A Stakeholder Approach to Corporate Social Responsibility

Pressures, Conflicts, and Reconciliation

Philip Kotler, François Maon, Adam Lindgreen

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9781409418399
• eBook ISBN:
  9781317186571
• Topic: Business
• Subtopic: Business General
• Index: Business

Corporate social responsibility has grown into a global phenomenon that encompasses businesses, consumers, governments, and civil society, and many organizations have adopted its discourse. Yet corporate social responsibility remains an uncertain and poorly defined ambition, with few absolutes. First, the issues that organizations must address can easily be interpreted to include virtually everyone and everything. Second, with their unique, often particular characteristics, different stakeholder groups tend to focus only on specific issues that they believe are the most appropriate and relevant in organizations' corporate social responsibility programs. Thus, beliefs about what constitutes a socially responsible and sustainable organization depend on the perspective of the stakeholder. Third, in any organization, the beliefs of organizational members about their organization's social responsibilities vary according to their function and department, as well as their own managerial fields of knowledge. A Stakeholder Approach to Corporate Social Responsibility provides a comprehensive collection of cutting-edge theories and research that can lead to a more multifaceted understanding of corporate social responsibility in its various forms, the pressures and conflicts that result from these different understandings, and some potential solutions for reconciling them.

PART I
Empirical-based Frameworks for Understanding Pressures, Conflict and ReconciliationUnderstanding Stakeholder Conflicts and Mobilization

CHAPTER 1
The Impact of Socioeconomic and Political Factors on Stakeholder Dialogs

MATTHIAS S. FIFKA^*

Keywords

Corporate social responsibility, Germany, France, stakeholder dialog, stakeholder participation, United States.

Introduction

Corporate social responsibility can only be successful if it is understood and practiced as an exchange and cooperation between a company and its stakeholders. One form of discourse that allows for the respective exchange is the so-called stakeholder dialog, which has received increasing attention during the last decade. From a management perspective, the possibility to improve long-term decision-making, continuous learning and innovation,¹ the preservation of the license to operate, and the utilization of external knowledge have been pointed out.² From the perspective of stakeholders, chances to move their ideas forward, to be involved in decision-making and monitoring processes and to raise credibility through cooperation instead of hostility have been put forward.³

Finally, from a broader social perspective, the creation of social capital has been given as a reason for dialog.⁴ Despite this substantial theoretical discussion and advocacy of stakeholder dialog, there has been only very limited empirical research on the actual dialog practices of businesses. It is the aim of this chapter to make a contribution towards filling this gap.

A stakeholder dialog can basically be understood as a “two-way dialogue on issues of corporate environmental and social responsibility, [which] is especially important in establishing stakeholder respect”.⁵ A broader definition that also considers the implications for businesses is offered by the World Business Council:

Stakeholder dialogue offers a tool to engage people in serious discussion, and a designed and facilitated process for groups to initiate dialogue with those persons and institutions that have a stake in their activities … Dialogue is about communicating with stakeholders in a way that takes serious account of their views. It does not mean involving stakeholders in every decision, or that every stakeholder request will be met. It means that stakeholder input should be acknowledged and thoughtfully considered. It is about giving stakeholders a voice, listening to what they have to say, and being prepared to act or react accordingly.⁶

As pointed out, suggestions made by stakeholders usually do not have a binding character for the firm. Thus, stakeholder dialogs are considered to take place at the “consultative” level of stakeholder participation, exceeding the “informative” stage, but not reaching a “decisional” level as the highest stage of integration.⁷ Moreover, stakeholder dialogs can be held in various forms such as traditional face-to-face conversations in a small group, but also as conferences, round tables, panel discussions, factory visits, open house days, etc. Regardless of the form, it is essential that the dialog is held on a regular basis and becomes institutionalized. This way, stakeholders frequently have the opportunity to voice their interests. Companies in turn are enabled to consider these interests on a continuous basis when planning their core business and corporate social responsibility activities, but they are given the opportunity to present and explain future undertakings to stakeholders as well.

Therefore, stakeholder dialogs can be regarded as a practical application of discourse ethics, as they intend to generate norms and consecutive actions which are acceptable to the actors involved. Steinmann and Löhr, as two of the major proponents of this approach, propose that the amicable resolution or prevention of conflicts should be the central aim of discourse ethics.⁸ Based on these preliminary considerations, a stakeholder dialog will be defined here as the voluntary dialog between a firm and one or more constituent groups for the mutual understanding and benefit of all participants.

Before such a dialog can take place, it is necessary for the companies to identify the stakeholders to be included. This identification of the relevant stakeholders is not only a core necessity, it also provides a significant challenge for companies due to two reasons. First, there is a large, if not to say infinite, number of external stakeholders, and it is simply not feasible, especially under cost considerations, to identify them all. Second, a company has to evaluate which of the numerous groups are relevant. Therefore, the impact of the business activities on the various stakeholder groups as well as the stakeholders’ potential influence on the business have to be assessed in order to identify the advantages or disadvantages which might arise from considering or not considering the respective interests.⁹

Unsurprisingly, a large body of literature on stakeholder identification has been developed,¹⁰ also in the specific context of corporate social responsibility and corporate citizenship,¹¹ with the aim of making recommendations on how to select the crucial stakeholders. Mitchell et al. have suggested placing “an emphasis on the legitimacy of a claim on a firm, based upon, for example, contract, exchange, legal title, legal right, moral right, at-risk status, or moral interest in the harms and benefits generated by company actions”¹² in order to narrow the selection process. Additionally, they recommend considering the power a stakeholder group has to affect the company’s behavior as well as the urgency of its claim. Falk and Helbich also point out that the potential influence wielded by stakeholders should be seen as the decisive selection criterion, but they refer explicitly to the influence on the cash flow of a company that groups can exert. They differentiate between groups that have a large influence (major suppliers and customers as well as managers), those groups which do not have a direct business relation but can still have a significant impact (e.g. the media), and groups of lesser importance that only have very sporadic contact with the company.¹³

While the identification of crucial stakeholders has been discussed intensively in the literature, either theoretically or prescriptively, little attention—as will be discussed in the literature review below—has been given to the empirical question of whether the dialog with specific stakeholder groups varies from country to country due to different political, social and economic structures. This is the central research question of this chapter. As countries for comparison, Germany, France and the United States were selected because they represent different economic and sociopolitical systems. The U.S. is often considered to be the prime example for a liberal market economy, with only minimal governmental intervention and a high degree of reliance on supply and demand as the central market mechanism. While Germany can also be considered a free market economy, governmental intervention is more extensive here, especially in order to guarantee a comprehensive social safety system through redistribution, commonly referred to as Social Market Economy. The degree of governmental coordination as a market mechanism is even higher in France due to the country’s economic and sociopolitical history. Today, France is only ranked 64th in the “Heritage Index of Economic Freedom”, finding itself among countries like Saudi Arabia, Thailand, and Turkey, while Germany and the U.S. are ranked 23rd and 8th, respectively.¹⁴ Thus, the question arises of whether and how these “varieties of capitalism”, as Hall and Soskice have called them, affect the inclusion of different stakeholder groups through dialog.¹⁵

This question will be discussed in the next chapter by first looking at the different business environments in the three countries and the results of existing studies. Based upon these observations and prior findings, it is hypothesized to what extent stakeholder dialogs with different groups will be held. These assumptions are then tested in an empirical study of the 100 largest companies in each of the three countries. With regard to the inclusion of the results of earlier studies to develop hypotheses, two important limitations must be pointed out, which make it difficult to compare their results to those of this study. First, earlier studies have usually analyzed the importance which was assigned to different stakeholder groups by businesses, but not whether dialogs with them were held. It is certainly possible to consider a specific stakeholder group as important, but not to voluntarily hold an institutionalized dialog with it, as, for example, in the case of shareholders who might be too numerous to be included. Second, the studies usually differ significantly with regard to the size and industry of the samples as well as the date of publication. The latter is especially crucial since it can be assumed that the attention given to stakeholders has increased considerably throughout recent years, although longitudinal studies that could prove that assumption do not exist.

Economic, Social, and Political Systems as Influence Factors for Stakeholder Dialog

As mentioned above, the economic, social and political environment for businesses differs substantially in the three countries of question. Throughout its history, the U.S. has been a major proponent of economic liberalism with only a very limited degree of governmental interventionism, which only increased in times of social or economic crisis, such as the Great Depression, the reforms in the wake of the “Great Society” in the 1960s, and the latest financial crisis.¹⁶ The social security system is rudimentary in comparison to Western European welfare states, thus the responsibility for individual well-being lies mostly with the private actors themselves. This has led to extensive charitable measures by American businesses, which partly compensates for the lack of social support through the government. Another important factor for the broad civic engagement of businesses is the puritan social ethos, because it propones the moral obligation of the more prosperous actors in society to help the ones in need.¹⁷ Consequentially, social engagement has a long tradition in the U.S., but its specific design and extent are left to the companies themselves. Therefore, the nature of corporate social responsibility is mostly voluntary, aside from the economic responsibility to increase shareholder value. Other actors in society might be able to morally claim a consideration of their interests by businesses: a legal claim to social services provided by businesses, however, does not exist in most cases.

In this regard a profound difference to Germany and France exists, where the social responsibility of businesses is largely of a legal nature, as Maignan and Ferrell pointed out. They examined consumer perspectives of corporate social responsibility in Germany, France and the U.S., and found that European consumers placed a strong emphasis on legal compliance and social benefits, whereas economic responsibilities ranked high in the U.S.¹⁸ Again, there are several reasons for this “European character” of corporate social responsibility. First, traditionally strong labor unions have fought for decades not only for specific workers’ rights but also for social benefits provided by companies in general. Other than in the U.S., unions took the role of representative...

Table of contents

• Cover Page
• Half Title Page
• Dedication
• Title Page
• Copyright Page
• Reviews for A Stakeholder Approach to Corporate Social Responsibility
• Contents
• List of Figures
• List of Tables
• About the Editors
• About the Contributors
• Foreword and Acknowledgment
• Part I Empirical-based Frameworks for Understanding Pressures, Conflict and Reconciliation
• Part II Theoretical-Based Frameworks for Understanding Pressures, Conflicts and Reconciliation
• Index