Pioneers in CSR UEAPME CSR Conference Rome, July 11 2008 Luc Van Liedekerke Centre for Economics and Ethics, KULeuven.
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Pioneers in CSR
UEAPME CSR Conference Rome, July 11 2008
Luc Van Liedekerke
Centre for Economics and Ethics, KULeuven
Content
Shifting values
CSR and Business ethics
Three roads to CSR for SME’s
Policy implications and conclusion
A cultural shift Values and norms: internalized rules of behavior
Value shift in Western societies (see world value studies)
Relevant changes
Value differentiation: behavioral impact
Soft values turn into hard values– Environmental concern– Human rights– Social rights
Two mechanisms: law and market pressure Globalization of economic structures NGO’s: Guardians of the new values Increased transparency
Impact of these changes
CSR revolution– Taking social and environmental relations
voluntary into account in commercial relations as well as in stakeholder relations (Green Book 2001)
Value building inside the firm: business ethics– Mission statement– Codes of conduct– Compliance structures …
Externaly driven CSR
The spotlight and the microphone: a disciplinary device
Importance of Brand name, reputation, risk control
CSR turns into a new quality demand (labels, certification, externally verified control…)
Typical for CSR by MNC and Government
Impact on SME
SME as supplier of MNC or Government is confronted with this extra quality demand
SME with permanent resource limitations has difficulties to recuperate this extra cost
CSR is extra burden, not very motivating, ticking the box approach to CSR
Sometimes it can work if rightly executed by the MNC (give time to the SME supplier, talk about it, make the supplier understand the necessity, the economic strength it brings etc.)
Social capital approach to CSR
Structural characteristic of the SME: embedded in the local community, highly depended upon this community therefore the SME will support the values of this community
Conclusion: CSR in terms of taking care of your ‘environment’ comes natural to SME’s
Yes, but highly depended upon the morality of this local community
Examples: Italy North and South, Germany versus England etc….
Internally driven CSR: Pioneers
The Unizo project: in depth study of the motivational characteristics of 9 CSR oriented SME leaders
Large spread in terms of activity, age and size (from 3 till 200 employees); 8 men, one woman.
In depth conversations about CSR themes: employees, environment, the local neighborhood, customers, suppliers, relation with society at large and future of CSR
Accompanied by value identification study methodology of S. Schwartz (1990, 2005)
Direct observations
Pioneers are internally driven; the value shift of the 70s has clearly marked them
Point of departure for their CSR choice is often one particular interest (a cooperative company structure, the environment…) but turning to CSR quickly spreads into other domains (from environment to employees and vice versa)
CSR is not a one shot choice, it is deeply engrained CSR implies burdens but does not hamper the
economic success of the company, on the contrary
Direct observations
CSR is clearly not a whim or caprice to them, they are very serious about it
They are firmly convinced that what they do is the right thing to do
Their CSR choice is a source of pride. External recognition of their efforts confirms their choice
They like to share their experience with others but do not feel the need for CSR reporting, going after labels or certification
A clear psychological profile
Self-direction is most important value; confirmed by many studies as central value for SME entrepreneurs in general, not specific to this group
Universalism and Benevolence are a close second and third. Both values are connected to a positive view of the world and other people
Power, security, conformity do not appeal to them They see themselves as craftsmen, with great
passion for their product They experience their work as a form of self
realization
Policy implications: tension between externally and internally driven CSR
Externally driven CSR demands transparency and the possibility to punish those who do not live up to CSR demands. This implies elaborate reporting, regular control etc.
Externally driven CSR limits the freedom of the entrepreneur, it takes initiative away and aims for conformity
Internally driven CSR is based on positive freedom, personal growth, taking initiative and not conforming to existing habits (see value wheel)
Policy implications: tension between externally and internally driven CSR
Internally driven CSR demands recognition for efforts, applause, and the possibility to tell your story to others
A CSR policy (by MNC or Government or NGO’s) that is strongly directed towards externally driven CSR can kill internally driven CSR. It simply ruins the motivational structure of the pioneer. The sense of control, creativity and initiative is lost
Conclusion
Pioneers matter because they inspire others with their drive for CSR
Pioneers redefine the borders of the market; where others see limitations and lack of resources they see possibilities and opportunities
CSR in the hand of pioneers becomes a form of inclusive innovation with a potentially large long term impact on the economy and society at large
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