all that in consideration? Can we accept, if this system is to reduce the human being to a unique rationality? Rationality is used mainly to define its components in order to hold mass in a defined context. This rationality based on evidences of image blocks to the human the possibility to become conscious of other realities. But, what does the system respond to the different human, to the human refusing to play, to the nonaligned human conscious of their values? Which way does it offer to him? For me, the greatest value of the human lies in their non-conventional, financially unmotivated and independent acts. Mister President, it is not difficult to see that today the values upon which we build our lives are values of substitution. This values being artificial, they perpetually need that we renew them, just like these artificial lakes that without renewal of the water: rot. Humans and above all the young generation have a minimum of consciousness and not yet ease of their vanities and of their object richness, realize the absurd situation on which they have to base their own myths. They resign themselves very often to see their realities as the only possibility to their lives. The present situation is destined to die for the human not finding new things to recycle the cycle of euphoria anymore and seeing that all their value finds itself in objects will lead them to lose any sense of life and to participate, by abdication, to their own death. This self destruction or resignation is very prevalent among the young generation who does not find values in work or in life anymore.

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Call for a global reconsideration., Luca Bagiella

This leads them to live in a universal dream folding on themselves in a “pseudoindividuality”. The euphoria related to the student’s status quo still guards and makes them imagine their place in a society already over-saturated and without meaning. Today, I put forward you, Mister President: the creation within the U.S government of a “mirror unit” composed of a “reflection committee” aimed for giving progressively back to the human: the possibility of their choices. My proposal of committee or unit will not represent the image of a new political measure destined to promote a certain party but to give to the human being the possibility to think about new overtures. They will be overtures of consciousness facing the system of manipulation rationalized especially by bad interpretations of psychoanalysis: the relationship human/object, human/human. This system is leading the human to replace “Being” to “having”, also replacing “necessity” with “desire”. This transforms them in “automat of happiness” docile and blind in an apathy of consent. The first reflections of this committee will aim for the understanding of the complexity of the functioning of their context: the government. Thus I have to answer, since now, to the naivety that would make you imagine such a proposal of novelty in view of the vanity of the human who having integrated the capitalist system, is hungry for power, money and popularity. And who would see in these proposals a concurrent idea, of pride or adversary, that my letter has not the objective to bring. Also, the committee will not admit, indeed, any situation of rank or tension of values. The people who will take part to this group will be remunerated a minimum and their involvement will be completely punctual and of conviction. This absence of pyramidal remuneration and of capitalist tension will make this committee: a platform of experimentation. The outgoing proposals will be authentic and above all non-alienated to norms of systems. These proposals will be presented as a study not bringing solutions, but reconsiderations aiming for “de-systemizations”. This committee will aim for “a voluntary simplicity” in which the human will think freely about these proposals. I am convinced that these outgoing proposals will have a great impact, by their truths on the humans of this world. It will be the experiment of a new sort of relation brought by the non-alienation of hierarchical societal roles that influence currently very much in the simplest relations. The roles are indeed too scored. I am sure that the popularity of such an idea of “free act” will lead, among humble and conscious people of the “post-Spectacular Society of Simulation”, a real challenge. But what does this empire of simulation answer, to the reality of the oldness and the death of theses objects? Indeed, Mister President, I let you think about this question mostly disturbing. Yes, what does retirement mean? Why have we decided that the human had to stop working? What is the place and the value of the person who does not work in the present society? How will your children react when, their euphoria’s past, they will see that all they have amounts to nothing? Because, in fact what is an object except a value reproducible to the infinite? It is certitude that the question of death is more taboo than any other. It is a big problem in a society based on a “dead value”: the economy.

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

I do not want to be pessimistic and this letter is a call to a common reflection, because it is not difficult to see that the present society is inert and goes around in circles, not knowing how to free itself from the inherited myths. And maybe also from its historical guilt. Conscious that I am not the first one to raise the problems of the system, I remind you, that since the beginning of the consumerist era: artists, intellectuals, personalities as well as movements and groups have denounced several of these failures. They have succeeded in bringing revolutions, but often their ideas have been engulfed by the cogwheel of the system. Have they satisfied themselves too fast with negligible temporary solutions? Have they not found the right words or the right people to transmit their messages? Have they not been heard or considered? Has there been an objectification of their ideas? Have they been imprisoned and sentenced to silence? Or have they been killed before being able to build up their big projects?! At the School of Visual-Arts (SVA) of New York until January 2009 as international exchange student. I have chosen this destination for I think being here in one of the headquarters of the international thought. Your country is one of the most influential countries above all, since the issue of the Second World War. Your “one-dimensional” thought has brought rationality to Europe in crisis of ideas. You were the model of success, of modernity, a dreamy place in a new capitalist system. You have made the object, of the idol and of capitalism your culture and a national identity. Your war against communism and, at the present time, the different actions of the politics of your predecessor shows to what extent your nation has imposed their ideas. These actions prove thus the great power of conviction and of intimidation of your imperialist strategy. These actions show the example and the image that you want to show to the other countries. That sums up why I think it is to your country to lead to evolution. It is to your country to tell the world that you are ready to rethink society. The world is waiting for your awareness! I hope that you have understood that my words are not so much against but rather a call for progress from a young generation of the 80’s. This evolution that I am talking about will represent a change that would not have been possible before, because we needed this previous experience of the object to pass to the next level of consciousness. The 20th century has been very rich in evolution in all the categories and capitalism was born out of a necessary evolution. Now the 21 st century calls officially with this letter and its proposal for a measure of exchanges, of communication and of truth. Measures that will be undertaken by the human for the human. The new being will understand their singularity and will integrate their duty when the cards turned towards them, will signify them that they are the substance of their life and that everything depends upon them. Life will then become a search for identity; it will take a personal sense for every one of us, according to their own ideals and without any categorization. Let us put the Question of “the Being” and of “Freedom” back in the center of the dialogue and into the center of “the Existence”. Hoping that your human consciousness is stronger than your love of objects and your vanity. And that you will be the President of this real progress. I hope that you will recognize here more than a simple letter, but a deep conviction.

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Call for a global reconsideration., Luca Bagiella

At the dawn of this new millennium I let you imagine, Mister President, a future that I hope near, where the “complete-human” will see their past stunned to see that we could have reduced, so long the human to a system of common denomination. He will also try to understand how entire generations have found a meaning to their lives with being the pawn, the puppets of a game in which they only had to go forward on the predefined squares happy to get their participations and their respect of the game’s rules small sheets of paper. These are papers that have the faces of men who define their own conditioning. The aim of the game being to have the biggest number of small papers to buy the work of another pawn concentrated to imagine which ephemeral object they will be able to buy. They will be surprised to see how these small pawns are excited by their participations in the game looked with intention the small animated box called “Television” that explained them the meaning of democracy!... At this point of the letter, I would like to get back to your election for it is a real and lived situation that represents, to the point, a big spectacular, artificial, and an absurd masquerade has been able to impregnate itself as leading institution on reality. Indeed, honestly: What do you think about this people who answering to your election accepts and caution their own manipulation as well as yours? You are conscious of that and like me you are surprised to see that such games could reach such a real result. Mister President, with the respect that I have for you and the American culture, let me tell you that you are as much manipulated as the people that vote for you ! Can you accept that, can you as a free human being accept such an objectification and utilization of your humanity?! Don’t you think that your choice of a camp (republicans/democrats) is the proof of a simplistic system in which we have classified ideas of human beings as opposed when we know pertinently that the human is by nature contradictory and in perpetual evolution? I am as conscious as you and I understand that you do not represent the absolute power so I ask you to share the words of this letter with your vice-president and with every representative of the executive departments. I assume my letter and announce you from now, that I am ready to present this project to the government. I strongly support communication and “the round table”. One man alone can do nothing and it is with all humans he will work, by declaring its "no knowledge" about the current reality that the change will take form. This letter does not have the illusory objective for the moment to change the world but to give it the possibilities to think the change, the evolution! In these words and wishing to have brought you a concrete reflection, I thank you for the time and for your consideration that you have accepted to give to the letter of a young citizen of the world. I would have so much left to tell you but I stop here and hope that you recognize in these writings an importance of first rank as well as a declaration of honesty and a humble act. Waiting for a response from you, I remain at your disposal and declare sincerely, Mister New President of the United States, my Human greetings. Change, we can believe in. Yes we can !

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Subtopic 2: Bliss or Misery? â&#x20AC;&#x201D; Contemplating the Engagement of Cultural Forms and Economic Progress

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Human Development for Contemporary China, Sixuan Qian

PIN-10166

Bliss or Misery? -----Contemplating the Engagement of Cultural Forms and Economic Progress Human Development for Contemporary China rd

Introduction On March, 3 , Standard & Pool reported a news considering China was one of the most promising economics entities under financial tsunami, while one week after, on March, 11 , New York Times put China in front of the spotlight again with a piece of news concerning a prevalent dissatisfaction among Chinese online population towards China’s cyberspace censorship. st

China has been a strong rising power, even when facing a global financial downturn. But is it truly promising and sustainable? In the paper, I intend to explain through both cultural and historical perspectives that an economic development within a society is problematic if it is lack consideration of its cultural context. Grass-Mud Horse: A Cultural Phenomenon in Contemporary China

Tucker (1997) considers the focus of culture as differences, ethnicity, community, identity and conflicts around these. Hecht talks about enactment layer in his communication theory of identity. In his point of view, culture identities are enacted in social behaviors and symbols. He says, “Communication is the locus of identity in the enactment of layer (Hecht et al., 2005, p263).” In other words, how people within a certain culture express and behave in the process of communication is a phenomenon belongs to that culture. Chinese cyberspace has become one unique and important community shaped by contextualized situation in contemporary China, with the great firewall as the most powerful on-line censorship in the world. China’s online population had always endured censorship. Some though, would break the firewall through proxy sever. The conflict had been rather invisible. Grass-mud horse, since its first appearance on cyberspace in January this year has somehow, made the conflict quite visible. The cartoon, grass-mud horse was made to tease the government’s on-line censorship, using similar sounds to create a contextualized dirty pun in Chinese. An online story was then created on how the grass-mud horse beating down the river crab, which was a pun of the government’s main slogan: harmonious society (Wines, 2009). According to Wines (2009), the grass-mud horse phenomenon was against the campaign the government censors began which had shut down more than 1,900 Web sites and 250 blogs — not only pornographic sites as it claim, but also online discussion forums, instant-message groups and even cell phone text messages. Among the most prominent Web sites that were closed down was bullog.com, a widely read forum whose liberal-minded bloggers.

Xiao Qiang, when interviewed by the New York Times, says, “The fact that the vast online population has joined the chorus, from serious scholars to usually politically apathetic urban white-collar workers, shows how strongly this expression resonates.”(Wines, 2009). Guo (2009) called the grass-mud horse allusions “weapons of the weak” and “hidden transcript”, two concepts constructed by the Yale political scientist James Scott. He explains that the hidden transcript is opposite to the open one, which is forbidden by the powerful, and thus can serve as the weapon of the powerless weak.

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Human development with both economic and cultural lens Material well-being is indeed significant for any society. However, one society’s development is not simply about economic growth. Tucker maintains that “without consideration of culture, which essentially has to do with people's control over their destinies, their ability to name the world in a way which reflects their particular experience, development is simply a global process of social engineering” (Tucker, 1997: p 4). He indicates that the true meaning of development should be the one of human’s where people’s beliefs, ideas, meanings and feelings are taken into consideration and respected. He further points out that a society is not only constituted by material things and by the actions it performs but above all by its idea of itself. He suggests that cultural perspectives are crucial through which we must consider how people view the world and their place in it and what is meaningful to them (Tucker, 1997).

Grass-mud horse phenomenon in current China has reminded me of the June Fourth Incident, which is not a cultural phenomenon but is initiated by cultural context then. When opening-up brought economic prosperities to China, it also created increasing gap between rich and poor, which Chinese intellectuals then claimed as visible inequality between the powerful and the powerless. They argued that a further economic and democratic reform was needed. A protest in Tiananmen Square thus started leading by university students in Beijing. At first, what the students want was only a dialogue with the country’s leaders. They wished their suggestions could be directly listened by top officials of the country. At that time, the government failed to action since there were completely different views towards the protest within it. The protesting students became aggressive after total ignorance, while the government’s attitude had turn from ignorance to repression. Tragedy thus happened (Miles, 1997). I mention the incident because I consider my analysis can be more logical through a historical perspective. We can and must learn from the tragedy of history. Firstly, an economic development without relative consideration for the cultural context can lead to economic downturn. According to Kelley & Shenkar (1993), there was a serious effect on the Chinese economy after the June Fourth Incident. Foreign loans to China were suspended by World Bank and governments; tourism revenue decreased from US$2.2 billion to US $1.8 billion; foreign direct investment commitments were cancelled and there was a rise in defense spending from 8.6% in 1986, to 15.5% in 1990, reversing a previous 10 year decline.

As for the grass-mud horse phenomenon, which also attracts a lot of attention of the foreign media, including prominent ones as the New York Times and the Guardian, there would certainly not be any direct foreign divestment causing only by it. However, a rather collective dissatisfied sentiment towards the government with the unemployment rate keep increasing in society under financial tsunami is simply not a good sign for China. No matter how promising its economics may appear to be currently. On the other hand, the phenomenon has brought China’s democratic problem up once more, which I think would make China an even less attractive investment country, especially under a global economic downturn. Secondly, economic reform could bring one society prosperity. However, the prosperity can never be sustainable if the society only pursuit for pure economical

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Human Development for Contemporary China, Sixuan Qian

growth without caring and respecting its people’s thoughts. June Fourth Incident had been a dark and sad memory for lots of intellectuals. Most of them were talent students from top universities in China. Even in contemporary China, a university student cost huge education investment of the country, never mention a top university student in the late 80s. China simply lost them. From public protest to the hidden context of mocking, Chinese people have learnt the art of being ingenious, being clearly aware of the unbearable price for speaking out. A possible brain drain could occur if China keeps going to ignore, or worse, suppress free thoughts and dissatisfied feelings of its people, which could be the most damaging poison for the economic development and in turn, a human development.

Economically, China is developing quite fast and well that the world can never ignore. Even under financial tsunami, it is one of the most promising economic entities. However, our achievements are largely own to the cheap and abundant labor resources. What we best at is manufactory, making others’ ideas into reality, the least important and valuable sector under global economical chain which can be transferred to any other region at any time. The economic development simply would not last, and due to the birth control policy in China, we would not even have such labor resources as we have today. We lack our own ideas. We lack the ability to innovate. Until today, China does have one single Nobel Price owner who holds a Chinese nationality. It is rather sad. What we truly lack are not top talents who have ideas but mechanisms that would stimulate their practical work and achievements, a mechanism that is culturally tolerant, free and loose. Thirdly, it is high time that a whole China should seriously rethink about its contemporary culture as well as a practical human development. Being one member of Chinese society, what I am confusing is that what our Chinese culture is and who are we. When talking about Chinese culture, we would refer to ancient China, five thousands of history, oriental, mysterious, glorious and beautiful. That is something we were, something that lead to where we are today, but it is not us. While a contemporary China would usually be referred to one with great economic achievements: modern cities, dazzling skyscrapers, which are part of us, but definitely not all of us. A culture for current China is somehow missing. From June Fourth to grass-mud horse, the apparent form of public discourse has changed; fierce anger and disappointment has been replaced by seemingly casual mocking. Nevertheless, the underlying thinking pattern has not, which are against of the current without practical thinking, with everyone knowing the problem and no one offering a sound solution. We lack a civilization that encourages knowledge application, the will to innovate as well as the public sphere for people to express and communicate. Conclusion There is an old Chinese saying that it takes more than one cold day for the river to freeze three feet deep. China’s development has long been insufficient when thinking through a cultural lens. Nevertheless, by the end of my paper, I would rather take another thought. As Xu (2008) points out, a crisis in Chinese is written as “危机” , in which “危” represents the crisis while “机” represents opportunity. In other words, by realizing the crisis, we can meet the opportunity.

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Reference

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Wines, M. (2009, March, 11). A Dirty Pun Tweaks China’s Online Censors, New York Times, Retrieved March,20th, 2009, from http://www.nytimes.com/2009/03/12/world/asia/12beast.html?_r=1&em

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Bhutan: Happiness of the people vs. Wealth of nations, Napeepat Vorawatpanich

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                                  

Global Initiatives Symposium in Taiwan

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Bhutan: Happiness of the people vs. Wealth of nations, Napeepat Vorawatpanich

                                 

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GIS Taiwan 2009

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                                 

Global Initiatives Symposium in Taiwan

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Bhutan: Happiness of the people vs. Wealth of nations, Napeepat Vorawatpanich

                                   

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                     

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Bliss and misery: the co-development of culture and economic progress, Thijs Velema

Word count: 1989/ PIN: 10264

Bliss and misery: the co-development of culture and economic progress The organising committee of the Global Initiatives Symposium in Taiwan perceives a profound tension between economic development on the one hand and a society‟s culture on the other. In their introduction to the sub-topic “Bliss or misery?” the GIS Taiwan host team (2009) states“[t]he engagement of culture and economic progress has been a rising concern. Increasing interaction and intensifying tension between culture and economic progress, particularly sharpened by globalization, have drawn the attention of many political entities and economic organizations” [italics added by the author]. The present essay contests this view. Therefore, it examines the extent to which economic progress and culture co-develop. Also, it will put the influence of globalization on this process into perspective, by analyzing examples from two periods of the economic history of the Netherlands. Culture and economic development In order to analyze the co-development of economic progress and culture, these two phenomena need to be defined. Economic development is a process in which a certain region or population builds or reshapes its economic structure and accumulates wealth. Economic development takes place in a context of competition, selection, variation and uncertainty (Boschma et al., 2002). Culture can be defined as a shared set of meanings and values that are lived through the material and symbolic practices of everyday life by a group of people. It allows people to interpret and react to the environment by providing a structure of meanings. Groups go through a constant process of re-shaping meanings and practices, magnified by external pressures. Hence, culture is a dynamic, ever-changing phenomenon (Knox and Marston, 2003). As illustrated in figure 1 on the next page, economic progress and culture co-develop. Not only does economic development affects culture, culture also poses an influence to economic development. The influence might be beneficial, with one factor strengthening the other. However, the effect can also be detrimental, posing threats to the further development of the two factors. Economic progress entails competition between various groups, and leads to a certain dynamic in the environment of a group. Hence, this poses an external pressure on culture, in which people use and adjust their culture in order to interpret the changing environment and react to it. These alterations might be for the better, in which a culture becomes more resilient, strengthening itself in the face of other cultures. Due to the accumulation of wealth, a culture might also become more institutionalized, through various practices of art, science and philosophy. However, economic progress might also lead to less adherence to a certain culture, in which a culture might be transformed into a form more reflective of the dominant cultural force. Hence, economic progress might pose opportunities and threats to a certain culture. This external pressure will lead to an adjustment of the culture, into a form more compatible and useful to the new environment.

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Subtopic 2: Bliss or Misery? â&#x20AC;&#x201D; Contemplating the Engagement of Cultural Forms and Economic Progress

Figure 1 The co-development of economic progress and culture Competition External pressure Economic development

Culture

Individual attitudes and values Social networks Institutions

Culture does also influence economic development, albeit in an indirect way. Culture affects three intermediate variables, which in turn influence economic growth. Moreover, culture might facilitate opportunities and threats to economic development. Firstly, as evident from the aforementioned definition of culture, individually held attitudes and values are formed and defined by culture. According to Wennekers and Thurik (1999, 40) especially â&#x20AC;&#x153;the attitudes and values towards work, production, wealth, and saving, toward new information, invention and strangers, and finally toward risk and failure seem particularly relevant for economic growthâ&#x20AC;?. Secondly, culture influences the social networks spanning the region. Social networks which encourage exchanges of all sort of forms and social bonding between partners are instrumental to economic growth. These network ties lower transaction costs, improve knowledge exchange and stimulate innovative activities, spurring economic progress (Boschma et al., 2002). Social networks are formed on the basis of trust embedded relations (Boschma et al., 2002). Cultural values define what exactly is trust, and on what basis actors can trust one another. Thirdly, culture influences the institutions in a region, in direct and indirect ways. Gertler (1997) points out that, notwithstanding language barriers, cooperation over cultural boundaries is predominantly affected by cultural-institutional differences. Also, institutions are based on the reigning cultural values in a given region. The role of these institutions in economic development is threefold (Wennekers and Thurik, 1999). Firstly, institutions determine the right to reward economic activity. Secondly, they bound the possibilities for trade and specialization; they affect the extent of the market. Thirdly, institutions determine the extent of economic freedom, and the extent to which individuals are allowed to seize economic opportunities. Culture then poses a refined influence on economic development, through the effect on institutions. This framework should not be interpreted as an argument for cultural determinism. Culture is merely one of the factors affecting economic development. Various elements, among others the presence of capital, demand conditions and the industrial base of a region also influence economic progress. For the sake of the argument, and due to the word limit, the present paper only focuses on the effect of culture on economic development.

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Bliss and misery: the co-development of culture and economic progress, Thijs Velema

Golden Age and late industrialization The co-development of culture and economic development can be illustrated by two different periods in Dutch economic history. In the seventeenth century the Dutch economy experienced a prolonged period of economic growth. Dutch ships sailed to the East Indies, carrying back heavy loads of merchandise, which were sold for huge profits in Europe. Cargo from overseas areas all came to the harbors of Amsterdam, Hoorn or Enkhuizen, which the Dutch distributed to the various corners of Europe. At its heyday “Amsterdam became an international market where one could find goods from all over the world … and the price quotations on the Amsterdam market dictated the process on the other European markets” (Cipolla, 1976, 249). Dutch workers were among the most specialized manual laborers, and the industry in the Low Countries boomed. In various sectors, the Dutch worked on the innovative edge of their activities, introducing many innovations. “The scope of the industrial diversification during the Dutch Golden Age was far reaching. This period in history witnessed advances in a wide variety of sectors including agriculture, fishery, construction, manufacturing, shipping and trade as well as a remarkable development of modern services such as finance, insurance, broking and factoring” (Wennekers, 2006, p.6). In short, the Dutch Golden Age commenced, with Holland being the envy of Europe. What brought about the economic surge of the Netherlands in the seventeenth century? Firstly, the period leading to the Dutch Golden Age can be characterized by fierce political struggle. The protestant Dutch republic fought for its independence against the catholic Spanish empire. At that time, Spain was the most powerful force in Europe, which could not tolerate to have divergent religious views in its territory. Therefore, it set out to annihilate the Protestants in the Low Countries. In its bid to maintain its religious and economic freedom, and its trade positions in Europe and the Far East, the Dutch Republic mobilized all its resources to fight of the threat of Spain (Landes, 2002). This external pressure gave rise to a certain Dutch culture, beneficial for both the economic and political enterprises of the Dutch Republic. Various authors point to the importance of the working ethos and culture of the Dutch in enabling the Golden Age (cf. Cipolla, 1976; Landes, 2002; Wennekers, 2006). This ethos stressed rationality, productivity, frugality and working diligently. It gave rise to “a dynamic society with an entrepreneurial orientation, of opportunities exploited for the production and marketing of new products and processes, domestically and globally (Wennekers, 2006, 5). Landes (2002) argues that it was the Dutch working ethos of working hard for small profits which led to an enormous accumulation of wealth. This capital was not spent to satisfy one‟s private pleasures to live a life of luxury and opulence, but it was re-invested in other economic activities. Hence, the prevalent, dominant culture in the Low Countries, which came into being under the Spanish threat, is an important factor in explaining the Dutch Golden Age. Also, as Cipolla (1976) notes, the economic rise during the Dutch Golden Age also led to a flowering of the arts, culture and science, which further institutionalized the Dutch culture. Art, science, philosophy and cartography were all pushed to new heights in the Dutch Golden Age by the likes of Vermeer, Rembrandt, Huygens, Grotius, Descartes and Mercator. “The Northern Low Countries in the seventeenth century were great in shipping as well as in painting, in commercial as well as philosophical speculation, and in scientific observation” (Cipolla, 1976, 250). Hence, the Dutch Golden Age led to a rise of artistic, cultural and scientific activities; economic and cultural activities strengthened and reinforced each other.

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However, the working culture during the Dutch Golden Age also had a limiting effect on economic development in later periods (Atzema and Wever, 1999; De Vries and Van der Wouden, 1995). The 19th century was an epoch characterized by the second wave of the industrial revolution (Boschma, et al., 2002). Various European countries, most notably England, Belgium and Germany, had an advanced industrial structure focused on the production of steel. These countries constructed a railway network, reaching to the corners of their territory. Meanwhile, the Netherlands went through a phase of economic stagnation. Up until the 1860s there was virtually no industry in the Low Countries, and only a small network of railway lines was constructed. In short, the Dutch economy was emulated by all neighboring countries. The mindset and culture prevalent in the Netherlands in the 19 th century can partially explain this period of economic stagnation (Atzema and Wever, 1999). The Dutch economic mind at that time was, just as in the 17th century Golden Age, oriented towards international trade and the production of tropical agricultural products in the Dutch East-Indies. Bankers invested in trade, not even considering the opportunities provided by industrial activities (De Vries and Van der Wouden, 1995). Therefore, it was unimaginable for many people that other activities would be profitable in the Netherlands. Due to the preference for international trade, so succesful in previous centuries, it was impossible to envisage an orientation towards industrial activities. Furthermore, the Dutch society lacked a culture of entrepreneurship and innovation. In 1841 this lack of entrepreneurial culture was pointed out by Potgieter, a Dutch writer (Atzema and Wever, 1999). He published a short essay about Jan and Jannetje Salie, which were rich merchants with an entrepreneurial spirit. Their youngest kid, Jan Salie, was spoiled by this wealth. Therefore, he was lazy and unable to earn a living; he depended on his father‟s savings. The parents, Jan and Jannetje Salie, represented the Dutch Golden Age. They were wealthy merchants with an industrious character. Young Jan Salie embodied the culture and spirit prevalent in the Netherlands in the 19th century; spoiled by inherited wealth, and not willing to work diligently. Conclusion The present essay argues that the interaction between culture and economic growth is a process which can best be described by co-development. As the examples made clear, economic progress provides both risks and opportunities for culture, and vice versa. Hence, the relation between culture and economic development has always been and will always be one of tension and opportunity. Since „culture‟ and „economic development‟ are both dynamic, interacting phenomena, encompassing a broad range of aspects, their adjustment to external pressures is a natural characteristic. Therefore, there can be no intensified tension between culture and economic progress. Likewise, the examples show that this has been at least the case since the 17 th century. It could be argued that the period of the Dutch Golden Age was as much a globalized age as the present one. Culture and economic progress nowadays co-develop in much the same way as in the 17th and 19th century described in this essay. Hence, the era of globalization did not fundamentally alter the process of co-development between culture and economic growth.

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List of references Atzema, Oedzge A.L.C. and Egbert Wever. 1999. De Nederlandse industrie. Assen: van Gorcum. Boschma, Ron A., Koen F. Frenken and Jan G. Lambooy. 2002. Evolutionaire economie: een inleiding. Bussum: Uitgeverij Coutinho. Cipolla, Carlo M. 1976. Before the industrial revolution: European society and economiy, 10001700. London: Methuen & co. De Vries, Jan and Ad Van der Woude. 1995. Nederland 1500-1815: De eerste ronde van moderne economische groei. Amsterdam: uitgeverij Balans, second edition. Gertler, Meric S. 1997. The invention of regional culture. In: Geographies of economies, edited by R. Lee and J. Wills, 47-58. London: Arnold. GIS Taiwan host team. 2009. Global Initiatives Symposium in Taiwan. http://gistaiwan.ntu.edu.tw/download/GIS_Taiwan_2009.pdf (accessed January 26, 2009). Knox, Paul L. and Sallie M. Marston. 2003. Human geography: places and region in global context. New Jersey: Pearson education, third edition. Landes, David S. 2002. Arm en rijk: Waarom werd het Westen rijk? Het opzienbarende en overtuigende antwoord van een gezaghebbend historicus. Utrecht: Uitgeverij het Spectrum, second edition. Wennekers, Sander and Roy Thurik. 1999. Linking entrepreneurship and economic growth. Small Business Economics 13, 1: 27-55. Wennekers, Sander. 2006. Entrepreneurship at country level: economic and non-economic determinants. PhD diss. Erasmus Universiteit.

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Bright side of globalization: culture industry and gender equality in Japan, Pei-Hsuan Chen

Word count: 1611/ PIN: 10274

Bright side of globalization: culture industry and gender equality in Japan ‘A country that makes a film like Star Wars deserves to rule the world.’ 1When people quote this sentence disappointed meaning is much stronger than praise. However, when American culture overwhelms the rest of the world with its movies and entertainment industry it is not necessarily harmful. There is still bliss. In 2008, following behind United State, United Kingdom, Australia and Germany, Japan took the fifth place in the movie office box rank of ‘Sex and the City’. This movie was in theater for three months. It is much longer than the culture-similar South Korea and Taiwan’s one month and three weeks. 2I was surprised because the story line is quite different from the reality of Japanese society. Four single and aged over thirty women living in Manhattan, they are professional women possessing wealth and power just like men. They are confident and talking about sex without shame. Although the movie seems not Japan, Japanese female were crazy for it. For this interesting phenomenon, I think Sex and the City made a hit not because of the feeling of similarity for Japanese girls but a feeling of expressing. Japanese female need a vent in their gender unequal society. Globalization may destroy some local culture, but it has bright side. I cannot assert that gender equality is a part of Western culture that can traced to the ancient Western history. However, it is true that today in the most Western countries female enjoy more equal status with male than in Eastern countries’. Sex and the City shows this culture and when it arrived in Japan it made a hit. Gender equality is a culture, value and ideology. It is the positive side of Western culture and because of globalization it can reach to the rest of the world. Globalization is a power of progress for the whole world. An advanced and positive thought or culture formed in some areas then expand and influence the whole world. In this essay, firstly, I would like to discuss gender unequal situation in Japan. Then, in this situation, decades ago Japanese female already found their way to express their stress, that is, Dojinshi. Finally, I would make a conclusion for this article. Pro feminist movie, drama or comic book is an opportunity not only for business arena but for female around the world. 1 2

Tyler Cowen, preface to Creative Destruction, Princeton University Press, 2002. Box Office Mojo, ‘Sex and the City(2008), Foreign Box Office’ http://www.boxofficemojo.com/movies/?page=intl&id=sexandthecity.htm 1

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Gender issue in Japan- the ancient and contemporary Japanese culture In this part I would like to discuss ‘women employment’, the most important indicate for gender equality. Figure 1, titles ‘Female labor-force participation by age group (international comparison)’ shows Japan’s special case. While the curves of female labor participation for other four countries shape U, Japan has special M-shape curve.

Active rate (percent)

Figure 1 100 90 80 70 60 50 40 30 20 10 0

Female Labor-force Participation by Age Group, 2007 (International Comparison) Japan U.S. Germany Australia Sweden

15(16)- 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 19

75+

Age group

Source: LABORSTA International Labor Organization, http://laborsta.ilo.org/default.html Arrange and figure by author

In the age twenty-one, the Japanese female labor-force participation curve starts to descend, and then in the early thirties it ascends again to the age forty-five. It seems naturally because by the time of marriage and pregnancy, women need to decide whether they will stay on the job market or not. In Japan’s case, the environment for married and pregnant women to keep working must be more detrimental than other developed countries. Work right for women is violated so that we can infer that Japanese society has a higher level of gender inequality than other countries even in the twenty-first century. Also, after the age of early thirty, the female labor-force participation rate is increasing. The reason is that there are many housewives re-enter job market for supplementing family income. In the early 21 century, eight out of ten part-timers are women, and most of them are housewives. Housewives do not try to achieve economic independent but earn little money for supporting their families.3 Therefore, wage difference between male and female workers is larger in Japan. In 2007, wage of female workers (197,700 Yen per month) in Japan is only sixty percent of male workers (328,500 Yen per month) in manufacturing industry. In the same year, wage per month of Taiwanese female workers is 33,969 Taiwanese dollars and it is sixty-eight percent of 3

Yoshio Sugimoto, An Introduction to Japanese Society (U.S.: Cambridge University Press, 2003), 155 2

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male workers’ 49,425 Taiwanese dollars.4 From this case, we see gender inequality is an obvious problem in Japan. Under this kind of stress Japanese female need to find a vent for expressing. It is difficult to change a system or to fight, but in the society riches with manga (Japanese comic books) they found their own way to vent distress, that is, Dojinshi. Dojinshi- a vent, culture and huge business The popularity of manga (Japanese comic book) is a special phenomenon in contemporary Japanese society. In all publish industry sales comic books and magazines took 22.6 percent share. Moreover, in terms of unit, manga occupy 38.1 percent in the market.5 In Japan manga is a serious business. However, I would like to talk about amateur manga world. Dojinshi, meaning ‘niche journal’, which is a way of publication and the major form is comic books and magazines. Also, Dojinshi are not sold in bookstores but by mail order or sold in comic fairs. There are different themes of Dojinshi manga, but what takes a large proportion is boys’ love. In Dojinshi market, main amateurs and consumers are female. Some argue that the reason of more female than male creating Dojinshi is that in the exam-oriented society girls have less pressure than boys so girls have more leisure time for Dojinshi.6 However, in my opinion, this can be a factor but it is not the main reason. I am more supportive for Dojinshi being an expressing way for Japanese girls. A research in United States shows that there are more female like boys’ love theme (in English language this genre is called ‘slash’) in more conservative and gender unequal environments.7 There are more boys’ love theme fans in rural areas than in metropolitan areas. In places where women find they need to meet the expectation of traditional women roles there will be more boys’ love fans. These women are discontent of the status they have so they find a way to express their stress. These fans draw the scene that men be raped and show men can also be very fragile in sexual aspect. In the case of Japan, boys’ love fans are in rural areas and also big cites. This indicates that Japanese society as a whole is more gender unequal than United States. It can also explain why Dojinshi can be particularly popular in Japan. However, this phenomenon is not merely an amateur hobby but a huge business. The biggest Dojinshi fair is Comic Market, held twice a year in Tokyo from 1975. This fair attracts approximately 500,000 consumers every time and more than fifty percent are female, spending 3 billion yen within forty-eight hours. Another big fair is Super 4 5 6 7

LABORSTA International Labor Organization, http://laborsta.ilo.org/default.html Mark Shilling, ‘Comic culture is serious business’, Japan Times, March 23, 2003. Frederik L. Schodt, Dreamland Japan (Berkeley, Calif. : Stone Bridge Press, 1996), 41 Mathew Thorn, ‘Girls And Women Getting Out Of Hand: The Pleasure And Politics Of Japan's Amateur Comics Community’ in Fanning the Flames: Fans and Consumer Culture in Contemporary Japan, ed. William W. Kelly (State University of New York Press, 2004), 180-181 3

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Comic City. It is held one a year in Tokyo. The 200,000 Super Comic City attendees are mostly female and boys’ love theme fans.8 Amateur manga is a form of expressing themselves for Japanese women in their gender unequal society. It is also a business although the main purpose is hobby sharing not profiting behavior. Amateur or enterprises can earn money in comic fairs and mail order sells. However, the most important thing is that boys’ love theme became an important sub-culture in Japan and has huge influence in other Asian countries. Conclusion Huge success of Sex and the City in Japanese movie box is the bright side of globalization. It is economic progress for United States and culture progress for Japan. For American movie industry, it is good news that a market can accept such a different concept from the reality of its society. Only when the story line of a movie can be accepted it has possibility to make a hit and earn money. In the same time, for Japan an advanced and better idea can reach to its society. The four actresses of Sex and the City are independent and successful. If Japanese female adore these women, they will tend to fight to the gender unequal status quo. Although Japanese female already created an important subculture, Dojinshi, to protest silently, this is not enough. Only when Japanese women stand up and try to overcome the disadvantageous environment, Japanese society can improve. Another good part is that higher woman labor-force participation can solve the current labor shortage problem. Talking about her dream, Ms. Yagi Natsumi, a Miss Japan in 2008 said’ I want to be a career woman, finding a balance between work and family. It is cool.’ Perhaps this dream is trivial for western countries people, but for Japanese girls this is big. When most Japanese girls hold the same dream and ideal as this Miss Japan’s, this society will have larger probability to become more equal in gender issue. Movie or drama can influence a society deeply, so it is the bright side that a movie with a great ideal can globalize and reach to this far-away eastern country. Gender issue is not only in Japan but in the rest of the world. Some culture or ideal cannot be understandable for other countries, but gender equality is not one of them. It is only time matters for expanding this value. Of course, the limitation is that it is more difficult to sell pro feminist movie or drama in certain areas, such as in Islamic countries. However, I believe that all human being can make a progress in gender issues just as what western countries did in the past one hundred years. This world can be better for both sexes. With the entertainment industry, this ideal will reach to every continent sooner or later.

8

Frederik L. Schodt, Dreamland Japan (Berkeley, Calif. : Stone Bridge Press, 1996), 43 4

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BLISS OR MISERY, AFRICAN ECONOMY IN THE GLOBAL ECONOMY TRANSITION, Haddy Bah

Word count:1989/PIN:E10278

BLISS OR MISERY, AFRICAN ECONOMY IN THE GLOBAL ECONOMY TRANSITION INTRODUCTION

The 1929 depression started in the US and it evolved into a global economic crisis. The 2008 recession started in the USA, like a contagion it has now engulfed the whole world. Views are sharply polarized regarding what the impact of the current recession, which is unlikely to ebb in the next few years, would be on Africa’s development and opportunity. Some say Africa’s marginalization is paradoxically a condition that may be more insulating rather than exposing Africa to danger. Others say marginalization is likely to make the recession, as it works itself out through the economic cycles across the globe severe and punishing on Africa. Still others claim the global recession may not have negative impact on the short-term, but is likely to have long-term negative consequences especially in regions of the world where the number of the poor has been growing as in Africa.

In the 1929 great depression, China was on a silver standard. Whilst those economies in the Gold standard suffered severely, China, though affected as well, was largely able to maintain a relatively stable currency during the depression. So the big question is, “will African economy be able to follow that of China during the 1929 great depression? This article deals in detail the possible challenges and opportunities for the African economy as a result of the recent ongoing global economic transition. CHALLENGES FOR AFRICAN ECONOMY IN THE GLOBAL ECONOMY TRANSITION Economic transition had in many instances resulted in marked changes in the distribution of wealth, leading to heightened poverty, particularly among the most vulnerable segments of society. The stresses in the financial markets of the United States that first emerged in the summer of 2007 transformed themselves into a full-blown global financial crisis in the fall of 2008: credit markets froze; stock markets crashed; and a sequence of insolvencies threatened the entire international financial system (World Bank, 2009). Massive liquidity injections by central banks and a variety of stopgap measures by governments proved inadequate to contain the crisis at first. The initially hesitant policy response has become increasingly robust. The United States government introduced a $700 billion rescue package and has taken equity positions in nine major banks and several large regional banks (Edmund, 2008). Various debt and deposit guarantees have also been introduced. At the same time, European governments have announced plans for equity injections and purchases of bank assets worth some $460 billion, along with up to almost $2 trillion in guarantees of bank debt. Markets remain volatile despite the forcefulness of these measures. During the initial phases of this financial crisis in 2007, the effects of the financial turmoil on developing countries were relatively modest. However, as the crisis intensified in 2008 and especially since mid-September, risk aversion (the absence of which had been the hallmark of the preceding boom) has increased, and capital flows to developing countries have seized up. As a result, the currencies of a wide range of developing countries depreciated sharply, and developing-market equity prices have given up almost all of their gains since the beginning of 2008. Initial public equity offerings have disappeared, and risk premiums have increased to developing-country firms (Landler & Mark, 2008). Not much has been heard from Africa about the impact of the global financial crisis that has sent markets tumbling, banks collapsing and homeowners fearing foreclosure. But there is concern on the world's

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poorest continent that the financial fever and fallout will be contagious. It's becoming clear that many developing countries — African countries — will not be immune to the spillover effects of this global financial crisis (Okonjo-Iweala, 2008). So, particularly poor people within these countries are now in a kind of danger zone. And the danger for them lies in the fact that they're taking a hit from what is call the "Four Fs" — the fuel crisis, food crisis, the fertilizer crisis and now the financial crisis. There is massive rise in the price of the three commodities — fuel, food and fertilizer — over the past year or so that has prompted riots in several African countries, including Senegal. The current global turbulence could certainly have a knock-on effect on the continent. In terms of the liquidity crunch, and in terms of the impact of exports, this could be the medium through which this is transmitted to developing countries — African countries. In the short -term, the key impact of the global recession is the likely reduction in world demand for Africa’s largely agricultural and mineral exports. Even the price of oil has gone down to $48 a barrel. The other key impact is the difficulties the recession induces in controlling macro-economic policy. The up and down swings of the markets and currencies make it harder for countries specially the vulnerable ones to maintain macro-economic stability.

Looking beyond these cases, there's also the issue of foreign aid — if donors are feeling the financial pinch, won't they be inclined to reduce aid to Africa? There is fear and uncertainty their own crisis, that they will not cut back on what they have promised to the developing countries, because a 1 percent reduction in growth could trap 20 million more people into poverty, (Okonjo-Iweala, 2008). The poorer countries do get foreign aid from richer nations, but it cannot be expected that current levels of aid (low as they actually are) can be maintained as donor nations themselves go through financial crisis. As such the Millennium Development Goals to address many concerns such as halving poverty and hunger around the world will be affected. African countries could face increasing pressure for debt repayment. As the crisis gets deeper and the international institutions and western banks that have lent money to Africa need to shore up their reserves more, one way could be to demand debt repayment. This could cause further cuts in social services such as health and education, which have already been reduced due to crises and policies from previous eras (Devarajan, 2008). The region could see a decrease in private investment flows. Such a decrease would compromise the financing of many infrastructure projects on the continent. The tourism industry which is dominated by tourists from western countries and helps to bring in foreign money is threatened by the global economic crisis. OPPORTUNITIES FOR AFRICAN ECONOMY IN THE GLOBAL ECONOMY TRANSITION The chief economist of the World Bank's Africa region (Devarajan, 2008), says that Africa’s banking system is not threatened by the current global financial crisis, but the region could see a decrease in private investment flows. Such a decrease would compromise the financing of many infrastructure projects on the continent. Devarajan proposes, however, that sovereign wealth funds may now turn to Africa as an attractive place to invest, given the upheaval in U.S. and European markets. In recent years, there has been more interest in Africa from Asian countries such as China. As the financial crisis is hitting the Western nations the hardest, Africa may yet enjoy increased trade for a while. The African Governments should seize this opportunity to devise measures for more regional and international integrations and revise their trade policies to attract investors. Secondly, Africa needs trade reform in order for it to succeed in this global economic transition phase. Trade reform in general has reinforced changes induced by other reforms. For example, the initial negative effects on farm profitability of cuts in subsidies and price supports in CEECs and the former Soviet Union (USSR) have been reinforced by trade liberalization, which has increased competition with foreign imports. Trade liberalization also reinforced the reallocation of production activities caused by the abolition of central

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planning. Planned allocations of resources to the production of certain commodities, often in inappropriate regions, may not be economically sustainable when trade has to be finance by hard currencies and when inputs are accounted for at real costs. The result has to be a major reorganization of production activities across the region. It is important to learn that African entrepreneurs are quite able to export, to break into dynamic markets, to overcome various trade barriers and constraints, so that possible. Thirdly, agriculture plays a major role in African economy, therefore with the expected opportunity that there may be more foreign investors showing interest in Africa due to the downfall of European economies, large foreign investments in the food industry and input supply industries can be created to ensure productivity gains and institutional innovations throughout the food chain, with important spill-over effects on domestic companies and on farms, and thereby improving the economic status of the rural households. It will also help greatly in ensuring food security in this region. Moreover, the economic crisis in the developed countries may force many African intellectual immigrants in these countries to return back to Africa due to diminishing job opportunities caused by the economic crisis. The return of these emigrants to Africa may contribute greatly in improving important sectors like education, health, technical and communication, thereby contributing indirectly to the economic development of Africa.

Almost an aside, the issue of tax havens is important for many poor countries. Tax havens result in capital moving out of poor countries into havens. An important source of revenue, domestic tax revenues account for just 13% of low income countriesâ&#x20AC;&#x2122; earnings, whereas it is 36% for the rich countries (Bartlette, 2007). This capital flight is estimated to cost poor countries from $350 billion to $500billion in lost revenue, outweighing foreign aid by almost a factor of 5 (Bartlette, 2007). In an effort to avert the eminent danger that economic crisis may cause on the economy of poor countries, A United Nations-sponsored conference in November, 2008, was conducted to address this issue. If the outcome of this conference is respected by the like those in Africa pay off debts, and also help them become more independent from the influence of wealthy creditor nations. Finally, this global economy transition phase provides Africa the opportunity to reform and adopt a single African currency. The way to overcome fragmentation and dependence and being caught in falling into periodic financial and stock market crises is for Africa to create a monetary union and an African currency. The latter currency is necessary to create producer user interaction across the continent to make Africans consume what other Africans produce in a large and dependable and independent African economy free from any old or new rising imperial powers and also to secure insulation from the rogue credit crises swings that mirror the episodic business cycle often endemic to the functioning of the world economy now or in the future. China had the Silver standard in 1929â&#x20AC;&#x201C; remained largely untouched by the Great depression. It has now a non-convertible Yuan that keeps her affected less though its economy is more integrated today. Africa must learn to go for what would work, establish a unitary currency as part of the grand effort to win its agency to manage its own united macro-economy! CONCLUSION In conclusion, the global economic transition poses both threats and opportunities for African economy. Certainly, there is no need to be over-optimistic with regard to Africaâ&#x20AC;&#x2122;s potential role in the world economy. Nevertheless, considering some success stories on various levels of the economy, there is also no room for a too pessimistic outlook.

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Reference 

Bartlette, W., (2008). Haven Tax, an Important Source of Revenue for Rich Countries. Journal of Economic Change and Restructuring, 42 (2), 24 – 46.

Devarajan, S., (2008). Africa and the Global Economic Crisis. http://www.cfr.org/publication/17551/africa_and_the_global_financial_crisis.html Retrieved 0n 2009 -2-16. Edmund, L., (September 18, 2008. Vast Bailout by U.S. Proposed Bid to Stem Financial Crisis. The New York Times, 12 -20.

Fackler, K., & Martin (2008-10-23). Trouble without Border. The New York Times. http://www.nytimes.com/2008/10/24/business/worldbusiness/24won.html. Retrieved on 2009-2

18. 

Landler & Mark (2008). West is in Talks on Credit to Aid Poorer Nations. The New York Times. http://www.nytimes.com/2008/10/24/business/worldbusiness/24emerge.html. retrieved on 2009 2-17.

Torbat, E. (2008). Global Financial Meltdown and the Demise of Neoliberalism. Global Research (Center for Research on Globalization). http://www.globalresearch.ca/index.php?context=va&aid=10549. Retrieved on 2009-2-15.

World Bank (2009). Global Economic Prospects: Outlook summary.

http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/EXTGBLP ROSPECTS/0,,contentMDK:20656835~menuPK:4357322~pagePK:2904583~piPK:2904598~th eSitePK:612501,00.html . Retrieved on 2009-2-15.

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On Cultural Diversity, Manuel Gallego Murcia

1568/PIN-10309

On Cultural Diversity “Take your boat and escape, happy man, far away from any form of culture” Epicurus Two Ideas of Culture Culture can be regarded as one of the key ideas of our time. We talk about culture in a multitude of ways: "enterprise culture", "regional and national culture", “cultural diversity”, "American culture", "cultural centre”1 or “culture of globalization” are only a few examples of a word that we find everywhere. One of the most quoted definitions of the concept of culture is due to EB Tylor, who defined culture as "the complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society". Culture is no longer just a Mozart concerto or a Dostoyevsky novel, but also a football game or a bad TV program. According to Tylor, culture is not only limited by the scope of the Ministries of Culture and UNESCO, but armies, technology, sports and politics are included within the "complex whole". Moreover, in his famous book "The Myth of the Culture" the Spanish philosopher Gustavo Bueno states the two great ideas of culture throughout history: 1) To the Greeks and Romans was the body of knowledge that an individual acquires during his life. 2) For the German idealist philosophers, culture is formed by the people as they write their history. Culture is the "spirit of the people" which elevates the individual above his animal condition. This second idea of culture as "the spirit of the people" is present today in the Ministries of Culture and other cultural organizations. These organizations select a set of cultural contents as “excellent contents” which an individual must learn to be a highbrow person. In this way, the “cultural set” raises the spirit of the people above the common and ordinary life. Cultural Diversity and Cultural Relativism The issue of cultural forms and cultural diversity in relation to the phenomenon of globalization is nowadays linked to the cultural relativism. The success of cultural relativism in two ideologies (Alvargonzález, 2002): the ideology of tolerance associated with liberal democracies (all votes are equal, and all opinions are respected by the mere fact of being issued, even opinions springing from ignorance) and the environmentalist fundamentalism 1

The concept of “cultural centre” (maison de la culture) was invented in France in the 30s with the objective of “transform a common good into a privilege”, online at <http://www.culture.gouv.fr/culture/historique/rubriques/43ans.pdf>

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(“environmentalism who preaches the conservation of all species ignoring that evolution is impossible without extinction”). In this section we intend to criticize the principle of cultural relativism, as a principle accepted by many as the ABC of modern anthropology. According to Harris, cultural relativism is defined as "the principle which states that all cultural systems are inherently equal in value, and that the characteristics of each must be assessed and explained in the system in which they appear." One of the leading representatives of cultural relativism, Claude Lévi-Strauss, popularized the famous formula "savage is a person who calls another person savage." From this point of view, the cultural content of a particular cultural sphere can only be evaluated within that sphere and not from the outside. The elements, features and cultural patterns can only be understood when we are placed within the cultural sphere, it is impossible to make value judgments from outside. Nevertheless, the claim that all cultural systems are "equal in value" is characterized by ambiguity. What values are we talking about? Commercial, aesthetic, moral or ethical value? If we consider the value in the field of ethics, namely, "all cultures are equal in ethical value" the main issue will be to determine which ethical judgments are based on truths valid in all cultural systems. In other words, if scientific truths can establish universally, ethical judgments are valid for all cultural fields, and therefore beyond any relativism. In this way, there will be totally condemnable practices that violate the basic ethical principles of people such as the right to physical integrity in the case of female circumcision of the clitoris. There are ethical principles, that although they have been developed in a particular culture (the West) are universally valid. In addition, when we talk about cultural diversity, we cannot look at all cultures on the basis of equality. The scientific and technological superiority of certain cultures over others is overwhelming.2 Globalization and Culture The phenomenon of Globalization is a cultural process, according to the definition of culture by Tylor. In the encyclopaedia Britannica we can find the next definition for “cultural globalization”: phenomenon by which the experience of everyday life, as influenced by the diffusion of commodities and ideas, reflects a standardization of cultural expressions around the world. The relationship between globalization and culture refers therefore to the influence that globalization is exerting over parts or elements of culture. When talking about culture, we are referring to the "selected culture” by the Ministries of Culture and those persons who know about, arts, literature, music, theatre, traditions, etc. It is appropriate to evaluate the true extent of the "culture of globalization." Already in 1998 an article in The Economist entitled "Culture Wars" cast a shadow upon the "cultural imperialism" allegedly pursued by Hollywood as others U.S. cultural industries around the 2

Prof. Fernando Savater asserts that: “to say that all cultures are equal is like saying crossing a river by swimming or by a bridge is the same” (2005) DiarioVasco.

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world. This article argues that cultural industries are heavily influenced by non-American individuals and companies outside the U.S. and that Americans are experiencing the influence of other foreign cultural contents, such as Hispanic American immigration in the U.S.3 An example from a business strategy point of view is the failure of the global strategy of Coca-Cola in the 90s, which highlights the differences between countries: Pankaj Ghemawat in his book "Redefining Global Strategy" shows data that in any case let us talk about globalization. Instead of it, Ghemawat talks about a “semiglobalization”.4 The Idea of Culture as a Driving-Idea We can say that the idea of culture today is one of the most prestigious ideas. The prestige of this idea comes from two sources (Bueno, 2005): 1. The first would be national sources, using the idea of "state of culture" by Fichte, namely, once a culture has been revealed, it is his right to claim a legitimate state. 2. A second source of prestige would come through the Ministries of Culture and other cultural agencies of government. The mission of these institutions would be to "enhance the value" of the culture, as if the value of a work by Beethoven, for example, came from his cultural condition and not on the contrary. I think it is relevant to add another one: 3. The growing importance of cultural industries in the economic activity. A report published by the European Commission in 2008 entitled "The economy of culture in Europe" states that "whilst the nominal growth of the European economy forum in the years 1999 to 2003 was 17.5%, the growth of the cultural & creative sector was 12.3% higher.” In this way, the sector turned over more than 654 billion Euros in 2003 so as it contributed to 2.6% of EU GDP in 2003 Case study: Culture in danger5 The use of the idea of culture as a driving-idea appears in a very clear way in the advertising campaign conducted by some artists in the Canadian province of Quebec as a protest to the Canadian Federal government of Stephen Harper due to the cut in the cultural budget. It should be noted that in this Canadian province of French-speaking majority, a strong nationalism has developed during the last few years. The official video of the campaign shows the attempt to raise funds by a musician of the Canadian Francophone region of Quebec to the Canadian government committee responsible for allocating funds to promote Canada abroad. During the performance, the misunderstanding between the jury (English-speaking) and the musician (French-speaking) abounds.

3

In 2005, the Hispanic TV channel Univision entered in the Nielsen Television Index as the fifth TV channel in the USA. 4 Alfred Kleinknecht and Jan ter Wengel also discuss the real impact of globalization on "The myth of economic globalization." Cambridge Journal of Economics, 1998. 5 The video of the campaign is available in <http://www.youtube.com/watch?v=Uhgv85m852Q>

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The committee, representing the Canadian government (conservative and English-speaking), is shown as authoritarian and archaic, and ready to crush the minority Quebec people. On the contrary, the artist is characterized by his powerlessness with regard to the jury. That is, the clash of two cultural spheres: the Canadian and Quebec. One sphere would be the Canadian one, the "cultural imperialism”, which tries to absorb, and even beat, the Québec sphere, a regional cultural sphere. There are two aspects from the artist that deserve a careful analysis. On the one hand, the fact that the folk singer is interpreted as a hallmark of Québec culture, on the other hand, the role of exclusive representative of Quebec society. These facts have a double root: 1. It would be assumed the idea that artists are these "sculptors of the human soul" that makes people to "move up on the mundane daily arable land." As if they believe that culture is what really makes us human, the addition to our animal nature. 2. It would use the idea of "cultural state" of Fichte; when a national culture is revealed, it is the right to claim a legitimate state. This would be a way to claim an independent state from Canada. Quebec nationalists create a clash between two cultural spheres, a "clash of civilizations" in the sense of Huntington, to ensure their survival and, in this case, central government funds. Because, wouldn’t it lose much interest and diffusion if there were not a threat, real or invented, over a certain culture? Quebec can not be considered an isolated case. In Europe, regions such as Catalonia, Flanders, Corsica or Scotland are in the same situation; the cultural justification for a legitimate state or the use of culture as a driving-idea.

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Bibliography -Alvargonzález, David, “Del relativismo cultural y otros relativismos”, 2002, El Catoblepas. -Bueno, Gustavo, “La vuelta a la caverna. Terrorismo, Guerra y Globalización”, 2004. -Bueno, Gustavo, “El mito de la cultura”, 1996. -European Commission, “The economy of culture in Europe”, online at <http://ec.europa.eu/culture/key-documents/doc873_en.htm> -Ghemawat, Pankaj, “Redefining Global Strategy. Crossing Borders in a World Where Differences Still Matter”, 2007 -Harris, Marvin “Introduction to general Anthropology” 1991. -Kleinknecht, Alfred & Wengel, Jan, “The myth of economic globalization”, 1998, Cambridge Journal of Economics. -Lévi-Strauss, Claude, “Tristes Tropiques”, 1955. -The Economist, “Culture Wars”, 1998.

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Kretek (Indonesia Cloves Cigarettes): Between Culture and Economic, Eryan Ramadhani

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Kretek (Indonesia Cloves Cigarettes): Between Culture and Economic Case Study on Cultural-Economic Pattern of the ‘Unique’ Smoking-Kreteks Culture among Indonesian Kretek: The Indonesia’s ‘Impressive’ Cultural-Economic Pattern It has been a difficult question to answer what the relations between culture and economic are, since both things are stand on a very different side. In this essay, I would like to try to make an easy and understandable explanation on relations between culture and economic with the case study on a pattern of smoking-kreteks culture in Indonesia. For generations kreteks has proved its existence and for long times it always stand next to Indonesia economic development. There is no such hesitancy about that for government and society also. It is an unusual event when we witness how important the influence of a culture for the existence of the-fourth-biggest population country in the world (in term of the economic sector). Another ‘unique’ phenomenon the people of Indonesia showed is how a ‘bad’ culture like smoking has an enormous effect on many sectors. In our mindset, a culture must be something unique and represent the daily life of their people. A culture must be something ‘good’ and in fact that Indonesia has lots of culture that agree with the requirements of a ‘normal’ culture, it appears another new phenomenon what exactly the definition of culture itself for Indonesian is. Those three questions are the core of this essay. Kretek: The ‘New’ Culture of Indonesia Indonesia is famous for its wonderful natural resources, including the plants. Nature of Indonesia has more than thousand and hundreds of plant’s varieties. One of the most popular is cloves. Indonesia provides the first class cloves with the first class taste. Cloves have been existed for more than a hundred years in Indonesia’s society. In early 1880s a man in Kudus, Central Java named Haji Jamahri used cloves as a mean to deliver the medicinal eugenol of cloves to the lungs, as it was thought to help asthma. Jamahri used the traditional ‘recipe’ by rubbing clove oil on his chest and smoked his hand rolled cigarettes after adding dried clovebuds. Without any predictions, it cured his chest pain and asthma. Thenceforth, he told everyone in his village to use cloves as a ‘medicine’ and soon clove cigarettes became available under the name of clove cigarettes (Indonesian called it rokok cengkeh). The word kretek will not be found in, either, any Indonesian or English Dictionary. It comes from the sound of crackling (tek..tek..tek..) of burning tobacco leaves, and people,

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for easy, called it kretek. Kreteks have become one of Indonesia’s cultures, especially in Java, which has the largest population of Indonesian (the people of Java in majority are Javanese). Kreteks were born in Java by a ‘pure’ Javanese. Since the time of its birth, kreteks suddenly became so famous that everyone around Java (co centrally in Central and East Java) knew it and assumed it as a new phenomenon in Java’s society. In the late of 18th century and the beginning of 19th century, no one ignore the existence of kreteks, whatever their status. It seemed like in that time when kreteks took a part in relations among the members of society, no one cared about one’s status whether he/she is Priyayi (a designation for the Javanese Kingdom family) or those who just held the status of slave. That kreteks have been able to unite the Javanese society without any objections; most Indonesian throughout the country, not including Javanese, also perceive the same way and easily kreteks walk in the new line of all Indonesian life (also become a part of Indonesia-rich culture). Culture is something patent on one’s society. A culture(s), however its influence, will always be sent down through generations. A Thing(s) defined, as culture must be firmed up by society. It means that before kreteks categorized as a culture, it needs the concurrence from society. Kretek: The ‘Dangerous’ Ingredients In simple ways, we can say that kreteks are made of up of approximately 60 to 80% tobacco, 20 to 40% ground cloves, clove oil and other additives. Usually machine-rolled, clove cigarettes come with or without filters. Actually, it is not as simple as that to determine the exactly formula of kreteks. Taken for the paper made of Agus Taftazani and Chomsin S.Widodo, the formula of kreteks, from the study of heavy metals content of seven kreteks (with cloves) of East Java product using Instrumental Neutron Activation Analysis (INAA), consists of heavy metal such as Hg (Mercury), Cd (Cadmium), Cr (Chrome), and Co (Cobalt). The concentration of heavy metals Hg, Cd, Cr and Co smaller than Accept Daily Intake (ADI) of FAO (Food Agricultural Organization) and WHO (World Health Organization). The Hg concentration was from 0.0096 to 0.1565 ppm and smaller than tobacco of Pakistan, Netherland and Iran (3.001 ppm). The Cd concentration was from 0.3967 to 1.4226 ppm. The Co concentration was from 0.4042 to 0.6426 ppm and smaller than tobacco of Pakistan and Netherland, but higher than Iran’s tobacco (0.2100 ppm). The concentration of Cr of samples was from 8.1432 to 11.2746 ppm and higher than three countries above mentioned. The result of F-test with confidence 95%, that the concentration

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Kretek (Indonesia Cloves Cigarettes): Between Culture and Economic, Eryan Ramadhani

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of Hg, Co and Cr of all cigarette samples have not significance different, but for Cd concentration has significance different.1 Smoking is dangerous. Lots of scientific research has proved how dangerous it is, but still it does not influence the smoking-kreteks culture among Indonesian society. Why it can happen? One possible and reasonable factor is the pattern of smoking-kreteks as a culture itself. It is painful as reality, but when thing(s) become a culture, it automatically will be eternal and accepted without any hesitance. Kretek: The Economic Beneficial Perspective As a culture, kreteks give lots of benefit for the government of Indonesia. According to the data from Indocommercial (1999; 2002), the total production number of kreteks has increased significantly from 159.500 million in 1996 to 168.071 million in 2001 (although the total production decreased between the year of 1998 and 1999). Besides consumed inside the Indonesian society, kreteks has also been exported to other countries such as United States of America (USA), Malaysia, and Thailand. The highest total number of Indonesia’s export on kreteks is in the year of 2000 with total production of 22.473 tons, which is equal to US$139.222 million. The main co-partner of Indonesia in exporting kreteks is Malaysia with the total export of 5.041,217 tons equal to US$61.184.464. In the year of 2003, kreteks industries contribute US$2.25 billion (total counting of tobacco taxes and export-foreign exchanges). Normally, the total national income from these industries ranges from US$2,6 to US$8,3 billion per year. Those numbers are tremendous for a development country like Indonesia. Kretek: Challenges and Opportunities Smoking-kreteks is Indonesian culture. It is a ‘tragic’ reality and we cannot blame it to the government or society, even to H. Jamahri, a founding father of kreteks. In recent years, an irreplaceable place for kreteks faces an insistence from the government, that says smoking is harmful especially for health and threaten one’s life, and Muslim society, that presume smoking as something proscribed. The fatwa of MUI (Majelis Ulama Indonesia or Indonesia Ulama Council) brought on smoking as something sinful. Albeit not a hundred percent people agree on this fatwa, it is still become a magnitude challenge for the existence of smokingclove-cigarette culture. Another potential challenge emerges from the international system.

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1 Agus Taftazani and Chomsin S.Widodo, “Study of Heavy Metal Content in Kretek and Non Kretek Cigarettes Using INAA Method”, accessed from http://nhc.batan.go.id/agus_taftazani1.php, March, 11th 2009

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Since the unhealthy ingredients that arranged kreteks have already been published, most export-destination countries, mainly USA, tighten their import policy on Indonesian kretek. It is a huge challenge means that the number of Indonesia’s export automatically will be decreased, so will the national income from foreign exchange. The challenge I have mentioned above mostly on economic sector. It is said so because the smoking-kreteks culture, immensely, interrelated to economic. The critique also emerges outside the economic point of view. It is spoken by the international organization, which has the highest ‘authority’ upon the international system, United Nations (UN). UN is divided into some different sub-organization with their own concern on one sector and in this case. UN has WHO (World Health Organization) as an accomplice that focused on health issues, including smoking. For long times WHO has warned Indonesia to limit her kreteks production under the reason of endangers people’s life. It is one of the biggest non-economic challenges that must be faced by the government of Indonesia. Although faces some unassailable challenges, the ‘unique’ smoking-kreteks culture, at least, still have some opportunities to survive. The fact that Indonesia’s economic almost rely on kreteks industries, there is a chance for these based-on-culture industries to keep their existence on. It is hard to let a culture go because the society as a safeguard will always keep an eye on it. There is a peculiar reality in the economic pattern of Indonesia that brings about some new questions. If this culture proved to give disadvantages to society, why does the government still keep it going? If the excuse is economics, should the government sacrifice its own people to live in such an unhealthy lifestyle? What does the government have to do? In the last part of this essay, I would like to give some suggestion to the Indonesian government in facing this problem. 1. There is no other way to escape from this cultural-economic vicious cycle. Society has their own privilege rights to sustain their belief on culture(s), so that the government cannot suppress its desire to society. We cannot easily erase a culture from, what socalled, civilization, so does the government. Nevertheless, in some ways, the government ‘intervention’ is needed. In the case of kreteks culture, the most possible way the government can do is by reforming the culture itself. Smoking is a ‘bad’ lifestyle and it will not easy to change a lifestyle, but it can be changed into a new healthier lifestyle by modifying the component of kreteks from hazardous contents to Global Initiatives Symposium 4 in Taiwan

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safer one. Recently, there is a great innovation of herbal cigarettes that made of ‘friendly’ components, for instance betel vine, siwak (bundle of young twigs or roots used to clean teeth, usually grow in Middle East), and honey. One of the best things this cigarette has is its zero percent (0%) contents of nicotine. This notion on herbal cigarettes probably is not the best settlement of this case, but at least it is effective enough to change the ‘bad’ culture to the ‘good’ one, in term of health. 2. There is no need to doubt that smoking-kreteks culture gives a fascinating impact on Indonesian economic. This fact, unfortunately, makes the new economic dependency on this culture. It will emerge another vicious cycle that difficult to be cut off. From this smoking-culture, Indonesia national income increases steadily and the industries relates on this smoking-culture welcome million workers to lessen the lack number of jobless in Indonesia. It helps the government very much. How do if the condition suddenly becomes the opposite? Does the government ready to face the condition when smoking and kreteks industries are totally prohibited? Indonesia’s government for long times has tended to hang on everything relates to kreteks. That is why I suggest the government not too depend on billion-dollar tobacco taxes and kreteks foreign exchange. Indonesia has lots of potential income source from thousand sectors, such as fishery and agriculture. With those formidable potentials, Indonesia has more opportunity to keep the economic growth on a constant rate without tied on tobacco taxes and kreteks industries.

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Contemplating the Engagement of Cultural Forms and Economic Progress: Bliss or Misery?, Hui Ting Chen

Word count: 1,971 / PIN: 10335

Contemplating the Engagement of Cultural Forms and Economic Progress: Bliss or Misery? Since financial turmoil struck the world in the late 2007, various kinds of industries have undergone a great deal of depression without any hopes of resuscitation in the near future. Cultural Creative Industry (CCI) is such an industry, unexpectedly, survived in this hard situation and still made a prosperous progress. Many people believe that exploiting the market of CCI is a wise decision to overcome economic crisis. But other people are wondering whether it is suitable for CCI to represent other industry in economic development. However, no one could tell whether it is a bliss or misery.

Definition of Cultural Creative Industry According to the definition given by UNESCO, Cultural Creative Industries are those based on tangible or intangible cultures, going through conceptual formulation, production and manufacturing processes and at the end present themselves as commercial products or services in the market. They usually have patent or copy right protections (UNESCO, 2000) i . To be more elaborate, fields such as printing, publishing, carving, design, architecture, visual and performing arts, music instrumentation, movie production, cultural recreations, etc, are included in CCI. Comparing to those traditional industries, CCI features knowledge-economy, globalization, network (Castells 2000) ii , and are less dependent on capital investment or land use. This characteristic makes CCI feasible to resist the impact of global economic crisis.

The Development of Cultural Creative Industry in Mainland China In China, because of the large population, industries are supposed to grow and develop prosperously. CCI benefits from this. According to the recent investigations, on the average, the sales amount of CCI increases up to 20% annually, ranking second among all the industries in China. Referring to the news, websites and published articles, we can easily get a brief idea about i

Ming-Ju, Hsu., Chiu-pai, Ho. A Study of Cultural & Creative Industry Courses (CCIC) Data Warehouse and Associated Talent Cultivation Programs Offered by Colleges and Universities in Taiwan[J]. International Journal of Technology and Engineering Education, 2006, 3(1): 5-17. ii Castells, Manuel. Materials for an Exploratory Theory of the Network Society[J]. British Journal of Sociology, 2000, 51(1): 5-24.

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how Chinese governments’ attitudes towards CCI. It is obvious that governments view CCI as an industry and tend to make it commercialized. Doubts are aroused, because one of the original goals of developing CCI is to preserve the culture. People are afraid that once commercialized, the culture essence would not be preserved as it was before. This situation is common at developing stage. I will take “798 Art District” as an example to elaborate the point.

A case in China, the development of “798 Art District” 798 Art District (in the following paragraphs, I will use “798” instead) locates in the northern part of Beijing, China. Interestingly, the place of 798 is not a new-constructed area. Instead, it is established on the site of an old “Bauhaus-style” electric factory. This factory was constructed by Russia in early 1950s and was designed by an architect from East Germany. With a total area of 60 square meters, the plant features a simple, plain design. Huge castings, lathes, water pipes, chimneys and bright, clean clearstories are easily seen. Undoubtedly, this electric factory was the most fashionable construction at that time. This factory has undergone many tremendous changes in China, such as the early industrialization period and Reform. We can easily found characters, pictures and signs remain on the wall. Until 2001, this electric factory quit functioning, and was taken over by Beijing Sevenstar Science & Technology Co., LTD. To get efficiency, Sevenstar lent the empty space to the artists. Considering the unique architecture, historical phenomenon, cheap rent, convenient transportation and easily accessed location, many artists rented a small room in this old “Bauhaus-style” plant and used this room as a place for living, daily work and exhibition. They believed that working within this phenomenon, their thought and creativity would be inspired. Supported by Beijing Government, in the year of 2006, 798 Art District opened. Until now, there are about 200 art organizations and 300 artists run a business or work in 798. On the premise of history conservation, they didn’t destroy the constructions, instead, they redecorated and redesigned them by using environmental-friendly materials and equipments, and this brought a new concept of living style to the people. 798 is a successful CCI case. It soon became an indispensable place for tourist. According to the news, the total number of visitors is up to 1.5 million person-times (Qi, 2009-02-13) and the gross earnings of 798 is up to 30 millions dollars in 2008. In generally, 798 is a place for artists to pursue their dreams, for consumers to purchase art, and also, for people to appreciate hundreds of thousands of artworks. However, this is not the only feature that 798 attracts visitors. The ideal intersection of art and culture, and the unique phenomenon contribute to 798’s reputation the most.

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Conflict between Cultural Conservation and Economic Progress 798 Art District is a case of Cultural Creative Industry. It shows an alternative industrious structure without the requirement of vast land and heavy machines and is even less polluted and low energy consuming. Undergoing the threats of global economic depression, the product of 798 still increases in a steady rate. In 2004, Beijing was judged by “Fortune” as one of the most developable cities in the world. The reason is, certainly, because of 798. However, the morning sun never lasts a day. Sevenstar Company decided to raise the rent. While making this decision, the manager deliberated not only the cost for 798’s further development (for example, upholster the indoor or outdoor exhibition area) but also the increasing value of this district. But, the rent was raised too high for those artists to afford. Some artists left 798 to find a cheaper place and after that, famous brands rented the space and opened art stores there. 798 was more and more like a business. Artists were sad, and cultural workers were sad, to accept the truth that art had gone away.

Risks and Opportunities 798 has made a miracle, changing an old factory into a modern art district. But now 798 encounters a dramatic shift, that is, the manager raised rent to the artists and also planned to use the remaining funds to redecorated 798. Some of the artists decided to move out and the others got dissatisfaction about the plan. I will make a brief discussion about this in the following paragraphs. Here is a summary about negative effects: First, 798 might lose the fundamental support from artists and encounter difficulties with art supply. Second, 798 would become commercialized and the cultural diversity might decrease eventually. Third, 798 might lose its attraction to the public because of inappropriate management. Reasons for the above conclusion are given below. First, the leaving of artists lessens the quantity and variety of art supply. Besides, because it is more likely to share ideas while artists are gathered and more creativity might at that time be inspired, the loss of interactions between artists might block the creativity source. As far as sustainability is concerned, a city’s “Wealth” plays a significant role during its development. A general concept of “Wealth” refers to the sum of a city’s assets, cultural information assets, agricultural assets, population, natural resources, financial assets, etc iii . If a city is rich in “Wealth”, it will be able to iii

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Robert Costanza, Ralph d’Arge, Rudolf de Groot, etc. The value of the world’s ecosystem services and natural capital[J]. Nature, 1997, (387).

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maintain functioning while encounters emergency, such as, economic recession. Applying this concept to 798 Art District, the loss of artists would result in the loss of a city’s “Wealth”. Therefore, the decision of raising the rent would lower 798’s sustainability level. Second, artists would try to earn more money in order to pay the higher rent. Inevitably, they might begin to figure out visitors’ taste and demand and then redesign their artwork. Doing so, some of the unpopular art styles would disappear in 798 and this would perhaps decrease the cultural diversity. Also, marketing skills and business model might enter. 798 would soon become a commercial area. All of them violate the original intention of constructing 798. As a result, the decision of raising the rent would direct cultural 798 to commercial 798. Finally, we know that the extra amount of rent will be used to rebuild/redecorate the old construction or for administrative cost. It sounds good to some degree. However, some artists point out that the ways of rebuilding 798 usually disobey the idea of art. In fact, most new constructions are built on commercial purposes and managers believe that doing so would make 798 even more appealing. The point is that the managers have no idea about art; neither do they know the necessity of preserving primal constructions and special phenomenon. Consequently, inappropriate management would destroy 798’s antiquated image. Here is another summary about the opportunities: First, a rat race would by any means occur between artists or store keepers, which might improve the quality of art. Second, 798 now is a well-known art district in the world. With its world-wide popularity, commercialization would do well to 798’s further development. Reasons for the above conclusion are also given below. First, in order to stay in such a perfect workplace, artists would manage to achieve a higher income. At the meanwhile, competition might emerge among artists. They then try their best to make an outstanding work to appeal customers and also improve the quality of artwork. This could provoke a “virtuous cycle” in 798 and lead 798 to become a high-level art district. Second, in this society, people now couldn’t survive without a colorful spiritual life. In China, 798 is a good choice for public, because it is convenient to get there, and for investors is also alike. Taking advantage of this, it is the best time for 798 to be commercialized and grasp the chance to develop.

Best Way for the Future of 798 Art District In China, establishing an art district is very common in many big cities in recent years. - 4 -in Taiwan Global Initiatives Symposium

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Problems emerged in 798 were easily seen in other art districts. The biggest problem is that most of the managers (including governments) consider GDP as the only value of an industry. They make their efforts to pursue a higher GDP without end. Although GDP is such an appealing index, when facing a cultural creative industry, we can’t emphasize GDP so much. Instead, from the angle of intangible assets, 798’s potential to enrich local cultural capacity seems more important. However, there is no right or wrong to regard CCI as an industry to pursue economic growth. I do admit that commercialization is inevitable during progress, but over-commercialization should be avoided in cultural creative industry. My point is that, cultural creativity is the core value of CCI, so nothing could weigh more than it. We should find a balance between cultural and economic parts. Besides, I suggest 798 be managed by a company experienced in cultural affairs. The crucial point is that the goal of managing a business is totally different form managing an art district. For example, though companies probably own experience of brand marketing, they might be unfamiliar with cultural brand marketing. Therefore, reorganizing a management group is essential. Additionally, there is a survey indicates that if a place could sufficiently offer special experience and phenomenon, it is enough to attract people to come, no matter how much marketing strategies have been done iv . A research also found that the main characteristics that made 798 so attractive are cultural phenomenon, art value and construction style (ranking by decreasing order). Thereby, I strongly agree that 798 develops in accordance with its features rather than short-term profit pursuit, and then 798 would keep its sustainability. Finally, I believe that art creation should be done while stress is limit. Florida (2002)v indicates that people’s creativity could only be completely inspired while living in a place with affordable houses, convenient transportation system, equality and limited stress. The manager of 798 might notice that and then act as an organizer, cooperate with artists and other workers, reconsider the dos and don’ts, and eventually make 798 a hopeful art district.

iv v

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Yi-Qun, Ning., Shan, Jin. Take 798Art District as a case for Beijing’s Cultural Tourism: From an Aspect of Market Formation.[J]. Tourism Tribune, 2008, 23(3)。 Florida, R. The Rise of the Creative Class[M]. United States: Basic books. 2002.

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The model that I would like to introduce to all of you is the European Route of Industrial Heritage (ERIH)., Alexander Pfennig

Word Count- 1990 /PIN-10342

Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress The model that I would like to introduce to all of you is the European Route of Industrial Heritage (ERIH). Some 250 years ago, in the 1750s, Russia founded its first university, Moscow State University. China annexed Tibet and introduced its “closed door policy” vis-à-vis Europe, sealing off its harbors from foreign trade. The United Kingdom expanded its colonial empire in India. These events, developments, and decisions alone would have had a lasting impact. However, the United Kingdom embarked on something that shaped world affairs and, in the words of Friedrich Engels, “at the same time changed the whole of civil society” 1 – the Industrial Revolution. Advances in medicine and a higher birth rate led to a growth in population in the United Kingdom. Agriculture and the textile industry were important pillars of the British economy. British cities became economic hubs as people fled the countryside in hope of a better future, creating large consumer markets and sizeable pools of labor. The answer to the growing demands of the consumers was greater production efficiency by way of technological innovation. In the 1760s, James Hargreaves invented a multi-spool spinning wheel, James Watts introduced major innovations to the pre-existent steam engine, and Richard Arkwright invented the automatic spinning machine. The Industrial Revolution reached its height with the development of the railway in the 19th century. Richard Trevithick built the first locomotive in 1804, and in 1830 the first regular railway line was introduced on the Liverpool-Manchester route. The emergence of the railway in turn gave a boost to heavy industry and mining since metals were required for the construction and maintenance of locomotives, wagons, and tracks. The Industrial Revolution went on to spread from Britain to the European continent and to Canada and the newly independent United States of America. The railway played an important part in linking up the various regions and regional centers in both the Old and the New World. On the European continent, the Industrial Revolution began in Belgium as it was able to rely on factors similar to those in the United Kingdom – deposits of iron ore and coal (in the French-speaking Wallonia region in the south of the country, around Mons and Charleroi) and a strong textile industry. Further to the east, in Germany, progress was hindered by the fact that the country was not yet unified but divided into numerous small states. By the 1830s, though, industrial centers emerged in Germany’s three mining regions: the Saarland (bordering France and Luxembourg), the Ruhrgebiet (close to the Netherlands), and upper Silesia (nowadays part of Poland and the Czech Republic). While these regional industrial centers throughout the continent strengthened the economies of old and new European powers alike provided work for millions of people over several generations, some of those very industries and the jobs they created eventually saw the sun set on themselves during the second half of the 20th century. With the advent of new competitors in other parts of the world, European industry and mining began to lose its competitive edge. 1

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Friedrich Engels. Die Lage der arbeitenden Klasse in England (Leipzig: Verlag Otto Wiegand, 1845).

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Factory and mine closures followed as European economies tried to regain its competitive edge by shifting to high technology and services. But change was not easy, and it did not come without a cost. The “Old Continent” faced rising unemployment – and a plethora of industrial wastelands. What to do? The answer was to preserve Europe’s industrial sites as a legacy for future generations. Europe’s industrial centers had transformed not only landscapes, but also social strata, and the very course of world history. Leaving those grand old halls of production simply to decay was not an option. The obstacles were many and the challenges manifold, but the success stories abound. The idea was not to create theme parks à la Disneyland, but venues with an educational mission that capture the hearts and minds. One example is the Zeche Zollverein, or Zollverein Coal Mine Industrial Complex, in north of the city of Essen in Germany’s most populous Federal State of Nordrhein-Westfalen (Northrhine-Westphalia). Essen, Germany’s seventh largest city with a population of just under 600,000, is located in the central south of the aforementioned Ruhrgebiet, an urban area of almost 4,500 km² and a population of more than five million (out of Germany’s roughly 80 million), making it the country’s largest urban agglomeration – about four times the size of Hong Kong. It is also Europe’s fourth largest urban area after Moscow, London, and Paris. The Ruhrgebiet’s geology is characterized by coal-bearing layers, some two meters thick, that lie at a depth of about 700 meters. By the mid 19th century, the Ruhrgebiet boasted almost 300 coal mines, giving rise to the area’s nickname, “Kohlenpott” (Coal Pot). Some of the sites have been replanted as parks and thus been returned to a state similar to before the Industrial Revolution. But not all structures were dismantled and the Zeche Zollverein still stands as a striking example of industrial architecture, Essen’s most famous and widely recognized landmark. Coal mining has a long tradition in Essen. The first proofs of mining in Essen date back as far as the 13th century and the first silver mine was opened in the mid 14th century. Coal was first mentioned in Essen in the second half of the 14th century, but coal mining began only in the mid 15th century. The founding year of the first coal mine on the grounds of the Zeche Zollverein was 1847, and the mine was then in operation from 1851 until its closure in 1986. The Zollverein Coking Plant, constructed between 1957 and 1961, was used somewhat longer than the mine and closed down in 1993. Zeche Zollverein was Germany’s most productive mine by 1890, and in 1937 it had 6,900 employees. Zeche Zollverein regained its leadership role among the German mines after the end of the Second World War by 1953. What about other sites? Of course, Zeche Zollverein is not alone in Europe. In October 2002, less than ten years after the Zollverein Coking Plant closed down, Nordrhein-Westfalen Tourismus e.V., the Tourism authority of the Federal State of Northrhine-Westphalia, became the leading institution of the newly founded European Route of Industrial Heritage. Currently, ERIH has ten partner institutions in three European countries. The ever-expanding ERIH network is not limited to these three European countries though. ERIH encompasses some 845 sites accessible to the public in 29 European countries – two more than there are member countries in the European Union. Out of these 845 sites, 66 have been selected as so-called “Anchor Points” for their outstanding historical and educational value and for their yeararound ease of access even for large numbers of visitors. The Anchor Points demonstrate former factory operations and offer multimedia installations, guided tours, as well as special trails for children.

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The model that I would like to introduce to all of you is the European Route of Industrial Heritage (ERIH)., Alexander Pfennig

At the time of writing, the Anchor Points are located in seven European countries: Belgium, the Czech Republic, France, Germany, Luxembourg, the Netherlands, and the United Kingdom. Further Anchor Points will be added in the years to come. The Anchor Points are hubs of the ten European Theme Routes that link the network: Textiles – From fiber to fabric; Manufacturing – Goods for the world; Water – Blue gold; Industrial Landscapes; Mining – The treasures of the earth; Energy – What makes us go; Housing & Architecture; Iron & Steel – The glow of the blast furnaces; Transport & Communication – The tracks of the Industrial Revolution; and Services & Leisure Industry. Altogether there are 575 sites along the European Theme Routes. And then there are the eleven Regional Routes with a total of 188 sites. The Regional Routes denote areas that have either linked several countries in the course of industrial development or left its indelible mark on the history and culture of a large part of a single European country. For the moment, the Regional Routes are to be found in six countries: the aforementioned Ruhrgebiet, the Rhineland Industrial Valleys, the Central German Innovation Region, the Lausitz Industrial Heritage Energy Route, the Euregio Maas-Rhine Region, the Saar-Lor-Lux Region, the Northwest England Industrial Powerhouse, the Heart of England Route, the South Wales Route, the Industrious East England, and the HollandRoute. ERIH has also established and made available to the public a database of more than 100 revised and in-depth biographies of personalities that were the driving forces of Europe’s industrialization. On its website at http://www.erih.net (in Dutch, English, French, and German, with 100,000 visitors each month), ERIH provides 1,300 links to other websites with further information of ERIH sites and relevant regions, including an events calendar searchable by date and country. ERIH realizes that it can and should not be alone in its endeavor and is, therefore, cooperating with 200 archeology and industrial heritage networks and organizations, and UNESCO World Heritage Sites. A framework for cooperation with The International Committee for the Conservation of Industrial Heritage (TICCIH) is in the making. Since 2000, TICCIH has been the scientific committee of the International Council on Monuments and Sites (ICOMOS), headquartered in Paris, that advises UNESCO on its World Heritage Sites. ERIH is being recognized and supported by the Interreg IIIB / IVB North West Europe Programs, an initiative of the European Communities to further interregional cooperation in the European Union, funded by the European Regional Development Fund (ERDF), from 2000 to 2006 and 2007 to 2013. For one year, since February 2008, ERIH has been a registered association. As such, ERIH has five tiers for prospective members on a yearly, renewable basis (October 1 to September 30): Anchor Point (500 Euros), Individual Sites (100 Euros), Corporate Members (500 Euros), Individuals (100 Euros), Friends of ERIH (donation). ERIH held its most recent two-day annual conference, “Industrial Heritage and Tourism – Old Iron is not enough”, in midNovember 2008 in Essen, open to the general public for a conference fee and free of charge for members. The choice of Essen as the venue for ERIH’s annual conference was an obvious one. For a long time, Essen was synonymous for pollution. Now it is one of Germany’s greenest cities. In 2010, Essen will be the European Capital of Culture (awarded by the European Union since 1985), representing the whole Ruhrgebiet, with 150 cultural projects and a budget of 63 million Euros. The German government is investing 18 million Euros for the 2010 European Capital of Culture, the Federal State of Northrhine-Westphalia is providing 118 million Euros. After (West) Berlin in 1988 and Greater Region of Belgium, France, Germany, and

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Luxembourg in 2007, this will be the third time that a German site has held this prestigious title. It is, without a doubt, in recognition of the fact that the Ruhrgebiet has turned the corner. In 2007, Germany finally decided to phase out its coal production. Out of 300,000 mine workers in the Ruhrgebiet, only 20,000 remained – of its 460,000 steel workers, less than 30,000. And yet, those vibrant 53 cities, the “Ruhr Metropolis”, are now home to more than 200 museums, 120 theaters, castles, palaces, and monasteries, and the largest shopping malls in Germany. It goes to show that “Old Europe”, while preserving its past, is right on track for a bright future. With ERIH still being young, there is room for improvement. As a matter of fact, ERIH is still not widely known to the European public. This would have to change. ERIH should reach out especially to young people. More often than not, children and teenagers do not like to learn about history by studying it, but by experiencing it. ERIH has the on-site facilities, but it still needs to move closer to its target audiences. A very simple way to approach young Europeans is through the schools where they all study. As the ERIH network is already wellestablished throughout Europe, a number of sites should be available for daytrips by bus for school classes. These daytrips would probably qualify for public funding from the local to the European level.

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The Digital Divide., Jiaying Shen

The Digital Divide I. INTRODUCTION Nowadays, we are experiencing the highly development of digital age. In this age of computer and the Net, we tend to believe knowledge is spread because information is open to the public, and individuals now have the power to influence the world from in front of their computers. Undoubtedly, the engagement of digital culture and economic process has been a heated issue. The recognition of the Increasing interaction between digital culture and economic progress has led various parties, e.g. political entities and economic organizations, to treat this issue seriously. II. CURRENT SITUATION: THE DIGITAL DIVIDE

A. EXPLANATION The term â&#x20AC;&#x2DC;digital divideâ&#x20AC;&#x2122; refers to the gap between people with effective access to digital and information technology and those with very limited or no access at all. It includes the imbalances in physical access to technology as well as the imbalances in resources and skills needed to effectively participate as a digital citizen. The digital divide may be classified based on gender, income, and race groups, and by locations.

There was once an interesting advertisement about a certain movie chain which launched its online ticketing service. The advertisement was mainly about two boys who plan to date the same girl for the movies. One of them goes to a cinema to buy tickets only to find a long queue. It is clear who wins the contest at last. But the loser does not lose because he is passive or unaggressive. It is not even related to his looks, personality or wealth. He loses just because he does not know how to buy a ticket online. It is an invisible digital divide that makes the difference.

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B. GLOBAL DIGITAL DIVIDE

The global digital divide is an existing problem, which reflects the existing economic divisions in the world. This global digital divide widens the gap in economic divisions around the world. At present there are up to 600 million Internet users whereas the same figure in 1993 was just 1 million. We can see how considerably it has grown. These 600 million of people constitute just one tenth of the world population and concentrate in developed countries. One third of them are in the United States. As is provided by The Global Digital Divide image above, the global digital poverty is especially acute in Africa. According to data in 2001, out of the 800 million African population, only 1 in 4 individuals own a radio, 1 in 13 a television, 1 in 40 a phone and 1 in 130 a radio. By the end of 2002, only 1.7 million people can get access to the Internet, among who only 1 out of 250-400 people has Internet access. However, in North America and Europe every other person can use the Internet. There goes the sentence “knowledge changes fate”. The uneven distribution in knowledge and information has deprived people in developing countries of a chance to change their fate. The importance of the interaction between digital culture and economic progress should draw more attention of the society. C. FROM THE CULTURE AND KNOWLEDGE GAP In 1970, Phillip J. Tichenor, C.N. Olien and G.A. Donohue, well-known communication scholars, proposed the hypothesis of the culture and knowledge gap. According to the hypothesis, whenever a new medium arises, people with higher economic statuses have a higher chance of getting knowledge than those lower statuses. The former is more capable of adapting to, using and controlling the new medium. As time goes by, the difference between their knowledge will widen, forming a knowledge gap. Once you use the internet, the information floods in. As a result, there come two groups of people: the ‘information rich’ who master information technology and enjoy all the convenience and benefits

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generated thus; the ‘information poor’ who do not get any advantages from information technology, which increasingly marginalizes them as it develops. In fact, age, gender, race, education level, economic condition and regional development are all factors that cause the great diversity of digital culture. D. HONG KONG IN FOCUS According to the 2007 Digital Opportunity Index (DOI) published by the International th Telecommunication Union in 2001, Hong Kong was ranked 8 in 191 economies. The percentage of Hong Kong people with personal computers and Internet access are respectively 74.2% and 70.1%, multiples of the same figures 10 years ago. However, Hong Kong is no exception of the digital divide problem. The digital divide in Hong Kong is occupied by the majority of citizens (especially youngsters and high-income earners) who benefit from telecommunications on one end, and minorities such as low-income families, the old and retired people are on the other end.

Such a wide gap easily marginalizes the weak. For example, when a teacher asks the class to do an online research, those who do not have computers at home may find it hard to express their difficulty. Similarly, when internet promotions become more popular, those companies who do not use the online resources for their business will not be able to attract consumers easily, reducing their competitiveness. III. RISKS: THE GRAVE POLARIZATION The digital divide has been recognized as an immense problem by scholars, policy makers, and the public, who have come to understand the potential of the Internet to improve everyday life for those on the margins of society and to achieve greater social equity and empowerment.

There remains a great risk due to the digital divide, i.e. the grave polarization. Along with the increase of the divide, the segregation within a society becomes more serious, resulting in such differentiation that would consist of various social groups, from high-income to low-income. Therefore, there comes a vicious circle, which has been shown below.

IV. RECOMMENDATION A. DIGITAL SOLIDARITY FUND In order to narrow the digital gap, the Hong Kong Council of Social Service established the Digital Solidarity Fund on 15 Dec 04 to subsidize different digital solidarity programmes. It has also established contact with people from all walks of life in order to formulate and carry out strategies for digital solidarity. The Fund depends mainly on donations from the Office of the Government Chief Information Officer and the business sector. It supports mainly the following three kinds of plans. B. SOUTH KOREA’S EXPERIENCE In fact, South Korea has provided a very good example in resolving the digital divide problem. In

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spite of the great attack suffered in the 1997 financial tsunami, South Korea has experienced a high development in the past few years, especially the development in science and technology. For example, the Korean Agency for Digital Opportunity and Promotion (KADO), provided by the government, has widely popularized the education of science and technology in the past years, and established more than 900 training centers. According to the relevant data, more than 13 million people have been involved in this programme, constituting one third of the total population. C. GLOBAL AWARENESS

The United Nations is aiming to raise awareness of the divide by way of the World Information Society Day and international conferences. It held two world conferences related to information and telecommunications in Geneva in 2003 and in Tunis (Capital of Tunisia) in 2005 respectively. Heads of state and ministers from more than 50 states, international organizations and elites from different fields attended them. They signed agreements such as the Declaration of Principles and the Plan of Action, aiming to act as a bridge between information-rich and information-poor countries. D. THE “GIVE ONE, GET ONE” PROGRAMME Furthermore, many civil organizations also strive to narrow down the digital gap in the world. The One Laptop per Child (OLPC) organization, for example, is advocating give each child a computer. It wants students of the right ages in developing countries to own an inexpensive laptop computer with Wi-Fi each so that they can learn on their own, engage in creation, entertain themselves and widen their horizons. OLPC launched its ‘Give One, Get One’ programme on 17 Nov. You can use US$399 to buy a laptop computer (the XO Laptop produced by OLPC) for yourself and another one for a child in a developing country. E. OTHER SOLUTIONS Apart from the solutions mentioned above, there are various other solutions to deal with the digital divide issue. And any solution is try to better understand the lifestyle of a minority or marginalized community in order to figure out what is meaningful to them [minorities and marginalized users] and how they use (or do not use) different forms of the Internet for meeting their objectives.

V. CONCLUSION Nowadays, the digital divide has been a rising concern, especially the interaction between digital culture and economic progress. However, the existence of a digital divide is not universally recognized. It is therefore an important job for the United Nations, international organizations and other non-governmental organizations to narrow down the international digital divide. VI. REFERENCES 1 The Digital Divide in Hong Kong http://www.legco.gov.hk/yr00-01/chinese/panels/itb/papers/a1143-3c.pdf 2 2007 C&SD Household Survey on IT Usage and Penetration 3 World Summit on the Information Society, WSIS http://www.itu.int/wsis/

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4 One Laptop per Child 5 Digital Divide â&#x20AC;&#x201C; Wikipedia http://en.wikipedia.org/wiki/Digital_divide

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Endeavor: fostering entrepreneurship across cultures, Luis Gorupicz

 

Endeavor: fostering entrepreneurship across cultures 

Economic progress and culture are not necessarily in conflict                  Endeavor shows that entrepreneurship is the way to go       





  

  

   

   

258



GIS Taiwan 2009

1


Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                              

 

 



  

 







  



2 Global Initiatives Symposium in Taiwan

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Endeavor: fostering entrepreneurship across cultures, Luis Gorupicz

                                                  

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 

GIS Taiwan 2009

3


Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                    

   To achieve economic progress we need even more Endeavor entrepreneurs         





4 Global Initiatives Symposium in Taiwan

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Endeavor: fostering entrepreneurship across cultures, Luis Gorupicz

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GIS Taiwan 2009

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Subtopic 2: Bliss or Misery? â&#x20AC;&#x201D; Contemplating the Engagement of Cultural Forms and Economic Progress

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GLOBALIZATION ECONOMIC CHALLENGES AND OPPORTUNITIES FOR AFRICA, Yahya Sanyang

WORD COUNT 2034/PIN 10392

GLOBALIZATION ECONOMIC CHALLENGES AND OPPORTUNITIES FOR AFRICA

The emergence of Africa economic development forums in the year 2009 marks an historic opportunity for African leaders both in the public and private sectors to join hand in the process of shaping the African agenda to meet the challenges of this period of globalization and the emerging information economy. Of critical importance to that process is the development of a clear conceptual framework of globalization and the information economy which can help to guide, thinking, planning and action within the continent. This is designed to contribute to the development of that conceptual framework and to make contribution to those economic institutions by describing the current context of globalization and defining the information economy. It also includes the highlights of some of the key challenges that have to be confronted if Africa is to take advantage of the information revolution in the year 2009.Finally it explores some of the strategic opportunities for Africa within this year. Globalization and information economy are among the most contested terms of this year. Globalization means very different things to many people. Far beyond the narrow definition of globalization that focuses primarily on financial integration, in a much more expansive definition of globalization is not just about the deepening of financial markets, but includes a whole range of social, political, economic and cultural phenomena. These areas are spheres of globalization. One reason that the information economy offers such promise to Africa is that each of these spheres of globalization is supported by the application of electronic commerce. Also through strategic planning, the opportunity exists for key geographic areas in Africa exploit information and communication technologies to become spaces of globalization. The information economy is based on a fundamental transformation of the underlying structure of the global political economy Analyst argued that this change is so definitive that it warrants the label of a techno-economic paradigm shift. This shift reflects changes in science and technology, the organization of business production, learning and entertainment. An aspect of this transformation includes the changing nature of business dynamics, the nature of manufacturing company, and demand articulation in technological development, technology fusion and industrial inertia. These changes are affecting nearly all sectors of the world system including intergovernmental organizations, the private sector, regional organizations, on governmental organizations and national states. This period of change engenders a potential restricting of power relations and the development of new forms of inequality in the world. It is possible that inequality in the information economy could go beyond a division between the so-called developed and developing countries to exacerbate intra-country divisions specially divisions could sharper between those individuals possessing in knowledge ,skills and abilities to contribute to the global information economy and those who do not possesses such skills. One characteristics of this current period of globalization is the emergence of a new techno-economic paradigm ,which some analyst, call innovation â&#x20AC;&#x201C;mediated production within this framework ,knowledge is increasingly embedded within the production process itself. One major issue that contrasts the knowledge economy from the industrial economy becomes the most important factors of production. This mode of production characterizes the overall knowledge economy within which the information economy is playing an increasingly important role. Perhaps the most important development within the information economy is the economic explosion caused by global electronic

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e-commerce is the production, distribution, marketing, sale or delivery of goods and services of electronic means. This includes the integrated use of information and communication technologies as the medium through which goods and services of economic value and researched designed, produced advertised, catalogued inventories, purchased, distributed accounts settled, follow up support and management information systems implemented. The global information economy could be characterized as disciplinarian its interpedently nature should ensures that bad decisions are punished immediately and goods decisions are rewarded with the same speed with such a global interpendent knowledge based economy it is critical that appropriate mechanisms be developed at global level to govern the global information economy-a global information economy regime. Globalization and the information economy present unique opportunities for Africa. However to capitalize on these on these opportunities tremendous challenges must be overcome. Some on the key challenges include the following, the development of information and communications infrastructure, human resource development and employment creation, the current position in the world economy and insufficient legal and regulatory frameworks and government strategy. Numerous studies have shown that benefits of an information age will not accrue to countries with an adequate national information and communications infrastructure. This must be connected to an interoperable with the emerging global information infrastructure. The African information and communications environment can be characterize by low telephone penetration rates, slow network growth antiquated systems, sub-optimal reinvestment of profits, high pricing of private facilities, poor inter city telephone links and widely varying national network infrastructures .There are various and sometimes competing approaches to develop the NICI.Given that the access to information and communication infrastructure is so abysmal in the continent ,achieving universal access to information infrastructure is seen as the sine qua non of widespread socio-economic development in an era of globalization and an information economy .

Some universal access is so critical numerous scholars; activist and development agencies have embraced the potential of multi purpose community information centers to help achieve those goals. Community information centers can serve as development vehicles in both developing and developed countries and can contribute to closing the infrastructure gab within developing countries. While still an incomplete definition MPICIâ&#x20AC;&#x2122;S may be defined as facilities in urban-peri-urban and rural areas which utilize shared information infrastructures to provide access to a wide variety of public and private information and communication based goods and services and which support local economy and social development objectives. These facilities have a range of ownership and business models that may stimulate the growth of the local communication market .In these facilities a focus on reliability sustainability and community ownership is critical .In addition to the potential of MPCIâ&#x20AC;&#x2122;S a wide variety of new an alternative infrastructure possibilities exists. Some of this form of alternative infrastructure includes the new generation of global mobile personal communications by satellites systems floating and flying platforms and multiplicity of local wireless solutions. Those forms of in fracture can facilitate the proverbial technological leap frogging and are perhaps the best example of that often used and sometimes derided them. For example developing countries in most cases, do not have the same fixed investment in copper cable and thus can skip laying more of it in favor of going directly to fiber or another broad solution. The rapid development of human resources and creating employment are also critical challenges facing Africa in the year 2009, low levels of education and literacy are crippling

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GLOBALIZATION ECONOMIC CHALLENGES AND OPPORTUNITIES FOR AFRICA, Yahya Sanyang

Africa’s ability to exploit the information economy. In many countries the limited use of English has also been cited as an additional constraining factor. The education requirements for the information economy are increasing in complexity. However some national development programs are still attempting to base their employment creation strategies on the perceive advantage that comes from access to large numbers of cheap unskilled labor. The reality is that national and regional strategies should focus on enhancing and attracting a core knowledge workers operating within the African region. This should e accomplished through both national and training regional education and training and through incentives to attract the Africa Diaspora and other skilled knowledge, workers in to the continent. However in this process we should take care to develop strategies to minimize the impact on the components of the population whose educational level and technical skills do not fit, and may never fit, the requirement of the new techno-economic paradigm of the information economy. With the emergence of globalization and the movement towards and information economy depends heavily on knowledge based products and services. Africa has witness its already tenuous position in the global economy deteriorate even further by almost any measure ,Africa’s current position in the world economy is near the bottom moreover the exports on which Africa is so dependent are confined mostly to primary commodities. These commodities account for about 90% of all African exports. Traditional exports from Africa are being displaced increasingly by new and relatively efficient products from other regions. Unfortunately the global economic slow down that also affected African economies. Further more even with such impressive growth even higher rates are required to begin to adequately address the over whelming proverbs and unemployment found in the region. One of the major repercussions endemic –macro –economic and political instability on the continent has been worsen the competitive environment for African private sector. Also policy and strategy net works for the African private sector are mostly weak and ineffective in influencing the most important debates on world trade. These networks will have to be strengthened in other for the African private sector to enhance its competitiveness and place in the world economy. With no real national boundaries the legal implications of the internet and World Wide Web are immense. Thorny issues such as intellectual property protection, privacy security, data protection, electronic payments and currency and wide ranging consumer protection issues have to be addressed in national legislation and regional strategies each with tremendous social and economic implications. One hand appropriate legal and regulatory infrastructure will enhance a county’s ability to attract investment and can help to stimulate local participation in the information economy. On the other hand appropriate legal and regulatory environment can-disempowered local entrepreneurs and cause international investors to look to other countries. Africa cannot afford wasted efforts. It is critical for Africa to work as collaboratively as possible with a multiplicity of actors at national and global levels. Without a doubt the challenges facing Africa in the information economy are daunting. However given the fundamental shift in the nature of the global economy it is critical that strategies for African development be shaped within this reality. There are many new windows of opportunity for Africa in the age of globalization and information economy. The transition of global economy to one based on knowledge and information presents numerous opportunities for developing countries that are willing to address them strategically .African and other developing countries can move to strategically develop competitive advantages within this new economy based on their own specific histories and materials condition. In other for these opportunities to be realized it is clear that part of Africa most moves quickly to become spaces of globalization. Specific geographic

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areas must be re-oriented to be able to more fully take advantage of the information economy through the development of information infrastructure and knowledge workers in their countries. This orientation includes developing a comprehensive strategic vision that harness the potential of globalization and information economy within that geographic space of the numerous potential applications emerging from the global information economy, some have greater strategic importance for African than others and may have significant impact on the socioeconomic development of our people. Application of potential strategic importance includes the following content development, educating learning and research rural development. In each of these areas very specific opportunities can move markets, exists for Africa and the development countries. Once again we have clear indication of the impact of global economic crisis on our economy here in Africa. The international monetary fund reversed its forecast for global growth a record said to be its lowest since the Second World War. Latest data have also indicated that IMF projects growth in advanced economies in 2009 whilst sub-Saharan Africa out put is expected to expand. In Africa we are in many ways almost powerless to shape our economic destiny as we are largely dependent on imports. This is said if we are careful of our economic policies we may be able to avoid the worst of the crisis. The sharp decline in global economic activity is likely to exert a drag on growth in Africa as economic growth is expected to be modest in 2009.careful economic management and prudent fiscal policy may be our only hope in the coming year. We must do our best however because ultimately this crisis will pass. When it does we must try to be in the best position.

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“Foreign” investment and the absorption capacity of Russian business culture, Andras Szirko

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     

                                                                                                                                                                                        

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GIS Taiwan 2009


Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                                                                                                                                                                                                           Global Initiatives Symposium in Taiwan

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“Foreign” investment and the absorption capacity of Russian business culture, Andras Szirko

                                                                                                                                                                                                                                                                                                          

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GIS Taiwan 2009

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

                                                                                                                                                                                                     

  Global Initiatives Symposium in Taiwan

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“Foreign” investment and the absorption capacity of Russian business culture, Andras Szirko

                              

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

            

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Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress, Yi-Ray Wu

Word Count- 1913 /PIN-10442

Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress The model that I would like to introduce to all of you is Global Bollywood as an ambassador of India – as India’s cultural representative to the world. Long popular in Indian communities around the world, Bollywood offers an alternative to mainstream western cinema, especially in developing countries. But how did Bollywood come to embody India? And how does it compare to major cinema industries in other countries? And, most of all, how does Bollywood manage to remain true to its roots and keep it real as a crossover cinema? How does Bollywood reload, redefine, and reinvent the Indian wheel of doctrine? How does it remain persuasive to the locals and become compelling to foreign audiences? For decades, moviegoers around the world, when thinking about cinema, instantly referred to Hollywood, a district of the Los Angeles metropolis, to the northwest of this sprawling city, and in the west of God’s own Country. This “Tinseltown”, as it came to be known, with its name in iconic white capital letters perched on a hill, a real estate advertisement originally, epitomized moving pictures in all corners of the globe. Nowadays, long after the so-called “Golden Age” and the big studio system of the 1920s to 1950s, almost all production companies are based outside Hollywood. Still, Hollywood has remained a synonym for America’s multi-billion dollar movie industry that creates dreams for a worldwide audience and for those in front and behind the cameras alike. Hollywood is a potent force that spreads American contemporary culture abroad. With almost ten million square kilometers and more than 300 million inhabitants, America is, after all, the third largest and the third most populous country in the world. And it has the world’s strongest economy. It should come as no surprise that such a country would have both a demand and a capacity for movies. But what about the other two countries that are even more populous than the United States? What about India, a country of some 1.1 billion people, and mainland China, a country of some staggering 1.3 billion people? Do they all watch Hollywood movies? Yes and no. They do, yes, but of course they have their own productions too. In China, movie-making started at the beginning of the 20th century as well, but it was mostly done by foreign companies. During the First World War, China’s domestic film industry began to take off, headquartered in and around Shanghai, East Asia’s biggest city at that time. Nevertheless, foreign, i.e. U.S. influence was strong during the next few decades, as Chinese film crews received American assistance and training through technical cooperation programs. In the early 1980s, a new generation of filmmakers had completed their training, among them such notable artists as Chen Kaige (陳凱歌), Tian Zhuangzhuang (田壯壯), and Zhang Yimou (張藝謀). “Yellow Earth” (黃土地) and “Farewell My Concubine” (霸王別姬), produced in 1984 and 1993, both by Chen Kaige, are just two examples of outstanding Chinese films that became known world-wide. 1996 saw the creation of the Hengdian World Studios, the largest movie studio in the world, in Hengdian Village, Dongyang County, Zhejiang Province. It has hosted the production teams of such blockbusters as “Hero” (2002) and “The Forbidden Kingdom” (2008). “Crouching Tiger, Hidden Dragon” (2000) and “House of Flying Daggers” (2004) have also contributed to the worldwide fame of mainland Chinese cinema.

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

However, is mainland China actually within the very first tier of world cinema, just as its impressive movie industry would suggest? Yes, quality-wise, definitely, it could be argued. What about quantity? There the answer would be negative, surprisingly. If the statistics of the International Movie Database can be trusted, there are ten countries that have produced more than 10,000 movies and China is not among them. The ten countries are: the United States of America, the United Kingdom, France, Germany, Canada, Italy, India, Japan, Spain, and Mexico. India plays a special role as it is, by the number of cinema admissions, the biggest market in the world. It should be noted that, based on output, India has sustained a comfortable lead over the United States and all other cinematic nations for at least three decades – for as long as or even longer than most moviegoers have been around.1 What kind of cinema would India produce – a country with more than 1,600 mother tongues, 22 official languages, home of four of the world’s ten largest religions? Almost from the start, Indian cinema has been mass cinema for a simple reason. Prices were low enough that most could afford to watch a movie. When technology was advanced enough, by the 1930s, the first Indian musicals appeared. This was the start of archetypical and hugely successful songand-dance element of Indian cinema. Add to this the Masala film that emerged after the Second World War. Just like the mixture of Indian spices where the name of this film genre comes from, Masala movies are a blend of different styles. They combine action, comedy, dance, (melo-) drama, musical,2 romance, and exotic locations. The picturization of Indian movies is characterized by “splash of color and charm”. It is “glamorous, surreal, and breathtakingly beautiful”, with “mind-boggling mammoth proportions, scores of unbelievable sets and fantastic landscapes”, and offer an “out of the world experience”.3 In the 1930s, the first studios were established, in several major Indian cities. Most prominently, this took place in Calcutta (Kolkata), West Bengal, in the east of India, Bombay (Mumbai), Maharashtra, in the west of the country, and Madras (Chennai), Tamil Nadu, in the south. Over the years and decades, Indian cinema has diversified to a degree that, today, a host of regional industries exist. These are: the Bengali or Bangla cinema, Bojpuri/Purvanchal cinema, Hindi cinema, Kannada cinema, Kashmiri cinema, Malayalam cinema, Marathi cinema, Oriya cinema, Punjab cinema, Tamil cinema, and Telugu cinema. Out of all these, Bollywood (or Hindi cinema) is the most famous, as it produces the greatest number of films in India and even ranks among the top film producers worldwide. Its influence is such that, oftentimes, it is used to epitomize Indian cinema as a whole (as shall be done in this article). Bollywood is recognized with its own proper entries both in the Oxford English Dictionary and the Encyclopædia Britannica, 4 even though the name evokes the image of a poorer and cheaper copy of a big brother looming large – Hollywood. Bollywood is said to be shaped by six ingredients: Indian epics, Sanskrit drama, Indian folk theater, Parsi theater, Hollywood, and MTV. In the 21st century, Bollywood has entered the world stage. 1 The Screen Digest gives the following figures: 432 vs. 242 in 1974, 829 vs. 266 in 1984, 754 vs. 635 in 1994, and 946 vs. 611 in 2004. Cf. Kumar, Shanti. 2008 Hollywood, Bollywood, Tollywood. Redefining the Global in Indian Cinema. In Global Bollywood, ed. Anandam P. Kavoori and Aswin Panathambekar, 99. New York: New York University Press 2 So important is the musical element that movie soundtracks alone make up 48 percent of the total revenue of music sales in India. Cf. Potts, Michel W. 2006. "Film Industry", Encyclopedia of India (vol. 2), p. 75, Thomson Gale 3 Ibid., p. 81. 4 The Encyclopædia Britannica describes Bollywood movies as having “formulaic story lines, expertly choreographed fight scenes, spectacular song-and-dance routines, emotion-charged melodrama, and larger-thanlife heroes”. Cf. Cinema of India, http://en.wikipedia.org/wiki/Indian_cinema. Retrieved 31 March 2009

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Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress, Yi-Ray Wu

Aishwarya Rai, the 1994 Miss India World and Miss World, went on to become an actress in Indian and western movies and to make it to the cover page of Time magazine. Shekhar Kapur in 1998 and 2007 directed two western productions, “Elizabeth” and “Elizabeth: The Golden Age”. The American cartoon TV series family “The Simpsons” took a trip to India in one of their episodes. Bollywood films create more revenue in the United Kingdom than local movies. 5 A 2008 British film “Slumdog Millionaire”, 6 the “feel-good film of the decade” according to the News of the World,7 was set entirely in India, with an Indian cast, and won four Golden Globes and eight Oscars. But not all were happy. “Slumdog Millionaire” has been labeled non-Indian, i.e. inauthentic, improbable, superficial, and insensitive. It was said that the choice of actors or the acting itself was poor – “middle-class anglophones” trying to portray poor immigrant underdogs from Mumbai’s slums.8 Admittedly, parts of the film are in Hindi, parts of it are in English. But this is not uncommon in Bollywood movies. Some found fault with the fact that there is a happy end, when in reality, slum dwellers do not, or never, even, find a way out of their misery, out of that cage that keeps them locked in, unable to move about freely. “No one wants to watch a movie about that”.9 “Deception”, cries the critic. Ironically, others say that “Slumdog Millionaire” is too harsh, even insulting – it paints a very unflattering picture of India. But is the mission, as it were, of cinema to be all glossy and nice and pretty, like an expensive coffee table book for an afternoon get-together? Is “Slumdog Millionaire” really that bad – is modern-day Bollywood that reaches out and tries to bridge gaps really unacceptable? Not necessarily. By and large, Indian experts are satisfied with the new direction, which they see as realistic and uplifting, as a breath of fresh air. Quite probably, “Slumdog Millionaire”, Bollywood, and India find themselves caught, but not trapped between tradition and modernity where they seek redefinition and reorientation. That is not a bad thing. And it is not an end. It is a start. Maybe “Slumdog Millionaire” is no masterpiece. But it does not have to be. The criticism largely misses the point. “Slumdog Millionaire”, like other Bollywood movies, tells a story as a Brothers Grimm fairy tale would tell a story. It weaves fact and fiction. If one were to expect educational cinema from Bollywood throughout, that would be wrong. It is entertainment after all. As India evolves, so does Indian cinema. Certainly this will not be to everybody’s liking, but then again, that would be impossible to achieve. The basic ingredients of the Masala cinema are all still there. As it has been a potpourri for a long time, it has just gained a component or two. Truth be told, it has moved on to nothing short of a new dimension, and compromise is 5

Punathambekar, Aswin and Anandam Kavoori. 2008. Global Bollywood. New York: New York University Press. p. 1 6 It was based on the 2005 novel “Q & A” by Indian diplomat. After the release of the movie, the book was republished as “Slumdog Millionaire”. 7 This quote was later used on the British posters for the promotion of the movie. 8 “‘Slumdog’ no hit with Rushdie”. http://www.ajc.com/services/content/printedition/2009/02/23/rushdie0223.html%3Fcxntlid%3Dinform_sr; Kesavan, Muku (5 February 2009). “Lost in translation –Slumdog Millionaire uses Hindi as authenticating décor”, http://www.telegraphindia.com/1090205/jsp/opinion/story_10485740.jsp. Retrieved 31 March 2009. Cf. Radhakrishnan, Smitha (28 November 2008). "Slumdog Sincerity". UCLA Asian Institute. http://www.asiaarts.ucla.edu/081128/article.asp?parentID=101268. Retrieved on 31 March 2009 9 Mazumdar, Sudid (21 February 2009). “Man Bites Slumdog”, http://www.newsweek.com/id/185798. Retrieved 31 March 2009. This very critic recounts his own story of upward mobility in India. This is a story that really happened and could actually be turned into a movie as well – with a few adaptions. Honi soit qui mal y pense.

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difficult indeed. But were there no alteration, then the productions might have merely historical or documentary value. Hence, Bollywood is introducing change we can believe in.

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A CASE STUDY ON EDUCATION IN INDIA- SANDWICHED BETWEEN CULTURE AND ECONOMY, Shailesh Upadhyay

Word Count: 1,991 /PIN: E10458

A CASE STUDY ON EDUCATION IN INDIA- SANDWICHED BETWEEN CULTURE AND ECONOMY Indian hinterland is split into 29 distinct states- each speaks a different story. India has given the world many surprises- on one hand Indian entrepreneurs and CEOs are making history and on the other, a vast Indian population is still craving for three meals a day. This irony is a result of drastically opposing cultures in Indian states- for instance, Gujarat is highly entrepreneurial whereas Kerala is industrially stagnant, Goa is fast and modern whereas Jharkhand is like an African tribal state. These polarities pose great challenges before businesses in India due to which India is ranked 122nd best place to do business - 45 places behind Pakistan. One of the strongest roots of any economy is its educational system-in India education has evolved with culture. Today when the financial situation is vulnerable, India needs to gear up and update the way it trains its youngsters- most importantly, abandon the cultural practices that hamper innovation in the educational system. 1.

EDUCATION - A Cultural Perspective The engagement between education culture and economic progress is like a mixture of flavors exhibiting corruption and discrimination on one hand and heroic triumphs of individuals on the other. Entrepreneurial growth amidst poverty and uncertainty has set an example in front of an astonished global audience.

1.1. Primary Education – Facing Many Cultural Hurdles

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In India, 70% population is rural whose livelihood depends upon agriculture. A farmer always expects his forth coming generations to preserve his agricultural integrity and cultural heritage, by adopting farming as an occupation-which he feels doesn’t require the intervention of education. Unfortunately, education is perceived as a barrier to agricultural continuity-out of fear that an educated individual would never resort to traditional farming. As a result, India has the largest number of illiterate people in the world- a whopping 35% of world’s total illiterates. To overcome this cultural barrier, Indian government made education for every child compulsory and each one was entitled to free primary education- but in vain. Farmers preferred to use their kids as agricultural workers instead of sending them to school. The farmers were encouraged only when the government introduced a novel scheme wherein every student attending primary school got free lunch and some grains. Despite increasing the educational budget to 2.8% of GDP in 2007-08, Indian education has not seen much positive change-the enrolment rate of children going to schools is almost 96% but almost half of them leave school by the age of. The quality of education remains poor because most primary school teachers either don’t show up at work or subject the students to severe corporal punishment. In India, a teacher is referred to as ‘the Guru’; equivalent to God-a thought that prevents people from seeing the other side of the coin-result of which is shallowness and misbehavior which has drastic consequences on children. For instance, in early February 2006, the Haryana Government suspended seven school staff including two accused teachers and the Principal of Government Senior Secondary School in Durjanpur in Jind district. 17 schoolgirls of Class VIII and IX were allegedly raped for eight months by the accused teachers. GIS Taiwan 2009

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1.2. Senior Secondary and Higher Education- A Middle Class Contribution Indian middle and upper class love spending on education, dreaming to see their kids with jobs and a good standard of living. An inherent culture of competing in studies pushes parents to enroll their kids in the best schools and coaching institutes. Further, the craze for medical and engineering streams is making the race towards higher education so fierce that parents have started spending loads of money on entrance exams’ coaching (classes taken after school hours for entrance exams’ preparation) - giving birth to a coaching industry with an annual turnover of INR 1000 crore . The fees of these coaching centers ranges from INR 25000 to INR 120000. Going abroad is also a trend observed in upper middle class families from South Indian stateshence, middle class culture places education at the top of its priority chart and is playing a major role in globalizing India today. Culture being really variable has also been risky in few respects that we will investigate as follows. •

Culture- An overshadowing Risk In India, culture is highly plural which has preserved age old traditions and continues to absorb new ideologies and thoughts. But the social hierarchy which was engraved in culture in the past has become a scar in the economy- today casteism has become a basis of disrupting social harmony. The reservation bill recently passed, demanded 27% seats for OBCs (Other Backward Castes) in premier government colleges including IITs (Indian Institute of Technology) and IIMs (Indian Institute of Management). Despite prolonged criticism from the students and President Abdul Kalam, the bill got passed. Today the total reservation in these institutes is 50%, a figure revealing the injustice that prevails in this democracy.i Worst of all, child marriage and chauvinism continue to influence societal beliefs- these have a profound effect on women’s education and empowerment. The inflating population and the crunch in quality education are leading to very low productivity. Opposing the saying, ‘India-Unity in Diversity’, cultural polarity is pulling down the economy.

Being Opportunistic- Find a solution by Tapping into Bottom of the Pyramid Ensuring quality education amongst India’s poor who constitute more than 40% of its population is an untapped domain.ii This sector comprises youth that has seen the worst face of life and can meet up to any challenge. But, due to lack of resources, they remain uneducated and deprived throughout their lives. If this sector is seen as an opportunity, a large number of committed and talented individuals can be added to the economy. For example- Anand Kumar, Bihar's IPS and a mathematician, founded a school, ‘Super 30’ in 2003 to help promising locals get ahead in the caste-based society. The school has shown on average around 90 percent selection in IIT Joint Entrance Examination- a feat that is considered almost impossible in India. This example presents us with a brilliant opportunity to give birth to more such initiatives which if employed, can do wonders.

2. ECONOMIC REFORMS- Unforeseen Change in Culture In the wake of severe economic crisis in 1991, India realized the need for privatization and introduced economic reforms. In tumbling times, this was a silver lining that led to a paradigm shift in educational systems which redefined culture. Global Initiatives Symposium in Taiwan

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2.1. Employment Generation- breaking taboos, chasing bigger dreams Economic reforms were followed by rapid industrial growth that led to employment generation- longing for a good life many people migrated to cities in search of jobs- most of whom ended up as factory workers or laborers. The migration resulted in cultural change and increased awareness towards education- today the situation is such that even slum dwellers earning less than $2 a day are sending their kids to school, hoping to see their kids as doctors or engineers. Even middle class has become more ambitious in this progressive era- pumping more energy into their kids to push them into IITs/IIMs .As a result, competition has become unimaginably tough- 3,20,000 students compete for 5000 seats in IIT and 2,30,000 for 1600 seats in IIMs. 2.2. Dawn of enlightenment, Fall of Superstition A black cat crosses the road, leaving most passersby scared to hell, clairvoyants still thrive and many people think of wasting their money on saints instead of visiting a doctor while ill. These are not fairy tales but superstitions which were once an everyday story in India- but today Science and logic have replaced it in many parts of the country. Today, people both rural and urban, profess the belief of being healthy and connected. This has led to a rise in internet usage and increased the demand for better health facilities. To meet this demand, Indian Space Research Space Institute (ISRO) in collaboration with Indian educational institutes has set up Village Resource Centers (VRCs), which serve as informational and telemedicine interfaces. Similarly mobile phone technology is also spreading to rural areas, thanks to companies like Reliance Communication which have made it accessible to poor. 2.3. Entrepreneurship- All over the place Before 1991, most Indians imagined themselves in government jobs, few dreamt of Multi National jobs but only a handful even considered being an entrepreneur. At present, the scene is drastically different. Today entrepreneurship awareness programs are flourishing in educational institutes- even school kids are becoming aware of entrepreneurial opportunities. Bodies like E-cell (Entrepreneurship Cell), TiE (The Indus Entrepreneurs) and NEN (National Entrepreneurship network) have played a phenomenal role in incorporating entrepreneurship in educational curriculum. A liberal society has thus come into being which is free, excited, successful and highly ambitious- this burst however has a few consequences that impose a threat on the national equilibrium. â&#x20AC;˘

Risk of excessive Westernization- Too cool to Handle? Metros like Mumbai are burgeoning with glory- women have become independent, industrialists have become unsurpassable and life is racing but in wake of this success, the problem of dwindling personal happiness and failure to cope with families has risen as well. Today children are migrating abroad to pursue their dreams of better education and jobs, leading to loneliness of old parents. Women have become so career oriented that they are unable to devote time to their marriages- the result is surging divorce rates and poor upbringing of children. Westernization is slowly taking its toll on the family life of citizenswhich needs to be tackled by promoting work life balance- companies like Agilent India and Google India have shown tremendous success in making employees not only successful but happy as well.

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Private Colleges- Collateral damage of Indian Politics In modern times hundreds of private colleges have mushroomed in India, especially in the South. Industrialization led to a need for more graduates- an opportunity which was brilliantly tapped by some people who established private colleges to churn out graduates. These colleges/universities are mostly run by people with an experience in politics who collect bribes for appointing faculty, admitting students and awarding good grades and jobs. Poor faculty, outdated syllabus, illogically inhibiting rules and lack of exposure to real world frustrates most of its students who resort to mediocrity. An ongoing tradition of doing engineering or medicine prompts parents to put their children into private colleges if they don’t fare well in the entrance exams. The stiff competition in entrance exams has thus proven advantageous for private education industry. Most students graduating from private colleges are a dent on the work force and do not add any value to economic progress. According to NASSCOM iii, 3 million graduates emerge each year, mostly from private colleges. Out of these, only 25% are employable which can be extended to 30 to 40% by giving further extensive training.

With Risks come Blessings In 2001, a group of ambitious entrepreneurs entered the ‘education’ scene and decided to revolutionize management education: a product of this was ISB, Hyderabad, an Institute that has attained a global status in less than 10 years of its creation. Today it is world No 15 according to Financial Times, London- paradigm shift that has changed the meaning of private management education altogether. Another such example is BITS Pilani, a pioneering technical institute that competes with IITs in terms of performance. Privatization has increased the demand for good practical education, which can be applied at the industrial level to add value. This makes education a big market today-where customers are longing for good services but the products of this industry are not that satisfactory yet .Businesses thus have a big opportunity to invest in quality education- which will change the course of culture and make people more open to innovation and liberalization.

3. CLOSING THOUGHT "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense." ~Lord Buddha

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Bibliography Creaking,groaning. Economist; 12/13/2008, Vol. 389 Issue 8610, Special Field p11-14, 3p IIT-JEE cut-off may fall a bit.14 April 2008.The Economic Times-Indiatimes online edition. 6 March 2009 <http://economictimes.indiatimes.com/rssarticleshow/msid-2949570,prtpage1.cms> ISB does it again, achieves global ranking of 15. 28 Jan 2009. The Financial Express. 2 March 2009 <http://www.financialexpress.com/news/isb-does-it-again-achieves-globalranking-of-15/416179/ > 17 girl students raped: 7 school staff suspended.9 Feb 2006.The Tribune-online edition. 7 March 2009 <http://www.tribuneindia.com/2006/20060209/main2.htm > Murthy, S.S. The business of coaching. 25 Jan 2005. The Hindu- Education Plus online edition. 7 March 2009 <http://www.hindu.com/edu/2005/01/25/stories/2005012500140300.htm > Over two lakh students appear for CAT.18 Nov 2007. The Times of India.6 March 2009 <http://timesofindia.indiatimes.com/articleshow/2549837.cms> Ruled By Lakshmi. Economist; 12/13/2008, Vol. 389 Issue 8610, Special Field p17-18, 2p The Other India.1 Jan 2008. Knowledge Commision.Gov (Frontline, India). 5 March 2009 <www.knowledgecommission.gov.in/downloads/news/news69.pdf> Verma, S.K. Cop quits Super-30, says experiment is over. 10 June 2008. The Times of India. 5 March 2009 <http://timesofindia.indiatimes.com/Cities/Patna/Cop_quits_Super30_says_experiment_is_over/articleshow/3115540.cms>

i

The Reservation bill, which enables 27 percentage of seats in central educational institutions to be kept aside for students of the Other Backward Classes, was passed in the Lok Sabha on Dec 2006. This has increased the total reservation in these institutions to 50 percentage. ii

According to The World Bank 456 m Indians constituting 42% Indian population live below the poverty line. (Source: Wikipedia-http://en.wikipedia.org/wiki/Poverty_in_India) iii

NASSCOM速 is the chamber of commerce of the IT-BPO industries in India. NASSCOM is a global trade body with more than 1200 members- it includes both Indian and multinational companies which are present in India.

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Word Count: 1979 / PIN: 10463

Subtopic 2: Bliss or Misery? ďź? Contemplating the Engagement of Cultural Forms and Economic Progress Opportunities and Needs: Engagement of Cultural and Economic Value in Cultural Heritage Tourism Introduction Until recently, economists have been reluctant to rely on culture as a possible determinant of economic phenomena . Part of the reason of this reluctance is the ambiguousness of the notion of culture which is so broad that it is rather difficult to design testable hypothesis. In the case of cultural heritage, although it has been capitalized and incorporated into the regional economic progress since the past century, there are still fierce debates on the relationship between cultural heritage conservation and economic development and a refined methodology for the strategies of heritage management is desperately required. Of all the economic appropriations of cultural heritage, tourism is one of the most noticeable forms. In reality tourism is a major economic force, the second largest industry in the world . Indigenous culture and heritage are major tourist attractions and brought a large amount of income for the industry. For example, the income generated from the sale of Aboriginal arts and crafts is AUD$200 million per annum, with half derived from tourist sales. It seems like a winwin situation for both heritage preservation and economic progress; however, the harsh reality is that, cultural heritage and tourism are not always benefiting from each other, and decision must be made by the investors, the government and other participants to achieve optimized results. To solve the strategic problems, economic analysis typically focuses on the value of changes at the margin, for example, one or more alternatives are compared with a baseline scenario. However, the development of techniques capable of valuing intangible values, especially those associated with intangible cultural assets is still in its infancy. How, for example, does one trade-off market development opportunities with values that are central cultural image and identity? For issues like these existing methods need further testing and alternative ones need to be explored. Definition: Heritage as cultural capital According to the Oxford English Dictionary, heritage originated from old French word heriter (inherit), referring to 1) property that is or may be inherited; an inheritance. 2) valued things such as historic buildings that have been passed down from previous generations. 3) things of historic or cultural value that are worthy of preservation. The forms of heritage varies a lot while a basic distinction is drawn by UNESCO between tangible (e.g. walled cities, cathedrals, palaces) and intangible forms (e.g. folklore, music, dance, rituals). To bridge the conceptual gaps between cultural and economic value in heritage, David Throsby

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and Brian Graham redefine heritage as a form of capital. Similar to the production process of other capitals(physical capital, human capital and natural capital), heritage items such as a painting or a historic building both required investment of physical and human resources in their original manufacture and construction and both give rise to a flow of services over time that may enter the final consumption of individuals directly (e.g. when people view the painting in a museum or visit the historic building), or that may contribute to the production of further goods and services (e.g. when the painting inspires the creation of new artworks or when the historic building is used as a commercial office space). And the distinction of heritage as a cultural capital is that it embodies both economic and cultural value, and its cultural value can exist independently. Economic and cultural value of heritage In order to help decision making in the investment of heritage projects, the economic and cultural value of heritage need to be assessed. In regard to the economic value of heritage, according to Throsby, it could be divided into use and non-use value. Use value refers to the direct valuation of the asset’s services by those who consume those services while non-use value refers to the value placed upon a range of non-rival and non-excludable public. To further explain the “use value”, Zeppel identifies four values including commodity values (portable cultural product, e.g. art, craft, souvenirs, music, dance), amenity values (associated with tourism and recreation, e.g. entree fees), marketing values (associated with the tourist promotion of the heritage, e.g. music used in the advertisement for the tourism promotion) and cyber values (refers to reproducing and selling cultural products via the Internet). As for the cultural value of heritage, there has been a basic agreement that it includes six components:  aesthetic value: beauty, harmony  spiritual value: understanding, enlightenment, insight  social value: connection with others, a sense of identity  historical value: connection with the past  symbolic value: objects or sites as repositories or conveyors of meaning  authenticity value: integrity, uniqueness The engagement of economic and cultural value of heritage in tourism Although it seems that the economic and cultural value of heritage as a cultural capital could be separately defined, there is a close relationship between them. Consider first the asset value of an item of tangible heritage such as a building of historical significance. The asset may have economic value that derives simply from its physical existence as a building irrespective of its cultural worth. But the economic value of the asset is likely to be augmented significantly due to its cultural value. So, for example, individuals may be willing to pay for the embodied cultural content of this asset by offering a price higher than that which they would offer for the physical entity alone. In use value, measured as the entrance fee, commodity sale, marketing, etc. would be expected to be greater the higher the cultural value people place on the experience of visiting it, other things being equal. Its non-use values would be similarly related to the building’s perceived cultural worth as well. Thus the overall economic value of the flow of 2

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services provided by the asset would be expected to be closely correlated with its cultural valuation. However, this impact of cultural value to economic value is not always being positive and sometimes it is rather complicated, especially for the cases of intangible heritage. The reasons are listed as follows: a) The difficulties to evaluate and compare the cultural values of the intangible heritage. Unlike most tangible heritage (such as historical buildings or paintings) that has got its own appraisal methodologies, most intangible heritage (such as folklores and music) does not have general rules of appreciation. Furthermore, as much of the cultural value of intangible heritage are only meaningful in the local/regional context (e.g. the sense of identity attached to some local music), the potential of attracting wide tourism interests is thus limited. b) The impositions in the process of intangible heritage tourism. Compared to tangible heritage such as historical buildings, the engagement with the tourists and culture in intangible heritage is not as that direct. What people have seen and experienced are performances chosen and adapted according to the intention of the tourism, therefore the level of how people enjoy and accept it would depend more on the marketing techniques than on the actual cultural value of the heritage itself. c) Even when an intangible heritage has been widely acknowledged of its high cultural value, it does not necessarily entail large economic profit in tourism. A representative case is Kunqu. In May 2001, UNESCO for the first time awarded the title of "Masterpieces of the Oral and Intangible Heritage of Humanity" to 19 outstanding cultural forms of expression from different regions of the world. Kunqu Opera, a school of traditional Chinese opera, was among them. It is the only Chinese art form listed, and is now a facet of the common cultural heritage of humankind. However, high cultural value does not result in high box office income. In recent years, following the rapid and dramatic change in concepts and lifestyles of the Chinese people, the survival of Kunqu has faced an enormous challenge. Likewise, the impact of economic value on cultural value is also complicated. On one hand, some tourist activities may contribute to the preservation of cultural values. For example, the income from the entry fees could be used to the maintenance of the historical buildings, which may otherwise deteriorate over time; the tourism activities such as visiting wine production, quilt making factory and other disappearing crafts did help to preserve those cultural heritage. Besides, the promotion by tourism could also be helpful for cultural education which may in return benefit cultural heritage. On the other hand, although over-exploitation could bring short-term profit, it may result in the damage of cultural heritage and hinder the development of tourism in the long run. One concept that is often been discussed in the research of heritage tourism is sustainability. To define sustainability in its application to cultural capital, Throsby suggests six principles or criteria: material and nonmaterial wellbeing; intergenerational equity; intragenerational equity; maintenance of diversity; precautionary principle; and maintenance of cultural systems and recognition of interdependence. Although progress has been made in identifying it in theoretical terms; the challenge now is to make it operational.

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If heritage is regarded as a resource, sustainability in this context has two basic conditions. First, the rate of use of renewable heritage resources must not exceed their rates of generation. Secondly, the rates of use of non-renewable physical heritage resources should not exceed the rate at which sustainable renewable substitutes are developed (for example, the substitution of irreplaceable sites or artefact with replicas). One possible move is toward virtual consumption of heritage, which can apply to both tangible and intangible forms. Conclusion: opportunities and needs In the essay, the concept of heritage has been redefined as cultural capital that yields both cultural and economic values so the discussion of cultural heritage will not be restricted in historical and archaeological field. By identifying both cultural and economic values of heritage as in the context of tourism, it can serve as theoretical background of assessment for investment decisions. However, attention should be drawn that the assessment of cultural value, especially for intangible heritage, is never been easy and the inter-relationship among cultural and economic values of heritage can be extremely complicated. Getting back to the question that was addressed in the introduction: how does one advise people about choices among strategies that trade off cultural gains for economic gains if those two values do not always benefiting each other? And what instrument choices are available to heritage managers, how effective are they and how can interaction among them be managed to maximum advantage? To answer those questions, firstly we need to understand the complexity of tourism. Tourism producers operate in both public and private sectors. While private-sector firms concerned mostly with their own profit margins, control of tourism by the public organizations is crucial. Fundamental to the success of heritage tourism planning is an appreciation of the nature of tourism and the varying viewpoints involved, including that of entrepreneurs, government, residents and tourists, as well as voices of NGOs and academics. On this basis, another keen requirement is to establish an approachable evaluation methodology. Some academic effort has been made by introducing the cost-benefit analysis used in ecological economics, but it is not well suited to the analysis of the consequences and merits of changing cultural values. In particular, there is need for people to develop models that enable development of models of cultural sustainability. From the above, it can be seen that the emerging suite of economic research issues associated with the protection, management and development of heritage are challenging. Moreover, in a society where resources are scarce, it is important to deliver these services in an efficient manner. The greatest intellectual challenge is to find ways to evaluate trade offs among cultural and natural values. Underlying all of these research opportunities is the search for information on the likely returns to increased investment in the worldâ&#x20AC;&#x2122;s heritage. As heritage becomes scarcer and populations increase, significant increases in values can be expected.

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Reference Butler, R. W. (2000, 4 July ). The Loss of Regional Heritage and the Development of Regional Heritage Tourism in Western Countries: a Reoccurring Paradox? Paper presented at the Heritage Economics: Challenges for Heritage Conservation and Sustainable Development in the 21st Century, Canberra: Australian National University. Common, M. (2000, 4 July ). The Role of Economics in Natural Heritage Decision Making. Paper presented at the Heritage Economics: Challenges for Heritage Conservation and Sustainable Development in the 21st Century, Canberra: Australian National University. Graham, B. (2002). Heritage as Knowledge: Capital or Culture? Urban Studies, 39(5-6), 1003-1017. Guiso, L., Sapienza, P., & Zingales, L. (2006). Does Culture Affect Economic Outcomes? Journal of Economic Perspectives, 20(2), 23-48. O'Hare, D. (2000, 4 July). Articulating the Heritage Tourism Resource in Coastal Towns: a Case Study of Noosa. Paper presented at the Heritage Economics: Challenges for Heritage Conservation and Sustainable Development in the 21st Century, Canberra: Australian National University. Soanes, C. (2005). Compact Oxford English Dictionary (3rd ed.). Oxford: Oxford University Press. Throsby, D. (2000, 4 July ). Conceptualising Heritage as Cultural Capital. Paper presented at the Heritage Economics: Challenges for Heritage Conservation and Sustainable Development in the 21st Century, Canberra: Australian National University. Zeppel, H. (2000, 4 July ). Indigenous Heritage Tourism and its Economic Value in Austrilia. Paper presented at the Heritage Economics: Challenges for Heritage Conservation and Sustainable Development in the 21st Century, Canberra: Australian National University.

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Bliss or Misery— Contemplating the Engagement at Cultural Forms and Economic Progress , Weichi Jeang

Global Initiatives Symposium Essay ʳ ˧˻˸̀˸ˍʳ ˖˻˴˿˿˸́˺˸̆ʳ˴́˷ʳˢ̃̃̂̅̇̈́˼̇˼˸̆ʿʳ̇˻˸ʳ˚˿̂˵˴˿ʳ˘˶̂́̂̀̌ʳ˼́ʳ̇˻˸ʳ˧̅˴́̆˼̇˼̂́ʳˣ˻˴̆˸ʳ ʳ ˦̈˵̇˼̇˿˸ˍʳ ˕˿˼̆̆ʳ̂̅ʳˠ˼̆˸̅̌Ϋʳ ˖̂́̇˸̀̃˿˴̇˼́˺ʳ̇˻˸ʳ˘́˺˴˺˸̀˸́̇ʳ˴̇ʳ˖̈˿̇̈̅˴˿ʳ˙̂̅̀̆ʳ ʳ ˴́˷ʳ˘˶̂́̂̀˼˶ʳˣ̅̂˺̅˸̆̆ʳ ʳ ʳ ʳ National Taiwan University Department of Medicine College of Occupational Therapy ʳ ˝˸˴́˺ʿʳ̊˸˼ˀ˶˻˼ʳ ʳ ʳ ʳ ˠ˴̅˶˻ʿʳ˅˃˃ˌʳ ʳ ʳ ʳ ʳ ʳ ʳ ʳ ʳ ʳ ʳ

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Preface Because numerous social difficulties have appeared day after day, I started wondering about what’s going on, and what is the reason that made so many people struggling in works and the salary. Thought the process, I realize that not only the financial strategy but also the value that matters of all. There maybe hides a fact that “Not to earn the most for the temporary, but for the permanence”, which may be a solution to the ecomomic dilemma . Hoping to having a proper values to esteem with, the whole environment can possess its own enthusiasm for another decades.

Text Recently, multitudinous social phenomenon of economy recession has made us to consider the solution of the predicament. The reasons of the recession have been brought up by numerous distinguished scholars. The first point of this article is to emphasize on the aspect that people probably may ignore: When the resource is sufficient enough, the entire environment can provide higher proportion of popularity to live in the high quality of life. On the contrast, when the environment doesn’t convert any new energy acquisition for the population outrageously rising, the affordable proportion will decrease, which is also represented that lower revenue group may become the majority. What’s worse, as soon as the divergence of proportion between high and low income group is over the toleration of society , the industry will develop unequally so as to cause only some companies that have gained profits from the high income can survive. Others will lost consumers, been forced to provide cheaper commodities. Otherwise, if people who used to live in luxury can not evaluate and control their ability of expenses, many phenomenon of malignant financial planning and banking problems will appear. Second, to explore the business, leaders have to ponder on what is the motivation that drive the consumers to spend their income. Leaders have to mold a set of permanent environment , to mold a set of values that is judged by a long-term thought rather than a temporal desire in order to urge the economic pattern without suspending.

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ʳ “According to Mogan JR reported at the end of last year……, the sales volume of global luxury commodities of 2009 will reduce to 4%. Especially in the main market such as United States and Japan , the volumes will drop apparently. Including the newest market as China , the sales volumes increased range will decrease from 15 -25% to 3%”

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From the figures of the table above, we can discover the percentage of basic consumption of eating and dressing had transferred to medical, entertainment and other categories that ensured the quality of life, which is indirectly indicated that more advanced, higher price commodities is gained the popularity gradually. As the reference, higher price commodities will not that welcomed as usual recently. The reason that encourages people to purchase high class level goods behind is affected by the entire social values that can be realizes as “Earn more, spend more, succeed more.” In this belief, people make the best effort to get property as much as they can. The unsteady situation will appear ill in such belief especially when the resource is insufficient as the population roars. Nevertheless, even people still maintain the eager of high class goods the basic living need is considerate at the first place. The demands of cheaper commodities arise progressively and win the profits by the amount nowadays. One way to unravel the dilemma is to adjust the motivation that caused the recession. Consumer require another core thinking as the motive force—According to Maslow's hierarchy of needs, what propel people to strive on work is the eager of the

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Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress

satisfaction of the need of physiological, safety, love/belonging, esteem, self-actualization. The flourishing economy is based on the values that various high class commodities and all kinds of exchange conducts can satisfy one’s esteem and self-actualization, which is truly brought a summit of lots of industries during 1960 to 1990. However, in the recent year, the strength is fading away step by step. Not focusing on real producing has had made the commerce of vanity and has had made the financial industry connected relatively to commerce meet the perplexity of challenges. It’s definitely convinced that the economic systems have to implement continuously, but the reason caused that caused finical difficulties must have to be deal with every effort. As well, the radical solution to the recession is still on the foundation of social values to the recognition of self esteem and self-actualization. If the whole environment still put highly praise on purchasing what others cannot afford , supposed that is a conduct of superiority, the chaos of economy will not have the opportunity to reflect its original view and will not provide human a placid life in the end. For the stable frame of commerce, correct values orientation is the social responsibility of each profit seeking enterprise, meanwhile, is one of the strategies of extend surplus and fortune.

Conclusion As what is mentioned before, to prevent the useless production and work plight, the main commodities should provide what consumers really need. If we over-emphasized on the unnatural desires, the society will sink in chaos that the persistence of products will decreased and causing the public diminish their spending for that they can’t explain what supports them to be the consumers. Certainly, if there is a quantification of whether the items of consuming are meeting the expectation, creating a scientific statistics. Furthermore, by comparing the timing of this factor and the relations between each economic depression, it is a more specific realizing and a stable index for predicting the prosperity. More over, it will provide those organizations directly involving in dominating the values of all public a most benefit suggestion, standing in the just right balance between luxury and the basic need-which can lead the most amount of wealth in the long run, getting the society a proper value in quality of life and self-esteem, and promoting the authentic booming in the commerce.

Reference ˗˼̅˸˶̇̂̅˴̇˸ˀ˚˸́˸̅˴˿ʳ̂˹ʳ˕̈˷˺˸̇ʿʳ˔˶˶̂̈́̇˼́˺ʳ˴́˷ʳ˦̇˴̇˼̆̇˼˶̆ʿʳ˘̋˸˶̈̇˼̉˸ʳˬ̈˴́ʿ˥ˁˢˁ˖ʳʻ˧˴˼̊˴́ʼʳ http://www.dgbas.gov.tw/public/Data/57121635571.pdfΖʻ˙˸˵̈˴̅̌ʳ˅˃ʿʳ˅˃˃ˌʼʳ

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˗̂̈ˀ˪˸˼ʳˡ˸̊̆ʳ ˻ttp://www.dwnews.com/big5/Consumer/shopping/ifeng_2009_02_11_4_0_49_895.h tmlʻ˙˸˵̈˴̅̌ʳ˅˃ʿʳ˅˃˃ˌʼʳ ್ཎ੖Ε‫׾‬ᆳख़࿭Ε௧ዿΖ್ཎ੖Գࢤጥ෻ᆖࠢΖʻ‫ؑק؀‬Κ೸ࡌΔ‫ˈˌ ا‬ʼΖ଄ ˆ˅ˀˇˋΖ ‫׆‬ਙࣟ‫ܦ‬ભဎΖᆖᛎ८ᘜ‫ٲ‬ᖲऱ߻ᒤፖ‫ڂ‬ᚨ  ‫ٺ‬ഏᆖ᧭ΰ‫ؑק؀‬Κ‫؀‬᨜८ᘜ㷇 ಝೃ‫ ا‬91α ൈॾពΖഏᎾ८ᘜ෻ᓵፖኔᎾΖ‫ؑק؀‬ΚԿ‫ا‬‫ ا‬92α ࡜ࣧሒᐚ(Nigel Doddထ ്‫ܩ‬फ᤟Ζषᄎ෻ᓵፖ෼‫ࢤז‬Ζΰ‫ؑק؀‬Κ؎ੌΔ ‫ ا‬92α

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A STUDY OF CULTURAL CONVERGENCE FROM PURCHASING POWER PARITY PERSPECTIVE

--- MORE EVIDENCE FROM W INDOWS VISTA INDEX

INTRODUCTION When Euro was first launched on 1 January 1999, against all odds, “Big Mac Index” (BMI) created by The Economist Magazine was one of the few who predicted the depreciation of Euro. This success triggered an international applause of Big Mac Index as a light-hearted assessment to measure purchasing power parity. The index is based on the law of one-price. In this case, a basket of goods is replaced with one product – the Big Mac hamburger which is sold in 119 countries. By converting the local prices into US dollars (USD) then compared with real exchange rate, Big Mac index uncovers the arbitrage opportunities exist between a particular country and United States. However, BMI is far from perfect. One could easily assume the change in business environment since 1986. What once a good indicator of a country’s PPP may not has the same representative status in this IT age. The change in global business environment may require a product what is constantly self-updating. Low price of Big Mac with the range of US$1.42 to US$4.601 will magnify a slight price differences between countries generating a large percentage error of the BMI. The change in eating habits further complicates the issue (Sonestedt, Wirfält, Gullberg and Berglund 2007).In addition, some cultures and religions have second thoughts about cows. Therefore, a large percentage of the Muslim and Hindu communities have to be excluded from BMI. The academia has also long being doubtful about this index, particularly on the existence of non-tradable component in the production cost (Pakko and Pollard 1996) as well as apparent component (beef) cost difference in a standardized product (Li 1997). Many attempts have been made to improve the index, from the “Tall Latte Index2” created by The Economist itself, to the Apple iPod Index by the Commonwealth Bank of Australia and eventually to the Game Console Index (Cox 2008). The paradigm has shifted from food items to high-tech products. 1

Source: The Economist Lattenomics, The Economist, http://www.economist.com/finance/displaystory.cfm?story_id=E1_NPGTDSN

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However, the manufacturing cost of iPod is still considerably high (40%3), not to mention the transportation cost required. In addition, the stiff competition in the hightech electronics market in developed countries might force retailers to cut their margin. On the other hand, due to fewer brands available in the developing nations, may allow the retailers to price them at higher price. This combined effect on market availability may undervalue the developed country currencies, while overvalue developing country currencies. Software industry usually requires a massive investment in centralized R&D (In 2007, Microsoft spent $6.2 billion on R&D4), while the manufacturing and packaging cost could be effectively reduced to near zero after mass production. Furthermore, software like operating systems (OS) have little component disparity as it is the platform where other program will rely on – maximum compatibility is required. This effectively removed possibility for disparity in components. These unique factors make software products a convincing candidate for evaluating PPP and cultural convergence. This paper aims to explore the interaction between purchasing power parity and cultural convergence using of software products instead of Fast-food products in measuring global purchasing power parity. Microsoft’s Windows Vista Home Basic Operation System is chosen to represent the software products. The rationale will be discussed in the following chapter. A similar methodology to the famous “Big Mac Index” is adopted here for a fair comparison between software products with fast-food products. To ensure the validity of our analysis results for individual countries, a combination of validation methods was employed – Sensitivity analysis and Triangulation process.

METHODOLOGY The prices of Window Vista Home Basic (WV) packaged edition in each country was obtained by calling the respective customer service centers of Microsoft Company of each country within two days5. This short time frame avoids data inaccuracy due to pricing policy changes. There are X countries in our sample, Table 1 shows the detailed analysis of all countries investigated. Data on currency exchange rates used in this study was taken directly from Bloomberg and presented in indirect terms (stated values demonstrate how much of the respective currency can be bought with 1 USD6). All exchange rates were taken as the daily closing

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Ryan Block, Your $200 iPod nano costs about $90 to make, http://www.engadget.com/2005/09/23/your-200-ipod-nano-costs-about-90-to-make/ 4 http://blog.searchenginewatch.com/060602-085238 5 Two dates are 31 Dec 2008 and 1 Jan 2009. 6 To convert values into direct figures showing the amount of US dollars that can be purchased with one unit of a particular currency, a reciprocal of the numbers shown may be done.

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price at 1 Jan 2009 to investigate the latest currency valuation while allowing ample time for back-testing. The implied PPP of the dollar is calculated by dividing the local WV price against the price in United States. This Vista PPP is the exchange rate that would equate the prices of WV in America as elsewhere. The implied exchange rate is compared to the actual market exchange rate between these currencies to determine if the relevant currency is under or overvalued7, as presented in the final column. A figure of 0 indicates a fair market valuation for the respective currency in line with strict PPP, figures below 0 indicates currency undervaluation and vice-versa8. This index is the technical equivalent of BMI in that it calculates PPP exchange rates simply by comparing the local currency prices against the US prices. This hence allows a fair comparison between BMI and WVI.

RESULTS AND ANALYSIS In Appendix 1, we have listed all the countries investigated. Among them, the Peruvian Nuevo Sol is the most undervalued currency (-76.07%), followed by the Chinese RMB (63.43%), On the other hand, the most overvalued currency is the Hungarian Forint (125.02%). Generally, the currencies of developing countries are generally undervalued. On the other hand, the Euro seems overvalued, still. It is interesting to note that within geographically close regions, valuations tend to be similar, namingly Malaysia (-42.06%) and Indonesia (-52.24%), as well as US (base currency) and Canada (6.55%). This suggests the existence of certain degree of pricing and cultural convergence across the immediate boarder.

ACCURACY COMPARISON BETWEEN BIG MAC INDEX AND WINDOWS VISTA INDEX We computed the absolute difference of Vistaâ&#x20AC;&#x2122;s valuation and Big Macâ&#x20AC;&#x2122;s valuation from the actual change in the exchange rates between 1 Jan 09 and 2 Feb 09. This allows us to compare the predictivity of Vista Index as well as Big Mac Index. The last two columns

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These terms are used in the same sense as BMI, according to PPP theory which argues that in the long run, exchange rates should move towards levels that would equalize prices of an identical basket of goods between any 2 countries. Realistically however, the market exchange rates will deviate to an extent from strict PPP. Markets should be assumed to adjust exchange rates to equalize prices of individual goods or any market baskets.

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For example: Canadian dollar is overvalued by 100* [(259/200)-1.22]/1,22 = 6.55%

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indicate the absolute difference of Windows Vista Index and Big Mac Index from actual. Absolute values are taken to eliminate trend biasness.9. Table 1: Comparison between Window Vista Index and Big Mac Index in reality

G8

NICs

Country

Vista Price (USD)

Vista Index 2009-1-1

Big Mac Price (USD)

Big Mac Exchange Exchange % Index rate rate change 2009-1-1 2009-1-1 2009-2-2 of USD

US Canada Euro Japan Russia

200 213 271 299 235

Nil 6.55% 34.76% 49.29% 17.36%

3.57 4.08 5.34 2.62 2.54

Nil 14.30% 49.60% -26.60% -28.90%

Nil 1.22 90.74 29.15 0.68

Nil 1.24 89.45 36.13 0.70

UK

200

-0.19%

4.57

28.00%

0.71

0.78

Nil -2.00% -8.54% 1.44% 19.33% -2.80%

China India Mexico Brazil Malaysia Philippines Thailand Turkey South Africa

73 103 159 193 116 174 188 123 137

-63.43% -48.72% -20.65% -3.66% -42.06% -13.17% -6.20% -38.54% -31.68%

1.83 Nil 3.15 4.73 1.7 1.96 1.86 4.32 2.24

-48.70% Nil -11.76% 32.50% -52.39% -45.10% -47.90% 21.00% -37.30%

9.48 13.71 2.32 6.83 48.77 3.47 47.52 34.78 1.54

10.13 14.42 2.31 6.85 48.93 3.62 47.72 34.97 1.65

Absolute Difference from Actual Vista Big Mac Nil Nil 0.05 0.12 0.26 0.41 0.51 0.25 0.02 0.48 0.03

0.25

-0.37% -0.33% -4.87% 0.13% -4.15% -0.42% -0.54% -6.74% -6.51%

0.64 Nil 0.26 0.04 0.46 0.14 0.07 0.45 0.38

0.49 Nil 0.17 0.33 0.57 0.46 0.48 0.14 0.44

Sum

3.29

4.59

Source: Bloomberg, Microsoft Co. Big Mac index seems to agree with Vista Index on Canada dollar and Euro for their overvaluation, as well as most of NIC currencies for their undervalued status. However, they disagree on Russia, Japan, Brazil and Thailand. In general, the Microsoft Vista Index has an absolute difference from actual fact by 3.29, while Big Mac Index is 4.59. The improvement is about 39%. This improvement in accuracy could due to the superior nature of software products in terms of international trade.

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Because positive figure in valuation indicates a tendency to devaluate, therefore we uses the Vista or Big Mac valuation to plus the actual difference in exchange rate to obtain the absolute difference

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G8 VS NICS (NEWLY INDUSTRALISED COUNTRIES) Figure 1: Plot of WVI vs GDP per capita

Valuation vs GDP per capita 45,000 40,000 Japan 35,000

Canada UK

GDP Per capita

Euro Zone

30,000 25,000 20,000

Malaysia Turkey

Russia

Mexico

15,000

Brazil Thailand

South Africa

China

10,000 5,000

Philippines

India

-80.00%

-60.00%

-40.00%

-20.00%

0.00%

Valuation

20.00%

40.00%

60.00% (5,000)

Source: Bloomberg, IMF *Radius of the circle is proportional to the GDP per capita of individual country. From figure 1, it is apparent that G8 countries are concentrated on the right hand side of the valuation chart; while NICs are disperse on the left hand side. This is because under the current recessionary environment, emerging country currencies seem greatly undervalued (average: -29.79%) [See appendix 1], while developed world seems more overvalued (average: 21.55%). From macroeconomic level, this is probably due to repatriation of funds from developing countries to developed world where investors have more confidence or eminent demand for cash to clear the balance sheet. This has increased the demand for developed country currencies, which results a superior exchange rate. Most interestingly, among G8, Russia has similar level of GDP per capita as Mexico, Turkey and Malaysia. However, Russian Ruble is overvalued as other G8 country currencies by 17.36% on its own. This abnormality suggests that Russian Rouble is likely to adjust its position to reach an equilibrium state. At the beginning of 2009, Russian Ruble tumbled by 19.33% (Source: Bloomberg) just in January alone. (as indicated by the red arrow) This is probably caused by the sharp drop

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in oil price from its peak at $145.8510 per barrel to $47.7511 per barrel. As its new found might, oil has been the main thrust for economic growth in Russia for past few years. However, the deepening of financial crisis, especially in the automobile industry, has led oil price to plunge. Rouble’s new position on 2 Feb 2009 matches the level as Mexico, Turkey and Malaysia. In theory, the likelihood of Russian Rouble to stabilize at current level is high. In fact, during February 2009, Russian Rouble only depreciated by 0.12% (Source: Bloomberg). This further justifies the accuracy of our model. This classification of currency valuation and the movement of Russian Ruble suggest to us that PPP is still greatly influenced by the economic level of a country. The law of oneprice may not stand though in today’s environment. This model also suggests that the law of one-price may be modified into law of two prices, adjusting to the level of classification of GDP per capita. This could be an interesting area for further research.

CONCLUSION In this paper, we have demonstrated the use of Window Vista OS as a better choice to Big Mac in currency valuation. MVI deviates from actual rates by 3.29, compared to BMI’s 4.59, implying an improvement in accuracy of about 39%. In general, emerging country currencies seem greatly undervalued (average: -29.79%), while currencies of the developed world seems more overvalued. The greater accuracy of WVI also implies the importance of software in globalization. All the above have proven the existence of pricing arbitrage among richer countries and less developed nations. Even though one may argue that there is certain degree of cultural and pricing convergence at broad, large discrepancies still exist in countries with different economic levels. The undervaluation of emerging country currencies may enhance the competency of their products; however, on the other hand, it might be fair to their land.

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APPENDIX 1: EVALUATION OF WINDOWS VISTA INDEX VS ACTUAL EXCHANGE RATE Vista Index Local Currency in dollars United States Australia 299 Britain 137 Canada 260 China 499 Euro Area12 194 India 5000 Hong Kong 1700 Hungary 84990 Indonesia 1060000 Japan 27090 Kenya 7600 Malaysia 400 New Zealand 337 Norway 1955 Peru 150 Poland 317 Pakistan 7990 Philippines 8250 Russia 6842 Saudi Arabia 619 Singapore 358 South Africa 1295 South Korea 247000 Sweden 1700 Switzerland 145 Taiwan 6890 Thailand 6514 Turkey 189 Vietnam 3100000 UAE 325 Source: Bloomberg, Microsoft Co.

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200 212 200 213 73 271 103 219 450 95 299 97 116 198 282 48 108 101 174 235 165 249 137 196 219 137 210 188 123 177 88

Implied ppp of the dollar 1.50 0.69 1.30 2.50 0.97 25.01 8.50 425.06 5301.33 135.48 38.01 2.00 1.68 9.78 0.75 1.59 39.96 41.26 34.22 3.10 1.79 6.47 1235.31 8.50 0.73 34.46 32.58 0.95 15503.88 1.63

Actual Exchange Rate 01/01/09 1.41 0.69 1.22 6.82 0.72 48.77 7.75 188.90 11100.00 90.75 78.62 3.45 1.70 6.92 3.13 2.95 79.05 47.52 29.16 3.75 1.43 9.48 1259.55 7.78 1.06 32.82 34.73 1.54 17479.00 3.67

The retail price for Euro Area is taken as the average retail price of the area.

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Under / over Valuation 6.05% -0.19% 6.55% -63.43% 35.40% -48.72% 9.70% 125.02% -52.24% 49.29% -51.65% -42.06% -0.96% 41.27% -76.07% -46.23% -49.45% -13.17% 17.36% -17.47% 24.78% -31.68% -1.92% 9.29% -31.70% 5.00% -6.20% -38.54% -11.30% -55.75%

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APPENDIX 2: VALUATION OF CURRENCIES WITH THE USD AS BASE CURRENCY Vista Index Local In US Currency dollars

G8

Africa North America South America Asia

Eurasia

United States Canada Japan Russia UK Euro Zone Italy Germany France

Implied ppt of the dollar

200

Nil

260 27090 6842 137 194 193 196 192

213 299 235 200 272 271 275 270

1.30 135.48 34.22 0.69 0.97 0.97 0.98 0.97

South Africa Mexico

1294 2199

137 159

6.47 11.00

Brazil

449

193

2.25

China India Malaysia Philippines Thailand Turkey

499 5000 400 8250 6514 189

73 103 116 174 188 123

2.50 25.01 2.00 41.26 32.58 0.95

Actual Exchange Rate 01/01/09 Nil

Under / over Valuation, % Nil

1.22 6.55% 90.75 49.29% 29.16 17.36% 0.69 -0.19% 0.72 34.76% 0.72 34.70% 0.72 37.66% 0.72 34.85% Average = 21.55% 9.48 -31.68% 13.86 -20.65% 2.33

-3.66%

6.82 -63.43% 48.77 -48.72% 3.45 -42.06% 47.52 -13.17% 34.73 -6.20% 1.54 -38.54% Average = -29.79%

Source: Bloomberg

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A STUDY OF CULTURAL CONVERGENCE FROM PURCHASING POWER PARITY PERSPECTIVE, Ming Xia

REFERENCE Anon. 2000. Big MacCurrencies. The Economist (US), 9 April. Pg 91 Ong, L.L. 1998. Fast food for thought: Burgernomics and the ASEAN currency crisis. Journal of the Securities Institute of Australia, Autumn (1) : pg 15-16 Laurenceson, James & Kam, Ki Tang 2006. China’s Equilibrium Exchange Rate and Trade Balance: a Tale of Apples and Pirates. East Asia Economic Research Group. Discussion paper No.8. Available from: IDEAS. [20 February 2009] Laurenceson, J. and Qin, F. (2006) The exchange rate debate, in Economic growth, transition and globalization in China (Ed.) Y. Wu, Edward Elgar, Cheltenham, pp 199-213 Ong Lilian (1997) Burgernomics: The economics of the Big Mac standard, Journal of International Money and Finance, 16, 865-78. Parsley, David.C. & Shang, Jin Wei (2003) A Prism into the PPP Puzzles: The Microfoudnations of Big Mac Real Exchage Rates, NBER Working Papers 10074 Yang, Jiawen (2004) Nontradables and the valuation of RMB – an evaluation of the Big Mac index, China Economic Review 15, 353-5 Cox, Joe (2007), Purchasing power parity and cultural convergence: evidence form the global video games marlet, Journal of Cultural Economcis, Volume 32, Number 3 Xu, Zhenhui (2002), Purchasing power parity, price indices and exchange rate forecasts, Journal of International Money and Finance, Vol.22: 105-130. Clement W. Kenneth & Lan Yihui, A New Approach To Forecasting Exchange Rates, Economics Discussion Working Paper, The University of Western Australia, Department of Economics Hines 2004. Cnet http://management.silicon.com/itdirector/0,39024673,39124118,00.htm. \

news.

Story, alan 2004. Intellectual property and computer software. Story, Alan (2004), Intellectual Property and Computer Software – A Battle of Competing Use and Access Visions for Countries of The South. UNCTAD-ICTSD Project on IPRs and Sustainable Development. Internationl Centre for Trade and Sustainable Development International Trade Administration, “Computer Software Industry”. [Online] U.S. Department of Commerce, (2008), Available at: http://www.trade.gov/investamerica/computer_software.asp [Accessed 9 March 2009].

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Desmond, J.P., “Innovation Alive and Well”. [Online] Software Magazine (2009), Available at: http://www.softwaremag.com/L.cfm?Doc=1175-10/2008 [Accessed 9 March 2009] Engel, C. & Rogers. J.H. (1996), How wide is the border? The American Economic Review, 86(5), 1112-1125 Engel, C. & Rogers, J.H. (2001) Deviations from purchasing power parity: Causes and welfare costs. Journal of International Economics, 55, 1242-1272. doi:10.1016/S00221996(01)00094-0 Hearn, G. and T. Mandeville (2005). How to be productive in the knowledge economy: the case of ICTs. Handbook on the knowledge economy. R. David, H. Grey and N. Abraham. Cheltenham, Edward Elgar: 255-267 Pakko, M. R. and Pollard, P.S.(1996) For here or to go? Purchasing power parity and the Big Mac. Federal Reserve Bank of St. Louis Review 78, 3-21. Desmond, J.P., “Innovation Alive and Well”. [Online] Software Magazine (2009). Available at: http://www.softwaremag.com/L.cfm?Doc=1175-10/2008 [Accessed 9 March 2009] Christensson, P., 2007. Commercial Software Definition. [Online] Available at: http://www.techterms.com/definition/commercialsoftware [Accessed 3 March 2009]. Fuller, T., “How Microsoft Warded Off Rivals”. [Online]New York: The New York Times, (2003), Available at: http://www.nytimes.com/2003/05/15/technology/15SOFT.html?ei=5007&en=a675991 e5c85fa9b&ex=1368331200&partner=USERLAND&pagewanted=all&position= [Accessed 20 February 2009]. Anon. , ‘Purchasing Power Parity and the Balassa-Samuelson Effect’. [Online] National Graduate Institute for Policy Studies , (2009). Available at: http://www.grips.ac.jp/teacher/oono/hp/lecture_F/lec05.htm [Accessed 10 March 2009]

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The financial industry – From Hawaii to somewhere else, Joao Brandao

Word count: 1995 / PIN: 10521

The financial industry – From Hawaii to somewhere else. 1. Current crisis’ facts Statements of companies losing the bulk of their market capitalization in an extremely short period of time seem commonplace to nowadays news readers. Nevertheless, a more careful analysis shows how astonishing it actually is. Market Capitalization indicates the current value of a company, as perceived by investors – who, if not rational, are supposed to act at least reasonably. A loss of 90% of a company market capitalization, within a couple of months indicates that, in this short period of time, investors revised the value of this company to a tenth - including its contracts, physical assets, know-how, brand image, work force, organizational culture and history in the society. What can be said about fundamentals? Is there a minimal stability on valuations that would justify its existence as a measure? Since the last quarter of 2007, the financial world experiences a shake-down in all its previous certainties. Current scenario comprises unforeseen wide corporate debt spreads, equity markets down to approximately a half worldwide, huge losses for pension funds, banks bail-outs, a dramatic shrink in alternative investments’ assets and concept attractiveness, real estate prices plunging and cheap bargains waiting for a good soul to pack them home. But what does all this mean? In there any truth or human sensation behind expressions such as widening spreads, equities downturn, bail-outs or shrink in alternative investments? Where is the connection between the financial fiction and individuals’ daily realities? 2. Some reasons The facts mentioned in the first section, summarizing current markets’ state of affairs have certainly a great variety of sources. There is no packaged explanation for a global turmoil of such magnitude. An analytical effort makes sense, though. I believe that the analysis can be made in two abstraction levels: i) the first, more factual, towards which specific actions can be undertaken to favor the emergence of a healthier environment; and ii) a more generic one, based on cultural aspects, whose directions are determined solely by the conjunction of several factors. 2.1. First abstraction level In the first abstraction level, two explanations can be put forward. One concerns the structure of information management and the other refers to a mixture of excessive risk-taking and lack of transparency. 2.1.1. Structure of information management The portfolio diversification principle implies holding a stake in different companies or assets in order to minimize risk exposure and to increase the remuneration per unit of risk of the overall portfolio. Holding a diversified portfolio means as well that the portfolio manager needs to monitor the evolution of a range of securities from which he may never had heard or seen, besides the numbers in his excel sheets. A “VlookUp” function providing the hopefully accurate accounting data and consequent financial multiples is all he may have at his disposition. The competition between asset managers pressures their cost structures, what culminates in one portfolio manager being responsible for an enormous number of accounts, especially in the case of private banks’ mandates. Nevertheless, this is an optimistic case, since there is still a manager taking care of the investments. Several quantitative investment strategies are controlled by a pre-defined

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algorithm which incurs trades based on econometric measures. No relation to real company management. No worries on the actual facts behind the variables’ Greek letters. 2.1.2. Excessive risk-taking The second factor relates to the excessive risk-bearing and the lack of transparency which dominate financial markets. Excessive risk-bearing is to be seen everywhere, from “dynamic” money market funds to highly leveraged structures, passing through ad infinitum securitization. The attempt to enhance performance, despite the price implicitly paid, is the main driver of this scenario. When looking at the structure of financial markets, what astonishes the most is the accordance of regulators and institutional investors with accounting and risk-measures practices delivering a clearly irresponsible message. Two simple examples: Earnings per Share measure and Off-balance sheet accounts. The first is a measure of a company’s profitability. It is calculated by dividing net earnings by the number of a firm’s outstanding shares. No problem if it would not be an easily distortable index and if its usage would not boost risk-taking as an overall practice to increase share price. Taking more debt relatively to equity, what means leveraging the company’s capital structure, reduces the number of shares against the potential profit that the overall capital can generate, increasing earnings per share. The sensitive point is that the risk one shareholder faces by holding one share of a highly leveraged company (possibly with higher Earnings per share) is not comparable to the risk he faces by holding one share of a operationally similar 100%-equity company. The focus on earnings per share is, consequently, a misleading practice since it totally ignores the amount of risk undertaken in order to generate a certain amount of return. The second example concerns the off-balance sheet structures. The function of the balance sheet is to provide a global view of the company’s patrimonial structure. It is supposed to inform in a systematic way about its liquidity and solvency scenario, as well as about its ratio of investments in fixed assets to working capital. The same applies to banks and financial institutions. Even if banks’ balance sheet refers to operations of a different nature, the fact that it should be an overall trustful guide to conscious decisions remains unchanged. Why then allowing off-balance sheet structures? Practioners tend to say it is a way of limiting the effects of prices’ volatility on banks’ balance sheets, which would be too heavily affected by the mark-to-market system. One question remains: shouldn’t the problem rely more on the fact that balance sheets are to a very high extent comprised by too risky assets? Wouldn’t a limitation of the degree to which banks can hold potential toxic assets make more sense than creating off-balance sheet structures? These are reflections that come to play, unfortunately, a little late. 2.2. Second abstraction level 2.2.1. Disconnection between the financial world and people’s daily realities A more profound look into the facts and behaviors described above generates the question of how all that influences daily life and what is the reason to worry about it. The somehow scary financial dictionary – with cold words and often pseudo-smart metaphors gives economic facts a sense of science fiction, making people forget these facts have direct consequences into their destinies. Exactly there, at the disconnection between the individual behavior in the “financial world” and its consequences in the real life, resides one possible explanation for the excessive risk-bearing as well as for the disregarded mechanism of information management described before. New technologies in the form of data provider services, instant trading systems and advanced quantitative models strengthen the segregation between the reality in which the

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investment is effectively made (the ideas and structure in which the money will be used) and the reality where the portfolio manager presses the Enter button. On the other side, the reality where the investor reserves part of its remuneration or accumulated savings in order to assign a mandate for a third party to manage it is also completed apart from that of the person who will effectively manage it. The intermediary function of the financial markets – establishing the connection between people who have money but no profitable business and those who have profitable ideas but no money – isolates the financial reality from that in which real people generate richness. Consequently, both the interpersonal relations – client vs. manager and manager vs. investment receptor – do not “feel” real. For the manager, his relation with clients takes the form of graphs and tables in the sales’ review meeting, in which the evolution of its penetration into the distribution networks is monitored. On the other side, his relation with target investment receptors appears as spreads/stock price movements, reflecting changes in demand or supply for the specific security. In addition to that, the manager’s relation with people’s savings gains a different color as well. The sanction for losing people’s money comes in the form of the threat of losing his job, or the threat of having his fund cut-off. Unless the specific manager is the only one (or one among a limited number of managers) that performs poorly, he does not suffer a high penalty. When the whole industry does badly, the responsibility for the downturn seems diffuse and there is no easy target to which investors can address their complaints. In this context, managers are offered a protection in case of downturn, while being able to enjoy the advantages of the upsides. 2.2.2. The dominance of one cultural model The financial markets are very much influenced by the Anglo-Saxon cultural model. This is true for many features of today’s world, but the financial sector reveals an especially higher prevalence of a single-modeled cultural influence. First of all, it is important to state that the association made between the financial markets’ features and the Anglo-Saxon culture is to be analyzed in an objective way. It means that no responsibility for the development of financial markets in the last years should be solely attributed to English ad North American, nor that the responsibility for the recent downturn is to be fully accounted to them. No value consideration is to be put forward. The idea is to approximate this analysis as much as possible of a scientific approach. North American, as stated in their famous expression “America is the land of opportunities” use to be entrepreneurial people, who feel individually responsible for their own future and success. In this sense, culturally speaking, it is common that they rely less on the local communities or on their federal government for providing them public goods or for granting them an enjoyable life standard. These responsibilities are in a very great extent imputable to their own actions. This cultural aspect brought to life a very entrepreneurial approach, what often includes a high degree of innovation, risk-taking and private autonomy in the marketplace. In this sense, the evolution of financial markets shows a case of dominance of one cultural model as one can rarely see in other sectors of society. Apart from general features related to the industry shape itself (such as those stated before: innovation and risk-taking), other aspects of cultural prevalence can be seen as well in basic and not easily noticeable practices. The sense of humor of people involved in this industry, as well as the way of presenting their arguments are much more harmonized under the American model than one can imagine. North American and English tend to be very direct and objective when presenting their arguments, using commonly an inductive approach. This

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means that the analysis is often less profound, more concise and it departures from the conclusion, to, afterwards, present what has driven them. 3. Opportunities Today’s society is living a precious moment in which much change can be done. The financial crisis, which disrupted into an economic, regulatory and political crisis, gave us the possibility of rethinking and re-shapening future institutions. Not only more attention is to be paid into the level of risk taken by individuals and asset managers, but also a much broader transformation can be expected. This transformation may include growing attractiveness of socially responsible investments, which take into account environmental, social and corporate governance issues. Apart of that, the current situation certainly affected the image and the credibility of today’s financial industry’s model. This offers the possibility of new models emerging in different geographic areas, such as China or Brazil. So, if the financial industry used to be Hawaii, in the sense of its Americanism (dominance of a specific cultural model) and of its insulated character (due to the depersonalization of the relationships between managers and investors and managers and investment receptors), we expect it to be somewhere else in the future. The more inclusive, diverse and ethic it gets to be, the greater the benefits that the society can obtain from its functions.

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CSR (corporate social responsibility) is a Matter of Existence, Not a Matter of Choice, Min Hee Han

Word Count-1536 / PIN-10528

CSR (corporate social responsibility) is a Matter of Existence, Not a Matter of Choice. Last year, the Federation of Korean Industries (FKI), which is a multifunctional association for domestic industries which exists in the form of an incorporated body, released the statement about a creative plan to improve the level of moral management and transparent management. That is every company must set up a CSR committee. FKI believed that companies could check whether a violation has occurred and systemically expand their CSR through a CSR committee. It is needless to say that the majority of businesses aim to make a profit. If so, why companies have to care about CSR? Indeed, today most companies in the world endeavor to involve themselves in CSR. In short, more companies are focusing on CSR to be a valued and respected company, not just profit seeking. Only before several years, companies had no problem increasing their sales and profits if they had had good products, technology and marketing ability. However, the lever of social consciousness of consumers, stakeholders and employees around company has increased. They never judge companies only by price or quality of product anymore. They care more about how much interests the companies take in various fields like environment, human rights and labor. “The worse business is, the more customers have a tendency to buy „something they like‟ rather than „something they need‟. At this time, customers want to make sure whether the company which makes the product hold up their end of social responsibility” said Shin Bea Kim, CEO of SK Telecom which is Korean mobile communication service company at an Business for Social Responsibility(BSR) conference held in New York 7, November,2008. It reflects the importance of CSR. Even if you are very smart, handsome and have special talent, nobody would like you if you have no consideration for others. Companies are the same. There would be no consumer to buy products made by companies which never consider social responsibility. That‟s why CSR is a matter of existence, not a matter of choice. Recently, there are a lot of SRI (Social Responsible Investment) fund investing in companies that are actively engaging in CSR. SRI funds are very big scale taking up about 12 % of whole fund market in U.S. and these funds guarantee high-rate profits. It means CSR makes good images about companies and it is automatically reflected to the value of stock. Furthermore, ISO (International Organization for Standardization) which is the world's largest developer and publisher of International Standards established ISO 26000 standard providing voluntary guidance on social responsibility. It concludes: “ISO 26000 will be a distillation of international expertise on social responsibility – what it means, what issues an organization needs to address in order to operate in socially responsible, and what is best practice in implementing social responsibility. Recently, CSR has been emphasized to be successful in business as an essential quality and many studies have shown that the number of companies taking CSR has been increasing. However, not a few companies still hesitate to implement SCR. What are the main problems they face? And how can we solve it? Firstly, a lot of companies regard CSR as „cost‟. That‟s why they have been reluctant to CSR. However, CSR is definitely „investment for the future‟. I think that only a few companies thoroughly understand this concept „CSR=investment for the future‟. Most

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companies still treat CSR as cost or just contribution and they believe that they need to have a strong sense of duty for CSR. However, they have to have a correct understanding about it „CSR is one of the activities to get profits.‟ That‟s why CSR also needs clear purpose, specific plans, sophisticated strategies and powerful marketing as a process of other products which create profits is. They have to choose and support CSR which can match the vision, management philosophy and image of the company and do best to lead CSR to excellent result. Kookmin Bank(KB), the Korea's largest commercial lender is a good example of how well-organized CSR can positively affect its business management. KB bank is carrying out a wide variety of social contribution projects as part of efforts to fulfill CSR. They has been trying to find areas where it can contribute, - and not merely one-off donations - to offer a sustainable impact. KB bank has been focusing on English education for underprivileged children. KB bank established social contribution program named „KB bank English camp‟ and built a library for children. Furthermore, KB bank made financial product „kangaroo passbook‟ for children and improved the living environment of children by providing financial aid and volunteer work. Another financial product is „woman free savings‟ this product offers higher interest rates to women who do volunteer work over five hours or adopt children during admission period. Like this, KB bank implemented successful CSR through efficient targeting and financial products. KB bank could encourage people to be interested in social problems through various social contribution and financial products which evoke social issues like poverty and the weak. Of course, KB bank could improve its images and increase profits. Second, a lot of companies have the limited definition of CSR. It naturally causes CSR more monotonous and less creative. Many companies still regard CSR as making such a large donation for mass starvation in Africa or environmental protection. Even though ISO offers standard guideline and check list, actually there is no precise definition to define the boundary of CSR. It includes many things like environment, human right, labor practices, organizational governance, community involvement and society development, fair business practice and consumer issue etc. In addition, every other activity considering social responsibility can be CSR. We can say that to abolish unethical production method, to admit the defective product and compensate and correct it as soon as possible are also CSR. Hanwha group which is the manufacturing and construction company in Korea made „green safe purchasing system‟. It is a kind of pre-assessment to select desirable cooperation enterprise. This pre-assessment consist of environment, safe and health sectors. It also includes a guide to choose high saving energy products or recycling products when employees buy office supplies. Furthermore, Hanwha is trying to use anti-volatile organic compound materials, make landscape gardening by using abandoned logging and use environment-friendly materials which never emit dioxins and dioxin-like PCB. These activities enable Hanwha to get a good reputation. Third, a lot of companies have no idea why CSR needs PR activities. If you realize that CSR is a kind of „investment‟, you have to recognize that CSR also need PR activities like other products which companies sell. In the past, demand was more than supply so that consumers did not have choice. Advances in technology gave consumers power in the market. Companies had to focus on making superior products and improving them over time. However, the marketing concept emerged in the mid-1950s. Instead of a product-centered, „make-and-sell‟ philosophy, business shifted to a customer-centered,‟ sense-and respond‟ philosophy. It implies every company has to find more effective marketing strategy and PR Global Initiatives Symposium in Taiwan

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strategy in order to attract customer‟s attention. Recently, almost all customers buy brand, not just product and brand means the images of the company. There is no better way to entice consumers than introducing companies‟ CSR as PR activities. Who is most reluctant to do CSR? Yes, probably shake holders. They would think that CSR is costs and costs deprive their power toward the company. However, if stake holders understand there is a good connection between CSR and profits, they would cheerfully support CSR. That is why PR activities are important to enhance the effect of CSR. In short, PR activities for CSR could maximize the effect of CSR and improve the value of the company. More customers would have a friendly feeling toward the company, it would directly connect to profits, and profits would make stake holders support CSR. As a result, CSR would be more popular. It is no secret that the world economy is struggling today. The economic crisis is widely spreading across the world and no company can predict tomorrow. Then, how can we overcome this rigorous challenge? Unfortunately, there is no clear answer. However, it is times like this that many economists view as an opportunity to implement needed change to ensure future competitiveness and create new opportunities. And I believe that CSR could be the core for companies to strengthen the competitiveness. As I mentioned, if companies regard CSR as „investment for future‟, if companies break confined meaning of CSR and mix much more creative method for CSR and if companies implement PR activities about CSR which they did, I am sure every company could be leading company which overcome financial crisis in the near future. Naturally, if social stability is threatened, this means that the lives of individuals are also changing as market colonization progresses. Economists talk of individuals making rational, selfish and well informed decisions in the marketplace. However, as old say goes" If you share pleasure, it will be twice more and if you share sadness, it will be a half less." If companies try to share society‟s sadness together through CSR, I‟m sure that customers would give them more love.

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Bliss or Misery? —Contemplating the Engagement of Cultural Forms and Economic Progress, Natalia Lopez

Word Count – 1994/PIN 10541

Bliss or Misery? —Contemplating the Engagement of Cultural Forms and Economic Progress An ancient Chinese proverb says “Give a man a fish and he will eat for one day, but teach him how to fish and he will eat for the rest of his life”. What relationship this proverb can have with cultural and economic development, one may ask. Education is the base of any human being’s behavior and the way people are educated at their own home makes that person “programmed” for the rest of his life. These teachings, which we will call a person’s “home culture”, dominate the way in which a person’s brain creates, and produces thoughts and feelings. Other institutions such as school, church, civil associations and others act as compliments to this “home culture”, but these compliments are not as strong as the one that should exist at home. A person’s home is the base for how these individuals will behave themselves in society. So, this takes us to our first point: The numerous cases of teenage pregnancy that have flooded Central American countries in recent years. The responsibility that parents have over their children is something irreplaceable. Teenagers have not reached the appropriate state of mind to raise a child, for they do not have an idea of what to do with their own lives, neither a strong income, nor the maturity needed to give a child all the information he needs to become a successful person. By information, we mean the set of moral values that can help him engage in critical thinking and become a valuable member of society. The cases of teenage pregnancy are especially numerous in rural areas, and in poor urban sectors of Central American cities. Children springing out of these sorts of cases, normally have no education, for they have to work to from an early age (some since the pristine age of three are sent to beg for money on the streets). They have no set of values on which to base their experiences upon, and therefore as having an example of a mother that doesn’t work or try to overcome her current situation, they choose “the easy life” by becoming burglars, thieves or gang members. Being born into these types of homes people have stopped thinking in terms of honor, leadership and responsibility, this leads them to live unsatisfied lives and it limits their ability to be able to live in society, because they value everything basing themselves with the benefits of the what immediate satisfaction can give them. In a gang, these children feel like they have a role model to look up to, in this case it is the gang lord. Children take the example he exhorts (killing, bribing, torturing, threatening…) as the role model they didn’t have at home; Allowing children emerging from single parent homes to become more susceptible to grow up with the incorrect set of values, or no values at all. Thus a big part of the young population in Central American countries is growing without the correct 1

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formation, allowing the local culture be set on the incorrect form of moral values, allowing the local culture to be based in the wrong set of beliefs. Take for example countries in Central America such as El Salvador or Honduras who have been plagued with this problem during the past two decades. When the stated members of these sorts of groups feel that their very own haven is under danger, they will react violently, not accepting any type of change that could “damage” their beloved “institution” (gang). If members in these sorts of conglomerates are not taught to involve themselves in the correct institutions with the correct values, all the efforts made to confront these organizations would be useless. One can agree up to a certain point that things like the abridgement of an educational policy, no educational continuity, the lack of experience of personnel in the Ministries, and the unavailability of education being enforced in a major scale (which limits the accumulative rhythm of production and productivity factors), have resulted in stranded economic policies which are simply fleeting and inefficient. This last example brings us to our second point: the gargantuan levels of corruption in Central American countries.

The lack of scrutiny on behalf of the governments on the problems that their countries are facing, because of excessive centralism and corruption (taking for example that all the educational reforms are proposed by the FAO, UN, or the World Bank, and not by the local government) has many Central American economies stuck on the same loophole for years to come. Governments are granted loans on the promise that, those loans will be used to enhance educational policies and institute new educational reforms. However, because of the before stated corruption problem, this goals are not fully achieved. Goals stated by these institutions are only maintained temporarily, or up to the date where a loan is approved, but after this allowance is approved those projects are completely abandoned, or simply disregarded. One should nevertheless see the corruption problem from another angle, and this is where we ask: Why do Central American governments have no concern over their own people? Let us retrace ourselves back to the time of the Spanish colony in Central America. It was not the case of a vigorous nationalism emerging to overthrow an oppressing Spanish dominion like in the case of Mexico, but an idea that spread out only to some members of Central American societies, being these members the “Criollos” (sons of Spaniards born in Central American territory, or a mix between a Spaniard and a local). The Criollos wanted to seize control of the local colonies and drive out any Spanish influence that could interfere with them. This is how the only people who got the benefits of an independence movement were the Criollos. It is historically proven that there were people in other towns, beside the capitals, who heard that they had achieved independence from Spain many years later. As a result of all of these matters there was no base culture to give cohesion to the population that was left in the former colonies. There were people who were not killed during the trivialities 2  

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of the Independence Movement, many Mestizos (mix between black slaves and the local Indian tribes) and Indians were left behind without any purpose, education and culture. There were many group conflicts following for there were regional battles between the same Criollos, for the seizing of territory in the former Spanish colonies. There was no unifying identity between the different groups left; they had nothing in common. Income disparity and “Hacienda” lifestyles were developed as a result. There was no need for a country, it surged because some people agreed to it, but those countries that emerged are not something one could call a nation. All of these factors plus many more have led to mold a Central American society where everyone wants to pursue their own ideas. There is no group effort into supporting a common goal thus leading to an inequality in the overall objectives regarding not only the economy, but shifting abnormally the whole direction in which the country should go. Central America offers many examples of which we could benefit juxtaposing, but in this case we will contemplate the reforms in Costa Rica. What made Costa Rica stand out from the rest of Central America and even earn its reputation as the Switzerland of Central America? Well, it is not easy but many years ago Costa Rica signed series of treaties called EPA-1 and EPA-2, which abolished the military in the country. After having abolished the military the Costa Rican government transferred all the money that was usually destined to military projects into education. As a result Costa Rica experienced a substantial increment in its literacy rate (recent statistics show that less than 4% of the population is illiterate). Professionals became more qualified and the overall lifestyle of the average Costarican changed drastically over the following years. The EPA-1 and EPA-2 also included a series of loans from different international organizations, which also were invested into education. These EPA projects had short-term effects, for they were not continually supported by the following governments. All the money that was asked in the loans was invested in schools only and even though education does help a country, it really was not invested into diverse sectors that could also help repay the debt. These events (the scantiness of continuity on behalf of the government to support the EPA treaties and the lack of financial advice to what was best to be done to ensure return of investment in the loans that had been acquired) lead Costa Rica to compass a behemotic foreign debt, which is nowadays considered “unpayable”, and has Costa Rica going through many predicaments to acquire new loans for future development plans. As seen with the example above, countries in Central America do have the potential to overcome all their predicaments and eventuate themselves into the road towards development. Central America has bounteous natural resources, outstanding weather conditions, and human talent to be able to achieve any quantity of goals that would like to be overcome. By having a strongvalued based cultural reform, which focuses on general development but also seizes its time and space limits to define progressive objectives of development that are compatible with the current forces of production, (this means remembering that agricultural reforms, in Central America were not influenced by mass consumption, and that the majority of the agricultural grounds in 3

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the countries are still under a slanted model of family agriculture) beginning from a dynamic vision of the society (social groups). Before completely heading unto our final point one should remember two types of conflict: Informational Conflict (which deals with how much a person knows and understands) and Communications Conflict (which deals with how ideas and messages are transported), we have analyzed that very few people around the world, as in Central America are willing to question their beliefs to try to understand new and different things. As a famous French professor once said “Every reform emerges by proving the inadequacy of the institutions to the reality of current situations”. As we have stated in the example of the “maras” above trying to deal with a problem as deep as that without overcoming these latter two conflicts will lead to nowhere. From these arguments we must conclude that priority number one would be to establish a new government program based on values so that can people can learn to work with will, heart and the correct attitudes, focusing on educational reforms in schools and universities so that the population can slowly develop a new sense of nationality. The great Honduran Eduardo Ordoñez once wrote “A government will not change its country through the charities of other countries in the world; it will change the country when it delivers itself to truth and sacrifice” Government implementations like the one Taiwan had many years ago where the government slogan was “Home is the factory” would work only if at the same time the government involves new fiscal policy disciplines, civic participation, a huge fight against corruption in all levels, (not only in the high spheres), redirection of public spending from subsidies toward broad-based provision of pro-growth, competitive exchange rates, liberalization of inward foreign direct investment (like what El Salvador has done in the past years) gradual trade liberalization, but most importantly people will have to unite to find the common solution to their problems, like what Taiwan did in giving 100% support to the Information Technology sector 15 years ago. We can conclude that it is an individual’s initiative that impels progress; with problems like illiteracy and lack of will it would be hard to achieve any sort of amelioration. Education (based on values like will, courage, imagination…) should be the main focus of every country, and as Che Guevara said “A country that doesn’t know how to read is easy to be fooled”.

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Bliss or Misery? —Contemplating the Engagement of Cultural Forms and Economic Progress, Natalia Lopez

Works Cited 1.

La FAO y la Reforma Agraria en América Latina: hacia una nueva visión. Paolo Groppo. May 20th 1997. Pgs 1-12

2. Reformas Educativas en LatinoAmerica en tiempos de Crisis. Melchor Huamán Cosi. Pgs 1-10 3. Los Procesos de la Reforma de la Educacion en America Latina. Melchor Huamán Cosi. A-MÉRIKA Magazine. www.revistaamerika.deusto.es. June 5th 2008.Pgs 1-10 4. Sentido en Comun. Eduardo A.Ordoñez. Bueso. www.sencomun.com

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Bliss or Misery? — Contemplating the Engagement at Cultural Forms and Economic Progress, Gantsetseg Byambajav

Word Count- 1853 /PIN-10585

Bliss or Misery? — Contemplating the Engagement at Cultural Forms and Economic Progress I would like to draw you attention to the what happened in Mongolian economy over 18 years ago. I was trying to understand what was happened in Mongolia and its preferences change in 2004. Please have a look what I was thinking at that time. Some of raised issues are still important for us and young people, like you and like me should be active and creative since we have been becoming the main engine of this society. This essay analyses some of the main preference changes that occurred in Mongolia during the decade of economic reform that has taken place since the beginning of the 1990s, with the country shifting from a planned economy to a market economy. This work will determine Mongolia’s preferences, some principles of communication and try to justify each of those preferences. Almost everything has changed in Mongolia due to changes to a market economy, which involves aspects concerning the economic system. By the end of 1990 change occurred. The reasons for such changes were: 1. The Soviet Union collapsed which was Mongolia’s only one ally. 2. People started to understand that something was wrong and it was not the perfect system. People wanted private capital and to have uncensored information, including the right to express their opinion. 3. People started to become sick of an “unchangeable” dogmatic ideology. Some young people resisted the social system and tried to meet the government officers. Those young people still pursued their goals and started to go on a hunger strike in front of the government house. Whilst this was happening, some army members of the government put forward their idea, which was to use military force against the public. Fortunately, Mongolia had a good leader and he made a decision to force the whole government to resign and announced a national election of parliament and president to the public. Thus, there was no bloodshed like a Tiananmen Square in China. With the shock of this change, the end of communism could occur more easily if people can take a bit of the past with them because most old Mongolian people often talk about “the good old days” and it is easy to imagine that they are describing the stable

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and peaceful time during socialism. People did not like endings and they did not want to let go of something. What was Mongolia? Firstly, before 1990, Mongolia was fairly closed but nonetheless much more open than today’s North Korea. There was no chance to know what was going on there and all national TV and radio stations had worked for this government before 1990. Communications media were directed by overlapping and interlocking government commissions. However, radio and television were available through Ulaanbaatar, both of which were supervised by the State Committee. That government never talked thoughts out and people saw government members very seldom. Once Steven (cited in Argenti & Foreman 2002, p. 37), vice president of communications at General Motors, said: “If leaders are successful, they will spend an increasing amount of time on communication issues”. Moreover, this government focused in depth on their interests first. Secondly, at that time, the government paid much attention to gathering information. They were concerned with the present orientations, facts and they required from the public that everything must be clear and detailed. Lawless complained that the papers would print whole speeches of the major players involved, which often spilled over two or more pages. It seemed that there were no events organized without the government censor. It was good in some cases because people seldom made errors but the worst thing was the government sometimes ignored people’s inspirations. They tended present orientation more than future possibilities. Thirdly, the socialist government had a major objective that followed the main principles of socialism such as private capital should not be allowed in this society and there should not be rich people. This government usually made impersonal decisions but sometimes paid insufficient attention to people’s wishes. It is widely accepted that the lack of consideration of people’s wishes was one reason for the collapse of the socialist system in Mongolia. If they thought they made a correct decision, which was not acceptable to the public, they usually forced the public to follow their decisions. It seemed that this government used a mass media very “nicely” for their purpose. Lawless stated “Truth – for decades the country’s only daily newspaper-was in there, but no one ever bought it”. Finally, that government liked using experience and standard ways and restrictive regulations to solve problems and make decisions. Actually, they tried to standardize everything instead of encouraging people’s inspirations. Ron (Cited in Argenti & Foreman 2002, p. 219) stated 2 Global Initiatives Symposium in Taiwan

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Bliss or Misery? — Contemplating the Engagement at Cultural Forms and Economic Progress, Gantsetseg Byambajav

“Ignorance is always a turnoff”. The government worked their plan. They were organized and tried to finish their task before the deadline. That government was the more stable of governments because there was only the Communist party and no competitors. That government changed rather slowly, deliberately and seldom entered and acknowledged a new situation. They created long-term visions and missions and divided them into short-term plans. Where did they go wrong? Their potential pitfalls were; they did not see the need for changing things that they believed were already working and overtook their emotions when they ignored their own feelings and values for too long. They were dogmatic. That was why they were clear about what they believed and preached to public. Absolutely, they controlled and censored all kind of media one hundred percent. How has Mongolia been changed? The Mongolian social and economic reform, which started in 1990, has been focused on an developing open country, an open economic policy, the protection of the right of private property, privatization of social and economic sectors, and encouragement of competition aimed at building and developing a market economy . Therefore, the most cadres were prepared in Russia. They had to study computing, an international accounting system, and English. The one regrettable thing happened in relation to Mongolian foreign affairs policy when the country was changing its system. Both the North Korean and the South Korean embassies were working in Mongolia. It was a very important chance to connect the two Koreas. Then the South Korean president visited Mongolia in 1999. At that time, the Mongolian president said that the government supports the South Korean “Sunshine” policy, which was passed to unite two Koreas. After this speech, North Korea withdrew their ambassador from Mongolia and closed their Embassy. Thus, the Mongolian president’s brief sentence resulted in a terrible clash of the Koreas. What we have become is too extravert and we offended North Korea however it is hard to know what wouldn’t ‘offend’ North Korea! The Mongolian foreign affair policy was implemented too quickly without careful thinking. The important things for the new government to consider are enough information, alternatives, options, and possibilities. Toffler (1990, p. 413) stated, “The appearance of the computer and new communications media in the mid-20th century smashed Moscow’s control of the mind in the 3

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countries it ruled or held captive”. It worked for Mongolians too and the new government started all major reforms by following their inspirations; however, some reforms had not brought good results. They have changed their preceding communication style, which was passive; they were isolated from the public, using an exclusive language and a “transmitter” (Hansen, 2004). They were always looking for possibilities and ready to test their new ways and methods to solve social problems. Sometimes they did so too quickly. For example, when they started the privatization, Mongolians had not enough savings, which was equal to only 3% of the value of the capitals that were going to be privatized. Now Mongolia is a democratic country, which is about the ways decisions are made especially with respect to personal values. The main difference between the new and old government is the new government works best in harmony with others and uses an inclusive language. A huge bureaucracy with communication procedures slows down decision-making (Argenti & Foreman, 2002). Their decisions are influenced by their own and other people’s likes and dislikes, which very easily creates an unstable situation. For instance, the governments were changed three times during four years and a few years ago, the government passed the Casino law in order to organize gambling games and their environments. The law was passed by 70% of parliament members’ votes. The funny thing is the parliament cancelled this law with about 80% of votes just after a couple of months. The new government thinks that humans are the engine of the development and always tries to encourage them. As a result, the adoption of Law on press freedom on 28 August 1998 by the Parliament was the first action in Mongolian history of 20th century taken by the State to release mass media from its control. Williams stated that the most dramatic indication of an open press was the appearance of pornography and the tabloid, which was called “Hot Blanket”, featured frontal nudity of occidental women. That was how people understood freedom of the press. In 1997, Undarya stated that there was only one TV and radio station until 1990 but after seven years there were over 600 newspapers nation-wide and overwhelming 70% of them are private, there were four independent TV stations and five independent radio stations in Mongolia. Moreover, in 2000, Lawless counted that there were more than 800 registered newspapers in Mongolia. The new government is definitely innovative and not afraid to experiment, so new things are always happening. Everyone is allowed to express their opinion and put forward their ideas. Maybe sometimes it could lead to anarchy, when people, who have some bad behavior, dominate in the society. For example, in the beginning of the transformation period, some people thought 4 Global Initiatives Symposium in Taiwan

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that democracy meant unlimited freedom. That is why Enkhtuya (cited in Lawless 2000, p. 125) said, “We [Mongolians] have a very low level of journalism”. After a while, they had to understand that one’s freedom is limited by other’s freedom. The new government is indeed much more sensitive to subtle signals in their external and internal environments than previous governments. Where might they go wrong? It seems that the main fault of the new government might be they move on to new ideas or projects without completing those already started and it creates a big load for the society. Thus, they may need to pay attention to and focus on key details. Summary

Strength

Weakness

The socialist government The democratic government It was the more stable government of They use values and can feel a little Mongolia signal and ready to be changed Well-organized and well informed They were dogmatic Sometimes they developed polarity

Democratic Maybe they are not stable and a discussion takes a long time to reach a conclusion

Summing up the changes that have occurred: •

Democracy instead of Communism

Inspirations instead of the Ideology

Value system and Harmony instead of the Dogma

Opening up instead of Closing off

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Downtown, Anywhere: inter-relationships between architecture, culture and the economy, Simrita Shaheed

Word Count: 1,999/PIN: 10596

Subtopic 2: Bliss or Misery? — Contemplating the Engagement of Cultural Forms and Economic Progress Downtown, Anywhere: inter-relationships between architecture, culture and the economy. The image taken to represent a nation or city is often of its architecture; New York is ―imagined and imaged through its Manhattan skyline‖, Moscow by the ―stark wall of the Kremlin, and bulbous towers of St. Basils Cathedral‖1. Thus architecture is not just how you experience a place; it is what a city says to the rest of the world about itself, its people, its culture. Architecture is an often overlooked form of cultural and economic engagement; focus on just prime real estate ignores the complex role architecture plays in the world economy. It creates tourism, international competition and collaboration, and literally sets the stage for world events such as the Olympics. In return, architecture itself is influenced by economic and political shifts across the world, especially colonisation and globalisation. This reciprocal arrangement has the power to create successes and failures extending beyond money penetrating everyday lives; for this reason it necessitates a deeper analysis. Historically, these engagements have been prevalent. In a colonial context, architecture is used to define the cultural differences between rulers and subjects. Buildings in a foreign architectural style can provide a permanent symbol of occupation, cementing power relationships, so that a ruling nation can legitimise draining resources from others. During the British rule of India, Edward Lutyens designed the city that is now the seat of the Indian government: New Delhi, showing how these colonial additions can retain importance. Shifting to conditions of post-colonialism, brings the city of Chandigarh to the fore. Despite limited funds, the first Prime Minister of India, Jawaharlal Nehru, commissioned a new Capital city for the state of Punjab to replace the losses of partition in 1947. However, the design of this show of national strength fell to a foreign architect, the Swiss-born Le Corbusier. Rather than drawing on traditional forms from the past to break from colonial rule, Nehru wanted to step defiantly forwards. A cultural fracture results; Chandigarh is criticised for being ―un-Indian.‖ The dilemma faced by post-colonial nations is that years under colonial rule are typified by foreign developments – if the newly independent country continues in this style they are untrue to the original culture, but in returning to the previous style, they face a void of missed developmental years, ―going forward into the past.‖2 The third choice is modernisation; an unbiased improvement of living standards, this solution is what Nehru meant by, ―Let this be a new city, unfettered by the traditions of the past…a symbol of the nation‘s faith in the future.‖3. However, our idea of modernisation, rather than being a set of ideals to be interpreted by each culture, has resulted in imposed standardised architectural forms and ways of living, sometimes inappropriate. Italian architect Ettore Sottsass‘s opinion captures this, ―India today is a different place and that is why I do not travel anymore. Nowadays, I find cars, radio stations and TVs, I find shops all over: it is the American way of life.‖4

1

Anthony D. King, Spaces of Global Cultures: Architecture Urbanism Identity, (London, 2004), p.xvi Carl Breckenridge et al., Cosmopolitanisms, (Durham and London, 2002), p.3 3 Vikramaditya Prakesh, Chandigarh’s Le Corbusier: The struggle for Modernity in Postcolonial India, (Seattle, 2002), p. 9 4 Ettore Sottsass, in The Domestic and the Foreign in Architecture, ed. Sang Lee and Ruth Baumeister (Rotterdam, 2007), p.331 2

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This association between Modern and the West5 is what is causing many of our cities to begin to look alike; sometimes erasing the past, such as vernacular architectures which evolved over centuries, to make way for untested futures. The risks of these regional developments have already come to the fore. Chandigarh‘s problems of slums, overloaded transport links and buildings suffering in the climate, can be traced back to Corbusier‘s work as architect; he was more interested in realising his ideas than adapting to the Indian context. ―Modernization has been characterised by a strange combination of the progressive and the oppressive‖6, the way to protect these opportunities is to ask for more than just modernity. The architect Arata Isozaki describes his experience of this process as a ―discussion about how to merge the Japanese tradition with Western technology without getting too close to either Western or vernacular architecture.‖7 Considering the process of colonisation itself; the difference between colonial powers ruling other territories, while others trade and engage with them, is a parallel with contemporary globalisation, where there are instances of imposed homogenisation of chains such as McDonalds, versus localised cultural transfers. Mathews writes, ―there has been a massive ‗Westernization‘ of architecture, in tandem with European political colonization and, later, American economic new-colonisation of much of the globe.‖8 Globalisation is here referred to as a ―new-colonization‖ because it is understood as a process whereby ―rich countries generally dominate the poorer ones thanks to the prevalence of their cultural products.‖9. This view of globalisation correlates with a process by which ―the world becomes a single place.‖10 A typical ‗Downtown, Anywhere‘ experience is walking into any Starbucks, which applies the same model, from the décor to the drinks, irrespective of nation or culture: a generic place. A contrasting state of globalisation occurs in the idea of ―a series of global cultures at once.‖11 In this model, rather than moving towards homogenisation, the flows of many different cultures into a place, through businesses, migrants and knowledge transfer, reacts with what is there already. Cecil Balmond, of Arup and Partners Ltd, explains that ―a more amoeba-like system grows, fits together and ultimately acts in unison.‖ Globalisation therefore is not a single monolithic idea, but describes the process by which a city adapts and is directly influenced by ―its social, ethnic and cultural composition.‖ Such as the historical example of the differences between Greek Byzantium, Roman Constantinople and Ottoman Istanbul, this all occurred in the same physical space.12 It is clear that both these conditions of globalisation exist today; the concern is that if homegenisation begins to take prevalence, the cultural rooting of a place is lost. It cannot be discounted that the survival of mass-produced brands relies on customers choosing to buy these products, like McDonald‘s burgers and Gap jeans, and the frequency of the associated architectural forms – superstores, shopping centres, chain outlets is an honest reflection of their popularity. However, as Ritzer writes, ―there is a pervasive, if largely subliminal, sense that even with this monumental abundance, there has also been

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King, Spaces of Global Cultures, p71 Hajime Yatsuka, ‗Fragmented Subjects in Former Colonial Cities‘, in The Domestic and the Foreign in Architecture, ed. Sang Lee and Ruth Baumeister (Rotterdam, 2007), p.60 7 Arata Isozaki, in The Domestic and the Foreign in Architecture, ed. Sang Lee and Ruth Baumeister (Rotterdam, 2007), p.276 8 Gordon Mathews, ‗Cultural Identity‘, in The Domestic and the Foreign in Architecture, ed. Sang Lee and Ruth Baumeister (Rotterdam, 2007), p.50 9 Ibid, p. 18 10 King, Spaces of Global Cultures, p24 11 King, Spaces of Global Cultures, p31 12 King, Spaces of Global Cultures, p82 6

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loss.‖13 Not only is there a loss in cultural identity specific to a place, but also a threat to the