We examine recent evolution in corporate responsibility in the forest industry, an important natural-resource-based industry which is under rapid internationalisation and structural change under challenging financial pressures. We address two recent trends in corporate communication: corporate disclosure, that is the adoption of consistent external reporting standards [namely the Global Reporting Initiative (GRI) ], and the growing awareness of engagement with and impact on local communities through philanthropy, generation of prosperity, communication and the social impact of core activities. This study uses (...) a comparative qualitative case approach to forest industry multinational enterprises (MNEs) based on a combination of secondary (reporting, company newsletters and other documentation) and interview data. Three large-scale multinational forest industry firms, all pursuing different strategies in terms of internationalisation and geographical and product diversification, were chosen for the study: Stora Enso, SCA and Sappi Ltd. Our results show that the overall quality of sustainability reporting has improved in these companies from 2005 to 2009 with the adoption of GRI. However, based on our fourfold categorisation of social impact, the core social impact indicator in GRI (SO1) has been interpreted very differently in these MNEs, and the adoption of GRI has not actually much improved the comparability of the reports or transparency of practices. (shrink)

Relations between non-governmental organizations (NGOs) and companies have been the subject of a sharply increasing amount of publications in recent years within academic business journals. In this article, we critically assess this fast-developing body of literature, which we treat as forming a ‘business and society discourse’ on NGO–business relations. Drawing on discourse theory, we examine 199 academic articles in 11 business and society, international business, and management journals. Focusing on the dominant articulations on the NGO–business relationship and key signifiers they (...) rely on, we analyze the problem-settings of articles in order to reveal the statements that are acceptable and appropriate within this field. Our threefold aim is to (1) identify dominant articulations of NGO–business relations in business and society discourse, (2) expose those articulations that are silenced or suppressed by these dominant articulations, and (3) critically assess possible power effects of these discursive dynamics in the field of discursivity. While business and society discourse on NGO–business relations overall remains open to many different articulations, we also find that those articulations that focus on NGO–business partnerships and governance initiatives tend to privilege collaborative and deliberative ways of engaging and marginalize more adversarial subject positions. We call for more recognition of the potentially constructive role that can be played by conflict. (shrink)

The Forest Stewardship Council (FSC) is a global private governance system overseeing the sustainability and biodiversity of the world forestry system through certification of forests and forestry processes and products, and is perceived as the strongest of the various certification schemes available (Domask, Globalization and NGOs: Transforming Business, Government, and Society , 2003 ; Gulbrandsen, Global Environmental Politics , 2004 ). It has seen more success in developed than developing countries in terms of amount of forest certified and number of (...) chain-of-custody certificates issued, raising questions as to its ability to promote biodiversity Gulbrandsen, Global Environmental Politics , 2004 ). A number of challenges have risen to the pragmatic and moral legitimacy of the FSC as a global governance system: alternative certification schemes, output and market access, cost of certification, plantations, and illegal logging. I examine each of these challenges as they pertain to the dimensions of pragmatic and moral legitimacy of the FSC. I conclude with a discussion of theoretical implications for global governance systems using ecolabel schemes, as well as a discussion of practical implications for the FSC in particular. (shrink)

Stakeholder literature has acknowledged the need to complement the extant theory on stakeholder management by more dynamic perspectives. This article makes use of the recent terminology of stakewatcher and stakeseeker to illustrate the dynamic aspect of stakeholder theory transposed in the graphical representation of Freeman’s stakeholder model. Presenting a few selected case studies, it applies the scheme on the concept of value responsibility chain; it exemplifies the role of stakeseekers in various forms of activism, from shareholders, NGOs and government, in (...) the stakeholder mobilisation process. This article clarifies how stakewatchers and stakeseekers can profoundly affect stakeholder salience, especially in crises. The transposition and integration of the dynamic aspect of stakeholder theory into the graphical representation strengthen the forceful pedagogical value of the Freeman’s stakeholder graphical model. (shrink)

Companies that have joined the United Nations Global Compact are required to submit a Communication on Progress, which is an environmental, social, and governance report, to the UNGC every year. If they fail to do so, they are marked and listed as non-communicating on the UNGC website. Using the event study methodology, this study shows that a company that fails to report to the UNGC is penalized in the financial markets with an average cumulative abnormal return of −1.6% over a (...) period of 5 trading days around the event. Although a major critique against the UNGC is that the initiative’s voluntary nature and its lack of external monitoring and sanction mechanisms render it ineffective in terms of the business participants’ implementation of the UNGC principles into their operations, this result suggests that investors may be able to pressure UNGC business participants to increase their compliance with the UNGC requirements and to “walk the talk.”. (shrink)

In this paper, the results of an empirical analysis of a set of 416 descriptive case studies published by corporate members of the UN Global Compact are presented. Although these cases cannot be viewed as representative of the Compact itself or of corporate social responsibility (CSR) and development in general, they can illustrate which kinds of projects are deemed appropriate as best practice examples among Compact members, and therefore indicate the direction, in which predominantly voluntary and business‐led CSR might at (...) best be evolving. To help contextualize the analysis, the paper starts with a brief overview of recent academic work on the strengths and limitations of CSR in the light of international development, followed by the empirical analysis of Compact case studies. The results raise doubts regarding the general suitability of contemporary CSR initiatives to tackle some of the most pressing developmental challenges. Instead, only certain topics are commonly addressed, while a number of issues such as anti‐corruption measures or labour rights are underrepresented in the case study sample. Regarding the target regions of the best practice examples, the majority is reported on activities based in OECD countries and a small number of emerging markets such as South Africa, India or China, while neglecting other regions such as sub‐Saharan Africa (excluding South Africa). From a European Union policy perspective, these results indicate that there is a role to play for the state in order to create a better fit between CSR agendas and the actual developmental needs in the South. (shrink)

The U.S. and U.K. models of corporate social responsibility (CSR) are relatively well defined. As the phenomenon of CSR establishes itself more globally, the question arises as to the nature of CSR in other countries. Is a universal model of CSR applicable across countries or is CSR specific to country context? This article uses integrative social contracts theory (ISCT) and four institutional factors – firm ownership structure, corporate governance, openness of the economy to international investment, and the role of civil (...) society – to examine CSR in Singapore, Turkey, and Ethiopia. Field research results illustrate variation across the institutional factors and suggest that CSR is responsive to country differences. Research findings have implications for consideration of the tradeoff between global and local CSR priorities and practices. (shrink)

This study tests a model that links stakeholder pressure to the implementation of corporate social responsibility activities and market performance. Stakeholder groups and competitors might exert pressure on companies to implement CSR, which could lead to positive effects on market performance. Using structural equation modeling, the authors find that stakeholders and competitors exert pressure differently. The effect of CSR implementation on market performance is moderated by market dynamism: It affects market performance more in dynamic environments. The authors discuss implications for (...) both companies and stakeholders. (shrink)

This paper studies Corporate Social Responsibility (CSR) from the viewpoint of social risk as part of reputational risk. We adopt the conception of social risk that includes the risks originated by environmental and social sustainability. Any risk involves hazards and opportunities. The success of its management consists of hedging the hazards and turning opportunities into value. CSR is the key for dealing with both goals. Opportunities can be identified through an accurate analysis that leads to discovering the unsatisfied needs contained (...) in societal claims in general and in the private politics of Non Governmental Organizations (NGO) in particular. Bringing these opportunities into line with the corporate know-how and undertaking projects together with the stakeholders with whom synergy is possible enables corporations to create shared value. A direct hedging of social risk hazards is hardly impossible. A good corporate social image constitutes a sound hedging against social risk. We have associated to social image the concept of CSR capital which means the value created through CSR. On this basis, we analyze the meaning and implications of social failure using Leland’s bankruptcy costs model. The quantification of the CSR capital may parallel the quantification of reputational capital about which several papers have been published. Combining the direct net present value created by a CSR expense with its tax savings and the savings it produces in the present value of the social failure costs, we estimate the total net present value created by these expenses. The analysis of social failure costs and the value created by social expenses is accompanied by a numerical illustration. EWW141015DXN. (shrink)

In July 2008, Pacific Rim Mining, a socially responsive Canadian gold mining Multinational Corporation (MNC) with $77 million invested in El Salvador, experienced a 30% decline in stock price when it suspended exploration drilling for gold there. In April 2009, the company filed a lawsuit against the government of El Salvador through Central American Free Trade Agreement to recover its investments plus damages. This corporate failure is explored based on: (1) four globalization economic development models, (2) the social, political, and (...) economic history of El Salvador, (3) the El Salvador gold mining industry, and (4) social movement reactions to international mining companies. MNCs must carefully engage "Social Justice" Nongovernment Organizations when pursuing economic development projects to ensure a nation's successful integration into the global economy. (shrink)

Stories about corporate social responsibility have become very frequent over the past decade, and managers can no longer ignore their impact on firm value. In this paper, we investigate the extent and the determinants of the stock market’s reaction following ordinary news related to environmental, social and governance issues—the so-called ESG factors. To that purpose, we use an original database provided by Covalence EthicalQuote. Our empirical analysis is based on about 33,000 ESG news, targeting one hundred listed companies over the (...) period 2002–2010. On average, firms facing negative events experience a drop in their market value of 0.1%, whereas companies gain nothing on average from positive announcements. We find also that market participants are responsive to the media, but they do not react to firms’ press releases or to NGOs’ disclosures. Moreover, our results indicate that sector’s reputation mitigates the loss and that cultural proximity and lexical contents of ESG disclosures play a significant role in the magnitude of the impact. (shrink)

Non-governmental organizations and pressure groups have taken up the mission of counterbalancing the huge power of the multinational corporations. Curiously, while most NGOs have a sincere ethical background and a genuine ethical motivation, the way some activist groups and NGOs themselves act does not always live up to the principles they advocate. Research using a multiple case study methodology is used to provide an illustration of various questionable practices followed by pressure groups revealing a range of tactics. The concerns, the (...) objectives and the legitimacy of NGOs and activist groups will be discussed, along with their strategies and tactics. A framework will be developed as a basis for analysing the ethical aspects of the various NGO actions. The analysis of the cases will reveal some worrisome inconsistencies between the demands and the practices of NGOs and activist groups. Should not the means employed by activists and NGOs be consistent with their own espoused or implied values? As power gives responsibility, NGOs should be seen as having corporate stakeholder responsibility. (shrink)

This article makes the case for the importance of paying attention to the internal dynamics of business in order to understand why and under which conditions firms engage in corporate social responsibility (CSR). The argument is that CSR assists decision-makers in firms to resolve managerial dilemmas. By a managerial dilemma this article understands a situation whereby the execution of management’s decisions requires asset specific allocation of resources. Asset specific allocation of resources transforms the intra-organizational mode of social coordination from a (...) hierarchy to one in which managers become dependent on, and vulnerable to, the behavior of subordinates. It is in these situations that corporate decision-makers introduce CSR standards in their attempt to avoid the foreseeable loss of control and organizational efficiency. (shrink)

ABSTRACT:The literatures of business ethics and international business have generally had little influence on each other. Nevertheless, the decline in the power of nation states, the emergence of non-governmental organizations, the proliferation of self-regulatory bodies, and the changing responsibilities, roles, and structure of multinational corporations make constructive engagement between these two disciplines imperative. This changing institutional landscape creates many areas of common concern. In this article, we describe the changing institutional context of global business and suggest ways in which both (...) business ethics and international business may inform each other more fruitfully. (shrink)

We examine recent evolution in corporate responsibility in the forest industry, an important natural‐resource‐based industry which is under rapid internationalisation and structural change under challenging financial pressures. We address two recent trends in corporate communication: corporate disclosure, that is the adoption of consistent external reporting standards [namely the Global Reporting Initiative (GRI) ], and the growing awareness of engagement with and impact on local communities through philanthropy, generation of prosperity, communication and the social impact of core activities. This study uses (...) a comparative qualitative case approach to forest industry multinational enterprises (MNEs) based on a combination of secondary (reporting, company newsletters and other documentation) and interview data. Three large‐scale multinational forest industry firms, all pursuing different strategies in terms of internationalisation and geographical and product diversification, were chosen for the study: Stora Enso, SCA and Sappi Ltd. Our results show that the overall quality of sustainability reporting has improved in these companies from 2005 to 2009 with the adoption of GRI. However, based on our fourfold categorisation of social impact, the core social impact indicator in GRI (SO1) has been interpreted very differently in these MNEs, and the adoption of GRI has not actually much improved the comparability of the reports or transparency of practices. (shrink)

Non-governmental organizations (NGOs) and pressure groups have taken up the mission of counterbalancing the huge power of the multinational corporations. Curiously, while most NGOs have a sincere ethical background and a genuine ethical motivation, the way some activist groups and NGOs themselves act does not always live up to the principles they advocate. Research using a multiple case study methodology is used to provide an illustration of various questionable practices followed by pressure groups revealing a range of tactics. The concerns, (...) the objectives and the legitimacy of NGOs and activist groups will be discussed, along with their strategies and tactics. A framework will be developed as a basis for analysing the ethical aspects of the various NGO actions. The analysis of the cases will reveal some worrisome inconsistencies between the demands and the practices of NGOs and activist groups. Should not the means employed by activists and NGOs be consistent with their own espoused or implied values? As power gives responsibility, NGOs should be seen as having corporate stakeholder responsibility. (shrink)

In this paper, the results of an empirical analysis of a set of 416 descriptive case studies published by corporate members of the UN Global Compact are presented. Although these cases cannot be viewed as representative of the Compact itself or of corporate social responsibility (CSR) and development in general, they can illustrate which kinds of projects are deemed appropriate as best practice examples among Compact members, and therefore indicate the direction, in which predominantly voluntary and business‐led CSR might at (...) best be evolving. To help contextualize the analysis, the paper starts with a brief overview of recent academic work on the strengths and limitations of CSR in the light of international development, followed by the empirical analysis of Compact case studies. The results raise doubts regarding the general suitability of contemporary CSR initiatives to tackle some of the most pressing developmental challenges. Instead, only certain topics are commonly addressed, while a number of issues such as anti‐corruption measures or labour rights are underrepresented in the case study sample. Regarding the target regions of the best practice examples, the majority is reported on activities based in OECD countries and a small number of emerging markets such as South Africa, India or China, while neglecting other regions such as sub‐Saharan Africa (excluding South Africa). From a European Union policy perspective, these results indicate that there is a role to play for the state in order to create a better fit between CSR agendas and the actual developmental needs in the South. (shrink)

This paper explores the role of NGOs in corporate social responsibility (CSR) through an analysis of various stakeholders’ perceptions and of NGOs’ self-perceptions. In the course of qualitative research based in Spain, we found that the perceptions of the role of NGOs fall into four categories: recognition of NGOs as drivers of CSR; concerns about their legitimacy; difficulties in the mutual understanding between NGOs and trade unions; the self-confidence of NGOs as important players in CSR. Each of these categories comprises (...) the various elements analysed in the paper. We found some discrepancies between the perception of others and the self-perceptions of NGOs, which explains why their role is often controversial. The research confirms that secondary stakeholders, such as NGOs, are key players in CSR, but their role is still regarded as controversial and their legitimacy contested. Deep-seated misunderstandings and mistrust among various stakeholder groups (particularly between NGOs and trade unions) are a possible hurdle to the integration of social and environmental concerns in business activity and corporate governance in Spain. The study finds that business managers need to take a less firm-centric and a more contextual approach, and look more closely into the relationship with and among stakeholder groups. For NGO managers, the research shows that NGOs are not always aware of the stereotypes they generate and the problems caused mainly by what is seen as ambivalent roles: critic and counsellor, accuser and judge, idealist and fund raiser. (shrink)

This article examines the factors that influence the propensity of corporations to engage with NGOs. Drawing from resource dependency theory and related theories of social networks and the resource-based view of the firm, the authors develop a series of hypotheses that draw from this conceptual foundation to predict a range of factors that influence firms to collaborate with NGOs. These factors include the level of commitment of the firm to CSR, the strategic fit between the firm’s and the NGO’s resources, (...) the level of trust the firm has in NGOs, the frequency of contact with NGOs, prior level and perception of experience with NGOs, and the level of pressure exerted by NGOs. The authors report on results of a survey of the Top 500 firms in the Netherlands on their interactions with NGOs, finding general support for our hypotheses, and suggest that understanding the motives for firm–NGO interactions can teach us more about firms’ corporate social activities and the way such activities are shaped in the dynamic interplay between firms and their stakeholders. Our findings are relevant for future research on cross-sectoral interactions, for corporations considering future relationships with NGO cohorts, and for broader questions about the role of stakeholders and the role of business in society. (shrink)

ABSTRACT:The literatures of business ethics and international business have generally had little influence on each other. Nevertheless, the decline in the power of nation states, the emergence of non-governmental organizations, the proliferation of self-regulatory bodies, and the changing responsibilities, roles, and structure of multinational corporations make constructive engagement between these two disciplines imperative. This changing institutional landscape creates many areas of common concern. In this article, we describe the changing institutional context of global business and suggest ways in which both (...) business ethics and international business may inform each other more fruitfully. (shrink)