Corporate_Social_Responsibility

Developing a Conceptual Framework of Corporate Social Responsibility Initiatives in Community Involvement: Content Analysis of Company Websites Denni I. Arli, Pamela D. Morrison, Australian School of Business, The University of New South Wales Abstract The rising importance and attention of socially responsible investment, increasing consumer and environmental concern and a growing political/ legislative environment have all contributed considerably to the pressure on business to be socially responsible. Businesses today face challenges to recognise the roots of social problems and identify ways to do business effectively in the community. To do so they need to adopt a variety of strategies, however insufficient attention has been devoted to studying the links between antecedents, strategies and consequences of CSR initiatives in the community. We aim to develop a conceptual framework for corporate social responsibility (CSR) initiatives to assist further research on community involvement. To do this we start by content analysing the CSR component of company websites. Introduction The Centre for Corporate Public Affairs (2007) conducted a survey on corporate community involvement and suggested that 90 per cent of CEOs and Boards regard corporate community involvement as an “obligation of good corporate citizenship and worth doing for the company’s external reputation and other benefits; 75 per cent consider it is an integral part of their business model” (p. 12); and only 10 per cent consider community involvement as peripheral to their business activity. More and more companies are recognising the importance and value of combining commerce and social development (Rohregger, 2006). Despite the increased attention on CSR initiatives in community involvement from both companies and researchers, a research gap is identified within the CSR literature. The relationship between CSR antecedents, strategies and consequences has not been explored adequately and many scholars have suggested that studies are needed to understand the phenomena (Campbell, 2007; Maignan & Ralston, 2002). There have been few attempts to understand how firms organise and manage their resources to start CSR initiatives or to analyse the consequences of chosen organisational forms for the nature of corporate social involvement (Atkinson, Schaefer, & Viney, 2000; Brammer & Millington, 2003). One way to identify a firm’s behaviour with respect to CSR is through analysing company websites (Basil & Erlanson, 2008; Maignan & Ralston, 2002; Esrock & Leichty, 1998). Websites can offer valuable data resources for the researcher, providing access to various corporate strategies (Singh & Point, 2004) and are useful channels for corporate reporting, providing information on community involvement as part of a firm’s corporate social responsibility commitment. Our study uses information conveyed on company websites to conceptually analyse how and why firms choose a particular initiative strategy; the types of strategy and the nature of community involvement. An understanding of the framework of the relationship between antecedents, strategies and consequences can assist companies in better identifying appropriate strategies and then implementing and assessing their CSR initiatives. This research lays the foundation for further research using case studies to develop a detailed understanding of the various initiating factors, strategies of implementation, and the consequences of CSR programs, and the relationships between these three key components. 1 CSR Community Involvement Strategy The World Business Council for Sustainable Development (2006) defines CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large”. CSR refers to a company’s commitment to operate in an economically and environmentally sustainable way, while recognising the interest of multiple stakeholders and maximising economic, social and environmental value (Carroll, 1979; Matten, Crane, & Chapple, 2003; Waddock, 2004; Waddock & Post, 1990; Wood, 1991). The rising importance and attention of socially responsible investment, increasing consumer and environmental concern and a growing political/ legislative environment have all contributed considerably to the pressure on business to be socially responsible (Kapstein, 2001). CSR is increasingly being identified as central to the core business activities which strongly link with a firm’s marketing strategy; it is no longer considered as merely philanthropic activities (Bhattacharya, Smith, & Vogel, 2004). Currently, companies are using various strategies to achieve their CSR objectives. According to Smith (2003, p. 68) “developing the right CSR strategy requires an understanding of what differentiates an organisation - its mission, values, and core business activities”; thus a firm’s social responsibility strategy should be unique because it reflects an individual company’s missions and values. This view is also reflected by Porter & Kramer (2007, p. 12) when they write “The more closely tied a social issue is to the company’s business, the greater the opportunity to leverage the firm’s resources and capabilities, and benefit society”. Research Design One way of identifying CSR activities within a company is to study how they report their strategies to their stakeholders. Stakeholders are one of the forces behind socially responsible activities in a company, and provide the initial pressure for corporations to adopt CSR (DFID, 2003). This pressure will bring CSR into the mainstream of a corporation’s activities. Websites are targeted to a wide range of stakeholders and thus, websites are logical sources of information for studying company behaviour toward CSR (Esrock & Leichty, 1998). Prior to collecting the data, we define the term website as a “collection of pages or files linked together and available on the World Wide Web provide by companies” (Petch, 2004). We identified several Australian based companies (n=31) that are currently involved in a community program. These companies are listed in the Corporate Responsibility Index (CRI) and other CSR websites. The CRI index was developed and maintained by ‘Business in the Community’, which consist of the St. James Ethics Center, the Sydney Morning Herald, the Age, and supported by Ernst and Young. The companies represent various industries (including banking and finance, consultancy, energy, health care, insurance, information technology, law, mining, telecommunication, and retail). Within these 31 companies, Austereo, Inc. (entertainment based media company) has the smallest number of employees: 668 and net- profit of A$ 46 million in 2007 (Austereo, 2007); while Westpac Inc. (banking and finance company) has the largest number of employees: 330,000 and net profit of A$3,451 million in 2007 (Westpac, 2007). We performed content analysis of the CSR component of the internet websites of these companies to provide an empirical starting point for generating new research evidence about 2 the nature and consequence of specific information (Kolbe & Burnett, 1991). In a scholarly content analysis, the variables should be connected with research questions (Neurendorf, 2002). According to Neurendorf (2002, p.107) “this process will ensure a logical progression from conceptualization of an issue through measurement and result that addresses what the researcher has in mind”. Based on the research gap identified above, we aim to investigate the following three research questions (RQ): RQ1: Using stakeholder theory framework, what are the antecedents of commencing CSR initiatives in the community' What are the company objectives' RQ2: What are the strategies used by companies in conducting CSR initiatives in community involvement' RQ3: What are the consequences of CSR initiatives to the community and to the company' The QSR Nvivo 7.0 qualitative analysis software was used to categorise the website data. Each page was coded in turn and a combination of content and thematic analysis was used to identify patterns in the data and match each quotation to the most relevant themes (Patton, 2002; Rice & Ezzy, 1999). The number of initial coding frameworks are not to be limited in order to allow the generation of ideas (Pope, Ziebland, & Mays, 1997; Weitzman & Miles, 1995). We develop coding guidelines and apply an inductive coding process to capture the key aspects of the themes in the raw data which are deemed the most important themes given the research questions (Creswell, 2002). We started with one company and coded all themes related to each research question (i.e. antecedents, strategies, and consequences). This procedure was then repeated across all companies. Analysis and Discussion The analysis of the research findings has been structured according to the appropriate research questions. Subsequently, we proposed a conceptual framework for corporate community involvement (see figure 1). RQ1: We found that companies regard stakeholders as one entity instead of separate actors. These stakeholders are the main drivers behind CSR initiatives, however there is no clear evidence on who has more influence than others. This issue can be further analysed through additional empirical research. Further, stakeholder engagements are used to emphasise the importance of building good relationships and trust with various stakeholders. Antecedent: "We seek to stay on top of emerging trends and sensitive issues through effective and regular dialogue with stakeholders. We maintain continuing multilateral and bilateral dialogue around specific issues to determine social, environmental and financial priorities" [Westpac, 2007]. Antecedent: “At the heart of our approach is a commitment to building relationships of trust, respect and integrity with all our stakeholders over the long term. This is more than a set of words to us. It requires us to lead with action, guided by our company values in everything we do” [ANZ, 2007, p.1]. Antecedent: "However, we are not driven simply by benevolence but by enlightened self interest. After all, successful and prosperous business cannot sustain if the communities in which they operate are not successful and prosperous. There is a mutual flow benefits" [Westpac, 2007]. Various stakeholders provide different motives for CSR. Our analysis showed that companies motives could be classified into four categories: the utilitarian perspective, the negative duty, the positive duty, and the new moral market place (Campbell, 2007; Swanson, 1995) (see figure 1). 3 Stakeholder’s Engagement (1) STAKEHOLDERS (2) MOTIVES (3) STRATEGIES (4) OUTCOMES Government Core/ Non-Core Business: Choose an initiative that is related / not related to the business The Utilitarian Perspective/ Competitive Advantage: An instrument to help achieve objectives, build reputation Partnership: Working with one/ various non-profit organisations Investors Intended Consequences: Achieve company’s CSR objectives Recipients: Individuals/ groups in the community Suppliers The Negative Duty Approach/ Moral/ Institutional Condition: Appease stakeholders, legitimacy factors The Positive Duty Approach/ Instrumental: Self-motivated, self interest Non-Partnership: Working directly with the recipients in the community NGOs Donation: Offer mainly financial contributions Unintended Consequences (+): Produce positive contributions in the community which was not predicted in the CSR’s objective Customers Employees Communities Relational/ New moral Marketplace: Peer pressure, concern about relationship with other group members Employee Volunteer: Encourage employees to get involve in the community Unintended Consequences (-): Produce negative contributions in the community which was not predicted in the CSR’s objective/ cause the program to discontinue METRIC : Internal and External Measurement Figure 1: A Conceptual Framework for CSR Community Involvement Sources: (1) Stakeholders, (2) Motives: Freeman, 1984; Campbell, 2007; Swanson, 1995 (3) Strategies: London & Hart, 2004; Porter & Kramer, 2007; Hamel & Prahalad; Smith, 2003 (4) Outcomes: Brown & Dacin, 1997; Du, Sen & Bhattacharya, 2008; Kotler & Lee, 2005; Porter & Kramer, 2007 4 RQ2: The content analysis suggests that there are four different strategies that companies use: partnership (i.e. working with one or various non-profit organisations; non-partnership (i.e. working directly with the recipient); donation (i.e. offer mainly financial contributions) and employee volunteering (i.e. allow employees to get involved in the community). The strategies used are not always connected to the core business of the company. Strategy : We didn’t want to over-complicate something that came so naturally, so our strategy is very simple: 1. Employee involvement: making it easy for our employees to get involved in the community and support the community group of their choice; 2. Community partnerships: collaborating with key community partners to help address key community issues; 3. Capacity building: helping community groups improve their operational effectiveness through training and access to business and finance tools” [Westpac, 2007] RQ3: The content analysis suggests companies are developing two metric indicators: internal and external. They use external organisation(s) to assess their performance and develop a variety of internal assessments. Only a few of the companies discussed the impact of their initiatives on the community. According to Porter & Kramer (2007) many CSR activities reported by companies are typically described in terms of dollar or volunteer hours spent but almost never in terms of impact. Recipients may well have a different perspective on the effectiveness and impact of the programmes, and what constitutes a success for the company might not be the case for the recipient. Thus it is necessary to study the impacts of different initiatives on communities through further empirical research. For future research, we propose to use a holistic multiple-case design to analyse this cause and effect phenomena investigating the links between antecedents, strategies and consequences of CSR initiatives (Yin, 1984). External assessment: "We have used the Global Initiative Report (G3) guidelines in preparing this report and have assessed our application at level B" [Vodafone, 2007]. Internal assessment: "We report our CR key performance indicators (KPIs) to Vodafone Group on a quarterly and year end basis" [Vodafone, 2007]. Nevertheless, there are some limitations in this study. Content analysis is a purely descriptive methodology and thus may not cover the underlying motives for the observed patterns (Kolbe & Burnett, 1991). Conclusion There is a need to identify the motivation which lead companies to adopt a CSR strategy involving the community, to identify the appropriate strategy for a particular company, and to identify the consequences, both to the company and to it’s community. Corporations increasingly see themselves in difficult situations, caught between critics demanding a higher level of CSR and investors applying relentless pressure to maximize short-term profit. Corporations are now starting to realise that CSR can create values if approached in a strategic way. Porter & Kramer (2003) posit that CSR can become part of a company’s competitive advantage by adopting CSR that is aligned with their core business. In addition, there is also very little known about the actual social impact of initiatives on the recipient (Baker, 2000). CSR researchers have largely focused on one side of the question, that is, the company and its profitability (Margolis & Walsh, 2003). Our research findings go some way to providing a useful framework for companies who are about to commence a CSR initiative in the community and also assist researchers in developing future studies on CSR, especially in the area of community involvement. The framework can be used to assist managers and researchers in understanding the complexity of companies’ decisions toward CSR activities and its stakeholders; it will verify or contrast other studies on CSR initiatives. 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