Corporate Social Responsibility of the Alibaba Holding Group

Table of Contents

1 Abstract

2 Introduction

3 Sustainability

4 Corporate Social Responsibility
4.1 Carrol's CSR model
4.2 Sustainability in Corporate Social Responsibility

5 Introduction of the Alibaba Group
5.1 Business sectors of the Alibaba Group
5.2 Alibaba's Corporate Social Responsibility

6 Sustainability in Alibaba's Corporate Social Responsibility
6.1 Success factors in the Social Responsibility model of Alibaba
6.1.1 The core of Alibaba's Corporate Social Responsibility
6.1.2 Economic sector in Alibaba's Corporate Social Responsibility
6.1.3 Environment sector in Alibaba's Corporate Social Responsibility
6.1.4 Social sector in Alibaba's Corporate Social Responsibility

7 Conclusion

8 Reference List

1 Abstract

The purpose of this paper is to outline the Corporate Social Responsibility (CSR) of the Alibaba Holding Group and show the success factors of its sustainability. Based on this framework, I present definitions of sustainability and CSR, based on journals and papers of various scientists and compare the similarities of these definitions. Afterwards, I introduce the Alibaba Group, its CSR, projects, methods and the Social Responsibility model, which combines its Corporate Social Responsibility with sustainability. It shows several initiatives of Alibaba and its CSR, where Alibaba operates in a sustainable way.

2 Introduction

As Howard Bowen mentioned in the early 1950's, large companies have a huge influence on the society and much power.¹ Their behavior affects many people of a country or even worldwide, whereby a sustainable Corporate Social Responsibility is increasingly important. It is essential that the CSR of a company is not only effective in its field of actions, but also sustainable in their activities so the economy, environment and the social benefit over the long term. CSR is more than short term improvements of the society.

The Alibaba Group is one of the largest companies of the world and has a giant influence on China with its 507 million mobile users.² Thereby, Alibaba has a big responsibility for their actions, behavior and sustainability, which is integrated and guided in Alibaba's CSR.

To analyze Alibaba's sustainability in its CSR this paper present definitions of sustainability and CSR, published from various scientists like Carroll and organizations like the United Nations, who defined sustainable development. In this paper, it is also shown, that the three sustainable sectors of sustainable development, which are economic, environmental and social development, must be considered in the CSR activities, so the intention is long-term improvement. For an appropriate analysis of Alibaba's CSR, I introduce at first the Alibaba Group and their basics of its CSR. In the end, I present the similarities of Alibaba's Social Responsibility model, of the three sustainable sectors and Carrol's CSR model.

3 Sustainability

The first-time people thought about a concept of sustainable behavior was in relation to agriculture when fertile land was organized and split in separated parts for certain groups of people, so single persons cannot harvest too much food for themselves. In Nigeria, for ex- ample, the land was divided between families, villages or communities who planned the consumption whereby they had an equitable distribution of food.³ This idea also fits with Harlem Brundtland's spread definition of sustainability, meaning today's generation should satisfy their consumption in a viable way, so future generations are not affected in meeting their needs.⁴ In 1997, the United Nations enhance this definition by classifying the topic into three sectors, which are economic development, social development and environmental protection. Nonetheless, these sectors are connected and cross each other.

Through economic growth, all countries and citizens can improve their well-being and benefit from a higher living standard. By developing the economy poverty can be reduced and peo­ple in developing countries can have a higher welfare. For the social development, the econ­omy and politics should be managed in a tolerable, sustainable way, where the responsible economists and politicians should care for a happy, satisfied society. The German scientist Hans Carl von Carlowitz defines the social development with immaterial values. Part of these are dignity, cautious, responsible manners and respecting the needs of the people.⁵ Dealing carefully with the environment reduces illness, hunger, poverty and the usage of natural resources for the current and future generations,⁶ whom should ensure a resource orientated management with a focus on renewable resources and the consideration of bear- able energy consumption. The economy just can use as many materials as available. Adding the aspect of guarding the nature guarantees the safety of the environment in the long run.

4 Corporate Social Responsibility

All companies influence stakeholders with their business activities and business behavior. Larger companies more than smaller ones. They are responsible for their actions and the consequences. An enormous field of work for companies and managers is Corporate Social Responsibility, which intends a company to show interest in politics, the community and its welfare, the employees and the whole social world. Companies should behave like model neighborliness, which does not bother and offers voluntary help for the neighborhood.⁷

In 1953 Howard Bowen published his definition of social responsibility of a businessman: “It 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”⁸ His book was one of the earliest definition of company's responsibility towards the society. For this reason, Carroll titled him “Father of Corporate Social Responsibility”⁹

4.1 Carrol's CSR model

Over the years, many redefinitions of different scientists where published. One of them was Carroll's four-part definition of CSR in 1979. He divided a company's responsibility into eco­nomic, legal, ethical and discretionary expectations from the society towards companies. In 1991, he corrected the discretionary to the philanthropic expectation. Carroll visualized these four terms as a pyramid, with the economic expectation as the basis. Without sustain- able and economically profitable business activities, none company can survive, which is expected by the society. The second stage of the pyramid is the legal responsibility. The company must obey the law. Ethical expectations are on the third stage and describe the ethical norms and behavior which also are expected by the society. They cover more than the law requests. The last of the four stages is the philanthropic responsibility, which is de- sired by the society. Companies take voluntary proactive measures in an ethical and sus- tainable way. These could be programs for drug abusers, training unemployed people, sup- porting mothers with day-care or different social help.¹⁰

In the 20th century, many definitions and interpretations of CSR were published and rein- vented. Carroll's pyramid with the four stages is one of the latest models and is used in various situations.

4.2 Sustainability in Corporate Social Responsibility

The whole concept of Corporate Social Responsibility comprised many aspects, which are included in the definition of sustainability. Three out of four stages of Carroll's pyramid- model deal with the same issues the United Nations mentioned in connection with sustain- ability. Putting the legal responsibility stage aside, Carroll's pyramid brought up the stages of economic, ethical and philanthropic responsibility¹¹, whereby the United Nations defined sustainability with economic, social and environmental parts.¹²

The economic part of the CSR implies the need for profitability for a company because oth- erwise it cannot remain on the market. Combined with the economic part of sustainability the sustainable part of CSR related to the economic side presents an idea of a company, that secures long-term economic performance and avoid harmful short-term behavior to- wards the society.¹³

The sustainable characteristics in the ethical responsibility stage of CSR are involved in the ethical norms and behavior towards the people who interact with the company, therefor a good treatment of the stakeholders. Likewise, the environmental protection is included in ethical responsibility because of the growing and consumption of natural resources, for ex- ample, is also regulated and normed, so food is not cultured with harmful pesticides and the limited resources are still available for future generations.¹⁴ The attention of the people's well-being and especially the future generations reflects the philanthropic stage in a sustain- able kind.

5 Introduction of the Alibaba Group

One of the world's biggest online concerns is the Alibaba Holding Group, which has busi­ness segments in e-commerce, finance, technology, consulting, artificial intelligence and lots more. In 1999, Jack Ma and 17 friends of him founded with a nominal capital of $60,000 Alibaba.com. It is a business-to-business trading platform and the primary company of the Alibaba Group. After a couple of years, Jack Ma expanded in other economic markets with different companies of the holding, which was first financed by investors like Goldmann Sachs, SoftBank, Fidelity and later Yahoo. In 2007, the Alibaba Group had their initial public offering (IPO) at the Hong Kong Stock exchange. Their second IPO at the New York Stock Exchange in 2014 with a value of $21.8 billion is the biggest IPO until today.¹⁵ With the capital of these IPO's and the profit of Alibaba, it could generate enough money to expand in many different business segments and build a nationwide service provider.¹⁶

5.1 Business sectors of the Alibaba Group

Apart from Alibaba.com, the other companies of the holding are also successful and have their separated market segment. They meet all the different needs of various customers. Taobao is an online marketplace for small companies and private persons, based on cos- tumer-to-costumer business.¹⁷ eBay, which has a similar business model got forced out of the market by Taobao and its market share of 67 %, compared to eBay's 29 % market share.¹⁸ As most users of Alibaba's services could not pay by credit card at small retailers, Alibaba invented Alipay as the basic payment system. It is a subsidiary of Ant Financial, which covers the whole financial sector of the Alibaba Group. It offers a cash- and credit card-less payment alternative. Due to the strongly increasing finance sector and the higher potential, in contrast to e-commerce, the Alibaba Group separated Alipay to its own individ­ual company.¹⁹ Aliyun is a cloud computing system for Alibaba users.²⁰ To push the e-com­merce sector, Alibaba founded Ali Institute, which helps and trains small and mid-sized com­panies in their e-commerce business.

5.2 Alibaba's Corporate Social Responsibility

In 2008 a devastating earthquake in Wenchuan, Sichuan destroyed over five million houses and caused the death of almost 70,000 people.²¹ Because of this tragedy, Alibaba decided few months later to start a company-wide Corporate Social Responsibility, by starting a do- nations platform on Taobao and aid China's citizens. In 2012 they developed the platform CSR approach, which complement their main online platform to provide and launch new CSR projects and increase public welfare. This CSR approach, which Alibaba Group's Chief Executive Officer Daniel Zhang published, was integrated in Alibaba's business model for a greater focus on social engagement. “We firmly believe that using business methods to help support the society and the public is the best way for Alibaba to perform social responsibili- ties.”²² A big part of this approach was the focus e-commerce strategy, which reduce the digital gap for the countryside compared to the cities.²³

The main vision of Alibaba's Corporate Social Responsibility is to make online business easier for everyone, whereby they create more job opportunities and improve the living standards, especially for the poorer people on the countryside. The Group planned to spend RMB ten million, covering 100,000 villages, to develop and spread their e-commerce plat­form. In 2007, the Alibaba Group established various charitable donations like the Alibaba Love Fund to raise money for education, medication, disaster relief, and environmental pro­tection and published its first CSR report. Based on the report of 2017, two million Alibaba users donated RMB 570 million to vulnerable people in this year. In the same year, they started the joint initiative Green Logistics, which Stands for an environmental friendly logistic System.

Apart from these projects, Alibaba's Corporate Social Responsibility bears many other pro- jects to improve the society's welfare. This kind of thinking is deeply integrated in the cor­porate culture of the Alibaba Group, as Daniel Zhang emphasizes: “Now, Alibaba's economy has over 500 million customers, tens of millions of merchants, and hundreds of thousands of service providers, and let them achieve development and success in an inclusive and sustainable business ecosystem is the goal of Alibaba. We are ready to make efforts with all parties concerned to create a healthy and happy life for the public.”²⁴

6 Sustainability in Alibaba's Corporate Social Responsibility

The four big social fields the Alibaba Group is acting in are named in their sustainability statement. These are creating job opportunities, participation and selected efforts addresses to social problems, supporting rural development in China and charitable donation.²⁵ Alibaba operates in all these fields with different methods. They support and develop many projects assist many small retailers to expand their business.

6.1 Success factors in the Social Responsibility model of Alibaba

The economical stage in Corporate Social Responsibility fits with the sustainable economic sector, meaning a company must secure a long-term economic performance and avoid harmful short-term behavior.²⁶ The similarities between the protection of the environment and the ethical stage of Carrol's pyramid represent the second sector of sustainability and the social sector of sustainability are involved in the philanthropic stage of CSR.²⁷

The economic, the environment and the social sector are all parts of Alibaba's Social Re- sponsibility model, the Alibaba Compass. The well-being of the customers, employees and Shareholders is the symbiotic layer, which presents the core of the model. The model com­bines the core with the stakeholders and other sectors which are the second layer of the model. They represent Alibaba's CSR. The last layer represents sustainability with the eco- nomic, environment and social value. In the second layer, the market is attached to the economic value of sustainability, the environment sector is attached to the environmental and the social value of sustainability, the society is attached to the social and the economic value and the government is attached to the economic value of sustainability by comply the law and pay taxes. This compass defines the connection and the relation from Alibaba's CSR and sustainability.²⁸

6.1.1 The core of Alibaba's Corporate Social Responsibility

The core of the model is defined as a customer first, employee second and shareholder third. Customer first means the Alibaba Group wants to create values for customers, pro­mote economic development and social progress. They use big data and internet technolo­gies to modify infrastructure, services and increase the inclusiveness of the economy. Also, many of the economic aims of Alibaba's CSR are in favor of the customers like supporting the rural development in China and creating job opportunities.²⁹

The guarantee of basic rights, interests and benefits, improve employee and career devel­opment and an enjoyable work environment is ensured by the concept of employee second. The whole Alibaba Group comply with the labor law, paid social insurance and take care of the employee's privacy. They attach high importance to ethical equality and a good treat­ment of the stakeholders.³⁰

Shareholders third stands for a protection of the rights and interests of Alibaba's Sharehold­ers and enable them a sustainable return of investment. Alibaba ensures the well-being of their shareholders by high standards of the internal control system and internal anti-corrup- tion actions. They have offer one-on-one and group meetings with shareholders, investor meeting reports, regular phone calls and e-mails and more, so they maintain a transparent relation to the Shareholders and investors. In relation to the government, Alibaba helped to create online platforms and cloud computing solutions for certain governments.³¹

6.1.2 Economic sector in Alibaba's Corporate Social Responsibility

The economic development is one of Alibaba's main goal and one of the major missions of the new economy in the CSR report of the Alibaba Group: “To make global economic devel­opment more sustainable.”³² The new economy includes creating job opportunities, expand their business segment, so many small businesses and retailer can participate in Alibaba's e-commerce platforms and supporting rural development in China. One initiative included door-to-door interviews to improve internet in the countryside.³³ In this way the farmers and villagers are connected to the worldwide ecosystem with a trustworthy delivery system. Alibaba's plan is it to become a giant retail platform and reach as many users as possible to connect the whole world. Jack Ma also mentioned this vision in Alibaba's plan for the next 20 years: “In the next 20 years [2016 until 2036] Alibaba aims to become the fifth largest economy in the world, serving two billion customers, creating 100 million job opportunities, and enabling ten million small businesses to make profits.”³⁴ In this sense Aliyun cut back the prices of its products in 2014 for a discount of about 61 %, so small and mid-sized com­panies also can afford the services. To promote the agriculture sector Alibaba developed a program for people who live in the cities, so they can rent agriculture land and grow products of their choice. By 2015, over 43,000 square meters were rented to about 3560 people.³⁵ With all these projects and developments Alibaba acts according to its major mission, to create a global sustainable economy.

[...]

¹ Howard R. Bowen, Social Responsibilities of the Businessman (Iowa City: University of Iowa Press, 2013).

² “Corporate Social Responsibility report,” 2017, accessed July 2018.

³ Don N. Ike, “The System of Land Rights in Nigerian Agriculture,” American Journal of Economics and Soci- ology 43, no. 4 (1984).

⁴ Harlem G. Brundtland, “World Commission on environment and development,” Environmental Policy and Law 14, no. 1 (1985).

⁵ Peter A. Wilderer, “Sustainable water resource management: the science behind the scene,” 2007.

⁶ United Nations, Agenda for Development (New York, NY, USA, 15.10.1997).

⁷ Archie B. Carroll, “Corporate Social Responsibility,” Business & Society 38, no. 3 (1999).

⁸ Howard R. Bowen, Social Responsibilities of the Businessman (Iowa City: University of Iowa Press, 2013), p. 6.

⁹ Archie B. Carroll, “Corporate Social Responsibility,” Business & Society 38, no. 3 (1999), p.270.

¹⁰ Ibid.

¹¹ Ibid.

¹² United Nations, Agenda for Development (New York, NY, USA, 15.10.1997).

¹³ Michael E. Porter and Mark R. Kramer, “The link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, 12.2006, accessed July 2018.

¹⁴ Iris Vermeir and Wim Verbeke, “Sustainable Food Consumption: Exploring the Consumer “Attitude - Be- havioral Intention” Gap,” Journal of Agricultural and Environmental Ethics 19, no. 2 (2006).

¹⁵ Kristina Zucchi, “Top 10 Largest Global IPOs Of All Time,” https://www.investopedia.com/a rticles/invest- ing/011215/top-10-largest-global-ipos-all-time.asp, accessed July 2018.

¹⁶ Gerrit Heinemann, H. M. Gehrckens, and Uly J. Wolters, eds., Digitale Transformation oder digitale Disrup- tion im Handel: Vom Point-of-Sale zum Point-of-Decision im Digital Commerce. Digitales Wachstum in China am Beispiel von Alibaba (Wiesbaden: Gabler, 2016). http://dx.doi.org/10.1007/978-3-658-13504-1.

¹⁷ Chengqi Guo and Xiaorui Hu, “Rogue insiders, signature loopholes, and fraud rings,” International Journal of Accounting & Information Management 20, no. 4 (2012).

¹⁸ Gerrit Heinemann, H. M. Gehrckens, and Uly J. Wolters, eds., Digitale Transformation oder digitale Disrup- tion im Handel: Vom Point-of-Sale zum Point-of-Decision im Digital Commerce. Digitales Wachstum in China am Beispiel von Alibaba (Wiesbaden: Gabler, 2016). http://dx.doi.org/10.1007/978-3-658-13504-1.

¹⁹ Ibid.

²⁰ Steve Yang and Minyi Huang, “Alibaba's platform Corporate Social Responsibility Approach,” Centennial College, 2015, http://cases.centennialcollege.hku.hk, accessed July 2018.

²¹ Tom Parsons, Chen Ji, and Eric Kirby, “Stress changes from the 2008 Wenchuan earthquake and increased hazard in the Sichuan basin,” Nature 454, no. 7203 (2008), https://www.nature.com/articles/nature07177.pdf.

²² Daniel Zhang, “Corporate Social Responsibility report,” 2017, accessed July 2018, p. 2.

²³ Steve Yang and Minyi Huang, “Alibaba's platform Corporate Social Responsibility Approach,” Centennial College, 2015, http://cases.centennialcollege.hku.hk, accessed July 2018.

²⁴ Daniel Zhang, “Corporate Social Responsibility report,” 2017, accessed July 2018, p. 2.

²⁵ “Sustainability,” 2018, https://www.alibabagroup.com/en/about/sustainability, accessed July 2018.

²⁶ Michael E. Porter and Mark R. Kramer, “The link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, 12.2006, accessed July 2018.

²⁷ Archie B. Carroll, “Corporate Social Responsibility,” Business & Society 38, no. 3 (1999).

²⁸ “Corporate Social Responsibility report,” 2017, accessed July 2018.

²⁹ Ibid.

³⁰ Ibid.

³¹ Ibid, p. 5.

³² Ibid.

³³ Chengqi Guo and Xiaorui Hu, “Rogue insiders, signature loopholes, and fraud rings,” International Journal of Accounting & Information Management 20, no. 4 (2012).

³⁴ Jack Ma, “Corporate Social Responsibility report,” 2017, accessed July 2018, p. 4.

³⁵ Steve Yang and Minyi Huang, “Alibaba's platform Corporate Social Responsibility Approach,” Centennial College, 2015, http://cases.centennialcollege.hku.hk, accessed July 2018.