This chapter aims to review the related literature of CSR. The research reviewed the literature including the definitions of CSR, the implementation of CSR, the relationship between CSR and Corporate Sustainability (CS), CSR implementation in SMEs and the food industry, and the CSR development in Taiwan.
Definitions of Corporate Social Responsibility
The definition of Corporate Social Responsibility has a long and varied history, and is more related to the business community's concern for the society for centuries. The formal writings of CSR are an important product in the 20th century, especially in the past 50 years. Although there are a variety of definitions, generally the literature cited A. B. Carroll to be the one who had given the best definition of CSR. This study also agrees with his definition which pointed out that the corporation's sole responsibility was to provide a maximum financial return to shareholders (Carroll, 1991). Additionally, he mentioned that to characterize the company's CSR in different ways may be useful to those executives who wish to set shareholders' minds at rest about the obligations with those to other competing groups that claim legitimacy. He framed the discussion as a pyramid of CSR in his seminal article, “The pyramid of corporate social responsibility:
Toward the moral management of organizational stakeholders”. In the early writing of CSR, it is more related to Social Responsibility (SR) rather than discussing Corporate Social Responsibility (CSR), the reason might be that during those days the discussion of the Corporations in the business sector was not prominent. As a result, there were many different definitions of CSR in scholarly writing, which the researcher had collected and shown in Table 2.1.
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Table 2.1.
Definitions of Corporate Social Responsibility
Definition Source
That social responsibility refers to businesses' decisions and actions taken for reasons at least partially beyond the firm's direct economic or technical interest.
Bowen, 1953, p.4
On its broadest sense, corporate social responsibility represents a concern with the needs and goals of society which goes beyond the merely economic.
Eells & Walton, 1974, p. 247
For a definition of social responsibility to fully address the entire range of obligations business has to society, it must embody the economic, legal, ethical, and discretionary categories of business performance.
Carroll. 1979, p. 499
CSR, to be accepted as legitimate, had to address the entire spectrum of obligations business has to society, including the most fundamental—economic.
Carroll, 1991, p. 43
A concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
European
Communities, 2001, p.11
Context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance.
Aguinis, 2011, p.855
Note. This table was compiled by the researcher for the purpose of this study.
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These scholars had provided the fundamental definitions of CSR. Bowen (1953) mentioned that social responsibility impacts the organization's decisions and is acted for a reason beyond the firm's economy. Additionally, Eells and Walton (1974) proposed that CSR represents the concern with the needs and goals of society which goes beyond merely the economic. Carroll (1979, 1991) explained that the essence of CSR is the entire range of obligations of a business, which includes four categories, economic, legal, ethical, and discretionary. Based on the definitions by scholars above, in this research, CSR is defined as how an organization concerns about all of its stakeholders, society, and the environment, and additionally, how they implement the concern of all the above into their culture and day-to-day operation.
Implementation of Corporate Social Responsibility
In the early period, the researchers were more interested in Social Responsibility (SR) than Corporate Social Responsibility (CSR), Keith Davis’ article titled “Understanding the social responsibility puzzle” (1967) stated that businesses by all kinds of groups in the system can influence each other; therefore, they must be socially responsible for their actions. Both society and social science were becoming interdependent, the business proposal is to make the profit as much as they can, at the same time, make the cost as low as they can. However, for the customer, they will hope to buy the products at the lowest price, therefore, determine the price is also the issue that businessmen should consider. Consequently, the balance between profit-making and quality maintenance is one of the social responsibilities. Yet, there are still many kinds of CSR.
Carroll (1991) had distinguished CSR as the pyramid of Corporate Social Responsibility. He separated CSR into four different kinds of responsibility, including economic, legal, ethical, and philanthropic. Most of the following researches were based on this model.
The first is the economic responsibility; since business, organizations have been created to produce goods and services. it had become a basic economy of our society. Therefore, to provide the consumer with good quality also the affordable price of goods and services is the
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responsibility of the organization. In addition, if without economic responsibility, all other business responsibilities will become moot consideration.
The second is a legal responsibility. Businesses are not only sanctioned to operate according to the profit motive, but also expected to follow the laws and the regulations and even the custom.
The companies need to process their business with a framework abide by the laws. To find a balance between profitability and legality is what business organizations must do.
The third is an ethical responsibility. Ethical responsibilities embrace some practices that are not codified into law. To protect moral rights and make sure what consumers, employees, shareholders, and communities regard as fair.
Last but not the least, the philanthropic responsibility is a sense that firms respond to the society as a good citizen. Firms often devote themselves to some artworks, financial foundations, educational foundations, social serving foundations, or focus on dealing with some significant social issues. This sense is more about the moral and ethical aspects, and more related to sociologic activities rather than the business.
So far these are the fundamental dimensions of CSR; furthermore, researchers started to consider the importance of the environment and count it into one of the dimensions of CSR. Moir (2001) had mentioned the issues CSR had covered are plant closures, employee relations, human rights, corporate ethics, community relations, and the environment. CSR Europe, an organization in which the members are the large firms across Europe, provided the guideline of CSR which included the following aspects, workplace (employees), marketplace (customers, suppliers), environment, community, ethics, and human rights. Branco and Rodrigues (2006) had also mentioned that CSR is an issue that relates to environmental protection, human resources management, health and safety at work, relations with local communities, and relations with suppliers and consumers.
Dahlsrud (2008) analyzed 37 definitions of CSR in his literature and created a five-dimension model of CSR, which included the environmental five-dimension, social five-dimension,
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economic dimension, stakeholder dimension, and voluntariness dimension. The environmental dimension includes all kinds of environment protection; social dimension deals with the relationship between the organization and the public, to integrate the social concern into their operation in order to contribute to a better society. The economic dimension refers to maximizing the profitability and the financial performance of the organization. The stakeholder dimension means the organization is responsible for all its stakeholders including employees, customers, suppliers, and the community. The voluntariness dimension includes all kinds of activities based on ethics and beyond the obligation.
Corporate Sustainability and Corporate Social Responsibility
Corporate sustainability (CS) can be defined as fulfilling the demands of a company’s direct and indirect stakeholders, as well as without compromising its ability to fulfill the demands of future stakeholders (Dyllick & Hockerts, 2002). Elkington (1997) proposed the bottom line model to state that if a company attempts to reach this goal of sustainability, it should maintain and keep improving its economic (Profit), social (People) and environment (Planet), also known as the 3P model. A company which is economically sustainable can always keep their cashflow adequate, and make sure the return to shareholders is constantly above the average. Additionally, a company that is ecologically sustainable will only use the natural resources in a way to ensure the rate of reproduction is faster than consumption. Therefore, they do not involve in any activity that might harm the environment. Last but not the least, a company with social sustainability contributes to the community and make themselves to be of value in the society.
Furthermore, some researchers started to differentiate CS and CSR. Linnanen and Panapanaan (2002) had proposed corporate sustainability as the ultimate goal, to keep the ability for the future at the same time reaching their needs. Kaptein and Wempe (2002) had also considered CS as the ultimate goal and placed CSR as the middle stage for the companies which
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try to fulfill the Triple Bottom Line. In addition,
E
uropean Commission (2001) also set a theme as CSR: a business contribution to Sustainable Development.However, many doubts that the differentiation of CS and CSR is too vague, for example, Van Marrewijk (2003) had recommended that it is necessary to keep even though only a small difference between CS and CSR. He associated CSR in the aspect of people and organization and CS as agency and principle. As a result, CSR is more related to actions such as transparency, stakeholder interaction, and sustainability reporting. Besides, CS is more related to multi-level of management such as value creation, and environmental management.
Montiel (2008) had proposed that according to his analysis of the literature review of CS and CSR, although there is still a number of differences between CSR and CS, the conceptualizations and measures of CSR and CS tended to be converging. Therefore, we should consider if we need to distinguish more specifics of the difference between CSR and CS, or if we should combine them into a structure that includes all kinds of social and environmental issues in the management area. He suggested that if we combine some of the elements in CSR and CS, that might become a better direction for the firms to become a sustainable and socially responsible organization.
Corporate Social Responsibility in Business Enterprise
The contemporary business enterprises often consider CSR as an important strategy of the company and will pay lots of effort into it. Aguinis and Cleves (2012) reported that more of the CSR literature originated from the fields of environmental issues, organization behavior, and human resource management. They focused more on how CSR is applied in organizational strategies. On the other hand, they also did the institutional level analysis according to Scott's (1995) three pillars of institutions, which is normative, cultural-cognitive, and regulative elements.
For instance, articles about laws and standards are related to regulative elements and will be classified into CSR at the institutional level of analysis. Additionally, cultural-cognitive and
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normative elements will include the construct shaped by externals to the firms such as the society and the consumers. In conclusion, the research of CSR in decades is more related to the business and the organization strategy, putting the theory into practice, and CSR as a major policy that has to be focused on, if the business enterprise or even any kind of organization wants to succeed.
Corporate Social Responsibility in Small and Medium Enterprises
According to Standards for Identifying Small and Medium-sized Enterprises published by SMEA (Small and Medium Enterprise Administration, Ministry of Economic Affairs R.O.C., 2015), there are two categories to define SME in Taiwan. First is for the manufacturing, construction, mining, and quarry industry with investment capital from shareholders of NTD $80 million or less, otherwise has fewer than 200 employees. Second is the industries not mentioned above, which sales revenues are lower than NTD $100 million last year and have less than 100 employees.
In most cases, the management in SME is the owners at the same time, and they assume multiple positions in the organization. Therefore, they often put their own value into the business strategy of the companies. Therefore, the motivation of top management is the most important approach for SMEs to conduct CSR programs (Lepoutre & Heene, 2006; Longenecker et al., 1989; Vyakarnam et al., 1997)
Besides, Granovetter (1985) proposed that the business actions of SMEs were often embedded in social relations. The close interpersonal relationship helps to improve confidence and the relationship between stakeholders, to have a good reputation in the society, and finally to promote the importance of the company in the market. As a result, social network and the interpersonal relationship could be the factors that force SMEs to consider CSR (Lepoutre &
Heene, 2006; Murillo, 2006).
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Corporate Social Responsibility in Food Industry
The supply chain in the food industry is a quite complex network from agriculture to food processing, food retailers, and ultimately to the consumers. Throughout the supply chain, there are many complicated procedures when food is delivered to a consumer from the time it was produced. By the time researchers started to discuss CSR in the food industry, various issues have bloomed, which include animal welfare and food suppliers’ sustainable practices such as animal treatment (Ordonez, 2000), slaughter process being humane (Garber, 2005) also the use of antibiotics (Leung, 2003). Maloni and Brown (2006) developed a framework of CSR applications in the supply chain in the food industry. There are totally eight categories in their model, including animal welfare, biotechnology, community, environment, fair trade, health and safety, labor, and procurement.
Animal welfare
The main propose of this category is that animals should not experience any unnecessary suffering, which includes humane approaches to handling, housing, transporting, and slaughtering.
Biotechnology
Maloni and Brown (2006) stated that biotechnology is a rapidly emerging category of CSR food supply chains, and it includes recombing DNA, tissue growing outside the body, cloning, and growth stimulation. The attitude of consumers and the boycott of industry practices had made the retailers be threatened and set a more comprehensive standard.
Community
The community aspect represents all kinds of supporting activities for the local community.
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Environment
There are many environmental issues that influence the food industry, such as global warming and water pollution. Therefore, the supply chain needs to not only provide environmentally friendly products but also develop practices for protecting the environment.
Fair trade
Fair trade is the idea that retailers should support the price for suppliers to keep them from poverty and keep the business sustainably developed.
Health and safety
These are big challenges in the food industry that should be overcome, such as mad cow disease, foot and mouth disease, the safety of the biological products, and the famine in some countries.
Labor and human rights
This aspect had already been discussed since the ‘‘sweatshop’’ issue had been exposed, the labor conditions of foreign manufacturers supplying US retailers such as NIKE and Wal-Mart (Emmelhainz & Adams, 1999). Therefore, companies are obligated to follow international labor standards.
Procurement
Carter (2000) offered a review of examples about the ethical issues that should be avoided during the process of procurement such as favoritism, preferential treatment, bribery, gifts, obscure contract terms, and rebidding past deadlines.
Development of Corporate Social Responsibility in Taiwan
According to the Corporate Social Responsibility Overview presented by Corporate Governance Center, Taiwan Stock Exchange (2019), Financial Supervisory Commission has launched the “Corporate Social Responsibility Best Practice Principles for Listed Companies”
and the “Ethical Corporate Management Best Practice Principles for Listed Companies” in 2010,
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in order to promote and guide the listed companies to implement CSR practices and to ensure integrity in corporate management for sustainable development. Besides, Financial Supervisory Commission (2014) also demanded the companies whose registered capitals are above ten billion NTD to publish their CSR report starting from 2014, and in 2017 the amount of registered capital was reduced to five billion NTD to include more companies into this reporting requirement.
Nowadays, the operation of companies is under constant monitoring by the public, in order to fulfill the environment, social, and governance dimensions of CSR. (Liu, 2016)
Not only the government is facilitating the CSR development in Taiwan, but some NGOs also devote themselves to promoting CSR in Taiwan. CommonWealth magazine and Global Views Monthly are two well-known social media companies in Taiwan. Both of them grant the CSR awards annually. The award can be seen as an honor to the company. According to CommonWealth (2019), the criteria of the competition are company governance, company commitment, social participation, and environmental protection. On the other hand, the standards of Global Views Monthly are environmental protection, company governance, and social participation. (Global Views Monthly, 2019)
Furthermore, as requirements of the government and the clients, most of the large enterprises have their CSR reports and are willing to apply for the award by the resources they had disbursed. These awards seem like the competitions for the large enterprises; however, since 2015, CommonWealth magazine added a division called “little giant” which allowed companies with revenue below five billion to join the competition. This can be seen as the initial opportunity for SMEs, in order to recognize the SMEs which, contribute to the society even though the contributions are not comparable to the large enterprises. This is a way to prove that SMEs do indeed have sufficient ability to implement CSR and, in their words, build a contribution to the society. At the same time, this also encourages the rest of the SMEs who still have not started their CSR practices to begin considering their social responsibility.
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