Corporate Social Responsibility

- fundamentals, findings, and managerial implications

Professor Magne Supphellenmagne.supphellen@nhh.no

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•1. Corporate social responsibility (CSR) and corporate ethics: Conceptual clarifications

•2. CSR: Why it can’t be overlooked•3. CSR: The findings – so far•4. Communication of CSR•5. Managerial implications

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Foretaksetikk• Verdier & normer (atferdsregler) for hva som er rett og galt å

gjøre – som ansatt eller leder i virksomheten– Individnivå– Gruppenivå (kultur)

• Normene kan gjelde alle sider ved virksomheten– Hvordan man bør forholde seg til arbeidsoppgaver, graden av

arbeidsinnsats, håndtering av relasjoner til andre ansatte, kundene, ledelsen, etc.

Det kapitalistiske system forutsetter etiske kvaliteter som ansvarlighet,

ærlighet og integritet

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Strategisk/instrumentell etikk?• Strategisk etikk: Når etiske spørsmål (”hva

er det riktig å gjøre?”) omdefineres til spørsmålet: Hva er det lurt (for meg og bedriften) å gjøre?

• ”Det etisk-strategiske paradoks”– Etikk som styres av strategiske hensyn

”relativiseres i stykker”– Etikk som forankres utenfor strategien gir

en tydeligere etikk, mer konsistent etisk atferd, et bedre omdømme og antagelig bedre resultater for bedriften

• Etikken må forankres utenfor profitthensynet – ellers mister den sin funksjon

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Definitions of CSR

–”CSR is the corporation’s moral responsibility to maximize its positive impact and minimize its negative impact on society (stakeholders) (Pride & Ferrell 1997)

–”Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources.”

(Kotler & Lee 2005)

Valgt definisjon av (praktisk) samfunnsansvar

• Ledelsens (ikke eiernes) bruk av bedriftens ressurser til sosiale og samfunnsgagnlige formål – ut over det loven og god forretningsskikk krever (frivillig)

– Bruk av økonomiske ressurser som ellers ville styrket bunnlinjen direkte

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Etikken & samfunnsansvaret påvirker hverandre gjensidig

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Etiskenormer

Samf.ansvar

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4 sentrale typer CSR aktiviteter

• 1. Støtte til aktiviteter i etablerte veldedige/sosiale organisasjoner/formål

– Canon sponset reklame for Unicef– Sparebankene støtter lokal idrett

• 2. Fast andel av omsetning gis til veldedige/sosiale organisasjoner/formål

– Washington Mutual gav en periode 1 USD for hver nye lønnskonto til public schools

• 3. Frivillig innsats– Arbeidstagerne får mulighet til å bruke x timer i

måneden på å hjelpe en lokal organisasjon/virksomhet

• 4. Sosialt ansvarlig forretningspraksis– Går lenger enn loven og “god forretningsskikk”

mht resirkulering, begrensning av utslipp, sosiale støtteordninger, etc.

Spørsmålet er om det er lønnsomt for den enkelte bedrift å bruke ressurser på samfunnsansvar – ut over de føringer som ligger i norske lover og god forretningsskikk.

Vil ekstra innsats gi gevinst på bunnlinja?I så fall: Under hvilke betingelser?

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2. Why it can’t be overlooked

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Why CSR can’t be overlooked (1)

•51 of the 100 greatest economies of the world are companies

•The turnover of GM and Ford Motor Comany together is larger than the total GNP of all nations in Africa south of Sahara…..

•Increased focus on companies’ CSR profile among consumers

•Increasing evidence of a positive effect of CSR on the market value of companies

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•Increased reporting of CSR-activities create expectations among investors

•Increased CSR-efforts sets standards– 90% of the Fortune 500 companies now have explicit CSR

initiatives

•The demands for CSR and the growth of anti-advertising organisations increase the downward risk of reputation damage if non-responsible practices are revealed

– Example: Adbuster

Why CSR can’t be overlooked (2)

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Why CSR can’t be overlooked (3): The demand for meaningful work

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3. CSR: The findings so far- on consumer evaluations, employee

identification,and market value

Effects of CSR on company evaluations (Sen & Battacharya 2001)• Positive direct effect of CSR record (the extent to which the

company is known for some CSR activities) on company evaluations

• This effect is positively moderated (strengthened) by attitudes toward the CSR activites

• The effect is also positively moderated by CSR-corporate ability congruity

• The positive effect of CSR is mediated by the level of ”company-consumer character overlap” (psych identification level)

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CSR record

Attitudetoward

company

Mediating

variable

Moderator

variable

Effects of CSR on intentions to adopt new services (Supphellen, forthcoming)

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CSR/no CSR

PurchaseIntention

Serviceexpectation(empathy)

CSR-ability fitCSR

importance

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Internal effects on employee efficiency (tentative)

EfficiencyCSR

Identificationwith thecompany

Employeemotivation

+

+

++

Effects of CSR on market value of firms (Luo & Battacharya 2006)

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CSR rating

Marketvalue

Customersatisfaction

Product qualInnovativenes

s+++/-

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Government and managers of other companies

TrustCSR+

4. Communication of CSR10.04.23

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Challenges and solutions• Challenge: Communicating CSR-efforts may backfire

– ”responsible people don’t talk about their responsibility”– the problem mainly refers to customers

• Solutions– Be careful with mass communication toward the customers– Make CSR-info available to loyals and customers with pro-

attitudes• High motivation to learn, less scepticism

– Use PR toward the general public• Third person perspective• Using endorsers in communication campaigns don’t seem to work

– Targeted communication of CSR toward other stakeholder groups

• investors, politicians, the employee market, employees, etc.

– Update and inspire employees• This will stimulate personal communication to externals• Believable information source for the other stakeholders

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5. Implications

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Summary and implications

•Companies should be proactive and integrate CSR in strategic planning – or minimize the effort

•CSR activities should be chosen which are positively evaluated by customers and overlap with their value systems

– These variables can be influenced•There should be a fit between corporate abilities and

CSR activities•CSR cannot replace innovativeness or product quality, but

CSR can be a strong determinant for a winning reputation and high market value if properly combined with competitive product quality and innovativeness

•Use CSR internally to strengthen pride and identification

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Selected references

• Luo, X. & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value, Journal of Marketing, vol 70.

• Sen S. & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility, Journal of Marketing Research, vol. 38.

• Brown, T. J. & Dacin, P. A. (1997). The company and the product: Corporate associations and consumer product responses, Journal of Marketing, vol. 61.

• Drumwright, M. E. (1996). Company advertising with a social dimension: The role of noneconomic criteria, Journal of Marketing, vol. 60.

• Kotler, P. & Lee, N. (2005). Corporate social responsibility, Wiley & Sons.’• Pride W.M & Ferrell O.C. (1997): Marketing: Concepts and Strategies,

Boston: Houghton Mifflin. • Supphellen, M. (2007). Metodologiske årsaker til at markedsførere

undervurderer betydningen av bedriftens sosiale ansvar, Magma.