Appendix 2 – Details of CSR History and Stakeholders
Appendix 2 – Details of CSR History and Stakeholders
In the 19th century the term Corporate Philanthropy was used to describe the social donations of business owners. The first literature to talk more about responsibility and stewardship to balance different stakeholder expectations was Walter Lipman (1914) in Drift and Mastery. During the 1920s business and society were linking together in greater extent. The driver for stakeholder responsibility was the increasing separation of ownership and management.
The big depression in the 1930s and the Second World War created other demands and focus in business and society during the 30s and 40s.
In 1953 New Jersey Supreme Court ruled positive on Corporate Philanthropy. Businesses were allowed to contribute to social welfare. Attracting well educated personnel in the post war climate was one motivating factor.
During the 1960s and 70s contribution of a certain percentage of profit was widely demonstrated, and business leaders joined social clubs and societies. The baby-boomer generation got into the top-management level. CSR motivation was based on self interest and self promotion.
In the late 1960s and in the 70s college and university students were negatively towards working in an industry. Anti war, anti racism, anti nuclear power and women’s rights were at the society agenda. The Pax World Fund was founded in 1971 with main focus to avoid investment in Vietnam War shares, and followed by The Calvert Social Investment Fund in 1982 with a broader social focus. CSR motivation was mostly based on improving investor relationships.
During the 80s society and business was hugely influenced by Reagan and Thatcher governments and Milton Friedman became the main “free market economy” influencer, promoting deregulation and privatisation. Generation Jones (Late baby-boomers) was entering the executive level in business. Business responsibility towards society was mainly secured by adaptation to standards and rules under the label Corporate Social Responsiveness. In 1983 American Express initiated a cause-related marketing initiative, donating money for restoring the Statue of Liberty each time their cards were used. The increased sales approach to CSR was well accepted by society.
The 90s are known as the decade of greed. Successful entrepreneurs, Silicon Valley and Business Schools were popular. The internet use and communication was rapidly increasing in the late 90s and into the new decade. Generation X entered the business world and fostered entrepreneurial technological and environmental initiatives. Motivational trend was mostly to do differently than the earlier generations, and make a profit.
The new millennium brought a new social agenda. Social investment funds were rising and global executives put CSR on the board agenda. Having a global conscience, founding, maintaining and sustaining social responsibility became widely spread. The first corporations with the vision and mission of marketing products and services that were socially and environmentally sustainable were formed. Business Schools adopted CSR programmes, and put both financial and social value creation on the agenda.
Mainstream drivers for transformation from short-term profit to stakeholder management identified by Laszlo (2005) are; scientific evidence of global climate change, environmental regulatory, political agenda, moral and value based principles and market focus on stakeholder value.
Economic risk I reduced due to the improved stakeholder relationships and Vogel (2006 p16) also states that CSR improves the ability to obtain finances at low cost.
Kotler & Lee (2005 p21) offer an extensive list of the benefits from CSR mainly based on a marketing related view of CSR. The market related advantages are to some extent supported by Porter & Kramer (2002) that suggest CSR is a way of obtaining competitive advantage.
Shopping for a better world is an increasing trend and Makover (1994 p71) lists financial benefits such as operating income growth, higher sales generation ratios and increase in financial Ratios (Mills & Robertson 1999) and strategic Value Drivers (Mills & Print 2006). He documents these based on data collection and is well in line with Vogel (2006 p30-32) whom also lists several empirical documented benefits.
Vogel (2006) concludes that the business case for CSR still has little empirical basis and that there are (Vogel 2006 p xi) “no appreciable differential in share prices between greener firms and industry laggards”. He addresses the constraints in the financial market for being short term focused.
The shared corporate and societal benefits of CSR are well described by Hopkins (2003 p26-30) and in the article of Moss Kanter (1999) examples of success illustrates how corporate social innovation have paid of to both society and corporation.
Laszlo (2005 p40-43) illustrates the multiple advantages of adopting CSR, based on a case of site remediation in the cement and concrete industry. The case illustrates the shared objectives of corporations and societal stakeholders, and turns several threats and risks towards the company into benefits for both parties.