CSR Overload? A Critical Analysis of Corporate Social Responsibility from the Companies` and the Consumers` Point of View


Master's Thesis, 2013
122 Pages, Grade: 1,5

Excerpt

Table of Contents

List of Abbreviations

List of Figures

List of Tables

1. Introduction
1.1 Problem Definition and Relevance of the Topic
1.2 Objectives of Work
1.3 Structure of Work

2. Theoretical Foundation of Corporate Social Responsibility
2.1 Definition
2.2 Distinction from Related Terms
2.3 Elements of CSR
2.3.1 Corporate Citizenship
2.3.2 Sustainability
2.3.3 Corporate Governance
2.4 Historical Development of CSR
2.5 Systemization of CSR
2.5.1 Pyramid of CSR by Carroll
2.5.2 Two-Dimensional Model of Corporate Social Responsibility by Quazi and O’Brien
2.5.3 Three-Dimensional Model of CSR by Schwartz/Carroll

3. CSR from the Companies’ Point of View
3.1 Causes for CSR
3.1.1 Moral Imperative and Sustainability
3.1.2 Prevention Against Barriers and Restrictions
3.1.3 Pressure from Society and Reputation
3.2 Ethical Values vs. the Market
3.2.1 Financial and Time Expenditure for CSR
3.2.2 Managing CSR
3.2.3 Missing Support of Stakeholders
3.3 CSR as Competitive Advantage
3.3.1 Unique Selling Proposition
3.3.2 Strategic CSR by Porter and Kramer
3.3.3 CSR and Communication
3.4 Greenwashing
3.4.1 Definition and Relation to CSR
3.4.2 Possible Effects of Greenwashing
3.5 Interim Conclusion – CSR from a Companies’ Point of View

4. CSR from the Consumers’ Point of View
4.1 Awareness of Corporate Social Responsibility
4.2 Influence of CSR on Consumer Behavior
4.2.1 Current Scientific Statistics
4.2.2 Reactance to CSR and Influence on Consumer Behavior
4.3 Empirical Questioning to Test Current Reactance to CSR Campaigns
4.3.1 Structure of Questioning
4.3.2 Evaluation of Results
4.4 Interim Conclusion – CSR from a Consumers’ Point of View

5. Recommendations for Companies to Implement CSR
5.1 Recommendations for the Decision Making for CSR
5.2 Recommendations for a Credible CSR Communication

6. Conclusion and Outlook

7. Appendix

8. Bibliography

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 2.1: The three pillars of sustainability

Figure 2.2: CSR-pyramid by Carroll

Figure 2.3: Two-dimensional model of CSR by Quazi/O’Brien

Figure 2.4: Three-dimensional model of CSR by Schwarz/Carroll

Figure 3.1: Looking inside out: Mapping the social impact of the value chain

Figure 3.2: A framework of CSR communication

Figure 4.1: CSR-overload and Influence on consumer behavior

Figure 4.2: Verification hypothesis H1 – attitude

Figure 4.3: Verification hypothesis H1 – development

Figure 4.4: Verification hypothesis H2 – trustworthiness

Figure 4.5: Verification hypothesis H2 – negative aspects

Figure 4.6: Verification hypothesis H3 – motives

Figure 4.7: Verification hypothesis H4 – irritation and penetration

Figure 4.8: Verification hypothesis H4 – McDonalds

Figure 4.9: Verification hypothesis H5 – greenwashing

List of Tables

Table 3.1: Frequently used greenwashing words in marketing

Table 4.1: Hypothesis H1

Table 4.2: Hypotheses H2 and H3

Table 4.3: Hypothesis H4

Table 4.4: Hypothesis H5

Table 4.5: Online-survey and related hypotheses

Table 4.6: Summary verification of hypotheses

1. Introduction

1.1 Problem Definition and Relevance of the Topic

Decades after the end of communism, problems of business ethics in capitalism have become one of the most discussed topics over the last couple of years in Germany as well as internationally.[1] The term and concept of “Corporate Social Responsibility” (CSR), which generally means that companies’ voluntarily takeover responsibility for different social, economic, ecological, and culture issues, has gained such popularity among academics and the popular media that it seems to be ubiquitous nowadays.[2] Even though the idea of companies being involved in such issues reaches back to the 19th century, the first scientific discussions took place within the 1930s when E. M. Dodd and Chester Barnard asked about the responsibility of leading employees at major companies. At the same time Theodore Kreps also developed a concept how to measure the social contribution of companies to society. The term “Social Responsibility” itself was used for the first time in 1953 by Howard Bowen in his work “Social Responsibilities of the Businessman”.[3]

More recent incidents and scandals such as “Nestle – Powder Milk”, “Shell – Brent Spar”, “Enron”, “Parmalat”, Sweatshops by different sports equipment and electronic devices producers and finally the financial crisis which made the headlines among many others, which did not make it to the front page, have forced companies to consider CSR even more. But also other issues such as climate change and global warming, human rights situation and terrorism affect how companies conduct their strategies and operational practices today.[4] It is observable that almost every large corporation in the western world makes some effort to communicate how it is committed to social issues that lie beyond its basic profit objectives. Only a brief glance at the websites of multinational companies is enough to notice that companies of many different industry sectors make much effort to present their corporate responsibility initiatives – even in controversial industries such as the tobacco and petroleum industry.[5] The industries claim to produce healthier food more fuel-efficient vehicles, conserve energy and other resources in their operations to make the world a better place.[6] In view of this, CSR begins to be wishful thinking or even propaganda to hide the true face of the business.[7] Doubtless what has come to be called corporate social responsibility is now a key-marketing and branding instrument for many companies.[8] Hence, numerous other companies, also small and medium sized companies are currently asking themselves the questions: Shall we also invest in CSR initiatives? Why should we do that – just to do something? Is this still an instrument to gain a competitive advantage? Especially the last question implies the question, if consumers still believe in the basic idea of CSR initiatives, or with the overload of CSR initiatives, if they even show reactance and mistrust against such issues.

There are already countless studies and publications about CSR with different related terms and objectives. Most of the empirical studies aim at the relation between CSR-initiatives and profit or brand. For example the study of the University of Würzburg “Corporate Social Responsibility in der Marketing‐ und Markenforschung” and the work of the Euro-FH “Corporate Social Responsibility und wirtschaftlicher Erfolg” summarize some of the current empirical studies about these topics with heterogeneous outcomes.[9] The empirical study of Marion Rommelspacher (2012) confirms a relation between CSR and consumer behavior, but does not ask about any reactance on CSR initiatives.[10] In 2010, the study of the Institut für Marken- und Kommunikationsforschung (IMK) of the Justus-Liebieg-University in Gießen directly asked consumers if they would boycott companies which did not take any CSR initiatives.[11] However, the opposite, i.e. consumers’ reactance to an excess of CSR was not asked for in this study. Some theoretical literature points out that wrong CSR communication can easily turn to negative reactions.[12]

It can be summarized that the majority of studies is aiming on positive reactions of consumers. Consequently there is a research gap of negative reactions that need to be closed.

1.2 Objectives of Work

The main goal of this work is to answer the following questions: Can CSR-initiatives still be a competitive advantage? Are there even first reactance signs of consumers due the overload of CSR nowadays? These questions shall be answered from the companies’ and the consumers’ perspective. Based on current literature and studies, it shall be explained from the companies’ point of view what can still be reasons for CSR, the dilemma of ethical values vs. profit, if and how it can be used as a competitive advantage even in times when many companies use CSR as “greenwashing” to pull the wool over the eyes of consumers and stakeholders.

From the consumers point of view it shall be worked out how CSR campaigns are recognized by consumers and especially what are the effects of a reactance to CSR campaigns. Do consumers already feel overloaded by CSR? What are the reactions on this overload? How is this expressed by consumers? This will be supported by an empirical questioning about the reactance to CSR campaigns. Finally, some recommendations shall be given for companies, especially for CSR communication.

1.3 Structure of Work

After presenting the problem and objectives of this work in chapter one, chapter two provides the theoretical basis for this work. The term CSR is defined and also distinguished from related terms. Furthermore, topics and other terms that can be seen as part of CSR are defined and explained such as “corporate citizenship”, “sustainability” and “corporate governance”. The chapter continues with the historical development of CSR, especially what underlines the reasons why CSR has become an often debated topic. Chapter two closes with the explanation of approaches that systematize CSR. The pyramid of CSR by Carroll, the two-dimensional model of CSR by Quazi and O’Brien, and finally the three-dimensional model of CSR by Schwartz/Carroll are explained.

Chapter three takes a look at CSR from a companies’ point of view. Initially, the motives and justifications of companies which show social responsibility are explained. This is often linked with moral imperatives, but also to prevent legal restrictions and the pressure of society. The chapter continues with an explanation of why CSR often fails and therewith barriers which need to be considered and eliminated first, before dealing with the topic. Companies often fail due to lacking resources, the know how to manage the topic, but also because of the missing support of stakeholders. Based on literature and studies, it is shown in a next step how CSR can be used as competitive advantage. Especially the strategic CSR approach by Porter and Kramer will be explained in more detail. The communication of CSR also plays a major role and will be explained within this chapter three. Closely linked to the last point and the fact that companies use the trend of CSR to mislead consumers, the so called “greenwashing” is one of the reasons why CSR has suffered criticism as well and will be explained at the end of chapter three. At the same time this forms the transition to the consumers’ point of view, as the question arises if consumers may show a negative attitude or even reactance towards CSR due to the current flood of CSR initiatives.

Chapter four therefore has a look at CSR from the consumers’ point of view. First of all, the chapter shows how CSR is recognized by different consumer groups and explains the influence on consumers’ behavior based on current studies. Afterwards, the effects of a possible reactance towards CSR are characterized and appropriate hypotheses are derived. These hypotheses are evaluated by an empirical survey and interpreted subsequently. The survey shows the basic attitude of consumers towards CSR and their opinion about motives, trust, development, deception and therewith a picture on how CSR is recognized especially with regards to a possible reactance.

Based on the survey results, chapter five provides corresponding recommendations. The chapter focuses on CSR communication again, especially how it should be adapted based on the findings of the survey. Chapter six concludes the main findings of this work and also gives a few suggestions for future scientific research.

2. Theoretical Foundation of Corporate Social Responsibility

2.1 Definition

The term Corporate Social Responsibility (CSR), which means generally that companies’ voluntarily take over responsibility for different social, economic, ecological, and cultural issues, has experienced an enormous body of research over the last decades; however, no widely accepted definition of CSR exists.[13] The book “Social Responsibilities of the Businessman” by Howard R. Bowen started the discussion of CSR. Bowen defined CSR as “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society.”[14] He also stated that CSR rests on two fundamental premises: Firstly as a social contracting, as it exists at the pleasure of society. Secondly as a moral agent within the society.[15] Following this initial definition, a number of other definitions appeared up to the end of 1960s, when CSR itself moved to the focus of interest.[16] Another early definition of CSR was the influential concept by Archie B. Carroll in 1979. He argued: “The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time.”[17] Further definitions followed, Donna J. Wood suggested in 1991, “the basic idea of corporate social responsibility is that business and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behavior and outcomes.”[18] Since October 2011, the European Commission puts forward a new definition of CSR, which is “the responsibility of enterprises for their impacts on society”[19]. They require, “to fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:

– maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;

– identifying, preventing and mitigating their possible adverse impacts.”[20]

They refer to five instruments to make up an evolving and increasingly coherent global framework for CSR: The OECD Guidelines for Multinational Enterprises, the 10 principles of the United Nations Global Compact, the ISO 26000 Guidance Standard on Social Responsibility, The ILO Tripartite Declaration of Principles Concerning Multinational Enterprises, and Social Policy and the UN Guiding Principles on Business and Human Rights.[21]

A universal definition of CSR is very problematic, as it strongly depends on the business system and the industry itself. Different social groups or stakeholders have also different expectations and requirements on business. Companies often define CSR and their understanding of the term for themselves.[22] The previous definitions, especially the one from the European Commission, give an idea and frame about the whole topic, but CSR needs to be distinguished from other related terms.

2.2 Distinction from Related Terms

There are different other related terms to CSR which are defined within this chapter to differentiate them from CSR. A company has to decide how it will address the issues arising from its responsibilities.[23] In 1978, William C. Frederick outlined a conceptual transition from the, as he called it, “philosophical-ethical concept of corporate social responsibility to the action-oriented managerial concept of corporate social responsiveness.”[24] Frederick called it the transition from CSR1 (Corporate Social Responsibility) to CSR2 (Corporate Social Responsiveness). While CSR1 has a more normative basis (what a company should do), CSR2 provides a more strategic and managerial focus (what issues can be chosen and what actions to address the issues).[25] Summarized, it describes how a company designs its relationship to society and environment rather than reacting on environmental influences (proactive). The term Corporate Social Responsibility finally established itself but it also includes some strategies from Corporate Social Responsiveness.[26]

To measure and illustrate the effectiveness and success of CSR activities a concept called Corporate Social Performance (CSP) was established in the 1970s already.[27] Donna J. Wood defined it as principles, processes, and outcomes.[28] Comparable to marketing activities, it is not always easy to measure the success of CSR activities or even if it has an influence on the company result.[29]

There are numerous other terms that are closely related to CSR, such as “Corporate Financial Responsibility” or “Socially Responsible Investments” (SRI). These are investments that integrate social, environmental, and ethical considerations into the “decision making” process of investments.[30] SRI also stands for “Sustainable and Responsible Investing” which stands for an investment style “that considers environmental, social and corporate governance criteria (ESG) to generate long-term competitive financial returns and positive societal impact”[31] as it is defined by the Forum of Sustainable and Responsible Investment. Sustainable investments have experienced enormous increase over the last decade. The Dow Jones Sustainability Index or the FTSE4Good are used as a benchmark for fund manager or other professional investors.[32]

Another term that is also closely linked to CSR is “Social Accountability”, which means that companies are accountable to their stakeholders for their performance on social issues, just as they are accountable to their shareholders for financial issues.[33]

Another term, “philanthropy” is one of the oldest forms of social responsibility, meaning the donation of monetary or product-/ service benefits to organizations for altruistic reasons only.[34] The term is also part of corporate societal marketing which also covers other fields just like sponsorships, advertising with social dimension, cause-related marketing[35], licensing agreements, social alliances, traditional volunteerism etc.[36] CSR is also often brought into context to PR (Public Relations), but within the theory and practice of PR there are different models for an effective communication to build trust between specific stakeholders and the company, these models are missing within CSR literature.[37]

There are other terms which are actual elements of CSR that will be defined within the next chapter in more detail.

2.3 Elements of CSR

2.3.1 Corporate Citizenship

A term which is often used as a synonym for CSR is Corporate Citizenship (CC).[38] Similar to CSR itself there is also no common definition for CC in literature. There are three different views of CC that can be distinguished, the narrow view, the equivalent view and the extended view. The narrow view is seen as philanthropic commitment, which is especially focused on local stakeholders.[39] Examples are donations or employee volunteering. It can be seen as a first development stage of CSR where successful companies are expected to give something back to society. In this case CC is part of CSR, it describes the social commitment within the local environment. This definition is not only very popular in Germany but also in other parts of the world.[40]

The equivalent view sees CC congruent with CSR. A part of literature defines CC simply as an updated label of CSR without any amount of knowledge acquired.[41] Arising in this context, some other authors ask why there is a need for a second term to describe the same concept and they argue with differences or extensions.[42]

The third theory, the extended view, goes beyond the typical CSR understanding and includes cultural and ecological intensions as well. Within this concept the motivation to act as corporate citizen is primarily based on political reasons, with other words the reaction on changes of political frame conditions but also the creation of these conditions.[43] Authors describe it as a concept where companies behave as active citizens with all rights and duties creating a society and its frame conditions. Within this concept CSR and CC can be seen as two different concepts. Within literature the difference and definitions between CSR and CC are very controversially discussed, especially the question if a corporation can be seen as a citizen.[44]

Due to the discussion within literature and the popularity of the term CSR, this work understands CC as part of CSR, as it describes further aspects how companies can influence or be part of a sustainable development of the society, especially outside of its business operations. The understanding of sustainability in this context will be explained in the following chapter.

2.3.2 Sustainability

This chapter shall briefly point out the links between sustainability and CSR. Sustainability is a broad term which was used in management theory to signal the ongoing nature of the business process. In the traditional economic context this means that the business will remain economically active and successful in the future. Especially the so called “Brundtland Report” by the World Commission on Environment and Development (WCED) includes social and environmental longevity into this context. The publishing of this report set the terms by which sustainability could begin to be operationalized.[45] The report defines “sustainable development” as “the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”[46] This definition has been the basis for several debates and discussions about the term sustainability. At least since the World Summit on Sustainable Development of 2002 in Johannesburg, the UN assumes “a collective responsibility to advance and strengthen the interdependent and mutually reinforcing pillars of sustainable development – economic development, social development and environmental protection – at local, national, regional and global levels”[47], as stated in their report. So, the term sustainability itself is based on three pillars: ecological sustainability, economic sustainability and social sustainability. If one pillar or aspect is disregarded it can have an influence on the other pillars. There are different other definitions in literature but this definition is widely accepted and shall be valid for the further course of this work.[48] The three pillar model is shown in the following figure 2.1.

illustration not visible in this excerpt

Figure 2.1: The three pillars of sustainability.

(Source: Own illustration based on: Kirchhof, S., Brandtweiner, R. (2011), p. 529.)

Similar to CC also sustainability is often used as a synonym for CSR; other authors argue that the economical aspect of CSR does not get enough recognition and therefore they see no total comparability.[49] Others therefore even claim that CSR and sustainability “can indeed be poles apart”.[50] To prevent a definition of CSR which only focuses on the social aspect the term “Corporate Responsibility” has also established itself in literature. Within this work the terms shall be interpreted in the widest sense in which the economical aspect shall not be neglected.[51] Sustainability and especially its three pillars shall therefore be seen as a basis and element of CSR. Another element is a good corporate governance which will be explained in the following chapter.

2.3.3 Corporate Governance

There is also no general working definition of corporate governance within literature, yet each definition varies from another. Early definitions appeared in the United Kingdom Cadbury Report in 1992 and the South African King Report from 1994.[52] In these reports CG is defined as “the system by which companies are directed and controlled.”[53] Over decades there have been further definition attempts, bringing more and additional aspects to the term corporate governance. The trend to define the term more precisely continued up to 2007 and the appearance of the Australian Securities Exchange’s (ASX) Principles of Good Corporate Governance and Best Practice Recommendations.[54] ASX defines “Corporate governance as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account. Corporate governance influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized. Effective corporate governance structures encourage companies to create value, through entrepreneurialism, innovation, development and exploration, and provide accountability and control systems commensurate with the risks involved.”[55] Other definitions, especially literature from the United States, are focusing more on the shareholder value concept.[56] In practice there are four principles of good corporate governance, namely:[57]

- Transparency
- Accountability
- Responsibility
- Fairness

All these principles are related to CSR.[58] Additionally all long-term benefits out of good corporate governance are also directly related to the sustainability of a company.[59] Corporate governance becomes increasingly driven by ethical norms as well. That shows the relation between all of these terms, especially between corporate governance and CSR. “Where there were once two separate sets of mechanisms, one dealing with “hard core” corporate decision-making and the other with “soft”, people friendly business strategies, scholars now point to a more hybridized, synthesized body of laws and norms and regulating corporate practices.”[60] This work as many authors as well therefore regard corporate governance as an element of CSR and the necessity of corporate governance to implement the principles of CSR as an instrument.[61] The European Commission shares this view; they separate two different instruments but subsume CC under the umbrella of CSR.[62] They describe it as follows: “CSR is separate from but linked to the concept of corporate governance, which is defined as the system by which companies are directed and controlled and as a set of relationships between company’s management, its board its shareholders and its other stakeholders.”[63]

As it can be seen in the previous chapters a particular definition and distinction of the field and related terms of CSR is very difficult but the frame and essence of the concept should now be clear. In the next chapter, the historical development of this topic will be explained, before different attempts of a systemization of CSR will be presented.

2.4 Historical Development of CSR

The debate about the responsibility of companies is not a new one; for decades it has been an ongoing discussion internationally, which was constantly re-initiated due to different circumstances.[64] The global rise of CSR goes hand in hand with an extended involvement of firms in global social matters.[65] In her work “The Politics of Corporate Social Responsibility, The Rise of a Global Business Norm” from 2010, Ursula Mühle describes four major periods that had a special impact on the development of CSR.[66] These periods shall be described shortly within this chapter.

As already described in the previous chapters the first recognition of CSR began in the 1950s with Bowen’s publication.[67] The topic and related issues started to be discussed by a larger public internationally one decade later. The first major period, from the 1960s to the 1970s, was characterized by social and environmental concerns triggered by the transnational expansion of multinational companies and linked to that the awareness of the limitation and the use of resources. During this period, three non-governmental organizations (NGOs) were founded, which are very influential organizations today: Amnesty International, the WWF and Greenpeace, which were reactions on the explained concerns. Nevertheless it were the three major international organizations, UN, ILO, and the OECD, that put the first pressure in favor of an regulatory framework concerning multinational companies and social policies. The majority of companies boycotted or ignored the first regulatory attempts while even getting support from neo-classical thinkers such as Milton Friedman. Even though there was a debate between all these institutions, it did not produce a global awareness of CSR. When companies claimed to behave socially responsible, they did it through philanthropic ways but did not present it as CSR, especially not in the understanding of today’s CSR concept.[68]

The second major period took place from the late 1970s to the mid-1990s. This period was especially shaped by the term “sustainability”, which includes social, environment, and economical aspects. As mentioned, the “Brundtland Report” from 1987 used to acknowledge a growing need to integrate these aspects into the corporate culture and strategies.[69] The period was characterized by new market forces along with political pressure to market regulations.[70] In the 1980s another wave of deregulations led to a mobilization of NGO’s against multinational companies. The examples range from Nike sweatshops to Dole Food or GM, also the foundation of the clean clothes campaign falls within this period.[71] Further incidents such as the explosion at Union Carbide in India and the oil spillage at Alaska (Exxon Valdez) triggered the launch of several reporting schemes of companies for environmental issues and certification schemes for environmental and labor issues: In 1989, the Ceres principles, a set of ten principles for ethical company behavior which forms today’s Global Reporting Initiative (GRI), in the early 1990s the Public Environmental Reporting Initiative or the United Nations Environmental Reporting Initiative are some examples.[72] These reporting guidelines and schemes were often country- and industry specific. The early 1990s were also a starting point for private monitoring, for example at employees in subcontracted companies. A change also took place on the level of CSR strategies, as many companies recognized the need for “environmental risk management” in addition to philanthropic actions.[73] The UN Earth Summit took place in Rio de Janeiro in 1992 and was attended by world leaders in order to launch a gradual shift to more sustainable forms of development, but this period of CSR development was still not of global awareness.[74]

CSR received its global character during the third major period – from the late 1990s to the early 2000s. Protests against companies spread globally and a massive increase in the calls for more political regulation could not be ignored anymore. Some companies immediately changed their behavior by introducing monitoring systems. Additionally, several new forms of regulation for environmental issues were introduced during this period, starting with the Kyoto Protocol in 1997.[75] The protocol introduced more powerful measures for the reduction of global greenhouse gas emissions.[76] Several other regulations achieved that companies had to report their emissions and other issues following the EU Integrated Pollution Prevention and Control (IPPC). The GRI, the Global Reporting Initiative (an expansion of the Ceres, as explained before), aimed to make economic, social and environmental reporting as normal as financial reporting as they stated, quite successfully as many companies participated. Furthermore the Global Compact, launched in a speech given by former UN secretary Kofi Annan at the 1999 World Economic Forum in Davos, was very successful. According to the Global Compact, companies shall commit themselves to ten principles of human and labor rights, environmental and anti-corruption standards.[77] The EU took also part in the CSR discussion with their so called “Green Book”, “Promoting a European framework for Corporate Social Responsibility” in 2001.[78] There were numerous examples of industry-specific self-regulation, especially the global interest of the International Organization for Standardization (ISO) 14001 certification of an environmental management system was and is still great. The standard was launched in 1996, updated 2004 and has become the gold standard for CSR-conscious firms. Not required by law, many multinational companies such as Ford, IBM have adopted the ISO 14001 to their standard worldwide. And also in specific industries such as the automotive industry, GM, Toyota and other demanding that all their top-suppliers are ISO 14001 certified.[79] The described period indicated the beginnings of an institutionalization of CSR within the world culture.[80] A study of the US National Policy Association from 2002 revealed that Europe passed the US regarding voluntary CSR activities at that time.[81] Even though the manner how companies used CSR remained the same as it mainly was still used for philanthropic reasons or as a risk management tool.[82]

The integration of CSR into the company strategy and another increase of firms committing themselves to CSR takes place since the mid-2000s. Especially financial market actors developed an interest in CSR assessments during this period, for example sustainability funds or institutional investors investing in sustainability or labor standards. During this period further issues have become relevant, such as climate change, supply chain questions, responsible education in business and also responsible investments.[83] Especially the financial and economic crisis intensified the discussion about CSR and the responsibility of companies. The missing responsibility of banks and investment managers is generally valid as the main-reason for the crisis.[84] After the recovery of the markets, many experts talked about the end of the traditional financial capitalism and new models of the global market economy with new central topics in theory and practice, especially business ethics.[85] But also the ongoing liberalization of the markets in the last couple of years and the explosion of the information- and communication market have extremely accelerated the globalization and the worldwide CSR movement, not to mention the ongoing big initiatives like the Global Compact and the GRI.[86] Indeed, a glance at the websites of multinational, but also of SMEs is enough to notice that firms in many industries and sectors spending much effort on their CSR activities and the communication of these activities. CSR has become a key marketing and branding exercise even beyond controversial industries.[87] The rising flood of CSR activities and discussions has also led to criticism and also to false environmental or sustainable claims used by companies to use the popularity of these issues, which is called “greenwashing” and will be explained in more detail later in this work.[88] Why and how companies are using CSR today and the current view of consumers on it will be specified in the following, but some major approaches to systematize CSR will be explained first.

2.5 Systemization of CSR

2.5.1 Pyramid of CSR by Carroll

Besides Archie Carroll’s definition of CSR, quoted in Chapter 2.1, his approach to systemize CSR is even more popular. Carroll identified four types of social responsibilities constituting CSR: economic, legal, ethical, and philanthropic responsibilities.[89] He argued: “For CSR to be accepted by a conscientious business person, it should be framed in such way that the entire ranges of business responsibilities are embraced.”[90] He represents these dimensions in terms of a pyramid as shown in the following figure 2.2, where the lower rungs, i.e. economic and the legal, are the fundament in order to be sustainable. The middle rung, ethics, is expected by corporations, the fourth rung, philanthropic responsibilities, is desirable as it promotes good corporate citizenship.[91]

illustration not visible in this excerpt

Figure 2.2: CSR-pyramide by Carroll.

(Source: Carroll, A. B. (1991), p. 42.)

Economic responsibilities describe the objective of companies to sell goods and services and make profit out of it, all based on customers’ needs. Carroll describes it as the basis for all other responsibilities.[92] “All other business responsibilities are predicted upon the economic responsibility of the firm, because without it others become moot considerations.”[93]

Legal responsibilities require the compliance with laws and regulations promulgated by federal, state and local governments. According to Carroll, legal responsibilities reflect a view of “codified ethics”, which are the basis for the relationship between business and society.[94] Legal responsibilities shall be seen as coexisting with economic responsibilities as fundamental precepts.[95]

The third level, ethical responsibility, obliges corporations to do what is right, just and fair and expected by society, even when they are not obliged to by the legal framework.[96] Ethical standards of a society are subject to dynamic changes and often the pre-stage for new laws, that means it exists a continuous dynamic relationship to the legal responsibilities.[97]

At the top of the pyramid, philanthropic responsibilities, describe the companies’ ambition to be a “good citizen” within society.[98] This addresses a great variety of issues, such as charitable donations, support for local events etc.[99] Carroll distinguishes between ethical and philanthropic: Ethical responsibilities are expected in an ethical or moral sense by society, in contrast to philanthropic responsibilities which are not required, even if philanthropic behavior is increasingly expected it is not felt unethical if it is missing.[100]

The pyramid tries to describe a necessary and sufficient set of obligations that socially responsible businesses should fulfill, taking into consideration their decreasing importance.[101] The theory has been adapted by many theorists and researchers but was also criticized. The criticism mostly focuses on the economic responsibilities which are meant to be the basis for CSR, which critics often see to be the reason for problems – the following levels would just represent the solutions for these problems. Another point of criticism is often seen in the exact delimitation of the different responsibilities. Carroll himself argues, however, that the delimitation is done for analytical reasons, in reality, the different responsibilities are overlapping areas that mutually influence one another.[102] This circumstance often leads to conflicts, especially between the economical and philanthropic responsibilities, which will be explained in more detail within this work.[103] Based on this CSR pyramid, Carroll (and Schwartz) developed another CSR model, the three dimensional model, the two dimensional model by Quazi and O’Brien will be explained first.

2.5.2 Two-Dimensional Model of Corporate Social Responsibility by Quazi and O’Brien

Quazi and O’Brien established a two dimensional model of CSR comprising two axes. The two dimensions are the span of corporate responsibility, the narrow to wider perspective and the range of outcomes of social commitments, called the cost to benefit driven perspective. They confirmed the validity of the concept based on empirical studies in dissimilar cultures – e.g. Australia and Bangladesh. They conclude that CSR is two-dimensional and universal in nature and that different culture environments have little impact on the ethical perceptions of corporate managers.[104] Out of the perspectives, the model has two axes (horizontal and vertical) and four quadrants. The position of a company in the model is determined by the company’s attitude to CSR and its benefits. The horizontal axe is labeled “narrow responsibility” (right) and “wide responsibility” (left) at its extremities. Former represents the company’s short-term objective which is strictly profit maximization. The latter represents the wider social outlook, according to which companies, beyond mere compliance to regulations, environmental protection, and conservation of natural resources etc. The vertical axis is labeled “benefits from CSR action” and “costs from CSR action” at its ends. It is implicated that companies which are more focused on short-term results are more concerned about the cost of CSR actions and therefore gravitate towards the lower and negative extremity. Companies which are more focused on strategic results and on the assumption that benefits might exceed costs, move towards the upper, positive extremity of the model.[105] The model is shown in the following figure 2.3.

illustration not visible in this excerpt

Figure 2.3: Two-dimensional model of CSR by Quazi/O’Brien.

(Source: Jamali, D., Sidani, Y. (2008), p. 334.)

As it can be seen in the figure, resulting from the intersections of the two axes are four quadrants which are representing four possible views of CSR: the classical view, the socioeconomic view, the modern view, and the philanthropic view. The classical view represents the neoclassical perspective, in which there is no provision for business to look beyond profit-making, and where CSR is seen to generate only costs but no benefits at all.[106] The socio-economic quadrant represents a narrow view of CSR but accepts that adopting some degree of social responsibility will lead to a net benefit for the company in terms of good customers and supplier relationship.[107] From this view, business still continues to pursue profit maximization as a primary objective, while it also tries to meet social demand and derives some benefits in the process. The modern view captures a perspective in which a business sees added value in serving a wider range of societal needs and expectations and perceiving net benefits from socially responsible actions.[108] Finally, the philanthropic view depicts a broader view of social responsibility in which business agrees to participate in charitable activities even when the latter are generally perceived as a net cost.[109] Besides two important dimensions of CSR, the model also captures cost benefit considerations, which are also relevant for managers in pursuit of CSR.[110] The only criticism of this model is seen in the superficiality, as philanthropic is seen to be the mean pillar.[111]

Another model will be explained in the following chapter, the three-dimensional model of CSR by Schwartz and Carroll, which is based on Carroll’s pyramid of responsibilities.[112]

2.5.3 Three-Dimensional Model of CSR by Schwartz/Carroll

A third explanatory model was developed by Schwartz and Carroll in 2003, based on Carroll’s first model which was explained previously in this work.[113] Schwartz and Carroll designed a Venn diagram or set diagram based around the three core aspects: economic, legal and ethical with the assumption that the philanthropic category is subsumed under the ethical and/or economic domains, reflecting the possible differing motivations for philanthropic activities.[114] This also removes the problem or criticism of the existence of a hierarchy between the core aspects.[115] Schwartz and Carroll describe it as follows: “By using a Venn diagram, the model initially suggests that none of the three CSR domains (i.e., economic, legal, or ethical) is prima facie more important or significant relative to the others.”[116]

As shown in the following figure 2.4, the overlap of the three domains creates seven possible categories of CSR-activities.[117] These different categories provide a more complete construct by which to classify corporate activities. According to Schwartz, “it is anticipated that as corporate managers and business students reflect on corporate actions and where they should be classified within the model, an improved understanding of the relationship between business and society and more specifically between economics, law, and ethics, might take place.”[118]

illustration not visible in this excerpt

Figure 2.4: Three-dimensional model of CSR by Schwarz/Carroll.

(Source: Schwartz, M., Carroll, A. B. (2003), p. 509.)

The classification of CSR-actions is also a first weakness or point of criticism of the model, since there are no indications to classify the entire company itself.[119] Schwartz and Carroll themselves point out another problem, they argue “some might question whether any action can be defined as “purely economic”, “purely legal”, or “purely ethical”.”[120] Most critics of the model argue that there is always a link between at least two of the dimensions in reality. Another problem of the model is seen in the nonexistence of an ecological dimension which is understood as part of the ethical dimension.[121]

While there are different other models of CSR that can be found in literature, most of them are similar or based on the explained models.[122] The previous chapter has shown all aspects to get an understanding of the concept of CSR. The next chapter will now have a closer look at CSR from a companies’ point of view, what can be reasons for CSR, what can be problems, how it can be useful and also how it can be misused. Based on that knowledge the work will have a look at CSR from the consumers’ point of view, especially the influence on consumers’ behavior and a possible reactance towards CSR due to the overload of CSR activities in the last years as explained.

3. CSR from the Companies’ Point of View

3.1 Causes for CSR

3.1.1 Moral Imperative and Sustainability

In accordance to the standard neoclassical model, a company only attaches an intrinsic value to profits and the only legitimate stakeholder is the shareholder.[123] That’s why Nobel laureate economist Milton Friedman also claimed that “the social responsibility of business is to increase its profits.”[124] But there are also some reasons why CSR might also be in the interests of a company, first of all the ethical reasons, what Michael Porter and Mark Kramer call the “moral imperative”.[125] They argue that CSR is strongly imbued with moral and ethical imperatives and in some areas moral considerations are easy to understand and apply, e.g. honesty in filing financial statements and operating within the law.[126] But as explained in the previous chapter, Carroll included the ethical responsibility in his pyramid definition of CSR over and beyond the legal responsibility be­cause the law does not cover every aspect that makes businesses act in an ethically responsible manner.[127] Hence, it should be understood that companies have a duty to be good citizens, as described in the previous chapter, and “do the right thing”.[128] The need for individuals and corporations to be socially responsible beyond the legislation goes far back in history and already been documented in the old testament – of course not defined as corporate social responsibility – but in terms of helping and supporting one another.[129] The German rationalist philosopher Immanuel Kant had a firm belief in the universality of ethical behavior. For him, moral criteria are categorical imperatives in the sense that they are absolute and unconditional, irrespective of consequences. This forms a necessary connection between morality and reason, because only rational beings are able to form and act in accordance with a universal conception of morality.[130] So, a Kantian approach of CSR focuses on the motivation about the concept – CSR activities that demonstrate that it is motivated by duty, not self-interest. A Kantian approach might also exclude an evaluation which focuses on the benefits to the company instead of the careful identification of corporate duties and responsibilities.[131] Authors confirm that only a credible, confidence building CSR-activity and the right communication is essential, because society would uncover the real motives behind it really fast – e.g. if these activities would only be for the benefit of the company.[132] Also the German government, the Federal Ministry of Labour and Social Affairs, appeals to companies from a moral point of view by giving examples of CSR-activities which might have a benefit for society: “Taking on responsibility means providing in-company vocational training for more youths than are necessary for meeting one's operational needs. Taking on responsibility means making sure that production sites do not discharge harmful substances or pollute the environment. It means respecting one's employees; not immediately terminating an employee ‒ even when the law would allow this ‒ but rather seeking alternative solutions. It means, for example, offering company day care and flexible working hours to make it easier for employees to reconcile the demands of work with the demands of raising a family.”[133] The integration of ethical and economic issues and especially the relation to each other, into the education is also progressing, from elementary school up to business schools, which will form managers and employees of a new generation, which really take care of moral driven activities, for example those mentioned by the Federal Ministry of Labour and Social Affairs.[134]

The moral imperative should be the basis for the next reason why companies might have an interest in CSR, the sustainable development of a company. As explained previously, this contains the three pillars, economic, social and environment.[135] According to that, companies should operate in ways that secure long term economic performance by avoiding short term behavior which may have a negative influence on economic or environmental aspects. Best practice examples are DuPont or McDonalds. DuPont has saved over $2 billion from reduction in energy from 1990 to 2006. McDonalds reduced its waste by 30% by changing the packaging material. So, CSR can be seen as a strategic instrument. This will be explained in more detail later in this work.[136] Another factor why companies are driven to use CSR, will be explained within the next chapter, which is mainly aimed on future developments and restrictions.

[...]


[1] Cf. Schreck, P. (2009), p. V.

[2] Cf. Crowther, D., Capaldi, N. (2012), p. 53.

[3] Cf. Fifka, M. (2011), pp. 17-18.

[4] Cf. Idowu, S. O., Filho, W. L. (2009), p. 1; Kröker, R. (2010), pp. 48-49; Sun, W., Stewart, J., Pollard, D. J. (2010), pp. 3-4.

[5] Cf. Fleming, P., Jones, M. T. (2013), p. 1; The appendix of this work shows screenshots of different companies’ websites from various industry sectors presenting their CSR effort.

[6] Cf. Karnani, A. (2012), w/o. p.

[7] Cf. Fleming, P., Jones, M. T. (2013), p. 2.

[8] Cf. Fleming, P., Jones, M. T. (2013), p. 1.

[9] Cf. Ebel, M. (2011), pp. 101-110, Waßman, J. (2011), p. 44.

[10] Cf. Rommelspacher, M. (2012), p. 220.

[11] The result was that the willingness to boycott such companies is quite low. Cf. Brunner, C. B., Esch, F-R. (2010), pp. 22-23.

[12] Cf. Osburg, T. H. (2012), p. 472.

[13] Cf. Apostolakou, A., Jackson, G. (2010), pp. 371 f.

[14] Bowen, H. R. (1953), p. 6.

[15] Cf. Gupta, M. (2009), p. 35.

[16] Cf. Rommelspacher, M. (2012), p. 32.

[17] Carroll, A. B. (1979), p. 500; Apostolakou, A., Jackson, G. (2010), pp. 372 f.

[18] Wood, D. J. (1991), p. 695.

[19] European Commission (2011), p. 6.

[20] ibid.

[21] Cf. European Commission (2011), pp. 6-7.

[22] Cf. Apostolakou, A., Jackson, G. (2010), pp. 372 f.

[23] Cf. Banerjee, S. B. (2007), p. 20.

[24] Frederick, W. C. (1994), p. 150.

[25] Cf. Frederick, W. C. (1994), p. 150; Banerjee, S. B. (2007), p. 20.

[26] Cf. Bruns, M. (2011), p. 16.

[27] Cf. Fifka, M. (2011), p. 30.

[28] Cf. Wood, D. J., Jones, R. E. (1995), p. 230.

[29] Cf. Fifka, M. (2011), p. 30.

[30] Cf. Huimin, L., Wai Kong, C. A., Eduardo, R. (2010), p. 152.

[31] USSIF (2013), w/o. p.

[32] Cf. Bruns, M. (2011), pp. 16-17.

[33] Cf. Pritchard, R. D. (2002), p. 258

[34] Cf. Bulmann, A. (2008), pp. 41-42.

[35] Cause-related marketing is defined as any marketing activity in which a company’s dona- tions to a specific cause are based on upon sales of a specific product or service. Cf. Roos, M. (2012), p. 12.

[36] Cf. L’Etang, J. (2010), p. 234.

[37] Cf. Bruns, M. (2011), pp. 20 f.

[38] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 9.

[39] Cf. Hoffmann, T. (2011), p. 61.

[40] Cf. Weber, M. (2008), pp. 44-45.

[41] Cf. Weber, M. (2008), p. 45.

[42] Cf. Fifka, M. (2011), p. 42.

[43] Cf. Hoffmann, T. (2011), p. 61.

[44] Cf. Weber, M. (2008), p. 45.

[45] Cf. Jallow, K. (2012), p. 32.

[46] United Nations (WCED) (1987), w/o.p.

[47] United Nations (2002), p.1.

[48] Cf. Kirchhof, S., Brandtweiner, R. (2011), p. 529; Kashmanian, R. M., Wells, R. P., Keenan, C. (2011), p. 108.

[49] Cf. Kraus, P. (2011), p. 62.

[50] Brueckner, M., Pforr, C. (2011), pp. 79-80.

[51] Cf. Kraus, P. (2011), p. 62.

[52] Cf. du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 3.

[53] du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 3.

[54] Cf. du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 4.

[55] ASX Corporate Governance Council (2007), p. 3.

[56] Cf. du Plessis, J. J., Hargovan, A., Bagaric, M. (2010), p. 4.

[57] Cf. Aras, G., Crowther, D. (2012), p. 15.

[58] Cf. ibid.

[59] Cf. Aras, G., Crowther, D. (2012), p. 17.

[60] Gill, A. (2008), p. 463.

[61] Cf. Bruns, M. (2011), pp. 30 f.

[62] Cf. Schneider, A. (2012), p. 26.

[63] Schneider A. (2012), p. 26.

[64] Cf. Palazzo, G. (2010), p. 73.

[65] Cf. Mühle, U. (2010), p. 53.

[66] Cf. Mühle, U. (2010), p. 41.

[67] Cf. Bruns, M. (2011), p. 6.

[68] Cf. Mühle, U. (2010), pp. 41-42.

[69] Cf. Mühle, U. (2010), p. 42.

[70] Cf. Mühle, U. (2010), p. 43.

[71] Cf. Schaltegger, S., Müller, M. (2008), p. 19.

[72] Cf. Mühle, U. (2010), p. 43, Idowu, S. O., Filho, W. L. (2009), p. 1.

[73] Cf. Mühle, U. (2010), p. 43.

[74] Cf. Mühle, U. (2010), p. 43.

[75] Cf. Mühle, U. (2010), p. 44.

[76] Cf. Cirman, A., Domadenik, P., Koman, M., Redek, T. (2009), p. 31.

[77] Cf. Mühle, U. (2010), pp. 43-44.

[78] Cf. Schaltegger, S., Müller, M. (2008), p. 19.

[79] Cf. Peng, M. (2009), p. 500.

[80] Cf. Mühle, U. (2010), pp. 43-44.

[81] Cf. Schaltegger, S., Müller, M. (2008), p. 20.

[82] Cf. Mühle, U. (2010), p. 44.

[83] Cf. Mühle, U. (2010), p. 45.

[84] Cf. Rommelspacher, M. (2012), p. 1.

[85] Cf. Palazzo, G. (2010), p. 81.

[86] Cf. Rommelspacher, M. (2012), p. 1,

[87] Cf. Fleming, P., Jones, M. T. (2013), p. 1.

[88] Cf. Fleming, P., Jones, M. T. (2013), p. 1; McKinney, M. L., Schoch, R. M., Yonavjak, L., (2007), p. 552.

[89] Cf. Woermann, M. (2013), p. 131.

[90] Carroll, A. B. (1991), p. 40.

[91] Cf. Woermann, M. (2013), p. 131.

[92] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 12.

[93] Carroll, A. B. (1991), p. 41.

[94] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 13.

[95] Cf. Carroll, A. B. (1991), p. 41.

[96] Cf. Habisch, A. (2005), p. 337.

[97] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 13.

[98] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), pp. 13-14.

[99] Cf. Habisch, A. (2005), p. 337.

[100] Cf. Carroll, A. B. (1991), p. 42.

[101] Cf. Geva, A. (2008), p. 7.

[102] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 14.

[103] Cf. Jones, A. (2001), pp. 221-222; Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), p. 14.

[104] Cf. Liangrong, Z. (2009), p. 22.

[105] Cf. Figueiras, J. L. M., Oliveira, M. G., Neto, F. C. C., Filho, J. C. L. S (2012), p. 59.

[106] Cf. Jamali, D., Sidani, Y. (2008), p. 335.

[107] Cf. Liangrong, Z. (2009), p. 23.

[108] Cf. Jamali, D., Sidani, Y. (2008), p. 335.

[109] Cf. Liangrong, Z. (2009), p. 23.

[110] Cf. Jamali, D., Sidani, Y. (2008), p. 335.

[111] Cf. Bruns, M. (2011), p. 25.

[112] Cf. Bruns, M. (2011), p. 26.

[113] Cf. Welzel, E. (2008), p. 58; Bruns, M. (2011), p. 26.

[114] Cf. Schwartz, M., Carroll, A. B. (2003), p. 508.

[115] Cf. Welzel, E. (2008), p. 58.

[116] Schwartz, M., Carroll, A. B. (2003), p. 508.

[117] Cf. Welzel, E. (2008), p. 58.

[118] Schwartz, M. (2011), p. 114.

[119] Cf. Welzel, E. (2008), p. 58.

[120] Schwartz, M., Carroll, A. B. (2003), p. 520.

[121] Cf. Welzel, E. (2008), p. 58.

[122] Cf. Mayerhofer, W., Grusch, L., Mertzbach, M. (2008), pp. 10 f.

[123] Cf. Graafland, J. (2002), p. 297.

[124] Friedman, M. (1970), pp. 32-33.

[125] Cf. Grant, M. (2010), p. 57.

[126] Cf. Porter, M., Kramer, M. (2006), p. 4.

[127] Cf. Masaka, D. (2008), p. 15; see chapter 2.5.1.

[128] Cf. Porter, M., Kramer, M. (2006), p. 3.

[129] Cf. Masaka, D. (2008), p. 13.

[130] Cf. Masaka, D. (2008), p. 18.

[131] Cf. L’Etang, J. (2006), p. 415.

[132] Cf. Mayer, J. (2013), p. 124.

[133] Federal Ministry of Labour and Social Affairs (2013), w/o. p.

[134] Cf. Kabisch, E.-M. (2010), p. 24.

[135] See chapter 2.3.2, Cf. Porter, M., Kramer, M. (2006), p. 4.

[136] Cf. Porter, M., Kramer, M. (2006), p. 4.

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Title
CSR Overload? A Critical Analysis of Corporate Social Responsibility from the Companies` and the Consumers` Point of View
College
University of applied sciences Dortmund
Course
BWL - Unternehmensethik, Wirtschaftsethik, Marketing
Grade
1,5
Author
Year
2013
Pages
122
Catalog Number
V263154
ISBN (eBook)
9783656517535
ISBN (Book)
9783656517467
File size
6098 KB
Language
English
Tags
CSR, Corporate Social Responsibility, Kritik
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Thomas Demmerling (Author), 2013, CSR Overload? A Critical Analysis of Corporate Social Responsibility from the Companies` and the Consumers` Point of View, Munich, GRIN Verlag, https://www.grin.com/document/263154

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