An analysis of stakeholder role in Corporate Social Responsibility and the implications of reactive and proactive policy by firms.
*Becky Speaking: Before you start to believe this is to high brow for your intellect take a moment to consider how super poignant this piece is as we move into an ever more digitised world and corporate responsibility becomes paramount. Every decision you make is shadowed by a recent instagram post or digitised advert; how you vote, the skinny tea you drink, your latest hair colour, the vibrator you buy. we have talked a lot about how the digital world affects our mental health in a similar notion should corporations not also consider their wider impact on society? In the following essay Kira (a previous writer of NLF) has a look at how much corporations are influenced by their responsibility to their stakeholders (us).
Introduction
Corporate Social Responsibility (CSR) is a commitment to progress, overall by means of discretionary business practices and significant contribution to social improvement. [Kotler and Lee, 2008.] This definition is significant as they go on to emphasise the unrestricted nature of voluntary Corporate Social Policies (CSP). Those with a ‘stake’ in a business are those who can be affected by the organization or who hold interest or concern in the organization. This can be a person, group or other organization.[BusinessDictionary.com, 2016]
This literature review will further focus on the distinction between reactive CSP and pro-active CSP in terms of CSR. It aims to assemble literature which provides explanation or theory behind the effects of stakeholder pressure on a firm’s participation in CSR. The latter part of the review aims to understand the effects on the way in which corporations’ participate in CSP due to stakeholder pressure. Some authors highlight stakeholder pressure, [Aguinis and Glavas, 2012] [Carroll, 1979, cited in Moon, 2005] [Butler, cited in Musafer, 2012] [Fredrick, cited in Carroll, 2010] whilst others highlight the more voluntary aspect of CSR [Rajak, 2011] [Moon, 2005] [Dentchev et al, 2015]. Methodology
My research into my chosen topic area was conducted via the use of online databases (such as Google Scholar and ScienceDirect) to acquire a distinct and varied selection of secondary sources. When searching for the sources an important factor of relevance became apparent and therefore dictated a more streamlined search into the literature. Understanding how stakeholder pressure can influence corporations’ participation in CSR. The three pillars of institutions provide a system which allows for analysis between the different aspects of CSR. [Scott 1995, cited in Aguinis and Glavas, 2012]. These elements are normative, cultural-cognitive and regulative. This is supported by the involvement of stakeholders [Aguilera et al 2010, cited in Aguinis and Glavas, 2012] which are suggested to pressure corporations to engage with CSR for several reasons: 1) self-interest driven 2) belief in moral standards and 3) based on relationships.
Therefore, it could be suggested that the need to focus on CSR implementations is essential to corporations due to the ethical pressure by stakeholders and further relationship pressures of government. The involvement of government is debated among academics who suggest that working with the law in an established part of business responsibility [Carrol, 1979, cited in Moon, 2005]. This aspect of CSR further suggests that it has become an underlying process in corporate behaviour, with different elements of business operations (such as staff training, reporting and appropriate management of in-house relationships) becoming a significant aspect of CSR. The relationship between business and the local community is highlighted by Butler, [cited in Musafer 2012], as being a necessity due to the nature of the local community often being the employees as well as the customers.
Does this pressure mitigate the positive effects of CSR? CSR has been criticised suggesting that it contributes to an organisational ‘shadow’, acting as a mechanism whereby a pro-active CSR system can be used to hide other behaviour which is objectively immoral [Rajak, 2011]. If CSR is an extension of internal benefit for corporations, then Dentchev et al ask if there is a role to play for Governments in encouraging corporations to commit more resources to CSR [2014]. In the UK, several narrow layers of CSR have been enacted into legislation which aims to encourage CSR [Moon, 2005]. This might suggest that companies participating in CSR up to the legal limit, but then not ‘beyond the law’, are not truly engaging in CSR, the adverse also being true. A ‘reactive’ effort, either to stop the laws affect or even acting as the previously referenced ‘shadow’. ‘Pro-active’ CSP could therefore produce greater positive overall net results compared to policies which only acknowledge the requirements of the law due to an “implied social contract” [Donaldson, 1982, cited in Garriga and Melé, 2004, p56]. The importance of these two concepts appears to show a separation of pro-active and reactive CSR policies in the literature reviewed. This appears to be supported by Frederick’s distinction between Corporate Social Responsibility, (appropriating a position of social responsibility) and corporate social responsiveness (a position of socially responsive action) [1995, cited in Carrol, 2010].
Conflicts and Agreements in the Literature
The literature overall appears to show a distinction between proactive and reactive CSR policies. As a further extension, Moon [2005] Dentchev et al, [2014] and Rajak [2011] highlight different aspects of voluntary CSR. The ‘extension of internal benefit’ highlighted by Dentchev [2014] is a similar concept to Rajak’s shadow as a means of corporations abusing CSR. The importance of acknowledging this ‘thin’ legislation is due to the suggestion that after this intermediate level has been achieved everything past that is voluntary, pro-active CSR [Moon, 2005]. The three pillars [Scott,1995, cited in Aguinis and Glavas] theory provides a significant contribution to the understand of stakeholder pressure in CSR which is supported by Butler [cited in Musafer, 2012], who links businesses to their local community, and Carroll [1979, cited in Moon, 2005] who indicates that CSR policies should be beyond the law. Fredrick [cited in Carrol, 2010] provides an essential part of the analysis of the understanding pro-active and reactive social policy; the pressure by stakeholders poses a fundamental influence for corporations. The literature does not appear to show that the pressure indicated by Aguilera [2010, cited in Aguinis and Glavas] [Carroll, 1979, cited in Moon 2005] Butler [cited in Musafer 2012] and Fredrick [cited in Carroll, 2010] constitutes CSR being only a reactive measure.
Conclusion
There is an acknowledged link between societal pressure and engagement in CSR policy. Further, there is suitable evidence to suggest that the pressure that exists does not mitigate the positive aspects of CSR. The larger names from who’s literature is being regarded are well known in the field; Moon, Carroll and Aguinis and Glavas are often cross-cited by each other. The initial scoping of the literature indicated that there were few significant studies on how voluntarism effects CSR. The literature shows that there is relevant understanding of this aspect of CSR but little significant direct evaluation. Rather, it is a secondary concept to supplement the overall understanding. Due to this, it might be suggested that more research be completed in the topic area so a fuller understanding of stakeholder pressure on corporate social policy can be ascertained.
find Kira:
References
Aguinis, H., Glavas, A. (2012) ‘What we know and Don’t Know About Corporate Social Responsibility: A Review and Research Agenda.’ Journal of Management. Vol 38, No 4, [PAGE NUMBER] BusinessDictionary. [2016] ‘Stakeholder.’ [Online] http://www.businessdictionary.com/definition/stakeholder.html [Accessed 5 December 2016] Carroll, A.B. & Shabana, K.M., (2010) ‘The business case for corporate social responsibility: A review of concepts, research and practice.’ International Journal of Management Reviews. Oxford: Blackwell Publishing Ltd. Vol 12, No 1.
Dentchev, N., Balen, M. & Haezendonck, E. (2015) ‘On voluntarism and the role of governments in CSR: towards a contingency approach.’ Business Ethics: A European Review. New Jersey: John Wiley & Sons, Inc. Vol 24, No 4.
Kotler, P. & Lee, N. (2008) ‘Corporate social responsibility: Doing the most good for your company and your cause.’ New Jersey: John Wiley & Sons, Inc.
Moon, J. (2004) ‘Government as a driver of corporate social responsibility: The UK in comparative perspective.’ International Centre for Corporate Social Responsibility. Nottingham: University of Nottingham.
Musafer, S (2012) ‘Corporate social responsibility: Measuring its value’ BBC NEWS, Business. 22nd October 2016 [Online] http://www.bbc.co.uk/news/business-19876138 [Accessed 17 November 2016]
Rajak, D. (2011) In good company: An anatomy of corporate social responsibility. Stanford: Stanford University Press
Bibliography
Campbell, J. (2007) ‘Why Would Corporations Behave In Socially Responsible Ways? An Institutional Theory of Corporate Social Responsibility.’ Academy of Management Review. Vol 32, No 3.
Carrol, A. (2004) ‘The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders’. Business Horizons. Vol 34, No 4.
Garriga, E., Melé, D. (2004) ‘Corporate Social Responsibility Theories: Mapping the Territory’. Journal of Business Ethics. Vol 53, No 1.
Roberts, R. (1996) ‘Determinants of Corporate Social Responsibility Disclosure: An Application of Stakeholder Theory’. Accounting, Organizations and Society. Vol 17, No 6.
Trotman, K., Bradley, G. (1981) ‘Associations Between Social Responsibility Disclosure and Characteristics of Companies. Accounting, Organizations and Society. Vol 6, No 4.
