Lecture 6/7: Corporate social responsibility Flashcards
What is CSR?
Corporate social responsibility: a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders
It is often used as an umbrella term that encompasses a range of ethical discourses and practices including business ethics, corporate philanthropy, and corporate citizenship
What are the objectives of CSR?
Organizations aim to balance:
- Economic objectives
- Social objectives
- Environmental objectives
What is the CSR triple bottom line?
People (social performance): all social and labor issues both inside and outside the organization
Planet (ecological): integrating environmental care into business operations
Profit (financial): generating financial returns for the organization and shareholders
CSR responsibilities
Philanthropic = be a good corporate citizen, desired by society
Ethical = do what is just and fair, avoid harm, expected by society
Legal = obey laws and regulations, required by society
Economic = be profitable, required by society
What is CSR in practice?
- Care for the environment
- Sustainability of Products
- Diversity
- Relations with the local community
- Relations with shareholders
- Relations with suppliers
- Social impact
- Relations with employees
Advantages of CSR?
- Acquiring legitimacy
- Protecting the public perception of the company
- Gaining competitive advantage through innovation
- Providing for consumer demand
- Changes in consumers’ attitudes
What is greenwashing?
High consumer demand for greener business gives rise to a phenomenon called greenwashing
- Businesses deliberately present their activities as “greener” or as more socially responsible than they actually are
- Consumers find a difference between rhetoric (i.e. how things are communicated) and reality
Pinkwashing, rainbowwashing…
When it comes to CSR, but also in the case of more negative events, consumers are likely to consider what are the motivations an organizations has to engage in a certain behavior. What are the different kinds of attributions?
Internal = perception that an event or behavior is caused by internal factors
External = perception that an event or behavior is caused by situational factors
Motives of CSR
Firm-serving = Organization is worried about its own outcomes (E.g. maximizing profit, attracting new customers) - Also called “self-centered”
Public-serving = Organization is concerned about collective goals (e.g. welfare community, environmental protection) - Also called “other-centered” or “altruistic”
An organization’s identity; What are the 6 C’s?
Character = what we are, without any doubt
Culture = what we feel like we are
Conceptualization = what we are seen as
Covenant = what is seen and expected
Constituencies = whom we seek to serve
Communication = what we say we are
Different ideas about identity
Balmer, 2008:
Corporate identity: “character” in the previous list (what we are, without any doubt), “actual identity”
Organizational identity = perception of the organization from internal stakeholders
Brown, 2006:
Intended image = perception of the organization from external stakeholders
Reputation = mental association held by external stakeholders
Hildebrand et al. 2011:
Actual identity = how the company actually is
Intended identity = company’s ideal identity, what it aspires towards
Perceived identity = how a company is perceived from the inside/outside
CSR and stakeholders: What are the positive outcomes?
Consumers are happy to pay more for sustainable products
Companies who engage in CSR can recruit the best candidates
However, question of identities:
o Do consumers identify with the company?
o Do consumers identify with the cause?
CSR and reputation
CSR can be beneficial for the reputation of an organization if the organization uses CSR to improve the identification of stakeholders to them by signalling values: e.g. making product more sustainable could make an organization look better in the eyes of consumers who care about sustainability
Climate crisis and CSR: Two streams of CSR
Moral = CSR as a way to fulfil businesses’ commitment to economic development while simultaneously improving the quality of life of the workforce, their families, the community, and society at large. Development and human well-being are part of the CSR agenda
Businesses engage in CSR because it is “the right thing to do” or they are motivated by intrinsic factors (e.g. ethical values and moral leadership)
Strategic = CSR is more focused on the strategic implications of CSR for corporations and less on its effects for society
Businesses engage in CSR because of extrinsic motivators (e.g. market and institutional pressures) and expected benefits (e.g. profits, increased employee commitment, customer loyalty)
Critics to CSR in a time of climate crisis
Short term CSR action are ineffective if not dangerous
Cause-related marketing campaigns often associated with CSR efforts allow organizations to make a profit due to global social problems (i.e. limited safe drinking water) especially in developing countries
CSR can function as a depoliticizing marketing practice that cements the role and power of corporate actors without delivering real improvements to people and communities
Shift in the view of what is CSR communication
Communication is more than a tool to craft a positive corporate image so as to gain or protect legitimacy
From CSR to corporate social responsiveness
Responsiveness requires communication:
“Responsiveness concerns the relative permeability of the organization’s boundaries and its willingness and ability to anticipate and adjust to society’s changing character, needs, and values. In this way responsive organizations are able to be more socially responsible by virtue of their willingness to hear and respond to social needs, standards, and values”
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: What is the Theory of the firm perspective on CSR?
CSR could be an integral part of differentiation strategies either directly through product features or indirectly through reputation and brand image
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: What is the Supply and Demand theory of CSR?
firms should only supply CSR that consumer, and other stakeholders, demand
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: What is the Consumer-company congruence (C-C-congruence)?
align manager and consumer perspectives in strategic CSR management
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: What is the objective of this study?
- Create a model to define and characterize CSR supply aimed at the ethical consumer market
- Empirically test which CSR characteristics consumers would truly value to create an impact on purchase intention
Which CSR characteristics lead consumers to choose a certain business/brand/product/service instead of another
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: CSR policy orientation + Theory
Weather a firm’s CSR value orientations echo consumer values and concerns
Social identity theory: explores the phenomenon of the “ingroup” and “outgroup”
People tend to adopt the identity of the group they belong to or are characterized in
Choosing ethical products from a specific company implies that customers endorse the company’s CSR policy orientation and identify with them
= In group identification
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: CSR stakeholder emphasis + Theory
Firms’ intention to attach importance and prioritize its responsibility to meet key stakeholder group’s CSR expectations
Stakeholder salience theory: stakeholder salience is based on power, legitimacy, and urgency
In strategic CSR management, how a firm considers stakeholders must be linked with stakeholders’ CSR interests
Kuokkanen and Sun, 2019 | CSR management to impact consumer choice: CSR fit with business + Theory
Fit of CSR means that a firm’s strategic CSR plan is determined by its core competencies and organizational capacities and its ability to excel in its efforts
Cognitive dissonance theory: a person whose private beliefs or behaviors do no align with public actions experience cognitive dissonance
- Whenever the fit is low = more cognitive resources are needed to process information
- CSR fit creates a perception of comfort by avoiding dissonance
