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Strategic Corporate Social Responsibility as

Stakeholder Management:

The Business Case for Corporate Social Responsibility (CSR) in

Korean Electronics Industry

Ki-Hoon LEE

The Graduate School of Corporate Environmental Management

The University of KwangWoon

447-1, Wolgye-dong, Nowon-gu, Seoul, 139-701, KOREA

E-mail: khlee@kw.ac.kr

ABSTRACT

The catchphrase “corporate social responsibility” (CSR) may be associated with

unnecessary ambiguity for some companies. In particular, global-scale companies

including Samsung Electronics and LG Electronics continue to expend various

resources for related activities without a coherent notion of the concept of CSR. What,

though, does corporate social responsibility mean to companies? Without a clear

understanding of the meaning of CSR, how companies can respond or take action in this

area? For the purposes of this study, CSR indicates corporate stakeholder responsibility.

Having the relevant key stakeholders involved in corporate business activities,

companies can likely understand how to respond to and contend with these stakeholders

in a strategic way without becoming weaker in terms of competitiveness. This study

attempts to answer how and why companies respond differently to their stakeholders. It

found that when key stakeholders were identified by decision makers, it resulted in

different strategic choices or responses. This may imply that unidentified stakeholders

have no influence or impact on corporate business activities.

Keyword List: corporate social responsibility, corporate social responsiveness,

corporate stakeholder responsibility, competitiveness, Korean electronics industry,

sustainable value

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INTRODUCTION

Many global companies have suffered the adverse consequences of not acting

responsibly. For example, Nike’s share price and brand sales were damaged severely

when the news broke regarding the poor production conditions of its factories in Asia.

In addition, Enron’s unethical practices led to the company’s dissolution and criminal

indictment of former executives. Since Bowen (1953)’s Social Responsibilities of the

Businessman published, there have been growing discussions with respect to corporate

social responsibility (McGuire, 1963; Greenwood, 1964; Klein, 2000; Brooks, 2005).

What should companies be responsible for? Despite the fact that there has been great

debate spanning decades about this central question, there remains a lack of consensus

regarding the definition of corporate social responsibility and thus no framework or

model for a systematic accounting (Carroll, 1979; Clarkson, 1995). McGuire (1963)

has, for example, suggested that corporate social responsibility supposes that there are

economic and legal obligations as well as certain responsibilities to society in

corporations’ activities. In more simplistic terms, Hay et al. (1976) suggest that business

is viewed as having a responsibility in terms of corporate business and other social

problem areas. There are many categorisations of corporate responsibility. One of the

most common is the triad of economic, environmental and social responsibilities, as in

the popular slogan ‘triple bottom line’ (Elkington, 1998). In academic and practical

literature, a distinction between social and environmental responsibilities is not

generally observed. Some academics include social issues under the label sustainability

and others include environmental issues under CSR.

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Carroll (1979) attempted to explain corporate social responsibility by building a

conceptual model of discretionary, ethical, legal and economic responsibility

dimensions. She considered corporations with respect to their response to social issues

mainly by the strategy behind their responses. As Carroll (1979) pointed out, corporate

social responses are management’s social performance rather than social responsibility.

Therefore, corporate management would choose their strategic options with respect to

social responsibility.

More recently, Wartick and Cochran (1985) viewed corporate social responsiveness as a

process of corporate social performance. Using Wilson’s (1974) reactive-proactive scale

model, Wartick and Cochran (1985) argue that corporate responses are directed at

managerial approaches to developing responses. However, as Wood (1991) observed,

the concept of the theoretical framework and impact of corporate social responsibility

has not moved significantly beyond Wartick and Cochran’s (1985) articulation.

According to Clarkson (1995), the principal reasons for this failure result from the

vague meaning of the term ‘social’ and the lack of clarity on an appropriate level of

analysis.

The research is, in particular, motivated by Clarkson (1995)’s point as mentioned above.

First of all, this study considers the term corporate social responsibility and/or corporate

social responsiveness as ‘corporate stakeholder responsibility1’ (emphasis added).

1 The term ‘corporate stakeholder responsibility’ is conceptually proposed here. CSR stands for corporate

social responsibility in this paper in order to avoid any unnecessary misunderstanding or confusion

resulting from a newly formed term of corporate stakeholder responsibility.

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The main reason is that the both concepts of corporate social responsibility and

corporate social responsiveness have explicitly included business itself as well as

corporate stakeholders. Therefore, it would be more a fruitful approach to build and

analyse business cases rather than to argue the finer points of the concepts and

definitions of CSR – semantic debate that has continued over five decades (Wood,

1991). Another important reason to conduct this research is because researchers ignore

many differences within stakeholder groups when they examine and measure corporate

social responsibility and performance (Harrison and Freeman, 1999). While numerous

conceptual, theoretical and empirical literature examples have been published since

Bowen’s (1953) book appeared, this review may be limited. Thus, in discussing

stakeholder management, only the most important ideas and conclusions that are

relevant to advancing the aims of this paper will be drawn.

This paper presents the results of research that investigated CSR strategies and practices

carried out in a sample of companies.

Being Responsible: What Does It Actually Mean?

Never before has there been such pressure on companies to address their social and

environmental responsibilities, and never before has there been such a wealth of

opportunity to be derived from doing so. Companies that embrace corporate

responsibility recognise that their social and environmental impact has to be managed in

just the same way as their economic or commercial performance. Getting started, or

putting corporate responsibility principles into practice, can be difficult, however, and

many companies struggle to justify the management of social and environmental affairs

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in terms of business benefits. In principle, the term corporate social responsibility

(CSR) refers to the obligations of companies to society; more specifically, it refers to a

company’s stakeholders and those affected by corporate policies and practices.

Although there is a CSR dichotomy between the ‘right thing to do’ (a normative case)

and an ‘enlightened self-interest’ (the business case), executives and companies’

reasoning as they relate to engaging in CSR likely reflect a mixture of these (Smith,

2003). Although many companies can agree that the CSR principle is concerned with

the societal obligations of business, they are not certain about the nature and scope of

these obligations. The operational meaning of CSR continues to be vague (Sethi, 1975;

Smith, 2003).

Having additional business cases for CSR may provide a quantity of ‘real’ answers

concerning why and how companies embrace CSR into their strategies and business

activities. In strategic management, Freeman (1984) introduced a stakeholder concept in

his book ‘Strategic Management: A Stakeholder Approach’. As seen in the title of the

book, corporations and decision makers need to identify and understand ‘the

stakeholders’, and manage them strategically. Recently, a number of prominent

companies have focused on building strong stakeholder relationships as a key element

of their business strategy. For example, Toyota and Honda adopted a policy of engaging

with their suppliers in their social and environmental management scheme. In addition,

Samsung and LG Electronics have placed emphasis on their socio-economic

contributions and their corporate reputations. The assumption underpinning these

strategies is that establishing positive relationships with stakeholders is ethical; plus it

makes good business sense. Consequently, it has a positive effect on corporate

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competitiveness and has a sustainable value. Hart and Milstein (2003) note that the

sustainable value framework makes clear the nature and magnitude of the opportunities

associated with sustainable development and connects them to dimensions of increasing

corporate value and competitiveness for the firm.

From the work of Post et al. (2002), the term “stakeholder management” refers to the

development and implementation of organizational policies and practices that take into

account the goals and concerns of all relevant stakeholders, all of whom are entitled to

consideration in managerial decision making. Strategic stakeholder literature

emphasizes the active management of stakeholder interests and has utilized various

approaches including corporate social responsibility studies (e.g., Donaldson and

Preston, 1995), network theory (e.g., Rowley, 1997) and resource-based thinking (e.g.,

Frooman, 1999). With the assumption that there are numerous stakeholders and that

their interests are differ, it is held throughout this paper that strategic stakeholder

management is about ‘managing potential conflicts stemming from divergent interests

without losing corporate competitiveness’.

Corporate Competitiveness and CSR

It is insufficient to say that social responsibility detracts from a firm’s primary

obligation-maximizing profits. This perspective ignores social and economic progress.

Increasingly, profit maximizing strategies need to be tempered by CSR considerations.

Stakeholders ironically hold both the key to success while also posing the biggest threat

to embedding corporate responsibility (Frooman, 1999; Henriques and Sharma, 2005).

The global economy and global information flow is demanding closer ties with all

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stakeholders, employees, suppliers, customers, communities and shareholders.

Stakeholders are looking at the social and environmental performance of all parties in a

product’s life cycle, from extraction to end-of-life (Paine, 2003). An association with

non-responsible companies through the supply chain can pose a real threat to

organizations (Wood and Brewster, 2005).

As Porter and Kramer (2002) noted, corporate executives often find themselves in a no-

win situation, captured between critics demanding even higher levels of corporate social

responsibility and investors applying relentless pressure to maximize short-term profits.

Given the current haziness surrounding corporate responsibility, it seems an appropriate

time to revisit the fundamental question: Should corporations engage in social

responsibility at all? Friedman argued in a 1970 New York Times Magazine article that

the only “social responsibility of business” is to “increase its profits.” In his book

Capitalism and Freedom, he also claimed that “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, 1962,

pp.60-61). The underlying assumption of Friedman’s argument is that social and

economic objectives are separate and distinct, so that a corporation’s social expenditures

come at the expense of its economic results. However, it is increasingly and widely

accepted that attempting to isolate business from society is unrealistic and that

dichotomizing economic and social objectives as distinct and competing are false

(Porter and Kramer, 2002; Smith, 2003). In particular, strategic management supports

that “the strategic decisions of large organizations inevitably involve social as well as

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economic consequences, inextricably intertwined…there is no such thing as a purely

economic strategic decision.” (Mintzberg, 1983, p.12).

Identifying Stakeholders and Stakeholder Groups

The newly proposed term ‘corporate stakeholder responsibility’ in this paper highlights

stakeholder identification (i.e., who are a company’s relevant stakeholders?).

Stakeholders have been defined in various ways, with a broad definition being given by

Freeman (1984) as “a stakeholder in an organization is (by definition) any group or

individual who can affect or is affected by the achievement of the organization’s

objectives (p.46)”. Preston (1990) found that General Electric, during the depression

years in the United States, identified four major stakeholder groups as shareholders,

employees, customers, and the general public. Additionally, Johnson & Johnson in 1947

listed strictly business stakeholders as customers, employees, managers and

shareholders. Preston cited Sears’ president Wood’s view on profit as ‘a by-product of

success in satisfying responsibly the legitimate needs and expectations of the

corporation’s primary stakeholder groups’. According to Clarkson (1995), stakeholders

are persons or groups that have, or claim, ownership, rights, or interests in a corporation

and its activities - past, present, or future.

Based upon the urgency and necessity for corporate survival, Clarkson (1995) divided

stakeholders as primary and secondary stakeholders. Power is the ability to influence a

firm’s behaviour, whether or not a stakeholder has a legitimate claim. Urgency is the

degree to which a stakeholder’s claim calls for immediate attention, adding a dynamic

component for a stakeholder to attain salience in the minds of managers. A primary

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stakeholder group is one without whose continuing participation the corporation cannot

survive as a going concern. This group is typically comprised of shareholders as well as

investors, employees, customers, and suppliers. If any primary stakeholder group

becomes dissatisfied and withdraws from the corporate system, in whole or in part, the

corporation will be seriously damaged or unable to continue as a going concern

(Clarkson, 1995). A secondary stakeholder group is one that influences or affects, or is

influenced or affected by the corporation, but are not engaged in transactions with the

corporation and are not essential for its survival. The media and a wide range of special

interest groups are considered as secondary stakeholders under this definition.

As corporate organizations have limited resources, strategic responses to stakeholders

based upon power and urgency may provide sorting criteria for identifying and

prioritizing stakeholders. Managing stakeholders strategically is seen as a means of

increasing the likelihood of achieving the ends of the corporation, or, of greater

financial performance (Mellahi and Wood, 2003). Berman et al. (1999) empirically

examined a strategic stakeholder management model in which firms will address

stakeholder concerns when they believe doing so will enhance their financial

performance. Their study found that when corporations foster connections with key

stakeholders and ensure that they are allocated resources, it contributes to their

profitability.

Stakeholder Engagement: Strategic Choice

Most companies understand the importance of managing relations with key stakeholders

such as shareholders, customers, employees, the local community, government, the

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media and the general public. Arguably, companies that have been successful in this

area have done more than simply issuing regular press releases and responding to

enquires. Given that companies have limited financial, human, physical and natural

resources, it isn’t seen as efficient or effective to deal with all stakeholders equally. The

question that regards how individual firms formulate their CSR strategy should reflect

an understanding of whether and why greater attention to CSR is warranted by a

particular organization. This question is raised to consider the complexity of a

stakeholder engagement strategy. The WBCSD warns that a “one-size-fits-all” approach

to CSR strategy (e.g., universal codes of conducts) may not provide the right answer.

Equally, however, generally asserted reasons for greater attention to CSR also may not

have universal application (Smith, 2003).

According to Carroll (1979), corporate social responses represent management’s social

performance rather than social responsibility. She viewed corporate response to social

issues as strategic choice; that is, management can choose their strategic options with

respect to social responsibility. Carroll (1979) and Wartick and Cochran (1985)

expressed a managerial approach to characterise corporate strategy toward social

responsiveness using a reactive – defensive – accommodative - proactive scale. Their

categorization of corporate strategy is based upon a performance level of doing less

(reactive) and doing more (proactive). The strategic decisions about certain levels of

corporate responses are based upon whether business decision makers see stakeholders

as threats and/or opportunities while conducting their businesses activities. From a

strategic choice perspective, Savage et al. (1991) proposed a stakeholder management

strategy with its basis concerned with potential threats or opportunities to firms.

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Similarly, Harrison and St. John (1996) developed a priority status stakeholder

management based upon the level of strategic importance.

Another important factor is related to the influence of corporate leaders within the

organization. It is their behaviour that serves as a model and message-sender to all.

Therefore, top management commitment to strategic CSR is key, and commitment is

signalled by chief executives. It would be a useful approach to identify the linkage

between top management’s commitment and strategic responses. Although assessing

the effectiveness of CSR efforts is often qualitative and hence difficult to measure and

quantify, this study attempts to provide business cases for CSR while exploring top

managers’ understanding of CSR and strategic responses.

RESEARCH METHODOLOGY

An exploratory, qualitative approach is used in order to develop understanding, gain

new insights, and clarify meanings. Qualitative methods typically produce a wealth of

detailed information about a much smaller number of people and cases (Marshall and

Rossman, 1995).

A multi case study is adopted for this study. As the field of business and society is

young and no widely accepted integrating framework exists (Jones, 1995), it is valuable

for research to explore real organizational goals and processes in organizations, and to

understand the failure of policies and practices. In total, 15 companies were researched

in order to provide a reasonable level of breadth without sacrificing the depth and

richness of the data (Eisenhardt, 1989).

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In the 15 case studies, qualitative data was mainly obtained and analysed. In this study,

qualitative data was obtained through the open-ended, in-depth, face-to-face interviews.

The collected qualitative data was analysed in a systematic way to produce presentable

output. This method was selected as it has advantages over other methods for achieving

the research objectives. In addition, a document analysis uses data from both primary

and secondary literature sources, such as social and environmental policies and reports,

data obtained from NGOs and research organizations, internet sources, promotional

material, journals, and other publications.

One of the most important information sources in this study is the interview. As Punch

(1998) points out, “the interview is considered a very good way of accessing people’s

perceptions, meanings, definitions of the situation and construction of reality. It is also

one of the most powerful ways we have of understanding others (p.175)”.

Interviews were conducted in 15 companies with a total of 40 corporate top managers in

the Korean electronics industry from April through June of 2005. A compiling of the

respondents by job title appears in Table 1.

[Table 1 about here]

A partially structured, focused interview technique was employed throughout. An

interview guide provided a framework of topics to be covered, but the manner and

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sequence in which they were asked varied from interview to interview. The interviews

averaged approximately one and a half hours.

Fifteen case studies were made. Each company case is related to a single case study. The

main topics described in each case study are: top-level commitment to strategic

management, and different business activities related to CSR issues.

For top-level commitment, the following issues are included:

� Top-level responsibility

� CSR policy

� Strategic planning

� Stakeholder involvement

For business response to CSR issues, the following issues are included:

� Social and environmental performance

� Social and environmental reports, and sustainability reports

� Social and environmental standards (AA 1000, SA8000, ISO14000)

� Record of fines and penalties

� Eco-products

The results obtained from this analysis were assessed by comparing them to the results

obtained from a conceptually clustered matrix analysis (Miles and Huberman, 1994).

According to Miles and Huberman (1994), a conceptually clustered matrix was

developed by bringing together items that “belong together” (p.127). This method uses

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descriptive displays of the data to identify common themes.

The author found it possible to identify the following themes: top management

commitment, and the strategic importance of CSR issues and operational performance

on CSR issues. Top management commitment includes top level responsibility and CSR

policy. The strategic importance of CSR issues includes strategic planning and

stakeholder involvement. Operational performance on CSR issues includes social and

environmental performance, social and environmental (sustainability) reports, social and

environmental standards, record of fines and penalties, and eco-products.

ANYLYSIS

•••• Patterns of CSR Strategy

Adapting CSR into business strategy and activity is considered a complex and multi-

dimensional process. Identifying the key elements in a study of this is straightforward,

but by analyzing case studies, three themes were identified. As mentioned earlier, the

cluster analysis method was used to identify groups of strategic behaviours. The results

for the cluster analysis of fifteen companies across the three aforementioned dimensions

of CSR are shown in Figure 1.

Hierarchical clustering procedures were employed to determine similarities and

differences among the fifteen cases in terms of their scores on the dimensions of CSR

themes. The objective of the cluster analysis was to discover which cases “hung

together” in terms of the dispersion of their scores on all of the dimensions considered

jointly (Miles and Huberman, 1994).

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A clustering technique that maximises the differences between clusters and avoids the

changing effects that occur with techniques such as the nearest neighbour was

considered to be the best approach. Using SPSS (ver. 11.0), Ward’s clustering method

helps to identify similar groups and offers opportunities to investigate similarities and

differences among different cases and groups (Barney and Hoskisson, 1990). Below are

the results of Ward’s method clustering (Figure 1).

[Figure 1 about here]

Four groups of companies are identified from the dendrogram:

Group A: Company 3

Group B: Company 9, 12, 13

Group C: Company 4, 14, 15

Group D: Company 1, 2, 5, 6, 7, 8, 10, 11

This gives an indication of which dimensions are discriminating the cluster from the

other clusters.

Identifying the key elements in the study was challenging, however, after analysing the

case studies, three themes were identified. As mentioned above, a cluster analysis

method is used for identifying groups of strategic behaviours. The results of the cluster

analysis of the sampled 15 companies across the three dimensions of strategic CSR

behavior are shown in Table 2.

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[Table 2 about here]

The results of the cluster analysis identify four patterns of CSR strategic behaviour.

Similarities and differences between the clusters are particularly so that general patterns

of CSR strategic behaviour can be identified and a more coherent descriptive profile of

the clusters can be developed.

Group A

Company 3 has very low level of strategic importance and operational performance of

CSR issues. Only the dimension related to top management’s commitment of CSR

issues has a medium rating. Such a low rating would indicate that the company is facing

some difficult challenges both within the organisation and from the outside. As

environmental performance was poor in 2003 and 2004, the company had to pay a

number of fines for exceeding their effluent consent levels. There were also

demonstrations by local residents protesting against the air pollution and noise which

resulted from the manufacturing process. In addition, environmental groups found

suspicious pipelines from the company facilities at the entry of a local riverside.

Environmental groups reported their findings to a local court, and investigators were

sent to examine the issues.

Although the company had to make substantial investments in order to comply with

environmental legislation, there was a definite focus on only regulation compliance. The

management is trying to implement some changes; however, the strategic consideration

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and operational performance is very low, while there is little more from management

other than its expectation of compliance. One of the top decision makers, the vice

president, confirmed that this company has not discovered opportunities from

stakeholders excepting the severe threats from them, including increased regulation and

legal allegations. He stated, “You know we tried our best, but we still have the same

number of non-compliance issues, and the severity is just as bad.”

The characteristics of Group A can be summarised as follows:

� A reactive approach to CSR with a lack of top management commitment and

strategic considerations

� Lack of staff who hold responsibility for legal compliance

� Weak commitment in terms of international standards for new and existing

operations

� An absence of linkage between financial performance and social and

environmental performance.

Group B

The companies in Group B show high levels of strategic importance and operational

performance of CSR issues with a medium level of top management commitment. All

three companies have no major social and environmental problems, although their

businesses do not involve products or processes that carry high social and

environmental risks. The major feature that these three companies have in common is

that they are all voluntarily implementing changes in their companies that reduce their

company’s impact on the natural environment and local community.

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This group of companies maintains a good social and environmental performance

record by reducing emissions from their facilities through investments in advanced

process technology, as well as by strategically focusing their product range. These

companies have discovered that the investment in new technology can both reduce

environmentally hazardous emissions as well as reduce cost through increasingly

efficient production. More meaningfully, there have seen a significant positive

relationship between environmental performance and financial performance.

Essentially, their environmental investment has increased while their turnover has also

increased. At the same time, their environmental performance has improved. Overall,

for these companies, environmental effectiveness and cost efficiency correlate well

together.

With regard to increasing cost pressures, one CEO from this group states:

Historically, companies like us have been accused of putting the financial

bottom line before their wider social or environmental responsibilities and of

concentrating on shareholder interests to the detriment of other stakeholder

groups such as employees and customers.

From this viewpoint, linkages between technological improvements, cost containment,

and environmental effectiveness will only grow in importance.

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The drivers for being environmentally conscious were primarily external in nature

arising from governmental regulations and market opportunities to tap the growing

demand for environmentally compatible products.

Characteristics of this group are:

� A desirability to make an early financial investment in environmental protection

and technology development

� Top management commitment to social and environmental issues seen as

critical for success

� Effective decentralisation of social and environmental specialists in different

business units

� Social and environmental considerations are viewed as an inseparable part of

business performance. It is seen as useful to set quantitative targets for different

social and environmental performance measures.

Group C

The companies in this group show high levels in the three different areas of top

management commitment, strategic importance and operational performance of CSR

issues. These companies have had very sound social and environmental performance

records over the last five years. This group of companies has achieved superior social

and environmental performance compared with companies in Groups A and B. They

take their reputation and corporate image very seriously. The CEO at Company 4 stated:

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A weak or poor reputation can threaten goodwill, co-operation and ultimately

the company’s license to operate. Such a threat now faces our company. Its

reputation is mixed, with some areas of important strength. But it also has

negative associations which, if left unchecked, are likely to undermine the

company’s ability to operate smoothly and efficiently - in other words, its

ability to serve its stakeholders and, in particular, its shareholders.

All of these companies are aware of CSR issues and regard these issues as business

opportunities rather than threats. Thus, with top management’s support, these companies

have a proactive strategy in social and environmental investment and technology

development. As the CEO at company 14 reported:

There is growing awareness that addressing sustainability concerns does not

depend on a tremendous investment but more on a proactive approach,

managerial ability and commitment tied to smart investment.

The initial cost of incorporating CSR concerns is seen as an investment rather than an

expense. It is an investment that has significant impact on the overall business. Those

companies with the skills to manage these issues do so at a fraction of the cost, and far

more effectively than those without an integrated approach. The companies manage to

maintain a certain level of social and environmental investment each year while

showing very good social and environmental performances.

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There are a number of important drivers leading to an emphasis on social and

environmental issues. These are governmental regulations, increasing public awareness

of social and environmental issues, corporate image and reputation, demands from

customers and the media. The effect has been for both social and environmental

performance and financial performance to show a positive increase.

The following are the characteristics of Group C companies:

� A proactive approach to CSR issues and stakeholder management, as seen from

the setting of specific targets for future social and environmental performance

for outcomes, inputs and processes, is critical for success.

� Top management understanding of CSR issues and support for these brings

much more attention to operational performance.

� Communicating their commitment to social and environmental standards and

performance to their employees, shareholders, suppliers, customers and the

local communities

� Recognising and responding to the community’s questions about their

operations

� Actively participating with government agencies and other appropriate groups

to ensure that the development and implementation of social and environmental

policies, laws, regulations, standards and practices serve the public interest

Group D

The group of companies in this category shows medium level of top management’s

commitment, strategic importance and operational performance of CSR issues. All eight

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companies have been focusing on reducing their operating costs and have not focused

on social and environmental issues more than what is required by regulations. Most

investments made were primarily to reduce cost, with environmental improvement as a

secondary consideration. A more detailed case study data shows no clear sign of a

significant reduction in pollution levels or waste.

For example, Company 8 is primarily focused on complying with regulations regarding

their operations but are taking a much more aggressive approach regarding their

products. The company stays very well informed about the types of electronics included

in their products and is attempting to reformulate any product that contains hazardous

chemicals that require special permits for use or are banned in certain markets. For

example, when chlorofluorocarbons (CFCs) were banned, the company had to secure a

replacement for the refrigerant in their refrigerators. This strategy helps the company to

keep compliance costs down, as the company avoids using certain hazardous materials,

thus avoiding the costs of obtaining permits and disposing of hazardous wastes. The

company has not faced any major environmental problems related to their business

activities.

CEO at Company 10 confirmed this. According to him:

All other companies like us are restructuring their organisations. If we don’t

make it, I don’t think we are able to be competitive in the market. In this

situation, paying attention to CSR issues does matter for business survival.

Group D companies have been identified as lacking the following characteristics:

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� Providing ongoing education and training for employees to effectively deal with

day-to-day social and environmental responsibilities.

� Complying with and exceeding requirements of all applicable social and

environment-related laws and regulations.

� Communicating their commitment to social and environmental standard and

performance to their employees, shareholders, suppliers, customers and the

local communities

� Recognising and respond to the community’s questions about its operations.

� Regularly assessing and reporting to management and the board of directors the

status of its compliance with this policy and with social and environmental laws

and regulations.

Based on the analysis of four different clusters, a CSR strategic response pattern was

compiled, and is shown in Table 3.

[Table 3 about here]

The cluster analysis identified four different groups of companies. These are labeled

laggard, limbo, champion and fire-fighter. Laggard indicates the minimum level of CSR

while champion refers to the maximum level of CSR in given cases. Only one company

is labeled as laggard, with a marginal monitoring strategy, while the majority of the

companies are positioned as fire-fighters, with a non-supportive and defensive strategy.

Some companies are situated in limbo with mixed or collaborative strategies, or denoted

as champions with a supportive and involved strategy.

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CONCLUSION

This paper began with a criticism of the vagueness of the term ‘corporate social

responsibility’ (CSR) which has been debated over several decades. In order to

understand corporate social responsibility at the firm level, top management’s

identification and prioritisation of stakeholders, and its commitment to and impact on

corporate responses and strategies were studied. Based upon the findings of this study,

the following conclusions can be drawn.

First, few companies are positioned as a laggard type in terms of CSR management.

The common characteristic of this category is that top executives view CSR issues as a

serious regulatory burden or threat. Thus, a company in this category tries to meet the

minimum level of regulatory legislation.

Second, the majority of Korean electronic companies are situated in fire-fighter category.

As a characteristic of this category is in the company’s complying with legislation while

avoiding extra cost, many companies continue to adhere to regulations rather than

identify new business or market opportunities. In this case, top executives do not see

CSR issues as new opportunities.

Third, some leading companies are positioned as in limbo or as champions. The main

characteristic of these companies is related to seeking new business opportunities

through CSR management. In other words, to them achieving leadership and a

competitive edge in CSR management will lead to better social, environmental and

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financial performance. In addition, a continuous commitment and improvements in

these areas are other main characteristics of these two groups. The main difference

between the two groups is dependent on explicit social and environmental goals as a

main business goal. The limbo group has fairly business-oriented goals while the

champion group has more balanced social, environmental and financial goals.

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REFERENCES

Anshen, M., (ed.) (1974) Managing the Socially Responsible Corporation, New York:

Macmillan Publishing Company.

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Figure 1. Output of CSR Cluster Analysis

- 30 -

Table 1. Composition of Respondents by Position Title

Position Number

� Corporate Executive Officers

� Corporate Vice Presidents

� Directors of CSR/Compliance Officers

� Directors of EHS Affairs

� Directors of Public Relations

6

9

8

13

4

TOTAL 40

Table 2. Generalised Patterns of Strategic CSR Behaviour

Dimensions of Strategic CSR Behaviour

CSR Themes

Cluster Company Top

Management’s

Commitment

Strategic

Importance of

CSR

Operational

Performance of

CSR

A 3 M VL VL

B 9, 12, 13 M H H

C 4, 14, 15 H H H

D 1, 2, 5, 6, 7, 8, 10, 11 M M M

H = High, M = Moderate, L = Low, VL = Very Low

- 31 -

Table 3. The Strategic Patterns of CSR Response

Cluster Label Identified

Stakeholders

Prioritised

Stakeholders Strategic Response

A Laggard •Government •Government Monitoring Strategy

B Limbo

•Shareholders

•Customers

•Employees

•Government

•Shareholders

•Customers

•Government

Collaborative

Strategy

C Champion

•Shareholders

•Employees

•Customers

•Competitors

•Investors

•Suppliers

•The Public

•Shareholders

•Employees

•Competitors

•Customers

•Investors

Involvement and

Maintenance

Strategy

D Fire-fighter •Government

•Shareholders

•Government

•Shareholders Defensive Strategy

- 32 -

Brief Bio Information

Professor Dr. Ki-Hoon Lee leads corporate sustainability management research group

and holds the chair of corporate sustainability management (CSM) at the KwangWoon

University. He is director of the Green MBA programme. He introduced the corporate

sustainability management (CSM) framework and guidelines to the Korean industries as

an advisor on the Korea Business Council for Sustainable Development (KBCSD). His

research interests include corporate sustainability management, corporate social

responsibility, stakeholder management, sustainability reporting, corporate

sustainability and value creation. He is the author of 2 books as well as of numerous

papers on business, strategic management, stakeholder management and sustainable

development. His recent book includes corporate sustainability management and value

evaluation published in 2005.