Corporate Social Responsibility CSR:

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Corporate Social Responsibility (CSR)
LIMITATIONS AND A RESEARCH AGENDA FOR SMEs

• Larry McCurry
• School of International Business
• University of Ulster at Magee.
• Christine Cadden
• School of International Business
• University of Ulster at Magee

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Corporate Social Responsibility

• Integrate Social and Environmental Concerns into
  Business Operations
• Past v Modern Initiatives
• Manage Strategically.
• Develop Instruments.
• Complex Issues
• Ethics, Human Rights, Environmentalism
• Sensationalism v Empirical Studies
• Compliance v Activism
• Accelerated by Globalisation

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Purpose of Paper

• Critical Review of CSR Literature
• Propose a Research Agenda

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Rise of CSR

• Globalisation, Deregulation, Privatisation
• Shrinking Role of Government
• Lack of super-regulatory mechanism.
• Business as an Engine for Economic Growth
• FDI in Developing Countries
• Responsibilities to Stakeholders
• Added complexity with Internationalisation.
• Abuse of economic power - denial
• Thai - slave labour sewing factory
• Haitian workers- 6 cents per 20 101 Dalmatian
  Outfit
• Pakistan- child labour footballs for World Cup
• Domestic v Overseas CSR standards.
• Rise of Civil Society Activism linking CSR to
  long term success.

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Definitions of CSR

• "The continuing commitment by business to behave
  ethically and contribute to economic development
  while improving the quality of life of the
  workforce and their families as well as local
  communities and society at large"
• (World Business Council for Sustainable
  Development WBCSD, 2001)
• "Being socially responsible means not only
  fulfilling legal expectations, but also going
  beyond compliance and investing more in human
  capital, the environment and relations with
  stakeholders"
• (The European Commission (2001)

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Definitions of CSR

• "Operating a business in a manner that meets or
  exceeds the ethical, legal, commercial and public
  expectations that society has of business"
• (Business for Social Responsibility, 2003)
• Corporate Social Responsibility is defined as
  categories of economic, legal, ethical and
  discretionary activities of a business entity as
  adapted to the values and expectations of
  society
• (Joyner et al., 2002)

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Definitions

• Difficulties with Comprehensive Definition
• Complex Concept
• Includes
• Social Contract
• Responsive to Societys long term needs and
  wants.
• Optimising Positive impacts
• Minimising Negative Impacts
• Balancing the interests of stakeholders and
  strategically managing interconnected social,
  environmental and economic impacts of business.

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Role of Business in Society

• Divided Opinions Of Managers
• Devote additional resources to promote CSR -
  relevance of multiple stakeholders.
• Resist engagement with CSR initiatives.

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Role of Business in Society
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Drivers of CSR

• Motivators
• 1. Performance driven - Invest for Financial
  Payback
• 2. Stakeholder driven or Negative Duty Approach -
  Comply with stakeholder norms and defined
  behaviour standards
• 3.Value driven or Positive Duty Approach - It is
  the right thing to do according to the value
  system of the company.
• Drivers
• 1. Protect and build reputation.
• 2. Manage risk across different countries,
  cultures and socio-political situations
• The price of irresponsible activity can be high
• e.g Brent Spar Oil Rig, Nike, Gap.

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Implementation Issues

• Initial - Code of Conduct
• Progress of implementation is stifled by the lack
  of -
• A commonly understood and agreed definition
• A common set of benchmarks to measure the
• attainment of CSR
• Processes in place to achieve the benchmarks
• A system of internal audit
• A system of external verification.

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Implementation Issues contd.

• UNIDO (2002)
• Policies and procedures need to be -
• Based on legitimate standard setting oversight
  
• processes
• Backed by robust processes of measurement and
  reporting
• Built on a strong business case to align CSR
  with business success
• Flexible enough to allow business to innovate,
  solve problems and develop opportunities .
• Needs to be embedded in Organisations mission

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Adoption of CSR Principles
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CSR Adoption and Improved Business Results

• Studies showed
• No Relationship (McWilliams Siegel, 2000)
• Positive Relationship (Waddock Graves, 1997)
• Negative Relationship (Wright Ferris, 1997)

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Technology Transfer from MNCs to SMEs

• MNC ethos traditionally passed on to SMEs through
  the supply chain.
• In matters of CSR - hampered by lack of
  definitions, guidelines and transferable
  practices.
• Compounded by accelerating divestment of non-core
  activities.

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Sourcing

• This is where CSR is operationalised.
• Core activity v Non-value adding.
• Concentration on core competencies. E.g Dell
• Maintaining competitiveness

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CSR within the Outsourcing Decision

• Outsourcing is the norm.
• Protect reputation through CSR
• Responsible purchasing is on the Agenda.
• Social Responsible Buying (SPB)
• Purchasing Social Responsibility (PSR)

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CSR within the Outsourcing Decision

• Themes advocated by stakeholders
• Respect of human and workers rights by employers.
• Working conditions and child labour
• Protection of natural resources
• Use of minority suppliers
• Conflict Potential
• Lowest cost -v- Cost of CSR
• Cultural perspective of ethical or business
  practice
• How to include soft social criteria into vendor
  selection.

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Unethical Activities identified in Research
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Summary of Prior Research

• Differentiation between Ethical and CSR issues.
• Positive correlation between environmental
  purchasing and financial performance.
• Studies industry or company specific not generic.
• PSR - direct and positive effect on supplier
  performance with improved trust and co-operation
• Criteria to integrate CSR into business based on
  large companies.

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CSR and SME

• Vast bulk of literature carried out in MNCs
• Assumption that cascading to SMEs is
  inappropriate.
• Large differences in attitudes between managers
  of MNCs and SMEs
• EU Commission recommend CSR be adapted to suit
  SME situation.
• SMEs lack
• awareness,
• experience and
• resources

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CSR and SME

• SMEs account for 90 of all business
• Few studies of the issues of CSR in SMEs
• Growing need for CSR guidelines and frameworks
  for SMEs as outsourcing accelerates.

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CSR/ SME INTERFACE
OPPORTUNITIES
THREATS
1. Burden of compliance monitoring. 2.
Corporate Social Responsibility Paradox Are SMEs
unable to generate benefits from CSR.
1. Business Case benefits better alignment with
consumer concerns, cost saving, productivity and
innovation. 2. Broader benefits of CSR. Lifelong
learning, community development.
BARRIERS
DRIVERS
1. Supply chain pressure from TNC/MNC. 2.
Shifting Markets Need to align production
towards changing consumer preferences. 3.Stakehold
er pressures. 4. To certify sub suppliers in
elongated supply chain.
1.Lack of technology, expertise, training and
investment necessary to make improvements. 2.
Few CSR Initiatives oriented towards SMEs.
3.Price Competition other pressing needs.
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Research Agenda

• Areas for further research.
• 1. The need for global convergence on policies
  and standards
• 2. Agreed definitions and frameworks for
  implementation.
• 3. The impact of CSR on SMEs in context of
  globalisation and escalating outsourcing

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Research Agenda

• Specifically empirical research needed in
• Small business responsibility framework.
• Awareness, uptake and effectiveness of CSR
  initiatives in SMEs.
• Best practice case studies of SMEs.
• Impact of clustering and coalitions on CSR.
• International comparative studies of CSR in SMEs.