Corporate Social Responsibility

Corporate social responsibility (CSR) is usually referred to as corporate responsibility, corporate citizenship, sustainability, and corporate accountability by academics and corporations (Epstein, 2009). Although these terms are differ-ent in nature (Savitz & Weber, 2014; Freeman & Hasnaoui, 2011), they are used interchangeably throughout this study to describe the initiatives a company voluntarily undertakes for the benefit of its various stakeholders (Davis et al., 2008). The wide concept of CSR plus its overlap with other business-society concepts present challenges in providing a single definition for it (Matten &

Crane, 2005). Likewise, CSR’s nature of being a contested concept (Moon et al., 2005) and an ever-changing phenomenon (Carroll, 1999) present additional dif-ficulties. What is better understood about CSR and its synonyms, however, is that they practically consist of “clearly articulated and communicated policies and practices of corporations that reflect business responsibility for some of the wider societal good” (Matten & Moon, 2008, p. 405). Activities that are aimed at the social good may include code of ethics, fair business practices, environmen-tal commitment, and community involvement (Sharp & Zaidman, 2010). The actual demonstration and direction of CSR are all dependent on the firm (Mat-ten & Moon, 2008).

Various literature identified the motivations for firms to implement CSR.

Maon et al. (2009, p.72) suggested that a plausible reason for conducting CSR is that the firm has a good understanding of its responsibility for the impact of its operations and thus, seeks for society’s approval of the company’s legitimacy.

This supports the principles of CSR as identified by Wood (1991, p. 696) which are (1) legitimacy, (2) public responsibility, and (3) managerial discretion. Based on these principles and on other existing literature, Pistoni et al. (2016) produced a list of determinants of CSR which they have divided into what is internal to and external from the company. They noted that the impact of stakeholders, howev-er, is apparent in both internal and external categories. As an external driver of CSR, stakeholders, especially secondary ones, can exert various pressures to the firm and influence it to adopt CSR. On the other hand, stakeholders may be viewed as internal drivers when, for example, a company considers the stake-holder’s interest as part of their values and objectives. Porter and Kramer (2006) suggested that in order for the firm and society to have mutual benefits from CSR, the former’s existing core framework for understanding competition and guiding business strategy should integrate a social perspective. Thus, develop-ing CSR initiatives is seen as an evolutionary and repetitive activity that re-sponds to and with the business environment (Maon et al., 2009).

2.2.1.Adoption of CSR practices

Studies have been made which proposed different paths that companies follow in shifting towards social responsibility (Pistoni et al., 2015). Such studies include Mirvis and Googins’ (2006) article on the stages of corporate citizenship evolution. They assumed a normative logic in the development process of CSR propelled by the application of internal capabilities to a societal issue. Five stages were identified which are Elementary, Engaged, Innovative, Integrated, and Transforming (Mirvis and Googins, 2006, p. 108). In the Elementary stage, pro-grams are undeveloped and citizenship does not go beyond compliance with the regulations. The second stage, Engaged, takes a step forward from simply complying to also engaging in philanthropic and environmental protection ac-tivities. The Innovative stage, as the name suggests, shows increased levels of innovation and learning as a result of a two-way communication with stake-holders, among many other methods. In the Integrated level, serious steps are taken to integrate citizenship into the business lines. Lastly, the Transforming

stage is when the strategic intent of the company is to form new markets by combining their citizenship and business agenda.

Another study by Ganescu (2012, p. 96) suggests six phases in corporate sustainability development. These are Rejection, Ignorance, Compliance, Efficiency, Proactive strategies, and Corporate sustainability. Unlike Mirvis and Googins’ (2006) strategies, Ganescu’s (2012) phases include defensive strategies in the first two—Rejection and Ignorance. It then moves on to reactive strategies in phases 3 and 4, then finally reach proactive strategies in the last two phases.

Meanwhile, Maon et al., (2010) presented seven stages of the process towards CSR (see figure 1) which consolidated the stages suggested by Mirvis and Googins and in other earlier studies. It also encompasses Ganescu’s phases and begins with Dismissing and moves forward to Self-protecting, Compliance-seeking, Capability-Compliance-seeking, Caring, Strategizing, and finally, Transforming (Maon et al., 2010, p. 31). The authors classified the first stage, Dismissing, to belong to the CSR cultural reluctance phase. Meaning, initiatives that are not focused on financial benefit are actively opposed upon and impacts on the society and en-vironment are ignored. Thus, the company does not carry out any CSR initia-tive at this stage nor does it have any motivation to do so (Maon et al., 2010).

Once organisations start to progress towards CSR, they now enter the CSR cultural grasp phase. In this phase, the concepts and rationale of CSR are gaining acknowledgement and sensitivity to CSR issues heightens. The stages FIGURE 1 CSR stages of development and cultural phases based on Maon

et al. (2010)

CSR Cultural Reluctance CSR Cultural Grasp CSR Cultural Embedment

1. Dismissing 2. Self-protecting

4. Capability-seeking 3. Compliance-seeking

5. Caring 6. Strategizing

7. Transforming

belonging to this phase are Self-protecting, Compliance-seeking, and Capability-seeking. In the Self-protecting stage, CSR activities are limited, sporadic and may display some incoherence and lack of structure. CSR issues are not actually tak-en into consideration, thus, CSR activities are considered as extra to the usual daily operations and may come in the form of philanthropic activities. In the next stage, Compliance-seeking, top management becomes more aware of the is-sues related to CSR and the potential threats to the company. CSR activities are mostly in the form of complying to regulatory frameworks and meeting mini-mum industry standards, particularly those related to employment and produc-tion. The Capability-seeking stage is where awareness of issues and risks further increase and skills in managing CSR essentials are developed. Additionally, or-ganisations start adopting a stakeholder management perspective and seeks to ensure its license to operate by taking a new attitude in its role in the society.

Attention is given to CSR initiatives that are profitable and improve the compa-ny’s reputation (Maon et al., 2010).

The final phase, CSR cultural embedment, is where the prospects of CSR to generate value is gaining recognition. Organisations expand their knowledge in CSR and relevant concepts, strengthen their relationships with key stakehold-ers, and utilise internal resources to proactively address the demands associated with CSR. The stages belonging to this phase are Caring, Strategizing, and Trans-forming. In the Caring stage, top management realise that CSR issues are a long-term challenge that cannot be addressed through mere compliance, reputation management strategies, or isolated income opportunities. Thus, initiatives are aimed at the long-term and targeted more to the external environment. Like-wise, a stakeholder dialogue perspective of CSR is progressively embodied leading them to communicate pertinent programmes and initiatives to the pub-lic. As CSR is now perceived to affect the company’s long-term survival and success, it begins to play a role in corporate strategy. At this point, the company advances to the Strategizing stage. CSR now becomes completely value driven and is the prevalent goal of all corporate activities. In the last stage, Transform-ing, the company fully incorporate CSR principles throughout the whole orga-nization, its every aspect and activity. The organisation embodies a completely transparent stance and aims to disseminate its expertise in CSR management (Maon et al., 2010).

All these sets of stages presented show a step-by-step path that or-ganisations take in CSR incorporation. However, it should be noted that com-panies may not always follow a linear route and instead, demonstrate a stop-and-go process (Pistoni et al., 2015, p. 681). Nonetheless, companies should know at which stage they stand to (1) have an idea on what challenges they may face in moving to the next stage, (2) frame strategic plans, (3) set bench-marks and goals effectively, and (4) possibly speed up the process of moving forward (Mirvis & Googins, 2006, p. 105).