City and Enterprise

Corporate Community Involvement in European and US Cities

Erik Braun, Leo Van de Berg, Alexander Otgaar

• Publisher: Taylor & Francis
• Year: 2018
• Print ISBN: 9781138711457
• eBook ISBN: 9781351777155
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This title was first published in 2003. While in the past, corporate community involvement was mainly considered a form of philanthropy, nowadays the argument is gaining credit that corporate community involvement is not only a matter of ethics, but also of self-interest. As companies recognize their interest in the welfare of the city, they may become inclined to invest in some way in that city's welfare. Assuming that the interests of public and private stakeholders tend to converge as companies become aware of their interest in an attractive environment, then corporate community involvement may bring along a new type of public-private partnership, as an instrument of urban regeneration. Bringing together comparative case studies from Amsterdam, Chicago, Leeds, London, Munich, New York, Seattle, St. Louis and The Hague, this considers the potential implications of corporate community involvement for the sustainable development of cities and the creation of cross-sector partnerships. It analyses the involvement of companies in urban challenges in the fields of education, employment, safety, affordable housing and the living environment. It also looks at the efforts made to establish strategic partnership between "enlightened" corporations and public authorities. The book reveals that "pro-active" firms attach much value to investments in their "urban environment" as part of their corporate strategy. But it also shows that cities do not yet take full advantage of these arising opportunities.

Chapter 1

Introduction

Introduction

In the past, corporate community involvement¹ was mainly considered a form of philanthropy. From some moral obligation, companies were presumed willing to contribute towards activities that help to solve or alleviate social problems. However, nowadays the argument is gaining credit that corporate community involvement is not (only) a matter of ethics, but (also) of self-interest. That argument may have intriguing consequences for the sustainable development of (major) cities and the relation between companies, local governments and non-profit organisations. For indeed, as companies recognise their interest in the welfare of the city (where their employees, suppliers and customers are situated), they may become inclined to invest in some way in that city’s welfare. We assume that the interests of public and private stakeholders tend to converge as companies become aware of their interest in an attractive environment. If that is true, corporate community involvement may bring along a new type of public-private partnership, as an instrument of urban regeneration.

To develop knowledge with respect to corporate community involvement in relation to urban development, the European Institute for Comparative Urban Research (EURICUR) has carried out an international investigation, of which this book is the result. The key question is: what are the (potential) implications of corporate community involvement for the sustainable development of cities and the creation of cross-sector partnerships? To answer that question, we have identified four sub-questions:

• 1) to what extent do companies show their community involvement, and in what way;
• 2) what is the relation between the type of company and its social activities;
• 3) to what degree do companies cooperate with other organisations - and the local government in particular - to give evidence of their social responsibilities and self-interest in an attractive city;
• 4) what are the factors of failure and success in the process of developing cross-sector partnerships ensuing from corporate community involvement?

Methodology

The investigation was carried out in two stages. In the first, exploratory stage, most attention was paid to the first three questions. By means of literature study, (panel) discussions in the Netherlands and case studies in Chicago, London, Munich and St Louis we analysed the state of the art concerning corporate community involvement (corporate social responsibility) in relation to urban development (Van den Berg, Braun and Otgaar, 2000). From that exploration we learned that, although the interests of city and enterprise often converge, the number of cross-sector initiatives ensuing from corporate community involvement is somewhat disappointing. That is why the second stage of the investigation was mainly orientated towards the fourth question. Through a thorough study of literature on public-private partnerships and case studies in Amsterdam, Leeds, London, New York and Seattle, we identified the main barriers in the translation of common interests into joint initiatives (Van den Berg, Braun and Otgaar, 2002).

With the help of experts in the field of corporate community involvement (including Business in the Community, UK and Samenleving en Bedrijf, The Netherlands) and local contacts (including our sister organisation, the North American Institute for Comparative Urban Research), and by means of literature and the internet, we selected the cities, companies and intermediary organisations that we considered relevant for this investigation. In total, more than 130 people were interviewed. They represent about 40 companies, several governmental bodies and various non-profit organisations. In addition, we used written sources for the empirical research, including scientific papers, policy reports, annual reports and the internet.

With regard to the selection of cities and companies (as ‘best practices’), several experts confirmed to us that North America and the UK are in terms of corporate community involvement ahead of continental Europe. Companies in these Anglo-Saxon countries appear to have a long tradition of community involvement and philanthropy in particular. Moreover, these countries do not have, like countries on the European continent, a dominant public sector, which could be an incentive for companies to put in their (voluntary) bit to solve social problems. Naturally, the experts also pointed out that the cultural, political and economic differences between continental Europe and the Anglo-Saxon countries must not be overlooked. To translate the experiences of the USA and the UK into lessons for continental Europe, where the government has assumed most social tasks, is not easy. However, what with the retrenchment of the welfare state and the reduction of taxes (in reaction to world-wide competition) the expectations with respect to the private sector may well change in Europe. Furthermore, European cities and companies would do wise to keep a watchful eye on the developments in North America, since experience has taught us that many American trends after some time will present themselves in Europe as well, if sometimes in a weaker form.

Structure of the Book

This book is composed as follows.

Chapter 2 sketches the research framework of this study. Theories concerning the interests of companies and communities, and dealing with collaboration between public and private actors are combined into several models that help to understand the dynamic relation between city and enterprise.

Chapter 3 discusses projects and initiatives in the Netherlands. We analyse the community involvement activities undertaken by large companies, and the results of two projects: the Consultation Platform for Urban Renewal and the ArenA Initiative.

Chapter 4 is about the experiences in Chicago, where the private sector has a long tradition of community involvement, for instance through interest groups such as The Commercial Club of Chicago. Furthermore, we bring up the progressive ideas concerning corporate community involvement that exist among Chicago-based companies, including McDonald’s and Sara Lee.

Chapter 5 takes you along to the English city of Leeds. We analyse the activities of the regional branch of Business in the Community, which is regarded as one of the most active in the UK. Besides, this chapter includes a section on football club Leeds United and its programme entitled Community United.

Chapter 6 deals with the metropolis of Greater London, where economic prosperity goes hand-in-hand with severe problems in the sphere of accessibility, poverty and the environment. This chapter analyses the ability and willingness of the private sector to contribute to a sustainable development of London, and shows the barriers towards cooperation between the public and private sectors.

Chapter 7 contains the experiences of the German city of Munich, with special attention to the social activities of car manufacturer BMW and electronics concern Siemens. Furthermore, this chapter includes an analysis of the project Munich in Artificial Light, a brave attempt to get small and medium sized companies involved in culture.

Chapter 8 tells the story of New York, only two months after the destructive terrorist attack on the World Trade Centre. We analyse the role of banks that have been, and still are, very active in low-to-moderate income neighbourhoods, and the partnerships that pharmaceutical manufacturer Pfizer has created for the benefit of community development around the establishment in Brooklyn.

Chapter 9 is concerned with the city of Seattle, and the social activities of aircraft builder Boeing and coffee retailer Starbucks in particular. Moreover, the chapter identifies the main issues in the Seattle region and the extent to which the private sector is willing and able to deal with these problems.

Chapter 10 comprises the case study of the city of St Louis, which includes an analysis of various intermediary organisations, which defend the public interests of the private sector. Furthermore, we discuss the activities of some companies in the field of community involvement, and the role of interest groups in relation to sustainable urban development.

Chapter 11 confronts the practical findings with the theoretical framework, analysing the barriers in the process of developing strategic cross-sector alliances aimed at a sustainable development of cities. In the end, we formulate some challenges for managers of cities and companies, in reaction to the increasing attention to corporate community involvement.

Notes

1   Alternative terms are corporate social responsibility and corporate social involvement. However, to emphasise the relation between companies and their local communities, we prefer to use the terms corporate community involvement and corporate citizenship.

References

Berg, L. van den, E. Braun and A.H. J. Otgaar (2000), City and Enterprise: Corporate Social Responsibility in European and US Cities, European Institute for Comparative Urban Research, Rotterdam.

Berg, L. van den, E. Braun and A.H.J. Otgaar (2002), City and Enterprise: From Common Interests to Joint Initiatives, European Institute for Comparative Urban Research, Rotterdam.

Chapter 2

Corporate Community Involvement

Introduction

In our view, corporate community involvement implies that a company considers not only the interests of shareholders (profit) but also the interests of society (people) and those of the environment (planet), not only from a moral commitment but also from the conviction that such an approach contributes to the long-term viability of the company. Several recent developments have caused companies to define their interests more broadly than in the past. Indeed, corporate community involvement has become a matter of self-interest, requiring a strategic approach. We assume that in particular cases city and enterprise have the same interests, and may therefore be willing to develop joint initiatives. In this chapter we analyse the road to cross-sector partnerships that ensue from corporate community involvement by looking at the (changing) interests of stakeholders and the factors of success and failure that play a role in the coalition-forming process.

The section that follows is about the interests of companies and the impact of corporate social responsibility on the behaviour of firms. In the third section we pay attention to the interests of local governments and other organisations that may contribute to sustainable urban development. The following section shows that in the road to partnership several stages can be observed. Next we look at the (financial and economic) factors that relate to the question whether cooperation is useful and necessary to achieve the objectives set by the relevant organisations. We then present (social, cultural, psychological, etc.) factors that are relevant because organisations consist of people with their own objectives, norms, values and capacities. The final section summarises and concludes, resulting in a schematic presentation of the coalition-forming process and the identification of four success factors.

The Interests of Companies

There are several theories regarding the objectives and interests held by companies. These theories are inevitably related to the company’s accountability (see, for instance, Karake-Shalhoub, 1999; Boudhan et al., 1996). The classical theory assumes that companies aim at making profit (Friedman, 1970). On that score they are beholden to their shareholders. In consequence, they mostly adopt a policy geared to maximum economic performance and maximum shareholder value. Although this theory is increasingly subject to criticism (Goyder (1998), for one, called the maximisation of shareholders value a shortsighted objective), the policy of companies is still undeniably largely determined by shareholders interests. On the other hand, shareholders as well are broadening their perspective, and allowing themselves to be guided more and more by factors which only indirectly and in the long term affect the company’s economic performance. That is true in particular of institutional investors such as pension funds. The rise of ethical funds and ‘ethical investors’ illustrates the trend.

Stakeholder Theories

In the past few decades, theories have been developed by which companies are accountable not only to their shareholders but also to other actors who influence the continuity of the firm. According to Douma and Eppink (1996), companies aim to secure not only their economic viability but also their social viability. The economic viability refers to the (financial) economic performance (with growth, profitability and solvency as primary indicators), the degree of independence and flexibility. Within the objective of social viability, these authors make a distinction between individual (internal) and social (external) acceptance of the company (see Table 2.1).

Table 2.1 An overall hierarchy of objectives

In fact, Douma and Eppink - like Post et al. (1999), de Waal (2000), and Karake-Shalhoub (1999) - rec...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Preface
• 1 Introduction
• 2 Corporate Community Involvement
• 3 The Netherlands
• 4 Chicago
• 5 Leeds
• 6 London
• 7 Munich
• 8 New York
• 9 Seattle
• 10 St Louis
• 11 Synthesis
• Index