Stakeholder Framework Analysis of the Meaning and Perception
of Corporate Social Responsibility: A North -South Comparison
Kenneth Amaeshi
kenneth_amaeshi@yahoo.com
Abstract:
Corporate social responsibility (CSR) has become a popular business concept, especially in
developed economies, and is argued to be largely founded on Anglo-American philosophies
and values. As typical of other business concepts, CSR is on its way to globalization,
especially through Transnational Corporations (TNCs). But to what extent are these
philosophies and values shared between developed (north) and developing (south)
economies? How does the south perceive CSR and what does it mean to it? How could TNCs
use CSR strategically across their various locations and cultures? These are some of the
questions this research will intend to address, amongst others. The study will undertake a
comparative analysis of UK and Nigerian stakeholders’ views on CSR. It is believed that it
will add to the body of knowledge on CSR, especially as the study relates to Transnational
Corporations who are, out of market necessity, caught in-between the north-south divide
web. The policy implications of the study would, also, be highlighted.
Key words: Corporate Social Responsibility, North-South divide, Transnational Corporations
and Business Ethics.
Introduction
About 3 billion people in developing nations live a rural, traditional and villagebased way of life decimated by poverty. Demographers generally agree that the
world's population, currently growing by about 90 million people per year, will
roughly double over the next 40 years. The developing nations will account for 90%
of that growth. These rural populations are further driven into poverty as they
compete for scarce natural resources. Women and children spend on average four to
six hours per day searching for fuel-wood and four to six hours per week drawing
and carrying water. Ironically, these conditions encourage high fertility rates
because, in the short run, children help the family to garner needed resources. But in
the long run, population growth in developing economies only reinforces a vicious
cycle of resource depletion and poverty (Stuart: 1997). In contrast, the average
American today consumes 17 times more than his or her Mexican counterpart and
hundreds of times more than the average Ethiopian. This contrasting picture of
Kenneth Amaeshi
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miserable poverty and stupendous affluence hacks at the root of the North-South
divide phenomenon, which is further orchestrated by the debates on internalization
of trade and globalization centering on equitably sharing the benefits of international
investment, trade, growth and development .
According to UNDP (2002) global disparities are growing with industrially and
technologically more advanced countries progressing well and others falling further
behind. Given these disparities in the economies of the north and south it will not be
surprising if the north and the south have different perceptions of and expectations
from businesses since businesses cannot operate in isolation from the environment of
which they are part of: businesses require the use of factors of production and other
facilities of the society and in return, the society needs the goods and services created
and supplied by businesses, including the creation and distribution of wealth.
Driven by the Anglo-American ideologies, the north believes that these exchanges
between business and the society and the continual interaction with the environment
confer some sort of responsibilities on businesses to the society and vice versa
(Cannon, 1994). These broader responsibilities conferred on businesses, which are
both internal and external to the business, are usually referred to as social
responsibilities and more commonly as corporate social respo nsibilities. However,
despite this over simplistic interpretation, CSR debates have recently generated
enough attention to divide management scholars.
Theoretical/Empirical Review
On one side of the CSR debate are those who share the view of Friedman (1970) that
the social responsibility of business is to maximise profit for the shareholders, within
the rules of the game (fair competition, no deception or fraud, and so on). This view,
which is known in the literature as the agency theory of corporate social
responsibility implies that directors of an organisation are agents of the owners and
are duty bound to act so as to maximise the interests of those owners, who made the
investment, in the first place, for this reason. A more recent development of this
theory is that of Sternberg (1994).
Kenneth Amaeshi
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At the other end of the spectrum is the stakeholder theory of corporate social
responsibility, which emphasises a much broader set of social responsibilities for
business. Stakeholders, as used in this theory, refer to those individuals or groups
who may affect or are affected by the organisation (Freeman, 1984 and 1994;
Clarkson, 1995). They include a wide variety of interests including: employees,
shareholders, consumers, government and other organisations or groups such as
suppliers, trade unions, business associates and even competitors (Mullins, 2002).
Although difficult to reconcile in practice, the two approaches (agency and
stakeholder theories) are not completely incompatible: to a stakeholder theorist,
shareholders count as one type of stakeholder, but not the only type to which duties
are owed by the firm. Thus, corporate social responsibility (CSR) can be broadly
defined as an organisation’s commitment to operate in an economically and
environmentally sustainable manner while recognising the interests of its
stakeholders1. In the same line of thought, the EU Green paper on CSR defined CSR
as ‘a concept whereby companies integrate social and environmental concerns in
their business operations and in their interaction with their stakeholders on a
voluntary basis’ as they are increasingly aware that responsible behaviour leads to
sustainable business success2. Stated in more pragmatic and managerial terms, the
CSR firm should strive to make a profit, obey the law, be ethical, and be a good
corporate citizen (Carroll, 1991:42).
Corporate social responsibility, as driven by western philosophy, is gradually
becoming a strategic force that is shaping successful businesses in developed
countries. Research conducted at the Canadian Centre for Social Performance and
Ethics at the University of Toronto indicates that, over the longer term, companies
that rate highest on ethics and corporate social responsibility are the most profitable 3.
These findings have also been demonstrated in similar studies.4 Many of today’s
1
http://www.cbsr.bc.ca/what_is_csr/index.cfm visited on April 8, 2003
2http://europa.eu.int/comm/employment_social/soc-dial/csr/csr2002_col_en.pdf
p.4
visited on April 8, 2003
3
4
http://www.cbsr.bc.ca/what_is_csr/index.cfm visited on April 8, 2003
See the following: (1) Orlitzky M., Schmidt F.L and Rynes S (2003). Corporate Social and
Financial Performance: A Meta-analysis. Organization Studies, 1 March 2003, vol. 24, no. 3, pp.
403-411(9) Sage Publications.
Kenneth Amaeshi
(2) Zairi M. and Peters J. (2002). The impact of social
Page 3 of 11
successful companies are operating with their stakeholders in mind. About 80% of
FTSE -100 companies now provide information about their environmental
performance, social impact, or both.5 Their progressive corporate social performance
contributes to their long -term financial viability, which further promotes healthy
communities and stable economies.
Studies (Harrison & Freeman, 1999; Barrett, 1998; Donaldson & Preston, 1995) have
confirmed that how well an organisation performs in corporate social performance is
largely dependent on the depth of its corporate social orientation and values. This
corporate social orientation is also a manifestation and extension of the
organisation’s ethical orientation (see Logsdon and Yuthas, 1997) – the organisation’s
ability to base its decisions and policies on what is good and what is right (what
ought to be) for its own sake (i.e. for the good of the society at large). This is the
height of corporate morality.
Morality is not merely a matter of rules, but also of principles – general standards for
evaluating conduct, standards that we apply to all behaviours and rules. At the
individual level the principles of morality include the principle of utility also known
as the principle of the greatest happiness. It tells us to produce the greatest balance of
happiness over unhappiness, making sure that we give equal consideration to the
happiness and unhappiness of everyone who stands to be affected by our actions. It
also includes the principle of fairness founded on the golden rule that states, “Do
unto others as we should have them do unto us” and which is, basically founded on
the need to respect the other person. In addition, there is the ethics of care and virtue
ethics views that are gaining popularity today (Gilligan, 1977, 1982). These principles
of morality at the individual level are also applicable to institutional and social
morality (Olen & Barry, 1992). But is there a common manifestation of what is right
or wrong? Is right or wrong culture dependent? No matter what the answer might
be, what would be its implications for businesses across cultures and nations?
responsibility on business performance. Managerial Auditing Journal, 8 May 2002, vol. 17, no. 4,
pp. 174-178(5): MCB University Press.
5See this website for a list of UK companies already adopting the CSR concept as a strategic
initiative: http://www.societyandbusiness.gov.uk/company/studies.htm visited on April 8,
2003
Kenneth Amaeshi
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These questions emphasis the need to examine the concept of CSR from different
philosophical perspectives. Although there is a possibility of the CSR concept to be
founded on universal principles of morality, the manifestations of this concept across
cultures and countries are not likely to be the same. Similar studies on ethical
differences across cultures corroborate this position. Thelen and Zhuplev (2001), for
example, presents a comparative analysis of attitudes between Russian and U.S.
undergraduate students on ethical issues in managing Russian small firms engaged
in business transactions with U.S. firms. Based on the real life situations, Russian and
American respondents were asked to select decision alternatives dealing with ethical
dilemmas. Significant differences were found between the two groups. Russians do
not recognize significant differences between various alternatives, despite the
disparity in the severity of these alternatives for resolving business problems.
Russians, compared to Americans, tend to prefer more forceful decision alternatives
resorting to business practices that would be considered unethical in the U.S. This is
attributable to differences in the countries' history, political, legal, and cultural
environment. The transitional nature of the Russian economy affects decisionmaking and business ethics.
In a similar study Robertson et al (2002) queried 210 financial services managers from
Australia, Chile, Ecuador and the United States about their ethical beliefs when faced
with four diverse dilemmas. In addition, the situational context was altered so the
respondent viewed each dilemma from a top management position and from a
position of economic hardship. Results suggest a complex interaction of situation,
culture and issue when individuals make ethical judgments. Specifically, Chileans
were found to have different beliefs about sex discrimination and child labour
dilemmas when compared to their colleagues from the other three nations. Chileans
and Australians also disagreed on the bribery dilemma. Anglo managers were more
likely than Latin American managers to change their ethical responses when the
situation was altered. In a situation like this where interpretations and
manifestations of ethical beliefs are determined by cultural differences, what should
be the criteria for making ethical decisions? Robertson et al (2002) suggested that
multinational firms interested in maintaining healthy ethical climates, should
consider adapting culturally contingent ethical guidelines, or policies to the local
Kenneth Amaeshi
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customs. If this suggestion should be adhered to, what happens in a situation where
board members from different cultures and beliefs need to take ethical decisions that
are not location specific?
Hooghiemstra and van Manen (2002) research among 2500 of the largest companies
in The Netherlands reveals the growing importance of social and ethical issues in the
corporate governance debate. Such issues can place non-executive directors in a
dilemma when his point of view is neither shared by the management board nor by
the other supervisory board members: Should he resign or should he try to influence
the others of his opinion? That is, in terms of Hirschman's (1970) classical work,
should he `exit' or `voice'. The paper reports the findings regarding non-executive
directors' choice based upon a qualitative and a quantitative study conducted among
almost 300 Dutch supervisory directors. Regarding bribing civil servants, nonexecutives seem to make a distinction based upon location. While a bribe in a third
world country seemed acceptable to approximately half of the responding outside
directors, it was considered unacceptable (and would lead to repercussions) in the
case where the bribe involved either a Dutch civil servant or another company's
employee. Indeed, in the qualitative study many of the non-executive directors
remarked that bribing people is sometimes necessary to do business, although it is
not a good thing to do. Furthermore, they also commented that ethical behaviour has
its limits. One of them said: `... You should not try to be more ethical than the rest of
the world', while another stated `... You should live up to the local habits and general
rules of conduct of the country you are doing business with'. In general, the nonexecutive directors' interpretation of ethical behaviour (with respect to bribing
people) seems to be that, ideally speaking, it is considered unacceptable; however,
local customs (in third world countries) sometimes force the company to buy off
people. Whereas bribing is considered unacceptable only in the Netherlands, nonexecutive directors do not make a distinction based upon location in case of
environmental pollution. Environmental pollution is considered unacceptable
irrespective of location and would lead to non-executives' action. Indeed, though not
specifically addressed in the qualitative study some respondents commented that the
same rules apply irrespective of whether it concerns a third world country or The
Netherlands.
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These studies showcase the complex web of ethical dilemmas and challenges
associated with CSR, as currently conceived. While the concept of corporate social
responsibility has its roots in the notion of stakeholder relations, the boundaries are
not well established. As a result, there are unresolved political and social issues
6
relating to the conduct of firms, especially TNCs . Notwithstanding, TNCs have
been facing a lot of consumer and civil society pressures primarily driven the CSR
agenda. In almost all cases this pressure arises in their main mature markets in the
North. However, many of the issues concern the impact of company operations and
sourcing in the South. For Shell, it was the issue of Ogoni land rights in Nigeria, for
BP their alleged involvement with security forces in Colombia, while for Nike and
Gap it was the working conditions in which their shoes and clothes were produced.
Thus the regional patterns in TNC-driven CSR depend on a combination of
historical, political, economic and cultural factors at both ends of the value chain
(UNIDO, 2002).
Research Objectives/Questions
This research is, therefore, intended to compare the perception and understanding of
CSR across the North-South economic divide in order to determine what CSR truly
means for each party and how these perceptions are a by product of a combination of
historical, political, economic and cultural factors. A major objective of this work will
be to ascertain the impact of economic development on the perception and relevance
of CSR as a corporate competitive tool. It will also seek to explore and clarify how
national philosophies shape the CSR agenda. Thus some of the questions to be
addressed by this research, amongst others, would be:
•
To what extent does economic status determine the CSR agenda and
significance?
•
Do the North and South differ in their understanding of CSR?
•
What are the strategic implications of CSR for the South, if any?
6
Trans-National Corporations (TNCs) account for over one quarter of the earth’s GNP
(Todaro et al., 2002) and are among the key drivers of the globalization process. With their
investment strategies, they can co-determine the economic prospects of entire regions and
countries. Their objectives and practices can lean towards “earning a quick buck” or “being a
responsible corporate citizen” (UNIDO, 2002).
Kenneth Amaeshi
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•
Do the North and South have any points of convergence in the current CSR
debate?
•
How do TNCs manage CSR and society business expectations in the South?
•
Do the North and South differ in their different stakeholders’ opinions; and if
they do, do these differences vary from industry to industry?
The study will survey UK and Nigeria business stakeholders. The choice of these two
countries is not arbitrary. A recent survey7 found that people were most interested in
corporate social performance in Australia, Canada, the USA and the UK, while there
was least concern in China, Nigeria, The Dominican Republic and Kazakhstan.
Somewhere in between were Germany, Japan, Indonesia and South Africa. In the
same survey, the USA and the UK dominate the FTSE4Good Global Index with 41
per cent and 18 per cent of constituent companies respectively. This in part reflects
the make up of the underlying index from which the FTSE4Good Index is compiled,
but also reflects their lead in CSR 8.
On the other hand, Osuagwu (2001) in his empirical evaluation of the corporate
strategies of Nigerian companies found out that Nigerian organizations were most
effective in achieving profitability objective through their grand corporate strategies,
while corporate social responsibility was the least achieved corporate objective via
corporate strategies. Given these reasons, the research considers it worthwhile to
base the study on a comparison of the UK and Nigerian stakeholder’s perception of
CSR.
Significance of Study
An anonymous writer once stated that the concept of corporate social responsibility
9
(CSR) is fuzzy, with unclear boundaries and debatable legitimacy . It is hoped that
this study will contribute to the body of knowledge on CSR and how the CSR
7
Environics International Ltd. (1999) Millennium Poll on Corporate Social Responsibility.
Toronto, Environics International Ltd
8
FTSE4Good.com (Index constituents for November 19th 2001)
Anonymous. Corporate socialism unethically masquerades as "CSR". Strategic
Direction. Bradford: May 2003. Vol. 19, Iss. 6; pg. 31, 5 pgs
9
Kenneth Amaeshi
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concept could be deployed more effective in developing countries. It will also
suggest ways to help transnational corporations to come up with more suitable CSR
strategies and policies across their different locations.
Methodology
This research will preliminarily adopt the following two -pronged but integrated
approaches:
q
Review of related literature/documentation
q
Survey, in-depth interview, and focused group sessions where necessary.
Review
of
Related
Literature/Documentation:
This
will
examine
the
multidisciplinary theories of and empirical studies on corporate social responsibility
in the literature.
Surveys/Interviews/Focused Group Sessions: Questionnaires will be developed and
structured interviews conducted. Focused group sessions would be held to unify the
views of the different stakeholders in the selected countries, where necessary.
Kenneth Amaeshi
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References
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Direction. Bradford: May 2003. Vol. 19, Iss. 6; pg. 31, 5 pgs
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Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral
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Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating
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Toronto, Environics International Ltd
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York Times Magazine, New York Times Corp, 13 September 1970
FTSE4Good.com (Index constituents for November 19th 2001)
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Cambridge, MA: Harvard University Press.
Harrison, J. G. & Freeman, R. E. (1999). Stakehold ers, social responsibility, and
performance: Empirical evidence and theoretical perspectives. Academy of
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Hirschman, A.O., 1970. Exit, Voice, and Loyalty. Responses to Decline in Firms, Organisations
and States, Harvard University Press, Cambridge, MA.
Hooghiemstra, R. and van Manen, J. (2002). Supervisory Directors and Ethical Dilemmas:
Exit or Voice? European Management Journal Volume 20, Issue 1 , February 2002,
Pages 1-9
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Logsdon, J. M. and Yuthas, K. (1997). Corporate social performance, stakeholder
orientation, and organizational moral development. Journal of Business Ethics 16:
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company
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Performance: A Meta-analysis. Organization Studies, 1 March 2003, vol. 24, no. 3,
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Osuagwu, L. (2001). An Empirical Evaluation of the Corporate Strategies of Nigerian
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Thelen, S. and Zhuplev, A. (2001). Comparing Attitudes toward Ethical Dilemmas in Small
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7, iss. 4, pp. 29-54
UNIDO (2002). Corporate Social Responsibility: Implications for Small and Medium
Enterprises in Developing Countries, Vienna 2002
Zairi M. and Peters J. (2002). The impact of social responsibility on business performance.
Managerial Auditing Journal , 8 May 2002, vol. 17, no. 4, pp. 174-178(5): MCB
University Press.
Websites
http://www.cbsr.bc.ca/what_is_csr/index.cfm visited on April 8, 2003
http://europa.eu.int/comm/employment_social/soc-dial/csr/csr2002_col_en.pdf
p.4
visited on April 8, 2003
http://www.cbsr.bc.ca/what_is_csr/index.cfm visited on April 8, 2003
http://www.societyandbusiness.gov.uk/company/studies.htm visited on April 8, 2003
Kenneth Amaeshi
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