IAG- Louvain School of Management Working Paper
MAINSTREAMING THE CORPORATE SOCIAL RESPONSIBILITY AGENDA: A CHANGE MODEL GROUNDED IN THEORY AND PRACTICE
François Maon 1,2 and Valérie Swaen, Université catholique de Louvain Adam Lindgreen, University of Hull
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François Maon, Department of Marketing, Louvain School of Management, Université catholique de Louvain, Place des Doyens 1, 1348 Louvain-la-Neuve, Belgium. Tel.: + 32(0)1047 8457. Fax: + 32(0)1047 8324. E-mail:
[email protected]. 2 The cases were developed by the first three authors who contributed equally. Thanks to Marlon Peeters who helped collecting data.
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MAINSTREAMING THE CORPORATE SOCIAL RESPONSIBILITY AGENDA: A CHANGE MODEL GROUNDED IN THEORY AND PRACTICE
ABSTRACT
In this article we introduce an integrative framework of Corporate Social Responsibility (CSR) design and implementation. We first present a concise review of CSR literature and CSR implementation models and then develop a multiple-case study research. The resulting framework based on a expansion of Lewin’s approach to change highlights four stages ranging from “raising CSR awareness” to “mainstreaming the CSR agenda” - that articulate around nine key steps of the CSR implementation process. Finally, we highlight critical success factors for CSR implementation.
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MAINSTREAMING THE CORPORATE SOCIAL RESPONSIBILITY AGENDA: A CHANGE MODEL GROUNDED IN THEORY AND PRACTICE
Introduction
Corporate social responsibility (CSR) has attained a high profile in the academic domain (de Bakker, Groenewegen, & den Hond, 2005; Lockett, Moon, & Visser, 2006; Margolis & Walsh, 2003; Walsh, Weber, & Margolis, 2003). As well, many consider it an absolute necessity that organizations define their roles in society and apply social, ethical, legal, and responsible standards to their businesses (Lindgreen & Swaen, 2004; Luo & Bhattacharya, 2006). CSR has achieved business prominence due to the activities of pressure groups and also the emergence of the “market for virtues” such as Socially Responsible Investment (Brammer & Millington, 2003; Vogel, 1978) that create further pressures to adopt CSR initiatives (The Economist, 2005; Vogel, 2005). Moreover, CSR has spread geographically from its original US setting (Bowen, 1953) to become a global concept (Matten & Crane, 2005; Scherer & Palazzo, 2007), becoming particularly well established in Europe (Habisch, Jonker, Werner, & Schmidpeter, 2004).
From a CSR perspective, organizations are seen as key drivers in the process of constructing a better world (Friedman & Miles, 2002) and are therefore under increasing pressure to demonstrate good and accountable corporate responsibility (Pinkston & Carroll, 1994). In addition to the prime requirement to deliver profits to shareholders, organizations are frequently subject to wider stakeholder interests and the need to demonstrate a balanced
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perspective. As a result, organizations are developing and updating their programs and policies, and attempting to measure their social and environmental performance, whilst at the same time engaging in consultations with stakeholders and, during this process, communicating their values to employees, environmental groups, local communities, and governments. The pressures are tangible as industry leaders such as Exxon, Nestlé, Nike, and Pfizer have found, encountering severe setbacks to their reputation because of their failure to maintain quality, ethical, and other socially responsible standards. By contrast, organizations such as The Body Shop and Ben & Jerry’s have based their entire business model explicitly on ethical foundations (Pearce II & Doh, 2005). Global leaders such as Johnson & Johnson, HP, and Shell have publicly acknowledged their social and environmental responsibilities and have developed processes to inform stakeholders using tools including sustainability reports, responsible products, active engagement with NGOs, and positive participation in networks to share best practice in the field of CSR (Engardio, Capell, Carey, & Hall, 2007; Kruse, 2005; Norguet, 2005; Schouten & Remmé, 2006).
In summary, CSR has moved from ideology to reality and is now acknowledged as an important dimension of contemporary business practice. Business leaders give increasing importance to this topic, recognizing that CSR is an important component of business survival and success in the 21st century. The management and marketing literature has significantly contributed to defining and characterizing the phenomenon of CSR (de Backer et al., 2005; Garriga & Melé, 2004) , as well as developing the discussion concerning best practice (Esty & Winston, 2006; Savitz, 2006). However, an area that remains largely unexplored in the literature concerns the development and implementation of CSR. Based on a series of indepth case studies, our paper seeks to develop a framework to help guide managers and to
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identify some of the factors that contribute to CSR’s successful development and implementation.
The remaining parts of the paper are organized as follows. First, we review aspects of CSR including issues of its development and implementation. Second, we provide details on the three cases developed for this study, including the methodology employed. Third, we present the findings, including our integrative framework for the development and implementation of CSR, as well as an identification of factors that are critical to a CSR program’s success. Finally, we identify theoretical and managerial contributions, as well as point to possible future avenues for research.
Literature Review
Definition of CSR
The concept and business awareness of CSR has evolved considerably since it first emerged in the 1950s (de Bakker et al., 2005). Over this time, the concept has developed from relatively uncoordinated and voluntary practices into more explicit commitments in response to stakeholder pressures and eventually into ongoing future commitments. With these changing perspectives of CSR a significant body of literature has been produced but the problems of definition remain (Clarkson, 1995).
Due to the difficulties in defining CSR, alternative conceptualizations have been developed, representing various aspects of the same concept of corporate “doing good”. Examining the Web pages of Fortune 500 organizations, Kotler and Lee (2005) revealed the following
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shopping list of related concepts corporate social responsibility, corporate citizenship, corporate philanthropy, corporate giving, corporate community involvement, community relations, community affairs, community development, corporate responsibility, global citizenship, and corporate societal marketing. Table 1 presents a summary list of definitions of CSR derived from the literature. ------------------------------Insert Table 1 about here -----------------------------From Table 1 it can be seen that CSR practices may be considered as discretionary (Kotler & Lee, 2005) or representing more sustained commitment (Holme & Watts, 2000). Similarly, CSR activities could be construed as voluntary (European Commission, 2001) or more of a commitment/obligation in nature (Anderson, 1989; Epstein, 1987; Jones, 1980). CSR practices may also be conceived as dynamic and process based (Maclagan, 1998) or more focused to a particular condition or state within a clearly defined boundary (Jones, 1980; Maignan, Ferrell, & Hult, 1998). Finally, CSR activities may be directed towards all stakeholders (Holme & Watts, 2000) or to a more specific group of stakeholders (Epstein, 1987; Maclagan, 1998).
From this multiplicity of definitions of CSR we choose the following definition of CSR: CSR is a stakeholder-oriented concept that extends beyond the boundaries of the organization, driven from an ethical understanding of the responsibility of the organization for the impact of its business activities, seeking in return the willingness of society to accept the legitimacy of the business (based on Gray, Owen, & Adams, 1996). We decided for the definition because it is based upon the stakeholder concept and calls for a real integration of CSR into the
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organization’s strategy. Also, the definition emphasizes that CSR should result in a win-win situation for the company and its stakeholders.
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Stakeholders
The concept of stakeholders is central to that of CSR. Stakeholders may be defined as "groups and individuals who can affect, or are affected by, the achievement of an organization’s mission" (Freeman, 1984: 54) or, alternatively "those groups who have a stake in or a claim on the firm" (Evan & Freeman, 1988: 97). The concept of stakeholders may be given a wider perspective as simply all those entities with a "critical eye" on corporate actors (BomannLarsen & Wiggen, 2004). Stakeholders thus form a link between the aims and ambitions of the organization and the expectations of society (Whetten, Rands, & Godfrey, 2002). This is a dynamic activity, as expectations and pressures change and is further complicated by the need for managers to resolve the interests of different stakeholders and to integrate this within the managerial decision-making process. Managers must make decisions about the extent of their responsibilities and the nature of the stakeholders to whom they are both responsible and accountable.
Stakeholder theory emphasizes the organization survival and success hinges on the organization’s ability to generate sufficient wealth, value, or satisfaction for its primary stakeholders, but not exclusively for shareholders (Clarkson, 1988). For example, Post Frederick, Lawrence and Weber (1996) see primary stakeholders as those who have direct relationships essential for the organization to realize its mission in producing goods or services for customers. Secondary stakeholders include social and political actors who support the mission by providing their tacit approval of the organization’s activities, thereby making them acceptable and giving the business credibility. Such secondary stakeholders include local communities, governments, and NGOs.
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Various analyses and specifications of stakeholders are also provided by the marketing literature. Morgan and Hunt (1994) identify stakeholders in four categories: internal, suppliers, buyers, and lateral stakeholders. Christopher, Payne and Ballantyne (1991) offer the six-market model as a normative model for categorizing the stakeholder groups to which the organization is responsible. These six market categories include customers, internal customers, suppliers, influencers, recruitments, and referrals. Each of these markets can influence positively or negatively the achievement of the organization’s mission and it is argued that it is therefore desirable to manage actively the relationship with each of them.
CSR development and implementation
CSR strategy development and implementation could be considered as an organizational change process (i.e., moving from a present to a future state; cf. Georges & Jones, 1995), or as a new way of organizing and working (Dawson, 2003). The aim is to align the organization with the dynamic demands of the business and social environment through the identification and management of stakeholder expectations.
In addition to change, CSR involves learning over time and the ability to understand the specific context and confluence of stakeholder expectations. Whilst there is no best way to bring about change (Burnes, 1996) enhanced learning of stakeholder expectations and the specifics of the context will help to ensure that change is beneficial and supported by appropriate mechanisms (Burnes, 2004). This requires managers to understand and be actively aware of both the context and expectations, but also to recognize that any changes they implement will also shape the environment in turn (Mitleton-Kelly, 2003). The development
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of CSR practices can therefore be seen as an evolutionary and recursive activity, acting and reacting on and with the business environment.
When considering how CSR can be implemented the literature offers various insights. However, to our knowledge most studies on CSR typically focus on limited aspects (Maignan, Ferrell, & Ferrell, 2005). This means that an integrative framework has yet to be offered for the development and implementation of CSR in a fashion that is soundly integrated to the organization’s strategy, structure, and culture (Bhattacharya & Sen, 2004; Smith, 2003).
Khoo and Tan (2002) suggest a cyclical process from preparation to transformation and implementation to results, but offer little in terms of detailed guidelines. Panapaanan Linnanen, Karvonen and Phan (2003) discuss five activities – organization and structure, planning, implementation, monitoring and evaluation, and communication and reporting – emphasizing the importance of social risk assessment. Hardjono and de Klein (2004) review models and studies derived from interpretive sociology and incorporated within the European Corporate Sustainability Framework (ECSF), however whilst rigorous this framework does not provide managerially relevant guidelines. The overview produced by Werre (2003) is a rich and practice-based perspective of CSR implementation based on four stages or phases – top-management awareness, formulation of a CSR vision and core corporate values, changing organizational behavior, and anchoring of change – but this approach is relatively poorly structured and consists more of general advice, and the application of the suggested framework is bounded by the limits of the single case study on which it is based. The eightstep approach identified by Maignan et al. (2005) provides more useful insights into the development and management of CSR policies, but lacks in-depth implementation guidelines as the linkage between strategy development and implementation is not explicated. Finally,
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Cramer suggests six main activities that "fall into place like a jigsaw puzzle" (2005: 586). These activities are as follows: list stakeholders’ expectations and demands; formulate a CSR vision and mission and a code of conduct; develop CSR strategies and plan of action; set up monitoring and reporting system; embed the process in quality and management systems; and communicate about achieved results. However, the retrospective conclusion is limited in terms of the guidance that it gives to managers despite the clear definition of the six main activities that are provided. Table 2 summarizes existing frameworks for developing and implementing a CSR orientation. ------------------------------Insert Table 2 about here -------------------------------From this analysis of CSR models and frameworks for the development and implementation of a CSR orientation, it can be seen that the majority of studies base the definition of CSR strategy on existing corporate norms and values. However, the frameworks proposed by Maignan et al. (2005) and Panapaanan et al. (2003) stress the role of stakeholders and their concerns. Yet these frameworks differ in the emphasis they give to the role of stakeholders in either providing input into the development and implementation of CSR the activities, or alternatively gaining feedback as part of the process improvement. This latter point of process improvement by regarding CSR implementation as a cyclical process was consistent across many of the frameworks discussed.
In attempting to integrate the differing perspectives of CSR development and implementation into a single, integrative model, we developed a preliminary model that has been confronted and refined by our multiple case study research (with the organizations being IKEA, Philips, and Unilever).
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Methodology
The qualitative case study approach is particularly useful where concepts and contexts are ill defined, as it enables in-depth understanding and explanation to be derived (Eisenhardt, 1989), and where change is radical and unpredictable (Matthyssens & Vandenbempt, 2003). Hence our research is inductive as we seek to augment our preliminary model by in-depth understanding in order to achieve our research objectives (Blaikie, 1993). These objectives are to develop a framework for the development and implementation of CSR practice, and to elicit the factors that contribute to its successful implementation.
The cases were selected using theoretical sampling (Strauss & Corbin, 1998). Coming from different business sectors, the selected organizations are global and have strong reputations for their investment in CSR. The three organizations are IKEA, Philips, and Unilever. IKEA was selected due to its long history and experience in the area and its response to several CSR-related crises and criticisms that has enabled the organization to develop structured policies and a range of collaborations and initiatives with stakeholders. Philips has the number one position in the Dow Jones Sustainability Index and is also sector leader in the 2006 Covalence Ethical Ranking (Covalence, 2007). Philips produces a highly regarded sustainability report on an annual basis. Unilever also publishes a detailed social and environmental report. This organization is ranked sixth in the food industry category of the Dow Jones Sustainability Index, and holds the leading position across all sectors of the Covalence Ethical Ranking (Covalence, 2007).
In conducting the case studies, extensive research was undertaken in order to understand the contextual issues surrounding each of the subject organizations. The aim of the data-collection
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process was to develop rich in-depth case histories of CSR development and the respective implementation processes. In order to improve rigor and understanding, secondary data was obtained and interviews were conducted to assist in developing rich insights and to improve generalisability. We interviewed senior managers who were responsible for the organizations’ CSR programs. These managers provided additional documentation and archival records. Such documentation is important in providing stable and exact data (Yin, 2003), which can be cross checked against other data sources in order to reduce selectivity and reporting bias. In addition, news articles, web pages, scientific literature, promotional material, and other literature were reviewed. Also, time was also spent at each case site resulting in additional information from short conversations, observations, and other in situ techniques.
The cases were analyzed using Eisenhardt’s (1989) method of within-case and cross-case analysis. Within-case analyses were conducted in order to summarize the data and develop preliminary findings. Each case was analyzed to gain a richer understanding of the processes each underwent to move towards a CSR vision. The outcomes of the within-case analyses could then be compared and contrasted by cross-case analysis in order to improve the rigor and quality of the results. That is, as each case achieved different degrees of CSR success the cases were compared and contrasted to analyze similarities and differences and to gain greater understanding of the processes involved. Cross-case analysis is essential for multiple case studies (Yin, 2003). At the same time, theoretical categories were elaborated on during open and axial coding procedures (Strauss & Corbin, 1998). Lastly, to gather a holistic and contextualized comprehension of how organizations approach CSR development, and implementation, in the analysis we tacked back and forth between literature and data, which led to the development of a number of theoretical categories (Spiggle, 1994). Overall, the
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process described was used to enrich the preliminary model shown in Figure 1 and to elicit factors important in CSR implementation.
Various methods for improving the quality of the research were adopted throughout our study. Consistent with the recommendations of interpretive researchers (Lincoln & Guba, 1985), grounded theorists (Strauss & Corbin, 1998), and previous case-based research in business-tobusiness marketing (Beverland, Napoli, & Lindgreen, 2007; Flint, Woodruff, & Gardial, 2002), we applied the criteria of credibility, transferability, dependability, confirmability, integrity, fit, understanding, generality, and control to improve the trustworthiness of the findings. These criteria included using experts to help select the cases, having the first three authors provide independent interpretations of the findings, and allowing respondents to provide feedback on initial findings. The interviews were conducted by the same interviewer, and colleagues performed independent coding of the transcripts, which also helped to reduce the role of bias (Lincoln & Guba, 1985; Strauss & Corbin, 1998).
Findings
Figure 1, which presents the final framework based on our literature review and multiple case study analysis, is detailed below. -----------------------------Insert Figure 1 about here ------------------------------We developed the framework in Figure 1 from the perspective of Lewin’s (1951) force field model of change. This model characterizes change as a state of imbalance between pressures for and against change (Wilson, 1992). These pressures are denoted as driving and restraining
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forces, respectively. By changing the equilibrium between driving and restraining forces through the creation of pressure in favor of change, managers effect change (Burnes, 2004; Lewin, 1951). Several recent change models have used Lewin’s (1951) model of change (e.g., Bamford & Forrester, 2003; Beverland & Lindgreen, 2007; Bullock & Batten, 1985). Lewin’s model is consistent with such models and presents change as a finite activity.
There are three stages in Lewin’s (1951) model: unfreezing, moving, and refreezing. In the first stage, the process described requires managers to unfreeze past practices associated with the status quo. Unlearning, therefore, is critical to a learning orientation and the development of a CSR orientation. A key element in unlearning is the uncovering of long-held, unchallenged, cultural assumptions concerning the ‘right way to do things’ (Schein, 1992). Such assumptions, often sub-consciously held, must be resurfaced through a change intervention – unfreezing process – and may result in energetic forces against the change (Wilson, 1992). Barriers to the development of a CSR orientation include threats to stability, fear of change, a belief that CSR orientation is inappropriate for the organization, and a belief that focusing on CSR would result in the organization losing sight of its core values.
In the second stage, moving involves guiding the organization towards a new set of assumptions (Lewin, 1951). The identification of the need to adopt a CSR orientation is just the start of the change process. Our literature review identified practices predicted to be involved in the development and implementation of a CSR orientation. In the third stage, to affect a new state, managers must then refreeze cultural assumptions. Depending on the degree of change necessary, refreezing may involve wider changes in order to build structures and processes that support the new ways (Katz & Kahn, 1978). Critically, a learning orientation is necessary to ensure the refreezing of CSR-oriented cultural values. An
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organization’s learning orientation is a resource that influences the quality of CSR-related behaviors. That is, in a learning organization employees are taught how to learn (generative learning), which involves constantly reflecting on past strategies and approaches to business rather than just learning through adaptation (trial and error) (Bell, Whitwell, & Lukas, 2002).
Additionally to these three stages, we included a fourth stage: sensitizing. In this stage, which precedes the unfreezing stage, top management awareness is raised about the importance of sustainability issues. A person or group of people seek to overcome resistance to change in this stage.
The four stages incorporate the following nine steps: raising CSR awareness inside the organization, assessing corporate purpose in a societal context, establishing a working definition and vision for CSR, assessing current CSR status, developing an integrated CSR strategic plan, implementing the CSR integrated strategic plan, maintaining internal and external communication, evaluating CSR integrated strategies and communication and, finally, institutionalizing CSR policy.
Step 1: Raising CSR awareness inside the organization
The raising of organizational sensitivity to organizational environment in general and CSR issues in particular can be succinctly defined as resulting from the influence of four key drivers: economic drivers, social drivers, political drivers and individual drivers. While the three first drivers can be considered as market-based, usually initiating when an organization anticipates or respond to a risk associated with societal impact of a particular business practice (Mazurkiewicz, 2004), the last drivers appear to be value-based and highlights the
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fact that CEOs usually orient the ethical norms for the organization (Agle, Mitchell, & Sonnenfeld, 1999; Waldman & Siegel, 2005) and that employees also bring their values into the workplace (Robertson, 1991). Our framework considers top-down processes (awareness of top managers that influence CSR strategy and CSR implementation) as well as down-top processes (awareness of employees, workers that influence their employers to include CSR practices). Table 3 summarizes key CSR drivers. ----------------------------Insert Table 3 about here -----------------------------The development and integration of a genuine CSR vision is often triggered by an evolution in the way management actually perceives its business and societal environment. This modification in management’ perception can be characterized either as reactive and resulting from external pressures of the environment such as in the case of damaging media coverage, NGO pressures and activists’ or communities’ protests (e.g. the repeated child labour issues faced by IKEA during the 90’s that have been disclosed through the media) or proactive such as in the case of the increasing weight of personal values of some individual or groups inside the company, since CSR isn’t solely driven by external pressures but may also be championed as a result of personal morality, inspired by managers or employees’ own socially oriented personal values (Hemingway, 2005; Hemingway & Maclagan, 2004).
“CSR at IKEA has developed in the 80s when IKEA ran into some conflicts. These were problems related to the use of raw materials and their functioning. (…) We had to do something, because we were loosing a lot of market share (…). Internally, this has been received positively, and people also expected us to make the right decisions based on received knowledge. At the end of the ‘80s, a lot of people appeared with
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knowledge on forestry, and our own co-workers were asking questions. So, there were two reasons, one internally and one externally” (IKEA)
“That started at the end of the ‘60s and the ‘70s, and at that time, related to the environmental area, one of the members of the Board of Management responsible for Research & Development, participated in the Club of Rome where the report “Limits to Growth” was published, and when he came back to Eindhoven, Frits Philips, president at that time, said “We have to start an environmental department”” (PHILIPS)
Step 2: Assessing corporate purpose in its societal context
Uncovering corporate norms and values “Values are the ideals and beliefs considered to be core to the company and used as anchors to guide the behaviour of employees. These are the principles that determine all aspects of the way the company does business – from simple day-to-day decisionmaking through to defining its mission and vision” (Philips, 2002)
Corporate values play a critical role as a prerequisite in developing proactive CSR. In order to improve organizational fit, “a CSR program must align with the values, norms, and mission of the organization” (Maignan et al., 2005). Awareness and understanding of the company’s vision and values and their relationships to the company core business practices is crucial. It is therefore especially relevant to recognize the organizational values and norms that are likely to have implication for CSR. By guiding behaviours and decisions within the organization, corporate values support organizational efficiency in reaching its vision and
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objectives. And by articulating corporate values and embedding them in management practices, companies may hope to “reinforce behaviours that benefit the company and communities inside and outside the firm, and which in turn strengthen the institution’s values” (Van Lee, Fabish, & McGaw, 2005: 4). In order to define or redefine corporate values companies might look at existing credos, corporate charters, mission statements, reports, websites and other documents.
For instance, IKEA’s corporate values and organizational culture could be summarized as (IKEA, 2004: 13): (a) Doing more with less: since its foundation, IKEA tries to avoid wasting all sorts of resources; (b) Daring to be different: questioning how and why things are the way they are, often opens up new avenues of approach; (c) Humanity and criticism: respect people, opinions and skills, being able to admit own mistakes and learn from those and those of others, and being able to accept constructive comments ; (d) Learning by listening: not only to experienced or enlightened people, but also to nongovernmental organisations; (e) Honesty is the best policy: enabling IKEA to build and enjoy long-term, close relationships, IKEA has to be honest in its communication towards employees, customers, and in its relationships with suppliers as well.
It is essential that the firm align its CSR goals and decision making with its overall goals and strategies, so that taking CSR considerations into account in corporate decision making becomes as natural as taking customer perspectives into account (Government of Canada, 2006). “We are now 114 years old and sustainability is in our DNA (…) sustainability is from before the term existed, because we were already acting sustainable for a long time,
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(…) that is why it [sustainability] is so embedded in all the organisation’s activities” (PHILIPS)
Next to finding existing norms, CSR activities and values inside the organization, it appears relevant to create new norms and values with respect to CSR. Lyon (2004) emphasizes that in order to incorporate CSR into long term strategy and decision-making criteria, the organisation must make transition from a target-driven culture to a value-driven culture. The organizations must therefore build upon corporate values to create an organizational culture that is receptive to change and can sustain a CSR strategy over the long run.
“Acting as a sustainable entrepreneur means stepping back and looking at what drives us as a company at the most basic level: our brand foundation, business strategy, values and expectations for business excellence” (Philips, 2005: 18).
Identifying key stakeholders and critical stakeholders’ issues “Locally, it is impossible to satisfy everybody [all stakeholders]” (IKEA)
A difficult dilemma for all managers who are faced with the integration of CSR within the organization is to define which relevant stakeholders’ categories the company should cooperate and participate with. Indeed, the primary objective for the company is to understand the continuously changing objectives, values, demands and expectations of the people who have a stake in their businesses (Freeman 1984; Jonker, & Foster 2002). The dilemma is not only the choice in stakeholders the company has to make, but rather the large diversity in stakeholder groups and their various (intrinsic) and often conflicting values, objectives, expectations and demands, and which have to be satisfied as a minimum.
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“The external stakeholders are not only the customers, but also governments, people living near IKEA stores and distribution centres, and suppliers, these are all viewed as main stakeholders” (IKEA)
“Stakeholders are divided into different groups, for instance media, and academia and other universities, of course customer research and contacts with non governmental organisations and not in the last place the suppliers, and other business partners...” (PHILIPS)
Clearly identifying who are the companies’ stakeholders allows avoiding the misplacement of resources on non-stakeholders or stakeholders who reveal no legitimate interest or concern. Mitchell, Agle and Wood (1997) consider that stakeholders’ categories can be identified by their attributed possession of three key attributes: (1) the stakeholder's power to influence the firm, (2) the legitimacy of the stakeholder’s relationship with the firm, and (3) the urgency of the stakeholder’s claim on the firm. Based on the analysis by managers of the presence of the three attributes of power, legitimacy and urgency, the salience or “the degree to which managers give priority to competing stakeholder claims” (Mitchell et al., 1997: 854) can then be defined and stakeholders and their respective issues prioritized. Driscoll and Starik (2004) have adapted Mitchell et al. (1997)’s model, and added proximity as a fourth attribute, explaining the distance between company and stakeholder type. Bryson (2004), Bryson, Cunningham and Lokkesmoe (2002) or Eden and Ackerman (1998) further provide tools and methods for mapping and identifying critical stakeholders along the dimensions of power, interest and influence.
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Unilever identified seven stakeholder groups as being important, namely (Unilever, 2001: 4): (1) shareholders, (2) employees, (3) consumers, (4) suppliers and trade customers as business partners, (5) government, (6) local communities and societies where Unilever does business, (7) academics and others with whom Unilever conducts research. Unilever conducts research among stakeholders to figure out their opinions about Unilever’s values and planned practices and activities (Cormack, 2002). This helped Unilever to develop their CSR methodology, eventually adapted according to their stakeholders’ views (Cormack, 2002).
It should be noted that CSR issues and influence of stakeholders are likely to vary both within and across industries and countries (Swaen & Maignan, 2000). For example, while U.S. organizations must pay attention to small investors’ demands, this is not the case in most European countries where stock ownership is not as widespread as in the U.S. Another example is a manufacturing company’s concern about its environmental record. The concern will depend on whether the company is dealing with corporate or with end-customers. In the latter case the company might be especially wary of negative media publicity or consumer boycotts, whereas in the former case the company might be worried about maintaining a good reputation among its few business partners (Swaen & Maignan, 2000).
“At Philips, we have a good opinion on which issues are important for them (stakeholders) (…) a few years ago we started on investigate what [kind of social activities] happened at Philips, all very fragmented based on too many decisions. We did not want that, so we decided to focus on specific themes that fitted in our organisation. That is how we decided to focus on healthcare and education” (PHILIPS)
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Step 3: Establishing a vision and a working definition for CSR
Having clarified internal values and norms as well as key stakeholders and their issues, this leads the organization to define a common meaning for CSR that allows for creating a socially responsible shared vision including stakeholders’ expectations and that would be compatible with long term strategic goals and the company. The development of a working definition for CSR is essential to enable managers and stakeholders to work in the same direction as well as for establishing foundations for the latter CSR assessment (Government of Canada, 2006). According to Maignan et al. (2005), the working definition of CSR or CSR commitments must essentially shed light on two key elements: (1) the motivation supporting the commitment to CSR, and (2) the stakeholders and issues that have been identified as of outmost importance by the organization. The working definition for CSR must allow building a constructive socially responsible vision.
“We are committed to contributing to sustainable development and work with other businesses, civil society organisations and governments towards achieving this goal. We recognise this as a commercial imperative as we will only be able to maximise shareholder value and prosper in the long term if we operate in a more sustainable way” (UNILEVER)
A strong leader is able of creating a vision for the future is aligned to the demands from the environment; also, the leader must communicate this vision in an inspiring way so that employees act accordingly.
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“Eventually it is about what radiates the chairman, what he does, and then you don’t even have to talk about it because you know it is OK.” (PHILIPS)
“Last year IKEA’s highest boss visited also a few projects, to get the feeling that IKEA “is doing good” and to see for himself that IKEA participating in it is a good case” (IKEA)
This socially responsible vision must not only be formulated and declared by top management but also formalized and communicated through official documents such as annual reports, corporate brochures and online information. It should be carefully designed by top management in accordance with identified corporate values and formulated in order to fit with current personal values of the employees (Werre, 2003).
Step 4: Assessing current CSR status
Auditing current CSR practices Existing mission statements, policies, codes of conduct, principles and other operating documents are logical candidates for review, as are external documents associated with programs or initiatives in which the firm is involved. Focusing first on existing statements, policies, code of conducts and other CSR-related documents. Second consultation of key managers representing key business functions inside the organization and consulting CSR and industry experts should be considered. Being open to working with a consulting firm to scrutinize the organization's current policies and practices might then be appropriate (O’Connell, 2004).
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The objective of this inventory is to identify organizational characteristics relating to five key CSR aspects that are (1) the social and (2) environmental dimensions and impacts of organizational activities, (3) the corporate governance issues, (4) the corporate commitment to sustainability, and (5) the societal dialogue process.
Another practical CSR audit methodology is provided by Morimoto, Ash and Hope (2005) and is based on the analysis of current CSR literature and interviews conducted with a number of interested and knowledgeable stakeholders that have been previously identified. This methodology appears especially relevant since social auditing through engaging stakeholders via dialogue then be applied to build trust, identify commitment and promote co-operation amongst stakeholders and corporations (Gao & Zhang, 2006).
“IKEA uses external knowledge to figure out whether it is doing the right thing, like with environmental organisations (Greenpeace, WWF). (…) IKEA does consult them every year” (IKEA)
Given the complexity and the scope of CSR concept, it is not surprising that a variety of procedures have been developed to assess the level of an organization’s responsibility. SA8000, AA 1000, Global Reporting Initiative are just a few examples of such auditing procedures.
Benchmarking competitors’ practices and CSR norms and standards Benchmarking CSR practices should allow the company to continue to highlight what should remain and give competitive advantage, and to identify inappropriate activities with respect to
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CSR. Benchmarking criteria should be defined in accordance with the characteristics of the industry sector under scrutiny.
Benchmarking competitors’ CSR practices should include three broad critical steps. First, identifying and selecting the best performers for each CSR-related issue to be benchmarked on the basis of the organization’s industry knowledge for industry-specific issues and on the basis of recognized CSR champions for what concerns CSR more general issues. Secondly, identifying norms and standards used or developed by competitors and measuring the performance of the best-in-class companies for each benchmark being considered. Finally, comparing with the organization’s performance for each variable to determine the gap between the organisation and the best performers.
“On top of that, all products’ and services’ development processes are checked on environmental soundness (EcoDesign), which is embedded as a permanent part in the product creation process. This resulting in time in knowing which environmental improvements can be implemented in a new product or an existing product that is redesigned. These [improvements] are then implemented, (…) Then, the top products are benchmarked against [products of] competitors and against other products. We call these products Green Flagships” (PHILIPS)
Learning from peers and sharing experience is also possible through networks that offer business managers learning, benchmarking, and capacity building opportunities, as well as the possibility of creating a dialogue between the organizations and its stakeholders: European policy makers, governments, investors, social partners, civil society, and academics. CSR Europe is the leading European business network for CSR with over 60 leading multinational 26
organizations as members (Unilever is one of those members). Since its inception in 1995, the mission of CSR Europe has been to help organizations integrate CSR into the way they do business, every day. CSR Europe has launched a European Roadmap for a sustainable and competitive enterprise. This Roadmap serves as a set of goals and strategies to integrate CSR in daily business practices. CSR Europe offers daily practical assistance and information on demand; business seminars in order to exchange practical solutions on issues such as diversity and employability; access to over 250 CSR best practices; and finally engaging with stakeholders.
“We are also members of a range of corporate responsibility organisations at national and regional levels, such as Business for Social Responsibility in the United States, Instituto Ethos in Brazil and CSR Europe” (UNILEVER)
“I do have a lot of contact with colleagues from other companies and especially those who in my opinion would be or are possible partners. I am consulting the Raad van de Nederlandse Detailhandel a lot, and mainly the bigger retail companies like KBB. These consultations are to find out who is doing what” (IKEA)
Step 5: Developing a CSR integrated strategic plan
Many companies want to invest in CSR activities but have some problems to integrate CSR into their strategy: “In any company, drawing up short- and longer-term strategies is a familiar procedure. What is often still missing up till now is the integration of the three P’s (planet, people and profit) into the strategy and the action plans which derive from it” (Cramer, 2005).
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A first step is to translate values, vision or policy statement into commitments, expectations or guiding principles (e.g. code of business conduct and ethics). Goals can then be set together with the development of targets and performance measures.
“We think it helps us improving our management, so it is not an add-on like “oh, it costs extra money, and in some instances money will be earned,” but we do think that it can be an advantage in bringing Philips products and services to the customers. This thinking has started mainly four to five years ago, and it is exposed for instance via the by Philips formulated strategy maps and green marketing. It is called the sustainability business concept. (…) In 2003, Philips started with a specific management agenda for sustainability (…) we have also defined key performance indicators for sustainability, what resulted in a lot of attention [for sustainability] – to that developments [regarding sustainability] in this company also go faster” (PHILIPS)
Other supporting factors include developing an integrated CSR enabling structure (define responsibilities). For instance, designate a senior official or a committee responsible for overall CSR implementation; improving interfunctional coordination; building CSR responsibilities into employees' job descriptions and performance evaluations; the recruitment of people knowledgeable in CSR with appropriate attitudes and skills; and finally developing a regular forum to share issues and knowledge across the company, produces new ideas, and increase visibility. At UK retailer Marks & Spencer, the corporate responsibility policy is set by the CSR committee, which is led by the company chairman and made up of key directors and managers. But the committee relies on the CSR Team to embed the policy throughout the business. "We have to make sure that there's a link between decisions made by the CSR committee and the operational side of the business," says Ed Williams, head of corporate
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responsibility. "Nothing will happen if it just remains with the CSR committee. We make sure that our people are in touch with stakeholder expectations and that they're developing their policies and actions accordingly to achieve a win-win." The two CSR forums are the main vehicles for achieving those. Each is chaired by senior line managers.
Step 6: Implementing CSR integrated strategic plan
Several organizations have developed guidelines for successful CSR implementation. The Canadian government offers several particular useful and relevant detailed guidelines and checkpoints helping the organization during the implementation (Government of Canada, 2006). The Canadian guide mentions the importance of employees and key stakeholders in the successful implementation of a CSR orientation. Although top management decides about CSR direction and strategy, middle management and employees are the ones who have to implement CSR in reality. The middle management’s role is “to put into effect the direction established by top management by making sure that resources are allocated and controlled appropriately, monitoring performance and behaviour of staff, and where necessary, explaining the strategy to those reporting to them” (Johnson & Scholes, 2002: 552). In addition, the middle management helps to communicate and perform the top-down decided vision and CSR implementation.
Employees are often a firm's human face capable of acting as ambassadors, advocates and sources of new ideas and information on CSR. On the other hand, if not properly engaged, employees and suppliers could be a source of problems for all concerned. Therefore, it is vitally important that there are good communication between top management and employees about CSR strategy and implementation. Engaging employees in implementation means
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focusing on awareness. Employees should receive context for and background on the firm's approach to CSR, including the motivation for engaging in it, why the approach was adopted, its relevance to the organization, how it fits with existing firm objectives, how it changes current approaches, and other implications. Involving employees in discussions of how CSR commitments are implemented is a way for these stakeholders to develop a sense of ownership of and pride in the firm's CSR activities (Government of Canada, 2006).
Employees’ training with respect to CSR could also be used to create awareness and make it easier for employees to see that CSR issues impact themselves and their close environment. IKEA's Co-worker Environment and Social Responsibility Training program was created in response to the company's first environmental action plan, launched in 1992. The training covers IKEA's worldwide environmental and social policies, programs, goals and performance, and all aspects of business operations, such as suppliers, transportation waste management, CO2 emissions, product design and packaging. The program is also designed to show employees how they can help the company achieve its goals in these areas.
“There is a standardised training package, which is adapted per country. (…) That is a first step, to pass on a feeling about what IKEA does, training and communication overall are the means to pass on the feeling what is expected from a co-worker” (IKEA)
“Philips provides workshops [on sustainability] and is very busy with embedding [sustainability] in all training activities - for my own sustainability network placed on divisional and corporate level we have developed a separate corporate curriculum, a special learning programme to look whether we meet the requirements and what we
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still have to learn. Next, we have a separate e-learning tool within the organisation” (PHILIPS)
Enthusiasm around a CSR program can be created by providing regular updates on the program’s progress. Another possibility is to develop incentives such as rewarding employees for relevant suggestions and to incorporate CSR performance elements in job description so that employees are rewarded for CSR achievement but penalized for non conformance. Only if the incentives are compatible to this more comprehensive view of stakeholder expectation and contribution will managers' values change and firms will be able to create more sustainable organizational wealth (Sachs & Ruhli, 2005).
“In 2005, we dismissed 66 people for breaches of our Code (compared to 89 in 2004)” (Unilever, 2006: 30)
“Philips gives supplier opportunities to assess themselves via a self-assessment tool, Philips audits the suppliers itself, and trains suppliers to make sure they will comply or keep complying to the rules. (…) The supplier is given the opportunity to improve himself, but in case non compliance keeps existing, at the end Philips has to terminate its relationship with such a supplier” (PHILIPS)
Corporate activities and employees’ activities that are not in line with CSR principles and the designed CSR strategy should be detected at an early stage because the image of the organization can otherwise suffer. Therefore, it is important to put in place mechanisms and processes that will allow for early detection, reporting, and resolution of problematic activity. Organizations could consider anonymous hotlines, e-mail boxes, and ombudspersons
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(Government of Canada, 2006). Care must be taken to ensure that not only are the mechanisms for dealing with the problems designed well, but also that they are the option of last resort. A senior manager should be assigned responsibility for investigating and reporting compliance on these issues.
Step 7: Communication about CSR commitments and performance
Continuous internal communication about CSR commitments increases awareness of CSR. Therefore an internal communication plan should be developed, identifying the communication means including newsletter, annual reports, meetings, and trainings. During the moving phase, the communication will consist in reporting the change and reassuring employees by informing them on the program’s progress, as well as on misconceptions in relation to the CSR implementation process. Doing this allows the top management and CSR team to get input as to effect of the implementation process, to develop sophisticated knowledge among all supervisory management personnel, and to clearly identify and delineate role relationships and expectations (Klein, 1996). During the refreezing stage, needs are more concerned with publicizing and demonstrating the success of the CSR program, as well as anchoring the CSR vision in the day-to-day activities of the organization (Klein, 1996).
Using collateral such as newsletters and magazines or other frequent multimedia delivery is particularly useful, especially in the refreezing stage where celebrating success is essential to institutionalize the process, but also in the moving phase – next group meetings at each level of the hierarchy - in order to maintain regular and continuous information.
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“Readme is an internal magazine, directed at co-workers. It also published a lot about CSR issues. (…) Readme is not sent to suppliers, but in case a supplier is mentioned, it can be send to the particular supplier. It is a magazine purely focused internally” (IKEA)
With regards to external communication, organizations are faced with greater demands for detailed information regarding the social and environmental impacts of their activities (Burchell & Cook, 2006). Responding to demands for transparency, many organizations publish information on how they fulfill their responsibilities to stakeholders (Dawkins, 2004). Many organizations’ annual reports already include non-financial information; many organizations also publish separate reports on their social and environmental activities even though there is no legal obligation for them to reveal this kind of information (Bollen, 2004).
Our analysis of IKEA's media advertising to the general public demonstrates that the organization seldom includes direct references to its CSR commitments. There is, for example, no mention of CSR in the nine key messages IKEA conveys to customers: the "IKEA concept," the "IKEA product range," "home furnishing specialist," "low price," "function," the "right quality," "convenient shopping," a "day out for the whole family," and "Swedish" (IKEA, 2006; Lewis, 2005). Instead, IKEA stresses its emphasis on the family and the environment, its Swedish roots, and, in turn, the solidarity and egalitarianism traditionally associated with Sweden. Explains Jean-Louis Baillot, CEO of IKEA France, "people consider that IKEA has an environmental behavior" because of its Scandinavian roots, which means that "it is ultimately not inevitably necessary to speak about it" (Comité 21, 2004). However, IKEA stores' brochures contained information relating to various products' environmental impact. The catalogs used to include two pages devoted to CSR themes, but such information
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have disappeared from the latest editions. Inside stores, customers could also read about IKEA's cause-related marketing campaigns and cooperative actions with Save the Children and UNICEF, as well as review "green panels" that advised them about good consumption practices. Information about the organization's CSR polices can also be found in public codes of conduct, brochures, and annual reports through the national IKEA Web sites.
IKEA's first social and environmental responsibility report was published in 2004 (for the year 2003). This first report described how IKEA had incorporated CSR into its entire supply chain and its collaboration with various NGOs. Anders Dhalvig, CEO of IKEA, declared at that time that IKEA's partners "have been eager to start working seriously with these issues and have progressed step by step, but it is only now, when we have accomplished a little more, that it seems right to start telling the rest of the world about it." The CEO also stressed that it was best to remain humble about what the organization had accomplished so far, "because there is so much more that still remains to be done" (IKEA, 2004: 36). IKEA has chosen to be cautious in communicating about its CSR is to avoid promoting "itself as a target for anti-globalization organizations who focus on big brand names like ours despite our many community- and environment-friendly policies and contributions" (Marianne Barner, quoted in Lewis, 2005, p. 175).
More clearly involved in a refreezing process, Philips recently provided much more detailed CSR reports compared to IKEA. Philips view this report as a valuable tool for “maintaining a dialogue with a variety of interested parties, including shareholders, customers, business partners, governmental and non-governmental organizations and, of course, Philips employees around the world, who work daily to improve the organization’s performance” (Philips, 2005: 2). At Unilever, its website is considered a central tool to provide annually
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updated communication on progress, explaining how they are implementing CSR principles across the whole business (Unilever, 2007: 24).
The three cases illustrate that organizations should be ready to communicate externally what has already been realized and what is still to achieve. Corporate decisions related to the nature and the level of communication about CSR practices are complex. The need to communicate about CSR commitments varies according to stakeholders, the importance they put on CSR issues, and the potential harmful impact and influence of the stakeholders on the concerned organization. Having clearly identified key stakeholders and their expectations, as well as maintaining continuous CSR dialogue remain cornerstones of the CSR communication strategy.
Step 8: Evaluating CSR integrated strategies and communication
To improve the CSR program, evaluation should be based on measuring, verifying, and reporting. The objectives are to determine what is working well, why, and how to ensure that it will continue; investigate what is not working well and why this is the case; explore barriers to success and what can be changed to overcome these barriers; and to revisit original goals and make new ones judged as necessary (Government of Canada, 2006).
Regular formal review of CSR activities enables stakeholders to be informed of progress and activities and provides visibility and transparency of activities. The audit process is widely understood as such a mechanism, and is the threshold by which performance and expectations are matched. The value of such audits is increased if the process is seen and acknowledged to be rigorous. This may be achieved by a range of mechanisms such as the involvement of
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external auditors and publishing of standards of performance against targets. The results of such audits can then be disseminated as evidence of conformance. Finally, stakeholders can be invited to verify the organization’s CSR performance.
“The next step is to follow up those codes of conduct by organising audits at several levels: by IKEA (doing business, contractual agreements with suppliers) and monitoring by external partners what has been done the last eight years (…) IKEA conducts audits in three ways: the people who make appointments, IKEA’s own IWAY auditors, and audits by KPMG, PriceWaterhouseCoopers etc” (IKEA)
“Regarding publicity, for instance the journalists and media, Philips measures its external communication in a KPI: 250 printed media are scanned to measure the amount of articles on Philips and sustainability and to measure whether these articles are favourable” (PHILIPS)
Step 9: Institutionalizing CSR
With the introduction of any new initiative in a company, the question is how one can maintain momentum and ensure continuation of the initiative? The danger exists that an initiative, which started with enthusiasm does not survive in the organisation. Especially in times of economic recession, there is a big risk that the initiative will die (Cramer, 2005).
"Sustainability can't be successfully addressed in isolation or as an 'add-on' to our dayto-day business (…) All functions, businesses and regions must be involved in managing sustainability issues. It's embedded in our corporate strategy, our
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manufacturing and products, and our extended business system”" (Barbara Kux, Chief Procurement Officer, in Philips 2004)
To be sustainable such activities need to be institutionalised into the organization and seen to be inherent to the culture and adopted as part of the long term strategy and decision making. The commitment of resources and rewards/penalties for achievement are powerful and symbolic indications of commitment.
“It is our firm belief that socially and environmentally responsible behaviour contributes to sustained profitable growth and value creation. That is why we are embedding sustainability thinking and acting in all of our daily activities” (Philips, 2005: 24).
Continuous stakeholder dialogue
To align with stakeholders' interests and create long-term value, organizations have to develop, apply, and maintain the necessary management competences and capabilities to deal with stakeholder concerns over time” (Ayuso, Rodriguez, & Ricart, 2006). Stakeholder dialogue is essential during the whole process of CSR development and implementation. When developing the CSR program, initiating a structured CSR dialogue is essential to identify and respond to expectations and to deal with key concerns. Ensuring that there is a consensus about the nature of the working definition for CSR and the socially responsible vision of the organisation is then crucial (Draper, 2006).
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“Because sustainability requires open, honest dialogue with our internal and external stakeholders, we are working to create more structure around stakeholder interactions. This is critical in helping us effectively manage the issues that are important to our various constituencies” (Philips, 2005: 5)
During the implementation phase, maintaining stakeholder dialogue and deepening collaboration with key stakeholders allow the development of knowledge and know-how on specific issues faced by the organisation. In the case of IKEA, for example, the organization paid considerable attention to its relationships with WWF and UNICEF. The parties entered into an ongoing dialogue, trusted each other, and made compromises along the way, resulting in highly successful relationships. This example demonstrates the importance of involving external stakeholders in the monitoring process, which indicates the organization is willing to change its CSR policies and thereby signals its credibility to the outside world.
“Listening and learning from all stakeholders helps us achieve our business goals and is central to our approach. Our business success depends on relationships of mutual benefit with many people” (UNILEVER)
When it comes to evaluation of CSR policies, the transparency of the stakeholder dialogue is a key driver of future improvement. Such transparency has further been shown as playing a positive role in the construction of stakeholders’ attitudes towards the organization (Maon, Swaen, & Lindgreen, 2006). Indeed, stakeholders who are engaged in a regular and transparent dialogue with an organization demonstrate less skepticism than do other stakeholders.
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“We also engage with specialist stakeholders and learn from their feedback. In 2005, through a series of structured stakeholder discussions, we received suggestions on improving our social and environmental reporting from a cross-section of international experts and have taken their comments on board in producing this report” (UNILEVER)
Continuous constructive dialogue in the refreezing phase then contributes to shore up weaknesses and correct deficiencies in order to institutionalize the CSR vision and processes and allowing a credible publication of the results achieved. Table 4 offers valuable insights on stakeholder dialogue by illustrating how Philips continuously keeps in touch with stakeholders through exchange and dialogue mechanisms that are tailored according to the categories of stakeholders that are addressed, using surveys, focus groups, networking practices, meetings, etc., depending on the nature of the relation with the concerned stakeholders.
{Insert Table 4 about here}
To conclude our findings, Table 5 summarises the different factors that play a key role in the CSR implementation process. Those critical factors for CSR implementation to be successful have been identified at the managerial level, the organizational level, and the corporate level.
{Insert Table 5 about here}
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Discussion
Our article addressed the following questions. First, we identified that Lewin’s (1951) planned change model captured the dynamics of adopting a CSR orientation. Second, we combined planned change theories with the limited research on implementing a CSR orientation. Based on three case organizations, we identified four stages in the process of developing and implementing CSR in an organization. Also, we posited that these stages encompass nine steps the role and importance vary across the stages. Our findings were supported with real time industry data, providing the first examples of the process of change towards CSR orientation. As such, our article both identifies new insights and extends extant theory by building on previous research (Cramer, 2005; Hardjono & de Klein, 2004; Khoo & Tan, 2002; Maignan et al., 2005; Panapaanan et al., 2003; Were, 2003). Finally, we identified factors that are critical to the successful development and implementation of CSR orientation. These factors cover the corporate, organizational, and managerial levels.
Limitations and future research
Our paper highlights the imperative need of developing more comprehensive frameworks when it comes to CSR policies design and implementation. In that perspective, the developed framework consists of an extensive effort of synthesizing key challenges and facilitators in the CSR design and implementation process. It appears essential in order to bring the reflection on CSR practices at a relevant and constructive operational level. As is the case for most research, our study has several limitations that affect our interpretations and that therefore must be considered. First, the study of process would be improved if it were conducted in real time and longitudinally, rather than relying on historical
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information and respondent recall. Also, instead of relying on the recall of a few organizational members future research would benefit from interviews with a range of stakeholders. This would, for example, identify the tension involved in managing the CSR program across different stakeholders. Finally, our results focused on radical planned change efforts whereas future research could examine more evolutionary, emergent efforts including for example organizations are already closer to a CSR orientation. Also, we rely on examining the CSR programs of three organizations in very different industry sectors. Future research should carry out additional case studies to challenge our findings, as generalizing across industry sectors can be difficult. These limitations should be considered when interpreting our results, but despite them, we believe our study offers several important contributions.
Managerial implications
The findings give rise to a number of insights into the practice of CSR. First, the four-stage model of change identified in Figure 1 provides the beginning of a road map for managers seeking to implement CSR-oriented change. Our framework can also be adopted by organizations requiring more evolutionary change efforts. Organizations that already have a set of CSR-oriented values but struggle to implement them effectively may be able to address immediately issues of refreezing. The organizations could do so by, perhaps, building in feedback systems and identifying short-term wins. Apart from this, our findings also identify that given the need to work across many functions to successfully execute the CSR program, managers should invest in internal marketing programs that educate members in the organization on the CSR program’s success, as well as CSR-relevant activities. Such internal marketing programs should be reinforced with a reconfiguration of human resource control systems to ensure buy-in to the CSR program.
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TABLE 1 Definitions of CSR “Corporate social responsibility is the managerial obligation to take action, to protect and to improve both the welfare of society as a whole and the interest of organizations” (Davis & Blomstrom, 1975: 5). “Corporate social responsibility is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract”. (Jones, 1980: 59) “Corporate Social Responsibility relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems which (by some normative standards) have beneficial rather than adverse effects on pertinent corporate stakeholders” (Epstein, 1987: 104) “Social Responsibility is the obligation of both business and society (stakeholders) to take proper legal, moral-ethical and philanthropic actions that will protect and improve the welfare of both society and business as a whole; all of this must of course be accomplished within the economic structures and capabilities of the parties involved” (Anderson 1989: 9) “Corporate social responsibility may be viewed as a process in which managers take responsibility for identifying and accommodating the interests of those affected by the organization’s actions.” (Maclagan, 1998: 147) “Corporate citizenship is the extent to which businesses meet the economic, legal, ethical and discretionary responsibilities placed on them by their various stakeholders” (Maignan, Ferrell, & Hult 1999: 457) “Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources” (Kotler & Lee, 2005: 3) “CSR is the business’ commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life” (Holmes & Watts, 2000: 10). “Corporate social responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” (European Commission, 2001: 6) “Corporate Social Responsibility is the way in which a company manages and improves its social and environmental impact to generate value for both its shareholders and its stakeholders by innovating its strategy, organisation and operations”. (CSR Europe, 2003)
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CSR Conception
Khoo & Tan (2002)
Business commitment to CSR should “envelop all employees (i.e. their health and wellbeing), the quality of products, the continuous improvement of processes, and the company’s facilities and profit-making opportunities” (p. 196). Sustainable manufacturing and development is further defined as “the integration of processes, decision making and the environmental concerns of an active industrial system that seeks to achieve economic growth, without destroying precious resources or the environment” (p. 197)
Werre (2003)
Corporate (social) responsibility is used in a general sense, referring to “the strategic choice to take responsibility for the impact of business with respect to economic, environmental and social dimensions” (p. 260).
TABLE 2 Existing frameworks about CSR implementation CSR integration process
Based on the Australian Business Excellence Framework, the authors consider 4 cyclic stages involved in transforming the company from its initial state to a socially responsible and sustainable organization in a continuous perspective: 1. Preparation (involving leadership and strategy planning) 2. Transformation (involving people and information management 3. Implementation (involving the embedment of sustainability in the company processes) 4. Sustainable business results (involving the review of the system’s performance)
4 main phases in a Corporate Responsibility (CR) implementation model: 1. Raising top-management awareness 2. Formulating a CR vision and core corporate values 3. Changing organizational behaviour 4. Anchoring the change
Stakeholders’ role in the process
Stakeholders’ concerns and roles are not integrated in the framework. The framework only refers to the necessity of addressing the wellbeing of employees as well as customers needs and expectations.
Importance of internal communication and employee’s involvement is underlined. But external stakeholders’ involvement is not mentioned except in their role for raising top management sensitivity as well as in external certification process. (to be continued next page) 56
CSR “encompasses three dimensions – economic, environmental and social” Panapanaan (Panapaanan et al., 2003: 134). et al. CSR is about “doing business (2003) sustainably and ethically as well as treating or addressing stakeholders’ concerns responsibly” (p. 135).
Businesses commitment to CSR is viewed as, “at a minimum, adopt values and norms along with organizational processes to minimize their negative impacts and maximize their positive Maignan, et impacts on important al. (2005) stakeholder issues” (p. 958) - CSR of an organization is issue-specific. - Commitment to CSR is best evaluated at the level of an individual business unit.
2 preliminary steps conditioning the commitment to CSR management precede 5 essential activities for CSR management: a. Assessment of CSR (identification of the main CSR areas and identifications of the relevant CSR parameters) b. Decision whether to proceed in managing CSR 1. Organization and structure 2. Planning 3. Implementation 4. Monitoring and evaluation 5. Communication and reporting 8 steps to be adopted to properly implement CSR from a marketing perspective: 1. Discovering organizational values and norms. 2. Identifying stakeholders and their respective salience. 3. Identifying the main issues of concern to the identified key stakeholders. 4. Assessing a meaning of CSR that fits the organization of interest. 5. Auditing current practices. 6. Prioritizing and Implementing CSR changes and initiatives. 7. Promoting CSR by creating awareness and getting stakeholders involved. 8. Gaining stakeholders feedback.
The authors mainly insists on step a. and emphasizes the critical role the social risk assessment through considering 4 main stakeholders’ clusters (employees, community, customers, community, suppliers) and their issues. The 5 “essential activities” are only evoked. The framework doesn’t consider any stakeholders’ role in that perspective. The framework highlights the importance of 2 feedback loops in order to gain stakeholders’ feedback: Stakeholders’ feedback to be used as input for the next audit. Consequently, the sequence linking steps 5 to 8 should be performed on a regular basis (bi-annual audits of current practices bi-annually). Stakeholders’ feedback as an input to reassess the first three steps of the CSR management process in the long-run (approximately every four years). (to be continued next page)
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Cramer (2005)
Cramer uses the WBCSD definition of CSR. CSR is then viewed as “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life” (p. 583)
6 main non-sequential activities for CSR implementation: 1. Listing the expectations and demands of the stakeholders 2. Formulating a vision and a mission with regard to corporate social responsibility and, if desired, a code of conduct 3. Developing short- and longer-term strategies with regard to corporate social responsibility and, using these, to draft a plan of action 4. Setting up a monitoring and reporting system 5. Embedding the process by rooting it in quality and management systems 6. Communicating internally and externally about the approach and the results obtained.
The emphasis is laid on the importance of dialoguing with stakeholders but the model remains unclear on their role and engagement in the process of organizational CSR development.
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TABLE 3 CSR Drivers Economic drivers o Development of perceived competitive advantage (Porter & Kramer, 2006) o Socially responsible investment and pressure from shareholders (Guay, Doh, & Sinclair, 2004; Williams, 1999) o Building and maintaining company image and reputation (Fombrun, 2005) o Pressure along the supply chain and improved risk management (Mamic, 2005) Political drivers o Evolution of the legal and regulatory frameworks (de la Cuesta González, & Valor Martinez, 2004). o Political promotion and pressure at local, regional or national level (Albareda, Tencati, Lozano & Perrini; Moon, 2004)
Social drivers o Recognition of the evolution of consumption trends (Crane & Matten, 2003) o Pressure from NGOs and communities (Guay et al., 2004; Ottaway, 2001) o Pressures from trade unions and international labor organizations (Hemphill, 2004) Individual drivers o Top management’s ethical orientation (Agle et al., 1999; Waldman & Siegel, 2005) o Employees and managers’ personal values (Hemingway, 2005; Hemingway & Maclagan, 2004)
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TABLE 4 Stakeholder Dialogue at Philips (Adapted from Philips, 2005, 21) Stakeholders
Means of interaction
Divisions
Dedicated interface Countries/Regions Corporate
Buyers B2B
Secondary stakeholders
Primary stakeholders
Customers
B2C
Advisory boards, co-R&D, co-strategy development Surveys (trend related, customer satisfaction related, application research), complaint resolution, focus groups
X
X
Suppliers Suppliers/business partners Financial service providers Internal Employees Social investors Mainstream investors Lateral Academia Non-governmental organizations Communities Regulatory bodies Media Competitors / other corporations
Supplier days (local, global), co-R&D, industry membership Ongoing ad hoc involvement, financial ratings Employee Engagement surveys, town hall meetings, People Performance mgmt system, compliance management system, (local) ombudsman Surveys Road shows, analyst (face to face) meetings, ratings
X X X
X
X X X
Co-R&D, exchange programs, local networking
X
X
Surveys, project development, ad hoc involvement
X
X
Social investment activities focused on education and health, local networking Local networking (business/community driven), participation in advisory bodies, cooperation in community projects Local networking, surveys Industry membership, network for best practices (e.g. WBCSD, Global Compact)
X X
X
X
X
X
X
X
X
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TABLE 5 Critical success factors for implementing integrated CSR policies PLAN
CORPORATE LEVEL
o Connecting CSR vision and initiatives with organization’s core values and competencies
DO
CHECK/IMPROVE
MAINSTREAM
o Considering mistakes as an opportunity to learn and improve programs and policies
o Formalizing CSR vision through official documents o Getting key people commitment (directors, owners, senior managers) o Engaging key stakeholders in the whole process o Building upon existing organizational structures and process
ORGANIZATIONAL LEVEL
o Ensuring that o Considering the company mistakes as an dispose of opportunity to internal skills learn and to make the improve transformation programs and policies o Training of employees about CSR
o Emphasizing relationships between new organizational behaviour and success
o Fostering the presence of moral/CSR champions o Thinking in terms of engagement rather than quick fix solutions o Creating enthusiasm and credibility around CSR (by providing regular updates on progress)
MANAGERIAL LEVEL
o Rewarding people that create CSR successes
o Leadership role
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FIGURE 1 Proposed integrative framework SENSITIZE
UNFREEZE
MOVE
PLAN
Social drivers
Political drivers
2. Assessing corporate purpose in a societal context
4. Assessing current CSR status
Uncovering organizational systems, as well as corporate norms and values
Auditing current CSR norms, standards, and practices
Economic drivers
Identifying key stakeholders and critical stakeholder issues
5. Developing a CSR integrated strategic plan –
3. Establishing a vision and a working definition for CSR
1. Raising CSR awareness inside the organization
Managers’ personal values
DO
6. Implementing CSR integrated strategic plan – Implementing organizational initiatives and strategies linking with CSR
Embedding CSR in organizational strategy Benchmarking competitors’ practices and CSR norms, standards, and practices
REFREEZE
CHECK / IMPROVE
8. Evaluating CSR integrated strategies and communication – Evaluating, verifying and reporting on CSR progress
MAINSTREAM
9. Institutionalizing CSR – Anchoring changes into organizational systems, as well as corporate culture and values
7. Communicating about CSR commitments and performance
Continuous stakeholder dialogue
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