A Stakeholder Approach to CSR

Citation preview

Ó Springer 2008

Journal of Business Ethics DOI 10.1007/s10551-007-9572-4

A Stakeholder Approach to Corporate Social Responsibility: A Fresh Perspective into Theory and Practice

ABSTRACT. Stakeholder theory has gained currency in the business and society literature in recent years in light of its practicality from the perspective of managers and scholars. In accounting for the recent ascendancy of stakeholder theory, this article presents an overview of two traditional conceptualizations of corporate social responsibility (CSR) (Carroll: 1979, ‘A ThreeDimensional Conceptual Model of Corporate Performance’, The Academy of Management Review 4(4), 497–505 and Wood: 1991, ‘Corporate Social Performance Revisited’, The Academy of Management Review 16(4), 691–717), highlighting their predominant inclination toward providing static taxonomic CSR descriptions. The article then makes the case for a stakeholder approach to CSR, reviewing its rationale and outlining how it has been integrated into recent empirical studies. In light of this review, the article adopts a stakeholder framework – the Ethical Performance Scorecard (EPS) proposed by Spiller (2000, ‘Ethical Business and Investment: A Model For Business and Society’, Journal of Business Ethics 27, 149–160) – to examine the CSR approach of a sample of Lebanese and Syrian firms with an interest in CSR and test relevant hypotheses derived from the CSR/stakeholder literature. The findings are analyzed and implications drawn regarding the usefulness of a stakeholder approach to CSR. KEY WORDS: corporate social responsibility (CSR), stakeholder theory, Lebanese and Syrian context

Introduction The topic of the social responsibilities of business has been a subject of intense controversy and interest over the past three decades. In part, this debate is an outgrowth of the proliferation of different conceptualizations of corporate social responsibility (CSR). The term CSR has indeed been defined in various

Dima Jamali

ways from the narrow economic perspective of increasing shareholder wealth (Friedman, 1962), to economic, legal, ethical and discretionary strands of responsibility (Carroll, 1979) to good corporate citizenship (Hemphill, 2004). These variations stem in part from differing fundamental assumptions about what CSR entails, varying from conceptions of minimal legal and economic obligations and accountability to stockholders to broader responsibilities to the wider social system in which a corporation is embedded. Resulting from these divergent fundamental assumptions is a lingering skepticism in the field of business and society, inviting Frankental (2001) to argue for example that ‘‘CSR is a vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning.’’ The confederation of British industry has similarly argued that ‘‘CSR is highly subjective and therefore does not allow for a universally applicable definition.’’ Social responsibility has been variously described as an elusive concept (Lee, 1987), a vague and ill-defined concept (Preston and Post, 1975), a concept with a variety of definitions (Votaw, 1973), a concept lacking theoretical integration and empirical verification (DeFillipi, 1982; Post, 1978; Preston, 1978), a concept lacking a dominant paradigm (Jones, 1983), and a concept susceptible to subjective and value-laden judgments (Aupperle et al., 1983). Along the same lines, Clarkson (1995) has forcefully argued that a fundamental problem in the field of business and society has been the notable absence of definitions of corporate social performance (CSP), corporate social responsibility (CSR1) and corporate social responsiveness (CSR2), and the lack of consensus about the meaning of these terms from an

Dima Jamali operational or managerial viewpoint (Clarkson, 1995). He makes the case that CSP can be analyzed more effectively by using a framework based on the management of a corporation’s relationships with its stakeholders than by using CSR models and methodologies given that corporations are the nexus of a complex web of stakeholder relationships and indeed manage relationships with specific stakeholder groups rather than with society at large. Maignan et al. (2005) similarly find that senior management and many marketers still struggle with the notion of CSR. The crux of the problem stems from the meaning of the word ‘social’ and how it links to daily business activities. Indeed, because of the level of abstraction of the word ‘social’, managers may have problems evaluating how their own organization can contribute to the well being of society as a whole (Clarkson, 1995; Maignan et al., 2005). Indeed as suggested by Clarkson (1995) ‘‘society is a level of analysis that is more inclusive, more ambiguous and further up the ladder of abstraction than a corporation itself.’’ Based on casual observation, the term society is often used interchangeably with the community stakeholder group in the business and society literature, raising a legitimate concern as to whether the societal level of abstraction is indeed helpful or justified. Hence, there is clearly some merit to a stakeholder approach to CSR, which will be further probed and explored in this article. Indeed as proposed by Maignan et al. (2005), even though businesses in general are accountable toward society at large, an individual business can be deemed responsible only toward stakeholders, or the definable agents with whom it interacts. The article starts by presenting an overview of two popular conceptualizations of CSR, highlighting their predominant inclination toward providing static taxonomic CSR descriptions. The article then makes the case for a stakeholder approach to CSR, reviewing its inherent logic and outlining how it has been integrated into recent empirical studies. In light of this review, the article adopts a stakeholder framework – the Ethical Performance Scorecard (EPS) proposed by Spiller (2000) – to examine the CSR approach of a number of Lebanese and Syrian firms that are considered active in CSR. The findings are presented and relevant implications

drawn regarding the usefulness of a stakeholder CSR approach.

Traditional CSR conceptualizations Various CSR conceptualizations are on offer in the literature. This section will shed briefly the light on two robust CSR conceptualizations that are wellgrounded in the literature. The first is Carroll (1979) four-part definition of CSR that was embedded into a conceptual model of CSP. The other is the CSP model by Wood (1991), which placed CSR into a comprehensive framework, emphasizing principles guiding responsibility behavior, processes of responsiveness and outcomes of performance. The purpose is to show that despite their groundbreaking insights, the models on offer still qualify as taxonomic, helping in turn accentuate or bring to light the dynamism inherent in a stakeholder approach as well as its practicality from a managerial perspective.

Carroll’s 1979/1991 conceptualization In 1979, Carroll differentiated between four types of CSR: economic, legal, ethical, and discretionary. The first category that Carroll (1979) delineated is a responsibility that is economic in nature, entailing, for example, providing a return on investment to owners and shareholders; creating jobs and fair pay for workers; discovering new resources; promoting technological advancement, innovation, and the creation of new products and services. Business from this perspective is the basic economic unit in society and all its other roles are predicated on this fundamental assumption (Carroll, 1979). The legal responsibility is the second part of the definition and entails expectations of legal compliance and playing by the ‘‘rules of the game.’’ From this perspective, society expects business to fulfill its economic mission within the framework of legal requirements set forth by the societal legal system. But, while regulations may successfully coerce firms to respond to an issue, it is difficult to ensure that they are applied equitably (Pratima, 2002). Moreover, regulations are reactive in nature, leaving little opportunity for firms to be proactive. Laws, therefore, attempt to circumscribe the limits of tolerable

A Stakeholder Approach to Corporate Social Responsibility business behavior, but they neither define ethics nor do they ‘‘legislate morality’’ (Solomon, 1994). In essence, ethical responsibility overcomes the limitation of law by creating an ethics ethos that companies can live by (Solomon, 1994). It portrays business as being moral, and doing what is right, just, and fair. Therefore, ethical responsibility encompasses activities that are not necessarily codified into law, but nevertheless are expected of business by societal members such as respecting people, avoiding social harm, and preventing social injury. Such responsibility is mainly rooted in religious convictions, humane principles and human rights commitment (Novak, 1996). However, one limitation to this type of responsibility is its blurry definition and the consequent difficulty for business to concretely deal with it (Carroll, 1979). The final type of responsibility is where firms have the widest scope of discretionary judgment and choice, in terms of deciding on specific activities or philanthropic contributions that are aimed at giving back to society. The roots of this type of responsibility lie in the belief that business and society are intertwined in an organic way (Frederick, 1994). Examples of such activities might include philanthropic contributions, conducting in-house training programs for drug abusers, or attempts at increasing literacy rates (Carroll, 1979). This type of responsibility is the most controversial of all since its limits are broad and its implications could conflict with the economic and profit-making orientation of business firms. Carroll (1991) revisited his four-part definition of CSR and organized the notion of multiple corporate social responsibilities in a pyramid construct (Figure 1). In this pyramid, economic responsibility is Total Responsibility Discretionary Responsibility

the basic foundation and discretionary the apex. This revised conceptualization implies that the four responsibilities are additive or aggregative. From this perspective, economic and legal responsibilities are socially required (i.e., mandatory), ethical responsibility is socially expected, while philanthropy is socially desired (Windsor, 2001) and each of these responsibilities comprises a basic component of the total social responsibility of a business firm. The other components of the CSP model originally proposed by Carroll (1979) entailed an identification of the social issues that business must address and a specification of the philosophy of responsiveness to the issues. Recognizing that social issues may change over time depending on the industry in which firms exist, an effective responsibility performance entails a systematic attempt at fleshing out the social issues that are of most interest to the firm. A strategy or mode of responsiveness must also be identified, although this component was vaguely addressed in Carroll’s (1979) conceptualization, with a simple differentiation between reactive, defensive, accommodative or proactive responsiveness strategies. Carroll’s (1979) conceptualization was useful and timely, and represented a significant advance in CSR research by specifying the different types or dimensions of social responsibility. However, his contribution qualifies primarily as taxonomic, outlining the range of responsibilities that managers are expected to fulfill. Details and guidelines regarding process and measurement however remain scant for both managers and scholars. As per Clarkson (1995), ‘‘Carroll’s model in the form of a three dimensional cube was complex and difficult to test. It did not lend itself to the development of a methodology that could be used in the field to collect, organize, and evaluate corporate data.’’ Herein lies the caveat of any taxonomic approach, which can be potentially remedied with a more practical stakeholder approach.

Ethical Responsibility Legal Responsibility Economic Responsibility

Figure 1. A hierarchy of CSR (adapted from Carroll, 1991)

Wood 1991 conceptualization In 1991, Wood revisited the CSP model and introduced important refinements by going beyond an identification of the different types of responsibilities to examine issues relating to the principles

Dima Jamali motivating responsible behavior, the processes of responsiveness and the outcomes of performance. Her refined postulation, therefore, placed CSR into a broader context than just a stand-alone definition, and conceptualized CSP as the product of a business firm’s particular configuration of principles of social responsibility, processes of social responsiveness, as well as observable outcomes as they relate to the firm’s societal relationships (Table I). The model offered by Wood (1991) constitutes a significant advance in CSR research. A researcher using the model would first consider the principles that motivate a firm’s social responsibility actions at three levels of analysis: institutional, organizational and individual. Therefore, the motivation for a firm’s social responsibility actions may stem from the principle of legitimacy (institutional level), i.e., from a desire to maintain credibility and legitimacy as a responsible societal actor in a shared environment. Alternatively, the motivation could stem from an organizational sense of public responsibility, particularly for outcomes related to the firm’s primary and secondary areas of involvement. Finally, the motivation could stem from the choices of individual managers and their personal responsibility preferences and inclinations. There is also room for interactivity among two or more of these principles in motivating CSP. Responsiveness according to Wood (1991) constitutes an action dimension that is needed to complement the normative and motivational component of social responsibility. It is conceptualized as comprising three facets – environmental assessment, TABLE I The CSP model (Wood, 1991) Principles of CSR1 Institutional principle: legitimacy Organizational principle: public responsibility Individual principle: managerial discretion Processes of CSR2 Environmental assessment Stakeholder management Issues management Outcomes of corporate behavior Social impacts Social programs Social policies

stakeholder management and issues management, which are effectively interlocked. Responsiveness is rooted in knowledge about the external environment and in rigorous environmental scanning/analysis. This knowledge could then be used to devise strategies for adapting to the environment or conversely changing it. Stakeholder management is another tenet of responsiveness and can be investigated by examining particular kinds of stakeholder management devices (e.g., employee newsletters, public affairs officials, and corporate social reporting). Issues management on the other hand entails an investigation of the firm’s approach to devising and monitoring responses to social issues. The outcomes of corporate behavior are in turn of direct and obvious interest in the assessment of CSP. According to Wood’s CSP model, outcomes are divided into three types: the social impacts of corporate behavior, the programs companies use to implement responsibility and the policies developed by companies to handle social issues and stakeholder interests. Whether corporate behavior is having positive or negative impact should objectively be assessed (positive impact as in the provision of jobs, the creation of wealth or technological innovation and negative impact as in toxic wastes or illegal payments to politicians). The nature of programs selected for investment of resources to achieve specific ends is also important as is the extent of the integration of social issues and impacts within the body of company policy. Although Wood’s (1991) CSP model integrates much of the earlier work into a coherent model for assessing an organization’s corporate social performance, it does not, according to Waddock (2004), fully consider the significance of stakeholder impacts. Stakeholder management is indeed accorded only limited attention in discussion of responsiveness processes. More fundamentally, Wood’s (1991) model may suffer from a certain level of abstraction from the perspective of practicing managers in view of its scholarly language of principles of CSR and processes of corporate social responsiveness. As articulated by Meehan et al. (2006) ‘‘While Wood’s 1991 model represents a significant piece of scholarship, it nevertheless failed to address the needs of practicing managers charged with implementing CSR/CSP programs and crucially measuring their impacts.’’

A Stakeholder Approach to Corporate Social Responsibility Both frameworks hence seem more oriented toward advancing theory and research in the field rather than influencing practice. The complex and dynamic nature of the social environment faced by most modern organizations, implying the need for on-going stakeholder management, is also difficult to capture with such taxonomic descriptions. Inherent in a stakeholder approach or model is an exchange perspective for social responsibility management, recognizing the changing/evolving needs of different groups of stakeholders which need to be continuously monitored and addressed in a fluid and dynamic manner. The potential usefulness/added value of a stakeholder approach will be further explored in the next section.

A stakeholder approach to corporate social responsibility (CSR) Some of the central concepts associated with what is known today as stakeholder theory began to gain currency during the mid-1980s (Freeman, 1984; Freeman and Reed, 1983). Freeman’s (1984) work helped to re-conceptualize the nature of the firm to encourage consideration of new external stakeholders, beyond the traditional pool – shareholders, customers, employees, and suppliers – legitimizing in turn new forms of managerial understanding and action (Jonker and Foster, 2002). Organizations from this perspective are expected to manage responsibly an extended web of stakeholder interests across increasingly permeable organization boundaries and acknowledge a duty of care towards traditional interest groups as well as silent stakeholders – such as local communities and the environment (Simmons, 2004). Stakeholder theory hence offered a new way to organize thinking about organizational responsibilities. By suggesting that the needs of shareholders cannot be met without satisfying to some degree the needs of other stakeholders, it turned attention to considerations beyond direct profit maximization. In other words, even when a firm seeks to serve its shareholders as a primary concern, its success in doing so is likely to be affected by other stakeholders (Foster and Jonker, 2005; Hawkins, 2006). Some even argue that an inclusive stakeholder approach makes commercial sense, allowing the firm

to maximize shareholder wealth, while also increasing total value added (Hawkins, 2006; Phillips et al., 2003; Wallace, 2003). By the end of the decade, many researchers were using stakeholder ideas and terminology (Wood, 1991). Several authors have indeed favored a stakeholder approach when examining CSR. In their assessment of CSR and CSP in the context of a sample of Italian SMEs, Longo et al. (2005) identified the demands of key stakeholders regarding the creation of value by the business, resulting in a grid of values (Table II), which associates each stakeholder with value classes that satisfy their respective expectations. These value classes have been derived based on studies and models already covered in existing literature, as well as on the basis of the analysis of various social audit and sustainability reports. Companies in their study are considered as socially responsible if they demonstrate social behavior satisfying the expectations of at least half of the value classes identified for each stakeholder. A similar approach was used by Abreu et al. (2005) in their exploration of the CSR experience and practice of enterprises in Portugal, whereby five key stakeholders were identified, including consumers, suppliers, the community, the government and the environment. Internally, they also examined workplace practices vis-a-vis employees. Their TABLE II The grid of values (Longo et al., 2005) Stakeholder

Expectations divided into value classes

Employees

Health and safety at work Development of workers’ skills Wellbeing and satisfaction of worker Quality of work Social equity Partnership between ordering company and supplier Selection and analysis systems of suppliers Product quality Safety of customer during use of product Consumer protection Transparency of consumer product information Creation of added value to the community Environmental safety and production

Suppliers

Customers

Community

Dima Jamali research suggests a clear inclination on the part of firms operating in Portugal to attend to the external dimension of CSR. Another study in the Spanish context (Uhlaner et al., 2004) also utilized a stakeholder approach, defining CSR effectiveness as the ability to satisfy a wide range of constituents within/ outside the organization. Two categories of stakeholders, economic and social, were identified with the findings suggesting the salience of the economic stakeholders – clients and employees – over the social ones including sports clubs, the church, and the environment. The researchers confirm on the basis of their study the utility of a stakeholder approach in the context of CSR.

A stakeholder approach was also used by Papasolomou et al. (2005) in the context of Cypriot businesses. Their rationale for using a stakeholder approach is that stakeholders invariably affect or are affected by business organizations and therefore can be seen as imposing on them different responsibilities. They identify six groups as key stakeholders including employees, customers, investors, suppliers, the community and the environment and delineate relevant CSR actions vis-a-vis each cluster respectively as illustrated in Table III. Their findings suggest that Cypriot firms accord the most attention to employees and consumers in their pursuit of CSR, moderate attention to the community stakeholder,

TABLE III CSR actions vis-a-vis key stakeholders (Papasolomou et al., 2005) Stakeholder

Actions vis-a-vis key stakeholders

Employees

Provides a family friendly work environment Engages in responsible human resource management Provides an equitable reward and wage system for employees Engages in open and flexible communication with employees Invests in employee development Encourages freedom of speech and promotes employee rights to speak up and report their concerns at work Provides child care support/paternity/maternity leave in addition to what is expected by law Engages in employment diversity in hiring and promoting women, ethnic minorities and the physically handicapped Promotes a dignified and fair treatment of all employees Respects the rights of consumers Offers quality products and services Provides information that is truthful, honest and useful Products and services provided are safe and fit with their intended use Avoids false and misleading advertising Discloses all substantial risks associated with product or service Avoids sales promotions that are deceptive/manipulative Avoids manipulating the availability of a product for purpose of exploitation Avoids engagement in price fixing Fosters reciprocal relationships between the corporation and community Invests in communities in which corporation operates Launches community development activities Encourages employee participation in community projects Strives for a competitive return on investment Engages in fair and honest business practices in relationships with shareholders Engages in fair trading transactions with suppliers Demonstrates a commitment to sustainable development Demonstrates a commitment to the environment

Consumers

Community

Investors Suppliers Environment

A Stakeholder Approach to Corporate Social Responsibility and limited attention to suppliers, investors and the environment. The bulk of the studies encountered in the literature and outlined above fall within the scope of descriptive stakeholder theory, which seeks to outline the views of participants of the mission/ objectives of their organization and its actions vis-a-vis different stakeholders (Brickson, 2007). This methodology can yield interesting insights particularly that organizations are socially constructed and act in accordance with shared perceptions (Brickson, 2007). There are also flavors in the literature of assessments along the lines of instrumental or normative stakeholder theory. Instrumental stakeholder theory assumes that the corporation is an instrument for wealth creation with CSR conceived as a strategic tool to promote economic objectives (Garriga and Mele, 2004). Normative stakeholder theory on the other hand delineates philosophically based moral obligations towards stakeholders (Brickson, 2007), focusing on the ethical requirements that cement the relationship between business and society (Garriga and Mele, 2004). While the tenet of stakeholder theory is that all stakeholders matter and that organizations should integrate their responsibilities to the various stakeholder constituencies, this balancing exercise has proven difficult to enact in practice (Galbreath, 2006; Vos and Achterkamp, 2006). Rather than producing every kind of social value for every stakeholder, organizations find themselves constrained in practice by limited resources and bounded rationality, and thus tend to prioritize their stakeholders according to instrumental and/or normative considerations. Such stakeholder classification or prioritization usually draws on managerial discretion, their specific instrumental or normative inclinations as well as their assessment of relational stakeholder attributes of power, legitimacy and urgency (Mitchell et al., 1997), legitimizing in turn the usefulness of a descriptive stakeholder theory or methodology. Overall, stakeholder theory in all its three veins or branches brought to the fore a set of new insights for CSR academics and practitioners. It accentuated the notion that corporations must be viewed as operating at the center of a ‘‘network of interrelated stakeholders that create, sustain and enhance value creating capacity’’ (Post et al., 2002) challenging in

turn an exclusive focus on shareholders. The language of stakeholder theory was also easier to grasp by managers/practitioners as most organizations understood and defined obligations and responsibilities vis-a-vis their traditional stakeholders (Clarkson, 1995). Stakeholder theory seems also easier to maneuver in collecting and analyzing CSR data as evidenced by the proliferation of empirical studies that have essentially integrated a stakeholder approach as outlined in the previous section. This stream of research has also led to the delineation of relevant stakeholder issues and associated measures of impacts, which, with further refinement, can serve as useful guidelines for managers in their pursuit of CSR actions and interventions (Davenport, 2000). The next section highlights how a stakeholder CSR approach – the EPS proposed by Spiller (2000) – was used to collect and analyze CSR data in the context of a sample of Lebanese and Syrian firms, allowing in turn to draw relevant implications regarding the usefulness of a stakeholder CSR approach.

Research methodology Research hypotheses The research methodology is consistent with descriptive stakeholder theory, which seeks to outline participants’ views of what the business organization is doing vis-a-vis its stakeholders, as well as the mechanisms through which different views come into being (Brickson, 2007). This descriptive stakeholder methodology will be supplemented in turn by reference to the two other veins of stakeholder theory, namely instrumental stakeholder theory and normative stakeholder theory. In the framework of these three branches of stakeholder theory, the following research hypotheses are derived and tested after being presented here in the context of the corresponding CSR literature in which they are respectively anchored. Developing country firms prioritize their stakeholders based primarily on instrumental considerations.

Hypothesis 1 (H1)

H1 draws on a large body of literature that shows unequivocally that stakeholder management is often

Dima Jamali conceived and approached instrumentally in relation to its implications for the bottom line and firm performance. Windsor argues in this respect that ’’a leitmotiv of wealth creation progressively dominates the managerial conception of responsibility’’ (Windsor, 2001). Firms tend to accord systematic attention to primary stakeholder management in anticipation of expected bottom line benefits. This is also consistent with the view that firms prioritize their stakeholders and investments based on stakeholder attributes of power, legitimacy and urgency – or indirect instrumental considerations (Mitchell et al., 1997). A wide range of empirical studies in various contexts provide support for this hypothesis (please see Uhlaner et al., 2004 and Papasolomou et al., 2005 who highlight the salience of the economic stakeholders in their respective studies; de Madariaga and Valor, 2007 who report differential firm attention across stakeholder groups particularly in relation to customers, employees and shareholders; Snider et al., 2003 who report that three stakeholder groups stand out in their study as essential to firm success namely customers, employees and owners; and Galbreath, 2006 who makes the case for an instrumental stakeholder management approach in his empirical study). H1 is applicable globally and in developing countries more specifically in view of the scarcity of resources and the salience of resource dependency theory in this particular context. Developing country firms are according systematic attention to a limited range of stakeholders.

Hypothesis 2 (H2)

H2 is related to H1 and consistent with an instrumental stakeholder management process. In view of limited resources and bounded rationality considerations, firms identify or prioritize a small number of what they consider to be core or focal stakeholders, with their stakeholder management process revolving around these key stakeholders. This hypothesis is grounded in the literature, with Clarkson (1995) differentiating between primary and secondary stakeholders and highlighting the inclination of firms to focus on primary stakeholders. It is also reflected in the writings of Carroll and Buckhholtz (2003), who make a distinction between core, strategic and environmental stakeholders. There is ample empirical evidence suggesting that firms channel their

stakeholder management efforts around specific stakeholders, with Knox et al. (2005) arguing for example that the majority of FTSE companies in their sample focused on less than three stakeholders; de Madariaga and Valor (2007) arguing that their sampled Spanish companies focus on three core stakeholders and Galbreath (2006) revealing through his study the criticality of focusing on few primary internal stakeholders. H2 is applicable globally and in developing countries more specifically where managerial resources and attention are stretched thin in light of limited budgets, competing pressures and less favorable contextual conditions. Instrumental stakeholder management inclinations are counter-balanced or nuanced by normative flavors, particularly vis-a-vis the community stakeholder.

Hypothesis 3 (H3)

H3 draws on a large body of literature that argues that firms need to maintain credibility and legitimacy as responsible societal actors in a shared environment. This is consistent with Wood’s (1991) legitimacy principle and Davis’ (1960) iron law of responsibility. H3 is also grounded in integrative theories and the integrative social contract theory specifically (please see Donaldson, 1982 and Donaldson and Dunfee, 1994), which assume that an implicit social contract exists between business and society, implying indirect obligations of business toward society. It is also anchored in the corporate citizenship postulation, a new notion connoting a sense of belonging and responsibility to a community (Matten et al., 2003). Finally, it is anchored in normative stakeholder theory which postulates that the interests of all stakeholders are of intrinsic value and merit consideration based on ethical motives and principles (Freeman and Philips, 2002). Normative stakeholder interpretations are frequently encountered in the literature, with various empirical studies reporting on firms’ strong sense of obligation to the community stakeholder group whose freedom and well-being is affected by their activities (see Jamali and Mirshak, 2007; Margolis and Walsh, 2003; Papasolomou et al., 2005). Stakeholder management is affected by the relational attributes of specific stakeholders (power, legitimacy, urgency) as well the pressures they can exert on corporations.

Hypothesis 4 (H4)

A Stakeholder Approach to Corporate Social Responsibility H4 draws on a large body of literature which argues that managers will prioritize stakeholder claims according to their relative power, legitimacy and urgency. It is thus consistent with Mitchell’s et al.’s (1997) theory of stakeholder identification and salience which proposes that the cumulative number of the three attributes of power, legitimacy and urgency contributes to a stakeholder’ s claim being salient from the perception of management. More recently, Neville et al. (2004) have argued that an increase in the degree of any of the three attributes will result in an increase in stakeholder salience. H4 is also consistent with the issues management and crisis management literatures. H4 is finally consistent with institutional theory that emphasizes that institutions and stakeholders in the firm’s external environment place pressures on firms, molding responses ranging from passive conformity to active compromise, defiance or strategic manipulation (Oliver, 1991). In this respect, it draws on the institutional isomorphism body of theory, and coercive institutionalism in specific, which argues that firms will be coerced to respond to the pressures exerted by institutionalized stakeholders and that a tendency to homogenization can be detected when formal and informal pressures come to bear on business firms via stakeholder activism and emerging cultural expectations (Shepard et al., 1997). Multinational corporations have a more balanced stakeholder management process, translating into attention to a wider range of stakeholders.

Hypothesis 5 (H5)

H5 draws on a large body of literature that seems to suggest that MNCs are diffusing their responsibility practices across countries in which they set shop (Hawkins, 2006). It is also grounded in the body of literature that seems to suggest the increased sophistication of MNCs in relation to CSR generally and stakeholder management specifically (Snider et al., 2003). With the advent of globalization, MNCs have unprecedented access to markets and lower production costs. They also have come under intense scrutiny by stakeholders and are thus expected to be increasingly more proficient at identifying and reconciling multiple stakeholder interests. It is frequently mentioned that MNCs are making systematic efforts at nurturing a wide

spectrum of trust-based stakeholder relationships grounded in their greater appreciation and sensitization to risks and repercussions associated with nonresponsible action and the competitive advantages of responsible social action. Various empirical studies provide support to this hypothesis, suggesting that MNCs are more prone to establish real dialogue with their stakeholders (Foster and Jonker, 2005) and to tailor their corporate community involvement activities in response to the preferences of societal stakeholders (Brammer and Millington, 2003). Research sample The first step in the research entailed an identification of potential companies in both Lebanon and Syria with an interest in CSR who could take part in the research. The companies were contacted first by phone, and then a formal introductory letter highlighting the aims of the research and its queries was sent to the companies, with the EPS form enclosed. An in-depth interview was then scheduled and conducted by the author and two graduate assistants (one in each country) with the person(s) responsible for CSR. The interviewees were all managers, occupying top managerial positions in their respective organizations (e.g., heads of public relations or communications units; marketing managers and development regional directors). The companies that finally confirmed their participation spanned different industries, including banking and financial services, Internet/multi-media services, telecommunications, energy and petrochemicals, food and beverage, hospitality, tobacco, pharmaceuticals and sales/distribution (Table IV). From a targeted pool of 20 companies operating in Lebanon, 14 confirmed their participation in the study by March 2006. Similarly, from a targeted pool of 13 companies operating in Syria, 8 confirmed their participation by late March, 2006. Interestingly, the sample comprised companies that are both national and international. Such sample composition is potentially interesting, allowing a comparison of the extent to which the CSR practices of local companies (Lebanese or Syrian) differ from their international counterparts as well as the extent to which local subsidiaries are influenced by the CSR approach of their mother firms.

Dima Jamali TABLE IV Sample profile Company name

Type of industry

Lebanese sample Company A* Company B Company C* Company D Company E Company F Company G* Company H Company I* Company J* Company K* Company L* Company M*

Financial services Banking and financial services Banking and financial services Banking and financial services Insurance Internet services Multimedia services Food and beverage Food and beverage Hospitality Hospitality Tobacco Pharmaceuticals

Company N

Sales and distribution

Syrian Sample Company O Company P Company Q

Telecommunications Telecommunications Management information systems

Company Company Company Company Company

Energy and petrochemicals Energy and petrochemicals Metal and contracting Food and beverage Food and beverage

R S T U V

Line of business

International banking and investment Commercial, retail and investment banking International banking and investment Banking services Financial protection and insurance Regional internet services/connections Provider of news and financial information Casual dining and fast food restaurant Global food service retailer Accommodation and recreational activities Accommodation and recreational activities Distribution and sales of tobacco products Development, manufacturing and marketing of leading prescription medicines Sales and distribution of consumer products (personal care, cosmetics and perfumery) GSM telephone lines and pre-paid cards GSM telephone lines and pre-paid cards Information and computer technology services Oil/natural gas exploration and production Oil/natural gas exploration and production Metals and contracting services Manufacturing and distribution of soft drinks Manufacturing of consumer packaged biscuits and beverage products

* Subsidiaries of International Corporations

Research tool and protocol The EPS proposed by Spiller in 2000 was selected for the primary component of this research. According to Spiller (2000), the EPS extends the Balanced Scorecard focus on satisfying shareholders and customers to take account of the other primary stakeholders comprising employees, suppliers, the community and the environment. While the EPS accords attention to the vision and purpose of the firm and its ethical principles, the primary focus of this diagnostic tool is on the company’s practices vis-a-vis primary stakeholders. These have been categorized in terms of the six main stakeholder groups and considered in terms of an inventory of

60 best practices that the author compiled based on an extensive review of international case studies and investment analysis (Table V). According to Spiller (2000), the EPS can be prepared at varying levels of depth. It can simply be an account of publicly available information vis-a-vis key stakeholder issues. Quantitative measures can be considered from the level of donations disclosed in the company’s accounts to financial results as well as qualitative assessments such as stakeholder perceptions of company performance included in media reports, or through additional consultation with stakeholders. Company involvement is, however, key in terms of provision of relevant information, as well as opportunity for discussion and justification

A Stakeholder Approach to Corporate Social Responsibility

TABLE V The EPS (Spiller, 2000) Stakeholder

Key business practices

Community

Generous financial donations Innovative giving Support for education and job training programs Direct involvement in community projects and affairs Community volunteer programs Support for the local community Campaigning for environmental and social change An employee-led approach to philanthropy Efficient and effective community activity Disclosure of environmental and social performance Environmental policies, organization and management Materials policy of reduction, reuse and recycling Monitoring, minimizing and taking responsibility for releases to the environment Waste management Energy conservation Effective emergency response Public dialogue and disclosure Product stewardship Environmental requirements for suppliers Environmental audits Fair remuneration Effective communication Learning and development opportunities Fulfilling work A healthy and safe work environment Equal employment opportunities Job security Competent leadership Community spirit Social mission integration Industry-leading quality program Value for money Truthful promotion Full product disclosure Leadership in research and development Minimal packaging Rapid and respectful responses to customer comments/concerns Customer dialogue Safe products Environmentally and socially responsible product composition

Environment

Employees

Customers

Dima Jamali

TABLE V continued Stakeholder Suppliers

Shareholders

Key business practices Develop and maintain long-term purchasing relationships Clear expectations Pay fair prices and bills according to terms agreed upon Fair and competent handling of conflicts and disputes Reliable anticipated purchasing requirements Encouragement to provide innovative suggestions Assist suppliers to improve their environmental/social performance Utilize local suppliers Sourcing from minority-owned suppliers Inclusion of environmental/social criteria in the suppliers’ selection Good rate of long term return to shareholders Disseminate comprehensive and clear information Encourage staff ownership of shares Develop and build relationships with shareholders Clear dividend policy and payment of appropriate dividends Corporate governance issues are well managed Access to company’s directors and senior managers Annual reports provide a picture of company’s performance Clear long-term business strategy Open communication with financial community

of areas of strength and concern from the perspective of practicing managers. It is precisely such discussions with managers relating to different conceptions of the stakeholder management process relative to specific stakeholder issues and the ability to gauge variations in prioritization in light of instrumental vs normative managerial inclinations and changing societal expectations that help account for the superiority and dynamism of a stakeholder approach to CSR over more taxonomic models. As illustrated in Table V, the terminology used in the EPS is simple. The interview entailed a discussion with the manager concerned of the relevant practices across stakeholder groups as per Table V. Numeric ratings to assess each of the 60 practices were then respectively reflected upon and decided by the managers interviewed, with a major strength recorded as 2, a strength as 1, no strengths/concerns

as 0, a concern as )1 and a major concern as )2, allowing in turn to obtain as per Spiller (2000) an overall quantitative EPS score – with the EPS scores ranging between 120 where each of the 60 practices is a major strength and )120 where each of the 60 practices is a major concern. The interviews were tape recorded with the ratings as dictated by the managers noted down by the researcher and discussion of specific ratings often dwelled upon in the context of the interview in way of further clarification. It should be noted that, while the EPS may provide interesting insights in the context of an exploratory research study, this approach is not without its caveats or limitations. One such limitation stems from the equal initial weighting of all 60 issues as reflected in the 5-point scale across issues which could at the outset be contested based on

A Stakeholder Approach to Corporate Social Responsibility subjective value judgments or normative inclinations. More fundamentally, however, is that the total EPS score calculated may be construed to reflect aggregative assumptions about the social impact or social performance of the firm, a concept that is also highly contestable (please see Norman and MacDonald, 2004). The EPS scores are thus used in the context of this study to conjure basic trends in relation to stakeholder management practices and not to provide an aggregative weighing of the overall social performance of the firm. The EPS methodology was nevertheless deemed useful for various reasons. First, it reflected a simple and comprehensive illustration of a stakeholder approach to CSR. The EPS provides in this respect a valuable tool for operationalizing the stakeholder approach to CSR. Second, it provides an opportunity for gauging the practices of a company vis-a-vis its key stakeholders and allows a comparative benchmark assessment of the patterns of firm performance vis-a-vis different stakeholders relative to other firms. This is particularly true when the EPS scores derived are supplemented by discussions with managers to gauge their assumptions, inclinations and changing perspectives with regard to various stakeholders and stakeholder issues.

Research findings The EPS ratings for each of the case study companies are presented in Tables VI and VII. These ratings are not intended as a definitive statement of the performance of the companies vis-a-vis core stakeholders, but simply report the findings compiled based on the interviews conducted. The EPS results reflect the pioneering work of Company A, which stands out for its successful balancing of the interests and concerns of all six stakeholder groups. It also reflects the consistent efforts of Company L at managing successfully the spectrum of stakeholder relationships. A question arises here as to whether the legitimacy of CSR practices can and should be questioned because of the nature of the industry in question (e.g. tobacco). As illustrated in Table VI, the EPS scores for the companies operating in Lebanon (both national and international) have ranged from a low of 40 to a high of 114, with an average EPS score of 73. The purpose here is not to consider the EPS scores as reflective of aggregate social performance, but rather to gauge stakeholder management patterns vis-a-vis the different stakeholders. Companies operating in Lebanon seem to be according the most attention

TABLE VI Ethical performance scores – Lebanese sample Company Name Company A* Company B Company C* Company D Company E Company F Company G* Company H Company I* Company J* Company K* Company L* Company M* Company N Lebanese sample averages

Community

Environment

Employees

Customers

Suppliers

Shareholders

Total EPS

14 2 9 12 10 5 3 13 9 15 10 10 10 13 10

20 )2 13 )5 )9 0 0 7 12 4 4 18 2 12 5

20 14 15 8 16 17 12 20 18 18 18 20 20 17 17

20 13 14 13 16 18 9 20 19 16 12 18 18 10 16

20 7 6 7 13 4 6 17 17 14 5 18 14 11 11

20 16 13 9 20 6 10 18 15 16 12 19 16 13 15

114 50 70 44 66 50 40 95 90 83 61 103 80 76 73

* Subsidiaries of International Corporations

Dima Jamali TABLE VII Ethical performance scores – Syrian sample Company Name Company O Company P Company Q Company R Company S Company T Company U Company V Syrian sample averages

Community

Environment

Employees

Customers

Suppliers

Shareholders

Total EPS

13 18 10 12 )1 11 6 5 9

1 10 )2 6 14 9 12 )16 4

17 18 20 16 8 4 15 6 13

13 18 17 6 9 9 19 16 13

11 14 17 7 0 10 13 10 10

17 20 4 13 0 5 10 9 10

72 98 66 60 30 48 75 30 60

to the traditional stakeholders, namely employees, customers and shareholders, respectively, and only limited attention to the silent stakeholders, including the community and the environment. This is possibly because ‘silent stakeholders’ tend to be less easily identifiable and less coherent in articulating demands and hence relegated to lower priority in a developing country context. Results for the Syrian sample are comparable, with consistently lower EPS scores across all stakeholder groups (Table VII). The highest EPS score for the Syrian sample is 98 and the lowest is 30, with an average EPS score of 60. Similar to the Lebanese sample, the weakest performance is in the environmental dimension, followed by the community dimension or in other words vis-a-vis the silent stakeholder groups. The highest consideration is accorded on the other hand to what Uhlaner et al. (2004) refer to as the economic stakeholders, namely customers and employees. It is clear from both tables that stakeholders are accorded systematic attention when they represent rational and/or economic motives for the firm.

A comparative assessment of the EPS scores of Lebanese and Syrian firms is shown in Table VIII. When excluding the subsidiaries of international corporations that may have potentially skewed the EPS scores of the Lebanese sample, we notice that the CSR performance of Lebanese and Syrian companies vis-a-vis key stakeholders are comparable, with Lebanese companies exhibiting a slightly better performance vis-a-vis organizational and economic stakeholders (e.g. employees, customers and shareholders) but worse performance vis-a-vis the environment. Overall, the findings suggest the salience of an instrumental stakeholder approach in developing countries (i.e. firms addressing stakeholder interests that most directly affect performance).

Discussion of findings An investigation into the application of the stakeholder approach in the Lebanese and Syrian contexts suggests a number of interesting findings and insights. This section will dwell on the findings

TABLE VIII A comparative benchmark – Lebanese vs Syrian samples Community Environment Employees Customers Suppliers Shareholders Total EPS Lebanese sample (including *) 10 Syrian sample 9 Lebanese sample (excluding *) 9 Syrian sample 9 * Subsidiaries of International Corporations

5 4 1 4

17 13 15 13

16 13 15 13

11 10 10 10

15 10 14 10

73 60 64 60

A Stakeholder Approach to Corporate Social Responsibility obtained in more detail in relation to the hypotheses derived from the literature. An articulation and explanation of the main findings will be supplemented as appropriate by the opinions and perspectives of the managers interviewed, which have been recorded and compiled during the interviews and can add much value here in terms of highlighting relevant nuances. The identities of the respective managers however will be kept anonymous. Developing country firms prioritize their stakeholders based primarily on instrumental considerations.

Hypothesis 1 (H1)

Our findings suggest that Lebanese and Syrian firms seem to prioritize their stakeholders based on instrumental considerations as reflected in the higher EPS scores in relation to organizational and economic stakeholders, namely employees, customers and shareholders respectively (Tables VI and VII). Discussions with managers from both contexts suggest that they indeed tend to selectively address stakeholder issues for instrumental reasons. One of the managers dwelled on this point ‘‘our primary mandate is to serve customers who in turn significantly influence the performance of our business. Firms exist in the first place to meet the needs of their customers.’’ Another manager highlighted the critical importance of good employee management in the sense that ‘‘productivity gains resulting from enlightened employee management policies yield substantial performance advantages over non responsible firms.’’ A similar view was expressed by another manager noting that ‘‘how employees are treated affects firm performance.’’A Lebanese manager summed it up nicely, ’’firms have to manage stakeholder relationships strategically in order to meet performance objectives.In the context of scarce resources, we must ask if any specific stakeholder relationship has the potential to generate advantages that positively affect the bottom line.’’ Based on these two sets of data H1 is accepted. Developing country firms are according systematic attention to a limited range of stakeholders.

Hypothesis 2 (H2)

Our findings suggest that Lebanese and Syrian firms seem to be according systematic attention to a limited number of stakeholders as reflected in the differential higher EPS scores in relation to three core

stakeholders namely employees, customers and shareholders respectively. This is true for both samples (Tables VI and VII) but is more clearly accentuated in relation to the EPS scores of the Lebanese sample. Discussions with managers in turn reinforce these observations. One of the managers expressed the view that despite the need to balance the interests of different stakeholders, ‘‘competitive pressures and traditional accounting systems tend to keep all eyes focused on the short-term and key stakeholder relationships.’’ In an attempt to justify the limited attention accorded to suppliers for example, one of our managers expressed the view that ‘‘we do not have the resources to ensure that appropriate controls are in place to monitor our entire supply chain. Attention to a few key stakeholders is thus dictated by practical considerations and priorities.’’ Another manager pointed out that ‘‘our objective is to attend to the needs of our customers and employees, with highest priority placed on the profitable creation and maintenance of superior customer value.’’ The two sets of data suggest that H1 and H2 are indeed related, and that H2 in turn is also accepted. Instrumental stakeholder management inclinations are counter-balanced or nuanced by normative flavors, particularly vis-avis the community stakeholder.

Hypothesis 3 (H3)

There is limited room to gauge whether H3 is supported by looking at the EPS scores in Tables VI and VII. The only relevant observation in this respect is that the community stakeholder group has received systematically higher EPS scores than the environment stakeholder in both samples. But this alone does not take us very far in way of evaluating H3. Discussions with managers on the other hand helped unveil interesting nuances in support of H3. According to one of the managers, ’’we have an obligation to assist the less fortunate community segments and constituencies. This is a responsibility of which we are conscious at all times.’’ Another manager expressed the view that ‘‘firms should seek to alleviate local problems and improve the quality of life of the local community.’’ A more progressive view was expressed by another manager who articulated that ’’business prosperity is linked to the well-being of the local community.’’These views are consistent with integrative social contract theory and with the corporate citizenship postulation, but more importantly seem to reflect norma-

Dima Jamali tive flavors and inclinations vis-a-vis the community stakeholder group specifically and hence H3 is accepted. Stakeholder management is affected by the relational attributes of specific stakeholders (power, legitimacy, urgency) as well as the pressures they can exert on corporations.

Hypothesis 4 (H4)

H4 is difficult to assess systematically in light of the EPS scores obtained and the fact that our data was derived through interviews with managers without equal consideration of stakeholder claims and perspectives. Nonetheless, it is safe to infer that our managers consider the employees, customers, shareholder and supplier stakeholder groups followed by the community stakeholder group to wield more power/legitimacy based on instrumental and normative considerations. More importantly in the context of our findings is the inferred limited pressures exerted by institutions and institutionalized stakeholders for environmental issues as can be detected in the lowest EPS scores in relation to the environmental stakeholder group in both samples (Tables VI and VII). This is further supported by discussions with managers, one of whom suggested that ‘‘given more pressing priorities, our stakeholders are least concerned about improvements in corporate environmental performance.’’ Another manager expressed the view that ‘‘there is not enough pressure on corporations to assume fuller responsibility for their environmental impacts and NGOs/environmental activist groups are virtually dormant.’’One of the managers noted that ‘‘the importance of corporate environmental performance is simply not appreciated in this neck of the world.’’ Given that the environment is a silent stakeholder, environmental issues tend to be channeled through coercive institutional pressures, which is clearly not the case in Syria and Lebanon and hence the relegation of the environment to the lowest priority in both contexts. Based on the above analysis, H4 is also accepted. Multinational corporations have a more balanced stakeholder management process, translating into attention to a wider range of stakeholders.

Hypothesis 5 (H5)

Findings from the Lebanese context suggest that multinational companies (MNCs) have transplanted with them a strong sense of responsibility, given that

as illustrated in Table VI, the EPS scores of the subsidiaries of international corporations which have been included in the sample are better than those of their local counterparts.1 The EPS scores obtained suggest that MNCs and their subsidiaries are making systematic efforts at managing the spectrum of stakeholder relationships. Discussions with MNC managers support this view. One of the most progressive managers of an MNC noted in this respect that ’’it is essential to nurture a wide spectrum of trust-based stakeholder relationships, which can serve as a source of opportunity and competitive advantage. Positive stakeholder relationships are associated with the on-going participation of stakeholders with the firm, thus increasing its stability and expanding its overall capacity, effectiveness and consistency of response.’’ Another MNC manager expressed the view that ‘‘balancing stakeholder relationships is the only way to protect the firm against constant environmental volatility and ultimate erosion of financial benefits.’’While the stakeholder management approach of MNCs seem also anchored in instrumental motivations, the EPS scores obtained suggest that MNCs have a more balanced stakeholder management process and are according attention to a wider range of stakeholders and thus H5 is accepted. Concluding remarks The recent ascendancy of stakeholder theory is grounded in the belief that firm–stakeholder relationships are the essential assets that managers must manage (Post et al., 2002). While CSR aims to define what responsibilities business ought to fulfill, the stakeholder concept addresses the issue of whom business is or should be accountable to (Kakabadse et al., 2005). Both concepts are closely inter-related. However, while the CSR concept still suffers from a level of abstraction, the stakeholder approach offers a practical alternative for assessing the performance of firms vis-a-vis key stakeholder groups and hence also indirectly gauging their CSP. Indeed, although the literature has made progress in terms of theoretical development, Clarkson’s (1995) concern that the business and society field has been hampered by the absence of widely accepted definitions of core concepts remains a valid criticism (Doh and Guay, 2006). This lack of clarity/ consensus has inhibited empirical testing of the

A Stakeholder Approach to Corporate Social Responsibility traditional business and society theories and translated into a relative paucity of systematic assessments of the societal impacts of business operations (Davenport, 2000). Clarkson’s (1995) integration of the concepts of stakeholders and CSP thus constituted an advance in this respect, providing an alternative theoretical lens, and making it easier for research to accrue. Stakeholder theory has accordingly witnessed a new resurgence and ascendancy in the context of CSR research. Brenner and Chochran postulated as early as 1991 that stakeholder theory holds the promise of becoming the theoretical centerpiece in a field that is searching for workable paradigms. Doh and Guay (2006) similarly find the adoption of a stakeholder model as a potentially appropriate and insightful theoretical lens, given its ability to systematically identify social stakeholder issues, and establish specific measures of performance. An organization’s stakeholder management data can thus be gathered and compared to other firms within and across industries, making social auditing for internal and external use both practical and possible (Davenport, 2000). Along these lines, this article has tried to make the case for a stakeholder approach to CSR, by arguing (1) that stakeholder theory in all its three veins or branches can bring to the fore a set of new insights for CSR academics and practitioners; (2) that the language of stakeholder theory is easy to grasp by managers as most firms understand and define obligations and responsibilities vis-a-vis their traditional stakeholders; and (3) that stakeholder theory seems easier to maneuver in collecting and analyzing CSR data as evidenced by the proliferation of empirical studies that have essentially integrated a stakeholder approach to CSR. It thus increasingly represents a concrete alternative to traditional taxonomic models on offer. Our empirical excursion in the Lebanese and Syrian contexts has shown on the other hand how stakeholder theory can be used to draw and test new hypotheses, and to derive insights into general CSR patterns/motivations. We have noted in this respect the continued preoccupation of firms with traditional core stakeholders (e.g., employees, customers and shareholders) and the salience of an instrumental stakeholder management approach based on a narrow definition/understanding of CSR, with the integration of some normative fla-

vors, vis-a-vis the community stakeholder. We have also noted that stakeholder management is affected by the relational attributes of stakeholders and the pressures they can exert on corporations, while also noting the increased proficiency of MNCs in balancing a broader range of stakeholder interests. While no over-generalizations can be drawn from our findings, particularly in relation to the latter two hypotheses (H4 and H5), the study is generally indicative of the possibilities and range of issues that can be explored within the context a stakeholder approach to CSR. The EPS methodology adopted in turn has its own limitations, but these have been noted and circumvented through using this tool for gauging stakeholder management patterns (and not as an aggregate measure of CSP) and by supplementing the data obtained through interviews with managers. Our empirical study shows that stakeholder methodology offers clear benefits in way of deriving intuitive insights particularly in the context of fleshing out specific stakeholder issues in the context of familiar language that was easy to grasp and relate to by managers. This research allows in turn the delineation of relevant suggestions for future research. There is a need for more research along these lines within the context of a stakeholder approach or framework. Variations to the EPS can be considered and other ways of classifying stakeholders (e.g., core vs. strategic vs. environmental) and differential weightings of stakeholder issues which could yield equally interesting insights. Research comparing the patterns of stakeholder management of local companies and international firms or subsidiaries is also very informative and can help build momentum towards improved global practices. Finally more research illuminating the patterns of stakeholder management and CSR in developing countries is also very much needed in view of the paucity of studies in such contexts.

Note 1

With the exception of Reuters, which could be accounted for in light of the nature of the industry (news provider) and the relatively small size of the subsidiary firm (comprising only 25 employees).

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Olayan School of Business - Management, American University of Beirut, Bliss Street, Beirut 11-0236, Lebanon E-mail: [email protected]