Tag Archives: Corporate Sustainability and Responsibility

Creating shared value through open innovation approaches

This is an excerpt from one of my latest articles that was published through Business Strategy and the Environment.

Big businesses are breaking down traditional silos among their internal departments to improve knowledge flows within their organizations and/or when they welcome external ideas and competences from external organizations (Aakhus & Bzdak, 2015; Chesbrough, 2003; Chesbrough & Bogers, 2014). Open innovation is related to the degree of trust and openness with a variety of stakeholders (Chesbrough, 2020; Leonidou et al., 2020; Zhu et al., 2019). Debately, this concept clearly differentiates itself from closed innovation approaches that are associated with traditional, secretive business models that would primarily rely on the firms’ internal competences and resources. In the latter case, the companies would withhold knowledge about their generation of novel ideas, including incremental and radical innovations within their research and development (R&D) department. They would be wary of leaking information to external parties. This is in stark contract with open innovation.

Open innovation is rooted in the belief that the dissemination of knowledge and collaboration with stakeholders would lead to win-win outcomes for all parties. Chesbrough (2003) argued that companies can maximize the potential of their disruptive innovations if they work in tandem with internal as well as with external stakeholders (rather than on their own) in order to improve products and service delivery. His open innovation model suggests that corporations ought to benefit from diverse pools of knowledge that are distributed among companies, customers, suppliers, universities, research center industry consortia, and startup firms.

Chesbrough (2020) distinguished between different types of insider information that could or could not be leaked to interested parties. He cautioned that sensitive information (he referred to as the “Crown Jewels”) ought to be protected and can never be revealed to external stakeholders. Nevertheless, he argued that an organization can selectively share specific communications with a “Middle Group” comprising key customers, suppliers, and/or partners in order to forge closer relationships with them. The companies’ internal R&D departments can avail themselves from their consumers’ insights as well as from external competences, capabilities, and resources, to cocreate value to their business and to society at large.

Chesbrough (2020) went on to suggest that a company should open-up their “long tail of intellectual property to everyone.” He contended that organizations may do so to save on their patent renewal fees. During the coronavirus (COVID-19) pandemic, many businesses joined forces and adopted such an intercompany open innovation approach to mass produce medical equipment. For instance, Ford Motor Co. sent its teams of engineers to consult with counterparts at 3M and General Electric to produce respirators, ventilators, and new 3-D-printed face shields, for the benefit of healthcare employees and COVID-19 patients (Washington Post, 2020).

Corporations are increasingly collaborating with experts hailing from diverse industry sectors to innovate themselves and to search for new sources of competitive advantage (Porter & Kramer, 2011; Roszkowska-Menkes, 2018). They may usually resort to open innovation approaches when they engage with talented individuals who work on a freelance basis or for other organizations, to benefit from their support. There is scope for companies to forge fruitful relationships with external stakeholders, who may be specialized in specific fields, to help them identify trends, penetrate into new markets, to develop new products, or to diversify their business model, to establish new revenue streams for their firm (Camilleri & Bresciani, 2022; Centobelli, Cerchione, Chiaroni, et al., 2020; Su et al., 2022). These stakeholders can add value to host organizations in their planning, organization, and implementation of social and environmentally sustainable innovations (Camilleri, 2019a; Sajjad et al., 2020).

Open innovation holds great potential to create shared value opportunities for business and society (Aakhus & Bzdak, 2015; Alberti & Varon Garrido, 2017; Roszkowska-Menkes, 2018). This argumentation is closely related to the strategic approach to corporate social responsibility (CSR) and to the discourse about corporate sustainability (Camilleri, 2022a; Eweje, 2020). Previous literature confirmed that open innovation processes can have a significant effect on the companies’ triple bottom line in terms of their economic performance as well as on their social and environmental credentials (Gong et al., 2020; Grunwald et al., 2021; Mendes et al., 2021; Testa et al., 2018).

The businesses’ ongoing engagement with their valued employees may result in a boost in their intrinsic motivations, morale, job satisfaction, and low turnover levels and could increase their productivity levels (Camilleri, 2021; Chang, 2020; Kumar & Srivastava, 2020; Schmidt-Keilich & Schrader, 2019). Their collaboration with external (expert) stakeholders may lead to positive outcomes including to knowledge acquisition, operational efficiencies, cost savings, and to creating new revenue streams from the development of innovative projects, among others (Ghodbane, 2019; Huizingh, 2011). Open innovation agreements are clearly evidenced when businesses forge strong relationships with internal and external stakeholders to help them plan, develop, promote, and distribute products (Bresciani, 2017; Camilleri, 2019b; Chesbrough & Bogers, 2014; Greco et al., 2022; Loučanová et al., 2022; Troise et al., 2021). They may do so to be in a better position to align corporate objectives (including to increase their bottom lines) with their social and environmental performance (Alberti & Varon Garrido, 2017; Herrera & de las Heras-Rosas, 2020; Mendes et al., 2021).

This paper provides a clear definition of the most popular paradigms relating to the intersection of open innovation approaches and corporate sustainability, as reported in Table 1.

Table 1. A list of the most popular paradigms relating to the intersection of open innovation approaches and corporate sustainability

“The following section synthesizes the content that was reported in past contributions. The researchers deliberate about open innovation opportunities and challenges for host organizations as well as for their collaborators”.

Open innovation opportunities

In the main, many commentators noted that open innovation approaches have brought positive outcomes for host organizations and their collaborators. The research questions of the extracted contributions (that are reported in Table 2) indicated that in many cases, companies are striving in their endeavors to build productive relationships with different stakeholders (Mtapuri et al., 2022; Peña-Miranda et al., 2022; Shaikh & Randhawa, 2022), to create value to their businesses as well as to society (Döll et al., 2022; Ghodbane, 2019; Roszkowska-Menkes, 2018). Very often, they confirmed that open innovation practitioners are promoting organizational governance (Aakhus & Bzdak, 2015; Sánchez-Teba et al., 2021), fair labor practices (Chang, 2020; Herrera & de las Heras-Rosas, 2020; Kumar & Srivastava, 2020; Schmidt-Keilich & Schrader, 2019), environmentally responsible investments (Aakhus & Bzdak, 2015; Cigir, 2018; Mendes et al., 2021; van Lieshout et al., 2021; Yang & Roh, 2019), and consumer-related issues (Greco et al., 2022; Loučanová et al., 2022; Wu & Zhu, 2021; Yang & Roh, 2019), among other laudable behaviors.

Many researchers raised awareness on the corporate sustainability paradigm (van Marrewijk, 2003) as they reported about the businesses’ value creating activities that are synonymous with the triple bottom line discourse, in terms of their organizations’ social, environment, and economic performance (Chang, 2020; Döll et al., 2022; Su et al., 2022; van Lieshout et al., 2021; Yang & Roh, 2019).

Other authors identified strategic CSR (Fontana, 2017; Porter & Kramer, 2006) practices and discussed about shared value perspectives (Abdulkader et al., 2020; Porter & Kramer, 2011) that are intended to improve corporate financial performance while enhancing their social and environmental responsibility credentials among stakeholders (Ghodbane, 2019; Roszkowska-Menkes, 2018; Sánchez-Teba et al., 2021).

Mendes et al. (2021) argued that strategic CSR was evidenced through collaborative approaches involving employees and external stakeholders. They maintained that there is scope for businesses to reconceive their communication designs with a wide array of stakeholders. Similarly, Aakhus and Bzdak (2015) contended that stakeholder engagement and open innovation processes led to improved decision making, particularly when host organizations consider investing in resources and infrastructures to be in a better position to address the social, cultural, and environmental concerns.

Firms could implement open innovation approaches to benefit from outsiders’ capabilities and competences (of other organizations, including funders, partners, and beneficiaries, among others) (Alberti & Varon Garrido, 2017). They may benefit from the external stakeholders’ support to diversify their business and/or to develop innovative products and services. Their involvement could help them augment their financial performance in terms of their margins and return on assets (Ben Hassen & Talbi, 2022).

Ongoing investments in open and technological innovations in terms of process and product development can result in virtuous circles and positive multiplier effects for the businesses as well as to society. Practitioners can forge cooperative agreements with social entrepreneurs, for-profit organizations, or with non-profit entities. Many companies are increasingly recruiting consultants who are specialized in sustainable innovations. Alternatively, they engage corporate reporting experts to help them improve their ESG credentials with stakeholders (Holmes & Smart, 2009).

Such open innovation approaches are intrinsically related to key theoretical underpinnings related to CSR including the stakeholder theory, institutional theory, signaling theory, and to the legitimacy theory, among others (Authors; Freudenreich et al., 2020). Firms have a responsibility to bear toward societies where they operate their business (in addition to their economic responsibility to increase profits). Their collaborative stance with knowledgeable professionals may provide an essential impetus for them to improve their corporate reputation and image with customers and prospects.

The open innovation paradigm suggests that it is in the businesses’ interest to engage with stakeholders through outside-in (to benefit from external knowledge and expertise), inside-out (to avail themselves of their extant competences and capabilities), and coupled (cocreation) processes with internal and external stakeholders (Enkel et al., 2009; Roszkowska-Menkes, 2018). Its theorists claim that outside-in processes are intended to enhance the company’s knowledge as they source external information from marketplace stakeholders including suppliers, intermediaries, customers, and even competitors, among others.

Many researchers emphasize that there are a number of benefits resulting from coopetition among cooperative competitors. Their inside-out collaborative processes stimulate innovations, lead to improvements in extant technologies, and provide complementary resources, resulting in new markets and products. Competing businesses can exchange their ideas and innovations with trustworthy stakeholders, outside of their organizations’ boundaries in order to improve their socio-emotional wealth (Herrera & de las Heras-Rosas, 2020). The proponents of open innovation advocate that businesses ought to foster an organizational culture that promotes knowledge transfer, ongoing innovations, and internationalization strategies.

Michelino et al. (2019) held that organizations ought to engage in ambidextrous approaches. These authors commended that practitioners should distinguish between exploratory and traditional units of their business model. They posited that it would be better for them if they segregated the former from the latter ones, especially if they want to develop new processes, products, and technologies in mature markets. The organizations’ exploratory units could be in a better position to flexibly respond to ongoing changes in their marketing environment.

Other researchers noted that it would be better if the businesses’ R&D activities are attuned with the practitioners’ expertise and/or with their stakeholders who are involved in their open innovation knowledge sharing strategies (Talab et al., 2018). Companies can generate new sources of revenue streams, even in areas that are associated with social issues and/or with green economies, if they reach new customers in different markets (Centobelli, Cerchione, & Esposito, 2020; Chang, 2020; Su et al., 2022; Yang & Roh, 2019). They may partner with other organizations to commercialize their (incremental or radical) innovations through licensing fees, franchises, joint ventures, mergers and acquisitions, spinoffs, and so forth.

Many commentators made reference to coupled processes involving a combination of outside-in and inside-out open innovation processes (Roszkowska-Menkes, 2018). The businesses’ transversal alliances involving horizontal and vertical collaborative approaches with external stakeholders can help them co-create ideas to foster innovations (Greco et al., 2022; Rupo et al., 2018). Several open innovation theorists are increasingly raising awareness on how collaborative relationships with stakeholders including consumers, lead users, organizations who may or may not be related to the company per se, universities as well as research institutions, among others, are supporting various businesses in their R&D stages and/or in the design of products (Khan et al., 2022; Naruetharadhol et al., 2022). Very often, their research confirmed that such cocreation processes are utilized in different contexts, for the manufacturing of a wide range of technologies.

The findings from this review reported that, for the time being, just a few researchers are integrating open innovation’s cocreation approaches with corporate sustainability outcomes. A number of contributing authors insisted that there are many advantages for socially and environmentally responsible companies to embrace open innovation approaches (Carayannis et al., 2021; Cigir, 2018; Mendes et al., 2021; Yang & Roh, 2019). In many cases, they argued that the practitioners’ intentions are to broaden their search activities and to avail themselves from talented employees and external experts in exchange for enhanced social legitimacy, thereby availing themselves of innovation capital for future enterprising activities (Greco et al., 2022; Holmes & Smart, 2009).

Hence, businesses may benefit from the competences and capabilities of individual consultants and organizations (from outside their company) to tap into the power of co-creation, to source ideas for social and green innovations (van Lieshout et al., 2021). These alliances are meant to support laudable causes, address the deficits in society, and/or to minimize the businesses’ impact on the natural environment (Altuna et al., 2015; Khan et al., 2022). For-profit organizations can resort to open innovation approaches to avail themselves of resources and infrastructures that are not currently available within their firm. This way they can reduce their costs, risks, and timescales when diversifying into sustainable business ventures, including those related to social entrepreneurship projects (Peredo & McLean, 2006; Shapovalov et al., 2019). They may do so to leverage their business, to gain a competitive advantage over their rivals.

Open innovation challenges

Open innovations could expose the businesses to significant risks and uncertainties associated with enmeshed, permeable relationships with potential collaborators (Gomes et al., 2021; Madanaguli et al., 2023). Various authors contended that practitioners should create an organizational culture that is conducive to open innovation (Herrera & de las Heras-Rosas, 2020; Mohelska & Sokolova, 2017). Generally, they argued that host organizations should communicate and liaise with employees as well as with external partners, during the generation of ideas and in different stages of their R&D projects. Some researchers noted that open innovation practitioners tend to rely on their external stakeholders’ valuable support to diversify their business models, products, or services (Chalvatzis et al., 2019; Park & Tangpong, 2021; Su et al., 2022).

A number of academic commentators argued that practitioners have to set clear, specific, measurable, attainable, relevant, and timely goals to them before they even start working on a project together (Alberti & Varon Garrido, 2017). In many cases, they maintained that host organizations are expected to foster a strong relationship with collaborators. At the same time, they should ensure that the latter ones comply with their modus operandi (Dahlander & Wallin, 2020). In reality, it may prove difficult for the business leaders to trust the new partners. Unlike their employees, the external parties are not subject to the companies’ codes of conduct, rules, and regulations (Chesbrough, 2020; Shamah & Elssawabi, 2015). A few authors indicated that senior management may utilize extrinsic and intrinsic incentives to empower and motivate internal as well as external stakeholders to pursue their organization’s open innovation objectives (Chang, 2020; Greco et al., 2022; Holmes & Smart, 2009; Roszkowska-Menkes, 2018; Schmidt-Keilich & Schrader, 2019).

Some researchers identified possible threats during and after the implementation of joint projects. Very often, they contended that host organizations risk losing their locus of control to external stakeholders who are experts in their respective fields (Madanaguli et al., 2023). The latter ones may possess unique skills and competences that are not readily available within the organization. A few authors cautioned that the practitioners as well as their collaborators are entrusted to safeguard each other’s intangible assets. A number of researchers warned and cautioned that they may risk revealing insider information about sensitive commercial details relating to their intellectual capital (Gomes et al., 2021). As a result, companies may decide to collaborate on a few peripheral tasks as they may be wary of losing their return on investments if they share trade secrets with their new partners, who could easily become their competitors. Their proprietary knowledge concerns are of course real and vital for their future prospects. Therefore, their relationships with internal and external stakeholders should be based on mutual trust and understanding in order to increase the confidence in the projects’ outcomes (Ferraris et al., 2020; Sánchez-Teba et al., 2021).

CONCLUSIONS

The companies’ ongoing engagement with internal and external stakeholders as well as their strategic CSR initiatives and environmentally sustainable innovations can generate economic value, in the long run. This review confirms that for-profit organizations are increasingly using open innovation approaches. At the same time, they are following ethical practices, adopting responsible human resources management policies, and investing in green technologies to gain institutional legitimacy and to create competitive advantages for their business. Many authors reported that their corporate sustainability behaviors can enhance their organizations’ reputation and image among customers as well as with marketplace stakeholders. At the same time, their laudable practices may even improve their corporate financial performance.

During COVID-19, many businesses turned to open innovation’s collaborative approaches. Various stakeholders joined forces and worked with other organizations, including with competitors, on social projects that benefit the communities where they operate their companies. In many cases, practitioners have realized that such partnerships with certain stakeholders (like researchers, knowledgeable experts, creative businesses, and non-governmental institutions, among others) enable their organizations to find new ways to solve pressing problems and at the same time helped them build a positive reputation. Indeed, open innovation approaches can serve as a foundation for future win-win alliances, in line with sociological research demonstrating that trust develops when partners voluntarily go the extra mile, to create value to their business and to society at large.

Yet, this research revealed that there is still a gap in the academic literature that links CSR/corporate sustainability with open collaborative approaches. At the time of writing, this paper, there were only 45 contributions on the intersection of these notions.

A full version of this open-access paper can be accessed through publisher: https://onlinelibrary.wiley.com/doi/full/10.1002/bse.3377

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The European Union’s corporate sustainability reporting directive (CSRD)

The European Union (EU)’s non-financial reporting directive (NFRD) law requires that large undertakings including corporations, listed businesses and government entities, among others, to disclose information on the way they operate and manage social and environmental challenges. This helps investors, civil society organisations, consumers, policy makers and other stakeholders to be in a better position to evaluate their non-financial performance (Camilleri, 2015; Camilleri, 2018; EU, 2014).

Recently, the EU (2021) put forward its proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD. In sum, the proposal extends the audit requirement to large companies and listed businesses in regulated markets (except listed micro-enterprises). They will be expected to introduce more detailed reporting requirements, according to mandatory EU sustainability reporting standards. At the time of writing this contribution, it is envisaged that the first set of standards would be adopted by October 2022 (EU, 2021).

References:

Camilleri, M.A. (2015). Environmental, social and governance disclosures in Europe.  Sustainability Accounting, Management and Policy Journal, 6(2), 224-242. https://www.emerald.com/insight/content/doi/10.1108/SAMPJ-10-2014-0065/full/html

Camilleri, M.A. (2018). Theoretical insights on integrated reporting: The inclusion of non-financial capitals in corporate disclosures, Corporate Communications: An International Journal, 23(4), 567-581. https://www.emerald.com/insight/content/doi/10.1108/CCIJ-01-2018-0016/full/html

EU (2014). Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups. European Commission, Brussels, Belgium. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0095

EU (2021). EU Taxonomy, Corporate Sustainability Reporting, Sustainability Preferences and Fiduciary Duties: Directing finance towards the European Green Deal COM/2021/188 final https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0188

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The Way Forward: Corporate Sustainability and Responsibility

An Excerpt from: Camilleri, M.A. (2017). Corporate Sustainability and Responsibility: Creating Value for Business, Society and the Environment. Asian Journal of Sustainability and Social Responsibility 2(1) 59-74. https://link.springer.com/article/10.1186/s41180-017-0016-5

In the past, CSR may have been more associated with corporate philanthropy, stewardship principles, contributions-in-kind toward social and environmental causes, environmental protection, employees’ engagement in community works, volunteerism and pro-bono service among other responsible initiatives. Very often, such altruistic CSR activities may have not resulted in financial performance to the business per se. On the contrary, certain discretionary
expenses in corporate philanthropy could have usurped the businesses’ slack resources (including financial assets, labour and time) without adding much value (in terms of corporate reputation and goodwill) to the businesses. Nevertheless, this research reported that the contemporary discourses on corporate social responsibility are opening new opportunities for the businesses themselves. The academic discourse about CSR is moving away from ‘nice-to
do’ to ‘doing-well-by-doing-good’ mantra. Evidently, the value-based approaches that were discussed in this paper could be considered as guiding principles that will lead tomorrow’s businesses to long term sustainability (in social and economic terms). Debatably, the profit motive (the business case or corporate sustainability concepts) could be linked with the corporate responsibility agenda. This way, the multinational corporations could be better prepared to address their societal and environmental deficits across the globe, whilst adding value to their business.

This review paper has built on the previous theoretical underpinnings of the corporate social responsibility agenda including Stakeholder Management, Corporate Citizenship and Creating Shared Value as it presents the latest Corporate Sustainability and Responsibility perspective. This value-based model reconciles strategic CSR and environmental management with a stakeholder approach to bring long term corporate sustainability, in terms of economic performance for the business, as well as corporate responsibility’s social outcomes. Recently, some international conferences including Humboldt University’s gatherings in 2014 and 2016 have also raised awareness on this proposition. The corporate sustainability and responsibility concept is linked to improvements to the companies’ internal processes including environmental management, human resource management, operations management and marketing (i.e. Corporate Sustainability). At the same time, it raises awareness on the
businesses’ responsible behaviours (i.e. Corporate Responsibility) toward stakeholders including the government, suppliers, customers and the community, among others. The fundamental motivation behind this approach is the view that creating connections between stakeholders in the value chain will open-up unseen opportunities for the competitive advantage of responsible businesses, as illustrated in Figure 1.

cs model

Multinational organizations are under increased pressures from stakeholders (particularly customers and consumer associations) to revisit their numerous processes in their value chain activities. Each stage of the company’s production process, from the supply chain to the transformation of resources could add value to their businesses’ operational costs as they produce end-products. However, the businesses are always expected to be responsible in their internal processes toward their employees or toward their suppliers’ labour force. Therefore, this corporate sustainability and responsibility perspective demands that businesses create economic and societal value by re-aligning their corporate objectives with stakeholder management and environmental responsibility. In sum, corporate sustainability and responsibility may only happen when companies demonstrate their genuine willingness to add corporate responsible dimensions and stakeholder engagement to their value propositions. This occurs when businesses opt for responsible managerial practices that are integral to their overall corporate strategy. These strategic behaviours create opportunities for them to improve the well-being of stakeholders as they reduce negative externalities on the environment. The negative externalities can be eliminated by developing integrated approaches that are driven by ethical and sustainability principles. Very often, multinational businesses are in a position to mitigate risk and to avoid inconveniences to third parties. For instance, major accidents including BP’s Deep Horizon oil spill in 2010, or the collapse of Primark’s Rana Plaza factory in Bangladesh, back in 2013, could have been prevented if the big businesses were responsible beforehand.

In conclusion, the corporate sustainability and responsibility construct is about embedding sustainability and responsibility by seeking out and connecting with the stakeholders’ varied interests. As firms reap profits and grow, there is a possibility that they generate virtuous circlesof positive multiplier effects (Camilleri, 2017). Therefore, corporate sustainability and responsibility can be considered as strategic in its intents and purposes. Indeed, the businesses are capable of being socially and environmentally responsible ‘citizens’ as they are doing well, economically. This theoretical paper has contributed to academic knowledge as it explained the foundations for corporate sustainability and responsibility. Although this concept is still evolving, the debate among academic commentators is slowly but surely raising awareness on responsible managerial practices and on the skills and competences that are needed to deliver strategic results that create value for businesses, society and the environment.

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Social Responsibility Research in Total Quality Management and Business Excellence (Taylor & Francis Online)

 

This is a pre-publication version of an academic paper, entitled; “Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard”, that was accepted by Total Quality Management and Business Excellence (Print ISSN: 1478-3363 Online ISSN: 1478-3371).

How to Cite: Camilleri, M.A. (2018). Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard. Total Quality Management & Business Excellence. (forthcoming). http://dx.doi.org/10.1080/14783363.2017.1413344


Abstract

The International Standards Organisation’s ISO 26000 on social responsibility supports organisations of all types and sizes in their responsibilities towards society and the environment. ISO 26000 recommends that organisations ought to follow its principles on accountability, transparency, ethical behaviours and fair operating practices that safeguard organisations and their stakeholders’ interests. Hence, this contribution presents a critical review of ISO 26000’s guiding principles. Afterwards, it appraises the business practitioners’ attitudes towards social responsibility practices, including organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues as well as community involvement and development. A principal component analysis has indicated that the executives were primarily committed to resolving grievances and on countering corruption. The results suggested that the respondents believed in social dialogue as they were willing to forge relationships with different stakeholders. Moreover, they were also concerned about environmental responsibility, particularly on mitigating climate change and sustainable consumption. In conclusion, this paper identifies the standard’s inherent limitations as it opens up future research avenues to academia.

Keywords: ISO 26000; International Standards Organisation; Social Responsibility; Organisational Governance; Human Rights; Labour Practices; environmental responsibility; fair operating practices; consumer issues; community involvement.


Introduction

The International Standard Organisation’s ISO 26000 provides guidance on social responsibility issues for businesses and other entities. This standard comprises broad issues, comprising labour practices, conditions of employment, responsible supply chain management, responsible procurement of materials and resources, fair operating practices, recommendations for negotiations with interested parties as well as collaborative stakeholder engagement among other issues (Helms, Oliver, & Webb, 2012; Castka & Balzarova, 2008a, 2008b, 2008c). ISO 26000 is aimed at all organisations, regardless of their activity, size or location. Its core subjects respect the international norms and assist organisations on accountability, transparency and ethical behaviours.

The social responsibility standard has emerged following lengthy partnerships’ agreements and negotiations between nongovernmental organisations (NGOs) and large multinational corporations (Helms et al., 2012; Boström & Halström, 2010; Castka & Balzarova, 2008a, 2008b, 2008c). Prior to ISO 26000, there were other certifiable and uncertifiable, multistakeholder standards and instruments; the Forest Stewardship Council (FSC), Greenpeace, Rainforest Alliance and Home Depot, among others (Balzarova & Castka, 2012; Castka & Corbett, 2016a). At the time, many organisations adopted voluntary environmental and social standards, as well as eco-labels such as ISO’s 14000, FSC, Fair Trade or the US Department of Agriculture’s USDA Organic Labelling. Like ISO 26000, their regulatory guidelines and principles encourage organisations and their stakeholders to become more socially responsible and environmentally sustainable. However, despite there are many standards and regulatory instruments, private businesses do not always provide credible information on their eco-labelling (Darnall, Ji, & Vazquez-Brust, 2016).

For this reason, environmental NGOs are putting pressure on national governments for more stringent compliance regulations on large undertakings to adhere to certified standards or ecolabels (Schwartz & Tilling, 2009). This approach could possibly inhibit the businesses and other organisations to reveal relevant information about their social responsibility and stakeholder engagement (Castka & Corbett, 2016b). Notwithstanding, there is still limited research and scant empirical evidence on how businesses are resorting to ISO 26000’s principles in their responsible managerial practices (see Hahn, 2013; Hahn & Weidtmann, 2016; Claasen & Roloff, 2012; Castka & Balzarova, 2008a, 2008b)Therefore, this contribution provides a review of the socially responsible standard’s guiding principles and appraises the executives’ attitudes towards ISO 26000. Firstly, it examines relevant theoretical insights and empirical studies on the managerial perceptions towards responsible organisational behaviours. Secondly, it sheds light on the development of ISO’s standard on social responsibility and its constituent elements. Thirdly, this paper reveals the managers’ perceptions of ISO 26000’s core topics, including organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues as well as community involvement and development. This research uses a principal component analysis (PCA) to obtain a factor solution of a smaller set of salient variables from ISO 26000’s core issues. The findings identify specific socially responsible activities which are being emphasised by the companies’ executives. The results suggest that the respondents were committed to improving their relationships with employees, marketplace as well as political and community stakeholders.

Literature review

The managerial perceptions of social responsibility

Several empirical studies have explored the managers’ attitudes towards and perceptions of corporate social responsibilities (Carollo & Guerci, 2017; Eweje & Sakaki, 2015; Moyeen & West, 2014; Fassin, Van Rossem, & Buelens, 2011; Pedersen, 2010; Basu & Palazzo, 2008; Nielsen & Thomsen, 2009 and Perrini, Russo, & Tencati, 2007, among others). A number of similar studies have gauged corporate social responsibility by adopting Fortune’s reputation index (Fryxell & Wang, 1994; Griffin & Mahon, 1997; Stanwick & Stanwick, 1998), the KLD index (Fombrun, 1998; Griffin & Mahon, 1997) or Van Riel and Fombrun’s (2007) RepTrak. Such measures required executives to assess the extent to which their company behaves responsibly towards the environment and the community (Fryxell & Wang, 1994). Despite their wide usage in past research, the appropriateness of these indices is still doubtful. For instance, Fortune’s reputation index failed to account for the multidimensionality of the corporate citizenship construct, and is suspected to be more significant of management quality than of corporate social performance (Waddock & Graves, 1997). Fortune’s past index suffered from the fact that its items were not based on theoretical arguments, as they did not appropriately represent the economic, legal, ethical and discretionary dimensions of the corporate citizenship construct.

Other academics, including Pedersen (2010), identified a set of common issues that were frequently used by managers when describing societal responsibilities. This study reported that managers still had a relatively narrow perception of societal responsibilities. Generally, they believed that CSR involves taking care of the workforce, and to manufacture products and deliver services that the customers want, in an eco-friendly manner. The managers who participated in Pedersen’s (2010) study did not believe that they had responsibilities towards society on issues such as social exclusion, Third World development and poverty reduction, among other variables. In a similar vein, Eweje and Sakaki (2015) pointed out that corporate social responsibility involved volunteering, diversity in the workplace and work–life balance. They contended that these are important areas that merit more attention, particularly for those businesses that are willing to prove their credentials. Moreover, Moyeen and West (2014) noticed that sustainable development and environmental issues often remained on the periphery of the managers’ understandings and perceptions of CSR

ISO’s social responsibility standard

In 2010, the development of ISO 26000 has represented a significant milestone in integrating socially and environmentally responsible behaviours into management processes (Toppinen, Virtanen, Mayer, & Tuppura, 2015; Hahn, 2013). ISO 26000 was developed through a participatory multi-stakeholder process with an emphasis on participatory decision-making and

democracy (Hahn & Weidtmann, 2016). For instance, the International Labour Organization (ILO) had established a Memorandum of Understanding (MoU) to ensure that ISO’s social responsibility standard is consistent with its very own labour standards. In fact, ISO 26000’s core subject on ‘Labour Practices’ is based on ILOs’ conventions on labour practices, including

Human Resources Development Convention, Occupational Health and Safety Guidelines, Forced Labour Convention, Freedom of Association, Minimum Wage Fixing Recommendation and the Worst Forms of Child Labour Recommendation, among others. Moreover, ISO’s core subject on ‘human rights’ is based on the Universal Declaration of Human Rights (adopted by the UN General Assembly in 1948).

The standard comprises seven essential areas in the realms of social responsibility: organisational governance, human rights, labour practices, environment, fair operating practices, consumer issues, and community involvement and development (ISO, 2014). ISO’s goal is to encourage organisations to integrate their guiding principles on social responsibility into their management strategies, systems and processes. Therefore, ISO 26000 assists in improving environmental, social and governance communications and also provides guidance on stakeholder identification and engagement (Camilleri, 2015a). It advises the practising organisations to take into account their varied stakeholders’ interests. According to Castka and Balzarova (2008a, p. 276), ‘ISO 26000 aims to assist organisations and their networks in addressing their social responsibilities as it provides practical guidance on how to operationalise CSR, by identifying and engaging with stakeholders and enhancing credibility of reports and claims made about CSR (Hąbek & Wolniak, 2016). Therefore, this standard has the potential to capture the context-specific nature of social responsibility.

ISO 26000 has been characterised as an evolutionary step in standard innovation because it is suitable for organisations of all sizes and sectors. This standard has unique features regarding authority and legitimacy (Hahn, 2013). Its guidelines describe social responsibility as ‘the actions a firm takes to contribute to “sustainable development”’ (Perez-Baltres, Doh, Miller, & Pisani, 2012, p. 158). Hahn (2013) suggested that ISO 26000 offers specific guidance on many facets of CSR, as it helps responsible businesses in their internal and external assessments and evaluations. Furthermore, when the organisations adopt ISO 26000, they could signal their social responsibility credentials and qualities to their marketplace stakeholders (Graffin & Ward, 2010). This way they may also reduce information asymmetries among supply chain partners (King, Lenox, & Terlaak, 2005).

ISO 26000 provides a unilateral understanding of social responsibility across the globe. It acknowledges that ‘social responsibility should be an integral part of the businesses’ core strategy (ISO, 2014). A wide array of social responsibility practices and stakeholder management issues are addressed in ISO 26000. This standard aims to unify and standardise social responsibility; it also acknowledges that each organisation has a responsibility to bear that are relevant to its business (Hąbek & Wolniak, 2016; Hahn, 2013). Notwithstanding, there are different industries, organisational settings, regional or cultural circumstances that will surely affect how entities implement the ISO standards ‘recommendations on responsible behaviours’.

The corporate culture is an important driver for socially responsible activities. Therefore, CEOs play a key role in giving their face and voice to their corporate sustainability agenda (Waldman et al., 2006; Caprar & Neville, 2012). Hence, ISO 26000 can be used as a vehicle for CSR communication. Hąbek and Wolniak (2016) suggested that this standard is rooted in a quality management framework, as it holds potential to enhance the credibility of the corporations’ social responsibility claims. Similarly, Moratis (2015) argued that the concept of credibility relates to scepticism, trust and greenwashing. Other research has demonstrated that some stakeholders have used standards to enhance their credibility, learning and legitimacy (Hąbek & Wolniak, 2016; Boström & Halström, 2010). Consequently, the organisations that are renowned for their genuine CSR credentials could garner a better reputation and image among stakeholders. This will ultimately result in significant improvements to the firms’ bottom lines. An organisational culture that promotes the sustainability agenda has the potential to achieve a competitive advantage, as businesses could improve their long-term corporate financial performance (Eccles, Ioannou, & Serafeim, 2012) via the development of valuable, rare and non-imitable organisational resources and capabilities (Barney, 1986). Eccles et al. (2012) analysed the financial performance of firms with either high or low sustainability orientation. The authors found that firms with a high sustainability orientation were associated with distinct governance mechanisms for sustainability, longer time horizons and deeper stakeholder engagement, as they dedicated more attention to non-financial disclosures. Their adoption of the sustainability standards, such as ISO 26000, can also be interpreted as a signal of a responsible corporate culture (Waldman et al., 2006).

On the other hand, many academic commentators argue that ISO 26000 has never been considered as a management standard. The certification requirements have not been incorporated into ISO 26000’s development and reinforcement process, unlike other standards, including ISO 9000 and ISO 14001(Hahn, 2013). In its present form, ISO 26000 does not follow a classical plan–do–check–act–type management system approach as it is the case for ISO 14001 (Hahn, 2013). Arimura, Darnall, and Katayama (2011) reported that the facilities that were certified with ISO’s 14000 were 40% more likely to assess their suppliers’ environmental performance and 50% more likely to require that their suppliers undertake specific environmental practices. Nevertheless, Arimura, Darnall, Ganguli, and Katayama (2016) argued that although ISO 14001 was a certifiable standard, the facilities that were adopting it were no more likely to reduce their air pollution emissions than noncertified ones.

Rasche and Kell (2010) admitted that the responsibility standards can never be a complete solution to the perennial social and environmental problems; they argued that the standards have inherent limitations that need to be recognised. Certain prestandardisation preparations may have created boundaries which have restricted the stakeholders’ influence. Suchman (1995) described the pre-standardisation phase as an effort which embedded new structures and practices into already legitimate institutions. During the pre-standardisation discussions among stakeholders, there were differing opinions and not enough consensus over ISO 26000’s certification (Mueckenberger & Jastram, 2010). Other authors declared that the certification of standards does not necessarily lead to improved performance (Aravind & Christmann, 2011; King et al., 2005). The development of ISO 26000 involved lengthy, multi-stakeholder corroborations that did not necessarily ensure legitimacy or guarantee that the standard could be considered as an enforceable instrument for industry participants. Balzarova and Castka (2012) also pointed out that the scope of the ISO 26000 standard was unclear as the actual implications for social and environmental improvement were still unknown. Many stakeholders, including chief executives, should have been in a position to leverage their arguments during the pre-standardisation arrangements (Balzarova & Castka, 2012). The responsible businesses could have discussed possible avenues for the standard’s reinforcement. For instance, those organisations that are in complete compliance with ISO 26000 are not required to disclose their social responsibility reports and to make them readily accessible to stakeholders (Balzarova & Castka, 2012). This contentious issue could lead organisations to not fully conform themselves to this uncertifiable standard.

Different industry representatives were (and are still) concerned that costly certification requirements could overburden organisations, particularly in emerging economies. The organisations’ stakeholders, including their employees, may be against the introduction of new standards as they could affect their firms’ bottom lines. When the standards are enforced, industry stakeholders need to comply with their requirements. The companies will usually have to absorb the cost of compliance with the standards (Delmas, 2002). Moreover, the standards may also lead to the creation of trade barriers and to significant increases in production costs (Montabon, Melnyk, Sroufe, & Calantone, 2000). Notwithstanding, when introducing new standards, the standard setters’ external audits could reveal regulatory non-compliance among adopting organisations (Schwartz & Tilling, 2009; Delmas, 2002). As a result, the industries’ implementation of a new standard such as ISO 26000 could be time-consuming because it may require holistic adaptations to change extant organisational processes. The standardisation of social responsibility has also been criticised for being costly and thereby difficult to implement, especially among the smaller companies (Toppinen et al., 2015).

Ávila et al.’s (2013) survey indicated that ISO 26000’s themes were under-represented, particularly those involving labour practices and the environment. The authors posited that the organisations that were supposedly following ISO 26000 have often faced difficulties in incorporating the social responsibility throughout all organisational mechanisms, processes and decisions. Ávila et al. (2013) argued that the businesses’ unsatisfactory engagement with consumer issues was even more serious, as they justify the organisations’ existence. It may appear that Ávila et al.’s (2013) research participants were only concerned about their corporate image (as they were supposedly implementing the social responsibility concept and its premises). Evidently, these firms were less interested in undertaking necessary actions to ensure truthful and fair compliance with ISO 26000.

Methodology

This research has explored the senior executives’ stance on ISO’s social responsibility standard. The respondents were all employed by listed companies in a small European member country. They were expected to indicate their attitudes towards and perceptions of ISO 26000’s core topics, including organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues as well as community involvement and development. The questionnaire’s design, layout and content were consistent with the social responsibility standard. Respondents were asked to indicate the strength of their agreement or disagreement with ISO 26000’s subjects. The survey instrument made use of the five-point Likert scaling mechanism, where a numerical value was attributed to the informant’s opinion and perception. The responses were coded from 1 (strongly disagree) to 5 (strongly agree) with 3 signalling indecision. Such symmetric, equidistant scaling has provided an interval level of measurement.

An online questionnaire link was sent electronically by means of an email, directly to the senior executives of all companies that were listed on the Malta Stock Exchange. There were numerous attempts to ensure that the questionnaire has been received by all email recipients. Many steps were taken to ensure a high response rate, which included reminder emails and numerous telephone calls. Eventually, there was a total of 374 (out of 1626) respondents who have willingly chosen to take part in this research. This sample represented a usable response rate of 23% of all targeted research participants. The surveyed respondents gave their socio-demographic details about their ‘role’, ‘age’, ‘gender’ and ‘education’ in the latter part of the survey questionnaire. The objective of this designated profile of owner-managers was to gain a good insight into their ability to make evaluative judgements in taking strategic decisions on social responsibility matters. Table 1 presents the profile of respondents who participated in this study.

 

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Following the data gathering process, the researcher carried out descriptive statistics to analyse the distribution and dispersion of the data. Afterwards, factor analysis (FA) data reduction techniques were used to achieve the desired reliability, timely and accurate assessment of the findings. Unless an instrument is reliable, it cannot be valid. The FA was developed to explore and discover the main construct or dimension in the data matrix. The primary objective of this analysis was to reduce the number of variables in the data-set and to detect any underlying structure between them (Hair, Anderson, Tatham, & Black, 1998). Therefore, FA identified the interrelationships among variables. FA extracted components to obtain a factor solution of a smaller set of salient variables which exhibited the highest variation from the linear combination of original variables (Hair et al., 1998). It then removed this variance and produced a second linear combination which explained the maximum proportion of the remaining variance. The first step was to decide which factor components were going to be retained in the PCA. This approach was considered appropriate as there were variables that shared close similarities and highly significant correlations. The criterion for retaining factors is that each retained component must have some sort of face validity and/or theoretical validity, but prior to the rotation process, it was impossible to interpret what each factor meant. The first component accounted for a fairly large amount of the total variance. Each succeeding component had smaller amounts of variance. Although a large number of components could be extracted, only the first few components will be important enough to be retained for interpretation.

The SPSS default was set to keep any factor with an eigenvalue larger than 1.0. If a factor component displayed an eigenvalue less than 1.0, it would have explained less variance than the original variable. Once the factors have been chosen, the next step was to rotate them. The goal of rotation was to achieve what is called a ‘simple structure’, with high factor loadings on one factor and low loadings on all others. The factor loading refers to the correlation between each retained factor and each of the original variables. With regard to determining the significance of the factor loading, this study had followed the guidelines for identifying significant factor loadings based on the specific sample size, as suggested by Hair et al. (1998).

Analysis

The survey questionnaires’ responses were imported directly into SPSS. After filtering responses and eliminating unusable or incomplete survey observations, a total of 374 valid responses were obtained. The managers of the listed companies were required to indicate their level of agreement with ISO 26000 core subjects. Reliability and appropriate validity tests have been carried out during the analytical process. Cronbach’s alpha was calculated to test for the level of consistency among the items.

Principal component analysis

Bartlett’s test of sphericity revealed sufficient correlation in the data-set to run a PCA since P< .001. The Kaiser–Meyer– Olkin’s Test (which measures the sampling adequacy) was also acceptable, as it was well above 0.5. With respect to scale reliability, all constructs were analysed for internal consistency by using Cronbach’s alpha. The composite reliability coefficient (Bagozzi & Yi, 1988) was 0.79, well above the minimum acceptance value of 0.7.

PCA has been chosen to obtain a factor solution of a smaller set of salient variables, from a much larger data-set. A varimax rotation method was used to spread variability more evenly among the constructs. PCA was considered appropriate as there were variables exhibiting an underlying structure. Many variables shared close similarities as there were highly significant correlations. Therefore, PCA has identified the patterns within the data and expressed it by highlighting the relevant similarities (and differences) in each and every component. In the process, the data have been compressed as it was reduced in a number of dimensions without much loss of information. From SPSS, the PCA has produced a table which illustrated the amount of variance in the original variables (with their respective initial eigenvalues), which were accounted for every component. There was also a percentage of variance column which indicated the expressed ratio, as a percentage of the variance (for each component). A brief description of the extracted factor components, together with their eigenvalues and their respective percentage of variance, is provided in Table 2 . The sum of the eigenvalues equalled the number of components. Only principal components with eigenvalues greater than 1 were extracted, and they accounted for more than 63% variance before rotation. The PCA analysis yielded 17 extracted components from ISO 26000’s 37 variables. These factor components were labelled following a cross-examination of the variables with the higher loadings. Typically, the variables with the highest correlation scores had mostly contributed towards the make-up of the respective component.

total variance

Discussion and conclusions

Many stakeholders, particularly the regulatory ones, from the most advanced economies are increasingly inquiring about the corporations’ responsible behaviours. Very often, multinational businesses are resorting to the NGOs’ tools and instruments, such as process and performance-oriented standards in corporate governance, human rights, labour, environmental

protection, anti-corruption as well as health and safety, among others (Camilleri, 2015a). In this light, ISO 26000 standard has been chosen to investigate company executives’ stance towards social responsibility practices.

This empirical research suggests that the respondents’ responsible and sustainable behaviours were both internally and externally focused. The managers indicated that they were paying attention to their human rights issues, labour and fair operating practices. Table 2 reported that the executives gave due importance to resolving grievances and anti-corruption within their organisation. This finding is consistent with other contributions which link CSR with the human resources management literature (Currie, Gormley, Roche, & Teague, 2016; Hahn, 2013; Wettstein, 2012; Pedersen, 2010; Ewing, 1989). The workplace conflict may be intrinsic to the nature of work, because employees and managers may have hard-to-reconcile competing interests (Currie et al., 2016). Ewing (1989) argued that companies develop grievance procedures to help them in their due processes. The author maintained that its development leads to better morale and productivity, fewer union interventions and less likelihood of being sued. However, grievance procedures could incur operating costs, often consume large amounts of previous time from executives and may open the door to chronic malcontents.

This study evidenced that the corporations’ managers were clearly against corrupt practices. Today’s listed businesses are increasingly expected to explain how they are fighting fraudulent activities and bribery issues. This study was conducted in a European Union jurisdiction which mandates a ‘comply or explain’ directive on non-financial reporting (Camilleri, 2015b). The European corporations are expected to be as transparent as possible, to disclose material information and to limit the pursuit of exploitative, unfair or deceptive practices (Camilleri, 2015b). Moreover, large organisations that are operating in member states (that have ratified the ILO’s conventions on labour rights) are morally and legally bound to promote fair operating practices and to engage in social dialogue. The findings suggest that the respondents were committed to forging relationships with different stakeholders, including suppliers and market intermediaries, the wider communities at large, as well as political groups, among others. Porter and Kramer (2011) contended that capable local suppliers foster greater logistical efficiency and ease of collaboration in areas, such as training, in order to boost productivity. Therefore, the success of every company is affected by supporting stakeholders and the extant infrastructure around it. The big businesses’ stakeholder engagement is rooted in institutional theory, as they are capable of aligning themselves with their broader context (Brammer, Jackson, & Matten, 2012). In fact, this study has also measured the respondents’ attitudes on social engagement (including the creation of jobs and skills development, the conditions of employment and the individuals’ civil and political rights) and on the subject of discrimination towards vulnerable groups, among other contingent topics. Moreover, the listed companies’ executives also indicated that they were concerned on environmental sustainability, particularly on global climate change. The corporations’ managers did not explain how they were committed to reduce the carbon footprint or prevent the emission of greenhouse gases. However, they may use new technologies, including renewable energy, water use and conservation. Alternatively, they could change older equipment to reduce pollution and make it more efficient and economical. The results suggest that respondents respected property rights, they utilised and consumed sustainable resources, and were concerned on protecting the natural environment.

Limitations and suggestions for future research

The extant literature has recognised this ISO 26000’s inherent limitations. For the time being, the businesses that are using this standard are not required to disclose material information on their social responsibility practices to stakeholders. One of the most contentious issues is that ISO 26000 still remains voluntary and uncertifiable. The practitioners may ultimately decide not to fully conform themselves with this standard, as they are not bound to do so. For this reason, ISO 26000’s role is still limited for regulators, standard-setting organisations and policy-makers.

In a nutshell, this paper has advanced an empirical study that explored the business executives’ appraisal of social responsibility practices. It has employed ISO 26000 as a comprehensive measure for organisational governance, human rights, labour practices, the environment, fair operating practices, consumer issues, and community involvement and development. Moreover, this contribution has critically analysed key theoretical underpinnings and previous empirical studies on the social responsibility standard. Further research may yield other conclusions about how responsible organisations and corporations could use this standard to appraise their social responsibility endeavours. Future studies could explore different stakeholders’ views, other than the corporation executives’ stance on ISO 26000 subjects. Academia could utilise ISO’s broad standard as a measure for social responsibility behaviours. Moreover, qualitative research could clarify in depth and breadth how organisations are mapping their progress and advancement in the implementation and monitoring of the standard’s responsible initiatives. Future research could identify certain difficulties in incorporating the social responsibility standard throughout the organisational systems and processes.

Acknowledgements

The author thanks this journal’s editor and his anonymous reviewers for their insightful remarks and suggestions.

Disclosure statement

No potential conflict of interest was reported by the author.

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Filed under Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Integrated Reporting, Marketing, Stakeholder Engagement, sustainable development

Corporate Sustainability and Responsibility: Creating Value for Business, Society and the Environment

 

 

 

This an excerpt from my latest open-access paper in Springer’s Asian Journal of Sustainability and Social Responsibility.

This review paper has built on the previous theoretical underpinnings of the corporate social responsibility agenda including Stakeholder Management, Corporate Citizenship and Creating Shared Value as it presents the latest Corporate Sustainability and Responsibility perspective. This value-based model reconciles strategic CSR and environmental management with a stakeholder approach to bring long term corporate sustainability, in terms of economic performance for the business, as well as corporate responsibility’s social outcomes.

Recently, some international conferences including Humboldt University’s gatherings in 2014 and 2016 have also raised awareness on this proposition. The corporate sustainability and responsibility concept is linked to improvements to the companies’ internal processes including environmental management, human resource management, operations management and marketing (i.e. Corporate Sustainability). At the same time, it raises awareness on the businesses’ responsible behaviours (i.e. Corporate Responsibility) toward stakeholders including the government, suppliers, customers and the community, among others. The fundamental motivation behind this approach is the view that creating connections between stakeholders in the value chain will open-up unseen opportunities for the competitive advantage of responsible businesses, as illustrated in Table 2. Corporate sustainability and responsibility focuses on exploiting opportunities that reconcile differing stakeholder demands as many corporations out there are investing in corporate sustainability and responsible business practices (Lozano 2015). Their active engagement with multiple stakeholders (both internal and external stakeholders) will ultimately create synergistic value for all (Camilleri 2017).

 

Multinational organisations are under increased pressures from stakeholders (particularly customers and consumer associations) to revisit their numerous processes in their value chain activities. Each stage of the company’s production process, from the supply chain to the transformation of resources could add value to their businesses’ operational costs as they produce end-products. However, the businesses are always expected to be responsible in their internal processes toward their employees or toward their suppliers’ labour force. Therefore, this corporate sustainability and responsibility perspective demands that businesses create economic and societal value by re-aligning their corporate objectives with stakeholder management and environmental responsibility. In sum, corporate sustainability and responsibility may only happen when companies demonstrate their genuine willingness to add corporate responsible dimensions and stakeholder engagement to their value propositions. This occurs when businesses opt for responsible managerial practices that are integral to their overall corporate strategy. These strategic behaviours create opportunities for them to improve the well-being of stakeholders as they reduce negative externalities on the environment. The negative externalities can be eliminated by developing integrated approaches that are driven by ethical and sustainability principles. Very often, multinational businesses are in a position to mitigate risk and to avoid inconveniences to third parties. For instance, major accidents including BP’s Deep Horizon oil spill in 2010, or the collapse of Primark’s Rana Plaza factory in Bangladesh, back in 2013, could have been prevented if the big businesses were responsible beforehand.

In conclusion, the corporate sustainability and responsibility construct is about embedding sustainability and responsibility by seeking out and connecting with the stakeholders’ varied interests. As firms reap profits and grow, there is a possibility that they generate virtuous circles of positive multiplier effects (Camilleri 2017). Therefore, corporate sustainability and responsibility can be considered as strategic in its intents and purposes. Indeed, the businesses are capable of being socially and environmentally responsible ‘citizens’ as they are doing well, economically. This theoretical paper has contributed to academic knowledge as it explained the foundations for corporate sustainability and responsibility. Although this concept is still evolving, the debate among academic commentators is slowly but surely raising awareness that are needed to deliver strategic results that create value for businesses, society and the environment.

References

Camilleri MA (2017) Corporate sustainability, social responsibility and environmental management: an introduction to theory and practice with case studies. Springer, Heidelberg, Germany

Lozano R (2015) A holistic perspective on corporate sustainability drivers. Corp Soc Responsib Environ Manag 22(1): 32-44.

 

How to Cite: Camilleri, M.A. (2017) Corporate Sustainability and Responsibility: Creating Value for Business, Society and the Environment. Asian Journal of Sustainability and Social Responsibility. 1-16. DOI: 10.1186/s41180-017-0016-5

 

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A Conceptual Model of Corporate Sustainability and Responsibility

The corporate sustainability and responsibility concept is linked to improvements to the companies’ internal processes, including; environmental management, human resource management, operations management and marketing (Porter & Kramer, 2011; Fombrun, 2005; Maignan & Ferrell, 2004). At the same time, it raises awareness on the businesses’ responsible behaviours toward stakeholders, including the government, suppliers, customers and the community, among others (Carroll & Shabana, 2010; Freeman, 1984). The fundamental motivation behind this approach is the view that creating connections between stakeholders in the value chain will open-up unseen opportunities for the competitive advantage of responsible businesses, as illustrated here:

(Camilleri, 2017a)

Corporate sustainability and responsibility focuses on exploiting opportunities that reconcile differing stakeholder demands as many corporations out there are investing in corporate sustainability and responsible business practices (Camilleri , 2017b). Their active engagement with multiple stakeholders (both internal and external stakeholders) will ultimately create synergistic value for all (Camilleri, 2017a).

Multinational organizations are under increased pressures from stakeholders (particularly customers and consumer associations) to revisit their numerous processes in their value chain activities. Each stage of the company’s production process, from the supply chain to the transformation of resources could add value to their businesses’ operational costs as they produce end-products. However, the businesses are always expected to be responsible in their internal processes, toward their employees or toward their suppliers’ labour force. Therefore, this corporate sustainability and responsibility perspective demands that businesses create economic and societal value by re-aligning their corporate objectives with stakeholder management and environmental responsibility. In sum, corporate sustainability and responsibility may only happen when companies demonstrate their genuine willingness to add corporate responsible dimensions and stakeholder engagement to their value propositions. This occurs when businesses opt for responsible managerial practices that are integral to their overall corporate strategy. These strategic behaviours create opportunities for them to improve the well-being of stakeholders as they reduce negative externalities on the environment.  The negative externalities can be eliminated by developing integrated approaches that are driven by ethical and sustainability principles. Very often, multinational businesses are in a position to mitigate risk and to avoid inconveniences to third parties. For instance, major accidents including BP’s Deep Horizon oil spill in 2010; or the collapse of Primark’s Rana Plaza factory in Bangladesh, back in 2013 could have been prevented if the big businesses were responsible beforehand.

In conclusion, the corporate sustainability and responsibility construct is about embedding sustainability and responsibility by seeking out and connecting with the stakeholders’ varied interests. As firms reap profits and grow, there is a possibility that they generate virtuous circles of positive multiplier effects (Camilleri, 2017a). Therefore, corporate sustainability and responsibility can be considered as strategic in its intents and purposes. Indeed, the businesses are capable of being socially and environmentally responsible ‘citizens’ as they are doing well, economically. This contribution explains the foundations for corporate sustainability and responsibility. Although this concept is still evolving; the debate among academic commentators is slowly but surely raising awareness on responsible managerial practices and on the skills and competences that are needed to deliver strategic results that create value for businesses, society and the environment.

References:

Camilleri, M.A. (2017a) Corporate Sustainability, Social Responsibility and Environmental Management: An Introduction to Theory and Practice with Case Studies. Springer, Heidelberg, Germany. http://www.springer.com/us/book/9783319468488

Camilleri, M.A. (Ed.) (2017b) CSR 2.0 and the New Era of Corporate Citizenship. IGI Global, Hershey, USA. ISBN13: 9781522518426 DOI: 10.4018/978-1-5225-1842-6 http://www.igi-global.com/book/csr-new-era-corporate-citizenship/166426

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, 12(1), 85-105.

Fombrun, C. J. (2005). A world of reputation research, analysis and thinking—building corporate reputation through CSR initiatives: evolving standards. Corporate Reputation Review, 8(1), 7-12.

Freeman, R.E. (1984). Strategic Management: A stakeholder approach. Pitman, Boston, MA. USA.

Maignan, I., & Ferrell, O. C. (2004). Corporate social responsibility and marketing: An integrative framework. Journal of the Academy of Marketing science, 32(1), 3-19.

Porter, M. E. & Kramer, M. R., (2011). Creating shared value. Harvard business review, 89 (1/2), 62-77.

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Mark Camilleri edited a book on sustainable and responsible business

Dr Mark Anthony Camilleri, Ph.D. (Edinburgh) has recently edited a business textbook entitled; ‘CSR 2.0 and the New Era of Corporate Citizenship’.
csr
This contribution is an authoritative reference source (for the latest scholarly research) on the ways in which corporate entities can implement responsible strategies that create synergistic value for both businesses and society. The authors (hailing from leading European universities) contend that responsible behaviors in the realm of business continue to remain a crucial component of organizational development.
By exploring core aspects of contemporary corporate strategies, businesses can create more value through social welfare and sustainable initiatives. This publication features an extensive coverage across a wide range of perspectives and topics, including corporate citizenship, corporate sustainability and responsibility, stakeholder engagement, business ethics, public spending, total responsibility management and social value co-creation, among others.
This publication is ideally designed for students, academics and researchers seeking current concise and authoritative research on the business case for corporate social responsibility.

Chapter 1 presents a thorough literature review on corporate social responsibility and its other related constructs, including corporate citizenship, stakeholder engagement and business ethics. Hence, this chapter reports on how CSR has evolved to reflect the societal realities.

Chapter 2 reviews the different definitions of the corporate responsibility paradigms and draws comparisons between related concepts. The author contends that organization studies; economic, institutional, cultural and cognitive perspectives are shaping the corporate responsibility agenda. She cleverly presents the benefits of integrating multiple perspectives and discusses about the possible research avenues in the realms of corporate responsibility.

Chapter 3 suggests that the field of CSR is ushering a new era in the relationship between business and society. The author puts forward a Total Responsibility Management (TRM) approach that may be useful for business practitioners who intend adopting CSR behaviors. This chapter posits that CSR strategies including managing relationship with stakeholders will contribute to the companies´success and will also bring community welfare.

Chapter 4 focuses on the national governments’ regulatory role of raising awareness on CSR behaviors among businesses. The author suggests that there is scope for the state agencies to promote CSR as a business case for companies. She provides an outline of the current state of “supranational regulative policies on public procurement” within the European Union context.

Chapter 5 uses a stakeholder perspective to encapsulate the CSR concept. The authors investigated social value cocreation (SVCC) through a qualitative study among different stakeholders (customers, employees, and managers). They implied that businesses ought to clarify their motives, by opening channels of communication with stakeholders. This way, there will be a higher level of SVCC with increased (stakeholder) loyalty toward the firms.

Chapter 6 sheds light on Porter and Kramer’s (2011) shared value proposition. The author explains how collaborative stakeholder interactions could lead to significant improvements in the supply chain.

Chapter 7 involved a longitudinal study that investigated how four different State Owned Enterprises communicated with Māori communities between 2008 and 2013. This study contributes to the extant research on the legitimacy theory and CSR communication with ethnic minorities in the Aotearoa (New Zealand) context.

Chapter 8 links the CSR paradigm with risk management. The author suggests that Serbian businesses ought to adopt corporate sustainable and responsible approaches in terms of their disaster risk reduction prior to environmental emergencies.

Chapter 9 involved a quantitative analysis that explored the CSR practices within the hospitality industry. The authors suggested that there were distinct social and environmentally responsible behaviors in different geographical areas. They argued that institutions can take their results into account when drawing up policies that are aimed at fostering responsible tourism practices.

Chapter 10 examined how CSR communication of self-serving motives can lead to more trust and credibility among stakeholders as well as corporate reputation. The authors implied that the marketers should be aware of how the public perceive CSR behaviors.

Chapter 11 reports that corporate (or organizational) storytelling is increasingly being used as a promotional tool to communicate CSR information to stakeholders. The authors present four companies that have used storytelling with the aims of transmitting values, fostering collaboration, leading change and sharing knowledge on responsible practices.

Chapter 12 relates corporate sustainability to the construct of emotional capital. The authors maintain that emotional capital enables businesses to attract and retain talent. They maintain that there are significant improvements to the firms’ bottom lines If they invest in responsible human resources management.

Chapter13 suggests that the transition from the CSR to CSR 2.0 requires the adoption of five new principles – creativity, scalability, responsiveness, glocality and circularity. The authors posit that these principles ought to be embedded within the organizations’ management values and culture. The authors propose a new framework that can be used to manage the processes of socially responsible organizations.

Chapter 14 investigated the banks’ behaviors during the economic crisis in Turkey. The authors reported on the bank’s CSR strategies as they supported small and medium sized enterprises, as well as local communities during the financial turmoil.

Chapter 15 offers insights on sustainable tourism as the authors investigated the constraints that explain why an attitude–behavior gap exists in responsible tourists’ behaviors.

Chapter 16 examines three leading networks that are intended to promote corporate sustainability and responsibility. The author explores their growing influence as he reviews their objectives, organizational structures, types of activities, practices and impacts.

Further details on this contribution is available here: http://www.igi-global.com/book/csr-new-era-corporate-citizenship/166426


About the Editor:

Dr. Mark Anthony Camilleri is a resident academic in the Department of Corporate Communication at the University of Malta. He specializes in strategic management, stakeholder engagement, corporate social responsibility and sustainable business. Mark successfully finalized his PhD (Management) in three years’ time at the University of Edinburgh in Scotland – where he was nominated for his “Excellence in Teaching”. During the past years, Mark taught business subjects at under-graduate, vocational and post-graduate levels in Hong Kong, Malta and the UK.

Dr Camilleri has published his research in peer-reviewed journals, chapters and conference proceedings. He is also a member on the editorial board of Springer’s International Journal of Corporate Social Responsibility and a member of the academic advisory committee in the Global Corporate Governance Institute (USA). Mark is a frequent speaker and reviewer at the American Marketing Association’s (AMA) Marketing & Public Policy conference and in the Academy of Management’s (AoM) Annual Meeting.

The Authors’ Biographies

Ozan Nadir ALAKAVUKLAR is a lecturer in management at Massey University School of Management. His research interests are based on sustainability, community organizing and social movements.

Marcello ATZENI received his PhD at the University of Cagliari. His research interests are related to tourism authenticity and consumer behavior.

Elisa BARAIBAR DIEZ is a Lecturer in Business Administration at the University of Cantabria. Her fields of research are corporate transparency, CSR, corporate governance and reputation. She focuses on transparency and its effects not only in a business context but also in other contexts such as universities.

Jesús BARRENA MARTINEZ is an Assistant Professor postdoctoral in the Department of Business Management at the University of Cadiz. He has a PhD in the field of Economics and Business Management. His teaching and research interests include Human Resource Management, Corporate Social Responsibility and Intellectual Capital. He has presented papers at international and national conferences and published in journals such as Corporate Social Responsibility and Environmental Management, International Journal of Management and Enterprise Development, Journal of Human Values, Tourism and Management Studies and Intangible Capital.

Roland BERBERICH is Independent researcher in Project Management with additional MRes degree from Heriot Watt University. He has acquired more than 10 years of project experience.

Claudiu George BOCEAN is Associate Professor at and PhD supervisor Faculty of Economics and Business Administration within University of Craiova. In 2000, graduated Bachelor Degree, major in Accountancy and Informatics, Faculty of Economics, University of Craiova, Romania. In 2004, graduated Master program in Business Administration, Faculty of Economics, University of Craiova, Romania. In 2007, PhD in Economics, Faculty of Economics, University of Craiova, Romania. In 2015, Habilitation title in Management, Academy of Economic Sciences Bucharest, Romania. Since 2002 – present, teaching and researching in Faculty of Economics and Business Administration, University of Craiova on topics such as Human Resource Management, Corporate Social Responsibility, Organization Theory, Business Economics, and co-operating within projects with national and international universities and organizations.

Michael Devereux obtained both Master in Business Administration (MBA) from University of North Carolina at Wilmington and a Master in International Business from Universitat de Valencia. Prior to graduate school, he gained a Bachelor in Economics and Geography focusing on international economics and Central/South America from Weber State University. Additionally, he has studied in Costa Rica, and in Guatemala participating in a microfinance and economic development project for indigenous women in Guatemala. His current interests are focused on international affairs, humanitarian components, health and well-being, economic development, community engagement, energy and environmental sustainability.

José Ignacio ELICEGUI REYES is Graduate in Management Business Administration and Business Sciences, as well as he has studied a Masters in Human Resource Management at the University of Cadiz. Currently, he is studying a Masters in Teacher Training in Secondary Schools and High Schools, Vocational Training and Language Training for the specialty of Business Administration at the University of Cadiz. Also, he is developing his PhD in the Human Resource Management field.

Martina G. GALLARZA lectures in the Marketing Department of Universidad de Valencia (SPAIN). She has formerly taught at Universidad Católica de Valencia, where she was Dean of the Business Faculty. Her research interests include consumer behavior and tourism services. She has authored more than 40 articles (in Annals of Tourism Research, Tourism Management, Journal of Consumer Behavior, Journal of Services Marketing, International Journal of Hospitality Management, Journal of Hospitality Marketing and Management among others), and has presented more than 70 papers in Congresses (EMAC, MKT TRENDS Conference, AMA Servsig, ATMC). She teaches in several international masters in Europe (MTM in IGC at Bremen (Germany) and MAE at IGR-IAE Rennes (France). Guest scholar for short periods at Columbia University (New York City. USA), ESCP (France), Sassari University (Sardinia. Italia), Strathclyde University (Glasgow, UK), She is member of the American Marketing Association (AMA), Asociación Española de Marketing (AEMARK), Association Française de Marketing (AFM) and formerly of Association Internationale d’Experts Scientifiques en Tourisme (AIEST She is member of the Board of Directors of Pernod Ricard. S.A. since 2012.

Raquel GOMEZ LOPEZ is a Lecturer in Business Management at the University of Cantabria (Spain). Her current research interests include quality management, excellence models, responsible management, family firms, innovation, and tourism. Raquel’s works have been published in journals of international impact such as Cornell Hospitality Quarterly, Total Quality Management & Business Excellence and Journal of Small Business and Enterprise Development among others. She is also author of several chapters in various collective works and one book. She regularly participates in prestigious international and national conferences, such as those organized by FERC, IFERA and ACEDE.

Misra Cagla GUL is an Associate Professor of Marketing and the Vice Director of the Graduate School of Arts and Sciences at Isik University. She holds a PhD degree from Bogazici University, and an MBA degree from Georgia State University. She has published in the fields of marketing and consumer behavior in times of recession, corporate social responsibility, social marketing, status consumption, green consumer behavior and strategic marketing. She teaches various marketing courses including consumer behavior, advertising and services marketing, both at undergraduate and graduate levels. Her professional experience includes over 5 years in marketing in telecommunications and energy sectors. She has a B.Sc. degree in Industrial Engineering from Bogazici University.

Jose Ramon CARDONA received a doctorate in business economics from the University of the Balearic Islands in 2012. He worked as lecturer in marketing at the University of Zaragoza, Pablo de Olavide University and the University of the Balearic Islands. He’s a research associate of the research group Business Management and Tourist Destinations.

Giacomo DEL CHIAPPA is an assistant professor of marketing at the Department of Economics and Business, University of Sassari (Italy), and Associate Researcher at CRENoS. He is also a senior research fellow, School of Tourism and Hospitality, University of Johannesburg, South Africa. His research is related to destination governance and branding, consumer behavior, and digital marketing. He has published articles in several international journals, among others the International Journal of Hospitality Management, Journal of Services Marketing, Journal of Travel Research, International Journal of Tourism Research, International Journal of Contemporary and Hospitality Management, Current Issues in Tourism, and Information Systems and E-Business Management.

Michael DEVEREUX obtained both Master in Business Administration (MBA) from University of North Carolina at Wilmington and a Master in International Business from Universitat de Valencia. Prior to graduate school, he gained a Bachelor in Economics and Geography focusing on international economics and Central/South America from Weber State University. Additionally, he has studied in Costa Rica, and in Guatemala participating in a microfinance and economic development project for indigenous women in Guatemala. His current interests are focused on international affairs, humanitarian components, health and well-being, economic development, community engagement, energy and environmental sustainability.

José Luis FERNANDEZ SANCHEZ, PhD is a Professor of Business Administration at the University of Cantabria. He specializes in CSR, especially social investment.

Paul George HOLLAND, received a Bachelor in Business degree from the Manukau Institute of Technology, Auckland, New Zealand in 2012 and a Master of Business Studies from Massey University, New Zealand in 2015.

Mehmet KAYTAZ is currently professor of economics and the Dean of Faculty of Economics and Administrative Sciences at Işık University, Istanbul, Turkey. He holds a M.A. degree from the University of Manchester (1974) and Ph.D. from the University of Nottingham (1978). He was a faculty member of Boğaziçi University between 1978-2005.He served as President of State Institute of Statistics, Turkey; as Undersecretary of Treasury; as an alternate director in European Bank for Reconstruction and Development, and as Chairman of Board of Directors of Eregli Iron & Steel Factories. He has authored articles and books on small-scale enterprises, income distribution, economic growth, statistics, finance and education.

Valentín-Alejandro MARTINEZ FERNANDEZ is a Permanent Professor at University of A Coruña, Area of Marketing and Market Research. B.A. Information Sciences, Complutense University of Madrid. MBA Management and Business Administration, University of A Coruña. PhD. Information Sciences, Complutense University of Madrid.

Patricia MARTINEZ GARCIA DE LEANIZ is an Assistant Professor at the University of Cantabria (Spain). Her current research interests include corporate social responsibility, consumer behavior, corporate marketing and responsible management. Her research focuses on theoretical and empirical studies in the tourism sector. Patricia’s works have been published in journals of international impact such as International Journal of Hospitality Management, Journal of Business Ethics, International Journal of Contemporary Hospitality Management and Journal of Travel and Tourism Marketing among others. She is also author of several chapters in various collective works and one book. She regularly participates in prestigious international and national conferences, such as those organized by EMAC, AEMARK and ACEDE.

Lars MORATIS is an expert in corporate social responsibility (CSR) affiliated with Antwerp Management School in Belgium as the Academic Director of the Competence Center Corporate Responsibility and with the NHTV University of Applied Sciences in The Netherlands as Professor of Sustainable Business. His research interests lie in the credibility of corporate CSR claims, ISO 26000, CSR strategy, CSR implementation, responsible management education and critical perspectives on CSR. His other interest is the psychology of sustainability. He received an MSc in Business Administration from Erasmus University Rotterdam School of Management and his PhD from the Open University the Netherlands. His PhD dissertation on ISO 26000 carried the title ‘Standardizing a better world? Essays and critical reflections on the ISO 26000 standard for corporate social responsibility’. He publishes on his research interest in both scientific and practitioner-oriented journals and book chapters. He has written several books, among which is ‘ISO 26000: The business guide to the new standard on social responsibility’.

María D. ODRIOZOLA (PhD) is a Lecturer in Business Administration at the University of Cantabria. Her research focuses on Human Resources Management and CSR. Particularly, she is specialized in labor social responsibility practices.

Mariella PINNA is a Research Fellow at the University of Sassari where she teaches in the area of “Ethics”. Her research interest is related to ethical consumption and consumer behavior.

Vesela RADOVIC is an associate professor, works in the Institute for Multidisciplinary Research, Belgrade University, Serbia. Dr. Radovic has an MPH in fire safety protection and a PhD in safety, protection and defense from the Faculty of Safety in Belgrade. She has a long record of experience in the area of disaster management. As an expert in the area of disaster management she prepared the handbook, Methodology of Risk Assessment and Emergency Management Planning at the Local Level. This manual was a part of the activities of the USAID, Serbia Preparedness, Planning and Economic Security Program, implemented by the DAI/Washington. She spent a year with the Fulbright/Hubert Humphrey Fellowship, at Tulane University, School of Public Health and Tropical Medicine, Department of International Health and Development, New Orleans, LA. During that year in USA her focus was on public policy making and emergency preparedness. Dr. Radovic will focus her future activities in academic community in order to share acquired knowledge to help her country, Serbia in supporting the necessary reforms in the context of Euro-Atlantic Integrations.

Amir Hossein RAHDARI is one of the top 25 youngest Sustainable Business professionals (2degrees). He is the director of research at Corporate Governance and Responsibility Development Centre, an external reviewer to several Int. peer-reviewed journals (JCR and Scopus indexed), a research contributor to CSRI and some other leading platforms. He is also an independent research & consultant and a member of several leading panels on sustainability including GBI Panel (US), NG Panel (UK), Ministry of Petroleum CSR Committee (Iran).

Pedro M. ROMERO FERNANDEZ is a Professor in the Department of Business Management at the University of Cadiz. His teaching experience (more than 15 years) spans the broad range of strategy, human resources and management. He has published his work in the field of HRM in peer-reviewed top national and international journals, such as the International Journal of Human Resource Management, British Journal of Management, Journal of Business Research and Journal of Business Ethics.

María Dolores SANCHEZ FERNANDEZ is a PhD “Competitiveness, Innovation and Development” and a Lecturer at the University of la Coruña (Spain), Faculty of Economics and Business, Department of Analysis and Business Management, Business Organization area. She is also part of the GREFIN (University of A Coruña) and GEIDETUR (University of Huelva) research groups and associate researcher at the Centre of CICS.NOVA.UMinho and Lab2PT research at the University of Minho, GEEMAT (Brazil) and REDOR Network (Mexico). She has been the author or co-author of several articles published in indexed journals. She has participated in over 100 communications in national and International conferences and is a member of the scientific committee. She reviews international scientific magazines in Spain, United States and Brazil. Her main research topics are: Corporate Social Responsibility, quality, tourism, the hotel industry and human resources.

Katharina SARTER is an Ailsa McKay Postdoctoral Fellow at Glasgow Caledonian University. Previously Research Fellow at Bielefeld University, University of Muenster, and University of Rostock as well as Bernheim Postdoctoral Fellow at the Hoover Chair of Economic and Social Ethics at the Catholic University of Louvain and Visiting Scholar at the Public Procurement Research Group at the School of Law of the University of Nottingham.

Catalina SITNIKOV is Professor at University of Craiova (Romania), Faculty of Economics and Business Administration. She has PhD title in Management since 2000, Habilitation title in Management since 2014 and since February 2015 is PhD supervisor in Management. For 3 years activated as Visiting Lecturer at Helsinki University of Technology, Lahti Center (Finland). Since 1995, she has been teaching undergraduate, master and PhD students. She teaches Quality Management, Total Quality Management and Management. Her main research areas include: management, strategic management, and mostly quality management, instruments and models specific to the stages of quality planning, control and improvement, quality management strategies, ISO standards, CSR from the perspective of specific standards and instruments.

Marius Sorin TUDOR holds a PhD from the Faculty of Economics and Business Administration within University of Craiova. In 1998, graduated Bachelor Degree, major in Accountancy and Informatics, Faculty of Economics, University of Craiova, Romania, In 2001, graduated Master program in Business Administration, Faculty of Economics, University of Craiova, Romania In 2008, PhD in Economics, Faculty of Economics, University of Craiova, Romania Since 2006 – present, teaching and researching in Faculty of Economics and Business Administration, University of Craiova on topics such as Project Management, Environmental Economics, Marketing public, Methods and techniques for decision-making in public organizations, Media management. Since 2015 – present, Manager of Universitaria – Publishing house within University of Craiova.

Başak UCANOK TAN received her B.A. degree in Business Administration from Başkent University. Upon her graduation she was granted the Sunley Management Scholarship and completed MSc in International Management from the University of Northampton, UK. Her master’s dissertation focused on the adverse psychological effects of financial crises on layoff survivors. She continued her academic pursuits in Marmara and Istanbul Bilgi University and earned her PhD in Organizational Behavior with her dissertation on the investigation of organizational citizenship behaviors in Turkish SMEs. Her academic research focus concentrates on the dynamics of micro organizational phenomena including work values, organizational citizenship behavior, organizational commitment, alienation, leadership and cooperative behavior. She has served as coordinator in Public Relations program in Istanbul Bilgi University from 2010 to 2012 and has recently became Associate Professor.

Anya Catharina Eva ZEBREGS is a master student at University of Amsterdam. Last January she completed her masters in Business Administration and currently she is writing her thesis for the Social Psychology masters. The two masters complement each other very well; she gathered knowledge about consumers, organizations, groups of people and how to influence them and combined this with strategic and economic knowledge. She is interested in marketing and consultancy and after her internship, which will start this September, she would like to find a job in either marketing or consultancy. Further, Anya has always been very interested in CSR and the non-profit market, one of the reasons why she chooses to write her first master thesis about CSR. Further, she is president of the board of SOLVE Consulting Amsterdam. SOLVE is a professional student consultancy organization active in social enterprise consulting. The organization advises non-profits and social enterprises in their efficiency and effectiveness.

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An Introduction to Socially Responsible Investment

Socially responsible investment (SRI) is the practice of incorporating social and environmental goals into investment decisions. Therefore, SRI is a strategy that encourages corporate practices that promote social responsibility and laudable initiatives such as impact investing, shareholder advocacy and community investing (Sparkes & Cowton, 2004; Guay, Doh & Sinclair, 2004; Schueth, 2003). At the same time, the rationale behind SRI is to consider both financial return as well as responsible investments for societal development. Its goals are based upon environmental issues, human rights, community involvement and labour relations (Ooi & Lajbcygier 2013; Sparkes, 2003; Friedman & Miles, 2001).

SRI’s professionally managed assets have emerged as a dynamic and quickly growing segment of the U.S. financial services industry (Schueth, 2003). In many cases, responsible and sustainable investments are influencing how asset managers invest in diversified portfolios (Lemke & Lins, 2014). This term refers to responsible investments that seek to avoid negative externalities. In fact, the investment portfolios of listed companies are often screened by SRI contractors (Renneboog, Ter Horst & Zhang, 2008). In fact, in recent years, SRI funds have become a popular investment opportunity. Many investors are attracted to businesses that will yield return on investment. Yet, it may appear that a large and growing segment of the population possess a spiritual yearning to integrate personal values into all aspects of life, including finance and investing (Schueth, 2003). As a result, many conscientious investors were avoiding businesses that are involved in alcohol, tobacco, fast food, gambling, pornography, weapons, contraception and abortion, fossil fuel production, and / or the military industries, among others (Logue, 2009; Ronneborg et al., 2008; Ghoul & Karam, 2007; Statman, 2000). In addition, responsible investors have become increasingly aware about the numerous instances of accounting fraud and other scandals that may have eroded their trust in corporate leadership. The areas of concern recognised by the SRI practitioners are often denoted under the heading of environmental, social and governance (ESG) issues, including social justice, human rights, anti-corruption and bribery issues and diversity on the boards (Camilleri, 2015).

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The Circular Economy Agenda for Corporate Sustainability and Responsibility

Most of the products we buy and consume are bound to reach their ‘end of life’ at some stage. To date, business and industry have customarily followed an economic model that is built on the premise of ‘take-make-consume and dispose’. When goods worn out or are no longer desired, they are often discarded as waste. Such a linear model also assumes that raw materials and resources are abundant, available and cheap to dispose of. However, the improper disposal of waste in landfills could cause health risks for society. Similarly, industrial and mining activities are causing resource depletion as well as pollution problems. The incineration of waste products also creates the need to dispose of residual toxic metals, including lead and mercury, which could also contaminate groundwater. Notwithstanding, it is envisaged that the reserves of some of globe’s key elements and minerals shall be depleted within the next century. At the same time, land degradation is constantly impacting on the natural environment, as arable land continues to disappear. In addition, plastic waste dumped into our seas and oceans is responsible for the deaths of millions of fish, seabirds, and sea mammals. Furthermore, the warming of the earth’s climate, that is one of the outcomes of carbon emissions from fossil fuels, is yet another serious problem facing today’s society.

The world’s growing populations and their increased wealth is inevitably leading to greater demands for limited and scarce resources. Boulding’s famous paper from 1966, “The economics of the coming spaceship Earth” anticipated that man will need to find his place in a cyclical ecological system which is capable of continuous reproduction of material. He went on to suggest that at the other end the effluents of the system are passed out into noneconomic reservoirs, including the atmosphere and the oceans. Of course, these ecological environments are not appropriated and do not enter into the exchange system. Twenty-five years ago, Granzin and Olsen (1991) reported that the US municipalities were already running out of landfills. These contentious issues underline the perennial conflict between economic development and environmental protection. Today’s society and its economic models still rely too much on resource extraction and depletion. If solutions are to be found, the public must be encouraged to alter a number of its irresponsible behaviours.

In this light, this contribution suggests that there is scope in using resources more efficiently; as better eco-designs, waste prevention and reuse of materials can possibly bring net savings for businesses, while also reducing emissions. In fact, WEF (2014) indicated that a shift towards CE can generate over US$ 500 million in material cost savings, 100,000 new jobs and prevent 100 million tons of waste globally, within five years. This means that there is a business case for CE as significant resource efficiencies could bring a new wave of smart, sustainable growth and competitiveness.

The basis of the CE economic approach lies in extracting the embedded costs of resources; through re-using, repairing, refurbishing, recycling and restoring materials and products throughout their life cycle. Arguably, what used to be regarded as ‘waste’ could be turned into a valuable resource for business and industry. The CE concept could be perceived as a response to the aspiration for sustainable growth in the context of increased regulatory pressures toward controlled operations management and environmentally responsible practices. Therefore, the setting of coherent policy frameworks and appropriate legislation could help to raise the bar for more responsible behaviours amongst public and private organisations.

Initially, the CE approach was being implemented in western countries were it was championed by a number of environmental NGOs (EMF, 2013; WEF, 2014). However, back in 2008, the People’s Republic of China had enacted a national law that promoted the CE model. Interestingly, China has experienced an average economic growth of 9.5% over the past two decades (since the start of their business-friendly policies and reforms). The United Nations Environment Program (UNEP) has recognised the significance of the rapid industrialisation in the Chinese scenario. Hence, UNEP in collaboration with the European Commission and Asia Pro Eco Programme have supported the Chinese city of Guiyang through the ‘Policy Reinforcement for Environmentally-Sound and Socially-Responsible Economic Development – PRODEV. In 2003, this city was still considered a relatively, underdeveloped region although it had a population of more than 3 million. For this reason, Guiyang had great potential as a pilot city for the exploration of sustainable development models (UNEP, 2006). In 2005, PRODEV supported Guiyang’s policy frameworks, financial systems that were intended to help the private sector development, facilitated technology transfers and sustained infrastructural development. PRODEV specified the best environmentally sound practices as it demonstrated the use of cleaner production processes (UNEP, 2006). Guiyang’s businesses have learned how to increase their operational efficiencies through better use of resources. These developments have also brought significant cost savings, and improvements in the firms’ bottom line. At the time, China needed a new sustainable development model which had the ability to ‘achieve improvements in resource productivity and eco-efficiency’ (Yuan, Bi, and Moriguichi, 2006:7). The country’s central development goal came into force in January 2009 as environmental conditions were expected to deteriorate due to rapid urban and industrial growth prospects.

In a similar vein, the European Union (EU) Commission has encouraged businesses to reuse, recycle and reduce resources to prevent the loss of valuable materials (EU, 2014). The EU Commission explained that, “new business models, eco-designs and industrial symbiosis can move the community towards zero-waste; reduce greenhouse emissions and environmental impacts” (EU, 2014:4). It transpired that the Europe has already started to prepare the ground work toward this transition. In fact, the ‘Resource Efficient Europe’ was one of the EU2020’s flagship ideas. This EU initiative involved the coordination of cross-national action plans and policies on the formulation of sustainable growth. The EU’s CE proposition was intended to bring positive environmental impacts, real cost savings, and greater profits. EU (2014) indicated that improvements in waste prevention and eco-design, the use and reuse of resources, and similar measures could translate to a net savings of € 600 billion, or 8 % of annual turnover (for EU businesses), while reducing total annual greenhouse gas emissions by 2-4%. This EU communication anticipated that the market for eco-industrial products will double between 2010 and 2020. It also posited that internationally, resource-efficiency improvements are in demand across a wide range of sectors. Lately, the EU has published a call for researchers, specifically in; (i) CIRC-01-2016: Eco-innovative approaches for the circular economy: large-scale demonstration projects, (ii) CIRC-02-2016: Water in the context of the circular economy, (iii) CIRC-03-2016: Smart specialisation for systematic eco-innovation / circular economy, (iv) CIRC-04-2016: New models and economic incentives for circular economy business and (v) CIRC-05-2016: Unlocking the potential for urban organic growth (EU, 2015b). Moreover, the European Fund for Strategic Investments (EFSI) has also unleashed a new financing avenue for future investments in infrastructure and innovation, including circular economy projects and closed loop systems.

Across the Atlantic, the US and Canada have also endorsed the circular economy perspective. The US Chamber of Commerce Foundation described the circular economy as a model that focuses on the careful management of material flows through product design, reverse logistics, business model innovation, and cross-sector collaboration. The US Foundation recognised that this regenerative model offers viable business opportunities that tackle environmental issues while stimulating economic growth and development. Similarly, Canada’s ‘Circular Economy Working Group’ (CEWG) has also encouraged the wider adoption of circular approaches as illustrated in Figure 1. This working group supports knowledge sharing on CE through a series of webinars and other avenues. They also featured numerous case studies that have presented the benefits of key circular business models.

 

                                  Figure 1. The Circular Business Model

ce                                    (Accenture, 2014 in CEWG, 2015)

Although the circular economy is a relatively new notion, there could be potential pitfalls in its policy formulation and application. Moreover, businesses and industries would probably resent being imposed any mandatory changes in their established behaviours. It is very likely that they would opt to remain in their status quo, where they are ‘locked-in’ to their traditional linear models. For the time being, many companies could not be knowledgeable about the CE perspective. The terms that are actually being used to describe both linear and circular economies are potentially misleading, as both combinations already exist, but in very different contexts.

Arguably, the long term investments for an active engagement in sustainable CE practices could possibly result in significant improvements in operational efficiencies. However, CE approaches may still be perceived as novel, risky and complex. Notwithstanding, the prices of green technologies do not necessarily reflect the real costs of resources and raw materials. Macro-environmental factors, including political, economic, social and technological issues could also impact on CE behaviours. Moreover, there may be policy makers and regulators who may not want to support the transition towards the circular economy. Of course, it would be better if governments, civil societies and the respective industries work in tandem to resolve the contentious issues relating to the increased scarce and limited resources, across the globe.

In conclusion, the CE concept has the potential to maximize the functioning of global eco-systems as it could lead to significant benefits to societal well-being. There are implications for the re-alignment of economic and management practice with well laid-out ecological and social models. Future research should begin to incorporate the latest ecological knowledge into our understanding of naturalistic economic models and systems, without silencing the social and human dimension.

References

Accenture. (2014), “Circular Advantage: Innovative Business Models and Technologies to Create value in a World without Limits to Growth”, available at: https://www.accenture.com/us-en/insight-circular-advantage-innovative-business-models-value-growth.aspx (accessed on the 12th October, 2015).

Boulding, K.E. (1966) The economics of coming spaceship earth in Jarret, H. (Ed.), Environmental Quality in a Growing Economy, Johns Hopkins Pres, Baltimore, M.D. pp. 3–14

EMF (2013), “Towards the Circular Economy. Ellen MacArthur Foundation Rethinking the Future”, available at: http://www.ellenmacarthurfoundation.org/assets/downloads/publications/TCE_Report-2013.pdf (accessed on the 28th October, 2015).

EU (2014), “Attitudes of Europeans towards Waste Management and Resource Efficiency”, European Commission, Brussels, available at:http://ec.europa.eu/public_opinion/flash/fl_388_en.pdf (accessed on the 17th October 2015).

EU (2015b), “Research and Innovation Industry 2020 in the Circular Economy” (Call identifier: H2020-IND-CE-2016-17; Publication date: 14-10-2015), available at:
http://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/calls/h2020-ind-ce-2016-17.html#c,topics=callIdentifier/t/H2020-IND-CE-2016-17/1/1/1&callStatus/t/Forthcoming/1/1/0&callStatus/t/Open/1/1/0&callStatus/t/Closed/1/1/0&+identifier/desc (accessed on the 5th November 2015).

Granzin, K. L. and Olsen, J. E. (1991), “Characterizing participants in activities protecting the environment: a focus on donating, recycling, and conservation behaviors”, Journal of Public Policy & Marketing, pp. 1-27.

UNEP (2006), “Circular Economy: An alternative model for economic development”, United Nations Environment Programme. Paris, France, available at:http://www.unep.org/resourceefficiency/Portals/24147/scp/nap/circular/pdf/prodev-summary.pdf (accessed on the 25th October 2015).

WEF (2014), “Circular Economy Can Generate US$ 1 Trillion Annually by 2025”, World Economic Forum, available at: http://www.weforum.org/news/circular-economy-can-generate-us-1-trillion-annually-2025 (accessed on the 27th October 2015).

Yuan, Z., Bi, J. and Moriguichi, Y. (2006), “The circular economy: A new development strategy in China”, Journal of Industrial Ecology, Vol. 10 No. 1, pp. 4-8.

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Filed under Business, Circular Economy, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR

Top US Corporate Citizenship Issues

In its latest quarterly magazine the Boston College Centre for Corporate Citizenship (BCCC) has reiterated how community involvement activities can contribute to achieve corporate goals – particularly, when they are aligned with the company’s business context and the interests of its stakeholders. Companies are becoming increasingly adept at tying employee volunteer and corporate giving programmes to their business strategy. Interestingly, BCCC (2015) noted that many businesses have proritised community involvement projects, including; K12 education, youth programmes and health and wellness programmes among others. These social issues have featured as the top priorities for businesses, as evidenced in BCCC’s (2015) Table. In 2009 and 2011 the top issues were more focused on environmental matters.

The inclusion of health in the top three social goals implies that lately there is more concern amongst US citizens regarding the rising cost of health care. In 2015, the U.S. has spent 17% of its gross domestic product on health care. This figure is higher than any other developed nation, and is projected to reach nearly 20 percent by 2024.

bccc

Unsurprisingly, science, technology, engineering and math (STEM) education is also an area that is receiving increased investments from business communities. According to BCCC’s (2015) study, nearly 40% of companies are focusing on STEM education in their community involvement programmes. These efforts ensure a future pipeline of talent and skills. In fact, OECD (2014) anticipated that there will be a 17 per cent increase in STEM related jobs between 2014 and 2024 (OECD, 2014).

Arguably, businesses are putting food where their mouth is. As they focus their competences and resources in the areas where they can do the most good, there is potential for them to achieve greater returns on their discretionary investments. At the same time, they close the skill gaps and mismatches in their labour market (Camilleri and Camilleri, 2015).

References:

BCCC (2015). The Corporate Citizen, Issue 14 (Fall 2015) Boston College Center for Corporate Citizenship https://bc-ccc.uberflip.com/i/571714-corporatecitizen-issue14

Camilleri, M.A.  and Camilleri, A. (2015). Education and social cohesion for economic growth, International Journal of Leadership in Education, DOI: 10.1080/13603124.2014.995721

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Filed under Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, Education