Corporate Social Responsibility - Research Paper Example

?Introduction In the beginning, corporations were not socially responsible. The old thinking for corporations was that the bottom line is the only thing that mattered. Therefore, getting goods as cheaply as possible, even if that meant that these goods came from countries with abusive labor practices, including child labor practices. The environment was theirs to plunder without regard, because, again, the bottom line was paramount. And charitable contributions were not considered by these corporations, as they took time and money away from corporation, which was seen as abusive to the shareholders. In short, being a good corporate citizen was not a part of the standard playbook in the corporations of old. This has changed. Nowadays, corporations need to be socially conscientious, if for no other reason than to avoid public relations nightmares when these socially irresponsible practices come to light. Corporations need to be socially responsible in procuring their goods and services, with an eye towards the environment and labor practices around the world. They also should be charitable, as individuals have indicated that they are more likely to give their business to corporations who share their values. If a corporation is big into animal rights, and makes this fact known, then consumers who are also big into animal rights will see that corporation in a better light and will give their business to this corporation. Therefore, charitable contributions, contrary to the old conventional wisdom, are actually beneficial to the bottom line. With this in mind, the focus of this study will be Swiss Banking firms and how being socially responsible benefits them by attracting new clients. Literature Review The corporate mandate to act responsibly is known as socially responsible procurement. Procurement is “the acquisition of goods and/or services at the best possible total cost of ownership, in the right quantity and quality, at the right time, in the right place for the direct benefit or use of governments, corporations, or individuals, generally via a contract.” (Butter at 2). There are generally four levels of procurement. At level one, needs are identified, as far as the specific good, service or work that needs to be procured. On the next level, suppliers are evaluated. On this level, the supplier must meet certain criteria to receive the contract, and they are evaluated according to their technical, financial and professional qualifications. At the third level, bids are evaluated, looking at “life-cycle costs, environmental impacts, innovation, user-friendliness and delivery of additional benefits.” At the fourth and final level, the contract is awarded and the supplier winning the bid must comply with any and all parameters set forth in the contract, such as mode of delivery, training of the staff and disposal of products. (Carpe Guide at 10-11). Socially responsible procurement is the act of procuring goods while taking into consideration the ethics of how they operate. Corporations must ensure that they or the corporations with whom they work receive appropriate wages and other fringe benefits and that employees are provided with safe working conditions (Socially Responsible Procurement). They must also consider the impact their operations have on the environment (Environmentally and Socially Responsible Procurement Working Group). Furthermore, corporations and government entities must consider the global context “and see purchasing as embedded in a global supply chain.” (Catlaw at 2). They therefore have a great responsibility that extends past their local chain into the global supply. There are three levels of strategic commitment to socially responsible procurement, according to Stanly and Thelen (3). The first one is the fundamental business protection model, which encompasses corporations and organizations that comply with legal and regulatory requirements, and do not go beyond this. The second one is the proactive level, where businesses mitigating unfavorable social risks “by anticipating them and heading them off before they become problems that can affect brand and reputation.” The third level is the “business enhancement” level, in which a business can actually use socially responsible procurement as an opportunity to become more efficient and innovative, and actually enhance their bottom line. A good example of this is a car company that leads the way in producing energy efficient vehicles that are popular and attractive to consumers. (Stanly & Thelen at 3). Closely related to the levels of strategic commitment are four basic models of corporate responsibility. The first is an instrumental model, which states that a corporation must seek to maximize profits, and a corporation may only consider socially responsible factors if it increases the bottom line. (McCarthy at 3). The second is political, which postulates that corporations’ first priority should not be wealth, but societal benefit. (McCarthy at 3). The third is integrative, which explores the symbiosis between business and society, and theorizes that one cannot exist without the other and each relies upon the other for “validity, status and survival.” (McCarthy at 3). The fourth is ethical, which states that businesses must treat individuals fairly, contribute to the sustainability of the environment, and keep “common good” in mind when conducting business affairs. (McCarthy at 3). Both stakeholders and citizens are putting pressure on corporations to adopt the ethical business model and the business enhancement level of commitment. In other words, corporations can no longer operate under the model of short-term greed and the maximization of profits at the expense of the environment and human rights. Another aspect of corporate responsibility is corporate charity. Economist Milton Friedman believed that corporations that give back are acting less responsibly then the ones that do not. According to Friedman’s philosophy, corporations are responsible only to shareholders, and charitable contributions presumably short-change these shareholders, because time and energy are devoted to these worthy causes (Reder, 1994, p. 174). Friedman’s analysis seems a bit short-sighted, at least to Kenneth Macke, a CEO of Dayton-Hudson. Macke believed that the health of the community is important to the corporation’s bottom line, because when the community is healthy, everybody benefits, such as retailers (Reder, 1994, p. 174). Therefore, contributing to the community would presumably come back to corporations in the form of higher profits, because a healthy community has more dollars to spend than a community that is not as healthy. Perhaps one of the biggest draws of corporate charity is the image sheen that comes with charitable contributions. When a corporation is aligned with a particular cause that is popular, individuals are more likely to buy that brand, and would switch retailers or brands to do so (Makower, 1994, p. 104). Therefore, the rewards of corporate giving are tangible to a corporation, and are something concrete that they can understand – doing good by a community increases its bottom line. Some brands become associated with a particular cause, and use this as a marketing tool. Examples of this include Ryka, a women’s athletic shoe manufacturer and its donation of 7 percent of its profits to women who were victim to violent crimes and Coors being associated with adult literacy (Makower, 1994, p. 191). More recently, the ubiquitous pink products that grace any given supermarket denotes that products’ alignment with the Susan G. Komen organization that is committed to ending breast cancer. Therefore, corporations reap the benefits for doing good in the form of higher profits. It is particularly important when a certain industry or company is known for doing wrong. Aligning oneself with charities is perhaps the best way for corporations or industries with a bad reputation to change the subject and look like one of the good guys. Research Questions Based upon the literature review, a number of questions present themselves. One is what is the firms’ motivations for being socially responsible? Do they feel that their socially responsible practices make good business sense? Another line of questions would be which of the models the firm sees as their primary motivation in being socially responsible. Do they subscribe to the fundamental business protection model, which means that they do not go beyond the basics? Are they proactive, where they anticipate social risks and head them off? Do they use socially responsible practices to enhance their business, making them more efficient and innovative? Moreover, it is important to find out how the firms handle the four levels of procurement. How do they identify their needs, evaluate their suppliers and evaluate their bids? How do they make sure that the winning supplier complies with the parameters set forth in the contract? Further, questions regarding the firm’s model of corporate responsibility is important. Are they using social responsibility to increase their bottom line, or do they believe that societal benefit comes before wealth? Do they believe that corporate profits cannot exist without societal responsibility? Further, it is important to discover why the corporations pursue charitable causes. Do they pursue charity because of the sheen that it gives, or do they feel that is it the right thing to do? The aim of the study would be to discover how corporate social responsibility assists in obtaining new clients. In particular, does the charity work and social responsibility give the firms the sheen that they need to get a leg up on their competitors? Research Design The research method that will be used is qualitative, as opposed to quantitative. Qualitative research differs from quantitative research in fundamental ways. Where quantitative research consists of mere data collecting, and marked by detachment from research participants and the viewing of research with a mechanical eye, qualitative research seeks to build a relationship with the participants of the studied phenomenon. (Langelett, 2003, p. 7). The researcher accomplishes this by making friends with his or her subjects by spending time with them and gaining their trust. The questions in qualitative research are open-ended, and geared towards the focus of the inquiry, which is set by the researcher. The raw data that is collected from the qualitative study is then analysed for patterns. Once a pattern is discerned, more data is collected to flesh out these patterns, while reconfirming the earlier themes and topics. (Langelett, 2003, p. 8). There are various kinds of qualitative research, of which the observation, the method to be used in this study, is just one. Observation research, is research that “involves the systematic observation, recording, description analysis and interpretation of people’s behavior” (Saunders et al., 2009). Moreover, there are two types of observation – participatory, where meaning is attached to actions and structured, which focuses on how frequent the actions are. Participatory means that the research lives with the participants, participating fully in the participant’s lives, so that the researcher is not merely an observer but gets to feel what the participants feel (Saunders et al., 2009). In this way, the researcher is able to ascertain how identity is constructed and deconstructed. There are four aspects of participant observation – the researcher can either be concealed or revealed, and the researcher can either observe or participate. Further, there are different kinds of data that participant observation can compile – secondary, primary or experiential data (Saunders et al., 2009). In this study, the case study will be focused upon the Swedish Banking Industry. The specific method that will be used will be questionnaires provided to key members of certain banks in Sweden, and these questionnaires will be used to flesh out the case study of the Swedish Banking Industry with relation to how their sense of corporate social responsibility affects their acquisition of new clients. The validity of results is one weakness of qualitative research and observation research (Saunders et al., 2009), and the inability to establish validity, which is necessary to be able to extrapolate the results to a broader segment of the population, is one trap that a qualitative researcher might fall into. There is the danger that the results will either be evaluated in a top-down deductive approach, in which the results of the data are simply wedged into a pre-existing theory or worldview, and simply used to legitimate this theory or worldview; or that the qualitative data will be used in a bottom-up approach, in which case it is only subjective accounts that cannot be tied into any working theory and does not move beyond discrete accounts. (Bailey et al., 1999, pp. 169-170). Other dangers are that there might be subject error, time error and the way to overcome these are habituation and minimal interaction (Saunders et al., 2009). One way of ensuring rigour, therefore validity and reliabilty, is to design the research in a systematic and self-conscious way, and approach all data collection, communication and interpretation in the same manner. The method and data must be carefully accounted so that another researcher can analyse the data and come with the same conclusions. Moreover, the researcher must have a coherent and plausible explanation for the phenomenon that is being studied. (Mays & Pope, 1995, p. 110). The reliability of a subject must be protected, and one way of doing this is by keeping meticulous records of observations and interviews, and documenting this process in great detail. The researcher must determine the interpretative procedures before beginning the data collecting process for instance, the researcher must decide how to code the utterances, and whether to use a computer to analyse the interview transcripts. Transcripts may also be analysed by multiple researchers, and the agreements on the transcripts between researchers may be compared. Also important is whether the process is audiotaped or videotaped, and these are important considerations as the process of audiotaping and videotaping enables subsequent researchers to duplicate the results. (Mays & Pope, 1995, p. 110). Some researchers suggest that a good measure of reliability would for the researcher to begin with a certain model or theory, then check the cases and data against this theory. (Ambert et. Al , 1995, p. 885). Some ways of ensuring validity would be to feed the findings back to the participants, to discover if the participants regard the findings as accurate and in line with their experiences. (Mays & Pope, 1995, p. 111). Triangulation or using multiple methods of data gathering and multiple informants are considered to be recursive checks against the validity of the researcher's interpretations. (Ambert et al., 1995, p. 885). Cross-checking, triangulation and depth of research are all important in strengthening validity. (Ambert et al., 1995, p. 885). Also important is, if there are cases that are examined that are deviant from the norm of that which is studied, is contradicted by other evidence or appears weak, the researcher must explain the variance in the data. (Mays & Pope, 1995, p. 111). Qualitative research, in particular questionnaires and case study research, is appropriate for the subject matter because the study will focus upon how individuals feel and perceive about their corporation’s socially responsible activities, and how these activities impact their acquisition of clients. It is also very important to discover what types of socially responsible activities these firms pursue, so qualitative research will go a long way towards finding this out. The data that will be collected will be information from these individuals about how they use socially responsible practices to enhance their firm’s image, and how they use these practices to obtain more clients. Also important would be to compile data as to why these firms have selected the particular socially responsible practices. Sources Used Ambert, A., Adler, P., Adler, P. & Detzner, D.F. 1995. Understanding and evaluating qualitative research. Journal of Marriage and Family, 57(4): 879-893. Bailey, C., White, C. & Pain, R. 1999. Evaluating qualitative research: Dealing with the tension between ”science” and ”creativity.” Area, 31(2): 169-183. Butter, F. 2007, “Procurement: the Transaction Costs Perspective in a Globalising World, ” Social Science Research Network, pp. 1-25. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1032152. Carpe Guide. “Carpe Guide to Responsible Procurement,” pp. 1-48. Available at: http://www.kozbeszerzes.hu/static/uploaded/document/CARPE_guide _to_responsible_procurement_2nd_edition.pdf. Catlaw, T. “Socially Responsible Supply Management: Thinking Globally in Local Government Purchasing During a Fiscal Crisis,” Social Science Research Network, pp. 1-4. Available at: http://www.transformgov.org/files/whitepaper/4c_Innovating_with_Socially_Responsible_Supply_Management_Tom_Catlaw.pdf. Environmentally & Socially Responsible Procurement Working Group. “Welcome to the Environmentally and Socially Responsible Procurement Working Group.” Available at: http://www.sustainableprocurement.net/. Langelett, G. 2003, “The Qualitative Tradition: A Complimentary Paradigm for Research in Economic Education,” web accessed 24 June 2010, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=377000 Makower, Joel. Beyond the Bottom Line. New York, NY: Simon & Schuster, 1999. Mays, N. & Pope, C. 1995. Rigour and qualitative research. BMJ: British Medical Journal, 311(6997): 109-112. Reder, Alan. In Pursuit of Principle and Profit. New York, NY: GP Putnam’s Sons, 1994. Saunders, M., Lewis, P. & Thornhill, A. Research Methods for Business Students. “The Socially Responsible Awarding of Public Contracts,” pp. 1-14. Available at: http://www.bmas.de/portal/37958/property=pdf/a172__Vergaberecht__englisch.pdf. Stanly, M. & Thelen, B. “Socially Responsible Procurement - Doing the Right Things for Everyone,” pp. 2-6. Available at: http://www- 935.ibm.com/services/us/gbs/bus/pdf/socially_responsible_procurement_9-14-09.pdf. Read More