The perception and adoption of corporate social responsibilities

Louise Karlsson Viktor Lindqvist

The perception and adoption of corporate social responsibilities

A case study of Sweden and

South Africa

Business Administration Master’s Thesis

15 ECTS

Term: Spring 2012

Supervisor: Mikael Johnson

Acknowledgment Louise Karlsson & Viktor Lindqvist

Acknowledgment

We would like thank our supervisor Mikael Johnson, who has supported us

and given us valuable guidance throughout the process.

We also want to thank:

Alison Ramsden

Nick Rockey

Bridgit Evans

Carina Glas

Fredrik Ljungdahl

Marianne Bogle

They have contributed to our thesis with rewarding interviews. Without them

we could not have completed this thesis.

Karlstad 2012-06-08

Louise Karlsson Viktor Lindqvist

Abstract Louise Karlsson & Viktor Lindqvist

Abstract

Title The perception and adoption of corporate social

responsibilities

Subtitle A case study of Sweden and South Africa

Author Louise Karlsson & Viktor Lindqvist

Supervisor Mikael Johnson

Subject/Course Business administration, Master thesis, 15 hp

Keywords Corporate social responsibility, corporate governance,

triple bottom line, code of conduct, window dressing,

South Africa, Sweden

Purpose Get a better understanding of the perception of CSR in

Sweden and South Africa and why companies in both

countries adopt CSR in its corporate governance.

Method With inspiration from the hermeneutics, qualitative

interviews have been conducted and relevant theory has

been carefully selected based on an inductive approach.

Empirics Totally six interviews, three from respective country.

Companies and organizations that are represented: CSR

Sweden, Greater Good South Africa, Trialogue South

Africa and PwC.

Theoretical framework Concepts of corporate governance, corporate social

responsibility and the interaction between them.

Conclusion Corporate social responsibility has been integrated in the

way of doing business in South Africa, whereas in

Sweden companies still see it as a sacrifice when

adopting CSR in its corporate governance. The history

and general condition in each country has resulted in that

companies contribution to the society plays a different

role in Sweden and South Africa, which have affected

their perception of the importance of integrating CSR in

corporate governance.

New knowledge PwC’s implementation process

Preamble Louise Karlsson & Viktor Lindqvist

Preamble

When we started our 8th semester, the spring 2012, at Karlstad University, we

did not have much knowledge of corporate governance besides our general

knowledge within business administration. Even less was our knowledge of

corporate social responsibility (CSR). As we studied the course Corporate

Governance in the first half of the spring semester, the section with CSR

caught our attention and especially company’s relation to CSR issues and

above all, that South Africa was one of the leading countries in the world in

this subject. How is it that a developing country like South Africa can be so

great when it comes to integrating CSR into its corporate governance and have

such a developed code of conduct? The course also gave us a critical approach

to CSR; does company’s really care about the society and the environment?

What if we would compare South Africa’s approach towards CSR with

Sweden’s approach to CSR, and try to find if the perception of CSR differ

between two countries as different as Sweden and South Africa.

Table of content Louise Karlsson & Viktor Lindqvist

Table of content

1. Introduction ..................................................................................................................... 4

1.1. Background and problem definition ................................................................... 4

1.2. Research purpose ................................................................................................... 6

1.3. Research question ................................................................................................... 6

1.4. Company Presentations ......................................................................................... 6

1.4.1. CSR Sweden ........................................................................................................ 7

1.4.2. Greater Good, South Africa ............................................................................. 7

1.4.3. Trialogue, South Africa ..................................................................................... 7

1.4.1. PwC ...................................................................................................................... 7

1.5. Delimitations ........................................................................................................... 7

1.6. Disposition .............................................................................................................. 8

2. Methodology .................................................................................................................... 9

2.1. Inductive approach ................................................................................................ 9

2.2. Research design .................................................................................................... 10

2.3. Research strategy .................................................................................................. 11

2.4. The interpretation and analysis process ............................................................ 13

3. Empirical data ................................................................................................................ 16

3.1. What is the perception of CSR in Sweden and South Africa? ....................... 16

3.2. Why do companies adopt CSR in its corporate governance? ........................ 17

3.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical? .......................... 18

4. Theoretical and Conceptual Framework .................................................................... 21

4.1. Corporate Governance ........................................................................................ 21

4.2. Corporate Social Responsibility ......................................................................... 22

4.2.2. CSR in countries with different political cultures ........................................ 24

4.2.3. Corporate Social Investment .......................................................................... 24

4.3. Code of conduct ................................................................................................... 24

4.3.1. UN Global Compact ....................................................................................... 25

4.3.3. South Africa’s King Report on Corporate Governance ............................. 26

4.4. Interaction between corporate governance and CSR ..................................... 27

4.4.1. Triple bottom line ............................................................................................ 27

4.4.3. Implementation barriers .................................................................................. 27

4.5. Black Economic Empowerment ........................................................................ 28

5. Analysis ........................................................................................................................... 29

Table of content Louise Karlsson & Viktor Lindqvist

6. Conclusion ..................................................................................................................... 40

6.1. What is the perception of CSR in Sweden and South Africa? ...................... 40

6.2. Why do companies in Sweden and South Africa adopt CSR in its corporate governance? ....................................................................................................................... 40

6.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical? ......................... 41

6.4. The researchers own reflections ........................................................................ 41

6.5. Further research ................................................................................................... 43

7. The new knowledge...................................................................................................... 44

8. The credibility of the thesis ......................................................................................... 47

Reference List ....................................................................................................................... 49

Appendix 1 - Interview respondents ................................................................................. 53

Introduction Louise Karlsson & Viktor Lindqvist

4

1. Introduction

n introduction wil l be gi ven in this chapter which wil l contain the

research background, problem def init ion, purpose, research questions,

del imitations and disposit ion. There wil l al so be a short presentation of the

represented companies .

1.1. Background and problem definition

Prior to the 20-century corporate governance was much about how to deal

with agency problems within in a company, i.e. between owners and managers.

Maximization of shareholder value was the primary goal for every company

and corporate governance should enable the shareholders to trust managers

with their investments. Stakeholders, environmental and social aspects were

often excluded in the business decision making process and no concerns were

being made for what the operations could cause (Gill 2008).

As a result of several major scandals, such as Enron and WorldCom in the end

of the 1990s’ (Grafström et al. 2008), the debate of corporate governance has

increased, both in the business world and the public society (Gill 2008). The

emphasis on transparency and accountability in corporate governance has

increased, and the company management is required to work with a higher

level of disclosure. The approach to corporate governance has changed and it

is no longer just maximizing shareholder value that is important for the

company managers (Gill 2008).

Today’s business organizations have to consider so much more than just the

best interest of the owner if they want to survive on the market (Sims 2003).

The interrelationship within a company should no longer only imply the board

of directors, managers, and shareholders, but also other stakeholders such as

employees, customers, suppliers, the environment and the community as a

whole (Gill 2008). A good relationship with the stakeholders is essential for a

company’s business (Roberts 2001). Corporate governance is an important

tool in building relationships (Selznick 1996) and getting an understanding of

what the relevant stakeholders want and expect from the company (Roberts

2001).

As the public society is becoming both more involved in the debate of

corporate governance and increasingly aware of the impacts the company’s

activities have on the society and environment, it is not possible for companies

A


5

to separate business from ethics, they have to be interrelated (Selznick 1996).

Roberts (2001) follows Selznick’s (1996) trail and emphasizes that corporate

governance and ethics should be linked together and that it should be a

connection between how a company thinks and how it acts, which should be

reflected in its core values.

The development of corporate social responsibility (CSR) has had an increased

influence on the characterization and implementation of corporate

governance. By adopting CSR in the daily usage of corporate governance,

companies have begun to integrate its goal of maximizing profit with social

and environmental goals (Gill 2008). There is no clear definition what CSR

actually means and many researchers have tried to develop an explanation

what the term actually comprise (Grafström et al. 2008). Enquist et al. (2006 p.

188) defines CSR as “…the voluntary integration of social and environmental concerns

into business operations and interactions with stakeholders”. CSR has also become a

basis within companies for how to treat employees, consumers and

communities (Gill 2008).

However, it can be difficult to distinguish how genuinely a company really is

integrating CSR in its corporate governance (Roberts 2001). Roberts (2001)

addresses “the ethics of narcissus” which implies that the company only wants to

be perceived as ethical by its surroundings which is the opposite of actually

taking responsibility for the effects the company activities has on the

environment and society. When the perception of a company does not match

with the reality regarding the implementation of CSR, it is called window

dressing (Holme 2010).

South Africa is a country that has a turbulent past with decades of racial

segregation back in the 1970’s and 80’s (Mallin 2010). Due to the apartheid

South Africa was effectively excluded from international financial markets’ and

countries from all over the world that had a connection to South Africa

decided to leave the country. When Nelson Mandela became the president of

South Africa in 1992, the social, political and economic climate started to

change within the country. The government stood in front of huge challenges’

in trying to get the country back on track again and get rid of the isolation

from the rest of the world (Alessandri et al. 2011). South Africa's unique

apartheid past has, according to Babarinde (2009), a major impact on the

business sectors approach to CSR. Companies' efforts to help improve access

to health, education and other essential infrastructure for the poor and less

fortunate, who comprise the vast majority of the population, is considered to


6

be important for the future and survival of the business. Companies in South

Africa have begun to view such efforts as a routine, and the associated

expenses as normal costs of doing business, which makes South Africa

prominent when it comes to CSR (Babarinde 2009).

Based on this we want to look into how the perception of CSR can vary

between two countries that are as different as Sweden and South Africa. We

aim to get an understanding if CSR is a strategy that companies genuinely

adopt or if it is just a way for companies to be perceived as ethical by its

surroundings.

1.2. Research purpose

The purpose of this research is to get a better understanding of the perception

of CSR in Sweden and South Africa and why companies in both countries

adopt CSR in its corporate governance.

1.3. Research question

What is the perception of CSR in Sweden and South Africa?

Why do companies in Sweden and South Africa adopt CSR in its

corporate governance?

Is CSR something that companies in Sweden and South Africa

genuinely adopts or is it just a way for companies to be perceived as

ethical?

1.4. Company Presentations

We have interviewed three non-governmental organizations (NGO’s); CSR

Sweden, Greater Good and Trialogue. A NGO is a group of people that, with

a non-profit approach, voluntarily work with questions of human rights,

environmental issues, health, monitoring compliance with policies etc. NGO’s

can be organized on a local, national or international level (NGO Global

Network 2012) and the size of NGO’s can vary from one single person

NGO’s to large organizations such as UNICEF (Unerman and O’Dwyer

2010). In addition we have also interviewed people from PwC in Sweden and

South Africa.


7

1.4.1. CSR Sweden

CSR Sweden is Sweden's leading business network that focuses on corporate

social responsibility and community involvement. Its primary purpose is to

inspire companies with responsibility issues in its work and to encourage the

discussion between businesses and politicians. CSR Sweden does this by

mediating contacts, experience and knowledge between companies and its

stakeholders.

1.4.2. Greater Good, South Africa

Greater Good South Africa is an intermediary organization that works a lot

with corporations and foundations and trying to help them to make good

decisions about how to spend their money, in trying to make change happen

in the country. They connecting givers with good causes and activating the

public to give responsibly. They do everything from strategy work to due

diligence monitoring and evaluation, and sometimes designing interventions.

1.4.3. Trialogue, South Africa

Trialogue is a leading consultancy and publisher, driving the development and

management of knowledge within the sustainability and corporate social

investment arenas. Through its industry handbooks and specialized consulting

services, they strive to be the portal for South Africa’s CSI and sustainable

business practitioners.

1.4.1. PwC

PwC (formerly PricewaterhouseCoopers) is the world's largest accounting and

consulting firm with about 169 000 employees in 158 countries, two of which

are Sweden and South Africa. PwC is considered one of the Big four with

Ernst & Young, KPMG and Deloitte after Arthur Andersen went bankrupt in

the wake of the Enron scandal.

1.5. Delimitations

Our research is delimited to study the perception of CSR in only Sweden and

South Africa. We have also delimited the number of respondents in each

country in our empirical data collection, due to the time limit for this thesis.


8

1.6. Disposition

Introduction Chapter 1

• The introduction contains the research background, problem definition, purpose, research questions, delimitations and disposition. A short company presentation is also presented.

Methodology Chapter 2

• In this capter the research design and strategy is presented along with the interpretation and analysis process which have been inspired by the hermeneutics.

Empirical data Chapter 3

• The empirical data is presented in chapter 3. Each research question is interactively discussed by the respondents.

Theoretical framework Chapter 4

• In this chapter , our theoretical and conceptual framework is presented, where we outline the concept of Corporate Governance and Corporate Social Responsibility and also describe the interaction between the two concepts.

Analysis Chapter 5

• In chapter 5, our analysis of the research questions is presented, where we have integrated the empirical material with the theoretical and conceptual framework.

Discussion and Conclusion Chapter 6

• Our conclusion of the research questions is presented in this chapter, along with our own reflections and recommendations to future research.

The new knowledge Chapter 7

• In order to get a new perspective of companies’ implementation of CSR in their corporate governance, we have studied PwC's implementation process and simultaneously tried to select new relevant theory that can be helpful to achieve an understanding of the process.

The credability of the thesis Chapter 8

• A credibility discussion of the thesis is presented in the final chapter.

Methodology Louise Karlsson & Viktor Lindqvist

9

2. Methodology

n this chapter the research design and strategy wi l l be presented along

with the interpretation and analysi s process which have been inspired by

the hermeneuti cs .



adopt CSR in its corporate governance. Since we had relatively little

knowledge of the subject from the beginning, we had an inductive approach to

the research. In order to get a deeper understanding of the CSR phenomenon,

we chose to have qualitative interviews with three respondents in each country

and were inspired by the hermeneutics interpretation method.

The path to understanding is many times unique, not least because the

researchers individual life stories at the time when the interpretations was

made is of great importance. Everyone has beliefs, prejudices and

preconceived notions that have to be taken into consideration throughout the

entire interpretation process (Faces & Thornberg, 2009). Due to that we have

been inspired by the hermeneutics we started the thesis by writing about our

knowledge and thoughts about the subject that is being studied. The reader

then knows which input values that are included and according to Fejes and

Thornberg (2009) do the researchers get a better picture of and become more

aware of how they may affect the interpretation process.

2.1. Inductive approach

An inductive approach implies that the researcher works on the basis of the

empirical data that will subsequently result in a theory. This approach

theoretically means that the researchers goes out into the world with almost no

expectations, gather all relevant information and finally systematizes the data

that they have received. By not having any preconceptions and expectations,

the researcher can then get empirical data which accurately reflects the reality

in a given context. This would assure that the information is relevant and

accurate (Jacobsen 2002). The theory will then be an outcome of the research

(Andersen 1998). However, modern psychological research has shown that

humans can not completely be without preconceptions about the real world

and that it is impossible to collect all relevant information. The researcher will

thus always undertake delimitation of the information, consciously or

unconsciously. Therefore has a more open inductive approach to data

I


10

collection become more common, which means that the researcher himself

sets limits on what should be collected before the collection begins (Jacobsen

2002). Qualitative methods are inherently open to new, unexpected

information and therefore, the use of such methods is often associated with

more inductive approaches (Bryman & Bell 2003). Justesen and Mik-Meyer

(2011) also emphasizes that it is hardly useful to develop clearly defined

hypotheses which will be verified or falsified, when it comes to studying the

process in an organization where different voices are to be heard. This

supports our choice of an inductive approach in our thesis.

2.2. Research design

The research design provides the researcher with a framework for the

collection and analysis of data (Bryman & Bell 2003). The researcher needs to

choses a design which is most suitable for the research questions. This means

that we decided on if the study would have a wide or an intensive approach

and if the study would be descriptive or explanatory (Jacobsen 2002).

According to Bryman and Bell (2003) are these choices important for the

reliability, replication and validity of the research.

We believe that an intensive approach was the most suitable for our research

questions which, according to Jacobsen (2002) contains a few units and several

variables. The units are most often referred to as people, thus that a few

people are interviewed regarding the research questions, which than results in

many different details, nuances, and variables. The starting point is often to

find all individual variations and differences in the perception of a

phenomenon and at the same time get the similarities. An intensive approach

implies that the researcher wants to get a deeper understanding of the

phenomenon that is being studied. The ideal is to interview many people, but

it is very time consuming and expensive which unfortunately means that a

distinction has to be made (Jacobsen 2002).

Since we have studied PwC and NGO’s in both Sweden and South Africa, we

have performed what Bryman and Bell (2003) refers to as a multiple case

study. This design is used when the researcher at a higher degree wants to

explain and indicate what the cause of a phenomenon is (Jacobsen 2002).

The descriptive approach implies that a researcher wants to gain further

insight on how a phenomena looks like. The explanatory approach entails to

explain why a phenomenon occurred, why something specific happened. Such


11

studies are intended to show the cause and effect of the phenomenon

(Jacobsen 2002). As the purpose of this research is to get a better

understanding of the perception of CSR in Sweden and South Africa and why

companies in both countries adopt CSR in its corporate governance, we had a

mix of descriptive and explanatory approach in our research.

2.3. Research strategy

The research strategy is defined as the general orientation to the conduct of

the research (Bryman & Bell 2003) and our choice of a qualitative research

implies that we focus on a small number of respondents to get a deeper

understanding of the subject. Qualitative research uses methods that are

suitable to describe the phenomena in its context in order to present an

interpretation that provides a better understanding of the phenomenon

(Justesen & Mik-Meyer 2011), which is in line with the purpose of our

research. Bryman and Bell (2003) explains that the qualitative research

emphasizes words rather than collecting numbers, which, according to

Jacobsen (2002), means that data will be collected in the form of words, for

example, through observation, individual interviews or group interviews.

With the intention of investigating specific research questions, the most

common approach of qualitative research is interviews, or more precisely

research-interviews (Justesen & Mik-Meyer 2011). The interview then consists

of a meeting between two or more people where there is some form of

exchange of knowledge (Dalen 2008). In our research we conducted

interviews in the form of two physical meetings, one with Carina Glas at PwC

Sweden and one with Marianne Bogle at CSR Sweden in Stockholm. In

addition, we conducted four telephone interviews with Fredrik Ljungdahl at

PwC Sweden, Alison Ramsden at PwC South Africa, Bridgit Evans at Greater

Good South Africa and Nick Rockey at Trialogue in South Africa. Alvesson

and Sköldberg (2000) stresses that a qualitative research is based on the

respondent’s standpoint and Jacobsen (2002) claims that proximity to the

respondents’ is an important aspect to get an understanding of the

respondents’ perceptions of the situation. The reason why we had four

telephone interviews was that we did not have the time or ability to travel to

South Africa to perform the interview as a physical meeting.

An interview can be more or less structured (Bryman 2008). The three most

common interview structures are unstructured, semi-structured and structured

interviews (Justesen & Mik-Meyer 2011; Bryman 2008). The unstructured


12

interview is, according to Justesen and Mik-Meyer (2011), defined by that it

primary is the respondent who determines the conversation structure and who

controls the conversation. However, one must not let the term “unstructured”

be misleading, an interview inevitably has some form of structure, but the

questions specific structure and sequence are not fixed. The interview can

therefore take a different direction, depending on how the interview goes

(Justesen & Mik-Meyer 2011). Bryman and Bell (2003) defines the semi-

structured interview by that the interviewer works with an interview guide with

themes and key questions that are determined in advance. This type of

interview is not as flexible as the unstructured interview, but there is room for

deviations from the guide if the respondent would bring up unexpected

interesting topics. The semi-structured interview is a method suitable for

research that is working exploratory to generate new knowledge and

simultaneously has a number of pre-selected themes that the interviewer wants

the respondents to reflect on (Bryman & Bell 2003). The structured interview is

defined by that the interviewer in advance has designed an interview guide that

precisely states both the questions and their sequence. In this interview form,

it is thus the interviewer who is in control of the interview (Justesen & Mik-

Meyer 2011).

After some research on each of the three interview methods, we considered

the semi-structured interview to be the most appropriate method for our

research. We chose the semi-structured interview because we have an

inductive approach to our research and we wanted to create opportunities in

the interview for new, unexpected knowledge. At the same time we wanted to

define the research questions before the interview, which become great themes

for the interview guide. We were also keen on getting fairly comparable

empirics since we wanted to compare the results from Sweden and South

Africa, which made the interview guide with themes and key questions perfect

for our research.

Qualitative interviews are time consuming and when a person in a senior

position is to be interviewed it can, since these people are typically very busy,

be difficult to get their attention and do an interview (Bryman & Bell 2003).

We knew from the beginning that it would take time and efforts in getting the

interviews we wanted. First of all we didn’t know at all who was working with

corporate governance and CSR issues at PwC since it essentially is an auditing

firm. We began with contacting the student manager at PwC in Karlstad

through telephone and e-mail and described the purpose and intention with


13

our thesis. The student manager was helpful and gave us names of some

people at PwC in Stockholm (Sweden), Johannesburg and Pretoria (South

Africa) that might be able to help us. After some time we got in contact with

Carina Glas (PwC) in Stockholm. Unfortunately was our timing with the thesis

not the best when it comes to getting contact with auditors since it was the

period when they had the largest workload due to all the annual reports that

had to be done. However, after several phone calls and e-mails we got a time

and date when we could do the interview at her office in Stockholm. When we

were in Stockholm we also managed to get an interview with Marianne Bogle

(CSR Sweden). Unfortunately, we did not accomplish to get a physical meeting

with Fredrik Ljungdahl (PwC) in Stockholm, but after several phone calls we

got a telephone interview with him. Getting the right contact in South Africa

was a bit trickier since we had to be in contact with a number of secretaries

instead of the person we were going to interview, but after several phone calls

and e-mails we finally got a date and time when we could do a telephone

interview with Alison Ramsden (PwC) in Johannesburg, Bridgit Evans

(Greater Good) in Cape Town and Nick Rockey (Trialogue) in Cape Town.

We sent a document to all of our respondents where we described the nature

and purpose with our thesis and how they would contribute to our research,

so that they, at forehand, knew the main theme of the interview, which

Bryman and Bell (2003) consider is a good approach.

2.4. The interpretation and analysis process

Hermeneutics deals with the interpretation, understanding and communication

of the phenomenon which is being studied (Fejes & Thornberg, 2009). The

philosophy behind the hermeneutics is according to Alvesson and Sköldberg

(2000, p. 53) "…the meaning of a part can only be understood if it is related to the

whole". This interpretation process is illustrated by the metaphor of the

hermeneutic circle (Alvesson & Sköldberg 1994) or spiral (Andersen 1998),

which shows the constant commuting between empirics and literature to gain

a deeper understanding of the phenomenon which is being studied (Fejes &

Thornberg, 2009). As the researchers allow themselves to commute between

the parts the spiral drills its way deeper into the understanding (Fejes &

Thornberg, 2009).


14

Figure 1 - The hermeneutic spiral (Fejes & Thornberg 2009 p. 76)

The language plays a central role in the interpretation proceedings, because the

dialogue is the essential implement for the collection of the empirical material

(Andersen 1998). This has been taken into consideration in our research. Due

to that the concept of CSR is complex and has many different definitions, we

have initiated all the qualitative interviews by asking respondents to tell us how

they define the term in order to refrain from any misunderstandings. Andersen

(1998) emphasizes that the consideration of the language contributes to that

the researcher is in on equal basis with the respondent.

During the actual interpretation process, it is important that the researchers

have an open attitude to the empirical material and lets its text speak to the

researchers (Fejes & Thornberg, 2009). Due to that the researchers transcribes

the interviews themselves, the researchers gets a great opportunity to become

familiar with their own data material. Furthermore, it also provides the

opportunity for a special closeness to the interview transcripts, which may

secure the latter analysis process (Dalen 2008). With this in mind, we

transcribed every interview by listening to each recorded interview. In total the

interview transcripts amounted in 48 pages.

The coding of the collected material is an important part of the analysis

process (Dalen 2008). Strauss and Corbin (1990) use the following definition

of coding:

Coding represents the operation by which data are broken down,

conceptualized, and put back together in new ways. It is the central

process by which theories are built from data. (Strauss & Corbin

1990 p. 57)

The coding process runs through several levels, which can be viewed as

different levels of interpretation. The goal is to reach an overall understanding

of the material and thus contribute to the generation of theory about the


15

phenomenon being studied (Dalen 2008). According to Dalen (2008) the

coding process of interview studies look like the following figure:

Figure 2 - Coding process (Dalen 2008 p. 75)

The open coding’s main purpose is to identify concepts that also can be

included in the categories. In axial coding the situation or context is outlined

within which an action takes place; conditions that trigger the action, concrete

responses to the situation and eventually the consequences of those. After the

researcher has found the various categories and analyzed the relationships

between the categories, the goal of the selective coding is to gather all parts in

order to get an understanding of what appears to be central regarding the

phenomenon that is being studied (Dalen 2008). By analyzing the interview

transcripts we tried to find patterns and broke it down into different

categories. Due to the inductive approach in our research and our opened

minds in the interpretation and analysis process we got deeper down in Fejes

and Thornberg’s (2009) spiral towards an understanding. With an open

approach, the researchers can be led in unexpected directions without being

frightened of that the original research questions are exceeded, extended or

supplemented. The researchers should not cover the unexpected or unknown

dimensions which open up in the text (Fejes & Thornberg, 2009). In the final

analysis phase, the researchers try to develop theoretical concepts and models

for an understanding of the current phenomenon (Dalen 2008).

Open coding Axial coding Selective coding Categorization Generalization/

Theorization

Empirical data Louise Karlsson & Viktor Lindqvist

16

3. Empirical data

he empirical data wi l l be presented in chapter 3. Each research

quest ion wil l be interact ively discussed by the respondents. Since the

research i s inspired by the hermeneuti cs, we have distance d us f rom the

respondents by turning the empiri cal materia l into tex ts. The respondents

are presented in appendix 1.

3.1. What is the perception of CSR in Sweden and South Africa?

According to Bogle (2012) CSR means that companies, on its own initiative,

are actively involved in community development. It is a topic that requires

unique expertise in many areas and dealing with CSR-issues demands long-

term thinking (Bogle 2012). Ljungdahl (2012) define CSR somewhere around

the triple bottom line, and states that companies have to capture all the

dimensions of responsibility, have a strategy for it and at the same time be able

to report measurable performance on the dimensions.

Ramsden (2012) discusses the triple bottom line and states that companies are

making the connections between the so called softer issues, which companies

were quite dismissive of before, and the financial bottom line: “…companies

align CSR with business strategy and business risk”. However, CSR is an old-fashion

term according to Ramsden (2012). South Africa developed the concepts

around CSR in more of a moral and ethical issue, as supposed to what South

Africa would call sustainability or sustainable development which is around

long-term viability of an organization (Ramsden 2012).

Rockey (2012), believe that corporate responsibility and integrated reporting is

a broad topic which includes more material issues than CSI, such as

HIV/AIDS-workforce, schools development, and other aspects that are more

aligned with what companies actually do. Evans (2012) explains that CSI is

one part of CSR and means an investment into the community. Due to that

CSI is a part of the BEE, South African companies invest 1 % of after tax

profit into community work (Evans 2012).

Sweden is, according to Bogle (2012), a rich country with for example great

infrastructure, clean water and minimal environmental pollution, and is

relatively spared against any larger issues. Bogle (2012) continues: “In Sweden we

have fallen behind when it comes to adopt CSR in our corporate governance because we have

believed that we are not a part of the problem”. Ljungdahl (2012) explains that

T


17

Sweden has a social system, with high taxes and strong unions, which allows

businesses not to take great social responsibility because the society in general

is taking so much responsibility.

According to Evans (2012) CSR is definitely not a trend and it will always be a

part of the business in South Africa. Evans (2012) continues by explaining the

situation in South Africa:

On every road there is a beggar and in the news every day there is a

reminder of how divided South Africa is. Our unemployment rate

is 25 % and our youth unemployment rate is 39 %. Everyone is

terrified of what will happen if we don’t do something. (Evans

2012)

Ljungdahl (2012) is more pessimistic when it comes to if CSR is a trend. The

CSR trend will go in cycles and during the last 20 years there has been a strong

trend, but it is nothing new because it has existed in all time in business

contexts (Ljungdahl 2012).

Ramsden (2012) stresses that it’s not possible for companies to be successful

without implementing CSR in its business and that CSR is not only important

in South Africa:

When you look at the issues in Europe today and the stock market

in terms of social economic and social political issues it has an

immediately impact on the financial bottom line in many

companies. (Ramsden 2012)

3.2. Why do companies adopt CSR in its corporate governance?

At the time of 1994, there was a need in South Africa to start looking at

environmental issues and subsequently the country also started to look at the

economic issues (Ramsden 2012). Problems and social needs that can exist in

different countries is something that companies have to pay attention to

(Cramer 2006), which Rockey (2012) also discusses and explain that a lot of

the education systems in South Africa needs help and also is help needed to

promote entrepreneurs in businesses.

The South African government is very excited about policies and legislation,

and as the government is a key stakeholder for most companies, it is essential

for companies to work with them and show them that they are on the same

page at the social economic development (Rockey 2012). Ramsden (2012)


18

believe that in terms of sustainability reporting and the triple bottom line,

South African companies were kind of pushed out there because of political

issues. In the aspects of social responsibility, it is legislated and then it got to

be done (Ramsden 2012).

Rockey (2012) believe that companies are recognizing that they are going to be

here for the long hall and therefore they need to focus on activities outside the

company. It is a strong reputation driver in South Africa and it is expected of

the companies from the employees and other stakeholders. Therefore, there

are a lot of companies and a lot of CEO’s that are willing to take a box with

this CSR approach (Rockey 2012).

Ljungdahl (2012) stresses that companies in Sweden are driven by what others

think about them and the business leaders are affected by it. It is about

different driving forces and pressures from various groups in the society,

especially the media are a very strong player (Ljungdahl 2012). According to

Ljungdahl (2012) investors' interest in CSR issues has become increasingly

important, even if it is not quite “mainstream”, and it is a key driver to get

listed companies to work with implementing CSR in its corporate governance.

Bogle (2012) believes that corporations today have become so big and they

operate worldwide on a whole different level than they have before. The

relationship between governments and companies has changed, and in some

countries there are companies that are bigger and stronger than the

government, which have made it difficult for legislations (Bogle 2012). The

balance of power has, according to Bogle (2012), changed and many

companies have found out that they have to take actions, which they did not

have to take before, if the society should be able to work. Astra Zenica is an

example within these issues, they predict that it will be difficult finding labor in

the future due to decreasing interest in these educations, and therefore built a

school in order to attract young people to become engineers (Bogle 2012).

3.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical?

Evans (2012) would not say that window-dressing and green wash is common,

but that it happens. In South Africa it is a real challenge when the executives

of companies just are in it for the public relations and marketing, which is a

rather common usage of the legislated CSI money (1 % after tax), and the

community is secondary in terms of the priorities (Evans 2012). Evans (2012)


19

means that some companies really prioritize government relationships and in

order to win those government relationships they use CSI money to say: “look

what we do for the community, in your community”, so from that point of view

window-dressing happens and it is very negative.

Ramsden (2012) stresses that for companies to be able to genuinely adopt

CSR, they must have a long-term thinking. It has to be integrated, the people

have to understand it and buy in to it. It is always easy to persuade the board

member’s, but the gap is at middle management and operational level where

they can’t see the benefits and therefore they aren’t living the values and aren’t

working towards long-term thinking. Therefore, corporate governance has a

very hectic discussion around behavior, values and corporate culture

(Ramsden 2012). Ramsden (2012) has seen differences in terms of values and

that are that CSR is now being made relevant to the operator.

Ljungdahl (2012) is pessimistic about the general knowledge of CSR in

Swedish companies and emphasizes that many companies do not have a deep

understanding of what CSR is and especially what it means for its business.

According to Ljungdahl (2012), companies’ window-dressing is an image issue

and “…image is important for companies as it can arouse strong emotions around the way

companies behave within CSR”.

Rockey (2012) discusses about the barriers of implementing CSR in

companies’ corporate governance. In many cases CSR is an awareness issue,

awareness of what the benefits are. There are still a lot of people out there that

find CSR as a distraction so it is about getting passionate about it on an

executive level, that’s probably the biggest barrier there ever is. “You still see

people trying to get it through on a middle management position and that don’t work”

(Rockey 2012).

One of the barriers that are preventing companies in Sweden from

implementing CSR in its corporate governance is, according to Ljungdahl

(2012), the incentive structure within companies that rewards the board of

directors. Ljungdahl (2012) stresses that CEO’s will never end with short-term

thinking and start looking at sustainability performance if companies’

remuneration is not connected to long-term goals. If companies are starting to

implement CSR in its corporate governance and are having goals towards

sustainability, the companies will then automatically have more long-term

thinking, because those kinds of goals can’t be reached over a night (Ljungdahl

2012). Ramsden (2012) believe that the economic downturn has changed the


20

way people think, and that although people’s minds are on the media on what

happens today it also makes people consider how things are going to be done

in the future, which increase the long-term thinking.

Bogle (2012) states that some companies in Sweden take CSR-issues seriously

and work a lot with these issues, but even in those companies it’s not

integrated throughout the whole company. The problem is that companies do

not see CSR-activities as a strategy; they only react on something that the

outside world requires (Bogle 2012). Bogle (2012) continues by giving an

example: “Companies join the UN Global Compact because it is considered to be the right

thing to do, but when I ask them why they don’t know”.

Bogle (2012) stresses that it cannot be forgotten that companies are

organizations that operate to earn money. Bogle (2012) resembles companies

as predators and explains that people want them to be as small rabbits that

should be nice to everyone, but the world doesn’t work that way.

Ramsden (2012) states that, in South Africa, people understand very clearly

what CSR is about because they live it every day. Evans (2012) explains that

South Africa is a country where poverty is very evident. It takes 10 minutes to

drive from the wealthiest part of Johannesburg to the poorest and there are

shacks and informal houses everywhere, so people are very well aware of the

context in which they live here (Evans 2012). “The only thing that you might find is

a CEO that doesn’t care, but they all know what is going on” (Evans 2012). Evans

(2012) claims that, in many companies, CSI is becoming a part of the DNA

within the company, a part of the overall strategy.

There should be some nature around the corporate culture and behavior, how

companies live their values and they should have a tone-at-the-top thinking

(Ramsden 2012). Ramsden (2012) mean that it is very easy to put up honesty,

integrity and their most valuable assets, but in terms of corporate governance

you can have everything in theory, but if companies are not living those values,

it doesn’t work (Ramsden 2012). Evans (2012) discuss that it is a broad

spectrum when it comes to if companies are genuinely adopting CSR or not.

South Africa have companies who start schools, who run schools, who

contribute to universities, who help orphans, do economic empowerment

projects, help communities (Evans 2012).

Theoretical and Conceptual Framework Louise Karlsson & Viktor Lindqvist

21

4. Theoretical and Conceptual Framework

n this chapter wi l l our theoreti cal and conceptual framework be

presented, which contains of the concept of Corporate Governance and

Corporate Social Responsibi l i ty and the interact ion between the two

concepts.

4.1. Corporate Governance

Every company is affected by corporate governance in one way or another and

its meaning and implementation has, according to Mallin (2010), changed over

the years. According to Gill (2008 p. 456) corporate governance is known as

“the set of processes, customs, policies, laws and institutions affecting the way in which

corporations is directed, administered or controlled”. But in recent years the definition

has changed from a functional, economic focus on the protection of

shareholders to an orientation that is aimed more at protecting investors and

other stakeholders (Gill 2008). Roberts (2001) emphasizes that corporate

governance and ethics should be linked together and that it should be a

connection between how a company thinks and how it acts, which should be

reflected in its core values.

Wheeler and Thompson (2006) believe that the theories behind corporate

governance and to who boards, directors and managers are responsible are

sharply divided between two groups. One group mean that the company’s

primary duty is to investors since they are the one who owns the company,

and one group emphasizes the importance of a more widely perspective where

all different kind of stakeholders are taken into consideration (Wheeler and

Thompson 2006).

A company that is governed with a shareholder view only concerns about the

owners, which are the shareholders (Andreasson 2011), and making profit is

the only objective that counts (Enquist et al. 2006). It is the shareholders that

determine over its priorities and the generated profit. Conflicts of interest can

easily occur between the owners and the managers (agency conflicts) and these

conflicts need to be solved, often by linking managerial rewards to corporate

performance measured by how the share price is going (Andreasson 2011).

Unlike a company with a shareholder view, a company that is governed with a

stakeholder view sees the company as a part of the society which requires that

it take its responsibility and care for others beyond the owners. All parties that

I


22

are affected by the behavior and performance of the company should be taken

into consideration, including customers, suppliers, employees, local

communities and governments (Andreasson 2011).

De Geer (2009) discusses some of the criticism to corporate governance and

CSR. Critics argue that the board of directors cannot use the company’s profit,

which should be passed on to the shareholders, for any sorts of social or

environmental purpose, how kind-hearted it may be (De Geer 2009).

4.2. Corporate Social Responsibility

There is no clear definition of what CSR actually means but many researchers

have tried to develop an explanation what the term comprise (Grafström et al.

2008). According to Enquist et al. (2006 p.188) CSR can be understood as

“…the voluntary integration of social and environmental concerns into business operations

and interactions with stakeholders”. Gill (2008) emphasizes that CSR is often seen

as a business strategy to make the ultimate goals of corporations more

achievable as well as more transparent, demonstrate responsibility towards

communities and the environment, and take the interests of stakeholders into

account when making long-term business decisions.

According to Grafström et al. (2008) it is today up to every company to make

an interpretation what CSR is all about. Although the most CSR actions are

voluntary and not required by law, companies have started to understand that

the modern society’s belief on CSR activities can be essential to maintain its

social legitimacy. The original business approach, where the maximization of

profits was the only thing that counted, has started to change direction to an

approach where different stakeholders have begun to impose requirements

(Grafström et al. 2008).

The world economy is, according to Soleymani (2010), under transformation.

Advanced development within the modern industry, helped by increased cross

border trade due to lower tariffs and a significant fall of transportation and

communications costs, have made the business market becoming a worldwide

market (Soleymani 2010). Since the competition on the global business market

today is quite tough, companies cannot afford to be publicly criticized due to,

for instance, poor working conditions, violation of human rights or

environmental scandals (Cramer 2006). It is not possible to separate business

from ethics (Enquist et al. 2006) and the industrialized and modern world we

live in, characterized by increased trade between countries, have improved the


23

interrelationship between business and society (Cerne 2008). The

manufacturing of products is often located on one side of the globe and the

consumption on the other so, according to Cerne (2008) what people

consume have consequences for people on the opposite side of the globe. Due

to this development, the debate and demand from the public society has

increased and companies have to pay attention to CSR and take responsibility

for its activities (Cerne 2008).

4.2.1. The Pyramid of Corporate Social Responsibility

Carroll (1991) stresses that CSR can be viewed as four levels of responsibility

components in a pyramid that together constitutes the total CSR; economic,

legal, ethical and philanthropic. The four responsibilities have always existed,

but they occur to different extent in different organizations. Economic and

legal responsibilities have considered being the fundamental guidelines for the

free market system, but as the market is changing, the ethical and

philanthropic responsibilities have received an increasing role in the market

(Carroll 1991).

Figure 3 - The Pyramid of Corporate Social Responsibility (Carroll 1991 p. 42)

Economic responsibilities are the most fundamental of all responsibilities

and consist of profit maximization, company efficiency and maintaining a

competitive position on the market (Carroll 1991).

Legal responsibilities imply that the company should achieve its goals within

the context of the government and the legal system (Carroll 1991).

Ethical responsibilities go beyond the economic and legal responsibilities

and towards integrity and ethical behavior. Societal mores and ethical norms

should be taken into account and the company has to recognize the society’s

Philantropical

Ethical

Legal

Economic


24

norms, which can be a challenge for managers and executives due to the

constant change of the society (Carroll 1991).

Philanthropic responsibilities are at the top of the pyramid and contain

voluntary and unexpected actions, in an ethical or moral sense, which makes

the company a good corporate citizen. The society needs companies that

donate its time and money, but the society doesn’t perceive the companies

unethical if they don’t (Carroll 1991).

4.2.2. CSR in countries with different political cultures

The globalization has opened many doors, and countries from all around the

globe are today a part of the business market. Due to that countries are

different in many ways, it is important to remember that every country has its

own perception of CSR. Depending on how the situation in a country looks

like, the approach to CSR will be more or less important. The political culture

and the social situation within a country frequently play a large role in what to

expect from companies concerning CSR (Cramer 2006).

4.2.3. Corporate Social Investment

Corporate Social Investment (CSI) is a South African phenomenon of the

activities that companies contribute to the community. The concept arose

during the apartheid era and was considered necessary to survive on the

international market when South Africa's politic was critical. As the

globalization is putting pressure on governments to provide comprehensive

social services, the focus has been more on what companies are contributing

in this area. However, opinions range from those who believe that CSR and

CSI contributes to positive social change, while benefiting from participating

companies themselves, to those who claim that participation only is a

distraction from profit maximization (Ndhlovu 2011).

4.3. Code of conduct

Culture, laws, ownership structure, corporate governance structure and stage

of development are all factors that make countries different from each other.

Although, something that is relevant for every country is corporate

governance and by developing a corporate governance code, countries can be

able to build confidence in their stock markets, improve transparency and

disclosure, and also ensure that companies take both the shareholders and

stakeholders interest into consideration (Mallin 2010). Andreasson (2011)


25

mean that a good corporate governance code is very important for emerging

markets, if they want to compete with the more established markets over

potential investors.

Due to the globalization, companies are growing larger and larger and enter

additional markets in developing countries. This have led to that companies in

some countries have so much economic power that they outplays the political

power in the single country. Therefore, concerns have been raised about how

multinational companies should be able to have control over its operations in

every single country and what impact they have on each country. To prevent

unethical behavior, some organizations such as UN Global Compact and The

Organization for Economic Co-Operation and Development (OECD) have

set up guidelines that companies can adapt to. These guidelines are so far

voluntary and it is up to every single company if they want to comply with

them or not (Laczniak & Kennedy 2011). Laczniak and Kennedy (2011)

believes that companies have to decide if they should have one global code of

conduct that should be adopted in every country or if they should create one

single code for every country they operate in.

4.3.1. UN Global Compact

The UN Global Compact is a voluntary membership for companies in the

private sector, whereby the company is then committed to aligning its business

and strategies with the Global Compact's ten principles that include human

rights, labor, environment and anti-corruption (UN Global Compact 2011).

However, Hamann et al. (2009) found something unexpected in their research

in business and human rights in South Africa. They analyzed the top 100 listed

companies on the Johannes Stock Exchange in order to get an understanding

of how and why companies consider human rights. What they found out was

that a membership in the UN Global Compact and sector and size of

companies had insignificant impact on the company’s involvement on human

rights. It was rather explicit leadership commitment and company policy,

government regulations, such as the Black Economic Empowerment and

Employment Practices, and stock exchange listing rules that had the most

impact of the company’s participation in human rights (Hamann et al. 2009).

4.3.2. The Swedish corporate governance code

The Swedish corporate governance code (Svensk kod för bolagsstyrning) was

introduced in year 2005 and revised 1 February 2010 (Swedish Corporate


26

Governance Board 2012a). The Swedish corporate governance code is

devoted to improve corporate governance within Swedish listed companies.

The code is a part of the corporate self-regulation and is a complement to the

Swedish Companies Act as it raises the standards for what is regarded as good

corporate governance (Swedish Corporate Governance Board 2012b).

According to the Swedish Corporate Governance Board (2012b), good

corporate governance implies that the company operates in line with the

owners' interests. Good corporate governance will then gain the public trust in

the companies which contributes to increased confidence in the Swedish

market, internationally (Swedish Corporate Governance Board 2012b).

4.3.3. South Africa’s King Report on Corporate Governance

Since South Africa is an emerging market under development, and with a

turbulent past it is a country with different needs and demands in comparison

to more developed countries. During the apartheid there was a need for a

corporate governance system that could build confidence in the financial

market in order to attract international investors, which subsequently would

enhance the economic growth in the country. The first King report, King I,

was released in 1994, the second King report, King II, was presented in 2002

(West 2009), and the current King report, King III was released in 2009 (King

2009).

King III emphasizes the importance for companies to conduct Integrated

Reporting. This means that companies should put its financial reports in

relation to how the company affects the community, both positively and

negatively. It should also explain what the company tends to do in the future

to reduce the negative effects and increase the positive effects it has on the

society (King 2009).

Sustainability has become an international issue of growing importance during

the 21th century. For a company to undertake sustainable actions, King III

emphasizes that it is essential for the company to undertake long-term

perspectives and good relations with its stakeholders, and attain its ethical,

social and environmental responsibilities. The awareness of sustainable issues

is not enough; the company must conduct a fundamental transformation of its

corporate structure and operations in order to accomplish a genuine

transformation towards sustainability. Due to that strategy, risk, performance,

and sustainability has become inseparable, the board must fully take on the


27

importance of integrated sustainability performance and reporting (King

2009).

4.4. Interaction between corporate governance and CSR

4.4.1. Triple bottom line

Today we think in terms of a “triple bottom line,” focusing on

economic prosperity, environmental quality, and – the element

which business had preferred to overlook – social justice.

(Elkington 1999 p.70)

By looking at and including aspects such as human rights, workers’ rights and

environmental protection companies have discovered that they can meet

different stakeholders’ interest but still achieve profit maximization (Gill

2008). Elkington (1999 p.12) explains the importance of corporate governance

in the work towards a sustainable business market with an approach to the

triple bottom line: “The better the system of corporate governance, the greater the chance

that we can build towards genuinely sustainable capitalism”.

4.4.2. The ethics of narcissus

As mentioned in the background, Roberts (2001) addresses “the ethics of

narcissus” which emphasizes that companies only have a desire to be

perceived as ethical, which is considered to be the contrary of actually being

ethical. Due to the importance of others perception of the company, its

corporate governance is characterized by a narcissistic obsession with the

company itself. A distorted self-image derived from that the company’s

desired image is what it identifies itself with, becomes a crucial part of the

corporate governance (Roberts 2001). When the perception of a company

does not match with the reality regarding the implementation of CSR, it is

called window dressing or green wash (Holme 2010).

4.4.3. Implementation barriers

Garavan et al. (2010) addresses several different types of barriers for

companies when it comes to adopt and implement CSR and corporate

sustainability. Two of them are individual and organizational barriers:

Individual barrier depends on how the employees react to CSR

initiatives. Knowledge and awareness about what CSR and

sustainability means and how they perceive that the organization


28

support these issues is two examples of individual barriers that can

complicate the implementation of these kinds of questions (Garavan et

al. 2010).

The organizational barrier depends more on the culture within the

organization. It can be reward systems or the degree of internal

communication that can affect CSR and sustainability implementation

(Garavan et al. 2010).

4.5. Black Economic Empowerment

During the apartheid almost every company in South Africa was owned by

white investors and the black people lived under constant oppression.

Therefore, the government raised the program Black Economic

Empowerment (BEE) which should encourage companies to sell its equity to

black investors and increase black ownership. Companies that complied with

the BEE and took its responsibility got rewarded in form of preferential

contracts from the government and an increased social legitimacy (Alessandri

et al. 2011). BEE is essentially a growth strategy that targets the South African

economy's weakest point: inequality (South Africa 2012). Alessandri et al.

(2011) believes that BEE actions have become a CSR strategy for companies

to signaling that they are committed and care about social needs.

Analysis Louise Karlsson & Viktor Lindqvist

29

5. Analysis

n chapter 5 wil l our analysi s of the research questions be presented,

where we have integrated the empir ical material with the theoreti cal and

conceptual framework.

We went in to this thesis with the hope of sorting out what CSR is all about

and how the perception of this phenomenon can differ between two as

different countries as Sweden and South Africa. The course Corporate

Governance, which we studied in the beginning of the spring semester 2012,

had aroused our interest. Especially South Africa had caught our interest and

we wanted to look deeper into how they perceive CSR and compare it with the

Swedish perception of it. What does CSR actually mean and how is it related

to corporate governance? Already in an early stage, we found out how

complex this phenomenon is and how the perception of CSR can differ

depending on whom you speak to. Every time we opened a new book, read a

new article or conducted a new interview we got a new insight in what CSR is

all about. The commuting between reading literature and having a

conversation with, for instance, a person that was a part of the King

Committee and has worked in the field for over 20 years, enables us to get

closer to an understanding of the phenomenon CSR. This commuting is in

line with Fejes and Thornberg’s (2009) spiral metaphor. In the literature, the

researchers can obtain knowledge that deepens and strengthens, but also

challenges the interpretation work. Scientific theory is an essential aid in the

interpretation process as manifested by the hermeneutical spiral mentioned

above (Fejes & Thornberg, 2009).

What is the perception of CSR in Sweden and South Africa?

There is no clear definition what CSR actually means and many researchers

have tried to develop an explanation what the term actually comprise

(Grafström et al. 2008). The globalization has open many doors’ and countries

from all around the globe are today a part of the business market. Due to that

countries are different in many ways it is important to remember that every

country has their own perception of CSR (Cramer 2006). According to

Enquist et al. (2006 p. 188) CSR can be understood as “…the voluntary

integration of social and environmental concerns into business operations and interactions

with stakeholders”. CSR means, according to Bogle (2012), that companies, on its

own initiative, are actively involved in community development. It is a topic

that requires unique expertise in many areas and dealing with CSR-issues

I


30

demands long-term thinking (Bogle 2012). Grafström et al. (2008) emphasizes

that it is today up to every company to make an interpretation what CSR is all

about. Although the most CSR actions are voluntary and not required by law,

companies have started to understand that compliance with the modern

society’s belief on CSR activities can be essential to maintain its social

legitimacy (Grafström et al. 2008).

Ljungdahl (2012) define CSR somewhere around the triple bottom line, and

states that companies have to capture all the dimensions of responsibility, have

a strategy for it and at the same time they have to be able to report measurable

performance on the dimensions.

Today we think in terms of a “triple bottom line,” focusing on

economic prosperity, environmental quality, and – the element

which business had preferred to overlook – social justice.

(Elkington 1999 p.70)

Ramsden (2012) discusses the triple bottom line and states that companies are

making the connections between the so called softer issues, which companies

were quite dismissive of before, and the financial bottom line: “…companies

align CSR with business strategy and business risk”. By looking at and including

aspects such as human rights, workers’ rights and environmental protection

companies have discovered that they can meet different stakeholders’ interest

but still achieve profit maximization (Gill 2008). Elkington (1999 p.12)

explains the importance of corporate governance in the work towards a

sustainable business market with an approach to the triple bottom line: “The

better the system of corporate governance, the greater the chance that we can build towards

genuinely sustainable capitalism”.

However, CSR is an old-fashion term according to Ramsden (2012). South

Africa developed the concepts around CSR in more of a moral and ethical

issue, as supposed to what South Africa would call sustainability or sustainable

development which is around long-term viability of an organization (Ramsden

2012). Corporate responsibility and integrated reporting is, according to

Rockey (2012), a broad topic which includes more material issues than CSI,

such as HIV/AIDS-workforce, schools development, and other aspects that

are more aligned with what companies actually do. Evans (2012) explains that

CSI is one part of CSR and means an investment into the community.

Ndhlovu (2011) stresses that CSI is a South African phenomenon that imply

the activities which companies do as a contribution to the community. The


31

concept arose during the apartheid era and was considered necessary to

survive on the international market when South Africa's politic was critical

(Ndhlovu 2011). Due to that CSI is a part of the BEE, South African

companies invest 1 % of after tax profit into community work (Evans 2012).

BEE is essentially a growth strategy that targets the South African economy's

weakest point: inequality (South Africa 2012) Alessandri et al. (2011) believes

that BEE actions have become a CSR strategy for companies to signaling that

they are committed and care about social needs.

Sweden is, according to Bogle (2012), a rich country with for example great

infrastructure, clean water and minimal environmental pollution, and is

relatively spared against any larger issues. Bogle (2012) continues “In Sweden we

have fallen behind when it comes to adopt CSR in our corporate governance because we have

believed that we are not a part of the problem”. Ljungdahl (2012) explains that

Sweden has a social system, with high taxes and strong unions, which allows

businesses not to take great social responsibility because the society in general

is taking so much responsibility.

According to Evans (2012) CSR is definitely not a trend and it will always be a

part of the business in South Africa. Evans (2012) continues by explaining the

situation in South Africa:

On every road there is a beggar and in the news every day there is a

reminder of how divided South Africa is. Our unemployment rate

is 25 % and our youth unemployment rate is 39 %. Everyone is

terrified of what will happen if we don’t do something. (Evans

2012)

Depending on how the situation in a country looks like, the approach to CSR

will be more or less important. The political culture and the social situation

within a country do often play a large role in what to expect from companies

concerning CSR (Cramer 2006). Since South Africa is an emerging market

under development, and with a turbulent past it is a country with different

needs and demands in comparison to more developed countries (West 2009).

Ramsden (2012) stresses that it’s not possible for companies to be successful

without implementing CSR in its business. According to Ramsden (2012) CSR

is not only important in South Africa and discusses Europe's economic

condition:


32

When you look at the issues in Europe today and the stock market

in terms of social economic and social political issues it has an

immediately impact on the financial bottom line in many

companies. (Ramsden 2012)

Ljungdahl (2012) is more pessimistic when it comes to if CSR is a trend. The

CSR trend will go in cycles and during the last 20 years there has been a strong

trend, but it is nothing new because it has existed in all time in business

contexts (Ljungdahl 2012).

According to Laczniak and Kennedy (2011), concerns have been raised about

how multinational companies should be able to have control over its

operations in every single country and what impact they have on each country.

To prevent unethical behavior, some organizations have set up guidelines

globally that companies can adapt to. These guidelines are so far voluntary and

it is up to every single company if they want to comply with them or not

(Laczniak & Kennedy 2011). Laczniak and Kennedy (2011) believes that

companies have to decide if they should have one global code of conduct that

should be adopted in every country or if they should create one single code for

every country they operate in. PwC is an international firm but Ramsden

(2012) explains that it is very consistent across all countries. “We are quite highly

connected so you won’t see major differences in philosophy or in policy and practice, it is fairly

similar” (Ramsden 2012).

Why do companies adopt CSR in its corporate governance?

At the time of 1994, there was a need in South Africa to start looking at

environmental issues (Ramsden 2012). Subsequently, Ramsden (2012) mean

that the country also started looking at the economic issues. Problems and

social needs that can exist in different countries is something that companies

have to pay attention to (Cramer 2006), which Rockey (2012) also discusses

and explain that a lot of the education systems in South Africa needs help and

also is help needed to promote entrepreneurs in businesses.

As the globalization is putting pressure on governments to provide

comprehensive social services, the focus has been more on what companies

are contributing in this area (Ndhlovu 2011). Ramsden (2012) believes that in

terms of sustainability reporting and the triple bottom line, South African

companies were kind of pushed out there because of political issues. In the

aspects of social responsibility, it is legislated and then it got to be done


33

(Ramsden 2012). Carroll (1991) should have called that the legal

responsibilities, which imply that the company should achieve its goals within

the context of the government and the legal system.

The South African government is very excited about policies and legislation,

and as the government is a key stakeholder for most companies, it is essential

for companies to work with them and show them that they are on the same

page at the social economic development (Rockey 2012). Companies that

comply with the BEE and take its responsibility get rewarded in form of

preferential contracts from the government and an increased social legitimacy

(Alessandri et al. 2011).

Rockey (2012) believes that companies are recognizing that they are going to

be here for the long hall and therefore they need to focus on activities outside

the company. It is a strong reputation driver in South Africa and it is expected

of the companies from the employees and other stakeholders (Rockey 2012).

Wheeler and Thompson (2006) believe that the theories behind corporate

governance and to who boards, directors and managers are responsible are

sharply divided between two groups. One group that consists of practitioners

and academics that means that the company’s primary duty is to investors

since they are the one who owns the company, and one group that emphasize

the importance of a more widely perspective where all different kind of

stakeholders are taken into consideration (Wheeler and Thompson 2006).

Unlike a company with a shareholder view, Andreasson (2011) mean that a

company that is governed with a stakeholder view sees the company as a part

of the society which requires that it take its responsibility and care for others

beyond the owners. Rockey (2012) believe that there are a lot of companies

and a lot of CEO’s that are willing to take a box with this approach. Critics

argue that the board of directors cannot use a company’s profit, which should

be passed on to the shareholders, for any sorts of social or environmental

purpose, how kind-hearted it may be (De Geer 2009). Opinions range from

those who believe that CSR and CSI contributes to positive social change,

while benefiting from participating companies themselves, to those who claim

that participation only is a distraction from profit maximization (Ndhlovu

2011).

Ljungdahl (2012) stresses that companies are driven by what others think

about them and the business leaders are affected by it. It is about different

driving forces and pressures from various groups in the society, especially the


34

media are a very strong player (Ljungdahl 2012). According to Ljungdahl

(2012) investors' interest in CSR issues has become increasingly important,

even if it is not quite “mainstream”, and it is a key driver to get listed

companies to work with implementing CSR in its corporate governance. Like

Enquist et al. (2006) are discussing, it is not possible to separate business from

ethics. Since the competition on the global business market today is quite

tough, companies cannot afford to be publicly criticized because of poor

working conditions, violation of human rights or environmental scandals

(Cramer 2006). The industrialized and modern world we live in, characterized

by increased trade between countries, has improved the interrelationship

between business and society. The manufacturing of products is often located

on one side of the globe and the consumption on the other, so what people

consume may thus have consequences for people on the opposite side of the

globe. Due to this development, the debate and demand from the public

society has increased and companies have to pay attention to CSR and take

responsibility for its activities (Cerne 2008).

The world economy is, according to Soleymani (2010), under transformation.

Advanced development within the modern industry, helped by increased cross

border trade due to lower tariffs and a significant fall of transportation and

communications costs, have made the business market becoming a worldwide

market (Soleymani 2010). Bogle (2012) believes that corporations today have

become so big and they operate worldwide on a whole different level than

they have before. The relationship between governments and companies has

changed, and in some countries there are companies that are bigger and

stronger than the government, which have made it difficult for legislations

(Bogle 2012). The balance of power has, according to Bogle (2012), changed

and many companies have found out that they have to take actions, which

they did not have to take before, if the society should be able to work. Astra

Zenica is an example within these issues, they predict that it will be difficult

finding labour in the future due to decreasing interest in these educations, and

therefore built a school in order to attract young people to become engineers

(Bogle 2012). Laczniak & Kennedy (2011) also talks about the development of

the globalization and stresses that due to the globalization, companies are

growing larger and larger and enter additional markets in developing countries.

This have led to that companies in some countries have so much economic

power that they outplays the political power in the single country (Laczniak &

Kennedy 2011).


35

Is CSR something that companies in Sweden and South Africa

genuinely adopts or is it just a way for companies to be perceived as

ethical?

Evans (2012) would not say that window-dressing and green wash is common,

but that it happens. When the perception of a company does not match with

the reality regarding the implementation of CSR, it is called window dressing

or green wash (Holme 2010). In South Africa it is a real challenge when the

executives of companies just are in it for the public relations and marketing,

which is a rather common usage of the legislated CSI money (1 % after tax),

and the community is secondary in terms of the priorities (Evans 2012).

Roberts (2001) addresses “the ethics of narcissus” which emphasizes that

companies only have a desire to be perceived as ethical, which is considered to

be the contrary of actually being ethical. Evans (2012) mean that some

companies really prioritizes government relationships and in order to win

those government relationships they use CSI money to say: “look what we do for

the community, in your community”, so from that point of view window-dressing

happens and it is very negative.

Ramsden (2012) stresses that for companies must have a long-term thinking to

be able to genuinely adopt CSR. According to King III, sustainability has

become an international issue of growing importance during the 21th century

(King 2009). For a company to undertake sustainable actions, King III

emphasizes that it is essential for the company to undertake long-term

perspectives and good relations with its stakeholders, and attain its ethical,

social and environmental responsibilities. The awareness of sustainable issues

is not enough; the company must conduct a fundamental transformation of its

corporate structure and operations in order to accomplish a genuine

transformation towards sustainability (King 2009). Ramsden (2012) has seen

differences in terms of values and that are that CSR is now being made

relevant to the operator.

It has to be integrated, the people have to understand it and buy in

to it. It is always easy to persuade the board member’s, but the gap

is at middle management and operational level where they can’t see

the benefits and therefore they aren’t living the values and aren’t

working towards long-term thinking. Therefore, corporate

governance has a very hectic discussion around behavior, values

and corporate culture. (Ramsden 2012)


36

Due to that strategy, risk, performance, and sustainability has become

inseparable, the board must fully take on the importance of integrated

sustainability performance and reporting (King 2009).

Ljungdahl (2012) is pessimistic about the general knowledge of CSR in

Swedish companies and emphasizes that many companies do not have a deep

understanding of what CSR is and especially what it means for its business.

According to Ljungdahl (2012), companies’ window-dressing is an image issue

and “…image is important for companies as it can arouse strong emotions around the way

companies behave within CSR”. Roberts (2001) addresses “the ethics of narcissus”

in his article and states that due to the importance of others perception of the

company, its corporate governance is characterized by a narcissistic obsession

with the company itself. A distorted self-image derived from that the

company’s desired image is what it identifies itself with, becomes a crucial part

of the corporate governance (Roberts 2001).

Rockey (2012) discusses about the barriers of implementing CSR in

companies’ corporate governance. In many cases CSR is an awareness issue,

awareness of what the benefits are. There are still a lot of people out there that

find CSR as a distraction so it is about getting passionate about it on an

executive level, that’s probably the biggest barrier there ever is. “You still see

people trying to get it through on a middle management position and that don’t work”

(Rockey 2012). Garavan et al. (2010) believes that individual barriers depend

on how the employees react to CSR initiatives. Knowledge and awareness

about what CSR and sustainability means and how employees perceive that the

organization support these issues is two examples of individual barriers that

can complicate the implementation of these kinds of questions (Garavan et al.

2010).

According to Garavan et al. (2010) organizational barriers depend on the

culture within the organization. It can be reward systems or the degree of

internal communication that can affect CSR and sustainability implementation

(Garavan et al. 2010). One of the barriers that are preventing companies from

implementing CSR in its corporate governance is, according to Ljungdahl

(2012), the incentive structure within companies that rewards the board of

directors. Companies who have a shareholder view have conflicts of interest

between the owners and the managers (agency conflicts) and these conflicts

are often being solved by linking managerial rewards to corporate performance

measured by how the share price is going (Andreasson 2011). Ljungdahl

(2012) stresses that if companies’ remuneration is not connected to long-term


37

goals, CEO’s will never end with short-term thinking and start looking at

sustainability performance.

If companies are starting to implement CSR in its corporate

governance and are having goals towards sustainability, the

companies will then automatically have more long-term thinking,

because those kinds of goals can’t be reached over a night.

(Ljungdahl 2012)

Bogle (2012) states that some companies in Sweden take CSR-issues seriously

and work a lot with these issues, but even in those companies it’s not

integrated throughout the whole company. The problem is that companies do

not see CSR-activities as a strategy; they only react on something that the

outside world requires (Bogle 2012). Bogle (2012) continues by giving an

example: “Companies join the UN Global Compact because it is considered to be the right

thing to do, but when I ask them why they don’t know”. In Hamann et al.’s (2009)

research in business and human rights in South Africa, the researchers found

out that a membership in the UN Global Compact had insignificant impact on

the company’s involvement on human rights. It was rather explicit leadership

commitment and company policy, government regulations, and stock

exchange listing rules that had the most impact of the company’s participation

in human rights (Hamann et al. 2009).

In both Sweden and South Africa is each countries code of conduct a stock

exchange listing rule (Swedish corporate governance board 2012a; Hanks &

Gardiner (2012). According to the Swedish corporate governance code, good

corporate governance implies that companies operate in line with the owners'

best interests. Good corporate governance will then gain the public trust in the

companies which contributes to increased confidence in the Swedish market

internationally (Swedish Corporate Governance Board 2012b). The King III,

emphasizes the importance for companies to adopt to integrated reporting

annually. This means that companies should put its financial reports in relation

to how the company affects the community, both positively and negatively. It

should also explain what the company tends to do in the future to reduce the

negative effects and increase the positive effects it has on the society (King

2009).

Bogle (2012) stresses that it cannot be forgotten that companies are

organizations that operate to earn money. This is in line with what Carroll

(1991) define as the economic responsibilities, which consist of maximizing


38

the profitability of the company and make as much money as possible. Bogle

(2012) resembles companies as predators and explains that people want them

to be as small rabbits that should be nice to everyone, but the world doesn’t

work that way.

Ramsden (2012) states that, in South Africa, people understand very clearly

what CSR is about because they live it every day. Evans (2012) explains that

South Africa is a country where poverty is very evident. It takes 10 minutes to

drive from the wealthiest part of Johannesburg to the poorest and there are

shacks and informal houses everywhere, so people are very well aware of the

context in which they live here (Evans 2012). “The only thing that you might find is

a CEO that doesn’t care, but they all know what is going on” (Evans 2012). Evans

(2012) claims that, in many companies, CSI is becoming a part of the DNA in

the company, a part of the overall strategy. According to Gill (2008) is CSR

often seen as a business strategy to make the ultimate goals of corporations

more achievable as well as more transparent, demonstrate responsibility

towards communities and the environment, and take the interests of groups

such as employees and consumers into account when making long-term

business decisions.

There should be some nature around the corporate culture and behavior, how

companies live their values and they should have a tone-at-the-top thinking

(Ramsden 2012). Ramsden (2012) mean that it is very easy to put up honesty,

integrity and their most valuable assets, but in terms of corporate governance

you can have everything in theory, but if companies are not living those values,

it doesn’t work. Roberts (2001) emphasizes that corporate governance and

ethics should be linked together and that it should be a connection between

how a company thinks and how it acts, which should be reflected in its core

values.

Ramsden (2012) believe that the economic downturn has changed the way

people think, and that although people’s minds are on the media on what

happens today it also makes people consider how things are going to be done

in the future, which increase the long-term thinking. Culture, laws, ownership

structure, corporate governance structure and stage of development are,

according to Mallin (2010), all factors that make countries different from each

other. Although, something that is relevant for every country is corporate

governance and by developing a corporate governance code, countries can be

able to build confidence in their stock markets, improve transparency and

disclosure, and ensure that companies take both shareholder’s and


39

stakeholder’s interest into consideration (Mallin 2010). Andreasson (2011)

mean that a good corporate governance code is very important for emerging

markets, if they want to compete with the more established markets over

potential investors.

Evans (2012) discuss that it is a broad spectrum when it comes to if

companies are genuinely adopting CSR or not. South Africa have companies

who start schools, who run schools, who contribute to universities, who help

orphans, do economic empowerment projects, help communities (Evans

2012). This is in line with the highest stage on Carroll’s (1991) pyramid of

CSR, which are Philanthropic responsibilities. The top of the pyramid contain

voluntary and unexpected actions, in an ethical or moral sense, which makes

the company a good corporate citizen. The society needs companies that

donate its time and money, but the society doesn’t perceive the companies

unethical if they don’t (Carroll 1991).

Conclusion Louise Karlsson & Viktor Lindqvist

40

6. Conclusion

n this chapter wil l our conclusion of the resea rch quest ions be presented.

We wil l al so present our own ref l ect ions and recommendations to future

research.

6.1. What is the perception of CSR in Sweden and South Africa?

It is not an understatement to say that CSR is a phenomenon that is a hot

topic in both South Africa and Sweden. The perception of what CSR is all

about is quite similar between the two countries. Both Ljungdahl (2012) and

Ramsden (2012) define CSR around Elkington’s (1999) “triple bottom line”,

where environmental, social and economic aspects are taken into account.

However, as Cramer (2006) is discussing, the perception of CSR depends on

how the situation in a country looks like. In South Africa, companies see CSR

activities as a strategy that is necessary for survival due to that the country is

dependent on companies’ contribution to the society. It has become an

essential part of doing business in South Africa. Swedish companies view

Sweden as a rich country and often perceive CSR as more of a temporary

strategy to satisfy stakeholders rather than a need for survival. Swedish

companies have, according to Bogle (2012), fallen behind when it comes to

adapting CSR in their corporate governance, because they believe that they are

not a part of the problem. Ramsden (2012) stresses that CSR is not only

important for countries such as South Africa, it is central to all countries.

6.2. Why do companies in Sweden and South Africa adopt CSR in its corporate governance?

It is not possible to separate business from ethics (Enquist et al. 2006). It is

inevitable that South Africa is affected by the apartheid era; the government

has through the BEE included CSR in the way South African companies are

doing the everyday business. It is a strong reputation driver and, according to

Rocky (2012), companies in South Africa stand apart if they do not take

responsibility. Ljungdahl (2012) states that Swedish companies are driven by

what other thinks about them and as the pressure from various groups in the

society increases, CSR issues has become increasingly important. Due to the

interrelationship between business and society the debate and demand from

the public society has increased and companies have to pay attention to CSR

(Cerne 2008). Companies today are becoming larger and larger, and many

I


41

companies have found out that they have to take actions which they did not

have to take before if the society should be able to work (Bogle 2012).

6.3. Is CSR something that companies in Sweden and South Africa genuinely adopts or is it just a way for companies to be perceived as ethical?

When the perception of a company does not match with the reality regarding

the implementation of CSR, it is called window dressing or green wash

(Holme 2010) and there is no doubt that window dressing occurs in both

Sweden and South Africa. The difference is that in South Africa companies are

obligated to invest in CSR activities, or what they call CSI, but in Sweden CSR

has more of a voluntary approach. As long as media do not have an eye on a

company in Sweden, we have got the perception, that Swedish companies

usually do not bother getting involved in CSR issues. Roberts (2001) addresses

“the ethics of narcissus” which emphasizes that companies only have a desire

to be perceived as ethical, which is considered to be the contrary of actually

being ethical.

The awareness issue of the benefits with implementing CSR as a strategy is

common both in Sweden and South Africa, as well as the lack of CSR

knowledge within companies (Rockey 2012; Bogle 2012). Roberts (2001)

emphasizes that corporate governance and ethics should be linked together

and that it should be a connection between how a company thinks and how it

acts, which should be reflected in its core values. Ramsden (2012) mean that it

is very easy to put up honesty, integrity and their most valuable assets, but in

terms of corporate governance you can have everything in theory, but if

companies are not living those values, it doesn’t work.

6.4. The researchers own reflections

After months of work, inspired by the hermeneutics, we wish to express our

own reflections on the phenomenon of CSR. We have come a long way

toward an understanding, but it's still a long road ahead in this complex

concept.

Sweden and South Africa are two completely different countries with different

history and general conditions. In the comparison between the two countries’

perception and adoption of CSR we have been inspired by Carroll’s (1991)

pyramid of CSR with the four levels of responsibilities; economic, legal,

ethical, and philanthropic.


42

Due to that South Africa has developed the BEE, they have correlated the

legal and ethical responsibilities. The society in South Africa is dependent on

the contributions from companies and is therefore also expecting it to a

greater extent, which can make it harder for companies in South Africa to

fulfill the philanthropic responsibilities.

Figure 4 - The Pyramid of Corporate Social Responsibility in South Africa (Revised from

Carroll 1991 p. 42)

The Swedish levels of responsibilities in the pyramid of CSR, we believe, are

similar to Carroll’s (1991) pyramid. Sweden is spared from difficulties in

relation to South Africa, which has led to that Swedish companies do not see

themselves as part of the problem. Sweden is lagging behind in the

development of CSR, but as the Swedish companies are growing and CSR

issues are becoming increasingly apparent, when looking at the concerns

around Europe, the feeling is that companies are beginning to understand that

they must take their corporate social responsibilities.

Figure 5 - The Pyramid of Corporate Social Responsibility in Sweden (Carroll 1991 p. 42)

Philan-tropical

Ethical & Legal

Economic

Philantropical

Ethical

Legal

Economic


43

When comparing the Swedish and South African code of conduct, we perceive

that the South African code of conduct stresses sustainability issues and

integrated reporting, while the Swedish code of conduct focuses more on the

agency conflicts between the shareholders and managers within a company.

We believe that this show the countries different perception of the importance

of integrating CSR in the corporate governance. Another thing which reflects

the differences between South Africa and Sweden is when we have asked our

respondents if they believe that CSR is a trend or if it is a topic that are here to

stay. Bogle (2012), Ljungdahl (2012) and Glas (2012) in Sweden were quite

restrained and believed that the debate around CSR issues will cool down over

time. Ramsden (2012), Evans (2012) and Rockey (2012) in South Africa was

almost annoyed over the question and instantly replied that it definitely is not

a trend.

6.5. Further research

To take this research to a new level, we recommend future research to take

one more country into the research and interview companies that are working

with implementing CSR in their corporate governance. To receive more

perspectives on CSR issues we recommend to interview respondents who

stand more skeptical to the subject. As South Africa’s history and general

condition seems to play a major role in its perception to the research

questions, we urge further researchers to visit South Africa in order to get a

better understanding of the phenomenon CSR.

The new knowledge Louise Karlsson & Viktor Lindqvist

44

7. The new knowledge

f ter studied the phenomenon CSR and tried to find out what it means and why

companies in Sweden and South Africa integrate it in their corporate governance, we

wanted to get a closer look how it can work in the reality. In order to get a new perspective of

companies’ implementation of CSR in their corporate governance, we have studied PwC's

implementation process and simultaneously tried to select new relevant theory that can be

helpful to achieve an understanding of the process.

How does PwC’s implementation process look like?

In 2002, PwC created a code of conduct that should permeate the entire

organization worldwide (Glas 2012). A corporate code of conduct is,

according to Erwin (2011), a document that companies develop as a tool to

communicate its responsible business practices and spread its commitment to

ethical concerns. By having a code of conduct, companies are able to build an

ethical organizational culture within the company which results in that its

employees know how they are expected to behave. The code of conduct is

designed to convey a company’s commitment to CSR. The code is often seen

as a fundamental tool for a company to sustain a company culture that is

based on CSR policies (Erwin 2011). Van Beek (2012) describe that PwC’s

code of conduct is basically a set of standards describing the behavior that is

expected of PwC’s own people. PwC already conducts its business in a

framework of relevant laws, regulations and internal policies, but they

recognize that these do not govern all behavior. Van Beek (2012) continues:

“We feel it is important for all our clients, our people and other stakeholders, to understand

exactly what we stand for and how they can expect us to conduct ourselves.”

CSR strategies should take geographic issues into account, such as political,

environmental, and social economic issues in order for it to be relevant.

Principles must be made so they are relevant for the country in which the

company operates (Ramsden 2012). Glas (2012) explains that PwC’s code of

conduct looks exactly the same at PwC globally. The code of conduct is

written in English and it has consciously not been translated to ensure that

there aren’t any interpretations. PwC has supplements to the code in form of

local policies that are adapted to the local legislation and other regulations. The

code of conduct is fundamental to PwC’s values and everything PwC stands

for. It is built on PwC’s ground values Teamwork, Leadership and Excellence

and each word is defined in the code of conduct (Glas 2012).

A


45

According to Van Beek (2012), PwC were committed to make the code of

conduct a long-term success. Therefore, they have dedicated ethics champions

around the world, educations for their employees, opened channels such as

helplines to enable people to raise concerns, and ways of monitoring the

program. PwC continue to drive and actively support this program around the

world and by doing this they ensure all code of conduct efforts remain

relevant (Van Beek 2012).

As CSR is becoming more essential for companies and investors around the

world, the concept of corporate governance has become a vehicle for

management to consider more ethical business. Companies want to assure

investors that they are accountable and transparent in its corporate

governance. In the post-Enron years, the regulations of corporate governance

and CSR have transformed. These transformations are coming together and

include both corporate self-regulation and how social groups, institutional

investors and NGOs strive to make self-regulation more affective, which

enables the convergence on corporate governance and CSR (Gill 2008).

PwC have a lot of “tone at the top” which means, according to Glas (2012),

that what the directors are saying should be heard all the way down in the

hierarchy. In order to ensure the “tone at the top”, PwC has a lot of internal

controls. PwC has a global workforce that visits every country each year and

does different surveys and tests to see if the Code is being followed. Glas

(2012) also explains that PwC have a whistle-blower function in all countries,

which is an external and internal anonymous communication channel that is

called “complains and allegations”.

The developments have influenced large public companies to voluntarily

create mechanisms of corporate governance in order to receive stakeholder

engagement and investor accountability (Gill 2008). According to Gill (2008,

p. 454) these mechanisms are called self-regulation which contain “CSR board

committees, company units dealing with business ethics, corporate codes of conduct, non-

financial reporting practices, and stakeholder complaint and dialogue channels”. Another

trend in self-regulation that is growing larger every day is non-financial

reporting and also integrated reporting where companies try to incorporate

governance and CSR issues into its financial reporting. This enables companies

to become even more transparent and accountable for investors and creates

stakeholder engagement (Gill 2008).


46

However, critics condemns the free market ideology underlying self-regulation

and that corporate code of conduct only are empty words that, in reality, does

not improve corporate behavior. Many people believe that even a well-

monitored code of conduct might not conduct any changes, unless changes

are also being made in the company culture and decision-making (Gill 2008).

Every office has workshops who deal with PwC’s code of conduct (Glas

2012).

The workshops are important because you need to talk about and

define the big words that are in the code of conduct in order to

understand it and to be able to integrate it in the employees’ daily

work. (Glas 2012)

Every new employed gets the Code of Conduct brochure and they have

workshops in what the Code really means (Glas 2012).

Many of the partners at PwC were on the King III committee, so Ramsden

(2012) emphasizes that they understand what CSR is all about. However, PwC

do not report publicly because they are an audit firm, but they still apply the

principles. “So we do have some reporting but to me it’s not enough, but it’s the nature of

an audit firm” (Ramsden 2012).

The credibility of the thesis Louise Karlsson & Viktor Lindqvist

47

8. The credibility of the thesis

s Fej es and Thornberg (2009) discusses; qualitat ive research require

that the researcher have a ref l ec tive approach and ref l ect over i t s

methodology and pract ices, i t s understandings and values, and how the

researcher or other actors that are involved in the research can inf luence the

study. In the fol lowing chapter a credibil i ty discus sion of the thesi s wil l be

presented.



adopt CSR in its corporate governance. Since we needed to have respondents

with high knowledge of and experience with CSR issues, it seemed natural to

interview people who work with and are passionate about it. This resulted in

that we, to a greater extent, got positive and confident opinions about the

subject and not those who are more skeptical about it. To get a broader

picture of the subject, we believe that further interviews have to be conducted

with people that are more skeptical to CSR. However, because of the time

limit for our research we could not include that in this thesis.

We conducted qualitative interviews in our empirical data collection.

Qualitative interviews can be compared with what Alvesson and Sköldberg

(1994) calls a narrative source where information passes through a subjective

medium, and therefore there is a risk that the information could be distorted.

Since we have been inspired by the hermeneutics we have to take into

consideration what Fejes and Thornberg (2009) states; the researchers enter

the research with a preconceived opinion and knowledge of the subject before

the research began. This, along with that we chose the theoretical framework

that we believed was relevant to the research questions, which we analyzed

together with the empirical material that resulted in a conclusion, implies that

the results can be rather subjective. We have been aware of the subjectivity

during the research and have tried to counteract it as much as possible. In

order to do so, we began the thesis by informing the reader of the knowledge

of the subject which we already possessed. This helps both the reader and us

to deal with potential subjectivity.

From a hermeneutical perspective, the conclusion can be interpreted from the

reader's own situation and therefor becomes difficult to generalize (Fejes &

Thornberg, 2009). Fejes and Thornberg (2009) indicate that the developed

A

The credibility of the thesis Louise Karlsson & Viktor Lindqvist

48

knowledge cannot be generalized in a statistical sense in the hermeneutic

tradition, however, the generalization can be made on meta-level.

Generalization on meta-level leads to insight into how it may seem for

someone to live under the conditions applied generalized by the reader's

interpretative process (Fejes & Thornberg, 2009).

Reference List Louise Karlsson & Viktor Lindqvist

49

Reference List

Alessandri, M.A. Sloan Black, S. and Jackson, W.E. (2011) Black Economic

Empowerment Transactions in South Africa: Understanding When

Corporate Social Responsibility May Create or Destroy Value, Long range

planning, 26, 229-249

Alvesson, M. and Sköldberg, K. (1994). Tolkning och reflektion: Vetenskapsfilosofi

och kvalitativ metod. Lund: Studentlitteratur.

Alvesson, M. and Sköldberg, K. (2000). Reflexive Methodology: New vistas for

qualitative research. London: SAGE Publications Ltd.

Andersen, I. (1998). Den uppenbara verkligheten – Val av samhällsvetenskaplig metod.

Lund: Studentlitteratur.

Andreasson, S. (2011) Understanding Corporate Governance Reform in South

Africa: Anglo-American Divergence, the King Reports, and

Hybridization, Business & Society, 50 (4), 647-673.

Babarinde, O. A. (2009). Bridging the Economic Divide in the Republic of

South Africa: A Corporate Social Responsibility Perspective. Thunderbird

International Business Review, 51(4), 355-368

Bryman, A. & Bell, E. (2003). Business research methods. New York: Oxford

University.

Bryman, A. (2008). Social Research Methods. Oxford University Press, third

edition.

Carroll, A.B. (1991) The Pyramid of Corporate Social Responsibility: Toward

the Moral Management of Organizational Stakeholders. Business Horizons,

34 (4), 39-48

Cerne, A. (2008). Working with and Working on Corporate Social

Responsibility – The Flexibility of a Management Concept. Lund: KFS i

Lund AB.

Cramer, J. (2006). Corporate social responsibility and globalization. Greenleaf

Publishing Ltd.

Dalen, M. (2008). Intervju som metod. Malmö: Gleerups Utbildning AB.


50

De Geer, H. (2009). 125 år med Corporate Social Responsibility. Bromma: Centrum

för Näringslivshistoria.

Elkington, J. (1999). Cannibals with forks. Capstone Publishing Ltd. Oxford

Enquist, B. Johnson, M. and Skålén, P. (2006) Adoption of Corporate Social

Responsibility – Incorporating a Stakeholder Perspective, Qualitative

Research in Accounting and Management, 3 (3), 188-207.

Erwin, P.M. (2011) Corporate Codes of Conduct: The Effects of Code

Content and Quality on Ethical Performance, Journal of Business Ethics, 99,

535-548.

Fejes, A. and Thornberg, R. (2009). Handbok i kvalitativ analys. Stockholm:

Liber.

Gill, A. (2008) Corporate Governance as Social Responsibility: A Research

Agenda. Berkley Journal of International Law, 26 (2), 453-478

Grafström, M. Göthberg, P. and Windell, K. (2008). CSR: Företagsansvar i

förändring. Malmö: Liber AB.

Hamann, R., Sinha, P., Kapfudzaruwa, F., Schild, C. (2009). Business and

Human Rights in South Africa: An Analysis of Antecedents of Human

Rights Due Diligence. Journal of Business Ethics, 87, 453–473.

Hanks, J. and Gardiner, L. (2012). Integrated Reporting: Lessons from the South

African Experience. Washington: Private Sector Opinion (25), International

Finance Corporation.

Holme, C. (2010). Corporate social responsibility: a strategic issue or a

wasteful distraction? Industrial and commercial training, 42 (4), 179-185.

Justesen, L. & Mik-Meyer, N. (2011). Kvalitativa metoder: Från vetenskap till teori.

Lund: Studentlitteratur.

King, M. (2009). King Code of Governance for South Africa 2009. Institute of

Directors in Southern Africa.

Laczniak, G.R. and Kennedy, A.M. (2011) Hyper Norms: Searching for a

Global Code of Conduct, Journal of Macromarketing, 31 (3), 245-256

Mallin, C.A. (2010). Corporate Governance. Oxford University Press, third

edition.


51

Ndhlovu, T. P. (2011). Corporate Social Responsibility and Corporate Social

Investment: The South African Case. Journal of African Business, 12, 72–92

NGO Global Network (2012). Definition of NGO’s. [Electronic]. Available:

http://www.ngo.org/ngoinfo/define.html [2012-05-14]

Roberts, J. (2001) Corporate Governance and the Ethics of Narcissus, Business

Ethics Quarterly, 11 (1), 109-127.

Selznick, P. (1996) Institutionalism "Old" and "New", Administrative Science

Quarterly, 41 (2), 270-277.

Sims, R.R. (2003). Ethics and corporate social responsibility. Preager

Publishers. Westport

Soleymani, M. (2010). The Heavy Price of Globalization: Globalization and

Sustainable Development. Perspectives on Global Development & Technology, 9

(1/2), 101-118.

South Africa (2012). Black economic empowerment. [Electronic]. Available:

http://www.southafrica.info/business/trends/empowerment/bee.htm

[2012-04-13]

Strauss, A. & Corbin, J. (1990) Basics of qualitative research: grounded theory

procedures and techniques. Newbury Park, California: Sage

Swedish Corporate Governance Board (2012a). Evolution of the Code.

[Electronic]. Available: http://www.corporategovernanceboard.se/the-

code/evolution-of-the-code [2012-05-14]

Swedish Corporate Governance Board (2012b). The aim of the Code.

[Electronic]. Available: http://www.corporategovernanceboard.se/the-

code/aim-of-the-code [2012-05-14]

UN Global Compact (2011). Overview of the UN Global Compact. [Electronic].

Available: http://www.unglobalcompact.org/AboutTheGC/index.html

[2012-05-13]

Unerman, J. and O’Dwyer, B. (2010) Ngo Accountability And Sustainability

Issues In The Changing Global Environment, Public Management Review,

12 (4), 475-486


52

West, A. (2009). The ethics of corporate governance: A (South) African

perspective. International Journal of Law and Management, 51(1), 10-16.

Interviews

Bogle, Marianne. CSR Sweden, Sweden. 2012-05-04

Evans, Bridgit. Greater Good, South Africa. 2012-05-15

Glas, Carina. PwC, Sweden. 2012-05-04

Ljungdahl, Fredrik. PwC, Sweden. 2012-05-15

Ramsden, Alison. PwC, South Africa. 2012-05-10

Rockey, Nick. Trialogue, South Africa. 2012-05-16

Secondary Data

Van Beek, Coenraad. (2012) Interview: Why have a code? [Electronic] Available:

http://www.pwc.com/gx/en/ethics-business-conduct/why-have-a-

code-interview.jhtml [2012-05-05]

Appendix 1 - Interview respondents Louise Karlsson & Viktor Lindqvist

53

Appendix 1 - Interview respondents

Alison Ramsden, PwC South Africa

Alison is a partner in charge of governance, integrated reporting and

sustainability in PwC South Africa. Alison sat on the King Committee in

South Africa and she was on the committee that put together the chapters

which contained corporate citizenship, stakeholder relations and integrated

reporting. She has been working with CSR for 20 years.

Bridgit Evans, Greater Good South Africa

Bridgit Evans is the CEO for the organization Greater Good South Africa and

she has worked in the field of CSR for about 10 years.

Nick Rockey, Trialogue South Africa

Trialogue’s managing director Nick Rockey has 16 years of consulting

experience across many market and industry sectors. Nick is involved in

product development in the fields of CSI and sustainability, and leads the

client consulting business for Trialogue.

Fredrik Ljungdahl, PwC Sweden

Fredrik Ljungdahl is the Director for sustainable solutions at PwC in

Stockholm. Fredrik have worked with sustainability issues for about 20 years,

both in the business sector but also as a scholar.

Marianne Bogle, CSR Sweden

Marianne Bogle is the managing director for CSR Sweden which is the leading

enterprise network that focuses on corporate social responsibility and

community involvement. With many years in the field Marianne is a person

with special knowledge within the CSR and sustainability area.

Carina Glas, PwC Sweden

Carina Glas is a senior manager at PwC in Stockholm and is responsible for

PwC’s “Business and Ethics” in Sweden and she has worked in the field since

2002.

Coenraad van Beek, PwC Globally

Coenraad van Beek is the global ethics leader at PwC.

The perception and adoption of corporate social responsibilities

Documents

Transcript of The perception and adoption of corporate social responsibilities