Corporate Social Responsibility as Tool For Risk Management: J Sainsbury Plc - Case Study Example

Corporate Social Responsibility as tool for risk management- J Sainsbury plc case study I. Objectives The main objective of this study is to determine how corporate social responsibility functions as a tool for J Sainsbury Plc’s risk management strategy. In order to achieve this primary objective, the following secondary aims would also be pursued: 1. define concepts such as corporate social responsibility, risks and its management; 2. determine J Sainsbury Plc’s Corporate Social Responsibility strategy and identify strengths, weaknesses, consistencies and inconsistencies especially in the context of risk mitigation; 3. explore the CSR’s link to risk management and develop a framework for linking J Sainsbury Plcs case CSR to its risk management; 4. outline related instances and examples wherein the Corporate Social Responsibility mitigates harm and risks; and 5. propose the best possible practice in Corporate Social Responsibility for J Sainsbury Plc both in short-term and long-term. Problems have been reported in regard to working on similar objectives. In this regard, a landmark, 10-year study conducted by Mayle (2006) suggested that researchers should focus on how firms must actually manage their stakeholders rather than empirically validating inherently untestable frameworks of social responsiveness. (p. 26) With this in mind, I feel that it is necessary to examine J Sainsbury Plc’s CSR performance, particularly in the development of a framework aimed at determining links to risk management. Rationale The management of actual risks is a complicated issue. For J Sainsbury Plc, risk management strategy is largely dominated by extensive merchandising and advertising that require enormous investments. For instance, there was the use of celebrity chef Jamie Oliver in its advertising campaign to promote J Sainsbury Plc as the best choice of supermarket for those interested in healthy eating. (Harris 2009, p. 73-74) This kind of strategy has been anchored mainly on commercial or market-driven reasons. Unfortunately, this is a shallow approach to risk management and poorly addresses those so-called lifestyle risks. According to Visser, Matten and Pohl (2007), individual companies or industries are often held responsible for these lifestyle risks and that as governments are unwilling and often unable to regulate these issues, we see an increasing social expectation of society addressed at companies to assume responsibility for these lifestyle risks. (p. 405) In this regard, one sees that studying and implementing Corporate Social Responsibility as a tool in risk management is important in two ways: first, CSR could address the risks that directly harm the company; secondly, CSR also changes the hearts and minds of its consumers and the market in the way it is associated with the risks that result on commercial activities that produce lifestyle risks such as global warming. All in all, using CSR as a tool in risk management seems to be the best for both the J Sainsbury Plc as well as the society principally, in the words of Hancock (2005), “to underpin the long-term security of the business. (p. 115) Thus, the author’s perceived need to study the subject. Finally, the focus of this study, which is to explain CSR as a tool for risk management, is classified within the business rationale of the concept more than the normative case. In this regard, I would like to cite that the resources, data and findings of this study would contribute in establishing mechanisms in preventing crisis or scandals to occur for not just for J. Sainsbury Plc but also for similar organizations. II. Literature Review An examination of the corpus of literature in regard to Corporate Social Responsibility and risk management underscores the fact that these two concepts are characterized by differing concepts, disciplines, theories and directions. As a result, there is a diverse range of opinions in regard to CSR and risk management and their relationship. Some of the studies and research undertaken on this paper’s subjects are outlined below: 1. Nina Boeger (2008) comprehensively explored the CSR concept and hot it helps organizations in their overall business objectives. In one of Boeger’s observation, she posited that the extent to which a business fulfills its societal obligations must be both a function of what is legally required to do, and what it chooses to do. (p. 10) Her arguments focused on encouraging a greater reflection on the balance between different kinds of normative standards for business action and the development of best practices in such a way that CSR benefits almost all of the aspects of business operations. 2. Two of the most comprehensive discourses on general risk management include those of Hiles’ (2007) and Sadgroves’ (2005). Hiles contribution is an in-depth exploration in regard to the benefits of institutionalizing risk management in an organization. For instance, he stressed that there is a need for the development of an internal documented policy and procedure to cover the implementation and correct application of risk management process. (p. 89) On the other hand, Sadgrove, examined and explained specific issues in risk management, including the cost and risk management processes, among other variables. (p. 14) 3. There are numerous studies that explore the link of CSR and risk management. For instance, Regester and Larkin (2008) focused on how it creates a more flexible and anticipatory reputation risk management processes by sensitizing the business risks associated with unfamiliar patterns of social change. They specifically cited that CSR could support risk management by: managing short-term risk; accessing valuable marketplace and social trends data; moving towards consensus and away from conflict through better stakeholder engagement; influencing view and behaviour inside and outside the organization; and, enhancing value through socially responsible investment. (p. 93) Mullerat and Brennan (2005) cited several specific examples in regard to how companies could benefit from focusing their CSR on helping to solve environmental problems. They were, for example, able to demonstrate how climate change could pose risks to companies such as J. Sainsbury Plc due to the financial ramifications that might result from policy changes, taxes associated with greenhouse emissions, higher fuel and energy prices, changes in the consumption patterns, reputational impacts and missed opportunities, along with the effect on operations or markets of the severe and changing weather conditions. (p. 176) 4. Reuvid (2005) outlined several frameworks for viewing CSR in risk management initiatives, especially with the idea that CSR as a social initiative can be a value-adding process as well besides its role in risk management. One of these frameworks involves a methodology that control risks by conducting a type of ‘gap analysis’ that uses risk assessment model. Here, CSR initiatives are incorporated in existing company strategy and activities through an assessment against the expectations and perceptions of stakeholders. (p. 89) Also in this context, Andre Habisch (2005) presented his own work by how CSR is viewed from the European perspective. In his discussion, he maintained that CSR is pivotal in the social, environmental and financial sustainability of an enterprise, finally concluding that there is a need for the development of a research framework for empirical comparative research that provides a basis to measure and compare CSR practices within European firms. (p. 319) 5. Den Hond, Bakker and Neergaard (2007) illustrated how CSR could counter bad publicity, citing a wide range of literature and researches that support such argument. On a wider perspective, they suggested a theory wherein organizations seek legitimacy by accommodating to norms, values and expectations in their environment, for example, in order to appear modern and progressive, to appear benign, or to live up to the expectations of relevant stakeholders. (p. 214) In the authors’ view, CSR can be seen as a management fashion as a collective answer to such institutional pressure that comprises a set of techniques for firms, which help them to become or remain legitimate, with the resources available and organizational alternatives sustainable. 6. Houdmont and Leka (2010) specifically cited how CSR mitigates risks through their study of the psychosocial issues in the workplace. Their point is that when an organization addresses the psychosocial risks in its employees, they prevent the shift of problems to the community, to families and, eventually to the workers and the workplace. The authors found a direct correlation between CSR and risk mitigation. To quote: “good psychosocial management leads to good business. It may lead to a more productive workforce in terms of less absence, more positive engagement, and greater mental flexibility.” (p. 314) 7. SustainAbility and Mistra (2009) also explored how CSR creates positive impact on a company’s long-term market value. In their study, they found that fifty two per cent of respondents, which is composed of managers and analysts, believe that social and environmental considerations will become a significant aspect of mainstream investment decisions in the next two years and that seventy six per cent of fund managers and analysts saw a clear link between non-financial risks and shareholder value and systematically take into account issues such as the ability to innovate, corporate governance and risk management, and the management of customer relations. In this study, it was also found that environmental impact, such as the effect that a company’s activities have on the biosphere, the physical world in which it operates, and supply chain management or what happens at various stages in the process used by a company to deliver goods and/or services, whether or not the company directly controls those stages, are considered to be the most relevant non financial areas of risk for certain sectors and companies. 8. Interesting studies that specifically examined J Sainsbury’s CSR initiatives include the works of McAlexander and Hansen (1998) as well as Heinelt and Smith (2003). McAlexander and Hansen outlined how CSR is fundamental in J Sainsbury Plc’s focus on improving its reputation and good-will, which are perceived to be instrumental to the company’s long-term strategic positions. The Scientific Services Division was particularly identified as the main agent within the organization in pursuing its CSR and environmental programs. (p. 8-2) Meanwhile, Heinelt and Smith, described the paternalistic nature of the company it its relationship with employees as well as with the wider society through its CSR initiatives. (p. 121-122) This information is important because it reveals the philosophy that guides how CSR could be utilized as a tool in the overall risk management strategy of the company. Again, I emphasize that the themes in this research has attracted many studies. It is not surprising, hence, that there are numerous frameworks and methodologies currently available that specifically suggest approaches and best practices in the areas of evaluation, assessment, examination, analysis and measurement of the CSR and risk and their relationship. The following outlines some of the available references about this aspect of this paper’s content: 1. Valerie Anderson is an excellent resource of models and research methodologies in evaluating and measuring employee loyalty. Her work is important especially with her use of numerous case studies, a number of which similar and applicable to the subject of this paper. For instance, there is the case illustration about local bargaining in the National Health Service, which demonstrates several approaches in examining and measuring abstract concepts such as CSR and its benefits. (p. 107) Here, a step-by-step outline of the research design and process were provided, highlighting how the combination of quantitative and qualitative methods could yield a comprehensive, balanced and credible data gathering and analysis especially on intangible concepts such as trust, commitment and loyalty. Anderson also provided extensive explanation on research design for students. Particularly, her work on the classifications of research is helpful in the identification of the right approach in order for this paper to achieve its objectives. Since this study concerns only one subject, which is J. Sainsbury Plc’s experience, the section on the Case Study research design is invaluable. 2. Ralph Hall (2008) provided several arguments why case study research could be effective, successful and even groundbreaking. He maintained that, in the context of determining specific, cause-effect relationships, this approach is one of the best. He is particularly helpful in validating and affirming Anderson’s definition of the case study, the case study inquiry and its research processes. At one point, Hall emphasized that the case study’s key feature is the real-life focus of the research where the object of the case is examined in its naturally occurring context. (p. 109) 3. Finally, an important resource that this paper finds relevant is the work of Zambon and Marzo (2007). Their book, Visualising Intangibles, offer valuable insights in regard to the qualitative and quantitave measurment, reporting, evaluation and management of intangibles. (p. 3) It must be underscored that CSR and risk forms part of the so-called intangible elements in organizations today, along with reputation, knowledge, competencies, innovation and leadership. III. Methodology The method to be use by this study is a combination of quantitative and qualitative models along with other related approaches such as the inductive and case study methods. All research depends on interpretation that is why it has many pitfalls. This problem would be addressed by employing quantitative methods of collecting data, primarily with the use of a questionnaire and a set of interview questions. With standard quantitative designs there is a conscious effort to limit the role of personal interpretation for that period between the time the research design is set and the time the data are collected and analyzed. (Stake p. 41) On the other hand, I also believe that qualitative method is essential to the study and that this is especially true in the case of sample selection and data interpretation. A credible study requires that persons most responsible for interpretations should be in the field, making observations, exercising subjective judgment, analyzing and synthesizing, all the while realizing their own consciousness. Particularly, wrote Anderson, the qualitative method would allow a researcher to gain a proper “feel” and “understanding” of the culture of the organization and the sentiments of the employees even if the sampling, as with the case of this study, is confined to a single organization. (p. 51) The study would also use elements of case study model. Ralph Hall (2008) provided several arguments why case study research could be effective, successful and even groundbreaking. He maintained that, in the context of determining specific, cause-effect relationships, this approach is one of the best. He is particularly helpful in validating and affirming Anderson’s definition of the case study, the case study inquiry and its research processes. At one point, Hall emphasized that the case study’s key feature is the real-life focus of the research where the object of the case is examined in its naturally occurring context. (p. 109) Since this is a form of a case study research, the sample selection approach will essentially be ad hoc. While the result may not representative of the result across the industry, it must be underscored that the objective of the research is to determine CSR and risk management strategies in the case of J. Sainsbury alone. This leads to the use of inductive approach in tandem with the qualitative methodology. The model emphasizes the observing aspects of social life and then proceeds with discovering patterns that could point to relatively universal principles. (Babbie 2009, p. 56) IV. Ethical issues In regard to the issue of my qualification as a researcher, in the context of this section, I would like to state that I satisfy all the requirements in order to successfully conduct this study. In addition, I am guided by several supervisors - all of them are expert in the field. This is particularly relevant in the drafting of the research questionnaire, selecting the participants, examining data and sharing results. Furthermore, I am aware of the factors that Cottrell and McKenzie (2010) outlined that indicate the knowledge and preparedness of a researcher: I am aware of the alternative approaches to meeting the study’s objectives; I am aware of the ethical guidelines, legal requirements and local customs and norms. (p. 100) With this, I am stating my capacity to complete this study ethically. This research reiterates that it will address all the ethical issues in regard to using people as subjects, specifically those concerning confidentiality, coercion and consent. In addition, this research would also ensure the protection of the subjects’ identities and maintain its independence from possible efforts by interested parties or organizations to influence the results. The above important ethical issues would be addressed by: 1. the use of the university’s standard procedures in regard to dissertation studies especially those that concern the sending of formal agreements which emphasize terms of consent on confidentiality, among other related terms; 2. furnishing J. Sainsbury and all other parties involved with a copy of this research proposal with the aim of fully informing them of the breadth and all of the intents of this study; 3. ensuring that there is the privacy of the subjects by employing a method of using letters in place of names. Here, I would like to underscore that only I and my dissertation supervisors would have access to the information and data I would be able to collect. I would also like to write down here that subjects are accorded the right to withdraw from this research. This is included in the letter of consent. Here, they are allowed to do so but that they would not have the right to edit or censor the final dissertation with the condition that their identity or department or other personal details are not disclosed and no other breach in the agreement has been committed. All in all, I would like to present all the data I collected – from the questionnaire to the records and documentations – as fully and clearly as possible. I will base my analysis on these data and that it is open for the reader to judge whether such analysis is correct and determine whether my conclusions are valid. Here, I underscore that even though all my arguments are open to challenge, these were made with firm foundations. I am aware that my research should avoid the design that would lead to biased result or harming the good standing of the stakeholders therein, such as the participants, J. Sainsbury Plc, the university, and myself. I know that what is being demanded in the context of ethics is judiciousness on my part. V. Data access For this paper, I have secured the permission of the management of J. Sainsbury Plc. to undertake the study within the company. I was given permission to interview employees as well as examine company records and documentations that are pertinent to my objectives. I believe, that they readily agreed because the outcome of my research might have some bearing on their relationship with their employees. The data would be collected from interviews, questionnaires and documentary analyses of the company records as well as the available related literature. All in all, a systematic framework of gathering data would be developed, combining fundamental methodologies in varying degrees of emphasis. VI. Resource implications CSR and risk management are two widely documented subjects in business management. As a result the body of literature has been extensive, greatly augmenting this research capability to draw the correct backdrop in the field, including the trends, challenges and opportunities, especially in the context of J. Sainsbury’s case. The advantage is not only in the area of drafting the content of this research. The number of existing research and studies on the subject also provide excellent models and experiences in terms of conducting the research and structuring the processes involved, especially in collecting and analyzing the data. Even the fact that the focus of this research is confined to J. Sainsbury alone, there are very little limitations in regard to resources as case studies on related subjects abound. Furthermore, as specified earlier in the Data Access section, I was able to secure permission and cooperation from J. Sainsbury to pursue my research objectives freely in within the organization. This means that I would be able to collect all I need – from interviews to pertinent documents especially concerning corporate policies and their own studies, if available – that would allow me to effectively discuss and analyze my topic. VII. Work Plan Week 1-3: Drafting, submission, revision and approval of research proposal. Week 4- 5: Drawing up of sample and research questionnaire. Week 6 - 14: Start to conduct interviews, survey of the sample and research of other pertinent data. Week 15-17: Start and Complete Data Analysis. Week 18-20: First dissertation draft would be completed and sent out for comments. Week 21-23: Revisions and submission of final dissertation. References Anderson, V 2004, Research methods in human resource management. CIPD Publishing. Babbie, E 2009, The Practice of Social Research. Cengage Learning. Boeger, N 2008, Perspectives on corporate social responsibility. Cheltenham: Edward Elgar Publishing. Cottrell, R and McKenzie, J 2010, Health Promotion and Education Research Methods: Using the Five Chapter Thesis/Dissertation Model. 2nd ed. Jones and Bartlett Learning. De Hond, F, Bakker, F and Neergaard, P 2007, Managing corporate social responsibility in action: talking, doing and measuring. Ashgate Publishing. Habisch, A 2005, Corporate social responsibility across Europe. Springer. Hancock, J 2005. Investing in corporate social responsibility: a guide to best practice. London: Kogan Page Hall, R 2008, Applied social research: planning, designing and conducting real-world research. South Yarra: Palgrave Macmillan Australia. Harris, E 2009, Strategic Project Risk Appraisal and Management . Farnham: Gower Publishing, Ltd. Heinelt, H and Smith, R 2003, Sustainability, innovation and participatory governance: a cross-national study of the EU eco-management and audit scheme. Hampshire: Ashgate Publishing, Ltd. Hiles, A 2007, The Definitive Handbook of Business Continuity Management. Chichester: John Wiley and Sons. Houdmont, J and Leka, S 2010, Contemporary Occupational Health Psychology: Global Perspectives on Research and Practice. John Wiley and Sons. Mayle, D 2006, Managing innovation and change. London: SAGE. McAlexander, J and Hansen, E 1998, J Sainsbury Plc and the Home Depot: Retailers Impact on Sustainability : Case Study. Island Press. Mullerat, R and Brennan, D 2005, Corporate social responsibility: the corporate governance of the 21st century. Kluwer Law International. Regester, M and Larkin, J 2008, Risk Issues and Crisis Management in Public Relations: A Casebook of Best Practice. Kogan Page Publishers. Reuvid, J 2005, Managing business risk: a practical guide to protecting your business. Kogan Page Publishers. Sadgrove, K 2005, The complete guide to business risk management. Farnham: Gower Publishing, Ltd. SustainAbility and Mistra 2009, “Values for Money: Reviewing the Quality of SRI Research.” SustainAbility. Retrieved 17 April 2010, from www.sustainability.com/publications/latest/values-for-money.pdf Visser, W, Matten, D and Pohl, M 2007, The A to Z of corporate social responsibility: a complete reference guide to concepts, codes and organisations. Chichester: John Wiley & Sons, Ltd. Zambon, S and Marzo, G 2007, Visualising intangibles: measuring and reporting in the knowledge economy. Ashgate Publishing, Ltd. Read More