Springer 2008
Journal of Business Ethics (2009) 87:153–168
DOI 10.1007/s10551-008-9876-z
CSR Practices and Corporate Strategy:
Evidence from a Longitudinal Case Study
ABSTRACT. This paper aims to contribute to the
present debate about business ethics and Corporate Social
Responsibility (CSR) that the Journal of Business Ethics is
hosting. Numerous contributions argued theoretical
frameworks and taxonomies of CSR practices. The
authors want to ground in this knowledge and provide
further evidence about how companies adopt CSR
practices to address stakeholders’ claims and consolidate
their trust. Evidence was provided by a longitudinal case
study about an Italian food company that is one of the
largest producers of baby food. This company reshaped its
corporate strategy along three decades through the
adoption of CSR practices in order to win stakeholders’
trust about food safety and supply chain behaviour. The
empirical exercise was informed by a literature review of
the relevant contributions in terms of CSR business
practices and levels of efforts to adopt them. In light of
this review, the authors adopted for the research framework the taxonomy of business practices proposed by
Spiller (2000, ‘‘Ethical Business and Investment: A Model
for Business and Society’’, Journal of Business Ethics 27,
149–160) and the levels of commitment towards CSR
proposed by Stahl and Grigsby (1997, Strategic Management; Total Quality & Global Competition (Blackwell,
Oxford)). The main findings are discussed in order to
argue theoretical implications and identify further areas of
research and debate.
KEY WORDS: business ethics, CSR business practices,
corporate strategy, food industry, stakeholders’ claims
Introduction
Consumers and governmental organisations are
focusing their attention more and more on Business
Ethics and Corporate Social Responsibility (CSR)
(Konrad et al., 2006). Moreover, consumers are
coping more and more with uncertainty, lack of
knowledge, imperfect information and complex
Lucio Lamberti
Emanuele Lettieri
decisions towards products and services in today’s
global society (Brenkert, 2002). This uncertainty
addresses new fundamental questions regarding the
trust between consumers and organisations (Choi
et al., 2007).
Giddens (1990) defined ‘‘trust’’ as the faith in the
practices or behaviours of which one possesses only
limited knowledge. In this view, the company’s reputation plays a relevant role. As consumers become
aware of the ethical implications of the companies’
behaviour, they develop a trust in the belief that the
company will maintain certain quality standards in
order to maintain, or improve, their reputation
(Kostova and Zaheer, 1999). Consequently, beyond
ethical considerations, consumers’ perceptions concerning CSR deficiencies can be extremely detrimental to corporate profitability and market share
(Enderle and Tavis, 1998).
Food industry can be taken as a reference example
in understanding the role of CSR in achieving competitive advantage (Maloni and Brown, 2006).
Today’s consumers are more and more uncertain
about how food companies really behave and how
much are they socially responsible (Deblonde et al.,
2007); the progressive globalisation of the food supply
chain has generated uncertainty on safety and security
practices; the consumption of mass food has addressed
concerns about pandemic diseases (e.g. mad cow
disease, foot and mouth disease, bird flu); the
increasing awareness about the risks related to obesity
has generated criticism of marketing and distribution
practices; the use of genetically modified ingredients
has raised the debate about how trustworthy is product
labelling (MacDonald and Whellams, 2007) etc.
Food companies, both multinational – e.g. Nestlé,
Kraft Food International, Danone, Heinz – and
domestic, are working to reinforce consumers’ trust.
This issue is urgent, because the claims are legitimated
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Lucio Lamberti and Emanuele Lettieri
by society as a whole (Maloni and Brown, 2006).
Consumers and other stakeholders are increasingly
aware that their choices about food (e.g. organic versus
non-organic) affect companies’ behaviour and politicians’ decision making, providing a relevant contribution to the formalisation of strategies and actions aimed
at ameliorating the social and environmental conditions
in specific areas of the planet (e.g. fair trade products,
eco-compatibility). In this view, Business Ethics and
CSR practices become a mean of competitive advantage for food companies (Deblonde et al., 2007).
This paper aims at contributing to the present
debate regarding Business Ethics and CSR that the
Journal of Business Ethics (JOBE) is hosting. Numerous
contributions argued about theoretical frameworks or
taxonomies for CSR practices. The authors want to
ground in this knowledge and provide further evidence about how companies adopt CSR practices to
address stakeholders’ claims and win their trust about
products and behaviour. Evidence will be provided
by a longitudinal case study about an Italian food
company that used CSR to reduce stakeholders’
uncertainty about food safety and supply chain
behaviour. Based on the results, the authors formalised a set of theoretical implications and argued some
locus for further research and debate.
Research methodology
The authors employed a single case study methodology for the empirical research (Yin, 2003). In particular, they decided to carry on a longitudinal case
study about an Italian food company. The managerial
literature has recently recognised that small sample
research is appropriate to understand the peculiarities
and the determinants of a phenomenon at an early
stage of knowledge. In this view, Siggelkow (2007)
claimed that a single case study can contribute to
existing knowledge through the deepening or widening of the current understanding.
The research design is based on two sequential
steps. Firstly, the authors carried out a literature
review about business ethics and CSR frameworks
that can be suitable for food companies in order to
give information to the next step. Secondly, the
authors selected a case study and carried out an indepth longitudinal analysis. In the following, both
steps are described briefly.
Electronic literature search
The authors carried out an electronic literature
search from January 1990 onwards covering Ebsco
and Cilea databases to collect the relevant contributions about business ethics and CSR frameworks
for food companies. The references of the selected
contributions were also reviewed. In order to be
included, a contribution had to describe, in whole or
part, a framework to support or audit CSR strategy
and practices in a company. The identified contributions were reviewed for relevancy by the authors
separately, on the basis of the title and abstract. If at
least one reviewer identified a contribution as being
potentially relevant, the full paper was obtained. The
collected papers were then reviewed and selected if
the authors considered them to meet the selection
criteria. A brief textual description was written for
framework, in particular concerning relevant stakeholders and dimensions of analysis. A framework has
been formalised in order to design a questionnaire
for semi-structured interviews.
Case study analysis
The empirical exercise involved a food company,
which is one of the largest producers of baby food in
Italy. This company was selected for at least four
reasons. Firstly, it has been widely recognised for
being socially responsible towards environment and
local community by both the Italian and the international stakeholders. Secondly, over the last three
decades, the top management endorsed various
strategies and actions to win stakeholders’ trust
regarding food safety and ethical behaviour. Thirdly,
it is a wholly owned subsidiary of an US multinational food company, which sells low price mass
food; this gave the opportunity to investigate to
what extent corporate governance and parent’s
reputation affect a subsidiary. Fourthly, the authors
had the possibility to have access to confidential data
over a period of three decades.
The analysis was carried out as follows:
• At the beginning, a relationship was established with the Managing Director. He was
briefed about the research project and the
authors asked to be introduced to the
CSR Practices and Corporate Strategy
•
•
•
•
•
Marketing Manager, the Human Resources
Manager, the Supply Chain Manager and the
R&D Manager in order to gather a composite
understanding;
The authors personally interviewed the
selected managers; they undertook a semistructured interview for each respondent
(each interview on average lasted one hour
and half) in order to gather the information
required; all of them had many years experience in the food industry and joined this
company at least 10 years ago;
All interviews were tape-recorded and transcribed; and a telephone follow-up with the
respondents was conducted when a few data
were missing;
All available secondary information regarding
strategies and practices for food safety and CRS
over the last 25 years was collected and triangulated with data drawn from the direct interviews in order to enhance research reliability;
External sources of information were identified to gather other points of view regarding
company’s social responsibility and behaviour. In particular, two sources of information
were covered. On the one hand, the reports
and claims about the Italian babyfood market
and the company that have been carried out
by various consumer representatives and by
the official consumer associations press organs
were collected by Internet. On the other
hand, the minutes regarding the meetings
between the company and the union officers
over the last 10 years were collected and
reviewed with a SA8000 consultant.
A first hand summary of the findings was discussed with the managers who were interviewed
in order to identify any misunderstanding.
Research framework
Even a cursory review of the literature would
identify that numerous frameworks and metrics for
CSR have been developed. Focusing on the Journal
of Business Ethics, the contributions that can be collected are also many. In this view, the authors tried
to make sense of a mass of – and often contradicting
– theories and evidence.
155
The literature review aimed at formalising a
research framework that, rooted in the existing
knowledge, could support the following case study.
Two research needs were addressed. Firstly, which
are the relevant stakeholders, their claims regarding
Business Ethics and CSR, and the business practices
that can be adopted by a food company to address
them? Secondly, how can the level of commitment
that a food company pays to adopt a specific business
practice for CSR be measured? In order to satisfy
these needs, the authors were looking for generally
agreed taxonomies that could be applied to investigate the case study.
In the following, the selected contributions are
described briefly.
The authors decided to select six contributions on
which are the relevant stakeholders and the business
practices to address their needs according to the
inclusion protocol described in the Methodology
section.
Spiller (2000), Papasolomou-Doukakis et al. (2005)
and Maignan et al. (2005) agree that six different
groups of stakeholders affect or are affected by what a
company decides or does, and therefore they address
specific responsibilities. They are: shareholders,
employees, customers, suppliers, the environment and the
community. Abreu et al. (2005) identified five groups of
stakeholders (consumers, suppliers, the community, the
government and the environment) investigating CSR
practices in Portugal. Longo et al. (2005) identified
four groups of stakeholders (employees, suppliers, customers and the community). Maloni and Brown (2006)
identified eight perspectives of CSR that are peculiar
for the food supply chain. They are: health and safety,
labour and human rights, procurement, fair trade, community, environment, animal welfare and biotechnology.
Although these perspectives are peculiar, they can be
easily related to the six groups of stakeholders. For
example, the perspective ‘‘labour and human rights’’
can be referred to the employees, because it is a specific business practice to address the claims of this
group of stakeholders.
The previously mentioned contributions identified a number of business practices that a company
can adopt to address stakeholders’ claims regarding
Business Ethics and CSR. Spiller (2000), among the
others, proposed a list of sixty business practices that
largely covered the other contributions (Table I). In
a recent contribution to the JOBE, Jamali (2007)
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Lucio Lamberti and Emanuele Lettieri
TABLE I
Perspectives and key business practices for CSR (Spiller, 2000)
Perspective
Key business practices
Community
1. Generous financial donations
2. Innovative giving
3. Support for education and job training programmes
4. Direct involvement in community projects and affairs
5. Community volunteer programmes
6. Support for the local community
7. Campaigning for environmental and social change
8. An employee-led approach to philanthropy
9. Efficient and effective community activity
10. Disclosure of environmental and social performance
1. Environmental policies, organisation and management
2. Materials policy of reduction, reuse and recycling
3. Monitoring, minimizing and taking responsibility for releases to the environment
4. Waste management
5. Energy conservation
6. Effective emergency response
7. Public dialogue and disclosure
8. Product stewardship
9. Environmental requirements for suppliers
10. Environmental audits
1. Fair remuneration
2. Effective communication
3. Learning and development opportunities
4. Fulfilling work
5. A healthy and safe work environment
6. Equal employment opportunities
7. Job security
8. Competent leadership
9. Community spirit
10. Social mission integration
1. Industry-leading quality programmes
2. Value for money
3. Truthful promotion
4. Full product disclosure
5. Leadership in research and development
6. Minimal packaging
7. Rapid and respectful responses to customer comments/concerns
8. Customer dialogue
9. Safe products
10. Environmentally and socially responsible product composition
1. Develop and maintain long-term purchasing relationships
2. Clear expectations
3. Pay fair prices and bills according to terms agreed upon
4. Fair and competent handling of conflicts and disputes
5. Reliable anticipated purchasing requirements
6. Encouragement to provide innovative suggestions
7. Assist suppliers to improve their environmental/social performance
Environment
Employees
Customers
Suppliers
CSR Practices and Corporate Strategy
157
TABLE I
continued
Perspective
Shareholders
Key business practices
8. Utilise local suppliers
9. Sourcing from minority-owned suppliers
10. Inclusion of environmental/social criteria in the suppliers’ selection
1. Good rate of long-term return to shareholders
2. Disseminate comprehensive and clear information
3. Encourage staff ownership of shares
4. Develop and build relationships with shareholders
5. Clear dividend policy and payment of appropriate dividends
6. Corporate governance issues are well managed
7. Access to company’s directors and senior managers
8. Annual reports provide a picture of the company’s performance
9. Clear long-term business strategy
10. Open communication with financial community
recognised the taxonomy proposed by Spiller (2000)
as one of the most suitable in the literature for
investigating the approaches to CSR. The authors
agreed on this choice and selected this framework
for the case study. The strengths and weaknesses of
this choice will be discussed in the light of the
evidence collected in the case study.
The authors decided to select four contributions
dealing with the levels of commitment to CSR business practices according to the inclusion protocol.
Brand (1989) identified three main levels of ethics. They are: transaction ethics (this type of ethics
illustrates the lowest acceptable policy; a company is
interested to assure its own rights); recognition ethics
(this type of ethics shows the balance between rights
and obligations a company recognises to assure a
general well-being); change ethics (this type of ethics
represents the upper limit: the company has an active
participation in the development and innovation of
norms and values aimed at improving society). Stahl
and Grigsby (1997) identified three main levels of
action in companies’ ethical behaviour: minimum
legal compliance (managers are committed to comply
with the minimum social requirements of the law;
enlightened self-interested (managers use social responsibility programmes as a strategic mean to communicate to the market that they are better than their
competitors to obtain a long-term profitability; proactive change (managers exploit company’s assets to
improve society independently of the direct benefits
to the company and they take position far beyond
the requirements of the law). Enderle and Tavis
(1998) identified three levels of ethical responsibility:
minimal ethical requirements (this first kind includes the
basic ethical norms, such as not to kill and not to
rob), positive obligations beyond the minimum (this
second kind aims at creating and maintaining trustworthy relationships with stakeholders, at helping
employees who are in need, at compensating the
community for unintentional damages, at engaging
for fair market conditions, etc.) and aspirations for
ethical ideals (moral actors are characterised by aspiring to ethical ideals, if they are to overcome purely
reactive behaviour and take a proactive stance).
Finally, Kok et al. (2001) identified four levels of
social responsibility grounding in the contributions
by Brand (1989) and Stahl and Grigsby (1997). They
are: ad hoc policy (managers consider the social issues
that can generate risks for the company), standard
social responsibility policy (managers consider the social
issues that are compulsory), planned social responsibility
policy (managers consider the social issues that can
affect business performance) and reviewed social
responsibility policy (stakeholders are systematically
involved in corporate strategy formulation). The
authors discussed the four levels detailing CSR
implications for both the external environment
(stakeholders, consumers, suppliers, the environment
and the community) and the internal environment
(employees).
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Lucio Lamberti and Emanuele Lettieri
Although each contribution has peculiarities, they
show communalities regarding which are the main
levels of commitment towards Business Ethics and
CSR practices. In this view, the authors decided to
adopt the model proposed by Stahl and Grigsby
(1997) to support the case study. The selected contribution was agreed also by Enderle and Tavis
(1998) and Kok et al. (2001). Thus, the authors
argued that the contribution by Stahl and Grigsby
(1997) can be considered as an accepted framework
among the Business Ethics scholars.
In conclusion, the authors based their research on
two contributions selected as relevant from the literature review. On the one hand, they adopted a
stakeholder taxonomy proposed by Spiller (2000),
and on the other hand, they referred to the levels of
commitment towards CSR business practices that
have been proposed by Stahl and Grigsby (1997).
Findings from the case study
Introduction: antecedents of the social responsible actions
Babyfood is one of the largest Italian manufacturers of
dietetic and baby food (1,400 employees and revenues
ca. 450e million in 2007). Since 1963, it has been a
wholly owned subsidiary of Snack&Meals, which is a
large multinational food group and one among the
worldwide leaders in the processed food industry.
Snack&Meals entered the Italian market by leveraging
on brand awareness and corporate identity of Babyfood.
Babyfood was born in early 1900s as a distributor of
a nutritional integrator for babies. Over the next
years, the company started producing noodles, cacao
powder and cookies flavoured with the core-business integrator. During the 1920s and 1930s, Babyfood consolidated its brand through the enlargement
of the portfolio of products, introducing processed
food (rice cream, corn semolina, etc.). After the end
of WWII, the company increased its capacity and
gained the sales leadership in the Italian baby food
market. The rising performances attracted the
attention of various foreign companies. Snack&Meals
acquired the Italian company and fostered the
enlargement of Babyfood’s portfolio of products,
introducing milk powder and homogenised food.
Successively, Babyfood started producing functional
foods. In particular, they launched products for food
intolerance and the first light baby food (low-fat soft
cheese). The success of this strategy convinced the
Italian society that Babyfood was an avant-garde in
food safety and healthy products, creating the premises for a still lasting trust.
During the 1970s, a series of disasters involved
chemical and atomic plants in Southern Europe, and a
wide cloud of dioxin covered that area (Italy included). A large number of food products, such as
milk, eggs, meat, could not be consumed for a long
period. As a result, consumers’ trust in food companies
rapidly decreased. New standards for food safety and
more socially responsible behaviours were required by
the market. Co-temporally, between the late 1970s
and the early 1980s, some competitors launched a few
aggressive marketing campaigns aimed at eroding
Babyfood’s market share and pressing prices down. In
order to avoid a price war, Babyfood decided to
strengthen its brand and differentiate its portfolio of
products. This strategy was aimed at maintaining a
premium price. A few secondary brands were introduced for covering the low tiers of offering (i.e. the
first price segment), while core brands were improved
in terms of quality and customisation. Moreover,
numerous CSR initiatives concerning social and
environment responsibility were undertaken, to win
customers’ trust that Babyfood was a safety-oriented
and health-oriented food company. They were successful and today, after some 30 years, Babyfood is still
perceived by different groups of stakeholders as an
example of an ethics-committed company.
The CSR business practices that Babyfood has
undertaken during the last 30 years will be detailed
according to Spiller’s taxonomy (2000), i.e. recognising
six main groups of stakeholders: shareholders, customers, employees, the supply chain, the community
and the environment. Moreover, the specific level of
commitment to each CSR practice will be discussed
according to Stahl and Grigsby’s (1997) model. All the
following insights come out of the triangulation of
direct interviews and secondary sources of information.
Evidence is summarised in Table II.
CSR business practices for each group of stakeholders
Shareholders
Babyfood, being a wholly owned subsidiary of
Snack&Meals, had to agree to the Ethical Code of the
CSR Practices and Corporate Strategy
159
TABLE II
Reapplication of Spiller’s and Stahl and Grigsby’s framework to Babyfood case study
Perspectives
Business practice implemented
Shareholders
Ethical code
CSR reporting
Suppliers
Multi-attribute vendor rating
Consultancy
Customers
Customer care
Labelling
Product information disclosure
Naturally protected programmes
Community
Support to depressed rural regions
Corporate giving
Nutrition education for children
Similarities to Spiller’s (2000)
key business practices
Predominant
level
of CSR
Sh.1. Good rate of long-term return to
shareholders
Sh.2. Disseminate comprehensive and
clear information
Sh.8 Annual report and accounts provide a comprehensive picture of the
company’s overall performance
Sh.9. Clear long-term business strategy
Su.1. Develop and maintain long-term
purchasing relationships
Su.2. Clear expectations
Su.3. Pay fair prices and bills according
to terms agreed upon
Su.7. Assist suppliers to improve their
environmental and social performance
Su.8. Utilise local suppliers
Su.10. Inclusion of an environmental
and social element in the selection of
suppliers
Cu.1. Industry-leading quality
programmes
Cu.4. Full product disclosure
Cu.5. Leadership in research and
development
Cu.6. Minimal packaging
Cu.7. Rapid and respectful responses to
customer comments, complaints and
concerns
Cu.8. Customer dialogue
Cu.9. Safe products
Cu.10. Environmentally and socially
responsible production and product
composition
Co.1. Generous financial donations
Co.2. Innovative giving
Co.3. Support for education and job
training programmes
Co.4. Direct involvement in community projects and affairs
Co.6. Support for the local community
Co.9. Efficient and effective community activity
Co.10. Disclosure of environmental
and social performance
Enlightened
self-interested
Enlightened
self-interested
Enlightened
self-interested
Proactive
change
Lucio Lamberti and Emanuele Lettieri
160
TABLE II
continued
Perspectives
Business practice implemented
Environment
Recycling
Biodiversity safeguard
Requirements for suppliers
Employees
Ethical code
Training
parent company and ensure compliance to Snack&Meals’ standards. The Code remarks the relevance of
food safety, customer-centricity, fair treatment and
empowerment of employees. Despite that, there are
no issues that are directly related to the baby food
market. The HR Manager stated that the present
Code is a means for standardisation in the group and
a limited (although not null) autonomy is left to each
subsidiary. In fact, Babyfood has no dedicated social
reporting system and its social and environmental
performance are collected in a biennial CSR Report
that is published by Snack&Meals for the whole
group. All activities that are related to social
reporting are managed at the headquarter level,
because the subsidiaries are managed as divisions
rather than as autonomous entities. In this view,
Babyfood has no freedom to develop its own social
and environmental reporting system. However, the
HR manager also stated that Babyfood had never
protested against the centralisation. All subsidiaries
are audited every 6 months to ensure conformance
to Snack&Meals’ Ethical Code and food safety standards. Babyfood has been always recognised over the
Similarities to Spiller’s (2000)
key business practices
En.2. Materials policy of reduction,
reuse and recycling
En.3. Monitoring, minimising and
taking responsibility for releases to the
environment
En.9. Environmental requirements for
suppliers
En.10. Environmental audits
Em.1. Fair remuneration
Em.2. Effective communication
Em.3. Learning and development
opportunities
Em.4. Fulfilling work
Em.5. A healthy and safe work
environment
Em.6. Equal employment
opportunities
Em.10. Social mission integration
Predominant
level
of CSR
Proactive
change
Minimum
legal
compliance
last 30 years as the group flagship in terms of social
and environmental responsibility.
So, Babyfood applies two CSR business practices
(Table II): it agrees to an Ethical Code and publishes its biennial social and environmental performance. The level of commitment to these practices
is high, because they have been made compulsory
for Babyfood by its parent company. This limited
autonomy must be taken into account to apply
Stahl and Grigsby’s taxonomy (1997). In fact,
Babyfood is compliant to what the parent company
requires and, as the HR manager stated, nothing has
been made to overcome this limitation and define
an improved own standard. However, Babyfood
behaves for being perceived as a social and environmental responsible company by the group’s
shareholders and for being recognised as the flagship
of the whole group. In this view, it is possible to
consider the level of commitment as enlightened
self-interested, because Babyfood exploits the two
CSR business practices as a means to communicate
that it is better than its competitors in order to get a
long-term profitability.
CSR Practices and Corporate Strategy
Customers and suppliers
After the late 1970s scandals, Babyfood top management was aware that performance of supply chain
should have been improved in terms of both food
safety and accountability. Customers and suppliers
were interested in monitoring how the supply chain
really works and to which extent food companies are
ethical. In fact, the supply chain is responsible for
ensuring food safety and environment safeguard.
Babyfood launched the ‘‘Naturally protected’’ program,
which formalised the criteria with which suppliers of
raw materials had to be compliant in order to enter
into a long-term partnership with Babyfood. They
are: abandonment of any potentially dangerous
chemical additive, complete traceability of materials
and activities, acceptance of unexpected quality
inspections by Babyfood or other third parties (e.g.
hospitals, research centres) and farming far from any
source of pollution, such as roads, highways,
chemical plants and big cities. Some of these criteria
would have been adopted for organic cultivation in
Italy only later on, and others (as the distance from
sources of pollution) are even more restrictive than
the Italian certification for organic farming. Suppliers
that are compliant with these criteria are granted
with a 3-year contract and buying prices that are
higher than the market (generally 10% more).
Contracts can be broken in case of any incompliance
with the criteria. In order to prevent these situations,
Babyfood provided suppliers with a team of specialists
to support them in ensuring food safety.
More recently, in 1990s, Babyfood developed a
multi-attribute rating system for potential suppliers.
Compliance to ‘‘Naturally protected’’ programme is
weighted with other attributes, such as the lack of
sentences and social and environmental responsibility (being compliant with ISO14000, SA8000 and
AA1100 standard positively contributes to vendor
rating). Although many thresholds that have been
formalised by Babyfood go beyond international
standards, Babyfood has never applied for being certificated. In particular, the top management has
largely invested to make the customer aware that
Babyfood’s approach is distinctive from competitors.
The Marketing Manager stated: ‘‘Babyfood does not
want to be a company compliant to internationally determined quality, environmental and social standards; we
want to set more restrictive standards and communicate
them to the market in order to be perceived as unique’’.
161
Babyfood regained the market share that had been
lost during the 1980s because of the aggressive
campaigns launched by the competitors. This datum
becomes more significant when we consider that the
global sales of processed baby food largely decreased
in Italy between 1980 and 1987, especially after the
Chernobyl disaster in 1985.
The level of commitment to CSR business
practices for suppliers can be considered co-temporally as proactive change (e.g. the team of specialists for
consultancy activities, the contribution for rural areas
development) and as enlightened self-interested (e.g. the
large part of the CSR initiatives is broadly advertised and aimed at improving business performance). Nonetheless, an enlightened self-interested
level of commitment to CSR is predominant. In
fact, Babyfood resorted to social and environment
responsibility to regain customer trust and market
share in order to increase long-term profitability.
In the late 1980s, Feedgrowth, which is the first
competitor of Babyfood in Italy and the only one
that has a relevant market share excluding private
labels, started advertising the CSR-related policies
applied to its supply chain. The effect was that appeal
of the ‘‘Naturally protected’’ programmes to its customers and suppliers progressively diminished. In
order to maintain its premium-price positioning,
Babyfood started empowering and promoting the
CSR dimensions of its business model.
Customer care became a relevant lever to make
customers aware of Babyfood’s efforts to continuously
improve food safety, health and environment safeguard. To this extent, Babyfood introduced in 1990
one of the first examples of phone assistance in Italy:
customers were provided with all required information concerning nourishment and health through
the presence of nutritionists and paediatricians. This
initiative had a great success, but it was too much
expensive, and after 6 months Babyfood decided to
save, providing standardised information through an
automatic response system. At present, Internet has
allowed increasing the level of customisation of this
service. In fact, Babyfood launched a new portal for
its customers; visitors, after being profiled and
recorded in a dedicated customer relationship management system, can make requests to specialists
filling in specific forms. Moreover, the portal has
been enriched with information about nutrition of
babies, recipes for them, products’ ingredients,
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Lucio Lamberti and Emanuele Lettieri
contraindications, etc. These efforts for transparency
were completed by the adoption of a more restrictive labelling policy. In fact, all ingredients, calories,
and nutritional information concerning each product
had to be reported on the label and must be easily
readable by customers. Peculiarities of the ‘‘Naturally
protected’’ policy for processing food were also stated.
These efforts can be recognised as proactive. The
labelling standards that were adopted in Babyfood
since 1995 are more restrictive than the Italian law
for food labelling that has been issued in 2006 in
compliance with the EU standards.
A few business practices for customers show a
proactive change level of commitment (e.g. the
restrictive labelling policy). Nonetheless, a large part
of them can be related to an enlightened self-interested
level of commitment. In fact, top management
launched the CSR practices after having carried
profit-oriented business cases. Many of them are part
of the long-term marketing strategy started with the
‘‘Naturally protected’’ project. The performance of
each CSR initiative was monitored in terms of
revenue increase and costs; in case of losses, top
management was ready to suspend it (e.g. the
phone-based assistance by specialists).
Community and environment
Babyfood started launching social advertising and
communication programs since 1984. The main
purpose was to regain customers’ trust towards food
safety within the supply chain. The development and
promotion of the ‘‘Naturally protected’’ programme
persuaded customers that Babyfood’s products were
completely free of any nutrition danger. In the 1990s,
public opinion’s interest moved from food safety issues to well-being, healthcare and environmental
sustainability. In this new context, Babyfood started
promoting its new business model based on healthy
and environmentally sustainable products. Examples
are the use of recycled materials for the secondary
packaging, incentives to suppliers for respecting and
promoting biodiversity and, recently, programs for
rural development in a few depressed Italian regions.
Moreover, top management decided to encourage
and sustain the modernisation of farming in Southern
Italy and to facilitate relationships between Babyfood
and the community. Seminars and conferences held
by well-known nutritionists were sponsored for primary school students. Corporate-giving initiatives to
fund Universities and research centres were approved
in order to sustain the research effort concerning severe child diseases. It is peculiar that Babyfood did not
formally publicise its involvement in any of the previous initiatives, despite their success and the large
echo provided by media, especially at a local level.
This modus operandi had been deliberate by top managers. In fact, the Managing Director, during one of
the last interviews, stated: ‘‘the contribution to health
research and urban development is not a matter of money or
market share. It is a matter of what type of social role Babyfood wants to play. These initiatives cannot be aimed to
short-term profit! We are interested to obtain accreditation,
trust and consensus. We believe that these outcomes cannot be
pushed by advertising. Others (e.g. non-governmental organisations, local institutions, customers through the word of
mouth) should win trust for us’’. This peculiar choice and
the level of innovativeness of these initiatives are
examples of a proactive change level of commitment for
CSR business practices that concern the community
and the environment.
Employees
Snack&Meals’ Ethical Code recognises that fair treatment of employees, empowerment and lack of any type
of discrimination are unavoidable premises for good
management. Babyfood was compliant to these indications, but top management believed that more should
be done. In 1998, Babyfood developed and launched ad
hoc training programs for workers to improve performance concerning safety of food and workers themselves. The HR Manager and the Supply Chain
Manager minted the slogan ‘‘value through values’’ to
remark that workers’ performance should be improved
through ad hoc strategies to boost their commitment
and involvement. The reputation of Babyfood as a socially and environmentally responsible food company
has been identified as a major lever for increasing
employees’ loyalty and motivation. An HR manager,
who previously worked for another food company,
stated that ‘‘Babyfood’s rate of turnover is 20% lower than
food industry average, even if job satisfaction does not significantly differ from industry standards and salaries are a little bit
lower than the average’’.
Considering the attention that other companies
worldwide are paying to standards such as the ILO or
the SA8000 in order to ameliorate employees’ working
conditions beyond law requirements, the efforts that
Babyfood paid to this group of stakeholders are not
CSR Practices and Corporate Strategy
particularly original or significant. Babyfood employees’
motivation and loyalty ground more into the company’s good reputation than in the company’s efforts to
set ‘‘far beyond the standard’’ working conditions. In
this view, the level of commitment for CSR business
practices for employees can be seen as oriented towards
minimum legal compliance.
Outcomes
All managers who have been interviewed agreed that
Babyfood won stakeholders’ trust over the last 30 years
because of the CSR business practices that had been
adopted. The practices help in Babyfood being perceived as a socially and environmentally responsible
food manufacturer and Babyfood’s products being
perceived as safer and healthier than the average in the
market. The Marketing Manager stated that this distinctive positioning enabled a series of formerly
unthinkable business opportunities, such as the entrance in the pharmacy channel in the 1990s. The
entrance was a success for the top management for at
least two reasons: on the one hand, Babyfood was able
to penetrate a market that had been historically protected by severe entry barriers, and on the other hand,
the entrance won stakeholders’ trust about food safety
and supply chain behaviour.
Discussion
Babyfood case history regarding CSR practices addresses at least four issues that should be remarked
and discussed: (i) the relationship between corporate
goals and the scope of CSR business practices; (ii)
the different levels of commitment for the different
CSR business practices; (iii) the impact of business
acquisitions on CSR business practices that are
undertaken; and (iv) the longitudinal issues in CSR.
These issues also suggest areas for further research,
such as deepening a few limitations that have been
found in the interpretive models adopted for this
study in order to suggest directions to improve them.
Relationship between corporate goals and the scope
of CSR business practices
Spiller’s taxonomy (2000) provides a checklist of
perspectives and business practices that a company is
163
likely to (or should) undertake in order to be perceived as ‘‘ethical’’. Babyfood case history shows that
top management has selected and implemented only
a limited set of them (Table II).
Is that enough to claim that Babyfood is a limited
ethical company? Since the 1980s, the company has
been pursuing higher and higher levels of corporate
citizenship, customers’ trust, environmental performances and proactivity towards the law. In this
view, Babyfood should be considered at least as a
company that is moving towards an ethical and social
responsibility. But what should be considered as a
threshold between ethical and unethical companies?
Longo et al. (2005) recently affirmed that, in order
to be considered ‘‘ethical’’, a company should adopt
at least half of the CSR values that literature has
proposed for each group of stakeholders. This can be
a means, but it can be seen, generally speaking, as
too much ‘‘draconian’’. Moreover, no role is
assigned to the level of commitment towards CSR,
which has been recognised as critical by numerous
contributions on business ethics (e.g. Brand, 1989;
Stahl and Grigsby, 1997).
Spiller’s taxonomy is useful to state the CSR
business practices, but it provides a limited support
to gather a clear understanding of a company’s ethos.
Babyfood case history shows that a company faces
different strategic challenges leveraging on a limited
set of CSR business practices that are consistent to a
specific CSR goal. The top management is largely
satisfied by the results they accomplished: the various
initiatives contributed to increasing the market
share and winning a distinctive positioning against
the competitors. Snack&Meals proudly states, in the
biennial CSR report, that Babyfood is a broadly
recognised socially and environmentally responsible
food manufacturer. But what would have happened
if the top management had had different strategic
goals? On the one hand, it is arguable that different
goals should be pursued through ad hoc CSR
business practices, while on the other hand, a holistic
and internally coherent behaviour should be adopted
by a company to be claimed as ‘‘ethical’’. The latter
argument is consistent to researchers who state that a
company should define a coherent portfolio of CSR
business practices that covers all groups of stakeholders (e.g. Jamali, 2007; Longo et al., 2005).
The choice between the two modus operandi
(holistic versus specific) is largely affected by the
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Lucio Lamberti and Emanuele Lettieri
reasons due to which a company resorts to CSR and
business ethics. Companies that recognise business
ethics as a part of their mission will promote holistic
approaches to CSR because they will want to pay
the same attention to all groups of stakeholders. On
the contrary, companies that recognise business
ethics as a new means to leverage on in order to
improve business performances will be more
attracted by self-interested CSR business practices.
Babyfood case history is an example of the latter
approach to CSR. In fact, the company implemented a set of CSR business practices to achieve
short- and medium-term goals (e.g. the ‘‘Naturally
protected’’ program, the phone-based customer care
service). Main goals were to increase customers’ trust
and create a competitive advantage. In this view, the
company started launching initiatives concerning
food safety. Suppliers were required to agree to the
‘‘Naturally protected’’ programme constraints and
adopt socially and environmentally responsible
business models. Babyfood repaid suppliers with
premium prices, long-term relationships, consultancy programs, etc. When the main competitors,
such as Feedgrowth, started imitating the initiatives
regarding supply chain, Babyfood started working on
customers, launching projects for customer care in
order to maintain its leadership. On the contrary,
satisfaction of employees has never been considered
a critical success factor by the top management. In
fact, Babyfood has implemented a limited number of
CSR business practices for this group of stakeholders
and the level of commitment has been also limited.
These considerations may suggest that companies
that leverage on CSR and business ethics to boost
business performance (i.e. when an enlightened selfinterested approach is pre-eminent) select unbalanced portfolios of CSR business practices because
of contingent needs, while companies that recognise
business ethics as part of their mission (i.e. when a
proactive change approach is pre-eminent) prefer
more balanced initiatives.
Different levels of commitment for the different CSR
business practices
Babyfood managers who have been interviewed stated clearly that the top management was interested
that the company was perceived as socially responsible
by the different groups of stakeholders. But when
they were talking about CSR towards the community and the environment, they clarified that the
purpose was being socially responsible. This was not a
word mistake. In fact, purposes were different and
level of commitment was also different. Babyfood case
history is interesting because it clearly emerges that a
company can be interested in endorsing the CSR
business practices towards the six main groups of
stakeholders according to different levels of commitment. Babyfood used a minimum legal compliance
commitment towards CSR business practices for
employees and a proactive change commitment towards the community and the environment. In the
case of Babyfood, the different level of commitment is
explained by a general self-interested approach
to CSR that was driven by contingent goals. This
explains why Babyfood’s actions had been focused on
both customers and suppliers. Nevertheless, this
argument clarifies just partially why the company
implemented a proactive change commitment for CSR
business practices towards the community and the
environment. In fact, if we assumed that the main
goal was increasing the profit in the short-term,
what interviewees stated about the limited return in
terms of profit from initiatives towards the community and the environment would seem contradictory. Moreover, top management decided to not
advertise these initiatives to the market.
The authors argue two concurrent explanations.
First, Babyfood started adopting CSR business practices when its competitors, such as Feedgrowth, started
advertising their initiatives to improve food safety
within the supply chain. These actions commoditised market expectations about food companies’
behaviours. Babyfood tried to preserve the distinctive
positioning through the enlargement of the present
extent of its responsibility. In this context, Babyfood
differentiated its brand identity moving from food
safety to customer care and from this to the community and the environment, following a path of
continuous improvement in order to meet the
growing expectations by the different groups of
stakeholders. The first approach based on reactivity
to stakeholders’ claims was gradually substituted by
proactivity. This argument, when supported by
other evidence, suggests that companies that aim at
pursuing competitive advantages through CSR
business practices are likely to start focusing on a
CSR Practices and Corporate Strategy
limited set of perspectives (i.e. groups of stakeholders) and practices in order to maximise benefits and
contain efforts. Later on, they start being proactive in
order to preserve their competitive advantage and
win stakeholders’ trust. This explanation, however,
does not clarify why Babyfood did not promote the
new CSR initiatives towards the community and the
environment. A possible explanation is that we must
consider that Babyfood top management has changed
over the last three decades. Interviewees stated that
present top management is more committed in terms
of CSR and business ethics, because of a new
awareness of the market. Last scandals in the food
industry have remarked that food manufacturers
should be socially and environmentally responsible.
In this view, Babyfood managers are endorsing a more
proactive change approach to CSR.
Impact of acquisitions on CSR business practices
Babyfood is a wholly owned subsidiary of Snack&Meals, a company whose stocks are listed on the
New York Stock Exchange. Babyfood has completely
agreed to and adopted the business practices that
Snack&Meals has developed for managing the relationship with shareholders. This modus operandi
should be discussed. The interviews that have been
collected and triangulated stated that this choice was
based on two considerations. On the one hand, the
parent company forced the subsidiary to adopt a
common standard for investor relationship (e.g.
external accountability should have been provided
through the parent company’s biennial CSR report)
and the subsidiary had limited capability to overcome or modify the standards. This suggest that, in
some way, Stahl and Grigsby’s taxonomy concerning
the level of commitment for CSR business practices
should take into account to what extent a company
can choose its behaviour. On the other hand, we
must consider that Babyfood provides to Snack&Meals
all data it requires to measure its performance in
terms of social and environmental responsibility.
Babyfood did not have any need to introduce or
develop other manners for managing shareholder
relationships, because the current policy that was
adopted by Snack&Meals awarded Babyfood as a top
ethical performer. In this view, the lack of new
policies can be seen as a deliberate choice that
165
Babyfood top management has taken to highlight the
company’s outstanding performance according to an
enlightened self-interest approach.
Babyfood case history suggests two implications.
First, CSR business practices at a subsidiary level can
be the result of a normative isomorphism. Second,
analysing the set of CSR business practices without an
in-depth understanding of the extent to which a
company is free to choose can lead to misleading
interpretations of the level of commitment. This
suggests that Stahl and Grigsby’s taxonomy should be
improved in order to cope with the moderating effect
of corporate governance and the degree of freedom of
a company. To this extent, it could be interesting to
ground the research in theoretical frameworks that
explicitly consider the degree of freedom, such as the
New Institutional Theory (e.g. DiMaggio and Powell, 1983; Giddens, 1984). For instance, Babyfood case
study shows an interesting mixture between the
normative isomorphism (because of the forcing action
by Snack&Meals) and the mimetic isomorphism (because of the deliberate choice to not introduce other
self-developed business practices).
The issue regarding to what extent corporate
governance can affect the adoption and the
deployment of CSR business practices is critical. Let
us think about the acquisition of the food manufacturer Kraft Food International by the tobacco
company Philip Morris. Kraft changed its mission
and vision in the late 1990s, shifting from ‘‘being the
largest food manufacturer worldwide’’ to ‘‘helping
worldwide people eating and living better’’. What is
the impact in terms of stakeholders’ trust, the
awareness that Kraft is managed by the largest
worldwide cigarette manufacture and that it is facing
numerous litigations for health damages? How can
Philip Morris manage without damaging its
subsidiaries in terms of CRS trustworthy? Coming
back to Babyfood, what are the advantages or the
disadvantages of managing CSR in a heterogeneous
group of companies? Should the parent company
approach business ethics from a top–down or a
bottom–up point of view?
Longitudinal issues in CSR practices
Babyfood adopted most of its CSR business practices
according to an enlightened self-interested level of
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Lucio Lamberti and Emanuele Lettieri
commitment. Then, after having achieved satisfying
results, the company started behaving according to
proactive change level of commitment. In the previous
sections the reasons of this choice have been
discussed. Nevertheless, in this section another
implication can be stated. The adoption of CSR
business practices can generate a virtuous cycle and
top management can be motivated to endorse new
practices because of the success of the previous ones.
The authors believe that the companies that obtain
good performance from CSR initiatives are more
likely to develop a trust in CSR as a means to increase business profitability (e.g. Owen and Swift,
2001). In fact, top managers become more and more
aware that CSR and business ethics are not only an
alternative means to increase profitability in the short
term, but they are the pillars of the company’s system of values and mission (van Marrewijk, 2004;
Willard, 2002).
The previous considerations suggest that both
Spiller’s and Stahl and Grigby’s models have areas of
improvement. In fact, they showed a common
limitation when applied to the Babyfood case history.
They are designed according to a classificatory
approach and they are aimed at identifying distinctive clusters of CSR business practices (Spiller’s
model) or levels of commitment (Stahl and Grigsby’s
model). Although such an approach is helpful and
straightforward, Babyfood case study shows that the
borders between different clusters are largely fuzzy
and a clear distinction is hard to make. As far as
Spiller’s model is concerned, the collected evidence
shows that a CSR initiative can affect many groups
of stakeholders according to a different level of
commitment; for instance, the agreement to an
Ethical Code is generally associated to employees,
but it also affects corporate citizenship, customer
care, supply chain relationships and environmental
care. In this view, it can be quite arbitrary to identify
only one group of stakeholders who are affected by
CSR initiatives. The Stakeholder Theory remarks
that overlapping effects should be related to CSR
business practices. Babyfood’s ‘‘Naturally Protected’’
programme was aimed at reinforcing customer care
through an action on the supply chain; it can be
misleading to limit this initiative to only one group
of stakeholders. Stahl and Grigsby’s choice to identify three main levels of commitment, instead, was
unsatisfying in picturing the complexity of the
context in which a level of commitment is generated. First, as affirmed above, the lack of a corporate
governance dimension in evaluating the level of
commitment may lead to misunderstandings in
reviewing a company’s behaviour (e.g. the difficulty
to associate Babyfood CSR business practices towards
shareholders to the theory). Second, the case history
shows that proactivity and self-interest, far from
being contradictory, may be co-temporally present
and, in some way, desirable. In fact, CSR business
practices for customers were deliberately self-interested: they were publicised and implemented for
increasing short-term profitability, while the ones
for the community were largely proactive and oriented to meet expectations that this group of
stakeholders have not expressed yet (e.g. supporting
underdeveloped rural regions). In conclusions, Stahl
and Grigsby’s taxonomy based on discrete levels of
commitment should further be discussed in order to
assume a continuum spectrum of levels to improve its
matching to practice. It would also be useful to
develop reliable measures, as happened for the
concept of ‘‘market orientation’’ (e.g. Kohli et al.,
1993), for the concepts of proactivity and selfinterest levels of commitment in order to facilitate
the benchmarking of different approaches.
Conclusions
This paper investigates the role that CSR can play as
a means for reshaping corporate strategy in order to
manage stakeholders’ uncertainty regarding products
and firms’ behaviour (Brenkert, 2002) and win their
trust (Choi et al., 2007). In this view, food industry
is a remarkable setting, because of the growing
uncertainty concerning food safety and internationalisation of supply chain (Maloni and Brown, 2006).
The empirical exercise has been based on a longitudinal case study of an Italian food manufacturer
that launched different CSR business practices for
being perceived as socially and environmentally
responsible. Findings contribute to the ongoing
debate regarding CSR and the role that it plays in
business strategy. Three main contributions can be
identified. First, this paper provides evidence that
Spiller’s (2000) and Stahl and Grigsby’s (1997)
taxonomies can be applied to a single case study to
understand the approach to CSR and business ethics.
CSR Practices and Corporate Strategy
Second, this work provides evidence regarding the
relationships between corporate strategy and CSR,
highlighting that the selection of an ad hoc portfolio
of CSR business practices can support long-term
strategy and short-term profitability. Third, the case
study allowed arguing some areas of improvement
for the models that have been used to design the
research framework and four research areas for further investigations.
This research also has a few limitations. First,
results that come out from a single case study can
hardly be generalised. In fact, results are affected by
the peculiarities of the setting, in terms of industry,
company, supply chain and goals. Consequently
they cannot be synthesised in a paradigm, but should
be transferred to other settings only when the different peculiarities have been fully understood.
Second, the authors did not have the opportunity to
interview face to face the managers that were previously in charge for reshaping corporate strategy
after the explosion of the chemical plant in 1976.
Their goals and actions were investigated only
through secondary sources of information (i.e. firms’
internal documents and reports, articles from the
local newspapers, opinions of current managers,
etc.). In this view, a bias could be present, despite
information being largely triangulated (Yin, 2003).
Note
1
For confidentiality reasons, both the company and
its parent have been anonymised through the use of
pseudonyms.
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Politecnico di Milano,
Department of Management,
Economics and Industrial Engineering,
Milano, Italy
E-mail: emanuele.lettieri@polimi.it;
lucio.lamberti@polimi.it