Economy Transdisciplinarity Cognition
www.ugb.ro/etc
Vol. XIV,
Issue 1/2011
27-35
The Application of Corporate Social Responsibility Models in Romania in
the Context of the Post-Accession to the European Union
IRINA-EUGENIA IAMANDI
Academy of Economic Studies,
Bucharest, Romania,
irina_iamandi@yahoo.com
Abstract
The aim of the present research paper is to present how corporate social responsibility (CSR) in Romania
evolved in the last years, especially after Romania’s accession to the European Union (EU). In this regard, a set
of specific objectives are proposed: a general presentation of CSR models in theoretical terms, based on
specialized literature review; a brief analysis of the main characteristics of CSR in EU, emphasizing the main
CSR models, forms, instruments and indicators at the European level; a comprehensive analysis of CSR in
Romania and the corresponding models, considering an empirical evaluation of the market and the research and
data presented by specialized organizations or researchers in the field; a comparison between the models of CSR
in EU and the ones in Romania, focussing on main similarities and differences; a thorough analysis of CSR and a
set of recommendations to be followed in order to transform CSR in Romania into a highly strategic approach;
an offering of practical examples for strengthening the theoretical part. The results of the research emphasize the
CSR achievements in Romania after 2007, but also reveal the necessary measures for it to become similar with
the CSR European approach and to benefit of the competitive advantages that corporate social involvement
brings on for the responsible companies.
Keywords
Corporate Social Responsibility (CSR), CSR Model, pragmatic approach, competitive advantage, stakeholders
INTRODUCTION
Within the context of increasing globalization, economic integration and post-crisis changes and
structural alterations, the companies acting at national or international level should achieve and
strategically maintain a set of distinctive competitive advantages in order to become an essential part
of the society they are acting in. Companies aiming o become important actors on the global market
should now take into account not only the economic and financial requirements, but also the social,
ecological and corporate governance ones. One way of doing this is by deeply considering corporate
social responsibility and including its main aspects into corporate business operations and in all
interactions with the stakeholders.
The European Commission – through its Multistakeholder Forum on CSR (2004) – defines corporate
social responsibility (CSR) as “a concept whereby companies integrate social and environmental
concerns in their business operations and in their interactions with their stakeholders on a voluntary
basis” [1]. CSR is also part of the Europe 2020 strategy for smart, sustainable and inclusive growth
and represents one of the main pillars of the Europe’s competitiveness model.
CSR is more relevant than ever in the context of the economic crisis and the necessary measures for
overcoming it, because CSR could build or rebuild trust in business and address societal challenges,
specifically important for the European social market economy. This is why in March 2010 the
European Commission made a strong commitment to “renew the EU strategy to promote CSR as a key
element in ensuring long term employee and consumer trust” [2].
1. GENERAL PRESENTATION OF CSR MODELS
CSR defined by Carroll (1979) [3] highlights the whole range of corporate social obligations:
economic, legal, moral and discretionary (philanthropic) responsibilities, which must be met
simultaneously by the socially responsible company. On the other hand, considering the reasons for
assuming additional corporate obligations, the specialized literature identifies three different types of
CSR approaches: pragmatic or rational approach to CSR (companies assume increased business
responsibilities and engage themselves in social projects in order to gain competitive advantages on
the long run), deontological approach to CSR (companies have the duty to assume additional
obligations to the one of making a profit due to the special role they have in the community) and
social pressure-based approach to CSR (companies must respond to the increasing social
requirements that the communities put on them).
The above two issues (types of responsibilities and reasons behind taking CSR) led to the emergence
and consolidation of four CSR strategic models in the specialized literature (Galbreath, 2006), each of
them being described and analyzed according to six components: goal, vehicles, measurement,
beneficiaries, corporate benefits and time-frame [4] (see Figure 1: CSR Models).
The four strategic CSR models are the following: CSR model based on shareholder strategy, CSR
model based on altruistic strategy, CSR model based on reciprocal strategy and CSR model based on
citizenship strategy. A brief description of the four CSR strategies identified by Galbreath is offered in
the following lines.
Figure 1: CSR Models
Source: Author’s adaptation, processing and graphical representation after J. Galbreath, Corporate Social Responsibility
Strategy: Strategic Options, Global Considerations, “Corporate Governance”, Vol. 6, No. 2, Emerald Group Publishing Ltd.,
Bradford, UK, 2006, pp. 176-180.
1.1 CSR Model based on Shareholder Strategy
The first CSR model exclusively involves maximizing revenues for the shareholders and giving
priority to profits, being reflected in the vision of the neo-liberal economist Milton Friedman. Some
regulations or legal norms may force companies that are strictly looking for profit maximization to
involve in reactive CSR strategies, meanwhile CSR initiatives are only adopted if they improve
corporate profitability. The model specifically emphasizes rationalization and self-interested activities,
consideration of financial results and shareholders, as major stakeholders, and analysis of financial
corporate benefits. Given its exclusive economic nature, this strategic model is predominantly based
on a short-term vision and it is increasingly considered an inappropriate approach for the current
business environment. For a structured presentation of the model, see Figure 2: CSR Model based on
Shareholder Strategy.
Figure 2: CSR Model based on Shareholder Strategy
Source: Author’s adaptation, processing and graphical representation after J. Galbreath, 2006, pp. 176-177, 179.
1.2 CSR Model based on Altruistic Strategy
The second CSR model starts from the premise that the company should positively involve into and
contribute to the development of the host community (“giving something back to community”),
because it is a member of that community. Usually, the corporate contribution takes the form of
philanthropy or donations. This strategy strengthens the relationship between company and
community (the beneficiaries of the model are community groups and causes) and highlights the
corporate intention of “doing the right thing”, without expecting anything in return. In general terms,
altruistic CSR strategy can be considered an act of corporate goodwill and the corporate benefits
obtained from involvement in philanthropic activities are not quantified. This approach is an
intermittent, possibly temporal-phased one (e.g.: yearly). For a structured presentation of the model,
see Figure 3: CSR Model based on Altruistic Strategy.
Figure 3: CSR Model based on Altruistic Strategy
Source: Author’s adaptation, processing and graphical representation after J. Galbreath, 2006, pp. 177-178, 179.
1.3 CSR Model based on Reciprocal Strategy
The third CSR model is best represented by the phrase “enlightened self-interest” and it is deeply
pragmatic by its nature, considering that it attempts to solve the conflict between economic objectives
and social, environmental or moral pressures that society puts on companies. The corresponding
approach to CSR is a proactive one: CSR is associated with corporate core activities and it is
recognized as a medium- or long-term investment. The model emphasizes the mutual benefits (the
beneficiaries are the company and the community as a whole); it uses public relations, sponsorships,
partnerships, involvement in the community issues, volunteering, and CSR forms in order to transmit
relevant information; corporate benefits are quantified through obtained financial performances,
achieved marketing objectives and developed human resources. Companies frequently use business
reports for measuring the results of this strategy, because they are more interested in the economic
profitability of their CSR actions than in the case of the altruistic strategy. For a structured
presentation of the model, see Figure 4: CSR Model based on Reciprocal Strategy.
Figure 4: CSR Model based on Reciprocal Strategy
Source: Author’s adaptation, processing and graphical representation after J. Galbreath, 2006, pp. 178, 179.
1.4 CSR Model based on Citizenship Strategy
The fourth CSR model is more integrated and has a wider coverage than the other CSR strategic
options outlined above, since it recognizes the importance that various stakeholders have for the
company and it takes into account the compensation of their divergent interests or expectations.
However, the company is not able to equally and evenly respond to the requirements of all the
stakeholders, meaning that a prioritization of the objectives related to primary and secondary
stakeholders is needed. In this sense, the model aims to promote values such as accountability,
transparency, sustainability and social responsibility; the corresponding vehicles are corporate
governance, applied ethics, dialogue with all categories of stakeholders and designing corporate
strategy; the measurement is holistic and addresses economic, environmental and social objectives; the
beneficiaries are represented by the company, partners from all sectors and society at large; the
corporate benefits are tangible and intangible. The model considers a long-term vision. For a
structured presentation of the model, see Figure 5: CSR Model based on Citizenship Strategy.
Figure 5: CSR Model based on Citizenship Strategy
Source: Author’s adaptation, processing and graphical representation after J. Galbreath, 2006, pp. 178-179.
None of these four models is applied in real life in pure form, but rather various combinations of them
are put into practice in the host countries, depending on the national culture, the legal environment, the
pressure of non-governmental organizations and the global standards. Therefore, the European
continent, in general, and the European Union, in particular, is characterized by a high diversity of
combinations of CSR models.
2. CSR IN THE EUROPEAN UNION
The development of CSR in Europe has been driven both by proactive strategies adopted by
pioneering businesses, European institutions and national governments, as well as by external
pressures from other stakeholders, such as civil society and the investor community, among others. As
a relatively wealthy, stable region with a developed economic and societal structure, the current CSR
issues and challenges in Europe naturally differ to some extent from those faced by the less developed
regions in the world. Many social and environmental responsibilities, which may fall under
companies’ voluntary CSR engagement elsewhere, are in Europe legally defined. However, the
increasing interest in business opportunities associated with innovative CSR approaches, together with
the growing stakeholder expectations for corporate accountability and responsible business practices
both within and outside Europe, continue to push the CSR agenda forward. Furthermore, as a result of
the financial and economic crisis, the level of public trust in business has fallen in many European
countries. In this context, it is crucial for companies of all sizes to contribute to rebuilding trust in
business and shaping a more responsible and sustainable economy in Europe and globally [5].
CSR in the EU is stronger developed and implemented than in the USA, although the idea of CSR was
born on the American continent in the middle of last century [6]. Due to the more protectionist social
policy of the EU, CSR in EU is stronger regulated, politicized and outside coordinated, which leads to
a “standardization” of the corporate social implication. In this way, some of the main coordinates of
CSR are centrally stated and regulated, meaning that CSR lost much of its voluntary character.
The approach of CSR in the EU is a predominantly deontological and macro-economic one,
progressive and proactive. Taking into account the above mentioned highly regulated character, the
CSR framework – at national or communitarian level – is pre-established and assumed more or less
voluntary by the private actors, aiming to meet with the generally indicated criteria by the European
Commission. The CSR nature and characteristics strongly vary between the member states [7].
Regarding the CSR models in the EU, two of them frequently appear: CSR model based on
citizenship strategy and CSR model based on reciprocal strategy, both of them recognizing the
importance of the stakeholders for business operations. The main CSR instrument in the EU is
corporate social reporting, and the challenges associated to CSR envisage the necessity of measuring
the CSR impact and providing a common framework for CSR evaluation and reporting. Important
steps in this last area were made by implementing ISO 26000 – Social Responsibility standard at the
global level, beginning with the end of 2010.
Deeply analyzing the CSR models in the EU and also taking into account the European public policies
presented in different publications [8] and communications, two different sub-models could be
identified: CSR integrated sub-model (CSR integrated in different national public policies) and CSR
voluntary sub-model (CSR freely assumed by the European companies and just supported by public
authorities). In the first sub-model countries like Bulgaria, Cyprus, Denmark, Finland, France,
Germany, Portugal and Sweden could be included; meanwhile Estonia, Greece, Ireland, UK,
Netherlands and Slovenia pertain to the second sub-model.
3. CSR IN ROMANIA
CSR in Romania is a concept initially (at the beginning of 2000) imposed by multinational companies
(MNC) as a fashion more than a necessity [9]. The MNC were the main promoters of social initiatives
in Romania, but nowadays CSR is also included in the business strategies of companies in Romania.
In what concerns the main characteristics of CSR in Romania, the following could be emphasized:
CSR is usually confused with philanthropy or patronage and it is primarily focused on donations
and/or occasional sponsorships; it has no strategic dimension, no long-term commitment, no coherence
nor unity, and its impact is not evaluated; the lack of transparency in the disbursement of funds is one
of the main problems associated with CSR in Romania.
The favorite areas of corporate social involvement in Romania, like in the EU, are, in a descending
order of their importance: environmental, social, educational and cultural domains. On the other hand,
the neglected areas of corporate social involvement compared to the general situation at the European
level are considered to be: medical and scientific research, large-scale cultural projects, civic and
human rights, some controversial social causes and management of goods’ donations [10].
3.1 CSR models in Romania
After Romania’s accession to the EU, CSR in Romania became stronger, because companies acting at
the European level have begun to impose their responsible business strategies also in our country,
specifically for gaining in terms of competitive advantages. At the same time, taking into account the
cultural context – at national and corporate level – the international companies implement in Romania
corporate social initiatives that are similar with the ones developed by them in other European
countries.
Analyzing the development of CSR in Romania, two main CSR models could be identified: CSR
model based on reciprocal strategy and CSR model based on shareholder strategy. The CSR model
based on reciprocal strategy is also developed and frequently encountered at the level of the EU,
meanwhile the CSR model based on shareholder strategy is a rather primitive form of CSR, that puts a
great emphasis on shareholders’ profitability and a low importance ascribed to other stakeholders.
Like in the EU, the CSR model based on altruistic strategy appears in very few situations, specifically
because the main purpose behind corporate social involvement still remains the pragmatic approach.
Comparing the case of Romania with the rest of the countries at the European level in terms of CSR,
Romania does not fit in the CSR integrated sub-model or in the voluntary one. However, the years
after Romania’s accession to the EU marked the beginning of CSR development in Romania in a
similar way to other European countries.
The main domains of corporate social involvement in Romania are: environmental protection, social
problems, support for socially disadvantaged categories, civic behaviour, interventions in case of
natural disasters, investments in health issues, education and youth, art and culture, sport.
The budgets allocated to CSR were constantly kept by big companies at the same level even during the
economic crisis period, due to the growing importance that CSR has as a competitiveness intensifier
for the responsible organizations.
The main forms of CSR in Romania are represented by philanthropy, volunteering and public relations,
meanwhile the CSR instruments most frequently considered are: corporate codes of conduct, social
investments, audit and social and ecological reporting [11].
Although important progresses in CSR area were made in Romania after its accession to the EU, a set
of necessities or challenges still remains to be solved:
- Differentiating between CSR and philanthropy;
- Strategically correlating corporate social programs with development or business objectives of
the companies on the long-term;
- Evaluating the impact of social programs on all the categories of stakeholders;
- Increasing transparency in granting funds for CSR;
- Affirming the competitive advantages induced by CSR on medium and long-term.
3.2 Examples of good practice in Romania
Considering the main domains of corporate social involvement in Romania presented above, a few
examples of good practice in Romania could be offered for strengthening the theoretical framework
described in the previous sections:
- Environmental protection (e.g. Alexandrion Group Romania, Cosmote, Elpreco, Lafarge
Romania, Mol Romania, Petrom, United Business Development, Vodafone Romania)
- Social issues (e.g. A&D Pharma, Cardinal Motors, E.ON Gaz, Intercontinental Bucharest,
McDonald’s Romania, Prod Ardealul)
- Civic behavior (e.g. Angst Romania, Coca-Cola HBC Romania, Pro TV, Procter & Gamble
Romania, Tuborg-URBB, UPC Romania)
- Human rights (e.g. Banca Transilvania, Baneasa Investments, Ginkgo & Sarantis Romania,
The Body Shop, Romanian Radio Broadcasting Company, Romanian Television)
- Health (e.g. Carrefour Romania, Dedeman, Petrom, Philips Romania, Prais Corporate
Communications, Vodafone Romania)
- Education (e.g. BRD-Groupe Société Générale, Holcim Romania, IBM Romania, Motorola
Romania, Orange Romania, RBS Bank Romania)
- Research (e.g. Agricola International Bacau, Continental Automotive Romania, Fujitsu
Siemens Computers, Gorenje Romania, Siveco Romania)
- Art and culture (e.g. Automobile Bavaria, Brand Management, Electrica, Pambac, Piraeus
Bank Romania, TNT Romania, Zentiva)
- Sport (e.g. BCR Leasing IFN, BRD-Groupe Société Générale, Mobexpert, CRE Trust, and
Zentiva) [12], [13].
On the site of CSR in Romania (www.responsabilitatesociala.ro), 40 responsible companies are
presented and enrolled on specific categories, with their corresponding corporate involvement in
ecological, cultural, educational, social, human rights and sport projects: A&D Pharma, Alexandrion
Group, Apa Nova, Arctic, Avon Romania, Banca Transilvania, BCR, BGS, BRD – Groupe Société
Générale, Carpatcement Holding, Coca-Cola HBC Romania, Dacia Groupe Renault, Dedeman,
Germanos Telecom Romania, Holcim Romania, JT International Romania, LaborMed Pharma, MOL
Romania, Novo Nordisk Romania, Orange Romania, OTP Bank Romania, Petrom, Praktiker
Romania, Provident Financial Romania, Raiffeisen Bank, RBS Romania, Romstal, SIVECO Romania
SA, Smithfield Prod, Terapia Ranbaxy, TeraPlast SA, The Rompetrol Group, Transgaz, Tuborg
Romania (URBB), UniCredit Tiriac Bank, UPC Romania, VelPitar, Vodafone Romania, Western
Union Romania, Zentiva [14].
4. RECOMMENDATIONS AND CONCLUSIONS
As previously stated, the years after Romania’s accession to the EU have marked the beginning of
CSR development in Romania in a similar way to other European countries. The main domains of
corporate social involvement at the European level (ecological, social, educational and cultural) are
also promoted in Romania, especially through the implication of multinational companies. The
companies having the financial power to develop important CSR projects recognize and beneficiate of
the competitive advantages that responsible behaviour could bring for them.
In order to take full advantage of the positive effects associated to CSR, companies in Romania should
strategically correlate their corporate social programs with their business and operational objectives on
the long-run. On the other hand, CSR should be also correlated with the level of foreign direct
investments (FDI) in Romania, reaffirming the necessity of efficiently attracting and using FDI as the
very essence of the investment process – a process that ensures, to a large extent, social, political and
economic welfare [15].
Finally, it could be stated that, after Romania’s accession to the EU, the progresses made on
implementing and reporting on CSR issues have been fundamental in their nature. The challenges that
Romania is facing in terms of CSR are not country-specific, but they rather represent common
necessities of CSR at the European level. The difference between CSR in Romania and CSR in other
more developed European countries consists in the intensity of manifesting of those challenges.
References
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[11] Idem
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Acknowledgements:
This work was co-financed from the European Social Fund through Sectoral Operational Programme
Human Resources Development 2007-2013, project number POSDRU/89/1.5/S/59184 “Performance
and excellence in postdoctoral research in Romanian economics science domain”.