Great Expectations - Investigating the connection between incentives for CSR activities and the actual results at Becker
Bachelorarbeit 2005 66 Seiten
Table of Contents
1.1 Sustainable development
1.2 Corporate Responsibility
1.3 Organizations and CR
2. Theory - Corporate Social Responsibility (CSR)
2.1 The concept of Corporate Responsibility
2.2 Development of a CSR model
3. Theory - Drivers for CSR
3.1 The concept of drivers
3.2. Development of a conceptual model
4. Theory on results
5. General conceptual model
6.1 Conceptual Design
6.1.1 Research Objective
6.1.2 Research Framework
6.1.3 Research Issue
6.1.4 Definition of Concepts / Operationalization
6.2 Technical Research Design
6.2.1 Research Material
6.2.2 Research Strategy
6.2.3 Reliability, Validity and Generalizability
7. Data presentation
7.1 Company info - Gebr. Becker GmbH & Co KG
7.2 Internal activities
7.2.1 Health care - Regular check-ups / External gym
7.2.2 Training and education - University cooperation
7.2.3 Employment conditions - Team-based structure
7.2.4. Employment conditions - Financial benefits
7.2.5 Employment conditions - Miscellaneous
7.3 External activities
7.3.1 Local community: Philantrophy
7.3.2 Business partners: Volunteering in professional organizations
7.3.3 Society: Corporate Social Promotion
7.3.4 Society : Corporate Social Promotion
8. Data analysis
8.1 Differences/similarities between data and conceptual model
8.2 The relation between drivers and results
9.1 Recommendations and theory reflection
9.2 A wider perspective
Over the last decades the emphasis on sustainable development has steadily been increasing. The exact reasons for this are still debated, but increasing globalization, technological advancements, liberalization of markets and increasing interdependencies between governments, businesses and civil society all seem to have made an impact on this increased interest and importance. What is certain is that organizations have become much more prominent as well as powerful in today’s world. However, with that changing position also new responsibilities arise. One of these is that the business world has to come up with its own answer for achieving sustainable development.
That is where the term Corporate Responsibility (CR) comes into play, which can be seen as the business response to sustainable development. This responsible can be focused on an economic, environmental or social pillar, the last one being the key focus of this particular research and also known as Corporate Social Responsibility (CSR). Many organizations have decided to engage in a wide variety of CSR measures. Many, mainly quantitative, studies have shown possible financial benefits for these companies. However, are these statistics really true, or has CSR actually become more of a fad, like there are so many in the world of organizations? Do organizations engage almost blindly in CSR activities, without actually knowing why and whether or not it will bring the proclaimed benefits?
Therefore, this research will try in a qualitative way to investigate what the connection is between the incentives that cause organizations to engage in CSR activities and the actual results of these activities by providing a description and analysis of these incentives and results for a company actively engaging in CSR activities. This research will be conducted in the German multinational Becker, specialized in vacuum pump technology.
The concepts which require further theoretical explanation are CSR activities, incentives or drivers for engagement into these activities and the projected results of the activities. These concepts are finally combined into an overall conceptual model.
CSR can be divided into internally and externally focused activities. The internal ones are employee-oriented in the areas of employment conditions, health and safety, training and education and emancipation of minority groups or equal rights. As for the external ones, these are focused on the local community, society or business partners, suppliers and customers. The drivers for CSR engagement are fourfold. They can be based on societal conditions, possible sanctions for irresponsible behavior, internal organizational conditions or on possible strategic incentives. Especially the latter aspect is important for this research since possible benefits can be obtained from these strategic incentives and therefore the results that are the outcome of CSR engagements have to be sought for in that category. Improved financial performance, higher productivity and motivational levels and the possibility of ensuring the recruitment of knowledgeable people are examples of these incentives. The overall conceptual model therefore is the following:
Abbildung in dieser Leseprobe nicht enthalten
Drivers lead to CSR activities, which in turn lead to certain results. The double arrowed dashed line indicates the aim of this research to find out if these drivers/incentives and results are actually coherent with each other or not.
In order to answer our research questions ‘what drivers cause an organization to engage in CSR activities and how are the expectations fuelled by these drivers met in comparison with the results of the CSR activities’ a single case study at the multinational Becker is conducted. This will make it possible to unravel the deeper reasons behind the CSR activities undertaken by this company as well as give a more valid insight into the connection between drivers and results. Especially in combination with the interview held with two knowledgeable people working at Becker and the help of several internal as well as external documents it will be possible to answer our research question and accomplish the aim of this research project. The empirical results of the interview and the documents will then be presented and analyzed in the remaining chapter of this thesis.
It has been shown that most prominently drivers for CSR activities are strategic, with a notable distinction in the results and evaluation of internal and external activities. In short, internally there is a higher awareness of the drivers and thus a more systematic attempt to evaluate the activities with regard to the goals. External activities are much less systematically evaluated and lookedupon, results are assumed and embraced but occur serendipitously and show also the organization’s general commitment to CSR. Subjective measures therefore prevail, generally the organization sees that expectations of drivers are mostly met, with few exceptions in which effects are too vague and challenging to be ascribed to one activity.
With the topic of this thesis being the role of organizations in sustainable development, it is important to provide some background of the sustainability movement. The organization’s role, in the field of Corporate Responsibility (CR), will then further be discussed in the theoretical chapter. For this research, the focus has been the topic of CR.
1.1 Sustainable development
If we take Adam Smith’s Wealth of Nations (1993/1776) as the starting point of modern thinking on organizations and economy, the fact that sustainability has not always been paramount throughout history becomes very clear. Smith argues for a system in which every organization or other economic entity pursues his/her own economic interest, because by doing that the “invisible hand” of the market makes sure that these actions are distilled into benefits for stakeholders like employees and shareholders as well as for society at large. A very prominent proponent of this view is Milton Friedman, who argued that the only concern of organizations should be to make a profit (Hopkins, 2003). In a neo-classical line of economic thinking it is then also often thought that resources are almost endless and that markets are working perfectly and therefore real problems will not emerge anyway. However, as we are confronted with poverty, social injustice and the like, it becomes clear that these markets are not entirely flawless and that resources are actually coming to a fast ending. Wartick and Wood (1998) gave several good examples of numerous global issues that require a more sustainable approach for development:
-Ecological problems: ozone layer destruction; destruction of oxygen-producing rain forests; global warming (greenhouse effect); acid rain; radioactive and toxic waste disposal; solid waste disposal; air, water and ground contamination, soil erosion; contamination and dissipation of drinking water; eco-terrorism; plant and animal species extinction; destruction of commercial species habitats (e.g. seafood); proliferation of chemical compounds with unknown environmental effects.
-Underlying problems: poverty, overpopulation and underproduction of food, illiteracy and lack of education, developed-world arrogance, irresponsible production and consumption patterns; nationalism, war; inability to govern common areas.
-Consequences: destruction of ecosystems; increasing rates of cancer, asthma, and other environmentally-linked diseases; long term, degradation of and irreversible harms to the natural resource base, especially water and soil; changes in weather and temperature patterns with possible geopolitical consequences.
We see many problems which each have their underlying causes and consequences. However, why do we especially turn at this point in time our heads towards these problems and is the call for sustainability heard more often? As a matter of fact, already from the 1960’s on sustainability became an issue. Elkington (2004) suggests that three main pressure waves have resulted in a change attitude towards the role of businesses in society.
Wave 1, starting in the early 1960s, brought an understanding that environmental impacts and natural resource demands have to be limited, resulting in an initial outpouring of environmental legislation. The business response was defensive, focusing on compliance, at best.
Wave 2, starting in the late 1980s, brought a wider realization that new kinds of production technologies and new kinds of products are needed, culminating in the insight that development processes have to become sustainable - and a sense that business would often have to take the lead. The business response became more competitive.
Wave 3, starting in the late 1990s, focuses on the growing recognition that sustainable development will require profound changes in the governance of corporations and in the whole process of globalization, putting a renewed focus on government and on civil society. Now, in addition to the compliance and competitive dimensions, the business response will focus on market creation (Elkington, in Henriques and Richardson, 2004, p 7)
The three pressure waves also show an increasing emphasis on sustainability. The exact causes for this increasing emphasis are subject to debate. However, many authors do assume that very important drivers that have put sustainable development high on the agenda are globalization, liberalization and privatization of markets, technological advancements and higher interdependencies between business, governments and civil society (Doove and Postema, 2003; Welford, 1998). This is also an important point made by the Dutch/British petrochemical giant Shell, which states that “increasing globalization, the relentless onrush of new technology, and the liberalization of markets continue to be the primary shapers of the future. And those members of the global class who look beyond the stresses of the moment worry about one of the biggest threats of all - that soon there won’t be a global environment capable of sustaining the world that the global economic game is creating” (Shell International Unlimited, 2002, p 13). These drivers will come back in the theoretical chapter of this thesis.
Furthermore, the many calls from researchers who warn for rapid degradation of the earth have resulted in a “wake up call” for many and do show the increasing need for everyone on this planet to rethink his or her position on it. To sum up, the above has shown that sustainability has become more important over the years, but what it actually encompasses remains unclear. Before we are able to explain the actual research being done in this thesis, it is important to first provide a more thorough background of sustainable development and the role of organizations within that concept.
To show the problems arising when attempting to actually define the concept, it is useful to first of
all present some definitions gathered by Gladwin et al. on the meaning of SD (1995, pp. 876- 877):
“Improving the quality of human life while living within the carrying capacity of supporting ecosystems (The World Conservation Union, United National Environment Programme & worldwide Fund for Nature, 1991, p 10)
Sustainability is an economic state where the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations. It can also be expressed as …leave the world better than you found it, take no more than you need, try not to harm life or the environment, and make amends if you do (Hawked, 1993, p 139)
Sustainability is a participatory process that creates and pursues a vision of community that respects and makes prudent use of all its resources - natural, human, human-created, social cultural, scientific etc. Sustainability seeks to ensure, to the degree possible, that present generations attain a high degree of economic security and can realize democracy and popular participation in control of their communities, while maintaining the integrity of the ecological systems upon which all life and all production depends, and while assuming responsibility to future generations to provide them with the where-with-all for their vision, hoping that they have the wisdom and intelligence to use what is provided in an appropriate manner (Viederman, 1994, p 5)”.
Finally, one of the most influential and agreed upon definitions is perhaps the one brought forward by the 1987 Brundtland commission of the World Commission on Environment and Development (WCED), which defined sustainability as the “development that meets the needs of present generation without compromising the ability of future generations to meet their own needs” (WCED, 1987).
Despite the differences, some common ground for a definition of sustainability can be found. The following aspects are seen to be important for achieving sustainability:
Environment: The environment must be valued as an integral part of the economic process and not treated as a free good. The environmental stock has to be protected and this implies minimal use of non-renewable resources and minimal emissions of pollutants. The ecosystem has to be protected so the loss of plant and animal species has to be avoided.
Equity: One of the biggest threats facing the world is that the developing countries want to grow rapidly to achieve the same standards of living as those in the North. That in itself would cause a major environmental disaster if it were modelled on the same sort of growth experienced in post-war Europe. Therefore, there needs to be a greater degree of equity and the key issue of poverty has to be addressed. But it seems hypocritical for the North to tell the South that it cannot attain the same standards of living and consumption. Futurity: Sustainable development requires that society, businesses and individuals operate on a different timescale than it currently operates in the economy. While companies commonly operate under competitive pressures to achieve short-run gains, long-term environmental protection is often compromised. To ensure that longer-term, inter-generational considerations are observed, longer planning horizons need to be adopted and business and governmental policy needs to be proactive rather than reactive (Welford, 1998, p 4).
Inclusiveness and connectivity: Sustainability embraces both environmental as well as social-economic systems. The problems of the world are greatly interconnected and interdependent. The three main actors (governments, businesses and civil society) have to take this systems view into consideration and together create integrated solutions for today’s problems.
As Gladwin et al. (1995, p 879) stipulate: “social equity and biospheric respect are required for enhanced welfare anywhere on the planet: Improved human welfare and social equity are necessary to motivate biospheric respect, and enhanced welfare and biospheric respect are needed to facilitate social equity”. It is for society as a whole not possible to reach economic goals without actually achieving social and environmental goals as well. Examples of social issues are among others issues dealing with literacy, employment, health care, population density and distribution of wealth.
To sum up, we are confronted with global problems having an environmental, economic and social dimension, which have to be solved by governments, civil society and businesses as key stakeholders. Furthermore, long-term solutions have to be strived for which are sustainable for all stakeholders on all three dimensions. As a working definition of SD for this particular thesis we therefore use the following:
Sustainable Development is the combined effort of civil society, organizations and governments to create a planet that is liveable for their own as well as for future generations. This is achieved by the integrative development of activities concerning the economic, environmental and social pillars of the human as well as non-human world.
1.2 Corporate Responsibility
Now, an overt meaning has been attached to SD, but what then is the role of organizations in all this? That is where Corporate Responsibility (CR) comes into play.
Obviously, is not possible to neglect the fact that sustainable development cannot be reached if, in our case organizations, continue to work as they are doing at the moment. The constraint they currently put on the natural environment is already far too high and with the projected growth of the world population of 9 billion in 2050 it is only about to get worse (Doove and Postema, 2003).
The previously described conditions have to be met in order to achieve economic, environmental and social sustainable growth. Since this dissertation discussed primarily the role of organizations in the sustainability issue, the focus of the remainder of this chapter will be primarily on them.
Some authors have proposed that a paradigm shift is needed in order to reach the desired future state of sustainability (Gladwin et al, 1995; Witsiers, 2003). They suggest that is has become the right time to acknowledge the coexistence of organizations and the natural world. For too long now, “psychic prisons” (Morgan, 1998) have been in existence that separate the two concepts from each other and view them as two separate entities with no intertwining. Gladwin et al. (1995) label this the technocentristic worldview in which the earth is more or less a tool to be used by organizations and in which notions of rationalism, capitalism, and technological advancements are crucial. Its antithesis is the ecocentristic worldview, which places the environment in the middle of its universe which has to be protected at all costs against the “evil world”. The authors then continue to opt for a new paradigm, which they labelled as sustain-centrism. In that worldview “the world is humanity’s home, to be kept clean, healthy, and properly managed for the sake of human survival and welfare” (Gladwin et al, 1995, p 890).
Whether this paradigm shift is actually occurring or not is beyond the scope of this dissertation, but what becomes eminent is the important role organizations have to play in the battle for sustainability. As a quote used by Witsiers (2003, p 34): “humans have become, by the power of a glorious evolutionary accident called intelligence, the stewards of life’s continuity on earth. We did not ask for this role, but we cannot abjure it. We may not be suited for it, but here we are”. As has become evident over the last decades, rapid technological advancements together with globalization and liberalization of the markets have greatly enhanced the influence, power and impact of businesses at the expense of civil society and government. Businesses have currently combined a high degree of power with a very low degree of responsibility. (Doove and Postema, 2003). The drivers for this increasing need for businesses to take a responsible stance are explained in more detail in the theoretical chapter, as well as a more thorough explanation of CR as such.
The important thing at the moment is that in a nutshell, CR encompasses the business response to SD. In other words, CR comes down to the corporate sector making its contribution to sustainable development; decreasing the environmental problems and enhancing social equality while maintaining viable. This process should be undertaken in an open, transparent and accountable manner towards stakeholders (Doove and Postema, 2003).
1.3 Organizations and CR
Now that the background for this study has been sufficiently explained, we can turn to the focus of this paper which is the relation between organizations and Corporate Social responsibility (CSR), a branch of the CR movement with a focus on the social affairs inside and outside an organization. More details on this topic will be found in the theory section of this paper.
Several studies worldwide, such as one carried out by the Canadian government in 2003 (CSR- Europe, 2004), have brought the topic into the political-economic world and thereby attempted to act as a motivator for organizations to engage in CSR activities. By listing many advantages, such as improved corporate image and better customer relations, that have become common- knowledge in the business field, these studies as well made a try to prove the so-called ‘business case’ of CSR. The concept of business case here relates to the idea that the economic performance of an organization can directly be linked to its engagement in CSR activities. (Mazurkiewicz, 2003). The topic has been, as mentioned earlier, the subject of manifold studies, more than 100 empirical studies published between 1972 and 2000 have examined the relationship between companies’ socially responsible conduct and financial performance. In these studies, the majority of results (68%) point to a positive relationship between corporate social performance and financial performance (CSR-Europe, 2004).
Until today, however, these studies have
mostly been of a purely quantitative nature. The methodology of these studies usually impedes the external validity of those studies since the economic performance of an organization depends on a magnitude of other factors next to a possible engagement in CSR activities. Stating that an organization improved its profit, for instance, due to its CSR activities thus becomes a bold notion. For a manager of an organization that considers an engagement in CSR activities, these studies are thus not a very convincing
Source: CSR Europe, 2004. motivator. Nevertheless, a growing part of CEOs believes in the necessity of SD activities for any organization, as the above study by PricewaterhouseCoopers (2002) shows.
Secondly, the development of CSR and SD as a hot topic with its brought forward advantages and benefits can possibly act as a driver for an organization to engage in CSR activities, even though a more careful analysis of the possible pros and cons for that specific company would have been necessary. Ideally, a rational-decision making approach would suggest that all options are carefully and thoroughly evaluated before a decision is made. (Hatch,1997). In reality, however, human-beings and organizations have to settle for the concept of so-called boundedrationality, a term coined by Herbert Simon upon describing the weaknesses and limitations of the rationalist view. Simon has thus become famous for arguing that organizations can never be perfectly rational in the above sense, because their members have limited information processing capabilities. In other words, it is impossible to evaluate all possibilities and all options of choice (Wickham, 2001). It can therefore be possible that managers engage in CSR activities with the hope to achieve certain outcomes but with actually diverging results.
Given the above, we decided first to research the drivers for a specific company to engage in CSR activities, which can be found in the first part of the research question below. Merely listing the conceptual factors that cause an engagement could, however, not provide an adequate answer to whether or not the expectations conveyed in the drivers have been justified. It is possible, for instance, that an organization starts a community sponsorship with the expectation/driver to boost the brand image but finds out after a while that the reputation remains unaffected. In that case, the driver would not have been justified and a more careful analysis in the beginning could have revealed that this action is not apt to boost brand image for that company. On the other side, positive results could occur that have not been anticipated upon the implementation of CSR activities. These results could then again work as a driver for further research and be added to our framework.
All in all, the actual research objective that this thesis is trying to accomplish is the following: to investigate the connection between the incentives that cause organizations to engage in CSR activities and the actual results of these activities by providing a description and analysis of these incentives and results for a company actively engaging in CSR activities.
Formulated in a research question that has to be answered:
What drivers cause an organization to engage in CSR activities and how are the expectations fuelled by these drivers met in comparison with the results of the CSR activities?
Additional sub-questions and necessary elaborations can be found in chapter 6 on methodology.
Regarding the drivers, a framework was developed which categorizes internal and external drivers into two sections respectively. The drivers were gathered from different studies and the framework as such remains adaptable which is important regarding the likeliness of additional drivers occurring throughout the data-gathering.
For the CSR activities, we chose for an equally generic framework that does not list the programs
by means of acronyms or abbreviations but more concrete the actual domain of actions. Here, fast adaptations are possible as well.
To enable an elaborated conclusion, the data gathering is of enormous importance. Even though the respective chapter will provide more information about this issue, it is important to know where the articulated drivers originate from. Even if that does not lie at the heart of the research, it can possibly provide valuable insights for additional follow-up research.
2. Theory - Corporate Social Responsibility (CSR)
As explained already in the background, the concept of Corporate Responsibility deals with the corporate response to sustainable development. The concept consists of the same three key pillars of Sustainable Development, that is, economic, environmental and social responsibility. Although this thesis focuses on the social aspects of CR, better known as Corporate Societal Responsibility, the latter cannot be sufficiently explained and used in the conceptual model without first elaborating some more on the former.
With respect to the research question that this thesis is trying to answer, the following questions will be after the following four chapters:
What conceptual model derived from theories will make the description and analysis of the drivers for engaging in CSR activities and the related results possible?
- What can be seen as the principles of Corporate Societal Responsibility?
- What are currently seen as the key incentives for organizations to engage in CSR activities and how are possible results of these activities related to those incentives?
- In what way can the answers of the questions above result in the building of a conceptual model that graphically represents the main concepts of this research and thereby helps to accomplish the research objective?
Chapter 2 will provide the answers on the first sub-question, after which chapter 3 and 4 will do the same for the second one. Finally, by combining the outcomes of these 3 chapters in chapter 5, we will see the answering of the last sub-questions and thereby also of the larger question of which these three sub-questions are part of. In other words, in chapter 5 the conceptual model will be presented.
2.1 The concept of Corporate Responsibility
As with so many other relatively new concepts, corporate responsibility also suffers from a high degree of ambiguity. As once put in an article:
‘the term is a brilliant one; it means something, but not always the same thing, to everybody. To some it conveys the idea of legal responsibility or liability; to others it means socially responsible behaviour in an ethical sense; to still others, the meaning transmitted is that of ‘responsible for’, in a casual mode; many simply equate it with charitable contribution” (Votaw, 1973, p. 11). Corporate Responsibility therefore often goes by the name of business ethics, corporate social /societal responsibility, sustainable business development or corporate citizenship (Doove and Postema, 2003). This often works very confusing, not only for the academic community but also for the practitioner in the field. He or she often cannot make sense of all these notions that are then also frequently highly abstract in nature. As a final result, the actual operationalization of the concept and implementation of responsible programs becomes very difficult (Epstein and Roy, 2001). Therefore, we will first very briefly discuss several popular notions of CR, after which we will present the meaning of the concept as far as this thesis is concerned.
Every citizen has legal rights but also certain (legal) duties. Corporate citizenship claims that this also holds true for organizations. These duties are often not officially prescribed, but are voluntary and in the hands of the organization itself. Managers should look at their ways of doing business not only from the usual bottom line figures, but also take into consideration what their own interests have as an influence on the interests of society at large. If these interests conflict, a fitting solution has to be sought which can satisfy both parties, which is in the long-term beneficial for both as well.
This concept is closely related to the previously discussed definition of the WCED, that was, the notion that sustainable development meant meeting the needs of the present without compromising the ability of future generations to meet their own needs. This has often resulted in confusion among managers since the definition is somewhat abstract and theoretical. Therefore, a combined effort of the World Business Council for Sustainable Development (WBCSD) and the International Institute for Sustainable Development (IISD) and Deloitte and Touche (1992) resulted in the following definition: For the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future. This definition combines a stakeholder perspective as well as accountability and care in an environmental, economic and social sense. The popular notion of the triple bottom line results from this. Companies are challenged to not only report and account for economic issue, but also for their impact on environmental and social matters (Elkington, in Henriques and Henderson, 2004).
Corporate Social Responsibility
The European Union has defined CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (European Commission, 2002). Or in different words a definition provided by the famous marketing expert Philip Kotler: “Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources” (Kotler, 2005, p 3). CSR is often seen as equivalent to CR, and although they are close to each other there is a difference. CR especially puts more emphasis on accountability and transparency of Responsible activities and their results than CSR brings forward. However, often they are used interchangeably. For this research, Corporate Social Responsibility refers more to the social pillar of the total concept of CR, this to prevent confusion in definitions from happening. Since that has happened in the past, now often the word Societal instead of Social is used for this issue.
Ethical business questions encompass those questions that are dealing with matters of good and evil, right or wrong, just and unjust and the like (Doove and Postema, 2003). These decisions have to be made at the macro level as well as on the individual level. The former addresses the issue of organizations in the (inter)national organization of society, which can reach from a shaper of society till a pure profit-oriented economic entity in a neo-liberal sense. On the individual level the focus is on the behaviour and actions of individuals within the organization (Johnson and Scholes, 2002). Especially on the macro level there is a clear link with Corporate Social Responsibility since CSR is concerned with the specific ethical issues facing corporate entities, that is, business ethics serve as the conceptual tool for the analysis of societal responsibility. The final result then of the combination of the two is normally being a good corporate citizen and having a sustainable organization.
Although all these four notions are right in themselves, they remain often partial and do not encompass the full horizon of Corporate Responsibility. They sometimes intertwine with each other and sometimes have their own distinct elements, as could be read in the above. By combining them we can come to a more coherent definition of what Corporate Responsibility actually means. After all, despite the differences in the exact definition of CR, there are some main features on which a relatively high degree of consensus exists:
It is behaviour by businesses over and above legal requirements, voluntarily adopted because businesses deem it to be in their long-term interest;
It is intrinsically linked to the concept of sustainable development: businesses need to integrate the economic, social and environmental impact in their operations; It is not an optional ‘add-on’ to business core activities - but about the way in which businesses are managed It is pointing to a perspective that takes into consideration not just shareholders, but different stakeholders. The practices of organizations have to be transparent, in compliance with standards of accountability and created in a constructive dialogue with stakeholders ((EU - A Business Contribution to Sustainable Development, 2002; Doove and Postema, 2003).
So what we have come to so far is that we have identified the concept of sustainable development. The position of organizations in accomplishing this sustainability can be called corporate responsibility. This voluntary corporate responsibility then can be subdivided into three pillars, namely economic, environmental and social corporate responsibility. The activities within these three pillars are focused on long term benefits for the organizations as well as for the society at large, and are brought into existence by taking into consideration many stakeholder demands as well.
2.2 Development of a CSR model
After this short overview we have now arrived at the point of explaining our specific area of focus, namely the social pillar of CR, which also goes by the name of Corporate Societal Responsibility (CSR). The World Business Council for Sustainable Development has defined this pillar as “ the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well of the local community and society at large” (World Business Council for Sustainable Development, 2005).
In relation to this very useful definition, we can now take a more concrete look at what actually CSR activities are on a more concrete level. According to Mazurkiewicz (2003), a distinction can be made between three different pillars:
a) Internal: a company running its business responsibly in relation to internal stakeholders (shareholders, employees, customers and suppliers);
b) Legal/Political: the role of business in relationship to the state, locally and nationally, as well as to inter-state institutions or standards;
c) Societal/external: business performance as a responsible member of the society in which it operates and the global community.
This distinction shows that a company engaging in CSR activities can do that on different levels and for different reasons. Either they engage in such activities because of internal reasons, because the law or politics orders them to or because an organization wants to make a contribution to the external society. These three pillars will be explained below. As for the conceptual model, this distinction will be followed together with more elaborated aspects of the levels. However, for this research the legal/political aspect does not hold. We have previously explained that CSR has a strong voluntarily nature, which is exactly the opposite of complying with legal and political directives. However, an organization can, of course, exceed the minimal demand of these directives. However, in that case we are, depending on the exact nature of the CSR programme, talking about one of the other two key pillars.
It should further be noted that this thesis does not have as its aim to precisely and exhaustively categorize CSR activities from theory to practice or vice versa. Especially not because very often, theoretical CSR programs are not recognized as such by organizations who often hold their own terminology (Doove and Postema, 2003). The purpose of this distinction of different aspects of CSR programs and activities is to make clear which aspects these programs do encompass in order to assess whether or not initiatives of the organization can actually be seen as a CSR activity or not. If what they are doing goes by the name of A, B or C is further irrelevant. What the three levels and their respective parts do contribute to this research is that they form the background against which initiatives, programmes and other actions of organizations are assessed on whether or not to take them into consideration as being a CSR activity and therefore relevant for the research. We will not take a deeper look into the different key aspects.
1) As for the internal reasons, we have made a distinction based on theory as well as on the preliminary research in several dimensions. These dimensions then have been further divided into more concrete activities that fit into such a program. However, including everything is not possible since the range of CSR activities is enormous. When speaking of training activities, for example, and endless list of training possibilities can be created. However, it should be clear that for this research the process of training as such is important, not especially what is trained. The internal side can be divided into the following aspects, based on work of the European Commission and the Worldbank (Mazurkiewicz):
Health & Safety: Every organization has to comply with minimal standards, however, others can go further than that to ensure the health of employees and thereby also the viability of the business as such. Initiatives can include the position of a counsellor, the possibility of getting regular medical check-ups, organizing company sports activities or making it a possibility for employees to sport on the premises or having contacts with outside gyms.
Employment conditions: An organization can offer the bare minimum or legally required employment conditions. Pay what you have to in an environment just sufficient to pass inspections. However, to ensure higher motivation among employees, better working conditions and also out of business sense an organization can go further one step. Examples are introducing the widely acclaimed team-based structure for better employee satisfaction and motivation by means of job-rotation, enlargement and increasing responsibilities. Also, extra financial benefits alongside that can be used. Company activities or internal publication (newspapers, intranet etc.) initiatives are also measures to improve general employment conditions.
Emancipatory programmes: Active policy of the organization to ensure that male as well as female workers have the same opportunities and treatments, but also all other minorities in the organization, based on religion, sexual preference or ethnic origin, for example. Of course, the law requires these issues but an organization can choose to do more and make special programmes to promote this cause. The organization can appoint representatives for one or more of the minorities involved in the organization, have it is their specific aim in their mission to do something about inequality or pursue active concrete programs which aim at targeting inquality.
Training & Education: Programmes aimed at ensuring the employability of people and keeping up the required knowledge and know-how in the organization. Cooperating with universities, having on-the-job or in-house training possibilities or hiring external experts for training can do this.
(European Commission, 2001; Mazurkiewicz, 2003)
These categories of internal activities and the more concrete programmes can be seen in Figure 6.3.
2) The external or societal perspective is multi-layered and may involve the company’s relations with the people and environment in the communities in which it operates, and those to which it exports. Following a distinction made by the European Commission (2001) for this research we see CSR as activities geared to the local community, wider society or to business partners, suppliers and consumers. As for the local community and society aspects, CSR activities can be divided into the following categories:
Community Volunteering - providing volunteer services to the community (e.g. offering your knowledge, helping out during events or becoming part of community organization) Corporate Philanthropy - making direct contributions to a charity or cause (e.g. donations to the local sports club, church or in times of trouble helping out the needy) Corporate Social Promotion - promoting behaviour change campaigns or social causes (e.g. dental care awareness, getting girls to play soccer and boys in ballet or making science more attractive to teenagers)
Cause-related Marketing - making a contribution or donating a certain percentage of revenues to a specific cause based on product sales or usage (e.g. certain percentage of profits, sales or turnover to the poor in Africa, cancer foundation or to the local church or school for refurbishment).
(European Commission, 2001; Kotler, 2005).
The four aspects mentioned in the above, again, can be divided into numerous indicators or concrete programmes, however, doing that will not be productive to our research. Only the listing of possible voluntary community engagements can be almost endless. Therefore, before the interview takes place the key activities undertaken by Becker will be sought for by means of preparatory research and these then will be placed in line with the CSR conceptual model.
As for the dimension of business partners, suppliers and consumers the distinction made above is harder to put into practice (European Commission, 2001). For this aspect important aspects to consider are:
- Promoting entrepreneurial activities (e.g. active venturing partnerships, assistance to smaller firms on social reporting and communication of their corporate social responsibility activities and mentoring schemes)
- Responsibility auditing of organization’s customers, suppliers and other business partners. You can either accept every customer, supplier etc. as a business, or make a more careful analysis of them in order not to get involved with “rotten apples”. A form of auditing of your partners is one measure that can be used for that.
- Memberships and active participation in professional organizations. Being active in these organizations of whatever kind (marketing, business-sector or technologically related, for example) ensures the viability of these organizations as such, but is also often beneficial for the company itself. These organizations are often very important as a spoke in the hub of the wider economy. They function as places of combined knowledge, but also as spokespersons on many occasions.
(European Commission, 2001)
The conceptual model regarding CSR activities is thus the following. For now, only the dimensions are presented, chapter 6 introduces the whole model in figure 6.3.:
illustration not visible in this excerpt
Up to this point, we have discussed what sustainable development actually means and what the role of organizations is in this concept in the form of their corporate societal responsibility. However, often in the academic literature a lot is said about many topics and that gives you almost the idea that every organization actively and happily embraces the concept as well without any further questions asked. If you have to believe the current literature, for example, all businesses are enthusiastic about networking and other partnering programs.