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PWU-CDCEC CALAMBA

ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

Chapter 2

THE REVIEW OF RELATED LITERATURE AND STUDIES


This chapter presented professional literature and studies reviewed to
give insights to the content of the study. Literature and researches that yield
implications and relevance to the subject matter being investigated were
also included in this chapter.
Several literature and studies have been made in the Philippines and
outside the Philippines with direct and indirect bearing on the subject to be
studied in this investigation.

Foreign Literature
International Co-operative Alliance in 1995. Cooperatives are
guided by principles. These principles are the empowering framework by
which cooperatives move on in their daily activities, without being lost in the
maze of their own operations. These are also the energizing tools upon which
the cooperatives look and grasp the future and assuredly cope up with the
futures concomitant complications. These principles are: (1.) Voluntary and
open membership, (2) Democratic member control, (3) Member economic
participation, (4) Autonomy and independence, (5) Education, training and
information, (6) Cooperation among cooperatives and last, (7) Concern for
community.

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22

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

In Finland, the S Group started to carry out a coherent plan of job well
being activities. The S Group is fully aware of the importance of developing
job wellbeing and the various forms it can take as part of the Groups
management culture and daytoday supervisor work. Training courses are
also designed on this topic.
Central to the SGroup policy are appraisal discussions, an essential
aspect of the management system. Appraisal discussions mutually delineate
responsibilities, expectations and objectives as well as the factors related to
reward. Occupational health, which is primarily arranged through SOKs own
and joint company occupational health units, serves as SOK Corporations
key support function in promoting wellbeing at work. Activities comprise
general practitioner care, with an emphasis on occupational health,
alongside

activities

that

serve

preventive

purpose

and

promote

occupational wellbeing. Over the years, the emphasis of occupational


healthcare has shifted from treating accidents and illnesses and preventive
care to promoting and sustaining health and wellbeing.
On the other hand a very interesting education projects are developed
by consumer cooperatives in Italy. One of these projects involves young
teenagers (10 to 15 years old), teachers and Coop employees. This exercise
of sustainable consumption is carried out in schools, where each involved
pupil receives a small budget of 15 euros. With this amount of money, he has
to plan and buy what he needs for a week, avoiding gadgets, toys or sweets,
but looking for example for suitable meat. The pupil has to buy the right

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

quantity with good value for money. Besides this education to responsible
consumption, other aspects of the project include raising awareness on the
air pollution, the polluting industry and the Co2 emissions coming from cars.
A large range of other projects focus on TV (to make children conscious
of the difference between virtual and real world), waste management,
bubblegum, fast food, water consumption, mobile phones, chocolate and
shoes.
It just makes good sense the companies must be concerned with their
profitability; clearly, without profits, the company would simply cease to exist
and there would be no benefits accruing to anyone. In recent years, however,
there has been an increasing amount of attention paid to the underlying
ethics of how companies, and particularly multinationals, compete in an
increasingly globalized marketplace, and precisely what responsibilities are
associated with doing business abroad. These questions are not new, but
they have assumed increasing importance today. Citing studies by J. Scott
Armstrong, Mayer reports that in the 1970s, there was fairly global and
homogenous response to increasing corporate pressures to make decisions
with their bottom line foremost in mind identified. Armstrong surveyed
approximately 2,000 management students from ten countries to play the
roles of corporate board members of a multinational pharmaceutical
company; the author posed the question of whether the company should
remove a drug that had been found to endanger human life from the market.
As board members, fully 79 percent refused to withdraw the drug and sought

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

legal and political actions to either delay or stop government efforts to ban
the drug (Mayer, 1999).
Likewise, the Bhopal tragedy caused by Dow Chemical and the Exxon
Valdez oil spill are just some of the better-known instances of the disasters
that took place in the late 20th century that clearly demonstrated the power
of the multinationals to cause enormous devastation on the health and
safety of neighboring communities if unconstrained. Not surprisingly, these
events have resulted in a demand for the imposition of corporate
responsibilities (Mehmet & Mendes, 2003). Unfortunately, these authors
point out that, These patterns of immediate denials and downplaying or
withholding of vital information seem a constant theme in these corporate
activities which have devastating impacts on local communities. Such
exercise of power without responsibility is a serious flaw in the workings of
global governance. (Mehmet & Mendes, 2003).
Corporate Social Responsibility (CSR) has permeated management
practice and theory up to a point where CSR can be referred to as the latest
management fad (Guthey, Langer, & Morsing, 2006). However, so far CSR
integration into business processes has been very uneven. Hockerts (2008),
for example, finds that most firms conceptualize CSR primarily as a tool to
reduce risks and operational cost. Only a minority of firms is actually using
CSR as a means to drive innovation. In their study of 150 German and British
pharmaceutical companies Blum-Kusterer and Hussain (2001) similarly find
that regulation and technological progress are the two main drivers for

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

sustainability innovations. They observed that the lure of emerging market


niches was no important motivator for the firms studied. This is unfortunate
since bringing stakeholders into the innovation process offers important
opportunities to increase both the social and financial performance of firms.
This report is part of the Nordic Centre on Corporate Responsibility (NCCR) a
collaborative research effort, bringing together CSR scholars from Denmark,
Sweden, Norway, Finland, and Iceland under the sponsorship of the Danish
Commerce and Companies Agency (DCCA) with the goal of studying CSRdriven innovation in the Nordic region.
With this literature review Copenhagen Business School (CBS) aims to
provide the theoretical grounding of the empirical work to be undertaken by
the NCCR. The report falls into five parts: a brief review of key concepts in
the CSR debate (i.e. organizational legitimacy, moral choices, stakeholder
interaction, and sustainable development); a short discussion of the state of
the art of innovation literature (i.e. incremental vs. radical innovations;
sustaining

vs.

entrepreneurial

disruptive
process,

innovation;

the

role

of

user-driven
the

innovation,

entrepreneur,

the

institutional

entrepreneurship); an analysis of extant publications on CSR and innovation


(corporate

social

innovation,

base

of

the

pyramid

(BOP),

social

entrepreneurship, and eco-innovations); an analysis of social innovation on


all four levels discussed in the first part; we close by providing a list of global
examples of social innovation brands.

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

For Morsing and Schultz (2006), this American CSR approach seems to
appear due to the fact that CSR is commonly regarded in the United States
from a philanthropic perspective as in Europe there is a tradition to
communicate CSR in a more implicit and reactive way.
There is no agreement in the literature concerning a definition of CSR
(Hopkins, 2003) that would comprise all the aspects this term involves. The
World Business Council for Sustainable Development, an organization that
unites some 200 leading companies around the commitment to sustainable
business development, defines companies social responsibility towards the
society in general: CSR is the continuing commitment by business to
behave ethically and to contribute to economic development while improving
the quality of life of the workforce and their families as well as of the local
community and society at large.
Burke and Logsdom brings to discussion, therefore, that some scholars
argue that despite of generating short-term costs, CSR is able to pay off in
the long-term.

Companies carrying on policies committed to societal

demands would benefit from greater social legitimacy with less government
regulation, and that a better society is simply good for long-term profitability.
As a result, a way found by the authors to link CSR to the economic
interests of the firm was the connection of companys corporate social
policies to its strategic model. According to them, a corporate social
responsibility is strategic when it yields substantial business-related benefits

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

to the firm, in particular by supporting core business activities and thus


contributing to the firms effectiveness in accomplishing its mission.
However, there are other approaches to CSR that totally oppose the
definition above. The most classical view is that the social responsibility of
business is to increase its profits (Friedman, 2000) while social responsibility
is considered to be under governmental duties.
Reconciling the firms economic orientation with its social orientation
has been a question in the CSR debate. In order to establish a possible
answer to this debate, Carroll has developed a four-part conceptualization of
CSR included the idea that corporation has not only economic and legal
obligations but also ethical and philanthropic responsibilities as well.
According to the author, to be accepted as legitimate, CSR has to address
the entire spectrum of obligations business has to society, including the most
fundamental: economic (2001).
Carroll has developed a definitional CSR model where the entire range
of business responsibilities is embraced. According to him, four kinds of
social

responsibilities

constitute

CSR:

economic,

legal,

ethical

and

philanthropic.
The pyramid depicted the economic responsibilities as the foundation
upon which all others (legal, ethical and philanthropic responsibilities) rest.
The author also emphasizes that business should not fulfil these sequentially
but each one should be fulfilled at all times meaning that the socially

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

engaged organization should strive to make a profit, obey the law, be


ethical and be a good corporate citizen.
Due to the vast range of the concept of CSR, some authors sought to
narrow the definition and established some areas where a company is
expected to work on in order to be recognized as a socially responsible
organization.
Susan Croft, in her book entitled Managing Corporate Reputation: The
New Currency (2003) dedicates a full chapter for Corporate Social
Responsibility where she asserts that the following topics may be addressed
by

CSR

policies:

pollution

and

environmental

issues;

supply-chain

management; human rights; ethical investment; good governance; political


and social issues; general business ethics; employee rights; training,
development and education; stakeholder engagement and dialogue; clean
technology and the overall reputation of the corporation.
Other scholars such as Andriof and McIntosh (2001) present a more
concise idea of the areas where CSR can be used. According to them, a CSR
policy is expected to contain four areas: environment, workplace, community
and market place.
Some other researchers such as Sen and Bhattacharya (2001)
understand CSR as a complex comprising six aspects: environment,
employee support, community support, product, diversity and non-domestic
operations.

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

One of those most visible changes suggested by some researchers


seems to be the current role the non-governmental organizations are playing
in their interactions with companies. Some researches show that NGOs are
placing a relevant level of importance in dialogues with the corporate world
as they apparently have identified this interaction as a manner to influence
corporate strategy (Burchell & Cook, 2006).
This close collaboration depicted by a two-way CSR communication
may lead to an increasing organizational awareness regarding stakeholders
expectations towards the company as well as contribute to identify potential
issues that may impact corporate assets. However, if superficially employed,
this engagement and mutual relationship company/stakeholders may evoke
distrust (Crane & Livesey, 2003).
In their study about CSR communication strategies, Morsing and
Schultz (2006) raise survey evidences calling for the importance of implicit
CSR communication by using annual reports or websites as more convenient
and secure ways to convey CSR messages rather than designing corporate
advertising or corporate CSR campaigns. Then, they argue that the more a
company exposes their ethical and social ambitions, the more they are
subject to attract criticism.
Generally if a company faces up either a lack of recognition from
stakeholders or a bad reputation moment such as a corporate scandal, it
tends to promote qualities such as

conveying a CSR message to society

which may lead to a bigger accentuated distrust.

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

The discussion about the use of the stakeholder approach in


communicating not only CSR but any kind of corporate message is pointed
out by Cornellisen (2004), who says that the future and success of any
company in todays society depends critically on how it is viewed by key
stakeholders.
According to Bhattacharya and Sen (2004), this apparent positive
connection between consumer approval and companies engaged with CSR
initiatives which may contribute to increasing sales has contributed
significantly in recent years to the strengthening of CSR activities by
business community, shifting the debate on social corporate involvement
from whether to how.
Although people say that CSR is implied in their purchase decisions,
statistics found in the survey developed by Bhattacharya and Sen mask the
real nature of customer response to CSR activities. According to their
findings, it is important for managers to understand how and why consumers
respond to CSR initiatives since they do not do it in the same way. For
instance, what works for one consumer segment, does not work for another
(Bhattacharya and Sen, 2004).
According to Ramasamy and Yeung (2009), since the late 1990s CSR
research has been focusing on an important and largest stakeholder who is
actually a driver of CSR: consumers. That is why it is important to understand
in the following section what the academic researchers have been finding in
terms of the weight CSR has in consumers purchasing habits.

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

From the time of Adam Smith, through the age of industrialization, the
Great Depression and the recent half-century globalization and prosperity,
the purpose and role of business has been a focus of debate (Post et al,
2002). Much of the debate has revolved around two hierarchal positions;
namely shareholder theory and stakeholder theory (Rugimbana et al, 2008).
Shareholder theory represents the classical approach to business, according
to this theory a firms responsibility rests solely with its shareholders
(Cochran, 1994). On the other hand stakeholder theory argues that
organizations are not only accountable to its shareholders but should balance
a multiplicity of stakeholders interests (Van Marrewijk, 2003). These two
competing views of the firm contrast each other so sharply that stakeholder
and shareholder theories are often described as polar opposites (Shankman,
2000).
Both theories are explained and arguments in their favor are set out.
The basis of stakeholder theory is then set out before turning attention to the
practical issue of defining individual stakeholders.

Local Literature
The Sony Group recognizes that its businesses have direct and indirect
impact on the communities in which they operate (2007 CSR report). Sony
Philippines celebrates the true spirit and beauty of humanity. It encourages
its employees to recognize community service as a responsibility as well as
privilege to help others most in need. In this recent tragedy, Sony Philippines

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

gives honor to the Filipino, for surviving the typhoons and lending a helping
hand to others, while rebuilding his life with a smile and a indomitable spirit
to

live.

Sony

recognizes

the

importance

of

preserving

the

natural

environment in order to create a sustainable society for our future


generations. Sony is committed to achieving this goal by seeking to combine
ongoing

innovation

in

environmental

technology

coupled

with

environmentally sound business practices.


On the other hand, Philexs Mining Corporation (2007) created an interdepartmental coordinating division called the Environment and Community
Relations Division (ECRD) to handle the environmental and community
relations of the company.

It is composed of four working groups:

Environmental

and

Engineering

Quality

Monitoring;

Environmental

Enhancement (Forestry); Environmental Sanitation and Beautification; and


Community Development. ECRD only had one main function: to formulate,
implement and recommend changes in policies, procedures and trainings
related

to

environment

and

community

development.

Thus

most

environmental and community relations policy would be left to ECRD.


Whatever coordination and operation problems that arose could be resolved
by the Environmental Committee (PEC), a sub-committee under the ECRD
that actively participates during the conduct of regular community and
environmental inspections and meetings, especially those by the Multipartite Monitoring Team (MMT).

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

However, Philippine Auto Components is enthusiast in formulating


programs/activities which can fairly address the needs of its society by
maximizing companys available resources in collaboration with all the
stakeholders: associates, community, environment, suppliers and customers.
"The community is our best security," explained Senen Bacani,
president of La Frutera, which has a vast banana plantation in a
Maguindanao, a region in the south where rebels operate nearby. "Not only is
there no disruption in our business operations, but in a way our good name is
very important in the business community because it really adds more to the
credibility

of

what

the

company

is

doing."

However, since most respondents have a foundation whose activities


are devolved from the main business units, funding for CSR activities is
dependent on business economics and realities. Practical issues influence the
decision on whether these CSR activities will continue to receive financial
support.
PNOC EC acknowledges the fact that its presence in the different areas
of operations is temporary, thus, we aspire to provide supplemental and
sustainable livelihood means to the members of our host communities. The
Malangas Project Operations initiated a Livestock Dispersal Project that will
benefit indigent families and local organizations. To date, the goats and
chicken are being raised and nurtured by the company and subsequently will
be given to target recipients.

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34

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

For 2010, PNOC have conducted 13 CSR programs with a total of 6,060
beneficiaries. In addition to Kaagapay Programs, they also implemented a
Relief Goods Operation named PNOC para sa PINOY during the onslaught of
typhoon Juan in Isabela. PNOC EC employees together with the KBP Isabela
Chapter distributed rice and canned goods, and also galvanized iron to 806
households. The success of these programs can be attributed to the valuable
support and active participation of employees and partner organizations
from different sectors which include government agencies, non government
organizations, LGUs, peoples organization and schools, among others.
In 2011, PNOC EC continue to strengthen and enhance its CSR
programs by conducting activities and sustainable projects that will provide
better opportunities and improve the lives of the members of our project
host communities.
BDO established the BDO Foundation Inc. as its corporate social
responsibility (CSR) arm and channel for its internal and external outreach
program. It aims to respond to the needs of the marginalized sector of
society for decent shelter, sustainable livelihood and practical education.
As one of the highlights for the year, it donated land to the City of
Taguig valued at P17 million for site development. Partnering with Gawad
Kalinga Foundation Inc., it aims to build the social infrastructure and
community for the informal settlers in the area.
BDO Foundation also donated P12 million for the construction of a
micro-finance center in Laguna for the CARD MRI (Center for Agriculture and

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PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

Rural Development- Mutually Reinforcing Institutions) Development Institute.


The partnership with CARD-MRI aims to train people on using micro-finance
and livelihood skills to help them alleviate poverty and develop the economic
potentials of the countryside.
Ultimately, the Bank through BDO Foundation Inc. aims to be a major
catalyst in the creation of opportunities for the under-privileged and in the
countrys socio-economic development.
The

PLDT-Smart

Foundation

(PSF)

is

non-stock,

non-profit

organization that fully serves as the social outreach arm of the country's
oldest and largest telecommunications conglomerate, the Philippine Long
Distance Telephone Company (PLDT). In its pursuit for social, political, and
economic development, it provides helpful communication tools and various
avenues for progress and empowerment through partnerships and tie-ups
with non-government organizations, people's organizations and cooperatives
throughout the Philippines. Headed by PLDT and Smart chairman Manuel V.
Pangilinan,

the

PSF

is

now

mainly

involved

with

corporate

social

responsibility programs focused on six areas: education, livelihood/social


entrepreneurship and microfinance, disaster preparedness, youth, poverty
reduction, and sports. All these endeavors are committed to one singular
goal that of fulfilling the needs and uplifting the quality of life of each and
every Filipino.
On the other hand, KEPCO Philippines has established cooperatives
within plant communities and has provided the needed infrastructure such as

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36

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

roads, multi-purpose halls, drainage systems, rehabilitation of schools and


churches for continuing development of its host communities. Through the
ICDF, KEILCO donated the land as a site of the Pedro Tolentino Memorial High
School/Ilijan High School.

Foreign Studies
Cooperative Social Responsibility has been adopted by a number of
cooperatives worldwide. In Canada, the Van City Coop and the Metro Credit
Union are adherents to the AA1000 of the Institute of Social and Ethical
Accountability.
Euro Coop, the European association of consumer cooperatives
produced this report to communicate to its members and other stakeholders
some of the best practices in terms of social responsibility. It only takes into
account some of these practices and only in 5 countries (Finland, Italy, Spain,
Sweden and the United Kingdom). The reason for this was the limit of pages
for this report and therefore it must be understood that this is not a
comprehensive work.
The report is divided into two main parts. The first part gives a general
overview of consumer cooperatives, their approach to social responsibility,
the indicators used and some examples. The second part is an annex with
the compilation of best practices in a more detailed way. More information

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37

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

about these or other activities can be found in the different Reports of the
individual cooperative organizations or by request to the Euro Coop
Secretariat in Brussels.
In Denmark, the FDB uses social reporting to measure the
implementation of its core values and goals and the achievements in its
action plans.
In Spain, the HISPACOOP has developed its own social audit model for
the consumer cooperatives. In Sweden, the KF has developed the
membership report, a tool for managing, evaluating and improving business,
strengthening the business profile, developing membership democracy and
enhancing the effectiveness and resource allocation.
In the UK, the CWS follows the path set by the New Economics
Foundation of London. And in Italy, the ANCC (National Association of
Consumer Cooperatives) and the various associations under it are continuing
to develop the balance sheet model, the social audit model that was
prevalent in the 70s.
According to Burke and Logsdom (2000), there seems to be a
consensus among business CSR supporters and academics that corporate
social responsibility policies not only bring gains to companies but also to the
whole society. However the difficulty relies to find out an empirical indicator
able to make clear that being a socially responsible company is directly
connected to improve its financial performance.

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38

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

Moreover, Coop Italia launched a website dedicated to conscious


consumption, as well as a alimenta il tuo benessere (feed your health)
didactical kit, to access a large public. The Coop School (Scuola Coop) is
particularly active in designing those training and education programmes.
A large range of other projects focus on TV (to make children conscious
of the difference between virtual and real world), waste management,
bubblegum, fast food, water consumption, mobile phones, chocolate and
shoes.
Another example of best practice is given by the Customer satisfaction
tracker developed by the Cooperative Group (UK).
In 2006, the Group introduced its Customer Satisfaction Tracker, a
measure of customer satisfaction for its food, pharmacy and travel
businesses. The first round of satisfaction surveys was undertaken monthly
from October to December 2006, each involving 500600 telephone (Food
and Travel) or exit (Pharmacy) interviews with customers of the three
businesses. Customers are asked to register satisfaction levels with The Co
operative and other retailers using a tenpoint scale. The survey enables the
Group to: track overall satisfaction; identify the relative importance of the
factors that drive satisfaction; and compare its performance to competitors.
In the UK, the Cooperative Group has developed a very progressive
policy which includes recognition of trade unions and active collaboration
with them, personal development and training, good salary and benefits,
work/life balance and a dynamic Health and wellbeing policy. Concerning

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39

PWU-CDCEC CALAMBA
ALVA CENTER ROSAL ST. BRGY. UNO, CROSSING CALAMBA CITY, LAGUNA
Contact No.: 0922-821-6938/0939-904-3185/0917-527-5465 Tel. No: (049) 508-1963/
(02)420-8209

training, the Group believes the way to build a successful and cooperative
business is to train and develop the people who work in the business. To
achieve this, it is committed to ensuring, amongst other things, that all
employees receive: induction training; an introduction to the cooperative
values; the knowledge and skills training to meet the requirements of the
job; financial support for developmental training as appropriate; and
entitlement to receive performance reviews.
The Group has achieved Investors in People accreditation. This national
quality award recognizes organizations that aim to improve performance by
developing their employees.
In addition to that, many consumer cooperatives in Europe have
developed special bodies covering social responsibility, like the Ethics
committee of the Spanish Eroski. The Ethics committee is made up of the
DirectorGeneral, the Consumer Director, the Social Responsibility Director,
the Members' Director and the Purchasing Director, which offers efficient
management that provides a response to its stakeholders and covers the
rights of consumers, workers, suppliers and the community at large. Eroski
develops a global management model supported by both horizontal and
vertical management systems, covering Eroskis commitments to economic
efficiency, customer satisfaction, the environment, defence of human rights,
workplace regulations and the fight against corruption.

PAGE
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All consumer cooperatives have since their origin integrated social


responsibility into their working culture. Codes of conduct adopted by some
members clearly highlight their willingness to act in a socially sustainable
way, willingness which is all the more evident as consumer cooperatives take
part to global CSR projects or frameworks such as the GRI (Global Reporting
Initiative) or the UN Global Compact.
A good example of this is the SEDEX initiative, which evaluates The Co
operative Groups policy regarding food supply. SEDEX, or Supplier Ethical
Data Exchange, was started in 2001 by a group of UK retailers and their first
tier suppliers. These businesses recognised a need to collaborate and drive
convergence

in

social

audit

standards

and

ethical

selfassessment

questionnaires. The founding of Sedex would achieve two goals: to ease the
burden on suppliers who were being audited multiple times and drive
improvements in labor standards at production sites globally.
Another valuable illustration comes from Eroski who is a founding
member of Fundacion Entorno, promoting sustainable business in Spain, and
is also member of the commission that is drawing up the conceptual
framework for social responsibility in Spain, promoted by AECA, the Spanish
Accounting and Business Administration Association.
Besides, its undertakings, set forth in its Code of Conduct, cover the
entire value chain, and involve employees, subcontractors and core
suppliers. They are monitored by means of an annual internal audit, based
on the self assessment tool provided by the Danish Ministry of Social Affairs.

PAGE
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In terms of connecting CSR practices with the increase of profits, many


surveys have shown that the inclination of consumers to buy products or
services from a socially responsible company is very high. For example, the
2002 Corporate Citizenship poll conducted by Cone Communications found
that 84% of Americans said they would be likely to switch brands to the one
associated with a good cause, if price and quality are similar (Bhattacharya &
Sen, 2004), similarly to what Beckmann has found.
Another study of 25.000 consumers in 23 nations showed that twothirds of those surveyed want companies to go beyond fiscal responsibility to
also take on social roles (Parker, 2005).
A MORI survey with 12.000 consumers across 12 European countries in
2000 reveals that 70% of consumers affirmed that a companys commitment
to social responsibility is important when they buy a product or service. The
survey also shows that 1 out of 5 respondents are willing to pay more for
products form socially responsible companies (www.csreurope.org).
Through the use of a variety of methodologies such as focus groups, indepth interviews, surveys and experiments, Bhattacharya and Sen concluded
that a positive link between CSR and purchase behavior exists only when
some conditions are satisfied: when the consumer supports the issue central
to the companys CSR efforts, when there is a high company to issue/cause
fit, when the product itself is of high quality, and when the consumer is not
asked to pay a premium price for social responsibility.

PAGE
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On the other hand, Mohr (2001) argues that most of consumers do not
seem to be aware that most companies engage in CSR initiatives. According
to the above mentioned scholar, consumers have difficulty obtaining and
remembering CSR information about the firms they buy from.
Some other theorists, such as Dawkins (2004), claim that an effective
communication of firms CSR programe is a rare achievement. However,
the same scholar concludes that consumers are quite interested in obtaining
more CSR information and thus CSR-related marketing communications may
be an opportunity to shape the company image and brand propositions.
Cultural differences have to be taken into account when referring to
CSR since some researchers such as Maignan & Ralston (2002) have
concluded that stakeholders tend to consider those questions regarding
company efforts to communicate CSR messages differently from country to
country.
According to the above mentioned authors who developed a study
based on the nature of the communication of CSR principles in corporate web
pages in France, the Netherlands, the United Kingdom and the United States,
French and German companies are not so used to conveying CSR in their
websites such as American organizations.
Another interesting finding in the research developed by Maignan &
Ralston which may reinforce the assumption that CSR is apparently sensitive
to cultural variations was the fact that most of the American companies
websites surveyed presented their social responsibility involvement as a part

PAGE
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44

of an extension of their core values while the majority of European


organizations tend to show their CSR commitment as a response to
stakeholders pressures.
Also in their CSR communication, European companies (especially
French and Dutch organizations) appeared likely to build their socially
responsible image by linking the production processes to environmental and
quality management actions.
On the other hand, American firms seem to appear committed to CSR
by accentuating their engagement in action that is not necessarily linked to
production and promotion activities such as philanthropic initiatives and
volunteerism.
Besides

that,

some

similarities

were

also

found.

In

terms

of

stakeholders, most of the researched companies in all four countries showed


their concern to convey their CSR messages focused on three main
stakeholders groups: community, employees and customers.
However Maignan and Ralston conclude that companies based in
different countries tend to hold substantially different perspectives on how
important it is to be perceived as socially responsible organization by the
general public. While U.K. and U.S. organizations tend to demonstrate their
contribution to society in their communications, French and Dutch companies
are more reluctant to publicize such initiatives.
The

above

referred

researchers

explain

this

reluctance

in

communicating CSR by arguing that European companies fear a public

PWU-CDCEC CALAMBA
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criticism as public opinion in the continent apparently tends to regard with


suspicion the true motivations that take a company to be involved in social
questions.
On the other hand, it is argued that the U.S. organizations perceive a
more proactive CSR communication since American society has adopted a
more positive image of business where companies are expected to set the
standards for a responsible behavior.
In another study to develop a cross-cultural comparison of consumers
perception of CSR, Isabelle Maignan (2001) has carried out a survey in
France, Germany and the US to investigate consumers readiness to support
socially engaged companies. One of her most important findings was that
French and German consumers are more willing to actively support
responsible companies in their purchasing activities than their American
counterparts.
However, the research showed that US consumers value more
companies that places higher its economic responsibility in the CSR agenda
while Europeans are more concerned about the business seeking to comply
with legal and ethical standards, which leaves the economic achievements
as only secondary. Maignans study also revealed that when trying to build
their image of a responsible organization in France and Germany, companies
need to be aware that the fact of performing financially well does not mean
that the organization will be perceived by consumers as a socially
responsible organization.

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The scholar recommends for business that want to position


themselves as socially responsible in France and Germany may have to
downplay

their

economic

achievements

and

emphasize

first

their

preparedness to serving their legal and ethical responsibilities, along with


their commitment to philanthropic duties (2001)
On the other hand, the same cannot be recommended to firms willing
to thrive in the American market as socially engaged. Claiming to be a
socially

responsible

organization

in

the

US

without

any

economic

achievement can be risky.


In a similar study carried out by

Ramasamy and Yeung (2009) with

Chinese consumers, the scholars found that buyers in this country are also
very supportive of CSR. The authors indicate that CSR issues have gained
prominence in emerging economies as well, particularly due to the role of
the mass media in increasing awareness.
Ramasamy and Yeung also revealed that consumers in the continental
China (excluding Hong Kong) also do not consider economic responsibilities
as a social responsibility of business. In this sense, one can affirm that those
results are consistent with the ones found in the Maignan study about
Western markets.
The Chinese survey also showed that consumers have different
expectations and somehow reluctance towards the communication of
philanthropic activities by companies although they recognize this is the
most common form of CSR in China.45 Ramasamy and Yeung conclude their

PAGE
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study affirming that other dimensions like ethics need to be given more
urgent attention in China and they suggest companies to highlight their
contribution to their shareholders, employees and other stakeholders by
embedding this ethical approach into the companys mission (2009).
The example above reaffirms what Maignan (2001) has argued: the
different ways consumers understand and perceive companies as socially
responsible organizations in different countries prove that firms may face
difficulties to implement, for instance in a global perspective, homogeneous
CSR communication programs.

Local Studies
The drivers of CSR tend to be weak in developing countries because
serious macroeconomic constraints may divert company attention to issues
of basic viability and securing shareholder returns. As studies on CSR in
developing countries remain scant, the available evidence suggests a
continued overwhelming concern with profitability and lower priority
according to social responsibility in view of more pressing survival issues.
However, it is also held that as the winds of change blow stronger in
the context of developing countries, and as local companies face the harsh
competitive dictates of the global marketplace, the reconciliation of societal
concerns with bottom-line performance becomes even more compelling.

PAGE
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Nevertheless, there are cases of Strategic CSR in developing countries,


which may imply increasing recognition of how business and societal goals
may be aligned successfully.
In the Philippines, various local conglomerates such as the Ayala
Corporation and the Lopez Group of Companies have begun to integrate CSR
into their core business operations.
Established

in

1834,

Ayala

Corporation

is

one

of

the

oldest

conglomerates in the Philippines. Since its inception, its founders were


involved in various social development programs as early as the 1860s
with the construction of a school building for girls and then in 1961 with the
formation of the Filipinas Foundation (the precursor of Ayala Foundation). In
2007, Ayala Corporation and its subsidiaries launched the Ayala Social
Initiatives, which channeled the companys CSR programs to focus on
education, environment, and entrepreneurship, with some notable initiatives:
Manila Water Company through its Tubig para sa Barangay (Water for
the Community) Project found cost effective ways to provide safe water and
sanitation services to an increasing number of poor residents within its
concession zone while creating employment opportunities by encouraging
cooperatives and water services. By serving the residents, Manila Water
doubled its billed water volume.
Ayala Land incorporated green innovations into its Nuvali housing
project, which included a lower carbon footprint (i.e. emphasis on water
conservation,

pedestrianization

and

cycling,

energy

efficiency

and

PAGE
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recycling). These changes have helped Nuvali in its commercial success and
in lowering its cost of operations.
The

Lopez

Group

of

Companies

established

the

Lopez

Group

Foundation in 2004 to act as the coordinative hub for the CSR programs of
the Lopez Group of Companies. The Lopez Group I s a diversified
conglomerate involved in several industries including telecommunications,
expressway infrastructure and petroleum pipelines. Each of these firms has
its own CSR program, although there is an ongoing effort to integrate the
different programs of individual firms in the Group. However, the decision to
align CSR efforts with the United Nations Millennium Development Goals is a
step towards Strategic CSR because it links corporate activities to national
and even to global goals.
Since 2008, Phoenix Foundation participates in the governments
Adopt A School Program. From one school, They now have four adopted
schools: Vicente Hizon Elementary School, Asuncion Hizon Elementary
School, and San Roque Central Elementary School in Davao City; and
Talisayan Elementary School in Zamboanga City. Phoenix shoulders the
salary of the pre-school teachers including budget for instructional materials,
so that young students can study for free. From 2008 to March 2011, a total
of 324 Phoenix Scholars already graduated.
Another Study conducted by Intel Philippines. One of the key corporate
values of Intel is to be an asset to our communities worldwide Through
constant and collaborative interactions with its external stakeholders, Intel

PAGE
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strives to become an asset in the communities where it operates. The Intel


Involved in the Community program is a volunteer program that interacts
with local communities, and focuses on four key areas technology inclusion,
education,

environment

stewardship

and

safety,

and

community

development. Intel Involved in the Philippines has logged the highest


percentage of employee volunteers worldwide. For this reason, the program
has encouraged not just Intel employees but also members of the local
government and the entire community to become active participants in
community development. Today, the Municipality of General Trias in Cavite,
where Intel Philippines is located, has begun to call itself The Town of
Volunteers.
One major initiative of the Intel Involved program is the Intel Involved
Matching Grant program. Launched in 2004, the program aims to promote
and maximize the benefits Intel employees provide to local schools. Intel
employees volunteer in select schools or in the Intel Computer Clubhouse,
which provides a creative and safe after-school learning environment where
young people from under-served communities work with adult mentors to
explore their own ideas, develop skills and build confidence through the use
of technology. Under the Intel Involved Matching Grant program, hours spent
by Intel employees volunteering in schools in their communities were
matched by a dollar grant from Intel Foundation. Every 20 hours of volunteer
work by Intel volunteers in pre-identified schools and learning institutions is
equivalent to US80. During the pilot phase, employees logged 99,650

PAGE
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volunteer hours which were equivalent to PhP12.2 million (US249, 125). By


September 2007, the Intel Foundation donated PhP37 million (US$832,100)
to 33 public schools in General Trias Municipality. This was as a result of Intel
Involved volunteers helping more than 30,000 students and 333,113 hours of
volunteer service.

Synthesis of the Review of Related Literature and Studies


The series of studies and literatures written by foreign and local
authors in this chapter discusses the concepts and narrative details of
relevant and related information to the study. These studies will provide
significant information that will help the researcher in conducting the study.
To better appreciate the above-mentioned literature and studies, they are
hereby summarized.
According

to

the

International

Co-operative

Alliance

in

1995,

cooperatives are guided by principles. These principles are the empowering


framework by which cooperatives move on in their daily activities, without
being lost in the maze of their own operations. These are also the energizing
tools upon which the cooperatives look and grasp the future and assuredly
cope up with the futures concomitant complications. These principles are:
(1.) Voluntary and open membership, (2) Democratic member control, (3)
Member economic participation, (4) Autonomy and independence, (5)
Education, training and information, (6) Cooperation among cooperatives
and last, (7) Concern for community.

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The S Group of Finland and the consumer cooperative of Italy believe in


the importance of developing a social responsibility, expectation and
objectives as well as the factors related to reward. It just makes good sense
the companies must be concerned with their profitability; clearly, without
profits, the company would simply cease to exist and there would be no
benefits accruing to anyone.
According to Mehmet and Mendes, exercise of power without
responsibility is a serious flaw in the working of global governance. For
Morsing and Schultz (2006), this American CSR approach seems to appear
due to the fact that CSR is commonly regarded in the United States from a
philanthropic perspective as in Europe there is a tradition to communicate
CSR in a more implicit and reactive way. Burke and Logsdom brings to
discussion, therefore, that some scholars argue that despite of generating
short-term costs, CSR is able to pay off in the long-term. Companies carrying
on policies committed to societal demands would benefit from greater social
legitimacy with less government regulation, and that a better society is
simply good for long-term profitability.
Carroll has developed a definitional CSR model where the entire range
of business responsibilities is embraced. According to him, four kinds of
social

responsibilities

constitute

CSR:

economic,

legal,

ethical

and

philanthropic.
The pyramid depicted the economic responsibilities as the foundation
upon which all others (legal, ethical and philanthropic responsibilities) rest.

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The author also emphasizes that business should not fulfil these sequentially
but each one should be fulfilled at all times meaning that the socially
engaged organization should strive to make a profit, obey the law, be
ethical and be a good corporate citizen.
According to Sony Group 2007 CSR Report, they recognize that its
businesses have direct and indirect impact on the communities in which they
operate. On the other hand, Philexs Mining Corporation (2007) created an
inter-departmental

coordinating

division

called

the

Environment

and

Community Relations Division (ECRD) to handle the environmental and


community relations of the company. BDO established the BDO Foundation
Inc. as its corporate social responsibility (CSR) arm and channel for its
internal and external outreach program. It aims to respond to the needs of
the marginalized sector of society for decent shelter, sustainable livelihood
and practical education.
Euro Coop, the European association of consumer cooperatives
produced a report to communicate to its members and other stakeholders
some of the best practices in terms of social responsibility. It only takes into
account some of these practices and only in 5 countries (Finland, Italy, Spain,
Sweden and the United Kingdom). In Spain, the HISPACOOP has developed
its own social audit model for the consumer cooperatives. In Sweden, the KF
has developed the membership report, a tool for managing, evaluating and
improving

business,

strengthening

the

business

profile,

developing

PAGE
53

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membership democracy and enhancing the effectiveness and resource


allocation.
In the Philippines, various local conglomerates such as the Ayala
Corporation and the Lopez Group of Companies have begun to integrate CSR
into their core business operations. Ayala Corporation and its subsidiaries
launched the Ayala Social Initiatives, which channeled the companys CSR
programs to focus on education, environment, and entrepreneurships, with
some notable initiatives.
Another study conducted by Intel Philippines. One of the key corporate
values of Intel is to be an asset to our communities worldwide Through
constant and collaborative interactions with its external stakeholders, Intel
strives to become an asset in the communities where it operates. The Intel
Involved in the Community program is a volunteer program that interacts
with local communities, and focuses on four key areas technology inclusion,
education,

environment

stewardship

and

safety,

and

community

development. Intel Involved in the Philippines has logged the highest


percentage of employee volunteers worldwide.
The above-cited literature and studies have contributed a lot to come
up with the framework of the present study. This is similar to the present
study whose primary aim is to assess the stakeholders observance social
responsibility at Sulong sa Tagumpay Multi-Purpose Cooperative. Thus, the
intent of the study is to develop guidelines to effectively utilize stakeholders
framework in managing social responsibility.

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PAGE
55