Values and Corporate Responsibility: CSR and Sustainable Development

Introduction

Introduction from the editors of the book that brings together all chapters.

Chapter 1.  The value of philanthropy - some economic and ethical perspectives from Adam Smith to the post-WW2 era

Atle Andreassen Raa, Norwegian Business School, BI

 

The aim of this chapter is to discuss the value of philanthropy from the perspective of economic theory. It starts with Adam Smith and the classical economists in the18^th and 19^th century and continues with the neoclassicals from the late 19^th century. Philanthropy has been seen as being inconsistent with the standard neoclassical theory of the self-interested man (homo economicus), which has its roots in Smith's 'invisible hand' metaphor. I argue that this interpretation of Adam Smith is too narrow. Adam Smith integrated moral philosophy into his economic theory and made room for altruism. Later in the 19^th century, the neoclassical economists constructed formal models based on individual self-interest, with no room for philanthropy. In the 1930, some economists saw the dissociation of economics and ethics as necessary. After WW2, however, we see a revival in interest in philanthropy among economists. Gary Becker in 1974 presented a utility function, which also included another person's welfare. In that way, the economic models acknowledge that philanthropy was of value for society. Economists after WW2 also presented strategic and ethical arguments for the values of philanthropy. Finally, the chapter contains an empirical case in order to throw more light on the potential value of philanthropy.     

 

Chapter 2. Personal Values and Corporate Responsibility Adoption

Dr Candice Chow and Professor Nada Kakabadse, Henley Business School

 

This chapter highlights the importance of executive values in shaping enterprises' Corporate Responsibility (CR) practices. Past management studies often examine organisational strategies and CR practices as two separate streams of organisational decisions. Current institutional norms dictate decision rationality to be grounded in seeking techno-optimisation. Economic theories often underpin how strategic decisions are being made and CR investment is an instrument to economic maximisation versus being an integral part of how businesses operate. Businesses are our wealth creation engines. They draw upon available environmental and social resources in order to achieve their economic objectives, and, in turn have a significant impact on the sustainability and well-being of our planet and our society. Our current environment is laced with complex global challenges such as climate change, social inequality, political unrest, resource depletion, all affecting humanity, planet sustainability and business longevity. Many of these issues are accounted for in the 17 sustainable development goals (SDGs), each having a list of targets that are measured with indicators. Enterprise business strategies cannot be divorced from CR and sustainability effort. Building responsible and sustainable futures in our current tumultuous environment requires advanced values - including virtues, systems-thinking, and complex, paradoxical management framing of issues and forward-looking consciousness. These advanced values permit acceptance of the centrality of humanity and moral responsibility within the business context. Values influence perception and inform our actions. Enterprises increasingly require a more complex, paradoxical management frame and futures literacy in order to adopt more transformative and more proactive responses to global sustainability issues. These in turn require human talent which holds advanced values along with high intellectual capacity to manage complexity in order to build the foundation for sustainable futures. The upper echelon of corporations hold enormous power  in their organisation and are responsible for shaping their businesses' strategic direction. Values are central to behaviour. Executives' value systems therefore have a significant influence on organisational approaches to CR adoption. Executives are often faced with competing values and tensions amongst personal, professional, organisational and situational challenges. How executives' personal values influence organisational decisions depend on a myriad of external situational factors, as well as their own internal awareness of their value priority and value strength. We argue that the bifurcation of values between organisational strategies and CR practices compromises the effectiveness of businesses to achieve sustainability across economic, social and environmental dimensions. In this book chapter, we present cases based on our qualitative study with Canadian executives of how values awareness when combined with value strength and personal conviction around social and environmental purpose can transform the role of business in society, whereby positive economic, social and environmental impact can be optimised.

 

Chapter 3. Searching for corporate values in a value crisis environment

Dusan Kucera, University of Economics, Prague

 

The chapter attempts to compare the desirable and declared value concept of CSR with long-term stagnation and recessions of values in Western society. The described "Crisis of capitalism" is integrally linked to corporate value crisis. Corporate managements have been actively accepting the CSR concept. However, the desirable development of the CSR concept and the deepening of its complexity and sustainability needs a more in-depth reinforcement in the value system. Without it, the known risk of marketing superficiality of the CSR concept grows. Reversing this dangerous trend can be supported only by an updated idea of values that will still be redefined, interpreted and applied to the specific conditions of companies and their regions. The chapter deals with a brief analysis of the current crisis of values and a discussed social trend of entrepreneurial pragmatism, which is continuously getting into tension with business ethics, new formulations of SCR and SDGs. The fundamental values are prerequisites for stabilising businesses, and their health and long-term development are founding themselves in crisis according to the description of well-known sociologists and some economists. A brief analysis of the value situation and current approaches in Western society is offered as a basis for the search direction of ongoing tasks in the definition of value premises today.  The author of the chapter attempts to do so by characterising of current entrepreneurial mind-sets, which are reflecting the broader societal trends.  It touches particular historical assumptions, philosophic crossings as prerequisites for identifying of current challenges of the business society. In philosophical terms is the discussed value crisis and recession of western society caused by the dualist conception of the world, the separation of scientific disciplines including economics - and the consequent reduction of visible and easily measurable financial indicators. The problem is the pragmatic demand for short-term results for marketing reasons. From this perspective, the author returns to the comprehensive and overall concept of CSR. His context includes the economics, sociology, environmentalism and the aspect of the future.

 

Chapter 4. The impact of cultural and educational values on entrepreneurial behavior

Anca-Teodora _erban-Oprescu, Bucharest University of Economic Studies

 

For Romania, the demise of the communist-type socialism and the necessary re-positioning of the Central and Eastern European countries in their transition to the forms of the free market have been the pivotal and challenging movements of the past three decades. Being successful and learning how to manage oneself in business have become the natural articulations of the new societal forms to  ensure an individual's wellbeing. At the same time, the process of achieving good results in the economic and business environment has been rendered all the more difficult by the lack of a genuine business-oriented culture rooted in education and societal values that foster and encourage entrepreneurial skills and spirit. Presently, in Romania there are structures and frameworks that encourage entrepreneurship, entrepreneurial values and efficient behaviour in business, and, at the level of economics and business-oriented universities there is curricular training in entrepreneurship. Still, Romanians need to have a better understanding of the core values that make for ethical and effective behavior in independent ventures. The main objective of the present study is to advance scientific knowledge and produce a framework which identifies the degree and impact of cultural and educational factors and values on the entrepreneurial spirit. Research methodology (both qualitative and quantitative) is structured on two levels - primary (surveys) and secondary (library documentation, news/media survey). The material proposes an innovative, empirically tested model of analysis of the impact of cultural and educational input and values on entrepreneurial behavior and offers a pertinent answer to the issue of how to strengthen the degree of competitiveness in the Romanian business environment, whilst raising awareness with regard to best practice and benchmarking.

 

 

 

 

 

Chapter 5. Emerging Green Values in the UK energy sector: Ecotricity as deep-green exemplar.

David McQueen and Amelia Turner, Bournemouth University

 

Sustainability has long been considered to be a key component of corporate social responsibility (CSR) (Eweje and Bathurst 2017) and from 2015 became the explicit, guiding principle for the UN's landmark Sustainable Development Goals (SDGs) which foreground the transformative potential of the private sector (Scheyvens et al. 2016). These goals and the bedrock tenet of sustainability are likely to have increasingly urgent relevance to business leaders in coming years. This chapter provides an in-depth case study exploring the strong environmental and sustainable values of UK energy firm Ecotricity and its Director, founder and owner Dale Vince. We outline Ecotricity's growth to become one of the UK's largest green-energy providers with 200,000 customers and shows how the company's success is built on a powerful commitment to sustainability and a set of interrelated, deep-green values which underpin every aspect of the company's decision-making. Tracing the history of the company from the mid 1990s when it became the first company to offer 'green electricity', the chapter outlines the key moments in Ecotricity's expansion, its unique business model, reputation in the market, political lobbying efforts, communication and social media strategy as well as the underpinning philosophy informing the growth of the business. The chapter considers Ecotricity's expansion and diversification from clean energy provider to offering a range of sustainable business initiatives including electric car charging stations, grid-scale battery storage, green mobile phone service, and vegan school food supplies. It also explores marketing strategies and media coverage of the company and assesses the extent to which the director's single-minded and uncompromising values have helped secure a loyal, niche customer base and could provide a model for future business success in the face of the rapidly accelerating climate crisis. The chapter concludes with a critical discussion of CSR in light of this crisis and the need for sustainability to take centre stage at every level of business decision making and strategic planning. 

 

Chapter 6. Managers' Perceptions of Corporate Social Reporting and Practices: Legitimacy in the Developing Country's Banking Industry

Mohammad Tazul Islam, Dhaka School of Bank Management, Bangladesh & Katsuhiko Kokubu, Kobe University, Japan

 

The purpose of the study is to explore the use of legitimacy theory to infer managers' perceptions in corporate social (CS) reporting in the emerging country's banking industry, taking Bangladesh as a case. This study conducted an in-depth semi-structured interview with bank officials involved in corporate policymaking, and social reporting and practices. Twenty-eight interviews (including seven MD/CEO, seventeen heads of the operational wings (CS reporting/or GB), one board secretariat, and three CS reporting operational managers) were conducted in 2016 to gather evidence from twenty-four listed banks (that covers 80% of the listed banks) in Bangladesh. This study finds that the concept of 'Corporate Social Responsibility' is clarified in a confined manner by the practitioners and regulators and CS reporting tends to be bank-centric. The study identified several legitimate factors such as bank regulations, CAMELS rating, CS reporting awards, direct influences from the central bank, political leaders & board of directors, management initiative, and community requirements and pressure that are contributing to the CS reporting by banks in Bangladesh. In addition, the study reveals that, supportive to the legitimacy theory argument, banks that are new in markets tend to disclose more CS information than the older banks to gain/build, and/or to increase market legitimacy in the industry. The originality of this study is that to date hardly any study has been conducted on the Bangladeshi banking industry, in particular one that applies legitimacy theory contemplation in explaining bank managers' perception in CS reporting.

 

Chapter 7. The effectiveness of combinations of corporate social responsibility activity (CSRA) and communication (CSRC) as strategies for (re)gaining legitimacy

Florian Weber, Karlsruhe Institute of Technology, Institute of Management, Germany & Kerstin Fehre, Vlerick Business School, Entrepreneurship, Governance and Strategy Area, Belgium

 

Numerous scandals have challenged companies' social legitimacy. Although researchers currently assume that companies can use corporate social responsibility (CSR) as a vehicle for improving their legitimacy in the eyes of stakeholders and of society in general, in fact, little research exists on the effectiveness of CSR strategies for improving legitimacy. In the present study, this lacuna is addressed with an examination of how corporate social responsibility activity (CSRA) and corporate social responsibility communication (CSRC) impact legitimacy. The results indicate that neither CSRA nor CSRC has a standalone effect on legitimacy. Nonetheless, CSR is important for legitimacy. Three CSR strategies consisting of different combinations of CSRA and CSRC are hypothesized to have different legitimacy impacts, which is then empirically tested in a sample of German companies. A CSR strategy that combines high levels of CSRA with low levels of CSRC emerges as the most effective for (re)gaining legitimacy, while an opposite strategy that combines low levels of CSRA with high levels of CSRC emerges as the worst.

 

Chapter 8. Role Models for a Responsible Way of Doing Business: Redefining the Cooperative Value Creation

Gerhard Kosinowski, School of Management, Germany

 

The present paper redefines the value creation model of cooperatives. The research work illustrates that the cooperative governance is a complex construct based on the principles of the pioneers of the modern cooperative movement. The notions of Owen, Raiffeisen, Schulze-Delitzsch and the Rochdale Society, which established alternatives to the capitalist exploitation of the 19th century industrialisation still shape the character of modern cooperative organisations. This is manifested in the member value management approach which is a popular analysis tool for the cooperative's value creation. According to this model cooperatives create direct, indirect and sustainable/ ideational member value. However, the present analysis illustrates that this approach does not adequately reflect the complexity of the cooperative business model. Against this background, a redefined model is presented which aims at the enhancement of general understanding, the illustration of important stakeholders as well as their involvement in the value creation process and improved clarity of the management approach. Applying the categories of monetary and meta-economic value as well as benefits for the members and non-members, the model introduces four types of value activities. The study fills the research gap of a holistic approach to cooperatives which not only illustrates value-creating activities within their original business area but also counts for their extensive engagement beyond their core business activities. The redefinition stresses the function of cooperatives as role models for a responsible way of doing business. They serve the interests of their members and the community in a variety of ways. Drawing on their accumulation of social and cooperative capital, they serve as driver for local growth and contribute to social well-being. The cooperative value creation shows how to build a business around its responsibilities, use a distinctive governance system as guidance and capitalise on knowledge and networks.

 

Chapter 9. Contending Drug Abuse through CSR: Community Partnership from Triple Bottom Line Perspectives

Jamilah Ahmad and Suriati Saad, Malaysia

 

Youth is the most valuable asset of any developing country. Drug abuse is becoming a major problem among youth and has been an increasing concern for the government and authorities in Malaysia. Research shows that the reasons for drug intake among youth have changed. Social pressure and the desire to be accepted by peers are among the current emerging trends surpassing domestic reasons with minimal outside intervention such as family and home atmosphere as well as economic constrains. Out of 30,844 registered drug cases in Malaysia 10,610 are youth below 29 years old (National Anti-Drug Agency, 2017) which is alarming. As the government prepares for the National Transformation Plan 2050 (TN50), issues related to drug abuse among the youth is not only a concern of the government but also the community. TN50 sets a vision for the nation with an eye on the aspirations of the youth. Therefore, the community members including organisations and institutions should establish a partnership in this social responsibility initiatives of nurturing brilliant future leaders amongst the youth.  Community should be given mandate to champion social problem and become the avenue to help the government and safeguard society members. This article will look at how CSR initiatives can be used to cultivate and nurture values in facing issues related to drug abuse among the youth in Malaysia. This article will analyse how the three core components of Triple Bottom Line (TBL) elements such as Planet, People and Profit can be used to gauge the implementation of CSR in this partnership.

 

Chapter 10. A Conceptual Framework of Strategic Corporate Social Responsibility

Adrian Andreas Baumgartner, Grenoble Ecole de Management, France

 

With an increasing interest towards the corporate social responsibility of the business sector, a growing number of disputes regarding the connection between the financial and social performance of companies can be observed. A substantial amount of the researches claiming that there is not much value in the attempts to fit in CSR in the frames of the business case is counterbalanced by those who consider that socially responsible behaviour ultimately leads to increased profits of the company. Nonetheless, and despite ongoing debates, empirical research on the motivation and economic impact of socially responsible behaviour remains limited. This study proposes a concept of strategic corporate social responsibility (SCSR), which is defined as a corporation's clearly articulated and communicated policies and practices towards gaining a competitive advantage by addressing unmet social needs. In this study, authors prove that SCSR activities have a positive impact not only on the corporate financial performance (CFP) or economic value (EV), but also on societal value (SV). The proposed framework aims at supporting the future theoretical and empirical research agenda on CSR and related concepts, as well as providing practical guidance and specific recommendations to business leaders aiming at implementing principles of CSR in their business model.

 

Chapter 11. Making corporate social responsibility works for both organisations and society

Omary Swallehe, Tanzania-Mzumbe University 

 

Many organizations use corporate social responsibility as a means of creating sustainable competitive advantage through building strong mutual relationships with all the stakeholders. The organizations use CSR as a strategy through implementing social activities such as building schools, hospitals, supporting social services and even contributing to the well beings of the needy ones. The purpose of this study was to evaluate the activities of the corporate citizens in the country and found the best way of aligning CSR initiatives to attain mutual benefits between the organizations and general public. Studies showed at least every organization in both developing and developed economies does participate in community affairs. Also that, the level of participation differs significantly between organizations and there is no clear direction of how best CSR should be undertaken. Again, organization stuck on the actual amount or percentage of profit should be returned to the community as CSR, where the ideas for the kind of support should be initiated from, who should be given the support, when the support should be delivery to the targeted community, frequency of the support and more importantly who from an organization should be championing the programme.  A total of 45 corporations in the country from four different industries were surveyed used semi structured interview guide. Contents analysis was used to categorize the responses into five major themes namely; strategic CSR, Organization ownership of CSR initiatives, Origin of CSR ideas and types of support, Beneficiaries of CSR supports and legal enforcement available.  This study found out that, majority of the surveyed corporations does not see CSR as strategic rather than moral obligations to the surrounding community. In this regard, the value of CSR cannot be clearly evidenced when CSR is not regarded as strategic tool.

 

Concluding reflections from the editors