Aude Richon Master Thesis (2006/2007) - CSR Strategy & Financial Impacts

Aude Richon
Academic year: 2006/2007

MASTER THESIS

CORPORATE SOCIAL RESPONSIBILITY:
Strategy and impacts on financial performance

Under the direction of Hassan El Asraoui

Aude Richon
Academic year: 2006/2007

MASTER THESIS

CORPORATE SOCIAL RESPONSIBILITY:
Strategy and impacts on financial performance

Under the direction of Hassan El Asraoui

«L’IÉSEG n’entend donner aucune approbation ni improbation aux opinions émises dans
les mémoires ; ces opinions doivent être considérées comme propres à leurs auteurs.»

IÉSEG School of Management
3 rue de la Digue
59000 Lille

Acknowledgements

I would like to thank all the people who permitted me to finish this thesis, and supported
me while writing it.
I would like to thank Hassan El Asraoui for his guidance and support during my work on
this thesis.
I thank Olivier Rayrole, who took time and advice me when I had problems with the
subject of this thesis. I would also thank the six persons who took time and accepted to
meet me for interviews. Thanks to them, I had the opportunity to better grasp the
concepts and challenges of CSR, and had the opportunity to bring valuable insight to my
work.
I would also thank Hedley Malloch for being part of my jury.
Last but not least, I thank first my family for their patience and unfailing support, then
my friends: Véro, for her advices, Clairoute and Brigitte, my roommates, for being
present during crisis moments, Maïlys, Caro, Tan, Boon, Dam, Pierrot, JB, le Bask , who
entertained me or motivated me depending on the circumstances.

i

Contents

1
2

3

4

5

6

7

INTRODUCTION ........................................................................................................... 1
THEORETICAL FRAMEWORK ..................................................................................... 5
2.1
Globalization’s Role in Awareness for Sustainable Development..................... 5
2.2
Evolutions and Definitions of Corporate Social Responsibility......................... 9
2.3
CSR as part of corporate strategy ..................................................................... 14
2.4
Critics and Measures to Overcome Them ........................................................ 17
2.5
Increasing expectations on MNCs .................................................................... 20
2.6
Performance...................................................................................................... 23
METHODOLOGY ....................................................................................................... 29
3.1
Research Model ................................................................................................ 30
3.2
Method of data collection ................................................................................. 32
3.3
Data analysis ..................................................................................................... 36
3.4
Methodology, hypothesis by hypothesis........................................................... 37
WHY WOULD COMPANIES ENGAGE IN CSR POLICIES?........................................... 38
4.1
Presentation of the interviewees ....................................................................... 38
4.2
Presentation of the themes and subthemes studied........................................... 41
4.3
Interviews analysis............................................................................................ 42
APPLICATION TO CONCRETE CASES ........................................................................ 60
5.1
Study on sustainable indexes ............................................................................ 60
5.2
Specific look at the automotive sector concerning the environmental pillar of
SD ..................................................................................................................... 70
ANALYSIS AND DISCUSSION ...................................................................................... 83
6.1
Hypothesis testing............................................................................................. 83
6.2
Attempts to answer secondary questions .......................................................... 87
6.3
Limits of the study ............................................................................................ 89
6.4
Managerial recommendations and avenues for research .................................. 90
CONCLUSION ............................................................................................................ 93

ii

Abbreviations

ACEA
ADEME
CFP
CSP
CSR
DJSI
EITI
EU
FDI
GC
GRI
JAMA
KAMA
MNC
MSCI
NGO
PRI
ROA
ROE
SD
SRI
UN
WBCSD

European Automobile Manufacturers’ Association
Agence de l’Environnement et de la Maîtrise de l’Energie
(Agency for the Environment and Energy Management)
Corporate Financial Performance
Corporate Social/Societal Performance
Corporate Social Responsibility
Dow Jones Sustainability Index
Extractive Industries Transparency Initiative
European Union
Foreign Direct Investment
Global Compact
Global Reporting Initiative
Japanese Automobile Manufacturers’ Association
Korean Automobile Manufacturers’ Association
Multinational Company
Morgan Stanley Capital International
Non-Governmental Organization
Principles for Responsible Investment
Return On Assets
Return On Equity
Sustainable Development
Socially Responsible Investment
United Nations
World Business Council for Sustainable Development

iii

Abstract

Society is feeling more and more concerned about the environment and social issues
caused, among other things, by relocation and environmental dumping. Globalization has
actually raised some ethical issues which peak levels were attained, socially speaking,
when apparel companies were denunciated for using sweatshops in developing countries,
and environmentally speaking, with Shell’s Brent Spar platform scandal. Consequently,
companies started to think of how they could improve their image, even their way of
doing business and started to engage in Corporate Social Responsibility (CSR).
The purpose of this thesis is to understand why companies decide to engage in CSR and
if CSR policies have impacts on firms’ financial performance. Thus, the research
problem is the following: What characterizes Corporate Social Responsibility
strategies and do they have an impact on financial performance?
In order to answer it, I will use first a review of the existing literature, then interviews
performed with persons in charge of CSR/Sustainable Development (SD) in companies
and opinion leaders will be analysed. To complement this part, a study on sustainability
indexes followed by a specific outlook at the automobile sector and its impact on the
environment will be undertaken.
The results show that Western multinational companies (MNCs) tend to be more and
more engaged, with law pushing for that as well. Stakeholders have quite an influence on
the process, but the main factor of success is the commitment of top management and the
integration of CSR in corporate culture. Quantitative results are more mitigated and it
cannot be clearly said that CSR favours or not financial performance. More prospective
is needed to be definite in the answer.

iv

IÉSEG Master Thesis – Aude Richon – 1 Introduction

1 Introduction

Society is feeling more and more concerned about the environment and social issues
caused, among other things, by relocation and environmental dumping. We can observe
this from the growing number of denunciations of companies’ practices by NonGovernmental Organizations (NGOs), but also by movies such as “The Corporation” by
Mark Ashbar, Jennifer Abbott and Joel Bakan1, or “An Inconvenient Truth” from Davis
Guggenheim and casting former US Vice-President Al Gore2. The written press
communicates as well on this growing concern for a more sustainable management of the
environment, like this June’s special report on business and climate change initiated by
The Economist3. Social concerns are also existing especially concerning working
conditions in developing countries and health and safety in general.
First, let us define a few concepts. According to the Green paper4 issued by the European
Commission in 2001, Corporate Social Responsibility (CSR) is a “concept whereby
companies integrate social and environmental concerns in their business operations and
in their interaction with their stakeholders on a voluntary basis”, which means beyond the
frame given by law. Even though the term “environment” is not mentioned in the
acronym CSR (perhaps because it is considered as obvious), I will study this component
in the thesis, and emphasize its importance in the last part.
The degree to which a firm is sustainable and responsible can be determined by the study
of its Corporate Social Performance (CSP), which is an extra-financial appraisal of its
operations. The evaluation of social performance is not really well-defined and depends
on who is evaluating it, as extra-financial rating agencies use different methods,
according to their beliefs, methods and clients’ requests. Even authors talk about it
without clearly defining it as Donna J. Wood highlighted5. She gave concepts and
attitudes to observe and analyse in order to grasp the CSP of a firm, but still, as CSP
incorporates components or concepts that are not necessarily quantifiable, it is really
difficult to give a precise definition of it.

1

Canadian documentary issued on Oct. 29, 2004, for more information: www.thecorporation.com.
American documentary issued on Sept. 15, 2006, for more information: www.climatecrisis.net.
3
Anonymous, (2007), “A special report on business and climate change”, The Economist, June 2nd,
383(8531).
4
Green papers are documents provided by the European Commission and aimed at provoking discussion
on a specific policy area.
5
Wood, D. J., (1991), “Corporate Social Performance Revisited”, Academy of Management Review, 16(4),
691-718.
2

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Looking for larger markets, lower costs, even lower environmental standards, many
companies have become multinational. First they have expanded to other countries
through exportations, to enlarge their market, then they intervened to help other countries
develop more quickly (like investments from the USA to Europe after WWII, or from
Germany to Eastern European countries after the fall of the Wall) and be able to reach
them with their products. Later, companies were trying to produce at a cheaper cost and
went to developing countries with less regulation (both social and environmental).
Nowadays not only production is concerned but also other activities like R&D which
makes qualified workers from developed countries feel threatened to lose their jobs.
Globalization is not a new phenomenon, however now we are facing a financial
globalization as well as a globalization of knowledge and technologies6.
Globalization has raised some ethical issues which peak levels were attained, socially
speaking, when most of the big apparel companies (like Nike, Gap, Reebok…) were
denunciated for using sweatshops in developing countries, because of the non respect of
Human Rights, pressure imposed on employees and the subsistence wages these workers
earned; and environmentally speaking, with Shell’s Brent Spar platform scandal. That is
how companies started to think of how they could improve their image, even their way of
doing business and started to engage in CSR.
This business approach is inextricably linked to the concept of Sustainable Development
(SD) which has been, first, tied more closely with environment. However the scope of
SD has gotten larger and larger in the last years and it is really a broad concept, difficult
to define precisely. The original definition (and the most commonly used one) comes
from the Brundtland Report issued in 1987 stating that “sustainable development is
development that meets the needs of the present without compromising the ability of
future generations to meet their own needs”. Thus, companies now have to take into
consideration all the stakeholders they are dealing with (not only the shareholders).
CSR really is an actual matter as nowadays companies are communicating about it as a
component totally integrated to their activities. Indeed, society as a whole, and local
communities in which companies are settled feel more and more concerned about the
impact companies have on their physical and human environment. Moreover we can
notice a growing awareness from companies (mostly managers) and from the main
audience concerning environmental issues. Maybe a game of imitation is also going on
between companies, which do not want to be left behind by their competitors or rating
agencies. Stakeholders have an influence also and can sometimes even expect that big
corporations play a more comprehensive role.
6

Mouhoub, E.M., (2006), Mondialisation et délocalisation des entreprises, La Découverte, 8.

2


Growing needs in energy, especially in emerging countries, limited oil reserves (non
renewable energy will necessarily become more expensive and renewable energy will be
more and more used, then comparably less expensive), waste management and
demographic growth at the global level (we are 6.5 billion and the last population
doubling only took 37.5 years) are factors requiring that we take care of the environment
and natural resources, and that we modify our consumption modes. The decrease in
natural resources, demographic pressure and climate change, the increasing volatility and
high prices of energy resources, are present and future constraints that put the emphasis
on energy and environmental issues, and place them in the heart of companies’
sustainable development policies. Sooner or later, businesses will have to consider them
while elaborating their corporate strategies. Thus, working on companies’ strategies and
CSR is relevant also because environmental responsibility has to be more clearly defined
and should be set up in the long run at an international level. If only one country is
setting standards to respect and all the others do nothing, then actions taken by the
environmentally-friendly country will have no impact. For the moment, only listed
companies have to publish a sustainability report in France, still not all of them are
complying with this law7. Nevertheless some MNCs demonstrate a strong commitment.
Some charts have also been elaborated but usually more as recommendations (like the
UN Global Compact) and do not have a mandatory value. An important aspect also is the
respect of Human Rights.
The purpose of the investigation is to understand why companies decide to engage in
CSR, and if it is a real concern or just a short-term fashion. For this purpose, it is also
important to have a critic look at CSR and SD more generally, starting by the lack of
clear definition and the underlying expectations companies might have (better reputation
for instance). I will attempt to demonstrate whether companies’ commitment to
sustainable practices has a positive impact on their performance, and the reasons of this
impact. I will bring to the fore the urge for MNCs to act in favour of CSR and determine
where it is coming from: stakeholders? managers? Collaboration between NonGovernmental Organisations (NGOs) and companies, in the frame of CSR, will be
evoked as well. Moreover, I will try to determine whether MNCs are really doing what
they are saying and promoting in their reports and advertisements. Another point
addressed will be the example leading companies can be for the others, and which
mechanisms are at stake when firms decide to develop corporate social responsibility
policies. Finally, I will verify if pushy environmental objectives and international
competition can be consistent and sustainable in the long run. For this purpose, I will
study the automotive sector and its impacts on the environment more specifically. More
generally, the thesis aims at answering the following research problem: What
7

Law n°2001-420 related to new economic regulations (Art. 116), 2001.

3


characterizes Corporate Social Responsibility strategies and do they have an impact
on financial performance?
To clearly understand the concepts used in this work, the first part is dedicated to a
review of the existing literature, it will also permit to distinguish the different opinions
on Sustainable Development (SD) and Corporate Social Responsibility (CSR) mainly
and their relation with performance. Then, the second part will be dedicated to the
presentation of the methodology I intend to use to answer the research questions.
The third part will include a qualitative analysis of interviews I made to determine why
and how companies want to implement CSR policies. It will also allow explaining the
consequences of such policies. The quantitative analysis will follow in the fourth part,
with the study of sustainability indexes, and a specific look at the automotive industry.
Finally, conclusions and managerial implications of the confrontation of the first part
theoretical framework with the qualitative and quantitative analysis will form the fifth
part.

4

IÉSEG Master Thesis – Aude Richon – 2 Theoretical framework

2 Theoretical framework
2.1 Globalization’s Role in Awareness for Sustainable Development
2.1.1 The Role of Globalization
The impacts of businesses on their social and physical environment have been
exacerbated by globalization, and these impacts have clearly boosted the ethical issues
society now has to face: we can hear daily of globalization and its bad consequences on
current society. This issue is not so easy to address as it is to be dealt with at an
international level and there is neither law nor global standard legally binding.
First, for a common understanding, let us define the concept of globalization. Mouhoud
El Mouhoub8 gives two different definitions of globalization depending on the way the
concept is apprehended:
- if we think in terms of international mobility of firms and production means then
we can define globalization as the “unprecedented acceleration of the freedom for
firms to localize in the global space”
- we can also define it thanks to its five components:
operations relocation, involving or not Foreign Direct Investments (FDI)
commercial flows of goods and services (between different firms or
between one firm’s own subsidiaries)
financial flows (short-term capital)
knowledge and technology flows
workers international migrations.
For the rest of the thesis, we will keep in mind the second definition to have a more
comprehensive approach of globalization, and in order to allow us to link the concept of
globalization more easily with corporate social responsibility.
Wage differences between developing and developed countries and lower environmental
standards in developing countries have actually led many companies to offshore their
activities. They have been going from capital intensive economies to labour intensive
ones (even though this phenomenon is now starting to reverse in some places). While the
motivation of workers in developing countries is often higher and sometimes a reason for
relocation, the main motivation to go abroad remains the possibility companies are given
to reach new markets (80% cases9).
8

Translated from French: El Mouhoub, M., Mondialisation et Délocalisation des Entreprises, 7.
Agrawal, V., Farrell, D., and Remes, J. K., (2003), “Offshoring and beyond”, McKinsey Quarterly,
Special Issue 4, 24-35.
9

5


While increasing firms’ leeway and power, globalization also assigns them
responsibilities. Thus, in 1999, in Davos, the United Nations (UN) former Secretary
General proposed the “Global Compact” (GC) between the UN and companies, asking
them to comply with 10 principles, expressing values and fundamental practices
necessary to respond to the global population’s socio-economical needs. The main
objective of the GC is to limit the negative effects of globalization. Even though
regulations are stricter and stricter, they are also sources of opportunities (boosting
innovation for instance).
From these issues, awareness started to grow and the concept of Sustainable
Development (SD) emerged as an “answer” took over by numerous authors and
researchers.

2.1.2 The Need for Sustainable Development
Sustainable Development (SD) is “development that meets the needs of the present
without compromising the ability of future generations to meet their own needs”10.
Frank-Dominique Vivien considers this definition more as a problem than as a solution11.
He points out that this statement is not very clear, as it does not develop indicators to
refer to and too many different other definitions of the concept are given by other
authors. Najib Sassenou (2006) even talked of “broadened sustainable development”12
which includes both temporal and spatial solidarities. For a company, it would mean on
the one hand the respect of all its stakeholders and on the other hand of its natural
environment, even though it is a public good. This same idea has also been put forward
by Pérez when he highlights the fact that social responsibility expresses a widening of the
management responsibility system of reference beyond its traditional meaning13. He
alleges that Responsible Management (RM) and CSR express the idea that organization
management must be “satisfying”, that is to say relevant and coherent, on a system of
reference widened both in space (geographic and societal) and in time.
As for Sassenou, SD has a theoretical justification when we look at endogenous growth
theories, these models actually aim at internalizing phenomena or behaviours which were
considered before as externalities (contamination e.g.). Externalities can be both positive
and negative: the development levels of a country or of the productivity of a plant are
10

Brundtland Report, 1987.
Vivien, F.-D., (2005), Le Développement Soutenable, Paris: La Découverte, 5.
12
Sassenou, N., (2006), “Développement Durable et Responsabilité Sociétale de l’Entreprise : Apport de la
Théorie Economique”, Revue d’économie financière, Sept., 85, 2.
13
Pérez, R., (2005), “Quelques Réflexions Sur le Management Responsable, le Développement Durable et
la Responsabilité Sociale de l’Entreprise”, La Revue des Sciences de Gestion, Jan.-April, 211-212, 29-46.
11

6


positive externalities; negative ones are environmental damages for instance. The main
issues concern negative externalities as, if no action is taken, they can have an
irreversible impact (on the environment mainly, thus on the ecosystem which can affect
livelihoods and living conditions, especially in developing countries where the
population is much more reliant on crops and dependent on natural phenomena).
SD includes three “pillars”: financial, environmental and social. The concept of “Triple
Bottom Line” is often brought up and allows the evaluation of a company’s performance
according to the three pillars of SD14:
•

•

Environmental: the company’s operations must permit the preservation of
ecosystems (analysis of the impacts of the firm and its products on resources
used, waste production, pollution…)

•

14

Financial: it is the most classical conception, it also includes the capacity to
develop economically the place where the firm is settled (no corruption, respect
of competitors…)

Social: what the social consequences of the company’s operations are for all its
stakeholders – employees (working conditions, wages, non-discrimination),
suppliers, customers, local communities (cultural respect, nuisance) society as a
whole.

L’Observatoire de la Responsabilité Sociale des Entreprises, ORSE, www.orse.org.

7


The scheme below shows that to be responsible a company has to find the balance
between these three dimensions so that it can combine three objectives: economic
prosperity, social justice and environmental quality15.
Figure 2.1: CSR’s three dimensions

Social /
Societal

fair

Economical

Sustainable

liveable

viable

Environment
nature

Source: Capron and Quairel-Lanoizelée16.

The vision shown in this scheme reinforces the following conception of SD from
Quebec’s plan for sustainable development17 stating that “the stakes of sustainable
development is the capacity of concerned partners to act in a concerted and harmonious
way in order to create and maintain a balance between the benefits of an action and its
consequences, either for the environment, the mode or the standard of living. This
harmony is the result of a common will, a vision that ensures solidarity and cohesion of
actions. It is necessary to consider any action knock-on on what characterizes quality of
life. The whole society is thus concerned. The quest for sustainable development applies
to both local and national levels. Sustainable development is a question of concern for
governments, regional and local authorities, socioeconomic actors and citizens”
(translated from French, 2004). Some new interpretations of the relations between the

15

ORSE: www.orse.org.
Capron, M. and Quairel-Lanoizelée, F., (2004), Mythes et Réalités de l’Entreprise Responsable, Paris:
La Découverte, 116.
17
Gouvernement du Québec, (2004), Plan de Développement Durable du Québec,
http://www.mddep.gouv.qc.ca/developpement/2004-2007/plan-consultation.pdf, 12.
16

8


three aspects of CSR add also a fourth dimension incorporating all the three others, this
fourth dimension is the ethical one; Yamaha18 is considering it in its CSR philosophy.
Many ethical issues are raised because of relocations (like job losses in parent countries,
bad working conditions in host countries), moreover numerous NGOs are denouncing
multinational companies’ (MNCs’) practices in developing countries (too low wages,
long working days, child labour, pollution…). An example of NGOs’ activism can be the
award-giving (Public Eye Awards) by two Swiss NGOs (la Déclaration de Berne and
Pronatura) for the most irresponsible companies during the Davos Forum this year19.
They made a list of candidates in three different categories: fiscal, social and
environmental. This can create very bad advertisement for cited companies (like CocaCola which was mentioned in two categories…).
The transcription of SD into business practices gave birth to Corporate Social
Responsibility (CSR) which evolution over time has not associated all the three pillars
together from the beginning.

2.2 Evolutions and Definitions of Corporate Social Responsibility
In 2004, the World Business Council for Sustainable Development (WBCSD) gave the
following definition of corporate responsibility: “The commitment of business to
contribute to sustainable economic development, working with employees, their families,
the local community and society at large to improve their quality of life”20.

2.2.1 Corporate Social Responsibility
Now let us see how the concept evolved over time.
Robert D. Hay and Edmund R. Gray (1980) identified three phases in the development of
social responsibility, while Sethi (1975) had also previously identified three phases,
encompassing more or less the same features, but named differently:

18

Yamaha: http://www.yamaha-motor.co.jp/global/about/csr/index.html.
Stam, C., (2006), “Des ONG décernent des prix de l’irresponsabilité d’entreprise en ouverture du Forum
de Davos”, Jan. 24, Novethic, http://www.novethic.fr/novethic/site/article/index.jsp?id=98111.
20
WBCSD: www.wbcsd.org.
19

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Table 2.1: Phases in the development of CSR
Robert D. Hay and Edmund R. Gray21

Sethi22

“Profit maximizing management”: the only objective of
Social obligation
managers is to maximize profits (Adam Smith, Calvinism)
“Trusteeship management”: dating back from the 1920s-1930s,
this phase recognised the importance of enlightened management
Social responsibility
towards all the people who interact with the company, not only
stockholders, but also employees, customers, suppliers, banks and
the community.
Social responsiveness
“Quality of Life Management”23: in this most recent phase, in
(proactivity) addition to their enlightened management, companies are
Frederick (1986)
expected to solve major society issues thanks to their knowledge
called this last one
and resources.
social rectitude24
Source: Newton and Ford.

As for him, Roland Pérez25 differentiated two conceptions of CSR:
•

a passive conception where the managerial model is based on the dissociation
business – off business, it is the neo liberal model in which CSR is non sense:
since the company respects the law it can do whatever it wants, if the manager is
only committed to business during the week, he can then be a good citizen the
rest of the time

•

an active conception: the managerial model is based on the integration business –
off business, professional and private life interact in this model, the manager must
be competitive but he also has to take care of his internal and external partners, as
well as the environment, keeping thinking of the future generations (which brings
us back to the definition of SD).
More generally, for Pérez, responsible management, CSR and SD represent the
integration of externalities in the company’s behaviour.

21

Newton, L. H. and Ford, M. M., (2004), Taking Sides: Clashing Views on Controversial Issues in
Business Ethics and Society, 8th ed., McGraw-Hill, 83-85. From Robert D. Hay and Edmund R. Gray,
“Introduction to Social Responsibility”, in David Keller, man. Ed., Ethics and Values: Basic Readings in
Theory and Practice (Pearson Custom Publishing, 2002). Reprinted from Robert D. Hay and Edmund R.
Gray, Business and Society: Cases and Text, 2nd ed. (South-Western, 1980). Copyright © 1981 by SouthWestern, a division of Thomson Learning.
22
Sethi, S. P., (1975), “Dimensions of Corporate Social Performance: An Analytical Framework”,
California Management Review, Spring, 17(3), 58-64.
23
Newton and Ford, (2004), Taking Sides: Clashing Views on Controversial Issues in Business Ethics and
Society, 85.
24
Amba-Rao, S. C., (1993), “Multinational Corporate Responsibility, Ethics, Interactions and Third World
Governments: An Agenda for the 1990s”, Journal of Business Ethics, 554.
25
Pérez, “Quelques Réflexions Sur le Management Responsable, le Développement Durable et la
Responsabilité Sociale de l’Entreprise”.

10


From the phases identified above, different definitions of CSR have been elaborated,
depending also on economic trends. Let us mention a few of them:
•

The only social responsibility of a company is to increase shareholder value
(Friedman, 1970; Hay and Gray, 1974; Zenisk, 1979). Zenisk also insisted on the
need for congruence between managerial values and shareholders’ expectations.

•

CSR is made of corporate good citizenship and philanthropy (Epstein, 1989; Hay
and Gray, 1974; Zenisk, 1979). “Corporate philanthropy refers to the practice of
companies of all size making charitable contributions to address a variety of
social, economic and other issues as well as part of their overall corporate
citizenship strategy”26. Donaldson (1989) also included ethics as an imperative in
management.

•

CSR is corporate legitimacy and value of management.

Patrick Gabriel and Christian Cadiou then raised the question of the company legitimacy
as a moral person27.
This question is even more relevant in the current context of the growing importance of
CSR and increasing clashes of interests between stakeholders. The two authors assert that
legitimacy is often tied to the social acceptability of actions undertaken by companies.
Thus, they offer different views on legitimacy:
•

R. Laufer (2000): the legitimate action is in accordance with the imperatives
defined by the roots of the legitimate power

•

Suchman (1995): legitimacy is defined by the finality of the action (noticeable
after the event)

•

Weber (in Gabriel and Cadiou, 2005): an action is legitimate if the cause it is
undertaken for is legitimate.

To give a comprehensive definition of social responsibility and answer the question on
the requirements of corporate social performance, Carroll (1979) created a « social
performance model ». He found out that there are three types of views on CSR:
•

the most classical one, questioning whether corporate responsibility should go
beyond profit and legal obligations

•

another one listing all the points CSR should address (beyond profit and legal
obligation, like social and environmental issues for instance)

•

the last one referring to the philosophy of response from companies: reactivity or
proactivity?

26

Anonymous, (2006), “CSR and philanthropy”, Caribbean Business, Sept. 28, 52.
Gabriel, P. and Cadiou C., (2005), “Responsabilité sociale et environnementale et légitimité des
entreprises: Vers de nouveaux modes de gouvernance ?”, La Revue des Sciences de Gestion, Direction et
Gestion, n° 211-212 - R.S.E., 127-142.
27

11


To give a comprehensive view of a business’ duties, he elaborated the following scheme:
Table 2.2: Categorization of Social Responsibilities
Discretionary
responsibilities

TOTAL

Ethical
responsibilities

SOCIAL
RESPONSIBILITIES Legal
responsibilities
Economic
responsibilities

Responsibilities left to the choice of
businesses (no expectations from the society,
like philanthropic donations).
To meet society’s expectations above the
legal and economic responsibilities. This
concept is not really well defined, thus
companies do not really know how to deal
with it.
Laws and regulations that businesses have to
respect as part of their “social contract”.
“first and foremost social responsibility”
The goal of businesses is to produce goods
and services that respond to the needs of
society, and sell them while making profit.
These are the bases of social responsibilities.

Source: Carroll28.

With this model, the different responsibilities can be addressed together and not
necessarily one after the other (economic and legal responsibilities are to be dealt with at
the same time e.g.).

2.2.2 Stakeholders
CSR includes taking care and addressing the claims/demands of all stakeholders.
According to Clarkson, “stakeholders are persons or groups that have, or claim,
ownership, rights or interests in a corporation and its activities, past, present or future.
Such claimed rights or interests are the results of transactions with, or actions taken by,
the corporation, and may be legal or moral, individual or collective. Stakeholders with
similar interests, claims, or rights can be classified as belonging to the same group:
employees, shareholders, customers, and so on.”29 Stakeholders can be then divided into
primary and secondary stakeholder groups depending if the survival of the company
depends on them or not. “A primary stakeholder group is one without whose continuing
participation the corporation cannot survive as a going concern”30 while “secondary
stakeholder groups are defined as those who influence or affect, or are influenced or
28

Carroll, A. B., (1979), “A Three-Dimensional Conceptual Model of Corporate Performance”, Academy
of Management Review, 4(4), 499-500.
29
Clarkson, M. B. E., (1995), “A Stakeholder Framework for Analyzing and Evaluating Corporate Social
Performance”, Academy of Management Review, 20(1), 106.
30
Ibid.

12


affected by, the corporation, but they are not engaged in transactions with the corporation
and are not essential for its survival”31. An overview of both groups can be seen in the
following scheme (with primary stakeholders in yellow and secondary stakeholders in
blue, while influencers are in light yellow):
Figure 2.2: Stakeholder groups

Unions

Media
Shareholders

Governments

Rating
agencies,

Employees

(Local/Territorial/
National
Authorities)

Certification
institutions

Civil Society
(NGOs…)

…

Firm
Communities

Special
interest
groups (that

Customers

Investors
(Banks…)

Suppliers
Environment

can influence
public opinion)

Source: Clarkson, 1995.

Secondary stakeholders do not have the power to prevent a company from performing;
however, they can mobilize the public opinion for or against a company and its acting.
There is actually a demand for social responsibility, thus companies have to create a
“level of trust among people – a feeling of security that each individual’s interests will be
taken into account”32. When people have this feeling of security they can work
productively, thus “social responsibility – that is, acting in the interest of others, even
when there is no legal imperative – lies at the base of trust”33. However acting in the

31

Clarkson, “A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance”,
107.
32
De Wit, B. and Meyer, R., (2004), Strategy: Process, Content, Context, 3rd ed., 598.
33
Ibid.

13


interest of employees is only a small part of social responsibility, which is to be extended
to all the stakeholders of the company.

2.3 CSR as part of corporate strategy
The French Observatory for CSR (ORSE)34 enumerates seven trends in determining what
kind of CSR companies are engaged in:
•

Ethical: this approach consists for a company in applying its ethical convictions
in its investments (first step in determining Socially Responsible Investments SRI), usually some sectors are excluded directly (alcohol, tobacco, nuclear power,
pornography…)

•

Environmental: companies are selected depending on their environmental
performance

•

Social: quality of the company’s social policies and respect of Human Rights
(HR)
Citizenship: around the notion of community (local community and ethnic
minorities), mainly developed in the US

•
•

SD: this approach favours companies that perform in their three sectors of
responsibility (according to the three pillars of SD), it favours a long-term view
and management systems that are looking for continuous progress and strategy
sustainability

•

Stakeholder: this approach emphasizes the dialogue with all the stakeholders of
the company and the way it takes into account their expectations, it is usually tied
with the SD approach

•

Financial: taking into account societal factors in the valuation of the company is
better to find the real value of the company rather than the only use of financial
data; however concepts of conviction and general interest are not taken into
account35.

The approach chosen by companies can depend on their activity and/or on their strategy.
“Corporate strategy is the pattern of decisions in a company that determines and reveals
its objectives, purposes, or goals, produces the principal policies and plans for achieving
those goals, and defines the range of business the company is to pursue, the kind of

34
35

ORSE, http://www.orse.org.
Anonymous, “Définition de la RSE”, ORSE, http://www.orse.org/fr/home/index.html#rse.

14


economic and noneconomic contribution it intends to make to its shareholders,
employees, customers, and communities.”36
However, it is not only a question of strategy, the adoption of CSR policies depends also
on the size and financial situation of companies, even though CSR, appearing as an
application of SD to MNCs, and also as a means to regulate their operations and
sometimes their unethical practices in their home countries and abroad, is a concept that
is spreading quite quickly. CSR first started with MNCs that implemented voluntary
codes of conduct and charters but now it is also spreading to Small and Medium
Enterprises (SMEs) because of the requirements of their business partners, or on a
voluntary basis. However, Tuzzolino and Armandi adapted Maslow’s need theory to US
companies37, and through their interpretation it is clear that MNCs are the only ones
capable of attaining the last state of need, that is realized through Corporate Social
Responsibility:

36

Andrews, K., (1987), “The concept of corporate strategy”, Article adapted with permission from Chapter
2 of The Concept of Corporate Strategy, McGraw-Hill Companies Inc., in De Wit, B. and Meyer, R.,
(2004), Strategy: Process, Content, Context, 3rd ed., Thomson, 71.
37
Tuzzolino, F. and Armandi, B. R., (1981), “A Need-Hierarchy Framework for Assessing Corporate
Social Responsibility”, Academy of Management Review, 6(1), 21-28.

15


Table 2.3: Need Hierarchy – Comparison between Individuals and Companies
Maslow

Tuzzolino & Armandi

PHYSIOLOGICAL
The fundamentals of survival, including Profitability (classical model – Friedman)
hunger and thirst
SAFETY
Dividend policy, payout ratio, integration
Concern over physical survival, ordinary
(vertical and horizontal), conglomeration,
prudence
competitive
position,
closure,
organizational slack
AFFILIATION
Trade association, industry publications,
Striving to be accepted by intimate
lobby group, bargaining, huddling,
member’s of one’s family or a group
cooptation
ESTEEM AND STATUS
Market position, product leadership,
Striving to achieve a high standing relative
financial ratios and margins, market share,
to others
image creation, price leadership
SELF-ACTUALIZATION
Internal (employee relations)
Job enrichment, compensation policy,
pension plan, work centrality, goal
A desire to know, understand, systematize, alignment
organize, and construct a system of values External (community and government
relations)
Corporate philanthropy, affirmative action,
pollution abatement, product reliability
Source: Tuzzolino & Armandi, 1981.

They even go further by talking of the teleogical imperative of today’s organizations, of
the need for goal congruence within the organization, the socially responsible activities
companies should be engaged in, and the fact that firms should repair the damages they
made to the environment 10 or 20 years before they even started to engage in CSR.
If we try to apply this scheme to SMEs they would probably be in one of the first three
steps, but no further. Thus, from this, we can see that SD and CSR cannot be taken care
of by any companies, as some of them have other priorities, such as just “surviving”.
Nevertheless, some SMEs start to have CSR policies while some MNCs are not doing
anything at all (except maybe some PR). Another element to take into consideration is
that the authors wrote this article more than 25 years ago, and other issues have emerged
since then (like global warming emphasized by recent disasters). Some things have
actually evolved over the last 25 years and it is also in the interest of SMEs to engage in

16


CSR voluntarily so that whenever any regulation shows up they are prepared and they
have no additional costs to bear.
The socially responsible organization is the self-actualizing organization (even though
the categorization of needs is fairly subjective): having satisfied prepotent needs, they
have the envious position of voluntarily contributing to the welfare of all their
constituencies38.

2.4 Critics and Measures to Overcome Them
2.4.1 CSR also Raised some Critics
Different critics have been addressed towards CSR, some argue that there is no need for
it, others say that it is unnecessary as, even if companies do not do anything for it, they
will not be sanctioned, finally it is also said to give too much freedom to companies that
eventually use it as a tool to avoid confrontation with stakeholders.
The French movement Attac (Association pour la Taxation des Transactions financiers
pour l’Aide aux Citoyennes et citoyens) also highlights the fact « social responsibility »
depends on soft law, which is not binding, is freely chosen by companies, and depends on
moral commitment only, without any penalty in case of non respect. The State does not
intervene, thus CSR fosters self-regulation.39
According to Betsy Atkins40, shareholders expect companies not to be irresponsible, thus
not to spend money on unnecessary things (like social causes which do not increase
profits). Companies should comply with the laws and regulations without behaving
zealously; otherwise they would irresponsibly and deceptively squander the money of
their stockholders. Actually, if shareholders want to behave in a socially responsible way
they do not have to rely on companies to do so: they can act by themselves. Atkins also
highlights the fact that firms should use “the rhetoric of social responsibility” as a
marketing tool, so that people feel good about consuming their products and investing in
the corporation, but firms should not spend money for it. She is actually following the
direction given by Milton Friedman (1970) for whom social actions can only be made

38

Tuzzolino and Armandi, (1981), “A Need-Hierarchy Framework for Assessing Corporate Social
Responsibility”, 25.
39
Group « Economie solidaire et démocratie économique » from the scientific committee of Attac: 2003,
“Responsabilité sociale des entreprises, ou contrôle démocratique des décisions économique ?”,
L’Economie Politique, April, 18, 7-25.
40
Atkins, B., (2006), “Corporate Social Responsibility: Is It “Irresponsibility”?”, The Corporate
Governance Advisor, 14(6), 28-29.

17


keeping in mind value maximization41, thus a firm can undertake social actions if it
“[makes] it easier to attract desirable employees, it [reduces] the wage bill and [lessens]
losses from pilferage and sabotage and [has] other worthwhile effects”42 or if it would
permit to avoid corporate taxes e.g.. For him, “whether blameworthy or not, the use of
the cloak of social responsibility and the nonsense spoken in its name by influential and
prestigious businessmen, does clearly harm the foundations of a free society”.
Alexandra Petrovic recounts in La Tribune that a study from Parson Consulting showed
that companies complying with the minimum requirements in terms of CSR are not
imposed sanctions on.43 Even in spite of social or environmental scandals, some
companies keep being very profitable (Total e.g.). Nevertheless SD is not opposed to
financial performance, even though SD is too often used for marketing purposes.
As also reminded by Lionel Lévy44, in France, listed companies have a legal obligation to
issue a sustainable development report every year (or include specific indicators in their
annual report clearly linked with their enforcement of CSR). However, most of the 700
French listed companies do not respect this law45, showing that sustainable development
is only used for marketing purposes for the image of the MNCs, without the
transformation of operations it should incorporate. There are also notation agencies that
can give the main audience a good overview of MNCs’ operations; however we are not
sure they are checking for the conditions in every country MNCs operate in.
Thus, from these remarks we can draw a first hypothesis:
H1: There is no sanction imposed on companies that are not committed to CSR.
Attac also denounces the fact that, as now companies have the shield of CSR, they are
choosing the partners they are negotiating with instead of the traditional collective
bargaining. They can also choose their own instruments to measure their progress in
terms of CSR, without using any standardised tools. A pretty similar critic comes from
the fact that CSR tends to bypass unions (which can also be supplanted by partnerships
between companies and NGOs). Actually when we read about CSR, we barely read
about unions or the potential role they can have in it.
41

Garriga, E. and Melé D., (2004), “Corporate Social Responsibility Theories: Mapping the Territory”,
Journal of Business Ethics, 53, 53.
42
Newton, L. H. and Ford, M. M., (2004), Taking Sides: Clashing Views on Controversial Issues in
Business Ethics and Society, 8th ed., McGraw-Hill, 93. From Milton Friedman, “The Social Responsibility
of Business is to Increase Its Profits”, in Thomas Donaldson and Patricia H. Werhane, eds., Ethical Issues
in Business: A Philosophical Approach, 4th ed. (Prentice Hall, 1993). Reprinted from The New York Times
Magazine (September 13, 1970). Copyright © 1970 by Milton Friedman.
43
Petrovic, A., (2006), “Le choix du développement durable ne profite guère aux entreprises”, La Tribune,
Jan. 17, 34.
44
Lévy, L., (2005), “Des rapports environnementaux et sociaux encore insuffisants”, La Tribune, April 29,
35.
45
Law n°2001-420 related to new economic regulations (Art. 116), 2001.

18


Likewise the French movement mentions that charters and codes of conduct are a good
means to send a signal to stakeholders however we can never know if they are really
implemented or not. Moreover, even though more and more companies seem committed
to CSR, the literature might tell us that concrete practice of CSR is limited as we can
only read always the same few examples (Shell, Nike, Adidas, Ben & Jerry’s, Body
Shop…).
Finally, Attac also says that CSR tends to take into account direct stakeholders, while
neglecting general interest.

2.4.2 Implementation of codes of conduct and reporting
As an answer to criticism on their implementation of CSR, more and more companies are
creating codes of conduct in order to make their commitment more concrete. Stefanie B.
Hiβ46 points out that systems to monitor these codes of conduct are often criticized as
they are said to be limited to few impromptu controls which are not an incentive for
sustainable improvements and efforts. Moreover controls usually cannot reach the
informal sector (impossible to check if subcontractors are complying with the codes of
conduct) which might be an incentive for relocation from the formal to the informal
sector. Finally, because of dependency structures, suppliers only comply with the least
that should be done (keeping in mind money savings).
KPMG conducted a survey47 in order to analyze trends in CSR reporting of the world's
largest corporations. For this purpose, they looked for information on the top 250
companies of the Fortune 500 (G250) and the top 100 companies in 16 countries (N100),
which accounted for more than 1600 companies.
Thanks to this survey KPMG found out that reporting has been increasing for 12 years.
Changes occurred in the information provided as before the main content was about
environment; nowadays (from 1999) sustainability reporting is also made (with still
environmental components, but also social and economic ones). In 2005, 52% of G250
and 33% of N100 companies issued separate CSR reports (45% percent and 23%,
respectively, in 2002). If we include annual financial reports with CSR information, these
percentages are even higher: 64% (G250) and 41% (N100). The sectors which have a
relatively high impact on environment are still leaders in reporting. At the global level
(G250), more than 80% companies are reporting in electronics and computers, utilities,
automotive and oil and gas sectors, whereas at the national level (N100), over 50% of
companies are reporting in the utilities, mining, chemicals and synthetics, oil and gas, oil

46

Hiβ, S. B., (2006), “Does Corporate Social Responsibility Need Social Capital?”, Journal of Corporate
Citizenship, Autumn, 23, 81-91.
47
KPMG, (2005), International survey of corporate responsibility, electronic version.

19


and gas and forestry, paper and pulp sectors. However the most remarkable increase is in
the financial sector (more than 50% growth since 2002).
Companies now need to also set up an independent external system of monitoring (in
addition to codes of conduct and internal controls), conducted by an independent
organization (NGO e.g.). It makes them more credible towards their stakeholders
(criticism of internal monitoring and the fact that codes of conduct have been
implemented in an unreliable way). Firms also have to develop these monitoring systems
in their supply chain in the developing countries in order to raise social standards there48.
‘Social standards’ is generally the “comprehensive term for minimum standards with
respect to the provision of labour contracts and labour rights”, more specifically ‘core
labour standards’ refers to the definition of the International Labour Organization (ILO)
– 8 key conventions in 4 areas49.
Nevertheless, there are complementarities between internal and external monitoring;
furthermore, internal monitoring can help to spread social standards within the culture of
the company if management feels concerned about it. There is actually a real need for
reciprocal understanding, taking into account the different cultures as MNCs are
operating in different countries with different cultures. In fact, problems can arise when
the manager has to make a choice between loyalty to the parent firm or the host nation’s
cultural values50.

2.5 Increasing expectations on MNCs
2.5.1 Should companies play the role of too weak governments?
Companies also have to understand now that there is an increase in social expectations
and that their role is being more important, it is not only about philanthropy, it is because
their power is huge (some MNCs have bigger budgets than those of some states) and for
this reason society is expecting accountability from their part. There are more and more
problems at an international level that governments fail to solve together (especially
environmental problems), thus companies are expected to commit themselves to find a

48

Hiβ, (2006), “Does Corporate Social Responsibility Need Social Capital?”.
Ibid, 82.
50
Amba-Rao, S. C., (1993), “Multinational Corporate Responsibility, Ethics, Interactions and Third World
Governments: An Agenda for the 1990s”, Journal of Business Ethic.
49

20


solution to these issues. They wanted to be more powerful and for some of them to get
more power than states, consequently they have to work on global issues.51
One of the sectors in which we can realize that governments not always play their role
any more is security as in some countries standing army supported by the state budget
tends to be out of date.52 Consequently it is noticeable that public and private sectors are
getting closer in their economic and security processes. Private sector provides arms and
techniques (legally or not), it can also offer security services (and it also has the most
dangerous technologies at its disposal) while public services (like defence departments)
are undergoing research and using technologies closed to the ones normally linked to
private sector. Furthermore, the business sphere has a more or less marked influence on
conflicts:
•

it can manipulate them, stir them up, keep them alive, even provoke them

•

and when conflicts end, the private sector is expected to provide resources for
rebuilding, to promote political or social rights, to give an orientation to new
investments53.
When conflicts are going on, companies should choose their side, or leave the country
(however this is usually quite expensive, especially if they plan to start operations over at
the same place), this would be morally the best solution. Anyhow, according to Bailes
and Holmqvist, recent analysis showed that growth and international economical
commitment more often end conflicts than produce them. Moreover MNCs often have
better knowledge of dangerous zones than national or international entities, thus they can
gain power from this situation or people can expect them to act responsibly as
governments should be doing.

2.5.2 CSR’s stakes
As mentioned in the Caribbean Business (2006)54, corporate philanthropy was first
focused on parent countries and is now expanding worldwide (even in countries firms are
not operating in, through foundations e.g.). Actually, companies found out that it can
help them reach new markets, develop better relationships with local governments and/or
business partners, and they are also improving their image. Philanthropy has thus become
51

Ruggie, J., (2002), “Comment & Analysis: Managing corporate social responsibility”, Oct. 25, Financial
Times,
http://search.ft.com/ftArticle?queryText=%22corporate+social+responsibility%22&aje=true&id=021025
000706&page=2.
52
Bailes, A. J. K. and Holmqvist, C., (2006), “Quel rôle pour le secteur privé?”, Politique étrangère,
Spring, in Problèmes économiques, May 24, 2.900, 33-38.
53
Ibid, 34.
54
Anonymous, (2006), “CSR and Philanthropy”, Caribbean Business, Sept. 28, 52.

21


a strategy by aligning charity with core business interests. Measurement tools of the
impact of charitable contributions have even been developed.
Moreover, CSR and the related codes of conduct should be an opportunity to spread
social standards in developing countries. However, “the social standards integrated into a
code of conduct convey certain values and norms. The monitoring systems used to
control the implementation of social standards have their limits because the ‘idea’ of
social standards and the values and norms incorporated in them do not trickle down into
the developing societies.”55 Thus social standards can be implemented only if they are
adapted to the context of each country, and their implementation can be sustainable if
there is “‘capital to be social’56 to bring them to life” (Hiβ, 2006).
“Increasingly companies are successfully intertwining public purpose marketing or
enlightened capitalism with their economic-oriented marketing strategies”57. Even
though marketing has been recognized as a way to promote CSR, some still think that
deciding to market socially is a trade-off with other activities (like performance
marketing). On the contrary, Attac says that nowadays thanks to CSR and
communication about it, companies can gain a competitive advantage over their
competitors and consider a long-term growth as they are now appreciated from internal
(employees) and external (consumers, governments) opinion.
According to Handelman and Arnold58, for the institutional theory, the viewpoint that
organizations attempt to meet short-term goals is incomplete. A main point in the
institutional theory is the acknowledgement of the institutional environment which
contains taken-for-granted social and cultural meaning systems defining social reality.
Thus the organization’s structure reflects the norms of the environment in which it is
immersed. Consequently in a same environment, organizations will tend to be
isomorphic as they are facing the same conditions. Organizations will try to find
legitimation which “represents a perception of how well the organization enacts and
upholds environmental norms”59. There are two elements of legitimation: pragmatic
legitimacy (egoistic motivation to increase one’s own welfare) and social legitimacy
(important for survival), based on whether the organization’s actions are consistent with
the welfare of the community and society. Organizations are looking for this legitimacy
55

Hiβ, S. B.: 2006, ‘Does Corporate Social Responsibility Need Social Capital?’, Journal of Corporate
Citizenship, Autumn, n° 23, 88.
56
Capital to be social’ is a normative quality of social capital including the use of networks, shared values
and trust in order to develop an affirmative attitude towards general interest.
57
Handelman, J. M. and Arnold, S. J., (1999), “The role of Marketing Actions with a Social Dimension:
Appeals to the Institutional Environment”, Journal of Marketing, July, 33.
58
Ibid, 34.
59
Ibid, 35.

22


from the society – word-of-mouth behaviour, avoiding boycotts (Handelman and Arnold,
1999).
They formulated four hypotheses and tested them with video scenarios shown to random
customers in a mall to collect their impressions. The results of the study indicate that
institutional theory has four specific contributions to make to the way we strategically
think about store, product and brand choice:
•

the theory and empirical results of this study strongly support the case for
institutional actions to become a strategic centrepiece, along with marketing’s
economic-oriented strategy

•

constituents have a minimum level of institutional actions that they find
acceptable, below that level, the effects of even high performative firms are
significantly impaired

•

legitimation reflects constituents’ approval of the organization, which is
necessary to obtain constituents’ support

•

institutional theory identifies support as an important dependent variable,
replacing the more specific store, product or brand choice variable if an
institutional orientation is to be adopted
Applied to CSR, this would explain that it is in the interest of MNCs to develop CSR
processes if other firms do, as their perception from stakeholders will be improved. Even
independently of what others are doing, MNCs should commit more to CSR in order to
comply with the expectations of their stakeholders; they will be able, then, to get
legitimation for their activities.
Companies are more likely to engage in CSR in a more regulated environment, either
through government regulations, collective agreements or when they partner with NGOs,
they need institutionalization to feel compelled to act responsibly. Stakeholders’ activism
is also usually required for the first move towards CSR60.

2.6 Performance
2.6.1 Socially Responsible Investment
“Socially Responsible Investment (SRI) combines investors' financial objectives with
their concerns about social, environmental, ethical (SEE) and corporate governance
issues. SRI is an evolving movement and even the terminology is still very much in the
evolving phase. Some SRI investors refer only to the SEE risks while others refer to ESG
60

Campbell, J. L., (2006), “Institutional Analysis and the Paradox of Corporate Social Responsibility”,
American Behavioral Scientist, March, 49(7), 925-938.

23


issues (Environmental, Social, and Governance). Eurosif believes both are relevant to
SRI. SRI is based on a growing awareness among investors, companies and governments
about the impact that these risks may have on long-term issues ranging from sustainable
development to long-term corporate performance.”61
SRI comes from the American business ethics, which started mostly with religious
congregations that wanted to invest in businesses respecting their Christian values.

2.6.2 Views on Performance
Meyer argues that “the performance of the firm is very difficult to measure, perhaps
impossible”62. As for him, the Western capitalistic way of thinking of performance is not
reliable as we cannot forecast future cash flows in a non-static environment. Moreover it
is also possible to cheat on figures by overstating revenues for instance. Even though we
have the possibility to add other (non financial) components to materialize performance,
those are too subjective (such as the balanced scorecard, defended by Kaplan) as it also
depends only on estimate. Thus thinking of performance seems only possible in the short
run, implying that it cannot have any academic realization.
J.P. Gond63 studied the interactions between societal and financial performances,
showing that they depend also on the interests main actors can have on the market. The
article he wrote attempts to show how interested actors construct and spread beliefs
concerning a positive relation between societal and financial performances on financial
markets on the one hand and in the business world on the other hand.
As for Gond, the choice of investing in a socially responsible way does not come from an
economic rationale but from a belief. He then tries to show how from these beliefs, the
positive relation becomes true thanks to interactions between societal and financial
performances on financial markets and in the managerial sphere. From an academic
perspective, he points out disappointing empirical results, with no concrete proof of a
positive relationship. From a managerial perspective, he brings to the fore that there is an
interest in a positive relation (at least symbolically), to legitimate measures managers
take. However to implement that kind of measure, the managers’ decisions depend on the
institutional context, as they have to be part of the social context.

61

European Social Investment Forum: http://www.eurosif.org/sri.
Meyer, M. W., (2005), “Can Performance Studies Create Actionable Knowledge if We Can’t Measure
the Performance of the Firm?”, Journal of Management Inquiry, 14, p. 287.
63
Gond, J. P., (2006), “Construire la Relation (Positive) entre Performance Sociétale et Financière sur le
Marché de l’ISR : de la Performance à l’Autoréalisation ?”, Revue d’Economie Financière, Sept., 85, 1-17.
62

24


Consequently, ratings have been created for the convergence of both concepts and permit
to define a metric on which to align “soft” notions linked to CSR. Actors can then
rationalise their actions with their newly adopted beliefs.
The positive correlation shown is also put forward, as we can only read or hear of a
positive correlation. Actually, if this correlation shows that responsible companies
outperform then an institutionalisation is possible at a larger level, if there are beliefs
existing then companies are going to change their way of doing things.
Previously, as no clear relationship had been established between Corporate Social
Performance (CSP) and Corporate Financial Performance (CFP), Orlitzky, Schmidt and
Rynes decided to conduct a meta-analysis to find a relationship between CSP and CFP.
So far, there had only been individual studies that lead to no conclusive result, no stable
pattern has been found yet. Thus the authors decided to aggregate the results of
individual studies, in order to get a greater precision thanks to the correction of statistical
errors. The following chart is summarizing different theories about potential
relationships, prior to their study:

25


Table 2.4: Theories on relations between CSP and CFP
Theories

Relationship
between CSP
and CFP

Instrumental stakeholder
theory

CSP
=>CFP

Stakeholder-agency
theory

CSP
=>CFP

Good management
theory

CSP
=>CFP

Slack resources theory

CFP
=>CSP

Virtuous circle theory

CSP
CFP

Authors
organizational performance depends on the
satisfaction of the different stakeholder
groups – Donaldson and Preston 1995, Jones
1995
- the different processes set up to adapt and
communicate with each stakeholder group
allow the managers to concentrate on the
organization’s financial goals (Hill and
Jones, 1992; Jones, 1995)
- when dealing with multiple stakeholders,
managers can permit their organization to
respond more efficiently to external demands
(Freeman and Evan, 1990)
high CSP provides a competitive advantage
by giving more rationality and fairness in the
treatment of external claims (Waddock and
Graves, 1997)
prior CFP is directly associated with
subsequent CSP:
- high levels of CFP may provide the slack
resources necessary to engage in CSR
(Ullmann, 1985; Waddock and Graves,
1997)
- the decision to allocate funds or determine
social and environmental policy depends on
the availability of excess funds (McGuire et
al., 1988)
cross-sectional relationship (Waddock and
Graves’, 1997)

Source: Orlitsky, Schmidt, Rynes, 2003.64

After the conduction of their meta-analysis across studies, they draw the following
conclusions:
- CSP and CFP are positively correlated
- the relationship of the relation is bidirectional and simultaneous
- reputation seems to be an important mediator in the relationship.
Moreover, the implication for managers is that market forces do not punish companies
with a high CSP, and that they can use (and should use) CSP as a reputational lever65.

64

Orlitzky, M., Schmidt, F. L., Rynes, S. L., (2003), “Corporate social and financial performance: a metaanalysis”, Organization Studies, 24(3), 403-441.
65
Ibid, 426.

26


Koedijk et al. (2006), in their paper, aimed at showing whether a firm can do good by
doing well. They used a database of eco-efficiency scores on a 8-year period (from
Innovest) to check if it influences financial performance and firm valuation. They found
out that “the benefits of adopting a strong environmental policy are unlikely to outweigh
the costs”66 and “that environmental winner companies initially did not trade at a
premium relative to losers” 67. However, “over time, the valuation differential between
winners and losers widened substantially”68. Thus, they demonstrated that “managers
have little reason to worry that an environmental policy conflicts with the company’s
primary financial objectives”69.

Ultimately, from this literature, I can draw five more hypotheses:
H2: Good environmental performance generates good financial performance.
I decided to focus on environment as there are more quantitative data on environmental
issues, as still some things can be measured, contrarily to social issues that are sometimes
just perceptions, or ways of doing things with nothing written, thus quite hard to prove.
The following hypothesis will permit to attempt the generalization of H2:
H3: Companies with high socially responsible standards perform better than those with
poor socially responsible standards.
Then, as we can hear more and more of CSR, I propose the following hypothesis:
H4: Companies tend to generalize CSR policies.
After that, I will test a hypothesis on whether companies are really committed to CSR:
H5: CSR is just PR.
Finally, to counter critics on CSR, and support a part of the literature, the last hypothesis
is:
H6: Even though sustainable development can be considered as in contradiction with the
market law, it provides development opportunities for companies.

66

Guenster, N., Derwall, J., Bauer, R. and Koedijk, K., (2006), “The Economic Value of Corporate EcoEfficiency”, winner of the 2005 Moskowitz Prize, Social Science Research Network,
http://ssrn.com/abstract=675628, 30.
67
Ibid.
68
Ibid.
69
Ibid.

27


Conceptual framework
In order to have a clear representation of the subject of the study, the readers can have a
look at the following summary of the study:
Figure 2.3: Conceptual framework

Stakeholders

COMPANY

Innovation

Communication
Sustainable
Development

Reputation
Image
Visibility

Economic

…

Environmental

Social

The conceptual framework gathers the entities which interact with a company while in a
CSR process. They are all both inside and outside the company as they all have impacts
and/or are present both inside and outside the company. The arrows represent the
relationships we will study along the thesis.

28

IÉSEG Master Thesis – Aude Richon – 3 Methodology

3 Methodology

“Research design is the plan and structure of investigation so conceived as to obtain
answers to research questions […] A research design expresses both the structure of the
research problem and the plan of investigation used to obtain empirical evidence on
relations of the problem”70.
In this part, I will give an overview of the organization of the study to answer the
research question, that is to say what is to be done in more technical terms. This part will
provide information on data collection, instrumentation and procedures. For that, let us
follow the different descriptors of research design given by Cooper and Schindler (2003).
We also have to keep in mind that the research design is clearly based on the research
question and needs to be adapted to it.

70

Phillips, B. S., (1971), Social Research Strategy and Tactics, 2nd ed., 93, quoted in Cooper, D. R. and
Schindler, P. S.: 2003, Business Research Methods, 8th ed., 146.

29


3.1 Research Model
Figure 3.1: Research model
Research purpose
To understand why companies decide to engage in Sustainable Development (SD),
and more specifically in Corporate Social Responsibility (CSR), while taking into
account the relationship between Corporate Social Performance (CSP) and Corporate
Financial Performance (CFP)
Research question
What characterizes Corporate Social Responsibility strategies and do they
have an impact on financial performance?
Secondary questions
Which conditions lie at
the heart of successful
CSR policies?

Why would companies
committed to CSR
perform well/better
financially?

How can companies
overcome/counterbalance
the constraints of
implementing CSR
policies? What are the
benefits?

Research design
Deductive study, quantitative approach (ratio analysis) and qualitative
approach (semi-structured face-to-face/telephone interviews)
Data collection
Primary data: interviews, financial data
Secondary data: annual and sustainability reports, articles, websites
Theoretical background
Sustainable Development, Corporate Social Responsibility, Societal
Performance, Financial Performance…
Analysis and conclusion
Inspired from: Persson & Slonovschi71.

This figure shows the research process and the path I will follow to complete my study
on CSR and performance. The first step is to determine the research purpose, then set up
the research question and subsidiary questions in order to clearly set the course of study
71

Persson, C. and Slonovschi, D., (2003), New Patterns of Foreign Direct Investments Indirect
Internationalisations of MNCs Using Platform Countries, Master Thesis, 12.

30


and research. Subsequently, the figure incorporates the methods used to gather
information and the concepts pre-required to come off to the analysis and draw the
conclusions.

3.1.1 Degree of research question crystallization
I will start with an explanatory study, using a wide range of secondary data (mainly
scientific articles and reports). This study is necessary to start the research as the research
problem is of international concern and a global level implies harder-to-grasp concepts
on which it is almost impossible to have an opinion or quick outlook right away. I will
get qualitative information from scientific articles and quantitative data from reports
(research organizations reports on MNCs and CSR and annual and sustainability reports
from companies).
Then, I will proceed with a formal study in order to answer the few hypotheses
mentioned earlier, drawn from the exploratory research and directly linked to the
research question.

3.1.2 Purpose of the study
The purpose of the investigation is to find out which spillovers a multinational company
(in this study, a multinational company) can get from the dedication of a part of its
resources to Corporate Social Responsibility.
We will have a look at a potential positive relationship between Corporate
Social/Societal Performance and Corporate Financial Performance. I will also try to show
why companies decide to engage in CSR, what they can gain from their commitment
(financially and in other immaterial aspects, such as reputation, innovation…). Thus, the
purpose of the study is descriptive, as the research is more or less made to determine how
sizeable the impact of CSR policies on a company’s performance is. However the study
might also have some causal aspects, as we will try to find relationships between CSP
and CFP.

3.1.3 Type and sources of data
For the sake of the study, we will use both primary and secondary data.
Primary data will be historical data concerning the returns (or other financial data) of
benchmarking stock market indexes and sustainable stock market indexes. They will be

31


compared through ratio and graphical analysis, depending on the relevance of the data
gathered. I will also perform six one-hour interviews with a few Sustainable
Development managers, as I want to understand their vision of CSR and the strategy of
their firm concerning it. Thus I will make only few interviews but these will be in-depth.
If I cannot reach enough companies, I will perform interviews of people working directly
with them on SD/CSR issues, such as consultants in sustainable development, or people
in charge for social investment.
Secondary data will be scientific articles, reports, studies…

3.1.4 Time dimension
The quantitative study will be cross-sectional as I will compare indexes over a 5-year
period in order to have results from which I could draw conclusions.
The qualitative study will be longitudinal as I will meet each person only once.

3.2 Method of data collection
3.2.1 Data collection
As far as data collection is concerned, monitoring will be the collecting process for
quantitative data. I will use the websites of institutions providing sustainable indexes and
databases from Bourse websites such as Yahoo Finance72.
To get qualitative data for the purpose of my study, I intend to interview five people in
charge for Sustainable Development/Corporate Social Responsibility in different French
multinational companies.
I prefer to pick multinational companies because smaller firms usually do not have one
person working full time on this issue, or each department of the firm is dealing with its
own part of social responsibility. For my thesis, I think it will be more relevant to grasp a
more comprehensive view of each company on this subject. If I cannot have access to
companies, then I will interview opinion leaders, who are not members of the companies
but work with them on CSR issues.
As defined by Valerie Janesick, an interview is the “meeting of two persons to exchange
information and ideas through questions and responses, resulting in communication and

72

Yahoo Finance: http://fr.finance.yahoo.com/.

32


joint construction of meaning about a particular topic”73. Interviewing is usually
described as a conversation between two people, one asking questions (interviewer) and
leading the conversation, and the other one answering them (interviewee). In the context
of this thesis, I will be both the researcher and the interviewer, which will allow me to
spend less time on the interview guide, as I precisely know what I am looking for and the
objectives of each question I will ask.
I plan to perform semi-structured interviews (in-depth interviews) – conversational but
with a minimum of structure (exploratory study) – so that interviewees will feel freer to
express their point of view and I will get the maximum information. It will also be easier
for me to catch their perspective on the situation. It will be as well a means to prevent the
“social desirability bias” of the structured interview: I do not only want to hear that
everything done by companies is perfect, I want to hear about a lack of opportunities to
detect issues for instance. As CSR remains quite controversial, it is important also to let
people talk about it, without directing them too much. Finally, I prefer not to use
unstructured interviews: they would be the best situation however the risk of missing
some information is too high.
The questions should have more or less the same meaning to the respondents as they will
occupy roughly the same function, which will take away one risk of bias. Another aspect
is that I will perform personal interviews but not on personal subjects, it will then be
probably easier for interviewees to answer as respondents will not be involved
personally. However the pressure of the company, the corporate culture, the secrecy
around strategy will probably maintain a certain reserve in their answers. Besides
interviewees will more or less control the course of the interview as I am “just” a student
while they will certainly be much older than I am and have a lot of responsibilities, even
though I am questioning them I have to be careful not to be manipulated. Nevertheless,
during the interview, I will develop a normal relationship with interviewees, as for a
discussion, I’ll disclose basic information about myself (background, purpose of my
study), and attempt to establish a relationship of confidence.
I will prepare an interview guide with the wording of questions, making sure it is almost
only made of open-ended questions to encourage the respondents to disclose more
information. I will, as much as possible, avoid yes/no questions, and no leading questions
(those that presuppose a particular answer). I intend to record the interviews, except if the
interviewee does not accept, in order to keep the most reliable of what would have been
said.

73

Quoted in Esterberg, (2005), Qualitative Methods in Social Research, chs. 5-9, McGraw-Hill Primis, p.
83.

33


The readers can have a look at the interview guide in Appendix A.

3.2.2 Weaknesses and strengths of the data collection method
3.2.2.1 Qualitative data
Interviewing allows many ways of gathering information through non verbal
communication, follow-up questions and probe for answers. There is also a possibility of
pre-screening the interviewees (if one firm does not let me talk to the manager for
sustainable development, I can choose another one), and making sure that the participants
have the information I am looking for.
Generally interviewing creates a good cooperation of respondents, but the risk here is
that I am going to interview professionals that have busy schedules and the subject can
be quite sensitive for some companies. Thus, I have to really show them that answering
my questionnaire is worthy. Another issue is that interviewing is costly: in time (to get
the appointments, talk to the people, follow-up) and in money (transportation costs) that
is another reason why I will only be able to interview few people. There is a risk of
subjectivity (because of the way of questioning for instance). Finally, I will have more
experience for the last interviews, so I might not get all the information I need from the
first ones.

3.2.2.2 Quantitative data
The weakness of the quantitative data collection process is that it is not flexible, it will be
difficult for me to analyse just certain components of the indexes for instance, or maybe I
will have the possibility to do it, but then I will not be able to find any benchmark to
compare to. The strength is that the data I will get is reliable and I will be able to draw
conclusions from it and argue against any critics. I will also have a certain flexibility
concerning the indicators I decide to study, depending on each index and/or sector of
activity. I will be able to study differences in financial performance, in volatility opposed
to societal performance for instance.

3.2.3 Research ethics
As far as ethics is concerned, I will be very careful to respect the interviewees I meet. I
will ask each of them if they agree on the recording of the interviews, if they agree that I

34


mention their company and name in the thesis. Moreover, I will not write out what they
tell me off-record.
I will mention every source I use and try to deliver the most relevant study to the readers.

3.2.4 Sampling design
3.2.4.1 Quantitative data
There is a limited amount of sustainable indexes, thus I will study most of them. You can
see the list of sustainable indexes in Appendix B.
Then for deeper analysis, I will study environmental and financial data of the companies
of the automotive sector from the MSCI World, 24 companies listed below:
- Kia Motors Corporation
- Bajaj Auto Limited
- BMW AG
- Maruti Udyog Limited
- Daimlerchrysler ag
- Mazda Motor Corp.
- Mitsubishi Motors Corp.
- Denway Motors Limited
- Nissan Motor Company Limited
- Fiat
- Ford Motor Company
- Peugeot SA
- Fuji Heavy Industries Limited
- Porsche AG
- Renault SA
- General Motors Corp.
- Suzuki Motor Corp.
- Harley-Davidson Inc.
- Toyota Motor Corp.
- Honda Motor Company Limited
- Volkswagen AG
- Hyundai
Motor
Company
- Yamaha
Motor
Company
Limited
- Isuzu Motors Limited
Limited

3.2.4.2 Qualitative data
I will not use a random sample for my study. I will choose a few companies and see if
they accept to meet me. I will attempt to meet the interviewees that would give me the
greatest possible insight on the subject.
Arguing a lack of time and interview fatigue as well, many companies refused the
interview. However, I still managed to interview Caroline Orjebin from Dexia. I met
Damien Buffet from Sarasin Expertise, who is a manager in Sustainable Responsible
Investment funds, and Florent Gitiaux from Ethicity, who is a consultant in Sustainable
Development. I also interviewed Yannick Ouaknine from Société Générale, who is an

35


SRI analyst and Sophie Glémet, who is the corporate communications manager of
Toyota France.

3.3 Data analysis
3.3.1 Topical scope of the study
I will limit my study to multinational companies as the information concerning them is
quite available. I do not intend to cover all the fields of CSR, but to have a more
comprehensive view on it and grasp the strategies of companies.

3.3.2 Method(s) to analyze the data
I will make a cross-sectional study of the interviews performed. It will give me the
opportunity to compare the practices of companies and their vision.
To complete this qualitative analysis, I will use ratio analysis, and a statistical or
econometrical model to explain the link between CSR and CSP and compare the
practices of different companies.

3.3.3 Limits
Even though CSR is talked about more and more, it is still a sensitive subject, and also a
possible way to gain competitive advantage, thus companies are not necessarily open to
share their practices, at least no more than what they actually do. Thus, first, it is quite
difficult to obtain interviews and second, it is highly possible that the only information
given will be the one we could have read anywhere.

36


3.4 Methodology, hypothesis by hypothesis
Reminder of the hypothesis:
H1: There is no sanction imposed on companies that are not committed to CSR.
H2: Good environmental performance generates good financial performance.
H3: Companies with high socially responsible standards perform better than those with
poor socially responsible standards.
H4: Companies tend to generalize CSR practices.
H5: CSR is just PR.
H6: Even though sustainable development can be considered as in contradiction with the
market law, it provides development opportunities for companies.
The following table introduces the readers to the way hypotheses are tested.
Table 3.1: Investigation of the hypotheses
Primary data

Secondary data

- sustainability indexes
returns

- existing literature

- environmental indexes
returns

H1

- annual reports of
automotive companies
- sustainability reports of
automotive companies
- complementary literature

H2

H3
H4
H5
H6

- interviews
- sustainability indexes
returns
- interviews


- interviews


- interviews


Method
- comparison of sustainability returns
against their benchmarks
- link with existing literature
- comparison of environmental returns
- ratio analysis of data from the
automotive industry
- comparison of sustainability returns
- cross-sectional analysis of interviews

37

IÉSEG Master Thesis – Aude Richon – 4 Why would companies engage in CSR policies?

4 Why would companies engage in CSR policies?
This part corresponds to the qualitative analysis of my research. It consists of the study of
the data gathered from the interviews I performed.

4.1 Presentation of the interviewees
For the readers to better understand the context of my interviews. Here is a short
presentation of each interviewee and its company. The interviewees are presented in the
order I met them.
Interviewee 1
Name: Caroline Orjebin
Company: Dexia SA
Position: Project Manager – Sustainable Development Department
Sector: Banking and finance
Employees: 33 321 of 72 nationalities
Geographic presence: international, 33 countries (except Asia and South
America)
Dexia (group) arose in 1996, from the alliance between two important European
institutions specialised in the local sector financing: Crédit Local de France and Crédit
Communal de Belgique. Dexia is amongst the twenty biggest financial institutions of the
Eurozone and is building its strategy on two pillars: retail banking in Europe (Belgium,
Luxembourg, Slovakia, and Turkey) and world leadership in public and project finance.
CSR lies at the heart of Dexia’s strategy. The group is part of UNEP-FI, the Global
Compact, the Equator Principles, the Principles for Responsible Investment (PRI), and
the Carbon Disclosure Project. Moreover it is included in 7 SD indexes: DJSI,
FTSE4Good, Aspi, Ethibel, Ethical Index Euro, ECPI®E-Capital Partners Indices,
Ethical Index Euro®.

38


Interviewee 2
Name: Florent Gitiaux
Company: Ethicity (SARL)
Position: Consultant in Sustainable Development
Sector: Consulting in Sustainable Development Strategy
Employees: 10 and external experts
Geographic presence: national, with one international client (Rainforest Alliance,
which is an NGO established in Chile)
Ethicity is an independent agency specialised in consulting in SD strategy. It was created
in 2001 and is working with companies such as Danone, Norauto, Yves Rocher, MAAF…
They are supplying them with an inventory of the firm’s situation, a formulation of
recommendations, then they are working together on improvements and concrete actions,
and finally they can also be asked for the set up of the sustainability reports of these
companies.
Interviewee 3
Name: Damien Buffet
Company: Sarasin Expertise AM
Position: Management SRI Values
Sector: Banking/Asset Management
Employees: 12
Geographic presence: national for clients, Eurozone for values
Founded in 1997, Sarasin Expertise AM has been since March 2003 the French
subsidiary of Banque Sarasin & Cie SA, which is a Swiss bank headquartered in Bâle. It
was one of the first companies to engage in sustainable development in France. Sarasin
Expertise is managing 33 billion euros of assets, with an SRI outstanding portfolio of 2 to
3 billion euros.

39


Interviewee 4
Name: Claude Arquizan
Company: Total SA
Position: In charge of the sponsorship of projects aiming at economic development and
employment generation in South West of France
Sector: Petroleum
Employees: 95070
Geographic presence: international (in more than 130 countries)
Total is an energy company, which is one of the chemical manufacturers’ leaders and is
the fifth largest international oil and gas producer. SD is very important for Total.
Indeed the firm is evolving in a controversial environment as the countries where oil is
extracted are mainly dictatorships. Total is part of the Global Compact and recognizes
the OECD guidelines for multinational companies. The group also set up a foundation
in 1992 in order to protect the biodiversity and is listed in the following SD indexes:
FTSE4Good, DJSI World, DJ STOXX SI, FTSE ISS CGI and ASPI Sustainable
Development and Governance indices.
Interviewee 5
Name: Yannick Ouaknine
Company: Société Générale
Position: Senior SRI Marketing Analyst
Sector: Banking
Employees: almost 120 000
Geographic presence: international (established in 77 countries)
Société Générale was created in 1864. It is now a leading bank in Europe in terms of
retail banking, market capitalization, financing and investment as well as asset
management. It also ratified the Global Compact, the PRI, the Carbon Disclosure Projec
and the UNEP-FI. At last, the company stock is listed in the following indexes:
FTSE4GOOD, Dow Jones Sustainability Index World, DJSI STOXX and Aspi Eurozone.
Interviewee 6
Name: Sophie Glémet
Company: Toyota
Position: Corporate Communications Manager
Sector: Automotive
Employees: 67 650
Geographic presence: international (production in 26 countries and markets in
over 170 countries/regions)
Toyota is now the first automobile manufacturer in the world. It sold more than 8.8
million vehicles in 2006. The company is very productive thanks to lean production and
processes such as Kaizen. Toyota is quite innovative technically as well and good at
innovative practices in terms of SD. It is also present in many sustainability indexes and
is part of the Global 100.

40


Dexia, Total and Toyota were interviewed as companies implementing CSR policies; I
attempted to get their point of view on CSR, its development and its outcomes. Ethicity,
Sarasin Expertise and Société Générale were a bit questioned on the CSR of their
company, but their role was more as opinion leaders, since with their activity they are in
regular contact with different companies and have the opportunity to observe evolutions
in terms of CSR.
The questionnaire used for the interviews is in Appendix A (the readers should note that
it had been adapted when I interviewed the opinion leaders).

4.2 Presentation of the themes and subthemes studied
I identified the themes and subthemes in accordance with the notes I gathered from the
interviews and the relevant topics for my research. They are all assembled in the
following table:
Table 4.1: Presentation of the themes and subthemes of the interviews analysis
Themes

Corporate history and CSR

CSR within the company

Communication and (potential)
achievements of CSR

Subthemes
Motives for action
Stakeholders’ influence
Evolution over time
Partnerships in the frame of CSR
Perspectives for the future
SD departments
Governance and decision making
Accreditations, certifications and labels
CSR at the global level
Integration of CSR in the day-to-day operations
Reporting and indicators
Communication
Positioning and image
Performance
Reasons for CSR policies success

First, we will have a look at how companies started to be interested in CSR and the
milestones of CSR policies implementation. Then, we will see the concretization of CSR
on a day-to-day basis, and finally, we will identify how companies communicate on their
SD measures and the results of these measures.

41


4.3 Interviews analysis
4.3.1 Corporate history and CSR
4.3.1.1

Motives for action

For this subtheme and from the interviews, I gathered ten reasons why companies would
implement CSR policies. They are all in the table below, with the corresponding
argument in the cells on the right.
Table 4.2: Motives companies can have to implement CSR policies

Commitment of
main shareholders

Will/Awareness of
the CEO

Company’s mission

Opportunity to act/
Act like the others

Denunciation of a
problem
Differentiation
policies
Attract new
shareholders

Dexia’s main French shareholder is the Caisse des Dépôts et
Consignations, which is itself very engaged in CSR, while its
main Belgian shareholder is ARCO, a mutualist group from the
Christian labour move which is very attached to ethics and CSR.
The president of Dexia wants the bank to be the reference bank
for sustainable development.
There is a mainstreaming awareness of top management on SD
issues; they are now communicating it to stakeholders.
The strategy of Sarasin Expertise in Paris is only based on SRI.
Toyota’s mission is to build the cleanest cars with the cleanest
supply and production chains.
Ethicity is often consulted by companies with no CSR policies,
which see that some things are happening and want to be part of
the move as well. They always have some actions put in place but
they need help to formalize their policies. Companies are doing
that prospectively rather than with a real will to change.
Some companies just take a few measures, to do like the others,
but take no concrete actions, it is not really CSR.
Nike can be an example for this one. However, it is not very
common, as NGOs do not have enough money to spend on
investigations and communication. Thus they only pick big
examples.
For companies like Sarasin Expertise, specializing in SRI and
working on a niche is important, otherwise they would be run
down by bigger groups.
When a company is in SRI indexes it can attract new investors as
well. They are investors that the company would not have thought
about before, thus CSR can be a good communication and
reputational tool.

42

Aude Richon Master Thesis (2006/2007) - CSR Strategy & Financial Impacts

Aude Richon Master Thesis (2006/2007) - CSR Strategy & Financial Impacts

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