the perception and adoption of corporate social responsibilities
TRANSCRIPT
Louise Karlsson Viktor Lindqvist
The perception and adoption of corporate social responsibilities
A case study of Sweden and
South Africa
Business Administration Master’s Thesis
15 ECTS
Term: Spring 2012
Supervisor: Mikael Johnson
Acknowledgment Louise Karlsson & Viktor Lindqvist
Acknowledgment
We would like thank our supervisor Mikael Johnson, who has supported us
and given us valuable guidance throughout the process.
We also want to thank:
Alison Ramsden
Nick Rockey
Bridgit Evans
Carina Glas
Fredrik Ljungdahl
Marianne Bogle
They have contributed to our thesis with rewarding interviews. Without them
we could not have completed this thesis.
Karlstad 2012-06-08
Louise Karlsson Viktor Lindqvist
Abstract Louise Karlsson & Viktor Lindqvist
Abstract
Title The perception and adoption of corporate social
responsibilities
Subtitle A case study of Sweden and South Africa
Author Louise Karlsson & Viktor Lindqvist
Supervisor Mikael Johnson
Subject/Course Business administration, Master thesis, 15 hp
Keywords Corporate social responsibility, corporate governance,
triple bottom line, code of conduct, window dressing,
South Africa, Sweden
Purpose Get a better understanding of the perception of CSR in
Sweden and South Africa and why companies in both
countries adopt CSR in its corporate governance.
Method With inspiration from the hermeneutics, qualitative
interviews have been conducted and relevant theory has
been carefully selected based on an inductive approach.
Empirics Totally six interviews, three from respective country.
Companies and organizations that are represented: CSR
Sweden, Greater Good South Africa, Trialogue South
Africa and PwC.
Theoretical framework Concepts of corporate governance, corporate social
responsibility and the interaction between them.
Conclusion Corporate social responsibility has been integrated in the
way of doing business in South Africa, whereas in
Sweden companies still see it as a sacrifice when
adopting CSR in its corporate governance. The history
and general condition in each country has resulted in that
companies contribution to the society plays a different
role in Sweden and South Africa, which have affected
their perception of the importance of integrating CSR in
corporate governance.
New knowledge PwC’s implementation process
Preamble Louise Karlsson & Viktor Lindqvist
Preamble
When we started our 8th semester, the spring 2012, at Karlstad University, we
did not have much knowledge of corporate governance besides our general
knowledge within business administration. Even less was our knowledge of
corporate social responsibility (CSR). As we studied the course Corporate
Governance in the first half of the spring semester, the section with CSR
caught our attention and especially company’s relation to CSR issues and
above all, that South Africa was one of the leading countries in the world in
this subject. How is it that a developing country like South Africa can be so
great when it comes to integrating CSR into its corporate governance and have
such a developed code of conduct? The course also gave us a critical approach
to CSR; does company’s really care about the society and the environment?
What if we would compare South Africa’s approach towards CSR with
Sweden’s approach to CSR, and try to find if the perception of CSR differ
between two countries as different as Sweden and South Africa.
Table of content Louise Karlsson & Viktor Lindqvist
Table of content
1. Introduction ..................................................................................................................... 4
1.1. Background and problem definition ................................................................... 4
1.2. Research purpose ................................................................................................... 6
1.3. Research question ................................................................................................... 6
1.4. Company Presentations ......................................................................................... 6
1.4.1. CSR Sweden ........................................................................................................ 7
1.4.2. Greater Good, South Africa ............................................................................. 7
1.4.3. Trialogue, South Africa ..................................................................................... 7
1.4.1. PwC ...................................................................................................................... 7
1.5. Delimitations ........................................................................................................... 7
1.6. Disposition .............................................................................................................. 8
2. Methodology .................................................................................................................... 9
2.1. Inductive approach ................................................................................................ 9
2.2. Research design .................................................................................................... 10
2.3. Research strategy .................................................................................................. 11
2.4. The interpretation and analysis process ............................................................ 13
3. Empirical data ................................................................................................................ 16
3.1. What is the perception of CSR in Sweden and South Africa? ....................... 16
3.2. Why do companies adopt CSR in its corporate governance? ........................ 17
3.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical? .......................... 18
4. Theoretical and Conceptual Framework .................................................................... 21
4.1. Corporate Governance ........................................................................................ 21
4.2. Corporate Social Responsibility ......................................................................... 22
4.2.2. CSR in countries with different political cultures ........................................ 24
4.2.3. Corporate Social Investment .......................................................................... 24
4.3. Code of conduct ................................................................................................... 24
4.3.1. UN Global Compact ....................................................................................... 25
4.3.3. South Africa’s King Report on Corporate Governance ............................. 26
4.4. Interaction between corporate governance and CSR ..................................... 27
4.4.1. Triple bottom line ............................................................................................ 27
4.4.3. Implementation barriers .................................................................................. 27
4.5. Black Economic Empowerment ........................................................................ 28
5. Analysis ........................................................................................................................... 29
Table of content Louise Karlsson & Viktor Lindqvist
6. Conclusion ..................................................................................................................... 40
6.1. What is the perception of CSR in Sweden and South Africa? ...................... 40
6.2. Why do companies in Sweden and South Africa adopt CSR in its corporate governance? ....................................................................................................................... 40
6.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical? ......................... 41
6.4. The researchers own reflections ........................................................................ 41
6.5. Further research ................................................................................................... 43
7. The new knowledge...................................................................................................... 44
8. The credibility of the thesis ......................................................................................... 47
Reference List ....................................................................................................................... 49
Appendix 1 - Interview respondents ................................................................................. 53
Introduction Louise Karlsson & Viktor Lindqvist
4
1. Introduction
n introduction wil l be gi ven in this chapter which wil l contain the
research background, problem def init ion, purpose, research questions,
del imitations and disposit ion. There wil l al so be a short presentation of the
represented companies .
1.1. Background and problem definition
Prior to the 20-century corporate governance was much about how to deal
with agency problems within in a company, i.e. between owners and managers.
Maximization of shareholder value was the primary goal for every company
and corporate governance should enable the shareholders to trust managers
with their investments. Stakeholders, environmental and social aspects were
often excluded in the business decision making process and no concerns were
being made for what the operations could cause (Gill 2008).
As a result of several major scandals, such as Enron and WorldCom in the end
of the 1990s’ (Grafström et al. 2008), the debate of corporate governance has
increased, both in the business world and the public society (Gill 2008). The
emphasis on transparency and accountability in corporate governance has
increased, and the company management is required to work with a higher
level of disclosure. The approach to corporate governance has changed and it
is no longer just maximizing shareholder value that is important for the
company managers (Gill 2008).
Today’s business organizations have to consider so much more than just the
best interest of the owner if they want to survive on the market (Sims 2003).
The interrelationship within a company should no longer only imply the board
of directors, managers, and shareholders, but also other stakeholders such as
employees, customers, suppliers, the environment and the community as a
whole (Gill 2008). A good relationship with the stakeholders is essential for a
company’s business (Roberts 2001). Corporate governance is an important
tool in building relationships (Selznick 1996) and getting an understanding of
what the relevant stakeholders want and expect from the company (Roberts
2001).
As the public society is becoming both more involved in the debate of
corporate governance and increasingly aware of the impacts the company’s
activities have on the society and environment, it is not possible for companies
A
Introduction Louise Karlsson & Viktor Lindqvist
5
to separate business from ethics, they have to be interrelated (Selznick 1996).
Roberts (2001) follows Selznick’s (1996) trail and emphasizes that corporate
governance and ethics should be linked together and that it should be a
connection between how a company thinks and how it acts, which should be
reflected in its core values.
The development of corporate social responsibility (CSR) has had an increased
influence on the characterization and implementation of corporate
governance. By adopting CSR in the daily usage of corporate governance,
companies have begun to integrate its goal of maximizing profit with social
and environmental goals (Gill 2008). There is no clear definition what CSR
actually means and many researchers have tried to develop an explanation
what the term actually comprise (Grafström et al. 2008). Enquist et al. (2006 p.
188) defines CSR as “…the voluntary integration of social and environmental concerns
into business operations and interactions with stakeholders”. CSR has also become a
basis within companies for how to treat employees, consumers and
communities (Gill 2008).
However, it can be difficult to distinguish how genuinely a company really is
integrating CSR in its corporate governance (Roberts 2001). Roberts (2001)
addresses “the ethics of narcissus” which implies that the company only wants to
be perceived as ethical by its surroundings which is the opposite of actually
taking responsibility for the effects the company activities has on the
environment and society. When the perception of a company does not match
with the reality regarding the implementation of CSR, it is called window
dressing (Holme 2010).
South Africa is a country that has a turbulent past with decades of racial
segregation back in the 1970’s and 80’s (Mallin 2010). Due to the apartheid
South Africa was effectively excluded from international financial markets’ and
countries from all over the world that had a connection to South Africa
decided to leave the country. When Nelson Mandela became the president of
South Africa in 1992, the social, political and economic climate started to
change within the country. The government stood in front of huge challenges’
in trying to get the country back on track again and get rid of the isolation
from the rest of the world (Alessandri et al. 2011). South Africa's unique
apartheid past has, according to Babarinde (2009), a major impact on the
business sectors approach to CSR. Companies' efforts to help improve access
to health, education and other essential infrastructure for the poor and less
fortunate, who comprise the vast majority of the population, is considered to
Introduction Louise Karlsson & Viktor Lindqvist
6
be important for the future and survival of the business. Companies in South
Africa have begun to view such efforts as a routine, and the associated
expenses as normal costs of doing business, which makes South Africa
prominent when it comes to CSR (Babarinde 2009).
Based on this we want to look into how the perception of CSR can vary
between two countries that are as different as Sweden and South Africa. We
aim to get an understanding if CSR is a strategy that companies genuinely
adopt or if it is just a way for companies to be perceived as ethical by its
surroundings.
1.2. Research purpose
The purpose of this research is to get a better understanding of the perception
of CSR in Sweden and South Africa and why companies in both countries
adopt CSR in its corporate governance.
1.3. Research question
What is the perception of CSR in Sweden and South Africa?
Why do companies in Sweden and South Africa adopt CSR in its
corporate governance?
Is CSR something that companies in Sweden and South Africa
genuinely adopts or is it just a way for companies to be perceived as
ethical?
1.4. Company Presentations
We have interviewed three non-governmental organizations (NGO’s); CSR
Sweden, Greater Good and Trialogue. A NGO is a group of people that, with
a non-profit approach, voluntarily work with questions of human rights,
environmental issues, health, monitoring compliance with policies etc. NGO’s
can be organized on a local, national or international level (NGO Global
Network 2012) and the size of NGO’s can vary from one single person
NGO’s to large organizations such as UNICEF (Unerman and O’Dwyer
2010). In addition we have also interviewed people from PwC in Sweden and
South Africa.
Introduction Louise Karlsson & Viktor Lindqvist
7
1.4.1. CSR Sweden
CSR Sweden is Sweden's leading business network that focuses on corporate
social responsibility and community involvement. Its primary purpose is to
inspire companies with responsibility issues in its work and to encourage the
discussion between businesses and politicians. CSR Sweden does this by
mediating contacts, experience and knowledge between companies and its
stakeholders.
1.4.2. Greater Good, South Africa
Greater Good South Africa is an intermediary organization that works a lot
with corporations and foundations and trying to help them to make good
decisions about how to spend their money, in trying to make change happen
in the country. They connecting givers with good causes and activating the
public to give responsibly. They do everything from strategy work to due
diligence monitoring and evaluation, and sometimes designing interventions.
1.4.3. Trialogue, South Africa
Trialogue is a leading consultancy and publisher, driving the development and
management of knowledge within the sustainability and corporate social
investment arenas. Through its industry handbooks and specialized consulting
services, they strive to be the portal for South Africa’s CSI and sustainable
business practitioners.
1.4.1. PwC
PwC (formerly PricewaterhouseCoopers) is the world's largest accounting and
consulting firm with about 169 000 employees in 158 countries, two of which
are Sweden and South Africa. PwC is considered one of the Big four with
Ernst & Young, KPMG and Deloitte after Arthur Andersen went bankrupt in
the wake of the Enron scandal.
1.5. Delimitations
Our research is delimited to study the perception of CSR in only Sweden and
South Africa. We have also delimited the number of respondents in each
country in our empirical data collection, due to the time limit for this thesis.
Introduction Louise Karlsson & Viktor Lindqvist
8
1.6. Disposition
Introduction Chapter 1
• The introduction contains the research background, problem definition, purpose, research questions, delimitations and disposition. A short company presentation is also presented.
Methodology Chapter 2
• In this capter the research design and strategy is presented along with the interpretation and analysis process which have been inspired by the hermeneutics.
Empirical data Chapter 3
• The empirical data is presented in chapter 3. Each research question is interactively discussed by the respondents.
Theoretical framework Chapter 4
• In this chapter , our theoretical and conceptual framework is presented, where we outline the concept of Corporate Governance and Corporate Social Responsibility and also describe the interaction between the two concepts.
Analysis Chapter 5
• In chapter 5, our analysis of the research questions is presented, where we have integrated the empirical material with the theoretical and conceptual framework.
Discussion and Conclusion Chapter 6
• Our conclusion of the research questions is presented in this chapter, along with our own reflections and recommendations to future research.
The new knowledge Chapter 7
• In order to get a new perspective of companies’ implementation of CSR in their corporate governance, we have studied PwC's implementation process and simultaneously tried to select new relevant theory that can be helpful to achieve an understanding of the process.
The credability of the thesis Chapter 8
• A credibility discussion of the thesis is presented in the final chapter.
Methodology Louise Karlsson & Viktor Lindqvist
9
2. Methodology
n this chapter the research design and strategy wi l l be presented along
with the interpretation and analysi s process which have been inspired by
the hermeneuti cs .
The purpose of this research is to get a better understanding of the perception
of CSR in Sweden and South Africa and why companies in both countries
adopt CSR in its corporate governance. Since we had relatively little
knowledge of the subject from the beginning, we had an inductive approach to
the research. In order to get a deeper understanding of the CSR phenomenon,
we chose to have qualitative interviews with three respondents in each country
and were inspired by the hermeneutics interpretation method.
The path to understanding is many times unique, not least because the
researchers individual life stories at the time when the interpretations was
made is of great importance. Everyone has beliefs, prejudices and
preconceived notions that have to be taken into consideration throughout the
entire interpretation process (Faces & Thornberg, 2009). Due to that we have
been inspired by the hermeneutics we started the thesis by writing about our
knowledge and thoughts about the subject that is being studied. The reader
then knows which input values that are included and according to Fejes and
Thornberg (2009) do the researchers get a better picture of and become more
aware of how they may affect the interpretation process.
2.1. Inductive approach
An inductive approach implies that the researcher works on the basis of the
empirical data that will subsequently result in a theory. This approach
theoretically means that the researchers goes out into the world with almost no
expectations, gather all relevant information and finally systematizes the data
that they have received. By not having any preconceptions and expectations,
the researcher can then get empirical data which accurately reflects the reality
in a given context. This would assure that the information is relevant and
accurate (Jacobsen 2002). The theory will then be an outcome of the research
(Andersen 1998). However, modern psychological research has shown that
humans can not completely be without preconceptions about the real world
and that it is impossible to collect all relevant information. The researcher will
thus always undertake delimitation of the information, consciously or
unconsciously. Therefore has a more open inductive approach to data
I
Methodology Louise Karlsson & Viktor Lindqvist
10
collection become more common, which means that the researcher himself
sets limits on what should be collected before the collection begins (Jacobsen
2002). Qualitative methods are inherently open to new, unexpected
information and therefore, the use of such methods is often associated with
more inductive approaches (Bryman & Bell 2003). Justesen and Mik-Meyer
(2011) also emphasizes that it is hardly useful to develop clearly defined
hypotheses which will be verified or falsified, when it comes to studying the
process in an organization where different voices are to be heard. This
supports our choice of an inductive approach in our thesis.
2.2. Research design
The research design provides the researcher with a framework for the
collection and analysis of data (Bryman & Bell 2003). The researcher needs to
choses a design which is most suitable for the research questions. This means
that we decided on if the study would have a wide or an intensive approach
and if the study would be descriptive or explanatory (Jacobsen 2002).
According to Bryman and Bell (2003) are these choices important for the
reliability, replication and validity of the research.
We believe that an intensive approach was the most suitable for our research
questions which, according to Jacobsen (2002) contains a few units and several
variables. The units are most often referred to as people, thus that a few
people are interviewed regarding the research questions, which than results in
many different details, nuances, and variables. The starting point is often to
find all individual variations and differences in the perception of a
phenomenon and at the same time get the similarities. An intensive approach
implies that the researcher wants to get a deeper understanding of the
phenomenon that is being studied. The ideal is to interview many people, but
it is very time consuming and expensive which unfortunately means that a
distinction has to be made (Jacobsen 2002).
Since we have studied PwC and NGO’s in both Sweden and South Africa, we
have performed what Bryman and Bell (2003) refers to as a multiple case
study. This design is used when the researcher at a higher degree wants to
explain and indicate what the cause of a phenomenon is (Jacobsen 2002).
The descriptive approach implies that a researcher wants to gain further
insight on how a phenomena looks like. The explanatory approach entails to
explain why a phenomenon occurred, why something specific happened. Such
Methodology Louise Karlsson & Viktor Lindqvist
11
studies are intended to show the cause and effect of the phenomenon
(Jacobsen 2002). As the purpose of this research is to get a better
understanding of the perception of CSR in Sweden and South Africa and why
companies in both countries adopt CSR in its corporate governance, we had a
mix of descriptive and explanatory approach in our research.
2.3. Research strategy
The research strategy is defined as the general orientation to the conduct of
the research (Bryman & Bell 2003) and our choice of a qualitative research
implies that we focus on a small number of respondents to get a deeper
understanding of the subject. Qualitative research uses methods that are
suitable to describe the phenomena in its context in order to present an
interpretation that provides a better understanding of the phenomenon
(Justesen & Mik-Meyer 2011), which is in line with the purpose of our
research. Bryman and Bell (2003) explains that the qualitative research
emphasizes words rather than collecting numbers, which, according to
Jacobsen (2002), means that data will be collected in the form of words, for
example, through observation, individual interviews or group interviews.
With the intention of investigating specific research questions, the most
common approach of qualitative research is interviews, or more precisely
research-interviews (Justesen & Mik-Meyer 2011). The interview then consists
of a meeting between two or more people where there is some form of
exchange of knowledge (Dalen 2008). In our research we conducted
interviews in the form of two physical meetings, one with Carina Glas at PwC
Sweden and one with Marianne Bogle at CSR Sweden in Stockholm. In
addition, we conducted four telephone interviews with Fredrik Ljungdahl at
PwC Sweden, Alison Ramsden at PwC South Africa, Bridgit Evans at Greater
Good South Africa and Nick Rockey at Trialogue in South Africa. Alvesson
and Sköldberg (2000) stresses that a qualitative research is based on the
respondent’s standpoint and Jacobsen (2002) claims that proximity to the
respondents’ is an important aspect to get an understanding of the
respondents’ perceptions of the situation. The reason why we had four
telephone interviews was that we did not have the time or ability to travel to
South Africa to perform the interview as a physical meeting.
An interview can be more or less structured (Bryman 2008). The three most
common interview structures are unstructured, semi-structured and structured
interviews (Justesen & Mik-Meyer 2011; Bryman 2008). The unstructured
Methodology Louise Karlsson & Viktor Lindqvist
12
interview is, according to Justesen and Mik-Meyer (2011), defined by that it
primary is the respondent who determines the conversation structure and who
controls the conversation. However, one must not let the term “unstructured”
be misleading, an interview inevitably has some form of structure, but the
questions specific structure and sequence are not fixed. The interview can
therefore take a different direction, depending on how the interview goes
(Justesen & Mik-Meyer 2011). Bryman and Bell (2003) defines the semi-
structured interview by that the interviewer works with an interview guide with
themes and key questions that are determined in advance. This type of
interview is not as flexible as the unstructured interview, but there is room for
deviations from the guide if the respondent would bring up unexpected
interesting topics. The semi-structured interview is a method suitable for
research that is working exploratory to generate new knowledge and
simultaneously has a number of pre-selected themes that the interviewer wants
the respondents to reflect on (Bryman & Bell 2003). The structured interview is
defined by that the interviewer in advance has designed an interview guide that
precisely states both the questions and their sequence. In this interview form,
it is thus the interviewer who is in control of the interview (Justesen & Mik-
Meyer 2011).
After some research on each of the three interview methods, we considered
the semi-structured interview to be the most appropriate method for our
research. We chose the semi-structured interview because we have an
inductive approach to our research and we wanted to create opportunities in
the interview for new, unexpected knowledge. At the same time we wanted to
define the research questions before the interview, which become great themes
for the interview guide. We were also keen on getting fairly comparable
empirics since we wanted to compare the results from Sweden and South
Africa, which made the interview guide with themes and key questions perfect
for our research.
Qualitative interviews are time consuming and when a person in a senior
position is to be interviewed it can, since these people are typically very busy,
be difficult to get their attention and do an interview (Bryman & Bell 2003).
We knew from the beginning that it would take time and efforts in getting the
interviews we wanted. First of all we didn’t know at all who was working with
corporate governance and CSR issues at PwC since it essentially is an auditing
firm. We began with contacting the student manager at PwC in Karlstad
through telephone and e-mail and described the purpose and intention with
Methodology Louise Karlsson & Viktor Lindqvist
13
our thesis. The student manager was helpful and gave us names of some
people at PwC in Stockholm (Sweden), Johannesburg and Pretoria (South
Africa) that might be able to help us. After some time we got in contact with
Carina Glas (PwC) in Stockholm. Unfortunately was our timing with the thesis
not the best when it comes to getting contact with auditors since it was the
period when they had the largest workload due to all the annual reports that
had to be done. However, after several phone calls and e-mails we got a time
and date when we could do the interview at her office in Stockholm. When we
were in Stockholm we also managed to get an interview with Marianne Bogle
(CSR Sweden). Unfortunately, we did not accomplish to get a physical meeting
with Fredrik Ljungdahl (PwC) in Stockholm, but after several phone calls we
got a telephone interview with him. Getting the right contact in South Africa
was a bit trickier since we had to be in contact with a number of secretaries
instead of the person we were going to interview, but after several phone calls
and e-mails we finally got a date and time when we could do a telephone
interview with Alison Ramsden (PwC) in Johannesburg, Bridgit Evans
(Greater Good) in Cape Town and Nick Rockey (Trialogue) in Cape Town.
We sent a document to all of our respondents where we described the nature
and purpose with our thesis and how they would contribute to our research,
so that they, at forehand, knew the main theme of the interview, which
Bryman and Bell (2003) consider is a good approach.
2.4. The interpretation and analysis process
Hermeneutics deals with the interpretation, understanding and communication
of the phenomenon which is being studied (Fejes & Thornberg, 2009). The
philosophy behind the hermeneutics is according to Alvesson and Sköldberg
(2000, p. 53) "…the meaning of a part can only be understood if it is related to the
whole". This interpretation process is illustrated by the metaphor of the
hermeneutic circle (Alvesson & Sköldberg 1994) or spiral (Andersen 1998),
which shows the constant commuting between empirics and literature to gain
a deeper understanding of the phenomenon which is being studied (Fejes &
Thornberg, 2009). As the researchers allow themselves to commute between
the parts the spiral drills its way deeper into the understanding (Fejes &
Thornberg, 2009).
Methodology Louise Karlsson & Viktor Lindqvist
14
Figure 1 - The hermeneutic spiral (Fejes & Thornberg 2009 p. 76)
The language plays a central role in the interpretation proceedings, because the
dialogue is the essential implement for the collection of the empirical material
(Andersen 1998). This has been taken into consideration in our research. Due
to that the concept of CSR is complex and has many different definitions, we
have initiated all the qualitative interviews by asking respondents to tell us how
they define the term in order to refrain from any misunderstandings. Andersen
(1998) emphasizes that the consideration of the language contributes to that
the researcher is in on equal basis with the respondent.
During the actual interpretation process, it is important that the researchers
have an open attitude to the empirical material and lets its text speak to the
researchers (Fejes & Thornberg, 2009). Due to that the researchers transcribes
the interviews themselves, the researchers gets a great opportunity to become
familiar with their own data material. Furthermore, it also provides the
opportunity for a special closeness to the interview transcripts, which may
secure the latter analysis process (Dalen 2008). With this in mind, we
transcribed every interview by listening to each recorded interview. In total the
interview transcripts amounted in 48 pages.
The coding of the collected material is an important part of the analysis
process (Dalen 2008). Strauss and Corbin (1990) use the following definition
of coding:
Coding represents the operation by which data are broken down,
conceptualized, and put back together in new ways. It is the central
process by which theories are built from data. (Strauss & Corbin
1990 p. 57)
The coding process runs through several levels, which can be viewed as
different levels of interpretation. The goal is to reach an overall understanding
of the material and thus contribute to the generation of theory about the
Methodology Louise Karlsson & Viktor Lindqvist
15
phenomenon being studied (Dalen 2008). According to Dalen (2008) the
coding process of interview studies look like the following figure:
Figure 2 - Coding process (Dalen 2008 p. 75)
The open coding’s main purpose is to identify concepts that also can be
included in the categories. In axial coding the situation or context is outlined
within which an action takes place; conditions that trigger the action, concrete
responses to the situation and eventually the consequences of those. After the
researcher has found the various categories and analyzed the relationships
between the categories, the goal of the selective coding is to gather all parts in
order to get an understanding of what appears to be central regarding the
phenomenon that is being studied (Dalen 2008). By analyzing the interview
transcripts we tried to find patterns and broke it down into different
categories. Due to the inductive approach in our research and our opened
minds in the interpretation and analysis process we got deeper down in Fejes
and Thornberg’s (2009) spiral towards an understanding. With an open
approach, the researchers can be led in unexpected directions without being
frightened of that the original research questions are exceeded, extended or
supplemented. The researchers should not cover the unexpected or unknown
dimensions which open up in the text (Fejes & Thornberg, 2009). In the final
analysis phase, the researchers try to develop theoretical concepts and models
for an understanding of the current phenomenon (Dalen 2008).
Open coding Axial coding Selective coding Categorization Generalization/
Theorization
Empirical data Louise Karlsson & Viktor Lindqvist
16
3. Empirical data
he empirical data wi l l be presented in chapter 3. Each research
quest ion wil l be interact ively discussed by the respondents. Since the
research i s inspired by the hermeneuti cs, we have distance d us f rom the
respondents by turning the empiri cal materia l into tex ts. The respondents
are presented in appendix 1.
3.1. What is the perception of CSR in Sweden and South Africa?
According to Bogle (2012) CSR means that companies, on its own initiative,
are actively involved in community development. It is a topic that requires
unique expertise in many areas and dealing with CSR-issues demands long-
term thinking (Bogle 2012). Ljungdahl (2012) define CSR somewhere around
the triple bottom line, and states that companies have to capture all the
dimensions of responsibility, have a strategy for it and at the same time be able
to report measurable performance on the dimensions.
Ramsden (2012) discusses the triple bottom line and states that companies are
making the connections between the so called softer issues, which companies
were quite dismissive of before, and the financial bottom line: “…companies
align CSR with business strategy and business risk”. However, CSR is an old-fashion
term according to Ramsden (2012). South Africa developed the concepts
around CSR in more of a moral and ethical issue, as supposed to what South
Africa would call sustainability or sustainable development which is around
long-term viability of an organization (Ramsden 2012).
Rockey (2012), believe that corporate responsibility and integrated reporting is
a broad topic which includes more material issues than CSI, such as
HIV/AIDS-workforce, schools development, and other aspects that are more
aligned with what companies actually do. Evans (2012) explains that CSI is
one part of CSR and means an investment into the community. Due to that
CSI is a part of the BEE, South African companies invest 1 % of after tax
profit into community work (Evans 2012).
Sweden is, according to Bogle (2012), a rich country with for example great
infrastructure, clean water and minimal environmental pollution, and is
relatively spared against any larger issues. Bogle (2012) continues: “In Sweden we
have fallen behind when it comes to adopt CSR in our corporate governance because we have
believed that we are not a part of the problem”. Ljungdahl (2012) explains that
T
Empirical data Louise Karlsson & Viktor Lindqvist
17
Sweden has a social system, with high taxes and strong unions, which allows
businesses not to take great social responsibility because the society in general
is taking so much responsibility.
According to Evans (2012) CSR is definitely not a trend and it will always be a
part of the business in South Africa. Evans (2012) continues by explaining the
situation in South Africa:
On every road there is a beggar and in the news every day there is a
reminder of how divided South Africa is. Our unemployment rate
is 25 % and our youth unemployment rate is 39 %. Everyone is
terrified of what will happen if we don’t do something. (Evans
2012)
Ljungdahl (2012) is more pessimistic when it comes to if CSR is a trend. The
CSR trend will go in cycles and during the last 20 years there has been a strong
trend, but it is nothing new because it has existed in all time in business
contexts (Ljungdahl 2012).
Ramsden (2012) stresses that it’s not possible for companies to be successful
without implementing CSR in its business and that CSR is not only important
in South Africa:
When you look at the issues in Europe today and the stock market
in terms of social economic and social political issues it has an
immediately impact on the financial bottom line in many
companies. (Ramsden 2012)
3.2. Why do companies adopt CSR in its corporate governance?
At the time of 1994, there was a need in South Africa to start looking at
environmental issues and subsequently the country also started to look at the
economic issues (Ramsden 2012). Problems and social needs that can exist in
different countries is something that companies have to pay attention to
(Cramer 2006), which Rockey (2012) also discusses and explain that a lot of
the education systems in South Africa needs help and also is help needed to
promote entrepreneurs in businesses.
The South African government is very excited about policies and legislation,
and as the government is a key stakeholder for most companies, it is essential
for companies to work with them and show them that they are on the same
page at the social economic development (Rockey 2012). Ramsden (2012)
Empirical data Louise Karlsson & Viktor Lindqvist
18
believe that in terms of sustainability reporting and the triple bottom line,
South African companies were kind of pushed out there because of political
issues. In the aspects of social responsibility, it is legislated and then it got to
be done (Ramsden 2012).
Rockey (2012) believe that companies are recognizing that they are going to be
here for the long hall and therefore they need to focus on activities outside the
company. It is a strong reputation driver in South Africa and it is expected of
the companies from the employees and other stakeholders. Therefore, there
are a lot of companies and a lot of CEO’s that are willing to take a box with
this CSR approach (Rockey 2012).
Ljungdahl (2012) stresses that companies in Sweden are driven by what others
think about them and the business leaders are affected by it. It is about
different driving forces and pressures from various groups in the society,
especially the media are a very strong player (Ljungdahl 2012). According to
Ljungdahl (2012) investors' interest in CSR issues has become increasingly
important, even if it is not quite “mainstream”, and it is a key driver to get
listed companies to work with implementing CSR in its corporate governance.
Bogle (2012) believes that corporations today have become so big and they
operate worldwide on a whole different level than they have before. The
relationship between governments and companies has changed, and in some
countries there are companies that are bigger and stronger than the
government, which have made it difficult for legislations (Bogle 2012). The
balance of power has, according to Bogle (2012), changed and many
companies have found out that they have to take actions, which they did not
have to take before, if the society should be able to work. Astra Zenica is an
example within these issues, they predict that it will be difficult finding labor in
the future due to decreasing interest in these educations, and therefore built a
school in order to attract young people to become engineers (Bogle 2012).
3.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical?
Evans (2012) would not say that window-dressing and green wash is common,
but that it happens. In South Africa it is a real challenge when the executives
of companies just are in it for the public relations and marketing, which is a
rather common usage of the legislated CSI money (1 % after tax), and the
community is secondary in terms of the priorities (Evans 2012). Evans (2012)
Empirical data Louise Karlsson & Viktor Lindqvist
19
means that some companies really prioritize government relationships and in
order to win those government relationships they use CSI money to say: “look
what we do for the community, in your community”, so from that point of view
window-dressing happens and it is very negative.
Ramsden (2012) stresses that for companies to be able to genuinely adopt
CSR, they must have a long-term thinking. It has to be integrated, the people
have to understand it and buy in to it. It is always easy to persuade the board
member’s, but the gap is at middle management and operational level where
they can’t see the benefits and therefore they aren’t living the values and aren’t
working towards long-term thinking. Therefore, corporate governance has a
very hectic discussion around behavior, values and corporate culture
(Ramsden 2012). Ramsden (2012) has seen differences in terms of values and
that are that CSR is now being made relevant to the operator.
Ljungdahl (2012) is pessimistic about the general knowledge of CSR in
Swedish companies and emphasizes that many companies do not have a deep
understanding of what CSR is and especially what it means for its business.
According to Ljungdahl (2012), companies’ window-dressing is an image issue
and “…image is important for companies as it can arouse strong emotions around the way
companies behave within CSR”.
Rockey (2012) discusses about the barriers of implementing CSR in
companies’ corporate governance. In many cases CSR is an awareness issue,
awareness of what the benefits are. There are still a lot of people out there that
find CSR as a distraction so it is about getting passionate about it on an
executive level, that’s probably the biggest barrier there ever is. “You still see
people trying to get it through on a middle management position and that don’t work”
(Rockey 2012).
One of the barriers that are preventing companies in Sweden from
implementing CSR in its corporate governance is, according to Ljungdahl
(2012), the incentive structure within companies that rewards the board of
directors. Ljungdahl (2012) stresses that CEO’s will never end with short-term
thinking and start looking at sustainability performance if companies’
remuneration is not connected to long-term goals. If companies are starting to
implement CSR in its corporate governance and are having goals towards
sustainability, the companies will then automatically have more long-term
thinking, because those kinds of goals can’t be reached over a night (Ljungdahl
2012). Ramsden (2012) believe that the economic downturn has changed the
Empirical data Louise Karlsson & Viktor Lindqvist
20
way people think, and that although people’s minds are on the media on what
happens today it also makes people consider how things are going to be done
in the future, which increase the long-term thinking.
Bogle (2012) states that some companies in Sweden take CSR-issues seriously
and work a lot with these issues, but even in those companies it’s not
integrated throughout the whole company. The problem is that companies do
not see CSR-activities as a strategy; they only react on something that the
outside world requires (Bogle 2012). Bogle (2012) continues by giving an
example: “Companies join the UN Global Compact because it is considered to be the right
thing to do, but when I ask them why they don’t know”.
Bogle (2012) stresses that it cannot be forgotten that companies are
organizations that operate to earn money. Bogle (2012) resembles companies
as predators and explains that people want them to be as small rabbits that
should be nice to everyone, but the world doesn’t work that way.
Ramsden (2012) states that, in South Africa, people understand very clearly
what CSR is about because they live it every day. Evans (2012) explains that
South Africa is a country where poverty is very evident. It takes 10 minutes to
drive from the wealthiest part of Johannesburg to the poorest and there are
shacks and informal houses everywhere, so people are very well aware of the
context in which they live here (Evans 2012). “The only thing that you might find is
a CEO that doesn’t care, but they all know what is going on” (Evans 2012). Evans
(2012) claims that, in many companies, CSI is becoming a part of the DNA
within the company, a part of the overall strategy.
There should be some nature around the corporate culture and behavior, how
companies live their values and they should have a tone-at-the-top thinking
(Ramsden 2012). Ramsden (2012) mean that it is very easy to put up honesty,
integrity and their most valuable assets, but in terms of corporate governance
you can have everything in theory, but if companies are not living those values,
it doesn’t work (Ramsden 2012). Evans (2012) discuss that it is a broad
spectrum when it comes to if companies are genuinely adopting CSR or not.
South Africa have companies who start schools, who run schools, who
contribute to universities, who help orphans, do economic empowerment
projects, help communities (Evans 2012).
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
21
4. Theoretical and Conceptual Framework
n this chapter wi l l our theoreti cal and conceptual framework be
presented, which contains of the concept of Corporate Governance and
Corporate Social Responsibi l i ty and the interact ion between the two
concepts.
4.1. Corporate Governance
Every company is affected by corporate governance in one way or another and
its meaning and implementation has, according to Mallin (2010), changed over
the years. According to Gill (2008 p. 456) corporate governance is known as
“the set of processes, customs, policies, laws and institutions affecting the way in which
corporations is directed, administered or controlled”. But in recent years the definition
has changed from a functional, economic focus on the protection of
shareholders to an orientation that is aimed more at protecting investors and
other stakeholders (Gill 2008). Roberts (2001) emphasizes that corporate
governance and ethics should be linked together and that it should be a
connection between how a company thinks and how it acts, which should be
reflected in its core values.
Wheeler and Thompson (2006) believe that the theories behind corporate
governance and to who boards, directors and managers are responsible are
sharply divided between two groups. One group mean that the company’s
primary duty is to investors since they are the one who owns the company,
and one group emphasizes the importance of a more widely perspective where
all different kind of stakeholders are taken into consideration (Wheeler and
Thompson 2006).
A company that is governed with a shareholder view only concerns about the
owners, which are the shareholders (Andreasson 2011), and making profit is
the only objective that counts (Enquist et al. 2006). It is the shareholders that
determine over its priorities and the generated profit. Conflicts of interest can
easily occur between the owners and the managers (agency conflicts) and these
conflicts need to be solved, often by linking managerial rewards to corporate
performance measured by how the share price is going (Andreasson 2011).
Unlike a company with a shareholder view, a company that is governed with a
stakeholder view sees the company as a part of the society which requires that
it take its responsibility and care for others beyond the owners. All parties that
I
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
22
are affected by the behavior and performance of the company should be taken
into consideration, including customers, suppliers, employees, local
communities and governments (Andreasson 2011).
De Geer (2009) discusses some of the criticism to corporate governance and
CSR. Critics argue that the board of directors cannot use the company’s profit,
which should be passed on to the shareholders, for any sorts of social or
environmental purpose, how kind-hearted it may be (De Geer 2009).
4.2. Corporate Social Responsibility
There is no clear definition of what CSR actually means but many researchers
have tried to develop an explanation what the term comprise (Grafström et al.
2008). According to Enquist et al. (2006 p.188) CSR can be understood as
“…the voluntary integration of social and environmental concerns into business operations
and interactions with stakeholders”. Gill (2008) emphasizes that CSR is often seen
as a business strategy to make the ultimate goals of corporations more
achievable as well as more transparent, demonstrate responsibility towards
communities and the environment, and take the interests of stakeholders into
account when making long-term business decisions.
According to Grafström et al. (2008) it is today up to every company to make
an interpretation what CSR is all about. Although the most CSR actions are
voluntary and not required by law, companies have started to understand that
the modern society’s belief on CSR activities can be essential to maintain its
social legitimacy. The original business approach, where the maximization of
profits was the only thing that counted, has started to change direction to an
approach where different stakeholders have begun to impose requirements
(Grafström et al. 2008).
The world economy is, according to Soleymani (2010), under transformation.
Advanced development within the modern industry, helped by increased cross
border trade due to lower tariffs and a significant fall of transportation and
communications costs, have made the business market becoming a worldwide
market (Soleymani 2010). Since the competition on the global business market
today is quite tough, companies cannot afford to be publicly criticized due to,
for instance, poor working conditions, violation of human rights or
environmental scandals (Cramer 2006). It is not possible to separate business
from ethics (Enquist et al. 2006) and the industrialized and modern world we
live in, characterized by increased trade between countries, have improved the
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
23
interrelationship between business and society (Cerne 2008). The
manufacturing of products is often located on one side of the globe and the
consumption on the other so, according to Cerne (2008) what people
consume have consequences for people on the opposite side of the globe. Due
to this development, the debate and demand from the public society has
increased and companies have to pay attention to CSR and take responsibility
for its activities (Cerne 2008).
4.2.1. The Pyramid of Corporate Social Responsibility
Carroll (1991) stresses that CSR can be viewed as four levels of responsibility
components in a pyramid that together constitutes the total CSR; economic,
legal, ethical and philanthropic. The four responsibilities have always existed,
but they occur to different extent in different organizations. Economic and
legal responsibilities have considered being the fundamental guidelines for the
free market system, but as the market is changing, the ethical and
philanthropic responsibilities have received an increasing role in the market
(Carroll 1991).
Figure 3 - The Pyramid of Corporate Social Responsibility (Carroll 1991 p. 42)
Economic responsibilities are the most fundamental of all responsibilities
and consist of profit maximization, company efficiency and maintaining a
competitive position on the market (Carroll 1991).
Legal responsibilities imply that the company should achieve its goals within
the context of the government and the legal system (Carroll 1991).
Ethical responsibilities go beyond the economic and legal responsibilities
and towards integrity and ethical behavior. Societal mores and ethical norms
should be taken into account and the company has to recognize the society’s
Philantropical
Ethical
Legal
Economic
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
24
norms, which can be a challenge for managers and executives due to the
constant change of the society (Carroll 1991).
Philanthropic responsibilities are at the top of the pyramid and contain
voluntary and unexpected actions, in an ethical or moral sense, which makes
the company a good corporate citizen. The society needs companies that
donate its time and money, but the society doesn’t perceive the companies
unethical if they don’t (Carroll 1991).
4.2.2. CSR in countries with different political cultures
The globalization has opened many doors, and countries from all around the
globe are today a part of the business market. Due to that countries are
different in many ways, it is important to remember that every country has its
own perception of CSR. Depending on how the situation in a country looks
like, the approach to CSR will be more or less important. The political culture
and the social situation within a country frequently play a large role in what to
expect from companies concerning CSR (Cramer 2006).
4.2.3. Corporate Social Investment
Corporate Social Investment (CSI) is a South African phenomenon of the
activities that companies contribute to the community. The concept arose
during the apartheid era and was considered necessary to survive on the
international market when South Africa's politic was critical. As the
globalization is putting pressure on governments to provide comprehensive
social services, the focus has been more on what companies are contributing
in this area. However, opinions range from those who believe that CSR and
CSI contributes to positive social change, while benefiting from participating
companies themselves, to those who claim that participation only is a
distraction from profit maximization (Ndhlovu 2011).
4.3. Code of conduct
Culture, laws, ownership structure, corporate governance structure and stage
of development are all factors that make countries different from each other.
Although, something that is relevant for every country is corporate
governance and by developing a corporate governance code, countries can be
able to build confidence in their stock markets, improve transparency and
disclosure, and also ensure that companies take both the shareholders and
stakeholders interest into consideration (Mallin 2010). Andreasson (2011)
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
25
mean that a good corporate governance code is very important for emerging
markets, if they want to compete with the more established markets over
potential investors.
Due to the globalization, companies are growing larger and larger and enter
additional markets in developing countries. This have led to that companies in
some countries have so much economic power that they outplays the political
power in the single country. Therefore, concerns have been raised about how
multinational companies should be able to have control over its operations in
every single country and what impact they have on each country. To prevent
unethical behavior, some organizations such as UN Global Compact and The
Organization for Economic Co-Operation and Development (OECD) have
set up guidelines that companies can adapt to. These guidelines are so far
voluntary and it is up to every single company if they want to comply with
them or not (Laczniak & Kennedy 2011). Laczniak and Kennedy (2011)
believes that companies have to decide if they should have one global code of
conduct that should be adopted in every country or if they should create one
single code for every country they operate in.
4.3.1. UN Global Compact
The UN Global Compact is a voluntary membership for companies in the
private sector, whereby the company is then committed to aligning its business
and strategies with the Global Compact's ten principles that include human
rights, labor, environment and anti-corruption (UN Global Compact 2011).
However, Hamann et al. (2009) found something unexpected in their research
in business and human rights in South Africa. They analyzed the top 100 listed
companies on the Johannes Stock Exchange in order to get an understanding
of how and why companies consider human rights. What they found out was
that a membership in the UN Global Compact and sector and size of
companies had insignificant impact on the company’s involvement on human
rights. It was rather explicit leadership commitment and company policy,
government regulations, such as the Black Economic Empowerment and
Employment Practices, and stock exchange listing rules that had the most
impact of the company’s participation in human rights (Hamann et al. 2009).
4.3.2. The Swedish corporate governance code
The Swedish corporate governance code (Svensk kod för bolagsstyrning) was
introduced in year 2005 and revised 1 February 2010 (Swedish Corporate
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
26
Governance Board 2012a). The Swedish corporate governance code is
devoted to improve corporate governance within Swedish listed companies.
The code is a part of the corporate self-regulation and is a complement to the
Swedish Companies Act as it raises the standards for what is regarded as good
corporate governance (Swedish Corporate Governance Board 2012b).
According to the Swedish Corporate Governance Board (2012b), good
corporate governance implies that the company operates in line with the
owners' interests. Good corporate governance will then gain the public trust in
the companies which contributes to increased confidence in the Swedish
market, internationally (Swedish Corporate Governance Board 2012b).
4.3.3. South Africa’s King Report on Corporate Governance
Since South Africa is an emerging market under development, and with a
turbulent past it is a country with different needs and demands in comparison
to more developed countries. During the apartheid there was a need for a
corporate governance system that could build confidence in the financial
market in order to attract international investors, which subsequently would
enhance the economic growth in the country. The first King report, King I,
was released in 1994, the second King report, King II, was presented in 2002
(West 2009), and the current King report, King III was released in 2009 (King
2009).
King III emphasizes the importance for companies to conduct Integrated
Reporting. This means that companies should put its financial reports in
relation to how the company affects the community, both positively and
negatively. It should also explain what the company tends to do in the future
to reduce the negative effects and increase the positive effects it has on the
society (King 2009).
Sustainability has become an international issue of growing importance during
the 21th century. For a company to undertake sustainable actions, King III
emphasizes that it is essential for the company to undertake long-term
perspectives and good relations with its stakeholders, and attain its ethical,
social and environmental responsibilities. The awareness of sustainable issues
is not enough; the company must conduct a fundamental transformation of its
corporate structure and operations in order to accomplish a genuine
transformation towards sustainability. Due to that strategy, risk, performance,
and sustainability has become inseparable, the board must fully take on the
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
27
importance of integrated sustainability performance and reporting (King
2009).
4.4. Interaction between corporate governance and CSR
4.4.1. Triple bottom line
Today we think in terms of a “triple bottom line,” focusing on
economic prosperity, environmental quality, and – the element
which business had preferred to overlook – social justice.
(Elkington 1999 p.70)
By looking at and including aspects such as human rights, workers’ rights and
environmental protection companies have discovered that they can meet
different stakeholders’ interest but still achieve profit maximization (Gill
2008). Elkington (1999 p.12) explains the importance of corporate governance
in the work towards a sustainable business market with an approach to the
triple bottom line: “The better the system of corporate governance, the greater the chance
that we can build towards genuinely sustainable capitalism”.
4.4.2. The ethics of narcissus
As mentioned in the background, Roberts (2001) addresses “the ethics of
narcissus” which emphasizes that companies only have a desire to be
perceived as ethical, which is considered to be the contrary of actually being
ethical. Due to the importance of others perception of the company, its
corporate governance is characterized by a narcissistic obsession with the
company itself. A distorted self-image derived from that the company’s
desired image is what it identifies itself with, becomes a crucial part of the
corporate governance (Roberts 2001). When the perception of a company
does not match with the reality regarding the implementation of CSR, it is
called window dressing or green wash (Holme 2010).
4.4.3. Implementation barriers
Garavan et al. (2010) addresses several different types of barriers for
companies when it comes to adopt and implement CSR and corporate
sustainability. Two of them are individual and organizational barriers:
Individual barrier depends on how the employees react to CSR
initiatives. Knowledge and awareness about what CSR and
sustainability means and how they perceive that the organization
Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist
28
support these issues is two examples of individual barriers that can
complicate the implementation of these kinds of questions (Garavan et
al. 2010).
The organizational barrier depends more on the culture within the
organization. It can be reward systems or the degree of internal
communication that can affect CSR and sustainability implementation
(Garavan et al. 2010).
4.5. Black Economic Empowerment
During the apartheid almost every company in South Africa was owned by
white investors and the black people lived under constant oppression.
Therefore, the government raised the program Black Economic
Empowerment (BEE) which should encourage companies to sell its equity to
black investors and increase black ownership. Companies that complied with
the BEE and took its responsibility got rewarded in form of preferential
contracts from the government and an increased social legitimacy (Alessandri
et al. 2011). BEE is essentially a growth strategy that targets the South African
economy's weakest point: inequality (South Africa 2012). Alessandri et al.
(2011) believes that BEE actions have become a CSR strategy for companies
to signaling that they are committed and care about social needs.
Analysis Louise Karlsson & Viktor Lindqvist
29
5. Analysis
n chapter 5 wil l our analysi s of the research questions be presented,
where we have integrated the empir ical material with the theoreti cal and
conceptual framework.
We went in to this thesis with the hope of sorting out what CSR is all about
and how the perception of this phenomenon can differ between two as
different countries as Sweden and South Africa. The course Corporate
Governance, which we studied in the beginning of the spring semester 2012,
had aroused our interest. Especially South Africa had caught our interest and
we wanted to look deeper into how they perceive CSR and compare it with the
Swedish perception of it. What does CSR actually mean and how is it related
to corporate governance? Already in an early stage, we found out how
complex this phenomenon is and how the perception of CSR can differ
depending on whom you speak to. Every time we opened a new book, read a
new article or conducted a new interview we got a new insight in what CSR is
all about. The commuting between reading literature and having a
conversation with, for instance, a person that was a part of the King
Committee and has worked in the field for over 20 years, enables us to get
closer to an understanding of the phenomenon CSR. This commuting is in
line with Fejes and Thornberg’s (2009) spiral metaphor. In the literature, the
researchers can obtain knowledge that deepens and strengthens, but also
challenges the interpretation work. Scientific theory is an essential aid in the
interpretation process as manifested by the hermeneutical spiral mentioned
above (Fejes & Thornberg, 2009).
What is the perception of CSR in Sweden and South Africa?
There is no clear definition what CSR actually means and many researchers
have tried to develop an explanation what the term actually comprise
(Grafström et al. 2008). The globalization has open many doors’ and countries
from all around the globe are today a part of the business market. Due to that
countries are different in many ways it is important to remember that every
country has their own perception of CSR (Cramer 2006). According to
Enquist et al. (2006 p. 188) CSR can be understood as “…the voluntary
integration of social and environmental concerns into business operations and interactions
with stakeholders”. CSR means, according to Bogle (2012), that companies, on its
own initiative, are actively involved in community development. It is a topic
that requires unique expertise in many areas and dealing with CSR-issues
I
Analysis Louise Karlsson & Viktor Lindqvist
30
demands long-term thinking (Bogle 2012). Grafström et al. (2008) emphasizes
that it is today up to every company to make an interpretation what CSR is all
about. Although the most CSR actions are voluntary and not required by law,
companies have started to understand that compliance with the modern
society’s belief on CSR activities can be essential to maintain its social
legitimacy (Grafström et al. 2008).
Ljungdahl (2012) define CSR somewhere around the triple bottom line, and
states that companies have to capture all the dimensions of responsibility, have
a strategy for it and at the same time they have to be able to report measurable
performance on the dimensions.
Today we think in terms of a “triple bottom line,” focusing on
economic prosperity, environmental quality, and – the element
which business had preferred to overlook – social justice.
(Elkington 1999 p.70)
Ramsden (2012) discusses the triple bottom line and states that companies are
making the connections between the so called softer issues, which companies
were quite dismissive of before, and the financial bottom line: “…companies
align CSR with business strategy and business risk”. By looking at and including
aspects such as human rights, workers’ rights and environmental protection
companies have discovered that they can meet different stakeholders’ interest
but still achieve profit maximization (Gill 2008). Elkington (1999 p.12)
explains the importance of corporate governance in the work towards a
sustainable business market with an approach to the triple bottom line: “The
better the system of corporate governance, the greater the chance that we can build towards
genuinely sustainable capitalism”.
However, CSR is an old-fashion term according to Ramsden (2012). South
Africa developed the concepts around CSR in more of a moral and ethical
issue, as supposed to what South Africa would call sustainability or sustainable
development which is around long-term viability of an organization (Ramsden
2012). Corporate responsibility and integrated reporting is, according to
Rockey (2012), a broad topic which includes more material issues than CSI,
such as HIV/AIDS-workforce, schools development, and other aspects that
are more aligned with what companies actually do. Evans (2012) explains that
CSI is one part of CSR and means an investment into the community.
Ndhlovu (2011) stresses that CSI is a South African phenomenon that imply
the activities which companies do as a contribution to the community. The
Analysis Louise Karlsson & Viktor Lindqvist
31
concept arose during the apartheid era and was considered necessary to
survive on the international market when South Africa's politic was critical
(Ndhlovu 2011). Due to that CSI is a part of the BEE, South African
companies invest 1 % of after tax profit into community work (Evans 2012).
BEE is essentially a growth strategy that targets the South African economy's
weakest point: inequality (South Africa 2012) Alessandri et al. (2011) believes
that BEE actions have become a CSR strategy for companies to signaling that
they are committed and care about social needs.
Sweden is, according to Bogle (2012), a rich country with for example great
infrastructure, clean water and minimal environmental pollution, and is
relatively spared against any larger issues. Bogle (2012) continues “In Sweden we
have fallen behind when it comes to adopt CSR in our corporate governance because we have
believed that we are not a part of the problem”. Ljungdahl (2012) explains that
Sweden has a social system, with high taxes and strong unions, which allows
businesses not to take great social responsibility because the society in general
is taking so much responsibility.
According to Evans (2012) CSR is definitely not a trend and it will always be a
part of the business in South Africa. Evans (2012) continues by explaining the
situation in South Africa:
On every road there is a beggar and in the news every day there is a
reminder of how divided South Africa is. Our unemployment rate
is 25 % and our youth unemployment rate is 39 %. Everyone is
terrified of what will happen if we don’t do something. (Evans
2012)
Depending on how the situation in a country looks like, the approach to CSR
will be more or less important. The political culture and the social situation
within a country do often play a large role in what to expect from companies
concerning CSR (Cramer 2006). Since South Africa is an emerging market
under development, and with a turbulent past it is a country with different
needs and demands in comparison to more developed countries (West 2009).
Ramsden (2012) stresses that it’s not possible for companies to be successful
without implementing CSR in its business. According to Ramsden (2012) CSR
is not only important in South Africa and discusses Europe's economic
condition:
Analysis Louise Karlsson & Viktor Lindqvist
32
When you look at the issues in Europe today and the stock market
in terms of social economic and social political issues it has an
immediately impact on the financial bottom line in many
companies. (Ramsden 2012)
Ljungdahl (2012) is more pessimistic when it comes to if CSR is a trend. The
CSR trend will go in cycles and during the last 20 years there has been a strong
trend, but it is nothing new because it has existed in all time in business
contexts (Ljungdahl 2012).
According to Laczniak and Kennedy (2011), concerns have been raised about
how multinational companies should be able to have control over its
operations in every single country and what impact they have on each country.
To prevent unethical behavior, some organizations have set up guidelines
globally that companies can adapt to. These guidelines are so far voluntary and
it is up to every single company if they want to comply with them or not
(Laczniak & Kennedy 2011). Laczniak and Kennedy (2011) believes that
companies have to decide if they should have one global code of conduct that
should be adopted in every country or if they should create one single code for
every country they operate in. PwC is an international firm but Ramsden
(2012) explains that it is very consistent across all countries. “We are quite highly
connected so you won’t see major differences in philosophy or in policy and practice, it is fairly
similar” (Ramsden 2012).
Why do companies adopt CSR in its corporate governance?
At the time of 1994, there was a need in South Africa to start looking at
environmental issues (Ramsden 2012). Subsequently, Ramsden (2012) mean
that the country also started looking at the economic issues. Problems and
social needs that can exist in different countries is something that companies
have to pay attention to (Cramer 2006), which Rockey (2012) also discusses
and explain that a lot of the education systems in South Africa needs help and
also is help needed to promote entrepreneurs in businesses.
As the globalization is putting pressure on governments to provide
comprehensive social services, the focus has been more on what companies
are contributing in this area (Ndhlovu 2011). Ramsden (2012) believes that in
terms of sustainability reporting and the triple bottom line, South African
companies were kind of pushed out there because of political issues. In the
aspects of social responsibility, it is legislated and then it got to be done
Analysis Louise Karlsson & Viktor Lindqvist
33
(Ramsden 2012). Carroll (1991) should have called that the legal
responsibilities, which imply that the company should achieve its goals within
the context of the government and the legal system.
The South African government is very excited about policies and legislation,
and as the government is a key stakeholder for most companies, it is essential
for companies to work with them and show them that they are on the same
page at the social economic development (Rockey 2012). Companies that
comply with the BEE and take its responsibility get rewarded in form of
preferential contracts from the government and an increased social legitimacy
(Alessandri et al. 2011).
Rockey (2012) believes that companies are recognizing that they are going to
be here for the long hall and therefore they need to focus on activities outside
the company. It is a strong reputation driver in South Africa and it is expected
of the companies from the employees and other stakeholders (Rockey 2012).
Wheeler and Thompson (2006) believe that the theories behind corporate
governance and to who boards, directors and managers are responsible are
sharply divided between two groups. One group that consists of practitioners
and academics that means that the company’s primary duty is to investors
since they are the one who owns the company, and one group that emphasize
the importance of a more widely perspective where all different kind of
stakeholders are taken into consideration (Wheeler and Thompson 2006).
Unlike a company with a shareholder view, Andreasson (2011) mean that a
company that is governed with a stakeholder view sees the company as a part
of the society which requires that it take its responsibility and care for others
beyond the owners. Rockey (2012) believe that there are a lot of companies
and a lot of CEO’s that are willing to take a box with this approach. Critics
argue that the board of directors cannot use a company’s profit, which should
be passed on to the shareholders, for any sorts of social or environmental
purpose, how kind-hearted it may be (De Geer 2009). Opinions range from
those who believe that CSR and CSI contributes to positive social change,
while benefiting from participating companies themselves, to those who claim
that participation only is a distraction from profit maximization (Ndhlovu
2011).
Ljungdahl (2012) stresses that companies are driven by what others think
about them and the business leaders are affected by it. It is about different
driving forces and pressures from various groups in the society, especially the
Analysis Louise Karlsson & Viktor Lindqvist
34
media are a very strong player (Ljungdahl 2012). According to Ljungdahl
(2012) investors' interest in CSR issues has become increasingly important,
even if it is not quite “mainstream”, and it is a key driver to get listed
companies to work with implementing CSR in its corporate governance. Like
Enquist et al. (2006) are discussing, it is not possible to separate business from
ethics. Since the competition on the global business market today is quite
tough, companies cannot afford to be publicly criticized because of poor
working conditions, violation of human rights or environmental scandals
(Cramer 2006). The industrialized and modern world we live in, characterized
by increased trade between countries, has improved the interrelationship
between business and society. The manufacturing of products is often located
on one side of the globe and the consumption on the other, so what people
consume may thus have consequences for people on the opposite side of the
globe. Due to this development, the debate and demand from the public
society has increased and companies have to pay attention to CSR and take
responsibility for its activities (Cerne 2008).
The world economy is, according to Soleymani (2010), under transformation.
Advanced development within the modern industry, helped by increased cross
border trade due to lower tariffs and a significant fall of transportation and
communications costs, have made the business market becoming a worldwide
market (Soleymani 2010). Bogle (2012) believes that corporations today have
become so big and they operate worldwide on a whole different level than
they have before. The relationship between governments and companies has
changed, and in some countries there are companies that are bigger and
stronger than the government, which have made it difficult for legislations
(Bogle 2012). The balance of power has, according to Bogle (2012), changed
and many companies have found out that they have to take actions, which
they did not have to take before, if the society should be able to work. Astra
Zenica is an example within these issues, they predict that it will be difficult
finding labour in the future due to decreasing interest in these educations, and
therefore built a school in order to attract young people to become engineers
(Bogle 2012). Laczniak & Kennedy (2011) also talks about the development of
the globalization and stresses that due to the globalization, companies are
growing larger and larger and enter additional markets in developing countries.
This have led to that companies in some countries have so much economic
power that they outplays the political power in the single country (Laczniak &
Kennedy 2011).
Analysis Louise Karlsson & Viktor Lindqvist
35
Is CSR something that companies in Sweden and South Africa
genuinely adopts or is it just a way for companies to be perceived as
ethical?
Evans (2012) would not say that window-dressing and green wash is common,
but that it happens. When the perception of a company does not match with
the reality regarding the implementation of CSR, it is called window dressing
or green wash (Holme 2010). In South Africa it is a real challenge when the
executives of companies just are in it for the public relations and marketing,
which is a rather common usage of the legislated CSI money (1 % after tax),
and the community is secondary in terms of the priorities (Evans 2012).
Roberts (2001) addresses “the ethics of narcissus” which emphasizes that
companies only have a desire to be perceived as ethical, which is considered to
be the contrary of actually being ethical. Evans (2012) mean that some
companies really prioritizes government relationships and in order to win
those government relationships they use CSI money to say: “look what we do for
the community, in your community”, so from that point of view window-dressing
happens and it is very negative.
Ramsden (2012) stresses that for companies must have a long-term thinking to
be able to genuinely adopt CSR. According to King III, sustainability has
become an international issue of growing importance during the 21th century
(King 2009). For a company to undertake sustainable actions, King III
emphasizes that it is essential for the company to undertake long-term
perspectives and good relations with its stakeholders, and attain its ethical,
social and environmental responsibilities. The awareness of sustainable issues
is not enough; the company must conduct a fundamental transformation of its
corporate structure and operations in order to accomplish a genuine
transformation towards sustainability (King 2009). Ramsden (2012) has seen
differences in terms of values and that are that CSR is now being made
relevant to the operator.
It has to be integrated, the people have to understand it and buy in
to it. It is always easy to persuade the board member’s, but the gap
is at middle management and operational level where they can’t see
the benefits and therefore they aren’t living the values and aren’t
working towards long-term thinking. Therefore, corporate
governance has a very hectic discussion around behavior, values
and corporate culture. (Ramsden 2012)
Analysis Louise Karlsson & Viktor Lindqvist
36
Due to that strategy, risk, performance, and sustainability has become
inseparable, the board must fully take on the importance of integrated
sustainability performance and reporting (King 2009).
Ljungdahl (2012) is pessimistic about the general knowledge of CSR in
Swedish companies and emphasizes that many companies do not have a deep
understanding of what CSR is and especially what it means for its business.
According to Ljungdahl (2012), companies’ window-dressing is an image issue
and “…image is important for companies as it can arouse strong emotions around the way
companies behave within CSR”. Roberts (2001) addresses “the ethics of narcissus”
in his article and states that due to the importance of others perception of the
company, its corporate governance is characterized by a narcissistic obsession
with the company itself. A distorted self-image derived from that the
company’s desired image is what it identifies itself with, becomes a crucial part
of the corporate governance (Roberts 2001).
Rockey (2012) discusses about the barriers of implementing CSR in
companies’ corporate governance. In many cases CSR is an awareness issue,
awareness of what the benefits are. There are still a lot of people out there that
find CSR as a distraction so it is about getting passionate about it on an
executive level, that’s probably the biggest barrier there ever is. “You still see
people trying to get it through on a middle management position and that don’t work”
(Rockey 2012). Garavan et al. (2010) believes that individual barriers depend
on how the employees react to CSR initiatives. Knowledge and awareness
about what CSR and sustainability means and how employees perceive that the
organization support these issues is two examples of individual barriers that
can complicate the implementation of these kinds of questions (Garavan et al.
2010).
According to Garavan et al. (2010) organizational barriers depend on the
culture within the organization. It can be reward systems or the degree of
internal communication that can affect CSR and sustainability implementation
(Garavan et al. 2010). One of the barriers that are preventing companies from
implementing CSR in its corporate governance is, according to Ljungdahl
(2012), the incentive structure within companies that rewards the board of
directors. Companies who have a shareholder view have conflicts of interest
between the owners and the managers (agency conflicts) and these conflicts
are often being solved by linking managerial rewards to corporate performance
measured by how the share price is going (Andreasson 2011). Ljungdahl
(2012) stresses that if companies’ remuneration is not connected to long-term
Analysis Louise Karlsson & Viktor Lindqvist
37
goals, CEO’s will never end with short-term thinking and start looking at
sustainability performance.
If companies are starting to implement CSR in its corporate
governance and are having goals towards sustainability, the
companies will then automatically have more long-term thinking,
because those kinds of goals can’t be reached over a night.
(Ljungdahl 2012)
Bogle (2012) states that some companies in Sweden take CSR-issues seriously
and work a lot with these issues, but even in those companies it’s not
integrated throughout the whole company. The problem is that companies do
not see CSR-activities as a strategy; they only react on something that the
outside world requires (Bogle 2012). Bogle (2012) continues by giving an
example: “Companies join the UN Global Compact because it is considered to be the right
thing to do, but when I ask them why they don’t know”. In Hamann et al.’s (2009)
research in business and human rights in South Africa, the researchers found
out that a membership in the UN Global Compact had insignificant impact on
the company’s involvement on human rights. It was rather explicit leadership
commitment and company policy, government regulations, and stock
exchange listing rules that had the most impact of the company’s participation
in human rights (Hamann et al. 2009).
In both Sweden and South Africa is each countries code of conduct a stock
exchange listing rule (Swedish corporate governance board 2012a; Hanks &
Gardiner (2012). According to the Swedish corporate governance code, good
corporate governance implies that companies operate in line with the owners'
best interests. Good corporate governance will then gain the public trust in the
companies which contributes to increased confidence in the Swedish market
internationally (Swedish Corporate Governance Board 2012b). The King III,
emphasizes the importance for companies to adopt to integrated reporting
annually. This means that companies should put its financial reports in relation
to how the company affects the community, both positively and negatively. It
should also explain what the company tends to do in the future to reduce the
negative effects and increase the positive effects it has on the society (King
2009).
Bogle (2012) stresses that it cannot be forgotten that companies are
organizations that operate to earn money. This is in line with what Carroll
(1991) define as the economic responsibilities, which consist of maximizing
Analysis Louise Karlsson & Viktor Lindqvist
38
the profitability of the company and make as much money as possible. Bogle
(2012) resembles companies as predators and explains that people want them
to be as small rabbits that should be nice to everyone, but the world doesn’t
work that way.
Ramsden (2012) states that, in South Africa, people understand very clearly
what CSR is about because they live it every day. Evans (2012) explains that
South Africa is a country where poverty is very evident. It takes 10 minutes to
drive from the wealthiest part of Johannesburg to the poorest and there are
shacks and informal houses everywhere, so people are very well aware of the
context in which they live here (Evans 2012). “The only thing that you might find is
a CEO that doesn’t care, but they all know what is going on” (Evans 2012). Evans
(2012) claims that, in many companies, CSI is becoming a part of the DNA in
the company, a part of the overall strategy. According to Gill (2008) is CSR
often seen as a business strategy to make the ultimate goals of corporations
more achievable as well as more transparent, demonstrate responsibility
towards communities and the environment, and take the interests of groups
such as employees and consumers into account when making long-term
business decisions.
There should be some nature around the corporate culture and behavior, how
companies live their values and they should have a tone-at-the-top thinking
(Ramsden 2012). Ramsden (2012) mean that it is very easy to put up honesty,
integrity and their most valuable assets, but in terms of corporate governance
you can have everything in theory, but if companies are not living those values,
it doesn’t work. Roberts (2001) emphasizes that corporate governance and
ethics should be linked together and that it should be a connection between
how a company thinks and how it acts, which should be reflected in its core
values.
Ramsden (2012) believe that the economic downturn has changed the way
people think, and that although people’s minds are on the media on what
happens today it also makes people consider how things are going to be done
in the future, which increase the long-term thinking. Culture, laws, ownership
structure, corporate governance structure and stage of development are,
according to Mallin (2010), all factors that make countries different from each
other. Although, something that is relevant for every country is corporate
governance and by developing a corporate governance code, countries can be
able to build confidence in their stock markets, improve transparency and
disclosure, and ensure that companies take both shareholder’s and
Analysis Louise Karlsson & Viktor Lindqvist
39
stakeholder’s interest into consideration (Mallin 2010). Andreasson (2011)
mean that a good corporate governance code is very important for emerging
markets, if they want to compete with the more established markets over
potential investors.
Evans (2012) discuss that it is a broad spectrum when it comes to if
companies are genuinely adopting CSR or not. South Africa have companies
who start schools, who run schools, who contribute to universities, who help
orphans, do economic empowerment projects, help communities (Evans
2012). This is in line with the highest stage on Carroll’s (1991) pyramid of
CSR, which are Philanthropic responsibilities. The top of the pyramid contain
voluntary and unexpected actions, in an ethical or moral sense, which makes
the company a good corporate citizen. The society needs companies that
donate its time and money, but the society doesn’t perceive the companies
unethical if they don’t (Carroll 1991).
Conclusion Louise Karlsson & Viktor Lindqvist
40
6. Conclusion
n this chapter wil l our conclusion of the resea rch quest ions be presented.
We wil l al so present our own ref l ect ions and recommendations to future
research.
6.1. What is the perception of CSR in Sweden and South Africa?
It is not an understatement to say that CSR is a phenomenon that is a hot
topic in both South Africa and Sweden. The perception of what CSR is all
about is quite similar between the two countries. Both Ljungdahl (2012) and
Ramsden (2012) define CSR around Elkington’s (1999) “triple bottom line”,
where environmental, social and economic aspects are taken into account.
However, as Cramer (2006) is discussing, the perception of CSR depends on
how the situation in a country looks like. In South Africa, companies see CSR
activities as a strategy that is necessary for survival due to that the country is
dependent on companies’ contribution to the society. It has become an
essential part of doing business in South Africa. Swedish companies view
Sweden as a rich country and often perceive CSR as more of a temporary
strategy to satisfy stakeholders rather than a need for survival. Swedish
companies have, according to Bogle (2012), fallen behind when it comes to
adapting CSR in their corporate governance, because they believe that they are
not a part of the problem. Ramsden (2012) stresses that CSR is not only
important for countries such as South Africa, it is central to all countries.
6.2. Why do companies in Sweden and South Africa adopt CSR in its corporate governance?
It is not possible to separate business from ethics (Enquist et al. 2006). It is
inevitable that South Africa is affected by the apartheid era; the government
has through the BEE included CSR in the way South African companies are
doing the everyday business. It is a strong reputation driver and, according to
Rocky (2012), companies in South Africa stand apart if they do not take
responsibility. Ljungdahl (2012) states that Swedish companies are driven by
what other thinks about them and as the pressure from various groups in the
society increases, CSR issues has become increasingly important. Due to the
interrelationship between business and society the debate and demand from
the public society has increased and companies have to pay attention to CSR
(Cerne 2008). Companies today are becoming larger and larger, and many
I
Conclusion Louise Karlsson & Viktor Lindqvist
41
companies have found out that they have to take actions which they did not
have to take before if the society should be able to work (Bogle 2012).
6.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical?
When the perception of a company does not match with the reality regarding
the implementation of CSR, it is called window dressing or green wash
(Holme 2010) and there is no doubt that window dressing occurs in both
Sweden and South Africa. The difference is that in South Africa companies are
obligated to invest in CSR activities, or what they call CSI, but in Sweden CSR
has more of a voluntary approach. As long as media do not have an eye on a
company in Sweden, we have got the perception, that Swedish companies
usually do not bother getting involved in CSR issues. Roberts (2001) addresses
“the ethics of narcissus” which emphasizes that companies only have a desire
to be perceived as ethical, which is considered to be the contrary of actually
being ethical.
The awareness issue of the benefits with implementing CSR as a strategy is
common both in Sweden and South Africa, as well as the lack of CSR
knowledge within companies (Rockey 2012; Bogle 2012). Roberts (2001)
emphasizes that corporate governance and ethics should be linked together
and that it should be a connection between how a company thinks and how it
acts, which should be reflected in its core values. Ramsden (2012) mean that it
is very easy to put up honesty, integrity and their most valuable assets, but in
terms of corporate governance you can have everything in theory, but if
companies are not living those values, it doesn’t work.
6.4. The researchers own reflections
After months of work, inspired by the hermeneutics, we wish to express our
own reflections on the phenomenon of CSR. We have come a long way
toward an understanding, but it's still a long road ahead in this complex
concept.
Sweden and South Africa are two completely different countries with different
history and general conditions. In the comparison between the two countries’
perception and adoption of CSR we have been inspired by Carroll’s (1991)
pyramid of CSR with the four levels of responsibilities; economic, legal,
ethical, and philanthropic.
Conclusion Louise Karlsson & Viktor Lindqvist
42
Due to that South Africa has developed the BEE, they have correlated the
legal and ethical responsibilities. The society in South Africa is dependent on
the contributions from companies and is therefore also expecting it to a
greater extent, which can make it harder for companies in South Africa to
fulfill the philanthropic responsibilities.
Figure 4 - The Pyramid of Corporate Social Responsibility in South Africa (Revised from
Carroll 1991 p. 42)
The Swedish levels of responsibilities in the pyramid of CSR, we believe, are
similar to Carroll’s (1991) pyramid. Sweden is spared from difficulties in
relation to South Africa, which has led to that Swedish companies do not see
themselves as part of the problem. Sweden is lagging behind in the
development of CSR, but as the Swedish companies are growing and CSR
issues are becoming increasingly apparent, when looking at the concerns
around Europe, the feeling is that companies are beginning to understand that
they must take their corporate social responsibilities.
Figure 5 - The Pyramid of Corporate Social Responsibility in Sweden (Carroll 1991 p. 42)
Philan-tropical
Ethical & Legal
Economic
Philantropical
Ethical
Legal
Economic
Conclusion Louise Karlsson & Viktor Lindqvist
43
When comparing the Swedish and South African code of conduct, we perceive
that the South African code of conduct stresses sustainability issues and
integrated reporting, while the Swedish code of conduct focuses more on the
agency conflicts between the shareholders and managers within a company.
We believe that this show the countries different perception of the importance
of integrating CSR in the corporate governance. Another thing which reflects
the differences between South Africa and Sweden is when we have asked our
respondents if they believe that CSR is a trend or if it is a topic that are here to
stay. Bogle (2012), Ljungdahl (2012) and Glas (2012) in Sweden were quite
restrained and believed that the debate around CSR issues will cool down over
time. Ramsden (2012), Evans (2012) and Rockey (2012) in South Africa was
almost annoyed over the question and instantly replied that it definitely is not
a trend.
6.5. Further research
To take this research to a new level, we recommend future research to take
one more country into the research and interview companies that are working
with implementing CSR in their corporate governance. To receive more
perspectives on CSR issues we recommend to interview respondents who
stand more skeptical to the subject. As South Africa’s history and general
condition seems to play a major role in its perception to the research
questions, we urge further researchers to visit South Africa in order to get a
better understanding of the phenomenon CSR.
The new knowledge Louise Karlsson & Viktor Lindqvist
44
7. The new knowledge
f ter studied the phenomenon CSR and tried to find out what it means and why
companies in Sweden and South Africa integrate it in their corporate governance, we
wanted to get a closer look how it can work in the reality. In order to get a new perspective of
companies’ implementation of CSR in their corporate governance, we have studied PwC's
implementation process and simultaneously tried to select new relevant theory that can be
helpful to achieve an understanding of the process.
How does PwC’s implementation process look like?
In 2002, PwC created a code of conduct that should permeate the entire
organization worldwide (Glas 2012). A corporate code of conduct is,
according to Erwin (2011), a document that companies develop as a tool to
communicate its responsible business practices and spread its commitment to
ethical concerns. By having a code of conduct, companies are able to build an
ethical organizational culture within the company which results in that its
employees know how they are expected to behave. The code of conduct is
designed to convey a company’s commitment to CSR. The code is often seen
as a fundamental tool for a company to sustain a company culture that is
based on CSR policies (Erwin 2011). Van Beek (2012) describe that PwC’s
code of conduct is basically a set of standards describing the behavior that is
expected of PwC’s own people. PwC already conducts its business in a
framework of relevant laws, regulations and internal policies, but they
recognize that these do not govern all behavior. Van Beek (2012) continues:
“We feel it is important for all our clients, our people and other stakeholders, to understand
exactly what we stand for and how they can expect us to conduct ourselves.”
CSR strategies should take geographic issues into account, such as political,
environmental, and social economic issues in order for it to be relevant.
Principles must be made so they are relevant for the country in which the
company operates (Ramsden 2012). Glas (2012) explains that PwC’s code of
conduct looks exactly the same at PwC globally. The code of conduct is
written in English and it has consciously not been translated to ensure that
there aren’t any interpretations. PwC has supplements to the code in form of
local policies that are adapted to the local legislation and other regulations. The
code of conduct is fundamental to PwC’s values and everything PwC stands
for. It is built on PwC’s ground values Teamwork, Leadership and Excellence
and each word is defined in the code of conduct (Glas 2012).
A
The new knowledge Louise Karlsson & Viktor Lindqvist
45
According to Van Beek (2012), PwC were committed to make the code of
conduct a long-term success. Therefore, they have dedicated ethics champions
around the world, educations for their employees, opened channels such as
helplines to enable people to raise concerns, and ways of monitoring the
program. PwC continue to drive and actively support this program around the
world and by doing this they ensure all code of conduct efforts remain
relevant (Van Beek 2012).
As CSR is becoming more essential for companies and investors around the
world, the concept of corporate governance has become a vehicle for
management to consider more ethical business. Companies want to assure
investors that they are accountable and transparent in its corporate
governance. In the post-Enron years, the regulations of corporate governance
and CSR have transformed. These transformations are coming together and
include both corporate self-regulation and how social groups, institutional
investors and NGOs strive to make self-regulation more affective, which
enables the convergence on corporate governance and CSR (Gill 2008).
PwC have a lot of “tone at the top” which means, according to Glas (2012),
that what the directors are saying should be heard all the way down in the
hierarchy. In order to ensure the “tone at the top”, PwC has a lot of internal
controls. PwC has a global workforce that visits every country each year and
does different surveys and tests to see if the Code is being followed. Glas
(2012) also explains that PwC have a whistle-blower function in all countries,
which is an external and internal anonymous communication channel that is
called “complains and allegations”.
The developments have influenced large public companies to voluntarily
create mechanisms of corporate governance in order to receive stakeholder
engagement and investor accountability (Gill 2008). According to Gill (2008,
p. 454) these mechanisms are called self-regulation which contain “CSR board
committees, company units dealing with business ethics, corporate codes of conduct, non-
financial reporting practices, and stakeholder complaint and dialogue channels”. Another
trend in self-regulation that is growing larger every day is non-financial
reporting and also integrated reporting where companies try to incorporate
governance and CSR issues into its financial reporting. This enables companies
to become even more transparent and accountable for investors and creates
stakeholder engagement (Gill 2008).
The new knowledge Louise Karlsson & Viktor Lindqvist
46
However, critics condemns the free market ideology underlying self-regulation
and that corporate code of conduct only are empty words that, in reality, does
not improve corporate behavior. Many people believe that even a well-
monitored code of conduct might not conduct any changes, unless changes
are also being made in the company culture and decision-making (Gill 2008).
Every office has workshops who deal with PwC’s code of conduct (Glas
2012).
The workshops are important because you need to talk about and
define the big words that are in the code of conduct in order to
understand it and to be able to integrate it in the employees’ daily
work. (Glas 2012)
Every new employed gets the Code of Conduct brochure and they have
workshops in what the Code really means (Glas 2012).
Many of the partners at PwC were on the King III committee, so Ramsden
(2012) emphasizes that they understand what CSR is all about. However, PwC
do not report publicly because they are an audit firm, but they still apply the
principles. “So we do have some reporting but to me it’s not enough, but it’s the nature of
an audit firm” (Ramsden 2012).
The credibility of the thesis Louise Karlsson & Viktor Lindqvist
47
8. The credibility of the thesis
s Fej es and Thornberg (2009) discusses; qualitat ive research require
that the researcher have a ref l ec tive approach and ref l ect over i t s
methodology and pract ices, i t s understandings and values, and how the
researcher or other actors that are involved in the research can inf luence the
study. In the fol lowing chapter a credibil i ty discus sion of the thesi s wil l be
presented.
The purpose of this research is to get a better understanding of the perception
of CSR in Sweden and South Africa and why companies in both countries
adopt CSR in its corporate governance. Since we needed to have respondents
with high knowledge of and experience with CSR issues, it seemed natural to
interview people who work with and are passionate about it. This resulted in
that we, to a greater extent, got positive and confident opinions about the
subject and not those who are more skeptical about it. To get a broader
picture of the subject, we believe that further interviews have to be conducted
with people that are more skeptical to CSR. However, because of the time
limit for our research we could not include that in this thesis.
We conducted qualitative interviews in our empirical data collection.
Qualitative interviews can be compared with what Alvesson and Sköldberg
(1994) calls a narrative source where information passes through a subjective
medium, and therefore there is a risk that the information could be distorted.
Since we have been inspired by the hermeneutics we have to take into
consideration what Fejes and Thornberg (2009) states; the researchers enter
the research with a preconceived opinion and knowledge of the subject before
the research began. This, along with that we chose the theoretical framework
that we believed was relevant to the research questions, which we analyzed
together with the empirical material that resulted in a conclusion, implies that
the results can be rather subjective. We have been aware of the subjectivity
during the research and have tried to counteract it as much as possible. In
order to do so, we began the thesis by informing the reader of the knowledge
of the subject which we already possessed. This helps both the reader and us
to deal with potential subjectivity.
From a hermeneutical perspective, the conclusion can be interpreted from the
reader's own situation and therefor becomes difficult to generalize (Fejes &
Thornberg, 2009). Fejes and Thornberg (2009) indicate that the developed
A
The credibility of the thesis Louise Karlsson & Viktor Lindqvist
48
knowledge cannot be generalized in a statistical sense in the hermeneutic
tradition, however, the generalization can be made on meta-level.
Generalization on meta-level leads to insight into how it may seem for
someone to live under the conditions applied generalized by the reader's
interpretative process (Fejes & Thornberg, 2009).
Reference List Louise Karlsson & Viktor Lindqvist
49
Reference List
Alessandri, M.A. Sloan Black, S. and Jackson, W.E. (2011) Black Economic
Empowerment Transactions in South Africa: Understanding When
Corporate Social Responsibility May Create or Destroy Value, Long range
planning, 26, 229-249
Alvesson, M. and Sköldberg, K. (1994). Tolkning och reflektion: Vetenskapsfilosofi
och kvalitativ metod. Lund: Studentlitteratur.
Alvesson, M. and Sköldberg, K. (2000). Reflexive Methodology: New vistas for
qualitative research. London: SAGE Publications Ltd.
Andersen, I. (1998). Den uppenbara verkligheten – Val av samhällsvetenskaplig metod.
Lund: Studentlitteratur.
Andreasson, S. (2011) Understanding Corporate Governance Reform in South
Africa: Anglo-American Divergence, the King Reports, and
Hybridization, Business & Society, 50 (4), 647-673.
Babarinde, O. A. (2009). Bridging the Economic Divide in the Republic of
South Africa: A Corporate Social Responsibility Perspective. Thunderbird
International Business Review, 51(4), 355-368
Bryman, A. & Bell, E. (2003). Business research methods. New York: Oxford
University.
Bryman, A. (2008). Social Research Methods. Oxford University Press, third
edition.
Carroll, A.B. (1991) The Pyramid of Corporate Social Responsibility: Toward
the Moral Management of Organizational Stakeholders. Business Horizons,
34 (4), 39-48
Cerne, A. (2008). Working with and Working on Corporate Social
Responsibility – The Flexibility of a Management Concept. Lund: KFS i
Lund AB.
Cramer, J. (2006). Corporate social responsibility and globalization. Greenleaf
Publishing Ltd.
Dalen, M. (2008). Intervju som metod. Malmö: Gleerups Utbildning AB.
Reference List Louise Karlsson & Viktor Lindqvist
50
De Geer, H. (2009). 125 år med Corporate Social Responsibility. Bromma: Centrum
för Näringslivshistoria.
Elkington, J. (1999). Cannibals with forks. Capstone Publishing Ltd. Oxford
Enquist, B. Johnson, M. and Skålén, P. (2006) Adoption of Corporate Social
Responsibility – Incorporating a Stakeholder Perspective, Qualitative
Research in Accounting and Management, 3 (3), 188-207.
Erwin, P.M. (2011) Corporate Codes of Conduct: The Effects of Code
Content and Quality on Ethical Performance, Journal of Business Ethics, 99,
535-548.
Fejes, A. and Thornberg, R. (2009). Handbok i kvalitativ analys. Stockholm:
Liber.
Gill, A. (2008) Corporate Governance as Social Responsibility: A Research
Agenda. Berkley Journal of International Law, 26 (2), 453-478
Grafström, M. Göthberg, P. and Windell, K. (2008). CSR: Företagsansvar i
förändring. Malmö: Liber AB.
Hamann, R., Sinha, P., Kapfudzaruwa, F., Schild, C. (2009). Business and
Human Rights in South Africa: An Analysis of Antecedents of Human
Rights Due Diligence. Journal of Business Ethics, 87, 453–473.
Hanks, J. and Gardiner, L. (2012). Integrated Reporting: Lessons from the South
African Experience. Washington: Private Sector Opinion (25), International
Finance Corporation.
Holme, C. (2010). Corporate social responsibility: a strategic issue or a
wasteful distraction? Industrial and commercial training, 42 (4), 179-185.
Justesen, L. & Mik-Meyer, N. (2011). Kvalitativa metoder: Från vetenskap till teori.
Lund: Studentlitteratur.
King, M. (2009). King Code of Governance for South Africa 2009. Institute of
Directors in Southern Africa.
Laczniak, G.R. and Kennedy, A.M. (2011) Hyper Norms: Searching for a
Global Code of Conduct, Journal of Macromarketing, 31 (3), 245-256
Mallin, C.A. (2010). Corporate Governance. Oxford University Press, third
edition.
Reference List Louise Karlsson & Viktor Lindqvist
51
Ndhlovu, T. P. (2011). Corporate Social Responsibility and Corporate Social
Investment: The South African Case. Journal of African Business, 12, 72–92
NGO Global Network (2012). Definition of NGO’s. [Electronic]. Available:
http://www.ngo.org/ngoinfo/define.html [2012-05-14]
Roberts, J. (2001) Corporate Governance and the Ethics of Narcissus, Business
Ethics Quarterly, 11 (1), 109-127.
Selznick, P. (1996) Institutionalism "Old" and "New", Administrative Science
Quarterly, 41 (2), 270-277.
Sims, R.R. (2003). Ethics and corporate social responsibility. Preager
Publishers. Westport
Soleymani, M. (2010). The Heavy Price of Globalization: Globalization and
Sustainable Development. Perspectives on Global Development & Technology, 9
(1/2), 101-118.
South Africa (2012). Black economic empowerment. [Electronic]. Available:
http://www.southafrica.info/business/trends/empowerment/bee.htm
[2012-04-13]
Strauss, A. & Corbin, J. (1990) Basics of qualitative research: grounded theory
procedures and techniques. Newbury Park, California: Sage
Swedish Corporate Governance Board (2012a). Evolution of the Code.
[Electronic]. Available: http://www.corporategovernanceboard.se/the-
code/evolution-of-the-code [2012-05-14]
Swedish Corporate Governance Board (2012b). The aim of the Code.
[Electronic]. Available: http://www.corporategovernanceboard.se/the-
code/aim-of-the-code [2012-05-14]
UN Global Compact (2011). Overview of the UN Global Compact. [Electronic].
Available: http://www.unglobalcompact.org/AboutTheGC/index.html
[2012-05-13]
Unerman, J. and O’Dwyer, B. (2010) Ngo Accountability And Sustainability
Issues In The Changing Global Environment, Public Management Review,
12 (4), 475-486
Reference List Louise Karlsson & Viktor Lindqvist
52
West, A. (2009). The ethics of corporate governance: A (South) African
perspective. International Journal of Law and Management, 51(1), 10-16.
Interviews
Bogle, Marianne. CSR Sweden, Sweden. 2012-05-04
Evans, Bridgit. Greater Good, South Africa. 2012-05-15
Glas, Carina. PwC, Sweden. 2012-05-04
Ljungdahl, Fredrik. PwC, Sweden. 2012-05-15
Ramsden, Alison. PwC, South Africa. 2012-05-10
Rockey, Nick. Trialogue, South Africa. 2012-05-16
Secondary Data
Van Beek, Coenraad. (2012) Interview: Why have a code? [Electronic] Available:
http://www.pwc.com/gx/en/ethics-business-conduct/why-have-a-
code-interview.jhtml [2012-05-05]
Appendix 1 - Interview respondents Louise Karlsson & Viktor Lindqvist
53
Appendix 1 - Interview respondents
Alison Ramsden, PwC South Africa
Alison is a partner in charge of governance, integrated reporting and
sustainability in PwC South Africa. Alison sat on the King Committee in
South Africa and she was on the committee that put together the chapters
which contained corporate citizenship, stakeholder relations and integrated
reporting. She has been working with CSR for 20 years.
Bridgit Evans, Greater Good South Africa
Bridgit Evans is the CEO for the organization Greater Good South Africa and
she has worked in the field of CSR for about 10 years.
Nick Rockey, Trialogue South Africa
Trialogue’s managing director Nick Rockey has 16 years of consulting
experience across many market and industry sectors. Nick is involved in
product development in the fields of CSI and sustainability, and leads the
client consulting business for Trialogue.
Fredrik Ljungdahl, PwC Sweden
Fredrik Ljungdahl is the Director for sustainable solutions at PwC in
Stockholm. Fredrik have worked with sustainability issues for about 20 years,
both in the business sector but also as a scholar.
Marianne Bogle, CSR Sweden
Marianne Bogle is the managing director for CSR Sweden which is the leading
enterprise network that focuses on corporate social responsibility and
community involvement. With many years in the field Marianne is a person
with special knowledge within the CSR and sustainability area.
Carina Glas, PwC Sweden
Carina Glas is a senior manager at PwC in Stockholm and is responsible for
PwC’s “Business and Ethics” in Sweden and she has worked in the field since
2002.
Coenraad van Beek, PwC Globally
Coenraad van Beek is the global ethics leader at PwC.