Communicating Corporate Social Responsibility : Perspectives and Practice 9781783507962, 9781783507955

Citation preview

COMMUNICATING CORPORATE SOCIAL RESPONSIBILITY: PERSPECTIVES AND PRACTICE

CRITICAL STUDIES ON CORPORATE RESPONSIBILITY, GOVERNANCE AND SUSTAINABILITY Series Editor: William Sun Recent Volumes: Volume 1:

Reframing Corporate Social Responsibility: Lessons from the Global Financial Crisis Edited by William Sun, Jim Stewart and David Pollard

Volume 2:

Finance and Sustainability: Towards a New Paradigm? A Post-Crisis Agenda Edited by William Sun, Ce´line Louche and Roland Pe´rez

Volume 3:

Business and Sustainability: Concepts, Strategies and Changes Edited by Gabriel Eweje and Martin Perry

Volume 4:

Corporate Social Irresponsibility: A Challenging Concept Edited by Ralph Tench, William Sun and Brian Jones

Volume 5:

Institutional Investors’ Power to Change Corporate Behavior: International Perspectives Edited by Suzanne Young and Stephen Gates

CRITICAL STUDIES ON CORPORATE RESPONSIBILITY, GOVERNANCE AND SUSTAINABILITY VOLUME 6

COMMUNICATING CORPORATE SOCIAL RESPONSIBILITY: PERSPECTIVES AND PRACTICE EDITED BY

RALPH TENCH WILLIAM SUN BRIAN JONES Leeds Metropolitan University, UK

United Kingdom North America India Malaysia China

Japan

Emerald Group Publishing Limited Howard House, Wagon Lane, Bingley BD16 1WA, UK First edition 2014 Copyright r 2014 Emerald Group Publishing Limited Reprints and permission service Contact: [email protected] No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-78350-795-5 ISSN: 2043-9059 (Series)

ISOQAR certified Management System, awarded to Emerald for adherence to Environmental standard ISO 14001:2004. Certificate Number 1985 ISO 14001

CONTENTS LIST OF TABLES

ix

LIST OF FIGURES

xi

LIST OF APPENDIX

xiii

LIST OF CONTRIBUTORS

xv

EDITORIAL ADVISORY AND REVIEW BOARD ACKNOWLEDGEMENTS

xix xxiii

PREFACE Phil Wilson

xxv

PART I: INTRODUCTION INTRODUCTION: CSR COMMUNICATION AS AN EMERGING FIELD OF STUDY Ralph Tench, William Sun and Brian Jones

3

PART II: COMMUNICATION IN CSR: THE COMMUNICATIVE ROLE, STRATEGY AND EVALUATION FOUR ACES: BRINGING COMMUNICATION PERSPECTIVES TO CORPORATE SOCIAL RESPONSIBILITY Øyvind Ihlen, Steve May and Jennifer Bartlett

v

25

vi

CONTENTS

COMMUNICATING, CONNECTING AND DEVELOPING SOCIAL CAPITAL FOR ORGANISATIONS AND THEIR COMMUNITIES: BENEFITS FOR SOCIALLY RESPONSIVE ORGANISATIONS Joy Chia

41

CORPORATE SOCIAL RESPONSIBILITY COMMUNICATION: TOWARDS A PHASE MODEL OF STRATEGIC PLANNING Bernd Lorenz Walter

59

CORRELATING LEADERSHIP STYLE, COMMUNICATION STRATEGY AND MANAGEMENT FASHION: AN APPROACH TO DESCRIBING THE DRIVERS AND SETTINGS OF CSR INSTITUTIONALIZATION Lars Rademacher and Nadine Remus

81

A MODEL FOR EVALUATING CORPORATE ENVIRONMENTAL COMMUNICATION Magnus Fredriksson and Eva-Karin Olsson

111

THE ROLE OF CORPORATE SOCIAL RESPONSIBILITY IN INTERNATIONAL INVESTMENT LAW: THE CASE OF TOBACCO Yulia Levashova

131

PART III: CSR DISCOURSES AND CORPORATE REPORTING A DIALECTICAL APPROACH TO ANALYZING POLYPHONIC DISCOURSES OF CORPORATE SOCIAL RESPONSIBILITY Ganga S. Dhanesh

157

Contents

vii

BRAND HERITAGE AND CSR CREDENTIALS: A DISCOURSE ANALYSIS OF M&S REPORTS Deviraj Gill and Anne Broderick

179

CAN ONE REPORT BE REACHED? THE CHALLENGE OF INTEGRATING DIFFERENT PERSPECTIVES ON CORPORATE PERFORMANCE Adria´n Zicari

201

COMMUNICATING ABOUT INTEGRATING SUSTAINABILITY IN CORPORATE STRATEGY: MOTIVATIONS AND REGULATORY ENVIRONMENTS OF INTEGRATED REPORTING FROM A EUROPEAN AND DUTCH PERSPECTIVE Tineke Lambooy, Rosemarie Hordijk and Willem Bijveld

217

PART IV: CSR ONLINE COMMUNICATION AND SOCIAL MEDIA THE RESPONSIBILITIES OF SOCIAL NETWORKING COMPANIES: APPLYING POLITICAL CSR THEORY TO GOOGLE, FACEBOOK AND TWITTER Theresa Bauer

259

TWITTER AND ITS USAGE FOR DIALOGIC STAKEHOLDER COMMUNICATION BY MNCs AND NGOs Sarah Inauen and Dennis Schoeneborn

283

CSR ONLINE COMMUNICATION: THE METAPHORICAL DIMENSION OF CSR DISCOURSE IN THE FOOD INDUSTRY Magdalena Bielenia-Grajewska

311

viii

CONTENTS

PART V: THE ROLE OF STAKEHOLDERS IN CSR COMMUNICATION: MANAGERS, EMPLOYEES AND CONSUMERS CORPORATE SOCIAL RESPONSIBILITY COMMUNICATION FROM THE VEDANTIC, DHARMIC AND KARMIC PERSPECTIVES Balakrishnan Muniapan and Sony Jalarajan Raj

337

SCEPTICAL EMPLOYEES AS CSR AMBASSADORS IN TIMES OF FINANCIAL UNCERTAINTY Anastasios Theofilou and Tom Watson

355

CREATING CONSUMER CONFIDENCE IN CSR COMMUNICATIONS Guido Berens and Wybe T. Popma

383

QUID PRO QUO? DUTCH AND GERMAN CONSUMER RESPONSES TO CONDITIONAL AND UNCONDITIONAL CORPORATE GIVING INITIATIVES IN ADVERTISING Brigitte Planken and Steef Verheijen

405

ABOUT THE EDITORS

425

ABOUT THE AUTHORS

427

LIST OF TABLES Chapter 5

Table 1

Chapter 6

Table 1

Table 2

Table 3

Table 4

Table 5

Table 6

Chapter 9

Table 1

Chapter 11

Table 1

Chapter 13 Chapter 16

Table 1 Table 1 Table 2

Drivers of CSR Institutionalization (Displayed in the Four Levels of AngusLeppan et al., 2010). . . . . . . . . . . . . Twenty Corporations Listed on the Stockholm Stock Exchange and their Sectoral Belonging. . . . . . . . . . . . . An Illustration of the Number of Answers Provided in Corporations Environmental Disclosures. . . . . . . . . . . . . . . . . The Quantity of Paragraphs Including Environmental Disclosure in the Annual Reports from 2006 of 20 Swedish Listed Corporations (Quantity).. . . . . . . . . . The Distribution of Answers Regarding Environmental Work in the Annual Reports from 2006 of 20 Swedish Listed Corporations (Percent). . . . . . . . . . . The Frequency, Scope, Context and Informativity of Environmental Discourse in the Annual Reports from 2006 of 20 Swedish Listed Corporations. . . . . . . . Four Categories of Corporations Divided by the Scope of Informativity and Quantity of Environmental Discourse in the Annual Reports from 2006 of 20 Swedish Listed Corporations. . . . . . . . . . . . . . . . Explanatory Dimensions as Part of the Research Findings.. . . . . . . . . . . . . PUMA EP&L Table and Visual Breakdown. . . . . . . . . . . . . . . . . Category Scheme for the Content Analysis. Measures and Items of Research. . . . . . Regression Model for Word of Mouth. . . ix

90 116 118

120

121

124

126 188 221 297 365 369

x

LIST OF TABLES

Table 3 Table 4 Table 5

Chapter 18

Table 6 Table 1

Table 2

Regression Model for Control Mutuality. . Regression Model for Relationship Commitment. . . . . . . . . . . . . . . . Regression Model for Relationship Satisfaction. . . . . . . . . . . . . . . . . Regression Model for Trust. . . . . . . . . Number of Participants Across Experimental Conditions (Unconditional Initiative, Conditional Initiative, No Initiative) and Nationality (Dutch, German).. . . . . . . . . . . . . . . . . . Mean Attitude to Product, Mean Attitude to Company and Mean Purchasing Intent, Across Three Experimental Treatments and Two Nationalities. . . . . . . . . . . . . .

369 370 370 371

417

418

LIST OF FIGURES Chapter 1 Chapter 4

Fig. 1 Fig. 1

Chapter 5

Fig. 1 Fig. 2 Fig. 3 Fig. 4

Fig. 5 Fig. 6 Fig. 7 Chapter 11 Fig. 1 Fig. 2 Fig. 3 Chapter 13 Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5 Fig. 6 Fig. 7 Fig. 8 Fig. 9

The CSR Communication Framework. . . . . Phase Model of Strategic Planning in CSR Communication. . . . . . . . . . . . . . . . . Institutional Drivers from Angus-Leppan et al. (2010, p. 190). . . . . . . . . . . . . . . . . . Management Fashion-Setting Process (Abrahamson 1996, p. 260). . . . . . . . . . . Management Approaches that Fit CSR. . . . . Primary Aims and Target Groups of CSR Implementation. . . . . . . . . . . . . . . . . The Development of CSR Consulting. . . . . . The Future Development of CSR Consulting. . CSR as a Topic in Executive Trainings. . . . . PUMA’s EP&L. . . . . . . . . . . . . . . . . The Key Objectives of the Van Gansewinkel Group with regard to ‘Planet’. . . . . . . . . . The Process of Preparing an Integrated Report. Model of Conceptual Orality and Literality by Koch and Oesterreicher (1994, p. 588).. . . . . Private versus Public Communication. . . . . . Familiar versus Unfamiliar Communication Participants.. . . . . . . . . . . . . . . . . . . . . Strong versus Weak Emotionality. . . . . . . . Inclusion versus Exclusion of Action Contexts. Inclusion versus Exclusion of Situational Referencing. . . . . . . . . . . . . . . . . . . Interaction versus Information. . . . . . . . . Information: Personal versus Impersonal. . . . Comparison of MNCs and NGOs on the Continuum of Conceptual Orality/Literality (Koch & Oesterreicher, 1994). . . . . . . . . .

xi

8 71 87 96 100 101 102 103 104 220 226 227 293 298 299 299 300 301 301 302 303

xii

LIST OF FIGURES

Fig. 10 MNCs: Degree of “Proximity” in Twitter Communication (Split by Industry). . . . . . . Fig. 11 NGOs: Degree of “Proximity” in Twitter Communication (Split by Segments). . . . . .

304 305

LIST OF APPENDIX Chapter 16 Appendix

Factors and Reliability Test. . . . . . . . . . . . .380

xiii

LIST OF CONTRIBUTORS Jennifer Bartlett

Queensland University of Technology, Brisbane, Australia

Theresa Bauer

Institute of Management, Humboldt University, Berlin, Germany

Guido Berens

Rotterdam School of Management, Erasmus University Rotterdam, the Netherlands

Magdalena BieleniaGrajewska

Department of Translation Studies, Faculty of Languages, University of Gdansk, Poland

Willem Bijveld

De Brauw Blackstone, Amsterdam, the Netherlands

Anne Broderick

De Montfort University, Leicester, UK

Joy Chia

School of Applied Media and Social Sciences, Monash University, Melbourne, Australia

Ganga S. Dhanesh

Department of Communications and New Media, National University of Singapore, Singapore

Magnus Fredriksson

Department of Informatics and Media, Uppsala University, Sweden

Deviraj Gill

De Montfort University, Leicester, UK

Rosemarie Hordijk

University of Utrecht, Utrecht, the Netherlands

Øyvind Ihlen

Department of Media and Communication, University of Oslo, Norway

Sarah Inauen

University of Zurich, Zurich, Switzerland xv

xvi

LIST OF CONTRIBUTORS

Brian Jones

Leeds Metropolitan University, Leeds, UK

Tineke Lambooy

Utrecht University, Utrecht, the Netherlands

Yulia Levashova

Molengraaff Institute, Utrecht University, Utrecht, the Netherlands; Centre for Sustainability, Nyenrode Business University, Breukelen, the Netherlands

Steve May

Department of Communication Studies, University of North Carolina at Chapel Hill, USA

Balakrishnan Muniapan

Human Resource Management, Swinburne University of Technology, Sarawak, Malaysia

Eva-Karin Olsson

Crismart (Crisis Management Research and Training), Swedish National Defence College, Stockholm, Sweden

Brigitte Planken

Department of Communication and Information Studies, Radboud University, Nijmegen, the Netherlands

Wybe T. Popma

Brighton Business School, University of Brighton, Brighton, UK

Lars Rademacher

Department of Media Management, MHMK University of Applied Sciences, Munich, Germany

Sony Jalarajan Raj

Institute for Communication, Entertainment, and Media, St. Thomas University, Florida, USA

Nadine Remus

Ludwig Maximilan University of Munich (LMU), Munich, Germany and MHMK University of Applied Sciences, Munich, Germany

Dennis Schoeneborn

University of Zurich, Zurich, Switzerland

William Sun

Leeds Metropolitan University, Leeds, UK

xvii

List of Contributors

Ralph Tench

Leeds Metropolitan University, Leeds, UK

Anastasios Theofilou

The Media School, Bournemouth University, Poole, UK

Steef Verheijen

Department of Business Communication Studies, Radboud University Nijmegen, the Netherlands

Bernd Lorenz Walter

Consultant for Strategic Communication and Reputation, based in Berlin, Germany

Tom Watson

The Media School, Bournemouth University, Poole, UK

Adria´n Zicari

Accounting and Management Control Department, Essec Business School, Paris, France

EDITORIAL ADVISORY AND REVIEW BOARD Fabienne Alvarez Professor of Management, Department of Economics and Business, University of Antilles and Guyane Pointe-a`-Pitre, France

Barry A. Colbert Reader & Director of CMA Center for Business & Sustainability, School of Business & Economics, Wilfrid Laurier University, Canada

Ralph Bathurst Senior Lecturer, School of Management (Albany), Massey University, New Zealand

Alexandre Di Miceli da Silveira Professor, School of Economics, Business and Accounting, University of Sao Paulo (FEA-USP), Brazil

Lawrence Bellamy Professor & Associate Dean, Chester Business School, Chester University, UK

Gabriel Eweje Associate Professor & Director of Sustainability & CSR Research Group, Department of Management & International Business, Massey University, New Zealand

Robert Chia Research Professor of Management, Glasgow University, UK Blanaid Clarke Associate Professor, Law School, University College Dublin, Ireland

Hershey H. Friedman Professor, Department of Economics, Brooklyn College of the City University of New York, USA

Thomas Clarke Professor of Management & Director of the Center for Corporate Governance, University of Technology, Sydney, Australia

Lyn Glanz Dean of Graduate Studies, Glion Institution of Higher Education and Les Roches-Gruye`re University of Applied Sciences, Switzerland

xix

xx

EDITORIAL ADVISORY AND REVIEW BOARD

Adrian Henriques Visiting Professor, Department of Business and Management, Middlesex University, UK Øyvind Ihlen Professor, Department of Media and Communication, University of Oslo, Norway Lin Jiang Professor of Management, Business School, Renmin University of China, China Eamonn Judge Professor & Research Director, Polish Open University, Poland Elizabeth C. Kurucz Assistant Professor, College of Management and Economics, University of Guelph, Canada Richard W. Leblanc Associate Professor, School of Administrative Studies, York University, Canada Ce´line Louche Associate Professor, Audencia Nantes School of Management, France Guler Manisali-Darman Principal of the Corporate Governance and Sustainability Center, Turkey

Malcolm McIntosh Professor & Director of Asia Pacific Center for Sustainable Enterprise, Griffith Business School, Griffith University, Australia James McRitchie Publisher of CorpGov.net (Corporate Governance), USA Abagail McWilliams Professor, College of Business Administration, University of Illinois at Chicago, USA Roland Perez Professor Emeritus, Economics and Management, University Montpellier I, France Yvon Pesqueux Chair of the Development of Organization Science, CNAM (Conservatoire National des Arts et Metiers), France; President-elect of International Federation of Scholarly Associations of Management (IFSAM) David Pollard Reader in Technology Transfer and Enterprise, Faculty of Business and Law, Leeds Metropolitan University, UK Lars Rademacher Professor, Department of Media Management, MHMK

xxi

Editorial Advisory and Review Board

(Macromedia University of Applied Sciences), Germany Simon Robinson Professor of Applied and Professional Ethics, Faculty of Business and Law, Leeds Metropolitan University, UK David Russell Head of Department of Accounting & Finance, Leicester Business School, De Montfort University, UK Ian Sanderson Professor Emeritus in Public Governance, Faculty of Business and Law, Leeds Metropolitan University, UK

Jim Stewart Professor of HRD & Leadership, Coventry Business School, Coventry University, UK Peter Stokes Professor of Sustainable Management, Marketing and Tourism, Deputy Dean, Faculty of Business, Enterprise & Lifelong Learning, University of Chester, UK Ralph Tench Professor of Communication, Faculty of Business and Law, Leeds Metropolitan University, UK Christoph Van der Elst Professor of Law, Law School, Tilburg University, The Netherlands

Greg Shailer Reader, School of Accounting and Business Information Systems, College of Business and Economics, the Australian National University, Australia

Wayne Visser Senior Associate, University of Cambridge Programme for Sustainability Leadership, UK; Adjunct Professor, La Trobe University, Australia

John Shields Professor & Associate Dean, Faculty of Economics and Business, the University of Sydney, Australia

Suzanne Young Associate Professor, La Trobe Business School, Faculty of Business, Economics and Law, La Trobe University, Australia

ACKNOWLEDGEMENTS The volume editors would like to thank all those that have engaged with and contributed to this volume. In particular individual chapter authors deserve praise and thanks for engaging so willingly with this project. All chapters were anonymously peer reviewed and we would like to thank all the reviewers for their time, effort and professionalism that have ensured the quality and consistency of the contributions. The reviewers of the volume chapters are: Fabienne Alvarez, Professor of Management, University of Antilles and Guyane, France Ralph Bathurst, Senior Lecturer, School of Management (Albany), Massey University, New Zealand Guido Berens, Assistant Professor of Corporate Communication, Rotterdam School of Management, Erasmus University, the Netherlands Magdalena Bielenia-Grajewska, Assistant Professor at Department of Translation Studies and Head of the Intercultural Communication and Neurolinguistics Laboratory at Faculty of Languages, University of Gdansk, Poland Audra Diers, Senior Lecturer in Public Relations, Sheffield Hallam University, UK Gabriel Eweje, Associate Professor & Director of Sustainability & CSR Research Group, Department of Management & International Business, Massey University, New Zealand Magnus Fredriksson, Senior Lecturer, Department of Journalism, Media and Communication, University of Gothenburg, Sweden Øyvind Ihlen, Professor at the Department of Media and Communication, University of Oslo, Norway Ce´line Louche, Associate Professor, Audencia Nantes School of Management, France Amy O’Connor, Associate Professor, Director of Graduate Studies, North Dakota State University, USA Eleanor O’Higgins, School of Business, University College Dublin, Ireland Eva-Karin Olsson, Assistant professor at Crismart (Crisis Management Research and Training), the Swedish National Defence College, Sweden xxiii

xxiv

ACKNOWLEDGEMENTS

Lars Rademacher, Professor for Communication Management, Macromedia University of Applied Sciences, Germany Ganga Sasidharan, Assistant Professor, Department of Communications and New Media, National University of Singapore, Singapore Peter Stokes, Professor of Sustainable Management, Marketing and Tourism, Chester Business School, University of Chester, UK Ivan Tchotourian, Associate professor in Law, University of Nantes, France Anastasios Theofilou, Senior Lecturer in Public Relations, Bournemouth University, UK Adria´n Zicari, Associated Teaching Professor, Essec Business School, France

PREFACE Corporate Social Responsibility (CSR) is presently at the fore of much public and political debate about the nature, scope, role and purpose of business and its relationship with society. That societies of the 21st century very much depend on businesses is very much taken as accepted but the relationship between the two is not always easy. Increasingly civil society expects and in some cases demands that businesses behave and operate in a way that is ethical, good for the environment and good for people (employees, entrepreneurs, consumers etc.). That said, the public are only too well aware of businesses behaving in ways that are not good for the environment, that are unethical and not beneficial to the wider society of which they are a part. Do we expect businesses to do too much? Or are businesses not doing enough with regards to their wider societal responsibilities? Given recent crises around food safety (horsemeat scandal), finance and banking (irresponsible lending, LIBOR rigging, financial mis-selling) and retailers sourcing goods from suppliers with poor health and safety standards the public demand for intervention has grown. Intervention must of course be fit for purpose, measured, appropriate and relevant to the problem at hand. The public call for politicians and businesses to do something should not be allowed to drown out the underlying truth that businesses do much that is good and without them we would all be the poorer. This point is important and should not be forgotten. Indeed different channels of communication should be used to reinforce the message that businesses, by and large and with minor exception, do good. Communication is an integral part of CSR and it is important that businesses and politicians communicate effectively on this theme. This is especially so in a post financial crisis/great recession period. CSR can help businesses to rebuild the bonds of trust they have with their various stakeholders. Just as importantly CSR can serve to help businesses innovate, thrive and prosper and can be one of the building blocks used to help repair national and international economies. The building of a good society is something that can only truly be done in partnership with communities and businesses. Working together in a way that is good for the environment is ethical and is good for people is something that has firm roots in xxv

xxvi

PREFACE

Labour history. The future for CSR and businesses that incorporate it and communicate about it has much promise. Those with a social conscience should find much appeal in working with, adapting to and communicating CSR. This book makes a valuable contribution to discussion of the communication of CSR. I am delighted to have been asked to write this preface and recognise that this book will be of value to communication practitioners, those working in CSR, as well as students and academics. (Phil Wilson is a Member of Parliament (MP) of the United Kingdom) Phil Wilson MP

PART I INTRODUCTION

INTRODUCTION: CSR COMMUNICATION AS AN EMERGING FIELD OF STUDY Ralph Tench, William Sun and Brian Jones ABSTRACT Purpose This chapter is to introduce to the reader the background, purpose, core themes and structure of the volume. Brief summaries of all the following chapters in the book are provided. Design/methodology/approach

Literature review and desk research.

Findings This chapter suggests that CSR communication as a crosssection of communication studies and CSR research should be highlighted as an important subject of inquiry to bridge the communicative gap between businesses and their stakeholders as well as the public at large. An initial theoretical framework on CSR communication is presented. Research implications A general research direction is provided for CSR communication. It encourages more future scholarly studies in this emerging and fascinating field.

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 3 21 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006025

3

4

RALPH TENCH ET AL.

Social/practical implications The overall purpose is to help grow knowledge and develop understanding of the ways in which businesses communicate CSR. Originality/value It is the first time in the field of CSR communication that a relatively comprehensive and systematic framework is presented. The chapters that follow in the book cover many contents of the framework. Keywords: Corporate social responsibility; communication; CSR communication framework

Corporate social responsibility (CSR) is increasingly seen as a priority in numerous countries, societies and businesses around the world. Over the last forty years or more, there have been various initiatives in the United Kingdom and internationally focusing on the advancement, development and exploitation of CSR. CSR initiatives vary in their aims and objectives but in general the purpose is to encourage businesses, governments and citizens to have a more socially responsible approach to the way they operate in order to help them cope with environmental as well as social change. It is certainly the case that compared with even the most recent past business and society’s expectations of one another has changed considerably. Political pressure, legislation and among other things environmental campaigning have prompted change and helped, for example, to raise standards of corporate governance. Communication on CSR has been an integral part of this period of change and remains so today. The role of business in society has grown and evolved to meet the changing expectations and demands of consumers, citizens, government and other stakeholders. Companies, corporations and organizations of all sizes, functions and sectors are increasingly having to communicate and explain what they do and why they do it to an increasingly vocal, educated body of stakeholders aware of their rights and the concomitant obligations of business. Yet, the remarkable role of communication in CSR has not yet attracted sufficient attention in both academic circles and business practice. In businesses CSR communication is often confused with the role of public relations (PR), as if self-promotion and information control/manipulation could automatically gain publicity and customer loyalty and win public trust. That CSR has recently been criticized as a PR campaign or ‘green washing’ activities (Tench, Sun, & Jones, 2012) indicates the fallacy of equating CSR communication to PR or replacing CSR communication with

Introduction: CSR Communication as an Emerging Field of Study

5

PR. In scholarly environments, communication studies and CSR research are two different academic fields. In communication studies CSR is not a primary focus, while in CSR research the role and functioning of communication have been largely neglected until recently (the first International CSR Communication Conference was held in Amsterdam in October 2011). Given that CSR has been widely regarded as a failed practice (as evidenced in the 2007 2009 financial crisis) (Sun, Stewart, & Pollard, 2010), and often misunderstood by business practitioners and misperceived by various stakeholders, CSR communication as a cross-section of communication studies and CSR research should be highlighted as an important subject of inquiry to bridge the communicative gap between businesses and their stakeholders as well as the public at large. Combining them in this way as a subject of enquiry will help to clarify the intention, motivation and perception of CSR initiatives and other activities, and enhance the mutual understanding and the effectiveness of dialogue between business actors and key stakeholders.

THE COMMUNICATIVE FRAMEWORK OF CSR What follows is a sketch of the CSR communication framework in which we outline several key components of CSR communication as an emerging field of study. The Role of Communication in CSR As the cross-section of communication studies and CSR research, CSR communication highlights the role of communication in CSR and how the message of CSR can be effectively conveyed from senders to recipients, how CSR activities can be understood mutually between senders and receivers and between receivers, and can be perceived precisely or correctly by those receivers. CSR without Communication: Information Lost It is often a problem that companies initiate CSR programmes and schemes and/or conduct general CSR activities, but they fail to communicate with their stakeholders and to let the public know what they are actually doing. Thus, when a communicative message is not sent out, corrupted or lost somewhere in the transmission process, companies may waste their endeavours on CSR. There are now more than 1,500 companies worldwide that

6

RALPH TENCH ET AL.

have published their CSR reports. Yet, many companies are over-reliant on corporate reports as a disclosure measure to inform the public. This is too limited. Multiple channels and efforts are needed to ensure that CSR information is accessible to stakeholders and the public. CSR with Communication: Information Exchanged When CSR endeavours and activities are communicated, whether intentionally or unintentionally, it may produce two different effects. On the one side CSR information can be positive and constructive because the companies, as the message originators and senders, convey sincere, reliable and transparent information to stakeholders and the public, which is perceived in the way it was intended. On the other side, CSR information can be negative and destructive to companies because they send out false, untrue, inaccurate or distorted information, or the message receivers misunderstand and misperceive CSR information. Hence, companies do not just need to engage in the information exchange process, but also must pay attention to the results of CSR communication. CSR in Communication: Two-Way Exchanges When communicating with stakeholders, communication practitioners need to be aware of the contested and sometimes controversial nature of the CSR subject matter. There is no universally agreed definition of the term CSR. This is in part due to the fact that different stakeholders seek to claim the concept as their own and to define it in their own interests. The competitive environment, the law as well as the expectations and demands of a range of stakeholders are factors driving companies’ need to communicate and engage with CSR issues. Nielsen and Thomsen (2007, p. 29) make the point: In principle, there are no limits to social responsibility. Therefore, the main challenge for the organizations is to manage the mutual expectations.

Thus, CSR communication is not simply a one-way public information model of exchange, nor is it just a company’s strategic management. It is or should be a two-way communication between companies and their stakeholders, with a focus on mutual understanding and shared values. For example stakeholders need to communicate with companies to persuade, motivate and press them to behave responsibly as well as to seek clarification and to ensure they have understood and perceived accurately what companies are intending to do and are actually doing.

Introduction: CSR Communication as an Emerging Field of Study

7

Communicative Subjects Communication involves message senders and receivers. On a mutual perspective, the senders and receivers of CSR messages are either companies or their stakeholders (including the public at large) respectively. To companies, different message receivers (stakeholders) have different interests in and concerns with CSR issues. Every company may have its own unique stakeholder groups. It is important that the appropriate message is sent to the appropriate receivers to address their related interest in issues. The type of message receivers may determine what a communication model would be taken, as different communications would be needed for different message receivers. Furthermore, stakeholders could be orientated on a continuum which places them anywhere from a pro to anti organizational position. It consequently becomes more complex for the organization when they manage how to communicate with those stakeholders that are more hostile towards them and possibly to businesses in society at large.

Communicative Contents From a company’s perspective, the content of CSR communication may include four aspects. First, companies need to make it explicit to the public what CSR perspectives they have. Such information may include CSR values, beliefs, cultures, assumptions, perceptions and conceptions. Second, companies need to inform the public about their CSR programmes, initiatives and other actions. They need to explain the motivations and purposes of those measures and justify their actions. The importance of the measures needs to be conveyed to the right audience. Third, companies also need to ensure that the CSR initiatives, programmes and other measures are actualized and implemented and that the effects of those actions are measured and recorded. It is also imperative that this process is shared and should be reported to the relevant publics or stakeholders. Finally, companies need to particularly address identified stakeholder and public concerns and issues relating to organizational behaviour, actions or performance. They need to identify the issues of concerns and keep stakeholders and the public informed of how those issues are tackled.

8

RALPH TENCH ET AL.

I. Communicative Subjects: Senders

Receivers

CSR

Communication

Information exchanged • Intentional/ unintentional • True/false • Perceived/ misperceived

Information lost

II. Communicative Content: • Perspectives of CSR • Programmes/initiatives of CSR • Strategic implementation of CSR • Stakeholder/public concerns

III. Communicative Forms/Approaches/Methods: • CSR reports • Media (incl. social media) • Advertising • Direct dialogue • Others

Fig. 1.

The CSR Communication Framework.

Communicative Forms and Means There are various channels through which companies can convey their CSR messages to their stakeholders and the public. Those may include formal CSR reports, media (including social media), advertising, direct dialogue, and other methods. The effectiveness and efficiency of each form and means needs to be measured and evaluated. More comprehensive and effective CSR communication could be achieved by utilizing possibly multiple channels. The above process describes the CSR communication framework which is visually represented in Fig. 1.

THE VOLUME This volume is not the first book published in the field of CSR communication, but is the first attempt to present CSR communication in a relatively

Introduction: CSR Communication as an Emerging Field of Study

9

comprehensive and systematic framework as shown above. The overall purpose is to help grow knowledge and develop understanding of the ways in which businesses communicate CSR. The volume is divided up into five parts. Following the introduction, part two comprises chapters that predominantly address theoretical and conceptual issues, with more focus on the strategic role of communication in CSR. Part three concerns CSR discourse analysis and CSR reporting. Within this part of the book approaches to discourse analysis and challenges to integrated reporting are examined. Part four focuses on the newly emerged method of CSR communication: online and social media, and addresses the ways in which CSR is affected by social media. Part five looks at CSR communication from different stakeholder perspectives, in which both internal and external communications are discussed. The chapters draw on a body of secondary research literature that allow for comparative analysis of CSR communication across subject areas, through detailed and richly textured primary data analysis, and via case studies and from differing stakeholder perspectives. Exploring key issues around the theory and practice of CSR communication this volume will be of interest and relevance to practitioners, policymakers and the academic community. The first CSR Communication Conference in Amsterdam in October 2011 bore witness to the fact that this is an emergent and topical area of research. The chapters that follow seek to describe, explain and analyse the divergent forms and changing shape of CSR as it relates to, is affected by and affects the world of communication.

OVERVIEWS OF THE VOLUME CONTRIBUTIONS The chapters are briefly summarized below and the purpose here is to give the reader an indication and flavour of the book’s contents. In the chapter ‘Four Aces: Bringing Communication Perspectives to Corporate Social Responsibility’, a communication perspective is brought to the irresponsibility debate. The authors from Australia, Norway and the United States, Jennifer Bartlett, Øyvind Ihlen and Steve May present a theoretical essay which reviews relevant literature on CSR communication and points to what they consider four key themes their four aces. Communication studies alert us to (1) how meaning is constructed through communication, something that has implications for the management of organizations as publics hold different views of CSR and expect different things from them; (2) how a dialogue between an organization and its

10

RALPH TENCH ET AL.

publics should be unfolded; (3) how practices of transparency can assist organizations to come across as trustworthy actors; and, importantly, (4) how a complexity view is fruitful to grasp the CSR communication process. These four key themes could be instructive for practitioners who want to argue for and demonstrate the usefulness of strategic communication for the management of CSR and bridge meso and macro levels of analysis. With the chapter Bartlett, Ihlen and May argue that communication studies have contributed a particular epistemological perspective built around social constructionism and complexity, as well as considerations about notions like dialogue and transparency in a way that can further the ability for corporate self-reflection. By focusing on practices at the meso level, further insights can be added to a dominant discourse in the CSR literature on institutionalized pressures on organizations to comply with social and mandated norms. Dialogue and transparency, for example, allow the micro-foundations of organization’s CSR practices to be examined, which in turn impact the practices at the meso and macro level. This can pave the way for new approaches to CSR and CSR communication that steer clear of too simple solutions such as, for instance, reporting against best practice guidelines that favour instrumental perspectives. It is through such approaches they argue that communication studies can bring deeper insights into the CSR discussion and seek to address paradoxes such as the co-existent expectations and criticisms of CSR and CSI (Corporate Social Irresponsibility) practices and communication. As such, they bridge meso and macro levels of analysis to contribute to the broader CSR/CSI discussion. The chapter by Joy Chia takes a community perspective and focuses on the understanding of communication to support social capital development in different regional contexts. The chapter argues from an empirical foundation that social responsiveness is possible when organizations understand their community. More explicitly Chia argues that by fixing organizations as members of their communities it is possible to see the value of their social capital within everything they do which includes the planning and delivery of CSR programmes. Coming from Australia the author uses examples of community-based projects in the region but also compares these with examples from Canada. She uses three regional community examples to explore different stakeholder and community needs to see how organizations identify their communication targets, who might be missing from the dialogue and also how communication could be better utilized in terms of form, content and medium.

Introduction: CSR Communication as an Emerging Field of Study

11

The focus of Bernd Lorenz Walter’s chapter ‘Corporate Social Responsibility Communication: Towards a Phase Model of Strategic Planning’ is ‘on the need to involve stakeholders in CSR communication processes’. Reputation enhancement is acknowledged to be an important feature and asset of CSR. Walter presents CSR as being a corporate mindset that ‘encompasses the economic, social and ecological responsibility of a corporation’. This view is supported and theoretically underpinned by the work of Crane and Matten (2007), Carroll (1991) and Porter and Kramer (2011). There is no all-embracing, one size fits all definition of CSR and recognizing this is important as it raises questions such as what should be communicated and how it should be done (or not done as the case may be). The need to communicate and engage with CSR is reinforced by discussion of legitimacy theory. Walter importantly points up the fact that once a business introduces CSR then communication is inevitable. The issue then of course becomes one of how to manage such CSR communication and this takes us to the rub of the problem presented in this chapter. Walter posits four types of CSR communication: (a) communication on and about CSR, (b) communication as part of the CSR mindset, (c) responsible communication and (d) communication of ‘ethical’ products and services. The place of ethics and how this might be aligned with strategy is given thoughtful and insightful discussion. An impressive body of literature is drawn on to build and sustain the flow of argument around reputation, credibility and trust, and stakeholder strategies. The chapter then moves on to consider the phase model of strategic planning in CSR communication and concludes with the observation that ‘the positive aspects of involving stakeholders in the strategic planning process of CSR communication strategies outweigh the negative’. This chapter is theoretically informed, rich in detail and makes for a valuable and most worthwhile read. Lars Rademacher and Nadine Remus’s chapter ‘Correlating Leadership Style, Communication Strategy and Management Fashion: An Approach to Describing the Drivers and Settings of CSR Institutionalization’ argues that CSR communication strategies need to take the genesis and drivers of CSR institutionalization into account. The chapter develops a complex set of interrelated drivers for CSR institutionalization from a literature review among them leadership styles and management fashion. It further discusses the influence of leadership styles and management fashions on CSR institutionalization and focuses on the diffusion of management concepts along a management fashion cycle. It then refers to executive trainers as the key facilitator and promoter of new business concepts and

12

RALPH TENCH ET AL.

presents data from a first online survey among German-speaking management trainers. The chapter highlights the managerial role in institutionalization of CSR by contextualizing their behaviour in a portfolio of performance indicators. From a management fashion perspective the various forms of explicit and implicit CSR are linked to management styles. The chapter lays the ground for further research of CSR institutionalization and integration into business strategy by providing a conceptualization of CSR drivers and settings that relate to a given organization. In their chapter Fredriksson and Olsson propose a model for evaluating environmental information based on ‘informativity’ as a measurement of whether corporate environmental disclosures provide readers with information relevant for making reasonable assessments of a company’s environmental work. Their chapter and proposed model are based on primary data collected from a limited study of the environmental disclosures from 20 Swedish corporations listed on the Stockholm stock exchange. Fredriksson and Olsson propose that, on a general level, informativity denotes a set of universal principles for information qualities. In order to make informed assessments, reports should provide readers with information on specific projects, outcomes and long-term impact. From their research and analysis their model aims to support researchers and practitioners to quantify corporate environmental information based on a set of key textual variables. By allowing for the quantification of qualitative information the model allows for comparative studies of CSR communication across, for example, companies, sectors and nations. The model is therefore applicable for corporations with an interest in evaluating their performance by applying standardized and set principles. In addition the model has potential to be applied as a tool by consumers and investors who are interested in making better and more informed assessments about a corporation’s environmental initiatives and performances. In the chapter ‘The Role of Corporate Social Responsibility in International Investment Law: The Case of Tobacco’, Yulia Levashova reveals the dilemma of CSR in international and national legal frameworks using the specific example of public health. The right to health is one of the human rights secured in international law and in the national legislation of a majority of States. Yet, the cases of tobacco disputes provided in this chapter illustrate that the Host States on the one side have to comply with the international obligations under human rights and environmental treaties and on the other side have to fulfill their economic obligations under BITs (Bilateral Investment Treaties). The case studies cast rather general questions regarding the legal framework of international investment and its

Introduction: CSR Communication as an Emerging Field of Study

13

role in providing sufficient policy space for Host States to implement the public policies and to ensure that foreign companies adhere to the CSR standards. The chapter ‘A Dialectical Approach to Analyzing Polyphonic Discourses of Corporate Social Responsibility’ by Ganga S. Dhanesh proposes using a dialectical approach infused with elements of dialogism to analyse polyphonic discourses of corporate social responsibility in order to create more nuanced understandings of the contradictions, oppositions, tensions and complexities that characterize the conceptualization, enactment and communication of CSR. The chapter illustrates the conceptual argument for a dialectical approach to examining discourses of CSR by using the example of the dualistic discussion of corporations as agents of empowerment or exploitation. When examined through a dialectical lens, the empowerment exploitation debate reveals, among others, the dissolution of boundaries between the categories of empowerment and exploitation, the coexistence and interplay of a multitude of related oppositions, and raises questions on praxical patterns employed by social actors to manage the dialectical tensions inherent in everyday organizing. A dialectical approach in communication studies could open possibilities for acknowledging the co-existence of and interplay among multiple voices in society, thus opening spaces for engaging with diverse perspectives and creating a more holistic understanding of complex social constructs such as CSR. Gill and Broderick in their chapter tackle the CSR pedigree and history of an established British brand, Marks & Spencer (M&S), the retail clothes and food business. M&S is a long-standing high street food and clothing store in the United Kingdom with subsidiary businesses around the world. M&S holds very strong brand recognition and values that Gill and Broderick attempt to understand in a detailed analysis of historical document held in the company’s archives. Using a discourse analysis methodology the authors attempt to dissect and understand brand heritage and its subsequent impact on CSR for the business. This is an ambitious and challenging piece of work using over 43 annual reports as evidence from over 70 years of published reporting by the firm. Essentially the authors target three questions: (1) an understanding of the textual patterns used by M&S in their CSR commentary for annual reports; (2) to distinguish the extent to which specific stakeholder groups were targeted in the discourse; (3) to identify which elements of brand heritage were prominent in the discourse and how such elements were integrated with the CSR message. In tackling these questions the chapter sheds considerable light on how one organization consistently manages its CSR messaging over a longitudinal

14

RALPH TENCH ET AL.

period of time. It demonstrates aspects of brand heritage consistency but also strategic issues of refreshment to maintain and update the thinking and activity of the organization over sustained periods of business activity with the danger of stakeholder message fatigue. The depth analysis provides many insights but crucially supports the contemporary literature view that authenticity in messaging and communication is the invaluable commodity for modern firms. The chapter by Adria´n Zicari looks at the ‘Challenge of Integrating Different Perspectives on Corporate Performance’. The question posed is whether or not it is possible to have one corporate report that integrates key financial and non-financial information. Beginning with an overview of issues related to corporate reporting mention is made of the work of the Integrated International Reporting Committee (IIRC), the Climate Disclosure Standard Board and, of course, the Global Reporting Initiative (GRI). Concepts such as value creation, stakeholders and the triple bottom line are used to explain, inform and underpin accounts of corporate reporting. Integrating financial with non-financial information in corporate reports is beset by a number of challenges and these are discussed in detail through theory and application. Environmental, Social and Governance (ESG) is a theme that runs throughout this chapter. Zicari highlights the work of the IIRC and their identification of six different capitals: financial, manufactured, human, intellectual, natural and social. The literature and the nature of the on-going debate serve to highlight the fact that the link between CSR and company performance remains contested. Integrated reporting might be described as a ‘nice to have’ idea but remains somewhat of an elusive concept in practice. It is undoubtedly something to which many companies aspire to work towards. A definitive model for integrated reporting has yet to be established. It might be described as a process that is on-going and that models for reporting are in part emergent and in part evolving. One reason given by Zicari for the limited progress made towards integrated reporting is that ‘Companies could perceive additional disclosure on ESG as detrimental to their competitiveness, particularly if their closest competitors do not make similar disclosures.’ Undoubtedly a number of obstacles have yet to be overcome. However, Zicari makes the point that ‘integrated reporting will allow for less opportunity for unsubstantiated or exaggerated claims about the social/environmental performance of reporting firms’. Integrated reporting remains an issue that has yet to be fully and properly addressed, though moves made at theory and practice levels suggest it will remain an item on future agendas for some time to come.

Introduction: CSR Communication as an Emerging Field of Study

15

The chapter ‘Communicating about Integrating Sustainability in Corporate Strategy: Motivations and Regulatory Environments of Integrated Reporting from a European and Dutch Perspective’ contributed by Tineke Lambooy, Rosemarie Hordijk and Willem Bijveld examines the developments of integrated reporting in law and in practice. It explores the motivation of companies and legislators to introduce integrating reporting, and then analyses how integrated reporting can be supported by legislation taking into account the existing regulatory environment in Europe. The authors find that although integrated reporting is currently being explored by some frontrunners of the business community and is being encouraged by investors, the existing legal framework does not offer any incentive, nor is uniformity and credibility in the reporting of non-financial information stimulated. The EU law gives scant guidance to companies to that end. The authors argue that amending the mandatory EU framework can support the comparability and reliability of the corporate information. Moreover, a clear and sound EU framework on integrated corporate reporting will assist international companies in their reporting. Currently companies have to comply with various regulations at an EU and a national level, which do not enhance a holistic view in corporate reporting. The authors suggest that this problem can be rectified by combining EU mandatory corporate reporting rules with the private regulatory reporting regime developed by the Global Reporting Initiative (GRI). Theresa Bauer writes about ‘The Responsibilities of Social Networking Companies: Applying Political CSR Theory to Google, Facebook and Twitter’. This chapter is very topical. It draws attention to the profit motive driving companies such as Google, Facebook and Twitter. However, it also draws attention to the ethical issues (e.g. deception and cyber bullying) that surround social networking sites (SNS) and looks at the responsibilities such companies should have or aspire to. A qualitative case study approach is adopted and a literature review on CSR and ethics in the SNS context provides a useful theoretical backdrop. Internet ethics is a relatively new area of study and is beset by many long-standing ethical issues that pertain to the wider economy and society in which individuals operate. Bauer offers a detailed discussion of CSR and corporate citizenship. Drawing on the work of Matten and Crane (2005) the increasing role that corporations play in enabling civil rights, providing social rights and channelling political rights is highlighted. Reference is then made to Habermas’s (1996) concept of deliberative democracy. The chapter moves on to give some background information about Facebook, Google and Twitter. The role of legislation of regulating technology in the age of the Internet is explored.

16

RALPH TENCH ET AL.

The growth of corporate power is looked at, as is the issue of social networking providers administering citizenship rights. Under the section ‘Civil Rights’ a detailed and fascinating discussion occurs around privacy. Equally so, the sections on ‘Social Rights’, ‘Political Rights’ and ‘Ecological Citizenship’ warrant a close and detailed read. Bauer notes that ‘neither Google, Facebook nor Twitter have become members of the UN Global Compact, one of the most important initiatives in global governance’. However, it is also pointed out that Twitter has as ‘Corporate Social Innovation and Philanthropy” team and that Facebook and Google engage in charitable/philanthropic activities; all three companies show some degree of commitment to ecological citizenship (i.e. environmental concerns). Bauer makes the point that ‘Globally operating companies such as Google, Facebook and Twitter face various political, legal, cultural and moral systems.’ This of course does not condone or serve to excuse their specific behaviours and practices with regards to issues such as human rights. Bauer highlights the good that SNS companies such as Twitter, Facebook and Google do with regards to their wider responsibilities and she does not shy away from discussing the contradictions and deficiencies of policies, practices and actual behaviours. Sarah Inauen and Dennis Schoeneborn’s chapter is titled “Twitter and Its Usage for Dialogic Stakeholder Communication by MNCs and NGOs”. Its focus, as the title suggests, is on the practices of Twitter usage by both non-governmental organizations (NGOs) and multi-national corporations (MNCs). In the era of social media, the means and methods of, as well as the opportunities for, stakeholder communication are of increasing importance. Social media poses a number of challenges to traditional corporate communications. Inauen and Schoeneborn draw on Habermas’s (1996) notion of deliberative democracy and suggest that ‘MNCs have to be in a constant communicative exchange with their stakeholders in order to maintain their moral legitimacy.’ How MNCs use social media in the deliberative discourse with their stakeholders in practice is the overarching problem presented and addressed in this chapter. The microblog Twitter is used here as one example of social media. One key finding from this study is that ‘MNCs and NGOs use relatively similar communication strategies on Twitter.’ Most interestingly it is reported that ‘Both types of organisations use Twitter predominantly for their one way communication.’ Issues such as legitimacy, profit, globalization, regulation and various scandals are discussed throughout the section on theoretical background. The chapter looks at and applies in context the concept of moral legitimacy. The gathered data was analysed through Koch and Oesterreicher’s (1994)

Introduction: CSR Communication as an Emerging Field of Study

17

model of conceptual orality and literality. The chapter reports on primary data findings and concludes by highlighting the fact CSR communication has become potentially polyphonic. Magdalena Bielenia-Grajewska’s chapter ‘CSR Online Communication: The Metaphorical Dimension Of CSR Discourse in the Food Industry’ combines an interesting theoretical/philosophical approach with keen ‘real-world’ insights and observations. The chapter offers an interpretative analysis of a sample of Polish and Italian food companies’ websites. The perception of CSR communication is presented as being determined by symbolic linguistic tools. The theoretical backdrop to this chapter is that of organizational metaphor. A general overview of CSR is offered and this is followed by discussion of CSR in the food industry. This section refers back to recent and in some cases on-going food safety issues of public concern such as BSE, foot and mouth disease, GM food and food labelling. The potential breakdown of public trust in the food supply chain as a result of food-related risks is an undoubted cause of concern for the public and the businesses affected. CSR is integral to the smooth, efficient and successful workings of the food industry and perceptions of that industry. BieleniaGrajewska makes the point that communication about food is ‘directly connected with linguistic issues since language can cause difficulties in communicating food safety’. One particular comment of real-world practice-based relevance is worth highlighting, ‘issues related to proper hygiene, storage and avoidance of cross contamination should be available in the language of the worker’. A section on CSR and metaphors is followed by discussion of metaphors in organization studies. The work of Sontag, Bourdieu and others is used to inform, build and illustrate argument. Bielenia-Grajewska writes, ‘metaphors should be framed for the selected audience since their power depends on the effect on receivers and the way they address the experience of knowledge of the person at whom the communicative act is directed’. Six metaphors are used to explore and analyse CSR communication in the food industry and these metaphors are (a) Organization as a teacher, (b) Organization as a network, (c) Organization as a protector, (d) Organization as a traditionalist, (e) Organization as a travel guide and (f) Organization as a family. These metaphors offer a fresh approach and a new lens through which to explore the subject of CSR, and for this and other reasons this chapter requires close reading. Balakrishnan Muniapan and Sony Jalarajan Raj write about ‘Corporate Social Responsibility Communication from the Vedantic, Dharmic and Karmic Perspectives’. This chapter employs ‘hermeneutics, a qualitative research methodology, which involves the study, understanding and

18

RALPH TENCH ET AL.

interpretation of religious texts of Vedanta particularly the “dharma” and “karma” in the context of CSR’. This makes for an interesting religious/ philosophical shift and theoretical move in the analysis of CSR. The chapter adds to the debate that surrounds the relationship between religion and business. A four-stage approach is adopted. Verses that relate to CSR are searched out from the Vedanta (Vedic literature) and then the verses are investigated in terms of content and context. Following this the relevance and meaning of verses that have some connection to CSR are subject to interpretation. Finally lessons from the verses are used to provide commentaries from the perspective of CSR. Vedanta is the source of Hinduism and draws on Vedic literature. The Bhagavad Gita is one of the best known scriptures in Vedanta. Dharma and karma are discussed and used to explore CSR and the way in which it might be perceived and understood. CSR is presented as being an evolving concept and the section exploring ‘Responsible Business Entity: An Introduction to CSR’ offers a good review of relevant literature. The place of philanthropy in CSR in acknowledged but recognition is also given to the fact CSR is a broad and deep concept and ideal. Businesses are argued to be under pressure from their stakeholders to act responsibly towards the wider society. Various corporate scandals are highlighted to demonstrate that businesses do not always behave in a responsible way. One particularly noteworthy point made is that of a ‘pressing need for organizations to be held accountable to the communities they serve and to be more socially responsible’. Furthermore, ‘By integrating CSR into core business processes and stakeholder management, businesses can achieve their ultimate goal of creating both corporate and social value.’ This chapter offers fresh insights into the relationship between CSR and religion. More work remains to be done in explaining and exploring the role religion plays in shaping understanding of CSR. Theofilou and Watson’s chapter ‘Sceptical Employees as CSR Ambassadors in Times of Financial Uncertainty’ builds on issues faced by organizations in times of financial turmoil and uses for its case example an established Greek media company. Specifically they base their empirical chapter on an investigation of personality traits and characteristics and the effect this has on employees and their interpretation of corporate responsibility messages. The chapter bases its discussions on empirical data collected from one of the largest companies in Greece. The case organization (To Vima) is a media company and is actively involved in CSR programmes, particularly those that are focusing on employees. Selfcompletion questionnaires to 612 employees were analysed. The findings are discussed around three themes, first that for internal staff the relationship indicators affected by specific investment are predictors of positive word of

Introduction: CSR Communication as an Emerging Field of Study

19

mouth. This translates into positive attitudes towards the employer when investments are made into issues with a high social impact. These activities are then positively shared via word of mouth on a voluntary basis. The most important conclusion the chapter draws is that dimensions of scepticism, as defined in the study, are predictors of both the potential for relationship building and positive word of mouth. In their chapter ‘Creating Consumer Confidence in CSR Communications’ Guido Berens and Wybe T. Popma examine the role of communication in stimulating consumer attitudes and buying behaviour towards corporate social responsibility. Through a comprehensive literature review on communicating CSR to consumers, they find that communication messages constructed and verified by the company can be quite effective in persuading consumers, if they are communicated in a credible way. The latter can, for example, be done by including specific behaviours and/or outcomes in the message. Messages constructed by the firm, but verified by a third party tend to have a higher credibility, but risk containing either too little information or too much. Messages constructed and verified by a third party can be seen as highly credible, but can sometimes be seen as merely PR. In addition, both messages focusing on deontological responsibility (the firm’s motives and behaviour) and on consequentialist responsibility (the outcomes of the firm’s behaviour) seem important to consumers. Brigitte Planken and Steef Verheijen’s chapter ‘Quid Pro Quo? Dutch and German Consumer Responses to Conditional and Unconditional Corporate Giving Initiatives in Advertising’ investigates consumer responses to conditional (CRM) versus unconditional (corporate philanthropy) corporate giving initiatives in advertising. A cross-cultural approach is used to investigate whether Dutch and Germans differ in consumer responses. Involving 178 Dutch and German consumers (convenience samples) in the investigation, this empirical research reveals that participants exposed to the conditional (CRM) or the unconditional (corporate philanthropy) giving initiatives displayed significantly more positive attitudes to company than participants in the control condition. German participants were significantly more positive about the product and the company than the Dutch. There were no effects on purchasing intent, and no interaction between nationality and type of corporate giving initiative. The findings suggest that communicating about corporate giving (in advertising) can contribute to positive consumer outcomes with respect to attitude to the company. The two nationalities studied did not differ in their response to the two types of corporate giving initiative, suggesting that both types could be effective in boosting corporate reputation in these countries.

20

RALPH TENCH ET AL.

CONCLUDING REMARKS Businesses add value and contribute to a ‘good’ society by providing us, the public citizens i.e. consumers, with the goods and services we need in order to survive and prosper in a market economy and society. Commercial organizations also create value, wealth and profits from which taxes are paid. In a liberal free market economy and society these are basic and fundamental ways of behaving and have at their core CSR. In delivering on this, businesses are by default and through their actions communicating their CSR credentials. Businesses of course do not always operate to serve the public good but pursue their own private interests for their own benefit by enhancing shareholder value or profits. Nevertheless, CSR communication can serve to reassure investors and other stakeholders that the business is serious about its commitment to environmental and social causes. Effective communication of CSR can help develop stakeholder engagement and improve stakeholder relations (Panwar, Rinne, Hansen, & Juslin, 2006). Communication tools provide businesses with the means to manage expectations around CSR and to address the changing needs of stakeholders (Golob & Bartlett, 2007). Understanding stakeholders’ needs has the potential to help business improvement. It can help build trust, consent and legitimacy. Companies need to implement CSR communication strategies to explain and have conversations with the various stakeholders with whom they seek to engage and consult. However, CSR communication is complex, dynamic and uneasy because stakeholders’ expectations and demands are various and changing and also because there is a lack of common definition and understanding of CSR. Thus, the effectiveness and efficiency of CSR communication is among the key matters in CSR studies. This volume serves as an initial step in CSR communication research and it should encourage more future scholarly studies in this emerging and fascinating field.

REFERENCES Carroll, A. B. (1991). The pyramid of corporate social responsibility. Business Horizons, July August, 39 48. Crane, A., & Matten, D. (2007). Corporate social responsibility as a field of scholarship. In A. Crane & D. Matten (Eds.), Corporate social responsibility. London: Sage. Golob, U., & Bartlett, J. (2007). Communicating about corporate social responsibility: A comparative study of CSR reporting in Australia and Slovenia. Public Relations Review, 33(1), 1 9.

Introduction: CSR Communication as an Emerging Field of Study

21

Habermas, J. (1996). Between facts and norms. Cambridge: MIT Press. Koch, P., & Oesterreicher, W. (1994). Schriftlichkeit und Sprache. In H. Gu¨nther & O. Ludwig (Eds.), Schrift und Schriftlichkeit. Ein interdisziplina¨res Handbuch internationaler Forschung (pp. 587 604). Berlin: Walter de Gruyter. Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review, 30(1), 166 179. Nielsen, A. E., & Thomsen, C. (2007). Reporting CSR what and how to say it? Corporate Communications: An International Journal, 12(1), 25 40. Panwar, R., Rinne, T., Hansen, E., & Juslin, H. (2006). Corporate responsibility: Balancing economic, environmental, and social issues in the forest products industry. Forest Products Journal, 56(2), 4 12. Porter, E. M., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, January February, 2 17. Sun, W., Stewart, J., & Pollard, D. (2010). Reframing corporate social responsibility: Lessons from the global financial crisis. Critical Studies on Corporate Responsibility, Governance and Sustainability series, Vol. 1). Bingley: Emerald. Tench, R., Sun, W., & Jones, B. (Ed.). (2012). Corporate social irresponsibility: A challenging concept. Critical Studies on Corporate Responsibility, Governance and Sustainability series, (Vol. 4). Bingley: Emerald.

PART II COMMUNICATION IN CSR: THE COMMUNICATIVE ROLE, STRATEGY AND EVALUATION

FOUR ACES: BRINGING COMMUNICATION PERSPECTIVES TO CORPORATE SOCIAL RESPONSIBILITY Øyvind Ihlen, Steve May and Jennifer Bartlett ABSTRACT Purpose The purpose of this chapter is to address the question of how communication studies can prove its value in relation to corporate social responsibility (CSR). As many disciplines seek to understand CSR, the role of communication has been relatively underexplored despite its prevalence in demonstrating and shaping social responsibility positions and practice. Design/methodology/approach

Literature review.

Social implications The literature review points to what we consider as four aces. Communication studies alert us to (1) how meaning is constructed through communication, something that has implications for the management of organizations as publics hold different views of CSR and expect different things from them; (2) how a dialogue between an organization and its publics should unfold; (3) how practices of

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 25 39 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006023

25

26

ØYVIND IHLEN ET AL.

transparency can assist organizations to come across as trustworthy actors; and, importantly, (4) how a complexity view is fruitful to grasp the CSR communication process. Originality/value These four key themes could be instructive for practitioners who want to argue for and demonstrate the usefulness of strategic communication for the management of CSR and bridge meso and macro levels of analysis. Keywords: Corporate social responsibility; strategic communication; dialogue; transparency; complexity

With the corporation as the dominant social institution of today (Deetz, 1992; Korten, 2001), it becomes important to understand the attempts of this institution to manage its relationship with society. The claim to be taking responsibility beyond that of profit seeking is recognized as a major corporate strategy to maintain legitimacy. As part of this, corporations engage in programmes for corporate social responsibility (CSR). CSR is here defined as the corporate attempt to negotiate relationships to stakeholders and the public at large (Ihlen, Bartlett, & May, 2011b). Corporations might attempt to map and evaluate actual and potential demands from stakeholders and develop and implement responses. The demands might include the expectation of dialogue, transparency, and accountability, among others. It might also incorporate the expectation to create a product or service that serves the public good and is sold at a fair price. Publics might also expect that corporations will do no harm to their diverse sets of stakeholders, whether it be environmental degradation, tax evasion, outsourcing of jobs, or faulty products and services, among others. Finally, publics might demand that corporations engage in citizenship by preserving democratic ideals and maintaining community engagement on a variety of issues. The management literature that deals with the corporate challenges above increasingly draws attention to communication as part of this process. While we maintain that communication is treated rather haphazardly in the mainstream CSR textbooks, there is evidence of interest in the management journals. Scholars have focused on non-financial reports (e.g. Aras & Crowther, 2009; Campbell, Shrives, & Bohmbach-Saager, 2001; Clarke & Gibson-Sweet, 1999; Hartman, Rubin, & Dhanda, 2007; Perrini, 2005), communication of corporate ethic codes (e.g. Painter-Morland, 2006;

Bringing Communication Perspectives to CSR

27

Svensson, Wood, Singh, & Callaghan, 2009a, 2009b), as well as stakeholder dialogue processes (e.g. Burchell & Cook, 2006, 2008; Habisch, Patelli, Pedrini, & Schwartz, 2011; Morsing & Schultz, 2006). Often, however, articles are published that focus on communication as something instrumental (e.g. merely as a means to an economic end) or they do not make any references to the scholarship of communication studies (e.g. Du, Bhattacharya, & Sen, 2010). This chapter will pick up and extend on some particular themes that we argue should be brought forward from communication studies in order to highlight the contribution this field can make to the understanding and management of CSR as well as how CSR functions discursively. The themes relate to epistemology as well as principles for effective communication, in particular the notions of dialogue and transparency. We also call attention to the importance of a perspective on complexity that can help correct attempts to oversimplify or control the environment. Moreover, we argue that these themes are crucial for the linkage between the organizational meso and societal macro levels of analyses, whether the scholar has a critical or an instrumental approach to CSR communication. The essay starts by discussing the epistemological perspective of social constructionism and the role of language. Next it moves on to explicate the role of dialogue and then the concept of transparency is discussed which also seems to be a prerequisite to increase trust. Finally, attention is drawn to the importance of injecting a view of complexity. We suggest that by considering these concepts, communication studies can help move beyond the typical failure of the control strategy favoured by many modernist thinkers. These then are four key areas or aces if you like where we believe communication has most to say and where it is easy to demonstrate the value of communication studies.

COMMUNICATION AND SOCIAL CONSTRUCTION As argued by May and Zorn (2003), CSR at its core is ‘about the simultaneously contested and consensual nature of the relationship between organizations and culture(s)’ (p. 595). It is about corporations and other groups making claims about what is good and what is bad (Wehmeier & Schultz, 2011). What is considered to be ethical business behaviour is historically and socially conditioned, and for corporations it can be very costly if they do not keep abreast with changes in the ethical landscape (Ihlen, 2008).

28

ØYVIND IHLEN ET AL.

Corporations need to map their surroundings to find who and what is ‘out there’ stakeholders, publics, the public but they also need to get a grasp of views that are articulated and how these might change over time. Being informed by communication studies (including rhetoric) and sociology is helpful in terms of understanding the co-constructive interrelationship between communication and action, and how ‘truth’ is created. Thinkers in the rhetorical tradition have pointed to how communication (rhetoric) is epistemic, in the sense that it creates truth and knowledge, or rather, understanding (Scott, 2008). Our knowledge and what we consider truth is historically and socially conditioned and based on social agreement. Communication is a key ‘when something is declared to be a fact, in the interpretation of that fact, and also in how it is used to justify action’ (Ihlen et al., 2011b). In short, truth is inseparable from discourse; it is inseparable from the way we use language and interact. It is not possible to unearth truth; truth or understanding is created through communication (Scott, 2008). For example, over the course of many years of CSR research and practice, several common truths have developed. One of the most commonly held assumptions has been the belief that CSR involves the negotiation of relationships with external publics rather than internal constituencies, such as employees. For many fields of study, such a focus has caused scholars to focus on issues of management more so than labour conditions, for example. Similarly, widely accepted definitions of CSR have begun to develop emergent truths, as well, including Carroll’s (1979) contention that CSR encompasses the ‘legal, ethical, and discretionary expectations that a society has of organizations at a given point in time’ (p. 500). Increasingly, businesspersons and scholars alike have begun to bracket corporate compliance and even business ethics from society’s discretionary expectations of corporations. The result has been a growing interest in non-governmental organizations (NGOs), advocacy groups, and broader sets of communities, in general, that corporations affect. While worthwhile and relevant, such an emphasis does divert CSR-related attention away from legal considerations, for example. In fact, CSR is often defined as what corporations are doing beyond the legal requirements (McWilliams, Siegel, & Wright, 2006; Perrini, Pogutz, & Tencati, 2006). In many respects, then, CSR scholars and practitioners have developed naturalized, self-imposed silos between legal, ethical, and discretionary/CSR questions. Social constructionism is among the most prominent epistemological theories and places communication at the centre. A social constructionist perspective maintains that communication constructs and modifies reality,

Bringing Communication Perspectives to CSR

29

social conditions and relationships (Berger & Luckmann, 1966). While many scholars (e.g. Bourdieu, 1991; Fairclough, 2001; Foucault, 1972) have argued that language is crucial, they have not accepted the radical versions of social constructionism bordering on relativism/subjectivism. Instead, the basic schism between the latter position and that of objectivism/realism is often bridged by placing the two positions on a continuum, and by introducing different mixtures of the two positions (Cherwitz & Hikins, 1999). Reality can be seen as a product of a synthesis between material structures and practices on the one side, and the use of symbols that reinforce or question these structures and practices on the other (Sandmann, 1996). While acknowledging the existence of material structures, it is argued that communication is needed for the social mediation of this knowledge. This epistemological position can be used for self-reflective purposes for corporations and functions as a guard against naive realism. Not only do different views exist regarding values, what is ethical or not, but also one’s own position of knowing in general becomes less certain. It invites selfreflection and also attention to communicative choices. In order to handle the complexity and challenges created by public pressure, modernization, rationalization, and social change, communicators need to approach their tasks in a reflective manner (Holmstro¨m, 2004; van Ruler & Vercˇicˇ, 2005; Wehmeier & Schultz, 2011). This also relates to different meanings of CSR. The concept has taken on a range of different meanings in various fields, industries and countries. For example, rhetoric, public relations, organizational communication, and business (see Ihlen, Bartlett, & May, 2011c) have each drawn on their own epistemologies to orient readers to a specific view of CSR that may focus on discourse, publics, labour processes, or management respectively. In addition, employees in divisions that range from marketing, public relations, branding, strategy, and customer service, among others, not only may identify different key audiences for CSR, but also may develop quite unique practices. Finally, developing countries have a decidedly different perspective on CSR and communitybased initiatives, for example, than established economies (Blowfield & Frynas, 2005). Both the benefits and consequences of CSR, then, may vary widely from country to country depending on economic conditions, as well as political, social and technical dimensions. In sum, communication studies call attention to the complex situations described above and points to implications for both practitioners’ and scholars’ view of CSR and communication.

30

ØYVIND IHLEN ET AL.

IDEAS FOR DIALOGUE As mentioned, corporations have to conceptualize their environments; that is, they need to get a picture of whom they depend on and have to relate to. Second, engaging in dialogue with groups both inside and outside the organization is preferred over one-way communication about the corporations’ CSR policy and action. Dialogue can be defined as an exchange between two or more parties and can be seen as both a technique and an orientation. The latter is characterized through, for instance, reciprocity, propinquity, empathy, risk and commitment (Kent & Taylor, 1998, 2002; Pieczka, 2011; Theunissen & Wan Noordin, 2012). Although one-way communication might be more prevalent in today’s business practice, there are several good reasons, both ethical and pragmatic, for why corporations should embrace dialogue as an orientation. Such dialogue can ideally create effective decision making and stakeholder engagement and improve corporate governance (Golob & Podnar, 2011; Ihlen, Bartlett, & May, 2011a). As noted by Golob and Podnar (2011), dialogue ‘can maximize stakeholders’ perceptions of legitimacy and trust, provided that the process of dialogue is transparent and the initiator responds constructively to their expressed expectations’ (p. 231). Dialogue can help catapult new issues to the forefront that otherwise might have been ignored. It can help make sense of issues in both economic and ethical terms, and be valuable for the discussion of how the issues might be integrated in the overall corporate strategy. Ideally, dialogue also opens up for a negotiation process where judgements and assumptions are set in play in an open and visible process (Bohm, 2008; Ihlen et al., 2011a). Pedersen (2006) has argued that five dimensions are necessary for stakeholder dialogue to work well: inclusion (all relevant stakeholders are included), openness (all issues can be discussed), tolerance (critical and alternative views should not be suppressed), empowerment (stakeholders should be able to influence the structure, process and outcome) and transparency (stakeholders should have access to information about the outcome after the dialogue has ended to be able to evaluate). A corporation and its stakeholder dialogue can score high or low on these dimensions, and through this dialogue the corporation will create new borders between itself and its stakeholders. The views that are articulated in this process will be interpreted and used in the corporate decision making process (Pedersen, 2006). As studies have shown, however, stakeholders might feel that the dialogue is strategic in its intent. That is, it is

Bringing Communication Perspectives to CSR

31

mainly conducted to further corporate interests and predefined corporate goals (Burchell & Cook, 2006). Critics point out that dialogue can be abused in this sense to co-opt NGOs and critical stakeholder groups (Bator & Stohl, 2011; Dempsey, 2011). A hidden goal can, for instance, be to privatize the debate by pulling it out from the public sphere. One positive consequence for the corporations is that this leaves out the larger audience that the NGOs might be able to influence otherwise (Rowell, 2002). A basic problem is that most often it is the corporations that lay down the premises and that instrumentalize the dialogue. The dialogue is used as a corporate tool for predefined goals, which reduces the ethical value. It also acts as a way to cut democratic processes short as ideas are presented and need to be resolved in required time frames so that processes of evaluation of options do not have time to circulate among groups (Herbst, 1995). At the same time, few parties would argue that corporations should not engage in dialogue with their stakeholders. Instead, critics point to the potential for learning and development for the corporation (Burchell & Cook, 2008; Gergen, Gerne, & Barrett, 2004). To engage in dialogue with stakeholders might be a way of getting a better grasp of the different understandings that stakeholders have of CSR. On the one hand, corporations can then proceed to use this new insight to manage or even manipulate stakeholders. On the other hand, the dialogue can also be used to rethink the relationship between the corporations and society in new ways. Again, this serves as a reminder that a reflective approach is necessary if corporations want to be able to handle public pressure, social change and complexity (Holmstro¨m, 2004, 2009; van Ruler & Vercˇicˇ, 2005). Dialogue can potentially lead to a more active engagement where the corporation actually risks something, for instance, getting criticism and unpleasant feedback. If the corporation does not engage in dialogue, it also runs the risk of only asking questions with answers that it would like to hear, thereby reinforcing existing views (Golob & Podnar, 2011; Morsing & Schultz, 2006). Marketing research has often concluded that people have little knowledge of CSR (Auger, Devinney, & Louviere, 2010; Du, Bhattacharya, & Sen 2007; Sen, Du, & Bhattacharya, 2009). People are not necessarily interested in dialoguing with corporations, at least in traditional forms like a stakeholder meeting. At the same time, however, it seems that the corporate intent towards and invitation to dialogue is considered important (Eriksson, 2003). Thus, there is a seeming disconnect between public interest in CSR and the emphasis that corporations place on it. It is important to remember, however, that the intended audience for CSR communication

32

ØYVIND IHLEN ET AL.

often is what has been called expert audiences (e.g. politicians, local authorities, journalists, critical stakeholder NGOs). These groups cannot only be expected to be more interested in CSR; they may also have some knowledge about this topic. Indeed, it has been recommended that these groups should be the ones CSR communication is directed to, so that the general public and customers can be reached indirectly (Morsing, Schultz, & Nielsen, 2008).

TRANSPARENCY AND TRUST An invitation to dialogue might be seen as an expression of goodwill for the audience a classical rhetorical strategy to strengthen credibility (Aristotle, trans. 2007). Much research has pointed to how corporations have a rhetorical challenge when they want to communicate about CSR. Studies suggest that CSR efforts can backfire if corporations are seen to be flaunting themselves and appear as self-serving (Lindgreen & Swaen, 2010; Schlegelmilch & Pollach, 2005; Yoon, Gurhan-Canli, & Schwarz, 2006). Stakeholders typically want to see alignment between the talk and action of CSR. Criticism of CSR is often rooted in disappointment as a result of how practices of CSR have not met the expectations created by the corporate discourse of CSR (May, Cheney, & Roper, 2007). Problems can arise when corporations argue that they are motivated by what is ‘good, or in other words, as having pure motives when, in reality, they may be merely meeting their fiduciary obligations to stockholders under the law’ (Ihlen et al., 2011a, p. 555). Ihlen et al. have summarized the advice in the literature in the following way: Communicators should fess up to their motives, but also to problems and dilemmas, and engage in dialogue about what they have learned and what they want to achieve. They should give proof through numbers, statistics and examples of outcomes and impacts, and have credible third parties attest to their work. (Ihlen et al., 2011a, p. 559)

This then is also a call for transparency. May (2006) has pointed out that transparency about CSR is a prerequisite to create trust, respect, fairness, and a sense of procedural justice. Henriques (2007) has argued that ‘transparency is part of the moral baseline for business conduct, rather than an optional extra to be adopted when it doesn’t adversely affect the bottom line’ (p. 4). Transparency would concern governance, missions, policies, procedures, and guidelines, as well as information about products and services and financial, environmental and social performance. Transparency

Bringing Communication Perspectives to CSR

33

is also crucial to create trust and credibility (Bentele & Nothhaft, 2011; Ihlen, 2011). Nadesan (2011) has pointed out, however, that transparency as a communicative phenomenon gives credence to the framing of CSR that sees voluntary responsibility measures as preferable to mandatory ones. This limits the potential of transparency. As Livesey and Kearins (2002) explain: Transparency thus carries with it the potential to reconstitute ‘reality’ related to sustainable development in one-sided, arbitrary, and manipulative ways. That is, in exercising the mechanics of knowledge production for example, decisions as to how to categorize and assign value to data sustainability reporting can be used as a way of imposing form on nature and society. It serves firms’ attempts to construct themselves, and business more generally, as ‘making progress’ toward sustainable development. (Livesey & Kearins, 2002, p. 250)

While transparency certainly has limits that should be recognized, we maintain that some level and form of transparency is needed to allow stakeholders to make more informed decisions regarding corporate practices. This could in turn allow ‘them to make employment, purchasing, and investment decisions that are consistent with their own values’ (Ihlen et al., 2011a, p. 554). Transparency, we believe, is a cornerstone for trust. This trust develops, over time, as corporations provide clear and accessible information about their mission/vision/values, employment practices, products or services, financial status and future direction, and positive and negative impacts on the lives of their various stakeholders, whether it be a consumer, a stockholder, a community member or a concerned citizen.

COMPLEXITY In communication studies, attention has lately been paid to the idea of complexity (e.g. Gilpin & Murphy, 2008, 2010). Here it is also possible to draw on the preceding movement in organization science (e.g. Anderson, 1999). A basic tenet of complexity theory is that organizations set themselves up for failure if they opt for a controlling strategy and/or approach their environment as a given entity. This is perhaps most challenging during crisis situations. Organizations typically engage in scientific planning and prescriptive decision making, but it is highly likely that they will find themselves in situations where they cannot control the driving factors of a crisis. This means that organizations are better off working with the challenge, and that they should learn to improvise and adapt. Complex systems are in a state of

34

ØYVIND IHLEN ET AL.

emergence, which make them unpredictable, and ambiguity and uncertainty are unavoidable. The advent of social media has, for instance, shown itself to propel CSR crises by, for instance, presenting additional channels for stakeholder complaints (Gilpin, 2010; Mei, Bansal, & Pang, 2010). We posit that organizations are fluid and socially constructed, and that they aim for legitimacy. Gilpin and Murphy (2008) argue that organizations should utilize ‘double loop learning’ questioning the variables themselves when something goes wrong. This activity easily ties in with thinking on CSR. The latter authors argue that improvisational, metacognitive and situational awareness skills are examples of what can turn organization members into learning experts which eventually will help organizations to adapt to uncertainty: ‘Complexity offers a framework for advances in conceptualizing stakeholders, studying the emergence of issues and crises, and tracking reputation across media and across national borders’ (Gilpin & Murphy, 2010, p. 80). The call for using complexity theory sits well with the three other elements mentioned in this review. When reality is seen as socially constructed through communication, it also implies that we acknowledge that people hold different views of reality. It is simply not possible to have a unified view of reality on the grander scale. In itself, a social constructionist perspective is by and large a view of a complex system. Similarly, theories on dialogue recognize the multiple goals and the intricacies of the dialogic process. As mentioned, some theorists argue that corporations need to risk something (Golob & Podnar, 2011; Morsing & Schultz, 2006). This might be something that goes against the functionalistic grain of attempting to control, seeing risk as ultimately negative. A call for complexity is also a call to see transparency as a potential reconstruction of reality through, for instance, choices of what kind of data is made available to stakeholders, in what format, and at what time. The transparency practices are, as Livesey and Kearins (2002) remind us, rooted in certain perspectives. In its simplest sense then, it could be argued that complexity theory is urging corporations and scholars alike to add more nuances to the picture of their environment and to realize that adaption is preferable to controlling strategies.

CONCLUSION In this chapter we have argued that communication studies have a pretty good hand that could be used in the academic and practical play around

Bringing Communication Perspectives to CSR

35

influence on CSR policy and practice. More specifically, we have used the metaphor of having four aces: Communication studies contribute to a particular epistemological perspective built around social constructionism and complexity, as well as considerations about notions like dialogue and transparency in a way that can further ability for corporate self-reflection. By focusing on practices at the meso level, further insights can be added to a dominant discourse in the CSR literature on institutionalized pressures on organizations to comply with social and mandated norms (Campbell, 2007). Dialogue and transparency, for example, allow the micro-foundations of organization’s CSR practices to be examined, which in turn impact the practices at the meso and macro level. This can pave the way for new approaches to CSR and CSR communication that steer clear of too simple solutions such as reporting against best practice guidelines that favour instrumental perspectives. Normative theory on dialogue for its part also provides a standard for criticism of corporate practice, and a perspective on the communicative and political function of transparency also furthers discussion of corporate interests and power. It is through such approaches that communication studies can bring deeper insights into the CSR discussion and seek to address paradoxes such as the co-existent expectations and criticisms of CSR practices and communication. As such, they bridge meso and macro levels of analysis to contribute to the broader CSR discussion.

REFERENCES Anderson, P. (1999). Complexity theory and organization science. Organization Science, 10(3), 216 232. Aras, G., & Crowther, D. (2009). Corporate sustainability reporting: A study in disingenuity? Journal of Business Ethics, 87, 279 288. Aristotle. (2007). On rhetoric: A theory of civic discourse (G. A. Kennedy, Trans., 2 ed.). New York, NY: Oxford University Press. Auger, P., Devinney, T. M., & Louviere, J. (2010). Global segments of socially conscious consumers: Do they exist? In N. C. Smith, C. B. Bhattacharya, D. Vogel, & D. I. Levine (Eds.), Global challenges in responsible business (pp. 135 160). New York, NY: Cambridge University Press. Bator, M. J., & Stohl, C. (2011). New partnerships for a new generation of corporate social responsibility. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 399 422). Oxford, UK: Wiley Blackwell. Bentele, G., & Nothhaft, H. (2011). Trust and credibility as basis of corporate social responsibility: (Mass-)mediated construction of responsibility. In Ø. Ihlen, J. Bartlett, & S. May

36

ØYVIND IHLEN ET AL.

(Eds.), Handbook of communication and corporate social responsibility (pp. 208 230). Oxford, UK: Wiley Blackwell. Berger, P., & Luckmann, T. (1966). The social construction of reality: A treatise in the sociology of knowledge. London: Penguin Books. Blowfield, M., & Frynas, J. G. (2005). Setting new agendas: Critical perspectives on corporate social responsibility in the developing world. International Affairs, 81(3), 499 513. doi:10.1111/j.1468-2346.2005.00465.x Bohm, D. (2008). On dialogue. New York, NY: Routledge. Bourdieu, P. (1991). Language & symbolic power (G. Raymond & M. Adamson, Trans.). Cambridge, UK: Polity. Burchell, J., & Cook, J. (2006). It’s good to talk? Examining attitudes towards corporate social responsibility dialogue and engagement processes. Business Ethics: A European Review, 15(2), 154 170. Burchell, J., & Cook, J. (2008). Stakeholder dialogue and organisational learning: Changing relationships between companies and NGOs. Business Ethics: A European Review, 17(1), 35 46. doi: 10.1111/j.1467-8608.2008.00518.x Campbell, D., Shrives, P., & Bohmbach-Saager, H. (2001). Voluntary disclosure of mission statements in corporate reports: Signaling what to whom? Business and Society Review, 106(1), 65 87. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946. Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497 505. Cherwitz, R. A., & Hikins, J. W. (1999). Rhetorical perspectivism. In J. L. Lucaites, C. M. Condit, & S. Caudill (Eds.), Contemporary rhetorical theory: A reader (pp. 176 193). New York, NY: Guilford Press. Clarke, J., & Gibson-Sweet, M. (1999). The use of corporate social disclosures in the management of reputation and legitimacy: A cross sectoral analysis of UK top 100 companies. Business Ethics: A European Review, 8(1), 5 13. Deetz, S. A. (1992). Democracy in an age of corporate colonization: Developments in communication and the politics of everyday life. New York, NY: State University of New York Press. Dempsey, S. E. (2011). NGOs as communicative actors within corporate social responsibility efforts. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 445 466). Oxford, UK: Wiley Blackwell. Du, S., Bhattacharya, C. B., & Sen, S. (2007). Reaping relational rewards from corporate social responsibility: The role of competitive positioning. International Journal of Research in Marketing, 24, 224 241. Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), 8 19. Eriksson, M. (2003). Fra˚n ingenjo¨rskonst til informato¨rskonst: Studier av PR och riskkommunikation O¨rebro studies in media and communication. O¨rebro, Sweden: Forskningscentrum Ma¨nniska Teknik Miljo¨. Fairclough, N. (2001). Language and power (2nd ed.), Harlow: Longman. Foucault, M. (1972). The archaeology of knowledge and the discourse on language. New York, NY: Pantheon Books.

Bringing Communication Perspectives to CSR

37

Gergen, K. J., Gerne, M. M., & Barrett, F. J. (2004). Dialogue: Life and death of the organization. In D. Grant, C. Hardy, C. Oswick, & L. L. Putnam (Eds.), The Sage handbook of organizational discourse (pp. 39 59). London: Sage. Gilpin, D. R. (2010). Organizational image construction in a fragmented online media environment. Journal of Public Relations Research, 22(3), 265 287. Gilpin, D. R., & Murphy, P. J. (2008). Crisis management in a complex world. New York, NY: Oxford University Press. Gilpin, D. R., & Murphy, P. J. (2010). Implications of complexity theory for public relations: Beyond crisis. In R. L. Heath (Ed.), The Sage handbook of public relations (pp. 71 84). Thousand Oaks, CA: Sage. Golob, U., & Podnar, K. (2011). Corporate social responsibility communication and dialogue. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 231 251). Oxford, UK: Wiley Blackwell. Habisch, A., Patelli, L., Pedrini, M., & Schwartz, C. (2011). Different talks with different folks: A comparative survey of stakeholder dialog in Germany, Italy, and the U.S. Journal of Business Ethics, 100(3), 381 404. doi: 10.1007/s10551-010-0686-8 Hartman, L., Rubin, R., & Dhanda, K. (2007). The communication of corporate social responsibility: United States and European Union multinational corporations. Journal of Business Ethics, 74(4), 373 389. Henriques, A. (2007). Corporate truth: The limits to transparency. London: Earthscan. Herbst, S. (1995). On the disappearance of groups: 19th- and early 20th-century conceptions of public opinion. In T. L. Glasser & C. T. Salmon (Eds.), Public opinion and the communication of consent (pp. 89 104). New York, NY: Guilford Press. Holmstro¨m, S. (2004). The reflective paradigm of public relations. In B. V. Ruler & D. Vercˇicˇ (Eds.), Public relations and communication management in Europe: A nation-by-nation introduction to public relations theory and practice (pp. 121 134). Berlin: Walter de Gruyter. Holmstro¨m, S. (2009). On Luhmann: Contingency, risk, trust and reflection. In Ø. Ihlen, B. van Ruler, & M. Fredriksson (Eds.), Public relations and social theory: Key figures and concepts (pp. 187 211). New York, NY: Routledge. Ihlen, Ø. (2008). Mapping the environment of corporate social responsibility: Stakeholders, publics, and the public sphere. Corporate Communications: An International Journal, 13(2), 135 146. Ihlen, Ø. (2011). Rhetoric and corporate social responsibility. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 147 166). Oxford, UK: Wiley Blackwell. Ihlen, Ø., Bartlett, J., & May, S. (2011a). Conclusions and take away points. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 550 571). Oxford, UK: Wiley Blackwell. Ihlen, Ø., Bartlett, J., & May, S. (2011b). Corporate social responsibility and communication. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 3 22). Oxford, UK: Wiley Blackwell. Ihlen, Ø., Bartlett, J., & May, S. (2011c). Corporate social responsibility and communication. In Ø. Ihlen, J. Bartlett & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 3–22). Oxford, UK: Wiley Blackwell. Kent, M. L., & Taylor, M. (1998). Building dialogic relationships through the world wide web. Public Relations Review, 24(3), 321 334. doi: 10.1016/s0363-8111(99)80143-x

38

ØYVIND IHLEN ET AL.

Kent, M. L., & Taylor, M. (2002). Toward a dialogic theory of public relations. Public Relations Review, 28, 21 37. Korten, D. C. (2001). When corporations rule the world (2nd ed.), Bloomfield, CN: Kumarian Press. Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International Journal of Management Reviews, 12(1), 1 7. Livesey, S. M., & Kearins, K. (2002). Transparent and caring corporations? A study of sustainability reports by the Body Shop and Royal Dutch/Shell. Organization & Environment, 15(3), 233 258. doi: 10.1177/1086026602153001 May, S. K. (Ed.) (2006). Case studies in organizational communication: Ethical perspectives and practices. Thousand Oaks, CA: Sage. May, S. K., Cheney, G., & Roper, J. (Eds.) (2007). The debate over corporate social responsibility. New York, NY: Oxford University Press. May, S. K., & Zorn, T. E. (2003). Forum introduction: Communication and corporate social responsibility. Management Communication Quarterly, 16(4), 595 598. doi:10.1177/ 0893318903252076 McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies, 43(1), 1 18. Mei, J. S. A., Bansal, N., & Pang, A. (2010). New media: A new medium in escalating crises? Corporate Communications: An International Journal, 15(2), 143 155. doi:10.1108/ 13563281011037919 Morsing, M., & Schultz, M. (2006). Corporate social responsibility communication: Stakeholder information, response and involvement strategies. Business Ethics: A European Review, 15(4), 323 338. Morsing, M., Schultz, M., & Nielsen, K. U. (2008). The ‘Catch 22’ of communicating CSR: Findings from a Danish study. Journal of Marketing Communications, 14(2), 97 111. Nadesan, M. (2011). Transparency and neo-liberal logics of corporate economic and social responsibility. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 252 275). Oxford, UK: Wiley Blackwell. Painter-Morland, M. (2006). Triple bottom-line reporting as social grammar: Integrating corporate social responsibility and corporate codes of conduct. Business Ethics: A European Review, 15(4), 352 364 .doi: 10.1111/j.1467-8608.2006.00457.x Pedersen, E. R. (2006). Making corporate social responsibility (CSR) operable: How companies translate stakeholder dialogue into practice. Business and Society Review, 111(2), 137 163. Perrini, F. (2005). Building a European portrait of corporate social responsibility reporting. European Management Journal, 23(6), 611 627. Perrini, F., Pogutz, S., & Tencati, A. (Eds.) (2006). Developing corporate social responsibility: A European perspective. Cheltenham, UK: Edward Elgar. Pieczka, M. (2011). Public relations as dialogic expertise? Journal of Communication Management, 15(2), 108 124. Rowell, A. (2002). Dialogue: Divide and rule. In E. Lubbers (Ed.), Battling big business: Countering greenwash, infiltration and other forms of corporate bullying (pp. 33 43). Totnes, UK: Green Books. Sandmann, W. (1996). The rhetorical function of’ Earth in Balance’. In S. A. Muir & T. L. Veenendall (Eds.), Earthtalk: Communication empowerment for environmental action (pp. 119 134). Westport, CT: Praeger.

Bringing Communication Perspectives to CSR

39

Schlegelmilch, B. B., & Pollach, I. (2005). The perils and opportunities of communicating corporate ethics. Journal of Marketing Management, 21(3/4), 267 290. Scott, R. L. (2008). Rhetoric and epistemology. In W. Donsbach (Ed.), The Blackwell international encyclopedia of communication. Oxford, England: Blackwell. Sen, S., Du, S., & Bhattacharya, C. B. (2009). Building brand relationships through corporate social responsibility. In D. J. MacInnis, P. C. Whan, & J. R. Priester (Eds.), Handbook of brand relationships (pp. 195 211). Armonk, NY: M. E. Sharpe. Svensson, G., Wood, G., Singh, J., & Callaghan, M. (2009a). A cross-cultural construct of the ethos of the corporate codes of ethics: Australia, Canada and Sweden, Business Ethics: A European Review 18(3), 253 267. Svensson, G., Wood, G., Singh, J., & Callaghan, M. (2009b). Implementation, communication and benefits of corporate codes of ethics: An international and longitudinal approach for Australia, Canada and Sweden. Business Ethics: A European Review, 18(4), 389 407. Theunissen, P., & Wan Noordin, W. N. (2012). Revisiting the concept’ of dialogue’ in public relations. Public Relations Review, 38(1), 5 13. doi: 10.1016/j.pubrev.2011.09.006 van Ruler, B., & Vercˇicˇ, D. (2005). Reflective communication management: Future ways for public relations research. In P. J. Kalbefleisch (Ed.), Communication yearbook (Vol. 29, pp. 239 274). Mahwah, NJ: Lawrence Erlbaum. Wehmeier, S., & Schultz, F. (2011). Communication and corporate social responsibility: A storytelling perspective. In Ø. Ihlen, J. Bartlett, & S. May (Eds.), Handbook of communication and corporate social responsibility (pp. 467 488). Oxford, UK: Wiley Blackwell. Yoon, Y., Gurhan-Canli, Z., & Schwarz, N. (2006). The effect of corporate social responsibility (CSR) activities on companies with bad reputations. Journal of Consumer Psychology, 16, 377 390.

COMMUNICATING, CONNECTING AND DEVELOPING SOCIAL CAPITAL FOR ORGANISATIONS AND THEIR COMMUNITIES: BENEFITS FOR SOCIALLY RESPONSIVE ORGANISATIONS Joy Chia ABSTRACT Purpose To understand the communication important to social capital development and community engagement in regional communities and its relevance to corporate social responsibility (CSR). Methodology/approach Qualitative approach including focus groups and semi-structured interviews. Case studies of three regional Australian and Canadian communities at different stages of community development.

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 41 58 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006002

41

42

JOY CHIA

Findings Communication, both traditional and in new media forms such as social media, was important to social capital development provided that it was diverse, appropriate to community needs and extended its reach to community members to include those who were marginalised. Access and skill issues affected some community members’ engagement when they attempted to use social media, although the increasing use of social media as a connector was observed. These findings have implications for organisations’ CSR, as organisations can be responsive to their communities if they also communicate and engage with them for mutual benefit. Research limitations/implications A pilot, exploratory study that highlighted the varied context of community social capital and the diversity of communication that engages and includes community members; ongoing research is in progress to gain understanding of regional communities’ connections and networks, and how to strengthen them and how stakeholders are identified and supported. Practical implications The study indicated that it is important to explore all communication avenues and extend the reach and participation of community communication through diverse channels including social media. The research provided some good examples where organisations support and encourage community social capital development this underpins the success of other programmes such as CSR programmes. Social implications To develop sound networks and relationships where organisations and their communities develop trust, deal with issues and collaboratively problem solve. Social capital develops and supports other forms of capital without it organisations may be too focused on ‘doing good’ rather than ‘being good’. Originality/value This chapter provides insight into communication layering and the context of social capital development for effective communication in regional communities. Social responsiveness is possible when organisations understand their community; this chapter puts forward the notion that organisations are members of their communities so that their social capital is important to all they do, including their planning and delivery of CSR programmes. Keywords: Social capital; community; regional; social responsibility; communication; engagement

Developing Social Capital for Socially Responsive Organisations

43

Corporate social responsibility (CSR) is part of social responsiveness and corporation’s responsibility to society (Caroll, 2008); the premise of this chapter is that social capital augments and provides another dimension to the capacity of organisations, not only to respond to society, but also to successfully engage with their communities. Communication critical to the development of social capital might also be important to organisations’ CSR programmes one can support the other. Indeed a lack of social capital that reflects poor communication with relational partners could impede organisations’ (CSR) initiatives as relationships will not be in place that develops trust and support for the plans of organisations. This is especially so as De-Bussy (2012) points to the lack of trust that the public has in businesses about their CSR initiatives even though organisations are functioning in an environment where they are expected to act responsibly as good corporate citizens. Some scholars (Benn, Todd, & Pendleton, 2010) contend that CSR is only emphasised to protect organisations’ reputations; instead incorporating public relations practitioners in strategic, proactive planning would better serve all stakeholders, ‘rather than a reactive damage control’ (p. 406) approach. These scholars observed that there was some unease in the role that public relations practitioners played when they are not actively engaged in the planning and development of CSR programmes. In this chapter, having a closer look at social capital and the relational context of organisations, their stakeholders and networks gives us some insights into the ways that communication professionals can legitimise their role and become key players that engage communities and become socially responsive to them. This chapter’s focus on social capital develops understanding of the key components of social capital that include connections between individuals, or between organisations and communities, and the relationships and social networks that are important to all partners. Meaningful relationships ‘foster reciprocity, but also facilitate coordination and communication and amplify information about the trustworthiness of individuals and organisations; that is their reputation’ (Luoma-aho, 2009, p. 234). When organisations take time to get to know their communities, work with them and establish beneficial partnerships, they open up opportunities for ongoing exchange, support and development. The very nature of social capital is that it is social; Coleman (1988) and Putnam (1995) emphasise that there are benefits to society that social capital brings; the premise of Putnam’s stance is that social capital includes ‘features of social life networks, norms and trust that enable participants to act together more effectively to pursue shared objectives’ (Putnam, 1995, p. 664). This increases capacity

44

JOY CHIA

for organisations, for example, to engage with their communities and collaborate for mutual benefit. In this chapter a focus on regional communities suggests that ‘real partnerships through shared community problem solving’, (Johnston, 2010, p. 218) or shared community planning and capacity building are critical to the way organisations relate to their communities. Managing day-to-day business, developing social capital and CSR initiatives are becoming increasingly important to organisations (Cornelissen, 2006; Crane, Matten, & Spence, 2008; Fisher & Lovell, 2006; L’Etang, 2006). Caroll posits that ‘total corporate social responsibility of business entails the simultaneous fulfilment of the firm’s economic, legal, ethical, philanthropic responsibilities’ (Caroll, 2008, p. 95). This may be so but organisations exist and function within communities and their social capital, or their relationships and networks will have an impact on the way their businesses and their philanthropic responses are understood, accepted and developed by their communities. The view of some scholars (Stark & Kruckeberg, 2003) that the key stakeholder for all organisations is society resonates with a social capital focus on community and organisations that is central to this chapter.

SOCIAL CAPITAL: SOME OF THE CHALLENGES FOR ORGANISATIONS Social capital is closely aligned with the concepts of CSR where organisations and society have the potential to prosper for the common good (Falck & Heblich, 2007). However, due to the intangible nature of social capital it can decline when its benefits are not recognised, or understood. Social capital can be locked into micro-cells and become exclusive to certain groups, or affiliations in organisations. An example of this occurred in the corporate organisation Enron (Lyon, 2008) where conflict and ambiguity made internal relationships strained, and relational exchanges were part of internal, exclusive networks. From Putnam’s (1995) perspective, internal, bonding capital had broken down and, instead, exclusivity stifled relational development and kept many employees ‘in the dark’. The lack of communication with all parties, internal or external (Putnam refers to the latter as bridging capital), resulted in a decline in social and economic capital, with dire consequences for a collapsing Enron. There were many other factors that led to Enron’s demise, but some scholars (Lattimore, Baskin, Heiman, & Toth, 2012) posit that it was critical to make communication

Developing Social Capital for Socially Responsive Organisations

45

transparent, and it was also important not to present and communicate inflated optimism about the organisation’s position and growth. The importance of open communication is apparent in the way organisations, such as Enron, functioned; knowing how to communicate and to do so effectively plays a role in social capital development. The relational context so important to social capital growth is contingent on communication that builds relationships, nurtures internal and external networks and makes them viable. The notion of social capital as relational is contentious though complex and multi-dimensional (Hazleton & Kennan, 2000) with researchers across a wide field beginning to explore what it means (Batt, 2008). A focus on social capital constantly reflects broader capital contexts, as Bourdieu (cited in Edwards, 2008) puts forward in his explication of four types of capital that contribute to organisational status: financial capital; social capital; cultural capital that includes educational and cultural perspectives; symbolic capital. Social capital has the potential for economic benefits for organisations and it contributes to other forms of capital such as intellectual capital (Nahapiet & Ghoshal, 1998). In this chapter the wider brief that frames organisations’ capital development is acknowledged as the close relationship of social capital and social responsiveness is highlighted. Coleman’s (1988) viewpoint that social capital encompasses the macro and micro levels where benefits are sometimes for society as a whole (macro), but they can also be for individuals (micro), depicts the context of social capital and how it functions. I would argue that there is a constant exchange between societal and individual social capital benefits and challenges, as networks and relationships will always have some individual value even though they may, primarily, be social. However, scholars such as Putnam (1993) argue that social capital is declining because of the focus on individualism, rather than the community, so that the propensity for civic engagement is no longer as apparent, as in previous decades. Twenty five years of declining confidence related to the ‘erosion of social capital’ (Pharr, Putnam, & Dalton, 2000, p. 22), observed particularly in democratic societies, suggests to these scholars that trust in government has also declined. Pharr, Putnam, Dalton posit that social capital decline is a symptom of governments performing inadequately and, conversely, when social capital grows good government is likely to be in place. These are important considerations for the socially responsive organisations; if social capital is declining organisations may find that programmes that respond to community needs may not be understood or appreciated and if trust is not part of

46

JOY CHIA

an organisation’s relationship with its stakeholders or community, it is likely that distrust is apparent (De-Bussy, 2012). For scholars such as Lin (2000) and Ferragina (2010) the inequality of social capital is evident, as opportunities to connect and form beneficial relationships are contingent on the access to networks. Some community members may not be part of networks, or they may be disadvantaged and ‘out of the communication loop’ in their community, or even in their organisation, as was evident in a Canadian study of Credit Union employees (Chia & Peters, 2008). In this study employees indicated that they were asked to participate in CSR programmes but they were not fully conversant with policies and plans relating to these initiatives. It was important that Credit Union employees participated in the decision making about community engagement programmes, and their corporate response to their stakeholders. They were the key players who acted as catalysts to set in motion bridging capital (Putnam, 1995) with their communities. When the Credit Union came to terms with the breakdown in internal communication concerning their CSR plans, employees met and made many changes to CSR programmes. Stakeholders were identified and community needs reassessed. This study indicated how closely aligned the developments of social capital and CSR are one impacts the other. Communication to engage, or to be able to involve community members, makes the planning of any community programmes a partnership for mutual benefit reciprocity is important to long-term relationships and successful networks. To understand what this means, as we move into the study reported here, community includes geographically defined groups in three regions that are progressing at different stages in their social capital development they provide some important perspectives about the way organisations can partner and in a sense ‘become active members of their communities’.

RESEARCH METHODOLOGY: QUALITATIVE RESEARCH UNCOVERING COMMUNICATION FOR SOCIAL CAPITAL GROWTH The three regional communities central to the study reported here were Roxby Downs, an isolated mining town with a population of 4,500, purpose-built in 1987 1988 to service Olympic Dam, the world’s largest uranium deposit, fourth largest copper deposit and fifth largest gold

Developing Social Capital for Socially Responsive Organisations

47

deposit managed by BHP-Billiton the main mining organisation; Mount Gambier with a population of 24,000, a centre for farming, timber and tourism and the regional centre for the South-East region of South Australia, and the region surrounding the city of Victoria, Canada, situated on Vancouver Island thriving on tourism and rich in produce and farming. The three regions were chosen as they reflected different stages of community development that can provide some important insights to the varied ways that social capital might grow or be hindered. Roxby Downs had a newly formed community centre with a huge mining corporation directly involved in supporting and sustaining the community; Mt Gambier had many established organisations and community programmes, but the regional town was going through a time of significant change with many businesses closing and the community needing to think afresh about its future. The Canadian community was thriving with a strong community engagement model in place and with many community programmes established, especially by the Credit Unions in that region. The precursor to this research (Chia & Peters, 2008) pointed to the Canadian community engagement models as benchmarks for the way community engagement is practised effectively and collaboratively. The research focus Building capacity for community centred solutions; the role of public relations practitioners and journalists in promoting regional sustainability and social capital was a communication focus. The research questions addressed: • The role of public relations and media in social capital development and how community messages are communicated and understood • The way that communication through traditional and new media, such as social media, was facilitating, or hampering social capital development • The context of social capital and what it means to regional communities and the organisations that support and engage with community members and key stakeholders In the Australian Canadian study the aim was to look beyond the ‘habitual frames’ (Schirato, Buettner, Jutel, & Stahl, 2010, p. 33) of social capital with a view to emphasise the sense making and reflexivity that Bourdieu and Wacquant (1992) contend are important to understanding what social capital is. A qualitative study was deemed the most appropriate to gain perspective about the subjective components that make up social capital relationships, the communication that is taking place to develop these relationships, and the networks that might evolve from the relational paradigm. As Flick (2006, p. 75) suggests, ‘subjects with their views on a

48

JOY CHIA

certain phenomenon construe a part of their reality so that the ‘verstehen’ or the understanding becomes part of the ‘epistemological principle’ of qualitative research’. The qualitative methods such as interviews allowed the researcher to probe and ask about feelings, meanings and viewpoints, thereby facilitating construction of the reality and meaning of the topic of research (Minichiello, Aroni, & Hays, 2008). The pilot study, in an area of research that is evolving, needed to take into account Edmondson and Mcmanus’s (2007) view that it is important to be rigorous and ensure that methodology is suitable for the study. No doubt the qualitative study worked well, and through snow-ball sampling one interviewee suggested another person for an interview; this tended to extend the parameters of the research and made them quite broad at times. This is the dilemma, and, also, the opportunity for the qualitative researcher as the initial purposive sampling (Stacks, 2011) resulting from briefings with representatives of the Roxby Downs Community Board, Mount Gambier’s Regional Centre, and the Office of Community Based research, Canada was useful, but the suggested sample did not include some of key players in community social development. It became apparent that an initial qualitative study needed to include key community and business leaders and media specialists who were active in civic engagement and development; the snowball sampling method was therefore required. The ‘researches’ identity, values and beliefs play a role in the production and analysis of qualitative data’ (Denscombe, 2003, p. 268) as the researcher found that the communication perspective was viewed through the lens of the researcher’s speciality and expertise public relations. In this chapter the public relations lens is core to the discussion, but reflections on the wider media context are also included. For a focus on regional media, that was part of the journalist’s perspective (see Richards, 2013). Interviews were conducted in the field as well as in organisations; visits were made to a community television station, to a community centre and to community research offices. These methods (Lindlof & Taylor, 2011, p. 171) facilitated exploratory research and continual testing of ideas, and adaptation as findings pointed to aspects of social capital development that were changing; social media, for example, were having an impact on communication (to be discussed later). The primary methods used semi-structured interviews (one to two hours each) and focus groups (two hours) were important as participants’ gave an account in their words of their experiences. Focus groups were important to gain an overall understanding of social capital, and one-onone interviews allowed in-depth exploration of the specifics of the research

Developing Social Capital for Socially Responsive Organisations

49

questions. Four interviews followed up on the focus group of 8 Roxby Downs participants, 11 Mount Gambier participants (2 focus groups of four members each, with 3 separate interviews of different partipants, and follow-up interviews with 4 of the focus group members), and 12 Canadian interviews were transcribed and coded (open coding) according to the dominant themes that emerged. Through axial coding, the frames or sub-headings of the broader themes were identified (Weerakkody, 2009). The manual coding was conducted by each member of the research team (the team also included two journalists), compared and discussed, and responses were clustered according to: • Responses that supported and encouraged community and social capital development; • Responses that focused on the role of, and contribution to, social capital in its various forms; • Responses related to community challenges and poor communication, and communication that did not include some stakeholders; • Responses that pointed to social media, regional media and other forms of communication important to public relations and communication exchange, connectedness and relationship building that affect social capital development. Field notes were prepared in the additional interviews with community project staff and in the meetings with a regional mayor, and other support staff they proved invaluable to establish understanding about community engagement and context. The Roxby Downs focus group participants included representatives of the local newspaper (The Monitor) and community radio station (RoxFM) as well as the local council and local businesses, the local community board and the regional development authority. Telephone interviews were also conducted with representatives of the mining company BHP-Billiton, Olympic Dam and local media, as they support the Roxby Downs community. Mt Gambier participants included community coordinators and managers of the two local councils that govern the city and its immediate environs, including those with responsibilities in the areas of communication, community and sustainability, as well as local media. Separate interviews were conducted with senior council staff, local journalists and media directors, a local university director, sustainability action group members and business owner who were actively involved in community support, policy development, communication management and media liaison.

50

JOY CHIA

Canadian interviews included members of the Office of Community Based Research at the University of Victoria as well as representatives with community responsibilities in corporate organisations, Credit Unions, community council, local media and communication managers, and a micro-lending society, a social media specialist, university communication manager, community radio staff, and a public relations director community activist. The model of community practice was found to be benchmarking community practice from other Canadian communities, suggested in previous research conducted by the author (Chia & Peters, 2008).

LAYERS OF COMMUNICATION: A SOCIAL CAPITAL PERSPECTIVE The focus groups that took place in the two Australian communities indicated that social capital was a term that research participants partly understood, but did not fully encapsulate. The follow-up interviews became very important to establish each regional community’s social capital perspective. It was difficult to make sense of the varied forms of communication that developed networks and relationships. One of the early interviews shed light on this aspect as the respondent, a Mt Gambier communication and community manager, indicated that she communicates and manages communication in her community action group according to the respective geographic grouping of her members, the demographics of her group, the stage of her community programmes, and the needs of her respective group. She developed strong relationships with core community members and trusted them to support her, which was her social capital. To extend that capital she communicated with the wider community through newsletters, community meetings and editorials in regional newspapers. Similar accounts and narratives about meaningful relationships and active networks were told during interviews with Australian and Canadian respondents, but these accounts, initially, reflected only one layer of a multi-layered communication network. Intertwined with newsletters from action groups that focused on local news specific to smaller regional locations was a vibrant communication network where organisations such as Credit Unions, local businesses and councils responded to their communities and engaged with them. Traditional forms of communication such as newsletters and face-to-face meetings had a place, but communication was even more effective when new forms of media such as Facebook supported traditional forms or became a primary way to communicate.

Developing Social Capital for Socially Responsive Organisations

51

Community members were communicating with key community organisations such as the mining corporation in Roxby Downs and the Credit Unions in Canada, through Facebook, because they were comfortable in this social media forum. Facebook communication began to connect these organisations to many new community members who brought fresh and innovative ideas and suggestions about community projects, and they also contested some of their community plans. In the mining town, for example, there was considerable discussion about the needs of the youth in the town, and many youth would not speak about these needs in face-to-face forums, or even attend such a forum, but social media provided an avenue for them to put forward their points of view. The community learnt that young people were bored and felt very isolated, so the mining corporation was challenged to reconsider its community programmes and its response to the mining town’s needs. This is especially relevant to this discussion on CSR as the mining corporation was involved in giving back to the community, but it also needed to dialogue and understand the needs of the community. Social media provided a forum for exchange facilitating the mining corporation’s engagement with key stakeholders, as a better understanding emerged about how best to work with the community. Similarly, Canadian organisations such as Credit Unions became involved with their communities when they communicated with a range of individuals and groups online, and then planned face-to-face discussions with them. They were able to set up support programmes, fund community events and take a long-term interest in setting up education programmes for low-income families. These examples, from Canadian Credit Unions, closely linked social capital growth to socially responsible programme management. Importantly, the communication with the community in its various forms, newsletters, websites, Facebook, regional media articles and face-to-face forums, gave them understanding about the realities of their communities’ needs. Their social capital, especially through their networks, contributed to valuable community knowledge assisting them to make good business decisions about how best to assist their communities and work with them. When relationships were established between organisations and their communities they also began to trust each other.

DIVERSE COMMUNICATION AND ITS CHALLENGES The Canadian and Australian regional communities varied in their stages of development; Roxby Downs community was constantly changing; the

52

JOY CHIA

Mt Gambier region was well established, but increasingly being challenged in terms of its viability; and the Canadian regional community forged ahead with business and community working together. Each of the communities was experiencing the need to embrace new forms of communication and to extend the reach of their communities. The place of social media and its possible role in connecting and opening up communication was recognised by the three communities, but each also experienced challenges that this form of communication brings. Canadian community coordinators and public relations practitioners gave some valuable insights into the way organisations respond to challenges and opportunities. They recognised that there were barriers to communication for the marginalised and disadvantaged in the community; there were two key issues access to new technology and the ability to communicate effectively through social media and online forums. Once these issues were identified, organisations such as Credit Unions set up support programmes for young people that included assistance with writing, especially online, and being able use social media to seek employment. Regional youth wanted to communicate their needs, share and collaborate with other young people and leaders in the community, and develop career plans. The assumption that social media was readily available to them and connecting all of them to other community members was not evident in this community. The Credit Union found that their key consideration was to understand how best they could assist young disadvantaged youth by providing targeted assistance and simultaneously developing strong relationships with the youth they were supporting. This example indicates how important it is that organisations take time to build relationships and become part of the programmes they fund social capital is embedded in organisation’s CSR initiatives. Mt Gambier regional community coordinators and public relations practitioners in the not-for-profit sector and local government, and local business leaders, together used a range of communication: Facebook, email, letter drops and telephone calls to reach out to newcomers and refugees with the aim to hold special events to welcome those new to their communities. These programmes also required attention to culturally acceptable ways to communicate through elders and community leaders. Through a sensitive, yet diverse communication approach special events were well attended, many community members attended events for the first time, and newcomers met others new to the community. Being responsive to the community required a combined effort of many community players that was also culturally sensitive. Regional businesses found that they became

Developing Social Capital for Socially Responsive Organisations

53

involved in the programmes they supported as this developed trust and engendered a ‘sense of care’ for the community. In each of the regions, the study revealed that leaders and champions, or those who took a special interest in community development, were critical for relationships to thrive. They were the people who worked with their communities, sourced funds that supplemented CSR initiatives and ensured that the community could afford to do what it planned to do. These leaders were key stakeholders (e.g. mayors, leading councillors, general practitioners) who instilled confidence in their communities and built the trust essential to social capital development. They had the interest of the community as a basis for their actions and they were often the channel to put forward strong points of view, areas of need and interest from other community members. They also liaised with businesses and corporations to identify community projects. These community leaders were at the pointed end of communication often reframing, giving media interviews and taking the views of the community to wider forums. Ewing (2007) suggests that stakeholders expect that organisations go beyond corporate giving so that they tackle social problems and they use their resources strategically; the study reported here indicates that organisations cannot achieve this without the support of community leaders, and trusted established networks. A social capital perspective, underpinned by strong community leadership, is indicative of a deeper, lasting and relational perspective than may be apparent in a traditional corporate response where one-way giving can be more about self-interest than mutual benefit (L’Etang, 2006).

COMMUNICATION FOR SOCIAL CAPITAL GROWTH, UNDERPINNING CSR INITIATIVES The research reported here explored communication forms for regional communities and ways that social capital develops and paves the way for organisations to respond to and support their communities. The study of three regional communities indicated that social capital was not in decline as Putnam (1995) suggests, rather the sense of community was being strengthened as social media were extending the reach of communication to, and with communities. For some scholars (Sander & Putnam, 2010) social media continues to be viewed with caution in terms of the role virtual ties might play in relationship development and networking. In this chapter the study highlighted

54

JOY CHIA

an increasing role for social media to engage community members in social capital initiatives. It has the same potential for CSR initiatives, but social media also provides a forum where organisations will be challenged and CSR initiatives questioned. As such some scholars (Kane, Fichman, Gallaugher, & Glaser, 2009) suggest that emerging media is moving at such a rapid pace that organisations will need to be constructive as they communicate with their communities and stakeholders through social media. They posit that organisations act as first responders, find common ground with community leaders and proactively use this medium to leverage community relations. This was especially evident in the Roxby Downs mining corporation that worked hard to establish relationships with the community using both traditional and social media, so that their CSR programmes could then be effective. When they initially attempted to give money and support programmes they considered important, they were often criticised for ‘looking good’ but not really caring about the community. As Ewing (2007) asserts, attempts to look good and to ‘spin’ a story will not be tolerated by stakeholders or community members, rather good news stories about CSR programmes, whether they appear on traditional or social media, are important. Ewing (2007, p. 368) posits that ‘actions speak louder than words when communicating corporate responsibility’ as the most effective communications are ‘those that address the concerns of stakeholders’. Further, when trust has been established the parties that are in relationships are also more likely to understand each other’s needs and respond appropriately to them. Trust, emphasised by Putnam (1995) and Coleman (1988), is a feature and a symbol that social capital is contributing to organisations’ overall capital. Putnam’s (1995) view that the sense of community is declining, and social capital is being depleted can be allayed when networks are opened up through social media and through diverse communication exchange that establishes meaningful relationships. In the study reported here social capital was the catalyst for many things: strong community relationships between organisations such as Credit Unions, mining corporations and their communities, successful events, sharing resources and developing a better understanding of community needs. Appropriate, open, culturally respectful and diverse communication was shown to leverage social engagement and trust between community members and the organisations that were important to them. The notion that social capital is embedded in organisations, as they work with their communities, establishes a basis for engagement, collaboration and a way to deal with community problems and issues. The three regional communities, often through public relations practitioners and

Developing Social Capital for Socially Responsive Organisations

55

community coordinators, and also through excellent leadership and business support, encouraged community participation in the plans of organisations that were important to them. In this way social capital cannot be taken for granted, rather nurturing and realising its benefit to economic capital, and other forms of capital (Cunningham, 2002; Luoma-aho, 2009), become an important consideration. Community leaders also play role as they exemplify the ‘practices of social capital leaders’ (McCallum & O’Connell, 2008, p. 156) and they are also aware of the competitive advantage of developing social capital that, according to Cornelissen (2006), is also central to organisations’ and communities’ sustainability. Cornelissen suggests that there is a ‘need for business to deliver wider societal value beyond shareholder and market value alone’ (p. 63): this is the premise of much of the discussion on social capital in this chapter; social capital leverages CSR, complements and augments it.

CONCLUSION This chapter emphasises that diverse communication is required that facilitates an understanding of the needs of various groups and stakeholders. Relationships develop through different communication channels to establish trust in the organisations that support communities. The three regional communities reported here were making progress as public relations practitioners, community leaders and concerned businesses acted as the bridge that connected, or set up communication to inform, connect and engage their communities. This presents a way forward to also prepare communities for programmes that organisations want to fund and support. The study here dovetails into the concepts and context of CSR as scholars (Cornelissen, 2006, Doorley & Garcia, 2007) indicate that stakeholders want and expect organisations to be actively engaged in responding to societal needs not just giving back to society. The study of three regional communities indicates that established social capital through networks and reciprocal relationships underpins sound CSR programmes that make a difference to their communities and strengthens them. Social capital is intangible and constantly changing and the role of communication and communication professionals who work alongside other community members and leaders needs further research and understanding, especially in terms of the possibilities that social media have where new players, new ideas and extended exchanges and dialogue begin

56

JOY CHIA

relationships. Current research is exploring regional stakeholders and community needs with a view to see how stakeholders are identified by organisations, who might be missing out, and what forms of communication could be more effectively utilised. The pilot study of three regions revealed that developing social capital is complex, supporting the notion that it is ‘an elusive concept’ (Batt, 2008, p. 487) and one that needs considerable research to understand and develop it. In this chapter, some of the complexities have been explored and the context of social capital and CSR considered as the development of social capital is argued to be a basis for all other planning. Social capital may be hard to define and even more difficult to quantify, yet this study has alerted us to the importance of organisations needing to develop strong and meaningful relationships where CSR programmes and all exchanges reflect genuine concern for communities the community is the stakeholder that matters.

REFERENCES Batt, P. (2008). Building social capital in networks. Industrial Marketing Management, 37, 487 491. Benn, S., Todd, L., & Pendleton, J. (2010). Public relations leadership in corporate social responsibility. Journal of Business Ethic, 96, 403 423. Bourdieu, P., & Wacquant, L. (1992). An invitation to reflexive sociology. Chicago, IL: University of Chicago Press. Caroll, A. (2008). The pyramid of corporate social responsibility. Toward the moral management of organizational stakeholders. In J. Burchell (Ed.), The corporate social responsibility reader. London: Routledge. Chia, J., & Peters, M. (2008). Employee engagement in organisations’ social capital: Does public relations have a role? Asia Pacific Public Relations Journal, 9, 103 120. Coleman, J. (1988). Social capital in the creation of human capital. The American Journal of Sociology, 94, 95 120. Cornelissen, J. (2006). Corporate communications: Theory and practice. London: Sage. Crane, A., Matten, D., & Spence, L. (2008). Corporate social responsibility: Readings and cases in the global context. London: Routledge. Cunningham, I. (2002). Developing human and social capital in organisations. Industrial and Commercial Training, 34(3), 89 94. De-Bussy, N. (2012). Corporate-level public relations: Reputations, brands, identities. In J. Chia & G. Synnott (Eds.), Introduction to public relations and communication management. Melbourne: Oxford University Press. Denscombe, M. (2003). The good research guide (2nd ed.). Philadelphia, PA: Philadelphia Open University Press. Doorley, J., & Garcia, H. (2007). Reputation management: The key to successful public relations and corporate communication. New York, NY: Routledge.

Developing Social Capital for Socially Responsive Organisations

57

Edmondson, A., & Mcmanus, S. (2007). Methodological fit in management field research. Academy of Management Review, 32(4), 1155 1179. Edwards, L. (2008). The social impact of public relations practice. Presented at the International Communication Association Conference, Montreal, Canada, May 21 26. Ewing, A. (2007). Corporate responsibility. In J. Doorley & H. Garcia (Eds.), Reputation management: The key to successful public relations and corporate communication. New York, NY: Routledge. Falck, O., & Heblich, S. (2007). Corporate social responsibility: Doing well by doing good. Business Horizons, 50, 247 254. Ferragina, E. (2010). Social capital and equality: Tocqueville’s legacy: Rethinking social capital in relation with income inequalities. The Tocqueville Review/la revue, Tocqueville, 31(1), 73 98. Fisher, C., & Lovell, A. (2006). Business ethics and values: Individual, corporate and international perspectives. London: Prentice Hall. Flick, U. (2006). An introduction to qualitative research (3rd ed.), London: Sage. Hazleton, V., & Kennan, W. (2000). Social capital: Reconceptualizing the bottom line. Corporate communication. An International Journal, 5(2), 81 86. Johnston, K. A. (2010). Community engagement: Exploring a relational approach to consultation and collaborative practice in Australia. Journal of Promotion Management, 16, 217 234. Kane, G., Fichman, R., Gallaugher, J, & Glaser, J. (2009).Community relations 2.0. Harvard Business Review, November, 45 50. Lattimore, D., Baskin, O., Heiman, S., & Toth, E. (2012). Public relations: The profession and the practice. New York, NY: McGraw-Hill. Lin, N. (2000). Inequality in social capital. Contemporary Sociology, 29(6), 785 795. Lindlof, T. R., & Taylor, B. C. (2011). Qualitative communication research methods (3rd ed.). Thousand Oaks, CA: Sage. Luoma-aho, V. (2009). On Putnam: Bowling together applying Putnam’s theories of community and social capital to public relations. In Ø. Ihlen, B. van Ruler, & M. Fredriksson (Eds.), Public relations and social theory: Key figures and concepts (pp. 231 251). New York, NY: Routledge. Lyon, A. (2008). The mis/recognition of Enron executives’ competence as cultural and social capital. Communication Studies, 59(4), 371 387. L’Etang, J. (2006). Corporate responsibility and public relations ethics. In J. L’Etang & M. Pieczka (Eds.), Public relations: Critical debates and contemporary practice. Mahwah, NJ: Lawrence Erlbaum. McCallum, S., & O’Connell, D. (2008). Social capital and leadership development. Leadership and Organization Development Journal, 30(2), 152 166. Minichiello, V., Aroni, R., & Hays, T. (2008). In-depth interviewing (3rd ed.). Sydney: Pearson. Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. The Academy of Management Review, 23(2), 242 266. Pharr, S., Putnam, D., & Dalton, R. (2000). A quarter century of declining confidence. Journal of Democracy, 11(2), 5 25. Putnam, R. (1993). The prosperous community: Social capital and public life. The American Prospect, 4(13), 1 12. Putnam, R. (1995). Turning in, turning out: The strange disappearance of social capital in America. Political Science and Politics, 28(4), 664 683.

58

JOY CHIA

Richards, I. (2013). Beyond city limits: Regional journalism and social capital. Journalism: theory, practice and criticism, 14(5), 627 642. Retrieved from http://jou.sagepub.com/ content/early/2012/07/11/1464884912453280 Sander, H., & Putnam, R. (2010). Still bowling alone? The post-9/11 split. Journal of Democracy, 21(1), 9 16. Schirato, T., Buettner, A., Jutel, T., & Stahl, G. (2010). Understanding media studies. Melbourne: Oxford University Press. Stacks, D. (2011). Primer of public relations research (2nd ed.). New York, NY: The Guilford Press. Stark, K., & Kruckeberg, D. (2003). Ethical obligations of public relations in an era of globalisation. Journal of Communication Management, 8(1), 29 40. Weerakkody, N. (2009). Research methods for media and communication. Melbourne: Oxford University Press.

CORPORATE SOCIAL RESPONSIBILITY COMMUNICATION: TOWARDS A PHASE MODEL OF STRATEGIC PLANNING Bernd Lorenz Walter ABSTRACT Purpose The chapter develops a phase model of strategic planning in integrated corporate social responsibility (CSR) communication by presenting CSR as a mindset in communication processes. Design/methodology/approach The chapter provides rationales for establishing a new phase model of strategic planning in CSR communication by adapting existing models of strategic communications. In this context, the main focus is on the need to involve stakeholders in CSR communication processes (Morsing & Schultz, 2006). Findings The chapter argues that in the sense of CSR communication, stakeholders should be involved in the strategic planning process from

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 59 79 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006022

59

60

BERND LORENZ WALTER

the beginning, with respect to the issues that the corporation and targeted stakeholder groups have in common. Research limitations/implications The chapter concentrates on selected key aspects of CSR and CSR communication. In particular the aspects such as reputation, credibility, ethical alignment and stakeholder involvement are considered as prerequisites for understanding the construction of the phase model. Practical implications This chapter provides practical implications for developing communication concepts in CSR communication in daily business practice. Originality/value This chapter facilitates a comprehensive understanding of strategic CSR communication as part of CSR reflected in the development processes of communication concepts. Keywords: CSR communication; strategic planning; communication strategy; stakeholder involvement strategy

In the face of changed media behaviour towards participation and transparency, corporations have started to redefine their communication business models. As a new infrastructure of communication, the Internet which is still very young is probably the main driver of this process. It shifts the pre-digital ‘read-only culture’ to a ‘read/write culture’ (Lessig, 2008, p. 28), and hence the balance of power between businesses and society. It enables social and ecological consciousness to find its way into the establishment, which has the potential to lead to major changes in business, politics and society. Corporate social responsibility (CSR) can be perceived as a reaction to this ongoing process of societal change. CSR calls for new approaches to business communication, since in the modern context the strategies and measures of the pre-Internet age often fail. This is true not only for the communication of CSR activities, but also for business communication as a whole. The communication concept is at the heart of every communication planning process, mostly in connection with campaign planning. This chapter refers to the numerous models of strategic planning from the past to present, a phase model which meets the requirements of CSR by taking the conceptual framework of Morsing and Schultz’s (2006) stakeholder involvement strategy into special account. In order to understand the phase model of CSR communication, it is important to reflect on

CSR Communication: Towards a Phase Model of Strategic Planning

61

some of its basic preconditions. Beginning with the concept of CSR itself and consequently CSR communication, this chapter will reflect on the main challenge for CSR communication bridging the gap between profits and morals. Enhanced reputation is seen as the most important asset of CSR communication, and is therefore targeted by all CSR communication concepts, which provides adequate reason to reflect critically on this subject. Credibility and trust are another hurdle faced by CSR communication, and has a direct connection to the ethical claims of CSR. Before the chapter finally presents its proposed phase model, it is important to reflect on the different stakeholder strategies leading to the Morsing and Schultz’s (2006) stakeholder involvement strategy.

CSR AS A CORPORATE MINDSET There is a huge variety of and even controversy around definitions of CSR in the multidisciplinary academic literature, as well as with practitioners. Since even ‘responsibility’ as a term is variously interpreted, it is unrealistic to expect to find a one-size-fits-all definition for CSR. However, it seems reasonable to suggest that, in its broadest sense, CSR refers to ‘the social obligations and impacts of business in society’ (Crane & Matten, 2007a, p. vi), and more specifically involves the ‘major transformation of business thinking […] to meet society’s broader challenges’ (Porter & Kramer, 2011, p. 4). Carroll and Buchholtz (2000, p. 35) developed the most commonly cited definition of CSR in reference to their CSR pyramid (Carroll, 1991): ‘Corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time’. Beyond the different dimensions of responsibility, this extrinsic definition of CSR emphasizes the fact that there are expectations which corporations must take into account and respond to in order to gain the ‘respect of society’ and finally a ‘license to operate’ (Porter & Kramer, 2011, p. 17). Following legitimacy theory, the existence of an organization can only be secured if it is perceived to take the values and norms of society into account (i.e. adhering to the social contract between business and society) (Farache, Perks, & Berry, 2009). In this sense, stakeholders determine the scope of action for corporations by ascribing legitimation. This legitimation is not only given for corporations’ philanthropic endeavours in forms such as voluntary activities undertaken to demonstrate good

62

BERND LORENZ WALTER

corporate citizenship. Rather, responsibility is coded into the corporate DNA: it is a measure to optimize the ‘business design’ to gain competitive advantages (Liebl, 2011) by ‘reconnecting company success with social progress’ (Porter & Kramer, 2011, p. 4). By implementing CSR into the core business and the entire value chain of the corporation, CSR relates more to making socially responsible profits than investing (irresponsible) profits in societal deeds. Thus, an intrinsically motivated perspective according to Carroll and Buchholtz’s definition, based on Elkingtons’s triple-bottom-line concept (Elkington, 1994), could be: CSR is a corporate mindset which encompasses the economic, social and ecological responsibility of a corporation ‘at a given point in time’ (Carroll, op. cit.). The appendix ‘at a given point in time’, to Carroll and Buchholtz’s definition, is an important addition, since the meaning and perception of responsibility changes over time. For instance, past responsibilities might conflict with the demands of today, and those of the future might not be any more acceptable or sufficient in terms of the legitimization of society (Smith, 2004). In addition to the time aspect, the cultural background of responsibility plays an important role, since the expectations of stakeholders assigned to responsible corporations are culture-based and vary greatly from country to country (Crane, Matten, & Spence, 2007).

THE ROLE OF CSR COMMUNICATION CSR communication is still one of the main topics of discussion in the business communication field (Zerfass, Moreno, Tench, Vercˇicˇ, & Verhoeven, 2011). However, since ‘CSR’ is difficult to define, the same is true for ‘CSR Communication’. CSR communication is a delicate issue due to the fact that it involves the inherent problem of communicating sustainability issues. Brugger (2010) summarized these problems with reference to the following attributes: complexity, contradictions, difficult visibility, longevity and negativity. In the face of these, many companies avoid discussing CSR at all, or at least treat it in a highly restrained manner. However, following Watzlawicks’s axiom, ‘one cannot not communicate’ (Watzlawick, BeavinBavelas, & Jackson, 1967, p. 51), the communication process in fact begins, whether intentionally or not, as soon as a corporation starts to implement CSR. Consequently, even if a corporation ‘decides’ not to talk about its CSR engagement perhaps adhering to the mindset that it is sometimes better to remain silent than to brag about the latest CSR endeavours

CSR Communication: Towards a Phase Model of Strategic Planning

63

(Sen, Du, & Bhattacharya, 2009) communication still inevitably occurs. In addition to the difficulties involved in the effective communication of CSR activities, a question can be raised regarding the self-conception and the scope of action of CSR communication as a whole. Bentele and Nothhaft (2011) stated that there are two simultaneous perspectives of CSR: the responsibility of the corporation and the perception of corporate responsibility by society. With this in mind, at least four types of CSR communication can be distinguished: a. Communication on and about CSR. This dimension ascribes CSR communication a service role in relation to CSR. CSR communication conveys CSR activities to the internal and external stakeholders groups, and is therefore directly connected to the public relations and organizational communication of the corporation (Schultz, 2011). In this sense, CSR communication primarily aims to ‘balance between deeds and words’ by adding further value (Morsing, 2003, p. 146). The main purpose of communication on and about CSR is to appear as a responsible corporation to attract those stakeholders who appreciate this attribute. However, this dimension of CSR communication has proven traditional instruments and measures of marketing and public relations to be insufficient (Morsing, 2003), and sometimes even misleading. Moreover, the paradox regarding the integration of CSR into the core business is that the more it is integrated, the fewer opportunities arise around publicoriented settings (Liebl, 2011). b. Communication as part of the CSR mindset. Since CSR is accepted as a mindset and thus is part of a corporations’ DNA, communication has to emphasize its role as an effective transmission belt of the corporate culture to the internal and external stakeholders. This dimension integrates the mindset of CSR into the entire corporate communications spectrum by following a strategy of participation. CSR in communication processes actively puts the interests of stakeholders, in terms of supporting the perception of individual benefits (Schrader & HenningThurau, 2001) as a shared concern (Scott & Lane, 2000), at the centre of attention. It integrates the stakeholders’ interests into all strategic communication decisions and processes to potentially strengthen ‘member identification’ (Morsing, 2006, p. 1). In addition, it stresses the meaning of communication towards listening (pull-communication), rather than talking (push-communication). All too often, corporations give answers to questions nobody has asked, and the actual questions remain unanswered (Dyllick, 1992). With regards to CSR, therefore, active listening

64

BERND LORENZ WALTER

does not mean waiting for the time to talk; instead, it involves actively exposing stakeholders’ interests and claims to find the right answers to them in contrast to the majority of today’s communication, which is about ‘telling, not listening’ (Grunig & Hunt, 1984, p. 23). The precondition for taking responsibility is to understand the demands that corporations should actually respond to. Following the constructive communication model, corporations must connect their own communication contents to the real-life scenario of the recipients (Brugger, 2010). This is especially true in the context of the communication of CSR activities, as corporations must take into consideration that not all stakeholder claims can be met by communications, and not all responsibility issues will be raised by stakeholders (Ulrich, 1998). c. Responsible communication. Every communication measure should consider ethical standards. Responsible communication requires ethical standards to be met with respect to every culture and form. Ethical conduct models already exist in the various communication disciplines, but are still violated. Responsible communication also implies ethical standards not only in terms of the message itself, but also how it is produced or distributed (e.g. using less paper). d. Communication of ‘ethical’ products and services. This consumer-oriented dimension of CSR communication entails all communication efforts to market products and services with ethical, societal and ecological attributes. There is a fast-growing market for these goods, which has a significant effect on the entire value chain. This dimension is not explicitly relevant to the understanding of the phase model, however, since it concentrates on products and services, rather than CSR as a corporate mindset.

ALIGNING ETHICS WITH STRATEGY CSR does not necessarily directly imply ethical motivations. Strictly speaking, it can simply help to decrease costs (e.g. energy efficiency) and enhance competitiveness (e.g. expanding to new markets). However, as soon as a corporation interacts with stakeholders, ethical claims are perceived, whether intended or not, and thus CSR becomes irrevocably involved, and stakeholders inevitably begin to judge CSR endeavours as being right or wrong in terms of morality and ethics (Crane & Matten, 2007a). Against this background, ethics play an important role for profit-making

CSR Communication: Towards a Phase Model of Strategic Planning

65

organizations, since stakeholders are very sceptical if profit-making and ethics are presented together. In reference to the Kantian framework, L’Etang summarized the reason for this scepticism as follows: ‘there is clearly something wrong about claiming moral capital while at the same time being driven largely by self-interest’ (L’Etang, 2006, p. 414). Earlier, she had argued that ‘where self-interest plays a part in the motivation of the action, then that action is regarded as prudential and cannot be regarded as a morally right action’ (L’Etang, 1996, p. 83). Many stakeholders, especially in Western cultures, perceive profit-making as an expression of self-interest which is made at the expense of others. Therefore, attempts by corporations to engage in CSR are often seen as ‘buying an indulgence’ which is especially true when the CSR engagement is not related to the core business (Suchanek, 2008, p. 5). As Suchanek suggested, ‘ethics implies that morality should always prevail over self-interest’ (Suchanek, 2008, p. 3). However, since profit-making belongs to the logic of existence of for-profit organizations, altruism is simply not affordable. On the other hand, it is not acceptable for profits to be made while negatively affecting third parties; this will also ultimately be detrimental to the corporation itself, if only when stakeholders eventually revoke the company’s license to operate. As a result, corporations should strive for win win situations; in other words, according to Suchanek’s (2008, p. 3) golden rule, corporations should ‘invest in social cooperation for mutual advantage’. With regards to CSR, this means that corporations should aspire to mutual benefits of both the society and the corporation (Porter & Kramer, 2006). Since this approach depends very much on human capital (including self-discipline, trustworthiness and social competence) and organizational capital (including the structure and rules of the corporation), Suchanek (2008, p. 4) suggests an extension to the golden rule: ‘[corporations should] invest in the conditions which foster social cooperation for mutual benefit’. Finally, it is the stakeholders who judge the extent to which a corporation succeeds in converging social responsibility and financial profits, which in turn will directly reflect on the CSR engagement and the corporation’s reputation (Webb & Mohr, 1998). Forehand and Grier suggested that intrinsic and extrinsic motives can work together and result, in the best case, in enhancing the credibility of the CSR message, as well as generating goodwill (Forehand & Grier, 2003). Consumers increasingly accept a ‘“win win” perspective’ as they come to know more about the CSR motivations of corporations, to the point where they ‘believ[e] that CSR initiatives can and should serve both the needs of society and the bottom lines of business’ (Du, Bhattacharya, & Sen, 2010, p. 10).

66

BERND LORENZ WALTER

REPUTATION Consumers and other stakeholders are still concerned about the fact that they feel under-informed about the ethical claims of corporations (Mohr, Webb, & Harris, 2001; Pomering & Dolnicar, 2009). Furthermore, as long as stakeholders are unaware of CSR endeavours, corporations cannot expect to see positive effects on their reputation. The likelihood of earning positive effects increases the more information stakeholders receive (Bortree, 2009); however, Morsing, Schultz and Nielsen (2008) presented this as a paradox: on the one hand, stakeholders expect corporations to take responsibility, but on the other, when corporations begin to talk about CSR, stakeholder scepticism rises. Often, stakeholders simply do not believe in the CSR engagement, and condemn it as an act of corporate hypocrisy (Wagner, Lutz, & Weitz, 2009). Therefore, some authors attest that CSR is nothing more than manipulation with the intention to mislead the public (Øyvind, 2011). As a result, many corporations decide to act in alignment with societal norms, but to do so quietly (Morsing, Schultz, & Nielsen, 2003). This is especially true when moral avowals are claimed which contain the risk to be scandalized when they are not going to be fulfilled (Eisenegger & Schranz, 2011). Indeed, this approach minimizes the risk of negative reaction, but obviously does not solve the paradox. In addition, it means that corporations cannot benefit from the supposed advantages to corporate reputation, which can be defined as the ‘overall estimation of a firm by its stakeholders, which is expressed by the net affective reactions of customers, investors, employees, and the general public’ (Fombrun, 1996, pp. 78, 79). In fact, whether CSR really does have a positive effect on corporations’ reputations depends on various factors. However, there is an overall agreement that reputation and CSR are somehow interconnected, and have even been described as ‘two sides of the same coin’ (Hillenbrand & Money, 2007, p. 1), although there is no consensus about what form this connection takes (Eisenegger & Schranz, 2011). Positive effects on reputation by CSR endeavours can be expected when a corporation already has a good, or at least a neutral, reputation (Pfau, Haigh, Sims, & Wigley, 2008), while corporations with a bad reputation receive a poor assessment (Yoon, Gu¨rhan-Canli, & Schwarz, 2006). ‘The more problematic the legitimacy of a company is, the more skeptical are constituents of legitimation attempts’ (Ashforth & Gibbs, 1990, p. 185). Stakeholders also expect corporations’ CSR endeavours to be linked with their core business (Haley, 1996). However, as Fouad Harndan, former campaign strategist for Greenpeace, contends, ‘good’ corporations are in

CSR Communication: Towards a Phase Model of Strategic Planning

67

particularly critical focus of certain stakeholder groups (and also journalists), who are waiting for the first mistake or evidence of irregularities (Liebl, 2011).

CREDIBILITY AND TRUST In terms of reputation-building, credibility and trust play a crucial role. In fact they are, to some extent, a license to communicate. Studies have shown that the credibility of a corporation is not affected if a CSR communication campaign primarily intends to make profits out of it (i.e. is selfinterested) (Schmitt & Ro¨ttger, 2011); however, when corporations try to conceal such self-interest, negative effects are seen on credibility, and consequently reputation (Forehand & Grier, 2003). However, CSR campaigns always pose a credibility risk (Schmitt & Ro¨ttger, 2011). Different factors can be utilized to avoid this risk, including one of the most important aspects: transparency (Brønn & Vrioni, 2001; Schmitt & Ro¨ttger, 2011). Crane and Matten (2007b, p. 70) defined transparency as the ‘degree to which corporate decisions, policies, activities and impacts are acknowledged and made visible to relevant stakeholders’. Transparency does not necessarily follow from the provision of more information, however it is more important that the information is understandable, and that recipients are willing to understand it (Herbst, 2011). Another important factor relating to credibility risk is the potential for discrepancies to arise between self-reporting and third-party reporting (Schmitt & Ro¨ttger, 2011). On the other hand, the credibility of CSR messages is enforced if they are communicated by third parties, or at least are accepted and welcomed by third parties (active third-party endorsement) (Eisenegger & Schranz, 2011). In particular, cooperation with NGOs enhances the credibility of CSR communication campaigns (Mutch & Aitken, 2009). Most important for the credibility of a CSR campaign is the involvement of stakeholders at least employees (Pomering & Dolnicar, 2009). Credibility, in turn, is marked by two components: competence and trust (Six & Scha¨fer, 1985). Following Luhmann (2000), trust involves a risky investment made in advance to reduce social complexity. Bentele broadens this perspective and argues that trust is not only a social mechanism, but also a communicative one (Bentele & Nothhaft, 2011). Trust comes into play if one acts in the absence of any form of security or guarantee. Opportunities and risks are assessed in the absence of more reliable

68

BERND LORENZ WALTER

approaches based on knowledge of past or current events. Since trust is developed from one’s own positive experiences, or those of third parties, Rotter describes trust as a result of a learning process (Rotter, 1981).

STAKEHOLDER STRATEGIES Responsibility demands third-party justification of actions; in the context of a corporation this third party consists of the stakeholders. Crane and Matten (2007b, p. 58) define a stakeholder as an ‘individual or a group which either: is harmed by, or benefits from, the corporation; or whose rights can be violated, or have to be respected, by the corporation’. Key stakeholders of a corporation include shareholders, employees, clients and civil society organizations. The stakeholder approach opens the existing narrow perspective on taking responsibility for increasing shareholder value via profit maximization to a broader level, which involves creating value for all stakeholders (Crane et al., 2007). Freeman, whose stakeholder theory basically established the idea of value creation for stakeholders (Freeman, 1984), even promotes ‘stakeholder responsibility’ over ‘corporate social responsibility’ (Freeman, 2004). Further to this idea, Porter and Kramer suggested their ‘principle of shared value which involves creating economic value in a way that also creates value for society by addressing its needs and challenges’ (Porter & Kramer, 2011, p. 4). Stakeholder relationships can take many forms. Morsing and Schultz (2006) distinguish three different stakeholder strategies, which sets the basis for the phase model which will subsequently be presented: a. Stakeholder information strategy. b. Stakeholder response strategy. c. Stakeholder involvement strategy.

Stakeholder Information Strategy The information strategy is, so far, the strategy that is most commonly adopted by corporations. The information strategy involves informing stakeholders about CSR, and about the corporation’s CSR activities ‘in order to attribute positive evaluations to it’ (Morsing, 2003, p. 148). Basically, this strategy follows linear communication models like Berlo’s sendermessage-channel-receiver model of communication (Berlo, 1960). In the

CSR Communication: Towards a Phase Model of Strategic Planning

69

best-case scenario, ‘the company ‘gives sense’ to its audiences’ (Morsing & Schultz, 2006, p. 327), for instance by publishing non-financial reports intended ‘to inform and convince public audiences about corporate legitimacy’ (Morsing & Schultz, 2006, p. 333). Corporations that follow the information strategy apparently attempt to understand stakeholders’ expectations and the best way in which to meet them; alternatively, in the worst-case scenario, corporations are simply not interested in stakeholder demands, which renders the stakeholder approach pointless. Against the background of the fact that, according to one study, one third of business leaders are more engaged with their personal career than with enabling and realizing something together (Herbst, 2011), the level of interest in creating mutual value might not be particularly strong. Moreover, it is not realistic for business leaders to control the meanings and perceptions among stakeholders (Crane & Livesey, 2003). On the contrary, ‘CSR initiatives may then retrospectively be perceived as a means of covering up or accommodating the legitimacy problem, which in turn reinforces stakeholder skepticism towards CSR initiatives and corporate legitimacy’ (Morsing & Schultz, 2006, p. 332). Consequently, it seems that ‘the more problematic the legitimacy, the greater the protestation of legitimacy’ (Ashforth & Gibbs, 1990, p. 185). Recognizing this, Morsing and Schultz (2006, p. 325) ‘suggest that there is an increasing need to develop sophisticated two-way communication processes (sense making and sense giving) when companies convey messages about CSR’.

Stakeholder Response Strategy The response strategy is based on the two-way symmetric model posited by Grunig and Hunt (1984), and strives for a bilaterally equal dialogue. Nevertheless, following the stakeholder response strategy a corporation’s intention is still to influence and convince stakeholders of its CSR strategy (Morsing & Schultz, 2006). In contrast to the stakeholder information strategy, in the response strategy stakeholders are invited to respond to the information given to them. Thus, in terms of CSR stakeholders are asked to give feedback on the corporation’s CSR activities and to ‘engage in sense giving in response to organizational actions’ (Holt, 2006, p. 12). By encouraging such feedback, the corporation has access to the public reaction to their CSR endeavours (Morsing & Schultz, 2006).

70

BERND LORENZ WALTER

Stakeholder Involvement Strategy The involvement strategy is Morsing and Schulz’s preferred strategy, and is also the basic idea for the CSR communication strategic planning phase model set forth in this chapter. Instead of sending messages to the stakeholders the involvement strategy invites stakeholders to ‘pro-actively’ take part in corporate CSR communication (Morsing, 2006, p. 177). This strategy also follows the model of stakeholder democracy, which gives stakeholders an opportunity to ‘influence and control corporate decisions’ (Crane & Matten, 2007b, p. 62). By doing so, the strategy aims to increase the credibility of CSR communications (Farache et al., 2009), and enhances stakeholders’ identification with the CSR message which, in turn, results in positive identification with the corporation (Morsing & Schultz, 2006). Morsing and Schultz argue ‘that striving towards stakeholder involvement and an improved mutual understanding of stakeholder expectations towards business and vice versa are crucial elements in its enactment’ (Morsing & Schultz, 2006, p. 336). The involvement strategy requires the organization’s willingness to listen as part of the CSR mindset, in order to stay up-to-date with stakeholders’ expectations. ‘Companies should not only influence but also seek to be influenced by stakeholders’ (Morsing & Schultz, 2006, p. 328). Accordingly, the messages are not created to give to the stakeholders, but rather are created with them. This activates a kind of ‘auto-communication’ (Christensen, 1997, p. 1), which proactively engages stakeholders in the communication process for ‘mutual construction of CSR communication’ to increase member identification via shared responsibility of the CSR message (Morsing & Schultz, 2006, p. 336). Thus, the strategy involves internal as well as external stakeholders in the sense giving and sense making process, which is critical for the ‘understanding and constructi[on] of issues in organizations’ (Holt, 2006, p. 13). Sense making involves many people in the creation of shared meaning and shared experience that will ultimately guide organizational action (Holt, 2006) towards a ‘preferred redefinition of organizational reality’ (Gioia & Chittipeddi, 1991, p. 442). The sense making process should not only ‘provide interpretation and meaning retrospectively for events that have already occurred’ (Holt, 2006, p. 6), but also anticipate future events. The participative involvement strategy is utilized by courageous corporations and stakeholders that are willing to change and ready to redistribute power, since ‘participation without redistribution of power is an empty and frustrating process for the powerless’ (Arnstein, 1969, p. 216). However,

CSR Communication: Towards a Phase Model of Strategic Planning

71

Crane and Livesey (2003, p. 40) warned that if involvement and dialogue are not ‘genuinely adopted’, it can lead to cynicism and distrust.

THE PHASE MODEL The phase model of strategic planning in CSR communication (Fig. 1) illustrates the process of conceptualizing and planning communication strategies commonly adopted in campaign planning processes, while taking the aforementioned premises into account. In particular, the following premises and preconditions, which were explained above, are of vital importance: a. Implementing CSR as a mindset. For this phase model, all of the presented types of CSR communication are taken into account, Evaluation

Measures

Materiality Assessment

Situation Analysis

Stakeholder Analysis

Control Feedback

Objectives/Target Groups

Stakehoder Involvement & Participation

Strategy

Issue Management Stakeholder Management Corporate Culture / Identity

Fig. 1.

Phase Model of Strategic Planning in CSR Communication.

72

BERND LORENZ WALTER

although it is argued that this phase model does not necessarily need to be used in the context of explicit CSR activities and the marketing of ‘ethical’ products and services. The following explanations are, however, in the context of communication on and about CSR. b. Striving for good reputation. As mentioned above, striving for good reputation is one of the main purposes of CSR communication. No matter what the actual intention of the communication strategy the phase model is adopted for, the benefits to reputation are considered. c. Pursuit of mutual benefits. Following Suchanek’s ‘golden rule’, the phase model is understood as an investment ‘in the conditions which foster social cooperation for mutual benefit’ (Suchanek, 2008, p. 4). Consequently, the main challenge for communications is to master the profit-morality balance in terms of stakeholder perception. d. Implementing the ‘stakeholder involvement strategy’. The phase model basically follows Morsing and Schultz’s stakeholder involvement strategy detailed above. The main focus in the phase model is on the participative nature of this strategy. It proactively involves and engages the internal and external stakeholders in the planning process. The different phases of the model follow well-known communication process models (Bruhn, 2006; Zerfass, 2004), and are also partly adopted by existing models on strategic planning (Bentele, 2005). Even though the models differ in the terms they use, the specific stages and their order are as follows: a. b. c. d. e.

Situation analysis. Objectives and target groups. Strategy (including positioning, messages and leading idea). Measures (including budgeting, timing etc.). Evaluation.

Meffert and Burmann (2005) used these phases to determine the following steps for a process-oriented approach for CSR communication: a. Situation analysis, which includes the analysis of self-perception, in contrast to the perception of others. b. Communication objectives, which encompasses the inner and outer communication objectives. c. Relation to the brand, including congruency with corporate branding and positioning of CSR aspects in terms of the core of the brand. d. Communication design, which involves concreting the intensity of communication; determining the instruments to be used, along with the

CSR Communication: Towards a Phase Model of Strategic Planning

73

content and stakeholder groups; and ensuring formal, content-rich and timely integration. e. Communication control, which includes monitoring the achievement of the objectives and identifying possible amendments. By adapting this approach and considering the premises and preconditions mentioned above, it can be argued that in each phase of the process stakeholders who are addressed by the communication strategy should be involved. The involvement of stakeholders should be incorporated into a normative model of communication, and should not only be considered by the implementation of dialogue-oriented communication tools (Brugger, 2010). This can be achieved, for instance, by involving stakeholder representatives into the strategic planning team, or by setting up a steering committee which is consulted and controls the strategic planning process. Furthermore, it is argued that the process of strategic planning starts before the situation analysis stage, since it must be anchored in the corporate culture and corporate identity. Corporate culture is a dynamic process, which stands in constant interaction with society to form the corporations’ identity. The CSR mindset has to be treated as a part of this corporate culture and identity in order to set the basis for truth and truthful communication, which is in line with the ‘normative rightness’ validity dimensions of Habermas’s communicative rationality theory (Habermas, 1981, 1983). Otherwise, there is a danger of obscurity or rejection of claims to validity, and thus communication failure occurs (Kunczik, 2002). In this context, truth is developed on a claim which all participants the corporation and the stakeholders share, and which is constantly developed in the framework of an ethical discourse (Habermas, 1983). In this discourse, the expectations of CSR are formulated without risk of falling into the reputation trap (Eisenegger & Schranz, 2011). Thus, it is very important to systematically identify the stakeholders and initiate a dialogue with them. In addition, it is important to identify the relevant issues, which can have multiple dimensions including societal problems, open questions, potential opportunities, etc., and are not necessarily related to communications (Liebl, 2011). In the context of social responsibility in particular, the focus is not only on communication, but also on concrete action in the form of strategy, processes, products, etc. Heath put this in terms of ‘getting the house in order’, which implies the identification and implementation of standards that reflect on social responsibility and result from the scanning and monitoring of the stakeholders, their value systems, and entitlements (Heath, 1997). The strategic issue management,

74

BERND LORENZ WALTER

therefore, must be conceived as a concerted task and the subject of a ‘strategic conversation’ throughout the entire organization not only in communication departments (van der Heijden, 1996, p. 1). As long as every single employee is part of this strategic endeavour, responsibility towards society is already a necessary part of this, provided that the employees are given enough space to contribute to the ‘strategic conversation’ (van der Heijden, op. cit.). Since strategic issue management is an ongoing process, it can also shape the brand experience of the relevant stakeholders (‘living the brand’) (Ind, 2001, p. 1), since they are actively engaged in selecting the issues to be supported (Du et al., 2010) in connection to a higher agenda. This engagement is a frequently and systematically designed process (Morsing & Schultz, 2006), which is directly interconnected with the materiality assessment to identify the most pressing issues at the relevant time. The materiality assessment identifies which issues are of core interest to the stakeholders in relation to the impact on corporations, and are ultimately relevant to the conceptualization of the communication strategy. Following the phase model, the stakeholder analysis and the results of the materiality assessment, based on a comprehensive issue analysis and stakeholder management, enter into the situation analysis as part of a systematic recording of the communication network of relationships within the enterprise and between the stakeholders within the organization, the market and the socio-political environment (Zerfass, 2004). The communication objectives and target groups also reflect directly on the results of the materiality assessment, as well as the stakeholder analysis. It is important to emphasize again here that the definition of the objectives and the target groups will be defined together with the stakeholders who represent these groups. They should be a proactive part of the definition process, as well as for the entire process of strategic planning. At the centre of every communication concept is the leading idea which is formulated as a result of a creative process. The leading idea is the common thread running through the communication measures, instruments and channels. In each case of communication, dialogue must be utilized. Cultural differences and the time perspective must also be taken into account, as mentioned above. The communication measures, instruments and channels have to be carefully selected and arranged to ensure a credible, authentic and trustworthy perception of the communication by the target groups. Here, stakeholder engagement again plays an important role as a yardstick for successful communication strategy, and even as inventors e.g. crowdsourcing, co-creation (Prahalad & Ramaswamy, 2000). Evaluation finally closes the circle of the communication control process. It is

CSR Communication: Towards a Phase Model of Strategic Planning

75

important here to give feedback on the single phases in terms of adjustments and improvements.

CONCLUSION The strategy of involving stakeholders in business processes outside communications has already been approved in selected areas (e.g. open innovation). Regarding communications, this chapter has presented an initial approach to the adoption of the phase model in organizational communications, which includes involving (mainly internal) stakeholders in the communication process, especially when it comes to communications about values and guiding principles. Implementing the phase model into communication processes by applying external stakeholders as well is, in practice, not as easy, especially given that collaboration with stakeholders is a learning process which entails many obstacles. Crane and Matten (2007b) summarized these obstacles as follows: resource intensity, culture clash, schizophrenia (mostly resulting from ethical dilemmas), uncontrollability, co-optation, accountability and resistance. Furthermore, it should be noted that corporations might merely cater to the lowest common denominator in decision-making processes, which is rarely the most efficient method of operation. In combination with this, corporations tend to collaborate with more ‘easy-care’ stakeholders than key stakeholders that represent the more critical stakeholder voices. Given the difficulties which can arise in stakeholder relationships, the degree and the means of involvement might vary in practical use. True to the maxim ‘the journey is the reward’, the positive aspects of involving stakeholders in the strategic planning process of CSR communication strategies outweigh the negative. Such positive factors include decreased risk of communication failures, which leads to consistent adherence to CSR practices, and advance anticipation of ethical dilemmas.

REFERENCES Arnstein, S. R. (1969). A ladder of citizen participation. Journal of the American Institute of Planners, 35(4), 216 224. Ashforth, B. E., & Gibbs, B. W. (1990). The double edge of organizational legitimation. Organization Science, 1(2), 177 194.

76

BERND LORENZ WALTER

Bentele, G. (2005). Konzeption. In G. Bentele, R. Fro¨hlich, & P. Szyszka (Eds.), Handbuch der Public Relations. Wissenschaftliche Grundlagen und berufliches Handeln (pp. 590 591). Wiesbaden: VS Verlag. Bentele, G., & Nothhaft, H. (2011). Vertrauen und Glaubwu¨rdigkeit als Grundlage von Corporate Social Responsibility: Die (massen-)mediale Konstruktion von Verantwortung und Verantwortlichkeit. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 45 70). Wiesbaden: VS Verlag. Berlo, D. K. (1960). The process of communication. New York, NY: Holt, Rinehart, & Winston. Bortree, D. S. (2009). The impact of green initiatives on environmental legitimacy and admiration of the organization. Public Relations Review, 35(2), 133 135. Brugger, F. (2010). Nachhaltigkeit in der Unternehmenskommunikation. Wiesbaden: Gabler Verlag. Bruhn, M. (2006). Integrierte Kommunikation. In B. F. Schmid & B. Lyczek (Eds.), Unternehmenskommunikation, Kommunikationsmanagement aus Sicht der Unternehmensfu¨hrung. Wiesbaden: Gabler Verlag. Brønn, P. S., & Vrioni, A. B. (2001). Corporate social responsibility and cause-related marketing: An overview. International Journal of Advertising, 20(2), 207 222. Carroll, A. B. (1991). The pyramid of corporate social responsibility. Business Horizons, July August, 39 48. Carroll, A. B., & Buchholtz, A. K. (2000). Business and society: Ethics and stakeholder management (4th ed.), Cincinnati, OH: South-Western College Publishing. Christensen, L. T. (1997). Marketing as auto-communication. Consumption, markets and culture. Public Relations Review, 1(3), 197 227. Crane, A., & Livesey, L. (2003). Are you talking to me? Stakeholder communication and the risks and rewards of dialogue. In J. Andriof, S. Waddock, B. Husted, & S. S. Rahman (Eds.), Unfolding stakeholder thinking: Relationships, communication reporting and performance (pp. 39 52). Sheffield, UK: Greenleaf Publishing Limited. Crane, A., & Matten, D. (2007a). Corporate social responsibility as a field of scholarship. In A. Crane & D. Matten (Eds.), Corporate social responsibility. London: Sage. Crane, A., & Matten, D. (2007b). Business ethics (2nd ed.), New York, NY: Oxford University Press. Crane, A., Matten, D., & Spence, L. J. (2007). Corporate social responsibility: In a global context. In A. Crane, D. Matten, & L. J. Spence (Eds.), Corporate social responsibility: Readings and cases in a global context (pp. 1 23). London: Routledge Chapman & Hall. Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication, International Journal of Management Reviews, 12(1), 8 19. Dyllick, T. (1992). Management der Umweltbeziehungen, O¨ffentliche Auseinandersetzung als Herausforderung. Wiesbaden: Gabler Verlag. Eisenegger, M., & Schranz, M. (2011). CSR Moralisierung des Reputationsmanagements. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 72 96). Wiesbaden: VS Verlag. Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review, 36(2), 90 100. Farache, F., Perks, K., & Berry, A. (2009). The role of advertising in the legitimization of CSR actions: Propositions and a conceptual framework. Proceeding on Australian and

CSR Communication: Towards a Phase Model of Strategic Planning

77

New Zealand Marketing Academy conference, November 30 December 2, 2009, Melbourne (pp. 1 9). Retrieved from http://www.duplication.net.au/ANZMAC09/Papers.html. Accessed on 21 September 2011. Fombrun, C.J. (1996). Reputation: Realizing value from the corporate image. Boston, MA: Harvard Business School Press. Forehand, M. R., & Grier, S. (2003). When is honesty the best policy? The effect of stated company intent on consumer skepticism. Journal of Consumer Psychology, 13, 349 356. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston, MA: Pitman. Freeman, R. E. (2004). The stakeholder approach revisited. Zeitschrift fu¨r Wirtschafts- und Unternehmensethik, 5(3), 228 241. Gioia, D. A., & Chittipeddi, K. (1991). Sensemaking and sensegiving in strategic change initiation. Strategic Management Journal, 12(6), 433 448. Grunig, J. E., & Hunt, T. T. (1984). Managing public relations. Fort Worth, TX: Harcourt Brace Jovanovich College Publishers. Habermas, J. (1981). Theorien des kommunikativen Handelns. Handlungsrationalita¨t und gesellschaftliche Rationalisierung. Frankfurt: Suhrkamp. Habermas, J. (1983). Moralbewusstsein und kommunikatives Handeln. Frankfurt: Suhrkamp. Haley, E. (1996). Exploring the construct of organization as source: Consumers’ understanding of organizational sponsorship of advocacy advertising. Journal of Advertising, 25, 19 36. Heath, R. L. (1997). Strategic issues management: Organizations and public policy challenges. Thousand Oaks, CA: Sage. Herbst, D. G. (2011). Rede mit mir, scm. Berlin: scm c/o prismus communications GmbH. Hillenbrand, C., & Money, K. (2007). Corporate responsibility and corporate reputation: Two separate concepts or two sides of the same coin? Corporate Reputation Review, 10, 261 277. Holt, M. K. (2006). An exploration into sensemaking and sensegiving: A stakeholder model approach. Proceedings of the Dr. John Amis’organizational theory doctoral seminar, University of Memphis, Memphis, TN. Ind, N. (2001). Living the brand (3rd. ed.), London: Kogan Page. Kunczik, M. (2002). Public relations. Konzepte und Theorien (4th ed.), Ko¨ln: Bo¨hlau. Lessig, L. (2008). Remix: Making art and commerce thrive in the hybrid economy. London: Bloomsburry Academic. Liebl, F. (2011). Corporate social responsibility aus Sicht des Strategischen Managements. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 305 326). Wiesbaden: VS Verlag. Luhmann, N. (2000). Vertrauen: Ein Mechanismus der Reduktion sozialer Komplexita¨t. Stuttgart: Lucius & Lucius. L’Etang, J. (1996). Corporate responsibility and public relations ethics. In J. L’Etang & M. Pieczka (Eds.), Critical perspectives in public relations (pp. 82 105). London: International Thomson Business Press. L’Etang, J. (2006). Corporate responsibility and public relations ethics. In J. L’Etang & M. Pieczka (Eds.), Public relations: Critical debates and contemporary practice (pp. 405 421). Mahwah, NJ: Lawrence Erlbaum. Meffert, H., & Burmann, Ch. (2005). Markenmanagement: Identita¨tsorientierte Markenfu¨hrung und praktische Umsetzung. Wiesbaden: Gabler Verlag. Mohr, L. A., Webb, D. J., & Harris, K. E. (2001). Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs, 35(1), 45 72.

78

BERND LORENZ WALTER

Morsing, M. (2003). Conspicuous responsibility: Communicating responsibility to whom? In M. Morsing & C. Thyssen (Eds.), Corporate values and responsibility (pp. 145 154). Frederiksberg: Samfundslitteratur. Morsing, M. (2006). Corporate social responsibility as strategic auto-communication: On the role of external stakeholder. Business Ethics: A European Review, 15(4), 171 182. Morsing, M., & Schultz, M. (2006). Corporate social responsibility communication: Stakeholder information, response and involvement strategies. Business Ethics: A European Review, 15(4), 332 338. Morsing, M., Schultz, M., & Nielsen, K. U. (2003). Integrating social initiatives into marketing. Paper presented at the International Conference on Integrating CSR and Marketing, Boston School of Management, September 19 20, Boston, MA. Morsing, M., Schultz, M., & Nielsen, K. U. (2008). The catch 22 of communication CSR: Findings from Danish study. Journal of Marketing Communication, 14(2), 97 111. Mutch, N., & Aitken, R. (2009). Being fair and being seen to be fair: Corporate reputation and CSR partnerships [Special issue: Corporate reputation as anticipated corporate conduct]. Australian Marketing Journal, 17(2), 92 98. Øyvind, I. (2011). Corporate social responsibility und die rhetorische Situation. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 151 170). Wiesbaden: VS Verlag. Pfau, M., Haigh, M. M., Sims, J., & Wigley, S. (2008). The influence of corporate social responsibility campaigns on public opinion. Corporate Reputation Review, 11(2), pp. 145 154. Pomering, A., & Dolnicar, S. (2009). Assessing the prerequisite of successful CSR implementation: Are consumers aware of CSR initiatives? Journal of Business Ethics, 85, 285 301. Porter, E. M., & Kramer, M. R. (2006). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, December, pp. 78 92. Porter, E. M., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, January-February, 2 17. Prahalad, C. K., & Ramaswamy, V. (2000). Co-opting customer competence. Harvard Business Review, January, 18 27. Rotter, J. B. (1981). Interpersonal trust, trustworthiness and gullibility. American Psychologist, 35, 1 7. Schmitt, J., & Ro¨ttger, U. (2011). Corporate responsibility Kampagnen als integriertes Kommunikationsmanagement. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 173 187). Wiesbaden: VS Verlag. Schrader, U., & Henning-Thurau, T. (2001). Umweltorientiertes Konsumentenverhalten. In W. F. Schulz (Ed.), Lexikon Nachhaltigkeit (pp. 179 186). Mu¨nchen: Oldenbourg. Schultz, F. (2011). Moralische und moralisierte Kommunikation im Wandel: Zur Entstehung von corporate social responsibility. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR (pp. 19 42). Wiesbaden: VS Verlag. Scott, S. G., & Lane, V. R. (2000). A stakeholder approach to organizational identity. Academy of Management Review, 25(1), 43 62. Sen, S., Du, S., & Bhattacharya, C. B. (2009). Building relationships through corporate social responsibility. In D. J. MacInnis, C. W. Park, & J. R. Priester (Eds.), Handbook of brand relationships (pp. 195 211). Armonk, NY: M.E. Sharpe. Six, B., & Scha¨fer, B. (1985). Einstellungsa¨nderungen. Stuttgart: Kohlhammer. Smith, J. (2004). A precis of a communicative theory of the firm. Business Ethics: A European Review, 13(4), 317 331.

CSR Communication: Towards a Phase Model of Strategic Planning

79

Suchanek, A. (2008). Business ethics and the golden rule. Diskussionspapier-Nr. 2008-3, Wittenberg-Zentrum fu¨r Globale Ethik, Lutherstadt-Wittenberg. Ulrich, P. (1998). Integrative Wirtschaftsethik Grundlagen einer lebensdienlichen O¨konomie. Bern: Verlag Paul Haupt. Van der Heijden, K. (1996). Scenarios: The art of strategic conversation. Chichester: Wiley. Wagner, T., Lutz, R. J., & Weitz, B. A. (2009). Corporate hypocrisy: Overcoming the threat of inconsistent corporate social responsibility perceptions. Journal of Marketing, 73(6), 77 91. Watzlawick, P., Beavin-Bavelas, J., & Jackson, D. (1967). Some tentative axioms of communication. In Pragmatics of human communication: A study of interactional patterns, pathologies and paradoxes (p. 48). New York, NY: W. W. Norton. Watzlawick, P., Beavin, J., & Jackson, D. D. (1967). Pragmatics of human communication. A study of interactional patterns, pathologies, and paradoxes. New York, NY: Norton. Webb, D. J., & Mohr, L. A. (1998). A typology of consumer responses to cause-related marketing: From skeptics to socially concerned. Journal of Public Policy & Marketing, 17(2), 226 238. Yoon, Y., Gu¨rhan-Canli, Z., & Schwarz, N. (2006). The effect of corporate social responsibility (CSR): Activities on companies with bad reputations. Journal of Consumer Psychology, 16(4), 377 390. Zerfass, A. (2004). Unternehmensfu¨hrung und O¨ffentlichkeitsarbeit, Grundlegung einer Theorie der Unternehmenskommunikation und Public Relations (2nd ed.), Wiesbaden: VS Verlag. Zerfass, A., Moreno, A., Tench, R., Vercˇicˇ, D., & Verhoeven, P. (2011). European communication monitor: Trends in communication management and public relations, Brussels. Retrieved from www.communicationmonitor.eu. Accessed on September 21, 2011.

CORRELATING LEADERSHIP STYLE, COMMUNICATION STRATEGY AND MANAGEMENT FASHION: AN APPROACH TO DESCRIBING THE DRIVERS AND SETTINGS OF CSR INSTITUTIONALIZATION Lars Rademacher and Nadine Remus ABSTRACT Purpose The antecedents and typical stages of development of corporate social responsibility (CSR) programs in a given organization or type of organization have been of minor interest in CSR research. Contrary to that the chapter argues that CSR communication strategies need to take the genesis and drivers of CSR institutionalization into account. Methodology/approach The chapter develops a complex set of interrelated drivers for CSR institutionalization from a literature

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 81 110 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006031

81

82

LARS RADEMACHER AND NADINE REMUS

review among them leadership styles and management fashion. The chapter further discusses the influence of leadership styles and management fashions on CSR institutionalization and focuses on the diffusion of management concepts along a management fashion cycle. It then refers to executive trainers as the key facilitator and promoter of new business concepts and presents data from a first online-survey among German speaking management trainers. Findings The chapter clears manager’s role in institutionalization of CSR by contextualizing their behavior in a portfolio of performance indicators. From a management fashion perspective the various forms of explicit and implicit CSR are linked to management styles. Practical implications The chapter lays ground for further research of CSR institutionalization and integration into business strategy by providing a conceptualization of CSR drivers and settings that relate to a given organization. As such it is designed as groundwork for a yet to develop CSR scorecard. Originality/value The connection between organizational type, organizational environment, leadership behavior, and the chosen CSR approach of a corporation is usually overseen. The chapter aims to uncover this connection. Keywords: CSR thinking; explicit and implicit CSR; leadership styles; management fashion; organizational learning

In recent years corporate responsibility has grown more important, as a key concept of management practice, to secure and protect future business. Moreover, many national or supra-national institutions expressed their interest in sustainable and ethical business management by publishing guidelines and whitepapers on corporate social responsibility (CSR), which can obviously be seen as a way to ensure sustainability and standards of ethical business practice. At least, it is seen as a step on the way to sustainability (Van Marrewijk, 2003). These efforts have risen on a global scale after the latest economic downturn (Martinuzzi & Zwirner, 2010) and lasted in a variety of CSR and sustainability reporting standards (Owen & O’Dwyer, 2008). But does the broader interest in ethical management and the development of policies and tools really indicate that CSR has grown to be a core component of business models or business theory. Or is CSR

Correlating Leadership Style, Communication Strategy and Management Fashion

83

just a fashionable issue, a management fashion that reflects our current “Zeitgeist”? The institutional starting points for most discussions, on the relevance of CSR in Europe, are the sustainability definition of the Brundtland Report (1987) and the EU commission’s definition of CSR (2001, 2003) and it’s national successors. These and other official papers and guidelines mentioned above (and others, too) indicate that CSR can be identified with a consistent body of ideas and measures. But CSR is quite the opposite of a sharply drawn concept. It is a convergence of ideas, a concept constantly in transition. That is why Curbach (2009) speaks of a CSR movement instead of a concept or theory. Acknowledging that CSR is a “constantly shifting concept” (Angus-Leppan, Metcalf, & Benn, 2010, p. 195), we find that a lot of the current research on CSR is, unsurprisingly, focused on different focal points of the broader CSR concept. This also accounts for management practice. Raupp, Jarolimek, and Schultz (2011) differentiate in their handbook, the differences between broad and narrow approaches to the CSR phenomenon. They trace back the more narrow approaches (like the EU commission’s definition) to Elkington’s (1999) conceptualization of the so-called “triple-bottom-line,” whereas Carrol’s pyramid of responsibilities (1991) represents the broader approaches. Finally, scholars of organizational and corporate communications take existing CSR initiatives as a starting point for their own research. Carrol (2008, p. 41f.), for example, recounts the emergence of various initiatives of CSR umbrella organizations, consultancies, etc. as clear indicators of the rising importance of CSR in recent years. The antecedents and typical stages of development of CSR programs in a given organization or type of organization have been of minor interest in CSR research. That is why, in recent years, the discussion seems to center on the question of how to communicate CSR programs, in order to prevent organizations from being accused of “window-dressing” or “greenwashing.” Contrary to what we believe, the first step, is to find out more about the relationship between organizations and the CSR concept they follow, before we can answer the question of how to communicate CSR activities. In other words: the question of how to communicate CSR is related to the type of organization, its environment, and the style of an organization, in relation to its chosen CSR activities and concept. In our chapter, we start with a reconstruction of the origins of the CSR concept and its potential influencers. Hence, we consult the literature about CSR drivers and the relationship of management styles/types and CSR. We differentiated between three levels of drivers and showed how they affect

84

LARS RADEMACHER AND NADINE REMUS

each other. As a second starting point, we refer to management fashion research. We suggest that CSR, under the conditions of “moralization of markets” (Stehr, 2007), can be interpreted as a dominant management fashion. Introducing the idea, that CSR might be a management fashion that works alongside a management fashion cycle, we propose that management trainers are among the influential catalysts that foster the diffusion of a new management approach in a manager’s community, as well as within a certain corporation. We then draw upon the findings of an online survey, we conducted, among management trainers from Germany and Switzerland and explain our methodology. We finally discuss our findings and develop suggestions for further research.

THE INSTITUTIONALIZATION OF CSR IN RESEARCH AND PRACTICE From what we have alluded to in our introduction, it is easy to surmise that we are uncertain of what exactly CSR is in an ontological sense. We can only describe how scholars and practitioners deal with this phenomenon or certain behavior widely known as CSR. Designed as a business case, management scholars argued that CSR can be distributed easily within a corporation. Kurucz, Colbert, and Wheeler (2008, p. 105) differentiate between four types of business cases that can be mapped according to their effect on value creation: a cost and risk reduction approach, a competitive advantage approach, a reputation and legitimacy approach, and a synergetic value creation approach. Using this concept, each following stage is inclusive of the last. The authors argue, “a ‘better business case’ for CSR must reflect the changing conditions for business at a global level.” To achieve a “more robust, nuanced, and compelling CSR business case” they suggest acknowledging system complexity, building integrative capacity, and taking a pragmatic approach by “encouraging managerial experimentation with new business models for value creation” (Kurutz et al., 2008, p. 105). Implicitly, the manager plays a key role in developing a business case for CSR in an organization. But the institutionalization is also dependent on a variety of external factors and drivers that we are going to discuss later on. On the other hand, as Lautermann and Pfriem (2011) show, there is still a huge difference between symbolic moralization and acting in a moral

Correlating Leadership Style, Communication Strategy and Management Fashion

85

sense. Di Lorenzo (2007) demonstrated this for four different industries, using the example of business conduct. Thus, it is not surprising that a given CSR strategy does not automatically mean or mirror a more ethical approach in business and vice versa. Researchers reacted to this situation by introducing the concept of “explicit” and “implicit” CSR (Matten & Moon, 2005, 2008) as an explanation. While implicit CSR is viewed as closely related to a strong normative context, explicit CSR is perceived strategically and is usually voluntarily implemented, as a result of deliberate decisions by the organization. That is, as a first step, emphasizing that the voluntary aspect of imposing CSR is connected to a mainly strategic behavior not to a more ethical basis of business behavior. In the context of most institutional definitions, this is interesting to note. Angus-Leppan et al. (2010, p. 190) point out that while valuable, “the emphasis to date on characterizing and justifying CSR actions has left unexplored the antecedents of CSR, such as the societal level values or leadership behaviors that trigger or shape corporate responses in this domain.” And also the conceptualization of implicit and explicit CSR does not take the genesis of CSR into account. In most cases the first quoted definition is drawn from Bowen’s book Social Responsibilities of the Businessmen that dates back to 1953. Further research usually starts after industrialization or with the beginning of the 20th century. Schultz (2011, p. 22) localizes the beginning of CSR thinking earlier: alongside the development of industrialization and the parallel development toward modern democratic societies. Schultz (2011) offers quite a helpful overview to reconstruct the history of CSR. But it does not explain the shift in discussion that has put CSR and the question of sustainability at the very heart of management discourse. In the liberal tradition that has dominated at least the last 30 years, every market player acts only on his own behalf. The “invisible hand” of the market negotiates diverse interests using money as a medium, with the result of growing or maximized wealth for (nearly) all. Looking at the individual market partners, the “invisible hand” relieves corporations from moral duties. The only duty regarding society lies with maximizing profits (Zu Knyphausen-Aufseß & Picot, 2010). But in an era of globalization, this form of moral relief does not work as it did earlier. Scherer and Palazzo (2007) use discourse ethics and refer to Habermas’ idea of deliberative democracy, which counts civil societies’ groups and NGOs among those who challenge not only state institutions, but who also expect corporations to find solutions for issues of public interest (den Hond/de Bakker, 2007). This view is supported by a number of publications in recent years. In a

86

LARS RADEMACHER AND NADINE REMUS

prominent volume, the editors (Habisch, Jonker, Wengner, & Schmidtpeter, 2005) claim that CSR has become part of discussions on sustainability and globalization all across Europe. Lydenberg (2005) directly refers to the idea of “the invisible hand” that needs guidance. He sees CSR as a “major secular development, driven by a long-term re-evaluation of the role of corporations in society” (Teach, 2005, p. 31). Additionally, multinational corporations have reached a position that puts them on the same level with traditional national states. According to Zu Knyphausen-Aufseß and Picot (2010), global enterprises cannot simply obey national law or national habits. Multinationals have grown to be political actors in their own right. They need to support transnational expectations, for example, when it comes to governance or compliance issues like corruption. As political actors, Scherer and Palazzo (2007) argue, corporations are already set in a context of wider responsibilities and need active involvement of the organizational members to solve problems of society. It leads Scherer and Palazzo to the concept of the “highinvolvement organization” that refers back to ideas of cooperative leadership, such as in heterarchical or self-organization concepts: The solution to a coordination problem is neither determined by the leader (through a hierarchical act) nor deduced from organizational rules (plans and programs). Instead, problems are solved through a joint effort of the organizational members, by making suggestions, putting forward arguments and counterarguments, and commonly determining the best solution (…). Although many of these proposals are designed to improve economic performance, they may help in the organizational implementation of political CSR. (Scherer & Palazzo, 2007, p. 1114)

The authors point in the direction of organizational culture and behavioral management that Schultz (2011, p. 38) expects to become the focal point in the discussion on institutionalizing CSR with Corporate Identity as the prospective answer to the “where” and “how” of moral communications. And this automatically diverts the focus to the leadership role and differing leadership concepts, in relation to organizational styles and organizational culture. In abstract terms, the concept of a “political corporation” no longer complies with the traditional idea of ongoing differentiation in society and the market system. “Corporations cannot be seen as free from moral expectations. This also means the formerly merely instrumental rationality has proven inappropriate” (Zu Knyphausen-Aufseß & Picot, 2010, p. 398; translated). We have already mentioned some of the parts necessary for this new approach to institutionalization. From Russo and Tencati (2009) we learned

Correlating Leadership Style, Communication Strategy and Management Fashion

87

about the role of organizational size. From Angus-Leppan et al. (2010) we adopted the four levels of institutional drivers, which refer to the individual in a given organizational context, the organization itself (including its culture and self-description), the organizational field (e.g., competitors, partners, clients, capital markets), and the context of a national business system (e.g., norms, legislation) (Fig. 1). Furthermore, the study of Angus-Leppan et al. (2010) finds a relationship between leadership styles and implicit and explicit (or strategic) uses of CSR. But we assume there are still more drivers to the institutionalization of CSR. We feel supported by Richter (2011, pp. 262 264) who describes seven external driving forces: (1) civil society actors who try to influence corporate behavior and thereby set the CSR agenda of companies; (2) local, national, and international media who play a role in educating the general public on emerging issues; (3) national and supranational governments who have taken action to ensure responsible practice; (4) new forms of

National Business Systems

The Organisation Field

The Organisation

The Individual within the Organisation

Fig. 1.

Institutional Drivers from Angus-Leppan et al. (2010, p. 190).

88

LARS RADEMACHER AND NADINE REMUS

discursive arenas that have a quasi-regulatory role in developing standards and guidelines; (5) ethical investment that has emerged as an alternative to traditional investment and thereby fosters a new perspective on financing issues; (6) large customers and suppliers, who have changed their policies to avoid dubious industry practices that might affect product quality, harm resources, or produce negative reputational effects; (7) consumer activism, which has been established as a form of protest that might represent “a major shift in consumer behavior driving corporate behavior and their CSR agendas” (Richter, 2011, p. 264). The problem with Richter’s way of identifying drivers and actors is the diverse nature of the entities he includes: while for example legislation can be described as a driver on a first level; supplier initiative, consumer activism, media report, and ethical investment could be seen as effects on a second or third level. The linkage and interdependence between the named factors are not clearly marked on a conceptual basis. That is probably why Richter calls them “forces and pressures in the CSR field” (p. 264) instead of drivers and actors. Another approach that refers to existing CSR initiative and ways to implement changes to the existing system is presented by Yuan, Bao, and Verbeke (2011). They focus on the organization and ask for a “fit” between organization and CSR initiative on three levels: as “external consistency” which means a fit with societal stakeholder’s demands; as “internal consistency” which represents the fit with the prevailing business practice of the organization; and as coherence of current and previous CSR initiatives, which interact with the former two and “will ultimately determine the credibility and effectiveness of CSR initiative outcomes” (Yuan et al., 2011, p. 76). In a further step, the authors draw on a core-periphery conception of the organization that they find with scholars like Hannan and Freeman (1984) and Siggelkow (2002), arguing that each organization consists of core elements like stated goals, forms of authority, core technology, and marketing strategy and peripheral elements like operating decisions, detailed arrangements designed “either to align the organization with its environment or to buffer its core from external fluctuation” (Yuan et al., 2011, p. 76). Following Siggelkows (2002) distinction of core elements, elaborating elements, independent elements, and inconsistent elements (and the interaction between them), they advocate that peripheral activities such as elaborating elements may also extend core elements. By introducing new CSR initiative a peripheral element by nature corporations may act as core-extending in one case, as well as independently at the organization’s periphery in another case. The core-extending activities are internally

Correlating Leadership Style, Communication Strategy and Management Fashion

89

driven, whereas the independent initiatives at the periphery are usually reactions to external demands. On these grounds, Yuan et al. (2011, p. 81) present seven CSR adoption patterns that range from “born” CSR orientations, where CSR is encrypted into the core of an organization, to relatively loose alliances, where CSR initiative is institutionalized outside the actual organization. By connecting these patterns with real-life examples, the authors can show that CSR does not only as most of the literature indicates react to external demands, but also to internal drivers. In a third perspective, we question the belief that CSR initiative is flourishing in settings, where well-enforced regulations work together with industry organizations and independent monitoring, for example, provided by NGOs (Campbell, 2007). In their case study on Kenya, Muthuri and Gilbert (2010) show that the national and cultural background plays a major role in CSR institutionalization. While there is no punitive risk in Kenya for those who do not fully comply with international CSR standards, they find evidence for a huge variety of CSR initiative that mainly roots in philanthropic responsibility and self-regulation. They conclude that “unlike Carrol’s CSR pyramid, philanthropy takes a higher priority than legal responsibilities in Kenya” (Muthuri & Gilbert, 2010, p. 478). As we have seen, many of the existing approaches suggest an overlap. In part, due to conflicting ideas about the driving forces behind CSR institutionalization. While general approaches concentrate on the basic conditions that enforce socially responsible action, without looking at organizational diversity, organization-focused approaches look at, for example, the internal and external “fit” between expectations and initiatives. Culturally focused research seems to indicate that drivers’ significance can vary according to the cultural background. It is likely that this also counts for smaller cultural entities like a particular field of business. We therefore proposed the following driving elements, whereby we extended the four levels of Angus-Leppan et al. (2010), that we found helpful to structure driving forces of CSR institutionalization (Table 1). We introduced three levels to categorize the accounted drivers. The first level represents the most basic level of CSR orientation. On the first level, we suggest that while contextualized in conduct or policies, the individual orientation of employees is a driving force behind socially responsible behavior. An example of this is the practice of Unicredit Bank Germany to support individual initiatives of their employees. These initiatives can be rewarded with financial support. Second, from an organizational perspective the ownership structure can have a strong impact on CSR

90

LARS RADEMACHER AND NADINE REMUS

Table 1.

Drivers of CSR Institutionalization (Displayed in the Four Levels of Angus-Leppan et al., 2010). Individual

First-level drivers

Individual Ethical orientation

Ownership structure (shareholderowned, familyowned)

Dominant leadership type/style Organizational culture (powerstructure, CSRsupportiveness)

Second-level drivers

Third-level drivers

Organizational

Employee organization fit

Organizational Context

Normative Context

Stakeholder structure

Cultural norms, expectations

Juridical form (e.g., stock listed, Limited company) Financial investors’ attention NGO observance

Legislation

Media coverage Branch image

(Transnational) CSR policies

Business conduct Fashion effects

supportiveness. While family-owned businesses often show quite a distinct ethical orientation, stock-listed firms usually lack this kind of pre-constitution. The German laser technology specialist “Trumpf” can serve as example here: the owners’ motivation is explained by a strong protestant Christian background. Focusing on the organizational context, the specific stakeholder structure is quite influential (Freeman, Harrison, & Wicks, 2007). Depending on who counts as primary and who as secondary stakeholders, the external demand for CSR initiative is variable. As a supplier in the automobile industry, for instance, the institutional clients might play the most important role, whereas a car manufacturer (at least in Germany) might count trade unions among its most important stakeholders. The stakeholder structure is usually strongly connected with a firms’ juridical form. A stock-listed corporation has other reporting duties and faces closer observance by stockholder representatives, financial journalists and NGOs. That is why we also count the juridical form among first-level drivers. Looking at CSR initiative, from a norms and expectations’ perspective, shows that issues like compliance or social responsibility have grown in public perception during recent years (Rademacher and Ko¨hler, 2012). These expectations expand usually beyond the current legal status and represent the normative context for future legal development. So

Correlating Leadership Style, Communication Strategy and Management Fashion

91

today’s expectations might turn into tomorrow’s legal obligations (Eisenegger, 2012). But since there is always an existing legislative context, which structures the current situation, we count legislation among first-level drivers. All entities on second level can count as derived from first level. Leadership styles, for example, are influenced by the ownership structure, as well as by the individual ethical approach and societal expectations. Combined with other factors they form an organizational culture, that may or may not be CSR supportive. Financial investors’ attention and NGO observance result from the reporting duties of different juridical forms and from cultural expectations that may be violated by corporations and political regulatory initiatives or freshly imposed CSR policies, which can be traced back to cultural norms and expectations that are not yet fulfilled by current legislation. Third-level entities again are effects of the latter: individuals can decide whether or not to fit into an organization with a certain culture, leadership structure, and CSR attitude. The so-called “war for talent” might put pressure on a firm and foster organizational change toward more CSR friendly culture, in order to attract new talents and retain present staff. Attention from NGOs and the financial institutions, as well as regulation initiatives, lead to rising media coverage that shapes the company’s reputation and contributes to the overall image of a branch of industry. In recent years, many industries suffered from the adverse reputational effects of individual wrongdoing; this shaped the public perception of the whole field (like that of the chemical industry, investment banking, or the health industry). A reputation, under pressure, usually has short-term effects on business conduct, that might be developed as corporate conduct for an individual company or as codes of conduct for a whole branch. Finally, we propose a fashion effect that we believe to be situated on a normative or quasi-normative level. If CSR has been established in corporate practice and as a management style, it is hard to avoid and automatically generates standards within a field of business and within a respective organization. The listed elements show how interwoven and complex the institutionalization of CSR in an organization is. When we move on to the question of management styles in the next paragraph, we have to keep in mind that a leadership style in general is not a question of choice, but a product of the interaction of a company’s history and culture, as well as of the ownership structure, leadership team style, juridical form, and specific lifecycle situation.

92

LARS RADEMACHER AND NADINE REMUS

LEADERSHIP STYLES AND THE INSTITUTIONALIZATION OF CSR INITIATIVE When we connect CSR engagement and institutionalization with leadership types and styles, we propose that leaders use CSR to influence their business activities. Matten and Moon (2005) saw various reasons for the shift from implicit to explicit CSR. They assume that government failure has triggered corporations to fill in “sub-political” roles or that corporations want to stay ahead of current legislation. Also corporations’ growing dependence on capital markets and a general need to seek or maintain a social license to operate are seen as possible causes. In earlier studies, for example, Waldman, Siegel, and Javidan (2006) found “that cultural dimensions predict the CSR values of executives.” A lot of authors refer to Basu and Palazzo (2008), who promoted the idea that the mentality of executives determine how an organization conceptualizes CSR. Furthermore, Angus-Leppan et al. (2010) argue that, according to Weick (1995), “sensemaking” is a retrospective technique to make sense of organizational ambiguity and to reduce uncertainty. In a corporations’ context executives use “sensemaking” to justify earlier decisions or create strategic decision chains to create strategies in retrospect (Wehmeier & Schultz, 2011). Sharp and Zaidman underline the strategic impact of “sensemaking” on CSR strategizing: Basu and Palazzo (2008) are among the first researchers to have adopted a process perspective in the study of CSR. They claim that an analysis of the sense-making process by which organizations understand and interpret CSR, rather than a strict focus on the content per se of a CSR program, enables a deeper understanding of its nature. Sense-making can be viewed as one of the multiple mechanisms that contribute to the strategization of a corporate activity, and it is to this broader framework that we now turn. (Sharp & Zaidman, 2010, p. 53)

Following, Sharp and Zaidman (2010), who rely on the “strategy as practice model” that Jarzabkowski (2005) developed, refer to Mintzberg’s (1990) redefinition of strategy “as an emergent rather than an intended action” (Sharp & Zaidman, 2010, p. 53). Angus-Leppan et al. (2010, p. 192) see: sensemaking as an important and relevant theory of meaning and action (…) because of such ambiguities around CSR and CSR practice. These have been highlighted in previous research undertaken by the authors indicating the diversity in interpretations and value estimations of CSR and its human an ecological elements among the different stakeholder groups of one organisation.

Correlating Leadership Style, Communication Strategy and Management Fashion

93

Also, Russo and Tencati (2009) show that without an explicit managerial or leadership framework, CSR initiatives are imposed in a very hands-on manner. And once installed they have a tendency to remain that way for a reasonable time without change. Since there is no real awareness of the leadership role in the CSR discussion so far, as Waldman & Siegel (2008) point out, we need to define the nature of leadership, before we can refer to the relationship of management styles to CSR practice and the CSR program implementation. Gemmil and Oakley (1992, p. 124) define leadership as “a social process (…) of dynamic collaboration, where individuals and organization members authorize themselves and others to interact in ways that experiment with new forms of intellectual and social meaning.” The CSR discourse has widely ignored the role of the corporate leader in implementing and institutionalizing CSR. Although top mangers are obviously in the best position to influence these types of strategies and projects, researchers have previously failed to examine the effect of leader values, ethics and styles in regards to CSR. (Angus-Leppan et al., 2010, p. 193)

We are aware that our discussion has omitted the whole leadership question. This is intentional, as it is not only the CEO or the board of directors who are in charge when it comes to CSR institutionalization. When CSR is a form of citizenship or a way to express corporate values, it also needs to be supported by employees (Swanson, 2008). To go further into the role of both managers and employees for institutionalizing CSR, we have to take a closer view of the most important literature.

MANAGERS’ ROLES IN INSTITUTIONALIZATION OF CSR In his three-part model Carrol (1979) does not directly address the role of the managers in driving CSR institutionalization. He advocates CSR as fourfold: economically, legally, ethically, and philanthropically. But the role of the manager as an individual decision maker and promoter of social responsibility is more or less implicit or seen as a prerequisite. Wartick and Cochran (1985) extended Caroll’s model in the direction of “social issues management” that “features the business sector as a moral agent while emphasizing that responsiveness involves managerial approaches” (Swanson, 2008, p. 230).

94

LARS RADEMACHER AND NADINE REMUS

Finally, Wood (1991) was among the first who discussed the managers’ attitude as a driver for CSR. Her model was refined by Swanson (2008), who presents a model of moral leadership in the form of a typology of leaders, who promote and execute moral leadership in contrast to those who neglect it. Referring back to Carrol (1979), it is the leaders’ duty to “first and foremost” fulfill their economic obligations. This leads Swanson to differentiate between leading the formal organization and the informal organization. As formal leader, the top executive can: help guide a firm toward responsible corporate conduct vis-a`-vis the formal organization, by directing other managers and employees along the chain of a command structure, to attend responsibly to concerns expressed by internal and external stakeholders, the former including employees and investors and the latter consumers, suppliers, the media, government agencies, and other groups in society that can affect or are affected by the firm’s activities. (Swanson, 2008, p. 233)

Leading the informal organization means to bridge the gap between a formal commitment of upper management and a lack of conviction among employees, who believe CSR engagement is mere “window dressing.” According to Schein (1992) there are a number of mechanisms executives can use to reinforce and shape the corporate culture, for example, reactions to critical incidents, criteria for rewards, criteria for recruitment, selection, and promotion. Swanson (2008, p. 236) presents two archetypes, one that neglects responsibility and misleads a whole organization that “can eventually lose touch with stakeholder expectations of social responsibility.” Executives who neglect responsibility will tend to use their formal and informal power to encourage employees to suppress value awareness. The leader who shows what Swanson calls “normative receptivity” will direct employee behavior toward productive social goals. And this attitude will not only meet social goals, but long-term economic performance “by enhancing its reputation and increasing community goodwill” (Swanson, 2008, p. 239). In their study Angus-Leppan et al. (2010) identify different leadership styles in relation to the institutionalization of CSR. Their question is which leadership style supports (or favors) which form of CSR. They distinguish between autocratic, authentic, ethical, emergent, and transformational leadership. An autocratic leadership turns out to be the style of choice when it comes to using CSR as a communication strategy. Thus, explicit or strategic1 CSR is mostly linked to autocratic leadership and extensive use of public relations, whereas implicit CSR is linked to authentic and emergent leadership and values. Since both systems can exist in one company,

Correlating Leadership Style, Communication Strategy and Management Fashion

95

that might lead to conflicting scenarios. In the Australian bank that AngusLeppan et al. (2010) observed, parts of the staff thought the CSR activities were used for “greenwashing.” “It appears that staff may actually require a more authentic leadership if the idea of ‘greenwashing’ is to be avoided” (Angus-Leppan et al., 2010, p. 206). From their study Angus-Leppan et al. (2010, p. 208) conclude that the extensive use of CSR in recruitment communication has led to conflict between the autocratic style that explicit CSR is frequently connected with, and the authentic and shared-leadership that is connected with implicit CSR. The authors suggest that different forms of leadership are needed to use the conflict for innovation. For example, transformational leaders may be necessary to help implement a complex CSR concept in organizations that are both authentic and expressive. Angus-Leppan et al. (2010) emphasize that further research should start at this very point. We try to connect to their ideas in conducting our own study on management trainers, to find out about leadership styles, as well as the nature of CSR. Is it already within the DNA of value creation or still a management fashion?

CSR AS A MANAGEMENT FASHION? THE IDEA OF A MANAGEMENT FASHION CYCLE During the last 20 years there is a growing tendency to look at management development from a management fashion point of view. The constantly changing paradigms (from TQM via Blue Ocean to post heroic management to name but a few) seem to indicate that there is something like a management fashion market that is constantly driven by the multiple interests of market partners. Carson (Phillips), Lanier, Carson, and Guidry (2000) analyzed no less than 16 distinct management fashions that have emerged in the last five decades. The most influential article on the topic, namely “Management Fashion” by Abrahamson (1996), has produced a range of scholarly reactions since its publication (Abrahamson & Fairchild, 1999; Jackson, 2001, Rolfsen, 2004). Benders and van Veen (2001) believe that the management fashion movement is a reaction to discussions in the business press. They distinguish between “prophets,” “disciples,” and “revisionists” on the one hand and “critics” or “skeptics” on the other who foster or publicly criticize the approach. Others treat management fashion as a “generic phenomenon” (Benders & van Veen, 2001, p. 34); it has become a popular academic topic.

96

LARS RADEMACHER AND NADINE REMUS

Management fashion, according to Benders and van Veen (2001), can be described as “the production and consumption of temporarily intense management discourse, and the organizational changes induced by and associated with this discourse.” That means management fashion is more than the public discourse, it also embraces what has actually diffused into the organizational body both in the mindset of managers as well as in measurable organizational changes. But management fashions do not arise out of the blue. Abrahamson (1996) describes a management fashion-setting process that relies on defined market structures. He refers to a lineup of creation, selection, processing, and dissemination stages of management fashion (cf. Fig. 2). The launch of a new management fashion, according to Abrahamson, starts with initial ideas of management gurus, and is fostered by mass media. Gurus can be management experts, for example, professors or managers, who have reached the guru status. Combined with the demand of management fashion users, a sample of techniques is chosen for promotion and development into fashion. Catalysts A General Model of Management Fashion Setting Norms of Rationality and Progress Management Fashion Market

Supply by Management: Fashion Setters

Demand by Management: Fashion Users

Sociopsychological and Technoeconomic Forces

Fig. 2.

Management Fashion-Setting Process (Abrahamson 1996, p. 260).

Correlating Leadership Style, Communication Strategy and Management Fashion

97

of these creation and selection stages are consulting firms and business schools. Consultants have a need to surprise their clients with new management ideas and to create at least the illusion of knowledge transfer. Compared to consultants, business schools serve a broader audience. While business consultants only work for smaller project groups or members of the top management, business school programs are offered to various levels of managers. Within a management fashion cycle they grab up ideas and techniques that top consultants have already tried out in practice. Besides Gurus, mass media is interpreted as management fashion setters. Together they generate the image of relevance. And it is not crucial if this image is accurate. The new trend can be an improvement or merely an older trend rediscovered: Management fashion setters produce the collective beliefs that certain management techniques are both innovations and improvements relative to the state of the art. (Abrahamson, 1996, p. 265; italics in original)

Can CSR be interpreted as a management fashion the way Abrahamson puts it? We suggest three ways to assess this question. First, we have to weigh the characteristics of management fashions: do they apply to CSR as well? Jackson and Rigby (2000) defined five criteria that they have derived from a literature review. A management fashion, according to them, has (1) a management concept, technique, or practice at its heart, (2) represents a collective belief of managers, (3) the new fashion creates its own cosmos of terminology and “signifiers,” (4) it shows a popular lifecycle or “bellshaped adoption,” and (5) is actively disseminated by the management fashion industry. Zorn and Collins (2007, p. 409), who also refer to these five criteria, add a sixth criterion when they emphasize the tendency of a fashion (and the fashion industry) to universalize a trend in two ways. Scenarios that worked for a few situations become generalized for a whole corporation; and managers who adopt a fashion tend to “universalize the values and interests underlying a fashion (…) to all stakeholders.” Rolfsen (2004) adds success factors for the dissemination of management fashions. She argues that successful fashions need the right timing: (1) it has to answer a prominent social or socioeconomic question of an era; (2) it has to present itself as anti-disaster strategy to an unfavorable way of solving the addressed question; (3) it needs a name easy to remember; (4) it must provide a “concrete recipe for action” (p. 124); (5) to become successful as a fashion, the concepts needs to stay partly “vague and ambiguous” (p. 125) in order to allow a variety of specifications (strategic ambiguity);

98

LARS RADEMACHER AND NADINE REMUS

(6) successful fashion spears to academia and finally and as Zorn and Collins (2007, p. 409) believe, (7) most controversial, successful management fashion usually spreads from US east coast institutions like Harvard or MIT. In the end, Zorn and Collins (2007) are undecided: they acknowledge a number of criteria that qualify CSR sustainability as a fashion. We believe this counts for the cycle dynamics or the appearance of “being academic” as well as to the criteria of being “vague and ambiguous.” As we have clearly stated, right at the beginning, CSR is more of a movement than a sharply drawn concept; so it might as well be called a fashion. But do other named criteria actually match? Let us, for example, have a look at the situation of a fashion in the phase of losing its attraction. Zorn and Collins describe how, for example, TQM became, in part, regular practice after the hype had expired and still holds enough interest to keep a scientific journal alive. They believe this could happen to CSR as well. This reminds us of Yuan et al. (2011) who suggested patterns of core-extending activities that could apply to the way CSR becomes part of the organizational core. If CSR is situated in a wider context, such as stakeholder theory or citizenship theory (Mele´, 2008), it might transform into a genuine value creation approach: “The main idea is that every business creates (and sometimes destroys) value for at least customers, suppliers, employees, communities (and society), and financiers. (…) Such value creation for stakeholders is the driving force of capitalism” (Freeman, 2013, p. 5). Thus, CSR definitely has the potential to turn from a management fashion into a core-extending activity. In a pre-study we conducted, (simply for practical reasons) in Germanspeaking countries, we wanted to find out about the current status of CSR in business training. In Abrahamson’s fashion cycle, from our point of view, management trainers are part of the consulting process. They are early adopters of new management trends and facilitate these ideas at an early stage of a management fashion’s life cycle. We assume that trainers get in contact with various levels of leaders, of differing hierarchical levels, and therefore have immediate access to what works as management technique and what does not. That is why we deem their judgement highly valuable, when it comes to evaluating a management fashion and its relevance to clients. Not only can we benefit from their experience with different management levels, but also with different clients and differing management styles. Moreover, management trainers are involved in organizational learning. As external experts, they are involved in consulting or training executives and conceptualizing leadership programs. CSR thinking, as we

Correlating Leadership Style, Communication Strategy and Management Fashion

99

described, is a matter of organizational learning and relies on several consulting and training initiatives to become widely accepted and supported by executives. For our purpose, we define a management trainer as a professional role, one that incorporates both a consulting and a teaching aspect and refers to knowledge resources and process know-how. A management trainer usually works within a leadership program and/or by order of a managementtraining firm that provides his credibility.

METHODOLOGY AND FINDINGS Survey Method and Sampling To find out about the predominant perception of CSR and to what extent management trainers both reflect and influence management theory and management practice, in the case of CSR, we created a sample of 130 management trainers for our pre-study chosen from the most prominent consulting firms in Germany and Switzerland and conducted an online survey. The target groups of our survey were executive consultants/coaches and management trainers who work both freelance or in consulting firms throughout Germany and Switzerland and who are dealing with CSR related issues. Based on a database of 130 self-recruited contacts, we invited the members of the target group to participate personally in the survey via e-mail. The survey was held during four weeks in August/September 2011 and conducted in the form of a German language questionnaire. The questionnaire was designed online by using ESF survey software and consisted of 22 questions. Most questions only allowed one answer to create clear indications. Sixty persons filled out the survey and answered at least one question. Thirty-five participants finished the questionnaire completely and answered all questions, so there are different participation rates for each answer. Twenty-four participants were German, 11 were Swiss, 23 male and 11 female. Twenty-four participants held a university degree, 5 a PhD. Twenty-four worked as freelancers or were the owner of a consulting business, 5 were members of a consulting firm, 6 did not answer the question. Out of the sample of 35 participants, 60 percent were members of a trainer network. Nineteen percent worked for major corporations, 41 percent for middle-sized companies, 25 percent for small- and medium-sized enterprises, and 12 percent for family businesses.

100

LARS RADEMACHER AND NADINE REMUS

Findings of the Pre-Study To learn about the specific methods of CSR implementation, we firstly asked our panel what the concept CSR stands for and which management approaches they see in close connection to CSR. More than 91 percent believe that CSR describes the voluntary responsible involvement, concerning issues of a social or environmental nature. Only a small minority, 6 percent, state that CSR stands for general engagement in view of common welfare (e.g., donations). Thus, we can conclude that most executive trainers have a precise understanding of CSR, which is very close to the norm set by institutions and officials (like the EU). Regarding the context of CSR, 63 percent see the closest ties to “Sustainable Management,” followed by “Corporate Citizenship” (18.2 percent). Still 4.5 percent see a connection between CSR and “Corporate Governance” (Fig. 3). As mentioned above, we believe that CSR is a learning program for the whole organization, and the institutionalization thereof exists with multiple connections to organizational drivers. The management executives’ experience is that the whole company has to be aligned to new values, if CSR is to be implemented adequately. The management is responsible, in this case, about 65 percent. Another 20 percent believe that CSR addresses the whole staff, with the aim of implementing a corporate culture that is based on sustainability ideals. Still some 9 percent see corporate communications in the lead. They agree that CSR is a way to influence the company’s image positively. No one actually puts capital markets or recruiting aspects first, Which of those management approaches fits CSR best? Corporate Citizenship

18.2%

Corporate Governance

4.5%

Sustainable Management Corporate Compliance

63.6% 0.0%

I can’t say

6.8%

Other

6,8%

0%

10%

20%

30%

40%

50%

60%

n=47

Fig. 3.

Management Approaches that Fit CSR (Own Survey).

70%

Correlating Leadership Style, Communication Strategy and Management Fashion

101

Thinking of primary target groups: Please choose one out of the following statements concerning CSR-related activities on which you agree most. CSR is mainly a topic for the capital market: journalists and analysts shall become convinced of the future orientation and reliability of the company

0.0%

CSR is mainly a topic for recruiting purposes: The company has to be presented as an attractive employer.

0.0%

CSR is mainly a topic for the staff: It is about implementation of a corporate culture based on sustainability

20.9%

CSR is mainly a topic for corporate communications: The image of the company has to be influenced positively by CSR activities.

9.3%

CSR is mainly a management topic: The whole company has to be aligned on new values.

65.1%

0%

10%

20%

30%

40%

50%

60%

70%

n=44

Fig. 4.

Primary Aims and Target Groups of CSR Implementation (Own Survey).

which are seen as important reasons for implementing CSR programs (cf. Menz & Nelles, 2009; Selter, Koch, & Fechtenhauer, 2009) (Fig. 4). Asked if CSR is more a short-term, medium-term, or long-term issue for value creation, 53.6 percent of the executive trainers view CSR as a longterm issue per se that can be made fruitful for short- and medium-term effects for the company via strategic communication. 36.6 percent do not understand CSR as a proactive strategy, rather as an indirect value driver, that has an influence on the overall legitimacy of the organization. That CSR has no short-term effects and is focused on organizational culture, declare another 19.5 percent. 9.7 percent believe CSR is merely management fashion that will soon leave the management agenda. A further question on the future of CSR leads to the conclusion, that CSR will be institutionalized in most companies within the next 10 years (45 percent), while 30 percent believe that the CSR fashion will peak off but still remain important on a solid level. Seventeen percent expect a stagnation of CSR institutionalization, with only 7 percent report a decreasing importance during the next 10 years. In accordance with German and Swiss management trainers, this development does not depend on the company size. Some 65 percent are convinced that small-sized enterprises feel a similar demand to show their social responsibility like big corporations do. When it comes to how seriously executives are engaged in the institutionalization of CSR, the answers draw a heterogenic picture. Thirty percent

102

LARS RADEMACHER AND NADINE REMUS

believe that executives perceive CSR as a passing fashion they do not have to execute. An equally large group (27.5 percent) are convinced that a lot of executives are deeply devoted to the idea of CSR, but receive no support from the top management. Fifteen percent of the respondents see executives as “CSR non-believers” who have to execute a strategic decision pro CSR that the top management has made. Only 5 percent actually recognize that the executives’ devotion and internal structures are both in place, to foster the institutionalization of CSR in their company a rather disappointing status quo. Moving onward to the question of management styles as a precondition and framework for the institutionalization of CSR, the management trainers are sure that a participative leadership style is the best ground to grow CSR initiatives on (60 percent). The alternatives of an autocratic style or the foundation as grassroots-movement from the staff (e.g., corporate volunteering) both reach only 20 percent in acceptance. In the next part of the survey, we concentrated on the management training business itself. We earlier assumed, that the relevance that executive trainers attribute to a consulting field decides whether they promote it to their clients or not (Fig. 5). According to management trainers, the clients’ interest has increased, but not accordingly to the massive medial interest (49 percent). Thirty-two Thinking of your consulting activities: Do you see an increase in importance regarding topics like CSR, Corporate Culture, Sustainability and Citizenship in the last few years?

My customers do not demand CSR consulting more often than before.

21.6%

The interest of customers has grown, but it is still poorly developed in comparison to the general awareness of these topics in media and society.

45.9%

The customers’ interest in training and consulting has grown strongly.

0%

32.4%

5% 10% 15% 20% 25% 30% 35% 40% 45% 50% n = 44

Fig. 5.

The Development of CSR Consulting (Own Survey).

Correlating Leadership Style, Communication Strategy and Management Fashion

103

percent say they feel an enormous rise of clients’ demand for consulting and training on CSR, while 21 percent cannot confirm a stronger demand. More than 50 percent believe the market for CSR consulting will expand further, but not as much as in recent years. Another 35 percent expect a strong expansion. Only 8 percent believe, CSR consulting is already peaking-off and expect a shrinking market (Fig. 6). As experts on the market side of CSR, consulting management trainers have an insight into leadership programs and executive training, which they observe or are potentially involved in. Unsurprisingly, 68 percent of the executive trainers we asked are sure that CSR is only rarely represented in executive training. Only 8 percent see CSR topics included in leadership programs in high quality, while 24 percent estimate CSR is represented in the current programs, but in low quality (Fig. 7). Asked for an overall estimation of the extent CSR thinking has reached the very heart of enterprises in their country, 64 percent responded that only a few companies support the institutionalization of CSR, while 26 percent believe that the CSR movement has reached most of the companies in their country. Only 5 percent believe CSR is already rooted in the whole national economy. Just 3 percent think CSR has not reached their economy at all.

Please estimate the future importance of CSR for your own practice in consulting and training. The importance of these topics is already peaking off.

8.1%

I expect a growing market for CSR topics, but it will not grow very strongly.

51.3%

Topics like CSR, Corporate Governance and Sustainability will definitely face a growing market.

I see another trend.

0%

35.1%

5.4%

10%

20%

30%

40%

50%

60%

n = 40

Fig. 6.

The Future Development of CSR Consulting (Own Survey).

104

LARS RADEMACHER AND NADINE REMUS Please estimate the current offer of executive-trainings: Is there a significant need for the topics CSR and Corporate Citizenship? CSR is already represented as a topic in executive-trainings in high quality. CSR is represented as a topic in executive-trainings, but without much profoundness. CSR plays a minor role in executive-trainings.

8%

68%

24%

n=40

Fig. 7.

CSR as a Topic in Executive Trainings (Own Survey).

DISCUSSION AND FURTHER RESEARCH In our introduction we argued that the question of how to communicate CSR is influenced or even determined by the relationship between organizational type, organizational environment, leadership style, and its chosen CSR approach. By suggesting a complex set of drivers for the institutionalization, (which is a requirement for CSR communication) we proposed a new concept of understanding and implementing organizational CSR programs, in order to conceptualize a framework for CSR that might later on result in a kind of CSR scorecard for organizational implementation. Angus-Leppan et al. (2010, p. 208) addressed Waldman and Siegel’s (2008) “concern at a lack of research around leadership behavior and CSR.” We follow their example and draw a line between leadership styles and their relation to CSR, on the one hand, and the management fashion discourse on the other because CSR is also discussed under the

Correlating Leadership Style, Communication Strategy and Management Fashion

105

perspective of being a mere management fashion, indicating that a fashion is a phenomenon that soon passes and thus has little influence. This interpretation might leave managers remaining distant toward the idea of CSR implementation. But as Abrahamson (1996) has already shown, management fashions are not simply an aesthetic phenomenon, and furthermore tend to have reasonable influences on managers. The Australian colleagues found it “not at all surprising” that “explicit and implicit CSR coexist in a single organization” (Angus-Leppan et al., 2010, p. 208). While explicit CSR is a good way to create a business case for CSR which is, what institutions like the EU expect from corporations and has potentially positive effects on attracting and recruiting talent “implicit CSR does encourage staff engagement and commitment. Because they produce different organizational outcomes for business, it is not surprising that companies would want the best of both worlds” (ibid.). In recent years the significant rise of explicit CSR has been discussed. Positioning CSR as a business case (e.g., as a part of reputation management, sustainable management) makes it a lot easier to institutionalize. But lacking staff support can soon question the internal credibility of the CSR engagement. And this can for example affect the psychological contract of employment. Staff hired under false pretenses might feel this contract has been violated. “Once this violation is discovered, employee loyalty and commitment may be tested” (Angus-Leppan et al., 2010, p. 209). Thus, we can concede that a minimum of value-based CSR is necessary to keep a balance between coherent PR strategy and cultural foundation, to use the existing conflict between implicit and explicit CSR as stimulation rather than destructive force. Angus-Leppan et al. (2010, p. 209) suggested transformational leadership could be suitable to deal with the conflict of these two types. We used a quantitative approach to find out a broader tendency in German and Swiss enterprises by asking management trainers about their experience with CSR in their client’s companies and their own consulting business. In our findings CSR is mainly seen within the context of sustainability. A majority of the management trainers refer to this connection. The link between CSR and governance or compliance issues (which is part of the latest scientific discussion) plays no significant role in the discourse of practical management. The close relationship between responsibility and citizenship discourse are viewed as less important. Also less than a quarter of the trainers we asked (18.2 percent) believe this is the best fit. In our view this reflects the strong position sustainability tasks have in the medial discussion as well as in management agendas. It is a product of the fashion constellation.

106

LARS RADEMACHER AND NADINE REMUS

Management trainers’ opinion reflects the current status of CSR as a task on the management’s agenda (65 percent). Less than a quarter (20 percent) believes that CSR is primarily a question of cultural implementation. If we add the fact that recruitment aspects or the capital markets’ perspective were not named at all and even corporate communications achieves low marks (9 percent) this shows that executive trainers execute a conservative and implicit CSR approach that still is close to a more autocratic leadership figure. But interestingly, management trainers believe that it is by far easier to institutionalize CSR in an organization that follows participative leadership style, which Angus-Leppan et al. (2010) saw connected to a more value-based implicit CSR concept. For us this is an indirect reference to transformational leadership. The transformational leader is powerful and sometimes autocratic, but on the other hand culture-oriented and is seeking support for the changes under way. With respect to their own consulting, business management trainers told us they see a solid future development of demand for consulting on CSR. Most of them are sure that this will rapidly change companies in Germany and Switzerland. The German and Swiss consultants estimated quite a similar development with no national deviance. But nevertheless the public hype with CSR distorts the lasting relevance. Thus, a reasonable number of management trainers expect declining attention. Most alarming for us were two findings. Management trainers play a role in leadership programs as well as in individual guidance and alignment of executives. If they tell us CSR and Corporate Citizenship still have no roots in leadership programs (and if so only on a superficial level), this is an indicator of how dispensable CSR still is on a wider scale. And within organizations CSR implementation has to overcome several obstacles. One lies with underestimating management fashions, which shows a gap between what is practiced and what the top management preaches. Another obstacle is that CSR support at top management level is paid no more than lip service. Executives can interpret this as a violation of the psychological employment contract. Hence, it is not surprising that most of the management trainers we asked believe that there is just a minority of enterprises in Germany and Switzerland, who already have CSR institutionalized in a convincing way. So we reach a twofold conclusion. In most of the scholarly literature on CSR, the role of organizational learning is still not the focus of the discussion in the executive’s role in institutionalizing CSR (one of the few is Hansen (2011) who suggests a KPI system). Most of the literature we discussed does not even strive to answer the question of how to implement

Correlating Leadership Style, Communication Strategy and Management Fashion

107

CSR in practice or usually stays on a superficial or abstract level. The discussion of institutionalization either focuses on organizational or contextual/normative drivers. Establishing a holistic view is a relevant task for future research. The other conclusion is that as Jonker and Marberg (2007) proposed a common ground for the conceptualization is still missing. Neither in academia nor in corporations (let alone between academia and corporations) is a way of thoroughly conceptualizing CSR institutionalization established. Consequently, the conceptual basis for CSR communication is undetermined. A further step should be to complement the drivers we suggested with a value creation approach of CSR to connect the implementation side with an outcome or outflow perspective. We hope the proposed idea of developing a tool, like a CSR scorecard, build on our driver systematic and can contribute to a better understanding of the relationship between organization management type and CSR implementation approach (cf. Hansen, 2011). If this understanding grows, we can expect it to have a huge impact on CSR communication.

NOTE 1. The term “strategic” is used in various ways in the CSR discussion. While Matten and Moon (2008) use “strategic” to qualify externally driven, explicit CSR, Porter and Kramer (2002, p. 57) argue that the focus on external consistency of CSR initiative leads to CSR portfolios that are “almost never truly strategic.”

ACKNOWLEDGMENTS We would like to thank Yasmin Patel-Agarwal for helpful comments on a previous version of this chapter.

REFERENCES Abrahamson, E. (1996). Management fashion. Academy of Management Review, 21(1), 254 285. Abrahamson, E., & Fairchild, G. (1999). Management fashion: Lifecycles, triggers, and collective learning processes. Administrative Science Quarterly, 44(4), 708 740. Angus-Leppan, T., Metcalf, L., & Benn, S. (2010). Leadership styles and CSR practice: An examination of sensemaking, institutional drivers and CSR leadership. Journal of Business Ethics, 93, 189 213.

108

LARS RADEMACHER AND NADINE REMUS

Basu, K., & Palazzo, G. (2008). Corporate social responsibility: A process model of sensemaking. The Academy of Management Review, 33(1), 122 136. Benders, J., & van Veen, K. (2001). What’s in fashion? Interpretative viability and management fashions. Organization, 8(1), 33 53. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of social responsibility. Academy of Management Review, 32(3), 946 967. Carrol, A. B. (1979). A three-dimensional conceptual model of corporate social performance. Academy of Management Review, 4, 497 506. Carrol, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34, 39 48. Carrol, A. B. (2008). A History of corporate social responsibility: Concepts and practices. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 19 46). Oxford: Oxford University Press. Carson (Phillips), P., Lanier, P., Carson, K. D., & Guidry, B. (2000). Clearing a path through the management fashion jungle: Some preliminary trailblazing. Academy of Management Journal, 43(1), 1143 1158. Curbach, J. (2009). Die corporate-social-responsibility-bewegung. Wiesbaden: VS. den Hond, F., & de Bakker, F. G. A. (2007). Ideologically motivated activism: How activist groups influence corporate social change activities. Academy of Management Review, 32, 901 924. Di Lorenzo, V. (2007). Business ethics: Law as a determinant of business conduct. Journal of Business Ethics, 3, 275 299. Eisenegger, M. (2012). Moral, Recht und Reputation. In L. Rademacher & A. Schmitt-Geiger (Eds.), Litigation-PR: Alles was Recht ist. Zum systematischen Stand der strategischen Rechtskommunikation (pp. 105 119). Wiesbaden: Springer VS. Elkington, J. (1999). Cannibals with forks: The tripple bottom line of 21st century. Oxford: Capstone. Europa¨ische Kommission, Generaldirektion Bescha¨ftigung und Soziales. (2001). Gru¨nbuch. Europa¨ische Rahmenbedingungen fu¨r die soziale Verantwortung der Wirtschaft. Luxemburg. European Comission, Directorate-General for Employment and Social Affairs. (2003). Mapping instruments for corporate social responsibility. Luxembourg. Freeman, R. E. (2013). A new story of business. In K. Lintemeier, A. Thiessen, & L. Rademacher (Eds.), Stakeholder integration (pp. 4 5). Munich: MHMK University Press. Freeman, R. E., Harrison, J., & Wicks, A. (Ed.). (2007). Managing for stakeholders. New Haven, CT: Yale University Press. Gemmil, G., & Oakley, J. (1992). Leadership: An alienating social myth? Human Relations, 45(2), 113 130. Habisch, A., Jonker, J., Wengner, M., & Schmidtpeter, R. (Eds.). (2005). Corporate Social Responsibility across Europe. Berlin: Springer. Hannan, M. T., & Freeman, J. (1984). Structural interia and organizational change. American Sociological Review, 49, 149 164. Hansen, E. G. (2011). Responsible leadership systems. An empirical analysis of integrating corporate responsibility into leadership systems. Wiesbaden: Gabler. Jackson, B. (2001). Management fashion and management gurus: A dramatistic inquiry. London: Routledge. Jackson, B., & Rigby, D. (2000), Bringing e-business to New Zealand: The role of the ‘top five’ management consulting firms. Paper presented at the European Institute of Advanced Studies in Management, Brussels.

Correlating Leadership Style, Communication Strategy and Management Fashion

109

Jarzabkowski, P. (2005). Strategy as practice An activity based approach. London: Sage. Jonker, J., & Marberg, A. (2007). Corporate social responsibility quo vadis? A critical inquiry to discursive struggle. Journal of Corporate Citizenship, 27, 107 118. Kurucz, E. C., Colbert, B. A., & Wheeler, D. (2008). The business case for corporate social responsibility. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 83 112). Oxford: Oxford University Press. Lautermann, C., & Pfriem, R. (2011). Corporate social responsibility in wirtschaftlichen Perspektiven. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR. Kommunikationswissenschaftliche Grundlagen, disziplina¨re Zuga¨nge und methodische Herausforderungen (pp. 281 304). Wiesbaden: VS. Lydenberg, S. (2005). Corporations and the public interest: Guiding the invisible hand. San Francisco: Berret-Koehler. Martinuzzi, A., & Zwirner, W. (2010). Transformational CSR Lern- und Dialogfa¨higkeit als strategische Wettbewerbsfaktoren nachhaltigen Wirtschaftens. In K. H. Prammer (Ed.), Corporate sustainability (pp. 156 173). Wiesbaden: Gabler. Matten, D., & Moon, J. (2005). United Kingdom: An explicit model of business society relations. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), Corporate social responsibility across Europe (pp. 51 66). Berlin: Springer. Matten, D., & Moon, J. (2008). ‘Implicit’ and ‘explicit’ CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, 33, 404 424. Mele´, D. (2008). Corporate social responsibility theories. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 47 82). Oxford: Oxford University Press. Menz, K.-M., & Nelles, M. (2009). Corporate social responsibility: Wird nachhaltigverantwortungsvolle Unternehmensfu¨hrung am Fremdkapitalmarkt honoriert? Eine kritische note. Finanz Betrieb, 4, 189 199. Mintzberg, H. (1990). The design school: Reconsidering the basic premises of strategic management. Strategic Management Journal, 11(1), 171 195. Muthuri, J. N., & Gilbert, V. (2010). An intitutional analysis of corporate social responsibility in Kenya. Journal of Business Ethics, 98, 467 483. Owen, D. L., & O’Dwyer, B. (2008). Corporate social responsibility: The reporting and assurance dimension. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 384 409): Oxford University Press. Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 57 68. Rademacher, L., & Ko¨hler, A. (2012). More than a legal issue? Compliance communication as a tool for reputation management. Sinergie, rivista di studi e ricerche, 88, 35 52. Raupp, J., Jarolimek, S., & Schultz, F. (2011). Corporate social responsibility als Gegenstand der Kommunikationsforschung. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR. Kommunikationswissenschaftliche Grundlagen, disziplina¨re Zuga¨nge und methodische Herausforderungen (pp. 9 18). Wiesbaden: VS. Richter, U. H. (2011). Drivers of change: A multiple case study on process of institutionalization of corporate responsibility among three multinational companies. Journal of Business Ethics, 102, 261 279. Rolfsen, M. (2004). The tyranny of trends? Towards an alternative perspective on fads in management. In D. Tourish & O. Hargie (Eds.), Key issues in organizational communication (pp. 112 129). London: Routledge.

110

LARS RADEMACHER AND NADINE REMUS

Russo, A., & Tencati, A. (2009). Formal vs. informal CSR strategies: Evidence from Italian micro, small, medium-sized, and large firms. Journal of Business Ethics, 85, 339 353. Schein, E. H. (1992). Organizational culture and leadership. San Francisco, CA: Jossey-Bass. Scherer, A. G., & Palazzo, G. (2007). Toward a political conception of corporate responsibility business and society seen from a Habermasian perspective. Academy of Management Review, 32, 1096 1120. Schultz, F. (2011). Moralische und morlisierte Kommunikation im Wandel: Zur Entstehung von corporate social responsibility. In J. Raupp, S. Jarolimek, & F. Schultz (Eds.), Handbuch CSR. Kommunikationswissenschaftliche Grundlagen, disziplina¨re Zuga¨nge und methodische Herausforderungen, VS, Wiesbaden (pp. 19 42). Selter, S., Koch, S., & Fechtenhauer, D. (2009). Der Mehrwert von CSR. Auswahlkritierium von Arbeitnehmern bei der Wahl eines Arbeitsplatzes. Wirtschaftspsychologie 2, 67 73. Sharp, Z., & Zaidman, N. (2010). Strategization of CSR. Journal of Business Ethics, 93, 51 71. Siggelkow, N. (2002). Evolution towards fit. Administrative Science Quarterly, 47, 125 159. Stehr, N. (2007). Die Moralisierung der Ma¨rkte. Eine Gesellschaftstheorie. Frankfurt am Main: Suhrkamp. Swanson, D. L. (2008). Top managers as drivers for corporate social responsibility. In A. Crane, A. McWilliams, D. Matten & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 227 248). Oxford: Oxford University Press. Teach, E. (2005). Two views of virtue. The corporate social responsibility movement is picking up steam. Should CFOs worry about it? CFO, 21(17), 31 34. United Nations World Comission on Environment and Development. (1987). Our Commun Future/Bruntland Report. New York, NY. Van Marrewijk, M. (2003). Corporate sustainability conference 2002: The impact of CSR on management disciplines. Journal of Business Ethics, 44, 89 93. Waldman, D. A., & Siegel, D. (2008). Defining the socially responsible leader. The Leadership Quarterly 1, 117 131. Waldman, D. A., Siegel, D. S., & Javidan, M. (2006). Components of CEO transformational leadership and corporate social responsibility. Journal of Management Studies, 43(8), 1703 1725. Wartick, S. L., & Cochran, P. L. (1985). The evolution of the corporate social performance model. Academy of Management Review, 10, 758 769. Wehmeier, S., & Schultz, F. (2011). Communication and corporate social responsibility: A storytelling perspective. In Ø. Ihlen, J. L. Bartlett, & S. May (Eds.), The handbook of communication and corporate social responsibility (pp. 467 487). Chichester: Wiley-Blackwell. Weick, K. E. (1995). Sensemaking in organisations. Thousand Oaks, CA: Sage. Wood, D. (1991). Corporate social performance revisited. Academy of Management Review, 16, 691 718. Yuan, W., Bao, Y., & Verbeke, A. (2011). Integrating CSR initiatives in business: An organizing framework. Journal of Business Ethics, 101, 75 92. Zorn, T. E., & Collins, E. (2007). Is sustainability sustainable? Corporate social responsibility, sustainable business, and management fashion. In S. May, G. Cheney, & J. Roper (Eds.), The debate over corporate social responsibility (pp. 405 416). Oxford: Oxford University Press. Zu Knyphausen-Aufseß, D., & Picot, A. (2010). Unternehmensethik aus der Perspektive der Organisationsforschung und-lehre Ein selektiver U¨berblick. Die Unternehmung, 62(4), 391 421.

A MODEL FOR EVALUATING CORPORATE ENVIRONMENTAL COMMUNICATION Magnus Fredriksson and Eva-Karin Olsson ABSTRACT Purpose The chapter proposes a model for evaluating environmental information based on informativity as a measurement of whether corporate environmental disclosures provide readers with information relevant for making reasonable assessments of companies’ environmental work. Methodology/approach On a general level, informativity denotes a set of universal principles for information qualities. In order to make informed assessments, information ought to provide readers with information on specific projects, outcome, and long-term impact. The model proposed herein allows researchers and practitioners to quantify corporate environmental information based on a set of key textual variables. By allowing for the quantification of qualitative information, the model allows for comparative studies of CSR communication across, for example, companies, sectors, and nations.

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 111 130 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006024

111

112

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

Research implications The model is applicable for corporations with an interest to evaluate their performance by applying standardized and set principles. .

Practical implications The model can be used as a tool for consumers and investors alike in making better and more informed assessments about a corporation’s environmental initiatives and performances. This application is particularly relevant for stakeholders with an interest in developing statistical data for assessing and benchmarking environmental communication. Originality The chapter proposes a model for evaluating environmental information as a measurement of whether corporate environmental disclosures provide readers with information relevant for making reasonable assessments of companies’ environmental work. Keywords: Corporate environmental disclosures; informativity; corporate social responsibility communication

Environmental risks such as climate change, pollution, desertification, and species extinction are all growing concerns impacting all areas of society such as social life, science, economy, and security policies. To Beck (1995, 1998), environmental risks are the unintended side-effects of the Industrial Revolution. Beck coined the concept “Risk society” to describe the importance of this transformation characterized by complexity, multiplicity, uncertainty, and ambivalence. He argues that we have entered an area of “sub-politics” a form of political participation without clear ideological reference, where economics and politics is merged, transforming the market to a political arena with environmental responsibility as one of several key issues. This shift can be seen in, for example, the increase of corporate environmental communication aiming to reach not only investors with an environmental agenda, but also new stakeholders such as environmental groups and political actors. The move from shareholder to stakeholder relations in connection to CSR and environmental communication has been widely studied. Within the field of accounting, the focus has been on developing models and system in order for corporations to communicate CSR and sustainability issues on a practical level such as balanced scorecard (Kaplan & Norton, 1992; 2004), Sustainability Reporting Guidelines (GRI, 2002, 2000 2006),

A Model for Evaluating Corporate Environmental Communication

113

or sustainability evaluation and reporting system (SERS) (Perrini & Tencati, 2006). Likewise, communication scholars have emphasized the need for CSR and environmental communication to develop new theoretical communicative venues. For example, Ihlen (2008) proposes a conceptual move for the study of environmental communication away from the concentration on stakeholder relations to a perspective where the structural conditions of the public sphere are embraced. This approach stresses the need for corporations to understand and keep in touch with current social norms and expectations. In line with this, Schouten and Remme (2006) argue for organizations and stakeholders to engage in joint sense-making processes allowing for corporations to understand stakeholders concerns. The model proposed in this chapter should be understood as an answer to these calls, as it takes into account the discursive preconditions for public communication rather than market communications. It does so by using a conceptualization of “informativity” as a measurement of whether corporate environmental disclosures provides its readers with knowledge relevant for making informed assessments about companies environmental work (c.f. Asp, 1986). In accordance with this, high levels of informativity are defined and measured by its ability to guide individuals in their assessments. In contrast, low informativity is defined as disclosures with limited or lack of relevance for individuals’ assessments. In the following, we will present the model and show how it can applied to make comparative analysis of corporations environmental communication but also be used as a tool for auditors, stakeholders, as well as corporations themselves to evaluate environmental disclosures.

ENVIRONMENTAL COMMUNICATION IN RISK SOCIETY As previously stated, Beck proposes that we live on the edge of a “risk society,” where risks have become a factor organizing social life, science, economy, and politics, which create new institutional preconditions and principal formations. The unexpected consequences of modernity and the Industrial Revolution, such as climate change, large-scale technological break-downs, and financial disruptions, have changed the preconditions for politics which was characterized by strong nation states and clear demarcations between political and business actors during modernity. Further, these unintended side-effects have changed the conditions for decision

114

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

making which has become dominated by the expectations of unexpected side-effects resulting in public demands for reflexivity self-questioning on individual, corporate, and political levels. As a result we can see new forms of political participation subpolitics a form of political participation without clear ideological reference, where economics and politics is merged, transforming the market to a political arena with environmental responsibility as one of the several key issues (Beck, Bonss, & Christoph, 2003). To meet these demands and expectations, a considerable and increasing number of corporations have chosen to incorporate environmental aspects in their business models. Communication is perceived as an essential component for gaining legitimacy in this development (Fredriksson, 2008, 2009). This can, for example, be illustrated by the fact that environmental argument these days are used in product advertising, as core corporate values, as well as buzz words on websites and in annual reports (cf. Adams & Frost, 2006; Boiral, 2007; Branco & Rodrigues, 2006; Gill, Dickinson, & Scharl, 2008). However, corporations’ sincerity and honesty when it comes to proclaimed environmental concerns are often questioned where a returning argument is that corporate environmental communication tends to be more about self-assertion rather than compensation for the lack of actual actions (Adams, 2002; Cerin, 2002; Ihlen, 2009; Jensen, 2001; Matten, 2004; Milne, Kearins, & Walton, 2006; Welford, 1997). It is thus seldom that corporations adhere to so-called strong positions in communicating the environment (as opposed to weak) in being actively progressive and social-oriented (Dobers & Springett, 2010; Turner, 1993). Yet, Frandsen and Johansen (2001) argue that corporate environmental communication entails features from both commercial and political discourses even though the principal aim is commercial - as the discourse has the nonintended outcome of addressing political expectations which often makes it more nuanced than intended. Still, the general scholarly criticism toward the corporate environmental communication argues that there are few signs of corporations adhering to their role as responsible partners in the risk society. A general shortcoming in the research on corporate environmental communication is the lack of comparative studies (for exceptions see Gill et al., 2008; Ihlen, 2009; Kim & Rader, 2010; Tixier, 2003). Comparisons are made difficult due to the lack of transparency in the information provided as well as clearly defined indicators. These perceived shortcomings have lead to various calls for joint standards on which to sustainability

A Model for Evaluating Corporate Environmental Communication

115

communication can be measured in order to facilitate comparisons across companies (Aras & Crowther, 2009; Birth, Illia, Lurati, & Zamparini, 2008; Crowther, 2006; Elkington, 1998; Perrini & Tencati, 2006; Schoenberger, 2000). Yet, these calls for standards have mostly dealt with how to integrate environmental corporate communication into traditional financial accounting rather than focusing on how to evaluate communication as such (Dawkins, 2004).

ASSESSING INFORMATIVITY The model proposed herein is an attempt to develop a model that makes it possible to compare environmental communication across companies. In focusing on informativity we take a normative stance in which we define the quality of environmental communication as disclosures providing investors and consumers with information on to which they can make informed assessments of corporations’ environmental impact. The model allows us to identify the various positions corporations take in discussing and providing information on their role as environmental risk producers as well as compare these across corporations. The model presented has been used earlier to evaluate other types of disclosures and has been proven to produce relevant and fruitful results (c.f. Asp, 1986; Fredriksson, 2000; Holmberg & Asp, 1984). The concept of informativity has its roots in information theory and a rather materialistic view on communication (cf. Shannon & Weaver, 1949). When applied here we have opened up the concept to incorporate individuals’ interpretations and use of information. In line with this we define informativity as the quality of information measured by its ability to guide individuals in making well-grounded assessments. Hence, the concept of informativity denotes three dimensions of universal informational qualities (Asp, 1986). • Frequency Disclosures relevant for individual’s assessments about corporation’s environmental work has to be of certain frequency, if it is not it will disappear in an overflow of irrelevant information. • Scope A high frequency could easily be obtained by the repetition of one aspect (i.e., what actions the company has taken within the environmental field); therefore the number of aspects covered has to be taken into account.

116

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

• Context To be able to judge the results, the conditions and the endurance of the work performed by the company in question must be accounted for. This means that information must contain action-oriented information as well as information on background, motives, and preconditions. Each of these three dimensions is essential but it is the combination of all three that makes the disclosures informative. An Application of the Model To show how the model works we have conducted a limited study of the environmental disclosures from 20 Swedish corporations listed on the Stockholm stock exchange. To secure a material with sufficient substance we made a random selection of 20 corporations from “large cap,” i.e. the largest corporations listed. The companies included are as follows (Table 1). Table 1.

Twenty Corporations Listed on the Stockholm Stock Exchange and their Sectoral Belonging.

Company ABB Assa Abloy Astra Zeneca Atlas Copco Boliden Ericsson Handelsbanken H&M Investor Nordea Sandvik SCA Scania SEB Skanska SKF Swedbank Tele2 TeliaSonera Volvo

Sector Industrials Industrials Health Care Industrials Materials IT, Hardware Finance Consumer Finance Finance Industrials Materials Industrials Finance Industrials Industrials Finance Telekom Telekom Industrials

A Model for Evaluating Corporate Environmental Communication

117

The study is based on the corporation’s annual reports from 2006 and the disclosures provided under the sections “Social Responsibility”, “Sustainable Development,” or similar. If there was a separate “Sustainable report” or similar, it has been included if the company referred to it as a part of its annual report and if the account is based on environmental activities under a confined period of time.1 The analysis is performed in three steps. Step 1 Defining relevant information. “Frequency”, “Scope,” and “Context” are theoretical concepts that can be measure in different ways. Here we decided to use a conceptualization where we focus on aspects of relevance for individual’s possibilities to evaluate the corporations’ work in the environmental field without further disclosures. We started with the question “What do one need to know to be able to evaluate what a corporation does?” Thereafter we worked heuristically finding 12 information aspects which cover vital areas related to the environmental measures undertaken by the corporation in question. Based on this we formulated 12 questions used as a template for the content analysis. The 12 questions are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

What actions have the company taken within the environmental field? How is the company conducting its environmental work? What tools is the company using in its environmental work? When did (or will) the company perform its environmental work? Where has (or will) the company undertaken its environmental work? What are the results of the environmental work? What causes can help explain the outcome? Why is the company engaged in environmental work? Who is responsible for the company’s environmental work? What goals does the company have with its environmental work? Who does the company perceive as its stakeholders in environmental issues? 12. Which are the preconditions for the company’s environmental work providing the background to their work. Question 7 12 are defined as background questions. Step 2 Categorizing the material. When the questions were defined, next step was to identify all paragraphs about environmental issues in the annual reports. Thereafter these paragraphs were categorized depending on the question(s) they answered. Each of the 12 questions above is directed toward each paragraph and if it is answered it has been marked accordingly. One question is marked not

118

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

more than once for each paragraph. Theoretically, it is therefore possible for one paragraph to cover 12 answers. In order to qualify as an answer, the information had to be specific. This means that general statements such as “NN’s environmental policy states that NN should reconsider environmental consequences as far as it is possible” weren’t included. However, all paragraphs containing environmental issues were counted. Step 3 Calculating frequency, scope, context, and informativity. When all paragraphs were categorized, frequency, scope, context, and informativity were calculated using the following formulas: • Frequency the total number of answers divided by the total number of paragraphs • Scope the number of different questions answered (0 12) divided by 12 • Context the sum of answers for question 1 6 divided by the sum of answers to question 7 12 where the highest sum were used as denominator. • Informativity the mean for frequency, scope, and context To illustrate the calculations, we have used the results from Boliden as an example (Table 2).

Table 2.

An Illustration of the Number of Answers Provided in Corporations Environmental Disclosures.

Question What How Tools When Where Results Cause Why Who Goals Stakeholders Background

Number of Answers 50 29 23 59 47 29 3 6 3 9 15 18

Total

293

Number of paragraphs

139

A Model for Evaluating Corporate Environmental Communication

119

With the following calculations as a result: 293/139 = 2.11 12/12 = 1.00 0.23 2.11 + 1.00 + .023 = 3.33; 3.33/3 = 1.11

Frequency: Scope: Context: Informativity:

RESULTS In this section we will illustrate the model by discussing the results we gained from our analysis of the 20 corporations mentioned above. For a start we can conclude that environmental issues have become essential to a number of corporations and out of 20 included in this exemplifying study 18 provide disclosures about positions, performances, and motives for their environmental work (Table 3). As can be seen from the table above, the actual space provided to environmental information varies considerable. Three companies stand out in terms of the number of paragraphs they dedicate to environmental communication ABB (230), SCA (140), and Boliden (139). All three produce a separate account on social responsibility. Assa Abloy, AstraZeneca, Ericsson, and Sandvik also publish separate reports but the space provided to environmental issues is considerable lower. The large amount of environmental information provided by ABB, SCA, and Boliden can be explained by the fact that they are all engaged in business with direct effects on the environments. However, the relation is not clear cut. Both Skanska and Scania are amongst the companies devoting less space to environmental concerns which is quite surprising. Skanska is involved in a business requiring large resources and have a track-record of being involved in large environmental scandals (as the discharge of toxic fluids while building the tunnel through Hallandsa˚sen in Sweden). Further, one can expect Scania a producer of heavy trucks, buses, and engines to engage in the climate change debate with its focus on transportation. Types of Questions Answered in the Corporations’ Disclosures After this overview we move on to see what answers the corporations provide in their disclosures (Table 4).

120

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

Table 3. The Quantity of Paragraphs Including Environmental Disclosure in the Annual Reports from 2006 of 20 Swedish Listed Corporations (Quantity).

ABB Assa Abloy Astra Zeneca Atlas Copco Boliden Ericsson Handelsbanken H&M Investor Nordea Sandvik SCA Scania SEB Skanska SKF Swedbank Tele2 TeliaSonera Volvo Mean

Paragraphs

Answers

230 41 44 46 139 81 14 19

371 70 99 106 293 181 31 38

1 63 140 43 1 23 67 12 2 6 66 52

2 124 295 64 2 59 174 37 0 18 125 104

Based on the results presented in Table 4 we can see that there are two aspects dominating the corporation’s environmental information: what has been done and when it was done. In total, these two aspects account for 40 percent of overall content. Other aspects provided considerable space is how the company in question conducted its environmental work, with which tools, with what results, as well as the main stakeholders. On the other hand, there is limited information on the motives for the actions taken as well as the underlying causes. In total, only 1 percent of overall content focused on these issues. As already mentioned, the majority of companies focused on answering the question on what they are doing in the environmental field. The way they described their environmental work varied but it was obvious that they tried to portray themselves as competent and active. One example of this was how descriptions related to how the corporations worked with reducing their environmental footprints were kept at

3 1 4

1 1 2 15 1

100 371

Sum N

100 70

10 24 11 29 6 11

25 15 16 10 6 9

100 99

9 15 6

18 16 3 15 5 8 3 1

100 106

2 9 1

16 15 13 20 3 18 3

100 293

17 10 8 20 16 10 1 2 1 3 5 6

100 181

7 12 1

24 7 13 18 5 10 2 1

Assa- Astra- Atlas- Boliden Ericsson Abloy Zeneca Copco

What How Tools When Where Results Cause Why Who Goals Stakeholders Background

ABB

100 31

23

3

16 26 3 10 10 10

Handelsbanken

100 38

5 18 3

3

18 32 3 13 3 3

0

100 2

50

50

100 124

6 6

2

25 10 7 22 11 11

100 295

16 11 8 17 6 14 1 3 1 2 9 11 100 64

11 6

3

14 11 8 20 6 20

100 2

50

50

100 59

20 2

15 19 8 14 10 12

100 174

2 8 3

21 11 20 11 9 12 2 1

100 37

5 22

11 24 8 19 3 8

100 0

H&M Investor Nordea Sandvik SCA Scania SEB Skanska SKF Swedbank Tele2

100 18

17

11 11

17 17 6 22

100 125

2 1 2 10 7

16 14 14 19 6

Telia Volvo Sonera

100 2089

19 13 11 19 8 1 1 1 1 3 11 4

All

Table 4. The Distribution of Answers Regarding Environmental Work in the Annual Reports from 2006 of 20 Swedish Listed Corporations (Percent).

122

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

a general level. For example, Scania wrote under the headline Scania in society: Scania work to continuously improve the work environment and to reduce the environmental impact of its production. Thus, the environmental impact is foremost taking place when its products are put in use. To Scania, as a manufacturer of vehicles, it is evident that we have to work towards reducing emissions, noise and personal injuries in traffic and to contribute to long term sustainable development (p. 26).

Some of the companies provided more in-depth descriptions of their actions. One such example is Sandvik which highlighted their handling of chemicals: Environmental damaging chemicals are used in a limited and well confined extent and these are taken care of after use in an environmental friendly manner. Trikloretylen is still used as degreaser for some of the production plants. However, during 2006, trikloretylen was abandoned in Sandvik Material Technology’s pipe factory in France (p. 80).

Another example is AstraZeneca, which includes a discussion on how their new asthma medicine contributes to carbon emission. However, the general feature was that corporations brought forward stories of success and in line with this we saw very few examples were problems, or lack of actions, were accounted for. Another dimension generating considerable attention was the question of how the companies conduct their environmental work. Thus, this dimension was more varied in terms of the amount of information provided whereas the actual descriptions have the same general character as the what dimension discussed above. For example, Hennes & Mauritz devoted considerable space to this dimension (32 percent) whereas the character of the information provided had a general character such as in the example below: Last year we mixed approximately 30 tones of ecological cotton in our clothes. Our goal for 2007 is to mix at least 100 tones ecological cotton in selected garments. Besides, H & M will in 2007 launch collections with 100 per cent ecological cotton (p. 43).

Again, it represents a typical general statement answering the how question. Another dimension which received considerable attention was Tools where the variations between companies in terms of the amount of information provided was small. The companies providing the largest share of information was SKF (20 percent) followed by ABB (16 percent) and Volvo (14 percent). The smallest amount of information (3 percent) besides Investor, Nordea, and SEB, which did not provide any information was provided by AstraZeeca, Handelsbanken, and Hennes & Mauritz.

A Model for Evaluating Corporate Environmental Communication

123

In general, the 3 percent respondents were devoted to ISO-certifications, environmental management systems, education, and technical solutions. The stakeholder dimension received a fare amount of space where the corporations specified their stakeholders, partners, and various interest groups. The companies devoting the largest share of space to this dimension were Handelsbanken (23 percent), Swedbank (22 percent), and Skanska (20 percent). Another feature of the discourse produced by the companies was the explicit references to time presented in form of graphs illustrating time frames and results. Whereas the actual presentations were quite similar few companies used the same accounting principles. There are for example references to Global Reporting Initiative (GRI) but no one adheres to the principles fully. What can further be discerned from the annual reports was the lack of clearly stated goals. The only company diverging from this tendency was Astra Zeneca, which accounted for a variety of goals in different fields. In line with this, all annual reports demonstrated a general lack of descriptions in relation to causes and as a consequence where the results of their environmental work were not placed in a wider context. The only exception here is Telia (11 percent) which is mainly a consequence of the company being sparse with environmental information in general. The lack of clearly stated goals and causes resulted in limited information about the geographic location of activities under taken. Yet there were some exceptions, such as Boliden, which very carefully described their work with enlarging of the plant in Harjavalt. However, there was no information available on whether the operation should be understood as an example of how the companies work with all their plants or if Harjavalta was a special case. The last aspect was background, which here relates to descriptions of the properties of different subjects, how they impact on the environment, and what forces companies to use these despite their dangerousness. In general, there were few companies which focused on this dimension. Nine companies excluded it altogether and the others chose to prioritize other aspects. Only SCA (11 percent) gave considerable space to background information. Taken together we can conclude that the majority of companies give priority to a smaller number of issues and leave others unanswered. There were no companies, except for SCA, that touched upon all aspects. SCA, Astra Zeneca, and Volvo were also the companies with the most equal distribution between the various aspects. We can also conclude that most descriptions were general to its nature. There were many general references

124

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

to corporate social responsibility, sustainability and similar concepts but few discussions on overall principles. Frequency, Scope, Context, and Informativity The last step in the model has been to use the answers to the 12 questions to calculate frequency, scope, context, as well as informativity (Table 5). Frequency refers to how frequent the corporations account for answers on the 12 questions stated above. As can be seen from the table, 10 out of 20 companies addressed more aspects than the mean but variations are vast. Besides Investor and Tele2 which did not account for any environmental information ABB (1.61), Assa Abloy (1.71), Boliden (2.11), Scania (1.49), SEB (2.00), and Volvo (1.89) were the corporations addressing the smallest amount of the dimensions. In general, the information Table 5. The Frequency, Scope, Context and Informativity of Environmental Discourse in the Annual Reports from 2006 of 20 Swedish Listed Corporations. Frequency

Scope

Context

Informativity

ABB Assa Abloy Astra Zeneca Atlas Copco Boliden Ericsson Handelsbanken H&M Investor Nordea Sandvik SCA Scania SEB Skanska SKF Swedbank Tele2 TeliaSonera Volvo

1.61 1.71 2.25 2.30 2.11 2.23 2.21 2.00

0.92 0.67 0.92 0.75 0.92 0.92 0.67 0.83

0.25 0.09 0.52 0.18 0.23 0.31 0.35 0.41

0.93 0.82 1.23 1.08 1.09 1.15 1.08 1.08

2.00 1.97 2.11 1.49 2.00 2.57 2.60 3.08

0.17 0.75 0.92 0.75 0.17 0.67 0.92 0.67

0.00 0.15 0.38 0.25 1.00 0.28 0.18 0.37

0.72 0.96 1.14 0.83 1.06 1.17 1.23 1.37

3.00 1.89

0.58 0.75

0.38 0.33

1.32 0.99

Mean

1.96

0.72

0.31

0.96

A Model for Evaluating Corporate Environmental Communication

125

provided focused on general descriptions and objectives of their environmental work without accounting for specific principles, methods, or results. At the other end of the continuum, Swedbank (3.08), Telia (3.00), and SKF (2.60) were the companies that included most aspects in their environmental communication. In contrast to the former group, these companies provided a higher frequency of more specific information regarding preconditions, approaches, and results of their environmental work. The differences between the two companies with the highest respective lowest frequency were 1.59. In other words; to receive as much information about Scania’s environmental work as SwedBank’s one have to read one and a half page instead of one. Scope refers to the level of variation within the companies’ annual reports. A company that chooses to repeatedly report a lesser amount of aspects will receive a low scope whereas companies reporting a higher amount of aspects will receive a high scope. Nine companies demonstrate a scope below mean. The disclosures provided by these companies was to a large extent one-sided in contrast to the companies with the highest scope that all accounted for a variety of aspects in their environmental disclosures. Context refers to the relationship between information about performances and background information. A company solely focusing on performances and results will present less contextual information as opposed to companies which also describe preconditions and motives for their environmental work. In total, 11 companies performed under mean (.31). This means that these companies were foremost focusing on what they are doing, how they have done it, as well as the results obtained. The companies with most contextual information, AstraZeneca (.52), H&M (.41), and SEB (1.00), took the information one step further in also accounting for stakeholders, responsible persons within the organization and goals which in different ways gives a fuller picture of their environmental work. It should thus be noted that SEB only account for two different aspects. If we exclude SEB, the difference between the companies providing the most and the least contextual information was .25, or put differently, one page in Astra Zeneca’s annual report consisted of more than 25 percent more background information compared to a page in Assa Abloy’s material. The above characteristics, frequency, scope, and context are all important aspects but it is first when we bringing them together we will be able to say something substantially about the informativity in these corporations’ environmental discourse. Based on our results, AstraZeneca (1.23), Swedbank (1.37), and TeliaSonera (1.32) were the ones who present the strongest level of informativity. At the other end of the continuum we have

126

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

Assa Abloy (.82), Nordea (.72), and Scania (.83), which had low levels of informativity.

Quantity in Relationship to Quality By measuring the informativity of environmental disclosures we will get a rather good picture of the disclosures provided and its qualities. However, as the observant reader probably has noted it is a measurement with shortcomings as a corporation as SEB covering just two paragraphs with environmental disclosures scores proportionately high. To avoid this we need to put informativity in relationship to quantity as it is done in Table 6. Boliden, Ericsson, SCA, and SKF offer their stakeholders rather extensive possibilities to evaluate their environmental performances. They provide extensive quantities of disclosures with high informativity. In contrast AssaAbloy, Investor, Nordea, Scania, SEB, and Tele2 are restrictive in their disclosures with low informativity as well as limited quantities. These two categories of corporations are rather easy to place on the high/low scale. However, we have two categories, one with a group of corporations offering Table 6. Four Categories of Corporations Divided by the Scope of Informativity and Quantity of Environmental Discourse in the Annual Reports from 2006 of 20 Swedish Listed Corporations. Informativity High Quantity

Low

High

1. Boliden Ericsson SCA SKF

2. ABB Sandvik Volvo

Low

3. Astra Zeneca Atlas Copco Handelsbanken H&M Skanska Swedbank TeliaSonera

4. Assa Abloy Investor Nordea Scania SEB Tele2

Note: The corporations in each field are ordered alphabetically.

A Model for Evaluating Corporate Environmental Communication

127

high quantities of disclosures but low informativity (ABB, Sandvik, Volvo) and one group of corporations offering low quality of disclosures but high informativity (Astra Zeneca, Atlas Copco, Handelsbanken, H&M, SEB, Skanska, Swedbank, and TeliaSonera) where it tend to be more difficult to construct a general principle for evaluation. However, with these specifics, we have come to the conclusion that the corporations in the third category are better off as they provide more substantial disclosures with a relatively high frequency in combination with a reasonable quantity.

RECOMMENDATIONS FOR FURTHER USE OF THE MODEL Our aim with the chapter has been to present the model described and applied above. In applying the notion of informativity we were able to move beyond simplistic understandings of environmental information provided by corporate actors focused on the amount of information. The advantage with the proposed model is that it makes it possible to get a measurement which can be used for various comparisons such as across organizations or the same company over time. This makes the model applicable not only to researchers in the field but also for corporations with an interest to evaluate their performance by applying standardized and set principles. Further, it can be a tool for consumers and investors alike in making better and more informed assessments about a corporation’s environmental initiatives and performances. We believe that the model can be of particular use for stakeholders with an interest in developing statistical data aimed at assessing and benchmarking corporations’ environmental communication. For further research on environmental communication we would encourage scholars to apply the model to do comparative research based on geographical areas, business sectors, as well as specific organisational features (such as structure, scale, leadership). In order to get a more nuanced and richer picture of respective companies’ communication, we suggest broadening the empirical material to also include, for example, web pages and other types of materials. We also welcome attempts to broaden the model by combining it with qualitative analyses. Finally, it should also be noted that the model encompasses some relative weaknesses. First, it provides a standardized set of variables and in doing so does not address the fact that different stakeholders might have different information needs. Further, it does not specifically focus on the quality of information in terms

128

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

of other aspects as the ability to understand often very complicated matters. However, with these shortcomings taken into account we think the model offers an opportunity for evaluation of an area with increasing importance.

NOTE 1. It should be noted that the model could of course be applied to the full annual report as well as other types of sources of information, such as websites, press releases, speeches, etc.

REFERENCES Adams, C. A. (2002). Internal organizational factors influencing corporate social and ethical reporting: Beyond current theorizing. Accounting Auditing and Accountability Journal, 15(2), 223 250. Adams, C. A., & Frost, G. R. (2006). Accessibility and functionality of the corporate web site: Implications for sustainability reporting. Business Strategy and the Environment, 15(4), 275 287. doi: 10.1002/bse.531 Aras, G., & Crowther, D. (2009). Corporate sustainability reporting: A study in disingenuity? Journal of Business Ethics, 87(0), 279 288. doi: 10.1007/s10551-008-9806-0 Asp, K. (1986). Ma¨ktiga massmedier. Studier i politisk opinionsbildning. Stockholm: Akademilitteratur. Beck, U. (1995). Att uppfinna det politiska. Bidrag till en teori om reflexiv modernisering. Go¨teborg: Daidalos. Beck, U. (1998). Risksamha¨llet. Pa˚ va¨g mot en annan modernitet. Go¨teborg: Daidalos. Beck, U., Bonss, W., & Christoph, L. (2003). The theory of reflexive modernization. Prolematic, hypotheses and research programme. Theory, Culture & Society, 20(2), 1 33. Birth, G., Illia, L., Lurati, F., & Zamparini, A. (2008). Communicating CSR: Practices among Switzerland’s top 300 companies. Corporate Communication: An International Journal, 13(2), 182 196. Boiral, O. (2007). Corporate greening through ISO 14001: A rational myth? Organization Science, 18(1), 127 146. Branco, M. C., & Rodrigues, L. L. (2006). Communication of corporate social responsibility by portuguese banks: A legitimacy theory perspective. Corporate Communications: An International Journal, 11(3), 232 248. Cerin, P. (2002). Communication in corporate environmental reports. Corporate Social Responsibility and Environmental Management, 9(1), 46 66. Crowther, D. (2006). Standards of corporate social responsibility: Convergence within the European Union. In D. Njavro & K. Krkac (Eds.), Business ethics and corporate social responsibility (pp. 17 34). Zagreb: MATE. Dawkins, J. (2004). Corporate responsibility: The communication challenge. Journal of communication Management, 9(2), 108 119.

A Model for Evaluating Corporate Environmental Communication

129

Dobers, P., & Springett, D. (2010). Corporate social responsibility: Discourse, narratives and communication. Corporate Social Responsibility and Environmental Management, 17(2), 63 69. doi:10.1002/csr.231 Elkington, J. (1998). Cannibals with forks: The triple bottom line of 21st century business. Gabriola Island, BC: New Society. Frandsen, F., & Johansen, W. (2001). The Rhetoric of green hotels. Hermes, Journal of Linguistics, 27, 55 83. Fredriksson, M. (2000). Var skall jag kryssa? En studie av RSV:s och dagspressens personvalsinformation info¨r valet 1998. Arbetsrapport/Institutionen fo¨r journalistik och masskommunikation, Go¨teborgs universitet. Go¨teborg: Institutionen fo¨r journalistik och masskommunikation, Go¨teborgs universitet. Fredriksson, M. (2008). Fo¨retags ansvar marknadens retorik : en analys av fo¨retags strategiska kommunikationsarbete. JMG, Institutionen fo¨r journalistik och masskommunikation, Go¨teborgs universitet, Go¨teborg. Fredriksson, M. (2009). On Beck: Risk and sub-politics in reflexive modernity. In Ø. Ihlen, B. V. Ruler, & M. Fredriksson (Eds.), Public relations and social theory key figures and concepts (pp. 21 42). London: Routledge. Gill, D. L., Dickinson, S. J., & Scharl, A. (2008). Communicating sustainability. A web content analysis of North American, Asian and European Firms. Journal of Communication Management, 12(3), 243 262. Global Reporting Initiative (GRI). (2002). 2002 sustainability reporting guidelines. Boston, MA: GRI. Retrieved from http://www.globalreporting.org. Accessed on 10 September 2005. Holmberg, S., & Asp, K. (1984). Kampen om ka¨rnkraften. En bok om va¨ljare, massmedier och folkomro¨stningen 1980. Stockholm: Liber. Ihlen, Ø. (2008). Mapping the environment for corporate social responsibility: Stakeholders, publics and the public sphere. Corporate Communications: An International Journal, 13(2), 135–146. Ihlen, Ø. (2009). Business and climate change: The climate response of the world’s 30 largest corporations. Environmental Communication: A Journal of Nature and Culture, 3(2), 244 262. Jensen, I. (2001). Public relations and emerging functions of the public sphere. An analytical framework. Journal of Communication Management, 6(2), 133 147. Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71–79. Kaplan, R. S., & Norton, D. P. (2004). Strategy maps: Converting intangible assets into tangible outcomes. Boston, MA: Harvard Business School Press. Kim, S., & Rader, S. (2010). What they can do versus how much they care: Assessing corporate communication strategies on fortune 500 web sites. Journal of Communication Management, 14(1), 59 80. Matten, D. (2004). The impact of the risk society thesis on environmental politics and management in a globalized economy principles, proficiency, perspectives. Journal of Risk Research, 7(4), 377 398. Milne, M. J., Kearins, K., & Walton, S. (2006). Creating adventures in Wonderland: The journey metaphor and environmental sustainability. Organization, 13(6), 801 839. doi:10.1177/1350508406068506 Perrini, F., & Tencati, A. (2006). Sustainability and stakeholder management: The need for new corporate performance evaluation and reporting systems. Business Strategy and the Environment, 15(5), 296 308. doi:10.1002/bse.538

130

MAGNUS FREDRIKSSON AND EVA-KARIN OLSSON

Schoenberger, K. (2000). Levi’s children: Coming to terms with human rights in the global marketplace. New York, NY: Grove Press. Schouten, E. M. J., & Remme, J. (2006). Making sense of corporate social responsibility in international business: Experiences from Shell. Business Ethics: A European Review, 15(4), 365–379. Shannon, C. E., & Weaver, W. (1949). The mathematical theory of communication. Champaign, IL: University of Illinois Press. Tixier, M. (2003). Soft vs. hard approach in communicating on corporate social responsibility. Thunderbird International Business Review, 45(1), 71 91. doi: 10.1002/tie.10056 Turner, R. K. E. (1993). Sustainable environmental economics and management: Principles and practice. London: Belhaven. Welford, R. (1997). Hijacking environmentalism. Corporate responses to sustainable development. London: Earthscan.

THE ROLE OF CORPORATE SOCIAL RESPONSIBILITY IN INTERNATIONAL INVESTMENT LAW: THE CASE OF TOBACCO$ Yulia Levashova ABSTRACT Purpose This chapter seeks to reveal what are the implications of the corporate social responsibility (CSR) debate on international investment law by focusing on the specific example of public health. The right to health is one of the human rights secured in international law and in the national legislation of a majority of States. This chapter will provide examples of investment cases concerning tobacco control measures, imposed by the Host States for the purpose of improving public health, though challenged by the tobacco companies under International Investment Agreements (IIAs) in investment tribunals. These specific examples cast rather general questions regarding the legal framework of

$

Yulia Levashova is a PhD candidate at Utrecht University’s Molengraaff Institute, the Netherlands, and a researcher at the Center for Sustainability of the Nyenrode Business University, the Netherlands.

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 131 153 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006027

131

132

YULIA LEVASHOVA

international investment framework and its role in providing sufficient policy space for Host States to implement the public policies and to ensure that foreign companies adhere to the CSR standards. Methodology/approach In order to investigate what are the implications of the CSR debate on international investment law on the example of tobacco industry, the author performs a literature review and analyze two tobacco disputes and its possible implication on the public health debate and protection of foreign investors. Findings This case study illustrates the complex paradigm that interlink economic and human rights obligations of States on one side of the spectrum and property rights and social responsibilities of tobacco companies on the other side. Originality/value of chapter This chapter addresses a very topical and pertinent issue in public international law, namely: the role of public interest norms in the regime of foreign direct investment. Keywords: Public health; tobacco control; international investment law; Bilateral Investment Treaties (BITs); right to health; International Investment Agreements (IIAs)

In the last decade Corporate Social Responsibility (CSR) has become a “buzz” word that has many definitions and addresses a variety of issues, including labor conditions, human rights, environmental responsibility, corporate governance, etc. The concept of CSR is discussed from different angles. In the recent past, CSR has attracted attention of legal scholars and lawyers and blossomed to a fully independent legal discipline. Digging deeper, CSR can be found in a variety of legal subjects, specifically when it deals with the private actors. One of the examples of such legal disciplines is the field of international investment law. This relatively novel field of law regulates the legal relations between States and investors (companies) through a legal network of International Investment Agreements (IIAs). Predominant shares of foreign investors are medium-sized enterprises and multinational companies. Operating abroad, foreign investors possess significant influence to impact the public policies of Host States. For example, a foreign investor (tobacco company) under a valid investment treaty may challenge in the arbitral tribunal the law of the Host State addressed to regulate the tobacco industry, justifying these measures by public health

The Role of Corporate Social Responsibility in International Investment Law

133

objective. In this case, the government of a Host State may be faced with the challenging dilemma of either to comply with its economic obligations under investment agreements or to proceed with tobacco measures under the risk of being taken to investment arbitration by the investor and payment of high compensation. The bargaining power of multinational corporations (MNCs) over the governments of Host States, which are mostly developing countries, makes governments reluctant to impose sanctions against them when their operations evoke legal problems concerning issues in relation to CSR, that is, labor, human rights, and the environment areas (Kurratu & Levashova, 2013). Commonly, companies do not consider such non-investment obligations to be their responsibility since, under international law, States are the addressees and bearers of human rights, labor, and environmental obligations. Traditionally, non-investment (CSR) issues, for example, human rights and environment, have not been considered pertinent to the field of international investment law and thus not addressed in IIAs. The goal of these agreements is to protect foreign investors and their investments abroad against arbitrary interference of the Host States. This field of law focuses primarily on investment obligations of States vis-a-vis investors, leaving companies’ responsibilities unaddressed. However, nowadays the claim is increasingly being made that broader non-investment obligations, in which CSR is included, should be incorporated in IIAs (Levashova, 2012). A number of countries have already introduced changes into their investment policies and laws to incorporate the CSR concerns.1 This chapter seeks to reveal what are the implications of the CSR debate on international investment law by focusing on the specific example of public health. The right to health is one of the human rights,2 secured in international law and in the national legislation of a majority of States. This chapter will provide examples of investment cases concerning tobacco control measures, imposed by the Host States for the purpose of improving public health, though challenged by the tobacco companies under IIAs in investment tribunals. These specific examples cast rather general questions regarding the legal framework of international investment framework and its role in providing enough policy space for Host States to implement the public policies and to ensure that foreign companies adhere to the CSR standards. This chapter is structured as follows. The first section will evaluate the general framework of international investment law and its relation to CSR issues. The second section of this contribution will analyze two recent tobacco investment claims against Uruguay and Australia, both lodged by the multinational tobacco company Philip Morris. In the same section, the

134

YULIA LEVASHOVA

author will explain the reasons for two States to introduce anti-tobacco legislation that, among others, include its compliance with the WHO Framework Convention on Tobacco Control (FCTC). The third section will offer a more detailed analysis of International Investment Law by evaluating the legal methods for interpreting IIAs at the investment tribunals from the perspective of non-investment norms, including the public health objectives. The conclusion will summarize the findings.

A BRIEF OVERVIEW OF INTERNATIONAL INVESTMENT LAW This section will be limited to the general framework of international investment law by underlying the most important evolutionary characteristics of this regime, including an overview of the main investment rules contained in investment treaties. This section will pay special attention to the issue of indirect expropriation and the regulatory power of the State, which is a significant matter in interpreting IIAs in investment cases concerning public health. In the last decade, the field of international investment law has witnessed an explosive growth that can be observed in the growing number of Bilateral Investment Treaties (BITs) (now more than 3,000) and a phenomenal rise in litigation under these agreements (Sornarajah, 2004; UNCTAD, 2010). By entering into a BIT, two parties agree on investment protection rules. Over the years, a network of bilateral investment agreements between capital exporting States and capital importing States has fashioned an instrument of public international law which creates rules for private foreign investments (Beveridge, 2006). Capital exporting States are mostly developed countries which have the capacity to export capital, whereas capital importing States are developing countries which are seeking to attract foreign investment.3 Despite the fact that a BIT is concluded between States, the right to enjoy full protection under these treaties and to settle disputes through arbitration with a Host State belongs to foreign investors (i.e., MNCs). BITs usually differ from country to country; however, the structure and the content of most provisions are comparable. Each BIT begins with the goal of the treaty, which is “the encouragement and protection of investment.”4 As a result, BITs provide a broad scope of protection and subsequently guarantee investors that (1) their investment will not be

The Role of Corporate Social Responsibility in International Investment Law

135

expropriated without just compensation; (2) they will not be discriminated against on the basis of their nationality; (3) they will be treated fairly and equally; and (4) they can seek recourse against the Host State through the treaty dispute resolution mechanism (Franck, 2009, p. 442).5 An investor, in accordance with many existing BITs, has the possibility of submitting investment-related disputes to arbitration. A substantial number of BITs offer investors the choice as to which arbitration regime to use and most BITs permit inter alia arbitration before the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) (Eilmansberger, 2009, p. 386). With rapid developments and dynamism that characterizes the international investment law come unavoidable challenges. Some criticize the international investment law system for the alleged lack of legitimacy (Franck, 2005; Schill, 2011). As sometimes claimed, the hindered ability of capital-importing States to implement domestic policies directed at the public good raises questions on the substantial legitimacy of the international investment law system (Dupuy, Petersmann, & Francioni, 2009).6 Also, an increasing tendency of some States to change their domestic investment system to allow more regulatory flexibility raises the question regarding the functionality of the entire system. To exemplify, a significant group of Latin American7 countries has withdrawn or is in the process of withdrawing from the ICSID Convention or particular BITs. The Republic of South Africa, together with other African States, has revised its BITs, incorporating public interest into a new Model BIT. These States have claimed that the international investment system governed by IIAs is unbalanced, giving predominately preference to the interests of foreign investors, without considering the public interests concerns raised by Host States. The phenomenon of “shrinking policy space” is a topical issue in the field of international investment law (Schill, 2011). The regulatory power of the State, rooted in State sovereignty and governed and executed by elected administrators and legislators, has been subject to review by private arbitrators. In exchange for securing and attracting the foreign investments by signing the IIAs, States agreed to transfer some of their regulatory ability in exchange for achieving international economic aims. Such exchange can sometimes impose constraints that affect the States’ ability to exercise its regulatory power. The next chapter will illustrate this point by discussing the anti-smoking related measures in the context of investment cases that generated discussion regarding the investment protection and public healthoriented policies of the States. In these cases, large tobacco companies, being investors in Uruguay and Australia, have challenged the anti-tobacco

136

YULIA LEVASHOVA

legislation, introduced by the governments. The restrictive anti-tobacco laws have interfered with the foreign investments of a tobacco company and as a result the foreign investor initiated investor state arbitration proceedings against discussed States for a breach of the applicable IIA. Before explaining two said cases, the general framework related to the tobacco policies will be explained.

TOBACCO POLICIES AND INTERNATIONAL INVESTMENT REGIME In the last 20 years, the goal of improving public health by reducing tobacco consumption has become a prominent issue on the policy agenda of many States. It is indicated by the World Health Organization (WHO) that “tobacco continues to be the leading cause of preventable death. It kills nearly 6 million people and causes hundreds of billions of dollars of economic damage worldwide each year” (WHO, 2011). The tobacco control measures, which range from labeling restrictions to bans on smoking in public places, have been introduced with a steady consistency in different parts of the world. For example, Australia, which has gone further than any other country, has introduced a plain-packaging law. This law requires that tobacco producers use plain dark-brown/olive packaging, where, instead of tobacco brands and logos, the packaging is covered with highly unattractive pictograms depicting the effects of smoking. The United Kingdom and New Zealand have also announced their intention to follow the Australian example and to introduce plain-packaging laws (Rourke, 2012). Not only national laws have contributed to strengthening the tobacco regulations. Globally, the WHO FCTC introduced a wide range of measures promoting public health through tobacco control, that are binding for the ratifying States. At the regional level, the adoption of the European Union Tobacco Directives provided harmonized standards in the field of marketing and consumer information regarding tobacco products.8 The Examples of Two Tobacco Investment Cases: Uruguay and Australia Uruguay On February 19, 2010, the tobacco giant Philip Morris International Inc. (hereafter: “PMI”)9 filed an arbitration claim against the Republic of Uruguay for breaching the 1991 Uruguay Swiss BIT.10 Uruguay adopted

The Role of Corporate Social Responsibility in International Investment Law

137

health legislation in the form of Presidential Decree No. 287/009, Ordinance No. 466, and Ordinance No. 514 (hereafter: “Tobacco Laws”), which implemented antismoking measures including (1) the introduction of antismoking warnings that cover up to 80% of cigarette packages; (2) the designation of six graphic images that illustrate the adverse effects of smoking; and (3) the prohibition of various misleading presentations of a single brand, for example, “light,” “mild,” etc. The Tobacco Laws were challenged by PMI in an arbitral claim in which PMI argued that Uruguay had breached its obligations under the BIT and international law.11 PMI demanded the suspension of the above-mentioned measures and compensation for the violation of the BIT.12 Australia In 2011, Philip Morris Asia Ltd13 (hereafter: “PMA”) filed a notice of claim14 against Australia challenging its plain-packaging legislation under the Hong Kong Australia BIT.15 On April 7, 2011 the government of Australia made public an Exposure Draft of the Tobacco Plain Packaging Bill 2011(hereafter: “the TPP Bill”) together with a Consultation Paper. Later that year, the TPP Bill was officially adopted.16 The essence of the TPP Bill is to prohibit using intellectual property on or in relation to tobacco products and packaging other than the product brand name and a line extension on the top, front, and base of the pack in a standard font and size. In addition to the introduction of plain packaging, the Australian government passed a regulation that will increase the size of the health warning from 30% to 75% of a cigarette package. 17 In the notice of claim PMA argued that the plain packaging, that will make all brands seem indistinguishable for the consumer, will affect its business in a fundamental way. It claimed that the competition between different tobacco products will be only based on prices, and all other attributes of the Phillip Morris brand will not be visible to the costumer. Furthermore, PMA claimed that the TPB Bill limits the use and enjoyment of its investment in Australia and that it is therefore in violation of numerous provisions of the Hong Kong Australia BIT. The violations of the BIT identified by PMA are the prohibition of expropriation,18 the failure to afford full protection and security, and the fair and equitable treatment of PMA’s investments. Furthermore, in parallel to investment arbitration, the consortium of the tobacco companies, including PMA’s Australian affiliate Philip Morris Ltd., resorted to legal proceedings under Australian domestic law, litigating over the plain-packaging law.19 The tobacco producers claim that the plain-packaging laws are in violation of the Australian

138

YULIA LEVASHOVA

Constitution, which permits the government to acquire the intellectual property of the companies without compensation. The High Court just rendered its judgment upholding the plain-packaging act ruling in government’s favor. The implications of the antitobacco court’s decision promise to be significant both for the government and for the tobacco industry. Many States have closely followed this case because some of them are also planning to introduce similar laws. Tobacco companies are hoping to halt the spread of plain-packaging practices.

Reasons for Anti-smoking Measures in Uruguay and Australia Both Uruguay and Australia are active proponents of the anti-smoking measures for the benefit of public health. The Australian Attorney-General has stated that by introducing the plain-packaging law it is believed “that .. [it]…will reduce the (15,000) deaths in Australia that occur every year from tobacco-related diseases” (Young-Soo, 2011). In Uruguay, the measures to reduce tobacco consumption were motivated by the increased tobaccorelated deaths in the country in the past few years. According to the Global Adults Tobacco Survey (GATS), more than 5,000 Uruguayan people die each year from tobacco-caused diseases.20 Therefore, Uruguay has been introducing antismoking policies directed at all areas related to the consumption of tobacco products. Thus, since 2006 “Uruguay became the first country in the Americas to become 100% smoke-free by enacting a ban on smoking in all public spaces and workplaces, including bars and casinos” (WHO, 2009, p. 30). Another reason for Uruguay and Australia to introduce the stringent measures to regulate the tobacco is their commitment to international health obligations under the WHO FCTC which were ratified by both States. Commenting on Uruguay and Australia cases, a number of reporters have underlined the significance of the FCTC in these cases. Similarly to the investment obligations under IIAs, the States have obligations under other international treaties, including the FCTC. In order to investigate this claim, the next subsection will concentrate on the FCTC and its legal status and application in an investor State dispute.

Significance of WHO Framework Convention on Tobacco Control in the Tobacco Investment Disputes Under the FCTC, States have agreed on international rules on tobacco control, which are or will becoming legally binding on States which have

The Role of Corporate Social Responsibility in International Investment Law

139

ratified the treaty. Both States involved in the cited investment cases, Uruguay21 and Australia,22 are parties to the FCTC. Objectives and Principles The FCTC was unanimously adopted by 192 Member States on May 2003 by the 56th World Health Assembly.23 The Convention is unique, because it is the first time that the “WHO has exercised its considerable treatymaking powers in the name of public health, as an explicit counterbalance to another international legal regime” (Prabhu & Atapattu, 2005, p. 366). In spite of the difficulties and controversy surrounding the tobacco-restrictive measures in respect of the trade and investment regime, the WHO was determined to develop an effective instrument that can assist in reducing tobacco consumption worldwide. As a result, the WHO FCTC became an encompassing tool that in its text deals with a range of issues, for example, tobacco taxes, advertising, the smuggling of tobacco products, the liability of tobacco companies, labels, and warnings.24 The Convention aims to regulate: (1) a reduction in demand; (2) the provision of information to consumers; (3) a reduction in supply; (4) a reduction in exposure to tobacco smoke; and (5) a minimization of the harm caused by individual tobacco products (McGrady, 2010, p. 15). The main goal of the FCTC is to provide “a framework for tobacco control measures to be implemented by the Parties […] in order to reduce continually and substantially the prevalence of tobacco use […].”25 The FCTC encourages the Parties to adopt more stringent measures than prescribed by the Convention “for the purpose of human health protection.”26 Considering the general character of the treaty it provides only for “minimum standards” with which States should comply. Importantly, for the discussion on the interaction between international investment law and tobacco, the FCTC underlines, in Article 2 (2), that “the provisions of the Convention and its protocols shall in no way affect the right of Parties to enter into bilateral or multilateral agreements, including regional or subregional agreements, on issues relevant or additional to the Convention and its protocols, provided that such agreements are compatible with their obligations under the Convention and its protocols.”27 It should be kept in mind that even though the FCTC is a binding international law instrument, the content of the Convention suggests that it was designed as a compromise solution between a purely recommendatory instrument and a convention with strict and clear norms in order to involve countries in an “incremental and flexible normative exercise” (Halabi, 2010, p. 124). Imitating the structure of the UN Framework Convention on Climate Change and other framework conventions, the idea behind the

140

YULIA LEVASHOVA

FCTC is that States should first embrace a general framework that aims to achieve cooperation between parties in achieving the broader goals of the FCTC. Then, more specific measures within the framework of the Convention are expected to be taken by States in the form of separate protocols in accordance with Article 33 of the FCTC. The Conference of the Parties (COP) under the FCTC may adopt the protocols to the Convention.28 The COP also set up an intergovernmental process for the development of Guidelines for the implementation of different provisions of the Convention.29 Packaging and Labeling of Tobacco Products The FCTC contains provisions that deal with the packaging and labeling of tobacco products, the main issue in the Australian and Uruguayan tobacco disputes. Article 11 of the FCTC lays down that: “Each Party shall, within a period of three years after entry into force of this Convention for that Party, adopt and implement, in accordance with its national law, effective measures to ensure that: (a) tobacco product packaging and labeling do not promote a tobacco product by any means that are false (….etc.) or any other sign that directly or indirectly creates the false impression that a particular tobacco product is less harmful than other tobacco products; (b) each unit packet and package of tobacco products (…) also carry health warnings describing the harmful effects of tobacco use, (…). These warnings and messages: (iii) shall be large, clear, visible and legible, (iv) should be 50% or more of the principal display areas but shall be no less than 30% of the principal display areas (…) etc.” This provision is accompanied by Guidelines providing more detailed rules regarding the requirements with respect to the packaging and labeling of cigarette packs. Guidelines were adopted for various provisions of the FCTC, among which are Article 11 that concerns the packaging and labeling of tobacco products and Article 13 that elaborates on the advertising, promotion, and sponsorship of tobacco products. The Guidelines for these provisions refer, among other issues, to plain packaging as a measure to develop effective packaging and labeling restrictions and pictorial health warnings to cover cigarette packs.30 The Guidelines for Article 1 contain a variety of options regarding the measures that States might adopt concerning the process for developing labels, their content, warnings, etc. The potential weakness of such an approach is the lack of uniform standards that can give rise to legal obligations (Halabi, 2010, p. 168). Furthermore, the legal status of the Guidelines raises controversy. As underlined by the WHO’s Convention Secretariat: the Guidelines are “a non-binding instrument adopted by an

The Role of Corporate Social Responsibility in International Investment Law

141

international body to provide assistance to countries in addressing specific issues at the national or international level.”31 Moreover, reading through the Guidelines that elaborate on plain packaging, it is clear that the drafters have used rather suggestive and recommendatory language. For example, the Guidelines state that States “should consider the plain-packaging requirements to eliminate the effects of advertising or promotion on packaging.”32 Nevertheless, the Guidelines, which are a “soft law” instrument, have significant importance in the framework of tobacco control. The Guidelines create common grounds that form a set of standards, which may serve as a basis for binding protocols or customary international law in the future, and help to hold governments and the tobacco industry accountable (Halabi, 2010, p. 168). In the context of international investment law and tobacco disputes, the FCTC plays an important role. Firstly, both Australia and Uruguay have ratified this Convention. Uruguay introduced restrictive tobacco legislation in pursuit of the commitments under the FCTC. For instance, the “single presentation requirement,” which prohibits producers from marketing under a single brand name, implemented in Ordinance 514, was one of the measures derived from Article 11 of FCTC. The goal of this rule was to eliminate the various cigarette packs that can create an incorrect impression about the harmfulness of the particular brand. Characteristics such as “light” or “mild” have proved to be misleading and therefore detrimental to public health. After the adoption of the Guidelines on Article 11 in 2009, in which States are encouraged to use warnings that cover more than 50% of a cigarette package, the Uruguayan government followed the Guidelines and increased the size of the health warnings from 50% to 80%, as provided for in the Guidelines.33 This measure has also been challenged by the investor.34 Similar to Uruguay, the introduction of plain packaging by the Australian government was motivated by the Guidelines agreed upon by the Conference of the Parties to the WHO FCTC in 2008 for the implementation of Articles 11 and 13 of the FCTC where it is stated that the Parties are recommended to consider the introduction of plain packaging.35 The question concerning the FCTC with regard to international investment law is whether the invocation of the FCTC and its specific provisions in investment arbitration can be a successful justification for the antitobacco measures, which presumably have an adverse impact on the value of the investments of tobacco companies. The next section will examine this issue by discussing the possibilities for the application of the FCTC and broader norms of public international law by Arbitral Tribunals.

142

YULIA LEVASHOVA

The Impact of the Tobacco Cases on the International Investment Regime These two cases by Philip Morris against Uruguay and Australia have important significance for the field of international investment law. First, if the Arbitral Tribunals render awards, more clarity will be obtained regarding the extent of the regulatory power of the States in the field of tobacco control. Second, these cases illustrate the deeper conflict of legal norms in the field of international investment law, where States sometimes face the situation where legislation taken in the public interest is in violation of the economic rights of foreign investors under IIAs and therefore might be challenged in an Arbitral Tribunal. For many developing countries, the threat of being sued by the investor and paying extensive compensation36 for a violation of an IIA can be a trigger to withdraw or to weaken the public health legislation. An example where this has actually occurred is Uzbekistan (Vadi, 2009, p. 786). British American Tobacco established a production monopoly in Uzbekistan when the tobacco sector was privatized in 1994. Recently a decree which introduces a tobacco ban in all public places, a ban on tobacco advertising and the introduction of health warnings was issued. The reaction of British American Tobacco was that it would be “delaying completion of its investment until the decree was replaced with a voluntary advertising code” (Gilmore & Collin, 2006, p. 355 358). Increasingly, the claim is being made that the regime of international investment law is characterized by its fragmentation and isolation from other norms of international law in the field of human rights protection, labor standards, and environmental protection (Van Aaken, 2008). A number of legal scholars have pointed to the unbalanced nature of a large majority of BITs (Hirsch, 2008, p. 155; Reinisch & Knahr, 2009, p. 201). These treaties contain binding obligations for Host States toward investors, without reciprocal responsibilities for investors. Consequently, public interest norms, such as public health, which sometimes become a part of investment disputes, generate questions regarding their legal implications for international investment law. The next section will deepen into this issue.

NON-INVESTMENT OBLIGATIONS IN INVESTMENT DISPUTES With the intention of providing clarity regarding the role of public health obligations with respect to the investment obligations of the Host States

The Role of Corporate Social Responsibility in International Investment Law

143

under IIAs, it is essential to analyze the possibilities and practices under the law on foreign direct investment to apply human rights law and other relevant public international law in investment disputes. Therefore, the first part of this section is devoted to an evaluation of the relevance of human rights law in the framework of investment disputes. Jurisdictional Matters Before an Arbitral Tribunal renders its decision on an investment dispute, a number of legal questions have to be resolved. Primarily, the Arbitral Tribunal has to determine whether it has jurisdiction to rule on the dispute. The matter of jurisdiction can be instrumental in defining whether noninvestment issues might be considered. The Tribunal, which principally derives its jurisdiction from the consent of the parties to the dispute, might be limited by the confines of the jurisdictional constraints underlined in the investment treaty or contract. Therefore, in order to determine the scope of its jurisdiction, an Arbitral Tribunal will analyse the so-called “compromissory clause,” which defines the jurisdiction of the Tribunal and can be found in the text of an investment treaty or contract. If the dispute is to be settled by the ICSID Tribunal, the arbitrators also consider Article 25 of the ICSID Convention, which is a key provision, delimiting the scope of jurisdiction of the Tribunal (Dupuy, 2009, p. 55). The analysis of how the “compromissory clause” and Article 25 of the ICSID Convention are formulated will reveal the ambit of the Tribunal’s jurisdiction. Most of the said provisions will be only “restricted” to “investment disputes […] or to alleged violations of the substantive rights in the investment treaty” (Peterson, 2005; Reiner & Schreuder, 2010, p. 83). Arguably, the restrictive formulation of these provisions in combination with the lack of human rights clauses in IIAs gives a narrowing effect to the scope of jurisdiction that in some cases might diminish the ability of the Tribunal to consider or to invoke the non-investment obligations raised by either party. Despite such constraints, the jurisdictional aspect is not the sole decisive factor with regard to the invocation of non-investment obligations; the applicable substantive standard is a vital component to consider. Human Rights as Substantive Law After the Arbitral Tribunal has established its jurisdiction over a case, the applicable substantive law has to be determined. There are two options to

144

YULIA LEVASHOVA

invoke non-investment law provisions, for example, in relation to public health. The first option is to determine whether the applicable investment treaty refers to non-investment provisions. The second option is to determine the choice of legal provisions to which the parties have consented in the investment agreement or the investment contract. Depending on the choice of law provisions it will be evident whether human rights norms or international and national law will be applicable in the case. “Numerous BITs contain composite choice of law clauses, typically including treaty rules, host state law and customary international law, under these provisions, human rights, as a component of international law, are part of the applicable law” (Reiner & Schreuder, 2010, p. 83). With regard to the first option that includes a direct reference to human rights law or environmental law in the text of the treaties, most BITs provide no such reference. However, there are a number of exceptions to this rule. Some States have included public interest norms, for example, human rights, environmental and labour law, etc., in their BITs and their number continues to increase. For instance, the Canadian and the US models of the investment agreements provide a reference to non-investment matters that might arise during investment activities. The Canadian Model stipulates a so-called “general exceptions” provision, which is also known as the “nonprecluded measures” clause. It states that “nothing in this Agreement shall be construed to prevent a Party from adopting or enforcing measures necessary to (a) protect human, animal or plant life, or health” (Canadian Model BIT, 2004). Furthermore, a definitional clarification of “indirect expropriation” is provided. In terms of public health measures it means that not all measures of the host state that effect investment in an adverse way can be declared “expropriatory” by the tribunals. For example, measures which are designed for and applied to public welfare objectives, thus to improve health or the environment, will not constitute indirect expropriation and are therefore exempt from the payment of compensation (Canadian Model BIT, 2004, Annex B 13 (1)). The US model BIT 201237 also contains an explicit reference in the substantive provisions to environmental and labour standards (Levashova, 2012). However, the presence of the clauses exemplified above does not indicate that the Arbitral Tribunal will deem them applicable apply and exempt the State it from the payment of compensation. The interpretation of these clauses by the Tribunal is of main importance. For example, in the respondent memorial on jurisdiction in the case of Philip Morris v. Uruguay, the legal counsel of Uruguay, claim that Article 2 of the Uruguay Switzerland BIT excludes from the scope of the treaty the antismoking measures

The Role of Corporate Social Responsibility in International Investment Law

145

challenged by the Philip Morris. Article 2 of this BIT is entitled: promotion, admission of investments. Besides the common formulation, as contained in many other BITs, that each party should encourage investment on its territory, it is also stated that: “the Contracting Parties recognize each other’s right not to allow economic activities for reasons of public security and order, public health or morality, as well as activities which by law are reserved to their own investors.”38 Exactly how this Article will be interpreted is far from clear; the Arbitral Tribunal has still to decide on that matter. The legal questions that ought to be answered by the Tribunal in this regard is whether Article 2 of the Uruguay Switzerland BIT is, first, applicable, and, second, whether it is a ground for the exclusion of the policies motivated by public health objectives, as argued by legal counsel. The intention of the parties, and understanding the purpose of this provision that goes beyond a literal interpretation, are still to be revealed. Furthermore, the question of whether this clause will be qualified as a “non-precluded measures clause” intended to limit a country’s liability in certain exceptional circumstances is open to discussion (Grinblat, 2010). Arbitral tribunals have already interpreted the “non-precluded measures” clauses contained in other BITs in the past. One example is the series of investment arbitrations against the Argentine Republic. The financial crisis in Argentina in the beginning of the century has greatly affected foreign investors that, for their part, have instigated a wave of claims against it. Specifically, foreign companies were harmed by the emergency legislation enacted by the Argentinian government in 2002 that led to enormous financial losses being experienced by investors (Grinblat, 2010). In the course of four recent investor State arbitrations, Argentina has invoked the “nonprecluded measures” clause under the US Argentine Republic BIT to justify the restrictive economic measures. The relevant provision stated that the application of the Treaty should not be precluded “…by any and all measures necessary for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace and security, or the protection on its own essential security interests.”39 In three40 out of the four disputes, the Arbitral Tribunals came to the conclusion that the “non-precluded measures” clause was not applicable and only in LG&E v. Argentine Republic41 did the Tribunal agree with the Argentine Republic and applied the “non-precluded measures” clause, thereby relieving the Argentine Republic from liability. In three unsuccessful attempts by Argentina to invoke the “non-precluded measures” clause, the arbitral tribunals gave a restrictive interpretation to this provision; in

146

YULIA LEVASHOVA

CMS v. Argentine Republic42 the Tribunal stated that this clause has a limited significance and “the Treaty in this case is clearly designed to protect investments at a time of economic difficulties or other circumstances leading to the adoption of adverse measures by the government.” In Enron v. the Argentine Republic43 similar restrictive reasoning was adopted (BurkeWhite & Von Staden, 2006 2007, p. 399). Therefore, whether and to what extent Article 2 of the Uruguay Switzerland BIT will be applicable in the Philip Morris v. Uruguay dispute will depend on the interpretation of this provision by the Tribunal. In the absence of a specific human rights provision in the text of the investment agreements, an assessment should be made regarding the possibility to invoke the non-investment norms in an indirect manner. According to the procedural rules, the parties can determine the substantive applicable law. However, if they fail to do so and the dispute falls under the ICSID Convention, Article 42 (1) of this Convention will be applicable. This provision states that “in the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.”44 According to prominent academics the meaning of “and” in Article 42 (1) can be further interpreted as allowing the arbitrators, in the absence of “choice of law” provisions, to apply international law not only “as a functional element of the choice of law process but also as a body of substantive rules.” (Gaillard & Banifatemi, 2003) Therefore, if the arbitrators will decide that the FCTC Convention or its specific rules are applicable to the case, it might be invoked via Article 42 (1) of the ICSID Convention. If arbitration takes place under the United Nations Commission on International Trade Law (UNCITRAL) rules (2011) as in the Philip Morris v. Australia dispute under the Hong Kong Australia BIT, Article 35 of the UNCITRAL rules is applicable. It provides that the “arbitral tribunal shall apply the rules of law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law which it determines to be appropriate” (United Nations Commission on International Trade Law, 2011). In the absence of a choice of law, the Tribunal has discretion to decide on the applicable law, including the norms of public international law, for example, public health legislation. A similar definition is contained in the International Chamber of Commerce (ICC) rules in Article 15, where the tribunal is free to apply any rules which it decides upon (Daujotos, 2010).

The Role of Corporate Social Responsibility in International Investment Law

147

CONCLUSION This contribution attempted to evaluate the role of CSR in international investment law by using the examples of two tobacco cases. It has revealed that CSR norms are rarely taken into account in IIAs. Also, an evaluation of public policies by the Arbitral Tribunals in the framework of investment cases is sometimes rather limited. The confrontation between States that implement strict anti-smoking laws in the interest of public health and tobacco companies that challenge these measures because of a reduction in profits raises many questions in the context of the international investment regime. To provide some clarity on this issue, this chapter aimed to analyze the legal implications with respect to the goals of public health and economic obligations under IIAs. This contribution has evaluated whether the public health objectives that Uruguay and Australia have implemented in the form of restrictive tobacco laws can be weighed by the Tribunals in the said investment disputes. Before the final decisions are rendered, it is difficult to predict what the impact and legal significance of the legislation motivated by public health considerations will be. However, this does not prevent a number of observations being made in this regard. After evaluating the general framework of international investment law, two issues have surfaced. First, the international investment regime is a unique system that allows foreign investors to initiate investment claims against States, enabling privately contracted arbitrators to decide upon the legality of sovereign acts, including public health legislation. Second, the interpretation of the regulatory act of a state in a dispute between a tobacco company and a host country plays an important role in the outcome of a dispute. What arguments will prevail in deciding whether the adoption of the antitobacco law constitutes an expropriatory act depends on the approach taken by the Tribunal. The weight given to the impact of the tobacco laws on the investor in contrast to the weight given to the goal of this legislation is a decisive factor in such a decision. The introduction of antitobacco measures in Uruguay and Australia, among other factors, was strongly motivated by the Convention on Tobacco Control, negotiated under the auspices of the WHO and to which both States are parties. This Convention played a major role in inspiring and laying down the rules for governments to toughen their antitobacco legislation in the interests of public health. Both Uruguay and Australia have justified the challenged tobacco regulations referring to their obligations under the Convention,

148

YULIA LEVASHOVA

specifically to Articles 11 and 13 of the FCTC and the Guidelines for these provisions that, among other issues, suggest that States parties should resort to plain packaging as a measure to develop effective packaging, as well as labeling restrictions and pictorial health warnings in order to cover cigarette packs. The legal character of the Guidelines is a controversial issue; however, these Guidelines are instrumental in the framework of tobacco control, which can become a basis for binding protocols or customary international law in the future. For assessing the option to invoke the FCTC as an applicable law in the discussed investment disputes, this contribution has analyzed the possibilities and practices under international investment law to apply human rights law and other relevant public international law in investment arbitration. Theoretically, there are number of ways to invoke non-investment norms. The analysis should originate in defining the scope of the Tribunal’s jurisdiction in evaluating the substantive law applicable in a specific case. For instance, sometimes the applicable investment agreements already contain a clause that either refers to the non-investment norm or is drafted as a so-called “non-precluded clause” that intends to limit the Host State’s liability in exceptional circumstances, such as exercising its regulatory power in the name of public health. However, even with the presence of such provisions, the liability of the Host State is not automatically excluded. This is contingent on the Tribunal’s interpretation of such a clause.

NOTES 1. The Republic of South Africa together with other African States has revised its Bilateral Investment Treaties (BITs), incorporating public interest into the Southern African Development Community (SADC) Model BIT Template (SADC, “SADC MODEL BIT Template with Commentary” (2012)). The United States Model BIT contains direct reference to labor and the environment in its text. Australia and Canada are considering to eliminate the dispute resolution provision from their investment agreements avoiding the investment arbitration claims all together. 2. The right to health is incorporated in numerous international conventions, for example, Convention on the Right of the Child, November 20, 1989, Article 24; Convention on the Elimination of All Forms of Racial Discrimination, December 21, 1965, Article 5, etc. Also see: Universal Declaration of Human Rights GA res 217 A (III), Article 25 (1) and World Health Organization (WHO) Constitution, July 22, 1946, preamble. 3. Please note that this trend has been changing, with more developing States that conclude BITs with each other, so-called “South-South BITs.”

The Role of Corporate Social Responsibility in International Investment Law

149

4. Footnote 27. 5. Note that the host state cannot initiate arbitration proceedings against an investor. 6. Numerous discussions took place regarding ability of Host States to regulate in public interest, see for example, issues concerning the environmental matters that arose during the dispute, for example, Tecmed v. United Mexican States, ICSID award 2003; Methanex v. United States, ICSID Award 2004; Vattenfall AB and others v. Federal Republic of Germany, claim, (ICSID Case No. ARB/12/12), 2012 and others. 7. Bolivia was first to withdraw from ICSID Convention in 2007; Ecuador has followed, in 2009; Venezuela announced its withdrawal in 2012; Argentina has numerously stated its intention to withdraw. Some States have never signed Convention, for example, Brazil and Mexico. 8. Tobacco Products Directive, 2012/9/EU. 9. Please note that the claim was instigated by three subsidiaries (FTR Holdings S.A., Philip Morris Products S.A., and Abal Hermanos S.A.) of Altria Group Inc., which is controlled by PMI. 10. FTR Holdings S.A. (Switzerland), Phillip Morris Products S.A. (Switzerland,) and Abel Hermanos S.A. (Uruguay) v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, 2010. Notice of Arbitration, February 19, 2010. 11. Ibid., para. 76 (the claim). 12. Ibid., para. 88. 13. The notice of a claim was served by PMA, which owns 100% of the available shares in Philip Morris Australia Ltd., which owns 100% of the available shares in Philip Morris Ltd. 14. A notice of the claim under the Hong Kong Australia BIT (Article 10) is a written notification of the claim, which states that from the moment of its submission and for the following three months, unless the dispute is not settled amicably, the parties to the dispute are bound to submit it to arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law 2010. 15. Notice of Claim by PMA to the Commonwealth of Australia pursuant to Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments, June 27, 2011. 16. Tobacco Plain Packaging Act 2011, Act No. 148 of 2011, an Act to discourage the use of tobacco products, and for related purposes, see http://www.comlaw. gov.au/Details/C2011A00148 17. Ibid. (the claim against Australia), para. 7. 18. Please note that expropriation might be lawful subject to a number of conditions: (1) under due process of law; (2) for a public purpose; (3) on a nondiscriminatory basis; and (4) against payment of compensation (the Hong Kong Australia BIT). 19. British American Tobacco Australasia Limited and Ors v. The Commonwealth of Australia, Case S389/2411, see http://www.hcourt.gov.au/cases/ case-s389/2011 20. GATS, Uruguay 2009, also see the sources mentioned in the Notice of Claim by PMA to the Commonwealth of Australia (footnote 10). 21. Uruguay is a party to the WHO FCTC that has ratified in 2005 and has transposed the provisions of the Convention into its national laws, specifically

150

YULIA LEVASHOVA

implementing the provision on tobacco packaging and labeling of the FCTC in its national legislation. 22. Australia has ratified the WHO FCTC on October 27, 2004 and it entered into force on February 27, 2005. 23. WHO FCTC, see http://www.who.int/fctc/en/. Accessed on July 6, 2010. 24. WHO FCTC, 2003, see http://whqlibdoc.who.int/publications/2003/9241591013. pdf. Accessed on July 6, 2010. 25. Article 3 FCTC. 26. Article 2 of WHO FCTC. 27. Ibid., footnote 34 WHO FCTC. 28. For instance, the Protocol on illicit trade in tobacco products is currently in an advanced stage of negotiations. 29. WHO FCTC, Protocol and Guidelines, see http://www.who.int/fctc/protocol/en/ 30. Guidelines for implementation of Article 11 of the WHO FCTC (Packaging and labeling of tobacco products), para. 14 (use of pictorials), para. 46 (plain packaging) see: http://www.who.int/fctc/guidelines/article_11.pdf and Guidelines for implementation of Article 13 of the WHO FCTC (Tobacco advertising, promotion and sponsorship), para. 15, see http://www.who.int/fctc/guidelines/ article_13.pdf 31. WHO, Additional matters identified in the Convention for consideration by the Conference of the Parties Elaboration of Guidelines for implementation of Article 7 and Article 9, and Elaboration of protocols, First Session, Provisional Agenda Items 5.2 and 5.3, A/ FCTC/COP/1/INF.DOC./3, 5 June 2006, http://apps.who.int/gb/fctc/PDF/cop1/ FCTC_COP1_ID3-en.pdf. 32. Guidelines for implementation of Article 11 of the WHO FCTC (Packaging and labeling of tobacco products). 33. Paragraph 12 of the Guidelines provides that the Parties “should consider using health warnings and messages that cover more than 50% of the principal display areas and aim to cover as much of the principal display areas as possible.” The text of health warnings and messages should be in bold print in an easily legible font size and in a specified style and color(s) that enhance overall visibility and legibility. 34. Uruguayan Decree 287/009, June 15, 2009. 35. WTO, Council for Trade-Related Aspects of Intellectual Property Rights, IP/ C/M/66, September 2011. One of the agenda times was the discussion on Australia: Tobacco Plain Packaging Bill 2011 and its Compatibility with the TRIPS Agreement, p. 26. 36. See for example the case Compania del Desarrollo de Santa Elena, S.A. v. Republic of Costa Rica, Case No. ARB/96/1 (February 17, 2000), where the Tribunal did not take into account the environmental and cultural purpose of expropriation in calculating compensation; the Tribunal awarded the company a total of 16,000,000 US dollars (stating that the company was entitled to compound interest that is four times higher than simple interest). 37. Please note: a new US Model BIT 2012 with regard to environmental and labor provisions mentioned in the text of treaty is similar to the old model BIT 2004. 38. UruguySwitzerland BIT (only available in French), the official title is: Accord entre la Confe´de´ration suisse et la Re´publique orientale de l’Uruguay concernant la

The Role of Corporate Social Responsibility in International Investment Law

151

promotion et la protection re´ciproques des investissements, entered into force April 22, 1991, see: http://www.sice.oas.org/Investment/BITSbyCountry/BITs/URU_ Switzerland_f.pdf The unofficial translation of part of Article 2 (1) of the Uruguay Switzerland BIT was taken from Uruguay’s Memorial on Jurisdiction, ICSID Case No. ARB/10/7, September 24, 2011, see: http://italaw.com/documents/PhilipMorris_v_Uruguay_ UruguayMemorialJurisdiction_24Sep2011.pdf 39. US Argentina BIT, Article XI. 40. Sempra Energy Int. v. Argentine Republic, ICSID Case No. ARB/02/16, Award on merits, September 28, 2007, see http://icsid.worldbank.org/ICSID/ FrontServlet?requestType = CasesRH&actionVal = showDoc&docId = DC694_En& caseId = C8; CMS Gas Transmission Company v. Argentine Republic, CASE No. ARB/01/8, award on merits, May 12, 2005, see http://icsid.worldbank.org/ICSID/ FrontServlet?requestType = CasesRH&actionVal = showDoc&docId = DC504_En& caseId = C4; and Enron Corporation Ponderosa Assets v. Argentine Republic, ICSID Case No. ARB/01/3, May 22, 2007, see http://italaw.com/documents/EnronAward.pdf 41. LG&E Energy Corporation and others v. the Argentine Republic, ICSID Case No. ARB/02/1, October 3, 2006, see http://icsid.worldbank.org/ICSID/FrontServlet? requestType = CasesRH&actionVal = showDoc&docId = DC627_En&caseId = C208 42. CMS Gas Transmission Company v. Argentine Republic, CASE No. ARB/01/ 8, award on merits, May 12, 2005, see http://icsid.worldbank.org/ICSID/FrontServlet? requestType = CasesRH&actionVal = showDoc&docId = DC504_En&caseId = C4 43. Enron Corporation Ponderosa Assets v. Argentine Republic, ICSID Case No. ARB/01/3, May 22, 2007, see http://italaw.com/documents/Enron-Award.pdf 44. Convention on the Settlement of Investment Disputes between States and Nationals of other States, 14 October 1966.

ACKNOWLEDGMENTS The author would like to thank Prof. Ige Dekker and Dr. Tineke Lambooy for their very useful comments on earlier drafts of this chapter.

REFERENCES Beveridge, F. (Ed.). (2006). Globalization and international investment. The international library of essays on globalization and law (pp. 500). UK: Ashgate Publishing. Burke-White, W., & Von Staden, A. (2006 2007). Investment protection in extraordinary times: The interpretation and application of non-precluded measures provisions in bilateral investment treaties. Virginia Journal of International Law, 48, 307. Daujotos, R. (2010). Assessment of the New UNCITRAL Arbitration Rules 2010. Retrieved from http://rimantasdaujotas.wordpress.com/2011/07/04/featured-assessment-of-the-newuncitral-arbitration-rules-of-2010/

152

YULIA LEVASHOVA

Dupuy, P.-M. (2009). Unification rather than fragmentation of international law? The case of international investment law and human rights law. In P.-M. Dupuy, E. U. Petersmann, & F. Francioni (Eds.), Human rights in international investment law and arbitration (pp. 45 63). Oxford: Oxford University Press. Dupuy, P.-M., Petersmann, E. U., & Francioni, F. (2009). Human rights and international investment law and arbitration (pp. 648). Oxford: Oxford University Press. Eilmansberger, T. (2009). Bilateral investment treaties and EU law. Common Market Law Review, 46. Franck, S. (2005). The legitimacy crisis in investment treaty arbitration: Privatizing public international law through inconsistent decisions. Fordham Law Review, 73, 1521. Franck, S. D. (2009). Development and outcomes of investment treaty arbitration. Harvard International Law Journal, 50(2), 442. Gaillard, E., & Banifatemi, Y. (2003). The meaning of ‘and’ in Article 42(1), Second Sentence, of the Washington Convention: The Role of International Law in the ICSID Choice of Law Process. Gilmore, A., & Collin, J. (2006). British American tobacco’s erosion of health legislation in Uzbekistan. British Medical Journal, 11(332)(7537). Grinblat, G. (2010, January 22). Non-precluded measures clauses and their effect on foreign investment. Martindale-Hubbell. Retrieved from http://www.martindale.com/investmentslaw/article_Mayer-Brown-LLP_896478.htm Halabi, S. F. (2011). The World Health Organization’s framework convention on tobacco control: An analysis of guidelines adopted by the conference of the parties. Georgia Journal of International and Comparative Law, 39(1), 3 66. Hirsch, M. (2008). Interactions between investment and non-investment obligations. In P. Muchlinski (Ed.), The Oxford handbook of international investment law. Oxford: Oxford University Press. Kurratu, A., & Levashova, Y. (2013). Investment law: The implementation of CSR under Indonesian laws and the Indonesian bilateral investment treaties: A lack of coherency? In T. Lambooy, A. Argyrou, A. Kusumadara, & M. Istiqomah (Eds.), CSR in Indonesia: Legislative developments and case studies (pp. 85 117). Jakarta: Konstitusi Press. Levashova, Y. (2012). Role of sustainable development in Bilateral investment treaties: Recent trends and developments. Journal of Sustainable Finance and Investment, 1, 222 229. McGrady, B. (2010). Trade and public health: The WTO, tobacco, alcohol and diet. Cambridge, UK: Cambridge University Press. Model Agreement between Canada and Another Country for the Promotion and Protection of Investments. (2004). Canada’s Foreign Investment Protection and Promotion Agreement (FIPAs) Negotiating Programme. Retrieved from http://www.international.gc.ca/tradeagreements-accords-commerciaux/agr-acc/fipa-apie/. Accessed on December 18, 2013. Peterson, L. (2003). International Human Rights in Bilateral Investment Treaties and Investment Treaty Arbitration, International Institute for Sustainable Development. Retrieved from http://www.iisd.org/pdf/2003/investment_int_human_rights_bits.pdf Prabhu, M., & Atapattu, S. (2005). The WHO framework convention on tobacco control: When the WHO meets the WTO. In M. C. Segger & C. G. Weeramanty (Eds.), Sustainable justice: Reconciling economic, social, and environmental law. The Netherlands: Martinus Nijhoff Publishers.

The Role of Corporate Social Responsibility in International Investment Law

153

Reiner, C., & Schreuer, C. (2009). Human rights and international investment arbitration. In P.-M. Dupuy, E. U. Petersmann, & F. Francioni (Eds.), Human rights in international investment law and arbitration (pp. 82 96). Oxford: Oxford University Press. Reinisch, A., & Knahr, C. (2009). International investment law in context. The Netherlands: Eleven International Publishing. Rourke, A. (2012). Plain-packaging cigarette challenge in Australian’s High Court. The Guardian UK, April 17, 2012. Retrieved from http://www.guardian.co.uk/world/2012/apr/ 17/cigarette-plain-packaging-australia-high-court Schill, S. (2011). Enhancing international investment law’s legitimacy: Conceptual and methodological foundations of a new public law approach. Virginia Journal of International Law, 52(57), 58 102. Sornarajah, M. (2004). The international law on foreign investment (2nd ed.). Cambridge, UK: Cambridge University Press. Sornarajah, M. (2010). The international law on foreign investment (3rd ed.). Cambridge, UK: Cambridge University Press. UNCTAD. (2010). World investment report 2010. Investing in a low carbon economy. New York, NY: United Nations. United Nations Commission on International Trade Law. (2011). UNCITRAL arbitration rules (as revised in 2010). Retrieved from http://www.uncitral.org/pdf/english/texts/arbitration/arbrules-revised/arb-rules-revised-2010-e.pdf Vadi, V. (2009). Trade mark protection, public health and international investment law: Strains and paradoxes. The European Journal of International Law, 20(3), 773 803. van Aaken, A. (2008). Fragmentation of international investment law: The case of international investment protection. Finnish Yearbook of International Law, 91 130. WHO. (2009). WHO report on the global tobacco epidemic: Implementing smoke-free environments. Retrieved from http://whqlibdoc.who.int/publications/2009/9789241563918_eng_full.pdf WHO. (2011). WHO report on the global tobacco epidemic: Warning about the dangers of tobacco. Retrieved from http://whqlibdoc.who.int/publications/2011/9789240687813_eng.pdf Young-Soo, S. (2011). Australia leading the war on tobacco. ABC News item. Retrieved from http://www.abc.net.au/unleashed/2732044.html

PART III CSR DISCOURSES AND CORPORATE REPORTING

A DIALECTICAL APPROACH TO ANALYZING POLYPHONIC DISCOURSES OF CORPORATE SOCIAL RESPONSIBILITY Ganga S. Dhanesh ABSTRACT Purpose This chapter proposes using a dialectical approach infused with elements of dialogism to analyze polyphonic discourses of corporate social responsibility (CSR) in order to create more nuanced understandings of the contradictions, oppositions, tensions, and complexities that characterize the conceptualization, enactment, and communication of CSR. Methodology/approach This chapter draws upon the notion of dialectics discussed by scholars such as Hegel and Marx and infuses it with Bakhtinian notions of dialogism to create a dialectical framework for analyzing discourses of CSR. Findings This chapter illustrates the conceptual argument for a dialectical approach to examining discourses of CSR by using the example of the dualistic discussion of corporations as agents of empowerment

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 157 177 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006020

157

158

GANGA S. DHANESH

or exploitation. When examined through a dialectical lens, the empowerment exploitation debate reveals, among others, the dissolution of boundaries between the categories of empowerment and exploitation, the coexistence and interplay of a multitude of related oppositions, and raises questions on praxical patterns employed by social actors to manage the dialectical tensions inherent in everyday organizing. Social implications A dialectical approach in communication studies could open possibilities for acknowledging the co-existence of and interplay among multiple voices in society, thus opening spaces for engaging with diverse perspectives and creating a more holistic understanding of complex social constructs such as CSR. Originality A dialectical approach that attends to tensions negotiated by social and organizational actors as they try to conceptualize, enact, and communicate CSR can enrich the study of polyphonic discourses of CSR by generating more textured and insightful understandings of CSR than those currently examined through mostly dualistic lenses. Keywords: Dialectics; dialogism; corporate social responsibility; dualistic; discourse

Extant discussions and debates of corporate social responsibility (CSR) have been not only highly diverse but also extremely polarized. On the one hand, corporations are often portrayed as saviours and benefactors which can contribute positively to social development by generating economic opportunities and lifting people out of poverty (Kotler & Lee, 2005; Prahalad, 2004). On the other hand, corporations are also portrayed as sinners and adversaries, who by virtue of their profit-maximizing raison d’etre are incapable of generating social good (Cloud, 2007; Munshi & Kurian, 2007; Schwarze, 2003; Townsley & Stohl, 2003). However, situated at the intersections between organizations and societies, the notion of CSR is not easily reducible to such dualistic or monochromatic portrayals. Instead, the construct of CSR reflects the messy, non-linear, complex, contradictory, oppositional forces and tensions that erupt when for-profit entities enter social spaces and attempt to conceptualize, enact, and communicate their social responsibilities in a world that is diverse, pluralistic, and heteroglossic (Papa, Singhal, & Papa, 2006). Further, highly complex and intertwined processes of global flows of ideas, images, information, commodities, finances, and people across national

A Dialectical Approach to Analyzing Polyphonic Discourses

159

boundaries pluralize extant social contexts (Pal & Dutta, 2008; Sriramesh & Vercic, 2003), within which social actors have to actively engage with and navigate the complexities of enacting and discursively shaping CSR (Scherer & Palazzo, 2008). Applying dualistic or monochromatic lenses, with their “either-or” focus, to examine a complex construct such as CSR is essentially reductionist in nature. While such approaches have their own merit and definitely have enabled the study of CSR, they tend to ignore the multiple contradictions, oppositions, and polarities that inhere within current systems of capitalism, in the interactions among organizations, governments and civil societies, and the diversity of the lived-in social contexts within which these interactions take place and are discursively constructed. It strips the notion of CSR of its underlying messiness and complexities; reduces understandings of CSR, forcing its categorizations into neat and tidy boxes such as strategic CSR versus altruistic CSR; and portrays corporations either as creators of economic opportunities or as agents of exploitation. Such bipolar ways of discussing CSR do not recognize or consider the underlying contradictions that emerge when corporations attempt to perform and discursively frame their social responsibilities. Such dualistic approaches only diminish our holistic understanding of current discourses of CSR in diverse contemporary societies. Baxter and Montgomery (1996) argued that the social scientific enterprise has focused for too long on one-sided, dualistic conceptualizations of social life, and should instead focus on the complexity and disorder that mark social life, not with a view to smooth out the chaos and disarray, but to understand the fundamental, continuing messiness. While honoring the important insights generated by extant approaches to analyzing debates and discourses of CSR, this chapter proposes a dialectical approach infused with elements of dialogism as an alternative that can adequately recognize and analyze the complexities and contradictions that underlie discourses of CSR. A dialectical approach, with its focus on contradiction, change, flux, totality, context, and praxis, can significantly nuance extant understandings of CSR. The central theme of a dialogic approach to dialectics is the co-existence of multiple contradictions, which are constantly engaged in a push-and-pull struggle between unifying, centralizing centripetal forces on one side and disunifying, decentralizing centrifugal forces on the other. The dialectical approach discussed in this chapter shares similarities with other dialectical approaches, including notions of contradiction, change, flux, totality, and praxis. However, this dialectical approach is different from the others in

160

GANGA S. DHANESH

that it is infused with dialogism, which rebels against the monologic aspect of the dialectical notion of thesis antithesis synthesis. It also rejects the idea of bipolar opposites and instead celebrates the notion of polyphony, the co-existence of multiple contradictions and oppositions within a web of interrelated push-and-pull forces. In this chapter, the dialectical notions of contradictions, change, flux, totality, and praxis all coalesce with dialogic principles of heteroglossia, and centripetal and centrifugal forces to create a dialectical framework from which researchers can tease out finer, more nuanced understandings of CSR discourses than those reached from typical examinations through mostly monologic or dualistic lenses. A dialectical approach that attends to dialectical tensions being negotiated by multiple social and organizational actors as they try to conceptualize, enact, and communicate CSR can enrich the study of CSR. It can generate more textured, nuanced, and insightful analyses of CSR discourses that celebrate the multiplicity of voices articulated within diverse social contexts.

A REVIEW OF DIALECTICS The notion of dialectics has been addressed in varied ways since antiquity. Broadly, the understanding of dialectics has evolved in two ways: as epistemology and as ontology. The dialectic, Caute (1967) argues, is “not only an epistemological principle, a principle of knowing about knowing, but also an ontological one, a principle of knowing about being. Dialectic is both a method of knowing and a movement in the object known” (p. 32). Elster (1985) merges both approaches and suggests that the dialectical method reflects the dialectical nature of the world. For ancient Greek philosophers, particularly Socrates and Plato, the dialectic was a method of reasoning, wherein people sought to reach the truth through reasoned arguments that would lead one to take the opposite position of the original argument. On the other hand, for Heraclitus, dialectics was a view of reality wherein he acknowledged the identity of opposites. “Men do not understand that what is divided is consistent with itself, it is a harmony of tensions. … the fairest harmony comes out of difference; everything originates in strife …. We enter and do not enter the same rivers, we are and we are not” (Fischer, 1996, p. 19). Though dialectics has been discussed in various ways, central to the understanding of dialectics are the notions of contradiction and change.

A Dialectical Approach to Analyzing Polyphonic Discourses

161

Contradiction At the core of dialectics is the notion of contradiction. In the dialectical perspective, contradiction is not necessarily undesirable. On the contrary, it is the co-existence of contradictions that drive change and movement, and create flux and motion in the natural sciences (Engels, 1940) and the social sciences (Baxter & Montgomery, 1996; Marx, 1970[1859]; Rawlins, 1998). A dialectical contradiction is the “coexistence and conflict of interpenetrated opposites” (Rawlins, 1989, p. 159). Contradiction in the dialectical viewpoint is the “coexistence of elements opposed to each other, simultaneous coexistence and opposition between these elements” (Mandel, 1979, p. 163). The dialectical notion of the co-existence of multiple contradictions resonates with Bakhtin’s notions of heteroglossia and centripetal and centrifugal forces. To Bakhtin, verbal discourse is a social phenomenon situated in a diverse, pluralistic, contradiction-ridden, heteroglossic, multi-languaged world. In this diverse and polychromatic world, centripetal forces representing the accepted, incontestable language center that in turn reflects the cultural, national, and political centralization of the verbal/ideological world exist in a constant struggle with centrifugal forces that represent forces of diversity and plurality. These centrifugal forces are constantly aiming to disunify, decentralize and fray the edges of the dominant center. In such a heteroglossic world riddled with the coexistence of multiple voices, any utterance, to Bakhtin (1981[1975]), is “a contradiction-ridden, tension-filled unity of two embattled tendencies in the life of language” (p. 272). The notion of the coexistence of oppositions has been reflected in Marxian thought too. Marx (1970[1859]) situated oppositions in the forces of production and the class relations created by these forces. He argued that capitalism is not possible without the simultaneous existence of capital and labor, the bourgeoisie, and the proletariat. In discourses of CSR too we can identify the co-existence of contradictions in debates such as the portrayals of corporations as agents of empowerment and exploitation, as friends and foes, as saviours and sinners. In addition to the notion of co-existing, multiple contradictions, a key aspect of dialectic is the notion of the unity of opposed determinations. Hegel, who reinstated the dialectical method of reasoning in the realm of philosophy in the late eighteenth century, applied dialectical thinking to expound fundamental categories of thought. He argued that thinking as understanding is characterized by fixed determinacy, where each category of thought is distinct from other categories. However, the dialectical moment is the dissolution of these fixed determinations and their transformation

162

GANGA S. DHANESH

into their opposites. “The dialectical moment is the self-sublation of these finite determinations on their own part, and their passing into their opposites” (Hegel, 1991[1830], p. 128). In other words, each category of thought holds within itself its opposite. Expounding this idea, Hegelian scholar Houlgate (1998) argued that “everything actual contains opposed determinations within it, and in consequence the cognition and, more exactly, the comprehension of an object amounts precisely to our becoming conscious of it as a concrete unity of opposed determinations” (p. 160). Hegel argued that each thought category, starting with the initial indeterminate thought of being, holds within it its opposite, nothing. Within life, inheres death, or mortality. Within death, inheres immortality, perpetual life. Thus, dialectics as a worldview is “destructive of neat systems and ordered structures, and compatible with the notion of a social universe that has neither fixity or solid boundaries” (Murphy, 1971, p. 90). Hegelian thought emphasizes this blurring of boundaries and the underlying unity of opposed determinations. When applied to discourses of CSR, a dialectical approach holds the potential to highlight the inherent oneness of apparently fixed and deterministic thought categories. For instance, a dialectical examination could unearth the blurring of boundaries among constructs such as empowerment and exploitation, the public and the private, strategic and altruistic. In addition to the dialectical notions of the co-existence of contradictions and the unity of opposed determinations, another important notion is the interplay of unified oppositions. It is perhaps this aspect that most distinguishes a dialectical perspective from a dualistic one. Dualisms are binary opposites that are considered static and isolated and are characterized by an either/or relationship (Miller, 2002). In dualisms, interaction and interdependence between the binary opposites are not possible, and they exist in parallel as antagonisms. On the other hand, the dialectical perspective focuses on the co-existence and interaction between opposing forces and emphasizes how social actors manage the co-existence of oppositions in a both/and fashion. Marxian scholars have also highlighted this notion of interplay of oppositions. Writing about the coexistence of capital and wage labor, Mandel (1979) argued, “The one cannot exist without the other. But this in no way means that the one is not constantly trying to throw off the other, that the proletariat is not trying to suppress capital and wage-earning, trying therefore to supplant capitalism, that capitalism has not the tendency to supplant living labour (wage labour) by ‘dead labour’ (machinery)” (p. 163). This interplay and interaction among oppositions drive change in any social system. The notion of conflict and contradiction as a necessary condition for change is another core concept common to all dialectical

A Dialectical Approach to Analyzing Polyphonic Discourses

163

approaches. In fact, Mandel (1979) suggested that the logic of contradiction and the logic of motion or change are identical definitions of dialectics.

Change, Motion, and Flux Wherever there is movement, wherever there is life, wherever anything is carried into effect in the actual world, there Dialectic is at work. (Hegel, 2009[1892], p. 148)

A fundamental cause of all change and transformation is the internal contradictions of the changing object. Contradiction between ideas helps to reach truth, while conflict and struggle among individuals, nations, or classes trigger social change. Dialectics is the logic of motion, applicable to things that change and transform and do not remain static with fixed, impermeable boundaries (Caute, 1967; Elster, 1985; Fischer, 1996; Mandel, 1979). However, even though change is a fundamental feature of all dialectical approaches, there are differences in the understanding of the end-states of change. One approach, most evident in the works of Hegel and Marx, assumes an ideal end-state for processes of change wrought by dialectics. In this approach, the interplay of contradictions leads to a transcendental state, following the logic of thesis-antithesis-synthesis. The dialectic is the movement to a higher plane where one category of thought (being) passes over into or contains its opposite (nothing) and then synthesizes with that opposite into a third, higher category (becoming) that synthesizes the first two. … but we call dialectic the higher rational movement in which these, being and nothing, apparently utterly separated, pass over into each other on their own, by virtue of what they are, and the presupposition sublates itself. It is the dialectical immanent nature of being and nothing themselves to manifest their unity, which is becoming, as their truth. (Hegel, 2010[1833], p. 80)

Unlike Hegel, who applied dialectical reasoning to categories of thought, Karl Marx gave dialectical thinking a materialist basis. Marx identified the key material factor as the economic factor and argued that material evolution in the human world was a dialectical movement caused by the struggle between internal contradictions inherent in a society divided into classes. “Class struggle, resulting from the existence of antagonistic social classes in society, governs movement and change in societies divided into classes” (Mandel, 1979, p. 162). According to Marx, all of history is a history of class struggles. He identified dialectics at work in the historical movement

164

GANGA S. DHANESH

from primitive, classless society through the era of feudalistic, bourgeoisie, and capitalist societies. However, these processes of dialectical change in human societies are fraught with struggle and resistance. Marx believed that the proletariat held within itself the power to transform class relations and push human societies into more progressive forms. However, once a particular form of class domination has come into existence, the dominant element in the class relations will resist attempts to change and will try to maintain the imbalances in the status quo that privilege their dominant role in society. The growing incompatibility and antagonism between the forces and relations of production will escalate social conflict, leading to revolutions (Caute, 1967; Fischer, 1996; Mandel, 1979). Thus, oppositions and antagonistic tensions inherent in class division will dialectically transform society, as we know it, into a higher form. This process of social struggle, change, and transcendence will continue until man is one with himself, no longer alienated from the fruits of his labor, in a classless communist society. Thus, human history will progress dialectically, each epoch superseded by a higher variant as the dialectical process plays itself out (Freedman, 1990). Rather than this approach to dialectical reasoning that aims for a higher, final end-state, or a transcendental synthesis, Bakhtin argued for indeterminate change. To Bakhtin, any form of synthesis of oppositions was monologic, and monologic ideals that reduced the unfinalizable, pluralistic, and polyphonic nature of social life to determinate, closed, and totalizing concepts were in stark contrast to his arguments for dialogism. In the indeterminate approach to end-state, change resulting from the interplay of oppositions does not move linearly toward an ideal end-state. It merely leads to qualitative and quantitative changes that move the system to a different place. Bakhtin expounded this position on dialectics while analyzing Dostoevsky’s work: In every voice he could hear two contending voices, in every expression a crack, and a readiness to go over immediately to another contradictory impression; in every gesture he detected confidence and lack of confidence simultaneously; he perceived the profound ambiguity, even multiple ambiguity of every phenomenon. But none of these contradictions or bifurcations ever became dialectical, they were never set in motion along a temporal path or in an evolving sequence: they were, rather, spread out in a plane, as standing alongside or opposite one another, as consonant but not merging … (Bakhtin, 1984[1929], p. 30)

Gardiner (2000) suggests that Bakhtin’s dialogic approach refuses to finalize or predetermine outcomes, while Hegel’s and Marx’s dialectical approach seeks a final resolution. This chapter adopts Bakhtin’s dialogic

A Dialectical Approach to Analyzing Polyphonic Discourses

165

approach in conceptualizing end-states in the dialectical perspective of change and transformation in debates and discourses of CSR. In addition to these elements of contradiction and change that underpin dialectics, scholars have identified two more elements that are critical to dialectics: totality and praxis (Baxter & Montgomery, 1996; Rawlins, 1992, 1998).

Totality The notion of totality refers to interdependence and context. Each pole of a contradiction can be understood only in relation to the other pole. Thus, stability and change exist together and mutually define each other. We can understand change only by the lack of stability. Further, each of these sets of mutually interpenetrating contradictions is also related to other contradictions in the social system. For example, the tension between change and stability is intrinsically linked to the tension between novelty and predictability, between transience and permanence. Thus, “contradictions cannot be understood in isolation but are embedded in a total knot of interrelated contradictions” (Werner & Baxter, 1994, p. 355). Accordingly, dialectics embedded within discourses of CSR can also be understood only in relation with each other. The idea of totality also refers to the importance of context in dialectical interplay. Verbal discourse is a social phenomenon wherein the dialectics of the object are interwoven with the social dialogue around it (Bakhtin, 1981[1975]). Discourse and context are interlaced. “Discourse lives, as it were, beyond itself, in a living impulse toward the object; if we detach ourselves completely from this impulse all we have left is the naked corpse of the word, from which we can learn nothing at all about the social situation or the fate of a given word in life” (Bakhtin, 1981[1975], p. 293). Any attempt to understand contradictions stripped of their context is “just as senseless as to study psychological experience outside the context of that real life toward which it was directed and by which it is determined” (1981[1975], p. 292). Foster (1996) emphasized this notion of interconnectedness in his definition of the dialectic as “the inner contradiction within the nature of thought and of all things, the recognition that nothing can be understood in isolation or as a rectilinear sequence of cause and effect, but only as the multiple interaction of all factors and as being in conflict with itself: that everything, as it comes into being, produces its own negation and tends to progress towards the negation of the negation” (p. 40).

166

GANGA S. DHANESH

The concept of totality thus draws attention to the interconnections among interacting dialectical contradictions and the specifics of the contradicting process. Therefore, it is imperative that dialectical researchers study contradictions at both particular and universal levels (Baxter & Montgomery, 1996). Accordingly, this chapter argues for the importance of studying the specifics of the social, economic, political, historical, and cultural contexts within which social actors conceptualize, enact, and discursively frame CSR. The final element in enabling an understanding of dialectics is the notion of praxis. Praxis Praxis refers to the notion that people are simultaneously actors and objects of their own actions. The human communicator is, to Rawlins (1992, pp. 7, 8), “an ongoing producer and product of his or her choices within an encompassing cultural matrix.” As social actors, people communicatively express dialectical tensions inherent in everyday social life, which morph into prescriptive, normative social practices that in turn restrain or draw the boundaries for future communicative actions. Communication scholars situate praxis in the struggle between competing forces in the symbolic rather than material practices of social life. Thus, this chapter situates dialectics in the words and language employed by the social and organizational actors involved in the everyday organizing, enactment, and communication of CSR. Dialectical researchers in the realm of interpersonal communication have proposed a set of eight praxis patterns that illustrate how people communicatively struggle with, cope with, or manage dialectical tensions in everyday lives (Miller, 2002). These patterns are: • Denial: An effort is made to subvert, obscure, and deny the contradiction by legitimating only one pole of the contradiction. • Disorientation: A fatalistic attitude is adopted in which contradictions are regarded as inevitable, negative, and unchangeable. • Spiraling inversion: Each pole of the contradiction is dominant at various points over time. There is an ebb and flow between the two poles of the dialectic. • Segmentation: Each pole of the contradiction is dominant, depending on the nature of the topic or activity domain. • Balance: All poles are legitimated at once in a compromise. This serves to dilute each pole of the contradiction.

A Dialectical Approach to Analyzing Polyphonic Discourses

167

• Integration: Relational parties are able to respond fully to all opposing forces at the same time without compromise or dilution. • Recalibration: The poles of the dialectic are transformed in a particular situation so that they are no longer regarded as oppositional. • Reaffirmation: The contradictory poles of the dialectic are accepted and celebrated as enhancing the richness of the relationship. While denial and disorientation are dysfunctional patterns, the remaining six represent a functional pattern “that celebrates richness and diversity afforded by the oppositions of a contradiction and that tolerates the tensions posed by their unity” (Baxter & Montgomery, 1996, p. 60). Employing a dialectical analysis of discourses of CSR with an eye on unearthing the praxis patterns invoked by social and organizational actors as they communicatively construct and enact CSR could generate a more insightful understanding of the complexities inherent in everyday CSR work. To summarize, the key aspects of a dialectical approach include notions of contradiction, change, totality, and praxis. These aspects of dialectics that encompass ideas, such as the coexistence of multiple contradictions, the unity of opposed determinations, and the interplay between these unified oppositions as drivers of change, mingle with Bakhtinian ideas of the interconnectedness of multiple oppositions, the push and pull between centripetal and centrifugal forces, the significance of context, the importance of language as the site for expression of social contradictions, and finally, the praxis patterns invoked by social actors to navigate among multiple dialectical tensions inherent in heteroglossic, pluralistic environments. An application of such a dialectical perspective infused with elements of Bakhtinian dialogism to an examination of polarized and dualistic discourses of CSR could help to generate more nuanced and multi-layered understandings of CSR. The next section will draw the connections between dialectics and discourses of CSR.

DIALECTICS AND DISCOURSES OF CSR The study of CSR includes an examination of the material and discursive aspects of enacting CSR. It includes not only the study of material aspects, such as the key activities carried out within the rubric of CSR and policies and processes enacted to manage the function, but more importantly, from a communication perspective, also the study of how social and organizational actors communicatively construct the meanings and drivers of CSR,

168

GANGA S. DHANESH

how they engage in an interpretive struggle among multiple competing meanings and realities. A dialectical analysis situates the study of CSR in the discursive spaces in which meanings of CSR are actively created and negotiated by social and organizational actors, specifically in the words and individual utterances of the actors embroiled in shaping practices and processes of CSR. The contradictions and oppositions that mark the construct of CSR and the diverse social contexts in which it is enacted are reflected in CSR talk generated by corporations, local communities, activist organizations, governments, and concerned citizens on diverse platforms such as websites, blogs, brochures, speeches, interviews, and books. Indeed, as Bakhtin (1981[1975]) propounded, language represents “the coexistence of socio-ideological contradictions between the present and the past, between different epochs of the past, between different socio-ideological groups in the present, between tendencies, schools, circles, and so forth …” (p. 291). Thus, this chapter situates the dialectic in the words, the individual utterances that together coalesce to form discourses of CSR. Communication scholars have theorized about differences in organizational life and the ways in which organizational actors discursively construct meaning systems that constitute daily organizational life. These scholars have argued that a holistic understanding of the differences, contradictions, tensions, paradoxes, and ironies inherent in organizational life can be achieved through a dialectical analysis that explores the co-existence of multiple, contradictory meanings and realities in the discursive space in which social actors actively engage to shape workplace practices and organizational behavior (Cheney & Ashkraft, 2007; Mumby, 2011; Stohl & Cheney, 2001; Tracy, 2004). Specifically, they have applied a dialectical framework to analyze issues such as organizational democracy, resistance and control in organizations (Ashkraft, 2005; Mumby, 2005; Stohl & Cheney, 2001), and communication between caregivers and patients (Considine & Miller, 2010; McGuire, Dougherty, & Atkinson, 2006), and in feminist studies (Buzzanell, 1995; Buzzanell & Liu, 2005). However, extant research on CSR has tended to be one-sided, often embracing either/or approaches to examine debates of CSR, pitting one pole of the contradiction against another in a clearly defined binary pair such as strategic CSR versus altruistic CSR. In order to create a richer, more nuanced and holistic understanding of the nature of CSR work enacted in pluralistic and complex environments, CSR theorizing must delve into a deeper and more reflexive examination of the ways in which social and organizational actors negotiate the dialectical tensions, contradictions,

A Dialectical Approach to Analyzing Polyphonic Discourses

169

and struggles embedded in the conceptual construction, enactment, and communication of CSR. To illustrate the dialectical approach to examining discourses of CSR, this chapter will discuss one of the prominent debates prevalent in extant discourses of CSR, specifically, empowerment versus exploitation, relating to the positive and negative consequences of corporations on society. This chapter will first present the dualistic treatment of the empowerment exploitation debate and then rearticulate these competing notions from a dialogic-dialectical perspective. From this perspective, social actors are balanced on a fine line, constantly acknowledging the coexistence of and navigating among competing poles of communicative action and calling into play one or more of the praxis patterns that enable them to manage the messy struggle among dialectical tensions inherent in everyday organizing and communicating.

REEXAMINING THE EMPOWERMENT EXPLOITATION DEBATE Portrayals of corporations as agents of either empowerment or exploitation, as friends or foes, have populated common understandings of the role of corporations in society. Very often the latter portrayal of corporations as perpetrators of exploitation and oppression predominates our collective consciousness, as a consistent stream of corporate misdeeds, wrongdoings, and irresponsibility percolate through channels of mass and social media. Examples abound: Union Carbide in India, Shell and the Ogoni tribe in Nigeria, Nike and its sweatshops in Asia, Sanlu and milk contamination in China. The global financial crisis has further blackened these portrayals of big multinational corporations as incapable of doing or generating any social good. On the other hand, a handful of corporations are hailed as heroes for engaging ethically with their stakeholders and for integrating socially and environmentally responsible processes and practices across the warp and weave of the organization. Examples include Ben & Jerry’s, Body Shop and the Tata group in India. These dualistic themes of corporations as entities that either empower or exploit have also permeated scholarly understandings of the effects of corporations on societies. In both popular and scholarly understandings, portrayals of corporations cluster around one or the other pole.

170

GANGA S. DHANESH

A Unidimensional Approach to Analyzing the Empowerment Exploitation Debate Tying in with the instrumental, strategic approach to CSR, the frame of empowerment portrays corporations as friends and saviours who generate economic opportunities, which might in turn help to reduce unemployment, help alleviate poverty, and help improve human social and economic development. This image of corporations as agents of empowerment draws upon economic multiplier arguments, such as corporations’ ability to generate income and investment opportunities, create jobs, build and improve physical and institutional infrastructure, and even plug governance gaps in emerging countries with weak political systems (Porter & Kramer, 2006; Visser, 2008). Further, concepts such as bottom-of-pyramid marketing (Prahalad, 2004; Prahalad & Hammond, 2002), in which corporations are seen as entities that bring otherwise inaccessible goods and services to the bottom tier of the socio-economic strata, also reify the frame of empowerment. However, this pole of the discourse that reifies corporations as saviours, friends, or agents of empowerment offers a counterpoint to those arguing against this pole. On the other end of the pole, scholarship portrays corporations as sinners and agents of oppression and exploitation who have been lambasted for transgressions ranging from environmental degradation, human rights violations, deforestation, and the creation of uneven playing fields to inculcating social dependencies through social giving programs (Breen, 2007; Munshi & Kurian, 2007; Prieto-Carro´n, Lund-Thomsen, Chan, Muro, & Bhushan, 2006). Cloud (2007) raised the Marxist argument that CSR is limited when conceptualized as a company’s externally directed benevolence and that the most important measure of a corporation’s commitment to CSR can be seen in its treatment of workers. However, Cloud also argued that such an inclusive conceptualization would be contrary to the basic injustices of capitalism directed at workers, the environment, the poor, and the victims of often-profitable wars. Other scholars such as Zorn and Collins (2007) have also endorsed this unidimensional perspective, that notions of CSR are essentially incompatible with capitalism constructed as a profit-maximization vehicle. Further, even though concepts such as bottom-of-pyramid marketing have been lauded for the benefits they have brought to disadvantaged sections of society, they have also been harshly criticized for being instruments of oppression, an additional device for corporations to exploit vulnerable publics (Karnani, 2007, 2009).

A Dialectical Approach to Analyzing Polyphonic Discourses

171

This one-sided approach of considering corporations either as empowering or exploiting entities does not acknowledge the dialectical notion that within one pole is embedded the seed of the other. Within processes and practices of empowerment lie the seeds of exploitation, a complexity that may be better understood by employing a dialectical approach.

A Dialectical Approach to Analyzing the Empowerment Exploitation Debate This section demonstrates the application of a dialectical approach to analyzing a predominantly dualistic debate that considers corporations either as agents of empowerment or of exploitation. It draws upon key aspects of a dialectical approach presented earlier such as (a) the notion of unity of opposed determinations, (b) the coexistence and interplay of multiple oppositions, (c) change and flux, (d) the importance of context, and (e) praxis patterns and applies these key aspects to the empowerment exploitation debate in order to tease out more nuanced and textured understandings that acknowledge the underlying complexities and dialectical tensions inherent in the empowerment exploitation debate. Unity of Opposed Determinations The dialectical approach emphasizes the obliteration of fixed boundaries and seeks within each thought category the seed of its opposite. Extending Hegel’s example that within life inheres death and within death inheres immortality and perpetual life, within the idea of empowerment inheres the idea of exploitation. To illustrate, this chapter will consider the example of a cement-manufacturing company that has operations in rural farmlands in India. This example could be representative of any manufacturing company that has operations in rural settings that might require the displacement of the original families who settled the land. In this particular case, the company acquired land for its operations after launching a campaign to convince the local farming community that the dust from the cement plant would not adversely affect their crops. However, the company had a bigger problem on their hands: the people whose lives had been disrupted and familiar livelihoods taken away due to acquisition of their lands for the cement plant. The company, being capital-intensive, could not offer jobs to all the displaced members of the community, so the company’s CSR team created a program to retrain the farmers who had lost their lands. They were trained to perform low-skilled jobs such as welding and driving

172

GANGA S. DHANESH

trucks. According to the CSR manager, the empowerment argument was that the free retraining increased opportunities for these farmers to access higher-paying jobs that would lead to an increased standard of living for the farming community that had been mired in poverty before the coming of the company. On the other hand, embedded in this argument of empowerment was the seed of exploitation, the loss of ancestral land, the loss of well-known ways of life, and the loss of community, dismembered by the presence of a corporation in their midst. Thus, inherent in the enactments and articulations of empowerment are the seeds of its opposite: loss, distress, and subsequently exploitation of the vulnerable. Coexistence and Interplay of Multiple Oppositions In the dialectical approach, focus is turned from binary oppositions to the co-existence of polyphonic contradictions that emerge when a forprofit entity enters the social space in heteroglossic and diverse societies that are permeated with multiple, opposing perspectives and viewpoints. These contradictions are not easily reducible to binary pairs such as empowerment exploitation, sinner saviour, strategic altruistic, public private, and duty consequences. Rather, they exist in a minefield of competing centrifugal and centripetal forces. For instance, at any point in time, alongside centripetal forces that privilege the discourses of corporations as entities that empower economic freedom and opportunities, exist similar radii of ideas such as progress, growth, development, liberation, and better standards of life. These multiple ideals were called upon in the case of the cement-manufacturing plant when the manager spoke about how the change in the farmers’ livelihoods led to higher-income opportunities, freedom from poverty, and better lifestyles. Playing off and against these centripetal forces are centrifugal forces that threaten to fray the edges of the dominant center by offering counternarratives, such as the exploitation of workers, the degradation of natural environments, and the loss of indigenous knowledge and ways of life. Specifically, in the case of the cement-manufacturing plant, “progress” was also accompanied by the introduction of social ills such as increased levels of alcoholism. Instead of examining binary oppositions pitted against each other such as empowerment versus exploitation, the dialectical approach considers the co-existence and dialectical interplay of the forces of empowerment and exploitation in a sea of multiple perspectives that could potentially include many radians of the empowerment exploitation argument, all playing with and off each other in a delicate dance of the dialectic. The centrifugal

A Dialectical Approach to Analyzing Polyphonic Discourses

173

forces refuse to lie dormant or silent. Instead, they actively add richness to the polyphonic spaces of discourse and offer opportunities for the dominant center to engage with these alternative voices and, in the process, effect change. Change and Flux The dialectical processes of navigating multiple competing forces hold within them the potential to trigger change. These processes hold within them the power to push centrifugal forces to center stage, dislodging the privileged center, only to find that the center will continue to be challenged by competing discourses from the fringes. Thus, this dialectical flux will continue displacing current understandings and articulations of CSR from one place to another. Following Bakhtinian logic, these change processes are not aimed toward an ideal end-state but merely move the discussion from one plane to another. Therefore, while the school of thought that reifies corporations as agents of empowerment might represent the dominant, unifying center, there always exists the possibility of revolutionary change where the inconsistencies of the situation could trigger struggles, pushing discourses of exploitation to center stage. In the case of the cementmanufacturing plant, the voice of activist groups who campaigned against the company represents centrifugal forces that hold within them the potential to disrupt the narrative of the dominant center. The Importance of Context Instead of separating each binary pair from the morass of social contradictions, the dialectical approach studies the interplay of these unified oppositions in their totality, in their relations with multiple other contradictions, and in their relations with the particularities of the context in which these contradictions live and play off each other. For instance, while the nature of the empowerment exploitation debate might be universal, the specifics of the social context in which these social phenomena occur will undoubtedly influence the specifics of the dialectical interplay. In the case of the cement-manufacturing plant, the specifics of the context, such as the nature of its CSR programs, its organizational leadership, the voices of activists, and the aspirations of the members of the local community, would determine the finer aspects of the dialectical tensions inherent in the situation, as well as the praxis patterns that social actors might invoke to manage these dialectical struggles. Hence, the specifics of dialectical oppositions must be studied within the richness of the social context in which they are embedded. Finally, the chapter comes to the last element of the dialectical

174

GANGA S. DHANESH

approach, praxis patterns employed by social and organizational actors as they attempt to conceptualize, enact, and communicate CSR in specific social, economic, political, historical, and cultural contexts. Praxis Patterns From the point of view of praxis, how can we come to understand the everyday tensions and struggles faced by social actors situated at the boundaries between their organizations and the organization’s web of constituencies, who actively face off and navigate the interplay amongst these unified oppositions? How do social actors organizational leaders, managers, employees, members of the local community, and activists articulate the complexities of navigating among competing poles of communicative action? What praxis patterns do they call into service to manage and articulate these everyday tensions at the boundaries of organizations, communities, and societies? Do they practice patterns of segmentation or denial? Do they subscribe to centripetal forces, ignoring the call of the centrifugal forces, or do they engage with both competing poles simultaneously? Answers to these questions would help to reorient researchers to a more nuanced, holistic, and richer examination of the multiple contradictions that underlie the dualistic approaches currently employed to analyze discourses of CSR.

CONCLUSION AND WAY FORWARD This chapter has proposed a dialectical approach to analyze discourses of CSR that might produce a richer and more nuanced understanding of extant discourses of CSR than do typical examinations with dualistic lenses. This chapter has attempted to probe under the surface, to analyze and understand the underlying messiness of CSR, replete with the interplay of apparently contradictory forces. The dialectical approach highlights the futility in compartmentalizing social experience into neat and tidy boxes. Rather, the dialectical approach to analyzing discourses of CSR emphasizes the dissolution of fixed boundaries, foregrounds the co-existence and interplay of multiple centripetal and centrifugal forces, and places much significance on the patterns of praxis by which social actors situated in the complexities of specific social contexts navigate among these dialectical tensions. In charting a way forward, it might be a fruitful exercise to extend the dialectical approach to analyzing the multiple debates rampant within

A Dialectical Approach to Analyzing Polyphonic Discourses

175

discourses of CSR. Other debates that might benefit from a dialectical analysis include the private versus public (the respective roles of business, government, and civil society in the social space), strategic versus altruistic (as drivers of CSR), and dissemination versus dialogue (in the communication of CSR by organizations). In the dialectical approach to examining discourses of CSR, the dialectic is located in the utterance, in the words of social actors who are actively engaged in everyday struggles among competing poles of communicative action. Since this chapter situates the dialectic in the words, the way forward would be to analyze CSR communication, or talk. This talk could be generated by organizations, on their websites, in CEO interviews, on blogs, and in speeches. It could also be generated by local communities affected by the presence of corporations in their communities. The voices of actors such as local leaders, community members, victims of corporate wrongdoing, and beneficiaries of corporate largesse and their families would offer a wealth of communication to be analyzed from a dialectical perspective. Finally, talk by civil-society bodies and governments can also be analyzed to unearth deeper, richer dialectical understandings of debates inherent in the discourses of CSR. Moreover, since centripetal and centrifugal forces are engaged in a constant process of change, it would also be beneficial to conduct longitudinal studies that can trace changes over time and space.

REFERENCES Ashkraft, K. L. (2005). Resistance through consent?: Occupational identity, organizational form, and the maintenance of masculinity among commercial airline pilots. Management Communication Quarterly, 19(1), 67 90. Bakhtin, M. M. (1981[1975]). The dialogic imagination: Four essays. (C. Emerson, & M. Holquist, Trans.). Austin, TX: University of Texas Press. Bakhtin, M. M. (1984[1929]). Problems of Dostoevsky’s poetics. (C. Emerson, Trans.). Minneapolis, MN: University of Minnesota Press. Baxter, L. A., & Montgomery, B. M. (1996). Relating: Dialogues and dialectics. New York, NY: The Guildford Press. Breen, M. (2007). Business, society and impact on indigenous peoples. In S. May, G. Cheney, & J. Roper (Eds.), The debate over corporate social responsibility (pp. 292 304). New York, NY: Oxford University Press. Buzzanell, P. M. (1995). Reframing the glass ceiling as a socially constructed process: Implications for understanding and change. Communication Monographs, 62(4), 327 354. Buzzanell, P. M., & Liu, M. (2005). Struggling with maternity leave policies and practices: A poststructuralist feminist analysis of gendered organizing. Journal of Applied Communication Research, 33(1), 1 25.

176

GANGA S. DHANESH

Caute, D. (Ed.). (1967). Essential writings of Karl Marx. London, UK: MacGibbon & Kee. Cheney, G., & Ashkraft, K. L. (2007). Considering the professional in communication studies: Implications for theory and research within and beyond the boundaries of organizational communication. Communication Theory, 17(2), 146 175. Cloud, D. L. (2007). Corporate social responsibility as oxymoron: Universalization and exploitation at Boeing. In S. May, G. Cheney, & J. Roper (Eds.), The debate over corporate social responsibility (pp. 219 231). Oxford, UK: Oxford University Press. Considine, J., & Miller, K. (2010). The dialectics of care: Communicative choices at the end of life. Health Communication, 25(2), 165 174. Elster, J. (1985). Making sense of Marx. Cambridge, UK: Cambridge University Press. Engels, F. (1940). Dialectics of nature. London, UK: Lawrence and Wishart. Fischer, E. (1996). How to read Karl Marx. New York, NY: Monthly Review Press. Foster, J. B. (1996). Introduction. In E. Fischer (Ed.), How to read Karl Marx (pp. 7 30). New York, NY: Monthly Review Press. Freedman, R. (1990). The Marxist system: Economic, political, and social perspectives. Chatham, NJ: Chatham House. Gardiner, M. E. (2000). Critiques of everyday life: An introduction. New York, NY: Routledge. Hegel, G. W. F. (1991[1830]). The encyclopedia logic (with the Zusatze) (T. F. Geraets, W. A. Suchting, & H. S. Harris, Trans.). Indianapolis/Cambridge: Hackett Publishing. Hegel, G. W. F. (2009[1892]). The logic of Hegel: Translated from the encyclopedia of the philosophical sciences (W. Wallace, Trans.). Oxford: Clarendon Press. Hegel, G. W. F. (2010). The science of logic (George di Giovanni, Trans.). Cambridge, UK: Cambridge University Press. Houlgate, S. (Ed.). (1998). The Hegel reader. Oxford, UK: Blackwell. Karnani, A. (2007). The mirage of marketing to the bottom of the pyramid: How the private sector can help alleviate poverty. California Management Review, 49(4), 90 111. Karnani, A. (2009). Romanticizing the poor. Stanford Social Innovation Review. Retrieved from http://www.ssireview.org/articles/entry/romanticizing_the_poor Kotler, P., & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: Wiley. Mandel, E. (1979). Introduction to Marxism (2nd ed.). London, UK: Ink Links. Marx, K. (1970[1859]). A contribution to the critique of political economy (S. W. Ryazanskaya, Trans.). Moscow: Progress Publishers. McGuire, T., Dougherty, D. S., & Atkinson, J. (2006). “Paradoxing the dialectic”: The impact of patients’ sexual harassment in the discursive construction of nurses’ caregiving roles. Management Communication Quarterly, 19(3), 416 450. Miller, K. (2002). Communication theories: Perspectives, processes and contexts. New York, NY: McGraw-Hill Higher Education. Mumby, D. K. (2005). Theorizing resistance in organization studies: A dialectical approach. Management Communication Quarterly, 19(1), 19 44. Mumby, D. K. (Ed.). (2011). Reframing difference in organizational communication studies: Research, pedagogy and practice. Thousand Oaks, CA: Sage. Munshi, D., & Kurian, P. (2007). The case of the subaltern public: A postcolonial investigation of corporate social responsibility’s (o)missions. In S. May, G. Cheney, & J. Roper (Eds.), The debate over corporate social responsibility (pp. 438 447). New York, NY: Oxford University Press. Murphy, R. (1971). The dialectics of social life. New York, NY: Basic Books.

A Dialectical Approach to Analyzing Polyphonic Discourses

177

Pal, M., & Dutta, M. J. (2008). Public relations in a global context: The relevance of critical modernism as a theoretical lens. Journal of Public Relations Research, 20(2), 159 179. Papa, M. J., Singhal, A., & Papa, W.H. (2006). Organizing for social change: A dialectic journey of theory and praxis. New Delhi: Sage. Porter, M. E., & Kramer, M. R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78 92. Prahalad, C. K. (2004). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Upper Saddle River, NJ: Wharton School Publishing. Prahalad, C. K., & Hammond, A. (2002). Serving the world’s poor, profitably. Harvard Business Review, 80(9), 48 57. Prieto-Carro´n, M., Lund-Thomsen, P., Chan, A., Muro, A., & Bhushan, C. (2006). Critical perspectives on CSR and development: What we know, what we don’t know, and what we need to know. International Affairs, 82(5), 977 987. Rawlins, W. K. (1989). A dialectical analysis of the tensions, functions, and strategic challenges of communication in young adult friendships. Communication Yearbook, 12, 157 189. Rawlins, W. K. (1992). Friendship matters: Communication, dialectics and the life course. New York, NY: Aldine De Gruyer. Rawlins, W. K. (1998). Writing about friendship matters: A case study in dialectical and dialogical inquiry. In B. M. Montgomery & L. A. Baxter (Eds.), Dialectical approaches to studying personal relationships (pp. 63 81). Mahwah, NJ: Lawrence Erlbaum. Scherer, A. G., & Palazzo, G. (2008). Globalization and corporate social responsibility. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. S. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 413 431). Oxford, UK: Oxford University Press. Schwarze, S. (2003). Corporate-state irresponsibility, critical publicity, and asbestos exposure in Libby, Montana. Management Communication Quarterly, 16(4), 625 632. Sriramesh, K., & Vercic, D. (2003). A theoretical framework for global public relations research and practice. In K. Sriramesh & D. Vercic (Eds.), The global public relations handbook (pp. 1 19). Mahwah, NJ: Lawrence Earlbaum. Stohl, C., & Cheney, G. (2001). Participatory processes/paradoxical practices: Communication and the dilemmas of organizational democracy. Management Communication Quarterly, 14(3), 349 407. Townsley, N. C., & Stohl, C. (2003). Contracting corporate social responsibility: Swedish expansions in global temporary agency work. Management Communication Quarterly, 16(4), 599 605. Tracy, S. J. (2004). Dialectic, contradiction or double bind? Analyzing and theorizing employee reactions to organizational tension. Journal of Applied Communication Research, 32(2), 119 146. Visser, W. (2008). Corporate social responsibility in developing countries. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. S. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 473 499). Oxford, UK: Oxford University Press. Werner, C. M., & Baxter, L. (1994). Temporal qualities of relationships: Organismic, transactional and dialectical views. In M. L. Knapp & G. R. Miller (Eds.), Handbook of interpersonal communication (2nd ed., pp. 323 379). Newbury Park, CA: Sage. Zorn, T. E., & Collins, E. (2007). Is sustainability sustainable? Corporate social responsibility, sustainable business, and management fashion. In S. May, G. Cheney, & J. Roper (Eds.), The debate over corporate social responsibility (pp.405 416). New York, NY: Oxford University Press.

BRAND HERITAGE AND CSR CREDENTIALS: A DISCOURSE ANALYSIS OF M&S REPORTS Deviraj Gill and Anne Broderick ABSTRACT Purpose The translation of corporate social responsibility (CSR) values in customer awareness and engagement with the CSR values with the corporate brand is a key challenge for UK retailers. This chapter examines the incorporation of CSR in the core brand discourse of Marks & Spencer (M&S), focusing on the interrelationship between CSR reporting and brand heritage. Design/methodology/approach Using Fairclough’s (1989) method of critical discourse analysis, this chapter reports on the key discourses around CSR to emerge from annual reports of M&S in the period from the 1940s to 2010s. Findings Findings identify how messages relating to CSR are shaped and presented to stakeholders, noting the textual patterns that emerge in the M&S discourse. Patterns included a substantial reliance on relational values, the strategic adoption of expressive values toward specific groups

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 179 199 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006026

179

180

DEVIRAJ GILL AND ANNE BRODERICK

(employees, suppliers), and textual cues such as metaphor and overwording as a means to draw out links to M&S brand heritage. Research implications The chapter highlights how we, as academics, need to consider both (a) the evolution of CSR reporting and how this reflects brand messages over time and (b) how CSR reporting is becoming integral in brand positioning for UK retailer brands. Practical limitations In dealing with archival materials, it is necessary to be selective and this can limit the range of textual patterns that might be articulated in the discourse analysis. Originality/value Limited research to date has examined the integration of CSR and brand heritage in organizational discourses. This study offers an in-depth examination of how this integration of CSR messages in brand communication has evolved for M&S one of the United Kingdom’s foremost retail brands. Keywords: Brand heritage; CSR reporting; critical discourse analysis

Over the past decade, the benefits organizations derive from behaving in a socially responsible way have been clearly articulated; improved financial performance (Johnson, 2003); building connections with consumers (Porter & Kramer, 2002); improved employee commitment; and reduced employee turnover (Miao, 2003). One key motivation for adopting more socially responsible initiatives centers on the relationships organizations seek to develop with customers (see Bhattacharya & Sen, 2003; Mohr & Webb, 2005). For many organizations, a focus on corporate social responsibility (CSR) may serve as a tool to inform stakeholders that they are concerned about societal and community issues, for other organizations the integration of CSR enhances brand image and corporate reputation. There is an ongoing debate as to whether organizations engage in CSR initiatives because they are good citizens and genuinely accept their obligations to society or alternatively, they believe that CSR will lead to an increase in profitability (Falkenberg & Brunsael, 2011). In either case, positioning an organization as being socially responsible requires organizations to continually inform stakeholders of their relevant CSR commitments. Grunig (1989) see CSR communication as a “central charter” in creating mutual understanding, managing potential conflicts and achieving legitimacy (Aldrich & Fiol, 1994) with stakeholders. Yet socially responsible organizations are

181

Brand Heritage and CSR Credentials

not adequately communicating their activities to their publics (Wilkinson & Balmer, 1996) and common guidelines on established CSR reporting have been difficult to achieve (Owen, 2003). Recent trends are upward voluntary reporting of CSR had risen significantly since 2005 (Kolk, van der Veen, Pinkse, & Fortanier, 2005). From a marketing perspective, a key reason for voluntary CSR reporting is the opportunity to portray the company in a favorable light (Stittle, 2002) and several past studies have noted the CSR orientation of UK companies (Jones, Comfort, & Hillier, 2007; Strong, 1995). It seems, however, no longer adequate to have a CSR orientation and the translation of the CSR message into customer awareness and engagement with the CSR values of the corporate brand seems to be the key challenge (Cornelissen, 2004, Knudsen, 2006). The incorporation of CSR in the core brand discourse and as part of brand heritage is difficult to achieve and limited research has examined the integration of CSR and brand heritage in the discourse that brands generate. This chapter takes this forward through an in-depth study of the representation of brand heritage in a discourse analysis of Marks & Spencer (M&S) annual reports with focus on how brand heritage is incorporated in CSR reporting. A brief theoretical overview on the stakeholder perspective on CSR and brand heritage literature is initially set out. The methodology (discourse analysis) adopted in the study is then outlined and findings examine how messages relating to CSR are shaped and presented to stakeholders, noting the textual patterns that emerge in M&S discourse. Findings identify the importance of relational values in CSR brand narratives and how the M&S discourse has evolved to address relevant stakeholder groups. One implication from the findings is whether CSR reporting in the discourses of even the most ethical brands can engage adequately with the customer.

LITERATURE REVIEW Corporate Social Responsibility

Importance of Stakeholders

Space does not permit a meticulous review of CSR and definitional constructs we offer a brief insight into the evolving nature of CSR constructs with focus on the stakeholder perspective. No universal definition of CSR has been agreed. The term CSR has multiple meanings frequent terms

182

DEVIRAJ GILL AND ANNE BRODERICK

include corporate responsibility, corporate citizenship, sustainability, and corporate social performance (Freeman & Hasnaoui, 2010). Dahlsrud (2008) and van Marrewijk (2003) see problems with the number of definitions, suggesting that they lean toward particular interests that cannot be easily reconciled. Most authors, for example, Snider, Hill, and Martin (2003), agree that the CSR construct describes the relationship between organizations and society; however the focus of planned CSR actions can fluctuate at given time periods (Pinkston & Carroll, 1996), thus what are regarded as essential CSR initiatives seems to evolve as social external concerns change. Social responsibility is not a new concept for organizations. Adam Smith’s (1937) classic mention of the invisible hand of the market place a metaphor to indicate unintentional prosperity for the common good was followed in the 1920s by an alternative view by Clark (1926), who stated that “business has obligations to society” (Freeman & Hasnaoui, 2010, p. 420). Marinetto (1999) argues that it was business leaders with religious conviction who promoted social responsibility in the early days. A later perspective by Carroll (1979) is credited with widening the definition of corporate obligations to include responsibilities that take account of economic, legal, ethical, and discretionary factors. The notion of organizations “going beyond” their obligations was supported by McWilliams and Siegel (2001, p. 117) who define CSR as: “…. some social good, beyond the interests of the firm and that which is required by law.” Parallel with a widening interpretation of the scope of CSR, the depth of obligations has also expanded we might argue that it is the current elasticity of the CSR concept that makes it so difficult to incorporate effectively in brand discourses. Against this expansion of the range of CSR obligations, the motivation to invest in CSR programs has grown in significance this significance can be directly linked to the need for organizations to match the expectations of multiple stakeholders (Argandona, 1998; Freeman, 1984; Harvey & Schaefer, 2001; Post, 2003). The idea of stakeholder theory linked to CSR was first mentioned by Johnson (1971) where he began to critique existing definitions of CSR and stated: A socially responsible firm is one whose managerial staff balances a multiplicity of interests. Instead of striving only for larger profits for its stockholders, a responsible enterprise also takes into account employees, suppliers, dealers, local communities and the nation. (Johnson, 1971, p. 50)

Reference to multiplicity of interests highlights the need to acknowledge duties to employees, suppliers, dealers, and local communities (echoing

Brand Heritage and CSR Credentials

183

Carroll, 1999). This premise was later developed by Freeman, who defines stakeholders as those groups without whose support the organization would cease to exist (1984, p. 31). More concretely, Jones (1980, pp. 59 60) focused on “obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract… a stakeholder may go beyond mere ownership.” Arguing for an interrelationship between companies and their stakeholders, Freeman (1984) notes active participation from stakeholders as necessary for successful CSR implementation and Lantos (2001) identifies customers and employees as two key stakeholder groups whose welfare, needs, and wants should be given priority. In order to create and maintain relationships with stakeholders, organizations now attempt to conduct their CSR practices as a means to generate trust (Berens, van Riel, & van Rekom, 2007). However, this is challenging Shrum, McCarty, and Lowrey (1995) highlighted the cynicism of consumers toward organizations in relation to CSR brand communications. Stakeholders can be harsh critics of claims if CSR initiatives are embarked on only as a form of compliance following key stakeholder pressure (e.g., environmental groups). For example, ALDI, in 2004, received criticism for selling garden furniture from Indonesian Meranti wood in Germany as the furniture did not indicate that the timber was sourced legally and ethically. An environmental group, supported by the public, put pressure on ALDI to withdraw the furniture from the market. In response to this, ALDI declared that it would sell furniture with the FSC certificate, which promotes sustainable forestry (http://www.robinwood.de/german/presse/040526.htm). Such vigilant scrutiny of how CSR claims are communicated to publics (Mia & Mamun, 2011) is now a fact of corporate life. How the corporate brand is perceived and assessed by internal and external audiences is an ongoing concern for many organizations, as evident in research in the United States and United Kingdom (Robertson & Nicholson, 1996) which revealed that companies tend to formulate their plan of social behavior to align with specific stakeholder groups. It is argued by Snider et al. (2003) that stakeholder theory is a useful platform to evaluate CSR and social reporting activities.

Brand Heritage and the Link to CSR Kotler, Armstrong, Saunders, and Wong (1996) define brand as “a name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers.” Taking this further, Kitchin (2003) integrates CSR into the branding definition, stating that

184

DEVIRAJ GILL AND ANNE BRODERICK

brands are designed to embody the core values of a product. Thus, if CSR is a core part of the brand, then associated CSR activities communicate these brand characteristics in some way. CSR links strongly to corporate brand identity through brand heritage, a concept distinct from business history. Hudson (2011) argues that business history involves systematic investigation, using historical research; in contrast, brand heritage involves the informal employment of historical themes, narratives and images by practitioners to achieve a marketing advantage. Urde, Greyser, and Balmer (2007) define brand heritage as a dimension of a brand’s identity which is found within its track record, longevity, symbols, core values, and history. Track record relates to demonstrated performance and core values are the values which guides the organizations corporate behavior (Urde, 1997). Lencioni (2002) argues that core values may act as a code of beliefs and become integral to brand identity and to establishing the brand’s heritage. The reflection of a company’s past in symbols (logos and design) can be influential, as can the organization’s history, whereas longevity may not result in brand heritage, but may be an influence on how the brand operates (Urde, 1997). Arguing against the five elements, Hakala, Latti, and Sandberg (2011) note that track record overlaps with history and core values; suggesting instead that consistency and continuity, rather than longevity, can capture the feel of the positioning strategy and the stability of underlying brand themes over time. In contrast, Banerjee (2007, p. 314) sees history, image, expectancy, and equity as representing the four main pillars of a brand’s heritage. The characterization of brand heritage becomes significant when a company seeks to parallel their CSR commentary with their corporate brand discourse. In order for CSR to be successfully incorporated into the corporate identity of a brand, organizations must take into consideration their relationship with stakeholders (Russo & Perrini, 2010). Yet we have argued above that CSR representation has become more complex, with multiple focus points; stakeholders are now more vigilant toward organizations and their social responsibility claims. Lantos (2001, p. 623) advises against “public relations fluff to look good in employees and the public’s eyes,” instead he advocates reinforcement of CSR commitments through statements that outline the organization’s philosophy, brand values, and social responsibilities in a public forum. Companies now seek to present their public CSR face as part of their brand positioning in multiple ways (Nielsen & Thomsen, 2007). A few companies have strategically implemented CSR advertisements that can be visually persuasive to build

Brand Heritage and CSR Credentials

185

brand confidence, for example, Shell’s advertisements in The Economist are usually visual, such as showing a fox in a green countryside environment against the background of an oil refinery. Most organizations have at least begun to integrate social value statements as part of their core brand vision in annual reports (see De Bakker, Groenewegen, & den Hond, 2005).

Rationale for looking at Marks and Spencer Case Where branding ideas seem to link to active CSR implementation is (a) the building and protection of corporate reputation (Middlemiss, 2003) and (b) incorporating CSR initiatives in brand strategies to gain the trust of a range of stakeholders as a means of differentiation from competitors. The incorporation of CSR in the core brand discourse and as part of brand heritage is difficult to achieve and limited research has examined the integration of CSR and brand heritage in the discourse that brands generate. This chapter addressed this through qualitative research that examines the interlinking of CSR and brand heritage for one multigenerational UK brand M&S. In terms of the company choice on the one hand, it was important to select a brand with a distinct heritage the M&S brand longevity exceeded 60 years, was UK-based, and had the potential of a welldocumented social history. This accords with Blomblack and Brunninge (2009) assertion that research should pay attention to older, multigenerational family businesses due to their interesting corporate identity. On the other hand, the M&S brand incorporated a range of activities that were at least national in scope and were diverse enough to present discourses that might reflect varying aspects of CSR. Furthermore, current corporate actions (e.g., publication of Plan A) appeared to conform to the recent efforts of many UK companies to strategically position their CSR efforts and to report their CSR credentials toward identified audiences. Thus, there was a “recency” element to this case choice. The study sought to address three research objectives (a) to decipher the textual patterns adopted by M&S in their CSR commentary in annual reports, (b) to distinguish the extent to which specific stakeholder groups were targeted in the discourse, and (c) to identify which elements of brand heritage were prominent in the discourse and how such elements were integrated with the CSR message.

186

DEVIRAJ GILL AND ANNE BRODERICK

METHODOLOGY Rationale for using Annual Reports for Discourse Analysis of M&S In order to get a view of the evolution of CSR reporting and to ascertain brand-related accounts targeted at stakeholders, it was necessary to capture HOW the brand-related content of CSR was shaped not just in present but also in prior communications. To achieve a consistent picture of the development of brand-related CSR commentary, it was important to consider CSR message content from a consistent document format. The use of the discourse in company annual reports by a range of stakeholders as a unified source of corporate information and their widespread dissemination (Deegan & Rankin, 1997) has made them a favored document to analyze in past studies of CSR communication. In this study, as an example of discourse, annual reports are important documents in terms of the organization’s construction of its own social imagery (Hines, 1988; Neimark, 1992). This is consistent with Fairclough (1995), who views critical discourse analysis as a social practice, which constitutes social identities, social relations, and the knowledge and meaning systems of the social world. Fairclough’s perspective is that texts (e.g., annual reports) and social contexts are linked collectively and mediated by discourse practices which are generated, expressed and reexpressed through a diverse process (Pesonen, Tienari, & VanhalaA, 2009). In this study, we adopted Fairclough’s (1989, 1995, 2005) approach to critical discourse analysis focusing on the ways in which messages relating to CSR are shaped and presented to different stakeholders throughout M&S’ history. There are some acknowledged limitations to only using annual reports. Gray, Kouhy, and Lavers (1995) and Zeghal and Ahmed (1990) suggest that a range of formats should be monitored if one is to capture the CSR messages by an entity. Press announcements were considered however, press announcements are produced by media outlets and journalists (Maat, 2007) and therefore are not directly produced by the organization this did not accord with our objective. With the focus on brand portrayal, annual reports were favored as they are a means by which organizations seeks to establish an image in the public sphere through voluntarily reporting and presenting a “reality” of corporate life (Hines, 1989).

Data Collection and Analysis Data collection involved several visits to the M&S archive in Leeds, where the authors obtained copies of the M&S annual reports from the

Brand Heritage and CSR Credentials

187

1940s to 2010s. The use of multiple reports across these time periods helped gain a clearer understanding of how the brand heritage elements link to CSR within different discourses the brand generates. A total of 43 annual reports, sampled on an even year basis were analyzed. The communicative events chosen for analysis are selected extracts from the reports. While analytical software packages may add rigor and prestige to a data set, or add to the quality of analysis (Ozkan, 2004), Barry (1998) notes how use of such packages may create distance between the researcher and the data in this case software such as NviVo was not used. Data were manually analyzed documents were scanned by authors a number of times, with manual selection of extracts where words, phrases, expressions, and metaphors relevant both to CSR and to brand portrayal became evident. Coding of phrases and words outlined patterns of occurrences of CSR initiatives implemented by M&S and highlighted where themes overlapped and where brand-relevant commentary was allied to SR statements. The selected extracts were then typed up into a separate Microsoft Word document where Fairclough’s discourse analysis was applied to the data. The initial descriptive analysis concentrates on communicative events following three analytical categories vocabulary, grammar, and textual structures which characterize the discourse form (Fairclough, 1989). The analysis of grammatical features and vocabulary illustrate how grammatical forms of language code happen in the text for particular purposes (Nielsen & Thomsen, 2007). After five documents had been analyzed by each researcher, the discourse categories and related coding were compared where analyzed excerpts were exchanged and a meeting was held to examine the accuracy and consistency of the categories being applied. Some filtering of the applied categories was then undertaken for example, Fairclough (2007) originally had 10 key questions that were applied to text extracts we refined these and omitted some that were less relevant (e.g., sentence modalities) and combined other questions to ensure more robust explanatory value that could capture depth in terms of text values in text production. At the interpretation stage of analysis, the process of text production and text interpretation were briefly analyzed the wider situational context of the discourse organization is examined and links between selected excerpts and the stakeholder audience were considered. By examining the situational cues in CSR-related excerpts from Fairclough’s (2005) perspective, that is, why this discourse, why now this enabled the authors to develop insights into the way M&S have sought to shape their commentary to stakeholder groups. Both levels of analysis offer insight into how the organization conveys their socially responsible credentials.

188

DEVIRAJ GILL AND ANNE BRODERICK

RESEARCH FINDINGS It is not possible to address all discourse elements in this section explanatory dimensions that are part of the findings are noted in Table 1. We report on three patterns in the discourse that seem to reflect CSR narratives that are interlinked with elements of brand heritage (i) the way in which stakeholders are addressed in company reporting practices through relational values in the discourse, values that appear to embody the brand Table 1. Descriptive Stage Selected DA Elements

Explanatory Dimensions as Part of the Research Findings. Definition of DA Elements

Application in Text Production

Explored illustrations of experiences portrayed in the text when addressing stakeholders, for example, references to the “valuable spirit” Relational A trace/cue to the social relationships Relational values explored values which are enacted via text in the representations of how discourse (Fairclough, 1989) stakeholders are addressed in CSR commentary which are embedded within the brand heritage elements, for example, “we have continued to maintain close and cordial relations” Expressive Explores subjects and social identities Expressive values in the text values through only one dimension explored clear brand identities concepts is to do with subjective which are proactively portrayed in values (Fairclough, 1989) the discourse, for example, metaphorical representations of “the family” Rewording/ Over-wording/ rewording shows Over-wording of certain phrases can Over-wording preoccupation with some aspect of show concern to particular CSR reality (Fairclough, 1989). or can reinforce ideologies, for example, reinforcement of core values. Classification The classification scheme constitutes Classification schemes within the schemes a particular way of dividing up discourse explored on one hand, some aspect of reality which is built identification of promises made to upon a particular ideological stakeholders and on the other representation of that reality fulfillment of promises made. (Fairclough, 1989). Experiential values

A trace/cue to the way in which the text producer’s experience of the natural or social world is represented (Fairclough, 1989)

Brand Heritage and CSR Credentials

189

history, longevity and track record, (ii) illustrations of experiential values and shared narratives when addressing employees, and (iii) the emergence from 2000 onward of a clearer emphasis on expressive values and classification schemes that exemplify core brand values in the discourse reflecting a period when M&S sought to strategically reinforce their brand reputation and recover their market position.

Addressing Stakeholders through Relational Values in CSR Accounts to Reflect Brand History In annual reports in the 1940s emphasis is placed on creating relational values within the text, conveying differentiated relationships between the company and manufacturer on the one hand and that of the organization and staff on the other. In the quote below, use of the words “co-operation,” “collaboration,” and “together” appear to convey a sense of common purpose a relational value: We have continued to maintain close and cordial relations with our suppliers. We are glad to say that by effective co-operation we have been able, together, to surmount many difficulties. We thank them for their valuable collaborations. (1944)

The producer of the text implies a friendly relationship. In comparison, in the excerpt below, a sense of benevolent concern centered on employee well-being emerges: We are maintaining our Welfare Services… A no. of our employees are now receiving pensions from the Marks and Spencer Benevolent Fund, after long and faithful service with the Company. (1944)

Reference to the benevolent fund highlights the monetary assistance provided to the employees of the organization where social responsibility is suggested in the relational values expressed. Text production shows a selective use of language for particular stakeholders. Where links between brand heritage elements and CSR were established in early reports, they seemed to center on track record, as in the excerpt below where the original date of the initiative is cited This Fund (i.e. Benevolence Fund) was established in 1936… (1944). This track record for employee well-being is cited again in the 1972 report, thirty years later, as the company highlights a continuity (noted as part of brand heritage by Hakala, Latti, & Sandberg, 2005) in their commitment to stakeholder welfare. The pronoun we is frequently used in CSR related comments, where the producer seeks to

190

DEVIRAJ GILL AND ANNE BRODERICK

highlight M&S actions on behalf of key stakeholders but the semantic meaning in the text changed over time. We take this opportunity of thanking our suppliers for their co-operation this year. We look forward to the time when restrictions and limitations on procedures will be removed. (1946)

In addressing suppliers, the use of the word “we” here is slightly more formal the excerpt exemplifies what Fairclough (2007) refers to as process and participant here the pronoun “we” reflects the directors showing appreciation towards their participants, which in this case are the suppliers. Also interesting is the tense of the message where earlier reports highlight past and present tense, in this excerpt the pronoun makes reference to a common future (we look forward to…) in a postwar Britain with their suppliers. While there is a continuous thread of M&S concern from the 1940s to 1970s for stakeholders interests (as in classic stakeholder perspectives on social responsibility stated by Harvey & Schaefer, 2001; Freeman, 1984; Johnson, 1971), some brand heritage references linked to social responsibility were intermittent with vague reference to principles but a lack of reinforcement of what principles are, as Our policy is based upon certain principles which have been responsible for the continuous growth of our business (1966). These limp text references seemed to lack any classification scheme. Conversely, other annual reports sought to establish a more concrete corporate history, with an accompanying classification scheme of the founder as a man of social principle and inspiration a historical figure: Lord Sieff was interested in human and social problems and, above all, in people…his philosophy and the principles which he formulated will remain a treasured example to his successors. (1972)

Paying tribute to Lord Sieff, this excerpt establishes his fundamental principles as a central historical part of the M&S brand thus linking the core values and history of the organization to a definable, concrete person. While not directly indicating current CSR actions, the link between the brand and interest in human and social problem is established, followed by an assurance that the founding philosophies will remain. This presentation of values is a powerful rhetoric of CSR credentials but such rhetoric was an inconsistent feature of text production in reports from the 1960s to 1980s. The producer of the CSR discourse attached to brand reflects the prevailing situational context in the way M&S brand values adapt to relevant social concerns across time periods. One brand value that is given

Brand Heritage and CSR Credentials

191

voice in annual reports of the late 1970s is the social commitment to local suppliers denoting support of British industry. Similar excerpts from this period restate the pledge that M&S made to adhere to one of Lord Sieffs founding principles to source many products in Britain. For older readers, these references suggested a longevity to local sourcing. For readers who were unfamiliar with the founding principles of M&S, timeline references, for example, fifty years or more recreate a past relationship. This discourse of commitment to local sourcing extended into the 1980s but in this period a more strategic kind of referencing occurred in annual report discourses the classification scheme moved from the personalized heroic image of Lord Sieff of the early 1970s to a more quantified argument citing economic contribution with references framed in terms of working with suppliers to reduce environmental harm, see the excerpt below: In 1974 we started our energy conservation campaign … we now use 30 per cent less energy than we would have. We continue to invest in … (1980)

With date references, longevity of an initiative and claims of achievement are juxtaposed. This kind of dual narrative the establishment of longevity of a social or environmental initiative, followed by the expression of current achievement from the initiative over a time period became a characteristic pattern in this and later M&S annual reports when reflecting on socially responsible policies. While it offers clarity of purpose, it seems rather pallid in rhetorical value. In contrast, some 1980s discourses adopted a classification scheme of short memory pieces that sought to educate the readers about organizational history, using an autobiographical tone: One hundred years ago Michael Marks, my grandfather, an immigrant from Lithuania, set up his stall in Leeds Open Market with £5 loaned him… a small textile wholesale merchant. I do not suppose that either foresaw what that market stall would become by 1984, one hundred years later. … they established principles which have been the foundations on which Marks and Spencer has been built and to which it owes its success and reputation. Teddy Sieff succeeded my father, and I followed Teddy as Chairman; we built on the principles our predecessors had established. (1984)

The company history is made real to readers with the use of the first person, which sets a more informal tone I suppose… and I followed… encouraging the reader to engage with the text. This storytelling narrative uses key facts (Polkinghorne, 1988) to emphasize how the M&S brand began and the degree to which it was imbued with a principled approach following this personal narrative, the core values of the organization are set out as a manifesto. Short bullet points enable the readers to digest the information. Key tenets of social responsibility emerge commitment to customers,

192

DEVIRAJ GILL AND ANNE BRODERICK

close cooperation with suppliers; sourcing of local British products and maintenance of good human relations rounding out the self-presentation of heritage in a directed narrative.

Illustrations of Experiential Values when Addressing Employees So far, we have noted relational values, over-wording, certain classification schemes and strong narrative elements within the M&S annual report discourse from the 1940s to 1980s. More subtly, the discourse also incorporated experiential values. Experiential values identified within a text provide an indication of how readers may derive some sense of social identity from the text (Fairclough, 2007). Experiential values were particularly notable when M&S seemed to focus on employee-linked discourses. Interpretations indicate that the content of the reporting had evolved by the 1960s, with more focus in text production on creating collective shared experiences through experiential values which individuals can recount and share. Metaphorical representations of the “family” featured in annual reports, drawing on the social essence of the brand these were particularly targeted toward pensioners of the organization, see the excerpt below: Our pensioners now number nearly 700 and our concern for their well-being continues…They are visited frequently, helped where necessary and is encouraged to keep in touch with their friends… They continue to enjoy many of our staff amenities and they know as members of the Marks and Spencer family they need fear neither isolation… (1964)

Here, the text emphasizes that the well-being of employees is ongoing and doesn’t stop once they leave. These initiatives are cues within the text which embody experiential values with focus on how pensioners experienced the social world, possibly creating a shared experience which readers may relate to. Later emphasis on the family unit focuses on employees who are currently employed by the organization from the 1970s to early 1980s; here the text production is illustrative of experiential values enacted within the text which audiences can relate to: We think of Marks and Spencer staff as being members of a family… (1970). Such metaphors also suggest an embedded organizational authenticity an element of retro brand authenticity (Brown, Kozinets, & Sherry, 2003). Cues that are embedded in texts to create a constructive authenticity through perceptions from personal experience and representations, for example, family spirit may serve as tools in (a) constructing a shared ideology of the past in present times and (b) in

Brand Heritage and CSR Credentials

193

triggering nostalgic recollections with individuals. Interestingly, from 1986 onward, references to a “family” atmosphere or the “family spirit” are not evident, reflective of inconsistency in brand rhetoric. A Clearer Emphasis on Expressive Values with Restatement of Core Brand Principles as a Strategic Kind of Discourse for External Audiences In the later period from the 1990s to 2010s, less relational or experiential values were noted and more expressive values defining the corporate brand occurred in texts. Positioning of SR as integral to the corporate brand was more overt the producer in the 2002 report adopted an apologetic tone with recognition that the organization had lost touch with their customers. An unmistakable reemphasis on reminding readers of the core M&S corporate brand values was apparent. The excerpt demonstrates a sophisticated text production that seeks to offer a “true” voice of the traditional M&S heritage. We have tapped into the values and qualities that customers traditionally associated with our brand but tended to be obscured in recent years. We have succeeded not by inventing a new Marks and Spencer but by discovering the fundamental strengths… (2002)

In 2006, for the first time in the analysis of the annual reports, the producer links the term CSR to brand heritage through core values. Declarative sentences and repetition of values appears to convey urgency to inform readers: CSR is very important to us. It reflects the way we have always conducted business and underpins our core values Quality, Value, Service, Innovation and Trust. (2006)

A second period when less relational and experiential values are in evidence occurs in the post-1990 reports in interpreting the environmental discourse, the tone adopted in illustrating credentials is proactive and practical. A wider breadth of representation of key contributors was notable. Framing of environmental issues in annual reports explicitly included external stakeholders such as Groundwork. Thus a more inclusive agenda is set out that relies less on single brand heritage elements such as core values/ brand history of M&S and links to a more future-oriented presentation of shared responsibility: Concern for environmental issues has led us to support a range of projects including five for Groundwork in the North West where young people are encouraged to participate … (1990)

194

DEVIRAJ GILL AND ANNE BRODERICK

The emphasis on working with suppliers to combat climate change continues to be evident in their reporting into 2010s. Discourses in reports now specifically name key external partners: Plan A has also re-emphasised the value of partnership in driving social and environmental change. Groups such as Forum for the Future, Oxfam, WWF … and many others have played an important role in helping us deliver Plan A to date. (2010)

Reference to “partnership” implies M&S have developed a cooperative relationship with each of the stakeholders mentioned above, and work closely with them in order to achieve objectives set out in their Plan A initiative. The SR credentials are enhanced in the “affiliate” names reflecting in text production the situational context of the 2010s where significant SR achievements depend on interrelated actions by networks of organizations. The variant is that these relational values link less to concrete brand heritage elements than earlier discourses and are markedly less “experiential.”

CONCLUSION AND DISCUSSION Objective 1: Decipher the Textual Patterns adopted by M&S in Their Discourse What emerges from the annual reports from the 1940s to 2000s are intermittent narratives that actively seek to project social concern and responsibility as an intrinsic part of the M&S brand. In earlier years, SR actions are directly noted and addressed to different stakeholders whereas in the 1970s significant past figures for the brand emerge in the discourse in annual reports and efforts seem to present SR credentials through brand storytelling and a strong citation of the continuity of SR commitments. In terms of the discourse, relational, expressive and experiential values of the brand were an integral part of the construction of an intentional CSR commentary, directed at relevant stakeholders. The excerpts demonstrate that M&S has consistently sought to place their philosophy, core values and social responsibility together on a public forum (as Lantos, 2001 proposed). The efforts to express their philosophy that are uncovered in the findings reinforce the longevity in CSR reporting, a consistency in presentation of core values (the core values do not change in essence) and a willingness from their earliest history to communicate about social concerns with relevant publics. To this end, in the evidence of their track record portrayed,

Brand Heritage and CSR Credentials

195

they appear to fulfill both Clark’s (1926) early iteration of the obligations to society but also to address the stakeholder interest to go beyond obligation this is encapsulated in narratives that shifted from a philanthropic, social obligation (1940s 1960s) to a more recent proactive social intent through partnership as set out in Plan A (2010s).

Objective 2: Distinguish the Extent to which Specific Stakeholder Groups were Targeted This study reinforces the idea that CSR reporting is directly produced for specific stakeholders (Robertson & Nicholson, 1996). Commentary is adapted to social concerns of the respective time period, that is, expressed action in support for co. pensioners in the postwar period when times were hard; citation of policy of sourcing British products in late 1970s at a time when foreign producers were undercutting home production (e.g., cars and white goods sectors). At different points in the M&S timeline, reframing of the SR discourse occurred, as a response to external events and to different stakeholders (shared wartime narratives with pensioners differed from environmental responsibility statements of 1980s). Reframing occurred in the 2000s when SR narratives became more sophisticated, a greater range of documents to comment on SR were produced and a more strategic use of metaphor, symbol and textual values emerged to trigger nostalgic memories with audiences (Brown et al., 2003).

Objective 3: Identify Elements of Brand Heritage that were Prominent in the Discourse and How They Linked with CSR In identifying elements of brand heritage that were prominent in the discourse it is clear that brand heritage elements (Halaka, 2004; Urde et al., 2007) are powerfully present at certain times to evoke the sense of company societal concern. Nonetheless, the brand heritage concept, as set out by Urde et al. (2007) and applied to the discourse has limitations. There was clear overlap between track record and longevity, therefore suggesting that more integration between Urde’s et al. (2007) elements is necessary. While links between some brand heritage elements and CSR were apparent (track record, longevity, and core values), the use of brand symbols was not linked to CSR in the annual reports, in contrast to Urde et al. (2007), who argued that the use of symbols are required as an element for a brand to

196

DEVIRAJ GILL AND ANNE BRODERICK

imply heritage. Our interpretations support the work of Halaka et al. (2011), who argue that consistency and continuity should be considered key elements of brand heritage one of the more successful discourse elements was the use of relevant classification schemes and the selective use of relational and experiential values in texts these had a unifying effect. Nonetheless, there appears at times to be CSR fadeout … periods where less effective text production is in evidence in discourse. In some excerpts, vague brand values are alluded to but are not concrete enough for readers to grasp. These excerpts exemplified a brand rhetoric that was less consistent and classification schemes that did not integrate brand heritage and CSR credentials effectively. Thus, brand heritage representations are significant brands may face problems of not being regarded as “cutting edge,” and are at risk of losing loyalty if they do not reframe their authentic appeal to younger generations to ensure that consumers continue to access and recognize M&S CSR credentials. Penaloza (2000) notes that marketers are now turning back to their brand histories and original brand associations to authenticate their market value. Brand authenticity in terms of CSR that customers may acknowledge matters it can determine the degree of engagement with the CSR message.

REFERENCES ALDI. (2004) Will auf Tropenholz aus Raubbau verzichten. Retrieved from http://www.robinwood.de/german/presse/040526.htm. Accessed in May 2011. Aldrich, H., & Fiol, M. (1994). Fools rush in? The institutional context of industry creation. Academy of Management Review, 19(4), 645 670. Argandona, A. (1998). The stakeholder theory and the common good. Journal of Business Ethics, 17, 1093 1102. Banerjee, S. (2007). Strategic brand-culture fit: A conceptual framework for brand management. Journal of Brand Management, 15, 312 321. Barry, C. A. (1998). Choosing qualitative data analysis software: Atlas/ti and Nudist compared. Sociological Research, 3(3). Retrieved from http://www.socresonline.org.uk/ socresonline/3/3/4.html. Berens, G., van Riel, C. B. M., & van Rekom, J. (2007). The CSR-quality trade-off: When can corporate social responsibility and corporate ability compensate each other? Journal of Business Ethics, 74, 233 252. Bhattacharya, C. B., & Sen, S. (2003). Consumer-company identification: A framework for understanding consumers’ relationships with companies. Journal of Marketing, 67, 76 88. Blomblack, A., & Brunninge, O. (2009). Corporate identity manifested through historical references. Corporate Communications: An International Journal, 14, 404 419. Brown, S., Kozinets, R. V., & Sherry, J. F., Jr. (2003). Teaching old brands new tricks: Retro branding and the revival of brand meaning. Journal of Marketing, 67, 19 33.

Brand Heritage and CSR Credentials

197

Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of management review, 4, 497 505. Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business Society, 38, 268 295. Clark, J. M. (1926). Social control of business. Chicago, IL: University of Chicago Press. Cornelissen, J. (2004). Corporate communications, theory and practice. London: Sage. Dahlsrud, A. (2008). How corporate social responsibility is defined: An analysis of 37 definitions. Corporate Social Responsibility and Environmental Management, 15, 1 13. De Bakker, F. G. A., Groenewegen, P., & den Hond, F. (2005). A bibliometric analysis of 30 years of research and theory on corporate social responsibility and corporate social performance. Business and Society Review, 44, 283 317. Deegan, C., & Rankin, M. (1997). The materiality of environmental information to users of annual reports. Accounting, Auditing & Accountability Journal, 10(4), 562 83. Fairclough, N. (1989). Language and Power. London: Longman. Fairclough, N. (1995) Media discourse. London: Edward Arnold. Fairclough, N. (2005). Critical discourse analysis, organisational discourse, and organisational change. Organization Studies, 26, 915 939. Fairclough, N. (2007). Language and globalization. London: Routledge. Falkenberg, J., & Brunsael, P. (2011). Corporate social responsibility: A strategic advantage or a strategic necessity? Journal of Business Ethics, 99, 9 16. Freeman, I., & Hasnaoui, A. (2010). The meaning of corporate social responsibility: The vision of four nations. Journal of Business Ethics, 100, 1 25. Freeman, R. E. (1984). Strategic management: A stakeholder approach (p. 46). Boston, MA: Pitman. Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal, 8, 47 77. Grunig, J. (1989). Symmetrical presuppositions as a framework for public relations theory. In C. Botan, & J. Hazleton (Eds.), Public relations theory (pp. 17–44). Hillsdale, NJ: Lawrence Erlbaum Associates. Grunig, J. E. (2006). Furnishing the edifice: Ongoing research on public relations as a strategic management function. Journal of Public Relations Research, 18(2), 151. Hakala, U., Latti, S., & Sandberg, B. (2005). Operationalising brand heritage and cultural heritage. Journal of product & brand management, 20, 447 456. Hakala, U., Latti, S., & Sandberg, B. (2011). Operationalising brand heritage and cultural heritage. Journal of Product & Brand Management, 20, 447–456. Harvey, B., & Schaefer, A. (2001). Managing relationships with environmental stakeholders: A study of UK water and electricity utilities. Journal of Business Ethics, 30, 243 260. Hines, R. D. (1988). Financial accounting: in communicating reality, we construct reality. Accounting, Organizations and Society, 13, 251 261. Hines, R. (1989). Sociopolitical paradigms in financial accounting research. Accounting, Auditing and Accountability Journal, 2(2), 72–92. Hudson, B. T. (2011). Brand heritage and the renaissance of Cunard. European Journal of Marketing, 45, 1538 1556. Johnson, H. H. (2003). Does it pay to be good? Social responsibility and financial performance. Business Horizons, 46, 34 40. Johnson, H. L. (1971). Business in contemporary society: Framework and issues. Belmont, Calif: Wadsworth Publishing Company.

198

DEVIRAJ GILL AND ANNE BRODERICK

Jones, P., Comfort, D., & Hillier, D. (2007). Corporate social responsibility: A case study of the top ten global retailers. EuroMed Journal of Business, 2, 23 35. Jones, T. M. (1980). Corporate social responsibility revisited, redefined. California Management Review, 22, 59 67. Kitchin, T. (2003). Corporate social responsibility: A brand explanation. Journal of Brand Management, 10, 312 326. Knudsen, J. S. (2006). The global reporting initiative in Denmark: Emperor’s new clothes or useful reporting too? In M. Morsing & A. Kakabadse (Eds.), Corporate Social Responsibility. Reconciling Aspiration with Application (pp. 129 39). Hampshire: Palgrave Macmillan. Kolk, A. M., van der Veen, M., Pinkse, J., & Fortanier, F. (2005). KPMG international survey of corporate responsibility reporting 2005. Amsterdam: Graduate Business School. Retrieved from http://www.wimm.nl/publicaties/kpmg2005.pdf. Accessed on August 31, 2005. Kotler, P., Armstrong, G., Saunders, J., & Wong, V. (1996). Principles of marketing (The European ed.). Hemel Hempstead: Prentice Hall. Lantos, G. P. (2001). The boundaries of strategic corporate social responsibility. Journal of consumer marketing, 18, 595 632. Lencioni, P. M. (2002). Make your values mean something. Harvard Business Review, 80, 113 117. Maat, H. (2007). How promotional language in press releases is dealt with by journalists: Genre mixing or genre conflict. Journal of Business Communication, 44, 59 95. Marinetto, M. (1999). The historical development of business philanthropy: Social responsibility in the new corporate economy. Business History, 41, 1 20. Marks & Spencer. (1944). Reports and accounts. March 31, 1944, Leeds. Marks & Spencer. (1946). Reports and accounts. March 31, 1946, Leeds. Marks & Spencer. (1964). Reports and accounts. March 31, 1964, Leeds. Marks & Spencer. (1966). Reports and accounts. March 31, 1966, Leeds. Marks & Spencer. (1970). Reports and accounts. March 31, 1970, Leeds Marks & Spencer. (1972). Reports and accounts. March 31, 1972, Leeds. Marks & Spencer. (1980). Reports and Accounts 31st March 1980, Leeds. Marks & Spencer. (1984). Reports and financial statements. March 31, 1984, Leeds Marks & Spencer. (1990). Reports and financial statements 1990. Leeds. Marks & Spencer. (2002). Things are looking up. Annual Review and Summary Financial Statement 2002. Retrieved from http://corporate.marksandspencer.com/documents/publications. Accessed in September 2012. Marks & Spencer. (2006). Your M&S, annual review and summary financial statement. Retrieved from http://corporate.marksandspencer.com/documents/publications/2006/2006_ annual_review.pdf. Accessed in May 2012. Marks & Spencer. (2010). Your M&S, annual review and summary financial statement. Retrieved from http://corporate.marksandspencer.com/documents/publications/2010/annual_ report_2010. Accessed in May 2012. McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. The Academy of Management Review, 26, 117 127. Mia, P., & Mamun, A. A. (2011). Corporate social disclosure during the global financial crisis. International Journal of Economics and Finance, 3, 174 187. Miao, E. (2003). Managing brands in the new stakeholder environment. Journal of Business Ethics, 44(2/3), 235 324. Middlemiss, N. (2003). Authentic not cosmetic: CSR as brand enhancement. The Journal of Brand Management, 10(4), 353 361.

Brand Heritage and CSR Credentials

199

Mohr, L. A., & Webb, D. J. (2005). The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs, 39, 121 147. Neimark, M. K. (1992). The hidden dimensions of annual reports. New York, NY: Markus Wiener. Nielsen, A. E., & Thomsen, C. (2007). Reporting CSR what and how to say it? Corporate Communications: An International Journal, 12, 25 40. Owen, D. L. (2003). Recent developments in European social and environmental reporting and auditing practice A critical evaluation and tentative prognosis. Research paper series. International Centre for Corporate Social Responsibility, Nottingham. Ozkan, B. C. (2004). Using NVivo to analyze qualitative classroom data on constructivist learning environments. The qualitative report, 9, 589 603. Penaloza, L. (2000). The commodification of the American West: Marketers’ production of cultural meanings at the trade show. The Journal of Marketing, 82 109. Pesonen, S., Tienari, J., & VanhalaA, S. (2009). The boardroom gender paradox. Gender in Management: An International Journal, 24, 327 345. Pinkston, T. S., & Carroll, A. B. (1996). A retrospective examination of CSR orientations: Have they changed? Journal of Business Ethics, 15, 199 206. Polkinghorne, D. (1988). Narrative knowing and the human sciences. Albany, NY: SUNY Press. Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80, 56–68. Post, F. R. (2003). A response to the social responsibility of corporate management: A classical critique. American Journal of Business, 18, 25 36. Robertson, D. C., & Nicholson, N. (1996). Expressions of corporate social responsibility in UK firms. Journal of Business Ethics, 15, 1095 1106. Russo, A., & Perrini, F. (2010). Investigating stakeholder theory and social capital: CSR in large firms and SMEs. Journal of Business Ethics, 91, 207 221. Shrum, L., McCarty, J. A., & Lowrey, T. M. (1995). Buyer characteristics of the green consumer and their implications for advertising strategy. Journal of Advertising, 24, 71 82. Smith, A. (1937). The Wealth of Nations (1776) (p. 740). New York, NY: Modern Library. Snider, J., Hill, R. P., & Martin, D. (2003). Corporate social responsibility in the 21st century: A view from the world’s most successful firms. Journal of Business Ethics, 48, 175 187. Stittle, J. (2002). UK corporate ethical reporting A failure to inform: Some evidence from company annual reports. Business and Society Review, 107, 349 370. Strong, C. (1995). Are grocery retail buyers making greener purchasing decisions? Greener Management International, 11, 103 112. Urde, M. (1997) ‘Ma¨rkesorientering’ (Brand orientation). Doctoral thesis, Lund University Press, Lund. Urde, M., Greyser, S. A., & Balmer, J. M. T. (2007). Corporate brands with a heritage. Journal of Brand Management, 15, 4 19. van Marrewijk, M. (2003). Concepts and definitions of CSR and corporate sustainability: Between agency and communion, Journal of Business Ethics, 44, 95 105. Wilkinson, A., & Balmer, J. M. T. (1996). Corporate and generic identities: Lessons from the Co-operative Bank. International Journal of Bank Marketing, 14, 22 35. Zeghal, D., & Ahmed, S. A. (1990). Comparison of social responsibility information disclosure media used by Canadian firms. Accounting, Auditing & Accountability Journal, 3, 38 53.

CAN ONE REPORT BE REACHED? THE CHALLENGE OF INTEGRATING DIFFERENT PERSPECTIVES ON CORPORATE PERFORMANCE Adria´n Zicari ABSTRACT Purpose The chapter aims to analyse the challenges needed in order to achieve the full integration of corporate reporting. Approach As a viewpoint chapter, both theoretical and practical problems are presented. Findings On the theoretical side, there is still an elusive relationship between environmental, social and governance (ESG) indicators and financial performance. Conceptual models are still in the making and a global standard has not yet been achieved. Besides, as each company may have different CSR strategies, it might be difficult to achieve comparability among firms. On the practical side, there might be concerns

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 201 216 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006028

201

202

ADRIA´N ZICARI

about materiality of data (what actually merits to be informed) and the potential risks for disclosing additional information to the market. Social implications While the linkage between non-financial and financial results is not yet standard practice, it should be encouraged by stakeholders. The impact of integrated reporting is probably not going to be limited to investors and financial markets, as other stakeholders would have the opportunity to act on the information provided by these documents. Originality/value Integrated reporting is still a concept that is being developed. Thus, this chapter aims to contribute to this ongoing academic and practical debate. Keywords: Integrated reporting; social performance; financial performance; CSR; SRI; financial analysis

In the last few years, there has been an increasing trend towards the integration of non-financial and financial information in corporate reports. For instance, IIRC (2011) asks for a ‘clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value’, while the CDSB (2010) proposes to link climate-change-related information to data contained in financial reports. A4S (2010), a think tank in London, aims to ‘ensure that sustainability information is included in mainstreaming reporting’, and presents recent examples of this inclusive reporting in several companies in different industries (A4S, 2009). Eccles and Krzus (2010a) propose ‘One Report’, a document that ‘combines a company’s key financial and non-financial information into a single document’. These propositions are not only limited to new formats or models for corporate reporting. For instance, two large accounting bodies, in a common document, emphasize the importance of non-financial information (AICPA & CIMA, 2012), and a global association of financial analysts has presented a manual for the consideration of environmental, social and governance (ESG) factors in company analysis (CFA Institute, 2008). Consequently, ESG information is gradually becoming understood not as a separate set of data specifically oriented to some stakeholders but as an integral part of the information that the company discloses to the public. The call for both higher recognition of non-financial information and its integration into mainstream reporting is not new. In 1975, a group of

Can One Report be Reached?

203

accounting bodies in the United Kingdom launched The Corporate Report, a document that asked for a complete revision of the reporting paradigm, and the inclusion of the view of stakeholders (Accounting Standards Steering Committee, 1975). Meek and Gray (1988) proposed that US companies should provide corporate information about value creation to a wide group of parties, not only shareholders. During the last two decades, a rich stream of accounting studies based on stakeholder theory has been positing the consideration of the viewpoint of all stakeholders (Freeman, Harrison, Wicks, Parmar, & De Colle, 2010). John Elkington (1997) famously proposed the triple bottom line, i.e. the simultaneous reporting of economic, environmental and social bottom lines. Accounting researchers have long been studying the possibilities of social reporting (e.g. Gray, 2001; Gray, Dey, Owen, Evans, & Zadek, 1997; Gray, Owen, & Maunders, 1988), and particularly the role of the ‘“new” models of business reporting’ (Guthrie & Boedker, 2006). GRI presented in 2000 the first version (G1) of their reporting model, which includes a comprehensive collection of ESG performance indicators. GRI achieve a global spread, particularly among large companies, and are now preparing their fourth version (G4). Integrated reporting (or One Report, an equivalent expression) would represent a next step in the evolution of corporate reporting. Companies would no longer present a social/sustainability report differently from their conventional financial report, but would instead prepare a unified statement of financial and non-financial perspectives. This unified report would not just be a juxtaposition of two different categories of data that remain isolated, but it would rather be a consolidated narrative of corporate performance. Integrated reporting is a promising avenue, as it represents the mainstreaming of non-financial reporting and an increased comprehension of the links between non-financial and financial performance. In any case, this move towards unified reporting is still an ongoing process (Tilley, 2012) in which Europe has probably made relatively more progress than the United States (Verschoor, 2011; Wallace, 2010). In spite of the best intentions of the involved parties and the significant results achieved, much work is still needed today. Consequently, this chapter aims to describe the challenges that lie in the path to integrated reporting. These challenges are categorised and analysed in two different sections, as some are considered of a more theoretical nature, while others are related to application. As a viewpoint paper, it intends to address the recent call by Burritt and Schaltegger (2010) for social accounting studies oriented towards the improvement of business decisions; and consequently, the

ADRIA´N ZICARI

204

paper proposes potential avenues for further progress, both in academic research and in reporting practice.

THEORETICAL CHALLENGES An Elusive Relationship Unifying ESG and conventional data in a single report implies finding a common theme, an inquiry about causes and consequences of CSR policies. Does it pay for the firm to pursue CSR practices? Do these practices (or some of them) carry a cost or are they nevertheless convenient? Can all ESG performance indicators have consistent progress, or might there be trade-offs between them? Is it still more convenient to conduct business as usual? It is only by aiming to answer these questions that integrated reporting makes sense: just putting together a conventional financial report and a sustainability report is not enough. Thus, the raison d’eˆtre of unified reporting should be the explanation of mutual interactions between ESG factors and financial performance. A parallel can be traced here with the Balanced Scorecard (Kaplan & Norton, 1992), a management tool that aims to describe mutual relationships across different corporate perspectives and financial performance. Management would not achieve financial performance by directly looking for it, but by achieving better performances in the non-financial perspectives. Consequently, the Balanced Scorecard presents a narrative of how financial results are obtained and an identification of the levers of that financial performance. In the same fashion, integrated reporting should attempt to explain relationships and compromises between ESG and financial performance in the reporting firm. These relationships can be elusive to measure, as there is still no single, unanimously agreed indicator for ESG performance. The comprehensiveness of ESG factors implies that CSR cannot be explained by a single indicator. Moreover, a rigorous definition of CSR is still a matter of dispute (e.g. Devinney, 2009; Matten & Moon, 2008; Garriga & Mele´, 2004). Thus, reaching consensus on a valid construct for social performance is still an unachieved task. For instance, in a meta-analysis of a large set of research studies (Margolis & Elfenbein, 2008), social performance has been measured in different ways.

Can One Report be Reached?

205

Additionally, the increased complexity of today’s business models may complicate the comprehension of cause consequence relationships. As a comparison, the classical ‘Du Pont system’ (Dearden, 1969) provided a straightforward explanation for corporate performance: earnings as percentage of sales and asset turnover were unambiguously identified as the levers of financial results. The cause consequence relationship was assumed to be obvious. At that time, tangible assets were the only relevant capital and, consequently, business models were mostly focused on achieving higher efficiency over those assets. In addition, the Du Pont system helped to highlight the complexity of unrelated diversification (Anthony & Govindarajan, 2007), a common business strategy in the past. As a classical example, ITT (a conglomerate firm based in New York) comprised more than two hundred companies all over the world, which were involved in very different businesses (Macintosh, 2005). In spite of that complexity, the Du Pont system gave senior managers a comprehension of the company, at least from a financial point of view. Today, unrelated diversification is out of favour and companies tend to focus on a definite industrial sector in order to better profit from their core competences (Prahalad & Hamel, 1990). As ESG factors are increasingly important for stakeholders, and potentially relevant for corporate performance, there is a need today to achieve a kind of updated Du Pont system that could account for the role of those ESG factors. With the passage of time, an increasing awareness about the role of different stakeholders in the value-creating process emerged (Freeman et al., 2010). It is likely that few companies today could now focus their managerial efforts only on managing their physical assets and thus forget their relationship with employees, clients, community and other stakeholders. Consequently, other capitals have become increasingly relevant: the IIRC (2011) identifies six different capitals: financial, manufactured, human, intellectual, natural and social, while White (2010) proposes a similar taxonomy of different capitals. Nowadays a sustainable corporate strategy should attempt to harmoniously increase all these diverse capitals, a far more challenging objective than the mere maximisation of financial capital alone. While the relationship between CSR and financial performance has been studied for a long time (e.g. Margolis & Elfenbein, 2008), much of this research has been mostly of a comparative nature, and has frequently tried to assess statistical relationships between ESG data and financial performance. For instance, Derwall, Guenster, Bauer, and Koedijk (2005) compared two different portfolios that differed in their eco-efficiency, while

ADRIA´N ZICARI

206

Dasgupta, Laplante, and Namingi (1998) analysed the impact of environmental news on companies listed on stock markets in four emerging countries. Finding a positive correlation between social/sustainability and financial performances could be useful for an investor, particularly if it can be proved that the former performance is a predictor for the latter. If that were the case, such an investor would have an advantage over investors that rely only on conventional financial information. However, even if this type of correlation were positive, it would not be enough for other stakeholders. They not only need more information about ESG issues, but also need a comprehension about how those issues interact among themselves and between financial performances. The question may remain open regarding whether sustainability makes the company more profitable or if it is that just by being profitable, companies can afford to be sustainable. There have been many attempts to empirically explore this potential cause consequence relationship, particularly in order to substantiate the business case for CSR. For instance, Repetto and Austin (2000) analyse the impact of environmental issues on the financial performance of paper companies in the United States; Austin and Sauer (2002) study the impact of environmental policy changes in different oil companies in the world; while Porter and Kramer (2006) aim to find examples for consistency between social responsibility and strategy. Nevertheless, there is no consensus about the links between CSR and company perfomance. For instance, Porter and van der Linde (1995) relate environmental management with competitive advantage; Hart (1995, 2007) proposes a ‘natural-resource-based view’ of companies, and many scholars (e.g. Dunfee, 2008) analyse CSR through the lens of stakeholder theory. More recently, Porter and Kramer (2011) posited that companies should focus on the creation of value for both shareholders and society.

Models Still in the Making In this context, the increased interest in integrated reporting appears to be more an aspiration than an accomplished situation. While it is accepted that this integrated reporting is conducive to a higher degree of implementation of CSR (Eccles & Krzus, 2010b), we are still far from an agreement on what an integrated report should include both non-financial and financial data. Moreover, there is still no agreed-upon theory on which to base this new kind of reporting practice.

Can One Report be Reached?

207

As a consequence of this lack of agreement, most progress in CSR models comes through the aggregation of different perspectives, usually by means of large discussion processes based on a multi-stakeholder approach. For instance, the recent creation of the ISO 26000 norm (social responsibility) involved the participation of experts from nearly 100 countries. Similar kinds of extensive consultative processes are now used in collective efforts such as GRI (2011) and IIRC (2011). As these dialogue processes are greatly structured and all involved parties have the opportunity to make a contribution, it is supposed that the final outcome would be easier to implement. Taking into consideration perspectives from stakeholders from all over the world may help these models to become truly global. It can also be expected that commitment from former participants will be more likely to happen. However, and in spite of the well-intentioned aims of these processes, several risks may arise. Firstly, the need to achieve the acceptance of involved parties can produce a dilution of requirements. Secondly, and close to the previous idea, the discussion process may end up in a mere aggregation of different, isolated perspectives into a patchwork of disconnected performance indicators. Lack (or scarcity) of unifying theoretical principles may generate confusion and eventually make CSR models less trustworthy (Archel, Husillos, & Spence 2011; Joseph, 2012; Moneva, Archel, & Correa, 2006). Consequently, stakeholders may have trouble making sense of ESG information and its links with financial information. Achieving that understanding can be difficult if the reporting model includes too many perspectives without a clear methodology that presents their mutual relationships. Consequently, these new models are still a work in progress. An agreedupon theoretical background has not yet been achieved and the cause consequence relationship between different indicators is still elusive. Nevertheless, it is possible that with the passage of time and the increase in reporting firms, a learning-by-doing process can gradually be achieved, at least among comparable firms. This iterative process may give researchers fresh empirical data that could help them to build new theoretical perspectives and consequently help in the evolution of these models.

Understanding CSR Choices at Company Level While general models are being developed, efforts are also being simultaneously undertaken that emphasise a more customised orientation. For instance, A4S proposes that sustainability key performance indicators

ADRIA´N ZICARI

208

(KPIs) for each firm have to be identified and that their connection with financial indicators has to be explained (A4S, 2009). Lydenberg and Rogers (2010) propose a methodology for determining these KPIs for integrated reporting. These sustainability KPIs may greatly differ depending on the industrial sector and the chosen CSR strategy. Porter and Kramer (2006) posit that those CSR strategies have to be consistent with the general strategy of the company. As a consequence, a generic approach to CSR would not be advisable and a customised CSR policy for each company would be preferred. Each firm would then report the sustainability KPIs that make sense according to its particular situation. For instance, a company that relies on a sophisticated workforce may focus on employee welfare and thus deploy specific HR policies and practices, while a mining firm operating in a remote place could emphasise the development of a local network of suppliers. While both strategic priorities are legitimate, they imply diverse approaches to CSR implementation and, consequently, reporting will probably be very different. A customised approach to integral reporting may be more useful to stakeholders, as it could more easily explain the company choices and their impact on the different performance dimensions. On the other hand, this approach implies additional effort on the part of stakeholders, who will have to be able to integrate a wide range of tools for comprehension. Not only will they have to use conventional financial analytical tools (like Return on Investment or Economic Value Added), but they will also need to become familiar with non-financial information (Lydenberg & Wood, 2010), and the whole analysis will need to be framed in the specific CSR strategy of the company. Furthermore, comparability among companies could suffer (Frank, 2010), as firms from the same industrial sector may follow different CSR strategies.

Practical Challenges From the aforementioned discussion, it remains clear that integrated reporting is still an ongoing process. This is not only because there is still no conclusive model (while some guidelines or discussion documents already exist: e.g. A4S, 2009; IIRC, 2011), but also because the corresponding corporate practice has not been consolidated. While there are already some interesting examples (e.g. those mentioned at A4S, 2010), it can be still said that ‘few organizations, if any […] could claim to have achieved the ideal of Integrated Reporting’ (IIRC, 2011). Consequently, this part of

209

Can One Report be Reached?

the chapter shall study some concrete issues that appear in today’s reporting models and practices. The fact that these practices are rapidly evolving necessarily implies that this analysis can be neither exhaustive nor definitive. Certainly, many of the issues to be analysed here merit further research in the near future, and some could deserve an article of their own.

What to Report? Firstly, there is the point of the ever-increasing amount of information that large companies are required to provide today. New regulations (for instance, the Sarbanes Oxley (SOX) rule in the United States) ask for higher disclosure standards, while multinational firms have to comply with different rules in each country or region, and stakeholders increase pressure on companies for more information. More data can certainly help to overcome the information asymmetry between managers and external parties; however, these external parties may have difficulty in making sense of the company situation and prospects when they have to analyse an excessive amount of data. Consequently, integrated reporting has to deal with the challenge of materiality (Massie, 2010; Forstater et al., 2006), and workable criteria have to be agreed on which information is relevant (IIRC, 2011). It is likely that a great deal of information will continue to be released in order to comply with current regulations, no matter whether that information is material or not. Nevertheless, a distinction should be provided between information that is truly material and information that is provided mainly for compliance purposes; the latter could perhaps be presented in an annex document. Secondly, the choice about what to inform can also be shaped by legal reasons. Both the company and directors themselves could be concerned about the content of integrated reports (IIRC, 2011; KPMG, 2010), as richer information could lead to increased questioning from shareholders and stakeholders. A difficult situation may arise: for one part, substantial information should not be omitted, and for the other part, the company may reasonably fear that the inclusion of additional data could compromise the firm (Sarfaty, 2010). While legal issues are out of the scope of this article, it should be mentioned here that a report that provides more information may potentially imply additional risks. There is an ongoing reflection on the possibility of achieving some kind of legal protection for reporting companies (A4S, 2009; IIRC, 2011).

210

ADRIA´N ZICARI

The issue can be paralleled with the role of liabilities in conventional financial reporting: companies are supposed to report not only assets but also liabilities. A mere list of the company’s assets does not constitute an accounting report: liabilities must also be presented in order to fairly represent a thorough picture of the firm. By the same token, an incomplete representation of ESG ‘liabilities’ may make the sustainable report more akin to an exercise in public relations than to real corporate reporting. However, it is still not completely clear which problems or situations actually constitute sustainability ‘liabilities’ for the company and have thus to be reported. It may be difficult to understand the ESG-related risks that the company faces in the future (Cowe, 2004). For instance, Lydenberg and Wood (2010) call for the need to include ‘bad news’, while Lewis (2010) proposes a set of criteria that might indicate the risk of accidents or environmental incidents. By allowing an assessment of the probability and potential impact of critical events, reported information would then be material for adequately estimating the value of the firm. Nevertheless, there are not only short-term impact risks (caused by an event, like an accident) but also long-term risk related to the changing expectations of society over time. Davis (2005) mentions cases of the pharmaceutical and energy sectors, which have been largely impacted by social pressures. Additionally, an increased level of accountability can imply a disadvantage for the firm if competitors do not follow this practice (IIRC, 2011). This problem exists already with conventional financial information: companies quoted on stock markets (which have as a consequence higher requirements for the disclosure of financial data) face increased competition from firms with scarcer standards for disclosure (e.g. foreign companies, privately owned firms) (The Economist, 2012), and that possible disadvantage makes many companies refrain from going public. Companies could perceive additional disclosure on ESG as detrimental to their competitiveness, particularly if their closest competitors do not make similar disclosures.

The Uneasy Feeling from Conventional Reporters Additional challenges towards integration may arise not from technical issues but from human ones. Managers who are today responsible for financial reporting may feel uncomfortable dealing with information that is not familiar to them. By the same token, Thurm (2010) sustains that those who are in charge of sustainability reporting today may resist integration

211

Can One Report be Reached?

with classical financial reporting, because of fears about the ‘dilution’ of existing sustainability reports into the larger frame of a conventional report. Thus, the attempt to integrate reports may end up as a mere physical addition of two different reports, with little, if any, consistence between them. This disconnection would be a sad outcome, as links between both kinds of reports can cast new light on material issues. For instance, company expenditures on social or environmental policies (which should be identified in the financial part of the integrated report) can be related to their sustainability impact (which would be explained and measured in the sustainability part of the report). Additionally, environmental investments/costs incurred by the firm could be compared with an estimation of environmental costs avoided, thus providing a depiction of how the company strategically manages its environmental challenges (Lydenberg & Wood, 2010). Efforts should be made to measure social and environmental impacts in monetary terms, while at the same time expenditures and income related to ESG factors have to be clearly identified. However, it should be stressed that there is not yet a unified framework or guideline for developing these kinds of comparisons: today there are still different propositions from researchers and practitioners and only a few examples from some leading companies. While this linkage between non-financial and financial results is not yet a standard practice, it should be encouraged by stakeholders, as it can illustrate the actual efficiency of CSR management.

CONCLUSIONS Integrated Research on Reporting The current developments in integrated reporting, both in corporate practice and in academic research, may bring out a deeper understanding of the relationship between ESG factors and financial performance, which remains today, to a large degree, a black box. Thus, these integrated reports are probably going to become, in the next few years, a privileged field of academic research for scholars, particularly in the areas of accounting, finance and strategy. It is also a moving target, an area of knowledge and management practice that is currently in a state of flux, where the initiative comes more frequently from management practitioners and stakeholders than from scholarly research.

ADRIA´N ZICARI

212

With the passage of time, it is also possible that increased comprehension of the integrated performance of firms may lead to better adaptations or developments in reporting models. The ongoing experience of the GRI is a remarkable example of how rapidly this learning loop can happen. As a consequence of this learning-by-doing process, it is also reasonable to expect some convergence in the different models and guidelines that exist today. While today’s profusion of models may be related to competition among different groups of standard-setters, it is possible that this diversity also expresses the difficulty of grasping the complex nature of the links between non-financial and financial outcomes. Additionally, integrated reporting will allow far less opportunity for unsubstantiated or exaggerated claims about the social/environmental performance of reporting firms, as these assertions can be more easily traced to the financial side of the report. Thus, if integrated reporting becomes standard practice, a much more prudent attitude on the part of companies may be expected, along with higher confidence on the part of readers of these reports.

Integrated Analysis on Reporting Another conclusion of this discussion is that further empirical research is needed on how stakeholders make sense of the data from integrated reports. For instance, in the realm of financial analysis, there is today discussion about a possible convergence of sustainability and conventional financial analysis a process of mainstreaming of non-financial information that is probably in progress, as Kanzer (2010) suggests and Crifo and Mottis (2011) sustain in their study on the French investment market. In a similar line, Iannou and Serafeim (2010) posit that financial analysts have in recent years begun to perceive sustainability as a source of corporate value. The CFA Institute (a global association of financial analysts) has recently presented a manual for analysis using ESG factors (CFA, 2008), a fact that further confirms this trend towards the mainstreaming of non-financial information in company analysis.1 However, the impact of integrated reporting is probably not going to be limited to investors and financial markets (i.e. impact on companies through investors’ decisions). Other stakeholders may probably act on the information provided by these documents. For instance, Wood (2010) posits that as a firm’s externalities are going to be more clearly exposed, stakeholders would have the opportunity to influence the company by

213

Can One Report be Reached?

different means: e.g. consumer action and public policy. There are already initiatives that aim to help stakeholders to better understand social reports (e.g. Lydenberg & Wood, 2010). As a final remark, the two questions considered in this conclusion are not isolated from one another. How integrated reports achieve a more meaningful explanation of the company’s comprehensive performance (first issue) and how people use those documents (second issue) are two pressing questions that promise fruitful avenues of research in the near future. Helping to address these two challenges could well be among the most relevant contribution of the work of scholars to global sustainability.

NOTE 1. Disclosure: the author holds the CFA certification.

REFERENCES Accounting for Sustainability (A4S). (2009). Connected reporting. A practical guide with worked examples. Accounting for Sustainability, London. Accounting for Sustainability (A4S). (2010). Connected reporting in practice. A consolidated case study. Accounting for Sustainability, London. Accounting Standards Steering Committee. (1975). The corporate report. The Institute of Chartered Accountants in England and Wales, London. AICPA & CIMA. (2012). Rebooting business. Valuing the human dimension. AICPA & CIMA, New York, NY. Anthony, R., & Govindarajan, V. (2007). Management control systems. Boston, MA: McGraw-Hill. Archel, P., Husillos, J., & Spence, C. (2011). The institutionalisation of unaccountability: Loading the dice of corporate social responsibility discourse. Accounting, Organizations and Society, 36, 327 343. Austin, D., & Sauer, A. (2002). Changing oil: Emerging environmental risks and shareholder value in the oil and gas industry. Washington, DC: World Resources Institute. Burritt, R., & Schaltegger, S. (2010). Sustainability accounting and reporting: Fad or trend? Accounting, Auditing & Accountability Journal, 23(7), 829 846. CFA Institute. (2008). Environmental, social and governance factors at listed companies. A manual for investors. CFA Institute, Charlottesville, VA. Climate Disclosure Standards Board (CDSB). (2010). Climate change reporting framework (Ed. 1.0). CDSB, London. Cowe, R. (2004). Risks, rewards and responsibility. London: Association of British Insurers. Crifo, P., & Mottis, N. (2011). Socially responsible investment in France: A “niche” opportunity or a “mainstream” investment? Ge´rer & Comprendre, 104(June), 14 25.

214

ADRIA´N ZICARI

Dasgupta, S., Laplante, B. & Namingi, N. (1998) Capital market responses to environmental performance in developing countries. Policy Research Working Paper. The World Bank, Washington, DC. Davis, I. (2005). The biggest contract. The Economist, 26 May. Dearden, J. (1969). The case against ROI control. Harvard Business Review, 47(3) (May/June), 124 135. Derwall, J., Guenster, N., Bauer, R., & Koedijk, K. (2005). The eco-efficiency premium puzzle. Financial Analysts Journal, 61(2), 51 63. Devinney, T. (2009). Is the socially responsible corporation a myth? The good, the bad, and the ugly of corporate social responsibility. Academy of Management Perspectives, 23(2), 44 56. Dunfee, T. (2008). Stakeholder theory. Managing corporate social responsibility in a multiple actor context. In A. Crane, A. Mc Williams, D. Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 346 362). Oxford: Oxford University Press. Chapter 15. Eccles, R., & Krzus, M. (2010a). Integrated reporting for a sustainable strategy. Financial Executive, (March), 29 32. Eccles, R., & Krzus, M. (2010b). One Report: Integrated reporting for a sustainable strategy. Hoboken, NJ: Wiley. Elkington, J. (1997). Cannibal with forks. Oxford: Capstone. Forstater, M., Zadek, S., Evans, D., Knight, A., Sillanpaa, M., Tuppen, E., & Warris, A. (2006). The materiality report. London: Accountability, BT Group & LRQA. Frank, R. (2010). Success factors in integrated reporting: A technical perspective. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Freeman, E., Harrison, J., Wicks, A., Parmar, B., & De Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge: Cambridge University Press. Garriga, E., & Mele´, D. (2004). Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics, 53, 51 71. Global Reporting Initiative (GRI). (2011). Sustainability reporting guidelines. Global Reporting Initiative, Amsterdam. Gray, R. (2001). Thirty years of social accounting, reporting and auditing: What (if anything) have we learnt? Business Ethics: A European Review, 10(1), 9 15. Gray, R., Dey, C., Owen, D., Evans, R., & Zadek, S. (1997). Struggling with the praxis of social accounting: Stakeholders, accountability, audits and procedures. Accounting, Auditing and Accountability Journal, 10(3), 325 364. Gray, R., Owen, D., & Maunders, K. (1988). Corporate social reporting: Emerging trends in accountability and the social contract. Accounting, Auditing and Accountability Journal, 1(1), 6 20. Guthrie, J., & Boedker, C. (2006). Perspectives on ‘new’ models of business reporting: A reflective note. Accounting, Auditing and Accountability Journal, 19(6), 785 792. Hart, S. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986 1014. Hart, S. (2007). Capitalism at crossroads. Philadelphia, PA: Wharton School Publishing. Iannou, I., & Serafeim, G. (2010). Drivers of corporate sustainability and implications for capital markets: An international perspective. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School.

Can One Report be Reached?

215

International Integrated Reporting Committee (IIRC). (2011). Towards integrated reporting. International Integrated Reporting Committee, London. Joseph, G. (2012). Ambiguous but tethered: An accounting basis for sustainability reporting. Critical Perspectives on Accounting, 23, 93 106. Kanzer, A. (2010). Toward a model for sustainable capital allocation. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Kaplan, R., & Norton, D. (1992). The balanced scorecard. Measures that drive performance. Harvard Business Review, 70(1) (January/February), 71 79. KPMG. (2010). Integrated reporting Closing the loop of strategy. KPMG, Amsterdam. Lewis, S. (2010). Learning from BP’s ‘sustainable’ self-portraits: From ‘integrated spin’ to integrated reporting. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Lydenberg, S., & Rogers, J. (2010). Integrated reporting and key performance indicators. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Lydenberg, S., & Wood, D. (2010). How to read a corporate social responsibility report. Boston, MA: Boston College Center for Corporate Citizenship. Macintosh, N. (2005). Accounting, accountants and accountability: Poststructuralist positions. New York, NY: Routledge. Margolis, J., & Elfenbein, H. (2008). Do well by doing good? Don’t count on it. Harvard Business Review, 86(1), 19–20. Massie, R. (2010). Accounting and accountability: Integrated reporting and the purpose of the firm. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Matten, D., & Moon, J. (2008). Implicit and explicit CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, 33(2), 404 424. Meek, G., & Gray, S. (1988). The value added statement: An innovation for US companies? Accounting Horizons, 2(2), 73 81. Moneva, J., Archel, P., & Correa, C. (2006). GRI and the camouflaging of corporate unsustainability. Accounting Forum, 30, 121 137. Porter, M., & Kramer, M. (2006). Strategy and society. Harvard Business Review, 84(12), (December), 78 92. Porter, M., & Kramer, M. (2011). Creating shared value. Harvard Business Review, 89(January/February), 62 77. Porter, M., & van der Linde, C. (1995). Green and competitive. Harvard Business Review, 73(5)(September/October), 120 134. Prahalad, C., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79 91. Repetto, R., & Austin, D. (2000). Pure profit. Washington, DC: World Resources Institute. Sarfaty, G. (2010). The role of lawyers in integrated reporting. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. The Economist. (2012). The endangered public company. The Economist, 19 May. Thurm, R. (2010). Two worlds collide One world to emerge! In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School.

216

ADRIA´N ZICARI

Tilley, C. (2012). Time to recognize value of integrated reporting. Financial Management, (February), 65. Verschoor, C. (2011). Should sustainability reporting be integrated? Strategic Finance, (December), 13 15. Wallace, M. (2010). Will the USA take a leap? Barriers to integrated reporting. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. White, A. (2010). The five capitals of integrated reporting: Toward a holistic architecture for corporate disclosure. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School. Wood, D. (2010). What should be done with integrated reporting. In R. Eccles, B. Cheng, & D. Saltzman (Eds.), The landscape of integrated reporting: Reflections and next steps. Cambridge, MA: Harvard Business School.

COMMUNICATING ABOUT INTEGRATING SUSTAINABILITY IN CORPORATE STRATEGY: MOTIVATIONS AND REGULATORY ENVIRONMENTS OF INTEGRATED REPORTING FROM A EUROPEAN AND DUTCH PERSPECTIVE Tineke Lambooy, Rosemarie Hordijk and Willem Bijveld ABSTRACT Purpose The authors have examined the developments in law and in practice concerning integrated reporting. An integrated report combines the most material elements of information about corporate performance (re: financial, governance, social and environmental functioning) currently reported in separate reports into one coherent whole. The authors first explore the motivation of companies and legislators to introduce integrating reporting. Next, they analyse how integrated

Communicating Corporate Social Responsibility: Perspectives and Practice Critical Studies on Corporate Responsibility, Governance and Sustainability, Volume 6, 217 255 Copyright r 2014 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 2043-9059/doi:10.1108/S2043-9059(2014)0000006021

217

218

TINEKE LAMBOOY ET AL.

reporting can be supported by legislation thereby taking into account the existing regulatory environment. Methodology/approach Literature study; desk research, analysing integrated reports; organisation of an international academic conference (30 May 2012 in Rotterdam, the Netherlands). Findings EU law needs adjusting in the field of corporate annual reporting. Although integrated reporting is currently being explored by some frontrunners of the business community and is being encouraged by investors, the existing legal framework does not offer any incentive, nor is uniformity and credibility in the reporting of non-financial information stimulated. The law gives scant guidance to companies to that end. The authors argue that amending the mandatory EU framework can support the comparability and reliability of the corporate information. Moreover, a clear and sound EU framework on integrated corporate reporting will assist international companies in their reporting. Presently, companies have to comply with various regulations at an EU and a national level, which do not enhance a holistic view in corporate reporting. The authors provide options on how to do this. They suggest combining EU mandatory corporate reporting rules with the private regulatory reporting regime developed by the Global Reporting Initiative (GRI). Research limitations/implications Focus on EU and Dutch corporate reporting laws, non-legislative frameworks, and corporate practices of frontrunners. Practical and social implications and originality/value of the chapter The chapter can provide guidance to policymakers, companies and other stakeholders who want to form an opinion on how to legally support integrated reporting. It addresses important questions, especially concerning how European and domestic legislation could be adjusted in order to (i) reflect the newest insights regarding corporate transparency and (ii) become an adequate framework for companies with added benefits for financiers and investors. Moreover, it reports on the benefits of integrated reporting for reporting companies. The authors argue that integrated reporting can be a critical tool in implementing corporate social responsibility (CSR) in the main corporate strategy of a company. Keywords: Integrated reporting; annual reporting; assurance; CSR reporting; stakeholders; European Union Accounting Directives; Global Reporting Initiative (GRI)

Communicating about Integrating Sustainability in Corporate Strategy

219

Various companies produce integrated reports and the European Commission (Commission) is pondering whether to adopt legislation to that end.1 Presently, integrated reporting is still largely a voluntary practice in most countries.2 This chapter examines whether the legal system of corporate annual reporting in the EU needs to be adjusted. An integrated report combines the most material elements of corporate information (e.g. financial, governance, social and environmental performance) currently reported in separate reports into one coherent whole with a clear, long-term perspective (Eccles & Krzus, 2010). It provides an opportunity for companies to present a holistic and complete picture of the functioning of the business in a clear, concise, connected and comparable manner.3 An integrated report can include all relevant corporate information or it can serve as the ‘top document’, the overarching document, to which detailed annual reports containing information about the financial and CSR performance are annexed. An integrated report addresses the longer-term consequences of decisions and actions taken by a multinational company and clarifies the link between the social, economic and environmental values of the enterprise. It shows the relationship between the organisation’s strategy, governance and business model (Druckman & Fries, 2010). Various developments indicate that there is a growing interest of companies and policymakers in integrated reporting (Eccles & Serafeim, 2011a, pp. 70 92; Frı´ as-Aceituno, Rodrı´ guez-Ariza, & Garcı´ a-Sa´nchez, 2013; Van Wensen, van, Broer, Klein, & Knop, 2011). First, various multinational companies already produce integrated reports or indicate that they want to make an integrated report (Eccles & Serafeim, 2011a, pp. 78 79).4 An innovative approach has been demonstrated by the German multinational PUMA, which published an ‘Environmental Profit & Loss Account’ (EP&L). This is a new practice in the field of integrated reporting (Santjer, 2011). While it is common practice that companies in their corporate accounting do not define externalities (such as CO2 emissions, waste and water use) of their business operations and by their suppliers (indicated as ‘tier 1 4’), PUMA has taken the step to present tangible figures and information to that extent. The company published the EP&L as part of the ‘PUMA Business and Sustainability Report’ (see Fig. 1) (PUMA, 2012). In its reporting, PUMA integrated various streams of information in order to account for the true costs of its production and business activities (PUMA, 2011a). In other words, PUMA put a price tag on the environmental impacts throughout its entire value chain. The PUMA EP&L assists PUMA in being transparent and communicating

220

TINEKE LAMBOOY ET AL. PUMA EP&L Results by Environmental Indicator 7%

2%

33%

Water use GHGs

26%

Land use Other air pollution Waste

32%

Fig. 1. PUMA’s EP&L. Source: PUMA’s EP&L Press Kit. Retrieved from http://about.puma.com/wp-content/themes/aboutPUMA_theme/media/pdf/2011/ en/vb1116.pdf.

tangible information to its stakeholders rather than only presenting sustainability ambitions. In addition, it aids PUMA in managing the worldwide risks it faces, e.g. sourcing raw materials. Since these risks have been clearly and fully identified in the report, PUMA will be better able to adjust its corporate strategy in order to address such risks (Lambooy, Bijveld, & Van’t Foort, 2012a). It is interesting that despite many competitors thinking PUMA’s share price would fall due to these explicit sustainability disclosures, PUMA’s share price remained stable (PUMA, 2011b) (Table 1). The second significant development is the establishment of the International Integrated Reporting Council (IIRC) in 2010, which demonstrates the growing interest of society, in particular businesses and investors, in integrated reporting. The IIRC builds on existing developments, such as the Accounting for Sustainability Project (A4S; www.accountingforsustain ability.org) and the Global Reporting Initiative (GRI; www.globalreporting. org), and has set as its goal to reach worldwide consensus for a framework on integrated reporting. The third development is that the GRI launched its fourth generation sustainability reporting guidelines (G4) at the international ‘Global Conference on Sustainability and Reporting’ in May 2013. In the G4, the emphasis of the guidelines has been focused on materiality. The G4 promote that companies concentrate in their reporting on those sustainability impacts that matter for their business. The G4 are also supportive to

Communicating about Integrating Sustainability in Corporate Strategy

221

Table 1. PUMA EP&L Table and Visual Breakdown. Water use h million

GHGs h million

Land use h million

Air Pollution h million

Waste

TOTAL Percentage of Total h million

h million

33%

32%

26%

7%

2%

100%

TOTAL PUMA operations Tier 1 Tier 2 Tier 3 Tier 4

47