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CSR & Organisational Identification: To Which Extent Do CSR Initiatives Achieve Organisational Identification?

A Theoretical Review Supported by Empirical Testing in Cooperation with 1492 GmbH and NOKIA

Bachelor Thesis 2009 73 Pages

Business economics - Business Ethics, Corporate Ethics

Excerpt

Table of Contents

Table of Figures

List of Abbreviations

1. Introduction
1.1 Question and Objectives
1.2 Methodology

2. Corporate Social Responsibility
2.1 History of Corporate Social Responsibility
2.2 Theoretical and Conceptual Framework of CSR Initiatives
2.2.1 Corporate Social Responsibility
2.2.2 Corporate Citizenship
2.2.3 CSR and CC as Basis for the Understanding of CSR Initiatives
2.3 The Usage of CSR Initiatives To Establish Lasting Stakeholder-Group Relationships With Employees
2.3.1 Basic Ideas of Stakeholder Theory & Stakeholder Management
2.3.2 Identification of Employees as First-Class-Stakeholder-Group
2.4 Intermediate Result

3. Organisational Identification of Employees
3.1 Theoretical and Conceptual Framework
3.1.1 The Emergence of the Concept of Organisational Identification
3.1.2 The Social Identity Approach as Theoretical Ground Work
3.2 The Social Identity Approach Applied to Organisations
3.2.1 Organisational Identification as Specific Form of Social Identification
3.2.2 Dimensions and Foci
3.2.3 Identity and Image of Organisations as Precondition for Organisational Identification
3.3 The Significance for Companies and Individuals
3.3.1 Reasoning for the Interest in Organisational Identification by Companies
3.3.2 Reasoning for the Interest in Organisational Identification by Individuals
3.4 Intermediate Result

4. Corporate Social Responsibility & Organisational Identification: To Which Extent Do CSR Initiatives Achieve Organisational Identification?
4.1 Functional Chain of Organisational Identification
4.2 Processes of the Emergence for Organisational Identification
4.2.1 Affinity
4.2.2 Emulation
4.2.3 Categorisation and Self-Enhancement
4.3 To Which Extent Do CSR Initiatives Achieve Organisational Identification?: Theoretical Reconstruction, Recent Developments in Scientific Research and Discussion
4.4 Intermediate Result

5. Empirical Testing: CSR & Organisational Identification in Terms of a Telecommunications Company

6. Summary and Outlook

References

Sources from the Internet

Table of Figures

Figure 1: The Pyramid of Corporate Social Responsibility

Figure 2: Linking Perceived Organisational Identity and Construed External Image To Strength of Organisational Identification

Figure 3: Functional Chain for the Emergence of Organisational Identification

Figure 4: Bar Chart How Voters Responded To 'Information'

Figure 5: Bar Chart How Voters Responded To 'Identification'

Figure 6: Bubble Chart Combining Both Variables

Figure 7: Table of Combined Results

List of Abbreviations

illustration not visible in this excerpt

1.Introduction

1.1 Question and Objectives

The identification with organisations plays a prominent role in our lives, since “organizations pervade everyday life”[1]. Usually we are born in a hospital, attend kindergarten, school and other educational institutions until most of us start working for a certain company or organisation in order to make a living for our families and ourselves. Furthermore, many people obtain a membership in various sports clubs, advocacy groups, or parties.[2] Individuals are grateful to such organisations and often make determined efforts for their maintenance, owing to their strong bonds towards these institutions.

Recently, companies have also realised that the identification of their employees is a competitive advantage in many ways. Since organisations “become larger, complex and boundary-less, organi­sational identification is viewed as a means for providing cohesion and as key ingredient of or­ganisational success”[3]. Based on findings of Bhattacharya and colleagues the individuals’ identifi­cation with the company results into several positive effects, such as cooperative behaviour, less employee turnover due to higher satisfaction, as well as having strong human capital in terms of knowledge and skills.[4] Accordingly, companies search for drivers that foster positive identifica­tion with the organisation.

One driver that has been discovered is seen in corporate social responsibility (CSR) initiatives of companies. The term ‘CSR’ has received great attention within academic discourses as well as in practice throughout the past decades. CSR is associated with the image that the companies’ pur­pose is more than simply maximising profits. In this respect The Economist notes the following:

”It would be a challenge to find a recent annual report of any big international company that justi­fies the firm’s existence merely in terms of profit, rather than ’service to the community'.”[5]

Another term that is closely related to CSR is that of corporate citizenship (CC). It embraces the notion of business people playing an active role as part of society which is depicted with the help of activities. Whereas CSR is the more academic term referring to the obligation business has to society to respond to social responsibility, CC is rather the managerial term cultivating com­munity-relations such as corporate giving or corporate volunteering. Both concepts shall be the foundation for the understanding of CSR initiatives.

Referring to the ideas of organisational identification (OI) and CSR initiatives introduced above a study by Carmeli and colleagues suggests that CSR initiatives of a company are positively associated with the employees’ identification.[6] Therefore, the paper at hand pursues the following two main objectives:

The first objective is to review the correlation between CSR and OI from a theoretical perspective and attempt to provide insights to the underlying question of the present paper: To which extent do CSR initiatives achieve OI? The second objective is to bridge theory and practice. In addition to the theoretical review an empirical survey in cooperation with a consultancy and a telecommuni­cations company has been carried out in order to broaden the theoretical view from an empirical perspective.

1.2 Methodology

In order to achieve the main objectives of the thesis, methodologically the elaboration will con­tain four steps. The firststep will deal with the concept of CSR, respectively CSR initiatives (chap­ter 2). It starts with outlining the main streams of the CSR concept in both USA and Europe during the past decades (2.1). Then, theoretical and conceptual basics of CSR initiatives will be presented (2.2). Section 2.2.1 will deal with Carroll’s well-known pyramid of CSR, followed by introducing the reader to the more practice-oriented concept of CC (2.2.2). In 2.2.3 elements from both concepts are taken to describe the nature of CSR initiatives in order to establish an underlying understanding for the purpose of the paper. Section 2.3 sketches the usage of such activities to establish lasting relationships with various stakeholders like employees. After explain­ing basic ideas of stakeholder theory and stakeholder management (2.3.1), the prominent role of employees as being a ‘first-class-stakeholder’ will be examined. It will be argued that employees play a crucial role in the firms’ stakeholder environment and that CSR initiatives may trigger off positive effects on behalf of the firm (2.3.2). One such positive effect is seen in building OI with the firm.

As a consequence, the second step will focus on the concept of OI (chapter 3). The purpose is directed to depict a proper understanding of what OI is and why it obtains such useful practical implications for both companies and individuals. Section 3.1 will put forward a theoretical and conceptual framework of OI: Firstly, early scientific approaches will be outlined that describe the nature of identification in the context of organisations (3.1.1). Afterwards the well-known social identity approach (SIA) is discussed, which prevailed as the underlying theoretical framework to explain the concept of OI (3.1.2). Then, in section 3.2 the findings of the SIA are applied to the context of organisations. After defining OI as a specific form of social identification (3.2.1), dif­ferent conceptualisations in terms of dimensions and foci will be displayed (3.2.2). A model by Dutton and colleagues will illustrate in how far the identity and the image of organisations are associated with OI (3.2.3). Section 3.3 answers the question why OI is useful in many respects.

Several reasons will be conducted from two different perspectives, one from the perspective of the company (3.3.1), and the other from the individual (3.3.2).

After that, the third step bridges step one and two (chapter 4). Building on the theoretical analysis of CSR and OI, the purpose of chapter 4 is to provide insights to the core question of the pres­ent thesis: To which extent do CSR initiatives achieve OI? Hence to arrive at suitable results, firstly an understanding of how OI emerges is required. Accordingly, the functional chain will be depicted in section 4.1, which will serve as the underlying model explaining the correlation be­tween CSR and OI. Next, three different approaches will be presented that exist among scientific literature on how (organisational) identification emerges (4.1). In particular these are the pro­cesses of affinity (4.2.1), emulation (4.2.2), as well as categorisation and self-enhancement (4.2.3). Drawing upon the three different processes, the entire functional chain will be reconstructed in terms of discussing the link between CSR and OI (4.3). In addition to the theoretical reconstruc­tion, a theoretical review of the current status among scientific literature will be presented as well as a discussion of practice-oriented studies. Ultimately, some deliberations by the author are re­flected upon (4.4).

Then, the fourth and final step attempts to apply and test the findings of the theoretical analysis to a practice-oriented context (chapter 5). An empirical survey in cooperation with a telecommuni­cations company and a consultancy has been carried out in order to provide additional insights of the theme from another perspective. For reasons of complexity reduction the design of the sur­vey has been simplified to solely two questions that aim to inquire about the employees’ degree of being informed about the a telecommunications company’s CSR initiatives and about the sta­tus of their identification with the telecommunications company community. The results will be presented, discussed and reflected upon.

At the end of the thesis all main aspects of the theoretical review as well as the findings of the empirical testing will be summarised (chapter 6). This will create the basis for a final outlook of the future perspectives in research and practice.

2. Corporate Social Responsibility

This chapter will introduce the reader to the field of CSR. Building upon stakeholder theory, it will also provide reasons, why employees are to be taken into account as a ‘first-class- stakeholder’. Firstly a compact historical overview of CSR will be presented, which will concen­trate on CSR in terms of scientific and political developments in both USA and Europe (2.1). Subsequently it will provide a coherent framework that gives meaning and definition to CSR, the frequently cited pyramid of CSR by Carroll will be outlined (2.2.1). Since CC is the more manag­erial concept and serves best to explain the notion of CSR initiatives, CC will be presented in section 2.2.2. Then, the two concepts of CSR and CC will be demarcated from each other and a preliminary understanding of CSR, respectively to CSR initiatives, will be displayed (2.2.3). Thus, section 2.3 will reveal the prominent role of employees as being a ‘first-class-stakeholder’. Ac­cordingly, the elaboration will start with introducing basic ideas of stakeholder theory and stake­holder management (2.3.1). On that score it will be argued that employees play a crucial role in the firms’ stakeholder environment and that CSR initiatives can trigger off positive effects on behalf of the firm (2.3.2). Finally, a summarisation of the main aspects will close the chapter (2.4).

2.1 History of Corporate Social Responsibility

The history of the academic field of CSR originated from different branches of research. Essen­tially different approaches can be identified in the USA and in Europe. The academic discourse in the USA was mainly coined by means of refining definitions and concepts of CSR, whereas in Europe the attention was rather turned toward a pragmatic application.[7]

The launch of the concept of CSR in the ‘modern era’ of US-literature has been determined by Bowen’s book “Social Responsibilities of the Businessman” which was published in 1953.[8] Even though there have been some references to CSR beforehand, his publication is seen as a con­siderable milestone so that Carroll deems Bowen to be the ‘Father of Corporate Social Responsi- bility’.[9] Bowen argues that companies’ actions touch many areas of life which engender the ques­tion to what extent business entities are obliged to be taken responsible for the society. He con­cludes that the social responsibility of businessmen ought to derive from the expectations and values the society upholds and in addition underlines that there are responsibilities which go be­yond the economic performance:

“It [social responsibility (LR)] refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action, which are desirable in terms of the objec­tives and values of our society.”[10]

Accordingly, in the 1960s various authors have proposed several attempts to broaden the first definition set by Bowen. Apart from Frederick (1960), McGuire (1963), and Walton (1967), Davis (1960) has come up with a management oriented view of CSR that focused rather on the social welfare of a society. He postulates that a social responsible business can be justified as far as it results into economic gains in the long run.[11] In this context Davis has become well-known for his ‘Iron Law of Responsibility’ stating that “social responsibilities of businessmen need to be commensurate with their social power”[12]. In addition to this, Davis revisits the understanding of CSR in terms of moving the responsibility from managers towards the influence of whole organi- sations on society[13].

In the early 1970s the discussion concerning the significance of CSR on society has turned out to be controversial. Most prominently Friedman’s article published in the New York Times has con­tributed to a vivid discourse. Friedman’s main message has been that the only social responsibility of business is to maximize profits within the legal frame.[14] Also, at the same time CSR definitions have proliferated and have become more specific due to works by various authors.[15] In 1979 Car­roll released a renowned article on the conception of a three-dimensional model of corporate social performance (CSP) and picks up certain notions of prior CSR definitions.[16] The categorisa­tion of the four different social responsibilities was developed further by Watrick/Cochran. They presented an extended revision of the three dimensional integration of responsibility, responsive­ness and social issues by Carroll. It has been argued that Carroll’s CSR definition merely covered the ethical component. In their view social responsibility should be viewed as principals, social responsiveness as a process and social issues management as policies}[17] A next step in the academic discourse has been done by Wood. She expands the CSP approach and outlines a CSP model that captures CSR concerns. Nevertheless she sharply distinguishes between drawing up categorisa­tions and principles.[18]

The emergence of the CSR concept in Europe has occurred much later.[19] In particular it has been politics, more precisely the European Union (EU), which put emphasis on the social responsi­bility of companies.[20] The starting point has been the so called Lisbon Strategy[21] which was set out by the European Council in March 2000. Its aim has been “to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”[22]. One year later the European Commission (EC) released both, the EU strategy[23] for a sustainable development and a Green Paper with the mission statement “Promoting a European Framework for Corporate Social Responsibility”.[24]

Here, the first time a definition of CSR is displayed by a political European institution:[25]

“[...] a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”[26]

Against the background of the Green Paper more activities have been undertaken in support of CSR. In 2004 the so called ‘European Multistakeholder Forum on CSR’ was established to foster the dialogue between experts, stakeholders[27] and companies.[28] Then, in 2006 the EC called for an ‘Alliance on Corporate Social Responsibility’ bringing together mainly industry actors and the Commission.[29]

On the whole one can summarize a stronger focus on CSR issues at the beginning of the 21st century. In contrast to the academic discourse on CSR in the USA, the main attention in Europe has been placed on political guidance.

2.2 Theoretical and Conceptual Framework of CSR Initiatives

2.2.1 Corporate Social Responsibility

Besides the understanding of CSR, other closely related concepts have evolved from scientific debate, which include corporate social responszveness[30] (CSR2) and corporate social performance[31] [32] Otheraffiliated concepts can also be seen in corporate philanthropy[33] and corporate governance’[34]. Since a de­tailed presentation of each concept would go beyond the scope of the thesis at hand, and CSR as well as CC serve best for the purposes of how CSR initiatives are supposed to be understood, the following will focus merely on CSR and CC.

One of the most well-known concepts of CSR was introduced by Carroll. According to his con­cept a firm is obliged to respond to social responsibility in four different components.

“For a definition of social responsibility to fully address the entire range of obligations business has to society, it must embody the economic, legal, ethical and discretionary categories of business performance.”[35]

Within his article Carroll puts emphasis on the fact that these four categories are not mutually excluded from each other, nor that they are supposed to sketch a continuum with economic mo­tives on the one hand and social concerns on the other.[36] It is rather intended to portray the total CSR of a company which enables us to classify certain motives or actions according to the differ­ent responsibilities that constitute the whole. Figure 1 visualizes Carroll’s pyramid of CSR:[37]

illustration not visible in this excerpt

Figure 1: The Pyramid of Corporate Social Responsibility. Source: Carroll 1991: 42.

The economic responsibility is located at the basis of the pyramid. Business organisations were estab-lished to be the basic unit within society. As such a firms’ duty is to produce goods and services to provide for the consumers’ needs and to contribute to the societies’ wealth. The motive for profit is the driving force for entrepreneurship. Therefore, all other business responsibilities rely on the economic responsibility of the firm due to the fact that the others rest upon this founda­tion. Acknowledging this, a firm is required to operate under legal responsibilities. Among the eco­nomic system certain ground rules have been laid down under which business is expected to play its economic role. Business units are expected to comply with the laws and regulations society has installed. As a consequence the firm, as a law-abiding player, is forced to respect and not to in­fringe this ‘social contract’ between business and society. Since the legal responsibilities mirror ‘codified ethics’, fundamental principals of fair operations are depicted within this framework of law. The ethical responsibilities comprise these activities and practices as well. On the contrary they are not codified into law and represent the norms and values of a society. Insofar ethical respon­sibilities indicate what extent societal members would regard as fair and just. Considering that such values and norms may mirror higher standards of ethical performance than currently re­quired by law, it is inevitable to meet the expectations society has of business. Therefore, “ethical responsibilities in this sense are often ill-defined or continually under public debate as to their legitimacy, and thus are frequently difficult for business to deal with”[38]. In this respect it is also set forth that ethical and legal responsibilities always deal with a dynamic interplay. That is, legal responsibilities are to be developed further to ethical standards, and therefore businessmen are constantly confronted with growing expectations to conduct according to higher ethical respon­sibilities. The last category is labelled as discretionary responsibilities. Later Carroll renamed this term to philanthropic responsibilities due to the fact that being philanthropic is of a more voluntarily notion than being discretionary consistent with the image of a good corporate citizen.[39] Thus, acknowledging voluntariness as the underlying foundation for philanthropy, it covers all the ac­tions of a company that go beyond what is explicitly expected from the society. Hence, contribu­tion to any humanitarian programs — the arts, education, or the community — are left to individual judgement and choice because a firm is not regarded as unethical if they do not comply with the favoured level. In that sense, according to the pyramid displayed in Figure 1, Carroll makes use of a metaphor maintaining that the philanthropic responsibilities are like “icing on the cake”[40]. In summarization Carroll postulates the following how to pursue his CSR concept:

“The CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen.”[41]

The view of being a good corporate citizen is rather used in a practice-oriented managerial con­text and serves as an inclusive reference to issues linked to social responsibility.[42] From this prac­tice-oriented perspective the idea of the so called triple bottom line has gathered wide acceptance among practitioners, since it provides guidance in terms of operationalisation. It refers to the expanded notion that the criteria for the creation of value are economic, ecological and social.[43] Since CSR initiatives address activities exerted in the field with a managerial component, the con­cept of CC is outlined in the subsequent section.

2.2.2 Corporate Citizenship

According to Carroll/Buchholtz the understanding of CSR has been embraced to the broader term of CC. Hereby, CC illustrates a conception of business actors that play an active role as part of society. The concept of the corporate citizen reflects the core idea of a civil society in which all participants themselves carry responsibility for the well-being of the community.[44] Although a widely accepted definition of CC is not established yet, CC has been subject of various interpreta­tions in both USA and Europe.[45] Among scientific literature in the USA, Carroll articulates that CC can be conceived from a broad view and a narrow view.[46]

The broad view suggests that CC encompasses all that is implied in the concepts of CSR, CSR2 and CSP. For instance, a broad conception has been put forward by Fombrun, who argues that CC is composed of a three-part view: (1) CC is the reflection of shared ethical and moral principles, (2) a vehicle to integrate individuals into the communities in which they work, and (3) a form of en­lightened self-interest, which balances all stakeholders’ demands and enriches a firm’s long-term- value.[47] Especially, the notion of the firms’ self-interest is according to the broad view a typical characteristic. CC explicitly focuses on the achievement of win-win-situations, meaning that CC is also part of the overall business strategy. That is why Graves and colleagues define CC as “ser­ving a variety of stakeholders well”[48] which embraces the idea of ethical business behaviour and the balancing of the needs of stakeholders.[49] After all, in a recap of the four categories of CSR, Carroll argues in his article “The Four Faces of Corporate Citizenship” that companies are ex­pected to fulfil the four responsibilities of being economic, legal, ethical, and philanthropic like private citizens.[50]

Concerning the narrow view, CC is understood in terms of corporate community relations suggest­ing that the firm behaves as a ‘good citizen’.[51] This view, which is predominantly held in Europe, embraces the functions through which a firm intentionally collaborates with non-profit organisa­tions, citizen groups, and other stakeholders at the community level.[52] Acknowledging this view of Anglo-American discussion, various authors from Germany have adopted this understand­ing.[53] Westebbe/Logan indicate that only those activities are classed among CC, which go beyond primary business activities.[54] As such according to Mutz/Korfmacher CC includes corporate giv­ing, corporate foundations, and corporate volunteering.[55]

Corporate giving comprises contributing money towards a fund or charitable purposes as well as sponsoring, whereas corporate foundations stand for the establishment of charitable foundations.[56] Corporate volunteering is considered as company measures which grant leave to employees from regular work in order to let them participate in welfare work or in similar activities.[57]

2.2.3 CSR and CC as Basis for the Understanding of CSR Initiatives

To agree upon the relation between CSR and CC a demarcation of the two concepts has been put forward by various authors. According to Beckmann three different suggestions exist amid the scientific literature: Firstly, CC is understood as the superior concept whereas CSR only plays a partial aspect.[58] Secondly, some advocate that CSR is the superior concept, which embraces the firm’s activities as a good corporate citizen.[59] And thirdly, this view equates the concepts of CSR and CC, which are solely seen as alternative explanations for the description of the same phe- nomenon.[60]

In order to arrive at an understanding of CTR initiatives, the paper at hand combines the notions of CSR and CC to flow into an explanation. Whereas CSR is the more academic term referring to the obligation business has to society to respond to social responsibility, CC is rather the manag­erial term cultivating community-relations. Accordingly, the notion of CSR and CC shall be sub­sumed to CSR initiatives in a rather broad sense defining CSR initiatives on the part of the firm as “actions that appear to further some social good, beyond the interests of the firm and that what is required by law”[61]. These actions include concrete activities described in terms of the nar­row CC view such as corporate giving, corporate foundations, and corporate volunteering in order to foster a socially-based purpose or a stakeholder group.[62] Therefore, CSR initiatives are intimately tied to the firms’ relationship with its stakeholders, indicating that the social obligations of business have specific nonmarket environment beneficiaries whose demands and expectations must be met by the firms’ performance.[63] The ethical behaviour of firms will enable them to achieve competitive advantages, because they develop lasting relationships with stakeholders.[64] As CSR initiatives also reveal the values of a company, they can also be part of the value proposition of a stakeholder with which he can identify.[65]

In this context it shall be noted that it is not enough just to enact CSR initiatives. At the same time companies must have in focus on the accuracy of their communication so that stakeholders become aware in how far the firm is pursuing CSR. Companies have several instruments available in order to inform their workforce about their CSR such as regular CSR reports, newsletters, or seminars. Also, a typical CC-activity like corporate volunteering is an excellent tool not just to involve stakeholders and make them aware of the firms’ CSR.[66]

Since CSR initiatives improve the connection to companies’ stakeholders, the following section will deal with basic ideas of stakeholder theory and stakeholder management and will reveal the eminent role employees play among various stakeholders.

2.3 The Usage of CSR Initiatives To Establish Lasting Stakeholder-Group Relationships With Employees

2.3.1 Basic Ideas of Stakeholder Theory & Stakeholder Management

In his article “The Pyramid of Corporate Social Responsibility” Carroll provides a segue from CSR to stakeholder theory, since the stakeholder concept personalises social or societal responsi­bilities by sketching the individuals and specific groups the firm ought to take into account in its CSR orientation. Therefore, “names and faces”[67] are put on stakeholders, which are most import­ant to the firm and to which it must be responsive so that it turns attention beyond direct profit maximisation.[68] While CSR aims to determine what responsibilities business ought to fulfil, the stakeholder concept addresses the issues of whom the firm should be accountable to. In this sense both concepts are closely inter-related, while CSR can be interpreted as a branch of stake­holder theory.[69]

Originally stakeholder theory is a concept that is derived from strategic management. Strategic management is a systematic way to solve the firms’ problems. According to Ansoff the objectives of strategic management are the future continuity, survival and profitability of the firm.[70] For the first time the usage of the term stakeholder grew out of the pioneering work of the Stanford Re­search Institute[71] in 1963, which was developed in the planning department of Lockheed.[72] Stake­holders are put into the description as “those groups without whose support the organization would cease to exist”[73], whereas each stakeholder has one or more of various kinds of stakes in a business.[74] The most popular definition of stakeholder has been developed by Freeman in his noted work “Strategic Management: A Stakeholder Approach” in which he outlines a new ap­proach to strategic management tasks. Freeman defines the term stakeholder as follows:

“A stakeholder in an organization is (by definition) any group or individual who can affect or is af­fected by the achievement of the organization’s objectives.”[75]

This definition is widely acknowledged because of its “landmark”[76] position in stakeholder theory.[77] As a matter of fact stakeholder theory has been subject to be presented in a number of ways, since it is a state of the art concept within strategic management literature. Donald­son/Preston have put forward a frequently cited categorisation of stakeholder approaches that articulates three views of the stakeholder model of the firm, which are in particular a descriptive, an instrumental and a normative view.[78]

The descriptive view provides information about how reality is. Accordingly, stakeholder theory is used in a descriptive way to mirror the internal and external reality of the firms’ environment and describes the actual practice in what way a company deals with its stakeholders.[79] According to the instrumental view it is useful to establish connections between practical implications of the stakeholder theory and the resulting achievement of traditional corporate performance goals such as profitability, stability and growth. Mostly on the basis of empirical studies, advocates of the instrumental view try to prove that a firm carrying trough stakeholder management c.p. will attain better results relative to others.[80] From the normative point of view stakeholders are identified by their interest in the firm, regardless of whether the firm has a corresponding interest in them. Stakeholders, thus, have an intrinsic value, which qualifies them for being cared about by the management of the firm, so that they are never regarded merely as a means to an end. Conse­quently, the normative perspective is frequently considered as the moral or ethical view due to the fact that it concentrates on how stakeholders should be treated.[81] In summarisation of the three different views Donaldson/Preston conclude that stakeholder theory is managerial in the sense that it does not simply describe but also advises attitudes, structures and practices which frame stakeholder management.[82]

With respect to the three different views, a differentiation can be made according to two con­cepts of stakeholder management: the strategic stakeholder management and the intrinsic stake­holder management. The descriptive and the instrumental views are subsumed into the strategic approach, which pursues a stakeholder management by means of generating positive effects con­tributing to the overall firms’ performance. On the contrary the normative view is linked to the intrinsic stakeholder management, which can be understood as a “normative (moral) commit­ment to treating stakeholders in a positive way”[83], which in turn also increases positive effects of the corporate performance.[84]

2.3.2 Identification of Employees as First-Class-Stakeholder-Group

Stakeholder management has become important, since managers have discovered that many stakeholders ought to be satisfied in order to meet the firms’ objectives.[85] As each stakeholder pursues different interests which mutually influence each other, the challenging task is therefore, to balance in between the area of conflict of diverse interests. However, basically not all stakes in the firm are legitimate a priori.[86] Insofar it must be clarified in how far the firms’ management is supposed to take into account the stakes of the various stakeholders. Consequently, to manage stakeholders effectively, each firm has to answer the question “who are our stakeholders?”[87]. Among literature a few approaches have been put forward to classify stakeholders according to their significance for the firm.[88] Clarkson distinguishes between primary and secondary stakeholders, whereas the primary stakeholder group is the one without whose continuing participation the firm cannot survive as a going concern. Accordingly, profitable companies can be differentiated from others that in the past have created wealth and value for all its primary stakeholder groups. In contrast, the secondary stakeholder group is not essential for the firms’ survival.[89] Encompassing the employees as focus against the background of the paper at hand, it is preva­lently accepted that employees are one of the most important stakeholders a firm has. Regardless whether one acknowledges Clarkson’s categorisation of stakeholder groups, which puts employ­ees in the group of primary stakeholders, or one screens other noted approaches of stakeholder categorisations, effectively in all respects employees are considered “to take on a peculiar role among stakeholders as they are closely integrated to the firm”[90].[91]

From the firms’ perspective, employees have significant influence on the firm, since they belong to one of the most important ‘resources’ a company obtains in terms of knowledge and skills. In particular, in an information- and knowledge-based strategy era in which continuing shortage of highly skilled and talented workers is expected, employees are the basis of potential competitive advantage.[92] Furthermore, they represent the company towards other stakeholders, such as cus­tomers, the local community and so forth, and besides act in the name of the firm towards them.[93] On the contrary, from the employees’ perspective they are greatly affected by the success or failure of the company, since they are dependent on income.

[...]


[1] House et al. 1995: 109.

[2] See Van Dick 2004: 1; Bdhm 2008: 1.

[3] Epitropaki/Martin 2005: 570. Due to the fact that the thesis is written from the perspective of a firm, organisations are to be understood in the first place as companies.

[4] See Bhattacharya et al. 1995: 46ff.

[5] The Economist 2005.

[6] See Carmeli et al. 2007: 973.

[7] See Loew et al. 2004: 18f. Some authors refer to historic roots of CSR. In ancient Greece firms had philanthropic motives distributing money and foot to poor people. Later on in the wake of the 19th century business units changed. More and more multicorporate enterprises occurred that possessed huge influence and power over the market. This emergence of new business entities brought up new questions of responsibilities within society. Then, after the world economic crisis around the 1930s companies were under intensified supervision by the state which conducted into more social activities. For a further review on roots of CSR see Carroll 1999: 268ff.; Carroll/Buchholtz 2006: 31ff.

[8] See Carroll 1979: 497; Carroll 1999: 269. Here Carroll makes the point that earlier articles principally mention Social Responsibility instead of CSR. Carroll utilised both terms synonymously. The paper at hand follows this practise.

[9] See ibid: 268ff. Carroll mentions a few articles that were published prior. For instance he refers to Barnard (1938), Clark (1939) and Kreps (1940).

[10] Bowen 1953: 6.

[11] See Davis 1960: 70f. Carroll remarks that Davis’ view is interesting because it became commonly accepted later in the 1970s and 1980s. See Carroll 1999: 271.

[12] Davis 1960: 71.

[13] See Davis 1967: 46. “Social responsibility moves one large step further by emphasizing institutional actions and their effect on the whole social system. Social responsibility, therefore, broadens a person’s view to the total social system” (Davis 1967: 46).

[14] See Friedman 1970: 32f. Carroll points out that Friedman’s statements were understood in different ways. He interprets Friedman in a way that only the philanthropic responsibility is rejected. See Carroll 1991: 43.

[15] See Carroll 1999: 291 and the cited literature.

[16] “The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organisations at a given point of time” (Carroll 1979: 500). Carroll’s pyramid of CSR will be explained in detail later on. See section 2.2.1.

[17] See Wartick/Cochran 1985: 758ff.; Carroll 1999: 287.

[18] See Wood 1991: 695. “A principle expresses something fundamental that people believe is true, or it is a basic value that motivates people to act” (Wood 1991: 695).

[19] One exception is Great Britain. See Loew et al. 2004: 24.

[20] See for the following Ibid: 24ff.

[21] Also known as Lisbon Agenda or Lisbon Process.

[22] European Council 2000: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/00100- r1.en0.htm.

[23] See European Commission 2001b: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2002:0347: FIN:DE: PDF.

[24] See European Commission 2001a: http://eur-lex.europa.eu/LexUriServ/site/en/com/2001/_0366en01.pdf.

[25] See Loew et al. 2004: 26.

[26] European Commission 2001a: 7.

[27] See section 2.3.1 for further details on stakeholders and stakeholder theory.

[28] See EMS Forum 2004: http://circa.europa.eu/irc/empl/csr_eu_multi_stakeholder_forum/info /data /en /CSR %20Forum%20final%20report.pdf.

[29] See European Commission 2006: 3. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2006:0136 :FIN: EN:PDF. This paper provoked anger from civil society organisations as well as trade unions. They criticise that NGOs are largely excluded from the CSR alliance because it only brings together the Commission and enter­prises. See http://www.euractiv.com/en/socialeurope/csr-corporate-social-responsibility/article-153515.

[30] Corporate Social Responsiveness (CSR2) is considered as the action-oriented variant of CSR. According to Freder­ick CSR2 is defined as follows: “Corporate social responsiveness refers to the capacity of a corporation to respond to social pressures. The literal act of responding, or of achieving a generally responsive posture, to society is the focus“ (Frederick 1978: 6). See also further authors that contributed to ideas of CSR2: Ackerman/Bauer 1976: 6; Epstein 1987: 104.

[31] Building on ideas of CSR, Carroll developed first a model of CSP. It includes three aspects that address major concerns of academics and managers, in particular CSR, social issues the organisation must address and the mode of social responsiveness. See Carroll 1979: 497ff. A major reformulation of the CSP model has been put forward by Wood. She defines CSP as the “business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal rela­tionships" (Wood 1991: 693). Other extensions of the CSP model have been presented by Wartick/Cochran 1985: 765-766 and Swanson 1995: 43-64 as well as Swanson 1999: 506-521.

[32] See Carroll/Buchholtz 2006: 29.

[33] According to Carroll/Buchholtz Corporate Philanthropy is considered as “the voluntary giving of financial re­sources by business” (Ibid: 480). Therefore, as firms give resources on a voluntarily basis, the concept of corporate philanthropy has a lot in common with the understanding of corporate citizenship (see 2.2.2). Amongst others a frequently noted article has been put forward by Porter/Kramer on the benefits of strategic corporate philanthropy: “True strategic giving [...] addresses important social and economic goals simultaneously, targeting areas of competi­tive context where the company and society both benefit because the firm brings unique assets and expertise” (Por­ter/Kramer 2002: 60).

[34] “Corporate Governance deals with the agency problem: the separation of management and finance. The funda­mental question of corporate governance is how to assure financiers that they get a return on their financial invest­ment” (Shleifer/Vishney 1997: 773).

[35] Carroll 1979: 499.

[36] See ibid: 499.

[37] See for the review on the distinct responsibilities Carroll 1979: 499f.; Carroll 1991: 40ff.; Carroll 2000: 26f.; Prom- berger/Spiess 2006: 8ff.

[38] Carroll 1991: 41. For instance, business has to deal with environmental, civil rights, or consumer movements which are able to exert pressure on the fulfilment of ethical responsibilities.

[39] See section 2.2.2 for further details on CC.

[40] Carroll 1991: 42.

[41] Ibid: 43.

[42] See Carroll/Buchholtz 2006: 38f. See also footnote 50 for a criticism by Crane/Matten.

[43] “[...] the TBL [Triple Bottom Line, (LR)] agenda focuses corporations not just on the economic value that they add, but also on the environmental and social value that they add — and destroy” (Elkington 2001: 3). See also Loew et al. 2004: 66f.

[44] See Bowie 1991: 58ff.; Loew et al. 2004: 50; Beckmann/Pies 2008: 110f. A starting point for the introduction of corporate citizenship is seen in the programme ‘Habit for Humanity’ initiated by the former US-President Jimmy Carter. The programme dealt with the discussion about the relationship between companies and their role inside society. Later on in the 1990s the term ‘corporate citizenship’ emerged as a new form of addressing the social role of companies among scientific literature. See Carroll 1999: 290; Crane/Matten 2007: 70. Carroll also finds first roots of CC among literature in the 1960s. See Carroll 1999: 271f.

[45] See Crane/Matten 2007: 70f.

[46] See Carroll 1999: 290; Carroll/Buchholtz 2006: 54. Crane/Matten distinguish among literature three different perspectives: A limited view of CC that equates CC with corporate philanthropy, an equivalent view of CC which equates CC with CSR and an extended view of CC which acknowledges the extended political role of the corpora­tion in society. See Crane/Matten 2007: 71ff.; Garriga/Mele 2004: 56f.

[47] See Fombrun 1997: 27ff.

[48] Graves et al. 2001: 17.

[49] See further details on stakeholder theory in section 2.3.1.

[50] See Carroll 1998: Iff. Crane/Matten harshly criticise Carroll’s conceptualisation of CC. From their point of view Carroll’s understanding of CC “consists in a somewhat updated label for CSR (or sometimes stakeholder manage­ment), without attempting to define any new role or responsibilities for the corporation" (Crane/Matten 2007: 73). Before Carroll published his article referring to CC in 1998, he identified being a good corporate citizen with his fourth level of CSR, in particular the philanthropic responsibility. See also section 2.2.1.

[51] See Carroll/Buchholtz 2006: 54.

[52] See Ibid; Schwalbach/Schwerk 2008: 78f.

[53] See Loew et al. 2004: 52f. Loew and colleagues mention three different streams that discuss CC from different perspectives within the German debate: (1) CC in terms of economic and business ethics, (2) CC carried out by business that goes beyond primary business activities, and (3) CC in terms of discussing sustainability. See Loew et al. 2004: 53f. A frequently cited definition for sustainability has been put forward by the so called Brundtland Commis­sion: “Sustainable development is development that meets the needs of the present without comprising the ability of future generations to meet their own needs" (Brundtland 1987: 43).

[54] See Westebbe/Logan 1995: 13. “Corporate Citizenship ist das gesamte koordinierte, einer einheitlichen Strategie folgende und uber die eigentliche Geschaftstatigkeit hinausgehende Engagement des Unternehmens zur Losung gesellschaftlicher Probleme“ (Westebbe/Logan 1995: 13, German definition). In contrast to Westebbe/Logan, who exclude CC from core business activities, the World Economic Forum puts forward a different view: “Corporate Citizenship is about the contribution a company makes to society through its core business activities, its social in­vestment and philanthropy programmes, and its engagement in public policy“ (World Economic Forum 2003: 17). See also Beckmann 2007: 6.

[55] See Mutz/Korfmacher 2003: 51f.; Loew et al. 2004: 53. Furthermore, Dresewski mentions nine instruments of a so called ’Corporate Citizenship-Mix’: Corporate Giving, Corporate Foundations, Corporate Volunteering, Social Sponsoring, Cause Related Marketing, Social Commissioning, Community Joint Venture, Social Lobbying and Ven­ture Philanthropy. See Dresewski 2004: 21f. and also Habisch 2003: 97ff.

[56] See MaaB/Clemens 2002: 11ff.; Loew et al. 2004: 53. According to some authors corporate giving and corporate foundations encompass the same and are therefore an equation is made with the two terms. See Bruhn 1998: 20.

[57] See Schoffmann 2001: 14; MaaB/Clemens 2002: 13f.; Herzig 2005: 5. Various companies have implemented cor­porate volunteering into their overall CSR strategy. Among others, the Deutsche Bank AG can be mentioned as an example. See Frankfurter Allgemeine Zeitung 2008: B2.

[58] See Loew et al. 2004: 54 and the cited literature.

[59] See Ibid; Wood/Logsdon: 84ff.

[60] See Beckmann 2007: 6f. Matten and colleagues claim that the concepts of CSR and CC have been used synony­mously. They refer to Carroll’s article “The Four Faces of Corporate Citizenship", in which he defines CC the same way as he defined CSR. See Matten et al. 2003: 112f.

[61] McWilliams/Siegel 2001: 117. Tetrault Sirsly/Lammertz note that McWilliams/Siegel have absorbed their defini­tion of CSR initiatives from Burke/Logsdon. See Tetrault Sirsly/Lammertz 2008: 348; Burke/Logsdon 1996: 495.

[62] See McWilliams/Siegel 2001: 117; Carroll/Buchholtz 2006: 55; Godfrey/Hatch: 2007: 88; Carmeli et al. 2007: 976.

[63] See Waddock et al. 2002: 145f.

[64] See Jones 1995: 404ff.; McWilliams/Siegel 2001: 118.

[65] See Bhattacharya et al. 2008: 37.

[66] See Breidenbach et al. 2008: 23f. The aspect to inform employees about the firms’ CSR initiatives will especially become relevant in chapter 5 according to the empirical survey.

[67] Carroll 1991: 43.

[68] See Carroll 1991: 43; Ibid. 1999: 290. “There is a natural fit between the idea of corporate social responsibility and an organization’s stakeholders" (Carroll 1991: 43).

[69] See Wentges 2002: 95f.; Foster/Jonker 2005: 51ff.; Jamali 2008: 228.

[70] See Ansoff 1979: 1. Etymologically, the word ‘strategy’ comes from the context of ancient Greek warfare, where it refers to the art of leading an army. At the beginning of the 19th century, the terminus was rediscovered by the Prus­sian Major-General and intellectual Carl von Clausewitz. In his famous book “About War” (German: “Vom Kriege”) he defined strategy as the general set of guidelines, in contrast to tactic, which is just a situational reaction to external stimuli.

[71] Today it is rather known as the SRI International. See http://www.sri.com.

[72] It is not by chance that the term stakeholder is relatively similar to the term of stockholder. The purpose has been to express that there are other groups, which have a stake in the firm compared to the stockholders. See Gobel 2006: 113.

[73] Freeman 1984: 31. See also Freeman/McVea 2001: 190f. and Brink 2002: 66f. “[...] managers needed to under­stand the concerns of shareholders, employees, customers, suppliers, lenders and society, in order to develop objec­tives that stakeholders would support. This support was necessary for long term success. Therefore, management should actively explore its relationships with all stakeholders in order to develop business strategies“ (Free- man/McVea 2001: 190).

[74] See Carroll/Buchholtz 2006: 67. Roots of stakeholder theory are also to find further in the past according to Berle/Means (1932). A further development can also be identified in the context of the stimulus-contribution theory. Important advocates are Barnard (1938), March/Simon (1958) and Cyert/March (1963) who especially focus on the the behavioural theory of the firm. See also for an overview Wentges 2002: 88ff. and Brink 2002: 67.

[75] Freeman 1984: 46. Furthermore, often a less wide definition is mentioned that has been developed by Free­man/Reed. According to them a stakeholder is “(a)ny identifiable group or individual on which the organization is dependent for its continued survival” (Freeman/Reed 1983: 91).

[76] Wood 1991: 704.

[77] Today’s companies are embedded in a network of mutual dependence with numerous stakeholders. To arrive at this view, the stakeholder concept parallels the evolution of a business enterprise. The starting point for Freeman’s considerations is formerly described by the production view of the firm. The production view sees the company as family- owned business, which brings products to the market. Efficiency and effectiveness of this process were the key fac­tors to success. Over time large firms have emerged as being economically more successful due to scale effects in production and the usage of better production techniques, as e.g. assembly lines. As a consequence of the increasing need for capital banks, stockholders and other financing institutions began to dominate the company. This develop­ment resulted in the evolution that can be titled as the managerial view of the firm. The management had to pay attention to more groups of people, who have a stake in the firm, than they had before. In the production view only the mar­ket, i.e. customers, and suppliers, mattered to the management, whereas they now additionally have to deal with the interests of the company’s owners and their workers. See Freeman 1984: 4 and also Carroll/Buchholtz 2006: 68ff. Finally, as major internal and external changes were to occur in business and firms had to undergo its multilateral relationships, Freeman’s suggestion to meet this new environment, is to “redraw the picture of the firm” (Freeman 1984: 24) in terms of the stakeholder view of the firm. In this view the management must perceive its stakeholders not merely in the way that they have some stake in the firm, but also the stakeholders have a stake in the firm as well. So the idea is to develop individual strategies for each group of stakeholders. Those strategies are thought to be more efficient in influencing the stakeholders’ decision whether to provide the company with their resources or not in a favourable way, since they address the various interests of stakeholders individually. See Freeman 1984: 25; Post et al. 2002: 51ff.

[78] See Donaldson/Preston 1995: 66ff. See also Jones/Wicks 1999: 212 who discuss the significance of Donaldson and Prestons’s scheme. Another way to address different stakeholders has been advanced by Goodpaster, who dis­tinguishes among the strategic approach, the multifiduciary approach, and the stakeholder synthesis approach. See Goodpaster 1991: 53ff.

[79] See Donaldson/Preston 1995: 70. See also for an overview of works that argue in favour of the descriptive view Wentges 2002: 94.

[80] “If you want to achieve (avoid) results X, Y or Z, then adopt (don’t adopt) principles and practices A, B, or C” (Donaldson/Preston 1995: 72). The major problem with empirical studies, which seek to show such a correlation, is that they can hardly deliver representative data. There are numerous factors that influence a companies’ perform­ance, which cannot be kept constant in order to isolate the influence of the utilisation of stakeholder principles. Donaldson/Preston therefore conclude that there hasn’t been a study yet, which represents solid evidence for the superiority of stakeholder management. See Donaldson/Preston 1995: 71ff. and 77; Donaldson 1999: 238. On the contrary Harrison/John put emphasis on the positive significance for companies: “We should do it because it is the right thing to do” (Harrison/John 1996: 48). See also Talaulicar 2006: 60f. for further details and an overview on arguments in favour of the instrumental view.

[81] See Wentges 2002: 95; Carroll/Buchholtz 2006: 74.

[82] See Donaldson/Preston 1995: 67; Carroll/Buchholtz 2006: 75.

[83] Berman et al. 1999: 488.

[84] See Ibid: 493f.; Brink 2002: 71f.

[85] See Carroll/Buchholtz 2006: 75.

[86] See for further details and an overview on the different stakes stakeholder hold Janisch 1993: 145ff.; Brink 2000: 199ff.

[87] Vos 2003: 142. See also Carroll/Buchholtz 2006: 76; Talaulicar 2006: 63. With reference to the definition posited by Freeman presented above, almost every entity in the business environment could be a potential stakeholder. So the question after the “principle of who or what really count” (Freeman 1994: 411) is unanswered.

[88] A frequently cited typology of stakeholder attributes has been put forward by Mitchell and colleagues. The three attributes of legitimacy, power, and urgency help to discover how stakeholders can be assessed. Their typology con­tributed to support the instrumental view of stakeholder theory. See Mitchell et al. 1997: 872ff.; Carroll/Buchholtz 2006: 71ff.

[89] See Clarkson 1995: 105ff. Other authors have put forward a relatively similar categorisation between primary and secondary stakeholders. Among others these are Harrison/John 1996: 47f.; Donaldson/Dunfee 1999: 167; Wheeler/Sillanpaa 1997: 167.

[90] Crane/Matten 2007: 265.

[91] Furthermore deep roots of stakeholder theory refer to employees as an important stakeholder group. See Berle/Means 1932: 355; Dodd 1932: 38; Cyert/March 1967: 27.

[92] See Waddock et al. 2002: 135.

[93] See Crane/Matten 2007: 265; Greenwood 2008: 3.

Details

Pages
73
Year
2009
ISBN (eBook)
9783640678655
ISBN (Book)
9783640681471
File size
2.1 MB
Language
English
Catalog Number
v154235
Institution / College
University of Bayreuth – Institut für Philosophie
Grade
1,0
Tags
CSR Corporate Social Responsibility Organisational Identification Identification Social Identity Theory Social Identity Approach Stakeholder Theory Stakeholder Management

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Title: CSR & Organisational Identification: To Which Extent Do CSR Initiatives Achieve Organisational Identification?