LEADING THOUGHTS

I just realized that I have quite a few papers in the queue relating to corporate social responsibility (CSR). If there are no objections, I’ll offer super-abbreviated overviews of these articles in this one post. That means you’ll be spared CSR posts for at least another two months. Deal?

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“Is the socially responsible corporation a myth? The good, the bad, and the ugly of corporate social responsibility,” by Timothy M. Devinney; Academy of Management Perspectives; (May 2009; pp. 44-56)

Devinney (Australian School of Business) argues that a socially responsible corporation is a “fundamental impossibility.” He writes that we must be willing to accept the good and bad character of the corporation. “We want the corporation to engage in good social activity, but to be nice and not use it for competitive advantage that forestalls competition. We want managers to act benevolently when making choices about the social investments of corporations, but to do so in ways that align with our conceptions of what is socially right. But all of this is impossible. We must accept that as a social organism the firm will be a complex mixture of virtues and vices that cannot be separated.” Devinney also offers several challenges that will bedevil researchers trying to measure CSR activities.

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“Making the most of corporate social responsibility,” by Tracey Keys, Thomas W. Malnight, and Kees van der Graaf; McKinsey Quarterly (December 2009)

In the ill-defined world of CSR, “smart partnering” is emerging as an effective way to create value for both businesses and society. In these partnerships, business are not seeking to avoid risk or burnish their reputations but instead to improve their “core value creation ability by addressing major strategic issues.” The authors, from the Swiss-based International Institute for Management Development, offer two examples of creative partnerships involving Unilever in India and Kenya. They figure there are three principles guiding smart CSR partnerships: concentrate your CSR, build a deep understanding of the benefits, and find the right partners.

Download this article (registration required)

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Valuing social responsibility programs,” by Sheila Bonini, Timothy M. Koller, and Philip H. Mirvis; McKinsey on Finance (No. 32, Summer 2009)

Companies with environmental, social, and governance (ESG) programs have difficulty linking operational metrics (say, tons of carbon emitted) to real financial impacts, often claiming that such programs are too deeply embedded in the core business to be measured meaningfully. The McKinsey consultants counter that some companies are developing hard data to measure even long-term or indirect value of ESG programs. Some examples:

• Growth: Access to new markets through exposure from ESG programs
• Return on capital: Higher employee morale and lower costs related to turnover or recruitment
• Management quality: Development of employees’ leadership skills and ability to adapt to changing political and social situations by engaging local communities.

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“What matters to managers?: The whats, whys, and hows of corporate social responsibility in a multinational corporation,” by Esben Rahbek Pedersen and Peter Neergaard; Management Decision (2009, Vol. 47 Issue: 8, 1261 – 1280)

To explore the different managerial perceptions of CSR, the researchers conducted a survey of 159 managers plus interviewed 10 top-level managers in one multinational manufacturer. Most of the managers surveyed consider CSR “the right thing to do,” though a large number also see their company’s CSR initiatives as relating to image and brand. While managers generally feel CSR is well integrated in their company, CSR is of second-tier concern because it is not tied to managers’ bonuses. The authors discuss how the alignment and misalignment of managerial perceptions are likely to affect corporate social performance. One possible benefit of “misaligned managerial perceptions: it can be a source of development and innovation.

photo credit: edmittance

Born in the U.S., the concept of corporate social responsibility (CSR) is now a global phenomenon, with identifiable practices such as certification schemes, reporting standards, and investment criteria. But even though CSR is global, writes Norwegian researcher Maria Gjølberg (U Oslo) in the Scandinavian Journal of Management, it is applied differently across different social, economic, cultural, legal, and political contexts.

Gjølberg set out to measure CSR activity on a national basis. She developed an index of CSR practices in 20 nations by identifying the nationality of the companies that adopted or qualified for major global CSR initiatives. She then weighed the results to correct for differences in the size of the nations’ economies.

The result: the leading CSR nations are Switzerland and the Nordic countries of Norway, Finland, Sweden, and Denmark. Mid-range performers are the UK, Netherlands, and Australia. Just on the positive side are Japan and Canada.

On the negative side of the index (in order from the worst performer) are Greece, Austria, the U.S., Italy, Ireland, Portugal, Belgium, Spain, Germany, and France.

Gjølberg offers two explanations for the high achievers:

“The first country cluster of CSR leaders comprises countries with comparatively strong globalised economies and large proportions of TNCs (transnational corporations), namely the UK, Switzerland, and the Netherlands. One possible mechanism linking TNCs to increased CSR efforts is the fact that these companies are more exposed to the spotlight of watchdogs from NGOs (non-government organizations) and the media.”

The other explanation is that Nordic countries all have strong corporatist traditions, more extensive social and environmental public policies, and strong political cultures that value participation.

What seems clear in Gjølberg’s research is that enthusiasm for CSR has less to do with ethics than with susceptibility to “naming and shaming” and the degree to which business is socially embedded in society.

This is a meaty and accessible article, so if CSR really rings your bell you will want to read the entire paper for excellent background on the topic.

“Measuring the immeasurable? Constructing an index of CSR practices and CSR performance in 20 countries”, by Maria Gjølberg; Scandinavian Journal of Management (2009, 25, 10—22)

If you cannot find this journal in your local library, email me for a copy of the paper: Alan [at] AlanMorantz.com

photo credit: dbersabe