HUDDERSFIELD UNIVERSITY BUSINESS SCHOOL
Master of Business Administration
Project Dissertation
Corporate Social Responsibility in Greece
Galina Paskaleva
May 2008
Contents
Table of Charts
Table of Figures
Table of Tables
I.Introduction
II.Objectives
III.Corporate governance
1.Corporate Social Responsibility concept
2.Corporate Social Responsibility definitions
3.Corporate social responsibility theories
4.Stakeholders
5.Drivers of corporate social responsibility
5.1 Ethical consumerism
5.2 Globalization and market forces
5.3.Social awareness and education
5.4 Ethics training
5.5 Laws and regulations
5.6 Crises
6.Corporate social responsibility reporting
7.Voluntary disclosure
8.CSR and questionable motives
IV.Corporate Social Responsibility in Greece
V.Research method
1.Research design
2.Sampling
3.Questionnaire structure
VI.Results from questionnaire
1.Corporate Governance
2.Environmental policy
3.Social policies
VII.Conclusions
VIII.Reflective Statement
Bibliography
Books
Articles
Internet
Table of Charts
Chart 1 Does your company report any links to the code of conduct?
Chart 2To what extent does your company match its internal business code with the code of conduct?
Chart 3Do you communicate your company's value system with clients, business partners, suppliers and other stakeholders?
Chart 4To what extent are your clients aware of your company's value system and code of conduct?
Chart 5To what extent your personnel is aware of your company's value system and code of conduct?
Chart 6To what extent do you train your personnel in knowing the importance of value systems and code of conduct?
Chart 7Does your company publishes the names of the experts, or departments responsible for the environmental activities?
Chart 8Does your company report water and energy spenders?
Chart 9Does your company tries to minimise its influence over the environment regarding conservation of energy?
Chart 10Does your company tries to minimise its influence over the environment regarding minimisation and recycling of waste?
Chart 11Does your company tries to minimise its influence over the environment regarding prevention of pollution (e.g. emissions to air and water disposal of waste water, noise?
Chart 12Does your company tries to minimise its influence over the environment regarding environmental protection?
Chart 13Does your company tries to minimise its influence over the environment regarding suitable transport options?
Chart 14To what extent does your company can save resources through its impact on the environment (e.g. through recycling, reducing energy consumption, pollution prevention?
Chart 15To what extent do you consider the potential impact on the environment in developing of new products and services?
Chart 16Does your enterprise provide clear and acurate information on ecological products, services and activities of their customers, suppliers, local community and etc?
Chart 17Does your company disclose policy regarding training/development of personnel and/or employees' motivation policies?
Chart 18Does your company presents its health and safety policy?
Chart 19Does your company disclose employment policy?
Chart 20Does your company offer training opportunities to local people community (e.g. apprenticeships, trainees ships or work experience for young and/ or disabled people)?
Chart 21To what extent are your employees encouraged to participate in local community activities (e.g. sharing time and experience or providing other practical assistance)?
Chart 22Does your company motivate your employees to develop real skills and long-term careers?
Chart 23To what extent does your company actively offers good balance between work- and private life of its employee, e.g. flexible working time or home based employment?
Table of Figures
Figure 1Evolution of corporate governance
Figure 2Carroll's Pyramid of Responsibilities
Figure 3Integration of the three dimensions forming the corporate social responsibility (Loimi and Dahlgren, 2005)
Figure 4Percentage of implementation of CSR practices (Source: Hellenic Network for CSR)
Figure 5Sectors of CSR implementation (Source: Hellenic Network for CSR)
Figure 6Deterring factors (Source: Hellenic Network for CSR)
Figure 7Questionnaire plan and structure according to the European Network for Corporate Social Responsibility
Table of Tables
Table 1Sample companies
I.Introduction
Each company, irrespectively of its size, is a social business unit and integral member of the society in which it operates. This is the reason why changes in the social environment affect the company’s actions each time. Nowadays, the social activities of a company are important for its present good functioning and social acceptance and future competitive advantage. The globalization and tuning off markets, fast technology development, increase of consumer influence over companies, increases influence of non-governmental organizations and parallel weakening of governmental influence shape the new socio-political frame which leads the companies to revise their place and responsibilities towards society. Nowadays there has been a big buzz around the corporate social responsibility and many companies are implementing social schemes in their activities. However, there are countries in which corporate social responsibility is highly adopted and implemented by companies, where in other countries this is not the case.
This paper is about to investigate the level of development and implementation of corporate social responsibility within Greek companies. This topic is interesting to investigate because, although that Greece is a European Union member country since 1981, the notion and further implementation of corporate social responsibility policies is now beginning to develop and implement within companies. The main purpose of the selected topic will investigate to what extent CSR practices are applied in Greece.
II.Objectives
This project is about to have two main objectives: the first is to explain and understand the issues of Corporate Social Responsibility, implementation and significance to companies which decide to implement it; and the second one is to investigate to what extent Greek companies implement corporate social responsibility policies and also which of these policies are mostly used. Another objective is to investigate the thesis of the Hellenic Network for CSR, which states that Greek companies link CSR with only with charity or philanthropy. In order to meet these objectives first a deep literature analysis of corporate social responsibility issues will be made and then all theoretical data will be implemented in order to investigate the main objective – which is to what extent and which corporate social responsibility policies are implemented.
III.Corporate governance
Corporate governance, in general, can be defined as the processes, laws, customs and institutions affecting the way a company is directed, administered and controlled. Also it includes the relationship between stakeholders’ goals and the goals for which the corporation is governed. Corporate governance is a complicated issue due to its multi-faceted nature. It combines the accountability of certain individuals in an organisation and the problem of principal-agent subject; the impact of corporate governance system in economic efficiency and the emphasis on shareholders’ welfare.
Gabrielle O’Donovan defines corporate governance as ‘an internal system encompassing policies and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes’. The definition of O’Donovan comes to say that good corporate governance can increase share price and cost of capital. Also good governance can improve public faith and confidence in the economic and political environment. Therefore, the corporate social responsibility practices come be seen as the external instrument of companies to show the stakeholders how well the company is doing. The main drivers of convergence between corporate governance and corporate social responsibility are stakeholders, employees, the need for reputation and trust, globalisation and models of leadership. Carson (1993) and Friedman (1970) argue that business should purely serve the interests of the shareholders and employing company’s resources for social good is threat full for organisational survival and places management in the role of non-elected policy-makers. On the contrary Monsen (1974) and Quinn and Jones (1995) argue that a company has responsibility and obligation to help solving problems of public concern. In line with this view, Davis (1973) and Velasque (1996) support the above opinion and elaborate on it by stating that ethical behaviour is more profitable and rational than unethical one and also crucial to organisational effectiveness.
Over the years corporate governance has moved from profit-cantered model to social-responsibility model. The models showed in Figure 1 show the basic conflict that prevails today in corporate governance – the profit-centred model and the social responsible model are mutually exclusive. Each one relates to an opposite half of the corporation’s domain, although those economic and social aspects of business are closely related to each other. However, in order to survive, a company needs to make profits, and those profits often rule out the social considerations.
Figure 1Evolution of corporate governance
1.Corporate Social Responsibility concept
The concept of ethics in business is a result of marketing evolution. It is developing during the last years and is derived from the fact that businesses should not be closed within the basic frames of the buyer-seller relationship but to consider the matters of safety and well being of the society. Obviously, when trying to combine customer needs and social well being, organizations come to dilemma because sometimes satisfying the needs of the customers may come to conflict to social values and well being. While the traditional marketing is looking to balance between the separate units of supply and demand, the socio-ethical marketing requires balancing between three sides – sellers, buyers and society with its demand for long-term well being. At this point the role of legislative institutions is very important, but however, when society is more developed ethics depends on social morale.
Business ethics can be both a normative and descriptive discipline. The normative nature is expressed in corporate practice, career specialization and the descriptive is referred to the range and quantity of business ethical issues as they are reflected with non-economic social values. Today, many corporations communicate their commitment to non-economic social values in variety of headings such as “social responsibility charters”, ethics code and so on.
2.Corporate Social Responsibility definitions
Until this moment there is no commonly accepted definition of corporate social responsibility. Many authors provide different definitions regarding corporate social responsibility. First who tried to give any explanation of corporate social responsibility was the Protestant work ethic which taught people to work hard and be successful (Lantos, 2001). Then Carroll (1979, 2000) suggested a model compounding of four parts regarding to which companies have to fulfil their legal, economic, philanthropic and ethical responsibilities in order to become good corporate citizens. According to Freeman (1984) companies need to act in alliance to their stakeholders’ social, moral and legal concerns, and Ness (1992) considers corporate social responsibility as obligation to the society. More recently, Dahlsrud (2006) in his research concludes that corporate social responsibility definitions are largely harmonious, but it is sometimes the structure of a specific context that causes confusion. However, one can argue that without a clear moral concept it is difficult to resolve the discrepancy of perspectives on the corporate social responsibility. According to Beckman (2006) it is difficult to measure the general corporate social responsibility considerations because researchers address only certain aspects of corporate social responsibility activities such as corporate giving, which do not represent the full range of responsibilities and provide limited picture of customers’ expectations as it concerns corporate social responsibility activities. Sharplin argued that that the complex relationship between corporations and society should be redefined within the frame of “social contract” or “set of written and unwritten rules and assumptions about behaviour patterns among the various elements in society”. This social contract includes obligations to individuals (including fair wages, salaries and remuneration, appropriate working conditions in return for the duties and responsibilities carried out by employees), obligations to groups and organizations (the later should compete with rivals on ‘honourable’ basis by respecting the mutual rights and obligations of trading partners, groups and other organizations), obligations to government (this requires payment of taxes, health insurances, keeping safety standards, observing the law and so on, where the government will provide the company with some privileges and allowances such as tax reduction) and obligation to the society (the expectation that companies will abide by the letter and the spirit of the law in dealing with consumer groups).
Another writer, Frederick (1986, 1994) describes corporate social responsibility as “corporation’s obligation to work for social betterment” and the movement towards corporate responsibility as “the capacity of a corporation to respond to social pressures”. Also depending on how the organization will respond to social pressure he divided to philosophical approach (corporate social responsibility 1) and managerial approach (corporate social responsibility 2). In 1986, he stated that there is the need to stress on the ethical side of business and society “to permit a systematic critique of business’s impact upon human consciousness, human community and human continuity”. This new approach was called corporate social responsibility 3. As it concerns the statement for organizational obligation to society, it is also shared by Kok et.al. (2001). He advocates that the organization, as a member of the society, must use its resources in such a manner so to benefit the given society.
Stormer (2003) states that “business is part of society….neither can exist without the other”. His thinking is shared by Mikkila (2003) who suggests that the society has given expectation regarding the appropriate functioning of a business and its outcomes.
However, many other authors argue that corporate social responsibility should have the form of voluntary activity (e.g. Oketch, 2004). This opinion is also shared in the European Commission’s Green Paper where it is defined as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”
Other writers argue that these definitions are too general and far from theory (Beltratti, 2005) and thus limited in their effectiveness.
All these arguments between authors confuse practitioners and limit them to fully implement corporate social responsibility practices, and make it difficult for academics to compare results across studies and prevent them to understand the implications of corporate social responsibility activity (McWilliams et.al, 2006; Gobbels, 2002). McWilliams suggests that finding a common definition and terminology of corporate social responsibility will aid practitioners and writers to model the role of corporate social responsibility within the organization. On the other hand finding a common definition of corporate social responsibility is quite difficult since the area in which corporate social responsibility is appealing to regards vague issues such as beliefs and attitudes which tend to fluctuate depending on social aspects and environments.
3.Corporate social responsibility theories
One of the most common theories about corporate social responsibility is Carroll’s (1979) four-part modeor Carroll’s Pyramid of responsibilities (Figure 2). This model represents the four basic obligations that a company has towards the society: economic, legal, ethical and discretionary aspects of business performance. According to Carroll, the economic responsibility is the first social responsibility because companies as such are basic economic units in it. This responsibility is expressed in the form of producing what that society needs and sell to make profit. The legal responsibility is expressed in the laws and regulations of a respective society under which a company is expected to operate. The ethical responsibility is not mandatory but expected by members of society, who expect companies to follow behaviours and activities of a given society. The last but not least is the discretionary responsibility, which as the third one is not forced by the law and a company is left the individual judgment and choice to apply it. Actions of voluntarily aspect are included in this area. The fourth part can be called also a philanthropic responsibility.
Figure 2Carroll's Pyramid of Responsibilities
From Figure 2 we can see that responsibilities cannot be achieved without the economic responsibility factor. For example if a company lacks products/services, employees and profitability it will cease to exist and all following responsibilities cannot be achieved. Carroll (1995) stated that responsibilities are “infused or embodied with ethical issues or overtones”. This means that economic responsibility “should coexist” (Kang and Wood, 1995) with other obligations and “social responsibility can only become reality if more managers become moral instead of amoral or immoral” (Carroll, 1991).
As an extension to this theory Loimi and Dahlgen (2005) suggest the existence of voluntarily economic, environmental and social responsibilities. Their theory states that if companies want to be considered as sustainable in the long term, they have to be financially stable, reduce their negative impact over the environment and act in line with the social and cultural expectations from society.
Figure 3Integration of the three dimensions forming the corporate social responsibility (Loimi and Dahlgren, 2005)