Inter-Organizational Cooperation
O’ Toole (2004) emphasized that in fostering inter-organization cooperation, first,
a common interest should be build and used. Secondly, using exchange, cooperation
can be facilitated. Recognizing the significance of different inter-organizational
patterns is one step toward effective implementation. In addition, skillful
implementation managers need to find ways of getting organizations to work together
toward policy success. Inducing implementation success via inter-organizational ties
typically requires some combination of generating and tapping common interests, on
the one hand, and/or utilizing exchanges to link units in productive ways for purposes
of policy. Each of these themes deserves attention.
Companies in order to response to governments calling would use corporate social responsibility as a means. CSR is related to the Values of the corporation, which endow its management with a sense of identity, stronger stability, give directions to important issues and guidance for managerial decisions (Deal &
Kennedy 2000). Therefore, Values are the core culture of a company, affecting its activities and relationships with stakeholders (Valentine & Barnett 2003). Values regulate the owners’ actions, product quality and also improve trust, loyalty and effectiveness resulting from enhanced organizational culture (Engelbrecht et al., 2005).
The World Business Council for Sustainable Development (WBCSD, 1999) defines CSR as a commitment to improve quality of life for its stakeholders by conducting ethical business while devoting itself to financial performance. The World Business Council for Sustainable Development (2003) has further explanations that CSR initiatives refer to business commitment devoted to sustainable economic development management with employees, their families, the local community and society by improving their life quality.
CSR focuses on the need for corporations to go beyond the interests of their shareholders and address the impact their activities have on a broader social and environmental spectrum. CSR attempts to counteract any negative effects that
corporations have on society and replace them with constructive influence. It has four components namely employment, customer, environment and society
The treatment of employees by large corporations has often come under scrutiny by political organizations and human rights groups. Particularly in developing countries, where many resource extraction industries have extensive operations, there are ongoing questions about just how equitable working conditions and pay levels are.
CSR seeks to assist corporations in treating both domestic and foreign employees equitably by providing safe and comfortable working conditions and a fair wage. This approach continues the ongoing transformation of a corporate mentality that was common in the nineteenth century, in which the rights of employees barely registered among the concerns of company owners.
Corporations have an obligation to provide safe, effective and good-quality products and services to their customers. A purely free-market analysis of this responsibility would state that these requirements will be met by the dictates of the market. The philosophy of CSR questions the truth of this belief, and advocates more proactive intervention into the relationship between corporations and their customers.
Consumer protection initiatives, such as those advocated by Ralph Nader, help to provide the legal backing under which consumers can challenge what they see as questionable practices on the part of corporations
Growing public awareness of environmental challenges involving toxins, resource depletion and climate change is forcing corporations to reconsider the traditional corporate view of the natural world as an unending cornucopia of resources.
Environmental aspects of CSR encourage corporations to consider the finite nature of the natural world, and to take much more stringent measures to reduce waste, address
polluting or destructive practices and integrate alternative energy systems and innovative waste-reduction programs. This shift in attitude is particularly critical in areas of South America and Africa, where corporations have extensive operations but are not subject to strict oversight and regulation.
In addition to their responsibilities to employees, customers and the natural world, corporations are responsible for their impact on human society. Many millions of people who are not employed by a corporation and who do not purchase its products are nevertheless affected by its activities. CSR recognizes the interrelated nature of society, and acknowledges that no individual or company can exist totally isolated from the rest of society. Therefore, corporations need to critically analyze what impact their activities have, for good or ill, on surrounding communities, and take steps to maximize the good and minimize the ill.
Will CSR then answers the question on how and how far is the corporate response to the public policy? As the pressuring issue of sustainability, any corporation in Taiwan has the duty to take its own social responsibility to help mitigating the environmental and societal problems while striving for the financial performance. As stated by Huang (2010), CSR development in Taiwan has been burgeoning and growing, it is still mostly deemed a random or casual activity rather than an imperative commitment to corporate value and culture. She elaborated that As CSR initiatives and their context in Taiwan are still at its preliminary stage, there is very limited literature and data for reference and study.
Nowadays, as declared by Stainer (2006), organizations are required to be responsible by formulating, implementing and monitoring strategic policies, not just
related to globalization, sustainability, demographics and technology but also to social responsibility. Most of the companies are merely using CSR as strategy for a business model or just performing their philanthropic duties. Ideally, CSR should be done to serve the corporate stakeholders, the society and addressing pressing societal issue in a long term. Investing in business or programs that would serve the stakeholders best, would eventually create a value based CSR that is not a temporary solution to societal issue that philanthropic approach. Therefore, a good relationship with stakeholders should be established and CSR performance should be evaluated. As noted by Moskowitz in 1972, corporate Social Responsibility Performance can help attract, retain and motivate employees, resulting in higher productivity and performance. The Instrumental stakeholder theory also claims that effective management when starting, developing or maintaining stakeholder relationships will enhance financial performance (Jones, 1995).
Corporate Social Performance can also contribute to the function of product differentiation and will attract socially conscious consumers or socially responsive investors (Kapstein, 2001). In recent years for instance, Social Responsible Investment (SRI), an investment strategy which seeks to maximize both financial return and social good, became a booming market in both the US and Europe. Assets in socially screened portfolios climbed to $2.71 trillion in 2007, an increase over the
$2.16 trillion counted in 2003 according to the Social Investment Forum's 2007 Report on Socially Responsible Investing Trends in the United States. From 2005-2007 alone, SRI assets increased more than 18 percent while the broader universe of professionally managed assets increased less than 3 percent.As of 2007 about one out of every nine dollars under professional management in the United States is involved in socially responsible investing—11 percent of the $25.1 trillion in
total assets under management tracked in Nelson Information’s Directory of Investment Managers. Research estimates by financial consultancy Celent predict that the SRI market in the US will reach $3 trillion by this year, 2011. The European SRI market grew from €1 trillion in 2005 to €1.6 trillion in 2007.
From approximately 1990 on, the concept of CSR became almost universally sanctioned and promoted by all constituents in society from governments and corporations to non-governmental organizations and individual consumers. Even international organizations (e.g. The United Nations, World Bank, Organization for Economic Corporation and Development, International Labor Organization) fully supported and aggressively established guidelines to continue the movement.
According to a study held by US Fortune magazine, of the Fortune 500 companies traded in 1977, less than half of these companies embraced CSR as an essential component in their annual reports. However, at the end of 1990, it was discovered that nearly 90% of the Fortune 500 companies listed CSR as one of the basic elements of their organizational goals, actively reporting the CSR events held by these corporations in their annual reports. From this, it is evident that CSR has received widespread recognition in many large corporations in the USA. In Taiwan, based on the results of a 2005 study conducted by Global Views Monthly magazine, merely 27.6% of public listed companies released information on their CSR programs. In 2006, this figure rose to 55.3%; as to foreign companies with branch offices in Taiwan, the number is 64.3%. From these figures, it is evident that CSR has become an important factor for Taiwanese and foreign corporations and has become the global trend. Corporate response strategy to CSR or topics in society can be categorized as reactive, accommodative, defensive and proactive (Carroll, 1979).
As strategy signifies the set of opportunities for creating value and deploying dynamic capabilities to obtain a competitive advantage (Oliver and Holzinger, 2008), therefore when a company has motives for value creation or maintenance that drive the decision to undertake stakeholders’ management, there are two ways to receive the opportunity advantage in managing stakeholder relations; either to aggressively influence the stake-holder’s demands and expectations, or to respond to the stakeholder’s demands to create more opportunities for a win-win situation (Oliver and Holzinger, 2008). Also, some scholars state that CSR performance can be evaluated by a corporation’s management of stakeholders, because through the valuable investment made in these stakeholders, a corporation can increase results and accumulate a competitive advantage (Clarkson, 1995).
The CSR strategies in this paper are based on value perspective (maintain or creating value) and strategic orientation (aggressively influencing or responding to a stakeholder’s demands). The motive for a corporate manager is to maintain or create organizational value, to place policies and response protocols of social responsibility in order to obtain opportunities for the development of relationships between organizations and stakeholders (Wood, 1991). Furthermore, organizations with specific dynamic capability can further increase the effectiveness of CSR strategies and improve its organizational performance.
Both sustaining the society and environment, and sustaining the enterprise require balancing acts between long and short-term strategies and among influential stakeholders (Roberts, 1992; Pirsch et al., 2007). In these days of rapid pace of technology advances, and uncertain and changing environment of the global market, business leaders realize that the strategies in the past are becoming less rewarding
(Holliday et al., 2002). Therefore, thinking of new ways to grow and prosper becomes an important issue among the companies which are keen on sustainable development.
Corporate responsibility represents the way for a firm to engage the process of the sustainable development that aligns the self-interest of the firm with the greater public good (Hutton et al., 2007). According to Caroll’s dimensions (1981), the foundation of a responsible company is to be profitable, but not at any cost. Meanwhile, the society also demands that the company obeys the law, acts in an ethical manner toward all stakeholders and be a good corporate citizen. The critical question is how a corporation can integrate sustainable development strategies into the overall strategy in order to create the core values and as well to enhance its sustainability. Before studying the “How” question, the “What” question should be answered- “what are the key factors affecting the sustainability strategies adoption?”(Law, 2010)
In regards to environment, how environmental issues affect the company’s behavior especially to its profitability especially when CSR is merely a business model not as a value creation or participatory governance? Klassen and McLaughlin (1966) mentioned that environmental management has an important influence on a firm’s financial performance. Stock market performance is one measure how environmental management improves financial performance. Furthermore, some believe that environmental management,for example, eliminating waste will reduce manufacturing cost (Allen 1992, Schmidheiny 1992).
In contrast, poor environmental management, such as pollution problems will hurt the firm’s stock price, meaning that the market, shareholders or investors expect its profitability to be lessened (Shane and Spicer 1983). When the market expects high future costs for pollution management, a negative impact arises (Stevens 1984). As declared also in the SRA (Sector Risk Analysis) conducted by CoreRating,
environmental problems cause the most serious value impact on the company’s reputation, branding, morale of employees and competencies. Huang (2010) concluded that environmental management is important and has an influence on the financial performance of a firm. It creates profits through either market gains or cost savings. Sustainable development was initially referring to environmental concerns, and now also compassing social, ethical and economically issues. Sustainability is a composite of social, economical and environmental issues (Carroll, 1981, 1999; DJSI, 2006). Sustainable development has been defined as “development that meets the needs of the present without compromising the ability of the future generations to meet their own needs”.
A growing number of organizations or firms have begun to adopt corporate responsibility strategies to contribute to sustainable development goals. These strategies are aimed at aligning the self-interest of the firms with the greater public good in ways that add value to both the firms and the society. Asian organizations are far lagging behind those in the West in having supportive policies and sustainable development strategies (Welford, 2005). Some Asian countries have moved towards sustainable development (Mental et al., 2007). Asia has been developing itself in many areas, within the context of sustainable society, new institutions and collaborations are formed to drive changes. Facing the challenges from the external environment, namely the market competition and changing needs on sustainability, companies in the industry also have internal forces driving them towards sustainable development. These internal forces involve corporate willingness and the mindset of being socially responsible by taking sustainability into serious consideration. Both these internal and external forces definitely promote the propagation of the sustainable development in the industry. (Law, 2009)