According to calculations of John Maynard Keynes standard of living has increased 100 percent over four thousand years. With passing days there is economic growth all around and there is nothing new about economic growth and globalization. Economic growth which is a world phenomenon brings some consequences for society and one of the important reasons is that we do not take into account moral, ethical and social aspects of this process. Theorists have indicated the implications of the rapid changing global economics and have said that economic growth and economic development might not be without social and moral consequences and implications.
A major question that arises here is who is responsible for ongoing process and for ensuring the wellbeing of people and safeguarding their prosperity? Is it government, business world (corporates), consumers, shareholders or others? To answer this, Government play the role of lawmaker and regulator of markets but they are the managers, corporates and business worlds whose acts concern market structure, consumer behavior or commercial conditions. Business world is responsible to shareholders for making profit, therefore they take risk for their profit/benefit. This risk is not opposed to social or moral principles which they formulate for their company but may be to principles of society and environment. Increasing competition makes business difficult in globalized world and hence the risk taking tendency increases.
Another major scenario where we can see effect of globalization on CSR in in consumer domain. According to international norms (practices) and expectation of consumers, companies have to take into account social, ethical and environmental issues because now cost of products and services is not the only criteria but proper production process and environment sensitivity are also considered by consumers.
Shareholders are interested in long term benefits from a sustainable company (company giving equal consideration to social and environmental performance rather than only to monetary profits) instead of short term profit. Sustainability includes the requirement that whatever justice is about- fair distribution of goods, fair procedures, and respect for rights- it is capable of being sustained into future indefinitely. Globalization has had very sharp effect on company behavior and the trend shows the acceptance of socially and ethically responsible companies by stakeholders. The challenge of CSR in a globalizing world is to engage in the political planning that aims at setting and resetting standards and regulations for global business behavior.
With globalizing world a need for new paradigm for CSR has been identified to address the global governance deficit and it is suggested by Scherer and Palazzo that this paradigm needs to recognize the more politically-active role of business in today’s evolving global order. This new paradigm is `political CSR’, which acknowledges that the old presumptions of strict separation of the political and economic spheres, no longer applies and involvement of business world in political deliberation is important.