Abstract
This article provides a review of what we know, what we do not know, and what we need to know about the relationship between industrial clusters and corporate social responsibility (CSR) in developing countries. In addition to the drivers of and barriers to the adoption of CSR initiatives, this study highlights key lessons learned from empirical studies of CSR initiatives that aimed to improve environmental management and work conditions and reduce poverty in local industrial districts. Academic work in this area remains embryonic, lacking in empirical evidence about the effects of CSR interventions on the profitability on local enterprises, workers, and the environment. Nor do theoretical frameworks offer clear explanations of the institutionalization and effects of CSR in local industrial districts in the developing world. Other key limitations in this research stream include an excessive focus on export-oriented industrial clusters, the risk that CSR becomes a form of economic and cultural imperialism, and the potential for joint-action CSR initiatives in clusters of small and medium-sized enterprises to offer a new form of greenwashing. From this review, the authors develop a theoretical model to explain why CSR has not become institutionalized in many developing country clusters, which in turn suggests that the vast majority of industrial clusters in developing countries are likely to engage in socially irresponsible behavior.
Similar content being viewed by others
References
Accountability (with the United Nations Industrial Development Organization). (2006). SME clusters and responsible competitiveness in developing countries. London: Accountability.
Awasthi, D., Pal, S., & Yagnik, J. (2010). Small producers and labour conditions in auto parts and components industry in North India. In A. Posthuma & D. Nathan (Eds.), Labor in global production networks in India (pp. 272–299). New Delhi: Oxford University Press.
Bailey, S., & Bryant, R. (1997). Third world political ecology: An introduction. London: Routledge.
Bair, J., & Gereffi, G. (2001). Local clusters in global chains: The causes and consequences of export dynamism in Torreon’s blue jeans industry. World Development, 29(11), 1885–1903.
Bair, J., & Palpacuer, F. (2012). From varieties of capitalism to varieties of activism: The anti-sweatshop movement in a comparative perspective. Social Problems, 59(4), 522–543.
Battaglia, M., Bianchi, L., Frey, M., & Iraldo, F. (2010). An innovative model to promote CSR among SMEs operating in industrial clusters: Evidence from an EU project. Corporate Social Responsibility and Environmental Management, 17(3), 133–141.
Bazan, L., & Navas-Aleman, L. (2004). The underground revolution in the Sinos Valley—A comparison of upgrading in global and national value chains. In H. Schmitz (Ed.), Local enterprises in the global economy-issues of governance and upgrading (pp. 110–139). Cheltenham: Edward Elgar.
Blackman, A. (2006). Small firms and the environment in developing countries—Collective action and collective impacts. Washington, DC: RFF Press.
Blackman, A., & Kildegaard, A. (2010). Clean technological change in developing-country industrial clusters: Mexican leather tanning. Environmental Economics and Policy Studies, 129(3), 115–132.
Blowfield, M., & Frynas, J. G. (2005). Editorial: Setting new agendas—Critical perspectives on corporate social responsibility in the developing world. International Affairs, 81(3), 489–513.
Campbell, J. (2007). Why would corporations behave in socially responsible ways: An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.
Carswell, G., & De Neve, G. (2013). Labouring for global markets—Conceptualising labour agency in global production networks. Geoforum, 44(1), 62–70.
Coe, N., & Hess, M. (2013). Global production networks, labour, and development. Geoforum, 44(1), 4–9.
Coe, N. M., & Jordhus-Lier, D. C. (2011). Constrained agency—Re-evaluating the geographies of labour. Progress in Human Geography, 35(2), 211–233.
Corpwatch. (2014). Definition of greenwash. Accessed March 28, 2014, from http://www.corpwatch.org/article.php?id=242.
Crow, M., & Batz, M. B. (2006). Clean and competitive? Small-scale bleachers and dyers in Tirupur, India. In A. Blackman (Ed.), Small firms and the environment in developing countries—Collective action and collective impacts (pp. 147–170). Washington, DC: RFF Press.
Dasgupta, N. (2000). Environmental enforcement and small industries in India: Reworking the problem in the poverty context. World Development, 28(5), 945–967.
De Neve, G. (2009). Power, inequality and corporate social responsibility: The politics of compliance in the South Indian garment industry. Economic and Political Weekly, 44(22), 63–71.
De Neve, G. (2014). Fordism, flexible specialisation and CSR: How Indian garment workers critique neoliberal labour regimes. Ethnography, 15(4), 184–209.
Dolan, C., & Opondo, M. (2005). Seeking common ground: Multistakeholder processes in Kenya’s cut flower industry. Journal of Corporate Citizenship, 18, 87–98.
Flyvbjerg, B. (2006). Five misunderstandings about case-study research. Qualitative Enquiry, 12(2), 219–245.
Garvey, N., & Newell, P. (2005). Corporate accountability to the poor? Assessing the effectiveness of community-based strategies. Development in Practice, 15(4), 389–404.
Giuliani, E. (2005). Cluster absorptive capacity: Why do some clusters forge ahead and others lag behind. European Urban and Regional Studies, 12(3), 269–288.
Gulati, M. (2012). Business responsibility: Global value chains, industrial clusters, and the future of CSR in India. Paper presented at “global value chains, industrial clusters, and the future of CSR in the BRICS countries,” Copenhagen Business School, 12–14 December, Copenhagen.
Hoivik, H. W., & Shankar, D. (2011). How can SMEs in a cluster respond to global demands for corporate responsibility? Journal of Business Ethics, 101(2), 175–195.
Humphrey, J., & Schmitz, H. (2002). How does insertion in global value chains affect upgrading in industrial clusters? Regional Studies, 36(9), 1017–1027.
Indian Ministry of Corporate Affairs. (2011). National voluntary guidelines on social, environmental, and economic responsibilities of business. New Delhi: IMCA.
Jamali, D., Lund-Thomsen, P., & Khara, N. (forthcoming). CSR institutionalized myths in developing countries: An imminent threat of selective decoupling. Business & Society.
Jenkins, H. (2004). A critique of conventional CSR theory: An SME perspective. Journal of General Management, 29(4), 37–57.
Kaplinsky, R. (2000). Globalisation and unequalisation—What can be learned from value chain analysis? Journal of Development Studies, 37(2), 117–146.
Kaplinsky, R. (2005). Globalization, poverty, and inequality—Between a rock and a hard place. Cambridge: Polity Press.
Kennedy, L. (1999). Co-operating for survival: Tannery pollution and joint action in the Palar Valley. World Development, 27(9), 1673–1691.
Kennedy, L. (2006). Improving environmental performance of small firms through joint action: Indian tannery clusters. In A. Blackman (Ed.), Small firms and the environment in developing countries—Collective action and collective impacts (pp. 112–128). Washington, DC: RFF Press.
Khan, A. (2007a). Power, policy and the discourse on child labour in the football manufacturing industry of Sialkot. Karachi: Oxford University Press.
Khan, F. (2007b). Representational approaches matter. Journal of Business Ethics, 73(1), 77–89.
Khan, F., & Lund-Thomsen, P. (2011). CSR as imperialism—Towards a phenomenological approach to CSR in the developing world. Journal of Change Management, 11(1), 73–90.
Khara, N., & Lund-Thomsen, P. (2012). Value chain restructuring, work organization, and labour outcomes in football manufacturing in India. Competition and Change, 16(4), 261–280.
Lund-Thomsen, P. (2004). Towards a critical framework on corporate social and environmental responsibility in the south: The case of Pakistan. Development, 47(3), 106–113.
Lund-Thomsen, P. (2008). The global sourcing and codes of conduct debate: Five myths and five recommendations. Development and Change, 39(6), 1005–1018.
Lund-Thomsen, P. (2009). Assessing the impact of public–private partnerships in the global south: The case of the Kasur tanneries pollution control project. Journal of Business Ethics, 90(Suppl. 1), 57–78.
Lund-Thomsen, P. (2013). Labor agency in the football manufacturing industry of Sialkot, Pakistan. Geoforum, 44(1), 71–81.
Lund-Thomsen, P., & Nadvi, K. (2009). Global value chains, local clusters, and corporate social responsibility: A comparative assessment of the sports goods clusters in Sialkot, Pakistan and Jalandhar, India. Technical Paper 17. Industrial Policy and Private Sector Development Branch, United Nations Industrial Development Organisation, Vienna.
Lund-Thomsen, P., & Nadvi, K. (2010a). Clusters, chains, and compliance: Corporate social responsibility and governance in football manufacturing in South Asia. Journal of Business Ethics, 93(Suppl 1), 201–222.
Lund-Thomsen, P., & Nadvi, K. (2010b). Global value chains, local collective action, and corporate social responsibility: A review of evidence. Business Strategy and the Environment, 19(1), 1–13.
Lund-Thomsen, P., & Nadvi, K. (2012). Applying the Atlanta Agreement on child labour in South Asia. In A. Reed, D. Reed, & P. Utting (Eds.), Business, non-state regulation and development. London: Routledge.
Lund-Thomsen, P., Nadvi, K., Chan, A., Khara, A., & Xue, H. (2012). Labor in global value chains: Work conditions in football manufacturing in China, India, and Pakistan. Development and Change, 43(6), 1211–1237.
Lund-Thomsen, P., & Pillay, R. G. (2012). CSR in industrial clusters: An overview of the literature. Corporate Governance, 12(4), 568–578.
Matten, D., & Moon, J. (2008). “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, 33(2), 404–424.
Mbohwa, C., Rwakatiwana, P., & Fore, S. (2010). The impact of industrial clusters in greening manufacturing industry practices in small and medium scale enterprises: The case of the Old Ardbennie Industrial Cluster in Harare, Zimbabwe. International Journal of Business and Emerging Markets, 2(1), 91–108.
Mezzadri, A. (2010). Assessing the effectiveness of corporate social responsibility as a tool for poverty reduction through productive activities: The case of the Delhi garment cluster. Growth, exports and technological change in developing countries (pp. 148–165). Vienna: UNIDO.
Mezzadri, A. (2014a). Backshoring, local sweatshop regimes and CSR in India. Competition and Change, 18(4), 327–344.
Mezzadri, A. (2014b). Indian garment clusters and CSR norms: Incompatible agendas at the bottom of the garment commodity chain. Oxford Development Studies, 42(2), 217–237.
Nadvi, K. (1999a). Collective efficiency and collective failure: The response of the Sialkot surgical instrument cluster to global quality pressures. World Development, 27(9), 1605–1626.
Nadvi, K. (1999b). Shifting ties: Social networks in the surgical instruments cluster of Sialkot. Pakistan, Development & Change, 30(1), 141–175.
Nadvi, K., & Barrientos, S. (2004). Industrial clusters and poverty alleviation: Mapping links and developing a methodology for poverty and social impact assessment of cluster development initiatives. Working Paper. United Nations Industrial Development Organization, Vienna.
Neilson, J., & Pritchard, B. (2009). Value chain struggles—Institutions and governance in the plantations of South India. London: Wiley-Blackwell.
Newell, P. (2005). Citizenship, accountability, and community: The limits of the CSR agenda. International Affairs, 81(3), 541–557.
North, D. (1990). Institutions, institutional change, and economic performance. Cambridge: Cambridge University Press.
O’Rourke, D. (2004). Community-driven regulation: Balancing development and the environment in Vietnam. Cambridge, MA: MIT Press.
Patel, S., Rajor, A., Jain, B., & Patel, P. (2013). Performance evaluation of effluent treatment plant of textile wet processing industry: A case study of Narol textile cluster, Ahmedabad, Gujarat, India. International Journal of Engineering Science and Innovative Technology, 2(4), 290–296.
Posthuma, A., & Nathan, D. (2010). Labor in global production networks in India. New Delhi: Oxford University Press.
Prieto-Carron, M., Lund-Thomsen, P., Chan, A., Muro, A., & Bhushan, C. (2006). Critical perspectives on CSR and development: What we know, what we don’t and what we need to know. International Affairs, 82(5), 977–987.
Puppim de Oliveira, J. A. (2008a). Upgrading clusters and small enterprises in developing countries—Environment, labor, innovation, and social issues. Aldershot: Ashgate.
Puppim de Oliveira, J. A. (2008b). Social upgrading among small enterprises and clusters in developing countries—New challenges for governance. Proceedings of the International Association for Business and Society, 19, 125–136.
Puppim de Oliveira, J. A., & Jabbour, C. (2011). Climate change, small enterprises and clusters: Conceptualizing the impacts of different governance approaches. Paper presented at SMEs, CSR, and competitiveness, Copenhagen Business School, 12–14 December, Copenhagen.
Pyke, F. (2010). Towards a new paradigm for developing economic clusters: Integrating regulatory frameworks, local governance, and the community. Geneva: Job Creation and Enterprise Department, ILO.
Rathi, A. K. A. (2013). Common environmental infrastructure: Case study on the management of common effluent treatment plants. International Journal of Environmental Engineering, 5(1), 93–109.
Sachdeva, A., & Panfil, O. (2008). CSR perceptions and activities of small and medium enterprises (SMEs) in seven geographical clusters—Survey report. Vienna: United Nations Industrial Development Organization.
Schmitz, H. (2004). Local enterprises in the global economy–Issues of governance and upgrading. Cheltenham: Edward Elgar.
Schmitz, H., & Nadvi, K. (1999). Clustering and industrialization: Introduction. World Development, 27(9), 1503–1514.
Scott, J. C. (1987). Weapons of the weak—Everyday forms of peasant resistance. New Haven, CT: Yale University Press.
Testa, G., Battaglia, M., & Bianchi, L. (2012). The diffusion of CSR initiatives in industrial clusters: Some findings from Italian experiences. International Journal of Technology Management, 58(1–2), 152–170.
Tewari, M., & Pillai, P. (2005). Global standards and the dynamics of compliance in the Indian leather industry. Oxford Development Studies, 33(2), 245–267.
Vives, A. (2006). Social and environmental responsibility in small and medium enterprises in Latin America. Journal of Corporate Citizenship, 21, 39–50.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Lund-Thomsen, P., Lindgreen, A. & Vanhamme, J. Industrial Clusters and Corporate Social Responsibility in Developing Countries: What We Know, What We do not Know, and What We Need to Know. J Bus Ethics 133, 9–24 (2016). https://doi.org/10.1007/s10551-014-2372-8
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-014-2372-8