Corporate responsibility, social responsibility and sustainability41

Business research is rich in concepts related to corporate responsibility (CR), corporate social responsibility (CSR), and corporate sustainability (CS). A closer look at scientific literature reveals that no unambiguous consensus exists regarding the concepts CSR and CS (Freeman et al., 2011; Sarvaiya and Wu, 2014), let alone sustainability (Hediger, 1999; Christen and Schmidt, 2012). This section discusses CSR and CS and explains the concept of ‘corporate responsibility for sustainability’ that is employed in this thesis. The discussion about corporate responsibility is included in the discussion about CSR and CS.

CSR first emerged as a formal concept in the 1950s (Sarvaiya and Wu, 2014), was sig-nificantly developed in the 1960s and 1970s (Freeman et al., 2011) and became general during the 1970s and 1980s (Montiel, 2008). So far, a consensual definition has not been reached among scientists (Sarvaiya and Wu, 2014). Freeman et al. (2011) referred to pre-vious research that has found CSR has lost its meaning due to overuse. For example, a review of 588 journal articles and 102 books by Aguinis and Glavas (2012) revealed the extent of the CSR literature and the nuances of CSR.

CSR has traditionally included a consideration for the well-being of the society from a philanthropic perspective as well as for the social consequences of business decisions (Sarvaiya and Wu, 2014). Company philanthropy has, however, also been criticised as being nothing more than charitable actions taken by the company managers at the expense

of the organisation’s private owners (The Economist, 2005c). Stakeholder theory plays a significant role in CSR (Freeman et al., 2011; Sarvaiya and Wu, 2014). Freeman et al.

(2011) suggested that the motivation of CSR could be addressed from the perspective of company stakeholder responsibility or corporate social responsiveness, of which both concepts refer to stakeholder inclusion. Historically, the ideology of CR developed from a shareholder-centred classic ideology that aims to produce profits for shareholders (shareholder responsibility) towards stakeholder ideology in which the needs, require-ments and expectations of a broader stakeholder base are considered (stakeholder respon-sibility) (Ketola, 2005). Dyllick and Hockerts (2002) and Sarvaiya and Wu (2014) stated that socially sustainable companies take responsibility for advancing the well-being of both the internal stakeholders, such as employees, and the external stakeholders, such as the society at large. According to this social dimension of CR, it is essential to gain stake-holders’ acceptance for all operations (Dyllick and Hockerts, 2002).

CSR has traditionally covered economic, legal and ethical dimensions (Sarvaiya and Wu, 2014). More recently, CSR has evolved to include environmental aspects along with the social and economic aspects (the triple bottom line in general) (Aguinis and Glavas, 2012;

Sarvaiya and Wu, 2014).

CS has emerged in management studies since the 1990s (Montiel, 2008; Whiteman et al., 2013). The World Business Council for Sustainable Development (WBCSD) has also pioneered in defining CS through linking the environmental and business economic di-mension through eco-efficiency (Dyllick and Hockerts, 2002; Montiel, 2008; Dyllick and Muff, 2016). According to Sarvaiya and Wu (2014), the concept of CS has been primarily based on the principle of conserving natural resources to achieve the benefits of economic sustainability. Similarly, as environmental aspects have gradually entered CSR, social aspects have been increasingly incorporated into CS (Montiel, 2008; Sarvaiya and Wu, 2014). While sustainable development is defined at the macro-level, CS refers to sustain-able development at the company level (Baumgartner and Ebner, 2010) and translates the environmental, social and economic dimensions of sustainable development into the tri-ple bottom line: peotri-ple, planet and profit.

The relationship between CSR and CS is complex. First, CR has traditionally been di-vided into CSR and environmental management (Ketola, 2010; Dyllick and Muff, 2016).

Furthermore, scientific literature discusses whether CSR is one pillar of CS or whether CSR is a subsystem of CS (Sarvaiya and Wu, 2014). Montiel (2008) found that CSR and CS employ different paradigms; i.e., the anthropocentric paradigm, in which nature has an instrumental or use value and the eco-centric paradigm, in which nature has an intrinsic value, respectively. Montiel (2008) and Sarvaiya and Wu (2014) provided a detailed ac-count of the relationship and the similarities and differences between CSR and CS based on a review of scientific literature.

Stakeholder theory is often considered to be an essential part of CS. Freeman et al. (2011) stated that stakeholder responsibility implies that a business is not sustainable unless it satisfies stakeholder interests. Dyllick and Hockerts (2002) suggested that CS should be

2.3 The sustainability of business 43 defined in terms of its ability to meet all stakeholders’ needs now and in the future. Ketola (2010) also emphasised the role of planetary boundaries in the definition of CS as follows:

“Corporate sustainability encompasses strategies and practices that aim to meet the cur-rent needs of stakeholders while seeking to protect, support and enhance the human and natural resources that will be needed in the future” (Ketola, 2010). Broadly understanding societal expectations and identifying and engaging relevant stakeholders can be consid-ered a prerequisite for holistic sustainability strategies that contribute to sustainable de-velopment (Dyllick and Muff, 2016). The natural environment can be included or ex-cluded from stakeholders and treated separately. Some researchers claim that the natural environment should be considered as a stakeholder because it lacks the political and eco-nomic voice that is granted to other stakeholders. Others claim that it makes no difference whether the natural environment is considered as a stakeholder or not, and such an ap-proach would not help managers to make decisions about the environment. (Freeman et al., 2011.) Bocken et al. (2014) stated that sustainable business models explicitly consider the natural environment and society as stakeholders. The broad inclusion of stakeholders in the debate about sustainability according to the ideologies of open and relative sustain-ability is likely to unearth challenging controversial stakeholder interests and trade-offs (Dyllick and Hockerts, 2002).

Dyllick and Hockerts (2002) defined social, economic and environmental CS. They ar-gued that “economically sustainable companies guarantee at any time cash flow sufficient to ensure liquidity while producing a persistent above average return to their stakehold-ers” (Dyllick and Hockerts, 2002). In contrast, Ketola (2010) advocated in favour of the view of sufficiency as a measure of economic sustainability; i.e., companies should target sufficient instead of maximal profits and, if surplus profits are generated, they should be used for environmental and sociocultural good. Furthermore, ecologically sustainable companies consume natural resources at a rate below natural reproduction, do not cause emissions that accumulate in the environment and do not degrade ecosystem services.

(Dyllick & Hockerts, 2002.) Further, socially sustainable companies add value at their local operating environment (Dyllick and Hockerts, 2002).

2.3.4 Corporate responsibility for sustainability

For the purposes of this thesis, it was important to develop a single interpretation of the various concepts of CSR and CS that exist. Sarvaiya and Wu (2014) suggested the con-cept of ‘Corporate Sustainability and Responsibility (CS-R)’ as a basic combination of CS and CSR. This thesis utilises a slightly modified term: ‘corporate responsibility for sustainability’.

The inclusion of the concept ‘corporate’ is necessary to emphasise the business perspec-tive, which is, by default, dependent on economic sustainability and profitability (Sar-vaiya and Wu, 2014). In contrast, Dyllick and Muff (2016) preferred ‘Business Sustaina-bility (BST)’ to CS because the reference to business is essential as opposed to a reference to the corporate level. Similarly, Freeman et al. (2011) stated that business social respon-sibility represented a more inclusive concept than CSR. This thesis acknowledges that the

inclusion of business is important; however, uses the term corporate instead (and inter-changeably) for the practical reason that it was utilised in the Publications. That is, this thesis acknowledges that the term could also be ‘business responsibility for sustainabil-ity’.

Merely using the concept of CSR could be misleading (Sarvaiya and Wu, 2014), even though social responsibility can be extended to cover the natural environment through stakeholder thinking. Therefore, responsibility should be taken for sustainability, which includes the environmental, social and economic dimension (Ketola, 2010). That is, a corporation takes responsibility for environmental, social and economic sustainability.

These dimensions of sustainability have different categorisations, in which the economic dimension could include both business economic and socioeconomic aspects, while the social dimension could include both internal and external social aspects, including soci-ocultural and socioeconomic dimensions.

Another important question concerns who the corporation is responsible to. Stakeholder theory approaches responsibility as responsibility to stakeholders. (Freeman et al., 2011.) A further question about responsibility relates to what or who drives the responsibility.

Heikkurinen (2013) defined stakeholder responsibility as a situation in which the corpo-ration has outsourced its responsibility to stakeholders; that is, stakeholders are the driver of (sustainability) activities. The reverse is intrinsic responsibility that emerges together with conscience economics (Ketola, 2010; Heikkurinen, 2013). The sources of intrinsic corporate responsibility could be thought of as a specific stakeholder group: internal hu-man stakeholders of the corporation that could be the individuals who hold power; for example, managers (Carballo-Penela and Castromán-Diz, 2014). This thesis assumes that a business is generally responsible to stakeholders and driven by stakeholder responsibil-ity. Stakeholders are both human and non-human, individual and collective, internal and external.

Why include both responsibility and sustainability and not just one? Ketola (2010) sug-gested that corporate sustainability is an absolute state of sustainability, which comprises the maximum level of responsibility for all dimensions of sustainability–environmental, social and economic. That is, CR does not equal CS since responsibility is relative and sustainability is absolute (Ketola, 2010). This thesis grasps the term CS in absolute terms.

Sustainability is not a journey (Whiteman et al., 2013), and companies are either sustain-able or unsustainsustain-able (Ketola, 2010). The absolute limits for business activities are deter-mined by the planetary boundaries and the social foundation. The ‘journey’ that compa-nies can take is related to the evolution and amplification of the responsibility for sustain-ability. In contrast, Arias-Maldonado (2013) and Dale et al. (2013) acted as advocates for open, relative, negotiated sustainability, while the ISO 13065 standard, ‘Sustainability criteria for bioenergy,’ asserts that sustainability is not a state or an absolute value; rather, it is an on-going process. However, these definitions are applied at the macro-level rather than in the context of CR; as such, they belong to a different discussion. Terminologically,

2.3 The sustainability of business 45 the name of the model suggests that the model concentrates on the maturity of responsi-bility for sustainaresponsi-bility, not sustainaresponsi-bility maturity, which is the term used by some schol-ars; for example, Fava (2014).