The value of Corporate Social Responsibility for consumers

Transcription

1 Faculty of Economics & Management Commercial Sciences & Management Field of Study Master of Science in Business Administration Programme Internally organised master thesis The value of Corporate Social Responsibility for consumers Master thesis by Liesbet VAN DER SMISSEN Submitted for the Degree of Master of Science in Business Administration Graduation Subject: International Relations Supervisor: Christel CLAEYS Academic Year: Defended in: September 2012 Hogeschool-Universiteit Brussel, Warmoesberg 26, 1000 Brussel Tel: , Fax: ,

2 Hogeschool - Universiteit Brussel F a c u l t e i t E c o n o m i e & M a n a g e m e n t Master Thesis - Summary THE VALUE OF CORPORATE SOCIAL RESPONSIBILITY FOR CONSUMERS Summary Liesbet VAN DER SMISSEN Degree Programme: Master of Science in Business Administration Graduation Subject: International Relations Type of Master Thesis: internally organized master thesis Confidential: no 1. Problem definition and research question There are different views on the relationship between corporate social responsibility (CSR) and business: by operating with a CSR perspective, proponents believe that companies are capable of making more long term profit and increasing long term success, while the opponents argue that CSR would only distract firms from the economic role of businesses, namely profit generation (Buhr & Grafström, 2007). Both the proponents as well as the opponents present a list of sound rational reasons do defend their viewpoint. Despite the ongoing debate as to whether or not social responsibilities should be the concern of corporate decision makers, it cannot be denied that corporate social responsibility has been increasingly present in today s world. Research indicates that consumers care about it and that nowadays most consumers expect companies to have fairly high levels of CSR (Boulstridge & Carrigan, 2000; Mohr, Webb, & Harris, 2001). Consumers are very important stakeholders for companies and the success of a company s CSR policy is to a large extent determined by these consumers. Hence, understanding them is critical. Part of understanding these customers relates to trying to find out why they buy from companies which incorporate social responsibilities into their business practices. Green and Peloza (2011) believe that consumers only support firms that engage in CSR, if they receive some kind of value from the exchange. Green and Peloza also point out that consumers usually don t view CSR as one overall impression of a firm, but that they look instead to how each CSR activity can add to their overall value proposition when making a purchase. This seems to indicate that consumers are still more motivated by self-interest than by the interest of society, which is exactly what D Astous and Legendre (2009) mentioned. Consequently companies try to understand consumers through analyzing what kind of value(s) these consumers derive from CSR, which brings us to the research question of this thesis: What is the value of corporate social responsibility for consumers? Before trying to understand the value consumers derive from CSR, it is important to know what CSR is. Despite the significant amount of research, literature has not succeeded in providing one generally accepted definition on CSR. The definitions offered in literature can be confusing and sometimes even contradicting. Therefore taking a consumer s point of view to analyze how they see CSR and what the value is they derive from it, can be very useful. 1

3 Hogeschool - Universiteit Brussel F a c u l t e i t E c o n o m i e & M a n a g e m e n t Master Thesis - Summary 2. Research method In first instance, a literature study is carried out to gain understanding of the main theoretical concepts related to the research and to examine to which extent existing literature already covers the subject. Subsequently, a combination of quantitative and qualitative research is conducted to investigate the opinions and behaviors of the respondents in relation to CSR and the value that could be derived from it. Our research approach is mainly deductive as we start from a literature review to find a problem definition and consequently design a research strategy to try and formulate an answer to the research question and the separate research objectives (Saunders, Lewis, & Thornhill, 2003). Our research combines elements of descriptive and explanatory research to report on what CSR is and the value consumers derive from it (Saunders et al., 2003). a. Justification of the research method As a result of the limited amount of available data regarding this topic, we felt the collection of primary data to be useful. We reasoned that for some questions a qualitative approach was more appropriate, whereas for other questions a quantitative approach was best. Saunders et al. (2003) stress that it is often beneficial to combine quantitative and qualitative methods. Saunders et al. (2003) also believe the deductive approach to be the most appropriate when dealing with a topic on which there is a wealth of literature from which you can define a theoretical framework (p. 90), which is certainly the case for CSR. b. Collection and processing of the data Due to the limited time and resources, purposive sampling was used to select the respondents. Our sample consists of men and women of different ages who shop at Bio-Planet in Ghent. We chose to work with them because we believe them to be particularly informative for our research purpose. This method of sample selection, however, limits the generalizability of our research. The research is executed with the help of interview-administered questionnaires. Our research consists of three parts. For parts one and three, the participants are given a written survey they have to fill out, while part two consists of some oral questions, which Saunders et al. (2003) label structured interviews. The questionnaire mainly consists of closed questions, but also includes a few open questions. The closed questions consist of a variety of multiple choice questions and some scale questions related to all of our research objectives. The processing of the data is done using the statistical program SPSS and some of the tables are constructed using Excel. We mainly use descriptive statistics, but we also execute a factor analysis to analyze the different types of value consumers derive from CSR. 3. Findings and conclusions The results of this study show that consumers associate CSR most often with the environment. This is not in line with Dahlsrud s (2008) study which actually found that the environmental dimension is the one the least present in all the existing definitions in literature. The fact that literature and the view of the consumers are not in line, only adds to the confusion companies are already experiencing. We also discovered that consumers don t always recognize the CSR activities of companies as CSR activities. The CSR activities in the product-related activities category seem to be the ones that the respondents most often recognize, while the activities of the philanthropy category are recognized the least. Consumers indirectly indicate that they find CSR important as the activities they perceive 2

4 Hogeschool - Universiteit Brussel F a c u l t e i t E c o n o m i e & M a n a g e m e n t Master Thesis - Summary as most important for companies to engage in, are also the ones they indicate as being an expression of CSR. We felt that the level of awareness among respondents regarding the different CSR activities of Bio-Planet was rather low. We believe there to be five distinct types of value consumers can derive from CSR, being: social value, emotional value, functional value, supply value and egocentric behavior value. The results regarding the two latter types of value are rather weak, so further research will be necessary in this area. We came to the conclusion that demographics are not a good predictor of the type of value consumers derive from CSR. Also the level of knowledge people have of CSR and the frequency of their shopping at Bio-Planet do not seem to have a significant impact on the value they derive from CSR. Nevertheless, the results indicate that the higher the influence the CSR policy has on a consumer s decision to shop at Bio-Planet, the higher the social, emotional and functional value they derive from it. The same goes for the importance of CSR: the more important the consumer finds CSR, the higher the emotional, functional and social value they derive from it and the lower the supply value. We have to be careful with these conclusions though because there was no significant difference found between all the different groups. Another important question which we also focused on in one of our research objectives is the question whether the CSR policy of a company really has an influence on a consumer s purchase decision and behavior. The results regarding this issue are inconsistent and contradictory to a certain extent. Whereas 82.7% of the respondents indicate indirectly that they consider CSR to be their main motivator to shop at Bio-Planet, we question this result as it seems that a lot of consumers indicated an offer of organic products as their main motivator to shop at Bio-Planet, but they don t really seem to be aware that organic products are a form of CSR. Hence it is arguable whether the CSR policy really influenced their decision. We believe our research to contribute to a better understanding of the complex consumer regarding the value they derive from CSR. 3

5 Preface Writing my master thesis was a very challenging and enriching experience. I would like to thank a few people who helped me during the process. First of all I would like to thank my supervisor, Christel Claeys, for her advice and support throughout the whole master thesis process. Secondly I would like to express my gratitude to Philip Sterck, Ruth Evenepoel and all the other people at Bio-Planet who made it possible for me to execute my research at Bio-Planet in Ghent. I would like to thank them for the nice welcome, the smooth cooperation and the sponsoring such that all respondents were offered a drink while participating in my research. I would also like to thank my boyfriend, Maxime Vandenbussche, and my mom, Marijke Gyns, who helped me with the collection of my data. Without their help it would have taken a much longer time to collect the necessary data for my research. Finally I would like to thank my family and friends for all the support they have given me throughout the whole process of writing my master thesis.

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7 Table of contents Overview of tables and figures... 3 List of appendices... 3 List of abbreviations... 3 Introduction... 5 PART I: LITERATURE REVIEW... 7 Chapter 1: Defining CSR Introduction The history of corporate social responsibility Prior to The 1950s The 1960s The 1970s The 1980s The 1990s The 21 st century To whom is an organization expected to have responsibility? Definitional clarity of CSR Synonyms Business ethics Corporate citizenship Corporate accountability (Corporate) sustainability Conclusion Chapter 2: Different views on CSR Introduction Different views on CSR Proponents Arguments in favor of CSR Opponents Arguments against CSR The link between corporate social performance and corporate financial performance The emergence of a new view Conclusion Chapter 3: CSR from a company s point of view Introduction Importance of, and motivation for incorporating CSR Return on CSR Different types of CSR activities Conclusion

8 Chapter 4: CSR from a consumer s point of view Introduction Importance of CSR for consumers The value of CSR for consumers Conclusion Chapter 5: Identifying and targeting the ethical consumer Introduction Identifying and targeting the ethical consumer Conclusion PART II: RESEARCH Chapter 6: Research design Introduction Development of the research question The concretization of the research question through research objectives The research design What will be observed? Who will be observed? How will the observation take place? Where will the data collection take place? When will the data collection take place? Data processing Expressing the research objectives in operational terms Conclusion Chapter 7: Analysis of the research results Introduction Description of the respondents Analysis of the research results Conclusion Chapter 8: Discussion of the research results Introduction Discussion of the research results Contribution to science and practice Limitations and future research Conclusion General conclusion Reference list Appendices A. Questionnaire B. Tables concerning the description of the respondents C. Tables concerning the analysis of the research results

9 Overview of tables and figures Table 1: The multi-faceted customer value of CSR activities Table 2: frequency table of the different age groups in our sample Table 3: frequency table presenting how often the respondents shop at Bio-Planet Table 4: frequency table presenting to which extent these activities are considered to be an expression of CSR List of appendices Appendix A: Questionnaire Appendix B: Tables concerning the description of the respondents Appendix C: Tables concerning the analysis of the research results List of abbreviations BSR Business for Social Responsibility CED Committee for Economic Development CFP Corporate Financial Performance CS corporate sustainability CSP Corporate Social Performance CSR Corporate Social Responsibility CSV Creating Shared Value ICSD Interdepartmental Commission for Sustainable Development SR Social Responsibility WCED World Commission on Environment and Development 3

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11 Introduction The fact that corporate social responsibility has been increasingly present in today s society cannot be denied (Carroll, 2008). Despite the continuous debate as to whether or not firms should have social responsibilities, research indicates that consumers seem to care about CSR and therefore it is in the best interest of the company to do so as well (Boulstridge & Carrigan, 2000; D Astous & Legendre, 2009) We say seem to care because the concept of CSR is characterized by a significant attitude-behavior gap (Roberts, 1996; Simon, 1995). Nevertheless, studies indicate that nowadays most consumers expect companies to have fairly high levels of CSR (Mohr, Webb, & Harris, 2001). Even though consumers indicate they expect fairly high levels of CSR, this does not clarify what exactly they expect from companies as the concept of CSR is not clearly defined in literature. Despite the significant amount of research, literature has not succeeded in providing one generally accepted definition on CSR (Clarkson, 1995). The lack of a general definition leads to confusion, but also hinders academic debate and corporate implementation. This makes it harder for companies to create effective and efficient CSR programs (McWilliams, Siegel & Wright, 2006). Mohr et al. (2001) and Riddleberger and Hittner (2009) don t believe this to be the only problem. They also point out that there has been little research on what the public expects. As a result those who run corporations lack a clear understanding of what the public wants from them and how far they are expected to go toward helping their communities (Mohr et al., 2001, p. 45). Understanding consumers is crucial for companies as they are considered major stakeholders for the company. The question today is also no longer whether companies should incorporate CSR into their activities, but rather how they should do this. Marketers try to target the consumers who take into account CSR in their purchase decisions and purchase behavior. If companies go through the lengths of incorporating CSR, they want to make sure that the right consumers, the ones that care, are made aware of this and know about it. But to be able to target these consumers they need to understand why consumers buy from companies which engage in CSR. Green and Peloza (2011) believe that consumers only support firms that engage in CSR, if they receive some kind of value from the exchange. This seems to indicate that consumers are still more motivated by self-interest than by the interest of society (D Astous & Legendre, 2009). With this thesis we want to contribute to a better understanding of the complex consumer. We want to take the consumer s point of view and increase understanding of on the one hand, what CSR actually means to them, given the definition in literature is unclear, and on the other hand the value they derive from CSR. We will use a combination of a literature review and research, in which we collect primary data, to formulate an answer to the research question What is the value of corporate social responsibility for consumers? and to the research objectives we will stipulate throughout this thesis. In first instance, a literature study is carried out to gain understanding of the main theoretical concepts related to the research and to examine to which extent existing 5

12 literature already covers the subject. Our literature review consists of five chapters. A first chapter focusses on defining CSR. We provide a short history on CSR, talk about to whom an organization is expected to have responsibility, talk about the definition(s) of CSR and point out some synonyms which are often used. In a second chapter we deal with the different views on CSR. We list some proponents and opponents and discuss the arguments which both groups use to defend their viewpoint. We also briefly discuss the link between social performance and corporate financial performance and talk about the emergence of a new view. In the third chapter we look at CSR from a company s point of view, whereas we do the same in chapter four, but then from a consumer s point of view. In both chapters we will analyze the importance of CSR for the company/consumer and we will talk about the value both companies and consumers derive from it. A last chapter briefly deals with identifying and targeting the ethical consumer. Chapters six, seven and eight deal with our research. In chapter six we will outline the research design, in chapter seven we analyze the research results, and chapter eight focuses on the discussion of these results. 6

13 PART I: LITERATURE REVIEW Chapter 1: Defining CSR 1.1 Introduction In this first chapter we try to understand what corporate social responsibility is and where it comes from. We will start off with some history of CSR. In a next section we will discuss the different views on to whom an organization is expected to have responsibility. Afterwards we will devote some time to the definitional aspect of CSR and then at the end of the chapter we will shortly look at some concepts which are often used interchangeably to talk about corporate social responsibility. 1.2 The history of corporate social responsibility Corporate social responsibility is a popular topic nowadays. Its phenomenal rise to prominence in the 1990s and 2000s suggests that it is a relatively new area of academic research (Crane, McWilliams, Matten, Moon, & Siegel, 2008, p. 3). Although it is true that CSR is mainly a product of the second half of the twentieth century, the roots of the concept, as we know it today, have a long and wide-ranging history (Carroll, 2008). The business community s concern for society is certainly not a new thing and can be traced back for centuries (Carroll, 2008). CSR is originally considered an American concept (Craps, 2012a). It came into existence at the beginning of the 20 th century and was at that time mainly linked to philanthropy. Even though the CSR concept did not originate in Europe, social entrepreneurship, which can be considered a form of CSR, exists even longer, already since the industrial revolution (Craps, 2012a) Prior to 1950 There is not a lot of literature on CSR found prior to 1950, but this doesn t mean that this period was lacking social initiatives and practices. During the Industrial Revolution there was a strong trend of emerging businesses, whose main concern during the midto-late 1800s was the employees and more specifically how to make them more productive workers (Carroll, 2008). In that time, but also still nowadays, it is often difficult to distinguish between what organizations are doing for social reasons and what they are doing for business reasons (Carroll, 2008). In the late 1800s philanthropy, or corporate contributions, gained importance. Here it was difficult to distinguish whether this was actually individual philanthropy or business philanthropy. According to Carroll (2008) corporate contributions have assumed a central role in the development of CSR since the beginning of the time periods being examined (p. 23). Before the 1900s corporate contributions were perceived in a more negative light as they were being seen as giving away stockholder s assets without their approval (Carroll, 2008). However, later on, they were perceived as a positive thing and something a company should do. Carroll (2008, pp ) talks about several initiatives taken by business owners and entrepreneurs, prior to 1950, in which they use their own money to support social 7

14 causes. One of these initiatives is for example providing money for various community projects (Carroll, 2008). Many of those initiatives would probably be categorized as socially responsible nowadays. It is apparent that even prior to 1950 some degree of social responsibility was being taken on by companies though they were never called social responsibility (Carroll, 2008, p. 22). Even though there is evidence of socially responsible business behavior, it was definitely not a wide-spread practice in those days. It is important to keep in mind that in those days the term social responsibility (SR) was more often used than corporate social responsibility (CSR). According to Carroll this use of SR instead of CSR may have been because the age of the modern corporation s prominence and dominance in the business sector had not yet occurred nor been noted (p. 25). Whereas the largest part of the period prior to 1950 was dominated by concern for how to make the employees more productive, starting in the 1920s-1930s corporate managers slowly started taking on responsibility to balance competing claims from other stakeholders (Carroll, 2008). Hay and Gray (1974) claim this to be a result from some structural changes both in business institutions as well as in society. This change in mindset among business executives, called businessmen in those days, is made tangible in the results of a study of Fortune magazine in 1946, Carroll (2008) refers to. One question these businessmen were being asked was whether they were responsible for consequences of their actions in a sphere wider than that covered by their profit-andloss statements (Carroll, 2008, p. 24). Of the respondents, 93.45% said yes. This result seems to support the idea that the mindset among business leaders was changing The 1950s The 1950s are the time in which the first important literature on CSR started to appear (Carroll, 2008). According to Carroll (2008) Howard R. Bowen s publication of his landmark book Social Responsibilities of the Businessman (1953) best marks the beginnings of the modern period of literature on this subject (p. 25). Bowen was also the first one to formulate a definition on CSR, which we will discuss later in more detail, in the section definitional clarity of CSR. Frederick (2006) summarizes the meaning of CSR in the 1950s by three core ideas. A first idea is that business managers should consider themselves as trustees of the public interest. A second one is the idea of business managers balancing competing claims to the resources of the corporation. A third and last idea is the acceptance of philanthropy as a manifestation of business support of good causes (Carroll, 2008, p. 26). The 1950s were characterized by a lot of talk about CSR, but not a lot of action. Carroll (2008) talks about a period in which attitudes were changing and business executives were learning to get comfortable with talking about CSR, but he also points out that there were very few corporate actions other than philanthropy The 1960s This period is similar to the previous one as it was characterized by more talk than action regarding CSR and as philanthropy continued to be the most noticeable manifestation of CSR (Carroll, 2008). However, according to Carroll (2008) the 1960s marked a momentous growth in attempts to formalize or more precisely state what CSR meant (p. 27). Some important contributors of that time include Keith Davis (1960), William C. 8

15 Frederick (1960) and Clarence Walton. (1967) Each of them set forward their own definition on CSR and their works contributed significantly to the CSR literature The 1970s The 1970s are an important period for the development of CSR literature. Carroll (2008) labels it a period of CSR acceleration. Some of the most important contributors of that time include Morrell Heald (1970), Harold Johnson (1971), George Steiner (1971), Richard Eels and Clarence Walton (1974) and many others. Carroll (2008) believes that a ground-breaking contribution to the concept of CSR came from the Committee for Economic Development (CED) in its 1971 publication, Social Responsibilities of Business Corporations (p. 29). The CED (1971) started from the observation that business functions by public consent and its basic purpose is to serve constructively the needs of society to the satisfaction of society (p. 11). The CED also pointed out that the social contract between business and society was changing substantially in a way that business is being asked to assume broader responsibilities to society than ever before and to serve a wider range of human values (p. 16). The CED made a distinction between three kinds of social responsibilities, which it visualizes by using three concentric circles. The inner circle refers to the basic responsibilities for the efficient execution of the economic function. The intermediate circle represents the responsibility for the execution of the economic function, but with respect for changing social values and priorities. Lastly, the outer circle refers to the newly emerging responsibilities that business should assume. This publication, regarding the CED s view of CSR, was considered especially influential because the CED was composed of business people and educators. Therefore the publication reflected an important practitioner view of the changing social contract between business and society and businesses newly emerging social responsibilities (Carroll, 2008, p. 29). We previously mentioned that SR was more often used than CSR in the early days. However, in the 1970s increasing reference is being made to corporate social responsibility (Carroll, 2008). The 1970s are also the period during which many articles began suggesting a managerial approach to CSR. A managerial approach to CSR refers to the idea of applying traditional management functions to deal with CSR issues (Carroll, 2008). This period is still characterized by more talk from an academic side than action at company level. But slowly legislative initiatives start to emerge dealing with certain aspects of CSR. These initiatives mandate that companies create organizational mechanisms for complying with federal laws dealing with the environment, product safety, employment discrimination, and worker safety (Carroll, 2008, p. 34) The 1980s Up till the 1980s there had been a strong focus on the definitional aspect of CSR. Many academics tried to formulate new or refined definitions (Carroll, 2008). The 1980s, however, became known as the period in which research became more important and as the period in which writings emerged on alternative or complementary concepts and 9

16 themes such as corporate social responsiveness, corporate social performance, public policy, business ethics, and stakeholder theory/management to mention a few (Carroll, 2008, p. 34). We will not further explore these concepts, even though they are linked to CSR, as they fall outside our scope of focusing on CSR. However, later on we will shortly discuss some of them when talking about synonyms of CSR. These writings about alternative or complementary concepts did not mean that the interest in CSR diminished. The CSR debate continued throughout the 1980s. Thomas M. Jones (1980) was one of those writers who participated in the debate in those days. One of his major contributions is his emphasis on CSR as a process instead of as a set of outcomes (Jones, 1980). He believes that corporate behaviour should not, in most cases, be judged by the decisions actually reached, but by the process by which they are reached (Jones, 1980, p. 65). Jones (1980) also already pointed out in 1980 that one of the arguments used by those opposed to CSR is that social responsibility is too vague to be useful (p. 60). This argument is still present in the debate regarding CSR which takes place nowadays. The 1980s are also the period in which research started taking place on the relationship between corporate social responsibility and firm profitability (Carroll, 2008). This relationship continued to be debated over time and is still controversial nowadays. We will discuss it in chapter The 1990s During the 1990s the trend of the 1980s continued as a lot of attention was given to concepts complementary to CSR. Carroll (2008) states that the CSR concept served as the basepoint, building block, or point-of-departure for other complementary concepts and themes, many of which embraced CSR thinking and were quite compatible with CSR (p. 37). The prominent themes of that period include corporate social performance (CSP), stakeholder theory, business ethics, sustainability, and corporate citizenship 1 (Carroll, 2008). The 1990s were also characterized by a considerable expansion of philanthropy. In those days companies also evolved in how they were dealing with CSR. It was the period in which we start to see management positions solely dedicated to corporate giving on the organizational charts of major companies. Carroll (2008) mentions a few examples: managers of corporate giving, corporate social responsibility, and public/community affairs (p. 38). These management positions, dedicated to corporate giving, contributed to another trend of the 90s, which still continues today, namely the appearance of distinct companies which have developed outstanding reputations for CSR practices. Despite the skepticism regarding the nature of some of their practices, certain companies are often associated with having good CSR practices. A few examples include The Body Shop, Ben & Jerry s, and Johnson and Johnson (Carroll, 2008). 1 Here again we will not further explore these concepts as they fall outside our scope of focusing on CSR. However, later on we will shortly discuss some of them when talking about synonyms of CSR. 10

17 Carroll (2008) believes that the most significant advances to CSR in this period came in the business practice territory and more specifically due to the creation of a non-profit organization called Business for Social Responsibility (BSR) in BSR was the first of its kind and was founded by a group of entrepreneurs and businesses who sought to create an organization that could help companies act in a more responsible manner (Business for Social Responsibility [BSR], 2012a, how and when was BSR founded). The founders wanted to bring together on the one hand the businesses which still had to embrace corporate responsibility and on the other hand the organizations promoting corporate responsibility (BSR, 2012a). The official mission on the website of BSR says the following: our mission is to work with business to create a just and sustainable world (BSR, 2012b, what is the mission of BSR). BSR is still active today and while their mission hasn t changed throughout their 20-year history, how they pursue their mission evolves continuously The 21 st century During the 21 st century the emphasis, so far, remains on empirical research of CSR and into related topics instead of on theoretical contributions to the concept, which dominated a few decades before (Carroll, 2008). This emphasis however does not mean that there has been no evolution on the conceptual front the past decade. Writers continued their work on definitions, concepts, frameworks, approaches, Carroll (2008) believes that the interest and growth of CSR has been most evident in the European Community (p. 41). From a business-point-of-view this period is characterized by an increased interest in CSR best practices. Carroll (2008) refers to a book, targeting a business audience, written by Kotler and Lee (2005) cataloguing these best practices. In their book the authors present 25 best practices which could be very valuable in assisting companies with their own CSR programs. Among the best practices are examples from The Body Shop, Ben & Jerry s, Johnson and Johnson, and many more (Kotler & Lee, 2005). A lot of these companies already developed an excellent reputation for CSR practices in the 90s, as mentioned before. The growing interest of businesses in CSR has been driven by a number of factors. One of those factors is a reaction to the scandals, during the 21 st century, such as Enron and Worldcom, which led to diminished public support for businesses. Another factor is the increased pressure from non-governmental organizations and trade unions to respect human rights and adopt good practices. A last factor is the belief that there is a business case 2 for ethical management (corporate social responsibility, 2008, para. 1). Especially since the beginning of the 21 st century, the CSR movement has been a global phenomenon. But even though it s a global phenomenon, there are important inter- and even intra-regional variations in practice (Carroll, 2008). There appears to be some divergence of commitment and management practices. Carroll (2008) also points out that some initiatives are more voluntary than others as some companies have been under legal and regulatory pressure to adopt them (p. 41). 2 This refers to the justification of ethical management in terms of its contribution to business performance (Business case, 2008) 11

18 Nonetheless, 2012 is not the year in which the development of CSR stops, CSR is still a developing field of research. The delineation of the field is not easy as it is interrelated with so many other concepts. Carroll (2008) states the following: the field of scholarship that CSR represents is a broad and diverse one, encompassing debates of many perspectives, disciplines and ideological positions; it is located at an intersection of many contributing disciplines (p. 7), which clearly makes it hard to study. 1.3 To whom is an organization expected to have responsibility? The different views on to whom an organization is expected to have responsibility have not been constant over time. Van Marrewijk (2003) acknowledges a sequence of three approaches to CSR that has been referred to by various authors in academic literature. Each approach includes and transcends the previous one and tries to formulate the subject of responsibility for the organization (Van Marrewijk, 2003). A first approach is the shareholder approach. Van Marrewijk (2003) quotes Friedman (1962), who says that according to the shareholder approach the social responsibility of business is to increase its profits (p. 96). This approach starts from profit maximization as an ultimate goal and believes that socially responsible activities don t belong to the domain of organizations but are a major task of governments (Van Marrewijk, 2003, p. 96). This approach states that organizations should only be concerned with CSR to the extent that it contributes to the profit maximization goal of the business (Van Marrewijk, 2003). A second approach is the stakeholder approach. This approach indicates that an organization should not only be accountable to its shareholders, but that it should also take into consideration the interests of all its stakeholders which might be affected by the organization trying to achieve its objectives (Van Marrewijk, 2003). Under this definition an organization is accountable to all its stakeholders, which are according to Jensen (2002) all individuals or groups who can substantially affect the welfare of the firm not only financial claimants, but also employees, customers, communities and government officials (p. 236). A third and last approach is the societal approach. Van Marrewijk (2003) considers this to be the broader view on CSR, but not necessarily the contemporary one. This approach indicates that companies are responsible to society as a whole, of which they are an integral part (Van Marrewijk, 2003, p. 97). It means that an organization should operate in a way that serves and satisfies the needs of society. Where Van Marrewijk (2003) talks about three approaches to CSR, Hay and Gray (1974) talk about three different phases over time and did this already 30 years before Van Marrewijk. Despite the different choice of wording, both frameworks are very much alike. Hay and Gray (1974) labeled the first phase profit maximization management. The phase I concept was the belief that business managers have but one single objective to maximize profits (Hay & Gray, 1974, p. 135). Hay and Gray state that there is only one constraint to this pursuit of profit maximization, namely the legal framework within which the firm is operating. This view was widely accepted throughout the nineteenth century and the beginning of the twentieth century (Hay & Gray, 1974). 12

19 A second phase introduced by Hay and Gray (1974) is called the Trusteeship management. According to Hay and Gray this phase emerged in the 1920s and 1930s. They claim this second phase to be a result of some structural changes both in business institutions as well as in society. According to this concept, corporate managers were responsible not simply for maximizing stockholder wealth but also for maintaining an equitable balance among the competing claims of customers, employees, suppliers, creditors, and the community, as well as the stockholders (Hay & Gray, 1974, p. 136). In this view, the manager is no longer considered simply as an agent of the owners, but he is more seen as a trustee for the various contributor groups to the firm (Hay & Gray, 1974, p. 136). A third phase is labeled quality of life management which arose in the 1950s. Just like Van Marrewijk s (2003) societal approach, the socially responsible firm under phase III reasoning is one that becomes deeply involved in the solution of society s major problems (Hay & Gray, 1974, p. 138). Society s major problems refers to social problems which had developed as direct and indirect results of economic success of the preceding years. Hay and Gray (1974, p. 137) give the following examples: air and water pollution, deteriorating cities, disregard for consumers, 1.4 Definitional clarity of CSR Many definitions of CSR can be found throughout literature. According to Carroll (2008) one of the first people to articulate a definition on CSR was R. Bowen. He did this in his book Social Responsibilities of the Businessman of We previously mentioned that in those days the term social responsibility (SR) was more often used than corporate social responsibility (CSR), therefore that s also the term that Bowen used in his definition. Bowen s definition stated the following It (SR) refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society (Carroll, 2008, p. 25). Since then many more have tried to formulate a clear and unbiased definition of CSR (Dahlsrud, 2008) Despite the high amount of studies empirically examining CSR and the numerous efforts to bring about this definition, Clarkson (1995) believes there has not yet been established a satisfactory and generally accepted definition for CSR, which still leads to great confusion (Dahlsrud, 2008). The confusion stems from the fact that without a clear definition theoretical development and measurement are difficult (McWilliams, Siegel, & Wright, 2006). Banerjee (2001) expresses the same idea by saying that corporate social responsibility is too broad in its scope to be relevant to organizations (p. 42). This is not a new idea as we previously pointed out that Jones (1980) already said in 1980 that social responsibility is too vague to be useful (p. 60). Hence, even though there is 20 years between both articles, the problem remains current. Part of the difficulty in defining CSR lays in the fact that it is unclear whether CSR is really a concept. In their book The Oxford Handbook of corporate social responsibility Crane, McWilliams, Matten, Moon and Siegel (2008) suggest that CSR should not be considered a concept, but rather a field of scholarship. Various authors have developed important and influential concepts, constructs, and theories of CSR, these are competing with many other concepts, constructs, and theories of CSR (Crane et al., 2008, p. 6). 13

20 Crane et al. believe that a closely defined term is not the solution because these differences should be accommodated for in CSR and not avoided to obtain a narrow definition. Kakabadse, Rozuel and Lee-Davies (2005) also believe that CSR should be seen as a process rather than a set of outcomes. They state that CSR cannot be a static concept because the environment society members live in is dynamic (Kakabadse et al., 2005, p. 285). Kakabadse et al. were not the first ones to come up with this. We previously mentioned Jones (1980) who also believed that CSR should be considered a process instead of a set of outcomes. Another part of the difficulty in defining CSR lays in the fact that different types of organizations present different views on CSR. According to Van Marrewijk (2003) their different views on CSR are based on the specific situation and challenges that distinct types of organizations are facing. This is in line with the view of Kakabadse et al. (2005) who state the following: CSR in practice tends to be very contextual, very sensitive to environmental, organisational, even individual specificities (p. 286). They continue: this characteristic makes CSR a very rich, but highly complex concept, and certainly difficult to define once and for all (Kakabadse et al., 2005, p. 286) Because of this Van Marrewijk (2003) believes that the current concepts and definitions are often biased towards specific interests (p. 96) He does, however believe in the importance of a definition, but argues that that one solution fits all definition for CS(R) should be abandoned, accepting various and more specific definitions matching the development, awareness and ambition levels of organizations (Van Marrewijk, 2003, p. 95). The reason why Van Marrewijk is not in favor of one definition is because it would be too broadly defined and too vague, which would make it useless in academic debate or in corporate implementation. He believes that each company should choose from the many opportunities which concept and definition is the best option, matching the company s aims and intentions and aligned with the company s strategy, as a response to the circumstances in which it operates (Van Marrewijk, 2003, p. 96). Despite the various definitions and the confusion that comes with it, Dahlsrud (2008) came to an interesting conclusion. He recognizes the wide array of definitions available, but shows in his analysis that the existing definitions are to a large degree congruent (Dahlsrud, 2008, p. 1). Dahlsrud came to this conclusion by looking for similarities and differences between existing definitions and executing frequency counts. Through a content analysis of existing CSR definitions he reasoned that all of them were consistently referring to five dimensions, being: the environmental dimension, the social dimension, the economic dimension, the stakeholder dimension and the voluntariness dimension. Afterwards he used frequency counts from Google to analyze how often the different dimensions were invoked. Dahlsrud (p. 5) found that four out of five dimensions have a comparable dimension ratio above 80% (the stakeholder dimension: 88%, the social dimension: 88%, the economic dimension: 86%, the voluntariness dimension: 80%). The fifth dimension, which is the environmental one, has a significantly lower dimension ratio of 59%. It is important however that all the dimensions have dimension ratios above 50%, which indicate that they are more likely than not to be included in a random definition (Dahlsrud, 2008, p. 5). In a next step Dahlsrud (2008) studied the consistency between the definitions by looking at how many of the five different dimensions each definition used. He found that eight of the definitions he worked with include all five dimensions. These eight, account 14

21 for 40% of the total frequency count. When looking at the definitions including three or more dimensions, he counted 31 definitions, constituting 97% of the total frequency count. Based on his research Dahlsrud concluded that although they apply different phrases, the definitions are predominantly congruent, making the lack of one universally accepted definition less problematic than it might seem at first glance (Dahlsrud, 2008, p. 7). Dahlsrud therefore concludes that the confusion is not so much about how CSR is defined, as about how CSR is socially constructed in a specific context (p. 1). It is interesting to see how the first definition of (corporate) social responsibility we discussed before, formulated by Bowen, mainly focusses on the social dimension. As mentioned before: in the days in which the definition was published, 1953, social responsibility (SR) was more often used than corporate social responsibility (CSR) (Carroll, 2008). It is therefore not surprising that most attention in this definition is given to the social dimension and that the other dimensions, more related to the corporate aspect, are not really present. As SR evolved more into CSR over time, the definitions in literature started to include more dimensions. From Dahlsrud s (2008) study we could conclude that the definition of CSR, formulated by the Commission of the European Communities in 2001, is the best one. We do this based on the fact that this definition has the highest frequency count and because it includes all 5 dimensions. Their definition on CSR is the following: A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Commission of the European Communities, 2001, p. 6; Dahlsrud, 2008, appendix). Unfortunately Dahlsrud s paper wasn t the solution to the problem regarding the CSR definition; many definitions on CSR have continued to exist. Even the European Commission altered its definition in 2011 and put forward a new, simpler, but also vaguer definition on CSR being the responsibility of enterprises for their impacts on society (European Commission, 2011, p. 6). The Commission then defines, in more generic terms, what enterprises should undertake to meet this responsibility. As mentioned before, the lack of a general definition leads to confusion, but also hinders academic debate and corporate implementation. Nevertheless, for companies it is critical to know what consumers consider to be CSR or CSR related activities. To say it with the words of Dahlsrud (2008): the challenge for business is not so much to define CSR, as it is to understand how CSR is socially constructed in a specific context and how to take this into account when business strategies are developed (p. 1). For the remainder of this thesis we will work with the initially proposed definition by the Commission of the European Communities in We already motivated why we believe this to be an appropriate choice. 1.5 Synonyms We previously mentioned that the lack of a satisfactory and generally accepted definition for CSR leads to great confusion (Clarkson, 1995; Dahlsrud, 2008). Furthermore there is a long list of concepts which are often used synonymously for CSR, which leads to an even greater amount of confusion. 15

22 Carroll (2008) provides a list of some of the terms which are often used interchangeably to talk about corporate social responsibility. They include the following: business ethics, corporate citizenship, corporate accountability, and sustainability (Carroll, 2008, p. 38). There are many other synonyms or related concepts which might be used to talk about CSR, including: conscious capitalism, corporate governance, and ecological economics (Craps, 2012b). However, we believe Carroll (2008) captures the most important ones and that s why we will focus on his list. Just as CSR is not clearly defined and delineated, the concepts below suffer from the same problem. Therefore it is important to keep in mind that the explanations below are not absolute and just views of different writers Business ethics According to the dictionary of human resource management by Oxford University Press (2008), business ethics is the application of ethical reasoning to the situation of business organizations (Business ethics, 2008). While CSR requires ethical reasoning, business ethics and CSR are not completely the same. Business ethics can be considered part of CSR, which is clearly illustrated in the hierarchical approach to CSR by Archie Carroll 3. Carroll (2001) talks about the pyramid of corporate social responsibility and suggests that four kinds of social responsibilities constitute total CSR: economic, legal, ethical, and philanthropic (p. 40). He believes that there is a hierarchy in these company responsibilities and that s why his framework is often referred to as the hierarchical approach to CSR (Craps, 2012a). Carroll (2001) believes that the main responsibilities of companies lay in the economical field and more precisely through being profitable. It is often argued that the economic responsibilities refer to what a business does for itself, and that the legal, ethical and philanthropic components refer to what businesses do for others. Carroll (2008), however, argues that economic viability is also something business does for society as it contributes to maintaining the business system. It is therefore that Carroll includes economic responsibilities in its view on CSR. A next set of responsibilities a company has to fulfill, are labeled legal responsibilities. This means that they are required to obey the law. Following the legal responsibilities are the ethical responsibilities, which refer to business ethics. It is clear from this that business ethics are only a part of CSR. Ethical responsibilities are the obligation to do what is right, just and fair (Craps, 2012a). These three aforementioned responsibilities are however not enough to constitute CSR. CSR also requires philanthropic responsibilities, which means that the company has to be a good corporate citizen. Carroll (2001) describes this as contribute resources to the community, improve the quality of life (p. 42). Within the field of business ethics, a range of competing positions can be found. These different positions are grounded in different schools of moral philosophy. The dictionary of human resource management by Oxford University Press mentions three positions, 3 Whereas the framework as a whole explains CSR, it is discussed in this section to illustrate how business ethics is only just a part of CSR. 16