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Think global, act local: Corporate Social Responsibility Management in Multinational Companies
M. Morand L. Rayman-Bacchus
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M. Morand L. Rayman-Bacchus, (2006),"Think global, act local: Corporate Social Responsibility Management in Multinational
Companies", Social Responsibility Journal, Vol. 2 Iss 3/4 pp. 261 - 272
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Think global, act local: Corporate Social Responsibility Management in Multinational Companies
Abstract
This paper investigates corporate social responsibility (CSR) policy management in multinational companies (MNCs).
The focus is on examining the relationship between subsidiaries and headquarters in the management of CSR, in terms
of the commonplace notion of ‘think global, act local’. Primary and secondary data was collected in one MNC and a
case study produced. The findings show that the initiative to launch a CSR policy is taken and enacted exclusively by
the headquarters, mainly as an answer to the financial and legal pressure felt to accompany the present widespread
interest in CSR. Findings are articulated around three major steps used to manage CSR initiatives: the determination of
values, the integration of those values in action and the evaluation of the policy. Consistency of policy is driven from
headquarters, through adoption of a corporate value framework, while the implementation is to some extent localised.
Feedback from subsidiaries is collected and shared by the centre, which also seeks out synergies in pursuit of increased
efficiency. Corporate structure is therefore linked to CSR management. Implementation is observed to comprise three
parts: the headquarters seek to motivate local actions through reference to the company culture, through directive
measures, and by pedagogic action. Pedagogy comes out as necessary in order for the CSR policy to permeate the
entire organisation and initiate the right actions and reactions in the variety of situations encountered throughout the
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organisation. Constant scrutiny and evaluation are considered necessary in order to sustain the credibility of the policy
in relation to external stakeholders.
Introduction
This paper is arranged in five sections. First the Background is laid out, outlining the growth of the Multinational
Corporation (MNC) and the increasing awareness of CSR. This induces some discussion about the notion of ‘think
global act local’, the need for a corporate values framework around CSR policy initiatives, and some assessment of the
role of stakeholders. A framework for realising CSR initiatives is suggested, based on corporate value setting,
integration and implementation of values, and evaluation and communication of policy aims. Next the Research Design
is presented, outlining the use of a case study of Food Corp, a French food manufacturing MNC. Results and Discussion
first describes then examines Food Corp’s commitment to corporate values and how this drives socially responsible
strategy in terms of realising abstract values (implementation and pedagogy) and the need to evaluate the extent to
which CSR policy initiatives are successfully implemented and lead to socially responsible competitive benefits.
Conclusions follow.
Background
1
cited in Agmon (2003)
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Volume 2 Number 3/4 November 2006
elaboration. According to Dunning J.H. and Mucchielli J. (2002) acchieving both represents a dilemma ; some
compromise is inevitable. The concerns of numerous stakeholders must be accommodated, some of whom have global
interests (e.g., NGOs) while others have local interests (community groups). ‘Accommodation’ here often means
achieving a manageable compromise, though this too is at times fragile. CSR policy may be part of corporate strategy
created by headquarters, but the implementation always demands local action. Consequently complex interactions
develop between the centre and the subsidiaries invoking both deliberate strategy making and emergent strategy.
Unavoidably there is a tension between globalisation (in the form of universal policy prescriptions from the centre) and
localisation (recognising and respecting local priorities, traditions and conditions). For some (De Wit and Meyer, 2004)
there is also a tension between profitability and responsibility, the implication being that one needs to choose between
the two.
The Shell Statement of General Business Principles provides a good example of the recognition that corporations
see the need to reconcile the seemingly contradictory goals of standardised values sustaining the value of the Group and
local adaptation of values. The Shell statement articulates clearly that although the Royal Dutch Shell Group of
companies is decentralized and diversified, all staff hold collective responsibility for the brand reputation. Kitchin
(2002) remarks that ‘true CSR is ultimately a process of business and brand adaptation’ as brand mediates the values
and contextualises relationships with the various stakeholders locally and globally. However stakeholder relationships
cannot be normalised worldwide.
This research sought to evaluate the management of CSR within MNCs, with a focus on the relationship between
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headquarters and subsidiaries. In particular we wanted to understand: the strategy framework supporting the
determination of a consistent worldwide social responsibility policy; the methods used in implementing consistent
global social responsibility values; and understand the CSR evaluation processes used.
1
cited in Brodhag, 2000
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Volume 2 Number 3/4 November 2006
embrace complex relations, such as developing a common language, a shared understanding and shared approaches to
problem solving. Again such generalisations seriously understate the challenges facing managers of MNCs. A readiness
to compromise is likely to be essential since many cultural differences, political ambitions, and customs and practices
are irreconcilable.
Brodhag (2004, p.3) suggests three alternative forms of network that support management relations between the
centre and the subsidiaries (Figure 1). The network can have a top-down orientation, the central information being
spread by the centre. The orientation can be bottom-up, supporting decentralisation and feedback from the subsidiaries.
Lastly, the orientation can be towards “networking”, with emphasis on a more distributed interrelationship between the
different subsidiaries and with the centre. This network will be present at different levels: between headquarters and
subsidiaries, and inside the entities between the management and the non-management.
Centre Centre
Members Members
Members
Networking organisation
The challenge for companies is therefore to find an adequate overall management system, which corresponds to the
corporate parenting style and to corporate strategy (Nilsson, 2000). In their study of parenting styles, Goold and
Campbell (1987), argue that the headquarters can shape the subsidiaries’ strategy through:
the structure of the organisation and therefore how information flows are organised and decision-making;
how plans are reviewed and therefore the degree of autonomy of the subsidiary;
the extent to which subsidiaries are free to interpret requests and instructions from the centre;
managerial overlaps with headquarters in coordinating functional synergies across different subsidiaries;
the allocation of resources.
Regardless of parenting style, the centre will have varying influence on the way managers of subsidiaries deal with
ambiguous business situations, and therefore their ethical stance when dealing with the unfamiliar. The centre may set
broad or narrow goals, and subsidiaries will always seek to exploit any flexibility provided by such goals. As a strategic
issue developing and implementing CSR policy is clearly subject to corporate strategy, organisational structure, the
allocation of discretionary decision-making and resources. Control over resources (funds, expertise, facilities) seems
likely to be particularly important for implementing a CSR policy. For example the centre may call upon subsidiaries to
implement CSR policy within budget constraints, while leaving the subsidiary in control of how allocated funds are
spent.
On-going scrutiny of MNC behaviour hightens the need for transparency, accountability and responsiveness to
rapidly changing social, economic and political circumstances. Brodhag (2004) argues that on a global scale which is
also a complex socio-economic context, the success of a CSR policy will depend on the organisation of an efficient
network linking corporate concerns such as brand value and shareholder relations, with everyday business realities in
very different contexts. The context is complex, so that decision-making is mainly based on negotiation, differing
reactions are linked to one another and often difficult to assess. In such a situation, no actor has full information, or the
authority to define a clear strategy for the long term (Brodhag et al., 2004). Ehlinger (1997) emphasizes that strategy
formation is also based on social interactions. While management style and internal power dynamics are important, top
management is no longer perceived as predominant in strategy formation, and numerous other stakeholder groups are
recognised as legitimate participants in the process. To the extent that strategy formation is a social process, CSR policy
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can only emerge from interactions between different stakeholders, at all levels within the company, both within and
outside the company, and including staff in differing geographical locations.
Realising CSR initiatives: value setting, integration and implementation, evaluation and communication
Managing CSR policy could be seen as a three-stage process: the setting of values, their integration with strategy as
well as implementation, and performance measurement and communication on the performance of the policy (Waddock
and Bodwell, 2002; ORSE, 2003, Litgeringen and Zadek, 2005). Ligeringen and Zadek (2005) puts the stages simply as
the need to ‘fix values’ which help establish ‘what to do’; the management systems which will determine how to
integrate the policy with corporate strategy; and the process guidelines to know ‘how to measure and communicate’
what is done.
Both Hendry (2004) and Andrews (2003) suggest a similar process. They suggest the first challenge for senior
managers is to develop managers and subordinates as moral individuals; this is the challenge of leadership. The second
challenge concerns more middle and senior level managers who may or may not feel some duty to infuse particular
corporate values into day-to-day management and run the ‘business organisation as a moral society’ (Hendry, 2004,
p.27). Thus the organisation will generate a moral environment and influence actions. The third challenge is learning
(through doing), and affects all managers and subordinate staff.
Value-setting
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Value setting is the first step toward a change in behaviours. Corporate values stem from organisational culture,
leadership and vision. Clearly, attempts at changing corporate values require communication between the leadership
and all staff wherever they are, in order to shape company culture. There is scope for variation in how corporate vision
is transmitted throughout the organisation. Three archetypal positions seem possible. First, a corporate values
framework could be developed that reflects some universal standards, applicable across all the regions and functions in
which the company is active. Alternatively, it could primarily be oriented towards satisfying the local operational
context and conditions, reflecting a decentralised value framework. Lastly, it could be strictly set by the headquarters
according to its own value framework and be applied in a directive manner across the subsidiaries.
Research Design
The focus is here to get a better understanding of the realities of relations between the headquarters and the subsidiaries,
and the attitudes of individuals at different levels concerning CSR. This invites an interpretivist perspective, and an
inductive approach, moving from the observation to the development of theory.
The research focused on one French multinational corporation, under the pseudonym ‘Food Corp’. Semi-
structured interviews were conducted at different levels in the company, at the headquarters and in two subsidiaries, in
order to get an insight to the decision-making processes and the interactions of the different parts of the company
concerning the development and implementation of a CSR policy. At the headquarters, contacts were made with the
manager of the total quality management programme (responsible for implementing the values of the company), and
with the communication manager. Communication has been a key role internally and externally in the implementation
and evaluation of a CSR policy. At the Austrian subsidiary the Marketing Manager was interviewed, while at the British
subsidiary the Production Manager was consulted. Interviews were conducted in person and by telephone, each lasting
approximately one hour and twenty minutes. Observation was also employed in the research. The researcher had
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worked six months for the Food Corp Austrian subsidiary before beginning the study. It was possible to observe and to
feel the attitudes of the subsidiary employees towards the headquarters during this period, notably on the company’s
CSR project. This enabled the inclusion in the study of some non-managerial points of view.
In order to gain an overview of the phenomenon, the corporate view was complement with the views of
observers. Three consultants specialised in CSR were interviewed, as well as a consultant specialised in small and
medium enterprises. This fourth interview enabled us to add knowledge about the actions and reactions that would be
encountered by an international Group in its relation with its small subsidiaries and its suppliers. Many subsidiaries of
Food Corp, often cheese manufactures and milk producers, are indeed small and situated in rural areas. Theory emerged
gradually from the research, which can be referred to as grounded approach (Saunders et al., 2003). The emergent
patterns recognised could indeed be tested on other respondents. The use of different sources of data and methods of
collection, typical of a case study research (Robson, 2002: 178)1 enabled a triangulation of the information, enhancing
both the validity and the reliability of the research and strengthening the conclusions (Eisenhardt, 1991).2
Results
Food Corp is a French multinational company, listed on the French stock exchange; it is one of the tenth biggest
companies worldwide in the dairy industry with about 88 production facilities and commercial subsidiaries in 21 out of
30 country operations on all continents (Figure 2). It employs almost 20 000 people. The majority of shares is held by
the founding family. There is no public promotion of the Group name, and the company name itself only carries
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meaning and value for shareholders and professionals. The Group name is not known in consumer markets although
many of the products are internationally known brands. The Group wants to stay close to the taste and habits of the
different markets, therefore most products are locally produced. Strategy is proposed by the Group executive and used
as a general orientation to the subsidiaries. The subsidiaries at the same time analyse their markets independently and
determine from these analyses major strategic directions, which are then proposed to the Group executive. The
subsidiaries, which are in direct contact with their various stakeholders, adapt the Group’s orientation to their particular
situation and propose an action plan, which is in turn must be validated by the Group executive before being put in
place. Headquarters impose financial control on all subsidiaries, and accounts are consolidated on a global basis.
The management structure of the Group is decentralised, an arrangement that the leadership regards as
‘enhancing responsibility taken at all level of the company as well as promoting an entrepreneurial spirit within the
company’ (Food Corp Annual Report, 2004). One of the key strategic orientations of the Group, as stated on its website,
is the adaptation of products to local markets.
1
cited in Saunders et al. 2003 p.93
2
cited in Harrison (2002)
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Volume 2 Number 3/4 November 2006
Group Purposes
- To prepare and sell products and services of very high quality which satisfy the expectations of consumers
perfectly by being constantly innovative
-To encourage the professional and social development of the men and women who work with and for the
group
- To secure and make fruitful the capital invested in the Group by preserving independence and its decision-
making autonomy
- To participate in the social and economic development of the countries which receive the Group and serve
the common good
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Global activities
culture. Management practice in the company encourages ethical behaviour among staff; it is a core element of the
company management.
The company has been adhering to the United Nations Global Compact since 2003. The Compact rests on
corporate engagement with nine social principles regarded as universal (the respect of human rights, the freedom of
association, the elimination of forced and child labour, the elimination of discriminations and the promotion of
environmental responsibility). The motivation to adhere to this treaty was mainly internal. Indeed the Compact
encouraged the Group to further formalise and improve its implementation of CSR. The Compact also provides an
external measure of its commitment to universally accepted moral values, though communication around the Group of
the significance of these principles is little developed. However, as the Communication Manager remarked,
communication with the external environment would probably develop as external forces are pushing the company to
be more open about its CSR commitment.
Those interviewed (consultants and corporate actors) agree that values should be determined at the corporate
level. Such values support the Group’s unity of purpose and help motivate all members of the organisation towards
common objectives. However, recognising that values need to have a basis in reality, some consultants underline the
importance of dialog among staff about the values of the company. They suggest that the meaning of a CSR policy
should be spread corporate-wide but its implementation should be decentralised. However, for McCaig, a food industry
consultant, companies are often too directive and do not leave enough room for the subsidiaries to adapt corporate
intention to local conditions. In addition, internal communication including feedback from subsidiaries is often poorly
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developed.
Food security has improved in order to protect the consumers but also to protect the company itself. Everyone
interviewed regard this as crucial for the company’s reputation and survival. To this end the Group imposed in 2004
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includes being able to satisfy the financial performance expectations of interested parties (shareholders, employees). In
order to convince the different subsidiaries of the importance of CSR, the Group executive must argue the business
case. Responsible business behaviour is a long-term commitment and the Group has to support its implementation
financially as the costs are otherwise often too high to be borne by small organisations, such as subsidiaries.
The US division head of the Group declared that for the company a commitment to responsible corporate values
has a clear positive impact on performance. The company pursues a single basic approach to the markets, but the action
plans are diversified according to the various local situations. The local approach of Food Corp is well illustrated by the
company’s relationships with its suppliers. The company set very strict worldwide quality standards for the milk it
purchases from farmers. It develops close relationships with local producers, as they cooperate on livestock diet and
livestock housing conditions. At the same time both Group executives and subsidiary managers recognise that local
tastes and expectations need to be respected; good sales depend on it! The setting or raising of standards here can be
seen as good, both for animal rights and the environment. Moreover, failure to deal respectfully with such high profile
issues could have a damaging impact on quality, and dramatically affect the products’ reputation and sales results.
Discussion
All actors in this study support a ‘think global, act local’ CSR management strategy. This means they support a
framework where there is interaction between local action and global values: local action must be coordinated centrally,
while at the same time global values have to be supported by local actions. Managing the development of CSR
initiatives and implementation at Food Corp involves drawing on corporate culture, the use of directive measures, and
pedagogic action (Figure 3).
The first step, setting and spreading values: the decision-making process
Corporate values are set unilaterally by headquarters and applied throughout the company. These values define a
mission, are explicit, and express the commitment by the firm to satisfying the expectations of society. The values
provide unity of purpose and constitute a large part of the organisation’s culture; Leadership is also infused with, and
reinforces, this culture. The commitment to principles and attitude among staff within the whole enterprise is the
product of the expectations of the directing family. The Group executive transmit these principle to the firm’s managers,
through internal auditing and communication programmes. Managers must translate these into operational objectives;
the implementation and realisation of these principles rests firmly with line managers and employees. The findings
show that the diffusion of ethical values follows a vertical division of tasks, as described by Hendry (2004). The pursuit
of TQM touches all functions and levels within the company, and is driven from the centre. The programmes are
enacted through frameworks of actions (values and principles of actions), working methods, policies (food security
requirements,), programmes (safety at work).
While the Food Corp executive see their organisation as decentralised, the above example of TQM is also clear
evidence of top-down management. The reality is a mix of the parenting styles, reflecting some combination of
Brodhag’s (2004) and Gould and Campbell’s (1987) archtypes. This is unavoidable. For example in order to identify
and make use of synergies, the Group seeks to keep control of strategy making. At the same time, the subsidiaries
determine how best to achieve their business objectives, seeking support from the centre where necessary. To the extent
that local objectives may not be in full harmony with corporate desires, there is tension between localisation and
globalisation (De Wit and Meyer, 2004).
The extent to which there is a tension between profitability and responsibility, as suggested for example in De
Wit and Meyer (2004) can here be questioned. The ethical responsibilities the company takes are closely related to
financial performance. Food Corp’s corporate values have a strong financial motivation, and the sustainability of the
firm is seen to rest on exceeding minimum food quality standards, as well as in meeting or exceeding social and
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environmental responsibilities. Philanthropy is rare and seen as unsustainable; most action must be justified by a
compelling business case. In case this suggests that managers are fully in control of their strategy, we should not forget
that external factors often drive justification and managerial behaviour. This can be seen for example in Food Corp
transforming its own normative framework into one set out by the UN Global Compact (www.globalcompact.org).
Further, in the context of public concerns around the price of global economic development, adopting such an external
standard also contributes to a positive corporate image of the company, which managers know often translates into
increased revenue.
Where international standards are non-partisan and respected, such as the UN Global Compact, they drive the
convergence of standards, and often raise standards. Within a global economy stakeholder groups (such as shareholders,
consumers, unions) often criticise MNCs for harbouring inconsistent social policies, for example, in providing
differentiated employee benefits in differing parts of the world. A global set of values internationally recognised, such
as the Global Compact helps minimise the effects of such semi-globalisation (Ghemawat, 2003).
Company culture
In Food Corp organisational culture is perceived as very strong. Cultural coherence is reinforced notably by the
pedagogical method of cross-functional and cross-regional meetings as well as training. Directive measures give the
limits of liberty within the Group culture. There is a compulsory dimension in the values of this culture and therefore
has a clear impact on practice; managers take the company values into account in everyday action. This pressure is also
present in the recruitment process. Day-to-day practice and induction of new staff help reinforce a unity of purpose. At
the same time individual staff draw their direction from the power of the cultural influence.
Directive measures
Directive measures take a number of forms: the unequal distribution of power and authority in managerial relations;
meeting statutory requirements; and the need to meet financial performance targets. There is indeed a clear power
relationship between the headquarters and the subsidiaries. Although negotiation and pedagogical action are preferred,
where this does not work, or is inappropriate, the implementation of corporate decisions is carried out anyway. This
again brings into question claims by the executive about the decentralised organisation and decision-making. CSR
measures are now to an extent legally motivated. Legal obligations have to be implemented through directive measures,
for example in order to comply with the new French regulation (NRE). Where the Group executive see CSR measures
as being of critical financial importance, these are also implemented in a directive manner. Factors contributing to a
concern with financial targets include external pressures (shareholders, creditors, alliances), public and consumer
concern for food security and quality, and competitive pressure on Food Corp, from both local and global competitors.
Pedagogic action
The “pedagogue” etymologically refers to the one who shows the way (give knowledge) and helps develop more
independence and responsibility in the one receiving knowledge. In Food Corp training and communication (meetings,
training programmes) helps build trust and encourages decentralised decision making. Delegation rests on trust among
staff in an organisation, and as in Food Corp, this trust can be developed through training and practise. This role of trust
seems particularly clear in the decentralised structure of Food Corp where decision making and social interaction is not
restricted by formal hierarchy between the centre and the subsidiary.
This study highlights that pedagogic action takes place in a context of uncertainty. First, the idea of CSR offers a
very loose framework, covering almost every action of an organisation’s staff. The range of activities covered by the
term CSR is very broad and includes many qualitative elements, and therefore may not be fully definable and
controllable. These include: how company policies treat employees as well as how employee behaviour toward each
other, customers, suppliers and other stakeholders; attitudes to implementing food quality standards; and attitudes to
meeting environmental standards. Second, preaching corporate responsibility can appear abstract and disconnected from
everyday life at first, as was initially the case in some subsidiaries of Food Corp. However, as noted above, the
development of practise through continuous improvement provided the means of learning, enabling headquarters to
convey corporate values and slowly transform behaviour. In this way espoused values become better understood and
accepted. Third, pedagogy does not mean removal of the need for managerial discretion and initiative. The global
competitive landscape seems to be evolving towards greater social and economic recognition of local stakeholders (for
example the Fair Trade movement). Such movements offer scope to Food Corp or its subsidiary managers to reflect on
whether they herald new ways of competing, for example through novel forms of cooperation with local stakeholders.
Evaluation
Unavoidably, in order for the Group to assess the success or otherwise of directive measures, there is regular evaluation
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of CSR related activity, through the pedagogical process previously described. The necessity for global consistency
combined with the significance of the issue, requires these directive measures to be strictly controlled.
Pressures Communication
Pressures Communication
COMPANY
COMPANY
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Company
values
Company
Subsidiary
Subsidiary values
Subsidiary
Subsidiary
Subsidiary
Subsidiary Subsidiary
Subsidiary Subsidiary
Subsidiary
Pressures Communication
Pressures Communication
Conclusions
The first objective of the research was to analyse the decision-making processes in determining a consistent worldwide
social responsibility policy in a MNC. The initiative comes from the headquarters and is diffused in a top-down manner.
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CSR is multidimensional, general and therefore supervised at the corporate level. General values and principles of
action are transmitted from the top management to the whole organisation. CSR is seen as financially sensible. The
CSR policy is mainly about making explicit, updating and formalising common values throughout the company. The
achievement of consistent global values grows out of communication, which in turn generates increased awareness,
more appropriate actions, leading to global consistency in the interpretation of corporate value.
The level of centralisation or decentralisation of a corporation influences the way a CSR policy is implemented.
In Food Corp, the centre sets the corporate values, and will use the hierarchical structure of the company to implement
these values. In addition, headquarters appear to take authoritative measures when financial performance depends on
good shareholder relations. This top down approach is joined by an organisational culture demanding compliance with
socially responsible employee behaviour. At the same time pedagogic actions seem to enable a controlled
decentralisation of subsidiary action. However tensions appear between the lofty values determined by top management
and the reality of day-to-day business, notably in the allocation of resources. Subsidiaries seem more concerned with
profitability while the centre seems more focused on being, and being seen, as behaving social responsibility.
Information flow from the bottom up is vital in order for CSR policy initiatives to work in an organised and coherent
manner, given the dispersed nature of the organisation.
Evaluation of practice and associated policy adjustments are integral to implementation, following a cycle of
continuous improvement. The growing interest in CSR, by stakeholders and shareholders, and the strictures of new
regulations, all help shape how the company communicates with its external environment. CSR evaluations should
include stakeholder attitudes since their support or dissatisfaction can significantly affect sustainable corporate
performance. It seems that this still has to be developed. The financial value of CSR is accepted but there is no strict
measure of it.
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