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A Stakeholder Approach To CSR
A Stakeholder Approach To CSR
Introduction
The topic of the social responsibilities of business has
been a subject of intense controversy and interest
over the past three decades. In part, this debate is an
outgrowth of the proliferation of different conceptualizations of corporate social responsibility (CSR).
The term CSR has indeed been defined in various
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operational or managerial viewpoint (Clarkson,
1995). He makes the case that CSP can be analyzed
more effectively by using a framework based on the
management of a corporations relationships with its
stakeholders than by using CSR models and methodologies given that corporations are the nexus of a
complex web of stakeholder relationships and indeed
manage relationships with specific stakeholder
groups rather than with society at large.
Maignan et al. (2005) similarly find that senior
management and many marketers still struggle with
the notion of CSR. The crux of the problem
stems from the meaning of the word social and
how it links to daily business activities. Indeed,
because of the level of abstraction of the word
social, managers may have problems evaluating
how their own organization can contribute to the
well being of society as a whole (Clarkson, 1995;
Maignan et al., 2005). Indeed as suggested by
Clarkson (1995) society is a level of analysis that
is more inclusive, more ambiguous and further up
the ladder of abstraction than a corporation itself.
Based on casual observation, the term society is
often used interchangeably with the community
stakeholder group in the business and society literature, raising a legitimate concern as to whether
the societal level of abstraction is indeed helpful or
justified.
Hence, there is clearly some merit to a stakeholder approach to CSR, which will be further
probed and explored in this article. Indeed as proposed by Maignan et al. (2005), even though
businesses in general are accountable toward society
at large, an individual business can be deemed
responsible only toward stakeholders, or the
definable agents with whom it interacts. The article
starts by presenting an overview of two popular
conceptualizations of CSR, highlighting their predominant inclination toward providing static taxonomic CSR descriptions. The article then makes
the case for a stakeholder approach to CSR,
reviewing its inherent logic and outlining how it
has been integrated into recent empirical studies. In
light of this review, the article adopts a stakeholder
framework the Ethical Performance Scorecard
(EPS) proposed by Spiller (2000) to examine the
CSR approach of a number of Lebanese and Syrian
firms that are considered active in CSR. The
findings are presented and relevant implications
Ethical Responsibility
Legal Responsibility
Economic Responsibility
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motivating responsible behavior, the processes of
responsiveness and the outcomes of performance.
Her refined postulation, therefore, placed CSR into
a broader context than just a stand-alone definition,
and conceptualized CSP as the product of a business
firms particular configuration of principles of social
responsibility, processes of social responsiveness, as
well as observable outcomes as they relate to the
firms societal relationships (Table I).
The model offered by Wood (1991) constitutes a
significant advance in CSR research. A researcher
using the model would first consider the principles
that motivate a firms social responsibility actions at
three levels of analysis: institutional, organizational
and individual. Therefore, the motivation for a
firms social responsibility actions may stem from the
principle of legitimacy (institutional level), i.e., from
a desire to maintain credibility and legitimacy as a
responsible societal actor in a shared environment.
Alternatively, the motivation could stem from an
organizational sense of public responsibility, particularly for outcomes related to the firms primary and
secondary areas of involvement. Finally, the motivation could stem from the choices of individual
managers and their personal responsibility preferences and inclinations. There is also room for
interactivity among two or more of these principles
in motivating CSP.
Responsiveness according to Wood (1991) constitutes an action dimension that is needed to complement the normative and motivational component
of social responsibility. It is conceptualized as comprising three facets environmental assessment,
TABLE I
The CSP model (Wood, 1991)
Principles of CSR1
Institutional principle: legitimacy
Organizational principle: public responsibility
Individual principle: managerial discretion
Processes of CSR2
Environmental assessment
Stakeholder management
Issues management
Outcomes of corporate behavior
Social impacts
Social programs
Social policies
Employees
Suppliers
Customers
Community
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research suggests a clear inclination on the part of
firms operating in Portugal to attend to the external
dimension of CSR. Another study in the Spanish
context (Uhlaner et al., 2004) also utilized a stakeholder approach, defining CSR effectiveness as the
ability to satisfy a wide range of constituents within/
outside the organization. Two categories of stakeholders, economic and social, were identified with
the findings suggesting the salience of the economic
stakeholders clients and employees over the social ones including sports clubs, the church, and the
environment. The researchers confirm on the basis
of their study the utility of a stakeholder approach in
the context of CSR.
A stakeholder approach was also used by Papasolomou et al. (2005) in the context of Cypriot
businesses. Their rationale for using a stakeholder
approach is that stakeholders invariably affect or are
affected by business organizations and therefore can
be seen as imposing on them different responsibilities. They identify six groups as key stakeholders
including employees, customers, investors, suppliers,
the community and the environment and delineate
relevant CSR actions vis-a-vis each cluster respectively as illustrated in Table III. Their findings suggest that Cypriot firms accord the most attention to
employees and consumers in their pursuit of CSR,
moderate attention to the community stakeholder,
TABLE III
CSR actions vis-a-vis key stakeholders (Papasolomou et al., 2005)
Stakeholder
Employees
Consumers
Community
Investors
Suppliers
Environment
turn an exclusive focus on shareholders. The language of stakeholder theory was also easier to grasp
by managers/practitioners as most organizations
understood and defined obligations and responsibilities vis-a-vis their traditional stakeholders (Clarkson,
1995). Stakeholder theory seems also easier to
maneuver in collecting and analyzing CSR data as
evidenced by the proliferation of empirical studies
that have essentially integrated a stakeholder approach as outlined in the previous section. This
stream of research has also led to the delineation of
relevant stakeholder issues and associated measures of
impacts, which, with further refinement, can serve as
useful guidelines for managers in their pursuit of
CSR actions and interventions (Davenport, 2000).
The next section highlights how a stakeholder CSR
approach the EPS proposed by Spiller (2000) was
used to collect and analyze CSR data in the context
of a sample of Lebanese and Syrian firms, allowing in
turn to draw relevant implications regarding the
usefulness of a stakeholder CSR approach.
Research methodology
Research hypotheses
The research methodology is consistent with
descriptive stakeholder theory, which seeks to
outline participants views of what the business
organization is doing vis-a-vis its stakeholders, as
well as the mechanisms through which different
views come into being (Brickson, 2007). This
descriptive stakeholder methodology will be supplemented in turn by reference to the two other
veins of stakeholder theory, namely instrumental
stakeholder theory and normative stakeholder
theory. In the framework of these three branches of
stakeholder theory, the following research hypotheses are derived and tested after being presented here
in the context of the corresponding CSR literature
in which they are respectively anchored.
Developing country firms prioritize their stakeholders based primarily on
instrumental considerations.
Hypothesis 1 (H1)
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conceived and approached instrumentally in relation
to its implications for the bottom line and firm performance. Windsor argues in this respect that a
leitmotiv of wealth creation progressively dominates
the managerial conception of responsibility
(Windsor, 2001). Firms tend to accord systematic
attention to primary stakeholder management in
anticipation of expected bottom line benefits. This
is also consistent with the view that firms prioritize their stakeholders and investments based on
stakeholder attributes of power, legitimacy and
urgency or indirect instrumental considerations
(Mitchell et al., 1997). A wide range of empirical
studies in various contexts provide support for this
hypothesis (please see Uhlaner et al., 2004 and
Papasolomou et al., 2005 who highlight the salience
of the economic stakeholders in their respective
studies; de Madariaga and Valor, 2007 who report
differential firm attention across stakeholder groups
particularly in relation to customers, employees and
shareholders; Snider et al., 2003 who report that three
stakeholder groups stand out in their study as essential
to firm success namely customers, employees and
owners; and Galbreath, 2006 who makes the case for
an instrumental stakeholder management approach in
his empirical study). H1 is applicable globally and in
developing countries more specifically in view of the
scarcity of resources and the salience of resource
dependency theory in this particular context.
Developing country firms are
according systematic attention to a limited range
of stakeholders.
Hypothesis 2 (H2)
Hypothesis 3 (H3)
Hypothesis 4 (H4)
Hypothesis 5 (H5)
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TABLE IV
Sample profile
Company name
Type of industry
Lebanese sample
Company A*
Company B
Company C*
Company D
Company E
Company F
Company G*
Company H
Company I*
Company J*
Company K*
Company L*
Company M*
Financial services
Banking and financial services
Banking and financial services
Banking and financial services
Insurance
Internet services
Multimedia services
Food and beverage
Food and beverage
Hospitality
Hospitality
Tobacco
Pharmaceuticals
Company N
Syrian Sample
Company O
Company P
Company Q
Telecommunications
Telecommunications
Management information systems
Company
Company
Company
Company
Company
R
S
T
U
V
Line of business
TABLE V
The EPS (Spiller, 2000)
Stakeholder
Community
Environment
Employees
Customers
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TABLE V
continued
Stakeholder
Suppliers
Shareholders
Research findings
The EPS ratings for each of the case study companies
are presented in Tables VI and VII. These ratings
are not intended as a definitive statement of the
performance of the companies vis-a-vis core stakeholders, but simply report the findings compiled
based on the interviews conducted. The EPS results
reflect the pioneering work of Company A, which
stands out for its successful balancing of the interests
and concerns of all six stakeholder groups. It also
reflects the consistent efforts of Company L at
managing successfully the spectrum of stakeholder
relationships. A question arises here as to whether
the legitimacy of CSR practices can and should be
questioned because of the nature of the industry in
question (e.g. tobacco).
As illustrated in Table VI, the EPS scores for the
companies operating in Lebanon (both national and
international) have ranged from a low of 40 to a high
of 114, with an average EPS score of 73. The purpose here is not to consider the EPS scores as
reflective of aggregate social performance, but rather
to gauge stakeholder management patterns vis-a-vis
the different stakeholders. Companies operating
in Lebanon seem to be according the most attention
TABLE VI
Ethical performance scores Lebanese sample
Company Name
Company A*
Company B
Company C*
Company D
Company E
Company F
Company G*
Company H
Company I*
Company J*
Company K*
Company L*
Company M*
Company N
Lebanese sample averages
Community
Environment
Employees
Customers
Suppliers
Shareholders
Total EPS
14
2
9
12
10
5
3
13
9
15
10
10
10
13
10
20
)2
13
)5
)9
0
0
7
12
4
4
18
2
12
5
20
14
15
8
16
17
12
20
18
18
18
20
20
17
17
20
13
14
13
16
18
9
20
19
16
12
18
18
10
16
20
7
6
7
13
4
6
17
17
14
5
18
14
11
11
20
16
13
9
20
6
10
18
15
16
12
19
16
13
15
114
50
70
44
66
50
40
95
90
83
61
103
80
76
73
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TABLE VII
Ethical performance scores Syrian sample
Company Name
Company O
Company P
Company Q
Company R
Company S
Company T
Company U
Company V
Syrian sample averages
Community
Environment
Employees
Customers
Suppliers
Shareholders
Total EPS
13
18
10
12
)1
11
6
5
9
1
10
)2
6
14
9
12
)16
4
17
18
20
16
8
4
15
6
13
13
18
17
6
9
9
19
16
13
11
14
17
7
0
10
13
10
10
17
20
4
13
0
5
10
9
10
72
98
66
60
30
48
75
30
60
Discussion of findings
An investigation into the application of the
stakeholder approach in the Lebanese and Syrian
contexts suggests a number of interesting findings
and insights. This section will dwell on the findings
TABLE VIII
A comparative benchmark Lebanese vs Syrian samples
Community Environment Employees Customers Suppliers Shareholders Total EPS
Lebanese sample (including *) 10
Syrian sample
9
Lebanese sample (excluding *) 9
Syrian sample
9
* Subsidiaries of International Corporations
5
4
1
4
17
13
15
13
16
13
15
13
11
10
10
10
15
10
14
10
73
60
64
60
Hypothesis 1 (H1)
Hypothesis 2 (H2)
Hypothesis 3 (H3)
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tive flavors and inclinations vis-a-vis the community
stakeholder group specifically and hence H3 is accepted.
Stakeholder management is affected by the relational attributes of specific
stakeholders (power, legitimacy, urgency) as well
as the pressures they can exert on corporations.
Hypothesis 4 (H4)
Hypothesis 5 (H5)
Note
1
With the exception of Reuters, which could be accounted for in light of the nature of the industry (news
provider) and the relatively small size of the subsidiary
firm (comprising only 25 employees).
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