Engaging in Corporate Social Responsibility -...

Engaging in Corporate Social Responsibility – and Communicating It Effectively

Social Responsibility – and Communicating It Effectively

Engaging in Corporate Social Responsibility

- and Communicating It Effectively

Authors: Malene Hjulmand Bundgaard - 283273

Mia Sørensen – 281837

Supervisor: Anne Gammelgaard Jensen

Characters: 98,736 - without spaces

Date: May 15th, 2009

BA in Marketing and Management Communication

Aarhus School of Business


Summary

The thesis presents suggestions as to why organisations engage in Corporate Social

Responsibility (CSR) and how organisations can communicate their CSR engagement

effectively through non-financial reports.

In order to establish a foundation for this discussion, the thesis presents different

definitions of and views on CSR. Furthermore, the thesis discusses how the free flow of

information and the following transparency in society have changed the agenda for most

organisations and why the shift from a shareholder perspective to a stakeholder

perspective is relevant. Additionally, the thesis also focuses on organisations’ increasing

impact on society and stakeholders’ increasing expectations to organisations. On the basis

of these discussions, the thesis identifies that the reasons for engaging in CSR, among

other things, are; to meet the needs and expectations of the stakeholders, to be more

transparent, to gain a competitive advantage, to ensure employee loyalty, to increase the

organisation’s revenue and to improve the organisation’s overall brand image.

The thesis presents three strategies for communicating CSR and clarifies which

communication strategy is the most effective when communicating a CSR engagement

through non-financial reports. The most effective CSR communication strategy is the

stakeholder involvement strategy, as this strategy involves the stakeholders and enables

an organisation to appear credible and work purposively towards meeting the

stakeholders’ expectations. In this connection, the thesis discusses how the organisation

beneficially can use this strategy by addressing and incorporating solely key stakeholders.

To further illustrate these discussions, the thesis presents Nike as an illustrative case

study. Nike is a good example of an organisation that engages in CSR and communicates

its CSR engagement effectively through non-financial reports. The thesis identifies that

Nike used CSR to manage its crisis in the 1990s and to regain its positive brand image

and, furthermore, that Nike adopts the stakeholder involvement strategy in its Corporate

Responsibility Report. Interestingly, findings further show that Nike did not need to address

solely key stakeholders to make its CSR communication effectively.

Number of characters in the summary: 1950


Table of Contents

1. Introduction .................................................................................................................... 1

1.1 Problem Statement ..................................................................................................... 1

1.2 Theory and Structure .................................................................................................. 2

1.3 Delimitation ................................................................................................................. 4

2. Corporate Social Responsibility ................................................................................... 6

2.1 The CSR Concept ...................................................................................................... 6

2.1.1 Critique of CSR .................................................................................................... 7

2.2 Public Relations .......................................................................................................... 8

2.2.1 Grunig and Hunt’s Four Models of PR .................................................................. 9

2.3 The History of CSR ................................................................................................... 11

2.4 Carrolls’ CSR Pyramid .............................................................................................. 12

2.5 Triple Bottom Line .................................................................................................... 14

2.6 Preliminary Conclusion ............................................................................................. 16

3. CSR – A Stakeholder Perspective .............................................................................. 17

3.1 Transparency ............................................................................................................ 17

3.2 Stakeholder Theory .................................................................................................. 19

3.2.1 The Shift from Shareholders to Stakeholders ..................................................... 21

3.3 Two Relevant Stakeholder Groups ........................................................................... 22

3.3.1 Employees.......................................................................................................... 23

3.3.2 Consumers ......................................................................................................... 24


4. Engaging in Strategic CSR ......................................................................................... 26

4.1 Trends in Society ...................................................................................................... 26

4.2 Five Stages of CSR Engagement ............................................................................. 27

4.3 Is CSR a Good Investment? ..................................................................................... 28

4.4 Branding CSR ........................................................................................................... 30


5. Communicating CSR Strategically ............................................................................. 32

5.1 CSR Communication Strategies ............................................................................... 32

5.1.1 Stakeholder Information Strategy ....................................................................... 35


5.1.2 Stakeholder Response Strategy ......................................................................... 35

5.1.3 Stakeholder Involvement Strategy ...................................................................... 36

5.1.4 Involving Stakeholders ....................................................................................... 36

5.2 Crisis Communication ............................................................................................... 38


6. Nike Case Study ........................................................................................................... 41

6.1 Why Nike Engaged in CSR....................................................................................... 41

6.1.1 The Development of Nike’s CSR Strategy ......................................................... 41

6.1.2 From a Market-Oriented Production System to a CSR Engagement ................. 43

6.2 Branding Nike’s CSR engagement ........................................................................... 44

6.3 Communicating Nike’s CSR ..................................................................................... 46

6.3.1Nike’s Communication Strategy .......................................................................... 46

6.3.1.1 Nike’s Key Stakeholders .............................................................................. 47

6.3.2 Nike’s Transparency and Credibility ................................................................... 48


7. Conclusion ................................................................................................................... 51

8. Bibliography ................................................................................................................. 54

8.1 Books ....................................................................................................................... 54

8.2 Articles ...................................................................................................................... 55

8.3 Websites ................................................................................................................... 58

9. Appendices .................................................................................................................. 59

9.1 CD ............................................................................................................................ 59

9.2 List of Figures and Tables ........................................................................................ 59


Social Responsibility – and Communicating It Effectively

Page 1 of 66

1. Introduction Years ago, the concept of Corporate Social Responsibility (CSR) did not exist.

Philanthropic activities were not fundamental to an organisation’s objectives, and doing

good in a social and environmental context were not considered to influence the

organisation’s financial performance. (Kotler & Lee, 2005: 1) However, the free flow of

information and the following transparency in society have changed the agenda for most

organisations. All organisations have various stakeholder groups with changing social

expectations, and the organisations most likely to succeed in this rapidly evolving global

society are those organisations that are able to balance the often inflicting interests of their

various stakeholder groups. CSR represents a means of anticipating and reflecting

societal concerns. (Werther & Chandler, 2008: 17-19) This thesis will consider this and

other reasons to why organisations engage in CSR.

Once an organisation has decided to engage in CSR, it is important for the organisation to

know how to effectively communicate its CSR engagement to its various stakeholder

groups. There are many different ways in which an organisation can communicate its CSR

engagement, and this thesis will discuss the use of non-financial reports in relation to CSR

communication, as these have become very popular as a tool for increasing organisations’

transparency.

The purpose of this thesis is therefore to discuss why organisations engage in CSR

activities and how they communicate their CSR engagement effectively to their

stakeholders through non-financial reports. Empirically, the thesis will discuss why Nike

engaged in CSR in the 1990s and how Nike has become one of the leading organisations

within CSR and CSR communication. Additionally, the thesis will discuss how Nike

communicates its CSR engagement to its stakeholders through a non-financial report.

1.1 Problem Statement

• Why are organisations engaging in CSR activities?

• How do organisations communicate their CSR engagement effectively to their

stakeholders through non-financial reports?

– Nike will be used as an illustrative case study.


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1.2 Theory and Structure

This thesis is divided into eight sections. The first section introduces the thesis and it will

commence with an introduction in order to establish a point of departure. The purpose of

the thesis will also be included, along with the problem statement which is the basis for

why we have chosen to write this thesis. Method and structure will be included to give an

overview of the different sections in the thesis and an overview of the theories and

methods we will use to work towards answering the problem statement. Finally,

delimitation will be included in this section to clarify which topics and issues we will not

address in this thesis despite of possible close connections to CSR and Nike.

The second section is named ‘Corporate Social Responsibility’ and in this section we will

build the foundation for CSR by discussing what is understood by the term. Among other

things, Archie B. Carroll’s CSR Pyramid and John Elkington’s concept of the Triple Bottom

Line will be used in this connection in order to give an understanding of the different

responsibilities that they believe an organisation has. This section will, furthermore, include

a definition of Public Relations as this is where CSR originates from, and James E. Grunig

and Todd T. Hunt’s four public relations models will be described to form the basis for

Morsing and Schultz’s communication strategies which will be discussed in section five.

The third section is named ‘CSR – A Stakeholder Perspective’ and in this section we will

work towards answering the first part of our problem statement, namely, why organisations

engage in CSR. In order to answer this question, we will discuss how globalisation has

made the world more transparent and how this has affected organisations’ decision on

whether or not to engage in CSR. Additionally, Edward Freeman, who proposes the

stakeholder theory, will be used in this section to highlight the shift in organisational focus

which has resulted from the increased demand to satisfy various stakeholders. Finally, to

further clarify why organisations engage in CSR, consumers and employees, who are two

important stakeholder groups, will be described in regards to how they are affected by the

organisation’s CSR engagement.

The fourth section is named ‘Engaging in Strategic CSR’ and in this section we will

elaborate the discussion of why organisations engage in CSR. In order to do this, we will

present some of the trends in today’s society and give a short example of the different

stages an organisation can go through to improve its CSR strategy by the use of Simon


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Zadek’s five stages. Whether or not CSR is a good investment for the organisation is a

question management often ask themselves and, for that reason, a discussion of this will

be included in this section. Finally, as CSR can have a positive effect on an organisations

corporate image, branding will be discussed briefly in relation to organisations’ CSR

engagement.

The fifth section is named ‘Communicating CSR Strategically’ and in this section we will

work on answering the second part of the problem statement, namely, how an organisation

can communicate its CSR engagement effectively to its stakeholders through non-financial

reports. Mette Morsing and Majken Schultz’s three CSR communication strategies, which

are based on Grunig and Hunt’s four PR models, will be used in this section to determine

how an organisation can communicate CSR effectively. Additionally, Karl E. Weick’s notion

of sensemaking and Dennis A. Gioia and Kumar Chittipeddi’s notion of sensegiving will

further be clarified as these are important aspects in order to understand Morsing and

Schultz’s communication strategies. In this section we will, furthermore, discuss crisis

communication. Even though this topic does not answer how to communicate effectively

through non-financial reports, it is included in this communication section for the purpose

of discussing the effect of being a good corporate citizen in a crisis situation, and because

crisis management can further give reasons to why organisations engage in CSR.

The sixth section presents our illustrative case study. This is a theoretical thesis, however,

the US apparel manufacturer, Nike, will be used to illustrate how the discussions from the

previous sections work in practice. Despite of Nike’s crisis in the 1990s, it is currently one

of the leading organisations within CSR and CSR communication, and Nike is a good

example to use in this thesis to reach a greater understanding of our problem statement.

The seventh section concludes the thesis. In this section we will give a short summary of

the main findings and, on the basis of these, we will answer why organisations engage in

CSR and how they communicate their CSR engagement effectively to their stakeholders

through non-financial reports.

In order to indicate who has prepared the individual sections, initials are provided in the

headlines: Mia Sørensen = MS and Malene Hjulmand Bundgaard = (MB). The headlines

without initials are prepared by both.


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1.3 Delimitation

The field of CSR is broad and it can be addressed and examined from many different

perspectives. The perspectives we have chosen to focus on in this thesis have, naturally,

lead to the necessity of delimitating others.

We have chosen to focus on the use of non-financial reports to communicate CSR

engagement and will not elaborate further on the use of any other communication

channels or the advantages and disadvantages of publishing CSR material online.

Likewise, we will not compare the effectiveness of non-financial reports to other methods

of communicating.

There are many terms to describe CSR, such as corporate citizenship, corporate

responsiveness, sustainability etc. We will, however, not elaborate on all the different

terms as these are fairly close to Corporate Social Responsibility and have somewhat the

same meaning.

Globalisation is highly relevant when discussing CSR and we will incorporate globalisation

in this thesis where we find it appropriate. However, a comprehensive discussion of

globalisation in its own term will not be included as this is beyond the scope of the thesis.

We further find that the discussion of culture in relation to CSR is too comprehensive for

this thesis. We are, however, aware of the fact that culture has a huge impact on the way

CSR is perceived by stakeholders and, furthermore, on the way in which organisations

should adapt their communication.

The concept of branding will not be thoroughly discussed nor will different branding

techniques. In order to focus on the problem statement, the concept of branding will only

be used briefly when discussing why organisations engage in CSR.

The thesis will not give a description of the different CSR initiatives an organisation can

engage in, as we look at CSR from a communicative perspective. In the illustrative case

study on Nike different initiatives will be described, however, this is only to portray how

Nike’s CSR engagement has developed over time.

We will not include anything about Nike’s communication to its stakeholders before the

crisis in the 1990s, as this is not relevant for the objectives of this thesis. Additionally, it


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should be mentioned that we are aware of the fact that Nike have used other methods

than CSR in order to get through the crisis and re-establish a positive image; such as new

product launches and marketing campaigns. However, this is a thesis on CSR and for that

reason other initiatives from Nike resulting from the crisis will not be mentioned.


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2. Corporate Social Responsibility This section will discuss what is understood by the term CSR as this is important in order

to build the foundation for further discussions about CSR. There are many definitions of

CSR, and in the following, two of these definitions will be presented. Moreover, as CSR

derives from Public Relations, this practice will be clarified, along with an explanation of

the connection to CSR. Finally, Archie B. Carroll’s CSR pyramid and John Elkington’s

Triple Bottom Line will be used in the clarification of CSR and in the discussion of whether

or not an organisation has responsibilities beyond making profits, thus, these will be

elaborated in this section.

2.1 The CSR Concept (MB)

Organisations are part of society’s infrastructure and, therefore, they must consider how

they impact society. The level of impact an organisation has on society has grown and in

this connection, the range of stakeholders the organisation needs to address has

increased (Werther & Chandler, 2006: 3). Stakeholders are people in society which affect

or are affected by the organisation’s business, e.g. employee, shareholders, consumers,

suppliers, media etc. (Freeman, 1984). In order to address the needs of the stakeholders

and society, an organisation can engage in CSR. Dr. Ralph Tench and Liz Yeomans

(2006: 97) state that CSR is the organisation’s responsibility to its stakeholders and

society. This description of CSR is somewhat superficial and is only one of the many

definitions of the concept, as there is no universally excepted definition of CSR. For

decades, theorists, organisations, businessmen etc. have all tried to define the concept

and this has resulted in many definitions. The fact that there are many different ways of

referring to CSR, e.g. corporate citizenship, sustainable development, sustainable

entrepreneurship, business ethics and corporate responsibility, hampers the process of

finding one common definition to describe the term (van Marrewijk, 2003: 95-96). Due to

the lack of one universally accepted definition of the term CSR, Economist and

Researcher Marcel van Marrewijk (2001: 96) argues that an organisation should choose

the definition and concept of CSR which best suits its organisational purpose and

intentions. Even though this argument seems sensible, it is still interesting to clarify the

CSR concept further and for that reason, two definitions will be described in the following.


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Definition 1:

In 1979, Professor Archie B. Carroll stated that CSR is ‘the social responsibility of

business encompasses the economic, legal, ethical and discretionary expectations that

society has of organizations at a given point in time’ (Werther & Chandler, 2006: 8).

Carroll’s definition of CSR is from the late 1970s, and even though the CSR debate has

changed since then, it is still one of the most quoted definitions in CSR literature. The

focus is on the four responsibilities of an organisation, namely; economic, legal, ethical

and philanthropic, and Carroll has placed these four responsibilities in a CSR pyramid

which will be elaborated later in this section.

Definition 2:

According to the Commission of the European Communities (EU Commission) (2001),

CSR is ’a concept whereby companies integrate social and environmental concerns in

their business operations and in their interactions with their stakeholders on a voluntary

basis’ (Matten & Moon, 2005: 338). With this definition, the EU Commission wants to give

a clear and common understanding of the concept. The EU Commission has focused on

the fact that CSR concerns social and environmental initiatives. CSR should be

incorporated in the organisation’s strategy and consider the organisation’s stakeholders.

Moreover, the EU Commission emphasises that CSR is a voluntary initiative.

According to Matten and Moon (2005: 338-339) Europe has been slower than the United

States of America to adopt CSR initiatives because of differences in economic and legal

responsibilities in society. Kampf (2007) supports Matten and Moon’s view and

emphasises that American organisations are situated in a system where organisations are

the ones who have historically fulfilled social and community giving towards local

communities. On the contrary, Europe, and especially Scandinavia, have a tradition for

Governments providing social benefits, and organisations are ‘good’ as long as they pay

taxes, obey the law and possibly support local sport and cultural events – however,

societies’ expectations to organisations seem to be changing (Korhonen & Seppala, 2005).

2.1.1 Critique of CSR (MB)

Today, the concept of CSR has gained ground because organisations and their roles in

society have become subject to more intense scrutiny from stakeholders, and this have

resulted in CSR advocates and CSR critics. Some critics believe that CSR is a distraction


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for management whose main job is to earn money to the shareholders, and other critics

believe that CSR lacks substance and a clear definition (Chandler & Werther 2006,

Frankental 2001, Henderson 2001). Frankental (2001: 20) states that ‘CSR is a vague and

intangible term, which can mean anything to anyone, and therefore is effectively without

meaning’. He further argues that CSR is simply a PR invention because there is no

common definition, no benchmarks to measure the effectiveness of CSR and no internal

and external systems which can audit and verify the results of CSR. Another reason why

the concept of CSR is vague and lacks a common definition is, according to Frankental

(2001: 20), that the concept continues to evolve. Additionally, van Marrewijk (2001: 96)

argues that definitions of CSR have a tendency to be biased towards specific interests

because the theorists and practitioners, who try to define the concept, view CSR in a way

that supports their particular situation.

The Nobel Price-winning economist Milton Friedman (1970) was one of the first theorists

who argued against CSR. Friedman said ‘there is one and only one social responsibility of

business – to use its resources and engage in activities designed to increase its profits so

long as it stays within the rules of the game, which is to say, engages in open and free

competition without deception or fraud’ (Friedman, 1970). As the quote states, Friedman

argued against CSR because he believed organisations should focus solely on their

economic goals.

2.2 Public Relations (MS)

The concept of CSR has not arisen out of nowhere. Public Relations (PR) is where CSR

originates from. Therefore, in order to get a thorough understanding of the field of CSR,

PR will be described in the following section.

Public Relations (PR) is what the words so evidently imply; the relationship between an

organisation and its various publics, both internal and external (Tench & Yeomans, 2006:

20). Another more detailed definition of PR has been presented by Harlow (1976), who

state that ‘Public relations is a distinctive management function which helps establish and

maintain mutual lines of communication, understanding, acceptance and cooperation

between an organisation and its publics; involves the management of problems or issues;

helps management to keep informed on and responsive to public opinions; defines and


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emphasises the responsibility of management to serve the public interest; helps

management keep abreast of and effectively utilise change; serving as an early warning

system to help anticipate trends; and uses research and ethical communication techniques

as its principal tools’ (Tench & Yeomans, 2006: 4). This definition covers most aspects of

PR but some argues that Harlow’s definition is too comprehensive. For that reason, other

researchers have tried to make more simplified definitions; these researchers state that

PR is merely the management of communication that exists between an organisation and

its publics (Grunig & Hunt, 1984: 6). Other researchers suggest that PR is the

management function that establishes and maintains mutually beneficial relationships

between an organisation and its publics and they, furthermore, add that the public is whom

the organisation’s success or failures depends on (Cutlip, Center and Broom, 2001: 6).

The list of definitions from different researchers and practitioners is long, and this shows

that there are different ways to address the PR profession. It can, however, be concluded

from the above definitions that PR is about communication between the organisation and

its stakeholders in order to create or maintain a relationship between the two.

2.2.1 Grunig and Hunt’s Four Models of PR (MS)

Many theorists have referred to the subject of PR, and in the following, Professors and PR

experts James E. Grunig and Todd T. Hunt’s PR models will be discussed. Grunig and

Hunt have developed four PR models which represent how PR has evolved through

history, respectively; press agentry/publicity, public information, two-way asymmetric and

two-way symmetric (see table 2.1).

The first model is the Press Agentry/Publicity. The purpose of this model is propaganda,

and the practitioners of this model generally view communication as telling, not listening

(Grunig & Hunt, 1984: 23). Research is almost irrelevant for this type of communication

because the complete truth is not essential, and the nature of the audience is not

important because this is a one-way communication model (Tench & Yeomans, 2006:

147). The Press Agentry/Publicity model was the first of the four models and it was

adopted by practitioners from 1850 to 1900 (Grunig & Hunt, 1984: 25).


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Characteristic

Press Agentry/ Publicity Model

Public Information

Model

Two-Way

Asymmetric Model

Two-Way

Symmetric Model

Purpose

Propaganda

Dissemination of information

Scientific persuasion

Mutual understanding

Nature of

Communication

One-way; complete truth not essential

One-way; truth important

Two-way; imbalanced

effects

Two-way; balanced

effects

Communication Model

Source � Rec.

Source � Rec.

Source � Rec.

Feedback

Group Group

Nature of Research

Little; “counting

house”

Little; readability, readership

Formative; evaluative

of attitudes


of understanding

Leading Historical

Figures

P. T. Barnum

Ivy Lee

Edward L. Bernays

Bernays, educators, professional leaders

Where Practiced

Today

Sports, theatre,

product promotion

Government, non-profit associations, business

Competitive business;

agencies

Regulated business;

agencies

Estimated Percentage

of Organizations Practicing Today

15%

50%

20%

15%

TABLE 2.1 Characteristics of Four Models of Public Relations (source: Grunig & Hunt, 1984: 22)

With the second model, Public Information, practitioners still view communication as

telling, not listening, however, public-information specialists do feel obligated to present a

complete picture of the organisation or the product they represent (Grunig & Hunt, 1984:

23). Therefore, even though the communication is one-way, the information has to be

accurate, true and specific, and the main aim for the practitioners is to inform rather than

persuade (Tench & Yeomans, 2006: 147). The Public Information model was the major

model of PR from about 1900 and until the 1920s (Grunig & Hunt, 1984: 25).

In the 1920s, the third model, Two-way Asymmetric, was developed (Grunig & Hunt, 1984:

25). According to Tench and Yeoman (2006: 147), this type of PR is rooted in persuasive

communication and aims to create agreement between the organisation and its

stakeholders by bringing them around to the organisation’s way of thinking. In the 1980s,

the Public Information model was the model primarily used by organisations, however,


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today, two-way asymmetric communication is more commonly practised compared to the

first two models (Tench & Yeomans, 2006: 147).

Finally, the last model is the Two-way Symmetric. This model did not appear until the

1960s and 1970s, and even in the 1980s, practitioners were only beginning to adapt to it

(Grunig & Hunt, 1984: 25). Rather than simply publish information, practitioners of this

approach research the values of the stakeholders and attempt to adapt the communication

material according to these (Clark, 2000: 367). The reason for this is that the aim of the

Two-way Symmetric model is to generate mutual understanding, and the two-way

communication process leads to changes in both the stakeholders’ and the organisation’s

position (Tench & Yeomans, 2006: 147).

2.3 The History of CSR (MS)

There is a close connection between PR and CSR, even though organisations have used

PR for centuries, and the concept of CSR did not really gain ground until the late 1970s,

and early 1980s. Both disciplines have similar processes, functions and objectives, and

both disciplines believe that it makes good business sense to ‘...enhance the quality of the

relationship of an organisation among key stakeholder groups’ (Clark, 2000: 376). Already

in the 1920s, social responsibility was on the agenda. Practitioners argued that social

responsibility was good for PR and thereby also good for business, but they had problems

defining the discipline. (Clark, 2000: 364)

Later, in the 1970s, the rise of CSR coincided with the publics’ increased demand for

information and organisations’ increased concern about their image. Furthermore, in this

period of time, researchers argued that organisations were actors in the environment and

should respond to social pressures and demands. Large organisations responded by

donating money to charity in order to help society with their needs. A few years later, when

the first real models of CSR emerged, it was obvious that the focus had changed slightly. It

was now important that organisations also showed how they responded to the needs of

society and what management believed was ethical behaviour. (Clark, 2000: 364-366)

Around the turn of the millennium, CSR was on the agenda in many boardrooms.

Researchers argued that CSR would help improve the organisation’s reputation, and in

this connection, CSR could contribute to the organisation’s financial result. (Tench &


FIGURE 2.1 Carroll’s CSR P

Yeomans, 2006: 100-101) Today, the interes

organisations are facing an increased demand from consumer

governmental organisations (NGOs), politicians

responsible (Werther & Chandler, 2006: 19

2.4 Carrolls’ CSR Pyramid

Early on, theorists argued that an organisation’s responsibility was to make the maximum

profit to its shareholder. It soon became apparent that organisations also had to comply

with the regulations and laws of society. In 1979, Carroll stated that an orga

not only got economic and legal responsibilities, but also ethical and discretionary

(philanthropic) responsibilities, and this became the starting point of Carroll’s

(see figure 2.1). (Carroll, 2001)

In 1991, Carroll created his four-

four types of social responsibilities that constitute

four types of responsibilities an organisation must obtain. At the bottom are the basic

responsibilities, respectively the economic and legal responsibilities. The

responsibility refers to an organisation’s ability to make profit and

states that an organisation must

reasonable and necessary for an organisation if it want

two levels are more ‘soft’ and contain the et

bility – and Communicating It Effectively

Carroll’s CSR Pyramid, Source: Carroll, 2001: 42

101) Today, the interest for CSR has increased further, as

organisations are facing an increased demand from consumers, employees, non

rganisations (NGOs), politicians, the media etc. to behave socially

Werther & Chandler, 2006: 19).

Pyramid (MB)



with the regulations and laws of society. In 1979, Carroll stated that an orga

economic and legal responsibilities, but also ethical and discretionary

(philanthropic) responsibilities, and this became the starting point of Carroll’s

-part CSR pyramid and with it, he suggested that there are

four types of social responsibilities that constitute total CSR. In the pyramid,


responsibilities, respectively the economic and legal responsibilities. The

refers to an organisation’s ability to make profit and the legal responsibility

obey the law and regulations in society. Both levels seem

reasonable and necessary for an organisation if it wants to survive. (Carroll,

two levels are more ‘soft’ and contain the ethical and philanthropic responsibilities. E

Philanthropic Responsibilities

Ethical Responsibilities

Legal Responsibilities

Economic Responsibilities

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t for CSR has increased further, as

s, employees, non-

to behave socially



with the regulations and laws of society. In 1979, Carroll stated that an organisation has

economic and legal responsibilities, but also ethical and discretionary

(philanthropic) responsibilities, and this became the starting point of Carroll’s CSR pyramid

part CSR pyramid and with it, he suggested that there are

. In the pyramid, he placed the


responsibilities, respectively the economic and legal responsibilities. The economic

legal responsibility

society. Both levels seem

s to survive. (Carroll, 2001) The last

philanthropic responsibilities. Even


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though all four responsibilities have been present in society previously, the upper two

levels have increased in importance. An organisation can survive in society without having

ethical and philanthropic responsibilities, however, in a CSR context, these two types of

responsibilities are very important. The ethical responsibility refers to how fair and ethical

an organisation is, and the philanthropic responsibility refers to the amount of resources an

organisation contributes to society. (Carroll, 2001) In Carroll’s own words; ‘philanthropy is

the icing on the cake’ (Carroll, 2001: 42). In connection with the CSR pyramid, this quote

further illustrates that Carroll believes that even though philanthropy is desired, the

economic, legal and ethical responsibilities are more important categories of social

responsibility. However, it is important to note that Carroll believes that all four

responsibilities have to be fulfilled by an organisation simultaneously in order to reach a

level of total CSR (Carroll, 2001: 43). Matten and Moon (2005: 337-338) argue that today’s

CSR is perceived to be centred mostly on ethical and philanthropic responsibilities and,

thereby, they indicate that the economic and legal responsibilities have become a matter

of course.

The external environment of the organisation change over time, and Carroll has

considered these changes in his CSR pyramid; ‘what is socially expected of organizations

typically migrates from discretionary to ethical to mandatory (legal and economic)’

(Chandler & Werther, 2006: 49). In other words, this quote shows how a CSR initiative

over time might turn into a law in an evolving society. Actions which previously have been

considered optional by an organisation can turn into an unwritten ethical responsibility

because the public expects the organisation to perform these actions and, eventually,

these actions might become written laws and regulations that the organisation needs to

follow in order to stay in business.

Carroll further emphasises that the CSR pyramid must be considered as a whole, even

though each responsibility often is presented as a distinct component. However, in order

for an organisation to stay in business they have to always consider their economic

responsibility. Therefore, tensions between the economic responsibility and the legal,

ethical and philanthropic responsibilities can arise because CSR activities often involve

costs. (Carroll, 2001: 42-43) As stated, Carroll believes that total CSR is gained when an

organisation considers all four types of responsibilities. Friedman (1970) criticised the


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concept of CSR as he believed that the sole responsibility of an organisation is to make

money. However, it can be argued that Friedman somewhat supported Carroll’s definition

of CSR because he has stated that the role of management is ‘...to make as much money

as possible while conforming to the basic rules of society, both those embodied in the law

and those embodied in ethical customs’ (Friedman, 1970). In this quote, Friedman

addressed three of Carroll’s four responsibilities, respectively; the economic, legal and

ethical responsibilities, and thereby somewhat contradicts himself.

2.5 Triple Bottom Line (MB)

A modern management cliché is: ‘if you can’t measure it, you can’t manage it’. Today,

many organisations engage in CSR, therefore, it can be argued that it is a good idea to

welcome attempts of tools that make it more obvious to management and stakeholders

how well an organisation is doing in regards to CSR. (Norman & MacDonald, 2003: 1) Like

Carroll’s CSR Pyramid, John Elkington’s (1997) triple bottom line (also called the three Ps

– profit, planet and people) emphasises that an organisation has responsibilities beyond its

financial responsibility. The triple bottom line emerged in connection with research that

showed that consumers were very positive towards socially responsible organisations. The

idea of the triple bottom line is that an organisation’s success should not only be measured

by the traditional financial bottom line, but also by the organisation’s social and

environmental performance (Norman & MacDonald, 2003: 1). Elkington (1997: 73) argued

that ‘society depends on the economy – and the economy depends on the global

ecosystem, whose health represents the ultimate bottom line’. Thus, management has to

extend the concept of the traditional bottom line, and consider their financial performance

equally with their social and environmental responsibilities, and further, find the right

balance between the three. (Tench & Yeomans, 2006)

A supporter of the triple bottom line is Dr. Michael B. Goodman (Goodman Podcast, 2009).

Goodman believes that the triple bottom line is necessary because the influence society

has on an organisation seems to continue to grow. Instead of only focusing on the financial

performance, which is a legal requirement in most countries, organisations should add a

statement in its financial report about the environmental and social performances.

According to Goodman, all three bottom lines complement one another as organisations

are expected to make money and be good citizens. If an organisation violates the trust of


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the society, the society can revoke the organisation’s licence to operate in the society.

(Goodman Podcast, 2009)

There are critics, like Friedman, who think that the sole purpose of an organisation is to

maximise its profits and shareholder value. One of these critics is Economy Professor

David Henderson (2001: 78) and he disagrees with CSR advocates who believe that an

organisation’s profitability is a means rather than an end. Henderson is a liberalist and

argues against the concept of the triple bottom line because it does not focus exclusively

on profits. Furthermore, Henderson believes that when an organisation collaborates with

NGOs and engages in CSR activities, the free market suffers. Where many CSR

advocates and practitioners argue that an organisation must consider all its stakeholders

and have them participate in the organisation’s business, Henderson believes that,

particularly, NGOs are a disturbance for an organisation’s main purpose: ‘to conduct

efficient business and make money’ (Henderson, 2001: 72). Another type of criticism is

exemplified by Ethics Professors Wayne Norman and Chris MacDonald (2003), who argue

that the triple bottom line is misleading and vague, and that organisations are not able to

measure their social and environmental performance the same way they measure their

financial performance. Norman and MacDonald further believe this is due to the lack of a

comprehensive definition of the triple bottom line concept, a methodology and a formula

for measurements. Norman and MacDonald do not criticise CSR or some of the

aspirations of the triple bottom line, however, they believe the triple bottom line promises

more than it can keep, because the jargon used to describe it, implies that it is

measurable. In their words, the triple bottom line is ‘good old-fashioned Single Bottom Line

plus Vague Commitments to Social and Environmental Concerns’ (Norman & MacDonald,

2003: 13), and the social and environmental bottom lines are not equivalent to the financial

bottom line, unless there is an agreed upon way by which data can be added and

subtracted and a net sum can be found. Norman and MacDonald (2003: 7) do not believe

that a methodology to calculate the social and environmental bottom lines can be found,

because a net sum for these in monetary units will seem insufficient. The lack of a

common set of CSR measurements constitutes that it is impossible to see whether or not

an organisation’s environmental and social performances have improved or declined. As a

result, organisations will not have to worry about having their ‘bottom lines’ compared in

global measurements, such as profit and loss, to other organisations and sectors. (Norman


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& MacDonald, 2003: 13) Even though theorists and practitioners disagree on whether or

not CSR is measurable and should be compared to the organisation’s financial

performance, advocates of CRS agree that organisations have a social and environmental

responsibility.

2.6 Preliminary Conclusion

CSR derives from the practice of PR and both disciplines emphasises the importance of a

good relationship between an organisation and its stakeholders. Grunig and Hunt’s four

models of PR specify how the communication between an organisation and its

stakeholders has evolved. CSR helps improve the relationship between an organisation

and its stakeholder, however, critics of CSR believe the term is vague and intangible

because of the lack of one common definition. Friedman further states that the

responsibility of an organisation is to make money and, thereby, he implies that CSR is a

distraction for the organisation. On the contrary, advocates of CSR believe that the

discipline of CSR can be used to improve the relationship to the stakeholders and further

address the needs of the stakeholders and society. Carroll’ CSR pyramid proposes that an

organisation cannot focus solely on its financial responsibility but that it has to consider its

legal, ethical and philanthropic responsibilities as well, and this view is supported by the

triple bottom line. The triple bottom line argues that an organisation which engages in CSR

should measure its CSR engagement equally with its financial bottom line, however, the

lack of one common set of CSR measurements results in disagreements regarding the

validity of the triple bottom line concept.


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3. CSR – A Stakeholder Perspective After the discussion about the concept of CSR, it is relevant to ask why organisations

engage in CSR. The answer is not unambiguous, and some of the reasons for an

organisation’s CSR engagement will be discussed in the following section.

3.1 Transparency (MB)

The notion of transparency has been connected to today’s society and organisations,

however, transparency cannot be discussed without the notion of globalisation.

Globalisation has an enormous impact on organisations and their practices. Moreover,

globalisation has empowered organisations, and some even claim that the multinational

organisations have become more powerful than governments and consumers. An example

of this is the fact that the world’s 100 largest economies consist of 51 organisations and

only 49 countries. (Werther & Chandler, 2006: 53) Globalisation has lead to improvements

in logistics and communications, and many large organisations have made use of these

new opportunities and moved their production to countries where the labour is paid less.

Organisations that move their production facilities to communities in the developing world

help these by creating jobs etc. However, global competition often results in the fact that

organisations move their production facilities when they find more profitable ones, and,

thereby, organisations cause unemployment among the remaining factory workers.

(Friedman, 2006) Many organisations have benefitted from globalisation, and advocates of

CSR believe that these organisations have a social responsibility to the society in which

they operate (Werther & Chandler, 2006).

Professors William B. Werther and David Chandler (2006: 55-56) divide globalisation into

two phases (see figure 3.1). In phase one, organisations became empowered because

they were able to expand globally, outsource manufacturing, reform their supply chain

management and develop global brands which were/are very powerful because of greater

sales and customer loyalty. In recent years, according to Werther and Chandler (2006: 52-

53), globalisation has entered phase two and the power has shifted from organisations to

stakeholders. In phase two, the enhanced power of the internet and new tools of

communication result in an informational transparency. Transparency can be looked at


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from different angles. Werther and Chandler (2006: 7) describe transparency from an

organisational perspective, and state that transparency is when an organisation makes its

decisions and procedures open and visible to the public. Stakeholders have become

empowered because they are in control of the free flow of information. The Internet allows

stakeholders to access large amounts of information very easily. If stakeholders are

dissatisfied with an organisation they can easily direct their power towards the organisation

and inflict large damages to its products, brand or reputation. (Werther & Chandler, 2006:

55-56) Once an organisation has gained a ‘bad’ reputation, it is hard to change the publics’

perception of the brand, and it will often lead to a drop in the amount of products/services

sold and other investments in the brand (McElhaney, 2008: 32-34).

Werther and Chandler, additionally, divide the empowered stakeholders into three groups.

The first group is the empowered media organisations. Today, the media organisations

have become empowered because their scope of operations has increased as a result of

new communication technologies. Therefore, it has become harder for organisations to

‘hide behind the fig leave of superficial PR campaigns’ (Werther & Chandler, 2006: 55);

meaning that there is a good chance that the stakeholders will find out if an organisation

tries to appear better than it is. The second group is the empowered consumers. If

consumers are not satisfied with an organisation they go online and create communities

Globalisation – Phase I

Empowered corporations

Globalisation – Phase II

Empowered stakeholders

Empowered

NGO’s

Empowered

consumers

Empowered

media

FIGURE 3.1 The two Phases of Globalisation, Source: Werther & Chandler, 2006: 27


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where they can express the opinions. Finally, the third group is the empowered NGOs.

NGOs also use the free flow of information to spread their knowledge – positive or

negative – about an organisation, and it can therefore be beneficial for an organisation to

join in a dialogue with NGOs and thereby discuss areas of which both parts are

concerned. (Werther & Chandler, 2006: 52-57)

The high level of transparency in society can pose a threat to an organisation, however, if

an organisation encourages transparency within the organisation it is argued that the

organisation can maintain some of its power (Werther and Chandler, 2006: 7). An

organisation has a number of different stakeholders and in order to maintain and conduct

‘good’ business, the organisation must have a good relationship with these stakeholders

(Freeman, 1984). Consumers are demanding ‘greater accountability for the environmental

consequences of the business’ actions’ (Werther & Chandler, 2006: 72), thus,

organisations can improve their relationship with various stakeholders by being socially

responsible and transparent. In order to be transparent, an organisation can encourage

stakeholders to participate in dialogue and involvement (Morsing & Schultz, 2006: 325) –

this will be further elaborated later in the section ‘Communicating CSR Strategically’. The

organisation must ensure that the channels of communication are clear and open so that

the stakeholders can communicate with the organisation and express their expectations

and concerns (Werther & Chandler, 2006: 56). When an organisation is transparent and

honest, the stakeholders will often find the organisation’s communication credible, as they

can then evaluate every aspect of the organisation. Additionally, the stakeholders will be

less likely to think that the organisation has something to hide when the organisation is

transparent. (Werther & Chandler, 2006: 94)

3.2 Stakeholder Theory (MB)

Whom does an organisation have a responsibility to? The stakeholder theory tries to

answer this question. The theory was first proposed in 1984 by Professor and Philosopher

Robert Edward Freeman and it suggests that an organisation ought to consider its various

stakeholders instead of just the shareholders as this can have a positive impact on the

organisation’s financial performance. The stakeholder theory gradually became an

accepted tool management used to help develop the organisation’s strategy (Fassin, 2009:

127). The most accepted definition of stakeholders is Freeman’s own definition; he stated


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that stakeholders are ‘any group or individual who can affect or is affected by the

achievement of the firm’s objectives’ (Freeman, 1984: 25). Freeman’s stakeholder theory

which is illustrated visually by a model shows how an organisation is related with its

various stakeholders. Freeman has revised the stakeholder model a couple of times,

however, his most sited stakeholder model consists of only seven stakeholders, namely,

customers, employees, civil society, suppliers, shareholders, competitors and government.

(Freeman, 1984) In 2003, Freeman refined his own model and divided it into internal

stakeholders (customers, communities, employees, suppliers, and financiers) and external

stakeholders (NGOs, environmentalists, governments, critics, others and the media) (see

figure 3.2) (Fassin, 2009: 115).

More recently, the stakeholder theory has developed as a result of the growing impact

organisations have on society, and it has been emphasised that it is important for

organisations to engage stakeholders in long-term mutual relationships (Andriof et al.,

2002). Management should therefore focus on managing the interactions with the

stakeholders and base these interactions on a relational and process-oriented view

(Andriof et al., 2002: 19), and it can be argued that an organisation which is socially

responsible considers the needs of and engages in long-term relationships with its various

stakeholders (Morsing & Schultz, 2006: 336).

Over the years, many have argued that Freeman’s concept of stakeholders is too vague,

and further that the number of stakeholders continues to rise ‘due to globalisation and

FIGURE 3.2 The adapted version of Freeman’s stakeholder model, source: Fassin, 2009:

115


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technological evolution, with improved communications and information systems, virtually

everyone and everything can ‘affect or be affected’ by the decisions and actions of a

business enterprise’ (Fassin, 2009: 117) In order to specify Freeman’s term of

stakeholders further, Professor and Researcher Yves Fassin (2009) proposes to divide the

term into four different categories. These categories are, respectively; stakeholders, the

people who actually have a stake in the organisation and therefore (should) have an

interest in the organisation; stakewatchers, the people who protect the interest of the real

stakeholders without having a real stake in the organisation themselves; stakekeepers, the

outside regulators who have influence and control over the organisation but do not have a

stake in the organisation; and stakeimpostors, who are the people who want to harm the

organisation. (Fassin, 2009: 121). Organisations’ impact on society has grown and as a

result the number of stakeholders organisations need to address has fluctuated, and most

organisations have changed focus from the narrow shareholder perspective to a broader

stakeholder perspective.

3.2.1 The Shift from Shareholders to Stakeholders (MB)

The stakeholder model has always been subject to criticism. Friedman (1970), who

supported the shareholder perspective, argues that management of an organisation

functions as agent for its shareholders, and its sole responsibility is to act in the

shareholders’ interests, and this includes that management has no right to use time or

resources to the benefit of other stakeholders involved as this would be on the expense of

the shareholders. In relation to Friedman’s perspective, the question of whether or not the

stakeholder theory endangers the business ends of an organisation, i.e. to make money,

can be raised. In the discussion about whether or not an organisation should take a

shareholder or a stakeholder perspective, there is a tendency to exaggerate the two

perspectives. When an organisation considers the needs of its stakeholders, the needs of

its shareholders are not necessarily sacrificed (Bird et al., 2007: 203). Additionally, an

organisation which have a stakeholder perspective do not necessarily consider the needs

and interests of all its stakeholders but perhaps only the stakeholders whose continued

support is necessary for the organisation’s survival. It can further be argued that an

organisation does not have the time and resources to cultivate relationships with all its

stakeholders (Morsing & Schultz, 2006: 335), nonetheless, today, the focus has shifted,

and many organisations have adopted the stakeholder perspective and are engaging in


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CSR. According to Professor Mette Morsing and Researcher Christina Thyssen (2003:

14), the shift to a stakeholder perspective is important. Even though many large

organisations are powerful today, they still have to keep in mind that a variety of

stakeholders have become empowered as a result of the free flow of information and new

communication tools. Therefore, it makes good sense that organisations should take

several stakeholders into consideration, as Freeman’s stakeholder theory suggests,

instead of solely focusing on the shareholders.

Werther and Chandler (2006: 61) argue that organisations can only maximise the

shareholder value by utilising strategies that address the needs of key stakeholders.

Werther and Chandler further state that CSR, driven by the stakeholder theory, is the way

in which the organisation can satisfy the key groups, as CSR is ‘a means of allowing

organizations to analyze the total business environment and formulate appropriate

organizational strategies’ (Werther & Chandler, 2006: 61). Professors Mette Morsing and

Majken Schultz (2006: 324) are also advocates of involving several stakeholders and they

argue that in order for an organisation to make profit and, thereby, survive it needs to

engage frequently with a variety of stakeholders as its dependence on these is vital. Bird

et al. (2007) take the stakeholder view further and have examined whether or not there is a

conflict within organisations between focusing solely on the interests of the shareholders

and, on the other hand, focusing on a wide spectrum of stakeholders. Interestingly, they

found little evidence to suggest that managers taking a wider stakeholder perspective will

jeopardise the interest of its shareholders (Bird et al., 2007: 189). Additionally, Bird et al.

argues that an organisation, whether or not it deliberately adopts the stakeholder

perspective, will consider more than its shareholders’ interests when it makes decisions.

With this result in mind, along with the arguments presented, Friedman’s idea of engaging

solely with the organisation’s shareholders seems rather obsolete. It is, however, worth

noting that organisations do attempt to reach a high shareholder value in order to stay in

business.

3.3 Two Relevant Stakeholder Groups (MS)

As argued above, an organisation should consider its various stakeholders when engaging

in CSR, as they will be affected in one way or another by this engagement. The


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consumers and employees are, among others, two important stakeholder groups in

regards to engaging in CSR and these will be elaborated further in this section.

3.3.1 Employees (MS)

One of the most important key stakeholder groups of the organisation is the employees

(Werther & Chandler, 2006: 118). The organisation should focus on the employees’

interests as they have a greater stake in the success of the organisation than e.g. the

investors. This is due to the fact that the employees’ jobs and economic livelihood are at

stake if the organisation is not performing well. (Branco & Rodrigues (2006: 127)

Moreover, the employees can act as ambassadors for the organisation and communicate

the image of the organisation to its customers and other stakeholders (Mangold & Miles

2007: 424, McElhaney 2008: 103). This way of communicating is, according to Professor

and founder of the Center for Responsible Business at the University of California Kellie

McElhaney (2009: 103), very useful for the organisation as people often seek credible

information about an organisation’s CSR initiatives through word-of-mouth

recommendations from peers.

Studies have shown that employee satisfaction is connected to the organisation’s level of

CSR engagement, and engaging in CSR can therefore ensure that employees stay

committed to the organisation; ‘employees tend to feel good about coming to work and

earning a paycheck, as well as about contributing to some sort of a social or environmental

issue’ (McElhaney, 2009: 102). Thus, CSR can have a positive effect on the employees’

motivation and, furthermore, on their commitment and loyalty to the organisation. In

addition to productivity benefits, the organisation may also see a reduction in staff turnover

and, thereby, save money on recruitment and training of new employees. CSR is,

however, not only beneficial for the organisation in regards to existing employees, it is also

a way for the organisation to attract better job applicants and stay or become a preferred

employer. (Branco & Rodrigues, 2006: 121) Furthermore, as Generation Y (those born

between 1979 and 1994) will dominate the labour market in the years to come, it is

especially advantageous for organisations to have a strong social responsibility reputation,

because Generation Y is characterised as being very conscious about socially responsible

organisations. (Yan, 2003: 291)


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3.3.2 Consumers (MS)

Today’s consumers have increasingly become more enlightened, and this is mainly due to

the power of the Internet which allows consumers to access greater amounts of

information concerning organisations (Werther & Chandler, 2006: 55). Consumers receive

information about the organisation and the organisation’s CSR from various channels.

According to Brown and Dacin (1997: 80) the information the consumers receive affects

the consumers’ overall evaluation of the organisation and influences their reactions to the

organisation’s products and services. Additionally, McElhaney (2008: 118) states that ‘a

commitment to CSR is quickly on its way to becoming the norm instead of the exception,

and people are beginning to respond with their loyalty – and their dollars – to companies

that offer effective substance and communication’. Brown and Dacin’s and McElhaney’s

views are supported by a research conducted by David, Kline and Dai (2005), which

evaluates the relationship among CSR practices, corporate identity, and purchase

intention for four organisations. Findings from the research showed, among other things,

that awareness of CSR initiatives seemed to have a positive effect on corporate identity

and purchase intention. In other words, communicating the organisation’s CSR efforts will

not only give the organisation a positive image among consumers, it will also influence the

consumers to purchase the organisation’s products and services. On the basis of the

above discussion, it can be concluded that consumer influence is an important motivation

for organisations to engage in CSR. Branco and Rodrigues (2006: 123), furthermore,

argue that organisations may profit if they recognise and meet the demand for

environmentally friendly products. This can be done either by introducing new products or

by publicising production process-related environmental improvements. Besides profit,

another benefit of these actions is that organisations can often avoid negative consumer

reactions such as boycotts of their products by being environmentally responsible. (Branco

& Rodrigues, 2006: 123) Finally, when an organisation communicates its CSR initiatives,

there are certain reservations that it must make in order to be perceived as credible

(Ashforth & Gibbs 1990, Morsing & Schultz 2006, Morsing, Schultz and Nielsen 2008).

However, this issue will be discussed later in the section ‘Communicating CSR

Strategically.’


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Organisations have become more vulnerable in today’s transparent society and, therefore,

an organisation which is socially responsible is more likely to maintain a positive image

among its various stakeholders. Globalisation and the increased level of transparency in

today’s society have empowered stakeholders and for that reason many organisations

have changed from a shareholder perspective to a broader stakeholder perspective. One

of the advocates of the shift in focus is Freeman, who argues that an organisation should

turn its attention to all of the organisation’s stakeholders, as this will have a positive effect

on the organisation’s financial performance. Therefore, more organisations engage in CSR

in order to attend to the expectations and needs of the various stakeholders. Two of the

important stakeholder groups, in regards to engaging in CSR, are employees and

consumers. Employees who work for a socially responsible organisation are more likely to

communicate positive word-of-mouth about the organisation and further stay committed.

Additionally, consumers are more enlightened about organisations’ actions because of the

free flow of information in today’s society, and CSR involvement has proven to influence a

consumers’ purchase decision in a positive way.


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4. Engaging in Strategic CSR

Today, an increasing number of organisations consider CSR as a strategic tool. This

section will further elaborate on the discussion of why organisations engage in CSR and

describe how an organisation can develop an effective CSR strategy. This section will also

include a discussion of how an organisation can benefit from the use of an effective CSR

strategy. Finally, as many organisations want to make CSR part of their corporate image,

branding CSR as a business strategy will be discussed.

4.1 Trends in Society (MS)

There are different reasons why an organisation engages in CSR, and today, many

organisations have implemented CSR in their business strategy. Werther and Chandler

(2006: 19-20) argues that CSR, as an element of strategy, is becoming extremely relevant

for organisations because of certain trends in society, respectively; increasing affluence,

changing social expectations, globalisation and the free flow of information, and ecological

sustainability. Werther and Chandler state that organisations should be aware of the

increased level of affluence in society. Consumers can afford to choose among many

different products and they are willing to pay more for products and services from a brand

they trust. Additionally, consumers in developed societies have higher expectations to the

organisations in which they invest. Werther and Chandler argue that the change in social

expectations is mainly due to corporate scandals in the last decades, e.g. Nike’s

‘sweatshop’ accusations in the 1990s, because these scandals have reduced the public’s

trust in many organisations. Globalisation and the free flow of information are other

reasons why organisations implement CSR to their strategies. The above mentioned

scandals or CSR lapses are rapidly brought to the attention of the public worldwide via the

free flow of information. (Werther & Chandler, 2006: 20) Additionally, Kucuk (2008) argues

that the Internet empowers consumers to connect with each other and form effective

platforms for consumer protests and this can result in collective actions against an

organisation. Finally, organisations which are perceived as indifferent to their

environmental responsibilities are more likely to be criticised by the public and thereby

gain negative publicity than organisations which engage in ecological sustainability as part

of their CSR initiative (Werther & Chandler, 2006: 20). Fenwick (2007: 634) argues that

ecological sustainability refers to both social- and environmental responsibility, and that


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these responsibilities range from issues of human rights to viability of local communities

and conservation of natural resources.

The above mentioned trends are concrete reasons as to why organisations engage in

CSR. However, an organisation’s CSR engagement can also originate from other factors

such as a crisis. McElhaney (2008: 10-11) argues that as long as organisations engage in

CSR, the reasons why they do so are unimportant. Others believe that serious ethical

questions are raised when an organisation engages in CSR as a reaction to criticism from

the public concerning the organisation’s practices (DeTienne & Lewis, 2005). Today, a

majority of organisations are already engaged in different CSR activities, however,

according to McElhaney, many of these organisations practice inauthentic CSR because

the CSR engagement is not part of the organisation’s overall business strategy. In order

for CSR to be authentic, it must be tied with the organisation’s mission- and vision

statement and values (McElhaney, 2008: 42).

4.2 Five Stages of CSR Engagement (MB)

Simon Zadek (2008), who is the chief executive of AccountAbility; an acknowledged

international non-profit organisation which promotes accountability for sustainable

business, believes that an organisation that engages in CSR, no matter the reason,

generally goes through five stages. When an organisation integrates CSR in its business

strategy, Zadek argues that most organisations, which face criticism from the public,

decides to engage in CSR as a defensive move, and he calls this stage one. In stage

two, management realises that the organisation needs to comply with the criticism from

the stakeholders and show them that the organisation is taking action to address the

problems. Organisations which move to stage three incorporate systems which ensure

that their CSR activities are carried out, and additionally, that these activities can be

somewhat measured. However, in stage three, organisations still perceive CSR as a cost.

Many organisations that engage in CSR are ‘stuck’ at stage one to three and practise what

McElhaney (2008: 90-91) calls inauthentic CSR. In order to move to stage four, an

organisation must consider CSR as a value or an opportunity and view CSR equally with

its business development-, its research and development-, its branding-, and finally, its

market-entry strategies. Some organisations reach stage five which, according to Zadek,

is the highest stage of CSR. Organisations at this stage embed CSR in their daily business


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operations and, furthermore, when they collaborate with other organisations.

Organisations at stage five try to attack a problem or cause in society and, thereby,

attempt to change ‘the rules of the game’. (McElhaney, 2008: 9-11) Zadek clearly specifies

how an organisation can develop an effective CSR strategy. However, it can be argued

that only few organisations, which try to ‘change the rules of the game’, are capable of

connecting their values with their CSR activities and, thereby, reach stage five.

Additionally, it can be argued that it is mostly social entrepreneurs, who recognise

problems in society and use entrepreneurial principals to conduct business which

encourages social change (Roberts & Woods, 2005: 49), that are able to reach stage five.

4.3 Is CSR a Good Investment? (MB)

Branco and Rodrigues (2006) argue that there are two contrasting cases for engaging in

CSR, namely, the normative case and the business case. Firstly, the normative case

suggests that an organisation is socially responsible because management has a desire to

do good. Management has chosen to focus on CSR because they believe it is the morally

correct thing to do. Secondly, the business case implies that management only engages in

CSR because they believe it will advance the organisation’s financial performance.

(Branco & Rodrigues, 2006: 112) The normative case clearly contradicts with Friedman’s

conviction; if management pursues CSR solely to do good they are ‘spending someone

else’s money for a general social interest’ (Friedman, 1970). However, it can also be

argued that CSR engagement has to be motivated by more than just a desire to enhance

the organisation’s financial performance, such as a true desire to be transparent and meet

the expectations of the stakeholders, if the CSR engagement is to be accepted by the

public (DeTienne & Lewis, 2005: 362). Finally, an organisation can also use a mixture of

the two cases when engaging in CSR (Branco & Rodrigues, 2006), and this correlates well

with the view many advocates of CSR have, as they believe there is nothing morally wrong

with improving an organisation’s financial performance as a result of CSR (DeTienne &

Lewis 2005: 362, Werther & Chandler 2006: 18). Whether an organisation chooses the

normative case or the business case, or a mixture of both, is often reflected by the

management’s values. However, most managers will not engage in CSR activities if these

will affect the organisation’s bottom line negatively in the long-term (Branco & Rodrigues,

2006: 112). CSR activities are often costly for an organisation, because it has to invest in,


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e.g. environmentally friendly equipment or implement new environmental programs

(Branco & Rodrigues, 2006: 112). Branco and Rodrigues (2006) argue that the benefits of

investing in CSR are long-term, and this means that an organisation must be prepared to

invest money short-term and not see results immediately.

When management develops the organisation’s strategy they strive to provide the

organisation with a source of sustainable advantage. A CSR engagement without

substance or a lack of a CSR engagement all together may threaten the competitive

advantage the organisation has within its industry. This perspective provides an economic

argument for engaging in CSR. (Werther & Chandler, 2006: 18) CSR can add value to an

organisation because it allows the organisation to consider the needs and concerns of its

various stakeholder groups. When an organisation considers these needs and concerns it

is more likely to retain its societal legitimacy and increase its financial viability. (Werther &

Chandler, 2006: 9-19) It is further argued that good stakeholder relationships can help

improve an organisation’s competitive advantage because the organisation gains access

to new knowledge, knowledge sharing and other beneficial resources (Morsing & Schultz,

2006: 325). Others argue that CSR can be used to control an organisation’s resources and

capabilities, and this can lead to rare products and services, products and services that

are difficult to imitate or maybe even lead to new products and services (McWilliams et al,

2006: 3). Another aspect is emphasised by Branco and Rodrigues (2006: 112) who believe

that CSR activities which improve qualitative aspects, e.g. employee morale and the

organisation’s reputation, can help improve the financial performance of an organisation.

Porter and Kramer (2006) support the above statements and argue that an organisation

can use charitable efforts to improve its competitive advantage. Furthermore, evidence

shows that today’s consumers in developed countries have higher expectations to

organisations, and the fact that an organisation engages in CSR is likely to have a positive

effect on consumers’ purchase intention (David, Kline and Dai 2005). Finally, as

mentioned previously, McElhaney (2008: 12) believes that an organisation can use CSR to

recruit and retain talented employees. When an organisation is socially responsible, the

employees will be more loyal to the organisation, because they are satisfied with and

proud of the values of the organisation.


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The above arguments for CSR indicate that a thoroughly considered CSR engagement

can be a good long-term investment for an organisation. However, there is no precise

answer as to whether or not an organisation which is socially responsible performs better

than an organisation which is not, and one of the reasons why is because it is very difficult

to measure the benefits of CSR (Branco & Rodrigues, 2006: 114).

4.4 Branding CSR (MB)

Until now, different strategic reasons to why organisations engage in CSR have been

presented. In the business world, the concept of branding is not new, however, the

awareness of the strategic value of branding has developed (Mark-Herbert & von Schantz,

2007: 6). The following will deal with organisations’ use of CSR as a strategic element to

strengthen their corporate brand.

Growing evidence shows that CSR can influence an organisation’s brand very positively,

and an organisation with a strong reputation for CSR survives longer in society. A CSR

engagement can strengthen brand positioning and enhance the organisation’s image

among stakeholders. (Kotler & Lee, 2005: 10) Many organisations, therefore, want to

make CSR part of their corporate image.

Currently, the way in which large organisations manage their identity and image is more

proactive. The brand is applied to the entire organisation and not just the products and

services. Corporate branding focuses on the organisation’s values and it is, therefore,

important that both management and employees transmit the organisation’s values

internally and externally to the stakeholders. (Muzellec & Lambkin, 2009: 40-42) When an

organisation engages in CSR to improve its image, it is important that the organisation’s

values are consistent with the organisation’s CSR engagement. Today, stakeholders have

very high expectations to organisations, and in order for the organisation to appear

credible among its stakeholders, the organisation must ensure that its CSR initiatives and

CSR communication match its values and brand attributes (Mark-Herbert & von Schantz,

2007). If the CSR engagement does not fit with the organisation’s brand strategy, the

stakeholders will find the organisation incredible, and it can be headed for disaster.

(McElhaney 2008: 27-29) McElhaney (2008: 27-29) emphasises how important it is for the

organisation to create a thoroughly considered CSR initiative with substance that matches

the organisation’s brand attributes before it brands itself as being socially responsible. The


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public perceives and interprets brands in different ways based on their interactions with the

brands and it is, therefore, important that management considers branding as on ongoing

process and always tries to anticipate the current needs of its stakeholders as these

change over time (McElhaney, 2008: 28-31).


Increasing affluence, changing social expectations, globalisation, the free flow of

information, and ecological sustainability are trends reasoning why many organisations

engage in CSR. However, not all organisations manage to integrate CSR well in their

business strategy, and Zadek proposes that organisations must consider CSR as a value

for the organisation in order to benefit from a CSR engagement. A thoroughly considered

CSR strategy can improve the relationship between an organisation and its stakeholders,

and improve or create products, which will give the organisation a competitive advantage.

Finally, an organisation with a well-prepared CSR engagement can brand itself as being

socially responsible and, thereby, improve the organisation’s brand.

.


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5. Communicating CSR Strategically

As it has been discussed in the previous sections, there are many reasons why

organisations engage in CSR. Organisations can use communication as a strategic tool to

communicate their CSR engagement. Once an organisation has chosen to engage in

CSR, it is beneficial for the organisation to know what expectations the stakeholders have

to the organisation, and how its CSR engagement is communicated to the stakeholders in

a way that meets their expectations. For that reason, three communication strategies will

be discussed in this section with the intention of determining how an organisation can

communicate CSR effectively. Additionally, the notion of crisis communication will be

discussed to clarify whether or not communicating the organisation’s CSR initiatives is

beneficial when facing a crisis.

5.1 CSR Communication Strategies (MS)

Incorporating the stakeholders when being corporate responsible seems to be a big step in

bringing the organisations CSR initiatives to a strategic level. While it is generally agreed

that organisations need to manage the relationships with their stakeholders (Morsing &

Schultz 2006, Nielsen & Thomsen 2007) the way in which they choose to do so varies

considerably. There is an emergence of non-financial reports as a means of increasing

transparency in regards to the organisation’s actions concerning social and environmental

issues (Nielsen & Thomsen, 2007: 29), and if the organisation let the stakeholders know

which CSR actions it is taking, the organisation will establish a relationship between itself

and its stakeholders. However, when an organisation communicates its CSR initiatives to

the stakeholders, it might also face the risk of what Ashforth and Gibbs (1990) define as

the ‘self-promoter’s paradox’, namely; suggesting that organisations who promote

themselves and their initiatives too much might evoke suspiciousness among

stakeholders, as this can be seen as an attempt to hide something. In relating to Fassin’s

(2009) categories of stakeholders, it can be argued that the ones who will, most likely, be

suspicious are the stakeholders and the stakewatchers because these two groups have a

real interest in the organisation. Additionally, it may be in the stakeimpostors interests to

increase the level of suspiciousness towards the organisation, because this group wants to

harm the organisation.


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In order to decrease the level of suspiciousness among the stakeholders, an organisation

needs to be transparent and communicate its CSR initiatives effectively. The following will

discuss the use of non-financial reports as a means to be transparent when

communicating CSR.

As mentioned in the section ‘CSR - A Stakeholder Perspective’, Freeman (1984) states

that an organisation depends upon all its stakeholders and not just the shareholders.

Morsing and Schultz (2006: 325) take the stakeholder concept further and stress the

importance of stakeholder relationship as a possible source of competitive advantage; they

advocate that managers should not manage the stakeholders themselves, however, they

should manage the relationship with the stakeholders instead. Based on Grunig and

Hunt’s (1984) characterisation of models of PR, which is described earlier in ‘Public

Relations’, Morsing and Schultz (2006) have developed three CSR communication

strategies as to how organisations strategically engage in CSR communication in relation

to their stakeholders. The purpose of CSR and PR are somewhat the same, namely, to

improve the relationship between an organisation and its stakeholders. Therefore, Morsing

and Schultz find it appropriate to further develop the work of Grunig and Hunt, and use

their way of communicating to the public/stakeholders and apply it to a CSR context.

Morsing and Schultz’s strategies are, respectively; a one-way communication strategy

entitled ‘the Stakeholder Information Strategy’; a two-way asymmetric communication

strategy entitled ‘the Stakeholder Response Strategy’: and a two-way symmetric

communication strategy entitled ‘the Stakeholder Involvement Strategy’ (see table 5.1). It

should be noted that Grunig and Hunt’s (1984) ‘Press Agentry/Publicity’ model is not

included in the following section, as this model has a propaganda function where

organisations often are presented through incomplete, distorted, or half-true information

(Grunig & Hunt, 1984: 21). Thus, Morsing and Schultz (2006: 325) find this model to be

inappropriate for CSR communication.

In order to fully understand the three CSR communication strategies, it is important to

clarify the sensemaking and sensegiving aspects of the strategies. According to Weick

(1995:13) sensemaking is a social process in which people make sense of communication

which is presented to them. In other words, a person interprets what has been presented

and creates his or her own meaning. Gioia & Chittipeddi (1991) have expanded the notion


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of sensemaking and introduced the concept of sensegiving by focusing on the managerial

processes that facilitate sensemaking in an organisation. With sensegiving, management

tries to influence the way in which employees understand or make sense of what is

presented to them. (Gioia & Chittipeddi, 1991: 443)

The stakeholder

Information strategy

The stakeholder response

strategy

The stakeholder

involvement strategy

Communication ideal:

(Grunig and Hunt, 1984)

Public Information, one-way

communication

Two-way asymmetric

communication

Two-way symmetric

communciation

Communition ideal: sensemaking and

sensegiving

Sensegiving

Sensemaking

Sensegiving

Sensemaking

Sensegiving -in iterative progressive

processes

Stakeholders:

Request more information on

corporate CSR efforts

Must be reassured that the

company is ethical and socially responsible

Co-construct corporate CSR

efforts

Stakeholder role:

Stakeholder influence:

support or oppse

Stakeholder respond to

corporate actions

Stakeholders are involved,

participate and suggest corporate actions

Identification of CSR focus:

Decided by top management

Decided by top management. Investigated in feedback via

opinion polls, dialogue, networks and partnerships

Negotiated concurrently in

interaction with stakeholders

Strategic communication

task:

Inform stakeholders about favourable corporate CSR

decisions and actions

Demonstrate to stakeholders how the company integrates

their concerns

Invite and establish frequent,

systematic and pro-active dialogue with stakeholders,

i.e. opinion makers, corporate critics, the media etc.

Corporate communication:

Design appealing concept

message

Identify relevant stakeholders

Build relationships

Third-party endorsements

of CSR initiatives:

Unnecessary

Integrate elements of surveys, rankings and

opinion polls

Stakeholders are themselves

involved in corporate CSR messages

TABLE 5.1 Three CSR Communication Strategies (Source: Morsing & Schultz, 2006: 326)

In their development of the three CSR communication strategies, Morsing and Schultz

(2006) have taken Gioia and Chittipeddi’s internal focus on the processes of sensemaking

and sensegiving among managers and employees, and added an external focus with the


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incorporation of all of the organisation’s stakeholders. Morsing and Schultz suggest that

‘not only managers but also external stakeholders may more strongly support and

contribute to corporate CSR efforts if they engage in progressive iterations of sensemaking

and sensegiving processes as this enhances awareness of mutual expectations’ (Morsing

& Schultz, 2006: 324). Once again, they advocate the incorporation of stakeholders

because the organisation benefits from the relationship with them.

5.1.1 Stakeholder Information Strategy (MS)

The first strategy is the Stakeholder Information Strategy. As the name implies, and as it

was also the case with Grunig and Hunt’s Press Agentry/Publicity model, the function is to

inform stakeholders about the organisation’s CSR initiatives through one-way

communication. This strategy assumes that stakeholders are important to the organisation

because they can either give support in terms of purchasing habits, loyalty and positive

word-of-mouth, or they can show opposition in terms of demonstration and boycotts or

spread negative word-of-mouth. Therefore, the organisation must inform its stakeholders

about its good intentions and actions to ensure positive stakeholder support. (Morsing &

Schultz, 2006: 327) The Stakeholder Information Strategy does not include the concept of

sensemaking. The reason for this is that the organisation ‘gives sense’ to the stakeholders

by distributing information to inform the stakeholders, as objectively as possible, about the

organisation (Morsing & Schultz, 2006: 327). Thereby, the organisation does not want the

stakeholders to create their own meaning, and the stakeholders do not have the possibility

to ‘make sense’ of the information given because the organisation uses a one-way

communication strategy. In this case, the organisation has a relationship with the

stakeholders where it tells rather than listens to them (Grunig & Hunt, 1984: 23), e.g. the

organisation does not accommodate feedback from the stakeholders.

5.1.2 Stakeholder Response Strategy (MS)

The Stakeholder Response Strategy is, on the contrary, a strategy where communication

flows to and from the public and this enables the organisation to receive feedback from its

stakeholders and thereby, adjust the communication material to make it relevant to the

stakeholders. The feedback is not used to change the organisation’s actions and its

approach, if dissatisfaction is evident, instead, it is used to identify the best possible way to

change the public‘s attitudes and behaviour. (Morsing & Schultz, 2006: 327) The


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Stakeholder Response Strategy incorporates both sensemaking and sensegiving. Both are

included as this is a two-way communication strategy where the organisation’s CSR

initiatives are presented to the stakeholders and they ‘make sense’ of what is presented

and create their own meaning. The organisation gets feedback from the stakeholders

through opinion polls and market surveys and, thereby, gets an idea of how the

stakeholders have interpreted its communication. From this, the organisation can adapt

the way it communicates. However, it is important to stress that even though this strategy

is a two-way communication strategy, it is predominantly a one-sided approach, ‘as the

organisation has the sole intention of convincing its stakeholders of its attractiveness’ and

thereby ‘give sense’ through communication. (Morsing & Schultz, 2006: 327)

5.1.3 Stakeholder Involvement Strategy (MS)

The Stakeholder Involvement Strategy is the last strategy presented and this strategy also

includes two-way communication between the organisation and its stakeholders. However,

compared to the above mentioned stakeholder response strategy, this strategy takes the

stakeholders’ opinions seriously and the organisation, as well as its stakeholders, will

change as a result of engaging in symmetric communication. This strategy emphasises the

organisation’s relationship with its stakeholders by encouraging dialogue with them in

order to make the organisation aware of what the stakeholders’ current expectations are.

Dialogue with the stakeholders can also enlighten the organisation of its potential influence

on the stakeholders’ expectations and make those expectations influence and change the

organisation (Morsing & Schultz, 2006: 328).The Stakeholder Involvement Strategy also

incorporates both sensemaking and sensegiving, however, in this strategy, these concepts

are used in iterative progressive processes. Morsing and Schultz (2006: 326) argue that

when organisations want to communicate with their stakeholders about their CSR

initiatives, they need to involve the stakeholders in a two-way communication process.

This communication process is defined as an ongoing iterative sensemaking and

sensegiving process, where there is a focus on frequent dialogue and interactions with the

stakeholders rather than merely information followed by feedback.

5.1.4 Involving Stakeholders (MS)

The three CSR communication strategies put emphasis on, respectively; information,

response and involvement within communication to and with the stakeholders. Morsing


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and Schultz (2006) argue that the organisation needs to move from informing and

responding to involving stakeholders in its CSR communication. It might, however, not be

all stakeholders that are interested in being involved to the same degree as Morsing and

Schultz presume. The organisation’s shareholders, whose personal image and social

reputation are strongly associated with the progress of the organisation, in particular

encourage the development of reporting the CSR engagement. On the contrary,

shareholders with a reduced stake in the firm’s capital show only a limited interest in this

area. (Prado-Lorenzo, Gallego-Alvarez and Garcia-Sanchez, 2009: 105) It is for that

reason important to keep in mind that not all the stakeholders are as committed to the

communication process as the organisation might expect. Additionally, while there may be

many people who are loud about wanting the organisation to be socially responsible, in

reality, there is a limit as to how much stakeholders are willing to impose their views and,

thereby, affect the organisation’s CSR initiatives. The reason for this is that these

initiatives could influence important characteristics such as price and quality of the

organisation’s product or service. (Werther & Chandler, 2006: 26) It is, furthermore,

relevant to note that stakeholders who are willing to impose their views on the

organisation’s CSR initiatives might have diverse opinions, and their judgements of what is

right and what is wrong are subjective. Additionally, Henderson (2001: 67) argues that in

connection with stakeholders ‘not all public expectations, and demands arising from them,

are well founded, reasonable or realistic’. In other words, when an organisation tries to

meet the expectations of its stakeholder by involving them in the CSR communication, it

might not turn out to be beneficial for the organisation but instead a waste of resources.

Werther and Chandler’s (2006: 61) notion of satisfying key groups of stakeholders, instead

of pursuing all the stakeholders, can add a potential resolution to the discussion

concerning whether or not it is a waste of resources to try to meet the expectations of the

stakeholders. This view is further supported by Morsing, Schultz and Nielsen (2008) who

argue that when communicating about CSR initiatives, it is important to aim at key

stakeholders, such as employees, local authorities and investors, as these can act as

ambassadors for the organisation and, further, communicate how responsible the

organisation is to customers and the general public. By doing this, Morsing, Schultz and

Nielsen (2008: 105) argue that suspiciousness among the public, concerning the


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organisation’s credibility, will be reduced as the information comes from other parties than

the organisation itself and, hence, does not look like a marketing activity.

Non-financial reports seem to be an appropriate response- and sensegiving tool for

communicating the organisation’s CSR initiatives. However, in order to avoid that the

organisation only publishes what it finds important and avoid the risk of being perceived as

self-absorbed when publishing information on how ‘good’ it is, the organisation needs to

include the key stakeholders in these non-financial reports (Morsing & Schultz, 2006: 333).

In these reports, the organisation, furthermore, needs to integrate reasoning as to why it is

necessary to engage in, sometimes costly, CSR activities, as this can create awareness

and understanding among the stakeholders (Nielsen & Thomsen, 2007: 30). According to

Morsing and Schultz (2006: 334), many non-financial reports are still expressions of the

stakeholder information strategy or the stakeholder response strategy. However, when

moving towards implementing the stakeholder involvement strategy, the organisation

shows that it takes its stakeholders seriously by considering the values of the

stakeholders, and it further attempts to adapt its communication material according to

these values (Clark, 2000: 367). In order to show that the organisation is serious about its

engagement with its stakeholders, and does care about their opinion, it should give critical

and highly involved stakeholders a voice in non-financial reports by letting them comment

on and critique issues regarding the organisation and its CSR initiatives (Morsing &

Schultz, 2006: 334). By doing this, the two-way communication within the stakeholder

involvement strategy becomes effective for the organisation as it allows the organisation to

identify what the stakeholders expect from the organisation and what they might expect in

the future (Morsing & Schultz 2006: 333, Nielsen & Thomsen 2007: 29-30).

5.2 Crisis Communication (MS)

As it has been stated in the previous discussions, being socially responsible and,

furthermore, communicating CSR initiatives effectively are contributing to a good

relationship between the organisation and its stakeholders. The following will discuss

whether or not it is also beneficial for an organisation to use its CSR initiatives when

communicating to the stakeholders in a crisis situation.

A definition of what crisis management is has been made by Fearn-Banks (2000: 480),

who states that ‘crisis management is strategic planning to prevent and respond during a


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crisis or negative occurrence, a process that removes some of the risk and uncertainty and

allows the organization to be in greater control of its destiny’. A crisis is often something an

organisation wants to avoid. It is, however, often something the organisation does not

have control of. Some crises might be unavoidable and unmanageable, e.g. nature and

human failure (Fearn-Banks, 2000: 479), thus, crisis management practices are adopted

by many organisations which are trying to avoid the negative outcome a possible crisis can

cause.

Tench and Yeomans (2006: 399) argue that even though a crisis is managed well from an

operational perspective, it is how the organisation communicates to its stakeholders about

the crisis that makes the difference. Furthermore, evidence suggests that good

communication from the organisation during a crisis can be the key to get support from the

stakeholders and it can further improve the organisation’s reputation (Tench & Yeomans,

2006: 339). It does make good sense to communicate well during a crisis and, thereby,

hope to put the organisation in a position of being perceived positively. However, would it

be a good idea to incorporate the organisation’s CSR initiatives in a crisis situation,

presupposing that the organisation is socially responsible, in an attempt to avoid a

negative reputation among its stakeholders? There are various opinions concerning this

matter. Advocating the incorporation of CSR efforts into a crisis communication, Schnietz

and Epstein (2005) argues that a reputation of CSR protects organisations from financial

losses during a corporate crisis. This argument is based on a study conducted by Schnietz

and Epstein in which they compared organisations that did have a reputation for being

socially responsible against organisations that did not. The results showed that those

organisations without reputations for being socially responsible saw a decline in

shareholder value, while those organisations in the same industries that were seen as

good corporate citizens suffered no decline in shareholder value during a crisis situation

(Schnietz & Epstein, 2005: 342).

When an organisation use CSR communication during a crisis, it is a way for the

organisation to defend itself, however, this defence might seem suspicious to the

stakeholders and have the opposite effect. Kim, Kim and Cameron (2009) argue that

communication concerning CSR efforts, which often focuses on the organisation’s

relationship with its community, are not necessarily perceived in a favourable manner in a


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crisis situation. This is due to the fact that ‘CSR may be viewed as accommodative

window-dressing that diminishes resources to assure corporate competence’ (Kim, Kim

and Cameron, 2009: 86). Additionally Kim, Kim and Cameron (2009: 86) suggest that

‘when an accident occurs, emphasis in crisis communication on corporate ability may be

more effective than CSR, especially when corporate responsibility is low’. Hence,

suggesting that CSR communication without substance is less useful in a crisis situation.

In this connection, the amount of time an organisation has been involved in CSR activities

can determine the effectiveness of CSR in a crisis situation. According to Vanhamme and

Grobben (2009: 280), organisations with a long history of involvement in CSR activities

have earned the right to mention their good deeds without raising suspicion among

stakeholders and vice versa. Vanhamme and Grobben reason this by arguing that the

organisations that have a short history of CSR have not built a solid reputation among its

stakeholders, and should the organisations, in spite of that, communicate publicly about

their newly initiated CSR activities, they will face ‘scepticism, disbelief, and, in turn, more

negative company and product perceptions, as well as doubts about the company’s

integrity’ (Vanhamme & Grobben, 2009: 280).


The best strategy to communicate CSR effectively to the organisation’s stakeholders has

been identified as the stakeholder involvement strategy. Through effective two-way

communication, organisations gain an understanding of what the stakeholders want, and

this further enables them to work purposive towards meeting the stakeholders’

expectations. However, communicating to all stakeholders might have the opposite effect

of what the organisation intends and will be a waste of resources. For that reason,

organisations should aim their CSR communication at key stakeholders and their opinions

should be incorporated in the organisation’s non-financial report. By involving

stakeholders’ opinions in the report, the organisation shows that it is serious about

engaging with stakeholders and that the organisation takes their opinions seriously. An

organisation can also use CSR communication in a crisis situation, however, the

organisation needs to have a reputation for being socially responsible otherwise it will

appear as simply ‘window dressing’, and the stakeholders will be sceptical and doubt the

organisation’s integrity.


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6. Nike Case Study In this section, the world’s leading apparel manufacturer, Nike, will be used as a case

study to illustrate some of the reasons why organisations engage in CSR and, furthermore,

how this engagement is communicated effectively to stakeholders through the use of non-

financial reports.

6.1 Why Nike Engaged in CSR (MS)

In 1996, Nike faced accusations that alleged it was using ‘sweatshops’ in its contract

factories in developing countries. The conditions of Nike’s factories became a worldwide

media topic and caused a stir among consumers, activists, international organisations and

NGOs. As a result, protests, small boycotts and demonstrations emerged. Nike could,

obviously, not remain passive while these accusations were circulating because the

accusations were demolishing Nike’s image. (Detienne & Lewis, 2005: 361) Nike

responded by advertising its new CSR engagement which included good factory

conditions at its contract factories, fair labour salaries and a clear code of conduct.

However, at the time of the crisis, Nike was not perceived as being socially responsible

(Detienne & Lewis, 2005: 362). Nike did not have a long history of involvement in CSR,

and when Nike communicated its new CSR engagement, it was meet with scepticism,

disbelief and doubts about its integrity because people found its CSR initiative to be

merely talk, not action. In particular, one question was raised: Did Nike engage in CSR to

improve the working conditions for its contract factory workers, or was the CSR

engagement solely to improve Nike’s stained image and thereby its financial performance?

Organisations engage in CSR for different reasons, and McElhaney (2008) argues that

Nike’s first reasons for engaging in CSR were completely self-serving as Nike wanted to

clear its name to remain one of the leading apparel manufactures in the world, and today,

Nike engages in some of the most strategic CSR.

6.1.1 The Development of Nike’s CSR Strategy (MS)

Nike’s CSR engagement can further be discussed in connection with Zadek’s five stages

of CSR. Nike first got involved in CSR as a defensive move to address criticism from the

public. The public’s negative respond to Nike’s first CSR communication suggests that

Nike communicated its CSR initiatives too quickly after engaging in CSR – the public

believed that Nike’s CSR initiative lacked substance. The public’s critical respond to Nike’s


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first CSR initiative scared the management at Nike and, for some time, the organisation

kept quiet about its CSR engagement. However, when Nike again decided to

communicate its CSR, it had learned from its past mistakes and had taken a new

progressive approach. Now, management clearly believed that Nike would benefit from

engaging in CSR. A vice president for corporate responsibility was appointed in 1998, and

later, in 2001, Nike established a corporate responsibility committee and published their

first CSR report (Werther & Chandler, 2006: 286).

In connection with Zadek’s five stages of CSR, it can be argued that Nike has passed

through stage one to three and is currently around stage four to five, as Nike has assigned

CSR internally and, further, created management processes to measure its CSR activities

(CR Report, 2005-2006). Additionally, CSR advocates argue that Nike engages in some of

the most strategic CSR. Some CSR critics emphasise that the CSR concept is vague and

intangible because it cannot be measured, however, Nike addresses this concern in its

Corporate Responsibility Report (CR Report) from fiscal year 2005-2006 (see appendix

9.1). After the crisis in 1990s, Nike decided, among other things, to donate three percent of

the prior fiscal year’s pre-tax income to different types of charity, and these money

donations could be measured and compared. However, Nike, with this CSR initiative,

realised it got locked in a traditional philanthropy model when it measured its CSR

involvement in society in dollars and further that money donations of this kind were short-

term transactions and, thereby, uncertain because they depended on Nike’s income. (CR

report, 2005-2006: 80) In order to improve its CSR strategy, Nike encouraged a long-term

commitment to society, and for several years now, Nike has executed CSR activities which

focus on long-term commitments. Additionally, Nike has recently joined forces with other

CSR advocates in the hope of developing a global measurement and evaluation

framework for its CSR activities (CR report, 2005-2006, Chapter 5). Even though Nike has

not used the concept of the triple bottom line in its CR Report, Nike still emphasises that it

wants to be able to measure its CSR engagement in order to make it easier to improve the

engagement from year to year (CR Report, 2005-2006: Chapter 2). In the CR Report, Nike

states that it wants to develop a systematic approach to measure the improvements that

originates from its CSR activities and, furthermore, Nike works together with its key

stakeholders to determine how these improvements can be measured (CR report, 2005-

2006, Chapter 2).


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Nike has used a lot of resources to improve its CSR engagement. Management at Nike

does not only see CSR as a value and a great opportunity for the organisation, they also

embed CSR into Nike’s business and decision-making processes (CR Report, 2005-2006:

10). The vice president for corporate responsibility attends strategic reviews and meetings

with Nike’s senior leadership, and the corporate responsibility functions at Nike are

managed jointly between the corporate responsibility teams and leaders across the Nike

organisation. (CR Report 2005-2006) In 2001, Nike’s chairman and former CEO, Phil

Knight, stated that ‘the performance of Nike and every other global company in the twenty-

first century will be measured as much by our impact on quality of life as it is by revenue

growth and profit margins. We hope to have a head start’ (Kotler & Lee, 2005: 7). In this

quote, Knight emphasises that no organisation can ignore CSR. However, the reasons

behind Nike’s current involvement in CSR can be discussed. In the 1990s, Nike engaged

in CSR because of the many accusations from activists, NGOs and consumers about

Nike’s use of ‘sweatshops’. Today, Nike’s has embedded CSR so convincingly in its

overall business strategy that management very likely sees CSR as a profitable business,

however, it can be argued that Nike cannot embed CSR so convincingly without

management having a true desire to do good in society.

6.1.2 From Market-Oriented Production System to CSR Engagement (MB)

After Nike’s crisis in the 1990s, it expanded the areas it wished to address in relation to

CSR. These were respectively; working conditions in its contract factories, environmental

protection and community welfare. Additionally, Nike introduced a code of conduct for its

contract factories. In the beginning, the implementation of the code of conduct was

hindered because Nike used a market-oriented production system that focused on

competition. There was a tension between Nike’s economic responsibility and its ethical

and philanthropic responsibilities. Then, and now, there is a high level of competitiveness

in the apparel industry, and therefore, many apparel manufacturers use factories in the

developing countries to manufacture products because of the lower costs. (Lin & Philips,

2007) These factories focus on price and delivery instead of CSR initiatives because they

have to stay competitive. This was also the case with Nike and, as a result, Nike’s code of

conduct was not always respected by the factory owners. An organisation that engages in

a market-oriented production system is more likely to move its product facilities from one

city or country to another when it finds a more profitable factory, and as a result


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communities that are left behind will suffer. When Nike embedded CSR in the

organisation’s overall strategy, it changed from the market-oriented production system to a

collaborative partnership with its contract factories. As a result, Nike’s contract factories

were relieved from price pressures and the constant fear of losing business to another

factory with cheaper prices. Nike argues that the collaborative partnership with its contract

factories will add incentives for CSR compliance at these factories. (Lin & Philips, 2007)

However, it can be argued that Nike can never have total control over the factory workers’

working conditions and other CSR initiatives because it does not own the factories. The

factories in the developing world are often the source of production for many different

organisations at the same time. A factory can have many different codes of conduct and it

becomes difficult for the factory owner to decide which one to follow. As a result,

organisations’ CSR initiatives will suffer because it is difficult for the contract factories to

meet the requirements of many different organisations. (McElhaney, 2008: 59)

Historically, organisations have operated individually and independent of one another. In

order to ensure that the factory owners respect the code of conduct, it can be argued that

Nike must collaborate with the organisations that use the same contract factories as Nike,

and develop a common code of conduct, in order to provide the factory owner with only

one set of guidelines and, thereby, ensure that the CSR initiatives can be executed by the

factory owner. However, collaborating with business competitors are not an easy task. The

traditional mindset of organisations needs to change if the organisations are to cooperate

with their business competitors. It must be very clear to the management of these

organisations what the benefits of the collaboration are, and management must be willing

to change their mindset in order for this to work.

6.2 Branding Nike’s CSR engagement (MB)

It is clear that Nike believes that CSR gives them a competitive advantage in the apparel

industry; ‘Corporate responsibility must evolve from being seen as an unwanted cost to

being recognized as an intrinsic part of a healthy business model, an investment that

creates competitive advantage and helps a company achieve profitable sustainable

growth’ (CR report, 2005-2006: 7). Today, Nike is the leading apparel manufacturer in the

world (Wright, 2009) and it can, therefore, be argued that Nike’s reputation and image


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have improved significantly since the 1990s, where Nike’s image was stained after the

‘sweatshop’ accusations.

Nike is a lifestyle brand, and it is especially important for lifestyle brands to reflect its

stakeholders’ values and aspirations correctly (Werther & Chandler 2006: 19, McElhaney,

2008). When Nike first introduced its CSR strategy, it did not match Nike’s overall core

brand attributes. The new assigned CSR department and Nike’s existing marketing and

advertising departments did not collaborate when the first CSR initiative was developed

and as a result these departments communicated different messages to the stakeholders.

Nike’s core brand attributes were identified as athletic, fierce, edgy, muscular, strong, and

fast, and the initial CSR message consisted of a ‘flowery feel-good’ message. The public

perceived Nike’s CSR messaging as inauthentic, because it did not match Nike’s attributes

and mission statement. (McElhaney, 2008: 90-91, Lin & Philips, 2007).

Today, CSR is a very well-integrated part of Nike’s corporate image. After the initial failure

to communicate its CRS, Nike has joined forces with its key stakeholders and redefined its

corporate message to the public. In connection with branding, it can be argued that Nike’s

CR report (2005-2006), which emphasises Nike’s commitment to CSR in its overall

business strategy and operations, is intended to protect the Nike brand from future CSR

lapses (Werther & Chandler, 2006: 58). However, because of the accusations in the

1990s, Nike still has to play c’atch-up’ with some of its stakeholders who continue to

question Nike’s operations in the developing world (Werther & Chandler, 2006: 77).

DeTienne & Lewis (2005: 359) argue that ‘maintaining integrity becomes more challenging

when a company must report less attractive details or respond to criticism. The problem

that faces many companies engaging public dialogue is how to ethically, legally, and

effectively disclose information while maintaining a positive image’. In the Nike case,

management at Nike is doing a tremendous job making its CSR initiatives transparent to

all its stakeholders. Nike’s transparency will be further elaborated in ‘Nike’s Transparency

and Credibility’. Nike further uses brand ambassadors to brand and communicate its CSR

strategy, as these are more believable than commercials. Employees do not become

brand ambassador from one day to another, and in order to develop these, Nike has

engaged its employees deeply in the process of creating CSR initiatives, and has further


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developed a CSR department and a cross-functional employee CSR council. (McElhaney,

2009: 103-104)

6.3 Communicating Nike’s CSR (MB)

Nike communicates its CSR initiatives through its CR Reports and has since 2001

published three of these. The last report, which is the one that will be the main source for

this section, is from fiscal year 2005 - 2006 and it was published in 2007. It is the first

report to be published only in a digital format (the previous reports were available in digital

format later on as well), and the reason is that Nike wants its information to be easy

accessible to consumers as well as other stakeholders (PR News Online, 2008: 11).

6.3.1 Nike’s Communication Strategy (MB)

Looking at Morsing and Schultz’s (2006) three CSR communication strategies, it is

apparent that Nike has adopted the stakeholder involvement strategy in its communication

of the CR Report. This strategy takes the stakeholders seriously, and the organisations

that adopt this strategy will try to improve or change its CSR initiatives as a result of the

dialogues and interactions with the stakeholders. Nike certainly takes it stakeholders

seriously and finds that it learns a great deal from them. This is evident, among other

places, in the CR report where Nike states; ‘we find that constructive engagement with

stakeholders is most often the approach that brings about the best insight to the

challenges we all have an interest in addressing’ (CR Report, 2005-2006: 126). Moreover,

Nike conducted a global stakeholder forum in 2004, where 70 diverse representatives of

stakeholders were invited to participate in a two-day event, where different CSR issues

were discussed (CR Report 2004: 14). Nike used the feedback from the forum to prioritise

its CSR initiatives both in the time just after the forum and also when conducting the 2005-

2006 CR Report. In regards to Nike’s communication of its CSR initiatives, a report review

committee, comprising of credible external stakeholders, read the CR report and provide

Nike with recommendations as to what can be done better in order for the communication

of CSR to be more effectively, and these recommendations are included in the CR report

(CR Report, 2005-2006: chapter 11) The recommendations have not, according to Nike,

been edited beforehand. Some of the committee’s recommendations from the previous CR

Report are included, along with an overview of what has been improved and adjusted

according to these recommendations, and this illustrates that Nike is capable of adapting


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to the feedback it receives from its stakeholders. An iterative sensemaking and

sensegiving process occurs as Nike, through the stakeholder forum, the report review

committee and, furthermore, its employees, ensures that it knows what the stakeholders

expect. Nike, thereby, tries to meet these expectations in its CSR initiatives and in its

communication of these through the CR Report. It should, however, be noted that

recommendations from Nike’s stakeholders only take up one page in the CR Report, and

since Seeing the CR Report is 162 pages in total, it can be discussed whether or not one

page of direct communication from the stakeholders is sufficient.

6.3.1.1 Nike’s Key Stakeholders (MB)

In a communication perspective, an organisation’s key stakeholders differ depending on

the context, e.g. Nike focuses on the needs of a different set of key stakeholders when

they launch a new product, compared to when they communicate their CSR initiatives. In

the case of the latter, Nike has specified their key stakeholders as ‘members of the socially

responsible investment (SRI) community, employees, academics, students, suppliers,

contract factory partners, customer, consumers, non-governmental organisations and

advocacy organisation leaders, and individuals with an in-depth knowledge of corporate

responsibility’ (Nike’s CR report, 2005-2006: 133). Nike’s audience for the CR Report is

very broad. The audience consists of many different stakeholder groups and some of

these groups, e.g. consumers, may easily perceive the material from Nike to be solely

marketing as they are more likely not to trust communication which comes directly from an

organisation (Morsing, Schultz and Nielsen, 2008). Nike might have too broad a group of

stakeholders for this non-financial report, if it wants its communication to be effective - at

least that is what Morsing, Schultz and Nielsen (2008) argue. It is, however, obvious from

the recognition that Nike receives that the way in which it communicates its CSR initiatives

is highly effective. In 2008, Nike won an award for ‘Best CSR Report of the Year’ because

of its CR Report (2005-2006), mainly because of its ability to incorporate the feedback

from ongoing dialogue with its stakeholders and because it made its report available to all

of its stakeholders by publishing the report on its website (PR News Online, 2008: 12). In

2008, Nike also won ‘The Leader in CSR’ (for US organisations with 25.000 employees

and more), and the motivation for this award was Nike’s ability to see CSR as a way to

reach growth and innovation and, once again, the incorporation of stakeholders in its CSR

initiatives (PR News Online, 2008: 11). Moreover, Nike has worked its way up the list ‘100


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Best Corporate Citizens’ in the US with, respectively; a 31st place in 2005, a 13th place in

2006 and a 3rd place in 2007 (Business Ethics Magazine). This proves that Nike’s CSR

initiatives and, further, the communication of these are effective and not perceived as

incredible by the public.

6.3.2 Nike’s Transparency and Credibility (MS)

Nike states that ‘we believe transparency is a central component to a responsible business

strategy and that reporting is key for delivering transparency’ (CR Report 2005-2006: 132).

Thus, Nike emphasises how serious it takes the notion of transparency. This is especially

evident in its CR report (2005-2006) where it describes all of the CSR initiatives it takes

and what initiatives it wants to carry out in the future. An example of Nike’s transparency is

a list of all of its contract factories, not only by name and country but also with specific

addresses of the factories, which Nike has published online (Nikebiz). Anyone interested in

the conditions of Nike’s contract factories can visit these or get in contact with the factories

for further information. This is a way for Nike to show its stakeholders that it has nothing to

hide and that it can be trusted. Additionally, it can be argued that Nike avoids the ‘self-

promoter’s paradox’ (Ashforth and Gibbs, 1990) when it communicates its CSR initiatives

because even though the report is a way for Nike to promote itself, Nike is being so

transparent about its CSR initiatives that the stakeholders can hardly doubt Nike’s

intentions.

After the crisis in the 1990s, Nike had to show the public and its stakeholders that it could

be trusted, as people did not think that there was any substance in the CSR initiatives Nike

claimed it was engaged in. Consequently, one of the efforts that Nike made to grant

credibility to its statements, after its first failed CSR communication, was to hire Andrew

Young, who is an outspoken civil rights leader, a UN representative, former Atlanta mayor

and CEO of the consulting firm Goodworks International (Canady, 1997). Young made an

independent assessment of Nike’s code of conduct and evaluated the effectiveness of the

code of conduct in Nike’s contract factories. As a part of the agreement between Nike and

Young, Young was allowed to publish the report, no matter the findings. (Young, 1997)

Whether or not the report was conducted independently, and without any interference from

Nike, has been argued by critics ever since. However, to let someone who is not involved

with the organisation examine if Nike was telling the truth was a deliberate move from Nike


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in order to make its actions transparent and establish credibility among its stakeholders.

Today, Nike has, as mentioned, published a list of its factories, and journalists or others

who question Nike’s CSR initiatives can examine the operation of these factories.

The non-financial report presents Nike from a very positive angle and even though the

organisation claim that it interacts with its stakeholders in every step of the way when it

conducts its CSR initiatives, one must keep in mind that the report is material published by

Nike, and Nike would, obviously, not present itself in a way that would make it appear

socially irresponsible. Furthermore, it can be discussed whether or not the content of the

CR report is completely credible when Nike does not own its contract factories. Nike does

not have total control over its contract factories, and its CSR initiatives may suffer as a

result, as it is difficult for the factory owners to meet the CSR requirements from different

organisations. Some people still have doubts about whether or not Nike is such a good

corporate citizen as it claims, however, the facts of the matter is that Nike is one of the

leading organisations in regards to CSR and CSR communication. When displaying itself

with such a transparent approach, Nike will always risk having critics attack its CSR

initiatives. However, today, Nike’s well embedded CSR strategy is a much better defence

against possible accusations than it used to be and, finally, rewards for ‘Leader of CSR’

and ‘Best CSR Report’ etc. cannot appear out of nowhere.


In order to manage the crisis and regain a positive brand image, Nike pursued the path of

being socially responsible. However, Nike’s first CSR communication was met with

scepticism from its stakeholders as they believed it lacked substance. Nike then took a

new progressive approach to CSR, and today, Nike engages in some of the most strategic

CSR, and brands Nike as a socially responsible organisation, e.g. by the use of its many

brand ambassadors. Nike communicates its CSR initiatives in a CR Report in which the

communication strategy has been identified as the stakeholder involvement strategy. The

CR Report is a good example of how Nike tries to meet the expectations of its

stakeholders, however, it should be noted that Morsing and Schultz’s notion of solely

addressing key stakeholders apparently is not necessary in Nike’s case, as Nike has been

able to aim its CR Report to a very broad group of stakeholders and still succeed in

communicating its CSR engagement effectively. Furthermore, Nike has reached high


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levels of great transparency of its corporate responsibilities by publishing thorough

information about itself and making this information available to everyone interested. The

stakeholder involvement increases Nike’s credibility, however, it is important to keep in

mind that Nike is the sender of the CR Report.


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7. Conclusion Organisations’ impact on society has grown and the stakeholders’ societal expectations to

organisations have increased. As a result the practice of CSR has become increasingly

popular. CSR emphasises the importance of enhancing the quality of the relationship

between an organisation and its stakeholders, and it can be used by organisations to

address the needs of stakeholders and society. There is no universally accepted definition

of CSR and the practice has both followers and critics. Nonetheless, research shows that

stakeholders are positive towards socially responsible organisations.

The purpose of this thesis was mainly to examine why organisations engage in CSR. From

the different discussions presented in this thesis, it is obvious that the answer is not

unambiguous as there are different reasons why organisations choose to engage in CSR.

Many organisations have changed from a shareholder perspective to a broader

stakeholder perspective due to globalisation and the increased level of transparency in

society. It is argued that when an organisation turns its attention to a variety of its

stakeholders this will have a positive effect on the organisation’s financial performance.

The shift in perspective necessitates that the organisation addresses the needs and

expectations of several stakeholder groups, and a CSR engagement can be a way for the

organisation to meet these needs and expectations. Another reason clarifying why an

organisation chooses to engage in CSR is the employees. If the organisation is socially

responsible, the employees are more likely to spread positive word-of-mouth and,

furthermore, stay loyal to the organisation. Additionally, a well-prepared CSR engagement

is good for the organisation’s financial performance seen as it has proven to influence the

consumers’ purchase decision in a positive way.

Current trends, such as increasing affluence, changing social expectations and the free

flow of information are also reasons why organisations engage in CSR. Even an

organisational crisis can be a reason why an organisation engages in CSR. The

organisation must, however, consider CSR as a value for the organisation in order to

benefit from a CSR strategy. If the organisation’s CSR engagement is thoroughly

considered, the engagement can be a beneficial long-term investment for the organisation,

and it can improve the relationship between the organisation and its stakeholders. The

organisation’s CSR engagement can further improve current products or create new, and


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along with the improved stakeholder relationship, this can help the organisation gain a

competitive advantage. Additionally, an organisation with a well-prepared CSR

engagement can brand itself as being socially responsible and, thereby, improve the

organisation’s overall brand image. No matter what the organisation’s reasons for

engaging is, it is essential that the CSR engagement is well-embedded in the organisation

and, furthermore, that there is substance in the CSR initiatives.

The second objective for this thesis was to find out how organisations, which engage in

CSR, can communicate their CSR engagement effectively to their stakeholders through

non-financial reports. Morsing and Schultz’s three CSR communication strategies consider

the way in which organisations communicate to their stakeholders. It is, however, the

stakeholder involvement strategy that is most effective in regards to CSR communication

as this strategy involves stakeholders and enables the organisation to appear credible

and, further, work purposively towards meeting the stakeholders’ expectations. However,

communicating to all stakeholders might have the opposite effect of what the organisation

intends and will be a waste of resources. The organisation can, therefore, aim its

communication at key stakeholders and further incorporate their opinions in the

organisation’s non-financial reports to show that it takes the stakeholders’ opinions

seriously. An organisation can also use CSR communication if it faces a crisis. It should,

however, be noted that the organisation needs to have a reputation for being socially

responsible when using CSR in a crisis situation, otherwise, the CSR communication will

appear as simply ‘window dressing’, and the stakeholders will be sceptical and doubt the

organisation’s integrity.

Looking at the case study on Nike, it is apparent that Nike’s attempt to use CSR, when it

faced a crisis in the 1990s, appeared as ‘window dressing’, and Nike’s stakeholders were

sceptical about its intentions because Nike did not have a solid reputation for being

socially responsible. The reason why Nike first engaged in CSR was, thus, because it

wanted to manage the crisis it was facing and regain a positive brand image. After Nike

was met with scepticism from its stakeholders, it took a new progressive approach in

connection with its CSR engagement and today, Nike engages in some of the most

strategic CSR, and brands itself as a socially responsible organisation. It has been

identified that Nike adopts the stakeholder involvement strategy when it communicates


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CSR to its stakeholders. The reason for this is that Nike encourages ongoing dialogues

with its stakeholders and involves them in its CR Report and, further, Nike changes as a

result of the feedback it receives from its stakeholders. The notion of satisfying key

stakeholder groups is apparently not necessary in Nike’s case, as Nike has been able to

aim its CR Report to a very broad group of stakeholders and still be highly successful with

it. Furthermore, Nike has a very transparent approach to its CSR engagement. Nike

publishes comprehensive information about itself and makes this information available to

everyone interested. Finally, Nike increases its credibility by involving its stakeholders,

however, it is important to keep in mind that Nike is the sender of the CR Report and that

Nike would, obviously, not publish anything that would make it appear irresponsible.


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8.3 Websites

• Business Ethics Magazine – http://www.business-ethics.com/node/75

• CR Report 2004 - (Nike’s Corporate Responsibility Report) –

http:www.nikebiz.com/responsibility/documents/Nike_FY04_report.pdf

• CR Report 2005-2006 – http://www.nikebiz.com/responsibility/reporting.html

• Canady (1997) -

http://galenet.galegroup.com.www.baser.dk/servlet/BCRC?lty=2000&locID=arhus&s

rchtp=cmp&lfy=1996&c=2058&cc=1&mode=c&tcp=NIKE&docNum=A150388701&b

Conts=13247&vrsn=unknown&rcp=CO&rsic=PK&ste=72&tab=2&tbst=tsCM&ccmp=

Nike+Inc.&n=25&finalAuth=true

• Goodman Podcast (2009) - http://asbcast.dk/cast/the-triple-bottom-line/

• Nikebiz –

http://nikebiz.com/responsibility/documents/Nike_CRR_Factory_List_C.pdf

• PR News Online (2008) -

http://www.prnewsonline.com/Assets/File/CSRissue_03242008.pdf

• Wright, J. (2009) - http://seekingalpha.com/article/119668-nike-great-global-brand-

even-in-market-downturn

• Young (1997) - Andrew Young: Assessment of Nike’s Code of Conduct –

http://www.calbaptist.edu/dskubik/young.htm#introduction


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9. Appendices

9.1 CD

• Business Ethics Magazine (100 Best Corporate Citizens)

• Canady, 1997 (New York Times article about Andrew Young)

• CR Report 2005-2006 (Nike’s Corporate Responsibility Report)

• Nikebiz.com (List of Nike’s contract factories)

• PR News Online, 2008 (Nike Rewards)

• Wright, 2009 (Nike Rewards)

9.2 List of Figures and Tables

• TABLE 2.1 – Grunig and Hunt’s PR Models

Characteristic

Press Agentry/ Publicity Model

Public Information

Model

Two-Way

Asymmetric Model

Two-Way

Symmetric Model

Purpose

Propaganda

Dissemination of information

Scientific persuasion

Mutual understanding

Nature of

Communication

One-way; complete truth not essential

One-way; truth important

Two-way; imbalanced

effects

Two-way; balanced

effects

Communication Model

Source � Rec.

Source � Rec.

Source � Rec.

Feedback

Group Group

Nature of Research

Little; “counting

house”

Little; readability, readership


of attitudes


of understanding

Leading Historical

Figures

P. T. Barnum

Ivy Lee

Edward L. Bernays

Bernays, educators, professional leaders

Where Practiced

Today

Sports, theatre,

product promotion

Government, non-profit associations, business

Competitive business;

agencies

Regulated business;

agencies

Estimated Percentage

of Organizations Practicing Today

15%

50%

20%

15%


• FIGURE 2.1 – Carroll’s CSR Pyramid

• FIGURE 3.1 – Werther and Chandler’s Two Phases of Globalisation





Globalisation – Phase I


Globalisation – Phase II


Empowered

NGOs

Empowered

consumers

bility – and Communicating It Effectively

CSR Pyramid

Werther and Chandler’s Two Phases of Globalisation





I


II


Empowered

media

Page 60 of 66


Page 61 of 66

• FIGURE 3.2 – Freeman’s Stakeholder Model


Page 62 of 66

• TABLE 4.1 – Morsing and Schultz’s CSR Communication Strategies

The stakeholder

Information strategy

The stakeholder response

strategy

The stakeholder

involvement strategy

Communication ideal:

(Grunig and Hunt, 1984)

Public Information, one-way

communication

Two-way asymmetric

communication

Two-way symmetric

communication

Communition ideal: sensemaking and

sensegiving

Sensegiving

Sensemaking

Sensegiving

Sensemaking

Sensegiving

Stakeholders:

Request more information on

corporate CSR efforts

Must be reassured that the

company is ethical and socially responsible

Co-construct corporate CSR

efforts

Stakeholder role:

Stakeholder influence:

support or oppse

Stakeholder respond to

corporate actions

Stakeholders are involved,

participate and suggest corporate actions

Identification of CSR focus:

Decided by top management

Decided by top management. Investigated in feedback via

opinion polls, dialogue, networks and partnerships

Negotiated concurrently in

interaction with stakeholders

Strategic communication

task:

Inform stakeholders about favourable corporate CSR

decisions and actions

Demonstrate to stakeholders how the company integrates

their concerns

Invite and establish frequent,

systematic and pro-active dialogue with stakeholders,

i.e. opinion makers, corporate critics, the media etc.

Corporate communication:

Design appealing concept

message

Identify relevant stakeholders

Build relationships

Third-party endorsements

of CSR initiatives:

Unnecessary

Integrate elements of surveys, rankings and

opinion polls

Stakeholders are themselves

involved in corporate CSR messages

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