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CORPORATE SOCIAL RESPONSIBILITY PROGRAMS IN MEDIUM-SIZED U.S. ENTERPRISES

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CORPORATE SOCIAL RESPONSIBILITY PROGRAMS IN
MEDIUM-SIZED U.S. ENTERPRISES
by
Joseph August Milczewski
A dissertation submitted in partial fulfillment of the
requirements for the degree of
DOCTOR OF BUSINESS ADMINISTRATION: LEADERSHIP
2016
Baker College
Flint, Michigan
ProQuest Number: 3745694
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APPROVED BY
___________________________________
Dr. Susan Cathcart, Ph.D., Chair
___________________________________
Dr. Peggy Houghton, Ph.D.
___________________________________
Dr. Mary Dereshiwsky, Ph.D.
*Signature of committee members not required for approval.
ABSTRACT
CORPORATE SOCIAL RESPONIBILITY PROGRAMS IN MEDIUM-SIZED U.S.
ENTERPRISES
by
Joseph August Milczewski
Corporate social responsibility programs have become an integral part of large and multinational companies. This has been in response to two issues: unethical business practices and the
growing concern of stakeholders in companies’ services, products, and activities. There has been
an absence of corporate social responsibility programs in medium-sized enterprises, particularly
in the United States. Many executives in U.S. medium-sized enterprises find it unnecessary to
initiate programs of this type. This study focused on the types of corporate social responsibility
programs that exist in medium-sized enterprises and the impact executives believe corporate
social responsibility programs have on their companies. The purpose of the study was to identify
the reasons why medium-sized enterprises lack corporate social responsibility programs. The
study used interviews of executives of medium-sized enterprises in Northeast Ohio. The
literature review presents the history of corporate social responsibility programs and the
theoretical concept, stakeholder theory, which has allowed these type of programs to develop
into their present state along with the advantages and benefits of the programs. The study is
significant because the lack of a corporate social responsibility program is detrimental to the
success of medium-sized companies. Findings suggest companies have realized financial
benefits, realized competitive advantages, and created goodwill through the implementation and
maintenance of corporate social responsibility programs.
This work is dedicated to the following:
My sons, Jacob and Raymond, who have in a special way been traveling with me throughout
this journey. My love for them is unending.
My mother and father, August and Irene, although not with me anymore, have instilled in me
a work ethic that has guided me throughout this venture.
Lastly, to my older brother, August Jr., no matter how old we get he still looks out for his
little brother.
ACKNOWLEDGMENTS
I would like to acknowledge the staff, library staff, and faculty of Baker College. I thank
them for their help and support in my academic journey through the doctoral program at Baker
College. I would particularly like to thank my dissertation chair, Dr. Cathcart, and the members
of the dissertation committee, Dr. Houghton and Dr. Dereshiwsky. Thank you all.
TABLE OF CONTENTS
LIST OF TABLES ....................................................................................................................vii
CHAPTER ONE INTRODUCTION AND STATEMENT OF THE PROBLEM......................... 1
Introduction ........................................................................................................................... 1
Statement of Problem ............................................................................................................ 2
Background of Problem ......................................................................................................... 3
Purpose of the Study.............................................................................................................. 6
Theoretical Support for the Study .......................................................................................... 6
Stakeholder Theory .........................................................................................................7
Shareholder Theory .........................................................................................................8
Methodology ......................................................................................................................... 9
Assumptions ........................................................................................................................ 11
Scope and Delimitations ...................................................................................................... 11
Limitations .......................................................................................................................... 12
Terminology........................................................................................................................ 13
Research Questions ............................................................................................................. 15
Significance of the Study ..................................................................................................... 16
Summary ............................................................................................................................. 17
CHAPTER TWO LITERATURE REVIEW .............................................................................. 19
Introduction ......................................................................................................................... 19
Unethical Business Behavior ............................................................................................... 19
Unethical Business Leadership ...................................................................................... 20
ii
Leadership Characteristics Inducing Unethical Behavior ............................................... 21
Lack of Leadership Development .................................................................................. 23
Theoretical Concepts ........................................................................................................... 24
Developmental Stages of Stakeholder Theory ................................................................ 25
History of Stakeholder Theory ....................................................................................... 28
CSR Programs ..................................................................................................................... 30
CSR Programs in Large and Multinational Corporations ..................................................... 34
CSR Programs in SMEs ...................................................................................................... 39
CSR Programs in SMEs Located Outside the United States ........................................... 41
CSR Programs in MEs ................................................................................................... 43
Leadership Theories ............................................................................................................ 45
Transactional Leadership Theory ................................................................................... 45
Transformational Leadership Theory ............................................................................. 46
Relational Models Theory.............................................................................................. 47
Leadership Theory in CSR ............................................................................................. 47
Research Methods ............................................................................................................... 48
Interviews ...................................................................................................................... 48
Alternative Methods of Research ................................................................................... 49
Determination of Research Methods .............................................................................. 52
Summary ............................................................................................................................. 52
CHAPTER THREE METHODOLOGY .................................................................................... 55
Introduction ......................................................................................................................... 55
iii
Design ................................................................................................................................ 55
Target Population ................................................................................................................ 57
Sampling Procedure ............................................................................................................ 58
Instrumentation ................................................................................................................... 59
Measurement Instrument ............................................................................................... 59
Pilot Study..................................................................................................................... 60
Data Collection ................................................................................................................... 61
Data Analysis ...................................................................................................................... 62
Interview Analysis ......................................................................................................... 62
Validity and Credibility ....................................................................................................... 62
Triangulation ................................................................................................................. 63
Protection of Human Participants ........................................................................................ 64
Summary ............................................................................................................................. 65
CHAPTER FOUR RESULTS ................................................................................................... 66
Introduction ......................................................................................................................... 66
Participant Demographics .................................................................................................... 66
Variations in Research Methodology ................................................................................... 67
Response Rate ..................................................................................................................... 67
Pilot Study and Analysis...................................................................................................... 67
Results of Data Analysis...................................................................................................... 69
Research Question 1 ...................................................................................................... 69
Research Question Two ................................................................................................. 76
iv
Triangulation and Convergence of Findings ........................................................................ 83
Company Websites ........................................................................................................ 84
Facebook ....................................................................................................................... 85
Alternative Interpretations ................................................................................................... 86
Summary ............................................................................................................................. 86
CHAPTER FIVE CONCLUSIONS AND RECOMMENDATIONS ......................................... 88
Introduction ......................................................................................................................... 88
Interpretation of Results ...................................................................................................... 89
Research Question One .................................................................................................. 89
Research Question Two ................................................................................................. 90
Implications of Theory ........................................................................................................ 92
CSR - Terminology ....................................................................................................... 92
CSR - Departmental Structure ....................................................................................... 93
Executive Involvement in CSR Programs ...................................................................... 95
Lack of CSR Programs at MEs ...................................................................................... 97
Implications for Practice ...................................................................................................... 98
CSR Program – Enriched Description and Definition..................................................... 98
CSR Program – Recognition of Benefits ........................................................................ 99
CSR Program – Improvement of Existing Programs ...................................................... 99
CSR Program – Approach to CSR, Not a Large Company Undertaking ....................... 101
Recommendation for Related Research ............................................................................. 103
Expansion of Demographics ........................................................................................ 103
v
CSR Programs at Small Enterprises ............................................................................. 103
CSR Programs at U.S. MEs ......................................................................................... 103
CSR Programs as a Function of Company Growth ....................................................... 104
CSR Programs as a Function of Economy .................................................................... 104
Sustainability ............................................................................................................... 104
Employee Reaction to CSR Programs .......................................................................... 104
Supply Chain CSR Initiatives ...................................................................................... 105
Summary ........................................................................................................................... 105
REFERENCES ....................................................................................................................... 107
vi
LIST OF TABLES
Table 1. Interview Questions ..................................................................................................... 60
Table 2. Participant Demographics ............................................................................................ 66
Table 3. Research Question One - Emerging Themes ................................................................ 76
Table 4. Research Question Two – Emerging Themes ............................................................... 83
vii
CHAPTER ONE
INTRODUCTION AND STATEMENT OF THE PROBLEM
Introduction
Many large corporations have view themselves as contributing members of society
(Maruffi, Petri, & Malindretos, 2013). With this viewpoint, large corporations have implemented
corporate social responsibility (CSR) programs to better deal with societal issues. The CSR
programs many corporations have adopted are those of a stakeholder-value position. Executives
in today’s large, globalized businesses realize that there are numerous stakeholders to satisfy. In
the past, corporations believed that the only social responsible obligation was to the shareholder
(Freidman, 1970). The program adopted by corporations instituting this type of policy is that of a
shareholder-owner value position (Maruffi et al. 2013). Even recently, there are still some
academics who believe this viewpoint still holds credibility (Coelho, McClure, & Spry, 2003;
Weymes, 2004).
Even with the emergence of CSR programs in large corporations, small and mediumsized enterprises (SMEs) are still reluctant to initiate CSR policies on any level (Bennington &
Minutolo, 2013; Tseng, Wu, Wu, & Chen, 2010; Williamson, Lynch-Wood, & Ramsay, 2006).
Executives at SMEs list certain barriers and constraints in their reluctance to implement CSR
programs. Emerging literature, most significantly regarding SMEs located outside the United
States, list the barriers and constraints as cost of implementation, time constraints, limited
knowledge about CSR issues, lack of awareness of benefits of this type program, and lack of
capacity to collect and analyze useful data. Other barriers and constraints include lack of
information on other SMEs and their CSR activities, existing tools for program development
being designed for large corporations, lack of adequate support services to guide and support
2
adoption and implementation of these programs, and fear of additional regulatory and
bureaucratic burdens from getting involved in CSR initiatives (Inyang, 2013a). The research
described in this study involved U.S.-based medium-sized enterprises, the business executives at
these enterprises, and their ideas and perspectives in regard to CSR programs.
Statement of Problem
A problem in today’s business world is a lack of CSR programs in U.S. medium-sized
enterprises (MEs). Executives at MEs lack the understanding of what CSR programs encompass
and the benefits and advantages that the programs create for businesses. CSR programs are
common in larger companies, especially multinational enterprises (MNEs). Companies such as
DuPont, Allstate, Gap Inc., and Mobil among others have very visible and successful CSR
programs (Ballou, Heitger, Landes, & Adams, 2006). CSR programs create value for a company
(Galie & Popst, 2006) and provide many benefits (Liu & Liu, 2009). The benefits of CSR issues
fall within five categories: improved quality of products and services, increased global business,
innovativeness in regard to products and processes, developing and maintaining corporate culture
with internal and external customers, and improving ethical performance (Cegarra-Navarro &
Martinez-Martinez, 2009). The positive correlation between CSR programs and the benefits
listed lead to an increase in productivity (Sun & Stuebs, 2012). Companies scoring high on the
Corporate Responsibility Index tend to have higher stock returns, better operating performance,
higher values, and lower operating expenses (Chen, Tang, & Hung, 2013). CSR programs in the
form of sustainability programs have created financial benefits through recycling and energy
efficiency (Katrinli, Gunay, & Biresselioglu, 2011). Once programs related to recycling and
energy efficiency are implemented, cost savings have been initiated. Another financial benefit to
3
public companies is the quality of CSR reporting. Companies that issued high quality CSR
reports tended to create a positive stock market reaction (Guidry & Patten, 2010).
CSR programs have not been embraced by SMEs (Freisleben, 2011; Laudal, 2011;
Sarbutts, 2003) particularly within the United States (Bennington & Minutolo, 2012; Thornton &
Byrd, 2013). Recently, the emergence of CSR programs in SMEs have been more prominent
internationally than in the United States. Companies within the European Union and some
African companies have initiated CSR programs (Inyang, 2013a; Kechiche & Soparnot, 2012;
Nielsen & Thomsen, 2009; Turyakira, Venter, & Smith, 2012).
Executives need to understand the benefits of incorporating CSR programs into their
companies. Businesses have a problem which has created distrust among stakeholders (Hurley,
Gillespie, Ferrin, & Dietz, 2013; Poppo & Schepker, 2010; Wilson, 2004). Stakeholders include
suppliers, customers, employees, boards of directors, government agencies, stockholders, and
neighborhood, community and advocacy groups, among others. Distrust can be lessened by
business executive involvement, whether it was created by the executives and their companies or
not. Employee and consumer surveys have found the benefits of CSR programs include easier
recruitment and retention of employees, attracting and keeping new customers, and attracting
new investors, especially those considered socially responsible or ethical investors (Sage, 2012).
Background of Problem
The public has been exposed to an increase in unethical leadership in the past 25 years
(Kopf, Carnevale, & Chambers, 2013; Sims, 2003). Business ethics has suffered from a lack of
ethical leadership. Many well-known and successful business executives have acted unethically,
in some cases illegally, in their business transactions. Unethical actions include executive
overpay, moral hazard of financial derivations, and excessive risk taking (Forte, 2013).
4
Beechnut, Tyco, Adelphia, Arthur Anderson, and Enron are some companies that have suffered
financially from executive’s actions (Sims). Executives such as Bernie Madoff, Jeff Skilling, and
Andrew Fastow have and are serving prison sentences for their actions. Financial institutions and
their employees and stakeholders have also suffered from the unethical behavior of executives.
Fannie Mae, Freddie Mac, Countrywide Financial, Goldman Sachs, Lehman Brothers, and
Merrill Lynch among others have been exposed as committing unethical and possibly illegal
behaviors (Friedland, 2009). Another example is the Horizon oil spill in the Gulf of Mexico,
where companies such as British Petroleum, Transocean, and Halliburton are liable due to
management oversight (Kopf et al., 2013). Starbucks Coffee Company, now a major purchaser
of fair trade coffee, once purchased coffee without regard for how it was grown or supplied
(Katrinli et al., 2011). Protests during the World Trade Organization Conference in Seattle in
1999 resulted in physical damage to Starbucks stores in the area. SMEs suffer the same problems
as larger companies but their problems are not as highly publicized as the larger companies
(Longenecker, Moore, Petty, Palich, & McKinney, 2006). The media have tended to focus on the
larger companies.
The recent economic downturn has created a stressful situation for SMEs; survival of the
business may become more important than ethical actions (Wiid, Cant, & van Niekerk, 2013).
Due to their smaller size, MEs may experience more difficulties regarding the operation of their
businesses than do larger businesses. Problems associated with ethical behavior in smaller
businesses include kickbacks, cover up, fraud, dishonesty in internal communications, lying to
stakeholders, and bullying, among other issues (Collins, 2012). These difficulties and the
awareness that large companies may be acting unethically affects the behavior and perception of
smaller companies, which may become more open to acting dishonestly (Wiid et al., 2013).
5
Corruption and fraud become a normal, acceptable practice recognized as a method of producing
results faster even while acknowledging the method may be illegal and/or unethical. Executives
may attempt to justify the unethical or illegal action as a means for survival.
The response to the actions of these companies and to companies operating under similar
circumstances has been stakeholder distrust (Sagar & Singla, 2004; Werhane, Hartman, Archer,
Bevan, & Clark, 2011; Wilson, 2004). There is a belief that businesses have an obligation to
society that extends beyond MNEs into SMEs (Inyang, 2013a). The idea that business has
responsibilities to society has been present for a time but in recent decades it has been described
as a revolution in regard to how people view the relationship (Lantos, 2001). Only 62% of chief
executive officers (CEOs) in North America and 69% of CEOs in Europe believe their industry
is trusted by the public (Lacy, Haines, & Hayward, 2012). Stakeholders such as consumers can
implement initiatives that can damage a company’s financial status and reputation unless
alternative actions are engaged by the company (Laer & de Ruyter, 2010; Zaharia & Zaharia,
2013).
The distrust of stakeholders in regard to SMEs can be significant. SMEs compromise
more than 90% of the world’s businesses (Bennington & Minutolo, 2012; Inyang, 2013a;
Potocan & Mulej, 2010). Distrust can affect reputation and brand, thereby creating a financial
predicament for these companies. Companies have implemented CSR programs to address
stakeholder distrust.
Companies such as Starbucks have taken a proactive approach and implemented CSR
programs to deal with various stakeholder issues (Corporate Behavior and Strategy, 2005).
Stakeholders can regain trust in companies through the implementation and maintenance of CSR
programs (Stewart, 2003; Tian, Wang, & Yang, 2011). The impact of Starbucks’ CSR program
6
has allowed the company to achieve CSR recognition such as One of the Best 100 Companies to
Work For, 100 Best Corporate Citizens, and The World’s Most Ethical Companies (Katrinli et
al., 2011). Companies such as Starbucks are also expecting more ethical behavior from their
suppliers.
Many of today’s MNEs are requiring their suppliers, no matter what size of company, to
implement or have a CSR program in effect (Andersen & Skjoett-Larsen, 2009; Luo & Zheng,
2013; Midttun, Dirdal, Gautesen, Omland, & Wenstøp, 2007). Actions such as these by larger
companies can be detrimental to the survival of smaller companies. Executives in MEs can
implement CSR programs as a response to pressure from larger companies and to stakeholder
distrust.
Purpose of the Study
The purpose of the study was to collect information from business executives to
determine what type of CSR programs are instituted at MEs and to inform companies without
CSR programs about the importance of having such a program. The researcher solicited
executives’ attitudes, perceptions, and philosophies toward CSR programs and the advantages
and disadvantages of having a CSR program. Information gathered during this study can be
shared with other business executives at MEs to help them implement or sustain CSR programs
at their companies.
Theoretical Support for the Study
Two models prevail in regard to CSR: stakeholder theory and shareholder theory
(Maruffi et al., 2013; Schafer, 2007). Companies committed to stakeholder theory are concerned
with the interests of primary and secondary stakeholders. Stakeholders are people or
organizations that can be affected by a company’s decisions, directly or indirectly. Companies
7
committed to shareholder theory are concerned primarily with the interests of the shareholder.
Business decisions incorporating this theory are based only on increasing profits for
shareholders.
Stakeholder Theory
CSR policies originate from stakeholder theory (Perrini, 2006; Tonder & RobertsLombard, 2013; Wiese & Toporowski, 2013), which theory was developed from earlier theories.
An early theory of the use of CSR policies was the resource-based view (Barney, 1991). This
theory posits that the ability of a firm to perform better than the competition is dependent on the
interplay of human, organizational, and physical resources. Firms adopting the resource-based
approach gain competitive advantage through procedures such as lower production costs or
higher quality products (Teece, Pisano, & Shuen, 1997). The dynamic capabilities approach
further develops the resource-based view and focuses on drivers behind the use of resources to
create competitive advantage (Teece et al., 1997). This approach emphasizes using a company’s
resources to adapt to shifts in the business environment. Resources include internal
technological, organizational, and managerial processes. Researchers have expanded both
concepts so as to identify social and ethical resources that can be used to create a competitive
advantage (Fiol, 1991; Herbig & Genestre, 1997; Litz, 1996). The process of moral decision
making is identified as another resource to be used as an advantage (Petrick & Quinn, 2001).
Executives base their decisions on integrity rather than profitability. Researchers have also
expanded the concept of dynamic capabilities to include relationships with stakeholders such as
employees, customers, suppliers, and communities (Harrison & St. John, 1996; Hillman & Klein,
2001). These views of social responsibility have evolved into the stakeholder theory of CSR.
Corporations that align with stakeholder theory tend to think of themselves as citizens of a
8
society addressing issues related to society and the environment (Galpen, 2013; Maruffi et al.,
2013). The success of relationships with stakeholders can be measured in the same way as other
projects.
A metric often used to evaluate the success of a project is return on investment (ROI)
(Phillips & Phillips, 2008; Weymes, 2004), which is also used to determine if a CSR program
should be implemented. The ROI can also be perceived as a barrier to a CSR program. The
private sector tends to focus on short-term ROI (Koppejan & Enserink, 2009) whereby the ROI
on capital and financial investments should be no more than 3 years for projects but can extend
to 10-15 years for large projects such as building construction. Companies have to realize that
CSR and stakeholder theory hold long-term benefits and the ROI will have to be anticipated over
a longer period (Forte, 2013; Porter & Miles, 2013). The evaluation process will have to change
from short-term to long-term ROIs (Laszlo, 2008).
Shareholder Theory
In contrast to stakeholder theory, shareholder theory posits that shareholder investment
and earnings are the most important responsibilities a company executive must address (Maruffi
et al., 2013). Shareholder theory is rooted in Friedman’s (1970) concept that the only
responsibility of a company is to increase profits. Friedman believed social and environmental
issues not related to profitability should not be a concern of management. He regarded investing
corporate funds in social and environmental issues as a form of embezzlement since executives
would be using shareholder monies for nonprofit ends.
Coelho, McClure, and Spry (2003) argued in support of shareholder theory, maintaining
that companies are not people and do not have ethics or responsibilities. Agents of the company
have the primary responsibility of increasing shareholders’ wealth. Coelho et al. claimed
9
executive corruption can result from using company funds for social issues as a replacement to
providing value to shareholders.
Some researchers have challenged Freidman’s (1970) shareholder theory, arguing that
management must also be concerned with a company’s success, stability, and ongoing viability.
To accomplish these objectives, management must use monies earmarked for shareholders,
which contradicts Freidman’s theory (Schaefer, 2007; Weymes, 2004). According to Grant
(1991), using shareholder monies for social issues could result in lower wages for employees or
higher prices for consumers. An executive could be recognized as an agent of employees and
customers and therefore not solely as an agent of shareholders. Another counterpoint to
Freidman’s shareholder theory is that stakeholder theory also includes shareholder concerns
(Hillman & Keim, 2001; Lantos, 2001; Schaefer, 2008) whereas shareholder theory recognizes
the shareholder as the only stakeholder. The theory implies that the shareholder has the only
claim on business profits. Stakeholder theory recognizes the shareholder one of several primary
stakeholders and in turn acknowledges shareholders’ needs.
Methodology
This study is a form of qualitative research. Qualitative studies explore social and cultural
phenomena in depth and are particularly appropriate when the topic being studied is new.
Qualitative research is an appropriate methodology for studying social, political, and cultural
aspects of people, society, and organizations (Myers, 2009). Due to the exploratory and
observational nature of qualitative research, this method tends to build theory from the ground up
(Leedy & Ormrod, 2005)..
Research design is a plan of action that links the methodology to the methods used
(Creswell & Clark, 2007). Common qualitative research designs include case study,
10
ethnography, grounded theory, and content analysis (Leedy & Ormrod, 2005). Exploratory and
explanatory studies are two other qualitative research designs. The current research is an
exploratory study. An exploratory researcher analyzes a phenomenon in order to become familiar
with the phenomenon, gain insight into it, and understand the phenomenon (Singleton & Straits,
2005). This type of research design is used when little is known about the topic.
Research methods are the techniques employed for data collection and analysis (Creswell
& Clark, 2007). Data collection in qualitative research includes methods such sampling,
participant observation, nonparticipant observation, archival research, focus groups, and
interviews (Bloomberg & Volpe, 2008; Myers, 2009). This exploratory study, a form of
phenomenological research, employed interviews. Interviews have the highest response rates in
research (Leedy & Ormrod, 2005). Initially, face-to-face interviews were to be conducted when
possible. Face-to-face interviews help the interviewer develop a rapport with the interviewee and
further gain the interviewee’s cooperation (Leedy & Ormrod, 2005). Instead, phone interviews
were used because face-to-face interviews were not possible. An employment opportunity for the
researcher that required relocation made r face-to-face interviews unrealistic.
Interviews can be structured, semistructured, or unstructured. Semistructured interviews
were used in this study. A semistructured interview makes use of previously formulated
questions however the interviewer may deviate from these questions based on answers provided
by the interviewee (Myers, 2009). The interviewer can elicit fuller responses and questions can
be added or deleted based on answers that may yield more accurate responses (Singleton &
Straits, 2005). Semi structured interviews provided the researcher with a means to expound on
answers and develop follow-up and new questions. The method allowed interviewees to explain
11
answers in a more thorough and detailed manner and helped the interviewee and interviewer
avoid confusion and misunderstanding (Singleton & Straits).
To assure that the initial interview questions were relevant to the topic being studied, a
pilot study was conducted. Pilot studies can be used to test ideas and methods and their
implications (Maxwell, 2005). The pilot study allowed adjustments to be made in the interview
process before the primary interviews took place (Thomas, 2003). The participants in the pilot
study were not participants in the final study.
Assumptions
The researcher is assumed to have collected data and presented the data in a truthful
manner. All conditions related to proper methods of research are presumed to have been used.
The conditions included avoidance of plagiarism, providing informed consent, abiding by the
law, abiding by ethical principles, and taking responsibility for findings.. The business
executives interviewed in the study were assumed to have represented their respective companies
accurately and honestly.
Scope and Delimitations
Nine business executives of MEs were interviewed. Executives were defined for this
study as employees who had at least achieved the title of director or vice president or were
involved directly with the management of the CSR programs. International, national, and
governmental agencies differ in the definition of business sizes, with many relying on the
number of employees working at the businesses as a defining factor. In today’s global economy,
the number of employees may be misleading. Many small companies, especially those in
technology, can have few employees but generate revenues equal to or exceeding medium and
large enterprises (Gibson & van der Vaart, 2008). For this reason, business size was defined in
12
terms of revenue and not the number of people employed by the company. The National Centre
for the Middle Market at Ohio State University defines a ME as that which has revenues between
$10 million and $1 billion (“The Mighty Middle,” 2012). The researcher used this definition.
Business executives are most qualified to interpret and represent a company. The executives
were from MEs located in the Northeast Ohio area.
Limitations
Limitations are conditions that weaken a study (Rossman & Rallis, 2003; Locke,
Spirduso, & Silverman, 2000). Sample size may have an impact on the research. A basic rule of
research is the larger the sample size, the better (Leedy & Ormrod, 2005). If fewer people are
interviewed there is less data available for interpretation.
Interviews my take a significant amount of time since the interviewer must meet with
multiple interviewees. Interviewees may try to impress the researcher and may not respond
honestly (Thomas, 2003), or may give answers that they believe the interviewer wants to hear.
Other limitations in regard to qualitative interviews are lack of trust and lack of time of
interviewee (Myers, 2009). The interviewer may be a stranger to the interviewee, which may
limit the amount of information gathered especially in regard to more personal matters. The
interviewee may be under a time restriction, might not answer questions completely, or might
provide an opinion instead of fact. A qualitative study relies on the researcher’s interpretation
and is therefore open to bias. Bias may be introduced in a number of ways. Interviewers may not
follow the interview schedule in a prescribed manner or may suggest answers to questions. There
may be a bias based on a respondent’s gender, race, or personality (Singleton & Straits, 2005).
Familiarity and personal relationships with the interviewee may also create a bias. Research
validity and credibility are addressed to minimize these limitations.
13
Terminology
Brand: Concept focusing on what a product, service, or company has promised to the
company’s customers (Ettenson & Knowles, 2008).
Business ethics: The principles, values, and standards that guide behavior in the world of
business (Ferrell, Fraedrich, & Ferrel, 2005).
Charitable foundations: Not-for-profit organizations formed to further cultural,
educational, religious, or public service objectives (Bottiglieri, Kroleski, & Conway, 2011).
Coding: Tags or labels used for assigning units of meaning to information during a study
(Miles & Huberman, 1994).
Competitive advantage: A value-creating strategy not being implemented by any current
or potential customers (Barney, 1991).
Corporate social responsibility (CSR): The company activities that address social and
environmental concerns in business operations and in interactions with stakeholders. The
activities operate within five dimensions: stakeholder dimension, social dimension, economic
dimension, voluntariness dimension, and environmental dimension (Dahlsrud, 2006; Marrewijk,
2004).
Economic dimension of CSR: The financial aspect of CSR describing CSR in terms of a
business operation (Dahlsrud, 2006).
Environmental dimension of CSR: The environmental aspect of CSR describing the
relationship between business and the natural environment (Dahlsrud, 2006).
Ethics: The branch of philosophy regarding values related to human conduct with respect
to rightness and wrongness in certain situations (Holmquist, 1993).
14
Ethical leadership: The form of leadership that engages in ethical conduct based on right
or wrong behavior (Odom & Green, 2003).
Leadership in Energy and Environmental Design (LEED): Nationally accepted
benchmarks for the design, construction and operation of high performance green buildings
(Silins, 2009).
Medium-sized enterprise: Business having revenues between $10 million and $1 billion
(The Mighty Middle, 2008).
Multinational enterprises (MNE): The form of business with operations in at least two
countries that are integrated to a certain degree (Laudal, 2011).
Primary stakeholder: The type of stakeholder of whose participation is important to the
survival of the company (Clarkson, 1995).
Purposeful sampling: Form of sampling that involve selection of typical cases or of cases
that represent relevant dimensions of the population (Singleton & Straits, 2005).
Reputation: Concept focusing on credibility and respect that a company has among
stakeholders (Ettenson & Knowles, 2008).
Resources: The strengths a business can use to conceive of and implement their
strategies. (Learned, Christensen, Andrews, & Guth, 1969).
Secondary stakeholder: The type of stakeholder who is influenced by or can influence by
the company but is not necessary to the survival of the company (Clarkson, 1995).
Small and medium-sized enterprise (SME): The form of business with less than 250
employees (Inyang, 2013a).
Social dimension of CSR: The aspect of CSR describing the relationship between
business and society (Dahlsrud, 2006).
15
Stakeholder: The individual or group of individuals that can affect or is affected by a
company’s actions either directly or indirectly (Freeman, 1984).
Stakeholder dimension of CSR: The aspect of CSR describing the relationship between
stakeholder and stakeholder groups and business (Dahlsrud, 2006).
Supply chain: Alignment of firms that bring products or services to market (Näslund &
Hulthen, 2012).
Sustainability: The capacity to meet the needs of the present without compromising those
of future generations (World Commission on Environment and Development, 1987).
Sustained competitive advantage: A value creating strategy not simultaneously being
implemented by any current or potential customers (Barney, 1991).
Target population: The group to which the researcher would like to generalize their
results (Singleton & Straits, 2005).
Tithing: A voluntary donation equal to 10% of income (Dahl & Ransom, 1999).
Unethical: The behaviors that violate normative standards (Ünal, Warren, & Chen, 2012).
Unethical leadership: The type of leadership that fails to make ethical decisions resulting
in amoral or immoral management (Odom & Green, 2003).
Voluntariness dimension of CSR: The aspect of CSR in which corporate activities go
beyond legal obligations and is based on the company’s ethical values (Dahlsrud, 2006).
Research Questions
Research questions provided the researcher with a framework for understanding the
phenomena under study (Bloomberg & Volpe, 2008). The research questions provide the basis
for the type of information and data that must be gathered for the researcher to learn from the
study. This study of corporate responsibility programs used an interpretative form of research
16
question that explored the meaning of things, situations, and conditions for the people involved
(Maxwell, 2005).
Question 1: What CSR programs exist in MEs?
Question 2: What impacts do executives of MEs believe CSR programs can have on their
companies?
Significance of the Study
This study provides medium-sized enterprise executives with an understanding of CSR
programs. The benefits, advantages, and disadvantages associated with CSR programs were
discussed with the executives and the results presented.
Research has been completed on programs at large corporations such as Starbucks Coffee
Company but there has been little focus on programs in MEs. Starbucks perceives their CSR
program as one that creates value for its stakeholders (Katrinli et al., 2011). Many other
corporations such as Cisco Systems, Home Depot, Delta Airlines, General Electric, IBM, and
DuPont share the same viewpoints as Starbucks on their CSR programs (Bhattacharya, Sen, &
Korschun, 2008). Through a survey of 1000 CEOs, 79% of the CEOs believed that CSR is vital
to the profitability of the company (Lee, Fairhurst, & Wesley, 2009). CSR has taken on a global
aspect. Over 6,000 corporations in 135 countries have adopted the United Nation’s Global
Compact policy, which sets standards for socially responsible behavior (Du, Swaen, Lindgreen,
& Sen, 2013). The United Nations asks the companies to embrace, enact, and support a set of
core values related to human rights, labor, environment, and anticorruption (United Nations
Global Compact, n.d.).
This study takes CSR research beyond large corporations and into MEs. Presently, SMEs,
especially those in the United States, are reluctant to apply CSR practices (Bennington &
17
Minutolo, 2012; Freisleben, 2011; Thornton & Byrd, 2013). The study explored why CSR
programs should be implemented at MEs. Research has been undertaken outside the United
States that indicates that programs in SMEs are becoming more prevalent. Executives of SMEs
in European countries such as Denmark, Italy, and the United Kingdom are embracing CSR
programs and are identifying their companies as being socially responsible (Del Baldo, 2010;
Kechicke & Soparnot, 2012; Nielsen & Thomsen, 2009). CSR programs have been recognized as
vital to their organizations. Research has revealed that this type of program is necessary for
smaller companies to transform into MNEs. A CSR program will provide SMEs with advantage
in growth and allow a competitive advantage (Laudal, 2011). Leaders will have the opportunity
to use the study to determine the effects that a CSR program can have on their company and
decide if such a program will be beneficial to their organization. This study provides a resource
for business leaders to make relevant decisions. The research provides a significant step in the
research of CSR programs in MEs.
Summary
Unethical and illegal business behavior has been prominent in the business world,
especially the last 3 decades (Katrinli et al., 2011; Longenecker et al., 2006; Sims, 2003). This
behavior has had a direct effect on business finances, reputations, and brands. Stakeholders have
lost trust in corporations (Sagar & Singla, 2004; Werhane et al., 2011; Wilson, 2004).
Companies such as Starbucks have responded to stakeholder distrust by implementing CSR
programs (Anonymous, 2005). Other companies such as DuPont, Lafarge, Walmart, and Cargill
have also adopted this action and implemented CSR programs (Laszlo, 2008). SMEs,
particularly those in the United States, have been slow to implement CSR programs in their
respective businesses (Freisleben, 2011; Laudel, 2011; Sarbutts, 2003). This study was
18
undertaken to determine why some MEs have implemented CSR programs. Business executives
were interviewed to determine reasons behind CSR program implementation. Chapter 2 is a
literature review of corporate responsibility programs at large and medium-sized companies and
substantiates the need for additional research in this area.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This study explored attitudes and perspectives of business executives in MEs toward CSR
programs. Three aspects were considered: CSR advantages and disadvantages, CSRs in MNEs,
and CSRs in SMEs. This chapter presents a review of the literature on CSR programs at both
MNEs and SMEs. It includes a discussion of prominent ethics leadership theories and methods
of research is then included.
Unethical Business Behavior
The formation of CSR programs has been in response to ethics problems in the business
world, which have increased in recent decades (Sims, 2003). Galie and Bopst’s (2006) research
that the Machiavellian form of leadership will not work in today’s business world. The concepts
of 15th-century politics cannot be implemented in the 21th-century business world—specifically,
using immoral activities to advance and organization. Examples include companies such as
Enron, WorldCom, and Tyco. Changes in the business world, particularly, stakeholder
involvement, have created a need for a new type of leader (Cohen, 2010; Kuo-Wei, 2005), one
who is adept at dealing with today’s business environment. Business leaders need to further
develop existing forms of leadership such as expectancy theory (Isaac, Zerbe, & Pitt, 2001),
relational models theory (Giessner & Quaquaebeke, 2011), structural theory (Vance & Harris,
2011), and benevolent leadership (Karakas & Sarigollu, 2011).
A high standard of business ethics has been absent for a number of years (Kopf et al.,
2013; Sims, 2003). Although many companies still operate with a high standard of ethics and are
socially responsible, a number of corporations and their executives have been found guilty of
20
operating illegally, unethically, and immorally. A business in itself cannot act unethically or
illegally. Executives making decisions on the companies’ behalf are committing the unethical
and illegal acts.
Unethical Business Leadership
Over recent decades unethical and illegal behavior has increased. Business leaders and
the companies they lead have been found negligent in their actions. Sims (2003) discusses
corporations that have been found guilty of either illegal actions or of unethical behavior,
including Beechnut, Tyco, Adelphia, Arthur Anderson and Enron. Unethical and illegal behavior
has caused companies such as these to go out of business, declare bankruptcy, and/or be acquired
and merged with other companies. In some instances, companies such as Salomon Brothers and
Beechnut have survived the controversy, although after Warren Buffett turned Salomon Brothers
into a successful company again, the company was sold. Many of the companies listed were
managed by executives wanting to increase their own wealth at the expense of the company’s
finances. What many of the companies have in common is the type of leadership: an executive
with a dominant personality.
Galie and Bopst (2006) use Imclone, Tyco, Adelphia, WorldCom, and others as examples
of the problems within the business world. Machiavellian principles are cited as the source of the
problem—the use of a dominant personality and power to win or be successful. Galie and Bopst
discuss the misuse of Machiavellian principles as opposed to the use of Machiavellian principles.
Machiavelli designed his principles for use by rulers and to be used in ruling a state for
governmental purposes. The business world has tried to apply the same principles but through
different means. One of Machiavelli’s greatest enemies was corruption: the act by that many of
the businesses listed had used to achieve wealth and power. As Sims (2003) noted, executives at
21
companies such as Enron, Tyco, and Adelphia used the power of their positions and their
company’s power to attain wealth for themselves and their companies. The executives' wealth
was achieved through corruption. Unethical behavior has extended beyond the institutions
mentioned and into financial institutions.
Friedland (2009) cites several financial institutions that have suffered due to the actions
of the executives who manage the institutions. Due to the company’s negligence, Lehman
Brothers declared bankruptcy. Institutions such as Bear Stearns, AIG, Goldman Sachs, Morgan
Stanley, Freddie Mac, Fannie Mae, and New Century have been shown to be guilty of
committing unethical and possibly illegal behavior. Many of the institutions who provided home
mortgage loans have been criticized for the quality of the loans that were granted. Methods used
included providing “stated income” (Friedland, 2009, p. 43) loans where incomes were never
verified. More than 40% of New Century’s loans were underwritten as such. Another practice of
the financial institutions was use of subprime mortgages, which allow persons with poor credit to
borrow money for a mortgage although at a higher rate of interest. Bear Stearns’ executives were
arrested for misrepresentations in the purchase and sale of securities. Fannie Mae and Freddie
Mac had to be bailed out of financial trouble by the United States government. The result of most
of the actions of the financial institutions mentioned was a significant increase in the number of
house foreclosures. The commonality amongst the institutions is the corruption of the executives
managing them.
Leadership Characteristics Inducing Unethical Behavior
Allio (2007) studied where corrupt leaders come from and how they developed such an
approach. Allio lists five possible reasons for leaders’ unethical actions: personality disorder,
weakness of will, misguided values, avoidance of reality, and complicity of followers.
22
Personality disorders can be further categorized into narcissism, expectation of entitlement,
craving glory, and the feeling that their uniqueness excuses them from abiding to ethical codes.
Weakness of will is further described by Allio as a lapse in judgment or a failure to fully
understand consequence or implications of one’s actions. Misguided values consist of leaders
choosing their own interest above all else. Allio explains avoidance of reality as leaders looking
to the short term instead dealing with the long term. Mention is also made of leaders using
outside influences, the economy, and high costs as reasons for behaving unethically. Lastly,
unethical leaders tend to have followers who act irresponsibly and advocate the actions of their
bosses. Allio offers five recommendations to leaders to avert bad leadership: pay attention to the
welfare of stakeholders, listen to alternative points of view and perspectives, rely on their team
for support, foster a culture of integrity, and cultivate personal awareness.
Das (2005) surveyed vice presidents at U.S. companies, who ranked their preferences on
14 key principles of ethical conduct. The participants were asked to rate how important these
principles are to them and how they consider the ethical conduct of other executives.
Respondents considered the Golden Rule as the most favorable ethical principle and mightequals-right as the least ethical principle. Senior executives also considered their actions to be
more ethical than their peers. Das took the most favorable principles and listed them as positive
and the least favorable as negative. The data were further categorized according to education
level, private versus public school, business versus nonbusiness education, gender, age, and job
experience. No distinct differences where noticed except that age and experience categories held
higher positive values for the positive principles and lower negative values for the negative
principles.
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Lack of Leadership Development
Unethical actions can be related to the lack of development and mentoring of the
successors of current business executives. Many successors are not qualified for the position they
assume. Hammet (2008) researched the development of the next generation of business leaders
and executives and found a lack of involvement of current business executives with succession
planning for the next generation. Some of the reasons found include low interpersonal contact
between senior leadership and the perception that these relationships will interfere with the
executive’s jobs. This inhibits senior executives from identifying personnel who may be
qualified for advancement. Other executives concentrate on advancing their own careers and
perceive others advancing as a threat. Executives that do take an interest in succession planning
tend to find personnel that are images of themselves and, if corrupt, tend to further the cycle of
corruption. The actions and unethical behaviors of executives have created stakeholder distrust.
The reaction of businesses to the lack of trust has been the implementation of CSR programs.
Conger and Nadler (2004) found similar results. Failure to adequately prepare a successor
can lead to failures by the successor or the company itself. As Hammet (2008) discovered, many
CEOs do not want to leave the job and fail to develop a successor. Many of these CEOs see
retirement as an end to their sense of purpose and individual importance. These CEOs rarely
mentor others and if they do they usually find someone of inferior skill so as to assure the
successor of not surpassing their own accomplishments. Improper succession planning is a major
contributor to CEO failure.
Cairns (2011) surveyed 55 large public and nonprofit organizations, small and mediumsized for profit organizations, and nonprofit higher education organizations for information on
CEO succession planning. More than half of the CEOs had been with in their position for less
24
than five years, suggesting that CEO transitions are a normal and routine event. Cairns references
six possible reasons for not developing a succession plan: organizations that are performing well
do not want create undue pressure for the existing CEO and therefore possibly affecting the
CEOs performance, many organizations do not have a large internal pool to choose from, there is
a lack of strategy for selecting successors, many CEOs are not included in the succession process
particularly in the final selection, some leaders are considered irreplaceable, and succession
planning is considered a long, complex process, whereas executives are normally focused on the
short term.
Greenberg (2012) references several crucial reasons for succession management:
retaining leadership is a strategic and economic necessity, strategy implementation is impossible
with the right leadership, and succession management fosters leadership growth and retention.
Greenberg suggests that filling positions internally would be a more strategic method than
external hiring. Hiring costs, ramp up time, and lost productivity are listed as reasons.
Techniques for internal succession management include creating goals by assessing current and
future business strategies, understanding the company’s competitive position and goals for
growth, and defining leadership needs. Next, a task force is identified to own and manage the
process. A method is established to determine which candidates have potential to fill the
position. Personality assessment may be given to further determine skill sets of candidates.
Lastly, a training program can be implemented and individual progress can be tracked to
determine the final candidates.
Theoretical Concepts
The foremost theory supporting CSR is stakeholder theory, which was initiated by
research of company resources and the value of those resources. A company’s resources can be
25
used to solve company problems and drive company value in regard to revenue, competitive
advantage, and company brand. Research on CSR programs has established that a competitive
advantage can be realized by implementing a CSR program (Falkenberg & Brunsael, 2011; Melo
& Galan, 2011; Zheng, Luo, & Wang, 2014).
Developmental Stages of Stakeholder Theory
Barney (1991) suggests that for a company to gain a sustained competitive advantage, it
must have four attributes in regard to resources: they must be valuable, they must be rare, they
must be imperfectly imitable, and there cannot be strategically equivalent substitutes for this
resource that are valuable but neither rare nor imperfectly imitable. This is known as the
resource-based view. Valuable resources allow a business to conceive of or implement strategies
that improve its efficiency and effectiveness. Rare resources are those resources that are not
being implemented by a large number of other companies. Resources such as innovation
strategies and quality of executive talent are considered rare. Imperfectly imitable resources
prevent competitors from fully understanding competitors’ resource use. This is a competitive
advantage as long as a company recognizes it possesses an imperfectly imitable resource.
Companies cannot create sustained competitive advantage if there is equivalent substitutability.
A company must be able to possess resources which cannot be duplicated by the competition and
are not considered rare and imperfectly imitated. At the time of Barney’s research, company
resources were recognized to be physical, human, and organizational. The combinations of these
resources are used to set strategic plans, which include problem solving. Barney notes that
reputation among customers and stakeholders is a form of competitive advantage. A positive
correlation between an increase in positive reputation and competitive advantage has been
26
established (Porter, 1980). The use of a company’s resources and the suggestion of a company’s
positive reputation are the initial stages to the development of stakeholder theory.
Teece, Pisano, and Shuen (1997) expanded on the resource-based view to include the
dynamic capabilities view. A firm cannot rely only on its resources but must also consider how
the resources act and react during rapid change. The competitive advantage of a firm is
dependent on distinctive processes, shaped by the company’s asset position and the evolutionary
paths it has adopted. Distinctive processes are ways of coordinating and combining the firm’s
asset position as a company’s portfolio of resources, such as those defined by Barney (1991), and
evolutionary paths or directions the firm decides to pursue.
Before the inception of the dynamic capability view, business strategies were usually
limited to two models: the competitive forces view pioneered by Porter (1980) and the game
theory view pioneered by Shapiro (1989). In the competitive forces view, businesses’ profit
potential is determined by five forces: entry barriers, threat of substitution, bargaining power of
buyers, bargaining power of suppliers, and industry rivalry. The game theory view concerns how
a firm can influence the behavior and actions of competitors. This in turn could change the
market environment. The dynamic capability view differentiates by focusing on the firm specific
resources a business possesses that are particularly difficult to imitate resources. The dynamic
capabilities model perceives a company’s ability to achieve competitive advantage through new
and innovative methods defined by path dependencies (Leonard-Barton, 1992). One company
resource important to a business is reputation, viewed as an external, intangible asset. The
reputational asset is critical in stakeholder theory model in developing stakeholder perception of
company actions and trust or distrust of the company. The reaction of a company to stakeholder
concern can be detrimental to the well-being of the company (Cheney, 2010; Harris & Wicks,
27
2010; Jackson, 2009). The dynamic capabilities approach uses a company’s assets, deploying
and redeploying assets based on the changing market.
Globalization has caused corporations to realign their organizational structures to meet
the demands of new customers and a new workforce (Herbig & Genestre, 1997). The
internationalization of business has created an atmosphere that must align with cultural and
social factors not addressed before. Herbig and Genestre used Hofstede’s (1980) study on
international differences of work-related values and Hofstede’s development of the four cultural
dimensions associated with the values: power distance, uncertainty avoidance, individualism,
and the masculine-feminine dimension. Power distance relates to the extent to which members of
a society accept unequally distributed power in an organization. A high power distance factor is a
situation where power is recognized and rarely questioned. Individuals with lower power
distance factor tend to be subservient to those with high power factor. Countries in the Far East
and Southeast Asia tend to exhibit these tendencies. Uncertainty avoidance concerns the anxiety
felt with conflicting values and unstructured outcomes. High value factors tend to minimize these
feelings with an observance of strict laws and behaviors. Countries listed earlier have a tendency
to higher values. Individualism concerns itself with the degree people feel involved in a group.
High factor values are associated with types of people who act more individually than socially.
The United States, Canada, Australia, and most Western civilization tend to have higher values.
Lastly, masculine societies emphasize competitiveness, aggression, and materialism, and
feminine societies emphasize relationships, concern for quality life, modesty, and caring. Herbig
and Genestre appropriated Maslow’s (1943) hierarchy of needs—physiological, security, social,
self-esteem, and self-actualization—as relevant to globalization and globalized stakeholder
concerns. Both Hofstede’s and Maslow’s findings must be taken into account when businesses
28
interact with stakeholders globally whether the stakeholders are host country customers, host
country workers, or expatriates from the country of origin of the business. Consideration must be
given to degrees of factors of cultural dimensions and hierarchy of needs of the stakeholders in
business actions.
History of Stakeholder Theory
Stakeholder and business relationships have taken on a more heightened importance in
recent years (Lantos, 2001).. Although not defined as stakeholder issues, companies have been
dealing with perceived stakeholder issues for a long time. Rodgers and Gago (2004) and defined
six dominant philosophical viewpoints that influenced company behavior over 75 years:
psychological egoism, deontology viewpoint, utilitarian position, relativist perspective, virtue
ethics outlook, and ethics of care. Each viewpoint was practiced predominantly in a certain time
frame but there are still companies which practice those held popular in a previous period.
Psychological egoism defines the period where businesses operated for their own self-interest
with shareholders being the only stakeholder. The deontology viewpoint incorporates business
decision making conditioned by rules and regulations. This period realized concern for
stakeholders such as government and adherence to governmental policies such as environmental
policies and employees and regard for their issues such as safety. The utilitarian position is
concerned with the philosophy of the greatest good for greatest number of people. This position
was held concurrently with the timeline of World War II. After the war, the relativist view
perspective came into acceptance. Companies expanded globally, rules and regulations or lack of
them allowed companies to act differently dependent on location. Businesses defined their own
base of actions when defining ethical standards. The emergence of the information age and with
it the ease of information gathering, MNEs were starting to suffer from public relations problems
29
with foreign governments and political and social action groups. The virtue ethics outlook was
implemented. A circumstance is perceived and a conscious look for a solution is initiated and
then a judgment is made. With the establishment of a broader stakeholder base, the ethics of care
perspective was applied. Corporations have become more willing to listen to stakeholder
perspective with the realization of the outcomes on their businesses. A partnership is recognized
between stakeholders and businesses and the understanding between them can be beneficial to
both parties.
Another study on the progression of stakeholder theory and in regard CSR theory was
undertaken by Moura-Leite and Padgett (2011). A literature review of CSR was organized on a
decade-by-decade basis from the 1950s through the 2000s. An early example of the CSR
concepts dates back to 1919, when Henry Ford was sued by Ford shareholders. The Supreme
Court ruled that the shareholders were entitled to their maximum request of dividend, thereby not
allowing Henry Ford to reinvest in plant expansions (Lee, 2008), an example of psychological
egoism (Rodgers & Gago, 2004). In the 1950s, corporations used philanthropy as the prominent
method of CSR action. The 1960s brought questions on what the definition of social
responsibility entailed. During this time businesses became involved with topics such as
philanthropy, customer relations, employee improvements, and stockholder relations (Heald,
1970). The 1970s was noted as the period where Friedman (1970) introduced a paper that
professed that the only social responsibility a company had was to its stockholders and to
policies that will create a profit. A shift in social responsibility policy was noted. Corporations
were expanding the voluntary dimension of social policy. Programs such as day care, training of
the unemployed, and in-house programs for drug abusers were implemented (Carroll, 2008).
Rodgers and Gago stated that the 1980s were a period where business was more responsive to
30
stakeholder concerns. Researchers were defining new concepts such as CSR, corporate
citizenship, public policy, stakeholder theory, and business ethics (Waddock, 2004). The 1990s
saw CSR become universally sanctioned. Organizations such as the World Bank, The United
Nations, and the International Labor Organization become supportive and established guidelines
to help expand the movement. Of the Fortune 500 companies in 1977, less than half had listed
CSR as an essential component in their annual report. In 1990, 90% listed CSR as a basic
element of their organizational goal and reported it in annual reports (Lee). The expansion and
popularity of the Internet has brought stakeholders closer to companies through corporate
reports, news websites, and activist websites. The same can be stated for cable television growth.
In the 2000s, researchers are determining that CSR is linked to corporate financial success. A
survey conducted by PricewaterhouseCoopers in 2002 found 70% of CEOs surveyed believe
CSR is vital to profitability (Vogel, 2005). Large corporations are expected to undertake
sustainability initiatives, live up to principles and standards, be more transparent, and engage
with stakeholders (Lee). Moura-Leite and Padgett propose further research in the area of CSR in
SMEs.
CSR Programs
Corporate social responsibility programs are perceived as a reaction to unethical behavior
of businesses (Panwar, Rinne, Hansen, & Juslin, 2006; Trebeck, 2008). A clear definition of
CSR has eluded researchers (Dahlsrud, 2006). The problem has not been an absence of a
definition as much as an abundance of definitions. Dahlsrud conducted a literature review of
CSR definitions in academic literature. After analyzing 37 definitions of CSR, Dahlsrud noted a
commonality in many of the definitions. The definitions tended to identify five dimensions of
CSR: environmental, social, economic, stakeholder, and voluntariness. The environmental
31
dimension describes the relationship between business and the natural environment, while the
social dimension describes the relationship between business and society. The business operation
in regard to CSR is described by the economic dimension. The stakeholder dimension is in
regard to the individual or group of individuals that can affect or is affected by a company’s
actions either directly or indirectly. The voluntariness dimension of CSR describes the activities
that go beyond legal obligations and is based on the company’s ethical values. Dahlsrud’s
findings indicate business is being impacted by new extents. Business has always had social,
environmental, and economic impacts but is now being impacted by stakeholders, a new
dimension.
Maruffi, Petri, and Malindrertos (2013) described two approaches to business
performance: the shareholder-owner value position and the stakeholder-value position. The
shareholder-owner value position follows the perspective of Friedman (1970) in that the only
social responsibility of a company is to increase shareholder profits. The stakeholder-value
position advocates increasing CSR. Maruffi et al. listed viewpoints of each approach. Advocates
of the shareholder-owner position argue against increasing CSR programs for the following:
reduction in profits, increased costs, lack of expertise, conflict of interest, detraction from basic
mission of business, dilution of business purpose, and gives corporation too much power among
others. The advocates for the stakeholder-value position list the following reasons for increasing
CSR: increased profits over time, better public image, reduction in need for more government
regulations, increased role in solving problems potentially created by business such as
environmental issues, drives for innovation, means of attracting better employees, and better use
of natural resources among others. Corporations that support the stakeholder-value position view
themselves as corporate citizens and seek to contribute to society.
32
CSR program initiatives should extend beyond consumers’ reaction and involve
stakeholders such employees, suppliers, and shareholders (Cegarra-Navarro & MartinezMartinez, 2009). Cegarra-Navarro and Martinez-Martinez determined CSR initiatives created
admiration for the company by linking CSR activities and its performance to stakeholders.
Admiration inspires customers to be supportive of the business through increased purchases and
loyalty to brand (Thompson, 1998). Admiration creates an atmosphere where employees work
harder, suppliers are more supportive, and shareholders remain loyal. Cegarra-Navarro and
Martinez-Martinez discussed five categories where CSR initiatives benefit businesses which are
then realized by the stakeholders: quality of products, global business, innovativeness, corporate
culture, and ethical obligations. Initiatives such as honest advertising, concern for environment,
machine safety, product checks, and control programs are understood to increase the quality of
products. This approach, especially the environmental aspect, bolsters team spirit, engenders
loyalty, and attracts high quality staff which then optimizes the ability of the company to produce
high quality products.
Global business increases with CSR implementation. Concern for the consumer attitudes
and perspectives, in regard to location, increase admiration for the company and create a
competitive advantage in the market. An effective corporate culture is established through CSR
initiatives, one where roles and responsibilities react to internal and external stakeholder
relationships. Businesses that recognize and understand their ethical obligation and act in an
ethical manner allow a company to have improved public image and increase staff morale.
Concern for environmental issues and for the quality of processes and work environment lead to
an increase in innovation which then can result in improved product for the customer, improved
safety for the employee, and new standards and processes for the respective industry.
33
Environmental issues, quality of processes, and work environment are listed as separate entities
but are not independent of each other. There is an interaction that allows an outcome in one to
affect, usually positively, an outcome in another. The outcomes affect the stakeholder
consciousness in a positive manner and increase admiration for the business. Various standards
to gauge and measure the effectiveness of a CSR program have been developed.
One type of CSR index was constructed and applied by Chen, Tang, and Hung (2013) for
a study of 738 Taiwanese businesses. Twenty-four variables were studied. Data were compiled
for various sources such as compliance programs, annual reports, websites, and CSR reports.
Companies with a higher performance value on the index were proven to higher stock returns,
higher operating performance, and enhanced firm values. Consumers were more apt to purchase
products from companies with a higher index. Significant findings included positive impacts
such as higher total sales and higher free cash flows of firms practicing CSR activities. The
implementation of these types of programs has created a positive condition for companies.
Consumers’ attitudes and behaviors in regard to whether a business had implemented a
CSR program were studied by Zaharia and Zaharia (2013). They considered the impact of
implementing CSR programs of SMEs in the food sector. CSR policies in which stakeholder
concerns are taken into account can have a positive impact on financial performance. The
opposing situation is valid, a negative impact can be realized by not taking stakeholder concerns
into account. Consumers perceive a lack of principles as being difficult to change. Social media
have created a situation where companies have lost customers through negative posts on blogs.
Customers who shop online can switch to the competition at no or little cost. Consumer’s
reaction to a company’s conduct provides an important incentive for companies to act in an
ethical and moral manner.
34
Forte’s (2013) research compares and contrasts the CSR approaches undertaken by
European businesses and the approaches undertaken by United States businesses. Forte found
that European and United States businesses approached CSR differently. Firms in the United
States have a tendency to present social involvement as a reflection of their core values. This
reasoning was used least by European businesses. Firms in Europe used CSR as a response to
stakeholder pressures. Forte discovered that CSR programs are more often found in countries
with social democratic traditions such as Canada, Norway, and Germany. Businesses with CSR
programs are more apt to be located in more developed countries. The important aspect of CSR,
no matter what country a business is located in, is the realization that the program will benefit the
business image and livelihood.
CSR Programs in Large and Multinational Corporations
DuPont was one of the first corporations to implement social responsibility polices
(Tebo, 2002). In the late 1980s, DuPont initiated a program to focus on public concerns of the
environment reaching beyond what the regulations require. DuPont approached the voluntarism
dimension of CSR defined by Dahlsrud (2008), going beyond legal obligations and basing their
actions on the company’s ethical values. One of the important aspects of the program concerned
the involvement of employees. Employees were asked for their ideas and solutions to
environmental issues. This in turn created employee confidence. DuPont’s CSR program
developed from this environmental program. Shortly afterward, DuPont made a commitment to
safety, health, and environment. This policy was implemented not only for the well-being of the
employees but also the community. Reduction of waste and emissions and increased energy
efficiency not only provided a safe working environment, it provided for a safe community
nearby and created reduced costs for DuPont. DuPont’s CSR program further developed to
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include programs to support employees such as day care and elder care. Commitment to ethical
business practices is ensured with oversight and auditing by a senior-level corporate compliance
committee.
Starbucks Coffee Company is another MNE that has embedded CSR in the company
culture (Katrinli et al., 2011). Initially, Starbucks implemented a CSR program solely based on
the reaction of stakeholders. After initial criticisms, Starbucks modified the program with the
realization that they could take the program beyond a reaction to stakeholder issues and make it
an extension of their corporate culture. This was accomplished to the extent that Starbucks
received numerous CSR recognitions including being named one of the world’s most ethical
companies (The world’s most ethical companies, 2010). Starbucks has had similar accolades
bestowed on it throughout the years. Katrinli. Gunay, and Biresselioglu cited Starbucks’
commitment to the environment with their concern for climate change. This initiative was
enacted by Starbucks by seeking renewable power sources. This concept is further enhanced by
their desire to seek LEED certification for their store, roasting plants, and headquarters. The
LEED certification is granted to a company that reduces the impacts the company makes on the
environment. These can include water usage, energy efficiency indoor environmental quality,
and innovation in design, among others. During the financial downturn in 2008 and 2009, the
company felt it must still be committed to responsible practices. The investments made to the
CSR program in these difficult times was with the belief that the existence of Starbucks in the
long run was tied to their CSR program. Starbucks believes the strategic use of CSR policies can
create the ability to charge premium prices, create trust among Starbucks’ stakeholders, and give
Starbucks the ability to hire high quality employees (Baron, 2001).
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Royal Dutch Shell is a MNE that has implemented a CSR program and proven it to be
successful in terms of profitability (Ekatah, Samy, Bampton, & Halabi, 2011). At the time of the
study, Shell employed 119,000 people in 145 countries. Prior to the research, Shell had come
under increased scrutiny for their lack of concern for social and environmental issues. After the
implementation of a CSR program, the company released statements in regard to social
performance such as reducing fatalities, improving gender diversity by improving hiring
practices towards females, and increasing social initiatives such as philanthropy. Environmental
initiatives included reducing amounts of greenhouse gas emissions released, reducing spills, and
total waste disposed. The researchers analyzed the reaction of profitability variables: revenue, net
income, and earnings per share, as the social and environmental changed over a period of years.
A correlation between revenues and gender and social initiative was recognized. Increase in
revenues over the period was a near perfect fit when compared to gender and social initiatives
curves. Fatalities and environmental initiatives showed a positive correlative relationship but
neither did in regard to revenue. When using net income as a variable, the findings were again
significant in regard to gender and social initiatives but also a strong relationship with a
reduction in fatalities was noted. Again the relationship to environmental initiatives was not
significant. The last economic variable, earnings per share, were similar to the net income
findings: significant in regard to gender and social initiatives, positive in regard to fatalities, and
positive but not correlated to environmental initiatives. Shell has expanded and acted on
increasing CSR initiatives and recognized an increase in profits while being socially responsible
throughout its global operations.
MNEs have expanded operations into developing countries where the needs of the
stakeholders may be in greater demand than in their home country. With this expansion, the
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MNEs have also had to expand their CSR programs to include dealing with stakeholder issues in
the developing countries were they operate. The programs not only help provide local
employment, education, and health but also promote a more open civil society (Haymon, 2008).
Newmont Mining, with an operation in Indonesia, is an example of such a company. Newmont
has contributed to community developmental programs in Indonesian areas where they are
located. The programs include agriculture training, education, building schools and hospitals,
and entrepreneurship training. Newmont’s initial step in developing and maintaining the
programs is to consult with local people in each of the communities to determine their needs and
thus avoiding contact though a third party where miscommunication or corruption may be
present. Newmont constantly monitors the programs to determine if they are successful. The
company collects data on their programs, analyzes the data, and determines if changes need to be
made to improve the programs.
A study of several MNEs found a common approach to CSR programs and issues.
Keijzers (2003) researched seven MNEs—Shell, Heineken, Diageo, Unilever, Ahold, Numico,
and ING—to discover how they maintain their CSR programs. Kreijzers discovered MNEs need
to approach CSR as a long-term strategy. The approach must not be implemented or sustained as
a piecemeal solution to stakeholder issues. Long-term value drivers which ensure company
continuity are different than short-term value drivers such as reputation management. Short-term
stakeholder issues can involve issues such as increased profits, pay raises, improved
environmental conditions, and possibly human rights issues, particularly in developing countries.
Common to all the issues is that they can be identified, quantified, and qualified. This allows a
company to make decisions where the results can be measured more accurately and quickly.
Long-term issues have a tendency to be in regard to company continuity and tend to be vaguer.
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The long-term drivers must be developed where there is less known factors which results in less
definitive solutions. An issue may change over time and the company must reevaluate their
position and that of the involved stakeholder.
Companies needed to understand the stakeholder concerns before acting on them as well
as the stakeholders understanding that companies can be limited in their response or sufficient
time may need to be allowed for the development of new policies to take effect. A commonality
shared by the seven MNEs is similar to a CSR policy also shared by Newmont Mining (Haymon,
2008), the bottom up approach. All the MNEs consider collecting data from the affected sources
as crucial. This approach allows businesses to have the correct information on which to respond.
Another commonality amongst the corporations is in regard to CSR reporting. Company
websites are used to issue CSR reports so the public, company stakeholders, and other
organizations can read and determine if the CSR actions the company undertakes is sufficient.
An issue which has developed with CSR policies concerns the differences in perception between
home office and local offices. A serious concern of a local office may be less of a concern of the
home office. The opposite situation may also exist. Good communication between the two
offices usually results in a solution. The understanding that this type of situation may arise must
be considered when making CSR decisions. Most important, the companies believe that the
business should be focused on the continuity of the company. The choice is not between longterm success and short-term performance but to first consider building for the future while
holding their selves to demanding short-term standards (Collins & Porras, 1998). Building for
the future is not an initiative to being undertaken exclusively by large corporation; SMEs have
implemented CSR programs.
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CSR Programs in SMEs
SMEs are a vital part of the global economy, where 90% of business enterprises consist
of SMEs (Inyang, 2013a). Research has been conducted to establish motivating factors, both
internal and external to the company, for companies to engage in CSR activities. Through a
qualitative literature survey, Inyang suggests several motivating factors and drivers responsible
for SMEs implementation of CSR programs. Internal motivators are an executive’s ethical
orientation, being the right thing to do, improving image, better business returns, and strong
identification with community. External factors consist of supply chain pressure, community
pressure, customer loyalty, obligation to obey laws, and avoidance of negative publicity.
Contrarily to the drivers and motivators for implementation, there are some constraints
associated with adoption of a CSR program: cost, time, limited knowledge of social issues, lack
of awareness of benefits of CSR, capacity to collect and analyze data, lack of information on
CSR activities, existing guidelines for implementation are designed for large companies, lack of
support services, and fear of adding regulatory and bureaucratic burdens from involvement. An
earlier study conducted by Inyang (2013b) identified some of the strategies SMEs are usng to
implement programs: community involvement, employee related initiatives, consumerism,
environmental initiatives, and supply chain burdens. SMEs tend to be more localized which can
create a strong identification within the community allowing SMEs to engage in community
activities such as sports, health, education, and philanthropy. Company size allows employees at
SMEs to create and develop a stronger relationship among themselves and the company. This
allows the company to be more aware of the needs and issues of employees. Companies of this
size usually have fewer consumers than larger companies and may be more localized. SMEs may
be better prepared to address consumer needs and issues. Environmentally friendly products are
40
being designed, energy conservation is being implemented, and recycling efforts are being
realized. Due to the smaller size of the companies, environmentally conscious efforts can be
more personalized. Lastly, larger companies are requiring companies in their supply chain to
behave properly and may even require their suppliers to implement CSR programs. In this
regard, SMEs may not even have a choice in the matter if they are to maintain a place in the
supply chain.
Inyang’s (2013b) findings concerning supply chain issues in regard to SMEs supported
Freisblen’s findings (2011) in a study of a filtration and hydraulic systems company whose
resources included superior technology, just-in-time capabilities, and governmental security
clearances. One step in securing a contract with the aerospace and defense contractor required
the supplier to document the CSR program of the supplier. Since many companies of this size do
not have a CSR program, the filtration firm almost lost the contract. A one year waiver was
granted while the SME initiated a program. The importance of a program can prove vital to its
well-being. Freisblen states SMEs have an advantage in implementing CSR programs due to less
layers of management than at larger companies. Ownership is important in the development of a
CSR program. Owners can be more directly involved and responsible of CSR activities, allowing
their own personal values and beliefs to be incorporated into the program. Suggestions in
implementing a CSR program include making it personal, establishing a thorough representation
of the company in the CSR committee, be inspired by but do not copy larger companies’
programs, and seek guidance from other companies in the supply chain. Larger companies have
more resources than SMEs and their programs may not be suitable for the smaller companies.
Representation should include personnel from different departments to create a more varied
influx of ideas. Companies should seek guidance from similar sized businesses in the supply
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chain since other businesses have been in the same situation and may be able to provide
direction.
CSR Programs in SMEs Located Outside the United States
Research of CSR programs in SMEs has predominately been in regard to non-U.S.
companies. One study concerned programs at companies in Uganda and compared the results to
companies in Australia, Malaysia, China, Denmark, Estonia, and the Czech Republic (Turyakira
et al., 2012). The study involved work oriented CSR activities, those aimed at improving
working conditions, social oriented CSR activities, those aimed at supporting social and
community activities, market oriented activities, those aimed at customers, suppliers, and
competitors, and environment oriented activities, those that minimize negative impacts on the
environment. The results of the surveys administered in these countries determined a positive
relationship between the work oriented CSR activities and the satisfaction of employees,
reputation of SMEs, and competitiveness of SMEs. A positive relationship exists between
society oriented CSR activities and the reputation, customer loyalty, and competitiveness of
SMEs. There exists a positive relationship between environmental CSR activities and the
reputation, customer loyalty, and competitiveness of SMEs. Results showed a positive
relationship between market oriented CSR activities and the reputation, customer loyalty, and
competitiveness of SMEs. Furthermore, a positive relationship was exhibited between employee
satisfaction and competitiveness, reputation and competitiveness, and customer loyalty and
competitiveness. The results demonstrate that CSR programs in SMEs provide benefits important
to the existence of the companies.
European CSR programs. CSR have been implemented in many European countries. A
study of the successful implementation of a CSR program in a French SME was conducted by
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Barabel and Meier (2010). Barabel and Meier identified two approaches to CSR programs
among SMEs. The dominant approach is viewed in a hostile manner as a constraint to other
business activities where businesses take a defensive approach. The proactive approach is
viewed as an opportunity which can generate value and innovation. The company studied,
Michel et Augustin, a manufacturer of biscuits in France, is in a mature and saturated industry.
The company was created in response to stakeholder concerns about health issues, nutrition, and
sustainability. The adoption of CSR from the inception of the company has enabled it to succeed
early in its existence. One of the crucial elements that was mentioned in studies by Friesland
(2011) and Inyang, (2013a) is owner/founder involvement. The owners took a personalized
approach by naming the business after themselves. An open-door policy exists with stakeholders;
interactivity with stakeholders is welcomed and encouraged. Transparency and truthfulness are
practiced through means of communication such as the company website and blog which are
used to relay information from recipes, to employee pictures, details of sales outlets, and
recruitment. The company injects humor through graphics on packaging, logos, and product
names. The concept is understood to be speaking to consumers and raising a smile. Barabel and
Meier discuss the company’s concern for using local suppliers and manufacturers thereby
creating a relationship with the local community, another crucial element mentioned in
Friesland’s and Inyang’s studies. Humanitarian and social projects are of concern to the owners.
Programs are functioning that support many physically and mentally challenged people in the
community. Michel et Augustin has redirected the aim of a company from doing well for
customers to doing well for everyone. An important aspect in this study was the different
approach a SME had as compared to MNE. A more localized approach was undertaken and the
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smaller size of the company allowed the implementation and maintenance of the CSR program to
be undertaken quicker, easier, and with less cost.
Kechiche and Soparnot (2012) conducted a literature review regarding CSR programs in
French SMEs. The literature review supports a number of viewpoints of the researchers
discussed earlier in this section (Barabel & Meier, 2010; Freisblan, 2011; Inyang, 2013a; Inyang
2013b; Turyakira et al., 2012). Attitudes of the director of a SME are a determining factor in the
implementation of CSR policies. A SME director can be more directly involved with the
concerns of stakeholders and it may mean a more ethical approach to the CSR policies. The
director’s local attachments to the community are recognized as a motivating factor for CSR
implementation, another manner in which the director better understands the needs of
stakeholders. Due to the smaller size of the company, an executive also understands the needs of
the workers.
An important aspect of the implementation of CSR measures in a SME is that the
approach of implementation is recognized as being different than that for a MNE. The size of the
business requires a different approach.
CSR Programs in MEs
There has been a lack of research associated with CSR programs in SMEs (Preuss &
Perschke, 2010). The question of what the difference of the effect of CSR programs on MEs as
opposed to small businesses and additionally to large businesses. The concept is that a ME is not
a larger version of a small company or a smaller version of a large company. Preuss and
Perschke suggest that larger companies tend to have highly formalized CSR programs which can
include specialized reports and website presence while small companies tend to have informal
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CSR programs; if programs at all. The medium-sized enterprises’ CSR programs usually are
situated somewhere in between the two.
Medium-sized CSR programs versus larger and smaller companies. Preuss and
Perschke (2010) interviewed textile manufacturer executives who believed a formal CSR
program was not necessary for their business. The only formal area of CSR was a comment
section where customers can provide feedback for the company. Management felt that concerns
of employees and customers could be approached on a less formal level. Similar to small
enterprises there was a belief a CSR program needed special executive expertise which is lacking
at a MEs. Customers surveyed believed that a company should have a strong CSR program
although at the time of the survey the lack of a formalized program was not a factor to limit
purchasing the company’s products. The customer survey indicated that major concerns within
the industry involved treatment of employees in oversea manufacturing plants, environmental
issues, and the use of size “zero” models. The staff at the textile factory was also surveyed.
Environmental issues were found to be the most prevalent issue for staff, followed by truth-inadvertising and overseas labor conditions. Preuss and Perschke’s findings indicate that the textile
company studied showed a CSR approach that lies somewhere in between small and large
companies. Upper management took a less active approach to a formalized CSR program while
the evidence of stakeholder concern, in this case the customers and employees, elevated their
concern for company actions and inactions.
Russo and Tencati (2009) conducted similar research but included micro firms:
businesses with fewer than 10 employees. Small businesses have 10-50, MEs have 50-250
employees, and large companies have over 250 employees. A survey of managers was conducted
at firms of these varying sizes. A result similar to that of Preuss and Perschke (2010) was found.
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Larger firms tended to have a more formal CSR program while smaller firms tended to have less
formalized CSR programs. MEs implemented five strategies in regard to CSR programs:
environment, employment, supply chain, local community, and community volunteering.
Environmental strategies included variables such as water, noise, pollution, and energy
reduction. Other variables associated with environmental strategies included packaging recovery
and waste management. Employment strategies included communication, corporate activities for
employees, flexible working time, and training, Supply chain strategy included two variables:
suppliers’ selection and customers’ selection. Local community strategies included sponsorship,
giving, and cause related marketing. Lastly, community volunteering included variables such as
hiring of disadvantaged people and volunteering. The strategies incorporated by micro, small,
and large enterprises contained similar results to MEs but had differences such as alternative
energy for large companies, lack of volunteering for micro firms, and medical and health benefits
for small firms. These results display a need for CSR strategy to address different type
stakeholders as a function of company size.
Leadership Theories
There has been much research and many theories developed in regard to business
leadership. These same theories can be applied to leadership in regard to CSR. Types of
leadership theories that apply to CSR include transactional leadership theory, transformational
leadership theory, and Relational Models Theory.
Transactional Leadership Theory
Transactional leadership is a needs-based method of leadership (Popper & Lipshitz,
1993). These types of leaders are sensitive to the needs of others that in return allows the leaders
to satisfy followers’ needs. Followers are rewarded for the effort produced. Effective
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transactional leaders match different situations to the appropriate strategy. Transactional leaders
set standards and monitor deviations from these standards. Leaders tend to monitor and control
followers (Bass, 1985), which can include correctional actions when necessary (Bono & Judge,
2004).
Transactional leadership provides a company with a CSR program the type of leader who
is results-oriented. The transactional leader tends to be rigid and set standards for compliance
(Groves & Larocca, 2011). Noncompliance is dealt with accordingly. Once a CSR program is
implemented, the transactional leader provides the company with an executive that maintains the
program standards and does not allow deviation from it (Du et al., 2013).
Transformational Leadership Theory
A transformational leader is one who can motivate followers. The relationship with
followers tends to be emotional (Popper & Lipshitz, 1993). People may follow this type of leader
because transformational leaders project the image of being one of them. Transformational
leaders also tend to have higher ethical and moral standards (Bono & Judge, 2004). Leaders of
this type understand the needs of followers and coach or mentor them in their development.
Transformational leaders provide motivation, stimulate enthusiasm, and build confidence. They
encourage thinking and allow followers to generate ideas and innovations and challenge the
standard. Although similar to the transactional leader in the aspect of understanding the needs of
the followers, the reaction to satisfying the needs is different. Transactional leaders tend to
reward while transformational leaders tend to nurture.
Transformational leaders promote CSR programs and stakeholder-oriented marketing
(Du et al., 2013). The transformational leader is more concerned with the broader depiction of
the CSR program and the effects on stakeholders rather than the day-to-day operation of the
47
program. In this regards, the combination of the two types of leaders, transactional and
transformational, are required for a functioning CSR program.
Relational Models Theory
Relational models theory (RMT) is based on four types of relationships between leaders
and followers: communal sharing, authority ranking, equality matching, and market pricing
(Giessner & Quaquebeke, 2011). Communal sharing focuses on what people have in common
and what differentiates the members of the group from those outside the group. People inside the
group are undifferentiated and follow a one-for-all and all-for-one attitude. Authority ranking
refers to ranking individuals along some characteristic such as gender, age, seniority, among
others. Respect is shown to those with higher ranking while security and protection are given to
those of lower rank. Resources are distributed based on rank with more resources granted to
higher ranking individuals and less resources to lower ranking individuals. Equality matching
focuses on balance and relying on one-for-one actions. A unit of exchange is balanced by
reciprocity. This type of relationship strives for equal treatment. Market pricing focuses on value.
Components and features of this type of relationship are reduced to single values and metrics.
Those possessing most of the metric can get the most value from the metric. The greatest good is
for the wealthiest. The use or misuse of these relationships can then be used to determine ethical
behaviors and actions. Like expectancy theory, RMT has been applied to business leaders and
their followers and through the current study can be extended to stakeholders.
Leadership Theory in CSR
Du, Swaen, Lindgreen, and Sen (2013) differentiated between forms of CSR. Technical
CSR refers to CSR actions in customer, employee, and governance domains and tend, to be
reactive, whereas institutional CSR refers to activities in the community and environment and
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tends to be discretionary decision making. Transformational leaders were positively associated
with a company’s institutional CSR practices. The transformational leader is more likely to
accept stakeholder-oriented marketing that takes into account stakeholders in marketing
activities. Transactional leaders had a positive relationship with CSR initiatives and
organizational outcome. This finding may be due to the fact that this type of leader will apply a
transactional method such as input-output to CSR initiatives and organizational outcomes. The
research suggests transformational leadership is best suited for initiating and designing CSR
practices while a transactional leader is best suited for implementing and deriving benefits from
the initiatives. Similar studies have established transformational leadership as the most effective
type of leadership in regard to CSR initiatives (Angus-leppan, Metcalf, & Benn, 2010; Groves &
Larocca, 2011; Shahin & Zairi, 2010).
Research Methods
There are many form of research: survey, experimental, casual-comparative, case study,
historical, correlational, developmental, grounded theory, ethnography, and action
methodologies (Ellis & Levy, 2009). The current study used qualitative methods (Myers, 2009).
Interviews
Information was gathered from business executives at MEs through interviews that
solicited executives’ perceptions of CSR programs. A semistructured interview provided the
interviewer with some freedom in developing questions while still allowing specific objectives to
be met.
Initially, face-to-face interviews were considered to create a rapport with the interviewee
(Singleton & Straits, 2005). This type of interview tends to yield the highest response rates. High
response rates can be attributed to the attractiveness of being asked to be interviewed in person,
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difficulty of saying no to someone asking for in-person interview, and importance and credibility
of the research since the interview takes place in person (Singleton & Straits, 2005). Difficulties
associated with the face-to-face interviews included cost, scheduling, and travel. An alternate
form of interview was used, phone interviews. Phone interviews produce rich and productive
results and have many of the same advantages as face-to-face interviews. Visual cues are the
only advantage of face-face interviewing lost when substituting phone interviewing (Chapple,
1999; Novick, 2008; Sturges & Hanrahan, 2004).
Midsize companies’ business executives from the Northeast Ohio area were interviewed.
As an interview was performed, questions were derived from previous answers and comments
and then presented to the interviewee.
Limitations and weaknesses of interview methods. A qualitative study relies on the
researcher’s interpretation and is therefore open to bias. Bias may be introduced in a number of
ways. Interviewers may not follow the interview schedule in a prescribed manner or may suggest
answers to questions. Interviewers may also be affected by a respondent’s gender, race, or
personality (Singleton & Straits, 2005). Participants may limit their answers due to time
restraints. Longer periods of time are usually needed to collect data through interviews than
through a survey. Respondents may be coached by interviewers. Weaknesses also include having
to train interviewers.
Alternative Methods of Research
Alternative forms of methodology must be considered when performing research of this
type. Other forms of study include quantitative methods such as surveys, case study,
ethnography, content analysis, and grounded theory. The determination of the type of
methodology is chosen by the researcher to best fit the topic of study.
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Surveys. A survey is a form of quantitative research. Surveys are used to collect
information to describe, compare, or explain knowledge, attitudes, and behaviors (Fink, 1995).
Categorization and numerical values can be used to quantify results. Answers to a descriptive
survey can be quantified into percentages and averages and results can be more easily studied
(Leedy & Ormrod, 2005). This allows results of the survey to be analyzed and expressed in
numerical forms instead of in less descriptive verbal forms such as many, some often, and rarely
(Thomas, 2003). A survey allows a researcher to capture a moment in time and then extrapolate
the findings. There are weaknesses in regard to surveys. Surveys tend to be highly standardized
and are less adaptable to change. Other methods of research can be changed and adapted based
on results of the participants. Surveys rely on reports of behavior rather than observation of
behavior thereby possibly creating a measurement error.
Case study. Case study examines a single social phenomenon or unit of analysis over a
unit of time (Singleton & Straits, 2005). An individual, program, or event is studied in depth for
a definite period of time. The case study is suitable for learning more about a little-known or
poorly understood situation or how a situation changes over time (Leedy & Ormrod, 2005). This
method of research uses observations, interviews, and documentation research as forms of data
collection. Case studies are the most prevalent type of research method used in business research
(Thomas, 2009). The major weakness with case study is in being a single study; the study’s
results are difficult to generalize. Another weakness of case studies is in the difficulty to access
concerned parties. Groups or individuals being studied may not want to be researched,
particularly if it depicts the group or individual negatively. Case studies tend to take a long time
to complete. It may take an increased amount of time to gain access, complete the empirical
research, analyze, and then document the findings.
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Ethnography. Ethnography involves looking at an entire group that shares a common
culture, for a lengthy period (Leedy & Ormrod, 2005). The group is studied in its natural setting
Ethnography allows a researcher to study a topic more in depth by observing both the actions of
and listening to what the subjects are saying (Thomas, 2009). This method of research has its
disadvantages. As with a case study, ethnography may take an extended period of time to
complete. In the same regard, the study usually involves research of a particular group or culture,
thereby making it difficult to generalize the results to include other groups or culture.
Content analysis. Content analysis involves the examination of contents to identify
patterns, themes, and biases (Leedy & Ormrod, 2005). Content analysis is the set of methods for
analyzing the symbolic content of any communications (Singleton & Straits, 2005). Data can be
obtained from many types of resources such as documents, videos, previous research, and
photographs among other forms of communication. Structures or patterns in these forms of
communication are recognized and various inferences are made in regard to them. The advantage
to this method is that the researcher has a method to quantify the contents of a qualitative text.
Observations such as frequency of words or change of frequency of words can be used to
quantify the contents. The main disadvantage is researcher bias by seeking information to
support one’s ideas and disregarding relative data (Myers, 2009). A thorough analysis of the data
collected will determine if the researcher exhibited any bias. Due to the form of data collection in
content analysis, this method may be very time consuming and laborious (Thomas, 2003).
Grounded theory. Grounded theory derives a theory from data collected in a natural
setting focusing on a process such as human actions and interactions and not from research
literature (Leedy & Ormrod, 2005). A process is studied and a theory is developed in regard to
the process. Grounded theory does not test a set of hypothesis; the hypothesis is derived from the
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grounded theory research (Myers, 2009). Grounded theory encourages systematic and detailed
analysis of data, encourages relationship between data and analysis, and it useful for describing
repeated processes. The main disadvantage to grounded theory lies in the inability of a researcher
to step back and analyze the situation on a broader scale and avoid getting too involved in detail
and coding.
Although these research designs are listed separately, the designs are not mutually
exclusive. A study may contain elements of any number of designs.
Determination of Research Methods
High response rates associated with interviews demonstrated it as a useful method of
research (Singleton & Straits, 2005). The appeal of being interviewed proved beneficial in regard
to interviewing business executives. Flexibility in redirecting questioning based on interviewee
responses helped in gathering information. Interviewing has been undertaken in the past when
eliciting information in similar circumstances (McCabe, 1999).
Summary
A definition of CSR was developed based on Dahlsrud (2006), who described CSR as
composed of five dimensions: social, environmental, economical, stakeholder, and voluntary.
Benefits of implementing a CSR program were explained (Cegarra-Navarro & MartinezMartinez, 2009; Maruffi et al., 2013; Zaharia and Zaharia, 2013). An index that can be used to
determine the effects of CSR programs was developed by Chen, Tang, and Hung (2013).
The section on CSR programs in MNEs included several studies completed on MNEs.
DuPont was recognized as one of the first MNEs to initiate a program (Tebo, 2002). Starbucks
has become one of the most exemplary corporations in regard to CSR policy (Katrinli et al.,
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2011). Examples of other MNEs included Royal Dutch Shell (Ekatah et al., 2011), Newmont
Mining (Haymon, 2008), Unilever, ING, and Heineken (Kreijzers, 2003).
Most studies on CSR programs in SMEs have taken place outside the United States
(Barabel & Meier, 2010; Kechiche & Soparnot, 2012; Turyakira et al., 2012). Implementation of
CSR programs in foreign countries has proved beneficial to those companies (Inyang, 2013a)
and has, in situations such as supply chain management, become a necessity (Freisblen, 2011).
Leadership studies include those associated with transactional and transformational
theory (Popper & Lipshitz, 1993) and relational models theory (Giessner & Quaquebeke, 2011).
Transactional leadership is a need-based form of leadership where followers are rewarded for
their efforts. Transformational leaders are perceived as motivational leaders. Relational models
theory relies on four relationships: communal sharing, authority ranking, equality matching, and
market pricing. The transformational leader tends to be the best type of leader to be associated
with CSR policies (Du et al., 2013).
Several research methods were described: survey, experimental, casual-comparative, case
study, historical, correlational, developmental, grounded theory, ethnography, and action
methodologies (Ellis & Levy, 2009). The current study was qualitative and employed
interviewing (Myers, 2009).
The literature review established a need to research CSR programs in MEs. Benefits of
the programs have been confirmed. Studies of SMEs in Asia, Africa, and Europe have been
conducted and are increasing in number. The lack of research has been in regard to MEs in the
United States. The studies used in this research are predominantly from companies located
outside the United States. Many of the studies included in this literature review call for further
study of CSRs in SMEs and in particular for companies located in the United States (Barabel &
54
Meier, 2012; Bennington & Minutolo, 2013; Inyang, 2103a; Jamali, Zanhour, & Keshishian,
2009; Kechiche & Sopranot, 2012; Mouria-Leite & Padgett, 2011). There is a gap in the
research in regard to CSR programs in MEs in the United States. This study will contribute to the
research in this area. Chapter 3 will present the research methodology used in the study:
instrumentation, data collection and analysis, validity and credibility, and protection of human
subjects.
CHAPTER THREE
METHODOLOGY
Introduction
The purpose of this case study was to explore business executives’ perceptions of CSR
programs in MEs. Data collection was based on individual interviews, which were recorded,
transcribed, and coded. The remainder of this chapter describes the research design and methods.
Design
This qualitative study employed exploratory research, appropriate when a particular
subject needs to be studied in depth, where the topic is new, and/or where little research has been
conducted (Myers, 2009). An emphasis is placed on exploration, discovery, and description
(Bloomberg & Volpe, 2008). Peshkin (1993) notes four purposes of qualitative studies:
description, interpretation, verification, and evaluation. Description can reveal the nature of
certain phenomena through situations, settings, processes, and relationships. Interpretation
allows a researcher to gain new insights into a particular phenomenon, develop new concepts, or
discover problems within a phenomenon. Verification allows a researcher to test the validity of
assumptions, claims, theories, or generalizations within real world concepts. Evaluation provides
a means to judge the effectiveness of particular policies, practices, or innovations. These can and
do overlap.
Qualitative research consists of four acts: asking, witnessing, interpreting, and knowing
(Stein & Mankowski, 2004). The act of asking focuses on identifying and enlisting the
participants who will be the focus of the study. Witnessing allows one to listen and affirm the
experiences of the participants. The act of interpreting involves analyzing and transforming the
56
experiences and participant’s knowledge into a practical form for others to understand.
Knowledge gained from the research is then made publicly accessible for other to understand and
learn. The researcher identified ME executives as participants. The interview provided a forum
for the researcher to ask questions and listen to the executives’ answers communicating their
experiences. The experiences were then analyzed and various conclusions drawn from them.
Lastly, the responses can be put into a form for others to access and learn.
Research design is the strategy used to perform research. Common forms of research
design include case study, ethnography, phenomenological study, grounded theory study, and
content analysis (Leedy & Ormrod, 2005). The determination of which research design to use is
a function of the research problem, purpose, and question (Bloomberg & Volpe, 2008). A
phenomenological study attempts to understand people’s perceptions, perspectives, and
understandings of a particular situation (Leedy & Ormrod, 2005). For this reason, a
phenomenological study was appropriate when researching CSR programs in MEs. This study
explored executives’ perceptions and perspectives in regard to CSR programs or lack of
programs at their institutions. A phenomenological study normally depends on interviews in
order to collect data from the participants. An important aspect of this type of study and data
collection is for the researcher to set aside preconceived beliefs, known as bracketing, that in turn
allows for a more accurate and precise description of the phenomenon (Lambert & Lambert,
2010). Bracketing provides the research with rigor and trustworthiness, thereby decreasing the
chance for researcher bias (Connelly, 2010).
Other methods were considered. Quantitative methodology largely focuses on
measurements and amounts (Thomas, 2003) and tends to examine a situation as it is (Leedy &
Ormrod, 2005). Much of the information collected in quantitative research can be summarized
57
through statistical analysis. Methods of data collection include observation, correlational
research, survey research, and interviews. In this study of CSR programs in MEs, quantitative
methodology would not have provided as rigorous results as did qualitative methodology.
Qualitative methodology provided the researcher with a more open forum to ask questions to
determine the reasons for and against the implementation of CSR programs. Questions were
developed in response to answers given by participants. Quantitative methodology is limited in
this area. Answers are either analyzed through collection methods such as a Likert scale or openended questions. While useful, the questions in both situations are predetermined. Qualitative
methodology provided both the researcher and participant with more detailed data to analyze.
Target Population
A target population is any well-defined group a researcher wants to study (Singleton &
Straits, 2005). The target population for the current study consisted of business executives from
MEs, defined as businesses that have revenues between $10 million dollars and $1 billion dollars
(“The Mighty Middle,” 2012). Business executives are the motivating force in implementing and
sustaining CSR programs (Kemp, 2010; Godos-díez, Fernández-gago, & Martínez-campillo,
2011; Leavy, 2012). Executives in SMEs tend to be influenced personally by CSR activities
(Graafland, J., & Mazereeuw-Van der, 2012; Dincer & Dincer, 2103; Thorton & Byrd, 2013).
These two characteristics of business executives provided the basis for defining them as the
target population for this study. The researcher resides in the Northeast Ohio region and
therefore the executives were chosen from companies in that area. They held the position of vice
president or director, or were directly involved with their company’s CSR program. Companies
included some that had a CSR program and some that did not.
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Sampling Procedure
The researcher used a form of nonprobability sampling, purposeful sampling.
Nonprobability sampling uses forms of case selection other than random sampling, whereas
probability sampling uses random forms of sampling (Singleton & Straits, 2005). Purposeful
sampling allowed the researcher to choose participants that are representative of the population
being studied. Important sources of variation in the population are identified then a sample is
selected that reflects this variation. In this study, business executives in MEs represented the
population and from that population a sample of nine executives was chosen. Purposeful
sampling ensures the researcher obtains data from appropriate resources (Bloomberg & Volpe,
2008). This type of purposeful sampling can be further labeled homogeneous purposeful
sampling, where the subgroup shares distinctive characteristics, business executives in SMEs
(Creswell & Clark, 2007). Three weaknesses can be identified with nonprobability sampling:
bias, variability prediction, and knowledge of participants. The researcher can exhibit bias in the
selection process since there is no control to lessen or prevent bias as in probability sampling.
Patterns of variability cannot be predicted as in probability sampling therefore making it
impossible to calculate sampling error or estimate sample precision. The selection of cases also
requires significant knowledge of the population to ensure the proper selection is realized. The
researcher’s knowledge of Northeast Ohio businesses helped mitigate bias and lack of
knowledge of the population. The sample size of nine executives fell within the acceptable range
of a sample size (Leedy & Ormrod, 2005).
59
Instrumentation
Instrumentation is critical in qualitative research particularly in regard to the use of openended questions (Sofaer, 2002). The development of open-ended questions must not allow
questions to transform into closed-ended question that tend to derive yes and no answers. A pilot
study was initiated to test the validity of the interview question. Pilot studies allow the researcher
to perform a trial study (Chenail, 2011).
Measurement Instrument
The instrument used in this study consisted of qualitative interview questions. An
interview can be unstructured, semistructured, or structured. A semistructured interview
provided the interviewer with a specific set of questions to ask while also providing flexibility
and freedom to the interviewer to alter questions based on answers to previous responses
(Singleton & Straits, 2005). The specific questions for the interview were developed from
research conducted on the topic of CSR. Open-ended questions were used to gather as much
information as necessary in regard to the research questions. The open-ended questions had been
prepared in advance. Table 1 shows the relationship between the study’s research questions and
interview questions.
60
Table 1
Interview Questions
______________________________________________________________________________
Research questions
Interview questions
______________________________________________________________________________
1. What type of CSR programs exist in
1. What is your definition of a CSR
MEs?
program?
2. In what form does this type of program
exist in your company?
3. For what reason did your company
implement a CSR program?
4. In what aspects do the reasons for
sustaining the program differ from the
reasons for implementing the program?
5. If your company does not have a CSR
program; what is the reason?
2. What type of impacts do executives of
MEs believe CSR programs can have on
their companies?
6. How has the implementation of a CSR
program helped or hurt the company in
regard to stakeholder issues?
7. How has the implementation of a CSR
program helped or hurt the company in
regard to reputation?
8. For what reasons would you recommend
or discourage other executives from
implementing a CSR program?
______________________________________________________________________________
Pilot Study
A pilot study was implemented to test the interview questions. A pilot study allowed the
researcher to address bias and instrumentation (Chenail, 2011). The researcher had the
opportunity to administer questions in the same way as the main study, ask participants for
feedback to identify difficult questions, record time to administer interview, discard all
unnecessary questions, and reword or rescale any questions that were not answered. The two
participants were comparable to the executives used in the final study. The professionals were
61
familiar with the researcher’s objective in the study and able to provide significant input about
the validity of the questions.
Data Collection
This qualitative study used interviews. This type of survey has certain advantages. The
interviewer can elicit fuller responses, which may provide more accurate responses, and
questions can be added or deleted based on the responses (Singleton & Straits, 2005). Interviews
help the interviewer develop a rapport with the interviewee and further gain the interviewee’s
cooperation. Face-to-face interviews have the highest response rates in survey research (Leedy &
Ormrod, 2005). Phone interviews were used when face-to-face interviews were deemed too
difficult to schedule. Phone interviews produce rich and productive results and have many of the
same advantages as face-to-face interviews (Chapple, 1999; Novick, 2008; Sturges & Hanrahan,
2004).
Various tools and methods were used to assist with the data collection. Purposeful
sampling allowed the researcher to choose the correct representation sample, ME executives.
Initially, the sample size was limited to seven executives. The sample size amount was adjusted
as the research was conducted. A specific set of interview questions were developed to assist
with the progress of the interview. These questions were used to initiate participant response and
prompt follow-up questions and answers. The interviewer, with the permission of the
interviewee, recorded the conversation. A time limit of one hour was designated as time frame of
the interview. After the completion of the pilot study, certain variables were adjusted to improve
the data collection process. Sample size, recording methods, initial question type and amount,
and time were adjusted.
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Data Analysis
The researcher used four-step phenomenological data analysis (Creswell, 1998).
Interview Analysis
A series of predetermined questions were used in the interviews, with supplementary
questions being developed during the interview. After completion of the interviews, the
researcher employed phenomenological data analysis involving four steps: organize the data,
peruse the data several times, identify general categories and themes, and summarize the data
(Creswell, 1998). Organization of the data was accomplished through a computer database. The
data were then examined multiple times to obtain a sense of what it contains. Classification
according to themes or categories was determined and recorded. Finally, the analysis findings
were interpreted, summarized, and transcribed. The first three steps can be described as coding:
tags or labels used for assigning units of meaning to descriptive or inferential information during
a study (Miles & Huberman, 1994). Codes helped reduce the size of the data and are useful in the
retrieval and organization of the data that in turn can speed up analysis. The steps for coding in
this research incorporated the following:

Identify data to be analyzed. In this study, it was the data collected during the interviews.

Identify any themes from the data. Build codebooks which organized the codes into lists.

Mark the area from which the data was collected with the applicable code. Construction
of models relating how the various themes and concepts are linked to each other.

Test the model on a different set of data (Ryan & Bernard, 2000).
Validity and Credibility
Validity takes two forms, internal validity and external validity (Leedy & Ormrod, 2005).
Internal validity is concerned with the extent of the research design and the data yielded from the
63
design, which allows accurate conclusions to be drawn about relationships within the data.
External validity is the extent the results of the study can apply in situations beyond the study.
Validity in qualitative research uses different terminology than that used in quantitative research.
Many qualitative researchers have replaced the term validity and introduced the term credibility
in qualitative research (Bloomberg & Volpe, 2008). Credibility confirms that the researcher has
accurately represented what the participants feel, think, and do. The perceptions of the
participant match the researcher’s portrayal; the research matches the world being described
(Bloomberg & Volpe). Qualitative researchers use various strategies to support the credibility of
research: triangulation, extensive time in the field, negative case analysis, feedback from others,
and respondent validation (Leedy & Ormrod, 2005). A common concern in the area of credibility
is researcher bias (Roberts & Priest, 2006). The admission of the potential for researcher bias is
seen as an approach to minimize the problem of bias. An honest attitude resonates well with
readers (Bloomberg & Volpe). Disconfirming evidence, that which presents a perspective
contrary to existing evidence, is presented whenever possible. The reporting of disconfirming
evidence confirms the accuracy of data analysis because in real life divergence of information is
expected and not all information may be positive and collaborate other evidence (Creswell &
Clark, 2007). In addition to these methods of ensuring credibility, the researcher had the
interview participants review the findings to determine if the ideas and perspectives of the
interviewees were adequately captured.
Triangulation
Triangulation is a strategy used to ensure internal validity (Leedy & Ormrod, 2005). This
method is common in qualitative research. Data were collected from multiple sources with the
64
expectation that the results of the various methods of collection will converge to support a
particular theory. In addition to interviews, the researcher analyzed social media and company
websites to compare interview answers with data presented on these sites. References to CSR
and terms related to the topic were observed and analyzed. Similarities and differences to
interviewee responses were noted and analyzed. Support for conclusions drawn from the
interviews can be shown to converge or diverge from data obtained through the social media and
company websites.
Protection of Human Participants
The researcher took precautions in regard to the protection of human participants. Human
participants should be guaranteed a right to privacy. The participants should be able to decide
when, where, to whom, and to what extent their attitudes, beliefs, and behavior will be revealed
(Singleton & Straits, 2005). The right to privacy was protected by guaranteeing anonymity and
confidentiality. These guarantees has been ensured through the use of the following methods.
Approval of the study through an Institutional Review Board (IRB) was sought. An IRB
ensures that all scientific research in the study will be conducted in a manner that is ethically
sound (Khalid & Saleem, 2011). The IRB subjected the proposed study to rules and regulations
to determine the extent to which the study was being undertaken in an ethically sound manner.
Anonymity for the interview section of the research was assured by not referencing the
specific name of the institutions. The geographical location of the participants has been revealed
but not to the extent as to identify exact locations of the businesses. Interviewees’ anonymity was
assured by not citing references to a particular interviewee by name or company name. Any data
collected with personnel information attached were destroyed when determined feasible. The
65
researcher sought informed consent of participants. Written consent was sought from the
interviewees to ensure their understanding of the nature of the study.
Summary
Chapter 3 described the methodology used in a study of CSR programs in MEs. Data
collection was based on semistructured interviews with a purposeful sample of nine executives
from MEs located in Northeast Ohio. Data were analyzed by identifying statements related to the
topic, grouping statements into meaning units, seeking divergent perspectives, and constructing a
composite. External and internal validity was enhanced by use of purposeful sampling.
Protection of human participants was enhanced through IRB review, informed consent, and
anonymity. Chapter 4 describes the results of the pilot and main studies and provided an analysis
of the results.
CHAPTER FOUR
RESULTS
Introduction
The purpose of the study was to explore business executives’ perceptions of CSR
programs in MEs. Participants were chosen from companies in Northeast Ohio. Two research
questions guided the study:
Question 1: What type of CSR programs exist in MEs?
Question 2: What type of impacts do executives of MEs believe CSR programs can have
on their companies?
Participant Demographics
Table 2 summarizes demographic information for the executives used in the study.
Table 2
Participant Demographics
______________________________________________________________________________
Demographic
Characteristic
______________________________________________________________________________
Location
Northeast Ohio
Participant title
Vice president, director or direct
responsibility for CSR program
Company size
Medium-sized, $10 million to $1 billion in
revenue (“The Mighty Middle,” 2012)
Business sector
Manufacturing and service sectors
Type of ownership
Privately held or publicly traded
______________________________________________________________________________
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Variations in Research Methodology
Deviations from the original research design where undertaken to allow for discrepancies
encountered during the study. The sample size initially was to consist of seven executives, which
fell within the acceptable range of a sample size (Leedy & Ormrod, 2005), but was expanded to
nine. Initially, face-to-face interviews were to be used, because the researcher relocated to
another region of the United States, interviews were conducted by telephone. Phone interviews
allowed scheduling changes to be less problematic and easily accommodated the interviewees’
schedules.
Response Rate
Companies were chosen from listings in Crain’s Cleveland Business (“Largest Privately
Held Companies,” 2014) and Hoover’s Business Directory (2015), both of which list companies
in Northeast Ohio based on revenue. Twenty-eight corporations were chosen from the listings.
Personnel associated with CSR programs at 10 corporations did not return calls. Contact with
personnel at these companies was attempted two to three times before contact ceased. Personnel
associated with CSR programs at seven businesses refused interviews. Three of the companies
that refused interviews mentioned company policy as the basis for refusal. The remaining four
companies responded to phone calls but were hesitant to grant interviews. Attempts to set up an
interview were delayed repeatedly and assumed to be a refusal after a period of time. Eleven of
the executives at the contacted businesses agreed to be interviewed. Two interviews were used
for the pilot study and nine interviews were used in the main research.
Pilot Study and Analysis
The first two executives who responded positively to being interviewed were chosen for
the pilot study. Any findings in the pilot study were not used in the analysis of the main research.
68
Both pilot study interviews were completed by phone. Questions were asked in the same manner
as they would be asked in the main study. The interviews were semistructured. Each executive
was asked a set of predetermined questions. As the interview progressed, the interviewees were
asked follow-up, open-ended questions based on their responses. The first executive appeared to
be interested in discussing only one area in the company’s CSR, a fund-raising program for
schools in the area. Further questioning about their CSR program provided little feedback
beyond this program. The interview ended abruptly after 10 minutes. Further investigation into
the company’s website found more CSR programs with which the company was involved. The
second interviewee provided detailed feedback about the company’s CSR program: employee
programs, community programs, and environmental programs. The interviewee spoke of the
program including inception, history, and future initiatives. The duration of the interview was
approximately 40 minutes.
The pilot study provided an adjustment to the method of questioning. During pilot
interviews a direct and strict approach was adopted by the interviewer. A tendency to hurry into
the next question did not allow the participants to fully describe their experiences. An
interviewer needs to be a good listener and avoid commenting (Adams, 2010). A common rule of
good interviewing is to listen more and talk less (Seidman, 2006). A less direct questioning
approach was adopted in the main research. The interviewees were allowed to expound on their
answers, allowing for a more comfortable exchange between interviewer and interviewee. The
appropriate length of time for the interview was determined to be approximately 40 minutes. The
initial questions used in the pilot study were not altered for the main research.
69
Results of Data Analysis
Data collection for the main body of research consisted of 30-40-minute telephone
interviews with nine executives at MEs. Participants signed informed consent forms and were
assured of anonymity. Results are reported according to the study’s research questions.
Research Question 1
Question 1: What type of CSR programs exist in MEs?
Transcripts were subjected to qualitative coding and thematic analysis (Braun & Clarke,
2006; Vaismoradi, Turunen, & Bondas, 2013). Similarities and dissimilarities in responses were
noted. To organize the results, they were classified according to definition, structure, charitable
donations, sustainability, community involvement, and employee initiatives..
Theme 1: Variations in definitions and terminologies used in reference to CSR
programs. The term CSR was not used by any of the participants to label their specific
programs. General terms such as community engagement, community involvement, charitable
contributions, sustainability, and other terms were used as descriptors. Four of the companies
categorized these terms under the labels people, planet, and community; others used the terms
under people and community. People referred to employees, community to the surrounding area
where the business operates, and planet to the surrounding environment. Specifically, employeerelated programs focused on providing employees with needs-based programs such as
educational assistance, health and wellness initiatives, time off for volunteerism, and employee
recognition among others. Planet-based programs referred to recycling, LEED certification,
energy conservation initiatives, and other programs related to the environment. Communitybased programs included charitable organizations, volunteerism, fund-raising events, food bank
support, and diversity-based programs among others. The terms people, community, and planet
70
are slightly different than those used by larger corporations to categorize their CSR programs.
Larger corporations use the term triple bottom line (Glavas & Mish, 2015; Markiewicz, 2015),
which refers to people, planet, and profit. The difference lies in the term community for MEs and
profit for larger enterprises. Larger companies combine the terms people and community into
one term: people. Another difference is the term profit in categorizing CSR programs in large
companies where internal profit for shareholders is included (Markiewicz, 2015). The larger
businesses include the financial benefits for the company and the shareholders in analyzing and
reporting CSR initiatives. MEs focused more on the community and people aspects of their
programs: our people and our communities are our priority, and take care of our people and
others at all levels.
Theme 2: Similarity in structure of CSR departments. All nine executives said their
respective businesses had some form of CSR program. The structure of the programs varied.
Four of the businesses have organized departments, typically one to two persons, to specifically
handle CSR issues, programs, and concerns. Other businesses undertook the handling of CSR
initiatives by incorporating the program responsibilities into departments such as the Human
Resources Department, the Marketing Department, or as an added responsibility of a specific
individual. One company split the responsibilities of maintaining a CSR program into two
departments: one to handle sustainability and investor issues and one to handle charitable giving,
employee programs, educational programs, and other CSR-related activities. MNEs, due to their
formal nature tend to have more formalized, specific departments to handle CSR initiatives with
greater amounts of personnel employed within the department (Baumann-Pauly, Wickert,
Spence, & Scherer, 2013). Accordingly, MNEs tend to publish CSR reports while the MEs tend
71
to lack such reporting. The commonality amongst the MEs was the lack of a formal CSR
department such as those common in larger or multinational companies.
Theme 3: Charitable donation initiatives. Two of the MEs have established charitable
foundations to further emphasize their commitment to CSR in regard to community initiatives.
Charitable foundations are not-for-profit organizations formed to further cultural, educational,
religious, or public service objectives (Bottiglieri et al., 2011). A further benefit of a not-forprofit organization is income tax exempt status that allows the organization to not pay taxes on
income. Donations to the charitable foundations are also tax deductible for the individual or
group making the donation. Charitable foundations are more common in regard to CSR programs
at large companies than at MEs. Larger businesses such as Wells Fargo, General Electric, Bank
of America, Coca-Cola, and Goldman-Sachs (Foundation Center, 2015) have created
foundations such as these. Contributions to these foundations are then used by the foundation to
support charities.
The common theme amongst the MEs, whether those with foundations or not, is that
they are active in contributing to local community charities and local chapters of national and
international charities. The range of charities includes local chapters of the American Cancer
Society, Catholic Charities, and the Epilepsy Foundation among others while local charities
include contributions to the local food banks and homeless shelters. One business practiced what
was referred to as “ghost contributions,” where the company instructed the charity to not
recognize the company publically for its donations. Another company’s owner proclaimed a
belief in tithing. Tithing’s foundation is in the Bible where 10% of income is donated to God;
“Be sure to set aside a tenth of all that your fields produce each year (Deuteronomy 14:21-23)
also “But remember the Lord your God, for it is He who gives you the ability to produce wealth,
72
and so confirms his covenant which He swore to your forefathers, as it is today (Deuteronomy
8:18). The 10% donation is given to various church ministries to promote religious beliefs.
Theme 4: Sustainability initiatives. Another difference between the medium-sized
enterprise CSR programs and that of larger corporations is the emphasis on sustainability.
Sustainability has been defined as the capacity to meet the needs of the present without
compromising those of future generations (World Commission on Environment and
Development, 1987). The emphasis of sustainability initiatives has been on environmental issues
such as energy conservation, recycling, and waste management (Cassells & Lewis, 2010). Larger
corporations are more invested in sustainability programs than MEs (Hashmi, Damanhouri, &
Rana, 2015). Executives interviewed appeared more interested in providing information on
programs such as volunteerism and charitable contributions. The commonality of the lack of
significant sustainability programs was noticeable in the MEs both in previous research (Cassells
& Lewis) and in this study. Most companies had some form of a sustainability program but it
was not emphasized as much as the employee and community initiatives. Companies operating
in the manufacturing industry were more apt to have a sustainability program. Manufacturing
companies have more opportunity for recycling and energy conservation programs. The
operation of a sustainability program is more beneficial in manufacturing than as in a servicerelated industry.
Theme 5: Direct community involvement. The community involvement initiatives of
MEs involved direct involvement with the local community where the company was located. All
of the executives interviewed mentioned direct involvement in local schools and the educational
process as a CSR initiative. Students were either brought to the businesses for tours and
educational sessions or employees were sent to schools to educate students about their respective
73
fields. Two of the businesses’ participation are so embedded in local education that their
involvement is an ongoing part of the curriculum whereas employees teach classes on a regular
basis. Educational involvement also included many companies sponsoring scholarships, grants,
and internships at their companies. One company, by their charter, must donate at least 50% of
their donations for educational purposes. Madden, Scaife, and Crissman (2006) found that SME
businesses operate in the community and many of the employees may also live in the community
thereby making it a crucial investment for the company. Executives and their employees feel
there is a need to give back to the community; there is a responsibility to be a good corporate
citizen.
Financial support was also prevalent in many of the companies in regard to the local
community. Donations were given to community organizations which supported recreational,
cultural, and arts initiatives such as local museums, park districts, cultural and arts organizations,
and the local events and activities sponsored by these organizations. Local sponsorship of events
such as fitness runs, walks, and bicycle rides are provided by many of the companies. These
events are used as fund raisers for local charities. Mowen, Kyle, and Jackowski (2007) found that
the majority of respondents to their survey supported corporate sponsorship of parks and
recreational agencies although a preference was made to sponsorship by local businesses as
opposed to national or international corporations.
Theme 6: Employee initiatives. Employees of the companies involved in this study
were recipients of benefits of the corporate responsibility programs at their companies. Health
and wellness programs were offered at all of the companies, with one company having onsite
health care. Wellness programs create healthy employees and provide cost savings for the
company (Lowe, 2014). The executives interviewed believed a wellness program provided the
74
company with a healthy employee which reduced employee absenteeism, reduced health costs to
both the individual and the company, and created a better working atmosphere. Financial
incentives were provided to employees who participated in the wellness programs. Financial
incentives are common at companies that offer wellness programs (O’Reilly, 2015). Employee
contributions to medical insurance coverage costs can be reduced through the programs.
Companies are known to offer reduced insurance costs to their employees with enrollment in
smoking cessation programs, attendance at fitness classes, and improving medical standards such
as cholesterol levels, blood pressure levels, glucose levels, and other medical standards.
Educational assistance is offered at all of the businesses. Assistance is provided along all
aspects of education. Businesses provided financial support to employees to earn a GED and/or a
college degree. Continuous education courses which help employees develop specific skill sets,
particularly in relation to their jobs at the company, were offered either internally through the
company or through an outside academic source. Manchester (2010) found that employee
retention is increased through tuition reimbursement programs. Although some companies
require a reimbursement service requirement, Manchester found that a complimentary
relationship exists between employer and employee. An advancement of the skills of employees
is complimented by the usage of those increased skills to boost productivity in the company.
Employee volunteerism was prevalent at all but one of the businesses. Many of the
volunteer initiatives involved efforts related to the charities the companies funded. Charities in
which employees were actively involved as volunteers were usually given preferential treatment
in regard to donations. One company donates at least 80% of its donations to employee involved
organizations while another company offers $500 to $1000 to each charity that an employee is
involved in. Another business allowed its employees to take company funded mission trips and
75
to be paid for the time spent on the mission trip. Four of the MEs offer paid time off to
employees to participate in volunteer work. One company allowed 10 paid days off. Employee
involvement was an important initiative at all companies. Responses such as keep employees
happy, healthy, and engaged and creating goodwill, employee retention and attraction were
mentioned by executives when describing the benefits of employee programs. Volunteerism
amongst employee has created a sense of self-integrity (Brockner, Senior, & Welch, 2014). Selfintegrity is a perception of one’s self-esteem, sense of identity, and sense of control (Steele,
1988). Correspondingly, people need to see themselves as competent and good, of being
coherent and stable, and capable of influencing important outcomes. Brockner, Senior, and
Welch (2014) suggest that the sense of self-integrity creates a commitment to the organization.
This relationship of employee and company to each other is enhanced by the volunteerism
initiatives. A similar situation exists as that which was created by the educational assistance
program. Manchester (2014) described this as complimentary relationship between business and
its employees. This relationship is experienced by the companies involved in the interviews and
their employees.
Summary. A similarity in the responses from the executives resulted in emergence of
certain themes:
Question 1: What type of CSR programs exist in MEs?
Similarities were noted in the responses which provided categorization into the following
themes: definition of CSR, departmental structure of the company’s CSR program, charitable
donation initiatives, sustainability initiatives, direct community involvement, and employee
initiatives. Table 3 provides a summary and categorization of the executives’ responses.
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Table 3
Research Question One - Emerging Themes
_________________________________________________________________________
Theme
Similarities
______________________________________________________________________
Theme 1 – Definition of CSR
Shared definition of people and community as
primary stakeholders
People – Employees
Community – Surrounding area where
business is conducted
Theme 2 – Departmental structure
CSR program initiatives administered by one
to two people in dedicated roles or
incorporated into Human Resources or
Marketing Departments
Theme 3 – Charitable donation initiatives
Emphasis in giving is placed on local charities
as opposed to international and national
charities
Theme 4 – Sustainability
People and community initiatives are given
priority over environmental initiatives
Theme 5 – Direct community involvement
Direct involvement through volunteerism in
local schools and educational processes and
indirect involvement through donations to
community organizations
Theme 6 – Employee initiatives
Health and wellness programs, volunteerism
programs, and matching donation initiatives
______________________________________________________________________________
The interviewees were initially questioned about the types of CSR programs at their
businesses. After the details of the programs were identified and the interviews progressed, the
interviewees were questioned about the impact their CSR program had on their company and its
stakeholders.
Research Question Two
Question 2: What type of impacts do executives of MEs believe CSR programs can have
on their companies?
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Through the use of qualitative coding and thematic analysis, categorization of results of
the interviews in regard to research question two were obtained. Similarities in the responses
were noted. To organize the results and allow a more complete analysis of the data, the results of
research question two were classified into the following categories: executive welfare, employee
welfare, financial benefits, supply chain relationships, sustainability, and the future of CSR.
Theme 1: Executive involvement in CSR programs. All executives interviewed were
directly involved with the CSR programs at their enterprises. Executive involvement included
volunteerism and charitable donation decision making in regard to amounts of donations and
charities to which the donations are rendered. Graafland and van der Mazereeuw (2012) found
that executives in companies considered to be SMEs tend to personally influence CSR activities
and that the motivation for CSR initiatives is higher when the owner and/or executives of the
company are directly involved. Their personal values and beliefs are an important motivating
factor in CSR programs in SMEs. There was a perception by interviewees that CSR is an ethical
duty and there is a need to contribute to the common good and to do the right thing. The value
and belief system of the executives are influenced by many factors: personal feelings, financial
conditions, friends and family, and religion beliefs (Dincer & Dincer, 2013). Ninety-five percent
of the respondents in Dincer and Dincer’s survey indicated that family and friends were a
significant factor when making CSR decisions. In research conducted by Thornton and Byrd
(2013), owners the CEOs of the companies described themselves as CSR champions. As with the
research conducted by Dincer and Dincer, the executives cited family and friends as influential
sources in the CSR decision-making process. As with this study, the executives commented CSR
initiatives were the right thing to do and the company should give back to the community.
Owners of three privately owned businesses interviewed in this study required some form of
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CSR program to be functioning at the company’s inception. The three owners had been involved
in corporate programs or charitable organizations before starting their businesses. All executives
interviewed not only are involved in their own companies CSR programs but also sit on boards
of various charities and cultural organizations throughout Northeast Ohio. Three of the
executives extended an offer of volunteering their expertise in this area to other executives, if
known to the interviewer, interested in implementing a CSR program.
Theme 2: Employee welfare. Seven of the executives interviewed mentioned satisfied
and engaged employees being important to the success of a company. The executives used such
terms as job satisfaction, organizational commitment, and employee retention to describe the
benefit of employee involvement particularly in regard to volunteerism and health benefits. One
executive described their CSR program as the most important retention tool the company
possesses. Health and wellness programs were of particular interest to employees. These
programs provide health benefits in various forms such as educational programs and discounted
medical contributions to employees for their involvement. One employer offers free medical,
eye, and dental coverage. Volunteer programs and the volunteerism of employees and leadership
was highly recognized by all nine interviewees during the interviews. Types of volunteer
initiatives were described, and all interviewees took considerable pride in the accomplishments
of their companies and the time spent in volunteer programs. Previous research has presented
similar results as those indicated in this research, involvement by employees in their companies’
CSR programs have a positive, significant impact on job satisfaction, organizational
involvement, and employee retention. Mozes, Josman, and Yaniv (2011) studied differences in
organizational identification, job satisfaction, volunteering, and motivation between employees
participating and those not participating in CSR initiatives. Organizational identity and
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motivation were considered higher among participants in CSR initiatives. Vlachos,
Panagopoulos, and Rapp (2013) found that employee job satisfaction increased a result of CSR
involvement. Managing stakeholder issues has a direct effect on how employees perform their
jobs and if they are satisfied the company they are working for is doing so. You, Huang, Liu, Un,
Lin, and Tseng (2013) found increased job satisfaction and organizational commitment as a
result of CSR initiatives. Employees feel proud of their company’s commitment to CSR and will
then bring a positive influence to their work attitude and enhance their commitment to the
company.
Theme 3: Financial benefits. All of the executives indicated that they do not try to
correlate their CSR program to financial performance or increased revenues. No performance
indicators are used to determine if the relationship exists. The executives said that their CSR
program was established and maintained because it was considered the right thing to do. One
executive believed that the CSR program at their company was a source of financial gain, though
no evidence of the gain could be quantified. Another executive assumed that the return and
increased number of customers are the source of increased sales and the involvement of their
initiatives in the community may have been a contributing factor, also implied but not quantified.
Interviewees would not attest to previous research findings in regard to financial benefits. There
suggests a positive relationship between a business implementing and maintaining a CSR
program and its financial performance. Companies that satisfy stakeholder demand tend to have
higher financial benefits then companies that do not have CSR programs (Berrone, Surroca, &
Tribó, 2007; Zali & Sheydayaee, 2013). The CSR programs is the differentiator that sets them
apart from the competition and allows competitive advantage to exist. Porter and Miles (2013)
conducted a study over a 10 year period between companies with and without CSR programs.
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The companies with a CSR program realized a 13.2% increase in profit as compared to the
control group that realized a 7% increase in profit. Companies with a CSR program were 88%
more profitable than those without programs.
Theme 4: Supply chain relationships. Supply chains are defined as the alignment of
firms that bring products or services to market (Näslund & Hulthen, 2012). In the case of the
MEs studied, the supply chain consists of vendors supplying materials and services to the
businesses and customers who purchase the goods or services offered by the enterprise. At the
time of the interview, executives stated that a presence of a CSR program was not a requirement
of business to their suppliers while one executive stated that a business customer supplied their
company with a questionnaire regarding CSR initiatives. The customer did not require a CSR
program as a requirement to do business. All nine executives thought that a CSR program would
become a requirement of suppliers in the future. Many of the events, in particular athletic
participation events such as runs, walks, and bicycling events sponsored by the companies had
participation of the companies’ vendors and customers. The companies had asked for
participation of vendors and customers while some supply chain members volunteered to
participate or be involved in the events in other capacities thereby creating a sense of goodwill
throughout the supply chain.
Theme 5: Sustainability initiatives. Sustainability was earlier defined as the capacity to
meet the needs of the present without compromising those of future generations (World
Commission on Environment and Development, 1987). In this study, sustainability represented
the CSR initiatives implemented by the company in regard to recycling and energy conservation.
Two outcomes were recognized by the implementation of a sustainability programs: some
financial benefits were recognized and employee participation in the sustainability programs
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established goodwill between the company and their employees and provided the employees
with a sense of accomplishment, gratification, and empowerment. Employees working for and
involved in their company’s sustainability programs have created a sense of well-being for
employees (Harvey, Bosco, & Gregory, 2010; Lamm, Tosti-kharas, & King, 2015). The MEs
consisted of manufacturing and service oriented businesses. All businesses had sustainability
programs with the service-oriented businesses employing recycling programs and the
manufacturing businesses using both energy conservations and recycling programs. A
manufacturing facility tends to have more to benefit from these types of programs since energy
usage is a major factor in their processes and waste generation tends to be greater than in service
industries. Manufacturing businesses realized savings through energy conservation programs
such as LEED certification, use of natural lighting, zero landfill initiatives, responsible car use,
fluid recycling, and other green initiatives. Recycling materials such as paper, cardboard, metals,
plastics, and other waste materials reduced landfill usage and therefore landfill fees and waste
removal. A financial savings is realized through these initiatives. Service industries tended to use
recycling initiatives such as paper, cardboard, plastics, and glass. One service sector company
did seek and receive LEED certification.
Theme 6: Future of CSR programs. Every executive interviewed stated that the CSR
programs at their companies would be expanded. A need for a specific department is understood
to be necessary for future expansion of CSR initiatives. Companies without personnel directly
responsible for the CSR initiatives anticipate that with an expansion of activities it will be
necessary to have a person or persons be responsible for the CSR department. Personnel whose
responsibilities are only with CSR initiatives will allow increased communication especially with
stakeholders such as employees and community organizations. Executives understand that
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customers will be requesting their suppliers to prove commitment to CSR initiatives and CSR
programs. Many large companies have already initiated this practice and require their suppliers
and vendors to report CSR initiatives to them (Inyang, 2013b). Interviewees anticipate the same
undertaking with their vendors, requiring proof of a CSR program or at least of some CSR-type
program. The executives plan to expand programs further into the community involving
increased interaction with the surrounding communities and increased commitment with
programs involving volunteer efforts by their employees. One company plans to initiate a
program whereby the company will be directly involved with a local suburban community. The
goal is to use the business’ CSR tools to further expand the community’s initiatives in serving
their constituents. The business anticipates assisting the community with programs such as
recycling, area clean ups, volunteerism at local charity chapters and community events among
others. One executive responded to future initiatives as being as yet undetermined emphasizing
that we find our path by walking it.
Summary. In summary, the commonality of responses resulted in emergence of certain
themes in regard to research question 2:
Question 2: What type of impacts do executives of MEs believe CSR programs can have
on their companies?
Similarities were noted in the responses which provided categorization into the following
themes: executive welfare, employee welfare, financial benefits, supply chain relationships,
sustainability initiatives, direct community involvement, and employee initiatives. Table 4
provides a summary and categorization of the executives’ responses.
83
Table 4
Research Question Two – Emerging Themes
______________________________________________________________________________
Theme
Similarities
______________________________________________________________________________
Theme 1 – Executive
involvement
Directly involved in CSR
program, influences type of
programs and donations to
charities, participate in
volunteer initiatives.
Theme 2 – Employee welfare
Increased employee goodwill,
retention, and attraction.
Theme 3 – Financial benefits
Effect of CSR program on
revenues not tracked.
Theme 4 – Supply chain
Customers not requiring proof
relationships
of CSR initiatives at eight of
the companies.
All companies are not requiring
CSR programs at their
suppliers.
Theme 5 – Sustainability
All businesses have
initiatives
sustainability programs.
Financial savings in regard to
sustainability initiatives at all
companies.
Theme 6 – Future of CSR
All executives will expand and
programs
formalize CSR programs at
their companies.
Increase exposure of programs
into communities.
______________________________________________________________________________
Triangulation and Convergence of Findings
Triangulation allows a researcher to obtain different perspectives on the same issue
(Walsh, 2013). This creates an increase in confidence in the findings, improves the quality of the
findings, and ensures internal validity. In this study, triangulation was accomplished through the
use of social media and company websites. Companies use social media such as Facebook,
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Twitter, and Instagram to distribute information to stakeholders and to a lesser degree as
information gathering centers through the use of interactive tools (Peterson, 2014; Sriramesh,
Rivera-Sánchez, & Soriano, 2013).
Company Websites
A company’s website allows the company to develop a closer relationship with customers
(Sinkovics, & Penz, 2005). Companies can expand globally through their websites and at lower
costs, as opposed to physical expansion, that can be costly. Information can be directed to
stakeholder groups, customers, investors, and the media through the company’s website. A
company can distribute information without interference from outside sources such as media
outlets and has control over the information it displays (Pollach, 2011).
All nine companies involved in the study had websites. Each website contained
information that supported the data collected during the interviews. One company offered limited
information on their CSR activities through the company’s website. This business had only
recently initiated any CSR initiatives but offered limited information on safety and
environmental programs. The remaining companies all offered specific and detailed material
about their CSR programs. Company websites contained links and tabs labeled in similar manner
as those labeled by executives in their interviews. Terms such as community engagement,
community outreach, philanthropy, community involvement, charitable contributions,
volunteerism, and sustainability were used as headings for the CSR initiatives. Many initiatives
listed by the executives were restated on the company websites. The websites provided more
detailed information about initiatives than offered by the executives. Information such as
volunteer hours, sponsored events and schedules, identities of charities beyond those listed by
executives, and sustainability initiatives. Emphasis as to why the business implemented and
85
maintained the programs was detailed. The websites supported the information stated by the
executives thereby ensuring the validity of the data gathered during the interviews.
Facebook
Facebook is a social network website. The general public uses it as a communication tool.
Blogs, messages, photos, and other information are shared among members to create and expand
social relationships (Kim, Kim, & Nam, 2014). Businesses have expanded the original use to
include Facebook as a public relations tool (Wright & Hinson, 2009). Businesses can use blogs
and message boards to receive feedback from the public and consumers about their products and
services. A Facebook page provides a more honest feedback since it is a direct method of
communication between the company and the public. Third parties such as marketing groups,
advertising companies, and media outlets are bypassed.
The social media website Facebook was used to ensure validity of the data. Two of the
businesses involved in the study did not have a Facebook page. The remaining companies used
Facebook to communicate with stakeholders. Information on the Facebook pages tended to
provide less detail than that given by the executives during their interviews or the information
provided on the company’s website. All companies involved in the study placed more emphasis
on employee, community, and charitable initiatives. Entries in the Facebook page were found to
be of a social nature. Many entries contained pictures of employees volunteering at community
or charity events. Employee recognition in regard to awards and achievements was also
highlighted. Little or no mention was made of sustainability efforts. A company’s Facebook page
is used to report positive effects in company image and customer relations (Verheyden, &
Goeman, 2013) and discuss program/services, achievements, and awards (Haigh, Brubaker, &
Whiteside, 2013). These MEs appeared to follow this strategy. Although the Facebook entries
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did not contain as detailed information as the company website, the Facebook entries did support
much of the executives’ data and thereby ensured the validity of the data.
Alternative Interpretations
The purpose of the study was to collect information from business executives to
determine what CSR programs are instituted at businesses of their size and to inform companies
without CSR programs about the importance of having a CSR program. All the MEs represented
had some form of CSR program. After a web search of MEs in Northeast Ohio (“Largest
Privately Held Companies,” 2014), it was found that 22 of the 44 enterprises listed in the revenue
range of $10 million to $1 billion did not have any indication on their website of having a CSR
or CSR-type program. Nine of the websites appear to operate more as a customer portal to obtain
information and purchase company products. These companies have significant revenues without
a CSR program or at least mention of such a program on their websites. Thirteen of the
companies not listing a CSR program were lower revenue earning businesses in Crain’s
Cleveland Business’ list. Businesses not listing a CSR program did have significant revenues in
general but their revenues were not as significant in comparison to businesses listing their CSR
programs.
Summary
The companies involved in this study all have some form of CSR program. These
programs were less structured than at larger companies and were usually administered by a
single individual or by an individual with responsibilities in other areas of the business. Program
initiatives were predominantly concerned with community involvement, charitable initiatives,
and employee volunteerism. Executives at the MEs anticipated further expansion of their CSR
programs in the future.
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The interviewees believe a CSR program provides benefits to their respective companies.
Companies did not include increased revenue when listing benefits although other research has
shown revenue increased with the implementation of a CSR program (Chen et al., 2013;
Goering, 2010). Executives stated that the relationship between revenue outcomes and CSR
initiatives was not tracked. The positive aspects of the CSR program were recognized as feel
good and right thing to do as opposed to financial gains. Executives mentioned employee
retention, employee satisfaction, and potential hiring attraction as significant benefits of the
program.
Company websites and Facebook pages were studied as a supplement to interview
findings. These forms of social media confirmed the interview results, although the information
on the Facebook pages was primarily social and directed at employee intercommunication,
volunteerism, and charity-related programs.
An alternative interpretation was presented. Successful MEs without CSR programs were
found to be financially successful. The financial revenues of the majority of the companies
without CSR programs were less than companies with CSR programs. Chapter 5 will provide an
interpretation and discussion of the results of the study. Limitations and suggestions for future
research will be proposed. The significance of the study will be addressed and a concluding
statement will be presented.
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATIONS
Introduction
The purpose of the study was to collect information from executives at MEs and to
determine what type of CSR programs are instituted at their businesses. The information can
then be used to inform companies without CSR programs about the importance of implementing
and maintaining a CSR program. The benefits, advantages, and disadvantages of CSR programs
have been collected. Interviews were held with executives and personnel from MEs directly
involved with the implementation and maintenance of CSR programs at their companies. Results
of the study were analyzed and similarities and disparities were recognized.
This study takes CSR research beyond the large corporations and into MEs. Research on
CSR has primarily focused on MNEs (Jamali et al., 2015) while research on MEs has been
minimal. Ninety percent of businesses worldwide are SMEs (Inyang, 2013a). The significant
number of businesses and lack of research create a gap in the study of CSR programs in MEs.
Information gathered from the executives of companies with CSR programs was used to study
and determine the effects that a CSR program had on their company. Executives of companies
without CSR program can decide if such a program will be beneficial to their organization. This
study provides a resource for business leaders to make relevant decisions to further their business
objectives and goals. The research provides a significant step in the research of CSR programs in
MEs.
This chapter will present the results gathered from the interviews and present conclusions
based on the interpretation of the interviews. Relationships to previous research findings on CSR
89
programs will be discussed. Recommendations for further research will be suggested. Support
for the significance of the study will be addressed followed by a concluding statement.
Interpretation of Results
Research Question One
Question 1: What type of CSR programs exist in MEs?
The interviewees agreed that a CSR program was vital to their respective enterprises.
CSR programs at MEs do not resemble CSR programs at larger companies. The lack of human
and financial capital place restrictions on the size of the CSR program and the type of initiatives
undertaken. A less structured and organized CSR program results due to lack of human capital at
MEs. Businesses in the revenue range of $10 million to $1 billion do not have the financial
resources to expand their programs beyond the location at which they operate their businesses.
The only initiatives beyond those that are local in which to be actively involved are the national
and international charities and then usually only through monetary contributions. There are
positive aspects to these limitations as well. It allows more emphasis to be placed on the local
communities, local charities, and the company’s employee initiatives. The owner, executives,
and employees can be more actively involved in local initiatives and the initiatives can be and in
many cases are more personal. This was relevant in where the emphasis of the community and
employee initiatives were engaged.
The dissimilarities between CSR programs at the MEs are in where the community and
employee initiatives take place. One company uses recreational activities to promote charitable
and community events, employee wellness, and volunteerism. This is accomplished through
events such as walks, runs, and cycling events. Another company promotes Christian values
through events such as missionary trips and local faith-based interactions. The remaining
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companies use educational programs and grants to local community organizations and charities
as the emphasis of their CSR programs.
CSR initiatives are usually classified into one of three categories: people, community,
and planet. The MEs used in the study tended to place emphasis on people and community and
less emphasis on planet whereby planet refers to sustainability. The nature of the businesses
involved in the study is a factor in the placement of importance. All but two of the companies
were manufacturing companies. Manufacturing companies are inclined to place more emphasis
on recycling and energy conservation due to their extended usage of specific resources related to
recycling and energy consumption. The remaining companies were service related. Although
sustainability measures were implemented at the service related companies, the utilization of
recyclables and energy usage is not as prevalent as that at manufacturing companies.
Research Question Two
Question 2: What type of impact do executives of MEs believe CSR programs can have
on their companies?
Executives stated that a corporate responsibility program has a positive impact on their
companies. The positive impact was realized by the owners, executives, and employees. CSR
initiatives not only created good will throughout the company but is seen as an attraction to hire
better personnel and a tool to keep existing personnel. Through their CSR initiatives, five of the
companies involved in the study received awards for being a model company for which to be
employed by. Although not having a large impact, the executives saw an increased positive
relationship with their supply chain of vendors and customers. This was mostly realized through
the community events where the vendors and customers were involved. Sustainability did not
91
have as much emphasis placed on it but was still an important initiative in the companies’ CSR
program.
Another positive impact of the CSR programs is realized by the surrounding communities
and the people who reside there. The community and charity initiatives undertaken by the
companies through financial contributions and employee volunteerism provide direct positive
support to the communities and create a feeling of goodwill. Educational initiatives provide
secondary school students with an understanding of the involved company’s form of business.
Sponsorship of local cultural, sports, charity, and recreational events creates good will between
the community and the company. Interviewees, through the initiatives of their CSR programs,
placed emphasis on employees and their local communities as primary stakeholders. All
interviewees believed a CSR program was essential to their business and created a positive
impact.
There was a consensus among the executives as to the importance of stakeholder
concerns. The businesses operate on the principle of stakeholder theory; the success of a business
is dependent on the interplay of human, organizational, and physical resources and the concept to
think of themselves as citizens of a society addressing issues related to society and the
environment (Galpin, 2013). The interviewees recognize the companies they represent and
themselves as global citizens; the concept of corporate citizenship. The motivating force behind
corporate citizenship is the decisions and behaviors of people that are employed by the company
(Galpin, 2013). A transition is made from a company behaving intrinsically to one that is
behaving both intrinsically and extrinsically. Coombe (2001) suggests that corporate citizenship
is a growth in company culture. A shift from limited self-interest to an interest in the well-being
of others is realized. Concern for others is the focal point of corporate citizenship. The term
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others being defined as stakeholders. The executives interviewed in this study and the CSR
initiatives implemented by their companies confirm the definition of and motivation behind
corporate citizenship as described Coombe and Galpin.
Implications of Theory
Results of research such as that undertaken here can be used to support, provide partial
support, negate, or offer no support for existing theories (Drotar, 2009). Interesting and valuable
insights can be observed that delve further into associated theoretical relationships (Geletkanycz
& Tepper, 2012). A theoretical framework may emerge from the data collected (Hannagan,
Schneider, & Greenlee, 2012). Multiple theories have been presented and cited during this study.
Relationships between information analyzed in this study and those of existing theories have
been recognized.
CSR - Terminology
Terminology differences regarding CSR programs at large and MEs. For example, triple
bottom line is used to describe CSR. Triple bottom line refers to the concept of people, planet,
and profit in defining CSR programs and the stakeholders the program addresses (Elkington,
1997). Similar terms used in describing triple bottom line are social, environmental, and
economic initiatives (Colbert & Kurucz, 2007). The term, triple bottom line, is prevalent in large
and multinational corporations in describing their programs, 68% of the top 250 global
companies on the Fortune 500 have used such terminology in reporting on their CSR programs
(Colbert & Kurucz). Companies such as Walmart, Home Depot, and Starbucks use triple bottom
line in their CSR reporting (“Who is Corporate Social,” 2009). Large companies tend to use
language of CSR such as triple bottom line. The terminology of the larger companies tend to be
more formalized while MEs prefer less formalized terminology (Roberts, Lawson, & Nicholls,
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2006). MEs and large companies used different terminology in describing their programs
(Vazquez-Carrasco & Lopez-Perez, 2012). MEs tend to be more concerned with the application
of appropriate attitudes and business cultures and are more informal in nature. Larger companies
are more apt to be concerned with issues such as CSR reporting. The reports are present on their
website or maybe submitted to organizations as the United Nations Global Compact Office, that
oversees sustainability and social responsibilities policies. Larger companies are concerned with
the formality of the reports and use a more formalized nature with usage. The executives in this
study did not use the terminology of larger companies in defining their CSR programs.
Use of terms that describe the nature of engagement with the community and the
environment are more often used at MEs (Baden & Harwood, 2013). Terms such as recycling
and volunteerism are prevalent. Baden and Harwood stated that the terms community, social, and
environmental responsiveness were favored to describe initiatives in MEs. This concurs with the
responses of the executives in this study who categorized their program initiatives with the
terms, people, community, and planet. A parallel is noted between the terms used by the
executives and those in the study: social and people, community in both instances, and
environmental and planet. Most of the executives’ responses and all the information gathered on
the companies’ websites did not mention or list the term CSR to define or describe company
initiatives. The information collected through the study of CSR programs in MEs support the
previous research on terminology.
CSR - Departmental Structure
Larger firms tend to have a formal or highly organized structure. The larger the company,
the more CSR policies enacted and the more structured the administration of the policies (Perera
et al., 2009). Larger businesses frequently have a specific department devoted to CSR programs.
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The CSR programs at larger companies may be so significant as to include representation at the
board of directors level. At larger companies, executives are employed to head the department
with a team of personnel reporting to the executive. There, CSR initiatives may require longterm planning as opposed to the CSR initiatives at MEs (Preuss & Perschke, 2010). Larger
companies are effected by a greater number of stakeholders and the pressure the stakeholder can
yield (Fassin, 2008). The larger companies tend to be scrutinized by the press more than MEs
and may feel pressure from stakeholders such as shareholders, regulatory agencies, and the
public in general. Russo and Tencati (2009) applied descriptors such as systematic, planned and
calculated, quantifiable, and measurable when labeling CSR departmental structure at large
companies.
Smaller enterprises tend to need less structure due to the lack of the visibility and
pressures experienced by large companies. Due to the smaller size of MEs, there is an inclination
toward direct contact between stakeholders, executives, and owners of the company (Fuller &
Tian, 2006). This allows a more personal and direct relationship with the company on CSR
issues. Jamali, Zanhour, and Keshishian (2009) applied descriptors such as nonsystematic,
unstructured, and nonformalized when labeling CSR departmental structure at MEs. The data
collected in this study has found the CSR programs at MEs were less formalized than at larger
companies. At five of the businesses a single employee was responsible for administering the
CSR initiatives while the remaining four companies used personnel from other departments to
administer the CSR initiatives on a part-time basis. The structure of the CSR programs at
companies involved in this study are less formalized than at larger companies. The study
supports the previous research.
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Executive Involvement in CSR Programs
Executives’ at large businesses tend to have more formal and distant relationships with
stakeholders (Baumann-Pauly et al., 2013). Due to the increased number of employees, number
of company facilities, and distance of facilities from the headquarters, large firms have less of an
identity in regard to CSR initiatives. Direct interaction with executives is limited and structure of
the CSR department is formalized further complicating communication in respect to CSR
initiatives. Communication methods are more formalized and impersonal. Emails, phone calls,
and memos are more prevalent as contrasted to MEs where direct contact with leadership is more
feasible. Jamali, Zanhour, and Keshishian (2009) mention that executives at individual locations
believe CSR initiatives should be directed by corporate policies and, therefore, by corporate
executives. Communication and enforcement of CSR policy then, as described, become an issue.
When CSR issues are implemented, leadership at large companies prefer to implement policies
considered nonsectarian and nonreligious to avoid any confrontation with stakeholders. This is in
contrast to leadership at MEs, where religiosity of leadership and personal beliefs may influence
CSR decisions.
Executives’ in MEs tend to be influenced personally by CSR activities (Graafland &
Mazereeuw-Van der, 2012). The motives for the personal involvement can be separated in the
two types: extrinsic and intrinsic motives. Extrinsic motives are concerned with the financial
aspect of the company. Intrinsic motives are nonfinancial and are more of a reflection of the
values and beliefs of the owners and/or executives of the company. Graafland states that intrinsic
motives can be further separated into two types of motives: being the right thing to do and
altruism. The executives in this study similarly stated being the right thing to do as a motivating
force behind their involvement in CSR initiatives. The intrinsic motive, altruism, is understood to
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be the motive in which executives and/or owners derive enjoyment for themselves by helping
others and contributing to the common good. Similarly, the executives interviewed in this study
mentioned the feel good aspect of being involved with the CSR initiatives. Dincer and Dincer’s
(2013) research found that executives at MEs are influenced by personal feelings, friends and
family, finances, and religion. Executives at MEs in many instances are major or sole owners
and/or decision makers at their businesses and can directly affect company practices
Murillo and Lozano (2006) state that executive/owner influence has a significant impact on
social initiatives implemented by the company. Additionally, in their study, concern for social
initiatives where present since the companies’ founding. Thornton and Byrd’s (2013) research on
CEOs of SMEs companies indicated that the CEOs describe their selves as the company’s CSR
champion. Furthermore, they admit decisions that are made in regard to CSR initiatives are
influenced by their personal beliefs, emotions, and values.
All the executives interviewed were directly involved in the CSR program at their
companies. They are actively involved in decision-making and participation. Ownership at three
of the businesses incorporated a CSR program at the business startup. All the executives
interviewed were personally involved in CSR activities from participation in volunteer activities
and charity events through organization and maintenance of the CSR department. One
owner/executive’s religion, as supported by Dincer and Dincer, had a direct effect on CSR
initiatives. The owner referred to the religious contribution of tithing when discussing the
donations to charities that the company supported. The data collected suggests the previous
research is supported with this study.
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Lack of CSR Programs at MEs
CSR programs have not been embraced by SMEs particularly in the United States
(Freisleben, 2001). Bennington and Minutolo (2012) suggests a lack of resources to produce
CSR reports and ability to manage stakeholder concerns as compared to larger companies as
being issues at SMEs. Freisleben cited lack of resources and understanding or perceiving the
need for a CSR program as barriers. Many executives believe they do not have the personnel or
financial resources to implement a CSR program. The executives do not envision their
companies as larger companies which have CSR programs. Laudel (2011) suggested similar
barriers as Freisleben and Bennington and Minutolo. Laudel lists insufficient cost/benefit ratio
and external control as barriers. MEs have less revenues than larger companies and with that less
financial freedom. There is a lack of revenues to develop and implement CSR initiatives. The
smaller companies are preoccupied with managing a day-to-day operation and lack the capability
of implementing CSR policies on their own. There is a limited knowledge base. Seidel, Seidel,
Tedford, Cross, Wait, and Hämmerle (2009) discovered several barriers to MEs’ lack of
sustainability programs in regard to CSR programs: underdeveloped organizational
environmental culture, ignorance of their own environmental impacts, lack of knowledge and
experience with environmental issues, absence of effective environmental legislation, lack of
awareness about environmental trends, limited financial and staff resources, and perceived
conflicts between environmentally friendly practices and other business objectives.
This research indicates that in the region of study, Northeast Ohio, nearly half of the
companies defined in the revenue range do not have CSR programs or do not publicize the
programs. All interviewees in this study had some form of CSR program implemented at their
companies. It is conceivable that only those executives who had programs would agree to be
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interviewed. In contrast, those without programs may refuse to be interviewed. The limited
number of CSR programs in the region suggest this research supports previous research.
Implications for Practice
The results of this study can be used to gain insights into CSR programs and/or address
problems at MEs. Executives can apply the information presented in the research to related
issues and topics at their companies. Barriers associated with the implementation and
maintenance of a CSR program can be analyzed and addressed.
CSR Program – Enriched Description and Definition
This research supports Dahlsrud’s (2006) five dimensions of a CSR program:
environmental, social, economic, stakeholder, and voluntariness. Findings in this study reveal a
parallel between Dahlsrud’s findings and the interviewees’ definition of their CSR programs.
Related terminology was discovered: environmental/sustainability, social/people,
economic/financial, volunteerism/employee volunteerism, and
stakeholders/people/communities/organizations which are directly affected by the company’s
actions.
This finding will allow an executive to obtain a better understanding and explanation of a
CSR program. Earlier research listed barriers such as limited knowledge about CSR issues and
lack of information on other SMEs and their CSR activities as reasons not to implement a CSR
program (Inyang, 2013a). The information collected in this study removes these specific barriers
from an executive’s decision-making process. A well-founded definition of a CSR program is the
first stage in the process of implementing a CSR program.
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CSR Program – Recognition of Benefits
The research conducted on CSR programs at MEs provides executives at companies
without CSR programs the opportunity to study the effects of a program and the value it can
create. Inyang (2013) cites lack of awareness of benefits of this type program as a barrier to CSR
program implementation. Cegarra-Navarro and Martinez-Martinez (2009) compared companies
with CSR programs to those without. The benefits can be classified into five categories: quality
of products and services, global business, innovativeness, corporate culture, and ethical
obligations. Other benefits cited include improved corporate culture, cost savings due to
recycling and energy reduction efforts, improved public image, increased productivity, and
improved ethical performance. Sun and Stuebs (2012) studied the chemical industry and found
firm productivity to be higher where CSR is initiated. The higher level of productivity allows a
company with a CSR program to have a competitive advantage. Chen, Tang, and Hung (2013)
developed a CSR Index which uses 24 CSR rules. Firms with a lower index number realized
lower stock returns, worse operating performance, lower values and higher operating expenses.
The data collected during this research supports the results of earlier research. Executives
interviewed during the study mentioned benefits such as employee retention, employee
attraction, creation of goodwill between employees and the company, improved company
culture, and adherence to ethical obligations. Executives at companies lacking a CSR program
will have a definition of the program and understand the benefits as well. A determination of
whether the benefits can create sufficient value for CSR program implementation can take place.
CSR Program – Improvement of Existing Programs
Results of this study can be used to expand or modify existing CSR programs. The study
can assist executives in the planning stages for the growth of their companies and CSR programs.
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The benefits cited from earlier research can provide incentive to further expand and develop the
program. Executive interviews cited benefits such as employee retention, employee attraction,
and creation of goodwill. All the interviewees cited the initiatives in the CSR program as being
the right thing to do and mentioning the feel good nature of the program. Activities cited during
the interview can provide executives with new initiatives of which they might have been
unfamiliar. Some initiatives cited in the study were similar throughout the companies: support of
local charities, support of cultural events, employee volunteerism, employee wellness initiatives,
and recycling efforts. Other initiatives and activities varied throughout the companies. The
variations may allow companies to further expand their own initiatives. Some company
initiatives which differentiated from the other companies included sponsorship of fitness
activities such as runs and walks for charity, educational support at local schools through
scholarships, energy conservation, and in one particular instance promoting rowing for
disadvantaged children.
Aggerholm and Trapp (2014) suggest a three-tier approach to CSR program expansion.
There are three distinct yet overlapping generations to the expansion of CSR programs. The first
generation is concerned with the most basic stakeholder, those directly involved with the
operation of the company. Issues of concern include: profit without legal risk, employee
concerns, ensuring compliance, and upholding law and order. The second generation expands
CSR into a more societal aspect. The issues reach beyond the internal level and expand into
society. Issues related to the second generation include: company/community related activities,
employee benefits, normative and business case arguments, sponsorship, and profit. Lastly, the
third generation expands CSR into a global environment. Issues take on a more global aspect and
include those that affect humankind, a sense of obligation to humankind, global social and
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environmental concerns, addressing global issues, and understanding the broader issues of
humankind. As evidenced in this study, one company is in the first generation of CSR growth
while the remaining companies have expanded into the second generation.
A specific path of expansion of CSR programs is mentioned by the interviewees and
supported by previous research. Although still not a requirement in many instances, more
businesses are requiring suppliers in their supply chain to implement or show evidence of a CSR
program (Tate, Ellram, & Kirchoff, 2010). Consumers are demanding products that are
environmentally friendly, high-quality, less harmful to the environment and the community
(Lash & Wellington, 2007). Beyond being environmentally responsible, companies in the supply
chain are understanding a need to become socially responsible (Hutchins & Sutherland, 2008).
Consideration must be given to the economic, social, and environmental impacts of the product
throughout the supply chain. Demands on how products are manufactured, what resources where
used and consumed in the manufacture, recycling capabilities of the products, packaging
recyclability, and labor situations are becoming relevant topics. Quantifiable values have
developed that can measure social responsibility involvement of a company: labor equity,
healthcare, safety, and philanthropy. Only one interviewee was contacted by a customer in regard
to its CSR program but all interviewees acknowledged the expected requirement of a CSR
program in the future by their customers. This study provides common insight and tentative
future planning by the interviewees into the requirement of the expansion of CSR programs in
the specific area of supply chain management.
CSR Program – Approach to CSR, Not a Large Company Undertaking
MEs must use a different approach to CSR implementation and maintenance than that
used by large companies; MEs are not smaller large companies (Preuss & Perschke, 2010). As
102
discovered in this and previous research, CSR is more formalized at larger companies than at
MEs. CSR initiatives are personally driven by the owner/executives at MEs. Initiatives at MEs
tend to be more localized and involve the community in which the company is located. Russo
and Perrini (2010) refer to the differences as large firms being externally financed, diversified,
with rigid and formalized processes, and usually oriented toward globalization. Larger national
and MNEs’ CSR programs are involved at an expanded level to coincide with the increased size
of the company and globalization of its business. Examples are the educational programs and
hospitals supported by Newmont Mining at their mining sites (Haymon, 2008) and Starbucks’
commitment to the environment (Katrinli et al., 2011). MEs tend independently owned,
internally financed, cash-limited, largely local, and based on informal relationships (Russo &
Perrini). Due to the informal nature of CSR programs at MEs, the companies operate on the
principle of social capital involving trust, informality, and networking. MEs build strong
relationships of trust, reputation, and legitimacy with specific stakeholders and use those
relationships to operate in a competent and resourceful manner.
The interviewees, in describing the initiatives their companies have undertaken, cited
instances of CSR involvement at local levels. Only one of the businesses has an office outside
the Northeast Ohio area and that office is involved in CSR initiatives at the local level at their
location. The CSR activities mentioned throughout the study has been local nature. Little
activity, beyond donations to national or international charities, have taken the CSR program
beyond local level involvement. Executives can use the study with the knowledge that the
programs they view at large MNEs are not the same as those which they implement. The CSR
programs at larger companies can provide the executives at smaller companies an indication of
what their programs will have to resemble as their companies grow.
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Recommendation for Related Research
The findings in the study on CSR programs in MEs have proven significant. There is an
understanding that research cannot end at this stage. Further research is necessary to expand on
this topic. As with many subjects of research, new opportunities of study are unlocked and new
questions for research are presented. Further research is recommended in regard to the following.
Expansion of Demographics
The study used MEs in Northeast Ohio. Research can be expanded beyond this region to
include other areas within the United States. Forty-four companies were defined in the revenue
range desired for the study. Areas of equivalent sample size may be studied to compare and
contrast with the findings in this study. Study of areas with larger sample sizes may prove
beneficial to the topic of research and to determine if the findings are related in geographical
areas with larger population sizes.
CSR Programs at Small Enterprises
A second recommendation is to study CSR or CSR-like programs at smaller enterprises.
By the definition used in this study, the revenue range would be businesses with less than $10
million in revenues. A contrast and comparison exercise can determine similarities and
dissimilarities between the small and medium-sized enterprises.
CSR Programs at U.S. MEs
The literature review indicated a gap in the study of CSR programs at MEs. This study
assisted in closing that gap in research. Further research is needed to confirm or challenge the
results. Similarities and dissimilarities between studies can be verified and discussed.
104
CSR Programs as a Function of Company Growth
Further research in this area can include study of a CSR program’s during a company’s
transition from a SME or from a ME to a large enterprise. This type of research can provide
insight into a CSR programs transition during periods of growth.
CSR Programs as a Function of Economy
Research can be conducted to include a study of CSR program’s as a function of
economy whether the individual company’s economic condition or that of the nation’s or world’s
business economy. Information can be gathered in regard to a company’s CSR initiatives during
time of economic constraint or recession.
Sustainability
The CSR programs at the MEs placed more emphasis on the people and community
aspects of the program. Sustainability programs at these businesses did create financial benefits
and goodwill amongst employees but companies did less to promote the sustainability programs.
Emphasis was placed on people and community programs. Further study of sustainability efforts
at MEs is needed to explain the lack of sustainability initiatives and the reasons for it.
Employee Reaction to CSR Programs
Further research into CSR programs may include employee responses to a company’s
CSR initiatives. This study included executive’s perceptions of employees to the company’s
CSR program but did not seek perceptions of the program directly from nonexecutive
employees. Additional information in this regard can be obtained from middle management,
lower management, and employees in nonmanagement positions.
105
Supply Chain CSR Initiatives
A relationship between CSR and supply chain management is being established.
Research is indicating that more companies will be requiring their suppliers to have some form
of CSR program. Further research is needed to confirm or disprove these reports.
Summary
The literature review and this study revealed a gap in the area of CSR programs in MEs,
particularly in the United States. The purpose of the study was to collect information from
executives at MEs, determine what type of CSR programs are instituted at their businesses, and
inform companies without CSR programs the significance of implementing and maintaining a
CSR program. The interviewees provided essential data in regard to CSR programs at their
businesses. Executives interviewed considered CSR programs to be a vital asset to the future of
their businesses. Employee goodwill, community goodwill, employee well-being, and the feel
good nature of the initiatives were regarded as the principle benefits of the CSR programs. The
executives believed other businesses regardless of size should implement a CSR programs. Three
executives offered to provide their personal input to companies contemplating the
implementation of a CSR program.
This study of CSR programs in MEs in the United States has shown that CSR programs
are present in companies of this size but lack in number as compared to large and multinational
companies. Crain’s Cleveland Business’ listing of largest companies in Northeast Ohio and
Hoover’s Business Directory were used to obtain prospective companies for the interviews. In
the listing, only 22 of the 44 companies listed in the revenue range studied made mention of their
CSR program on their website. The lack of mention may be due to absence of a CSR program or
a lack of concern for the importance of a CSR program. The companies that do reference their
106
CSR program on their website do so in a highly presentable method. References to the CSR
program initiatives and the impacts of the program are presented on the websites and referred to
on company Facebook pages. Through interviews with executives at nine of these businesses, it
has been determined that CSR programs are essential in the operation of the businesses.
Executives at these businesses are extremely proud of their CSR initiatives. They are
exceptionally proud of the sense of good will it creates with their stakeholders. Executives are
aware of the feel good and right thing to do atmosphere such programs create. Companies
without CSR programs need to implement a CSR program to realize the benefits such a program
can provide.
The results of the research reinforces the significance of the study. MEs can use the
results of the study to understand the importance of implementing and maintaining a CSR
program. The social and financial benefits are advantageous to the business and the absence of a
program may be detrimental to the future of a business. Additional consideration can be given
that executives believe CSR programs are essential in employee retention and attraction. This
study of corporate responsibility programs in MEs has reduced the gap in research and provided
a significant step in the research of CSR programs in MEs in the United States.
107
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