Corporate Social Responsibility Overload? Intention, Abuse, Misinterpretation of CSR from the Companies‘ and the Consumers‘ Point of View
©2014
Textbook
127 Pages
Summary
More recent incidents and scandals such as Sweatshops by different sports equipment and electronic devices producers and finally the financial crisis which made the headlines among many others, which did not make it to the front page, have forced companies to consider CSR way more than in the past. But also other issues such as climate change and global warming, human rights situation and terrorism affect how companies conduct their strategies and operational practices today. Almost every large corporation in the western world makes some effort to communicate how it is committed to social issues that lie beyond its basic profit objectives – even in controversial industries such as the tobacco and petroleum industry. The industries claim to produce healthier food more fuel-efficient vehicles, conserve energy and other resources in their operations to make the world a better place. CSR often begins to be wishful thinking to hide the true face of a business. Doubtless what has come to be called responsibility of companies for ecological and social issues besides economic issues is now a sales and branding instrument for many companies. Hence, numerous other companies, also small and medium sized companies are currently asking themselves the questions: Shall we also invest in CSR initiatives? Why should we do that – just to do something? Is this still an instrument to gain a competitive advantage? Especially the last question implies the question, if consumers still believe in the basic idea of CSR initiatives, or with the overload of CSR initiatives, if they even show reactance and mistrust against such issues.
Excerpt
Table Of Contents
3.4
Greenwashing ... 41
3.4.1 Definition and Relation to CSR ... 41
3.4.2 Possible Effects of Greenwashing ... 44
3.5
Interim Conclusion CSR from a Companies' Point of View ... 45
4.
CSR from the Consumers' Point of View ... 48
4.1
Awareness of Corporate Social Responsibility ... 48
4.2
Influence of CSR on Consumer Behavior ... 49
4.2.1 Current Scientific Statistics ... 49
4.2.2 Reactance to CSR and Influence on Consumer Behavior ... 51
4.3
Empirical Questioning to Test Current Reactance to CSR ...
Campaigns
...
55
4.3.1 Structure of Questioning ... 55
4.3.2 Evaluation of Results ... 59
4.4
Interim Conclusion CSR from a Consumers' Point of View ... 69
5.
Recommendations for Companies to implement CSR ... 72
5.1
Recommendations for the Decision Making for CSR ... 72
5.2
Recommendations for a Credible CSR Communication ... 74
6.
Conclusion and Outlook ... 80
Appendix ... 84
Bibliography ... 104
IX
List of Abbreviations
ASX... Australian Securities Exchange
B2C ... Business-to-Consumer
CC ... Corporate Citizenship
CEO ... Chief Executive Officer
CSP ... Corporate Social Performance
CSR ... Corporate Social Responsibility
ESG ... Environmental, Social and Governance
EU ... European Union
GM ... General Motors
GRI ... Global Reporting Initiative
GRI ... Global Reporting Initiative
HR ... Human Resources
ILO ... International Labour Organization
IPPC ... Integrated Pollution Prevention and Control
ISO ... International Organization for Standardization
KPI ... Key Performance Indicator
LOHAS ... Lifestyles of Health and Sustainability
NGO... Non-Governmental Organization
OECD ... Organization for Economic Co-operation and Development
PR ... Public Relations
R&D ... Research & Development
SME ... Small and Medium Sized Enterprise
SOR ... Stimulus-Organism-Response
SRI ... Social Responsible Investments
UN ... United Nations
UNEP ... United Nations Environmental Reporting Initiative
USP ... Unique Selling Proposition
WCED ... World Commission on Environment and Development
WWF ... World Wide Fund for Nature
X
List of Figures
Figure 2.1:
The three pillars of sustainability. ... 10
Figure 2.2:
CSR-pyramide by Carroll. ... 16
Figure 2.3: Two-dimensional model of CSR by Quazi/O'Brien... 19
Figure 2.4:
Three-dimensional model of CSR by Schwarz/Carroll ... 21
Figure 3.1:
Looking inside out: Mapping the social impact of the value chain ... 35
Figure 3.2:
A framework of CSR communication ... 41
Figure 4.1:
CSR-overload and influence on consumer behavior. ... 54
Figure 4.2: Verification hypothesis H1 attitude ... 60
Figure 4.3:
Verification hypothesis H1 development ... 61
Figure 4.4:
Verification hypothesis H2 trustworthiness ... 62
Figure 4.5:
Verification hypothesis H2 negative aspects ... 63
Figure 4.6: Verification hypothesis H3 motives ... 64
Figure 4.7: Verification hypothesis H4 irritation and penetration ... 65
Figure 4.8:
Verification hypothesis H4 McDonalds ... 67
Figure 4.9:
Verification hypothesis H5 greenwashin ... 67
XI
List of Tables
Table 3.1:
Frequently used greenwashing words in marketing ... 43
Table 4.1:
Hypothesis H... 52
Table 4.2:
Hypotheses H2 and H3. ... 53
Table 4.3:
Hypothesis H4 ... 53
Table 4.4:
Hypothesis H5 ... 54
Table 4.5:
Online-survey and related hypotheses ... 59
Table 4.6:
Summary verification of hypotheses ... 69
1
1. Introduction
1.1 Problem Definition and Relevance of the Topic
Decades after the end of communism, problems of business ethics in capitalism
have become one of the most discussed topics over the last couple of years in
Germany as well as internationally.
1
The term and concept of "Corporate Social
Responsibility" (CSR), which generally means that companies' voluntarily takeover
responsibility for different social, economic, ecological, and culture issues, has
gained such popularity among academics and the popular media that it seems to
be ubiquitous nowadays.
2
Even though the idea of companies being involved in
such issues reaches back to the 19
th
century, the first scientific discussions took
place within the 1930s when E. M. Dodd and Chester Barnard asked about the
responsibility of leading employees at major companies. At the same time Theo-
dore Kreps also developed a concept how to measure the social contribution of
companies to society. The term "Social Responsibility" itself was used for the first
time in 1953 by Howard Bowen in his work "Social Responsibilities of the Busi-
nessman".
3
More recent incidents and scandals such as "Nestle Powder Milk", "Shell Brent
Spar", "Enron", "Parmalat", Sweatshops by different sports equipment and electron-
ic devices producers and finally the financial crisis which made the headlines
among many others, which did not make it to the front page, have forced compa-
nies to consider CSR even more. But also other issues such as climate change and
global warming, human rights situation and terrorism affect how companies conduct
their strategies and operational practices today.
4
It is observable that almost every
large corporation in the western world makes some effort to communicate how it is
committed to social issues that lie beyond its basic profit objectives. Only a brief
glance at the websites of multinational companies is enough to notice that compa-
nies of many different industry sectors make much effort to present their corporate
responsibility initiatives even in controversial industries such as the tobacco and
1
Cf. Schreck, P. (2009), p. V.
2
Cf. Crowther, D., Capaldi, N. (2012), p. 53.
3
Cf. Fifka, M. (2011), pp. 17-18.
4
Cf. Idowu, S. O., Filho, W. L. (2009), p. 1; Kröker, R. (2010), pp. 48-49; Sun, W., Stewart,
J., Pollard, D. J. (2010), pp. 3-4.
2
petroleum industry.
5
The industries claim to produce healthier food more fuel-
efficient vehicles, conserve energy and other resources in their operations to make
the world a better place.
6
In view of this, CSR begins to be wishful thinking or even
propaganda to hide the true face of the business.
7
Doubtless what has come to be
called corporate social responsibility is now a key-marketing and branding instru-
ment for many companies.
8
Hence, numerous other companies, also small and
medium sized companies are currently asking themselves the questions: Shall we
also invest in CSR initiatives? Why should we do that just to do something? Is
this still an instrument to gain a competitive advantage? Especially the last question
implies the question, if consumers still believe in the basic idea of CSR initiatives,
or with the overload of CSR initiatives, if they even show reactance and mistrust
against such issues.
There are already countless studies and publications about CSR with different
related terms and objectives. Most of the empirical studies aim at the relation
between CSR-initiatives and profit or brand. For example the study of the University
of Würzburg "Corporate Social Responsibility in der Marketing und Marken-
forschung" and the work of the Euro-FH "Corporate Social Responsibility und
wirtschaftlicher Erfolg" summarize some of the current empirical studies about
these topics with heterogeneous outcomes.
9
The empirical study of Marion Rom-
melspacher (2012) confirms a relation between CSR and consumer behavior, but
does not ask about any reactance on CSR initiatives.
10
In 2010, the study of the
Institut für Marken- und Kommunikationsforschung (IMK) of the Justus-Liebieg-
University in Gießen directly asked consumers if they would boycott companies
which did not take any CSR initiatives.
11
However, the opposite, i.e. consumers'
reactance to an excess of CSR was not asked for in this study. Some theoretical
literature points out that wrong CSR communication can easily turn to negative
reactions.
12
5
Cf. Fleming, P., Jones, M. T. (2013), p. 1; The appendix of this work shows screenshots of
different companies' websites from various industry sectors presenting their CSR effort.
6
Cf. Karnani, A. (2012), w/o. p.
7
Cf. Fleming, P., Jones, M. T. (2013), p. 2.
8
Cf. Fleming, P., Jones, M. T. (2013), p. 1.
9
Cf. Ebel, M. (2011), pp. 101-110, Waßman, J. (2011), p. 44.
10
Cf. Rommelspacher, M. (2012), p. 220.
11
The result was that the willingness to boycott such companies is quite low. Cf. Brunner, C.
B., Esch, F-R. (2010), pp. 22-23.
12
Cf. Osburg, T. H. (2012), p. 472.
3
It can be summarized that the majority of studies is aiming on positive reactions of
consumers. Consequently there is a research gap of negative reactions that need
to be closed.
1.2 Objectives
of
Work
The main goal of this work is to answer the following questions: Can CSR-initiatives
still be a competitive advantage? Are there even first reactance signs of consumers
due the overload of CSR nowadays? These questions shall be answered from the
companies' and the consumers' perspective. Based on current literature and
studies, it shall be explained from the companies' point of view what can still be
reasons for CSR, the dilemma of ethical values vs. profit, if and how it can be used
as a competitive advantage even in times when many companies use CSR as
"greenwashing" to pull the wool over the eyes of consumers and stakeholders.
From the consumers point of view it shall be worked out how CSR campaigns are
recognized by consumers and especially what are the effects of a reactance to
CSR campaigns. Do consumers already feel overloaded by CSR? What are the
reactions on this overload? How is this expressed by consumers? This will be
supported by an empirical questioning about the reactance to CSR campaigns.
Finally, some recommendations shall be given for companies, especially for CSR
communication.
1.3 Structure of Work
After presenting the problem and objectives of this work in chapter one, chapter two
provides the theoretical basis for this work. The term CSR is defined and also
distinguished from related terms. Furthermore, topics and other terms that can be
seen as part of CSR are defined and explained such as "corporate citizenship",
"sustainability" and "corporate governance". The chapter continues with the histori-
cal development of CSR, especially what underlines the reasons why CSR has
become an often debated topic. Chapter two closes with the explanation of ap-
proaches that systematize CSR. The pyramid of CSR by Carroll, the two-
dimensional model of CSR by Quazi and O'Brien, and finally the three-dimensional
model of CSR by Schwartz/Carroll are explained.
Chapter three takes a look at CSR from a companies' point of view. Initially, the
motives and justifications of companies which show social responsibility are
4
explained. This is often linked with moral imperatives, but also to prevent legal
restrictions and the pressure of society. The chapter continues with an explanation
of why CSR often fails and therewith barriers which need to be considered and
eliminated first, before dealing with the topic. Companies often fail due to lacking
resources, the know how to manage the topic, but also because of the missing
support of stakeholders. Based on literature and studies, it is shown in a next step
how CSR can be used as competitive advantage. Especially the strategic CSR
approach by Porter and Kramer will be explained in more detail. The communica-
tion of CSR also plays a major role and will be explained within this chapter three.
Closely linked to the last point and the fact that companies use the trend of CSR to
mislead consumers, the so called "greenwashing" is one of the reasons why CSR
has suffered criticism as well and will be explained at the end of chapter three. At
the same time this forms the transition to the consumers' point of view, as the
question arises if consumers may show a negative attitude or even reactance
towards CSR due to the current flood of CSR initiatives.
Chapter four therefore has a look at CSR from the consumers' point of view. First of
all, the chapter shows how CSR is recognized by different consumer groups and
explains the influence on consumers' behavior based on current studies. After-
wards, the effects of a possible reactance towards CSR are characterized and
appropriate hypotheses are derived. These hypotheses are evaluated by an
empirical survey and interpreted subsequently. The survey shows the basic attitude
of consumers towards CSR and their opinion about motives, trust, development,
deception and therewith a picture on how CSR is recognized especially with
regards to a possible reactance.
Based on the survey results, chapter five provides corresponding recommenda-
tions. The chapter focuses on CSR communication again, especially how it should
be adapted based on the findings of the survey. Chapter six concludes the main
findings of this work and also gives a few suggestions for future scientific research.
5
2. Theoretical Foundation of Corporate Social Responsibility
2.1 Definition
The term Corporate Social Responsibility (CSR), which means generally that
companies' voluntarily take over responsibility for different social, economic,
ecological, and cultural issues, has experienced an enormous body of research
over the last decades; however, no widely accepted definition of CSR exists.
13
The
book "Social Responsibilities of the Businessman" by Howard R. Bowen started the
discussion of CSR. Bowen defined CSR as "the obligations of businessmen to
pursue those policies, to make those decisions, or to follow those lines of action
which are desirable in terms of objectives and values of our society."
14
He also
stated that CSR rests on two fundamental premises: Firstly as a social contracting,
as it exists at the pleasure of society. Secondly as a moral agent within the socie-
ty.
15
Following this initial definition, a number of other definitions appeared up to the
end of 1960s, when CSR itself moved to the focus of interest.
16
Another early
definition of CSR was the influential concept by Archie B. Carroll in 1979. He
argued: "The social responsibility of business encompasses the economic, legal,
ethical and discretionary expectations that society has of organizations at a given
point in time."
17
Further definitions followed, Donna J. Wood suggested in 1991,
"the basic idea of corporate social responsibility is that business and society are
interwoven rather than distinct entities; therefore, society has certain expectations
for appropriate business behavior and outcomes."
18
Since October 2011, the
European Commission puts forward a new definition of CSR, which is "the respon-
sibility of enterprises for their impacts on society"
19
. They require, "to fully meet their
corporate social responsibility, enterprises should have in place a process to
integrate social, environmental, ethical, human rights and consumer concerns into
their business operations and core strategy in close collaboration with their stake-
holders, with the aim of:
13
Cf. Apostolakou, A., Jackson, G. (2010), pp. 371 f.
14
Bowen, H. R. (1953), p. 6.
15
Cf. Gupta, M. (2009), p. 35.
16
Cf. Rommelspacher, M. (2012), p. 32.
17
Carroll, A. B. (1979), p. 500; Apostolakou, A., Jackson, G. (2010), pp. 372 f.
18
Wood, D. J. (1991), p. 695.
19
European Commission (2011), p. 6.
6
maximizing the creation of shared value for their owners/shareholders and for
their other stakeholders and society at large;
identifying, preventing and mitigating their possible adverse impacts."
20
They refer to five instruments to make up an evolving and increasingly coherent
global framework for CSR: The OECD Guidelines for Multinational Enterprises, the
10 principles of the United Nations Global Compact, the ISO 26000 Guidance
Standard on Social Responsibility, The ILO Tripartite Declaration of Principles
Concerning Multinational Enterprises, and Social Policy and the UN Guiding
Principles on Business and Human Rights.
21
A universal definition of CSR is very problematic, as it strongly depends on the
business system and the industry itself. Different social groups or stakeholders
have also different expectations and requirements on business. Companies often
define CSR and their understanding of the term for themselves.
22
The previous
definitions, especially the one from the European Commission, give an idea and
frame about the whole topic, but CSR needs to be distinguished from other related
terms.
2.2 Distinction from Related Terms
There are different other related terms to CSR which are defined within this chapter
to differentiate them from CSR. A company has to decide how it will address the
issues arising from its responsibilities.
23
In 1978, William C. Frederick outlined a
conceptual transition from the, as he called it, "philosophical-ethical concept of
corporate social responsibility to the action-oriented managerial concept of corpo-
rate social responsiveness."
24
Frederick called it the transition from CSR1 (Corpo-
rate Social Responsibility) to CSR2 (Corporate Social Responsiveness). While
CSR1 has a more normative basis (what a company should do), CSR2 provides a
more strategic and managerial focus (what issues can be chosen and what actions
to address the issues).
25
Summarized, it describes how a company designs its
relationship to society and environment rather than reacting on environmental
20
ibid.
21
Cf. European Commission (2011), pp. 6-7.
22
Cf. Apostolakou, A., Jackson, G. (2010), pp. 372 f.
23
Cf. Banerjee, S. B. (2007), p. 20.
24
Frederick, W. C. (1994), p. 150.
25
Cf. Frederick, W. C. (1994), p. 150; Banerjee, S. B. (2007), p. 20.
7
influences (proactive). The term Corporate Social Responsibility finally established
itself but it also includes some strategies from Corporate Social Responsiveness.
26
To measure and illustrate the effectiveness and success of CSR activities a
concept called Corporate Social Performance (CSP) was established in the 1970s
already.
27
Donna J. Wood defined it as principles, processes, and outcomes.
28
Comparable to marketing activities, it is not always easy to measure the success of
CSR activities or even if it has an influence on the company result.
29
There are numerous other terms that are closely related to CSR, such as "Corpo-
rate Financial Responsibility" or "Socially Responsible Investments" (SRI). These
are investments that integrate social, environmental, and ethical considerations into
the "decision making" process of investments.
30
SRI also stands for "Sustainable
and Responsible Investing" which stands for an investment style "that considers
environmental, social and corporate governance criteria (ESG) to generate long-
term competitive financial returns and positive societal impact"
31
as it is defined by
the Forum of Sustainable and Responsible Investment. Sustainable investments
have experienced enormous increase over the last decade. The Dow Jones
Sustainability Index or the FTSE4Good are used as a benchmark for fund manager
or other professional investors.
32
Another term that is also closely linked to CSR is "Social Accountability", which
means that companies are accountable to their stakeholders for their performance
on social issues, just as they are accountable to their shareholders for financial
issues.
33
Another term, "philanthropy" is one of the oldest forms of social responsibility,
meaning the donation of monetary or product-/ service benefits to organizations for
altruistic reasons only.
34
The term is also part of corporate societal marketing which
also covers other fields just like sponsorships, advertising with social dimension,
cause-related marketing
35
, licensing agreements, social alliances, traditional
26
Cf. Bruns, M. (2011), p. 16.
27
Cf. Fifka, M. (2011), p. 30.
28
Cf. Wood, D. J., Jones, R. E. (1995), p. 230.
29
Cf. Fifka, M. (2011), p. 30.
30
Cf. Huimin, L., Wai Kong, C. A., Eduardo, R. (2010), p. 152.
31
USSIF (2013), w/o. p.
32
Cf. Bruns, M. (2011), pp. 16-17.
33
Cf. Pritchard, R. D. (2002), p. 258
34
Cf. Bulmann, A. (2008), pp. 41-42.
35
Cause-related marketing is defined as any marketing activity in which a company's dona-
tions to a specific cause are based on upon sales of a specific product or service. Cf. Roos,
M.
(2012), p. 12.
8
volunteerism etc.
36
CSR is also often brought into context to PR (Public Relations),
but within the theory and practice of PR there are different models for an effective
communication to build trust between specific stakeholders and the company,
these models are missing within CSR literature.
37
There are other terms which are actual elements of CSR that will be defined within
the next chapter in more detail.
2.3 Elements of CSR
2.3.1 Corporate Citizenship
A term which is often used as a synonym for CSR is Corporate Citizenship (CC).
38
Similar to CSR itself there is also no common definition for CC in literature. There
are three different views of CC that can be distinguished, the narrow view, the
equivalent view and the extended view. The narrow view is seen as philanthropic
commitment, which is especially focused on local stakeholders.
39
Examples are
donations or employee volunteering. It can be seen as a first development stage of
CSR where successful companies are expected to give something back to society.
In this case CC is part of CSR, it describes the social commitment within the local
environment. This definition is not only very popular in Germany but also in other
parts of the world.
40
The equivalent view sees CC congruent with CSR. A part of literature defines CC
simply as an updated label of CSR without any amount of knowledge acquired.
41
Arising in this context, some other authors ask why there is a need for a second
term to describe the same concept and they argue with differences or extensions.
42
The third theory, the extended view, goes beyond the typical CSR understanding
and includes cultural and ecological intensions as well. Within this concept the
motivation to act as corporate citizen is primarily based on political reasons, with
other words the reaction on changes of political frame conditions but also the
creation of these conditions.
43
Authors describe it as a concept where companies
behave as active citizens with all rights and duties creating a society and its frame
36
Cf. L'Etang, J. (2010), p. 234.
37
Cf. Bruns, M. (2011), pp. 20 f.
38
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 9.
39
Cf. Hoffmann, T. (2011), p. 61.
40
Cf. Weber, M. (2008), pp. 44-45.
41
Cf. Weber, M. (2008), p. 45.
42
Cf. Fifka, M. (2011), p. 42.
43
Cf. Hoffmann, T. (2011), p. 61.
9
conditions. Within this concept CSR and CC can be seen as two different concepts.
Within literature the difference and definitions between CSR and CC are very
controversially discussed, especially the question if a corporation can be seen as a
citizen.
44
Due to the discussion within literature and the popularity of the term CSR, this work
understands CC as part of CSR, as it describes further aspects how companies
can influence or be part of a sustainable development of the society, especially
outside of its business operations. The understanding of sustainability in this
context will be explained in the following chapter.
2.3.2 Sustainability
This chapter shall briefly point out the links between sustainability and CSR.
Sustainability is a broad term which was used in management theory to signal the
ongoing nature of the business process. In the traditional economic context this
means that the business will remain economically active and successful in the
future. Especially the so called "Brundtland Report" by the World Commission on
Environment and Development (WCED) includes social and environmental longevi-
ty into this context. The publishing of this report set the terms by which sustainabil-
ity could begin to be operationalized.
45
The report defines "sustainable develop-
ment" as "the development that meets the needs of the present without
compromising the ability of future generations to meet their own needs."
46
This
definition has been the basis for several debates and discussions about the term
sustainability. At least since the World Summit on Sustainable Development of
2002 in Johannesburg, the UN assumes "a collective responsibility to advance and
strengthen the interdependent and mutually reinforcing pillars of sustainable
development economic development, social development and environmental
protection at local, national, regional and global levels"
47
, as stated in their report.
So, the term sustainability itself is based on three pillars: ecological sustainability,
economic sustainability and social sustainability. If one pillar or aspect is disregard-
ed it can have an influence on the other pillars. There are different other definitions
44
Cf. Weber, M. (2008), p. 45.
45
Cf. Jallow, K. (2012), p. 32.
46
United Nations (WCED) (1987), w/o.p.
47
United Nations (2002), p.1.
10
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53
Over decades there have been further definition at-
tempts, bringing more and additional aspects to the term corporate governance.
The trend to define the term more precisely continued up to 2007 and the appear-
ance of the Australian Securities Exchange's (ASX) Principles of Good Corporate
Governance and Best Practice Recommendations.
54
ASX defines "Corporate
governance as the framework of rules, relationships, systems and processes within
and by which authority is exercised and controlled in corporations. It encompasses
the mechanisms by which companies, and those in control, are held to account.
Corporate governance influences how the objectives of the company are set and
achieved, how risk is monitored and assessed, and how performance is optimized.
Effective corporate governance structures encourage companies to create value,
through entrepreneurialism, innovation, development and exploration, and provide
accountability and control systems commensurate with the risks involved."
55
Other
definitions, especially literature from the United States, are focusing more on the
shareholder value concept.
56
In practice there are four principles of good corporate
governance, namely:
57
· Transparency
· Accountability
· Responsibility
· Fairness
All these principles are related to CSR.
58
Additionally all long-term benefits out of
good corporate governance are also directly related to the sustainability of a
company.
59
Corporate governance becomes increasingly driven by ethical norms
as well. That shows the relation between all of these terms, especially between
corporate governance and CSR. "Where there were once two separate sets of
mechanisms, one dealing with "hard core" corporate decision-making and the other
with "soft", people friendly business strategies, scholars now point to a more
hybridized, synthesized body of laws and norms and regulating corporate practic-
53
du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 3.
54
Cf. du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 4.
55
ASX Corporate Governance Council (2007), p. 3.
56
Cf. du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 4.
57
Cf. Aras, G., Crowther, D. (2012), p. 15.
58
Cf. ibid.
59
Cf. Aras, G., Crowther, D. (2012), p. 17.
12
es."
60
This work as many authors as well therefore regard corporate governance as
an element of CSR and the necessity of corporate governance to implement the
principles of CSR as an instrument.
61
The European Commission shares this view;
they separate two different instruments but subsume CC under the umbrella of
CSR.
62
They describe it as follows: "CSR is separate from but linked to the concept
of corporate governance, which is defined as the system by which companies are
directed and controlled and as a set of relationships between company's manage-
ment, its board its shareholders and its other stakeholders."
63
As it can be seen in the previous chapters a particular definition and distinction of
the field and related terms of CSR is very difficult but the frame and essence of the
concept should now be clear. In the next chapter, the historical development of this
topic will be explained, before different attempts of a systemization of CSR will be
presented.
2.4 Historical Development of CSR
The debate about the responsibility of companies is not a new one; for decades it
has been an ongoing discussion internationally, which was constantly re-initiated
due to different circumstances.
64
The global rise of CSR goes hand in hand with an
extended involvement of firms in global social matters.
65
In her work "The Politics of
Corporate Social Responsibility, The Rise of a Global Business Norm" from 2010,
Ursula Mühle describes four major periods that had a special impact on the devel-
opment of CSR.
66
These periods shall be described shortly within this chapter.
As already described in the previous chapters the first recognition of CSR began in
the 1950s with Bowen's publication.
67
The topic and related issues started to be
discussed by a larger public internationally one decade later. The first major period,
from the 1960s to the 1970s, was characterized by social and environmental
concerns triggered by the transnational expansion of multinational companies and
linked to that the awareness of the limitation and the use of resources. During this
period, three non-governmental organizations (NGOs) were founded, which are
very influential organizations today: Amnesty International, the WWF and Green-
60
Gill, A. (2008), p. 463.
61
Cf. Bruns, M. (2011), pp. 30 f.
62
Cf. Schneider, A. (2012), p. 26.
63
Schneider A. (2012), p. 26.
64
Cf. Palazzo, G. (2010), p. 73.
65
Cf. Mühle, U. (2010), p. 53.
66
Cf. Mühle, U. (2010), p. 41.
67
Cf. Bruns, M. (2011), p. 6.
13
peace, which were reactions on the explained concerns. Nevertheless it were the
three major international organizations, UN, ILO, and the OECD, that put the first
pressure in favor of an regulatory framework concerning multinational companies
and social policies. The majority of companies boycotted or ignored the first
regulatory attempts while even getting support from neo-classical thinkers such as
Milton Friedman. Even though there was a debate between all these institutions, it
did not produce a global awareness of CSR. When companies claimed to behave
socially responsible, they did it through philanthropic ways but did not present it as
CSR, especially not in the understanding of today's CSR concept.
68
The second major period took place from the late 1970s to the mid-1990s. This
period was especially shaped by the term "sustainability", which includes social,
environment, and economical aspects. As mentioned, the "Brundtland Report" from
1987 used to acknowledge a growing need to integrate these aspects into the
corporate culture and strategies.
69
The period was characterized by new market
forces along with political pressure to market regulations.
70
In the 1980s another
wave of deregulations led to a mobilization of NGO's against multinational compa-
nies. The examples range from Nike sweatshops to Dole Food or GM, also the
foundation of the clean clothes campaign falls within this period.
71
Further incidents
such as the explosion at Union Carbide in India and the oil spillage at Alaska
(Exxon Valdez) triggered the launch of several reporting schemes of companies for
environmental issues and certification schemes for environmental and labor issues:
In 1989, the Ceres principles, a set of ten principles for ethical company behavior
which forms today's Global Reporting Initiative (GRI), in the early 1990s the Public
Environmental Reporting Initiative or the United Nations Environmental Reporting
Initiative are some examples.
72
These reporting guidelines and schemes were often
country- and industry specific. The early 1990s were also a starting point for private
monitoring, for example at employees in subcontracted companies. A change also
took place on the level of CSR strategies, as many companies recognized the need
for "environmental risk management" in addition to philanthropic actions.
73
The UN
Earth Summit took place in Rio de Janeiro in 1992 and was attended by world
68
Cf. Mühle, U. (2010), pp. 41-42.
69
Cf. Mühle, U. (2010), p. 42.
70
Cf. Mühle, U. (2010), p. 43.
71
Cf. Schaltegger, S., Müller, M. (2008), p. 19.
72
Cf. Mühle, U. (2010), p. 43, Idowu, S. O., Filho, W. L. (2009), p. 1.
73
Cf. Mühle, U. (2010), p. 43.
14
leaders in order to launch a gradual shift to more sustainable forms of develop-
ment, but this period of CSR development was still not of global awareness.
74
CSR received its global character during the third major period from the late
1990s to the early 2000s. Protests against companies spread globally and a
massive increase in the calls for more political regulation could not be ignored
anymore. Some companies immediately changed their behavior by introducing
monitoring systems. Additionally, several new forms of regulation for environmental
issues were introduced during this period, starting with the Kyoto Protocol in
1997.
75
The protocol introduced more powerful measures for the reduction of global
greenhouse gas emissions.
76
Several other regulations achieved that companies
had to report their emissions and other issues following the EU Integrated Pollution
Prevention and Control (IPPC). The GRI, the Global Reporting Initiative (an expan-
sion of the Ceres, as explained before), aimed to make economic, social and
environmental reporting as normal as financial reporting as they stated, quite
successfully as many companies participated. Furthermore the Global Compact,
launched in a speech given by former UN secretary Kofi Annan at the 1999 World
Economic Forum in Davos, was very successful. According to the Global Compact,
companies shall commit themselves to ten principles of human and labor rights,
environmental and anti-corruption standards.
77
The EU took also part in the CSR
discussion with their so called "Green Book", "Promoting a European framework for
Corporate Social Responsibility" in 2001.
78
There were numerous examples of
industry-specific self-regulation, especially the global interest of the International
Organization for Standardization (ISO) 14001 certification of an environmental
management system was and is still great. The standard was launched in 1996,
updated 2004 and has become the gold standard for CSR-conscious firms. Not
required by law, many multinational companies such as Ford, IBM have adopted
the ISO 14001 to their standard worldwide. And also in specific industries such as
the automotive industry, GM, Toyota and other demanding that all their top-
suppliers are ISO 14001 certified.
79
The described period indicated the beginnings
of an institutionalization of CSR within the world culture.
80
A study of the US
74
Cf. Mühle, U. (2010), p. 43.
75
Cf. Mühle, U. (2010), p. 44.
76
Cf. Cirman, A., Domadenik, P., Koman, M., Redek, T. (2009), p. 31.
77
Cf. Mühle, U. (2010), pp. 43-44.
78
Cf. Schaltegger, S., Müller, M. (2008), p. 19.
79
Cf. Peng, M. (2009), p. 500.
80
Cf. Mühle, U. (2010), pp. 43-44.
15
National Policy Association from 2002 revealed that Europe passed the US regard-
ing voluntary CSR activities at that time.
81
Even though the manner how companies
used CSR remained the same as it mainly was still used for philanthropic reasons
or as a risk management tool.
82
The integration of CSR into the company strategy and another increase of firms
committing themselves to CSR takes place since the mid-2000s. Especially
financial market actors developed an interest in CSR assessments during this
period, for example sustainability funds or institutional investors investing in
sustainability or labor standards. During this period further issues have become
relevant, such as climate change, supply chain questions, responsible education in
business and also responsible investments.
83
Especially the financial and economic
crisis intensified the discussion about CSR and the responsibility of companies.
The missing responsibility of banks and investment managers is generally valid as
the main-reason for the crisis.
84
After the recovery of the markets, many experts
talked about the end of the traditional financial capitalism and new models of the
global market economy with new central topics in theory and practice, especially
business ethics.
85
But also the ongoing liberalization of the markets in the last
couple of years and the explosion of the information- and communication market
have extremely accelerated the globalization and the worldwide CSR movement,
not to mention the ongoing big initiatives like the Global Compact and the GRI.
86
Indeed, a glance at the websites of multinational, but also of SMEs is enough to
notice that firms in many industries and sectors spending much effort on their CSR
activities and the communication of these activities. CSR has become a key
marketing and branding exercise even beyond controversial industries.
87
The rising
flood of CSR activities and discussions has also led to criticism and also to false
environmental or sustainable claims used by companies to use the popularity of
these issues, which is called "greenwashing" and will be explained in more detail
later in this work.
88
Why and how companies are using CSR today and the current
81
Cf. Schaltegger, S., Müller, M. (2008), p. 20.
82
Cf. Mühle, U. (2010), p. 44.
83
Cf. Mühle, U. (2010), p. 45.
84
Cf. Rommelspacher, M. (2012), p. 1.
85
Cf. Palazzo, G. (2010), p. 81.
86
Cf. Rommelspacher, M. (2012), p. 1,
87
Cf. Fleming, P., Jones, M. T. (2013), p. 1.
88
Cf. Fleming, P., Jones, M. T. (2013), p. 1; McKinney, M. L., Schoch, R. M., Yonavjak, L.,
(2007),
p.
552.
16
view
proa
2.5
2.5.1
Besi
syste
sibili
ties.
8
shou
emb
the f
fund
corp
prom
Figur
89
Cf
90
Ca
91
Cf
w of consum
aches to sys
Systemiz
1 Pyramid
des Archie
emize CSR
ties constit
89
He argue
uld be fram
raced."
90
H
following fig
ament in o
orations, t
motes good
re 2.2: CSR
(Sou
f. Woermann
arroll, A. B. (
f. Woermann
mers on it
stematize C
zation of C
of CSR by
e Carroll's d
R is even m
tuting CSR
ed: "For CS
ed in such
He represe
gure 2.2, w
order to b
the fourth
corporate
R-pyramide b
urce: Carroll,
n, M. (2013),
(1991), p. 40
n, M. (2013),
t will be sp
CSR will be
CSR
y Carroll
definition o
more popula
R: economi
SR to be a
way that th
nts these d
where the lo
e sustaina
rung, phi
citizenship
by Carroll.
A. B. (1991)
p. 131.
0.
p. 131.
pecified in
e explained
of CSR, quo
ar. Carroll i
c, legal, et
accepted by
he entire ra
dimensions
ower rungs
able. The m
ilanthropic
p.
91
), p. 42.)
the follow
d first.
oted in Ch
identified fo
thical, and
y a conscie
anges of bu
s in terms
, i.e. econo
middle run
responsib
wing, but s
apter 2.1,
our types o
philanthro
entious bus
usiness res
of a pyram
omic and th
g, ethics,
bilities, is
some majo
his approa
of social res
pic respon
siness pers
sponsibilitie
mid as show
he legal, ar
is expecte
desirable
or ap-
ach to
spon-
nsibili-
son, it
es are
wn in
re the
ed by
as it
17
Economic responsibilities describe the objective of companies to sell goods and
services and make profit out of it, all based on customers' needs. Carroll describes
it as the basis for all other responsibilities.
92
"All other business responsibilities are
predicted upon the economic responsibility of the firm, because without it others
become moot considerations."
93
Legal responsibilities require the compliance with laws and regulations promulgated
by federal, state and local governments. According to Carroll, legal responsibilities
reflect a view of "codified ethics", which are the basis for the relationship between
business and society.
94
Legal responsibilities shall be seen as coexisting with
economic responsibilities as fundamental precepts.
95
The third level, ethical responsibility, obliges corporations to do what is right, just
and fair and expected by society, even when they are not obliged to by the legal
framework.
96
Ethical standards of a society are subject to dynamic changes and
often the pre-stage for new laws, that means it exists a continuous dynamic
relationship to the legal responsibilities.
97
At the top of the pyramid, philanthropic responsibilities, describe the companies'
ambition to be a "good citizen" within society.
98
This addresses a great variety of
issues, such as charitable donations, support for local events etc.
99
Carroll distin-
guishes between ethical and philanthropic: Ethical responsibilities are expected in
an ethical or moral sense by society, in contrast to philanthropic responsibilities
which are not required, even if philanthropic behavior is increasingly expected it is
not felt unethical if it is missing.
100
The pyramid tries to describe a necessary and sufficient set of obligations that
socially responsible businesses should fulfill, taking into consideration their de-
creasing importance.
101
The theory has been adapted by many theorists and
researchers but was also criticized. The criticism mostly focuses on the economic
responsibilities which are meant to be the basis for CSR, which critics often see to
be the reason for problems the following levels would just represent the solutions
for these problems. Another point of criticism is often seen in the exact delimitation
92
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 12.
93
Carroll, A. B. (1991), p. 41.
94
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 13.
95
Cf. Carroll, A. B. (1991), p. 41.
96
Cf. Habisch, A. (2005), p. 337.
97
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 13.
98
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), pp. 13-14.
99
Cf. Habisch, A. (2005), p. 337.
100
Cf. Carroll, A. B. (1991), p. 42.
101
Cf. Geva, A. (2008), p. 7.
18
of the different responsibilities. Carroll himself argues, however, that the delimita-
tion is done for analytical reasons, in reality, the different responsibilities are
overlapping areas that mutually influence one another.
102
This circumstance often
leads to conflicts, especially between the economical and philanthropic responsibili-
ties, which will be explained in more detail within this work.
103
Based on this CSR
pyramid, Carroll (and Schwartz) developed another CSR model, the three dimen-
sional model, the two dimensional model by Quazi and O'Brien will be explained
first.
2.5.2 Two-Dimensional Model of Corporate Social Responsibility by Quazi and
O'Brien
Quazi and O'Brien established a two dimensional model of CSR comprising two
axes. The two dimensions are the span of corporate responsibility, the narrow to
wider perspective and the range of outcomes of social commitments, called the
cost to benefit driven perspective. They confirmed the validity of the concept based
on empirical studies in dissimilar cultures e.g. Australia and Bangladesh. They
conclude that CSR is two-dimensional and universal in nature and that different
culture environments have little impact on the ethical perceptions of corporate
managers.
104
Out of the perspectives, the model has two axes (horizontal and
vertical) and four quadrants. The position of a company in the model is determined
by the company's attitude to CSR and its benefits. The horizontal axe is labeled
"narrow responsibility" (right) and "wide responsibility" (left) at its extremities.
Former represents the company's short-term objective which is strictly profit
maximization. The latter represents the wider social outlook, according to which
companies, beyond mere compliance to regulations, environmental protection, and
conservation of natural resources etc. The vertical axis is labeled "benefits from
CSR action" and "costs from CSR action" at its ends. It is implicated that compa-
nies which are more focused on short-term results are more concerned about the
cost of CSR actions and therefore gravitate towards the lower and negative extrem-
ity. Companies which are more focused on strategic results and on the assumption
that benefits might exceed costs, move towards the upper, positive extremity of the
model.
105
The model is shown in the following figure 2.3.
102
Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 14.
103
Cf. Jones, A. (2001), pp. 221-222; Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 14.
104
Cf. Liangrong, Z. (2009), p. 22.
105
Cf. Figueiras, J. L. M., Oliveira, M. G., Neto, F. C. C., Filho, J. C. L. S (2012), p. 59.
Figur
As it
four
view
class
sion
only
narro
will l
relat
tion
some
busin
tions
phila
agre
perc
also
106
Cf
107
Cf
108
Cf
109
Cf
re 2.3: Two-
(Sou
t can be se
quadrants
w, the socio
sical view
for busines
costs but
ow view of
ead to a n
tionship.
107
as a prima
e benefits
ness sees
s and perc
anthropic vi
ees to part
ceived as a
captures c
f. Jamali, D.,
f. Liangrong,
f. Jamali, D.,
f. Liangrong,
-dimensiona
urce: Jamali,
een in the f
which are
oeconomic
represents
ss to look b
no benef
CSR but a
et benefit f
From this
ary objectiv
in the proc
added valu
eiving net
iew depicts
ticipate in
a net cost.
1
cost benefi
, Sidani, Y. (2
, Z. (2009), p
, Sidani, Y. (2
, Z. (2009), p
al model of C
D., Sidani, Y
figure, resu
e represent
view, the
the neocla
beyond pro
fits at all.
10
accepts tha
for the com
view, busi
ve, while it
cess. The m
ue in servin
benefits fr
s a broader
charitable
09
Besides
t considera
2008), p. 335
p. 23.
2008), p. 335
p. 23.
SR by Quaz
Y. (2008), p.
ulting from
ting four p
modern vi
assical per
ofit-making,
06
The soc
at adopting
mpany in te
iness still c
also tries
modern vie
ng a wider r
rom socially
r view of so
activities
s two impo
ations, whic
5.
5.
zi/O'Brien.
334.)
the interse
possible vie
ew, and th
rspective, i
, and where
cio-econom
some deg
erms of goo
continues t
to meet so
ew captures
range of so
y responsi
ocial respo
even when
rtant dimen
ch are also
ections of th
ews of CS
he philanth
n which th
e CSR is s
mic quadran
gree of soci
od custome
to pursue p
ocial dema
s a perspe
ocietal need
ble actions
onsibility in
n the latte
nsions of C
o relevant f
he two axe
R: the clas
ropic view
ere is no p
een to gen
nt represe
ial respons
ers and sup
profit maxim
and and de
ctive in wh
ds and exp
s.
108
Finally
which bus
er are gen
CSR, the m
for manage
19
es are
ssical
. The
provi-
nerate
nts a
sibility
pplier
miza-
erives
hich a
pecta-
y, the
iness
erally
model
ers in
20
pursuit of CSR.
110
The only criticism of this model is seen in the superficiality, as
philanthropic is seen to be the mean pillar.
111
Another model will be explained in the following chapter, the three-dimensional
model of CSR by Schwartz and Carroll, which is based on Carroll's pyramid of
responsibilities.
112
2.5.3 Three-Dimensional Model of CSR by Schwartz/Carroll
A third explanatory model was developed by Schwartz and Carroll in 2003, based
on Carroll's first model which was explained previously in this work.
113
Schwartz
and Carroll designed a Venn diagram or set diagram based around the three core
aspects: economic, legal and ethical with the assumption that the philanthropic
category is subsumed under the ethical and/or economic domains, reflecting the
possible differing motivations for philanthropic activities.
114
This also removes the
problem or criticism of the existence of a hierarchy between the core aspects.
115
Schwartz and Carroll describe it as follows: "By using a Venn diagram, the model
initially suggests that none of the three CSR domains (i.e., economic, legal, or
ethical) is prima facie more important or significant relative to the others."
116
As shown in the following figure 2.4, the overlap of the three domains creates
seven possible categories of CSR-activities.
117
These different categories provide a
more complete construct by which to classify corporate activities. According to
Schwartz, "it is anticipated that as corporate managers and business students
reflect on corporate actions and where they should be classified within the model,
an improved understanding of the relationship between business and society and
more specifically between economics, law, and ethics, might take place."
118
110
Cf. Jamali, D., Sidani, Y. (2008), p. 335.
111
Cf. Bruns, M. (2011), p. 25.
112
Cf. Bruns, M. (2011), p. 26.
113
Cf. Welzel, E. (2008), p. 58; Bruns, M. (2011), p. 26.
114
Cf. Schwartz, M., Carroll, A. B. (2003), p. 508.
115
Cf. Welzel, E. (2008), p. 58.
116
Schwartz, M., Carroll, A. B. (2003), p. 508.
117
Cf. Welzel, E. (2008), p. 58.
118
Schwartz, M. (2011), p. 114.
Figur
The
mod
Schw
migh
lega
link b
is se
of th
Whil
of th
show
will n
reas
be m
cons
119
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120
Sc
121
Cf
122
Cf
re 2.4: Thre
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classificati
el, since t
wartz and
ht question
l", or "pure
between at
een in the n
e ethical di
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em are sim
wn all aspe
now have a
ons for CS
misused. Ba
sumers' po
f. Welzel, E.
chwartz, M.,
f. Welzel, E.
f. Mayerhofe
ee-dimension
urce: Schwar
on of CSR-
there are
Carroll the
whether a
ly ethical"."
t least two o
nonexistenc
imension.
12
e different o
milar or bas
cts to get a
a closer loo
SR, what ca
ased on th
int of view
(2008), p. 58
Carroll, A. B
(2008), p. 58
er, W., Grusc
nal model of
rtz, M., Carro
-actions is
no indicat
emselves p
any action
"
120
Most c
of the dime
ce of an ec
21
other mode
sed on the
an understa
ok at CSR
an be prob
hat knowled
w, especiall
8.
B. (2003), p. 5
8.
ch, L., Mertzb
CSR by Sch
oll, A. B. (200
also a first
tions to cl
point out a
can be de
critics of the
ensions in r
cological di
els of CSR
explained
anding of th
from a co
blems, how
dge the wo
y the influe
520.
bach, M. (200
hwarz/Carroll
03), p. 509.)
t weakness
assify the
another pro
efined as "
e model ar
reality. Ano
mension w
R that can b
models.
122
he concept
ompanies' p
it can be u
ork will hav
ence on co
08), pp. 10 f.
.
s or point o
entire co
oblem, the
"purely eco
rgue that th
other proble
which is und
be found in
The previo
t of CSR. T
point of vie
useful and
ve a look a
onsumers'
.
f criticism o
mpany itse
ey argue "s
onomic", "p
here is alwa
em of the m
derstood as
literature,
ous chapte
The next ch
ew, what ca
also how i
at CSR from
behavior a
21
of the
elf.
119
some
purely
ays a
model
s part
most
er has
hapter
an be
it can
m the
and a
Details
- Pages
- Type of Edition
- Erstausgabe
- Year
- 2014
- ISBN (eBook)
- 9783954897230
- ISBN (Softcover)
- 9783954892235
- File size
- 10.2 MB
- Language
- English
- Publication date
- 2014 (September)
- Keywords
- Business Ethics Corporate Social Responsibility CSR Overload CSR
