LITERATURE REVIEW - The Glocalization of Corporate Social Responsibility and its Effects on Bus

This chapter introduces the theoretical support of the present academic research.

An introduction to all the dimensions and factors used as variables in this study are presented and described. For this purpose, a detailed literature review was conducted to support the relations between variables.

The UNGC and the Local Influences relations with CSR are explained. In addition, CSR evolution and definition are discussed, while general backgrounds of CSR within Europe/Spain, and Asia/Taiwan are described to allocate the terms in the global context. At last CSR and its relation with the business performance are described in an explanatory way.

The purpose of this Chapter is to describe the theoretical evidence that support the GLCSR Model framework and its questionnaire.

United Nations Global Compact

In the year 1999, the UN Secretary General Kofi Annan made a call for business representatives to support a new sustainable global economy at the World Economic Forum in Davos, showing the necessity of a global and common partnership to promote strategic CSR around the world. Citing his words on that event “I propose that you, the business leaders gathered in Davos, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market.” Kofi Annan; World Economic Forum 1999 (UNGC & DNVGL, 2015, p.47).

This first call reached to the ears of global leaders and executives, who felt attracted with the idea of implementing deep changes in the way to do business.

With the dream of a globalized compact shared values and principles for a global sustainable future, the United Nations started to informally discuss about launching a multi-stake holder initiative for achieving this purposes (UNGC & DNVGL, 2015). One year later, the United Nation Global Compact (UNGC) was launched in July 2000.

Due to the UN high relevant position in the international socio-political scene, since the year 2000, the concept of Corporate Social Responsibility stopped to be only acclaimed by activist and NGO’s and started to receive more and more attention from

all the sectors of the society (UNGC, 2014a; UNGC & DNVGL, 2015). In this sense, the UNGC was one of the pioneering institutions to promote guidance for business which wanted to operate accordingly to certain corporate sustainability standards.

By following the UN Global Compact definition, “the UNGC is 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, p.22). The UN Global Compact works with business to transform our world, aiming to create a sustainable and inclusive global economy that delivers lasting benefits to all people, communities and markets (UNGC & DNVGL, 2015).

In the past 15 years, the Global Compact has played a significant and leading role spreading the practices of corporate sustainability around the world (UNGC &

DNVGL, 2015). Nowadays, it is one of the institutions with the highest impact promoting CSR to private organizations (McKinsey and Company, 2004; UNGC &

Deloitte, 2010; UNGC & DNVGL, 2015).

The UNGC has functioned as a global catalyst since it was launched in the year 2000 (UNGC, 2014). With the purpose to become the leading initiative for encouraging the private for profit sector to engage into CSR, the UNGC created a network of organizations highly involved in CSR strategies, where open forums and mutual support can be encounter to create a common sustainable future (UNGC, 2014b; UNGC &

DNVGL, 2015).

At the time this research is conducted, the UN Global Compact initiative is the leading platform for the development, implementation and disclosure of responsible corporate policies and practices (KPMG, 2011; KPMG, 2013). It is the largest corporate sustainability initiative in the world, with over 8,000 companies and 4,000 nonbusiness signatories based in 160 countries (UNGC, 2014a).

The UNGC combines several mechanisms to support CSR strategies: normative principles, networks for learning and co-operation, communication and transparency about CSR activities. All these mechanisms are built around the UNGC frame of reference: The 10 UN Global Compact’s Principles. The UNGC ten principles are

derived from different international declarations and institutions in pro of human rights, fair labour, environment and anti-corruption (UNGC, 2014a).

The UNGC Human Rights principles were based on the UN Universal Declaration of Human Rights signed by UN member in 1948 (see Table 2.2.) The UNGC Labour principles were based on The International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work that was adopted by governments, corporations and labor organizations of 177 countries in 1998 defines (see Table 2.2.). The UNGC environmental principles were based on the Declaration and International Plan of Action (Agenda 21) that was adopted at the Rio Conference on Environmental and Development in 1992 as well as the Brundtland Commission Report that requires corporations to avoid large-scale environmental decay (see Table 2.2.). The UNGC anti-corruption principle was based on the 2003 UN Convention against Corruption (UNGC, 2014a) (see Table 2.2.).

Table 2.1

The UNGC 10 Principles

Topic Principle Content

Human Rights 1 Businesses should support and respect the protection of internationally proclaimed human rights.

Human Rights 2 Make sure that they are not complicit in human rights abuses.

Human Rights 3 Corporations should uphold the freedom of association and the effective recognition of the right to collective bargaining.

Labour Rights 4 The elimination of all forms of forced and compulsory labor.

Labour Rights 5 The effective abolition of child labor.

Labour Rights 6 The elimination of discrimination in respect of employment and occupation.

Environmental Values

7 Corporations should support a precautionary approach to environmental challenges.

(continued)

14 Table 2.1 (continued)

Topic Principle Content

Environmental Values

8 Corporations should undertake initiatives to promote greater environmental responsibility

Environmental Values

9 Corporations should encourage the development and diffusion of environmentally friendly technologies

Anti-Corruption Values

10 Corporations should work against corruption in all its forms, including extortion and bribery.

Note: adapted from “Guide to corporate sustainability” by UNGC (2014a).

The UNGC principles can be thought as the epicenter of the UNGC initiatives and values. Consequently, the 10 principles work for organizations as the performance guideline in terms of CSR and CS (UNGC & Deloitte, 2010). Moreover, when UNGC encourage private profit organizations to become sustainable by engaging CSR, companies are asked to follow a five steps procedure (UNGC & DNVGL, 2015).

As a first request, the UNGC demands organizations to operate responsibly in line with ten UNGC universal principles. A second request based on taking strategic actions that support the society around them. A third request establishing high commit at the managerial level of the organization. A fourth request to report annually on their efforts to promote and implement CSR. And a fifth request demanding local engagement where they have a presence (UNGC & DNVGL, 2015).

Moreover, since 2000 the UNGC has been working in close collaboration with Deloitte Touche Tohmatsu to develop a management model to help, support and guide partner organizations implement their CSR guidelines successfully (UNGC & Deloitte, 2010). In 2010, the UNGC Management Model was published (see figure 2.1.) and since its releasing, it has worked as a framework to guide corporations in their implementation and achievement of CSR policies and standards (UNGC & Deloitte, 2010). The model establishes 6 steps as the framework of the CSR implementation process.

The Model is flexible and should be used to guide annual strategy planning and execution efforts in relation to integrating the Global Compact principles, but as the

UNGC & Deloitte explain, “It can also spark innovative ideas aimed at creating value for shareholders and stakeholders over the long term” (UNGC & Deloitte, 2010 p.6).

Furthermore, according to the UNGC guideline, the process of engaging CSR strategies by following the management model is a cyclic process (UNGC & Deloitte, 2010); oriented to be used in a strategic way for organizations when implementing internal and external CSR. Through a continued usage of the model, organizations will achieve long term improvement for themselves as well as for their stakeholders and shareholders (UNGC & Deloitte, 2010; UNGC & DNVGL, 2015).

Figure 2.1. The UNGC Management Model. Adapted from UN Global Compact Management Model Framework for Implementation by United Nations Global Compact (UNGC) & Deloitte, 2010, p.8.

As the UN Management model indicates, when organizations want to follow and engage the UNGC principles and values, the first step of the process starts with the commitment from the leaders of the organizations.

The UNGC Commitment and Leadership in the Private Profit-Organizations

Today we can affirm that leaders and managers in organizations have direct impact to the organizational culture and innovation (Jung, Chow & Wu, 2003; Robbins

& Judge, 2013 p.554; Schein, 2010).

Following McWilliams, Siegel, & Wright (2006, p.3) corporate leaders are mindful of the fact that business norms and standards, regulatory frameworks, and stakeholder demand for CSR can vary substantially across nations, regions, and lines of business. Therefore, they represent the first milestone in the pathway to engage in CSR.

As shown in the UNGC Management Model (see Figure 2.1.) and the UNGC Performance Model (see Figure 2.2.), engaging the UNGC CSR standards starts with the vision and commitment from the leaders and shareholders of the private profit organizations (UNGC, 2007).

Figure 2.2. UNGC Performance Model. Adapted from “After the signature. A guide to engagement in the United Nations Global Compact” by United Nations Global Compact (UNGC), 2007.

The leaders are the main drives of the vision throughout the organizations (UNGC & Deloitte, 2010; UNGC & DNVGL, 2015; UNGC, 2007). However, quoting the UNGC makes clear that the vision should be commonly achieved and known for all the members within an organization, “leadership commitment to improved social and environmental performance is crucial in effecting lasting change. However, to have maximum effect, this message must be widely communicated throughout the organization and beyond” (UNGC, 2007, p.11).

Although top management and executives are the part of the firm who can more easily know the degree of commitment to the UNGC principles, employees are also an essential piece when referring to CSR standards, and hence, their perceptions have high value whether we want to understand the current status of CSR within organizations.

Moreover, as shown by international surveys like Rowland International (2006) and conferences “HR Leadership: Workforce 2020 and the Future of Work”, there are significant differences between employees and executives on their perceptions about organizational culture, values and management strategies. Therefore, aiming to avoid a biased image of organizations, the employees in this study are understood as a key element that will allow the research to draw a better understanding of the current UNGC and CSR situation within the surveyed multinational private profit organizations.

The Local Influences of CSR

There is growing interest among managers in the antecedents and consequences of CSR. Following McWilliams, Siegel & Wright, (2006, p.3) “executives in organizations are also aware that their managers are under constant pressure from employees, suppliers, community groups, NGOs, and government to increase their involvement in CSR”.

Stakeholders

The local influences in this study mean the regional and local forces (avoiding international) that can influence and 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 represent a source of pressure for organizations.

For this study, we have highlighted the Employees and the Media & Lobby Groups influences to remark the impact of these groups among the other stakeholders of the organizations.

Employees

In addition to leaders, employees, as individuals inside the organization, are also key contributors for organizational development and change (Robbins & Judge, 2013).

Quoting Robbins & Judge (2013, p.555) employees are great connoisseurs and contributors of organizational culture due to the socialization process. Therefore, employees also represent a driven force to engage in CSR. Furthermore, McWilliams, Siegel & Wright (2006) assumed employees as one of the main factors for companies to engage in CSR.

Media and Lobby Groups

From the 1990s, lobby groups, as NGOs and activist platforms, have represented the biggest claim against corporations’ human rights and environmental abuses, corporations’ corruption scandals and other facts that have impacted the image and overall perceptions of the private for profit sector (Hertz, 2004). All these cases have been published by international and local media, impacting the image of corporations – in 2001, the multinationals companies were the least trusted institution in Europe far behind the Church, the local media or the European Union (Hertz, 2004). Furthermore, with the irruption of internet, and the access to unlimited information, activist and NGOs have increased their scope and made a bigger call to society for realizing the impact that the private sector was having.

In this context, international institutions as the United Nations or the World Economic Forum, national governments and citizens demanded corporations to increase the consciousness of their actions and impact in the global society. As a response, corporations awarded of the critical situation regarding with society, reacted and have followed the trend to engage in CSR actions (UNGC, 2014a).

But not only external forces were the agents of awareness. Inside organizations, the trade union has represented the main voice to claim in pro of CSR (McWilliams, Siegel & Wright, 2006).

The Necessity of Corporate Social Responsibility in the Global Society

The statement extracted from the speech of the Secretary General of the United Nations Ban Ki-Moon in 2015 denotes the emergency to attract the private sector in the commitment for a common responsible and sustainable future. “….[W]e need companies to gear up for implementation of the SDGs. Scalable partnership models aligned with the goals will be essential. But, significant progress will result only when companies go further, and integrate the goals into business strategies, research and development and new product development” (GRI, UNGC & WBCSD, 2015, p.9).

In addition, the year 2015 has represented a milestone in the pathway to achieving a sustainable future. The 69th United Nations General Assembly held in New York on September 2015, gathered 193 member states and the heads from other international institution, who formally agreed to the 70.1 resolution “Transforming our world: the 2030 Agenda for Sustainable Development” which included 17 Sustainable Development Goals (SDGs) (See Table 2.1.), in a call to global business to understand their key role in the future society.

Table 2.1

The 17 Sustainable Development Goals

Goal Sustainable Development Goals

1 End poverty in all its forms everywhere

2 End hunger, achieve food security and improved nutrition and promote sustainable agriculture.

3 Ensure healthy lives and promote well being for all at all ages 4 Ensure inclusive and equitable quality education and promote

life-long learning opportunities for all.

5 Achieve gender equality and empower all women and girls 6 Ensure availability and sustainable management of water and

sanitation for all

7 Ensure access to affordable, reliable, sustainable and modern energy for all

(continued)

20 Table 2.1 (continued)

Goal Sustainable Development Goals

8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

9 Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

10 Reduce inequality within and among countries

11 Make cities and human settlements inclusive, safe, resilient and sustainable

12 Ensure sustainable consumption and production patterns 13 Take urgent action to combat climate change and its impacts 14 Conserve and sustainably use the oceans, seas and marine

resources for sustainable development

15 Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss 16 Promote peaceful and inclusive societies for sustainable

development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels 17 Strengthen the means of implementation and revitalize the

global partnership for sustainable development

Source: The United Nations General Assembly. 70/1. Transforming our world: the 2030 Agenda for Sustainable Development. United Nations (UN), 2015.

As the UN Global Compact did it in the year 2000, the UN is making a call for a multi-stakeholder partnership to support the SDG’s. In this call, the private sector is considered as the key engine to embrace sustainable development and future (GRI, UNGC & WBCSD, 2015).

In addition, as business interests are increasingly overlapping with societal interests and human development objectives, responsible business practices and cross-sector partnerships play an essential role in the way to achieve a common social and environmentally sustainable development (UNGC, 2007). Therefore, promoting a more

inclusive and stable global market through the active engagement of businesses in CSR will be essential to achieve the SDG’s.

But furthermore, the role of business and the industry in international development is not anymore limited to mobilizing financial resources (United Nations Development Group [UNDG], 2015). It lies more fundamentally in the impact of their core operations on the issues covered by the proposed SDGs.

The private sector has traditionally been the driver of scientific and technological development, representing a dynamic and powerful force in innovative capacity (UNDG, 2015). And hence, the private profit organizations are understood by the United Nations, as instrumental in knowledge sharing and technology transfer, which are crucial to sustainability and economic development (UNDG, 2015).

Consequently, these arguments are considered motivated the United Nations to make a call for partnership with the private profit organizations in pro of CSR, while also a call for the UN state member was done to enhance the national and international regulations and standards of CSR.

The CSR Concept: Evolution, Definition &Characteristics

The history and evolution of CSR are related with the history of humans and our concern for a sustainable and an inclusive future.

The origin and early interest in the academic field about the concept of CSR is still confused, different researchers propose different dates and authors as the first developer of the concept. Some studies date back the origins of CSR to the XVIII century, when in 1713 Hans Carl von Carlowitz coined the concept of sustainability using the example of forest management (UNGC, 2014b). Half century later, the concept of Corporate Responsibility appeared when the father of the liberal economy Adam Smith introduced it in his writing “The wealth of nations” in 1776 (UNGC, 2014b). Moreover, further studies date the origins of CSR and its academic interest in the middle of the XIX century (Doane, 2005; Duran & Radojicic, 2004).

Moving into the XX century, in the 1930s, the debate of CSR begun between US scholars, with the Columbia professor Adolf A. Berle and Harvard professor E. Merrick Dodd (Cochran, 2007). However, the majority of authors understand and attribute the

first CSR definition to Howard R. Bowen, who in 1953 published his book Social Responsibility of the Businessman (Garriga & Mele, 2004; Nguyen, 2014), and establishing the new era of CSR (Carroll, 1999) in a context where the Stakeholder Theory was just developed by Edward Freeman in his book Strategic Management: A Stakeholder Approach. In this context, when CSR discussions started, ethical and moral arguments were the drivers. Since then CSR activities have become more holistic and professional (UNGC, 2014a) trying to be integrated into the strategic vision of private profit organizations.

Moving forward, during the XX century, there has not emerged any widely accepted definition, although a lot of academic research and development has been made within the CSR field (Argandoña & Hoivik, 2009; Carroll, 1991; Dahlsrud, 2006;

Garriga & Mele, 2004; Moir, 2001; Nguyen, 2014). To give an appropriate context for this situation, it is needed to understand the constant changes that business models and private profit organizations need to implement if they want to adapt themselves when crossing boundaries (Robertson, 1995; UNGC, 2014a) and especially during the last 25 years with the globalization; however we realize that the topic has been on the table for almost a century now due to the impact for the society.

During the decade of the 1990s, the concept of CSR has experienced an exponential growth in relevance for governments and organizations, it has as well coped many researches within the business management field (UNGC & DNVGL, 2015). A global market appeared as a consequence of the end of the Cold War, and hence the world become a smaller place (Huntington, 1993), or “flatter” as the author Thomas

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