Implicit and Explicit CSR: A conceptual framework for understanding CSR in Europe

1
Implicit and Explicit CSR A conceptual
framework for understanding CSR in Europe

• Dirk MattenResearch Seminar
• School of Management
• Royal Holloway, University of London
• 16 February 2005

2
Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

3
My recent work on CSR in Europe

• Analysis of the curricula and research activities
  of business schools in 14 european countries in
  CSR (Matten and Moon 2005)
• Development of a European curriculum in business
  ethics (Crane and Matten 2004)
• Comparative analysis of the use of codes of
  conducts by MNCs from CDN, UK and GER (Bondy,
  Matten and Moon 2004)
• Development of a institutional theory informed
  approach to study MNCs (Geppert, Matten and
  Walgenbach 2006)

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CSR in Europe a young phenomenon
Politcial level
Green paper CSR by EU- Commission
Corpororate level
launch of CSR Europe
Academic level launch of
European Academy
of Business in Society
1996
2002
2001
5
CSR in Europe as a research topic

• Why was CSR not discussed in Europe before? Were
  European companies hitherto socially
  irresponsible?
• What are the reasons that CSR is becoming an
  issue now?What are the challenges companies want
  to tackle with CSR?

6
Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

7
What is CSR?

• Corporate social responsibility encompasses the
  economic, legal, ethical, and philanthropic
  expectations placed on organizations by society
  at a given point in time. (Carroll und Buchholtz
  2002)
• Garriga Melé 2004 aspects of CSR
• Instrumental/Economic
• Political
• Social
• Ethical

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CSR as an american concept

• More than 50 years of corporate practice in the
  US (Carroll 1999)
• More than 30 years of tradition in academic
  research and teaching
• Numerous journals
• Business and Society (1961)
• Business Society Review (1972)
• Journal of Business Ethics (1982)
• Business Ethics Quarterly (1991)

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Synonyms for CSR

• Various European translations
• Business Ethics and various translations of the
  term into European languages
• Corporate Environmental Management transl.
• Sustainability Management
• Corporate Citizenship

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What is Europe?

• EU CH, N
• Caveats
• UK and Ireland share similarities with the
  american model of capitalism (Lane 1992) and have
  a particular legacy of reforms in post 1980 (Moon
  2004).
• Eastern Europe (former communist block) has
  different institutional and economic legacy.

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Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

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CSR in comparative perspective rights and
status of employees

• Working conditions, working time or benefits are
  dominant topics in the area of CSR in the
  American context
• US example since 2004 Starbucks Coffee provides
  a basic health insurance for all franchisees
  working more than 20 days/month
• Social security of employees in Europe is
  typically subject to numerous laws and
  regulations and embedded in a welfare state
  approach
• UK default health insurance through National
  Health Service (NHS)
• Germany membership in health insurance is
  mandatory (gesetzliche Krankenversicherung)
  employers contribution to the monthly premium is
  defined in the law

13
CSR in comparative perspective genetic
engineering

• Laisser faire approach of Federal Drug Agency and
  US Department of Agriculture EU-Commission is
  rather conservative (Vogel 2002)
• Until 2002 58 GMOs were released in the US only
  18 in EU 1999 60 of food in US contains GMOs
• Significant differences in the risk percepton of
  GMOs (1998) 14 anti in US, 65 in Sweden, 50
  in Germany, 39 in UK
• 2000 as part of the CSR policies, McDonalds,
  Gerber and McCain issue voluntary self-commitment
  not to use GMOs

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CSR in comparative perspective education

• Second most important CSR issue for US companies
  no significance for companies NL or F (Maignan
  Ralston 2002)
• Corporate donations to education in US in 1998
  3.25bill ( 3.8bill from foundations such as
  Ford, Carnegie etc.)
• Most European education systems rely heavily or
  even exclusively on state money

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Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

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CSR as aggregate of implicit and explicit elements
Social salience of a CSR issue
Intensity of theinstitutionalframework
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CSR as aggregate of implicit and explicit elements
Social salience of a CSR issue
Intensity of theinstitutionalframework
European Countries
USA
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CSR as aggregate of implicit and explicit elements
Social salience of a CSR issue
CSR as an explicit element of corporate policies
Intensity of theinstitutionalframework
European Countries
USA
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CSR as aggregate of implicit and explicit elements
Social salience of a CSR issue
CSR as implicit element of the institutional
framework of corporations
CSR as an explicit element of corporate policies
Intensity of theinstitutionalframework
European Countries
USA
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Implicit and explicit CSRthe example of health
care
Social salience of a CSR issue
Health insurance courtesy of Starbucks Coffee
Implicit CSR
Health insurance in the NHS
Explicit CSR
Intensity of theinstitutionalframework
European Countries
USA
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Implicit and explicit CSRthe example of GMOs
Social salience of a CSR issue
Implicit CSR
Risk averseregulatory approachof EU Commission
McDonalds voluntarily refrains from GMOs
Explicit CSR
Intensity of theinstitutionalframework
European Countries
USA
22
Implicit and explicit CSRthe example of
education
Social salience of a CSR issue
Implicit CSR
Corporate sponsoring of (higher) education
State funded systems of (higher) education
Explicit CSR
Intensity of theinstitutionalframework
European Countries
USA
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Definition of CSR as a dual construct
24
Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

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Implicit CSR and the National Business
Systems-approach (Whitley)
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NBS approach as a framework for research into
implicit CSR

• 30 years of established research tradition in
  comparative research in Europe (e.g. Sorge,
  Maurice, Whitley, Kristensen, Clark, Child,
  Kieser, Lane)
• Conceptualization of divergent models of
  capitalism in Europe
• Anglo-saxon (GB, IRL)
• Nordic (SF, S, N, DK)
• Rhenish (D, F, CH, A, NL, LUX, B, I, ES, P)
• Eastern European (PL, H, CZ, SK, SLO etc.)
• Key finding that NBS only change slowly over time
  if at all
• Allows for research into national systems of CSR

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Implicit CSR and European National Business
Systems

• Stronger role of the state in risk sharing and
  coordination of the economy
• Relatively minor role of capital markets.
• Highly regulated markets for labour
• Powerful position of trade unions and industry
  associatons
• Trust and authority relations in the model of the
  rhenish capitalism (Albert 1991)

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Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

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Explicit CSR and Neo-Institutionalism

• Organizational fields as those organizations
  that, in the aggregate, constitute a recognized
  area of institutional life key suppliers,
  resource and product consumers, regulatory
  agencies, and other organizations that produce
  similar services and products (DiMaggio and
  Powell 1983).
• New, rational organizational practice occurs
  because it is regarded as legitimate within the
  organizational field (Meyer and Rowan 1977,
  Scott 2001).
• Neo-Institutionalism explains the global
  diffusion of management concepts and practices
  beyond national or industry borders (Business
  Re-engineering, ISO 9000, Lean Management, TQM
  etc. Meyer 2000).

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Ligitimacy of management practice through ...

• Coercive Isomorphismsexternal rules, demands,
  expectations, norms, laws which have to be
  respected to avoid sanctions of loss of trust
• Mimetic Processesincreasingly complex
  technologies, goal ambiguities and uncertainty
  causes managers to just imitate best practices
• Normative Pressuresprofessionalization of the
  management craft by way of an increase in formal
  degrees and global networks, especially in the
  context of professional and ecucational
  associations and industry associations.

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Increase of explicit CSR in Europe through
isomorphisms

• Coercive Isomorphisms
• Standarization efforts of the EU
• Industrial Metastandards (ISO 14000, SA 8000, AA
  1000 etc.)
• Global NGOs sanction corporate misbehaviour
  (Shell, Nestlé)
• Role of global investors
• Cutback of the welfare state in most European
  countries
• Corporate role in privatized public services
  increases stakeholder expecatations
• Mimetic Processes
• Adoption of the Anglo-Saxon model of management
  processes and structures by most European
  companies (Whittington und Mayer 2000)
• Leading role of anglo-saxon MNCs in CSR in Europe
  (Codes of Conduct, social accounting,
  philanthropy)
• Normative Pressures
• Increase of CSR in European management education
  (Matten und Moon 2005)
• Emergence of numerous professional networks and
  industry association in CSR in Europe

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Peculiarities of European explicit CSR

• Pivotal role of regulating/governmental bodies
• Multistakeholder-approach (government, industry
  associations, trade unions, NGOs)
• Corporate involvement in regulatory processes
  (z.B. Polder-model, self-commitments)
• Dominant role of ecological/environmental issues
• Philanthropy only of marginal importance
• Secular approach

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Structure

• The problem
• CSR on its way to Europe
• CSR in comparative perspective
• Implicit CSR and explicit CSR as complimentary
  elements of CSR
• Implications for a research agenda in CSR
• Implicit CSR and National Business Systems
• Explicit CSR and the global diffusion of
  management concepts
• Conclusions

34
Implications of the proposed framework

• Descriptive implications CSR has different
  contents, meanings and connotations depending on
  the institutional and national context
• Instrumental implications corporate CSR has to
  be adapted to and contextualized in a specific
  institutional and national environment
• Normative implications revisiting the core
  assumptions of CSR in the Anglo-Saxon debate,
  which sees CSR (that is explicit CSR) as an
  approach to locate social responsibilities of
  corporations which is better and more appropriate
  than collective, regulatory solutions to the
  problem (that is implicit CSR)

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CSR in Europe Back to the research questions

• Why was CSR not discussed in Europe before?
• European companies have ever been socially
  responsible however, they
• did not use the label of CSR for this
• practiced CSR as a natural/self-evident response
  to the institutional framework of business.
• What are the reasons that CSR is becoming an
  issue now?
• CSR gets on the agenda in Europe now because
• Globalisation confronts european MNCs with
  contexts which institutionalize social
  responsibility in a different way from their
  respective home countries
• Changes in the organizational field of
  companies popularize CSR as a management idea.

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