Returns on social development initiatives of MNEs: issues and perspectives

Purpose This paper aims to reflect on different issues and perspectives on returns on investments made by MNEs towards social development. Need for an inclusive society drives accountable and effective cooperation between different actors in a market. Although multinational enterprises (MNEs) that operate in developing markets invest in social development, their managers find it very challenging to incorporate social development agenda into their business practices. Therefore, academics should develop business models which can guide thoughts and actions of managers of MNEs towards social development while allowing them to hold on to the business objectives and targets. Design/methodology/approach A review of current literature with available anecdotes about business practices helped the author to form a viewpoint and make recommendations. Findings The objective of the eighth millennium development goal is to promote global partnership between MNEs and domestic firms with or without intervention of a subsidiary. Addressing the particular needs of developing countries, such as capability enhancement or poverty reduction by managers of MNEs in a global setting, becomes a very complex issue. Investments by MNEs in developing countries towards these objectives are driven by different factors such as operational transparency, technological efficiency, investment types, innovation capability, branding strategy, quality assurance, public–private partnership, market-based pricing, reciprocity, distribution for penetration, etc., apart from linkages they create for developing resource-based competencies required for survival in a competitive market. Research limitations/implications Empirical investigation of the viewpoint presented here will be required to convert recommendations into models applicable by managers of MNEs. Practical implications This study will help to enable managers of MNEs to perform need-based socially responsible actions. Social implications This study will facilitate participation of MNEs in social development through their contributions towards poverty reduction and capability enhancement. Originality/value This paper pushes managers and academic scholars to think about the strategies required to incorporate social agenda into business models of MNEs benefiting from developing markets.