Changing nature of corporate social responsibility

Introduction

Following many years of Corporate Social Responsibility being (CSR) associated with related terms such as business ethics, corporate performance, corporate accountability, corporate responsibility, stake holder involvement etc; the current decade seems to be the one in which CSR has grown into a well - known collective expression. The growth of CSR has been a consequence of organizations realizing their responsibility towards their stake holders in the context of shocking business scandals (e.g. Enron) and growing concerns of environmental changes (e.g. global warming). The European Union defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” (European Commission, 2002). According to Vernon and Mackenzie (2007), the question of whether companies should seek to do good by exercising CSR, rather than concentrate solely on wealth creation, is no longer interesting and in fact the focus today is on how well companies do good. Stake holders heightened expectations of companies' to take on public responsibilities, than was the case a few years back, point in this direction. Companies engage in CSR through diverse activities such as donating to charitable organisations (e.g. Ben and Jerry's), ‘green' activities (e.g. move by major retailers to eliminate plastic bags and promote ‘green' bags) and by implementing environment friendly purchase and supply policies. However, an interesting finding brought forward by a survey conducted by Research International is that even though companies' CSR practices are commendable; they need to be viewed with suspicion as these activities are not enough on their own (Social Funds, 2000). The scepticism about CSR activities is related to a growing trend for organizations to drift away from the ‘hard issues' and concentrate more on ‘soft issues'. The Research International survey revealed that despite of ignoring crucial issues such as treatment of employees, commitment to the local community etc, some companies portray themselves as socially responsible in the disguise of charity and other CSR activities which deal with ‘soft issues' (Social Funds, 2000). Sceptics are also rife about the use of CSR purely as a marketing stunt for improving business performance. In the context of CSR being ranked no.1 priority by companies in the last few years (Cost Sector, 2009); this research aims to study the changing nature of CSR, with particular focus on organization's motivation for engaging in socially responsible activities (whether it is a response to society's expectations or the company's strategic move). By contributing to a deep understanding of rationales, notions, risks and effects of CSR, the proposed research provides strategic insights on the subject. With findings based on both corporate and stake holder perspectives on the subject, this research will contribute to useful and interesting reading for both businesses and stake holders. The findings of this study will be based on the UK food retail industry. Food retailers make a good context for study especially considering the several socially and environmentally responsible schemes that retailers are involved in and the significance of CSR asserted by industry standards.

Research Aims

With improved business performance being attributed to CSR activities, companies' motivation to exercise CSR as a response to society's expectations is questionable. The main purpose of this research is to establish to what extent CSR gaining increased priority is in actuality a reflection of companies acting to meet the interests of society or simply a means for generating profits in a marketing oriented way. In this regard, the research aims to explore CSR behaviour in depth and in turn aims to establish companies' rationales for CSR behaviour. Results will be derived by studying CSR practices in the UK food retail industry.

Research Question and Objectives

The most important question that this research aims to address is: Have companies changed their priorities in response to society's changing expectations? In line with the main research question, other significant questions include: Are the traditional priorities of profit generation and wealth creation, still the main priority for companies? Is CSR a part of companies' marketing strategy for improving business performances? What factors can lower the priority for CSR in companies? How is the UK food retail industry defining and interpreting CSR? What are the CSR activities incorporated by food retailers in the UK currently? How effective are companies' CSR activities in dealing with social issues? How can CSR's contribution to business performance be measured? What are the risks of CSR?

From the research question, the objectives of the research have been derived. The three
main objectives of the research are summarized below -

To examine the changing nature (or role) of CSR in the UK food retail industry.
To establish the motivation and rationales behind proactive, reactive and non active CSR policies.
To assess the CSR activities of food retailers and to evaluate the effectiveness of CSR
activities in fulfilling social expectations.

Literature Review

According to Cooke (1997) “the only proper goal of the managers of a business is to maximise the owner's wealth while acting legally, ethically, morally and honestly”. In contrast, the modern stake holder theory asserts that companies have more groups to satisfy (stake holders), rather than solely meeting the interests of share holders (Friedman, 1970). Several law suits and cases against companies in modern times highlight the consequences of not meeting stake holder needs. This in turn also throws light on the fact that companies' CSR activities are a consequence of stakeholder pressure. On a broader level, inability to meet consumer expectations could result in inability to retain customer loyalty with consumers consequently shifting to other companies in the market. Taking both the wealth creation and stake holder theories into account, it can then be argued that the rational for companies engaging in CSR activities is fulfilling social expectations with the underlying goal of profit generation shaping these activities. With regard to how CSR can enable improved business performance, the societal marketing concept can be used to describe the relation. The foundation of the societal concept is built on the philosophy that “what is good for society is ultimately good for business as well” (Kotler and Zaltamn, 1971). The societal marketing framework enables marketers to generate a balance between profitability and social interests based on the view that economic benefits are important for the organization but not at the expense of the interests of society and customers. In line, another rational of companies engaging in CSR activities has been brought forward by Lantos (1999) who states that for many organizations CSR fulfills a public relations role rather than represent true corporate philanthropy. Waddock and Graves (1997) contends that CSR can build the firm's corporate image and when strategically managed can prove profitable for the company. In addition, CSR can enable competitive advantages for companies that proactively respond to customer expectations as researches indicate that most companies incorporate CSR only when the need is enforced by industry or government standards. Summing up all the above views, it can then be understood that, in situations where ignoring social responsibility can prove detrimental for organizations, the money making objective of businesses is bound to surface. This in turn questions the very essence of CSR, i.e., organization's social responsibility being true corporate philanthropy or not.

However, the theory that the rationale behind companies' exercising CSR is related to improved business performance; is contradicted by Goldreyer and Diltz (1999) whose research findings indicate that there is no difference in performance levels in between companies that exercise CSR and those that do not. The argument is supported by Balabanis et al (1998) who found that the relation between CSR and business performance is enhanced by communication of CSR practices. In other words, just because a company behaves socially responsible does not imply obvious improvement in economic performances. In order to derive financial gains, it is crucial for companies to create awareness by communicating their CSR activities to stake holders.

UK food retailers have been in the forefront of companies that have exhibited proactive socially responsible behaviour on several occasions. Chase (1991) notes that enabling corporate goodwill and enhancement of corporate image at a low cost is the rationale behind these activities. Environmental issues are among the most significant issues that retailers have responded to. In fact today, environmental performance has become an industry standard, alongside other significant customer issues. However, Strong (1995) notes that even though all food retailers respond to environmental concerns today, the level of response varies greatly. While some major retailers respond to environmental issues proactively, others only respond to rules set by the industry or government. Furthermore, it can be argued that environmental issues are an obvious area for companies to exhibit social responsibility, and actual behaviour levels (whether proactive, reactive or non active) can be determined by studying companies' CSR activities in other socially beneficial areas. For e.g. Tesco opening up stores in remote areas of UK with the aim to provide customers (even though few in number) easy access, points in this direction.

However, most companies do not proactively engage in such activities which are socially beneficial. The differences in manner and extend to which retailers incorporate CSR activities, has often been related to corporate resources. According to Mitchel (1989), large enterprises tend to respond more proactively to social responsibilities as they have greater resources and can benefit from the consequent goodwill and corporate image that the company gains, in comparison to smaller retailers. The argument that financial resources are a major determinant of companies' exercising CSR is further highlighted by the fact that almost all researches on CSR are based on large enterprises. Practical evidences support the theory as well. In the context of the current global recession, in a recent survey conducted by Cost Sector (2009), cost reduction emerged as the top priority of retailers in the UK food industry, a position enjoyed by CSR previously. Respondents to the survey revealed that not only has the priority of CSR fallen significantly, but also companies are looking at cutting down investments in their CSR activities as a part of their cost reduction strategy. The above argument in turn raises the question of whether CSR is truly a response to social expectations or rather simply a function exercised when times are favorable and resources available.

Plan of Investigation

Research Design

With the study aimed at developing theories (with no pre - set notions about the outcomes), the nature of the research can be termed as exploratory. The approach would enable familiarizing with the subject and in turn developing ideas throughout the research process. A mixed methodology, i.e., both qualitative and quantitative methods of data collection and analysis will be used in the research. According to Das (1983), “qualitative and quantitative methodologies are not antithetic or divergent, rather they focus on the different dimensions of the same phenomenon”, highlighting the fact that quantitative and qualitative methods are complementary and provide better results when used together in researches.

Procedure

Both primary and secondary data collection methods will be employed for gathering data. Review of related literature will form the foundation of the research. The various theories in relation to CSR behaviour rationales will shape the arguments of the research and will also form the guideline for devising the survey and interview questions. Secondary research on consultancy surveys, articles and company documents will be conducted in order to understand the trends in the UK food retail industry, with particular focus on CSR activities in the sector.

Qualitative content analysis methodology will be used for analyzing the contents of food retailers' websites pertaining to CSR. The sample frame for the content analysis comprises of the UK food retailers with websites that address CSR. The sample frame is expected to be small (estimated at 20 companies) and hence, all the websites in the sample frame will be content analyzed. Content analysis of websites will be conducted in a two step process. Firstly, the sections of the websites referring to corporate and society relationships will be examined. The consequent data obtained will be statistically analyzed (since the sample size is small, Excel spreadsheet will be used) in order to derive relationships between frequencies of CSR dimensions and organisational characteristics.

Store Audits will be conducted in order to identify the CSR practices and extend to which they are exercised by different food retailers. Owing to time and other practical constraints (of obtaining an accurate list of all the food retailers and issues of accessing these stores) only major retailers will be included in the sample. CSR practices at the stores will be assessed based on several dimensions of CSR. The data gathered will then be statistically analyzed in order to position each store on its level of social responsibility (proactive, reactive and non active).

In - depth formal interviews will be conducted with key decision makers with the goal of obtaining information on CSR activities, relation to business performance and rationales, in a relatively quicker manner. Compared to other data collection approaches, the interviews will involve a very small sample (around 3 to 4) owing to accessibility issues. The questions to be covered during the interviews will be devised in advance. The interviews will be recorded and transcribed later on in order to aid analysis.

The fourth data collection method and the one with the largest sample size will be the questionnaire survey. The UK consumer population is the population of interest for the survey. The goal of the survey is to understand consumers viewpoint on food retailers' CSR activities and to what extend a company's socially responsible behaviour can influence consumers' buying behaviour. Considering the size of the population and the research constraints, the final sample cannot be large enough in order to be considered accurate. However, special care will be taken in ensuring the data collected is as representative of the population as possible. The data obtained will be entered into an Excel spreadsheet for creating bar graphs and tables that depict the patterns in consumer behaviour in relation to CSR activities.

Grounded theory approach developed by Glaser and Strauss (1967) will be used for analyzing the qualitative data. Grounded theory as the name suggests, implies, theories are generated from and grounded in data. In other words, by closely examining the data repetitively, the researcher develops theories. The validity of these theories is then confirmed with the support of suitable evidence from the data. Theories that cannot be established will be refuted and in certain cases the devised theories would require modifications. The method is suitable considering the exploratory nature of the research.

Potential Benefits

This research proves extremely beneficial with regard to its approach of examining the subject from both the consumer and corporate perspective. The results obtained from the research would help executives in understanding the response of consumer behaviour to retailers' that exercise CSR behaviour. The final outcome of the research would also enable generating an opinion on whether CSR in practice holds the same significance among companies and stake holders as is the popular notion.

Limitations

With regard to the data obtained from the questionnaire survey, owing to time and other practical constraints, it is not possible to obtain a large sample. Hence, the final customer sample cannot be expected to be a good representation of the consumer population in UK. Furthermore, random sampling would prove a poor choice with regard to its ability to highlight the relationship between consumer demographics (age, gender etc) and consumer behaviour, in relation to retailers' CSR practices. In addition, similar to other researchers in the field of CSR, this research too extensively depends on major retailers. The data gathering approaches selected do not provide much scope for smaller retailers to be included (for instance, content analysis of websites will only include major retailers as small food retailers do not have websites).

Conclusion

The proposed research aims at establishing the rational for CSR behaviour exhibited by UK food retailers. Appropriate data gathering techniques have been selected to help fulfill the objectives of the research. The proposed research is intended to be a practically and theoretically significant study in the area of CSR. From a broader perspective, the research will also make interesting reading for researchers in the fields of corporate and consumer behaviour.

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