CSR debate focuses mainly on external determinants of responsible business practice: government regulation, activist campaigns, consumer pressure, that sort of thing. An emergent stream of research seeks not to deny the importance of these factors, but rather to note that there can be internal drivers too. I look here at research reported by Christian R Thauer in a Business & Society article published online about a year ago, but not yet available in hard copy. The title is “Goodness Comes from Within: Intra-organizational Dynamics of Corporate Social Responsibility”.

Thauer tests his hypotheses on a range of different inward investors in the South African automotive and textile industries. This is a solid choice because the country attracts considerable foreign direct investment. It also has national regulation meeting most international norms and standards, but lacks satisfactory enforcement and monitoring. It is therefore a case of “limited statehood” typical of emerging markets. Here, as in much of the global South, companies can get away with pretty lax compliance if they want to. It turns out, though, that some do not want to. Why is that?

Thauer argues first that firms will voluntarily boost their labour-related CSR if they face a human resource dilemma. Any firm that invests in training workers to acquire specific skills will be keen not to lose them either temporarily (to illness) or permanently (to another employer). As part of a strategy designed to ensure employee stability, a firm can pay higher salaries. However, there may still be uncertainty in its local environment, generated for instance by the HIV/AIDS pandemic in the South African case. He found that companies in this situation responded by launching HIV/AIDS programmes ranging from condom distribution to information campaigns, disease management, medication and even antiretroviral therapy.

Thauer argues secondly that firms will enhance their production-related CSR if they confront a technological specialization dilemma. That’s not easy to grasp. The central idea is that any firm making a major investment that will not generate a return for many years to come also faces considerable uncertainty. It will therefore want to minimize the risks it faces. He found that companies in this situation responded by operating to heightened environmental standards so as not to provoke discontent and even opposition in the local community.

Business can therefore be good anyway. Making all the necessary controls for external factors, Thauer demonstrates that risk factors generated by specific skill sets or significant sunk costs with lengthy payback periods create strong internal incentives for firms to engage in CSR.