Legitimacy as a Key Driver of CSR

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• Legitimacy as a Key Driver of CSR
• and Consequences for the
• Development Agenda
• Ralf Barkemeyer
• University of St Andrews
• Sustainable Development
• Research Centre (SDRC)
• United Kingdom

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What is the Impact of CSR on Development?

• Rapid dissemination of Corporate Social
  Responsibility
• Increased scope
• CSR gaining grounds on Development agenda
• Practice outpacing underlying theory
• CSR can work, for some people, in some places,
  on some issues, some of the time. (Newell 2005,
  556)
• ? Under which circumstances does CSR contribute
  towards development?
• My PhD topic in a nutshell
• Based on an analysis of the role of
  organizational legitimacy within CSR, I will...
• ...specify the conceptual limits of CSR in a
  developing country context
• ...analyze the impact of corporate legitimacy
  management on the Global Compact Learning Forum
  Case Studies

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Why do Companies engage in CSR?

• Neo-Institutionalism Legitimacy
• Companies engage in CSR...
• ...in order to gain legitimacy from their
  stakeholders
• Legitimacy is a generalized perception or
  assumption that the actions of an entity are
  desirable, proper, or appropriate within some
  socially constructed system of norms, values,
  beliefs, and definitions (Suchman 1995)
• Pragmatic Legitimacy
• Moral Legitimacy
• Cognitive Legitimacy
• By definition, Legitimacy not a universal concept

Postconscious Legitimacy _____________________
____________________________________ Preconscio
us Legitimacy
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Legitimacy as a Driver of CSR
Home Market Legitimacy
Host Market Legitimacy

• Postconscious Legitimacy CSR as a means of
  managing the legitimacy of primary (Northern)
  stakeholders
• Preconscious Legitimacy Potential mismatch
  between home market host market understanding
  of legitimacy

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Preconscious LegitimacyThe World Values Survey
(WVS)

• WVS is a series of cross-cultural studies on
  human values, accomplished by the International
  Network of Social Scientists
• 4 Waves of interviews 1981-2001, covering 83
  nation-states
• Most comprehensive study in this field
• Focus on democratization processes, value change
• Publicly accessible
• Limits of analyzing values on a national basis,
  e.g.
• Indonesia
• Vietnam

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WVS Snapshot 1 The Environment

• Humans should master nature
• vs.
• Humans should coexist with nature
• Materialism ? Post-Materialism?

• Tradition
• vs.
• High economic growth

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WVS Snapshot 2 Human Rights

• Respect for individual human rights nowadays
• Also sharp divide regarding trust in public
  institutions, political parties, government,
  police, armed forces, etc.
• ? Pivotal role of financially and politically
  independent middle class?

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WVS Snapshot 3 Governance (Vietnam)

• How can the private sector contribute to enhanced
  governance in Vietnam?
• and how can we convince the Vietnamese people
  that they actually have a governance problem?!?

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Postconscious Legitimacy The UN Global Compact

• Current research on UN Global Compact, e.g.
• The Global Compact (various publications)
• UNIDO (2004)
• McKinsey Company (2004)
• Gjølberg/Ruud (2005)
• Waddock (2004)
• Whitehouse (2003)
• Global Compact Learning Forum case studies
• Research cases
• Teaching cases
• Descriptive case stories
• Total number of case stories 384 (April 2006)
• Number of OECD country-based businesses reporting
  on projects carried out globally/ located in
  Non-OECD countries 167

• Work in Progress

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Postconscious Legitimacy The UN Global Compact
(2)

• GC case stories are
• just one component of the GC Learning Forum
• by no means representative, BUT
• if the other parts of the Learning Network are
  to bring about any significant change, this
  should also become apparent in the Global Compact
  Case Stories
• they can serve to illustrate what kinds of
  projects are deemed appropriate/desirable by the
  private sector regarding
• Regional variation of initiators/projects
• Global Compact principles addressed
• Length of projects
• Innovative (e.g. new methods applied ?
  conservative (e.g. ISO14000)
• Organizational (e.g. EMS) ? Operational
  projects
• Nb of PPPs ? Total Nb of projects
• Stakeholders addressed
• Estimated impact on financial bottom-line/Who
  covers costs?
• Dynamic perspective Temporal development of GC
  case stories

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Consequences The Micro Level

• CSR as a means of international development?
• Increased Awareness
• - Private (Northern) interests ? Public
  (Southern) interest
• - Danger of detachment of corporations
  legitimacy management from the actual problem
• - Mismatch of legitimacies
• CSR that do not match local understanding of
  legitimate action will not generate sustainable
  success
• CSR initiatives that acknowledge host market
  understanding of legitimate action will be more
  successful
• Feedback loops
• Multi-Stakeholder Initiatives
• Increased integration of Southern stakeholders

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The Macro Level Towards a Tipping Point?

• 2,478 corporate GC members ? 65,000 MNCs ?
  Total number of businesses
• Mismatch between policy impact of MNCs and their
  economic, social and environmental impacts?
• Total employment by MNCs and affiliates in
  developing countries (OECD 2001) 19
  million
• People below US1 per day in developing
  countries 1,200 million
• Export of Western understanding of legitimacy?
• Mismatch between (short-term) corporate
  legitimacy management and need for (long-term)
  capacity-building?
• Undermining the enabling environment?
• MNCs as Structural Policy Actors?

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My Contact Details

• Ralf Barkemeyer
• University of St Andrews
• Sustainable Development
• Research Center (SDRC)
• School of Management
• Gateway Building
• University of St Andrews
• St Andrews
• Fife, KY16 9SS
• Scotland
• Tel [phone]
• barkemeyer_at_sustainablevalue.com