\O/news/27588639_ vn tatagrowthshop. 1 Apri 11-19. iding transformation ness Ethies, 59(1/2): alving and executing ‘darch/Apri): wwwivey slving-and-executing- westidentity.comftatal Chapter 12 The future of CSR in a global context IN THIS CHAPTER WE WILL: © Revisit the case for and against CSR © Understand the current state of CSR © _ Introduce social entrepreneurship and social innovation as future areas of CSR © Assess new social movements as drivers of CSR . e ° Understand how new trends in regulation will shape CSR Discuss CSR as an emerging profession in management Reflect on the future of CSR as an academic subject CSR ~ is it a good idea then? | Coming toward the end of our journey through the world of CSR, itis time to revisit ome of our starting points. Let's begin with one of the more delicate issues we Highlighted back in Chapter 2, namely the contested status ofthe field in the wider ontex of business practice, research, and teaching. Remember, there are a number Ci prominent voices out there, both in the literature as well as in practice, who stil Hhnk that CSR should not exist and is just a lot of thot air (Stern, 2009) In Section B we studied the key practical sponses to this contention in four stint fields of corporate activity ~ marketplace, workplace, community, and the {iological environment. Here, we discovered that CSR has indeed enjoyed a rather 0 uptake and application by companies. Taking a closer look at why companies Uithese things we have learned that companies can operate more successfully ‘alert new expectations from customers, employees, local communitie, and554 MANAGING CSR Wider public concems about the natural environment, Most of what we discussed, however, would not necessarily pacify the critics. CSR sceptics, such as Mitton Friedman (1970), would in fact be quite happy with most of what companies do today under the name of CSR ~ after all, the rationale is that it contributes to the bottom line by lowering costs, providing new market opportunitics, enhencing ‘employee efficiency, etc. Aneel Karnani (see Chapter 2) would perhaps hasten to add that CSR is therefore a misnomer for such activities and that corporations, by Pretending to be ‘socially responsible’, are just fooling us into believing they are interested in the public good ~ whilo in realty they are doing these things simply to make yet more maney. Be that as it may, it isin Section C - where we talked about the management of CSR - that it became clear that we can make a reasonably solid case for arguing that CSR deserves its own place in the management curriculum. After al, for whatever reasone companies engage in CSR, we are definitely able to circumscribe «8 fairly distinct set of instruments, tools and practices that companies apply when they ‘do CSR’. We have studied, among others, new forms of reporting, now approaches to strategy and new ways of interacting with other societal actors ~ al of which warrant the differentiation of CSR as a new field of business practice. So, our preliminary conclusion is that even if companies are not turning into ‘do gooders' (Portney, 2008: 267) when they practise CSR, they definitely engage with societal demands using a distinct and evolving subset of management practice. Therefore, at the end of this book, there can be little doubt that CSR is indoed a legitimate new member in the sub-disciplines of management, alongside the usual suspects such as marketing, finance, human resource management, or strategy. This is, however, not the whole story. Some of the themes we discussed in the course of this bagk suggest that CSR is maybe a little more than just another field craton) tata pope sche Urs gee eh to make a profit. Take, for instance, the reading by Valente and Crane (Chapter 7): good deal of what corporations are doing in developing countrios or other places: with poor public governance clearly transcends a narrow business case rationale, Or think of Utting’s discussion of equality in the workplace (Chapter 6): companies have to address discrimination and, more generally, respect basic human rights not just because of any associated promise of profit In the short term, such measures invariably cost valuable resources to implomont and there is hardly any direct revenve or other gain to offset these costs. In fact, a growing numbor of CSR issues ore just fuelled by a general rise in the breadth and depth of public expectations towards business. It appears that CSR faces a number of challenges that are more retated to what we discussed in Chapter 2 under the label of a ‘social licence to operate’ itis in this growing set of social expectations that CSR can be seen as a basi Condition to operate. This indeed gives critics of CSR a real headache. They would probably shout for the government to ‘rescue’ corporations from these undue demands on their licence to operate. We have seen in particular in the thiee integrative case studies that in many instances governments just are not up 10 thet textbook role anymore. This book has showcased that companies become involved in furthering the public good without an immediate and quantifiable contributionwhat we discussed, ties, such as Milton what companies do it contributes to the ‘tunities, enhancing 4 perhaps hasten to hat corporations, by 0 believing they are ese things simply to out the management olid case for arguing oulum. After all, for able to citcumscribe apanies apply when 5 of reporting, new societal actors ~ all 'siness practice ‘not turning into ‘do sfiritely engage with nagement practice at CSR is indeod a alongside the usual rnont, or strategy. wwe discussed in the an just another field ment of old, namely Crane (Chapter 7): ries or other places sess caso rationale. ipter 6): companies ic human rights not rm, such measures yany direct revenue SSR issues are just sectations towards at are more rotated cence to operate’. bo seen as a basic dache. They would from these undue icular in the three tare not up to theit become invalved tble contribution 10 THE FUTURE OF CSR IN A GLOBAL CONTEXT 585 the bottom line. CSR, in those instances, is more than pure and simple profit sanmization. Rather, itis often the overarching enabling condition of business tho vena 22 Begin with. Throughout the book we have time and again come across the teasons why these activities are pursued by private companies: the sac of business in contemporary society has changed and the social expectations et what Hiahfaner od Provide to society have significantly broadened, This is only furth highlighted by the media storm and public outrage that eneces wines business: scandals are exposed, The future of CSR - some trends and perspectives In this final concluding chapter we will sketch out some of the implications of our ciscussions about CSR over the last 11 chapters. We will see that thoes evolve around the two key themes just mentioned: what ie the relationship between the business value and the social value thal a business creates? And what dese ¢ say about the changing role of business in sociely when we see a number of mat aement activities that obviously are not immediately linked to plain old profits? The Later aspect has surfaced every now and then throughout our discussions in ths book atthe end of our journey though itis worth fleshing it outa litle move by looking at the dynamics and future developments in CSR. New business models: social entrepreneurship and social innovation Figure 12-1 provides an overview of future developments in CSR inthe contest of vocal can business. As discussed throughout the book the question of erecting Social valu is atthe core ofthe CSR project. But social value may be a means 12 én end, oF an end itso, ust as economic value (or profits} can be a means ora goal. Pilerent combinations ofthese two goals give rso to different forme of Cot ae d Bets | contacporny Social oon Innovation 2 3 Br | tednorarcsn Social Patantropy) | Entrepreneurship Hoa Soci! value Social etve sa means mood He 12.1: Future developments in CSR558 MANAGING CSR Contemporary CSR Ina standard business ~ regardless of whether itis a family-owned SME or a ‘multibillion dollar publicly listed corporation ~ social value creation however has to be aligned with the core purpose of the business, which in most cases consist of profit generation, in many cases even profit maximization. Most of the book has in fact focused on segment 1 of Figure 12.1: firms address consumer demand for far trade, implement diversity policies for their employees or set up recycling pro- grammes because the social value of those measures serves as a means to generate Profits. All along the value chain, throughout all the functional operations of the business, well-run companies are aware that successtul integration of societal expectations will ukimately contribute to the bottom line. Sometimes this contribution is short-term and quantifiable in a simple business case analysis; in other situations the contribution of CSR to the bottom line is more long-torm and indirect and is a fundamental basic condition of the licence to operate’ for the business, Traditional CSR We have also discussed the approach of traditional CSR represented in segment 2. For these companies CSRs an activity that is mostly driven by the desire to share Some of their business success with their wider societal envionment. Sponsorship of sports teams, funding of arts and music, employee volunteering to help the homeless, or ondowments given to universities — all these are seen a6 something a ‘good corporate citizen’ should do in ‘giving back’ to society, in order to be @ responsible member of society. This is the top level of Carroll's ‘pyramid of CSR, which we discussed in Chapter 3, These activities generally do noi pursue a direct profit goal as they are not linked to the core business ~ other than creating some general good will or positive brand recognition. In most cases companies also da ‘not havea strategic intent with these activitios. The choice of project or stakeholder group may depend on the owner, the CEO or the employees’ personal preferences, ‘or some commitment to local communities (e.g. the local soccer or hockey team) of wider societal concems (e.g. contribution to earthquake or tsunami rei). ‘Sometimes, however, philanthropists have gone beyond this approach. Frank (2007), inhis entertaining portrait ofthe ‘superrich' in America describes how many of those philanthropists have applied a more strategic approach to philanthropy. Rather than just giving away money, for example, one former investment banker set Lup a company with the explicit goal to get 500 wells in Ethiopia up and running within 2 yoar. The companies set up by such philanthropists are run as professional ‘businesses — the only difference is that the goal is not profit but the creation of soci value. Probably the most well-known organization in this space is the Bill & Melinda Gates Foundation,’ whose purpose — among others ~ is the development of drugs for currently untreatable diseases. The lattor example highlights that businesses that are set up just to reach a certain social goal often venture into highly uncertain an Tisky endeavours. Similar to 'venture capital’ they are often roferred to as vanlLl@THE FUTURE OF CSR IN A GLOBAL CONTEXT 557 Ehlantivopy' (Van Slyke & Newman, 2006) ae both are similar in approach and imreseion = with the only diference being that the latter approach ve primarily ly-owned SME or a interested in socal outcomos as a goal ofthe organisation iene This eras, however, ot just the domain of rich people and phiantropite. In ortcanne cenit ci|___ay Counties global we have son the occ busessoe whocraedie na 31 of the book has in Pato crate sociale, This ad usto segment 3, namely caval entenroreutyn "mer demand for fir 2t up recycling pro ‘a means to generate Social entrepreneurship al operations of the egration of societal Soctl entrepreneurship can be described ass process involving the innovative use mes this contribution and Combination of resources to pursue opportunities to catalyze vocla change 5; in other situations | and/or address social needs’ (Mair & Marti, 2006: 87). That is, the primary goal of nndindvect and isa | __ social enrepronewrahip is socal value creation yet ypcaly leverages the power business, ‘of markets, and the profit motive to achieve those goals ‘Social enterprices have grown considerably over the last two decades and are esented in sogment (enable poor rural families to sot up small businesses.? Founded in 1976 by Nobel y the desire to share Prize winner Muhammad Yunus, Grameen Bank also illustrates Why the terminology ‘ment. Sponsorship i anlteprencurship' has become popular for this type of businese: they mre aoe tering to help the initiated and run by charismatic entrepreneurs who ~ similar 10 ‘for-profit! entre- | vistthe seen as something a Byeneurs ~ have a vison for their business, run it professionally and successfully, | companion ty, in order to be a albeit for a ditferent purpose than traditional businesses, st ® ‘pyramid of CSR’ While Grameen Bank and Yunus get a great deal of recognition for their | fe nie: not pursue a direct irocredt busines, the typos and purposes of social ontrprises are vay many | invertor than ereating some and varied. Another example of such a social entrepreneur ie Britich celebrity chet | soci entrepre companies also do Jamie Oliver who with his Fifteen restaurant in London sot up a social enterprise | nourshp oject or stakeholder hose Purpose is o provide under-priveged young people with tang ane jobs | ray, cond preference ma atetng industry The UKin some wayecan beseenas aleaderininesrses | e ‘or hockey team) or with the ‘Community Interest Company’, introduced in 2008 ae « legal charterfor | gine | rami relief). ‘Social enterprises.4 at sis approach. Frank lescribes how many ich to philanthropy. Social innovation ‘estment banker set 3 and running within The latest trend in CSR, however, ia businesses which attempt both profit and social un as professional Pate as part of their business goals. This area of ‘social innovate (segment 4, +e creation of social Boure 12.1) describes businesses (or projects within larger Companies) that take a 's the Bill & Melinda Specific social need as a business opportunity. One of the long-standing definitions velopment of drugs: Sass Social innovation as a situation where companies take ‘community needs as hat businesses that 2PPertunities to develop ideas and demonstrate businose technologies, to find and ighly uncertain and fo96 oars, and to solve long-standing business problome’ (Mose Kanter, red to as ‘venture 1999: 194)588 MANAGING sR We have discussed some examples of these approaches in Chapter 6 in the reading by Prahalad and Hammond, who introduced the BOP approach as one €merging aoa of socal innovation. As discussed in Integrative case 3, the new Tate Nano car is also a good example here: while addressing a social need [eafe {2nsportation), Tata provides a solution that at the same timos cantibutes to ing Potton line. Companies inthis space, rather than talking about CSR tend to profes the language of CSO’, corporate social opportunity (Grayson & Hodges, 2004) Beyond the developing world, socal innovation and the idea of running a company with dual, or even multiple purposes has gained significant tration in ws US, where the model of the ‘Benefit Corporation’ as a new legal form of ‘company fas emerged. Those companies, commony referred to as'B-Corps' are set up ith the Getberate ‘corporate purpose to create a material postive impact on society and the environment’ and the fiduciary duties ofthe management include the suceseefd attainment ofthose goals. The B-Corp was first implemented ae a new legal charter secapporations in Delaware and by 2012 had been adopted in sevon other states, and the designation of certified B-Corporation had been given to more than 506 ‘companies. ‘Social entropreneurship and social innovation clearly are among the most vibrant [ew business models and contemporary areas of development in CSR. Thoy have been popularized in many ways ~ through government initiatives, business asec, Gallons, and in the popular business press. The most widely received example of the latter is Michael Porter's concopt of ‘shared value’ (Porter & Kramer, 2011) ag an approach to social innovation, where businesses pursue simuitanoauely economic and social value. New social movements Social movernents are collective efforts to change society, comprising people united. by a common set of beliefs about a preferred state of the world (Den Hond & De Bakker, 2007). Social movements, represented by NGO groupe, activists, and arthers looking to change corporate behaviour have long played a role in shoping the context in which CSR has emerged and become insttutionalized. Earierin thie book we came across the definition of CSR as ‘the economic, legal, ethical, and cliscretionary expectations that society has of organizations at a given point in tine” Expectations by socioty therefore are one of the key starting points for CSR and it follows that as those expectations change with the devolopment of new social movements, so does the nature of what CSR is intended to achieve (Don Hond & De Bakker, 2007; Vogel, 2000). Arguably, the development of CSR has boon vety much influenced by the rise ofthe environmental movement inthe 1970s and 19808 (Hoffman, 2001) and by the anti-globalization movement inthe early 2000s (Eschie & Maiguashea, 2005), Among the latest wave of such movements we have seen the rise of the 62° Called ‘Occupy Wall Street’ movement.’ After gaining global attention with a symbolic ‘eccupation’ of Wall Street (or more precisely, Zuccott Park, alte square close f0 |