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The Social Responsibility Of Any Business Management Essay

Introduction

The social responsibility of any business to its society has been pondered over for a long time. Corporate Social Responsibility (CSR) can be defined in different viewpoints - from narrow perspective as quoted by Milton Friedman “ the social responsibility of business is to increase its profits” (Friedman, 1970) to ethical, legal and economic responsibilities (Carroll, 1979) to wider social perspectives of corporate citizenship (Hemphill, 2004). Businesses which were mainly focussing on generating profits, now consider sustainability also as prime area of focus.

CSR has been recognised in terms of responsibility that businesses have towards their stakeholders. Stakeholders play an important role in redefining the responsibilities of the corporate to the society and the surroundings past the fiscal performance and assesses whether their behaviours are in a social and ethical manner (KPMG, 2008). In the recent years, the electronic and software industries are mainly concerned in establishing corporate social responsibility in order to survive and create an imperative strategy concerning the stakeholders and the society. This report focuses mainly on socially responsible business of two multinational organisations – one from the high income group and the other from emerging economies group respectively.

Sony Corporation (Sony) is one of the world’s largest manufacturers of communications, video, electronics and IT products for individual customers as well as corporate markets. Sony is a Japanese multinational company with its headquarters in Tokyo. Sony’s main business units are Sony Electronics in US, Sony Pictures Entertainment, Sony Computer Entertainment, Sony BMG Music Entertainment and Sony Financial Holdings. Sony has annual turnover of US$82.94 billion with approximately 171,300 employees for the year ending March 2009. The electronic division comprising of videos, TVs and ICT products account to almost 65.1% of the sales (Sony, 2009).

Western India vegetable Products Ltd, also popularly known as Wipro, was started in the year 1945. Initially, it was started as a small business provider of cooking oil in India. Today it has grown into a multinational technology corporation on a global platform. Wipro Limited is an Indian multinational company with its headquarters in Bangalore, India. It is listed on the New York Stock Exchange and had an annual turnover of US$6.54 billion with total of 97,810 employees and 863 active customers for the year ending March 2009 (Wipro, 2009). Wipro’s main business units are Technology, InfoTech, Consumer care and lighting, BPO and infrastructure engineering.

This report addresses the below questions and provides an analysis of the CSR activities of Sony and Wipro. Who are the key stakeholders from a CSR perspective? Their similarities and differences? How CSR is viewed? What are different CSR approach/initiatives? Classification of CSR activities? What are the underlying differences between the two companies’ CSR activities from two viewpoints?

1 Stakeholder Identification for Sony and Wipro from CSR perspective

Freeman defines a stakeholder in an organisation as ‘‘any group or individual who can affect or is affected by the achievement of the organization’s objectives’’ (Freeman, 1984, p. 46). The stakeholder theory and the associated concepts began to gain momentum in the 1980s (Freeman, 1984; Freeman and Reed, 1983). Freeman’s (1984) work stresses on redefining the strategy of companies to look beyond the internal stakeholders like shareholders, employees, customers to external stakeholders to bring about changes on managerial behaviour. (Jonker and Foster, 2002).

Mitchell et al (1997) developed the stakeholder saliency model that describes three attributes that gives the relationship between the stakeholders and the firms. They are: (1) Power, (2) Legitimacy, and (3) Urgency. In this report, the stakeholder saliency model is being utilized to understand and identify the stakeholders of CSR of both Sony and Wipro.

Based on the three attributes, the stakeholders can be classified into eight subgroups. They are:

Dormant

Discretionary

Demanding

Dominant

Dangerous

Dependent

Definitive

Non- Stakeholders

1.1 Sony’s CSR Stakeholder

Figure 1. Sony’s CSR Stakeholder Salience Model adapted from (Mitchell et al, 1997)

Government and policy makers are the dormant stakeholders as in each region the government has power on the corporation, for example, in Japan , Sony complies with Home appliance recycling law and In US, Sony complies to Electronic Waste Recycling Act in state of California Government. Employees are dominant stakeholders as the work culture in Sony allows any employee to report any abuse or breach of rules avoiding any possible retaliation Consumers and minor shareholders are the discretionary stakeholders as they have little power but Sony is managed in the interest of all the customers and shareholders. Research and academics are dependent stakeholders as they benefit from the CSR activities of Sony. The Board of Directors are definitive stakeholders as they have the full influence on any decision taken in Sony. They introduced the Sony Group Code of Conduct which is followed across Sony Group (Sony CSR, 2009). NGOs like Greenpeace are dangerous stakeholders as they have argued that Sony has not substituted its toxic chemicals with safer chemicals in given the timeline (Greenpeace, 2006).

1.2 Wipro’s CSR Stakeholder

Figure 2. Wipro’s CSR Stakeholder Salience model

Wipro stakeholders from CSR perspective can be classified based on the Stakeholder Saliency model as the following. Government and policy makers are the dormant stakeholders with Wipro’s continuous involvement with the central and state government, for example, Wipro is the participant in The Confederation of Indian Industry [1] (CII) project of sustainable growth and as signatory to UN Global Compact [2] (UNGC). NGO like Greenpeace are the dangerous stakeholders as they have the power and urgency to call for immediate action from Wipro; Greenpeace India conducted a vociferous campaign against Wipro for dumping huge volumes of hazardous waste in illegal recycling units in Delhi, Chennai and Bangalore, India (Greenpeace, 2005). Community groups are demanding stakeholders as they require Wipro to act in a social and eco-friendly manner in all the projects they undertake. Research and academics are dependent stakeholders as they depend on the benefits obtained from Wipro’s CSR activities, for example, ‘Wipro Applying Thought in Schools (WATIS)’. Board of Directors and major shareholders are definitive stakeholders as they have the power, urgency and legitimacy to influence the decisions in Wipro. Employees are the discretionary stakeholders as they volunteer themselves in the ‘Wipro Cares’ programme towards education, social and community development (Wipro CSR, 2009).

1.3 Similarities and differences between the stakeholders of the two companies

Stakeholder groups can be classified further into three types – Latent, Expectant and Definitive stakeholders. The latent stakeholder group consist of only one of the attributes, show little interest in the organisation and get little attention from the organisation. Hence, they are the least salient stakeholders in the Stakeholder Salience Model. The second group, the expectant stakeholder group consist of any of the two attributes and they can adopt an active role in claiming the organisation. This group is the moderately salient according to the model. The third one, the definitive stakeholder group, has all the three attributes and will be the centre of management’s attention.

1.3.1 Stakeholder similarities of Sony and Wipro

In both Sony and Wipro, the government and the policy makers are dormant stakeholders coming under the latent group since they have power to influence but they show little interest in the companies. The NGOs and Research & academics are all expectant stakeholders for both the companies, as both have moderate saliency in both the firms. NGOs monitor and support the CSR activities of both companies while research and academics are benefited by the CSR activities. In the both the companies, board of directors are in the definitive group as they have the supreme power to influence anything that happens in the companies with respect to CSR policy.

1.3.2 Stakeholder differences of Sony and Wipro

Sony is implementing CSR as corporate governance. They are organised in each level of CSR implementation. They consider activities with regard to employees and suppliers as CSR activities eg. Green Partners, apart from external stakeholders (Sony CSR, 2009). But Wipro, on the other hand, are more socially responsible to the outside communities rather than also considering its own employees, suppliers and related stakeholders. Thus, Sony’s CSR activities are based on equal important to both external and internal stakeholders whereas Wipro’s CSR activities majorly focus on the external stakeholders.

2 How CSR is viewed by Sony and Wipro?

This section of the report deals with objectives of understanding how CSR is viewed and considered in both the companies. Both the companies believe that their businesses have direct and indirect consequence to the society. Sony started publishing first environmental reports in the year 1994. In 2003, in order to increase the horizon of information, Sony included the issues related to CSR and published “CSR Report” in 2003. While Wipro did its first issue of the CSR report in 2008, it has still lot to learn about implementing CSR (Corporate register, 2009). Each has different CSR initiatives and approach.

2.1 Sony CSR Initiatives and Approaches

Sony classifies it’s CSR into six categories as shown in the figure 3. Each category is specifically designed to suit different stakeholder. The table below gives detailed description about the CSR approaches in Sony. In brief, Sony is highly committed to corporate governance, customer satisfaction & demands, employees (key stakeholders), social involvement (external stakeholders) and CSR innovation (utilizing new technologies). Table 2 shows various approaches of CSR activities.

Figure 3. Six Sony’s CSR categories

CSR Categories

CSR Approach

Corporate Governance and Compliance

Implementing Sony Group Code of Conduct, Sony Supplier code of conduct and strong corporate governance across the group.

Product Responsibility

Improve the Product quality and usability, establishing customer support centres and Supply chain management from CSR perspective.

Employee

Maintaining Work life balance, 360 degree Employee-management communication, giving Equal opportunities, and providing Health and safety measures.

Social Contribution

Volunteer system for employees like “SomeOne Needs You (SONY)”

Sony foundations – Various foundations have been established for education, music, science and film/photography.

Environment

Cutting down of greenhouse gas emissions(GHS), protecting bio diversity by tree planting, creating wild life sanctuary etc.,

Chemical management – Strict control over the toxic chemical substances usage

CSR Innovation

Sony experiments new technologies to contribute more to the society to create sustainable lifestyle.

Partnership – Sony considers it important to join hands with various stakeholders in undertaking more CSR activities like WWF [3] .

Table 2. Sony’s various CSR approaches. Source: (Sony CSR, 2009)

2.2 Wipro CSR Initiatives and Approaches

Wipro’s main CSR activities can categories into two namely Social Contribution and Environment as shown on figure 4.

Figure 4. Two Wipro’s CSR categories

Social contribution comprises of projects like Wipro Cares (a volunteer programme run by the employees serving towards education & social development), Wipro Applying Thought in Schools (network of social organisation to reform education) and Mission 10X (trust to increase employability skills of graduates). Environmental involvement is mainly of Eco Eye project promoting ecological practices.

CSR initiatives

CSR approach

Wipro Cares

Helping children from downtrodden sections in the society (learning enhancement) and

Providing rehabilitation facilities to survivors of natural mishaps E.g.- Disaster rehabilitation programme

WATIS

School reform projects conducting workshops, supporting fellowships to encourage people to get involved in these activities

Wipro education Fellowship is being provided to those who help in education reform work

Mission 10X

Providing Training to the faculty members of the engineering colleges to enhance their pedagogic skills.

Certification for students which contribute to professional development and employability skills.

Eco eye

Investing Green building, Reducing of GHS emission, energy conversation, RoHS [4] compliance, E-waste management

Table 3. Wipro’s CSR approaches. Source: (Wipro CSR, 2009)

2.3 How did these CSR initiatives and approach emerge? Is it due to corporate irresponsibility towards the society?

Both Sony and Wipro have learned from mistakes. For instance, in 2000, Sony faced issue from the international union for violating human rights by changing the working conditions for its employees. Dispute began when workers had to stand for long working hours with less time allotted for break. This is was detrimental for workers’ health as some women would faint during the day (Post, 2000), Sony has finally framed its code of conduct with respect to UNGC in the year 2003 and also considers it’s as one of CSR measures (Sony CSR, 2009). Similarly, Wipro got notice from Karnataka Pollution Control Board (KPCB) for illegally dumping hazardous waste (Greenpeace, 2005b). Furthermore, Business green featured that Wipro is not performing well in producing innovative products to embrace the environmental factors and deficient of targets like GHS reduction (Young, 2008). Wipro has overcome all the hurdles by supporting Individual Producer Responsibility and initiated take-back and recycling programme (Greenpeace, 2009a). Additionally, in 2008, Wipro charted Eco Eye program to promote environmental sustainability practices (Wipro CSR, 2009).

2.4 Has CSR performance increased or decreased?

In Greenpeace’s Guide to Greener Electronics September 2009, Sony jumps from 12th place to 8th place with an improved score of 5.1 out of 10. Sony’s rating reflects its commitment towards precautionary principle criterion and supporting Individual Producer Responsibility and also gained points for external verification of its GHS emission for its sites across world (Greenpeace, 2009). Apparently, Greenpeace’s Guide to Greener Electronics India September 2009 ranks Wipro second scoring 6.9 out of 10 for its strong performance on e-waste management and climate change (Greenpeace, 2009b). Moreover, it can be inferred from the table 4 that both Sony and Wipro have adapted to international standards. Nevertheless, both these companies have set examples for other companies to follow. For instance, Sony’s Take Back Recycling Program is first initiatives within electronics industry (Environmental leader, 2007) and Wipro’s green building at Gurgoan, India achieved platinum rating by US Green Building Council (USGBC) under ‘Leadership in Energy and Environmental Design (LEED)’ category (Wipro CSR, 2009). Tangible results are evident and visible that both companies over the years are improving CSR activities.

CSR INDEX

Sony

Wipro

Dow Jones Sustainability Indexes (DJSI), November 2009

Listed in DJSI Asia under Consumer Goods category

Not listed

FTSE4Good, November 2009

Listed in FTSE4Good Japan with Index weight of 2.62%,

Not listed

UN Global Compact

No Participation

Active participant

Global Reporting Initiative (GRI)

CSR report 2009 follows GRI G3 guidelines and declared as A+. and third party checked

Sustainability Report 2007-08 follows GRI G3 guidelines and declared as A+ and Third-party-checked.

World Business Council for Sustainable Development (WBCSD)

One of founding member

Not listed

ISO 14001 standard

Certified ISO 14001 throughout the Sony Group in 2005

India's first Software Company to get the ISO 14001 certification

Table 4. Various CSR Index for Sony and Wipro

3 Classification of CSR profile of Sony and Wipro

Ponte et al’s typology of CSR initiatives is used to classify and highlight specific examples of CSR activities performed by Sony and Wipro which are mapped in table 5.

Location of CSR activity

Type of CSR Activity

Engaged

Disengaged

Sony

Proximate

- Sony Group Code of Conduct

- Sony alliance with various institution like Electronic Industry Citizenship Coalition (EICC) , WWF [5] 

- Environmental policy

- Take Back Recycling Program

- Sony Creative Science award [6] 

- Promoting awareness of HIV/AIDS.

- Employees volunteering at various sites like Sony Science Program [7] and Sony Wonder Technology Lab [8] .

Distant

- Sony Supplier Code of Conduct

- Supplier Carbon Reporting Project

- Green Partner Program for its suppliers

- Eco-Patent Commons Project [9] 

- GreenFillSM project [10] 

- Cause related marketing such as sponsoring FIFA 2010 World CupTM in South Africa, “Solar-bear” campaign

- Mobile Library Project in South Africa

- UNICEF's photo project EYE SEE IV  [11] 

Wipro

Proximate

- ‘Spirit of Wipro’ represents core value of Wipro

- Implementing Eco Eye program

- Ecological Stewardship – Green building, Green product, Green IT

- Adopting to UN Global compact, OHSAS [12] framework, RoHS

- Creation of biodiversity spots in and around Wipro campus and communities

- Car-pooling program helping impact on their daily commuting.

- Wipro cares along with NGO’s

Distant

- Reducing carbon footprints with other stakeholders.

- E-waste disposal through certified agency

- Producer responsibility program, E-waste disposal through agency.

- Wipro Applying Thought In School (WATIS)

- Mission 10X

Table 5. CSR activity matrix by location and type. Source: Ponte et al, 2009 and Sony CSR, 2009

Sony’s engaged CSR activities at proximity have mainly targeted the employees, customers and the environment. Sony Group Code of Conduct, emission cutting target for GHS, recycling and value based customer service depicts their interest in engaged CSR activities. Sony’s disengaged proximity CSR activities mainly focussed on education in initiating creativity among children and awareness among the downtrodden. Sony’s distant activities are mainly in the form of partnerships and sponsoring. Notable ones are sponsorship for sports and wildlife. Wipro’s proximity CSR activities mostly dominate areas like environmental issues, rain water management and participation in international treaties. Distant CSR activities are mainly focussed on education for children from the backed societies, and e-waste management. These efforts show both Sony and Wipro have high commitment towards the society.

3.1 Comparative CSR profile of Sony and Wipro

From the Table 6, Sony has shown high degree involvement in engaged and disengaged CSR activities compared to Wipro which has shown high interest in disengaged CSR activities and medium interest in engaged activities; the only difference between the two companies is Sony is more oriented towards ‘cause-related marketing’ whereas Wipro mainly focuses in serving society through education.

Tricky CSR issues

Sony laptop explosions due to contamination of cells in its manufacturing process of batteries (Espiner, T., 2006).

Sony Indonesia faced pressure from International union for serious human and labour rights violation (Post, 2008).

Failed to meet low carbon challenge (Business green, 2008)

World bank ban Wipro for "providing improper benefits to bank staff" to get the contract (Times online,2009).

Degree of negative profile in the past

High

High

Low

High

CSR profile

Sophisticated approach towards CSR that includes a refined supplier policy; member of various institution

Has a Sustainable Management policy and engaged with the stakeholders

Engaged

HIGH

Medium

Disengaged CSR profile

Progressive Cause related marketing & various Sony Foundation

High degree involvement in serving the local community mainly through education

HIGH

HIGH

CSR Awards

Environmental Communication Awards 2005 Sustainability Excellence Award by Global Environmental Forum

Business World FICCI-SEDF Corporate Social Responsibility Award 2003

Firm

SONY

WIPRO

Table 6. Comparative CSR profile of Sony and Wipro

In simple terms, Sony can be branded as a ‘Good Performer - rebounder’, since Sony rapidly addressed the key negative CSR issues (BusinessWire, 2006) Conversely, Wipro circumvented the negative CSR issues diluting the timeline (Blakely, 2009).

3.2 Business viewpoint of CSR approach

On one hand, when firm involves in social responsibility it could be additional cost to the company and hence negatively affects its economic performance. In 2009, Sony has reported its first loss after 14 years mainly due to meltdown of global economy and appreciation of currency (Sony, 2009). However, CSR initiatives like Sony Take back recycle program at this stage will definitely cause damage financially conflicting to a firm’s responsibility to its shareholders.

On the other, Social performance can be positively related to a firm's economic performance (Winsemius and Guntram, 1992). Interestingly, Wipro has found marketing opportunities from its green CSR activities for its Infrastructure engineering division providing solutions such as Green IT and IT for Green which have ultimately helped to diversify its business thereby improving its economic performance (Wipro CSR, 2009). Likewise, Sony is using recycled plastics to manufacture new TV which has reduced its inventory cost and cause-related marketing can drive Sony’s brand identity to a wider reach, thereby indirectly strengthening its economic performance (Sony CSR, 2009)

Conclusion

In this modern era, CSR has not only become a vital part of wealth creation, but also a ladder to increase competitiveness and value of the organisation in the market doing good to the society, thereby, enjoying mutual benefit. This report has scrutinized the CSR approaches and activities of two different companies – Sony and Wipro. CSR programmes initiated by Sony, classify it as a normative company where most of its CSR activities are multidimensional attending to all stakeholders. Sony has followed cause-related marketing with high involvement in internal and external stakeholders covering all areas of need. Also, Sony has shown keen interest in resolving issues immediately related to CSR activities. Wipro CSR activities are highly oriented towards society through education and its development. Hence, Wipro needs to concentrate on other issues apart from education like poverty and healthcare. Therefore, in this context, Sony is a pioneer in CSR activities and Wipro has a long way to go.

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