Defining CSR

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EBR 19,5

352

Defining corporate social responsibility A view from big companies in Germany and the UK Daniel Silberhorn Burston-Marsteller, Frankfurt, Germany, and

Richard C. Warren Manchester Metropolitan University Business School, Manchester, United Kingdom Abstract Purpose – The purpose of this comparative study is to explore how large German and British companies publicly define corporate social responsibility (CSR), as well as why and how the respective notion of CSR was developed.

Design/methodology/approach – The study is based on a qualitative content analysis of the CSR web sites of 40 British and German companies, and on a series of interviews with senior managers.

Findings – The main findings are that CSR is now presented as a comprehensive business strategy, arising mainly from performance considerations and stakeholder pressure. Companies focus on how they interact with stakeholders and how business activities impact on society. Most CSR policies addressed community, employee and customer issues. Increasingly, “quality of life” topics are emphasised. CSR policies varied with turnover, industry sector and nationality. In developing their notions of CSR, firms emphasized the primacy of reactive pragmatism and experience. Corporate culture also emerged as an influence, with institutionalised CSR functions and communications departments driving initiatives. The study concludes that business and CSR strategy appear to be on a convergent path, making business and CSR integration across the company the norm in future.

Research limitations/implications – Owing to the study’s exploratory character, the samples are not representative for the British and German economies.

Practical implications – The study suggests that especially German companies could benefit more from demonstrating a broad, business-driven understanding of CSR. Originality/value – Contributing to a deeper understanding of notions, rationales and influences, the study provides both science and practice with a more solid foundation for discussing and implementing CSR. It also broadens the perspective by looking at Germany and the UK. Keywords Corporate social responsibility, Economic sustainability, Corporate strategy, Germany, United Kingdom Paper type Research paper

European Business Review Vol. 19 No. 5, 2007 pp. 352-372 q Emerald Group Publishing Limited 0955-534X DOI 10.1108/09555340710818950

Introduction The first decade of the new millennium seems to be the one where corporate social responsibility (CSR) is coming of age after so many false dawns in past decades.

Perhaps, the shock of business scandals such as Enron, WorldCom and Parmalat, together with the impact of climate change on the environment, have been the tipping points that have pushed many businesses into a fundamental rethink about their responsibilities towards their various stakeholders. The new conversation about CSR in

business suggests that it is a normative, multi-level concept, whose meaning depends on various perspectives and relationships, and, that it changes in response to social trends. While earlier notions of CSR often had a regional, person-centred philanthropic focus, recent conceptions of CSR are inclusive, broad and diverse. The European Union, for instance, has defined CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” (European Commission, 2002).

CSR is now a well-known expression for what, in the past, has been a collection of different and yet related terms: corporate philanthropy, corporate citizenship, business ethics, stakeholding, community involvement, corporate responsibility, socially responsible investment, sustainability, triple-bottom line, corporate accountability and corporate social performance. Some of these terms have a family resemblance to each other, but many of these expressions have other connotations as well. This lack of consensus seriously hampers theoretical development as well as research into the implementation of these policies (Goebbels, 2002). One starting point in terms of CSR research is to explore how corporations are themselves defining and interpreting CSR. Most empirical studies of CSR have been focused on firms in the USA, Canada and the UK, but few have attempted to assess whether definitions of CSR differ between countries (Hopkins, 2004).

This study examines how CSR is defined from a corporate perspective by looking at the actual notions of CSR that large companies publish on their web sites, it also explores the thinking and definitional influences that informed these notions. The study also seeks to compare the perspectives on CSR across British and German companies, as these are the leading countries in CSR developments in Europe. The study will first review the literature on corporate perspectives on CSR and then describe the methodology that underpinned this comparative analysis. The findings of the comparative content analysis and interviews will then be presented and discussed, and finally, the implications and conclusions for the future of CSR will be assessed.

Research literature on corporate perspectives of CSR The early studies of how companies define CSR were made in the USA in the 1970s, using topical or issues-related approaches (Holmes, 1976; Bowman and Haire, 1975).

Aupperle et al. (1985) conducted one of the first studies that used a definitional construct of CSR, operationalizing Carroll’s (1979) well-documented four-part CSR definition. A sample of executives confirmed economic responsibility as their highest priority, followed by the legal, ethical and the discretionary CSR components. In subsequent years, a limited number of European studies suggested that the organisations’ perceptions of their social responsibilities changed internationally.

Moore and Richardson (1988) and Cowton (1987) found that the economic component continued to be stressed in the UK, with the main responsibilities being seen as producing goods and services and obeying the law. However, they observed a shift away from philanthropy. In Germany, Dierkes (1980) and Longnecker (1985) similarly reported that, while quality, profit and growth remained the top priority, “quality of life” issues were gaining importance. Pinkston (1991) found that legal responsibilities had become the highest-ranking CSR component in Germany and Sweden. In the USA, Pinkston (1991) also reported an increased significance of the legal and ethical components of CSR. His findings were supported by Pinkston and Carroll (1996).

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They observed that economic and legal responsibilities were perceived as almost equally important, and that ethical responsibilities had become more important at the expense of philanthropic responsibilities.

With economic and legal responsibilities thus converging to form a minimum threshold of CSR and ethical responsibilities gaining importance, the adequacy of Carroll’s (1979) four-part definition has been questioned. The framework appears unable to capture the direction of change within the now more prominent ethical and philanthropic components – into which the “greatest magnitude of a corporation’s social responsibility” falls (Pinkston and Carroll, 1996, p. 205). While Carroll’s (1979) conceptualisation is still occasionally used today (Joyner and Payne, 2002), O’Dwyer (2003) exemplifies the change in the way recent studies investigate the notion of CSR: examining qualitatively the corporate understanding of CSR, O’Dwyer chooses a normative, broad societal approach. He observes a tendency to interpret CSR in a way that is consistent with corporate goals of shareholder wealth maximisation. He also identifies three partially overlapping rationales which underpin the acceptance of corporate responsibilities, which he calls proactive enlightened self-interest, reactive enlightened self-interest and obligations/duties.

Other scholars have recently investigated the public presentation of CSR, similarly choosing a more grounded approach and taking advantage of the world wide web (Esrock and Leichty, 1998; Esrock and Leichty, 2000; Maignan and Ralston, 2002; Snider et al., 2003). They focused on the number of CSR statements, the stakeholder groups addressed, and the variations between companies or countries. Maignan and Ralston (2002), for instance, conceptualize CSR in terms of principles, processes and stakeholder issues. They report differences in the extent and choice of means in CSR reporting across four countries, as well as in the underlying motivations, which they categorise as performance-driven, stakeholder-driven and value-driven. Viewing CSR as a construct describing “the relationship between business and the larger society” Snider et al. (2003, p. 175) found that similar CSR messages are sent to similar stakeholder groups, irrespective of the company’s nationality.

Factors influencing corporate definitions of CSR This research evidence tends to suggest that CSR notions develop in interactions between organisationally framed values and external influences. Here, a small number of researchers have highlighted specific areas on the individual, organisational and institutional levels of CSR, as identified by Wood (1991). On the individual level, Hemingway and Maclagan (2004) argue that managers’ personal values strongly influence CSR policies. On the organisational level of CSR, studies have examined the influence of directorial type, the public relations function, and particularly financial resources and performance. Ibrahim et al. (2003) suggest that a company’s directorial type affects CSR decisions, as outside directors appear more concerned about the discretionary components of CSR. With respect to the public relations function, Heath and Ryan (1989) found that a large number of practitioners were not involved in the creation of corporate codes of behaviour. Rather, as Miles (1987) already argued, top-level management philosophy appeared to be critical for the take-up of CSR. Finally, corporate resources were found to principally influence the range of philanthropic activities (Pinkston and Carroll, 1996), with larger companies devoting more money (Levy and Shatto, 1980). On a more general level, McGuire et al. (1988)

discovered that firms with a high-financial performance were better equipped to act in a socially responsible way. Larger companies were also found to have a broader scope of CSR reporting on their web sites (Esrock and Leichty, 1998). On the institutional level of CSR, several researchers have suggested that the company’s industry sector influences the attitudes and behaviours associated with CSR (Bhambri and Sonnenfeld, 1988; Lerner and Fryxell, 1988; L’Etang, 1994).

However, several authors suggest that, despite these internal factors, companies are primarily reactive with respect to CSR, responding to external pressures rather than proactively defining CSR (L’Etang, 1994; Vogel, 2005). Here, industry-specific issues as well as public visibility play a role. O’Dwyer (2003) and Esrock and Leichty (1998) found that companies from sectors with a high-environmental impact had to respond more to external pressures and emphasized environmental preservation more than others. In addition, societal developments appear to force businesses to evolve their notion of CSR (Carroll, 1999; Wilson, 2000; Zadek, 2004). Such pressure is said to increase when codified by legislation (Pinkston and Carroll, 1996; O’Dwyer, 2003). In this context, the mass media are seen to exert control by making company behaviour public (Pinkston and Carroll, 1996). Maignan and Ralston (2002) also point to increasingly questioning investors as transmission belts of public opinion.

Despite the recent tendency to take a more grounded approach to researching the notion of CSR and first attempts to uncover the rationale behind corporate definitions, the thinking behind CSR and the definitional process’s internal and external influences remain under-researched. Research activities also largely focused on the Anglo-Saxon regions. Therefore, this study was designed to try to understand how CSR is defined in major German and British companies, both in terms of conceptualisation as well as the guiding rationale and factors that influenced its formation.

Methodology The study began with a content analysis of 40 corporate web sites’ CSR statements so as to examine how German and British companies publicly define CSR. This was followed up by eight semi-structured telephone interviews with senior CSR managers from major German and British companies in order to explore the rationale behind their CSR notions and investigate the definitional influences.

For the content analysis, a stratified systematic sample of 20 companies was taken from each country’s 2004 Handelsblatt turnover ranking, choosing every second case after a random start. Firms were excluded if their or their parent company’s web site did not address CSR, or if cross-referencing with a CSR report available online revealed a significantly narrower scope of reporting on the web site. In such cases, the following company on the list was examined. The content analysis’s coding scheme was developed using a combination of techniques suggested by Neuendorf (2002), modifying an existing CSR conceptualization advanced by Maignan and Ralston (2002). Based on Wood (1991), their approach conceptualizes CSR as a configuration of principles and processes that minimize a firm’s negative impact and maximize its positive impact on specific stakeholder issues. For the content analysis, sections of the corporate web sites were examined that explicitly referred to the business/society relationship. Annual reports were referred to online in order to validate the data. A statistical analysis then explored the CSR dimensions’ frequencies and relationships with organisational characteristics (Table I).

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Table I. Content analysis sample by industry sector

3 1 4

2 2 4

Technology 5 5 10

Service 2 3 5

3 2 5

2 3 5

Environ-mentally oriented

0 1 1

Food and agriculture

356

German British Total

Transportation

Industry sector Wholesale Chemical and and retail pharmaceutical

3 3 6

Other

20 20 40

Total

EBR 19,5

For the interviews, a purposive sample of eight companies was chosen from the FTSE4Good UK and FTSE4Good Europe indices (Table II). This CSR index series is compiled by an independent research institute and measures the performance of companies that meet a recognised basic standard of corporate responsibility. The indices therefore provide information-rich cases with regard to the research questions (Patton, 2002). The interview sample covers different high-impact business sectors, in four cases it was possible to realize interviews with firms that were part of the content analysis. Within the companies, senior CSR managers with on average eight years of experience were interviewed.

The interview guide’s structure followed generally accepted standards for interviews (Flick, 2002). It was mainly used as a guideline to ensure all areas are covered while allowing flexible reactions and probing. The telephone interviews were tape-recorded and transcribed using a simplified version of Drew’s (1995) transcription conventions. The interview transcripts were analyzed using a hierarchical template analysis, which produces a list of codes representing themes identified in the transcripts (King, 1999). This provided the basis for a thematic discussion structured around the main themes.

It is to be acknowledged that owing to the study’s exploratory character, the samples are not representative for the British and German economies, particularly not for smaller companies, and that the findings’ generalizability is therefore limited.

However, while only a small range of industry sectors could be covered in the interviews, all companies examined represent high-impact companies with a long tradition in CSR. Findings: how CSR is understood in UK and German companies The content analysis and interviews indicated that performance considerations were the most prominent motivating principle behind CSR, followed by corporate values, and lastly response to stakeholder pressures (Table III). All principles, and in particular the stakeholder-driven one, are presented more frequently on German web sites. While both German and British companies cite a variety of combinations, German companies offer a slightly more differentiated set of motivations with more companies citing two or even three motivating principles. Combinations with stakeholder-driven CSR are more frequent on German web sites (Figure 1).

Both nations favour the performance-driven perspective over the value-driven and stakeholder-driven ones (Figure 2). However, German companies still emphasize the value-driven perspective slightly stronger than their British counterparts, while more British than German companies put performance first.

CSR processes designate the managerial procedures and instruments employed by businesses to bring their motivational principles into practice. On average, the sampled companies discuss 11 CSR processes (mean ¼ 11.28, s ¼ 2.460). German companies mention slightly fewer processes with a higher variation (mean ¼ 10.30, s ¼ 3.045) than their British counterparts (mean ¼ 12.25, s ¼ 1.070). While all CSR processes are mentioned by at least half of the companies and the gaps between successive processes are minimal, stakeholder engagement and communication (40 mentions), management of environmental impact (39), code of ethics and business conduct (38), and philanthropic programmes (38) lead the table (Table III).

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Table II. Interview sample 60 55

8

104 70

29 8 11

67

108 174

129 60 41

219

22

Employees (thousand) Interviewee job title

UK

Senior external CSR advisor

Germany Corporate affairs manager UK Sustainable development manager UK Global CR manager

Senior manager bank in society UK Vice-president of CSR Germany Senior spokesperson group communications Germany Director of cultural affairs

UK

Origin

Sources: For company data – Fame Database and Datamonitor (November 2004); figures rounded

International healthcare and pharmaceutical holding company Merchandise and luxury goods retail group

Worldwide banking and financial services group Global car manufacturer Retailing and financial services

Worldwide banking and financial services group Global oil and gas group Global insurance group

Turnover (billion £)

UKRG08

UKPh07

þ5 8

GECa05 UKRe06

GEBa04

UKEn02 GEIn03

UKBa01

Interview code

4 16

6

21 4

9

Interviewee CSR experience (years)

358

Company

EBR 19,5

Companies mentioning Principles motivating CSR 1. Performance-driven CSR 2. Value-driven CSR 3. Stakeholder-driven CSR CSR processes 1. Stakeholder engagement and communication 2. Management of environmental impact 3. Code of ethics and business conduct 4. Philanthropic programmes 5. Business operation 6. Corporate governance and compliance with law 7. Human resources processes 8. Risk management 9. Health and safety programmes 10. Supply chain management 11. Employee community involvement 12. Corporate benchmarking 13. Sponsorships 14. Quality programmes Stakeholder issues 1. Community stakeholders a. Quality of life b. Protection of the environment c. Education d. Human rights e. Arts and culture f. Cultural diversity g. Safety h. Animal welfare 2. Customer stakeholders a. Quality b. Safety/health c. Data protection 3. Employee stakeholders a. Health and safety b. Equal opportunity c. Learning and development d. Employee care 4. Shareholders/investors a. Inclusion b. Shareholder value 5. Suppliers Additional CSR themes 1. Transparency 2. Sustainability 3. Responsiveness 4. Accountability

All

UK

Germany

Difference test

31 25 21

15 12 9

16 13 12

X 2 ¼ 0.143, df ¼ 1, p . 0.05 X 2 ¼ 0.107, df ¼ 1, p . 0.05 X 2 ¼ 0.902, df ¼ 1, p . 0.05

40 39 38 38 36 35 34 33 32 29 26 25 25 21

20 20 20 19 19 20 17 19 20 17 17 15 11 11

20 19 18 19 17 15 17 14 12 12 9 10 14 10

– X 2 ¼ 1.026, df ¼ 1, p . 0.05 X 2 ¼ 2.105, df ¼ 1, p . 0.05 X 2 ¼ 0.000, df ¼ 1, p . 0.05 X 2 ¼ 1.111, df ¼ 1, p . 0.05 X 2 ¼ 5.714, df ¼ 1, p , 0.05 X 2 ¼ 0.000, df ¼ 1, p . 0.05 X 2 ¼ 4.329, df ¼ 1, p , 0.05 X 2 ¼ 10.00, df ¼ 1, p , 0.05 X 2 ¼ 3.135, df ¼ 1, p . 0.05 X 2 ¼ 7.033, df ¼ 1, p , 0.01 X 2 ¼ 2.667, df ¼ 1, p . 0.05 X 2 ¼ 0.960, df ¼ 1, p . 0.05 X 2 ¼ 0.100, df ¼ 1, p . 0.05

40 39 33 24 21 12 11 7

20 19 18 13 6 4 6 5

20 20 15 11 15 8 5 2

– X 2 ¼ 1.026, df ¼ 1, p . 0.05 X 2 ¼ 1.558, df ¼ 1, p . 0.05 X 2 ¼ 0.417, df ¼ 1, p . 0.05 X 2 ¼ 8.120, df ¼ 1, p , 0.01 X 2 ¼ 1.905, df ¼ 1, p . 0.05 X 2 ¼ 0.125, df ¼ 1, p . 0.05 X 2 ¼ 1.558, df ¼ 1, p . 0.05

22 21 3

12 13 2

10 8 1

X 2 ¼ 0.404, df ¼ 1, p . 0.05 X 2 ¼ 2.506, df ¼ 1, p . 0.05 X 2 ¼ 0.360, df ¼ 1, p . 0.05

34 31 31 28

20 17 15 12

14 14 16 16

X 2 ¼ 7.059, df ¼ 1, p , 0.01 X 2 ¼ 1.290, df ¼ 1, p . 0.05 X 2 ¼ 0.143, df ¼ 1, p . 0.05 X 2 ¼ 1.905, df ¼ 1, p . 0.05

8 8 9

5 6 8

3 2 1

X 2 ¼ 0.625, df ¼ 1, p . 0.05 X 2 ¼ 2.500, df ¼ 1, p . 0.05 X 2 ¼ 7.025, df ¼ 1, p , 0.01

39 38 31 31

20 18 18 19

19 20 13 12

X 2 ¼ 1.026, df ¼ 1, p . 0.05 X 2 ¼ 2.105, df ¼ 1, p . 0.05 X 2 ¼ 3.584, df ¼ 1, p . 0.05 X 2 ¼ 7.025, df ¼ 1, p , 0.01

Differences between the two nationalities are most noticeable for the processes corporate governance and compliance with law, risk management, health and safety management, corporate benchmarking, and employee community involvement. British companies mention these processes more often than their German counterparts.

Sponsorships are the only process German companies present more often.

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Table III. CSR principles, processes, stakeholder issues, and additional CSR themes presented on corporate web sites (n ¼ 40)

EBR 19,5

Stakeholderdriven

Performancedriven 2

4

1

Performancedriven 2

3

5

360 Figure 1.

Combination of CSR principles (No. of firms)

3 2

5

3

6

1

1 Value-driven

2 Value-driven

Germany

UK

CSR issues are CSR-related concerns of importance to the stakeholders that directly or indirectly affect a company’s activities. On average, the sampled companies discuss ten issues on their web sites (mean ¼ 9.55, s ¼ 2.470). German companies (mean ¼ 9.00, s ¼ 2.636) display greater variance, and refer to slightly fewer issues than the British (mean ¼ 10.10, s ¼ 2.220).

As shown in Table III, community stakeholders (mean ¼ 4.68) are by far the most frequently referred to group, followed by employees (mean ¼ 3.1) and customers Nationality German British

12

10

Count

8

6

4

2

0 Value-driven

Figure 2.

Primary CSR principles

Performance- Stakeholder-driven driven Primary CSR Principle

(mean ¼ 1.15). Shareholder (mean ¼ 0.4) or supplier issues (mean ¼ 0.23) are hardly brought up. Overall, quality of life (40 mentions), protection of the environment (39), employee health and safety (34), and education (33) are the most common issues.

The frequencies vary noticeably between the nations. While there is cross-national agreement with respect to the importance of quality of life issues and environmental protection, British companies emphasize education, human rights and animal welfare more often than German firms. In contrast, German companies emphasize cultural diversity and especially arts and culture significantly more. While the British companies discuss all three customer issues more often than the German firms, the employee stakeholder issues present a more varied picture. Whereas British companies speak about equal opportunity and especially about health and safety significantly more often, German firms refer more recurrently to learning and development and employee care issues. Companies in both countries scarcely refer to either shareholder or supplier issues. However, British companies still pay clearly more attention to these stakeholder groups than German firms (Table III).

Furthermore, most CSR sections refer to additional themes that describe aspects of corporate behaviour in relation to CSR. Specifically, “Transparency” is presented as part of CSR by 39 (98 per cent) companies, “Sustainability” by 38 (95 per cent), and “Accountability” and “Responsiveness” by 31 (78 per cent) (Table III).

German and British companies hardly differ with respect to “Transparency” and “Sustainability”. However, only 12 (60 per cent) German companies mention “Accountability” and 13 (65 per cent) “Responsiveness” as opposed to 19 (95 per cent) and 18 (90 per cent), respectively, of the British (Figure 3).

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361

Sustainability Accountability Transparency Responsiveness

1

0.8

Mean

0.6

0.4

0.2

0 German

British Nationality

Figure 3.

Additional CSR themes on corporate web sites

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The underlying rationale and thinking behind corporate CSR definitions The eight respondents had observed a growth in stakeholder expectations and public scrutiny with respect to corporate behaviour since the late 1990s, attributing it mainly to a general loss of trust in businesses that was accelerated by a series of food scares and major business scandals:

362

What we find (. . .) is a much more questioning society. Consumers expect from us that we demonstrate that we are dealing with all the substantive social, environmental issues that we may cause (UKRe06).

As a result, companies were required to communicate their social performance more clearly and to organise all CSR-related areas more coherently. This increasingly extends to global issues, as corporations are moving towards “a broader sense of community” (UKBa02).

At the same time, businesses had to recognise the potential impact of corporate behaviour on reputation, with the implication that a bad reputation may lead to a loss of trust and ultimately the company’s “Lizenz zum Wirtschaften” (licence to operate) (GEIn03). Therefore, developing the CSR notion is at least partly motivated “by the need to defend our reputation” (UKPh07). Accepting responsibility, on the other hand, was understood to strengthen the reputation, also with employees, fostering “pride and loyalty” (UKPh07). Behaving in a socially responsible way, most respondents found, is crucial to achieve sustainable business success: “Long-term we cannot be successful unless we also address the wider issues around us, in the environment and in society generally” (UKBa02). Such a profit focus is usually justified by arguing that a company’s failure would be “catastrophic for all its stakeholders, investors and employees particularly” (UKBa02).

Several respondents argued that daily business activities constitute the main impact on society, highlighting the necessity of a comprehensive, business-focused CSR notion. Any supplementary social investment has to be “directly relevant to our business and connected things that we can do” (UKEn01).

Consequently, while half of the respondents referred to reputation measurement as part of gauging success, most acknowledged that there is “no overall benchmark of success” (UKRG08). One respondent even claimed to consider overall societal progress and development the “ultimate measure” (UKEn01). In fact, this company emphasized that any narrow CSR notion would always be perceived as a mere “green wash” by the public: You can open as many schools and hospitals as you like, but if your core business is rotten, you’re going to be found out by society pretty quickly. The first and foremost action of corporate responsibility is getting the business done right (UKEn01).

Five respondents furthermore indicated that their concept of CSR enables them to “get on with the purpose of business, which is doing business” (UKEn01). This was seen as crucial, as the respondents felt it is impossible to satisfy every interest involved in business decisions and found that “opinions change very fast”(UKRG08) with respect to ethics. Especially, by means of transparency and stakeholder engagement, the present CSR notions allow internally and externally justifiable decisions.

Explaining his company’s strong stakeholder-orientation, one respondent argued that trying to reflect a societal consensus was the only way to avoid mistakes and punishment. Accordingly, six of the eight respondents admitted that their company’s

CSR approach is based more on practice and experience than on a theoretical basis.

Here, some respondents refer to a “more instinctive” (UKBa02), evolutionary approach that is “to some extent subjective and has to do with your gut feeling” (UKPh07). The main guiding principle appears to be the notion of sustainable development, which six companies referred to. In addition, all respondents mentioned stakeholder theory at least implicitly.

Most respondents pointed to what they presented as a long tradition of responsibility, suggesting that the present CSR notion is the result and part of a “continuing learning process” (UKEn01). This evolution appears to be driven by a network of mutually interacting external and internal factors, which had recently triggered major conscious advancements within four companies.

Industry sector emerged as major external factor. With respect to CSR principles, environmentally-oriented companies exclusively focus on the performance aspect.

Technology companies also favour that perspective. The transportation sector highlights the value-driven one, chemical and pharmaceutical businesses emphasize both the value-driven and the performance principle. The service industry displays the greatest variance across all three principles (Figure 4).

Food and agriculture (mean ¼ 14.00), followed by wholesale/retail (mean ¼ 13.00, s ¼ 1.000) and chemical and pharmaceutical (mean ¼ 12.00, s ¼ 1.000), discuss the largest number of CSR processes (Figure 5). The transportation sector mentions the fewest (mean ¼ 9.50, s ¼ 2.380). Companies with a low-environmental impact present noticeably fewer than average, and display a high-variance (mean ¼ 9.25, s ¼ 5.500).

As Figure 6 shows, the number of CSR issues varies as well. While the sectors wholesale/retail ðmean ¼ 11:00; s ¼ 3:000Þ and chemical and pharmaceutical ðmean ¼ 10:60; s ¼ 1:637Þ discuss the highest number of issues, transportation ðmean ¼ 7:75; s ¼ 2:217Þ and service ðmean ¼ 8:50; s ¼ 2:579Þ mention the least. Low-impact industries mention the lowest average number with the greatest variance ðmean ¼ 8:50; s ¼ 4:933Þ; high-impact industries discuss the most ðmean ¼ 9:90; s ¼ 2:143Þ:

363

Industry Sector Transportation Technology Service

5

4

Count

Defining CSR

Wholesale/ retail Chemical & Pharmaceutical Environmentally oriented Food and agriculture Other

3

2

1

0 Value-driven

Performance-driven Stakeholder-driven Primary CSR Principle

Figure 4.

Industry sector and primary CSR principle

10

8

6

4 Mean Number of CSR Issues

re tu er ul th ric ed O nt ag e i d or an al lly od a t tic Fo en eu ac nm m ro ar vi Ph En & al ic l ai em et Ch /r le sa le ho W e ic rv Se gy lo no ch n Te tio ta or sp an Tr

re er ltu u th O ric ag ed d nt ie an r o od lly al Fo ta tic en eu nm ac ro m vi ar En Ph & al ic l em ai et Ch /r le sa

le ho

W

e ic rv Se gy lo no ch n Te tio ta or sp an Tr

Industry Sector

Figure 6.

Industry sector and number of CSR issues

Industry Sector

Figure 5.

Industry sector and number of CSR processes

10

6

4

Mean Number Processes

8

364

Average: 11.28 14

12

EBR 19,5

2

0

Average: 9.55 12

2

0

Beyond frequencies, all respondents indicated that the respective industry sector generates specific issues:

Defining CSR

One company of the group handles an enormous amount of private information on individuals. For that company, handling data protection and privacy and treating that information properly is a critical business issue (UKRG08).

The transportation and the technology industries and the “other” category mention “Accountability” the least often (25, 75 and 50 per cent). “Responsiveness” is only mentioned by 50 per cent of the companies in the technology, 60 per cent in the chemical and pharmaceutical, and 50 per cent in the “other” sector (Figure 7).

One-time events had a stronger influence among the British sample than for the German companies, usually involving public criticism of what stakeholders perceived as socially irresponsible behaviour. In one instance, a succession of three incidents triggered a substantial effort to consciously re-define CSR. As one respondent summarized: “Business issues arise and are dealt with, we learn from them, we built them in and we move forward” (UKEn01).

This reactive, evolutionary process involves a wide stakeholder network, suggesting that the respondents view and experience CSR strongly as a “Dialogthema” (diolog topic)(GECa05).

Here, the business community emerged as a major factor, providing orientation in terms of developments and best practice, advancing the notion and exercising control through business initiatives. One British respondent cited a Business in the Community (BITC) CSR framework as his company’s notion’s basis.

Sustainability Accountability Transparency Responsiveness

1

0.8

Mean

365

0.6

0.4

0.2

0 re tu ul ed er ric nt th ag orie l O d ca an lly euti ta od en mac Fo nm ar ro Ph vi En al & l i ic ta em / re Ch ale s le ho W e ic rv gy Se lo no n ch tio Te rta po ns

a Tr

Industry Sector

Figure 7.

Industry sector and additional CSR themes

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366

For all respondents, NGOs play a major role that goes beyond an external control function and actually informs strategic direction. Two British respondents acknowledged that NGOs, who generally adopt a broad view on CSR, are often “more in keeping with the expectations of our customers than think tanks or policy makers” (UKRe06). Additionally, as co-formers of public opinion, NGOs are seen to provide “some element of forward-looking, forward projection” (UKRG08): “If you understand what Greenpeace are campaigning on now, it might tell you, in ten years time, what’s going to be the socially acceptable norm” (UKRG08).

Media scrutiny, which was mentioned by four British and one German respondent, was identified as posing serious reputation risks if irresponsible behaviour is exposed.

Already a small failure was felt to potentially “destroy everything you’ve worked for such a long time” (UKPh07). This risk requires companies to control their CSR standards and be transparent about them in every activity.

For half of the respondents, the financial community’s broadening perspective on risk was perceived as an important impulse to widen the CSR perspective, particularly in the UK: “They started all of a sudden to switch from asking only environmentally related questions to broaden their interests to human rights and employee issues, etc.”

(UKPh07).

The influence of governments and regulations was generally perceived as low, and more often referred to by the German respondents.

Internally, the evolution of CSR is linked to corporate culture. Most respondents indicated that the respective notion had to be “something that works for our management, for our company, for our culture, for our history” (UKEn01). Accordingly, there is a high-degree of variance with respect to which groups or people are most involved in developing the CSR notion. All respondents reported that their company has charged specialised committees with responsibilities to “oversee the CSR work” (UKBa02), providing “an overall direction, a long-term vision” (UKEn01). However, half of the respondents said that their notion has developed within a cross-functional network of both strategic and business units, which are confronted with CSR issues, and had varying degrees of responsibility. In two British companies, the development was led from the top, in three cases the respondents themselves claim to have a significant influence on the development.

Within these company-specific networks, the public relations function generally played a significant role. Six respondents indicated that their public relations functions are involved in two-way boundary-spanning communication, relating messages to internal and external audiences, but also “working very closely” with stakeholders to “understand what their expectations” (UKRe06) are, and then advising management and influencing the company’s strategic direction in terms of CSR. In two companies, the public relations function assumed a “coordinating role” (UKBa02) or “Klammerfunktion” (bracket function)(GECa05): Sie kennen und koordinieren alle nachhaltigkeitsbezogenen Vorga¨nge und Aktivita¨ten im Unternehmen und sind letztendlich Sprachrohr nach außen [...] und nehmen auch eine sensitive Stellung zur Außenwelt wahr, und tragen sie auch wieder nach innen (GECa05).(Translation: “They know and coordinate all sustainability-related procedures and activities within the company and ultimately are the external mouthpiece [. . .] and are also sensitive towards the environment and feed that back into the company.”)

While all British respondents indicated that the role of public relations exceeds that of a communicator, one German respondent insisted that the public relations function exists exclusively to send messages out.

Lastly, the results suggest that turnover plays a role. While the top 20 companies emphasize the value-driven and performance CSR principle, the lower-half of the sampled top 40 companies presents a more varied picture. The third-quartile has the largest number of companies citing the stakeholder perspective as main motivating principle (Figure 8).

Turnover rank hardly appears to influence the number of processes. Variation is highest in the fourth-quartile (Table IV). The number of CSR issues decreases slightly from the second to the fourth turnover quartile.

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Discussion and conclusion This study provides some evidence that CSR has come a long way from its early regional, person-centred, philanthropic focus. While the sample does not allow generalizations about German and British companies as a whole, the findings suggest that the largest corporations are projecting CSR as a comprehensive sustainable business strategy, based on transparency, accountability and responsiveness, which Turnover Rank 1. Quartile 2. Quartile 3. Quartile 4. Quartile

8

Count

6

4

2

0 Value-driven

Performancedriven

Figure 8.

Turnover rank and primary CSR principle

Stakeholderdriven

Primary CSR Principle

Turnover rank

Mean

N

Std deviation

1. Quartile 2. Quartile 3. Quartile 4. Quartile Total

11.30 11.18 11.45 11.13 11.27

10 11 11 8 40

2.946 2.401 1.635 3.227 2.460

Table IV. Turnover rank and average number of CSR processes

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recognizes the business-society interdependence and constantly evolves in interactions between the company and its increasingly global environment.

While supporting earlier findings that self-interest and performance considerations are major drivers of CSR, the study challenges O’Dwyer’s (2003) conclusions that companies act mostly proactively. Within a more questioning society and faced with fast changing views on CSR issues, most companies have adopted a reactive approach, making responsiveness and stakeholder engagement central themes within their CSR notions. The study also found a shift within the British sample from performance to values as a motivational principle, compared to Maignan and Ralston’s (2002) findings, suggesting that companies increasingly present CSR as a part of their corporate culture.

The findings also reflect a significant increase in the number of CSR processes, which has indeed quadrupled in comparison with Maignan and Ralston (2002). The emphasis has shifted to processes that determine how the company interacts with stakeholders and how it may achieve a positive impact through its regular business activities, confirming the tendency of a broadening CSR notion and a growing importance of ethical aspects observed by Pinkston (1991) and Pinkston and Carroll (1996). In contrast, philanthropic programmes and especially sponsorships have continued to lose prominence. At the same time, companies now present their regular business activities as an important means of fulfilling their responsibility.

Accordingly, both the overall number and mentions of individual CSR issues have significantly increased, accompanied by a shift concerning which issues are addressed most often. While protection of the environment and education remain a top priority for a large majority of companies, these issues are overtaken by “quality of life” issues.

The most significant change, however, can be observed with respect to employee issues. Their number has doubled compared to Maignan and Ralston’s (2002) findings, and each is also mentioned more often. The respondents suggested that this might be due to the recognition of the employees’ importance for business success. However, some statements clearly suggest that long-term sustainability and profitability retain precedence in case of a conflict of interests.

All in all, external pressures and an increasing awareness among companies of their regular business activities’ impact is the major driver for large companies to communicate a considerably broader CSR notion. In fact, CSR and business appear to be converging into what is often presented as a sustainable business strategy.

While the underdeveloped theoretical foundations of the CSR notions generally provide decision makers with little guidance and make CSR vulnerable to criticism, the idea of sustainability, strongly rooted in the objective of long-term profitability, offers at least some direction. In accordance with Moir (2001) and Robertson and Schlegelmilch (1993), stakeholder theory emerged as the most widely used framework, helping to identify and communicate areas and issues of responsibility.

The similarities between large German and British companies generally support Snider et al.’s (2003) observation that global companies act similarly in their development and dissemination of CSR messages. The slight differences found in this study, however, support Hopkins’s (2004) argument that CSR differs from country to country. These differences may be due to different starting points for CSR in Germany and the UK. In Germany, the welfare state had already introduced stricter legislation in areas such as employee rights and green issues, whereas in the UK a more laissez-faire

state passed on the responsibilities to the market. In the UK, a large number of institutions and networks therefore developed to monitor businesses’ social performance, subjecting business to greater scrutiny. Consequently, UK companies were driven to launch broader CSR initiatives to improve their legitimacy and social acceptance, including the areas companies in Germany already had to cater for by law.

In Germany, the lower influence of investors and ethical investment may be due to a traditional unwillingness of German investors to criticise companies publicly as a result of a “Deutschland AG” (German Inc.)(GEIn03) culture of traditionally strongly intertwined interests within the German economy.

Conceptions of CSR are evolving constantly in interaction with internal and external influences. Supporting Bhambri and Sonnenfeld (1988) and Esrock and Leichty (1998), the location of the firm in a particular industry sector emerged as an important factor in the development of CSR policies, with different industries exhibiting diverse patterns of motivational principles and discussing differing numbers of CSR processes and issues. That high-impact companies generally present a broader CSR notion appears to be due to the wider range of critical issues they face and to the stricter public scrutiny such companies experience.

In accordance with L’Etang (1994), who argues that companies are primarily reactive in terms of CSR issues, the study found support for Pinkston and Carroll’s (1996) argument that CSR notions evolve in response to newly emerging issues. Eager to avoid potential conflicts and ensuing damage to their reputation should they not reflect societal consensus, the companies developed CSR notions that emphasize stakeholder engagement, transparency and responsiveness. Moreover, while the findings support earlier works by Pinkston and Carroll (1996) and Maignan and Ralston (2002) with respect to the roles of the media and investors, the significant influence of the business community and NGOs in shaping the CSR notion still has to be recognized.

In terms of internal influences, corporate culture appears to determine the general attitude towards CSR and how the notion is advanced. As clear criteria increasingly guide CSR-related work and large companies strive to develop objective measures to gauge success, it can generally be observed that CSR positions and functions are more and more institutionalised. Challenging Heath and Ryan’s (1989) conclusion that they are often hardly involved in defining CSR, the study also found that communications practitioners played a significant internal and external role, which may be due to the general direction which the notion of CSR has taken. As cornerstone of transparency and responsiveness, the public relations function is increasingly realizing its potential as a strategic business function identified by scholars such as Grunig et al. (1992) or Cutlip et al. (2000). Generally, such organisational factors limit the power of individuals, challenging Hemingway and Maclagan’s (2004) conclusion that CSR is mainly the result of individual values and action.

However, the study supports earlier findings that company size and turnover influence the presented CSR notion. As Esrock and Leichty (1998) argue, the larger companies’ slightly broader notion could be seen as a response to greater demands placed on big firms. It may also be influenced by a generally more extensive corporate disclosure in comparison with companies that have fewer resources, as suggested already by Cowen et al. (1987).

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The findings suggest that especially German companies, focusing more than British firms on classic value-driven corporate citizenship, may feel obliged to embrace and communicate a clearer and broader notion of CSR in the future. Especially, as the present demise of the welfare state and high-unemployment figures increase the pressure to demonstrate socially responsible behaviour. Here, a proactive stance may help firms to avoid some painful experiences the British sample reported, and could reduce risks and even improve reputation and relationships. Tighter regulation can be expected if the private sector fails to embrace CSR principles. Yet companies should not search for “off the shelf” solutions, as appropriateness and believability are industry- and business-specific. Here, CSR highlights the public relations function’s strategic value as a boundary-spanning function.

CSR has come a long way from its early philanthropic roots, and has moved beyond the tipping point to become a wide-spread strategic business practice. Full CSR integration across the company is becoming the norm for large firms. The long-term question is whether this trend will lead to the development of a sustainable capitalism, in which present niche products such as organic food, renewable energy and fair trade products can play a more prominent role. Social welfare and long-term business success may well depend upon these changing notions of sustainability. For the future, the categorical imperative of CSR is societal sustainability.

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Further reading Abott, W.F. and Monsen, R.J. (1979), “On the measurement of corporate social responsibility: self-reported disclosures as a method of measuring corporate social involvement”, Academy of Business Journal, Vol. 22, pp. 501-15.

Friedman, M. (1962), “The social responsibility of business is to increase its profits”, The New York Times, September 21, p. 126.

Goebbels, M. (2001), “The contemporary dynamics of corporate social responsibility: untangling an emerging notion”, unpublished article, Erasmus University Rotterdam, Rotterdam.

Jones, M.T. (1996), “Missing the forest for the trees: a critique of the social responsibility concept and discourse”, Business and Society, Vol. 35 No. 1, pp. 7-41.

Very¨iy¨, D. and Grunig, J.E. (2003), “The origins of public relations theory in economics and strategic management”, in Moss, D., Very¨iy¨, D. and Warnaby, G. (Eds), Perspectives on Public Relations Research, Routledge, London, pp. 9-58.

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