Responsibility and Internationalization: Developing Corporate Responsibility Strategy to Prevent Crises

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Responsibility and Internationalization:
Developing Corporate Responsibility Strategy to
Prevent Crises
Dr. Patrick Reinmoeller
Professor of Strategic Management
Cranfield School of Management
Cranfield University
[email protected]
CRP measures in
countries are the
explicit part of
mostly tacit values
and customs.
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Profitability
and
Superior
Performance
Strategy
CRP
International Strategy:
Localization?
Global integration?
Country
1
Country
n
Country
…
Mexico
Core
Strategy
Country
…
Country
…
USA
Nafta
Country
2
Country
Country
Country
Japan
Country
Country
Japan
Country
Thailand
Japan Japan
China
Country
Japan
Canada
Core
Strategy
Country
Country… Country
Country Country
I
F
B E
Country
...
Country
...
Asia
Country
NL
Europe
Country
n
Core
Strategy
Country
...
Country
1
Country
2
Country
...
2
Understanding what matters
• Is your CRP influenced by the industry your are in, bad/good
timing or by networks?
• What explains CRP differences between firms?
• Using variance decomposition
• Data from 130 large Japanese firms over 5 years
(O’Shaughnessy, Gedajlovic, Reinmoeller 2007)
Variance Components of ROA, Market to Book and CRP
ROA
Market to Book
CRP
Year
3.8%
5.5%
1.2%
Industry
5.7%
4.7%
25.6%
Keiretsu
1.7%
0%
0%
Firm
47%
48.1%
58.0%
Full
model
58.2%
58.3
84.8%
Effect
(O’Shaughnessy, Gedajlovic and Reinmoeller, 2007)
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Measuring “responsible” Behavior
• Conceptualization/labeling in US
• Western (US) standards and measures
• CRP localization or global integration?
Motivation
How firms perform in terms of Corporate Responsibility is a issue of great importance.
How it can be managed in globally operating firms is unclear.
Many studies define corporate responsibility performance (CRP) as dependent
performance variable (outcome) – as if independent of context.
Management needs guidelines to pursue higher CRP.
This paper develops a framework CRP for international competition.
Research questions
Does context matter for CRP?
How does context matter for CRP?
Case studies
Country measures of CRP
Results
Context defines CRP.
Universal issues and peripheral issues co-exist.
Managers are responsible for their choices that lead to CRP.
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Inherent contradictions call for putting CRP in context
Extreme Ideals
- responsible firms survive
- firms that survive are responsible
Economic consequences
- CSP as public good
- efficiency requires goal setting and standard taking
- benefits through differentiation vis-à-vis compliance
Definitions
- specific norms and values (quality)
- reputation (perceived quality)
- construction (emergent quality)
- input (CRP drives performance)
- process (CRP as improvement exercise)
- output (CRP as measure)
- institutions (CRP as prevailing norms)
Quest for clarity
- Decision makers need a standard to improve
Method: comparative case of CRP measures
Content analysis
Standardized measures defining CRP
Comparing strategic decision making vis-à-vis these measures
CRP measures seek to influence corporations and to focus corporate
behavior by making legitimate expectations of different stakeholder
Focus on explicit CSR measures (current state of CSP)
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1) One country (US) two measures of CRP*:
lead to different sets of choices
Community
Employees
Diversity
Defense/Military (neg.)
Consumer orientation
Employment for women
Environmental protection
Contributions to society
South Africa (neg.)
Homosexuality
Nuclear Power (neg.)
Prevention of cruelty
against animals
* KLD and CEP
2) Two countries (US and Japan) and three measures**:
lead to different choices in international competition
US
South Africa (neg.)
Defense/Military (neg.)
Homosexuality
Prevention of cruelty
against animals
Nuclear Power (neg.)
Community*
Consumer orientation
Environmental protection
Employees*
Diversity*
Employment for women
Contributions to society
Information Disclosure
Corporate Ethics
Japan
* Shared categories across three measures
**KLD, CED and ICC
(Reinmoeller 2008)
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Two contexts can lead to different choices and CRP
Fully cleared
Partially cleared
US+
US+Japan
Key issues
Japan+
Partially cleared
Fully Cleared
US
Japan
Measures
In international competition firms make resource allocation choices
between
1)
meeting the local CSP expectations fully in all markets
2)
meeting the local CSP expectations selectively
3)
meeting selected CSP expectations in all markets
4)
meeting CSP ambitions (if higher than CSP expectations)
(Reinmoeller 2008)
Results
Context matters for CSP within and across countries.
Context matters by guiding resource allocation to co-existing core issues
and peripheral issues.
International consensus in development.
Core issues may be more stable and staple.
Peripheral issues may be instable but differentiating.
Managers are responsible for their choices of strategic options that lead
to CSP.
Managers need to overcome contradictions (economizing vs exhausting)
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Possible solutions to overcome contradictions
• Adapt, Adopt or Integrate
• Accepting the path dependence of standardized measures
• Development of company specific CRP initiatives and measures
(innovation to simplify and differentiate)
• Overcoming contradictions through structural and process solutions
(ambidexterity and dialectics)
• Leadership and cognitive styles
• Shared prudence (unified style and adaptive autonomy)
Importance of Items over multiple CRP measures
Copyright © 2008 Reinmoeller
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Measuring Overlap and Outliers
Girwan Newman Clustering
Copyright © 2008 Reinmoeller
Deciding on Global CSP Strategy
is complex …
but can be simplified
• 8 countries
• Meaningful differences
• 10 measures
• Identifying outliers
• 55 items
• 190 attention points
• Outlier analysis
• Content analysis
• Strategic Options
Copyright © 2008 Reinmoeller
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Patrick Reinmoeller
[email protected]
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