Industry, Innovation and Infrastructure

Living Edition
| Editors: Walter Leal Filho, Anabela Marisa Azul, Luciana Brandli, Pinar Gökcin Özuyar, Tony Wall

Corporate Social Performance

  • Elena BattagliniEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-71059-4_28-1

Definition

Social performance is a complex corporate issue that addresses management and enterprises policies, which are compatible with the objectives and the values of society. While initially applied mainly in relation to concerns of shareholders, stakeholders, and state welfare, there is a growing interest in locating CSP in much broader contexts of innovation patterns and trajectories. The focus of these new lines of enquiry is relying on community-led CSP policies engaged with socially innovative forms of work organization and solidarity relationships between enterprises, citizens, and actors within and beyond territories.

Introduction

Companies are facing new demands to engage in public-private, multistakeholder, and cross sector partnerships (Rein and Stott 2009; Draxler 2016) and are undergoing pressure to be accountable not only to shareholders but also to workers, employees, consumers, suppliers, local communities, policy-makers, and society at large (Anderson 2005; Cavanagh et al. 2005).

Therefore, corporate social performance (CSP) refers to the principles, practices, and outcomes of social, economic, and environmental relationships and dynamics with social actors and organizations, in terms of the deliberate actions of businesses toward these social actors as well as the unintended externalities of corporate activity.

The intellectual roots of CSP are quite deep, spanning history, philosophy, legal studies, economics, social science, and more. Given its complexity and value-laden thematization, CSP is a dynamic, multidimensional concept composed of concern for shareholders, stakeholders, and community/state welfare that is still lacking of a common agreement on its underlying motives. The two most common arguments that explains CSP conceptual ambivalence are, on the one side, that business exists to serve the good of the greater community and, on the other, that the social responsibility of business is to increase its profits (Yılmaz 2013).

CSP concept is stemming from the earlier concept of corporate social responsibility (CSR), later incorporated as one dimension of CSP referring, in particular, to the ethical and/or structural principles of social responsibility or business engagement with others. Despite CSR has been debated for more than a century from a business and communications perspective, the first who defined it in modern terms was Bowen (1953). He claimed CSR as “an obligation to pursue policies to make decisions and to follow lines of action which are compatible with the objectives and the values of society” (Bowen 1953: 6).

Over time, scholars’ attention have been focusing on business processes for implementing (or avoiding) social performance and responding to stakeholder issues and then to the impacts and outcomes of CSP-related behaviors. Although important milestones toward a comprehensive theory can be identified in different authors (Ackerman and Bauer 1976; Carroll 1979; Davis 1973; Frederick 1978; Freeman 1984; Miles 1987; Wartick and Cochran 1985), it’s only since the 1990s that the free-standing, implicitly competing ideas previously discussed have been challenged within a more systematic perspective integrating the institutional, organizational, and individual level principles of CSP (Wood 1991). This articulated framework included the “why (principles), what and how (processes), and what happened (outcomes)” of CSP, encompassing corporate social responsibility and responsiveness, stakeholder theory, business ethics, corporate political action, issue management, and sustainability.

Social Performance and Responsiveness

Responsiveness relates to the intraorganizational factors affecting the implementation of social performance within firms and making it possible to carry out wide-scale business model transformations involving innovation of products and processes related to new products’ design, reengineering production incentive systems and assessment processes, and leading cross-functional organizational change.

The Ackerman and Bauer (1976) corporate social responsiveness research program contended to assist with an analysis of the firms’ internal dynamic, shaping how organization may institutionalize social and environmental issues. Corporate social responsiveness has challenged the episteme underpinning contemporary management science, which remains heavily influenced by the neoliberal axiomatic system (Gomez 1996; Martinet 1990), leaving little space for understanding the dynamic interplay between the firm and society.

Along time, intraorganizational dimensions of social performance have been losing their relevance in favor of discursive analysis, neoinstitutional theory, sensemaking, processes to decipher CSP, and sustainable development-related practices. At the macro-level, this research underlines the influence of institutional variables on corporate behavior (Aguilera et al. 2007; Campbell 2007). At the microlevel, it analyzes CSP discourse (Crane 2000; Humphreys and Brown 2008), and it describes how managerial practices are influenced by the firm’s identity, its corporate values, and its managers’ conceptions (Basu and Palazzo 2008; Howard-Grenville et al. 2008). Focusing on how responsibility is socially constructed, this predominantly theory-based research pays limited attention to the role of formal structures and organizational systems in transforming the firm’s production processes and business model. Furthermore, while researchers in this strand strive to identify general laws modeled to predict how the firm will behave, the analysis of real-world practices, how they evolve, and their impact on a societal scale remains underdeveloped (Walsh et al. 2003).

CSP and Impacts on Stakeholders and Shareholders

One of the main approach in analyzing social performance as a company strategy deals with its social impacts on the stakeholders (Wood and Jones 1995; Spirig 2006). As social performance is not usually a visible attribute of products and services, the “stakeholders” theory perspective (Freeman 1984) can assess its impact. Stakeholders are both a source of expectations about what is desirable and undesirable performance and the beneficiaries of corporate actions and outputs. Werther and Chandler (2006) segregate the firm’s stakeholders into three groups: organizational, economic, and societal. Furthermore, they discuss various CSP pros and cons for the corporation using economic, moral, and rational arguments and provide reasons for CSP’s growing importance and relevance. The authors state that corporate leaders must strive to operate from a multiple stakeholders’ perspective, trying to balance results (profits) and methods (operational activities). A “strategic lens” concept, which includes vision, mission, strategy, and tactics, with social performance serving as the filter, was considered one of the key ingredients in developing a CSP strategic plan.

To manage their social performance, companies may use environmental auditing programs (voluntary standards) as the following:

International Standard of Social Accountability 8000 (SA8000): it focused mostly on employees and on the issue of working conditions. It is based on the principles of international standards that relate to working conditions and are part of International Labour Organization’s conventions, the United Nations’ Universal Declaration of Human Rights, and Convention on Children’s Rights. The standard divides requirements into nine areas (Social Accountability International 2008): child labor, forced labor, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours, remuneration, and management responsibility.

ISO 26000 Guidance for Social Responsibility. Rather than presenting requirements, this norm provides guidelines for implementing CSR principles in companies. The standard defines seven basic topics: corporate governance, human rights, labor relation practices, environment, business ethics (e.g., issues of corruption, competition), customer protection, and community involvement and development.

The aim of standard OHSAS 18001 Occupational Health and Safety Management is to evaluate, eliminate, and minimize risk to employees and other subjects influenced by companies. Another directive governing management of occupational health and safety is ILO-OSH 2001 issued by International Labour Organization founded by the United Nations.

The AA1000 Accountability Assurance Standard (2008 – currently in revision for launch in 2019) is a methodology used by sustainability professionals for sustainability-related assurance engagements, to evaluate the nature and extent to which an organization adheres to the accountability principles. It is aimed at improving relations with stakeholder groups and their involvement in the sustainable development strategy. The aim of this standard is to include responsibility into corporate management (Pavláková Dočekalová et al. 2018).

The inadequacy of existing private social auditing schemes raised critics toward private social auditing and the so-called compliance model, especially if implemented in export-oriented industries in developing countries that are lacking of national labor regulations (Locke 2013).

Several labor tragedies, occurring in environmental audited factories, called for renewed public and academic commitment aimed at integrating the compliance model with rules that could pledge for basic levels of safety and decent work conditions for laborers. The compliance model is based on rules or meeting standards of detailed audit protocols (checklists). Differently the committed-oriented approach relies on analyzing and correcting root causes of current issues relying on joint problem-solving, information, sharing, trust, reciprocity, mentoring, coaching, diffusion of best practices, and integration of standards, with operational excellence. While private social auditing is made of repeated audits, pressures from above, the committed-oriented approach foresees more proactive process based on learning, capacity building, incentives, and mutual respect (Locke et al. 2009).

Among the approaches aimed at analyzing social performance as company strategy effects on its shareholders, stands the so-called triple bottom line (TBL or 3BL). It is an accounting framework made of three different sections: social, environmental (or ecological), and financial. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value (Elkington 1997; Willard 2002; Savitz and Weber 2006).

Vosburgh, R. M. (2007) highlights case studies of how specific companies are engaging human resource management (HR) experiences in different TBL-related initiatives. The author concludes that there are many proven examples that the TBL concept is viable and critically important for organizations to understand and adopt. Social performance is enhanced when HR assumes an active leadership role in creating formal, sanctioned, and supported mechanisms, practices, and processes.

Value-Based Leadership and Social Performance Toward Sustainability

Companies have increasingly recognized the critical importance of those strategic plans incorporating the three views of sustainability: market industry, resource-based, and institutional-based. By considering all three domains, enterprises drive to adapt to the restrictions imposed by the economic, social, and environmental systems, managing and controlling corporate social, environmental, and economic performance. This impetus may be driven by internal factors, such as a management commitment to sustainability as a core value or by management recognition that sustainability can create financial value for the corporation through enhanced revenues and lower costs. However, often the main drivers for a sustainability strategy can be envisaged in external pressures such as government regulation, marketplace demands, competitors’ actions, or pressure from NGOs (nongovernmental organizations). For example, controls on GHG (greenhouse gas) emissions will affect the price of energy and the products, services, and sectors that rely on that energy (Epstein and Rejc Buhovac 2014).

Scholars agree on leadership as a means to ensure that an organization strives for sustainability. Hanson and Middleton (2000), Nelson (2004), McGaw (2005), and Rigling Gallagher (2012) highlight the features of management leaders needed for building a sustainable global society and the way to educate and develop individuals with these capabilities.

From a review of the leadership and development literature, DeSantis and Stough (1999) concluded that there is a tendency for identifiable local (leadership-oriented) groups to emerge and cooperate to influence the regional economic future of the community. Based on their review, leadership was defined as “the tendency of a community to collaborate across sectors in a sustained, purposeful manner to enhance the economic performance of its region” (Stough 2003).

The growing interest in leadership of place (Stough 2003; Sotarauta 2005, 2009; Gibney et al. 2009; Stimson et al. 2011) will continue to drive the need for an explicit connection between leadership and the treatment of and interaction with places. These leaders will require new tools that can help explain these relationships and more importantly how they can be assessed, which can be central to leadership in terms of guiding how communities recruit the best fitting organizations or address local or regional place building issues.

Waldman et al. (2006) conducted a wide empirical research on 561 firms located in 15 countries on 5 continents. Its main findings show that managers in wealthier countries may be more in tune with shareholder CSP issues in their decision-making process; in poorer countries, managers may feel more of a personal responsibility toward the community and society. At the opposite end, managers in cultures stressing values of greater power distance tend to devalue all three aspects of CSP (concern for shareholders, stakeholders, and community/state welfare) and tend to be more self-centered and lacking in concern for shareholders, other stakeholders, and the society in their decision-making process. These findings also suggest that leadership in the form of vision and integrity may help drive CSP values beyond economic or cultural factors and may even help align CSP values in decision-making processes, as well as subsequent actions based on those values, notwithstanding cultural differences.

These examples show the growing academic interest in analyzing value-oriented leadership. Value-based strategies are also framed as critical success factors in the business world for their positive impacts in risk management, organizational functioning, and market positioning while shaping company’s identity and reputation and earning the trust of customers and suppliers (Paine 2003). Some authors (Poovan et al. 2006) argued that social values could have an impact also on team effectiveness. Especially in case of multicultural workforce values like collectivism, collaboration, caring, dignity, and respect make a positive contribution toward successful management of diversities, one of the foundations of the social side of corporate responsibility.

The question is then how to mediate among existing contradictions (e.g., profits and values, interests of owners and workers). Prilleltensky (2000) proposes a framework for value-based leadership in sharp contrast with the general thinking of applied ethics as being an individual’s responsibility to identify dilemmas and act according to his or her best judgment. As the leaders’ role is to facilitate – at the individual, organizational, and community level – congruence among values, interests, and power, different directions are envisaged to enact value-based practices, in consideration of the level of power of the multiple stakeholders involved.

Amid disparate statements around value-based CSP seen as the future of business, Vogel (2005) argues that this claim is nothing more than a new creed to mask self-interest. Hence, the author points out important changes in corporate practices and shortcomings of civil regulation and indicates that the most critical dimension of corporate responsibility may well be a company’s impact on public policy. Finally, it is not enough for firms to produce social benefits in isolation; they must also support public policies that establish minimum standards for less virtuous competitors, not just to create a level playing field but because such requirements are frequently necessary to accomplish the underlying goals of CSP.

Value-based leadership can be also farmed within the much broader concept of innovation: Van Kleef and Roome (2007), for instance, emphasize the need for sustainability-driven innovation to engage a wider range of external actors that contribute to the generation of ideas for innovation and that serve to highlight the negative aspects of innovation that need to be ameliorated or controlled. Their research leads to a series of conclusions about the characteristics or demands of sustainability-driven innovation due to this wider set of participating actors. These include the need for capacities of collaboration across diverse interests and the importance of mobilizing networks to promote inventiveness and to promote trust and collaboration in the formalization of ideas and structures needed to deliver those ideas as innovations. The paper recognizes the importance of vision as a guide to those involved in innovation, while values and management attitudes provide a basis for the alignment of strategic processes that foster commitment to learning and diversity of ideas and inputs.

Paths Forward

In addition to descriptive/analytical discussions of the concept, much of the neoinstitutional and sustainable development research literature discusses social performance framed as resource do deal with innovative approaches and new ways of thinking for effectively addressing sustainability toward the environmental global challenges modern societies are facing. Suggested guidelines for helping build capacity to effectively address the complexities associated with sustainable development include:

Social Performance as Place-Based Sustainable Development Process/Community Engagement

Companies taking the lead in environmental and social sustainability by adopting a community approach might well be the key to changing current views of capitalism (Handy 2002).

Massey (1993) argues that global phenomena are grounded and emplaced. Furthermore, global risks, in the words of Beck (2016), require evolution, metamorphosis, and not only the transformation of policy horizons starting from the “factuality” of the impacts of the capitalistic development paradigm and of climate change. In fact they distribute forms of social inequality that often escape the traditional perspectives of the mainstream economy that avoiding crucial categories such as space-time and are expected to be applied in any place and at any time. In this sense, adopting a local scale, a place-based action and perspective is to be considered crucial. The risks assume, in fact, different geographies in relation to the different social inequalities involved (Beck 2016: 87).

Despite a body of studies that, until the first half of the twentieth century, had not taken into account the variables of time and space in their analysis of development, places are taken in their specificity as the founding element for describing (and for some authors, interpreting) the constraints and opportunities of development for their historical, cultural, and socioeconomic conditions. The neoclassical theory of growth expunges the spatial variable, and it has been gradually questioned in favor of the so-called endogenous regional development approach (Stimson et al. 2011) that acknowledges a growing interest in leadership of place driving the need for an explicit connection between leadership and the treatment of and interaction with places.

In this perspective, Thomas and Cross (2007) have developed a provocative typology of organizations and their relationship to place. Two viewpoints exist, which reveal not only how corporations see themselves in relation to place but also “the meaning they give to place, which then influences their goals, contributions to place, and all variety of behaviour.” One viewpoint conceptualizes corporations and their success as interdependent with the well-being of place; the other conceptualizes corporations and their success as independent of place. Organizations of the first type consider themselves as responsible for the material, natural and social realms of place, view their success as intimately tied to the greater well-being of place, and proactively seek opportunities to invest in their place. Organizations of the second type, on the other hand, see themselves primarily as economic agents and occupants of place. Their primary responsibility is to their shareholders, not to the places in which they are located, and generating jobs and tax revenues is their main contribution to place. As a result, they may ignore the social and natural resources of their place, often to their own long-term detriment (Thomas and Cross 2007: 40).

In the analysis (and implementation) of CSP, taking a place perspective means recognizing values and integrating the meanings individuals and groups give to a place in terms of its geographic and social contexts. This approach focuses on how place can play a role in the strategic relationships organizations have with their communities, their clients, and employees. Based on the findings from an expert panel, it is a measurement instrument designed to assess an organization’s values and strategies along five dimensions or latent constructs of place building: ethical, social, natural, built environment, and economic. It serves as both a mirror and a lens through which organizations can (1) locate themselves on a continuum of values and strategies with regard to place (i.e., their relations to its social, natural, material, economic, and ethical dimensions) and (2) develop strategies for how they might stay where they are or get where they would rather be (Thomas et al. 2016).

The growth of CSP worldwide has encouraged organizations of many types, including universities, to look within and reinforce or renew their own social practices (Leitão and Silva 2007). Choueiri and Myntti (2012) highlight the strategic CSP case of the Neighborhood Initiative at the American University of Beirut, which seeks to share the university’s intellectual resources for the public good in the district of Beirut just outside the campus walls. This case study highlights the issues that arise when adopting this approach to community engagement. Corporations can learn several important lessons on social responsibility from the discourse of universities. As this Beirut case show, the well-being of universities and companies is connected to the well-being of their places: place affects the availability of talent at present and in the future. Creative, skilled employees, world-class faculty staff, and smart students are attracted by a high quality of life in a healthy and vibrant neighborhood.

Accordingly, other studies on university-community partnerships (Bok 1982; Maurrasse 2001; Berdahl et al. 2011) suggest that the strongest and most durable of them have encouraged innovation and creativity, which emerged out of a process of listening rather than imposing. If an organization sees itself as a change agent in its community and creates an organizational culture emphasizing collaboration, mutual learning and openness to change and building partnerships might lead to effective social innovations and sustainable development.

Partnership Building and CSP

The emphasis on place-based solutions and local resources promotes participatory projects that sustain human relations, bonds of trust, and therefore social capital that can lead to concrete and visible effects on the environment, neighborhoods, cultural heritage, local economy, and other local resources.

In this perspective, Kambalame and deCleene (2006) point out CSP as key factor in improving Malawi’s livelihoods, particularly in the agriculture sector. CSP in Malawi has traditionally tended to be philanthropic in nature, responding to perceived individual needs of the location where the company tends to operate rather than setting up target strategic interventions to improve overall sustainable livelihood at the country level. Presented case studies evidence that CSP partnerships in Malawi are at a crossroad between traditional approaches of dealing with a business’s specific concern and the new approach that sees partnerships as catalysts for reengineering the core business strategy itself.

Kimball et al. (2013) highlights how Organizational Place Building Inventory (OPBT) has been used with respect to enterprise involved in cultural heritage management. An evaluative approach assesses the current state of place building and yields results that are useful for taking stock, planning, and envisioning. An integrative approach uses OPBT to assess “placekeeper” values from across constituencies and yields results that are useful for building consensus and conducting gap analyses and conflict management and resolution. Finally, a restorative approach employs OPBT as the organizational place building inventory, an intervention through which marginalized, subaltern, or underrepresented constituencies can be recognized and invited into the place building process (Kimball and Thomas 2012).

Partnership building can be framed as multistakeholder approach. In this perspective, Waddell (2007) draws on work with multiple stakeholder global networks – global action networks (GANs) – and proposes to aggregate stakeholders by organizational sectors, addressing the challenges from individual change to societal change while understanding the work as building complex systems and thinking in terms of development stages. The author concludes that GANs hold substantial promise as global change agents.

Knowledge Economy

In knowledge-based economy of modern societies (Stehr 2002), knowledge becomes a force of production, displacing the forces of production typical of industrial society, namely, property and capital, and therefore a source of additional value, economic growth, and productivity including, of course, the possibility of a transition to a sustainable economic system.

Waddock (2007) asserts the need for an integrated knowledge economy, managerial leadership in global organizations and institutions, and corresponding efforts by management education programs. Fostering leadership’s integrity is displayed as having a central role in the current knowledge economy. Integrity is defined as individual integrity with an ethical and value-laden basis together with understanding the world as an integrated system – ecologically, socially, and from a business ecosystem perspective.

Tomorrow’s leaders need to have the courage to change the system and carry though decisions that will accomplish the following objectives: balance imbalances and make trade-offs of profitability for other important values, integrate an understanding of the world’s complexity, and understand the interconnectedness that exists among the different entities. Understand the long-term consequences of their decisions and be decision-makers that benefit people, business, and societies, as well as the natural environment.

Conclusions

Facing complexities of global challenges, the sociologist Ulrich Beck stated that: “We need new ways of seeing the world, being in the world and imagining and doing politics” (Beck 2016: 181). Accordingly, the conceptualization of CSP as sustainability-driven innovation means toward community-led engagement helps tackling complex social issues like valued resources, their affordances and limits for their use, their preservation or innovation cannot be solved using expert-driven, and centralized and rational-technical approaches. Community-led value-centered problems are highly resistant to resolutions using rational choice approaches since it expunges culture in their frames of references. Instead, they require transformation even metamorphosis in the way we conceptualize and approach corporate management within sustainable development innovative policies.

The failure of governance and politics in different spheres of society considers social innovation as a strategy and process not only to satisfy individual and collective needs abused by the market but to strengthen the solidarity content of social relations between people involved in social innovation initiatives, as well as call up these relations as triggers of sociopolitical empowerment. Especially regional studies mainly focused on sustainable development have adopted the view of social innovation, because of the material, social, and political conditions inherent to region and places looking spatially and institutionally embedded social innovation for renewed human development (Moulaert et al. 2013).

New fields of research which consider place-based social innovation show the importance of the interaction between new socially innovative initiatives on the one hand and governance and institutionalization processes on the other hand.

The involvement of multistakeholders’ approaches on CSP, within civil society new engagements, can foster more democratic forms of development governance (especially bottom-linked governance) opening up the range of economic activities to social services and culture and stimulating attitudes of entrepreneurs to new corporate forms (social and solidarity enterprises), socially innovative forms of work organization and solidarity relationships between enterprises, citizens, and actors within and beyond territories.

Cross-References

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Urban and Regional Economics Research UnitGiuseppe Di Vittorio FoundationRomeItaly

Section editors and affiliations

  • Lizhen Huang
    • 1
  1. 1.Department of manufacturing and civil engineeringNorwegian University of Science and TechnologyGjøvikNorway