Background of the Study
Rising as the current world largest exporter, China has developed an ambitious project -One Belt One Road- aiming to enhance Europe and Asia commercial trade by building the 21st century “Silk Road” (Central Intelligence Agency [CIA], 2015). For fulfilling this project, international common trade regulations are going to be needed fitting business operations with current policies and standards from Asian and European regions (China Britain Business Council [CBBC], 2015). In this context, Corporate Social Responsibility (CSR) has postulated as one of the biggest challenges for private profit organizations, representing a milestone to connect business operations not only in Asia and Europe but worldwide.
However, CSR is not only a way to link business in a responsible way but something bigger. Following what was introduced in the “Post-2015 development agenda” from the 70th General Assembly of the United Nations held in New York, on September 2015 (United Nations [UN], 2015), strategic CSR is considered as the key to achieving a sustainable future, fulfilling the new 17 Sustainable Development Goals (SDGs), which represent a call to action for companies around the world (Global Reporting Initiative [GRI], United Nations Global Compact [UNGC] & World Business Council for Sustainable Development [WBCSD], 2015). Furthermore, the Paris Agreement on Climate Change, which on May 2016 has been signed by 19 countries, remarks the vital importance of drastically reducing the environmental impact of the private sector with the support of international and national standards and regulations (United Nations Framework Convention on Climate Change [UNFCCC], 2016).
The global prime relevance of CSR for society started with the end of the Cold War, when the scenery for business became global, unlimited opportunities appeared and organizations started to cross boundaries encouraged by international open trade policies (United Nations Global Compact [UNGC] & DNVGL, 2015). It is at this moment -the 1990s-, when the globalization and CSR movements began to raise with unstoppable strength (UNGC & DNVGL, 2015). In the year 2000, the necessity for a sustainable future and the claim for CSR became global issues of concern led by the United Nations (UN) and the United Nations Global Compact (UNGC) (UNGC &
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DNVGL, 2015). Since then, both topics have attracted the attention of all sectors of the global society; from citizens to governors, from NPO’s to private organizations, from academia to media.
As written in the UNGC guide to corporate social responsibility UNGC (2014a, p.7) “world’s challenges – ranging from climate, water and food crises, to poverty, conflict and inequality – are in need of solutions that the private sector can help to deliver”. UNGC in 2014 or the UN in 2015 along with all of its members, identified the private sector and its capacity engaging CSR as the solution for some of the most important global problems of the 21 century. A lighting of hope for these problems was expressed by the UNGC in 2014, “businesses are responding, moving beyond their basic responsibilities and going further into a strategic opportunity space. This includes business models, products and services with a joint societal and economic return;
publicly advocating for government policies that advance sustainability priorities; and, importantly, collaborating with peers to make systemic changes” (UNGC, 2014a, p.7).
Worldwide, private profit organizations and their stakeholders are getting more and more conscious about the necessity and benefits of strategic CSR (UNGC, 2014b).
A significant evidence of this concern is shown by the Top 250 Fortune multinational companies’, which more than 80% report about CSR and are involved with CSR initiatives and actions (UNGC & DNVGL, 2015). The performance of an organization and its relationships with the society and contexts in which is operating, as well as its impact on the environment, have become critical facts when measuring the ability of this organization to perform in an effective way and keep their leading positions in the market (International Organization for Standardization [ISO] 26000, 2012). Hence, CSR has become not only a vision but a new advantage strategy for organizations sustainable development (UNGC, 2014a).
Nowadays, there are no agreed-upon definitions of what CSR entails (Argandoña & Hoivik, 2009; Carrol, 1999; Dahlsrud, 2006; Garriga & Mele, 2004;
Moir, 2001; Nguyen, 2014), but the disagreement among researchers contributes to making CSR one of the most popular topics within the business administration field. In the present research, a deeper discussion about CSR is introduced, and a global definition of CSR is proposed.
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From the last 25 years, the concept of CSR has evolved more than ever due to the changing business contexts in which organizations have operated and the yearly raised importance given from all sectors of society (UNGC & DNVGL, 2015). The result of this evolution is CSR being transformed from a ‘goodwill’ concept (Isaksson, 2012) mostly demanded by activist and visionaries, into becoming a business function, a strategic management component of vital importance to firm level success (Carroll &
Shabana, 2010; ISO, 26000, 2012; KPMG, 2011; Luo & Bhattacharya, 2009; UNGC &
DNVGL, 2015) and an essential part of a firm’s strategy (Bondy, Moon & Matten, 2012;
McWilliams & Siegel, 2011; Noland & Phillips, 2010).
In the present research, a deeper discussion about CSR is introduced, and a global definition of CSR is proposed.
Although in the last 10 years researchers have found both positive, negative or neutral correlations from CSR on business performance (McWilliams Siegel & Wright 2006; Orlitzky, Schmidt & Rynes, 2003), in the last decade, CSR has moved towards a strategic concept showing its positive and direct effects on BP, as gathered the meta-analysis of Margolis, Elfenbein, & Walsh (2009) and Wang, Dou, & Jia (2015).
When CSR is understood as a strategic business concept, recent studies have shown how CSR promotes and improves the financial performance of organizations (EC, 2014; Isaksson, 2012; KPMG, 2013; Nguyen, 2014; UNGC & DNVGL, 2015;
Wang, Dou & Jia, 2015), benefits companies in the long term making them increasing their business performance, as well as increasing their prestigious, image, and business opportunities (Carrol & Shabanna, 2010; Mishra & Suar, 2010; Nguyen, 2014; UNGC, DNVGL, Monday Morning & Sustania [MM&S], 2015).
Focusing on a Spain, in the last two decades CSR has acquired a high relevance position for the private profit sector (Marca España & Foretica, 2014; Ministerio de Empleo y Seguridad Social [MESS], 2014). Spanish manufacturing companies have not only been encouraged to adopt CSR by national and international institutions but also from private initiatives as UNGC, GRI or ISO (Fernandez, de la Fuente & Gago, 2011).
Furthermore, the evolution of CSR strategies in Spain has a direct relationship with its integration process within the European Union (EU) and with the internationalization of Spanish companies (Fernandez, de la Fuente & Gago, 2011). Therefore, for understand
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CSR in Spain, a wider approach to CSR (including the EU influence) must be introduced.
According to several researches and global indexes (KPMG CSR global survey, EU statistics, RobecoSam), Spain and its private profit organizations ranked as one of the global leaders engaging in CSR during the last decade (European Commission [EC], 2013a; KPMG, 2011; Lim & Tsutsui, 2011; RobecoSam, 2014). Furthermore, in 2008 the Spanish National Council for Corporate Social Responsibility was funded (Boletín Oficial del Estado [BOE], 2008), while in 2014 the CSR National Plan, implemented by the Ministry of Labor and Social Insurance, was approved (MESS, 2014). Both actions evidence how CSR is being promoted by National initiatives due to the attention and concern acquired within the Spanish politic scene during the last years.
In addition, in 2011 the European Commission (EC) started to institutionally promote CSR, encouraging private profit businesses in the European region, as well as country members, to engage in CSR policies and actions, and in this way, increasing the international competitiveness of the region and obtaining global competitive advantages (EC, 2014). Furthermore, in 2014, mandatory directives in CSR reporting were signed by the European Parliament and all the Member States.
Moving to Taiwan, it is currently ranked as the 14th most competitive economy in the world by the World Economic Forum in 2015, and recognized as one of the world’s largest producers of electronic-related products with an extensive and well-established network of industrial zones (Nguyen, 2014).
Taiwan and its manufacturing companies, with $311.4 billion in exports income in 2014 and a drop to $262.6 billion in 2015 (CIA, 2015), will need to adapt the coming regulations if they want to remain international competitiveness. However, CSR this western concept has begun to acquire relevance in the last decade (Low & Ang, 2012) promoted by the government and the pressures of international regulations (Sharma, 2013).
Although, in the last 50 years the cultural influences coming from the Confucianism, Taoism, and Buddhism ideologies predominating in Taiwan, have made the private sector to play an essential role in the development of the community and social welfares (Sharma, 2013), the concept of CSR still has a low presence within the
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Taiwanese profit private sector (Sharma, 2013). However, the fact that CSR has globally raised as a socio-political concern for governments and business (United Nations [UN], 2015), combined with the recent Taiwanese governmental actions which encourage the private sector to engage in CSR, have put pressure on Taiwanese multinational companies to adopt CSR international standards (Sharma, 2013).
Within these contexts, this research pretends to empirically show and compare, using the GLCSR theoretical framework, the current situation of the UNGC and CSR in Spanish and Taiwanese private profit organizations, as well as examine the influence that UNGC, the Local Influences and CSR have over the Business Performance of the surveyed organizations, with the last aim to increase their international business competitiveness and promote sustainable development for the benefit of society.
Purpose of the Study
The purpose of this study is to empirically research the United Nations Global Compact and the Local Influences effects on Corporate Social Responsibility and how they influence the Business Performance of manufacturing private profit organizations operating in Spain and Taiwan by developing an SEM called GLCSR, showing what the dominant factors are, and comparing the results within these 2 countries.
Moreover, the purpose also focuses on the comparative analysis of Spain and Taiwan and the variation on the perception depending on the hierarchy rank of employees.
Questions of the Study
Since this research attempts to clarify the impacts and effects of United Nations Global Compact (UNGC), Local Influences (LI), Corporate Social Responsibility (CSR) on the Business Performance (BP) of manufacturing private profit organizations from Spain and Taiwan, the questions of the study are as follow:.
1. Does the UNGC have effects on CSR?
2. Does the LI have effects on CSR?
3. Does CSR have effects on Business Performance?
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4. Are there significant differences when comparing the Spanish and Taiwanese samples μ’s?
5. Are there significant differences in the perceptions between the different professional levels within the sample?
Significance of the Study
In the globalized society, it is impossible to ignore the relevance that Corporate Social Responsibility has acquired as an essential role creating a global sustainable future (GRI, UNGC & WBCSD, 2015), promoting the harmonization, from a mutual interest partnership, between the profit-organizations and the global society. In this context, the present research investigates some of the motives that drive enterprises to embrace CSR, showing what the main factors are.
Besides, this research also provides a managerial tool for business to realize and explore what are the dominant factors of the included dimensions are and how they affect Business Performance. Furthermore, this study also shows the weakest factors helping managers create a guide to business operations in their way to improve and gain international competitive advantage.
For academia, this research introduces the structural equation model called
“Glocal CSR” with the aim to provide empirical and significant evidence of the relations between the UNGC, the LI, CSR and the BP variables. Furthermore, this model can be useful to future researchers and organizations who want to investigate the glocalization of CSR in different populations. Moreover, the research provides a global CSR definition based on the literature review, aiming to solve the controversial and changing essence of this term.
In addition, scholars in recent studies have argued that the tendency toward socially responsible corporate behavior varies across countries and that much more research is required to understand why (Campbell, 2007; Maignan & Ralston, 2002).
Consequently, this study is significant by using two different samples from manufacturing private profit organizations operating in Spain and Taiwan, allowing the author to compare the CSR status across countries.
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Lastly, the research compares the self-perceptions that employees, middle managers and top managers have over their own organizations, creating a new scenario for future researchers.
Delimitations of the Study
The scope of the present thesis is limited by the characteristics of its inner research, and hence, the scope of the thesis investigation and its results are delimited to Spain and Taiwan, while it conclusions shouldn’t be generalized into other countries.
Furthermore, the research has been conducted focusing on manufacturing private profit organizations in Spain and in Taiwan, implying that the results cannot be misunderstood and generalized into a macro-national level.
Further delimitations are based on the research approach, which intends to examine in one hand, the relationship among the variables of United Nations Global Compact, the Local Influences, Corporate Social Responsibility and Business Performance, while on the other hand, makes a comparison between the results gathered from the Spanish and the Taiwanese samples.
Limitations of the Study
The limitations of the study are based on the approach and the way in which the study has been conducted:
-The quantitative approach methodology was conducted surveying executives, managers and baseline employees from manufacturing private profit-organizations operating in Spain and Taiwan. Consequently, the results and their conclusions should not be generalized to different populations.
-The samples were gathered in specific dates; therefore, further researches using the same methodology can vary.
-The questionnaire was used and developed as the measurement tool to collect the data from Spain and Taiwan.
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Definition of the Terms
Business Performance (BP): In this study BP means the outcomes resulting from the interplay among an organization’s attributes, actions, and environment (Combs, Ketchen, Crook & Shook, 2005) which can be measured through a financial, customer, internal process and learning and growth perspectives.
Corporate Social Responsibility (CSR): In this study CSR refers to a concept whereby companies integrate social, ethical and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis and which delivers long-term value in financial, environmental social and ethical terms.
Corporate Sustainability (CS): following KPMG International Survey of Corporate Responsibility Reporting (2013), the most used terms among companies worldwide are corporate responsibility (14%) or corporate social responsibility (25%) and sustainability report (43%). Therefore, corporate social responsibility in this study involves the term sustainability and other similar terms, even if CS is a consequence of the long-term implementation of CSR.
Local Influences: The local influences in this study mean the regional and local forces (avoiding international) that can influence or represent a driven force for CSR. As expressed in Hertz (2004) and McWilliams, Siegel & Wright (2006) employees, the union, community groups, NGOs and other stakeholders can be considered as a source of pressure for organizations.
Stakeholders: any group or individual who can affect or is affected by the achievement of the organization’s objectives.
United Nations Global Compact (UNGC): a call to companies everywhere to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, and to take action in support of UN goals and issues (UNGC & DNVGL; 2015).
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List of Acronyms
BP – Business PerformanceBPCP – Business performance customer perspective BPFP – Business performance financial performance BPIB – Business performance internal business BSC – Balance Score-Card
CS – Corporate sustainability
CSR – Corporate social responsibility
CSRCR – Corporate social responsibility communication and reporting CSRMS – Corporate social responsibility management systems
CSRREM – Corporate social responsibility resources and environmental management CSRPS – Corporate social responsibility products and services
CSRSM – Corporate social responsibility
CSRV – Corporate social responsibility vision, values and strategy EC – European commission
EU – European Union
GCAC – Glocal compact anti corruption GCE – Global compact environment GCHR – Global compact human right GCLR – Global compact labour right LI – Local influences
LIE – Local influences employees
LIMLB – Local influences media and lobby groups
10 LIS – Local influences stakeholders
SDGs – Sustainable development goals UN – United Nations
UNGC – United Nations Global Compact
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