International companies

First of all it has to be noticed that there does no straightforward definition for CSR exist. The growing interest of companies, government, the general public, academics or civil society organizations has only served to extend the array of definitions. In the very beginning those were focused on how companies are managed with view to society and then shifted to the behavior of the whole company rather than individuals within.

This led to the debate what companies should be responsible for in another direction so that now there is less stress on the philosophical meaning and more on the pure act of being responsible. Nevertheless, the following figure shows at least some definitions of the understanding of CSR in the recent history. 1 A responsible company is one that listens to its stakeholders and responds with honesty to their concerns. Starbucks, CSR Report, 2004

CSR commits us to operate in a socially responsible way everywhere we do business, fairly balancing the needs and concerns of our various stakeholders – all those who impact, are impacted by, or have a legitimate interest in the Company's actions and performance. Chiquita, www. chiquita. com, accessed 24 March 2004 CSR [is] the proposition that companies are responsible not only for maximizing profits, but also for recognizing the needs of such stakeholders as employees, customers, demographic groups and even the regions they serve.

PricewaterhouseCoopers, www. pwcglobal. com, accessed 24 March 2004 CSR requires companies to acknowledge that they should be publicly accountable not only for their financial performance but also for their social and environmental record. Confederation of British Industry, 2001 [CSR is] a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis. European Commission, Directorate General for Employment and Social Affairs

[Corporate responsibility is the] responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that (a) contributes to sustainable development, health and the welfare of society; (b) takes into account the expectations of stakeholders; (c) is in compliance with applicable law and consistent with international norms of behavior; and (d) is integrated through the organization and practiced in its relationships. Draft of ISO 26000, International Guidance Standard of Social Responsibility, 4 September 2009

Figure 1: Definitions of corporate responsibility (Blowfield, Murray, 2011, page 8) 2. 2. The Four Mainstream Theories When looking at all of these different interpretations of what a definition can be about it is important to know some specific theories of CSR. This chapter therefore will give a brief overview about the contemporary existing four mainstream theories of CSR. 2 All of them consider their focus more or less on one of the different aspects by Carroll which are perhaps the most widely cited framework for the different aspects of social responsibility: economics, politics, ethics and discretionary.

3 The first of those is Corporate Social Performance (CSP) which is understood as "the configuration in the business organization of principles of social responsibility, processes of response to social requirements, and policies, programs and tangible results that reflect the company's relations with society. "4 This means business also has responsibilities for social problems created by business which includes ethical requirements and discretionary or philanthropic actions carried out by business in favor of society.

Therefore improving corporate social performance "means altering corporate behavior to produce less harm and more beneficial outcomes for society and their people. "5 To determine specific responsibilities within this theory it is necessary paying attention to social expectations regarding the company's performance and concern for social needs. It has also to be emphasized that society gives license to business to operate and, consequently, business must serve society not only by creating wealth, but also by contributing to social needs and satisfying social expectations towards business.

This leads to an immanent risk to which a company would be vulnerable if its performance was contrary the expectations of those people who constitute the company's social environment. Therefore corporate reputation is related to the acceptance of the community in which it is operating. 6 The Shareholder Value Theory (SVT) says that the only social responsibility of business is making profits and increasing the economic value of the company for its shareholders. Only if prescribed by law or helpful to the maximization of the shareholder value other social activities would be engaged.

It could be also be described as "the only [… ] responsibility of business towards the society is the maximization of profits to the shareholders, within the legal framework and the ethical custom of the country. "7 This Theory is founded in the Agency Theory where the owners are the principal and the managers are the agent. 8 The third of the mainstream CSR theories is the Stakeholder Theory. This Theory focuses on the individuals or groups with a stake in or claim on the company. More precisely it means those people who benefit from or are harmed by corporate actions.

Such groups include for example suppliers, community, employees, customers or financiers. The main problem about this theory is all of these stakeholders have a different view of social responsibility. Therefore it is suggested to take responsibility only for the entire specific group affecting business activities. 9 Summarized this means "the purpose of the firm is to create wealth or value for its stakeholders by converting their stakes into goods and services. "10 The Last of these theories is the Corporate Citizenship (CC).

CC suggests that business is a part of the society and has frequently used as equivalent to CSR. 11 It says that "'be a good corporate citizen' includes 'actively engaging in acts or programs to promote human welfare or goodwill' and 'be a good global corporate citizen' is related to philanthropic responsibility, which 'reflects global society's expectations that business will engage in social activities that are not mandated by law nor generally expected of business in an ethical sense'"12 Therefore this is the only theory which overcomes the narrow perspective which reduces business only to its economic purpose.

All of these theories can be used to explain how companies take care of their CSR. But which of them is the best depends on what is expected from that company to do to maintain an appropriate behavior in society. For example nowadays companies in the USA will tend mostly to the SVT model while European or Japanese companies more likely follow the stakeholder model. However, few and far between there are also companies existing which use the CSP model and an increasing number of mostly transnational companies adopt the CC model.

13 For this reason this seminar paper will focus on the CC model to give an idea how to successfully implement CSR in an operations strategy as well as how important environmentalism can be especially for international companies. 2. 3. Possible Business Cases Beside the theories it is also necessary to understand the business case of CSR. Each investment in a project or initiative like implementing CSR in an operations strategy needs to promise a suitably significant return to justify the expenditure.

This is what in business practitioner terms is called a business case and related to CSR becomes known as 'do well by doing good' which means financially performing better by taking care of its responsibilities towards creating a better society. 14 Therefore are existing four general types which will briefly be discussed in this chapter. The first approach to generate value through implementing CSR in the strategy is in order to reduce costs and risk of the company. To reach this the social or environmental performance gains has to mitigate the threats to the viability of the company and the corporate financial performance.

15 The second approach is getting a competitive advantage against rivals. Building a business case for CSR with focus on a competitive advantage could happen through strategically orienting and directing resources toward the perceived demands of stakeholders. Those demands are in this case less constraints as more opportunities which could be leveraged for the benefit of the company. 16 Another approach can be building value through gains in the company's reputation and legitimacy. Measurements for reaching this have an aligning perspective.

Therefore it is quite similar to the competitive advantage approach just focused by enhancing the reputation and legitimacy of the company by using CSR initiatives. 17 The last approach is the synergistic value creation by finding win-win-win outcomes through seeking out and connecting stakeholder interests. This generates pluralistic definitions of value for multiple stakeholders simultaneously. But due to the fact that many of the out coming ideas fall outside traditional business models this approach could be a real challenge. 18

Each of the four possible business cases has a different key value proposition which could help to find the right approach and is summed up in the following quotation: "Business cases framed as cost and risk reduction focus on trading among what are viewed generally as competing interests; competitive advantage business cases describe payoffs accrued through adapting to the competitive environment; a CSR proposition based on building reputation and legitimacy advocates aligning with political and social norms and expectations; and synergistic value creation approaches are aimed to relating disparate elements in the operating domain, and integrating those elements in novel ways. 

But what initially sounds logic in the truth is nothing else as building a coherent justification for a company to invest in CSR-defined initiatives. 20 Nevertheless this shall be sufficient for this seminar paper to explain the reason why it could be an asset to invest in CSR from an economic point of view. 2. 3. 1. Excursion: Cause-related marketing and cause affinity The perception of negative effect has changed consumers' consumption patterns a company's performance nowadays is judged more and more by its impact on the environment and on the society. But as CSR is not easy for the public to comprehend its receptiveness can be enhanced by using an effective communication of the company's efforts in that way. Therefore cause-related marketing is nowadays widely practiced. 21

However, this leads to the problem that cause specificity could be more appealing a company more than implementing a good corporate citizenship because it is much easier to communicate, most likely cheaper and more adjustable. Unfortunately this cause affinity of customers connected with the fact that CSR is more or less expected gets companies to rather use cause-related marketing than building up a sustainable corporate citizenship. Otherwise such a decision bears also risks. Because the public is more likely suspecting companies only try to convince them rather than really supporting or only exploiting the original cause, they may tend to react unfavorably to cause-related marketing. 22 So can this indeed be an alternative for sustainable CSR?

If looking at the business cases CSR could be implemented to create a competitive advantage or/and to increase a company's reputation. "In practice, CSR has been perceived as motivated mainly by marketing purposes"23 which is result of the very beginning of this excursion: CSR is not easy to comprehend. Therefore an adequate marketing is somehow needed to create a competitive advantage and/or increase a company's reputation. It is done by selecting areas of focus that fit with company values. This could be supporting a specific business goal or choosing issues related to core products and core markets. 24 But does it also work without or even with negative CSR behind such marketing campaigns?

"Cause-related marketing can be part of CSR, but cause-related marketing alone cannot fully embody CSR. "25 However cause-related marketing helps to largely compensate negative impressions of unethical behavior if customers are cause affine and support the advertised cause. Therefore a marketing campaign which is tuned toward a target group's favored cause might be able to safeguard a company against future ethical troubles. 26 So this short excursion about cause-related marketing and cause affinity shows contemporary CSR is such an important topic which can create competitive advantages and/or reputation gains that it even becomes abused. 2. 4. The Relationship between CC and CFP Implementing CSR can create profits for a company.

Orlitzky, Schmidt and Rynes did a meta-analysis in 2003 which supports a positive relationship between CC and the corporate financial analysis (CFP), which means implementing or improving the company's CC simultaneously improves their financial viability. Besides that CC also seems to reduce business risk. Both of these effects are most likely mediated by the organizational reputation (Crane et al. , 2008). So thinking back to the excursion about cause-related marketing, this fact strengthens the assumption that reputation is one key factor when talking about CSR and therefore maybe the most popular business case. Orlitzky and his colleagues also found out that CFP is a positive predictor of future CC whereby CC also predicts CFP.

This means that a business can develop mutually beneficial relations with stakeholder groups which might pay off surprisingly fast for the socially responsible company (Crane et al. , 2008). An indicator why CC and CFP are most likely positive correlated could be because CC is helping to improve managerial knowledge and skills as well as enhancing the corporate reputation. For example engaging stakeholders constructively in company activities let them may look more favorably upon a socially responsible company so that such employers may attract better and more committed employees. Also external stakeholders may become more willing to buy the company's products or pay a premium for the goods from socially responsible companies (Crane et al. , 2008)