Corporate social responsibility in auto industry: an iranian perspective
| Author | Ghodratollah Talaei/Mehran Nejati |
| Position | Iran Khodro Company, Iran/Department of Economics, Management and Accounting Yazd University, Iran |
| Pages | 84-94 |
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Within the last decade corporate social responsibility (CSR) has been gaining momentum across the business community and it is seen to be increasingly high on boardroom agendas. It is no news that today's business organizations are expected to exhibit ethical behavior and moral management. However, over the past half century the bar has been steadily raised. Now, not only are firms expected to be virtuous, but also they are being called to practice "social responsibility" or "corporate citizenship" (Carroll, 2000), accepting some accountability for societal welfare.
Existing universal figures all point to this fact that today's automobile industry is considered the third largest after food and construction industries when considering the capital ratio and investment, not to mention it as the biggest industry from the technological point of view (IB Chamber, 2002). Although the chief goal of auto manufacturing companies is to manufacture more cars in order to gain more income, it is important to consider that they be committed to their social responsibilities. Unfortunately, too frequently marketers still focus solely on their products and markets while neglecting the social impact of their activities (Flores, 2001).
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Perhaps this is because the concept of corporate social responsibility (CSR) Corporate social responsibility is a fuzzy one with unclear boundaries and debatable legitimacy. The purpose of this paper is to clarify the CSR concept in auto industry by offering an historical perspective on CSR, reviewing the different viewpoints on the role of business in Iranian society.
The legitimacy of CSR relates to a set of fundamental and crucial questions: Why do corporations exist? Should enterprises also be concerned with their social performance as well as economic results? If so, what does it mean to be "socially responsible"? To whom do businesses owe "responsibilities"? What kinds of activities and programs should CSR include? How can we measure social performance and thereby know when companies have fulfilled their societal obligations? This paper will offer suggestions for answering these questions in the context of auto industry based on a synthesis and analysis of the literature, with a focus on auto industry. Of course we must have in mind that empirical research is needed for definitive answers to these questions.
The first car imported into Iran was a Ford that Mozaffaredin Shah, the king of Qajar, had purchased from Belgium. This car which puffed much smoke was renowned as "smoky chariot". Following urbanization process since 1920, the importing trend of cars increased. Most automobiles of that time were brought from the USA and England. The first car manufactured in Iran was called "Paykan". It was produced in "Iran National Industrial Corporation" licensed by British Talbot Company and offered to market in 1967. Later on, Iran National Company, on a gradual basis, assumed the manufacture of other vehicles like pick up, minibus and passenger bus. In the same year, two models of American "Rambler" cars locally called "Aria" and "Shahin" were produced by Pars Khodro, however, one year later, in 1968, a model of French Citroen named "Dyane" was offered by SAIPA Company to the national market.
In 1972, Pars Khodro transformed into "Iran General Motors" and started manufacturing two models of Chevrolet (Opel) 2500 cc and 2800 cc as well as three other cars licensed by American General Motors, namely; "Buick", "Cadillac" and "Chevrolet Nova". The production of these cars continued until 1981. In SAIPA Company the production of "Citroen Dyane" stopped in 1980, however, the manufacturing of "Renault 5" that had already been launched in 1975 went ahead. Later the production of innovative cars such as "Pride", "Peugeot 405 and 206", "Nissan Patrol" and "Mazda 323" started and some has continued till today.
According to French automaker Peugeot, Iran has one car for every 21 inhabitants. Turkey has one for every 12. Western European countries and Japan have nearly one car for every two people. That indicates tremendous market
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growth potential, and in part explains substantial foreign car manufacturer interest in the Iranian market. (AME Info, 2004)
According to Fortune Magazine (Ellis, 2006): This nation of 70 million people [Iran] has much at stake. Its auto industry has boomed in recent years to become one of the biggest sectors outside of oil, employing 150,000 and accounting for about 4% of GDP. With nearly one million...
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