Impact of Corporate Social Responsibility on the Competitiveness of Multinational Corporations

Current development trends, at the global level, caused fundamental transformation in doing business in modern economy, and at the same time, set a request to change the dominant business strategies and policies by which companies achieve their goals. The liberalization of international trade and investment flows has contributed to the spread of the effects of technological progress and influenced development in many countries, but also raised a number of limitations in opportunities for achieving sustainable development. Decade of the nineties of the twentieth century can be characterized as a period of increasing pressure on the environment, the direct recipient of pollutants, resulting from the use of dirty manufacturing processes and production techniques, as well as the space through which manufactured products are distributed, used and postponed. The uncontrolled use of natural resources, especially non-renewable, has led to the endangerment of existential prerequisite for the maintenance of a healthy environment, as well as deterioration of environmental quality and escalating environmental problems on a global level.Under pressure from institutional factors, multinational corporations (MNCs), as motor of developments in the world economy, today pay more attention to the integration of the dimensions of sustainability in its own operations. Involving aspects of managing the impacts of corporate activities on social development and the environment is in the function of sustainable business. Development of key competences in the area of addressing social and environmental issues is a prerequisite of achieving and sustaining competitive advantage of MNCs in the modern market. In addition, long-term negligence of the non-financial aspects of the business can make multiple negative effects on the financial performance and the reduction of corporate reputation among key stakeholders, thereby reducing its competitive advantage.Great impact on the rise of social-economic consciousness of MNCs was made by a bulk of problems caused by negative consequences of their activities, which gave rise to boycott of consumers and other stakeholders. This resulted in the decrease of enterprise credibility, ruin of their reputation, built in years, and failure in competitiveness. An MNC management team has realized that un-responsible behavior towards environment could have a “boomerang effect” to it. On the other hand, responsible behavior of enterprises towards stakeholders, society, and environment could contribute to achievement of competitive advantage. For example, by ensuring good working conditions to employees, by instigation of non-discrimination, by respecting of human rights, and by offering a possibility of advancement, MNC become attractive for new employees, especially most talented people. By insuring transparency towards shareholders, and respect of their rights, by continuous reporting, and risk management, MNC become attractive for new investments. By offering quality, healthy, and safe products, and by performing promises about after-sale services, enterprises become attractive for consumers. Talented employees, substantial capital, and safe market are the key conditions for achieving MNC competitive advantage. Hence, it is obvious that social responsible behavior of MNC becomes important factor of their survival and success. By explaining the impact of corporate social responsibility on the competitiveness of MNCs, the aim of this paper is to highlight the importance of such practice for the competitiveness of MNCs.