Activities of Corporate Social Responsibility - Case Study Example

Business in a Global Context Activities of Corporate Social Responsibility (CBR) have different motivators to their engagement. According to Ditlev-Simonsen and Wenstøp (2013, pp 138) customers, employees, owners of firms, the government and NGO’s motivate managers to engage in CSR activities in the given order. Corporate social responsibility may be affected using different forms of approaches. Some firms use advertisements, corporate reports or web sites in order to communicate effectively with the target populating. Advertisements made purely include information relevant to the corporate social responsibility actions implemented by the firm, excluding any attempt to promote the company’s products. Advertising CSR for individual firms is assumed to be a formal and official means of communicating to the society their assumed image (Farache and Perks, 2010, pp. 235 – 248) CSR made through adverts are assumed to be legitimate. The legitimacy theory argues that the only way a firm can secure its existence is by having a perception in society that it is operating and abiding to the norms and values in the given society. The theory asserts that once a company establishes itself in a community, then it brings along a binding contract between the firm and the society. This contract states that the firm will operate within the norms and values of that society. Companies with a higher susceptibility to social and environmental threats should therefore disclose this information to the community as well as the mitigation measures put in place. This reduces the threat to the legitimacy theory (Needle, 2010). In this light, larger companies receive more attention as compared to smaller companies, especially those who have direct customer contact. This also prompts these large firms to incorporate the community by intuition. Studies into the legitimacy theory exist, and base themselves under two approaches. The strategic approach focuses on the strategic manipulation of symbols via communication behavior so as to achieve legitimacy (Needle, 2010). On the other hand, the institutional approach places focus on the pressures a firm faces due to the community they are based in. The disclosure made by companies to the community about the potential environmental and social threats through communication portrays a socially responsible image. This assists them in earning legitimacy on their behavior from the community (Needle, 2010). Firms adopt several strategies, so as to deal with community pressure on legitimacy. The firm must inform the stakeholders about their intention to optimize or improve performance. This communication acts as a means to reinforce the firm’s reputation as well as maintain legitimacy. CSR achieves this through providing an opportunity to communicate the firm’s congruence, having incorporated society concerns therein (Farache and Perks, 2010, pp. 235 – 248). The second strategy involves an attempt to change the stakeholder’s perceptions in regard to various events whereas maintaining corporate behavior. The firm then diverts the stakeholder’s attention from the problem, by focusing on the positive production activities which do not associate with the problem. This prompts a further effort to change the stakeholder’s expectation in regards to the firm’s performance (Needle, 2010). CSR implementation levels largely depend on individual community setups. In any given society, businesses, the Government and the civil society assume the role of CSR drivers (Sarbutts, 2003, pp. 340–347). In order to clearly understand this, consider a case study of Brazil and the UK. In Brazil, the economy is characteristic of high inequality levels and other social related problems. The Gini index used as a measurement of income inequality in Brazil records a 59.1. This form of society setup lacks government accountability, a sense of social responsibility as well as poor organization of the civil society. This leads to a further lack of follow up on environmental and corporate performances by the consumers. Opinion polls from consumers in this society prioritize health, education and security issues, whereas environmental and cultural issues assume the least areas of concern. On the other hand, a country such as the UK prioritizes corporate social responsibility as well as environmental concerns. This is evidenced by the fact that it became the pioneer country to setup a government minister for CSR (Farache and Perks, 2010, pp. 235 – 248). The government as well as the business investors further projects the long term environmental and social risks as a contribution to national advancement. Media coverage projections also promote CSR adoption and awareness to the consumers in the UK. Another case study on CSR would involve a closer look into businesses such as the Chevron and Banco Real. Chevron is one of the world’s largest public oil companies worldwide. During the years, a variety of environmental and human rights issues erupted due to its operation. The community claimed that the company operations led to environmental degradation since they dumped over 18 billion gallons of carcinogenic waste into the rainforest in Equator. This in turn led to the pollution of related swamps, rivers and other water bodies in the region. Regardless of these assertions, Chevron is recognized for its CSR practices and occupies the ninth position in an accountability rating conducted in 2007 as well as records in the Dow Jones Sustainability index (Ditlev-Simonsen and Wenstøp, 2013, pp. 138). Banco Real is a firm in the banking industry and ranks 3rd largest in Brazil’s private sector banking. The custodians of the bank bought it in 1998, and in the year 2007, Brazilian banks reported a double amount of profits compared to American banks. Although the bank employs over 30,000 people, criticisms erupted over the exorbitant profits in the banking sector, while the overall Brazilian economy was under recession. Nonetheless, Banco Real has received rewards form CSR practices inclusive of the Valor Social Award as well as the ECO award. Another CSR practice that promotes the firm’s assumed role in social responsibility and environmental management is the being a member of the Ethos Institute which has adopted equator principles (Sarbutts, 2003, pp. 340–347). In regards to the above case study’s data collection, an analysis was made on the Vega and Exame magazines in Brazil, as well as The Economist and Time magazine in the UK. The analysis took a period of 1 year between May 2006 and April 2007. For both companies, the analysis made was based on one campaign for each company. During the analysis period, both firms published the largest number of CSR advertisements, with 20 and 31 insertions each respectively. The magazines under study are similar in regards to popularity in their respective countries. Vega magazine of Brazil is the leading weekly news magazine, circulating to one million personnel in average. Among these, 73% of the readers are in the highest socio economic classes, 55% being female and the rest male. Likewise, intelligent readers holding university and postgraduate degrees are 247% higher than the national average. 91% of Brazilian CEO’s from the five hundred largest companies in Brazil read the Exame magazine. The Economist of UK is Britain’s most successful business and political magazine, circulating to over one hundred and eighty thousand people weekly. Time magazine on the other hand is the leading weekly news magazine in UK and Europe. Annual income records of the Economist readers account to one hundred and eighteen thousand pounds, who work in head offices. Over 67% of The Time’s magazine readers are employed in leading positions (Sarbutts, 2003, pp. 340–347). During the research period, Chevron made 54 individual insertions on CSR campaigns in both magazines under study, while The Banco Real campaign included one insertion in the Veja magazine. The Chevron strategy increased consumer awareness since it involved repeating the message severally in different copies or issues of the magazine. This repetition could be attributed due to the fact that most of the details are complex for the consumer to comprehend in one reading. On the contrary, Banco Real published the same information in all the three ads in the insertion, with a few changes in the image and title during the ad referencing. Another difference between the two campaigns is depicted in the target audience. Due to the nature of information given in the publication, the Chevron campaign targets male population, whereas Banco Real’s audience is heterogeneous. Chevron publications relates to environmental themes since they form part of the top agenda for British consumers as well as due to the nature of the industry. In contrast, the consumers in Brazil prioritize on health, education and security, whereas corporate bodies view environmental concerns as less important issues. Corporate firms such as Banco Real thus tend to focus on social issues to a larger extent than environmental issues. The company thus justifies its charging of high interest rates by asserting that a portion of its profits is directed to CSR actions (Needle, 2010). In connection to legitimacy strategies, Banco Real diverts the stakeholder’s attention from the problem at hand, by focusing on a positive activity that is not related to the problem. The company asserts that it uses recycled paper to produce cheque books as an action of sustainability and equity. This however does not prove the link between high interest charges to environmental actions (Needle, 2010). Chevron on the other hand faces numerous accusations connected with the oil industry as well as environmental issues. In its campaign, Chevron communicates its intentions of improving performance as it indulges in energy saving activities as a legitimacy strategy. It also focuses on changing the stakeholder’s perception regarding events, without changing corporate behavior. While it addresses the need to diversify energy sources and adopting the use o natural gas, it fails to explain that natural gas is not renewable, thus prone to depletion. The two companies bring into public notice the issues relating society and the firm’s operations, but use the legitimacy strategy of diverting attention. Chevron’s CSR advertisement addresses incongruent issues of exploration, rather than tackling the issue of conservation. CSR advertising represents a reflection of the surrounding world, which is a voluntary activity. This poses some challenges in that firm’s select what they want to communicate, thus portraying themselves as responsible and active in CSR. Whereas the readers may have different interpretations, CSR advertising portrays CSR as self-serving in nature (Farache and Perks, 2010, pp. 235 – 248). Bibliography Ditlev-Simonsen, C and Wenstøp, F. 2013. How stakeholders view stakeholders as CSR motivators. Social Responsibility Journal, 9(1) pp. 137-147. Farache, F and Perks, J. 2010. CSR Advertisements: A Legitimacy Tool? Corporate Communications: An International Journal. 15(3) pp. 235 – 248. Needle, D. 2010. Business Ethics and Corporate Social Responsibility. In Business in Context. CENGAGE Lrng Business Press. Sarbutts, N. 2003. Can SMEs ‘do’ CSR? A Practitioner’s View Of The Ways Small- And Medium-Sized Enterprises Is Able to Manage Reputation through Corporate Social Responsibility. Journal of Communication Management, 7(4) pp. 340–347. Read More