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Engaging in Corporate Social Responsibility – and Communicating It Effectively
Social Responsibility – and Communicating It Effectively
Engaging in Corporate Social Responsibility
- and Communicating It Effectively
Authors: Malene Hjulmand Bundgaard - 283273
Mia Sørensen – 281837
Supervisor: Anne Gammelgaard Jensen
Characters: 98,736 - without spaces
Date: May 15th, 2009
BA in Marketing and Management Communication
Aarhus School of Business
Engaging in Corporate Social Responsibility – and Communicating It Effectively
Summary
The thesis presents suggestions as to why organisations engage in Corporate Social
Responsibility (CSR) and how organisations can communicate their CSR engagement
effectively through non-financial reports.
In order to establish a foundation for this discussion, the thesis presents different
definitions of and views on CSR. Furthermore, the thesis discusses how the free flow of
information and the following transparency in society have changed the agenda for most
organisations and why the shift from a shareholder perspective to a stakeholder
perspective is relevant. Additionally, the thesis also focuses on organisations’ increasing
impact on society and stakeholders’ increasing expectations to organisations. On the basis
of these discussions, the thesis identifies that the reasons for engaging in CSR, among
other things, are; to meet the needs and expectations of the stakeholders, to be more
transparent, to gain a competitive advantage, to ensure employee loyalty, to increase the
organisation’s revenue and to improve the organisation’s overall brand image.
The thesis presents three strategies for communicating CSR and clarifies which
communication strategy is the most effective when communicating a CSR engagement
through non-financial reports. The most effective CSR communication strategy is the
stakeholder involvement strategy, as this strategy involves the stakeholders and enables
an organisation to appear credible and work purposively towards meeting the
stakeholders’ expectations. In this connection, the thesis discusses how the organisation
beneficially can use this strategy by addressing and incorporating solely key stakeholders.
To further illustrate these discussions, the thesis presents Nike as an illustrative case
study. Nike is a good example of an organisation that engages in CSR and communicates
its CSR engagement effectively through non-financial reports. The thesis identifies that
Nike used CSR to manage its crisis in the 1990s and to regain its positive brand image
and, furthermore, that Nike adopts the stakeholder involvement strategy in its Corporate
Responsibility Report. Interestingly, findings further show that Nike did not need to address
solely key stakeholders to make its CSR communication effectively.
Number of characters in the summary: 1950
Engaging in Corporate Social Responsibility – and Communicating It Effectively
Table of Contents
1. Introduction .................................................................................................................... 1
1.1 Problem Statement ..................................................................................................... 1
1.2 Theory and Structure .................................................................................................. 2
1.3 Delimitation ................................................................................................................. 4
2. Corporate Social Responsibility ................................................................................... 6
2.1 The CSR Concept ...................................................................................................... 6
2.1.1 Critique of CSR .................................................................................................... 7
2.2 Public Relations .......................................................................................................... 8
2.2.1 Grunig and Hunt’s Four Models of PR .................................................................. 9
2.3 The History of CSR ................................................................................................... 11
2.4 Carrolls’ CSR Pyramid .............................................................................................. 12
2.5 Triple Bottom Line .................................................................................................... 14
2.6 Preliminary Conclusion ............................................................................................. 16
3. CSR – A Stakeholder Perspective .............................................................................. 17
3.1 Transparency ............................................................................................................ 17
3.2 Stakeholder Theory .................................................................................................. 19
3.2.1 The Shift from Shareholders to Stakeholders ..................................................... 21
3.3 Two Relevant Stakeholder Groups ........................................................................... 22
3.3.1 Employees.......................................................................................................... 23
3.3.2 Consumers ......................................................................................................... 24
3.4 Preliminary Conclusion ............................................................................................. 25
4. Engaging in Strategic CSR ......................................................................................... 26
4.1 Trends in Society ...................................................................................................... 26
4.2 Five Stages of CSR Engagement ............................................................................. 27
4.3 Is CSR a Good Investment? ..................................................................................... 28
4.4 Branding CSR ........................................................................................................... 30
4.5 Preliminary Conclusion ............................................................................................. 31
5. Communicating CSR Strategically ............................................................................. 32
5.1 CSR Communication Strategies ............................................................................... 32
5.1.1 Stakeholder Information Strategy ....................................................................... 35
Engaging in Corporate Social Responsibility – and Communicating It Effectively
5.1.2 Stakeholder Response Strategy ......................................................................... 35
5.1.3 Stakeholder Involvement Strategy ...................................................................... 36
5.1.4 Involving Stakeholders ....................................................................................... 36
5.2 Crisis Communication ............................................................................................... 38
5.3 Preliminary Conclusion ............................................................................................. 40
6. Nike Case Study ........................................................................................................... 41
6.1 Why Nike Engaged in CSR....................................................................................... 41
6.1.1 The Development of Nike’s CSR Strategy ......................................................... 41
6.1.2 From a Market-Oriented Production System to a CSR Engagement ................. 43
6.2 Branding Nike’s CSR engagement ........................................................................... 44
6.3 Communicating Nike’s CSR ..................................................................................... 46
6.3.1Nike’s Communication Strategy .......................................................................... 46
6.3.1.1 Nike’s Key Stakeholders .............................................................................. 47
6.3.2 Nike’s Transparency and Credibility ................................................................... 48
6.4 Preliminary Conclusion ............................................................................................. 49
7. Conclusion ................................................................................................................... 51
8. Bibliography ................................................................................................................. 54
8.1 Books ....................................................................................................................... 54
8.2 Articles ...................................................................................................................... 55
8.3 Websites ................................................................................................................... 58
9. Appendices .................................................................................................................. 59
9.1 CD ............................................................................................................................ 59
9.2 List of Figures and Tables ........................................................................................ 59
Engaging in Corporate Social Responsibility – and Communicating It Effectively
Social Responsibility – and Communicating It Effectively
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1. Introduction Years ago, the concept of Corporate Social Responsibility (CSR) did not exist.
Philanthropic activities were not fundamental to an organisation’s objectives, and doing
good in a social and environmental context were not considered to influence the
organisation’s financial performance. (Kotler & Lee, 2005: 1) However, the free flow of
information and the following transparency in society have changed the agenda for most
organisations. All organisations have various stakeholder groups with changing social
expectations, and the organisations most likely to succeed in this rapidly evolving global
society are those organisations that are able to balance the often inflicting interests of their
various stakeholder groups. CSR represents a means of anticipating and reflecting
societal concerns. (Werther & Chandler, 2008: 17-19) This thesis will consider this and
other reasons to why organisations engage in CSR.
Once an organisation has decided to engage in CSR, it is important for the organisation to
know how to effectively communicate its CSR engagement to its various stakeholder
groups. There are many different ways in which an organisation can communicate its CSR
engagement, and this thesis will discuss the use of non-financial reports in relation to CSR
communication, as these have become very popular as a tool for increasing organisations’
transparency.
The purpose of this thesis is therefore to discuss why organisations engage in CSR
activities and how they communicate their CSR engagement effectively to their
stakeholders through non-financial reports. Empirically, the thesis will discuss why Nike
engaged in CSR in the 1990s and how Nike has become one of the leading organisations
within CSR and CSR communication. Additionally, the thesis will discuss how Nike
communicates its CSR engagement to its stakeholders through a non-financial report.
1.1 Problem Statement
• Why are organisations engaging in CSR activities?
• How do organisations communicate their CSR engagement effectively to their
stakeholders through non-financial reports?
– Nike will be used as an illustrative case study.
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1.2 Theory and Structure
This thesis is divided into eight sections. The first section introduces the thesis and it will
commence with an introduction in order to establish a point of departure. The purpose of
the thesis will also be included, along with the problem statement which is the basis for
why we have chosen to write this thesis. Method and structure will be included to give an
overview of the different sections in the thesis and an overview of the theories and
methods we will use to work towards answering the problem statement. Finally,
delimitation will be included in this section to clarify which topics and issues we will not
address in this thesis despite of possible close connections to CSR and Nike.
The second section is named ‘Corporate Social Responsibility’ and in this section we will
build the foundation for CSR by discussing what is understood by the term. Among other
things, Archie B. Carroll’s CSR Pyramid and John Elkington’s concept of the Triple Bottom
Line will be used in this connection in order to give an understanding of the different
responsibilities that they believe an organisation has. This section will, furthermore, include
a definition of Public Relations as this is where CSR originates from, and James E. Grunig
and Todd T. Hunt’s four public relations models will be described to form the basis for
Morsing and Schultz’s communication strategies which will be discussed in section five.
The third section is named ‘CSR – A Stakeholder Perspective’ and in this section we will
work towards answering the first part of our problem statement, namely, why organisations
engage in CSR. In order to answer this question, we will discuss how globalisation has
made the world more transparent and how this has affected organisations’ decision on
whether or not to engage in CSR. Additionally, Edward Freeman, who proposes the
stakeholder theory, will be used in this section to highlight the shift in organisational focus
which has resulted from the increased demand to satisfy various stakeholders. Finally, to
further clarify why organisations engage in CSR, consumers and employees, who are two
important stakeholder groups, will be described in regards to how they are affected by the
organisation’s CSR engagement.
The fourth section is named ‘Engaging in Strategic CSR’ and in this section we will
elaborate the discussion of why organisations engage in CSR. In order to do this, we will
present some of the trends in today’s society and give a short example of the different
stages an organisation can go through to improve its CSR strategy by the use of Simon
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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Zadek’s five stages. Whether or not CSR is a good investment for the organisation is a
question management often ask themselves and, for that reason, a discussion of this will
be included in this section. Finally, as CSR can have a positive effect on an organisations
corporate image, branding will be discussed briefly in relation to organisations’ CSR
engagement.
The fifth section is named ‘Communicating CSR Strategically’ and in this section we will
work on answering the second part of the problem statement, namely, how an organisation
can communicate its CSR engagement effectively to its stakeholders through non-financial
reports. Mette Morsing and Majken Schultz’s three CSR communication strategies, which
are based on Grunig and Hunt’s four PR models, will be used in this section to determine
how an organisation can communicate CSR effectively. Additionally, Karl E. Weick’s notion
of sensemaking and Dennis A. Gioia and Kumar Chittipeddi’s notion of sensegiving will
further be clarified as these are important aspects in order to understand Morsing and
Schultz’s communication strategies. In this section we will, furthermore, discuss crisis
communication. Even though this topic does not answer how to communicate effectively
through non-financial reports, it is included in this communication section for the purpose
of discussing the effect of being a good corporate citizen in a crisis situation, and because
crisis management can further give reasons to why organisations engage in CSR.
The sixth section presents our illustrative case study. This is a theoretical thesis, however,
the US apparel manufacturer, Nike, will be used to illustrate how the discussions from the
previous sections work in practice. Despite of Nike’s crisis in the 1990s, it is currently one
of the leading organisations within CSR and CSR communication, and Nike is a good
example to use in this thesis to reach a greater understanding of our problem statement.
The seventh section concludes the thesis. In this section we will give a short summary of
the main findings and, on the basis of these, we will answer why organisations engage in
CSR and how they communicate their CSR engagement effectively to their stakeholders
through non-financial reports.
In order to indicate who has prepared the individual sections, initials are provided in the
headlines: Mia Sørensen = MS and Malene Hjulmand Bundgaard = (MB). The headlines
without initials are prepared by both.
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1.3 Delimitation
The field of CSR is broad and it can be addressed and examined from many different
perspectives. The perspectives we have chosen to focus on in this thesis have, naturally,
lead to the necessity of delimitating others.
We have chosen to focus on the use of non-financial reports to communicate CSR
engagement and will not elaborate further on the use of any other communication
channels or the advantages and disadvantages of publishing CSR material online.
Likewise, we will not compare the effectiveness of non-financial reports to other methods
of communicating.
There are many terms to describe CSR, such as corporate citizenship, corporate
responsiveness, sustainability etc. We will, however, not elaborate on all the different
terms as these are fairly close to Corporate Social Responsibility and have somewhat the
same meaning.
Globalisation is highly relevant when discussing CSR and we will incorporate globalisation
in this thesis where we find it appropriate. However, a comprehensive discussion of
globalisation in its own term will not be included as this is beyond the scope of the thesis.
We further find that the discussion of culture in relation to CSR is too comprehensive for
this thesis. We are, however, aware of the fact that culture has a huge impact on the way
CSR is perceived by stakeholders and, furthermore, on the way in which organisations
should adapt their communication.
The concept of branding will not be thoroughly discussed nor will different branding
techniques. In order to focus on the problem statement, the concept of branding will only
be used briefly when discussing why organisations engage in CSR.
The thesis will not give a description of the different CSR initiatives an organisation can
engage in, as we look at CSR from a communicative perspective. In the illustrative case
study on Nike different initiatives will be described, however, this is only to portray how
Nike’s CSR engagement has developed over time.
We will not include anything about Nike’s communication to its stakeholders before the
crisis in the 1990s, as this is not relevant for the objectives of this thesis. Additionally, it
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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should be mentioned that we are aware of the fact that Nike have used other methods
than CSR in order to get through the crisis and re-establish a positive image; such as new
product launches and marketing campaigns. However, this is a thesis on CSR and for that
reason other initiatives from Nike resulting from the crisis will not be mentioned.
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2. Corporate Social Responsibility This section will discuss what is understood by the term CSR as this is important in order
to build the foundation for further discussions about CSR. There are many definitions of
CSR, and in the following, two of these definitions will be presented. Moreover, as CSR
derives from Public Relations, this practice will be clarified, along with an explanation of
the connection to CSR. Finally, Archie B. Carroll’s CSR pyramid and John Elkington’s
Triple Bottom Line will be used in the clarification of CSR and in the discussion of whether
or not an organisation has responsibilities beyond making profits, thus, these will be
elaborated in this section.
2.1 The CSR Concept (MB)
Organisations are part of society’s infrastructure and, therefore, they must consider how
they impact society. The level of impact an organisation has on society has grown and in
this connection, the range of stakeholders the organisation needs to address has
increased (Werther & Chandler, 2006: 3). Stakeholders are people in society which affect
or are affected by the organisation’s business, e.g. employee, shareholders, consumers,
suppliers, media etc. (Freeman, 1984). In order to address the needs of the stakeholders
and society, an organisation can engage in CSR. Dr. Ralph Tench and Liz Yeomans
(2006: 97) state that CSR is the organisation’s responsibility to its stakeholders and
society. This description of CSR is somewhat superficial and is only one of the many
definitions of the concept, as there is no universally excepted definition of CSR. For
decades, theorists, organisations, businessmen etc. have all tried to define the concept
and this has resulted in many definitions. The fact that there are many different ways of
referring to CSR, e.g. corporate citizenship, sustainable development, sustainable
entrepreneurship, business ethics and corporate responsibility, hampers the process of
finding one common definition to describe the term (van Marrewijk, 2003: 95-96). Due to
the lack of one universally accepted definition of the term CSR, Economist and
Researcher Marcel van Marrewijk (2001: 96) argues that an organisation should choose
the definition and concept of CSR which best suits its organisational purpose and
intentions. Even though this argument seems sensible, it is still interesting to clarify the
CSR concept further and for that reason, two definitions will be described in the following.
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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Definition 1:
In 1979, Professor Archie B. Carroll stated that CSR is ‘the social responsibility of
business encompasses the economic, legal, ethical and discretionary expectations that
society has of organizations at a given point in time’ (Werther & Chandler, 2006: 8).
Carroll’s definition of CSR is from the late 1970s, and even though the CSR debate has
changed since then, it is still one of the most quoted definitions in CSR literature. The
focus is on the four responsibilities of an organisation, namely; economic, legal, ethical
and philanthropic, and Carroll has placed these four responsibilities in a CSR pyramid
which will be elaborated later in this section.
Definition 2:
According to the Commission of the European Communities (EU Commission) (2001),
CSR is ’a concept whereby companies integrate social and environmental concerns in
their business operations and in their interactions with their stakeholders on a voluntary
basis’ (Matten & Moon, 2005: 338). With this definition, the EU Commission wants to give
a clear and common understanding of the concept. The EU Commission has focused on
the fact that CSR concerns social and environmental initiatives. CSR should be
incorporated in the organisation’s strategy and consider the organisation’s stakeholders.
Moreover, the EU Commission emphasises that CSR is a voluntary initiative.
According to Matten and Moon (2005: 338-339) Europe has been slower than the United
States of America to adopt CSR initiatives because of differences in economic and legal
responsibilities in society. Kampf (2007) supports Matten and Moon’s view and
emphasises that American organisations are situated in a system where organisations are
the ones who have historically fulfilled social and community giving towards local
communities. On the contrary, Europe, and especially Scandinavia, have a tradition for
Governments providing social benefits, and organisations are ‘good’ as long as they pay
taxes, obey the law and possibly support local sport and cultural events – however,
societies’ expectations to organisations seem to be changing (Korhonen & Seppala, 2005).
2.1.1 Critique of CSR (MB)
Today, the concept of CSR has gained ground because organisations and their roles in
society have become subject to more intense scrutiny from stakeholders, and this have
resulted in CSR advocates and CSR critics. Some critics believe that CSR is a distraction
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for management whose main job is to earn money to the shareholders, and other critics
believe that CSR lacks substance and a clear definition (Chandler & Werther 2006,
Frankental 2001, Henderson 2001). Frankental (2001: 20) states that ‘CSR is a vague and
intangible term, which can mean anything to anyone, and therefore is effectively without
meaning’. He further argues that CSR is simply a PR invention because there is no
common definition, no benchmarks to measure the effectiveness of CSR and no internal
and external systems which can audit and verify the results of CSR. Another reason why
the concept of CSR is vague and lacks a common definition is, according to Frankental
(2001: 20), that the concept continues to evolve. Additionally, van Marrewijk (2001: 96)
argues that definitions of CSR have a tendency to be biased towards specific interests
because the theorists and practitioners, who try to define the concept, view CSR in a way
that supports their particular situation.
The Nobel Price-winning economist Milton Friedman (1970) was one of the first theorists
who argued against CSR. Friedman said ‘there is one and only one social responsibility of
business – to use its resources and engage in activities designed to increase its profits so
long as it stays within the rules of the game, which is to say, engages in open and free
competition without deception or fraud’ (Friedman, 1970). As the quote states, Friedman
argued against CSR because he believed organisations should focus solely on their
economic goals.
2.2 Public Relations (MS)
The concept of CSR has not arisen out of nowhere. Public Relations (PR) is where CSR
originates from. Therefore, in order to get a thorough understanding of the field of CSR,
PR will be described in the following section.
Public Relations (PR) is what the words so evidently imply; the relationship between an
organisation and its various publics, both internal and external (Tench & Yeomans, 2006:
20). Another more detailed definition of PR has been presented by Harlow (1976), who
state that ‘Public relations is a distinctive management function which helps establish and
maintain mutual lines of communication, understanding, acceptance and cooperation
between an organisation and its publics; involves the management of problems or issues;
helps management to keep informed on and responsive to public opinions; defines and
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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emphasises the responsibility of management to serve the public interest; helps
management keep abreast of and effectively utilise change; serving as an early warning
system to help anticipate trends; and uses research and ethical communication techniques
as its principal tools’ (Tench & Yeomans, 2006: 4). This definition covers most aspects of
PR but some argues that Harlow’s definition is too comprehensive. For that reason, other
researchers have tried to make more simplified definitions; these researchers state that
PR is merely the management of communication that exists between an organisation and
its publics (Grunig & Hunt, 1984: 6). Other researchers suggest that PR is the
management function that establishes and maintains mutually beneficial relationships
between an organisation and its publics and they, furthermore, add that the public is whom
the organisation’s success or failures depends on (Cutlip, Center and Broom, 2001: 6).
The list of definitions from different researchers and practitioners is long, and this shows
that there are different ways to address the PR profession. It can, however, be concluded
from the above definitions that PR is about communication between the organisation and
its stakeholders in order to create or maintain a relationship between the two.
2.2.1 Grunig and Hunt’s Four Models of PR (MS)
Many theorists have referred to the subject of PR, and in the following, Professors and PR
experts James E. Grunig and Todd T. Hunt’s PR models will be discussed. Grunig and
Hunt have developed four PR models which represent how PR has evolved through
history, respectively; press agentry/publicity, public information, two-way asymmetric and
two-way symmetric (see table 2.1).
The first model is the Press Agentry/Publicity. The purpose of this model is propaganda,
and the practitioners of this model generally view communication as telling, not listening
(Grunig & Hunt, 1984: 23). Research is almost irrelevant for this type of communication
because the complete truth is not essential, and the nature of the audience is not
important because this is a one-way communication model (Tench & Yeomans, 2006:
147). The Press Agentry/Publicity model was the first of the four models and it was
adopted by practitioners from 1850 to 1900 (Grunig & Hunt, 1984: 25).
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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Characteristic
Press Agentry/ Publicity Model
Public Information
Model
Two-Way
Asymmetric Model
Two-Way
Symmetric Model
Purpose
Propaganda
Dissemination of information
Scientific persuasion
Mutual understanding
Nature of
Communication
One-way; complete truth not essential
One-way; truth important
Two-way; imbalanced
effects
Two-way; balanced
effects
Communication Model
Source � Rec.
Source � Rec.
Source � Rec.
Feedback
Group Group
Nature of Research
Little; “counting
house”
Little; readability, readership
Formative; evaluative
of attitudes
Formative; evaluative
of understanding
Leading Historical
Figures
P. T. Barnum
Ivy Lee
Edward L. Bernays
Bernays, educators, professional leaders
Where Practiced
Today
Sports, theatre,
product promotion
Government, non-profit associations, business
Competitive business;
agencies
Regulated business;
agencies
Estimated Percentage
of Organizations Practicing Today
15%
50%
20%
15%
TABLE 2.1 Characteristics of Four Models of Public Relations (source: Grunig & Hunt, 1984: 22)
With the second model, Public Information, practitioners still view communication as
telling, not listening, however, public-information specialists do feel obligated to present a
complete picture of the organisation or the product they represent (Grunig & Hunt, 1984:
23). Therefore, even though the communication is one-way, the information has to be
accurate, true and specific, and the main aim for the practitioners is to inform rather than
persuade (Tench & Yeomans, 2006: 147). The Public Information model was the major
model of PR from about 1900 and until the 1920s (Grunig & Hunt, 1984: 25).
In the 1920s, the third model, Two-way Asymmetric, was developed (Grunig & Hunt, 1984:
25). According to Tench and Yeoman (2006: 147), this type of PR is rooted in persuasive
communication and aims to create agreement between the organisation and its
stakeholders by bringing them around to the organisation’s way of thinking. In the 1980s,
the Public Information model was the model primarily used by organisations, however,
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today, two-way asymmetric communication is more commonly practised compared to the
first two models (Tench & Yeomans, 2006: 147).
Finally, the last model is the Two-way Symmetric. This model did not appear until the
1960s and 1970s, and even in the 1980s, practitioners were only beginning to adapt to it
(Grunig & Hunt, 1984: 25). Rather than simply publish information, practitioners of this
approach research the values of the stakeholders and attempt to adapt the communication
material according to these (Clark, 2000: 367). The reason for this is that the aim of the
Two-way Symmetric model is to generate mutual understanding, and the two-way
communication process leads to changes in both the stakeholders’ and the organisation’s
position (Tench & Yeomans, 2006: 147).
2.3 The History of CSR (MS)
There is a close connection between PR and CSR, even though organisations have used
PR for centuries, and the concept of CSR did not really gain ground until the late 1970s,
and early 1980s. Both disciplines have similar processes, functions and objectives, and
both disciplines believe that it makes good business sense to ‘...enhance the quality of the
relationship of an organisation among key stakeholder groups’ (Clark, 2000: 376). Already
in the 1920s, social responsibility was on the agenda. Practitioners argued that social
responsibility was good for PR and thereby also good for business, but they had problems
defining the discipline. (Clark, 2000: 364)
Later, in the 1970s, the rise of CSR coincided with the publics’ increased demand for
information and organisations’ increased concern about their image. Furthermore, in this
period of time, researchers argued that organisations were actors in the environment and
should respond to social pressures and demands. Large organisations responded by
donating money to charity in order to help society with their needs. A few years later, when
the first real models of CSR emerged, it was obvious that the focus had changed slightly. It
was now important that organisations also showed how they responded to the needs of
society and what management believed was ethical behaviour. (Clark, 2000: 364-366)
Around the turn of the millennium, CSR was on the agenda in many boardrooms.
Researchers argued that CSR would help improve the organisation’s reputation, and in
this connection, CSR could contribute to the organisation’s financial result. (Tench &
Engaging in Corporate Social Responsibility
FIGURE 2.1 Carroll’s CSR P
Yeomans, 2006: 100-101) Today, the interes
organisations are facing an increased demand from consumer
governmental organisations (NGOs), politicians
responsible (Werther & Chandler, 2006: 19
2.4 Carrolls’ CSR Pyramid
Early on, theorists argued that an organisation’s responsibility was to make the maximum
profit to its shareholder. It soon became apparent that organisations also had to comply
with the regulations and laws of society. In 1979, Carroll stated that an orga
not only got economic and legal responsibilities, but also ethical and discretionary
(philanthropic) responsibilities, and this became the starting point of Carroll’s
(see figure 2.1). (Carroll, 2001)
In 1991, Carroll created his four-
four types of social responsibilities that constitute
four types of responsibilities an organisation must obtain. At the bottom are the basic
responsibilities, respectively the economic and legal responsibilities. The
responsibility refers to an organisation’s ability to make profit and
states that an organisation must
reasonable and necessary for an organisation if it want
two levels are more ‘soft’ and contain the et
bility – and Communicating It Effectively
Carroll’s CSR Pyramid, Source: Carroll, 2001: 42
101) Today, the interest for CSR has increased further, as
organisations are facing an increased demand from consumers, employees, non
rganisations (NGOs), politicians, the media etc. to behave socially
Werther & Chandler, 2006: 19).
Pyramid (MB)
Early on, theorists argued that an organisation’s responsibility was to make the maximum
profit to its shareholder. It soon became apparent that organisations also had to comply
with the regulations and laws of society. In 1979, Carroll stated that an orga
economic and legal responsibilities, but also ethical and discretionary
(philanthropic) responsibilities, and this became the starting point of Carroll’s
-part CSR pyramid and with it, he suggested that there are
four types of social responsibilities that constitute total CSR. In the pyramid,
four types of responsibilities an organisation must obtain. At the bottom are the basic
responsibilities, respectively the economic and legal responsibilities. The
refers to an organisation’s ability to make profit and the legal responsibility
obey the law and regulations in society. Both levels seem
reasonable and necessary for an organisation if it wants to survive. (Carroll,
two levels are more ‘soft’ and contain the ethical and philanthropic responsibilities. E
Philanthropic Responsibilities
Ethical Responsibilities
Legal Responsibilities
Economic Responsibilities
Page 12 of 66
t for CSR has increased further, as
s, employees, non-
to behave socially
Early on, theorists argued that an organisation’s responsibility was to make the maximum
profit to its shareholder. It soon became apparent that organisations also had to comply
with the regulations and laws of society. In 1979, Carroll stated that an organisation has
economic and legal responsibilities, but also ethical and discretionary
(philanthropic) responsibilities, and this became the starting point of Carroll’s CSR pyramid
part CSR pyramid and with it, he suggested that there are
. In the pyramid, he placed the
four types of responsibilities an organisation must obtain. At the bottom are the basic
responsibilities, respectively the economic and legal responsibilities. The economic
legal responsibility
society. Both levels seem
s to survive. (Carroll, 2001) The last
philanthropic responsibilities. Even
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though all four responsibilities have been present in society previously, the upper two
levels have increased in importance. An organisation can survive in society without having
ethical and philanthropic responsibilities, however, in a CSR context, these two types of
responsibilities are very important. The ethical responsibility refers to how fair and ethical
an organisation is, and the philanthropic responsibility refers to the amount of resources an
organisation contributes to society. (Carroll, 2001) In Carroll’s own words; ‘philanthropy is
the icing on the cake’ (Carroll, 2001: 42). In connection with the CSR pyramid, this quote
further illustrates that Carroll believes that even though philanthropy is desired, the
economic, legal and ethical responsibilities are more important categories of social
responsibility. However, it is important to note that Carroll believes that all four
responsibilities have to be fulfilled by an organisation simultaneously in order to reach a
level of total CSR (Carroll, 2001: 43). Matten and Moon (2005: 337-338) argue that today’s
CSR is perceived to be centred mostly on ethical and philanthropic responsibilities and,
thereby, they indicate that the economic and legal responsibilities have become a matter
of course.
The external environment of the organisation change over time, and Carroll has
considered these changes in his CSR pyramid; ‘what is socially expected of organizations
typically migrates from discretionary to ethical to mandatory (legal and economic)’
(Chandler & Werther, 2006: 49). In other words, this quote shows how a CSR initiative
over time might turn into a law in an evolving society. Actions which previously have been
considered optional by an organisation can turn into an unwritten ethical responsibility
because the public expects the organisation to perform these actions and, eventually,
these actions might become written laws and regulations that the organisation needs to
follow in order to stay in business.
Carroll further emphasises that the CSR pyramid must be considered as a whole, even
though each responsibility often is presented as a distinct component. However, in order
for an organisation to stay in business they have to always consider their economic
responsibility. Therefore, tensions between the economic responsibility and the legal,
ethical and philanthropic responsibilities can arise because CSR activities often involve
costs. (Carroll, 2001: 42-43) As stated, Carroll believes that total CSR is gained when an
organisation considers all four types of responsibilities. Friedman (1970) criticised the
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concept of CSR as he believed that the sole responsibility of an organisation is to make
money. However, it can be argued that Friedman somewhat supported Carroll’s definition
of CSR because he has stated that the role of management is ‘...to make as much money
as possible while conforming to the basic rules of society, both those embodied in the law
and those embodied in ethical customs’ (Friedman, 1970). In this quote, Friedman
addressed three of Carroll’s four responsibilities, respectively; the economic, legal and
ethical responsibilities, and thereby somewhat contradicts himself.
2.5 Triple Bottom Line (MB)
A modern management cliché is: ‘if you can’t measure it, you can’t manage it’. Today,
many organisations engage in CSR, therefore, it can be argued that it is a good idea to
welcome attempts of tools that make it more obvious to management and stakeholders
how well an organisation is doing in regards to CSR. (Norman & MacDonald, 2003: 1) Like
Carroll’s CSR Pyramid, John Elkington’s (1997) triple bottom line (also called the three Ps
– profit, planet and people) emphasises that an organisation has responsibilities beyond its
financial responsibility. The triple bottom line emerged in connection with research that
showed that consumers were very positive towards socially responsible organisations. The
idea of the triple bottom line is that an organisation’s success should not only be measured
by the traditional financial bottom line, but also by the organisation’s social and
environmental performance (Norman & MacDonald, 2003: 1). Elkington (1997: 73) argued
that ‘society depends on the economy – and the economy depends on the global
ecosystem, whose health represents the ultimate bottom line’. Thus, management has to
extend the concept of the traditional bottom line, and consider their financial performance
equally with their social and environmental responsibilities, and further, find the right
balance between the three. (Tench & Yeomans, 2006)
A supporter of the triple bottom line is Dr. Michael B. Goodman (Goodman Podcast, 2009).
Goodman believes that the triple bottom line is necessary because the influence society
has on an organisation seems to continue to grow. Instead of only focusing on the financial
performance, which is a legal requirement in most countries, organisations should add a
statement in its financial report about the environmental and social performances.
According to Goodman, all three bottom lines complement one another as organisations
are expected to make money and be good citizens. If an organisation violates the trust of
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the society, the society can revoke the organisation’s licence to operate in the society.
(Goodman Podcast, 2009)
There are critics, like Friedman, who think that the sole purpose of an organisation is to
maximise its profits and shareholder value. One of these critics is Economy Professor
David Henderson (2001: 78) and he disagrees with CSR advocates who believe that an
organisation’s profitability is a means rather than an end. Henderson is a liberalist and
argues against the concept of the triple bottom line because it does not focus exclusively
on profits. Furthermore, Henderson believes that when an organisation collaborates with
NGOs and engages in CSR activities, the free market suffers. Where many CSR
advocates and practitioners argue that an organisation must consider all its stakeholders
and have them participate in the organisation’s business, Henderson believes that,
particularly, NGOs are a disturbance for an organisation’s main purpose: ‘to conduct
efficient business and make money’ (Henderson, 2001: 72). Another type of criticism is
exemplified by Ethics Professors Wayne Norman and Chris MacDonald (2003), who argue
that the triple bottom line is misleading and vague, and that organisations are not able to
measure their social and environmental performance the same way they measure their
financial performance. Norman and MacDonald further believe this is due to the lack of a
comprehensive definition of the triple bottom line concept, a methodology and a formula
for measurements. Norman and MacDonald do not criticise CSR or some of the
aspirations of the triple bottom line, however, they believe the triple bottom line promises
more than it can keep, because the jargon used to describe it, implies that it is
measurable. In their words, the triple bottom line is ‘good old-fashioned Single Bottom Line
plus Vague Commitments to Social and Environmental Concerns’ (Norman & MacDonald,
2003: 13), and the social and environmental bottom lines are not equivalent to the financial
bottom line, unless there is an agreed upon way by which data can be added and
subtracted and a net sum can be found. Norman and MacDonald (2003: 7) do not believe
that a methodology to calculate the social and environmental bottom lines can be found,
because a net sum for these in monetary units will seem insufficient. The lack of a
common set of CSR measurements constitutes that it is impossible to see whether or not
an organisation’s environmental and social performances have improved or declined. As a
result, organisations will not have to worry about having their ‘bottom lines’ compared in
global measurements, such as profit and loss, to other organisations and sectors. (Norman
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& MacDonald, 2003: 13) Even though theorists and practitioners disagree on whether or
not CSR is measurable and should be compared to the organisation’s financial
performance, advocates of CRS agree that organisations have a social and environmental
responsibility.
2.6 Preliminary Conclusion
CSR derives from the practice of PR and both disciplines emphasises the importance of a
good relationship between an organisation and its stakeholders. Grunig and Hunt’s four
models of PR specify how the communication between an organisation and its
stakeholders has evolved. CSR helps improve the relationship between an organisation
and its stakeholder, however, critics of CSR believe the term is vague and intangible
because of the lack of one common definition. Friedman further states that the
responsibility of an organisation is to make money and, thereby, he implies that CSR is a
distraction for the organisation. On the contrary, advocates of CSR believe that the
discipline of CSR can be used to improve the relationship to the stakeholders and further
address the needs of the stakeholders and society. Carroll’ CSR pyramid proposes that an
organisation cannot focus solely on its financial responsibility but that it has to consider its
legal, ethical and philanthropic responsibilities as well, and this view is supported by the
triple bottom line. The triple bottom line argues that an organisation which engages in CSR
should measure its CSR engagement equally with its financial bottom line, however, the
lack of one common set of CSR measurements results in disagreements regarding the
validity of the triple bottom line concept.
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3. CSR – A Stakeholder Perspective After the discussion about the concept of CSR, it is relevant to ask why organisations
engage in CSR. The answer is not unambiguous, and some of the reasons for an
organisation’s CSR engagement will be discussed in the following section.
3.1 Transparency (MB)
The notion of transparency has been connected to today’s society and organisations,
however, transparency cannot be discussed without the notion of globalisation.
Globalisation has an enormous impact on organisations and their practices. Moreover,
globalisation has empowered organisations, and some even claim that the multinational
organisations have become more powerful than governments and consumers. An example
of this is the fact that the world’s 100 largest economies consist of 51 organisations and
only 49 countries. (Werther & Chandler, 2006: 53) Globalisation has lead to improvements
in logistics and communications, and many large organisations have made use of these
new opportunities and moved their production to countries where the labour is paid less.
Organisations that move their production facilities to communities in the developing world
help these by creating jobs etc. However, global competition often results in the fact that
organisations move their production facilities when they find more profitable ones, and,
thereby, organisations cause unemployment among the remaining factory workers.
(Friedman, 2006) Many organisations have benefitted from globalisation, and advocates of
CSR believe that these organisations have a social responsibility to the society in which
they operate (Werther & Chandler, 2006).
Professors William B. Werther and David Chandler (2006: 55-56) divide globalisation into
two phases (see figure 3.1). In phase one, organisations became empowered because
they were able to expand globally, outsource manufacturing, reform their supply chain
management and develop global brands which were/are very powerful because of greater
sales and customer loyalty. In recent years, according to Werther and Chandler (2006: 52-
53), globalisation has entered phase two and the power has shifted from organisations to
stakeholders. In phase two, the enhanced power of the internet and new tools of
communication result in an informational transparency. Transparency can be looked at
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from different angles. Werther and Chandler (2006: 7) describe transparency from an
organisational perspective, and state that transparency is when an organisation makes its
decisions and procedures open and visible to the public. Stakeholders have become
empowered because they are in control of the free flow of information. The Internet allows
stakeholders to access large amounts of information very easily. If stakeholders are
dissatisfied with an organisation they can easily direct their power towards the organisation
and inflict large damages to its products, brand or reputation. (Werther & Chandler, 2006:
55-56) Once an organisation has gained a ‘bad’ reputation, it is hard to change the publics’
perception of the brand, and it will often lead to a drop in the amount of products/services
sold and other investments in the brand (McElhaney, 2008: 32-34).
Werther and Chandler, additionally, divide the empowered stakeholders into three groups.
The first group is the empowered media organisations. Today, the media organisations
have become empowered because their scope of operations has increased as a result of
new communication technologies. Therefore, it has become harder for organisations to
‘hide behind the fig leave of superficial PR campaigns’ (Werther & Chandler, 2006: 55);
meaning that there is a good chance that the stakeholders will find out if an organisation
tries to appear better than it is. The second group is the empowered consumers. If
consumers are not satisfied with an organisation they go online and create communities
Globalisation – Phase I
Empowered corporations
Globalisation – Phase II
Empowered stakeholders
Empowered
NGO’s
Empowered
consumers
Empowered
media
FIGURE 3.1 The two Phases of Globalisation, Source: Werther & Chandler, 2006: 27
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where they can express the opinions. Finally, the third group is the empowered NGOs.
NGOs also use the free flow of information to spread their knowledge – positive or
negative – about an organisation, and it can therefore be beneficial for an organisation to
join in a dialogue with NGOs and thereby discuss areas of which both parts are
concerned. (Werther & Chandler, 2006: 52-57)
The high level of transparency in society can pose a threat to an organisation, however, if
an organisation encourages transparency within the organisation it is argued that the
organisation can maintain some of its power (Werther and Chandler, 2006: 7). An
organisation has a number of different stakeholders and in order to maintain and conduct
‘good’ business, the organisation must have a good relationship with these stakeholders
(Freeman, 1984). Consumers are demanding ‘greater accountability for the environmental
consequences of the business’ actions’ (Werther & Chandler, 2006: 72), thus,
organisations can improve their relationship with various stakeholders by being socially
responsible and transparent. In order to be transparent, an organisation can encourage
stakeholders to participate in dialogue and involvement (Morsing & Schultz, 2006: 325) –
this will be further elaborated later in the section ‘Communicating CSR Strategically’. The
organisation must ensure that the channels of communication are clear and open so that
the stakeholders can communicate with the organisation and express their expectations
and concerns (Werther & Chandler, 2006: 56). When an organisation is transparent and
honest, the stakeholders will often find the organisation’s communication credible, as they
can then evaluate every aspect of the organisation. Additionally, the stakeholders will be
less likely to think that the organisation has something to hide when the organisation is
transparent. (Werther & Chandler, 2006: 94)
3.2 Stakeholder Theory (MB)
Whom does an organisation have a responsibility to? The stakeholder theory tries to
answer this question. The theory was first proposed in 1984 by Professor and Philosopher
Robert Edward Freeman and it suggests that an organisation ought to consider its various
stakeholders instead of just the shareholders as this can have a positive impact on the
organisation’s financial performance. The stakeholder theory gradually became an
accepted tool management used to help develop the organisation’s strategy (Fassin, 2009:
127). The most accepted definition of stakeholders is Freeman’s own definition; he stated
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that stakeholders are ‘any group or individual who can affect or is affected by the
achievement of the firm’s objectives’ (Freeman, 1984: 25). Freeman’s stakeholder theory
which is illustrated visually by a model shows how an organisation is related with its
various stakeholders. Freeman has revised the stakeholder model a couple of times,
however, his most sited stakeholder model consists of only seven stakeholders, namely,
customers, employees, civil society, suppliers, shareholders, competitors and government.
(Freeman, 1984) In 2003, Freeman refined his own model and divided it into internal
stakeholders (customers, communities, employees, suppliers, and financiers) and external
stakeholders (NGOs, environmentalists, governments, critics, others and the media) (see
figure 3.2) (Fassin, 2009: 115).
More recently, the stakeholder theory has developed as a result of the growing impact
organisations have on society, and it has been emphasised that it is important for
organisations to engage stakeholders in long-term mutual relationships (Andriof et al.,
2002). Management should therefore focus on managing the interactions with the
stakeholders and base these interactions on a relational and process-oriented view
(Andriof et al., 2002: 19), and it can be argued that an organisation which is socially
responsible considers the needs of and engages in long-term relationships with its various
stakeholders (Morsing & Schultz, 2006: 336).
Over the years, many have argued that Freeman’s concept of stakeholders is too vague,
and further that the number of stakeholders continues to rise ‘due to globalisation and
FIGURE 3.2 The adapted version of Freeman’s stakeholder model, source: Fassin, 2009:
115
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technological evolution, with improved communications and information systems, virtually
everyone and everything can ‘affect or be affected’ by the decisions and actions of a
business enterprise’ (Fassin, 2009: 117) In order to specify Freeman’s term of
stakeholders further, Professor and Researcher Yves Fassin (2009) proposes to divide the
term into four different categories. These categories are, respectively; stakeholders, the
people who actually have a stake in the organisation and therefore (should) have an
interest in the organisation; stakewatchers, the people who protect the interest of the real
stakeholders without having a real stake in the organisation themselves; stakekeepers, the
outside regulators who have influence and control over the organisation but do not have a
stake in the organisation; and stakeimpostors, who are the people who want to harm the
organisation. (Fassin, 2009: 121). Organisations’ impact on society has grown and as a
result the number of stakeholders organisations need to address has fluctuated, and most
organisations have changed focus from the narrow shareholder perspective to a broader
stakeholder perspective.
3.2.1 The Shift from Shareholders to Stakeholders (MB)
The stakeholder model has always been subject to criticism. Friedman (1970), who
supported the shareholder perspective, argues that management of an organisation
functions as agent for its shareholders, and its sole responsibility is to act in the
shareholders’ interests, and this includes that management has no right to use time or
resources to the benefit of other stakeholders involved as this would be on the expense of
the shareholders. In relation to Friedman’s perspective, the question of whether or not the
stakeholder theory endangers the business ends of an organisation, i.e. to make money,
can be raised. In the discussion about whether or not an organisation should take a
shareholder or a stakeholder perspective, there is a tendency to exaggerate the two
perspectives. When an organisation considers the needs of its stakeholders, the needs of
its shareholders are not necessarily sacrificed (Bird et al., 2007: 203). Additionally, an
organisation which have a stakeholder perspective do not necessarily consider the needs
and interests of all its stakeholders but perhaps only the stakeholders whose continued
support is necessary for the organisation’s survival. It can further be argued that an
organisation does not have the time and resources to cultivate relationships with all its
stakeholders (Morsing & Schultz, 2006: 335), nonetheless, today, the focus has shifted,
and many organisations have adopted the stakeholder perspective and are engaging in
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CSR. According to Professor Mette Morsing and Researcher Christina Thyssen (2003:
14), the shift to a stakeholder perspective is important. Even though many large
organisations are powerful today, they still have to keep in mind that a variety of
stakeholders have become empowered as a result of the free flow of information and new
communication tools. Therefore, it makes good sense that organisations should take
several stakeholders into consideration, as Freeman’s stakeholder theory suggests,
instead of solely focusing on the shareholders.
Werther and Chandler (2006: 61) argue that organisations can only maximise the
shareholder value by utilising strategies that address the needs of key stakeholders.
Werther and Chandler further state that CSR, driven by the stakeholder theory, is the way
in which the organisation can satisfy the key groups, as CSR is ‘a means of allowing
organizations to analyze the total business environment and formulate appropriate
organizational strategies’ (Werther & Chandler, 2006: 61). Professors Mette Morsing and
Majken Schultz (2006: 324) are also advocates of involving several stakeholders and they
argue that in order for an organisation to make profit and, thereby, survive it needs to
engage frequently with a variety of stakeholders as its dependence on these is vital. Bird
et al. (2007) take the stakeholder view further and have examined whether or not there is a
conflict within organisations between focusing solely on the interests of the shareholders
and, on the other hand, focusing on a wide spectrum of stakeholders. Interestingly, they
found little evidence to suggest that managers taking a wider stakeholder perspective will
jeopardise the interest of its shareholders (Bird et al., 2007: 189). Additionally, Bird et al.
argues that an organisation, whether or not it deliberately adopts the stakeholder
perspective, will consider more than its shareholders’ interests when it makes decisions.
With this result in mind, along with the arguments presented, Friedman’s idea of engaging
solely with the organisation’s shareholders seems rather obsolete. It is, however, worth
noting that organisations do attempt to reach a high shareholder value in order to stay in
business.
3.3 Two Relevant Stakeholder Groups (MS)
As argued above, an organisation should consider its various stakeholders when engaging
in CSR, as they will be affected in one way or another by this engagement. The
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consumers and employees are, among others, two important stakeholder groups in
regards to engaging in CSR and these will be elaborated further in this section.
3.3.1 Employees (MS)
One of the most important key stakeholder groups of the organisation is the employees
(Werther & Chandler, 2006: 118). The organisation should focus on the employees’
interests as they have a greater stake in the success of the organisation than e.g. the
investors. This is due to the fact that the employees’ jobs and economic livelihood are at
stake if the organisation is not performing well. (Branco & Rodrigues (2006: 127)
Moreover, the employees can act as ambassadors for the organisation and communicate
the image of the organisation to its customers and other stakeholders (Mangold & Miles
2007: 424, McElhaney 2008: 103). This way of communicating is, according to Professor
and founder of the Center for Responsible Business at the University of California Kellie
McElhaney (2009: 103), very useful for the organisation as people often seek credible
information about an organisation’s CSR initiatives through word-of-mouth
recommendations from peers.
Studies have shown that employee satisfaction is connected to the organisation’s level of
CSR engagement, and engaging in CSR can therefore ensure that employees stay
committed to the organisation; ‘employees tend to feel good about coming to work and
earning a paycheck, as well as about contributing to some sort of a social or environmental
issue’ (McElhaney, 2009: 102). Thus, CSR can have a positive effect on the employees’
motivation and, furthermore, on their commitment and loyalty to the organisation. In
addition to productivity benefits, the organisation may also see a reduction in staff turnover
and, thereby, save money on recruitment and training of new employees. CSR is,
however, not only beneficial for the organisation in regards to existing employees, it is also
a way for the organisation to attract better job applicants and stay or become a preferred
employer. (Branco & Rodrigues, 2006: 121) Furthermore, as Generation Y (those born
between 1979 and 1994) will dominate the labour market in the years to come, it is
especially advantageous for organisations to have a strong social responsibility reputation,
because Generation Y is characterised as being very conscious about socially responsible
organisations. (Yan, 2003: 291)
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3.3.2 Consumers (MS)
Today’s consumers have increasingly become more enlightened, and this is mainly due to
the power of the Internet which allows consumers to access greater amounts of
information concerning organisations (Werther & Chandler, 2006: 55). Consumers receive
information about the organisation and the organisation’s CSR from various channels.
According to Brown and Dacin (1997: 80) the information the consumers receive affects
the consumers’ overall evaluation of the organisation and influences their reactions to the
organisation’s products and services. Additionally, McElhaney (2008: 118) states that ‘a
commitment to CSR is quickly on its way to becoming the norm instead of the exception,
and people are beginning to respond with their loyalty – and their dollars – to companies
that offer effective substance and communication’. Brown and Dacin’s and McElhaney’s
views are supported by a research conducted by David, Kline and Dai (2005), which
evaluates the relationship among CSR practices, corporate identity, and purchase
intention for four organisations. Findings from the research showed, among other things,
that awareness of CSR initiatives seemed to have a positive effect on corporate identity
and purchase intention. In other words, communicating the organisation’s CSR efforts will
not only give the organisation a positive image among consumers, it will also influence the
consumers to purchase the organisation’s products and services. On the basis of the
above discussion, it can be concluded that consumer influence is an important motivation
for organisations to engage in CSR. Branco and Rodrigues (2006: 123), furthermore,
argue that organisations may profit if they recognise and meet the demand for
environmentally friendly products. This can be done either by introducing new products or
by publicising production process-related environmental improvements. Besides profit,
another benefit of these actions is that organisations can often avoid negative consumer
reactions such as boycotts of their products by being environmentally responsible. (Branco
& Rodrigues, 2006: 123) Finally, when an organisation communicates its CSR initiatives,
there are certain reservations that it must make in order to be perceived as credible
(Ashforth & Gibbs 1990, Morsing & Schultz 2006, Morsing, Schultz and Nielsen 2008).
However, this issue will be discussed later in the section ‘Communicating CSR
Strategically.’
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3.4 Preliminary Conclusion
Organisations have become more vulnerable in today’s transparent society and, therefore,
an organisation which is socially responsible is more likely to maintain a positive image
among its various stakeholders. Globalisation and the increased level of transparency in
today’s society have empowered stakeholders and for that reason many organisations
have changed from a shareholder perspective to a broader stakeholder perspective. One
of the advocates of the shift in focus is Freeman, who argues that an organisation should
turn its attention to all of the organisation’s stakeholders, as this will have a positive effect
on the organisation’s financial performance. Therefore, more organisations engage in CSR
in order to attend to the expectations and needs of the various stakeholders. Two of the
important stakeholder groups, in regards to engaging in CSR, are employees and
consumers. Employees who work for a socially responsible organisation are more likely to
communicate positive word-of-mouth about the organisation and further stay committed.
Additionally, consumers are more enlightened about organisations’ actions because of the
free flow of information in today’s society, and CSR involvement has proven to influence a
consumers’ purchase decision in a positive way.
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4. Engaging in Strategic CSR
Today, an increasing number of organisations consider CSR as a strategic tool. This
section will further elaborate on the discussion of why organisations engage in CSR and
describe how an organisation can develop an effective CSR strategy. This section will also
include a discussion of how an organisation can benefit from the use of an effective CSR
strategy. Finally, as many organisations want to make CSR part of their corporate image,
branding CSR as a business strategy will be discussed.
4.1 Trends in Society (MS)
There are different reasons why an organisation engages in CSR, and today, many
organisations have implemented CSR in their business strategy. Werther and Chandler
(2006: 19-20) argues that CSR, as an element of strategy, is becoming extremely relevant
for organisations because of certain trends in society, respectively; increasing affluence,
changing social expectations, globalisation and the free flow of information, and ecological
sustainability. Werther and Chandler state that organisations should be aware of the
increased level of affluence in society. Consumers can afford to choose among many
different products and they are willing to pay more for products and services from a brand
they trust. Additionally, consumers in developed societies have higher expectations to the
organisations in which they invest. Werther and Chandler argue that the change in social
expectations is mainly due to corporate scandals in the last decades, e.g. Nike’s
‘sweatshop’ accusations in the 1990s, because these scandals have reduced the public’s
trust in many organisations. Globalisation and the free flow of information are other
reasons why organisations implement CSR to their strategies. The above mentioned
scandals or CSR lapses are rapidly brought to the attention of the public worldwide via the
free flow of information. (Werther & Chandler, 2006: 20) Additionally, Kucuk (2008) argues
that the Internet empowers consumers to connect with each other and form effective
platforms for consumer protests and this can result in collective actions against an
organisation. Finally, organisations which are perceived as indifferent to their
environmental responsibilities are more likely to be criticised by the public and thereby
gain negative publicity than organisations which engage in ecological sustainability as part
of their CSR initiative (Werther & Chandler, 2006: 20). Fenwick (2007: 634) argues that
ecological sustainability refers to both social- and environmental responsibility, and that
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these responsibilities range from issues of human rights to viability of local communities
and conservation of natural resources.
The above mentioned trends are concrete reasons as to why organisations engage in
CSR. However, an organisation’s CSR engagement can also originate from other factors
such as a crisis. McElhaney (2008: 10-11) argues that as long as organisations engage in
CSR, the reasons why they do so are unimportant. Others believe that serious ethical
questions are raised when an organisation engages in CSR as a reaction to criticism from
the public concerning the organisation’s practices (DeTienne & Lewis, 2005). Today, a
majority of organisations are already engaged in different CSR activities, however,
according to McElhaney, many of these organisations practice inauthentic CSR because
the CSR engagement is not part of the organisation’s overall business strategy. In order
for CSR to be authentic, it must be tied with the organisation’s mission- and vision
statement and values (McElhaney, 2008: 42).
4.2 Five Stages of CSR Engagement (MB)
Simon Zadek (2008), who is the chief executive of AccountAbility; an acknowledged
international non-profit organisation which promotes accountability for sustainable
business, believes that an organisation that engages in CSR, no matter the reason,
generally goes through five stages. When an organisation integrates CSR in its business
strategy, Zadek argues that most organisations, which face criticism from the public,
decides to engage in CSR as a defensive move, and he calls this stage one. In stage
two, management realises that the organisation needs to comply with the criticism from
the stakeholders and show them that the organisation is taking action to address the
problems. Organisations which move to stage three incorporate systems which ensure
that their CSR activities are carried out, and additionally, that these activities can be
somewhat measured. However, in stage three, organisations still perceive CSR as a cost.
Many organisations that engage in CSR are ‘stuck’ at stage one to three and practise what
McElhaney (2008: 90-91) calls inauthentic CSR. In order to move to stage four, an
organisation must consider CSR as a value or an opportunity and view CSR equally with
its business development-, its research and development-, its branding-, and finally, its
market-entry strategies. Some organisations reach stage five which, according to Zadek,
is the highest stage of CSR. Organisations at this stage embed CSR in their daily business
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operations and, furthermore, when they collaborate with other organisations.
Organisations at stage five try to attack a problem or cause in society and, thereby,
attempt to change ‘the rules of the game’. (McElhaney, 2008: 9-11) Zadek clearly specifies
how an organisation can develop an effective CSR strategy. However, it can be argued
that only few organisations, which try to ‘change the rules of the game’, are capable of
connecting their values with their CSR activities and, thereby, reach stage five.
Additionally, it can be argued that it is mostly social entrepreneurs, who recognise
problems in society and use entrepreneurial principals to conduct business which
encourages social change (Roberts & Woods, 2005: 49), that are able to reach stage five.
4.3 Is CSR a Good Investment? (MB)
Branco and Rodrigues (2006) argue that there are two contrasting cases for engaging in
CSR, namely, the normative case and the business case. Firstly, the normative case
suggests that an organisation is socially responsible because management has a desire to
do good. Management has chosen to focus on CSR because they believe it is the morally
correct thing to do. Secondly, the business case implies that management only engages in
CSR because they believe it will advance the organisation’s financial performance.
(Branco & Rodrigues, 2006: 112) The normative case clearly contradicts with Friedman’s
conviction; if management pursues CSR solely to do good they are ‘spending someone
else’s money for a general social interest’ (Friedman, 1970). However, it can also be
argued that CSR engagement has to be motivated by more than just a desire to enhance
the organisation’s financial performance, such as a true desire to be transparent and meet
the expectations of the stakeholders, if the CSR engagement is to be accepted by the
public (DeTienne & Lewis, 2005: 362). Finally, an organisation can also use a mixture of
the two cases when engaging in CSR (Branco & Rodrigues, 2006), and this correlates well
with the view many advocates of CSR have, as they believe there is nothing morally wrong
with improving an organisation’s financial performance as a result of CSR (DeTienne &
Lewis 2005: 362, Werther & Chandler 2006: 18). Whether an organisation chooses the
normative case or the business case, or a mixture of both, is often reflected by the
management’s values. However, most managers will not engage in CSR activities if these
will affect the organisation’s bottom line negatively in the long-term (Branco & Rodrigues,
2006: 112). CSR activities are often costly for an organisation, because it has to invest in,
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e.g. environmentally friendly equipment or implement new environmental programs
(Branco & Rodrigues, 2006: 112). Branco and Rodrigues (2006) argue that the benefits of
investing in CSR are long-term, and this means that an organisation must be prepared to
invest money short-term and not see results immediately.
When management develops the organisation’s strategy they strive to provide the
organisation with a source of sustainable advantage. A CSR engagement without
substance or a lack of a CSR engagement all together may threaten the competitive
advantage the organisation has within its industry. This perspective provides an economic
argument for engaging in CSR. (Werther & Chandler, 2006: 18) CSR can add value to an
organisation because it allows the organisation to consider the needs and concerns of its
various stakeholder groups. When an organisation considers these needs and concerns it
is more likely to retain its societal legitimacy and increase its financial viability. (Werther &
Chandler, 2006: 9-19) It is further argued that good stakeholder relationships can help
improve an organisation’s competitive advantage because the organisation gains access
to new knowledge, knowledge sharing and other beneficial resources (Morsing & Schultz,
2006: 325). Others argue that CSR can be used to control an organisation’s resources and
capabilities, and this can lead to rare products and services, products and services that
are difficult to imitate or maybe even lead to new products and services (McWilliams et al,
2006: 3). Another aspect is emphasised by Branco and Rodrigues (2006: 112) who believe
that CSR activities which improve qualitative aspects, e.g. employee morale and the
organisation’s reputation, can help improve the financial performance of an organisation.
Porter and Kramer (2006) support the above statements and argue that an organisation
can use charitable efforts to improve its competitive advantage. Furthermore, evidence
shows that today’s consumers in developed countries have higher expectations to
organisations, and the fact that an organisation engages in CSR is likely to have a positive
effect on consumers’ purchase intention (David, Kline and Dai 2005). Finally, as
mentioned previously, McElhaney (2008: 12) believes that an organisation can use CSR to
recruit and retain talented employees. When an organisation is socially responsible, the
employees will be more loyal to the organisation, because they are satisfied with and
proud of the values of the organisation.
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The above arguments for CSR indicate that a thoroughly considered CSR engagement
can be a good long-term investment for an organisation. However, there is no precise
answer as to whether or not an organisation which is socially responsible performs better
than an organisation which is not, and one of the reasons why is because it is very difficult
to measure the benefits of CSR (Branco & Rodrigues, 2006: 114).
4.4 Branding CSR (MB)
Until now, different strategic reasons to why organisations engage in CSR have been
presented. In the business world, the concept of branding is not new, however, the
awareness of the strategic value of branding has developed (Mark-Herbert & von Schantz,
2007: 6). The following will deal with organisations’ use of CSR as a strategic element to
strengthen their corporate brand.
Growing evidence shows that CSR can influence an organisation’s brand very positively,
and an organisation with a strong reputation for CSR survives longer in society. A CSR
engagement can strengthen brand positioning and enhance the organisation’s image
among stakeholders. (Kotler & Lee, 2005: 10) Many organisations, therefore, want to
make CSR part of their corporate image.
Currently, the way in which large organisations manage their identity and image is more
proactive. The brand is applied to the entire organisation and not just the products and
services. Corporate branding focuses on the organisation’s values and it is, therefore,
important that both management and employees transmit the organisation’s values
internally and externally to the stakeholders. (Muzellec & Lambkin, 2009: 40-42) When an
organisation engages in CSR to improve its image, it is important that the organisation’s
values are consistent with the organisation’s CSR engagement. Today, stakeholders have
very high expectations to organisations, and in order for the organisation to appear
credible among its stakeholders, the organisation must ensure that its CSR initiatives and
CSR communication match its values and brand attributes (Mark-Herbert & von Schantz,
2007). If the CSR engagement does not fit with the organisation’s brand strategy, the
stakeholders will find the organisation incredible, and it can be headed for disaster.
(McElhaney 2008: 27-29) McElhaney (2008: 27-29) emphasises how important it is for the
organisation to create a thoroughly considered CSR initiative with substance that matches
the organisation’s brand attributes before it brands itself as being socially responsible. The
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public perceives and interprets brands in different ways based on their interactions with the
brands and it is, therefore, important that management considers branding as on ongoing
process and always tries to anticipate the current needs of its stakeholders as these
change over time (McElhaney, 2008: 28-31).
4.5 Preliminary Conclusion
Increasing affluence, changing social expectations, globalisation, the free flow of
information, and ecological sustainability are trends reasoning why many organisations
engage in CSR. However, not all organisations manage to integrate CSR well in their
business strategy, and Zadek proposes that organisations must consider CSR as a value
for the organisation in order to benefit from a CSR engagement. A thoroughly considered
CSR strategy can improve the relationship between an organisation and its stakeholders,
and improve or create products, which will give the organisation a competitive advantage.
Finally, an organisation with a well-prepared CSR engagement can brand itself as being
socially responsible and, thereby, improve the organisation’s brand.
.
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5. Communicating CSR Strategically
As it has been discussed in the previous sections, there are many reasons why
organisations engage in CSR. Organisations can use communication as a strategic tool to
communicate their CSR engagement. Once an organisation has chosen to engage in
CSR, it is beneficial for the organisation to know what expectations the stakeholders have
to the organisation, and how its CSR engagement is communicated to the stakeholders in
a way that meets their expectations. For that reason, three communication strategies will
be discussed in this section with the intention of determining how an organisation can
communicate CSR effectively. Additionally, the notion of crisis communication will be
discussed to clarify whether or not communicating the organisation’s CSR initiatives is
beneficial when facing a crisis.
5.1 CSR Communication Strategies (MS)
Incorporating the stakeholders when being corporate responsible seems to be a big step in
bringing the organisations CSR initiatives to a strategic level. While it is generally agreed
that organisations need to manage the relationships with their stakeholders (Morsing &
Schultz 2006, Nielsen & Thomsen 2007) the way in which they choose to do so varies
considerably. There is an emergence of non-financial reports as a means of increasing
transparency in regards to the organisation’s actions concerning social and environmental
issues (Nielsen & Thomsen, 2007: 29), and if the organisation let the stakeholders know
which CSR actions it is taking, the organisation will establish a relationship between itself
and its stakeholders. However, when an organisation communicates its CSR initiatives to
the stakeholders, it might also face the risk of what Ashforth and Gibbs (1990) define as
the ‘self-promoter’s paradox’, namely; suggesting that organisations who promote
themselves and their initiatives too much might evoke suspiciousness among
stakeholders, as this can be seen as an attempt to hide something. In relating to Fassin’s
(2009) categories of stakeholders, it can be argued that the ones who will, most likely, be
suspicious are the stakeholders and the stakewatchers because these two groups have a
real interest in the organisation. Additionally, it may be in the stakeimpostors interests to
increase the level of suspiciousness towards the organisation, because this group wants to
harm the organisation.
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In order to decrease the level of suspiciousness among the stakeholders, an organisation
needs to be transparent and communicate its CSR initiatives effectively. The following will
discuss the use of non-financial reports as a means to be transparent when
communicating CSR.
As mentioned in the section ‘CSR - A Stakeholder Perspective’, Freeman (1984) states
that an organisation depends upon all its stakeholders and not just the shareholders.
Morsing and Schultz (2006: 325) take the stakeholder concept further and stress the
importance of stakeholder relationship as a possible source of competitive advantage; they
advocate that managers should not manage the stakeholders themselves, however, they
should manage the relationship with the stakeholders instead. Based on Grunig and
Hunt’s (1984) characterisation of models of PR, which is described earlier in ‘Public
Relations’, Morsing and Schultz (2006) have developed three CSR communication
strategies as to how organisations strategically engage in CSR communication in relation
to their stakeholders. The purpose of CSR and PR are somewhat the same, namely, to
improve the relationship between an organisation and its stakeholders. Therefore, Morsing
and Schultz find it appropriate to further develop the work of Grunig and Hunt, and use
their way of communicating to the public/stakeholders and apply it to a CSR context.
Morsing and Schultz’s strategies are, respectively; a one-way communication strategy
entitled ‘the Stakeholder Information Strategy’; a two-way asymmetric communication
strategy entitled ‘the Stakeholder Response Strategy’: and a two-way symmetric
communication strategy entitled ‘the Stakeholder Involvement Strategy’ (see table 5.1). It
should be noted that Grunig and Hunt’s (1984) ‘Press Agentry/Publicity’ model is not
included in the following section, as this model has a propaganda function where
organisations often are presented through incomplete, distorted, or half-true information
(Grunig & Hunt, 1984: 21). Thus, Morsing and Schultz (2006: 325) find this model to be
inappropriate for CSR communication.
In order to fully understand the three CSR communication strategies, it is important to
clarify the sensemaking and sensegiving aspects of the strategies. According to Weick
(1995:13) sensemaking is a social process in which people make sense of communication
which is presented to them. In other words, a person interprets what has been presented
and creates his or her own meaning. Gioia & Chittipeddi (1991) have expanded the notion
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of sensemaking and introduced the concept of sensegiving by focusing on the managerial
processes that facilitate sensemaking in an organisation. With sensegiving, management
tries to influence the way in which employees understand or make sense of what is
presented to them. (Gioia & Chittipeddi, 1991: 443)
The stakeholder
Information strategy
The stakeholder response
strategy
The stakeholder
involvement strategy
Communication ideal:
(Grunig and Hunt, 1984)
Public Information, one-way
communication
Two-way asymmetric
communication
Two-way symmetric
communciation
Communition ideal: sensemaking and
sensegiving
Sensegiving
Sensemaking
Sensegiving
Sensemaking
Sensegiving -in iterative progressive
processes
Stakeholders:
Request more information on
corporate CSR efforts
Must be reassured that the
company is ethical and socially responsible
Co-construct corporate CSR
efforts
Stakeholder role:
Stakeholder influence:
support or oppse
Stakeholder respond to
corporate actions
Stakeholders are involved,
participate and suggest corporate actions
Identification of CSR focus:
Decided by top management
Decided by top management. Investigated in feedback via
opinion polls, dialogue, networks and partnerships
Negotiated concurrently in
interaction with stakeholders
Strategic communication
task:
Inform stakeholders about favourable corporate CSR
decisions and actions
Demonstrate to stakeholders how the company integrates
their concerns
Invite and establish frequent,
systematic and pro-active dialogue with stakeholders,
i.e. opinion makers, corporate critics, the media etc.
Corporate communication:
Design appealing concept
message
Identify relevant stakeholders
Build relationships
Third-party endorsements
of CSR initiatives:
Unnecessary
Integrate elements of surveys, rankings and
opinion polls
Stakeholders are themselves
involved in corporate CSR messages
TABLE 5.1 Three CSR Communication Strategies (Source: Morsing & Schultz, 2006: 326)
In their development of the three CSR communication strategies, Morsing and Schultz
(2006) have taken Gioia and Chittipeddi’s internal focus on the processes of sensemaking
and sensegiving among managers and employees, and added an external focus with the
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incorporation of all of the organisation’s stakeholders. Morsing and Schultz suggest that
‘not only managers but also external stakeholders may more strongly support and
contribute to corporate CSR efforts if they engage in progressive iterations of sensemaking
and sensegiving processes as this enhances awareness of mutual expectations’ (Morsing
& Schultz, 2006: 324). Once again, they advocate the incorporation of stakeholders
because the organisation benefits from the relationship with them.
5.1.1 Stakeholder Information Strategy (MS)
The first strategy is the Stakeholder Information Strategy. As the name implies, and as it
was also the case with Grunig and Hunt’s Press Agentry/Publicity model, the function is to
inform stakeholders about the organisation’s CSR initiatives through one-way
communication. This strategy assumes that stakeholders are important to the organisation
because they can either give support in terms of purchasing habits, loyalty and positive
word-of-mouth, or they can show opposition in terms of demonstration and boycotts or
spread negative word-of-mouth. Therefore, the organisation must inform its stakeholders
about its good intentions and actions to ensure positive stakeholder support. (Morsing &
Schultz, 2006: 327) The Stakeholder Information Strategy does not include the concept of
sensemaking. The reason for this is that the organisation ‘gives sense’ to the stakeholders
by distributing information to inform the stakeholders, as objectively as possible, about the
organisation (Morsing & Schultz, 2006: 327). Thereby, the organisation does not want the
stakeholders to create their own meaning, and the stakeholders do not have the possibility
to ‘make sense’ of the information given because the organisation uses a one-way
communication strategy. In this case, the organisation has a relationship with the
stakeholders where it tells rather than listens to them (Grunig & Hunt, 1984: 23), e.g. the
organisation does not accommodate feedback from the stakeholders.
5.1.2 Stakeholder Response Strategy (MS)
The Stakeholder Response Strategy is, on the contrary, a strategy where communication
flows to and from the public and this enables the organisation to receive feedback from its
stakeholders and thereby, adjust the communication material to make it relevant to the
stakeholders. The feedback is not used to change the organisation’s actions and its
approach, if dissatisfaction is evident, instead, it is used to identify the best possible way to
change the public‘s attitudes and behaviour. (Morsing & Schultz, 2006: 327) The
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Stakeholder Response Strategy incorporates both sensemaking and sensegiving. Both are
included as this is a two-way communication strategy where the organisation’s CSR
initiatives are presented to the stakeholders and they ‘make sense’ of what is presented
and create their own meaning. The organisation gets feedback from the stakeholders
through opinion polls and market surveys and, thereby, gets an idea of how the
stakeholders have interpreted its communication. From this, the organisation can adapt
the way it communicates. However, it is important to stress that even though this strategy
is a two-way communication strategy, it is predominantly a one-sided approach, ‘as the
organisation has the sole intention of convincing its stakeholders of its attractiveness’ and
thereby ‘give sense’ through communication. (Morsing & Schultz, 2006: 327)
5.1.3 Stakeholder Involvement Strategy (MS)
The Stakeholder Involvement Strategy is the last strategy presented and this strategy also
includes two-way communication between the organisation and its stakeholders. However,
compared to the above mentioned stakeholder response strategy, this strategy takes the
stakeholders’ opinions seriously and the organisation, as well as its stakeholders, will
change as a result of engaging in symmetric communication. This strategy emphasises the
organisation’s relationship with its stakeholders by encouraging dialogue with them in
order to make the organisation aware of what the stakeholders’ current expectations are.
Dialogue with the stakeholders can also enlighten the organisation of its potential influence
on the stakeholders’ expectations and make those expectations influence and change the
organisation (Morsing & Schultz, 2006: 328).The Stakeholder Involvement Strategy also
incorporates both sensemaking and sensegiving, however, in this strategy, these concepts
are used in iterative progressive processes. Morsing and Schultz (2006: 326) argue that
when organisations want to communicate with their stakeholders about their CSR
initiatives, they need to involve the stakeholders in a two-way communication process.
This communication process is defined as an ongoing iterative sensemaking and
sensegiving process, where there is a focus on frequent dialogue and interactions with the
stakeholders rather than merely information followed by feedback.
5.1.4 Involving Stakeholders (MS)
The three CSR communication strategies put emphasis on, respectively; information,
response and involvement within communication to and with the stakeholders. Morsing
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and Schultz (2006) argue that the organisation needs to move from informing and
responding to involving stakeholders in its CSR communication. It might, however, not be
all stakeholders that are interested in being involved to the same degree as Morsing and
Schultz presume. The organisation’s shareholders, whose personal image and social
reputation are strongly associated with the progress of the organisation, in particular
encourage the development of reporting the CSR engagement. On the contrary,
shareholders with a reduced stake in the firm’s capital show only a limited interest in this
area. (Prado-Lorenzo, Gallego-Alvarez and Garcia-Sanchez, 2009: 105) It is for that
reason important to keep in mind that not all the stakeholders are as committed to the
communication process as the organisation might expect. Additionally, while there may be
many people who are loud about wanting the organisation to be socially responsible, in
reality, there is a limit as to how much stakeholders are willing to impose their views and,
thereby, affect the organisation’s CSR initiatives. The reason for this is that these
initiatives could influence important characteristics such as price and quality of the
organisation’s product or service. (Werther & Chandler, 2006: 26) It is, furthermore,
relevant to note that stakeholders who are willing to impose their views on the
organisation’s CSR initiatives might have diverse opinions, and their judgements of what is
right and what is wrong are subjective. Additionally, Henderson (2001: 67) argues that in
connection with stakeholders ‘not all public expectations, and demands arising from them,
are well founded, reasonable or realistic’. In other words, when an organisation tries to
meet the expectations of its stakeholder by involving them in the CSR communication, it
might not turn out to be beneficial for the organisation but instead a waste of resources.
Werther and Chandler’s (2006: 61) notion of satisfying key groups of stakeholders, instead
of pursuing all the stakeholders, can add a potential resolution to the discussion
concerning whether or not it is a waste of resources to try to meet the expectations of the
stakeholders. This view is further supported by Morsing, Schultz and Nielsen (2008) who
argue that when communicating about CSR initiatives, it is important to aim at key
stakeholders, such as employees, local authorities and investors, as these can act as
ambassadors for the organisation and, further, communicate how responsible the
organisation is to customers and the general public. By doing this, Morsing, Schultz and
Nielsen (2008: 105) argue that suspiciousness among the public, concerning the
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organisation’s credibility, will be reduced as the information comes from other parties than
the organisation itself and, hence, does not look like a marketing activity.
Non-financial reports seem to be an appropriate response- and sensegiving tool for
communicating the organisation’s CSR initiatives. However, in order to avoid that the
organisation only publishes what it finds important and avoid the risk of being perceived as
self-absorbed when publishing information on how ‘good’ it is, the organisation needs to
include the key stakeholders in these non-financial reports (Morsing & Schultz, 2006: 333).
In these reports, the organisation, furthermore, needs to integrate reasoning as to why it is
necessary to engage in, sometimes costly, CSR activities, as this can create awareness
and understanding among the stakeholders (Nielsen & Thomsen, 2007: 30). According to
Morsing and Schultz (2006: 334), many non-financial reports are still expressions of the
stakeholder information strategy or the stakeholder response strategy. However, when
moving towards implementing the stakeholder involvement strategy, the organisation
shows that it takes its stakeholders seriously by considering the values of the
stakeholders, and it further attempts to adapt its communication material according to
these values (Clark, 2000: 367). In order to show that the organisation is serious about its
engagement with its stakeholders, and does care about their opinion, it should give critical
and highly involved stakeholders a voice in non-financial reports by letting them comment
on and critique issues regarding the organisation and its CSR initiatives (Morsing &
Schultz, 2006: 334). By doing this, the two-way communication within the stakeholder
involvement strategy becomes effective for the organisation as it allows the organisation to
identify what the stakeholders expect from the organisation and what they might expect in
the future (Morsing & Schultz 2006: 333, Nielsen & Thomsen 2007: 29-30).
5.2 Crisis Communication (MS)
As it has been stated in the previous discussions, being socially responsible and,
furthermore, communicating CSR initiatives effectively are contributing to a good
relationship between the organisation and its stakeholders. The following will discuss
whether or not it is also beneficial for an organisation to use its CSR initiatives when
communicating to the stakeholders in a crisis situation.
A definition of what crisis management is has been made by Fearn-Banks (2000: 480),
who states that ‘crisis management is strategic planning to prevent and respond during a
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crisis or negative occurrence, a process that removes some of the risk and uncertainty and
allows the organization to be in greater control of its destiny’. A crisis is often something an
organisation wants to avoid. It is, however, often something the organisation does not
have control of. Some crises might be unavoidable and unmanageable, e.g. nature and
human failure (Fearn-Banks, 2000: 479), thus, crisis management practices are adopted
by many organisations which are trying to avoid the negative outcome a possible crisis can
cause.
Tench and Yeomans (2006: 399) argue that even though a crisis is managed well from an
operational perspective, it is how the organisation communicates to its stakeholders about
the crisis that makes the difference. Furthermore, evidence suggests that good
communication from the organisation during a crisis can be the key to get support from the
stakeholders and it can further improve the organisation’s reputation (Tench & Yeomans,
2006: 339). It does make good sense to communicate well during a crisis and, thereby,
hope to put the organisation in a position of being perceived positively. However, would it
be a good idea to incorporate the organisation’s CSR initiatives in a crisis situation,
presupposing that the organisation is socially responsible, in an attempt to avoid a
negative reputation among its stakeholders? There are various opinions concerning this
matter. Advocating the incorporation of CSR efforts into a crisis communication, Schnietz
and Epstein (2005) argues that a reputation of CSR protects organisations from financial
losses during a corporate crisis. This argument is based on a study conducted by Schnietz
and Epstein in which they compared organisations that did have a reputation for being
socially responsible against organisations that did not. The results showed that those
organisations without reputations for being socially responsible saw a decline in
shareholder value, while those organisations in the same industries that were seen as
good corporate citizens suffered no decline in shareholder value during a crisis situation
(Schnietz & Epstein, 2005: 342).
When an organisation use CSR communication during a crisis, it is a way for the
organisation to defend itself, however, this defence might seem suspicious to the
stakeholders and have the opposite effect. Kim, Kim and Cameron (2009) argue that
communication concerning CSR efforts, which often focuses on the organisation’s
relationship with its community, are not necessarily perceived in a favourable manner in a
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crisis situation. This is due to the fact that ‘CSR may be viewed as accommodative
window-dressing that diminishes resources to assure corporate competence’ (Kim, Kim
and Cameron, 2009: 86). Additionally Kim, Kim and Cameron (2009: 86) suggest that
‘when an accident occurs, emphasis in crisis communication on corporate ability may be
more effective than CSR, especially when corporate responsibility is low’. Hence,
suggesting that CSR communication without substance is less useful in a crisis situation.
In this connection, the amount of time an organisation has been involved in CSR activities
can determine the effectiveness of CSR in a crisis situation. According to Vanhamme and
Grobben (2009: 280), organisations with a long history of involvement in CSR activities
have earned the right to mention their good deeds without raising suspicion among
stakeholders and vice versa. Vanhamme and Grobben reason this by arguing that the
organisations that have a short history of CSR have not built a solid reputation among its
stakeholders, and should the organisations, in spite of that, communicate publicly about
their newly initiated CSR activities, they will face ‘scepticism, disbelief, and, in turn, more
negative company and product perceptions, as well as doubts about the company’s
integrity’ (Vanhamme & Grobben, 2009: 280).
5.3 Preliminary Conclusion
The best strategy to communicate CSR effectively to the organisation’s stakeholders has
been identified as the stakeholder involvement strategy. Through effective two-way
communication, organisations gain an understanding of what the stakeholders want, and
this further enables them to work purposive towards meeting the stakeholders’
expectations. However, communicating to all stakeholders might have the opposite effect
of what the organisation intends and will be a waste of resources. For that reason,
organisations should aim their CSR communication at key stakeholders and their opinions
should be incorporated in the organisation’s non-financial report. By involving
stakeholders’ opinions in the report, the organisation shows that it is serious about
engaging with stakeholders and that the organisation takes their opinions seriously. An
organisation can also use CSR communication in a crisis situation, however, the
organisation needs to have a reputation for being socially responsible otherwise it will
appear as simply ‘window dressing’, and the stakeholders will be sceptical and doubt the
organisation’s integrity.
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6. Nike Case Study In this section, the world’s leading apparel manufacturer, Nike, will be used as a case
study to illustrate some of the reasons why organisations engage in CSR and, furthermore,
how this engagement is communicated effectively to stakeholders through the use of non-
financial reports.
6.1 Why Nike Engaged in CSR (MS)
In 1996, Nike faced accusations that alleged it was using ‘sweatshops’ in its contract
factories in developing countries. The conditions of Nike’s factories became a worldwide
media topic and caused a stir among consumers, activists, international organisations and
NGOs. As a result, protests, small boycotts and demonstrations emerged. Nike could,
obviously, not remain passive while these accusations were circulating because the
accusations were demolishing Nike’s image. (Detienne & Lewis, 2005: 361) Nike
responded by advertising its new CSR engagement which included good factory
conditions at its contract factories, fair labour salaries and a clear code of conduct.
However, at the time of the crisis, Nike was not perceived as being socially responsible
(Detienne & Lewis, 2005: 362). Nike did not have a long history of involvement in CSR,
and when Nike communicated its new CSR engagement, it was meet with scepticism,
disbelief and doubts about its integrity because people found its CSR initiative to be
merely talk, not action. In particular, one question was raised: Did Nike engage in CSR to
improve the working conditions for its contract factory workers, or was the CSR
engagement solely to improve Nike’s stained image and thereby its financial performance?
Organisations engage in CSR for different reasons, and McElhaney (2008) argues that
Nike’s first reasons for engaging in CSR were completely self-serving as Nike wanted to
clear its name to remain one of the leading apparel manufactures in the world, and today,
Nike engages in some of the most strategic CSR.
6.1.1 The Development of Nike’s CSR Strategy (MS)
Nike’s CSR engagement can further be discussed in connection with Zadek’s five stages
of CSR. Nike first got involved in CSR as a defensive move to address criticism from the
public. The public’s negative respond to Nike’s first CSR communication suggests that
Nike communicated its CSR initiatives too quickly after engaging in CSR – the public
believed that Nike’s CSR initiative lacked substance. The public’s critical respond to Nike’s
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first CSR initiative scared the management at Nike and, for some time, the organisation
kept quiet about its CSR engagement. However, when Nike again decided to
communicate its CSR, it had learned from its past mistakes and had taken a new
progressive approach. Now, management clearly believed that Nike would benefit from
engaging in CSR. A vice president for corporate responsibility was appointed in 1998, and
later, in 2001, Nike established a corporate responsibility committee and published their
first CSR report (Werther & Chandler, 2006: 286).
In connection with Zadek’s five stages of CSR, it can be argued that Nike has passed
through stage one to three and is currently around stage four to five, as Nike has assigned
CSR internally and, further, created management processes to measure its CSR activities
(CR Report, 2005-2006). Additionally, CSR advocates argue that Nike engages in some of
the most strategic CSR. Some CSR critics emphasise that the CSR concept is vague and
intangible because it cannot be measured, however, Nike addresses this concern in its
Corporate Responsibility Report (CR Report) from fiscal year 2005-2006 (see appendix
9.1). After the crisis in 1990s, Nike decided, among other things, to donate three percent of
the prior fiscal year’s pre-tax income to different types of charity, and these money
donations could be measured and compared. However, Nike, with this CSR initiative,
realised it got locked in a traditional philanthropy model when it measured its CSR
involvement in society in dollars and further that money donations of this kind were short-
term transactions and, thereby, uncertain because they depended on Nike’s income. (CR
report, 2005-2006: 80) In order to improve its CSR strategy, Nike encouraged a long-term
commitment to society, and for several years now, Nike has executed CSR activities which
focus on long-term commitments. Additionally, Nike has recently joined forces with other
CSR advocates in the hope of developing a global measurement and evaluation
framework for its CSR activities (CR report, 2005-2006, Chapter 5). Even though Nike has
not used the concept of the triple bottom line in its CR Report, Nike still emphasises that it
wants to be able to measure its CSR engagement in order to make it easier to improve the
engagement from year to year (CR Report, 2005-2006: Chapter 2). In the CR Report, Nike
states that it wants to develop a systematic approach to measure the improvements that
originates from its CSR activities and, furthermore, Nike works together with its key
stakeholders to determine how these improvements can be measured (CR report, 2005-
2006, Chapter 2).
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Nike has used a lot of resources to improve its CSR engagement. Management at Nike
does not only see CSR as a value and a great opportunity for the organisation, they also
embed CSR into Nike’s business and decision-making processes (CR Report, 2005-2006:
10). The vice president for corporate responsibility attends strategic reviews and meetings
with Nike’s senior leadership, and the corporate responsibility functions at Nike are
managed jointly between the corporate responsibility teams and leaders across the Nike
organisation. (CR Report 2005-2006) In 2001, Nike’s chairman and former CEO, Phil
Knight, stated that ‘the performance of Nike and every other global company in the twenty-
first century will be measured as much by our impact on quality of life as it is by revenue
growth and profit margins. We hope to have a head start’ (Kotler & Lee, 2005: 7). In this
quote, Knight emphasises that no organisation can ignore CSR. However, the reasons
behind Nike’s current involvement in CSR can be discussed. In the 1990s, Nike engaged
in CSR because of the many accusations from activists, NGOs and consumers about
Nike’s use of ‘sweatshops’. Today, Nike’s has embedded CSR so convincingly in its
overall business strategy that management very likely sees CSR as a profitable business,
however, it can be argued that Nike cannot embed CSR so convincingly without
management having a true desire to do good in society.
6.1.2 From Market-Oriented Production System to CSR Engagement (MB)
After Nike’s crisis in the 1990s, it expanded the areas it wished to address in relation to
CSR. These were respectively; working conditions in its contract factories, environmental
protection and community welfare. Additionally, Nike introduced a code of conduct for its
contract factories. In the beginning, the implementation of the code of conduct was
hindered because Nike used a market-oriented production system that focused on
competition. There was a tension between Nike’s economic responsibility and its ethical
and philanthropic responsibilities. Then, and now, there is a high level of competitiveness
in the apparel industry, and therefore, many apparel manufacturers use factories in the
developing countries to manufacture products because of the lower costs. (Lin & Philips,
2007) These factories focus on price and delivery instead of CSR initiatives because they
have to stay competitive. This was also the case with Nike and, as a result, Nike’s code of
conduct was not always respected by the factory owners. An organisation that engages in
a market-oriented production system is more likely to move its product facilities from one
city or country to another when it finds a more profitable factory, and as a result
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communities that are left behind will suffer. When Nike embedded CSR in the
organisation’s overall strategy, it changed from the market-oriented production system to a
collaborative partnership with its contract factories. As a result, Nike’s contract factories
were relieved from price pressures and the constant fear of losing business to another
factory with cheaper prices. Nike argues that the collaborative partnership with its contract
factories will add incentives for CSR compliance at these factories. (Lin & Philips, 2007)
However, it can be argued that Nike can never have total control over the factory workers’
working conditions and other CSR initiatives because it does not own the factories. The
factories in the developing world are often the source of production for many different
organisations at the same time. A factory can have many different codes of conduct and it
becomes difficult for the factory owner to decide which one to follow. As a result,
organisations’ CSR initiatives will suffer because it is difficult for the contract factories to
meet the requirements of many different organisations. (McElhaney, 2008: 59)
Historically, organisations have operated individually and independent of one another. In
order to ensure that the factory owners respect the code of conduct, it can be argued that
Nike must collaborate with the organisations that use the same contract factories as Nike,
and develop a common code of conduct, in order to provide the factory owner with only
one set of guidelines and, thereby, ensure that the CSR initiatives can be executed by the
factory owner. However, collaborating with business competitors are not an easy task. The
traditional mindset of organisations needs to change if the organisations are to cooperate
with their business competitors. It must be very clear to the management of these
organisations what the benefits of the collaboration are, and management must be willing
to change their mindset in order for this to work.
6.2 Branding Nike’s CSR engagement (MB)
It is clear that Nike believes that CSR gives them a competitive advantage in the apparel
industry; ‘Corporate responsibility must evolve from being seen as an unwanted cost to
being recognized as an intrinsic part of a healthy business model, an investment that
creates competitive advantage and helps a company achieve profitable sustainable
growth’ (CR report, 2005-2006: 7). Today, Nike is the leading apparel manufacturer in the
world (Wright, 2009) and it can, therefore, be argued that Nike’s reputation and image
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have improved significantly since the 1990s, where Nike’s image was stained after the
‘sweatshop’ accusations.
Nike is a lifestyle brand, and it is especially important for lifestyle brands to reflect its
stakeholders’ values and aspirations correctly (Werther & Chandler 2006: 19, McElhaney,
2008). When Nike first introduced its CSR strategy, it did not match Nike’s overall core
brand attributes. The new assigned CSR department and Nike’s existing marketing and
advertising departments did not collaborate when the first CSR initiative was developed
and as a result these departments communicated different messages to the stakeholders.
Nike’s core brand attributes were identified as athletic, fierce, edgy, muscular, strong, and
fast, and the initial CSR message consisted of a ‘flowery feel-good’ message. The public
perceived Nike’s CSR messaging as inauthentic, because it did not match Nike’s attributes
and mission statement. (McElhaney, 2008: 90-91, Lin & Philips, 2007).
Today, CSR is a very well-integrated part of Nike’s corporate image. After the initial failure
to communicate its CRS, Nike has joined forces with its key stakeholders and redefined its
corporate message to the public. In connection with branding, it can be argued that Nike’s
CR report (2005-2006), which emphasises Nike’s commitment to CSR in its overall
business strategy and operations, is intended to protect the Nike brand from future CSR
lapses (Werther & Chandler, 2006: 58). However, because of the accusations in the
1990s, Nike still has to play c’atch-up’ with some of its stakeholders who continue to
question Nike’s operations in the developing world (Werther & Chandler, 2006: 77).
DeTienne & Lewis (2005: 359) argue that ‘maintaining integrity becomes more challenging
when a company must report less attractive details or respond to criticism. The problem
that faces many companies engaging public dialogue is how to ethically, legally, and
effectively disclose information while maintaining a positive image’. In the Nike case,
management at Nike is doing a tremendous job making its CSR initiatives transparent to
all its stakeholders. Nike’s transparency will be further elaborated in ‘Nike’s Transparency
and Credibility’. Nike further uses brand ambassadors to brand and communicate its CSR
strategy, as these are more believable than commercials. Employees do not become
brand ambassador from one day to another, and in order to develop these, Nike has
engaged its employees deeply in the process of creating CSR initiatives, and has further
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developed a CSR department and a cross-functional employee CSR council. (McElhaney,
2009: 103-104)
6.3 Communicating Nike’s CSR (MB)
Nike communicates its CSR initiatives through its CR Reports and has since 2001
published three of these. The last report, which is the one that will be the main source for
this section, is from fiscal year 2005 - 2006 and it was published in 2007. It is the first
report to be published only in a digital format (the previous reports were available in digital
format later on as well), and the reason is that Nike wants its information to be easy
accessible to consumers as well as other stakeholders (PR News Online, 2008: 11).
6.3.1 Nike’s Communication Strategy (MB)
Looking at Morsing and Schultz’s (2006) three CSR communication strategies, it is
apparent that Nike has adopted the stakeholder involvement strategy in its communication
of the CR Report. This strategy takes the stakeholders seriously, and the organisations
that adopt this strategy will try to improve or change its CSR initiatives as a result of the
dialogues and interactions with the stakeholders. Nike certainly takes it stakeholders
seriously and finds that it learns a great deal from them. This is evident, among other
places, in the CR report where Nike states; ‘we find that constructive engagement with
stakeholders is most often the approach that brings about the best insight to the
challenges we all have an interest in addressing’ (CR Report, 2005-2006: 126). Moreover,
Nike conducted a global stakeholder forum in 2004, where 70 diverse representatives of
stakeholders were invited to participate in a two-day event, where different CSR issues
were discussed (CR Report 2004: 14). Nike used the feedback from the forum to prioritise
its CSR initiatives both in the time just after the forum and also when conducting the 2005-
2006 CR Report. In regards to Nike’s communication of its CSR initiatives, a report review
committee, comprising of credible external stakeholders, read the CR report and provide
Nike with recommendations as to what can be done better in order for the communication
of CSR to be more effectively, and these recommendations are included in the CR report
(CR Report, 2005-2006: chapter 11) The recommendations have not, according to Nike,
been edited beforehand. Some of the committee’s recommendations from the previous CR
Report are included, along with an overview of what has been improved and adjusted
according to these recommendations, and this illustrates that Nike is capable of adapting
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to the feedback it receives from its stakeholders. An iterative sensemaking and
sensegiving process occurs as Nike, through the stakeholder forum, the report review
committee and, furthermore, its employees, ensures that it knows what the stakeholders
expect. Nike, thereby, tries to meet these expectations in its CSR initiatives and in its
communication of these through the CR Report. It should, however, be noted that
recommendations from Nike’s stakeholders only take up one page in the CR Report, and
since Seeing the CR Report is 162 pages in total, it can be discussed whether or not one
page of direct communication from the stakeholders is sufficient.
6.3.1.1 Nike’s Key Stakeholders (MB)
In a communication perspective, an organisation’s key stakeholders differ depending on
the context, e.g. Nike focuses on the needs of a different set of key stakeholders when
they launch a new product, compared to when they communicate their CSR initiatives. In
the case of the latter, Nike has specified their key stakeholders as ‘members of the socially
responsible investment (SRI) community, employees, academics, students, suppliers,
contract factory partners, customer, consumers, non-governmental organisations and
advocacy organisation leaders, and individuals with an in-depth knowledge of corporate
responsibility’ (Nike’s CR report, 2005-2006: 133). Nike’s audience for the CR Report is
very broad. The audience consists of many different stakeholder groups and some of
these groups, e.g. consumers, may easily perceive the material from Nike to be solely
marketing as they are more likely not to trust communication which comes directly from an
organisation (Morsing, Schultz and Nielsen, 2008). Nike might have too broad a group of
stakeholders for this non-financial report, if it wants its communication to be effective - at
least that is what Morsing, Schultz and Nielsen (2008) argue. It is, however, obvious from
the recognition that Nike receives that the way in which it communicates its CSR initiatives
is highly effective. In 2008, Nike won an award for ‘Best CSR Report of the Year’ because
of its CR Report (2005-2006), mainly because of its ability to incorporate the feedback
from ongoing dialogue with its stakeholders and because it made its report available to all
of its stakeholders by publishing the report on its website (PR News Online, 2008: 12). In
2008, Nike also won ‘The Leader in CSR’ (for US organisations with 25.000 employees
and more), and the motivation for this award was Nike’s ability to see CSR as a way to
reach growth and innovation and, once again, the incorporation of stakeholders in its CSR
initiatives (PR News Online, 2008: 11). Moreover, Nike has worked its way up the list ‘100
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Best Corporate Citizens’ in the US with, respectively; a 31st place in 2005, a 13th place in
2006 and a 3rd place in 2007 (Business Ethics Magazine). This proves that Nike’s CSR
initiatives and, further, the communication of these are effective and not perceived as
incredible by the public.
6.3.2 Nike’s Transparency and Credibility (MS)
Nike states that ‘we believe transparency is a central component to a responsible business
strategy and that reporting is key for delivering transparency’ (CR Report 2005-2006: 132).
Thus, Nike emphasises how serious it takes the notion of transparency. This is especially
evident in its CR report (2005-2006) where it describes all of the CSR initiatives it takes
and what initiatives it wants to carry out in the future. An example of Nike’s transparency is
a list of all of its contract factories, not only by name and country but also with specific
addresses of the factories, which Nike has published online (Nikebiz). Anyone interested in
the conditions of Nike’s contract factories can visit these or get in contact with the factories
for further information. This is a way for Nike to show its stakeholders that it has nothing to
hide and that it can be trusted. Additionally, it can be argued that Nike avoids the ‘self-
promoter’s paradox’ (Ashforth and Gibbs, 1990) when it communicates its CSR initiatives
because even though the report is a way for Nike to promote itself, Nike is being so
transparent about its CSR initiatives that the stakeholders can hardly doubt Nike’s
intentions.
After the crisis in the 1990s, Nike had to show the public and its stakeholders that it could
be trusted, as people did not think that there was any substance in the CSR initiatives Nike
claimed it was engaged in. Consequently, one of the efforts that Nike made to grant
credibility to its statements, after its first failed CSR communication, was to hire Andrew
Young, who is an outspoken civil rights leader, a UN representative, former Atlanta mayor
and CEO of the consulting firm Goodworks International (Canady, 1997). Young made an
independent assessment of Nike’s code of conduct and evaluated the effectiveness of the
code of conduct in Nike’s contract factories. As a part of the agreement between Nike and
Young, Young was allowed to publish the report, no matter the findings. (Young, 1997)
Whether or not the report was conducted independently, and without any interference from
Nike, has been argued by critics ever since. However, to let someone who is not involved
with the organisation examine if Nike was telling the truth was a deliberate move from Nike
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in order to make its actions transparent and establish credibility among its stakeholders.
Today, Nike has, as mentioned, published a list of its factories, and journalists or others
who question Nike’s CSR initiatives can examine the operation of these factories.
The non-financial report presents Nike from a very positive angle and even though the
organisation claim that it interacts with its stakeholders in every step of the way when it
conducts its CSR initiatives, one must keep in mind that the report is material published by
Nike, and Nike would, obviously, not present itself in a way that would make it appear
socially irresponsible. Furthermore, it can be discussed whether or not the content of the
CR report is completely credible when Nike does not own its contract factories. Nike does
not have total control over its contract factories, and its CSR initiatives may suffer as a
result, as it is difficult for the factory owners to meet the CSR requirements from different
organisations. Some people still have doubts about whether or not Nike is such a good
corporate citizen as it claims, however, the facts of the matter is that Nike is one of the
leading organisations in regards to CSR and CSR communication. When displaying itself
with such a transparent approach, Nike will always risk having critics attack its CSR
initiatives. However, today, Nike’s well embedded CSR strategy is a much better defence
against possible accusations than it used to be and, finally, rewards for ‘Leader of CSR’
and ‘Best CSR Report’ etc. cannot appear out of nowhere.
6.4 Preliminary Conclusion
In order to manage the crisis and regain a positive brand image, Nike pursued the path of
being socially responsible. However, Nike’s first CSR communication was met with
scepticism from its stakeholders as they believed it lacked substance. Nike then took a
new progressive approach to CSR, and today, Nike engages in some of the most strategic
CSR, and brands Nike as a socially responsible organisation, e.g. by the use of its many
brand ambassadors. Nike communicates its CSR initiatives in a CR Report in which the
communication strategy has been identified as the stakeholder involvement strategy. The
CR Report is a good example of how Nike tries to meet the expectations of its
stakeholders, however, it should be noted that Morsing and Schultz’s notion of solely
addressing key stakeholders apparently is not necessary in Nike’s case, as Nike has been
able to aim its CR Report to a very broad group of stakeholders and still succeed in
communicating its CSR engagement effectively. Furthermore, Nike has reached high
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levels of great transparency of its corporate responsibilities by publishing thorough
information about itself and making this information available to everyone interested. The
stakeholder involvement increases Nike’s credibility, however, it is important to keep in
mind that Nike is the sender of the CR Report.
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7. Conclusion Organisations’ impact on society has grown and the stakeholders’ societal expectations to
organisations have increased. As a result the practice of CSR has become increasingly
popular. CSR emphasises the importance of enhancing the quality of the relationship
between an organisation and its stakeholders, and it can be used by organisations to
address the needs of stakeholders and society. There is no universally accepted definition
of CSR and the practice has both followers and critics. Nonetheless, research shows that
stakeholders are positive towards socially responsible organisations.
The purpose of this thesis was mainly to examine why organisations engage in CSR. From
the different discussions presented in this thesis, it is obvious that the answer is not
unambiguous as there are different reasons why organisations choose to engage in CSR.
Many organisations have changed from a shareholder perspective to a broader
stakeholder perspective due to globalisation and the increased level of transparency in
society. It is argued that when an organisation turns its attention to a variety of its
stakeholders this will have a positive effect on the organisation’s financial performance.
The shift in perspective necessitates that the organisation addresses the needs and
expectations of several stakeholder groups, and a CSR engagement can be a way for the
organisation to meet these needs and expectations. Another reason clarifying why an
organisation chooses to engage in CSR is the employees. If the organisation is socially
responsible, the employees are more likely to spread positive word-of-mouth and,
furthermore, stay loyal to the organisation. Additionally, a well-prepared CSR engagement
is good for the organisation’s financial performance seen as it has proven to influence the
consumers’ purchase decision in a positive way.
Current trends, such as increasing affluence, changing social expectations and the free
flow of information are also reasons why organisations engage in CSR. Even an
organisational crisis can be a reason why an organisation engages in CSR. The
organisation must, however, consider CSR as a value for the organisation in order to
benefit from a CSR strategy. If the organisation’s CSR engagement is thoroughly
considered, the engagement can be a beneficial long-term investment for the organisation,
and it can improve the relationship between the organisation and its stakeholders. The
organisation’s CSR engagement can further improve current products or create new, and
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along with the improved stakeholder relationship, this can help the organisation gain a
competitive advantage. Additionally, an organisation with a well-prepared CSR
engagement can brand itself as being socially responsible and, thereby, improve the
organisation’s overall brand image. No matter what the organisation’s reasons for
engaging is, it is essential that the CSR engagement is well-embedded in the organisation
and, furthermore, that there is substance in the CSR initiatives.
The second objective for this thesis was to find out how organisations, which engage in
CSR, can communicate their CSR engagement effectively to their stakeholders through
non-financial reports. Morsing and Schultz’s three CSR communication strategies consider
the way in which organisations communicate to their stakeholders. It is, however, the
stakeholder involvement strategy that is most effective in regards to CSR communication
as this strategy involves stakeholders and enables the organisation to appear credible
and, further, work purposively towards meeting the stakeholders’ expectations. However,
communicating to all stakeholders might have the opposite effect of what the organisation
intends and will be a waste of resources. The organisation can, therefore, aim its
communication at key stakeholders and further incorporate their opinions in the
organisation’s non-financial reports to show that it takes the stakeholders’ opinions
seriously. An organisation can also use CSR communication if it faces a crisis. It should,
however, be noted that the organisation needs to have a reputation for being socially
responsible when using CSR in a crisis situation, otherwise, the CSR communication will
appear as simply ‘window dressing’, and the stakeholders will be sceptical and doubt the
organisation’s integrity.
Looking at the case study on Nike, it is apparent that Nike’s attempt to use CSR, when it
faced a crisis in the 1990s, appeared as ‘window dressing’, and Nike’s stakeholders were
sceptical about its intentions because Nike did not have a solid reputation for being
socially responsible. The reason why Nike first engaged in CSR was, thus, because it
wanted to manage the crisis it was facing and regain a positive brand image. After Nike
was met with scepticism from its stakeholders, it took a new progressive approach in
connection with its CSR engagement and today, Nike engages in some of the most
strategic CSR, and brands itself as a socially responsible organisation. It has been
identified that Nike adopts the stakeholder involvement strategy when it communicates
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CSR to its stakeholders. The reason for this is that Nike encourages ongoing dialogues
with its stakeholders and involves them in its CR Report and, further, Nike changes as a
result of the feedback it receives from its stakeholders. The notion of satisfying key
stakeholder groups is apparently not necessary in Nike’s case, as Nike has been able to
aim its CR Report to a very broad group of stakeholders and still be highly successful with
it. Furthermore, Nike has a very transparent approach to its CSR engagement. Nike
publishes comprehensive information about itself and makes this information available to
everyone interested. Finally, Nike increases its credibility by involving its stakeholders,
however, it is important to keep in mind that Nike is the sender of the CR Report and that
Nike would, obviously, not publish anything that would make it appear irresponsible.
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• Morsing, M., M, Schultz, M. and Nielsen, K. U. ”The ’Catch 22’ of Communicating
CSR: Findings from a Danish Study”. Journal of Marketing Communications Vol. 14
(2008), 97-111.
• Muzellec, L. and Lambkin, M.C. ”Corporate Branding and Brand Ardhitecture: A
Conceptual Framework in Marketing Theory Vol. 9 (2009), 39-51.
• Nielsen, A. E. and Thomsen, C. ”Reporting CSR – What and How to Say It?”.
Corporate Communications: An International Journal Vol. 12 (2007), 25-40.
• Norman W. and MacDonald, C. ”Getting to the Bottom of ’Triple Bottom Line”
Business Ethics Quarterly March 2003, 1-14.
• Prado-Lorenzo, J. M., Gallego-Alvarez, I. and Garcia-Sanchez, I. M. ”Stakeholder
Engagement and Corporate Social Responsibility Reporting: The Ownership
Structure Effect” Corporate Social Responsibility and Environmental Management
Vol. 16 (2009), 94-107.
• Roberts, D. and Woods, C. “Changing the World on a Shoestring: The Concept of
Social Entrepreneurship” University of Auckland Business Review Vol. 7 (2005), 45-
52.
• Schnietz, K. E. and Epstein, M. J. ”Exploring the Financial Value of a Reputation
for Corporate Social Responsibility During a Crisis”. Corporate Reputation Review
Vol. 7 (2005), 327–345.
• van Marrewijk, M ”Concepts and Definitions of CSR and Corporate Sustainability:
Between Agency and Communion” Journal of Business Ethics Vol. 44 (2003), 95-
103.
• Vanhamme, J. and Grobben, B. ‘‘’Too Good to Be True!’ - The Effectiveness of
CSR History in Countering Negative Publicity”. Journal of Business Ethics Vol. 85
(2009), 273–283.
• Yan, J. ”Corporate Responsibility and the Brands of Tomorrow” Brand Management
Vol. 10 (2003), 290-302.
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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8.3 Websites
• Business Ethics Magazine – http://www.business-ethics.com/node/75
• CR Report 2004 - (Nike’s Corporate Responsibility Report) –
http:www.nikebiz.com/responsibility/documents/Nike_FY04_report.pdf
• CR Report 2005-2006 – http://www.nikebiz.com/responsibility/reporting.html
• Canady (1997) -
http://galenet.galegroup.com.www.baser.dk/servlet/BCRC?lty=2000&locID=arhus&s
rchtp=cmp&lfy=1996&c=2058&cc=1&mode=c&tcp=NIKE&docNum=A150388701&b
Conts=13247&vrsn=unknown&rcp=CO&rsic=PK&ste=72&tab=2&tbst=tsCM&ccmp=
Nike+Inc.&n=25&finalAuth=true
• Goodman Podcast (2009) - http://asbcast.dk/cast/the-triple-bottom-line/
• Nikebiz –
http://nikebiz.com/responsibility/documents/Nike_CRR_Factory_List_C.pdf
• PR News Online (2008) -
http://www.prnewsonline.com/Assets/File/CSRissue_03242008.pdf
• Wright, J. (2009) - http://seekingalpha.com/article/119668-nike-great-global-brand-
even-in-market-downturn
• Young (1997) - Andrew Young: Assessment of Nike’s Code of Conduct –
http://www.calbaptist.edu/dskubik/young.htm#introduction
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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9. Appendices
9.1 CD
• Business Ethics Magazine (100 Best Corporate Citizens)
• Canady, 1997 (New York Times article about Andrew Young)
• CR Report 2005-2006 (Nike’s Corporate Responsibility Report)
• Nikebiz.com (List of Nike’s contract factories)
• PR News Online, 2008 (Nike Rewards)
• Wright, 2009 (Nike Rewards)
9.2 List of Figures and Tables
• TABLE 2.1 – Grunig and Hunt’s PR Models
Characteristic
Press Agentry/ Publicity Model
Public Information
Model
Two-Way
Asymmetric Model
Two-Way
Symmetric Model
Purpose
Propaganda
Dissemination of information
Scientific persuasion
Mutual understanding
Nature of
Communication
One-way; complete truth not essential
One-way; truth important
Two-way; imbalanced
effects
Two-way; balanced
effects
Communication Model
Source � Rec.
Source � Rec.
Source � Rec.
Feedback
Group Group
Nature of Research
Little; “counting
house”
Little; readability, readership
Formative; evaluative
of attitudes
Formative; evaluative
of understanding
Leading Historical
Figures
P. T. Barnum
Ivy Lee
Edward L. Bernays
Bernays, educators, professional leaders
Where Practiced
Today
Sports, theatre,
product promotion
Government, non-profit associations, business
Competitive business;
agencies
Regulated business;
agencies
Estimated Percentage
of Organizations Practicing Today
15%
50%
20%
15%
Engaging in Corporate Social Responsibility
• FIGURE 2.1 – Carroll’s CSR Pyramid
• FIGURE 3.1 – Werther and Chandler’s Two Phases of Globalisation
Philanthropic Responsibilities
Ethical Responsibilities
Legal Responsibilities
Economic Responsibilities
Globalisation – Phase I
Empowered corporations
Globalisation – Phase II
Empowered stakeholders
Empowered
NGOs
Empowered
consumers
bility – and Communicating It Effectively
CSR Pyramid
Werther and Chandler’s Two Phases of Globalisation
Philanthropic Responsibilities
Ethical Responsibilities
Legal Responsibilities
Economic Responsibilities
I
Empowered corporations
II
Empowered stakeholders
Empowered
media
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Engaging in Corporate Social Responsibility – and Communicating It Effectively
Page 61 of 66
• FIGURE 3.2 – Freeman’s Stakeholder Model
Engaging in Corporate Social Responsibility – and Communicating It Effectively
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• TABLE 4.1 – Morsing and Schultz’s CSR Communication Strategies
The stakeholder
Information strategy
The stakeholder response
strategy
The stakeholder
involvement strategy
Communication ideal:
(Grunig and Hunt, 1984)
Public Information, one-way
communication
Two-way asymmetric
communication
Two-way symmetric
communication
Communition ideal: sensemaking and
sensegiving
Sensegiving
Sensemaking
Sensegiving
Sensemaking
Sensegiving
Stakeholders:
Request more information on
corporate CSR efforts
Must be reassured that the
company is ethical and socially responsible
Co-construct corporate CSR
efforts
Stakeholder role:
Stakeholder influence:
support or oppse
Stakeholder respond to
corporate actions
Stakeholders are involved,
participate and suggest corporate actions
Identification of CSR focus:
Decided by top management
Decided by top management. Investigated in feedback via
opinion polls, dialogue, networks and partnerships
Negotiated concurrently in
interaction with stakeholders
Strategic communication
task:
Inform stakeholders about favourable corporate CSR
decisions and actions
Demonstrate to stakeholders how the company integrates
their concerns
Invite and establish frequent,
systematic and pro-active dialogue with stakeholders,
i.e. opinion makers, corporate critics, the media etc.
Corporate communication:
Design appealing concept
message
Identify relevant stakeholders
Build relationships
Third-party endorsements
of CSR initiatives:
Unnecessary
Integrate elements of surveys, rankings and
opinion polls
Stakeholders are themselves
involved in corporate CSR messages
top related