Causes of Increased Corporate Social Responsibility
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The main aim of this research was to establish the extent to which the increased priority of CSR is in actuality a reflection of companies acting to meet the interests of society or simply a means for generating profits in a marketing oriented way. In this regard, the research sought to explore CSR behaviour in depth and in turn tried to establish companies' rationales for CSR behaviour in the UK food retail industry.
A mixed methodology with both qualitative and quantitative methods of data collection and analysis were used in the research. Qualitative content analysis was used for analysing the contents of food retailers' websites pertaining to CSR. Store Audits were conducted in order to identify the CSR practices and extent to which they are exercised by different food retailers. In - depth formal interviews were conducted with key decision makers with the goal of obtaining information on CSR activities. Lastly, a questionnaire survey was used with the UK consumer population as the population of interest.
The members of the UK Food Retail Industry showed that they have given paramount importance to CSR in order to somehow become a better neighbour to their customers, render them effective public services and at the same time contribute to the preservation and protection of the environment. The responses to the questions revealed a common rationale behind their CSR policies and ensured that the organisation established a good reputation amongst the members of the community, thereby enabling the latter to maintain a certain level of trust for the UK food retailers.
The study supported the fact highlighted by previous studies that companies have become more aware and mindful of their responsibilities, roles and rights towards the society. They were seen to have implemented activities, practices and guidelines in order to fulfill their legal, ethical, social and environmental roles and responsibilities towards stakeholders, employees, customers, and environment and society in general. However, it can also be realised that these policies contribute to the building of trust in the customers towards the organisations. Thus, as the trust is established, it is more likely that the customers will remain loyal to the organisation, thereby increasing their chances of generating profit.
Chapter 1: Introduction
For many years Corporate Social Responsibility (CSR) has been associated with related terms like business ethics, corporate performance, corporate accountability, corporate responsibility and stake holder involvement. In recent years CSR has grown into a well-known collective expression. The growth of CSR has been a result of organisations realising their responsibility toward their stake holders in the context of business scandals (e.g. Enron) and a growing concern for environmental changes (e.g. global warming).
The European Union defines CSR as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis" (European Commission, 2002). According to Vernon and Mackenzie (2007), the question of whether companies should seek to do good by exercising CSR, rather than concentrate solely on wealth creation, is no longer interesting and in fact the focus today is on how well companies do good. Increasingly stake holders expect companies to take on public responsibility. Companies engage in CSR through diverse activities such as donating to charitable organisations (e.g. Ben and Jerry's), 'green' activities (e.g. moves by major retailers to eliminate plastic bags and promote 'green' bags) and by implementing environment friendly purchase and supply policies. A survey conducted by Research International, however, found that while CSR practices are commendable, they need to be viewed with caution as these activities are not sufficient in and of themselves (Social Funds, 2000).
The scepticism about CSR activities is related to the growing trend for organisations to drift away from the 'hard issues' and concentrate more on 'soft issues'. The Research International survey revealed that despite ignoring crucial issues such as treatment of employees, and commitment to the local community, some companies portray themselves as socially responsible using charity and other CSR activities, which deal with 'soft issues' (Social Funds, 2000). Sceptics also believe that CSR is often used purely as a marketing tool to improving business performance. In the context of CSR being rated as a priority by companies in the last few years (Cost Sector, 2009), this research aims to study the changing nature of CSR, with particular focus on an organisation's motivation for engaging in socially responsible activities (whether it is a response to society's expectations or a strategic move by a company). By contributing to a deeper understanding of rationales, notions, risks and effects of CSR, the proposed research provides strategic insights on the subject. With findings based on both corporate and stake holder perspectives on the subject, this research aims to contribute to useful and interesting reading for both businesses and stake holders. The findings of this study are based on the UK food retail industry. Food retailers make a good context for study especially considering the several socially and environmentally responsible schemes that they are involved in and the significance of CSR asserted by industry standards.
In this attempt Chapter Two provides the background and review of literature conducted in order to extensively analyse previous works published with regard to Corporate Social Responsibility and the manner by which it applies to the members of the UK food retail industry.
Chapter Three discusses the different methods used in order to obtain data for the study to obtain relevant results.
Chapter Four then presents the results obtained from the use of the different methodologies enumerated in the study.
The results shall then be discussed in relation to the aim of the study in Chapter Five and conclusions would be provided by answering the research questions.
Lastly in Chapter 6 we will give us an understanding of the scope and limitations of this study.
Chapter 2: Background and Literature Review
2.1 Background of the study
Society's preoccupation with the social responsibility of organisations has existed since at least the early 1930s and probably even before. Wells (2002) notes that it is perhaps the infamous Dodd-Berle correspondence contained within the Harvard Law Review Issue of 1931-32 that launched the debate on corporate social responsibility. The debate started when corporate law professor Adolf A. Berle Jr. published an article arguing for the imposition of legal control on management so that only their shareholders would benefit from their decisions (Berle, 1931). E.M. Dodd, another professor from Harvard, published an article that addressed the issue raised by Berle. He argues that besides focusing on the interests of the shareholders, managers must also take into consideration the concerns of the employees, consumers and the organisation's stakeholders. Berle (1931) responded by saying that companies should “not abandon emphasis on the view that business corporations exist for the sole purpose of making profits for their stockholders until such time as [one is] prepared to offer a clear and reasonably enforceable scheme of responsibilities to someone else” (Berle, 1932, p. 1365).
Since the idea of corporate social responsibility has its roots in the legal community, several academic disciplines have followed the debate with little discussion occurring between and among them (Radin, 1999). More specifically, researchers in the field of business ethics have spent substantial effort in the past two decades to come up with a stakeholder theory that would eventually fall under corporate social responsibility, existing as a separate approach to management.
The issue of corporate social responsibility was not discussed after the argument between Berle and Dodd. It resurfaced in the 1960s and the 1970s against the backdrop of the civil rights movement in America. This is due to the fact that the top agendas of politicians, public interest groups, individual citizens and corporations have been largely influenced by concerns about the environment, product safety, workplace health and safety, racial and sex discrimination, urban congestion, political corruption and technological advances. Apart from this, the increasing influence and power that organisations possessed during this period (this period being the 60's and 70s?) has eventually led to a widespread societal belief that large businesses have a duty towards ensuring the betterment of society (Banner, 1979).
The power and influence of corporations, actual or perceived, and the impact of their economic, social and political actions on society in general, has led to a broad societal expectation that corporations be held accountable for their actions. Simply put, there is growing public sentiment that organisations must be responsible enough to weigh the impact of their decisions on the different parties involved. As a result, they must be able to eliminate, minimize or compensate for the harmful damages that they may inflict on society. The above mentioned justification is basically derived from a moral position that corporations are expected, and should, behave like any citizen in society. This expectation is also justified on the basis that corresponding responsibilities always accompany power. As Dodd (1932) asserts, “power over the lives of others tends to create on the part of those most worthy to exercise it a sense of responsibility.”
Moreover, the increasing power of organisations has resulted in a societal expectation that corporations act proactively and at the same time, carry out a leadership role in order to provide solutions to problems that the world faces (CSR Survey, 2003). This means that given that organisations frequently have more resources than governments, they should give something back to the society. In the same manner, they are also called to allocate and offer some of their resources to carry out good works and help the less fortunate sectors of society.
Overall, this CSR goal is justified as follows: initially, a societal need is identified. For instance, areas such as education, healthcare, low-income housing or the arts may require funding that cannot be generated privately or that government is unable to provide to enable these institutions to continue making goods or services available or even to exist. Second, corporations are identified as capable of filling the gap by providing either funds or infrastructure to address the need. In other words, an appeal to organisations is made because they frequently have the capacity, in accordance with their size and reach, to act as agents of “social progress” (Kahn, 1997).
As repeatedly mentioned earlier, corporate social responsibility has been required of companies that have both, actual or perceived power and influence. This is why multinational corporations that operate parts of the globe where people fear the effects and consequences of Globalisation are expected to perform such duties. This, according to Zinkin (2004) is usually brought about by the fact that these corporations are usually seen as enemies rather than friends. Thus, to regain the trust and confidence of the people, the company must be able to make their social responsibility known as this is said to give them legitimacy to operate in a given country (Zinkins, 2004).
2.2 Literature Review
In order to gain a better understanding of the concepts and principles of CSR, the review of literature is divided into the following sections:
1. Corporate Social Responsibility: Definitions and History,
2. Corporate Social Responsibility and the UK Food Retail Industry, and
2.2.1 Corporate Social Responsibility: Definitions and History
Globalisation, the increasing influence of companies including small and medium enterprises, a change in the position and opinion of governments, and a paradigm shift in working with and appreciating the importance of building solid relations with stakeholders- are all factors that have contributed to changing the dynamics of the relationship between businesses and society. Businesses have always been mindful of their responsibilities towards society. The concept of companies sharing their resources and influence with other groups has been repeatedly spoken about for centuries (Bowe, 1953).
Nowadays, companies have become more aware and mindful of their responsibilities, roles and rights towards the society. They are seen to have implemented activities, practices and guidelines in order to fulfill their legal, ethical, social and environmental responsibilities to stakeholders, which include shareholders, employees, customers, suppliers and the environment and society in general. These actions have been given many terms, including: (1) Corporate Responsibility or CR, (2) Corporate Social and Environmental Responsibility or CSER, (3) Corporate Citizenship, (4) Corporate Accountability, and lastly, (5) Socially Responsible Business (SRB) (Raynard & Forstater, 2002). However, the most famous terminology would have to be Corporate Social Responsibility or CSR.
CSR first began to be written about by academics in the 20th century. The term Corporate Social Responsibility and the modern view on CSR are largely attributed to Howard Bowen, who is considered by many scholars, especially Carroll, as the father of CSR. Bowen conceived CSR as an integral part of a larger vision of a better American society with a robust and socially responsible business sector. Before Bowen wrote his book in 1953, CSR was not a generally accepted practice among businesses in the United States.
Carroll (1991) writes that in the early years, businesses believed that their only obligation was to their shareholders and their only function was the quest of financial improvement in order to provide the greatest financial return to their shareholders. The errors of this way of thinking soon became apparent. For one, businesses still had to work within laws set down by governments. In the 1960s, groups advocating social issues pushed for a more extensive concept of responsibilities for businesses. In the 1970s, various organisations in charge of the social issues pushed by the activist groups were created in the U.S. Some of these organisations were the Environmental Protection Agency (EPA), the Equal Employment Opportunity Commission (EEOC), the Occupational Safety and Health Administration (OSHA), and the Consumer Product Safety Commission (CPSC). These governmental organisations allowed the establishment of national public policy that now acknowledged the legality of environmental issues. The new policies forced businesses to re-examine their own strategies and to learn how to develop a balance between making a profit and the legal and ethical responsibilities placed on them by a widening range of stakeholders.
For Bowen (1953), businesses become prominent in society because society needs the products and services provided by these companies. This grants businesses vital decision-making power in the way they affect the lives of many people. Therefore, for a balanced business-society relationship to continue, Bowen (1953) asks what responsibilities society can reasonably expect businessmen to assume. The answer to this question, Bowen states, is corporate social responsibility. He defines CSR as a social obligation that necessitates businessmen to engage in policies, formulate decisions, and implement actions that are considered desirable when connected with the objectives and values of society. He took a broad view when defining what business responsibilities include—responsiveness, stewardship, social audit, corporate citizenship and rudimentary stakeholder theory.
Bowen's concept of a mutual relationship between business and society is echoed by Porter and Kramer (2006), who point out that the value of CSR lies in the values companies share with societies they exist in. Businesses operate in social contexts and societies need the products and services that businesses provide, thus there is a mutual need for each entity. CSR, therefore, makes it possible to promote a collaborative relationship between business and society.
Many have tried to create a definition of corporate social responsibility that encompasses its functions and the range of responsibilities it entails. One of the most comprehensive is that of the World Business Council for Sustainable Development (2007), which defines CSR as the long-lasting commitment that businesses create which compels them to behave in an ethical manner and to add to the development of the economy while helping improve the quality of life of their employees and their families in addition to the lives of those in the local communities and society in general. This definition is specific enough to imply the holistic and philanthropic maxim of CSR. It is also broad enough to include activities or programs that companies engage in that do not directly yield income but bring visible and long-term benefits to both the companies and the recipients of the programs and activities such as youth and partner communities. With this definition programs such as scholarships and funds for research, advocacy programs for the environment, and livelihood programs can be considered as CSR.
One of the earliest authors on CSR, Carroll (1979) was the first to propose the four categories of ordered layers of CSR—economic, legal, ethical, and discretionary—when he wrote that the social responsibility of businesses includes the economic, legal, ethical, and discretionary expectations that society puts upon enterprises.
Aupperle, Carroll, and Hatfield (1985) further defined these categories into:
* Economic responsibilities showcase the principle that businesses have the primary responsibility to generate products and profits and fulfill the desires of their customers;
* Legal responsibilities highlight the issue that economic responsibilities must be performed within the restriction of rules and regulations as mandated by the laws of the land;
* Ethical responsibilities takes into consideration the codes, norms, and values that are not written into laws but are still followed implicitly by society; these responsibilities rise above the complexities of written laws and encompass activities that are vigorously carried out without any clear and defined statements made about them;
* Discretionary or philanthropic responsibilities reflect the voluntary nature of actions that are not easy to establish and assess, but are still expected by society.
These categories are still widely cited and frequently reproduced in management and CSR journals by researchers and authors on CSR. The reason for its lasting acknowledgement may be the simplicity of the model. Carroll's (1979) categories are logical and easy to understand. The author himself writes that these categories are merely guidelines or reminders that the motives or actions of businesses can be generally classified into any of the categories he presented. The arrangement and relative influence of each category was intended to imply the basic role each had in the progression of significance. When it first came out, Carroll's model reflected a point of view that was simultaneously retrospective and developmental. It was based on the assertion that historically businesses first emphasised only the economic aspects of their trade. The legal aspect came next, and the ethical and discretionary were only emphasised in recent years.
Juholin (2004) suggests that companies practice corporate social responsibility (CSR) because of long-term profits that CSR brings to companies. Other reasons may also include the commitment of top management to the moral and ethical standards promoted by CSR, competitiveness of the market today, and the visionary skills of many business leaders that allows them to anticipate the needs of the future.
Porter and Kramer (2006) agree that CSR provides long-term profits. The authors note that companies should practice CSR and integrate it in their core strategic plans to ensure long-term prosperity. This is because socially responsible activities can return goodwill for companies. On the other hand, activities that harm the environment or result in any disadvantage to stakeholders can only result in bad karma in the form of bad financial operation, low brand positioning, and, worse, a rift in the relationship between companies and their consumers and suppliers and even expensive litigations. Porter and Kramer (2006) write that corporations are not obligated to solve the problems of the world. They do not have resources to do this. But, a company that is well managed can have a greater impact than any other organisation or charity group when they do something good for society.
CSR does not merely imply profitability for companies. Its results go beyond the costs or constraint of altruistic actions. CSR can be a source of market opportunity, improvement, and an edge over the competition (Porter & Kramer, 2006). It also does not mean engaging in activities for the sake of doing what is socially required and expected of these companies based on legal and social laws, especially those on environmental issues. CSR implies taking action to go beyond these laws to minimize any harm towards and maximize benefits for all stakeholders in order to fulfill what society desires (Raynard & Forstater, 2002).
Warhurst (2001) identifies three major elements of CSR—product use, business practice, and distribution of profits. Product use entails the positive involvement of products from businesses that assist in the promotion of welfare and better quality of life for members of society. Business practice entails business governance that observes the rules and regulations and presents a high level of thrust towards welfare of the natural environment and equity for all generations and species. Distribution of profits entails equal distribution of profits across a varied range of sectors of society, with emphasis on local communities.
Bowen (1953) also notes that CSR should not be seen as a primary solution to the many problems of society. CSR can only do so much, and it should only be seen by companies and society as a set of guidelines for businesses in the way they perform and carry on their operations within the context of a larger society and the many issues that abound within the social milieu that they operate in.
A key concept of CSR is the idea of stakeholders. Stakeholders are all groups or individuals who have an impact on or are affected by the attainment of any organisation's goals (Freeman, 1984). It can be said that stakeholders are any entity who have a big “stake” in what businesses do. The concept of stakeholders therefore goes beyond the shareholders, employees, and clients or customers of a company. It includes communities, public interest groups, social activist groups, environmental groups, and the media which, according to Freeman, author of the Stakeholder Theory, businesses are accountable to.
Other researchers (Marcus, 1996; Munilla & Miles, 2005) list specific stakeholders as: owners; customers; employees; local, regional and national communities; competitors; suppliers; social activists; public at large; creditors; non-government organisations (NGOs); and even the natural environment, which, although unable to state its opinions, has become a major stakeholder today because of the many laws promulgated to care for the Earth in a sustainable way.
Hopkins (2003) writes that CSR primarily deals with ensuring that businesses treat stakeholders in an ethical or responsible way which means treating them in a manner considered suitable by members of any civilized society. The social context of this definition includes economic responsibility. Stakeholders can be both within businesses and outside it. This signifies the natural environment as a stakeholder. In a broader sense, the objective of social responsibility is to establish better and higher standards of living while maintaining the capability of businesses to make a profit. These two components of the objective of social responsibility are both done for the stakeholders within and outside companies.
According to Freeman (1984) for successful transactions with stakeholders, businesses must accept the authority and procedures of various stakeholders. Stakeholders will thus have the freedom to communicate their concerns. Furthermore, to manage and develop a strong relationship with stakeholders, businesses must understand their concerns and develop programs that will address these concerns. Stakeholders have various ways to ensure that businesses fulfill society's expectations. Some may opt to organize rallies, some may opt for more peaceful negotiations, some may engage in joint activities such as seminars or tree-planting sessions or other awareness raising activities, and some may use the media to further disseminate their issues. For example, the environmental group Greenpeace printed leaflets and wrote articles against genetically modified food, which led some food manufacturing corporations to either stop production of certain products or to develop new, healthier items.
Freeman (1984) points out that the term “stakeholder” first appeared in management literature in a 1963 international memorandum published by the Stanford Research Institute. The term then was strictly yet broadly defined as the peoples or groups who give their support to companies and without whom businesses would stop to surviving. The main idea in this initial context already shows a measure of the importance of stakeholders. In a way, this definition states that without the support of stakeholders, businesses would not be able to survive. Of course, the limitation of this definition lies in the fact that stakeholders here may mean only the groups that are influential for companies such as the shareholders or government groups or investors.
Each business activity has a different group of stakeholders. This is because each individual in society is interested in and promotes a varied and widely different range of concerns (Freeman, 1984). Some are more interested in environmental issues, while others advocate employment benefits, and still others fight for education. One way to determine which stakeholder is relevant to which particular aspect of business is through the generation of a generic stakeholder map, which is a diagram of the various groups relevant to the whole organisation broken down into levels and subdivisions in order to divide big groups into small groups based on specific interests. Some experts, however, think that this mapping procedure does not encapsulate the complex linkages between businesses and the various individuals and groups in society.
An approach of corporate social responsibility that centers on stakeholders emphasizes the strategic and effective management of relationships and promotion of what Freeman and McVea (2001) call shared interests. The stakeholder model also puts some emphasis on persuading businesses to rebuild or restore relationships with groups or organisations that they have been at odds with. A good stakeholder management program also involves open communication, negotiation, management, and motivation. The end result of all of these actions leads to the establishment of an attitude of partnership, mutual association and interdependence between businesses and stakeholders. All of these activities are held together by the values and ethical standards that businesses stand for.
Freeman and McVea (2001) further emphasise that good stakeholder management promotes a business' own company values. CSR does not mean catering to the interests of stakeholders while abandoning all other aspects of business. Rather it entails in-depth deliberations taking into account all factors of social expectations. A well-developed stakeholder management program also allows businesses to create approaches that can serve stakeholders even in the long run. Although some individuals may not be happy with short-term decisions and feel that their causes need more attention, a good stakeholder management program takes all things into considerations so that all stakeholders, not just a chosen few, continue to be firm supporters of businesses.
Besides understanding stakeholders' concerns, businesses must also look at the other components of CSR to determine the entire range of responsibilities that stakeholders expect them to embrace. When discussing and identifying these components of CSR, scholars and authors have been turning to the CSR pyramid presented by Carroll (1991). The CSR pyramid is arranged to follow the levels of Carroll's (1979) earlier work of the four categories of CSR. The arrangement is in accordance with the degrees of social expectations that have been connected with each category. It has been used to assess businesses performance in terms of quantity, quality, effectiveness, and efficiency in their implementation of CSR initiatives.
Table 2.2.1 The Pyramid of Corporate Social Responsibility
Be a Good Corporate Citizen
Contribute Resources to the community; Improve Quality of Life
Obligation to do what is right, just and fair; Avoid Harm
Obey the Law
Law is Society's codification of right and wrong; Play the Rules of the game
The Foundation on which all the others rest
(Source : Pyramid of Corporate Social Responsibility (Carroll, 1991, p. 39))
Obligations or responsibilities included in the pyramid have always existed in the business world. But the importance of philanthropic and ethical responsibilities has only received attention in recent years. Through this pyramid, Carroll (1991) hoped to show that a good CSR program can be broken down into well-defined components that make up a complete package. It can be seen as a framework for comprehending companies' ever-evolving CSR activities. In addition, looking at each component can help leaders to distinguish and understand the various obligations of businesses that are in constant conflict with each other but which are mutually exclusive. Based on the expected activities for each level, economic responsibilities seem to be always in tension with the other responsibilities.
Carroll (1991) also included the concept of stakeholders in this model, pointing out that taking their perspective into account would allow businesses to recognize the tension between all levels of the pyramid as realities of any organisation. This perspective can also allow businesses to see the pyramid as a united basis or framework of how firms will implement their decisions, actions, and programs.
As can be seen, economic profit forms the foundation of the whole pyramid. Carroll (1991) acknowledges the basic fact that businesses were created historically as economic entities that are primarily concerned with making money and creating profit. Without this component, all other responsibilities become moot. Carroll states that the idea he was proposing was that CSR, to be acknowledged as a legitimate action for businesses, had to deal with the whole range of responsibilities these businesses had to answer for to society. Of course this would have to include the most basic responsibility—economic. The next level shows that businesses are obligated to follow the rules of law—various national and international laws—that society has laid down to brand businesses good corporate citizens. By performing their obligations at this level, businesses are already partially fulfilling their social contract with society. Legal responsibilities point to the rules codified into law while ethical responsibilities, the next level of the CSR pyramid, take into account the standards of moral conduct and norms that society expects businesses to follow even though these have not been codified into law. The last level, philanthropic responsibilities, involves voluntarily sharing resources to and helping improve the quality of lives of various stakeholders through charitable activities.
Many companies feel that by contributing financial aid to communities, they are already performing their roles as good corporate citizens. However, by separating ethical and philanthropic responsibilities, Carroll (1991) was able to show that philanthropic programs are just a part of the bigger picture. CSR is not limited to donations, but to the values that businesses advocate and stand for, and to the ethical standards that companies adhere to and strategically implement in their core programs. In a sense, charitable projects can be said to be just the tip of a much larger and more important base of social responsibilities.
According to Cooke (1997) "the only proper goal of the managers of a business is to maximise the owner's wealth while acting legally, ethically, morally and honestly". In contrast, the modern stake holder theory asserts that companies have more groups to satisfy (stake holders), rather than solely meeting the interests of share holders (Friedman, 1970). Several law suits and cases against companies in modern times highlight the consequences of not meeting stake holder needs. This in turn also throws light on the fact that companies' CSR activities are a consequence of stakeholder pressure. On a broader level, inability to meet consumer expectations could result in inability to retain customer loyalty with consumers consequently shifting to other companies in the market. Taking both the wealth creation and stake holder theories into account, it can then be argued that the rational for companies engaging in CSR activities is fulfilling social expectations with the underlying goal of profit generation shaping these activities.
With regard to how CSR can enable improved business performance, the societal marketing concept can be used to describe the relation. The foundation of the societal concept is built on the philosophy that "what is good for society is ultimately good for business as well" (Kotler and Zaltamn, 1971). The societal marketing framework enables marketers to generate a balance between profitability and social interests based on the view that economic benefits are important for the organisation but not at the expense of the interests of society and customers.
In line, another rational of companies engaging in CSR activities has been brought forward by Lantos (1999) who states that for many organisations CSR fulfils a public relations role rather than represent true corporate philanthropy. Waddock and Graves (1997) contends that CSR can build the firm's corporate image and when strategically managed can prove profitable for the company. In addition, CSR can enable competitive advantages for companies that proactively respond to customer expectations as researches indicate that most companies incorporate CSR only when the need is enforced by industry or government standards. Summing up all the above views, it can then be understood that, in situations where ignoring social responsibility can prove detrimental for organisations, the money making objective of businesses is bound to surface. This in turn questions the very essence of CSR, i.e., organisation's social responsibility being true corporate philanthropy or not.
However, the theory that the rationale behind companies' exercising CSR is related to improved business performance; is contradicted by Goldreyer and Diltz (1999) whose research findings indicate that there is no difference in performance levels in between companies that exercise CSR and those that do not. The argument is supported by Balabanis et al (1998) who found that the relation between CSR and business performance is enhanced by communication of CSR practices. In other words, just because a company behaves socially responsible does not imply obvious improvement in economic performances. In order to derive financial gains, it is crucial for companies to create awareness by communicating their CSR activities to stake holders.
2.2.2 Corporate Social Responsibility and the UK Food Retail Industry
UK food retailers have been at the forefront of companies that have exhibited proactive socially responsible behaviour on several occasions. Chase (1991) notes that enabling corporate goodwill and the enhancement of corporate image at a low cost is the rationale behind these activities. Environmental issues are among the most significant issues that retailers have responded to. In fact today, environmental performance has become an industry standard, alongside other significant customer issues. However, Strong (1995) notes that even though all food retailers respond to environmental concerns today, the level of response varies greatly. While some major retailers respond proactively, others only respond to rules set by the industry or government. Furthermore, it can be argued that environmental issues are an obvious area for companies to exhibit social responsibility, and actual behaviour levels (whether proactive, reactive or non active) can be determined by studying companies' CSR activities in other socially beneficial areas. For example, Tesco opening up stores in remote areas of UK with the aim of providing customers (even though few in number) easy access, points in this direction. However, most companies do not proactively engage in such activities which are socially beneficial. The differences in the manner and extent to which retailers incorporate CSR activities, has often been related to corporate resources.
According to Mitchel (1989), large enterprises tend to respond more proactively to social responsibilities as they have greater resources and can benefit from the resultant goodwill and enhancement of corporate image that the company gains, in comparison to smaller retailers. The argument that financial resources are a major determinant of companies' exercising CSR is further highlighted by the fact that almost all research on CSR is based on large enterprises. Practical evidences supports this theory.
In the context of the current global recession, a recent survey conducted by Cost Sector (2009) showed that cost reduction emerged as the top priority of retailers in the UK food industry, a position enjoyed by CSR previously. Respondents to the survey revealed that not only has the priority of CSR fallen significantly, but also companies are looking at cutting down investments in their CSR activities as a part of their cost reduction strategy. The above argument in turn raises the question of whether CSR is truly a response to social expectations or rather simply a function exercised when times are favourable and resources available.
2.2.3 Summary of the Background and Literature review
The effects of Globalisation have contributed in changing the dynamics of the relationship between the businesses and the society. Companies become more aware and mindful of their responsibilities, roles and rights towards the society. These actions have been given many terms, the most famous being Corporate Social Responsibility or CSR.
The term Corporate Social Responsibility and modern view on CSR are largely attributed to Howard Bowen, who is considered by many scholars, especially Carroll, as the father of CSR. Bowen conceived CSR as an integral part of a bigger vision of a better American society with a robust and socially responsible business sector.
One of the most comprehensive definitions of CSR has been given by the World Business Council for Sustainable Development (2007). It defines CSR as the long-lasting commitment that businesses create that compels them to behave in an ethical manner and to add to the development of the economy while helping improve the quality of life of their employees and their families in addition to the lives of those in the local communities and society in general.
One of the earliest authors on CSR, Carroll (1979) was first to propose the four categories of ordered layers of CSR—economic, legal, ethical, and discretionary. These categories are still widely cited and frequently reproduced in top management and CSR journals by many researchers and authors on CSR up to this day.
A key concept in CSR is the idea of stakeholders. Stakeholders are all groups or individuals who have an impact on or are affected by the attainment of any organisation's goals. The term then was strictly yet broadly defined as the peoples or groups who give their support to companies and without whom businesses would stop to surviving. (Freeman, 1984)
Summing up all the above views, it can then be understood that, in situations where ignoring social responsibility can prove detrimental for organisations, the money making objective of businesses is bound to surface. This in turn questions the very essence of CSR, i.e., organisation's social responsibility being true corporate philanthropy or not.
UK food retailers have been in the forefront of companies that have exhibited proactive socially responsible behaviour on several occasions. Chase (1991) notes that enabling corporate goodwill and enhancement of corporate image at a low cost is the rationale behind these activities.
2.2.4 Aims and Objectives
With improved business performance being attributed to CSR activities, companies' motivation to exercise CSR as a response to society's expectations is questionable. The main purpose of this research is to establish the extent to which the increased priority of CSR is in actuality a reflection of companies acting to meet the interests of society or simply a means for generating profits in a marketing oriented way. In this regard, the research aims to explore CSR behaviour in depth and in turn aims to establish companies' rationales for CSR behaviour. Results will be derived by studying CSR practices in the UK food retail industry.
Research Questions and Objectives
The most important question that this research aims to address is: Have companies changed their priorities in response to society's changing expectations? In line with the main research question, other significant questions include: Are the traditional priorities of profit generation and wealth creation still the main priority for companies? Is CSR a part of companies' marketing strategy for improving business performances? What factors lower the priority for CSR in companies? How is the UK food retail industry defining and interpreting CSR? What are the CSR activities incorporated by food retailers in the UK currently? How effective are companies' CSR activities in dealing with social issues? How can CSR's contribution to business performance be measured? What are the risks of CSR?
From the research question, the objectives of the research have been derived. The three main objectives of the research are summarized below -
1. To examine the changing nature (or role) of CSR in the UK food retail industry.
2. To establish the motivation and rationales behind proactive, reactive and non active CSR policies.
3. To assess the CSR activities of food retailers and to evaluate the effectiveness of CSR activities in fulfilling social expectations.
Chapter 3: Methodology
3.1. Research Design
With the study aimed at developing theories (with no pre-set notions about the outcomes), the nature of the research can be termed as exploratory. The approach would enable familiarising with the subject and in turn developing ideas throughout the research process. A mixed methodology with both qualitative and quantitative methods of data collection and analysis will be used in the research. According to Das (1983), "qualitative and quantitative methodologies are not antithetic or divergent, rather they focus on the different dimensions of the same phenomenon", highlighting the fact that quantitative and qualitative methods are complementary and provide better results when used together with research.
Both primary and secondary data collection methods will be employed for gathering data. Review of related literature will form the foundation of the research. The various theories in relation to CSR behaviour rationales will shape the arguments of the research and will also form the guideline for devising the survey and interview questions. Secondary research on consultancy surveys, articles and company documents will be conducted in order to understand the trends in the UK food retail industry, with particular focus on CSR activities in the sector.
Qualitative content analysis will be used for analysing the contents of food retailers' websites pertaining to CSR. The sample frame for the content analysis comprises of the UK food retailers with websites that address CSR. The sample frame is expected to be small (estimated at 20 companies) and hence, all the websites in the sample frame will be content analysed. Content analysis of websites will be conducted in a two step process. Firstly, the sections of the websites referring to corporate and society relationships will be examined. The consequent data obtained will be statistically analysed (since the sample size is small, Excel spreadsheet will be used) in order to derive relationships between frequencies of CSR dimensions and organisational characteristics.
Store Audits will be conducted in order to identify the CSR practices and extent to which they are exercised by different food retailers. Owing to time and other practical constraints (of obtaining an accurate list of all the food retailers and issues of accessing these stores) only major retailers will be included in the sample. CSR practices at the stores will be assessed based on several dimensions of CSR. The data gathered will then be statistically analysed in order to position each store on its level of social responsibility (proactive, reactive and non active).
In-depth formal interviews will be conducted with key decision makers with the goal of obtaining information on CSR activities, relation to business performance and rationales, in a relatively quicker manner. Compared to other data collection approaches, the interviews will involve a very small sample (around 3 to 4) owing to accessibility issues. The questions to be covered during the interviews will be devised in advance.
The fourth data collection method and the one with the largest sample size will be the questionnaire survey. The UK consumer population is the population of interest for the survey. The goal of the survey is to understand consumers viewpoint on food retailers' CSR activities and to what extend a company's socially responsible behaviour can influence consumers' buying behaviour. Considering the size of the population and the research constraints, the final sample was thought to comprise of 100 people. Thus the sample cannot be considered large enough to be accurate. However, special care will be taken in ensuring the data collected to be as representative of the population as possible. The data collected will be stored using SPSS (v16.0).
Grounded theory approach developed by Glaser and Strauss (1967) will be used for analysing the qualitative data. Grounded theory as the name suggests, implies, theories are generated from and grounded in data. In other words, by closely examining the data repetitively, the researcher develops theories. The method is suitable considering the exploratory nature of the research.
Chapter 4: Results
As mentioned in the methods section, both primary and secondary data collection methods have been employed in order to gather data. Qualitative content analysis was used in order to analyse the contents of the food retailers' websites which pertain to initiatives regarding Corporate Social responsibility or CSR. Apart from this, in-depth formal interviews were also conducted with key decision makers with the goal of obtaining information on CSR activities, relation to business performance and rationales in a relatively quick manner. For the ease of analysis and interpretation of data the results are divided into sections which reflect the data obtained from the each method of data collection.
4.2. Corporate Social Responsibility: A Qualitative Content Analysis Approach
The following food retailers were evaluated by the researcher using the Qualitative Content Analysis Approach: (1) Tesco, (2) Sainsbury's, (3) ASDA (Wal-Mart USA); (4) Morrison, and (5) Somerfield.
The first website evaluated was that of TESCO. According to the portion of the company's website which had been devoted to the presentation of their statements with regard to CSR, the company is committed to their customers, staff, community, suppliers, property and environment. According to TESCO, their core purpose and values are of paramount importance to their company as it plays a part in defining the way they do their business, the manner by which they treat their customers, their people, each other and their suppliers. These strategy and values help define their responsibilities to the communities where their business operates and create the culture and environment in which their business strategy continues to deliver strong results. Thus, these responsibilities are evident with regard to their philosophy of “Every Little Helps (Tesco, 2009).”
The main policy objective of TESCO with regard to corporate social responsibility is to earn the trust of their customers by acting responsibly in the communities they serve. They continuously recognize their impact on society at all levels and work to maximize the benefits they bring. Table 4.2.1 briefly summarizes the values that are reflected in the Corporate Social Responsibility Initiatives of Tesco.
Table 4.2.1 Values reflected in the Corporate Social Responsibility Initiatives of Tesco
No one tries harder for customers
· Understand customers better than anyone
· Be energetic, be innovative and be first for customers
· Use our strengths to deliver unbeatable value to our customers
· Look after our people so they can look after our customers
Treat people how we like to be treated
* All retailers, there's one team… The Tesco Team
* Trust and respect each other
* Strive to do our very best
* Give support to each other and praise more than criticize
* Ask more than tell, and share knowledge so that it can be used
* Enjoy work, celebrate success and learn from experience
Thus, TESCO is concerned with the provision of exemplary service to their customers and committing all the members of the organisations to work towards the attainment of the said goal. However, they are also committed to the society, their suppliers and the environment. With regard to the community, Tesco (2009) stated that they engage themselves in various charity works in order to strengthen their presence in the society. In the same manner, with regard to the environment, the company notes that they are currently adopting practices that are environment-friendly such as the proper waste management, recycling, repackaging and the reduction in the use of regular plastic bags.
The second company evaluated was J. Sainsbury PLC. According to the official website of Sainsbury, their CSR initiatives are focused on the following key commitments: (1) best for food and health, (2) sourcing with integrity, (3) respect for the environment, (4) making a positive difference to the community, and lastly, (5) promoting an environment of a great workplace. With respect to the first commitment, the company states that it has always been their goal to offer their customers with great quality food at fair prices. Hence they make it a point that while they make efforts in order to sell their goods at fair prices, they provide them with the best food and health which inspire customers to eat a healthy balanced diet through the promotion of healthy eating and active lifestyles (J Sainsbury PLC, 2009).
Another aspect wherein Sainsbury focuses on is sourcing with integrity. According to Sainsbury, this is of paramount importance to their ability to deliver great products at fair prices. This means that they are working properly with their suppliers in order to guarantee the sustainability of their products in the round, making sure that they give consideration to their economic, environmental and social impacts (J Sainsbury PLC, 2009).
Sainsbury also gives importance to the environment. According to them, they make it a point that they take environmental issues seriously by becoming responsible to the manner by which they run their business and to make it easy for their customers to be responsible towards the environment as well (J Sainsbury PLC, 2009). Apart from this, the company also exhibits efforts in order to make a positive difference to their communities. In general, initiatives pertaining to this focus on the provision of quality service and products to their customers. In addition, they also ensure that their strategies are devised in such a way that they wanted to make a difference to their communities by being a good neighbour. This includes initiatives such as the provision of employment using local suppliers and contractors and the regeneration of the local surroundings (J Sainsbury PLC, 2009).
The last value embedded in the corporate social responsibility program of J Sainsbury PLC was their commitment to provide a great workplace. According to them, the provision of a great workplace is deeply rooted in their heritage and values. In fact, they believe that this plays a crucial role in the achievement of their business goals. This is generally due to their reliance to the members of their workforce to make sure that they render exemplary service to their customers every single day (J Sainsbury PLC, 2009).
4.2.3. ASDA (Wal-Mart USA)
The third UK food retailer evaluated was ASDA UK. According to the website, ASDA's approach to corporate social responsibility can be summed in three words: people, prices and planet. With regard to people, ASDA (2008) highlights the importance of listening to their customers and their colleagues in order to make it easier for them to act on the things that matter (i.e. the promotion of fair trade, reduction in packaging and the support of local farmers). On the other hand, with regard to prices, ASDA UK asserts their continuous support to the growers and producers in order to facilitate the creation of a range of naturally affordable products and through offering healthier choices that care for the environment as well. The last aspect of their corporate social responsibility initiatives is planet wherein the company renders is planet which is notable with the steps they have undertaken like increasing energy efficiency, cutting road miles and sending zero waste to landfill (ASDA, 2008).
The fourth food retailer evaluated for this dissertation was Morrison's Supermarket. Just like the previously discussed food retailers in the United Kingdom, Morrison's approach to corporate social responsibility is also consistent with their vision and values and at the same time, reflects sound commercial thinking. These strategies are focused on the following aspects: (1) the environment, (2) the society - shoppers, colleagues and communities; and lastly, (3) taking good care of the effects of their businesses. In relation to the environment, the company ensures that they are constantly eliminating their production of carbon and other wastes. However, with regard to society, the company ensures that they are taking good care of their shoppers, their colleagues and their communities. Lastly, the company also gives importance to sourcing, sustainable supply and their engagement with stakeholders as an essential aspect of how they take care of how they go about their businesses (Morrison's Supermarket, 2009).
The last UK food retailer that was subject to the analysis of the research was Somerfield. Somerfield is generally committed to becoming a nearby local store wherein the customers could find their daily needs. However, they also make sure that they give something back to the community through the operation of charity initiatives. At the same time, Somerfield is also committed towards the reduction of the waste they produce in order to ensure the safety of the environment (Somerfield Stores, 2009).
4.2.6 Summary of the content analysis
The analysis presented above shows that the UK food retailers analysed tend to focus on the following aspects in order to guarantee the success of their initiatives with regard to corporate social responsibility: (1) the customers, (2) their employees, (3) the community, and (4) the environment. The strategies employed by the companies are considered to be of paramount importance in a sense that it guarantees the companies of the proper operations of their businesses and at the same time, renders efficient customer service and products of high quality.
4.3. Interview with Decision Makers
Interviews were conducted in order to determine the manner by which corporate social responsibility initiatives influence the business decisions of the heads of the organisations most especially with regard to their operations as well as the other activities of their businesses. Table 4.3.1 presents the answers of the interviewees to the first question asked: How can you briefly describe the initiatives you adopt with regard to corporate social responsibility?
Table 4.3.1 Brief Description of Initiatives adopted with regard to Corporate Social Responsibility
Interviewee 1: Our initiatives related to corporate social responsibility is basically devoted in order to ensure that our customers are getting the most out of their money because of the value of the products that we offer to them. Apart from this, we also make it a point to give paramount importance to waste management in order to reduce the waste we emit… Through this we become more responsible to our environment. We also participate in charitable activities wherein we donate part of our profit to these institutions in order to give back to the society. In addition to this CSR is also evident in our workplace in a sense that each employees is made to feel that he or she is an essential part of the organisation. Thus, we provide them with a work place that is responsive to their needs.
Interviewee 2: We focus our CSR initiatives to giving the best to our customers, with respect to both the products and services that they obtain from us. Apart from this, we also make sure that we are a good neighbor in the society by reducing our negative impacts. We also render services to charitable institutions. We participate in the fight against climate change, global warming and the like…
Interviewee 3: Our CSR initiatives help us focus in our business operations. It is through this that we build a better name for our organisation. We give what our customers want. In turn, they remain loyal to us… we provide them with high quality services and products…. We give back to the society. We give importance to the environment by reducing our use of plastic bags and resort to paper bags instead…
Interviewee 4: Our CSR initiatives are focused on the following aspects: the customers, the society, the employees and the environment. We ensure that we remain committed to the said aspects… by giving them what they want, need and basically, giving back to the society…
From the answers of the respondents to the interview questions, one can see that corporate social responsibility initiatives of members of the UK Food Retail Industry tend to be divided into three aspects, namely: (1) those which are aimed towards the customers, (2) those that are adopted for the protection and preservation of the environment; and lastly, (3) those that show their responsibility as the member of a society (i.e. charitable activities). Also the interviewees established the importance of their CSR initiatives to their business operations in a sense that the former enables them to be mindful of their duty to the society whilst they conduct their business operations.
It is then in relation to this that we looked into the rationale behind the initiatives adopted by the members of the UK Food Retail Industry in relation to corporate social responsibility. The answers to this particular question what are the common rationales behind your CSR initiatives? These are presented in Table 4.3.2 below.
Table 4.3.2 Rationale behind CSR initiatives
Interviewee 1: The rationale behind our corporate social responsibility initiatives is related to the need to establish a better name for our organisation…. To gain the trust of our customers with what we are doing to ensure that they remain loyal to our business so that they would continue doing business with us. We also desire to give back to the society. We recognize the fact that we are indeed an important part of the society in such a way that we must be able to show that we care and become responsible for our ways. Once again, this is important in maintaining the trust given to us by our customers.
Interviewee 2: Our CSR initiatives are built upon the rationale that these are important in maintaining our customers' trust. It is also of great importance in terms of building a good image of our organisation.
Interviewee 3: We establish CSR initiatives based on the rationale that this would help us in establishing the name and image of our corporation. Through this, we may be able to properly enhance the loyalty of our customers to our business.
Interviewee 4: Behind our CSR initiatives is the rationale that these are essential in terms of maintaining the loyalty of our customers to our organisation. In a sense, this enables us to establish a better image of our corporation to the members of the society where we belong in.
The statements show that there is a common rationale behind the UK food retailers' adoption of CSR initiatives and this is to ensure the establishment of a good reputation for their businesses through their programs that are aimed for the benefit of the society and the environment.
Table 4.3.3 presents the responses of the interviewees to the question How important is CSR to your business decisions?
Table 4.3.3 Effects of CSR to Business Operations
Interviewee 1: CSR is important to our decisions in a sense that this helps us in ensuring that all our activities are parallel to our mission and vision statements. Through this, we make business decisions in such a way that we still give great importance to the needs of our customers and at the same time, take into consideration our impact to the society.
Interviewee 2: Our CSR initiatives help us a lot in making decisions, yes. In this manner, we were able to somehow gain a better understanding of how we can properly operate while taking everything into consideration like our impact to the society and how we can satisfy the needs of our customers. Through this, we have the ability to ensure that the goals of the above initiatives are properly met.
Interviewee 3: Our CSR initiatives are important in making business decisions. Usually, we take these into consideration in deciding what is best for our company. For instance, in our operations, we look into our commitment to the customers and to the society before we actually perform our activities. In this way, we are guaranteed tha
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