When companies set up shop in developing countries, they often find that they have to do a lot more than just run a business.

In many of these countries, local institutions can’t meet basic needs, from health care and education to roads and reliable electricity. But companies can’t operate without a healthy, productive work force and solid infrastructure—so, more and more of them are taking matters into their own hands. Companies are laying down roads and water pipes, setting up schools and hospitals and bankrolling a range of social programs.

In other words, companies increasingly are taking on functions typically handled by the public sector.

This new role, however, isn’t easy. Companies are struggling to figure out how to help locals without making them too dependent, while also finding ways to placate shareholders back home who may not see the value of all these pricey investments.

Even companies that go into emerging markets specifically to provide public services may end up in a maze of complications. For instance, utilities that open in a newly deregulated country often must play politics to win over activists who consider them interlopers.

What follows is a guide for companies that are starting operations in emerging markets. We’ll look at the four basic approaches companies take to providing social services, as well as the challenges each strategy presents—and the best ways to overcome them.

Into the Breach

In the first approach, companies directly take on public-service roles, even when these have little relationship to their core business. For instance, a mining company might build schools, health-care facilities or general infrastructure—things that have nothing to do with the job of mining but are essential to creating an environment for doing business.

Consider Magadi Soda Co. When the mining company—a part of India’s TATA Chemicals Ltd.—set up operations in Kenya, it discovered that almost all government-funded public programs in the region were centered on the city of