The Cultural Influence On Corporate Social Responsibility

Published Date: 02 Nov 2017

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The cultural influence on Corporate Social Responsibility

Prepared by: Dina Bou Karroum

Table of Contents

CHAPTER I: INTRODUCTION

In recent decades, there has been a stable rise in pressure on companies to act more responsibly. Customers increasingly acknowledge social as well as environmental issues and expect companies to act more responsibly regarding these issues. And because of this development companies feel that they are obliged tackle such topics. What used to be a nice to do, became a must-do since the interest of individuals has turned into a collective movement that manifests itself in the form of a high public awareness. Thanks to this awareness the customer awards to the social activities of companies, the individual within the public entity is regularly confronted with these topics and is – in turn - influenced, which leads to a further spreading of awareness (Bode, 2012).

Compared to many other concepts that have been known for a century or more, Corporate Social Responsibility is considered a new trend. And the term CSR became a buzzword in both media and literature. In order for companies to act in a sustainable way, the three parts of CSR- people, planet and profit-should be properly balanced. Consequently, corporations should not only focus on gaining profits but also focus on their environmental and social performance. This can be considered a clear explanation that can be found in literature books, but there is no common definition of CSR. Plenty of researches and scholars described the phenomenon and created models that explain the whole idea of CSR but the clear meaning of CSR remains a debatable subject (Bode, 2012). CSR, the term which originated in the west, has been discussed all over the world resulting in plenty of different definitions. Moreover, there is no universally accepted definition of Corporate Social Responsibility (Wang & Juslin, 2009).

Although the term CSR lacks a common definition, it is considered popular especially nowadays. It became one of the companies’ duties, to perform in a socially responsible way. Companies can no more neglect this phenomenon, even though there are no laws or governmental obligations for this engagement in society. Thus becoming socially active is considered a voluntary act by corporations. But at the same time practicing CSR is considered a demand or more likely an expectation from stakeholders (Bode, 2012).

In the framework of the discussion of CSR and its rising popularity, countless researches were done in order to answer the question on how culture influences CSR. It has been assumed that national culture have an impact on CSR which in turn affect stakeholders expectations of the social and environmental performance of the company in addition to the organization’s approach to the issue. (Bode, 2012)

For more than 2 decades, scholars have been assuming the relation between national culture and Corporate Social Responsibility based on empirical findings. And researchers were able to successfully confirm this relation. Yet all these studies discussed the general influence of national culture on CSR, and because national culture and CSR are considered blurry concepts , the details of this influence remain a debatable subject. (Bode, 2012)

Purpose of the study

The purpose of the study is to discuss how culture influences corporate social responsibility. And the study’s objective include a study of two of Hofstede’s cultural dimensions and there effects on Corporate Social Responsibility.

CHAPTER II : LITERATURE REVIEW

2.1 Corporate Social Responsibility

In order to satisfy the expectations and protect the interest of the group or society, corporations perform some behaviors that are felt somehow obligatory, enforced or implied for majors acting in their official capacity. These behaviors towards society show that a corporation is socially responsible. Companies nowadays are issuing reports that detail their labor, environmental and corporate-giving practices. So social responsibility nowadays became a must do instead of nice-to-do (Mondy, W. year).

Intel is considered socially responsible that because it created an impression of being a great place to work in. About 325,000 employees donated 2 million hours to community service (Mondy, W. year).

Procter & Gamble, also showed how socially responsible it is through pursuing programs to encourage employment opportunities for minorities and women, to strengthen US education, to encourage employee involvement in civic activities and the political process, and to develop and implement environment-protection technology (Mondy, W. year).

Since the past 50years Corporate Social Responsibility have been an important topic that scholars talked about.CSR firstly appeared during the 1930s and 1940s. In the 1950s CSR was more often referred to as SR(social responsibility). During this time Bowen stated definition of the social responsibility ties of businessmen and he raised many questions about this topic, the most important of all was "What responsibilities to society may businessmen reasonably be expected to assume?" (Flannagan, 2011)

Bowen added that businessman is somehow obligated to do decisions or actions that pleas the values and objectives of the society. Bowen argued that social responsibility is not the solution but instead it is an important aspect that most guide business in the future (Flannagan, 2011).

In the decade of the 1960s the meaning of CSR began to be clear, and more accurate. Keith Davis was one of the first writers to define CSR during that period, and he later wrote more about the topic in his business and society textbook and in his articles (Flannagan, 2011).

Davis argued that social responsibility is a great and brilliant idea but it should be observed from a managerial perspective. At that period Frederick, McGuire, and Walton were academics that also discussed this topic. In the 1970s definitions of CSR started to grow, and became more specific. And at that time CSR began to be referred to as CSP and corporate social responsiveness. The names that seemed to dominate that period, included Johnson, Davis, Steiner, Eells and Walton, Sethi, Preston and Post, and Caroll (Flannagan, 2011)

Fewer definitions of CSR were noticed in the 1980s and during the 1990s writers did not formulate new definitions of CSR, instead they accepted previous definitions (Carroll, 1999). Corporations during that time became concerned about their image (Clark, 2000). Developing the focus on environmental awareness in 1970s, sustainable development and social issues became the society concern in the 1980s (Flannagan, 2011).

The European Commission of Enterprise and Industry defined CSR as the concept where the corporations combine environmental and social concern in their interaction with stakeholders. This definition is considered to be up-to-date that shows that CSR is not governed by laws instead it is considered to be voluntary and is part of a corporation’s strategy. It also states that CSR concerns both environmental and social issues in a society (Flannagan, 2011).

During the last 25 years, theoreticians and practitioners were giving an increasing great focus to Corporate Social Responsibility. And because the world is becoming more globalized companies are communicating their efforts through intercultural communication (Flannagan, 2011). Consumers, investors, communities, employees, journalists and many other publics depend on the social behavior of the corporation when evaluating it. And so, corporate responsibility is considered an important activity for the company in the eyes of the society (Capriotti & Moreno, 2006). Thus companies have obligations towards individuals, other organizations, government and society in general.

Obligations to individuals: Companies have obligations to their employees. Individuals expect a fair pay, to be paid on time…(Mondy, W. year).

Obligations to other organizations: Managers should be aware that companies should compete with one another in an ethical and moral way without subterfuge or irresponsible concern of their mutual rights (Mondy, W. year).

Obligations to government: Companies are expected to work with the guidelines of governmental organizational affair such as the equal employment opportunity commission (Mondy, W. year).

Obligation to society in general: The traditional definition of business responsibility has been that companies should produce goods and services to get profits in return. Profitable firms are able to pay taxes to the government and make donations for charities. The most important aim of the company is to satisfy the society needs and thus society demands more than these needs from companies and profitable large firms. Environmental protection, economic development in poor countries, and educational support are possible issues that companies might be involved in (Mondy, W. year).

2.1.1 Steps for CSR:

Development of a person assigned responsibility for the program and structure and then reported to senior management or board member.

Determine a review of what he company is presently doing with regard to CSR. In addition to a gap analysis which indicates the difference between what the company is and where it wants to be in the future.

Determine shareholders’ expectations and perspectives

Write a policy statement that covers CSR areas such as environmental, social and community issues.

Develop a set of objectives and action plan to implement the policies

Create company’s quantitative and qualitative targets and key performance indicators with the necessary measurement, monitoring, and auditing mechanism.

Communicate the direction of CSR for the company to stakeholders and fund managers.

Determine the progress of CSR.

Report the progress of CSR program.(Mondy, W. year).

2.2 Hofstede’s Cultural Dimensions

Along years, culture has been defined in many ways, but it is principally viewed as the characteristics of and meanings shared by a particular group of people in a society (Brian, Jiing-Lih & W.Harvey, 2000). Geert Hofstede defines culture as the "software of the mind" that guides human to think and behave in a certain way. Edward Hall an anthropologist and business consultant gave a more relevant definition: "The people we were advising kept bumping their heads against an invisible barrier…We knew that what they were up against was a completely different way of organizing life, of thinking, and of conceiving the underlying assumptions about the family and the state, the economic system, and even man himself." So Hall meant that it culture differences is sometimes invisible (Cateora & Graham, 2002). Different cultures have different traditions, values, beliefs, customs… (Ho, Wang & Vitell, 2012). Hofstede studied various national cultures, (90,000 people in 66 countries) and his theory proposed four primary dimensions along which cultural values could be analyzed: Power Distance Index (PDI), Individualism/Collective Index (IDV), Masculinity/Femininity Index (MAS), and Uncertainty Avoidance Index. (Brian, Jiing-Lih & W.Harvey, 2000). Hofstede has never recognized any errors or weaknesses in his research, but instead he added a fifth dimension which is "Confucian Dynamism"(1991) or "large versus short-term Orientation"(1999) (McSweeney, 2002)

2.2.1 Power Distance Index

Power distance is the strength of social hierarchy and the extent in which this hierarchy is seen to be unavoidable. It also refers to the degree in which the less powerful members accept how the power is distributed unequally. Individuals who have high power distance( such as Guatemala, Arab countries and Venezuela) tend to be hierarchical and are more likely to tolerate this inequality, while individuals who have less power distance index( such as Germany, Finland, New Zealamd) tend to value equality and are less likely to believe that superiors are entitled to such privilege (Ho, Wang & Vitell, 2012).

2.2.2 Uncertainty Avoidance Index

Uncertainty avoidance refers to the degree of tolerance a culture has towards uncertainty and ambiguity. Individuals with high uncertainty avoidance ( in Greece, Guatemala, and Uruguay) tend to be more emotional and prefer to implement rules, regulations, and laws. These people feel more comfortable in a structured situation such as having a clear hierarchy. And thus they have a high level of anxiety and stress and avoid taking risks. Unlike individuals with low uncertainty avoidance (Singapore and Great Britain) who prefer to have less rules and are more tolerant to change. According to Hofstede individuals with low uncertainty avoidance are more likely to take risks that are associated with unethical actions (Ho, Wang & Vitell, 2012). Therefore, cultures with high UAI seek absolute truth while those with low UAI seek understanding and knowledge (Cateora & Graham, 2002).

2.2.3 Masculinity/Femininity Index

MAS focus on achievement and assertiveness. Masculinity refers to the distribution of emotional roles between genders. Masculine cultures values are competitiveness, power, individual achievements, ambition, assertiveness and self-centeredness, while feminine cultures place more value on relationships, quality of life, caring, social support, and helping others. Individuals from masculine societies do not appreciate much supportive behavior. (McSweeney, 2002)

2.2.4 Individualism/Collective Index

Individualistic societies (United States, Australia, and Great Britain) emphasize on personal achievements, individual expressions and rights. People from such societies reflect an "I" mentality, they choose their own affiliations and tend to value freedom, independence and personal time. In addition they are expected to stand up for themselves and care more for personal interests. In contrast, in collectivist societies (Guatemala, Venezuela and Colombia), people believe that group interests are more important than personal interests. Members of such groups reflect a "we" mentality and are more likely to behave ethically than those who belong to individualistic societies. (McSweeney, 2002)

2.2.5 Long Term Orientation

Long-term orientation represents the time horizon of a society. Short-term orientated societies care more for past and present values so they respect traditions, and try to fulfill social obligations and reciprocation, whereas long-term oriented societies are considered to be future oriented (McSweeney, 2002)

Societies with low power distance, high Confucian dynamics and high certainty avoidance are positively related to the importance of social responsibility (Kim & Kim, 2010).

REFRENCE

Bode, C. M. (2012). The effect of national culture on corporate social responsibility orientation: A comparison between dutch and german business students. (Unpublished master's thesis, University of Twente)Retrieved from http://essay.utwente.nl/61584/1/MSc_C_Bode.pdf

Brian, B. K., Jiing-Lih, F., & W.Harvey, H. (2000). A cross-cultural comparison of corporate social responsibility orientation: Hong kong vs. united states students. The Literature On Corporate Social Responsibility, 4, 151-167.

Capriotti, P., & Moreno, A. (2006). Corporate citizenship and public relations: The importance and interactivity of social responsibility issues on corporate websites. Public Relations Review, 33, 84-91. doi: 10.1016/j.pubrev.2006.11.012

Carroll, A. B. (1999). Corporate social responsibility.Evolution of a Definitional Construct, 38(3), 268-295

Cateora, P. R., & Graham, J. L. (2002). International marketing. (11th ed.). New York, NY: McGraw-Hill. Retrieved from http://mhhe.com

Clark, C. (2000). Difference between public relations and corporate responsibility: An analysis. Public Relations Review, 26(3), 363-380.

Flannagan, C. (2011). The impact of culture on the communication of csr. (Unpublished master's thesis, Aarhus University).

Ho, F. N., Wang, H. D., & Vitell, S. J. (n.d.). A global analysis of corporate social performance:the effects of cultural and geographic environments. (2012).Journal of Business Ethics, 107, 423-433. doi: 10.1007/s10551-011-1047-y

Kim, Y., & Kim, S. (n.d.). The influence of cultural values on perceptions of corporate social responsibility: Application of hofstede's dimensions to korean public relations practitioners. (2010). Journal of Business Ethics, 91, 485-500. doi: 10.1007/s10551-009-0095-z

McSweeney, B. (n.d.). Hofstede's model of national cultural differences and their consequences:a triumph of faith-a failure of analysis. (2002). Human Relations, 55(1), 89-118. Retrieved from http://hum.sagepub.com

Wang, L., & Juslin, H. (n.d.). The impact of chinese culture on corporate social responsibility:the harmony approach. (2009). Journal of Business Ethics, 88, 433-451. doi: 10.1007/s10551-009-0306-7