Corporate social responsibility in catering business in Hong Kong : current situation and the way forward

Transcription

1 Title Corporate social responsibility in catering business in Hong Kong : current situation and the way forward Author(s) Guan, Zhiliang; 关 芝 良 Citation Issued Date 2013 URL Rights Creative Commons: Attribution 3.0 Hong Kong License

2 Corporate social responsibility in catering business in Hong Kong: Current situation and the way forward By GUAN, Zhi Liang DISSERTATION Submitted in partial fulfilment of the requirements for the degree of Master of Sciences (Environmental Management) Faculty of Science The University of Hong Kong June, 2013

3 ABSTRACT The development of catering business in Hong Kong is facing a wide range of challenges and issues, including the increase in operating costs, growing pressure from public prospection about healthier diets, food safety as well as environmental protection, etc. Corporate Social Responsibility (CSR), acting a brand new corporate strategy can be adopted to upgrade catering business industry structure and achieve long term sustainability. The aim of this study is to investigate the current performance of CSR in Hong Kong s catering business in terms of its contribution to the well-being of the environment, community and economy. Using web-based questionnaires, relevant data was randomly collected from 16 restaurants located in the Hong Kong Island, Kowloon and the New Territories. The analysis and results indicate that 1) most managers from catering business have basic awareness of CSR concept and its benefits for corporations; 2) Only a minority of catering business in Hong Kong has adopted CSR; 3) Restaurants without CSR strategy have expressed strong willingness to implement CSR, most notably for small and medium sized restaurants; and 4) Among the five key CSR aspects, ethical procurement performed worst in the self-assessment system. In order to promote CSR into catering business, numerous recommendations are given. 1) Strengthening in education and training by government and interested organizations; 2) Providing incentives and policy support, establishing legislative regulation by government; and 3) Improving the quantity, quality and reliability of corporations communication with other stakeholders, such as disclosing CSR report. i

4 DISCLOSURE STATEMENT This dissertation represents the author s own work conducted for the purposes of this MSc in Environmental Management programme. All significant data or analysis used in this dissertation from other sources -including work the author may have carried out for purposes other than for this programme has clearly been identified as such. Signed: - Printed Name (Date) ii

5 ACKNOWLEDGEMENTS I should express my sincerely gratitude to many people. Firstly and most importantly, thank for my supervisor, Dr. Winnie Law. Her patience, kind guidance and boundless encouragement help me complete this dissertation efficiently and properly. She is keen to give me prompt feedbacks and academic instruction when needed. I am so grateful and lucky to have her as my dissertation supervisor. I wish her all the best and has a happy life with her newborn baby in the future. Secondly, I would like to thank Andrew Russell, the director of Plastics Disclosure Project that operated by the non-profit organization, Ocean Recovery Alliance. He not only introduced me to the director in the Community Business, an experienced nonprofit organization about the implementation of Corporate Social Responsibility in Hong Kong, but also offered numerous valuable chances to explore my understanding of the catering business in Hong Kong. My success in this dissertation is partly due to his enthusiastic support. Finally, I would like to express my deeply appreciative of Faulty of Science, providing this opportunity for me to explore my knowledge of environmental management. iii

6 TABLE of CONTENTS ABSTRACT... i DISCLOSURE STATEMENT... ii ACKNOWLEDGEMENTS... iii TABLE of CONTENTS... iv LIST OF FIGURES... v LIST OF TABLES... vi LIST OF ABBREVIATIONS... vii 1 Introduction Significance of study Research goal Research objectives Scope of study and methodology Structure Understanding and Building up Theories and Practice of CSR in Catering Business CSR CSR Definitions Historical development of CSR definitions Four major contemporary theories of CSR CSR in practice Catering Business Application of CSR in Catering Business Case study A: McDonald Case study B: Starbuck Summary of two case studies CSR and Catering Business in Hong Kong General Application of CSR in Hong Kong iv

7 3.2 Catering business in Hong Kong: current trends and challenges CSR in catering business in Hong Kong Methodology Purpose of conducting questionnaire survey with restaurants Selection of sampling restaurants Design of the questionnaire Data collection Survey Results Profile of the responded restaurants and the respondents Result analysis The analysis of the result of respondents CSR awareness The analysis of the result of corporate CSR performance Limitations of survey Summary of analysis Discussion and Recommendations Discussion Recommendations Conclusion BIBLOGRAPHY APPENDICES v

8 LIST OF FIGURES Figure 2.1 Drivers of CSR in developing countries 21 Figure 2.2 CSR pyramid 21 Figure 4.1 A scoring system 43 Figure 5.1 The overall score of CSR performance among three groups 54 Figure 6.1 The key aspects of green restaurants 62 vi

9 LIST OF TABLES Table 2.1 The dimension score and dimension ration for each of five 6 dimensions in CSR definitions Table 2.2 The overview of historical development of CSR 8 Table 2.3 Various CSR theories in terms of four aspects Table 2.4 Lists of some popular international guidelines in CSR 19 Table 3.1 The overall result of top 10 Oxfam CSR survey 31 Table 3.2 A brief description of CSR-related organizations in Hong 32 Kong Table 3.3 The amount of five types of restaurant and employees in Hong 35 Kong Table 3.4 The annual value of total receipts of restaurants sector 35 business in Hong Kong Table 3.5 A summary of related Environmental Law in Hong Kong s 36 Restaurant Table 4.2 The checklist of CSR performance in questionnaires. 44 Table 4.3 Specific weighting of indicators in Section C of the 45 questionnaire Table 5.1 The classification of restaurants, depending on their 47 consumption level Table 5.2 Table 5. 2 a profile of respondents and respondents 48 Companies Table 5.3 Descriptive statistics on the specific question in a 51 questionnaire Table 5.4 The scores of each indicators and overall performances. 54 Table 6.1 A summary of corresponding recommendations in terms of different stakeholders 62 vii

10 LIST OF ABBREVIATIONS CPCE CSR CSP EC ISO HKAEE HKCSS HKEPD HKQAA HK SAR Government Committee on the Promotion of Civic Education Corporate Social Responsibility Corporate Social Performance European Commissions International Standardization Organization Hong Kong Awards for Environmental Excellence Hong Kong Council of Social Service Hong Kong Environmental Protection Department Hong Kong Quality Assurance Agency The Government of Hong Kong Special Administrative Region HKPC HKQAA NGO ISCT WBCSD Hong Kong Productivity Council Hong Kong Quality Assurance Agency Non-Governmental Organization Integrative Social Contract Theory World Business Council for Sustainable Development SAI SR SFC UNDP Social Accountability International Social Responsibility Securities and Futures Commission United Nations Development Programme viii

11 1 Introduction 1.1 Significance of Study Hong Kong is widely known as a culinary capital of Asia, as well as its consumerism that is stimulated by its status as the Asia s international finance center. The combination of these factors often leads to conflicts among environmental management and public s sensory enjoyment, such as excessive consumption on food and energy. However, the increase in rent expense, growing public prospection on a healthier diet, food safety and environmental protection, have led to an urgent call for an upgrading of the catering industry. In order to maintain Hong Kong s image as the food paradise, how to achieve long term sustainability in catering business is of significance. Therefore, different range of catering business in Hong Kong, including multinational corporates and Hong Kong style local restaurants should find their own role in globalization system. Corporate Social Responsibility (CSR) is a compelling corporate strategy to achieve long term sustainability. The concept of CSR is relatively well understood and supported by its 60 years development in academic research and empirical analysis. With the stimulus of globalization and economic crisis, CSR has been worldwide adopted, especially in developed countries. Compared with the western countries, the efficiency of CSR implementation in developing countries is still implicit. This is not only due to the difference in the stages of economic development, but also caused by the variances in culture, as well as philosophy and religion. Hence, the concept and implementation of CSR in Asia should be alternated in some extent, in order to maximizing its effectiveness in corporate. However, CSR implementation still meets a series of issues and challenges at the operational level. 1

12 Additionally, there is scarce literatures in CSR implementation. Hence, the significance of this dissertation is not only to increase related stakeholders understanding of CSR, resulting in the achievement of long term sustainability, but also fill in the academic gap of CSR, especially for catering business in Hong Kong. The aim of this dissertation is to evaluate the performance of CSR in Hong Kong s catering business in terms of its contribution to the well-being of the environment, community and economy, so that a series of improvements to catering business can be suggested. 1.2 Research Goal This paper has the key research goal to evaluate the current performance of CSR in Hong Kong s catering business in terms of its contribution to the well-being of the environment, community and economy. Hence, a series of recommendations to catering business can be suggested, based on the size of catering business. 1.3 Research Objectives Four research tasks were identified in order to satisfy the study goal: Understand thoroughly the concepts, principles and the best practice of CSR, especially the role of CSR in the catering business Investigate the current practice of CSR in the catering business/industry through local and overseas case studies Identify the opportunities, difficulties and constraints in the implementation of CSR in the catering business from both the internal operation and external customer expectation perspectives Suggest possible solutions to promote awareness and best practice of CSR in catering business in Hong Kong 2

13 1.4 Scope of Study and Methodology According to Cambridge Business English Dictionary, definition of catering refers to any activities provides food and drink service to people or organizations. Hence, the catering business in my study is defined as any business provides food service, covering diverse types of business modes, such as event catering, boxed lunch catering. However, due to limitations of time and effort, the scope of my study focuses on diverse types of restaurants in Hong Kong only, other forms of catering business, such as boxed lunch catering, food services factory, and catering service for flights and so on are not included in my study. The methodology of my investigation is divided three parts. Firstly, review the historical development of CSR theories and concepts to build up a brief understanding of CSR and its related feasibility. Secondly, in depth evaluation of the adoption of CSR in Hong Kong will be introduced, including the brief introduction of the general CSR performance, current issues and challenges. More importantly, reviewing of current CSR implementation in Hong Kong catering business will be illustrated by analyzing a selection of well-known restaurants related annual reports (e.g. CSR reports or sustainability reports). Thirdly, a purposely-designed questionnaire will be applied to current performance of CSR in Hong Kong catering business in terms of its contribution to the well-being of the environment, community and economy. 3

14 1.5 Structure The structure of this paper is embodied in 6 chapters. Chapter 1 gives a brief introduction of research objective and background information of CSR. Chapter 2, literature review, reveals the historical evolutional of CSR and interrupts relevant theories, so as to enhance the reader s understanding and build up the concept and practices of CSR in Catering Business. In depth evaluation of the adoption of CSR in catering business in Hong Kong will be presented in Chapter 3. Explanation of methodology and analysis of the result is given in Chapter 4 and Chapter 5 respectively. Finally, Chapter 6 concludes the findings and suggests relevant recommendations of how CSR will be implemented in Hong Kong in future. 4

15 2 Understanding and Building up Theories and Practice of CSR in Catering Business 2.1 CSR CSR Definitions There are various definitions of CSR since the terminology first proposed in 1950s (Belu and Manesu, 2013; Dongmin, 2012). As one of the widely used definitions (Dahlsrud, 2008), The European Commissions (EC) (2002) defines CSR as the process of companies to integrate social and environmental factors into their business strategy and in their interaction with stakeholders on a voluntary basis. However, the EU concept neglects the importance of economic development in some extent, which is the fundamental concern in corporate operations. On the contrary, another typical example is the World Business Council for Sustainable Development (WBCSD) where it refers CSR to: the commitment of business to contribute to sustainable economic development, working with their employees, their families, the local community and society at large to improve their quality of life (WBSD, 2006). In addition to the divergence in definitions, companies from different industries also have specific strategies and concerns of CSR implementation (Belu and Manesu, 2013). For instance, oil companies emphasize more on the environmental risk assessments. Despite of this, different criteria from the different types of companies still focus on three main concepts, involving environmental, social and economy, which is consistent with three bottom line (Elkington, 1994; Crane and McWilliams et al., 2008; Dongmin, 2012; Belu and Manesu, 2013; Constantin and Cristinana, 2013). Dahlsrub(2008) developed a novel coding scheme to categorize the dimensions of most CSR literatures definitions, involving stakeholders, social, economic, 5

16 voluntariness and environment. Higher dimension score indicates the higher frequency of involvement in CSR definition samples. As Table 2.1 demonstrated, both the stakeholders dimension and the social dimension are the most likely to take under consideration in CSR definition, respectively. However, environmental dimension still lacks concerns. One of the explanations is because the concerns about the environment was raised in several decades. Dimension The definition is coded to the dimensions if it refers to Dimension Score Dimension Ration (%) The stakeholders The natural environment The social The relationship between business and society The economic Socio-economic or financial aspects. The voluntariness Stakeholders or stakeholder groups The environmental Actions not prescribed by law Table 2.1. The dimension score and dimension ration for each of five dimensions in CSR definitions (Dahlsrud, 2008) With the prevalence of CSR implementation, numerous international standardizations are applied to suitable for implementing in various countries. Take ISO26000 Guidance on Social Responsibility as an example, it is an emerging type of International Standardization Organization for different corporates from all over the world to implement CSR in a comprehensive and holistic way. Compared with other similar universal CSR standard, ISO26000 emphasizes on stakeholder management. Furthermore, it further divides the three concepts mentioned above into the following seven subjects, namely human rights, labour practices, fair operating practice, consumer issues, community involvement and development, as well as the 6

17 environment. In comparison with other ISO certifications, such as ISO14001:2004, ISO2600 incorporates voluntary guidance. ISO2600 is involved voluntary base. Currently, 83 countries have become a member of this ISO standard, while Hong Kong still under observation (ISO, 2010). Another related international standard is Social Accountability8000, which is used for auditing social compliance for a work place (SAI, 2012) Based on literature review, the definition of CSR in my study is the process of integrating the social and environmental well-being in the business model of corporate for long-term economic sustainability. In-depth explanations of the development of CSR definition will be given in the next section Historical development of CSR definitions CSR has attracted businessman interest since With the increase in public awareness, consumers demand and globalization, the development of CSR concept and principle is changed and updated. Therefore, the definitions of CSR are varying for different periods. Crane and McWilliams et al., (2008) summarized the overview of CSR definitions over these 60 years, in terms of guiding principles, drivers of CSR and policy instruments. In this chapter, detail evaluation of the historical development of CSR is introduced, based on four periods: s,1970s-1980s, 1980s-1990s, 2000s-contemporary. 7

18 CSR Types Year Guiding Main CSR CSR Driver CSR Policy Principle Action Instrument CSR1 1950s Corporate Corporate Executive Philanthropy Corporate Social -1960s manager are philanthropy conscience and public Stewardship public and company relations trustees and reputation social stewards CSR2 1960s- Corporate Interact with Government Stakeholder Corporate Social 1970s should stakeholders control and negotiations Responsiveness respond to and comply stakeholder and regulatory legitimate with public pressures compliance social policies demands CSR3 1970s- Create and Treatment Human Mission Corporate/Business 1980s maintain an stakeholders rights and statements Ethics ethical with respect religion- /social corporate and dignity ethnic values contracts/ethics culture codes CSR4 1980s- Acknowledge Adopt and Globalization International Corporate 2000s responsibility implement disruptions code Global Citizenship for corporate global of economy compliance global impact sustainability and and programs environment sustainability policy Table 2.2 The overview of historical development of CSR (Crane and McWilliams et al., 2008: 132) 8

19 s In 1953, Bowen (1953), the father of CSR, first incorporated the social responsibility as a terminology into the book Social Responsibilities of the Businessman. He defined that social responsibility as the obligations of businessmen to pursue those polices, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of society (Bowen, 1953). At the earliest stage of CSR evolution, corporations voluntarily allocated their return on local community by reducing wealth disparity and public equalization to achieve social income balance. During 1960s to 1970s, the proliferation of CSR definitions is mainly due to the increasing awareness of stakeholder (e.g. labors and consumers ) own rights and government regulations. Therefore, CSR has a set of brand-new missions, which is to take actions to reduce social conflicts and satisfy their demands. For examples, sexual discrimination in workplace, upgrade working environment and ensure fair prices for the consumers can be used to indicate CSR helped corporate actively response to social demands (Crane and McWilliams et al., 2008). 1970s-1980s However, the development of CSR definitions during 1980s became more specific and extent to various themes, for instance, corporate social responsiveness, corporate social performance and stakeholder theories, which will be explained in the following sections. Jones (1980) argued that Preston and Post s (1975) have an implicit definition of CSR due to the emphasis of public responsibility. He proposed that CSR should be considered as a process rather than a series of outcomes. Other scholars, such as Frank Tuzzolino and Barry Armandi (1981) agreed Jones (1980) view and applied a need-hierarchy framework to assess CSR, which is based on Malsows 9

20 analytical framework. Malsows hierarchy incorporates the needs of physiological, esteem, safety, affiliate and self-actualization into organizational operations of CSR. Dalton and Cosier (1982) also proposed a model depicting a 2 x 2 matrix, with four parameters: responsible and irresponsible in one matrix, while legal and illegal on the other matrix. They summarized that CSR should be allocated into legal and responsible cell and corporations should follow this as a CSR strategy. However, they underestimated the difficulties and uncertainties of definitions about those four parameters. Rich Strand (1983) proposed another paradigm of organizational operations of CSR, which emphasizes on the contribution of social environment into related concepts (e.g. social responsibility and social responsiveness). 1980s-1990s There was growing number of experimental literature focusing on the relationship between operationalizing of CSR and corporation financial performance. One of the most notable experimental studies was conducted by Philip Corchran and Robert Wood (1984). They examined the impacts of social responsibility on corporation financial performance using reputation index as an indicator. Additionally, Aupperle et al., (1985) first applied a theoretical definition of CSR proposed by Carroll (1983) into CSR assessment indicators, which involves four components: economic, legal, ethical and discretionary. Steven Wartick and Philip Corchran (1985) developed a more comprehensive corporate social performance model that goes beyond the integrated social issues proposed by Carroll. They proposed that responsibility is severed as the principle of CSR, responsiveness serves as a process of CSR and social issues serves as policies for corporations to obey. In 1991, Wood further broadened Wartick and Corchran s formulation (1985) into detailed evaluation. She identified the process of corporate social responsiveness, including issues management, 10

21 environmental assessment and stakeholder management. Furthermore, she considered social issues as the consequences of corporate behavior. With the development of CSR concepts, its applications are widely served as ethical commitments, which go beyond the previous two earlier CSR phases. The introduction of social contract between companies and society emphasis on the universal of human rights principle should involve as vital considerations to company strategy (Donaldson and Dune fee, 1999). 2000s-contemporary In 2000s, globalization, acting as the worldwide penetration of market-driven corporate enterprise, stimulate the development of CSR, which focuses on responsibility of citizenship without borders (Crane and McWilliams et al., 2008). Moreover, the negative impacts of globalization have attracted people attentions, especially in terms of environmental damage and the notion of sustainability. Therefore, the concept of Corporate Global Citizens has been proposed as an alternative guideline to mitigate the potential impacts. For instance, the Global Reporting Initiative (GRI) has initiated various certifications or report requirements for assessing companies social performance, such as the AA1000 and SA8000 (Crane and McWilliams et al., 2008) Four Major Contemporary Theories of CSR CSR is the product of industrialization and stimulus its applications in different countries via globalization (May et al., 2007). Since the 1960s, various CSR theories with specific concepts and dimensions have been proposed and developed. Classification of CSR theories by their perspectives and corresponding approaches is 11

22 suitable for application. Therefore, in this section, four mainstream theories of CSR will be generally classified and briefly introduced, including (1) instrumental theories, (2) political theories, (3) integrative theories and (4) ethical theories separately (Garriga and Melé, 2004). Instrumental theories The leitmotiv of Instrumental theories is to merely concern with the economic interrelationship between society and business. This type of CSR theories is wildly applied as a corporations strategy to gain profit maximization for shareholders within legislation and ethical responsibilities. Generally, there is a large amount of literature in favor of evaluating the correlation between corporate financial performance and CSR. Nevertheless, despite the positive relationship between proper CSR performance and firm success, from different perceptions (financial return/firm prices) (e.g. Posnikoff, 1997; Wright and Ferris, 1997), the reliability of findings still needs to be further investigated due to the uncertainty and difficulties of measurement methods (Griffin, 2000). Based on their different economic objectives, three types of instrumental theories will be introduced. The first instrumental theory is Maximization of shareholder value. As the wellknown representative for this theory, Milton Friedman stated (1970) that the only one responsibility of business toward society is the maximization of profits to the shareholder within the legal framework and the ethical custom of the country. Friedman s view has explicit objective that maximize shareholder s profit when corporate make decisions. Consequently, government revenues will increase social economic issues, such as pilferage and sabotage will reduce. Nevertheless, it is argued that this theory considering economic development as a supreme goal,which only 12

23 could achieve short-term profit. Therefore, it is currently amended as Enlightened Value Maximization by Jensen (2000), which take the demand of stakeholders into account in order to gain long term economic benefit. The second instrumental theory is named as the creation of competitive advantage, which focuses on how corporations could gain competitive advantage and long term benefit by allocating resources and returns (Husred and Allen, 2000). Generally, three different approaches are summaries as follows. Firstly, social investment may create the context of competitive advantage. The experimental findings of the Porter model conducted by Porter and Kramer (2002) indicate that investments in corporate philanthropic activities has better positive impacts on competitiveness, in comparison to the government or individual. This is supported by Burke and Lodgson (1996) conclusion: if philanthropic activities is parallel with corporate mission, a confidential profit return will achieve, which out of stage from its constituents companies (Porter and Kramer, 2002). The second one is the resources-based view of the firm and the corresponding dynamic. This theory emphasize on maximizing the resource efficiency in order to increase competitiveness, which is useful for current resource scarcity. For catering business, the heavily dependent on energy consumption leads to an increase in corporate risk. Hart (1995) integrate different aspects of dynamic capabilities and interrelationship with the external environment to set up a comprehensive model. He found that the natural environment constraints could also lead to energy innovation and capabilities development. Therefore, enhance energy efficiency and reduce waste will be both challenging issues and stimulus the development of industry. The last one is proper strategies for the bottom of the economic pyramid. Prabalad(2002) used the case study in India to prove that consider the poor as innovative opportunity to explore 13

24 new custom market, which could refer to a disruptive innovation. As Christensen and Overdorf (2000) state, disruptive innovation could be achieved by the introduction of low capabilities products with more attractive price to absorb the largest number of customs from the pyramid base. The third instrumental theory is Corporate Social Performance, which emphasizes on the interaction between business organization s configuration of principles of social responsibility and the society (Wood, 1991: 693). This theory states that business not only consider their profit, but also take responsibilities on those activities that caused social impacts. For instance, the involvement of philanthropic action and ethical requirements in company strategies indicate their contribution on society and the general public. Carroll (1979) first introduced the concept of Corporate Social Performance, which incorporate legal, ethical, discretionary and economics Political theories. Political theories emphasis on power responsibility in the political area. Davis (1960) first introduced the power of the company into CSR, involving two principles: the social power equation and the iron law of responsibility. The social power equation refers to the generation of social power when they are running business. And the iron law of responsibility means that social power responsibility is unstable. The long term neglect of its significance will tend to lose its function. Therefore, he rejected the freemarket idea proposed by Friedman. Donaldson and Dune fee (1999) introduced the concept of Integrative Social Contract Theory (ISCT), which was mentioned in previous sections. This contract provides rules for different kinds of social contracts. Corporate citizenship theories also could be considered as political theories. However, 14

25 even though there is a significant disagreement about the definitions of corporate citizenship theories, most scholars generally accepted that environmental problems, business responsibility of the local community and the corresponding partnership are three vital considerations. Therefore, in 2002, 34 of the world largest multinational companies signed a statement Global Corporate Citizenship-the Leadership Challenge for CEOs and Boards to increase their sense of social responsibility (Wood and Lodsgon, 2002). Integrative theories Integrative theories are about how to satisfy social demands and allocate resource. This is because the existence and development of business is heavily dependent on the society. Due to the variation demand of different industries, the corresponding actions for corporate management are various. Issues management, stakeholder management and corporate social performance are three well-known theories. Ethical theories Finally, ethical theories focus on the ethical demand of interaction the relationship between business and society. Generally, the major approaches includes normative stakeholder theory, universal right and sustainable development. Summary of these theories will be illustrated in Table

26 Types of Theory Approaches Short Description Some Key references Instrumental Maximization of Long-term value maximization Friedman(1970), theories shareholder value Jensen(2000) Strategies for -social investments in competitive Porter and competitive context Kramer(2002) advantages -strategies based on the natural resource Hart(1995),Lizt(1996) view of the firm and the dynamic Parahalad and capabilities of the firm Hammond(2002) -strategies for the bottom of economic Hart and pyramid Christensen(2002) Prahalad(2003) Varadarajam and Menon(1988) Murray and Montanari(1986) Cause-related Altruistic activities socially recognized Davis(1960,1967) marketing used as an instrument of marketing Political theories Corporate Social responsibilities of business arise Donaldson and constitutionalism from the amount of social power that Dunfee(1994,1999) they have Integrative Social Assumes that a social contract between Contact Theory business and society exists Corporate The firm is regarded as a citizen with Lodgson(2002), Andriof citizenship certain community involvement. and McIntosh(2001) Integrative theories Issue Management Corporate process of response to those social and political issues which may impact significantly upon it Ackerman(1973) Sethi(1957).Jones(1980) Wartick and Public responsibility Stakeholder management Corporate Social Performance Law and the existing public policy process are taken as a Jreference for social performance Balances the interests of the stakeholders of the firm Searches for social legitimacy and processes to give appropriate responses Mahon(1994) to social issues Table 2.3 Various CSR theories in terms of four aspects (Garriga and Melé, 2004) 16

27 Types of Theory Ethical theories Approaches Short Description Some Key references Stakeholder Considers fiduciary duties Freeman(1984,1994) normative towards stakehodlers for the firm. Donaldson and theory Its application requires references Preston(1995) to some moral theory Freeman and Philips(2002), Phillips et al.,(2003) Universal rights Frameworks based on human The Global Sullvan rights, labor rights and respect Principles(1999) for the environment UN Global Compact(1999) Sustainable Aimed at achieving human World Commission on development development considering Environmental and present and future generations Development (Brutland Report)(1987), Gladwin and Kenelly(1995) The common Oriented towards the common of Alford and Naughton good good of society (2002), Mele(2002) Kaku(1997) (Continued)Table 2.3 (Garriga and Melé, 2004) 17

28 2.1.4 CSR in Practice The worldwide adoption of CSR attracts attentions from governments, corporates, interested organizations as well as the general public. However, CSR implementation varies from country to country, in terms of the concept, policies, incentives, and related issues in practice. There is a growing global trend on the transformation of CSR modes, from voluntary benchmark to the legislative requirement. For instance, the establishment of the regulatory framework, namely The UK companies Act of 2006, aim at mandatorily requiring directors to concern more about shareholders benefit by taking proper actions, for instance, enhance community involvement(oxfam, 2010). In this section, CSR operationalization in developed countries and developing countries will be introduced respectively. CSR in developed countries CSR adoption breeds in western countries. In terms of developed countries, Crane and Matten(2007) used Carroll s CSR pyramid to examine CSR in European context. They concluded that even though different levels of CSR have specific significance roles and interactions with others, all of them have played important roles in Europe. Hence, the European Commission (EC) emphasizes on the significance of CSR, in order to achieve sustainability. Therefore, both multinational corporates and small and medium enterprises are encouraged to adopt CSR strategy in the EC. For instance, the EC launched a new conceptual framework and related instruments or guidelines to improve the international reorganization in The list of international guidelines on CSR is shown in Table 4. Moreover, in order to improve their understanding of CSR operationalization, the EC conducted a comprehensive analysis of policy references on the large corporates in The result of analysis suggests that the larger size of the corporate is, the higher likelihood to involve internationally 18

29 recognized CSR instruments (EC, 2013). Lists of International guidelines on CSR. Business Principles for Countering Bribery ISO 2600 Guidance Standard of Social Responsibility Global Reporting Initiative Guidelines United Nations Global Compact Universal Declaration on Human rights The United Nations Guiding Principle on Business and Human rights The ILO Declaration on Fundamental Principles and Rights at Work The Tripartite Declaration of Principles Concerning Multinational Enterprise &Social Policy Table 2.4. Lists of some popular international guidelines in CSR (Sources: EC, 2013) Additionally, there are numerous national differences in CSR communications and adoption in developed countries, based on extensive comparative studies among the United States and European countries (Matten and Moon, 2008). For instance, Maignan and Ralston (2002) conducted a comprehensive analysis of firm selfpresentation on the internet to investigate four developed countries (The United Kingdom, the United States. France and the Netherlands), regarding to the principle of CSR and relevant processes. One of the explanations is that European corporations generally favoured the performance-driven method, because they regarded CSR as a corporate instrument to improve firm s competitive advantages. In contrast, most U.S corporates consider CSR adoption as a major part of their organizational culture, which is called as the values-driven method. Consequently, corporations in U.S. prefer to enhance their community involvement, in comparison with most European countries. 19

30 CSR in Asia Compared with the western countries, the implementation of CSR in Asia still in an embryonic stage. The incidence of CSR adoption is generally in comparatively developed countries and cities, such as Singapore, Japan and Korean. Although Asian is the emerging market to adopt CSR, the understanding of CSR operationalization is still insufficient. Chapple and Moon (2005) evaluated that the majority of CSR in Asia engages in three factors: the community involvement, and social responsibility production and employee relations. For instance, Ramasamy et al., (2010) indicates that the CSR supporting from Asian s consumers is caused by both altruistic and egotistical reasons. Additionally, numerous empirical researches indicate that culture may affect the priority of perceived CSR (Pinkston Carroll, 1994; Edmondson and Carroll, 1999). It suggests that differences between developed and developing countries, such as culture and economic system, have significant influence on assessing the performance of CSR. Therefore, both the establishment of a new model and the enhancement in their awareness of the major drivers of CSR are facilitate CSR operationalization in developing countries. In order to explore the intrinsic causes of the difference in CSR implementation, Crane and McWilliams et al., (2008) categorized the drivers of CSR in developing countries into two types. One is the internal drivers, which is composed of political reform, market access, crisis response, government gap, as well as social economic priorities. External driver is another type that covers stakeholder activism, supply chain, international standardization and investment incentive (See figure 2.1). For instance, the main constraints of widely applied CSR in mainland China is due to the 20

31 low external pressure from customer, media and weak government enforcement (Joyce, 2010). cultural edition social-economic priorities government gap crisis response stakeholder activism supply chain political reform internal drivers market access investment incentives extermal drivers international standardization Figure 2.1. Drivers of CSR in developing countries (Crane and McWilliams et al., 2008: 245) Figure 2.2 CSR pyramid (Crane and McWilliams et al., 2008) Also, based on Carroll (1991) pyramid, Crane and McWilliams et al., (2008) replaced legal responsibilities to philanthropic responsibilities, acting as the second highest priority (See figure 2.2). Furthermore, Birch and Moon (2004) assessed different types of CSR issues (e.g. Environment and employee) and modes of actions (e.g. volunteering and partnerships) among countries in Asia and concluded that the development of CSR and corresponding performance are significantly various. This 21

32 result is supported by a considerable amount of quantitative studies (Garriga and Melé, 2004). Take Malaysia as an example, disclosing company s CSR or Sustainability annual report is one of the requirements in Bursa Malaysia s listing rules. However, such requirements still not launched in Hong Kong Exchange Stock yet (Oxfam, 2010). One of the advantages of CSR implementation in Asia is to offset the shortage of their legislative regulation in government, concerns about human right. For instance, the Bangladresh Garment Factory Disaster and Mexican bribery disclosure Wal-Mart s worse performance in CSR, including unethical procurement and the working safety neglect (Sethi, 2013). Measurement method of CSR There are four principal measurement methods and their relative difficulties during application of CSR. Domini Social Index is the first measurement method that involves eight detriments of CSR, including corporate government, community, employee relations, diversity, environment, human right, controversial business issues and product quality. The criteria is gradually worldwide applied into international standards (Griffin and Mahon, 1997; Becchetti et al., 2005; Kong 2012). As the second measurement method, The Fortune reputation survey is aim at establishing a comprehensive corporate reputation index by using questionnaires to collect information of eight determinants in CSR. Thirdly, the self-reported measure (e.g. Toxic Release Inventory), which is generally applied by government and special interested group. The final measurement method is corporate philanthropy. Both Griffin and Mahon (1997) and Godfrey (2006) applied corporate philanthropy as an evaluation system. Specifically, the result of Godfrey (2006) study indicates that philanthropy is able to provide insurance value to shareholders. 22

33 However, there are several difficulties in CSR measurement. One of the major issues is the implicit and broader boundary of CSR definitions. Therefore, it is difficult to quantify CSR with multidimensional concepts. Consequently, the assessment of CSR performance still needs further investigation. Another obstacle is caused by the diverse of issues and milestones in different corporates. Hence, specific concepts of CSR framework and issues are designed to meet various corporates requirements. In other words, it is time consuming and highly expensive for corporate develop their own CSR strategy. Furthermore, the higher standard of environment management and quality caused by CSR adaptation normally requires high cost and continuous input of labour resource. To some extent, it is difficult for small and medium size corporates to adopt CSR. Last but not least, information asymmetry means that the transparency and credibility of information provided by corporations are uncertain. Therefore, it is difficult for both consumers and shareholder to observe and audit relevant information (Crane and McWilliams et al., 2008). 23

34 2.2 Catering Business Catering business is generally considered as any business that provides food and beverage service to people. Also, catering business is one of the backbone activities in the economic development of most cities. Furthermore, it brings extensive employment opportunities, including restaurants, fast food restaurants, cafe shops as well as catering-related companies. However, driven by urbanization, globalization and economic crisis, the industry structure mode and practice meet a diverse of changes and challenges. For instance, large catering companies may have their own farms and centralized kitchens, which significantly improve the efficiency of food procurement, food preparation, and distribution within different branches. Typical cases can be drawn from Multinational Corporation includes KFC and McDonald, while for local cases includes Tsui Wah Group and Maxim s Group. To be specific, the transportation system in Tsui Wah Group is composed of green vans, which can reduce 30% of particle emission (Tsui Wah, 2013). For small and medium size catering companies, they prefer to emphasis on the distinguishing characteristics, including freshness, local, and nature. In term of economic crisis, it further intensifies the difficulties and challenges that the catering industry facing. For instance, the 2008 economic crisis led to a significant drop in annual increase rate of catering business in Hong Kong. Consequently, a continuously upgrade of industry structure essential for future development in catering business. Despite of the impacts of urbanization, globalization and economic crisis on this industry, consumer perception also changes the structure of catering business because of those underlying negative impacts on the general public, such as the obesity 24

35 epidemic and foodborne infection (Mackison et al., 2009; Li et al., 2010). For instance, in United States approximately 76 billion people suffered from foodborne infection (Tauxe, 2002). Furthermore, an experimental research in U.S. show that 97% foodborne infection results from improper food handling manners (Howes et al., 1996) As the general public and government have better awareness of the significance of healthier diet and food safety, the requirements for food industry are not merely the quality of food and service, as well as hygienic conditions of their personnel and facilities (Drosinos et al., 2005; Çakıroğlu and Uçar 2008). Numerous experimental researches indicate that a large portion of consumers prefer to know accessible information of on menus or pre-packed food, such as nutrition composition and the ingredients (Mackison et al., 2009; Hoefkens et al., 2012). A growing amount of food safety scandals and food contamination stimulates public concerns on the reliability of food surveillance and food safety, such as the melamine contamination incident in China and horsemeat scandal in one of the biggest supermarket in Britain (Guardian, 2013). Also, catering business involves employees healthy, occupational safety and risk (Mackision et al., 2009). Therefore, comprehensive surveillance system and regular education and training play significant role in protect personnel healthy. For instance, the enhancement of hygienic control contribute to reduction in microbiological quality and the occurrence of healthy problems (Çakıroğlu and Uçar 2008). For instance, the application of the Hazard Analysis Critical Control Point System (HACCP) in Ferrara supports this statement (Legnani, et al., 2004). 25

36 To a broader perspective, the emergency of novel catering business emphasized on efficient resource consumption, ethical issues and anthropogenic impacts on the ecosystem. In order to meet the growing needs for healthier or green diet, there is a global trend that catering business started to adopt new strategies or business modes, such as the promotion of sustainable restaurants, green restaurants and ethical procurement (Tikkanen and Varkoi, 2011). Since catering business is the key source of food waste, a growing number of restaurants, related food industry and institutions devotes to maximize the values of waste by reuse, education and training and technology innovation (Koivula et al., 2004; Gramza et al.,2011). For instance, some corporates are willing to donate catering waste to generate fertilizer by further composting. This method can significantly reduce food waste and carbon footprint, as well as maximize the value of organic material. Cathy Pacific Catering Services (H.K.) Ltd has donated their leftover and fruit peels to local recycler to produce fish feed (Cathy Pacific Catering Services, 2011). A similar project established by Yale University has been running for 10 years. The aim of this project is to improve Yale students understanding of the integrated meaning of food, land and agriculture. This project not only supplies local foods from their own farm to their dining catering, but also offer academic training about food and agriculture (Yale University, 2012). In summary, catering business plays an important role in people s daily life. However, the structure mode and practice of catering business is changing due to the alternation in public perpetration and raise of economic crisis. Therefore, catering business is facing a wide range of challenges and issues, including the increase in operating costs, growing pressure from the customers resulting from an increased 26

37 awareness of a healthy diet, food safety and environmental protection, etc. Therefore, a brand new corporate strategy in catering business is needed to upgrading the industry structure and to boost the recovery of catering business. An in-depth evaluation of novel instrument will be provided in the next section. 2.3 Application of CSR in Catering Business Catering business plays a significant role in people daily life. Also, it is the major source of waste and anthropogenic pollution, such as wastewater discharge and food waste. Related authorities made efforts on mitigate anthropogenic impacts on the environment, for instance, charge for disposable plastics bags and throw away lunch box in China restaurants and promotion of green restaurants certification in United State (Dinegreen, 2013). Nevertheless, a comprehensive strategy still needed to concerns not only environment, but also economic development, society as well as community. Consequently, it is a global trend to implement CSR in catering business, especially for multinational fast food chain restaurants, such as McDonald, KFC, Burger Kings and Starbucks (Li, et al, 2010; CSR CUMBA, 2011; KFC, 2013) Case study A: McDonald Take McDonald as an example, its annual CSR report (2010) contains explicit commitment and mission to make progress, including the operation of ethical and sustainable manner as well as concerns with about their influences on environment and society. In their report, six key determinants in CSR reports include governance and ethics, nutrition and well-being, sustainable supply chain, environmental responsibility, employee experience and community. Each of them not only has explicit objectives and missions, but also established corresponding performance indicators. For example, 27