Corporate Sustainability Management in the Energy Sector 3834908541, 9783834908544

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Oliver Salzmann Corporate Sustainability Management in the Energy Sector

GABLER EDITION WISSENSCHAFT

Oliver Salzmann

Corporate Sustainability Management in the Energy Sector An Empirical Contingency Approach

GABLER EDITION WISSENSCHAFT

Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the Internet at http://dnb.d-nb.de.

Dissertation TU Berlin, 2006

1st Edition 2008 All rights reserved © Gabler | GWV Fachverlage GmbH, Wiesbaden 2008 Editorial Office: Frauke Schindler / Anita Wilke Gabler is part of the specialist publishing group Springer Science+Business Media. www.gabler.de No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder. Registered and/or industrial names, trade names, trade descriptions etc. cited in this publication are part of the law for trade-mark protection and may not be used free in any form or by any means even if this is not specifically marked. Cover design: Regine Zimmer, Dipl.-Designerin, Frankfurt/Main Printed on acid-free paper Printed in Germany ISBN 978-3-8349-0854-4

Prefaceȱ

Vȱ

Prefaceȱ Theȱcompletionȱofȱmyȱthesisȱowesȱmostȱtoȱmyȱ“Doktorvater”ȱProf.ȱDr.ȱUlrichȱStegerȱ forȱhisȱcontinuousȱguidanceȱandȱencouragement,ȱand,ȱaboveȱall,ȱhisȱdeterminationȱtoȱ readȱ theȱ finalȱproduct.ȱIȱcannotȱ thankȱhimȱ enough.ȱ Iȱ wouldȱ alsoȱlikeȱ toȱ expressȱmyȱ gratitudeȱtoȱmyȱsecondaryȱsupervisorȱProf.ȱDr.ȱAxelȱvonȱWerderȱforȱhisȱadviceȱandȱ support.ȱ Furthermore,ȱ Iȱ wouldȱ likeȱ toȱ thankȱ theȱ CSMȱ teamȱ atȱ IMD,ȱ Aileenȱ IonescuȬSomersȱ andȱ Kayȱ Richiger,ȱ andȱ theȱ “BCSȱ researchȱ team,”ȱ withoutȱ whomȱ thisȱ hugeȱ studyȱ wouldȱneverȱhaveȱbeenȱpossible.ȱ Iȱ amȱ alsoȱ extremelyȱ gratefulȱ toȱ Albertȱ Diverséȱ andȱ myȱ brotherȱ Ralphȱ forȱ coachingȱ andȱoftenȱchallengingȱmeȱ(thanksȱAlbert!)ȱonȱtheȱstatistics,ȱandȱtoȱWolfgangȱAmannȱ andȱJochenȱBrellochsȱforȱtheirȱrepeatedȱfeedbackȱandȱ“patsȱonȱtheȱback.”ȱIȱwouldȱalsoȱ likeȱtoȱthankȱthoseȱwhoȱinvestedȱtheirȱtimeȱinȱthisȱresearchȱeffortȱbyȱservingȱasȱinterȬ vieweesȱorȱansweringȱtheȱquestionnaire.ȱ Last,ȱbutȱnotȱleast,ȱIȱwouldȱlikeȱtoȱacknowledgeȱtheȱinfiniteȱpatience,ȱmoralȱsupportȱ andȱ understandingȱ ofȱ myȱ familyȱ andȱ myȱ girlfriendȱ Petra.ȱ Thisȱ achievementȱ wouldȱ notȱhaveȱbeenȱpossibleȱwithoutȱthem.ȱ OliverȱSalzmannȱ

ȱ

Listȱofȱcontentsȱ

VIIȱ

Listȱofȱcontentsȱ Preface...................................................................................................................................... V Listȱofȱcontents.................................................................................................................... VII Listȱofȱabbreviations ............................................................................................................ XI Listȱofȱfigures .....................................................................................................................XIII Listȱofȱcharts ........................................................................................................................ XV Listȱofȱtables ..................................................................................................................... XVII Listȱofȱregressionȱtables ................................................................................................... XIX 1

Introduction..................................................................................................................... 1 1.1 1.2 1.3

2

Researchȱfield ........................................................................................................... 1 Structure ................................................................................................................... 2 Intendedȱcontributions ........................................................................................... 4

Theoreticalȱfoundationȱandȱconcepts ......................................................................... 7 2.1 Contingencyȱtheory................................................................................................. 7 2.2 CSMȱandȱrelatedȱtheoreticalȱframeworks ............................................................ 8 2.2.1 Corporateȱsocialȱresponsibility...................................................................... 8 Corporateȱsocialȱperformanceȱ(CSP) ............................................................ 9 2.2.2 2.2.3 Corporateȱsustainability ............................................................................... 12 2.2.4 Discussion....................................................................................................... 13 2.3 Keyȱconcepts .......................................................................................................... 16 2.3.1 DeterminantsȱofȱCSM ................................................................................... 16 2.3.1.1 Issuesȱ–ȱtheȱprincipleȱofȱpublicȱresponsibility....................................... 16 2.3.1.2 Stakeholdersȱ–ȱtheȱprincipleȱofȱlegitimacy............................................. 18 2.3.1.3 Managers’ȱattitudesȱ–ȱtheȱprincipleȱofȱmanagerialȱdiscretion ............ 19 2.3.1.4 CompanyȬspecificȱdeterminantsȱ–ȱtheȱprincipleȱofȱcorporateȱ discretion.................................................................................................... 20 2.3.2 CSM ................................................................................................................. 21 2.3.3 OutcomeȱofȱCSM ........................................................................................... 24

3

Reviewȱofȱempiricalȱliterature ................................................................................... 25 3.1 DeterminantsȱofȱCSM ........................................................................................... 26 3.2 CSM ......................................................................................................................... 30 3.2.1 Strategicȱdisposition...................................................................................... 30 3.2.2 Economicȱrationale........................................................................................ 31 3.2.3 Implementation ............................................................................................. 34 3.3 Outcomes................................................................................................................ 35

ȱ

VIIIȱ

Listȱofȱcontentsȱ

3.4

Summaryȱandȱresearchȱgaps................................................................................ 36

4

Conceptualȱrationaleȱandȱresearchȱquestions ......................................................... 37

5

Method ........................................................................................................................... 43 5.1 Selectionȱofȱsuitableȱmethod ................................................................................ 44 5.1.1 Contingencyȱapproach.................................................................................. 44 5.1.2 Selectionȱofȱinstruments ............................................................................... 46 5.2 Instruments ............................................................................................................ 51 5.2.1 Dataȱcollection................................................................................................ 51 5.2.1.1 Qualitativeȱmethods.................................................................................. 51 5.2.1.2 Quantitativeȱmethods ............................................................................... 54 5.2.2 Dataȱanalysis .................................................................................................. 57 5.2.2.1 Qualitativeȱmethods.................................................................................. 57 5.2.2.2 Quantitativeȱmethods ............................................................................... 58 5.2.2.2.1 Basicȱstatistics....................................................................................... 58 5.2.2.2.2 Advancedȱstatistics ............................................................................. 59 5.3 Synergisticȱfitȱofȱmethods..................................................................................... 68 5.4 Evaluation............................................................................................................... 70

6

Sectorȱcharacteristics.................................................................................................... 75 6.1 6.2 6.3

7

Dataȱcollected ................................................................................................................ 81 7.1 7.2

8

Characteristicsȱandȱactivitiesȱofȱcompanies....................................................... 75 Trends,ȱdriversȱandȱcompetitiveȱforces.............................................................. 77 Discussion............................................................................................................... 79

Qualitativeȱdata ..................................................................................................... 81 Quantitativeȱdata................................................................................................... 82

Empiricalȱevidence....................................................................................................... 87 8.1 Issues ....................................................................................................................... 90 8.1.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ..................................................... 90 8.1.1.1 Socialȱandȱethicalȱissues ........................................................................... 92 8.1.1.2 Environmentalȱissues................................................................................ 95 8.1.1.3 Theȱrelativeȱimportanceȱofȱenvironmentalȱandȱsocialȱissues.............. 98 8.1.2 Advancedȱstatistics ..................................................................................... 102 8.1.2.1 Correlations .............................................................................................. 102 8.1.2.2 Regressions............................................................................................... 111 8.1.3 Discussion..................................................................................................... 112 8.2 Externalȱstakeholders,ȱindustryȱandȱpartnerships ......................................... 116 8.2.1 Governmentsȱandȱregulators ..................................................................... 116 8.2.1.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 116

Listȱofȱcontentsȱ

IXȱ

8.2.1.2 Advancedȱstatistics ................................................................................. 118 8.2.2 Publicȱpressureȱgroups ............................................................................... 121 8.2.2.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 121 8.2.2.2 Advancedȱstatistics ................................................................................. 123 8.2.3 Customers..................................................................................................... 125 8.2.3.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 125 8.2.3.2 Advancedȱstatistics ................................................................................. 127 8.2.4 Financialȱcommunity .................................................................................. 129 8.2.4.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 129 8.2.4.2 Advancedȱstatistics ................................................................................. 131 8.2.5 Industryȱandȱpartnerships ......................................................................... 135 8.2.5.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 135 8.2.5.2 Advancedȱstatistics ................................................................................. 137 8.2.6 Legitimacyȱandȱtheȱrelativeȱimportanceȱofȱexternalȱstakeholders ....... 142 8.2.6.1 Theȱroleȱofȱlegitimacy ............................................................................. 142 8.2.6.1.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ......................................... 142 8.2.6.1.2 Advancedȱstatistics ........................................................................... 145 8.2.6.1.2.1 Correlations ................................................................................. 145 8.2.6.1.2.2 Regressions.................................................................................. 152 8.2.6.2 Theȱrelativeȱimportanceȱofȱexternalȱstakeholders .............................. 152 8.2.6.2.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ......................................... 152 8.2.6.2.2 Advancedȱstatistics ........................................................................... 157 8.2.6.2.2.1 Correlations ................................................................................. 157 8.2.6.2.2.2 Regressions.................................................................................. 159 8.2.7 Discussion..................................................................................................... 165 8.3 Managers .............................................................................................................. 170 8.3.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ................................................... 170 8.3.2 Advancedȱstatistics ..................................................................................... 175 8.3.2.1 Correlations .............................................................................................. 175 8.3.2.2 Regressions............................................................................................... 180 8.3.3 Discussion..................................................................................................... 182 8.4 Companies............................................................................................................ 184 8.4.1 CompanyȬspecificȱdeterminants ............................................................... 185 8.4.1.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 185 8.4.1.2 Advancedȱstatistics ................................................................................. 191 8.4.1.3 Discussion................................................................................................. 194 8.4.2 Strategicȱdisposition.................................................................................... 198 8.4.2.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 198 8.4.2.2 Advancedȱstatistics ................................................................................. 204 ȱ

Xȱ

Listȱofȱcontentsȱ

8.4.2.2.1 Correlations ........................................................................................ 204 8.4.2.2.2 Regressions......................................................................................... 208 8.4.2.3 Discussion................................................................................................. 211 8.4.3 Economicȱrationale...................................................................................... 215 8.4.3.1 Importanceȱandȱelementsȱofȱtheȱbusinessȱcase ................................... 216 8.4.3.2 Issueȱintegration ...................................................................................... 219 8.4.3.3 Buildingȱandȱquantifyingȱtheȱbusinessȱcase ........................................ 222 8.4.3.4 Discussion................................................................................................. 225 8.4.4 Implementation ........................................................................................... 235 8.4.4.1 Managementȱtools ................................................................................... 236 8.4.4.1.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ......................................... 236 8.4.4.1.2 Advancedȱstatistics ........................................................................... 239 8.4.4.1.3 Discussion........................................................................................... 241 8.4.4.2 Structures.................................................................................................. 243 8.4.4.2.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ......................................... 243 8.4.4.2.2 Advancedȱstatistics ........................................................................... 244 8.4.4.2.2.1 Correlations ................................................................................. 244 8.4.4.2.2.2 Regressions.................................................................................. 249 8.4.4.2.3 Discussion........................................................................................... 250 8.4.4.3 Initiatives .................................................................................................. 251 8.4.4.3.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ......................................... 251 8.4.4.3.2 Advancedȱstatistics ........................................................................... 255 8.4.4.3.3 Discussion........................................................................................... 256 8.4.5 Outcome........................................................................................................ 258 8.4.5.1 Qualitativeȱanalysisȱandȱbasicȱstatistics ............................................... 258 8.4.5.2 Advancedȱstatistics ................................................................................. 259 8.4.5.2.1 Correlations ........................................................................................ 259 8.4.5.2.2 Regressions......................................................................................... 261 8.4.5.3 Discussion................................................................................................. 265 9

Synopsis ....................................................................................................................... 269 9.1 Findings ................................................................................................................ 269 9.2 Significanceȱofȱtheȱstudy .................................................................................... 278 9.2.1 Implicationsȱforȱtheory ............................................................................... 278 9.2.2 Implicationsȱforȱpractice............................................................................. 279 9.3 Limitationsȱandȱsuggestionsȱforȱfurtherȱresearch........................................... 284 9.4 Conclusion............................................................................................................ 289

Appendices .......................................................................................................................... 291 Bibliography........................................................................................................................ 333

Listȱofȱabbreviationsȱ

XIȱ

Listȱofȱabbreviationsȱ BCSȱ

Businessȱcaseȱforȱsustainabilityȱ

CSȱ

Corporateȱsustainabilityȱ

CSMȱ

Corporateȱsustainabilityȱmanagementȱ

CSPȱ

Corporateȱsocialȱperformanceȱ

CSRȱ

Corporateȱsocialȱresponsibilityȱ

EHSȱ

Environmental,ȱhealthȱ&ȱsafetyȱ

ESPȱ

Environmental/socialȱperformanceȱ

GMȱ

Generalȱmanagerȱ

IEAȱȱ

InternationalȱEnergyȱAgencyȱ

NGOȱ

NonȬgovernmentalȱorganizationȱ

OGȱ

Oilȱ&ȱgasȱ

OPECȱ

OrganizationȱofȱPetroleumȱExportingȱCountriesȱ

RoIȱ

Returnȱonȱinvestmentȱ

SMEȱ

SmallȱandȱmediumȬsizedȱenterpriseȱ

SDȱ

Sustainableȱdevelopmentȱ

SOȱ

Sustainabilityȱofficerȱ

TQMȱ

Totalȱqualityȱmanagementȱ

UNEPȱ

UnitedȱNationsȱEnvironmentȱProgrammeȱ

UTȱ

Electric/gasȱutilityȱ

WBCSDȱ

WorldȱBusinessȱCouncilȱforȱSustainableȱDevelopmentȱ

WECȱ

WorldȱEconomicȱForumȱ

WRIȱ

WorldȱResourcesȱInstituteȱ

ȱ

Listȱofȱfiguresȱ

XIIIȱ

Listȱofȱfiguresȱ Figureȱ1.1:ȱStructureȱofȱtheȱcontent....................................................................................... 3 Figureȱ2.1:ȱStructureȱofȱsectionȱ2 ........................................................................................... 7 Figureȱ2.2:ȱWood’sȱcorporateȱsocialȱperformanceȱmodel,ȱbasedȱonȱWoodȱ(1991)....... 11 Figureȱ4.1:ȱCorporateȱsustainabilityȱperformanceȱmodel................................................ 38 Figureȱ5.1:ȱStructureȱofȱsectionȱ5 ......................................................................................... 43 Figureȱ5.2:ȱVisualizationȱofȱcontingencyȱapproach .......................................................... 44 Figureȱ5.3:ȱVisualizationȱofȱconcurrentȱtriangulizationȱdesignȱ(basedȱonȱCreswell,ȱ Clark,ȱGutmann,ȱ&ȱHanson,ȱ2004,ȱp.ȱ236) ................................................................. 48 Figureȱ5.4:ȱProcessȱofȱissueȱintegrationȱbasedȱonȱSalzmannȱ(2003a,ȱp.ȱ24) ................... 52 Figureȱ5.5:ȱSystemizationȱofȱvalueȱdriversȱandȱvalueȱconstructs ................................... 53 Figureȱ5.6:ȱIntraȬȱandȱcrossȬsectorȱcomparisons ............................................................... 59 Figureȱ5.7:ȱVariablesȱthatȱareȱsubjectȱtoȱcorrelationȱanalysis .......................................... 60 Figureȱ5.8:ȱRegressionȱanalysisȱ–ȱTestedȱdeterminantsȱofȱCSMȱintent.......................... 63 Figureȱ5.9:ȱRegressionȱanalysisȱ–ȱTestedȱdeterminantsȱofȱCSMȱsuccess ....................... 64 Figureȱ5.10:ȱSystemizationȱofȱmodelsȱpredictingȱCSMȱintent......................................... 65 Figureȱ5.11:ȱSystemizationȱofȱmodelsȱpredictingȱCSMȱsuccess ...................................... 65 Figureȱ5.12:ȱComplementarityȱofȱcorrelationsȱandȱregressions...................................... 68 Figureȱ5.13:ȱSynergisticȱfitȱofȱmethodsȱ–ȱQuantitativeȱapproach ................................... 69 Figureȱ5.14:ȱSynergisticȱfitȱofȱmethodsȱ–ȱQualitativeȱapproach...................................... 70 Figureȱ7.1:ȱSamplesȱ–ȱDimensionsȱofȱcomparison ............................................................ 82 Figureȱ8.1:ȱStructureȱofȱsectionȱ8 ......................................................................................... 88 Figureȱ8.2:ȱIssuesȱandȱstakeholdersȱacrossȱtheȱvalueȱchainȱ(OG)................................... 91 Figureȱ8.3:ȱIssuesȱandȱstakeholdersȱacrossȱtheȱvalueȱchainȱ(UT) ................................... 91 Figureȱ8.4:ȱCorrelationsȱ–ȱEnvironmentalȱissueȱsignificance ........................................ 103 Figureȱ8.5:ȱCorrelationsȱ–ȱSocialȱissueȱsignificance ........................................................ 103 Figureȱ8.6:ȱDeterminantsȱofȱissueȱsignificance ................................................................ 113 Figureȱ8.7:ȱCorrelationsȱ–ȱGovernments’ȱSDȱrole ........................................................... 118 Figureȱ8.8:ȱCorrelationsȱ–ȱPublicȱpressureȱgroups’ȱSDȱrole .......................................... 123 Figureȱ8.9:ȱCorrelationsȱ–ȱConsumers’ȱSDȱrole ............................................................... 127 Figureȱ8.10:ȱCorrelationsȱ–ȱCapitalȱmarkets’ȱfutureȱSDȱrole ......................................... 132 Figureȱ8.11:ȱCorrelationsȱ–ȱIndustry’sȱSDȱrole ................................................................ 138 Figureȱ8.12:ȱCorrelationsȱ–ȱPublicȬprivateȱpartnerships’ȱSDȱrole................................. 141 Figureȱ8.13:ȱCorrelationsȱ–ȱImportanceȱofȱlegitimacy .................................................... 146 Figureȱ8.14:ȱCorrelationsȱ–ȱDamageȱtoȱlegitimacy.......................................................... 148 Figureȱ8.15:ȱDeterminantsȱofȱoutsideȱpressure ............................................................... 167 Figureȱ8.16:ȱCorrelationsȱ–ȱBBBȱattitude .......................................................................... 175 Figureȱ8.17:ȱCorrelationsȱ–ȱWWȱattitude.......................................................................... 176 Figureȱ8.18:ȱCorrelationsȱ–ȱCAȱattitude............................................................................ 177 ȱ

XIVȱ

Listȱofȱfiguresȱ

Figureȱ8.19:ȱCorrelationsȱ–ȱUCAȱattitude......................................................................... 178 Figureȱ8.20:ȱSystemizationȱofȱbarriersȱtoȱCSM ................................................................ 194 Figureȱ8.21:ȱCorrelationsȱ–ȱSDȱfamiliarity........................................................................ 204 Figureȱ8.22:ȱCorrelationsȱ–ȱFutureȱSDȱimportance ......................................................... 205 Figureȱ8.23:ȱCorrelationsȱ–ȱCSMȱintent ............................................................................ 205 Figureȱ8.24:ȱCorrelationsȱwithȱstrategicȱdisposition....................................................... 206 Figureȱ8.25:ȱDeterminantsȱofȱCSMȱintent......................................................................... 213 Figureȱ8.26:ȱProcessesȱofȱissueȱintegrationȱ(Salzmann,ȱ2003b,ȱp.ȱ15)........................... 219 Figureȱ8.27:ȱMappingȱtheȱbusinessȱcaseȱforȱsustainabilityȱȱ (BasedȱonȱSalzmann,ȱ2003b,ȱp.ȱ11) ............................................................................ 224 Figureȱ8.28:ȱDifferentȱcasesȱforȱcorporateȱsustainability ............................................... 227 Figureȱ8.29:ȱTheȱcomplexityȱofȱtheȱbusinessȱcaseȱforȱsustainability ............................ 228 Figureȱ8.30:ȱConceptualȱFrameworkȱ(Salzmannȱetȱal.,ȱ2005b,ȱp.ȱ6) ............................. 230 Figureȱ8.31:ȱTheȱbusinessȱcaseȱandȱitsȱdeterminants...................................................... 233 Figureȱ8.32:ȱCorrelationsȱ–ȱCrossȬdisciplinaryȱcollaboration........................................ 245 Figureȱ8.33:ȱCorrelationsȱ–ȱCrossȬdisciplinaryȱpotential ............................................... 246 Figureȱ8.34:ȱCorrelationsȱ–ȱCSMȱsuccess.......................................................................... 260 Figureȱ8.35:ȱDeterminantsȱofȱCSMȱsuccess ...................................................................... 266 Figureȱ9.1:ȱCrossȬsectorȱdifferences .................................................................................. 276 Figureȱ9.2:ȱIntegrationȱofȱtheȱbusinessȱcaseȱintoȱtheȱconceptualȱframework.............. 285 Figureȱ9.3:ȱDevelopedȱframeworkȱ–ȱTheȱbusinessȱcaseȱforȱsustainabilityȱandȱitsȱ determinants ................................................................................................................ 287

Listȱofȱchartsȱ

XVȱ

Listȱofȱchartsȱ Chartȱ7Ȭ1:ȱRegionsȱofȱoperationȱ–ȱOGȱgeneralȱmanagers ................................................ 83 Chartȱ7Ȭ2:ȱRegionsȱofȱoperationȱ–ȱUTȱgeneralȱmanagers................................................. 83 Chartȱ7Ȭ3:ȱNationalitiesȱ–ȱOGȱgeneralȱmanagers .............................................................. 83 Chartȱ7Ȭ4:ȱNationalitiesȱ–ȱUTȱgeneralȱmanagers............................................................... 83 Chartȱ7Ȭ5:ȱRegionsȱofȱoperationȱ–ȱOGȱsustainabilityȱofficers.......................................... 84 Chartȱ7Ȭ6:ȱRegionsȱofȱoperationsȱ–ȱUTȱsustainabilityȱofficers......................................... 84 Chartȱ7Ȭ7:ȱNationalitiesȱ–ȱOGȱsustainabilityȱofficers........................................................ 84 Chartȱ7Ȭ8:ȱNationalitiesȱ–ȱUTȱsustainabilityȱofficers ........................................................ 84 Chartȱ8Ȭ1:ȱIssuesȱ–ȱOpenȬendedȱquestionȱ(Generalȱmanagersȱ–ȱOG) ............................ 99 Chartȱ8Ȭ2:ȱIssuesȱ–ȱOpenȬendedȱquestionȱ(Generalȱmanagersȱ–ȱUT)............................. 99 Chartȱ8Ȭ3:ȱMostȱimportantȱissuesȱ(Sustainabilityȱofficersȱ–ȱOG) .................................. 100 Chartȱ8Ȭ4:ȱMostȱimportantȱissuesȱ(Sustainabilityȱofficersȱ–ȱUT)................................... 100 Chartȱ8Ȭ5:ȱSignificanceȱofȱenvironmentalȱandȱsocialȱissuesȱ (Generalȱmanagersȱandȱsustainabilityȱofficers) ...................................................... 101 Chartȱ8Ȭ6:ȱCapitalȱmarkets’ȱfutureȱSDȱroleȱandȱsummaryȱstatistics ............................ 130 Chartȱ8Ȭ7:ȱImportanceȱofȱlegitimacy ................................................................................. 144 Chartȱ8Ȭ8:ȱDamageȱtoȱlegitimacyȱinȱtheȱpastȱthreeȱyears............................................... 144 Chartȱ8Ȭ9:ȱContributionȱofȱdifferentȱgroupsȱtoȱsustainableȱdevelopmentȱ (Generalȱmanagersȱ–ȱOG)........................................................................................... 153 Chartȱ8Ȭ10:ȱȱIncidentsȱdamagingȱbrandȱvalueȱandȱreputationȱ (Generalȱmanagersȱ–ȱOG)........................................................................................... 154 Chartȱ8Ȭ11:ȱIncidentsȱdamagingȱbrandȱvalueȱandȱreputationȱ (Sustainabilityȱofficersȱ–ȱUT) ..................................................................................... 154 Chartȱ8Ȭ12:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱOG) ......................................................... 155 Chartȱ8Ȭ13:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱUT) .......................................................... 155 Chartȱ8Ȭ14:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG) ............................................................... 156 Chartȱ8Ȭ15:ȱBarriersȱ(Generalȱmanagersȱ–ȱUT) ................................................................ 156 Chartȱ8Ȭ16:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱOG) ......................................................... 172 Chartȱ8Ȭ17:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱUT) .......................................................... 172 Chartȱ8Ȭ18:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG) ............................................................... 173 Chartȱ8Ȭ19:ȱBarriersȱ(Generalȱmanagersȱ–ȱUT) ................................................................ 173 Chartȱ8Ȭ20:ȱPromotingȱfactorsȱ(Sustainabilityȱofficersȱ–ȱOG)........................................ 173 Chartȱ8Ȭ21:ȱPromotingȱfactorsȱ(Sustainabilityȱofficerȱ–ȱUT) .......................................... 173 Chartȱ8Ȭ22:ȱPersonalȱattitudesȱtowardsȱcorporateȱsustainabilityȱ (Generalȱmanagers) ..................................................................................................... 174 Chartȱ8Ȭ23:ȱPromotingȱfactorsȱ(Sustainabilityȱofficersȱ–ȱOG)........................................ 186 Chartȱ8Ȭ24:ȱPromotingȱfactorsȱ(Sustainabilityȱofficerȱ–ȱUT) .......................................... 186 Chartȱ8Ȭ25:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱOG) ......................................................... 188 ȱ

XVIȱ

Listȱofȱchartsȱ

Chartȱ8Ȭ26:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱUT) .......................................................... 188 Chartȱ8Ȭ27:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG) ............................................................... 189 Chartȱ8Ȭ28:ȱBarriersȱ(Generalȱmanagersȱ–ȱUT) ................................................................ 189 Chartȱ8Ȭ29:ȱSDȱfamiliarityȱandȱCSMȱintent...................................................................... 199 Chartȱ8Ȭ30:ȱFutureȱSDȱimportance .................................................................................... 200 Chartȱ8Ȭ31:ȱValueȱdriversȱ(OGȱsustainabilityȱofficers)................................................... 216 Chartȱ8Ȭ32:ȱValueȱdriversȱ(UTȱsustainabilityȱofficers) ................................................... 216 Chartȱ8Ȭ33:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorporateȱsustainabilityȱ (Generalȱmanagersȱ–ȱOG)........................................................................................... 236 Chartȱ8Ȭ34:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorporateȱsustainabilityȱ (Generalȱmanagersȱ–ȱUT) ........................................................................................... 236 Chartȱ8Ȭ35:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorporateȱsustainabilityȱ (Sustainabilityȱofficersȱ–ȱOG)..................................................................................... 237 Chartȱ8Ȭ36:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorporateȱsustainabilityȱ (Sustainabilityȱofficersȱ–ȱUT) ..................................................................................... 237 Chartȱ8Ȭ37:ȱResponsesȱtoȱenvironmentalȱandȱsocialȱissuesȱ (Generalȱmanagersȱ–ȱOG)........................................................................................... 252 Chartȱ8Ȭ38:ȱResponsesȱtoȱenvironmentalȱandȱsocialȱissuesȱ (Generalȱmanagersȱ–ȱUT) ........................................................................................... 252 Chartȱ8Ȭ39:ȱCorporateȱinitiativesȱ(Generalȱmanagersȱ–ȱOG) ......................................... 254 Chartȱ8Ȭ40:ȱCorporateȱinitiativesȱ(Generalȱmanagersȱ–ȱUT).......................................... 254 Chartȱ8Ȭ41:ȱProgressȱinȱadoptingȱmoreȱsustainableȱbusinessȱpractices....................... 259ȱ ȱ ȱ

Listȱofȱtablesȱ

XVIIȱ

Listȱofȱtablesȱ Tableȱ3Ȭ1:ȱEmpiricalȱstudiesȱonȱOGȱandȱUTȱsector .......................................................... 25 Tableȱ4Ȭ1:ȱModificationsȱtoȱWood’sȱ(1991)ȱCSPȱmodel.................................................... 37 Tableȱ4Ȭ2:ȱGapsȱinȱempiricalȱliteratureȱandȱstudyȱcharacteristicsȱtoȱfillȱthem.............. 40 Tableȱ5Ȭ1:ȱTimelineȱofȱtheȱcrossȬindustryȱresearchȱproject.............................................. 43 Tableȱ5Ȭ2:ȱComplementarityȱandȱtriangulationȱthroughȱmixedȱmethodsȱ –ȱbasedȱonȱBortzȱ(2002,ȱp.ȱ237)ȱandȱTeddlieȱ(2003,ȱp.ȱ15) ........................................ 47 Tableȱ5Ȭ3:ȱDummyȱvariablesȱandȱreferenceȱgroups ......................................................... 62 Tableȱ7Ȭ1:ȱInterviewȱsample ................................................................................................. 81 Tableȱ8Ȭ1:ȱSummaryȱstatisticsȱ–ȱGovernments’ȱSDȱrole ................................................. 117 Tableȱ8Ȭ2:ȱSummaryȱstatisticsȱ–ȱPublicȱpressureȱgroups’ȱSDȱrole ................................ 122 Tableȱ8Ȭ3:ȱSummaryȱstatisticsȱ–ȱConsumers’ȱSDȱrole ..................................................... 126 Tableȱ8Ȭ4:ȱSummaryȱstatisticsȱ–ȱIndustry’sȱSDȱrole ........................................................ 136 Tableȱ8Ȭ5:ȱSummaryȱstatisticsȱ–ȱPublicȬprivateȱpartnerships’ȱSDȱrole......................... 137 Tableȱ8Ȭ6:ȱParametersȱofȱstrategicȱdispositionȱtoȱCSMȱ–ȱbasedȱonȱinterviewsȱandȱ analysisȱofȱcorporateȱreports/websites ..................................................................... 201 Tableȱ8Ȭ7:ȱPortfolioȱofȱmanagementȱtoolsȱusedȱinȱcompaniesȱ(basedȱonȱDozȱetȱal.,ȱ 1988)............................................................................................................................... 238 Tableȱ8Ȭ8:ȱSummaryȱstatisticsȱ–ȱCrossȬdisciplinaryȱcollaboration................................ 243 Tableȱ8Ȭ9:ȱSummaryȱstatisticsȱ–ȱCrossȬdisciplinaryȱpotential ....................................... 244 Tableȱ8Ȭ10:ȱSummaryȱstatisticsȱ–ȱCSMȱsuccess................................................................ 258 Tableȱ8Ȭ11:ȱCorrelationsȱwithȱCSMȱsuccess ..................................................................... 261 Tableȱ9Ȭ1:ȱCrossȬdisciplinaryȱdifferences ......................................................................... 277 ȱ

ȱ

Listȱofȱregressionȱtablesȱ

XIXȱ

Listȱofȱregressionȱtablesȱ RegressionȱTableȱ8Ȭ1:ȱCSMȱintentȱ–ȱIssuesȱ(Reducedȱclusterȱmodels)......................... 111 RegressionȱTableȱ8Ȭ2:ȱCSMȱintentȱ–ȱImportanceȱofȱandȱdamageȱtoȱlegitimacyȱ (Expandedȱsubmodels)............................................................................................... 152 RegressionȱTableȱ8Ȭ3:ȱCSMȱintentȱ–ȱSDȱroleȱofȱexternalȱstakeholdersȱ(Expandedȱ submodels) ................................................................................................................... 160 RegressionȱTableȱ8Ȭ4:ȱCSMȱintentȱȬȱIncidentsȱthatȱdamagedȱlegitimacy(Expandedȱ submodels) ................................................................................................................... 162 RegressionȱTableȱ8Ȭ5:ȱCSMȱintentȱ–ȱExternalȱbarriersȱ(Reducedȱsubmodels) ............ 163 RegressionȱTableȱ8Ȭ6:ȱCSMȱsuccessȱ–ȱExternalȱbarriersȱ(Reducedȱsubmodels).......... 163 RegressionȱTableȱ8Ȭ7:ȱCSMȱintentȱ–ȱAllȱvariablesȱrelatingȱtoȱinfluenceȱfromȱ externalȱstakeholdersȱ(Reducedȱclusterȱmodels) .................................................... 164 RegressionȱTableȱ8Ȭ8:ȱCSMȱintentȱ–ȱManagers’ȱpersonalȱattitudesȱ (Expandedȱclusterȱmodels) ........................................................................................ 181 RegressionȱTableȱ8Ȭ9:ȱCSMȱsuccessȱ–ȱManagers’ȱpersonalȱattitudesȱ (Expandedȱclusterȱmodels) ........................................................................................ 182 RegressionȱTableȱ8Ȭ10:ȱCSMȱintentȱ–ȱBarriersȱ(Expandedȱsubmodels) ....................... 191 RegressionȱTableȱ8Ȭ11:ȱCSMȱintentȱ–ȱBarriersȱ(Reducedȱsubmodels).......................... 192 RegressionȱTableȱ8Ȭ12:ȱCSMȱsuccessȱȬȱBarriersȱ(Reducedȱsubmodels) ........................ 193 RegressionȱTableȱ8Ȭ13:ȱCSMȱintentȱ–ȱSummaryȱmodels ................................................ 209 RegressionȱTableȱ8Ȭ14:ȱCSMȱsuccessȱȬȱCSMȱtoolsȱ(Reducedȱsubmodels).................... 239 RegressionȱTableȱ8Ȭ15:ȱCSMȱsuccessȱ–Structuresȱ(Expandedȱsubmodels).................. 249 RegressionȱTableȱ8Ȭ16:ȱCSMȱsuccessȱ–ȱInitiativesȱ(Reducedȱsubmodels).................... 255 RegressionȱTableȱ8Ȭ17:ȱCSMȱsuccessȱ–ȱAllȱcorporateȱdiscretionaryȱfactorsȱ (Reducedȱclusterȱmodel)............................................................................................. 262 RegressionȱTableȱ8Ȭ18:ȱSummaryȱmodelsȱȬȱCSMȱsuccess .............................................. 264 ȱ RegressionȱTableȱAȱ1:ȱCSMȱintentȱȬȱpublicȱresponsibilityȱȱ (Expandedȱclusterȱmodels) ........................................................................................ 307 RegressionȱTableȱAȱ2:ȱCSMȱintentȱ–ȱimportanceȱofȱandȱdamageȱtoȱlegitimacyȱ (Reducedȱsubmodels) ................................................................................................. 307 RegressionȱTableȱAȱ3:ȱCSMȱintentȱ–ȱSDȱrolesȱofȱexternalȱstakeholdersȱȱ (Reducedȱsubmodels) ................................................................................................. 307 RegressionȱTableȱAȱ4:ȱCSMȱintentȱ–ȱincidentsȱthatȱdamagedȱlegitimacyȱȱ (Reducedȱsubmodels) ................................................................................................. 307 RegressionȱTableȱAȱ5:ȱCSMȱintentȱ–ȱexternalȱbarriersȱ(Expandedȱmodels) ................ 308 RegressionȱTableȱAȱ6:ȱCSMȱsuccessȱ–ȱexternalȱbarriersȱ(Expandedȱmodels) ............. 308 RegressionȱTableȱAȱ7:ȱCSMȱintentȱȬȱpersonalȱattitudesȱ(Reducedȱmodels) ................ 308 RegressionȱTableȱAȱ8:ȱCSMȱsuccessȱ–ȱPersonalȱattitudesȱ(Reducedȱmodels) ............. 308 ȱ

XXȱ

Listȱofȱregressionȱtablesȱ

RegressionȱTableȱAȱ9:ȱCSMȱintentȱ–ȱexternalȱbarriersȱ(Expandedȱmodels) ................ 309 RegressionȱTableȱAȱ10:ȱCSMȱsuccessȱ–ȱexternalȱbarriersȱ(Expandedȱmodels) ........... 309 RegressionȱTableȱAȱ11:ȱCSMȱintentȱȬȱInternalȱbarriersȱ(Expandedȱmodels)............... 309 RegressionȱTableȱAȱ12:ȱCSMȱintentȱȬȱInternalȱbarriersȱ(Reducedȱmodels) ................. 309 RegressionȱTableȱAȱ13:ȱCSMȱsuccessȱ–ȱInternalȱbarriersȱ(Expandedȱmodels)............ 310 RegressionȱTableȱAȱ14:ȱCSMȱsuccessȱȬȱInternalȱbarriersȱ(Reducedȱmodels)............... 310 RegressionȱTableȱAȱ15:ȱCSMȱsuccessȱȬȱbarriersȱ(Expandedȱsubmodels)..................... 310 RegressionȱTableȱAȱ16:ȱCSMȱsuccessȱȬȱCSMȱtoolsȱ(Expandedȱmodels)....................... 311 RegressionȱTableȱAȱ17:ȱCSMȱsuccessȱ–ȱCorporateȱstructureȱ (Reducedȱsubmodels) ................................................................................................. 311 RegressionȱTableȱAȱ18:ȱCSMȱsuccessȱȬȱCSMȱinitiativesȱ(Expandedȱmodels).............. 311

1.1ȱResearchȱfieldȱ

1 1.1

1ȱ

Introductionȱ Researchȱfieldȱ

Theȱhistoryȱofȱcorporateȱsocialȱresponsibilityȱandȱotherȱrelatedȱconceptsȱcanȱbeȱtracedȱ wayȱ backȱ toȱ ancientȱ Mesopotamiaȱ andȱ Greeceȱ (andȱ probablyȱ evenȱ further),ȱ whereȱ businessmenȱ wereȱ punishedȱ forȱ negligenceȱ thatȱ harmedȱ workersȱ andȱ theȱ generalȱ public.ȱHowever,ȱitȱisȱobviousȱthatȱtheȱindustrialȱrevolutionȱatȱtheȱendȱofȱtheȱ19thȱcenȬ turyȱsubstantiallyȱincreasedȱtheȱsignificanceȱofȱbusinessesȱandȱthusȱalsoȱtheirȱscopeȱtoȱ behaveȱ moreȱ orȱ lessȱ responsiblyȱ withinȱ society.ȱ Becauseȱ thereȱ wasȱ noȱ legislationȱ inȱ thisȱ areaȱ atȱ thatȱ time,ȱ historyȱ mentionsȱ severalȱ businessmenȱ whoȱ postulatedȱ thatȱ businessȱshouldȱserveȱsocietyȱandȱtookȱcorrespondingȱinitiativesȱ(Balzaȱ&ȱRadojicic,ȱ 2004;ȱWren,ȱ1979).ȱWithȱtheȱemergenceȱofȱlaborȱunionsȱandȱlegislationȱ(onȱminimumȱ wages,ȱ disabilityȱ compensationȱ etc.),ȱ theȱ conceptȱ ofȱ theȱ socialȱ responsibilityȱ ofȱ theȱ businessmanȱgainedȱimportanceȱoverȱtheȱfollowingȱdecades.ȱ AfterȱWorldȱWarȱII,ȱsocialȱconcernsȱwereȱincreasinglyȱincorporatedȱintoȱmanagementȱ educationȱandȱlegislationȱ(foremostȱsocialȱsecurityȱsystems).ȱBetweenȱ1960ȱandȱ1980,ȱ rapidȱeconomicȱgrowthȱandȱitsȱsocialȱandȱenvironmentalȱeffectsȱ(includingȱincidentsȱ suchȱasȱe.g.ȱAberfan,ȱWalesȱinȱ1966ȱandȱSeveso,ȱItalyȱinȱ1976)ȱtriggeredȱseveralȱinitiaȬ tivesȱ suchȱ asȱ theȱ Clubȱ ofȱ Romeȱ andȱ theȱ Brandtȱ Reportȱ asȱ wellȱ asȱ newȱ regulatoryȱ standardsȱ inȱ industrializedȱ countries,ȱ e.g.ȱ theȱ USȱ Environmentalȱ Protectionȱ Actȱ (Mohan,ȱ2003).ȱ Obviouslyȱtheȱgrowingȱacceptanceȱofȱbusinesses’ȱsocialȱandȱenvironmentalȱresponsiȬ bilityȱ wasȱ intensivelyȱ discussedȱ amongȱ scholarsȱ andȱ practitioners.ȱ Theȱ bestȬknownȱ contributionȱtoȱthisȱdebateȱisȱundoubtedlyȱMiltonȱFriedman’sȱclaimȱthatȱ“fewȱtrendsȱ couldȱsoȱthoroughlyȱundermineȱtheȱveryȱfoundationȱofȱourȱfreeȱsocietyȱasȱtheȱaccepȬ tanceȱ byȱ corporateȱ officialsȱ ofȱ aȱ socialȱ responsibilityȱ otherȱ thanȱ toȱ makeȱ asȱ muchȱ moneyȱ forȱ theirȱ stockholdersȱ asȱ possible”ȱ (Friedman,ȱ 1962).ȱ Consequentlyȱ scholarsȱ increasinglyȱ builtȱ aȱ strongerȱ andȱ moreȱ logicallyȱ groundedȱ caseȱ forȱ corporateȱ socialȱ responsibilityȱ (CSR).ȱ Forȱ exampleȱ Johnsonȱ (1971)ȱ presentedȱ severalȱ viewsȱ ofȱ socialȱ responsibility,ȱamongȱthemȱutilityȱmaximizationȱ(ratherȱthanȱprofitȱmaximization)ȱasȱ theȱprimeȱmotivationȱofȱcompanies.ȱHeȱpostulatedȱthatȱsociallyȱresponsibleȱmanagersȱ maximizeȱutilityȱbyȱextendingȱtheirȱinterestȱbeyondȱtheirȱownȱwellȬbeingȱtoȱtheirȱfelȬ lowȱemployeesȱandȱcitizens.ȱ Inȱtheȱ1980sȱandȱ1990sȱaȱplethoraȱofȱfurtherȱdefinitionsȱandȱframeworksȱwereȱdevelȬ opedȱ andȱ refinedȱ (Arlowȱ &ȱ Gannon,ȱ 1982;ȱ Carroll,ȱ 1999;ȱ Davenport,ȱ 2000;ȱ Moir,ȱ 2001).ȱ Furthermore,ȱ theȱ notionȱ ofȱ sustainableȱ development,ȱ initiallyȱ definedȱ inȱ theȱ Brundtlandȱ Reportȱ byȱ theȱ Worldȱ Commissionȱ onȱ Environmentȱ andȱ Developmentȱ (1987),ȱgainedȱmoreȱandȱmoreȱimportance.ȱHowever,ȱtheȱinflatedȱuseȱofȱtermsȱsuchȱ ȱ

2ȱ

1ȱIntroductionȱ

asȱ corporateȱ socialȱ responsibility,ȱ corporateȱ sustainabilityȱ andȱ corporateȱ citizenshipȱ ledȱtoȱsignificantȱskepticismȱandȱcynicism,ȱparticularlyȱinȱcivilȱsociety.ȱ Soȱfarȱempiricalȱresearchȱessentiallyȱonlyȱproducedȱaȱplethoraȱofȱinstrumentalȱstudiesȱ yieldingȱinconclusiveȱevidenceȱforȱaȱsoundȱbusinessȱcase,ȱandȱfailedȱtoȱdescribeȱcorȬ porateȱ sustainabilityȱ managementȱ (CSM)ȱ andȱ itsȱ economicȱ rationaleȱ comprehenȬ sivelyȱ (Griffinȱ &ȱ Mahon,ȱ 1997;ȱ Morsing,ȱ 2003).1ȱ Inȱ particular,ȱ sectorȬspecificȱ andȱ comparativeȱapproachesȱareȱmissingȱalthoughȱtheȱcontingentȱcharacterȱofȱCSMȱandȱ relatedȱ conceptsȱ suchȱ asȱ socialȱ responsivenessȱ wasȱ diagnosedȱ asȱ earlyȱ asȱ theȱ 1970sȱ (Arlowȱetȱal.,ȱ1982,ȱp.ȱ235;ȱCarroll,ȱ1979;ȱSethi,ȱ1975).ȱUnderstandablyȱskepticismȱhasȱ notȱebbedȱawayȱ(Walleyȱ&ȱWhitehead,ȱ1994).ȱ Theȱpresentȱstudy’sȱobjectiveȱisȱtoȱfillȱtheseȱgapsȱbyȱempiricallyȱexaminingȱtheȱmainȱ externalȱ andȱ internalȱ determinantsȱ (i.e.ȱ driversȱ orȱ barriers)ȱ ofȱ CSM,ȱ companies’ȱ apȬ proachesȱtoȱCSMȱinȱtermsȱofȱbothȱstrategicȱdispositionȱandȱimplementation,ȱandȱtheȱ economicȱrationaleȱforȱtheirȱapproachesȱandȱtheirȱoutcomeȱ–ȱtheȱindividualȱresearchȱ questionsȱareȱlaidȱoutȱinȱdetailȱinȱsectionȱ4.ȱTheȱstudyȱadoptsȱaȱclearȱdescriptiveȱconȬ tingencyȱ approachȱ thatȱ isȱ basedȱ onȱ dataȱ collectedȱ fromȱ twoȱ groupsȱ ofȱ managers,ȱ namelyȱsustainabilityȱexpertsȱandȱnonȬsustainabilityȱexperts,ȱinȱtwoȱdifferentȱindusȬ tryȱ sectorsȱ (integratedȱ oilȱ andȱ gasȱ vs.ȱ electricȱ utilities)ȱ andȱ severalȱ geographicalȱ reȬ gionsȱofȱoperations.ȱ 1.2

Structureȱ

Theȱstudyȱisȱ dividedȱ inȱ nineȱblocksȱ(seeȱ Figureȱ 1Ȭ1).ȱInȱtheȱintroductoryȱ sectionȱ theȱ authorȱelaboratesȱonȱtheȱstudy’sȱresearchȱfieldȱandȱobjectivesȱasȱwellȱasȱitsȱstructureȱ andȱintendedȱcontributions.ȱ Sectionȱ 2ȱ dealsȱ withȱ existingȱ differentȱ theoreticalȱ frameworksȱ forȱ CSMȱ andȱ relatedȱ concepts.ȱItȱalsoȱdefinesȱtheȱkeyȱconceptsȱusedȱinȱthisȱstudy.ȱ Inȱsectionȱ3ȱtheȱauthorȱassessesȱempiricalȱstudiesȱandȱdataȱtoȱprovideȱaȱcomprehenȬ siveȱbenchmarkȱforȱtheȱpresentȱstudy.ȱ Inȱsectionȱ4,ȱtheȱauthorȱelaboratesȱonȱeveryȱdetailȱofȱtheȱstudy’sȱconceptualȱrationaleȱ andȱ focusȱ–ȱbasedȱonȱtheȱ theoreticalȱ andȱempiricalȱgapsȱidentifiedȱ beforehand.ȱ SecȬ tionȱ 5ȱ presentsȱ andȱ evaluatesȱ theȱ researchȱ methodȱ chosen.ȱ Moreȱ specifically,ȱ itȱ exȬ plainsȱ(1)ȱwhyȱandȱhowȱtheȱdesignȱandȱinstrumentsȱofȱthisȱstudyȱwereȱselected,ȱandȱ (2)ȱhowȱtheȱdataȱwereȱcollectedȱandȱanalyzed.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 1

ȱTheȱtermȱ“corporateȱsustainabilityȱmanagementȱ(CSM)”ȱessentiallyȱmeansȱcorporateȱresponsivenessȱ toȱenvironmentalȱandȱsocialȱissues;ȱtheȱtermȱ“businessȱcaseȱforȱsustainability”ȱrefersȱtoȱtheȱeconomicȱ rationaleȱ forȱ corporateȱ sustainabilityȱ (i.e.ȱ positiveȱ netȱ economicȱ benefit).ȱ Bothȱ conceptsȱ willȱ beȱ deȬ finedȱinȱdetailȱbelow.ȱ

1.2ȱStructureȱ

3ȱ

Sectionȱ 6ȱ presentsȱ anȱ analysisȱ ofȱ theȱ mainȱ characteristicsȱ ofȱ bothȱ sectorsȱ (corporateȱ activities,ȱ drivers,ȱ trends,ȱ etc.)ȱ fromȱ aȱ nonȬsustainabilityȱ perspectiveȱ toȱ provideȱ theȱ contextȱ forȱ aȱ comprehensiveȱ andȱ holisticȱ discussionȱ ofȱ CSM.ȱ Obviouslyȱ companies’ȱ activitiesȱandȱbusinessȱenvironmentsȱ(regulation,ȱcompetition)ȱgreatlyȱdetermineȱtheȱ degreeȱtoȱwhichȱtheyȱcanȱengageȱCSM.ȱ

Section 1: Introduction Section 2: Theoretical foundation and concepts 2.1 Contingency theory 2.2 Corporate sustainability management and related theoretical frameworks: • Corporate social responsibility • Corporate sustainability • Corporate social performance

2.3 Key concepts: • Determinants • Corporate sustainability management • Outcomes

Section 3: Review of empirical literature 3.1 Empirical studies on key concepts

3.2 Sector-specific empirical studies

Section 4: Conceptual rationale and research questions

Section 5: Method Section 6: Sector characteristics Section 7: Data collected Section 8: Empirical evidence

8.1 Issues

8.2 External stakeholders, industry and partnerships

8.3 Managers

8.4 Companies

Section 9: Synopsis

ȱ Figureȱ1.1:ȱStructureȱofȱtheȱcontentȱ

ȱ

4ȱ

1ȱIntroductionȱ

Inȱsectionȱ7ȱtheȱauthorȱdescribesȱtheȱsamplesȱonȱwhichȱtheȱstudyȱisȱbased.ȱInȱparticuȬ larȱheȱelaboratesȱonȱtheȱdistributionȱofȱrespondents’ȱmanagementȱfunctions,ȱtheirȱreȬ gionsȱofȱoperationsȱandȱtheirȱnationalities.ȱ Sectionȱ8ȱpresentsȱandȱinterpretsȱofȱtheȱempiricalȱevidenceȱcollected.ȱFinallyȱsectionȱ9ȱ featuresȱtheȱauthor’sȱkeyȱfindings,ȱanȱassessmentȱofȱtheȱstudy’sȱsignificanceȱandȱsugȬ gestionsȱforȱfurtherȱresearch.ȱ 1.3

Intendedȱcontributionsȱ

Theȱ presentȱ studyȱ isȱ largelyȱ deductiveȱ andȱ explanatoryȱ inȱ nature,ȱ sinceȱ itȱ aimsȱ toȱ comprehensivelyȱanalyzeȱandȱexplainȱcompanies’ȱapproachesȱtoȱCSMȱandȱtheirȱoutȬ come.ȱSinceȱtheȱeconomicȱrationaleȱforȱCSMȱisȱanȱareaȱinȱwhichȱdescriptiveȱempiricalȱ studiesȱhaveȱnotȱbeenȱundertakenȱtoȱdate,ȱtheȱauthorȱwillȱanalyzeȱthisȱsubconceptȱinȱ aȱmoreȱinductiveȱandȱexploratoryȱway,ȱnamelyȱtheȱanalysisȱofȱtheȱeconomicȱrationaleȱ forȱCSM.2ȱ Itȱ shouldȱ beȱ notedȱ thatȱ theȱ studyȱ doesȱ notȱ includeȱ anyȱ normativeȱ discussionȱ aboutȱ howȱ “much”ȱ CSMȱ companiesȱ shouldȱ engageȱ inȱ toȱ resolveȱ existingȱ environmentalȱ andȱsocialȱissues.ȱItȱisȱbasedȱonȱtheȱassumptionȱthatȱcompaniesȱareȱeconomicȱentitiesȱ whoseȱprimaryȱobjectiveȱisȱtheȱmaximizationȱofȱexpectedȱprofitsȱ(Lankoski,ȱ2000,ȱp.ȱ 5)ȱ Contributionsȱcanȱbeȱexpectedȱinȱthreeȱareasȱthatȱcompriseȱ(1)ȱtheȱconceptualȱframeȬ workȱdevelopedȱforȱandȱtestedȱinȱthisȱstudy,ȱ(2)ȱtheȱmethod,ȱandȱ(3)ȱtheȱdata.ȱ Conceptualȱframeworkȱ Toȱdataȱaȱtheoreticalȱframeworkȱforȱcorporateȱsustainabilityȱperformanceȱ(thatȱincorȬ poratesȱCSMȱasȱaȱkeyȱconcept)ȱdoesȱnotȱexistȱasȱsuch.ȱCorporateȱsocialȱperformanceȱ modelsȱ(Wood,ȱ1991)ȱareȱlargelyȱadequateȱtoȱcaptureȱtheȱcomplexityȱofȱcorporateȱsusȬ tainabilityȱ performance.ȱ However,ȱ theyȱ exhibitȱ severalȱ shortcomings.ȱ Thisȱ study’sȱ conceptualȱframeworkȱforȱcorporateȱsustainabilityȱperformanceȱ(seeȱsectionȱ4)ȱbuildsȱ onȱtheȱstrengthsȱofȱWood’sȱ(1991)ȱmodelȱofȱcorporateȱsocialȱperformance.ȱItȱisȱinnoȬ vativeȱ insofarȱ asȱ itȱ takesȱ aȱ sequentialȱ (processȬoriented)ȱ perspectiveȱ ofȱ CSM.ȱ Itȱ inȬ cludesȱtheȱdeterminantsȱofȱCSM,ȱcompanies’ȱstrategicȱdispositionȱtoȱandȱimplemenȬ tationȱofȱCSMȱandȱtheȱoutcome.ȱThusȱitȱisȱalsoȱdesignedȱtoȱexamineȱcausalȱeffectsȱbeȬ tweenȱtheȱkeyȱconceptsȱdefined.ȱItsȱheuristicȱvalueȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ17)ȱshouldȱbeȱ significant,ȱ sinceȱ itȱ notȱ onlyȱ explainsȱ variationsȱ inȱ CSMȱ andȱ itsȱ outcomeȱ butȱ isȱ alsoȱ ableȱ toȱ anticipateȱ futureȱ eventsȱ andȱ developments.ȱ Furthermore,ȱ unlikeȱ competingȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 2

ȱ Aȱ combinedȱ inductiveȱ andȱ deductiveȱ approachȱ isȱ notȱ uncommonȱ inȱ empiricalȱ researchȱ (Bortzȱ &ȱ Döring,ȱ2002,ȱp.ȱ35),ȱsinceȱstudiesȱareȱoftenȱbasedȱonȱknownȱtheoreticalȱframeworksȱbutȱalsoȱofferȱ modificationsȱtoȱthem.ȱ

1.3ȱIntendedȱcontributionsȱ

5ȱ

modelsȱ ofȱcorporateȱ socialȱ performanceȱ (Wood,ȱ 1991),ȱ itȱ explicitlyȱ differentiatesȱ beȬ tweenȱfourȱmotivatingȱprinciplesȱofȱCSMȱandȱtakesȱintoȱaccountȱbothȱitsȱsocialȱandȱ environmentalȱdimension.ȱFinally,ȱitȱincorporatesȱtheȱeconomicȱrationaleȱforȱCSM.ȱ Methodȱ Empiricalȱ literatureȱ onȱ CSMȱ orȱ relatedȱ conceptsȱ hasȱ largelyȱ ignoredȱ itsȱ contingentȱ natureȱ(Salzmann,ȱ2002).ȱEarlyȱstudiesȱbyȱBuehlerȱ(1979),ȱAbouzeidȱ(1978)ȱandȱShettyȱ (1979)ȱ asȱ wellȱ asȱ moreȱ recentȱ researchȱ byȱ Henriquesȱ andȱ Sadorskyȱ (1996),ȱ Banerjeeȱ (2003)ȱandȱLankoskiȱ(2000)ȱfocusȱonȱaȱnarrowerȱresearchȱdomain,ȱi.e.ȱonȱaȱsubsetȱofȱ conceptsȱanalyzedȱinȱtheȱpresentȱstudy,ȱandȱconsiderȱotherȱandȱfewerȱcontingenciesȱ suchȱasȱorganizationalȱresourcesȱandȱindustry.ȱ Basedȱ onȱ theȱ premisesȱ ofȱ contingencyȱ theoryȱ thatȱ companies’ȱ strategies,ȱ structuresȱ andȱ performanceȱ –ȱ whetherȱ inȱ aȱ generalȱ orȱ aȱ specificallyȱ social/environmentalȱ conȬ textȱȬȱareȱdeterminedȱbyȱsituationalȱ(bothȱinternalȱandȱexternal)ȱvariablesȱ(Greeningȱ &ȱGray,ȱ1994,ȱp.ȱ491;ȱLuthansȱ&ȱSteward,ȱ1977,ȱp.ȱ183;ȱWood,ȱ1991,ȱp.ȱ700),ȱtheȱpreȬ sentȱstudyȱtakesȱaȱmultipleȱcontingencyȱperspectiveȱbyȱdescribingȱcorporateȱsustainȬ abilityȱmanagement,ȱitsȱdeterminantsȱandȱitsȱoutcomeȱacross:ȱ -

twoȱgroupsȱ(orȱdisciplines)ȱofȱmanagersȱinȱ

-

twoȱindustryȱsectorsȱandȱ

-

variousȱregionsȱofȱoperations.ȱ

Thusȱitȱallowsȱforȱ(1)ȱaȱsectorȬ,ȱmanagementȱgroupȬȱandȱregionȬspecificȱanalysisȱthatȱ ensuresȱ clearȱ interpretabilityȱ (internalȱ validity),ȱ andȱ (2)ȱ comparativeȱ analysisȱ thatȱ yieldsȱmoreȱgeneralizableȱresultsȱ(externalȱvalidity).3ȱ Theȱvalidityȱandȱtheȱscopeȱofȱresultsȱisȱfurtherȱincreasedȱthroughȱtheȱstudy’sȱmixedȱ methodȱ designȱ thatȱ combinesȱ bothȱ qualitativeȱ andȱ quantitativeȱ instrumentsȱ ofȱ dataȱ collectionȱandȱanalysisȱandȱthusȱmakesȱaȱcomplementarityȱandȱtriangulationȱofȱfindȬ ingsȱpossibleȱ(Teddlieȱ&ȱTashakkori,ȱ2003,ȱp.ȱ17).ȱ Dataȱ Itȱ isȱ surprisingȱ howȱ fewȱ descriptiveȱ studiesȱ onȱ theȱ businessȱ caseȱ forȱ sustainabilityȱ managementȱareȱavailableȱtoȱdateȱ(seeȱEpsteinȱ&ȱRoy,ȱ2003ȱasȱaȱrareȱexception),ȱparȬ ticularlyȱ ifȱ oneȱ takesȱ intoȱ accountȱ thatȱ aȱ plethoraȱ ofȱ instrumentalȱ studiesȱ producedȱ largelyȱinconclusiveȱevidenceȱregardingȱitsȱexistenceȱ(Salzmann,ȱ2002).ȱThisȱstudyȱisȱ theȱfirstȱofȱitsȱkindȱtoȱincludeȱaȱcomprehensiveȱdescriptionȱofȱtheȱeconomicȱrationaleȱ forȱCSMȱasȱitȱisȱperceivedȱbyȱmanagers.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 3

ȱ

ȱSeeȱe.g.ȱBortzȱ(2002,ȱp.ȱ37)ȱonȱtheȱneedȱforȱinternalȱandȱexternalȱvalidityȱofȱresearchȱresults.ȱ

6ȱ

1ȱIntroductionȱ

Furthermoreȱtheȱdatasetȱonȱwhichȱthisȱstudyȱreliesȱisȱnew,ȱuniqueȱandȱ–ȱconsideringȱ thatȱthisȱisȱnotȱaȱcrossȬsectionalȱstudyȱ–ȱrelativelyȱlarge.ȱThusȱtheȱstudyȱprovidesȱanȱ extensiveȱ andȱ currentȱ benchmarkȱ forȱ aȱ soȱ farȱ unmatchedȱ varietyȱ ofȱ dimensionsȱ ofȱ CSM.ȱItȱshouldȱbeȱnoted,ȱhowever,ȱthatȱdueȱtoȱitsȱbroadȱscope,ȱitȱcannotȱprovideȱdeȬ tailedȱanalysesȱofȱtheȱindividualȱdimensions.ȱ

2.1ȱContingencyȱtheoryȱ

2

7ȱ

Theoreticalȱfoundationȱandȱconceptsȱ

Inȱ thisȱ section,ȱ theȱ authorȱ providesȱ anȱ overviewȱ ofȱ existingȱ theoreticalȱ frameworksȱ andȱ definitionsȱ thatȱ relateȱ toȱ theȱ study’sȱ researchȱ objectiveȱ andȱ keyȱ conceptsȱ (seeȱ Figureȱ2Ȭ1).ȱ

Section 2: Theoretical foundation and concepts 2.1 Contingency theory 2.2 Corporate sustainability management and related theoretical frameworks: • Corporate social responsibility • Corporate social performance • Corporate sustainability

2.3 Key concepts: • Determinants • Corporate sustainability management • Outcomes

ȱ

Figureȱ2.1:ȱStructureȱofȱsectionȱ2ȱ

2.1

Contingencyȱtheoryȱ

Contingencyȱtheoryȱwasȱpopularizedȱinȱtheȱ1960sȱinȱparticularȱ(Dessler,ȱ1976;ȱFiedȬ ler,ȱ1967).ȱItȱstatesȱthatȱmanagementȱandȱorganizationalȱlifeȱareȱsituationalȱandȱsubȬ jectȱtoȱcontingencies.ȱTheȱtheoryȱhasȱaȱwideȱrangeȱofȱapplications,ȱsuchȱasȱe.g.ȱinȱorȬ ganizationȱdesignȱasȱwellȱasȱleadershipȱandȱbehaviorȱ(Luthansȱetȱal.,ȱ1977,ȱp.ȱ183).ȱ Itȱimpliesȱ thatȱtheȱ strategies,ȱstructuresȱ andȱ practicesȱofȱ anȱorganizationȱ dependȱonȱ theȱ wayȱ inȱ whichȱ environmentalȱ variablesȱ becomeȱ relevantȱ toȱ itȱ (Longeneckerȱ &ȱ Pringle,ȱ 1978).ȱ Luthansȱ andȱ Stewartȱ (1977)ȱ attemptedȱ toȱ developȱ aȱ generalȱ continȬ gencyȱ theoryȱ ofȱ managementȱ andȱ definedȱ theȱ contingencyȱ approachȱ asȱ identifyingȱ andȱ developingȱ functionalȱ relationshipsȱ betweenȱ environmentalȱ (e.g.ȱ culture,ȱ techȬ nology,ȱ rawȱ materials),ȱ managementȱ (e.g.ȱ planning,ȱ leadership)ȱ andȱ performanceȱ variables.ȱ Theyȱ alsoȱ offeredȱ aȱ detailedȱ classificationȱ ofȱ theȱ variablesȱ theyȱ incorpoȬ ratedȱ(p.ȱ184).ȱHowever,ȱtheirȱtheoryȱhasȱseveralȱshortcomings.ȱMostȱimportantlyȱitȱisȱ veryȱ complexȱ andȱ lacksȱ aȱ descriptionȱ ofȱ theȱ functionalȱ relationshipsȱ betweenȱ theȱ variables.ȱHenceȱitȱisȱnotȱaȱgeneralȱtheoryȱinȱaȱstrictȱsenseȱ(Longeneckerȱetȱal.,ȱ1978,ȱp.ȱ 681;ȱLuthansȱ&ȱTodd,ȱ1978,ȱp.ȱ685).ȱ Itȱ isȱ obviousȱ thatȱ contingencyȱ theoryȱ alsoȱ appliesȱ toȱ theȱ domainȱ ofȱ corporateȱ socialȱ responsibilityȱ andȱ performance.ȱ Earlyȱ empiricalȱ studiesȱ inȱ thatȱ areaȱ pointedȱ toȱ theȱ needȱtoȱexamineȱcorporateȱsocialȱperformanceȱandȱresponsivenessȱcontingentlyȱuponȱ factorsȱ suchȱ asȱ organizationalȱ size,ȱ relevanceȱ ofȱ issuesȱ andȱ industryȱ characteristicsȱ (Abouzeidȱ etȱ al.,ȱ 1978;ȱ Arlowȱ etȱ al.,ȱ 1982;ȱ Buehlerȱ etȱ al.,ȱ 1979;ȱ Holmes,ȱ 1977,ȱ 1978;ȱ Shetty,ȱ 1979).ȱ However,ȱ theoreticalȱ foundationsȱ inȱ theȱ domainȱ onlyȱ emergedȱ muchȱ later:ȱHustedȱ(2000)ȱpresentedȱanȱissueȬcontingentȱmodel,ȱarguingȱthatȱaȱbetterȱfitȱofȱ corporateȱ strategiesȱ andȱ structuresȱ withȱ socialȱ issuesȱ increasesȱ socialȱ performance.ȱ ȱ

8ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

Furthermore,ȱGreeningȱandȱGrayȱ(1994)ȱpresented,ȱbasedȱonȱtheirȱempiricalȱanalysis,ȱ aȱmodelȱthatȱincorporatesȱinstitutionalȱpressure,ȱmanagerialȱdiscretionȱandȱfirmȱsizeȱ asȱtheȱkeyȱdeterminantsȱofȱcorporateȱissuesȱmanagementȱstructures.ȱTheȱauthorȱwillȱ describeȱ bothȱ studiesȱ (Greeningȱ etȱ al.,ȱ 1994;ȱ Husted,ȱ 2000)ȱ inȱ moreȱ detailȱ inȱ sectionȱ 2.2.2ȱCorporateȱsocialȱperformance.ȱ 2.2

CSMȱandȱrelatedȱtheoreticalȱframeworksȱ

Anȱ assessmentȱ ofȱ theȱ currentȱ academicȱ literatureȱ quicklyȱ revealsȱ thatȱ theȱ termȱ “CSM”ȱ isȱ onlyȱ rarelyȱ used.ȱ Scholarsȱ haveȱ focusedȱ moreȱ stronglyȱ onȱ otherȱ conceptsȱ suchȱasȱcorporateȱsustainabilityȱandȱinȱparticularȱcorporateȱsocialȱresponsibilityȱandȱ corporateȱsocialȱperformance.ȱInȱtheȱfollowingȱparagraphsȱtheȱorigins,ȱmeaningsȱandȱ linksȱofȱtheȱdifferentȱtermsȱwillȱdiscussedȱinȱmoreȱdetail.ȱ 2.2.1 Corporateȱsocialȱresponsibilityȱ Theȱoriginȱofȱcorporateȱsocialȱresponsibilityȱ(CSR)ȱcanȱbeȱtracedȱbackȱtoȱtheȱfirstȱhalfȱ ofȱtheȱlastȱcenturyȱorȱevenȱfurtherȱtoȱtheȱindustrialȱrevolution.ȱDuringȱtheȱ1950sȱandȱ 1960s,ȱtheȱnotionȱgainedȱmoreȱimportanceȱthroughȱcontributionsȱfromȱauthorsȱsuchȱ asȱ Bowenȱ (1953)ȱ andȱ McGuireȱ (1963)ȱ whoȱ reactedȱ toȱ emergingȱ socialȱ issuesȱ ofȱ emȬ ployeeȱ andȱ humanȱ rightsȱ inȱ theȱ US.ȱ Aȱ comprehensiveȱ scholarlyȱ frameworkȱ develȬ opedȱvirtuallyȱexclusivelyȱinȱtheȱUSȱthroughȱcontributionsȱfromȱauthorsȱsuchȱasȱCarȬ rollȱ (1979),ȱ Wartickȱ andȱ Cochranȱ (1985),ȱ Woodȱ (1991),ȱ Swansonȱ (1999)ȱ andȱ McWilliamsȱ(2001).ȱȱ StudiesȱmainlyȱsearchedȱforȱprinciplesȱtoȱguideȱbusinessȱinȱtermsȱofȱitsȱroleȱinȱsociȬ ety,ȱi.e.ȱfactorsȱthatȱmotivateȱbusinessȱtoȱcertainȱlevelsȱofȱresponsivenessȱtoȱsocialȱandȱ environmentalȱ issues,ȱ andȱ discussedȱ severalȱ theoriesȱ suchȱ asȱ agencyȱ theoryȱ (FriedȬ man,ȱ 1970),ȱ stakeholderȱ theoryȱ (Freeman,ȱ 1984)ȱ andȱ corporateȱ socialȱ performanceȱ modelsȱ(Carroll,ȱ1979;ȱWartickȱetȱal.,ȱ1985;ȱWood,ȱ1991).ȱOverall,ȱtheȱconceptȱofȱcorȬ porateȱsocialȱresponsibilityȱvariesȱgreatlyȱacrossȱtheȱdifferentȱmanagementȱ andȱacaȬ demicȱ disciplines.ȱ Probablyȱ theȱ mostȱ significantȱ contributionȱ comesȱ fromȱ Carrollȱ (1979)ȱ withȱ hisȱ definitionȱ ofȱ fourȱ categoriesȱ ofȱ socialȱ responsibility.ȱ Heȱ definedȱ theȱ fourȱcategoriesȱ–ȱeconomic,ȱlegal,ȱethicalȱandȱdiscretionaryȱresponsibilityȱ–ȱasȱhierarȬ chicalȱbutȱnotȱmutuallyȱexclusiveȱconceptsȱandȱarguedȱthatȱtheyȱcouldȱserveȱasȱprinȬ ciplesȱforȱmanagersȱselectingȱadequateȱcorporateȱresponsesȱtoȱaȱspecificȱissue.ȱCarrollȱ acknowledgedȱ companies’ȱeconomicȱresponsibilityȱ toȱ generateȱ profitsȱasȱtheȱ fundaȬ mentalȱ organizingȱ principleȱ andȱ thusȱ defusedȱ argumentsȱ relatingȱ toȱ theȱ priorityȱ ofȱ economicȱoverȱsocialȱresponsibilityȱ(Friedman,ȱ1970).ȱTheȱremainingȱthreeȱprinciplesȱ areȱdefinedȱasȱfollows:ȱTheȱlegalȱresponsibilityȱofȱbusinessȱisȱcomplianceȱwithȱexistȬ ingȱ regulation;ȱ theȱ ethicalȱ responsibilityȱ refersȱ toȱ fulfillingȱ society’sȱ expectationsȱ orȱ avoidingȱcausingȱharm;ȱtheȱprincipleȱofȱdiscretionaryȱ(alsoȱlaterȱcalledȱphilanthropic)ȱ

2.2ȱCSMȱandȱrelatedȱtheoreticalȱframeworksȱ

9ȱ

responsibilityȱ refersȱ toȱ actionsȱ thatȱ areȱ notȱ expectedȱ byȱ societyȱ orȱ thoseȱ thatȱ bringȱ aboutȱsocialȱbenefits.ȱ Theȱ1980sȱmainlyȱsawȱempiricalȱinstrumentalȱstudiesȱinvestigatingȱtheȱeconomicȱefȬ fectsȱ ofȱ differentȱ levelsȱ ofȱ corporateȱ socialȱ responsibility.ȱ Sinceȱ thenȱ scholarsȱ haveȱ partlyȱ refocusedȱ onȱ theoreticallyȱ soundȱ andȱ practicalȱ principlesȱ forȱ corporateȱ socialȱ responsibilityȱ(Carroll,ȱ1999;ȱWhetten,ȱRands,ȱ&ȱGodfrey,ȱ2002,ȱp.ȱ381).ȱWood’sȱ(1991)ȱ formulationȱ ofȱ threeȱ fundamentalȱ principlesȱ asȱ partȱ ofȱ herȱ reformulatedȱ corporateȱ socialȱperformanceȱmodelȱremainsȱoneȱofȱtheȱmostȱsignificantȱcontributionsȱtoȱdate.ȱ Theȱmodelȱcomprisesȱtheȱinstitutionalȱprincipleȱofȱlegitimacyȱ(properȱuseȱofȱpower),ȱ theȱ organizationalȱ principleȱ ofȱ publicȱ responsibilityȱ (responsibilityȱ forȱ outcomesȱ reȬ latedȱtoȱtheȱprimaryȱandȱsecondaryȱactivitiesȱofȱbusinesses)ȱandȱtheȱindividualȱprinȬ cipleȱ ofȱ managerialȱ discretionȱ (managers’ȱ responsibilityȱ toȱ exerciseȱ theȱ discretionȱ availableȱ toȱ themȱ toȱ contributeȱ toȱ sociallyȱ responsibleȱ outcomes)ȱ (Wood,ȱ 1991,ȱ p.ȱ 696).ȱItȱwillȱbeȱdiscussedȱinȱmoreȱdetailȱinȱsectionsȱ2.3.1.1ȱtoȱ2.3.1.3.ȱ 2.2.2 Corporateȱsocialȱperformanceȱ(CSP)ȱ Theȱconceptȱofȱcorporateȱsocialȱperformanceȱrefersȱtoȱcorporateȱbehaviorȱratherȱthanȱ toȱ principlesȱ thatȱ guideȱ theȱ behavior.ȱ Theȱ firstȱ keyȱ theoreticalȱ contributionsȱ origiȬ natedȱinȱtheȱ1970s:ȱSethiȱ(1975)ȱarguedȱthatȱcorporateȱsocialȱperformanceȱisȱculturallyȱ andȱtemporallyȱdeterminedȱandȱpresentedȱaȱthreeȬstateȱschemaȱforȱclassifyingȱcorpoȬ rateȱbehavior,ȱwhichȱcomprisedȱ(1)ȱsocialȱobligationȱ(proscriptive),ȱ(2)ȱsocialȱresponȬ sibilityȱ (prescriptive),ȱ andȱ (3)ȱ socialȱ responsivenessȱ (anticipatoryȱ andȱ preventive).ȱ Subsequently,ȱ Carrollȱ (1979)ȱ introducedȱ aȱ threeȬdimensionalȱ corporateȱ socialȱ perȬ formanceȱmodel.ȱItȱcomprisedȱ(1)ȱsocialȱresponsibilityȱencompassingȱtheȱfourȱcategoȬ riesȱreferredȱtoȱabove,ȱ(2)ȱsocialȱissuesȱthatȱchangeȱoverȱtimeȱandȱdifferȱbetweenȱinȬ dustries,ȱ andȱ (3)ȱ socialȱ responsivenessȱ thatȱ standsȱ forȱ “anȱ actionȱ phaseȱ ofȱ manageȬ mentȱrespondingȱinȱtheȱsocialȱsphere“ȱ(Carroll,ȱ1979,ȱp.ȱ502).ȱ WartickȱandȱCochranȱ(1985)ȱcontinuedȱwithȱCarroll’sȱthreeȬdimensionalȱCSPȱmodel.ȱ Theyȱdiscussedȱthreeȱkeyȱchallengesȱtoȱtheȱconceptȱofȱsocialȱresponsibility:ȱ -

Theȱ conceptȱ ofȱ economicȱ responsibilityȱ attacksȱ bothȱ basicȱ premisesȱ ofȱ corporateȱ socialȱresponsibility:ȱ(1)ȱtheȱsocialȱcontractȱthatȱimpliesȱaȱsetȱofȱrightsȱandȱobligaȬ tionsȱthatȱbusinessȱoperationȱmustȱfollow,ȱandȱ(2)ȱtheȱideaȱofȱmoralȱagencyȱpostuȬ latingȱanȱalignmentȱbetweenȱtheȱvaluesȱofȱbusinessȱandȱsociety.ȱ

-

Theȱconceptȱofȱpublicȱresponsibilityȱ(Prestonȱ&ȱPost,ȱ1975)ȱcallsȱforȱaȱdiscussionȱofȱ whichȱissuesȱareȱrelevantȱorȱirrelevantȱandȱhowȱresponsibilitiesȱmayȱbeȱrealized.ȱ

-

Theȱ challengeȱ ofȱ socialȱ responsivenessȱ demandsȱ aȱ shiftȱ ofȱ emphasisȱ awayȱ fromȱ socialȱobligationsȱtoȱtheȱprocessȱofȱsocialȱresponsiveness.ȱ

ȱ

10ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

Theyȱsynthesizedȱtheȱchallengesȱandȱexistingȱmodels.ȱFirst,ȱbothȱeconomicȱresponsiȬ bilityȱandȱpublicȱresponsibilityȱwereȱsubsumedȱinȱoneȱmodel.ȱSecond,ȱsocialȱresponȬ sivenessȱwasȱincludedȱasȱaȱseparateȱprocessȱdimensionȱofȱcorporateȱsocialȱperformȬ ance.ȱThird,ȱcorporateȱsocialȱperformanceȱwasȱbasedȱonȱtheȱpoliciesȱofȱ(social)ȱissuesȱ managementȱ (asȱ aȱ directȱ extensionȱ ofȱ socialȱ responsiveness).ȱ Thusȱ theȱ authorsȱ creȬ atedȱaȱprinciple/process/policyȱmodelȱofȱcorporateȱsocialȱperformance.ȱCorporateȱsoȬ cialȱperformanceȱwasȱdefinedȱasȱ“theȱunderlyingȱinteractionȱamongȱtheȱprinciplesȱofȱ socialȱresponsibility,ȱtheȱprocessȱofȱsocialȱresponsiveness,ȱandȱtheȱpoliciesȱdevelopedȱ toȱaddressȱsocialȱissues”ȱ(Wartickȱetȱal.,ȱ1985,ȱp.ȱ758).ȱ Woodȱ (1991)ȱ revisitedȱ theȱ modelȱ ofȱ corporateȱ socialȱ performanceȱ andȱ synthesizedȱ formulationsȱfromȱseveralȱauthorsȱsuchȱasȱCarrollȱ(1979)ȱandȱforemostȱWartickȱandȱ Cochranȱ (Wartickȱ etȱ al.,ȱ 1985).ȱ Sheȱ addressedȱ theȱ followingȱ issuesȱ inȱ existingȱ theoȬ reticalȱliteratureȱ(Wood,ȱ1991,ȱp.ȱ692):ȱ 1. Theȱtermȱ“performance”ȱrefersȱtoȱactionsȱandȱoutcomesȱ–ȱratherȱthanȱinteractionsȱ andȱ integrationȱ asȱ conceptualizedȱ byȱ Wartickȱ andȱ Cochranȱ (1985).ȱ Henceȱ anȱ acȬ tionȱcomponentȱneededȱtoȱbeȱaddedȱtoȱtheȱmodelȱofȱcorporateȱsocialȱperformanceȱ toȱfacilitateȱtheȱdefinitionȱofȱcorporateȱsocialȱperformanceȱasȱsuch.ȱWood’sȱ(1991)ȱ modelȱ featuresȱ aȱ processȱ viewȱ ofȱ socialȱ performanceȱ ratherȱ thanȱ anȱ outcomeȬ orientedȱapproachȱasȱpresentedȱbyȱWoodȱandȱJonesȱ(1995).ȱ 2. Thereȱareȱvariousȱfacetsȱofȱsocialȱresponsiveness.ȱHenceȱitȱisȱessentialȱtoȱseeȱitȱasȱaȱ setȱofȱprocessesȱ(e.g.ȱstakeholderȱmanagement,ȱenvironmentalȱassessment)ȱratherȱ thanȱaȱsingleȱprocess.ȱ 3. TheȱoutcomeȱcomponentȱofȱWartickȱandȱCochran’sȱ(1985)ȱmodel,ȱnamelyȱpolicies,ȱ isȱ tooȱ restrictive.ȱ Aȱ comprehensiveȱ corporateȱ socialȱ performanceȱ modelȱ shouldȱ incorporateȱ additionalȱ dimensionsȱ ofȱ outcomeȱ suchȱ asȱ programsȱ andȱ otherȱ obȬ servableȱoutcomesȱ(e.g.ȱsocialȱimpactsȱofȱcorporateȱbehavior).ȱ 4. Corporateȱsocialȱperformanceȱisȱaȱ“neutral”ȱconceptȱinȱtheȱsenseȱthatȱitȱisȱnotȱlimȬ itedȱtoȱresponsibleȱcompanies:ȱItȱcanȱbeȱpositivelyȱorȱnegativelyȱevaluated.ȱ Woodȱ(1991,ȱp.ȱ693)ȱdefinedȱcorporateȱsocialȱperformanceȱasȱaȱcompany’sȱ“configuraȬ tionȱ ofȱ principlesȱ ofȱ socialȱ responsibility,ȱ processesȱ ofȱ socialȱ responsiveness,ȱ andȱ policies,ȱprograms,ȱandȱobservableȱoutcomesȱasȱtheyȱrelateȱtoȱtheȱfirm’sȱsocietalȱrelaȬ tionship”ȱ (seeȱ Figureȱ2Ȭ2ȱforȱ aȱvisualizationȱofȱ theȱmodel):ȱ Itȱ isȱ processȬȱratherȱthanȱ resultsȬoriented:ȱ Corporateȱ socialȱ performanceȱ isȱ seenȱ asȱ aȱ configurationȱ ofȱ drivers,ȱ processesȱandȱoutcomes,ȱratherȱthanȱasȱanȱoutcomeȱonly.ȱ Sheȱalsoȱsuggestedȱthatȱtheȱthreeȱguidingȱprinciplesȱofȱsocialȱresponsibilityȱ–ȱpublicȱ responsibility,ȱlegitimacyȱandȱmanagerialȱdiscretionȱ(discussedȱinȱmoreȱdetailȱinȱ2.3ȱ Keyȱ concepts)ȱ –ȱ shouldȱ notȱ beȱ understoodȱ asȱ absoluteȱ standards,ȱ butȱ asȱ “analyticalȱ

2.2ȱCSMȱandȱrelatedȱtheoreticalȱframeworksȱ

11ȱ

formsȱ toȱ beȱ filledȱ withȱ theȱ contentȱ ofȱ explicitȱ valueȱ preferencesȱ thatȱ existȱ withinȱ aȱ givenȱculturalȱorȱorganizationalȱcontextȱandȱthatȱareȱoperationalizedȱthroughȱtheȱpoȬ liticalȱandȱsymbolicȱprocessesȱofȱthatȱcontext”ȱ(Wood,ȱ1991,ȱp.ȱ700).ȱȱ

Public responsibility

Managerial discretion

Legitimacy

Principles of social responsibility

Corporate social performance as business organization's configuration of

Processes of social responsiveness

Environmental Stakeholder assessment management

Issues management

Outcomes of corporate behavior

Social impacts

Social programs

Social policies

ȱ Figureȱ2.2:ȱWood’sȱcorporateȱsocialȱperformanceȱmodel,ȱbasedȱonȱWoodȱ(1991)ȱ

Woodȱ discussedȱ threeȱ processesȱ thatȱ areȱ interlinkedȱ andȱ partlyȱ overlap:ȱ environȬ mentalȱ assessmentȱ (analysisȱ ofȱ theȱ company’sȱ businessȱ environment),ȱ stakeholderȱ managementȱ(theȱmanagementȱofȱstakeholderȱrelationships),ȱandȱissuesȱmanagementȱ (minimizingȱsurprises,ȱcrisisȱmanagement,ȱpublicȱaffairs).ȱOutcomesȱofȱcorporateȱbeȬ haviorsȱwereȱcategorizedȱintoȱtheȱsocialȱimpactsȱofȱcorporateȱbehaviorȱ(althoughȱnotȱ explicitlyȱnamed,ȱenvironmentalȱincidentsȱsuchȱasȱoilȱspillsȱwereȱalsoȱaccountedȱfor),ȱ corporateȱ socialȱ programsȱ (investmentsȱ ofȱ resourcesȱ inȱ someȱ courseȱ ofȱ action)ȱ andȱ corporateȱsocialȱpoliciesȱtoȱguideȱdecisionȬmakingȱ(Wood,ȱ1991,ȱp.ȱ709).ȱItȱshouldȱbeȱ notedȱ thatȱ –ȱ unlikeȱ socialȱ programsȱ andȱ socialȱ policiesȱ –ȱ socialȱ impactsȱ existȱ bothȱ withinȱandȱbeyondȱtheȱorganizationȱ(henceȱtheȱwhiteȱratherȱthanȱtheȱgreyȱboxȱinȱFigȬ ureȱ 2Ȭ2ȱ –ȱ inȱ contrastȱ toȱ theȱ otherȱ outcomesȱ andȱ theȱ processesȱ ofȱ socialȱ responsiveȬ ness).ȱ Itȱ isȱ importantȱ toȱ noteȱ thatȱ Woodȱ (1991)ȱ primarilyȱ presentsȱ aȱ “classificatoryȱ device”ȱratherȱthanȱaȱtheory,ȱasȱtheȱnatureȱofȱtheȱrelationshipsȱbetweenȱtheȱelementsȱ ofȱherȱmodelȱremainȱunclear.ȱ Sinceȱ Wood’sȱ refinement,ȱ researchȱ hasȱ increasinglyȱ focusedȱ onȱ measurementȱ andȱ theoreticalȱ developmentȱ (Collinsȱ &ȱ Starik,ȱ 1995;ȱ Greeningȱ etȱ al.,ȱ 1994;ȱ Griffin,ȱ 2000;ȱ Griffinȱ etȱ al.,ȱ 1997;ȱ Husted,ȱ 2000;ȱ Moore,ȱ 2001;ȱ Simpsonȱ &ȱ Kohers,ȱ 2002;ȱ Swanson,ȱ 1999;ȱWoodȱetȱal.,ȱ1995).ȱAsȱCarrollȱ(1999,ȱp.ȱ292)ȱalsoȱpointedȱout,ȱrevisedȱorȱadaptedȱ frameworksȱhaveȱnotȱemergedȱdistinctȱfromȱexistingȱframeworksȱandȱareȱunlikelyȱtoȱ ȱ

12ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

doȱ soȱ inȱ theȱ future.ȱ Neverthelessȱ twoȱ subsequentȱ modelsȱ ofȱ corporateȱ socialȱ perȬ formanceȱwillȱbeȱdiscussedȱinȱmoreȱdetail,ȱasȱtheyȱalsoȱ–ȱlikeȱtheȱpresentȱstudyȱ–ȱinȬ corporateȱaȱcontingencyȱapproach.ȱ Basedȱ onȱ empiricalȱ analysis,ȱ Greeningȱ andȱ Grayȱ (1994)ȱ presentedȱ aȱ contingencyȱ modelȱ forȱ corporateȱ socialȱ performanceȱ thatȱ incorporatesȱ bothȱ institutionalȱ theoryȱ andȱ resourceȱ dependencyȱ theory.ȱ Partlyȱ inȱ alignmentȱ withȱ Woodȱ (1991),ȱ theyȱ conȬ cludedȱthatȱcorporateȱsocialȱperformanceȱisȱdrivenȱbyȱissuesȱmanagementȱstructuresȱ whichȱ areȱ inȱ turnȱ motivatedȱ byȱ externalȱ institutionalȱ pressures,ȱ i.e.ȱ legitimacy,ȱ andȱ organizationalȱresponseȱcapabilitiesȱ(Gray,ȱ1994,ȱp.ȱ491).ȱ Hustedȱ(2000)ȱformulatedȱanȱissueȬcontingentȱmodelȱofȱcorporateȱsocialȱperformanceȱ asȱ “aȱ functionȱ ofȱ theȱ matchȱ betweenȱ theȱ socialȱ issuesȱ andȱ theȱ varietiesȱ ofȱ responseȱ thatȱareȱavailableȱtoȱtheȱfirm”ȱ(p.ȱ25).ȱHisȱmodelȱimpliesȱthatȱaligningȱstrategiesȱandȱ structuresȱ toȱ socialȱ issuesȱ willȱ leadȱ toȱ greaterȱ socialȱ performance.ȱ Inȱ contrastȱ toȱ Wood’sȱ (1991)ȱ model,ȱ itȱ isȱ resultsȬoriented,ȱ asȱ heȱ definesȱ corporateȱ socialȱ performȬ anceȱ“asȱtheȱextentȱtoȱwhichȱstakeholders’ȱexpectationsȱregardingȱtheȱfirm’sȱbehaviorȱ withȱrespectȱtoȱthoseȱsameȱorȱotherȱrelevantȱstakeholdersȱareȱsatisfiedȱorȱexceeded”ȱ (p.ȱ31).ȱHeȱcontinuedȱtoȱpresentȱseveralȱhypothesesȱaboutȱwhichȱstrategiesȱ(computaȬ tion,ȱ discovery,ȱ inspiration,ȱ bargaining)ȱ andȱ structuresȱ (bureaucratic,ȱ collegial,ȱ orȬ ganizedȱchaosȱandȱrepresentative)ȱshouldȱbeȱusedȱtoȱachieveȱtheȱalignmentȱbetweenȱ theȱfirmȱandȱitsȱenvironmentȱmostȱeffectively,ȱdependingȱonȱtheȱnatureȱofȱtheȱexistȬ ingȱ socialȱ issue,ȱ whichȱ heȱ definedȱ inȱ termsȱ ofȱ differentȱ kindsȱ ofȱ expectationalȱ gapsȱ betweenȱtheȱcompanyȱandȱitsȱstakeholdersȱ(seeȱalsoȱsectionȱ2.3.1.1)ȱ 2.2.3 Corporateȱsustainabilityȱ Corporateȱsustainabilityȱwasȱ“born”ȱwithȱaȱslightȱenvironmentalȱemphasisȱatȱtheȱendȱ ofȱtheȱ1980s.ȱItȱisȱbasedȱonȱtheȱnormativeȱsinceȱmultigenerationalȱconceptȱofȱsustainȬ ableȱdevelopment.4ȱInȱgeneral,ȱcomparedȱtoȱcorporateȱsocialȱresponsibility,ȱitȱisȱseenȱ asȱ theȱ broaderȱ organizingȱ principle,ȱ becauseȱ itȱ differsȱ fromȱ theȱ traditionalȱ manageȬ mentȱparadigmsȱofȱgrowthȱandȱprofitȱmaximizationȱbyȱincorporatingȱaȱsocietalȱthreeȬ dimensionalȱ(economic,ȱenvironmentalȱandȱsocial)ȱgoalȱofȱsustainabilityȱforȱcorporaȬ tions,ȱgovernmentsȱandȱcivilȱsocietyȱ(Wilson,ȱ2003).ȱBusinessȱrespondedȱtoȱtheȱ“call”ȱ ofȱ theȱ Brundtlandȱ Reportȱ (Worldȱ Commissionȱ onȱ Environmentȱ andȱ Development,ȱ 1987)ȱ withȱ theȱ Businessȱ Charterȱ forȱ Sustainableȱ Developmentȱ (1990)ȱ andȱ Changingȱ Courseȱ (Schmidheiny,ȱ 1992)ȱ whichȱ wasȱ endorsedȱ byȱ theȱ thenȱ Businessȱ Councilȱ forȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 4

ȱThereȱareȱaȱvarietyȱofȱdefinitionsȱforȱtheȱtermȱsustainableȱdevelopment.ȱTheȱmostȱcommonȱoneȱorigiȬ natesȱfromȱtheȱBrundtlandȱReportȱ(WorldȱCommissionȱonȱEnvironmentȱandȱDevelopment,ȱ1987),ȱinȱ whichȱsustainableȱdevelopmentȱisȱdefinedȱasȱaȱdevelopmentȱthatȱmeetsȱtheȱneedsȱofȱpresentȱgeneraȬ tionsȱwithoutȱcompromisingȱtheȱabilityȱofȱfutureȱgenerationsȱtoȱmeetȱtheirȱneeds.ȱ

2.2ȱCSMȱandȱrelatedȱtheoreticalȱframeworksȱ

13ȱ

Sustainableȱ Development.ȱ Bothȱ arguedȱ forȱ aȱ synergisticȱ ratherȱ thanȱ dualisticȱ relaȬ tionshipȱ betweenȱ economicȱ performanceȱ onȱ theȱ oneȱ hand,ȱ andȱ environmentalȱ andȱ socialȱperformanceȱonȱtheȱother.ȱȱ Corporateȱ sustainabilityȱ wasȱ subsequentlyȱ refinedȱ byȱ severalȱ authorsȱ (Marrewijk,ȱ 2003;ȱMarrewijkȱ&ȱWerre,ȱ2003;ȱStarik,ȱ1995,ȱp.ȱ916).ȱAlongsideȱsustainableȱdevelopȬ ment,ȱWilsonȱ(2003)ȱidentifiedȱthreeȱkeyȱconstituentsȱofȱcorporateȱsustainability:ȱ -

Corporateȱsocialȱresponsibility,ȱwhichȱoffersȱethicalȱargumentsȱforȱmanagers’ȱandȱ companies’ȱengagementȱinȱsustainableȱdevelopment.ȱ

-

Stakeholderȱ theoryȱ whichȱ providesȱ theȱ necessaryȱ businessȱ arguments,ȱ asȱ itȱ sugȬ gestsȱ thatȱ moreȱ sustainableȱ businessȱ practicesȱ willȱ improveȱ companies’ȱ relationȬ shipsȱwithȱtheirȱstakeholders.ȱ

-

Corporateȱ accountability,ȱ whichȱ complementsȱ corporateȱ socialȱ responsibilityȱ byȱ referringȱtoȱcompanies’ȱdutyȱtoȱexplainȱandȱjustifyȱcorporateȱactivitiesȱratherȱthanȱ toȱtheȱneedȱtoȱengageȱinȱthem.ȱ

Asȱ theseȱ moreȱ recentȱ contributionsȱ show,ȱ improvingȱ theȱ theoreticalȱ basisȱ ofȱ corpoȬ rateȱ sustainabilityȱ remainsȱ aȱ challengingȱ task,ȱ sinceȱ theȱ underlyingȱ normativeȱ conȬ ceptȱ ofȱ sustainableȱ developmentȱ isȱ moreȱ complexȱ thanȱ thatȱ ofȱ corporateȱ socialȱ reȬ sponsibilityȱdueȱtoȱitsȱmultiȬdimensionalȱandȱmultiȬgenerationalȱnature.ȱItȱisȱalsoȱobȬ viousȱthatȱanyȱtheoreticalȱfoundationȱofȱcorporateȱsustainabilityȱwillȱtoȱaȱcertainȱexȬ tentȱ“fallȱback”ȱonȱtheȱalreadyȱexistingȱframeworksȱforȱcorporateȱsocialȱresponsibilityȱ andȱsocialȱperformance.ȱ 2.2.4

Discussionȱ

Aȱreviewȱofȱexistingȱtheoreticalȱframeworksȱrevealsȱsignificantȱdifferencesȱinȱtermsȱofȱ twoȱcriteria:ȱ 1. Comprehensiveness:ȱBothȱcorporateȱsocialȱresponsibilityȱandȱcorporateȱsocialȱperȬ formanceȱfeatureȱaȱstrongȱandȱconclusiveȱtheoreticalȱbasis.ȱInȱcontrast,ȱcorporateȱ sustainabilityȱisȱhardlyȱtheoreticallyȱgrounded.ȱ 2. Focus:ȱCorporateȱsocialȱresponsibilityȱandȱcorporateȱsustainabilityȱareȱconceptualȬ izedȱasȱprinciplesȱthatȱmotivateȱcorporateȱbehavior.ȱInȱcontrast,ȱmodelsȱofȱcorpoȬ rateȱ socialȱ performanceȱ areȱ aȱ lotȱ broader:ȱ Alongsideȱ motivatingȱ principles,ȱ i.e.ȱ driversȱofȱcorporateȱbehavior,ȱtheyȱincludeȱcorporateȱbehaviorȱasȱsuchȱ(processesȱ ofȱ socialȱ responsiveness)ȱ andȱ itsȱ outcome.ȱ Furthermore,ȱ theȱ notionȱ ofȱ corporateȱ socialȱresponsibilityȱtendsȱbeȱmoreȱnarrowȱandȱlessȱstronglyȱfocusedȱonȱenvironȬ mentalȱ(moreȱstronglyȱonȱsocial)ȱeffectsȱofȱcorporateȱactivitiesȱthanȱcorporateȱsusȬ tainabilityȱ (Marrewijkȱ etȱ al.,ȱ 2003).ȱ Theȱ meaningsȱ ofȱ bothȱ conceptsȱ haveȱ increasȬ

ȱ

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2ȱTheoreticalȱfoundationȱandȱconceptsȱ

inglyȱconvergedȱ(Wheeler,ȱColbert,ȱ&ȱFreeman,ȱ2003,ȱp.ȱ2),ȱandȱareȱnowadaysȱofȬ tenȱconsideredȱsynonyms.ȱ Sinceȱtheȱpresentȱstudyȱaimsȱtoȱanalyzeȱtheȱdeterminantsȱofȱandȱresultingȱapproachesȱ toȱCSM,ȱtheȱtheoreticalȱframeworkȱofȱcorporateȱsocialȱperformanceȱisȱbestȱsuited.ȱToȱ date,ȱtheȱmodelsȱofȱWoodȱ(1991),ȱGreeningȱandȱGrayȱ(1994)ȱandȱHustedȱ(2000)ȱrepreȬ sentȱtheȱmostȱstringentȱtheoreticalȱfoundations.ȱAsȱtheȱauthorȱwillȱillustrateȱinȱtheȱfolȬ lowing,ȱtheyȱdifferȱinȱtermsȱofȱtheirȱstrengthsȱandȱweaknesses.ȱ Lackȱofȱdifferentiationȱbetweenȱsocialȱandȱenvironmentalȱissuesȱ Woodȱ (1991,ȱ p.ȱ 708)ȱ focusesȱ onȱ theȱ shortȬtermȱ socialȱ impactsȱ ofȱ corporateȱ behaviorȱ (factoryȱ disasters,ȱ illegalȱ payments,ȱ etc).ȱ Hereȱ itȱ isȱ necessaryȱ toȱ broadenȱ theȱ frameȬ workȱ toȱ explicitlyȱ differentiateȱ betweenȱ socialȱ andȱ environmentalȱ issues,ȱ andȱ thusȱ takeȱ intoȱ accountȱ theȱ pureȱ environmental,ȱ i.e.ȱ biophysical,ȱ constraintsȱ (seeȱ sectionȱ 2.3.1.1ȱIssuesȱ–ȱtheȱprincipleȱofȱpublicȱresponsibility)ȱofȱeconomicȱactivitiesȱ(Starikȱ&ȱ Rands,ȱ 1995,ȱ p.ȱ 909).ȱ Similarly,ȱ Greeningȱ andȱ Grayȱ (1994)ȱ andȱ Hustedȱ (2000)ȱ failȱ toȱ distinguishȱbetweenȱtheȱtwoȱissueȱdimensions.ȱ InadequateȱprocessȬorientation:ȱFromȱmotivatingȱprinciplesȱtoȱstrategy,ȱimplementationȱandȱ outcomeȱ Asȱ pointedȱ outȱ earlier,ȱ Wood’sȱ (1991)ȱ modelȱ isȱ aȱ classificatoryȱ deviceȱ thatȱ doesȱ notȱ describeȱfunctionalȱtheoryȬbasedȱrelationshipsȱbetweenȱitsȱelements.ȱFurthermore,ȱitsȱ systemizationȱofȱprocessesȱ(e.g.ȱstakeholderȱmanagement)ȱandȱ outcomesȱ(e.g.ȱsocialȱ programs)ȱ doesȱ notȱ lendȱ itselfȱ toȱ anȱ analysisȱ ofȱ howȱ externalȱ andȱ internalȱ determiȬ nantsȱinfluenceȱcompanies’ȱstrategicȱdispositionȱtoȱCSM,ȱwhichȱinȱturnȱinfluencesȱtheȱ implementationȱ ofȱ CSMȱ andȱ eventuallyȱ theȱ outcomeȱ (i.e.ȱ actualȱ socialȱ andȱ environȬ mentalȱeffects)ȱofȱCSM.ȱ Hustedȱ(2000)ȱtakesȱaȱsystemsȱapproachȱtoȱsocialȱissueȱstrategies,ȱbasedȱonȱwhichȱtheȱ “natureȱofȱtheȱsocialȱissueȱdeterminesȱidealȱstrategyȱandȱstructureȱthatȱmustȱbeȱusedȱ toȱ achieveȱ anȱ alignmentȱ betweenȱ theȱ firmȱ andȱ itsȱ socialȱ environment”ȱ (p.ȱ 34).ȱ Heȱ linksȱcertainȱstrategiesȱandȱstructuresȱtoȱhigherȱsatisfactionȱofȱrelevantȱstakeholders’ȱ demandsȱ(p.ȱ36).ȱHisȱprocessȱorientationȱisȱveryȱspecificȱ–ȱclearlyȱtooȱspecificȱforȱtheȱ presentȱstudy,ȱwhichȱwasȱdesignedȱtoȱdetectȱcommonalitiesȱandȱdifferencesȱbetweenȱ industriesȱacrossȱtheȱ“entireȱprocess”,ȱi.e.ȱfromȱmotivatingȱprinciplesȱtoȱoutcome.ȱ GreeningȱandȱGray’sȱ(1994)ȱmodelȱ alsoȱ incorporatesȱaȱ processȱ viewȱ ofȱ externalȱ andȱ internalȱdeterminantsȱthatȱinfluenceȱtheȱchoiceȱofȱcorporateȱresponsesȱandȱresultingȱ corporateȱ socialȱ performance.ȱ However,ȱ theirȱ frameworkȱ primarilyȱ relatesȱ toȱ issuesȱ managementȱstructuresȱandȱdoesȱnotȱdifferentiateȱbetweenȱstrategicȱdispositionȱandȱ implementation.

2.2ȱCSMȱandȱrelatedȱtheoreticalȱframeworksȱ

15ȱ

PartialȱignoranceȱofȱcompanyȬspecificȱdeterminantsȱ Wood’sȱ (1991)ȱ frameworkȱ doesȱ notȱ accountȱ forȱ companyȬspecificȱ determinantsȱ ofȱ CSM,ȱaȱconceptȱtheȱauthorȱdefinesȱ–ȱfollowingȱtheȱterminologyȱofȱmanagerialȱdiscreȬ tionȱ–ȱasȱcorporateȱdiscretion.ȱCorporateȱdiscretionȱhasȱbeenȱreferredȱtoȱ–ȱevenȱifȱnotȱ explicitlyȱ–ȱinȱtheȱcontextȱofȱtwoȱotherȱmotivatingȱprinciples,ȱlegitimacyȱandȱmanageȬ rialȱdiscretion:ȱDavisȱ(1960)ȱstatesȱthatȱtheȱsocialȱresponsibilityȱofȱbusinessmenȱisȱinȬ fluencedȱbyȱtheȱculturalȱframework,ȱobjectivesȱandȱpoliciesȱofȱtheirȱcompanies.ȱWoodȱ(1991,ȱ p.ȱ700)ȱnotesȱthatȱtheȱprincipleȱofȱmanagerialȱdiscretionȱfocusesȱonȱtheȱ“optionsȱandȱ opportunitiesȱavailableȱtoȱindividualȱactorsȱwithinȱtheirȱorganizationalȱandȱinstitutionalȱ contexts.”ȱTheȱauthorȱofȱthisȱstudyȱpostulatesȱthatȱinternalȱdriversȱsuchȱasȱcorporateȱ culture,ȱtoolsȱandȱprocessesȱareȱsignificantȱmotivatingȱfactorsȱthatȱinfluenceȱ(andȱareȱ influencedȱ by)ȱ managerialȱ discretion:ȱ Managers’ȱ proactiveȱ attitudesȱ areȱ moreȱ likelyȱ toȱresultȱinȱcorrespondingȱbehaviorȱ(i.e.ȱdecisionȬmaking)ȱwhenȱtheirȱworkingȱenviȬ ronmentȱ isȱ “inȱ tune”ȱ withȱ them.ȱ Nevertheless,ȱ aȱ differentiationȱ betweenȱ corporateȱ andȱmanagerialȱdiscretionȱisȱclearlyȱmeaningful,ȱbecause,ȱforȱexample,ȱpersonalȱattiȬ tudesȱandȱcorporateȱcultureȱdoȱnotȱnecessarilyȱmatch.5ȱ WhereasȱGreeningȱandȱGrayȱ(1994)ȱseparatelyȱandȱexplicitlyȱconsiderȱcorporateȱdisȬ cretionȱ –ȱunderȱ theȱlabelȱ ofȱresourceȱdependencies/firmȱcapabilitiesȱ –ȱandȱtopȱ manȬ agementȱdiscretionȱ(p.ȱ491),ȱHusted’sȱ(2000)ȱmodelȱimplicitlyȱincorporatesȱthemȱintoȱ theȱ differentȱ issueȱ types.ȱ Forȱ example,ȱ Husted’sȱ (2000)ȱ typeȱ 2ȱ socialȱ issueȱ mayȱ inȬ volveȱ anȱ incongruenceȱ betweenȱ theȱ firm’sȱ perceptionȱ ofȱ corporateȱ vision/purposeȱ andȱitsȱexternalȱstakeholders.ȱThisȱincongruenceȱmayȱbeȱpartlyȱcausedȱbyȱbothȱcorpoȬ rateȱandȱmanagerialȱdiscretionȱ(p.ȱ32).ȱ Lackȱofȱconsiderationȱofȱeconomicȱrationaleȱ Woodȱlargelyȱneglectsȱtheȱeconomicȱrationaleȱforȱprocessesȱofȱsocialȱresponsiveness,ȱ althoughȱitsȱimportanceȱisȱimplicitȱ(Freeman,ȱ1984;ȱWilson,ȱ2003,ȱp.ȱ4):ȱWithoutȱprofȬ its,ȱ aȱ firmȱ neglectsȱ itsȱ economicȱ function,ȱ itsȱ firstȱ andȱ foremostȱ socialȱ responsibilityȱ (Carroll,ȱ1979,ȱp.ȱ500),ȱandȱthusȱrisksȱlosingȱtheȱlicenseȱtoȱoperateȱfromȱseveralȱstakeȬ holdersȱsuchȱasȱownersȱandȱemployees.ȱGreeningȱandȱGrayȱ(1994)ȱincludeȱbothȱcorȬ porateȱ socialȱ andȱ financialȱ performanceȱ asȱ anȱ outcomeȱ componentȱ inȱ theirȱ model.ȱ Hustedȱ(2000)ȱimplicitlyȱtakesȱintoȱaccountȱtheȱeconomicȱrationale,ȱasȱheȱdefinesȱcorȬ porateȱ socialȱ performanceȱ inȱ relationȱ toȱ theȱ (profitȬdriven)ȱ satisfactionȱ ofȱ stakeȬ holders.ȱOverall,ȱhowever,ȱtheȱbusinessȱcaseȱforȱcorporateȱsustainabilityȱisȱonlyȱmarȬ ginallyȱdiscussedȱinȱanyȱofȱtheȱframeworksȱpresented.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 5

ȱ

ȱInȱfact,ȱcorporateȱdiscretionaryȱfactorsȱsuchȱasȱinvestmentȱinȱhumanȱresourcesȱdirectedȱatȱenvironȬ mentalȱ issuesȱ haveȱ alreadyȱ beenȱ testedȱ empiricallyȱ underȱ theȱ labelȱ ofȱ theȱ managerialȱ discretionȱ (Henriquesȱ&ȱSadorsky,ȱ1995).ȱ

16ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

2.3

Keyȱconceptsȱ

Havingȱ discussedȱ theȱ existingȱ theoreticalȱ frameworksȱ relevantȱ toȱ thisȱ study,ȱ inȱ thisȱ sectionȱtheȱauthorȱintroducesȱtheȱcorrespondingȱkeyȱconceptsȱthatȱcomprise:ȱ -

theȱdeterminantsȱofȱCSMȱ

-

CSMȱandȱtheȱindividualȱsubdimensionsȱofȱstrategicȱdisposition,ȱtheȱeconomicȱraȬ tionaleȱandȱimplementationȱ

-

andȱtheȱoutcomeȱofȱCSM.ȱ

2.3.1

DeterminantsȱofȱCSMȱ

Theȱ determinantsȱ ofȱ CSMȱ compriseȱ theȱ threeȱ principlesȱ ofȱ socialȱ responsibilityȱ thatȱ featureȱinȱWood’sȱ(1991)ȱmodelȱofȱcorporateȱsocialȱperformance:ȱpublicȱresponsibilityȱ (issues),ȱ legitimacyȱ (stakeholders)ȱ andȱ managerialȱ discretionȱ (managers).ȱ Asȱ statedȱ above,ȱ Wood’sȱ modelȱ doesȱ notȱ accountȱ forȱ companyȬspecificȱ determinantsȱ suchȱ asȱ corporateȱculture.ȱInȱtheȱpresentȱstudyȱtheyȱareȱexplicitlyȱaccountedȱfor.ȱInȱanalogyȱtoȱ Wood’sȱ threeȱ originalȱ principles,ȱ companyȬspecificȱ determinantsȱ areȱ summarizedȱ underȱtheȱprincipleȱofȱcorporateȱdiscretion.ȱ 2.3.1.1 Issuesȱ–ȱtheȱprincipleȱofȱpublicȱresponsibilityȱ Theȱprincipleȱofȱpublicȱresponsibilityȱrefersȱtoȱtheȱ“functionsȱofȱorganizationalȱmanȬ agementȱ withinȱ theȱ specificȱ contextȱ ofȱ publicȱ policy”ȱ (Prestonȱ etȱ al.,ȱ 1975,ȱ p.ȱ 10).ȱ Itȱ postulatesȱthatȱ “businessesȱareȱresponsibleȱforȱoutcomesȱrelatedȱtoȱtheirȱprimaryȱandȱsecondaryȱareasȱofȱinȬ volvementȱwithȱsociety”ȱ(Wood,ȱ1991,ȱp.ȱ697).ȱ

Hence,ȱ itȱ doesȱ notȱ allowȱ aȱ definitionȱ ofȱ corporateȱ responsibilityȱ throughȱ personalȱ preferencesȱ andȱ theȱ socialȱ connectionsȱ ofȱ firms’ȱ topȱ executives.ȱ However,ȱ itȱ leavesȱ roomȱforȱmanagerialȱinterpretationȱofȱtheȱrelevanceȱofȱproblemsȱ(Wood,ȱ1991,ȱp.ȱ698).ȱ Itȱtargetsȱcompaniesȱatȱtheȱorganizationalȱlevelȱbutȱdoesȱnotȱrequireȱthemȱtoȱsolveȱallȱ ofȱsociety’sȱsocialȱandȱenvironmentalȱproblemsȱ(Wood,ȱ1991,ȱp.ȱ697).ȱ Wartickȱ andȱ Mahonȱ (1994,ȱ alsoȱ citedȱ inȱ Husted,ȱ 2000,ȱ p.ȱ 32)ȱ classifiedȱ socialȱ issuesȱ basedȱ onȱ differentȱ kindsȱ ofȱ expectationalȱ gaps:ȱ (1)ȱ aȱ cognitiveȱ conflictȱ dueȱ toȱ disȬ agreementsȱaboutȱtheȱrealityȱ(e.g.ȱdifferentȱperceptionsȱofȱenvironmentalȱproblems),ȱ (2)ȱ aȱ conflictȱ ofȱ visionȱ andȱ purposeȱ (e.g.ȱ differentȱ perceptionsȱ ofȱ theȱ legitimacyȱ ofȱ producingȱaȱpotentiallyȱharmfulȱproduct),ȱandȱ(3)ȱgoalȱincongruence,ȱe.g.ȱconflictingȱ goalsȱandȱpurposesȱbetweenȱaȱcompanyȱandȱitsȱstakeholdersȱ(i.e.ȱclashȱwithȱaȱcomȬ petitor’sȱdifferentȱcorporateȱstrategy).ȱ Alongȱtheseȱlines,ȱtheȱauthorȱofȱtheȱpresentȱstudyȱdefinesȱanȱissueȱasȱanyȱkindȱofȱsoȬ cialȱ orȱ environmentalȱ problemȱ thatȱ isȱ causedȱ throughȱ companies’ȱ primaryȱ andȱ secȬ

2.3ȱKeyȱconceptsȱ

17ȱ

ondaryȱactivitiesȱ(alsoȱaȱlackȱofȱengagement),ȱandȱwhichȱmayȱeventuallyȱleadȱtoȱexȬ pectationalȱ gapsȱ betweenȱ theȱ companyȱ andȱ itsȱ stakeholders.ȱ However,ȱ heȱ willȱ notȱ differentiateȱbetweenȱtheȱdifferentȱkindsȱofȱgapsȱdescribedȱabove,ȱbutȱratherȱbetweenȱ theȱenvironmentalȱandȱsocialȱnatureȱofȱissues.ȱ Issuesȱcanȱdifferȱacrossȱseveralȱdimensionsȱthatȱareȱinterdependentȱandȱinfluenceȱtheȱ strengthȱofȱtheȱunderlyingȱmotivatingȱprinciple:ȱscopeȱ(globalȱvs.ȱlocal),ȱsensoryȱvisiȬ bilityȱ (sight,ȱ smell,ȱ etc.),ȱ certaintyȱ (determinabilityȱ ofȱ impacts),ȱ transparencyȱ (deterȬ minabilityȱofȱcause)ȱandȱemotivityȱ(Bansalȱ&ȱRoth,ȱ2000;ȱBowen,ȱ2000,ȱp.ȱ100).ȱ Theȱ principleȱ ofȱ publicȱ responsibilityȱ isȱ empiricallyȱ supportedȱ byȱ variousȱ studiesȱ (e.g.ȱAgleȱ&ȱMitchell,ȱ1999;ȱBansalȱetȱal.,ȱ2000;ȱCordanoȱ&ȱFrieze,ȱ2000;ȱHenriquesȱetȱ al.,ȱ 1996;ȱ Lawrenceȱ &ȱ Morell,ȱ 1995;ȱ Rondinelliȱ &ȱ Berry,ȱ 2000;ȱ Winn,ȱ 1995).ȱ Itȱ isȱ alsoȱ linkedȱtoȱtheȱprincipleȱofȱlegitimacy:ȱObviously,ȱtheȱsignificanceȱofȱanȱissueȱtoȱaȱcomȬ panyȱdependsȱonȱtheȱexistenceȱofȱatȱleastȱoneȱstakeholderȱwhoȱisȱwillingȱtoȱrewardȱorȱ punishȱcorporateȱactivitiesȱthatȱdoȱorȱdoȱnotȱaddressȱtheȱissue,ȱi.e.ȱtheȱstakeholder’sȱ demandȱlinksȱtheȱissueȱtoȱfinancialȱthreatȱorȱopportunity.ȱ Scholarsȱ beganȱ discussingȱ theȱ significanceȱ ofȱ socialȱ issuesȱ relativelyȱ earlyȱ –ȱ inȱ factȱ environmentalȱ issuesȱ wereȱ treatedȱ asȱ beingȱ ofȱ aȱ socialȱ andȱ anȱ economicȱ natureȱ (Throop,ȱ Starik,ȱ &ȱ Rands,ȱ 1993,ȱ p.ȱ 66).ȱ Environmentalȱ issuesȱ wereȱ onlyȱ recognizedȱ veryȱlateȱbyȱstrategicȱmanagementȱtheories,ȱdespiteȱtheirȱbiophysicalȱandȱthermodyȬ namicȱsignificanceȱasȱisȱbrieflyȱillustratedȱinȱtheȱfollowingȱtwoȱparagraphs:ȱ -

Theȱ lawȱ ofȱ entropyȱ statesȱ thatȱ disorderȱ inȱ anyȱ closedȱ physicalȱ systemȱ isȱ alwaysȱ increasing.ȱLocalizedȱreductionȱofȱentropyȱwithinȱhumanȱorganizationsȱandȱotherȱ biologicalȱ systemsȱ isȱ onlyȱ possibleȱ “atȱ theȱ expenseȱ ofȱ muchȱ greaterȱ amountsȱ ofȱ disorderȱinȱtheȱsurroundingȱenvironment”ȱ(Throopȱetȱal.,ȱ1993,ȱp.ȱ72).ȱThisȱmeansȱ thatȱeconomicȱactivitiesȱareȱinherentlyȱlinkedȱtoȱincreasesȱinȱentropy,ȱe.g.ȱthroughȱ theȱuseȱofȱfossilȱfuels.ȱ

-

Carryingȱcapacityȱstandsȱforȱtheȱmaximumȱpopulationȱanȱenvironmentȱcanȱ“susȬ tain”ȱwithoutȱincurringȱlongȬtermȱdamage.ȱForȱtheȱhumanȱspecies,ȱlifestylesȱplayȱ aȱ significantȱ additionalȱ factorȱ sinceȱ theyȱ determineȱ intensityȱ ofȱ consumption.ȱ Currentȱlevelsȱofȱconsumptionȱareȱbelievedȱtoȱbeȱapproachingȱorȱevenȱexceedingȱ theȱthresholdsȱofȱglobalȱcarryingȱcapacityȱ(Starikȱetȱal.,ȱ1995,ȱp.ȱ910).ȱ

ObviouslyȱenvironmentalȱissuesȱareȱlargelyȱsectorȬspecific.ȱInȱtheȱenergyȱsectorȱtheyȱ spanȱaȱgrowingȱrangeȱofȱpollutants,ȱhazardsȱandȱecosystems,ȱbutȱareȱalsoȱdueȱtoȱsevȬ eralȱfactorsȱsuchȱasȱpopulationȱgrowth,ȱeconomicȱdevelopmentȱandȱlifestylesȱthatȱareȱ partlyȱbeyondȱtheȱenergyȱindustry’sȱcontrolȱ(e.g.ȱairȱemissionȱfromȱmobilityȱsector).ȱ Theyȱareȱmainlyȱassociatedȱwithȱtheȱproductionȱandȱconsumptionȱofȱfuels,ȱandȱmostȱ importantlyȱ includeȱ acidȱ precipitationȱ (throughȱ SO2ȱ andȱ NOxȱ emissionsȱ associatedȱ ȱ

18ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

withȱ theȱ useȱ ofȱ fossilȱ fuels),ȱ stratosphericȱ ozoneȱ depletionȱ (NOxȱ emissions),ȱ globalȱ climateȱchangeȱ(mainlyȱthroughȱ CO2ȱemissions),ȱtheȱemissionȱofȱnuclearȱsubstancesȱ andȱtheȱdirectȱdestructionȱofȱecosystemsȱthroughȱextractiveȱactivitiesȱ(Dincer,ȱ1999).ȱ Socialȱissuesȱprimarilyȱcompriseȱfuelȱpoverty,ȱparticularlyȱinȱruralȱareasȱofȱdevelopȬ ingȱ countriesȱ –ȱ alsoȱ referredȱ toȱ asȱ theȱ NorthȬSouthȱ energyȱ divideȱ (Worldȱ Energyȱ Council,ȱ 1999).ȱ Theyȱ alsoȱ includeȱ relocationsȱ dueȱ toȱ largeȱ hydropowerȱ orȱ surfaceȱ miningȱ projectsȱ (Khagram,ȱ 2003;ȱ Suzman,ȱ 1998)ȱ andȱ fairȱ allocationȱ ofȱ oilȱ revenuesȱ betweenȱ oftenȱ totalitarianȱ nationalȱ governmentsȱ andȱ theȱ localȱ communitiesȱ aroundȱ extractionȱandȱproductionȱprojectsȱ(Fritz,ȱ2003;ȱGavin,ȱ2003).ȱ 2.3.1.2 Stakeholdersȱ–ȱtheȱprincipleȱofȱlegitimacyȱ Theȱ institutionalȱ principleȱ ofȱ legitimacyȱ originatesȱ fromȱ Davisȱ (1960)’ȱ Ironȱ Lawȱ ofȱ Responsibility.ȱ Davisȱ definesȱ socialȱ responsibilityȱ asȱ “businessmen’sȱ decisionsȱ andȱ actionsȱthatȱareȱtakenȱforȱreasonsȱatȱleastȱpartiallyȱbeyondȱtheȱfirm’sȱdirectȱeconomicȱ orȱtechnicalȱinterestsȱ(Davis,ȱ1960,ȱp.ȱ70),ȱandȱinfluencedȱbyȱtheȱculturalȱframework,ȱ objectivesȱ andȱ policiesȱ ofȱ theirȱ companies.ȱ Heȱ statesȱ thatȱ peopleȱ haveȱ historicallyȱ beenȱconcernedȱwithȱbalancingȱpowerȱandȱresponsibility.ȱTheȱIronȱLawȱofȱResponsiȬ bilityȱ suggestsȱ thatȱ powerȱ andȱ responsibilityȱ areȱ coȬequal:ȱ Avoidanceȱ ofȱ socialȱ reȬ sponsibilityȱhasȱledȱtoȱtheȱreductionȱofȱpower,ȱsinceȱotherȱsocietalȱgroups,ȱmostȱimȬ portantlyȱgovernmentsȱwillȱassumeȱtheȱnecessaryȱresponsibilities.ȱSocietyȱcanȱamendȱ orȱ revokeȱ aȱ company’sȱ charterȱ toȱ existȱ (i.e.ȱ licenseȱ toȱ operate),ȱ ifȱ itȱ doesȱ notȱ useȱ itsȱ powerȱinȱaȱwayȱthatȱsocietyȱconsidersȱresponsibleȱ(Davis,ȱ1973ȱp.ȱ314).ȱThusȱtheȱprinȬ cipleȱofȱlegitimacyȱcanȱbeȱphrasedȱasȱfollows:ȱ Societyȱgrantsȱlegitimacyȱandȱpowerȱtoȱbusiness.ȱInȱtheȱlongȱrun,ȱthoseȱwhoȱdoȱnotȱuseȱpowerȱ inȱaȱmannerȱwhichȱsocietyȱconsidersȱresponsibleȱwillȱtendȱtoȱloseȱitȱ(Davis,ȱ1973,ȱp.ȱ314ȱcitedȱ by;ȱWood,ȱ1991).ȱ

Theȱ principleȱ ofȱ legitimacyȱ isȱ supportedȱ byȱ severalȱ significantȱ theoreticalȱ developȬ mentȱsuchȱasȱFreeman’sȱstakeholderȱtheoryȱ–ȱaccordingȱtoȱwhichȱfirmsȱshouldȱbeȱreȬ sponsibleȱ toȱ “thoseȱ groupsȱ whoȱ canȱ affectȱ orȱ areȱ affectedȱ byȱ theȱ achievementȱ ofȱ anȱ organization’sȱ purpose”ȱ (Freeman,ȱ 1984,ȱ pȱ 49),ȱ andȱ legitimacyȱ theoryȱ (Suchman,ȱ 1995).ȱ Theȱ latterȱ transcendsȱ earlyȱ managementȱ theoriesȱ thatȱ understoodȱ organizaȬ tionsȱ asȱ rational,ȱ socialȱ machinesȱ thatȱ efficientlyȱ transformȱ inputsȱ toȱ outputs.ȱ Theȱ underlyingȱ rationaleȱ isȱ basedȱ onȱ theȱ conceptȱ ofȱ organizationalȱ legitimacy,ȱ whichȱ Suchmanȱdefinesȱasȱaȱ“perceptionȱorȱassumptionȱthatȱtheȱactionsȱofȱanȱentityȱareȱdeȬ sirable,ȱ proper,ȱ orȱ appropriateȱ withinȱ someȱ sociallyȱ constructedȱ systemȱ ofȱ norms,ȱ values,ȱ beliefsȱ andȱ definitions”ȱ (Suchman,ȱ 1995,ȱ p.ȱ 574).ȱ Suchmanȱ concludesȱ thatȱ companiesȱandȱtheirȱmanagersȱhaveȱsignificantȱroomȱforȱmaneuverȱtoȱensureȱorganȬ izationalȱlegitimacy.ȱ

2.3ȱKeyȱconceptsȱ

19ȱ

Numerousȱstudiesȱalsoȱempiricallyȱconfirmȱtheȱprincipleȱofȱlegitimacyȱ(Bansalȱetȱal.,ȱ 2000;ȱ Greeningȱ etȱ al.,ȱ 1994;ȱ Lawrenceȱ etȱ al.,ȱ 1995;ȱ Winn,ȱ 1995).ȱ Theȱ importanceȱ ofȱ stakeholdersȱ inȱ drivingȱ CSMȱ dependsȱ onȱ twoȱ factors:ȱ (1)ȱ theirȱ powerȱ toȱ revokeȱ aȱ company’sȱlicenseȱtoȱoperateȱandȱ(2)ȱtheirȱdemandȱforȱCSM.ȱTheȱlatterȱfactorȱisȱinfluȬ encedȱbyȱtheȱlegitimacyȱandȱtheȱurgencyȱofȱtheȱdemandȱ(Agleȱetȱal.,ȱ1999,ȱp.ȱ508).ȱ Itȱ isȱ alsoȱ meaningfulȱ toȱ differentiateȱ betweenȱ twoȱ kindsȱ ofȱ licensesȱ toȱ operate:ȱ theȱ formalȱandȱtheȱinformal.ȱTheȱformerȱisȱobviouslyȱgrantedȱbyȱgovernmentsȱandȱreguȬ lators,ȱtheȱlatterȱbyȱnonȬregulatoryȱstakeholdersȱsuchȱasȱcapitalȱmarkets,ȱNGOsȱandȱ customers.ȱ Sinceȱ bothȱ kindsȱ areȱ grantedȱ byȱ differentȱ stakeholders,ȱ theyȱ canȱ beȱ amendedȱ orȱ revokedȱ forȱ varyingȱ degreesȱ ofȱ corporateȱ environmentalȱ andȱ socialȱ efȬ fects,ȱ dependingȱ onȱ eachȱ stakeholders’ȱ individualȱ agenda.ȱ Theȱ informalȱ licenseȱ toȱ operateȱincludesȱ intangibleȱconceptsȱsuchȱ asȱ brandȱ valueȱandȱreputation,ȱemployeeȱ satisfactionȱ(i.e.ȱtheȱgoodwillȱofȱnonȬregulatoryȱstakeholders).ȱItȱisȱaȱsignificantȱmodȬ eratingȱfactorȱofȱCSMȱforȱtheȱfollowingȱreasons.ȱFirst,ȱeveryȱcompanyȱhasȱtoȱhaveȱaȱ formalȱlicenseȱtoȱoperate.ȱHenceȱaȱgreaterȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperȬ ateȱ isȱ associatedȱ withȱ aȱ riskȱ premium.ȱ Second,ȱ legislativeȱ processesȱ areȱ relativelyȱ slowȱ comparedȱ toȱ possibleȱ adȱ hocȱ reactionsȱ fromȱ customers,ȱ NGOsȱ orȱ employees,ȱ whichȱcanȱaffectȱtheȱinformalȱlicenseȱtoȱoperateȱimmediatelyȱ(e.g.ȱbrandȱdamageȱdueȱ toȱconsumerȱprotests,ȱdiscontinuedȱoperationsȱthroughȱstrikes)ȱ(Steger,ȱ2003,ȱp.ȱ73).ȱ 2.3.1.3 Managers’ȱattitudesȱ–ȱtheȱprincipleȱofȱmanagerialȱdiscretionȱ Theȱprincipleȱofȱmanagerialȱdiscretionȱfocusesȱonȱtheȱlevelȱofȱtheȱindividual.ȱItȱstatesȱ thatȱsociallyȱresponsibleȱactionȱisȱnotȱcarriedȱoutȱbyȱanȱabstractȱorganizationȱbutȱbyȱ managersȱ whoȱhaveȱanȱindividual’sȱrightȱandȱresponsibilityȱtoȱactȱresponsiblyȱwithinȱaȱgivenȱeconomic,ȱ legalȱandȱethicalȱframeworkȱ(Wood,ȱ1991,ȱp.ȱ698).ȱ

Theȱprincipleȱisȱbasedȱonȱtheȱpremiseȱthatȱsocietyȱandȱcompaniesȱprovideȱmanagersȱ withȱaȱsetȱofȱchoicesȱ(Ackermann,ȱ1975,ȱp.ȱ32).ȱJobȱdescriptionȱandȱcorporateȱproceȬ duresȱleaveȱmanagers’ȱsignificantȱroomȱtoȱactȱmoreȱorȱlessȱresponsiblyȱasȱindividuals.ȱ Individualȱdecisionsȱareȱdeterminedȱbyȱseveralȱfactorsȱsuchȱasȱpersonalȱattitudesȱandȱ values,ȱwhichȱmayȱvaryȱaccordingȱtoȱdifferentȱculturalȱbackgrounds,ȱlevelsȱofȱexperiȬ ence,ȱ etcȱ (Wood,ȱ 1991,ȱ p.ȱ 700).ȱ Asȱ Duttonȱ etȱ al.ȱ (1983)ȱ stateȱ inȱ theirȱ frameworkȱ onȱ strategicȱ issueȱ diagnosis,ȱ managersȱ alsoȱ haveȱ significantȱ impactȱ onȱ howȱ issuesȱ areȱ organizedȱ andȱ exploredȱ –ȱ i.e.ȱ onȱ developmentsȱ thatȱ precedeȱ theȱ actualȱ managerialȱ decisionȱ–ȱthroughȱtheirȱcognitiveȱmapsȱandȱpoliticalȱinterestsȱ(p.ȱ10)ȱwhichȱinfluenceȱ causeȬeffectȱunderstandings,ȱpredictiveȱjudgments,ȱlanguageȱandȱlabels.ȱ Aȱ theoreticalȱ principleȱ ofȱ sociallyȱ responsibleȱ humanȱ actionȱ hasȱ beenȱ missingȱ forȱ aȱ longȱ time.ȱ Whereasȱ literatureȱ onȱ corporateȱ socialȱ responsibilityȱ primarilyȱ emphaȬ sizedȱorganizationalȱreactionȱtoȱexternalȱdemand,ȱbusinessȱethicsȱwasȱtoȱsomeȱextentȱ ȱ

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2ȱTheoreticalȱfoundationȱandȱconceptsȱ

moreȱ concernedȱ withȱ theȱ actionȱ ofȱ individualsȱ withinȱ theȱ organizationȱ (Whettenȱ etȱ al.,ȱ2002,ȱp.ȱ382).ȱModelsȱofȱethicalȱandȱunethicalȱbehaviorȱinȱcompaniesȱwereȱlargelyȱ absentȱ untilȱ theȱ endȱ ofȱ theȱ 1980s,ȱ whenȱ Bommerȱ etȱ al.ȱ (1987,ȱ p.ȱ 265)ȱ developedȱ aȱ modelȱthatȱexplainsȱdecisionȬmakingȱthroughȱtheȱindividualȱproblemȱsituationȱorȱdiȬ lemmaȱandȱseveralȱenvironmentalȱ(suchȱasȱsocial,ȱprofessionalȱandȱpersonal)ȱfactors.ȱ Theȱ importanceȱ ofȱ theȱ principleȱ ofȱ managerialȱ discretionȱ hasȱ beenȱ empiricallyȱ conȬ firmedȱbyȱvariousȱauthorsȱ(Anderssonȱ&ȱBateman,ȱ2000;ȱBansalȱetȱal.,ȱ2000;ȱCordanoȱ etȱal.,ȱ2000;ȱEgriȱ&ȱHerman,ȱ2000;ȱGreeningȱetȱal.,ȱ1994;ȱMorris,ȱRehbein,ȱHosseini,ȱ&ȱ Armacost,ȱ1990;ȱSturdivantȱ&ȱGinter,ȱ1977;ȱWinn,ȱ1995).ȱȱ 2.3.1.4 CompanyȬspecificȱdeterminantsȱ–ȱtheȱprincipleȱofȱcorporateȱdiscretionȱ TheȱprincipleȱofȱcorporateȱdiscretionȱisȱnotȱanȱexplicitȱpartȱofȱWood’sȱframework,ȱalȬ thoughȱitȱisȱinterlinkedȱwithȱmanagerialȱdiscretion.ȱInȱanalogyȱtoȱtheȱlatter,ȱitȱstatesȱ thatȱ companiesȱhaveȱtheȱpotentialȱandȱresponsibilityȱtoȱprovideȱanȱadequateȱorganizaȬ tionalȱandȱinstitutionalȱcontextȱforȱtheȱmindsetȱandȱactivitiesȱofȱitsȱemployeesȱ throughȱe.g.ȱcorporateȱcultures,ȱcorporateȱobjectivesȱandȱpoliciesȱ(Davis,ȱ1960;ȱWood,ȱ 1991,ȱ p.ȱ 700).ȱ CompanyȬspecificȱ factorsȱ constituteȱ importantȱ determinantsȱ ofȱ howȱ stronglyȱ companiesȱ exerciseȱ theirȱ discretionaryȱ powersȱ toȱ resolveȱ socialȱ andȱ enviȬ ronmentalȱ issues:ȱ “Thoughȱ externalȱ factorsȱ createȱ incentivesȱ andȱ expectationsȱ forȱ firms,ȱ intrafirmȱ dynamicsȱ areȱ likelyȱ toȱ influenceȱ howȱ managersȱ perceive,ȱ interpretȱ andȱ translateȱ theseȱ externalȱ pressuresȱ intoȱ actionableȱ items”ȱ (Griffin,ȱ 2000,ȱ p.ȱ 485).ȱ Bommerȱ etȱ al.ȱ (1987,ȱ p.ȱ 271)ȱ alsoȱ argueȱ thatȱ corporateȱ goals,ȱ policiesȱ andȱ cultureȱ “stronglyȱ influenceȱmanagers’ȱ decisionsȱ onȱ whetherȱtoȱactȱethicallyȱorȱ unethically.”ȱ Furthermore,ȱFredricksonȱ(1986)ȱsuggestsȱthatȱ–ȱinȱadditionȱtoȱtheȱundisputedȱ“strucȬ tureȱ followsȱ strategy”ȱ –ȱ structureȱ hasȱ aȱ significantȱ effectȱ onȱ strategy,ȱ particularlyȱ whenȱstrategyȱisȱnotȱsufficientlyȱinstitutionalizedȱ(p.ȱ295).ȱThisȱisȱlikelyȱtoȱbeȱparticuȬ larlyȱrelevantȱtoȱCSMȱifȱstrategyȱlacksȱ–ȱasȱitȱisȱoftenȱtheȱcaseȱ(Morsing,ȱ2003)ȱ–ȱinstiȬ tutionalizationȱandȱintegrationȱintoȱbusinessȱstrategies.ȱ Severalȱempiricalȱstudiesȱhaveȱconfirmedȱtheȱimportanceȱofȱcorporateȱdiscretion,ȱalȬ thoughȱ theȱ authorsȱ neverȱ explicitlyȱ referredȱ toȱ theȱ principleȱ asȱ such.ȱ Inȱ factȱ HenriȬ quesȱandȱSadorskyȱ(1995)ȱtestedȱandȱpartlyȱconfirmedȱfirms’ȱfinancialȱpositionsȱandȱ investmentsȱ inȱ humanȱ resourcesȱ asȱ determinantsȱ ofȱ environmentalȱ responsivenessȱ underȱtheȱexplicitȱlabelȱofȱ“managerialȱdiscretion.”ȱOtherȱauthorsȱascertainedȱtheȱroleȱ ofȱcorporateȱstructuresȱ(Lawrenceȱetȱal.,ȱ1995,ȱp.ȱ116;ȱSwinthȱ&ȱRaymond,ȱ1995),ȱcorȬ porateȱ toolsȱ (Kolkȱ &ȱ Levy,ȱ 2001),ȱ corporateȱ cultureȱ (Cruzȱ DenizȬDenizȱ &ȱ GarciaȬ Falcon,ȱ2002)ȱandȱorganizationȱsizeȱ(Greening,ȱ1995,ȱp.ȱ487)ȱinȱinfluencingȱindividualȱ

2.3ȱKeyȱconceptsȱ

21ȱ

dimensionsȱ ofȱ CSMȱ suchȱ asȱ climateȱ changeȱ strategies,ȱ emissionȱ reductions,ȱ issueȱ managementȱstructuresȱandȱsocialȱprograms.ȱ 2.3.2 CSMȱ Asȱoutlinedȱabove,ȱaȱwidelyȱacceptedȱdefinitionȱofȱcorporateȱsustainabilityȱisȱmissingȱ inȱtheȱtheoreticalȱliteraturesȱtoȱdate.ȱTheȱnotionsȱofȱcorporateȱsustainabilityȱandȱsusȬ tainableȱdevelopmentȱareȱratherȱabstractȱandȱconstituteȱratherȱguidingȱprinciplesȱforȱ corporateȱ activitiesȱ (Marrewijk,ȱ 2003;ȱ Marrewijkȱ etȱ al.,ȱ 2003;ȱ Worldȱ Commissionȱ onȱ EnvironmentȱandȱDevelopment,ȱ1987).ȱ Inȱmostȱcorporateȱsocialȱperformanceȱmodels,ȱtheȱnotionȱofȱresponsivenessȱprovidesȱ “anȱ actionȱ counterpartȱ toȱ theȱ principledȱ reflectionȱ ofȱ socialȱ responsibility”ȱ (Wood,ȱ 1991,ȱp.ȱ703).ȱThisȱactionȱcounterpart,ȱwhichȱcorrespondsȱtoȱtheȱmeaningȱofȱCSMȱinȱ theȱpresentȱstudy,ȱhasȱbeenȱsystemizedȱinȱdifferentȱwaysȱ(Ackermann,ȱ1975;ȱStrand,ȱ 1983;ȱWood,ȱ1991).ȱHowever,ȱnoneȱofȱthemȱdifferentiatedȱbetweenȱstrategyȱandȱimȬ plementation.ȱ Theȱ authorȱ arguesȱ thatȱ thisȱ differentiationȱ isȱ meaningful,ȱ becauseȱ itȱ takesȱintoȱaccountȱthatȱcorporateȱresponsivenessȱthroughȱprocessesȱsuchȱasȱenvironȬ mentalȱ assessment,ȱ stakeholderȱ managementȱ andȱ issuesȱ managementȱ (Wood,ȱ 1991,ȱ p.ȱ703)ȱisȱcontingentȱupon:ȱ -

aȱ moreȱ orȱ lessȱ consciousȱ strategicȱ decisionȱ toȱ reactȱ toȱ theȱ motivatingȱ principles,ȱ i.e.ȱ drivers,ȱ moreȱ orȱ lessȱ stronglyȱ andȱ systematicallyȱ (strategicȱ disposition).ȱ Thisȱ decisionȱobviouslyȱreliesȱonȱhowȱcompaniesȱrecognizeȱandȱevaluateȱdrivers,ȱandȱ howȱtheyȱperceiveȱtheȱfinancialȱeffectȱofȱrespondingȱtoȱthem,ȱi.e.ȱhowȱstrongȱandȱ soundȱtheirȱeconomicȱrationaleȱis.ȱ

-

andȱaȱcompanyȬspecificȱapproachȱtoȱimplementingȱthisȱstrategicȱdecisionȱthroughȱ differentȱmeansȱsuchȱasȱmanagementȱtools,ȱstructures,ȱetc.ȱ(implementation).ȱ

Inȱthisȱsituationȱitȱappearsȱobviousȱtoȱgoȱbeyondȱexistingȱnotionsȱofȱcorporateȱsocialȱ responsiveness,ȱalsoȱtoȱconsiderȱbothȱsocialȱandȱenvironmentalȱissues.ȱTheȱresultingȱ definitionȱrefersȱtoȱCSMȱas:ȱ TheȱstrategicȱandȱprofitȬdrivenȱcorporateȱresponseȱtoȱenvironmentalȱandȱsocialȱisȬ suesȱthatȱareȱcausedȱthroughȱtheȱorganization’sȱprimaryȱandȱsecondaryȱactivities.ȱ Itȱ incorporatesȱ aȱ certainȱ levelȱ ofȱ strategicȱ dispositionȱ toȱ respond,ȱ isȱ basedȱ onȱ aȱ moreȱorȱlessȱelaboratedȱeconomicȱrationaleȱandȱimplementedȱthroughȱtools,ȱstrucȬ turesȱandȱinitiatives.ȱ Theȱfirstȱpartȱofȱthisȱdefinitionȱisȱratherȱcloseȱtoȱthatȱofȱissuesȱmanagementȱwhichȱhasȱ beenȱdescribedȱasȱaȱfirm’sȱidentification,ȱanalysisȱandȱresponseȱtoȱsocialȱandȱ–ȱinȱtheȱ caseȱofȱstrategicȱissuesȱmanagementȱasȱdefinedȱbyȱDuttonȱ(1987)ȱ–ȱpurelyȱcompetitiveȱ issuesȱ(Greeningȱetȱal.,ȱ1994).ȱHowever,ȱtheȱauthorȱintentionallyȱrefrainedȱfromȱusingȱ thisȱterminologyȱtoȱdissociateȱtheȱconceptȱofȱCSMȱfromȱtheȱusualȱ“dangerous”ȱconȬ ȱ

22ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

nectionȱofȱissuesȱmanagementȱwithȱpublicȱrelationsȱandȱcrisisȱmanagementȱ(seeȱalsoȱ p.ȱ33).ȱ Theȱ attributeȱ “strategic”ȱ emphasizesȱ theȱ needȱ forȱ aȱ systematicȱ andȱ integratedȱ apȬ proach,ȱtheȱattributeȱ“profitȬdriven”ȱstressesȱtheȱimportanceȱofȱaȱsoundȱeconomicȱraȬ tionaleȱ forȱ resolvingȱ issuesȱ underȱ considerationȱ andȱ thusȱ acknowledgesȱ economicȱ responsibilityȱasȱtheȱfundamentalȱorganizingȱprinciple:ȱAȱfirmȱcanȱonlyȱsuccessfullyȱ resolveȱ issuesȱ associatedȱ withȱ itsȱ activitiesȱ ifȱ itȱ generatesȱ profitsȱ inȱ theȱ midȱ toȱ longȱ term.ȱȱ CSMȱ asȱ definedȱ aboveȱ incorporatesȱ threeȱ importantȱ subconcepts,ȱ namelyȱ strategicȱ disposition,ȱ economicȱ rationaleȱ andȱ implementation.ȱ Sinceȱ noneȱ ofȱ themȱ hasȱ beenȱ describedȱ andȱ definedȱ inȱ theȱ contextȱ ofȱ corporateȱ socialȱ responsivenessȱ orȱ relatedȱ conceptsȱbefore,ȱtheȱauthorȱprovidesȱdefinitionsȱinȱtheȱfollowingȱparagraphs.ȱ Strategicȱdispositionȱ TheȱstrategicȱdispositionȱtoȱCSMȱrefersȱtoȱ companies’ȱ willingnessȱ toȱ integrateȱ socialȱ andȱ environmentalȱ issuesȱ systematiȬ callyȱandȱpersistentlyȱintoȱtheirȱbusinessȱstrategies.ȱ ThusȱitȱrepresentsȱtheȱstrategicȱcomponentȱofȱcorporateȱsocialȱandȱenvironmentalȱreȬ sponsiveness.ȱItȱisȱinfluencedȱbyȱtheȱfourȱmotivatingȱprinciplesȱdescribedȱabove:ȱpubȬ licȱresponsibility,ȱlegitimacy,ȱmanagerialȱdiscretionȱandȱcorporateȱdiscretion.ȱ Economicȱrationaleȱ TheȱeconomicȱrationaleȱforȱCSMȱhasȱbeenȱconceptualizedȱthroughȱtheȱnotionȱofȱtheȱ businessȱcaseȱforȱsustainabilityȱ(Epsteinȱetȱal.,ȱ2003;ȱHolliday,ȱSchmidheiny,ȱ&ȱWatts,ȱ 2002;ȱPerceval,ȱ2003;ȱReed,ȱ2001).6ȱIfȱaȱsignificantȱpositiveȱeconomicȱnetȱeffectȱofȱinteȬ gratingȱanȱenvironmentalȱorȱsocialȱissueȱintoȱbusinessȱstrategiesȱorȱoperationsȱcanȱbeȱ clearlyȱ diagnosed,ȱ oneȱ usuallyȱ speaksȱ ofȱ aȱ strongȱ businessȱ caseȱ forȱ sustainability.ȱ Obviously,ȱtheȱstrongerȱtheȱbusinessȱcaseȱ(e.g.ȱimprovedȱreputationȱandȱprocessȱeffiȬ ciency),ȱtheȱgreaterȱtheȱmotivationȱforȱCSMȱ(Bansalȱetȱal.,ȱ2000).ȱ Itȱshouldȱbeȱnotedȱthatȱtheȱtermȱ“businessȱcaseȱforȱsustainability”ȱisȱstillȱrarelyȱusedȱ amongȱscholarsȱwho,ȱparticularlyȱinȱtheȱUS,ȱreferȱratherȱtoȱaȱpositiveȱfinancialȬsocialȱ performanceȱ linkȱ (e.g.ȱ Griffinȱ etȱ al.,ȱ 1997;ȱ Prestonȱ &ȱ OȇBannon,ȱ 1997;ȱ Stanwickȱ &ȱ Stanwick,ȱ 1998a).ȱ Thisȱ linkȱ isȱ alsoȱ atȱ theȱ rootȱ ofȱ theȱ majorȱ frameworksȱ buildingȱ aȱ theoreticalȱbusinessȱcaseȱforȱsustainability.ȱTheyȱprimarilyȱcompriseȱtheȱsocialȱimpactȱ hypothesisȱ (Cornellȱ &ȱ Shapiro,ȱ 1987)ȱ andȱ theȱ goodȱ managementȱ hypothesisȱ (WadȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 6

ȱToȱfullyȱadhereȱtoȱtheȱterminologyȱusedȱinȱtheȱpresentȱstudy,ȱoneȱwouldȱhaveȱtoȱuseȱtheȱtermȱ“theȱ businessȱcaseȱforȱCSM.”ȱHoweverȱtheȱauthorȱhasȱstuckȱwithȱtheȱoriginalȱnotion,ȱsinceȱitȱisȱalreadyȱ relativelyȱcommonlyȱusedȱtoday.ȱ

2.3ȱKeyȱconceptsȱ

23ȱ

dockȱ&ȱGraves,ȱ1997).ȱSeveralȱauthorsȱhaveȱalsoȱexplicitlyȱdiscussedȱaȱnonȬlinear,ȱinȬ vertedȱ UȬshapedȱ relationshipȱ betweenȱ environmentalȱ orȱ socialȱ andȱ financialȱ perȬ formanceȱ(Alanen,ȱ1998;ȱLankoski,ȱ2000;ȱSalzmann,ȱ2002;ȱSchalteggerȱ&ȱSynnestvedt,ȱ 2001;ȱSteger,ȱ2004).ȱAnȱinvertedȱUȬshapedȱrelationshipȱnotȱonlyȱexplainsȱtheȱlargelyȱ inconclusiveȱempiricalȱevidenceȱonȱtheȱlinkȱbetweenȱenvironmentalȱorȱsocialȱandȱfiȬ nancialȱperformance,ȱbutȱisȱalsoȱintuitivelyȱappealingȱsinceȱ“exaggerated”ȱimproveȬ mentsȱofȱenvironmentalȱorȱsocialȱperformanceȱ(e.g.ȱtowardsȱaȱzeroȱemissionȱgoal)ȱareȱ extremelyȱcostly,ȱandȱwouldȱmostȱcertainlyȱdamageȱcorporateȱprofits.ȱ Aȱbusinessȱcaseȱforȱsustainabilityȱcanȱonlyȱbeȱbuiltȱsystematicallyȱthroughȱaȱprocessȱ thatȱ recognizesȱrelevantȱsocialȱandȱenvironmentalȱissuesȱandȱtheȱeconomicȱpotentialȱofȱ resolvingȱthemȱandȱintegratesȱthemȱintoȱstrategies.ȱ Thisȱprocess,ȱinȱtheȱfollowingȱtextȱreferredȱtoȱasȱissueȱintegration,ȱshouldȱnotȱbeȱconȬ fusedȱwithȱtheȱnotionȱofȱissueȱmanagement,ȱwhichȱstillȱlargelyȱhasȱaȱconnotationȱofȱ issueȱshapingȱthroughȱpublicȱrelations,ȱcrisisȱmanagement,ȱetc.ȱ(Ansoff,ȱ1975;ȱArringȬ tonȱ&ȱSawaya,ȱ1984).ȱ Implementationȱ Applyingȱ contingencyȱ theoryȱ toȱ organizationȱ designȱ suggestsȱ thatȱ thereȱ isȱ noȱ bestȱ wayȱtoȱalignȱorganizationȱtoȱaȱstrategicȱdecision,ȱbutȱallȱalternativesȱareȱnotȱequallyȱ suitableȱ (Galbraithȱ &ȱ Kazanjian,ȱ 1986,ȱ p.ȱ 9).ȱ Variousȱ “soft”ȱ (e.g.ȱ corporateȱ culture)ȱ andȱ “hard”ȱ (e.g.ȱ structure)ȱ meansȱ existȱ toȱ fulfillȱ thisȱ task.ȱ Theyȱ compriseȱ interȱ aliaȱ managementȱ toolsȱ suchȱ asȱ e.g.ȱ incentiveȱ systems,ȱ tasksȱ andȱ initiativesȱ (i.e.ȱ concreteȱ actionsȱdependingȱonȱhowȱtheȱstrategyȱisȱoperationalized)ȱandȱstructuresȱ(e.g.ȱcrossȬ disciplinary,ȱcrossȬbusinessȱteams)ȱ(Hussey,ȱ1996,ȱp.ȱ8;ȱMaxwell,ȱRothenberg,ȱBriscoe,ȱ &ȱMarcus,ȱ1997,ȱp.ȱ120).ȱ Inȱtheȱpresentȱstudy,ȱthreeȱdimensionsȱofȱtheȱimplementationȱofȱCSMȱareȱconsidered:ȱ 1. TheȱportfolioȱofȱmanagementȱtoolsȱthatȱcompaniesȱuseȱtoȱensureȱthatȱtheȱstraȬ tegicȱdispositionȱisȱimplementedȱ 2. Theȱportfolioȱofȱinitiativesȱthatȱcompaniesȱcarryȱoutȱtoȱresolveȱenvironmentalȱ andȱ socialȱ issues.ȱ Itȱ shouldȱ beȱ notedȱ thatȱ –ȱ toȱ narrowȱ theȱ alreadyȱ immenseȱ scopeȱofȱtheȱstudyȱ–ȱinitiativesȱforȱstakeholderȱinteractionȱ(Wood,ȱ1991,ȱp.ȱ704)ȱ willȱnotȱbeȱaccountedȱfor,ȱevenȱthoughȱtheyȱconstituteȱaȱsignificantȱcomponentȱ ofȱsustainabilityȱmanagement.ȱ 3. TheȱcorporateȱstructuresȱandȱdegreeȱtoȱwhichȱtheyȱfacilitateȱcollaborationȱbeȬ tweenȱ sustainabilityȱ expertsȱ andȱ generalȱ managersȱ (inȱ theȱ followingȱ referredȱ toȱasȱcrossȬdisciplinaryȱcollaboration).ȱ ȱ

24ȱ

2ȱTheoreticalȱfoundationȱandȱconceptsȱ

Theȱ thirdȱ componentȱ isȱ meaningful,ȱ becauseȱ structuresȱ stronglyȱ determineȱ compaȬ nies’ȱinformationȱprocessingȱandȱlearningȱcapabilitiesȱ(Steger,ȱ1998,ȱp.ȱ232).ȱCollaboȬ rationȱmayȱoccurȱforȱaȱfiniteȱperiodȱofȱtimeȱinȱadȱhocȱcrossȬfunctionalȱteamsȱ(Fordȱ&ȱ Randolph,ȱ 1992,ȱ p.ȱ 272;ȱ Lawrenceȱ etȱ al.,ȱ 1995)ȱ orȱ continuouslyȱ inȱ permanentȱ manȬ agementȱ structuresȱ thatȱ haveȱ beenȱ establishedȱ forȱ e.g.ȱ goalȱ settingȱ (Maxwellȱ etȱ al.,ȱ 1997,ȱp.ȱ120).ȱInȱanyȱcase,ȱcloserȱcollaborationȱbetweenȱgeneralȱmanagementȱandȱ(enȬ vironmentalȱ orȱ sustainability)ȱ expertsȱ indicatesȱ aȱ higherȱ levelȱ ofȱ implementation,ȱ sinceȱitȱillustratesȱthatȱtheȱexpertsȱtakeȱaȱgreaterȱroleȱasȱadvisorsȱorȱchangeȱagents.ȱ 2.3.3 OutcomeȱofȱCSMȱ Woodȱ (1991)ȱ dividesȱ theȱ outcomeȱ ofȱ corporateȱ socialȱ performanceȱ intoȱ threeȱ types:ȱ socialȱ impactsȱ ofȱ corporateȱ behavior,ȱ programsȱ usedȱ toȱ implementȱ responsivenessȱ andȱ policiesȱ toȱ handleȱ issuesȱ andȱ interactȱ withȱ stakeholdersȱ (p.ȱ 708).ȱ Sheȱ considersȱ corporateȱsocialȱperformanceȱaȱconfigurationȱofȱmotivatingȱprinciples,ȱprocessesȱandȱ outcomes.ȱInȱcontrastȱtoȱherȱprocessȬorientedȱperspective,ȱGreeningȱandȱGrayȱ(1994)ȱ andȱHustedȱ(2000)ȱpreferȱaȱ“resultsȱorientation”ȱinȱtheirȱframeworks,ȱi.e.ȱtheȱoutcomeȱ ofȱaȱcorporateȱresponseȱisȱsomeȱlevelȱofȱcorporateȱsocialȱperformance,ȱdefinedȱasȱtheȱ extentȱtoȱwhichȱstakeholders’ȱexpectationsȱareȱsatisfiedȱorȱexceededȱ(Husted,ȱ2000)ȱ Asȱalreadyȱelaboratedȱaboveȱinȱsectionȱ2.2.4,ȱforȱtheȱpurposesȱofȱthisȱstudyȱitȱisȱmoreȱ adequateȱtoȱdefineȱoutcomesȱofȱCSMȱ asȱaȱchangeȱ inȱ theȱ socialȱ andȱ environmentalȱeffectsȱ ofȱaȱ company’sȱprimaryȱ andȱ secondaryȱ activities,ȱ whichȱ resultsȱ fromȱ undertakingȱ socialȱ andȱ environmentalȱ initiativesȱandȱaffectsȱtheȱcompany’sȱfinancialȱperformance.ȱ Theȱdefinitionȱisȱkeptȱneutral,ȱsinceȱtheȱoutcomeȱofȱcorporateȱinitiativesȱisȱnotȱnecesȬ sarilyȱpositive,ȱparticularlyȱsinceȱitȱfeaturesȱthreeȱdimensionsȱ(environmental,ȱsocialȱ andȱ financial),ȱ whichȱ cannotȱ –ȱ asȱ discussedȱ aboveȱ –ȱ beȱ expectedȱ toȱ haveȱ aȱ consisȬ tentlyȱsynergisticȱrelationshipȱ(seeȱalsoȱGriffinȱetȱal.,ȱ1997;ȱSalzmann,ȱ2002).ȱ ȱ

3.1ȱDeterminantsȱofȱCSMȱ

3

25ȱ

Reviewȱofȱempiricalȱliteratureȱ

Inȱthisȱsection,ȱtheȱauthorȱwillȱreviewȱtheȱrelevantȱempiricalȱliterature.ȱHeȱwillȱbeginȱ withȱ anȱ overviewȱ ofȱ empiricalȱ studiesȱ undertakenȱ onȱ bothȱ sectorsȱ (seeȱ Tableȱ 3Ȭ1).ȱ Thisȱoverviewȱwillȱbeȱbriefȱandȱconciseȱtoȱonȱtheȱoneȱhandȱprovideȱsomeȱinsightȱintoȱ researchȱfociȱtoȱdateȱbutȱonȱtheȱotherȱtoȱavoidȱredundancies:ȱAnyȱsectorȬspecificȱreȬ searchȱ thatȱ isȱ relevantȱ toȱ theȱ presentȱ studyȱ willȱ beȱ discussedȱ inȱ moreȱ detailȱ inȱ theȱ comingȱ subsections,ȱ inȱ whichȱ previousȱ researchȱ inȱ theȱ study’sȱ keyȱ conceptsȱ willȱ beȱ reviewed.ȱ Studiesȱonȱtheȱoilȱ&ȱgasȱ(OG)ȱsectorȱ Environmentalȱissuesȱ inȱgeneral,ȱinȱparticuȬ larȱthoseȱassociatedȱ withȱextractiveȱactiviȬ tiesȱandȱemissions.ȱ CorporateȱresponȬ sivenessȱandȱstrateȬ giesȱ Climateȱchangeȱ strategiesȱ

Changingȱindustryȱ structureȱthroughȱ mergersȱandȱacquisiȬ tionsȱȱ ManagementȱparaȬ digmsȱ LongȱandȱshortȬtermȱ stabilityȱofȱsupplyȱandȱ possibleȱeconomicȱ andȱpoliticalȱimplicaȬ tionsȱȱ Stakeholderȱandȱcrisisȱ managementȱ

Studiesȱonȱtheȱelectric/gasȱutilitiesȱ(UT)ȱsectorȱ

Dincerȱ(1999),ȱGarciaȱ (2003)ȱ

MarketȱtrendsȱandȱlibȬ eralizationȱȱ

Birnbaumȱ(2002)ȱ

Sharmaȱ(1999),ȱPerȬ cevalȱ(2003)ȱ

Climateȱchangeȱȱ

Asmusȱ(2002)ȱ

Asmusȱ(2002),ȱKolkȱ (2001),ȱRowlandsȱ (2000),ȱSkjaersethȱ (2001),ȱReinhardtȱ(2001) e.g.ȱErnstȱ(1999)ȱ

Nuclearȱpowerȱȱ

Stoettȱ(2003),ȱOECDȱ (2002)ȱ

Externalȱcostȱofȱpowerȱ generationȱ

Söderholmȱ(2000),ȱ Follandȱ(2000)ȱ

Adelmanȱ(1995),ȱPollioȱ (1999)ȱ Tempestȱ(1993),ȱMoranȱ (1981)ȱ

Stegerȱ(1997),ȱLawrenceȱ (2002)ȱ

Tableȱ3Ȭ1:ȱEmpiricalȱstudiesȱonȱOGȱandȱUTȱsectorȱ

ItȱisȱapparentȱthatȱmuchȱmoreȱresearchȱhasȱbeenȱdoneȱonȱtheȱOGȱsectorȱthanȱonȱtheȱ UTȱsector,ȱlargelyȱdueȱtoȱitsȱgreatȱvisibility,ȱtheȱsheerȱscaleȱofȱitsȱoperations,ȱitsȱfinanȬ cialȱpower,ȱandȱenvironmentalȱeffects.ȱEmpiricalȱstudiesȱonȱtheȱtwoȱsectorsȱprimarilyȱ focusȱon:ȱ -

environmentalȱ issuesȱ (climateȱ changeȱ inȱ particular)ȱ andȱ theirȱ externalȱ costs;ȱ asȱ wellȱasȱstakeholderȱmanagementȱ(withȱaȱclearȱfocusȱonȱtheȱOGȱsector)ȱ

-

corporateȱstrategiesȱandȱmanagementȱparadigmsȱ(hereȱtheȱOGȱsectorȱisȱclearlyȱaȱ moreȱfrequentȱsubjectȱofȱstudies)ȱ

ȱ

26ȱ

-

3ȱReviewȱofȱempiricalȱliteratureȱ

majorȱdriversȱ andȱtrendsȱinȱ bothȱmarketsȱsuchȱ asȱsupplyȱ security,ȱconsolidationȱ throughȱ mergersȱ andȱ acquisitions,ȱ marketȱ liberalizationȱ (inȱ theȱ UTȱ sectorȱ only),ȱ etc.ȱ

Overallȱ thisȱ leavesȱ vastȱ researchȱ areasȱ suchȱ asȱ aȱ comprehensiveȱ analysisȱ ofȱ theȱ deȬ terminantsȱ andȱ outcomeȱ ofȱ CSMȱ untouched.ȱ Sharmaȱ andȱ Vredenburg’sȱ (1994)ȱ andȱ Perceval’sȱ (2003)ȱ contributionsȱ areȱ rareȱ exceptionsȱ butȱ areȱ merelyȱ qualitativeȱ inȱ naȬ ture.ȱ 3.1

DeterminantsȱofȱCSMȱ

Inȱgeneral,ȱresearchȱtakingȱaȱcontingencyȱperspectiveȱtoȱexamineȱvariousȱinfluentialȱ factorsȱ isȱ –ȱ despiteȱ severalȱ earlyȱ studiesȱ inȱ thisȱ domainȱ –ȱ limited.ȱ Thisȱ isȱ becauseȱ thoseȱstudiesȱonlyȱfocusedȱonȱnarrowȱaspectsȱofȱCSM,ȱe.g.ȱchangesȱinȱcorporateȱstrucȬ turesȱ (Holmes,ȱ 1978),ȱ corporateȱ preferencesȱ forȱ socialȱ activitiesȱ (Holmes,ȱ 1977)ȱ andȱ corporateȱ goalsȱ (Shetty,ȱ 1979).ȱ Holmesȱ (1978)ȱ foundȱ thatȱ structuralȱ alterationsȱ inȱ largeȱ corporationsȱ inȱ orderȱ toȱ becomeȱ moreȱ sociallyȱ responsiveȱ wereȱ industryȬ specific.ȱ Sheȱ alsoȱ identifiedȱ industryȬspecificȱ preferencesȱ forȱ certainȱ kindsȱ ofȱ socialȱ activitiesȱ(Holmes,ȱ 1977):ȱ Whereasȱ oil,ȱgasȱ andȱ miningȱcompaniesȱwereȱ particularlyȱ inclinedȱ toȱ reduceȱ pollution,ȱ utilityȱ companiesȱ (alongsideȱ transportationȱ andȱ comȬ municationȱfirms)ȱwereȱmoreȱstronglyȱfocusedȱonȱdonationsȱandȱrecruitingȱracialȱandȱ ethnicȱ minoritiesȱ (p.ȱ 436).ȱ Shettyȱ (1979)ȱ similarlyȱ concludedȱ thatȱ industryȬspecificȱ strategicȱ issuesȱ andȱ companyȱ sizeȱ influencedȱ theȱ (alsoȱ sociallyȬoriented)ȱ configuraȬ tionȱofȱcorporateȱgoals.ȱ Studiesȱonȱmanagers’ȱattitudesȱtowardȱcorporateȱsocialȱresponsibilityȱareȱrelevantȱforȱ twoȱ reasons.ȱ First,ȱ theyȱ pointȱ toȱ theȱ principleȱ ofȱ managerialȱ discretion,ȱ particularlyȱ sinceȱ theyȱ haveȱ beenȱ ableȱ toȱ linkȱ managers’ȱ attitudesȱ toȱ corporateȱ responsivenessȱ (e.g.ȱ Sturdivantȱ etȱ al.,ȱ 1977).ȱ Second,ȱ theyȱ provideȱ complementaryȱ evidenceȱ forȱ theȱ contingentȱcharacterȱofȱCSM,ȱsinceȱtheyȱdetectedȱseveralȱsignificantȱdeterminantsȱofȱ attitudes:ȱ -

Organizationalȱ activity:ȱ Leadersȱ inȱ nonprofitȱ environmentalȱ organizationsȱ areȱ moreȱ proȬenvironmentȱ andȱ moreȱ receptiveȱ toȱ transformationalȱ leadershipȱ (i.e.ȱ fundamentalȱ transformationȱ ofȱ mission,ȱ structure,ȱ culture,ȱ etc.)ȱ thanȱ leadersȱ inȱ forȬprofitȱenvironmentalȱproductȱandȱserviceȱorganizationsȱ(Egriȱetȱal.,ȱ2000)ȱ

-

Managementȱlevel:ȱMarzȱetȱal.ȱ(2003)ȱfoundȱthatȱmidȬlevelȱandȱfemaleȱmanagersȱ exhibitedȱhigherȱsocialȱorientationȱthanȱtheirȱlowȬlevelȱandȱmaleȱcounterparts.ȱ

-

Age:ȱ Collinsȱ andȱ Ganotisȱ (1973)ȱ detectedȱ anȱ “unexpected”ȱ lowestȱ senseȱ ofȱ perȬ sonalȱresponsibilityȱamongȱyoungȱmanagers.ȱȱ

Countryȱinfluencesȱappearȱtoȱbeȱlessȱimportant.ȱQuaziȱandȱO’Brienȱ(2000)ȱtestedȱtheȱ validityȱofȱtheirȱtwoȬdimensionalȱmodelȱofȱCSRȱacrossȱtwoȱnationalȱculturesȱ(AustraȬ

3.1ȱDeterminantsȱofȱCSMȱ

27ȱ

liaȱandȱBangladesh)ȱandȱfoundȱthatȱdifferingȱculturalȱandȱmarketȱsettingsȱwereȱfoundȱ toȱ haveȱ littleȱ effectȱ onȱ managers’ȱ CSRȱ concepts.ȱ Similarly,ȱ Maignanȱ andȱ Ferrel’sȱ (2000)ȱ crossȬnationalȱ studyȱ (US,ȱ France)ȱ onȱ aȱ fourȬdimensionalȱ modelȱ ofȱ corporateȱ citizenshipȱrevealedȱonlyȱaȱfewȱdifferencesȱbetweenȱtheȱsamples.7ȱ Anotherȱsetȱofȱstudiesȱexaminedȱdeterminantsȱofȱvaryingȱconceptsȱofȱcorporateȱsocialȱ orȱenvironmentalȱresponsiveness.ȱSinceȱvirtuallyȱallȱofȱtheseȱstudiesȱanalyzeȱaȱsetȱofȱ severalȱ determinants,ȱ aȱ detailedȱ determinantȬspecificȱ discussionȱ wouldȱ becomeȱ ratherȱopaque.ȱItȱshouldȱbeȱnotedȱthatȱtheȱempiricalȱfindingsȱofȱallȱstudiesȱhaveȱbeenȱ respectivelyȱbrieflyȱreferredȱtoȱalreadyȱinȱsectionsȱ2.3.1.1ȱtoȱ2.3.1.4ȱaboveȱinȱtheȱconȬ textȱ ofȱ theȱ correspondingȱ determinant.ȱ However,ȱ inȱ theȱ followingȱ theȱ authorȱ willȱ onlyȱdiscussȱtheȱmostȱsignificantȱcontributionsȱinȱmoreȱdetail:ȱ Greeningȱ andȱ Grayȱ (1994)ȱ analyzedȱ differencesȱ inȱ corporateȱ structuresȱ forȱ issuesȱ managementȱ andȱ theirȱ determinantsȱ withinȱ similarȱ macroȬinstitutionalȱ environȬ ments.ȱBasedȱonȱtheirȱempiricalȱtestingȱofȱhypothesesȱincorporatingȱbothȱinstitutionalȱ andȱresourceȱdependencyȱtheories,ȱtheyȱdevelopedȱaȱcontingencyȱmodelȱofȱcorporateȱ socialȱperformance,ȱwhichȱincludesȱ–ȱconsistentȱwithȱWood’sȱ(1991)ȱmodelȱ–ȱsocietalȱ demandsȱandȱorganizationalȱresponseȱcapabilitiesȱ(Greening,ȱ1994,ȱp.ȱ491).ȱTheyȱconȬ cludedȱ thatȱ aȱ combinationȱ ofȱ institutionalȱ pressure,ȱ managerialȱ discretionȱ andȱ firmȱ sizeȱ determinesȱ variationsȱ inȱ issuesȱ managementȱ structures.ȱ Theȱ authorsȱ alsoȱ conȬ trolledȱforȱpossibleȱindustryȱinfluencesȱinȱtheirȱdataȱandȱfoundȱthatȱoilȱandȱgasȱcomȬ paniesȱasȱwellȱasȱutilitiesȱwereȱlessȱlikelyȱthanȱfoodȱprocessingȱcompaniesȱtoȱemployȱ committeesȱforȱissuesȱmanagementȱactivities.ȱ Winnȱ (1995)ȱ studiedȱ theȱ determinantsȱ ofȱ innovativeȱ environmentalȱ policyȱ changesȱ throughȱinterviewsȱsheȱconductedȱinȱfourȱUSȱfirms.ȱFirmsȱsurveyedȱ(AmericanȱAirȬ lines,ȱBankȱofȱAmerica,ȱPatagoniaȱInc.,ȱandȱStarKistȱTunaȱCompany)ȱwereȱselectedȱtoȱ representȱaȱwideȱrangeȱofȱdifferentȱcompaniesȱinȱtermsȱofȱage,ȱsize,ȱownershipȱstrucȬ tureȱandȱindustryȱsector.ȱWinnȱidentifiedȱ“changingȱlegitimacyȱdemandsȱbyȱvariousȱ pressureȱgroupsȱinȱconjunctionȱwithȱtheȱpresenceȱofȱaȱmanagementȱchampion”ȱasȱtheȱ mostȱsignificantȱdriversȱofȱpolicyȱchanges.ȱ Inȱtheirȱsurveyȱofȱ400ȱlargeȱCanadianȱfirms,ȱHenriquesȱandȱSadorskyȱ(1995)ȱquantitaȬ tivelyȱexaminedȱtheȱdeterminantsȱofȱenvironmentalȱresponsivenessȱ(operationalizedȱ throughȱaȱformulatedȱplanȱforȱdealingȱwithȱenvironmentalȱissues).ȱRegressionȱanalyȬ sisȱindicatedȱthatȱenvironmentalȱresponsivenessȱwasȱpositivelyȱinfluencedȱbyȱseveralȱ companyȬspecificȱfactorsȱ(suchȱasȱhavingȱaȱpersonȱresponsibleȱforȱenvironmentalȱisȬ sues,ȱtheȱexistenceȱofȱanȱissueȱcommittee,ȱsizableȱassetsȱdueȱtoȱhighȱlevelȱofȱmanageȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 7

ȱ

ȱ Attitudesȱ towardsȱ CSRȱ wereȱ alsoȱ investigatedȱ byȱ e.g.ȱ Arlowȱ etȱ al.ȱ (1982),ȱ Bowmanȱ (1977)ȱ Holmesȱ (1976)ȱandȱRojsekȱ(2001).ȱ

28ȱ

3ȱReviewȱofȱempiricalȱliteratureȱ

rialȱ complexityȱ andȱ publicȱ visibility),ȱ environmentalȱ issuesȱ thatȱ wereȱ seenȱ asȱ veryȱ important,ȱ andȱ outsideȱ pressureȱ fromȱ shareholders,ȱ customers,ȱ regulatorsȱ (dueȱ toȱ highȱ costȱ ofȱ nonȬcompliance).ȱ Aȱ firm’sȱ profitabilityȱ andȱ informationȬrelatedȱ investȬ mentsȱ hadȱ noȱ influence.ȱ Inȱ anotherȱ paperȱ basedȱ onȱ theȱ sameȱ data,ȱ theȱ authorsȱ adoptedȱ aȱ differentȱ statisticalȱ approachȱ andȱ detectedȱ significantȱ effectsȱ ofȱ outsideȱ pressure,ȱ aȱ firm’sȱ salesȬtoȬassetȱ ratio8,ȱ theȱ importanceȱ ofȱ environmentalȱ issuesȱ andȱ industryȱsectors:ȱComparedȱtoȱtheȱmanufacturingȱsector,ȱtheȱnaturalȱresourceȱsectorȱ wasȱ more,ȱandȱ theȱ serviceȱ sectorȱlessȱ environmentallyȱ responsiveȱ (Henriquesȱ etȱ al.,ȱ 1996).ȱ Lawrenceȱ andȱ Morellȱ (1995)ȱ analyzedȱ environmentalȱ managementȱ practicesȱ andȱ theirȱdriversȱthroughȱcaseȬstudyȱresearchȱinȱeightȱUSȱmanufacturingȱfirms.ȱFacilitiesȱ wereȱselectedȱbasedȱonȱpreviousȱsignificantȱprogressȱinȱreducingȱhazardousȱchemicalȱ emissions,ȱachievedȱthroughȱexcellenceȱinȱenvironmentalȱmanagement.ȱTheȱauthorsȱ identifiedȱ aȱ complexȱ interactionȱ ofȱ fourȱ factorsȱ leadingȱ toȱ proactiveȱ environmentalȱ practices:ȱMotivationȱ(throughȱregulation,ȱcompetitiveȱadvantage,ȱtopȱmanagement),ȱ opportunityȱ(definedȱasȱaȱrecognizedȱoccasionȱforȱchangeȱsuchȱasȱtheȱintroductionȱofȱ aȱ newȱ product),ȱ resourcesȱ (financial,ȱ technicalȱ andȱ informational)ȱ andȱ processesȱ (suchȱasȱlineȱmanagementȱinvolvement,ȱcrossȬfunctionalȱteam,ȱTQMȱprocesses,ȱenviȬ ronmentalȱauditsȱandȱincentiveȱsystems).ȱ Sharmaȱetȱal.ȱ(1999)ȱanalyzedȱcorporateȱenvironmentalȱstrategiesȱinȱtheȱCanadianȱoilȱ andȱ gasȱ industryȱ inȱ termsȱ ofȱ issueȱ interpretationȱ andȱ organizationalȱ contextȱ eleȬ ments.ȱTheȱauthorsȱconductedȱ19ȱinterviewsȱwithȱseniorȱexecutivesȱandȱmiddleȱmanȬ agersȱ inȱ sevenȱ differentȱ companies.ȱ Basedȱ onȱ thisȱ multiȬcaseȱ studyȱ approach,ȱ theyȱ wereȱ ableȱ toȱ differentiateȱ betweenȱ reactiveȱ andȱ proactiveȱ strategies,ȱ whichȱ wereȱ drivenȱ byȱ riskȱ reductionȱ andȱ theȱ creationȱ ofȱ competitiveȱ advantage,ȱ respectively.ȱ TheyȱfoundȱthatȱleadersȱappearedȱtoȱadoptȱproactiveȱopportunityȬbasedȱapproaches,ȱ whereasȱlaggardsȱexhibitedȱmoreȱreactiveȱandȱthreatȬbasedȱstrategiesȱ(p.ȱ94).ȱDifferȬ encesȱinȱstrategiesȱwereȱadditionallyȱattributedȱtoȱtheȱfollowingȱdimensionsȱofȱorganȬ izationalȱ context:ȱ timingȱ ofȱ response,ȱ issueȱ legitimationȱ throughȱ topȱ management,ȱ informationȱflowȱandȱcontrolȱ(incentive)ȱsystems.ȱ Bansalȱ andȱ Rothȱ (2000)ȱ identifiedȱ theȱ followingȱ motivationsȱ forȱ ecologicalȱ responȬ sivenessȱ (definedȱ asȱ aȱ setȱ ofȱ corporateȱ initiativesȱ aimedȱ atȱ reducingȱ environmentalȱ impact)ȱ throughȱ aȱ qualitativeȱ studyȱ onȱ twoȱ largeȱ UKȱ firms:ȱ (1)ȱ theȱ potentialȱ toȱ imȬ proveȱ longȬtermȱ profitabilityȱ (competitiveness)ȱ fromȱ improvedȱ reputation,ȱ processȱ efficiency,ȱetc.ȱ;ȱ(2)ȱlegitimationȱinȱorderȱtoȱavoidȱunderminingȱtheȱlicenseȱtoȱoperateȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 8

ȱAȱhighȱratioȱisȱseenȱasȱanȱindicatorȱofȱfirmsȱthatȱworkȱcloseȱtoȱcapacity,ȱandȱthusȱmayȱbeȱmoreȱconȬ cernedȱwithȱreengineeringȱandȱrestructuringȱthanȱenvironmentalȱissuesȱ(Henriquesȱetȱal.,ȱ1996).ȱ

3.1ȱDeterminantsȱofȱCSMȱ

29ȱ

orȱ longȬtermȱ survival;ȱ andȱ (3)ȱ ecologicalȱ responsibility.ȱ Althoughȱ motivationsȱ wereȱ foundȱtoȱbeȱmixed,ȱfirmsȱwereȱlargelyȱdrivenȱbyȱlegitimacy,ȱlessȱbyȱcompetitiveness,ȱ andȱevenȱlessȱbyȱecologicalȱresponsibility.ȱ SkjaersethȱandȱSkodvinȱ(2001)ȱdiscussedȱdifferencesȱinȱtheȱclimateȱpolicyȱstrategiesȱofȱ Shellȱ andȱ Exxonȱ Mobilȱ basedȱ onȱ twoȱ models.ȱ Theȱ corporateȱ actorȱ modelȱ explainsȱ strategicȱchoiceȱthroughȱcompanyȬspecificȱfactorsȱ(inȱthisȱstudy:ȱenvironmentalȱrisk,ȱ environmentalȱ reputationȱ andȱ organizationalȱ learning);ȱ theȱ domesticȱ politicsȱ modelȱ suggestsȱthatȱdifferencesȱinȱclimateȱpolicyȱstrategiesȱareȱdueȱtoȱcountryȬspecificȱsocieȬ talȱ demandsȱ andȱ governmentalȱ pressure.ȱ Theȱ authorsȱ concludedȱ thatȱ observedȱ difȬ ferencesȱ inȱ strategiesȱ cannotȱ beȱ explainedȱ throughȱ companyȬspecificȱ features,ȱ butȱ ratherȱthroughȱtheȱvariationȱinȱsocietalȱandȱpoliticalȱcontext.ȱ Kolkȱ andȱ Levyȱ (2001)ȱ analyzedȱ developmentsȱ inȱ oilȱ companies’ȱ climateȱ changeȱ strategiesȱandȱidentifiedȱseveralȱexplanatoryȱfactors.ȱTheseȱincludedȱtheȱlocationȱandȱ timingȱ ofȱ changesȱ inȱ strategiesȱ (socioȬculturalȱ andȱ regulatoryȱ context),ȱ companies’ȱ economicȱ andȱ marketȱ position,ȱ andȱ internalȱ organizationalȱ factorsȱ (degreeȱ ofȱ cenȬ tralization,ȱpositionȱofȱCEO,ȱcorporateȱculture).ȱȱ Dunnȱ (2002)ȱ comparedȱ corporateȱ climateȱ changeȱ strategiesȱ andȱ theirȱ drivers.ȱ Heȱ identifiedȱthreeȱmajorȱdeterminantsȱofȱclimateȱpolicyȱrisk,ȱwhichȱvaryȱacrossȱindustryȱ sectorsȱ andȱ countries,ȱ andȱ driveȱ corporateȱ climateȱ changeȱ strategiesȱ (technology,ȱ economicsȱ andȱ policy).ȱ Sinceȱ theȱ perceivedȱ riskȱ ofȱ climateȱ policyȱ isȱ relativelyȱ highȱ amongȱelectricityȱandȱenergyȱsuppliers,ȱtheyȱexhibitȱrelativelyȱactiveȱclimateȱchangeȱ strategies.ȱ Dunnȱ alsoȱ specificallyȱ pointsȱ toȱ crossȬfunctionalȱ variationȱ inȱ termsȱ ofȱ inȬ volvementȱ inȱ governmentȱ tradingȱ schemesȱ andȱ investmentȱ inȱ longȬtermȱ energyȱ sources,ȱandȱaȱtransatlanticȱdivideȱofȱcorporateȱpositionsȱdueȱtoȱdifferentȱgovernmentȱ policiesȱandȱpublicȱopinion.ȱȱ Banerjeeȱ etȱ al.ȱ (2003)ȱ empiricallyȱ examinedȱ antecedentsȱ ofȱ corporateȱ environmentalȱ orientationȱ andȱ environmentalȱ strategy.ȱ Basedȱ onȱ multigroupȱ pathȱ analysisȱ ofȱ dataȱ fromȱ243ȱNorthȱAmericanȱmanagers,ȱtheyȱconcludedȱthatȱpublicȱconcern,ȱregulatoryȱ forces,ȱ competitiveȱ advantageȱ andȱ topȱ managementȱ commitmentȱ constituteȱ imporȬ tantȱdriversȱofȱcorporateȱenvironmentalism.ȱFurthermore,ȱtheyȱfoundȱthatȱseveralȱofȱ theseȱ effectsȱ areȱ moderatedȱ byȱ industryȱ type.ȱ Whereasȱ highȱ environmentalȱ impactȱ industriesȱ areȱ mainlyȱ drivenȱ byȱ publicȱ concern,ȱ followedȱ byȱ regulations,ȱ sectorsȱ causingȱmoderateȱ environmentalȱeffectsȱmainlyȱ reactȱ toȱcompetitiveȱ advantage,ȱfolȬ lowedȱbyȱregulatoryȱforces.ȱ Buysseȱ andȱ Verberkeȱ (2003)ȱ analyzedȱ theȱ environmentalȱ strategiesȱ ofȱ 197ȱ Belgianȱ firmsȱ fromȱ differentȱ industriesȱ inȱ termsȱ ofȱ theirȱ stakeholderȱ managementȱ perspecȬ tive.ȱTheyȱfoundȱthatȱcompaniesȱwithȱ(ratherȱreactive)ȱpollutionȱpreventionȱstrategiesȱ consideredȱ regulatorsȱ mostȱ important,ȱ whereasȱ thoseȱ exhibitingȱ moreȱ proactiveȱ ȱ

30ȱ

3ȱReviewȱofȱempiricalȱliteratureȱ

leadershipȱ strategiesȱ aimedȱ toȱ “activelyȱ manageȱ theȱ changingȱ normsȱ andȱ expectaȬ tionsȱ ofȱ variousȱ stakeholders,ȱ otherȱ thanȱ regulators”ȱ andȱ perceivedȱ theȱ primaryȱ stakeholdersȱ(employees,ȱshareholders,ȱcustomersȱandȱsuppliers)ȱasȱparticularlyȱimȬ portantȱ(p.ȱ476).ȱ 3.2

CSMȱ

EmpiricalȱstudiesȱonȱCSMȱhaveȱfocusedȱonȱaȱwideȱrangeȱofȱdifferentȱtopicsȱsuchȱasȱ strategiesȱ (Taponȱ &ȱ Sarabura,ȱ 1995),ȱ stakeholderȱ managementȱ practicesȱ (Morris,ȱ 1997),ȱbusinessȱplanningȱ(Dechantȱ&ȱAltman,ȱ1994),ȱandȱreportingȱ(Rondinelliȱetȱal.,ȱ 2000).9ȱ Inȱ theȱ followingȱ sections,ȱ empiricalȱ studiesȱ thatȱ relateȱ toȱ theȱ subconceptsȱ ofȱ CSM,ȱ namelyȱ strategicȱ disposition,ȱ economicȱ rationale,ȱ andȱ implementationȱ willȱ beȱ reȬ viewed.ȱ Itȱ shouldȱ beȱ notedȱ thatȱ severalȱ studiesȱ examinedȱ severalȱ conceptsȱ simultaȬ neouslyȱ(e.g.ȱArlowȱetȱal.,ȱ1982;ȱRondinelliȱetȱal.,ȱ2000).ȱ 3.2.1 Strategicȱdispositionȱ Studiesȱthatȱexaminedȱcompanies’ȱstrategicȱdispositionȱtoȱorȱdifferentȱconceptualizaȬ tionsȱofȱcorporateȱsocialȱandȱenvironmentalȱresponsivenessȱ(e.g.ȱchangesȱinȱpolicies,ȱ introductionȱ ofȱ environmentalȱ plans)ȱ primarilyȱ focusedȱ onȱ theȱ determinantsȱ ofȱ reȬ sponsivenessȱ (e.g.ȱ Banerjeeȱ etȱ al.,ȱ 2003;ȱ Henriquesȱ etȱ al.,ȱ 1995).ȱ Studiesȱ onȱ strategicȱ dispositionȱ asȱ suchȱ couldȱ notȱ beȱ foundȱ inȱ theȱ literature,ȱ obviouslyȱ becauseȱ anȱ isoȬ latedȱexaminationȱofȱthisȱconceptȱonlyȱprovidesȱlimitedȱscopeȱforȱresearch.ȱ Theȱ authorȱ presentsȱ twoȱ empiricalȱ studiesȱ thatȱ dealȱ withȱ corporateȱ strategies,ȱ theirȱ linkȱtoȱCSMȱandȱoperationalization.ȱTheyȱareȱfeaturedȱtoȱillustrate:ȱ -

howȱ corporateȱ strategiesȱ areȱ influencedȱ byȱ motivatingȱ principlesȱ ofȱ CSM,ȱ i.e.ȱ “greenȱ concerns,”ȱ inȱ aȱ sectorȱ (theȱ chemicalȱ sector)ȱ thatȱ isȱ asȱ processȬorientedȱ asȱ theȱOGȱandȱUTȱsectorsȱ(Taponȱetȱal.,ȱ1995).ȱ

-

thatȱtheȱcomplexȱrequirementsȱofȱtheȱconceptȱofȱsustainableȱdevelopmentȱorȱcorȬ porateȱ sustainabilityȱ tendȱ toȱ overburdenȱ companiesȱ inȱ general,ȱ andȱ areȱ clearlyȱ dominatedȱbyȱfinancialȱgoalsȱ(Mathieu,ȱ2002).ȱ

Taponȱ andȱ Saraburaȱ (1995)ȱ discussedȱ theȱ impactȱ ofȱ greenȱ concernsȱ onȱ corporateȱ strategiesȱinȱtheȱchemicalȱindustry.ȱThreeȱkeyȱelementsȱofȱgreenȱstrategiesȱwereȱidenȬ tified:ȱ(1)ȱtransparencyȱtoȱbuildȱandȱmaintainȱtrustȱthroughȱstrategicȱintent,ȱadequateȱ corporateȱ cultures,ȱ environmentalȱ auditsȱ andȱ customer/publicȱ relations;ȱ (2)ȱ processȱ andȱproductȱredesign;ȱandȱ(3)ȱwasteȱhandling.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 9

ȱOtherȱrelevantȱstudiesȱincludeȱthoseȱofȱElkingtonȱ(1994),ȱMathieuȱ(2002)ȱandȱDunnȱ(2002).ȱ

3.2ȱCSMȱ

31ȱ

Mathieuȱ(2002)ȱexaminedȱtheȱroleȱofȱsustainableȱdevelopmentȱinȱGermanȱcompaniesȱ throughȱ31ȱinterviewsȱwithȱexperts,ȱmanagersȱandȱmembersȱofȱindustryȱassociations.ȱ Sheȱdiscussedȱproblemsȱassociatedȱwithȱtheȱcomplexityȱofȱtheȱtermȱ“sustainableȱdeȬ velopment”ȱ (SD),ȱ SDȱ dimensionsȱ andȱ theirȱ integrationȱ intoȱ corporateȱ goals,ȱ operaȬ tionalizationȱandȱ implementation,ȱandȱmeasuresȱandȱinstruments.ȱAccordingȱtoȱherȱ findings,ȱSDȱ(asȱaȱthreeȬdimensionalȱconcept)ȱplaysȱonlyȱaȱminorȱroleȱinȱmostȱcomȬ panies.ȱTheȱeconomicȱdimensionȱdominatesȱtheȱsocialȱandȱenvironmentalȱones.ȱFurȬ thermore,ȱmostȱcompaniesȱfollowedȱinternalȱguidelinesȱforȱimplementingȱSD.ȱDueȱtoȱ aȱ clearȱ lackȱ ofȱ specificallyȱ SDȬrelatedȱ measuresȱ andȱ instruments,ȱ companiesȱ mostlyȱ reliedȱonȱ“conventional”ȱtoolsȱofȱenvironmentalȱmanagementȱ(p.ȱ223).ȱ 3.2.2

Economicȱrationaleȱ

Studiesȱ thatȱ dealȱ withȱ theȱ economicȱ rationaleȱ forȱ CSMȱ canȱ beȱ broadlyȱ assignedȱ toȱ threeȱcategories:ȱ(1)ȱinstrumentalȱstudiesȱonȱtheȱfinancialȱeffectsȱofȱCSM;ȱ(2)ȱdescripȬ tiveȱstudiesȱonȱhowȱtheȱeconomicȱrationaleȱisȱbuiltȱinȱcompanies;ȱandȱ(3)ȱstudiesȱonȱ theȱprocessȱofȱissueȱintegration.ȱ Instrumentalȱstudiesȱ Qualitativeȱapproachesȱsuchȱasȱcaseȱstudiesȱareȱdominatedȱbyȱanecdotalȱevidenceȱonȱ successfulȱpollutionȱpreventionȱprojectsȱandȱcostȱsavingsȱbutȱalsoȱreferȱtoȱotherȱissuesȱ suchȱasȱriskȱavoidanceȱandȱcorporateȱsustainabilityȱasȱpartȱofȱoperationalȱexcellenceȱ (Dechantȱetȱal.,ȱ1994;ȱElkington,ȱ1994).ȱFurthermore,ȱaȱplethoraȱofȱquantitativeȱstudiesȱ basedȱ onȱ variousȱ differentȱ methodologies10ȱ didȱ notȱ findȱ aȱ simpleȱ relationshipȱ beȬ tweenȱ environmentalȱ andȱ socialȱ performanceȱ onȱ theȱ oneȱ handȱ andȱ financialȱ perȬ formanceȱ onȱ theȱ other.ȱ Thisȱ isȱ obviouslyȱ –ȱ asȱ pointedȱ outȱ inȱ severalȱ empiricalȱ reȬ searchȱreviewsȱ(Griffinȱetȱal.,ȱ1997;ȱPavaȱetȱal.,ȱ1996;ȱWagnerȱ&ȱSchaltegger,ȱ2001)ȱ–ȱ because:ȱ -

Theȱ relationshipȱ isȱ dynamicȱ andȱ contingentȱ onȱ situational,ȱ companyȬspecific,ȱ countryȬspecificȱ andȱ plantȬspecific11ȱ factors.ȱ Industryȱ andȱ plantȱ effectsȱ appearedȱ toȱreflectȱfactorsȱwithinȱcorporateȱcontrolȱ(e.g.ȱorganizationalȱcapabilities)ȱandȱbeȬ yondȱ itȱ (e.g.ȱ imperfectȱ markets,ȱ governmentȱ interventions)ȱ (Lankoski,ȱ 2000;ȱ Reinhardt,ȱ1999,ȱp.ȱ10).ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 10

ȱMethodologiesȱcomprisedȱcorrelation,ȱregressionȱandȱportfolioȱanalysisȱ(e.g.ȱBowmanȱ&ȱHaire,ȱ1975;ȱ Bragdonȱ&ȱMarlin,ȱ1972;ȱCampbellȱ&ȱSoderstrom,ȱ1996;ȱDavidsonȱIIIȱ&ȱWorrel,ȱ1990;ȱDowell,ȱHart,ȱ &ȱYeung,ȱ2000;ȱHillmanȱ&ȱKeim,ȱ2001;ȱKiernan,ȱ2001;ȱMcGuire,ȱSundgren,ȱ&ȱSchneeweis,ȱ1988;ȱPavaȱ &ȱ Krausz,ȱ 1996;ȱ Prestonȱ etȱ al.,ȱ 1997;ȱ Ruf,ȱ Muralidhar,ȱ Brown,ȱ Janney,ȱ &ȱ Paul,ȱ 2001;ȱ Stanwickȱ &ȱ Stanwick,ȱ 1998b;ȱ Stanwickȱ etȱ al.,ȱ 1998a;ȱ Verschoor,ȱ 1999,ȱ 2002),ȱ andȱ eventȱ studiesȱ (Frooman,ȱ 1997;ȱ Innovest,ȱ2002a).ȱ

11

ȱLankowskiȱalsoȱfoundȱfirmȱlevelȱeffectsȱalmostȱfortyȱtimesȱasȱimportantȱasȱindustryȬlevelȱeffects.ȱ

ȱ

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3ȱReviewȱofȱempiricalȱliteratureȱ

Thereȱwereȱseveralȱshortcomingsȱinȱtheȱmethodologiesȱsuchȱasȱtheȱuseȱofȱaȱwideȱ varietyȱ ofȱ sometimesȱ poorȱ socialȱ performanceȱ (SP)ȱ measures,ȱ aȱ lackȱ ofȱ controlȱ variables,12ȱ insufficientȱ empiricalȱ testingȱ ofȱ definitionsȱ andȱ concepts,ȱ andȱ inadeȬ quateȱsamplingȱtechniquesȱ(Griffinȱetȱal.,ȱ1997;ȱOrlitzky,ȱ2001).ȱ

-

TheȱwideȱmajorityȱofȱstudiesȱareȱfocusedȱonȱlargeȱmultiȬindustryȱUSȱsamples,ȱleavingȱ aȱ vastȱ researchȱ areaȱ untouched.ȱ Givenȱ theȱ substantialȱ amountȱ ofȱ instrumentalȱ reȬ searchȱ undertaken,ȱ itȱ isȱ particularlyȱ unfortunateȱ thatȱ toȱ dateȱ onlyȱ fewȱ studiesȱ haveȱ takenȱaȱmoreȱdifferentiatedȱcontingencyȱperspective:ȱTheyȱfocusedȱonȱoneȱparticularȱ industryȱ(Greening,ȱ1995;ȱMoore,ȱ2001;ȱSimpsonȱetȱal.,ȱ2002),ȱadoptedȱaȱcomparativeȱ approachȱ acrossȱ severalȱ industriesȱ and/orȱ plantsȱ (Klassenȱ &ȱ McLaughlin,ȱ 1996;ȱ Lankoski,ȱ2000)ȱandȱexaminedȱadditionalȱfactorsȱthatȱcouldȱpossiblyȱconfuseȱtheȱrelaȬ tionship.ȱProbablyȱtheȱmostȱsignificantȱstudyȱtoȱdateȱisȱLankoski’sȱanalysisȱofȱtheȱdeȬ terminantsȱ ofȱ environmentalȱ profitȱ (Lankoski,ȱ 2000).13ȱ Overallȱ theȱ evidenceȱ ofȱ inȬ strumentalȱstudiesȱreviewedȱrevealsȱconsiderableȱuncertaintyȱamongȱscholarsȱaboutȱ theȱrobustnessȱofȱaȱbusinessȱcaseȱforȱsustainability.ȱ Descriptiveȱstudiesȱ VeryȱfewȱstudiesȱsoȱfarȱhaveȱdealtȱwithȱtheȱeconomicȱrationaleȱonȱaȱmoreȱspecificȱorȬ ganizationalȱlevel,ȱi.e.ȱhowȱcompaniesȱbuildȱandȱpresentȱtheirȱbusinessȱcaseȱforȱsusȬ tainability.ȱEpsteinȱandȱRoyȱpresentȱaȱsustainabilityȱlinkageȱmapȱthatȱhelpsȱmanagersȱ operationalizeȱ corporateȱ sustainabilityȱ strategies.ȱ Theȱ frameworkȱ incorporatesȱ fiveȱ componentsȱcomprisingȱcorporateȱandȱbusinessȱunitȱstrategies,ȱsustainabilityȱactions,ȱ sustainabilityȱ performance,ȱ stakeholderȱ reactionsȱ andȱ longȬtermȱ corporateȱ financialȱ performanceȱ (Epsteinȱ &ȱ Roy,ȱ 2001,ȱ p.ȱ 589).ȱ Theyȱ acknowledgeȱ theȱ difficultyȱ ofȱ aȱ broadȱidentificationȱandȱassessmentȱofȱstakeholders,ȱissuesȱandȱrelatedȱperformance,ȱ butȱ argueȱthatȱ“fewȱcostsȱ canȱ beȱconsideredȱpurelyȱexternal”ȱinȱtheȱlongȱterm.ȱ FurȬ thermore,ȱtheyȱnoteȱthatȱonlyȱaȱfewȱcompaniesȱhaveȱquantifiedȱtheȱlinkȱbetweenȱsusȬ tainabilityȱ andȱ financialȱ performance.ȱ Someȱ engageȱ inȱ sustainabilityȱ actionsȱ asȱ theȱ rightȱ thingsȱ toȱ do.ȱ Inȱ bothȱ cases,ȱ sustainabilityȱ actionsȱ areȱ vulnerableȱ toȱ “swayingȱ publicȱ opinions,ȱ changingȱ corporateȱ leadershipȱ andȱ financialȱ cycles”ȱ (Epsteinȱ etȱ al.,ȱ 2001,ȱp.ȱ603).ȱInȱaȱcorrespondingȱanalysisȱofȱ20ȱexternalȱcorporateȱreports,ȱtheyȱexamȬ inedȱcompanies’ȱuseȱofȱsystemsȱandȱmeasuresȱthatȱlinkȱsustainabilityȱactionsȱtoȱlongȬ termȱ financialȱ performance.ȱ Theyȱ distinguishedȱ betweenȱ environmental,ȱ healthȱ &ȱ safety,ȱ communityȬȱ andȱ employeeȬrelatedȱ elementsȱ ofȱ sustainabilityȱ actions.ȱ ExamȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 12

ȱ Severalȱ controlȱ variablesȱ wereȱ proposed,ȱ includingȱ theȱ nationalȱ levelȱ andȱ approachȱ ofȱ environȬ mentalȱregulation,ȱfirmȱsize,ȱandȱindustryȱmarketȱstructureȱ(Wagnerȱetȱal.,ȱ2001)ȱ

13

ȱ Environmentalȱ profitȱ wasȱ operationalizedȱ asȱ overcompliance,ȱ i.e.ȱ aȱ perceivedȱ winȬwinȱ situation,ȱ measuredȱasȱtheȱpercentageȱshareȱofȱactualȱeffluentȱdischargesȱinȱtheȱpermittedȱeffluentȱdischarges.ȱ

3.2ȱCSMȱ

33ȱ

plesȱ ofȱ aȱ fullȱ linkȱ toȱ corporateȱ financialȱ performanceȱ wereȱ numerousȱ forȱ theȱ enviȬ ronmentalȱ dimensionȱ butȱ typicallyȱ limitedȱ toȱ theȱ directȱ benefitsȱ ofȱ costȱ reductionȱ (Epsteinȱetȱal.,ȱ2003,ȱp.ȱ84).ȱTheȱauthorsȱdidȱnotȱfindȱanyȱfullȱlinkagesȱbetweenȱcorpoȬ rateȱfinancialȱperformanceȱandȱcommunityȱrelationsȱorȱemployeeȱmanagement.ȱConȬ sequentlyȱ theyȱ advocateȱ theȱ useȱ ofȱ corporateȱ performanceȱ modelsȱ thatȱ illustrateȱ companies’ȱunderlyingȱassumedȱmotivationsȱforȱsustainabilityȱactions,ȱandȱpointȱ toȱ theȱ needȱ forȱ moreȱ specificȱ guidanceȱ aboutȱ tradeȬoffsȱ andȱ causalȱ relationshipsȱ throughȱappropriateȱmetricsȱandȱdataȱgathering.ȱ Ruudȱ(1995)ȱassessedȱtheȱrationalityȱofȱtheȱcorporateȱenvironmentalȱactionsȱofȱtransȬ nationalȱcorporationsȱinvolvedȱinȱbauxiteȱmining.ȱTheȱauthorȱarguesȱforȱaȱdistinctionȱ betweenȱtwoȱfactorsȱrelevantȱtoȱcorporateȱdecisionȬmaking:ȱtheȱindividualȱdecisionȬ makerȱandȱtheȱfirm.ȱInȱtheȱcaseȱofȱreclamationȱofȱbauxiteȱmines,ȱtheȱdecisionȬmakers’ȱ beliefȱ thatȱ theirȱ firmȱ shouldȱ engageȱ inȱ moreȱ sustainableȱ businessȱ practicesȱ isȱ sugȬ gestedȱ toȱ beȱ rationalȱ fromȱ bothȱ theȱ individual’sȱ moralȱ andȱ theȱ company’sȱ profitȬ maximizingȱ pointȱ ofȱ view:ȱ Theȱ beyondȱ complianceȱ behaviorȱ hasȱ severalȱ economicȱ advantages,ȱ suchȱ asȱ theȱ standardizationȱ ofȱ globalȱ activities;ȱ betterȱ accessȱ toȱ new,ȱ neighborȱ minesȱ throughȱ reclamation;ȱ enhancedȱ licensesȱ toȱ operateȱ andȱ image;ȱ andȱ theȱreductionȱofȱfutureȱliabilities.ȱAlthoughȱmorallyȱphrasedȱprojectsȱcanȱbeȱ(exȱpost)ȱ explainedȱ byȱ theirȱ profitability,ȱ theȱ promotionȱ ofȱ moreȱ sustainableȱ practicesȱ canȱ beȱ “severelyȱhamperedȱifȱtheȱproposedȱprojectsȱareȱpresentedȱinȱtimesȱofȱfinancialȱdiffiȬ culties,ȱparticularlyȱifȱtheȱprojectȱhasȱpurelyȱcostȱcreatingȱcharacterȱinȱtheȱshortȱtermȱ (p.ȱ18).ȱ Similarlyȱfewȱstudiesȱprovideȱmoreȱ“technical”ȱassistanceȱonȱhowȱtoȱbuildȱandȱquanȬ tifyȱtheȱBCS.ȱWWFȬUKȱ(2001)ȱhasȱpublishedȱaȱrouteȱ mapȱtowardȱtheȱbusinessȱcase,ȱ designedȱasȱaȱguidelineȱforȱseniorȱmanagersȱaimingȱtoȱbuildȱtheirȱcompanyȬspecificȱ businessȱcase.ȱTheȱrouteȱmapȱhasȱ6ȱstepsȱ–ȱfromȱidentifyingȱsignificantȱimpactsȱtoȱdeȬ terminingȱpreferredȱactionsȱforȱinclusionȱinȱaȱbusinessȱcase.ȱRepettoȱ(2000)ȱpresentsȱaȱ toolȱ thatȱ isȱ primarilyȱ targetedȱ atȱ theȱ financialȱ sectorȱ (butȱ alsoȱ managers).ȱ Itȱ isȱ deȬ signedȱ toȱ quantifyȱ andȱ benchmarkȱ environmentalȱ exposureȱ andȱ risksȱ andȱ identifyȱ theȱfinanciallyȱmostȱeffectiveȱinvestmentsȱtoȱreduceȱenvironmentalȱrisk.ȱTheȱunderlyȬ ingȱmethodologyȱisȱscenarioȬbasedȱandȱusesȱstandardȱtechniquesȱofȱfinancialȱanalyȬ sis.ȱ Issueȱintegrationȱ Hainsworthȱ andȱ Mengȱ (1988,ȱ p.ȱ 27)ȱ arguedȱ thatȱ issueȱ managementȱ canȱ beȱ seenȱ asȱ “proactionaryȱratherȱthanȱreactionary,”ȱsinceȱitȱisȱusedȱtoȱinfluenceȱtheȱdevelopmentȱ ofȱissuesȱthatȱmayȱhaveȱanȱimpactȱonȱcorporateȱactivities.ȱHoweverȱtheȱterminologiesȱ usedȱ inȱ mostȱ empiricalȱ (andȱ theoretical)ȱ studiesȱ suggestȱ thatȱ issueȱ managementȱ reȬ fersȱtoȱaȱmoreȱreactiveȱapproachȱofȱmanagingȱsurprisesȱatȱanȱoperationalȱlevelȱratherȱ ȱ

34ȱ

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thanȱtheȱactiveȱsearchȱforȱimportantȱissuesȱwhoseȱintegrationȱintoȱbusinessȱstrategiesȱ canȱ beȱ basedȱ onȱ aȱ soundȱ economicȱ rationale.ȱ Thusȱ empiricalȱ studiesȱ onȱ issueȱ manȬ agementȱareȱhardlyȱrelevant.ȱ 3.2.3 Implementationȱ Essentiallyȱ thereȱ areȱ noȱ empiricalȱ studiesȱ onȱ theȱ implementationȱ ofȱ –ȱ explicitlyȱ –ȱ CSM.ȱ Howeverȱ severalȱ dimensionsȱ ofȱ corporateȱ responsivenessȱ –ȱ environmentalȱ managementȱinȱparticularȱ–ȱhaveȱbeenȱresearched.ȱInterȱalia,ȱstudiesȱhaveȱdiscussedȱ companies’ȱactivitiesȱ(Maxwellȱetȱal.,ȱ1997),ȱeffectsȱ(e.g.ȱHamschmidtȱ&ȱDyllick,ȱ2001;ȱ Steger,ȱ 2000),ȱ successȱ factorsȱ (Ramusȱ &ȱ Steger,ȱ 2000)ȱ andȱ barriersȱ (Apsan,ȱ 2000).ȱ Inȱ theȱfollowing,ȱtheȱmostȱrelevantȱstudiesȱwillȱbeȱdiscussedȱinȱmoreȱdetail:ȱ ArlowȱandȱGannonȱ(1982)ȱconductedȱaȱmetaȬanalysisȱofȱempiricalȱstudiesȱonȱtheȱrelaȬ tionshipȱbetweenȱsocialȱresponsibilityȱandȱexecutiveȱperceptions,ȱcorporateȱgoalsȱandȱ practices,ȱ organizationalȱ changes,ȱ andȱ economicȱ performance.ȱ Theyȱ foundȱ thatȱ corȬ porateȱ socialȱ responsibilityȱ (CSR)ȱ isȱ operationalizedȱ inȱ companiesȱ inȱ aȱ mixtureȱ ofȱ voluntaryȱ andȱ mandatedȱ programs,ȱ rarelyȱ drivenȱ byȱ profitability.ȱ Theyȱ alsoȱ identiȬ fiedȱ newȱ companyȱ policies,ȱ organizationalȱ positionsȱ andȱ arrangementsȱ asȱ CSRȬ drivenȱorganizationalȱchanges,ȱandȱconcludedȱthatȱtheȱmostȱappropriateȱperspectiveȱ onȱ socialȱ responsivenessȱ isȱ aȱcontingencyȱ one,ȱ incorporatingȱ severalȱ factorsȱ suchȱ asȱ theȱnatureȱofȱtheȱindustryȱandȱorganizations’ȱresourcesȱandȱskillsȱ(p.ȱ240).ȱ Maxwellȱetȱal.ȱ(1997)ȱpresentedȱthreeȱcaseȱstudiesȱtoȱdiscussȱissuesȱofȱimplementingȱ corporateȱenvironmentalȱstrategies.ȱTheyȱidentifiedȱseveralȱkeyȱchallenges,ȱincludingȱ internalȱconflicts,ȱlackȱofȱmanagementȱstructures,ȱinconsistenciesȱbetweenȱgoalsȱandȱ resourcesȱ–ȱacrossȱbusinessȱdivisionsȱandȱdiverseȱgeographicȱmarkets.ȱFurthermore,ȱ theȱauthorsȱpointedȱtoȱvariousȱsuccessȱfactorsȱforȱeffectiveȱimplementation,ȱincludingȱ (1)ȱ visibleȱ topȱ managementȱ commitmentȱ andȱ incentiveȱ systems;ȱ (2)ȱ managementȱ structuresȱ improvingȱ linesȱ ofȱ communicationȱ andȱ encouragingȱ theȱ integrationȱ ofȱ (environmental)ȱ issuesȱ intoȱ businessȱ operations;ȱ andȱ (3)ȱ formulationȱ ofȱ environȬ mentalȱ strategiesȱ andȱ correspondingȱ managementȱ systemsȱ thatȱ areȱ congruentȱ withȱ theȱexistingȱcorporateȱcultureȱ(p.ȱ131).ȱ Anderssonȱ andȱ Batemanȱ (2000)ȱ comparedȱ successfulȱ andȱ unsuccessfulȱ environȬ mentalȱchampioningȱepisodesȱinȱUSȱfirmsȱthroughȱsurveyȱandȱinterviewȱdata.ȱTheyȱ concludedȱ thatȱ theȱ formerȱ wereȱ associatedȱ withȱ moreȱ environmentalȱ scanningȱ andȱ specificȱissueȱframingȱ(e.g.ȱrelyingȱonȱformalȱbusinessȱlanguage,ȱandȱframingȱissuesȱ asȱfinancialȱopportunities).ȱ“Soft”ȱinfluencingȱtacticsȱofȱcoalitionȱbuildingȱandȱinspiȬ rationalȱ appealȱ wereȱ foundȱ toȱ beȱ usedȱ moreȱ oftenȱ byȱ successfulȱ environmentalȱ champions.ȱ Additionally,ȱ theȱ followingȱ internalȱ andȱ externalȱ contextualȱ factorsȱ apȬ pearedȱ toȱ influenceȱ theȱ successȱ ofȱ championingȱ episodes:ȱ corporateȱ environmentalȱ

3.2ȱCSMȱ

35ȱ

paradigms,ȱ regulatoryȱ requirements,ȱ competitiveȱ pressuresȱ andȱ theȱ presenceȱ ofȱ anȬ tagonists.ȱ Percevalȱ (2003)ȱ comparedȱ theȱ approachesȱ ofȱ Shellȱ andȱ BPȱ toȱ sustainableȱ developȬ ment:ȱBasedȱonȱqualitativeȱdataȱ(primarilyȱinterviewsȱinȱbothȱcompanies),ȱheȱreportsȱ thatȱ bothȱ haveȱ recognizedȱ theȱ strategicȱ advantageȱ ofȱ beyondȱ complianceȱ positions,ȱ mentionȱ conceptsȱ ofȱ sustainabilityȱ inȱ missionȱ andȱ valueȱ statements.ȱ Whereasȱ Shellȱ anticipatesȱ socialȱ andȱ environmentalȱ expectationsȱ throughȱ “globalȱ businessȱ scenarȬ ios”,ȱBPȱhasȱoptedȱforȱaȱmoreȱ“opaqueȱsystem”ȱbecauseȱitȱconsidersȱchangingȱbusiȬ nessȱstrategyȱ“accordingȱtoȱexpectationsȱofȱfutureȱoutcomes”ȱtooȱrisky.ȱInȱbothȱcomȬ panies,ȱ responsivenessȱ toȱ societalȱ expectationȱ isȱ essentialȱ toȱ maintainingȱ theirȱ liȬ censesȱtoȱoperateȱandȱisȱfacilitatedȱthroughȱvariousȱsystemsȱsuchȱasȱstakeholderȱenȬ gagementȱ toȱ detectȱ issuesȱ andȱ respondȱ adequately.ȱ Furthermore,ȱ bothȱ firmsȱ haveȱ systems,ȱ structuresȱ andȱ routinesȱ reflectingȱ theȱ significanceȱ ofȱ social,ȱ environmentalȱ andȱ economicȱ criteria:ȱ Atȱ Shell,ȱ responsibilityȱ isȱ delegatedȱ moreȱ fullyȱ toȱ unitsȱ andȱ businesses.ȱ Measurementȱ andȱ informationȱ systemsȱ alsoȱ differȱ slightly,ȱ presumablyȱ reflectingȱdifferentȱperceptionsȱaboutȱtheirȱresponsibilities:ȱBPȱmeasuresȱitsȱimpactȱinȱ orderȱtoȱmanageȱ itsȱ riskȱ andȱ beȱaccountableȱtoȱ society.ȱShellȱisȱ pioneeringȱinȱ itsȱ acȬ ceptanceȱ ofȱ theȱ roleȱ ofȱ NGOsȱ asȱ verifiersȱ ofȱ itsȱ reporting.ȱ Percevalȱ alsoȱ identifiedȱ aȱ clearȱ distinctionȱ inȱ policyȱ formulation:ȱ Whereasȱ BPȱ takesȱ aȱ riskȬbasedȱ viewȱ ofȱ theȱ BCSȱ withȱ aȱ “keenȱ awarenessȱ toȱ focusȱ onȱ avoidingȱ valueȱ reductionȱ thatȱ mightȱ ariseȱ fromȱ overȬintegrationȱ ofȱ SDȱ thinking,”ȱ Shellȱ hasȱ aȱ moreȱ synergisticȱ andȱ growthȬ basedȱapproach.ȱ Rondinelliȱ andȱ Berryȱ (2000)ȱ carriedȱ outȱ aȱ contentȱ analysisȱ ofȱ theȱ environmentalȱ reȬ portsȱofȱ37ȱmultinationalȱcompanies’ȱinȱorderȱtoȱidentifyȱdrivingȱforces,ȱpracticesȱandȱ theirȱeffectsȱonȱsustainableȱdevelopmentȱandȱeconomicȱperformance:ȱTheȱnumberȱofȱ reportedȱ externallyȱ orientedȱ practicesȱ (e.g.ȱ strategicȱ alliancesȱ withȱ stakeholderȱ groups)ȱ wasȱ relativelyȱ smallȱ comparedȱ withȱ thatȱ ofȱ internallyȱ orientedȱ initiatives,ȱ amongȱthemȱpollutionȱ preventionȱ andȱ cleanȱ manufacturing,ȱandȱproductȱandȱ procȬ essȱ redesign.ȱ Despiteȱ theȱ lackȱ ofȱ quantification,ȱ companiesȱ reportȱ onȱ theȱ economicȱ benefitsȱ andȱ valueȱ drivers,ȱ includingȱ theȱ reductionȱ ofȱ risksȱ andȱ liabilities,ȱ longerȬ termȱreturnsȱresultingȱfromȱcompetitiveȱadvantage,ȱresourceȱpreservation,ȱfavorableȱ image,ȱandȱproductȱinnovation.ȱ 3.3

Outcomesȱ

ThereȱareȱseveralȱempiricalȱstudiesȱexaminingȱtheȱoutcomesȱofȱCSM.ȱTheyȱareȱlimitedȱ toȱcaseȱstudiesȱandȱanecdotalȱevidenceȱonȱtheȱsuccessfulȱimplementationȱofȱCSMȱandȱ haveȱalreadyȱbeenȱreviewedȱaboveȱinȱsectionsȱ3.2.2ȱEconomicȱrationaleȱandȱ3.2.3ȱImȬ plementation.ȱOverallȱinsightsȱprovidedȱareȱlimitedȱbecauseȱtheȱoutcomeȱofȱCSMȱisȱ

ȱ

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3ȱReviewȱofȱempiricalȱliteratureȱ

notȱconsistentlyȱdefinedȱandȱoperationalizedȱ–ȱthroughȱe.g.ȱmoreȱcommitment,ȱlowerȱ emissions,ȱimprovedȱsourceȱreductionȱ–ȱinȱanyȱofȱtheȱstudiesȱ(Maxwellȱetȱal.,ȱ1997).ȱ Thereȱareȱnoȱquantitativeȱstudiesȱexaminingȱpossibleȱdeterminantsȱofȱtheȱoutcomeȱofȱ CSMȱ inȱ theȱ existingȱ literature.ȱ Severalȱ instrumentalȱ studiesȱ (Kraftȱ &ȱ Hage,ȱ 1990;ȱ McGuireȱetȱal.,ȱ1988;ȱMoore,ȱ2001)ȱexaminingȱtheȱcorporateȱsocialȬfinancialȱperformȬ anceȱlinkȱfoundȱthatȱgreaterȱfinancialȱperformanceȱledȱtoȱgreaterȱsocialȱperformance.ȱ However,ȱtheirȱapproachȱwasȱclearlyȱfocusedȱonȱtheȱlinkȱbetweenȱsocialȱandȱfinancialȱ performance,ȱandȱthusȱadditionalȱdeterminantsȱsuchȱasȱstructure,ȱmanagementȱtoolsȱ andȱinitiativesȱwereȱignored.ȱ 3.4

Summaryȱandȱresearchȱgapsȱ

Basedȱ onȱ hisȱ reviewȱ ofȱ empiricalȱ studiesȱ onȱ keyȱ conceptsȱ ofȱ thisȱ study,ȱ theȱ authorȱ concludesȱtheȱfollowing:ȱ 1. Studiesȱ onȱ theȱ driversȱ ofȱ CSMȱ onlyȱ examinedȱ aȱ subsetȱ ofȱ theȱ fourȱ determinantsȱ referredȱtoȱabove.ȱTheyȱareȱbasedȱonȱeitherȱqualitativeȱorȱquantitativeȱapproaches.ȱ TheȱempiricalȱbasisȱforȱWood’sȱthreeȱ“original”ȱprinciplesȱofȱsocialȱresponsibilityȱ isȱstrongȱbutȱbiasedȱtowardȱtheȱenvironmentalȱdimensionȱofȱCSM.ȱ 2. CSMȱisȱcontingentȱuponȱvariousȱfactorsȱsuchȱasȱsectorȱandȱevenȱplantȱcharacterisȬ tics,ȱregionȱofȱoperations,ȱetc.ȱHenceȱitȱisȱimportantȱtoȱconductȱ(1)ȱsectorȬspecificȱ studiesȱtoȱincreaseȱtheȱinternalȱvalidityȱofȱresults;ȱorȱ(2)ȱ–ȱevenȱbetterȱ–ȱcomparaȬ tiveȱstudiesȱtoȱsimultaneouslyȱensureȱinternalȱandȱexternalȱvalidity.ȱFewȱstudiesȱ explicitlyȱanalyzedȱsectorȱandȱplantȱeffectsȱrespectivelyȱbutȱfocusedȱonlyȱonȱcomȬ ponentsȱofȱCSMȱsuchȱasȱdeterminantsȱofȱenvironmentalȱresponsivenessȱ(Banerjeeȱ etȱal.,ȱ2003;ȱHenriquesȱetȱal.,ȱ1996)ȱandȱenvironmentalȱprofitȱ(Lankoski,ȱ2000).ȱ 3. ThereȱisȱaȱlackȱofȱdescriptiveȱresearchȱonȱCSMȱinȱgeneralȱandȱonȱitsȱeconomicȱraȬ tionaleȱinȱparticular.ȱBasedȱonȱtheȱfewȱstudiesȱthatȱhaveȱbeenȱconducted,ȱoneȱcanȱ concludeȱthatȱcompaniesȱengageȱinȱCSMȱforȱeconomicȱreasons,ȱbutȱlackȱadequateȱ modelsȱandȱmethodologiesȱtoȱoperationalizeȱthisȱeconomicȱpotentialȱinȱaȱsystemȬ aticȱ way.ȱ Thusȱ managers’ȱ decisionsȱ areȱ oftenȱ takenȱ inȱ conditionsȱ ofȱ significantȱ uncertainty.ȱ 4. Implementationȱ ofȱ CSMȱ isȱ contingentȱ uponȱ variousȱ internalȱ factorsȱ suchȱ strucȬ tures,ȱmanagementȱtools,ȱetc.ȱHowever,ȱquantitativeȱresearchȱonȱimplementationȱ andȱitsȱeffectivenessȱareȱlargelyȱlacking.ȱ 5. Overallȱ mostȱ empiricalȱ studiesȱ focusȱ onȱ moreȱ orȱ lessȱ narrowȱ subsetsȱ ofȱ theȱ keyȱ conceptsȱ ofȱ CSM.ȱ Generallyȱ theyȱ takeȱ aȱ narrowȱ environmentalȱ perspective.ȱ Theȱ socialȱdimensionȱofȱCSMȱisȱlargelyȱignored.ȱ

4ȱConceptualȱrationaleȱandȱresearchȱquestionsȱ

4

37ȱ

Conceptualȱrationaleȱandȱresearchȱquestionsȱ

Inȱ theȱ followingȱ sectionsȱ theȱ authorȱ presentsȱ theȱ conceptualȱ framework,ȱ whichȱ isȱ basedȱonȱtheȱcomprehensiveȱassessmentȱofȱexistingȱtheoreticalȱframeworksȱinȱsectionȱ 2ȱTheoreticalȱfoundationȱandȱconcepts.ȱItȱwasȱdevelopedȱto:ȱ -

matchȱtheȱfocusȱofȱtheȱstudy,ȱandȱ

-

provideȱ aȱ stringentȱ theoryȱ andȱ wellȱ laidȬoutȱ argumentsȱ fromȱ whichȱ researchȱ questionsȱorȱhypothesesȱcanȱbeȱderivedȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ27).ȱ

Furthermoreȱ theȱ authorȱ linksȱ theȱ frameworkȱ toȱ aȱ setȱ ofȱ specificȱ researchȱ questionsȱ formulatedȱ toȱ concretizeȱ theȱ study’sȱ objectiveȱ andȱ reflectȱ theȱ gapsȱ inȱ theȱ empiricalȱ literatureȱidentifiedȱinȱsectionȱ3.ȱ Theȱframeworkȱattemptsȱtoȱmodelȱcorporateȱsustainabilityȱperformance.ȱAnalogousȱ toȱWood’sȱmodelȱ(1991,ȱp.ȱ693),ȱcorporateȱsustainabilityȱperformanceȱisȱdefinedȱasȱ aȱbusinessȱorganization’sȱconfigurationȱofȱexternalȱandȱinternalȱdeterminantsȱofȱCSM,ȱstrateȬ gicȱdispositionȱto,ȱeconomicȱrationaleȱfor,ȱimplementationȱofȱCSM,ȱandȱitsȱoutcomeȱ

Theȱ frameworkȱisȱbasedȱ onȱseveralȱmodelsȱofȱcorporateȱsocialȱ performanceȱ(GreenȬ ingȱetȱal.,ȱ1994;ȱHusted,ȱ2000;ȱWood,ȱ1991)ȱthatȱhaveȱseveralȱshortcomingsȱinȱtheȱconȬ textȱofȱthisȱstudy.ȱThusȱtheȱfinalȱframeworkȱhasȱseveralȱmodificationsȱ(seeȱTableȱ4Ȭ1):ȱ Shortcomingsȱinȱmodelsȱofȱcorporateȱsocialȱ performanceȱ(Greeningȱetȱal.,ȱ1994;ȱHusted,ȱ 2000;ȱWood,ȱ1991)ȱ Lackȱ ofȱ differentiationȱ betweenȱ socialȱ andȱ environmentalȱissuesȱ Economicȱrationaleȱignoredȱ InadequateȱprocessȱorientationȱandȱsystemiȬ zationȱofȱsubconceptsȱ

PartialȱignoranceȱofȱcompanyȬspecificȱdeterȬ minantsȱofȱcorporateȱresponsivenessȱ

Modifiedȱframeworkȱforȱcorporateȱsustainabilityȱ performanceȱ ExplicitlyȱincorporatesȱbothȱtheȱsocialȱandȱenvironȬ mentalȱdimensionȱ DefinitionȱofȱCSMȱincludesȱreferenceȱtoȱtheȱneedȱforȱaȱ businessȱcaseȱ Newȱsystemizationȱofȱsubconceptsȱandȱdefinitions:ȱ - Strategicȱdispositionȱ - Implementationȱ - Outcomeȱdefinedȱasȱsocialȱandȱenvironmentalȱ effectsȱofȱcorporateȱbehaviorȱonlyȱ Explicitlyȱaccountsȱforȱtheȱmotivatingȱprincipleȱofȱ corporateȱdiscretionȱÎȱAccountsȱforȱfourȱmotivatingȱ principlesȱinȱtotalȱ

Tableȱ4Ȭ1:ȱModificationsȱtoȱWood’sȱ(1991)ȱCSPȱmodelȱ

Consequentlyȱ theȱ corporateȱ sustainabilityȱ performanceȱ modelȱ hasȱ severalȱ advanȬ tagesȱ(seeȱFigureȱ4Ȭ1):ȱ 1. Itȱexplicitlyȱaccountsȱforȱbothȱtheȱsocialȱandȱenvironmentalȱdimensionsȱofȱissuesȱ andȱofȱCSM,ȱandȱthusȱalsoȱemphasizesȱtheirȱbiophysicalȱ(andȱnonȬsocial)ȱandȱintȬ ergenerationalȱlongȬtermȱscope.ȱ

ȱ

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4ȱConceptualȱrationaleȱandȱresearchȱquestionsȱ

2. Itȱfeaturesȱfourȱdeterminantsȱ–ȱinȱWood’sȱ(1991)ȱmodelȱreferredȱtoȱasȱprinciplesȱ–ȱ ofȱ socialȱ responsibility:ȱ issues,ȱ externalȱ stakeholders,ȱ managersȱ andȱ companyȬ specificȱfactors.ȱ 3. Itsȱ systemizationȱ ofȱ conceptsȱ allowsȱ aȱ differentiationȱ betweenȱ theȱ strategicȱ andȱ theȱimplementationalȱdimensionsȱofȱCSM.ȱ 4. Itsȱ processȱ orientationȱ facilitatesȱ aȱ sequentialȱ viewȱ ofȱ CSMȱ rangingȱ fromȱ itsȱ deȬ terminantsȱ throughȱ strategicȱ dispositionȱ andȱ implementation,ȱ toȱ itsȱ outcome.ȱ Itȱ thusȱ allowsȱ oneȱ toȱ seeȱ corporateȱ sustainabilityȱ managementȱ andȱ itsȱ outcomeȱ asȱ dependentȱvariablesȱ(Husted,ȱ2000,ȱp.ȱ25)ȱ 5. Theȱ modelȱ explicitlyȱ incorporatesȱ theȱ economicȱ rationaleȱ forȱ CSMȱ andȱ thusȱ sigȬ nalizesȱaȱsynergisticȱrelationshipȱbetweenȱtheȱthreeȱdimensionsȱofȱcorporateȱsusȬ tainabilityȱ (financial,ȱ environmental,ȱ social),ȱ andȱ theȱ importanceȱ ofȱ buildingȱ aȱ soundȱ economicȱ rationaleȱ forȱ addressingȱ theȱ environmentalȱ andȱ socialȱ issuesȱ causedȱbyȱcompanies’ȱprimaryȱandȱsecondaryȱactivities.ȱ

External

as business organization’s configuration of

Corporate sustainability performance

Determinants of corporate sustainability management Internal

Issues

Stakeholders

Managers

Public Responsibility

Legitimacy

Managerial Discretion

Company-specific drivers Corporate discretion

Corporate sustainability management: A profit-driven corporate response to social and environmental issues caused through the organization’s primary and secondary activities

Strategic disposition and economic rationale (what to do?) Implementation (how to do it?) Tools

Initiatives

Structure

Outcome Social and environmental impacts and financial performance

ȱ Figureȱ4.1:ȱCorporateȱsustainabilityȱperformanceȱmodelȱ

Itȱshouldȱbeȱnotedȱ thatȱtheȱcolorsȱusedȱinȱFigureȱ4Ȭ1ȱindicateȱfourȱdifferentȱunitsȱofȱ analysisȱexaminedȱinȱthisȱstudy:ȱissues,ȱexternalȱstakeholders,ȱmanagersȱ(allȱthreeȱinȱ lightȱgreyȱboxes)ȱandȱcompaniesȱ(inȱdarkȱgreyȱboxes).ȱ

4ȱConceptualȱrationaleȱandȱresearchȱquestionsȱ

39ȱ

Theȱframeworkȱrestsȱonȱtheȱfollowingȱcornerstones:ȱ 1. Strategicȱ dispositionȱ toȱ CSMȱ isȱ jointlyȱ affectedȱ byȱ fourȱ factors,ȱ namelyȱ issues,ȱ stakeholders,ȱ managersȱ andȱ companyȬspecificȱ determinants.ȱ Thisȱ meansȱ thatȱ strategicȱdispositionȱmayȱvaryȱdependingȱon:ȱ - howȱ importantȱ socialȱ andȱ environmentalȱ issuesȱ areȱ toȱ theȱ corporateȱ activityȱ (Henriquesȱ etȱ al.,ȱ 1996,ȱ p.ȱ 383;ȱ Wood,ȱ 1991,ȱ p.ȱ 697):ȱ Theȱ sameȱ issue,ȱ e.g.ȱ emȬ ploymentȱ orȱ biodiversity,ȱ mayȱ varyȱ significantlyȱ inȱ termsȱ ofȱ importanceȱ deȬ pendingȱonȱe.g.ȱtheȱlocationȱandȱkindȱofȱcorporateȱactivity.ȱ - howȱstrongȱtheȱpressureȱfromȱstakeholdersȱotherȱthanȱmanagersȱisȱ(Henriquesȱ etȱal.,ȱ1995,ȱp.ȱ72;ȱWood,ȱ1991,ȱp.ȱ695):ȱTheȱsameȱstakeholderȱmayȱexertȱdifferȬ entȱ levelsȱ ofȱ pressureȱ dependingȱ onȱ e.g.ȱ localȱ levelsȱ ofȱ regulation,ȱ kindsȱ ofȱ corporateȱactivities.ȱ - howȱ proactiveȱ orȱ reactiveȱ managersȱ areȱ (Bansalȱ etȱ al.,ȱ 2000,ȱ p.ȱ 731;ȱ Wood,ȱ 1991,ȱp.ȱ698)ȱ - howȱproactiveȱorȱreactiveȱaȱcompanyȱasȱaȱwholeȱis.ȱSomeȱmayȱbeȱmoreȱproacȬ tiveȱthanȱothersȱthroughȱaȱmoreȱopenȱcorporateȱculture,ȱeffectiveȱtoolsȱsuchȱasȱ scenarioȱbuildingȱandȱotherȱorganizationalȱfactorsȱ(Griffin,ȱ2000,ȱp.ȱ485;ȱKolkȱ etȱal.,ȱ2001,ȱp.ȱ505).ȱ 2. TheȱstrategicȱdimensionȱofȱCSMȱ(whatȱtoȱdo?)ȱincorporatesȱcompanies’ȱstrategicȱ dispositionȱ toȱ andȱ theȱ businessȱ caseȱ forȱ sustainability.ȱ E.g.ȱ theȱ decisionȱ toȱ apȬ proachȱCSMȱstrategicallyȱthrough,ȱsay,ȱaȱpilotȱbusinessȱunitȱforȱrenewableȱenergyȱ technologyȱ dependsȱ onȱ aȱ company’sȱ strategicȱ dispositionȱ andȱ theȱ economicȱ raȬ tionaleȱforȱcorrespondingȱdecisions.ȱ 3. TheȱstrategicȱdimensionȱofȱCSMȱaffectsȱtheȱimplementation.ȱE.g.ȱaȱmoreȱstrategicȱ andȱcommittedȱapproachȱthroughȱtopȱmanagementȱcommitment,ȱandȱaȱstrongerȱ integrationȱofȱissuesȱintoȱbusinessȱstrategiesȱ leadȱtoȱmoreȱeffectiveȱ implementaȬ tionȱofȱCSMȱ(Kolkȱetȱal.,ȱ2001,ȱp.ȱ506ȱ;ȱMaxwellȱetȱal.,ȱ1997,ȱp.ȱ131).ȱ 4. Implementationȱ ofȱ CSMȱ isȱ characterizedȱ byȱ managementȱ tools,ȱ initiativesȱ andȱ structuresȱ(Hussey,ȱ1996,ȱp.ȱ8;ȱMaxwellȱetȱal.,ȱ1997,ȱp.ȱ120).ȱThusȱleadersȱareȱlikelyȱ toȱfeatureȱaȱbundleȱofȱmoreȱsophisticatedȱtoolsȱandȱinitiativesȱ(scenarioȬbuilding,ȱ communityȱinvolvement)ȱthanȱlaggards:ȱ 5. Companies’ȱ approachesȱ toȱ implementationȱ determineȱ theȱ outcomeȱ ofȱ CSMȱ (Maxwellȱetȱal.,ȱ1997,ȱp.ȱ131).ȱE.g.ȱtheȱuseȱofȱmoreȱsophisticatedȱtoolsȱandȱinitiaȬ tivesȱcanȱbeȱexpectedȱtoȱimproveȱtheȱoutcomeȱofȱCSMȱ.ȱ Basedȱ onȱ theseȱ cornerstones,ȱ theȱ studyȱ isȱ designedȱ toȱ fillȱ severalȱ gapsȱ identifiedȱ inȱ theȱbodyȱofȱempiricalȱliteratureȱreviewedȱinȱsectionȱ3ȱ(seeȱTableȱ4Ȭ2).ȱ ȱ

40ȱ

4ȱConceptualȱrationaleȱandȱresearchȱquestionsȱ

Shortcomingsȱinȱempiricalȱliteratureȱ

Characteristicsȱofȱtheȱpresentȱstudyȱȱ

Focusȱonȱenvironmentalȱdimensionȱandȱonlyȱ someȱsubsetsȱofȱtheȱconceptsȱofȱCSMȱ

Broadȱanalysisȱofȱtheȱdeterminantsȱof,ȱapȬ proachesȱtoȱandȱoutcomeȱofȱCSM,ȱtakingȱintoȱ considerationȱbothȱtheȱsocialȱandȱenvironmentalȱ dimensionsȱ

Onlyȱfocusedȱonȱaȱsubsetȱofȱtheȱfourȱdriversȱofȱ CSMȱfeaturedȱinȱtheȱconceptualȱframeworkȱ

Examinesȱallȱfourȱdrivers:ȱissues,ȱexternalȱstakeȬ holders,ȱmanagersȱandȱcompanyȬspecificȱdriversȱ

LackȱofȱresearchȱonȱtheȱbusinessȱcaseȱforȱsustainȬ abilityȱ

Businessȱcaseȱforȱsustainabilityȱexaminedȱasȱpartȱ ofȱCSMȱ

LackȱofȱstudiesȱonȱimplementationȱandȱtheȱdeȬ terminantsȱofȱtheȱoutcomeȱofȱCSMȱ

Analysisȱofȱcompanies’ȱapproachesȱtoȱimpleȬ mentingȱCSMȱ(managementȱtools,ȱstructures,ȱ initiatives)ȱandȱtheirȱeffectȱonȱtheȱoutcomeȱ

Tableȱ4Ȭ2:ȱGapsȱinȱempiricalȱliteratureȱandȱstudyȱcharacteristicsȱtoȱfillȱthemȱ

Theȱstudyȱemploysȱaȱcontingencyȱapproachȱ(seeȱ5.1ȱSelectionȱofȱsuitableȱmethod)ȱthatȱ examinesȱ theȱ internalȱ andȱ externalȱ determinantsȱ of,ȱ theȱ strategicȱ dispositionȱ to,ȱ theȱ implementationȱ ofȱ andȱ theȱ outcomeȱ ofȱ CSM.ȱ Theȱ socialȱ andȱ environmentalȱ dimenȬ sionsȱareȱconsideredȱequally.ȱFurthermore,ȱitȱisȱdesignedȱtoȱanalyzeȱcompanies’ȱecoȬ nomicȱrationaleȱforȱCSMȱandȱtheȱdeterminantsȱofȱstrategicȱdispositionȱtoȱandȱtheȱoutȬ comeȱofȱCSM.ȱ Followingȱ theȱ comprehensiveȱ reviewȱ ofȱ theoreticalȱ frameworks,ȱ empiricalȱ researchȱ andȱtheȱdefinitionȱofȱtheȱstudy’sȱkeyȱconcept,ȱtheȱauthorȱtranslatesȱhisȱresearchȱobjecȬ tiveȱ –ȱanȱempiricalȱexaminationȱ ofȱtheȱmainȱ externalȱandȱ internalȱ determinantsȱ(i.e.ȱ driversȱorȱbarriers)ȱofȱCSM,ȱcompanies’ȱapproachesȱtoȱCSMȱinȱtermsȱofȱbothȱstrategicȱ dispositionȱ andȱ implementation,ȱ theȱ economicȱ rationaleȱ forȱ theirȱ approachesȱ andȱ theirȱoutcomeȱ–ȱintoȱindividualȱresearchȱquestions.ȱTheyȱareȱsystemizedȱaccordingȱtoȱ theȱ fourȱ unitsȱ ofȱ analysisȱ –issues,ȱ externalȱ stakeholders,ȱ managersȱ andȱ companiesȱ (correspondingȱtoȱsectionsȱ8.1ȱtoȱ8.4)ȱ–ȱofȱtheȱstudy:ȱ 1. Issues:ȱ Whatȱ areȱ theȱ mostȱ importantȱ environmentalȱ andȱ socialȱ issuesȱ acrossȱ aȱ company’sȱentireȱvalueȱchainȱandȱhowȱdoȱtheyȱaffectȱCSMȱ(seeȱsectionȱ8.1)?ȱ 2. Externalȱstakeholders:ȱWhatȱrolesȱdoȱexternalȱstakeholdersȱplayȱandȱhowȱdoesȱpresȬ sureȱorȱignoranceȱonȱtheirȱpartȱaffectȱCSMȱ(seeȱsectionȱ8.2)?ȱ 3. Managers:ȱ Whatȱ roleȱ doȱ managersȱ playȱ inȱ CSMȱ andȱ howȱ doȱ theirȱ attitudes,ȱ knowledgeȱandȱmindsetȱinfluenceȱCSMȱ(seeȱsectionȱ8.3)?ȱ

4ȱConceptualȱrationaleȱandȱresearchȱquestionsȱ

41ȱ

4. Companiesȱ(seeȱsectionȱ8.4):ȱ -

WhatȱareȱtheȱmostȱsignificantȱcompanyȬspecificȱ(ratherȱthanȱmanagerȬ,ȱi.e.ȱinȬ dividualȬrelated)ȱdeterminantsȱofȱCSMȱ(e.g.ȱprocesses,ȱtools,ȱculture),ȱandȱhowȱ doȱtheyȱinfluenceȱCSM?ȱ

-

Whatȱisȱcompanies’ȱstrategicȱdispositionȱtoȱCSM,ȱandȱwhatȱareȱitsȱkeyȱdeterȬ minantsȱandȱeffectsȱonȱimplementation?ȱ

-

Whatȱ isȱ companies’ȱ economicȱ rationaleȱ forȱ CSMȱ andȱ howȱ doȱ theyȱ integrateȱ socialȱandȱenvironmentalȱissuesȱintoȱtheirȱstrategiesȱandȱoperationsȱbasedȱonȱ thisȱrationale?ȱ

-

HowȱdoȱcompaniesȱimplementȱCSM:ȱe.g.ȱwhatȱtoolsȱdoȱtheyȱuse,ȱwhatȱinitiaȬ tivesȱdoȱtheyȱundertakeȱtoȱresolveȱenvironmentalȱandȱsocialȱissues?ȱ

-

WhatȱisȱtheȱoutcomeȱofȱCSMȱandȱwhatȱareȱitsȱkeyȱdeterminants?ȱ

Theȱauthorȱintendsȱtoȱidentifyȱsignificantȱrelationshipsȱbetweenȱvariables,ȱe.g.ȱtheȱdeȬ terminantsȱofȱstrategicȱdisposition,ȱratherȱthanȱtoȱcompareȱtheȱstrengthsȱofȱtheȱrelationȬ shipsȱ found.ȱ Thisȱ approachȱ appearsȱ adequate:ȱ Theȱ ratherȱ exploratoryȱ stageȱ ofȱ thisȱ researchȱfieldȱandȱtheȱbroadȱscopeȱofȱthisȱstudyȱwouldȱmakeȱitȱdifficultȱtoȱexplainȱtheȱ greaterȱ strengthsȱ ofȱ oneȱ associationȱ overȱ another,ȱ sinceȱ complementaryȱ qualitativeȱ dataȱorȱsecondaryȱdataȱfromȱotherȱstudiesȱmayȱbeȱlacking.ȱ

ȱ

5.1ȱSelectionȱofȱsuitableȱmethodȱ

5

43ȱ

Methodȱ

Thisȱsectionȱdescribesȱinȱdetailȱhowȱtheȱauthorȱintendsȱtoȱachieveȱtheȱobjectivesȱofȱtheȱ study.ȱThisȱincludes:ȱ -

aȱ discussionȱ ofȱ theȱ suitabilityȱ ofȱ theȱ methodȱ chosenȱ (seeȱ sectionȱ 5.1ȱ Selectionȱ ofȱ suitableȱmethod)ȱ

-

aȱdescriptionȱofȱtheȱinstrumentsȱusedȱtoȱcollectȱandȱanalyzeȱtheȱdataȱ(seeȱsectionȱ 5.2ȱInstruments)ȱ andȱofȱhowȱ theyȱcomplementȱ eachȱotherȱ (seeȱsectionȱ 5.3ȱ SynerȬ gisticȱfitȱofȱmethods)ȱ

-

anȱoverallȱevaluationȱofȱtheȱmethodȱ(sectionȱ5.4ȱEvaluation).ȱ Section 5: Method 5.1 Selection of suitable method • Contingency approach • Mixed method design

5.2 Instruments Description of individual methods of • Data collection • Data analysis

5.3 Synergistic fit of instruments How do individual instruments complement each other?

5.4 Evaluation Quality of research design and methods

Figureȱ5.1:ȱStructureȱofȱsectionȱ5ȱ

Itȱ isȱ importantȱ toȱ noteȱ thatȱ thisȱ studyȱ isȱ basedȱ onȱ dataȱ collectedȱ inȱ theȱ courseȱ ofȱ aȱ crossȬindustryȱ researchȱ projectȱ (referȱ toȱ Tableȱ 5Ȭ1ȱ forȱ theȱ exactȱ timelineȱ andȱ proceȬ dures)ȱcarriedȱoutȱbyȱtheȱForumȱforȱCorporateȱSustainabilityȱManagementȱ(CSM)ȱatȱ IMDȱinȱLausanne,ȱSwitzerland,ȱinȱpartnershipȱwithȱWWFȱInternational.ȱ Periodȱ

Stepȱ

Aprilȱ2002ȱ

Researchȱreviewȱ Formulationȱofȱresearchȱhypothesesȱandȱobjectivesȱ–ȱdevelopedȱjointlyȱbyȱ theȱresearchȱteamȱ(seeȱAppendixȱCȱ–ȱHypothesesȱandȱobjectivesȱofȱIMDȱ researchȱproject)ȱ

Juneȱ2002ȱ

Developmentȱandȱpretestsȱofȱmeansȱofȱdataȱcollectionsȱ(interviewȱguideȬ linesȱandȱquestionnaires)ȱ

Julyȱ2002ȱ–ȱAprilȱ2003ȱ

Establishingȱcontactsȱwithȱcompaniesȱȱ Distributingȱquestionnairesȱ ConductingȱfaceȬtoȬfaceȱinterviewsȱincludingȱfollowȱupȱ

May–ȱAugustȱ2003ȱ

FinalizationȱofȱsectorȬspecificȱresearchȱreportsȱandȱfeedbackȱprocessȱ

Tableȱ5Ȭ1:ȱTimelineȱofȱtheȱcrossȬindustryȱresearchȱprojectȱ

Theȱ projectȱ wasȱ establishedȱ toȱ examineȱ theȱ businessȱ caseȱ forȱ sustainabilityȱ inȱ nineȱ industriesȱ inȱ total;ȱ inȱ additionȱ toȱ theȱ OGȱ andȱ UTȱ sectorsȱ (subjectȱofȱ thisȱ study),ȱ theȱ industriesȱ surveyedȱ were:ȱ automotive,ȱ aviation,ȱ chemical,ȱ foodȱ andȱ beverage,ȱ fiȬ nance,ȱpharmaceutical,ȱtechnology.ȱ ȱ

ȱ

44ȱ

5ȱMethodȱ

5.1

Selectionȱofȱsuitableȱmethodȱ

Inȱtheȱfollowingȱsectionsȱtheȱauthorsȱwillȱelaborateȱonȱwhyȱtheȱmethodȱchosenȱisȱtheȱ mostȱsuitableȱinȱtheȱcontextȱofȱthisȱstudy.ȱ 5.1.1 Contingencyȱapproachȱ Asȱtheȱreviewȱofȱempiricalȱliteratureȱrevealed,ȱCSM,ȱitsȱdeterminantsȱandȱitsȱoutcomeȱ areȱdependentȱonȱaȱvarietyȱofȱfactorsȱincludingȱlocalȱsocialȱandȱenvironmentalȱcondiȬ tions,ȱmarketsȱandȱcorporateȱactivities,ȱnationalȱregulationsȱandȱcultures.ȱToȱcontrolȱ forȱthose,ȱtheȱstudyȱadoptsȱaȱcontingencyȱapproachȱthatȱisȱvisualizedȱinȱFigureȱ5Ȭ2.ȱ Subconcepts of corporate sustainability performance Regions of operations

Determinants

….. Strategic disposition Latin Europe

Economic rationale

Implementation

Nordic

Mid-Northern Europe

North America Outcome

Expertise Industry sector

Sustainability officers

General managers

Integrated oil and gas sector (OG)

Sustainability officers

General managers

Electric utilities sector (UT)

ȱ Figureȱ5.2:ȱVisualizationȱofȱcontingencyȱapproachȱ

Itȱ isȱ basedȱ onȱ theȱ considerationȱ thatȱ corporateȱ sustainabilityȱ performanceȱ andȱ theȱ wayȱitȱisȱdescribedȱbyȱtheȱrespondentsȱisȱcontingentȱuponȱexternalȱandȱinternalȱdeȬ terminantsȱ thatȱ areȱ likelyȱ toȱ differȱ acrossȱ industriesȱ (e.g.ȱ differentȱ technologiesȱ andȱ resources),ȱcountriesȱ(differentȱlevelsȱofȱregulatoryȱandȱpublicȱpressure)ȱandȱmanagȬ ersȱ(differentȱexpertiseȱandȱresponsibilities).ȱȱ Theȱstudy’sȱcontingencyȱapproachȱallowsȱtheȱempiricalȱexaminationȱofȱtheȱconstituȬ entsȱofȱ theȱcorporateȱ sustainabilityȱ performanceȱmodelȱ acrossȱ theȱfollowingȱ dimenȬ sions:ȱ

5.1ȱSelectionȱofȱsuitableȱmethodȱ

45ȱ

1. Twoȱ industryȱ sectors:ȱ theȱ integratedȱ oilȱ &ȱ gasȱ (OG)ȱ sectorȱ andȱ theȱ electricȱ utilitiesȱ(UT)ȱsectorȱ 2. Twoȱmanagementȱgroups:ȱsustainabilityȱofficersȱ(SOs)ȱandȱgeneralȱmanagersȱ (GMs)ȱ 3. Differentȱregionsȱofȱoperations:ȱprimarilyȱEuropeȱandȱNorthȱAmericaȱ Industryȱsectorsȱ Theȱtwoȱsectorsȱwereȱchosenȱforȱtheirȱeconomic,ȱenvironmentalȱandȱsocialȱrelevance.ȱ Theȱenergyȱindustryȱasȱaȱwholeȱnotȱonlyȱcontributesȱtoȱeconomicȱdevelopmentȱandȱ activitiesȱ throughȱ theȱ provisionȱ ofȱ primaryȱ andȱ secondaryȱ energy,ȱ butȱ itsȱ activitiesȱ areȱalsoȱassociatedȱwithȱseveralȱsocialȱandȱenvironmentalȱissuesȱ(Dincer,ȱ1999;ȱInterȬ nationalȱEnergyȱAgency,ȱ2003;ȱInternationalȱEnergyȱAgencyȱ&ȱOECD,ȱ2002;ȱWBCSD,ȱ 1999).ȱ TheȱselectionȱofȱthisȱsectorȱlargelyȱimpliesȱaȱfocusȱonȱlargeȱandȱoftenȱglobalȱcompaȬ niesȱratherȱthanȱsmallȱandȱmediumȬsizedȱenterprisesȱ(SMEs).ȱThisȱfocusȱisȱlegitimateȱ andȱreasonable,ȱsinceȱlargeȱcorporationsȱconstituteȱmoreȱcompellingȱresearchȱobjectsȱ becauseȱ theyȱ (1)ȱ featureȱ aȱ widerȱ rangeȱ ofȱ activitiesȱ andȱ haveȱ moreȱ resourcesȱ thanȱ SMEs,ȱandȱ(2)ȱareȱunderȱsignificantlyȱmoreȱscrutinyȱfromȱgovernmentsȱandȱcivilȱsociȬ etyȱdemandingȱthatȱresponsibilityȱcomesȱwithȱpowerȱ(Davis,ȱ1960,ȱp.ȱ314).ȱ Theȱfocusȱonȱlargeȱcorporationsȱhasȱanȱadditionalȱadvantage.ȱThisȱuniverseȱlendsȱitȬ selfȱbetterȱtoȱconvenienceȱsampling:ȱItȱmadȱsenseȱtoȱbenefitȱfromȱdirectȱaccessȱtoȱreȬ spondentsȱ atȱ IMDȱ whichȱ –ȱ asȱ anȱ internationalȱ businessȱ schoolȱ –ȱ hostsȱ manyȱ manȬ agementȱ educationȱ programs,ȱ mostlyȱ attendedȱ byȱ managersȱ fromȱ globalȱ firms.ȱ Itȱ shouldȱ beȱ notedȱ thatȱ convenienceȱ samplingȱ isȱ proneȱ toȱ biasȱ (Saunders,ȱ Lewis,ȱ &ȱ Thornhill,ȱ 2003,ȱ p.ȱ 177).ȱ Nevertheless,ȱ theȱ samplingȱ strategyȱ wasȱ chosenȱ –ȱ evenȱ ifȱ onlyȱ forȱ aȱ partȱ ofȱ theȱ finalȱ sampleȱ –ȱ becauseȱ theȱ intendedȱ contingencyȱ approachȱ posedȱaȱsignificantȱchallengeȱinȱtermsȱofȱsampleȱsize.ȱ Managementȱgroupsȱ Theȱstudyȱdifferentiatesȱbetweenȱtwoȱgroupsȱ(orȱdisciplines)ȱofȱmanagersȱ–ȱsustainȬ abilityȱofficersȱandȱgeneralȱmanagersȱ–ȱtoȱtakeȱaccountȱofȱtheȱcontingencyȱofȱresponȬ dents’ȱ perceptionsȱ ofȱ corporateȱ sustainabilityȱ performanceȱ onȱ professionalȱ activityȱ andȱexperience.ȱForȱtheȱpurposesȱofȱthisȱresearchȱtheȱtwoȱgroupsȱofȱmanagersȱareȱdeȬ finedȱasȱfollows:ȱ -

ȱ

SustainabilityȱofficersȱareȱmanagersȱwhoȱexhibitȱspecialȱsustainabilityȬrelatedȱexȬ pertiseȱandȱhaveȱtheȱroleȱofȱpromotingȱCSMȱinȱtheirȱcompany.ȱTheyȱareȱusuallyȱ affiliatedȱ withȱ corporateȱ sustainability,ȱ environmentalȱ orȱ publicȱ affairsȱ departȬ ments.ȱ

46ȱ

-

5ȱMethodȱ

Generalȱmanagersȱareȱmanagersȱfromȱotherȱ(i.e.ȱnonȬsustainability)ȱbusinessȱfuncȬ tionsȱ suchȱ asȱ finance,ȱ researchȱ andȱ developmentȱ (R&D),ȱ humanȱ resourcesȱ (HR)ȱ andȱcorporateȱstaff.ȱTheyȱshallȱrepresentȱaȱpopulationȱwithȱlowerȱlevelsȱofȱawareȬ nessȱofȱ issues,ȱoutsideȱpressureȱfromȱ stakeholders,ȱ andȱcorrespondingȱ corporateȱ responses.ȱ

Countriesȱ CountriesȱrepresentȱtheȱthirdȱdimensionȱofȱtheȱcontingencyȱapproachȱadoptedȱtoȱacȬ countȱ forȱ differencesȱ inȱ theȱ businessȱ environmentȱ (e.g.ȱ levelȱ ofȱ regulations,ȱ societalȱ pressure,ȱcorporateȱcultures).ȱTheȱauthorȱattemptedȱprimarilyȱtoȱrecruitȱcompaniesȱinȱ Northȱ America,ȱ Europeȱ andȱ Japan,ȱ i.e.ȱ industrializedȱ countries,ȱ forȱ hisȱ interviews,ȱ sinceȱ theyȱ accountȱ forȱ theȱ majorȱ shareȱ ofȱ energyȱ consumptionȱ globallyȱ andȱ relatedȱ socialȱandȱenvironmentalȱeffectsȱ(EnergyȱInformationȱAdministration,ȱ2004,ȱp.ȱ1).ȱTheȱ samplingȱ forȱ theȱ mail/online/faxȱ questionnaireȱ focusedȱ lessȱ strictlyȱ onȱ theȱ threeȱ reȬ gions,ȱalsoȱforȱreasonsȱofȱconvenienceȱ(seeȱsectionȱ5.2.1ȱDataȱcollection).ȱ 5.1.2

Selectionȱofȱinstrumentsȱ

InȱtheȱfollowingȱparagraphsȱtheȱauthorȱwillȱbuildȱaȱcaseȱforȱtheȱinstrumentationȱchoȬ senȱforȱtheȱpresentȱstudy.ȱ Mixedȱmethodȱdesignȱ Theȱstudyȱfeaturesȱaȱmixedȱmethodȱdesign,ȱi.e.ȱitȱusesȱbothȱqualitativeȱandȱquantitaȬ tiveȱdataȱcollectionȱandȱanalysisȱtechniquesȱ(Teddlieȱetȱal.,ȱ2003,ȱp.ȱ11).ȱItȱshouldȱbeȱ notedȱ thatȱ mixedȱ methodȱ researchȱ hasȱ beenȱ subjectȱ toȱ significantȱ criticismȱ byȱ reȬ searchersȱ whoȱ consideredȱ qualitativeȱ andȱ quantitativeȱ methodsȱ irreconcilableȱ beȬ causeȱofȱtheȱincompatibilityȱofȱtheirȱparadigmsȱofȱpostpositivismȱ(quantitativeȱmethȬ ods)ȱ andȱ constructivismȱ (qualitativeȱ methods).ȱ Thisȱ incompatibilityȱ thesisȱ hasȱ beenȱ largelyȱdiscreditedȱmainlyȱdueȱtoȱtheȱsuccessesȱofȱmixedȱmethodȱresearchȱinȱtheȱpast.ȱ Moreover,ȱ mixedȱ methodsȱ areȱ supportedȱ byȱ twoȱ paradigms,ȱ namelyȱ pragmatismȱ andȱ theȱ transformativeȬemancipatoryȱ paradigmȱ (p.ȱ 20).ȱ Asȱ Teddlieȱ andȱ Tashakkoriȱ (2003)ȱ illustrate,ȱ mixedȱ methodsȱ researchȱ isȱ superiorȱ toȱ singleȱ approachȱ designȱ inȱ threeȱareas:ȱ Scope:ȱUsingȱmixedȱmethodsȱoffersȱaȱbroaderȱscope,ȱmainlyȱsinceȱitȱenablesȱ“theȱreȬ searcherȱ toȱ simultaneouslyȱ answerȱ confirmatoryȱ andȱ exploratoryȱ questions,ȱ andȱ thereforeȱ verifyȱ andȱ generateȱ theoryȱ inȱ theȱ sameȱ study”ȱ (p.ȱ 15).ȱ Throughȱ mixedȱ methodȱ researchȱ itȱ isȱ possibleȱ toȱ demonstrateȱ orȱ detectȱ aȱ relationshipȱ betweenȱ twoȱ variablesȱ andȱ toȱ explainȱ whyȱ theȱ relationshipȱ exists.ȱ Inȱ theȱ presentȱ study,ȱ relationȬ shipsȱ areȱ detectedȱ throughȱ quantitativeȱ methodsȱ (correlationȱ andȱ regressionȱ analyȬ sis).ȱTheȱprocessȱbyȱwhichȱtheȱrelationshipsȱoccurȱisȱexploredȱinȱmoreȱdetailȱthroughȱ qualitativeȱmethodsȱ(interviewsȱandȱcontentȬanalysis).ȱ

5.1ȱSelectionȱofȱsuitableȱmethodȱ

47ȱ

Betterȱinference:ȱBetterȱinferenceȱresultsȱfromȱmixingȱmethodsȱinȱsuchȱaȱwayȱthatȱtheirȱ strengthsȱareȱcomplementaryȱandȱtheirȱweaknessesȱdoȱnotȱoverlapȱ(seeȱTableȱ5Ȭ2).ȱInȱ theȱcaseȱofȱtheȱpresentȱstudy,ȱaȱqualitativeȱcomponentȱ(interviews)ȱensuresȱsufficientȱ depth,ȱ andȱ aȱ quantitativeȱ componentȱ (mail,ȱ faxȱ andȱ onlineȱ questionnaire)ȱ adequateȱ breadth.ȱThisȱuseȱofȱbothȱmethodsȱfacilitatesȱsoundȱinferencesȱaboutȱcomplexȱtopicsȱ suchȱasȱcorporateȱsustainabilityȱperformanceȱ(Teddlieȱetȱal.,ȱ2003,ȱp.ȱ16).ȱȱ CriteriaȱofȱcompariȬ sonȱ Dataȱgeneratedȱ Surveyȱsituationȱ Costsȱ Amountȱofȱcontrolȱ overȱsurveyȱsituaȬ tionȱ Accuracy/biasȱ

DegreeȱofȱstandardiȬ zationȱ Resultsȱ

Questionnaireȱ (Mail,ȱfaxȱandȱonline)ȱ Quantitativeȱ Largelyȱuncontrolledȱ(unclearȱwhoȱ filledȱinȱtheȱquestionnaire)ȱ Lessȱexpensiveȱ Lowȱ(e.g.ȱuncertainȱwhoȱreallyȱfilledȱ inȱtheȱquestionnaire)ȱ

Interviewsȱ (semiȬstructured,ȱpersonal)ȱ Qualitativeȱ Largelyȱcontrolledȱ

Weakerȱbias:ȱdueȱtoȱgreaterȱanonymȬ ityȱ

Strongerȱbiasȱ Lessȱaccurate,ȱsinceȱrealityȱverbalizedȱ andȱinterpretativelyȱassessedȱ Lowȱ

Highȱ - Moreȱgeneralizableȱ - Commonȱpatternsȱ - Detectedȱrelationshipsȱbetweenȱ variablesȱ

Moreȱexpensiveȱ Highȱ(personalȱcontrolȱthroughȱinterȬ viewer)ȱ

- Lessȱgeneralizable,ȱcaseȬspecificȱ - ExplanationȱofȱdetectedȱrelationȬ shipsȱȱ

Tableȱ5Ȭ2:ȱComplementarityȱandȱtriangulationȱthroughȱmixedȱmethodsȱ–ȱbasedȱonȱBortzȱ(2002,ȱp.ȱ 237)ȱandȱTeddlieȱ(2003,ȱp.ȱ15)ȱ

Opportunityȱtoȱdetectȱdivergentȱviews:ȱQualitativeȱandȱquantitativeȱcomponentsȱdoȱnotȱ necessarilyȱleadȱtoȱtheȱsameȱconclusions.ȱWhenȱtheyȱdoȱconverge,ȱthisȱindicatesȱtheirȱ validity.ȱHoweverȱtheyȱcanȱalsoȱgenerateȱ“aȱnewȱcomprehensionȱofȱtheȱphenomenonȱ byȱformingȱcomplementaryȱpartsȱofȱaȱjigsawȱpuzzleȱorȱ[..]ȱproduceȱunexplainableȱdiȬ vergenceȱleadingȱtoȱaȱfalsificationȱofȱpreviousȱtheoreticalȱassumptions”ȱ(Erzbergerȱ&ȱ Prein,ȱ1997,ȱp.ȱ146Ȭ147ȱcitedȱbyȱTeddlieȱetȱal.,ȱ2003,ȱp.ȱ17).ȱThisȱadvantageȱisȱparticularȱ significantȱinȱaȱstudyȱthatȱtakesȱaȱratherȱexplanatoryȱapproach.ȱ Theȱapproachȱadoptedȱinȱtheȱpresentȱstudyȱfulfillsȱtwoȱkeyȱfunctionsȱ–ȱtriangulationȱ andȱ complementarityȱ (Teddlieȱ etȱ al.,ȱ 2003,ȱ p.ȱ 17),ȱ whichȱ areȱ moreȱ concretelyȱ illusȬ tratedȱinȱsectionȱ5.3ȱSynergisticȱfitȱofȱmethods,ȱafterȱtheȱindividualȱmethodsȱofȱdataȱ collectionȱandȱanalysisȱhaveȱbeenȱdescribedȱinȱmoreȱdetail:ȱ 1. Triangulation:ȱTheȱstudy’sȱconcurrentȱtriangulationȱdesign,ȱdepictedȱinȱFigureȱ5Ȭ3,ȱ featuresȱ theȱ simultaneousȱ useȱ ofȱ quantitativeȱ andȱ qualitativeȱ methodsȱ toȱ crossȬ validateȱfindingsȱwithinȱtheȱstudy.ȱTheȱmethodȱisȱprimarilyȱquantitativelyȱdrivenȱ andȱdeductiveȱinȱnatureȱtoȱtestȱtheȱconceptualȱframeworkȱpresentedȱinȱsectionȱ4ȱ (Bortzȱetȱal.,ȱ2002,ȱp.ȱ34).ȱDataȱcollectedȱandȱanalyzedȱfromȱtheȱtwoȱmanagementȱ ȱ

48ȱ

5ȱMethodȱ

functionsȱ(generalȱmanagersȱandȱsustainabilityȱofficers)ȱprovideȱaȱsecondȱopporȬ tunityȱforȱtriangulatingȱresultsȱwithinȱtheȱquantitativeȱdimensionȱofȱthisȱstudy.ȱ QUAN

QUAN

General managers

Sustainability officers

qual

Results

General managers Sustainability officers

QUAN

QUAN

Data collection QUAN

Data analysis QUAN

Data collection

qual

Data analysis

Combined data interpretation

qual

Data collection

Data analysis

Legend: Quan = quantitative method Qual = qualitative method Uppercase (Quan) denotes priority over lowercase (qual)

ȱ

Figureȱ5.3:ȱVisualizationȱofȱconcurrentȱtriangulizationȱdesignȱ(basedȱonȱCreswell,ȱClark,ȱGutȬ mann,ȱ&ȱHanson,ȱ2004,ȱp.ȱ236)ȱ

Althoughȱbothȱgroupsȱofȱmanagersȱwereȱalsoȱinterviewed,ȱitȱwouldȱnotȱbeȱdecepȬ tiveȱ toȱ speakȱ ofȱ aȱ comprehensiveȱ thirdȱ opportunityȱ forȱ triangulation,ȱ becauseȱ qualitativeȱdataȱlackȱtheȱnecessaryȱaccuracy.ȱ 2. Complementarity:ȱTheȱ complementarityȱ resultsȱ fromȱ twoȱ characteristicsȱ ofȱ theȱ inȬ terviews.ȱ Firstȱ theyȱ haveȱ aȱ slightlyȱ differentȱ focusȱ thanȱ theȱ questionnaire:ȱ Theyȱ examineȱ theȱ economicȱ rationaleȱ forȱ CSMȱ andȱ theȱ processȱ ofȱ issueȱ integrationȱ moreȱclosely.ȱDueȱtoȱtheȱlackȱofȱ“preparatory”ȱdescriptiveȱresearchȱandȱtheoretiȬ calȱfoundationsȱinȱthisȱarea,ȱitȱwasȱobviousȱtoȱadoptȱaȱratherȱexploratory,ȱinducȬ tiveȱ andȱ thusȱ qualitativeȱ approachȱ (Bortzȱ etȱ al.,ȱ 2002,ȱ p.ȱ 34,ȱ 299).ȱ Aȱ quantitativeȱ andȱdeductiveȱapproachȱwouldȱhaveȱbeenȱpremature.ȱHowever,ȱtheȱbusinessȱcaseȱ isȱtooȱimportantȱasȱaȱkeyȱconceptȱofȱCSMȱtoȱomitȱitȱfromȱtheȱanalysisȱcompletely.ȱ Second,ȱ interviewsȱ areȱ ableȱ toȱ explainȱ orȱ illustrateȱ componentsȱ ofȱ theȱ modelȱ inȱ moreȱ depthȱ (Teddlieȱ etȱ al.,ȱ 2003,ȱ p.ȱ 17).ȱ Toȱ achieveȱ thisȱ objective,ȱ aȱ semiȬ structuredȱandȱpersonalȱinterviewȱapproachȱwasȱchosenȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ239,ȱ 315).ȱItȱstrikesȱaȱbalanceȱbetweenȱ(1)ȱallowingȱforȱtheȱnecessaryȱdegreeȱofȱfreedomȱ toȱeffectivelyȱcaptureȱtheȱcomplexityȱofȱtheȱresearchȱtopicȱandȱ(2)ȱavoidingȱcomȬ

5.1ȱSelectionȱofȱsuitableȱmethodȱ

49ȱ

promisingȱ theȱ reliabilityȱ ofȱ theȱ approachȱ throughȱ aȱ certainȱ levelȱ ofȱ standardizaȬ tionȱthatȱdecreasesȱinterviewerȱbias.ȱ Dataȱcollectionȱ Theȱpresentȱstudy’sȱdataȱcollectionȱemploysȱtwoȱsurveyȱmethods,ȱi.e.ȱtwoȱmeansȱofȱ systematicallyȱ collectingȱ primaryȱ dataȱ fromȱ respondentsȱ (Saundersȱ etȱ al.,ȱ 2003,ȱ p.ȱ 280;ȱ Tullȱ &ȱ Hawkins,ȱ 1993,ȱ p.ȱ 165):ȱ directȱ personalȱ interviewsȱ andȱ online/fax/mailȱ questionnaires.ȱThereȱareȱtwoȱkeyȱargumentsȱforȱaȱsurveyȱapproach:ȱ 1. Theȱ authorȱ foundȱ aȱ clearȱ lackȱ ofȱ surveyȬbased,ȱ contingencyȱ approachesȱ inȱ theȱ empiricalȱliterature.ȱSuchȱstudiesȱonȱtheȱentireȱscopeȱofȱCSMȱ(fromȱdeterminantsȱ toȱoutcome)ȱandȱitsȱeconomicȱrationaleȱinȱparticularȱareȱclearlyȱneeded.ȱ 2. Theȱcontingencyȱperspectiveȱtakenȱinȱthisȱstudyȱrequiresȱdataȱfromȱtwoȱindustryȱ sectorsȱinȱvariousȱcountries.ȱThusȱtheȱissueȱofȱdataȱcompatibilityȱagainȱpointsȱtoȱaȱ surveyȱapproachȱasȱtheȱobviousȱchoice.ȱ Theȱsurveyȱfollowsȱtheȱresearchȱphilosophyȱofȱinterpretivismȱ(Saundersȱetȱal.,ȱ2003,ȱ p.ȱ83),ȱwhichȱpointsȱtoȱtheȱneedȱtoȱ“exploreȱtheȱsubjectiveȱmeaningsȱmotivatingȱpeoȬ ple’sȱaction”ȱinȱorderȱtoȱbeȱableȱtoȱunderstandȱthese.ȱTheȱimportanceȱofȱsubjectivityȱ (i.e.ȱpersonalȱknowledge,ȱexperience)ȱisȱbasedȱonȱtheȱtheoryȱofȱsocialȱconstructivismȱ andȱ theȱ modelȱ ofȱ symbolicȱinteractionismȱandȱjustifiesȱ theȱ operationalizationȱ ofȱtheȱ study’sȱ keyȱ conceptsȱ throughȱ respondents’ȱ perceptions:ȱ Respondents’ȱ responseȱ toȱ thingsȱisȱdeterminedȱthroughȱtheȱmeaningsȱthoseȱthingsȱhaveȱforȱthemȱ(Bortzȱetȱal.,ȱ 2002,ȱ p.ȱ 304).14ȱ However,ȱ surveysȱ areȱ subjectȱ toȱ typicalȱ biasesȱ suchȱ asȱ selfȬ presentationȱandȱsocialȱdesirabilityȱbiasȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ232),ȱparticularlyȱifȱtheȱ researchȱtopicȱ isȱ asȱ valuesȬladenȱasȱ CSM.ȱ Toȱcounteractȱandȱ controlȱforȱpossibleȱ biȬ ases,ȱtheȱauthorȱemployedȱtwoȱstrategies:ȱ 1. Twoȱdifferentȱgroupsȱofȱmanagersȱ–ȱgeneralȱmanagersȱandȱsustainabilityȱofficersȱ –ȱwereȱsurveyedȱtoȱtriangulateȱresults.ȱ 2. Resultsȱ wereȱ benchmarkedȱ withȱ qualitativeȱ primaryȱ dataȱ obtainedȱ fromȱ interȬ viewsȱwithȱexternalȱstakeholdersȱ(e.g.ȱpublicȱpressureȱgroups,ȱlegislators,ȱexperts;ȱ seeȱ Appendixȱ Aȱ –ȱ Interviewȱ samples)ȱ andȱ qualitativeȱ secondaryȱ dataȱ sourcedȱ fromȱinternalȱandȱexternalȱcompanyȱdocuments,ȱacademicȱjournalsȱandȱnewspaȬ pers.ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 14

ȱ

ȱAsȱtheȱcorrespondingȱThomasȬTheoremȱpostulates:ȱ“Ifȱmenȱperceiveȱsituationsȱasȱreal,ȱtheyȱareȱrealȱ inȱtheirȱconsequences.”ȱ(citedȱinȱRogers,ȱ1995,ȱp.ȱ209)ȱ

50ȱ

5ȱMethodȱ

Dataȱanalysisȱ Instrumentsȱ ofȱ quantitativeȱ dataȱ analysisȱ wereȱ particularlyȱ carefullyȱ selected.ȱ Itȱ shouldȱbeȱnotedȱthatȱdataȱgeneratedȱbyȱLikertȬtypeȱscalesȱwereȱgenerallyȱcodedȱfromȱ 1ȱ toȱ 5ȱ andȱ treatedȱ asȱ intervalȱ data.ȱ Onlyȱ intervalȱ dataȱ areȱ suitedȱ toȱ theȱ useȱ ofȱ moreȱ powerfulȱ statisticalȱ toolsȱ suchȱ asȱ tȬtests,ȱ correlationsȱ andȱ regressions.ȱ However,ȱ strictlyȱspeaking,ȱLikertȬtypeȱscalesȱgenerateȱordinalȱdata.ȱ Theȱpresentȱstudyȱfollowsȱ theȱcommonȱpracticeȱofȱ carryingȱoutȱ“perȱ fiat”ȱmeasureȬ mentsȱ usingȱ instrumentsȱ thatȱ areȱ assumedȱ toȱ measureȱ respondents’ȱ characteristicsȱ (suchȱ asȱ e.g.ȱ attitudesȱ inȱ theȱ caseȱ ofȱ thisȱ study)ȱ onȱ anȱ intervalȱ scaleȱ (Hammannȱ &ȱ Erichson,ȱ 2000,ȱ p.ȱ 27).ȱ Academicȱ disputeȱ betweenȱ puristsȱ andȱ pragmatistsȱ onȱ thisȱ kindȱofȱmeasurementȱhasȱaȱlongȱhistoryȱandȱappearsȱtoȱbeȱongoingȱ(Bortzȱetȱal.,ȱ2002,ȱ p.ȱ180;ȱDavisȱ&ȱCosenza,ȱ1988,ȱp.ȱ180;ȱHüttner,ȱ1997,ȱp.ȱ111).ȱPerȱfiatȱmeasurementȱasȱ advocatedȱbyȱtheȱpragmaticsȱandȱcarriedȱoutȱinȱtheȱpresentȱstudyȱcanȱbeȱjustifiedȱasȱ follows:ȱ 1. Mostȱ standardȱ statisticalȱ techniquesȱ suchȱ asȱ regressionȱ analysisȱ areȱ notȱ stronglyȱ affectedȱ byȱ smallȱ deviationsȱ fromȱ theȱ intervalȱ requirementȱ (Mason,ȱ Lind,ȱ&ȱMarchal,ȱ1999,ȱp.ȱ475;ȱTraylor,ȱ1983;ȱTullȱetȱal.,ȱ1993,ȱp.ȱ308).ȱ 2. SeveralȱauthorsȱhaveȱconcludedȱthatȱrespondentsȱperceiveȱcertainȱLikertȬtypeȱ scalesȱasȱequidistant,ȱandȱthusȱableȱtoȱgenerateȱvirtuallyȱintervalȱdataȱ(Craskȱ&ȱ Fox,ȱ1987;ȱRohrmann,ȱ1978;ȱTraylor,ȱ1983;ȱWyattȱ&ȱMeyers,ȱ1987).15ȱ 3. Theȱ confirmationȱ ofȱ empiricalȱ researchȱ hypothesesȱ becomesȱ moreȱ difficultȱ throughȱincorrectȱassumptionsȱaboutȱtheȱmeasurementȱscale,ȱi.e.ȱanȱempiricalȱ confirmationȱ ofȱ theȱ hypothesisȱ isȱ seenȱ asȱ aȱ proofȱ forȱ theȱ correctȱ assumptionȱ aboutȱtheȱmeasurementȱscaleȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ27).ȱ 4. Multipleȱ linearȱ regressionȱ wasȱ chosenȱ asȱ theȱ mostȱ suitableȱ methodȱ toȱ detectȱ causalȱrelationships,ȱsinceȱordinalȱregressionȱonlyȱprovidedȱanȱequallyȱ“risky”ȱ alternative.ȱThisȱisȱbecauseȱordinalȱregressionȱmodelsȱrequireȱrelativelyȱlargeȱ samples,ȱsinceȱtheyȱ areȱbasedȱonȱ maximumȱlikelihoodȱestimation.ȱ Maximumȱ likelihoodȱ estimationȱ hasȱ beenȱ hardlyȱ researchedȱ andȱ isȱ consideredȱ riskyȱ forȱ sampleȱ sizes:ȱ Whereasȱ onlyȱ sampleȱ sizesȱ aboveȱ 500ȱ areȱ consideredȱ adequateȱ forȱ someȱ categoricalȱ regressionȱ models,ȱ orderedȱ probitȱ andȱ logitȱ modelsȱ reȬ quireȱevenȱlargerȱsamplesȱ(Longȱ&ȱFreese,ȱ2003,ȱp.ȱ69).ȱHowever,ȱtheȱlargeȱsecȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 15

ȱHowever,ȱitȱshouldȱbeȱnotedȱthatȱ–ȱstrictlyȱspeakingȱ–ȱsuchȱstudiesȱonlyȱjustifyȱtheȱintervalȱtreatmentȱ forȱtheirȱindividualȱsampleȱ–ȱinȱtheȱcaseȱofȱCraskȱ–ȱUSȱcollegeȱstudentsȱ(Craskȱetȱal.,ȱ1987,ȱp.ȱ336)ȱ

5.1ȱSelectionȱofȱsuitableȱmethodȱ

51ȱ

torȬspecificȱ samplesȱ thatȱ areȱ neededȱ toȱ facilitateȱ theȱ study’sȱ contingencyȱ apȬ proachȱareȱdifficultȱtoȱgenerate.ȱ Theȱfollowingȱmeasuresȱ wereȱ takenȱtoȱensureȱ thatȱbiasesȱ throughȱperȱfiatȱ measureȬ mentȱwereȱdetectedȱand/orȱavoidedȱasȱmuchȱasȱpossible:ȱ 1. TestsȱforȱnormalityȱusingȱSTATA’sȱskewness/kurtosisȱtests.ȱ 2. MannȬWhitneyȱ Uȱ tests:ȱ Althoughȱ theȱ tȬtestȱ isȱ consideredȱ reasonablyȱ robustȱ againstȱ theȱ violationȱ ofȱ theȱ normalȱ distributionȱ assumptionȱ (Hamilton,ȱ 2003,ȱ p.ȱ 112),ȱ theȱ authorȱ additionallyȱ performedȱ MannȬWhitneyȱ Uȱ testsȱ (Bühlȱ &ȱ Zöfel,ȱ2000,ȱp.ȱ292)ȱtoȱgiveȱmoreȱassuranceȱonȱresultsȱ(Hamilton,ȱ2003,ȱp.ȱ112).ȱ 3. Cautiousȱinterpretation:ȱTheȱauthorȱonlyȱinterpretsȱtheȱsignificanceȱandȱtheȱdiȬ rectionȱ ofȱ theȱ regressionȱ coefficients,ȱ notȱ theȱ sizeȱ ofȱ theirȱ effects.ȱ Asȱ outlinedȱ above,ȱtheȱconsequentȱinformationȱlossȱisȱinsignificant,ȱconsideringȱtheȱratherȱ exploratoryȱstageȱofȱresearchȱandȱtheȱbroadȱscopeȱofȱthisȱstudy.ȱ 4. Comprehensiveȱsetȱofȱregressionȱdiagnosticsȱ(seeȱsectionȱ5.2.2.2.2ȱforȱmoreȱdeȬ tails). 5.2

Instrumentsȱ

Inȱtheȱfollowingȱsection,ȱinstrumentsȱofȱdataȱcollectionȱandȱanalysisȱwillȱbeȱdescribedȱ inȱmoreȱdetail.ȱ 5.2.1 Dataȱcollectionȱ 5.2.1.1 Qualitativeȱmethodsȱ SemiȬstructuredȱ andȱ personalȱ interviewsȱ withȱ eachȱ company’sȱ sustainabilityȱ officerȱ andȱ atȱ leastȱ oneȱ additionalȱ generalȱ managerȱ wereȱ employedȱ toȱ collectȱ qualitativeȱ data.ȱ Onlineȱ databasesȱ wereȱ usedȱ asȱ aȱ samplingȱ frameȱ forȱ theȱ majorȱ companiesȱ inȱ bothȱsectors.16ȱAsȱaȱrule,ȱtheȱsustainabilityȱofficerȱwasȱcontactedȱfirst.ȱIfȱtheȱcompanyȱ agreedȱtoȱparticipateȱinȱtheȱproject,ȱheȱwasȱaskedȱtoȱidentifyȱpossibleȱgeneralȱmanagȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 16

ȱ

ȱTheȱauthorȱcontactedȱtheȱfollowingȱcompanies:ȱBGȱGroupȱplcȱ(UK),ȱBPȱplcȱ(UK),ȱCentricaȱplcȱ(UK),ȱ ChevronTexacoȱ Corporationȱ (US),ȱ ConocoPhillipsȱ (US),ȱ Cosmoȱ Oilȱ Companyȱ Ltd.ȱ (US),ȱ Dukeȱ EnȬ ergyȱ(US),ȱElectricitéȱdeȱFranceȱ(France),ȱElȱPasoȱCorporationȱ(US),ȱEONȱAGȱ(Germany),ȱExxonȱMoȬ bilȱ Corporationȱ (US),ȱ Fortumȱ Corporationȱ (Finland),ȱ Idemitsuȱ Kosanȱ Co.ȱ (Japan),ȱ Japanȱ Energyȱ Corporationȱ(Japan),ȱKochȱIndustriesȱ(US),ȱMarathonȱOilȱCorporationȱ(US),ȱNipponȱOilȱCorporationȱ (Japan),ȱNorskȱHydroȱASAȱ(Norway),ȱRAGȱAktiengesellschaftȱ(Germany),ȱRuhrgasȱAGȱ(Germany),ȱ RWEȱAGȱ(Germany),ȱRoyalȱDutch/ShellȱGroupȱofȱCompaniesȱ(UK,ȱNetherlands),ȱSchlumbergerȱLtdȱ (US),ȱScottishȱPowerȱplcȱ(UK),ȱStatoilȱ(Norway),ȱSuezȱ(France),ȱTheȱTokyoȱElectricȱPowerȱCompanyȱ Inc.ȱ(Japan),ȱTotalȱSAȱ(France),ȱTXUȱCorp.ȱ(US),ȱVattenfallȱABȱ(Sweden)ȱ

52ȱ

5ȱMethodȱ

ersȱwhoȱcouldȱbeȱinterviewedȱinȱaddition.ȱThisȱsamplingȱprocessȱisȱalsoȱreferredȱtoȱasȱ snowballȱsamplingȱ(Saundersȱetȱal.,ȱ2003,ȱp.ȱ176).ȱ Theȱ authorȱ alsoȱcontactedȱ severalȱ externalȱ stakeholdersȱ (regulators,ȱpublicȱ pressureȱ groups)ȱ andȱ expertsȱ toȱ obtainȱ qualitativeȱ dataȱ thatȱ couldȱ beȱ usedȱ toȱ crossȬvalidateȱ resultsȱfromȱtheȱinterviewsȱwithȱtheȱgeneralȱmanagersȱandȱsustainabilityȱofficers.17ȱ Theȱ interviewȱ guidelinesȱ (providedȱ inȱ Appendixȱ Hȱ –ȱ Interviewȱ guidelines)ȱ featureȱ (1)ȱ coreȱ modulesȱ usedȱ withȱ everyȱ intervieweeȱ toȱ facilitateȱ aȱ meaningfulȱ crossȬcaseȱ analysis;ȱandȱ(2)ȱfunctionȬspecificȱmodulesȱthatȱwereȱtailoredȱtoȱcertainȱmanagementȱ functionsȱsuchȱasȱinvestorȱrelationsȱandȱfinance,ȱHRȱandȱcorporateȱstrategyȱandȱdeȬ velopment.ȱ Interviewsȱ focusedȱ onȱ theȱ sameȱ conceptsȱ asȱ theȱ questionnaire,ȱ i.e.ȱ issues,ȱ stakeȬ holders,ȱ valueȱ drivers,ȱ strategyȱ andȱ implementation.ȱ However,ȱ theyȱ wereȱ moreȱ stronglyȱgearedȱtowardȱtheȱbusinessȱcaseȱforȱsustainabilityȱandȱidentifyingȱtheȱtoolsȱ companiesȱ useȱ toȱ detectȱ andȱ presentȱ theȱ economicȱ rationaleȱ forȱ CSM.ȱ Theseȱ toolsȱ wereȱbroadlyȱassignedȱtoȱfourȱsequentialȱprocessesȱleadingȱtoȱtheȱintegrationȱofȱenviȬ ronmentalȱandȱsocialȱissuesȱintoȱstrategicȱdecisionȬmakingȱȱ(seeȱFigureȱ5Ȭ4).ȱ Tracking: What issues is the company facing?

Mapping: Which of the company’ activities are associated with the issues in particular?

Prioritization: What issues are economically most significant?

Decision-making: How are issues and their economic significance integrated into strategic decision making?

ȱ Figureȱ5.4:ȱProcessȱofȱissueȱintegrationȱbasedȱonȱSalzmannȱ(2003a,ȱp.ȱ24)ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 17

ȱ Theȱ authorȱ contactedȱ theȱ followingȱ institutions:ȱ Greenpeaceȱ Deutschland,ȱ Europeanȱ Commission,ȱ Theȱ Worldȱ Economicȱ Forumȱ (WEF),ȱ Theȱ Worldȱ Businessȱ Councilȱ forȱ Sustainableȱ Developmentȱ (WBCSD),ȱ theȱ Unitedȱ Nationsȱ Environmentalȱ Programȱ (UNEP),ȱ theȱ Internationalȱ Energyȱ Agencyȱ (IEA),ȱWWFȱInternational.ȱ

5.2ȱInstrumentsȱ

53ȱ

TheȱeconomicȱrationaleȱforȱCSMȱwasȱoperationalizedȱthroughȱaȱsetȱofȱvalueȱdriversȱ referredȱ toȱ inȱ bothȱ theȱ interviewȱ guidelinesȱ andȱ theȱ questionnaires.ȱ Theȱ conceptȱ ofȱ valueȱ driversȱ originatesȱfromȱ Rappaport’sȱ (1986)ȱ shareholderȱ valueȱnetwork,ȱwhichȱ illustratesȱtheȱlinksȱbetweenȱshareholderȱvalueȱ(asȱtheȱcorporateȱobjective)ȱandȱmanȬ agementȱ decisions.ȱ Theȱ decisionsȱ areȱ “impounded”ȱ inȱ valueȱ driversȱ suchȱ asȱ salesȱ growth,ȱ operatingȱ profitȱ margin,ȱ whichȱ influenceȱ theȱ valuationȱ componentsȱ (cashȱ flow,ȱ discountȱ rateȱ andȱ debt)ȱ ofȱ shareholderȱ valueȱ (p.ȱ 76).ȱ Rappaport’sȱ notionȱ ofȱ valueȱdriversȱisȱslightlyȱmodifiedȱforȱtheȱpurposesȱofȱthisȱstudy:ȱHere,ȱitȱconceptualȬ izesȱ anȱ increaseȱ inȱ corporateȱ financialȱ performanceȱ thatȱ isȱ achievedȱ throughȱ corpoȬ rateȱactivitiesȱthatȱaddressȱenvironmentalȱandȱsocialȱissues.ȱ

Corporate activities that resolve environmental and social issues...

• Improve the license to operate and grow • Attract and retain talent • Improves access to capital

Value constructs

• Increase brand value and reputation

Decrease net cost through primarily incremental innovation

Increase Net revenue through primarily radical innovation

Value drivers

• Improve risk management

Increase

Financial Performance ȱ Figureȱ5.5:ȱSystemizationȱofȱvalueȱdriversȱandȱvalueȱconstructsȱ

Hence,ȱ valueȱ driversȱ areȱ essentiallyȱ economicȱ argumentsȱ forȱ CSM:ȱ e.g.ȱ mostȱ obviȬ ouslyȱnetȱcostȱdecreasesȱorȱrevenueȱincreasesȱbutȱalsoȱmoreȱintangibleȱconceptsȱsuchȱ asȱbrandȱvalue,ȱreputationȱandȱtheȱlicenseȱtoȱoperate.ȱInȱtheȱpresentȱstudy,ȱtheseȱinȬ tangibleȱ conceptsȱ areȱ referredȱ toȱ asȱ valueȱ constructs,ȱ sinceȱ theyȱ areȱ moreȱ complex,ȱ interdependentȱandȱcanȱbeȱmaterializedȱintoȱeitherȱreducedȱcostsȱorȱadditionalȱreveȬ nue.ȱ Alongsideȱtheȱprimaryȱqualitativeȱdataȱcollectedȱthroughȱtheȱinterviews,ȱtheȱauthorȱ alsoȱusedȱaȱdiverseȱrangeȱofȱsecondaryȱdataȱsourcesȱincludingȱnewspaperȱandȱjournalȱ articles,ȱcorporateȱreportsȱandȱwebsites.ȱThisȱthirdȱpillarȱ–ȱnextȱtoȱtheȱinterviewsȱandȱ questionnairesȱ–ȱisȱimportantȱtoȱfurtherȱcomplementȱandȱtriangulateȱprimaryȱdata.ȱInȱ ȱ

54ȱ

5ȱMethodȱ

particularȱ corporateȱ reportsȱ andȱ websitesȱ provideȱ anȱ effectiveȱ meansȱ toȱ benchmarkȱ primaryȱdataȱcollectedȱon:ȱ -

Issues:ȱWhichȱissuesȱareȱmentionedȱandȱdiscussedȱinȱdetail?ȱ

-

Companies’ȱstrategicȱdisposition:ȱWhatȱareȱtheȱmissionsȱandȱpoliciesȱofȱcomȬ panies?ȱToȱwhatȱextentȱdoȱtheyȱincorporateȱissues?ȱHowȱdoȱcompaniesȱoperaȬ tionalizeȱcorporateȱsustainability?ȱ

-

Implementation:ȱ Whatȱ measuresȱ doȱ companiesȱ useȱ toȱ implementȱ corporateȱ sustainabilityȱmanagement?ȱWhatȱenvironmentalȱandȱsocialȱactivitiesȱdoȱtheyȱ engageȱin?ȱ

5.2.1.2 Quantitativeȱmethodsȱ Quantitativeȱdataȱwereȱcollectedȱthroughȱtwoȱquestionnaires,ȱanȱSOȱandȱaȱGMȱverȬ sionȱ(providedȱinȱAppendixȱIȱ–ȱQuestionnaires).ȱTheȱSOȱversionȱofȱtheȱquestionnaireȱ wasȱ distributedȱ toȱ theȱsustainabilityȱofficerȱ interviewedȱ inȱ theȱ participatingȱ compaȬ nies,ȱwhoȱwasȱaskedȱtoȱforwardȱitȱtoȱotherȱsustainabilityȱexpertsȱinȱtheȱorganization.ȱ Theȱ GMȱ versionȱ wasȱ distributedȱ moreȱ widely,ȱ beyondȱ theȱ companiesȱ thatȱ particiȬ patedȱinȱtheȱstudyȱthroughȱinterviews.ȱThisȱmultiȬprongedȱapproachȱcomprisedȱdisȬ tribution:ȱ – Atȱ IMDȱ toȱ participantsȱ inȱ variousȱ managementȱ coursesȱ (convenienceȱ samȬ pling)ȱ –

Viaȱ email,ȱ mostlyȱ throughȱ theȱ keyȱ contactsȱ foundȱ inȱ theȱ interviewȱ processȱ (snowballȱsampling)ȱ

–

Mailȱandȱfaxȱ(usingȱinternalȱandȱexternalȱdatabasesȱasȱsamplingȱframes).ȱ

Furthermore,ȱ anȱ onlineȱ GMȱ versionȱ ofȱ theȱ questionnaireȱ wasȱ createdȱ andȱ madeȱ acȬ cessibleȱonȱtheȱproject’sȱwebsite.ȱTheȱsampleȱgeneratedȱbyȱtheȱonlineȱquestionnaireȱisȱ largelyȱbasedȱonȱaȱselfȬselectionȱandȱsnowballȱprocess.ȱToȱincreaseȱtheȱnumberȱofȱreȬ sponsesȱfromȱUTȱgeneralȱmanagers,ȱanȱadditionalȱmailingȱtargetedȱtheȱUTȱsectorȱinȱ theȱUK,ȱGermany,ȱFranceȱandȱtheȱNordicȱcountries.ȱ Theȱ twoȱ versionsȱ partlyȱ overlapȱ toȱ achieveȱ aȱ triangulationȱ andȱ complementarityȱ ofȱ results:ȱȱ 1. Complementarityȱwasȱprimarilyȱensuredȱthroughȱaȱsetȱofȱquestionsȱthatȱaccountȱ forȱ theȱ differentȱ levelsȱ ofȱ awarenessȱ andȱ expertiseȱ ofȱ sustainabilityȱ officersȱ andȱ generalȱ managers.ȱ Questionsȱ thatȱ wereȱ onlyȱ usedȱ inȱ theȱ GMȱ questionnaireȱ foȬ cusedȱ onȱ interȱ aliaȱ managers’ȱ personalȱ attitudes,ȱ theȱ importanceȱ ofȱ legitimacyȱ (brandȱ value,ȱ reputation)ȱ andȱ theȱ collaborationȱ betweenȱ sustainabilityȱ officersȱ andȱgeneralȱmanagers.ȱTheyȱwereȱmoreȱgeneralȱinȱnatureȱthanȱthoseȱthatȱwereȱinȬ cludedȱ onlyȱ inȱ theȱ SOȱ questionnaire,ȱ whichȱ broughtȱ intoȱ focusȱ conceptsȱ thatȱ reȬ

5.2ȱInstrumentsȱ

55ȱ

quireȱmoreȱspecialȱexpertise,ȱsuchȱasȱtheȱsustainabilityȱperformanceȱofȱaȱcompanyȱ andȱsectorȱcomparedȱtoȱothers,ȱtheȱmostȱimportantȱpromotingȱfactorsȱofȱCSMȱandȱ theȱmostȱimportantȱelementsȱofȱtheȱbusinessȱcaseȱforȱsustainability.ȱ 2. TriangulationȱwasȱachievedȱthroughȱaȱcertainȱoverlapȱbetweenȱtheȱtwoȱquestionȬ naires.ȱTheȱquestionsȱthatȱfeaturedȱinȱbothȱquestionnairesȱdealȱwithȱinterȱaliaȱtheȱ significanceȱofȱissues,ȱcompanies’ȱstrategicȱdispositionȱtoȱCSM,ȱbarriersȱtoȱcorpoȬ rateȱ sustainability,ȱ theȱ useȱ ofȱ toolsȱ andȱ systemsȱ thatȱ relateȱ toȱ corporateȱ sustainȬ abilityȱandȱtheȱroleȱofȱdifferentȱstakeholdersȱcontributingȱtoȱsustainableȱdevelopȬ ment.ȱTheseȱquestionsȱaccountȱforȱroughlyȱ60%ȱofȱtheȱSOȱquestionnaire,ȱandȱ50%ȱ ofȱtheȱGMȱquestionnaire.ȱ Theȱ questionnairesȱ measureȱ managers’ȱ perceptionsȱ largelyȱ throughȱ aȱ setȱ ofȱ nonȬ numberedȱ butȱ equidistantȱ 5ȬpointȬLikertȬtypeȱ scalesȱ andȱ multipleȱ choiceȱ questions.ȱ Anȱoverviewȱofȱtheȱoperationalizationȱofȱtheȱstudy’sȱconceptsȱandȱtheȱtermsȱusedȱisȱ providedȱ inȱ Appendixȱ Dȱ –ȱ Operationalizationȱ ofȱ keyȱ concepts.ȱ Sinceȱ theȱ empiricalȱ researchȱdomainȱofȱCSMȱisȱrelativelyȱnewȱandȱuntouched,ȱwidelyȱacceptedȱandȱtradiȬ tionalȱoperationalizationsȱareȱmissingȱfromȱtheȱliterature.ȱMostȱofȱtheȱoperationalizaȬ tionsȱ chosenȱ inȱ theȱ presentȱ studyȱ areȱ obviousȱ andȱ needȱ noȱ moreȱ detailedȱ explanaȬ tion.18ȱHoweverȱthereȱareȱaȱfewȱexceptions:ȱ 1. ItȱisȱworthȱdistinguishingȱbetweenȱtheȱthreeȱrelatedȱsubconceptsȱofȱissueȱsignifiȬ cance,ȱ importanceȱ ofȱ legitimacy,ȱ andȱ theȱ SDȱ rolesȱ ofȱ stakeholders:ȱ Issueȱ signifiȬ canceȱ isȱ measuredȱ forȱ theȱ socialȱ andȱ environmentalȱ dimensions.ȱ Itȱ refersȱ toȱ theȱ significanceȱofȱtheȱfinancialȱopportunityȱorȱthreatȱassociatedȱwithȱaȱparticularȱisȬ sueȱdimension.ȱTheȱopportunityȱandȱthreatȱisȱdeterminedȱbyȱ(1)ȱaȱfirm’sȱresponȬ sibilityȱ forȱ outcomesȱ relatedȱ toȱ itsȱ primaryȱ andȱ secondaryȱ areasȱ ofȱ involvementȱ withȱsocietyȱ(Wood,ȱ1991,ȱp.ȱ697)ȱandȱ(2)ȱstakeholdersȱwhoȱrewardȱcorporateȱacȬ tivitiesȱcarriedȱoutȱassumeȱthatȱresponsibilityȱbyȱminimizingȱnegativeȱandȱmaxiȬ mizingȱ positiveȱ outcomes.ȱ Whereasȱ issueȱ significanceȱ bundlesȱ theȱ demandsȱ ofȱ severalȱ stakeholdersȱ inȱ termsȱ ofȱ theȱ twoȱ issueȱ dimensions,ȱ SDȱ rolesȱ ofȱ stakeȬ holdersȱreferȱtoȱtheȱdemandȱforȱCSMȱofȱanȱindividualȱgroupȱofȱstakeholdersȱunreȬ latedȱ toȱ aȱ specificȱ issueȱ orȱ issueȱ dimensions,ȱ i.e.ȱ itȱ bundlesȱ theȱ demandsȱ ofȱ oneȱ stakeholderȱ groupȱ onȱ thoseȱ issuesȱ itȱ considersȱ importantȱ toȱ provideȱ anȱ overallȱ measureȱforȱitsȱdemandȱforȱCSM.ȱTheȱimportanceȱofȱlegitimacyȱisȱoperationalizedȱ asȱtheȱimportanceȱofȱbrandȱvalueȱandȱreputation,ȱi.e.ȱitȱmeasuresȱtheȱimportanceȱ ofȱaȱcompany’sȱinformalȱratherȱthanȱformalȱ(legal)ȱlegitimacyȱorȱlicenseȱtoȱoperȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 18

ȱ

ȱ Theȱ GMȱ questionnaireȱalsoȱ hadȱ aȱquestionȱ onȱ companies’ȱ preferenceȱ forȱ certainȱ stakeholderȱ manȬ agementȱ initiatives.ȱ Asȱ alreadyȱ outlinedȱ inȱ theȱ definitionȱ ofȱ corporateȱ sustainabilityȱ management,ȱ stakeholderȱmanagementȱisȱaȱmeaningfulȱdimensionȱofȱCSM,ȱbutȱisȱignoredȱhereȱtoȱlimitȱtheȱalreadyȱ substantialȱscopeȱofȱtheȱstudy.ȱ

56ȱ

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ate.ȱ Thisȱ informalȱ kindȱ ofȱ legitimacyȱ isȱ grantedȱ byȱ nonȬregulatoryȱ stakeholdersȱ suchȱasȱcapitalȱmarkets,ȱcustomersȱandȱNGOs.ȱThusȱtheȱimportanceȱofȱlegitimacy,ȱ asȱ operationalizedȱ inȱ thisȱ study,ȱ measuresȱ theȱ scaleȱ ofȱ theȱ “informalȱ premium”ȱ addedȱtoȱtheȱaverageȱfinancialȱstakesȱassociatedȱwithȱtheȱformalȱlicenseȱtoȱoperateȱ thatȱeveryȱcompanyȱneedsȱtoȱexist.ȱItȱcanȱbeȱamendedȱorȱrevokedȱmoreȱswiftlyȱ–ȱ throughȱboycotts,ȱNGOȱcampaigns,ȱandȱsellingȱofȱsharesȱ–ȱthanȱtheȱformalȱlicenseȱ toȱ operate.ȱ Henceȱ aȱ greaterȱ importanceȱ ofȱ legitimacyȱ asȱ operationalizedȱ inȱ thisȱ studyȱmakesȱtheȱfinancialȱthreatȱorȱopportunityȱassociatedȱwithȱaȱparticularȱissueȱ moreȱimmediate.ȱȱ 2. TheȱfourȱstatementsȱdesignedȱtoȱmeasureȱtheȱreactiveȱorȱproactiveȱattitudesȱofȱreȬ spondentsȱwereȱdesignedȱinȱtheȱcourseȱofȱtheȱcrossȬindustryȱresearchȱprojectȱcarȬ riedȱ outȱ atȱ IMD.ȱ Theyȱ wereȱ constructedȱ toȱ describeȱ aȱ “continuum”ȱ ofȱ leastȱ toȱ mostȱproactiveȱstatementsȱthatȱdescribeȱtheȱroleȱofȱbusinessȱinȱsociety.ȱ 3. Theȱmultipleȱchoiceȱquestionȱdesignedȱtoȱmeasureȱrespondents’ȱawarenessȱofȱtheȱ availabilityȱandȱuseȱofȱtoolsȱrefersȱtoȱtheȱfollowingȱkindsȱofȱmanagementȱtools:ȱ a. Dataȱ managementȱ toolsȱ providingȱ managersȱ withȱ relevantȱ information:ȱ MeasȬ urementȱ toolsȱ toȱ increaseȱ transparencyȱ (e.g.ȱ measuringȱ materialȱ andȱ wasteȱ flows),ȱ toolsȱ measuringȱ resourceȱ allocationȱ (e.g.ȱ environmentalȱ expenses),ȱ strategicȱ planningȱ andȱ accountingȱ proceduresȱ thatȱ takeȱ accountȱ ofȱ environȬ mentalȱandȱsocialȱissuesȱ(e.g.ȱscenarioȬplanning,ȱfullȱcostȱaccounting).ȱ b. Managers’ȱ managementȱ toolsȱ thatȱ shapeȱ managers’ȱ expectationsȱ andȱ percepȬ tions:ȱ Corporateȱ values,ȱ policiesȱ andȱ standardsȱ thatȱ takeȱ accountȱ ofȱ environȬ mentalȱ andȱ socialȱ issues,ȱ rewardȱ andȱ punishmentȱ systems,ȱ managementȱ deȬ velopmentȱ(e.g.ȱenvironmentalȱtrainingȱcourses).ȱ c. Conflictȱmanagementȱtoolsȱthatȱareȱusedȱtoȱȱreallocateȱresponsibilitiesȱandȱbuildȱ consensusȱ withinȱ theȱ organization:ȱ (1)ȱ Coordinationȱ committeesȱ discussingȱ andȱpushingȱ strategicȱ decisionsȱ atȱ theȱcorporateȱ levelȱ andȱ (2)ȱ businessȱ teamsȱ resolvingȱconflictsȱandȱpushingȱenvironmentalȱandȱsocialȱimprovementsȱonȱanȱ operationalȱlevel.ȱȱ ThisȱsystemizationȱwasȱadoptedȱfromȱDoz,ȱandȱPrahaladȱ(1988,ȱp.ȱ76)ȱtoȱgainȱinȬ sightsȱintoȱhowȱearlyȱorȱlateȱcompaniesȱareȱinȱtheȱprocessȱofȱstrategicȱredirectionȱ toȱCSM.ȱThusȱdataȱshouldȱcomplementȱtheȱmeasurementȱofȱcompanies’ȱstrategicȱ dispositionȱandȱstructure.ȱDozȱandȱPrahaladȱ(1988)ȱfoundȱinȱtheirȱempiricalȱinvesȬ tigationȱofȱprocessesȱofȱstrategicȱredirectionȱthatȱdataȱmanagementȱtoolsȱareȱusedȱ earlyȱinȱtheȱchangeȱprocess,ȱmanagers’ȱmanagementȱtoolsȱthroughoutȱtheȱprocessȱ (softȱ toolsȱsuchȱ asȱ managementȱ developmentȱandȱ corporateȱvaluesȱ atȱtheȱbeginȬ

5.2ȱInstrumentsȱ

57ȱ

ning;ȱ harderȱ toolsȱ suchȱ asȱ incentiveȱ systemsȱ laterȱ inȱ theȱ process),ȱ andȱ conflictȱ managementȱtoolsȱinȱtheȱmiddleȱofȱtheȱchangeȱprocess.ȱ 4. TheȱbusinessȱcaseȱforȱsustainabilityȱisȱoperationalizedȱthroughȱaȱsetȱofȱvalueȱdrivȬ ersȱandȱvalueȱconstructsȱalreadyȱoutlinedȱinȱmoreȱdetailȱinȱtheȱpreviousȱsection.ȱ 5. TheȱoutcomeȱofȱCSMȱhasȱaȱveryȱsimpleȱoperationalization,ȱnamelyȱrespondents’ȱ perceptionsȱ ofȱ theȱ successȱ ofȱ environmentalȱ orȱ socialȱ initiativesȱ carriedȱ outȱ inȱ theirȱcompanyȱ–referredȱtoȱasȱCSMȱsuccessȱinȱthisȱstudy.ȱHowever,ȱasȱdiscussedȱ aboveȱinȱtheȱdefinitionȱofȱtheȱstudy’sȱkeyȱconcepts,ȱtheȱoutcomeȱofȱcorporateȱsusȬ tainabilityȱisȱmoreȱcomplexȱandȱthreeȬdimensionalȱinȱnature:ȱItȱcomprisesȱtheȱefȬ fectȱofȱCSMȱonȱcorporateȱfinancialȱperformance,ȱandȱtheȱsocialȱandȱenvironmentalȱ effectsȱ ofȱ corporateȱ activities.ȱ Itȱ isȱ importantȱ toȱ noteȱ thatȱ theȱ threeȬdimensionalȱ natureȱ ofȱ CSMȱ successȱ wasȱ notȱ elaboratedȱ onȱ inȱ theȱ questionnaire,ȱ onȱ theȱ asȬ sumptionȱthatȱrespondentsȱwereȱunlikelyȱtoȱindicateȱhighȱlevelsȱofȱCSMȱsuccessȱifȱ initiativesȱ wereȱ clearlyȱ unsuccessfulȱ inȱ eitherȱ theȱ financialȱ orȱ theȱ twoȱ nonȬ financialȱdimensions.ȱ CSMȱsuccessȱwasȱalsoȱoperationalizedȱthroughȱsustainabilityȱofficers’ȱperceptionȱ ofȱ theirȱ sectors’ȱandȱ companies’ȱadoptionȱofȱmoreȱsustainableȱbusinessȱpracticesȱ inȱcomparisonȱtoȱotherȱsectorsȱandȱtheirȱpeers,ȱrespectivelyȱ(“Underperformer”ȱtoȱ “Overperformer”).ȱ Whenȱinterpretingȱtheȱrelativeȱfrequenciesȱresultingȱfromȱmultipleȱchoiceȱquestions,ȱ itȱisȱimportantȱtoȱnoteȱthatȱrespondentsȱwereȱnotȱaskedȱtoȱrankȱitemsȱinȱtermsȱofȱtheirȱ importance.ȱ However,ȱ oneȱ canȱ assumeȱ thatȱ higherȱ levelsȱ ofȱ awarenessȱ resultȱ inȱ higherȱrelativeȱfrequenciesȱofȱcertainȱitems.ȱHenceȱgreaterȱrelativeȱfrequenciesȱcanȱbeȱ seenȱasȱproxyȱmeasuresȱforȱtheȱimportanceȱofȱanȱitem.ȱ 5.2.2

Dataȱanalysisȱ

Theȱstudyȱemploysȱseveralȱmeansȱofȱanalyzingȱtheȱqualitativeȱandȱquantitativeȱdataȱ collected.ȱTheyȱwillȱbeȱdescribedȱinȱmoreȱdetailȱinȱtheȱfollowingȱparagraphs.ȱ 5.2.2.1 Qualitativeȱmethodsȱ Theȱ authorȱ comprehensivelyȱ documentedȱ everyȱ interviewȱ throughȱ notesȱ inȱ bulletȱ pointȱformat.ȱInȱaȱfewȱcases,ȱinterviewsȱwereȱtapedȱandȱtranscribed.ȱEveryȱcaseȱwasȱ enteredȱ intoȱ wordȬprocessingȱ software,ȱ codedȱ andȱ describedȱ followingȱ aȱ categoryȱ systemȱthatȱmatchedȱtheȱheadingsȱprovidedȱinȱtheȱinterviewȱguidelines:ȱ -

SectionȱAȱ–ȱBuildingȱtheȱbusinessȱcaseȱforȱsustainabilityȱ(BCS):ȱExternalȱpressuresȱ (issues,ȱstakeholders)ȱandȱvalueȱdriversȱ

-

SectionȱBȱ–ȱImplementingȱtheȱBCS:ȱInternalȱbarriersȱandȱpromotingȱfactorsȱ

-

SectionȱCȱ–ȱBCSȬrelatedȱtoolsȱ

ȱ

58ȱ

-

5ȱMethodȱ

SectionȱDȱ–ȱFunctionȬspecificȱmodules.ȱ

DataȱwereȱthenȱanalyzedȱforȱcontentȱusingȱinȬcaseȱandȱcrossȬcaseȱanalysisȱandȱexamȬ inedȱforȱconciseȱquotes.ȱ 5.2.2.2 Quantitativeȱmethodsȱ Quantitativeȱ dataȱ obtainedȱ fromȱ theȱ questionnaireȱ wereȱ codedȱ (e.g.ȱ openȬendedȱ questions)ȱ andȱ recodedȱ whereȱ necessaryȱ (e.g.ȱ “other”ȱ responsesȱ wereȱ allocatedȱ toȱ mainȱitemsȱwhereȱadequate).ȱTheyȱwereȱthenȱanalyzedȱusingȱtheȱstatisticalȱsoftwareȱ packageȱ STATAȱ 8.0.ȱ Theȱ authorȱ providesȱ theȱ completeȱ dataȱ setȱ andȱ correspondingȱ STATAȱdoȬȱandȱlogȬfilesȱonȱanȱattachedȱCDȬRomȱtoȱensureȱthatȱresultsȱandȱmethodȬ ologiesȱareȱfullyȱtransparentȱandȱreproducible.ȱ 5.2.2.2.1 Basicȱstatisticsȱ Severalȱ meansȱ ofȱ basicȱ quantitativeȱ dataȱ analysisȱ areȱ employedȱ inȱ thisȱ study.ȱ Theyȱ compriseȱbothȱdescriptiveȱandȱinferentialȱmethods:ȱ -

Relativeȱfrequenciesȱdisplayedȱinȱpieȱchartsȱtoȱdescribeȱcategoricalȱdataȱȱ

-

Summaryȱstatisticsȱthatȱincludeȱmeans,ȱstandardȱdeviations,ȱstandardȱerrorsȱandȱ 95%ȱconfidenceȱintervalsȱtoȱdescribeȱintervalȱdataȱ

-

-

F2Ȭtestsȱ toȱ detectȱ statisticallyȱ significantȱ differencesȱ inȱ primarilyȱ categoricalȱ dataȱ betweenȱtheȱdifferentȱsamples.ȱMultipleȱchoiceȱquestionsȱwereȱdichotomizedȱbeȬ forehandȱ(Hamilton,ȱ2003,ȱp.ȱ99).ȱ

tȬtestsȱ forȱ equalȱ andȱ unequalȱ variancesȱ toȱ detectȱ statisticallyȱ significantȱ differȬ encesȱinȱintervalȱdataȱbetweenȱtheȱdifferentȱsamples.ȱUnequalȱvariancesȱwereȱdeȬ tectedȱ usingȱ STATA’sȱ varianceȬratioȱ testsȱ (Hamilton,ȱ 2003,ȱ p.ȱ 114).ȱ Itȱ shouldȱ beȱ notedȱthatȱtȬtestsȱareȱalsoȱsuitedȱtoȱsmallȱsamplesȱbelowȱ30ȱobservations,ȱasȱlongȱ asȱtheȱsampledȱpopulationsȱareȱapproximatelyȱnormallyȱdistributedȱ(seeȱalsoȱtheȱ exampleȱ providedȱ inȱ Masonȱ etȱ al.,ȱ 1999,ȱ p.ȱ 353,ȱ 363;ȱ Stataȱ Corporation,ȱ 2003,ȱ p.ȱ 294)ȱ

ResultsȱofȱbothȱF2ȬȱandȱtȬtestsȱareȱonlyȱreferredȱtoȱinȱtheȱtext.ȱAllȱdetailsȱareȱprovidedȱ inȱtheȱcorrespondingȱlogȬfiles.ȱBothȱtestsȱfacilitateȱtwoȱkindsȱofȱcomparisonsȱbetweenȱ theȱfourȱsamplesȱgeneratedȱforȱtheȱpresentȱstudyȱ(seeȱFigureȱ5Ȭ6):ȱ 1. CrossȬdisciplinaryȱdifferences,ȱi.e.ȱdifferencesȱbetweenȱtheȱtwoȱgroupsȱofȱ(1)ȱgenȬ eralȱmanagersȱandȱ(2)ȱsustainabilityȱofficers:ȱThisȱcomparisonȱisȱessentialȱbecauseȱ perceptionsȱ ofȱ sustainabilityȱ officersȱ whoȱ areȱ expectedȱ toȱ exhibitȱ greaterȱ awareȬ nessȱandȱexpertiseȱrepresentȱanȱimportantȱbenchmarkȱforȱgeneralȱmanagers’ȱperȬ ceptions.ȱItȱshouldȱbeȱnotedȱthatȱcrossȬdisciplinaryȱmeanȱdifferencesȱcanȱonlyȱbeȱ assessedȱforȱaȱsubsetȱofȱquestionsȱthatȱwereȱincludedȱinȱbothȱquestionnaires.ȱ

5.2ȱInstrumentsȱ

59ȱ

UT sector Sustainability officers

OG sector Cross-sector comparison

Cross-disciplinary comparison

General managers

Sustainability officers

Cross-disciplinary comparison

Cross-sector comparison

General managers

ȱ Figureȱ5.6:ȱIntraȬȱandȱcrossȬsectorȱcomparisonsȱ

2. CrossȬsectorȱdifferences,ȱi.e.ȱbetweenȱtheȱUTȱandȱOGȱsector,ȱbasedȱonȱdataȱfromȱ eitherȱgeneralȱmanagersȱorȱsustainabilityȱofficers:ȱThisȱkindȱofȱcomparisonȱisȱnecȬ essaryȱtoȱdetectȱandȱexplainȱsignificantȱsectorȬspecificȱperceptions.ȱDifferencesȱbeȬ tweenȱsustainabilityȱofficersȱfromȱoneȱsectorȱandȱgeneralȱmanagersȱfromȱtheȱotherȱ willȱnotȱbeȱreported,ȱsinceȱtheirȱrelevanceȱisȱclearlyȱlimited.ȱ 5.2.2.2.2 Advancedȱstatisticsȱ Theȱ studyȱ alsoȱ featuresȱ twoȱ meansȱ ofȱ advancedȱ quantitativeȱ analysis:ȱ correlationsȱ andȱ regressions.ȱ Correlationsȱ andȱ regressionsȱ areȱ appliedȱ onȱ dataȱ collectedȱ fromȱ generalȱ managersȱ onlyȱ forȱ severalȱ reasons:ȱ First,ȱ theȱ scopeȱ ofȱ theȱ studyȱ wouldȱ beȱ overstretchedȱ ifȱ dataȱ fromȱ sustainabilityȱ officersȱ wasȱ alsoȱ analyzedȱ inȱ suchȱ depth.ȱ Second,ȱ generatingȱ samplesȱ sufficientȱ forȱ thoseȱ meansȱ ofȱ dataȱ analysisȱ wouldȱ haveȱ beȱdifficultȱ(ifȱnotȱimpossible).ȱObviouslyȱthereȱareȱmoreȱgeneralȱmanagersȱthanȱsusȬ tainabilityȱexpertsȱinȱcompaniesȱworldwide.ȱThird,ȱitȱcouldȱbeȱarguedȱthatȱadvancedȱ analysisȱofȱGMȱdataȱisȱmoreȱmeaningful,ȱsinceȱgeneralȱmanagersȱ–ȱasȱtheȱmajorityȱofȱ managersȱ inȱ companiesȱ –ȱ determineȱ companies’ȱ approachesȱ toȱ CSMȱ moreȱ stronglyȱ thanȱsustainabilityȱofficers.ȱ Correlationȱ andȱ regressionȱ analysisȱ areȱ basedȱ onȱ theȱ sameȱ threeȱ samplesȱ respecȬ tively:ȱtheȱtwoȱsectorȬspecificȱsamplesȱandȱtheȱtotalȱsample.ȱBecauseȱtheȱtotalȱsampleȱ containsȱtheȱtwoȱsectorȬspecificȱsamples,ȱthisȱmeansȱthatȱcorrelationsȱandȱregressionsȱ thatȱ areȱ basedȱ onȱ theȱ totalȱ sampleȱ areȱ ableȱ toȱ borrowȱ strengthȱ fromȱ theȱ OGȱ andȱ UTȱ ȱ

60ȱ

5ȱMethodȱ

samplesȱtoȱdetectȱweakerȱeffectsȱthatȱmayȱnotȱbeȱstatisticallyȱsignificantȱinȱtheȱsepaȬ rateȱ samples.ȱ Basicallyȱ correlationsȱ andȱ regressionsȱ basedȱ onȱ theȱ totalȱ sampleȱ treatȱ respondentsȱ asȱ originatingȱ fromȱ theȱ sameȱ populationȱ ofȱ energyȱ managers.ȱ Resultsȱ thatȱareȱbasedȱonȱtheȱsectorȬspecificȱsamplesȱareȱmoreȱlikelyȱtoȱdetectȱeffectsȱthatȱareȱ specificȱ forȱ theȱ individualȱ sectors.ȱ However,ȱ theirȱ explanatoryȱ powerȱ couldȱ sufferȱ fromȱlimitedȱsampleȱsizes.ȱ Standardȱpairwiseȱcorrelationȱ StandardȱpairwiseȱcorrelationsȱareȱusedȱtoȱdetectȱassociationsȱbetweenȱintervalȱvariȬ ables.ȱResultsȱareȱprovidedȱinȱthreeȱcorrelationȱmatricesȱ(AppendixȱEȱ–ȱPairwiseȱcorȬ relationȱ analysis)ȱwhichȱ featureȱcorrelationȱcoefficientsȱandȱ theȱcorrespondingȱ tȬtestȱ probabilitiesȱ forȱ theȱ nullȱ hypothesesȱ ofȱ eachȱ individualȱ correlationȱ equalingȱ zeroȱ (Hamilton,ȱ2003,ȱp.ȱ135).ȱ Issues

Socialȱissues

Companies

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations

Internalȱbarr.

Barriers

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Damageȱtoȱlegitimacy

Consumers Governments CurrentȱSDȱrole

SDȱimportance CSMȱINTENT

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

SDȱfamiliarity Strategic disposition

Toolsȱand initiatives

Structure

Tools Initiatives CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Correlations tested

ȱ Figureȱ5.7:ȱVariablesȱthatȱareȱsubjectȱtoȱcorrelationȱanalysisȱ

Pairwiseȱcorrelationȱisȱaȱwellȱsuitedȱandȱefficientȱmethodȱofȱobtainingȱanȱoverviewȱofȱ theȱ data.ȱ Itȱ makesȱ itȱ easyȱ toȱ quicklyȱ identifyȱ anyȱ associationsȱ betweenȱ allȱ intervalȱ variables.ȱTheȱvariablesȱthatȱareȱsubjectȱtoȱcorrelationȱanalysisȱareȱsystemizedȱaccordȬ ingȱtoȱtheȱfourȱdifferentȱunitsȱofȱanalysis:ȱissues,ȱmanagers,ȱexternalȱstakeholdersȱandȱ companiesȱ(seeȱFigureȱ5Ȭ7).ȱPairwiseȱcorrelationȱgeneratesȱaȱvastȱamountȱofȱquantitaȬ tiveȱ evidenceȱ onȱ howȱ issues,ȱ managersȱ andȱ externalȱ stakeholdersȱ relateȱ toȱ compaȬ

5.2ȱInstrumentsȱ

61ȱ

nies’ȱ approachesȱtoȱ CSM,ȱ asȱ wellȱasȱonȱ howȱ theyȱ areȱlinkedȱamongȱeachȱ other,ȱe.g.ȱ notȱ onlyȱ howȱ issuesȱ andȱ managers’ȱ attitudesȱ areȱ related,ȱ butȱ alsoȱ howȱ issuesȱ areȱ linkedȱtoȱeachȱother,ȱandȱhowȱtheȱstrategicȱdispositionȱofȱcompaniesȱisȱlinkedȱtoȱCSMȱ success.ȱ TheȱimmenseȱscopeȱofȱtheȱevidenceȱgeneratedȱisȱparticularlyȱvisibleȱifȱoneȱacknowlȬ edgesȱ thatȱ bothȱ existingȱ andȱ missingȱ correlationsȱ constituteȱ meaningfulȱ empiricalȱ findings.ȱObviouslyȱtheȱauthorȱinterpretsȱeveryȱexistingȱ(statisticallyȱsignificant)ȱcorȬ relation.ȱ Missingȱ correlationsȱ areȱ onlyȱ reportedȱ andȱ discussedȱ inȱ detailȱ ifȱ theȱ resultȱ significantlyȱcontributesȱtoȱtheȱstudy’sȱobjectives.ȱ Multipleȱlinearȱregressionsȱ Multipleȱregressionȱanalysisȱisȱemployedȱtoȱdetectȱ 1. Theȱ causalȱ effectsȱ betweenȱ intervalȱ variables.ȱ Theȱ firstȱ setȱ ofȱ regressionȱ modelsȱ aimsȱtoȱexplainȱvariationȱinȱCSMȱintentȱthroughȱ(1)ȱtheȱnatureȱandȱsignificanceȱofȱ issues;ȱ(2)ȱtheȱ(promotingȱorȱdeterring)ȱSDȱroleȱofȱexternalȱstakeholdersȱ–ȱnamelyȱ NGOs,ȱ governments,ȱ consumersȱ andȱ theȱ financialȱ communityȱ –ȱ andȱ theȱ imporȬ tanceȱofȱandȱtheȱdamageȱtoȱlegitimacy;ȱ(3)ȱpersonalȱattitudesȱofȱmanagersȱtowardȱ theȱroleȱofȱbusinessȱinȱsociety;ȱandȱ(4)ȱcompanyȬspecificȱinternalȱbarriersȱ(seeȱFigȬ ureȱ 5Ȭ8).ȱ Theȱ secondȱ setȱ ofȱ regressionsȱ testsȱ theȱ followingȱ hypotheticalȱ determiȬ nantsȱofȱCSMȱsuccessȱ(seeȱFigureȱ5Ȭ9):ȱ(1)ȱpersonalȱattitudesȱofȱmanagersȱtowardȱ theȱroleȱofȱbusinessȱinȱsociety;ȱ(2)ȱexternalȱbarriers:ȱandȱ(3)ȱcompanyȬspecificȱfacȬ tors.ȱȱ 2. Theȱeffectȱofȱdemographicȱvariables,ȱprimarilyȱtheȱindustryȱsectorȱandȱregionsȱofȱ operations.ȱTheȱconsiderationȱofȱdemographicȱvariablesȱrepresentsȱanȱadditionalȱ “pillar”ȱ ofȱ theȱ study’sȱ contingencyȱ approach.ȱ Demographicȱ variablesȱ areȱ diȬ chotomizedȱ andȱ introducedȱ intoȱ regressionȱ modelsȱ asȱ dummyȱ variablesȱ usingȱ oneȱofȱ theȱ categoriesȱasȱaȱreferenceȱgroupȱ (seeȱTableȱ5Ȭ3),ȱwhichȱisȱ thusȱomittedȱ fromȱtheȱmodel.ȱ Asȱinȱtheȱcorrelationȱanalysis,ȱtheȱauthorȱemploysȱthreeȱsamples:ȱTȱmodelsȱareȱbasedȱ onȱtheȱtotalȱsampleȱofȱOGȱandȱUTȱgeneralȱmanagers:ȱModelsȱareȱrunȱtoȱdetectȱtheȱefȬ fectsȱofȱindependentȱvariablesȱthatȱexistȱinȱbothȱsectors.ȱOGȱmodelsȱandȱUTȱmodelsȱ areȱ basedȱ onȱ theȱ respectiveȱ sectorȬspecificȱ samplesȱ ofȱ generalȱ managers,ȱ andȱ areȱ moreȱlikelyȱtoȱdetectȱeffectsȱthatȱareȱspecificȱforȱtheȱindividualȱsectors.ȱHowever,ȱtheȱ explanatoryȱpowerȱisȱlikelyȱtoȱsufferȱbecauseȱofȱtheȱlimitedȱsampleȱsize.ȱ

ȱ

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5ȱMethodȱ

Contingencyȱ dimensionȱ Industryȱsectorȱ BusinessȱfuncȬ tionȱ

Demographicȱ variableȱ Sectorȱ Functionȱȱ

Managementȱ levelȱ

Positionȱ

RegionȱofȱopȬ erationȱ

Operationsȱ

RegionȱofȱnaȬ tionalityȱ

Nationalityȱ

Ageȱ

Ageȱ

Genderȱ

Genderȱ

Dummyȱvariablesȱusedȱ UTȱsectorȱ - R&Dȱ - Operationsȱ - Marketingȱ - Financeȱ - Otherȱfunctionȱ - Boardȱmemberȱ - Seniorȱmanagementȱ - Middleȱmanagementȱ - Nordicȱ - LatinȱEuropeȱ - NorthȱAmericasȱ - Developingȱeconomiesȱ - Otherȱ - Nordicȱ - LatinȱEuropeȱ - NorthȱAmericasȱ - Developingȱeconomiesȱ - Otherȱ - Betweenȱ35ȱandȱ50ȱ - Overȱ50ȱ - Femaleȱ

Referenceȱ groupȱ Oilȱ&ȱgasȱ HRȱandȱcorȬ porateȱstaffȱ

JuniorȱmanȬ agementȱȱ MidȬNorthernȱ Europeȱȱ

MidȬNorthernȱ Europeȱȱ

Belowȱ35ȱȱ Maleȱ

Tableȱ5Ȭ3:ȱDummyȱvariablesȱandȱreferenceȱgroupsȱ

Submodels,ȱclusterȱmodelsȱandȱsummaryȱmodelsȱ TheȱtotalȱnumberȱofȱindependentȱvariablesȱtestedȱinȱtheȱmodelsȱonȱCSMȱintentȱandȱ CSMȱ successȱ amountsȱ toȱ 28ȱ andȱ 30ȱ respectivelyȱ (seeȱ Figureȱ 5Ȭ8ȱ andȱ Figureȱ 5Ȭ9).ȱ InȬ cludingȱtooȱmanyȱofȱthemȱinȱoneȱmodelȱwouldȱstretchȱtheȱdataȱbecauseȱofȱconstraintsȱ presentedȱ byȱ degreesȱ ofȱ freedom.19ȱ Furthermore,ȱ multicollinearityȱ andȱ interactionȱ effectsȱwouldȱ makeȱitȱ difficultȱtoȱ detectȱtheȱindividualȱ effectȱ ofȱvariablesȱ andȱcouldȱ biasȱtheȱresults.ȱToȱcounterȱtheseȱpossibleȱstumblingȱblocks,ȱsubmodelsȱforȱtheȱclusȬ tersȱthatȱhaveȱtooȱmanyȱvariablesȱareȱrunȱfirst.ȱ Theȱclusterȱmodelsȱanalyzeȱtheȱjointȱeffectȱofȱallȱvariablesȱthatȱthematicallyȱbelongȱtoȱ theȱfourȱclusters:ȱissues,ȱ(external)ȱstakeholders,ȱmanagersȱandȱcompanyȬspecificȱfacȬ torsȱ (alsoȱ correspondingȱ toȱ theȱ fourȱ subsectionsȱ inȱ sectionȱ 8).ȱ Bothȱ submodelsȱ andȱ clusterȱmodelsȱserveȱasȱaȱguideȱtoȱtheȱeffectȱthatȱtheȱvariablesȱhaveȱonȱtheȱdependentȱ variable,ȱwithȱtheȱcaveatȱthatȱtheyȱmayȱoverestimateȱtheȱeffectȱofȱtheȱchosenȱcluster,ȱ sinceȱotherȱvariablesȱareȱnotȱaccountedȱfor.ȱFinally,ȱtheȱsummaryȱmodelsȱincorporateȱ theȱjointȱeffectȱofȱvariablesȱfromȱallȱclusters.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 19

ȱCeterisȱparibusȱanȱincreaseȱinȱtheȱnumberȱofȱindependentȱvariablesȱmakesȱitȱmoreȱdifficultȱtoȱrejectȱ theȱ nullȱ hypothesisȱ thatȱ theȱ multipleȱ correlationȱ coefficientsȱ areȱ zeroȱ atȱ anȱ adequateȱ significanceȱ level.ȱ

5.2ȱInstrumentsȱ

63ȱ

Submodels

Clusterȱmodels

SDȱroleȱofȱexternal stakeholders: • Capitalȱmarkets’ȱ futureȱSDȱrole • Consumers’ȱcurrentȱ SDȱrole • Governments’ȱcurrentȱ SDȱrole • NGOs’ȱcurrentȱSDȱ role

CSM intent

Incidents • Mediaȱcampaigns • NGOȱcampaigns • Conflictsȱwith authorities • Boycottȱcampaigns • Shareholder opposition • Otherȱincidents

Externalȱbarriers • Regulation • Oppositionȱfromȱ investors • Lackȱofȱinterest from customers

Summaryȱmodel

CSM intent

Externalȱstakeholders AllȱlegitimacyȬrelatedȱ factors CSM intent

CSM intent

•CompanyȬspecific factors •Externalȱ stakeholders

Managers’ȱattitudes • BBBȱattitude • WWȱattitude • CAȱattitude • UCAȱattitude

Legitimacy • Importanceȱofȱ legitimacy • Damageȱtoȱlegitimacy

Issues Issueȱsignificance • Environmentalȱissues • Socialȱissues Issueȱdescription • Emissions • Otherȱenviron.ȱissues • Socialȱissuesȱ • Otherȱissues

CSM intent

•Managers‘ȱ attitudes

CSM intent

•Issues

CSM intent Companies:ȱInternalȱbarriers

CSM intent

• Managers’ȱmindset • Managers’ȱlackȱofȱ expertise/knowledge • Organizationalȱ culture

CSM intent

ȱ

Figureȱ5.8:ȱRegressionȱanalysisȱ–ȱTestedȱdeterminantsȱofȱCSMȱintentȱ

Itȱ isȱ importantȱ toȱ noteȱ thatȱ variablesȱ operationalizingȱ companies’ȱ strategicȱ disposiȬ tionȱ toȱ CSMȱ (i.e.ȱ SDȱ familiarity,ȱ SDȱ importanceȱ andȱ CSMȱ intent)ȱ areȱ notȱ takenȱ intoȱ accountȱ asȱ independentȱ variablesȱ inȱ theȱ regressionȱ modelsȱ examiningȱ variationȱ inȱ CSMȱsuccess.ȱThisȱisȱdoneȱforȱtheȱfollowingȱreasons:ȱ 1. Theȱauthorȱattemptsȱtoȱavoidȱconstraintsȱinȱtheȱdegreesȱofȱfreedomȱandȱtoȱpreventȱ SDȱ familiarity,ȱ SDȱ importanceȱ andȱ CSMȱ intentȱ fromȱ pickingȱ upȱ theȱ effectsȱ ofȱ otherȱcompanyȬspecificȱcategoricalȱvariables.ȱ 2. Itȱisȱobviousȱthatȱcompanies’ȱstrategicȱdispositionȱdeterminesȱCSMȱsuccess,ȱsinceȱ theȱwillingnessȱtoȱintegrateȱcertainȱissuesȱintoȱbusinessȱstrategiesȱandȱoperationsȱ precedesȱ theȱ implementationȱ ofȱ CSMȱ throughȱ organizationalȱ changesȱ (manageȬ mentȱ tools,ȱ structures)ȱ andȱ correspondingȱ corporateȱ activitiesȱ (e.g.ȱ communityȱ involvement,ȱemissionȱreduction).ȱNevertheless,ȱtheȱexistenceȱofȱthisȱlinkȱbetweenȱ strategicȱ dispositionȱ andȱ CSMȱ successȱ doesȱ notȱ remainȱ untested.ȱ Itȱ isȱ examinedȱ throughȱcorrelationȱanalysis.ȱ

ȱ

64ȱ

5ȱMethodȱ

Submodels

Clusterȱmodels

Internalȱbarriers • Mindset • Knowledge • Tools • Corporateȱculture Managementȱtools • Managementȱtools • Resourceȱallocation • Strategyȱtools • Corporateȱvalues,ȱetcȱ. • Incentiveȱtools • Managementȱ development • Coordinationȱ committees • Businessȱteams • Otherȱtools • Noȱtools

Summaryȱmodel

Externalȱstakeholdersȱ– externalȱ barriers CSM intent

• Regulation • Oppositionȱfromȱ investors • Lackȱofȱinterestȱfromȱ customers

CSM intent

Managers’ȱattitudes

CSM intent

• BBBȱattitude • WWȱattitude • CAȱattitude • UCAȱattitude

CSM intent

•Externalȱ stakeholders

Companies

Allȱcorporateȱ discretionaryȱfactors

CSM intent

Structure • CrossȬdisciplinaryȱ collaboration • CrossȬdisc.ȱpotential

•Managers‘ȱ attitudes

CSM intent

•CompanyȬspecificȱ factors

CSM intent

Externalȱbarriers • Env.ȱperformance • Businessȱethics • SupplyȱchainȱȬ social • Supplyȱchainȱ– env. • Community • Otherȱinitiatives • Noȱinitiatives

CSM intent

ȱ

Figureȱ5.9:ȱRegressionȱanalysisȱ–ȱTestedȱdeterminantsȱofȱCSMȱsuccessȱ

Expandedȱandȱreducedȱmodelsȱ Moreover,ȱtheȱauthorȱdistinguishesȱbetweenȱexpandedȱmodelsȱandȱreducedȱmodels:ȱ -

Expandedȱ modelsȱ areȱ providedȱ forȱ allȱ submodelsȱ andȱ clusterȱ models.ȱ Theyȱ inȬ cludeȱallȱvariablesȱthatȱformȱaȱclusterȱorȱsubcluster,ȱplusȱtwoȱdemographicȱvariȬ ablesȱ thatȱ wereȱ dichotomizedȱ andȱ introducedȱ throughȱ aȱ dummyȱ variableȱ apȬ proach:ȱ(1)ȱRegionsȱofȱoperationsȱareȱaddedȱtoȱallȱmodelsȱtoȱcontrolȱforȱtheirȱposȬ sibleȱmoderatingȱeffects.ȱ(2)ȱAȱdummyȱvariableȱmeasuringȱtheȱUTȱsectorȱeffectȱisȱ introducedȱ–obviouslyȱonlyȱtoȱtheȱTȱmodel,ȱinȱwhichȱitȱchangesȱtheȱstartingȱpointȱ ofȱtheȱregressionȱlineȱbutȱnotȱtheȱslopeȱcoefficientsȱofȱtheȱindependentȱvariables,ȱ i.e.ȱ itȱ mayȱ detectȱ aȱ possibleȱ overallȱ positiveȱ orȱ negativeȱ biasȱ ofȱ UTȱ respondentsȱ thatȱisȱdueȱtoȱtheȱcharacteristicsȱofȱtheȱUTȱsectorȱ(orȱrespondents)ȱthatȱareȱnotȱconȬ trolledȱ inȱ theȱ regressionȱ model.ȱ Theȱ authorȱ focusesȱ onȱ theseȱ twoȱ demographicȱ variablesȱbecauseȱtheyȱareȱkeyȱtoȱtheȱcontingencyȱapproachȱadoptedȱinȱtheȱstudy.ȱ Addingȱ moreȱ demographicȱ variablesȱ wouldȱ meanȱ runningȱ intoȱ dataȱ constraintsȱ becauseȱofȱdegreesȱofȱfreedom.ȱ

5.2ȱInstrumentsȱ

65ȱ

Total sample

OG sample

UT sample

Cluster models Issue

Cluster Cluster Summary Cluster models models models models External Managers Companies plusȱsubmodels stakeholders plusȱsubmodels

Expanded models Reduced models

ȱ

Figureȱ5.10:ȱSystemizationȱofȱmodelsȱpredictingȱCSMȱintentȱ

Total sample

OG sample

UT sample

Cluster Cluster Summary Cluster models models models models Managers Companies External plusȱsubmodels stakeholders plusȱsubmodels

Figureȱ5.11:ȱSystemizationȱofȱmodelsȱpredictingȱCSMȱsuccessȱ

ȱ

Expanded models Reduced models

ȱ

66ȱ

5ȱMethodȱ

Reducedȱ modelsȱ resultȱ fromȱ anȱ iterativeȱ andȱ theoreticallyȱ guidedȱ forwardȬ selectionȱ processȱ thatȱ takesȱ intoȱ accountȱ theȱ entireȱ setȱ ofȱ independentȱ nonȬ demographicȱvariablesȱincludedȱinȱtheȱexpandedȱmodels.ȱHenceȱeveryȱexpandedȱ modelȱhasȱitsȱcorrespondingȱreducedȱmodelȱwhich,ȱhowever,ȱonlyȱfeaturesȱstatisȬ ticallyȱ significantȱ variablesȱ andȱ henceȱ providesȱ aȱ clearerȱ regressionȱ equation.ȱ Inȱ someȱ cases,ȱ whereȱ theȱ expandedȱ modelsȱ lackȱ statisticalȱ significance,ȱ reducedȱ modelsȱ mayȱ yieldȱ statisticallyȱ validȱ regressionȱ equations.ȱ Asȱ aȱ rule,ȱ reducedȱ modelsȱonlyȱcompriseȱcoefficientsȱthatȱareȱstatisticallyȱsignificantȱatȱaȱ5%ȱlevel.20ȱ

-

Theȱnumberȱofȱmodelsȱtestedȱinȱthisȱstudyȱisȱsubstantial,ȱasȱillustratedȱinȱFigureȱ5Ȭ10ȱ andȱFigureȱ5Ȭ11:ȱAllȱsubmodelsȱandȱclusterȱmodelsȱareȱrunȱasȱreducedȱandȱexpandedȱ versionsȱforȱthreeȱsamplesȱ(theȱtotalȱandȱtwoȱsectorȬspecificȱsamples).ȱAnȱexceptionȱisȱ theȱ clusterȱ modelȱ onȱ companyȬspecificȱ factorsȱ andȱ theirȱ influenceȱ onȱ CSMȱ success.ȱ Hereȱonlyȱaȱreducedȱmodelȱmakesȱsenseȱsinceȱtheȱnumberȱofȱvariablesȱtestedȱwouldȱ overstretchȱtheȱdataȱbecauseȱofȱconstraintsȱpresentedȱbyȱdegreesȱofȱfreedom.ȱ Theȱ summaryȱ modelsȱ areȱ alsoȱ providedȱ forȱ theȱ threeȱ samplesȱ butȱ onlyȱ asȱ reducedȱ models,ȱsinceȱtheȱsheerȱnumberȱofȱvariablesȱtestedȱwouldȱoverstretchȱtheȱdata.ȱ Regressionȱdiagnosticsȱ Theȱfollowingȱregressionȱdiagnosticsȱwereȱemployedȱtoȱtestȱwhetherȱtheȱassumptionsȱ requiredȱforȱmultipleȱlinearȱregressionsȱareȱmetȱ(Hamilton,ȱ2003,ȱp.ȱ152;ȱMasonȱetȱal.,ȱ 1999,ȱp.ȱ475):ȱ 1. RamseyȱRESETȱtestsȱforȱomittedȱvariablesȱwhichȱuseȱtheȱpowersȱofȱtheȱfittedȱvalȬ uesȱ toȱ testȱ theȱ nullȱ hypothesisȱ thatȱ additionalȱ variablesȱ wouldȱ notȱ improveȱ theȱ model.ȱ 2. Theȱ BreuschȬPaganȱ /ȱ CookȬWeisbergȱ testȱ forȱ heteroscedasticityȱ testingȱ theȱ asȬ sumptionȱofȱconstantȱerrorȱvariance.ȱ 3. AȱtestȱforȱhighȱmulticollinearityȱthroughȱtheȱcalculationȱofȱvarianceȱinflationȱfacȬ torsȱ(vif)ȱȱforȱtheȱindependentȱvariablesȱspecifiedȱinȱtheȱfittedȱmodelȱ(NBȱSTATAȱ automaticallyȱdropsȱpredictorsȱcausingȱperfectȱmulticollinearity).ȱ 4. Testsȱofȱtheȱdistributionȱandȱmeanȱofȱtheȱresiduals.21ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 20

ȱTheȱauthorȱusedȱSTATA’sȱaregȱcommandȱtoȱtestȱwhetherȱaȱdummyȱapproachȱtoȱdemographicȱvariȬ ablesȱ wasȱ worthwhile.ȱ Ifȱ so,ȱ thenȱ theȱ completeȱ setȱ ofȱ dummyȱ variablesȱ excludingȱ theȱ referenceȱ groupȱ isȱ addedȱ toȱ theȱ model.ȱ Basedȱ onȱ theȱ backwardȱ eliminationȱ procedure,ȱ theȱ dummyȱ variableȱ withȱtheȱhighestȱpȱvalueȱaboveȱ.05ȱisȱdropped.ȱ

21

ȱ Multipleȱ linearȱ regressionȱ isȱ basedȱ onȱ theȱ assumptionȱ thatȱ residualsȱ areȱ homoscedastic,ȱ i.e.ȱ ȱ norȬ mallyȱdistributedȱwithȱaȱmeanȱofȱzeroȱ(Masonȱetȱal.,ȱ1999,ȱp.ȱ475).ȱȱ

5.2ȱInstrumentsȱ

67ȱ

TheyȱwereȱappliedȱtoȱtheȱsummaryȱmodelsȱbecauseȱofȱtheirȱcomplexityȱandȱtheirȱparȬ ticularȱ importanceȱ toȱ thisȱ study.ȱ Detailedȱ resultsȱ ofȱ theȱ regressionȱ diagnosticsȱ areȱ providedȱinȱAppendixȱGȱandȱtheȱcorrespondingȱSTATAȱlogȬfileȱ(anregdiag.log).ȱ Complementarityȱofȱcorrelationsȱandȱregressionsȱ Oneȱ keyȱ aspectȱ ofȱ thisȱ studyȱ isȱ theȱ complementaryȱ useȱ ofȱ correlationsȱ andȱ regresȬ sions:ȱ 1. Correlationsȱbetweenȱissues,ȱmanagers’ȱattitudesȱandȱexternalȱstakeholdersȱonȱtheȱ oneȱhandȱandȱcompanies’ȱapproachesȱtoȱCSMȱonȱtheȱotherȱanalyzeȱtheȱsameȱassoȬ ciationsȱbetweenȱvariablesȱasȱtheȱregressionȱmodels.ȱRegressionsȱanalyzeȱtheȱjointȱ causalȱ effectsȱ ofȱ independentȱ variablesȱ onȱ CSMȱ intentȱ andȱ CSMȱ successȱ respecȬ tively.ȱ Henceȱ theyȱ areȱ likelyȱ notȱ toȱ detectȱ effectsȱ ofȱ someȱ independentȱ variablesȱ becauseȱofȱconstraintsȱinȱtheȱdegreesȱofȱfreedom.ȱAdditionally,ȱvariablesȱcouldȱbeȱ omittedȱ fromȱ regressionȱ modelsȱ dueȱ toȱ aȱ lackȱ ofȱ statisticalȱ significance,ȱ becauseȱ theirȱeffectȱisȱpickedȱupȱbyȱoneȱofȱtheȱvariablesȱthatȱremainedȱinȱtheȱmodelsȱ(beȬ causeȱofȱtheirȱstatisticalȱsignificance).ȱThusȱcorrelationsȱclearlyȱprovideȱadditionalȱ insightsȱbecauseȱtheyȱrevealȱassociationsȱthatȱexistȱinȱtheȱdataȱbutȱareȱtooȱweakȱtoȱ beȱdetectedȱinȱtheȱregressionȱmodels.ȱ 2. Inȱtermsȱofȱtheȱvariablesȱthatȱareȱsubjectȱtoȱtheȱanalysis,ȱpairwiseȱcorrelationȱobviȬ ouslyȱ goesȱ farȱ beyondȱ theȱ regressionȱ analysisȱ byȱ analyzingȱ linksȱ betweenȱ variȬ ablesȱwithinȱandȱbetweenȱaȱwiderȱrangeȱofȱdifferentȱclusters.ȱ 3. CorrelationsȱasȱappliedȱinȱthisȱstudyȱdoȱnotȱassessȱtheȱeffectsȱofȱcategoricalȱvariȬ ables.ȱThisȱvoidȱisȱfilledȱthroughȱtheȱregressionȱmodelsȱwhichȱallowȱtheȱexaminaȬ tionȱofȱtheȱinfluenceȱofȱcategoricalȱvariablesȱthroughȱaȱdummyȱvariableȱapproach.ȱ Thusȱregressionȱmodelsȱalsoȱshedȱlightȱonȱtheȱeffectsȱofȱdemographicȱvariables.ȱ Figureȱ5Ȭ12ȱvisualizesȱtheȱcomplementarityȱofȱbothȱmethods:ȱVariablesȱthatȱareȱconȬ sideredȱ inȱ bothȱ methodsȱ areȱ highlightedȱ inȱ whiteȱ boxes.ȱ Theyȱ alsoȱ includeȱ theȱ twoȱ dependentȱ variablesȱ CSMȱ intentȱ andȱ CSMȱ success.ȱ Categoricalȱ variablesȱ areȱ onlyȱ takenȱintoȱaccountȱthroughȱregressions.ȱTheyȱareȱhighlightedȱinȱblack.ȱAȱthirdȱcateȬ goryȱofȱvariablesȱ–ȱhighlightedȱinȱgrayȱ–ȱisȱonlyȱconsideredȱthroughȱcorrelation.ȱ ȱ

ȱ

68ȱ

5ȱMethodȱ Issues

Socialȱissues Environmentalȱissues

Managers

Issue description

Companies

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations

Internalȱbarr.

Internalȱbarriers

Strategic disposition

SDȱimportance

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

CSMȱINTENT

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

SDȱfamiliarity

Damageȱtoȱlegitimacy

Toolsȱand initiatives

Incidents Consumers Governments CurrentȱSDȱrole

Structure

Tools Initiatives CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs Externalȱbarriers

ȱ

Figureȱ5.12:ȱComplementarityȱofȱcorrelationsȱandȱregressions

5.3

Synergisticȱfitȱofȱmethodsȱ

Nowȱthatȱtheȱindividualȱmethodsȱofȱdataȱcollectionȱandȱanalysisȱhaveȱbeenȱpresentedȱ individually,ȱtheȱauthorȱwillȱelucidateȱtheirȱsynergisticȱfitȱinȱmoreȱdetail.ȱ AsȱFigureȱ5Ȭ13ȱillustrates,ȱtheȱuseȱofȱmethodsȱhasȱbeenȱorchestratedȱinȱaȱwayȱthatȱenȬ suresȱcomplementarityȱandȱcrossȬvalidationȱofȱresults.ȱ Quantitativeȱmethods:ȱTheȱquantitativeȱmethodsȱcompriseȱdataȱcollectionȱthroughȱtwoȱ questionnairesȱ thatȱ targetȱ sustainabilityȱ officersȱ andȱ generalȱ managersȱ respectively.ȱ Theyȱpartlyȱoverlapȱinȱtermsȱofȱtheȱcompositionȱofȱquestions,ȱandȱthusȱdataȱcollectedȱ areȱableȱtoȱcomplementȱandȱcrossȬvalidateȱeachȱother.ȱQuantitativeȱdataȱanalysisȱfolȬ lowsȱaȱtwoȬprongedȱapproach:ȱ 1. F2ȬȱandȱtȬtestsȱareȱemployedȱtoȱcompareȱmeansȱandȱrelativeȱfrequenciesȱwithinȱtheȱ sameȱ sectorȱ acrossȱ theȱ twoȱ managementȱ groupsȱ (generalȱ managersȱ vs.ȱ sustainȬ abilityȱ officers)ȱ andȱ betweenȱ theȱ twoȱ sectorsȱ (OGȱ respondentsȱ vs.ȱ UTȱ responȬ dents).ȱ

2. CorrelationsȱandȱregressionsȱareȱbasedȱonȱdataȱcollectedȱonlyȱfromȱgeneralȱmanȬ agers.ȱ Theyȱ areȱ bothȱ employedȱ toȱ examineȱ relationshipsȱ betweenȱ intervalȱ variȬ ablesȱacrossȱthreeȱsamples:ȱtheȱtwoȱsectorȬspecificȱsamplesȱandȱtheȱtotalȱsample.

5.2ȱSynergisticȱfitȱofȱmethodsȱ

69ȱ

Concepts targeted

Focus

Data analysis

Data collection

3. ȱMoreȱ specifically,ȱ correlationsȱ analyzeȱ relationshipsȱ betweenȱ allȱ intervalȱ variȬ ables,ȱ regressionsȱ analyzeȱ theȱ causalȱ effectȱ ofȱ severalȱ intervalȱ andȱ categoricalȱ variablesȱonȱtwoȱdependentȱvariablesȱ(CSMȱintentȱandȱCSMȱsuccess).ȱThusȱcorreȬ lationsȱandȱregressionsȱareȱableȱtoȱcomplementȱandȱcrossȬvalidateȱnotȱ onlyȱ eachȱ other,ȱbutȱalsoȱtheȱcrossȬsectorȱandȱcrossdisciplinaryȱdifferencesȱorȱcommonalitiesȱ detectedȱthroughȱF2ȬȱandȱtȬtests:ȱRegressionsȱinȱparticularȱareȱdesignedȱtoȱexplainȱ possibleȱvariationȱinȱCSMȱintentȱandȱCSMȱsuccessȱthroughȱaȱsetȱofȱindependentȱ variables.ȱ Furthermore,ȱ regressionsȱ controlȱ forȱ theȱ effectsȱ ofȱ demographicȱ variȬ ables,ȱespeciallyȱcountriesȱofȱoperations,ȱandȱareȱthusȱanȱimportantȱmeansȱofȱtheȱ study’sȱcontingencyȱapproach.ȱ 2ȱQuestionnaires

4ȱsamples: • OGȱgeneralȱmanagers • OGȱsustainabilityȱofficer

GMȱandȱOGȱdata (allȱ4ȱsamples) ¾ F2Ȭtests: CrossȬsectorȱandȱ Ȭfunctionalȱcomparison: Categoricalȱvariables

¾ tȬtests: CrossȬsectorȱand Ȭfunctionalȱcomparison: Intervalȱvariables

• UTȱgeneralȱmanagers • UTȱsustainabilityȱofficers

GMȱdataȱonly (3ȱsamplesȱincludingȱtotal) ¾ Correlations: AssociationȱbetweenȱintervalȱvariaȬ bles inȱGMȱdataȱanalyzedȱinȱtotalȱsampleȱandȱbothȱ sectors

¾ Regressions: IdentifyingȱdeterminantsȱofȱCSMȱintentȱ andȱCSMȱsuccessȱamongȱintervalȱandȱcategoricalȱ variables,ȱinȱtheȱtotalȱsampleȱandȱacrossȱbothȱsectors,ȱ influencesȱofȱdemographicȱvariables

Sectorȱandȱfunction:

Sectorȱandȱcountries:

Whereȱareȱsimilaritiesȱandȱ differencesȱbetweenȱtheȱ samplesȱinȱtermsȱof ¾ Means ¾ Relativeȱfrequencies?

Whereȱareȱsimilaritiesȱandȱdifferencesȱinȱtheȱsamplesȱ ¾Associationsȱbetweenȱvariables ¾Causalȱeffectsȱbetweenȱvariables ¾Theȱinfluenceȱofȱcountriesȱandȱotherȱdemographicȱ variables?

¾Determinantsȱcorporateȱsustainabilityȱmanagement ¾Companies’ȱapproachesȱtoȱcorporateȱsustainabilityȱmanagementȱinȱtermsȱ ofȱbothȱstrategicȱdispositionȱandȱimplementation,ȱtheȱeconomicȱrationaleȱ forȱtheirȱapproaches ¾Outcome

ȱ

Figureȱ5.13:ȱSynergisticȱfitȱofȱmethodsȱ–ȱQuantitativeȱapproachȱ

Qualitativeȱ methods:ȱ Whereasȱ theȱ quantitativeȱ methodsȱ ensureȱ sufficientȱ breadthȱ inȱ theȱ study,ȱ theȱ qualitativeȱ methodsȱ facilitateȱ aȱ moreȱ inȬdepthȱ examinationȱ ofȱ theȱ study’sȱ keyȱ concepts,ȱ particularlyȱ theȱ economicȱ rationaleȱ forȱ CSM.ȱ Interviewsȱ withȱ sustainabilityȱofficers,ȱgeneralȱmanagers,ȱexternalȱstakeholdersȱandȱexpertsȱareȱqualiȬ tativelyȱ examinedȱ throughȱ crossȬȱ andȱ withinȬcaseȱ analysis.ȱ Theȱ resultingȱ dataȱ notȱ onlyȱbroadensȱtheȱscopeȱofȱtheȱstudyȱbutȱalsoȱfacilitatesȱbetterȱinferenceȱandȱopporȬ tunitiesȱtoȱdetectȱdivergencesȱinȱtheȱdata:ȱ

ȱ

5ȱMethodȱ

Interviews

4ȱsamples: • OGȱgeneralȱmanagers • OGȱsustainabilityȱofficers • UTȱgeneralȱmanagers • UTȱsustainabilityȱofficers

plusȱexternalȱstakeholders

¾ CrossȬ andȱwithinȱcaseȱanalysis

Data analysis

Data collection

70ȱ

Concepts targeted

Focus

Sector,ȱfunctionȱandȱcountries:

¾Doȱqualitativeȱdataȱmatchȱwithȱsimilaritiesȱandȱdifferencesȱdetectedȱinȱquantitativeȱ dataȱandȱcanȱtheyȱexplainȱthem? ¾Exploratoryȱfocusȱonȱeconomicȱrationaleȱforȱcorporateȱsustainabilityȱmanagement

Externalȱstakeholders:

¾Howȱcloselyȱdoȱqualitativeȱdataȱfromȱmanagersȱmatchȱwithȱthoseȱfromȱexternalȱ stakeholdersȱandȱexpert?

¾Determinantsȱcorporateȱsustainabilityȱmanagement ¾Companies’ȱapproachesȱtoȱcorporateȱsustainabilityȱmanagementȱinȱ termsȱofȱbothȱstrategicȱdispositionȱandȱimplementation,ȱtheȱ economicȱrationaleȱforȱtheirȱapproaches ¾Outcome

ȱ

Figureȱ5.14:ȱSynergisticȱfitȱofȱmethodsȱ–ȱQualitativeȱapproachȱ

1. QualitativeȱdataȱobtainedȱfromȱgeneralȱmanagersȱandȱsustainabilityȱofficersȱproȬ videȱanȱimportantȱqualitativeȱbenchmarkȱforȱquantitativeȱdataȱandȱthusȱfacilitateȱ theȱtriangulationȱofȱresults,ȱalsoȱbecauseȱtheyȱprovideȱinsightsȱintoȱtheȱnatureȱofȱ theȱrelationshipsȱdetectedȱorȱnotȱdetectedȱthroughȱcorrelationsȱandȱregressions.ȱ 2. Qualitativeȱ dataȱ obtainedȱ fromȱ externalȱ stakeholdersȱ andȱ expertsȱ enableȱ theȱ reȬ searcherȱ toȱ crossȬvalidateȱ bothȱ qualitativeȱ andȱ quantitativeȱ dataȱ collectedȱ fromȱ managers.ȱ 3. Qualitativeȱ dataȱ onȱ theȱ economicȱ rationaleȱ forȱ corporateȱ sustainabilityȱ areȱ colȬ lected.ȱThisȱallowsȱforȱaȱmoreȱexploratoryȱapproachȱtoȱthisȱkeyȱconcept,ȱdeemedȱ necessaryȱbasedȱonȱtheȱliteratureȱreview.ȱ 5.4

Evaluationȱ

Theȱstudy’sȱobjectiveȱisȱtoȱempiricallyȱexamineȱtheȱmainȱexternalȱandȱinternalȱdeterȬ minantsȱ(i.e.ȱdriversȱorȱbarriers)ȱtoȱCSM,ȱcompanies’ȱapproachesȱtoȱCSMȱinȱtermsȱofȱ bothȱ strategicȱ dispositionȱ andȱ implementation,ȱ theȱ economicȱ rationaleȱ forȱ theirȱ apȬ proachesȱandȱtheirȱoutcome.ȱ InȱtheȱfollowingȱparagraphsȱtheȱauthorȱprovidesȱaȱbriefȱcriticalȱassessmentȱofȱtheȱreȬ searchȱdesignȱandȱtheȱmethodsȱchosenȱtoȱachieveȱtheȱstudy’sȱresearchȱobjective.ȱ

5.4ȱEvaluationȱ

71ȱ

Qualityȱofȱresearchȱdesignȱ Theȱapproachȱadoptedȱinȱthisȱstudyȱisȱrelativelyȱcomplexȱtoȱadequatelyȱcaptureȱtheȱ complexityȱofȱtheȱresearchȱtopicȱ(Newman,ȱRidenour,ȱNewman,ȱ&ȱDeMarceȱJr.,ȱ2003,ȱ p.ȱ 168)ȱ andȱ incorporatesȱ theȱ currentȱ stateȱ ofȱ theȱ researchȱ field.ȱ Itȱ featuresȱ aȱ mixedȱ methodȱ designȱ thatȱ comprisesȱ bothȱ qualitativeȱ andȱ quantitativeȱ methodsȱ (theȱ latterȱ havingȱpriorityȱofȱtheȱformer),ȱandȱthusȱensuresȱaȱwideȱscopeȱofȱtheȱstudy,ȱbetterȱinȬ ference,ȱandȱopportunitiesȱtoȱpresentȱaȱgreaterȱdiversityȱofȱdifferentȱ(possiblyȱdiverȬ gent)ȱviewsȱ(Teddlieȱetȱal.,ȱ2003,ȱp.ȱ16).ȱ TheȱapproachȱtakesȱaȱclearȱcontingencyȱperspectiveȱonȱtheȱconceptȱofȱcorporateȱsusȬ tainabilityȱperformance,ȱtheȱneedȱforȱwhichȱwasȱclearlyȱhighlightedȱthroughȱtheȱlitȬ eratureȱreview.ȱTheȱapproachȱallowsȱforȱaȱdifferentiatedȱanalysisȱacrossȱtwoȱindustryȱ sectors,ȱtwoȱmanagementȱgroupsȱandȱvariousȱcountries.ȱTheȱselectionȱofȱtheȱindustryȱ sectorsȱ andȱ mainlyȱ industrializedȱ countriesȱ clearlyȱ ensuresȱ theȱ relevanceȱ ofȱ thisȱ study:ȱtheȱsectorsȱandȱcountriesȱforȱtheirȱeconomic,ȱenvironmentalȱandȱsocialȱsignifiȬ canceȱ(locallyȱandȱglobally),ȱtheȱtwoȱmanagementȱgroupsȱbecauseȱofȱtheirȱlikelyȱroleȱ asȱprotagonistsȱinȱtheȱfutureȱofȱCSMȱ–ȱinȱgeneralȱwithȱsustainabilityȱofficersȱasȱcataȬ lysts,ȱgeneralȱmanagersȱasȱ“deterrers.”ȱ Theȱ contingencyȱ approachȱ greatlyȱ increasesȱ theȱ internalȱ validityȱ ofȱ theȱ studyȱ comȬ paredȱ toȱ theȱ numerousȱ studiesȱ employingȱ multiȬindustryȱ samples.ȱ Thisȱ canȱ beȱ exȬ pectedȱsince,ȱasȱtheȱempiricalȱliteratureȱreviewȱrevealed,ȱcorporateȱsustainabilityȱperȬ formanceȱ clearlyȱ featuresȱ sectorȬspecificȱ characteristics.ȱ Henceȱ resultsȱ willȱ beȱ moreȱ clearlyȱ interpretableȱ inȱ aȱ sectorȬspecificȱ context,ȱ i.e.ȱ changesȱ inȱ theȱ dependentȱ variȬ ableȱ canȱ beȱ moreȱ clearlyȱ explainedȱ throughȱ theȱ influenceȱ ofȱ independentȱ variables,ȱ andȱ thusȱ theȱ numberȱ ofȱ explanationsȱ beyondȱ thoseȱ formulatedȱ inȱ theȱ conceptualȱ frameworkȱdecreasesȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ57).ȱHowever,ȱitȱhasȱtoȱbeȱpointedȱoutȱthatȱ theȱstatisticalȱvalidityȱthatȱisȱseenȱasȱpartȱofȱtheȱinternalȱvalidityȱmayȱbeȱaffected,ȱbeȬ causeȱ severalȱ conditionsȱ requiredȱ forȱ theȱ quantitativeȱ methodsȱ employedȱ inȱ thisȱ studyȱareȱnotȱentirelyȱmet:ȱTheyȱcompriseȱprimarilyȱ(1)ȱprobabilityȱsampling,ȱneededȱ forȱstatisticalȱinferenceȱ(Dowdyȱ&ȱWearden,ȱ1983.ȱp.ȱ9),ȱandȱ(2)ȱintervalȱdataȱrequiredȱ forȱmostȱstandardȱstatisticalȱtechniques.ȱAlthoughȱtheseȱstatisticalȱtoolsȱtendȱtoȱbeȱroȬ bustȱagainstȱsuchȱviolations,ȱresultsȱcanȱbeȱbiasedȱ(Masonȱetȱal.,ȱ1999,ȱp.ȱ475).ȱAgainstȱ thisȱ backdrop,ȱ theȱ authorȱ appliedȱ aȱ comprehensiveȱ setȱ ofȱ diagnosticsȱ andȱ compleȬ mentaryȱ meansȱ ofȱ dataȱ analysis.ȱ Moreover,ȱ heȱ adoptedȱ aȱ conservativeȱ approachȱ toȱ interpretingȱ regressionȱ models:ȱ Onlyȱ theȱ directionȱ ofȱ theȱ independentȱ variables’ȱ efȬ fectsȱwasȱinterpreted,ȱnotȱtheȱstrength.ȱȱ Theȱauthorȱalsoȱstatesȱthatȱtheȱstudyȱisȱlargelyȱbasedȱonȱmanagers’ȱperceptions,ȱcomȬ plementedȱwith,ȱprimarily,ȱqualitativeȱdataȱcollectedȱthroughȱinterviewsȱwithȱstakeȬ holders,ȱ andȱ secondaryȱ dataȱ sourcesȱ (corporateȱ reports,ȱ websites,ȱ newspaperȱ andȱ ȱ

72ȱ

5ȱMethodȱ

journalȱ articles).ȱ Hence,ȱ overall,ȱ aȱ potentialȱ biasȱ inȱ qualitativeȱ dataȱ (throughȱ selfȬ representationȱ andȱ socialȱ desirability)ȱ isȱ –ȱ dueȱ toȱ triangulationȱ withȱ otherȱ sourcesȱ Ȭȱ unlikelyȱtoȱremainȱundetected.ȱSince,ȱinȱtermsȱofȱquantitativeȱdataȱcollected,ȱtheȱreȬ searchȱdesignȱisȱlimitedȱtoȱselfȬreportedȱmeasuresȱfromȱmanagersȱonly,ȱtheȱfollowingȱ aspectsȱareȱtoȱbeȱtakenȱintoȱconsideration:ȱ -

Theȱ indirectȱ measurementȱ ofȱ stakeholders’ȱ positionȱ (throughȱ managers’ȱ selfȬ reportedȱ measures)ȱ isȱ meaningful,ȱ asȱ theirȱ perceivedȱ positionȱ (ratherȱ thanȱ theirȱ actualȱposition)ȱdeterminesȱmanagers’ȱdecisionȬmakingȱ(“perceptionȱisȱreality”).ȱ

-

However,ȱ theȱ useȱ ofȱ selfȬreportedȱ measuresȱ toȱ assessȱ companyȱ positionsȱ andȱ situationsȱisȱmoreȱproblematicȱwhenȱassessingȱrelationshipsȱandȱcausalȱlinksȱbeȬ tweenȱthoseȱvariables,ȱforȱexampleȱtoȱdetermineȱwhetherȱaȱreportedȱinternalȱbarȬ rierȱ(e.g.ȱmanagers’ȱmindset)ȱinfluencesȱcompanies’ȱCSMȱintentȱ orȱCSMȱsuccess.ȱ Inȱ thisȱ situation,ȱ itȱ isȱ generallyȱ preferableȱ toȱ measureȱ theȱ dependentȱ variableȱ throughȱ aȱ thirdȱ sourceȱ (e.g.ȱ aȱ stakeholder,ȱ aȱ ratingȱ agency).ȱ However,ȱ thisȱ apȬ proachȱ isȱ alsoȱ associatedȱ withȱ certainȱ issues:ȱ First,ȱ itȱ wouldȱ furtherȱ increaseȱ theȱ complexityȱofȱtheȱstudyȱbyȱhavingȱtoȱhaveȱanȱadditionalȱmeansȱofȱdataȱcollection.ȱ Second,ȱitȱrequiresȱanȱindividualȱcompanyȬspecificȱassessmentȱofȱtheȱvariableȱunȬ derȱconsiderationȱbyȱtheȱthirdȱparty.ȱThisȱmeansȱthatȱvaluesȱmayȱnotȱbeȱavailableȱ forȱ everyȱ companyȱ inȱ theȱ sample,ȱ whichȱ wouldȱ decreaseȱ theȱ totalȱ sampleȱ size.ȱ Third,ȱquestionsȱaboutȱtheȱvalidityȱandȱobjectivityȱofȱtheȱadditionalȱmeasurementȱ naturallyȱariseȱtoo.ȱ

Theȱ contingencyȱ approachȱ alsoȱ contributesȱ toȱ theȱ externalȱ validityȱ ofȱ thisȱ study,ȱ largelyȱbecauseȱitȱensuresȱinstrumentalȱvalidity,ȱi.e.ȱtheȱcrossȬvalidationȱbetweenȱtheȱ twoȱsectorsȱandȱtheȱtwoȱmanagementȱgroupsȱrespectivelyȱguaranteesȱthatȱtheȱsurveyȱ instrumentsȱrecordȱwhatȱtheyȱshould.22ȱHowever,ȱitȱhasȱtoȱbeȱstressedȱthatȱtheȱsampleȱ isȱ unlikelyȱ toȱ beȱ fullyȱ representativeȱ ofȱ eitherȱ ofȱ theȱ twoȱ sectors.ȱ Itȱ isȱ obviousȱ thatȱ onlyȱtheȱmoreȱinterestedȱelementsȱofȱtheȱpopulationȱrespondȱtoȱsurveysȱofȱthisȱkind.ȱ UnfortunatelyȱtheȱmultiȬprongedȱapproachȱ toȱquantitativeȱdataȱcollectionȱ necessaryȱ toȱobtainȱadequateȱsampleȱsizesȱmakesȱanȱexaminationȱofȱnoȬresponsesȱimpossible.ȱ Qualityȱofȱmethodsȱ Inȱ theȱ followingȱ paragraphsȱ theȱ authorȱ brieflyȱ assessesȱ theȱ methodsȱ employedȱ acȬ cordingȱtoȱtheirȱthreeȱcommonȱqualityȱcriteria,ȱnamelyȱobjectivity,ȱreliabilityȱandȱvaȬ lidity.ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 22

ȱ Externalȱ validityȱ isȱ givenȱ ifȱ resultsȱ canȱ beȱ generalizedȱ toȱ otherȱ individuals,ȱ situationsȱ orȱ pointsȱ inȱ timeȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ57;ȱSaundersȱetȱal.,ȱ2003,ȱp.ȱ102).ȱ

5.4ȱEvaluationȱ

73ȱ

Objectivityȱ Objectivityȱrefersȱtoȱinterpersonalȱconsensus,ȱi.e.ȱdifferentȱresearchersȱshouldȱbeȱableȱ toȱreachȱsimilarȱresultsȱifȱtheyȱadoptȱtheȱsameȱmethodȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ194,ȱ326).ȱ Thisȱcanȱbeȱachievedȱthroughȱtheȱexactȱdescriptionȱofȱtheȱprocessȱtheȱresearcherȱhasȱ goneȱthroughȱandȱaȱcertainȱstandardization.ȱInȱbothȱrespectsȱtheȱauthorȱhasȱensuredȱ theȱgreatestȱpossibleȱobjectivity:ȱFirst,ȱproceduresȱhaveȱbeenȱaccuratelyȱdocumented.ȱ Second,ȱtheȱauthorȱachievesȱaȱhighȱlevelȱofȱstandardizationȱthroughȱtheȱmethodsȱofȱ dataȱ collectionȱ (questionnairesȱ andȱ interviewȱ guidelines)ȱ andȱ dataȱ analysisȱ (e.g.ȱ standardȱ quantitativeȱ methodsȱ suchȱ asȱ tȬtestsȱ andȱ regressionsȱ usingȱ standardȱ softȬ ware).ȱ Reliabilityȱ Reliabilityȱessentiallyȱconcernsȱtheȱaccuracyȱofȱtheȱmethod.ȱIfȱitȱlacksȱaccuracy,ȱsituȬ ationalȱfactorsȱwillȱcauseȱmeasurementȱerrorsȱ(e.g.ȱparticipantȱbiasȱthroughȱtiredness,ȱ guessing).ȱ Aȱ completelyȱ reliableȱ methodȱ shouldȱ yieldȱ theȱ sameȱ resultsȱ ifȱ repeatedȱ withȱ theȱ sameȱ respondent.ȱ Obviouslyȱ thisȱ canȱ neitherȱ beȱ fullyȱ achievedȱ inȱ aȱ semiȬ structuredȱinterviewȱnorȱisȱitȱnecessarilyȱdesirable,ȱsinceȱe.g.ȱtheȱresearcherȱmayȱfoȬ cusȱonȱaȱrecentȱeventȱorȱexperienceȱtheȱintervieweeȱreportsȱonȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ 195,ȱ 327).ȱ Againȱ theȱ authorȱ attemptedȱ toȱ ensureȱ theȱ bestȱ possibleȱ reliabilityȱ ofȱ theȱ methodȱforȱhisȱpartȱbyȱusingȱstandardizedȱmethodsȱofȱdataȱcollectionȱandȱanalysis.ȱInȱ particular,ȱheȱensuresȱcompleteȱtransparencyȱofȱtheȱdataȱanalysisȱprocessȱbyȱprovidȬ ingȱrawȱ dataȱ andȱ STATAȱ logȬȱ andȱdoȬfiles.ȱ Nevertheless,ȱtheȱ reliabilityȱofȱ quantitaȬ tiveȱdataȱcollectionȱisȱaffected,ȱsinceȱtheȱsituationsȱinȱwhichȱquestionnairesȱareȱfilledȱ inȱ(e.g.ȱonlineȱatȱhomeȱorȱduringȱIMDȱprograms)ȱmayȱdifferȱsignificantly.ȱ Validityȱ Validityȱisȱtheȱmostȱimportantȱcriterionȱforȱresearchȱquality.ȱInȱtheȱcontextȱofȱtheȱclasȬ sicalȱtestȱtheory,ȱitȱindicatesȱwhetherȱaȱtestȱ(e.g.ȱanȱIQȱtest)ȱreallyȱmeasuresȱwhatȱitȱisȱ designedȱ toȱ measure.ȱ Itȱ incorporatesȱ threeȱ kindsȱ ofȱ validity:ȱ faceȱ validity,ȱ criterionȱ validityȱ andȱ constructȱ validityȱ (Bortzȱ etȱ al.,ȱ 2002,ȱ p.ȱ 199).ȱ Theȱ presentȱ studyȱ hasȱ aȱ clearlyȱexplanatoryȱfocusȱandȱmeasuresȱaȱvarietyȱofȱconceptsȱ(orȱconstructs)ȱthroughȱ aȱlimitedȱnumberȱofȱitems.ȱThusȱvalidityȱ–ȱunlikeȱreliabilityȱ–ȱisȱnotȱquantitativelyȱasȬ sessed.ȱThisȱdoesȱnotȱnecessarilyȱmeanȱthatȱtheȱmethodȱlacksȱvalidity.ȱConstructȱvaȬ lidityȱcanȱbeȱassumedȱifȱe.g.ȱrelationshipsȱdetectedȱthroughȱcorrelationsȱandȱregresȬ sionsȱfitȱtheȱstudy’sȱconceptualȱframeworkȱandȱqualitativeȱfindings.ȱ Theȱvalidityȱofȱqualitativeȱmethodsȱconcernsȱseveralȱaspectsȱsuchȱasȱtheȱauthenticityȱ andȱ honestyȱ ofȱ interviewees’ȱ statementsȱ andȱ possibleȱ biasesȱ fromȱ theȱ researcherȱ inȱ theȱ courseȱ ofȱ interviewingȱ andȱ interpretation.ȱ Validityȱ hasȱ beenȱ maximizedȱ inȱ theȱ presentȱ studyȱ throughȱ withinȬȱ andȱ crossȬcaseȱ analysis,ȱ comparisonsȱ withȱ otherȱ sourcesȱ (mainlyȱ internalȱ andȱ externalȱ companyȱ documents)ȱ and,ȱ mostȱ importantly,ȱ ȱ

74ȱ

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interpersonalȱ consensusȱ building:ȱ Interpersonalȱ consensusȱ buildingȱ wasȱ achievedȱ amongȱ theȱ teamȱ membersȱ ofȱ theȱ crossȬindustryȱ researchȱ projectȱ referredȱ toȱ above,ȱ betweenȱ theȱ researcherȱ andȱ intervieweesȱ throughȱ dialogicȱ validationȱ (followȬupȱ phoneȱinterviewsȱandȱfocusedȱgroupȱdiscussion),23ȱandȱbyȱengagingȱexternalȱexpertsȱ (Bortzȱ etȱ al.,ȱ 2002,ȱ p.ȱ 329):ȱ Membersȱ ofȱ theȱ project’sȱ advisoryȱ council,ȱ composedȱ ofȱ managersȱandȱexperts,ȱcriticallyȱreviewedȱtheȱresearchȱresults.ȱ24ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 23

ȱAsȱpartȱofȱtheȱresearchȱprojectȱcarriedȱoutȱatȱIMD,ȱtheȱauthorȱproducedȱresearchȱreportsȱonȱbothȱsecȬ torsȱandȱaȱcomparativeȱreport.ȱTheȱreportsȱenteredȱaȱcomprehensiveȱfeedbackȱprocessȱincludingȱfolȬ lowȬupȱphoneȱinterviews,ȱemailȱcorrespondence,ȱandȱaȱtwoȬhourȱgroupȱsessionȱwithȱtheȱsustainabilȬ ityȱofficersȱfromȱtheȱparticipatingȱcompanies.ȱ

24

ȱ Theȱ advisoryȱ councilȱ wasȱ establishedȱ toȱ criticallyȱ assessȱ theȱ progressȱ ofȱ IMD’sȱ crossȬindustryȱ reȬ searchȱproject,ȱwithinȱtheȱframeworkȱofȱwhichȱtheȱcurrentȱstudyȱwasȱcarriedȱout.ȱ

6.1ȱCharacteristicsȱandȱactivitiesȱofȱcompaniesȱ

6

75ȱ

Sectorȱcharacteristicsȱ

Thisȱsectionȱelaboratesȱonȱtheȱmajorȱcharacteristicsȱofȱbothȱsectorsȱwithoutȱapplyingȱaȱ specificȱ sustainabilityȱ focus.ȱ Thisȱ isȱ necessaryȱ toȱ setȱ theȱ stageȱ forȱ aȱ comprehensiveȱ discussionȱofȱtheȱintegrationȱofȱenvironmentalȱandȱsocialȱissuesȱintoȱbusinessȱstrateȬ giesȱandȱoperations.ȱTheȱanalysisȱwillȱbeȱbriefȱandȱexhaustiveȱbyȱnoȱmeansȱbutȱitȱwillȱ beȱ focusȱ onȱ thoseȱ factorsȱ thatȱ playȱ theȱ mostȱ importantȱ roleȱ settingȱ theȱ contextȱ forȱ CSM:25ȱtheȱkeyȱcharacteristicsȱandȱactivitiesȱofȱbothȱsectors,ȱtrends,ȱdriversȱandȱcomȬ petitiveȱforces.ȱ 6.1

Characteristicsȱandȱactivitiesȱofȱcompaniesȱ

Bothȱsectorsȱareȱinvolvedȱinȱtheȱproduction,ȱdistributionȱandȱsupplyȱofȱenergy.ȱTheȱ OGȱsectorȱmainlyȱsuppliesȱprimaryȱenergy,ȱtheȱUTȱsectorȱmainlyȱsecondaryȱenergy,ȱ namelyȱelectricity.26ȱEnergyȱ–ȱandȱparticularlyȱoilȱ–ȱisȱaȱstrategicȱandȱcheapȱcommodȬ ity:ȱ -

Theȱstrategicȱimportanceȱofȱoilȱandȱitsȱgeopoliticalȱeffectsȱareȱparticularlyȱvisibleȱ inȱUSȱforeignȱpolicyȱ(Barlettȱ&ȱSteele,ȱ2003;ȱPrüller,ȱ2003).ȱItȱisȱrisingȱthroughȱtheȱ increasingȱ dependencyȱ ofȱ developedȱ countriesȱ onȱ oilȱ importsȱ (Anonymous,ȱ 2001b).ȱ

-

Energyȱ isȱ inexpensive,ȱ particularlyȱ inȱ industrializedȱ countries.ȱ Forȱ example,ȱ enȬ ergyȱ expenditureȱ amountsȱ toȱ 2%ȱ ofȱ theȱ householdȱ incomeȱ ofȱ aȱ highȬincomeȱ UKȱ household.27ȱApartȱfromȱsomeȱheavyȬindustryȱbranches,ȱtheȱproportionȱofȱenergyȱ expenditureȱinȱproductionȱcostsȱisȱsimilarlyȱlow.ȱ

Integratedȱoilȱandȱgasȱsectorȱ OGȱcompaniesȱareȱprimarilyȱinvolvedȱinȱ(1)ȱglobalȱexplorationȱandȱproductionȱofȱoilȱ andȱ gasȱ (upstreamȱ business)ȱ inȱ variousȱ regionsȱ aroundȱ theȱ globe,ȱ andȱ (2)ȱ refiningȱ andȱmarketingȱofȱoilȱproductsȱ(downstream).ȱTheseȱareasȱalsoȱrepresentȱtheȱtwoȱkeyȱ businessȱ units.ȱ OGȱ companiesȱ alsoȱ engageȱ inȱ gasȱ distribution,ȱ powerȱ generationȱ mainlyȱforȱownȱuseȱinȱrefineriesȱ(gasȱ&ȱpower)ȱandȱchemicals.ȱFurthermore,ȱenergyȱ logisticsȱ isȱ anȱ increasinglyȱ importantȱ crossȬbusinessȱ activity.ȱ Theȱ oilȱ producedȱ isȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 25

ȱForȱaȱmoreȱdetailedȱanalysis,ȱreferȱtoȱSalzmannȱ(2004).ȱ

26

ȱ Primaryȱ energyȱ sourcesȱ canȱ beȱ assignedȱ toȱ threeȱ broadȱ categories:ȱ renewableȱ fuelsȱ (e.g.ȱ biomass),ȱ nonȬrenewableȱfuelsȱ(e.g.ȱfossilȱfuelsȱsuchȱasȱoil,ȱgasȱandȱcoal,ȱnuclearȱfuels)ȱandȱrenewableȱnaturalȱ forcesȱ(e.g.ȱsolarȱheatȱandȱlight,ȱwind,ȱgeothermalȱheating).ȱSecondaryȱenergyȱsourcesȱorȱcarriersȱareȱ derivedȱfromȱtheseȱȱprimaryȱenergyȱsources,ȱforemostȱelectricityȱbutȱalsoȱhydrogenȱandȱalcohol.ȱ

27

ȱ Onȱ theȱ otherȱ hand,ȱ itȱ canȱ reachȱ upȱ toȱ 15%ȱ ofȱ householdȱ incomeȱ inȱ Ugandaȱ (Internationalȱ Energyȱ Agencyȱetȱal.,ȱ2002,ȱp.ȱ8).ȱ

ȱ

76ȱ

6ȱSectorȱcharacteristicsȱ

mainlyȱ suppliedȱ toȱ theȱ transportȱ (57%)ȱ andȱ industrialȱ (19%)ȱ sectors;ȱ gasȱ servesȱ mainlyȱindustrialȱpurposesȱ(44.8%)ȱ(InternationalȱEnergyȱAgency,ȱ2003).ȱ Inȱcontrastȱtoȱtheȱ1970s,ȱtheȱmajorȱOGȱcompaniesȱnoȱlongerȱdominateȱoilȱproduction,ȱ primarilyȱ dueȱ toȱ competitionȱ withȱ severalȱ mediumȬsizedȱ privateȱ andȱ severalȱ largeȱ nationalȱoilȱcompaniesȱandȱtheȱcreationȱofȱtheȱOrganizationȱofȱPetroleumȱExportingȱ Countriesȱ(OPEC)ȱ(Ketola,ȱ1993,ȱp.ȱ22).ȱOPECȱhasȱrecentlyȱeffectivelyȱcontrolledȱtheȱ oilȱ price,ȱ whichȱ substantiallyȱ determinesȱ OGȱ companies’ȱ profitsȱ andȱ henceȱ shareȱ pricesȱ (Drack,ȱ 2003;ȱ Vorholz,ȱ 2003a).ȱ Theȱ influenceȱ ofȱ theȱ majorȱ companiesȱ suchȱ asȱ Shell,ȱTotalȱandȱExxonȱMobilȱinȱtheȱdownstreamȱbusinessȱisȱstillȱsignificant.ȱOverȱtheȱ lastȱ decade,ȱ theȱ industryȱ hasȱ consolidatedȱ throughȱ severalȱ mergers.ȱ Strongerȱ enȬ gagementȱofȱnationalȱoilȱcompaniesȱinȱdownstreamȱactivitiesȱremainsȱaȱmajorȱpotenȬ tiallyȱdisruptiveȱfactorȱ(Ernstȱetȱal.,ȱ1999).ȱ Electricȱutilitiesȱsectorȱ UTȱcompaniesȱareȱtypicallyȱactiveȱinȱhardȱcoalȱandȱligniteȱmining,ȱpowerȱgeneration,ȱ electricityȱandȱgasȱnetworkȱactivities,ȱandȱtheȱmarketingȱandȱsalesȱofȱelectricityȱandȱ gas.ȱElectricityȱisȱmainlyȱgeneratedȱthroughȱtheȱuseȱofȱcoalȱ(38.7%),ȱgasȱ(18.3%),ȱnuȬ clearȱfuelsȱ(17.1%)ȱandȱhydropowerȱ(16.6%)ȱItȱisȱprimarilyȱsuppliedȱtoȱtheȱindustrialȱ sectorȱ(41.7%).ȱOtherȱsectorsȱ(includingȱagriculture,ȱcommercialȱ&ȱpublicȱservice,ȱandȱ residential)ȱaccountȱforȱaȱ56.5%ȱshareȱ(InternationalȱEnergyȱAgency,ȱ2003).ȱUTȱcomȬ paniesȱareȱtypicallyȱsmallerȱandȱlessȱprofitableȱthanȱOGȱcompaniesȱ(referȱtoȱAppenȬ dixȱBȱ–ȱKeyȱfinancialsȱofȱsectorȱsamplesȱforȱtheȱcompaniesȱthatȱparticipatedȱinȱtheȱinȬ terviewȱphaseȱofȱtheȱproject).ȱ ComparedȱtoȱtheȱclearlyȱglobalȱnatureȱofȱtheȱOGȱsector,ȱinȱtheȱUTȱsectorȱtheȱbusinessȱ modelsȱ –ȱ relatingȱ toȱ powerȱ generationȱ distributionȱ andȱ supplyȱ –ȱ clearlyȱ featureȱ reȬ gionalȱcharacteristics.ȱCompaniesȱareȱmoreȱstronglyȱdependentȱonȱtheȱlocalȱavailabilȬ ityȱofȱresourcesȱ(e.g.ȱcoal,ȱhydropower)ȱandȱonȱdomesticȱenergyȱpoliciesȱ(e.g.ȱFrance’sȱ preferenceȱforȱnuclearȱpowerȱgeneration).ȱInȱEurope,ȱforȱexample,ȱtheȱsectorȱexhibitsȱ aȱ strategicȱ focusȱ onȱ Europeanȱ energyȱ markets,ȱ verticalȱ integrationȱ (Bender,ȱ 2003;ȱ Economistȱ Intelligenceȱ Unit,ȱ 2003b)ȱ andȱ expansionȱ intoȱ otherȱ OECDȱ countries.ȱ Theȱ implementationȱofȱtheȱliberalizedȱEUȱelectricityȱandȱgasȱmarketsȱhasȱhadȱ–ȱdependȬ ingȱ onȱ theȱ degreeȱ toȱ whichȱ theȱ respectiveȱ domesticȱ marketsȱ haveȱ openedȱ –ȱ severalȱ significantȱ effects,ȱincludingȱrisingȱcostȱpressureȱ(throughȱinefficiencies,ȱovercapaciȬ ties),ȱ investmentȱ riskȱ (customersȱ canȱ switchȱ suppliersȱ moreȱ easily)ȱ (Bohne,ȱ 2003;ȱ Flauger,ȱ 2003a)ȱ andȱ theȱ convergenceȱ ofȱ gasȱ andȱ powerȱ marketsȱ (Buchan,ȱ 2001c;ȱ Commissionȱ ofȱ theȱ Europeanȱ Communities,ȱ 2004).ȱ Inȱ severalȱ Europeanȱ countries,ȱ marketȱconcentrationȱhasȱincreasedȱasȱaȱconsequenceȱ(Vorholz,ȱ2003b).ȱFutureȱdevelȬ opmentȱ willȱ dependȱ substantiallyȱ onȱ howȱ consistentlyȱ liberalizationȱ processesȱ areȱ drivenȱforward.ȱ

6.2ȱTrends,ȱdriversȱandȱcompetitiveȱforcesȱ

6.2

77ȱ

Trends,ȱdriversȱandȱcompetitiveȱforcesȱ

Inȱ theȱ following,ȱ theȱ authorȱ outlinesȱ theȱ keyȱ trendsȱ andȱ driversȱ andȱ competitiveȱ forces.ȱ Energyȱ demandȱ isȱ growing,ȱ andȱ theȱ supplyȱ isȱ becomingȱ increasinglyȱ chalȬ lenging.ȱHoweverȱinȱtheȱshortȱtoȱmediumȱterm,ȱdrasticȱchangesȱinȱtheȱcurrentȱenergyȱ mixȱareȱnotȱbeȱexpected.ȱ Demandȱandȱsupplyȱ Demandȱ isȱ coupledȱ withȱ economicȱ development,ȱ populationȱ growthȱ and,ȱ inȱ theȱ shortȱterm,ȱweatherȱconditions.ȱInȱtheȱpast,ȱgrowthȱinȱenergyȱconsumptionȱhasȱbeenȱ substantial,ȱ butȱ soȱ farȱ mainlyȱ limitedȱ toȱ industrialȱ nations.ȱ Inȱ theȱ future,ȱ itȱ willȱ beȱ mainlyȱdrivenȱthroughȱrisingȱdemandȱfromȱdevelopingȱandȱemergingȱcountries,ȱparȬ ticularlyȱinȱAsia.ȱ Atȱtheȱsameȱtime,ȱoilȱreservesȱinȱdevelopedȱcountriesȱareȱmaturing.ȱHenceȱsubstantialȱ amountsȱ ofȱ investmentȱ inȱ theȱ developmentȱ ofȱ additionalȱ oilȱ &ȱ gasȱ fieldsȱ areȱ necesȬ sary.ȱTheseȱdevelopmentsȱwillȱbecomeȱincreasinglyȱdifficultȱforȱtwoȱmajorȱreasons:ȱ 1. Fieldsȱ areȱ lessȱ accessible,ȱ andȱ thusȱ extractionȱ andȱ productionȱ willȱ becomeȱ moreȱ technicallyȱ challengingȱ andȱ expensiveȱ inȱ generalȱ (e.g.ȱ moreȱ deepwaterȱ drillingȱ willȱbecomeȱnecessary)ȱ(Anonymous,ȱ2003e;ȱMorrison,ȱ2000).ȱ 2. TheȱhostȱcountriesȱinȱwhichȱfutureȱE&Pȱactivitiesȱwillȱtakeȱplaceȱ(mainlyȱAfrica,ȱ theȱ formerȱ Sovietȱ Unionȱ andȱ theȱ Middleȱ East)ȱ areȱ obtainingȱ greaterȱ bargainingȱ powerȱandȱbearȱmoreȱpoliticalȱandȱsocialȱrisks.ȱHenceȱpoliticalȱrivalry,ȱdomesticȱ strifeȱ andȱ corruptionȱ willȱ certainlyȱ increaseȱ insurance,ȱ projectȱ financeȱ andȱ secuȬ rityȱcostsȱ(Anonymous,ȱ2003g,ȱp.ȱ2).ȱ OilȱsupplyȱisȱsignificantlyȱaffectedȱbyȱshortȬtermȱsupplyȱdisruptionȱand,ȱinȱtheȱlongȱ term,ȱresourceȱdepletion.ȱBothȱfactorsȱareȱlinkedȱbyȱgeopolitics,ȱwhichȱmakesȱitȱdiffiȬ cultȱtoȱestimateȱtheȱrangeȱofȱfossilȱfuels.ȱNewȱdiscoveriesȱandȱpriceȱshiftsȱdueȱtoȱsupȬ plyȱdisruptionsȱinȱtheȱMiddleȱEastȱandȱotherȱregionsȱcanȱmakeȱcertainȱreservoirsȱthatȱ wereȱ previouslyȱ tooȱ expensiveȱ toȱ useȱ suddenlyȱ attractive.ȱ Variousȱ studiesȱ estimateȱ thatȱ supplyȱ gaps,ȱ particularlyȱ forȱ oil,ȱ willȱ becomeȱ evidentȱ betweenȱ 2030ȱ andȱ 2050ȱ (Puplava,ȱ9ȱAprilȱ2006;ȱRWE,ȱ2003;ȱShellȱInternationalȱLtd,ȱ2001).ȱ ShortȬtermȱ supplyȱ disruptionȱ andȱ resourceȱ depletionȱ areȱ lessȱ significantȱ inȱ theȱ UTȱ sector,ȱsinceȱitsȱprimaryȱenergyȱ(coal,ȱgasȱandȱnuclearȱfuels)ȱgenerallyȱoriginatesȱfromȱ politicallyȱ moreȱ stableȱ regionsȱ (e.g.ȱ Australia,ȱ China,ȱ Southȱ Africa)ȱ orȱ domesticȱ deȬ posits.ȱRecentȱblackouts,ȱe.g.ȱinȱtheȱUSȱandȱItaly,ȱareȱlikelyȱtoȱleadȱtoȱaȱnewȱemphasisȱ onȱsupplyȱsecurityȱinȱtheȱshortȱtoȱmediumȱterm,ȱwhichȱwillȱcompeteȱwithȱtheȱmainȱ goalsȱ ofȱ liberalizationȱ (lowȱ consumerȱ pricesȱ andȱ economicȱ efficiency)ȱ andȱ environȬ mentalȱconsiderationsȱ(Anonymous,ȱ2003g,ȱp.ȱ8).ȱ

ȱ

78ȱ

6ȱSectorȱcharacteristicsȱ

Competitiveȱforcesȱ Competitiveȱ forcesȱ (Porter,ȱ 1980)ȱ exhibitȱ severalȱ meaningfulȱ differencesȱ andȱ comȬ monalitiesȱacrossȱbothȱsectors:ȱ 1. Highȱ capitalȱ intensityȱ andȱ scaleȱ economiesȱ constituteȱ greatȱ barriersȱ toȱ entryȱ ofȱ newȱcompetitorsȱandȱalsoȱbarriersȱtoȱradicalȱinnovation.ȱTheȱOGȱsector’sȱtechnoȬ logicalȱ lockȬinȱ isȱ evenȱ strengthenedȱ throughȱ existingȱ businessȱ systemsȱ withȱ neighboringȱ industriesȱ (longȱ lifeȱ cyclesȱ ofȱ fossilȬfuelȱ basedȱ modesȱ ofȱ transport)ȱ (Steger,ȱ2004).ȱ 2. Customersȱ canȱ easilyȱ switchȱ suppliers,ȱ particularlyȱ inȱ theȱ OGȱ sector.ȱ FurtherȬ more,ȱtheȱpriceȱelasticityȱinȱtheȱtransportȱsectorȱisȱsignificant,ȱandȱthusȱincreasesȱ competitionȱinȱOGȱdownstreamȱactivities.ȱInȱtheȱUTȱsector,ȱindustrialȱcustomersȱ useȱtheirȱbargainingȱpowerȱinȱliberalizedȱelectricityȱmarkets.ȱInȱcontrast,ȱlowȱelecȬ tricityȱ pricesȱ andȱ theȱ administrativeȱ effortȱ ofȱ switchingȱ electricityȱ suppliersȱ proȬ videȱlittleȱincentiveȱforȱprivateȱhouseholdsȱtoȱexerciseȱpotentialȱbargainingȱpowerȱ (Anonymous,ȱ2003b).ȱ 3. InȱtheȱOGȱsector,ȱtheȱbargainingȱpowerȱofȱsuppliersȱ–ȱmostȱimportantlyȱnationalȱ governmentsȱasȱtheȱresourceȱownersȱ–ȱisȱsignificantlyȱhigher,ȱbecauseȱcompaniesȱ relyȱonȱ licensesȱfromȱaȱfewȱ andȱmostlyȱ politicallyȱlessȱstableȱ countries.ȱToȱ shareȱ theȱriskȱofȱsubstantialȱupstreamȱinvestments,ȱtheȱsectorȱcommonlyȱreliesȱonȱjointȱ venturesȱ(Anonymous,ȱ2001b).ȱȱ 4. Theȱcurrentȱthreatȱfromȱsubstitutesȱisȱlowȱinȱbothȱsectorsȱ(Purdum,ȱ2003).ȱHowȬ ever,ȱrenewableȱenergyȱsources,ȱdistributedȱgenerationȱandȱhydrogenȱtechnologyȱ constituteȱlongȬtermȱalternativesȱwithȱsignificantȱdisruptiveȱpotential.ȱ Currentȱandȱfutureȱenergyȱmixȱ Inȱtoday’sȱworld,ȱprimaryȱenergyȱdemandȱisȱmainlyȱmetȱbyȱoilȱ(35%),ȱcoalȱ(23%)ȱandȱ naturalȱgasȱ(21%),ȱwhichȱ“translates”ȱintoȱtheȱfollowingȱfuelȱsharesȱofȱtotalȱfinalȱconȬ sumption:ȱ Oilȱ isȱ clearlyȱ theȱ mostȱ importantȱ energyȱ sourceȱ accountingȱ forȱ 43%,ȱ folȬ lowedȱ byȱ naturalȱ gasȱ (16.3%),ȱ andȱ electricityȱ (15.6%)ȱ (Internationalȱ Energyȱ Agency,ȱ 2003).ȱȱ Severalȱ scenariosȱ aimȱ toȱ projectȱ theȱ worldȱ energyȱ mixȱ inȱ 2030.ȱ Resultsȱ varyȱ signifiȬ cantlyȱ dueȱ toȱ differentȱ methodologies,ȱ butȱ suggestȱ thatȱ itȱ willȱ notȱ changeȱ dramatiȬ cally.ȱNaturalȱgasȱisȱexpectedȱtoȱexhibitȱtheȱstrongestȱgrowth.ȱTheȱcurrentȱ10%ȱshareȱ ofȱrenewableȱenergiesȱ willȱ notȱ increaseȱ substantiallyȱ –ȱ inȱfactȱitȱ mayȱevenȱ decline.28ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 28

ȱ Thisȱ conclusionȱ isȱ reachedȱ basedȱ onȱ aȱ metaȬanalysisȱ ofȱ severalȱ energyȱ scenariosȱ fromȱ theȱ Energyȱ Informationȱ Administrationȱ (EIA),ȱ theȱ Internationalȱ Energyȱ Agencyȱ (IEA)ȱ andȱ EUȱ DirectorateȬ GeneralȱforȱResearchȱ(RWE,ȱ2003,ȱp.ȱ53)ȱ

6.2ȱTrends,ȱdriversȱandȱcompetitiveȱforcesȱ

79ȱ

TwoȱShellȱscenariosȱtakeȱaȱmoreȱlongȬtermȱperspectiveȱofȱpossibleȱdevelopmentsȱbyȱ 2050.ȱ Theyȱ differȱ inȱ termsȱ ofȱ theȱ mostȱ importantȱ driversȱ (superiorȱ endȬuseȱ technolȬ ogyȱbyȱconsumersȱvs.ȱresourceȱscarcity,ȱenvironmentȱandȱsecurityȱconcerns,ȱcompetiȬ tiveȱ responsesȱ andȱ competingȱ societalȱ priorities)ȱ andȱ projectȱ thatȱ renewablesȱ couldȱ playȱaȱsubstantialȱpartȱasȱprimaryȱ energyȱsourcesȱ inȱ theȱlongȬtermȱfuture,ȱ andȱ thusȱ leadȱtoȱtheȱstabilizationȱofȱatmosphericȱcarbonȱdioxideȱconcentrationsȱ(ShellȱInternaȬ tionalȱLtd,ȱ2001,ȱp.ȱ58).ȱ 6.3

Discussionȱ

Analysisȱofȱtheȱmainȱsectorȱcharacteristicsȱbroughtȱtoȱlightȱseveralȱcommonalitiesȱandȱ differences,ȱwhichȱmakeȱaȱsectorȱcomparisonȱclearlyȱworthwhile:ȱ -

Thereȱisȱaȱslightȱoverlapȱinȱtheȱactivitiesȱofȱbothȱsectors:ȱOGȱcompaniesȱprimarilyȱ focusȱonȱtheȱextractionȱandȱproductionȱofȱoilȱandȱgas,ȱandȱtheȱrefiningȱandȱmarȬ ketingȱofȱoil.ȱSomeȱalsoȱengageȱinȱpowerȱgenerationȱandȱtheȱmarketingȱofȱgas.ȱInȱ contrastȱ UTȱ companies’ȱ extractionȱ andȱ productionȱ activitiesȱ areȱ limitedȱ toȱ hardȱ coal,ȱligniteȱandȱgas.ȱTheyȱclearlyȱfocusȱonȱelectricityȱproduction,ȱandȱtheȱdistriȬ butionȱ(networkȱactivities)ȱandȱsupplyȱofȱelectricityȱandȱgas.ȱTheyȱareȱexpandingȱ theirȱactivitiesȱgloballyȱ(throughȱacquisitionsȱinȱtheȱelectricityȱandȱgasȱmarketsȱofȱ otherȱ industrializedȱ countriesȱ andȱ internationalȱ extractionȱ activities)ȱ butȱ theirȱ businessȱmodelsȱhaveȱmoreȱregionalȱcharacteristics.ȱThereȱareȱseveralȱreasonsȱforȱ this:ȱ(1)ȱUntilȱongoingȱliberalizationȱinȱelectricityȱandȱgasȱmarketsȱbegan,ȱcompaȬ niesȱfocusedȱonȱtheirȱhomeȱmarkets;ȱandȱ(2)ȱelectricityȱisȱgeneratedȱcloseȱtoȱwhereȱ itȱisȱconsumedȱbecauseȱstorageȱandȱtransportȱareȱcomparativelyȱexpensive.ȱ

-

Bothȱ sectorsȱ useȱ capitalȬintensiveȱ processesȱ toȱ supplyȱ cheapȱ andȱ strategicȱ comȬ modities.ȱ However,ȱ onȱ averageȱ OGȱ companiesȱ areȱ moreȱ resourcefulȱ thanȱ UTȱ companies.ȱFurthermore,ȱtheȱOGȱsectorȱisȱmoreȱstronglyȱlockedȱintoȱtechnologicalȱ trajectoriesȱprimarilyȱdueȱtoȱtheȱfleetȱinertiaȱinȱtheȱtransportȱsector.ȱ

-

Bothȱ sectorsȱ alsoȱ faceȱ similarȱ futureȱ challengesȱ ofȱ growingȱ energyȱ demandȱ andȱ depletingȱfossilȱfuels.ȱHowever,ȱpressureȱonȱtheȱOGȱsectorȱisȱstrongerȱbecauseȱ(1)ȱ itsȱdownstreamȱoperationsȱspanȱaȱbroaderȱscale,ȱandȱ(2)ȱoilȱ–ȱasȱitsȱkeyȱresourceȱ–ȱ willȱdepleteȱmostȱquicklyȱofȱallȱfossilȱfuels.ȱ

-

Additionally,ȱ competitionȱ inȱ theȱ downstreamȱ OGȱ businessȱ isȱ stronger,ȱ althoughȱ liberalizationȱofȱtheȱUTȱsectorȱisȱalsoȱleadingȱtoȱaȱsignificantȱincreaseȱinȱcompetiȬ tiveȱpressure.ȱ

-

TheȱOGȱsector’sȱupstreamȱactivitiesȱbearȱconsiderablyȱgreaterȱpoliticalȱandȱsocialȱ risks,ȱ associatedȱ withȱ localȱ conditionsȱ inȱ theȱ supplierȱ countriesȱ andȱ geopolitics.ȱ TheȱbargainingȱpowerȱofȱsuppliersȱinȱtheȱOGȱsector,ȱi.e.ȱgovernmentsȱasȱtheȱownȬ ersȱofȱoilȱandȱgasȱresources,ȱisȱsubstantiallyȱhigher.ȱ

ȱ

7.1ȱQualitativeȱdataȱ

7

81ȱ

Dataȱcollectedȱ

Inȱtheȱfollowingȱtwoȱsections,ȱtheȱauthorȱbrieflyȱelaboratesȱonȱtheȱamountȱofȱqualitaȬ tiveȱandȱquantitativeȱdataȱcollectedȱinȱtheȱcourseȱofȱthisȱstudy.ȱOverallȱtheȱevidenceȱ obtainedȱ(33.25ȱhoursȱofȱinterviewȱtimeȱandȱjustȱunderȱ200ȱreturnedȱquestionnaires)ȱ isȱrelativelyȱextensive,ȱifȱoneȱconsidersȱthatȱtheȱstudyȱadoptsȱaȱcontingencyȱapproachȱ thatȱdoesȱnotȱallowȱmoreȱeasilyȱobtainableȱmultiȬindustryȱsamples.ȱ 7.1

Qualitativeȱdataȱ

Sevenȱ OGȱ andȱ sixȱ UTȱ companiesȱ fromȱ Europeȱ andȱ theȱ USȱ respondedȱ positivelyȱ whenȱaskedȱtoȱparticipateȱinȱtheȱstudyȱthroughȱinterviews.ȱInȱmostȱcases,ȱtheȱauthorȱ conductedȱatȱleastȱtwoȱfaceȬtoȬfaceȱinterviewsȱperȱcompanyȱ(oneȱSOȱandȱatȱleastȱoneȱ GM)ȱandȱfollowedȱupȱbyȱphoneȱwhenȱnecessary.ȱTheȱsampleȱincludesȱallȱmajorȱnonȬ sustainabilityȱ businessȱ functionsȱ (seeȱ Tableȱ 7Ȭ1).ȱ Furthermore,ȱ sevenȱ nonȬcorporateȱ organizations,ȱ i.e.ȱ externalȱ stakeholdersȱ suchȱ asȱ publicȱ pressureȱ groups,ȱ regulatorsȱ andȱexperts,ȱalsoȱagreedȱtoȱcontributeȱtoȱtheȱstudyȱthroughȱinterviews.ȱTheȱnumberȱ ofȱ conductedȱ interviewsȱ amountsȱ toȱ aȱ totalȱ ofȱ 45.ȱ Intervieweesȱ mainlyȱ originatedȱ fromȱ MidȬNorthernȱ Europe,ȱ Latinȱ Europeȱ andȱ Nordicȱ countriesȱ (seeȱ Appendixȱ Aȱ –ȱ Interviewȱsamplesȱforȱdetails).ȱ Sector Managementȱ disciplineȱ Sustainabilityȱofficersȱ Generalȱmanagers:ȱ Operationsȱincludingȱsupplyȱchain (someȱwithȱresponsibilityȱinȱenvironmental,ȱ healthȱandȱsafety)ȱ Publicȱaffairs,ȱcommunicationsȱ Finance,ȱinvestorȱrelationsȱ Strategyȱ Researchȱ&ȱdevelopmentȱ HumanȱResourcesȱ Subtotalȱforȱgeneralȱmanagersȱ Totalȱ

OGȱsectorȱ

UTȱsectorȱ

Externalȱstakeholdersȱ (#ȱofȱinterviews)ȱ

14ȱ

7ȱ

- EnvironmentalȱorȬ ganizationsȱ(4)ȱ - Regulatorsȱ(1)ȱ - Intergovernmentalȱ organizations,ȱe.g.ȱ UNEP,ȱIEAȱ(3)ȱ - MultiȬindustryȱplatȬ forms,ȱe.g.ȱWBCSD,ȱ WEFȱ(2):ȱ

11ȱ 25ȱ

6ȱ

1ȱ

1ȱ 1ȱ 2ȱ 1ȱ 0ȱ

0ȱ 2ȱ 1ȱ 0ȱ 1ȱ 5ȱ 12ȱ

ȱ 10ȱ

Tableȱ7Ȭ1:ȱInterviewȱsampleȱ

Intervieweesȱ providedȱ ca.ȱ 45ȱ minȱ forȱ anȱ interviewȱ onȱ averageȱ (ifȱ oneȱ takesȱ intoȱ acȬ countȱthatȱsomeȱinterviewsȱwereȱconductedȱwithȱtwoȱinterviewees),ȱwhichȱaddsȱupȱ toȱaȱtotalȱofȱatȱleastȱ33.25ȱhoursȱofȱinterviewȱtime,ȱexcludingȱfollowȬupȱinterviewsȱbyȱ phone.ȱ Dependingȱ onȱ theirȱ availability,ȱ variousȱ internalȱ andȱ externalȱ companyȱ documentsȱ suchȱasȱanalystȱandȱannualȱreportsȱasȱwellȱasȱcorporateȱenvironmental,ȱsocialȱresponȬ

ȱ

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sibilityȱorȱsustainabilityȱreportsȱwereȱusedȱforȱtheȱpreparationȱofȱandȱdiscussionȱdurȬ ingȱtheȱinterviews.ȱ Furthermore,ȱ theȱ authorȱ (passively)ȱ participatedȱ inȱ aȱ threeȬhourȱ sessionȱ ofȱ aȱ globalȱ OGȱ companyȱ atȱ IMD,ȱ duringȱ whichȱ generalȱ managersȱ discussedȱ driversȱ andȱ pracȬ ticesȱofȱCSMȱwithȱoneȱofȱtheȱcompany’sȱsustainabilityȱofficers.ȱ 7.2

Quantitativeȱdataȱ

Theȱ numberȱ ofȱ returnedȱ andȱ validȱ questionnairesȱ amountedȱ toȱ 205ȱ inȱ total.ȱ Theyȱ compriseȱ13ȱandȱ55ȱquestionnairesȱfromȱUTȱsustainabilityȱofficersȱandȱgeneralȱmanȬ agersȱrespectively,ȱandȱ17ȱandȱ120ȱquestionnairesȱfromȱOGȱsustainabilityȱofficersȱandȱ generalȱmanagersȱrespectivelyȱ(seeȱFigureȱ7Ȭ1).ȱ

UTȱsector 13 Sustainability officers

OGȱsector CrossȬsectorȱcomparison

CrossȬdisciplinaryȱcomparison

55 General managers

CrossȬsectorȱcomparison

17 Sustainability officers

CrossȬdisciplinaryȱcomparison

120 General managers ȱ

Figureȱ7.1:ȱSamplesȱ–ȱDimensionsȱofȱcomparisonȱ

TheȱGMȱsamplesȱinȱbothȱsectorsȱareȱdominatedȱbyȱHRȱandȱcorporateȱstaff,ȱfollowedȱ byȱ–ȱinȱtheȱOGȱsectorȱ–ȱoperationsȱ(27%)ȱandȱmarketingȱ(14%),ȱandȱ–ȱinȱtheȱUTȱsectorȱ –ȱ financeȱ (18%)ȱ andȱ operationsȱ (13%).ȱ OGȱ respondentsȱ primarilyȱ originateȱ fromȱ middleȱ (42%)ȱ andȱ seniorȱ (38%)ȱ managementȱ positions.ȱ Theȱ UTȱ sampleȱ isȱ clearlyȱ dominatedȱ byȱ seniorȱ managersȱ (60%).ȱ Middleȱ managementȱ isȱ theȱ secondȱ mostȱ imȬ portantȱgroupȱatȱ35%.ȱBothȱsamplesȱareȱclearlyȱdominatedȱbyȱmaleȱrespondentsȱagedȱ 35ȱtoȱ50.ȱInȱtheȱOGȱsamples,ȱrespondentsȱwhoȱoperateȱinȱNorthȱAmericaȱaccountȱforȱ

7.2ȱQuantitativeȱdataȱ

83ȱ

theȱlargestȱproportion,ȱfollowedȱbyȱrespondentsȱbasedȱinȱMidȬNorthernȱEuropeȱandȱ Nordicȱ countriesȱ (seeȱ Chartȱ 7Ȭ1).ȱ Asȱ Chartȱ 7Ȭ2ȱ illustrates,ȱ theȱ UTȱ sampleȱ ofȱ generalȱ managersȱ isȱ clearlyȱ dominatedȱ byȱ respondentsȱ whoȱ operateȱ inȱ MidȬNorthernȱ Europe.ȱ

Other 7%

NR 4%

Developing Economies 2% Nordic 15%

Latin Europe 5%

Developing Economies 12%

Other 2%

NR 0% Nordic 16%

North Americas 5% Mid-Northern Europe 19%

Latin Europe 7%

North Americas 36%

Mid-Northern Europe 70%

Chartȱ7Ȭ1:ȱRegionsȱofȱoperationȱ–ȱOGȱgeneralȱ managersȱ

Chartȱ7Ȭ2:ȱRegionsȱofȱoperationȱ–ȱUTȱgeneralȱ managersȱ

Theȱ sampleȱ distributionȱ ofȱ nationalitiesȱ doesȱ notȱ deviateȱ substantiallyȱ fromȱ thatȱ ofȱ theȱregionsȱofȱoperationȱ(seeȱChartȱ7Ȭ3ȱandȱChartȱ7Ȭ4).ȱ

NR 13%

Developing Economies 0%

Nordic 17%

Latin Europe 5%

Other 5%

Other 0% NR 11%

Nordic 18%

North Americas 5%

Developing Economies 8% Latin Europe 2%

Mid-Northern Europe 23%

North America 34%

Chartȱ7Ȭ3:ȱNationalitiesȱ–ȱOGȱgeneralȱmanagersȱ

Mid-Northern Europe 61%

Chartȱ7Ȭ4:ȱNationalitiesȱ–ȱUTȱgeneralȱmanagersȱ

Theȱ SOȱ questionnaireȱ wasȱ emailedȱ orȱ faxedȱ directlyȱ toȱ allȱ sustainabilityȱ officersȱ inȬ terviewed,ȱ withȱ aȱ requestȱ toȱ forwardȱ itȱ toȱ otherȱ sustainabilityȱ expertsȱ inȱ theirȱ comȬ ȱ

84ȱ

7ȱDataȱcollectedȱ

pany.ȱInȱbothȱsectors,ȱsustainabilityȱofficersȱoperateȱmainlyȱinȱtheirȱcompany’sȱenviȬ ronmentalȱhealthȱ&ȱsafetyȱ(EHS)ȱdepartmentȱ(44%ȱinȱtheȱOG,ȱ58%ȱinȱtheȱUTȱsector).ȱȱ Other 6% Developing Economies 0%

NR 0%

Nordic 12%

Latin Europe 18%

Developing Economies 0% Latin Europe 8%

NR 0% Other 0% Nordic 15%

North Americas 8%

North Americas 12%

Mid-Northern Europe 52%

Chartȱ7Ȭ5:ȱRegionsȱofȱoperationȱ–ȱOGȱ sustainabilityȱofficersȱ

Developing Economies 6% Latin Europe 6%

NR 0%

Other 0% Nordic 12%

Mid-Northern Europe 69%

Chartȱ7Ȭ6:ȱRegionsȱofȱoperationsȱ–ȱUTȱsustainȬ abilityȱofficersȱ

Developing Economies 0%

Other 0% NR 15%

Nordic 15%

Latin Europe 0% North Americas 8%

North Americas 24%

Mid-Northern Europe 52%

Mid-Northern Europe 62%

Chartȱ7Ȭ7:ȱNationalitiesȱ–ȱOGȱsustainabilityȱofȬ ficersȱ

Chartȱ7Ȭ8:ȱNationalitiesȱ–ȱUTȱsustainabilityȱ officersȱ

AsȱChartȱ7Ȭ5ȱtoȱChartȱ7Ȭ8ȱillustrate,ȱthatȱMidȬNorthernȱEuropeanȱbiasȱisȱsubstantialȱinȱ theȱ sampleȱ ofȱsustainabilityȱofficers,ȱ particularlyȱ inȱtheȱ UTȱsector.ȱ Theȱ biasȱ hasȱ “inȬ creased”ȱcomparedȱtoȱtheȱGMȱsamplesȱbecauseȱcollectingȱdataȱfromȱsuchȱaȱrelativelyȱ smallȱpopulationȱprovedȱtoȱbeȱdifficult.ȱTheȱauthorȱhadȱtoȱrelyȱonȱpersonalȱrelationȬ

7.2ȱQuantitativeȱdataȱ

85ȱ

shipsȱ withȱ managersȱ whoȱ hadȱ alreadyȱ participatedȱ inȱ theȱ interviewȱ stage.ȱ Asȱ menȬ tionedȱearlier,ȱmostȱofȱthemȱwereȱbasedȱinȱMidȬNorthernȱEurope.ȱ Sustainabilityȱ(33%ȱinȱtheȱOG,ȱ7%ȱinȱtheȱUTȱsector)ȱandȱexternalȱaffairsȱdepartmentsȱ (17%ȱinȱtheȱOG,ȱ14%ȱinȱtheȱUTȱsector)ȱalsoȱappearȱtoȱplayȱaȱsignificantȱrole.ȱItȱshouldȱ alsoȱ beȱ notedȱ thatȱ 21%ȱ ofȱ UTȱ respondentsȱ operatedȱ inȱ functionsȱ thatȱ couldȱ notȱ asȬ signedȱ toȱ anyȱ ofȱ theȱ departmentsȱ referredȱ toȱ above.ȱ Overall,ȱ theȱ sampleȱ ofȱ sustainȬ abilityȱofficersȱ(13ȱinȱtheȱUTȱandȱ17ȱinȱtheȱOGȱsector)ȱisȱsmall.ȱNevertheless,ȱtheȱauȬ thorȱdecidedȱtoȱincorporateȱtheȱdataȱinȱthisȱstudyȱforȱtwoȱreasons:ȱ First,ȱgivenȱitsȱratherȱexploratoryȱcharacter,ȱtheȱstudyȱwillȱsignificantlyȱbenefitȱfromȱ anȱadditionalȱbenchmark,ȱifȱresultsȱareȱinterpretedȱcarefully.ȱSecond,ȱSTATA’sȱtȬtest,ȱ whichȱisȱusedȱinȱtheȱstudyȱtoȱcompareȱtheȱmeansȱbetween/amongȱsustainabilityȱoffiȬ cersȱ andȱ generalȱ managersȱ doesȱ allowȱ forȱ smallȱ samples,ȱ asȱ itȱ isȱ basedȱ onȱ theȱ StuȬ dent’sȱtȱ(Masonȱetȱal.,ȱ1999,ȱp.ȱ353).ȱ

ȱ

8ȱEmpiricalȱevidenceȱ

8

87ȱ

Empiricalȱevidenceȱ

Inȱtheȱfollowingȱsection,ȱtheȱempiricalȱfindingsȱwillȱbeȱpresentedȱandȱdiscussed.ȱItȱisȱ dividedȱintoȱfourȱsubsectionsȱthatȱdealȱwithȱtheȱfourȱindividualȱunitsȱofȱanalysisȱ(seeȱ Figureȱ8Ȭ1).ȱItȱshouldȱbeȱnotedȱthatȱtheseȱfourȱunitsȱwillȱbeȱconsistentlyȱhighlightedȱinȱ theȱ followingȱ colors:ȱ redȱ (issues),ȱ greenȱ (externalȱ stakeholders),ȱ orangeȱ (managers)ȱ andȱblueȱ(companies).ȱ Sectionȱ8.1ȱexaminesȱtheȱimportanceȱofȱenvironmentalȱandȱsocialȱissues,ȱandȱfocusesȱ specificallyȱ onȱ aȱ descriptionȱ ofȱ theȱ individualȱ problemsȱ andȱ theirȱ relevanceȱ toȱ theȱ companiesȱ andȱ sectorsȱ overall.ȱ Obviouslyȱ socialȱ andȱ environmentalȱ problemsȱ onlyȱ becomeȱ issuesȱ ifȱ someȱ stakeholder’sȱ demandȱ makesȱ theȱ problemȱ relevantȱ toȱ corpoȬ rateȱ activities,ȱ becauseȱ itȱ holdsȱ theȱ companyȱ publiclyȱ responsibleȱ (Wood,ȱ 1991,ȱ p.ȱ 698).ȱHenceȱtheȱroleȱofȱindividualȱstakeholdersȱinȱdeterminingȱtheȱsignificanceȱofȱtheȱ issuesȱwillȱbeȱmentioned.ȱHowever,ȱtheȱsectionȱprimarilyȱdiscussesȱtheȱnatureȱofȱdifȬ ferentȱsocialȱorȱenvironmentalȱissues,ȱandȱhowȱcompaniesȱareȱrespondingȱtoȱtheirȱreȬ sponsibilityȱ toȱ themȱ ratherȱ thanȱ focusingȱ onȱ theȱ importanceȱ ofȱ individualȱ stakeȬ holders.ȱ Sectionȱ8.2ȱfeaturesȱaȱcomprehensiveȱdiscussionȱofȱlegitimacyȱandȱtheȱimportanceȱofȱ stakeholdersȱotherȱthanȱmanagersȱ(whoseȱroleȱisȱexaminedȱseparatelyȱinȱsectionȱ8.3),ȱ namelyȱgovernmentsȱandȱregulators,ȱpublicȱpressureȱgroupsȱandȱtheȱfinancialȱcomȬ munity.ȱAsȱmentionedȱinȱtheȱpreviousȱparagraph,ȱsomeȱrepetitionȱthroughȱbriefȱrefȬ erencesȱ toȱ issuesȱ isȱ unavoidable.ȱ However,ȱ theȱ clearȱ focusȱ isȱ onȱ theȱ stakeholderȱ asȱ suchȱ ratherȱ thanȱ theȱ issue.ȱ Furthermore,ȱ theȱ roleȱ ofȱ industryȱ (i.e.ȱ theȱ respondents’ȱ companiesȱandȱcompetitors)ȱandȱpublicȬprivateȱpartnershipsȱisȱexaminedȱtoȱobtainȱaȱ meaningfulȱbenchmarkȱforȱrespondents’ȱassessmentȱofȱexternalȱstakeholderȱactivitiesȱ andȱtoȱdetectȱpossibleȱdifferencesȱinȱtheȱselfȬperceptionȱofȱcompaniesȱ(andȱtheirȱcomȬ petitors),ȱandȱinȱtheȱperceptionȱofȱtheȱeffectivenessȱofȱpublicȬprivateȱpartnerships.ȱ Theȱroleȱofȱmanagersȱasȱinternalȱstakeholdersȱwillȱbeȱassessedȱinȱsectionȱ8.3.ȱAsȱindiȬ vidualsȱinȱaȱcorporateȱenvironment,ȱtheyȱareȱableȱtoȱexerciseȱconsiderableȱmanagerialȱ discretionȱandȱthusȱeitherȱdriveȱorȱdeterȱCSM,ȱdependingȱonȱtheirȱlevelȱofȱknowledgeȱ andȱ expertiseȱ asȱ wellȱ asȱ theirȱ personalȱ attitudes.ȱ Henceȱ thisȱ isȱ anȱ areaȱ ofȱ particularȱ interestȱinȱthisȱstudy.ȱ Sectionȱ8.4ȱdealsȱwithȱcompaniesȱasȱtheȱfinalȱunitȱofȱanalysis.ȱItȱcomprisesȱaȱdiscusȬ sionȱofȱinternalȱandȱcompanyȬspecificȱbarriersȱ(e.g.ȱoppositionȱfromȱfunctions,ȱcorpoȬ rateȱculture)ȱandȱcomparesȱthemȱwithȱtheȱsignificanceȱofȱexternalȱbarriersȱ(e.g.ȱlackȱofȱ interestȱ fromȱ customers),ȱ companies’ȱ strategicȱ dispositionȱ toȱ CSMȱ (e.g.ȱ howȱ muchȱ shouldȱenvironmentalȱandȱsocialȱcriteriaȱbeȱtakenȱintoȱconsideration?)ȱandȱtheirȱwaysȱ ofȱoperationalizingȱitȱ(e.g.ȱtools,ȱinitiatives).ȱ ȱ

88ȱ

8ȱEmpiricalȱevidenceȱ

Sectionȱ8:ȱEmpiricalȱevidence 8.1ȱIssues

8.2ȱExternal 8.3ȱManagers stakeholders,ȱindustry andȱpartnerships 8.2.1ȱGovernments andȱregulators 8.2.2ȱPublicȱpressure groups 8.2.3ȱCustomers 8.2.4ȱFinancialȱcommunity 8.2.5ȱIndustryȱand partnerships 8.2.6ȱLegitimacyȱand theȱrelative importanceȱof externalȱstakeholders

8.4ȱCompanies

8.4.1ȱCompanyȬspecific determinants 8.4.2ȱStrategicȱdisposition 8.4.3ȱEconomicȱrationale 8.4.4ȱImplementation 8.4.4.1ȱManagement tools 8.4.4.2ȱStructure 8.4.4.3ȱCorporate initiatives 8.4.5ȱOutcome

ȱ Figureȱ8.1:ȱStructureȱofȱsectionȱ8ȱ

AsȱaȱruleȱtheȱsectionsȱandȱsubsectionsȱinȱFigureȱ8Ȭ1ȱaboveȱfeatureȱthreeȱsubsectionsȱ each,ȱwhichȱcompriseȱ(1)ȱqualitativeȱanalysisȱandȱbasicȱstatistics,ȱ(2)ȱadvancedȱstatisȬ tics,ȱ andȱ (3)ȱ discussion.ȱ Theȱ onlyȱ exceptionȱ isȱ sectionȱ 8.4.3ȱ Economicȱ rationale,ȱ forȱ whichȱ noȱ advancedȱ statisticsȱ areȱ availableȱ dueȱ toȱ theȱ necessarilyȱ moreȱ exploratoryȱ andȱqualitativeȱapproachȱtoȱtheȱbusinessȱcaseȱforȱsustainability.ȱ Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Subsectionsȱ titledȱ “Qualitativeȱ analysisȱ andȱ basicȱ statistics”ȱ containȱ reportsȱ onȱ theȱ findingsȱfromȱtheȱinterviews,ȱwhichȱareȱthenȱputȱintoȱtheȱcontextȱprovidedȱbyȱbasicȱ quantitativeȱ dataȱ analysis.ȱ Theseȱ statisticsȱ includeȱ relativeȱ frequenciesȱ (reportedȱ inȱ pieȱcharts)ȱasȱwellȱasȱΛ2ȬandȱtȬtests.ȱ Dependingȱonȱtheȱlengthȱofȱtheȱsectionȱandȱtheȱcomplexityȱofȱtheȱresults,ȱtheȱauthorȱ providesȱbriefȱconclusionsȱtoȱsummarizeȱkeyȱfindingsȱandȱinterpretations.ȱ Advancedȱstatisticsȱ Subsectionsȱwithȱtheȱheadingȱ“Advancedȱstatistics”ȱfeatureȱtheȱresultsȱofȱtheȱcorrelaȬ tionȱand/orȱregressionȱanalysis.ȱVariousȱfiguresȱwillȱbeȱprovidedȱtoȱpresentȱtheȱcorreȬ lationȱanalysisȱresultsȱinȱaȱclearȱformat.ȱItȱshouldȱbeȱnotedȱthatȱonlyȱcorrelationsȱthatȱ areȱstatisticallyȱsignificantȱatȱaȱ5%ȱlevelȱareȱincluded.ȱAssociationsȱwithȱlowerȱsignifiȬ

8ȱEmpiricalȱevidenceȱ

89ȱ

canceȱ levelsȱ mayȱ beȱ reportedȱ fromȱ timeȱ toȱ time.ȱ Itȱ isȱ possibleȱ thatȱ correlationsȱ andȱ regressionsȱthatȱareȱbasedȱonȱtheȱtotalȱandȱtheȱOGȱsampleȱmightȱyieldȱsimilarȱresultsȱ dueȱtoȱtheȱpreponderanceȱofȱOGȱrespondentsȱinȱtheȱtotalȱsample.29ȱ Correlationsȱ describeȱ theȱ associationsȱ betweenȱ twoȱ concepts,ȱ e.g.ȱ issueȱ significanceȱ andȱmanagers’ȱattitudes.ȱItȱisȱworthwhileȱreportingȱonȱthemȱinȱtheȱtwoȱsectionsȱthatȱ dealȱwithȱtheseȱconceptsȱrespectivelyȱ–ȱessentiallyȱtwiceȱinȱtheȱcourseȱofȱthisȱstudy,ȱ sinceȱ aȱ holisticȱ interpretationȱ requiresȱ theȱ considerationȱ ofȱ allȱ associationsȱ thatȱ oneȱ variableȱ exhibitsȱ withȱ theȱ remainingȱ variablesȱ tested.ȱ Thisȱ rationaleȱ isȱ followedȱ inȱ thisȱ study.ȱ However,ȱ toȱ avoidȱ unnecessaryȱ redundancies,ȱ everyȱ correlationȱ isȱ onlyȱ discussedȱinȱdetailȱonce,ȱnamelyȱtheȱfirstȱtimeȱitȱisȱreported.ȱThusȱmostȱsubsectionsȱ thatȱpresentȱtheȱstudy’sȱcorrelationȱresultsȱfeatureȱaȱbriefȱiterationȱofȱresultsȱalreadyȱ interpretedȱinȱdetailȱinȱaȱpreviousȱsection,ȱandȱaȱmoreȱdetailedȱdiscussionȱofȱresultsȱ thatȱareȱ“new”ȱinȱtheȱstudy,ȱi.e.ȱresultsȱofȱcorrelationsȱthatȱhaveȱnotȱbeenȱmentionedȱ inȱanyȱofȱtheȱpreviousȱsections.ȱ Givenȱ theȱ exploratoryȱ natureȱ ofȱ thisȱ studyȱ itȱ shouldȱ beȱ notȱ surprisingȱ ifȱ someȱ exȬ pandedȱ regressionȱ modelsȱ areȱ notȱ valid,ȱ orȱ includeȱ coefficientsȱ whoseȱ pȬvaluesȱ areȱ belowȱ theȱ regularȱ 0.05ȱ orȱ 0.10ȱ levels.ȱ Thisȱ isȱ preciselyȱ whyȱ theȱ authorȱ providesȱ reȬ ducedȱmodelsȱinȱaddition.ȱAsȱaȱrule,ȱtheȱdiscussionȱofȱtheȱinfluenceȱofȱdemographicȱ variablesȱprimarilyȱfocusesȱonȱtheȱeffectȱofȱtheȱindustryȱsectorsȱandȱregionsȱofȱoperaȬ tions.ȱ Otherȱ statisticallyȱ significantȱ demographicȱ variablesȱ willȱ notȱ beȱ discussedȱ inȱ detail,ȱ sinceȱ theyȱ areȱ primarilyȱ usedȱ toȱ controlȱ forȱ possibleȱ individualȱ biasesȱ inȱ theȱ personalȱattitudesȱofȱrespondents,ȱwhichȱhaveȱalreadyȱbeenȱfoundȱinȱearlierȱempiriȬ calȱstudies.ȱItȱshouldȱbeȱnotedȱthatȱinȱtheȱreducedȱandȱexpandedȱmodelsȱsignificanceȱ levelsȱofȱ5%ȱandȱ10%ȱareȱindicatedȱinȱboldȱandȱitalic,ȱrespectively.ȱGenerallyȱonlyȱeiȬ therȱ theȱ reducedȱ orȱ theȱ expandedȱ modelȱ willȱ beȱ shownȱ andȱ interpretedȱ inȱ theȱ text.ȱ Theȱ“missing”ȱoneȱwillȱbeȱprovidedȱinȱAppendixȱFȱ–ȱRegressionȱmodels.ȱRegressionȱ diagnosticsȱonȱtheȱsummaryȱmodelsȱ(seeȱAppendixȱGȱ–ȱRegressionȱdiagnostics)ȱindiȬ cateȱthatȱassumptionsȱunderlyingȱmultipleȱregressionȱanalysisȱareȱreasonablyȱmet.ȱ Asȱ inȱ theȱ subsectionsȱ onȱ “qualitativeȱ analysisȱ andȱ basicȱ statistics,”ȱ theȱ authorȱ proȬ videsȱ briefȱ conclusionsȱ toȱ summarizeȱ keyȱ findingsȱ andȱ interpretationsȱ ifȱ theȱ scopeȱ andȱcomplexityȱofȱtheȱresultsȱmakeȱthemȱnecessary.ȱ Discussionȱ DiscussionȱsectionsȱrepresentȱaȱsynthesisȱofȱresultsȱandȱinterpretationsȱfromȱtheȱpreȬ viousȱsectionsȱ(“Qualitativeȱanalysisȱandȱbasicȱstatistics”ȱandȱ“Advancedȱstatistics”),ȱ i.e.ȱtoȱwhatȱextentȱtheyȱconvergeȱorȱdiverge,ȱandȱcomplementȱeachȱother.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 29

ȱ

ȱThereȱareȱmoreȱthanȱtwiceȱasȱmanyȱOGȱasȱUTȱrespondents.ȱ

90ȱ

8ȱEmpiricalȱevidenceȱ

Theyȱ discussȱ (1)ȱ theȱ importanceȱ ofȱ theȱ respectiveȱ conceptȱ examined,ȱ e.g.ȱ issues,ȱ toȱ CSM,ȱ (2)ȱ itsȱ relationshipsȱ withȱ otherȱ conceptsȱ examinedȱ inȱ thisȱ studyȱ (itsȱ determiȬ nantsȱ andȱ effects),ȱ andȱ (3)ȱ itsȱ contingencyȱ character,ȱ i.e.ȱ toȱ whatȱ extentȱ theȱ conceptȱ featuresȱdifferentȱcharacteristicsȱacrossȱtheȱtwoȱindustryȱsectors,ȱmanagementȱdisciȬ plinesȱandȱdifferentȱregionsȱofȱoperations.ȱTheȱauthorȱwillȱcompareȱtheȱfindingsȱwithȱ thoseȱofȱotherȱstudiesȱandȱputȱthemȱintoȱbroaderȱperspective.ȱHeȱwillȱalsoȱdiscussȱtheȱ limitationsȱofȱtheȱstudyȱandȱprovideȱsuggestionsȱforȱfurtherȱresearch.ȱ 8.1

Issuesȱ

Accordingȱtoȱtheȱconceptualȱframeworkȱpresentedȱinȱsectionȱ4,ȱissuesȱareȱsignificantȱ motivatingȱ factorsȱ forȱ CSM,ȱ sinceȱ companiesȱ areȱ publiclyȱ responsibleȱ forȱ environȬ mentalȱ andȱ socialȱ problemsȱ causedȱ byȱ theirȱ activitiesȱ (Prestonȱ etȱ al.,ȱ 1975;ȱ Wood,ȱ 1991,ȱp.ȱ697).ȱ Inȱthisȱsection,ȱtheȱauthorȱwill:ȱ -

reportȱonȱtheȱissuesȱmentionedȱbyȱtheȱrespondentsȱtoȱthisȱsurveyȱ

-

describeȱtheȱcharacteristicsȱofȱtheȱmostȱimportantȱsingleȱenvironmentalȱandȱsocialȱ issuesȱinȱbothȱsectorsȱinȱmoreȱdetailȱ(cause,ȱrelatedȱstakeholdersȱandȱcorporateȱreȬ sponse)ȱ

-

assessȱtheirȱoverallȱimportanceȱandȱeffectsȱonȱcompanies’ȱapproachesȱtoȱCSM.ȱ

8.1.1

Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ

Figureȱ 8Ȭ2ȱ andȱ Figureȱ 8Ȭ3ȱ includeȱ allȱ theȱ differentȱ environmentalȱ andȱ socialȱ issuesȱ thatȱwereȱmentionedȱinȱtheȱinterviews.ȱThereȱareȱaȱsubstantialȱnumber,ȱparticularlyȱ inȱtheȱOGȱsectorȱlargelyȱdueȱtoȱitsȱglobalȱscaleȱofȱactivitiesȱandȱitsȱoperationsȱinȱdeȬ velopingȱcountriesȱ–ȱcomparedȱtoȱtheȱUTȱsector.ȱIssuesȱvaryȱnotȱonlyȱacrossȱdifferentȱ locationsȱ ofȱ corporateȱ activitiesȱ butȱ alsoȱ acrossȱ differentȱ kindsȱ ofȱ activitiesȱ themȬ selves.ȱ Thisȱ isȱ visibleȱ particularlyȱ inȱ theȱ OGȱ sector,ȱsinceȱ itȱ isȱ highlyȱ verticallyȱ inteȬ grated.ȱ Overall,ȱ sustainabilityȱ officersȱ interviewedȱ exhibitedȱ greaterȱ knowledgeȱ aboutȱtheȱentireȱrangeȱofȱissuesȱacrossȱtheȱvalueȱchain.ȱThisȱisȱtoȱbeȱexpected,ȱbecauseȱ theyȱ haveȱ severalȱ responsibilitiesȱ includingȱ aȱ corporateȱ reviewȱ andȱ advisoryȱ roleȱ whichȱrequiresȱthemȱtoȱdealȱwithȱvariousȱorganizationalȱunitsȱandȱissues.ȱInȱcontrast,ȱ generalȱmanagers’ȱ awarenessȱ tendsȱ toȱbeȱ limitedȱtoȱ issuesȱ thatȱareȱ moreȱshortȱtermȱ andȱdirectlyȱassociatedȱwithȱtheirȱresponsibility.ȱ

Issues

8.1ȱIssuesȱ

91ȱ

•Scale of activity relatively small, new equipment minimizes environmental impact

•Climate change •Environmental impact (e.g. groundwater), access to areas, depending on local level of biodiversity •Primarily in developing countries: revenue streams •Developing countries only (e.g. Chad, Myanmar): human rights

•Climate change •Other environmental impacts (clean fuels, cleaner production •Social impact (employment)

•Climate change •Alcohol, pornography sold at gas stations

Transport: •Pipeline construction and maintenance: employment, environmental impact (spills, routes through sensitive bioregions) •Shipping: spills •Road transport: safety

Search

Extraction

Production

Refining

Rigs, pipelines, tankers

Stakeholders

•Host governments

•Host governments, increasingly concerned with non-economic issues •Local community •Joint venture partners •Civil society •International lending institutions

Sales

Big refineries, small outlets •Host governments •Local communities •Neighboring industries Î inter-sectoral cooperation

•Customers

ȱ

Issues

Figureȱ8.2:ȱIssuesȱandȱstakeholdersȱacrossȱtheȱvalueȱchainȱ(OG)ȱ

•Relocation (also large hydropower) •Biodiversity (also large hydropower) •Lay-offs (decreasing domestic subsidies) •Health & safety

Extraction & Production (Hard coal, lignite)

Stakeholders

Gas fields, hard coal and lignite mining •Host governments •Local community •Local pressure groups

•Health & safety, particularly nuclear •Nuclear waste •Climate change •Local air pollution •Visual pollution (wind power)

Power Generation

•Health & safety •Electromagnetic fields •Fuel poverty

Distribution & supply

Large power plants and distributed generation •Host governments •Local community •Local pressure groups

Electricity and gas networks •Host governments •Local community •Local pressure groups •Commercial and private customers •Municipalities

ȱ Figureȱ8.3:ȱIssuesȱandȱstakeholdersȱacrossȱtheȱvalueȱchainȱ(UT)ȱ

ȱ

92ȱ

8ȱEmpiricalȱevidenceȱ

Itȱisȱobviousȱthatȱextractionȱactivitiesȱandȱlargeȱhydropowerȱprojectsȱareȱunderȱmoreȱ scrutinyȱ dueȱ toȱ theirȱ sizeȱ andȱ greaterȱ environmentalȱ andȱ socialȱ significanceȱ comȬ paredȱtoȱe.g.ȱdownstreamȱoperations.ȱ Inȱ theȱ followingȱ sectionsȱ 8.1.1.1ȱ andȱ 8.1.1.2,ȱ theȱ mostȱ importantȱ socialȱ andȱ environȬ mentalȱissuesȱofȱbothȱsectorsȱareȱdescribedȱinȱmoreȱdetail.ȱTheȱauthorȱwillȱalsoȱbrieflyȱ mentionȱhowȱcompaniesȱrespondedȱtoȱthem.ȱ 8.1.1.1 Socialȱandȱethicalȱissuesȱ Theȱissuesȱareȱsystemizedȱaccordingȱtoȱtwoȱcategories:ȱ(1)ȱshortȬtermȱoperationalȱisȬ suesȱandȱ(2)ȱlongȬtermȱstrategicȱissues.ȱ Operationalȱissuesȱ Theȱ OGȱ sectorȱ facesȱ severalȱ socialȱ andȱ ethicalȱ issuesȱ associatedȱ withȱ itsȱ extractionȱ andȱproductionȱactivitiesȱinȱdevelopingȱcountries.ȱOnshoreȱoperationsȱareȱmoreȱreleȬ vantȱinȱthisȱrespectȱdueȱtoȱtheirȱgreaterȱvisibility.ȱTheȱfollowingȱissuesȱwereȱbroughtȱ upȱbyȱtheȱinterviewees:ȱ -

Benefitsȱforȱlocalȱcommunitiesȱatȱproductionsȱsites:ȱTheȱlackȱofȱlocalȱinfrastrucȬ tureȱ aroundȱ productionȱ sitesȱ callsȱ forȱ aȱ fairȱ allocationȱ ofȱ oilȱ &ȱ gasȱ revenuesȱ beȬ tweenȱnationalȱ(host)ȱgovernmentsȱandȱtheȱlocalȱcommunities.ȱPeopleȱmigrateȱtoȱ sitesȱinȱtheȱhopeȱofȱemploymentȱandȱhigherȱstandardsȱofȱliving,ȱwhichȱputsȱaddiȬ tionalȱstressȱonȱ localȱfacilities.ȱ Changingȱ employmentȱ levelsȱ areȱ alsoȱ reportedȱtoȱ causeȱ significantȱ socialȱ problemsȱ whenȱ aȱ projectȱ switchesȱ fromȱ constructionȱ toȱ maintenanceȱmode,ȱwhichȱcanȱrequireȱaȱworkforceȱreductionȱofȱupȱtoȱ95%.ȱTodayȱ sustainabilityȱ leadersȱ carryȱ outȱ fullȱ impactȱ assessments,ȱ involveȱ communitiesȱ inȱ theȱ projectȱ planningȱ andȱ establishȱ necessaryȱ localȱ infrastructuresȱ forȱ e.g.ȱ educaȬ tion,ȱ healthȱ (alsoȱ toȱ combatȱ epidemicsȱ suchȱ asȱ malariaȱ andȱ HIVȱ inȱ e.g.ȱ Africa),ȱ governanceȱandȱincomeȱgenerationȱ(Bamber,ȱ2002;ȱGavin,ȱ2003).ȱ

-

Humanȱ rightsȱ violationsȱ (Dias,ȱ 2003):ȱ Humanȱ rightsȱ organizationsȱ repeatedlyȱ criticizedȱtheȱwayȱlocalȱworkforcesȱsufferȱunderȱtotalitarianȱpoliticalȱregimesȱ(e.g.ȱ Myanmar,ȱLibya,ȱAngola,ȱetc.)ȱthroughȱe.g.ȱlocalȱcontractorsȱhiredȱ(includingȱloȬ calȱpolice)ȱtoȱensureȱsecurityȱonȱsite.ȱThereȱwereȱalsoȱaccusationsȱofȱforcedȱlabor.ȱ Companiesȱ reactedȱ byȱ becomingȱ increasinglyȱ involvedȱ withȱ theȱ correspondingȱ authorities,ȱ e.g.ȱ Statoilȱ engagedȱ inȱ theȱ trainingȱ ofȱ Venezuelanȱ judgesȱ onȱ humanȱ rightsȱ(Murray,ȱ2002),ȱandȱmanagement’sȱawarenessȱofȱsuchȱissuesȱwasȱincreasedȱ throughȱtrainingȱprogramsȱ(Anonymous,ȱ2002a).ȱȱ

-

Corruptionȱ (linkedȱ toȱ fairȱ allocationȱ ofȱ revenuesȱ referredȱ toȱ above):ȱ Companiesȱ wereȱaskedȱtoȱbeȱtransparentȱaboutȱpaymentsȱtoȱnationalȱandȱregionalȱauthoritiesȱ toȱreduceȱbribery.ȱBPȱtookȱtheȱleadȱinȱ2001ȱwhenȱitȱannouncedȱthatȱitȱwouldȱpubȬ lishȱallȱtheȱpaymentsȱmadeȱtoȱAngola,ȱwhoseȱgovernmentȱpromptlyȱthreatenedȱtoȱ

8.1ȱIssuesȱ

93ȱ

cancelȱBP’sȱcontractȱ(Fritz,ȱ2003).ȱSinceȱthenȱcorruptionȱcontinuesȱtoȱbeȱaȱsignifiȬ cantȱissueȱinȱtheȱoilȱindustryȱ(Anonymous,ȱ2004b;ȱSchmittȱ&ȱHennessy,ȱ2004).ȱȱ Thoseȱissuesȱoftenȱoccurȱsimultaneously,ȱsinceȱtheyȱareȱproneȱtoȱemergeȱinȱpoor,ȱcorȬ ruptȱ andȱ leastȱ developedȱ countries,ȱ inȱ Africaȱ inȱ particularȱ (e.g.ȱ Chad,ȱ Cameroon),ȱ andȱ tendȱ toȱ beȱ accompaniedȱ byȱ significantȱ environmentalȱ problemsȱ (Hortaȱ &ȱ Djiraibe,ȱ2002).ȱTheyȱareȱprimarilyȱscrutinizedȱbyȱinternationalȱlendingȱinstitutions30ȱ andȱ NGOsȱ suchȱ asȱ Amnestyȱ Internationalȱ andȱ Transparencyȱ International,ȱ andȱ areȱ relevantȱdueȱtoȱtheirȱeffectsȱonȱOGȱcompanies’ȱreputationȱandȱchieflyȱtheȱlocal,ȱandȱ increasingly,ȱ“global”ȱlicenseȱtoȱoperateȱ(Marsden,ȱ2000ȱp.ȱ15;ȱWheelerȱetȱal.,ȱ2003ȱp.ȱ 9).ȱAtȱtheȱendȱofȱJuneȱ2004,ȱtheȱUSȱsupremeȱcourtȱruledȱthatȱperpetratorsȱofȱhumanȱ rightsȱ offenses,ȱ i.e.ȱ potentiallyȱ alsoȱ OGȱ companies,ȱ couldȱ beȱ heldȱ liable,ȱ ifȱ offensesȱ wereȱ widelyȱ acceptedȱ asȱ violationsȱ ofȱ internationalȱ law.31ȱ Theȱ significanceȱ ofȱ socialȱ andȱ ethicalȱ issuesȱ wasȱ recognizedȱ byȱ mostȱ intervieweesȱ whoȱ alsoȱ consideredȱ socialȱ issuesȱ“moreȱdifficultȱtoȱgrasp”ȱthanȱenvironmentalȱproblems,ȱsinceȱtheyȱrequireȱdifȬ ferentȱmanagementȱandȱreportingȱpracticesȱ(e.g.ȱSAȱ8000),32ȱwhichȱareȱasȱyetȱunfamilȬ iarȱtoȱchieflyȱlaggardȱcompanies.ȱ Theȱ UTȱ sectorȱ facesȱ twoȱ socialȱ challengesȱ thatȱ areȱ moreȱ typicalȱ forȱ itsȱ regionalȱ andȱ eurocentricȱbusinessȱmodels:ȱ -

Downsizing:ȱTheȱderegulationȱofȱmarketsȱhasȱsignificantlyȱincreasedȱcompetitiveȱ pressure,ȱtoȱwhichȱcompaniesȱareȱreactingȱwithȱlayoffs.ȱAȱgradualȱphasingȱoutȱofȱ subsidiesȱtoȱdomesticȱminingȱactivitiesȱhasȱbeenȱassociatedȱwithȱshutȱdownsȱandȱ hasȱhadȱtoȱbeȱmanagedȱinȱaȱsociallyȱacceptableȱmanner.ȱ

-

Relocationȱ ofȱ residents:ȱ Surfaceȱ miningȱ andȱ largeȱ hydropowerȱ projectsȱ requireȱ relocationȱ ofȱ residentsȱ andȱ haveȱ beenȱ settledȱ largelyȱ successfullyȱ throughȱ diaȬ loguesȱwithȱresidentsȱandȱcitizens’ȱinitiativesȱinȱEurope.ȱInȱdevelopingȱcountries,ȱ damsȱ areȱ stillȱ beingȱ criticizedȱ byȱ NGOsȱ forȱ theirȱ unwantedȱ socialȱ andȱ environȬ mentalȱeffectsȱ(Khagram,ȱ2003;ȱParker,ȱ2001;ȱSuzman,ȱ1998).ȱ

Bothȱissuesȱhaveȱaȱcertainȱimpactȱonȱreputation,ȱandȱtheȱformalȱ(regulations)ȱandȱinȬ formalȱ (buyȬinȱ fromȱ workforceȱ andȱ residents)ȱ licenseȱ toȱ operateȱ butȱ areȱ clearlyȱ lessȱ importantȱthanȱtheȱkindsȱofȱsocialȱissuesȱfacedȱbyȱOGȱcompanies.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 30

ȱTheȱWorldȱBank’sȱOperationalȱPoliciesȱandȱDirectivesȱtakeȱaccountȱofȱvariousȱissuesȱofȱsustainableȱ developmentȱsuchȱasȱpoverty,ȱAIDS,ȱenvironmentȱandȱglobalization.ȱ

31

ȱ Relevantȱ casesȱ haveȱ beenȱ broughtȱ againstȱ Unocal,ȱ ChevronTexacoȱ andȱ otherȱ majorȱ oilȱ companiesȱ (Anonymous,ȱ2004c).ȱ

32

ȱ

ȱSAȱ8000ȱisȱaȱstandardȱforȱsociallyȱresponsibleȱemploymentȱpracticesȱandȱfeaturesȱnineȱdifferentȱareasȱ includingȱchildȱlabor,ȱforcedȱlaborȱandȱdiscrimination.ȱ

94ȱ

8ȱEmpiricalȱevidenceȱ

Strategicȱissuesȱ Thereȱ isȱ oneȱ keyȱ strategicȱ socialȱ issue,ȱ namelyȱ theȱ NorthȬSouthȱ energyȱ divide.ȱ Itȱ isȱ causedȱthroughȱtheȱlackȱofȱaccessȱtoȱenergyȱofȱpopulationsȱinȱdevelopingȱcountries.ȱ Peopleȱinȱruralȱareas,ȱinȱparticular,ȱspendȱaȱdisproportionatelyȱhighȱshareȱofȱtheirȱinȬ comeȱandȱtimeȱonȱgainingȱaccessȱtoȱenergy.ȱTheseȱresourcesȱareȱthenȱnotȱavailableȱforȱ childȱcare,ȱeducation,ȱincomeȱgenerationȱandȱhenceȱeconomicȱdevelopmentȱ(InternaȬ tionalȱEnergyȱAgencyȱetȱal.,ȱ2002,ȱp.ȱ6).ȱ Althoughȱ thisȱ problemȱ hasȱ beenȱ recognizedȱ byȱ theȱ sectorȱ (alsoȱ byȱ mostȱ interviewȬ ees),ȱitȱremainsȱclearlyȱunresolvedȱdueȱtoȱtheȱlackȱofȱexternalȱpressureȱandȱfinancialȱ opportunitiesȱ(Anderssonȱ etȱal.,ȱ 2000ȱp.ȱ 565;ȱ Prahaladȱ &ȱ Hart,ȱ2002).ȱResidentsȱ lackȱ theȱnecessaryȱpurchasingȱpowerȱthatȱwouldȱjustifyȱmoreȱsubstantialȱinvestments.ȱTheȱ costsȱofȱdecentralizedȱphotovoltaicȱsystemsȱorȱgridȱextensionsȱtoȱremoteȱcommunitiesȱ (whereȱpopulationȱdensityȱandȱdemandȱareȱgenerallyȱlow,ȱbutȱconcentratedȱatȱpeakȱ times)ȱareȱrelativelyȱhigh.ȱ Toȱpartlyȱresolveȱthisȱissueȱofȱenergyȱpoverty,ȱOGȱcompaniesȱhaveȱestablishedȱlocalȱ energyȱ infrastructuresȱ aroundȱ theirȱ facilitiesȱ andȱ carriedȱ outȱ pilotȱ projectsȱ ofȱ ruralȱ electrificationȱ(e.g.ȱthroughȱsolarȱsystems).ȱSomeȱhaveȱenteredȱtheȱutilityȱbusinessȱinȱ developingȱcountriesȱ(e.g.ȱBGȱGroup)ȱbutȱfocusȱonȱurbanȱareasȱonly.ȱApartȱfromȱpilotȱ projects,ȱUTȱcompaniesȱalsoȱrefrainȱfromȱseriousȱengagementȱinȱruralȱareas.ȱ Conclusionȱ Theȱ kindsȱ ofȱ keyȱ socialȱ andȱ ethicalȱ issuesȱ largelyȱ differȱ betweenȱ theȱ twoȱ sectors.ȱ Henceȱitȱisȱnotȱpossibleȱtoȱmakeȱaȱdirectȱcomparisonȱofȱtheȱindividualȱissuesȱacrossȱ theȱsectorȱ–ȱasȱprovidedȱforȱtheȱenvironmentalȱissuesȱinȱtheȱnextȱsectionȱ–ȱapartȱfromȱ theȱstrategicȱissueȱofȱtheȱNorthȬSouthȱenergyȱdivide.ȱ TheȱgreatȱdivergenceȱbetweenȱtheȱsectorsȱisȱdueȱtoȱtheȱlocationȱofȱtheȱactivitiesȱconȬ cerned.ȱTheȱUTȱsectorȱhasȱaȱmoreȱregionalȱbusinessȱmodel.ȱInȱtheȱcaseȱofȱtheȱcompaȬ niesȱsurveyedȱthisȱmeansȱaȱEurocentricȱperceptionȱofȱissues,ȱi.e.ȱissuesȱareȱlessȱsevereȱ (dueȱtoȱcomparativelyȱhighȱstandardsȱofȱliving)ȱandȱmoreȱstronglyȱregulatedȱthanȱinȱ developingȱ countries.ȱ Thisȱ alsoȱ meansȱ thatȱ theȱ levelȱ ofȱ managerialȱ uncertaintyȱ isȱ lower.ȱFurthermore,ȱtheȱextractionȱofȱprimaryȱenergyȱsourcesȱ(e.g.ȱcoal)ȱbyȱUTȱcomȬ paniesȱ takesȱ placeȱ inȱ countriesȱ (e.g.ȱ China,ȱ Australia,ȱ Southȱ Africa)ȱ thatȱ onȱ averageȱ haveȱlessȱsevereȱsocialȱproblemsȱthanȱlessȱdevelopedȱcountriesȱinȱAfricaȱ(e.g.ȱChad,ȱ Cameroon,ȱNigeria)ȱorȱAsiaȱ(e.g.ȱMyanmar).ȱ Finallyȱtheȱtwoȱsectorsȱrecognizeȱtheirȱ onlyȱ sharedȱissueȱofȱtheȱNorthȬSouthȱenergyȱ divide.ȱTheirȱresponsesȱareȱveryȱsimilarȱandȱlargelyȱlimitedȱtoȱpilotȱprojects,ȱclearlyȱ becauseȱofȱtheȱlackȱofȱexternalȱpressureȱandȱfinancialȱopportunities.ȱ

8.1ȱIssuesȱ

95ȱ

8.1.1.2 Environmentalȱissuesȱ Intervieweesȱ primarilyȱ pointedȱ toȱ theȱ significanceȱ ofȱ severalȱ environmentalȱ issues,ȱ namelyȱ climateȱ change,ȱ localȱ airȱ pollution,ȱ biodiversityȱ andȱ landscapeȱ protection,ȱ andȱ–ȱinȱsomeȱcountriesȱ–ȱnuclearȱpower,ȱwhichȱcouldȱalsoȱbeȱseenȱasȱhealthȱ&ȱsafetyȱ issue.ȱIssuesȱwillȱbeȱdescribedȱinȱmoreȱdetailȱinȱtheȱfollowingȱtext.ȱAgain,ȱtheȱauthorȱ differentiatesȱbetweenȱoperationalȱandȱstrategicȱissues.ȱ Operationalȱissuesȱ Biodiversityȱandȱlocalȱenvironmentalȱdeteriorationȱ Theȱ issueȱ ofȱ biodiversityȱ andȱ localȱ environmentalȱ deteriorationȱ isȱ primarilyȱ associȬ atedȱwithȱextractionȱandȱproductionȱactivitiesȱthatȱrequireȱaccessȱtoȱareasȱwithȱhighȱ levelsȱ ofȱ biodiversity,ȱ andȱ thatȱ emitȱ harmfulȱ substancesȱ intoȱ theȱ environment,ȱ priȬ marilyȱwaterȱandȱsoil.ȱItȱisȱdependentȱonȱtheȱlocalȱinfrastructureȱ(e.g.ȱinȱEuropeȱmostȱ pipelinesȱ areȱ laidȱ underground),ȱ landscapeȱ (surfaceȱ mining)ȱ andȱ levelȱ ofȱ biodiverȬ sity,ȱandȱthusȱ localȱ stakeholdersȱ (regulators,ȱneighbors)ȱandȱsomeȱglobalȱNGOsȱ areȱ theȱmainȱpressureȱgroups.ȱInȱsomeȱcasesȱ(e.g.ȱinȱtermsȱofȱsurfaceȱminingȱactivitiesȱinȱ Germany)ȱcitizenȱgroupsȱareȱperceivedȱasȱhavingȱaȱstrongerȱinfluenceȱthanȱnationalȱ andȱglobalȱNGOs.ȱ InȱtheȱOGȱsector,ȱbiodiversityȱcanȱmainlyȱbeȱaffectedȱthroughȱoilȱspillsȱandȱmajorȱexȬ tractionȱ andȱ constructionȱ activitiesȱ (platforms,ȱ pipelines)ȱ inȱ developingȱ countries,ȱ whichȱrequireȱaccessȱtoȱremoteȱareasȱwithȱhighȱlevelsȱofȱbiodiversity.ȱInȱtheȱUTȱsecȬ tor,ȱsurfaceȱminingȱactivitiesȱandȱlargeȱhydropowerȱprojectsȱcanȱhaveȱsignificantȱenȬ vironmentalȱimpacts.ȱSinceȱsurfaceȱminingȱactivitiesȱareȱstronglyȱregulatedȱinȱdevelȬ opedȱ countriesȱandȱprovideȱmuchȬneededȱ employment,ȱ externalȱ pressureȱ isȱ mainlyȱ associatedȱ withȱ largeȱ hydropowerȱ projectsȱ inȱ developingȱ andȱ emergingȱ economiesȱ (Kynge,ȱ2002;ȱParker,ȱ2001).ȱ Althoughȱtheȱsafetyȱofȱnuclearȱpowerȱgenerationȱandȱtheȱunresolvedȱissueȱofȱwasteȱ disposalȱhaveȱtriggeredȱoppositionȱfromȱcivilȱsocietyȱinȱsomeȱEuropeanȱcountriesȱ–ȱofȱ whichȱ several,ȱ suchȱ asȱ Germanyȱ andȱ Belgium,ȱ haveȱ legislatedȱ toȱ phaseȱ outȱ nuclearȱ energyȱ (Dombey,ȱ 2002)ȱ –ȱ overallȱ theȱ significanceȱ ofȱ biodiversityȱ andȱ localȱ environȬ mentalȱdeteriorationȱisȱlessȱstrongȱinȱtheȱUTȱsector.ȱThisȱisȱbecauseȱitȱisȱmainlyȱactiveȱ inȱEurope,ȱwhereȱrelativelyȱhighȱenvironmental,ȱhealthȱandȱsafetyȱstandardsȱareȱalȬ readyȱ compliedȱ withȱ andȱ levelsȱ ofȱ biodiversityȱ areȱ lowerȱ thanȱ inȱ developingȱ counȬ tries.ȱ Inȱ theȱ OGȱ sectorȱ economicȱ implicationsȱ areȱ moreȱ significant,ȱ particularlyȱ beȬ causeȱlocalȱenvironmentalȱeffectsȱinȱdevelopingȱcountriesȱareȱstronglyȱscrutinizedȱbyȱ NGOsȱonȱaȱglobalȱscaleȱandȱlinkedȱtoȱtheȱsocialȱissuesȱdescribedȱinȱtheȱpreviousȱsecȬ tionȱ(e.g.ȱhumanȱrights,ȱinfrastructures,ȱbenefitȱofȱlocalȱcommunities).ȱHenceȱtheyȱareȱ moreȱ stronglyȱ associatedȱ withȱ companies’ȱ (formalȱ andȱ informal)ȱ licenseȱ toȱ operate,ȱ brandȱvalueȱandȱreputationȱ(Cooper,ȱ2003;ȱHoyosȱ&ȱMcNulty,ȱ2003;ȱWhite,ȱ1996).ȱ ȱ

96ȱ

8ȱEmpiricalȱevidenceȱ

Localȱairȱpollutionȱ Localȱ airȱ pollutionȱ isȱ causedȱ throughȱ NOxȱ andȱ SO2ȱ emissionsȱ thatȱ resultȱ fromȱ theȱ combustionȱofȱfossilȱfuelsȱandȱleadȱtoȱsmog,ȱacidificationȱandȱeutrophication.ȱInȱtheȱ OGȱ sector,ȱ itȱ isȱ associatedȱ withȱ operationsȱ (productionȱ andȱ refining)ȱ and,ȱ mostȱ imȬ portantly,ȱȱwithȱproductȱuseȱinȱtheȱmobility,ȱindustrialȱandȱresidentialȱsectors.ȱLocalȱ airȱpollutionȱhasȱbecomeȱaȱsevereȱenvironmentalȱandȱhealthȱproblemȱinȱurbanȱareasȱ ofȱ developingȱ countries,ȱ andȱ isȱ thusȱ underȱ moreȱ scrutinyȱ fromȱ regulatorsȱ thanȱ cliȬ mateȱchangeȱis.ȱInȱOECDȱcountries,ȱtheȱimportanceȱofȱlocalȱairȱpollutionȱhasȱclearlyȱ decreased.ȱ Companiesȱ reactedȱ toȱ increasingȱ regulatoryȱ andȱ publicȱ pressureȱ inȱ theȱ previousȱtwoȱdecadesȱandȱagreedȱtoȱphaseȱoutȱleadȱandȱtoȱreduceȱtheȱsulfurȱcontentȱ inȱ motorȱ fuels.ȱ Thisȱ requiredȱ majorȱ investmentsȱ inȱ newȱ technologiesȱ (Anonymous,ȱ 1998;ȱSmith,ȱ1998).ȱInȱtheȱfuture,ȱtheȱproductionȱofȱincreasinglyȱcleanerȱfuelsȱwillȱreȬ mainȱcostlyȱbecauseȱitȱisȱconsiderablyȱenergyȬȱandȱCO2Ȭintensive.ȱOnȱtheȱotherȱhand,ȱ reputationȱ andȱ brandȱ valueȱ areȱ expectedȱ toȱ benefitȱ fromȱ furtherȱ developmentsȱ beȬ causeȱtheyȱdemonstrateȱenvironmentalȱleadershipȱ(2003d;ȱRistau,ȱ2004).ȱ InȱtheȱUTȱsector,ȱtheȱsignificanceȱofȱlocalȱairȱpollutionȱhasȱclearlyȱdecreasedȱandȱapȬ pearsȱtoȱbeȱlowerȱthanȱinȱtheȱOGȱsector.ȱCompaniesȱmadeȱsignificantȱinvestmentsȱinȱ endȬofȬtheȬpipeȱandȱintegratedȱtechnologiesȱtoȱreduceȱemissionsȱ–ȱasȱinȱtheȱOGȱsectorȱ becauseȱ ofȱ hardeningȱ externalȱ pressureȱ (e.g.ȱ EUȱ largeȱ combustionȱ plantȱ directive,ȱ domesticȱemissionȱlimits).ȱHowever,ȱinȱseveralȱEuropeanȱcountries,ȱwasteȬfuelȬfiredȱ powerȱplantsȱmayȱposeȱaȱsignificantȱchallengeȱinȱtheȱfuture,ȱsinceȱemissionȱstandardsȱ willȱbeȱmoreȱdifficultȱtoȱmeet.ȱ Strategicȱissuesȱ Climateȱchange,ȱwhichȱisȱcausedȱbyȱtheȱemissionȱofȱgreenhouseȱgasesȱandȱisȱlikelyȱtoȱ haveȱregionalȱandȱglobalȱenvironmentalȱeffectsȱ(e.g.ȱrisingȱseaȱlevels,ȱshiftingȱclimateȱ zones),ȱwasȱperceivedȱasȱtheȱmostȱsignificantȱissueȱinȱbothȱsectors.ȱInȱtheȱOGȱsectorȱ greenhouseȱgasȱemissionsȱareȱprimarilyȱrelatedȱtoȱproductȱuse,ȱi.e.ȱburningȱofȱfossilȱ fuelsȱ inȱ theȱ mobility,ȱ industrialȱ andȱ residentialȱ sectors.ȱ However,ȱ greenhouseȱ gasȱ emissionsȱfromȱoperationsȱareȱalsoȱseenȱtoȱplayȱaȱsignificantȱroleȱinȱareasȱwithȱlittleȱ energyȬintensiveȱ industryȱ andȱ highȱ sharesȱ ofȱ renewableȱ energyȱ (e.g.ȱ Nordicȱ counȬ tries).ȱ Theȱ Kyotoȱ Protocol,ȱ whichȱ –ȱ afterȱ itsȱ ratificationȱ throughȱ Russiaȱ –ȱ bindsȱ industrialȬ izedȱcountriesȱtoȱcommitmentsȱtoȱreduceȱgreenhouseȱgasȱemissions,ȱhasȱhadȱaȱnotaȬ bleȱ influenceȱ onȱ nationalȱ regulations,ȱ particularlyȱ inȱ Europe.ȱ Severalȱ nationalȱ govȬ ernmentsȱinȱEuropeȱ(e.g.ȱtheȱNetherlands,ȱtheȱUKȱandȱNorway)ȱhaveȱincreasedȱreguȬ latoryȱ pressureȱ throughȱ ecoȬtaxesȱ andȱ aȱ bundleȱ ofȱ policyȱ measuresȱ targetedȱ atȱ endȱ usersȱinȱtheȱmobility,ȱindustrialȱandȱresidentialȱsectors:ȱTheȱissueȱofȱclimateȱchangeȱinȱ theȱOGȱsectorȱisȱmainlyȱpushedȱbyȱpublicȱpressureȱgroupsȱsuchȱasȱGreenpeaceȱandȱ

8.1ȱIssuesȱ

97ȱ

FriendsȱofȱtheȱEarth.ȱAsȱaȱreaction,ȱleadingȱEuropeanȱcompaniesȱsuchȱasȱShellȱandȱBPȱ haveȱestablishedȱinternalȱemissionȱtradingȱsystemsȱandȱareȱparticipatingȱinȱtheȱUK’sȱ voluntaryȱ emissionȱ tradingȱ systemȱ (Nicholls,ȱ 2003b).ȱ Companiesȱ withȱ lessȱ CO2Ȭ intensiveȱproductȱmixes,ȱe.g.ȱBGȱGroupȱ(moreȱnaturalȱgas,ȱlessȱoil),ȱconsiderȱclimateȱ changeȱmoreȱofȱanȱopportunityȱthanȱaȱthreat.ȱ ComparedȱwithȱOGȱcompanies,ȱUTȱfirms’ȱgreenhouseȱgasȱemissionsȱareȱclearlyȱassoȬ ciatedȱwithȱtheirȱownȱoperations,ȱi.e.ȱpowerȱgenerationȱfromȱfossilȱfuels.ȱInȱfact,ȱUTȱ firmsȱ areȱ amongȱ theȱ greatestȱ singleȱ industrialȱ CO2ȱ emittersȱ inȱ Europeȱ andȱ areȱ thusȱ moreȱsuitableȱtargetsȱforȱnationalȱandȱEuropeanȱlegislatorsȱthanȱtheȱupstreamȱoilȱ&ȱ gasȱ activities.33ȱ Inȱ conclusion,ȱ mostȱ UTȱ companiesȱ surveyedȱ areȱ subjectȱ toȱ stronger,ȱ moreȱshortȬtermȱandȱprimarilyȱregulatoryȱpressureȱinȱEuropeȱdueȱtoȱtheȱcomingȱCO2ȱ emissionȱ tradingȱ systemȱ (Leyvaȱ &ȱ Lekander,ȱ 2003,ȱ p.ȱ 122).34ȱ Mostȱ managersȱ acrossȱ bothȱsectorsȱacknowledgeȱthatȱtheȱpriceȱofȱgreenhouseȱgasȱemissionsȱ(setȱbyȱecoȬtaxesȱ andȱ emissionȱ allowances)ȱ willȱ increaseȱ overȱ time.ȱ Theȱ Carbonȱ Disclosureȱ Project,ȱ aȱ groupȱ ofȱinstitutionalȱ investorsȱ scrutinizingȱtheȱcorporateȱ sectorȱ inȱtermsȱ ofȱitsȱCO2ȱ portfolio,ȱisȱconsideredȱanȱadditionalȱdriverȱtoȱemissionsȱreductionȱ(Nicholls,ȱ2003a).ȱ Overall,ȱ OGȱ managers,ȱ andȱ sustainabilityȱ officersȱ inȱ particular,ȱ considerȱ climateȱ changeȱaȱsignificantȱthreatȱtoȱtheirȱcompanies’ȱbrandȱvalueȱandȱreputationȱ(Hoyosȱetȱ al.,ȱ2003;ȱMerolli,ȱ2003).ȱHowever,ȱtheȱlicenseȱtoȱoperateȱisȱonlyȱbelievedȱtoȱbeȱendanȬ geredȱinȱtheȱmidȱtoȱlongȱtermȱ(Mansley,ȱ2002).ȱAllȱinȱallȱUT,ȱmanagersȱareȱmoreȱconȬ cerned,ȱ particularlyȱ dueȱ toȱ theȱ forthcomingȱ EUȱ emissionsȱ tradingȱ systemȱ andȱ theȱ greaterȱ CO2ȱ intensivenessȱ ofȱ theȱ sectorȱ (Gassman,ȱ 2004;ȱ Preußȱ &ȱ Gassman,ȱ 2003;ȱ Whittakerȱ&ȱKiernan,ȱ2003).ȱManagementȱattentionȱisȱgreaterȱbecauseȱclimateȱchangeȱ featuresȱ aȱgreaterȱ senseȱ ofȱ urgencyȱ andȱ greaterȱ financialȱ opportunitiesȱ orȱ threatsȱ inȱ theȱshortȱtermȱ(Anderssonȱetȱal.,ȱ2000,ȱp.ȱ565).ȱ Conclusionȱ Whereasȱ localȱ airȱ pollution,ȱ biodiversityȱ andȱ localȱ environmentalȱ deteriorationȱ apȬ pearȱtoȱaffectȱOGȱcompaniesȱmoreȱstronglyȱthanȱUTȱcompanies,ȱregulatoryȱpressureȱ onȱ climateȱ changeȱ primarilyȱ targetsȱ theȱ UTȱ sectorȱ inȱ theȱ shorterȱ term.ȱ Inȱ contrast,ȱ pressureȱfromȱ civilȱsocietyȱ onȱ climateȱchangeȱclearlyȱ focusesȱonȱ theȱOGȱ sector.ȱ Itȱ isȱ impossibleȱtoȱseriouslyȱcompareȱtheȱimportanceȱofȱenvironmentalȱissuesȱbetweenȱtheȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 33

ȱAsȱstatisticsȱfromȱtheȱUSȱEnergyȱInformationȱAgencyȱalsoȱillustrate,ȱtheȱentireȱUSȱindustrialȱsectorȱ emittedȱ 1.6ȱ billionȱ metricȱ tonsȱ ofȱ CO2ȱ inȱ 2001,ȱ whereasȱ theȱ electricȱ powerȱ sectorȱ onȱ itsȱ ownȱ acȬ countedȱforȱ2.2ȱbillionȱmetricȱtonsȱofȱCO2ȱemittedȱȱ (www.eia.doe.gov/oiaf/1605/ggrpt/cdemissions_tbls.htmlȱonȱ5ȱMayȱ2004)ȱ

34

ȱ

ȱOilȱrefineriesȱareȱalsoȱaffectedȱbyȱtheȱEUȱemissionȱtradingȱsystem.ȱ

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twoȱ sectorsȱ atȱ suchȱ anȱ aggregatedȱ levelȱ onȱ onlyȱ theȱ qualitativeȱ evidenceȱ collected.ȱ However,ȱoneȱcanȱdrawȱtwoȱconclusions:ȱ 3. Relativelyȱ shortȬtermȱ regulatoryȱ pressureȱ onȱ theȱ UTȱ sectorȱ regardingȱ climateȱ changeȱisȱhardeningȱandȱlargelyȱcompensatesȱforȱtheȱlowerȱvisibilityȱofȱissuesȱandȱ companiesȱinȱtheȱUTȱsectorȱinȱEurope,ȱwhichȱhasȱmostlyȱkeptȱcompaniesȱfromȱtheȱ strongerȱscrutinyȱofȱcivilȱsociety.ȱ 4. Inȱ theȱ OGȱ sectorȱ environmentalȱ effectsȱ areȱ moreȱ diverseȱ andȱ relateȱ toȱ activitiesȱ acrossȱ theȱ entireȱ valueȱ chain,ȱ whichȱ areȱ carriedȱ outȱ onȱ aȱ globalȱ scale.ȱ Inȱ theȱ UTȱ sectorȱtheyȱareȱlessȱdiffuseȱandȱthusȱmoreȱeasilyȱcontrollable,ȱasȱtheyȱareȱmainlyȱ associatedȱwithȱgreenhouseȱgasesȱemittedȱfromȱpowerȱplantsȱthatȱareȱmostlyȱopȬ eratedȱinȱdevelopedȱcountries.ȱTheseȱplantsȱareȱoperatedȱinȱindustrializedȱcounȬ triesȱwithȱhighȱenvironmentalȱstandardsȱandȱthusȱpresentȱveryȱsuitableȱtargetsȱforȱ correspondingȱenvironmentalȱpolicyȱinstruments.ȱȱ 8.1.1.3 Theȱrelativeȱimportanceȱofȱenvironmentalȱandȱsocialȱissuesȱ Inȱtheȱfollowingȱsection,ȱtheȱauthorȱwillȱassessȱtheȱimportanceȱofȱenvironmentalȱandȱ socialȱissuesȱinȱrelationȱtoȱeachȱother,ȱacrossȱbothȱsectors.ȱToȱdoȱso,ȱheȱwillȱelaborateȱ on:ȱ -

respondents’ȱawarenessȱofȱissues,ȱi.e.ȱtheirȱabilityȱtoȱnameȱandȱdescribeȱtheȱmostȱ importantȱonesȱ

-

respondents’ȱperceptionȱofȱtheȱsignificanceȱofȱissues.ȱ

Issueȱawarenessȱ Whenȱ askedȱ toȱ specifyȱ environmentalȱ andȱ socialȱ issuesȱ thatȱ affectȱ theirȱ companiesȱ “much”ȱorȱ“veryȱmuch,”ȱaȱsubstantialȱshareȱofȱgeneralȱmanagersȱinȱbothȱsectorsȱdidȱ notȱ respondȱ (seeȱ Chartȱ 8Ȭ1ȱ andȱ Chartȱ 8Ȭ2),ȱ whichȱ pointsȱ toȱ aȱ relativelyȱ lowȱ levelȱ ofȱ issueȱ awareness.ȱ Furthermore,ȱ dataȱ indicateȱ aȱ somewhatȱ narrow,ȱ environmentallyȱ dominatedȱ view:ȱ Socialȱ issuesȱ takeȱ onlyȱ aȱ 12%ȱ andȱ 17%ȱ shareȱ andȱ areȱ thusȱ clearlyȱ lessȱfrequentlyȱnamedȱthanȱenvironmentalȱissues,ȱwhichȱaccountȱoverallȱforȱ42%ȱandȱ 33%ȱinȱtheȱOGȱandȱUTȱ sectorȱrespectively.ȱThisȱ viewȱcouldȱ haveȱbeenȱ expectedȱ forȱ severalȱreasons:ȱ 1. Comparedȱ toȱ environmentalȱ issues,ȱ socialȱ issuesȱ suchȱ asȱ humanȱ rights,ȱ corrupȬ tionȱandȱbenefitsȱofȱlocalȱcommunitiesȱhaveȱonlyȱbecomeȱimportantȱmoreȱrecentlyȱ dueȱ toȱ NGOȱ activitiesȱ (Lamontȱ &ȱ Michael,ȱ 2003;ȱ Murray,ȱ 2002).ȱ Theyȱ areȱ moreȱ elusiveȱandȱdifficultȱtoȱhandle,ȱsinceȱtheyȱrequireȱaȱnewȱandȱhigherȱlevelȱofȱcorpoȬ rateȱinvolvementȱwithȱgovernmentsȱandȱcommunitiesȱ(Gavin,ȱ2003).ȱ

8.1ȱIssuesȱ

99ȱ

2. Mostȱ respondentsȱ areȱ basedȱ inȱ Europeȱ andȱ theȱ US,ȱ whereȱ theyȱ areȱ confrontedȱ withȱhigherȱregulatoryȱstandardsȱandȱlessȱsevereȱsocialȱproblemsȱthanȱtheirȱcounȬ terpartsȱinȱdevelopingȱcountries.ȱHenceȱtheyȱareȱlessȱfamiliarȱwithȱthoseȱissues.ȱȱ Theȱ higherȱ proportionȱ ofȱ “socialȱ issues”ȱ inȱ theȱ UTȱ sectorȱ isȱ unexpected,ȱ sinceȱ –ȱ asȱ outlinedȱ inȱ theȱ previousȱ sectionȱ –ȱ socialȱ issuesȱ affectȱOGȱ companiesȱ moreȱstrongly.ȱ However,ȱ resultsȱ shouldȱ beȱ relativized,ȱ becauseȱ mostȱ ofȱ theȱ socialȱ problemsȱ deȬ scribedȱ(e.g.ȱrecruitment,ȱdiversity,ȱlayoffsȱandȱenergyȱprices)ȱpointȱtoȱrespondents’ȱ eurocentricȱ perceptionȱ ofȱ corporateȱ sustainabilityȱ andȱ thusȱ alsoȱ partlyȱ reflectȱ theȱ strongȱEuropeanȱbiasȱinȱtheȱUTȱsample.ȱ

Pollution (e.g. climate change, acidification) 19%

Pollution (e.g. climate change, acidification) 21%

NR 42%

Other issues 3%

Social issues 12%

Other environmental issues (e.g. biodiversity, environment in general) 22%

Chartȱ8Ȭ1:ȱIssuesȱ–ȱOpenȬendedȱquestionȱ(GenȬ eralȱmanagersȱ–ȱOG)ȱ

Other environmental issues (e.g. biodiversity, environment in general) 14%

NR 48%

Other issues 2%

Social issues 17%

Chartȱ8Ȭ2:ȱIssuesȱ–ȱOpenȬendedȱquestionȱ(GenȬ eralȱmanagersȱ–ȱUT)ȱ

Resultsȱbasedȱonȱdataȱobtainedȱfromȱsustainabilityȱofficersȱ(seeȱChartȱ8Ȭ3ȱandȱChartȱ 8Ȭ4)ȱshouldȱbeȱtreatedȱwithȱreservationȱdueȱtoȱtheȱsmallȱsamples.ȱBothȱchartsȱshowȱaȱ strongȱ focusȱ onȱ environmentalȱ issuesȱ (energyȱ consumptionȱ andȱ climateȱ changeȱ asȱ wellȱ asȱ pollutionȱ andȱ wasteȱ management)ȱ whichȱ accountȱ forȱ 82%ȱ andȱ 79%ȱ ofȱ theȱ mostȱ importantȱ issuesȱ mentionedȱ inȱ theȱ OGȱ andȱ UTȱ sectors,ȱ respectively.ȱ Theȱ factȱ thatȱclimateȱchangeȱisȱmoreȱfrequentlyȱnamedȱinȱtheȱOGȱthanȱinȱtheȱUTȱsectorȱshowsȱ thatȱitȱ“competes”ȱwithȱtheȱissueȱofȱnuclearȱwasteȱinȱutilities.ȱHealthȱ&ȱsafetyȱasȱwellȱ asȱ socialȱ andȱ ethicalȱ issuesȱ areȱ equallyȱ lessȱ importantȱ inȱ theȱ OGȱ andȱ UTȱ sectors,ȱ inȱ whichȱtheyȱeachȱaccountȱforȱ6%ȱandȱ7%,ȱrespectively.ȱ

ȱ

100ȱ

8ȱEmpiricalȱevidenceȱ

Other social and ethical issues 6%

Other social and Other ethical issues 7% 7%

Other NR 6% 0%

NR 0%

Health & safety 7%

Health & safety 6%

Energy consumption and climate change 46%

Other (or generally) environmental issues 12% Energy consumption and climate change 70%

Chartȱ8Ȭ3:ȱMostȱimportantȱissuesȱ(SustainabilȬ ityȱofficersȱ–ȱOG)ȱ

Pollution and waste management 33%

Chartȱ8Ȭ4:ȱMostȱimportantȱissuesȱ(SustainabilȬ ityȱofficersȱ–ȱUT)ȱ

Issueȱsignificanceȱ Asȱ Chartȱ 8Ȭ5ȱ shows,ȱ ratingsȱ ofȱ theȱ significanceȱ ofȱ socialȱ andȱ environmentalȱ issuesȱ alsoȱ confirmȱ theȱ dominanceȱ ofȱ theȱ environmentalȱ overȱ theȱ socialȱ dimensionȱ forȱ allȱ fourȱsamples.ȱTheȱcrossȬdisciplinaryȱdifferencesȱinȱtheȱsignificanceȱofȱsocialȱandȱenviȬ ronmentalȱissuesȱareȱstatisticallyȱsignificantȱinȱtheȱOGȱandȱUTȱsectors.ȱTheseȱresultsȱ clearlyȱ illustrateȱ theȱ greaterȱ awarenessȱ ofȱ sustainabilityȱ officers,ȱ andȱ pointȱ toȱ theirȱ specialȱexpertiseȱandȱroleȱasȱadvisorsȱandȱcatalystsȱinȱtheirȱcompanies.ȱThisȱisȱlikelyȱ toȱapplyȱinȱparticularȱtoȱtheȱcomplexȱandȱonlyȱmoreȱrecentlyȱemergingȱsocialȱissuesȱ whoseȱsoundȱassessmentȱrequiresȱmoreȱexperiencedȱandȱwellȬtrainedȱpersonnelȱ(seeȱ sectionȱ8.1.1.1).ȱ TheȱtȬtestsȱrevealȱonlyȱoneȱnotableȱcrossȬsectorȱmeanȱdifference:ȱUTȱgeneralȱmanagȬ ersȱconsiderȱsocialȱissuesȱlessȱsignificantȱthanȱgeneralȱmanagersȱfromȱtheȱOGȱsector;ȱ thisȱdifferenceȱisȱstatisticallyȱsignificantȱatȱaȱ10%ȱlevel.ȱThisȱfindingȱisȱinȱparallelȱwithȱ sustainabilityȱofficers’ȱperceptionȱofȱtheȱmostȱimportantȱenvironmentalȱandȱsocialȱisȬ suesȱ andȱ qualitativeȱ evidenceȱ presentedȱ inȱ theȱ previousȱ sectionsȱ 8.1.1.1ȱ Socialȱ andȱ ethicalȱissuesȱandȱ8.1.1.2ȱEnvironmentalȱissues.ȱ Itȱcanȱbeȱexplainedȱthroughȱaȱlessȱglobal,ȱmoreȱeurocentricȱbusinessȱmodelȱinȱtheȱUTȱ sector,ȱinȱwhichȱsocialȱissuesȱareȱlimitedȱtoȱlayoffsȱandȱrelocationȱdueȱtoȱsurfaceȱminȬ ingȱactivities.ȱInȱcontrast,ȱOGȱcompaniesȱfaceȱconsiderableȱsocialȱchallengesȱinȱdevelȬ opingȱcountriesȱwhichȱareȱunderȱintenseȱscrutinyȱfromȱpublicȱpressureȱgroupsȱglobȬ allyȱ(Garciaȱetȱal.,ȱ2003,ȱp.ȱ47),ȱandȱhaveȱsignificantȱfinancialȱdownsideȱpotential.ȱ

8.1ȱIssuesȱ

101ȱ

Signficance of issues (1 "Not at all" To 5 "Very much")

5

UT general managers OG general managers UT sustainability officers

4

OG sustainability officers

3

2

1

0

Env. Issues

Social issues

ȱ

Chartȱ8Ȭ5:ȱSignificanceȱofȱenvironmentalȱandȱsocialȱissuesȱ(Generalȱmanagersȱandȱsustainabilityȱ officers)ȱ

Althoughȱonlyȱoneȱmeanȱdifferenceȱbetweenȱtheȱsectorsȱwasȱstatisticallyȱsignificant,ȱ oneȱ canȱ confidentlyȱ diagnoseȱ aȱ generalȱ lowerȱ issueȱ significanceȱ inȱ theȱ UTȱ sectorȱ inȱ theȱ dataȱ fromȱ bothȱ generalȱ managersȱ andȱ sustainabilityȱ officersȱ (seeȱ crossȬsectorȱ meanȱ differenceȱ displayedȱ inȱ Chartȱ 8Ȭ5).ȱ Thisȱ indicatesȱ thatȱ issuesȱ inȱ theȱ UTȱ sectorȱ areȱlessȱsevere:ȱTheȱUTȱsectorȱmainlyȱoperatesȱinȱEurope,ȱwhereȱsocialȱissuesȱ(downȬ sizing,ȱ relocationȱ dueȱ toȱ surfaceȱ mining)ȱ areȱ eitherȱ minorȱ orȱ wellȱ managed.ȱ MoreȬ over,ȱ apartȱ fromȱ aȱ relativelyȱ highȱ profileȱ ofȱ nuclearȱ powerȱ inȱ someȱ countriesȱ (e.g.ȱ Germany),ȱenvironmentalȱissuesȱareȱalsoȱeitherȱlessȱimportantȱ(localȱairȱpollution)ȱorȱ notȱlocallyȱvisibleȱ(climateȱchange).ȱ TheȱissueȱsignificanceȱisȱalsoȱinfluencedȱbyȱfactorsȱthatȱrelateȱtoȱtheȱmotivatingȱprinȬ cipleȱofȱlegitimacy.ȱComparedȱtoȱtheȱOGȱsector,ȱissueȱsignificanceȱmayȱbeȱfurtherȱreȬ ducedȱ throughȱ theȱ lowerȱ organizationalȱ visibilityȱ ofȱ UTȱ companies:ȱ Typicallyȱ theyȱ areȱsmallerȱthanȱOGȱcompanies,ȱwithȱfewerȱresources;ȱtheirȱbrandsȱareȱalsoȱlessȱvisiȬ bleȱandȱvulnerableȱ(Bowen,ȱ2000,ȱp.ȱ100;ȱSteger,ȱ2003,ȱp.ȱ106).ȱHence,ȱtheȱsameȱissue,ȱ e.g.ȱ climateȱ change,ȱ mayȱ provokeȱ differentȱ (sectorȬspecific)ȱ reactionsȱ fromȱ stakeȬ holdersȱ(seeȱsectionsȱ8.1.1.2ȱandȱ8.2).ȱ Conclusionȱ Itȱisȱnotȱsurprisingȱthatȱsustainabilityȱofficers,ȱasȱexpertsȱandȱcatalystsȱinȱtheȱdomainȱ ofȱCSMȱinȱtheirȱcompanies,ȱconsiderȱbothȱenvironmentalȱandȱsocialȱissuesȱmoreȱsigȬ nificantȱthanȱgeneralȱmangersȱinȱbothȱsectors.ȱFurthermore,ȱitȱcouldȱalsoȱbeȱexpectedȱ ȱ

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8ȱEmpiricalȱevidenceȱ

thatȱ environmentalȱ issuesȱ wouldȱ beȱ consideredȱ moreȱ significantȱ thanȱ socialȱ issues,ȱ becauseȱ companiesȱ haveȱ comeȱ aȱ longȱ wayȱ sinceȱ theȱ beginningsȱ ofȱ environmentalȱ managementȱinȱtheȱ1980s.ȱItȱisȱapparentȱthatȱthisȱ“traditional”ȱfocusȱonȱtheȱenvironȬ mentalȱdimensionȱpredominatesȱmoreȱclearlyȱinȱtheȱUTȱsectorȱbecauseȱofȱitsȱregionalȱ focusȱonȱEurope.ȱ However,ȱresponsesȱregardingȱissueȱsignificanceȱneedȱtoȱbeȱputȱintoȱperspective:ȱInȱ particularȱ generalȱ managers’ȱ perceptionsȱ ofȱ issueȱ significanceȱ areȱ unlikelyȱ toȱ reflectȱ aȱ comprehensiveȱunderstandingȱofȱtheȱissuesȱunderȱconsideration.ȱThisȱcanȱbeȱclearlyȱ seenȱfromȱtheȱhighȱnumberȱofȱmanagersȱwhoȱareȱnotȱableȱ(orȱwilling)ȱtoȱspecifyȱtheȱ mostȱimportantȱissuesȱofȱtheirȱcompany.ȱItȱcanȱbeȱattributedȱtoȱtheȱfactȱthatȱenvironȬ mentalȱandȱsocialȱissuesȱcurrentlyȱhaveȱaȱnotableȱbutȱratherȱlowȱrelevanceȱtoȱcompaȬ nies’ȱcoreȱbusiness:ȱ Asȱtheȱauthorȱwillȱdiscussȱfurtherȱinȱsectionȱ8.2ȱExternalȱstakeholders,ȱindustryȱandȱ partnerships,ȱ outsideȱ pressureȱ fromȱ stakeholdersȱ isȱ ratherȱ limited,ȱ andȱ soȱ financialȱ threatsȱandȱopportunitiesȱassociatedȱwithȱissuesȱareȱlow:ȱ -

Issuesȱsuchȱasȱhumanȱrightsȱandȱlocalȱairȱpollutionȱ(shortȬtermȱoperationalȱissues)ȱ areȱrelevantȱtoȱ theȱ coreȱbusiness,ȱbutȱ canȱbeȱ addressedȱratherȱeasilyȱthroughȱ inȬ crementalȱinnovationsȱinȱcompanies’ȱoperationsȱandȱprocesses.ȱHenceȱtheirȱfinanȬ cialȱsignificanceȱisȱlimitedȱandȱwillȱcontinueȱtoȱbeȱso.ȱ

-

LongȬtermȱ strategicȱ issuesȱ (e.g.ȱ climateȱ change)ȱ areȱ alsoȱ relevantȱ toȱ companies’ȱ coreȱ business.ȱ Theirȱ financialȱ significanceȱ isȱ alsoȱ limitedȱ butȱ willȱ increaseȱ overȱ time.ȱTheyȱareȱlikely,ȱalongsideȱotherȱfactorsȱsuchȱasȱresourceȱdepletion,ȱgeopoliȬ tics,ȱtoȱtriggerȱdistinctȱtransitionsȱinȱcurrentȱbusinessȱmodelsȱ(ShellȱInternationalȱ Ltd,ȱ2001).ȱ

8.1.2

Advancedȱstatisticsȱ

8.1.2.1 Correlationsȱ TheȱfollowingȱcorrelationȱandȱregressionȱanalysesȱaimȱtoȱshedȱmoreȱlightȱonȱtheȱmoȬ tivatingȱeffectsȱofȱtheȱsignificanceȱofȱbothȱenvironmentalȱandȱsocialȱissues.ȱFigureȱ8Ȭ4ȱ andȱFigureȱ8Ȭ5ȱdisplayȱallȱcorrelationsȱdetectedȱinȱtheȱtotalȱandȱtheȱtwoȱsectorȬspecificȱ samplesȱbetweenȱenvironmentalȱandȱsocialȱissueȱsignificanceȱrespectivelyȱandȱotherȱ variablesȱatȱaȱ5%ȱlevelȱofȱsignificance.ȱTheyȱwillȱbeȱdiscussedȱinȱdetailȱinȱtheȱfollowȬ ingȱparagraphs.ȱ

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103ȱ

Issues

Socialȱissues

Companies

OG,ȱUT,ȱT

OG,ȱT

Environmentalȱissues

Managers

T

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations

UT,ȱT

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

SDȱfamiliarity

T

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Strategic disposition

Externalȱstakeholders

CSMȱINTENT

Capitalȱmarkets

FutureȱSDȱrole

SDȱimportance

Importanceȱofȱlegitimacy Damageȱtoȱlegitimacy

Legitimacy

OG,ȱUT,ȱT

Structure

UT

Consumers

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

T

Governments

CSMȱSUCCESS

PPPs

CurrentȱSDȱrole

Industry

Positiveȱcorrelation

NGOs

Negativeȱcorrelation

ȱ Figureȱ8.4:ȱCorrelationsȱ–ȱEnvironmentalȱissueȱsignificanceȱ Issues

Companies

Socialȱissues Environmentalȱissues

Managers

OG,ȱUT,ȱT

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations OG,ȱT

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

Externalȱstakeholders FutureȱSDȱrole

Legitimacy

Capitalȱmarkets

OG,ȱUT,ȱT

SDȱfamiliarity

StrategicUT,ȱT disposition

SDȱimportance

OG,ȱT

CSMȱINTENT

T

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

OG,ȱT

Importanceȱofȱlegitimacy

UT,ȱT

Damageȱtoȱlegitimacy

UT,ȱT UT,ȱT

Consumers Governments CurrentȱSDȱrole

Structure T

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.5:ȱCorrelationsȱ–ȱSocialȱissueȱsignificanceȱ

ȱ

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8ȱEmpiricalȱevidenceȱ

Issueȱsignificanceȱ Theȱ positiveȱ linkȱ betweenȱ theȱ significanceȱ ofȱ socialȱ andȱ environmentalȱ issuesȱ sugȬ gestsȱ thatȱ moreȱ proactiveȱ respondentsȱ exhibitȱ generallyȱ greaterȱ awarenessȱ ofȱ anyȱ kindȱ ofȱ issueȱ thatȱ affectsȱ theirȱ businessȱ unitȱ orȱ function.ȱ Thisȱ isȱ plausibleȱ becauseȱ proactiveȱrespondentsȱsupposedlyȱexhibitȱcertainȱcognitiveȱmapsȱ(definedȱasȱaȱrepreȬ sentationȱ ofȱ conceptsȱ andȱ beliefsȱ heldȱ byȱ theȱ individual)ȱ thatȱ differentiateȱ theirȱ unȬ derstandingȱ aboutȱ causeȬeffectȱ relationshipsȱ andȱ interpretationȱ ofȱissuesȱfromȱthoseȱ ofȱlessȱreactiveȱmanagersȱ(Duttonȱetȱal.,ȱ1983,ȱp.ȱ311).ȱ Managers’ȱattitudesȱ Thisȱinterpretationȱofȱproactiveȱmanagers’ȱmoreȱsophisticatedȱcognitiveȱmapsȱisȱalsoȱ inȱlineȱwithȱevidenceȱonȱtheȱlinkȱbetweenȱissueȱsignificanceȱandȱmanagers’ȱattitudes:ȱ Moreȱproactiveȱmanagersȱconsiderȱenvironmentalȱandȱsocialȱissuesȱmoreȱsignificant:ȱ -

TheȱsignificanceȱofȱenvironmentalȱissuesȱisȱnegativelyȱrelatedȱtoȱaȱstrongerȱreacȬ tiveȱBBBȱ(“Theȱbusinessȱofȱbusinessȱisȱbusiness”)ȱattitude.ȱThisȱlinkȱalsoȱexistsȱforȱ socialȱissueȱsignificanceȱbutȱlacksȱstatisticalȱsignificance,ȱpresumablyȱ–ȱasȱqualitaȬ tiveȱanalysisȱalsoȱrevealedȱ–ȱbecauseȱrespondentsȱareȱlessȱfamiliarȱwithȱsocialȱthanȱ withȱ environmentalȱ issues.ȱ Henceȱ theyȱ rateȱ theȱ significanceȱ ofȱ socialȱ issuesȱ lessȱ consistently,ȱwhichȱappearsȱtoȱconfoundȱtheȱpositiveȱcorrelation.ȱTheȱfactȱthatȱtheȱ twoȱmoreȱproactiveȱattitudesȱ(CA,ȱUCA)ȱareȱsignificantlyȱlinkedȱtoȱbothȱenvironȬ mentalȱ andȱ socialȱ issueȱ significanceȱ suggestsȱ thatȱ particularlyȱ reactiveȱ managersȱ areȱlargelyȱunfamiliarȱwithȱsocialȱissues.ȱ

-

Theȱ CAȱ (“CSMȱ toȱ gainȱ longȬtermȱ competitiveȱ advantage”)ȱ attitudeȱ isȱ positivelyȱ linkedȱtoȱtheȱsignificanceȱofȱsocialȱandȱenvironmentalȱissuesȱinȱtheȱtotalȱandȱOGȱ sample.ȱJudgingȱonlyȱfromȱtheȱcorrelationȱcoefficients,ȱtheseȱlinksȱmayȱalsoȱexistȱ inȱtheȱUTȱdata.ȱHowever,ȱsignificanceȱlevelsȱareȱlower,ȱmostȱlikelyȱforȱtheȱfollowȬ ingȱreasons:ȱFirstȱtheȱUTȱsampleȱisȱsmaller,ȱsecond,ȱtheȱlinksȱexhibitȱgreaterȱvariaȬ tionȱbecauseȱUTȱrespondentsȱhaveȱaȱlessȱstrongȱCAȱattitudeȱand/orȱareȱlessȱfamilȬ iarȱwithȱenvironmentalȱand,ȱinȱparticular,ȱsocialȱissues.ȱ

-

TheȱUCAȱ(“CSMȱevenȱifȱlongȬtermȱcompetitiveȱadvantageȱisȱunproven”)ȱattitudeȱ isȱpositivelyȱassociatedȱwithȱbothȱenvironmentalȱandȱsocialȱissueȱsignificance,ȱbutȱ onlyȱ inȱtheȱ totalȱsample.ȱ Theȱcorrelationsȱprobablyȱlackȱstatisticalȱsignificanceȱ inȱ theȱ sectorȬspecificȱ samplesȱ becauseȱ theyȱ wereȱ confoundedȱ byȱ socialȱ desirabilityȱ bias,ȱ whichȱ probablyȱ affectedȱ theȱ veryȱ “progressive”ȱ UCAȱ attitudesȱ moreȱ stronglyȱthanȱtheȱotherȱattitudes.ȱ

-

Inȱcontrast,ȱissueȱsignificanceȱisȱunrelatedȱtoȱtheȱWWȱ(“CSMȱifȱthereȱareȱwinȬwinȱ situations”)ȱattitude.ȱThisȱcanȱmostȱlikelyȱbeȱattributedȱtoȱtheȱoperationalizationȱofȱ

8.1ȱIssuesȱ

105ȱ

WWȱattitudeȱwhichȱappearsȱtoȱ haveȱ appealedȱtoȱ bothȱ proactiveȱandȱ reactiveȱ reȬ spondentsȱequallyȱ(seeȱsectionȱ8.3).ȱ Externalȱstakeholdersȱandȱlegitimacyȱ Capitalȱmarketsȱ Itȱ isȱ somewhatȱ surprisingȱ thatȱ theȱ significanceȱ ofȱ socialȱ ratherȱ thanȱ environmentalȱ issuesȱisȱrelatedȱtoȱaȱmoreȱproactiveȱfutureȱroleȱofȱcapitalȱmarketsȱ–ȱparticularlyȱsurȬ prisingȱinȱtheȱUTȱsample,ȱevenȱifȱitȱisȱonlyȱstatisticallyȱ significantȱatȱaȱ10%ȱlevel.ȱInȱ theȱ past,ȱ socialȱ issuesȱ haveȱ hardlyȱ beenȱ relevantȱ toȱ theȱ financialȱ community.ȱ HowȬ ever,ȱrecentȱdevelopmentsȱmayȱindicateȱaȱslightȱchangeȱinȱstance.ȱTheȱpotentialȱimȬ pactsȱofȱsocialȱandȱpoliticalȱrisksȱassociatedȱwithȱtheȱOGȱsector’sȱextractionȱandȱproȬ ductionȱactivitiesȱwillȱbeȱincreasinglyȱscrutinizedȱbyȱfinancialȱinstitutions:ȱMoreȱthanȱ 20ȱprivateȱbanksȱhaveȱadoptedȱtheȱEquatorȱprinciplesȱforȱdetermining,ȱassessingȱandȱ managingȱsocialȱ(andȱenvironmental)ȱriskȱassociatedȱwithȱprojectȱfinancingȱinȱemergȬ ingȱmarkets.35ȱFurthermore,ȱsocialȱissuesȱhaveȱprovokedȱseveralȱshareholderȱresoluȬ tionsȱ filedȱ againstȱ majorȱ OGȱ companies:ȱ E.g.ȱ inȱ Mayȱ 2004ȱ aȱ shareholderȱ resolutionȱ seekingȱ improvedȱ communicationȱ betweenȱ Unocal’sȱ boardȱ ofȱ directorsȱ andȱ shareȬ holdersȱ aboutȱ theȱ company’sȱ naturalȱ gasȱ projectȱ inȱ Myanmarȱ andȱ accusationsȱ ofȱ “slaveȱlabor”ȱandȱotherȱhumanȱrightsȱviolationsȱwasȱsupportedȱbyȱ20%ȱofȱtheȱshareȬ holdersȱ –ȱ capturingȱ “10%ȱ moreȱ affirmativeȱ votesȱ thanȱ aȱ typicalȱ socialȬissueȱ resoluȬ tion”ȱ(Parker,ȱ2004).ȱ Nevertheless,ȱitȱmayȱbeȱunrealisticȱtoȱmakeȱoutȱaȱsignificantȱlinkȱbetweenȱsocialȱissuesȱ andȱtheȱfutureȱroleȱofȱcapitalȱmarketsȱbasedȱonȱtheȱcorrelationsȱfoundȱinȱbothȱsectors.ȱ Theȱ financialȱ implicationsȱ associatedȱ withȱ environmentalȱ issuesȱ suchȱ asȱ climateȱ change,ȱ tankerȱ accidentsȱ orȱ nuclearȱ incidentsȱ areȱ atȱ leastȱ asȱ significantȱ asȱ thoseȱ reȬ latedȱtoȱsocialȱissues,ȱandȱthusȱalsoȱscrutinizedȱbyȱtheȱfinancialȱcommunity.ȱSinceȱtheȱ correspondingȱlinkȱbetweenȱenvironmentalȱissuesȱandȱtheȱSDȱroleȱofȱcapitalȱmarketsȱisȱ missingȱfromȱtheȱdata,ȱtheȱcorrelationȱbetweenȱtheȱsocialȱissueȱsignificanceȱandȱcapiȬ talȱ markets’ȱ futureȱ roleȱ moreȱ likelyȱ suggestsȱ thatȱ moreȱ proactiveȱ responȬ dents/companiesȱ areȱ moreȱ awareȱ ofȱ bothȱ socialȱ issuesȱ andȱ recentȱ developmentsȱ inȱ theȱfinancialȱsector.ȱ Governmentsȱandȱconsumersȱ InȱtheȱUTȱsectorȱenvironmentalȱissueȱsignificanceȱisȱnegativelyȱrelatedȱtoȱaȱmoreȱproȬ activeȱ roleȱ ofȱconsumersȱ andȱ governments,ȱevenȱifȱ theȱ latterȱ correlationȱ isȱ onlyȱsigȬ nificantȱatȱaȱ10%ȱlevel.ȱThisȱsuggestsȱthatȱrespondentsȱfromȱlaggardȱcompaniesȱwithȱ littleȱissueȱawarenessȱalsoȱconsiderȱconsumersȱandȱgovernmentsȱmoreȱproactive,ȱi.e.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 35

ȱ

ȱwww.equatorȬprinciples.comȱonȱ15ȱJuneȱ2004ȱ

106ȱ

8ȱEmpiricalȱevidenceȱ

theyȱperceiveȱgreaterȱdemandȱforȱCSMȱfromȱthem.ȱTheȱfactȱthatȱbothȱcorrelationsȱareȱ weakȱandȱnotȱstatisticallyȱsignificantȱinȱtheȱOGȱdataȱsuggestsȱthatȱbothȱstakeholdersȱ hardlyȱ influenceȱ theȱ significanceȱ ofȱ issuesȱ inȱ theȱ OGȱ sector.ȱ Thisȱ alsoȱ matchesȱ withȱ qualitativeȱandȱquantitativeȱevidenceȱpresentedȱinȱsectionȱ8.2.ȱ Publicȱpressureȱgroupsȱ ItȱisȱpeculiarȱthatȱsocialȱandȱenvironmentalȱissueȱsignificanceȱandȱtheȱSDȱroleȱofȱpubȬ licȱ pressureȱ groupsȱ areȱ unrelated:ȱ Correlationȱ coefficientsȱ inȱ allȱ threeȱ samplesȱ lackȱ statisticalȱsignificance,ȱmostȱofȱthemȱareȱcloseȱtoȱzero.ȱAtȱfirstȱsightȱthisȱappearsȱtoȱbeȱ aȱmismatchȱofȱfindingsȱinȱtermsȱofȱtheȱOGȱsectorȱinȱparticular,ȱsinceȱ–ȱasȱinterviewsȱ revealedȱ(seeȱsectionȱ8.2.2.1)ȱ–ȱpublicȱpressureȱgroupsȱrepresentȱtheȱmostȱimportantȱ sourceȱ ofȱ outsideȱ pressureȱ onȱ OGȱ companies.ȱ However,ȱ thisȱ missingȱ linkȱ betweenȱ NGOs’ȱSDȱroleȱandȱissueȱsignificanceȱmayȱpointȱtoȱtheȱfactȱthatȱNGOsȱactuallyȱrepreȬ sentȱcatalystsȱforȱactionsȱofȱcompanies’ȱprimaryȱstakeholders,ȱdefinedȱasȱthoseȱstakeȬ holdersȱ “withoutȱ whoseȱ participationȱ companiesȱ cannotȱ survive,”ȱ i.e.ȱ interȱ aliaȱ shareholders,ȱ employees,ȱ customers,ȱ communityȱ residentsȱ andȱ regulatorsȱ (Hillmanȱ etȱal.,ȱ2001,ȱp.ȱ126).ȱThusȱNGOs’ȱactivitiesȱareȱonlyȱeffectiveȱifȱprimaryȱstakeholdersȱ changeȱ theirȱ demandsȱ forȱ CSM,ȱ i.e.ȱ NGOsȱ areȱ onlyȱ ableȱ toȱ pressȱ onȱ certainȱ issuesȱ suchȱasȱhumanȱrightsȱorȱclimateȱchangeȱifȱprimaryȱstakeholdersȱreactȱtoȱNGOs’ȱcamȬ paigns,ȱe.g.ȱifȱtheȱ financialȱcommunityȱ actsȱuponȱ climateȱchangeȱ risksȱ(e.g.ȱ throughȱ theȱCarbonȱDisclosureȱProject,ȱshareholderȱresolutions),ȱifȱlegislatorsȱprovideȱaȱlegisȬ lativeȱ basisȱ forȱ introducingȱ lawsuitsȱ againstȱ humanȱ rightsȱ violationsȱ inȱ developingȱ countriesȱ(Alden,ȱ2002;ȱAnonymous,ȱ2004c).ȱ IndustryȱandȱpublicȬprivateȱpartnershipsȱ CorrelationsȱbetweenȱsocialȱandȱenvironmentalȱissueȱsignificanceȱandȱtheȱroleȱofȱinȬ dustryȱ andȱ publicȬprivateȱ partnershipsȱ (PPPs)ȱ areȱ notȱ detected.ȱ Thisȱ isȱ presumablyȱ becauseȱpossibleȱlinksȱareȱconfoundedȱbyȱtheȱfactȱthatȱissueȱsignificanceȱisȱassessedȱ inȱrelationȱtoȱtheȱrespondents’ȱbusinessȱunitȱorȱfunction,ȱwhereasȱtheȱroleȱofȱindustryȱ andȱPPPsȱfocusesȱonȱaȱmuchȱmoreȱgeneralȱandȱaggregatedȱlevel.ȱ Importanceȱofȱandȱdamageȱtoȱlegitimacyȱ Bothȱtheȱimportanceȱofȱandȱdamageȱtoȱlegitimacyȱareȱpositivelyȱlinkedȱtoȱsocialȱissueȱ significance.ȱThisȱindicatesȱthatȱaȱgreaterȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperȬ ate,ȱ e.g.ȱ brandȱ valueȱ andȱ reputation,ȱ increasesȱ theȱ significanceȱ ofȱ issues,ȱ asȱ itȱ raisesȱ theȱfinancialȱstakes.ȱ Itȱisȱsurprisingȱthatȱtheȱlinkȱbetweenȱlegitimacyȱandȱissueȱsignificanceȱexistsȱonlyȱinȱ theȱsocialȱnotȱinȱtheȱenvironmentalȱissueȱdimension.ȱMostȱrespondentsȱoperateȱinȱinȬ dustrializedȱ countries,ȱ inȱ whichȱ localȱ environmentalȱ andȱ socialȱ issuesȱ areȱ ofȱ minorȱ importance.ȱ Itȱ isȱ puzzlingȱ thatȱsocialȱ issuesȱ(suchȱasȱhumanȱ rights,ȱenergyȱpoverty)ȱ areȱ linkedȱ toȱ legitimacyȱ whereasȱ environmentalȱ issues,ȱ whichȱ compriseȱ climateȱ

8.1ȱIssuesȱ

107ȱ

changeȱasȱoneȱofȱtheȱmostȱsignificantȱsingleȱissuesȱ(accordingȱtoȱtheȱinterviewees),ȱareȱ not.ȱOneȱcanȱdrawȱtwoȱconclusions:ȱ 1. Generalȱmanagersȱwhoȱrespondedȱtoȱtheȱquestionnaireȱ–ȱinȱcontrastȱtoȱtheȱinterȬ vieweesȱ–ȱappearȱtoȱbeȱstillȱlargelyȱunawareȱofȱtheȱsignificanceȱofȱclimateȱchangeȱ toȱcompanies’ȱbrandȱvalueȱandȱreputation.ȱ 2. Sustainabilityȱ leadersȱ considerȱ socialȱ issuesȱ moreȱ significant,ȱ attachȱ greaterȱ imȬ portanceȱ toȱ legitimacy,ȱ andȱ reportȱ greaterȱ damageȱ toȱ legitimacy,ȱ eitherȱ becauseȱ theyȱareȱmoreȱwillingȱtoȱacknowledgeȱdamageȱand/orȱbecauseȱtheyȱhaveȱmoreȱofȬ tenȱbeenȱsubjectȱtoȱincidentsȱthatȱdamagedȱtheirȱlegitimacyȱ(Vogl,ȱ2003).ȱ Itȱ isȱ surprisingȱ thatȱ quantitativeȱ OGȱ dataȱ doȱ notȱ revealȱ anyȱ statisticallyȱ significantȱ linkageȱbetweenȱissueȱsignificanceȱandȱtheȱtwoȱlegitimacyȬrelatedȱvariables,ȱwhereasȱ interviewsȱsuggestȱthatȱsomeȱsocialȱissuesȱsuchȱasȱhumanȱrightsȱinȱdevelopingȱcounȬ triesȱ andȱ publicȱ pressureȱ onȱ climateȱ changeȱ haveȱ sensitizedȱ OGȱ companiesȱ toȱ theȱ vulnerabilityȱofȱlegitimacy.ȱTheȱauthorȱoffersȱtheȱfollowingȱexplanations:ȱ -

Theȱ missingȱ linkȱ betweenȱ issueȱ significanceȱ andȱ theȱ importanceȱ ofȱ legitimacyȱ showsȱthatȱOGȱrespondents’ȱperceptionsȱofȱtheȱfinancialȱpremiumȱaddedȱtoȱissueȱ significanceȱthroughȱ(informal)ȱlegitimacyȱdifferȱsignificantly.ȱItȱisȱpossibleȱthatȱaȱ thirdȱlatentȱvariableȱsuchȱasȱcorporateȱcultureȱandȱstakeholders’ȱdemandsȱforȱtheȱ grantingȱofȱlegitimacy,ȱwhichȱcouldȱbothȱdifferȱmoreȱwidelyȱacrossȱtheȱregionsȱofȱ operations,ȱhasȱdulledȱtheȱexpectedȱrelationship.ȱ

-

Theȱ missingȱ linkȱ betweenȱ damageȱ toȱ legitimacyȱ andȱ issueȱ significanceȱ couldȱ beȱ attributedȱ toȱ responseȱ biasȱ andȱ aȱ selectiveȱ occurrenceȱ ofȱ incidentsȱ (onlyȱ someȱ companiesȱ mayȱ haveȱ beenȱ affected).ȱ Additionallyȱ oneȱ shouldȱ takeȱ intoȱ accountȱ thatȱtheȱmostȱ“prominent”ȱincidentsȱinȱtheȱOGȱsectorȱsuchȱasȱtheȱgroundingȱofȱtheȱ ExxonȱValdezȱinȱPrinceȱWilliamȱSoundȱ(1989),ȱhumanȱrightsȱabusesȱinȱOgoniland,ȱ Nigeriaȱ(1994)ȱandȱBrentȱSparȱ(1995)ȱoccurredȱatȱtimesȱtheȱquestionnaireȱdidȱnotȱ cover.36ȱ

Strategicȱdispositionȱ PositiveȱcorrelationsȱbetweenȱissueȱsignificanceȱonȱtheȱoneȱhandȱandȱSDȱfamiliarity,ȱ SDȱimportanceȱandȱCSMȱintentȱclearlyȱsuggestȱthatȱCSMȱisȱdrivenȱbyȱissues.ȱOverallȱ socialȱ issuesȱ areȱ moreȱ clearlyȱ linkedȱ toȱ companies’ȱ strategicȱ dispositionȱ thanȱ enviȬ ronmentalȱ issues.ȱ Thisȱ outcomeȱ isȱ inȱ lineȱ withȱ theȱ associationsȱ reportedȱ aboveȱ thatȱ linkedȱ socialȱ ratherȱ thanȱ environmentalȱ issueȱ significanceȱ toȱ legitimacyȱ andȱ theȱ fuȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 36

ȱ

ȱItȱonlyȱfocusesȱonȱincidentsȱoverȱtheȱpastȱthreeȱyears,ȱi.e.ȱonȱtheȱperiodȱbetweenȱroughlyȱ1999ȱandȱ 2002.ȱ

108ȱ

8ȱEmpiricalȱevidenceȱ

tureȱSDȱroleȱofȱcapitalȱmarkets,ȱandȱthusȱsupportsȱtheȱconclusionȱthatȱsustainabilityȱ leadersȱhaveȱgoneȱbeyondȱaȱnarrowȱenvironmentalȱapproachȱtoȱCSM.ȱ TheȱclearȱlinkȱbetweenȱstrategicȱdispositionȱandȱsocialȱratherȱthanȱenvironmentalȱisȬ suesȱisȱparticularlyȱvisibleȱinȱtheȱOGȱdata,ȱwhichȱexhibitȱveryȱweakȱandȱstatisticallyȱ notȱ significantȱ correlationsȱ betweenȱ environmentalȱ issueȱ significanceȱ andȱ bothȱ SDȱ importanceȱandȱCSMȱintent.ȱTheseȱresultsȱaugmentȱfindingsȱfromȱtheȱinterviewsȱandȱ suggestȱthatȱalthoughȱenvironmentalȱissuesȱareȱconsideredȱimportantȱinȱtheȱOGȱsecȬ torȱ–ȱinȱfactȱslightlyȱmoreȱimportantȱthanȱinȱtheȱUTȱsectorȱ–ȱsocialȱissuesȱthreateningȱ theȱlicenseȱtoȱoperateȱinȱdevelopingȱcountriesȱareȱtheȱmainȱdriversȱofȱCSM.ȱTheȱrelaȬ tivelyȱweakerȱlinkȱbetweenȱstrategicȱdispositionȱandȱenvironmentalȱissuesȱalsoȱsugȬ gestsȱthatȱclimateȱchangeȱhardlyȱdrivesȱCSMȱintentȱinȱtheȱOGȱsector.ȱThisȱisȱplausibleȱ becauseȱ primarilyȱ sustainabilityȱ leadersȱ haveȱ –ȱ asȱ indicatedȱ byȱmostȱ intervieweesȱ –ȱ acknowledgedȱ climateȱ changeȱ asȱ aȱ significantȱ threatȱ toȱ theȱ sector.ȱ However,ȱ asȱ theȱ authorȱwillȱalsoȱdiscussȱinȱmoreȱdetailȱinȱsectionȱ8.4.2ȱStrategicȱdisposition,ȱcorporateȱ responsesȱareȱlimitedȱtoȱlargeȬscaleȱincrementalȱandȱlargelyȱefficiencyȬbasedȱorȱsmallȬ scaleȱpilotȱprojects.ȱThusȱclimateȱchangeȱisȱintegratedȱintoȱbusinessȱstrategiesȱandȱopȬ erationsȱ onlyȱ toȱ aȱ limitedȱ extent.ȱ Theȱ strongȱ linkȱ betweenȱ strategicȱ dispositionȱ andȱ socialȱratherȱenvironmentalȱissuesȱalsoȱillustratesȱthatȱprimarilyȱsustainabilityȱleadersȱ whoȱareȱprimarilyȱconcernedȱwithȱsocialȱissuesȱinȱdevelopingȱcountriesȱandȱtheirȱpoȬ tentialȱeffectsȱonȱtheȱlicenseȱtoȱoperateȱandȱgrowȱparticipatedȱinȱtheȱsurvey.ȱOneȱcanȱ reasonablyȱ assumeȱ thatȱ laggardȱ companiesȱ areȱ stillȱ primarilyȱ drivenȱ byȱ environȬ mentalȱissues.ȱ Sinceȱ interviewsȱ pointȱ toȱ aȱ minorȱ roleȱ ofȱ socialȱ issuesȱ inȱ theȱ UTȱ sector,ȱ correlationsȱ betweenȱcompanies’ȱstrategicȱdispositionȱandȱsocialȱissueȱsignificanceȱinȱUTȱdataȱareȱ somewhatȱ unexpectedȱ andȱ possiblyȱ causedȱ byȱ outliersȱ andȱ socialȱ desirabilityȱ bias.ȱ Theyȱ couldȱ alsoȱ indicateȱ thatȱ sustainabilityȱ leadersȱ inȱ theȱ UTȱ sectorȱ whoȱ exhibitȱ aȱ greaterȱ strategicȱ dispositionȱ toȱ CSMȱ alsoȱ takeȱ socialȱ issuesȱ (e.g.ȱ relocationȱ dueȱ toȱ largeȱhydropowerȱprojects,ȱenergyȱpoverty)ȱmoreȱstronglyȱintoȱaccountȱ(seeȱe.g.ȱsoȬ cialȱstrategiesȱdescribedȱinȱWBCSD,ȱ2002,ȱp.ȱ21).ȱTheȱonlyȱclearȱdifferenceȱtoȱtheȱOGȱ sectorȱisȱtheȱmoderatelyȱpositiveȱandȱstatisticallyȱsignificantȱ(atȱaȱ10%ȱlevel)ȱcorrelaȬ tionȱbetweenȱenvironmentalȱissueȱsignificanceȱandȱCSMȱintent,ȱwhichȱisȱalsoȱtheȱonlyȱ associationȱ (betweenȱ issueȱ significanceȱ andȱ strategicȱ disposition)ȱ whoseȱ coefficientȱ indicatesȱ aȱ strongerȱ correlationȱ withȱ environmentalȱ ratherȱ thanȱ socialȱ issueȱ signifiȬ cance.ȱ Thisȱlinkȱisȱinȱparallelȱwithȱqualitativeȱevidenceȱonȱtheȱrelativelyȱgreaterȱimportanceȱ ofȱ environmentalȱ issuesȱ inȱ theȱ UTȱ sectorȱ (seeȱ sectionȱ 8.1.1.2)ȱ andȱ indicatesȱ thatȱ theȱ UTȱsectorȱisȱdrivenȱbyȱenvironmentalȱchallengesȱ–ȱasȱpointedȱoutȱearlierȱ–ȱdueȱtoȱitsȱ currentȱ strategicȱ focusȱ onȱ Europeȱ andȱ developedȱ countries,ȱ selectiveȱ externalȱ presȬ

8.1ȱIssuesȱ

109ȱ

sureȱ regardingȱ nuclearȱ powerȱ generation,ȱ andȱ greaterȱ concernȱ aboutȱ forthcomingȱ regulatoryȱ pressureȱ onȱ climateȱ change.ȱ Asȱ theȱ interviewsȱ alsoȱ revealed,ȱ climateȱ changeȱ isȱ recognizedȱ moreȱ asȱ aȱ shortȬtermȱ issueȱ directlyȱ associatedȱ withȱ UTȱ firms’ȱ productionȱactivitiesȱandȱtheirȱcurrentȱlicenseȱtoȱoperate,ȱwhereasȱOGȱcompaniesȱareȱ moreȱaffectedȱinȱtheȱlongȱtermȱatȱtheȱproductȱuseȱphase.ȱ Structureȱ Evidenceȱ alsoȱ pointsȱ toȱ aȱ strongȱ linkȱ betweenȱ issueȱ significanceȱ andȱ theȱ levelȱ ofȱ crossȬdisciplinaryȱ collaboration.ȱ Ifȱ oneȱ takesȱ intoȱ accountȱ theȱ positiveȱ linkȱ betweenȱ issueȱsignificanceȱandȱmanagers’ȱproactiveȱattitudes,ȱthisȱisȱveryȱplausible,ȱsinceȱgenȬ eralȱmanagers’ȱcollaborationȱwithȱsustainabilityȱofficersȱorȱdepartmentsȱnaturallyȱinȬ creasesȱ familiarityȱ withȱ issuesȱ throughȱ e.g.ȱ existingȱ reviewȱ andȱ advisoryȱ mechaȬ nisms,ȱandȱaltersȱcognitiveȱmapsȱ(Duttonȱetȱal.,ȱ1983).ȱInȱthisȱrespectȱdifferencesȱbeȬ tweenȱtheȱsectorsȱareȱmarginal,ȱsinceȱtheȱmissingȱcorrelationȱwithȱsocialȱissueȱsignifiȬ canceȱ inȱ theȱ OGȱ dataȱ isȱ statisticallyȱ significantȱ atȱ aȱ 10%ȱ level.ȱ Theȱ positiveȱ linkȱ beȬ tweenȱ issueȱ significanceȱ andȱ theȱ levelȱ ofȱ crossȬdisciplinaryȱ collaborationȱ couldȱ alsoȱ indicateȱthatȱgreaterȱissueȱsignificanceȱhasȱledȱtoȱtheȱcreationȱofȱmoreȱevolvedȱcrossȬ disciplinaryȱ structures,ȱ obviouslyȱ becauseȱ issueȱ significanceȱ increasesȱ strategicȱ disȬ position,ȱwhichȱinȱturnȱleadsȱtoȱtheȱimplementationȱofȱadequateȱstructures.ȱ GreaterȱcrossȬdisciplinaryȱpotentialȱisȱlinkedȱtoȱgreaterȱissueȱawareness,ȱwhichȱindiȬ catesȱ thatȱ respondentsȱ fromȱ leadingȱ companiesȱ exhibitȱ greaterȱ issueȱ awarenessȱ andȱ assessȱ theȱ potentialȱ ofȱ moreȱ extensiveȱ crossȬdisciplinaryȱ collaborationȱ moreȱ posiȬ tively,ȱobviouslyȱdueȱtoȱpositiveȱexperiencesȱwithȱcrossȬdisciplinaryȱcollaborationȱinȱ theȱpast.37ȱAlthoughȱallȱcoefficientsȱareȱpositiveȱinȱbothȱ sectors,ȱthereȱisȱoneȱnotableȱ difference:ȱ Correlationȱ coefficientsȱ inȱ theȱ UTȱ sectorȱ indicateȱ aȱ strongerȱ associationȱ betweenȱ crossȬdisciplinaryȱ potentialȱ andȱ issueȱ significance,ȱ particularlyȱ inȱ termsȱ ofȱ environmentalȱissueȱsignificance.ȱTheȱfactȱthatȱtheseȱassociationsȱareȱstrongerȱinȱtheȱ UTȱsectorȱcouldȱsuggestȱthatȱUTȱgeneralȱmanagersȱareȱcloseȱtoȱtheȱstartȱandȱthusȱstillȱ relativelyȱsteepȱpartȱofȱtheȱlearningȱcurve:ȱTheȱgreaterȱrespondents’ȱissueȱawarenessȱ is,ȱtheȱmoreȱpositivelyȱtheyȱassessȱcrossȬdisciplinaryȱpotential.ȱInȱtheȱOGȱsectorȱhighȱ issueȱ awarenessȱ mayȱ –ȱ inȱ contrastȱ –ȱ beȱ lessȱ stronglyȱ associatedȱ withȱ greaterȱ crossȬ disciplinaryȱpotentialȱbecauseȱsomeȱofȱtheȱsustainabilityȱleaderȱrespondentsȱmayȱalȬ readyȱ considerȱ mostȱ ofȱ theȱ potentialȱ toȱ haveȱ beenȱ exploited.ȱ Theȱ strongerȱ linkȱ beȬ tweenȱcrossȬdisciplinaryȱpotentialȱandȱenvironmentalȱissueȱsignificanceȱinȱparticularȱ alignsȱ withȱ theȱ dominantȱ roleȱ ofȱ environmentalȱ issuesȱ inȱ theȱ UTȱ sector,ȱ discussedȱ earlierȱinȱsectionȱ8.1.1.2.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 37

ȱ

ȱBothȱvariables,ȱtheȱlevelȱofȱcrossȬdisciplinaryȱcollaborationȱandȱtheȱpotentialȱforȱmoreȱextensiveȱcolȬ laborationȱ toȱ contributeȱ toȱ moreȱ sustainableȱ businessȱ practices,ȱ areȱ indeedȱ positivelyȱ relatedȱ (seeȱ sectionȱ8.4.4.2).ȱ

110ȱ

8ȱEmpiricalȱevidenceȱ

CSMȱsuccessȱ FinallyȱsocialȱissueȱsignificanceȱisȱpositivelyȱlinkedȱtoȱCSMȱsuccess.ȱTheȱassociationȱisȱ statisticallyȱ significantȱ atȱ aȱ 10%ȱ levelȱ inȱ theȱ totalȱ sample,ȱ whichȱ suggestsȱ thatȱ itȱ isȱ subjectȱtoȱnotableȱvariation.ȱNeverthelessȱitȱisȱhighlyȱplausible:ȱGreaterȱissueȱsignifiȬ canceȱ reflectsȱ greaterȱ externalȱ pressureȱ associatedȱ withȱ theȱ issue,ȱ andȱ isȱ positivelyȱ linkedȱtoȱstrategicȱdisposition,ȱwhichȱleadsȱtoȱaȱfasterȱandȱmoreȱeffectiveȱimplemenȬ tationȱofȱcorporateȱenvironmentalȱandȱsocialȱinitiatives.ȱ Itȱisȱimportantȱtoȱnoteȱthatȱsocialȱratherȱenvironmentalȱissueȱsignificanceȱisȱrelatedȱtoȱ CSMȱ success.ȱ Thisȱ resultȱ suggestsȱ thatȱ leadingȱ companiesȱ reportingȱ greaterȱ CSMȱ successȱareȱcharacterizedȱbyȱaȱheightenedȱawarenessȱofȱtheȱsocialȱdimensionȱofȱCSM.ȱ ObviouslyȱmostȱcompaniesȱinȱbothȱsectorsȱhaveȱcomeȱanȱequallyȱlongȱwayȱinȱrecogȬ nizingȱenvironmentalȱissues,ȱsoȱthatȱtodayȱstrongerȱemphasisȱonȱtheȱsocialȱdimensionȱ ofȱCSMȱdiscriminatesȱtheȱleadersȱfromȱtheȱlaggards.ȱ Conclusionȱ Theȱevidenceȱpresentedȱsuggestsȱthatȱcompaniesȱwithȱmoreȱproactiveȱmanagersȱandȱ moreȱelaborateȱcorporateȱstructures,ȱwhichȱfacilitateȱcrossȬdisciplinaryȱcollaboration,ȱ exhibitȱ greaterȱ issueȱ awareness.ȱ Greaterȱ issueȱ awarenessȱ isȱ alsoȱ clearlyȱ linkedȱ toȱ companies’ȱ greaterȱ strategicȱ dispositionȱ toȱ CSM.ȱ Someȱ nuancesȱ inȱ theȱ dominatingȱ (socialȱ orȱ environmental)ȱ issueȱ dimensionȱ areȱ notableȱ acrossȱ theȱ twoȱ sectors.ȱ ComȬ panies’ȱCSMȱintentȱisȱlinkedȱtoȱsocialȱissueȱsignificanceȱinȱtheȱOGȱsector,ȱtoȱenvironȬ mentalȱissuesȱinȱtheȱUTȱsector.ȱ Aȱ comparisonȱ ofȱ Figureȱ 8Ȭ4ȱ andȱ Figureȱ 8Ȭ5ȱ revealsȱ thatȱ theȱ significanceȱ ofȱ socialȱ ratherȱ thanȱ environmentalȱ issuesȱ isȱ linkedȱ toȱ variablesȱ thatȱ relateȱ toȱ externalȱ stakeȬ holdersȱ andȱ legitimacy.ȱ Overallȱ thisȱ resultȱ isȱ puzzling,ȱ sinceȱ environmentalȱ issues,ȱ particularlyȱ climateȱ change,ȱ areȱ atȱ leastȱ asȱ relevantȱ toȱ companies’ȱ brandȱ valueȱ andȱ reputationȱasȱsocialȱissues.ȱThisȱappliesȱtoȱtheȱUTȱsectorȱinȱparticular,ȱinȱwhichȱsocialȱ issuesȱareȱofȱminorȱoverallȱimportance.ȱ Henceȱ itȱ isȱ suggestedȱ thatȱ theȱ positiveȱ linkageȱ betweenȱ issueȱ significanceȱ andȱ bothȱ theȱ importanceȱ ofȱ andȱ theȱ damageȱ toȱ legitimacyȱ –ȱ detectedȱ inȱ theȱ totalȱ andȱ theȱ UTȱ sampleȱ–ȱsuggestsȱthatȱcompaniesȱattachȱmoreȱsignificanceȱtoȱissues,ȱtheȱmoreȱimporȬ tantȱtheyȱconsiderȱtheȱinformalȱlicenseȱtoȱoperate.ȱThisȱsuggestsȱthatȱcompaniesȱareȱ goingȱbeyondȱaȱmereȱcomplianceȬorientedȱapproachȱtoȱCSMȱandȱincreasinglyȱaimȱtoȱ protectȱ orȱ buildȱ upȱ anȱ informalȱ kindȱ ofȱ legitimacyȱ throughȱ greaterȱ goodwillȱ fromȱ nonȬregulatoryȱstakeholders.ȱ Inȱ theȱ liberalizingȱ Europeanȱ energyȱ markets,ȱ UTȱ comȬ paniesȱmayȱalsoȱperceiveȱdamageȱtoȱbrandȱvalueȱandȱreputationȱmoreȱclearly.ȱRecentȱ experiencesȱ supportȱ thisȱ finding,ȱ sinceȱ corporateȱ socialȱ responsibilityȱ wasȱ foundȱ toȱ supportȱtheȱbuildingȱofȱbrandsȱ(Gray,ȱ2003)ȱinȱtheȱUKȱelectricityȱmarket.ȱ

8.1ȱIssuesȱ

111ȱ

Theȱlinkȱbetweenȱsocialȱratherȱthanȱenvironmentalȱissueȱsignificanceȱandȱbothȱofȱtheȱ legitimacyȬrelatedȱvariablesȱsuggestsȱprimarilyȱthatȱsustainabilityȱleadersȱhaveȱgoneȱ beyondȱ aȱ mereȱ environmentalȱ focusȱ andȱ becomeȱ moreȱ awareȱ ofȱ theȱ importanceȱ ofȱ socialȱissuesȱ(e.g.ȱrelocation,ȱenergyȱpoverty).ȱ 8.1.2.2 Regressionsȱ Theȱ followingȱ regressionȱ modelsȱ analyzeȱ theȱ effectȱ ofȱ environmentalȱ andȱ socialȱ isȬ suesȱonȱcompanies’ȱintentionȱtoȱintegrateȱenvironmentalȱandȱsocialȱcriteriaȱintoȱbusiȬ nessȱstrategiesȱandȱoperationsȱ(CSMȱintent).ȱ

Indep var Soc issues

T model 166 10.72 0.0000 0.2103 0.1906 .7538 Coeff .2330794

UT sector

-.5179783

North Am Dev econ Constant

Num of obs F Prob > F R-squared Adj R-squared Root MSE

Indep var Soc issues

OG model 112 12.59 0.0000 0.2592 0.2386 .71368 Coeff .2776461

Indep var Env issues

UT model 54 5.10 0.0095 0.1668 0.1341 .78195 Coeff .1775457

-.6256973 -.4383872

North Am Dev econ

-.6771252 -.4397351

Nordic

.7283435

3.385708

Constant

3.25639

Constant

2.790949

RegressionȱTableȱ8Ȭ1:ȱCSMȱintentȱ–ȱIssuesȱ(Reducedȱclusterȱmodels)ȱ

Theȱ OGȱ modelȱ suggestsȱ thatȱ theȱ OGȱ sector’sȱ CSMȱ intentȱ isȱ drivenȱ byȱ socialȱ issues,ȱ andȱ moderatedȱ byȱ individualȱ regionsȱ ofȱ operation.ȱ Companiesȱ operatingȱ inȱ Northȱ Americaȱ andȱ developingȱ economiesȱ featureȱ lowerȱ levelsȱ ofȱ CSMȱ intentȱ thanȱ thoseȱ operatingȱ inȱ theȱ remainingȱ regions,ȱ dueȱ toȱ lessȱ societalȱ andȱ regulatoryȱ pressureȱ (Skjaersethȱ etȱ al.,ȱ 2001;ȱ Souzaȱ Portoȱ &ȱ Freitas,ȱ 2003)ȱ andȱ presumablyȱ corporateȱ culȬ turesȱ (Kolkȱ etȱ al.,ȱ 2001).ȱ Theȱ factȱ thatȱ socialȱ ratherȱ environmentalȱ issuesȱ influenceȱ CSMȱ intentȱ inȱ theȱ OGȱ sectorȱ –ȱ althoughȱ respondentsȱ consideredȱ environmentalȱ isȬ suesȱmoreȱsignificantȱthanȱsocialȱonesȱ–ȱsuggestsȱtheȱfollowing:ȱFinancialȱthreatsȱandȱ opportunitiesȱ associatedȱ withȱ environmentalȱ issuesȱ areȱ probablyȱ fairlyȱ homogeneȬ ouslyȱassessedȱacrossȱtheȱsector.ȱInȱcontrast,ȱonlyȱtheȱleadingȱcompaniesȱwithȱgreaterȱ CSMȱintentȱnotedȱtheȱfinancialȱsignificanceȱofȱsocialȱissues.ȱ Inȱcontrast,ȱinȱtheȱUTȱsector,ȱCSMȱintentȱisȱpositivelyȱaffectedȱbyȱtheȱsignificanceȱofȱ environmentalȱissuesȱandȱisȱhigherȱinȱNordicȱcountries.ȱTheȱpositiveȱbiasȱofȱNordicȱ regionsȱ canȱ beȱ attributedȱ toȱ severalȱ factorsȱ suchȱ asȱ higherȱ levelsȱ ofȱ environmentalȱ awarenessȱ andȱ moreȱ efficientȱ environmentalȱ governanceȱ (Midittunȱ &ȱ Kamfjord,ȱ 1999,ȱp.ȱ875).ȱ TheȱTȱmodelȱshowsȱtheȱeffectȱofȱissueȱsignificanceȱonȱCSMȱintentȱinȱtheȱtotalȱsample.ȱ TheȱresultsȱareȱremarkableȱinsofarȱasȱtheyȱpointȱtoȱtheȱroleȱofȱsocialȱratherȱthanȱenviȬ ronmentalȱissuesȱinȱdrivingȱcorporateȱsustainabilityȱinȱtheȱenergyȱsectorȱasȱaȱwhole.ȱ TheyȱmostȱlikelyȱalsoȱreflectȱtheȱpreponderanceȱofȱOGȱrespondentsȱinȱtheȱtotalȱsamȬ ȱ

112ȱ

8ȱEmpiricalȱevidenceȱ

ple.ȱTheȱstatisticallyȱsignificantȱnegativeȱeffectȱofȱtheȱUTȱsectorȱdummyȱvariableȱreȬ vealsȱ theȱ leadingȱ positionȱ ofȱ OGȱ companiesȱ overȱ utilities.ȱ Possibleȱ reasonsȱ forȱ this,ȱ suchȱasȱlowerȱorganizationalȱvisibility,ȱexternalȱpressureȱandȱgreaterȱinternalȱdeficits,ȱ willȱbeȱdiscussedȱinȱlaterȱsections.ȱTheȱTȱ modelȱalsoȱshowsȱaȱ negativeȱeffectȱinȱtwoȱ regionsȱofȱoperations.ȱTheȱinterpretationȱisȱidenticalȱtoȱthatȱforȱtheȱOGȱmodel.ȱ 8.1.3

Discussionȱ

Importanceȱofȱissuesȱandȱtheȱprincipleȱofȱmanagerialȱdiscretionȱ Bothȱqualitativeȱandȱquantitativeȱmethodsȱpointȱtoȱtheȱsignificanceȱofȱissuesȱ(Wood,ȱ 1991,ȱp.ȱ697)ȱinȱtheȱareaȱofȱCSM,ȱasȱsuggestedȱinȱtheȱstudy’sȱconceptualȱframeworkȱ forȱcorporateȱsustainabilityȱperformance.ȱQualitativeȱdataȱinȱparticularȱrevealȱaȱgreatȱ numberȱofȱdifferentȱissues.ȱTheirȱrelevanceȱdiffers,ȱandȱonlyȱaboutȱaȱhandfulȱofȱkeyȱ issuesȱreallyȱtriggerȱmeaningfulȱcorporateȱresponsesȱthatȱareȱaimedȱtoȱresolveȱthem.ȱ However,ȱ incrementalȱ modificationsȱ ofȱ processesȱ andȱ operationsȱ sufficeȱ toȱ addressȱ allȱsocialȱandȱenvironmentalȱissuesȱthatȱareȱcurrentlyȱassociatedȱwithȱperceivableȱfiȬ nancialȱrisksȱandȱopportunities.ȱThisȱlittleȱrelevanceȱtoȱcurrentȱbusinessȱmodelsȱalsoȱ explainsȱmanagers’ȱlowȱlevelȱofȱissueȱawareness.ȱNevertheless,ȱtwoȱlongȬtermȱstrateȬ gicȱissuesȱ–ȱtheȱNorthȬSouthȱenergyȱdivideȱ(onceȱcurrentȱgrowthȱmarketsȱinȱAsiaȱareȱ served)ȱ and,ȱ aboveȱ all,ȱ climateȱ changeȱ –ȱ showȱ significantlyȱ greaterȱ relevanceȱ forȱ companies,ȱasȱtheȱfinancialȱstakesȱareȱsubstantial:ȱBothȱissuesȱrequireȱdistinctȱchangesȱ toȱcurrentȱbusinessȱmodelsȱfromȱanȱorganizationalȱandȱaȱtechnologicalȱpointȱofȱviewȱ (lowerȱcarbonȱintensity,ȱdistributedȱgeneration,ȱetc.).ȱ Determinantsȱandȱeffectsȱofȱissueȱsignificanceȱ Theȱauthorȱhasȱbeenȱableȱtoȱlinkȱissueȱsignificanceȱtoȱtheȱprinciplesȱofȱlegitimacyȱ(i.e.ȱ toȱ greaterȱ externalȱ demandsȱ forȱ CSM,ȱ greaterȱ importanceȱ ofȱ andȱ damageȱ toȱ legitiȬ macy)ȱandȱmanagerialȱdiscretionȱ(i.e.ȱmanagers’ȱmoreȱproactiveȱattitudes),ȱasȱwellȱasȱ toȱmoreȱadvancedȱapproachesȱtoȱCSM.ȱInȱparticular,ȱaȱpositiveȱcausalȱeffectȱonȱcomȬ panies’ȱ willingnessȱ toȱ integrateȱ socialȱ andȱ environmentalȱ issuesȱ intoȱ strategiesȱ andȱ operationsȱ(CSMȱintent)ȱhasȱbeenȱestablished.ȱThusȱfindingsȱareȱinȱlineȱwithȱthoseȱofȱ Henriquesȱ andȱ Sadorskyȱ (1996,ȱ p.ȱ 392),ȱ Anderssonȱ andȱ Batemanȱ (2000,ȱ p.ȱ 656)ȱ andȱ BansalȱandȱRothȱ(2000,ȱp.ȱ 729)ȱwhoȱlinkedȱtheȱrelevanceȱ ofȱ environmentalȱ issuesȱ toȱ corporateȱenvironmentalȱresponsiveness.ȱ Theȱ studyȱ alsoȱ revealsȱ severalȱ issueȱ drivers,ȱ i.e.ȱ factorsȱ thatȱ determineȱ theȱ signifiȬ canceȱofȱissues.ȱTheyȱcomprise:ȱ 1. Theȱ kindȱ ofȱ corporateȱ activityȱ thatȱ determinesȱ theȱ absoluteȱ socialȱ andȱ environȬ mentalȱ effectsȱ ofȱ corporateȱ behavior:ȱ E.g.ȱ theȱ moreȱ carbonȬintensiveȱ theȱ fuelȱ orȱ productȱ mixȱ is,ȱ theȱ moreȱ significantȱ theȱ corporateȱ riskȱ associatedȱ withȱ climateȱ change.ȱ

8.1ȱIssuesȱ

113ȱ

2. Theȱ locationȱ ofȱ theȱ activity.ȱ Theȱ locationȱ isȱ mostȱ significant,ȱ sinceȱ itȱ determinesȱ whetherȱandȱtoȱwhatȱextentȱtheȱsameȱcorporateȱactivityȱisȱperceivedȱasȱlegitimate.ȱ Theȱ sameȱ environmentalȱ orȱ socialȱ issueȱ mayȱ provokeȱ moreȱ orȱ lessȱ greaterȱ deȬ mandsȱfromȱstakeholdersȱtoȱresolveȱit,ȱdependingȱonȱvariousȱfactorsȱsuchȱasȱlocalȱ regulationsȱ andȱ societalȱ values:ȱ E.g.ȱ Theȱ sameȱ amountȱ ofȱ CO2ȱ emissionsȱ bearsȱ greaterȱrisksȱassociatedȱwithȱclimateȱchangeȱinȱEuropeȱthanȱinȱtheȱUSȱdueȱtoȱdifȬ ferentȱlevelsȱofȱsocietalȱandȱregulatoryȱpressure.ȱTheȱsameȱlevelȱofȱcommunityȱinȬ volvementȱisȱperceivedȱasȱadequateȱinȱindustrializedȱcountriesȱbutȱconsideredȱinȬ adequateȱinȱdevelopingȱcountriesȱdueȱtoȱdifferentȱ needsȱ ofȱ theȱlocalȱpopulation.ȱ Theȱsameȱamountȱofȱpollutionȱ(e.g.ȱaȱminorȱoilȱspill)ȱmayȱcauseȱdifferentȱlevelsȱofȱ publicȱoutrageȱdependingȱonȱtheȱlocalȱlevelȱofȱbiodiversityȱandȱtheȱsensoryȱvisiȬ bilityȱofȱtheȱeffectȱ(Bowen,ȱ2000,ȱp.ȱ100).ȱ 3. Aȱ company’sȱ visibilityȱ isȱ aȱ significantȱ moderatingȱ factor.ȱ Size,ȱ consumerȱ nameȱ recognition,ȱandȱitsȱattitudeȱ(proactiveȬcooperativeȱvs.ȱreactiveȬconfrontational)ȱtoȱ theȱissueȱunderȱconsiderationȱadditionallyȱplayȱanȱinfluentialȱrole.ȱ Corporateȱactivity Local,ȱregionalȱorȱ globalȱbiophysical,ȱ socialȱconditions

Socialȱorȱenvironmentalȱintake e.g.ȱtonsȱofȱCO2 emitted

e.g.ȱcriticalȱlevelȱofȱCO2ȱ concentrationȱinȱtheȱ atmosphereȱ

Socialȱorȱenvironmentalȱissue e.g.ȱclimateȱchange

Transparency Certainty

Visibleȱissue Visibleȱsocialȱorȱenvironmentalȱeffect attributableȱtoȱcorporateȱactivity (Bowenȱ2000),ȱe.g.ȱfloods,ȱstorms,ȱrisingȱseaȱlevel

Organizationalȱvisibility (Bowenȱ2000) • Size • Consumerȱnameȱrecognition • Locationȱofȱheadquarters • Approachȱtoȱtheȱissue:ȱnegation, climateȱchangeȱstrategy,ȱ pilotȱprojectsȱȱtoȱdevelop renewables

(Bansal andȱRoth,ȱ2000)

Local,ȱregionalȱor globalȱlevelȱofȱlegitimacy Currentȱandȱfuture

Outsideȱpressure fromȱstakeholdersȱonȱtheȱcompany toȱminimizeȱtheȱeffect

• Societalȱstandards,ȱvalues • Regulations

Informalȱlicenseȱtoȱoperate • Brandȱvalue • Reputation • Communityȱrelations

Financialȱthreatȱorȱopportunity Managers’ȱmindset, knowledge asȱperceivedȱbyȱtheȱmanagers:

Issueȱsignificance

(e.g.ȱcognitiveȱmaps)

ȱ

Figureȱ8.6:ȱDeterminantsȱofȱissueȱsignificanceȱ

Figureȱ8Ȭ6ȱaimsȱtoȱillustrateȱtheȱdeterminantsȱofȱissueȱsignificanceȱincorporatingȱfindȬ ingsȱ fromȱ Bansalȱ andȱ Rothȱ (2000)ȱ andȱ Bowenȱ (2000).ȱ Theȱ formerȱ identifiedȱ severalȱ attributesȱ ofȱ “issueȱsalience”ȱ asȱ determinantsȱ ofȱ environmentalȱ responsiveness.ȱ Theȱ ȱ

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latterȱdevelopedȱandȱtestedȱaȱtypologyȱofȱenvironmentalȱvisibilityȱasȱaȱtriggerȱofȱorȬ ganizationalȱresponse,ȱwhichȱincludedȱtheȱconceptsȱofȱissueȱvisibilityȱandȱorganizaȬ tionalȱvisibility.ȱ Asȱdepictedȱinȱtheȱfigure,ȱaȱcertainȱprimaryȱorȱsecondaryȱcorporateȱactivityȱ(orȱaȱlackȱ ofȱsuchȱactivity,ȱe.g.ȱlackȱofȱcommunityȱinvolvement)ȱisȱassociatedȱwithȱsomeȱsocialȱ orȱ environmentalȱ intakeȱ throughȱ theȱ businessȱ environment,ȱ whichȱ causesȱ anȱ issue.ȱ Theȱseverityȱofȱtheȱissueȱdependsȱonȱlocal,ȱregionalȱorȱglobalȱbiophysicalȱandȱsocialȱ conditions.ȱHowever,ȱtheȱentireȱscopeȱofȱtheȱissuesȱisȱnotȱnecessarilyȱvisible.ȱVisibilȬ ityȱ differsȱ dependingȱ onȱ theȱ transparencyȱ (howȱ easilyȱ attributableȱ toȱ theȱ corporateȱ activity?)ȱ andȱ theȱ certaintyȱ (howȱ certainȱ andȱ measurableȱ isȱ theȱ effect?)ȱ ofȱ theȱ issueȱ causedȱbyȱtheȱintake.ȱInȱtheȱcaseȱofȱclimateȱchange,ȱtheȱtransparencyȱisȱrelativelyȱhighȱ inȱ someȱ countriesȱ (e.g.ȱ internalȱ orȱ externalȱ accountingȱ andȱ tradingȱ systemsȱ forȱ CO2ȱ emissions)ȱandȱtheȱcertaintyȱisȱlimitedȱ(effectsȱareȱcomplex,ȱglobalȱandȱlongȱterm).ȱ Theȱvisibleȱissueȱthenȱtriggersȱcurrentȱandȱfutureȱoutsideȱpressureȱfromȱstakeholdersȱ onȱcompaniesȱtoȱresolveȱtheȱissue.ȱTheȱdeterminantsȱofȱoutsideȱpressureȱwillȱbeȱdisȬ cussedȱinȱmoreȱdetailȱinȱsectionȱ8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnerships.ȱ Interȱaliaȱitȱdependsȱonȱtheȱorganizationalȱvisibilityȱofȱtheȱcompanyȱorȱbusinessȱunitȱ (Bowen,ȱ 2000,ȱ p.ȱ 100),ȱ theȱ local,ȱ regionalȱ orȱ globalȱ limitȱ ofȱ legitimacyȱ thatȱ correȬ spondsȱ toȱ theȱ issueȱ underȱ considerationȱ andȱ theȱ importanceȱ toȱ theȱ companyȱ ofȱ theȱ informalȱlicenseȱtoȱoperate.ȱTheȱlimitȱofȱlegitimacyȱrefersȱtoȱtheȱdegreeȱofȱissueȱvisiȬ bilityȱandȱorganizationalȱvisibilityȱatȱwhichȱstakeholdersȱattemptȱtoȱamendȱorȱrevokeȱ companies’ȱcurrentȱlicenseȱtoȱoperateȱ(Davis,ȱ1973,ȱp.ȱ314).ȱItȱisȱdeterminedȱbyȱseveralȱ factorsȱ suchȱ asȱ societalȱ standards,ȱ valuesȱ andȱ regulations.ȱ Managers’ȱ perceptionȱ ofȱ theȱ legitimacyȱ andȱ strengthȱ ofȱ theȱ outsideȱ pressureȱ dependsȱ onȱ theirȱ individualȱ mindsetȱ andȱ knowledge,ȱ e.g.ȱ theirȱ cognitiveȱ mapȱ (Duttonȱ etȱ al.,ȱ 1983).ȱ Thus,ȱ issueȱ significanceȱisȱdeterminedȱbyȱindividualȱmanagers’ȱperceptionȱofȱshortȬȱorȱlongȬtermȱ financialȱthreatȱorȱopportunitiesȱcausedȱbyȱoutsideȱpressureȱonȱaȱparticularȱissue.ȱ Consideringȱtheȱvariousȱfactorsȱthatȱinfluenceȱissueȱsignificance,ȱitȱisȱclearȱthatȱissuesȱ representȱ theȱrootȱ ofȱ theȱcontingencyȱ natureȱofȱ CSM.ȱ Inȱthisȱ context,ȱ theȱ studyȱ alsoȱ revealsȱhowȱimportantȱtheȱdifferentiationȱbetweenȱsocialȱandȱenvironmentalȱkindsȱofȱ issuesȱ is:ȱ Bothȱ issueȱ dimensionsȱ doȱ notȱ exhibitȱ theȱ sameȱ relationshipsȱ withȱ otherȱ variables.ȱThisȱ meansȱinȱ particularȱthatȱ variationsȱ inȱ companies’ȱ CSMȱ intentȱ canȱbeȱ betterȱexplained,ȱtheȱfinerȱtheȱdifferentiationȱis.ȱInȱthisȱcontext,ȱtheȱauthorȱproposesȱ thatȱanyȱadditionalȱdifferentiationȱcouldȱshedȱfurtherȱlightȱonȱtheȱstrengthsȱofȱpublicȱ responsibilityȱasȱanȱorganizingȱprincipleȱofȱcorporateȱsustainabilityȱperformance.ȱ Contingencyȱperspectiveȱonȱissueȱsignificanceȱ Theȱ evidenceȱ alsoȱ showsȱ thatȱ theȱ contingencyȱ approachȱ chosenȱ inȱ thisȱ studyȱ isȱ worthwhile.ȱIssueȱsignificance,ȱandȱitsȱmotivatingȱeffectȱonȱCSM,ȱdiffersȱbetweenȱtheȱ

8.1ȱIssuesȱ

115ȱ

twoȱsectors,ȱmanagementȱgroupsȱandȱseveralȱregionsȱofȱoperations,ȱwhichȱcanȱbeȱexȬ plainedȱ throughȱ theȱ influenceȱ ofȱ theȱ determinantsȱ displayedȱ inȱ Figureȱ 8Ȭ6:ȱ E.g.ȱ theȱ sectorsȱdifferȱinȱtermsȱofȱtheȱkindsȱandȱlocationsȱofȱcorporateȱactivities,ȱtheȱorganizaȬ tionalȱvisibilityȱofȱtheȱcompaniesȱandȱtheȱlocalȱandȱregionalȱlimitsȱofȱlegitimacy;ȱtheȱ managementȱgroupsȱdifferȱinȱtermsȱofȱtheirȱmindsetȱandȱknowledge;ȱandȱtheȱregionsȱ featureȱspecificȱlevelsȱofȱlegitimacy,ȱbiophysicalȱandȱsocialȱconditionsȱasȱwellȱasȱlevȬ elsȱofȱissueȱtransparencyȱandȱcertainty.ȱ Bothȱ qualitativeȱ andȱ quantitativeȱ methodsȱ showedȱ thatȱ theȱ UTȱ sectorȱ isȱ moreȱ stronglyȱ influencedȱ byȱ environmentalȱ issues,ȱ theȱ OGȱ byȱ socialȱ issues.ȱ Thusȱ theȱ reȬ sultsȱreflectȱtheȱOGȱsector’sȱgrowingȱawarenessȱofȱoperationalȱrisksȱassociatedȱwithȱ extractionȱandȱproductionȱactivitiesȱinȱdevelopingȱcountriesȱandȱtheȱUTȱsector’sȱcurȬ rentȱ strategicȱ focusȱ onȱ developedȱ countriesȱ andȱ greaterȱ concernȱ aboutȱ increasingȱ regulatoryȱpressureȱonȱclimateȱchange.ȱTheyȱalsoȱshowȱthatȱ–ȱinȱtendencyȱ–ȱtheȱmoreȱ urgentȱ andȱ locallyȱ relevantȱ issuesȱ areȱ moreȱ likelyȱ toȱ beȱ takenȱ upȱ byȱ managementȱ (Anderssonȱetȱal.,ȱ2000,ȱp.ȱ656):ȱTheȱOGȱsector’sȱsocialȱissuesȱinȱdevelopingȱcountriesȱ areȱobviouslyȱlocalȱ(orȱregional);ȱclimateȱchangeȱisȱaȱglobalȱissueȱbutȱtheȱcomingȱEUȱ CO2ȱemissionsȱtradingȱsystemȱwillȱindeedȱhaveȱaȱveryȱlocalȱimpactȱonȱpowerȱplantsȱ inȱtheȱUTȱsector.ȱ Regressionsȱ alsoȱ showȱ thatȱ theȱ energyȱ sectorȱ asȱ aȱ wholeȱ isȱ drivenȱ byȱ socialȱ ratherȱ thanȱenvironmentalȱissues.ȱHowever,ȱitȱwouldȱcertainlyȱbeȱrashȱtoȱdiagnoseȱaȱparaȬ digmȱshiftȱinȱthisȱrespect,ȱlargelyȱbecauseȱtheȱsampleȱisȱbiasedȱtowardsȱsustainabilityȱ leaders.ȱ Theȱ surprisinglyȱ dominantȱ roleȱ ofȱ socialȱ issuesȱ overȱ environmentalȱ issuesȱ shouldȱ ratherȱ beȱ seenȱ asȱ aȱ signȱ ofȱ theȱ renunciationȱ ofȱ theȱ traditionalȱ narrowȱ enviȬ ronmentalȱfocusȱamongȱsustainabilityȱleaders.ȱ Theȱ dataȱ alsoȱ exhibitȱ differencesȱ inȱ sustainabilityȱ officers’ȱ andȱ generalȱ managers’ȱ perceptionsȱofȱsocialȱandȱenvironmentalȱissueȱsignificance.ȱThisȱfindingȱpointsȱtoȱtheȱ importanceȱofȱmanagementȱdevelopment,ȱproactiveȱcorporateȱculturesȱandȱmoreȱinȬ tensiveȱcollaborationȱ betweenȱtheȱtwoȱmanagementȱdisciplinesȱsurveyed.ȱTheȱmotiȬ vatingȱ effectȱ ofȱ publicȱ responsibilityȱ isȱ veryȱ complexȱ throughȱ theȱ greatȱ numberȱ ofȱ highlyȱ fragmentedȱ issues.ȱ Adequateȱ corporateȱ responsesȱ areȱ moreȱ likelyȱ toȱ beȱ achievedȱifȱmanagers,ȱandȱgeneralȱmanagersȱinȱparticularȱ(asȱtheȱdecisionȬmakersȱinȱ theirȱbusinessȱunitsȱandȱfunctions),ȱhaveȱaȱthoroughȱunderstandingȱofȱtheȱsocialȱandȱ environmentalȱ issuesȱ theirȱ companyȱ facesȱ andȱ theȱ financialȱ risksȱ andȱ opportunitiesȱ associatedȱwithȱthem.ȱ

ȱ

116ȱ

8ȱEmpiricalȱevidenceȱ

8.2

Externalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

Theȱpresentȱsectionȱaimsȱtoȱprovideȱanȱoverviewȱofȱtheȱstakeholders’ȱimportanceȱtoȱ CSMȱratherȱthanȱanȱissueȬspecificȱdiscussionȱpresentedȱinȱtheȱpreviousȱsections:ȱ -

Inȱsectionsȱ8.2.1ȱtoȱ8.2.5ȱtheȱauthorȱfirstȱdescribesȱtheȱindividualȱrolesȱ(demandȱforȱ CSM,ȱ activities)ȱ takenȱ byȱ externalȱ stakeholdersȱ (governmentsȱ andȱ regulators,ȱ publicȱpressureȱgroups,ȱcustomersȱandȱtheȱfinancialȱcommunity),ȱtheȱindustryȱasȱ aȱwholeȱandȱpublicȬprivateȱpartnerships.ȱ

-

Sectionȱ8.2.6ȱdealsȱwithȱ -

legitimacy,ȱmoreȱspecificallyȱitsȱimportanceȱandȱitsȱvulnerabilityȱthroughȱconȬ flictsȱwithȱstakeholdersȱ(sectionȱ8.2.6.1).ȱ

-

theȱrelativeȱimportanceȱofȱexternalȱstakeholdersȱ(sectionȱ8.2.6.2).ȱ

Finally,ȱ theȱ authorȱ synthesizesȱ andȱ discussesȱ theȱ findingsȱ fromȱ quantitativeȱ andȱ qualitativeȱmethodsȱinȱtheȱsectionsȱreferredȱtoȱaboveȱ(sectionȱ8.2.7).ȱ 8.2.1 Governmentsȱandȱregulatorsȱ 8.2.1.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ IntervieweesȱfromȱtheȱUTȱsectorsȱseeȱnationalȱandȱEuropeanȱgovernmentsȱandȱreguȬ latorsȱ asȱ theȱ mostȱ powerfulȱ externalȱ pressureȱ groupsȱ inȱ termsȱ ofȱ corporateȱ sustainȬ ability.ȱ Thisȱ isȱ notȱ becauseȱ theyȱ areȱ mostȱ demandingȱ butȱ becauseȱ theyȱ areȱ inȱ theȱ strongestȱ positionȱ toȱ changeȱ orȱ revokeȱ companies’ȱ currentȱ licensesȱ toȱ operateȱ throughȱhigherȱchieflyȱenvironmentalȱstandards.ȱInȱtheȱpastȱdomesticȱemissionȱstanȬ dardsȱandȱtheȱEUȱlargeȱcombustionȱplantȱdirectiveȱeffectivelyȱreducedȱairȱpollutionȱ (EconomistȱIntelligenceȱUnit,ȱ2003a).ȱNowadaysȱmostlyȱutilitiesȱwithȱaȱCO2Ȭintensiveȱ fuelȱ mixȱ forȱ theirȱ powerȱ plantsȱ areȱ stronglyȱ drivenȱ byȱ theȱ Europeanȱ CO2ȱ emissionȱ tradingȱsystemȱwhichȱwillȱbecomeȱmandatoryȱafterȱ2008.ȱTheȱEUȱhasȱalsoȱsetȱanȱinȬ dicativeȱtargetȱforȱelectricityȱsourcedȱfromȱrenewableȱenergiesȱofȱ12.5%ȱbyȱ2012.ȱ Inȱcontrast,ȱgovernmentsȱinȱindustrializedȱcountriesȱconstituteȱaȱlessȱpowerfulȱpresȬ sureȱgroupȱinȱtheȱOGȱsectorȱbecause,ȱasȱelaboratedȱinȱtheȱquoteȱbelowȱandȱsectionȱ8.1ȱ Issuesȱinȱmoreȱdetail,ȱtheyȱcannotȱeasilyȱregulateȱthoseȱactivitiesȱthatȱareȱassociatedȱ withȱtheȱsector’sȱmajorȱissues.ȱThisȱisȱbecauseȱtheȱactivitiesȱtakeȱplaceȱinȱdevelopingȱ countriesȱ (socialȱ impactȱ ofȱ upstreamȱ activities)ȱ andȱ inȱ theȱ useȱ phaseȱ ofȱ theȱ productȱ (localȱairȱpollutionȱand,ȱaboveȱall,ȱclimateȱchangeȱthroughȱuseȱofȱfossilȱfuels).ȱInterȬ vieweesȱalsoȱreportedȱthatȱgovernmentsȱinȱdevelopedȱcountriesȱareȱclearlyȱmoreȱconȬ cernedȱ withȱ socialȱ andȱ environmentalȱ performanceȱ thanȱ developingȱ countriesȱ are.ȱ Theȱlatterȱareȱprimarilyȱconcernedȱwithȱoilȱandȱgasȱrevenues,ȱevenȱifȱtheyȱbecomeȱinȬ creasinglyȱ awareȱ ofȱ environmentalȱ andȱ socialȱ issuesȱ overȱ time.ȱ Inȱ developedȱ counȬ triesȱ regulatoryȱ pressureȱ onȱ OGȱ companiesȱ isȱ limitedȱ toȱ raisingȱ standardsȱ ofȱ fuelȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

117ȱ

quality,ȱi.e.ȱtheȱreductionȱofȱleadȱandȱsulfurȱcontentȱtoȱcombatȱlocalȱairȱpollution.ȱInȱ Europe,ȱindividualȱmemberȱstatesȱhaveȱintroducedȱecoȬtaxesȱonȱfuels.ȱFurthermore,ȱ refineriesȱ willȱ beȱ subjectȱ toȱ theȱ forthcomingȱ EUȱ emissionȱ tradingȱ systemȱ (AnonyȬ mous,ȱ2004d),ȱbutȱtheȱcorrespondingȱpressureȱ isȱsubstantiallyȱ lowerȱthanȱ inȱ theȱUTȱ sectorȱdueȱtoȱtheȱlowerȱcarbonȱintensityȱ(seeȱsectionȱ8.1.1.2ȱEnvironmentalȱissues).ȱ Anȱ intervieweeȱ fromȱ theȱ Europeanȱ Commissionȱ acknowledgedȱ theȱ positiveȱ enviȬ ronmentalȱ performanceȱ ofȱ theȱ energyȱ sectorȱ asȱ aȱ whole,ȱ particularlyȱ inȱ termsȱ ofȱ airȱ emissions.ȱAȱclearȱdifferentiationȱbetweenȱtheȱtwoȱsubsectorsȱwasȱmadeȱinȱtermsȱofȱ policyȱmixesȱused:ȱ TheȱOGȱsectorȱ canȱonlyȱ beȱindirectlyȱregulatedȱatȱtheȱuseȱ phaseȱ ofȱ itsȱproducts.ȱ Thisȱisȱalsoȱwhereȱtheȱmajorȱenvironmentalȱimpactȱoccursȱ[inȱEurope].ȱOneȱ[theȱ regulator]ȱ hasȱ toȱ targetȱ billionsȱ ofȱ consumersȱ ratherȱ thanȱ aȱcoupleȱ ofȱ companiesȱ andȱ facesȱ lackȱ ofȱ politicalȱ acceptanceȱ andȱ alternativesȱ (e.g.ȱ publicȱ transport)ȱ asȱ majorȱchallengesȱ(EuropeanȱCommission,ȱDGȱEnergyȱandȱTransport).ȱ Theȱ lowerȱ importanceȱ ofȱ governmentsȱ andȱ regulatorsȱ inȱ theȱ OGȱ sectorȱ isȱ alsoȱ indiȬ catedȱ byȱ theȱ quantitativeȱ data,ȱ sinceȱ bothȱ OGȱ generalȱ managersȱ andȱ sustainabilityȱ officersȱ ratedȱ governments’ȱ SDȱ roleȱ lowerȱ thanȱ theirȱ counterpartsȱ inȱ theȱ UTȱ sector.ȱ Dueȱtoȱtheȱlimitedȱsizeȱofȱtheȱtwoȱsustainabilityȱofficerȱsamples,ȱcrossȬsectorȱvariationȱ isȱ onlyȱ statisticallyȱ significantȱ inȱ theȱ dataȱ obtainedȱ fromȱ generalȱ managers.ȱ CrossȬ disciplinaryȱ differencesȱ inȱ theȱ ratingsȱ betweenȱ sustainabilityȱ officersȱ andȱ generalȱ managersȱareȱsmallȱandȱnotȱstatisticallyȱsignificant,ȱwhichȱgivesȱadditionalȱassuranceȱ toȱtheȱresults.ȱ Governments’ȱSDȱroleȱ(1ȱ=ȱ“Leastȱproactive”ȱtoȱ5ȱ=ȱ“Mostȱproactive”)ȱ

Generalȱmanagersȱ

Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

51ȱ 116ȱ

3.176471ȱ 2.706897ȱ

.0998268ȱ .0648112ȱ

.7129062ȱ .6980375ȱ

2.975962ȱȱȱȱ3.376979ȱ 2.578518ȱȱȱȱ2.835275ȱ

Sustainabilityȱofficersȱ

Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

13ȱ 17ȱ

3ȱ 2.823529ȱ

.2264554ȱ .1764706ȱ

.8164966ȱ .7276069ȱ

2.506596ȱȱȱȱ3.493404ȱ 2.449428ȱȱȱȱ3.19763ȱ

Tableȱ8Ȭ1:ȱSummaryȱstatisticsȱ–ȱGovernments’ȱSDȱroleȱ

Theȱdataȱpresentedȱillustrateȱthatȱroleȱofȱgovernmentsȱvariesȱbetweenȱtheȱtwoȱsectorsȱ dueȱtoȱtheȱdifferentȱlocusȱofȱtheȱmajorȱenvironmentalȱandȱsocialȱimpactȱgeographicallyȱ andȱwithinȱtheȱvalueȱchain.ȱ Theȱ UTȱsectorȱcanȱbeȱmoreȱ directlyȱ andȱ moreȱconvenientlyȱ regulatedȱ(asȱeasierȱtarȬ getsȱ thanȱ individualȱ consumersȱ andȱ households)ȱ andȱ itȱ isȱ moreȱ stronglyȱ concernedȱ withȱ theȱ formalȱ licenseȱ toȱ operate,ȱ i.e.ȱ withȱ currentȱ andȱ futureȱ regulatoryȱ pressure.ȱ ȱ

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8ȱEmpiricalȱevidenceȱ

Theȱ OGȱ sector’sȱ formalȱ licenseȱ toȱ operateȱ isȱ notȱ underȱ greatȱ threat:ȱ Policyȱ instruȬ mentsȱtargetingȱtheȱuseȱofȱitsȱproduct,ȱi.e.ȱfossilȱfuels,ȱinȱdevelopedȱcountriesȱareȱnotȱ necessarilyȱ popularȱ andȱ politicallyȱ accepted.ȱ Furthermore,ȱ regulatoryȱ measuresȱ onȱ theȱ environmentalȱ andȱ socialȱ effectsȱ ofȱ upstreamȱ activitiesȱ inȱ developingȱ countriesȱ areȱlargelyȱabsent,ȱbecauseȱgovernmentsȱdemandȱaȱsteadyȱflowȱofȱoilȱandȱgasȱreveȬ nuesȱratherȱthanȱsoundȱenvironmentalȱmanagementȱandȱcommunityȱinvolvement.ȱ 8.2.1.2 Advancedȱstatisticsȱ Figureȱ 8Ȭ7ȱ displaysȱ theȱ correlationsȱ thatȱ theȱ dataȱ exhibitȱ betweenȱ governments’ȱ SDȱ roleȱandȱotherȱvariables.ȱInȱtheȱfollowingȱparagraphs,ȱtheȱauthorȱwillȱdiscussȱtheȱreȬ sultsȱinȱmoreȱdetail.ȱ Issues

Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. SDȱfamiliarity

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv. Strategic OG,ȱT disposition

Externalȱstakeholders FutureȱSDȱrole

SDȱimportance CSMȱINTENT

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

OG

Damageȱtoȱlegitimacy UT

Structure

Consumers

UT

Governments CurrentȱSDȱrole

PPPs

CSMȱSUCCESS OG

Industry NGOs

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

Positiveȱcorrelation UT

Negativeȱcorrelation

ȱ Figureȱ8.7:ȱCorrelationsȱ–ȱGovernments’ȱSDȱroleȱ

Issueȱsignificanceȱ Thereȱ isȱ aȱ linkageȱ betweenȱ environmentalȱ issueȱ significanceȱ andȱ governments’ȱ SDȱ role,ȱ whichȱ isȱ negativeȱ inȱ theȱ UTȱ data,ȱ butȱ itȱ isȱ onlyȱ statisticallyȱ significantȱ atȱ justȱ aboveȱ theȱ 10%ȱ levelȱ (henceȱ notȱ includedȱ inȱ theȱ figureȱ above).ȱ Oneȱ canȱ assumeȱ thatȱ theȱ relationshipȱ wouldȱ attainȱ moreȱ adequateȱ significanceȱ levelsȱ inȱ aȱ largerȱ sample.ȱ Henceȱ theȱ authorȱ cautiouslyȱ suggestsȱ thatȱ moreȱ proactiveȱ individualsȱ (andȱ compaȬ nies)ȱ considerȱ governments’ȱ demandȱ forȱ CSMȱ lessȱ strong.ȱ Theyȱ appearȱ toȱ beȱ moreȱ awareȱofȱtheȱissuesȱandȱmoreȱstronglyȱacknowledgeȱtheȱneedȱforȱcorporateȱresponsesȱ

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119ȱ

thanȱtheirȱreactiveȱcounterpartsȱwhoȱconsequentlyȱperceiveȱgovernmentalȱinitiativesȱ asȱmoreȱdemanding.ȱ Theȱfactȱthatȱthisȱlinkȱexistsȱwithȱenvironmentalȱratherȱthanȱsocialȱissueȱsignificanceȱ indicatesȱ thatȱprimarilyȱenvironmentalȱ regulationsȱ(chieflyȱtheȱ EUȱemissionȱtradingȱ system)ȱ areȱ relevantȱ toȱ companiesȱ andȱ thusȱ supportsȱ theȱ findingsȱ presentedȱ above.ȱ Theȱ missingȱ linkȱ betweenȱ issueȱ significanceȱ andȱ governments’ȱ SDȱ roleȱ inȱ theȱ OGȱ dataȱ isȱ alsoȱ inȱ parallelȱ withȱ theȱ qualitativeȱ data,ȱ whichȱ indicatedȱ thatȱ governmentsȱ andȱregulatorsȱplayȱaȱrelativelyȱminorȱroleȱasȱexternalȱpressureȱgroupsȱinȱtheȱOGȱsecȬ tor.ȱ Externalȱstakeholdersȱandȱlegitimacyȱ Publicȱpressureȱgroupsȱ RespondentsȱinȱtheȱUTȱsectorȱwhoȱconsiderȱgovernments’ȱSDȱroleȱproactiveȱareȱalsoȱ likelyȱtoȱconsiderȱtheȱSDȱroleȱofȱpublicȱpressureȱgroupsȱproactive.ȱThisȱsuggestȱthatȱ theȱ activitiesȱ ofȱ NGOsȱ andȱ theȱ reactionsȱ ofȱ governmentsȱ areȱ lessȱ stronglyȱ linkedȱ inȱ theȱOGȱthanȱinȱtheȱUTȱsector:ȱThisȱisȱplausibleȱsinceȱNGOȱcampaignsȱonȱOGȱcompaȬ niesȱfocusȱmostlyȱonȱsocialȱandȱenvironmentalȱissuesȱinȱdevelopingȱcountriesȱandȱonȱ climateȱchange,ȱandȱtriggerȱlittleȱdirectȱregulatoryȱpressureȱfromȱhostȱandȱhomeȱgovȬ ernments.ȱInȱtheȱUTȱsector,ȱcampaignsȱonȱclimateȱchangeȱandȱnuclearȱpowerȱhaveȱinȱ factȱledȱtoȱnotableȱchangesȱinȱEuropean,ȱnationalȱandȱlocalȱregulationsȱ(e.g.ȱnuclearȱ phaseȱout,ȱemissionȱtrading).ȱ PublicȬprivateȱpartnershipsȱ Furthermore,ȱ respondentsȱ inȱ theȱ OGȱ sectorȱ reportingȱ aȱ moreȱ proactiveȱ SDȱ roleȱ ofȱ governmentsȱ alsoȱ considerȱ PPPsȱ moreȱ proactive.ȱ Thisȱ presumablyȱ pointsȱ toȱ theȱ inȬ volvementȱofȱgovernmentsȱinȱtheseȱpartnerships.ȱInȱdevelopingȱcountries,ȱtheȱexploȬ rationȱandȱdevelopmentȱofȱoilȱ&ȱgasȱfieldsȱandȱtheȱconstructionȱofȱpipelinesȱhasȱtraȬ ditionallyȱoccurredȱthroughȱPPPs,ȱthroughȱwhichȱtheȱpublicȱsectorȱisȱableȱtoȱtransferȱ riskȱtoȱtheȱprivateȱsector,ȱwhichȱcontributesȱbothȱcapitalȱandȱknowȬhow.ȱ Strategicȱdispositionȱ Relationshipsȱ betweenȱ governments’ȱ SDȱ roleȱ andȱ companies’ȱ strategicȱ disposition,ȱ whichȱwouldȱhaveȱbeenȱexpectedȱinȱtheȱUTȱsectorȱbasedȱonȱtheȱqualitativeȱdataȱpreȬ sentedȱabove,ȱareȱnotȱfound.ȱThereȱareȱseveralȱexplanations:ȱFirst,ȱtheȱsampleȱisȱtooȱ smallȱandȱbiased.ȱSecond,ȱrelationshipsȱareȱsubduedȱbyȱsomeȱthirdȱvariableȱsuchȱasȱaȱ reactiveȱ mindsetȱ orȱ otherȱ internalȱ barriers.ȱ Third,ȱ theȱ relationshipȱ betweenȱ governȬ ments’ȱroleȱandȱstrategicȱdispositionȱhardlyȱexists.ȱInȱfactȱtheȱthirdȱinterpretationȱ isȱ veryȱplausible,ȱsinceȱgovernmentsȱprovideȱrelativelyȱlittleȱstrategicȱguidanceȱtoȱcomȬ panies’ȱstrategicȱdisposition,ȱapartȱfromȱtheȱlegislatedȱphasingȱoutȱofȱnuclearȱpowerȱ inȱsomeȱcountriesȱandȱemissionȱtradingȱsystems.ȱThusȱtheȱmissingȱlinkȱbetweenȱgovȬ ȱ

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8ȱEmpiricalȱevidenceȱ

ernments’ȱ demandȱ forȱ CSMȱ andȱ strategicȱ dispositionȱ suggestsȱ thatȱ bothȱ measuresȱ haveȱlittleȱstrategicȱimplicationsȱforȱtheȱUTȱsectorȱandȱrequireȱnoȱradicalȱchangesȱinȱ businessȱmodels.ȱ Itȱ isȱ puzzlingȱ thatȱ theȱ OGȱ sectorȱ exhibitsȱ theȱ onlyȱ statisticallyȱ significantȱ sectorȬ specificȱlinkȱbetweenȱgovernments’ȱSDȱroleȱandȱstrategicȱdispositionȱtoȱCSM,ȱnamelyȱ theȱfutureȱimportanceȱofȱsustainableȱdevelopmentȱtoȱtheȱcompaniesȱ(SDȱimportance).ȱ Theȱassociationȱmayȱ beȱspuriousȱbutȱcouldȱalsoȱsuggestȱthatȱOGȱ companiesȱexperiȬ encingȱgreaterȱdemandȱforȱCSMȱfromȱgovernmentsȱattachȱgreaterȱimportanceȱtoȱtheȱ conceptȱofȱsustainableȱdevelopmentȱ inȱtheȱfuture.ȱThisȱ couldȱ pointȱ toȱanȱincreasingȱ demandȱ fromȱ hostȱ governmentsȱ inȱ developingȱ countriesȱ forȱ theȱ resolutionȱ ofȱ localȱ socialȱandȱenvironmentalȱissues,ȱwhichȱisȱinȱlineȱwithȱfindingsȱfromȱtheȱinterviews.ȱ OverallȱdataȱhintȱatȱanȱinsignificantȱtoȱweakȱroleȱofȱgovernmentsȱinȱprovidingȱlongȬ termȱstrategicȱguidance:ȱThereȱisȱnoȱlinkȱbetweenȱtheirȱSDȱroleȱandȱCSMȱintent.ȱFurȬ thermore,ȱ greaterȱ SDȱ familiarityȱ isȱ negativelyȱ relatedȱ toȱ governments’ȱ SDȱ roleȱ (atȱ aȱ 10%ȱsignificanceȱlevelȱinȱtheȱtotalȱsample),ȱi.e.ȱtheȱmoreȱfamiliarȱcompaniesȱareȱwithȱ theȱ conceptȱ ofȱ sustainableȱ development,ȱ theȱ lessȱ demandingȱ theyȱ perceiveȱ governȬ mentsȱinȱtermsȱofȱCSM.ȱ Structureȱ Correlationsȱalsoȱindicateȱthatȱrespondents’ȱperceptionsȱofȱgovernments’ȱSDȱroleȱareȱ relatedȱtoȱcorporateȱstructures.ȱHowever,ȱtheyȱrevealȱaȱsignificantȱdifferenceȱbetweenȱ theȱtwoȱsectors:ȱ -

Inȱ theȱ UTȱ sector,ȱ closerȱ crossȬdisciplinaryȱ collaborationȱ andȱ greaterȱ crossȬ disciplinaryȱpotentialȱareȱassociatedȱwithȱaȱlessȱproactiveȱSDȱroleȱofȱgovernments,ȱ i.e.ȱweakerȱdemandȱforȱCSMȱfromȱgovernments.ȱIfȱoneȱassumesȱthatȱcloserȱcrossȬ disciplinaryȱ collaborationȱ andȱ greaterȱ crossȬdisciplinaryȱ potentialȱ areȱ aȱ proxyȱ measureȱforȱrespondents’ȱhigherȱlevelsȱofȱawarenessȱasȱwellȱasȱcompanies’ȱhigherȱ levelȱ ofȱ implementingȱ CSM,ȱ theseȱ linkagesȱ suggestȱ thatȱ leadingȱ companiesȱ perȬ ceiveȱregulatoryȱpressureȱlessȱstronglyȱthanȱlaggardsȱdo.ȱ

-

InȱtheȱOGȱsector,ȱrespondentsȱwhoȱworkȱmoreȱcloselyȱwithȱsustainabilityȱofficersȱ considerȱ governments’ȱ roleȱ moreȱ proactive.ȱ Ifȱ oneȱ followedȱ theȱ interpretationȱ suggestedȱforȱtheȱUTȱdata,ȱthisȱwouldȱmeanȱthatȱrespondentsȱand/orȱcompaniesȱ thatȱ areȱ higherȱ onȱ theȱ CSMȱ learningȱ curveȱ feelȱ governmentalȱ pressureȱ moreȱ strongly.ȱThisȱwouldȱcontradictȱtheȱfactȱthatȱleadingȱOGȱcompaniesȱoftenȱ“overȬ comply”ȱ(e.g.ȱvoluntaryȱemissionȱtradingȱsystemsȱatȱBPȱandȱShell,ȱcommunityȱinȬ volvementȱ inȱ developingȱ countries),ȱ andȱ areȱ subjectȱ toȱ littleȱ externalȱ pressureȱ fromȱregulationsȱcomparedȱtoȱUTȱcompanies.ȱToȱthisȱextent,ȱtheȱresultsȱareȱpuzȬ zlingȱbutȱthereȱisȱoneȱexplanation:ȱSinceȱcrossȬdisciplinaryȱcollaborationȱisȱsignifiȬ cantlyȱhigherȱ(seeȱsectionȱ8.4.4.2)ȱandȱcurrentȱregulatoryȱpressureȱisȱlowȱinȱtheȱOGȱ

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121ȱ

sector,ȱ respondentsȱ fromȱ sustainabilityȱ leadersȱ thatȱ exhibitȱ closeȱ crossȬ disciplinaryȱ collaborationȱ mayȱ perceiveȱ greaterȱ demandȱ forȱ CSMȱ fromȱ governȬ mentsȱ inȱ theȱ future,ȱ presumablyȱ fromȱ hostȱ governmentsȱ inȱ particularȱ which,ȱ asȱ theȱinterviewsȱrevealed,ȱareȱbecomingȱincreasinglyȱconcernedȱwithȱsocialȱandȱenȬ vironmentalȱissues.ȱ Conclusionȱ Correlationsȱ revealȱ fewȱ statisticallyȱ significantȱ associationsȱ betweenȱ governments’ȱ SDȱrolesȱandȱotherȱvariables.ȱThereȱareȱsurprisinglyȱfewȱinȱtheȱUTȱdataȱinȱparticular,ȱ sinceȱ governmentsȱ andȱ regulatorsȱ wereȱ identifiedȱ asȱ theȱ mostȱ powerfulȱ externalȱ pressureȱgroupȱinȱtheȱUTȱsector.ȱ Overall,ȱ thisȱ suggestsȱ governmentsȱ playȱ aȱ minorȱ roleȱ inȱ leadingȱ theȱ corporateȱ susȬ tainabilityȱagendaȱandȱ–ȱinȱtheȱcaseȱofȱUTȱcompaniesȱ–ȱthatȱthereȱareȱsignificantȱinȬ ternalȱbarriersȱsuchȱasȱaȱlackȱofȱstructuresȱandȱreactiveȱmindsets.ȱE.g.ȱseveralȱregulaȬ toryȱ measures,ȱ mostȱ prominentlyȱ theȱ comingȱ EUȱ emissionsȱ tradingȱ system,ȱ areȱ notȱ reflectedȱinȱcompanies’ȱstrategicȱdisposition.ȱTheȱresultsȱalsoȱsuggestȱthatȱtheȱlevelȱofȱ crossȬdisciplinaryȱ collaborationȱ influencesȱ generalȱ managers’ȱ perceptionȱ ofȱ governȬ ments’ȱdemandȱforȱCSM.ȱ 8.2.2

Publicȱpressureȱgroupsȱ

8.2.2.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ PublicȱpressureȱgroupsȱorȱnonȬgovernmentalȱorganizationsȱ(NGOs)ȱfocusȱinȱparticuȬ larȱ onȱ theȱ environmentalȱ and/orȱ socialȱ effectsȱ ofȱ corporateȱ activitiesȱ inȱ developingȱ countriesȱ andȱ companies’ȱ strongȱ focusȱ onȱ nonȬrenewableȱ primaryȱ energyȱ sourcesȱ (Luhmann,ȱ Müller,ȱ Nitsch,ȱ &ȱ Ziesing,ȱ 2002).ȱ Moreover,ȱ theyȱ criticizeȱ governments’ȱ fossilȬfuelȬbasedȱ policiesȱ andȱ lobbyȱ forȱ theȱ internalizationȱ ofȱ externalȱ costsȱ andȱ theȱ reorganizationȱofȱsubsidiesȱtoȱoffsetȱtheȱcompetitiveȱdisadvantagesȱofȱrenewableȱenȬ ergies.ȱ TheȱallocationȱofȱsubsidiesȱbetweenȱnonȬrenewableȱandȱrenewableȱenergyȱsourcesȱisȱ aȱfieldȱofȱconsiderableȱcomplexityȱandȱcontroversialȱdiscussion.ȱInȱgeneral,ȱitȱisȱdiffiȬ cultȱtoȱdrawȱmeaningfulȱ conclusions,ȱ primarilyȱ dueȱtoȱtheȱvarietyȱ ofȱimplicitȱsubsiȬ dies:ȱE.g.ȱoneȱmayȱargueȱthatȱaȱsignificantȱproportionȱofȱtheȱUSȱdefenseȱbudgetȱtoȱseȬ cureȱoilȱandȱgasȱfieldsȱinȱtheȱMiddleȱEastȱimplicitlyȱsubsidizesȱfossilȱfuelsȱ(2001a).ȱAȱ Greenpeaceȱ studyȱ concludedȱ thatȱ directȱ subsidiesȱ forȱ renewableȱ energiesȱ andȱ conȬ servationȱinȱWesternȱEuropeȱbetweenȱ1990ȱandȱ1995ȱamountedȱtoȱlessȱthanȱoneȬthirdȱ ofȱtheȱamountȱprovidedȱtoȱfossilȱandȱnuclearȱenergyȱ(Ruigrokȱ&ȱOosterhuis,ȱ1997).ȱ Inȱ additionȱ toȱ theirȱ boycottȱ andȱ protestȱ campaigns,ȱ NGOsȱ haveȱ filedȱ shareholderȱ resolutionsȱagainstȱseveralȱmajorȱ OGȱcompanies,ȱ whichȱ areȱfindingȱ moreȱandȱ moreȱ support,ȱ particularlyȱ fromȱ theȱ sociallyȱ responsibleȱ investmentȱ communityȱ (Merolli,ȱ ȱ

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8ȱEmpiricalȱevidenceȱ

2002;ȱSt.ȱClair,ȱ2004).ȱHence,ȱasȱOGȱintervieweesȱalsoȱindicated,ȱNGOsȱareȱtheȱmostȱ importantȱsourceȱofȱexternalȱpressureȱinȱtermsȱofȱcorporateȱsustainabilityȱinȱtheȱOGȱ sector.ȱ Inȱ contrast,ȱ UTȱ companiesȱ areȱ organizationallyȱ lessȱ visibleȱ andȱ lessȱ profitable.ȱ FurȬ thermore,ȱtheirȱextractionȱactivitiesȱtakeȱplaceȱinȱemergingȱorȱdevelopedȱeconomies,ȱ whereȱ theyȱ provideȱ muchȬneededȱ employmentȱ andȱ affectȱ areasȱ withȱ relativelyȱ lowȱ levelsȱofȱbiodiversity.ȱHence,ȱNGOȱpressureȱonȱutilitiesȱisȱlessȱstrongȱandȱconfrontaȬ tional,ȱandȱfocusesȱonȱsingleȱissuesȱsuchȱasȱe.g.ȱnuclearȱtransport,ȱsurfaceȱminingȱandȱ theȱconstructionȱofȱplants.ȱInȱfact,ȱasȱoneȱintervieweeȱindicated,ȱlocalȱpressureȱgroupsȱ (e.g.ȱcitizensȱgroups)ȱoftenȱplayȱaȱgreaterȱroleȱthanȱglobalȱNGOsȱwithȱmuchȱmoreȱreȬ sources.ȱ However,ȱ interviewsȱ withȱ largeȱ environmentalȱ organizationsȱ alsoȱ suggestȱ thatȱ climateȱ changeȱ andȱ gridȱ accessȱ forȱ electricityȱ fromȱ renewableȱ sourcesȱ mayȱ beȬ comeȱsignificantȱissuesȱthatȱNGOsȱwillȱincreasinglyȱtakeȱupȱagainstȱtheȱmajorȱEuroȬ peanȱelectricȱutilities.ȱ Publicȱpressureȱgroups’ȱSDȱroleȱ(1ȱ=ȱ“Leastȱproactive”ȱtoȱ5ȱ=ȱ“Mostȱproactive”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

48ȱ 115ȱ

3.375ȱ 3.347826ȱ

.1099041ȱ ȱ.072066ȱ

.7614376ȱ .7728221ȱ

3.153902ȱȱȱȱ3.596098ȱ 3.205064ȱȱȱȱ3.490588ȱ

Sustainabilityȱofficersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

13ȱ 17ȱ

3.307692ȱ 3.411765ȱ

.2370928ȱ .1928658ȱ

.8548504ȱ .7952062ȱ

2.791111ȱȱȱȱ3.824273ȱ 3.002907ȱȱȱȱ3.820622ȱ

Tableȱ8Ȭ2:ȱSummaryȱstatisticsȱ–ȱPublicȱpressureȱgroups’ȱSDȱroleȱ

MeanȱdifferencesȱinȱtheȱSDȱroleȱofȱNGOsȱbetweenȱallȱfourȱgroupsȱofȱrespondentsȱareȱ marginalȱandȱnotȱstatisticallyȱsignificantȱ(seeȱTableȱ8Ȭ2).ȱAlthoughȱoneȱmayȱhaveȱexȬ pectedȱ aȱ moreȱ proactiveȱ NGOȱ roleȱ inȱ theȱ quantitativeȱ OGȱ dataȱ basedȱ onȱ theȱ interȬ views,ȱ missingȱ differencesȱ areȱ notȱ necessarilyȱ inconsistentȱ withȱ theȱ findingȱ thatȱ NGOsȱpresentȱaȱmoreȱimportantȱpressureȱgroupȱinȱtheȱOGȱthanȱinȱtheȱUTȱsector.ȱTheȱ SDȱroleȱofȱNGOsȱonlyȱoperationalizesȱtheirȱdemandȱforȱCSMȱratherȱthanȱtheirȱpowerȱ orȱ intentionȱ toȱ affectȱ companies’ȱ legitimacy.ȱ Thusȱ theȱ insignificantȱ differencesȱ beȬ tweenȱ theȱ twoȱ sectorsȱ suggestȱ thatȱ NGOs’ȱ agendasȱ onȱ differentȱ operationalȱ issues,ȱ butȱ chieflyȱ onȱ aȱ moreȱ rapidȱ introductionȱ ofȱ renewableȱ energies,ȱ areȱ perceivedȱ asȱ equallyȱdemandingȱacrossȱbothȱsectors.ȱInȱfactȱtheȱmoreȱimportantȱroleȱofȱNGOsȱasȱ anȱexternalȱpressureȱgroupȱinȱtheȱOGȱsectorȱisȱrevealedȱthroughȱtheȱrelativelyȱgreaterȱ numberȱ ofȱNGOȱ campaignsȱ OGȱ companiesȱ haveȱ beenȱ subjectȱ toȱ (seeȱ sectionȱ 8.2.6.2ȱ Theȱrelativeȱimportanceȱofȱexternalȱstakeholders).ȱ

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123ȱ

8.2.2.2 Advancedȱstatisticsȱ TheȱpresentȱsectionȱfeaturesȱaȱdiscussionȱofȱcorrelationsȱdetectedȱbetweenȱtheȱSDȱroleȱ ofȱNGOsȱandȱotherȱvariables.ȱAsȱFigureȱ8Ȭ8ȱillustrates,ȱtheirȱnumberȱisȱratherȱlimited.ȱ Issues

Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. T

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders Capitalȱmarkets

FutureȱSDȱrole

Importanceȱofȱlegitimacy Legitimacy

SDȱimportance

T,ȱUT

CSMȱINTENT

T

Damageȱtoȱlegitimacy

Consumers Governments CurrentȱSDȱrole

SDȱfamiliarity

Strategic disposition

T

Structure

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

UT

CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.8:ȱCorrelationsȱ–ȱPublicȱpressureȱgroups’ȱSDȱroleȱ

Issuesȱ IssueȱsignificanceȱandȱtheȱSDȱroleȱofȱNGOsȱareȱunrelated,ȱpresumablyȱbecauseȱNGOsȱ essentiallyȱ actȱ asȱ catalystsȱ forȱ companies’ȱ primaryȱ stakeholdersȱ suchȱ asȱ customers,ȱ governmentsȱandȱtheȱfinancialȱcommunityȱ(asȱdiscussedȱinȱdetailȱinȱsectionȱ8.1.2.1).ȱ Managers’ȱattitudesȱ AssociationsȱbetweenȱNGOs’ȱSDȱroleȱandȱmanagers’ȱattitudesȱareȱlimitedȱtoȱaȱposiȬ tiveȱ linkȱ withȱ theȱ CAȱ (“CSMȱ toȱ gainȱ longȬtermȱ competitiveȱ advantage”)ȱ statement,ȱ whichȱ is,ȱ however,ȱ onlyȱ statisticallyȱ significantȱ atȱ aȱ 10%ȱ levelȱ inȱ theȱ totalȱ andȱ OGȱ sample.ȱThisȱindicatesȱthatȱmoreȱproactiveȱattitudesȱareȱalsoȱassociatedȱwithȱgreaterȱ awarenessȱ ofȱ NGOs’ȱ demandsȱ forȱ CSM.ȱ Theȱ factȱ thatȱ theȱ correspondingȱ UTȱ coeffiȬ cientȱindicatesȱaȱsimilarȱrelationshipȱinȱtermsȱofȱdirectionȱandȱstrengthȱbutȱfailsȱtoȱatȬ tainȱstatisticalȱsignificanceȱcanȱbeȱattributedȱtoȱtheȱsmallerȱsampleȱsizeȱand/orȱaȱlessȱ stronglyȱdevelopedȱCAȱattitudeȱinȱtheȱUTȱsector.ȱ

ȱ

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8ȱEmpiricalȱevidenceȱ

Externalȱstakeholdersȱandȱlegitimacyȱ Theȱ relationshipȱ betweenȱ theȱ roleȱ ofȱ governmentsȱ andȱ NGOsȱ revealsȱ aȱ moreȱ directȱ linkȱ betweenȱ NGOȱ campaignsȱ (includingȱ thoseȱ ofȱ citizensȱ groups)ȱ andȱ reactionsȱ fromȱgovernmentsȱ(e.g.ȱclimateȱchange,ȱphasingȱoutȱofȱnuclearȱpowerȱgeneration)ȱinȱ theȱUTȱsectorȱ(seeȱsectionȱ8.2.1.2ȱforȱaȱmoreȱdetailedȱdiscussion).ȱ Moreover,ȱ theȱ positiveȱ correlationȱ betweenȱ NGOs’ȱ roleȱ and,ȱ onȱ theȱ oneȱ hand,ȱ theȱ importanceȱ ofȱ legitimacyȱ and,ȱ onȱ theȱ otherȱ hand,ȱ consumers’ȱ SDȱ roleȱ pointsȱ toȱ theȱ effectsȱofȱNGOȱ campaignsȱ onȱ consumerȱawarenessȱandȱbehavior,ȱ andȱ theȱmoderatȬ ingȱ factorȱ ofȱ organizationalȱ visibility.ȱ Theȱ moreȱ importantȱ companiesȱ considerȱ leȬ gitimacyȱ toȱ beȱ (dueȱ toȱ greaterȱ consumerȱ nameȱ recognition,ȱ levelȱ ofȱ downstreamȱ competition,ȱ switchingȱ costȱ ofȱ customersȱ etc.),38ȱ theȱ moreȱ sensitiveȱ theyȱ areȱ toȱ theȱ demandsȱofȱNGOsȱandȱconsumersȱforȱCSM.ȱ Itȱ isȱ somewhatȱ puzzlingȱ thatȱ NGOs’ȱ SDȱ roleȱ isȱ linkedȱ toȱ importanceȱ ofȱ legitimacy,ȱ butȱnotȱtoȱtheȱdamageȱtoȱlegitimacy.ȱThisȱcouldȱsuggestȱthatȱcompaniesȱareȱparticuȬ larlyȱ awareȱ ofȱ NGOs’ȱ activitiesȱ ifȱ theirȱ informalȱ licenseȱ toȱ operateȱ isȱ importantȱ toȱ them.ȱTheȱlackȱofȱassociationȱwithȱtheȱactualȱdamageȱtoȱtheirȱlegitimacyȱallowsȱtwoȱ interpretations:ȱ (1)ȱ theȱ correlationȱ isȱ confoundedȱ byȱ respondents’ȱ unwillingnessȱ toȱ acknowledgeȱtheȱtrueȱlevelȱofȱdamage;ȱandȱ(2)ȱcompaniesȱhaveȱbeenȱalertedȱbyȱinciȬ dentsȱ thatȱ theirȱ peersȱ haveȱ encountered,ȱ notȱ necessarilyȱ onesȱ theyȱ themselvesȱ haveȱ experienced.ȱ Strategicȱdispositionȱ Furthermore,ȱcorrelationsȱconfirmȱtheȱsignificantȱroleȱofȱNGOsȱinȱdrivingȱcorporateȱ sustainabilityȱ throughȱ variousȱ campaignsȱ suchȱ asȱ consumerȱ boycotts,ȱ lobbyingȱ andȱ shareholderȱresolutions.ȱAȱmoreȱproactiveȱSDȱroleȱofȱNGOsȱisȱrelatedȱtoȱcompanies’ȱ greaterȱfamiliarityȱwithȱtheȱconceptȱofȱsustainableȱdevelopmentȱ(SDȱfamiliarity)ȱandȱ intentionȱ toȱ integrateȱ socialȱ andȱ environmentalȱ criteriaȱ intoȱ businessȱ strategiesȱ andȱ operationsȱ(CSMȱintent).ȱTheȱmissingȱlinkȱwithȱSDȱimportanceȱisȱlikelyȱtoȱbeȱcausedȱ byȱ aȱ socialȱ desirabilityȱ bias,ȱ whichȱ mayȱ haveȱ affectedȱ resultsȱ moreȱ stronglyȱ dueȱ toȱ theȱsmallerȱ(3Ȭpoint)ȱLikertȱscaleȱwithȱwhichȱSDȱimportanceȱisȱmeasured.ȱ ItȱisȱsurprisingȱthatȱtheȱOGȱdataȱdoȱnotȱ–ȱinȱcontrastȱtoȱtheȱUTȱdataȱ–ȱexhibitȱaȱstatistiȬ callyȱsignificantȱlinkȱbetweenȱNGOs’ȱSDȱroleȱandȱstrategicȱdisposition.ȱThisȱindicatesȱ thatȱ theȱ associationȱ betweenȱ theȱ twoȱ variablesȱ exhibitsȱ greaterȱ variationȱ inȱ theȱ OGȱ thanȱinȱtheȱUTȱdata,ȱpresumablyȱbecauseȱNGOs’ȱinfluenceȱdiffersȱmoreȱwidelyȱinȱtheȱ OGȱ sector.ȱThisȱ isȱ becauseȱ OGȱcompaniesȱ areȱ moreȱ globallyȱ active,ȱ andȱbothȱ issuesȱ andȱ companiesȱ areȱ moreȱ visible.ȱ Henceȱ theȱ sectorȱ isȱ underȱ scrutinyȱ fromȱ aȱ greaterȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 38

ȱReferȱtoȱBowenȱ(2000,ȱp.ȱ100)ȱforȱadditionalȱdeterminantsȱofȱorganizationalȱvisibility.ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

125ȱ

numberȱofȱNGOsȱwithȱdifferentȱagendasȱonȱaȱgreaterȱnumberȱofȱissues.ȱFurthermore,ȱ OGȱ respondents’ȱ perceptionȱ ofȱ NGOs’ȱ influenceȱ couldȱ exhibitȱ greaterȱ variationȱ beȬ causeȱ mostȱ ofȱ themȱ operateȱ inȱ Europeȱ andȱ Northȱ America,ȱ andȱ areȱ notȱ asȱ closeȱ toȱ mostȱofȱtheȱissuesȱofȱtheirȱsectorȱ(e.g.ȱinȱdevelopingȱcountriesȱsuchȱasȱhumanȱrights,ȱ corruption)ȱasȱUTȱrespondents.ȱ Conclusionȱ Overallȱ theȱ correlationsȱ detectedȱ pointȱ toȱ aȱ significantȱ effectȱ ofȱ NGOȱ activitiesȱ onȱ companies’ȱstrategicȱdisposition.ȱTheyȱalsoȱrevealȱthatȱNGOsȱmainlyȱactȱasȱcatalystsȱ forȱ changeȱ byȱ targetingȱ companies’ȱ primaryȱ stakeholdersȱ (consumersȱ andȱ governȬ ments)ȱthroughȱboycottȱcampaignsȱandȱlobbying.ȱ 8.2.3

Customersȱ

8.2.3.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Alongsideȱshareholders,ȱcustomersȱplayȱtheȱmostȱdeterrentȱroleȱinȱbothȱsectors.ȱOGȱ intervieweesȱ acknowledgedȱ thatȱ NGOȱ boycottȱ campaignsȱ (mostȱ prominentlyȱ theȱ “StopȱEsso”ȱandȱ“BrentȱSpar”ȱcampaignsȱinȱtheȱUKȱandȱGermany,ȱrespectively)ȱhadȱ noticeableȱ effectsȱ onȱtheirȱcompanies.ȱNevertheless,ȱ effectiveȱcampaignsȱareȱ seenȱasȱ exceptionsȱ toȱ theȱ rule,ȱ insofarȱ asȱ theirȱ effectȱ isȱ selectiveȱ andȱ limitedȱ toȱ consumersȱ withȱ greaterȱ environmentalȱ awareness.ȱ Allȱ inȱ all,ȱ consumers’ȱ strongȱ preferenceȱ forȱ cheapȱandȱconvenientȱenergyȱandȱtheirȱlackȱofȱenvironmentalȱawarenessȱandȱbehavȬ iorȱareȱconsideredȱtwoȱofȱtheȱmostȱsignificantȱexternalȱbarriersȱtoȱcorporateȱsustainȬ ability.ȱIntervieweesȱfromȱtheȱUTȱsectorȱdrewȱaȱsimilarlyȱnegativeȱpictureȱofȱtheȱcurȬ rentȱandȱfutureȱroleȱofȱitsȱcustomers.ȱMostȱcorporateȱcustomers,ȱparticularlyȱifȱtheirȱ productionȱprocessȱareȱhighlyȱenergyȬintensive,ȱtendȱtoȱbeȱevenȱlessȱenvironmentallyȱ consciousȱthanȱprivateȱcustomersȱ(Platts,ȱ2002).39ȱ CrossȬdisciplinaryȱ differencesȱ inȱ consumers’ȱ SDȱ roleȱ areȱ notȱ statisticallyȱ significant.ȱ However,ȱitȱisȱnotableȱthatȱsustainabilityȱofficersȱfromȱbothȱsectorsȱassessedȱtheȱconȬ sumers’ȱ roleȱ moreȱ negativelyȱ thanȱ generalȱ managersȱ did.ȱ Thisȱ couldȱ indicateȱ thatȱ sustainabilityȱ officersȱ areȱ moreȱ criticalȱ aboutȱ theȱ predominantlyȱ deterrentȱ partȱ thatȱ consumersȱ areȱ alsoȱ likelyȱ toȱ playȱ inȱ theȱ mediumȱ toȱ longȱ term,ȱ whichȱ alsoȱ reflectsȱ theirȱ–ȱasȱcatalystsȱ–ȱmoreȱstrategicȱperspectiveȱofȱCSM.ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 39

ȱ

ȱThereȱareȱexceptionsȱsuchȱasȱtheȱGreenȱPowerȱMarketȱDevelopmentȱGroup,ȱaȱcoalitionȱofȱtheȱWorldȱ ResourcesȱInstituteȱandȱ12ȱUSȱcorporationȱ(includingȱAlcoaȱInc.,ȱGeneralȱMotors,ȱIBMȱandȱDuPont),ȱ whoȱannouncedȱtheȱpurchaseȱofȱ97ȱMegawattsȱofȱgreenȱpowerȱinȱ2000ȱȱ (www.newsroom.wri.org/newsreleaseȱonȱ01/10/2003).ȱ

126ȱ

8ȱEmpiricalȱevidenceȱ

Consumers’ȱSDȱroleȱ(1ȱ=ȱ“Leastȱproactive”ȱtoȱ5ȱ=ȱ“Mostȱproactive”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

49ȱ 115ȱ

2.285714ȱ 1.895652ȱ

.1336306ȱ .0724149ȱ

.9354143ȱ .7765637ȱ

2.017032ȱȱȱȱ2.554397ȱ 1.752199ȱȱȱȱ2.039106ȱ

Sustainabilityȱofficersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

13ȱ 17ȱ

2ȱ 1.705882ȱ

.2531848ȱ .1663781ȱ

.9128709ȱ .6859943ȱ

1.448358ȱȱȱȱ2.551642ȱ 1.353177ȱȱȱȱ2.058588ȱ

Tableȱ8Ȭ3:ȱSummaryȱstatisticsȱ–ȱConsumers’ȱSDȱroleȱ

Whereasȱinterviewsȱdoȱnotȱpointȱtoȱanyȱsignificantȱdifferenceȱinȱconsumers’ȱSDȱroleȱ betweenȱsectors,ȱtheȱquantitativeȱdataȱrevealȱaȱmoreȱpositiveȱroleȱofȱconsumersȱinȱtheȱ UTȱthanȱinȱtheȱOGȱsector:ȱTheȱdifferenceȱisȱvisibleȱinȱtheȱdataȱobtainedȱfromȱbothȱsusȬ tainabilityȱ officersȱ andȱ generalȱ managers,ȱ butȱ isȱ onlyȱ statisticallyȱ significantȱ inȱ theȱ GMȱ sampleȱ (atȱ theȱ 10%ȱ level).ȱ Theȱ meanȱ differencesȱ areȱ somewhatȱ surprisingȱ andȱ couldȱrevealȱthatȱUTȱmanagersȱperceiveȱgreaterȱdemandȱforȱCSMȱfromȱcustomersȱbeȬ causeȱtheirȱcompanies’ȱapproachȱtoȱCSMȱleavesȱaȱgreaterȱ“supplyȱgap”ȱthanȱthatȱofȱ OGȱcompanies.40ȱAlternatively,ȱtheȱsignificantȱmeanȱdifferenceȱcouldȱpointȱtoȱaȱmoreȱ proactiveȱroleȱofȱcustomersȱinȱtheȱUTȱsector,ȱwhichȱis,ȱhowever,ȱdifficultȱtoȱdiagnose:ȱ Consumersȱareȱlargelyȱignorantȱofȱenvironmentalȱandȱsocialȱissues.ȱHowever,ȱthereȱ areȱsomeȱnuances:ȱ -

Kalkmanȱ andȱ Petersȱ (2002)ȱ testedȱ severalȱ electricityȱ brandȱ conceptsȱ inȱ theȱ UK,ȱ GermanyȱandȱSpain,ȱandȱfoundȱthatȱenvironmentalȱfriendlinessȱwasȱaȱsignificantȱ componentȱ ofȱ theȱ conceptȱ thatȱ receivedȱ higherȱ consumerȱ ratings.ȱ However,ȱ theȱ extentȱ toȱ whichȱ theseȱ ratingsȱ reflectȱ actualȱ purchasingȱ behaviorȱ isȱ clearlyȱ quesȬ tionable.ȱFurthermore,ȱgreenȱelectricityȱsuppliersȱwereȱamongȱtheȱfewȱnewȱcomȬ paniesȱ thatȱ managedȱ toȱ surviveȱ inȱ Germany’sȱ liberalizedȱ marketȱ dueȱ toȱ higherȱ customerȱ loyaltyȱ andȱ priceȱ premiumsȱ (Flauger,ȱ 2003b).ȱ Someȱ USȱ statesȱ requireȱ electricȱ utilitiesȱ toȱ phaseȱ inȱ electricityȱ fromȱ localȱ renewableȱ resourcesȱ (Peltier,ȱ 2003).ȱ Finally,ȱ severalȱ bigȱ USȱ companiesȱ suchȱ asȱ Generalȱ Motors,ȱ IBMȱ andȱ DuȬ Pontȱhaveȱformedȱaȱpartnership,ȱtheȱGreenȱPowerȱMarketȱDevelopmentȱGroupȱofȱ theȱWorldȱResourcesȱInstituteȱ(WRI),ȱtoȱbuildȱcorporateȱdemandȱforȱgreenȱpower.ȱ

-

InȱtheȱOGȱsectorȱbothȱprivateȱandȱnonȬprivateȱcustomersȱtendȱtoȱbeȱlargelyȱignoȬ rantȱofȱtheȱenvironmentalȱpropertiesȱofȱfuels,ȱwhichȱclearlyȱaffectsȱtheȱmarketabilȬ ityȱ ofȱ environmentallyȱ friendlyȱ products:ȱ Biodieselȱ isȱ recognizedȱ forȱ itsȱ drivȬ ability,ȱ fuelȱ consumptionȱ benefitsȱ andȱ environmentalȱ credentialsȱ onlyȱ byȱ aȱ clearȱ minorityȱ ofȱ consumersȱ (Anonymous,ȱ 2004e;ȱ Siehoff,ȱ 2004).ȱ Furthermore,ȱ whenȱ OGȱ companiesȱ introducedȱ cleanerȱ fuelsȱ inȱ severalȱ marketsȱ suchȱ asȱ theȱ NetherȬ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 40

ȱAȱmoreȱadvancedȱapproachȱtoȱCSMȱinȱtheȱOGȱsectorȱisȱdiagnosedȱcomprehensivelyȱinȱsectionȱ8.4.ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

127ȱ

lands,ȱ Germanyȱ andȱ Argentina,ȱ productsȱ wereȱ mostlyȱ positionedȱ primarilyȱ throughȱhighȱperformanceȱattributesȱtoȱlegitimateȱaȱpriceȱpremiumȱ(Anonymous,ȱ 2000;ȱ Klähn,ȱ 2000).ȱ However,ȱ customersȱ canȱ moreȱ easilyȱ switchȱ suppliersȱ inȱ theȱ OGȱthanȱinȱtheȱUTȱsector,ȱandȱseveralȱboycottȱcampaignsȱonȱShellȱ(andȱitsȱdeciȬ sionȱtoȱsinkȱtheȱBrentȱSpar)ȱandȱExxonȱMobilȱ(andȱitsȱclimateȱchangeȱposition)ȱdidȱ haveȱsignificantȱimpacts.ȱ Itȱ remainsȱ difficultȱ toȱ reachȱ aȱ definiteȱ conclusionȱ aboutȱ theȱ mainȱ reasonȱ consumersȱ areȱmoreȱproactiveȱinȱtheȱUTȱsector,ȱalthoughȱitȱappearsȱthatȱdemandȱforȱCSMȱisȱlessȱ persistentȱandȱmoreȱadȬhocȱinȱtheȱOGȱsector,ȱi.e.ȱlargelyȱunrelatedȱtoȱtheȱproductȱasȱ suchȱandȱobservableȱinȱtheȱformȱofȱboycottȱcampaigns.ȱ 8.2.3.2 Advancedȱstatisticsȱ Figureȱ 8Ȭ9ȱ displaysȱ allȱ correlationsȱ detectedȱ betweenȱ consumers’ȱ SDȱ roleȱ andȱ otherȱ variables.ȱTheyȱwillȱbeȱdiscussedȱinȱmoreȱdetailȱinȱtheȱfollowingȱparagraphsȱ Issues

Companies

Socialȱissues Environmentalȱissues

Managers

UT

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. SDȱfamiliarity

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv. Strategic disposition

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

SDȱimportance CSMȱINTENT

OG

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

OG,ȱT T,ȱUT

Structure

Consumers

UT

Governments CurrentȱSDȱrole

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation T

Negativeȱcorrelation

ȱ Figureȱ8.9:ȱCorrelationsȱ–ȱConsumers’ȱSDȱroleȱ

Issuesȱ Theȱnegativeȱcorrelationȱbetweenȱissueȱsignificanceȱandȱconsumers’ȱSDȱroleȱindicatesȱ thatȱsustainabilityȱ leadersȱinȱtheȱUTȱsectorȱexhibitȱgreaterȱissueȱawarenessȱandȱperȬ ceiveȱlessȱstrongȱdemandȱforȱCSMȱfromȱconsumers.ȱInȱcontrast,ȱissueȱawarenessȱandȱ consumers’ȱSDȱroleȱareȱunrelatedȱinȱtheȱOGȱsector,ȱwhichȱindicatesȱthatȱbothȱsustainȬ ȱ

128ȱ

8ȱEmpiricalȱevidenceȱ

abilityȱ leadersȱ andȱ laggardsȱ considerȱ consumersȱ insignificantȱ andȱ reactiveȱ stakeȬ holdersȱ(referȱalsoȱtoȱsectionȱ8.1.2.1ȱforȱaȱmoreȱdetailedȱdiscussion).ȱ Externalȱstakeholdersȱandȱlegitimacyȱ Theȱpositiveȱlinkȱbetweenȱconsumers’ȱandȱNGOs’ȱSDȱroleȱreflectsȱtheȱeffectȱofȱNGOȱ campaignsȱ atȱ triggeringȱ consumerȱ boycottsȱ orȱ otherȱ changesȱ inȱ consumerȱ behaviorȱ (seeȱalsoȱsectionȱ8.2.2.2).ȱ Theȱ positiveȱ linkȱ betweenȱ consumers’ȱ currentȱ SDȱ roleȱ onȱ theȱ oneȱ handȱ and,ȱ onȱ theȱ oneȱhand,ȱcapitalȱmarkets’ȱfutureȱSDȱroleȱand,ȱonȱtheȱotherȱhand,ȱtheȱdamageȱtoȱleȬ gitimacyȱincurredȱclearlyȱpointsȱtoȱtheȱeffectȱofȱhighȱprofileȱconsumerȱboycotts.ȱTheseȱ boycottsȱresultȱinȱtheȱlossȱofȱreputationȱandȱbrandȱvalue,ȱandȱinȱcorrespondingȱreacȬ tionsȱofȱcapitalȱmarkets.ȱE.g.ȱShell’sȱshareȱpriceȱwasȱaffectedȱbyȱtheȱbotchedȱdisposalȱ ofȱ theȱ Brentȱ Sparȱ platformȱ andȱ accusationsȱ ofȱ humanȱ rightsȱ violationsȱ inȱ Nigeriaȱ –ȱ butȱonlyȱtoȱaȱlimitedȱextentȱ(Caulkin,ȱ1997).ȱNevertheless,ȱthisȱcaseȱillustratesȱaȱnotaȬ bleȱtriangulatingȱeffectȱofȱconsumerȱboycottsȱandȱcapitalȱmarkets’ȱdemandȱforȱCSM,ȱ whichȱcouldȱbecomeȱstrongerȱifȱcapitalȱmarketsȱbecomeȱmoreȱsensitiveȱtoȱCSM.ȱItȱisȱ notȱsurprisingȱthatȱtheȱUTȱdataȱlackȱthisȱspecificȱassociation:ȱConsumerȱboycottsȱareȱaȱ ratherȱ inconvenientȱ optionȱ becauseȱ switchingȱ toȱ aȱ competitorȱ isȱ tooȱ costȬȱ andȱ timeȬ intensive.ȱ Structureȱ Consumers’ȱSDȱroleȱisȱnegativelyȱlinkedȱtoȱbothȱcrossȬdisciplinaryȱcollaborationȱandȱ potential.ȱ Ifȱ oneȱ againȱ assumesȱ (seeȱ sectionȱ 8.2.1.2)ȱ thatȱ bothȱ variablesȱ indicateȱ aȱ moreȱadvancedȱimplementationȱ ofȱCSMȱandȱgreaterȱawarenessȱofȱissuesȱandȱstakeȬ holders’ȱ demands,ȱ theȱ negativeȱ relationshipȱ isȱ plausible:ȱ Respondentsȱ fromȱ leadingȱ companiesȱ whoȱ areȱ alsoȱ moreȱ familiarȱ withȱ issuesȱ andȱ stakeholdersȱ throughȱ moreȱ extensiveȱcrossȬdisciplinaryȱcollaborationȱperceiveȱlessȱstrongȱdemandȱforȱCSMȱfromȱ consumersȱthanȱlaggards.ȱItȱshouldȱbeȱnotedȱthatȱtheȱcorrespondingȱrelationshipsȱareȱ weakȱ andȱ notȱ statisticallyȱ significantȱ inȱ theȱ OGȱ sector,ȱ whichȱ suggestsȱ thatȱ generalȱ managers’ȱperceptionȱofȱtheȱconsumers’ȱpredominantlyȱdeterrentȱroleȱisȱindependentȱ ofȱtheirȱlevelsȱofȱawarenessȱandȱtheirȱcompanies’ȱlevelȱofȱCSMȱimplementation.ȱThisȱ additionallyȱ supportsȱ evidenceȱ presentedȱ above,ȱ whichȱ suggestedȱ thatȱ customersȱ playȱaȱconsistentlyȱmoreȱdeterrentȱroleȱinȱtheȱOGȱsector.ȱ Conclusionȱ Inȱ conclusion,ȱ theȱ evidenceȱ clearlyȱ supportsȱ theȱ findingsȱ presentedȱ inȱ theȱ previousȱ sectionȱaboutȱtheȱpredominantlyȱdeterrentȱroleȱofȱconsumersȱasȱanȱexternalȱpressureȱ group.ȱThisȱisȱparticularlyȱvisibleȱthroughȱtheȱlackȱofȱcorrelationsȱbetweenȱconsumȬ ers’ȱSDȱroleȱandȱstrategicȱdisposition.ȱTheȱdataȱalsoȱexhibitȱsectorȬspecificȱnuances:ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

129ȱ

-

OverallȱconsumersȱinȱtheȱUTȱsectorȱappearȱtoȱplayȱaȱmoreȱproactiveȱrole.ȱPressureȱ fromȱ environmentallyȱ friendlyȱ consumersȱ isȱ moreȱ persistentȱ andȱ relatedȱ toȱ theȱ processȱofȱpowerȱgeneration,ȱi.e.ȱtheȱquestionȱofȱwhetherȱtheȱelectricityȱpurchasedȱ isȱgeneratedȱfromȱrenewableȱorȱnonȬrenewableȱenergyȱsources.ȱ

-

Inȱ theȱ OGȱ sector,ȱ consumers’ȱ switchingȱ costsȱ areȱ lowerȱ (e.g.ȱ oneȱ justȱ needsȱ toȱ driveȱtoȱanotherȱgasȱstation).ȱThusȱboycottȱcampaignsȱappearȱtoȱhaveȱaȱsignificantȱ butȱonlyȱbriefȱeffect.ȱTheyȱconstituteȱaȱshortȬtermȱreactionȱofȱcustomersȱtoȱcorpoȬ rateȱactivitiesȱratherȱthanȱtoȱtheȱenvironmentalȱpropertiesȱofȱtheȱproduct.ȱ

8.2.4

Financialȱcommunityȱ

8.2.4.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Intervieweesȱfromȱbothȱsectorsȱconsideredȱtheȱfinancialȱcommunityȱ–ȱinȱadditionȱtoȱ consumersȱ–ȱtheȱstakeholderȱthatȱplaysȱtheȱmostȱpassiveȱorȱevenȱcounterproductiveȱ partȱ inȱ termsȱofȱ corporateȱsustainabilityȱ dueȱ toȱitsȱ focusȱ onȱshortȬtermȱprofitability.ȱ Despiteȱ recentȱ trendsȱ inȱ theȱ USȱ towardȱ moreȱ scrutinyȱ ofȱ issuesȱ suchȱ asȱ accountingȱ practicesȱandȱclimateȱchangeȱrisksȱ(Bayon,ȱ2002),ȱEuropeanȱshareholdersȱ(andȱinsurȬ anceȱ companiesȱ inȱ particular)ȱ areȱ consideredȱ moreȱ progressiveȱ playersȱ thanȱ theirȱ AngloȬSaxonȱ counterpartsȱ (Kantaria,ȱ 2002).ȱ Theȱ followingȱ significantȱ nuancesȱ menȬ tionedȱbyȱseveralȱsustainabilityȱofficersȱinterviewedȱcouldȱpointȱtoȱaȱmoreȱproactiveȱ roleȱofȱtheȱfinancialȱcommunityȱinȱtheȱfutureȱ(e.g.ȱInnovest,ȱ2002b):ȱ -

Internationalȱ lendingȱ institutionsȱ suchȱ asȱ theȱ Worldȱ Bankȱ playȱ anȱ increasinglyȱ significantȱ roleȱ inȱ settingȱ standardsȱ forȱ corporateȱ activitiesȱ inȱ developingȱ counȬ tries,ȱ e.g.ȱ inȱ termsȱ ofȱ ensuringȱ aȱ fairȱ allocationȱ ofȱ oilȱ revenuesȱ andȱ preventingȱ humanȱrightsȱviolationsȱ(Beattie,ȱ2002).ȱ

-

Theȱ scrutinyȱ ofȱ capitalȱ marketsȱ andȱ sociallyȱ responsibleȱ investorsȱ differsȱ fromȱ NGOs’ȱ pressureȱ inȱ termsȱ ofȱ bothȱ qualityȱ (moreȱ conceptual)ȱ andȱ intensityȱ (moreȱ consistent).ȱ Companiesȱ reactȱ onȱ aȱ moreȱ conceptualȱ andȱ strategicȱ basis,ȱ alsoȱ beȬ causeȱshareholdersȱareȱ–ȱunlikeȱNGOsȱ–ȱprimaryȱstakeholders:ȱ Ourȱ climateȱ policyȱ isȱ moreȱ theȱ consequenceȱ ofȱ theȱ influenceȱ ofȱ capitalȱ markets’ȱ thanȱNGOȱcampaignsȱ(OG2,ȱSO)ȱ

-

Privateȱ banksȱ andȱ insuranceȱ companiesȱ areȱ becomingȱ increasinglyȱ importantȱ stakeholdersȱinȱtermsȱofȱenvironmentalȱandȱsocialȱissues,ȱasȱtheȱmotivationȱofȱtheȱ CarbonȱDisclosureȱProjectȱ(Nicholls,ȱ2003a)ȱandȱtheȱadoptionȱofȱtheȱEquatorȱPrinȬ ciplesȱthroughȱvariousȱbanksȱillustrate.41ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 41

ȱ

ȱTheȱCarbonȱDisclosureȱProjectȱisȱaȱgroupȱofȱinstitutionalȱinvestorsȱthatȱscrutinizesȱtheȱcorporateȱsecȬ torȱinȱtermsȱofȱitsȱCO2ȱportfolio.ȱTheȱEquatorȱPrinciplesȱraiseȱtheȱstandardsȱofȱbanks’ȱsocialȱandȱenȬ vironmentalȱriskȱmanagementȱinȱemergingȱcountries.ȱȱ

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8ȱEmpiricalȱevidenceȱ

Finally,ȱ companiesȱ areȱ recognizingȱ theȱ increasingȱ importanceȱ ofȱ sustainabilityȱ stockȱindicesȱandȱpressureȱfromȱinstitutionalȱinvestorsȱsuchȱasȱpensionȱfunds.ȱ

Future reaction of capital markets (1 = "Much more negatively" to 5 = "Much more positively")

ThisȱmoreȱproactiveȱtrendȱisȱalsoȱreflectedȱinȱtheȱquantitativeȱdataȱpresentedȱinȱChartȱ 8Ȭ6.ȱRespondentsȱfromȱallȱfourȱsamplesȱexpectȱaȱmoreȱpositiveȱreactionȱfromȱcapitalȱ marketsȱ toȱ improvedȱ corporateȱ socialȱ andȱ environmentalȱ performanceȱ inȱ theȱ nextȱ fiveȱyears.ȱTheȱonlyȱstatisticallyȱsignificantȱdifferenceȱbetweenȱtheȱfourȱgroupsȱofȱreȬ spondentsȱisȱfoundȱbetweenȱtheȱgeneralȱmanagersȱofȱbothȱsectors:ȱOGȱgeneralȱmanȬ agersȱexpectȱaȱmoreȱpositiveȱreactionȱthanȱtheirȱcounterpartsȱfromȱtheȱUTȱsector.ȱ 5

4

UT general managers OG general managers UT sustainability officers 3

OG sustainability officers

2

1

0

ȱ

Chartȱ8Ȭ6:ȱCapitalȱmarkets’ȱfutureȱSDȱroleȱandȱsummaryȱstatisticsȱ

Thereȱareȱtwoȱpossibleȱandȱcomplementaryȱexplanations:ȱ 1. OGȱcompaniesȱhaveȱcomeȱunderȱmoreȱpressureȱfromȱshareholdersȱandȱinvestors,ȱ mostȱprominentlyȱdueȱtoȱ(1)ȱaȱclearȱgeneralȱtrendȱtowardȱaȱgreaterȱnumberȱofȱsoȬ cialȱ andȱ environmentalȱ shareholderȱ resolutionsȱ thatȱ areȱ alsoȱ increasinglyȱ moreȱ stronglyȱ supported,42ȱ andȱ (2)ȱ theȱ Equatorȱ Principles.ȱ Itȱ isȱ difficultȱ toȱ determineȱ preciselyȱ theȱ actualȱ effectȱ ofȱ theseȱ twoȱ driversȱ onȱ corporateȱ practices.ȱ Afterȱ all,ȱ shareholderȱ resolutionsȱ areȱ generallyȱ votedȱ downȱ andȱ theȱ Equatorȱ Principlesȱ needȱ toȱ beȱ properlyȱ implemented.ȱ However,ȱ theyȱ seemedȱ toȱ haveȱ significantlyȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 42

ȱ Betweenȱ Januaryȱ andȱ Juneȱ 2002,ȱ 17ȱ outȱ ofȱ 100ȱ proposalsȱ acrossȱ variousȱ industriesȱ receivedȱ moreȱ thanȱ15%ȱofȱtheȱvotes.ȱSupportȱforȱproposalsȱonȱgreenhouseȱgasȱemissionsȱalmostȱdoubledȱfromȱ9.3ȱ toȱ18.3%ȱ(www.socialfunds.comȱonȱ3ȱJulyȱ2002).ȱ

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131ȱ

changedȱgeneralȱmanagers’ȱperceptionsȱinȱtheȱOGȱsector,ȱasȱtheȱdifferencesȱinȱtheȱ dataȱmightȱindicate.ȱ 2. TheȱmeanȱdifferenceȱcouldȱbeȱattributedȱtoȱOGȱgeneralȱmanagers’ȱmoreȱproactiveȱ attitudes.ȱ Intervieweesȱ fromȱ theȱ UTȱ sectorȱ reportedȱ thatȱ shareholdersȱ areȱ awareȱ ofȱ relativelyȱ highȱenvironmentalȱstandardsȱinȱOECDȱcountriesȱ(andȱEuropeȱinȱparticular),ȱandȱareȱ mainlyȱconcernedȱaboutȱadequateȱprovisionsȱforȱoperationalȱaccidentsȱandȱtransparȬ encyȱinȱtheȱ“PostȬEnronȱEra.”ȱ Sustainabilityȱplaysȱaȱveryȱminorȱroleȱforȱinvestors.ȱEnvironmentalȱperformanceȱ mattersȱinȱtermsȱofȱriskȱ andȱ liabilitiesȱattachedȱtoȱ assetsȱthatȱareȱ toȱ beȱ disposed.ȱ Theyȱ areȱ additionallyȱ concernedȱ withȱ insuranceȱ coverageȱ ofȱ nuclearȱ liabilitiesȱ (OG5,ȱfinance).ȱ SinceȱmostȱUTȱfirmsȱareȱamongȱtheȱgreatestȱCO2ȱemittersȱinȱtheirȱcountryȱofȱoperaȬ tion,ȱ theyȱ areȱ particularlyȱ concernedȱ aboutȱ theȱ comingȱ emissionsȱ tradingȱ systemsȱ andȱ increasingȱ interestȱ inȱ theȱ carbonȱ intensityȱ ofȱ theirȱ fuelȱ mixȱ fromȱ investorsȱ andȱ ratingȱagencies:ȱStandardȱ&ȱPoor’sȱhasȱrecentlyȱpublishedȱaȱstudyȱsuggestingȱthatȱtheȱ creditȱratingȱofȱEuropeanȱenergyȱcompanies,ȱparticularlyȱthoseȱfeaturingȱaȱrelativelyȱ carbonȬintensiveȱ energyȱ mixȱ mayȱ sufferȱ dueȱ toȱ theȱ comingȱ EUȱ emissionsȱ tradingȱ (Flauger,ȱ2003c).ȱTheȱfactȱthatȱgeneralȱmanagersȱinȱtheȱUTȱsectorȱneverthelessȱexpectȱ aȱlessȱ(butȱstill)ȱpositiveȱfutureȱroleȱofȱcapitalȱmarketsȱthanȱtheirȱcounterpartsȱinȱtheȱ OGȱsector,ȱsuggestsȱtheȱfollowing:ȱCurrentȱpositiveȱtrendsȱinȱtheȱfinancialȱsectorȱareȱ lessȱ visibleȱ inȱ theȱ UTȱ sector,ȱ whereasȱ shareholderȱ resolutions,ȱ whichȱ areȱ frequentlyȱ introducedȱinȱtheȱOGȱsector,ȱtendȱtoȱincreaseȱawarenessȱmoreȱeffectively,ȱsinceȱtheyȱ areȱmoreȱconfrontationalȱandȱoftenȱtakenȱupȱbyȱtheȱmedia.ȱ Inȱconclusion,ȱaȱmoreȱproactiveȱ roleȱofȱtheȱfinancialȱcommunityȱisȱexpectedȱinȱbothȱ sectors.ȱMoreȱpositiveȱexpectationsȱinȱtheȱOGȱsectorȱreflectȱaȱgenerallyȱstrongerȱandȱ visibleȱ interestȱ ofȱ moreȱ sociallyȱ responsibleȱ andȱ increasinglyȱ “mainstream”ȱ shareȬ holdersȱ inȱ theȱ majorȱ OGȱ companies,ȱ presumablyȱ alsoȱ becauseȱ theyȱ haveȱ beenȱ veryȱ profitableȱ overȱ theȱ lastȱ fewȱ years.ȱ Despiteȱ theseȱ moreȱ recentȱ andȱ partlyȱ promisingȱ trendsȱthatȱareȱrelevantȱtoȱbothȱsectors,ȱitȱshouldȱbeȱnotedȱthatȱtheȱfinancialȱcommuȬ nityȱclearlyȱisȱaȱdeterrentȱtoȱCSMȱforȱtwoȱreasons.ȱFirst,ȱitȱnarrowlyȱfocusesȱonȱshortȬ termȱ financialȱ targets.ȱ Second,ȱ itȱ isȱ primarilyȱ concernedȱ withȱ downsideȱ riskȱ ratherȱ thanȱ upsideȱ potential,ȱ i.e.ȱ itȱ isȱ moreȱ likelyȱ toȱ punishȱ laggardsȱ andȱ unsustainableȱ businessȱpracticesȱthanȱtoȱrewardȱleadersȱ(Frooman,ȱ1997).ȱ 8.2.4.2 Advancedȱstatisticsȱ Inȱtheȱfollowingȱparagraphs,ȱtheȱauthorȱwillȱdiscussȱcorrelationsȱbetweenȱtheȱfutureȱ SDȱroleȱofȱcapitalȱmarketsȱandȱotherȱvariablesȱ(Figureȱ8Ȭ10).ȱ ȱ

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8ȱEmpiricalȱevidenceȱ

Issues

Socialȱissues

Companies

OG,ȱT

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

T

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱOG,ȱUT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

OG,ȱT

Externalȱstakeholders FutureȱSDȱrole

SDȱfamiliarity Strategic T,ȱOG,ȱUT disposition

CSMȱINTENT

Capitalȱmarkets Importanceȱofȱlegitimacy

T,ȱOG

Damageȱtoȱlegitimacy

T,ȱOG

Legitimacy

T,ȱOG

T

Consumers

Structure OG,ȱT

Governments CurrentȱSDȱrole

PPPs

SDȱimportance

T,ȱOG

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

T

Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.10:ȱCorrelationsȱ–ȱCapitalȱmarkets’ȱfutureȱSDȱroleȱ

Issuesȱ Socialȱ issueȱ significanceȱ andȱ capitalȱ markets’ȱ SDȱ roleȱ areȱ positivelyȱ related,ȱ whichȱ suggestsȱthatȱrespondentsȱfromȱleadingȱcompaniesȱareȱmoreȱawareȱofȱbothȱsocialȱisȬ suesȱ andȱ recentȱ developmentsȱ inȱ theȱ financialȱ sectorȱ thanȱ laggardsȱ (asȱ discussedȱ inȱ detailȱinȱsectionȱ8.1.2.1).ȱ Managers’ȱattitudesȱ Strongȱproactiveȱattitudesȱ(CAȱ“CSMȱtoȱgainȱlongȬtermȱcompetitiveȱadvantage”ȱandȱ UCAȱ “CSMȱ despiteȱ unprovenȱ longȬtermȱ competitiveȱ advantage”)ȱ areȱ relatedȱ toȱ aȱ moreȱ proactiveȱ futureȱ SDȱ roleȱ ofȱ capitalȱ markets:ȱ aȱ stronglyȱ reactiveȱ BBBȱ attitudeȱ (“Theȱbusinessȱofȱbusinessȱisȱbusiness”)ȱisȱlinkedȱtoȱaȱlessȱproactiveȱfutureȱSDȱroleȱofȱ capitalȱmarkets.ȱInȱcontrast,ȱtheȱWWȱattitudeȱ(“CSMȱifȱthereȱareȱwinȬwinȱsituations”)ȱ lacksȱaȱstatisticallyȱsignificantȱlink,ȱpresumablyȱbecauseȱ–ȱasȱalsoȱsuggestedȱaboveȱinȱ sectionȱ8.1.2.1ȱ–ȱbothȱproactiveȱandȱreactiveȱrespondentsȱcouldȱequallyȱstronglyȱrelateȱ toȱ theȱ statementȱ provided.ȱOverallȱ theseȱ resultsȱclearlyȱsuggestȱ thatȱmoreȱ proactiveȱ respondentsȱhaveȱmoreȱpositiveȱexpectationsȱofȱtheȱfutureȱSDȱroleȱofȱcapitalȱmarkets,ȱ presumablyȱforȱtwoȱcomplementaryȱreasons:ȱ(1)ȱrespondentsȱwithȱaȱproactiveȱmindȬ setȱareȱmoreȱawareȱofȱrecentȱpositiveȱtrendsȱdescribedȱabove;ȱandȱ(2)ȱtheȱassociationȱ mayȱhaveȱbeenȱpartlyȱcausedȱbyȱ“wishfulȱthinking”ȱofȱproactiveȱrespondents:ȱTheyȱ

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moreȱclearlyȱseeȱaȱneedȱforȱchangeȱandȱthusȱhopeȱforȱaȱmoreȱproactiveȱroleȱofȱcapitalȱ marketsȱinȱtheȱfuture.ȱ Theȱ onlyȱ significantȱ differenceȱ betweenȱ theȱ twoȱ sectorsȱ liesȱ inȱ theȱ weaklyȱ positiveȱ andȱstatisticallyȱnotȱsignificantȱrelationshipȱbetweenȱcapitalȱmarkets’ȱSDȱroleȱandȱtheȱ UCAȱattitudeȱ(“CSMȱevenȱifȱcompetitiveȱadvantageȱunproven”)ȱinȱtheȱUTȱsector.ȱTheȱ correspondingȱ linkȱ inȱ theȱ OGȱ sectorȱ isȱ moderatelyȱ positiveȱ andȱ statisticallyȱ signifiȬ cant,ȱwhichȱsuggestsȱthatȱproactiveȱattitudesȱareȱmoreȱconsistentlyȱandȱstronglyȱdeȬ velopedȱinȱOGȱcompanies.ȱ Externalȱstakeholdersȱandȱlegitimacyȱ Consumers’ȱSDȱroleȱ Capitalȱmarketsȱandȱconsumers’ȱSDȱroleȱpositivelyȱcorrelate.ȱThisȱsuggestsȱthatȱhighȱ profileȱconsumerȱboycottsȱ(e.g.ȱinȱGermanyȱdueȱtoȱtheȱBrentȱSparȱcrisis),ȱandȱtheȱsubȬ sequentȱlossȱofȱreputationȱandȱbrandȱvalue,ȱhaveȱledȱtoȱcorrespondingȱcapitalȱmarketȱ reactionsȱ(asȱdiscussedȱinȱdetailȱinȱsectionȱ8.2.3.2)ȱinȱtheȱOGȱsector,ȱandȱareȱlikelyȱtoȱ doȱsoȱinȱtheȱfuture.43ȱ Importanceȱofȱandȱdamageȱtoȱlegitimacyȱ Furthermore,ȱ thereȱ areȱ twoȱ positiveȱ correlationsȱ withȱ theȱ importanceȱ ofȱ legitimacyȱ andȱ theȱ damageȱ toȱ legitimacy.ȱ Theȱ firstȱ associationȱ showsȱ thatȱ companiesȱ areȱ conȬ cernedȱwithȱtheirȱlegitimacyȱbecauseȱtheyȱexpectȱcapitalȱmarketsȱtoȱactȱmoreȱproacȬ tivelyȱinȱtheȱfuture.ȱTheȱsecondȱassociationȱsuggestsȱthatȱtheyȱhaveȱ“learnedȱthisȱlesȬ son”ȱinȱtheȱpastȱfromȱNGOȱcampaignsȱandȱconsumerȱboycottsȱandȱcapitalȱmarkets’ȱ reactionȱ toȱ them.ȱ Theȱ greaterȱ theȱ damageȱ toȱ theirȱ legitimacy,ȱ theȱ moreȱ proactiveȱ companiesȱexpectȱcapitalȱmarketsȱtoȱbeȱinȱtheȱfuture.ȱInȱtheȱOGȱsectorȱthisȱappearsȱtoȱ reflectȱrealityȱreasonablyȱwell:ȱReactionsȱofȱcapitalȱmarketsȱtoȱdamagedȱlegitimacyȱ–ȱ exceptȱforȱsevereȱenvironmentalȱ incidentsȱ–ȱhaveȱnotȱbeenȱtooȱdrasticȱbutȱnotable.44ȱ However,ȱtheyȱcouldȱbecomeȱmoreȱextremeȱdueȱtoȱtheȱpossiblyȱmoreȱproactiveȱroleȱ ofȱcapitalȱmarketsȱinȱtheȱfuture.ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 43

ȱAsȱaȱresultȱofȱGreenpeaceȱUK’sȱStopȱEssoȱcampaign,ȱtheȱnumberȱofȱconsumersȱunwillingȱtoȱbuyȱpetȬ rolȱfromȱEssoȱdueȱtoȱitsȱapproachȱtoȱclimateȱchangeȱincreasedȱsubstantially.ȱConsistentlyȱoverȱ5%ȱofȱ theȱpopulationȱboughtȱintoȱtheȱcampaignȱ(Gueterbock,ȱ2004,ȱp.ȱ267).ȱ

44

ȱ

ȱ Whereasȱ Exxon’sȱ shareȱ priceȱ didȱ notȱ immediatelyȱ reactȱ significantlyȱ toȱ theȱ Exxonȱ Valdezȱ spillȱ inȱ 1989ȱ(Kearns,ȱ1989),ȱtheȱverdictȱofȱaȱfederalȱcourtȱexposingȱitȱtoȱupȱtoȱUS$ȱ15ȱbillionȱpunitiveȱdamȬ agesȱinȱ1994ȱledȱtoȱaȱ4%ȱdropȱ(Waters,ȱ1994).ȱShell’sȱshareȱpriceȱwasȱaffectedȱbyȱtheȱbotchedȱdisposalȱ ofȱtheȱBrentȱSparȱplatformȱandȱaccusationsȱofȱhumanȱrightsȱviolationsȱinȱNigeriaȱ–ȱbutȱonlyȱtoȱaȱlimȬ itedȱextentȱ(Caulkin,ȱ1997).ȱTheȱCanadianȱTalismanȱEnergyȱmovedȱoutȱofȱMyanmarȱfollowingȱproȬ testsȱfromȱhumanȱrightsȱorganizationsȱandȱsubsequentȱlossesȱinȱshareȱprice.ȱItsȱCEOȱsaidȱ“heȱcouldȱ notȱ justifyȱ lettingȱ 12%ȱ ofȱ hisȱ company’sȱ productionȱ dentȱ theȱ shareȱ priceȱ soȱ badlyȱ (Anonymous,ȱ 2002b)ȱ

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8ȱEmpiricalȱevidenceȱ

Itȱshouldȱbeȱnotedȱthatȱtheȱcorrespondingȱassociationsȱhaveȱsimilarȱstrengthȱandȱtheȱ sameȱdirectionȱinȱtheȱUTȱsample,ȱbutȱareȱnotȱstatisticallyȱsignificant,ȱpresumablyȱdueȱ toȱconstraintsȱinȱtheȱdegreesȱofȱfreedomȱaȱgreaterȱvariationȱinȱtheȱassociation.ȱNeverȬ theless,ȱ resultsȱ couldȱ pointȱ toȱ theȱ increasingȱ importanceȱ ofȱ legitimacyȱ inȱ Europe’sȱ liberalizedȱelectricityȱ markets,ȱwhichȱmayȱ becomeȱmoreȱandȱ moreȱ relevantȱtoȱ moreȱ proactiveȱcapitalȱmarketsȱinȱtheȱfuture.ȱItȱcouldȱalsoȱindicate,ȱinȱtheȱwakeȱofȱtheȱEnȬ ronȱcrisis,ȱcompanies’ȱincreasedȱsensitivityȱtoȱissuesȱrelatingȱtoȱcorporateȱgovernanceȱ andȱ businessȱ ethics,ȱ whichȱ canȱ significantlyȱ affectȱ legitimacyȱ andȱ shareȱ prices,ȱ andȱ areȱthusȱincreasinglyȱscrutinizedȱbyȱcapitalȱmarkets.ȱ PublicȬprivateȱpartnershipsȱ Thereȱisȱoneȱremainingȱcorrelationȱbetweenȱcapitalȱmarkets’ȱSDȱroleȱandȱaȱmoreȱproȬ activeȱroleȱofȱpublicȬprivateȱpartnerships.ȱThisȱcouldȱindicateȱthatȱcompaniesȱthatȱareȱ higherȱonȱtheȱCSMȱcurveȱ(1)ȱhaveȱrecognizedȱtheȱpotentialȱofȱpublicȬprivateȱpartnerȬ shipsȱtoȱresolveȱissuesȱsuchȱasȱtheȱNorthȬSouthȱenergyȱdivideȱorȱtheȱfairȱallocationȱofȱ oilȱ revenuesȱ inȱ developingȱ countries;ȱ andȱ (2)ȱ expectȱ greaterȱ demandȱ forȱ CSMȱ fromȱ capitalȱmarketsȱinȱtheȱfuture.ȱ Strategicȱdispositionȱ Aȱ moreȱ proactiveȱ futureȱ SDȱ roleȱ ofȱ capitalȱ marketsȱ alsoȱ positivelyȱ correlatesȱ withȱ companies’ȱ strategicȱ disposition.ȱ Whereasȱ itȱ isȱ linkedȱ toȱ OGȱ companies’ȱ currentȱ SDȱ familiarityȱandȱCSMȱintent,ȱitȱisȱonlyȱlinkedȱtoȱUTȱcompanies’ȱfutureȱSDȱimportance.ȱ Thisȱcorroboratesȱevidenceȱpresentedȱaboveȱonȱtheȱstrongerȱroleȱofȱcapitalȱmarketsȱinȱ theȱOGȱsector.ȱ Structureȱ Theȱpositiveȱcorrelationȱbetweenȱcapitalȱmarkets’ȱSDȱroleȱandȱcrossȬdisciplinaryȱcolȬ laborationȱ showsȱ thatȱ leadingȱ companiesȱ thatȱ haveȱ implementedȱ CSMȱ moreȱ comȬ prehensivelyȱ considerȱ theȱ futureȱ roleȱ ofȱ capitalȱ marketsȱ moreȱ positively.ȱ Theȱ sameȱ conclusionȱ canȱ beȱ drawnȱ fromȱ theȱ positiveȱ linkȱ withȱ crossȬdisciplinaryȱ potentialȱ ifȱ oneȱassumesȱthatȱgreaterȱpotentialȱindicatesȱhigherȱlevelsȱofȱrespondents’ȱawarenessȱ (whichȱ shouldȱ beȱ prevalentȱ inȱ leadingȱ companies)ȱ ratherȱ thanȱ lowȱ levelsȱ ofȱ impleȬ mentation,ȱ whichȱ wouldȱ beȱ associatedȱ withȱ unexploitedȱ potentialȱ (seeȱ sectionȱ 8.4.4.2).ȱTheȱcorrelationȱisȱmoderatelyȱpositiveȱinȱbothȱsectorsȱbutȱnotȱstatisticallyȱsigȬ nificantȱinȱtheȱUTȱdata,ȱpresumablyȱdueȱtoȱtheȱsmallerȱsizeȱand/orȱgreaterȱvariationȱ inȱtheȱlink.ȱ Conclusionȱ Inȱconclusion,ȱtheȱrelationshipsȱfoundȱlinkȱseveralȱexpectedȱcharacteristicsȱofȱcompaȬ niesȱthatȱareȱmoreȱadvancedȱinȱCSM.ȱAlongsideȱexpectationsȱaboutȱcapitalȱmarkets’ȱ greaterȱdemandȱforȱCSMȱinȱtheȱfuture,ȱtheseȱcharacteristicsȱinclude:ȱGreaterȱstrategicȱ

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135ȱ

disposition,ȱmoreȱintensiveȱcrossȬdisciplinaryȱcollaboration,ȱmoreȱproactiveȱattitudesȱ ofȱ managersȱ andȱ greaterȱ issueȱ awarenessȱ andȱ greaterȱ potentialȱ ofȱ publicȬprivateȱ partnerships.ȱ Mostȱ importantlyȱ theȱ dataȱ pointȱ toȱ aȱ notableȱ positiveȱ influenceȱ ofȱ capitalȱ markets’ȱ expectedȱgreaterȱdemandȱforȱCSMȱonȱcompanies’ȱstrategicȱdisposition.ȱTheyȱalsoȱreȬ vealȱ perceptionsȱ ofȱ aȱ lessȱ importantȱ futureȱ roleȱ ofȱ capitalȱ marketsȱ inȱ theȱ UTȱ sector,ȱ probablyȱalsoȱbecauseȱgeneralȱmanagersȱareȱlargelyȱunawareȱofȱexistingȱtrends.ȱItȱisȱ importantȱnotȱtoȱoverestimateȱtheȱproactiveȱroleȱofȱcapitalȱmarkets.ȱTheirȱcurrentȱroleȱ isȱ clearlyȱ disruptiveȱ ratherȱ thanȱ constructive,ȱ henceȱ perceptionsȱ ofȱ theirȱ futureȱ roleȱ mayȱbeȱbiased.ȱ 8.2.5

Industryȱandȱpartnershipsȱ

8.2.5.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Theȱ roleȱ ofȱ industryȱ inȱ contributingȱ toȱ sustainableȱ developmentȱ isȱ determinedȱ byȱ variousȱcompanies,ȱsustainabilityȱleadersȱandȱlaggards,ȱwhichȱcompeteȱagainstȱeachȱ otherȱacrossȱtheȱvalueȱchain.ȱInȱgeneral,ȱcompetitionȱonȱenvironmentalȱandȱsocialȱisȬ suesȱisȱlowȱbutȱhasȱbeenȱincreasing,ȱparticularlyȱinȱtheȱOGȱsector:ȱAsȱtheȱinterviewsȱ suggest,ȱaȱgoodȱcorporateȱrecordȱisȱincreasinglyȱlinkedȱtoȱanȱimprovedȱlicenseȱtoȱopȬ erateȱandȱgrow,ȱwhichȱshortensȱ theȱ“timeȱtoȱmarket”ȱandȱincreasesȱemployeeȱsatisȬ factionȱ(Banerjee,ȱ2003;ȱSuggett,ȱ2000).ȱCompetitorsȱcanȱalsoȱplayȱanȱimportantȱroleȱinȱ partlyȱdeterminingȱtheȱenvironmentalȱandȱsocialȱperformanceȱofȱupstreamȱjointȱvenȬ tures.ȱ Intervieweesȱ reportedȱ thatȱ aȱ jointȱ venture’sȱ performanceȱ eitherȱ convergesȱ atȱ theȱ levelȱ ofȱ theȱ moreȱ proactiveȱ partnersȱ orȱ theȱ laggards,ȱ dependingȱ onȱ theȱ relativeȱ powerȱandȱcorporateȱsustainabilityȱagendasȱofȱtheȱcompaniesȱinvolved.ȱ Bothȱ OGȱ generalȱ managersȱ andȱ sustainabilityȱ officersȱ considerȱ theirȱ industry’sȱ SDȱ roleȱ moreȱ proactiveȱ thanȱ theirȱ counterpartsȱ inȱ theȱ UTȱ sector.ȱ Althoughȱ theseȱ variaȬ tionsȱ mayȱ partlyȱ reflectȱ theȱ OGȱ sector’sȱ moreȱ advancedȱ approachȱ toȱ CSMȱ (asȱ deȬ scribedȱ inȱ sectionȱ 8.4ȱ inȱ particular),ȱ theyȱ areȱ notȱ veryȱ meaningfulȱ forȱ theȱ followingȱ reasons:ȱFirst,ȱneitherȱofȱtheȱdifferencesȱisȱstatisticallyȱsignificant.ȱSecond,ȱitȱremainsȱ unclearȱwhetherȱmanagers’ȱassessmentȱincludedȱlaggardȱcompaniesȱinȱotherȱregionsȱ ofȱoperation.ȱThisȱappliesȱtoȱUTȱrespondentsȱinȱparticular,ȱsinceȱtheȱsector’sȱapproachȱ isȱclearlyȱmoreȱregionalȱandȱEurocentricȱthanȱthatȱofȱtheȱOGȱsector.ȱ

ȱ

136ȱ

8ȱEmpiricalȱevidenceȱ

Industry’sȱSDȱroleȱ(1ȱ=ȱ“Leastȱproactive”ȱtoȱ5ȱ=ȱ“Mostȱproactive”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

51ȱ 117ȱ

2.607843ȱ 2.675214ȱ

.0973308ȱ .0651791ȱ

.6950808ȱ .7050197ȱ

2.412349ȱȱȱȱ2.803338ȱ 2.546118ȱȱȱȱ2.804309ȱ

Sustainabilityȱofficersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

13ȱ 17ȱ

2.846154ȱ 3ȱ

.1538462ȱ .1485221ȱ

.5547002ȱ .6123724ȱ

2.510952ȱȱȱȱ3.181356ȱ 2.685147ȱȱȱȱ3.314853ȱ

Tableȱ8Ȭ4:ȱSummaryȱstatisticsȱ–ȱIndustry’sȱSDȱroleȱ

Inȱ bothȱ sectorsȱ sustainabilityȱ officersȱ assessȱ theȱ industry’sȱ SDȱ roleȱ moreȱ positivelyȱ thanȱgeneralȱmanagersȱdo.ȱInȱtheȱOGȱsectorȱthisȱcrossȬdisciplinaryȱdifferenceȱisȱstatisȬ ticallyȱsignificant.ȱTheȱresultȱcorrespondsȱwithȱsustainabilityȱofficers’ȱhigherȱratingsȱ forȱtheirȱcompanies’ȱSDȱfamiliarityȱ(seeȱsectionȱ8.4.2ȱStrategicȱdisposition).ȱItȱisȱaȱlittleȱ surprising,ȱsinceȱoneȱmayȱhaveȱexpectedȱSOsȱtoȱhaveȱaȱmoreȱcritical,ȱi.e.ȱdemanding,ȱ assessmentȱofȱtheȱ industry’sȱroleȱdueȱtoȱtheirȱroleȱasȱchangeȱagentsȱinȱtheirȱcompaȬ niesȱ andȱ theirȱ greaterȱ awarenessȱ ofȱ strategicȱ issuesȱ (climateȱ changeȱ andȱ theȱ energyȱ divide)ȱandȱresponsesȱrequiredȱinȱtheȱshortȱandȱlongȱterm.ȱThereȱareȱseveralȱexplanaȬ tionsȱforȱaȱmoreȱpositiveȱassessment:ȱ(1)ȱTheyȱareȱmoreȱawareȱofȱexistingȱbestȱpracȬ ticesȱ throughoutȱ theȱ industry.ȱ (2)ȱ Theyȱ areȱ moreȱ calculatedlyȱ optimisticȱ asȱ changeȱ agentsȱinȱtheirȱcompanies.ȱ(3)ȱAlthoughȱtheyȱreportȱonȱseveralȱinternalȱbarriersȱsuchȱ asȱ mindset,ȱ lackȱ ofȱ knowledge,ȱ etc.ȱ (seeȱ sectionȱ 8.4.1ȱ CompanyȬspecificȱ determiȬ nants),ȱtheyȱmayȱstillȱbeȱlargelyȱunfamiliarȱwithȱtheȱevenȱmoreȱtroublesomeȱsituationȱ atȱ theȱ operationalȱ levelȱ –ȱ withȱ theȱ “veryȱ bottomȱ management”ȱ asȱ oneȱ intervieweeȱ phrasedȱit.ȱ(4)ȱSustainabilityȱofficersȱoverstateȱorganizationalȱalignmentȱinȱtheirȱcomȬ panyȱandȱtheȱsectorȱbecauseȱtheyȱareȱmoreȱstronglyȱconcernedȱwithȱCSMȱatȱtheȱstraȬ tegicȱlevelȱ(e.g.ȱstrategyȱformulation).ȱQualitativeȱevidenceȱobtainedȱfromȱaȱtwoȬhourȱ sessionȱthatȱanȱOGȱsustainabilityȱofficerȱheldȱatȱIMDȱwithȱaȱgeneralȱmanagementȱauȬ dienceȱprimarilyȱsupportsȱtheȱfirstȱexplanation:ȱGeneralȱmanagers’ȱlowerȱawarenessȱ ofȱ bestȱ practicesȱ evenȱ withinȱ theirȱ ownȱ companyȱ isȱ plausibleȱ inȱ largeȱ organizations,ȱ particularlyȱifȱactivitiesȱ–ȱasȱinȱtheȱOGȱsectorȱ–ȱareȱscatteredȱaroundȱtheȱglobe.ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

137ȱ

PublicȬprivateȱpartnerships’ȱSDȱroleȱ(1ȱ=ȱ“Leastȱproactive”ȱtoȱ5ȱ=ȱ“Mostȱproactive”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

47ȱ 111ȱ

2.55319ȱ 2.75675ȱ

.1045165ȱ ȱ.058951ȱ

.7165288ȱ .6210873ȱ

2.342811ȱȱȱȱ2.763572ȱ 2.63993ȱȱȱȱȱȱ2.873584ȱ

Sustainabilityȱofficersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

12ȱ 17ȱ

2.5ȱ 2.764706ȱ

.288675ȱ .182495ȱ

1ȱ .752447ȱ

1.86463ȱȱȱȱȱ3.13537ȱ 2.377833ȱȱȱȱ3.151578ȱ

Tableȱ8Ȭ5:ȱSummaryȱstatisticsȱ–ȱPublicȬprivateȱpartnerships’ȱSDȱroleȱ

Inȱ theȱ interviewsȱ publicȬprivateȱ partnershipsȱ wereȱ mentionedȱ inȱ theȱ contextȱ ofȱ corȬ porateȱactivitiesȱinȱtheȱdevelopingȱworld.ȱTheyȱareȱthusȱmoreȱrelevantȱtoȱOGȱcompaȬ niesȱ thatȱ engageȱ inȱ educationȱ andȱ youthȱ development,ȱ healthcareȱ (infrastructure,ȱ HIV/AIDSȱ awarenessȱ programs)ȱ andȱ waterȱ andȱ sanitationȱ programsȱ (ExxonMobil,ȱ 2003,ȱp.ȱ14Ȭ21;ȱTheȱShellȱPetroleumȱDevelopmentȱCompanyȱofȱNigeriaȱLtd.,ȱ2003,ȱpp.ȱ 15Ȭ2).ȱLeadingȱUTȱcompaniesȱthatȱoperateȱinȱdevelopingȱcountriesȱcarryȱoutȱsimilarȱ activitiesȱ(WBCSD,ȱ2002,ȱp.ȱ21).ȱNeverthelessȱpublicȬprivateȱpartnershipsȱareȱconsidȬ eredȱlessȱeffectiveȱinȱthisȱstudy’sȱUTȱsample,ȱmostȱlikelyȱdueȱtoȱitsȱbiasȱtowardsȱcomȬ paniesȱthatȱmainlyȱoperateȱinȱdevelopedȱcountries.ȱ ThisȱfindingȱisȱsupportedȱbyȱquantitativeȱdataȱindicatingȱthatȱbothȱOGȱgeneralȱmanȬ agersȱ andȱ sustainabilityȱ officersȱ assessȱ theȱ SDȱ roleȱ ofȱ publicȬprivateȱ partnershipsȱ moreȱ positivelyȱ thanȱ theirȱ counterpartsȱ inȱ theȱ UTȱ sectorȱ (seeȱ Tableȱ 8Ȭ5).ȱ Theȱ crossȬ sectorȱdifferenceȱinȱtheȱperceptionsȱofȱtheȱgeneralȱmanagersȱisȱstatisticallyȱsignificant.ȱ CrossȬdisciplinaryȱdifferencesȱbetweenȱtheȱperceptionsȱofȱgeneralȱmanagersȱandȱsusȬ tainabilityȱ officersȱ areȱ marginalȱ andȱ clearlyȱ notȱ statisticallyȱ significant,ȱ whichȱ givesȱ additionalȱassuranceȱonȱtheȱcrossȬsectorȱvariation.ȱ 8.2.5.2 Advancedȱstatisticsȱ Theȱ followingȱ paragraphsȱ featureȱ aȱ discussionȱ ofȱ theȱ correlationsȱ betweenȱ theȱ SDȱ rolesȱofȱbothȱindustryȱandȱpublicȬprivateȱpartnershipsȱandȱotherȱvariablesȱ(seeȱFigureȱ 8Ȭ11ȱandȱFigureȱ8Ȭ12).ȱ

ȱ

138ȱ

8ȱEmpiricalȱevidenceȱ

Issues

Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. OG

SDȱfamiliarity

Strategic T,ȱUT disposition

SDȱimportance

T,ȱOG

CSMȱINTENT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets T,ȱOG

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy T,ȱUT

Structure

Consumers Governments CurrentȱSDȱrole

PPPs

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

T,ȱOG

CSMȱSUCCESS

T,ȱOG,ȱUT

Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.11:ȱCorrelationsȱ–ȱIndustry’sȱSDȱroleȱ

Correlationsȱbetweenȱtheȱindustry’sȱSDȱroleȱandȱotherȱvariablesȱ Managers’ȱattitudesȱ Theȱindustry’sȱSDȱroleȱisȱpositivelyȱlinkedȱtoȱtheȱCAȱ(“CSMȱtoȱgainȱlongȬtermȱcomȬ petitiveȱadvantage”)ȱattitudeȱinȱtheȱOGȱdataȱ(atȱaȱ10%ȱsignificanceȱlevel).ȱThisȱcouldȱ indicateȱthatȱmoreȱproactiveȱOGȱrespondentsȱareȱmoreȱoptimisticȱaboutȱtheirȱsector’sȱ performance,ȱalthoughȱtheyȱtendȱtoȱbeȱmoreȱawareȱofȱunresolvedȱenvironmentalȱandȱ socialȱ issues,ȱ becauseȱ theyȱ areȱ alsoȱ moreȱ awareȱ ofȱ bestȱ practicesȱ inȱ theirȱ ownȱ comȬ panyȱandȱthroughoutȱtheȱentireȱsector.ȱItȱcouldȱalsoȱpointȱtoȱcalculatedȱoptimismȱorȱ “wishfulȱthinking”ȱofȱindividualsȱwhoȱseeȱtheȱneedȱforȱaȱmoreȱdistinctȱshiftȱinȱcorpoȬ rateȱactivities.ȱ Theȱ correspondingȱ UTȱ coefficientȱ isȱ closeȱ toȱ zeroȱ andȱ statisticallyȱ notȱ significant,ȱ whichȱ suggestsȱ thatȱ (1)ȱ proactiveȱ attitudesȱ areȱ lessȱ developedȱ inȱ theȱ UTȱ sector,ȱ and/orȱ(2)ȱtheȱindustry’sȱSDȱroleȱisȱassessedȱmoreȱheterogeneously,ȱpresumablyȱsinceȱ respondentsȱ areȱ lessȱ awareȱ ofȱ existingȱ initiativesȱ throughoutȱ theirȱ industryȱ and/orȱ sectorȱ performanceȱ isȱ indeedȱ moreȱ heterogeneousȱ (e.g.ȱ throughȱ differencesȱ inȱ fuelȱ mixesȱorȱtheȱlevelȱofȱmarketȱliberalization).ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

139ȱ

Externalȱstakeholdersȱandȱlegitimacyȱ Theȱ correlationȱ betweenȱ theȱ industry’sȱ SDȱ roleȱ andȱ theȱ importanceȱ ofȱ legitimacyȱ isȱ weakȱandȱnotȱstatisticallyȱsignificantȱinȱtheȱUTȱsector,ȱwhereasȱinȱtheȱOGȱsectorȱitȱisȱ statisticallyȱsignificantȱandȱpositive,ȱi.e.ȱtheȱmoreȱimportantȱOGȱrespondentsȱconsiderȱ legitimacyȱtoȱbe,ȱtheȱmoreȱpositivelyȱtheyȱassessȱtheȱSDȱroleȱofȱindustry.ȱ ThisȱpointsȱtoȱaȱsignificantȱcrossȬsectorȱdifference:ȱTheȱmotivatingȱeffectȱofȱlegitimacyȱ isȱweakerȱandȱlessȱconsistentȱinȱtheȱUTȱsectorȱbecauseȱindustryȱperformanceȱand/orȱ theȱimportanceȱofȱlegitimacyȱ isȱ lessȱ homogenousȱthanȱ inȱ theȱ OGȱ sectorȱ(seeȱ sectionȱ 8.2.6.1,ȱforȱaȱmoreȱcomprehensiveȱdiscussionȱofȱtheȱroleȱofȱlegitimacy).ȱThusȱUTȱdataȱ againȱindicateȱthatȱUTȱcompaniesȱareȱatȱdifferentȱstagesȱinȱtheȱprocessȱofȱliberalizaȬ tion.ȱHowever,ȱitȱisȱlikelyȱthatȱlegitimacyȱwillȱbecomeȱmoreȱimportantȱwithȱongoingȱ liberalizationȱprocesses.ȱ Theȱ positiveȱ linkȱ betweenȱ theȱ industry’sȱ SDȱ roleȱ andȱ publicȬprivateȱ partnershipsȱ (PPPs)ȱsupportsȱqualitativeȱevidenceȱpresentedȱearlierȱonȱtheȱeffectivenessȱofȱpublicȬ privateȱpartnershipsȱatȱassistingȱtheȱsectorsȱtoȱresolveȱprimarilyȱsocialȱandȱhealthȱisȬ suesȱinȱdevelopingȱcountriesȱandȱtoȱsupportȱpilotȱelectrificationȱprojects.45ȱ Strategicȱdispositionȱ Correlationsȱ alsoȱ showȱ thatȱ respondentsȱ whoȱ indicatedȱ greaterȱ SDȱ familiarity,ȱ greaterȱSDȱimportanceȱandȱgreaterȱCSMȱintentȱalsoȱassessedȱtheirȱindustry’sȱSDȱroleȱ moreȱ positively.ȱ Thisȱ suggestsȱ thatȱ sustainabilityȱ leaderȱ respondentsȱ haveȱ aȱ moreȱ positiveȱ perceptionȱ ofȱ theȱ entireȱ sector’sȱ performance.ȱ Theyȱ appearȱ toȱ haveȱ aȱ moreȱ optimisticȱmindsetȱ–ȱpresumablyȱdueȱtoȱgreaterȱawarenessȱofȱcurrentȱinitiativesȱandȱ bestȱ practicesȱ –ȱ ratherȱ thanȱ aȱ criticalȱ attitudeȱ towardsȱ laggardȱ companies,ȱ whichȱ wouldȱ haveȱ beenȱ reflectedȱ inȱ negativeȱ correlationsȱ betweenȱ theȱ industry’sȱ SDȱ roleȱ andȱcompanies’ȱstrategicȱdisposition.ȱ Itȱshouldȱbeȱnotedȱthatȱtheȱlinkageȱbetweenȱtheȱindustry’sȱSDȱroleȱandȱCSMȬrelatedȱ variablesȱ(e.g.ȱCSMȱintent,ȱCSMȱsuccess)ȱisȱweakerȱinȱtheȱUTȱthanȱinȱtheȱOGȱsector.ȱ Thusȱtheȱdataȱindicateȱthatȱ(1)ȱUTȱrespondentsȱareȱlessȱoptimisticȱaboutȱtheirȱsector’sȱ performance,ȱpresumablyȱbecauseȱtheirȱownȱcompaniesȱareȱrelativelyȱinexperienced,ȱ i.e.ȱstillȱatȱtheȱlowerȱendȱofȱtheȱCSMȱlearningȱcurve,ȱandȱ(2)ȱtheȱperceptionȱofȱtheȱinȬ dustry’sȱSDȱroleȱisȱlessȱhomogenousȱforȱreasonsȱreferredȱtoȱabove.ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 45

ȱ

ȱE.g.ȱtheȱSouthȱAfricanȱutilityȱEskomȱhasȱlaunchedȱaȱcomprehensiveȱHIV/AIDSȱprogramȱandȱplayedȱ aȱ keyȱ roleȱ inȱ establishingȱ theȱ Southȱ Africanȱ Businessȱ Coalitionȱ againstȱ HIV/AIDSȱ (Hollidayȱ etȱ al.,ȱ 2002,ȱp.ȱ122).ȱShellȱandȱEskomȱformedȱaȱjointȱventureȱprojectȱtoȱinstallȱhomeȱsolarȱsystemsȱinȱSouthȱ Africaȱ(WBCSD,ȱ2002,ȱp.ȱ39)ȱ

140ȱ

8ȱEmpiricalȱevidenceȱ

Structureȱ DataȱalsoȱexhibitȱaȱpositiveȱlinkȱwithȱcrossȬdisciplinaryȱcollaboration.ȱThisȱresultȱisȱinȱ lineȱwithȱfindingsȱpresentedȱinȱtheȱpreviousȱparagraph:ȱCrossȬdisciplinaryȱcollaboraȬ tionȱ tendsȱ toȱ increaseȱ respondents’ȱ awarenessȱ ofȱ corporateȱ activitiesȱ andȱ thusȱ posiȬ tivelyȱinfluencesȱtheirȱviewȱofȱtheȱoverallȱperformanceȱofȱtheȱindustry.ȱFurthermore,ȱ correlationsȱbetweenȱtheȱindustry’sȱSDȱroleȱandȱcrossȬdisciplinaryȱpotentialȱyieldȱdifȬ ferentȱresultsȱacrossȱtheȱtwoȱsectors:ȱInȱtheȱUTȱsectorȱtheȱrelationshipȱisȱmoderatelyȱ positiveȱbutȱonlyȱstatisticallyȱsignificantȱatȱaȱ10%ȱlevel.ȱȱ InȱtheȱOGȱsectorȱitȱisȱveryȱweakȱ(inȱfactȱslightlyȱnegative)ȱandȱclearlyȱnotȱstatisticallyȱ significant.ȱThisȱsuggestsȱthatȱOGȱrespondents’ȱassessmentȱofȱcrossȬdisciplinaryȱpoȬ tentialȱmayȱbeȱmoderatedȱmoreȱstronglyȱthroughȱotherȱcompanyȬspecificȱfactorsȱsuchȱ asȱ corporateȱ culturesȱ andȱ structures,ȱ andȱ theȱ currentȱ levelȱ ofȱ collaboration,ȱ i.e.ȱ reȬ spondentsȱwhoȱworkȱrelativelyȱcloselyȱwithȱsustainabilityȱexpertsȱmayȱconsiderȱtheȱ stillȱunexploitedȱpotentialȱminor.ȱThusȱrespondentsȱwithȱhigherȱlevelsȱofȱawarenessȱ ofȱ corporateȱ activitiesȱ doȱ notȱ necessarilyȱ assessȱ crossȬdisciplinaryȱ potentialȱ moreȱ positively.ȱ Thisȱ isȱ notȱ implausible,ȱ sinceȱ OGȱ companiesȱ tendȱ toȱ beȱ largerȱ andȱ thusȱ moreȱcomplexȱorganizations,ȱandȱareȱthusȱlikelyȱtoȱexhibitȱgreaterȱvariationȱinȱcorpoȬ rateȱculture,ȱstructure,ȱetc.ȱȱ CorrelationsȱbetweenȱtheȱSDȱroleȱofȱpublicȬprivateȱpartnershipsȱandȱotherȱvariablesȱ Figureȱ8Ȭ12ȱdisplaysȱcorrelationsȱbetweenȱtheȱroleȱofȱPPPsȱinȱcontributingȱtoȱsustainȬ ableȱdevelopmentȱandȱotherȱvariables.ȱTheyȱwillȱbeȱdiscussedȱinȱtheȱfollowingȱparaȬ graphs.ȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ Issues

141ȱ Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱOG,ȱUT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

T

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

T

SDȱfamiliarity

Strategic T,ȱOG,ȱUT disposition

SDȱimportance

OG,ȱUT

CSMȱINTENT

T

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

Structure

Consumers Governments CurrentȱSDȱrole

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

OG

T,ȱOG

CSMȱSUCCESS

PPPs Industry

T,ȱOG,ȱUT

NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.12:ȱCorrelationsȱ–ȱPublicȬprivateȱpartnerships’ȱSDȱroleȱ

Managers’ȱattitudesȱ Aȱ positiveȱ linkȱ betweenȱ PPPsȱ andȱ theȱ twoȱ proactiveȱ attitudesȱ (CA:”CSMȱ toȱ gainȱ longȬtermȱ competitiveȱ advantage”ȱ andȱ UCAȱ “CSMȱ despiteȱ unprovenȱ competitiveȱ advantage”)ȱofȱmanagersȱsuggestsȱthatȱmoreȱproactiveȱmanagersȱareȱmoreȱawareȱofȱ possibleȱcontributionsȱofȱpartnershipsȱwithȱpublicȱagenciesȱtoȱmoreȱsustainableȱbusiȬ nessȱpractices.ȱ Externalȱstakeholdersȱandȱlegitimacyȱ PositiveȱlinksȱbetweenȱPPPs’ȱSDȱroleȱandȱ(1)ȱthatȱofȱgovernmentsȱandȱindustryȱandȱ (2)ȱtheȱfutureȱroleȱofȱcapitalȱmarkets,ȱpointȱtoȱtheȱuseȱofȱpublicȬprivateȱpartnershipsȱ inȱ leadingȱ companies.ȱ Leadersȱ areȱ likelyȱ toȱ beȱ moreȱ awareȱ ofȱ greaterȱ contributionsȱ fromȱgovernmentsȱandȱindustryȱthatȱbothȱparticipateȱinȱtheȱpartnershipsȱandȱexpectȱ capitalȱmarketsȱtoȱtakeȱonȱaȱmoreȱproactiveȱSDȱroleȱinȱtheȱfuture.ȱ StrategicȱdispositionȱandȱCSMȱsuccessȱ CorrelationsȱalsoȱshowȱaȱclearȱpositiveȱlinkȱbetweenȱPPPs’ȱSDȱroleȱandȱbothȱstrategicȱ dispositionȱandȱCSMȱsuccess.ȱComparedȱtoȱtheȱassociationsȱdetectedȱwithȱtheȱindusȬ try’sȱSDȱrole,ȱthereȱareȱfewerȱcrossȬsectorȱdifferences.ȱInȱtheȱUTȱdataȱtheȱcorrelationȱ betweenȱPPPs’ȱSDȱroleȱandȱbothȱCSMȱintentȱandȱCSMȱsuccessȱareȱpositiveȱbutȱonlyȱ theȱformerȱisȱalsoȱstatisticallyȱsignificantȱ(evenȱifȱonlyȱatȱaȱ10%ȱlevel).ȱ ȱ

142ȱ

8ȱEmpiricalȱevidenceȱ

ThusȱtheȱresultsȱpointȱtoȱtheȱperceptionȱinȱleadingȱcompaniesȱofȱtheȱgreaterȱeffectiveȬ nessȱ ofȱ PPPs,ȱ particularlyȱ inȱ theȱ OGȱ sector.ȱ Thisȱ isȱ plausible,ȱ sinceȱ UTȱ companiesȱ surveyedȱinȱthisȱstudyȱrelyȱlessȱstronglyȱonȱpublicȱagenciesȱbecauseȱtheirȱcoreȱactiviȬ tiesȱareȱlocatedȱinȱdevelopedȱcountriesȱ(70%ȱofȱUTȱgeneralȱmanagersȱoperateȱinȱMidȬ NorthernȱEurope).ȱAnȱadditionalȱfactorȱcouldȱbeȱtheȱfactȱthatȱOGȱcompaniesȱengageȱ moreȱstrategicallyȱinȱpartnershipsȱbecauseȱtheyȱhaveȱtoȱextractȱandȱproduceȱoilȱandȱ gasȱwhereȱtheȱdepositsȱareȱlocated,ȱi.e.ȱoftenȱinȱruralȱareasȱwithȱlittleȱinfrastructure.ȱ Inȱcontrast,ȱUTȱfirmsȱthatȱoperateȱinȱdevelopingȱcountriesȱstillȱfocusȱprimarilyȱonȱurȬ banȱareas,ȱwhereȱpartnershipsȱforȱhealth,ȱeducationȱandȱcommunityȱdevelopmentȱareȱ lessȱneeded.ȱThroughȱitsȱelectrificationȱprogramȱlaunchedȱinȱ1991,ȱEskomȱhasȱraisedȱ theȱelectrificationȱrateȱinȱurbanȱareasȱinȱSouthȱAfricaȱtoȱ90%.ȱInȱruralȱareasȱonlyȱ40%ȱ ofȱtheȱhomesȱareȱelectrifiedȱ(WBCSD,ȱ2002,ȱp.ȱ39).ȱ Conclusionsȱ Itȱisȱnotȱsurprisingȱthatȱthereȱareȱsomeȱparallelsȱwithȱtheȱassociationsȱdetectedȱforȱtheȱ roleȱofȱindustry,ȱsinceȱindustryȱisȱinvolvedȱinȱPPPs.ȱOverallȱresultsȱindicateȱthatȱsusȬ tainabilityȱ leadersȱ inȱ theȱ OGȱ sectorȱ inȱ particularȱ assessȱ theirȱ sector’sȱ SDȱ roleȱ moreȱ positivelyȱthanȱlaggards,ȱandȱexhibitȱgreaterȱawarenessȱofȱtheȱeffectivenessȱofȱPPPs,ȱ obviouslyȱ becauseȱ theyȱ moreȱ stronglyȱ relyȱ onȱ themȱ toȱ resolveȱ localȱ socialȱ issuesȱ inȱ developingȱcountries.ȱOverallȱthisȱpointsȱtoȱaȱmoreȱadvancedȱandȱconfidentȱapproachȱ toȱCSMȱinȱtheȱOGȱcomparedȱtoȱtheȱUTȱsector,ȱwhichȱcanȱbeȱpartlyȱattributedȱtoȱtheȱ importanceȱofȱlegitimacyȱandȱitsȱgreaterȱmotivatingȱroleȱinȱtheȱOGȱsector.ȱThisȱalsoȱ mostȱlikelyȱreflectsȱOGȱcompanies’ȱgreaterȱorganizationalȱvisibility.ȱ 8.2.6 Legitimacyȱandȱtheȱrelativeȱimportanceȱofȱexternalȱstakeholdersȱȱ Inȱtheȱpresentȱsection,ȱtheȱauthorȱwillȱelaborateȱonȱtheȱroleȱofȱlegitimacyȱasȱsuch,ȱopȬ erationalizedȱasȱbrandȱvalueȱandȱreputation,ȱinȱtheȱareaȱofȱCSMȱ(seeȱsectionȱ8.2.6.1).ȱ Heȱwillȱalsoȱcompareȱtheȱrelativeȱimportanceȱofȱtheȱexternalȱstakeholdersȱasȱpressureȱ groupsȱ(seeȱsectionȱ8.2.6.2).ȱ 8.2.6.1 Theȱroleȱofȱlegitimacyȱ 8.2.6.1.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Theȱinterviewsȱindicateȱthatȱbothȱtheȱinformalȱandȱformalȱkindsȱofȱlegitimacyȱhaveȱaȱ clearȱ effectȱ onȱ CSM.ȱ Intervieweesȱ mostlyȱ referredȱ toȱ twoȱ concepts,ȱ theȱ (informalȱ orȱ formal)ȱlicenseȱtoȱoperateȱ(orȱgrow)ȱandȱreputation,ȱandȱreportedȱthatȱtheirȱcompaȬ niesȱhaveȱreactedȱtoȱchangingȱdemandsȱfromȱstakeholders.ȱȱ Thusȱdifferentȱinstitutionalȱenvironmentsȱandȱsocietalȱvaluesȱdetermineȱtheȱlimitsȱofȱ legitimacyȱ –ȱ i.e.ȱ theȱ visibleȱ significanceȱ ofȱ anȱ issueȱ –ȱ atȱ whichȱ stakeholdersȱ reactȱ toȱ amendȱorȱrevokeȱcompanies’ȱcurrentȱlicensesȱtoȱoperate.ȱLimitsȱofȱlegitimacyȱcanȱbeȱ local,ȱ regional,ȱ nationalȱ orȱ evenȱ global.ȱ Forȱ example,ȱ theȱ USȱ andȱ Europeȱ varyȱ inȱ

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termsȱ ofȱ societalȱ pressureȱ toȱ combatȱ climateȱ changeȱ (Browne,ȱ 1997;ȱ Sharmaȱ etȱ al.,ȱ 1999,ȱp.ȱ91;ȱSkjaersethȱetȱal.,ȱ2001):ȱ Originallyȱourȱactionsȱwereȱbasedȱonȱexpertȱanalysis,ȱlessȱonȱpublicȱperceptions.ȱ However,ȱthereȱhasȱbeenȱaȱchangeȱinȱopinion,ȱprimarilyȱdueȱtoȱreputationalȱdamȬ ageȱweȱincurredȱinȱEurope.ȱThisȱisȱalsoȱoneȱreasonȱwhyȱourȱsustainabilityȱreportȱ wasȱoriginallyȱplannedȱasȱaȱEuropeanȱReportȱ(OG1,ȱupstreamȱEHS).ȱ Furthermore,ȱ regulatoryȱ standardsȱ onȱ localȱ socialȱ andȱ environmentalȱ issuesȱ varyȱ widelyȱ betweenȱ developingȱ andȱ developedȱ countriesȱ (Souzaȱ Portoȱ etȱ al.,ȱ 2003).ȱ Lowerȱ standardsȱ areȱ oftenȱ overcompensatedȱ forȱ byȱ greaterȱ scrutinyȱ fromȱ publicȱ pressureȱgroups,ȱandȱsoȱtheȱOGȱsectorȱinȱparticularȱhasȱbecomeȱmoreȱsensitiveȱtoȱsoȬ cialȱandȱenvironmentalȱissuesȱinȱdevelopingȱcountriesȱ(Gavin,ȱ2003).ȱȱ Whereasȱ mostȱ intervieweesȱ areȱ familiarȱ withȱ theȱ potentialȱ effectsȱ ofȱ shortȬtermȱ opȬ erationalȱissuesȱ(e.g.ȱhealthȱ&ȱsafety)ȱonȱbrandȱvalueȱandȱreputation,ȱlegitimacyȱconȬ cernsȱaboutȱlongȬȱtermȱstrategicȱchallengesȱsuchȱasȱclimateȱchangeȱtendȱtoȱbeȱlimitedȱ toȱsustainabilityȱofficersȱandȱmanagersȱoperatingȱinȱpilotȱbusinessȱunits:ȱ StrategicȱtransitionȱtoȱrenewablesȱwillȱbeȱanȱiterativeȱprocessȱbetweenȱtheȱdifferȬ entȱstakeholders.ȱThereȱwillȱbeȱmoreȱandȱmoreȱpressure.ȱTheȱEuropeanȱCommisȬ sionȱisȱdoingȱaȱveryȱgoodȱjobȱatȱtheȱmomentȱ(OG4,ȱrenewablesȱbusinessȱunit).ȱ ItȱisȱobviousȱthatȱtheȱsignificanceȱofȱlegitimacyȱisȱgreaterȱinȱtheȱOGȱsectorȱ(seeȱChartȱ 8Ȭ7),ȱ sinceȱ OGȱ companiesȱ operateȱ inȱ moreȱ competitiveȱ downstreamȱ marketsȱ andȱ haveȱ greaterȱ organizationalȱ visibilityȱ (Bowen,ȱ 2000).ȱ Accordingȱ toȱ theȱ principleȱ ofȱ “countervailingȱpower,”ȱOGȱcompanies’ȱsize,ȱprofitabilityȱandȱrelativelyȱlowȱlevelȱofȱ regulationȱ attractsȱ oppositionȱfromȱpublicȱpressureȱgroups.ȱ Furthermore,ȱ nameȱrecȬ ognitionȱbyȱconsumersȱisȱconsiderablyȱhigherȱthanȱinȱtheȱUTȱsectorȱ(Kalkmanȱetȱal.,ȱ 2002),ȱandȱthusȱOGȱcompaniesȱareȱmoreȱvulnerableȱtoȱincidentsȱthatȱmayȱdamageȱleȬ gitimacy,ȱ e.g.ȱ boycottȱ orȱ mediaȱ campaignsȱ (Steger,ȱ 2003,ȱ p.ȱ 106).ȱ Interviewȱ dataȱ reȬ vealȱtwoȱadditionalȱfactorsȱthatȱmoderateȱcompanyȬȱorȱplantȬspecificȱrisksȱassociatedȱ withȱlegitimacy:ȱ -

Locationȱ andȱ profileȱ ofȱ headquartersȱ andȱ facilities:ȱ Asȱ oneȱ intervieweeȱ claimed,ȱ Nordicȱplayersȱmayȱbeȱunderȱlessȱscrutinyȱglobally,ȱdueȱtoȱ“spillȱover”ȱfromȱtheȱ goodȱenvironmentalȱandȱethicalȱrecordsȱofȱtheirȱhomeȱcountries.ȱFurthermore,ȱfaȬ cilitiesȱprovidingȱmuchȬneededȱemploymentȱareȱunderȱlessȱexternalȱpressure.ȱ

-

Corporateȱreputation:ȱCompaniesȱdifferȱinȱtermsȱofȱtheirȱcorporateȱidentity,ȱtheirȱ approachȱtoȱexternalȱstakeholdersȱandȱtheȱimageȱandȱvisibilityȱofȱtheȱtopȱexecuȬ tivesȱ(Anonymous,ȱ2003f;ȱBrowne,ȱ1997).ȱ

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5

UT general managers

Importance of brand and reputation (1 = "Not at all" to 5 = "Very much")

4

OG general managers

3

2

1

0

ȱ

Chartȱ8Ȭ7:ȱImportanceȱofȱlegitimacyȱ

Whereasȱ theȱ crossȬsectorȱ differenceȱ inȱ theȱ importanceȱ ofȱ legitimacyȱ isȱ statisticallyȱ significant,ȱtheȱdifferenceȱinȱtermsȱofȱactualȱdamageȱtoȱlegitimacyȱ(seeȱalsoȱChartȱ8Ȭ8),ȱ i.e.ȱlossȱofȱlegitimacy,ȱareȱnot.ȱ 4

Damage to brand and reputation (1 = "No impact at all" to 4 = "Severe")

UT general managers 3

OG general managers

2

1

0

ȱ

Chartȱ8Ȭ8:ȱDamageȱtoȱlegitimacyȱinȱtheȱpastȱthreeȱyearsȱ

Thisȱisȱunexpected,ȱbecauseȱofȱtheȱOGȱsector’sȱgreaterȱissueȱandȱorganizationalȱvisiȬ bility,ȱandȱcanȱbeȱattributedȱtoȱtheȱfollowingȱreasons:ȱFirst,ȱtheȱsensitivityȱofȱtheȱquesȬ

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tionȱmakesȱitȱproneȱtoȱsubstantialȱbias:ȱ31%ȱofȱOGȱandȱ44%ȱofȱUTȱmanagersȱdidȱnotȱ respond,ȱandȱonlyȱ7%ȱandȱ6%ȱrespectivelyȱreportedȱ“severe”ȱdamageȱtoȱlegitimacy.ȱ Second,ȱ theȱ mostȱ “prominent”ȱ incidentsȱ inȱ theȱ OGȱ sectorȱ occurredȱ inȱ aȱ periodȱ theȱ questionnaireȱdidȱnotȱcover.ȱ EvenȱifȱoneȱtakesȱintoȱaccountȱthatȱrespondentsȱfromȱbothȱsectorsȱareȱlikelyȱtoȱdownȬ playȱ theȱ severityȱ ofȱ damageȱ toȱ legitimacy,ȱ dataȱ indicateȱ thatȱ theȱ effectȱ ofȱ incidentsȱ hasȱ beenȱ ratherȱ weakȱ overall,ȱ presumablyȱ becauseȱ boycottȱ campaigns,ȱ shareholderȱ resolutionsȱ onȱ environmentalȱ andȱ socialȱ issues,ȱ andȱ protestsȱ againstȱ nuclearȱ powerȱ areȱ limitedȱ toȱ certainȱ countriesȱ andȱ exertȱ briefȱ andȱ selectiveȱ ratherȱ thanȱ persistentȱ pressureȱonȱcompanies.ȱThusȱgeneralȱmanagersȱmayȱalsoȱlackȱawarenessȱofȱsuchȱinȬ cidents.ȱ Inȱconclusion,ȱcompaniesȱhaveȱrecognizedȱtheȱfinancialȱpremiumȱassociatedȱwithȱinȬ formalȱkindsȱofȱlegitimacyȱorȱlicenseȱtoȱoperate,ȱwhichȱenableȱtheȱcompanyȱtoȱcreateȱ aȱ steadyȱ flowȱ ofȱ revenues,ȱ sinceȱ operationsȱ canȱ continueȱ uninterruptedlyȱ (e.g.ȱ noȱ strikes,ȱnoȱoccupationȱofȱfacilities,ȱnoȱscandalsȱandȱcrisesȱtoȱmanage)ȱandȱefficientlyȱ (motivatedȱ personnel),ȱ andȱ productsȱ areȱ consistentlyȱ demandedȱ byȱ customersȱ (e.g.ȱ noȱboycotts).ȱOverallȱdataȱpresentedȱsuggestȱthatȱtheȱinformalȱlicenseȱtoȱoperateȱisȱaȱ particularlyȱimportantȱdriverȱofȱCSMȱinȱtheȱOGȱsectorȱbecauseȱofȱseveralȱfactorsȱsuchȱ asȱtheȱvisibilityȱofȱsomeȱissuesȱ(e.g.ȱsocialȱconflicts)ȱandȱgreaterȱorganizationalȱvisibilȬ ityȱofȱcompaniesȱasȱwellȱasȱstrongerȱdownstreamȱcompetition.ȱ Whereasȱinterviewȱ data,ȱ fromȱsustainabilityȱ officersȱ inȱ particular,ȱpointȱtoȱaȱsignifiȬ cantȱimpactȱofȱNGOȱandȱboycottȱcampaignsȱinȱtheȱOGȱsector,ȱsurveyȱdataȱfromȱgenȬ eralȱ managersȱ revealȱ littleȱ effectȱ ofȱ incidentsȱ thatȱ damagedȱ legitimacy.ȱ Ifȱ oneȱ takesȱ intoȱ accountȱ possibleȱ biasȱ fromȱ respondents,ȱ thisȱ suggestsȱ thatȱ incidentsȱ haveȱ beenȱ ratherȱselectiveȱandȱtooȱinsignificantȱtoȱdrawȱnotableȱattentionȱfromȱgeneralȱmanagȬ ers.ȱThisȱcouldȱadditionallyȱpointȱtoȱ(1)ȱaȱstronglyȱreactiveȱmindsetȱofȱgeneralȱmanȬ agersȱ whoȱ areȱ focusedȱ onȱ theirȱ everyȬdayȱ activitiesȱ inȱ theirȱ businessȱ functionȱ andȱ unit,ȱ andȱ (2)ȱ aȱ failureȱ toȱ communicateȱ theȱ significanceȱ ofȱ incidentsȱ acrossȱ businessȱ unitsȱandȱfunctions.ȱ 8.2.6.1.2 Advancedȱstatisticsȱ 8.2.6.1.2.1 Correlationsȱ Importanceȱofȱlegitimacyȱ Inȱtheȱfollowingȱparagraphsȱtheȱauthorȱwillȱpresentȱandȱdiscussȱcorrelationsȱbetweenȱ theȱimportanceȱofȱlegitimacyȱandȱotherȱvariablesȱ(seeȱFigureȱ8Ȭ13).ȱ

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Issues

Socialȱissues

T,ȱUT

Companies

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱOG T,ȱOG

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

T,ȱOG

T,ȱOG,ȱUT

SDȱfamiliarity

Strategic T disposition

SDȱimportance

T,ȱOG,ȱUT

CSMȱINTENT

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

Structure

Consumers Governments CurrentȱSDȱrole

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

T,ȱOG,ȱUT

CSMȱSUCCESS

PPPs Industry NGOs

T,ȱOG T

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.13:ȱCorrelationsȱ–ȱImportanceȱofȱlegitimacyȱ

Issuesȱ Socialȱissueȱsignificanceȱandȱlegitimacyȱareȱrelated,ȱwhichȱindicatesȱthatȱsustainabilȬ ityȱleadersȱexhibitȱgreaterȱawarenessȱofȱsocialȱissuesȱandȱattachȱgreaterȱimportanceȱtoȱ legitimacyȱ(asȱdiscussedȱinȱdetailȱalreadyȱinȱsectionȱ8.1.2.1).ȱ Managers’ȱattitudesȱ Theȱ importanceȱ ofȱ legitimacyȱ isȱ relatedȱ toȱ theȱ personalȱ attitudesȱ ofȱ respondents,ȱ moreȱspecificallyȱtoȱtheȱCAȱattitudeȱ(CSMȱtoȱgainȱlongȬtermȱcompetitiveȱadvantage)ȱ andȱ WWȱ attitudeȱ (CSMȱ onlyȱ inȱ winȬwinȱ situations);ȱ theȱ correspondingȱ correlationsȱ alsoȱexistȱinȱtheȱUTȱsectorȱbutȱtheirȱsignificanceȱlevelsȱareȱjustȱaboveȱ10%.ȱTheȱlinksȱ indicateȱthatȱproactiveȱmanagersȱareȱmoreȱstronglyȱconcernedȱwithȱtheirȱcompanies’ȱ legitimacy.ȱ Externalȱstakeholdersȱandȱlegitimacyȱ Furthermore,ȱtheȱimportanceȱofȱlegitimacyȱpositivelyȱcorrelatesȱwithȱtheȱSDȱrolesȱofȱ capitalȱmarkets,ȱindustryȱandȱNGOs.ȱThisȱindicatesȱthat:ȱ -

Industry,ȱ moreȱ specificallyȱ theȱ OGȱ sector,ȱ isȱ drivenȱ byȱ theȱ importanceȱ ofȱ legitiȬ macyȱasȱaȱmotivatingȱfactorȱofȱCSMȱ(asȱdiscussedȱinȱmoreȱdetailȱinȱsectionȱ8.2.5ȱ Industryȱandȱpartnerships).ȱ

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147ȱ

-

Companies’ȱ sensitivityȱ toȱ theȱ importanceȱ ofȱ legitimacy,ȱ whichȱ isȱ determinedȱ throughȱseveralȱfactorsȱsuchȱasȱcorporateȱcultureȱ(Steger,ȱ1998a;ȱ2003,ȱp.ȱ241)ȱandȱ organizationalȱvisibilityȱ(Bowen,ȱ2000,ȱp.ȱ100);ȱitȱisȱincreasedȱthroughȱgreaterȱdeȬ mandȱforȱCSMȱfromȱpublicȱpressureȱgroupsȱ(seeȱsectionȱ8.2.2).ȱ

-

Companiesȱareȱconcernedȱwithȱretainingȱandȱincreasingȱtheirȱlegitimacyȱbecauseȱ theyȱexpectȱcapitalȱmarketsȱtoȱactȱmoreȱproactivelyȱinȱtheȱfutureȱ(seeȱalsoȱsectionȱ 8.2.4ȱFinancialȱcommunityȱonȱp.ȱ133)ȱ

Thereȱ isȱ noȱ statisticallyȱ significantȱ linkȱ betweenȱ theȱ importanceȱ ofȱ legitimacyȱ andȱ damagesȱtoȱlegitimacy.ȱAlthoughȱcompaniesȱthatȱattachȱgreaterȱimportanceȱtoȱlegitiȬ macyȱcouldȱreportȱgreaterȱdamage,ȱbecauseȱstakesȱareȱhigherȱifȱanȱincidentȱoccurs,ȱaȱ linkȱshouldȱnotȱbeȱstronglyȱexpected,ȱbecauseȱtheȱdamageȱisȱatȱleastȱasȱstronglyȱdeȬ terminedȱbyȱtheȱnatureȱofȱtheȱincidentȱasȱbyȱtheȱlevelȱofȱlegitimacyȱatȱstake.ȱ Theȱ missingȱ linkȱ betweenȱ theȱ importanceȱ ofȱ legitimacyȱ andȱ consumers’ȱ SDȱ roleȱ pointsȱtoȱtheȱfactȱthatȱconsumersȱareȱhardlyȱrelevantȱtoȱcompanies’ȱlegitimacy,ȱexceptȱ throughȱboycottsȱthatȱareȱoftenȱtriggeredȱbyȱNGOȱcampaigns.ȱThisȱisȱconfirmedȱbyȱaȱ statisticallyȱsignificantȱlinkageȱbetweenȱconsumers’ȱSDȱroleȱandȱactualȱdamageȱtoȱleȬ gitimacyȱ (seeȱ Figureȱ 8Ȭ14),ȱ andȱ fitsȱ evidenceȱ obtainedȱ fromȱ theȱ interviews:ȱ Overallȱ theȱ consumers’ȱ roleȱ isȱ deterrent,ȱ butȱ selectiveȱ pressureȱ dueȱ toȱ consumerȱ boycottsȱ constitutesȱaȱsubstantialȱlegitimacyȱrisk.ȱ StrategicȱdispositionȱandȱCSMȱsuccessȱ TheȱdataȱalsoȱexhibitȱaȱclearȱlinkȱbetweenȱtheȱimportanceȱofȱlegitimacyȱandȱtheȱstraȬ tegicȱdispositionȱtoȱCSMȱ–ȱconsistentlyȱacrossȱbothȱsectorsȱ–ȱandȱthusȱclearlyȱsupportȱ findingsȱfromȱtheȱinterviewsȱaboutȱtheȱmotivatingȱeffectȱofȱlegitimacy.ȱTheȱpositiveȱ linkȱwithȱCSMȱsuccessȱsuggestsȱthatȱgreaterȱstrategicȱdispositionȱleadsȱtoȱtheȱimpleȬ mentationȱofȱCSMȱmeasuresȱthatȱeffectivelyȱcontributeȱtoȱCSMȱsuccess.ȱThisȱisȱhighlyȱ plausibleȱ sinceȱ companies’ȱ initiativesȱ needȱ toȱ beȱ successfulȱ toȱ retainȱ andȱ expandȱ companies’ȱinformalȱlicenseȱtoȱoperate.ȱ Structureȱ Theȱ dataȱ doȱ notȱ showȱ anyȱ linkȱ betweenȱ theȱ importanceȱ ofȱ legitimacyȱ andȱ crossȬ disciplinaryȱcollaboration.ȱTheȱfactȱthatȱtheȱimportanceȱofȱlegitimacyȱisȱlinkedȱtoȱstraȬ tegicȱdispositionȱbutȱnotȱtoȱcurrentȱstructuresȱ–ȱallȱcoefficientsȱareȱpositiveȱbutȱcloseȱ toȱ zeroȱ –ȱ asȱ oneȱ dimensionȱ ofȱ CSMȱ implementationȱ suggestsȱ thatȱ theȱ associationȱ isȱ subduedȱ byȱ someȱ thirdȱ variableȱ suchȱ asȱ internalȱ driversȱ orȱ barriersȱ (e.g.ȱ corporateȱ culture)ȱorȱtheȱdifferentȱscalesȱ(categoricalȱandȱpseudoȬcontinuous)ȱusedȱtoȱmeasureȱ bothȱvariables.ȱ

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Damageȱtoȱlegitimacyȱ Inȱtheȱfollowingȱparagraphsȱtheȱauthorȱwillȱpresentȱandȱdiscussȱcorrelationsȱbetweenȱ damageȱtoȱlegitimacyȱinȱtheȱpastȱthreeȱyearsȱandȱotherȱvariablesȱ(seeȱFigureȱ8Ȭ14).ȱ Issues

Socialȱissues

T,ȱUT

Companies

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations T

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

SDȱfamiliarity

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv. Strategic T,ȱOG disposition

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

SDȱimportance CSMȱINTENT

T,ȱOG

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

Consumers Governments CurrentȱSDȱrole

CrossȬdisc.ȱcollabor.

Structure T,ȱOG

T

CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.14:ȱCorrelationsȱ–ȱDamageȱtoȱlegitimacyȱ

Issuesȱ Socialȱ issueȱ significanceȱ andȱ damageȱ toȱ legitimacyȱ areȱ positivelyȱ related.ȱ Thisȱ sugȬ gestsȱthatȱcompaniesȱthatȱhaveȱincurredȱgreaterȱdamageȱtoȱlegitimacyȱreportȱgreaterȱ issueȱ significanceȱ (seeȱ sectionȱ 8.1.1.3ȱ Theȱ relativeȱ importanceȱ ofȱ environmentalȱ andȱ socialȱissuesȱforȱaȱmoreȱdetailedȱandȱsectorȬspecificȱdiscussion).ȱ Managers’ȱattitudesȱ Moreȱ proactiveȱ managersȱ alsoȱ reportȱ greaterȱ damageȱ toȱ legitimacy.ȱ Theȱ correlationȱ coefficientsȱbetweenȱallȱfourȱattitudesȱandȱdamageȱtoȱlegitimacyȱsupportȱthisȱfinding,ȱ althoughȱonlyȱoneȱlinkȱwithȱtheȱCAȱattitudeȱ(CSMȱtoȱgainȱlongȬtermȱcompetitiveȱadȬ vantage)ȱ isȱ statisticallyȱ significant.ȱ Relationshipsȱ betweenȱ theȱ variablesȱ couldȱ beȱ reȬ cursive:ȱ Proactiveȱ managersȱ couldȱbeȱmoreȱwillingȱtoȱ acknowledgeȱ greaterȱdamageȱ toȱ legitimacy,ȱ andȱ greaterȱ damageȱ toȱ legitimacyȱ mayȱ alsoȱ haveȱ changedȱ managers’ȱ attitudes.ȱ

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Externalȱstakeholdersȱandȱlegitimacyȱ Damageȱtoȱlegitimacyȱpositivelyȱcorrelatesȱwithȱcapitalȱmarkets’ȱfutureȱSDȱrole,ȱobȬ viouslyȱ sinceȱ incidentsȱ haveȱ triggeredȱ reactionsȱ fromȱ capitalȱ marketsȱ andȱ areȱ exȬ pectedȱtoȱdoȱsoȱinȱtheȱfutureȱ(seeȱalsoȱsectionȱ8.2.4ȱFinancialȱcommunity).ȱ Itȱisȱalsoȱpositivelyȱrelatedȱtoȱconsumers’ȱSDȱrole,ȱwhichȱpointsȱtoȱsignificantȱeffectsȱ ofȱconsumerȱboycottsȱandȱprotestsȱ(seeȱalsoȱsectionȱ8.2.3ȱCustomers).ȱ Strategicȱdispositionȱ Damageȱ toȱ legitimacyȱ isȱ alsoȱ linkedȱ toȱ companies’ȱ strategicȱ disposition,ȱ butȱ lessȱ clearlyȱthanȱtheȱimportanceȱofȱlegitimacy,ȱasȱtheȱlowerȱnumberȱofȱstatisticallyȱsignifiȬ cantȱ linksȱ shows.ȱ Furthermore,ȱ dataȱ revealȱ twoȱ differencesȱ betweenȱ theȱ sectors:ȱ Inȱ contrastȱtoȱtheȱOGȱsample,ȱinȱtheȱUTȱsampleȱdamageȱtoȱlegitimacyȱisȱlinkedȱtoȱneiȬ therȱ(1)ȱSDȱimportance,ȱnorȱ(2)ȱCSMȱintent.46ȱ Theseȱ resultsȱ areȱ inȱ parallelȱ withȱ findingsȱ fromȱ theȱ interviews,ȱ whichȱ suggestȱ thatȱ OGȱ companiesȱ reactȱ toȱ decreasingȱ legitimacyȱ byȱ increasinglyȱ integratingȱ environȬ mentalȱ andȱ socialȱ issuesȱ intoȱ operationsȱ –ȱ particularlyȱ inȱ developingȱ countriesȱ (e.g.ȱ communityȱinvolvement).ȱTheȱmissingȱlinkȱinȱtheȱUTȱdataȱclearlyȱsuggestsȱthatȱdamȬ ageȱtoȱlegitimacyȱinȱtheȱUTȱsectorȱhasȱbeenȱmarginalȱandȱhasȱthusȱnotȱtriggeredȱanyȱ significantȱchangesȱinȱtheirȱstrategicȱdispositionȱandȱactivities.ȱ Structureȱ ThereȱisȱaȱstatisticallyȱsignificantȱlinkȱtoȱbothȱcrossȬdisciplinaryȱcollaborationȱandȱpoȬ tential:ȱ -

TheȱlinkȱwithȱcrossȬdisciplinaryȱcollaborationȱisȱstatisticallyȱsignificantȱandȱposiȬ tiveȱ inȱ theȱ UTȱ sector,ȱ inȱ theȱ OGȱ sectorȱ itȱ isȱ negative:ȱ Evenȱ ifȱ theȱ OGȱ coefficientȱ lacksȱstatisticalȱsignificance,ȱthisȱdifferenceȱisȱquiteȱinsightful,ȱsinceȱitȱagainȱindiȬ catesȱthatȱbothȱsectorsȱareȱatȱdifferentȱstagesȱofȱtheȱCSMȱlearningȱcurve:ȱTheȱposiȬ tiveȱ linkȱ inȱ theȱ UTȱ dataȱ suggestsȱ thatȱ moreȱ advancedȱ UTȱ companiesȱ featuringȱ strongerȱ crossȬdisciplinaryȱ structuresȱ haveȱ becomeȱ moreȱ awareȱ ofȱ damageȱ toȱ theirȱlegitimacy.ȱTheȱnegativeȱlinkȱinȱtheȱ OGȱdata,ȱalthoughȱstatisticallyȱ notȱsigȬ nificant,ȱcouldȱindicateȱthatȱmoreȱadvancedȱcompaniesȱwereȱinȱfactȱsubjectȱtoȱlessȱ damageȱtoȱbrandȱvalueȱandȱreputation.ȱThisȱisȱnotȱimplausible,ȱalthoughȱitȱcanȱbeȱ arguedȱthatȱcompaniesȱthatȱareȱsustainabilityȱleadersȱareȱtheȱpreferredȱtargetsȱofȱ NGOȱcampaigns,ȱsinceȱtheyȱ areȱsuspectedȱofȱ greenwashingȱ (Kolkȱ etȱ al.,ȱ 2001,ȱ p.ȱ 507;ȱVogl,ȱ2003).ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 46

ȱ

ȱInȱtheȱOGȱsectorȱtheȱlinkȱisȱmoderatelyȱstrongȱandȱpositiveȱ(almostȱstatisticallyȱsignificantȱatȱaȱ5%ȱ level),ȱinȱtheȱUTȱsectorȱcloseȱtoȱzeroȱ(inȱfactȱnegative)ȱandȱstatisticallyȱnotȱsignificantȱ

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8ȱEmpiricalȱevidenceȱ

Theȱ positiveȱ linkȱ withȱ crossȬdisciplinaryȱ potentialȱ isȱ lineȱ withȱ correlationsȱ preȬ sentedȱ aboveȱ (withȱ strategicȱ disposition,ȱ issueȱ awareness,ȱ attitudes,ȱ etc.)ȱ andȱ couldȱindicateȱaȱrelationshipȱthatȱisȱcharacterizedȱbyȱaȱfeedbackȱloop:ȱ(1)ȱResponȬ dentsȱwhoȱareȱmoreȱexperiencedȱthroughȱcloserȱcollaborationȱwithȱsustainabilityȱ expertsȱareȱmoreȱawareȱofȱorȱwillingȱtoȱacknowledgeȱdamageȱtoȱlegitimacyȱinȱtheȱ past.ȱ (2)ȱ Moreȱ advancedȱ companiesȱ incurredȱ moreȱ damageȱ toȱ legitimacyȱ inȱ theȱ pastȱandȱreactedȱwithȱgreaterȱstrategicȱdispositionȱandȱthusȱmoreȱevolvedȱcorpoȬ rateȱstructures.ȱ

Differencesȱinȱcorrelationsȱ Thereȱ areȱ severalȱ differencesȱ betweenȱ theȱ correlationsȱ detectedȱ betweenȱ otherȱ variȬ ablesȱ and,ȱ onȱ theȱ oneȱ hand,ȱ theȱ importanceȱ ofȱ legitimacyȱ and,ȱ onȱ theȱ otherȱ hand,ȱ damageȱ toȱ legitimacy.ȱ Theyȱ willȱ beȱ discussedȱ inȱ moreȱ detailȱ inȱ theȱ followingȱ paraȬ graphs.ȱ Itȱisȱnotableȱthatȱinȱcontrastȱtoȱtheȱimportanceȱofȱlegitimacy,ȱtheȱdamageȱtoȱlegitimacyȱ lacksȱlinksȱwithȱseveralȱvariables:ȱ 1. ThereȱisȱnoȱstatisticallyȱsignificantȱlinkȱtoȱNGOs’ȱSDȱrole.ȱThisȱsuggestsȱthatȱ(1)ȱtheȱ correlationȱ isȱ affectedȱ byȱ respondents’ȱ unwillingnessȱ toȱ acknowledgeȱ theȱ trueȱ levelȱ ofȱ damage,ȱ and/orȱ (2)ȱ thatȱ companiesȱ haveȱ alsoȱ beenȱ alertedȱ byȱ incidentsȱ thatȱtheirȱpeersȱexperienced,ȱnotȱnecessarilyȱthemselves.ȱ 2. Thereȱisȱnoȱlinkȱtoȱtheȱindustry’sȱSDȱrole.ȱThisȱsuggestsȱthatȱincidentsȱthatȱdamageȱ legitimacyȱ areȱ eitherȱ limitedȱ toȱ aȱ fewȱ companiesȱ orȱ assessedȱ differentlyȱ acrossȱ severalȱcompanies.ȱ 3. ThereȱisȱnoȱlinkȱtoȱCSMȱsuccess.ȱThisȱisȱaȱbitȱunexpected,ȱbecauseȱ–ȱasȱinterviewȱ dataȱalsoȱsuggestȱ–ȱincidentsȱthatȱdamageȱlegitimacyȱcanȱcauseȱsubstantialȱimpeȬ tusȱforȱorganizationalȱchangesȱandȱthusȱaffectȱtheȱeffectivenessȱofȱcorporateȱenviȬ ronmentalȱandȱsocialȱinitiatives.ȱTheȱlinkȱmayȱbeȱmissingȱforȱseveralȱreasons:ȱ(1)ȱ Socialȱdesirabilityȱbias.ȱ(2)ȱLearningȱeffects:ȱCompaniesȱthatȱwereȱnotȱdirectlyȱsubȬ jectȱtoȱincidentsȱincorporatedȱorganizationalȱchangesȱneverthelessȱasȱaȱreactionȱtoȱ incidentsȱtheirȱpeersȱexperienced.ȱ(3)ȱLowerȱimportanceȱofȱlegitimacy:ȱDamageȱtoȱ legitimacyȱonlyȱhasȱaȱ“sustainable”ȱeffectȱonȱcompaniesȱifȱlegitimacyȱisȱimportantȱ toȱtheȱcompanyȱandȱperceivedȱtoȱbeȱatȱriskȱinȱtheȱlongȱtermȱratherȱthanȱtheȱshortȱ term.ȱ (4)ȱ Internalȱ barriersȱ thatȱ preventȱ possibleȱ significantȱ changesȱ thatȱ couldȱ haveȱcontributedȱtoȱCSMȱsuccess.ȱ Furthermore,ȱdamageȱtoȱlegitimacyȱhasȱsomeȱassociationsȱwithȱvariablesȱthatȱtheȱimȬ portanceȱofȱlegitimacyȱlacks:ȱ

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151ȱ

1. Itȱisȱlinkedȱtoȱconsumers’ȱSDȱrole.ȱThisȱisȱplausible,ȱsinceȱconsumersȱplayȱaȱpreȬ dominantlyȱ deterrentȱ roleȱ butȱ occasionallyȱ reactȱ toȱ NGOȱ orȱ mediaȱ campaigns,ȱ mainlyȱthroughȱconsumerȱboycotts.ȱ 2. ItȱisȱlinkedȱtoȱcrossȬdisciplinaryȱcollaborationȱandȱpotential.ȱThisȱcouldȱpointȱtoȱaȱ generalȱmanagerȱmindsetȱthatȱisȱmoreȱstronglyȱgearedȱtowardȱriskȱreductionȱ(asȱ outlinedȱ inȱ moreȱ detailȱ inȱ sectionȱ 8.4.3ȱ Economicȱ rationale)ȱ –ȱ henceȱ theȱ greaterȱ awarenessȱofȱdamageȱincurredȱ–ȱthanȱtowardȱtheȱgeneralȱmotivatingȱfactorȱofȱleȬ gitimacy.ȱ Conclusionȱ Inȱconclusion,ȱevidenceȱpresentedȱpointsȱtoȱlegitimacyȱasȱaȱsignificantȱdriverȱofȱCSM,ȱ particularlyȱinȱtheȱOGȱsector,ȱwhichȱreflectsȱtheȱlatter’sȱgreaterȱorganizationalȱvisibilȬ ityȱandȱmoreȱcompetitiveȱdownstreamȱmarkets.ȱTheȱconceptȱofȱlegitimacyȱisȱlinkedȱtoȱ issueȱsignificance,ȱmanagers’ȱattitudes,ȱstrategicȱdispositionȱandȱCSMȱsuccess.ȱ Theȱ importanceȱ ofȱ legitimacyȱ isȱ determinedȱ byȱ theȱ currentȱ andȱ futureȱ SDȱ rolesȱ ofȱ NGOsȱ andȱ capitalȱ markets,ȱ respectively;ȱ theȱ damageȱ toȱ legitimacyȱ occursȱ throughȱ incidentsȱ relatedȱ toȱ theȱ currentȱ andȱ futureȱ SDȱ rolesȱ ofȱ consumersȱ andȱ capitalȱ marȬ kets,ȱrespectively.ȱTheseȱrelationshipsȱrevealȱNGOs’ȱroleȱinȱcatalyzingȱreactionsȱfromȱ consumersȱandȱcapitalȱmarkets.ȱ Althoughȱ theȱ operationalizationȱ ofȱ legitimacyȱ chosenȱ forȱ thisȱ studyȱ (“brandȱ valueȱ andȱ reputation”)ȱ isȱ notȱ reallyȱ compatibleȱ withȱ theȱ roleȱ ofȱ governmentsȱ andȱ regulaȬ tors,ȱsinceȱitȱfocusesȱonȱtheȱinformalȱratherȱthanȱformalȱlicenseȱtoȱoperate,ȱtheȱlackȱofȱ associationsȱbetweenȱtheȱimportanceȱofȱandȱdamageȱtoȱlegitimacyȱandȱgovernments’ȱ SDȱroleȱisȱmeaningful,ȱsinceȱitȱpointsȱtoȱaȱlackȱofȱguidanceȱandȱexternalȱpressureȱfromȱ regulatorsȱ andȱ legislators.ȱ Conflictsȱ withȱ authorities,ȱ asȱ littleȱ asȱ theyȱ areȱ indicated,ȱ appearȱtoȱhaveȱminorȱrelevanceȱtoȱcompanies’ȱbrandȱvalueȱandȱreputation.ȱThisȱfindȬ ingȱisȱinȱlineȱwithȱcompanies’ȱincrementalȱapproachesȱtoȱCSMȱthatȱareȱperfectlyȱsuffiȬ cientȱ toȱ meetȱ regulatoryȱ standards,ȱ andȱ theȱ roleȱ ofȱ NGOsȱ asȱ thoseȱ stakeholdersȱ (“watchdogs”)ȱthatȱmostȱstronglyȱaffectȱtheȱinformalȱdimensionȱofȱlegitimacy.ȱ Finally,ȱdamageȱtoȱlegitimacyȱisȱlessȱclearlyȱlinkedȱtoȱCSMȱthanȱtheȱimportanceȱofȱleȬ gitimacy.ȱ Thereȱ areȱ severalȱ complementaryȱ reasonsȱ forȱ this:ȱ (1)ȱ Socialȱ desirabilityȱ biasȱpreventedȱrespondentsȱfromȱindicatingȱtheȱtrueȱlevelȱofȱdamage.ȱ(2)ȱCompaniesȱ mayȱ learnȱ fromȱ theȱ damageȱ toȱ theȱ legitimacyȱ ofȱ theirȱ peers,ȱ whichȱ wouldȱ maskȱ aȱ possibleȱassociation.ȱ(3)ȱTodayȱtheȱleadingȱcompaniesȱaboveȱallȱareȱprofoundlyȱawareȱ ofȱtheirȱorganizationalȱvisibilityȱandȱexposure,ȱwhichȱthusȱ“suffice”ȱasȱmotivationȱforȱ CSM.ȱ (4)ȱ Damageȱ toȱ legitimacyȱ isȱ aȱ lessȱ relevantȱ motivatingȱ factorȱ ifȱ legitimacyȱ asȱ suchȱisȱlessȱimportant.ȱThisȱcouldȱpartlyȱapplyȱtoȱtheȱUTȱsector,ȱinȱwhichȱreputationȱ andȱbrandȱvalueȱareȱlowerȱbutȱareȱbecomingȱincreasinglyȱimportantȱdueȱtoȱongoingȱ marketȱliberalization.ȱ ȱ

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8ȱEmpiricalȱevidenceȱ

8.2.6.1.2.2 Regressionsȱ RegressionȱmodelsȱprovidedȱbelowȱinȱRegressionȱTableȱ8Ȭ2ȱshowȱthatȱtheȱimportanceȱ ofȱ legitimacyȱ hasȱ aȱ statisticallyȱ significantȱ positiveȱ effectȱ onȱ CSMȱ intentȱ inȱ allȱ threeȱ models,ȱ whereasȱ theȱ damageȱ toȱ legitimacyȱ doesȱ notȱ attainȱ statisticalȱ significanceȱ inȱ anyȱofȱtheȱmodels.ȱ T model 108 5.59 0.0000 0.3113 0.2556 .71263

OG model 78 6.26 0.0000 0.3850 0.3235 .68055 Coeff .3834678 .0986357

.3261286 -.0420575

.0733383 -.6135013 -.082756 -.5847856 .2721515

-.2120864 -.7786374 -.2913629 -.7015981 .2305751

.5931272 .0393686 .4183617 -.5395808 .1342905

2.39373

2.277337

2.403296

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Importance of legitimacy Damage to legitimacy

.349672 .0518231

UT sector

-.1614597

Nordic North Am Latin Europe Develop econ Other reg Constant

UT model 30 1.07 0.4170 0.2533 0.0157 .82117

RegressionȱTableȱ8Ȭ2:ȱCSMȱintentȱ–ȱImportanceȱofȱandȱdamageȱtoȱlegitimacyȱ(ExpandedȱsubmodȬ els)ȱ

Henceȱ theyȱ supportȱ findingsȱ fromȱ theȱ correlationȱ analysisȱ onȱ theȱ relativelyȱ greaterȱ significanceȱofȱtheȱimportanceȱofȱlegitimacyȱoverȱtheȱdamageȱtoȱlegitimacy.ȱ Itȱisȱalsoȱimportantȱtoȱnoteȱthatȱtheȱregressionȱmodelsȱareȱinȱparallelȱwithȱinterviewȱ data,ȱ sinceȱ theyȱ showȱ twoȱ statisticallyȱ significantȱ regionȱ effects.ȱ Comparedȱ toȱ theirȱ counterpartsȱoperatingȱinȱMidȬNorthernȱEurope,ȱgeneralȱmanagersȱinȱNorthȱAmericaȱ andȱ developingȱ economiesȱ reportȱ lowerȱ levelsȱ ofȱ CSMȱ intent,ȱ presumablyȱ dueȱ toȱ lowerȱ societalȱ andȱ regulatoryȱ pressureȱ (Skjaersethȱ etȱ al.,ȱ 2001;ȱ Souzaȱ Portoȱ etȱ al.,ȱ 2003)ȱandȱinternalȱbarriersȱsuchȱasȱcorporateȱculturesȱ(e.g.ȱKolkȱetȱal.,ȱ2001).ȱ 8.2.6.2 Theȱrelativeȱimportanceȱofȱexternalȱstakeholdersȱ 8.2.6.2.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Inȱtheȱfollowingȱparagraphs,ȱtheȱauthorȱwillȱcompareȱtoȱwhatȱextentȱexternalȱstakeȬ holderȱcontributeȱtoȱCSM.ȱHeȱwillȱassess:ȱ -

theirȱdemandsȱforȱCSM,ȱi.e.ȱtheirȱSDȱrolesȱ

-

theirȱinfluenceȱthroughȱincidentsȱthatȱaffectȱcompanies’ȱlegitimacy,ȱandȱ

-

theirȱimportanceȱasȱexternalȱbarriersȱtoȱCSM.ȱ

SDȱrolesȱofȱexternalȱstakeholders,ȱindustryȱandȱpublicȬprivateȱpartnershipsȱ Asȱ Chartȱ 8Ȭ9ȱ shows,ȱ thereȱ areȱ fewȱ notableȱ crossȬdisciplinaryȱ differencesȱ inȱ generalȱ managers’ȱ andȱ sustainabilityȱ officers’ȱ perceptionsȱ ofȱ externalȱ stakeholders’ȱ SDȱ roleȱ

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153ȱ

(whichȱ haveȱ beenȱ discussedȱ inȱ theȱ previousȱ section).ȱ Overallȱ resultsȱ areȱ relativelyȱ congruentȱ inȱ bothȱ sectors,ȱ whichȱ givesȱ reasonableȱ assuranceȱ onȱ theȱ individualȱ ratȬ ings.ȱTheȱlessȱproactiveȱSDȱroleȱofȱgovernmentsȱcomparedȱtoȱpublicȱpressureȱgroupsȱ inȱ theȱ UTȱ sectorȱ doesȱ notȱ contradictȱ findingsȱ fromȱ theȱ interviewsȱ thatȱ pointedȱ toȱ governmentsȱasȱtheȱmostȱinfluentialȱexternalȱpressureȱgroup.ȱPublicȱpressureȱgroupsȱ certainlyȱexhibitȱgreaterȱdemandȱforȱCSMȱfromȱUTȱcompaniesȱthanȱgovernmentsȱdoȱ (asȱillustratedȱinȱtheȱchartȱbelow),ȱbutȱtheyȱhaveȱexertedȱlessȱstrongȱandȱmoreȱselecȬ tiveȱpressureȱonȱthemȱ(inȱtermsȱofȱnuclearȱtransportȱandȱlargeȱhydropowerȱprojectsȱ inȱ developingȱ countries)ȱ thanȱ governmentsȱ andȱ regulators,ȱ whichȱ forȱ theirȱ partȱ areȱ moreȱinfluential,ȱbecauseȱtheirȱpolicyȱinstrumentsȱdirectlyȱtargetȱtheȱfirmsȱ(Khagram,ȱ 2003).ȱ Consumers Group Mean Std. Dev. Freq. UT GM 2.29 0.94 49 OG GM 1.90 0.78 115 UT SO 2.00 0.91 13 OG SO 1.71 0.69 17 Total 1.98 0.84 194

4

Contribution to sustainable development 1 = "Least proactive" to 5 = "Most proactive"

3

2

1 UT General managers OG General managers UT Sustainability officers OG Sustainability officers 0 Industry

Governments

PPPs

NGOs

Consumers

Governments Group Mean UT GM 3.18 OG GM 2.71 UT SO 3.00 OG SO 2.82 Total 2.86 PPPs Group Mean UT GM 2.55 OG GM 2.76 UT SO 2.50 OG SO 2.76 Total 2.69 Industry Group Mean UT GM 2.61 OG GM 2.68 UT SO 2.85 OG SO 3.00 Total 2.70 NGOs Group Mean UT GM 3.38 OG GM 3.35 UT SO 3.31 OG SO 3.41 Total 3.36

Std. Dev. Freq. 0.71 51 0.70 116 0.82 13 0.73 17 0.74 197 Std. Dev. Freq. 0.72 47 0.62 111 1.00 12 0.75 17 0.69 187 Std. Dev. Freq. 0.70 51 0.71 117 0.55 13 0.61 17 0.69 198 Std. Dev. Freq. 0.76 48 0.77 115 0.85 13 0.80 17 0.77 193

Chartȱ8Ȭ9:ȱContributionȱofȱdifferentȱgroupsȱtoȱsustainableȱdevelopmentȱ(Generalȱmanagersȱ–ȱOG)ȱ

Furthermore,ȱ theȱ chartȱ illustratesȱ thatȱ respondentsȱ fromȱ allȱ fourȱ samplesȱ considerȱ NGOsȱtheȱmostȱproactiveȱandȱconsumersȱtheȱleastȱproactiveȱgroup.ȱTheseȱresultsȱareȱ notȱ unexpectedȱ andȱ reflectȱ (1)ȱ theȱ increasinglyȱ prominentȱ partȱ publicȱ pressureȱ groupsȱ areȱ playingȱ globallyȱ inȱ scrutinizingȱ theȱ environmentalȱ andȱ socialȱ performȬ anceȱofȱcompaniesȱandȱ(2)ȱconsumers’ȱlackȱofȱenvironmentalȱawarenessȱandȱbehaviorȱ asȱwellȱasȱtheirȱstrongȱpreferenceȱforȱcheapȱandȱconvenientȱenergyȱ(Mathieu,ȱ2002,ȱp.ȱ 91).ȱ Obviouslyȱ thisȱ doesȱ notȱ ruleȱ outȱ theȱ selectiveȱ impactȱ ofȱ boycottȱ campaigns,ȱ whichȱhaveȱhadȱsignificantȱeffectsȱonȱtheȱOGȱsectorȱinȱtheȱpast.ȱ Inȱ theȱ OGȱ sector,ȱ industry,ȱ governmentsȱ andȱ publicȬprivateȱ partnershipsȱ playȱ roughlyȱtheȱsameȱlessȱtoȱfairlyȱproactiveȱSDȱrole,ȱwhereasȱinȱtheȱUTȱsector,ȱgovernȬ ȱ

ȱ

154ȱ

8ȱEmpiricalȱevidenceȱ

mentsȱareȱratedȱhigherȱandȱPPPsȱlowerȱthanȱindustry,ȱapparentlyȱbecauseȱUTȱcomȬ paniesȱ areȱ moreȱ stronglyȱ andȱ directlyȱ regulatedȱ inȱ theirȱ mainȱ marketsȱ (mainlyȱ Europe)ȱandȱrelyȱlessȱstronglyȱonȱPPPsȱthanȱOGȱcompaniesȱforȱupstreamȱactivitiesȱinȱ developingȱcountries.ȱAlthoughȱrespondents’ȱ(selfȬ)ȱassessmentȱofȱtheȱindustry’sȱroleȱ isȱproneȱtoȱsocialȱdesirabilityȱbias,ȱresultsȱsuggestȱthatȱOGȱgeneralȱmanagersȱandȱsusȬ tainabilityȱofficersȱconsiderȱtheirȱindustryȱ–ȱinȱcontrastȱtoȱUTȱrespondentsȱ –ȱrespecȬ tivelyȱ roughlyȱ equallyȱ orȱ moreȱ proactiveȱ thanȱ governments.ȱ Thisȱ findingȱ isȱ inȱ lineȱ withȱOGȱcompanies’ȱactivitiesȱinȱdevelopingȱcountriesȱ(e.g.ȱcommunityȱinvolvement,ȱ fairȱallocationȱofȱoilȱrevenue,ȱetc.)ȱwhichȱhaveȱmovedȱcorporateȱsocialȱandȱenvironȬ mentalȱperformanceȱclearlyȱbeyondȱcompliance.47ȱ Incidentsȱthatȱdamagedȱlegitimacyȱ Chartȱ8Ȭ10ȱandȱChartȱ8Ȭ11ȱillustrateȱhowȱoftenȱincongruencesȱinȱtheȱ“supply”ȱofȱandȱ “demand”ȱ forȱ CSMȱ haveȱ ledȱ toȱ significantȱ conflictsȱ withȱ theȱ correspondingȱ stakeȬ holder.ȱ

NR 29%

Media campaign 18%

Media campaign 20%

NR 41%

NGO campaign 8%

NGO campaign 21%

Other 12% Shareholder opposition Conflicts with 3% authorities Consumer boycotts 13% 4%

Chartȱ8Ȭ10:ȱȱIncidentsȱdamagingȱbrandȱvalueȱ andȱreputationȱ(Generalȱmanagersȱ–ȱOG)ȱ

Other 12%

Shareholder opposition 2%

Conflicts with authorities 15% Consumer boycotts 2%

Chartȱ8Ȭ11:ȱIncidentsȱdamagingȱbrandȱvalueȱandȱ reputationȱ(Sustainabilityȱofficersȱ–ȱUT)ȱ

TheyȱshowȱtwoȱclearlyȱvisibleȱcrossȬsectorȱdifferences:ȱTheȱUTȱdataȱexhibitȱaȱsmallerȱ proportionȱofȱNGOȱcampaignsȱandȱaȱgreaterȱshareȱofȱnoȬresponses.ȱBothȱdifferencesȱ areȱstatisticallyȱsignificant.ȱTheȱrelativelyȱgreaterȱnumberȱofȱnoȬresponsesȱmayȱpartlyȱ reflectȱlessȱproactiveȱattitudesȱandȱlowerȱlevelsȱofȱawarenessȱofȱUTȱrespondentsȱwhoȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 47

ȱ Thereȱ areȱ variousȱ examplesȱ ofȱ companies’ȱ approachesȱ toȱ communityȱ involvementȱ toȱ improveȱ healthcare,ȱ education,ȱ economicȱ developmentȱ (ExxonMobil,ȱ 2003).ȱ Inȱ 2003ȱ Shellȱ establishedȱ aȱ newȱ Sustainableȱ Communityȱ Developmentȱ Strategyȱ thatȱ placesȱ greaterȱ emphasisȱ onȱ partnershipsȱ withȱ communities,ȱgovernmentsȱandȱotherȱorganizationsȱ(TheȱShellȱPetroleumȱDevelopmentȱCompanyȱofȱ NigeriaȱLtd.,ȱ2003,ȱp.ȱ16)ȱ

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155ȱ

areȱlessȱableȱand/orȱwillingȱtoȱrespond.ȱHowever,ȱitȱalsoȱsupportsȱtheȱfindingȱaboutȱ theȱ generallyȱ lowerȱ organizationalȱ andȱ issueȱ visibilityȱ ofȱ UTȱ comparedȱ toȱ theȱ stronglyȱ scrutinizedȱ majorȱ OGȱ companiesȱ (e.g.ȱ Hoyosȱ etȱ al.,ȱ 2003;ȱ Merolli,ȱ 2002;ȱ Prüller,ȱ2003;ȱSt.ȱClair,ȱ2004).ȱItȱappearsȱthatȱrelativelyȱweakȱregulatoryȱpressureȱonȱ theȱ OGȱ sectorȱ isȱ compensatedȱ forȱ byȱ moreȱ scrutinyȱ fromȱ civilȱ society,ȱ whichȱ influȬ encesȱcompanies’ȱapproachȱtoȱCSMȱ(Whettenȱetȱal.,ȱ2002,ȱp.ȱ402).ȱ ExternalȱbarriersȱtoȱCSMȱ Chartȱ8Ȭ12ȱtoȱChartȱ8Ȭ15ȱdisplayȱtheȱrelativeȱfrequenciesȱofȱbarriersȱtoȱCSMȱreportedȱ byȱsustainabilityȱofficersȱandȱgeneralȱmanagers,ȱrespectively.ȱInȱtheȱSOȱdata,ȱcustomȬ ersȱ andȱ investorsȱ takeȱ significantȱ sharesȱ asȱ externalȱ barriersȱ amountingȱ toȱ 10%ȱ andȱ 11%ȱinȱtheȱOGȱandȱUTȱsectors,ȱrespectively.ȱInȱtheȱGMȱdata,ȱproportionsȱareȱlargelyȱ similar:ȱExcludingȱtheȱnumberȱofȱnoȬresponsesȱincludedȱinȱtheȱcharts,ȱcustomersȱandȱ investorsȱtakeȱ12%ȱandȱ10%ȱinȱtheȱOGȱsector,ȱandȱ22%ȱandȱ8%ȱinȱUTȱsector.ȱȱ

Lack of interest from customers 10%

Other 4%

Opposition or lack of interest from investors 10% Organization culture 15%

Absences of appropriate tools 15%

Managers' mindsets 19%

Managers' lack of knowledge 15%

Regulation 12%

Chartȱ8Ȭ12:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ OG)ȱ

Lack of interest from customers 11%

Other 0%

Opposition or lack of interest from investors 11% Organization culture 14%

Absences of appropriate tools 11%

Managers' mindsets 23%

Managers' lack of knowledge 22% Regulation 8%

Chartȱ8Ȭ13:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ UT)ȱ

Theȱproportionsȱofȱregulationsȱalsoȱplayȱaȱnotableȱroleȱinȱtheȱcharts,ȱwhichȱcouldȱinȬ dicateȱthatȱcompaniesȱsurveyedȱareȱindeedȱsustainabilityȱleadersȱthatȱfeelȱimpededȱinȱ theirȱbeyondȬcomplianceȱactivitiesȱthroughȱinappropriateȱlegislationȱ(e.g.ȱinadequateȱ subsidies;ȱlowȱregulatoryȱstandardsȱthroughȱwhichȱcomplianceȬorientedȱcompetitorsȱ gainȱaȱcompetitiveȱadvantage,ȱe.g.ȱcorruption).ȱHowever,ȱitȱisȱjustȱasȱlikelyȱthatȱcomȬ paniesȱfeelȱoverregulatedȱandȱthusȱpreventedȱfromȱengagingȱinȱCSMȱinȱaȱmoreȱflexiȬ bleȱ way,ȱ whichȱ wouldȱ pointȱ againȱ toȱ aȱ ratherȱ reactiveȱ andȱ conservativeȱ mindsetȱ ofȱ respondents.ȱ Thereȱ areȱ noȱ statisticallyȱ significantȱ crossȬsectorȱ orȱ crossȬdisciplinaryȱ differences.ȱ However,ȱtheȱgreaterȱproportionȱofȱ“Lackȱofȱinterestȱfromȱcustomers”ȱinȱtheȱdataȱobȬ ȱ

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8ȱEmpiricalȱevidenceȱ

tainedȱ fromȱ UTȱ generalȱ mangersȱ (seeȱ Chartȱ 8Ȭ15)ȱ deservesȱ someȱ attention,ȱ sinceȱ itȱ contradictsȱ theȱ findingsȱ presentedȱ inȱ sectionȱ 8.2.3ȱ Customers,ȱ whichȱ pointedȱ toȱ aȱ moreȱproactiveȱroleȱofȱconsumersȱinȱtheȱUTȱthanȱinȱtheȱOGȱsector.ȱTheȱauthorȱsugȬ gestsȱ thatȱ theȱ relativelyȱ greaterȱ proportionȱ ofȱ “Lackȱ ofȱ interestȱ fromȱ customers”ȱ inȱ Chartȱ8Ȭ15ȱshouldȱnotȱbeȱoverinterpretedȱforȱseveralȱreasons:ȱ(1)ȱTheȱcrossȬsectorȱdifȬ ferenceȱisȱnotȱstatisticallyȱsignificant.ȱ(2)ȱItȱisȱpossibleȱthatȱgeneralȱmanagersȱfromȱtheȱ UTȱ sectorȱ areȱ moreȱ likelyȱ toȱ blameȱ externalȱ barriersȱ thanȱ toȱ acknowledgeȱ internalȱ failings,ȱwhichȱcouldȱpointȱtoȱaȱmoreȱreactiveȱmindset.ȱ(3)ȱFindingsȱonȱtheȱmoreȱproȬ activeȱroleȱofȱcustomersȱinȱtheȱUTȱsectorȱreferredȱtoȱaboveȱareȱlimitedȱtoȱconsumers.ȱ TheȱcontradictoryȱresultȱaboutȱtheȱgreaterȱimportanceȱofȱcustomersȱasȱexternalȱbarriȬ ersȱ alsoȱ includesȱ industrialȱ andȱ commercialȱ customers,ȱ whichȱ couldȱ haveȱ distortedȱ theȱproportions.ȱ

Managers' mindset 9%

Managers' mindset 12%

NR 34%

Other 2% Lack of interest from customers 8% Opposition or lack of interest from investors 7%

Managers' lack of knowledge/expertise 11% Regulation (e.g. subsidies & low environmental/social standards) 4% Absence of appropriate tools and processes 8% Organizational culture 14%

Chartȱ8Ȭ14:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG)ȱ

Managers' lack of knowledge/expertise 5% Regulation (e.g. subsidies & low environmental/social standards) 5%

NR 39%

Absence of appropriate tools and processes 8% Organizational culture 11% Other 4% Lack of interest from customers 14%

Opposition or lack of interest from investors 5%

Chartȱ8Ȭ15:ȱBarriersȱ(Generalȱmanagersȱ–ȱ UT)ȱ

Finallyȱ itȱ isȱ alsoȱ importantȱ toȱ noteȱ thatȱ theȱ significanceȱ ofȱ individualȱ stakeholders,ȱ includingȱ jointȱ ventureȱ partners,ȱ dependsȱ onȱ theȱ kindȱ ofȱ corporateȱ activity,ȱ whichȱ canȱalsoȱchangeȱaccordingȱtoȱtheȱlifeȱcycleȱphaseȱofȱaȱproject:ȱ Theȱmostȱsignificantȱstakeholdersȱareȱgovernments,ȱpartnersȱandȱtheȱlocalȱpopulaȬ tionȱ(fishermen,ȱonshoreȱfacilities).ȱItȱwouldȱnotȱbeȱfairȱtoȱrankȱthemȱinȱtermsȱofȱ importance,ȱsinceȱthisȱdependsȱonȱtheȱbusinessȱenvironmentȱandȱlifeȱcycleȱphaseȱofȱ theȱindividualȱproject.ȱOnceȱdrillingȱisȱinitiated,ȱpartnersȱbecomeȱmoreȱimportantȱ (OG6,ȱE&PȱNorthȱSea).ȱ

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157ȱ

Conclusionȱ DataȱrevealȱthatȱexternalȱstakeholdersȱvaryȱinȱtermsȱofȱtheirȱdemandsȱforȱCSMȱwithinȱ theȱ sameȱ sector.ȱ Asȱ qualitativeȱ dataȱ revealedȱ above,ȱ thisȱ variationȱ originatesȱ fromȱ stakeholders’ȱdifferentȱperceptionsȱofȱtheȱvisibleȱissueȱandȱorganizationalȱvisibilityȱasȱ wellȱ asȱ theirȱ differentȱ limitsȱ ofȱ legitimacy.ȱ Theseȱ threeȱ factorsȱ obviouslyȱ alsoȱ causeȱ crossȬsectorȱvariationȱinȱtheȱdemandȱofȱtheȱsameȱpressureȱgroup.ȱ TheȱrankingsȱforȱtheȱCSMȱdemandȱlevelȱofȱNGOs,ȱgovernmentsȱandȱconsumersȱareȱ identicalȱ acrossȱ bothȱ sectors:ȱ NGOsȱ areȱ consideredȱ mostȱ demanding,ȱ followedȱ byȱ governmentsȱ andȱ consumers.ȱ However,ȱ itȱ isȱ evidentȱ thatȱ UTȱ companiesȱ –ȱ asȱ easierȱ targetsȱ–ȱareȱnotȱonlyȱmoreȱstronglyȱregulatedȱthanȱtheȱOGȱsector.ȱUTȱcompaniesȱalsoȱ considerȱgovernmentsȱmoreȱdemanding,ȱandȱtheirȱSDȱroleȱisȱconsistentlyȱconsideredȱ moreȱproactiveȱthanȱthatȱofȱtheȱindustry.ȱInȱtheȱOGȱdata,ȱitȱisȱevidentȱthatȱtheȱpresentȱ study’sȱsampleȱofȱcompaniesȱthatȱareȱlikelyȱsustainabilityȱleadersȱhardlyȱfeelsȱdrivenȱ byȱgovernments,ȱandȱevenȱthatȱtheirȱcurrentȱapproachȱtoȱCSMȱleadsȱtoȱovercompliȬ ance.ȱ Resultsȱ alsoȱ showȱ thatȱ thisȱ relativeȱ lackȱ ofȱ regulatoryȱ pressureȱ onȱ theȱ OGȱ sectorȱ isȱ compensatedȱ forȱ throughȱ strongerȱ scrutinyȱ fromȱ publicȱ pressureȱ groups.ȱ Theȱ OGȱ sectorȱ isȱ alsoȱ moreȱ oftenȱ subjectȱ toȱ incidentsȱ thatȱ damageȱ brandȱ valueȱ andȱ reputaȬ tion,ȱ whichȱ canȱ beȱ attributedȱ toȱ bothȱ higherȱ issueȱ andȱ organizationalȱ visibilityȱ (BoȬ wen,ȱ 2000).ȱ Finally,ȱ quantitativeȱ dataȱ areȱ alsoȱ inȱ lineȱ withȱ qualitativeȱ findingsȱ preȬ sentedȱabove,ȱwhichȱpointȱtoȱtheȱsignificantȱroleȱofȱcustomersȱandȱcapitalȱmarketsȱasȱ externalȱbarriersȱtoȱCSM.ȱ 8.2.6.2.2 Advancedȱstatisticsȱ 8.2.6.2.2.1 Correlationsȱ Inȱ theȱ followingȱ theȱ authorȱ presentsȱ aȱ comparisonȱ ofȱ theȱ correlationsȱ detectedȱ beȬ tweenȱtheȱSDȱrolesȱofȱtheȱfourȱexternalȱstakeholdersȱ–ȱcapitalȱmarkets,ȱgovernments,ȱ publicȱpressureȱgroupsȱandȱconsumersȱ–ȱandȱotherȱvariablesȱrespectivelyȱ(i.e.ȱaȱcomȬ parisonȱ ofȱ Figureȱ 8Ȭ7ȱ toȱ Figureȱ 8Ȭ10)ȱ toȱ shedȱ additionalȱ lightȱ onȱ theȱ relativeȱ imporȬ tanceȱofȱthoseȱpressureȱgroups.ȱ Issuesȱ Onlyȱcapitalȱmarketsȱandȱconsumersȱareȱlinkedȱtoȱissueȱsignificance.ȱItȱisȱnotableȱthatȱ bothȱ areȱ –ȱ inȱ contrastȱ toȱ NGOsȱ –ȱ primaryȱ transactionalȱ stakeholders.ȱ Furthermoreȱ bothȱ areȱ –ȱ inȱ contrastȱ toȱ governmentsȱ –ȱ ableȱ toȱ reactȱ quicklyȱ toȱ socialȱ andȱ environȬ mentalȱissues,ȱandȱbothȱareȱlinkedȱtoȱtheȱimportanceȱofȱand/orȱtheȱdamageȱtoȱlegitiȬ macy,ȱi.e.ȱ“brandȱvalueȱandȱreputation.”ȱ ThisȱsuggestsȱthatȱtheyȱareȱableȱtoȱdriveȱCSMȱatȱtheȱmarketȱratherȱthanȱtheȱregulatoryȱ level,ȱi.e.ȱtheyȱaffectȱcompanies’ȱinformalȱratherȱthanȱformalȱlicenseȱtoȱoperate.ȱThisȱisȱ ȱ

158ȱ

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alsoȱwhereȱNGOsȱcomeȱintoȱplayȱsinceȱtheyȱtendȱtoȱtriggerȱreactionsȱfromȱbothȱcapiȬ talȱmarketsȱandȱconsumersȱthroughȱtheirȱcampaigningȱactivities.ȱ Managers’ȱattitudesȱ Apartȱ fromȱ theȱ futureȱ SDȱ roleȱ ofȱ capitalȱ markets,ȱ onlyȱ theȱ currentȱ SDȱ roleȱ ofȱ publicȱ pressureȱ groupsȱ (NGOs)ȱ isȱ linkedȱ toȱ managers’ȱ proactiveȱ attitudes.ȱ Ifȱ oneȱ assumesȱ thatȱmoreȱproactiveȱrespondentsȱareȱmoreȱfarsightedȱandȱawareȱofȱcurrentȱandȱfutureȱ developmentsȱ(Duttonȱetȱal.,ȱ1983),ȱtheȱlackȱofȱlinksȱwithȱtheȱremainingȱexternalȱpresȬ sureȱgroupsȱisȱquiteȱtelling:ȱApparentlyȱtheseȱgroups,ȱnamelyȱgovernmentsȱandȱconȬ sumers,ȱplayȱsuchȱaȱmarginalȱroleȱthatȱevenȱmoreȱproactiveȱrespondentsȱdoȱnotȱperȬ ceiveȱanyȱstrongerȱinvolvementȱfromȱthem.ȱ Strategicȱdispositionȱ Capitalȱmarkets’ȱSDȱroleȱshowsȱtheȱclearestȱlinkȱtoȱstrategicȱdisposition,ȱfollowedȱbyȱ theȱSDȱroleȱofȱpublicȱpressureȱgroups,ȱgovernmentsȱandȱconsumers.ȱTheȱkeyȱimporȬ tanceȱofȱcapitalȱmarketsȱisȱsomewhatȱsurprisingȱandȱshouldȱbeȱrelativizedȱbecauseȱitȱ concernsȱaȱpotentialȱfutureȱsituation.ȱSinceȱcapitalȱmarketsȱplayȱaȱpredominantlyȱdeȬ terrentȱroleȱtoday,ȱtheȱclearȱlinkȱcouldȱalsoȱsimplyȱrevealȱmoreȱproactiveȱmanagers’ȱ “hope”ȱ forȱ aȱ continuationȱ ofȱ recentȱ trendsȱ (asȱ describedȱ inȱ sectionȱ 8.2.4ȱ Financialȱ community)ȱtowardȱaȱmoreȱresponsibleȱroleȱforȱcapitalȱmarkets.ȱThisȱinterpretationȱisȱ alsoȱsupportedȱbyȱaȱpositiveȱcorrelationȱbetweenȱcapitalȱmarkets’ȱfutureȱSDȱroleȱandȱ proactiveȱattitudes,ȱparticularlyȱbecauseȱnoȱotherȱexternalȱstakeholderȱexhibitsȱaȱstaȬ tisticallyȱsignificantȱlinkȱtoȱmanagers’ȱattitudes.ȱ Theȱ clearȱ linkȱ betweenȱ capitalȱ marketsȱ andȱ strategicȱ dispositionȱ mayȱ alsoȱ reflectȱ companies’ȱstrongȱgeneralȱfocusȱonȱdeliveringȱshareholderȱvalue.ȱItȱcertainlyȱimpliesȱ thatȱCSMȱ–ȱprovidedȱitȱisȱincreasinglyȱdemandedȱfromȱcapitalȱmarketsȱinȱtheȱfutureȱ–ȱ willȱhaveȱtoȱbeȱbasedȱonȱaȱsoundȱbusinessȱcase.ȱThisȱrequirementȱwouldȱobviouslyȱbeȱ lessȱstrongȱifȱCSMȱwasȱmoreȱstronglyȱdrivenȱbyȱgovernmentsȱandȱregulators.ȱ TheȱfactȱthatȱNGOs’ȱSDȱroleȱisȱmoreȱclearlyȱlinkedȱtoȱstrategicȱdispositionȱthanȱgovȬ ernments’ȱ roleȱ isȱ clearlyȱ pointsȱ toȱ aȱ lackȱ ofȱ strategicȱ guidanceȱ fromȱ governments,ȱ whichȱ alsoȱ illustratesȱ thatȱ theȱ significanceȱ ofȱ theȱ EUȱ emissionsȱ tradingȱ systemȱ isȱ ratherȱlimited,ȱsinceȱitsȱobjectivesȱcanȱbeȱachievedȱratherȱeasilyȱthroughȱincrementalȱ innovationsȱ(e.g.ȱinvestmentsȱinȱenergyȱefficiency).ȱConsumers’ȱSDȱroleȱisȱunrelatedȱ toȱ companies’ȱ strategicȱ disposition,ȱ whichȱ pointsȱ toȱ theirȱ predominantlyȱ deterrentȱ attitudes.ȱTheirȱselectiveȱshortȬtermȱpressureȱthroughȱconsumerȱboycottsȱshouldȱnotȱ beȱignoredȱbutȱclearlyȱhasȱnoȱstrategicȱimplications.ȱ Structureȱ Theȱ SDȱ roleȱ ofȱ capitalȱ markets,ȱ governmentsȱ andȱ consumersȱ areȱ –ȱ unlikeȱ thatȱ ofȱ NGOsȱ–ȱlinkedȱtoȱcrossȬdisciplinaryȱcollaborationȱandȱpotential.ȱIfȱoneȱassumesȱthatȱ

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159ȱ

crossȬdisciplinaryȱcollaborationȱandȱpotentialȱoperationalizeȱgreaterȱexperienceȱwithȱ andȱ awarenessȱ ofȱ issuesȱ andȱ theȱ correspondingȱ demandsȱ ofȱ externalȱ pressureȱ groups,ȱ theȱ missingȱ linkȱ withȱ NGOs’ȱ SDȱ roleȱ showsȱ thatȱ managers’ȱ perceptionsȱ ofȱ NGOs’ȱactivitiesȱareȱindependentȱofȱchangingȱlevelsȱofȱawareness.ȱ AgainȱthisȱresultȱseparatesȱNGOsȱasȱsecondaryȱcontextualȱstakeholdersȱfromȱprimaryȱ transactionalȱstakeholders,ȱwhichȱreactȱtoȱNGOȱactivitiesȱwithȱchangesȱinȱtheirȱtransȬ actionsȱ (e.g.ȱ newȱ regulations,ȱ taxes;ȱ boycotts,ȱ sellingȱ shares).ȱ Itȱ isȱ importantȱ toȱ noteȱ thatȱcrossȬdisciplinaryȱcollaborationȱandȱ potentialȱareȱlinkedȱtoȱtheȱrolesȱofȱtransacȬ tionalȱstakeholdersȱbecauseȱitȱshowsȱthatȱcompaniesȱwithȱmoreȱevolvedȱCSMȱstrucȬ turesȱandȱrespondentsȱwithȱhigherȱlevelsȱofȱawareness,ȱrespectively,ȱareȱmoreȱsensiȬ tiveȱ toȱ stakeholdersȱ thatȱ affectȱ companiesȱ moreȱ directlyȱ thanȱ NGOsȱ asȱ contextualȱ stakeholders.ȱ Conclusionȱ StrategicȱdispositionȱtoȱCSMȱandȱmoreȱproactiveȱattitudesȱareȱprimarilyȱlinkedȱtoȱtheȱ SDȱrolesȱofȱcapitalȱmarketsȱandȱNGOs.ȱThisȱpointsȱtoȱaȱsignificantȱpotentialȱeffectȱofȱ capitalȱmarketsȱthatȱhasȱyetȱtoȱbeȱrealized;ȱaȱlackȱofȱstrategicȱguidanceȱfromȱgovernȬ ments,ȱwhichȱreactȱtoȱdemandsȱfromȱcivilȱsocietyȱinȱtheȱshortȱtermȱbecauseȱtheyȱrelyȱ onȱpoliticalȱsuccessȱ(Steger,ȱ1998a,ȱp.ȱ589);ȱandȱaȱpredominantlyȱdeterrentȱroleȱofȱconȬ sumers.ȱ TheȱrelativelyȱgreatȱimportanceȱofȱNGOsȱasȱexternalȱstakeholdersȱisȱmeaningfulȱsinceȱ theyȱprovideȱtheȱcontextȱinȱwhichȱtheȱcompanies’ȱprimaryȱtransactionalȱstakeholdersȱ –ȱmainlyȱconsumersȱandȱcapitalȱmarketsȱ–ȱactȱinȱtheȱshortȱterm.ȱThisȱalsoȱmeansȱthatȱ theȱmainȱconcernȱofȱmostȱcompaniesȱisȱtheȱshortȬtermȱriskȱofȱlosingȱtheȱinformalȱ(i.e.ȱ brandȱ valueȱ andȱ reputation)ȱ ratherȱ thanȱ theȱ formalȱ (e.g.ȱ changingȱ regulatoryȱ reȬ gimes)ȱlicenseȱtoȱoperateȱthroughȱemergingȱsocialȱandȱenvironmentalȱissues.ȱ Finally,ȱtheȱSDȱrolesȱofȱprimaryȱstakeholdersȱareȱpositivelyȱassociatedȱwithȱmoreȱdeȬ velopedȱcorporateȱstructuresȱandȱgreaterȱissueȱsignificance.ȱThisȱpointsȱtoȱ(1)ȱaȱlinkȱ betweenȱ theȱ twoȱ motivatingȱ principlesȱ ofȱ (1)ȱ legitimacyȱ (i.e.ȱ pressureȱ fromȱ transacȬ tionalȱstakeholders)ȱandȱ(2)ȱpublicȱresponsibilityȱ(i.e.ȱresponsibilityȱforȱtheȱsocialȱandȱ environmentalȱ effectsȱ ofȱ corporateȱ activities),ȱ andȱ (2)ȱ theȱ importanceȱ ofȱ corporateȱ structuresȱ thatȱ facilitateȱ crossȬdisciplinaryȱ collaborationȱ becauseȱ theyȱ significantlyȱ determineȱmanagers’ȱperceptionsȱofȱstakeholders’ȱdemandȱforȱCSM.ȱ 8.2.6.2.2.2 Regressionsȱ Inȱtheȱfollowingȱsection,ȱregressionȱmodelsȱareȱusedȱtoȱassessȱtheȱrelativeȱinfluenceȱofȱ externalȱ stakeholdersȱ onȱ CSM.ȱ Submodelsȱ firstȱ assessȱ theȱ effectsȱ ofȱ severalȱ setsȱ ofȱ variablesȱonȱCSMȱintentȱseparately.ȱTheyȱrespectivelyȱexamineȱtheȱeffectsȱof:ȱ

ȱ

160ȱ

8ȱEmpiricalȱevidenceȱ

-

Externalȱ stakeholders’ȱ SDȱ roles,ȱ i.e.ȱ theirȱ individualȱ demandsȱ forȱ CSMȱ (RegresȬ sionȱTableȱ8Ȭ3)ȱ

-

Incidentsȱthatȱhaveȱdamagedȱlegitimacyȱinȱtheȱpastȱthreeȱyearsȱ(RegressionȱTableȱ 8Ȭ4).ȱ

-

Externalȱbarriersȱtoȱcorporateȱsustainability.ȱHereȱtheȱeffectsȱonȱbothȱCSMȱintentȱ andȱsuccessȱareȱinvestigatedȱ(RegressionȱTableȱ8Ȭ5ȱandȱRegressionȱTableȱ8Ȭ6).ȱ

TheȱclusterȱmodelȱonȱCSMȱintentȱ(RegressionȱTableȱ8Ȭ7)ȱincorporatesȱtheȱeffectsȱofȱallȱ variablesȱtestedȱpreviouslyȱinȱtheȱseparateȱsubmodels.ȱ Submodelȱ–ȱSDȱrolesȱofȱstakeholdersȱ Asȱtheȱregressionȱmodelsȱinȱtheȱtableȱbelowȱillustrate,ȱaȱmoreȱproactiveȱcurrentȱroleȱ ofȱNGOsȱandȱaȱmoreȱproactiveȱfutureȱroleȱofȱcapitalȱmarketsȱhaveȱaȱstatisticallyȱsigȬ nificantȱeffectȱonȱCSMȱintent.ȱTheseȱresultsȱareȱinȱlineȱwithȱfindingsȱfromȱtheȱcorrelaȬ tionȱanalysisȱpresentedȱinȱtheȱpreviousȱsection.ȱ T model

OG model

UT model

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Future SD role - Capital markets Current SD role - Consumers Current SD role - Governments Current SD role - NGOs

149 3.55 0.0003 0.2047 0.1470 .77625

103 4.09 0.0002 0.2836 0.2143 .73096

46 2.03 0.0641 0.3368 0.1709 .77921

.206493 -.0403777 .0207638 .2061017

Coeff .3582275 -.1579707 -.0094584 .0348867

-.0359029 .0443107 .0474479 .5241982

UT sector

-.4283364

Nordic North Am Latin Europe Dev econ Other reg

-.0025701 -.6232768 -.0101307 -.2847854 .1123592

-.4943823 -.8792507 -.4143929 -.1691712

.4810275 -.1331178 1.037493 -.840563 .1953399

Constant

2.636266

3.157

1.612106

-.5651934

RegressionȱTableȱ8Ȭ3:ȱCSMȱintentȱ–ȱSDȱroleȱofȱexternalȱstakeholdersȱ(Expandedȱsubmodels)ȱ

TheȱsectorȬspecificȱmodelsȱareȱsomewhatȱpuzzling:ȱTheȱstatisticallyȱsignificantȱeffectȱ ofȱ capitalȱ marketsȱ ratherȱ thanȱ NGOsȱ inȱ theȱ OGȱ modelȱ isȱ unexpected,ȱ particularlyȱ sinceȱqualitativeȱdataȱpointȱtoȱaȱstrongȱeffectȱofȱNGOȱactivities.ȱAsȱalreadyȱsuggestedȱ aboveȱ inȱ termsȱ ofȱ correlationȱ results,ȱ thisȱ missingȱ linkȱ isȱ probablyȱ dueȱ toȱ greaterȱ variationsȱ inȱ NGOs’ȱ influenceȱ inȱ theȱ OGȱ sector.ȱ Inȱ contrastȱ toȱ UTȱ respondents,ȱ OGȱ managers’ȱassessmentȱofȱNGOs’ȱinfluenceȱappearsȱtoȱexhibitȱgreaterȱvariationȱforȱtheȱ followingȱreasons:ȱ 1. ComparedȱtoȱtheȱUTȱsector,ȱaȱgreaterȱnumberȱofȱNGOsȱscrutinizeȱaȱgreaterȱrangeȱ ofȱcorporateȱactivitiesȱinȱtheȱOGȱsectorȱinȱtermsȱofȱaȱgreaterȱnumberȱofȱissuesȱinȱaȱ greaterȱ varietyȱ ofȱ countries.ȱ Thisȱ meansȱ thatȱ NGOs’ȱ demandsȱ canȱ varyȱ signifiȬ cantly.ȱ

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161ȱ

2. MostȱofȱtheȱOGȱrespondentsȱoperateȱinȱEuropeȱandȱNorthȱAmerica,ȱwhereasȱmostȱ NGOȱ activitiesȱ focusȱ onȱ issuesȱ inȱ developingȱ countries.ȱ Thusȱ respondents’ȱ perȬ ceptionsȱofȱNGOs’ȱdemandsȱareȱlikelyȱtoȱexhibitȱgreaterȱvariation,ȱsinceȱtheyȱareȱ lessȱcloseȱtoȱtheȱissue.ȱUTȱrespondentsȱtendȱtoȱbeȱcloserȱtoȱtheȱissues.ȱ Thusȱ itȱ isȱ plausibleȱ thatȱ capitalȱ marketsȱ areȱ linkedȱ toȱ CSMȱ intentȱ inȱ theȱ OGȱ sector.ȱ Theȱpositionȱofȱcapitalȱmarkets,ȱe.g.ȱonȱclimateȱchange,ȱisȱmoreȱcoherentȱthanȱtheȱpoȬ sitionȱofȱNGOs.ȱThisȱallowsȱforȱaȱmoreȱconceptualȱresponse.ȱInȱadditionȱitȱisȱplausibleȱ thatȱOGȱcompaniesȱalignȱtheirȱapproachȱtoȱCSMȱtoȱshareholdersȱasȱoneȱofȱtheirȱmostȱ importantȱtransactionalȱstakeholders.ȱ TheȱfactȱthatȱCSMȱintentȱisȱdrivenȱbyȱNGOsȱratherȱthanȱgovernmentsȱinȱtheȱUTȱsecȬ torȱisȱalsoȱinȱlineȱwithȱfindingsȱpresentedȱaboveȱsuggestingȱthatȱgovernments’ȱinitiaȬ tivesȱclearlyȱlackȱstrategicȱguidance.ȱCapitalȱmarketsȱmayȱplayȱanȱinsignificantȱroleȱinȱ theȱUTȱsectorȱbecauseȱgeneralȱmanagersȱareȱlessȱfamiliarȱwithȱanȱincreasinglyȱproacȬ tiveȱroleȱofȱtheȱfinancialȱcommunityȱand/orȱlessȱfocusedȱonȱtheȱdemandsȱfromȱcapitalȱ marketsȱ sinceȱ companiesȱ areȱ orȱ haveȱ beenȱ stateȬownedȱ andȱ stronglyȱ regulatedȱ asȱ formerȱnaturalȱmonopolists.ȱ Finallyȱtheȱstatisticallyȱsignificantȱsectorȱandȱregionȱeffectsȱshouldȱbeȱnoted.ȱTheyȱinȬ dicateȱlessȱCSMȱintentȱinȱtheȱUTȱsector.ȱTheȱnegativeȱsectorȱeffectȱisȱmostȱlikelyȱdueȱ toȱlowerȱissueȱandȱorganizationalȱvisibilityȱinȱtheȱUTȱsector,ȱwhichȱmoderatesȱoutsideȱ pressure,ȱbutȱcouldȱalsoȱhintȱatȱinternalȱdeficitsȱsuchȱasȱcorporateȱculturesȱandȱmanȬ agers’ȱmindset,ȱwhichȱpreventȱ greaterȱCSMȱintent.ȱTheȱnegativeȱeffectȱofȱregionsȱofȱ operationsȱinȱNorthȱAmerica,ȱdevelopingȱcountriesȱ(statisticallyȱsignificantȱatȱaȱ10%ȱ levelȱinȱtheȱOGȱdata)ȱandȱNordicȱcountriesȱ(inȱtheȱOGȱmodelȱonly)ȱsimilarlyȱindicateȱ lessȱinternalȱcapabilitiesȱandȱlowerȱorganizationalȱvisibilityȱofȱbusinessȱunitsȱorȱcomȬ paniesȱoperatingȱinȱtheseȱregions.ȱTheseȱcountryȱeffectsȱareȱinȱlineȱwithȱfindingsȱfromȱ theȱinterviewȱdataȱpresentedȱabove.ȱ Submodelȱ–ȱIncidentsȱ TheȱfollowingȱregressionȱmodelsȱshowȱwhichȱkindsȱofȱincidentsȱthatȱdamageȱlegitiȬ macyȱcanȱbeȱlinkedȱtoȱcompanies’ȱCSMȱintent.ȱTheyȱrevealȱaȱnegativeȱeffectȱofȱconȬ flictsȱwithȱauthorities,ȱwhichȱisȱstatisticallyȱsignificantȱȱinȱtheȱtotalȱandȱtheȱOGȱsampleȱ (inȱtheȱlatterȱatȱaȱ10%ȱlevel).ȱ

ȱ

162ȱ

8ȱEmpiricalȱevidenceȱ T model 101 2.70 0.0039 0.2689 0.1692 .77238

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Media campaigns NGO campaigns Conflicts authorities Boycott campaigns Shareholder oppositions Other incidents

-.2414118 -.0055816 -.4425226 -.2656037 -.2176631 .0692916

UT sector

-.3661229

Nordic North Am Latin Europe Dev econ Other reg Constant

OG model 75 2.59 0.0088 0.3113 0.1911 .75877 Coeff -.1205565 -.0095522

UT model 26 0.55 0.8313 0.2671 0.2215 .9537

-.0756823 -.2669499 .1557093

-.8457848 -.4383139 -.5263879 -.1806032 -.5 -.3598355

-.0068062 -.8038528 -.0664533 -.6769614 .1133928

-.288386 -.9698099 -.3068663 -.8062312 -.0258236

.5558602 (dropped) .3810829 -.9383139 1.179232

4.464038

4.534238

4.464702

-.3952947

RegressionȱTableȱ8Ȭ4:ȱCSMȱintentȱȬȱIncidentsȱthatȱdamagedȱlegitimacyȱ(Expandedȱsubmodels)ȱ

Judgingȱ fromȱ theȱ signsȱ ofȱ theȱ coefficients,ȱ theȱ modelsȱ wouldȱ appearȱ toȱ indicateȱ theȱ likelihoodȱ ofȱ incidentsȱ asȱ aȱ functionȱ ofȱ CSMȱ intent.ȱ Thusȱ theȱ resultsȱ areȱ somewhatȱ plausible,ȱ sinceȱ theyȱ showȱ thatȱ laggardȱ companiesȱ featuringȱ lessȱ CSMȱ intentȱ haveȱ hadȱmoreȱconflictsȱwithȱauthorities.ȱTheȱUTȱcorrelationȱcoefficientȱsuggestsȱthatȱthisȱ linkȱexistsȱinȱbothȱsectors,ȱbutȱfailsȱtoȱbecomeȱstatisticallyȱsignificantȱinȱtheȱUTȱdataȱ dueȱtoȱconstraintsȱinȱtheȱdegreesȱofȱfreedom.ȱ Theȱ factȱ thatȱ theȱ effectȱ ofȱ NGOȱ campaignsȱ isȱ notȱ statisticallyȱ significantȱ inȱ theȱ OGȱ modelȱ indicatesȱ thatȱ OGȱ companiesȱ areȱ targetedȱ byȱ NGOsȱ independentlyȱ ofȱ theirȱ levelȱofȱCSMȱintent.ȱThisȱresultȱisȱconceivable.ȱInȱfact,ȱitȱhasȱbeȱarguedȱthatȱleadingȱ companiesȱhaveȱbeenȱbyȱNGOȱcampaignsȱatȱleastȱasȱoftenȱasȱlaggardsȱ(Vogl,ȱ2003).ȱ AtȱfirstȱsightȱtheȱinsignificantȱeffectȱofȱshareholderȱresolutionsȱalsoȱcontradictsȱfindȬ ingsȱaboutȱtheȱkeyȱimportanceȱofȱcapitalȱmarketsȱpresentedȱabove.ȱThisȱputativeȱinȬ consistencyȱ canȱ beȱ attributed,ȱ alongsideȱ responseȱ bias,ȱ toȱ theȱ factȱ thatȱ theȱ variableȱ underȱ considerationȱ refersȱ toȱ specificȱ incidentsȱ inȱ theȱ past,ȱ whereasȱ findingsȱ aboutȱ theȱroleȱofȱcapitalȱmarketsȱaboveȱreferȱtoȱaȱpossibleȱfutureȱandȱmoreȱpersistentȱinfluȬ ence.ȱ Overallȱregressionȱmodelsȱaboveȱindicateȱthatȱcompaniesȱthatȱareȱmoreȱadvancedȱinȱ termsȱofȱCSM,ȱi.e.ȱexhibitȱgreaterȱCSMȱintent,ȱareȱlessȱfrequentlyȱsubjectȱtoȱincidentsȱ thatȱdamageȱlegitimacy.ȱFurthermore,ȱtheyȱshowȱsectorȱandȱcountryȱeffectsȱthatȱareȱ veryȱsimilarȱtoȱthoseȱdetectedȱinȱtheȱpreviousȱmodels.ȱHenceȱtheirȱinterpretationȱwillȱ notȱbeȱiteratedȱhere.ȱ Submodelȱ–ȱExternalȱbarriersȱ Theȱfollowingȱregressionȱmodelsȱexamineȱtheȱeffectȱofȱthreeȱexternalȱbarriers,ȱnamelyȱ lackȱofȱinterestȱfromȱcustomer,ȱregulationȱandȱoppositionȱorȱlackȱofȱinterestȱfromȱcusȬ

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163ȱ

tomersȱonȱbothȱCSMȱsuccessȱandȱCSMȱintent.ȱTheȱhighȱnumberȱofȱinvalidȱregressionȱ modelsȱisȱmostȱlikelyȱdueȱtoȱconstraintsȱinȱtheȱdegreesȱofȱfreedom,ȱsinceȱtheȱnumberȱ ofȱ casesȱ thatȱ couldȱ beȱdrawnȱ onȱ forȱ theȱmodelsȱwasȱlimitedȱ dueȱtoȱaȱ greatȱshareȱ ofȱ noȬresponsesȱ(seeȱChartȱ8Ȭ14ȱandȱChartȱ8Ȭ15).ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 76 3.54 0.0341 0.0884 0.0634 .80991 Coeff .4481358

Indep var Customers Investors

-.4471797

Constant

3.531549

OG model Not valid

UT model Not valid

RegressionȱTableȱ8Ȭ5:ȱCSMȱintentȱ–ȱExternalȱbarriersȱ(Reducedȱsubmodels)ȱ

Theȱ effectȱ ofȱ regulationȱ (e.g.ȱ inadequateȱ subsidies,ȱ lowȱ environmental/socialȱ stanȬ dards)ȱasȱaȱbarrierȱisȱomittedȱfromȱbothȱmodelsȱdueȱtoȱlackȱofȱstatisticalȱsignificance.ȱ TheȱvalidȱTȱmodelȱshowsȱaȱnegativeȱeffectȱofȱoppositionȱfromȱinvestors,ȱwhichȱcanȱbeȱ interpretedȱinȱtwoȱways:ȱ 1. Theȱfinancialȱcommunityȱandȱcapitalȱmarketsȱinȱparticularȱconstituteȱaȱsignificantȱ barrierȱtoȱgreaterȱCSMȱintent,ȱi.e.ȱtheyȱnegativelyȱaffectȱcompanies’ȱwillingnessȱtoȱ incorporateȱsocialȱandȱenvironmentalȱcriteriaȱintoȱbusinessȱstrategiesȱandȱoperaȬ tionsȱtodayȱasȱalsoȱconcludedȱinȱsectionȱ8.2.4ȱFinancialȱcommunity.ȱThisȱinterpreȬ tationȱisȱnotȱcontradictoryȱtoȱtheȱpositiveȱeffectȱofȱcapitalȱmarkets’ȱSDȱroleȱonȱCSMȱ intentȱbecauseȱthatȱvariablesȱrefersȱtoȱaȱfutureȱsituation.ȱ 2. LaggardȱcompaniesȱwithȱlessȱCSMȱintentȱconsiderȱinvestorsȱaȱbarrierȱtoȱCSMȱbeȬ causeȱ theyȱ areȱ largelyȱ unawareȱ ofȱ recentȱ trendsȱ pointingȱ toȱ moreȱ proactiveȱ inȬ volvementȱofȱcapitalȱmarketsȱinȱtheȱfuture.ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model Not valid

OG model 52 3.92 0.0532 0.0727 0.0542 .77105 Coeff.

Indep var Investors

-.4774436

Constant

3.263158

UT model Not valid

RegressionȱTableȱ8Ȭ6:ȱCSMȱsuccessȱ–ȱExternalȱbarriersȱ(Reducedȱsubmodels)ȱ

TheȱpositiveȱcorrelationȱcoefficientȱforȱtheȱlackȱofȱinterestȱfromȱcustomersȱinȱRegresȬ sionȱ Tableȱ 8Ȭ5ȱ suggestsȱ thatȱ sustainabilityȱ leadersȱ withȱ greaterȱ CSMȱ intentȱ tendȱ toȱ criticizeȱtheȱenvironmentalȱignoranceȱofȱtheirȱcustomersȱmoreȱoftenȱthanȱlaggardsȱdo.ȱ TheȱnegativeȱinfluenceȱofȱinvestorsȱonȱCSMȱsuccessȱmostȱlikelyȱoccursȱinȱextractionȱ andȱ productionȱ projectsȱ whoseȱ substantialȱ upfrontȱ costsȱ requireȱ jointȱ ventures:ȱ Asȱ ȱ

164ȱ

8ȱEmpiricalȱevidenceȱ

intervieweesȱ repeatedlyȱ reported,ȱ laggardȱ companies,ȱ particularlyȱ theȱ stateȬownedȱ oilȱfirmsȱofȱhostȱgovernmentsȱinȱdevelopingȱcountries,ȱimpingeȱonȱtheȱoverallȱsocialȱ andȱenvironmentalȱcharacteristicsȱofȱprojects.ȱ Clusterȱmodelȱ–ȱExternalȱstakeholdersȱ TheȱfollowingȱclusterȱmodelȱonlyȱincludesȱaȱsubsetȱofȱtheȱvariablesȱthatȱwereȱstatistiȬ callyȱ significantȱ inȱ theȱ threeȱ submodelsȱ above.ȱ Thisȱ suggestsȱ thatȱ theȱ effectsȱ ofȱ theȱ omittedȱ variablesȱ haveȱ beenȱ pickedȱ upȱ byȱ theȱ variablesȱ thatȱ remainȱ inȱ theȱ clusterȱ model.ȱ T model 101 10.95 0.0000 0.3133 0.2847 .71667

Num. of obs F Prob > F R-squared Adj Rsquared Root MSE

OG model 111 13.92 0.0000 0.2807 0.2605 .70042

UT model 54 7.26 0.0017 0.2217 0.1912 .75574

Indep var Imp leg Confl auth

Coeff .3413822 -.3628666

Indep var Imp leg Cap markets

Coeff .3064229 .2639094

Indep var Imp leg

Coeff .2776573ȱ

North Am Dev econ

-.5478015 -.5300627

North Am

-.4122189

Nordic

.7382502ȱ

Constant

2.656458

Constant

1.584652

Constant

2.323933

RegressionȱTableȱ8Ȭ7:ȱCSMȱintentȱ–ȱAllȱvariablesȱrelatingȱtoȱinfluenceȱfromȱexternalȱstakeholdersȱ (Reducedȱclusterȱmodels)ȱ

TheȱmodelsȱindicateȱthatȱOGȱandȱUTȱcompaniesȱthatȱattachȱgreaterȱimportanceȱtoȱleȬ gitimacyȱalsoȱreportȱgreaterȱCSMȱintent.ȱThisȱfindingȱisȱveryȱplausibleȱsinceȱitȱpointsȱ –ȱasȱbothȱqualitativeȱandȱquantitativeȱevidenceȱpresentedȱaboveȱ–ȱtoȱtheȱimportanceȱ ofȱtheȱinformalȱlicenseȱtoȱoperateȱandȱgrowȱinȱdrivingȱCSM.ȱItȱisȱparticularlyȱmeanȬ ingfulȱ inȱ termsȱ ofȱ theȱ UTȱsector,ȱsinceȱ itȱ revealsȱ thatȱ governmentsȱ –ȱ despiteȱ havingȱ beenȱ identifiedȱ asȱ theȱ mostȱ importantȱ (evenȱ ifȱ notȱ theȱ mostȱ demanding)ȱ externalȱ pressureȱgroupȱ–ȱdoȱnotȱdriveȱCSMȱintent.ȱThisȱpointsȱtoȱaȱvoidȱofȱstrategicȱguidanceȱ fromȱregulatorsȱandȱlegislatorsȱthatȱisȱfilledȱbyȱpublicȱpressureȱgroups.ȱFurthermore,ȱ allȱ threeȱ modelsȱ showȱ statisticallyȱ significantȱ regionȱ effectsȱ thatȱ supportȱ qualitativeȱ andȱquantitativeȱfindingsȱpresentedȱabove.ȱTheyȱcouldȱpointȱtoȱvariationȱinȱbothȱinȬ ternalȱ (e.g.ȱ corporateȱ cultures)ȱ andȱ externalȱ factorsȱ (e.g.ȱ societalȱ pressure)ȱ acrossȱ countries.ȱTheȱTȱmodelȱadditionallyȱfeaturesȱthreeȱstatisticallyȱsignificantȱindependȬ entȱ variables:ȱ Theȱ negativeȱ coefficientȱ forȱ conflictsȱ withȱ authoritiesȱ suggestsȱ thatȱ companiesȱthatȱreportȱconflictsȱwithȱauthoritiesȱhaveȱlessȱCSMȱintent.ȱ Theȱ sectorȬspecificȱ modelsȱ differȱ inȱ moreȱ thanȱ theȱ demographicȱ variablesȱ included:ȱ InȱcontrastȱtoȱtheȱUTȱmodel,ȱtheȱOGȱmodelȱadditionallyȱindicatesȱaȱpositiveȱeffectȱofȱ proactiveȱcapitalȱmarketsȱinȱtheȱfutureȱonȱCSMȱintent.ȱThisȱdoesȱnotȱnecessarilyȱmeanȱ thatȱfutureȱpressureȱfromȱcapitalȱmarketsȱwillȱbeȱstrongerȱinȱtheȱOGȱsector.ȱGreaterȱ interestȱ fromȱ theȱ financialȱ sectorȱ inȱ theȱ CO2ȱ portfoliosȱ ofȱ companiesȱ concernsȱ UTȱ

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165ȱ

companiesȱ atȱ leastȱ asȱ muchȱ asȱ OGȱ companies.ȱ However,ȱ theȱ insignificantȱ effectȱ ofȱ capitalȱmarketsȱinȱtheȱUTȱdataȱclearlyȱindicatesȱmanagers’ȱlowerȱlevelsȱofȱawareness,ȱ presumablyȱ becauseȱ theȱ interestȱ ofȱ sociallyȱ responsibleȱ andȱ increasinglyȱ “mainȬ stream”ȱshareholdersȱhasȱconcentratedȱonȱtheȱOGȱsector.ȱ 8.2.7

Discussionȱ

Importanceȱofȱexternalȱstakeholdersȱandȱtheȱprincipleȱofȱlegitimacyȱ Accordingȱ toȱ theȱ principleȱ ofȱ legitimacy,ȱ societyȱ canȱ amendȱ orȱ revokeȱ companies’ȱ charterȱtoȱexistȱ(i.e.ȱlicenseȱtoȱoperate)ȱifȱtheyȱdoȱnotȱuseȱtheirȱpowerȱinȱaȱwayȱthatȱitȱ considersȱresponsibleȱ(Davis,ȱ1973,ȱp.ȱ314).ȱAsȱtheȱpresentȱstudyȱreveals,ȱinȱlineȱwithȱ othersȱ (e.g.ȱ Anderssonȱ etȱ al.,ȱ 2000;ȱ Buysseȱ etȱ al.,ȱ 2003;ȱ Henriquesȱ etȱ al.,ȱ 1996),ȱ theseȱ possibleȱrevocationsȱamendmentsȱconstituteȱanȱimportantȱdriverȱofȱCSM.ȱ Bothȱqualitativeȱandȱquantitativeȱmethodsȱshowȱthatȱstakeholders’ȱdemandsȱforȱCSMȱ andȱ theȱ importanceȱ ofȱ informalȱ legitimacyȱ areȱ positivelyȱ linkedȱ toȱ companies’ȱ apȬ proachȱ toȱ CSMȱ (strategicȱ disposition,ȱ structureȱ andȱ success),ȱ issueȱ significanceȱ (asȱ alreadyȱillustratedȱinȱsectionȱ8.1ȱIssues)ȱandȱproactiveȱmanagers’ȱattitudes.ȱThisȱalsoȱ meansȱthat:ȱ 1. StakeholderȱdemandsȱareȱissueȬrelated.ȱ 2. Managers’ȱperceptionsȱofȱstakeholderȱdemandsȱdependsȱonȱtheirȱpersonalȱatȬ titudes,ȱwhichȱagainȱpointsȱtoȱtheȱimportanceȱofȱtheȱindividualȱmanagerȱandȱ theȱneedȱtoȱinfluenceȱhisȱorȱherȱknowledgeȱandȱmindsetȱthroughȱtrainingȱandȱ otherȱmanagementȱtools.ȱ 3. InformalȱlegitimacyȱgrantedȱbyȱprimarilyȱnonȬregulatoryȱstakeholdersȱsuchȱasȱ customers,ȱinvestorsȱandȱNGOsȱasȱtheȱmainȱcatalystsȱisȱaȱsignificantȱmotivatȬ ingȱ factorȱ forȱ CSM.ȱ Companiesȱ thatȱ areȱ moreȱ awareȱ andȱ concernedȱ withȱ theȱ financialȱpremiumȱassociatedȱwithȱthatȱfactorȱreportȱgreaterȱissueȱsignificanceȱ andȱgreaterȱstrategicȱdispositionȱtoȱCSM.ȱ Theȱstudyȱadditionallyȱshowsȱthatȱexternalȱ stakeholdersȱdifferȱinȱtermsȱofȱtheȱpresȬ sureȱtheyȱexert.ȱTheirȱindividualȱdemandsȱforȱCSMȱvary:ȱ -

Governmentsȱ andȱ regulatorsȱ provideȱ littleȱ longȬtermȱ strategicȱ guidanceȱ toȱ comȬ panies.ȱEssentiallyȱtheyȱrespondȱtoȱpublicȱpressureȱbecauseȱtheyȱrelyȱonȱpoliticalȱ successȱ(Steger,ȱ1998a,ȱp.ȱ589).ȱ

-

Apartȱfromȱaȱsmallȱnicheȱsegment,ȱcustomersȱ(consumersȱandȱcorporateȱcustomȬ ers)ȱplayȱaȱdeterrentȱroleȱdueȱtoȱtheirȱstrongȱpreferenceȱforȱcheapȱandȱconvenientȱ energy.ȱNevertheless,ȱsomeȱadȱhocȱreactionsȱareȱpossibleȱ(e.g.ȱconsumerȱprotestsȱ andȱboycotts).ȱTheyȱareȱoftenȱtriggeredȱbyȱNGOȱcampaigns.ȱ

ȱ

166ȱ

8ȱEmpiricalȱevidenceȱ

-

Theȱ financialȱ community’sȱ typicalȱ focusȱ onȱ shortȬtermȱ profitsȱ isȱ associatedȱ withȱ significantȱdisinterestȱandȱresistanceȱtoȱCSM.ȱHowever,ȱseveralȱtrendsȱpointȱtoȱaȱ lessȱdeterrentȱandȱpotentiallyȱpromotingȱpartȱinȱtheȱfutureȱ(e.g.ȱincreasingȱattenȬ tionȱtoȱclimateȱchangeȱrisks):ȱInterȱalia,ȱcapitalȱmarketsȱhaveȱshownȱsignificantȱadȱ hocȱreactionsȱtoȱNGOȱcampaignsȱandȱconsumerȱboycotts.ȱ

-

Publicȱ pressureȱ groupsȱ clearlyȱ playȱ theȱ roleȱ ofȱ catalysts,ȱ i.e.ȱ theyȱ areȱ contextualȱ stakeholdersȱ(Steger,ȱ2003,ȱp.ȱ102).ȱTheirȱdemandsȱforȱCSMȱareȱveryȱhigh,ȱsomeȬ timesȱevenȱnaive.ȱTheirȱactivitiesȱprovideȱaȱcontextȱwithinȱwhichȱcompanies’ȱpriȬ maryȱorȱtransactionalȱstakeholdersȱexerciseȱaȱcertainȱdiscretionȱbyȱeitherȱsupportȬ ingȱNGOs’ȱdemandsȱorȱnot:ȱInȱseveralȱcasesȱNGOȱcampaignsȱhaveȱbeenȱfoundȱtoȱ triggerȱanȱincreaseȱinȱoutsideȱpressureȱonȱcompaniesȱfromȱgovernmentsȱandȱreguȬ lators,ȱcustomers/consumersȱandȱtheȱfinancialȱcommunity.ȱ

Obviouslyȱ thoseȱ individualȱ demandsȱ forȱ CSMȱ exhibitȱ sectorȬȱ andȱ regionȬspecificȱ variationsȱthatȱwillȱbeȱexpandedȱinȱmoreȱdetailȱbelow.ȱHowever,ȱoverallȱtheȱdemandȱ forȱCSMȱfromȱexternalȱstakeholdersȱandȱtheȱcorrespondingȱoutsideȱpressureȱisȱratherȱ low.ȱ Thisȱ isȱ alsoȱ aȱ majorȱ explanatoryȱ factorȱ forȱ theȱ ratherȱ incrementalȱ approachȱ toȱ CSMȱdiagnosedȱinȱsectionȱ8.4ȱCompanies.ȱ Determinantsȱofȱoutsideȱpressureȱ Theȱstudyȱalsoȱshedsȱlightȱonȱtheȱdeterminantsȱofȱoutsideȱpressureȱ(seeȱFigureȱ8Ȭ15).ȱ Overallȱ outsideȱ pressureȱ onȱ aȱ specificȱ issueȱ resultsȱ fromȱ individualȱ stakeholders’ȱ demandsȱforȱCSMȱandȱtheirȱrespectiveȱpowerȱtoȱamendȱorȱrevokeȱcompanies’ȱcurrentȱ licenseȱ toȱ operate.ȱ Stakeholders’ȱ individualȱ demandȱ forȱ CSMȱdependsȱ onȱthreeȱ facȬ torsȱthatȱwereȱidentifiedȱthroughȱtheȱqualitativeȱanalysisȱ(seeȱalsoȱsectionȱ8.1.3):ȱ 1. Theȱvisibleȱissueȱ(e.g.ȱsocialȱconflictsȱdueȱtoȱaȱlackȱofȱcommunityȱinvolvementȱinȱ developingȱcountries,ȱlossȱofȱbiodiversityȱdueȱtoȱanȱoilȱspill)ȱ–ȱseeȱFigureȱ8Ȭ6ȱforȱ theȱdeterminantsȱofȱissueȱvisibility.ȱ 2. Organizationalȱ visibilityȱ (Bowen,ȱ 2000):ȱ Organizationalȱ visibilityȱ isȱ determinedȱ throughȱ companyȱ size,ȱ consumerȱ nameȱ recognition,ȱ theȱ locationȱ andȱ profileȱ ofȱ headquartersȱandȱfacilities,ȱtheȱcorporateȱattitudeȱandȱreputationȱ(Isȱtheȱcompanyȱ responsiveȱ orȱ “stubborn”?)ȱ andȱ profitability.ȱ Aȱ largeȱ andȱ veryȱ profitableȱ comȬ panyȱ isȱ aȱ betterȱ andȱ moreȱ legitimateȱ targetȱ thanȱ aȱ firmȱ thatȱ mayȱ haveȱ toȱ layȱ offȱ partȱofȱitsȱworkforceȱinȱitsȱstruggleȱtoȱsurvive.ȱ 3. Theȱlocal,ȱregionalȱorȱglobalȱlimitsȱofȱlegitimacy:ȱTheyȱareȱissueȬspecificȱandȱdeȬ termineȱatȱwhatȱlevelȱofȱissueȱvisibilityȱandȱorganizationalȱvisibilityȱstakeholdersȱ attemptȱtoȱamendȱorȱrevokeȱcompanies’ȱcurrentȱlicenseȱtoȱoperateȱ(Davis,ȱ1973,ȱp.ȱ 314).ȱTheyȱareȱcontingentȱuponȱregulatoryȱandȱnonȬregulatoryȱstandards.ȱE.g.ȱinȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

167ȱ

termsȱofȱclimateȱchange,ȱEuropeanȱsocietiesȱhaveȱadoptedȱaȱmoreȱprecautionaryȱ stanceȱthanȱtheȱUS.ȱ Corporate activity

Organizational visibility (Bowen 2000) • Size • Consumer name recognition • Location of headquarters • Approach to the issue: negation, climate change strategy, pilot projects to develop renewables

Visible issue Visible social or environmental effect attributable to corporate activity e.g. floods, storms, rising sea level

• Societal standards, values • Regulations

Transactional stakeholders Regulators/ governments

Local, regional or global limits of legitimacy

Financial community

Contextual stakeholders

Consumers/ customers

Public pressure groups

Demand for CSM to resolve the issue

Power to amend or revoke current license to operate

Potential impact on

Formal license to operate

Informal license to operate

Current and future

Outside pressure to minimize the effect

Issue significance

ȱ

Figureȱ8.15:ȱDeterminantsȱofȱoutsideȱpressureȱ

DifferentȱindividualȱdemandȱlevelsȱforȱCSMȱtoȱresolveȱtheȱissueȱunderȱconsiderationȱ resultȱfromȱtheȱfactȱthatȱtheȱvisibilityȱofȱtheȱissue,ȱofȱtheȱcompanyȱandȱtheȱlimitsȱofȱ legitimacyȱ oftenȱ varyȱ forȱ theȱ differentȱ pressureȱ groups.ȱ Inȱ addition,ȱ theȱ powerȱ toȱ amendȱ andȱ revokeȱ theȱ currentȱ licenseȱ toȱ operateȱ moderatesȱ theȱ outsideȱ pressureȱ originatingȱfromȱanȱindividualȱgroupȱofȱstakeholders.ȱ Theȱpowerȱofȱregulatorsȱandȱgovernmentsȱisȱrelativelyȱhighȱifȱtheyȱareȱableȱtoȱrevokeȱ theȱformalȱlicenseȱtoȱoperateȱeasily.ȱThisȱdependsȱonȱtheȱfollowingȱfactors:ȱȱ -

Theȱlocationȱofȱtheȱkeyȱsocialȱorȱ environmentalȱintakeȱgeographically:ȱItȱisȱ diffiȬ cultȱ forȱ governmentsȱ inȱ industrializedȱ countriesȱ toȱ influenceȱ corporateȱ activitiesȱ inȱdevelopingȱcountries.ȱ

-

Theȱ locationȱ ofȱ theȱ keyȱ socialȱ orȱ environmentalȱ intakeȱ withinȱ theȱ valueȱ chain:ȱ Companiesȱareȱmoreȱopportuneȱtargetsȱofȱpolicyȱinstrumentsȱthanȱconsumersȱandȱ householdsȱforȱreasonsȱofȱpoliticalȱacceptance.ȱ

ȱ

168ȱ

8ȱEmpiricalȱevidenceȱ

-

Theȱcertaintyȱandȱtheȱtransparencyȱofȱtheȱissue:ȱItȱisȱdifficultȱtoȱlegitimateȱregulaȬ tionȱ ifȱ theȱ issueȱ underȱ considerationȱ isȱ neitherȱ directlyȱ attributableȱ toȱ theȱ comȬ panyȱnorȱclearlyȱmeasurable.ȱ

-

Theȱgeneralȱbargainingȱpowerȱofȱgovernmentsȱasȱsuppliers,ȱi.e.ȱtheȱownersȱofȱtheȱ primaryȱenergyȱsourceȱ(e.g.ȱoilȱ deposits).ȱInȱbothȱsectorsȱthisȱkindȱofȱbargainingȱ powerȱisȱnotȱoverwhelminglyȱhigh.ȱIfȱoneȱcomparesȱitȱbetweenȱtheȱtwoȱsectors,ȱitȱ isȱgreaterȱinȱtheȱOGȱsector,ȱinȱwhichȱcompaniesȱfaceȱhighȱswitchingȱandȱopportuȬ nityȱ costsȱ ifȱ anȱ upstreamȱ permitȱ isȱ revokedȱ orȱ lostȱ toȱ aȱ competitor.ȱ However,ȱ itȱ shouldȱ beȱ notedȱ thatȱ thisȱ potentiallyȱ strongȱ positionȱ ofȱ governmentsȱ isȱ atȱ leastȱ partlyȱweakenedȱbyȱtheirȱrelianceȱonȱsteadyȱoilȱrevenues,ȱparticularlyȱinȱtheȱcaseȱ ofȱ developingȱ countries.ȱ Governments’ȱ bargainingȱ powerȱ overȱ UTȱ companiesȱ isȱ lower,ȱasȱfirmsȱareȱableȱtoȱsourceȱfromȱaȱvarietyȱofȱcountriesȱandȱdomesticȱdeposȬ its.ȱ

Theȱ powerȱ ofȱ theȱ remainingȱ stakeholdersȱ isȱ highȱ ifȱ theyȱ areȱ ableȱ toȱ revokeȱ compaȬ nies’ȱ informalȱ licenseȱ toȱ operateȱ easily.ȱ Theȱ determinantsȱ ofȱ theirȱ bargainingȱ powerȱ comprise:ȱ -

Theȱvulnerabilityȱofȱreputation,ȱbrandsȱandȱprofits,ȱparticularlyȱinȱtheȱshortȱterm,ȱ whichȱ isȱ determinedȱ throughȱ organizationalȱ visibilityȱ andȱ theȱ levelȱ ofȱ downȬ streamȱcompetitionȱwithinȱtheȱsectors.ȱItȱinȱturnȱisȱinfluencedȱbyȱtheȱexistenceȱofȱ substitutesȱ(Doȱcompetitorsȱandȱcompetitiveȱproductsȱexist?)ȱandȱtheȱbargainingȱ powerȱofȱcustomersȱ(HowȱcostlyȱandȱtimeȬintensiveȱisȱswitchingȱtoȱaȱcompetitor,ȱ howȱlargeȱareȱtheȱpurchaseȱvolumes?).ȱCompanies’ȱvulnerabilityȱcanȱbeȱexploitedȱ throughȱvariousȱactivitiesȱsuchȱasȱNGOȱorȱmediaȱcampaigns,ȱconsumerȱboycotts,ȱ occupationȱofȱfacilitiesȱ(asȱhasȱoccurredȱinȱdevelopingȱcountries).ȱ

-

Theȱlocationȱofȱtheȱkeyȱsocialȱorȱenvironmentalȱintakeȱdoesȱnotȱmatter.ȱBoycottsȱ andȱ NGOȱ campaignsȱ areȱ largelyȱ independentȱofȱ nationalȱ bordersȱthroughȱ modȬ ernȱmediaȱandȱtheȱinternetȱinȱparticular.ȱ

-

CertaintyȱandȱtransparencyȱofȱtheȱissueȱareȱalsoȱsignificantȱbutȱlessȱimportantȱfacȬ tors.ȱ However,ȱ soundȱ argumentationȱ andȱ evidenceȱ isȱ particularlyȱ importantȱ forȱ NGOsȱ toȱ ensureȱ longȬtermȱ credibilityȱ (e.g.ȱ Greenpeace’sȱ Brentȱ Sparȱ campaign)ȱ (Stegerȱetȱal.,ȱ1997).ȱ

Theȱrelativeȱimportanceȱofȱtheȱformalȱandȱinformalȱlicenseȱtoȱoperateȱdependsȱonȱtheȱ balanceȱ betweenȱ regulatoryȱ andȱ nonȬregulatoryȱ stakeholders’ȱ power.ȱ Resultsȱ aboutȱ theȱminorȱsignificanceȱofȱgovernmentsȱandȱregulatorsȱasȱoutsideȱpressureȱgroupsȱinȱ bothȱsectorsȱshowȱ thatȱ companies’ȱformalȱ licenseȱ toȱ operateȱ isȱ notȱchallengedȱ atȱtheȱ regulatoryȱ levelȱ today.ȱ Inȱ comparison,ȱ theȱ informalȱ licenseȱ toȱ operateȱ isȱ moreȱ stronglyȱthreatened,ȱevenȱifȱonlyȱthroughȱselective,ȱadȱhocȱreactionsȱfromȱconsumersȱ

8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ

169ȱ

andȱcapitalȱmarketsȱtoȱNGOȱcampaigns.ȱTheȱauthorȱsuggestsȱthatȱongoingȱprocessesȱ ofȱ globalizationȱ andȱ liberalizationȱ couldȱ increaseȱ theȱ importanceȱ ofȱ theȱ informalȱ liȬ censeȱtoȱoperateȱinȱtheȱfuture,ȱbecauseȱ(1)ȱdomesticȱregulationȱwillȱbecomeȱmoreȱandȱ moreȱinadequateȱforȱtargetingȱtransnational,ȱglobalȱcorporateȱactivities,ȱandȱ(2)ȱinterȬ nationalȱ regulationsȱ canȱ onlyȱ beȱ introducedȱ throughȱ timeȬintensiveȱ consensusȬ buildingȱ(e.g.ȱKyotoȱProtocol).ȱFurthermore,ȱsomeȱaspectsȱofȱcompanies’ȱinformalȱliȬ censeȱ toȱ operateȱ willȱ likelyȱ beȱ “internalized”ȱ byȱ regulatorsȱ andȱ thusȱ incorporatedȱ intoȱtheȱformalȱlicenseȱtoȱoperateȱ(e.g.ȱtheȱintroductionȱofȱmandatoryȱemissionȱtradȬ ingȱschemesȱafterȱleadingȱcompaniesȱhadȱalreadyȱestablishedȱinternalȱsystems).ȱThisȱ developmentȱmostlyȱlikelyȱputsȱleadingȱcompaniesȱatȱanȱadvantageȱoverȱlaggards.ȱ Nevertheless,ȱitȱshouldȱbeȱnotedȱthatȱthereȱisȱnoȱgeneralȱfirstȬmoverȱadvantage.ȱTheȱ determinantsȱofȱcompanies’ȱlicenseȱtoȱoperateȱasȱlistedȱaboveȱhaveȱaȱconnotationȱthatȱ stronglyȱ emphasizesȱ theȱ minimizationȱ ofȱ downsideȱ potentialȱ byȱ companies,ȱ i.e.ȱ theȱ avoidanceȱ ofȱ damageȱ toȱ theȱ currentȱ informalȱ licenseȱ toȱ operateȱ throughȱ boycotts,ȱ NGOȱcampaigns,ȱetc.ȱThisȱreflectsȱthatȱtheȱupsideȱpotentialȱofȱexpandingȱtheȱlicenseȱ toȱoperateȱthroughȱmoreȱenvironmentallyȱbenignȱproductsȱ(e.g.ȱbiodiesel,ȱelectricityȱ fromȱ renewableȱ primaryȱ energyȱ sources)ȱ andȱ operationsȱ isȱ indeedȱ marginal.ȱ StakeȬ holdersȱareȱmoreȱlikelyȱtoȱselectivelyȱpunishȱfailuresȱandȱweaknessesȱthanȱtoȱrewardȱ firstȱmovers.ȱ Finallyȱtheȱauthorȱdiagnosesȱtwoȱlimitationsȱinȱtheȱmethodology:ȱQuantitativeȱmethȬ odsȱonlyȱmeasuredȱindividualȱstakeholders’ȱdemandȱforȱCSM,ȱnotȱtheirȱpower.ȱItȱisȱ likelyȱ thatȱ aȱ combinationȱ ofȱ bothȱ measuresȱ asȱ independentȱ variablesȱ couldȱ signifiȬ cantlyȱ improveȱ theȱ explanatoryȱ powerȱ ofȱ theȱ principleȱ ofȱ legitimacy.ȱ Furthermore,ȱ quantitativeȱmethodsȱonlyȱmeasuredȱindividualȱdemandsȱforȱCSMȱatȱanȱoverall,ȱnotȱ anȱissueȬspecific,ȱlevel.ȱSinceȱdemandsȱforȱCSMȱwereȱfoundȱtoȱbeȱissueȬspecific,ȱtheȱ explanatoryȱpowerȱofȱtheȱvariablesȱmostȱlikelyȱsuffered.ȱ Contingencyȱperspectiveȱonȱtheȱroleȱofȱoutsideȱpressureȱ Theȱstudy’sȱcontingencyȱapproachȱprovidedȱseveralȱsectorȬȱandȱregionȬspecificȱfindȬ ings.ȱCrossȬsectorȱvariationȱinȱtheȱdemandsȱofȱexternalȱstakeholdersȱcanȱbeȱattributedȱ toȱdifferencesȱinȱtheȱwayȱtheseȱgroupsȱperceiveȱtheȱvisibleȱissueȱ(issueȱvisibility),ȱtheȱ companiesȱ(organizationalȱvisibility)ȱandȱtheȱrespectiveȱlimitsȱofȱlegitimacy.ȱ TheȱUTȱsectorȱisȱdrivenȱbyȱtheȱmotivationȱtoȱretainȱandȱexpandȱ itsȱformalȱlicenseȱtoȱ operate.ȱItsȱmainȱissueȱcanȱbeȱ“conveniently”ȱregulated,ȱsinceȱitȱisȱassociatedȱwithȱtheȱ productionȱandȱnotȱ–ȱasȱinȱtheȱOGȱsectorȱ–ȱwithȱtheȱuseȱphaseȱofȱitsȱproduct.ȱHowȬ ever,ȱitȱisȱimportantȱtoȱnoteȱthatȱgovernments’ȱdemandȱforȱCSMȱdoesȱnotȱinfluenceȱ companies’ȱCSMȱintent,ȱdespiteȱtheȱUTȱsector’sȱfocusȱonȱtheȱformalȱlicenseȱtoȱoperate,ȱ i.e.ȱtheȱrelativelyȱgreatȱbargainingȱpowerȱofȱgovernmentsȱandȱregulators.ȱThisȱclearlyȱ pointsȱ toȱ aȱ lackȱ ofȱ strategicȱ guidanceȱ andȱ longȬtermȱ outsideȱ pressureȱ onȱ theirȱ part.ȱ ȱ

170ȱ

8ȱEmpiricalȱevidenceȱ

Advancedȱstatisticsȱhaveȱshownȱthatȱtheȱinformalȱlicenseȱtoȱoperateȱalsoȱrepresentsȱaȱ relevantȱ driverȱ ofȱ CSMȱ inȱ theȱ sector.ȱ Thisȱ mayȱ reflectȱ growingȱ awarenessȱ ofȱ brandȱ valueȱandȱreputationȱinȱEurope’sȱliberalizingȱenergyȱmarkets,ȱinȱwhichȱcapitalȱmarȬ ketsȱ areȱ alsoȱ expectedȱ toȱ exertȱ moreȱ outsideȱ pressureȱ onȱ companiesȱ inȱ termsȱ ofȱ cliȬ mateȱchangeȱrisk.ȱ TheȱOGȱsectorȱfeaturesȱaȱgreaterȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperateȱdueȱtoȱ greaterȱorganizationalȱvisibility,ȱgreaterȱdownstreamȱcompetitionȱ(e.g.ȱlowerȱswitchȬ ingȱ costsȱ ofȱ customers,ȱ liberalizedȱ markets),ȱ andȱ theȱ factȱ thatȱ theirȱ mainȱ issuesȱ areȱ difficultȱtoȱregulateȱdueȱtoȱtheirȱlocationȱ(geographicallyȱandȱwithinȱtheȱvalueȱchain).ȱ TheyȱareȱmoreȱstronglyȱdrivenȱbyȱNGOsȱandȱcapitalȱmarkets,ȱwhichȱcompensatesȱforȱ aȱ relativeȱ lackȱ ofȱ regulatoryȱ pressure.ȱ Consumersȱ canȱ exertȱ significantȱ adȱ hocȱ presȬ sureȱthroughȱboycottsȱbutȱoverallȱtheirȱroleȱisȱlessȱproactiveȱthanȱinȱtheȱUTȱsector.ȱ Thereȱ areȱ noȱ significantȱ crossȬdisciplinaryȱ variationsȱ inȱ theȱ perceptionsȱ ofȱ externalȱ stakeholders’ȱdemandȱforȱCSM,ȱwhichȱgivesȱadditionalȱassuranceȱonȱtheȱresultsȱpreȬ sentedȱ inȱ theȱ previousȱ twoȱ paragraphs.ȱ However,ȱ bothȱ qualitativeȱ andȱ quantitativeȱ dataȱrevealȱsomeȱnotableȱdifferencesȱbetweenȱseveralȱregions.ȱE.g.ȱtheȱUSȱandȱdevelȬ opingȱ countriesȱ haveȱ higherȱ limitsȱ ofȱ legitimacy:ȱ Theȱ USȱ inȱ particularȱ isȱ lessȱ conȬ cernedȱ withȱ climateȱ changeȱ mainlyȱ becauseȱ ofȱ certainȱ societalȱ valuesȱ (e.g.ȱ lessȱ riskȱ averse);ȱdevelopingȱcountriesȱ largelyȱ ignoreȱ socialȱ andȱ environmentalȱrisksȱ andȱ areȱ mainlyȱinterestedȱinȱsteadyȱrevenues.ȱ 8.3

Managersȱ

Inȱtheȱpresentȱsectionȱtheȱauthorȱaimsȱtoȱshedȱlightȱonȱtheȱimportanceȱofȱmanagersȱasȱ internalȱdeterminantsȱofȱCSM,ȱi.e.ȱtheȱsignificanceȱofȱmanagerialȱdiscretionȱasȱaȱmotiȬ vatingȱprincipleȱ(Wood,ȱ1991).ȱTheȱsectionȱfeaturesȱanȱanalysisȱofȱmanagers’ȱmindset,ȱ experienceȱandȱknowledgeȱandȱhowȱtheyȱinfluenceȱmanagers’ȱawarenessȱandȱpercepȬ tionȱofȱissues,ȱexternalȱpressureȱgroups,ȱtheȱimportanceȱofȱlegitimacyȱandȱtheirȱcomȬ panies’ȱapproachȱtoȱCSM.ȱ 8.3.1

Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ

Itȱ isȱ difficultȱ toȱ drawȱ anyȱ seriousȱ generalȱ sectorȬspecificȱ conclusionsȱ onȱ managers’ȱ attitudesȱandȱknowledgeȱbasedȱonȱtheȱinterviewsȱbecauseȱtheȱdataȱareȱlargelyȱcaseȬ specific.ȱ Theȱ followingȱ quotesȱ areȱ indicativeȱ ofȱ relativelyȱ highȱ levelsȱ ofȱ awarenessȱ andȱexpertiseȱwhichȱareȱnotȱrepresentativeȱofȱtheȱentireȱsample,ȱbutȱtendȱtoȱbeȱfoundȱ moreȱoftenȱamongȱrespondentsȱfromȱtheȱOGȱsector:ȱ Inȱtheȱshortȱterm,ȱsustainabilityȱ(e.g.ȱaȱstrongȱenvironmentalȱpolicy)ȱcostsȱmoney.ȱ Hence,ȱoneȱtradesȱoffȱshortȬtermȱandȱpossibleȱlongȬtermȱcostsȱ(i.e.ȱavoidingȱprobȬ lemsȱ andȱ badȱ pressȱ associatedȱ withȱ them).ȱ Thusȱ sustainabilityȱ isȱ aboutȱ gainingȱ longȬtermȱcompetitiveȱadvantageȱ(OG1,ȱsupplyȱchain).ȱ

8.3ȱManagersȱ

171ȱ

Theȱmainȱelementsȱofȱcorporateȱsustainabilityȱareȱenvironmentalȱandȱsafetyȱrisks.ȱ Itȱisȱdifficultȱtoȱmoveȱawayȱfromȱefficiencyȱandȱinvestorȱreturn.ȱOpportunitiesȱareȱ moreȱelusive,ȱbutȱweȱwouldȱlikeȱtoȱbecomeȱbetterȱatȱidentifyingȱthemȱ(OG6,ȱE&P).ȱ AsȱaȱsustainabilityȱofficerȱfromȱaȱleadingȱOGȱcompanyȱalsoȱnoted,ȱitȱisȱunlikelyȱthatȱ generalȱ managersȱ fullyȱ understandȱ theȱ dynamicsȱ ofȱ today’sȱ energyȱ systemsȱ whichȱ areȱ drivenȱ byȱ longȬtermȱ depletion,ȱ shortȬtermȱ supplyȱ risksȱ andȱ climateȱ change.48ȱ Qualitativeȱ dataȱ suggestȱ thatȱ individualȱ resistanceȱ toȱ corporateȱ sustainabilityȱ manȬ agementȱappearsȱtoȱbeȱcontingentȱonȱseveralȱfactors:ȱ 1. Levelȱofȱprocessȱorientation:ȱMoreȱprocessȬorientedȱmanagersȱ(e.g.ȱinȱtheȱUTȱsecȬ torȱandȱtheȱOGȱdownstreamȱbusinessȱunits:ȱgasȱ&ȱpower,ȱrefiningȱandȱmarketing)ȱ haveȱaȱtendencyȱtoȱ“sweat”ȱtheirȱassetsȱ(Bergȱ&ȱMoors,ȱ2002).ȱ 2. Levelȱ ofȱ competition:ȱ Managersȱ inȱ theȱ downstreamȱ OGȱ businessȱ faceȱ aȱ moreȱ competitiveȱ environmentȱ (lowerȱ marginsȱ inȱ aȱ typicalȱ commodityȱ business)ȱ thanȱ theirȱ counterpartsȱ inȱ theȱ upstreamȱ business.ȱ Inȱ theȱ UTȱ sector,ȱ marketȱ liberalizaȬ tionȱ hasȱ alsoȱ ledȱ toȱ risingȱ costȱ pressureȱ (throughȱ inefficiencies,ȱ overcapacities)ȱ andȱinvestmentȱriskȱ(customersȱcanȱswitchȱsuppliersȱmoreȱeasily).ȱ 3. Issueȱ visibility:ȱ Managersȱ inȱ theȱ UTȱ sectorȱ andȱ OGȱ downstreamȱ businessȱ unitsȱ operateȱmainlyȱinȱdevelopedȱcountriesȱ(powerȱplantsȱandȱrefineries),ȱinȱwhichȱsoȬ cialȱissuesȱareȱnegligibleȱandȱenvironmentalȱstandardsȱareȱhigh.ȱ 4. Managementȱ level:ȱLowerȱmanagementȱlevelsȱareȱ reportedȱ toȱ exhibitȱ greaterȱ reȬ sistance.ȱ Theȱgreatestȱchallengeȱisȱtheȱveryȱbottom,ȱ“firstȱline”ȱmanagementȱonȱtheȱsiteȱdueȱ toȱmindsetȱ–ȱpeopleȱareȱtenȱyearsȱorȱlessȱawayȱfromȱretirementȱ–ȱandȱlackȱofȱeduȬ cationȱ(OG4,ȱSO).ȱ 5. Businessȱfunctions:ȱSomeȱfunctionsȱ(e.g.ȱfinance)ȱresistȱmoreȱstronglyȱthanȱothersȱ (e.g.ȱ R&D),ȱ whichȱ reflectsȱ theirȱ differentȱ rolesȱ andȱ responsibilities.ȱ Financeȱ offiȬ cersȱhaveȱtoȱdealȱwithȱ“hardȬnosed”ȱshortȬtermȱprofitȱorientedȱfinancialȱanalysts;ȱ R&Dȱ managersȱ areȱ paidȱ toȱ haveȱ aȱ moreȱ longȬtermȱ perspectiveȱ onȱ theȱ business.ȱ However,ȱintervieweesȱalsoȱreportedȱthatȱanȱindividual’sȱstrongȱattitudeȱisȱableȱtoȱ “dominate”ȱthoseȱgenericȱlevelsȱofȱresistance.ȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 48

ȱ

ȱAȱrecentȱShellȱscenarioȱconcludesȱthatȱpriceȱincreasesȱdueȱtoȱinternalizedȱemissionȱcostsȱwouldȱnotȱ beȱaȱsufficientȱdriverȱforȱaȱfuelȱchange,ȱsinceȱitȱwouldȱonlyȱbringȱelectricityȱpricesȱinȱ2010ȱupȱtoȱ1980sȱ level.ȱAsȱfarȱasȱthisȱgoes,ȱtheȱdepletionȱeffectȱandȱgeopoliticsȱasȱadditionalȱdriversȱmayȱeventuallyȱ triggerȱaȱpossiblyȱunsmoothȱtransitionȱperiodȱ(ShellȱInternationalȱLtd,ȱ2001,ȱp.ȱ40).ȱ

172ȱ

8ȱEmpiricalȱevidenceȱ

Itȱisȱdifficultȱtoȱgeneralizeȱonȱaȱmoreȱorȱlessȱproactiveȱroleȱofȱbusinessȱfunctions.ȱItȱ oftenȱdependsȱmoreȱonȱtheȱindividual,ȱnotȱonȱtheȱfunction:ȱInȱourȱcase,ȱtheȱCFOȱ wasȱoneȱofȱtheȱbiggestȱsupportersȱ(OG7,ȱSO).ȱ Whatȱ mattersȱ aȱ lotȱ inȱ termsȱ ofȱ decisionȬmakingȱ is:ȱ Whoȱ isȱ inȱ theȱ roomȱ (OG2,ȱ GM).ȱ 6. CompanyȬspecificȱfactorsȱsuchȱasȱcorporateȱculture:ȱ Ourȱcompanyȱhasȱanȱopenȱcorporateȱculture,ȱwhichȱisȱbasedȱonȱitsȱcoreȱvaluesȱandȱ encouragesȱproactiveȱbehavior:ȱForȱexample,ȱaȱpersonalȱassistant’sȱinitiativeȱledȱtoȱ theȱ introductionȱ ofȱ aȱ wasteȱ separationȱ andȱ recyclingȱ schemeȱ atȱ ourȱ corporateȱ headquartersȱ(OG2,ȱSO).ȱ Itȱ isȱ notȱ possibleȱ toȱ drawȱ anyȱ sectorȬspecificȱ conclusionsȱ onȱ qualitativeȱ dataȱ only.ȱ Thisȱ voidȱ isȱ filledȱ throughȱ theȱ quantitativeȱ data,ȱ whichȱ suggestȱ thatȱ mindsetȱ andȱ knowledgeȱgenerateȱmoreȱindividualȱresistanceȱinȱtheȱUTȱthanȱinȱtheȱOGȱsector:ȱUTȱ sustainabilityȱofficersȱconsiderȱmindsetȱandȱlackȱofȱknowledgeȱmoreȱimportantȱthanȱ OGȱ sustainabilityȱ officersȱ (seeȱ Chartȱ 8Ȭ16ȱ andȱ Chartȱ 8Ȭ17),ȱ evenȱ ifȱ thisȱ differenceȱ isȱ notȱstatisticallyȱsignificant.ȱ

Lack of interest from customers 10%

Other 4%

Opposition or lack of interest from investors 10%

Organization culture 15%

Absence of appropriate tools 15%

Managers' mindset 19%

Lack of interest from customers 11%

Other 0%

Opposition or lack of interest from investors 11%

Managers' lack of knowledge 15%

Regulation 12%

Chartȱ8Ȭ16:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ OG)ȱ

Organization culture 14%

Absence of appropriate tools 11%

Managers' mindset 23%

Managers' lack of knowledge 22% Regulation 8%

Chartȱ8Ȭ17:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ UT)ȱ

Inȱ contrast,ȱ UTȱ generalȱ managersȱ lessȱ frequentlyȱ considerȱ managers’ȱ mindsetȱ andȱ lackȱ ofȱ knowledgeȱ andȱ expertiseȱ anȱ importantȱ barrierȱ toȱ CSMȱ (seeȱ Chartȱ 8Ȭ18ȱ andȱ Chartȱ8Ȭ19).ȱTheȱdifferenceȱinȱtermsȱofȱmanagers’ȱmindsetȱisȱstatisticallyȱsignificant.ȱ ThisȱsuggestsȱthatȱUTȱgeneralȱmanagersȱareȱlargelyȱunawareȱofȱtheirȱownȱshortcomȬ ingsȱandȱconstituteȱaȱmoreȱimportantȱbarrierȱinȱtheirȱsector.ȱTheȱonlyȱstatisticallyȱsigȬ nificantȱ crossȬdisciplinaryȱ differenceȱ additionallyȱ supportsȱ thisȱ conclusion:ȱ UTȱ susȬ tainabilityȱofficersȱmoreȱfrequentlyȱreportȱmanagers’ȱmindsetȱasȱbarriersȱthanȱ“their”ȱ generalȱmanagersȱdo.ȱTheirȱassessmentȱshouldȱbeȱmoreȱ“trustworthy”ȱbecauseȱtheyȱ

8.3ȱManagersȱ

173ȱ

areȱ moreȱ likelyȱ toȱ haveȱ aȱ betterȱ overviewȱ ofȱ theȱ strengthȱ ofȱ resistanceȱ withinȱ theirȱ companyȱdueȱtoȱtheirȱroleȱasȱadvisorsȱandȱchangeȱagents.ȱ

Managers' mindset 9%

Managers' mindset 12%

NR 39%

Regulation (e.g. subsidies & low environmental/social standards) 4%

Other 2%

Absence of appropriate tools and processes 8%

Absence of appropriate tools and processes 8%

Lack of interest from customers 8% Opposition or lack of interest from investors 7%

Organizational culture 14%

Chartȱ8Ȭ18:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG)ȱ

Other 0%

Corporate values 16% Autonomy and internal scope of SO 2% Top management commitment and leadership 19%

Regulation (e.g. subsidies & low environmental/social standards) 5%

Managers' lack of knowledge/expertise 11%

NR 34%

Demands of individual shareholders and institutional investors 2%

Managers' lack of knowledge/expertise 5%

Open organizational culture 0% Public pressure 8%

Opposition or lack of interest from investors 5% Lack of interest from customers 14%

Chartȱ8Ȭ19:ȱBarriersȱ(Generalȱmanagersȱ–ȱUT)ȱ Open organizational culture 0%

Demans from individual shareholders and institutional investors 21%

Other 0%

Public pressure 15% Increased competition on environmental and social issues in industry 8%

Increased competition on environmental and Corporate values 5% social issues in industry Autonomy and 14% New business opportunities 16%

Dialogue with stakeholders 6%

Organizational culture 11% Other 4%

Process and product innovations 17%

Chartȱ8Ȭ20:ȱPromotingȱfactorsȱ(Sustainabilityȱ officersȱ–ȱOG)ȱ

New business opportunities 13%

internal scope of SO 0%

Top management commitment and leadership 25%

Dialogue with stakeholders 8%

Process and product innovations 5%

Chartȱ8Ȭ21:ȱPromotingȱfactorsȱ(Sustainabilityȱ officerȱ–ȱUT)ȱ

Initialȱ evidenceȱ hintsȱ atȱ greaterȱ individualȱ resistanceȱ andȱ lessȱ proactiveȱ attitudesȱ ofȱ managersȱinȱtheȱUTȱsector.ȱTheȱgreaterȱproportionȱofȱtopȱmanagementȱcommitmentȱ andȱleadershipȱ(seeȱChartȱ8Ȭ20ȱandȱChartȱ8Ȭ21)ȱasȱaȱpromotingȱfactorȱofȱCSMȱinȱtheȱ UTȱsectorȱonlyȱcontradictsȱthisȱfindingȱatȱfirstȱsight.ȱIfȱoneȱtakesȱintoȱaccountȱtheȱrelaȬ tivelyȱ prominentȱ roleȱ ofȱ topȱ managersȱ (suchȱ asȱ Johnȱ Browneȱ ofȱ BPȱ andȱ –ȱ untilȱ reȬ centlyȱ–ȱPhilipȱWattsȱofȱShell)ȱinȱtheȱOGȱsector,ȱitȱisȱmoreȱlikelyȱthatȱtheȱgreaterȱproȬ portionȱinȱtheȱUTȱsectorȱindicatesȱlessȱorganizationalȱalignmentȱ(whichȱisȱdiagnosedȱ

ȱ

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moreȱcomprehensivelyȱinȱsectionȱ8.4.4ȱImplementation)ȱandȱhenceȱgreaterȱrelianceȱonȱ topȱmanagementȱsupport.ȱ Theȱmostȱconclusiveȱandȱstrongestȱevidenceȱforȱgenerallyȱmoreȱreactiveȱattitudesȱofȱ managersȱ inȱ theȱ UTȱ sectorȱ isȱ generatedȱ throughȱ respondents’ȱ differentȱ levelsȱ ofȱ agreementȱwithȱstatementsȱthatȱdescribeȱtheȱroleȱofȱbusinessȱinȱsociety;ȱtheseȱareȱtheȱ BBBȱattitudeȱ(“Theȱbusinessȱofȱbusinessȱisȱbusiness”),ȱtheȱWWȱattitudeȱ(“CSMȱonlyȱifȱ thereȱareȱwinȬwinȱsituations”),ȱtheȱCAȱattitudeȱ(“CSMȱtoȱgainȱlongȬtermȱcompetitiveȱ advantage”)ȱ andȱ theȱ UCAȱ attitudeȱ (“CSMȱ despiteȱ unprovenȱ longȬtermȱ competitiveȱ advantage”).ȱ 5

UT General managers OG General managers

BBB attitude Group Mean Std. Dev. Freq. UT GM 2.06 0.96 54 OG GM 1.84 0.91 118 Total 1.91 0.93 172

Strength of attitude 1 = "Agree not at all" to 5 = "Agree very much"

4

WW attitude Group Mean Std. Dev. Freq. UT GM 3.31 1.22 55 OG GM 3.58 1.30 119 Total 3.49 1.28 174

3

CA attitude Group Mean Std. Dev. Freq. UT GM 3.84 0.76 55 OG GM 4.34 0.81 119 Total 4.18 0.82 174

2

UCA attitude Group Mean Std. Dev. Freq. UT GM 3.18 1.04 55 OG GM 3.48 1.01 119 Total 3.39 1.02 174

1

0

BBB attitude

WW attitude

CA attitude

UCA attitude

Chartȱ8Ȭ22:ȱPersonalȱattitudesȱtowardsȱcorporateȱsustainabilityȱ(Generalȱmanagers)ȱ

Chartȱ 8Ȭ22ȱ showsȱ thatȱ theȱ CAȱ attitudeȱ isȱ theȱ strongest,ȱ followedȱ byȱ theȱ WW,ȱ UCAȱ andȱ BBBȱ attitudeȱ inȱ bothȱ sectors.ȱ Theȱ chartȱ alsoȱ illustratesȱ thatȱ proactiveȱ attitudesȱ (WW,ȱ CAȱ andȱ UCA)ȱareȱ stronger,ȱ andȱ theȱ reactiveȱ BBBȱ attitudeȱ weaker,ȱ inȱ theȱ OGȱ sectorȱthanȱinȱtheȱUTȱsector.ȱMostȱimportantlyȱtheȱdifferencesȱinȱtheȱCAȱandȱUCAȱareȱ statisticallyȱsignificant.ȱ ThisȱmoreȱproactiveȱstanceȱofȱOGȱrespondentsȱcanȱbeȱattributedȱtoȱgreaterȱissueȱsigȬ nificanceȱ(andȱawareness),ȱgreaterȱorganizationalȱvisibilityȱandȱoutsideȱpressureȱ(seeȱ sectionsȱ 8.1ȱ Issuesȱ andȱ 8.2ȱ Externalȱ stakeholders,ȱ industryȱ andȱ partnerships)ȱ andȱ fewerȱinternalȱdeficitsȱsuchȱasȱcorporateȱculturesȱ(seeȱsectionȱ8.4ȱCompanies).ȱ

ȱ

8.3ȱManagersȱ

8.3.2

175ȱ

Advancedȱstatisticsȱ

8.3.2.1 Correlationsȱ Figureȱ8Ȭ16ȱtoȱFigureȱ8Ȭ19ȱshowȱtheȱcorrelationsȱdetectedȱbetweenȱtheȱfourȱattitudesȱ andȱotherȱvariablesȱrespectively.ȱTheyȱwillȱbeȱdiscussedȱinȱmoreȱdetailȱinȱtheȱfollowȬ ingȱparagraphs.ȱ Issuesȱ Theȱ figuresȱ showȱ thatȱ moreȱ proactiveȱ managersȱ considerȱ socialȱ andȱ environmentalȱ issuesȱmoreȱsignificant,ȱmoreȱreactiveȱrespondentsȱconsiderȱthemȱlessȱsignificant.ȱAsȱ alreadyȱ discussedȱ above,ȱ thisȱ isȱ becauseȱ managersȱ withȱ moreȱ proactiveȱ attitudesȱ haveȱdifferentȱbeliefsȱandȱconcepts,ȱmoreȱproactiveȱcognitiveȱmaps,ȱandȱaȱmoreȱcomȬ prehensiveȱunderstandingȱofȱcauseȬeffectȱrelationshipsȱthanȱrespondentsȱwithȱaȱmoreȱ reactiveȱmindsetȱ(Duttonȱetȱal.,ȱ1983,ȱp.ȱ311).ȱ Issues

Companies

Socialȱissues Environmentalȱissues

T

Managers BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱOG

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

T,ȱOG

Externalȱstakeholders Capitalȱmarkets

FutureȱSDȱrole

T

Strategic disposition

SDȱfamiliarity SDȱimportance CSMȱINTENT

T

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

Consumers Governments CurrentȱSDȱrole

Structure

T

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.16:ȱCorrelationsȱ–ȱBBBȱattitudeȱ

Managers’ȱattitudesȱ Asȱoneȱwouldȱexpect,ȱresultsȱshowȱthatȱtheȱtwoȱmoreȱproactiveȱattitudesȱ(CAȱ“CSMȱ toȱ gainȱ competitiveȱ advantage”,ȱ UCAȱ “CSMȱ despiteȱ unprovenȱ competitiveȱ advanȬ tage”)ȱ negativelyȱ correlateȱ withȱ theȱ reactiveȱ BBBȱ (Businessȱ ofȱ businessȱ isȱ business)ȱ attitude.ȱTheȱfactȱthatȱtheȱWWȱattitudeȱisȱonlyȱpositivelyȱassociatedȱwithȱtheȱCAȱattiȬ ȱ

176ȱ

8ȱEmpiricalȱevidenceȱ

tudeȱprovidesȱsomeȱevidenceȱthatȱtheȱformerȱmayȱbeȱslightlyȱonȱtheȱproactiveȱratherȱ thanȱtheȱreactiveȱsideȱofȱtheȱcontinuumȱprovidedȱbyȱtheȱfourȱattitudes.ȱ Issues

Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T

SDȱfamiliarity

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv. Strategic disposition

Externalȱstakeholders FutureȱSDȱrole

Legitimacy

CSMȱINTENT

Capitalȱmarkets Importanceȱofȱlegitimacy

T,ȱOG

Damageȱtoȱlegitimacy T,ȱUT

Consumers Governments CurrentȱSDȱrole

SDȱimportance

Structure

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.17:ȱCorrelationsȱ–ȱWWȱattitudeȱ

SDȱrolesȱofȱexternalȱstakeholders,ȱindustryȱandȱpublicȬprivateȱpartnershipsȱ ResultsȱrevealȱthatȱproactiveȱrespondentsȱhaveȱmoreȱpositiveȱexpectationsȱofȱtheȱfuȬ tureȱSDȱroleȱofȱcapitalȱmarkets,ȱandȱconsiderȱtheȱcurrentȱSDȱroleȱofȱNGOsȱmoreȱproacȬ tive.49ȱThisȱsuggestsȱthatȱproactiveȱmanagersȱareȱmoreȱawareȱofȱcurrentȱandȱpossibleȱ futureȱ demandsȱ fromȱ externalȱ pressureȱ groupsȱ and/orȱ areȱ biasedȱ inȱ theȱ senseȱ thatȱ theyȱ wishȱ forȱ moreȱ proactiveȱ engagementȱ fromȱ capitalȱ marketsȱ inȱ theȱ futureȱ (forȱ aȱ moreȱ detailedȱ andȱ sectorȬspecificȱ discussionȱ referȱ toȱ sectionȱ 8.2.4ȱ Financialȱ commuȬ nityȱandȱsectionȱ8.2.2ȱPublicȱpressureȱgroups).ȱ Moreover,ȱproactiveȱattitudesȱareȱlinkedȱtoȱaȱmoreȱproactiveȱSDȱroleȱofȱindustryȱandȱ publicȬprivateȱ partnerships,ȱ whichȱ indicatesȱ thatȱ proactiveȱ managersȱ areȱ (1)ȱ moreȱ optimisticȱaboutȱtheȱSDȱroleȱofȱtheȱsectorȱasȱaȱwholeȱandȱofȱPPPsȱdueȱtoȱtheirȱgreaterȱ awarenessȱ ofȱ currentȱ sectorȬspecificȱ initiativesȱ andȱ bestȱ practices;ȱ and/orȱ (2)ȱ posiȬ tivelyȱ biasedȱ (“wishfulȱ thinking”)ȱ dueȱ toȱ theirȱ greaterȱ awarenessȱ ofȱ issuesȱ thatȱ reȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 49

ȱ Theȱ correlationsȱ betweenȱ theȱ CAȱ attitudeȱ andȱ NGOs’ȱ SDȱ roleȱ isȱ statisticallyȱ significantȱ atȱ aȱ justȱ aboveȱ5%ȱlevelȱinȱtheȱtotal,ȱatȱaȱjustȱaboveȱ10%ȱlevelȱinȱtheȱOGȱsample.ȱ

8.3ȱManagersȱ

177ȱ

mainȱ unresolvedȱ despiteȱ currentȱ activitiesȱ inȱ theȱ sectorȱ (seeȱ sectionȱ 8.2.5ȱ Industryȱ andȱpartnerships).ȱ Issues

Socialȱissues

T,ȱOG

Environmentalȱissues

T,ȱOG

Managers BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations

Companies

T,ȱOG T

CA:ȱCSMȱtoȱgainȱcompetitiveȱadv. UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

T,ȱUT,ȱOG

Externalȱstakeholders Capitalȱmarkets

FutureȱSDȱrole

Legitimacy

T,ȱUT,ȱOG

Importanceȱofȱlegitimacy

T,ȱOG

Damageȱtoȱlegitimacy

T

T,ȱOG

SDȱfamiliarity

StrategicT,ȱUT disposition

SDȱimportance

T,ȱOG

CSMȱINTENT

T,ȱUT

Structure

Consumers

T,ȱOG

Governments CurrentȱSDȱrole

PPPs Industry NGOs

T,ȱOG

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

T,ȱOG,ȱUT

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.18:ȱCorrelationsȱ–ȱCAȱattitudeȱ

Legitimacyȱ Proactiveȱmanagersȱalsoȱexhibitȱgreaterȱsensitivityȱtoȱcompanies’ȱlegitimacyȱ(seeȱalsoȱ sectionȱ 8.2.6.1ȱ Theȱ roleȱ ofȱ legitimacy).ȱ Inȱ contrastȱ toȱ theȱ threeȱ moreȱ proactiveȱ attiȬ tudes,ȱtheȱBBBȱattitudeȱdoesȱnotȱexhibitȱaȱstatisticallyȱsignificantȱlinkȱwithȱeitherȱtheȱ importanceȱofȱorȱtheȱdamageȱtoȱlegitimacy.ȱNevertheless,ȱtheȱsignȱofȱtheȱcoefficientsȱ alsoȱ indicatesȱ thatȱ reactiveȱ respondentsȱ considerȱ legitimacyȱ lessȱ important,ȱ andȱ reȬ portȱlessȱdamageȱtoȱit.ȱ Overallȱtheseȱresultsȱindicateȱthatȱmoreȱproactiveȱmanagersȱ–ȱdueȱtoȱgreaterȱknowlȬ edge,ȱ expertiseȱ andȱ moreȱ “activist”ȱ personalȱ valuesȱ –ȱ moreȱ stronglyȱ recognizeȱ theȱ financialȱstakesȱassociatedȱwithȱinformalȱlegitimacy.ȱ Strategicȱdispositionȱ Overallȱdataȱexhibitȱaȱclearȱpositiveȱlinkȱbetweenȱproactiveȱmanagers’ȱattitudesȱandȱ greaterȱstrategicȱdisposition.ȱTheȱauthorȱsuggestsȱthatȱtheȱdetectedȱlinkȱbetweenȱperȬ sonalȱ attitudesȱ andȱ strategicȱ dispositionȱ mayȱ beȱ synergistic:ȱ Proactiveȱ managersȱ driveȱcorporateȱsustainabilityȱwithinȱtheȱorganizationȱ(fromȱtheȱbottomȱup)ȱ–ȱasȱposȬ tulatedȱ byȱ theȱ motivatingȱ principleȱ ofȱ managerialȱ discretionȱ (Wood,ȱ 1991).ȱ ConȬ ȱ

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8ȱEmpiricalȱevidenceȱ

versely,ȱcompanies’ȱmoreȱaccentuatedȱapproachȱtoȱCSMȱmayȱattractȱmoreȱproactiveȱ employeesȱ andȱ strengthenȱ proactiveȱ attitudesȱ ofȱ theirȱ employeesȱ (fromȱ theȱ topȱ down)ȱ(Anonymous,ȱ2004a,ȱp.ȱ2;ȱDechantȱetȱal.,ȱ1994,ȱp.ȱ8)ȱ Issues

Socialȱissues

T

Environmentalȱissues

T

Managers BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

Companies

T,ȱOG

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱUT,ȱOG

SDȱfamiliarity

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

T,ȱOG

StrategicT,ȱOG disposition

SDȱimportance

T,ȱOG

CSMȱINTENT

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy T,ȱUT

Structure

Consumers

T,ȱUT

Governments CurrentȱSDȱrole

PPPs Industry NGOs

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

T

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.19:ȱCorrelationsȱ–ȱUCAȱattitudeȱ

Aȱ strongȱ BBBȱ attitudeȱ isȱ negativelyȱ relatedȱ toȱ SDȱ familiarity,ȱ SDȱ importanceȱ andȱ CSMȱintentȱinȱbothȱsectors.ȱTheȱcorrelationȱwithȱSDȱfamiliarityȱisȱstatisticallyȱsignifiȬ cant.ȱTheȱWWȱdoesȱnotȱexhibitȱanyȱstatisticallyȱsignificantȱassociationȱwithȱstrategicȱ dispositionȱ inȱ eitherȱ ofȱ theȱ twoȱ sectors.ȱ Thisȱ resultsȱ correspondsȱ withȱ conclusionsȱ drawnȱalreadyȱinȱpreviousȱsectionsȱthatȱbothȱproactiveȱandȱreactiveȱrespondentsȱareȱ equallyȱstronglyȱrelatedȱtoȱtheȱattitudeȱdescribed.50ȱ TheȱCAȱattitudeȱisȱmostȱclearlyȱlinkedȱtoȱstrategicȱdisposition:ȱItȱisȱpositivelyȱrelatedȱ toȱSDȱfamiliarity,ȱCSMȱintentȱ(bothȱatȱaȱ5%ȱsignificanceȱlevel)ȱandȱSDȱimportanceȱ(atȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 50

ȱThusȱexistingȱopposedȱrelationshipsȱcancelȱeachȱotherȱout.ȱInȱsomeȱcasesȱthisȱoverlapȱcausesȱnotableȱ discontinuityȱ inȱ theȱ correlationȱ coefficientsȱ acrossȱ allȱ fourȱ attitudes,ȱ particularlyȱ inȱ theȱ UTȱ sector.ȱ E.g.ȱ theȱ correlationȱ coefficientsȱ betweenȱ theȱ fourȱ attitudesȱ andȱ NGOs’ȱ contributionȱ toȱ sustainableȱ developmentȱareȱasȱfollowsȱ(fromȱtheȱleastȱtoȱtheȱmostȱproactiveȱattitude):ȱ0.0887ȱ(businessȱofȱbusiȬ nessȱisȱbusiness),ȱȬ0.1134ȱ(winȬwin),ȱ0.1498ȱ(competitiveȱadvantage)ȱandȱ0.1237ȱ(unprovenȱcompetiȬ tiveȱadvantage).ȱCorrelationȱcoefficientsȱwithȱconsumers’ȱandȱgovernments’ȱrolesȱbehaveȱinȱaȱsimiȬ larȱway.ȱ

8.3ȱManagersȱ

179ȱ

aȱ 10%ȱ significanceȱ level)ȱ inȱ theȱ OGȱ sector,ȱ inȱ theȱ UTȱ sectorȱ onlyȱ toȱ SDȱ importance.ȱ Theȱ UTȱ coefficientsȱ forȱ theȱ remainingȱ variablesȱ SDȱ familiarityȱ andȱ CSMȱ intentȱ areȱ alsoȱpositiveȱbutȱlackȱstatisticalȱsignificance,ȱwhichȱcouldȱbeȱcausedȱbyȱtheȱrelativelyȱ smallerȱsampleȱsizeȱcomparedȱtoȱtheȱOGȱsector.ȱHowever,ȱtheȱfactȱthatȱtheȱcorrelationȱ betweenȱtheȱCAȱattitudeȱandȱCSMȱintentȱareȱroughlyȱtwiceȱasȱstrongȱinȱtheȱOGȱasȱinȱ theȱ UTȱ sampleȱ providesȱ reasonableȱ evidenceȱ forȱ aȱ moreȱ stronglyȱ developedȱ proacȬ tiveȱattitude.ȱ Correlationsȱ detectedȱ betweenȱ theȱ UCAȱ attitudeȱ andȱ strategicȱ dispositionȱ additionȬ allyȱsupportȱthisȱconclusion:ȱWhereasȱtheȱassociationsȱbetweenȱtheȱattitudeȱandȱbothȱ SDȱ importanceȱ andȱ CSMȱ intentȱ areȱ positiveȱ andȱ statisticallyȱ significantȱ inȱ theȱ OGȱ sample,ȱUTȱdataȱdoȱnotȱyieldȱanyȱstatisticallyȱsignificantȱresults.ȱ Overallȱ attitudesȱ areȱmoreȱstronglyȱ linkedȱ toȱstrategicȱdispositionȱ inȱ theȱ OGȱsector.ȱ Thisȱ fitsȱ withȱ evidenceȱ presentedȱ aboveȱ onȱ OGȱ managers’ȱ greaterȱ issueȱ awarenessȱ andȱ concernsȱ aboutȱ theirȱ companies’ȱ legitimacy.ȱ However,ȱ asȱ theȱ authorȱ willȱ alsoȱ demonstrateȱinȱsectionȱ8.4ȱCompanies,ȱOGȱmanagersȱareȱnotȱonlyȱmoreȱproactiveȱbeȬ causeȱofȱstrongerȱexternalȱdrivers:ȱTheȱmoreȱadvancedȱapproachȱofȱOGȱcompaniesȱtoȱ theȱimplementationȱofȱCSMȱisȱalsoȱaȱsignificantȱdeterminingȱfactor.ȱ Structureȱ Dataȱ alsoȱ pointȱ toȱ aȱ significantȱ relationshipȱ betweenȱ managers’ȱ proactiveȱ attitudesȱ andȱbothȱcloserȱcrossȬdisciplinaryȱcollaborationȱandȱgreaterȱcrossȬdisciplinaryȱpotenȬ tial.ȱOverallȱcrossȬsectorȱdifferencesȱinȱtheȱstrengthsȱandȱstatisticalȱsignificanceȱofȱcoȬ efficientsȱareȱminorȱandȱwillȱnotȱbeȱdiscussedȱinȱdetail.ȱ Coefficientsȱ describingȱ theȱ associationȱ betweenȱ theȱ BBBȱ attitudeȱ andȱ bothȱ crossȬ disciplinaryȱcollaborationȱandȱpotentialȱareȱnegativeȱinȱtheȱthreeȱsamples.ȱOneȱofȱtheȱ sixȱ correlations,ȱ namelyȱ theȱ oneȱ withȱ crossȬdisciplinaryȱ collaborationȱ inȱ theȱ totalȱ sampleȱisȱstatisticallyȱsignificant.ȱ TheȱWWȱattitudeȱisȱpositivelyȱrelatedȱtoȱcloserȱcollaboration,ȱcorrelationsȱbeingȱstaȬ tisticallyȱ significantȱ inȱ theȱ totalȱ andȱ UTȱ samples.ȱ Thisȱ resultȱ clearlyȱ indicatesȱ thatȱ consultationȱ withȱ andȱ coachingȱ throughȱ sustainabilityȱ expertsȱ raisesȱ managers’ȱ awarenessȱofȱtheȱwinȬwinȱpotentialȱassociatedȱwithȱCSM.ȱTheȱCAȱandȱUCAȱattitudeȱ areȱpositivelyȱassociatedȱwithȱbothȱcrossȬdisciplinaryȱcollaborationȱandȱpotential.ȱ Oneȱcanȱconcludeȱthatȱcorrelationsȱestablishȱaȱclearȱlinkȱbetweenȱmanagers’ȱproactiveȱ attitudesȱandȱaȱhigherȱlevelȱofȱimplementationȱofȱCSM.ȱThisȱisȱtoȱbeȱexpected,ȱsinceȱ moreȱ intensiveȱ crossȬdisciplinaryȱ collaborationȱ inȱ anyȱ formȱ (e.g.ȱ directȱ individualȱ consultationȱwithȱsustainabilityȱexperts,ȱbusinessȱteams)ȱincreasesȱmanagers’ȱawareȬ nessȱofȱissuesȱandȱ externalȱpressureȱ groups,ȱ changesȱtheirȱ cognitiveȱ mapsȱandȱthusȱ contributesȱtoȱmoreȱproactiveȱattitudesȱinȱtheȱlongȱratherȱthanȱshortȱterm.ȱTheȱposiȬ ȱ

180ȱ

8ȱEmpiricalȱevidenceȱ

tiveȱ linkȱ betweenȱ proactiveȱ attitudesȱ andȱ crossȬdisciplinaryȱ potentialȱ alsoȱ indicatesȱ thatȱ proactiveȱ managersȱ areȱ moreȱ inclinedȱ toȱ collaborateȱ andȱ considerȱ crossȬ disciplinaryȱcollaborationȱmoreȱworthwhile.ȱ CSMȱsuccessȱ Finally,ȱ proactiveȱ attitudesȱ areȱ positivelyȱ associatedȱ withȱ CSMȱ success.ȱ Thisȱ linkȱ isȱ visibleȱinȱtheȱstatisticallyȱsignificantȱpositiveȱcorrelationȱbetweenȱtheȱCAȱattitudeȱandȱ CSMȱsuccess.ȱPossibleȱassociationsȱwithȱtheȱremainingȱattitudesȱareȱmostȱlikelyȱconȬ foundedȱ byȱ socialȱ desirabilityȱ biasȱ whichȱ affectedȱ theȱ UCAȱ attitudeȱ inȱ particular51ȱ andȱlittleȱdiscriminatoryȱpotentialȱofȱtheȱWWȱstatementȱ(bothȱproactiveȱandȱreactiveȱ respondentsȱrelateȱtoȱitȱequally).ȱȱ OverallȱtheȱattitudeȬCSMȱsuccessȱrelationshipȱpointsȱtoȱtheȱmeaningfulnessȱofȱmanaȬ gerialȱdiscretion:ȱItȱindicatesȱthatȱaȱsignificantȱpotentialȱofȱCSMȱisȱexploitedȱmoreȱefȬ fectivelyȱbyȱproactiveȱmanagersȱ(Wood,ȱ1991,ȱp.ȱ696).ȱ Conclusionȱ Inȱconclusion,ȱtheȱfindingsȱstronglyȱsuggestȱthatȱproactiveȱmanagersȱareȱmoreȱfamilȬ iarȱwithȱexistingȱissuesȱandȱcurrentȱandȱfutureȱdemandsȱfromȱexternalȱstakeholders.ȱ Theyȱalsoȱreportȱgreaterȱstrategicȱdispositionȱandȱmoreȱadvancedȱimplementationȱofȱ CSMȱinȱtheirȱcompanies.ȱCorrelationȱcoefficientsȱdoȱnotȱdifferȱsubstantiallyȱbetweenȱ theȱsectors.ȱHowever,ȱalthoughȱresultsȱacrossȱbothȱsectorsȱareȱnotȱentirelyȱcomparaȬ bleȱ dueȱ toȱ theȱ smallerȱ UTȱ sample,ȱ overallȱ dataȱ indicateȱ thatȱ proactiveȱ attitudesȱ areȱ moreȱstronglyȱdevelopedȱinȱtheȱOGȱsector.ȱ 8.3.2.2 Regressionsȱ Thisȱsectionȱfeaturesȱregressionȱ modelsȱthatȱexamineȱtheȱ effectȱ ofȱtheȱ fourȱattitudesȱ (BBB,ȱ WW,ȱ CAȱ andȱ UCA)ȱ onȱ CSMȱ intentȱ andȱ success,ȱ respectivelyȱ (seeȱ Regressionȱ Tableȱ 8Ȭ8).ȱ Theȱ authorȱ notesȱ thatȱ theȱ effectȱ ofȱ “managers’ȱ mindset”ȱ andȱ “lackȱ ofȱ knowledgeȱandȱexpertise”ȱasȱbarriersȱtoȱCSMȱwillȱbeȱincludedȱinȱregressionȱanalysisȱ inȱsectionȱ8.4.2.2.2,ȱbecauseȱtheyȱfitȱthoseȱmodelsȱbetterȱinȱtermsȱofȱtheirȱoperationaliȬ zationȱ (allȱ variablesȱ inȱ thoseȱ modelsȱ areȱ operationalizedȱ asȱ barriersȱ toȱ CSM)ȱ andȱ measurementȱ(allȱvariablesȱareȱnominal).ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 51

ȱAȱmoreȱdetailedȱexaminationȱofȱtheȱcorrelationȱcoefficientsȱrevealsȱanȱunexpectedȱdiscontinuityȱinȱ bothȱsamples,ȱsimilarȱtoȱthatȱvisibleȱinȱtheȱcoefficientsȱofȱtheȱWWȱattitude.ȱInȱmanyȱcases,ȱtheȱcoeffiȬ cientsȱ indicateȱ aȱ lessȱ proactiveȱ attitudeȱ thanȱ theȱ coefficientsȱ ofȱ theȱ CAȱ attitude,ȱ whichȱ indicatesȱ aȱ strongȱsocialȱdesirabilityȱbiasȱforȱthisȱattitude.ȱE.g.ȱInȱtheȱOGȱsample,ȱtheȱcorrelationȱcoefficientsȱbeȬ tweenȱtheȱfourȱattitudesȱandȱtheȱimportanceȱofȱsocialȱissuesȱareȱasȱfollowsȱ(fromȱtheȱleastȱtoȱtheȱmostȱ proactiveȱattitude):ȱȬ0.0538ȱ(businessȱofȱbusinessȱisȱbusiness),ȱ0.0249ȱ(winȬwin),ȱ0.2564ȱ(competitiveȱ advantage)ȱandȱ0.1443ȱ(unprovenȱcompetitiveȱadvantage).ȱAȱsimilarȱpatternȱisȱobservableȱforȱcorreȬ lationȱcoefficientsȱwithȱtheȱroleȱofȱpublicȬprivateȱpartnerships.ȱTheȱsameȱappliesȱtoȱtheȱUTȱsample.ȱ

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181ȱ

Regressionȱ modelsȱ supportȱ bothȱ qualitativeȱ andȱ quantitativeȱ evidenceȱ presentedȱ aboveȱ onȱ theȱ positiveȱ linkȱ betweenȱ manages’ȱ proactiveȱ attitudesȱ andȱ CSM:ȱ Theyȱ showȱsignificantȱpositiveȱeffectsȱofȱtheȱCAȱattitudeȱonȱCSMȱintentȱandȱCSMȱsuccess.ȱ TheȱfactȱthatȱtheȱeffectsȱofȱtheȱWWȱattitudeȱandȱUCAȱattitudeȱareȱnotȱstatisticallyȱsigȬ nificantȱ isȱ notȱ surprisingȱ inȱ theȱ lightȱ ofȱ theȱ correlationsȱ resultsȱ presentedȱ earlier,ȱ whichȱshowedȱthatȱsocialȱdesirabilityȱbiasȱand,ȱinȱtheȱcaseȱofȱtheȱWWȱattitude,ȱlittleȱ discriminatoryȱpotential,ȱconfoundedȱpossibleȱassociations.ȱTheȱinfluenceȱofȱtheȱBBBȱ attitudeȱisȱweakȱandȱnotȱstatisticallyȱsignificantȱinȱanyȱofȱtheȱmodels,ȱalsoȱpresumaȬ blyȱtoȱdueȱsocialȱdesirabilityȱbias.ȱ T model 165 5.18 0.0000 0.2518 0.2032 .75002

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var BBB attitude: Business of business is business WW attitude: CSM only in win-win situations CA attitude: CSM to gain competitive advantage UCA attitude: CSM despite unproven comp. adv.

-.0021984 .044665 .3394197 .021804

UT sector

-.3536869

Nordic North Am Latin Europe Dev econ Other reg

.0903376 -.5552745 .0178057 -.2761702 .181467

Constant

2.382804

OG

model 112 6.13 0.0000 0.3510 0.2937 .68733 Coeff .0537984 .0290978 .4166961 .0387211

-.4197257

UT model 53 0.93 0.5083 0.1631 -0.0120 .85097 -.0233499 .0357694 .1763691 .0068478

-.0890881

.7463102 -.231956 .4355066 -.4212515 .3858773

2.156873

2.627776

-.7551018 -.2288685

-.47343

RegressionȱTableȱ8Ȭ8:ȱCSMȱintentȱ–ȱManagers’ȱpersonalȱattitudesȱ(Expandedȱclusterȱmodels)ȱ

ItȱshouldȱbeȱnotedȱthatȱtheȱeffectȱofȱtheȱCAȱattitudeȱisȱonlyȱsignificantȱinȱoneȱofȱtheȱ sectorȬspecificȱmodels.ȱHowever,ȱtheȱsizeȱofȱtheȱcorrespondingȱcoefficientȱinȱtheȱUTȱ modelsȱalsoȱprovidesȱsomeȱevidenceȱforȱtheȱexistenceȱofȱthisȱeffectȱinȱtheȱUTȱsector,ȱ whichȱ mayȱ notȱ beȱ statisticallyȱ significantȱ becauseȱ ofȱ theȱ limitedȱ sampleȱ sizeȱ and/orȱ becauseȱtheȱunderlyingȱattitudeȱisȱlessȱdevelopedȱandȱsoȱdominatedȱbyȱcorporateȱorȱ sectorȬspecificȱ factorsȱ (i.e.ȱ lackȱ ofȱ openȱ corporateȱ cultures,ȱ currentȱ orȱ formerȱ stateȱ ownership,ȱstronglyȱregulatedȱbusinessȱenvironment).ȱ Finallyȱtheȱeffectsȱofȱseveralȱdummyȱvariablesȱareȱstatisticallyȱsignificantȱandȱindicateȱ thatȱsectorȱandȱregionȱeffectsȱ(NorthȱAmericaȱandȱNordic)ȱmoderateȱtheȱrelationshipȱ betweenȱtheȱdependentȱandȱindependentȱvariables.ȱTheȱnegativeȱdummyȱforȱtheȱUTȱ sectorȱpointsȱtoȱlowerȱlevelsȱofȱCSMȱintentȱandȱCSMȱsuccessȱinȱUTȱcompanies,ȱwhichȱ canȱbeȱattributedȱtoȱbothȱexternalȱfactorsȱdiscussedȱaboveȱandȱinternalȱbarriersȱthatȱ willȱbeȱdiscussedȱinȱmoreȱdetailȱinȱsectionȱ8.4ȱCompanies.ȱ

ȱ

182ȱ

8ȱEmpiricalȱevidenceȱ

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var BBB attitude: Business of business is business WW attitude: CSM only in win-win situations CA attitude: CSM to gain competitive advantage UCA attitude: : CSM despite unproven competitive advantage

T model 164 1.52 0.1369 0.0904 0.0309 .74957 .0699032 .0076743 .1726002 .0162969

OG model 110 1.71 0.0973 0.1331 0.0551 .75332 Coeff .0924386 -.0374301

.203433 -.0160763

UT model 54 0.36 0.9479 0.0686 -0.1219 .75963 .0801434 .0683858 .0759947 .0682392

UT sector

-.3094356

Nordic North Am Latin Europe Dev econ Other reg

-.19871 -.3799544 -.1066371 -.2649101 -.2171363

-.5040395 -.6086083 -.3413017 -.4391145

.0840831 .2749738 .1920724 -.3097819 -.2373941

Constant

2.78972

3.085305

2.367402

-.4774114

RegressionȱTableȱ8Ȭ9:ȱCSMȱsuccessȱ–ȱManagers’ȱpersonalȱattitudesȱ(Expandedȱclusterȱmodels)ȱ

Mostȱregionȱeffectsȱhaveȱalsoȱbeenȱdetectedȱinȱpreviousȱmodels.ȱTheyȱcanȱbeȱattribȬ utedȱtoȱdifferencesȱinȱissueȱsignificance,ȱoutsideȱpressureȱbutȱalsoȱinternalȱcompanyȬ relatedȱdeficitsȱ(e.g.ȱinadequateȱcorporateȱcultures).ȱ 8.3.3 Discussionȱ Importanceȱofȱmanagers’ȱattitudesȱandȱtheȱprincipleȱofȱmanagerialȱdiscretionȱ Qualitativeȱandȱquantitativeȱevidenceȱsupportȱtheȱhypothesisȱunderlyingȱtheȱstudy’sȱ conceptualȱframeworkȱaboutȱtheȱsignificanceȱofȱmanagerialȱdiscretionȱtoȱCSM.ȱProacȬ tiveȱ attitudesȱ haveȱ beenȱ linkedȱ toȱ greaterȱ issueȱ significance,ȱ greaterȱ awarenessȱ ofȱ demandsȱfromȱstakeholdersȱ(namelyȱcapitalȱmarketsȱandȱNGOs)ȱandȱgreaterȱimporȬ tanceȱofȱlegitimacy.ȱMoreoverȱtheyȱhaveȱbeenȱfoundȱtoȱbeȱrelatedȱtoȱmoreȱadvancedȱ approachesȱtoȱCSM,ȱwhichȱisȱinȱparallelȱwithȱfindingsȱfromȱseveralȱauthorsȱ(AndersȬ sonȱetȱal.,ȱ2000,ȱp.ȱ565;ȱBansalȱetȱal.,ȱ2000,ȱp.ȱ731;ȱBichta,ȱ2003,ȱp.ȱ17;ȱSturdivantȱetȱal.,ȱ 1977;ȱWinn,ȱ1995,ȱp.ȱ151).ȱ Quantitativeȱdataȱonȱmanagers’ȱattitudesȱwasȱinterȱaliaȱcollectedȱthroughȱaȱsetȱofȱfourȱ statements,ȱtoȱwhichȱrespondentsȱwereȱaskedȱtoȱindicateȱtheirȱlevelȱofȱagreementȱorȱ disagreement.ȱ Resultsȱ pointedȱ toȱ surprisinglyȱ proactiveȱ attitudes:ȱ Respondentsȱ showedȱ theȱ strongestȱ adherenceȱ toȱ aȱ statementȱ thatȱ promotedȱ CSMȱ asȱ aȱ meansȱ ofȱ gainingȱlongȬtermȱadvantage.ȱThisȱcallsȱforȱaȱclearȱwordȱofȱcaution,ȱsinceȱtheȱdataȱareȱ obviouslyȱaffectedȱbyȱsocialȱdesirabilityȱbias:ȱ -

Asȱtheȱauthorȱwillȱillustrateȱinȱsectionȱ8.4.3ȱEconomicȱrationaleȱinȱparticular,ȱpreȬ ciselyȱ theȱ inherentlyȱ uncertainȱ natureȱ ofȱ longȬtermȱ competitiveȱ advantage,ȱ i.e.ȱ lackȱofȱeasilyȱvisibleȱshortȬtermȱcompetitiveȱadvantage,ȱconstitutesȱoneȱofȱtheȱkeyȱ barriersȱtoȱCSM.ȱ

8.3ȱManagersȱ

183ȱ

-

Quantitativeȱ evidenceȱ presentedȱ inȱ sectionȱ 8.4.1ȱ CompanyȬspecificȱ determinantsȱ revealsȱmanagers’ȱmindsetȱasȱaȱsignificantȱinternalȱbarrierȱtoȱCSMȱinȱtheȱUTȱsecȬ tor.ȱ

-

Furthermore,ȱsectionsȱ8.4.4.2ȱStructureȱandȱ8.4.4.3ȱCorporateȱinitiativesȱpointȱtoȱaȱ ratherȱreactiveȱmanagers’ȱmindsetȱandȱlowȱlevelȱofȱawareness.ȱ

Determinantsȱofȱmanagers’ȱattitudesȱ Theȱ principleȱ ofȱ managerialȱ discretionȱ statesȱ thatȱ managersȱ “constantlyȱ makeȱ deciȬ sionsȱandȱchoices,ȱ[…]ȱsomeȱminorȱandȱothersȱofȱgreatȱconsequences”ȱ(Wood,ȱ1991,ȱ p.ȱ699).ȱAsȱoutlinedȱearlier,ȱtheseȱdecisionsȱandȱactionsȱareȱbasedȱonȱtheȱmeaningȱtheȱ managers’ȱenvironmentȱandȱstimuliȱhaveȱforȱthemȱ(Bortzȱetȱal.,ȱ2002,ȱp.ȱ304)ȱ–ȱstimuliȱ suchȱ asȱ aȱ visibleȱ issue,ȱ outsideȱ pressureȱ fromȱ stakeholdersȱ regardingȱ thatȱ issue,ȱ inȬ centivesȱorȱdisincentivesȱfromȱwithinȱtheirȱcompaniesȱthatȱprovideȱmanagersȱwithȱaȱ setȱofȱchoices.ȱ Forȱexample,ȱifȱmanagersȱperceiveȱanȱissueȱasȱsignificant,ȱtheyȱwillȱrespondȱinȱaȱcerȬ tainȱ wayȱ (e.g.ȱ gatheringȱ additionalȱ information,ȱ whichȱ mayȱ changeȱ cognitiveȱ mapsȱ andȱincreaseȱtheȱwillingnessȱtoȱintegrateȱtheȱissueȱintoȱdecisionȬmaking);ȱifȱtheyȱconȬ siderȱitȱinsignificant,ȱtheyȱwillȱrespondȱdifferently.ȱThisȱlinkȱisȱreflectedȱinȱtheȱresultsȱ ofȱ theȱ study’sȱ advancedȱ statistics:ȱ Moreȱ proactiveȱ managersȱ notȱ onlyȱ perceiveȱ theȱ stimuliȱ(e.g.ȱissue,ȱoutsideȱpressure)ȱasȱgreaterȱbutȱalsoȱreportȱgreaterȱstrategicȱdispoȬ sitionȱtoȱCSM,ȱmoreȱadvancedȱimplementationȱandȱgreaterȱCSMȱsuccess.ȱ Mainlyȱqualitativeȱdataȱpointȱtoȱseveralȱfactorsȱthatȱmoderateȱ–ȱalongsideȱtheȱindustryȱ sectorȱ–ȱtheȱeffectȱofȱexternalȱandȱinternalȱ(companyȬspecific)ȱstimuli.ȱTheyȱcomprise:ȱ -

Managementȱ levelȱ andȱ age:ȱ Bothȱ factorsȱ areȱ likelyȱ toȱ interactȱ soȱ thatȱ olderȱ topȱ managersȱareȱunlikelyȱtoȱdisplayȱtheȱsameȱattitudeȱasȱolderȱmanagersȱatȱtheȱbotȬ tomȱlevel:ȱInterviewsȱpointedȱtoȱreactiveȱattitudesȱofȱolderȱmanagersȱatȱtheȱbottomȱ level.ȱ Simerlyȱ (2003,ȱ p.ȱ 357)ȱ foundȱ aȱ positiveȱ linkȱ betweenȱ topȱ managers’ȱ tenureȱ (linkedȱwithȱage)ȱandȱcorporateȱsocialȱperformance,ȱwhichȱheȱattributedȱtoȱexterȬ nalȱ pressureȱ (inȱ theȱ chemicalsȱ andȱ petroleumȱ industry)ȱ thatȱ hadȱ sensitizedȱ topȱ managersȱoverȱtime.ȱThusȱtheȱdiscriminatingȱfactorsȱappearȱtoȱbeȱknowledgeȱandȱ expertise,ȱasȱwellȱasȱcontactȱwithȱexternalȱstakeholders.ȱ

-

Businessȱ functionȱ (e.g.ȱ financeȱ vs.ȱ R&D)ȱ andȱ businessȱ unitȱ (e.g.ȱ upstreamȱ vs.ȱ downstream):ȱ Bothȱ factorsȱ determineȱ contactȱ withȱ externalȱ stakeholders,ȱ theȱ isȬ suesȱ thatȱ areȱ visible,ȱ andȱ otherȱ parametersȱ thatȱ affectȱ individuals’ȱ decisionȬ making:ȱtheȱlevelȱofȱcompetitionȱandȱcorrespondingȱcostȱandȱtimeȱpressure.ȱ

-

Corporateȱ cultureȱ andȱ structure,ȱ e.g.ȱ levelȱ ofȱ crossȬdisciplinaryȱ collaborationȱ beȬ tweenȱsustainabilityȱexpertsȱandȱgeneralȱmanagersȱ(Winn,ȱ1995,ȱp.ȱ148).ȱ

ȱ

184ȱ

-

8ȱEmpiricalȱevidenceȱ

Regionȱofȱoperation:ȱTheȱregionȱofȱoperationȱaffectsȱmanagers’ȱpersonalȱattitudesȱ throughȱdifferentȱissuesȱandȱsocioȬpoliticalȱinfluencesȱsuchȱasȱregulationȱandȱpubȬ licȱpressureȱ(Winn,ȱ1995,ȱp.ȱ148).ȱ

ItȱisȱalsoȱlikelyȱthatȱotherȱtypicalȱdemographicȱvariablesȱsuchȱasȱgenderȱandȱnationalȬ ityȱdetermineȱrespondents’ȱpersonalȱattitudesȱ(e.g.ȱMarzȱetȱal.,ȱ2003;ȱSturdivantȱetȱal.,ȱ 1977)ȱbutȱqualitativeȱmethodsȱinȱthisȱstudyȱdidȱnotȱrevealȱthat.ȱ Itȱshouldȱbeȱnotedȱthatȱtheȱfactorsȱlistedȱaboveȱhaveȱbeenȱidentifiedȱthroughȱlargelyȱ qualitativeȱmethods.ȱThusȱquantitativeȱdataȱwouldȱbeȱdesirableȱtoȱcrossȬvalidateȱtheȱ findingsȱ andȱ obtainȱ moreȱ generalizableȱ results.ȱ Unfortunatelyȱ aȱ profoundȱ quantitaȬ tiveȱanalysisȱinȱthisȱrespectȱwouldȱhaveȱgoneȱfarȱbeyondȱtheȱlimitsȱofȱthisȱstudy.ȱ Contingencyȱperspectiveȱonȱmanagers’ȱattitudesȱ Theȱ study’sȱ contingencyȱ perspectiveȱ revealedȱ severalȱ differencesȱ inȱ managers’ȱ attiȬ tudes,ȱwhichȱcanȱbeȱattributedȱtoȱtheȱdeterminantsȱlistedȱabove.ȱ -

Overallȱ UTȱ respondentsȱ exhibitȱ lessȱ proactiveȱ attitudes,ȱ obviouslyȱ dueȱ toȱ lessȱ visibleȱissues,ȱlessȱoutsideȱpressureȱandȱorganizationalȱvisibilityȱbutȱalsoȱ–ȱasȱsecȬ tionȱ8.4.1ȱCompanyȬspecificȱdeterminantsȱwillȱshowȱ–ȱdueȱtoȱinternalȱdeficits.ȱ

-

TheȱexistenceȱofȱinternalȱdeficitsȱinȱtheȱUTȱsectorȱisȱalsoȱreflectedȱinȱdifferentȱperȬ ceptionsȱofȱtheȱmainȱbarriersȱtoȱCSMȱbetweenȱgeneralȱmanagersȱandȱsustainabilȬ ityȱofficers.ȱTheȱstudyȱrevealsȱthatȱgeneralȱmanagersȱareȱlargelyȱunawareȱofȱtheirȱ lackȱofȱknowledgeȱandȱexpertise,ȱandȱtheirȱreactiveȱmindset.ȱ

-

Finallyȱregressionȱanalysisȱpointedȱtoȱseveralȱsignificantȱregionȱeffects.ȱTheyȱmostȱ likelyȱreflectȱdifferencesȱinȱoutsideȱpressureȱ(i.e.ȱlocalȱissueȱvisibility,ȱlimitsȱofȱleȬ gitimacyȱandȱorganizationalȱvisibility),ȱbutȱalsoȱregionalȱvariationȱinȱtheȱinternalȱ capabilitiesȱofȱcompanies.ȱ

8.4

Companiesȱ

Inȱtheȱpresentȱsection,ȱtheȱauthorȱwillȱexamineȱtheȱfourthȱandȱfinalȱunitȱofȱanalysis,ȱ namelyȱcompanies.ȱTheȱanalysisȱincludes:ȱ -

InternalȱandȱespeciallyȱcompanyȬspecificȱdeterminantsȱofȱCSMȱandȱtheirȱrelativeȱ importanceȱ inȱ comparisonȱ toȱ externalȱ determinantsȱ (sectionȱ 8.4.1ȱ CompanyȬ specificȱdeterminants).ȱ

-

Companies’ȱ strategicȱ dispositionȱ toȱ CSM,ȱ i.e.ȱ companies’ȱ willingnessȱ toȱ andȱ apȬ proachȱtoȱrespondingȱtoȱtheȱchallengeȱofȱrecognizedȱenvironmentalȱandȱsocialȱisȬ suesȱ(sectionȱ8.4.2ȱStrategicȱdisposition)ȱandȱanȱoverallȱassessmentȱofȱCSMȱdeterȬ minants.ȱ

8.4ȱCompaniesȱ

185ȱ

-

Theȱbusinessȱcaseȱforȱsustainabilityȱandȱcompanies’ȱapproachesȱtoȱintegratingȱenȬ vironmentalȱandȱsocialȱissuesȱintoȱdecisionȬmakingȱbasedȱonȱeconomicȱrationaleȱ (sectionȱ8.4.3ȱEconomicȱrationale).ȱ

-

TheȱimplementationȱofȱCSM,ȱi.e.ȱmanagementȱtoolsȱandȱstructuresȱusedȱtoȱensureȱ organizationalȱalignment,ȱandȱinitiativesȱcarriedȱoutȱtoȱresolveȱenvironmentalȱisȬ suesȱ(sectionȱ8.4.4ȱImplementation).ȱ

-

TheȱoutcomeȱofȱCSMȱandȱanȱoverallȱassessmentȱofȱitsȱdeterminantsȱ(sectionȱ8.4.5ȱ Outcome).ȱ

8.4.1

CompanyȬspecificȱdeterminantsȱ

Inȱtheȱpresentȱsection,ȱtheȱauthorȱaimsȱtoȱroundȱoutȱevidenceȱpresentedȱsoȱfarȱonȱtheȱ determinantsȱofȱCSMȱthatȱrelateȱtoȱtheȱprinciplesȱofȱpublicȱresponsibilityȱ(issues),ȱleȬ gitimacyȱ (stakeholders)ȱ andȱ managerialȱ discretionȱ (manager’ȱ mindsetsȱ andȱ attiȬ tudes):ȱ -

HeȱwillȱdiscussȱtheȱinfluenceȱofȱcompanyȬspecificȱdeterminantsȱofȱCSMȱ(promotȬ ingȱ factorsȱ andȱ barriers),ȱ which,ȱ basedȱ onȱ theȱ principleȱ ofȱ corporateȱ discretion,ȱ provideȱmanagersȱwithȱaȱcompanyȬspecificȱsetȱofȱchoicesȱandȱthusȱaffectȱtheirȱinȬ dividualȱdecisionȬmaking.ȱ

-

Furthermore,ȱ heȱ willȱ assessȱ theȱ relativeȱ importanceȱ ofȱ corporateȱ discretionaryȱ barriersȱcomparedȱwithȱmanagerialȱdiscretionaryȱbarriers,ȱandȱtheȱrelativeȱimporȬ tanceȱofȱtheseȱinternalȱbarriersȱcomparedȱwithȱexternalȱones.ȱ

8.4.1.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Promotingȱfactorsȱ Itȱisȱnotȱ possibleȱtoȱsingleȱoutȱoneȱorȱtwoȱ salientȱkeyȱfactorsȱpromotingȱCSMȱinȱtheȱ OGȱsectorȱ–ȱbasedȱonȱtheȱrelativeȱfrequenciesȱdisplayedȱinȱChartȱ8Ȭ23.ȱInȱtheȱUTȱsecȬ torȱ topȱ managementȱ commitmentȱ andȱ demandȱ fromȱ shareholders/investorsȱ takeȱ aȱ significantȱ leadȱ overȱ theȱ remainingȱ itemsȱ (seeȱ Chartȱ 8Ȭ24).ȱ Theȱ greaterȱ shareȱ ofȱ topȱ managementȱcommitmentȱisȱunlikelyȱtoȱindicateȱstrongerȱtopȱmanagementȱinȱtheȱUTȱ sectorȱbutȱisȱratherȱdueȱtoȱUTȱrespondents’ȱstrongerȱpreconceptionsȱaboutȱtheȱobviousȱ keyȱroleȱofȱtopȱmanagers.ȱ Theȱmoreȱsignificantȱpromotingȱroleȱofȱshareholdersȱandȱinvestorsȱ–ȱcomparedȱtoȱtheȱ OGȱ sectorȱ –ȱ couldȱ partlyȱ reflectȱ samplingȱ error,ȱ sinceȱ theȱ financialȱ communityȱ wasȱ foundȱ toȱ haveȱ aȱ strongerȱ roleȱ inȱ theȱ OGȱ sectorȱ aboveȱ (seeȱ sectionȱ 8.2.4ȱ Financialȱ community).ȱItȱcouldȱalsoȱreflectȱaȱmoreȱexternallyȱmotivatedȱandȱthusȱmoreȱcompliȬ anceȬorientedȱapproachȱtoȱCSMȱinȱtheȱUTȱsector.ȱ Additionalȱ circumstantialȱ evidenceȱ supportsȱ thisȱ finding:ȱ First,ȱ UTȱ dataȱ exhibitȱ aȱ greaterȱ shareȱ ofȱ publicȱ pressureȱ (8%ȱ inȱ theȱ OG,ȱ 15%ȱ inȱ theȱ UTȱ sector)ȱ andȱ aȱ lowerȱ ȱ

186ȱ

8ȱEmpiricalȱevidenceȱ

shareȱofȱcompetitionȱonȱissuesȱ(14%ȱinȱtheȱOG,ȱ8%ȱinȱtheȱUTȱsector).ȱSecond,ȱoverallȱ UTȱsustainabilityȱofficersȱtendȱtoȱreportȱexternalȱpromotingȱfactorsȱmoreȱoftenȱthanȱ theirȱcounterpartsȱinȱtheȱOGȱsector:ȱExternalȱfactorsȱ(publicȱpressure,ȱcompetitionȱonȱ issuesȱandȱdemandsȱfromȱcapitalȱmarkets)ȱaccountȱforȱ44%ȱinȱtheȱUT,ȱforȱ24%ȱinȱtheȱ OGȱsample.ȱ

Demands of individual shareholders and institutional investors 2%

Other 0%

Corporate values 16% Autonomy and internal scope of SO 2% Top management commitment and leadership 19%

Open organizational culture 0% Public pressure 8% Increased competition on environmental and social issues in industry 14% New business opportunities 16%

Dialogue with stakeholders 6%

Process and product innovations 17%

Chartȱ8Ȭ23:ȱPromotingȱfactorsȱ(Sustainabilityȱ officersȱ–ȱOG)ȱ

Open organizational culture 0%

Demans from individual shareholders and institutional investors 21%

Other 0%

Public pressure 15% Increased competition on environmental and social issues in industry 8%

Corporate values 5%

New business opportunities 13%

Autonomy and internal scope of SO 0% Top management commitment and leadership 25%

Dialogue with stakeholders 8%

Process and product innovations 5%

Chartȱ8Ȭ24:ȱPromotingȱfactorsȱ(Sustainabilityȱ officerȱ–ȱUT)ȱ

ItȱshouldȱbeȱnotedȱthatȱcrossȬsectorȱdifferencesȱareȱnotȱstatisticallyȱsignificantȱdueȱtoȱ theȱlimitedȱsampleȱsizes.ȱNevertheless,ȱtheyȱhintȱatȱaȱmoreȱreactiveȱapproachȱtoȱCSMȱ inȱtheȱUTȱsector,ȱwhichȱcanȱbeȱattributedȱtoȱbothȱexternalȱfactorsȱasȱdescribedȱinȱtheȱ previousȱsectionsȱ8.1ȱIssuesȱandȱ8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnershipsȱ andȱmostȱlikelyȱinternalȱdeficitsȱthatȱwillȱbeȱdiscussedȱfurtherȱbelow.ȱ Twoȱfindingsȱareȱsurprising,ȱalthoughȱtheyȱshouldȱnotȱbeȱoverinterpreted,ȱgivenȱtheȱ limitedȱsampleȱsize:ȱ -

Openȱorganizationalȱcultureȱtakesȱaȱ0%ȱshareȱinȱbothȱsectors.ȱThisȱresultȱsuggestsȱ thatȱ proactiveȱ corporateȱ culturesȱ areȱ lackingȱ andȱ isȱ inȱ lineȱ withȱ bothȱ qualitativeȱ andȱ quantitativeȱ evidenceȱ collectedȱ fromȱ generalȱ managersȱ (particularlyȱ regresȬ sionȱresultsȱpresentedȱinȱsectionȱ8.4.1.2).ȱ

-

Theȱ autonomyȱandȱ internalȱ scopeȱ ofȱtheȱ sustainability/environmentalȱ officerȱ apȬ pearsȱtoȱbeȱanȱinsignificantȱfactor.ȱThisȱstronglyȱsuggestsȱthatȱotherȱinternalȱfacȬ torsȱsuchȱasȱtopȱmanagementȱcommitmentȱandȱcorporateȱvaluesȱareȱmoreȱcrucialȱ thanȱtheȱindividualȱroleȱofȱtheȱofficer.ȱInȱadditionȱitȱmayȱpointȱtoȱtheȱfactȱthatȱtheȱ individualȱratherȱthanȱtheȱroleȱmatters.ȱ

Asȱtheȱchartsȱaboveȱshow,ȱinternalȱdriversȱareȱreportedȱmoreȱfrequentlyȱthanȱexterȬ nalȱdrivers,ȱifȱoneȱassumesȱthatȱbusinessȱopportunitiesȱandȱstakeholderȱdialogueȱreȬ quireȱbothȱinternalȱandȱexternalȱfactorsȱtoȱcoincide:ȱInternalȱdriversȱaccountȱforȱ76%ȱ

8.4ȱCompaniesȱ

187ȱ

andȱ56%ȱinȱtheȱOGȱandȱUTȱsectorsȱrespectively.52ȱThisȱpointsȱtoȱratherȱlittleȱoutsideȱ pressureȱonȱcompaniesȱtoȱengageȱinȱCSMȱmoreȱstrongly,ȱaȱconclusionȱthatȱwouldȱbeȱ inȱparallelȱwithȱcompanies’ȱlargelyȱincrementalȱapproachȱtoȱCSM,ȱwhichȱisȱdescribedȱ inȱmoreȱdetailȱinȱsectionsȱ8.4.2ȱStrategicȱdispositionȱandȱ8.4.4.3ȱCorporateȱinitiatives:ȱ Apparentlyȱ incrementalȱ innovationsȱ areȱ adequateȱ toȱ satisfyȱ theȱ keyȱ demandsȱ fromȱ externalȱ stakeholders.ȱ Thusȱ itȱ isȱ alsoȱ veryȱ tellingȱ thatȱ UTȱ respondentsȱ moreȱ freȬ quentlyȱreportȱexternalȱdriversȱalthoughȱ–ȱasȱtheȱsectionsȱonȱIssuesȱ(8.1)ȱandȱExternalȱ stakeholders,ȱindustryȱandȱpartnershipsȱ(8.2)ȱrevealedȱ–ȱtheyȱareȱunderȱlessȱoutsideȱ pressure.ȱ Thisȱ mismatchȱ pointsȱ toȱ aȱ ratherȱ complianceȬorientedȱ andȱ reactiveȱ apȬ proachȱinȱtheȱUTȱsector,ȱwhichȱcouldȱbeȱattributedȱtoȱlowerȱissueȱandȱorganizationalȱ visibilityȱandȱaȱlowerȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperate,ȱi.e.ȱbrandȱvalueȱ andȱreputation.ȱ Barriersȱ Ifȱ oneȱ additionallyȱ assumesȱ thatȱ respondentsȱ tendȱ toȱ overstateȱ externalȱ barriersȱ toȱ blameȱoutsideȱfactorsȱratherȱthanȱtoȱacknowledgeȱcorporateȱorȱindividualȱfaults,ȱbothȱ sustainabilityȱ officers’ȱ andȱ generalȱ managers’ȱ perceptionsȱ ofȱ barriersȱ toȱ CSMȱ areȱ clearlyȱmeaningful:ȱRespondentsȱfromȱbothȱsectorsȱmoreȱoftenȱreportȱinternalȱbarriȬ ersȱ(managers’ȱmindset,ȱlackȱofȱknowledge,ȱorganizationalȱcultureȱandȱaȱlackȱofȱapȬ propriateȱtoolsȱandȱprocesses)ȱthanȱexternalȱbarriersȱ(regulation,ȱoppositionȱorȱlackȱofȱ interestȱfromȱinvestorsȱandȱlackȱofȱinterestȱfromȱcustomers).ȱ Sustainabilityȱofficersȱ Chartȱ8Ȭ25ȱandȱChartȱ8Ȭ26ȱdisplayȱtheȱrelativeȱfrequenciesȱofȱbarriersȱasȱindicatedȱbyȱ sustainabilityȱ officers.ȱ Althoughȱ Λ2Ȭtestsȱ doȱ notȱ detectȱ anyȱ statisticallyȱ significantȱ crossȬsectorȱdifferenceȱdueȱtoȱtheȱlimitedȱsampleȱsizes,ȱresultsȱareȱindicativeȱinsofarȱ asȱinternalȱbarriersȱaccountȱforȱ64%ȱoverallȱinȱtheȱOGȱsector,ȱcomposedȱofȱ34%ȱrelatȬ ingȱtoȱmanagerialȱdiscretionaryȱfactorsȱ(mindsetȱandȱlackȱofȱknowledge)ȱandȱ30%ȱtoȱ actualȱcorporateȱdiscretionaryȱfactorsȱ(organizationalȱcultureȱandȱlackȱofȱappropriateȱ tools).ȱ Inȱ theȱ UTȱ sectorȱ internalȱ barriersȱ takeȱ aȱ higherȱ 70%ȱ shareȱ thatȱ allotsȱ aȱ 45%ȱ shareȱtoȱmanagerialȱdiscretionaryȱfactorsȱandȱ25%ȱtoȱcorporateȱdiscretionaryȱfactors.ȱ TheȱimportanceȱofȱinternalȱbarriersȱisȱalsoȱconfirmedȱbyȱtheȱsustainabilityȱofficersȱinȬ terviewedȱwhoȱcriticizeȱ -

managers’ȱ lackȱ ofȱ awarenessȱ andȱ knowledge,ȱ shortȱ timeȱ horizonȱ andȱ narrowȱ mindsetȱbasedȱonȱtechnologyȱandȱengineeringȱ(seeȱsectionȱ8.3ȱManagersȱforȱmoreȱ details),ȱbutȱalsoȱ

ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 52

ȱ

ȱIfȱstakeholderȱdialogueȱandȱbusinessȱopportunitiesȱareȱaccountedȱforȱasȱinternalȱdrivers.ȱ

188ȱ

-

8ȱEmpiricalȱevidenceȱ

companies’ȱ“exaggerated”ȱfocusȱonȱproductionȱtargetsȱandȱfinancialȱperformance,ȱ lackȱ ofȱ managementȱ commitment,ȱ inadequateȱ corporateȱ culturesȱ andȱ structures,ȱ oppositionȱ fromȱ lineȱ management,ȱ lackȱ ofȱ toolsȱ andȱ operationalizationȱ ofȱ CSM,ȱ i.e.ȱaȱfailureȱtoȱexplainȱwhatȱCSMȱmeansȱforȱtheȱindividualȱbusinessȱunit,ȱfunctionȱ orȱemployee.ȱ

Lack of interest from customers 10%

Other 4%

Opposition or lack of interest from investors 10%

Organization culture 15%

Absence of appropriate tools 15%

Managers' mindset 19%

Lack of interest from customers 11%

Other 0%

Opposition or lack of interest from investors 11%

Managers' lack of knowledge 15%

Regulation 12%

Chartȱ8Ȭ25:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ OG)ȱ

Organization culture 14%

Absence of appropriate tools 11%

Managers' mindset 23%

Managers' lack of knowledge 22% Regulation 8%

Chartȱ8Ȭ26:ȱBarriersȱ(Sustainabilityȱofficersȱ–ȱ UT)ȱ

Interviewsȱalsoȱpointȱtoȱdifferencesȱinȱcorporateȱcultures,ȱwhichȱcanȱbeȱattributedȱtoȱ variationsȱinȱcorporateȱhistory,ȱe.g.ȱformerȱstateȱownershipȱ(inȱtheȱcaseȱofȱUTȱfirms),ȱ internalȱ capabilitiesȱ andȱ structuresȱ (Kolkȱ etȱ al.,ȱ 2001,ȱ p.ȱ 505)ȱ andȱ nationalȱ culturesȱ (Skjaersethȱ etȱ al.,ȱ 2001).ȱ Theȱ influenceȱ ofȱ nationalȱ culturesȱ isȱ particularlyȱ visibleȱ inȱ OGȱ companies’ȱ positionsȱ onȱ climateȱ change:ȱ Europeanȱ companiesȱ firstȱ adoptedȱ aȱ moreȱproactiveȱapproachȱtoȱclimateȱchanges,ȱwhichȱisȱstillȱreflectedȱinȱdifferentȱconȬ notationsȱofȱtheirȱpublicȱstatementsȱ(seeȱe.g.ȱBrowne,ȱ1997;ȱDahan,ȱ2001).ȱ Overallȱ USȬbasedȱ companiesȱ tendȱ toȱ focusȱ onȱ technologyȱ andȱ engineering,ȱ theyȱ areȱ tooȱ immatureȱ toȱ understandȱ softȱ issuesȱ (“cowboyȱ mentality”)ȱ andȱ politicalȱ risksȱ(OG7,ȱSO).ȱ Generalȱmanagersȱ TheȱgreaterȱshareȱofȱinternalȱbarriersȱdetectedȱinȱtheȱquantitativeȱdataȱfromȱsustainȬ abilityȱ officersȱ isȱ mirroredȱ inȱ correspondingȱ perceptionsȱ ofȱ generalȱ managersȱ (seeȱ Chartȱ8Ȭ27ȱandȱChartȱ8Ȭ28):ȱInternalȱbarriersȱaccountȱforȱ45%ȱinȱtheȱOGȱ(comparedȱtoȱ aȱ19%ȱshareȱofȱexternalȱbarriers)ȱandȱ33%ȱinȱtheȱUTȱsectorȱ(comparedȱtoȱaȱ24%ȱshareȱ ofȱ externalȱ barriers).ȱ Howeverȱ theȱ sectorȬspecificȱ proportionsȱ betweenȱ managerialȱ discretionaryȱbarriersȱandȱcorporateȱdiscretionaryȱbarriersȱsomewhatȱinvertȱthoseȱofȱ sustainabilityȱ officers:ȱ Barriersȱ relatingȱ toȱ managerialȱ discretionaryȱ factorsȱ areȱ reȬ portedȱmoreȱoftenȱinȱtheȱOGȱ(23%)ȱthanȱinȱtheȱUTȱsectorȱ(14%).ȱȱ

8.4ȱCompaniesȱ

189ȱ Managers' mindset 12% Managers' lack of knowledge/expertise 11%

NR 34%

Regulation (e.g. subsidies & low environmental/social standards) 4%

Other 2%

Absence of appropriate tools and processes 8%

Lack of interest from customers 8% Opposition or lack of interest from investors 7%

Organizational culture 14%

ȱ

Chartȱ8Ȭ27:ȱBarriersȱ(Generalȱmanagersȱ–ȱOG)ȱ

Asȱoutlinedȱinȱsectionȱ8.3ȱManagers,ȱthisȱsuggestsȱthatȱUTȱgeneralȱmanagersȱappearȱ toȱbeȱlessȱawareȱofȱtheirȱshortcomings,ȱnamelyȱtheirȱmindsetȱandȱlackȱofȱknowledgeȱ andȱexpertise.ȱ

Managers' mindset 9%

Managers' lack of knowledge/expertise 5% Regulation (e.g. subsidies & low environmental/social standards) 5%

NR 39%

Absence of appropriate tools and processes 8% Organizational culture 11% Other 4%

Opposition or lack of interest from investors 5% Lack of interest from customers 14%

ȱ Chartȱ8Ȭ28:ȱBarriersȱ(Generalȱmanagersȱ–ȱUT)ȱ

ItȱisȱdifficultȱtoȱreachȱaȱfinalȱconclusionȱonȱtheȱrelativeȱimportanceȱofȱindividualȱinterȬ nal,ȱi.e.ȱmanagerialȱdiscretionaryȱandȱcorporateȱdiscretionaryȱbarriersȱbasedȱonȱqualiȬ

ȱ

190ȱ

8ȱEmpiricalȱevidenceȱ

tativeȱevidenceȱandȱtheȱbasicȱstatistics.ȱParticularlyȱinȱtheȱpieȱchartsȱthereȱareȱnoȱproȬ portionsȱthatȱwouldȱconsistentlyȱpointȱtoȱoneȱorȱtwoȱmoreȱimportantȱfactors.ȱ However,ȱ ifȱ oneȱ categorizesȱ themȱ intoȱ softȱ factorsȱ (managers’ȱ mindset,ȱ lackȱ ofȱ knowledgeȱandȱcorporateȱculture)ȱandȱhardȱfactorsȱ(lackȱofȱadequateȱprocessesȱandȱ tools),ȱtheȱformerȱclearlyȱdominateȱtheȱlatterȱinȱnumbers.ȱTheȱgreaterȱimportanceȱofȱ softȱfactorsȱisȱnotȱimplausible,ȱbecauseȱtheȱenvironmentalȱandȱsocialȱissuesȱareȱveryȱ complexȱandȱdifficultȱtoȱcaptureȱandȱresolveȱthroughȱmereȱ“hardȱtechnicalities,”ȱi.e.ȱ inȱ extremeȱ termsȱ standardizedȱ toolsȱ andȱ processes,ȱ whichȱ theȱ interviewsȱ withȱ susȬ tainabilityȱofficers,ȱinȱparticular,ȱalsoȱrevealed.ȱ Itȱ shouldȱ beȱ notedȱ thatȱ severalȱ intervieweesȱ alsoȱ considerȱ aȱ lackȱ ofȱ toolsȱ andȱ procȬ essesȱ aȱ significantȱ barrierȱ toȱ CSM.ȱ Itȱ isȱ possibleȱ thatȱ thisȱ perceptionȱ partlyȱ reflectsȱ managers’ȱadherenceȱtoȱ“technicalȱproceduresȱandȱstandardization”ȱthatȱremoveȱpoȬ tentialȱuncertainties.ȱOneȱcanȱexpectȱthatȱportfoliosȱofȱtoolsȱ(describedȱinȱmoreȱdetailȱ inȱsectionȱ8.4.4.1ȱManagementȱtools)ȱwillȱbeȱexpandedȱandȱrefinedȱinȱtheȱfuture,ȱandȱ thusȱwillȱbeȱincreasinglyȱableȱtoȱfulfillȱthisȱdesiredȱpurpose.ȱHowever,ȱtheȱauthorȱarȬ guesȱ thatȱ theyȱ willȱ stillȱ notȱ beȱ ableȱ toȱ adequatelyȱ captureȱ theȱ complexityȱ thatȱ isȱ inȬ herentȱinȱenvironmentalȱandȱsocialȱissuesȱandȱtheirȱintegrationȱintoȱdecisionȬmaking.ȱ Henceȱsoftȱfactorsȱwillȱremainȱimportant.ȱ Conclusionȱ Descriptiveȱstatisticsȱpresentedȱaboveȱpointȱtoȱseveralȱconclusions.ȱ 1. Internalȱ driversȱ andȱ barriersȱ areȱ moreȱ importantȱ toȱ CSMȱ thanȱ externalȱ driversȱ andȱbarriers.ȱ 2. “Soft”ȱ internalȱ barriersȱ (e.g.ȱ culture,ȱ mindset)ȱ areȱ moreȱ significantȱ thanȱ hardȱ inȬ ternalȱbarriersȱ(e.g.ȱtools).ȱ 3. Managerialȱ discretionaryȱ factorsȱ suchȱ asȱ managers’ȱ mindsetȱ andȱ lackȱ ofȱ knowlȬ edgeȱ andȱ expertiseȱ areȱ atȱ leastȱ asȱ importantȱ barriersȱ asȱ corporateȱ discretionaryȱ factorsȱ(corporateȱcultureȱandȱlackȱofȱappropriateȱtools).ȱ Regressionȱ resultsȱ presentedȱ inȱ theȱ nextȱ sectionȱ areȱ largelyȱ inȱ lineȱ withȱ theseȱ findȬ ings.ȱ Theȱ UTȱ sectorȱ appearsȱ toȱ featureȱ aȱ moreȱ basicȱ andȱ complianceȬbasedȱ approachȱ toȱ CSM,ȱ whichȱ isȱ alsoȱ characterizedȱ throughȱ greaterȱ internalȱ deficits.ȱ Thisȱ resultȱ isȱ inȱ parallelȱwithȱfindingsȱaboutȱ -

lessȱproactiveȱmanagersȱ(sectionȱ8.3ȱManagers)ȱ

-

lowerȱissueȱsignificanceȱasȱdiagnosedȱinȱsectionȱ8.1ȱIssuesȱ

-

weakerȱ demandȱ fromȱ externalȱ stakeholdersȱ asȱ describedȱ inȱ sectionȱ 8.2ȱ Externalȱ stakeholders,ȱindustryȱandȱpartnerships.ȱ

8.4ȱCompaniesȱ

191ȱ

Furthermore,ȱ interviewsȱ suggestȱ thatȱ internalȱ deficits,ȱ suchȱ asȱ slow,ȱ bureaucraticȱ structuresȱandȱ“closed”ȱratherȱthanȱopenȱcorporateȱculturesȱmayȱbeȱdueȱtoȱformerȱorȱ currentȱ stateȱ ownership,ȱ andȱ aȱ greaterȱ importanceȱ ofȱ theȱ formalȱ ratherȱ thanȱ theȱ inȬ formalȱlicenseȱtoȱoperate.ȱȱ 8.4.1.2 Advancedȱstatisticsȱ TheȱfollowingȱregressionȱmodelsȱshedȱmoreȱlightȱonȱtheȱrelativeȱimportanceȱofȱinterȬ nalȱbarriersȱ(alsoȱinȱcomparisonȱtoȱexternalȱbarriers)ȱinȱdeterminingȱCSMȱintentȱandȱ CSMȱsuccess.ȱ CSMȱintentȱ WhereasȱtheȱexpandedȱUTȱandȱOGȱmodelsȱinȱRegressionȱTableȱ8Ȭ10ȱareȱeitherȱinvalidȱ orȱ notȱ veryȱ meaningful,ȱ theȱ Tȱ modelȱ showsȱ thatȱ managers’ȱ lackȱ ofȱ knowledgeȱ andȱ expertiseȱ andȱ organizationalȱ cultureȱ have,ȱ asȱ internalȱ barriers,ȱ aȱ statisticallyȱ signifiȬ cantȱandȱnegativeȱeffectȱonȱCSMȱintent.ȱ Alongsideȱ“otherȱbarriers”ȱwhoseȱeffectȱwillȱnotȱbeȱdiscussedȱinȱmoreȱdetail,ȱtwoȱexȬ ternalȱ barriers,ȱ namelyȱ theȱ lackȱ ofȱ interestȱ fromȱ investorsȱ andȱ customers,ȱ influenceȱ companies’ȱCSMȱintentȱatȱaȱstatisticallyȱsignificantȱlevel.ȱObviouslyȱtheȱsignsȱofȱtheirȱ coefficientsȱareȱidenticalȱtoȱthoseȱinȱtheȱregressionȱmodelȱthatȱexaminedȱtheȱeffectȱofȱ externalȱbarriersȱonȱCSMȱonlyȱ(seeȱRegressionȱTableȱ8Ȭ5ȱandȱRegressionȱTableȱ8Ȭ6).ȱȱ

-.3394067

OG model 53 1.95 0.0534 0.3944 0.1926 .7727 Coeff .401663 -.3016703

.1706313 -.6624577

Lack of appropriate tools and processes Corporate culture

.0690948 -.4865689

-.0207926 -.3946652

-.7700676

Regulation (e.g. subsidies, low standards) Opposition or lack of interest from investors Lack of interest from customers

.0537136

-.403575 .3824812

-.0573084 -.2906728 .409117

-.9269448

Other barriers

.5686706

.6293585

1.132074

UT sector

-.6198976

Nordic North Am Latin Europe Dev econ Other reg

.2548329 -.4919454 -.0767419 -.2027633 -.0053231

-.5662781 -1.110623 -.5610937 -.7262077 -.5128962

.7935175 -.4918264 -1.263529 .4103157 (dropped)

Constant

4.030497

4.477314

3.359752

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Managers’ mindset Managers’ lack of knowledge and expertise

T model 76 2.45 0.0084 0.3595 0.2125 .74265 .3023782

UT model 23 1.36 0.3190 0.6195 0.1628 .72308

-.0104848 .2921082 .7717024

RegressionȱTableȱ8Ȭ10:ȱCSMȱintentȱ–ȱBarriersȱ(Expandedȱsubmodels)ȱ

Theyȱsuggestȱthatȱ(1)ȱsustainabilityȱleadersȱwithȱgreaterȱCSMȱintentȱratherȱthanȱlagȬ gardsȱapparentlyȱconsiderȱcustomerȱbehaviorȱaȱsignificantȱdeterringȱfactorȱforȱCSM,ȱ andȱ(2)ȱinvestorsȱconstituteȱaȱsignificantȱbarrierȱtoȱgreaterȱCSMȱintent,ȱmainlyȱinȱtheȱ ȱ

192ȱ

8ȱEmpiricalȱevidenceȱ

viewȱofȱlaggardȱcompanies,ȱpresumablyȱbecauseȱtheyȱareȱlargelyȱunawareȱofȱrecentȱ trends.ȱ Inȱ contrastȱ toȱ theȱ expandedȱ modelsȱ above,ȱ theȱ threeȱ reducedȱ modelsȱ inȱ Regressionȱ Tableȱ 8Ȭ11ȱ provideȱ clearȱ evidenceȱ forȱ theȱ relativelyȱ greaterȱ importanceȱ ofȱ internalȱ overȱexternalȱbarriers.ȱNoneȱofȱtheȱexternalȱbarriersȱattainȱsignificanceȱatȱaȱ5%ȱlevelȱ whenȱadded.ȱ

Indep var Corp cult

T model 76 11.14 0.0013 0.1308 0.1190 .78548 Coeff -.6015246

Constant

3.871795

Num of obs F Prob > F R-squared Adj R-squared Root MSE

Indep var Corp cult

OG model 53 8.31 0.0058 0.1401 0.1232 .80522 Coeff -.6385714

UT model 23 3.56 0.0730 0.1451 0.1044 .74789 Coeff

Indep var Corp cult

-.6031746

Constant

3.96

Constant

3.714286

RegressionȱTableȱ8Ȭ11:ȱCSMȱintentȱ–ȱBarriersȱ(Reducedȱsubmodels)ȱ

Furthermore,ȱ resultsȱ areȱ congruentȱ withȱ conclusionsȱ presentedȱ inȱ theȱ previousȱ secȬ tionȱonȱtheȱkeyȱimportanceȱofȱsoftȱratherȱthanȱhardȱinternalȱfactors:ȱTheyȱrevealȱstaȬ tisticallyȱsignificantȱeffectsȱforȱcorporateȱculturesȱandȱlackȱofȱknowledgeȱandȱexperȬ tise,ȱwhereasȱtheȱlackȱofȱtoolsȱandȱprocessesȱfeaturesȱcoefficientsȱthatȱareȱcloseȱtoȱzeroȱ andȱdoȱnotȱreachȱadequateȱsignificanceȱlevelsȱinȱanyȱofȱtheȱmodels.ȱ CSMȱsuccessȱ Inȱ contrastȱ toȱ theȱ expandedȱ modelsȱ onȱ CSMȱ intent,ȱ thoseȱ onȱ CSMȱ successȱ featureȱ probabilitiesȱofȱaȱgreaterȱFȬstatisticȱthatȱareȱsomewhatȱunsatisfactoryȱ(seeȱRegressionȱ Tableȱ Aȱ 15ȱ inȱ theȱ Appendixȱ Fȱ –ȱ Regressionȱ models).ȱ Sinceȱ theȱ numberȱ ofȱ observaȬ tionsȱonȱwhichȱtheȱmodelsȱareȱbasedȱisȱalmostȱidenticalȱtoȱtheȱnumberȱinȱtheȱmodelsȱ onȱ CSMȱ intent,ȱ theȱ reasonȱ forȱ theȱ lowerȱ probabilitiesȱ isȱ aȱ lowerȱ abilityȱ ofȱ theȱ indeȬ pendentȱ variablesȱ toȱ explainȱ variationȱ inȱ theȱ dependentȱ variableȱ ratherȱ thanȱ conȬ straintsȱinȱtheȱdegreesȱofȱfreedom.ȱThisȱcouldȱsuggestȱthatȱrespondents’ȱassessmentȱ ofȱ CSMȱ successȱ variesȱ moreȱ greatlyȱ thanȱ thatȱ ofȱ CSMȱ intent,ȱ presumablyȱ sinceȱ theȱ former’sȱoperationalizationȱdoesȱnotȱaccountȱforȱtheȱthreeȬdimensionalityȱ(economic,ȱ environmentalȱandȱsocialȱoutcome)ȱofȱtheȱunderlyingȱconcept.ȱ Theȱ reducedȱ modelsȱ shownȱ inȱ Regressionȱ Tableȱ 8Ȭ12ȱ belowȱ consistentlyȱ revealȱ orȬ ganizationalȱ cultureȱ asȱ aȱ significantȱ barrierȱ toȱ CSMȱ success.ȱ Furthermore,ȱ asȱ theȱ Tȱ modelȱ indicates,ȱ companiesȱ inȱ theȱ energyȱ industryȱ asȱ aȱ whole,ȱ whichȱ achievedȱ greaterȱCSMȱsuccess,ȱfeelȱheldȱbackȱthroughȱinadequateȱregulation.53ȱThisȱcouldȱhintȱ atȱtwoȱweakȱspotsȱinȱtheȱregulatoryȱenvironmentȱofȱleadingȱcompanies:ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 53

ȱDespiteȱaȱ10%ȱlevelȱofȱsignificance,ȱRegulationȱwasȱincludedȱinȱtheȱmodelȱtoȱillustrateȱthisȱpoint.ȱ

8.4ȱCompaniesȱ

193ȱ

1. Lackȱofȱenvironmental,ȱsocialȱandȱethicalȱ(e.g.ȱcorruption)ȱstandardsȱinȱdevelopȬ ingȱcountries,ȱwhichȱmayȱputȱsustainabilityȱleadersȱatȱaȱcompetitiveȱdisadvantageȱ inȱtheȱshortȱterm:ȱE.g.ȱobviouslyȱaȱcomprehensiveȱstakeholderȱdialogueȱrequiresȱaȱ significantȱ amountȱ ofȱ resourcesȱ (inȱ termsȱ ofȱ timeȱ andȱ money).ȱ However,ȱ interȬ vieweesȱ alsoȱ mentionȱ thatȱ theyȱ improveȱ theȱ licenseȱ toȱ operateȱ andȱ growȱ inȱ theȱ longȱterm.ȱThisȱobviouslyȱappliesȱtoȱOGȱcompaniesȱinȱparticularȱbecauseȱtheyȱareȱ moreȱactiveȱinȱdevelopingȱcountries.ȱ 2. Lackȱofȱmarketȱincentivesȱforȱrenewableȱenergiesȱ(e.g.ȱdirectȱorȱindirectȱsubsidiesȱ forȱfossilȱfuels).ȱ

Indep var

T model 75 6.35 0.0029 0.1499 0.1263 .70708 Coeff

Indep var

OG model 52 6.23 0.0039 0.2026 0.1701 .72227 Coeff

Corp cult

-.5174538

Corp cult

-.571134

Regulations

.3722594

Investors

-.5225331

Constant

3.290985

Constant

3.593814

Num of obs F Prob > F R-squared Adj R-squared Root MSE

Indep var

UT model 23 4.98 0.0176 0.3324 0.2656 .57777 Coeff

Corp cult Mindset

-.5196078 -.5882353

Constant

3.382353

RegressionȱTableȱ8Ȭ12:ȱCSMȱsuccessȱȬȱBarriersȱ(Reducedȱsubmodels)ȱ

TheȱOGȱmodelȱalsoȱpointsȱtoȱaȱnegativeȱlinkȱbetweenȱCSMȱsuccessȱandȱoppositionȱorȱ lackȱofȱinterestȱfromȱinvestors,ȱwhichȱisȱsimilarȱtoȱtheȱoneȱfoundȱinȱtheȱmodelsȱaboveȱ onȱCSMȱintentȱ(seeȱRegressionȱTableȱ8Ȭ10).ȱThusȱinterpretationsȱareȱcongruent:ȱ 1.

Investorsȱ negativelyȱ affectȱ theȱ successȱ ofȱ CSM,ȱ whichȱ mostȱ likelyȱ refersȱ toȱ susȬ tainabilityȱlaggardsȱwhoseȱlessȱproactiveȱapproachȱcriticallyȱimpingesȱonȱtheȱsoȬ cialȱ andȱ environmentalȱ characteristicsȱ ofȱ upstreamȱ jointȱ venturesȱ inȱ theȱ OGȱ secȬ tor.ȱ

2.

Laggardsȱ thatȱ areȱ lessȱ successfulȱ atȱ CSMȱ tendȱ toȱ considerȱ investorsȱ asȱ externalȱ barriersȱ moreȱ oftenȱ becauseȱ theyȱ areȱ lessȱ awareȱ ofȱ recentȱ developmentsȱ (e.g.ȱ EquatorȱPrinciples,ȱtheȱWorldȱBank’sȱPrototypeȱCarbonȱFund).ȱ

Theȱ reducedȱ UTȱ modelȱ providesȱ strongȱ evidenceȱ forȱ theȱ importanceȱ ofȱ internalȱ (mindsetȱ andȱ culture)ȱ ratherȱ thanȱ externalȱ barriersȱ inȱ theȱ UTȱ sector.ȱ Thisȱ findingȱ matchesȱinterviewȱdataȱthatȱalsoȱsuggestȱthatȱUTȱcompaniesȱlackȱinternalȱcapabilitiesȱ dueȱtoȱstateȱownershipȱandȱlittleȱexternalȱpressureȱinȱtheȱpast.ȱ InȱcontrastȱtoȱtheȱreducedȱmodelsȱonȱCSMȱintent,ȱtwoȱoutȱofȱthreeȱreducedȱmodelsȱonȱ CSMȱsuccessȱ(RegressionȱTableȱ8Ȭ12)ȱcompriseȱbothȱinternalȱ(corporateȱculture)ȱandȱ externalȱbarriersȱ(regulationȱandȱoppositionȱfromȱinvestors).ȱThisȱimpedesȱaȱdefiniteȱ conclusionȱ onȱ theȱ relativelyȱ greaterȱ importanceȱ ofȱ internalȱ overȱ externalȱ barriers.ȱ HenceȱtheȱauthorȱranȱadditionalȱregressionȱmodelsȱtoȱexamineȱtheirȱeffectsȱonȱCSMȱ ȱ

194ȱ

8ȱEmpiricalȱevidenceȱ

intentȱandȱCSMȱsuccessȱseparatelyȱ(seeȱRegressionȱTableȱAȱ9:ȱtoȱRegressionȱTableȱAȱ 14ȱinȱAppendixȱFȱ–ȱRegressionȱmodels).ȱTheȱmodelsȱdoȱnotȱyieldȱanyȱmeaningfulȱadȬ ditionalȱfindingsȱaboutȱtheȱstatisticalȱsignificanceȱandȱsignsȱofȱcorrelationȱcoefficients.ȱ However,ȱ theȱ modelȱ parametersȱ supportȱ theȱ findingsȱ basedȱ onȱ qualitativeȱ analysisȱ andȱ basicȱ statisticsȱ aboveȱ aboutȱ theȱ keyȱ importanceȱ ofȱ internalȱ deficitsȱ ratherȱ thanȱ externalȱ barriers:ȱ Theȱ parametersȱ (foremostȱ Probȱ >ȱ Fȱ andȱ adjustedȬR2)ȱ ofȱ mostȱ exȬ pandedȱ andȱ allȱ reducedȱ modelsȱ thatȱ onlyȱ includedȱ internalȱ barriersȱ areȱ superiorȱ toȱ thoseȱofȱtheȱ“competing”ȱmodels.ȱ Conclusionȱ ResultsȱofȱtheȱregressionȱmodelsȱareȱinȱparallelȱwithȱqualitativeȱandȱquantitativeȱeviȬ denceȱpresentedȱinȱtheȱpreviousȱsection:ȱTheyȱshowȱthatȱbothȱCSMȱintentȱandȱCSMȱ successȱareȱnegativelyȱaffectedȱbyȱ 1.

internalȱratherȱthanȱexternalȱbarriersȱandȱ

2.

moreȱ specificallyȱ byȱ softȱ internalȱ barriersȱ (inadequateȱ corporateȱ culture)ȱ ratherȱ thanȱhardȱinternalȱbarriersȱ(lackȱofȱtoolsȱandȱprocesses).ȱ

8.4.1.3 Discussionȱ ImportanceȱofȱcompanyȬspecificȱdeterminantsȱandȱtheȱprincipleȱofȱcorporateȱdiscretionȱ BothȱqualitativeȱandȱquantitativeȱmethodsȱpointȱtoȱaȱsignificantȱroleȱofȱcorporateȱdisȬ cretionaryȱfactorsȱinȱdeterminingȱCSM.ȱResultsȱareȱthusȱinȱlineȱwithȱthoseȱofȱpreviousȱ studiesȱ(Henriquesȱetȱal.,ȱ1996;ȱLawrenceȱetȱal.,ȱ1995;ȱSwinthȱetȱal.,ȱ1995;ȱWinn,ȱ1995).ȱ Externalȱbarriers

Internalȱbarriers

Oppositionȱandȱlackȱofȱ interestȱfromȱinvestorsȱ

Managers’ mindset

Managerial discretionary barriers

Managers’ȱlack ofȱknowledge andȱexpertise

“Soft” Internal barriers

Lackȱofȱinterest fromȱcustomersȱ Corporate culture

Corporate discretionary barriers Regulation

Lackȱofȱtoolsȱand processes

“Hard” internal barriers

ȱ Figureȱ8.20:ȱSystemizationȱofȱbarriersȱtoȱCSMȱ

8.4ȱCompaniesȱ

195ȱ

Theȱimportanceȱofȱcorporateȱdiscretionaryȱdeterminantsȱhasȱbeenȱassessedȱinȱseveralȱ waysȱ(seeȱFigureȱ8Ȭ20):ȱ -

Theirȱimportanceȱjointlyȱwithȱmanagerialȱdiscretionaryȱfactors,ȱi.e.ȱtheȱimportanceȱ ofȱinternalȱorganizationalȱdeterminantsȱrelativeȱtoȱexternalȱdeterminantsȱ

-

Theȱimportanceȱofȱsoftȱinternalȱbarriersȱrelativeȱtoȱhardȱinternalȱbarriersȱ

-

Theirȱimportanceȱrelativeȱtoȱthatȱofȱmanagerialȱdiscretionaryȱfactors.ȱ

Internalȱvs.ȱexternalȱdriversȱ Quantitativeȱ methodsȱ revealȱ aȱ greaterȱ importanceȱ ofȱ internalȱ comparedȱ toȱ externalȱ determinants,ȱi.e.ȱdriversȱandȱbarriers,ȱofȱCSM.ȱAtȱfirstȱsightȱthisȱresultȱisȱpuzzling.ȱ Otherȱempiricalȱstudiesȱdoȱnotȱprovideȱanyȱmeaningfulȱbenchmarkȱforȱthisȱresult:ȱ -

Skjaersethȱ andȱ Skodvinȱ (2001)ȱ concludedȱ thatȱ politicalȱ contextsȱ haveȱ influencedȱ theȱ corporateȱ climateȱ changeȱ strategiesȱ ofȱ Shellȱ andȱ Exxonȱ moreȱ stronglyȱ thanȱ companyȬspecificȱ factors.ȱ Theyȱ consideredȱ theȱ mostȱ importantȱ factorsȱ determinȬ ingȱclimateȱchangeȱstrategiesȱtoȱbeȱsocietalȱdemandsȱforȱenvironmentalȱprotectionȱ throughȱconsumerȱbehavior,ȱgovernmentȱsupplyȱofȱenvironmentalȱpolicyȱ(policyȱ mix),ȱandȱtheȱinstitutionalȱlinkageȱbetweenȱtheȱdemandȱforȱclimateȱchangeȱactionsȱ andȱcorporateȱreactionsȱ(exclusiveȱconfrontationalȱvs.ȱinclusiveȱandȱcollaborativeȱ approaches).ȱ However,ȱ itȱ isȱ mostȱ likelyȱ thatȱ theirȱ findingsȱ onlyȱ applyȱ toȱ aȱ wellȬ definedȱandȱstrategicȱissueȱsuchȱasȱclimateȱchange,ȱwhichȱonȱaȱglobalȱscaleȱisȱstillȱ inȱaȱpoliticizationȱphaseȱandȱwillȱonlyȱaffectȱcompaniesȱsubstantiallyȱinȱtheȱlongȱ term.ȱTodayȱmostȱ significantȱoutsideȱ demandsȱforȱ CSMȱdoȱnotȱ requireȱ aȱ radicalȱ changeȱ ofȱ businessȱ model,ȱ i.e.ȱ modificationsȱ ofȱ processesȱ andȱ productsȱ toȱ miniȬ mizeȱ environmentalȱ andȱ socialȱ effectsȱ couldȱ veryȱ wellȱ originateȱ fromȱ internalȱ drivingȱforces.ȱ

-

Winnȱ analyzedȱ theȱ adoptionȱ ofȱ environmentalȱ policiesȱ inȱ fourȱ USȱ companiesȱ atȱ theȱbeginningȱofȱtheȱ1990s.ȱSheȱpointedȱtoȱseveralȱinternalȱandȱexternalȱdetermiȬ nantsȱ includingȱ society,ȱ theȱ organizationȱ andȱ individuals.ȱ Sheȱ alsoȱ stronglyȱ emȬ phasizedȱtheȱimportanceȱofȱinternalȱfactorsȱsuchȱasȱhistoryȱofȱsocialȱresponsibility,ȱ hierarchicalȱ organizationalȱ designȱ and,ȱ aboveȱ all,ȱ keyȱ individualsȱ (personalȱ valȬ ues,ȱ issueȱ awareness)ȱ inȱ drivingȱ environmentalȱ responsivenessȱ (Winn,ȱ 1995,ȱ p.ȱ 144).ȱ

-

Otherȱstudiesȱ(Bansalȱetȱal.,ȱ2000;ȱHenriquesȱetȱal.,ȱ1996;ȱRheeȱ&ȱSuȬYol,ȱ2003;ȱRoȬ jsek,ȱ 2001)ȱ alsoȱ discussȱ possibleȱ externalȱ andȱ internalȱ determinantsȱ ofȱ environȬ mentalȱ orȱ socialȱ responsivenessȱ butȱ doȱ notȱ provideȱ anyȱ additionalȱ insightsȱ intoȱ theȱrelativeȱimportanceȱofȱinternalȱvs.ȱexternalȱbarriers.ȱ

Itȱshouldȱbeȱnotedȱthatȱevidenceȱonȱtheȱimportanceȱofȱinternalȱdriversȱisȱonlyȱbasedȱ onȱ theȱ smallȱ samplesȱ drawnȱ fromȱ sustainabilityȱ officersȱ andȱ thusȱ resultsȱ shouldȱ beȱ ȱ

196ȱ

8ȱEmpiricalȱevidenceȱ

handledȱ withȱ dueȱ caution.ȱ Nevertheless,ȱ theyȱ areȱ insightfulȱ andȱ inȱ parallelȱ withȱ qualitativeȱdataȱthatȱpointȱtoȱaȱratherȱincrementalȱapproachȱtoȱCSMȱ(seeȱe.g.ȱsectionsȱ 8.4.2ȱ Strategicȱ dispositionȱ andȱ 8.4.3ȱ Economicȱ rationale):ȱ Sinceȱ outsideȱ pressureȱ isȱ relativelyȱweak,ȱcompaniesȱareȱableȱtoȱrespondȱonȱaȱ“businessȬasȬusual”ȱbasis.ȱ Internalȱvs.ȱexternalȱbarriersȱ Quantitativeȱ methodsȱ (regressionȱ modelsȱ inȱ particular)ȱ provideȱ soundȱ evidenceȱ forȱ theȱ greaterȱ significanceȱ ofȱ internalȱ (ratherȱ thanȱ external)ȱ barriersȱ inȱ termsȱ ofȱ bothȱ CSMȱintentȱandȱCSMȱsuccess.ȱThisȱmayȱhaveȱbeenȱexpectedȱinȱtermsȱofȱCSMȱsuccessȱ –ȱ becauseȱ CSMȱ successȱ isȱ moreȱ stronglyȱ internallyȱ determinedȱ throughȱ companies’ȱ strategicȱdispositionȱandȱapproachȱtoȱimplementingȱCSM.ȱItȱmayȱbeȱsomewhatȱsurȬ prisingȱatȱfirstȱsightȱwithȱrespectȱtoȱtheȱimpactȱonȱCSMȱintent,ȱparticularlyȱsinceȱsevȬ eralȱintervieweesȱblamedȱexternalȱbarriersȱsuchȱasȱignorantȱcustomers,ȱinvestorsȱandȱ capitalȱmarketsȱforȱlittleȱcorporateȱengagementȱinȱtheȱareaȱofȱCSM.ȱ However,ȱtheȱgreaterȱimportanceȱofȱinternalȱbarriersȱisȱinȱlineȱwithȱtheȱgreaterȱimporȬ tanceȱofȱinternalȱ(ratherȱthanȱexternal)ȱdriversȱdiscussedȱabove,ȱandȱtheȱcorrespondȬ ingȱconclusion:ȱTheȱresultsȱpointȱtoȱaȱrelativelyȱ“feeble”ȱandȱincrementalȱapproachȱtoȱ CSMȱinȱgeneral:ȱInnovationsȱtoȱprocessesȱandȱproductsȱareȱmostlyȱminorȱandȱincreȬ mental.ȱHenceȱtheȱeffectsȱofȱexternalȱbarriersȱ(e.g.ȱlackȱofȱinterestȱfromȱcustomersȱandȱ investorsȱasȱwellȱasȱinadequateȱlegislation)ȱareȱnegligible.ȱ Theȱgreaterȱimportanceȱofȱbothȱinternalȱdriversȱandȱbarriersȱalsoȱpointsȱtoȱsignificantȱ butȱ unexploitedȱ potentialȱ forȱ CSM:ȱ Removingȱ theȱ internalȱ barriersȱ willȱ mostȱ likelyȱ leadȱtoȱmoreȱproactiveȱapproachesȱtoȱCSMȱinȱtheȱfuture.ȱ Softȱvs.ȱhardȱinternalȱbarriersȱ Quantitativeȱmethodsȱalsoȱprovideȱadditionalȱinsightsȱintoȱtheȱrelativeȱimportanceȱofȱ softȱinternalȱ(e.g.ȱmindset,ȱknowledgeȱandȱculture)ȱvs.ȱhardȱinternalȱfactors.ȱHardȱinȬ ternalȱfactorsȱsuchȱasȱaȱlackȱofȱtoolsȱandȱprocessesȱappearȱtoȱbeȱlessȱstrongȱbarriersȱtoȱ CSMȱdueȱtoȱtheȱ“soft”ȱandȱcomplexȱnatureȱofȱcorporateȱsustainability,ȱwhichȱmakesȱ itȱratherȱinaccessibleȱforȱsuchȱinflexibleȱresources.ȱInȱhighlyȱcomplexȱ(andȱhenceȱunȬ certain)ȱsituations,ȱsoftȱfactorsȱsuchȱasȱcorporateȱcultureȱandȱmanagers’ȱmindsetȱareȱ moreȱimportantȱfactors,ȱsinceȱmanagersȱhaveȱtoȱfallȱbackȱonȱthemȱwhenȱmakingȱdeciȬ sionsȱ(Badaraccoȱ&ȱWebb,ȱ1995;ȱJamesȱJr.,ȱ2000;ȱTinsley,ȱ2002;ȱTrevino,ȱ1999).ȱ Thisȱdoesȱnotȱmeanȱthatȱtoolsȱareȱirrelevant.ȱInȱfactȱempiricalȱstudiesȱsuggestȱthatȱcerȬ tainȱ toolsȱ areȱ highlyȱ effective:ȱ ScenarioȬbasedȱ planningȱ playedȱ aȱ substantialȱ roleȱ inȱ influencingȱShell’sȱpositionȱonȱclimateȱchangeȱ(Kolkȱetȱal.,ȱ2001,ȱp.ȱ506;ȱSkjaersethȱetȱ al.,ȱ2001,ȱp.ȱ53).ȱIncentiveȱsystemsȱpositivelyȱaffectȱenvironmentalȱresponsivenessȱbeȬ causeȱtheyȱcreateȱanȱenvironmentȱinȱwhichȱmanagersȱareȱbetterȱinformedȱandȱmoreȱ inclinedȱ toȱ adoptȱ opportunityȬratherȱ thanȱ threatȬdrivenȱ approachesȱ (Sharmaȱ etȱ al.,ȱ

8.4ȱCompaniesȱ

197ȱ

1999).ȱResultsȱprovidedȱinȱsectionȱ8.4.4.1ȱManagementȱtoolsȱsupportȱthisȱconclusion,ȱ asȱtheyȱshowȱthatȱspecificȱtoolsȱareȱinȱdemandȱandȱinfluenceȱtheȱsuccessȱofȱcorporateȱ socialȱandȱenvironmentalȱinitiatives.ȱ Managerialȱvs.ȱcorporateȱdiscretionaryȱbarriersȱ Overallȱ evidenceȱ pointsȱ toȱ aȱ greaterȱ importanceȱ ofȱ corporateȱ discretionaryȱ thanȱ managerialȱ discretionaryȱ barriers.ȱ However,ȱ thisȱ conclusionȱ isȱ onlyȱ basedȱ onȱ aȱ fewȱ regressionȱmodelsȱandȱthusȱshouldȱnotȱbeȱoverinterpreted.ȱTheȱresultsȱareȱplausibleȱ becauseȱcompaniesȱdefineȱtheȱspaceȱ(i.e.ȱaȱsetȱofȱchoices)ȱthrough,ȱe.g.ȱcorporateȱculȬ turesȱ andȱ structures,ȱ inȱ whichȱ theȱ individualȱ managerȱ canȱ thenȱ exerciseȱ hisȱ orȱ herȱ ownȱdiscretionaryȱpower,ȱbasedȱonȱhisȱorȱherȱmoreȱorȱlessȱproactiveȱattitudesȱ(Wood,ȱ 1991,ȱp.ȱ699).ȱ ItȱisȱalsoȱtellingȱthatȱinȱtheȱUTȱsectorȱCSMȱsuccessȱisȱaffectedȱbyȱbothȱmanagerialȱdisȬ cretionaryȱbarriersȱ(managers’ȱmindset)ȱandȱcorporateȱdiscretionaryȱbarriersȱ(corpoȬ rateȱ culture).ȱ Thisȱ hintsȱ atȱ theȱ followingȱ conclusions:ȱ (1)ȱ UTȱ managersȱ exhibitȱ strongerȱ reactiveȱ attitudesȱ thanȱ OGȱ managers,ȱ whichȱ isȱ inȱ parallelȱ withȱ evidenceȱ providedȱinȱsectionȱ8.3ȱManagers).ȱ(2)ȱTheirȱindividualȱattitudesȱhaveȱaȱstrongerȱefȬ fect,ȱ sinceȱ corporateȱ discretionaryȱ factorsȱ (e.g.ȱ corporateȱ cultures,ȱ toolsȱ andȱ procȬ esses)ȱareȱlessȱdeveloped.ȱ Determinantsȱofȱcorporateȱdiscretionaryȱfactorsȱ ItȱisȱobviousȱthatȱcorporateȱdiscretionaryȱfactorsȱareȱinfluencedȱbyȱtheȱsameȱdetermiȬ nantsȱ thatȱ alsoȱ impactȱ onȱ managers’ȱ attitudes:ȱ Theȱ moreȱ companiesȱ areȱ affectedȱ byȱ certainȱ issuesȱ andȱ stakeholders,ȱ theȱ moreȱ theyȱ areȱ inclinedȱ toȱ respondȱ throughȱ aȱ processȱofȱstrategyȱ formulationȱ (suchȱ asȱShellȱandȱBPȱ inȱ termsȱ ofȱclimateȱchangeȱinȱ Europe),ȱandȱthroughȱtheȱcreationȱofȱtoolsȱandȱstructuresȱ(e.g.ȱincentiveȱsystems).ȱOfȱ course,ȱleadershipȱ(e.g.ȱBP’sȱJohnȱBrowne’sȱ1997ȱStanfordȱspeechȱonȱclimateȱchange)ȱ alsoȱplaysȱaȱkeyȱrole.ȱ Qualitativeȱ methodsȱ inȱ thisȱ studyȱ additionallyȱ pointȱ toȱ threeȱ factorsȱ thatȱ moderateȱ theȱ developmentȱ ofȱ organizationalȱ capabilitiesȱ determiningȱ corporateȱ discretionaryȱ effects.ȱTheyȱcomprise:ȱ -

Stateȱownership:ȱStateȱownershipȱisȱreportedȱtoȱbeȱassociatedȱwithȱmoreȱbureauȬ craticȱstructuresȱandȱcultures,ȱandȱthusȱlikelyȱtoȱbeȱlinkedȱtoȱaȱmoreȱreactiveȱandȱ complianceȬorientedȱapproachȱtoȱCSM.ȱ

-

Theȱ licenseȱ toȱ operate:ȱ Aȱ generallyȱ greaterȱ importanceȱ ofȱ theȱ informalȱ licenseȱ toȱ operate,ȱ e.g.ȱ brandȱ valueȱ andȱ reputation,ȱ callsȱ forȱ aȱ moreȱ proactiveȱ approachȱ toȱ CSMȱandȱcorrespondingȱcapabilities,ȱsinceȱtheȱriskȱofȱshortȬtermȱreactionȱthroughȱ customersȱandȱcapitalȱmarketsȱisȱhigher.ȱ

ȱ

198ȱ

-

8ȱEmpiricalȱevidenceȱ

Nationalȱroots:ȱTheȱnationalȱrootsȱ(locationȱofȱcorporateȱheadquarters)ȱalsoȱinfluȬ enceȱcorporateȱattitudesȱtowardsȱcertainȱissuesȱsuchȱasȱclimateȱchange,ȱsinceȱtheyȱ determineȱtheȱdominantȱsocioȬpoliticalȱandȱculturalȱparadigmsȱ(Hofstede,ȱ1994).ȱ

Contingencyȱperspectiveȱonȱcorporateȱdiscretionaryȱdeterminantsȱ Theȱstudyȱalsoȱrevealsȱsomeȱdifferencesȱbetweenȱtheȱtwoȱsectorsȱandȱsomeȱregionsȱofȱ operations:ȱ -

Asȱmentionedȱbrieflyȱabove,ȱtheȱUTȱsectorȱexhibitsȱmoreȱinternalȱdeficitsȱandȱthusȱ aȱratherȱcomplianceȬorientedȱandȱreactiveȱapproach,ȱwhichȱcouldȱbeȱattributedȱtoȱ lowerȱ issueȱ andȱ organizationalȱ visibility,ȱ aȱ lowerȱ importanceȱ ofȱ theȱ informalȱ liȬ censeȱtoȱoperateȱand,ȱinȱsomeȱcases,ȱstateȱownership.ȱ

-

Regionȱeffectsȱcanȱbeȱdiagnosedȱonȱtheȱbasisȱofȱqualitativeȱandȱquantitativeȱdata,ȱ whichȱpointȱtoȱaȱnegativeȱbiasȱofȱNorthȱAmericanȱregionsȱofȱoperationȱcomparedȱ toȱ MidȬNorthernȱ Europeanȱ regions.ȱ Thisȱ appearsȱ toȱ reflectȱ aȱ lessȱ strongȱ societalȱ demandȱforȱCSM.ȱ

8.4.2 Strategicȱdispositionȱ Inȱ theȱ presentȱ sectionȱ theȱ authorȱ willȱ elaborateȱ onȱ howȱ stronglyȱ companiesȱ inȱ bothȱ sectorsȱadhereȱtoȱCSMȱatȱaȱstrategicȱlevel,ȱi.e.ȱhowȱtheyȱreactȱtoȱtheȱissuesȱrecognizedȱ fromȱaȱstrategicȱpointȱofȱview.ȱ Inȱsectionȱ8.4.2.1ȱheȱwillȱassessȱtheirȱstrategicȱdispositionȱbasedȱonȱquantitativeȱdataȱ onȱtheȱconceptsȱofȱSDȱfamiliarity,ȱSDȱimportanceȱandȱCSMȱintent,ȱwhichȱareȱthenȱputȱ intoȱ perspectiveȱ throughȱ qualitativeȱ dataȱ obtainedȱ fromȱ theȱ interviewsȱ asȱ wellȱ asȱ secondaryȱqualitativeȱdataȱ(companyȱdocuments,ȱnewspaperȱandȱjournalȱarticles).ȱ Inȱsectionȱ8.4.2.2,ȱheȱwillȱassessȱtheȱdeterminantsȱofȱcompanies’ȱstrategicȱdispositionȱ inȱmoreȱdetail,ȱasȱwellȱasȱtheȱeffectsȱofȱstrategicȱdispositionȱtoȱCSMȱonȱimplementaȬ tionȱandȱoutcome.ȱ 8.4.2.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Quantitativeȱdataȱ SDȱfamiliarityȱandȱCSMȱintentȱ Chartȱ 8Ȭ29ȱ displaysȱ theȱ meansȱ ofȱ SDȱ familiarityȱ andȱ CSMȱ intentȱ obtainedȱ fromȱ theȱ fourȱdifferentȱsamples.ȱTheȱcrossȬsectorȱdifferenceȱclearlyȱpointsȱtoȱaȱgreaterȱstrategicȱ dispositionȱtoȱCSMȱinȱtheȱOGȱsector,ȱwithȱtheȱfollowingȱbeingȱstatisticallyȱsignificant:ȱ -

OGȱgeneralȱmanagersȱreportȱgreaterȱSDȱfamiliarityȱandȱCSMȱintentȱthanȱUTȱgenȬ eralȱmanagers.ȱ

-

OGȱsustainabilityȱofficersȱalsoȱreportȱgreaterȱSDȱfamiliarityȱthanȱUTȱsustainabilityȱ officersȱ(beingȱstatisticallyȱsignificantȱatȱaȱ10%ȱlevel).ȱ

8.4ȱCompaniesȱ

199ȱ

5

UT general managers

1 = "Not at all" to 5 = "Very much"

OG general managers UT sustainability officers

4

OG sustainability officers

3

2

1

0

SD familiarity

CSM intent

ȱ

Chartȱ8Ȭ29:ȱSDȱfamiliarityȱandȱCSMȱintentȱ

Theȱ greaterȱ CSMȱ intentȱ inȱ theȱ OGȱ sectorȱ canȱ beȱ confidentlyȱ attributedȱ toȱ strongerȱ driversȱ(issues,ȱoutsideȱpressure,ȱproactiveȱ managers)ȱandȱlessȱinternalȱdeficitsȱ(e.g.ȱ lackȱofȱcorporateȱculture)ȱcomparedȱtoȱtheȱUTȱsectorȱ–ȱasȱtheȱauthorȱdiagnosedȱinȱtheȱ previousȱsectionsȱ8.1ȱIssues,ȱ8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnerships,ȱ8.3ȱ Managersȱandȱ8.4.1ȱCompanyȬspecificȱdeterminants.ȱMoreȱdetailsȱareȱalsoȱprovidedȱ inȱtheȱsubsequentȱsectionȱ8.4.2.2ȱAdvancedȱstatistics.ȱ FurtherȱdataȱexhibitȱseveralȱcrossȬdisciplinaryȱdifferences:ȱInȱbothȱsectorsȱsustainabilȬ ityȱofficersȱreportȱhigherȱlevelsȱofȱSDȱfamiliarityȱandȱCSMȱintentȱthanȱgeneralȱmanȬ agers.ȱTheȱmeanȱdifferencesȱinȱSDȱfamiliarityȱareȱ–ȱdespiteȱtheȱsmallȱsamplesȱ–ȱstatisȬ ticallyȱ significantȱ inȱ bothȱ sectors.ȱ Theseȱ resultsȱ matchȱ findingsȱ reportedȱ inȱ sectionȱ 8.2.5ȱ Industryȱ andȱ partnershipsȱ whichȱ showedȱ thatȱ sustainabilityȱ officersȱ considerȱ theirȱ industryȱ moreȱ proactiveȱthanȱgeneralȱ managersȱdo.ȱThusȱtheȱ sameȱalternativeȱ interpretationsȱareȱvalid,ȱe.g.ȱcalculatedȱoptimismȱofȱcatalystsȱand,ȱaboveȱall,ȱgreaterȱ awarenessȱofȱexistingȱbestȱpractices.ȱ SDȱimportanceȱ InterȬȱ andȱ intraȬsectorȱ meanȱ differencesȱ inȱ SDȱ importanceȱ areȱ marginalȱ (seeȱ Chartȱ 8Ȭ30).ȱObviouslyȱthisȱisȱpartlyȱbecauseȱtheȱunderlyingȱscaleȱhasȱonlyȱ3ȱpointsȱandȱisȱ thusȱ lessȱ capableȱ ofȱ measuringȱ nuancesȱ inȱ perceptionȱ thanȱ theȱ 5ȬpointȬLikertȱ scalesȱ usedȱtoȱassessȱSDȱfamiliarityȱandȱCSMȱintent.ȱȱ

ȱ

200ȱ

8ȱEmpiricalȱevidenceȱ

3

Future SD importance (1 = "Decreasing" to 5 = "Increasing")

UT general managers OG general managers UT sustainability officers 2

OG sustainability officers

1

0

ȱ

Chartȱ8Ȭ30:ȱFutureȱSDȱimportanceȱ

Resultsȱareȱproneȱtoȱsocialȱdesirabilityȱbias,ȱbutȱtheȱsmallȱcrossȬdisciplinaryȱvariationȱ wouldȱalsoȱtendȱtoȱindicateȱthatȱtheȱimportanceȱofȱsustainableȱdevelopmentȱtoȱcomȬ paniesȱinȱtheȱfutureȱhasȱbeenȱrecognizedȱnotȱonlyȱbyȱsustainabilityȱofficersȱbutȱalsoȱ byȱgeneralȱmanagers.ȱ Qualitativeȱbenchmarkȱ ValuesȱonȱSDȱfamiliarityȱandȱCSMȱintentȱrangeȱfromȱ3.5ȱtoȱ4.5,ȱmeaningȱroughlyȱbeȬ tweenȱ “moreȱorȱless”ȱ andȱ “veryȱ much.”ȱObviouslyȱ thoseȱ attributesȱ areȱ notȱveryȱinȬ dicative.ȱInȱtheȱfollowingȱtheȱauthorȱaimsȱtoȱcutȱthroughȱpotentialȱsocialȱdesirabilityȱ biasȱbyȱbrieflyȱdescribingȱcompanies’ȱactualȱstrategicȱapproachȱtoȱCSM:ȱ AllȱinȱallȱcorporateȱvisionsȱinȱbothȱsectorsȱareȱclearlyȱbasedȱonȱtheȱprofitableȱextracȬ tion,ȱproductionȱandȱuseȱofȱfossilȱfuelȱrespectively.ȱThisȱisȱalsoȱclearlyȱreflectedȱinȱtheȱ mainȱissuesȱdiscussedȱandȱtheȱcorrespondingȱCSMȱfocusȱ(seeȱTableȱ8Ȭ6).ȱ Climateȱ changeȱ isȱ addressedȱ onȱ anȱ incrementalȱ levelȱ throughȱ internalȱ processȱ imȬ provementsȱ toȱ raiseȱ energyȱ efficiencyȱ (Kolkȱ etȱ al.,ȱ 2004,ȱ p.ȱ 312)ȱ inȱ particularȱ andȱ throughȱ renewableȱ energyȱ technologiesȱ thatȱ areȱ graduallyȱ developedȱ inȱ nicheȱ marȬ kets.ȱȱ

8.4ȱCompaniesȱ ParametersȱofȱcompaȬ nies’ȱstrategicȱdisposiȬ tionȱtoȱCSMȱ Currentȱmainȱdriversȱ

201ȱ OGȱsectorȱ

-

Strategicȱobjectivesȱ

-

Issuesȱdiscussedȱ

-

-

-

ExampleȱofȱmainȱacȬ tivitiesȱ(seeȱsectionȱ 8.4.4.3ȱCorporateȱiniȬ tiatives)ȱȱ

- Growingȱenergyȱdemandȱ - LiberalizationȱandȱprivatizationȱÎȱ processȱefficiencyȱ(Asmus,ȱ2002;ȱ Birnbaumȱetȱal.,ȱ2002).ȱ EconomicȱgrowthȱandȱwelfareȱimprovementsȱthroughȱprofitableȱextracȬ tion,ȱproductionȱandȱuseȱofȱfossilȱfuelsȱ Profitableȱgrowthȱ - Profitableȱgrowthȱ Competitivenessȱ - Competitivenessȱ - Diversificationȱ(geographicallyȱandȱ inȱtermsȱofȱfuelȱmix)ȱtoȱensureȱ supplyȱsecurityȱ SocialȱissuesȱinȱdevelopingȱcounȬ - Localȱenvironmentalȱimpactsȱ triesȱ - Climateȱchangeȱ Localȱenvironmentalȱimpactsȱ(e.g.ȱ oilȱspills)ȱ Climateȱchangeȱ Mainly:ȱEfficient,ȱenvironmentallyȱ - Mainly:ȱEfficientȱandȱthusȱlessȱcarȬ bonȬintensiveȱgenerationȱofȱelecȬ andȱsociallyȱresponsibleȱextractionȱ tricity,ȱfuelȱswitchingȱ(Kolkȱetȱal.,ȱ andȱproductionȱofȱoilȱ&ȱgas,ȱreducȬ 2004,ȱp.ȱ309)ȱ tionȱofȱgasȱflaringȱ(Kolkȱ&ȱPinske,ȱ 2004,ȱp.ȱ309)ȱȱ - UseȱofȱrenewableȱenergyȱtechnolȬ ogy,ȱdependingȱonȱlocalȱgeophysiȬ Leaders:ȱCommittedȱapproachȱtoȱ calȱconditionsȱandȱbusinessȱenviȬ developingȱrenewableȱenergiesȱ ronmentsȱ(e.g.ȱsubsidies)ȱ(DonnerȬ (GehlenȱSouth,ȱ2000,ȱp.ȱ5).54ȱ bauer,ȱ2003;ȱMarsh,ȱ2003)ȱ Laggards:ȱ“Waitȱandȱsee”ȱpositionȱ (Buchan,ȱ2001b;ȱSalzmann,ȱ2004,ȱp.ȱ 137)55ȱ - CO2ȱemissionȱreductionȱ Communityȱinvolvementȱ - Communityȱinvolvementȱ Spillȱpreventionȱ CO2ȱemissionȱreduction:ȱcorporateȱ targetȱsetting,ȱinternalȱemissionsȱ tradingȱsystemsȱ(ShellȱandȱBP)ȱ

- Geopoliticsȱ - Resourceȱdepletionȱ - RapidlyȱgrowingȱdemandȱinȱAsiaȱ

Corporateȱvisionȱ

CSMȱfocusȱ

UTȱsectorȱ

-

Tableȱ8Ȭ6:ȱParametersȱofȱstrategicȱdispositionȱtoȱCSMȱ–ȱbasedȱonȱinterviewsȱandȱanalysisȱofȱcorpoȬ rateȱreports/websitesȱ

InȱtheȱUTȱsector,ȱtheȱroleȱofȱnuclearȱpowerȱasȱaȱpossibleȱcarbonȱneutralȱalternativeȱtoȱ fossilȱfuelsȱisȱuncertainȱ(e.g.ȱSwedenȱhasȱabandonedȱtheȱphasingȱoutȱagreedȱuponȱasȱ earlyȱasȱ1980)56ȱandȱcountryȬspecificȱ(Franceȱvs.ȱGermany).57ȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 54

ȱShellȱHydrogenȱisȱmainlyȱworkingȱinȱjointȱventuresȱwithȱneighboriingȱindustries,ȱfocusingȱonȱfuelȱ infrastructureȱandȱreformerȱtechnologies.ȱShellȱRenewablesȱisȱincorporatingȱaȱrangeȱofȱactivitiesȱinȱ solar,ȱ biomass,ȱ forestry,ȱ andȱ ruralȱ electrification.ȱ BPȱ Solarȱ hasȱ reportedȱ profitsȱ sinceȱ 2000ȱ (Gehlenȱ South,ȱ2000).ȱ

55

56

ȱ

ȱseeȱalsoȱe.g.ȱwww.shell.com:ȱOurȱstrategyȱ–ȱstrategicȱdirection,ȱorȱ www.bp.com/investor_centre/fin_operȱ(27/03/2003).ȱ

ȱLofstedtȱ(2001)ȱ

202ȱ

8ȱEmpiricalȱevidenceȱ

Theȱfollowingȱquotesȱfromȱbothȱsectorsȱillustrateȱhowȱuncertainȱcompaniesȱareȱaboutȱ theirȱengagementȱinȱrenewablesȱandȱotherȱalternativesȱtoȱaddressȱclimateȱchangeȱasȱ theȱmostȱimportantȱstrategicȱissue:ȱ Weȱintendȱtoȱbeȱinȱoilȱandȱgasȱforȱaȱveryȱlongȱtime.ȱTheȱbigȱtransitionȱtakesȱplaceȱ fromȱoilȱtoȱgas.ȱThereȱisȱnoȱplanȱforȱrenewables,ȱnoȱ50ȱyearsȱscenario.ȱRenewablesȱ constituteȱ aȱ businessȱ developmentȱ option:ȱ Thereȱ isȱ noȱ strategicȱ commitmentȱ toȱ them,ȱmoreȱaȱ“seeȱwhatȱyouȱcanȱlearn”ȱattitudeȱ(OG3,ȱSO).ȱ Gasȱwillȱbeȱtheȱ“fuelȱofȱchoice”ȱuntilȱ2020.ȱItȱisȱlegitimateȱtoȱwatchȱdevelopmentsȱ (renewables,ȱhydrogen)ȱforȱanotherȱ5ȱyearsȱandȱinvestȱinȱtheȱefficiencyȱofȱgas,ȱandȱ CO2ȱcaptureȱandȱstorageȱasȱmidȬtermȱsolutionsȱ(OG4,ȱSO).ȱ Atȱ theȱ endȱ ofȱ theȱ day,ȱ it’sȱ allȱ aboutȱ socialȱ (i.e.ȱ theȱ consumers’)ȱ choice,ȱ OECDȱ countriesȱcouldȱgoȱoffȱfossilȱfuelsȱinȱ5Ȭ10ȱyearsȱtime,ȱbutȱourȱmainȱchallengeȱisȱtheȱ energyȱdemandȱofȱtheȱdevelopingȱcountries;ȱfacilitatingȱtheirȱdevelopmentȱisȱalsoȱ aboutȱsustainableȱdevelopmentȱ(OG2,ȱSO).ȱ Atȱ theȱ moment,ȱ thereȱ isȱ littleȱ potentialȱ forȱ commerciallyȱ viableȱ radicalȱ innovaȬ tions,ȱ apartȱ fromȱ fuelȱ cellsȱ andȱ maybeȱ superconductivity.ȱ Inȱ theȱ future,ȱ generaȬ tionȱwillȱbeȱmoreȱdecentralizedȱandȱbasedȱonȱnaturalȱgasȱ(UT1,ȱSO).ȱ Theȱ strategicȱ uncertaintyȱ isȱ lowerȱ inȱ theȱ UTȱ sector,ȱ sinceȱ twoȱ ofȱ theȱ strategicȱ issuesȱ thatȱOGȱcompaniesȱfaceȱ–ȱresourceȱdepletionȱandȱgeopoliticsȱ–ȱareȱlessȱsevereȱdueȱtoȱ aȱmoreȱdiversifiedȱfuelȱmixȱandȱaȱgeographicalȱfocusȱonȱEuropeȱandȱtheȱUS.ȱ TheȱNorthȬSouthȱenergyȱdivideȱasȱtheȱsecondȱmajorȱstrategicȱissuesȱdoesȱhardlyȱplayȱ anyȱrole,ȱsinceȱitȱdoesȱnotȱconcernȱbothȱsectors’ȱkeyȱmarketsȱthatȱareȱEurope,ȱNorthȬ AmericaȱandȱAsia.58ȱ Ourȱexpertiseȱisȱtoȱproduceȱlargeȱamountsȱofȱelectricity;ȱweȱneedȱclientsȱwhoȱareȱ ableȱtoȱpayȱforȱthatȱ(UT2,ȱSO).ȱ Inȱadditionȱtoȱtheȱgreaterȱsignificanceȱofȱissuesȱandȱoutsideȱpressureȱasȱwellȱasȱmoreȱ proactiveȱattitudesȱofȱmanagersȱinȱtheȱOGȱsectorȱreferredȱtoȱabove,ȱthereȱisȱanotherȱ significantȱ differenceȱ betweenȱ theȱ twoȱ sectorsȱ whichȱ supportsȱ quantitativeȱ dataȱ aboveȱ suggestingȱ thatȱ strategicȱ dispositionȱ toȱ CSMȱ isȱ greaterȱ inȱ theȱ OGȱ sector:ȱ theȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 57

ȱ ProȬargumentsȱ usedȱ areȱ climateȱ neutralityȱ andȱ supplyȱ security,ȱ whichȱ haveȱ toȱ competeȱ withȱ highȱ costsȱofȱdisposalȱandȱsafetyȱ(2003a;ȱBauquis,ȱ2003;ȱHerbst,ȱ2003)ȱ

58

ȱThereȱareȱaȱfewȱexceptions:ȱE.g.ȱtheȱE7ȱ–ȱanȱinitiativeȱofȱnineȱleadingȱelectricȱutilitiesȱfromȱG7ȱcounȬ tries,ȱformedȱinȱtheȱwakeȱofȱtheȱ1992ȱRioȱSummitȱ–ȱhasȱestablishedȱaȱFundȱforȱSustainableȱEnergyȱ Developmentȱinȱdevelopingȱandȱemergingȱcountriesȱtoȱimplementȱrenewableȱenergy,ȱruralȱelectrifiȬ cationȱandȱgreenhouseȱgasȱreducingȱprojects.ȱShellȱandȱEskomȱhaveȱformedȱaȱjointȱventureȱbringingȱ solarȱ toȱ 50,000ȱ homesȱ inȱ ruralȱ areasȱ ofȱ theȱ Easternȱ Capeȱ (www.shell.comȱ –ȱ Newsȱ &ȱ Libraryȱ 22/11/2000:ȱInternationalȱawardȱforȱShellȬEskom’sȱSouthȱAfricanȱruralȱelectrificationȱproject).ȱ

8.4ȱCompaniesȱ

203ȱ

greaterȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperate.ȱInȱtheȱpastȱtheȱOGȱsectorȱactedȱ lessȱ strategicallyȱ aggressivelyȱ inȱ environmentalȱ thanȱ inȱ generalȱ businessȱ termsȱ (KeȬ tola,ȱ1993,ȱp.ȱ32).ȱHowever,ȱthisȱsituationȱappearsȱtoȱbeȱchangingȱgradually.ȱCompaȬ niesȱhaveȱincreasinglyȱrecognizedȱtheȱcompetitiveȱadvantageȱthatȱcanȱbeȱgainedȱfromȱ CSMȱthroughȱitsȱpositiveȱeffectȱonȱcompanies’ȱinformalȱlicenseȱtoȱoperate.ȱBPȇsȱ“beȬ yondȱpetroleum”ȱrebrandingȱeffortȱisȱprobablyȱtheȱmostȱobviousȱ“proof”ȱofȱthisȱdeȬ velopment:ȱ However,ȱ itȱ hasȱ beenȱ widelyȱ criticizedȱ byȱ bothȱ NGOsȱ andȱ peersȱ forȱ “greenwashing”ȱ (Buchan,ȱ 2001a).ȱ Sustainabilityȱ officersȱ interviewedȱ inȱ thisȱ studyȱ claimedȱtheȱanȱimprovedȱinformalȱlicenseȱtoȱoperateȱacceleratesȱlicensingȱproceduresȱ andȱconstructionȱprocesses,ȱandȱthusȱdecreasesȱtheȱ“timeȱtoȱmarket”ȱ(seeȱsectionȱ8.4.3ȱ Economicȱrationaleȱforȱaȱmoreȱdetailedȱbusinessȱcase).ȱFurthermore,ȱtheȱgreaterȱstraȬ tegicȱ dispositionȱ toȱ corporateȱ sustainabilityȱ inȱ theȱ OGȱ sectorȱ isȱ alsoȱ reflectedȱ inȱ theȱ higherȱ profileȱ ofȱ statementsȱ fromȱ topȱ executivesȱ onȱ CSMȱ (Anonymous,ȱ 2003f;ȱ Browne,ȱ1997;ȱDahan,ȱ2001).ȱ Inȱcomparison,ȱtheȱcompetitiveȱaspectȱofȱCSMȱisȱsmallerȱinȱtheȱUTȱsector.ȱHowever,ȱ itȱ canȱ beȱ expectedȱ toȱ increaseȱ inȱ Europe’sȱ liberalizedȱ electricityȱ andȱ gasȱ markets,ȱ sinceȱcorporateȱsocialȱandȱenvironmentalȱrecordsȱwillȱbecomeȱmoreȱrelevant,ȱasȱtheyȱ supportȱtheȱbuildingȱofȱbrandsȱ(Gray,ȱ2003).ȱ Conclusionȱ Companiesȱinȱbothȱsectorsȱhaveȱaȱclearlyȱincrementalȱratherȱthanȱaȱradicalȱapproachȱ toȱ CSM,ȱ i.e.ȱ theyȱ generallyȱ respondȱ toȱ socialȱ andȱ environmentalȱ issuesȱ onȱ aȱ “busiȬ nessȬasȬusual”ȱ level.ȱ Traditionalȱ businessȱ modelsȱ areȱ notȱ seriouslyȱ questionedȱ beȬ causeȱ theyȱ areȱ clearlyȱ theȱ mostȱ profitableȱ onesȱ underȱ theȱ currentȱ marketȱ regimes.ȱ However,ȱ theyȱ areȱ moreȱ “responsiblyȱ interpreted”ȱ thanȱ inȱ theȱ past.ȱ Thisȱ alsoȱ inȬ cludesȱ theȱ developmentȱ ofȱ radicalȱ innovationsȱ inȱ nicheȱ markets.ȱ Henceȱ ifȱ responȬ dentsȱindicateȱaȱgreatȱstrategicȱdispositionȱofȱtheirȱcompaniesȱinȱthisȱstudy,ȱtheyȱacȬ tuallyȱ referȱ toȱ aȱ veryȱ responsibleȱ interpretationȱ ofȱ theirȱ sector’sȱ traditionalȱ businessȱ model.ȱȱ Quantitativeȱdataȱalsoȱshowȱthatȱcompanies’ȱstrategicȱdispositionȱisȱgreaterȱinȱtheȱOGȱ thanȱinȱtheȱUTȱsector,ȱwhichȱreflectsȱgreaterȱdrivingȱforcesȱandȱlowerȱinternalȱbarriȬ ersȱinȱtheȱOGȱsectorȱdiagnosedȱbeforehand.ȱSustainabilityȱofficersȱindicateȱaȱgreaterȱ strategicȱ dispositionȱ thanȱ generalȱ managersȱ doȱ andȱ thusȱ confirmȱ theirȱ roleȱ asȱ cataȬ lystsȱandȱreviewers.ȱ Finally,ȱ qualitativeȱ dataȱ revealȱ aȱ highȱ degreeȱ ofȱ uncertaintyȱ aboutȱ futureȱ developȬ mentsȱ(e.g.ȱhowȱandȱwhenȱtoȱcombatȱclimateȱchangeȱthroughȱaȱtransitionȱtoȱrenewȬ ableȱ energies),ȱ particularlyȱ inȱ theȱ OGȱ sector,ȱ whichȱ clearlyȱ reflectsȱ theȱ complexȱ dyȬ namicsȱofȱtheȱglobalȱenergyȱsystemsȱthatȱareȱdrivenȱandȱhinderedȱbyȱgeopolitics,ȱreȬ sourceȱdepletion,ȱgrowingȱenergyȱdemandȱandȱtechnologicalȱtrajectories.ȱ ȱ

204ȱ

8ȱEmpiricalȱevidenceȱ

8.4.2.2 Advancedȱstatisticsȱ 8.4.2.2.1 Correlationsȱ Inȱtheȱpresentȱsection,ȱtheȱauthorȱreportsȱonȱcorrelationsȱdetectedȱbetweenȱtheȱthreeȱ variablesȱ thatȱ operationalizeȱ strategicȱ dispositionȱ –ȱ SDȱ familiarity,ȱ SDȱ importanceȱ andȱCSMȱintentȱ–ȱandȱtheȱremainingȱvariablesȱ(seeȱFigureȱ8Ȭ21ȱtoȱFigureȱ8Ȭ23).ȱ Issues

Socialȱissues Environmentalȱissues

Managers

Companies

OG,ȱUT,ȱT OG,ȱT T

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

OG,ȱT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

SDȱfamiliarity Strategic disposition

SDȱimportance

OG,ȱUT,ȱT

CSMȱINTENT

OG,ȱUT,ȱT

Damageȱtoȱlegitimacy OG,ȱT

Structure

Consumers Governments CurrentȱSDȱrole

PPPs Industry NGOs

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

OG,ȱUT,ȱT

CSMȱSUCCESS

T OG,ȱT T

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.21:ȱCorrelationsȱ–ȱSDȱfamiliarityȱ

8.4ȱCompaniesȱ

205ȱ

Issues

Socialȱissues

Companies

UT, T

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

UT,ȱT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

OG,ȱT

Externalȱstakeholders FutureȱSDȱrole

OG,ȱUT,ȱT

Capitalȱmarkets

SDȱimportance

OG,ȱT

CSMȱINTENT

T

Importanceȱofȱlegitimacy

OG,ȱT

Damageȱtoȱlegitimacy

Legitimacy

SDȱfamiliarity Strategic disposition

OG,ȱUT,ȱT

CrossȬdisc.ȱpotential OG,ȱT

Governments PPPs

CurrentȱSDȱrole

CrossȬdisc.ȱcollabor.

Structure

Consumers

OG,ȱT

CSMȱSUCCESS

OG,ȱUT,ȱȱT UT,ȱT

Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.22:ȱCorrelationsȱ–ȱFutureȱSDȱimportanceȱ Issues

Socialȱissues

Companies

OG,ȱT

Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

OG,ȱT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

OG,ȱT

OG,ȱT

Externalȱstakeholders FutureȱSDȱrole

OG,ȱT

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

OG,ȱUT,ȱT

Strategic disposition

CSMȱINTENT

OG,ȱUT,ȱT

Damageȱtoȱlegitimacy OG,ȱT

Structure

Consumers

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

Governments CurrentȱSDȱrole

SDȱfamiliarity

Strategic SDȱimportance disposition

OG,ȱUT,ȱT

PPPs

OG,ȱT

Industry

OG,ȱT

NGOs

UT,ȱT

CSMȱSUCCESS

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.23:ȱCorrelationsȱ–ȱCSMȱintentȱ

ȱ

206ȱ

8ȱEmpiricalȱevidenceȱ

Correlationsȱbetweenȱstrategicȱdispositionȱonȱtheȱoneȱhandȱandȱissues,ȱmanagers’ȱatȬ titudesȱandȱexternalȱstakeholdersȱonȱtheȱotherȱhaveȱalreadyȱbeenȱdiscussedȱinȱdetailȱ inȱtheȱpreviousȱsections.ȱHenceȱresultsȱandȱinterpretationȱareȱbrieflyȱsummarizedȱinȱ theȱfollowingȱtable:ȱ TestedȱvariȬ ablesȱ

Detectedȱlinkȱ

Briefȱinterpretationȱ

IssueȱsignifiȬ canceȱ Managers’ȱattiȬ tudesȱ

Positiveȱ

IssueȱsignificanceȱdrivesȱstrategicȱdisposiȬ tionȱtoȱCSM.ȱ Proactiveȱ(negative)ȱattitudesȱofȱmanagersȱ positivelyȱ(negatively)ȱaffectȱcompanies’ȱ strategicȱdisposition.ȱConversely,ȱcompaȬ niesȱwithȱgreaterȱstrategicȱdispositionȱmayȱ alsoȱattractȱmanagersȱwithȱstrongerȱproacȬ tiveȱattitudes.ȱ AȱmoreȱproactiveȱSDȱroleȱofȱcapitalȱmarketsȱ drivesȱstrategicȱdispositionȱ–ȱmoreȱclearlyȱinȱ theȱOGȱthanȱinȱtheȱUTȱsector.ȱ AȱmoreȱproactiveȱSDȱroleȱofȱNGOsȱdrivesȱ strategicȱdispositionȱ–ȱmoreȱclearlyȱinȱtheȱ OGȱthanȱinȱtheȱUTȱsector.ȱ Theȱpredominantlyȱignorantȱattitudeȱofȱ consumersȱmakesȱtheirȱroleȱatȱdeterminingȱ strategicȱdispositionȱinsignificant.ȱ TheȱSDȱroleȱofȱgovernmentsȱisȱonlyȱweaklyȱ linkedȱtoȱstrategicȱdispositionȱwhichȱpointsȱ toȱaȱlackȱofȱlongȬtermȱstrategicȱguidanceȱ fromȱlegislators.ȱ Greaterȱcurrentȱimportanceȱofȱandȱpastȱ damageȱtoȱlegitimacy,ȱi.e.ȱtheȱinformalȱliȬ censeȱtoȱoperate,ȱleadȱtoȱgreaterȱstrategicȱ disposition.ȱ Greaterȱcurrentȱimportanceȱofȱandȱpastȱ damageȱtoȱlegitimacy,ȱi.e.ȱtheȱinformalȱliȬ censeȱtoȱoperate,ȱleadȱtoȱgreaterȱstrategicȱ disposition.ȱ Greaterȱstrategicȱdispositionȱisȱassociatedȱ withȱaȱmoreȱpositiveȱperceptionȱofȱtheȱSDȱ roleȱofȱindustry.ȱ Greaterȱstrategicȱdispositionȱisȱassociatedȱ withȱaȱmoreȱpositiveȱperceptionȱofȱtheȱSDȱ roleȱofȱpublicȬprivateȱpartnershipsȱandȱinȬ dustry.ȱ

CapitalȱmarȬ kets’ȱfutureȱSDȱ roleȱ NGOs’ȱcurrentȱ SDȱroleȱ

- Positiveȱ(forȱ proactiveȱatȬ titudes)ȱ - Negativeȱ (forȱreactiveȱ attitudes)ȱ Positiveȱ

Positiveȱ

Consumers’ȱ currentȱSDȱroleȱ

Insignificantȱ

Governments’ȱ currentȱSDȱroleȱ

Insignificantȱ

Importanceȱofȱ legitimacyȱ

Positiveȱ

DamageȱtoȱleȬ gitimacyȱ

Positiveȱ

Industry’sȱcurȬ rentȱSDȱroleȱ

Positiveȱ

PublicȬprivateȱ partnerships’ȱ currentȱSDȱroleȱ

Positiveȱ

ReferenceȱtoȱsecȬ torȬspecificȱinterȬ pretationȱ Sectionȱ8.1ȱIssuesȱ

Sectionȱ8.3ȱManagȬ ersȱ

Sectionȱ8.2.4ȱFiȬ nancialȱcommunityȱ Sectionȱ8.2.2ȱPublicȱ pressureȱgroupsȱ Sectionȱ8.2.3ȱCusȬ tomersȱ Sectionȱ8.2.1ȱGovȬ ernmentsȱandȱ regulatorsȱȱ ȱ Sectionȱ8.2.6.1ȱTheȱ roleȱofȱlegitimacyȱ

Sectionȱ8.2.6.1ȱTheȱ roleȱofȱlegitimacyȱ

Sectionȱ8.2.5ȱIndusȬ tryȱandȱpartnerȬ shipsȱ Sectionȱ8.2.5ȱIndusȬ tryȱandȱpartnerȬ shipsȱ

Figureȱ8.24:ȱCorrelationsȱwithȱstrategicȱdispositionȱ

Theȱfollowingȱcorrelationsȱhaveȱnotȱbeenȱpreviouslyȱmentioned,ȱandȱthusȱwillȱbeȱdisȬ cussedȱinȱdetail.ȱ

8.4ȱCompaniesȱ

207ȱ

Strategicȱdispositionȱ Correlationȱ coefficientsȱ betweenȱtheȱ threeȱ variablesȱ thatȱ describeȱ companies’ȱ strateȬ gicȱ dispositionȱ areȱ allȱ positive,ȱ asȱ oneȱ wouldȱ expect.ȱ Onlyȱ theȱ linkȱ betweenȱ SDȱ faȬ miliarityȱandȱSDȱimportanceȱisȱweakȱandȱlacksȱstatisticalȱsignificance,ȱparticularlyȱinȱ theȱUTȱsample.ȱThisȱindicatesȱthatȱmanagersȱwhoȱreportȱhighȱlevelsȱofȱSDȱfamiliarityȱ inȱtheirȱcompaniesȱdoȱnotȱnecessarilyȱexpectȱanȱincreaseȱinȱtheȱimportanceȱofȱsustainȬ ableȱ developmentȱ inȱ theȱ future,ȱ whichȱ pointsȱ toȱ aȱ significantȱ degreeȱ ofȱ skepticismȱ aboutȱtheȱfutureȱofȱCSM.ȱ Nevertheless,ȱlinksȱbetweenȱSDȱfamiliarityȱandȱCSMȱintentȱandȱ SDȱimportanceȱandȱ CSMȱ intentȱ onȱ theȱ otherȱ revealȱ thatȱ companiesȱ areȱ reactingȱ toȱ currentȱ andȱ possibleȱ futureȱtrends:ȱCompaniesȱthatȱexhibitȱgreaterȱSDȱfamiliarityȱ(i.e.ȱawarenessȱofȱissues,ȱ externalȱpressure,ȱetc.)ȱandȱexpectȱanȱincreaseȱinȱpressureȱtendȱtoȱintegrateȱsocialȱandȱ environmentalȱ criteriaȱ moreȱ comprehensivelyȱ intoȱ theirȱ businessȱ strategiesȱ andȱ opȬ erations.ȱTheȱlinkȱbetweenȱSDȱimportanceȱandȱCSMȱintentȱisȱweakerȱandȱnotȱstatistiȬ callyȱ significantȱ inȱ theȱ UTȱ sector,ȱ whichȱ pointsȱ toȱ aȱ relativelyȱ lowerȱ importanceȱ ofȱ CSMȱonȱtheȱUTȱcompanies’ȱagenda.ȱ Structureȱ CrossȬdisciplinaryȱcollaborationȱ Figureȱ8Ȭ21ȱtoȱFigureȱ8Ȭ23ȱalsoȱshowȱaȱsignificantȱlinkȱbetweenȱtheȱstrategicȱdisposiȬ tionȱ andȱ crossȬdisciplinaryȱ collaboration.ȱ Theȱ correlationȱ betweenȱ CSMȱ intentȱ andȱ crossȬdisciplinaryȱ collaborationȱ isȱ weakȱ andȱ statisticallyȱ insignificantȱ inȱ theȱ UTȱ secȬ tor.ȱ Thisȱ isȱ inȱ parallelȱ withȱ evidenceȱ presentedȱ earlierȱ inȱ termsȱ ofȱ internalȱ barriers,ȱ whichȱsuggestedȱthatȱCSMȱisȱlessȱdeeplyȱimplementedȱinȱUTȱcompanies.ȱ CrossȬdisciplinaryȱpotentialȱ Inȱ contrastȱ toȱ crossȬdisciplinaryȱ collaboration,ȱ crossȬdisciplinaryȱ potentialȱ isȱ largelyȱ unrelatedȱtoȱstrategicȱdisposition.ȱThisȱcouldȱbeȱattributedȱtoȱaȱsignificantȱvariationȱinȱ theȱwayȱrespondentsȱassessȱthisȱpotential,ȱcausedȱbyȱdifferencesȱinȱmanagers’ȱawareȬ nessȱ andȱ mindset,ȱ andȱ differencesȱ inȱ corporateȱ culture,ȱ structure,ȱ andȱ theȱ currentȱ levelȱofȱcollaboration.ȱTheseȱfactorsȱareȱlikelyȱtoȱintroduceȱgreaterȱvariationȱinȱtheȱasȬ sessmentȱ ofȱ theȱ potentialȱ thanȱ inȱ theȱ “assessment”ȱ ofȱ theȱ levelȱ ofȱ collaborationȱ (seeȱ alsoȱsectionȱ8.4.4.2ȱStructure).ȱ Aȱmoreȱdetailedȱcomparisonȱofȱtheȱcorrelationȱcoefficientsȱandȱtheirȱ(lackȱof)ȱstatistiȬ calȱ significanceȱ revealsȱthatȱ SDȱimportance,ȱ ratherȱ thanȱSDȱfamiliarityȱ andȱ CSMȱinȬ tent,ȱareȱlinkedȱwithȱcrossȬdisciplinaryȱpotential,ȱwhichȱsuggestsȱthatȱcompaniesȱthatȱ expectȱCSMȱtoȱplayȱanȱimportantȱroleȱinȱtheȱfutureȱalsoȱputȱgreaterȱhopeȱinȱmoreȱinȬ tensiveȱcrossȬdisciplinaryȱcollaboration.ȱ

ȱ

208ȱ

8ȱEmpiricalȱevidenceȱ

CSMȱsuccessȱ FinallyȱthereȱisȱclearȱlinkȱbetweenȱtheȱstrategicȱdispositionȱandȱtheȱsuccessȱofȱcorpoȬ rateȱ environmentalȱ andȱ socialȱ initiativesȱ (CSMȱ success).ȱ Thisȱ isȱ highlyȱ plausible,ȱ sinceȱ aȱ moreȱ advancedȱ andȱ committedȱ approachȱ toȱ CSMȱ isȱ mostȱ likelyȱ associatedȱ withȱ greaterȱ effectivenessȱ ofȱ corporateȱ initiativesȱ (Perceval,ȱ 2003;ȱ Rowlands,ȱ 2000;ȱ Steger,ȱ 1998b).ȱ Itȱ isȱ alsoȱ inȱ lineȱ withȱ theȱ associationȱ ofȱ aȱ moreȱ advancedȱ approachȱ withȱ greaterȱ issueȱ awareness;ȱ moreȱ proactiveȱ attitudesȱ ofȱ managersȱ andȱ greaterȱ awarenessȱ ofȱ outsideȱ pressure;ȱ theȱ importanceȱ ofȱ retainingȱ andȱ improvingȱ legitiȬ macy;ȱandȱcloserȱcrossȬdisciplinaryȱcollaboration,ȱasȱtheȱotherȱcorrelationsȱrevealed.ȱ Conclusionȱ Correlationsȱ showȱ thatȱ strategicȱ dispositionȱ isȱ drivenȱ byȱ issueȱ significance,ȱ greaterȱ CSMȱdemandȱfromȱcapitalȱmarketsȱandȱNGOs,ȱgreaterȱimportanceȱofȱandȱdamageȱtoȱ legitimacy,ȱ andȱ moreȱ proactiveȱ attitudesȱ ofȱ managers.ȱ Thusȱ theyȱ clearlyȱ pointȱ toȱ thoseȱfactorsȱthatȱleadȱtoȱlowerȱstrategicȱdispositionȱinȱtheȱUTȱsector.ȱTheyȱalsoȱindiȬ cateȱthatȱcompaniesȱwithȱgreaterȱstrategicȱdispositionȱhaveȱmoreȱpositiveȱperceptionsȱ ofȱtheirȱindustry’sȱcontributionȱtoȱsustainableȱdevelopmentȱandȱareȱmoreȱinclinedȱtoȱ relyȱonȱpublicȬprivateȱpartnerships.ȱ Resultsȱalsoȱpointȱtoȱnotableȱskepticismȱaboutȱtheȱgreaterȱimportanceȱofȱsustainableȱ development,ȱ i.e.ȱ aȱ greaterȱ needȱ forȱ CSM,ȱ inȱ theȱ future.ȱ Theyȱ thusȱ corroborateȱ eviȬ denceȱ presentedȱ earlierȱ onȱ aȱ ratherȱ reactiveȱ mindsetȱ ofȱ generalȱ managersȱ andȱ curȬ rentlyȱlimitedȱdemandsȱfromȱstakeholders,ȱwhichȱcanȱbeȱmetȱthroughȱaȱ“watery”ȱapȬ proachȱ toȱ CSM.ȱ Howeverȱ correlationsȱ alsoȱ illustrateȱ thatȱ companiesȱ thatȱ areȱ moreȱ familiarȱwithȱtheȱconceptȱofȱsustainableȱdevelopmentȱandȱitsȱcurrentȱandȱfutureȱimȬ plicationsȱ exhibitȱ greaterȱ intentionȱ toȱ respondȱ toȱ theȱ issuesȱ theyȱ recognized.ȱ Thisȱ clearlyȱshowsȱthatȱcompaniesȱareȱonȱanȱlearningȱcurveȱinȱtermsȱofȱCSM.ȱ Greaterȱ strategicȱ dispositionȱ isȱ alsoȱ associatedȱ withȱ greaterȱ crossȬdisciplinaryȱ colȬ laborationȱ andȱ CSMȱ success,ȱ whichȱ demonstratesȱ thatȱ aȱ moreȱ strategicȱ andȱ distinctȱ approachȱ toȱ CSMȱ leadsȱ toȱ aȱ strongerȱ andȱ moreȱ effectiveȱ (henceȱ successful)ȱ impleȬ mentation.ȱ Overallȱ theȱ UTȱ sectorȱ attachesȱ lessȱ importanceȱ toȱ theȱ conceptȱ ofȱ sustainableȱ develȬ opmentȱandȱexhibitsȱfewerȱlinksȱbetweenȱstrategicȱdispositionȱandȱcrossȬdisciplinaryȱ collaboration.ȱThisȱpointsȱtoȱitsȱlowerȱpositionȱonȱtheȱCSMȱlearningȱcurve,ȱwhichȱalsoȱ reflectsȱtheȱsector’sȱconfigurationȱofȱdriversȱandȱbarriersȱreferredȱtoȱabove.ȱ 8.4.2.2.2 Regressionsȱ Inȱtheȱpresentȱsectionȱtheȱauthorȱcomprehensivelyȱassessesȱtheȱinternalȱandȱexternalȱ determinantsȱofȱCSMȱintentȱbyȱexaminingȱtheirȱjointȱeffectsȱinȱsummaryȱmodelsȱ(seeȱ

8.4ȱCompaniesȱ

209ȱ

Regressionȱ Tableȱ 8Ȭ13)ȱ ratherȱ thanȱ theirȱ separateȱ effectsȱ throughȱ theȱ variousȱ subȬ modelsȱandȱclusterȱmodelsȱpresentedȱthroughoutȱtheȱstudy.ȱ

Indep var

T model 76 11.24 0.0000 0.4453 0.4056 .64519 Coeff

Imp leg Customers

.2749165 .3238749

Imp leg

.3261695

CA attitude

.3955331

CA attitude Knowledge

.308352 -.406914

Corp cult

-.437983

Corp cult

-.470526

North Am

-.316520

Num. of obs F Prob > F R-squared Adj R-squared Root MSE

Constant

1.051468

OG

Indep var Soc issues

model 52 10.56 0.0000 0.5344 0.4838 .62268 Coeff .2570981

Indep var Env Issues

UT model 51 6.51 0.0003 0.3613 0.3058 .71312 Coeff .1857644

Imp leg

.2055168

Nordic

.5611539

Female

.6565826

Constant

1.862531

Constant

.4479149

RegressionȱTableȱ8Ȭ13:ȱCSMȱintentȱ–ȱSummaryȱmodelsȱ

Theȱ threeȱ summaryȱ modelsȱ explainȱ betweenȱ 36%ȱ andȱ 53%ȱ ofȱ theȱ variationȱ inȱ CSMȱ intent.ȱ Variousȱ variablesȱ thatȱ haveȱ beenȱ includedȱ inȱ theȱ individualȱ submodelsȱ andȱ clusterȱmodelsȱareȱomittedȱfromȱtheȱsummaryȱmodelȱbecauseȱtheirȱeffectȱlackedȱstaȬ tisticalȱsignificance.ȱThisȱhappenedȱforȱtwoȱreasons:ȱ(1)ȱTheirȱeffectȱwasȱpickedȱupȱbyȱ aȱvariableȱthatȱisȱincludedȱinȱtheȱsummaryȱmodel.ȱE.g.ȱitȱisȱveryȱprobableȱthatȱanyȱefȬ fectȱofȱstakeholderȬrelatedȱvariablesȱisȱreflectedȱinȱtheȱinfluenceȱofȱtheȱimportanceȱofȱ legitimacy,ȱ whichȱ isȱ significantȱ inȱ allȱ threeȱ summaryȱ models.ȱ (2)ȱ Constraintsȱ inȱ theȱ degreesȱofȱfreedomȱpreventedȱmoreȱvariablesȱfromȱbecomingȱstatisticallyȱsignificant.ȱ ThisȱappliesȱparticularlyȱtoȱtheȱUTȱmodelȱdueȱtoȱtheȱlimitedȱsampleȱsize.ȱ TheȱOGȱmodelȱfeaturesȱcoefficientsȱfromȱallȱfourȱclustersȱthatȱwereȱindividuallyȱtestedȱ throughoutȱtheȱstudy:ȱIssues,ȱexternalȱstakeholdersȱ(legitimacy),ȱmanagersȱandȱcomȬ panies.ȱThisȱisȱanȱimportantȱfindingȱinȱitself,ȱsinceȱitȱindicatesȱthatȱnoneȱofȱtheȱorgaȬ nizingȱ principlesȱ hypothesizedȱ toȱ determineȱ CSMȱ intentȱ basedȱ onȱ theȱ study’sȱ conȬ ceptualȱframeworkȱ–ȱi.e.ȱpublicȱresponsibility,ȱlegitimacy,ȱmanagerialȱandȱcorporateȱ discretionȱ–ȱdominatesȱtheȱremainingȱones.ȱ Theȱcoefficientsȱindicateȱthat:ȱ 1. CSMȱintentȱisȱdrivenȱbyȱtheȱimportanceȱofȱlegitimacyȱinȱbothȱsectors.ȱThisȱclearlyȱ correspondsȱtoȱtheȱevidenceȱpresentedȱearlierȱinȱsectionȱ8.2ȱExternalȱstakeholders,ȱ industryȱandȱpartnerships,ȱwhichȱsuggestedȱthatȱexternalȱstakeholdersȱareȱanȱesȬ sentialȱdriverȱofȱ CSMȱ sinceȱ theyȱ determineȱcompanies’ȱinformalȱlicenseȱ toȱ operȬ ate.ȱCSMȱisȱhinderedȱbyȱlackȱofȱinterestȱfromȱcustomers:ȱTheȱpositiveȱcoefficientȱ suggestsȱthatȱcompaniesȱwithȱgreaterȱCSMȱintentȱtendȱtoȱconsiderȱcustomers’ȱigȬ ȱ

210ȱ

8ȱEmpiricalȱevidenceȱ

noranceȱofȱ CSMȱaȱgreaterȱbarrierȱthanȱlaggardsȱwithȱlowerȱCSMȱintentȱ(seeȱsecȬ tionȱ8.2.3ȱCustomers).ȱItȱshouldȱbeȱnotedȱthatȱtheȱindividualȱinfluenceȱofȱotherȱexȬ ternalȱstakeholders’ȱdemandsȱ(i.e.ȱtheȱSDȱrolesȱofȱpublicȱpressureȱgroups,ȱregulaȬ tors,ȱ governments,ȱ capitalȱ marketsȱ andȱ customers)ȱ andȱ incidentsȱ thatȱ damagedȱ companies’ȱlegitimacyȱinȱtheȱpastȱareȱomittedȱfromȱallȱthreeȱmodels,ȱsinceȱtheyȱdoȱ notȱattainȱstatisticalȱsignificance.ȱTheirȱeffectȱappearsȱtoȱbeȱpickedȱupȱbyȱtheȱimȬ portanceȱofȱlegitimacy.ȱ 2. CSMȱintentȱisȱdrivenȱbyȱproactiveȱmanagersȱwhoȱconsiderȱCSMȱaȱmeansȱofȱgenȬ eratingȱ longȬtermȱ competitiveȱ advantageȱ (CAȱ attitude).ȱ Itȱ isȱ plausibleȱ thatȱ indiȬ vidualsȱwhoȱ–ȱceterisȱparibusȱ–ȱexhibitȱmoreȱproactiveȱattitudesȱareȱmoreȱlikelyȱtoȱ exerciseȱmanagerialȱdiscretionȱ(Wood,ȱ1991,ȱp.ȱ698).ȱTheȱCAȱattitudeȱisȱmissingȱinȱ theȱ UTȱ summaryȱ modelȱ (asȱ itȱ wasȱ inȱ theȱ clusterȱ modelȱ presentedȱ inȱ sectionȱ 8.3ȱ Managers),ȱ presumablyȱ dueȱ toȱ constraintsȱ inȱ theȱ degreesȱ ofȱ freedomȱ and/orȱ beȬ causeȱ proactiveȱ attitudesȱ areȱ lessȱ developedȱ orȱ dominatedȱ byȱ internalȱ barriersȱ (e.g.ȱcorporateȱculture)ȱinȱtheȱUTȱsector.ȱ 3. CSMȱintentȱisȱdrivenȱbyȱtheȱsignificanceȱofȱsocialȱandȱenvironmentalȱissuesȱinȱtheȱ OGȱandȱUTȱ sectors,ȱ respectively.ȱ Asȱalreadyȱdiscussedȱinȱ sectionȱ 8.1ȱ Issues,ȱ thisȱ indicatesȱ thatȱ leadingȱ companiesȱ inȱ theȱ OGȱ sectorȱ concentrateȱ moreȱ stronglyȱ onȱ socialȱ issuesȱ inȱ developingȱ countriesȱ dueȱ toȱ theirȱ relevanceȱ toȱ companies’ȱ inforȬ malȱ licenseȱ toȱ operate.ȱ UTȱ companies’ȱ focusȱ onȱ environmentalȱ issuesȱ pointsȱ toȱ theirȱgeographicalȱfocusȱonȱdevelopedȱcountries,ȱinȱwhichȱsocialȱissuesȱareȱnegliȬ gibleȱandȱpressureȱonȱclimateȱchangeȱstronger.ȱAsȱdiscussedȱinȱsectionȱ8.1ȱIssues,ȱ issueȱsignificanceȱalreadyȱtakesȱintoȱaccountȱexternalȱdemandsȱfromȱstakeholdersȱ onȱthatȱparticularȱissue.ȱThusȱtheȱeffectȱofȱtheȱimportanceȱofȱlegitimacyȱalongsideȱ issueȱsignificanceȱinȱbothȱsectorȬspecificȱmodelsȱsuggestsȱthatȱCSMȱintentȱisȱaddiȬ tionallyȱ moderatedȱ byȱ theȱ importanceȱ ofȱ theȱ informalȱ licenseȱ toȱ operate.ȱ Thisȱ suggestsȱ thatȱ theȱ informalȱ downsideȱ potentialȱ (e.g.ȱ consumerȱ boycott)ȱ andȱ theȱ upsideȱpotentialȱ(e.g.ȱgoodȱcommunityȱrelations,ȱgoodwillȱfromȱsocietyȱspeedsȱupȱ licensingȱ procedures)ȱ areȱ significantȱ determinantsȱ ofȱ CSM,ȱ alsoȱ becauseȱ theȱ inȬ formalȱlicenseȱtoȱoperateȱcanȱbeȱmoreȱquicklyȱrevokedȱthanȱtheȱformalȱlicenseȱtoȱ operateȱ(whichȱmostlyȱreliesȱonȱslowerȱlegislativeȱmodifications).ȱ 4. CSMȱintentȱisȱhinderedȱbyȱcorporateȱdiscretionaryȱbarriers,ȱnamelyȱcorporateȱculȬ tureȱandȱlackȱofȱmanagers’ȱknowledgeȱandȱexpertise.ȱInȱcontrastȱtoȱtheȱOGȱmodel,ȱ theȱ UTȱ modelȱ doesȱ notȱ compriseȱ anyȱ internalȱ barriers.ȱ Thisȱ doesȱ notȱ meanȱ thatȱ theyȱdoȱnotȱexist.ȱOnȱtheȱcontrary,ȱtheȱdataȱpresentedȱinȱsectionȱ8.4.1ȱCompanyȬ specificȱdeterminantsȱillustrateȱthatȱinternalȱbarriersȱareȱgreaterȱinȱtheȱUTȱsector.ȱ Henceȱitȱisȱmostȱlikelyȱthatȱcorporateȱdiscretionaryȱbarriersȱfailȱtoȱattainȱstatisticalȱ significanceȱdueȱtoȱconstraintsȱinȱtheȱdegreesȱofȱfreedom.ȱ

8.4ȱCompaniesȱ

211ȱ

Theȱmodelsȱalsoȱpointȱtoȱseveralȱinfluencesȱofȱdemographicȱvariables:ȱInȱtheȱenergyȱ sectorȱasȱaȱwhole,ȱrespondentsȱwhoȱoperateȱinȱNorthȱAmericaȱreportȱlessȱCSMȱintentȱ thanȱ theirȱ counterpartsȱ inȱ otherȱ regionsȱ ofȱ operation.ȱ Thisȱ appearsȱ toȱ reflectȱ lowerȱ levelsȱofȱsocietalȱpressureȱinȱNorthȱAmericaȱ(Skjaersethȱetȱal.,ȱ2001)ȱandȱdifferencesȱinȱ corporateȱcharacteristicsȱsuchȱasȱtopȱmanagementȱcommitmentȱ(Sharmaȱetȱal.,ȱ1999)ȱ andȱlevelȱofȱcentralizationȱ(Ketola,ȱ1993;ȱKolkȱetȱal.,ȱ2001).ȱ TheȱUTȱmodelȱshowsȱpositiveȱeffectsȱofȱNordicȱregionsȱofȱoperationȱandȱfemaleȱgenȬ der.ȱItȱisȱlikelyȱthatȱtheȱregionȱeffectȱreflectsȱstrongerȱregulatoryȱpressureȱ(Midittunȱetȱ al.,ȱ 1999)ȱ andȱ theȱ relativelyȱ strongȱ useȱ ofȱ renewableȱ energyȱ inȱ Nordicȱ countries,ȱ whichȱrequiresȱcompaniesȱtoȱtakeȱenvironmentalȱȱissuesȱintoȱaccountȱmore.ȱTheȱgenȬ derȱeffectȱcouldȱindicateȱaȱstrongerȱsocialȬdesirabilityȱbiasȱofȱfemaleȱrespondents.ȱȱ 8.4.2.3 Discussionȱ Strategicȱdispositionȱputȱintoȱperspectiveȱ QualitativeȱprimaryȱandȱsecondaryȱdataȱhaveȱprovidedȱanȱimportantȱmeansȱofȱputȬ tingȱ theȱ abstractȱ quantitativeȱ dataȱ onȱ companies’ȱ strategicȱ dispositionȱ intoȱ perspecȬ tive.ȱTheyȱshowȱthatȱcompaniesȱinȱbothȱsectorsȱhaveȱaȱclearlyȱincrementalȱapproachȱ toȱCSM.ȱ AsȱoneȱwouldȱexpectȱfromȱsectorsȱthatȱareȱresourceȬintensiveȱandȱproduceȱcommodiȬ tiesȱ–ȱasȱe.g.ȱalsoȱtheȱchemicalȱsector,ȱCSMȱisȱclearlyȱprocessȬdrivenȱ(ratherȱthanȱmarȬ ketȱdriven),ȱtriggeredȱbyȱregulatoryȱandȱNGOs’ȱoutsideȱpressureȱ(ratherȱthanȱgreenȱ pullȱfromȱconsumers),ȱandȱleadsȱtoȱcompetitiveȱadvantagesȱbyȱreducingȱcostȱthroughȱ processȱ improvementsȱ suchȱ asȱ pollutionȱ control,ȱ energyȱ efficiencyȱ andȱ wasteȱ disȬ posalȱ(Holliday,ȱ2001;ȱSteadȱ&ȱStead,ȱ1995,ȱp.ȱ44;ȱTaponȱetȱal.,ȱ1995).ȱLongȬrangeȱviȬ sionsȱ forȱ corporateȱ sustainabilityȱ thatȱ requireȱ strongȱ (alsoȱ moral)ȱ leadership,ȱ areȱ sharedȱbyȱmanagementȱandȱworkforce,ȱandȱcouldȱgenerateȱsignificantȱinternalȱpresȬ sureȱandȱenthusiasmȱ(Hart,ȱ1995,ȱp.ȱ102;ȱKetola,ȱ1993,ȱ p.ȱ32)ȱareȱclearlyȱmissing.ȱAsȱ theȱauthorȱdemonstratedȱinȱ8.2ȱExternalȱstakeholders,ȱindustryȱandȱpartnerships,ȱthisȱ situationȱreflectsȱtheȱwidespreadȱignoranceȱofȱtheȱprimaryȱtransactionalȱstakeholdersȱ (customers,ȱinvestors,ȱetc.)ȱinȱbothȱsectors.ȱ However,ȱ theȱ authorȱ alsoȱ notesȱ thatȱ companiesȱ haveȱ movedȱ beyondȱ aȱ purelyȱ PRȬ based,ȱ “greenwashing”ȱ approachȱ toȱ CSM.ȱ Particularlyȱ theȱ leadersȱ inȱ bothȱ sectorsȱ haveȱ systematicallyȱ implementedȱ newȱ structuresȱ andȱ processesȱ (asȱ explainedȱ inȱ moreȱ detailȱ inȱ sectionȱ 8.4.4ȱ Implementation).ȱ OGȱ firmsȱ inȱ particularȱ haveȱ changedȱ businessȱpractices,ȱtoȱimproveȱtheirȱinformalȱlicenseȱtoȱoperateȱinȱdevelopingȱcounȬ tries.ȱ

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Strategicȱ responsesȱ toȱ theȱ majorȱ strategicȱ issuesȱ (NorthȬSouthȱ energyȱ divideȱ and,ȱ esȬ pecially,ȱ climateȱ change)ȱ includeȱ –ȱ basedȱ onȱ Ansoff’sȱ systemizationȱ ofȱ responseȱ strategiesȱ(Ansoff,ȱ1975):ȱ 1. EnvironmentalȱandȱselfȬawareness:ȱInȱparticularȱcompaniesȱthatȱareȱsustainabilityȱ leadersȱhaveȱrecognizedȱtheȱmajorȱissuesȱthroughȱtheirȱrelationshipȱtoȱtheȱexterȬ nalȱenvironmentȱandȱinternalȱconfigurationsȱ(e.g.ȱscenarioȱbuilding).ȱ 2. Flexibility:ȱInternalȱemissionsȱtradingȱsystemsȱandȱdiversificationȱ(e.g.ȱrenewableȱ energyȱ technology)ȱ enhanceȱ futureȱ potentialȱ ratherȱ thanȱ createȱ tangibleȱ changesȱ inȱprofitsȱandȱgrowth.ȱ Directȱresponsesȱ(theȱthirdȱandȱstrongestȱresponseȱcategory),ȱwhichȱwouldȱavertȱtheȱ threatȱ throughȱ externalȱ actionȱ (strategicȱ planningȱ &ȱ implementation)ȱ andȱ internalȱ contingencyȱ planning,ȱ areȱ essentiallyȱ lacking.ȱ However,ȱ oneȱ couldȱ argueȱ thatȱ theȱ creationȱ ofȱ independentȱ businessȱ unitsȱ forȱ renewableȱ energyȱ technologiesȱ andȱ serȬ vicesȱ andȱ aȱ correspondingȱ strategicȱ commitmentȱ byȱ sustainabilityȱ leaders,ȱ particuȬ larlyȱinȱtheȱOGȱsector,ȱconstituteȱdirectȱresponsesȱ(Ansoff,ȱ1975,ȱp.ȱ26).ȱButȱthisȱviewȱ couldȱ beȱ overoptimistic,ȱ asȱ strategicȱ planningȱ largelyȱ revolvesȱ aroundȱ fossilȬfuelȱ basedȱenergy,ȱandȱrenewablesȱactivitiesȱareȱstillȱlargelyȱpilotȱprojects.ȱ Itȱ remainsȱ toȱ beȱ seenȱ whenȱ andȱ howȱ theȱ majorȱ longȬtermȱ issuesȱ ofȱ climateȱ changeȱ andȱenergyȱdivideȱwillȱbeȱmoreȱcomprehensivelyȱaddressed.ȱTheȱtimingȱwillȱdependȱ onȱaȱvarietyȱofȱinterdependentȱfactorsȱthatȱdriveȱtheȱglobalȱenergyȱsystem.ȱTheȱchalȬ lengesȱ willȱ beȱ significant,ȱ sinceȱ distinctȱ responsesȱ toȱ bothȱ issuesȱ requireȱ newȱ techȬ nologiesȱandȱbusinessȱmodelsȱthatȱcompaniesȱareȱstillȱlargelyȱunfamiliarȱwith.ȱTheyȱ areȱtestedȱinȱpilotȱprojectsȱandȱgraduallyȱdevelopedȱinȱnicheȱmarkets,ȱsinceȱtheyȱ(1)ȱ relyȱ onȱ partnershipsȱ withȱ “neighboring”ȱ industryȱ sectorsȱ (e.g.ȱ automotive,ȱ technolȬ ogy)ȱtoȱswitchȱtechnologicalȱtrajectories,ȱparticularlyȱinȱtheȱOGȱsector;ȱandȱ(2)ȱlackȱaȱ strongerȱandȱcompetitiveȱbusinessȱcaseȱinȱtoday’sȱbusinessȱenvironments,ȱasȱtheȱauȬ thorȱwillȱdiscussȱinȱmoreȱdetailȱinȱtheȱnextȱsectionȱ8.4.3ȱEconomicȱrationale.ȱ Determinantsȱandȱeffectsȱofȱstrategicȱdispositionȱ Evidenceȱ obtainedȱ fromȱ correlationȱ andȱ regressionȱ analysisȱ providesȱ theȱ followingȱ significantȱinsightsȱintoȱtheȱdeterminantsȱandȱtheȱeffectsȱofȱcompanies’ȱstrategicȱdisȬ positionȱtoȱCSM.ȱTheȱsummaryȱmodelȱsuggestsȱthatȱcompanies’ȱintentionȱtoȱintegrateȱ issuesȱintoȱoperationsȱisȱdeterminedȱbyȱtheirȱperceptionȱofȱtheȱfinancialȱthreatȱorȱopȬ portunitiesȱassociatedȱwithȱtheȱissuesȱtheyȱface.ȱ

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Submodels

Clusterȱmodels

SDȱroleȱofȱexternal stakeholders: • Capitalȱmarkets’ȱ futureȱSDȱrole (OG) • NGOs’ȱcurrentȱSDȱ role (bothȱsectors)

CSM intent

CSM intent

Legitimacy • Importanceȱofȱ legitimacyȱ(both sectors)

CSM intent

Externalȱbarriers • Customers (bothȱsectors) • Investors (bothȱsectors)

Summaryȱmodel

CSM intent

• Organizationalȱ culture (bothȱsectors)

•Importanceȱofȱ legitimacyȱ(bothȱ sectors) • Externalȱbarriers •Lackȱofȱinterestȱ fromȱcustomersȱ (bothȱsectors)

CSM intent

•Managers‘ȱ attitudes CSM intent

•CAȱattitudeȱȱ(bothȱ sectors,ȱprimarilyȱ OG) •Lackȱofȱmanagers‘ȱ knowledgeȱandȱ expertiseȱ(OG)

Companies:ȱInternalȱbarriers CSM intent

•Socialȱissue significanceȱ(OG)

•Legitimacy CSM intent

Managers’ȱattitudes • Proactiveȱattitude:ȱ CSMȱtoȱgainȱ competitiveȱ advantageȱ(bothȱ sectors,ȱprimarilyȱOG) • Lackȱofȱmanagers’ȱ knowledgeȱandȱ expertiseȱ(bothȱ sectors)

•CompanyȬspecificȱ factors

•Environmentalȱ issueȱsignificanceȱ (UT)

Externalȱstakeholders • Importanceȱofȱ legitimacy (bothȱsectors) • Conflictsȱwithȱ authoritiesȱ(bothȱ sectors) • Capitalȱmarketsȱ(OG)

Incidents

• Conflictsȱwithȱ authorities (bothȱsectors)

Issues Issueȱsignificance • Environmentalȱissues (UT) • Socialȱissues (OG)

•Companies CSM intent

•Corporateȱculture (bothȱsectors)

ȱ

Figureȱ8.25:ȱDeterminantsȱofȱCSMȱintentȱ

Theȱgreaterȱtheȱthreatȱorȱopportunity,ȱtheȱgreaterȱtheȱCSMȱintent,ȱwhichȱisȱadditionȬ allyȱ moderatedȱ byȱ corporateȱ culture,ȱ managers’ȱ attitudesȱ andȱ knowledge,ȱ andȱ twoȱ legitimacyȬrelatedȱ variables.ȱ Theȱ effectȱ ofȱ theȱ importanceȱ ofȱ legitimacyȱ showsȱ thatȱ companiesȱareȱmoreȱinclinedȱtoȱrespondȱtoȱissuesȱifȱtheyȱhaveȱrecognizedȱtheȱimporȬ tanceȱofȱtheȱinformalȱlicenseȱtoȱoperate,ȱmostȱlikelyȱbecause:ȱ 1. Theȱinformalȱlicenseȱtoȱoperateȱcanȱbeȱmoreȱquicklyȱrevokedȱthanȱtheȱformalȱone.ȱ Thisȱ meansȱ thatȱ theyȱ areȱ moreȱ likelyȱ toȱ respondȱ ifȱ theȱ threatȱ orȱ opportunityȱ isȱ moreȱimmediate.ȱ 2. Theȱ formalȱ licenseȱ toȱ operateȱ isȱ notȱ seriouslyȱ challenged.ȱ Thisȱ resultȱ isȱ particuȬ larlyȱplausibleȱifȱoneȱtakesȱintoȱaccountȱcomplementaryȱevidenceȱaboutȱtheȱinsigȬ nificantȱroleȱofȱgovernmentsȱandȱregulatorsȱinȱdrivingȱCSM.ȱ Theȱinfluenceȱofȱlargelyȱignorantȱcustomersȱreflectsȱtheȱdemotivatingȱeffectȱofȱbeingȱ largelyȱ unableȱ toȱ leverageȱ moreȱ responsibleȱ businessȱ practicesȱ intoȱ greaterȱ sales.ȱ Itȱ shouldȱbeȱnotedȱthatȱthisȱinfluenceȱisȱonlyȱperceivedȱbyȱcompanies’ȱwithȱhigherȱCSMȱ intent.ȱ Strategicȱ dispositionȱ isȱ jointlyȱ determinedȱ byȱ fourȱ factors:ȱ issues,ȱ externalȱ stakeȬ holders,ȱ managersȱ andȱ companyȬspecificȱ characteristicsȱ (seeȱ Figureȱ 8Ȭ25).ȱ Thusȱ theȱ ȱ

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evidenceȱisȱinȱlineȱwithȱthatȱofȱotherȱstudiesȱalsoȱpointingȱtoȱtheȱsignificanceȱofȱsomeȱ ofȱ theȱ fourȱ determinantsȱ referredȱ toȱ aboveȱ (Banerjeeȱ etȱ al.,ȱ 2003;ȱ Bansalȱ etȱ al.,ȱ 2000;ȱ Greeningȱetȱal.,ȱ1994;ȱ Henriquesȱetȱ al.,ȱ 1995;ȱ Henriquesȱ etȱal.,ȱ1996;ȱLawrenceȱetȱal.,ȱ 1995;ȱSharmaȱetȱal.,ȱ1994;ȱSkjaersethȱetȱal.,ȱ2001;ȱWinn,ȱ1995).ȱHowever,ȱthisȱstudy’sȱ resultsȱalsoȱgoȱbeyondȱthoseȱofȱmostȱpreviousȱstudies.ȱTheyȱshowȱthat:ȱ 1. Aȱ differentiationȱ betweenȱ managerialȱ discretionȱ (i.e.ȱ individuals’ȱ attitudesȱ andȱ knowledge)ȱandȱcorporateȱdiscretionȱ(i.e.ȱcorporateȱculture)ȱisȱvalid,ȱsince,ȱasȱhyȬ pothesizedȱ inȱ theȱ conceptualȱ framework,ȱ corporateȱ discretionaryȱ factorsȱ deterȬ mineȱtheȱspaceȱinȱwhichȱindividualsȱmayȱorȱmayȱnotȱexerciseȱtheirȱdiscretionaryȱ power.ȱ 2. Theȱ fourȱ motivatingȱ principlesȱ featuredȱ inȱ theȱ study’sȱ conceptualȱ frameworkȱ haveȱ suchȱ aȱ clearȱ individualȱ effectȱ onȱ companies’ȱ strategicȱ dispositionȱ thatȱ theyȱ doȱnotȱdominateȱeachȱother:ȱAtȱleastȱoneȱvariableȱfromȱeachȱofȱtheȱfourȱprinciplesȱ remainsȱinȱtheȱfinalȱsummaryȱmodelȱwithoutȱbeingȱpickedȱupȱbyȱaȱ“competing”ȱ one.ȱThisȱmeansȱvariationȱinȱcompanies’ȱstrategicȱdispositionȱcanȱbeȱcomprehenȬ sivelyȱexplainedȱthroughȱaȱholisticȱassessmentȱofȱdifferencesȱinȱissueȱsignificance,ȱ theȱimportanceȱofȱtheȱinformalȱlicenseȱtoȱoperate,ȱmanagers’ȱattitudesȱandȱknowlȬ edge,ȱandȱcorporateȱculture.ȱ 3. TheȱinfluenceȱofȱtheȱfourȱdeterminantsȱofȱCSMȱisȱmoderatedȱbyȱsectorȱ(Banerjeeȱetȱ al.,ȱ2003;ȱHenriquesȱetȱal.,ȱ1996)ȱandȱregionȱeffectsȱ(Skjaersethȱetȱal.,ȱ2001).ȱ Itȱ shouldȱ beȱ notedȱ thatȱ theȱ regressionȱ analysisȱ wasȱ notȱ designedȱ toȱ assessȱ whetherȱ oneȱdeterminantȱofȱCSMȱintentȱisȱmoreȱimportantȱthanȱanother,ȱbecauseȱtheȱauthorȱ choseȱaȱratherȱconservativeȱapproachȱtoȱinterpretingȱregressionȱresultsȱtoȱcounteractȱ possibleȱbiasesȱ(asȱoutlinedȱinȱsectionȱ5ȱMethod).ȱHowever,ȱbasedȱonȱtheȱqualitativeȱ andȱ quantitativeȱ analysisȱ undertakenȱ inȱ sectionȱ 8.4.1ȱ CompanyȬspecificȱ determiȬ nants,ȱoneȱcouldȱcautiouslyȱconcludeȱthatȱinternalȱdriversȱofȱCSMȱareȱatȱleastȱasȱimȬ portantȱasȱexternalȱones,ȱifȱoneȱtakesȱintoȱaccountȱthatȱcurrentȱapproachesȱareȱlargelyȱ characterizedȱbyȱaȱmoreȱresponsibleȱinterpretationȱofȱ“businessȬasȬusual.”ȱ Correlationsȱ aboveȱ alsoȱ showȱ theȱ effectsȱ ofȱ strategicȱ dispositionȱ onȱ implementationȱ andȱ outcome:ȱ Greaterȱ strategicȱ dispositionȱ leadsȱ toȱ (1)ȱ aȱ higherȱ levelȱ ofȱ organizaȬ tionalȱ alignment,ȱ indicatedȱ throughȱ moreȱ intensiveȱ collaborationȱ betweenȱ sustainȬ abilityȱ expertsȱ andȱ generalȱ managers,ȱ andȱ (2)ȱ greaterȱ CSMȱ success.ȱ Thisȱ isȱ highlyȱ plausible,ȱsinceȱtheȱrecognitionȱofȱissuesȱandȱtopȱmanagement’sȱdecisionȱtoȱintegrateȱ themȱintoȱbusinessȱstrategiesȱandȱoperationsȱtriggersȱaȱprocessȱofȱorganizationalȱreȬ directionȱ thatȱ becomesȱ visibleȱ inȱ changesȱ inȱ companies’ȱ businessȱ principles,ȱ corpoȬ rateȱ values,ȱ visions,ȱ structuresȱ (e.g.ȱ crossȬdisciplinaryȱ taskȱ forces),ȱ andȱ allocationȱ ofȱ resources.ȱTheseȱchangesȱcontributeȱtoȱCSMȱsuccessȱ(Dozȱetȱal.,ȱ1988;ȱSteger,ȱ1998b,ȱ p.ȱ99).ȱ

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Contingencyȱperspectiveȱonȱstrategicȱdispositionȱ Theȱ study’sȱ contingencyȱ approachȱ providesȱ severalȱ sectorȬ,ȱ disciplineȬȱ andȱ regionȬ specificȱfindings.ȱ Qualitativeȱ analysisȱ andȱ basicȱ statisticsȱ revealȱ lowerȱ strategicȱ dispositionȱ inȱ theȱ UTȱ sector,ȱwhichȱcanȱbeȱclearlyȱexplainedȱwithȱtheȱsectorȬspecificȱinfluenceȱofȱtheȱdeterȬ minantsȱidentifiedȱthroughȱtheȱregressionȱmodels:ȱUTȱcompaniesȱgenerallyȱnotȱonlyȱ faceȱ weakerȱ driversȱ (lowerȱ issueȱ significance,ȱ lowerȱ importanceȱ ofȱ theȱ informalȱ liȬ censeȱ toȱ operateȱ andȱ lessȱ proactiveȱ managers)ȱ butȱ alsoȱ strongerȱ internalȱ barriersȱ toȱ CSMȱ(lessȱopenȱcorporateȱcultures).ȱ Theȱ onlyȱ statisticallyȱ significantȱ crossȬdisciplinaryȱ variation,ȱ namelyȱ theȱ greaterȱ SDȱ familiarityȱreportedȱbyȱsustainabilityȱofficersȱcomparedȱtoȱgeneralȱmanagers,ȱcanȱbeȱ mainlyȱattributedȱtoȱgeneralȱmanagers’ȱlowerȱawarenessȱofȱexistingȱbestȱpracticesȱinȱ generallyȱ largeȱ andȱ complexȱ organizationsȱ andȱ theȱ (possiblyȱ calculated)ȱ optimismȱ sustainabilityȱofficersȱexhibitȱasȱcatalystsȱinȱtheirȱcompanies.ȱ Regionȱ effectsȱ foundȱ inȱ regressionȱ modelsȱ areȱ likelyȱ toȱ beȱ causedȱ byȱ differencesȱ inȱ societalȱandȱregulatoryȱpressureȱ(e.g.ȱUSȱvs.ȱEuropeanȱstanceȱonȱclimateȱchange)ȱandȱ organizationalȱsettingsȱ(Ketola,ȱ1993;ȱKolkȱetȱal.,ȱ2001;ȱSharmaȱetȱal.,ȱ1994;ȱSkjaersethȱ etȱal.,ȱ2001).ȱ 8.4.3 Economicȱrationaleȱ Inȱ theȱ presentȱ sectionȱ theȱ authorȱ willȱ describeȱ howȱ companiesȱ approachȱ theȱ ecoȬ nomicȱ rationaleȱ forȱ CSM,ȱ whichȱ relatesȱ toȱ bothȱ theirȱ strategicȱ disposition,ȱ i.e.ȱ theirȱ willingnessȱtoȱintegrateȱissuesȱintoȱstrategies,ȱandȱtheirȱimplementationȱofȱCSM.ȱTheȱ sectionȱincludesȱaȱdiscussionȱofȱ -

theȱimportanceȱandȱelementsȱofȱtheȱbusinessȱcase,ȱi.e.ȱwhatȱeconomicȱargumentsȱ (valueȱdrivers)ȱforȱCSMȱmanagersȱconsiderȱmostȱcompellingȱ(sectionȱ8.4.3.1)ȱ

-

theȱ tools,ȱ structuresȱ andȱ processesȱ thatȱ areȱ usedȱ toȱ integrateȱ environmentalȱ andȱ socialȱissuesȱintoȱbusinessȱstrategiesȱandȱoperationsȱ(section.ȱ8.4.3.2).ȱ

-

howȱ systematicallyȱ andȱ comprehensivelyȱ theȱ businessȱ caseȱ is,ȱ couldȱ andȱ shouldȱ beȱbuiltȱ(sectionȱ8.4.3.3).ȱ

Evidenceȱ providedȱ willȱ beȱ basedȱ onȱ qualitativeȱ analysisȱ andȱ basicȱ statistics.ȱ AdȬ vancedȱstatisticsȱareȱnotȱusedȱbecauseȱrelevantȱdataȱobtainedȱfromȱsustainabilityȱoffiȬ cersȱlackedȱanȱadequateȱnumberȱofȱobservations.ȱ

ȱ

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8ȱEmpiricalȱevidenceȱ

8.4.3.1 Importanceȱandȱelementsȱofȱtheȱbusinessȱcaseȱ Elementsȱofȱtheȱbusinessȱcaseȱ Overallȱintervieweesȱeasilyȱrelateȱtoȱtheȱconceptȱofȱtheȱbusinessȱcaseȱforȱsustainabilityȱ andȱtheȱvalueȱdrivers.ȱThisȱappliesȱtoȱsustainabilityȱofficersȱinȱparticularȱbecauseȱtheyȱ stronglyȱ relyȱ onȱ aȱ soundȱ economicȱ rationaleȱ forȱ corporateȱ sustainabilityȱ initiativesȱ dueȱtoȱtheirȱroleȱasȱchangeȱagentsȱinȱtheirȱcompany.ȱTheyȱindicateȱthatȱtheȱidentificaȬ tionȱofȱtheȱmostȱimportantȱvalueȱdriversȱis,ȱunlikeȱtheȱquantificationȱofȱtheȱeconomicȱ potentialȱitself,ȱrelativelyȱeasyȱ(Salzmann,ȱ2004,ȱp.ȱ136):ȱ Aȱfirstȱguessȱaboutȱtheȱmostȱimportantȱvalueȱdriversȱusuallyȱtakesȱyouȱprettyȱfar.ȱ Youȱdoȱnotȱneedȱtoȱcrunchȱnumbersȱtoȱidentifyȱthemȱ(OG2,ȱSO).ȱ Attracts Talent and increases employee satisfaction 10%

Helps us to manage our risks better 20%

Leads to innovation of products and services 8% Improves brand value and reputation 16%

Other 4%

Improves our access to capital 2% Leads to cost reductions 12%

Is essential to maintaining our 'license to operate' 28%

Chartȱ8Ȭ31:ȱValueȱdriversȱ(OGȱsustainabilityȱofȬ ficers)ȱ

Other 3% Helps us to manage our risks better 18%

Attracts Talent and increases employee satisfaction 8% Improves our access to capital 0%

Leads to innovation of products and services 5% Improves brand value and reputation 26%

Leads to cost reductions 13%

Is essential to maintaining our 'license to operate' 27%

Chartȱ8Ȭ32:ȱValueȱdriversȱ(UTȱsustainabilityȱofȬ ficers)ȱ

Asȱ Chartȱ 8Ȭ31ȱ andȱ Chartȱ 8Ȭ32ȱ indicate,ȱ sustainabilityȱ officers’ȱ understandingȱ ofȱ theȱ businessȱ caseȱ forȱ sustainabilityȱ goesȱ beyondȱ aȱ mereȱ “costȱ reductionȱ focus.”ȱ Threeȱ valueȱconstructs,ȱnamelyȱtheȱlicenseȱtoȱoperate,ȱbrandȱvalueȱandȱreputation,ȱandȱriskȱ management,ȱappearȱtoȱbeȱtheȱmostȱcompellingȱelementsȱofȱtheȱbusinessȱcaseȱforȱsusȬ tainability.ȱTheȱinnovationȱofȱproductsȱandȱprocessesȱplaysȱaȱmarginalȱroleȱasȱaȱvalueȱ driverȱaccountingȱforȱonlyȱaȱ5%ȱandȱ8%ȱshare,ȱrespectively.ȱ Theȱ proportionsȱ inȱ theȱ chartsȱ areȱ clearlyȱ mirroredȱ inȱ andȱ explainedȱ throughȱ theȱ statementsȱ ofȱ theȱ interviewees.ȱ Theyȱ clearlyȱ differentiateȱ betweenȱ aȱ “robust”ȱ andȱ “elusive”ȱpartȱofȱtheȱbusinessȱcaseȱforȱsustainabilityȱdependingȱonȱtheȱvalueȱdriversȱ used,ȱandȱreportȱaȱsignificantȱfocusȱonȱrisksȱratherȱthanȱopportunities:ȱ Theȱbusinessȱcaseȱonȱenvironmental,ȱhealthȱandȱsafetyȱperformanceȱhasȱalmostȱnoȱ limits,ȱit’sȱaȱ“noȬbrainer”.ȱInvestmentsȱareȱbuiltȱaroundȱthat.ȱMoreȱradicalȱinnoȬ

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vationsȱareȱtheȱtrickyȱpart.ȱTheyȱareȱpushedȱonlyȱbyȱenthusiastsȱinȱR&DȱandȱenȬ vironmentalȱaffairsȱratherȱthanȱtopȱmanagementȱ(OG3,ȱstrategy).ȱ Riskȱ reductionȱ isȱ theȱ majorȱ issueȱ andȱ valueȱ driver.ȱ Xȱ [UTȱ company]ȱ hasȱ soȱ farȱ solelyȱ identifiedȱ opportunitiesȱ throughȱ measuresȱ ofȱ riskȱ reduction.,ȱ butȱ weȱ haveȱ recognizedȱ thisȱshortcomingȱandȱareȱcurrentlyȱ lookingȱforȱwaysȱ ofȱimprovementȱ (UT4,ȱSO).ȱ Thisȱ differentiationȱ betweenȱ aȱ robust,ȱ shortȬtermȱ andȱ riskȬbasedȱ (essentiallyȱ pragȬ matic)ȱbusinessȱcaseȱandȱanȱelusive,ȱlongȬtermȱandȱopportunityȬbasedȱoneȱcanȱbeȱatȬ tributedȱtoȱseveralȱsystemicȱandȱorganizationalȱfactors:ȱ 1. Generalȱ managers’ȱ expertiseȱ andȱ responsibilities:ȱ Sustainabilityȱ officersȱ considerȱ riskȱ reductionȱ aȱ moreȱ powerfulȱ argumentȱ forȱ corporateȱ sustainabilityȱ (thanȱ opȬ portunitiesȱ forȱ strategicȱ innovation),ȱ sinceȱ itȱ isȱ muchȱ moreȱ stronglyȱ relatedȱ toȱ generalȱmanagers’ȱdailyȱworkȱ(henceȱmuchȱmoreȱtangibleȱforȱthem)ȱthanȱradicalȱ innovationȱsuchȱasȱtheȱdevelopmentȱofȱrenewableȱenergies.ȱ 2. Marketsȱ andȱ regulation:ȱ Dueȱ toȱ currentȱ marketȱ andȱ regulatoryȱ frameworksȱ (seeȱ stakeholders’ȱ demandsȱ forȱ CSMȱ discussedȱ inȱ sectionȱ 8.2),ȱ theȱ businessȱ caseȱ forȱ radicalȱ andȱ longȬtermȱ innovationȱ inȱ particularȱ isȱ marginal.ȱ Henceȱ significantȱ paradigmȱ shiftsȱ doȱ notȱ takeȱ place.ȱ Toȱ obtainȱbuyȬinȱ fromȱgeneralȱ managersȱ andȱ topȱ management,ȱ itȱ isȱ obviousȱ toȱ buildȱ theȱ businessȱ caseȱ onȱ aȱ moreȱ solidȱ valueȱ proposition,ȱ whichȱ underȱ theȱ currentȱ businessȱ environmentȱ favorsȱ theȱ “increȬ mentalȱapproach,”ȱi.e.ȱmoreȱefficientȱandȱ(sociallyȱandȱenvironmentally)ȱresponȬ sibleȱfossilȱfuelȱproductionȱ(Salzmann,ȱ2003a,ȱp.ȱ135).ȱ 3. Technology:ȱ Allȱ sustainabilityȱ officersȱ andȱ mostȱ keyȱ decisionȬmakersȱ recognizeȱ theȱstrategicȱrisksȱandȱopportunitiesȱ(climateȱchange,ȱNorthȬSouthȱenergyȱdivide)ȱ andȱtheȱeventualȱneedȱforȱaȱradicalȱinnovationȱofȱtechnologiesȱandȱbusinessȱmodȬ els.ȱNevertheless,ȱuncertaintyȱisȱsubstantial,ȱinȱparticularȱinȱtheȱOGȱsector,ȱwhichȱ isȱstronglyȱlockedȱintoȱtechnologicalȱtrajectoriesȱ(throughȱhighȱfleetȱinertia)ȱwithȱ theȱmobilityȱsector.ȱ 4. Complexityȱ(timeȱandȱscopeȱofȱCSM):ȱTheȱmoreȱlongȱtermȱtheȱperspectiveȱandȱtheȱ broaderȱtheȱscopeȱofȱanȱinitiativeȱ(i.e.ȱlevelȱofȱaggregation,ȱnumberȱofȱissuesȱtoȱbeȱ addressed),ȱ theȱ moreȱ complexȱ isȱ theȱ buildingȱ ofȱ aȱ businessȱ case,ȱ asȱ itȱ reliesȱ onȱ moreȱdataȱ(whichȱneedȱtoȱbeȱcompatibleȱforȱaggregation)ȱandȱisȱsubjectȱtoȱmoreȱ contingenciesȱ(Howȱdoȱissuesȱdevelop?ȱHowȱisȱinitiativeȱimplementedȱacrossȱdifȬ ferentȱbusinessȱunits?).ȱInȱadditionȱtheȱbusinessȱcaseȱforȱlongȬtermȱactivitiesȱisȱfurȬ therȱmarginalized,ȱsinceȱfutureȱcashȱflowsȱareȱstronglyȱdiscountedȱ(Schalteggerȱ&ȱ Figge,ȱ1998,ȱp.ȱ7).ȱAsȱtheȱquoteȱaboveȱillustrates,ȱitȱisȱeasyȱtoȱbuildȱaȱbusinessȱcaseȱ forȱ shortȬtermȱ andȱ adȱ hocȱ initiativesȱ thatȱ improveȱ efficiencyȱ orȱ healthȱ &ȱ safetyȱ ȱ

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performance.ȱAȱriskȱfocus,ȱi.e.ȱtheȱseizingȱofȱopportunitiesȱthroughȱriskȱreduction,ȱ isȱ alsoȱ lessȱ complexȱ andȱ resourceȱ intensiveȱ thanȱ anȱ activeȱ searchȱ forȱ opportuniȬ ties,ȱwhichȱrequiresȱmoreȱ“outȬofȬtheȱbox”ȱthinking.ȱȱ CrossȬsectorȱdifferencesȱ Theȱ quantitativeȱ dataȱ showȱ onlyȱ oneȱ notableȱ differenceȱ betweenȱ theȱ twoȱ sectors,ȱ whichȱisȱalsoȱstatisticallyȱsignificant:ȱComparedȱtoȱOGȱsustainabilityȱofficers,ȱUTȱsusȬ tainabilityȱ officersȱ moreȱ frequentlyȱ considerȱ brandȱ valueȱ andȱ reputationȱ oneȱ ofȱ theȱ threeȱ mostȱ importantȱ argumentsȱ whenȱ promotingȱ theȱ conceptȱ ofȱ sustainableȱ develȬ opment.ȱ AtȱfirstȱsightȱthisȱresultȱisȱnotȱfullyȱinȱlineȱwithȱGMȱdataȱpresentedȱinȱsectionȱ8.2.6.1,ȱ accordingȱtoȱwhichȱOGȱgeneralȱmanagersȱconsiderȱbrandȱvalueȱandȱreputationȱmoreȱ importantȱthanȱUTȱgeneralȱmanagersȱdo.ȱHowever,ȱthisȱsupposedȱcontradictionȱcanȱ beȱexplainedȱandȱsolvedȱasȱfollows:ȱ -

Theȱ higherȱ importanceȱ indicatedȱ byȱ OGȱ generalȱ managers–ȱ comparedȱ toȱ theirȱ counterpartsȱinȱtheȱUTȱsectorȱ–ȱappearsȱtoȱadequatelyȱreflectȱtheȱhigherȱvisibilityȱ ofȱtheirȱcompaniesȱandȱbrands.ȱ

-

TheȱfactȱthatȱUTȱsustainabilityȱofficersȱconcentrateȱtheirȱresponsesȱmoreȱstronglyȱ onȱbrandȱvalueȱandȱreputationȱ(inȱadditionȱtoȱriskȱmanagementȱandȱtheȱlicenseȱtoȱ operate)ȱillustratesȱthatȱtheyȱareȱlessȱawareȱofȱtheȱpotentialȱofȱotherȱvalueȱdriversȱ suchȱ asȱ employeeȱ satisfaction,ȱ innovationȱ andȱ improvedȱ accessȱ toȱ capital.ȱ Theirȱ counterpartsȱinȱtheȱOGȱsectorȱappearȱtoȱhaveȱaȱwiderȱandȱmoreȱholisticȱperspecȬ tiveȱonȱtheȱbusinessȱcase:ȱTheirȱportfolioȱofȱvalueȱdriversȱisȱmoreȱbalanced,ȱwhichȱ pointsȱ–ȱinȱparallelȱwithȱevidenceȱpresentedȱearlierȱ–ȱtoȱaȱmoreȱadvancedȱandȱsoȬ phisticatedȱapproachȱtoȱCSM.ȱ

Thisȱ interpretationȱ isȱ alsoȱ supportedȱ byȱ qualitativeȱ data,ȱ whichȱ suggestȱ thatȱ valueȱ constructsȱappearȱtoȱbeȱtheȱcurrentȱkeyȱelementsȱofȱtheȱbusinessȱcaseȱinȱtheȱOGȱsecȬ tor.ȱBeyondȱtheȱtraditionalȱfocusȱonȱefficiency,ȱhealthȱ&ȱsafetyȱ(toȱcutȱcosts),ȱtheȱinȬ formalȱlicenseȱtoȱoperateȱ(orȱgrow)ȱinȱdevelopingȱcountriesȱisȱconsideredȱparticularlyȱ important:ȱTheȱaimȱisȱtoȱimproveȱitȱthroughȱenvironmentalȱandȱsocialȱinitiativesȱ(e.g.ȱ communityȱ development,ȱ fairȱ allocationȱ ofȱ oilȱ revenueȱ throughȱ revenueȱ manageȬ ment)ȱ andȱ stakeholderȱ dialogue,ȱ becauseȱ itȱ improvesȱ accessȱ toȱ capitalȱ fromȱ privateȱ banksȱ andȱ internationalȱ financialȱ institutionsȱ suchȱ asȱ theȱ Worldȱ Bank),ȱ acceleratesȱ licensingȱproceduresȱandȱshortensȱtheȱtimeȱtoȱmarket.ȱ InȱtheȱUTȱsectorȱtheȱimportanceȱofȱvalueȱconstructsȱisȱlower,ȱmostȱlikelyȱbecauseȱtheȱ competitionȱonȱsuchȱconceptsȱisȱlessȱstrong.ȱTimeȱwillȱtellȱwhetherȱmarketȱliberalizaȬ tionȱinȱEuropeȱwillȱbringȱthemȱ–ȱbrandȱvalueȱandȱreputationȱinȱparticularȱ–ȱmoreȱintoȱ focus,ȱsinceȱCSMȱmayȱbeȱincreasinglyȱrecognizedȱasȱaȱmeansȱtoȱgainȱcompetitiveȱadȬ

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219ȱ

vantage,ȱprovidedȱthatȱregulationsȱwillȱspurȱcompetitionȱthroughȱe.g.ȱappropriatelyȱ pricedȱnetworkȱaccessȱ(Gray,ȱ2003;ȱTack,ȱ1999,ȱp.ȱ51).ȱ 8.4.3.2 Issueȱintegrationȱ Havingȱ discussedȱ theȱelementsȱ ofȱ theȱ businessȱ caseȱ inȱtheȱ previousȱ section,ȱ theȱ auȬ thorȱnowȱdealsȱwithȱtheȱtools,ȱstructuresȱandȱprocessesȱusedȱtoȱintegrateȱissuesȱintoȱ corporateȱdecisionȬmakingȱbasedȱonȱsoundȱeconomicȱrationale.ȱTheȱlevelȱofȱdetailȱis,ȱ however,ȱlimitedȱforȱthreeȱreasons:ȱ 1. Givenȱ theȱ substantialȱ breadthȱ ofȱ theȱ study,ȱ theȱ interviewȱ timeȱ wasȱ insuffiȬ cientȱtoȱobtainȱmoreȱdetailedȱqualitativeȱdata.ȱȱ 2. IntervieweesȱwereȱsomewhatȱreluctantȱtoȱprovideȱdeeperȱinsightsȱintoȱprocȬ essesȱ andȱ systemsȱ usedȱ toȱ integrateȱ issues,ȱ asȱ theyȱ areȱ consideredȱ proprieȬ taryȱinformation.ȱ 3. Lackȱofȱcomplementaryȱquantitativeȱdata.ȱ

Tracking: Whatȱissues isȱtheȱcompanyȱfacing?

Mapping: Whichȱofȱtheȱcompany’ȱactivities areȱassociatedȱwithȱtheȱissues inȱparticular?

Prioritization: Whatȱissuesȱare economicallyȱmostȱsignificant?

DecisionȬmaking: Howȱareȱissuesȱandȱtheirȱ economicȱsignificanceȱintegrated intoȱstrategicȱdecisionȱmaking?

•Stakeholderȱdialogue •Businessȱintelligence •Networkingȱwith personalȱcontacts •Externalȱstakeholder panels

•Internetȱplatformȱ (e.g.ȱTellȱShell) •Internalȱnetworks •Surveys (internalȱandȱexternal)

•Environmentalȱand socialȱimpact assessment •Measuringȱmaterialȱand energyȱflows •…

•Qualitativeȱand quantitative riskȱassessments •…

•Fullȱcostȱaccounting •Costȱbenefitȱanalysis •…

ȱ Figureȱ8.26:ȱProcessesȱofȱissueȱintegrationȱ(Salzmann,ȱ2003b,ȱp.ȱ15)ȱ

Figureȱ8Ȭ26ȱfeaturesȱtheȱcategoriesȱdevelopedȱtoȱsystemizeȱtheseȱprocessesȱandȱtools,ȱ alongȱ withȱ severalȱ examples.ȱ Itȱ remainsȱ difficultȱ toȱ accuratelyȱ assessȱ howȱ wellȱ equippedȱ companiesȱ areȱ withȱ processesȱ andȱ toolsȱ toȱ detect,ȱ assessȱ andȱ integrateȱ isȬ suesȱintoȱdecisionȬmaking.ȱHowever,ȱgivenȱtheȱsystematicȱfactorsȱofȱmarginalityȱandȱ ȱ

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8ȱEmpiricalȱevidenceȱ

complexity,ȱwhichȱmakeȱtheseȱtasksȱratherȱdifficult,ȱitȱisȱsafeȱtoȱassumeȱthatȱlaggardȱ companiesȱinȱparticularȱtendȱtoȱlackȱ theȱ necessaryȱtechnicalȱ andȱhumanȱcapacityȱtoȱ systematicallyȱtakeȱaccountȱofȱtheirȱsocialȱandȱenvironmentalȱissues.ȱ Dependingȱonȱtheȱcomplexityȱandȱtheȱimportanceȱofȱtheȱissue,ȱvariousȱorganizationalȱ unitsȱareȱinvolvedȱinȱtheȱprocessȱofȱissueȱintegrationȱ(Salzmann,ȱ2003a,ȱp.ȱ14).ȱMostȱ importantly,ȱtheyȱinclude:ȱ -

Theȱcorporateȱsustainabilityȱfunction:ȱItȱusuallyȱtracksȱissuesȱatȱtheȱcorporateȱ level,ȱalsoȱbasedȱonȱdataȱcollectedȱfromȱbusinessȱunits,ȱandȱreviewsȱbusinessȱ plansȱinȱtermsȱofȱwhetherȱtheyȱsufficientlyȱtakeȱintoȱaccountȱsocialȱandȱenviȬ ronmentalȱrisksȱ(inȱsomeȱcompaniesȱtheyȱevenȱhaveȱtheȱauthorityȱtoȱrejectȱinȬ adequateȱplans).ȱ

-

Theȱcorporateȱstrategyȱteam:ȱItȱcoordinatesȱinputȱfromȱcorporateȱstaffȱandȱpriȬ oritizesȱstrategicȱ(includingȱimportantȱsocialȱandȱenvironmental)ȱissuesȱtoȱinȬ corporateȱthemȱintoȱstrategicȱdecisionȬmaking.ȱ

-

Issueȱteams:ȱTheirȱcompositionȱvariesȱdependingȱonȱtheȱimportanceȱofȱtheȱisȬ sue.ȱ Forȱ veryȱ importantȱ issues,ȱ theyȱ tendȱ toȱ beȱ “moreȱ comprehensive,ȱ crossȬ functionalȱ andȱ crossȬbusinessȱ andȱ senior”ȱ (p.ȱ 15).ȱ Theyȱ areȱ consideredȱ effecȬ tiveȱmeansȱofȱassessingȱclearlyȱdefinableȱissues,ȱdevelopingȱstrategiesȱandȱapȬ plicationȱtools,ȱandȱbuildingȱinternalȱconsensusȱforȱissueȱintegration.ȱ

-

Corporateȱsustainabilityȱcommittees:ȱTheyȱareȱcomposedȱofȱtopȱmanagement,ȱ corporateȱ sustainabilityȱ staff,ȱ andȱ keyȱ headsȱ fromȱ functionsȱ andȱ businessȱ units.ȱTheyȱtakeȱkeyȱstrategicȱdecisionsȱonȱcorporateȱsustainability.ȱ

Asȱtheȱsomewhatȱbroadȱrolesȱandȱresponsibilityȱofȱunitsȱreveal,ȱtheȱfollowingȱprocȬ essesȱofȱissueȱintegrationȱshouldȱnotȱbeȱseenȱasȱisolatedȱsteps,ȱbutȱideallyȱasȱpartsȱofȱaȱ fluid,ȱiterativeȱandȱmultiȬunitȱprocedure.ȱ Issueȱtrackingȱ Toolsȱtoȱtrackȱissuesȱandȱdetectȱemergingȱonesȱdifferȱdependingȱonȱtheȱnatureȱofȱtheȱ issueȱ(global,ȱregionalȱorȱlocal).ȱTheyȱcompriseȱinterȱaliaȱdirectȱrepresentationȱatȱtheȱ federal,ȱ stateȱ andȱ localȱ levelsȱ ofȱ governmentȱ (businessȱ intelligence);ȱ coordinationȱ withȱ otherȱ companiesȱ throughȱ tradeȱ associations,ȱ improvementȱ ofȱ mediaȱ relations;ȱ andȱissueȱadvertisingȱ (Arringtonȱ etȱal.,ȱ1984;ȱ Heugens,ȱ 2002).ȱ Personalȱ contactsȱ andȱ networksȱinȱindustryȱassociationsȱandȱplatformsȱasȱwellȱasȱstakeholderȱdialoguesȱareȱ consideredȱmostȱeffectiveȱ atȱ theȱ corporateȱlevel.ȱAtȱ theȱ projectȱlevel,ȱenvironmentalȱ andȱsocialȱimpactȱassessmentȱadditionallyȱplayȱanȱimportantȱrole.ȱ

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221ȱ

Issueȱmappingȱ Onceȱissuesȱareȱdetected,ȱtheirȱrelevanceȱtoȱtheȱindividualȱcompany,ȱprojectȱorȱbusiȬ nessȱunitȱneedsȱtoȱbeȱassessed.ȱCorporateȱsocialȱandȱenvironmentalȱeffectsȱareȱexamȬ inedȱtoȱfacilitateȱaȱmeaningfulȱprioritizationȱ(WhatȱareȱourȱmainȱsocialȱandȱenvironȬ mentalȱeffectsȱandȱwhereȱdoȱtheyȱoccur?)ȱObviouslyȱtheȱmoreȱcorporateȱactivitiesȱareȱ involved,ȱtheȱmoreȱimportantȱissueȱmappingȱbecomes,ȱbecauseȱitȱfacilitatesȱinformedȱ andȱ thusȱ moreȱ confidentȱ decisionȬmakingȱ (Sharmaȱ etȱ al.,ȱ 1999,ȱ p.ȱ 94).ȱ Thusȱ dataȱ managementȱtoolsȱ(e.g.ȱenvironmentalȱaccountingȱtoȱtrackȱmaterialȱandȱwasteȱflows)ȱ andȱimpactȱassessmentsȱareȱessentialȱtoȱfacilitateȱȱinternalȱandȱexternalȱbenchmarkingȱ andȱprioritizeȱareasȱofȱactionȱ(e.g.ȱcountry,ȱregionȱorȱaȱparticularȱcorporateȱactivity).ȱ Intervieweesȱ alsoȱ pointedȱ toȱ theȱ roleȱ ofȱ localȱ management’sȱ awareness,ȱ buyȬinȱ andȱ expertiseȱbecauseȱtheyȱareȱmostȱfamiliarȱwithȱtheȱactualȱsituation.ȱ Inȱ someȱ casesȱ itȱ isȱdifficultȱtoȱ clearlyȱdifferentiateȱbetweenȱ issueȱ trackingȱandȱ mapȬ ping:ȱ E.g.ȱ althoughȱ environmentalȱ andȱ socialȱ impactȱ assessmentsȱ areȱ generallyȱ unȬ dertakenȱ toȱ mapȱ issuesȱ (thatȱ areȱ alreadyȱ onȱ aȱ company’sȱ “radarȱ screen”),ȱ theirȱ useȱ canȱalsoȱresultȱinȱtheȱdetectionȱofȱnewȱandȱemergingȱissues.ȱȱ Issueȱprioritizationȱ AgainȱinterviewȱdataȱpointȱtoȱtheȱimportanceȱofȱexperiencedȱandȱwellȬtrainedȱstaff,ȱ particularlyȱifȱtheȱ issuesȱ areȱ ofȱstrategicȱimportance.ȱ Inȱbothȱsectors,ȱ companiesȱuseȱ riskȱ managementȱ proceduresȱ toȱ prioritizeȱ issues.ȱ Ideallyȱ theyȱ compriseȱ bottomȬupȱ andȱtopȬdownȱprocedures:ȱ -

BusinessȱunitsȱandȱcountryȱmanagersȱnaturallyȱfocusȱonȱmoreȱshortȬtermȱandȱ localȱissues.ȱTheyȱsubmitȱriskȱreportsȱtoȱtheȱcorporateȱfunction.ȱ

-

CorporateȱsustainabilityȱexpertsȱtakeȱaȱmoreȱholisticȱandȱlongȬtermȱapproachȱ andȱassessesȱpotentialȱcrossȱimpacts.ȱ

Theȱtoolsȱasȱsuchȱcompriseȱbothȱqualitativeȱandȱquantitativeȱ(riskȱscore,ȱfinancialȱfigȬ ures)ȱassessmentsȱandȱtakeȱdifferentȱparametersȱ–ȱsuchȱasȱprobabilityȱofȱoccurrence,ȱ possibleȱconsequences,ȱdegreeȱofȱcontrolȱ–ȱintoȱaccount.ȱTheyȱyieldȱriskȱpriorityȱlistsȱ atȱtheȱcorporateȱlevelȱbutȱalsoȱforȱindividualȱcountriesȱandȱprojectsȱ(Salzmann,ȱ2003a,ȱ p.ȱ18).ȱ IntegrationȱintoȱdecisionȬmakingȱ Onceȱissuesȱareȱfoundȱtoȱbeȱofȱsignificantȱimportanceȱtheyȱneedȱtoȱbeȱintegratedȱintoȱ decisionȬmaking.ȱ Interviewȱ dataȱ suggestȱ thisȱ finalȱ stepȱ remainsȱ theȱ mostȱ importantȱ challenge.ȱTheȱfollowingȱfactorsȱareȱmostȱsignificant:ȱ -

ȱ

Presentingȱtheȱbusinessȱcaseȱtoȱmanagers:ȱManagersȱareȱpresentedȱwithȱtheȱecoȬ nomicȱrationaleȱforȱintegratingȱtheȱissuesȱunderȱconsideration,ȱe.g.ȱfaceȱtoȱfaceȱbyȱ theȱsustainabilityȱofficerȱorȱthroughȱsuccessfulȱcaseȱstudiesȱthatȱareȱpublishedȱinȬ

222ȱ

8ȱEmpiricalȱevidenceȱ

ternallyȱ andȱ externally.ȱ Suchȱ presentationsȱ compriseȱ (1)ȱ anȱ exȬanteȱ andȱ univerȬ sallyȱ quantifiableȱ businessȱ caseȱ forȱ improvementsȱ inȱ environmental,ȱ healthȱ &ȱ safetyȱperformance,ȱ(2)ȱexȬpostȱandȱcaseȬstudyȬbasedȱevidenceȱofȱtheȱpositiveȱefȬ fectsȱ ofȱ corporateȱ activitiesȱ onȱ valueȱ constructsȱ suchȱ asȱ brandȱ value,ȱ reputationȱ andȱtheȱlicenseȱtoȱoperate.ȱTheyȱdoȱnotȱnecessarilyȱpresentȱaȱquantifiedȱbusinessȱ case,ȱ butȱ mayȱ alsoȱ beȱ designedȱ toȱ makeȱ employeesȱ feelȱ goodȱ aboutȱ theirȱ (enviȬ ronmentallyȱandȱsociallyȱresponsible)ȱemployer.ȱ -

Topȱmanagementȱcommitment,ȱcorporateȱvaluesȱandȱpolicies:ȱTheyȱprovideȱanȱ organizationalȱcontextȱ thatȱfacilitatesȱissueȱintegrationȱ inȱ theȱ decisionȬmakingȱofȱ individualsȱ(e.g.ȱBichta,ȱ2003,ȱp.ȱ16).ȱ

-

Otherȱmanagementȱtools:ȱManagementȱtoolsȱsuchȱasȱmetricsȱ(e.g.ȱglobalȱcommuȬ nityȱ spending,ȱ emissionȱ toȱ air),ȱ targetsȱ (e.g.ȱ relativeȱ emissionȱ reductionȱ byȱ x%),ȱ modificationsȱ toȱ investmentȱ appraisalsȱ andȱ accountingȱ proceduresȱ (e.g.ȱ toȱ acȬ countȱforȱcarbonȱcosts),ȱscenarioȱanalysisȱandȱbackcastingȱdirectlyȱrelateȱtoȱoneȱorȱ severalȱspecificȱissues.ȱ

-

Managementȱstructures:ȱCrossȬfunctionalȱandȱcrossȬbusinessȱteamsȱcompriseȱexȬ ecutiveȱ managersȱ fromȱ aȱ diverseȱ rangeȱ ofȱ businessȱ unitsȱ and/orȱ functions,ȱ andȱ thusȱ facilitateȱ notȱ onlyȱ consensusȬbuildingȱ butȱ alsoȱ issueȱ prioritizationȱ throughȱ crossȬimpactȱassessment.ȱ

Overall,ȱ companiesȱ appearȱ toȱ beȱ atȱ differentȱ stagesȱ ofȱ theȱ learningȱ curve.ȱ Whereasȱ leadersȱhaveȱmetrics,ȱtargetsȱandȱincentiveȱsystemsȱinȱplaceȱ(e.g.ȱremunerationȱconȬ tingentȱ uponȱ theȱ group’sȱ balancedȱ scoreboardȱ whichȱ alsoȱ incorporatesȱ environȬ mentalȱandȱsocialȱcriteria),ȱlaggardsȱhaveȱlessȱsystematicȱframeworks:ȱ Sustainabilityȱ isȱ “hardwired”ȱ intoȱ itsȱ systemsȱ andȱ processesȱ (e.g.ȱ newȱ businessȱ proposalȱ mustȱ takeȱ accountȱ ofȱ environmentalȱ andȱ socialȱ issues,ȱ carbonȱ costȱ acȬ counting,ȱ etc.)ȱ andȱ “softwired”ȱ intoȱ theȱ heartsȱandȱ mindsȱ ofȱ ourȱ peopleȱ (awareȬ ness,ȱexcitementȱandȱknowledge)ȱ(OG2,ȱSO).ȱ Thereȱisȱnoȱformalȱprocedureȱsoȱfar.ȱTargetsȱareȱset,ȱapproachesȱ(e.g.ȱcoalȱvs.ȱgasȬ firedȱpowerȱplant)ȱtoȱachieveȱtargetsȱareȱdiscussedȱwithȱbusinessȱunitsȱ(UT1,ȱSO).ȱ Overall,ȱ thereȱ isȱ littleȱframework,ȱ weȱ areȱ concentratingȱ onȱ theȱ hotȱ topicsȱ (OG3,ȱ SO).ȱ 8.4.3.3 Buildingȱandȱquantifyingȱtheȱbusinessȱcaseȱ AlthoughȱseveralȱcompaniesȱstressȱtheȱpotentialȱtoȱcreateȱeconomicȱvalueȱbyȱinternalȬ izingȱissuesȱ(e.g.ȱenhancingȱtheȱlicenseȱtoȱoperateȱorȱtoȱgrow,ȱbeingȱaȱpreferredȱpartȬ nerȱforȱhostȱgovernments,ȱreputation,ȱinnovation,ȱetc.)ȱinȱtheirȱpublicȱdocuments,ȱinȬ terviewsȱ suggestȱ thatȱ onlyȱ veryȱ fewȱ companiesȱ haveȱ attemptedȱ toȱ systematicallyȱ

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223ȱ

mapȱ outȱ theirȱ businessȱ caseȱ forȱ sustainability,ȱ i.e.ȱ toȱ linkȱ corporateȱ responseȱ toȱ cerȬ tainȱenvironmentalȱ andȱsocialȱ issuesȱandȱtheȱ differentȱ valueȱ driversȱ andȱvalueȱconȬ structsȱ(asȱdepictedȱinȱFigureȱ8Ȭ27),ȱeitherȱatȱtheȱcorporateȱlevel,ȱorȱevenȱtheȱprojectȱ levelȱ(Corbettȱ&ȱWassenhove,ȱ1993ȱp.ȱ118;ȱEpsteinȱetȱal.,ȱ2001ȱp.ȱ588;ȱWheeler,ȱG,ȱ&ȱP,ȱ 2000ȱp.ȱ291).ȱThisȱprofitȬorientedȱbutȱyetȱintuitiveȱintegrationȱofȱissuesȱintoȱcorporateȱ activitiesȱisȱlackingȱinȱ laggardȱcompaniesȱinȱparticular,ȱ andȱthusȱ canȱ beȱ confidentlyȱ consideredȱ aȱ significantȱ stumblingȱ blockȱ toȱ corporateȱ sustainabilityȱ management.ȱ Thereȱareȱseveralȱreasonsȱforȱthisȱmissingȱlink:ȱ 1. Highȱlevelȱofȱcomplexityȱandȱuncertainty:ȱFigureȱ8Ȭ27ȱisȱaȱveryȱsimplifiedȱdeȬ pictionȱofȱtheȱrealȱsituation,ȱsinceȱissuesȱareȱnumerousȱandȱhighlyȱfragmented.ȱ Inȱsomeȱcasesȱsuchȱasȱanȱemissionsȱreductionȱschemeȱ(e.g.ȱreduceȱflaring),ȱitȱisȱ quiteȱ straightforwardȱ toȱ linkȱ anȱ initiativeȱ toȱ costȱ reductions.ȱ Inȱ otherȱ casesȱ suchȱasȱ communityȱ involvement,ȱ theȱnetȱ economicȱ effectsȱ andȱ thusȱtheȱ busiȬ nessȱ logicȱ mayȱ beȱ highlyȱ dependentȱ onȱ localȱ andȱ regionalȱ conditions.ȱ Itȱ alsoȱ appearsȱ thatȱ laggardȱ companiesȱ inȱ particularȱ lackȱ motivation,ȱ resourcesȱ andȱ systemsȱ forȱ trackingȱ theirȱ issuesȱ andȱ correspondinglyȱ theirȱ socialȱ andȱ enviȬ ronmentalȱinitiatives.ȱ 2. Marginalityȱ ofȱ economicȱ valueȱ createdȱ throughȱ CSMȱ activities:ȱ Asȱ outlinedȱ above,ȱtheȱexpectationsȱofȱexternalȱstakeholdersȱforȱCSMȱareȱsoȱmoderateȱthatȱ theyȱcanȱbeȱmetȱ(orȱevenȱexceeded)ȱthroughȱanȱincrementalȱapproachȱtoȱCSMȱ (Steger,ȱ 2004,ȱ p.ȱ 72).ȱ Theȱ incrementalȱ approachȱ isȱ dominatedȱ byȱ initiativesȱ suchȱ asȱ efficiencyȱ improvementsȱ whoseȱ businessȱ logicȱ isȱ selfȬevidentȱ andȱ marginal.ȱ Theȱ economicȱ potentialȱ ofȱ radicalȱ innovationsȱ toȱ businessȱ modelsȱ (e.g.ȱrenewableȱenergies)ȱisȱevenȱlessȱsignificant,ȱasȱtheirȱdevelopmentȱinȱnicheȱ marketsȱ andȱ pilotȱ projectsȱ suggests.ȱ Henceȱ companiesȱ avoidȱ theȱ effortȱ ofȱ modelingȱ causalȱ relationshipsȱ betweenȱ theirȱ socialȱ andȱ environmentalȱ initiaȬ tivesȱandȱfinancialȱperformance.ȱ Obviouslyȱ theseȱ barriersȱ toȱ establishingȱ aȱ soundȱ businessȱ logicȱ alsoȱ applyȱ toȱ theȱ quantificationȱofȱtheȱbusinessȱcase.ȱTheȱexȬanteȱquantificationȱofȱtheȱbusinessȱcaseȱforȱ aȱ “small”ȱ andȱ wellȬdefinedȱ corporateȱ environmentalȱ orȱ occupationalȱ healthȬrelatedȱ activityȱisȱrelativelyȱfeasible.ȱHowever,ȱlargeȱprojectsȱorȱgroupȱactivitiesȱareȱimpossiȬ bleȱtoȱassess.ȱ Itȱ worksȱ forȱ lostȱ workdaysȱ (insuranceȱ figures)ȱ andȱ emissionsȱ tradingȱ (penaltyȱ cost,ȱ averageȱ tradingȱ costs).ȱ Weȱ haveȱ tried,ȱ butȱ itȱ isȱ difficultȱ forȱ theȱ softȱ issuesȱ (OG5,ȱSO).ȱ

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8ȱEmpiricalȱevidenceȱ Systemizationȱof:

Sustainabilityȱissuesȱaffecting strategicȱrisksȱandȱopportunities

Sustainabilityȱissues Corporateȱactivities

Energyȱdivide

Climateȱchange

Valueȱdrivers

Sustainabilityȱissuesȱaffecting operationalȱrisksȱandȱopportunities Localȱairȱpollution Biodiversity

Health Safety

Radicalȱinnovationȱforȱnewȱproducts andȱmarkets

Humanȱrights Monetaryȱflows

Incrementalȱimprovementsȱin Environmental performance

H&S performance

Social performance Brandȱvalueȱandȱreputation Licenseȱtoȱoperate Attractȱandȱretainȱtalent

Netȱcostȱdecreases throughȱincrementalȱinnovation

Netȱrevenueȱincreases throughȱradicalȱinnovation

Economicȱvalue

ȱ Figureȱ8.27:ȱMappingȱtheȱbusinessȱcaseȱforȱsustainabilityȱ(BasedȱonȱSalzmann,ȱ2003b,ȱp.ȱ11)ȱ

Buildingȱ aȱ quantifiedȱ businessȱ caseȱ forȱ sustainabilityȱ isȱ notȱ possible.ȱ Weȱ haveȱ generatedȱquantitativeȱcaseȬbased,ȱexȬpostȱevidence,ȱwhichȱisȱnotȱgenerallyȱappliȬ cable.ȱWithȱtheȱexceptionȱofȱcarbonȱcostȱaccounting,ȱoneȱhasȱtoȱ“jump”ȱbetweenȱ corporateȱ strategyȱ andȱ individualȱ caseȱ studies.ȱSo,ȱ weȱ areȱ lookingȱ forȱ additionalȱ toolsȱ(UT3,ȱSO).ȱ Interviewsȱ suggestȱ thatȱ decisionsȱ areȱ primarilyȱ takenȱ basedȱ onȱ projectsȱ andȱ issuesȱ whoseȱrelevanceȱisȱassessedȱthroughȱriskȱassessmentȱproceduresȱdescribedȱabove.ȱAsȱ theȱ secondȱ quoteȱ aboveȱ illustrates,ȱ mostȱ companiesȱ perceiveȱ theirȱ currentȱ methodȬ ologiesȱforȱquantifyingȱtheȱbusinessȱcaseȱasȱinsufficient.ȱThisȱisȱnotȱsurprisingȱifȱoneȱ takesȱintoȱaccountȱtheȱdiagnosedȱlackȱofȱcausalȱmodeling:ȱQuantificationȱandȱnecesȬ saryȱmethodologiesȱareȱonlyȱmeaningfulȱifȱtheyȱcanȱbeȱbasedȱonȱbusinessȱlogicȱthatȱ postulatedȱaȱcausalȱlinkȱbetweenȱaȱsocialȱorȱenvironmentalȱinitiativeȱandȱchangesȱinȱ economicȱperformance.ȱ Itȱisȱimportantȱtoȱnote,ȱhowever,ȱthatȱneitherȱsustainabilityȱofficersȱnorȱgeneralȱmanȬ agersȱcalledȱforȱanȱexȱanteȱquantificationȱinȱallȱsituations.ȱIntervieweesȱoftenȱarguedȱ thatȱtheȱbusinessȱcaseȱforȱmoreȱefficientȱandȱsaferȱprocessesȱisȱobviousȱandȱdoesȱnotȱ necessarilyȱ requireȱ quantificationȱ –ȱ investmentsȱ areȱ alreadyȱ builtȱ aroundȱ environȬ mental,ȱhealthȱandȱsafetyȱissues.ȱAȱplausibleȱbusinessȱlogicȱwithoutȱexactȱquantificaȬ

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tionȱ wasȱ claimedȱ toȱ convinceȱ bystandersȱ inȱ theȱ company,ȱ providedȱ thatȱ positiveȱ moderatingȱfactorsȱsuchȱasȱaȱproactiveȱorganizationalȱcultureȱexist:ȱ Businessȱ plansȱ andȱ projectsȱ toȱ increaseȱ environmentalȱ andȱ socialȱ performanceȱ shouldȱ beȱ basedȱ onȱ anȱ “earnestȱlogic,”ȱ quantificationȱ isȱ notȱ necessary,ȱ evenȱ ifȱ –ȱ obviouslyȱ–ȱaȱRoIȱfigureȱwouldȱbeȱtheȱmostȱcompellingȱ(OG5,ȱfinance).ȱ However,ȱthisȱclaimȱraisesȱtwoȱimportantȱquestions:ȱ 1. Howȱconvincingȱisȱbusinessȱlogicȱ(withoutȱquantification)ȱinȱtimesȱofȱfinanȬ cialȱpressureȱorȱafterȱchangesȱinȱstrategyȱorȱmanagement?ȱ 2. Howȱ compellingȱ canȱ businessȱ logicȱ be,ȱ ifȱ externalȱ pressureȱ onȱ companiesȱ andȱhenceȱfinancialȱthreatsȱandȱopportunitiesȱareȱmarginal?ȱ Inȱlightȱofȱtheȱtwoȱquestionsȱabove,ȱitȱisȱobviousȱthatȱquantificationȱremainsȱonȱcomȬ panies’ȱ agenda:ȱ Oneȱ ofȱ theȱ leadingȱ OGȱ companiesȱ isȱ currentlyȱ developingȱ methodȬ ologiesȱtoȱquantifyȱtheȱeconomicȱpotentialȱofȱcertainȱcorporateȱactivities.ȱItȱfocusesȱonȱ valueȱ constructsȱ suchȱ asȱ theȱ formalȱ andȱ informalȱ licenseȱ toȱ operateȱ andȱ employeeȱ satisfaction.ȱ However,ȱ itȱ wouldȱ beȱ unrealisticȱ toȱ expectȱ toolsȱ thatȱ goȱ farȱ beyondȱ aȱ projectȬȱandȱissueȬbasedȱquantificationȱofȱtheȱbusinessȱcase,ȱi.e.ȱforȱexampleȱ -

aȱquantifiedȱlinkȱbetweenȱCSMȱandȱemployeeȱsatisfactionȱ(e.g.ȱthroughȱmultiȬ variateȱanalysesȱofȱemployeeȱsurveys)ȱandȱresultingȱfinancialȱeffectsȱ

-

caseȬbasedȱevidenceȱforȱeconomicȱgainsȱofȱobtainingȱpermitsȱfasterȱandȱminiȬ mizingȱdisruptionsȱofȱoperationsȱinȱdevelopingȱcountriesȱthroughȱcomprehenȬ siveȱ stakeholderȱ dialogues,ȱ communityȱ involvementȱ andȱ soundȱ environȬ mentalȱmanagement.ȱ

8.4.3.4 Discussionȱ Focusȱonȱoperationalȱrisksȱratherȱthanȱstrategicȱopportunitiesȱ Overallȱ evidenceȱ revealsȱ aȱ clearȱ dilemmaȱ inȱ theȱ businessȱ caseȱ forȱ sustainability,ȱ whichȱcanȱbeȱbrieflyȱdepictedȱasȱfollows:ȱȱ 1. Costȱ reductionsȱ canȱ beȱ ratherȱ easilyȱ achievedȱ throughȱ incrementalȱ innovations.ȱ Theyȱareȱeasyȱtoȱquantifyȱandȱprovideȱaȱrobustȱbusinessȱcaseȱforȱimprovementsȱinȱ environmental,ȱhealthȱandȱsafetyȱperformance.ȱHowever,ȱcorporateȱinitiativesȱinȱ thisȱ areaȱ onlyȱ resolveȱ someȱ ofȱ theȱ environmentalȱ andȱ socialȱ issuesȱ bothȱ sectorsȱ face.ȱ 2. Valueȱ constructsȱ suchȱ asȱ brandȱ value,ȱ reputationȱ andȱ employeeȱ satisfactionȱ areȱ currentlyȱconsideredȱtheȱmostȱimportantȱvalueȱdriversȱ(constructs)ȱbutȱareȱintanȬ gible.ȱ Theȱ actualȱ economicȱ valueȱ attachedȱ toȱ themȱ –ȱ asȱ eitherȱ costȱ decreasesȱ orȱ revenueȱincreasesȱ–ȱcanȱbeȱcreatedȱthroughȱbothȱincrementalȱandȱradicalȱinnovationȱ ȱ

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butȱisȱyetȱtoȱbeȱleveraged.ȱBrandȱvalueȱdoesȱnotȱperȱseȱimproveȱfinancialȱperformȬ ance,ȱhenceȱitȱisȱoftenȱdifficultȱtoȱquantifyȱasȱmostȱintervieweesȱpointedȱout.ȱ 3. Theȱbusinessȱcaseȱforȱradicalȱinnovationȱthroughȱrevenueȱincreasesȱisȱweak.ȱHowȬ ever,ȱonlyȱaȱsoundȱbusinessȱcaseȱforȱmoreȱradicalȱinnovationȱ(beyondȱe.g.ȱincreȬ mentalȱprocessȱmodificationȱtoȱimproveȱecoȬefficiency)ȱwouldȱleadȱtoȱmoreȱaccenȬ tuatedȱ approachesȱ toȱ resolveȱ theȱ twoȱ majorȱ strategicȱ issues:ȱ climateȱ changeȱ andȱ theȱNorthȬSouthȱenergyȱdivide.ȱ Inȱthisȱsituation,ȱcompaniesȱhaveȱmovedȱbeyondȱaȱmereȱcostȱreductionȱfocusȱandȱalsoȱ considerȱ valueȱ constructsȱ suchȱ asȱ brandȱ valueȱ andȱ reputation,ȱ i.e.ȱ theȱ informalȱ liȬ censeȱ toȱ operate,ȱ compellingȱ argumentsȱ forȱ CSM.ȱ Currentȱ demandsȱ forȱ CSMȱ fromȱ stakeholdersȱareȱsatisfiedȱbyȱincrementalȱimprovementsȱtoȱcorporateȱactivities,ȱwhichȱ clearlyȱreflectsȱtheȱfactȱthatȱtheȱstrongestȱbusinessȱcaseȱcanȱbeȱbuiltȱandȱquantifiedȱforȱ theȱmanagementȱofȱoperationalȱrisksȱratherȱthanȱstrategicȱopportunities.ȱ Overall,ȱ theȱbusinessȱcaseȱ forȱ corporateȱ sustainabilityȱisȱratherȱmarginal,ȱandȱ thereȬ foreȱ –ȱ asȱ Stegerȱ (2004,ȱ p.ȱ 72)ȱ alsoȱ arguesȱ basedȱ onȱ recentȱ crossȬindustryȱ evidenceȱ –ȱ corporateȱ sustainabilityȱ isȱ largelyȱ dominatedȱ byȱ theȱ “dailyȱ grindȱ ofȱ businessȱ andȱ maximizingȱshareholderȱvalue.”ȱSeveralȱsignificantȱbarriersȱtoȱaȱ“breakthroughȱbusiȬ nessȱcase”ȱexistȱ–ȱincludingȱtechnologicalȱtrajectoriesȱandȱbusinessȱsystemsȱ(upstreamȱ andȱdownstream)ȱintoȱwhichȱindustriesȱareȱlocked;ȱconsumerȱinertia;ȱandȱmanagers’ȱ attitudesȱ(p.ȱ68)ȱ Issueȱintegrationȱ Qualitativeȱ dataȱ provideȱ anȱ overviewȱ ofȱ companies’ȱ structures,ȱprocessesȱ andȱ toolsȱ usedȱtoȱidentify,ȱmap,ȱprioritize,ȱandȱintegrateȱissuesȱintoȱcorporateȱdecisionȬmaking.ȱ Itȱ appearsȱ thatȱ laggardȱ companiesȱ haveȱ aȱ ratherȱ inadequateȱ portfolioȱ ofȱ suchȱ tools,ȱ althoughȱ theȱ exploratoryȱ interviewȬbasedȱ approach,ȱ onȱ whichȱ thisȱ conclusionȱ isȱ based,ȱinherentlyȱlacksȱgeneralizability.ȱTheȱauthorȱsuggestsȱthatȱaȱfurtherȱmoreȱinȬ tensiveȱ ratherȱ thanȱ extensiveȱ studyȱ (i.e.ȱ basedȱ onȱ moreȱ inȬdepthȱ analysesȱ inȱ fewerȱ companies)ȱ couldȱ moreȱ closelyȱ analyzeȱ organizationalȱ settingsȱ (crossȬbusinessȱ teams),ȱproceduresȱ(riskȱreviews)ȱandȱtoolsȱ(e.g.ȱcarbonȱcostȱaccounting)ȱusedȱtoȱinȬ tegrateȱissuesȱintoȱcorporateȱdecisionȬmaking,ȱandȱthusȱmoreȱpreciselyȱidentifyȱgaps,ȱ bestȱpracticesȱandȱsuccessȱfactorsȱforȱissueȱintegration.ȱ Evidenceȱ showsȱ thatȱ theȱ portfolioȱ ofȱ tools,ȱ particularlyȱ forȱ issueȱ prioritization,ȱ areȱ characterizedȱbyȱaȱdistinctȱfocusȱonȱrisk,ȱwhichȱreflectsȱtheȱpredominantlyȱriskȬbasedȱ businessȱ caseȱ forȱ sustainabilityȱ –ȱ asȱ describedȱ inȱ theȱ previousȱ paragraphs.ȱ Itȱ alsoȱ pointsȱtoȱtheȱimportanceȱofȱtheȱprincipleȱofȱmanagerialȱdiscretion:ȱIndividualȱmanagȬ ersȱ orȱ issueȱ teamsȱ haveȱ aȱ greatȱeffectȱ onȱ CSM,ȱ sinceȱ theirȱ effortsȱ inȱ identifyingȱ andȱ evaluatingȱ issuesȱ resultȱ inȱ assumptions,ȱ causeȬeffectȱ understandings,ȱ predictiveȱ

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judgments,ȱlanguagesȱandȱlabels,ȱwhichȱdetermineȱ“inȱlargeȱpart,ȱhoweverȱimplicitly,ȱ theȱsubsequentȱofȱcourseȱofȱdecisionȱmaking”ȱ(Duttonȱetȱal.,ȱ1983,ȱp.ȱ310).ȱ Thisȱfindingȱoffersȱanȱadditionalȱexplanationȱforȱcompanies’ȱlargelyȱincrementalȱandȱ reactiveȱ approachȱ toȱ CSM.ȱ Reactiveȱ attitudesȱ andȱ lackȱ ofȱ knowledgeȱ andȱ expertiseȱ amongȱindividualsȱwhoȱidentifyȱandȱprioritizeȱissuesȱmayȱnegativelyȱaffectȱissueȱinȬ tegration,ȱparticularlyȱifȱissuesȱareȱcomplexȱandȱthusȱrequireȱaȱsubstantialȱamountȱofȱ personalȱ judgment.ȱ Thisȱ insightȱ callsȱ forȱ theȱ employmentȱ ofȱ experiencedȱ andȱ wellȬ trainedȱstaffȱforȱprocessesȱofȱissueȱprioritizationȱinȱparticular.ȱ Buildingȱandȱquantifyingȱtheȱbusinessȱcaseȱforȱsustainabilityȱ Obviouslyȱmanagersȱwouldȱpreferȱmoreȱrobust,ȱquantifiedȱbusinessȱcaseȱforȱsustainȬ abilityȱoverȱaȱmoreȱelusiveȱone,ȱwhichȱisȱassociatedȱwithȱgreaterȱuncertaintyȱofȱdeciȬ sionȬmakingȱ processes.ȱ Qualitativeȱ dataȱ obtainedȱ inȱ thisȱ studyȱ showȱ thatȱ theȱ busiȬ nessȱcaseȱforȱsustainabilityȱatȱtheȱrobustȱendȱofȱtheȱspectrumȱisȱlimitedȱtoȱratherȱobȬ viousȱsituationsȱ(e.g.ȱefficiencyȱimprovements).ȱ Robust

The case for sustainability

Universal ex ante quantifiable business case

Compelling business logic without ex ante quantifiable business case Backed up by anecdotal, ex post evidence

Corporate values and culture Elusive

Moral case for sustainability

ȱ Figureȱ8.28:ȱDifferentȱcasesȱforȱcorporateȱsustainabilityȱ

Thisȱfindingȱcanȱbeȱattributedȱtoȱseveralȱreasons:ȱ 1. Complexityȱ causedȱ byȱ aȱ plethoraȱ ofȱ oftenȱ highlyȱ fragmentedȱ issues.ȱ Figureȱ 8Ȭ29ȱ illustratesȱ howȱ difficultȱ itȱ wouldȱ beȱ toȱ comprehensivelyȱ assessȱ theȱ financialȱ opȬ portunitiesȱ andȱ threatsȱ thatȱ relateȱ toȱ onlyȱ oneȱ issueȱ suchȱ asȱ climateȱ change.ȱ AlȬ thoughȱcomplexityȱisȱlargelyȱsystemic,ȱsomeȱofȱitȱcouldȱbeȱreducedȱbyȱdecreasingȱ theȱdiagnosedȱlackȱofȱorganizationalȱresourcesȱ(seeȱpointȱ2ȱbelow).ȱ

ȱ

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8ȱEmpiricalȱevidenceȱ

2. Lackȱ ofȱ resources.ȱ Dataȱ managementȱ (toȱ trackȱ issuesȱ andȱ activities)ȱ canȱ beȱ chalȬ lenging,ȱ particularlyȱ inȱ largeȱ multinationalȱ organizations,ȱ andȱ thusȱ requiresȱ cerȬ tainȱ toolsȱ andȱ systems.ȱ Furthermore,ȱ itȱ isȱ difficultȱ toȱ developȱ andȱ retainȱ theȱ managerialȱexpertiseȱnecessaryȱtoȱassessȱandȱprocessȱtheȱdataȱavailable.ȱ 3. Marginalityȱ ofȱ theȱ businessȱ caseȱ andȱ companies’ȱ correspondingȱ lackȱ ofȱ interest.ȱ Asȱ mentionedȱ earlier,ȱ theȱ outsideȱ pressureȱ toȱ respondȱ toȱ socialȱ andȱ environȬ mentalȱ issuesȱ –ȱ e.g.ȱ theȱ scrutinyȱ fromȱ theȱ financialȱ sector,ȱ mandatoryȱ emissionsȱ tradingȱ systems,ȱ increasedȱ demandȱ forȱ renewableȱ energyȱ products,ȱ etc.ȱ asȱ deȬ pictedȱ inȱ Figureȱ 8Ȭ29ȱ toȱ illustrateȱ theȱ exampleȱ ofȱ climateȱ changeȱ –ȱ isȱ limited.ȱ Companiesȱcanȱdoȱveryȱlittleȱinȱtheȱshortȱtermȱtoȱinfluenceȱthisȱmarginality.ȱTheȱ viabilityȱofȱmoreȱsustainableȱtechnologiesȱandȱbusinessȱmodelsȱandȱhenceȱaȱmoreȱ substantialȱfinancialȱeffectsȱofȱCSMȱclearlyȱdependsȱonȱcontributionsȱfromȱmultiȬ pleȱstakeholdersȱ(changesȱinȱregulations,ȱcustomerȱbehavior).ȱFromȱtheȱcompanyȱ side,ȱtheȱdevelopmentȱofȱpilotȱprojectsȱandȱlobbyingȱforȱnewȱbusinessȱsystemsȱareȱ possibleȱbutȱalsoȱhighlyȱriskyȱoptions.ȱȱ Corporateȱactivity (e.g.ȱproductionȱandȱuseȱofȱfossilȱfuelsȱlikelyȱtoȱbeȱassociated withȱclimateȱchange) Currentȱandȱfuture

Outsideȱpressure toȱminimizeȱtheȱeffect

ScrutinyȱofȱCO2ȱintensity byȱfinancialȱsector EcoȬtaxes

Costs

Consumerȱprotestsȱandȱboycotts NGOȱcampaigns Shareholderȱresolutions

Brandȱvalueȱandȱreputation Employeeȱsatisfaction Accessȱtoȱcapital etc.

Theȱbusinessȱcase: Financialȱthreatȱorȱopportunity

Increasedȱdemandȱfor renewableȱenergy

Revenues

Managers’ȱmindset,ȱknowledge (e.g.ȱcognitiveȱmaps)

asȱperceivedȱbyȱtheȱmanagers:

Corporateȱcultureȱandȱtools

Issueȱsignificance Figureȱ8.29:ȱTheȱcomplexityȱofȱtheȱbusinessȱcaseȱforȱsustainabilityȱ

Inȱ thisȱ situationȱ companiesȱ claimȱ thatȱ aȱ proactiveȱ organizationalȱ cultureȱ isȱ asȱ anȱ equallyȱpragmaticȱandȱeffectiveȱ“strategy”ȱtoȱensureȱtheȱintegrationȱofȱissuesȱintoȱdeȬ cisionȬmakingȱ (Salzmann,ȱ 2004,ȱ p.ȱ 136).ȱ Thisȱ resultȱ isȱ alsoȱ inȱ lineȱ withȱ crossȬsectorȱ

ȱ

8.4ȱCompaniesȱ

229ȱ

findingsȱ fromȱ Stegerȱ (2004,ȱ p.ȱ 41)ȱ suggestingȱ thatȱ aȱ “corporateȱ cultureȱ ofȱ doingȱ theȱ rightȱ thing”ȱ –ȱ inȱ additionȱ toȱ theȱ realizationȱ thatȱ theȱ monetaryȱ costsȱ ofȱ initiativesȱ isȱ smallȱ –ȱ relievesȱ managersȱ fromȱ theȱ pressureȱ ofȱ providingȱ monetaryȱ quantification.ȱ Severalȱ authorsȱ haveȱ alsoȱ arguedȱ alongȱ theseȱ lines,ȱ maintainingȱ thatȱ corporateȱ susȬ tainabilityȱ isȱ essentiallyȱ drivenȱ byȱ aȱ normativeȱ caseȱ (Schendler,ȱ 2002;ȱ Simms,ȱ 2002).ȱ However,ȱitȱisȱobviousȱthatȱstrategiesȱandȱprojectsȱthatȱexhibitȱsuchȱelusiveȱjustificaȬ tionȱ becomeȱ vulnerableȱ toȱ cutbacksȱ inȱ timesȱ ofȱ increasedȱ financialȱ pressureȱ orȱ changesȱinȱleadershipȱ(Henriquesȱetȱal.,ȱ1996;ȱMorsing,ȱ2003).ȱ Ifȱaȱbusinessȱcaseȱcannotȱbeȱquantifiedȱexȱante,ȱoneȱcanȱalsoȱfallȱbackȱonȱaȱlessȱrobustȱ caseȱsuchȱasȱaȱcompellingȱbusinessȱlogicȱthatȱcanȱbeȱbackedȱupȱbyȱanecdotalȱevidenceȱ andȱ supportedȱ throughȱ anȱ exȱ postȱ quantifiedȱ caseȱ (Anderssonȱ etȱ al.,ȱ 2000,ȱ p.ȱ 564).ȱ ThisȱfindingȱisȱalsoȱinȱlineȱwithȱconclusionsȱfromȱStegerȱ(2004,ȱp.ȱ39,ȱ62)ȱacrossȱsevȬ eralȱindustryȱsectors.ȱHeȱstatesȱthatȱtheȱdifficultyȱofȱquantifyingȱtheȱbusinessȱcaseȱbeȬ yondȱprojectȬrelatedȱestimatesȱdoesȱnotȱpresentȱaȱseriousȱbarrierȱtoȱsocialȱandȱenviȬ ronmentalȱ initiatives,ȱ asȱ longȱ asȱ theȱ initiativesȱ supportȱ theȱ coreȱ businessȱ strategy.ȱ However,ȱtheȱdiagnosedȱlackȱofȱapproachesȱthatȱaimȱtoȱsystematicallyȱlinkȱcorporateȱ activitiesȱresolvingȱissuesȱwithȱaȱpositiveȱeconomicȱeffectȱsuggestsȱthatȱaȱconclusiveȱ businessȱ logicȱ isȱ largelyȱ missing,ȱ particularlyȱ inȱ laggardȱ companiesȱ (Wheelerȱ etȱ al.,ȱ 2000,ȱp.ȱ291).ȱThisȱmostȱcertainlyȱisȱanotherȱstrongȱexplanatoryȱfactorȱforȱcompaniesȱ (andȱstakeholders)ȱfallingȱbackȱonȱnormativeȱjustification.ȱ Theȱ authorȱ suggestsȱ thatȱ individualȱ proactiveȱ attitudesȱ andȱ greaterȱ experienceȱ (asȱ discussedȱ inȱ sectionȱ 8.3ȱ Managers)ȱ mayȱ beȱ particularlyȱ effectiveȱ inȱ aȱ situationȱ inȱ whichȱtheȱbusinessȱcaseȱforȱsustainabilityȱisȱelusiveȱratherȱthanȱrobust.ȱAȱmandateȱforȱ CSMȱwithoutȱaȱstrong,ȱquantifiedȱbusinessȱcaseȱisȱmoreȱlikelyȱtoȱcomeȱfromȱaȱcorpoȬ rateȱ executiveȱ whoȱ isȱ ableȱ toȱ understandȱ theȱ issueȱ underȱ considerationȱ andȱ toȱ perȬ ceiveȱanȱeconomicȱlogicȱforȱitsȱintegrationȱ(Schendler,ȱ2002,ȱp.ȱ29).ȱ Overallȱtheȱpresentȱstudyȱisȱableȱtoȱhintȱatȱseveralȱconclusionsȱonȱtheȱquantificationȱ ofȱtheȱbusinessȱcaseȱforȱsustainability.ȱHowever,ȱitȱalsoȱclearlyȱpointsȱtoȱtheȱneedȱforȱ furtherȱ–ȱandȱratherȱquantitativeȱ–ȱresearchȱinȱthisȱareaȱtoȱobtainȱ(1)ȱmoreȱgeneralizȬ ableȱresultsȱandȱ(2)ȱdeeperȱinsightsȱintoȱtheȱimportanceȱofȱquantification,ȱtheȱnatureȱ andȱ effectȱ ofȱ initiativesȱ aimedȱ toȱ quantifyȱ theȱ businessȱ case,ȱ andȱ theȱ significanceȱ ofȱ systemicȱ andȱ internalȱ barriersȱ toȱ quantificationȱ effortsȱ (e.g.ȱ marginalityȱ ofȱ theȱ busiȬ nessȱcase,ȱcomplexity,ȱorganizationalȱdeficits).ȱ Basedȱ onȱ theȱ findingsȱ presentedȱ above,ȱ IMD’sȱ Forumȱ forȱ Corporateȱ Sustainabilityȱ launchedȱ aȱ followȱ upȱ empiricalȱ studyȱ (Salzmann,ȱ Steger,ȱ &ȱ IonescuȬSomers,ȱ 2005b)ȱ to:ȱ -

ȱ

examineȱtheȱroleȱquantificationȱplaysȱinȱcompaniesȱinȱbuildingȱtheȱbusinessȱcaseȱ forȱcorporateȱsustainabilityȱ

230ȱ

-

8ȱEmpiricalȱevidenceȱ

identifyȱtheȱmainȱfactorsȱdeterringȱquantification.ȱ

Itȱ isȱ basedȱonȱ aȱ sampleȱ ofȱ 300ȱ managers,ȱ mainlyȱ sustainabilityȱ expertsȱ inȱ ratherȱ exȬ posedȱindustriesȱ(suchȱasȱalsoȱoilȱ&ȱgas)ȱandȱlargeȱmultinationalȱcompanies,ȱandȱfeaȬ turesȱaȱconceptualȱframeworkȱdepictedȱbelow:ȱ

DETERMINANTS

GAPS/ IMPORTANCE

Reasons for lack of quantification Internal deficits

Systemic

Lack of hard resources

Complexity

Lack of soft resources

Marginality

Motivation/need Dominance Lack of softoffactors need e.g. culture more important Business Logic (L)? Question 8b, 8e 8f

Importance of quantification

Location of gaps

Lack of quantification

Challenges

Frequency of quantification

ACTIVITIES

Benefits - ex ante

Costs - ex ante

Benefits - ex post

Costs- ex ante

Tools Business logic

CSM level

ȱ Figureȱ8.30:ȱConceptualȱFrameworkȱ(Salzmannȱetȱal.,ȱ2005b,ȱp.ȱ6)ȱ

Theȱauthorsȱdrewȱtheȱfollowingȱconclusions:ȱ -

Costsȱ andȱ risksȱ areȱ lessȱ diffuseȱ andȱ immaterial,ȱ henceȱ theyȱ areȱ alsoȱ moreȱ easilyȱ understoodȱbyȱmanagersȱ(asȱsuggestedȱaboveȱinȱtheȱpresentȱstudy),ȱandȱtraceableȱ byȱexistingȱsystemsȱandȱtoolsȱ(investmentȱproposals,ȱaccountingȱsystems).ȱHenceȱ theyȱareȱmoreȱfrequentlyȱquantifiedȱthanȱbenefitsȱandȱopportunitiesȱ(Salzmannȱetȱ al.,ȱ2005b,ȱp.ȱ13).ȱCompanies’ȱportfolioȱofȱquantificationȱtoolsȱisȱlimitedȱandȱ–ȱasȱ expectedȱ fromȱ theȱ interviewsȱ inȱ theȱ presentȱ studyȱ –ȱ dominatedȱ byȱ pragmaticȱ (ratherȱthanȱsophisticated)ȱandȱriskȬorientedȱmethodologies.ȱ

-

Companiesȱ failȱ toȱproduceȱmoreȱ exȱ post,ȱi.e.ȱcaseȬbased,ȱquantifiedȱ evidenceȱforȱ opportunitiesȱ andȱ benefitsȱ dueȱ toȱ aȱ lackȱ ofȱ staffȱ timeȱ andȱ experienceȱ asȱ wellȱ asȱ complexity.ȱThisȱlackȱofȱexȱpostȱevidenceȱisȱlikelyȱtoȱbeȱveryȱcritical,ȱasȱopportuniȬ tiesȱ andȱ benefitsȱ inȱ mostȱ casesȱ onlyȱ materializeȱ overȱ time.ȱ Ifȱ theyȱ cannotȱ beȱ

8.4ȱCompaniesȱ

231ȱ

tracked,ȱ theȱ upsideȱ potentialȱ ofȱ sustainabilityȱ initiativesȱ remainsȱ undetectedȱ (Salzmannȱetȱal.,ȱ2005b,ȱp.ȱ14).ȱ -

Causalȱmodelingȱ(orȱbusinessȱlogic)ȱisȱessentialȱtoȱCSMȱforȱtwoȱreasons:ȱFirst,ȱinȱ manyȱcasesȱquantificationȱisȱhinderedȱbyȱorganizationalȱfactorsȱ(lackȱofȱresourcesȱ andȱneed)ȱandȱsystemicȱbarriersȱ(e.g.ȱcomplexity).ȱSecond,ȱquantificationȱwithoutȱ businessȱ logicȱ hasȱ noȱ meaningȱ (Salzmannȱ etȱ al.,ȱ 2005b,ȱ p.ȱ 15).ȱ Itȱ isȱ importantȱ atȱ leastȱtoȱattemptȱaȱvalidationȱofȱcausalȱmodelsȱthroughȱquantification,ȱasȱcorporateȱ decisionȬmakingȱcouldȱbeȱseriouslyȱaffectedȱbyȱhalfȬbakedȱassumptionsȱandȱfalseȱ preconceptionsȱ(Ittnerȱ&ȱLarcker,ȱ2003,ȱp.ȱ91;ȱSalzmannȱetȱal.,ȱ2005b,ȱp.ȱ15).ȱBothȱ quantificationȱandȱbusinessȱlogicȱ(withoutȱquantification)ȱcontributeȱsignificantlyȱ toȱCSM.ȱ

-

Thereȱisȱsignificantȱlackȱofȱquantification,ȱwhichȱpreventsȱcorporateȱsustainabilityȱ initiativesȱ fromȱ beingȱ undertaken.ȱ Asȱ Salzmannȱ etȱ al.ȱ (2005b,ȱ p.ȱ 16)ȱ areȱ ableȱ toȱ show,ȱ thisȱ lackȱ isȱ determinedȱ byȱ organizationalȱ factorsȱ (andȱ notȱ –ȱ asȱ oftenȱ preȬ sumedȱ –ȱbyȱ systemicȱfactors),ȱ namelyȱ (1)ȱcompanies’ȱ inabilityȱ toȱ trackȱ theȱsocialȱ andȱ environmentalȱ effectsȱ ofȱ initiatives,ȱ whichȱ clearlyȱ makesȱ aȱ comprehensiveȱ quantificationȱ ofȱ theȱ resultingȱ economicȱ effectsȱ impossible;ȱ (2)ȱ corporateȱ cultureȱ andȱmanagementȱeducation;ȱandȱ(3)ȱtheȱroleȱandȱsophisticationȱofȱcausalȱmodelȬ ing/businessȱlogic.ȱLackȱofȱquantificationȱalsoȱbecomeȱgreaterȱatȱmoreȱaggregatedȱ levelsȱ(corporateȱorȱpolicyȱlevelȱandȱtheȱbusinessȱunitȱlevel),ȱwhereasȱquantificaȬ tionȱ atȱ theȱ projectȱ levelȱ appearsȱ toȱ beȱ lessȱ challenging,ȱ obviouslyȱ sinceȱ theȱ comȬ patibilityȱandȱquantityȱofȱrelevantȱdataȱisȱlessȱofȱaȱproblem.ȱTheȱsignificantȱlackȱofȱ quantificationȱatȱtheȱmoreȱaggregatedȱlevelsȱalsoȱclearlyȱreflectsȱmanagers’ȱdesireȱ forȱ moreȱ holisticȱ andȱ comprehensiveȱ measurementȱ toȱ supportȱ theirȱ decisionȬ makingȱ (asȱ suggestedȱ aboveȱ inȱ theȱ presentȱ study).ȱ Overallȱ thisȱ suggestsȱ thatȱ companiesȱ shouldȱ initiallyȱ focusȱ onȱ projectsȱ andȱ quickȱ winsȱ whoseȱ social,ȱ enviȬ ronmentalȱandȱthusȱeconomicȱeffectsȱareȱeasierȱtoȱmeasure.ȱ

-

Systemicȱfactorsȱplayȱaȱclearlyȱlessȱsignificantȱroleȱthanȱorganizationalȱfactorsȱinȱ determiningȱ companies’ȱ activitiesȱ toȱ quantifyȱ theȱ economicȱ effectsȱ ofȱ theirȱ susȬ tainabilityȱinitiatives.ȱHowever,ȱtheirȱinfluenceȱisȱnotȱinsignificant.ȱMarginalityȱofȱ theȱbusinessȱcaseȱisȱlinkedȱtoȱlessȱfrequentȱquantification.ȱItȱisȱimportantȱtoȱnoteȱ thatȱ Salzmannȱ etȱ al.ȱ (2005b)ȱ alsoȱ revealȱ companies’ȱ tendencyȱ toȱ marginalizeȱ theȱ businessȱcaseȱifȱtheyȱexhibitȱorganizationalȱdeficits,ȱi.e.ȱtoȱaȱcertainȱextentȱmarginȬ alityȱ reflectsȱ anȱ inaccurateȱ preconception.ȱ Thisȱ clearlyȱ putsȱ interviewees’ȱ arguȬ mentsȱofȱmarginalityȱ(asȱdiscussedȱaboveȱinȱtheȱpresentȱstudy)ȱintoȱperspective.ȱ

-

Theȱstudyȱfurthermoreȱshowsȱthatȱcompanies’ȱdataȱmanagementȱhasȱanȱessentialȱ weakness.ȱTheȱinabilityȱtoȱmeasureȱtheȱsocialȱandȱenvironmentalȱeffectsȱofȱinitiaȬ tives,ȱandȱthusȱgenerateȱdataȱonȱtheȱbasisȱofȱwhichȱeconomicȱeffectsȱcanȱthenȱbeȱ

ȱ

232ȱ

8ȱEmpiricalȱevidenceȱ

quantified.ȱToȱclarify:ȱTheȱeconomicȱeffectȱofȱanȱinitiativeȱ–ȱe.g.ȱcostȱsavingsȱinȱtheȱ formȱ ofȱ reducedȱ fines,ȱ lowerȱ insuranceȱ costs,ȱ etc.ȱ throughȱ improvementsȱ inȱ corȬ porateȱenvironmental,ȱhealthȱorȱsafetyȱperformanceȱ–ȱcanȱonlyȱbeȱseriouslyȱmeasȬ uredȱifȱitsȱsocialȱorȱenvironmentalȱeffectsȱareȱmeasured,ȱi.e.ȱfewerȱlostȱworkdays,ȱ reducedȱnumberȱofȱspills,ȱetc.ȱSinceȱcompaniesȱareȱlargelyȱunableȱtoȱgenerateȱtheȱ basicȱdata,ȱtheȱprocessingȱofȱtheȱdataȱbyȱexperiencedȱstaffȱrepresentsȱaȱlessȱsignifiȬ cantȱbottleneck.ȱ -

DemandȬrelatedȱ factorsȱ wereȱ foundȱ toȱ beȱ ofȱ significantȱ butȱ generallyȱ overstatedȱ importanceȱ(Salzmannȱetȱal.,ȱ2005b,ȱp.ȱ17):ȱStrongȱcausalȱmodeling/businessȱlogicȱ makesȱ quantificationȱ lessȱ important,ȱ i.e.ȱ sustainabilityȱ initiativesȱ areȱ indeedȱ lessȱ likelyȱ toȱ beȱ rejectedȱ ifȱ theirȱ economicȱ effectsȱ haveȱ notȱ been,ȱ orȱ couldȱ notȱ haveȱ been,ȱquantified.ȱHowever,ȱitȱisȱclearlyȱnoȱpanaceaȱeither,ȱasȱcompaniesȱindicatingȱ aȱstrongȱdominanceȱofȱbusinessȱlogic,ȱmakingȱquantificationȱobsolete,ȱsufferȱfromȱ insufficientȱ dataȱ managementȱ andȱ thusȱ alsoȱ greaterȱ complexity.ȱ Theȱ overstateȬ mentȱ ofȱ softȱ organizationalȱ factorsȱ wasȱ particularlyȱ obvious.ȱ Itȱ appearsȱ thatȱ aȱ proactiveȱ corporateȱ cultureȱ andȱ managementȱ educationȱ –ȱ supposedlyȱ meantȱ toȱ makeȱ quantificationȱ lessȱ importantȱ –ȱ areȱ oftenȱ associatedȱ withȱ insufficientȱ dataȱ managementȱ capacitiesȱ andȱ withȱ aȱ consequentȱ tendencyȱ toȱ blameȱ externalȱ sysȬ temicȱfactorsȱforȱaȱlackȱofȱquantification.ȱ

Salzmannȱetȱal.ȱ(2005b)ȱwereȱunableȱtoȱdetectȱanyȱdifferencesȱacrossȱdifferentȱindusȬ tries,ȱmostȱlikelyȱdueȱtoȱanȱinsufficientȱsampleȱsizeȱperȱindustry.ȱHowever,ȱitȱappearsȱ likelyȱthatȱmoreȱriskȬexposedȱsectorsȱsuchȱasȱenergyȱandȱchemicalsȱexhibitȱaȱgreaterȱ capacityȱ forȱ dataȱ managementȱ thanȱ others.ȱ Theȱ studyȱ leavesȱ roomȱ forȱ furtherȱ reȬ search,ȱsinceȱitȱdifferentiates:ȱ -

neitherȱbetweenȱdifferentȱkindsȱofȱvalueȱdriversȱandȱconstructs.ȱThisȱdifferentiaȬ tionȱ remainsȱ particularlyȱ interesting,ȱ sinceȱ valueȱ constructsȱ suchȱ asȱ riskȱ reducȬ tion,ȱtheȱlicenseȱtoȱoperate,ȱbrandȱvalueȱandȱreputationȱ(seeȱChartȱ8Ȭ31ȱandȱChartȱ 8Ȭ32)ȱareȱtheȱcurrentȱkeyȱargumentsȱforȱpromotingȱCSMȱinternally.ȱ

-

norȱbetweenȱdifferentȱkindsȱofȱsustainabilityȱinitiatives.ȱHenceȱthereȱisȱstillȱaȱlackȱ ofȱ quantitativeȱ evidenceȱ onȱ whichȱ socialȱ orȱ environmentalȱ initiativesȱ primarilyȱ lendȱthemselvesȱtoȱquantificationȱandȱareȱthusȱeasiestȱtoȱpromote.ȱAȱcomparisonȱ withȱcompanies’ȱcurrentȱportfolioȱofȱinitiativesȱcouldȱthenȱalsoȱrevealȱtoȱwhatȱexȬ tentȱtheȱquantifiabilityȱofȱeffectsȱdeterminesȱcompanies’ȱselectionȱprocessȱforȱcerȬ tainȱenvironmentalȱandȱsocialȱactivities.ȱ

Basedȱonȱtheȱfindingsȱpresentedȱaboveȱandȱinȱcomplementaryȱsectionsȱofȱthisȱstudy,ȱ theȱ authorȱ developedȱ theȱ followingȱ modelȱ toȱ captureȱ theȱ mainȱ determinantsȱ ofȱ theȱ businessȱcaseȱforȱcorporateȱsustainability:ȱTheȱfinancialȱopportunitiesȱandȱthreatsȱasȬ sociatedȱwithȱsocialȱandȱenvironmentalȱissuesȱareȱdeterminedȱbyȱsystemicȱandȱorganȬ

8.4ȱCompaniesȱ

233ȱ

izationalȱfactors.ȱSystemicȱfactorsȱareȱlargelyȱbeyondȱcorporateȱcontrolȱ(atȱleastȱinȱtheȱ shortȱterm).ȱ Systemic factors

Marginality • Regulatory and market framework • Technology (lock-in)

Organizational factors Tools/Systems • Impact assessment • Early awareness system • etc.

Structures • Cross-functional • Cross-business

Issues

Financial opportunities and threats

Validation Causal modeling

Business case

Managers

Complexity • Time • Scope (corporate vs. plant level, single vs. multiple issues)

• Knowledge • Awareness • Availability

Soft org. factors • Corporate culture • Top management commitment

ȱ Figureȱ8.31:ȱTheȱbusinessȱcaseȱandȱitsȱdeterminantsȱ

Thisȱ alsoȱ meansȱ thatȱ thereȱ areȱ interactionsȱ betweenȱ bothȱ factors:ȱ Companiesȱ withȱ elaborateȱstructures,ȱtoolsȱandȱsystemsȱasȱwellȱasȱmoreȱskilledȱandȱproactiveȱmanagȬ ersȱ areȱ likelyȱ toȱ considerȱ financialȱ threatsȱ andȱ opportunitiesȱ lessȱ complexȱ andȱ lessȱ marginal.ȱTheȱframeworkȱconceptualizesȱcompanies’ȱmotivationȱtoȱimproveȱonȱtheirȱ organizationalȱcapacities,ȱwhichȱcontributeȱtoȱcausalȱmodelingȱ(formulatedȱbusinessȱ logic)ȱandȱsubsequentȱvalidationȱ(throughȱquantification).ȱTheyȱinclude:ȱ -

Toolsȱandȱsystemsȱtoȱcollectȱandȱprocessȱrelevantȱdataȱ

-

Structuresȱ thatȱ improveȱ dataȱ management,ȱ facilitateȱ decisionȬmakingȱ andȱ strengthenȱorganizationalȱalignmentȱ

-

Skilledȱmanagersȱwhoȱcomplementȱtheȱ“technicalities”ȱofȱtoolsȱandȱsystemsȱ

-

Softȱorganizationalȱfactorsȱthatȱcanȱhaveȱaȱsignificantȱmoderatingȱforce,ȱwhichȱ howeverȱshouldȱnotȱbeȱoverestimated.ȱ

Theȱauthorȱconcludesȱwithȱtheȱfollowingȱremarks:ȱ

ȱ

234ȱ

8ȱEmpiricalȱevidenceȱ

First,ȱtheȱempiricalȱfindingsȱpresentedȱaboveȱpointȱtoȱoneȱfurtherȱdilemma:ȱAsȱlongȱ asȱ socialȱ andȱ environmentalȱ initiativesȱ (e.g.ȱ initiativesȱ toȱ stopȱ flaring,ȱ orȱ otherȱ inȬ vestmentsȱ inȱ ecoȬefficientȱ processes,ȱ improvementsȱ inȱ laborȱ conditions)ȱ areȱ underȬ takenȱ“onȱtheȱside”ȱ(asȱanȱaddȬon),ȱtheirȱrelevanceȱtoȱcoreȱbusinessȱstrategiesȱisȱratherȱ difficultȱtoȱproveȱandȱcommunicate.ȱHowever,ȱtheirȱeffectsȱareȱalsoȱeasierȱtoȱisolate.ȱ Thisȱ meansȱ converselyȱ thatȱ buildingȱ aȱ quantitativeȱ businessȱ caseȱ forȱ sustainabilityȱ becomesȱmoreȱdifficult,ȱtheȱmoreȱintegratedȱcompanies’ȱapproachesȱtoȱCSMȱbecomeȱ (Salzmannȱetȱal.,ȱ2005b,ȱp.ȱ19),ȱi.e.ȱtheȱmoreȱrelevantȱCSMȱbecomesȱtoȱtheȱcoreȱbusiȬ nessȱ strategy.ȱ Howȱ willȱ theȱ importanceȱ ofȱ quantificationȱ developȱ ifȱ CSMȱ becomesȱ moreȱ andȱ moreȱ integrated?ȱ Itȱ isȱ obviousȱ thatȱ higherȱ levelsȱ ofȱ integrationȱ intoȱ busiȬ nessȱstrategiesȱ(andȱeventuallyȱaȱ“sustainable”ȱbusinessȱmodel)ȱwouldȱmakeȱ“specialȱ treatment”ȱ throughȱ complexȱ causalȱ modelsȱ andȱ theirȱ validationȱ increasinglyȱ obsoȬ lete.ȱ Second,ȱtheȱlackȱofȱquantificationȱdescribedȱaboveȱisȱnotȱinherentȱtoȱCSMȱonly.ȱItȱhasȱ alsoȱ beenȱ discussedȱ inȱ theȱ contextȱ ofȱ nonȬfinancialȱ measurement.ȱ NonȬfinancialȱ measurementȱhasȱdevelopedȱduringȱtheȱ1980sȱandȱ1990sȱtoȱfacilitateȱaȱmoreȱholisticȱ andȱstrategicȱassessmentȱofȱcorporateȱperformanceȱ(Kennerleyȱ&ȱNeely,ȱ2002,ȱp.ȱ145).ȱ ItȱgoesȱbeyondȱtheȱtraditionalȱfocusȱonȱfinancialȱmeasuresȱandȱoftenȱlaggingȱindicaȬ torsȱ(e.g.ȱaccountingȱfiguresȱtreatingȱinvestmentsȱmerelyȱasȱcostsȱandȱthusȱfailingȱtoȱ recognizeȱtheȱpotentialȱgenerationȱofȱfutureȱrevenues),ȱbutȱobviouslyȱbearsȱtheȱchalȬ lengeȱofȱmeasuringȱfutureȱandȱintangibleȱeffects.ȱHenceȱitȱisȱnotȱsurprisingȱthatȱemȬ piricalȱ researchȱinȱ thisȱdomainȱ yieldsȱresultsȱveryȱsimilarȱtoȱ thoseȱ presentedȱ above:ȱ Mostȱ importantlyȱ studiesȱ foundȱ aȱ significantȱ lackȱ ofȱ nonȬfinancialȱ measurement,ȱ mainlyȱdueȱtoȱlazinessȱandȱthoughtlessnessȱ(Ittnerȱetȱal.,ȱ2003,ȱp.ȱ90;ȱReid,ȱTarbert,ȱ&ȱ Thomson,ȱ2000).ȱHereȱtheȱauthorȱpointsȱtoȱsignificantȱunexploitedȱpotentialȱforȱcrossȬ pollonizationȱ betweenȱ bothȱ domainsȱ inȱ bothȱ practiceȱ andȱ research.ȱ Theȱ followingȱ questionsȱareȱparticularlyȱinteresting:ȱ -

Toȱwhatȱextentȱcanȱmethodologiesȱandȱstaffȱexpertiseȱbeȱpooled?ȱ

-

Isȱ thereȱ aȱ linkȱ betweenȱ companies’ȱ capacityȱ forȱ nonȬfinancialȱ measurementȱ andȱtheirȱabilityȱtoȱquantifyȱtheirȱbusinessȱcaseȱforȱsustainability?ȱ

Third,ȱthereȱappearsȱtoȱbeȱaȱcertainȱparallelȱbetweenȱtheȱroleȱofȱsystemicȱandȱorganȬ izationalȱbarriersȱandȱtheȱimportanceȱofȱexternalȱandȱinternalȱbarriersȱtoȱCSM:ȱComȬ panies’ȱ currentȱ approachȱ toȱ CSMȱ isȱ incrementalȱ andȱ hinderedȱ byȱ internalȱ barriers,ȱ henceȱ existingȱ externalȱ barriers,ȱ namelyȱ theȱ lackȱ ofȱ awarenessȱ ofȱ theȱ keyȱ transacȬ tionalȱ stakeholders,ȱ haveȱ notȱ yetȱ hadȱ aȱ significantȱ effect.ȱ Inȱ lineȱ withȱ this,ȱ theȱ sysȬ temicȱbarriersȱtoȱquantificationȱ–ȱaȱmarginalȱbusinessȱcaseȱforȱcorporateȱsustainabilityȱ andȱtheȱcomplexityȱassociatedȱwithȱenvironmentalȱandȱsocialȱeffectsȱ–ȱplayȱaȱminorȱ role.ȱAȱlackȱofȱquantificationȱisȱmainlyȱcausedȱbyȱorganizationalȱbarriers.ȱOverallȱthisȱ

8.4ȱCompaniesȱ

235ȱ

suggestsȱthatȱcompaniesȱhaveȱ–ȱasȱlegitimateȱasȱblamingȱexternalȱbarriersȱmayȱbeȱ–ȱ failedȱtoȱbuildȱupȱtheȱnecessaryȱcapacityȱforȱaȱfullyȱsystematicȱapproachȱtoȱCSM.ȱThisȱ mostȱcertainlyȱappliesȱtoȱlaggardȱcompaniesȱinȱparticular.ȱ Contingencyȱperspectiveȱonȱtheȱbusinessȱcaseȱforȱsustainabilityȱ EvidenceȱpresentedȱsuggestsȱthatȱOGȱcompaniesȱhaveȱmoreȱdevelopedȱprocessesȱtoȱ integrateȱissuesȱandȱaȱbroaderȱperspectiveȱonȱsignificantȱvalueȱdrivers,ȱwhichȱreflectsȱ theirȱ sector’sȱ higherȱ positionȱ onȱ theȱ CSMȱ learningȱ curve.ȱ Obviouslyȱ OGȱ companiesȱ haveȱ beenȱ confrontedȱ withȱ issuesȱ andȱ anȱ economicȱ argumentȱ forȱ theirȱ integrationȱ moreȱ oftenȱ thanȱ UTȱ companiesȱ dueȱ toȱ higherȱ issueȱ andȱ organizationalȱ visibilityȱ inȱ theirȱsector.ȱThisȱalsoȱmeansȱthatȱOGȱsustainabilityȱofficersȱareȱmoreȱoftenȱrequiredȱ toȱconclusivelyȱarticulateȱtheȱeconomicȱrationaleȱforȱcorporateȱsustainability.ȱ Overallȱtheȱstudyȱclearlyȱrevealsȱaȱstrongȱcontingencyȱcharacterȱofȱtheȱbusinessȱcaseȱ forȱsustainability,ȱwhichȱalsoȱexplainsȱwhyȱtheȱplethoraȱofȱinstrumentalȱstudiesȱthatȱ triedȱtoȱlinkȱ(mostly)ȱsocialȱandȱfinancialȱperformanceȱproducedȱlargelyȱinconclusiveȱ results:ȱ Thereȱ isȱ aȱ businessȱ caseȱ forȱ sustainability,ȱ ifȱ aȱ processȱ ofȱ issueȱ integrationȱ leadsȱ toȱ anȱ increaseȱ inȱ socialȱ and/orȱ environmentalȱ performanceȱandȱ hasȱ aȱ positiveȱ netȱeffectȱonȱfinancialȱperformanceȱ(seeȱFigureȱ8Ȭ27).ȱIssuesȱandȱcorporateȱactivitiesȱtoȱ resolveȱthemȱ–ȱandȱthusȱobviouslyȱtheirȱsocial,ȱenvironmentalȱandȱeconomicȱeffectsȱ–ȱ varyȱbetweenȱcountriesȱ(e.g.ȱdifferentȱregulatoryȱandȱsocietalȱpressure),ȱindustryȱsecȬ tors,ȱbusinessȱunitsȱandȱsitesȱ(e.g.ȱdifferentȱprocessesȱandȱproducts)ȱ(Lankoski,ȱ2000,ȱ p.ȱ150).ȱ Thisȱstrongȱcontingencyȱcharacterȱpointsȱtoȱtheȱneedȱtoȱassessȱallȱthreeȱdimensionsȱofȱ corporateȱperformanceȱ(financial,ȱenvironmentalȱandȱsocial)ȱatȱlessȱaggregatedȱlevelsȱ thanȱ earlierȱ studiesȱ whichȱ usedȱ e.g.ȱ reputationȱ scoresȱ andȱ multiȬdimensionalȱ measȬ uresȱofȱsustainabilityȱindicesȱasȱmeasuresȱofȱsocialȱperformance.ȱSuchȱmeasuresȱobȬ viouslyȱ maskȱ individualȱ issueȬspecificȱ relationshipsȱ betweenȱ social/environmentalȱ andȱ financialȱ performance:ȱ Whereasȱ oneȱ corporateȱ responseȱ toȱ aȱ certainȱ issueȱ mayȱ leadȱtoȱaȱpositiveȱnetȱeconomicȱeffect,ȱanotherȱresponseȱtoȱanotherȱissueȱmayȱbeȱassoȬ ciatedȱwithȱaȱnegativeȱnetȱeconomicȱeffect,ȱdependingȱonȱvariousȱparametersȱsuchȱasȱ individualȱcostȱstructures;ȱtheȱlevelȱofȱoutsideȱpressure,ȱwhichȱinfluencesȱtheȱlevelȱofȱ issueȱ integration;ȱ etc.ȱ Thusȱ instrumentalȱ studiesȱ wouldȱ clearlyȱ becomeȱ moreȱ meanȬ ingfulȱ ifȱ theyȱ focusedȱ onȱ onlyȱ oneȱ issueȱ orȱ environmental/socialȱ intakeȱ andȱ correȬ spondingȱcorporateȱactivities.ȱȱ 8.4.4

Implementationȱ

TheȱfollowingȱsectionȱdealsȱwithȱtheȱimplementationȱofȱCSM.ȱItȱrespectivelyȱfocusesȱ onȱtheȱfollowingȱkeyȱareas:ȱ

ȱ

236ȱ

8ȱEmpiricalȱevidenceȱ

-

theȱuseȱofȱmanagementȱtools,ȱtheirȱcurrentȱfocusȱandȱgaps,ȱasȱwellȱasȱtheirȱeffectȱ onȱCSMȱsuccessȱ(sectionȱ8.4.4.1ȱManagementȱtools)ȱ

-

structure,ȱ i.e.ȱ theȱ levelȱ andȱ potentialȱ ofȱ crossȬdisciplinaryȱ collaboration,ȱ andȱ itsȱ effectsȱonȱCSMȱsuccessȱ(sectionȱ8.4.4.2ȱStructure)ȱ

-

corporateȱinitiatives,ȱtheirȱcurrentȱfocusȱandȱtheirȱlinkȱwithȱCSMȱsuccessȱ(seeȱsecȬ tionȱ8.4.4.3ȱCorporateȱinitiatives)ȱ

8.4.4.1 Managementȱtoolsȱ 8.4.4.1.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Chartȱ8Ȭ33ȱtoȱChartȱ8Ȭ36ȱexhibitȱtheȱportfolioȱofȱtoolsȱusedȱinȱcompaniesȱinȱrelationȱtoȱ corporateȱsustainabilityȱasȱreportedȱbyȱbothȱgeneralȱmanagersȱandȱsustainabilityȱoffiȬ cers.ȱ Business teams and task forces to resolve conflicts and push improvements on an operational level 11% Coordination committee discussing and pushing strategic decisions at corporate level 11% Management development 9%

Other 0%

NR 0% No initiatives 1% Measurement tools to increase transparancy 17% Tools measuring resource allocation 11%

Strategic planning and accounting procedures 10%

Reward and punishment systems Corporate values 8% policies and standards 22%

Chartȱ8Ȭ33:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorpoȬ rateȱsustainabilityȱ(Generalȱmanagersȱ–ȱOG)ȱ

Business teams and task forces to resolve conflicts and push improvements on an operational level 7% Coordination committee discussing and pushing strategic decisions at corporate level 8%

Other 1%

NR 1%

No initiatives 3% Measurement tools to increase transparancy 21%

Tools measuring resource allocation 12%

Management development 8% Reward and punishment systems 4%

Strategic planning and accounting procedures 12% Corporate values policies and standards 23%

Chartȱ8Ȭ34:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorpoȬ rateȱsustainabilityȱ(Generalȱmanagersȱ–ȱUT)ȱ

Itȱdifficultȱtoȱsingleȱoutȱoneȱorȱtwoȱdominantȱtoolsȱbasedȱonȱtheȱproportions,ȱbutȱitȱisȱ notableȱ thatȱ corporateȱ values,ȱ policiesȱ andȱ standardsȱ takesȱ theȱ greatestȱ shareȱ inȱ allȱ charts.ȱThisȱisȱnotȱsurprisingȱsinceȱtheyȱ–ȱasȱtheȱinterviewsȱalsoȱsuggestȱ–ȱareȱtheȱbaȬ sic,ȱessentialȱmeansȱofȱintegratingȱCSMȱintoȱtheȱorganization:ȱTheyȱprimarilyȱcreateȱaȱ commonȱunderstandingȱwithinȱcompanies.ȱ

8.4ȱCompaniesȱ

Business teams and task forces to resolve conflicts and push improvements on an operational level 12% Coordination committee discussing and pushing strategic decisions at corporate level 13%

237ȱ

No initiatives Other 0% 0% Measurement tools to increase transparency 14%

Management development 16% Reward and punishment systems 7%

Tools measuring resource allocation 6% Strategic planning and accounting procedures 10%

Corporate values, policies and standards 22%

Business teams and task forces to resolve conflicts and push improvements on an operational level 7% Coordination committee discussing and pushing strategic decisions at corporate level 15% Management development 10% Reward and punishment systems 10%

Other 5% No initiatives 0% Measurement tools to increase transparency 15% Tools measuring resource allocation 7% Strategic planning and accounting procedures 12% Corporate values policies and standards 19%

Chartȱ8Ȭ35:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorpoȬ Chartȱ8Ȭ36:ȱToolsȱandȱsystemsȱrelatedȱtoȱcorpoȬ rateȱsustainabilityȱ(Sustainabilityȱofficersȱ–ȱOG)ȱ rateȱsustainabilityȱ(Sustainabilityȱofficersȱ–ȱUT)ȱ

However,ȱcategorizationȱintoȱdataȱmanagement,ȱmanagers’ȱmanagementȱandȱconflictȱ resolutionȱyieldsȱseveralȱadditionalȱinsightsȱ(seeȱTableȱ8Ȭ7):ȱ Theȱproportionsȱpointȱtoȱanȱearlyȱstageȱinȱcompanies’ȱphaseȱofȱstrategicȱredirectionȱtoȱ CSM.ȱ Forȱ bothȱ sectorsȱ theyȱ revealȱ aȱ dominanceȱ ofȱ (1)ȱ dataȱ managementȱ toolsȱ thatȱ provideȱ relevantȱ infrastructuresȱ andȱ informationȱ neededȱ toȱ useȱ otherȱ managementȱ tools;ȱandȱ(2)ȱsoftȱmanagers’ȱmanagementȱtoolsȱsuchȱasȱcorporateȱvalues,ȱpoliciesȱandȱ standardsȱ andȱ managementȱ development,ȱ whichȱ alterȱ perceptionsȱ ofȱ theȱ manageȬ ment.ȱInȱcontrastȱ“harder”ȱtoolsȱsuchȱasȱrewardȱandȱpunishmentȱsystems,ȱwhichȱareȱ ratherȱatȱtheȱendȱofȱaȱredirectionȱprocess,ȱonlyȱaccountȱforȱaȱminorȱproportionȱ(Dozȱetȱ al.,ȱ1988,ȱp.ȱ76).ȱ Qualitativeȱdataȱsimilarlyȱpointȱtoȱcompanies’ȱinitialȱstageȱofȱredirection.ȱSustainabilȬ ityȱ officersȱ inȱ particularȱ areȱ clearlyȱ awareȱ ofȱ theȱ necessityȱ forȱ andȱ lackȱ ofȱ adequateȱ tools.ȱTheȱcurrentȱgapsȱareȱmostlyȱtoolsȱtoȱensureȱorganizationalȱalignment,ȱi.e.ȱmanȬ agers’ȱmanagementȱtoolsȱandȱconflictȱresolutionȱtools:ȱ Weȱareȱawareȱofȱsocialȱandȱenvironmentalȱproblems,ȱbutȱareȱlookingȱforȱaȱsoundȱ methodologyȱ toȱ assessȱ socialȱ impacts.ȱ Soȱ far,ȱ aȱ weȱ lackȱ expertiseȱ andȱ resourcesȱ (OG4,ȱSO).ȱ We,ȱtheȱindustry,ȱareȱquiteȱgoodȱatȱissueȱtrackingȱandȱevaluation.ȱOrganizationalȱ alignmentȱisȱtheȱmostȱdifficultȱstepȱ(OG5,ȱSO).ȱ TheȱuseȱofȱmoreȱsophisticatedȱstrategicȱtoolsȱsuchȱasȱscenarioȱanalysisȱandȱbackcastȬ ingȱisȱrarelyȱreported.ȱTheȱlackȱofȱsuchȱtoolsȱisȱjustifiedȱbyȱtheȱfactȱthatȱtheyȱareȱapȬ pliedȱbyȱindustryȱassociationsȱorȱmultiȬindustryȱplatforms.ȱCarbonȱcostȱaccountingȱisȱ increasinglyȱusedȱinȱbothȱsectorsȱtoȱinternalizeȱcurrentȱandȱfutureȱcostsȱofȱCO2ȱemisȬ

ȱ

238ȱ

8ȱEmpiricalȱevidenceȱ

sions.ȱ Atȱ theȱ projectȱ level,ȱ investmentȱ appraisalsȱ alsoȱ increasinglyȱ featureȱ thisȱ fullȱ costȱapproach.ȱCostȱbenefitȱanalysesȱincorporateȱissuesȱthatȱareȱhardȱtoȱquantify.ȱ Sectorȱandȱ disciplineȱ Toolsȱ Dataȱmanagementȱtoolsȱ - Measurementȱtoolsȱ - ToolsȱtoȱmeasureȱresourceȱallocaȬ tionȱ - Strategicȱplanningȱandȱaccountingȱ proceduresȱ Softȱmanagers’ȱmanagementȱtoolsȱ - Corporateȱvalues,ȱpoliciesȱandȱ standardsȱ - Managementȱdevelopmentȱ Hardȱmanagers’ȱȱmanagementȱtoolsȱ - Rewardȱandȱpunishmentȱsystemsȱ Conflictȱresolutionȱtoolsȱ - Coordinationȱcommitteesȱ(strategicȱ level)ȱ - Businessȱteamsȱ(operationalȱlevel)ȱ

OGȱsectorȱ Generalȱ Sustainabilityȱ managersȱ officersȱ

UTȱsectorȱ Generalȱ Sustainabilityȱ managersȱ officersȱ

38%ȱ

30%ȱ

45%ȱ

34%ȱ

31%ȱ

38%ȱ

31%ȱ

29%ȱ

8%ȱ

7%ȱ

4%ȱ

10%ȱ

22%ȱ

25%ȱ

15%ȱ

22%ȱ

Tableȱ8Ȭ7:ȱPortfolioȱofȱmanagementȱtoolsȱusedȱinȱcompaniesȱ(basedȱonȱDozȱetȱal.,ȱ1988)ȱ

Differencesȱ inȱ theȱ useȱ ofȱ managementȱ toolsȱ acrossȱ theȱ twoȱ sectorsȱ andȱ disciplinesȱ displayedȱinȱtheȱtableȱareȱdifficultȱtoȱinterpret:ȱTheyȱareȱpartlyȱcontradictory,ȱwhichȱ couldȱalsoȱbeȱdueȱtoȱtheȱfactȱthatȱtheȱsmallȱSOȱsampleȱhasȱbiasedȱtheȱresultsȱ(SOȱreȬ spondentsȱmayȱnotȱnecessarilyȱcomeȱfromȱtheȱsameȱcompaniesȱasȱgeneralȱmanagers):ȱ 1. Dataȱ fromȱ bothȱ managementȱ disciplinesȱ consistentlyȱ pointȱ toȱ aȱ largerȱ shareȱ ofȱ dataȱmanagementȱinȱtheȱUTȱsector,ȱwhichȱcouldȱpointȱtoȱaȱmoreȱbasicȱportfolioȱofȱ toolsȱinȱtheȱUTȱsector.ȱ 2. Theȱshareȱofȱsoftȱmanagers’ȱmanagementȱtoolsȱappearsȱtoȱbeȱsimilarȱinȱbothȱsecȬ tors,ȱ judgingȱ fromȱ theȱ GMȱ data;ȱ andȱ greaterȱ inȱ theȱ OGȱ sector,ȱ judgingȱ fromȱ SOȱ data.ȱThereȱisȱalsoȱanȱinconsistencyȱinȱtheȱshareȱofȱhardȱmanagers’ȱmanagementȱ tools:ȱ Accordingȱ toȱ generalȱ managersȱ theȱ shareȱ ofȱ hardȱ managers’ȱ managementȱ toolsȱisȱgreaterȱinȱtheȱOGȱsector,ȱaccordingȱtoȱsustainabilityȱofficersȱitȱisȱgreaterȱinȱ theȱUTȱsector.ȱInȱbothȱcasesȱtheȱauthorȱprefersȱtoȱtrustȱtheȱGMȱratherȱthanȱtheȱSOȱ dataȱdueȱtoȱtheȱgreaterȱsampleȱsize,ȱandȱthusȱconcludesȱthatȱtheȱgreaterȱshareȱofȱ hardȱ managers’ȱ managementȱ toolsȱ inȱ theȱ OGȱ sectorȱ reflectsȱ theȱ OGȱ sector’sȱ higherȱlevelȱofȱimplementation.ȱ Theseȱresultsȱareȱalsoȱinȱlineȱwithȱtheȱabsoluteȱfrequenciesȱofȱmanagementȱtoolsȱused.ȱ Theȱ followingȱ crossȬsectorȱ differencesȱ areȱ statisticallyȱ significant,ȱ andȱ alsoȱ clearlyȱ pointȱ toȱ aȱ moreȱ advancedȱ approachȱ toȱ CSMȱ inȱ theȱ OGȱ sector,ȱ withȱ moreȱ resourcesȱ allocatedȱtoȱit:ȱ

8.4ȱCompaniesȱ

239ȱ

-

OGȱgeneralȱmanagersȱmoreȱoftenȱreportȱtheȱuseȱofȱcorporateȱvalues,ȱrewardȱandȱ punishmentȱ systems,ȱ managementȱ development,ȱ coordinationȱ committeesȱ andȱ businessȱteamsȱthanȱtheirȱcounterpartsȱinȱtheȱUTȱsector.ȱ

-

OGȱ sustainabilityȱ officersȱ moreȱ oftenȱ indicateȱ theȱ useȱ ofȱ managementȱ developȬ mentȱthanȱUTȱsustainabilityȱofficersȱdo.ȱ

Furthermore,ȱ statisticallyȱ significantȱ crossȬdisciplinaryȱ differencesȱ canȱ beȱ detected:ȱ OGȱgeneralȱmanagersȱmoreȱoftenȱreportȱtheȱuseȱofȱtoolsȱtoȱmeasureȱresourceȱallocaȬ tion,ȱtheyȱlessȱoftenȱreportȱtheȱuseȱofȱmanagementȱdevelopmentȱthanȱOGȱsustainabilȬ ityȱ officers.ȱ Thisȱ variationȱ isȱ somewhatȱ indicativeȱ ofȱ theȱ mindsetȱ andȱ awarenessȱ ofȱ bothȱgroups:ȱSustainabilityȱofficersȱseeȱaȱgreaterȱneedȱtoȱbuildȱexpertiseȱamongȱgenȬ eralȱ managers,ȱ whereasȱ theȱ latterȱ tendȱ toȱ beȱ moreȱ focusedȱ onȱ andȱ concernedȱ aboutȱ theȱallocationȱofȱadequateȱfinancialȱresourcesȱforȱcorporateȱsocialȱandȱenvironmentalȱ initiatives.ȱ Theȱ authorȱ concludesȱ thatȱ bothȱ sectorsȱ haveȱ portfoliosȱ ofȱ managementȱ toolsȱ thatȱ pointȱ toȱ anȱ earlyȱ stageȱ ofȱ strategicȱ redirectionȱ toȱ CSM,ȱ inȱ whichȱ organizationalȱ alignmentȱ isȱ theȱ keyȱ challenge.ȱ However,ȱ theȱ greaterȱ numberȱ ofȱ managementȱ toolsȱ usedȱinȱOGȱcompaniesȱclearlyȱrevealsȱaȱmoreȱadvancedȱstageȱofȱtheirȱsector,ȱwhichȱ canȱbeȱattributedȱtoȱstrongerȱexternalȱandȱinternalȱdriversȱelaboratedȱonȱinȱtheȱpreviȬ ousȱsections.ȱ 8.4.4.1.2 Advancedȱstatisticsȱ Theȱfollowingȱregressionȱmodelsȱ(seeȱRegressionȱTableȱ8Ȭ14)ȱshowȱthatȱseveralȱkindsȱ ofȱmanagementȱtoolsȱaffectȱCSMȱsuccess.ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Incent tools

T model 163 10.97 0.0000 0.1715 0.1559 .70013 Coeff .4004324

Indep var Incent tools Manag develop

OG model 113 9.19 0.0000 0.2019 0.1799 .7172 Coeff .3766003 .3814714

Strategy tools

.2821253

Business teams

.2980669

Coord commit

.3349719

Constant

3.08246

Constant

3.065055

Indep var

UT model 49 4.21 0.0209 0.1548 0.1181 .61235 Coeff

Bus teams

.4606742

Age > 50

.5200642

Constant

3.128411

RegressionȱTableȱ8Ȭ14:ȱCSMȱsuccessȱȬȱCSMȱtoolsȱ(Reducedȱsubmodels)ȱ

Inȱ theȱ totalȱ sample,ȱ incentiveȱ tools,ȱ strategyȱ toolsȱ (e.g.ȱ strategicȱ planningȱ andȱ acȬ countingȱprocedures)ȱandȱbusinessȱteamsȱhaveȱaȱpositiveȱeffectȱonȱCSMȱsuccess:ȱ -

ȱ

Incentiveȱtoolsȱsuchȱasȱ“hard”ȱmanagers’ȱmanagementȱtoolsȱappearȱtoȱbeȱeffectiveȱ atȱfacilitatingȱorganizationalȱalignmentȱandȱthusȱcontributingȱtoȱCSM,ȱsinceȱtheyȱ

240ȱ

8ȱEmpiricalȱevidenceȱ

effectivelyȱ changeȱ managers’ȱ perceptionsȱ andȱ expectations,ȱ sinceȱ theyȱ stronglyȱ defineȱ“intraȬorganizationalȱrulesȱofȱtheȱgame”ȱ(Dozȱetȱal.,ȱ1988,ȱp.ȱ76).ȱ -

StrategicȱplanningȱandȱaccountingȱproceduresȱratherȱthanȱtoolsȱthatȱmeasureȱreȬ sourceȱallocationȱorȱincreaseȱtransparencyȱ(throughȱe.g.ȱtheȱmeasurementȱofȱmaȬ terialȱ andȱ wasteȱ flows)ȱ appearȱ toȱ beȱ theȱ mostȱ effectiveȱ dataȱ managementȱ tools.ȱ Thisȱisȱplausible,ȱsinceȱstrategicȱplanningȱandȱaccountingȱproceduresȱprovideȱanȱ importantȱ strategicȱ contextȱ inȱ whichȱ otherȱ dataȱ managementȱ toolsȱ (suchȱ asȱ e.g.ȱ resourceȱ allocation)ȱ functionȱ moreȱ effectively.ȱ Theyȱ indicateȱ aȱ moreȱ integrativeȱ andȱadvancedȱapproachȱtoȱCSMȱasȱtheyȱ(1)ȱinextricablyȱlinkȱissuesȱwithȱcorporateȱ decisionȬmakingȱ(e.g.ȱOntarioȱHydro’sȱapproachȱtoȱfullȱcostȱaccountingȱdescribedȱ inȱ ICF,ȱ 1996)ȱ andȱ (2)ȱ deliberatelyȱ setȱ outȱ “toȱ contemplateȱ radicalȱ environmentalȱ changeȱandȱpressures,ȱandȱtoȱchallengeȱconventionalȱthinkingȱatȱtheȱseniorȱmanȬ agementȱlevel”ȱ(e.g.ȱscenarioȱbuilding)ȱ(Kolkȱetȱal.,ȱ2001,ȱp.ȱ506;ȱSkjaersethȱetȱal.,ȱ 2001,ȱp.ȱ53).ȱ

-

Theȱ positiveȱ effectȱ ofȱ businessȱ teamsȱ confirmsȱ theȱ necessityȱ toȱ resolveȱ conflictsȱ withinȱ theȱ organization.ȱ However,ȱ itȱ isȱ notȱ immediatelyȱ obviousȱ whyȱ conflictȱ resolutionȱ atȱ theȱ operationalȱ levelȱ (throughȱ businessȱ teams)ȱ ratherȱ thanȱ atȱ theȱ corporateȱlevelȱ(throughȱcoordinationȱcommittees)ȱisȱaȱsignificantȱdeterminantȱofȱ CSMȱ successȱ inȱ theȱ Tȱ model.ȱ Aȱ lookȱ atȱ theȱ sectorȬspecificȱ modelsȱ revealsȱ thatȱ CSMȱ successȱ isȱ determinedȱ throughȱ conflictȱ resolutionȱ atȱ theȱ corporateȱ levelȱ inȱ theȱOGȱsector,ȱatȱtheȱoperationalȱlevelȱinȱtheȱUTȱsector.ȱItȱisȱunlikelyȱthatȱthisȱreȬ sultȱ suggestsȱ thatȱ OGȱ companiesȱ exhibitȱ greaterȱ conflictȱ atȱ theȱ corporateȱ levelȱ thanȱUTȱcompanies,ȱwhichȱhenceȱonlyȱhaveȱtoȱrelyȱonȱbusinessȱteamsȱtoȱresolveȱ conflictsȱatȱtheȱoperationalȱlevel.ȱIfȱoneȱtakesȱintoȱaccountȱtheȱqualitativeȱdataȱandȱ basicȱstatisticsȱpresentedȱinȱtheȱpreviousȱsection,ȱthisȱresultȱmostȱlikelyȱindicatesȱaȱ moreȱstrategicȱ(andȱthusȱcorporate)ȱapproachȱtoȱCSMȱinȱtheȱOGȱsector.ȱThusȱtheȱ effectȱofȱbusinessȱteamsȱinȱtheȱUTȱsectorȱindicatesȱthatȱCSMȱsuccessȱisȱstillȱmerelyȱ pursuedȱatȱtheȱoperationalȱratherȱthanȱtheȱstrategicȱcorporateȱlevel.ȱSinceȱbusinessȱ teamsȱratherȱthanȱcoordinationȱcommitteesȱfeatureȱinȱtheȱtotalȱmodel,ȱtheȱauthorȱ concludesȱthatȱoverall,ȱinȱaȱbroaderȱpopulationȱofȱenergyȱcompanies,ȱtheȱsuccessȱ ofȱcorporateȱenvironmentalȱandȱsocialȱinitiativesȱisȱstillȱlargelyȱdeterminedȱatȱtheȱ operationalȱlevel.ȱ

ComparedȱtoȱtheȱUTȱmodel,ȱtheȱOGȱmodelȱfeaturesȱaȱgreaterȱnumberȱofȱindependentȱ variables,ȱwhichȱcouldȱbeȱpartlyȱcausedȱbyȱsmallerȱconstraintsȱinȱtheȱdegreesȱofȱfreeȬ dom.ȱHowever,ȱalsoȱbasedȱonȱtheȱevidenceȱpresentedȱinȱtheȱpreviousȱsection,ȱitȱisȱjustȱ asȱlikelyȱthatȱmoreȱtoolsȱhaveȱaȱstatisticallyȱsignificantȱpositiveȱeffectȱonȱCSMȱsuccessȱ becauseȱOGȱ companiesȱ useȱmanagementȱ toolsȱ moreȱ effectivelyȱandȱtoȱ aȱ greaterȱ exȬ tent:ȱTheȱOGȱmodelȱshowsȱtwoȱadditionalȱpositiveȱcoefficientsȱforȱtheȱeffectȱofȱincenȬ

8.4ȱCompaniesȱ

241ȱ

tiveȱsystemsȱandȱmanagementȱdevelopment.ȱInȱparticularȱtheȱinfluenceȱofȱincentiveȱ systemsȱasȱaȱhardȱmanagers’ȱmanagementȱtoolȱindicatesȱaȱmoreȱadvancedȱandȱinteȬ grativeȱapproachȱtoȱCSMȱcomparedȱtoȱtheȱUTȱsector.ȱTheȱpositiveȱeffectȱofȱmanageȬ mentȱdevelopmentȱisȱalsoȱinȱlineȱwithȱtheȱimportanceȱthatȱOGȱsustainabilityȱofficersȱ andȱgeneralȱmanagersȱattachȱtoȱthisȱtoolȱinȱparticular,ȱandȱsuggestsȱthatȱOGȱmanagȬ ersȱareȱbetterȱtrainedȱinȱtheȱareaȱofȱcorporateȱsustainability.ȱ TheȱUTȱmodelȱindicatesȱthatȱrespondentsȱagedȱ50+ȱtendȱtoȱoverestimateȱCSMȱsuccessȱ comparedȱ toȱ respondentsȱ whoȱ areȱ youngerȱ thanȱ 35,ȱ supposedlyȱ becauseȱ theyȱ areȱ moreȱ stronglyȱ settledȱ inȱ theirȱ seniorȱ positionsȱ andȱ exhibitȱ aȱ moreȱ conservativeȱ andȱ reactiveȱmindsetȱ(asȱsuggestedȱbyȱqualitativeȱdataȱpresentedȱabove).ȱHenceȱtheyȱareȱ lessȱ awareȱ ofȱ theȱ keyȱ issuesȱ andȱ theȱ needȱ toȱ improveȱ corporateȱ environmentalȱ andȱ socialȱperformance.ȱTheȱTȱmodelȱshowsȱaȱnegativeȱeffectȱofȱNorthȬAmericanȱnationȬ alsȱcomparedȱtoȱotherȱrespondents.ȱThisȱnegativeȱbiasȱcorrespondsȱtoȱaȱnegativeȱbiasȱ ofȱrespondentsȱoperatingȱinȱNorthȱAmerica,ȱandȱ–ȱasȱsuggestedȱearlierȱ–ȱcouldȱbeȱatȬ tributedȱ toȱ bothȱ strongerȱ externalȱ (lessȱ interestȱ fromȱ customersȱ andȱ investors)ȱ andȱ internalȱbarriersȱ(mostȱlikelyȱcorporateȱcultures)ȱtoȱcorporateȱsustainability.ȱ Basedȱonȱtheȱregressionȱmodels,ȱoneȱcanȱconcludeȱthat:ȱ -

Allȱthreeȱtypesȱofȱmanagementȱtoolsȱ(dataȱmanagement,ȱmanagers’ȱmanagementȱ andȱconflictȱresolution)ȱcontributeȱtoȱaȱmoreȱeffectiveȱimplementationȱofȱCSM.ȱ

-

Theȱ OGȱ sectorȱ hasȱ aȱ moreȱ strategicȱ andȱ integrativeȱ approachȱ throughȱ existingȱ (andȱmoreȱeffective)ȱincentiveȱsystemsȱandȱmanagementȱdevelopment.ȱ

8.4.4.1.3 Discussionȱ Portfolioȱofȱmanagementȱtoolsȱ Quantitativeȱdataȱrevealȱanȱemphasisȱonȱdataȱmanagementȱtoolsȱandȱ“softer”ȱmanagȬ ers’ȱmanagementȱtoolsȱandȱthusȱindicateȱaȱratherȱearlyȱstageȱinȱcompanies’ȱstrategicȱ redirectionȱ toȱ corporateȱ sustainability.ȱ Thisȱ alsoȱ explainsȱ whyȱ interviewsȱ considerȱ organizationalȱalignmentȱtheȱkeyȱchallengeȱofȱCSM.ȱ “Harder”ȱ managementȱ toolsȱ suchȱ asȱ incentiveȱ systemsȱ areȱ yetȱ toȱ beȱ implementedȱ comprehensively.ȱ Theirȱ roleȱ isȱ particularlyȱ significant,ȱ sinceȱ softȱ toolsȱ becomeȱ lessȱ effectiveȱasȱsoonȱasȱfinancialȱpressureȱincreases.ȱHowever,ȱtheirȱintroductionȱcannotȱ beȱ forcedȱ inȱ largeȱ multinationalȱ organizations.ȱ Firstȱ softerȱ toolsȱ areȱ necessaryȱ toȱ “unlockȱandȱchallengeȱtheȱdominantȱperspectives”ȱandȱthusȱgraduallyȱlegitimizeȱtheȱ strategicȱredirectionȱ(Dozȱetȱal.,ȱ1988,ȱp.ȱ76).ȱ Theȱimportanceȱofȱdataȱmanagementȱtoolsȱshouldȱnotȱbeȱunderestimated,ȱsinceȱtheyȱ reduceȱ informationȱ gapsȱ andȱ lackȱ ofȱ direction,ȱ whichȱ preventȱ shiftsȱ inȱ decisionȬ makingȱdueȱtoȱuncertaintyȱ(Sharmaȱetȱal.,ȱ1999,ȱp.ȱ95).ȱTheyȱalsoȱeffectivelyȱcontemȬ ȱ

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8ȱEmpiricalȱevidenceȱ

plateȱ radicalȱ changesȱ andȱ challengeȱ conventionalȱ seniorȱ managementȱ thinking,ȱ asȱ canȱbeȱseenȱfromȱtheȱeffectsȱofȱShell’sȱscenarioȱbuildingȱ(Kolkȱetȱal.,ȱ2001,ȱp.ȱ506).ȱ Theȱpresentȱstudyȱalsoȱrevealsȱthatȱdifferentȱmanagementȱtoolsȱareȱusedȱatȱdifferentȱ levelsȱofȱtheȱorganization.ȱButȱitȱisȱlimitedȱinȱtermsȱofȱitsȱdepthȱandȱisȱthusȱunableȱtoȱ analyzeȱeitherȱtheȱcrossȬlevelȱuseȱofȱtoolsȱorȱtheȱtoolsȱandȱtheirȱstrengthsȱandȱweakȬ nessesȱinȱmoreȱdetail.ȱAȱmoreȱintensiveȱinȬdepthȱempiricalȱapproachȱcouldȱsubstanȬ tiallyȱcontributeȱtoȱ aȱmoreȱ thoroughȱunderstandingȱofȱexistingȱ bottlenecksȱandȱbestȱ practicesȱinȱtermsȱofȱmanagementȱtoolsȱthatȱrelateȱtoȱCSM.ȱ ItȱshouldȱbeȱtakenȱintoȱaccountȱthatȱbothȱquantitativeȱandȱqualitativeȱdataȱwereȱobȬ tainedȱfromȱleadingȱcompaniesȱinȱtheirȱsectors.ȱIfȱtheirȱmanagers,ȱandȱsustainabilityȱ officersȱ inȱ particular,ȱ stateȱ aȱ lackȱ ofȱ tools,ȱ itȱ isȱ obviousȱ thatȱ theȱ portfolioȱ ofȱ toolsȱ inȱ laggardȱcompaniesȱareȱevenȱmoreȱincomplete.ȱ Effectsȱofȱmanagementȱtoolsȱ Bothȱqualitativeȱdataȱ andȱregressionȱmodelsȱprovidedȱshowȱthatȱmanagementȱtoolsȱ affectȱCSMȱsuccess.ȱThisȱfindingȱisȱinȱparallelȱwithȱtheȱprincipleȱofȱcorporateȱdiscreȬ tionȱincorporatedȱinȱthisȱstudy’sȱframework.ȱItȱalsoȱsignificantlyȱcomplementsȱresultsȱ presentedȱinȱsectionȱ8.4.1ȱCompanyȬspecificȱdeterminants,ȱwhichȱpointedȱtoȱaȱratherȱ lowȱ(statisticallyȱinsignificant)ȱinfluenceȱofȱtoolsȱ(andȱprocesses)ȱasȱbarriersȱtoȱCSM.ȱ TheȱpositiveȱeffectsȱonȱCSMȱsuccessȱdetectedȱforȱcertainȱtoolsȱinȱtheȱpresentȱsectionȱ suggestsȱthatȱtheȱlackȱofȱtoolsȱandȱprocessesȱdidȱnotȱattainȱstatisticalȱsignificanceȱinȱ theȱ regressionȱ modelsȱ aboveȱ forȱ twoȱ complementaryȱ reasons:ȱ (1)ȱ constraintsȱ inȱ theȱ degreesȱofȱfreedom,ȱandȱ(2)ȱaȱlackȱofȱdifferentiationȱbetweenȱtheȱplethoraȱofȱdifferentȱ tools.ȱ Theȱ diagnosedȱ significanceȱ ofȱ managementȱ toolsȱ alsoȱ matchesȱ findingsȱ fromȱ otherȱauthorsȱsuchȱasȱKolkȱ(2001)ȱandȱSharmaȱ(1999).ȱ Theȱpresentȱstudyȱdoesȱnotȱallowȱforȱaȱdetailedȱanalysisȱofȱtheȱrelativeȱeffectivenessȱofȱ individualȱ toolsȱ orȱ toolȱ categoriesȱ suchȱ asȱ e.g.ȱ dataȱ management,ȱ managers’ȱ manȬ agementȱandȱconflictȱresolutionȱtools.ȱSuchȱanȱassessmentȱcouldȱcontributeȱsubstanȬ tiallyȱtoȱtheȱmoreȱeffectiveȱdevelopmentȱandȱapplicationȱofȱmanagementȱtoolsȱinȱtheȱ areaȱ ofȱ CSM.ȱ Sinceȱ toolsȱ areȱ notȱ equallyȱ effectiveȱ throughoutȱ aȱ processȱ ofȱ strategicȱ redirectionȱ(Dozȱetȱal.,ȱ1988,ȱp.ȱ76),ȱdescriptiveȱresearchȱinȱthisȱareaȱshouldȱalsoȱexamȬ ineȱtheȱeffectivenessȱofȱtoolsȱcontingentȱuponȱcompanies’ȱstageȱofȱredirection.ȱ Basedȱonȱtheȱqualitativeȱandȱquantitativeȱevidenceȱgathered,ȱtheȱauthorȱarguesȱthatȱ managementȱ toolsȱ thatȱ effectivelyȱ changeȱ managers’ȱ perceptionsȱ andȱ attitudes,ȱ e.g.ȱ managementȱdevelopmentȱandȱincentiveȱtools,ȱtendȱtoȱbeȱparticularlyȱeffective.ȱThisȱ isȱbecauseȱtheseȱtoolsȱbuildȱmotivationȱandȱexpertiseȱamongȱmanagersȱwhoȱareȱthusȱ enabledȱtoȱreactȱmoreȱproactivelyȱinȱsituationsȱofȱgreatȱuncertaintyȱandȱcomplexity,ȱ whichȱ frequentlyȱ occurȱ whenȱ standardizedȱ systemsȱ andȱ processesȱ areȱ unableȱ toȱ

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243ȱ

graspȱtheȱcomplexityȱandȱdynamicsȱofȱtheȱplethoraȱofȱcurrentȱorȱemergingȱsocialȱorȱ environmentalȱchallenges.ȱ Contingencyȱperspectiveȱonȱmanagementȱtoolsȱ Bothȱ qualitativeȱ andȱ quantitativeȱ dataȱ showȱ thatȱ theȱ UTȱ sectorȱ lagsȱ behindȱ theȱ OGȱ sectorȱinȱtermsȱofȱtheȱimplementationȱofȱCSM:ȱUTȱcompaniesȱfeatureȱaȱrelativeȱlackȱ ofȱseveralȱsoftȱandȱhardȱmanagers’ȱmanagementȱtools.ȱTakingȱfindingsȱfromȱtheȱpreȬ viousȱsectionsȱintoȱaccountȱ(e.g.ȱlowerȱissueȱsignificance,ȱlessȱoutsideȱpressure,ȱlowerȱ strategicȱdisposition),ȱthisȱwasȱtoȱbeȱexpected.ȱ CrossȬdisciplinaryȱ differencesȱ inȱ theȱ reportedȱ useȱ ofȱ twoȱ toolsȱ (measurementȱ ofȱ reȬ sourceȱ allocationȱandȱ managementȱdevelopment)ȱ areȱinsightfulȱinsofarȱasȱtheyȱ giveȱ awayȱ theȱ respectiveȱ keyȱ agendasȱ ofȱ respondents:ȱ Generalȱ managersȱ areȱ concernedȱ aboutȱtheirȱbudgetsȱandȱareȱ–ȱasȱrevealedȱinȱsectionȱ8.3ȱManagersȱforȱtheȱUTȱsectorȱ–ȱ largelyȱ unawareȱ ofȱ theirȱ reactiveȱ mindsets,ȱ whichȱ constituteȱ aȱ significantȱ deterrentȱ factorȱ forȱ CSM.ȱ Sustainabilityȱ officersȱ appearȱ toȱ haveȱ recognizedȱ thisȱ shortcomingȱ andȱputȱmoreȱemphasisȱonȱchangingȱmindsetȱthroughȱmanagementȱtraining.ȱ 8.4.4.2 Structuresȱ 8.4.4.2.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Theȱlevelȱofȱ crossȬdisciplinaryȱ collaborationȱ isȱratherȱ lowȱinȱ bothȱsectors:ȱInȱ theȱ UTȱ sectorȱalmostȱ40%ȱofȱtheȱrespondentsȱdoȱnotȱworkȱwithȱtheirȱsustainabilityȱorȱenviȬ ronmentalȱofficerȱatȱall.ȱ CrossȬdisciplinaryȱcollaborationȱ(1ȱ=ȱNoȱcollaboration”ȱtoȱ3ȱ=ȱ“CollaborationȱonȱdayȬtoȬdayȱbasis”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

48ȱ 120ȱ

1.8125ȱ 2.05ȱ

.1059249ȱ .0601702ȱ

.7338691ȱ .6591311ȱ

1.599407ȱȱȱȱ2.025593ȱ 1.930857ȱȱȱȱ2.169143ȱ

Tableȱ8Ȭ8:ȱSummaryȱstatisticsȱ–ȱCrossȬdisciplinaryȱcollaborationȱ

TheȱsectorȬspecificȱmeansȱareȱjustȱbelowȱorȱaboveȱaȱvalueȱofȱ2ȱ(seeȱTableȱ8Ȭ8),ȱwhichȱ standsȱforȱcollaborationȱonȱanȱadȱhocȱbasis.ȱTheȱlevelȱofȱcollaborationȱisȱlowerȱinȱtheȱ UTȱsector,ȱthisȱdifferenceȱbeingȱstatisticallyȱsignificant.ȱ Furthermore,ȱquantitativeȱdataȱalsoȱpointȱtoȱlowȱlevelsȱofȱcrossȬdisciplinaryȱpotential:ȱ TheȱtwoȱsectorȬspecificȱmeansȱ(locatedȱbetweenȱ2ȱ“little”ȱandȱ3ȱ“fairly”)ȱrevealȱgenȬ eralȱ managers’ȱ significantȱ skepticismȱ ofȱ aboutȱ theȱ meaningfulnessȱ ofȱ crossȬ disciplinaryȱ collaborationȱ (seeȱ Tableȱ 8Ȭ9).ȱ Thisȱ alsoȱ suggestsȱ thatȱ crossȬdisciplinaryȱ collaborationȱhasȱbeenȱratherȱineffective.ȱInȱfactȱsocialȱdesirabilityȱbiasȱmayȱhaveȱadȬ ditionallyȱconcealedȱtheȱrealȱandȱmostȱprobablyȱhigherȱlevelȱofȱskepticism.ȱ

ȱ

244ȱ

8ȱEmpiricalȱevidenceȱ

CrossȬdisciplinaryȱpotentialȱȱ(1ȱ=ȱ“Notȱatȱall”ȱtoȱ5ȱ=ȱ“Veryȱmuch”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

45ȱ 117ȱ

2.4ȱ 2.940171ȱ

.1399856ȱ .0918829ȱ

.9390517ȱ .9938657ȱ

2.117878ȱȱȱȱ2.682122ȱ 2.758185ȱȱȱȱ3.122157ȱ

Tableȱ8Ȭ9:ȱSummaryȱstatisticsȱ–ȱCrossȬdisciplinaryȱpotentialȱ

GeneralȱmanagersȱfromȱtheȱOGȱsectorȱreportȱgreaterȱcrossȬdisciplinaryȱpotentialȱthanȱ theirȱcounterpartsȱfromȱtheȱUTȱsector.ȱAgainȱthisȱdifferenceȱisȱstatisticallyȱsignificant.ȱ TheȱresultsȱalsoȱgiveȱaȱclearȱindicationȱofȱhowȱcrossȬdisciplinaryȱpotentialȱshouldȱbeȱ interpreted:ȱ Quantitativeȱ dataȱ pointȱ toȱ moreȱ intensiveȱ crossȬdisciplinaryȱ collaboraȬ tionȱ inȱ theȱ OGȱ sector.ȱ Thusȱ theȱ OGȱ sector’sȱ greaterȱ crossȬdisciplinaryȱ potentialȱ isȱ mostȱ unlikelyȱ toȱ beȱ anȱ indicatorȱ ofȱ aȱ lackȱ ofȱ structure.ȱ Onȱ theȱ contrary,ȱ itȱ suggestsȱ thatȱrespondentsȱ areȱmoreȱawareȱ ofȱtheȱ benefitsȱ ofȱcrossȬdisciplinaryȱstructures,ȱi.e.ȱ thatȱCSMȱhasȱbeenȱmoreȱeffectivelyȱimplemented.ȱResultsȱofȱmostȱcorrelations,ȱparȬ ticularlyȱtheȱpositiveȱassociationȱbetweenȱcrossȬdisciplinaryȱcollaborationȱandȱpotenȬ tial,ȱsupportȱthisȱinterpretation.ȱ Overallȱtheȱquantitativeȱdataȱrevealȱtwoȱclearȱfindings:ȱFirstȱgeneralȱmanagersȱfindȱitȱ difficultȱtoȱcollaborate.ȱSecondȱtheyȱconsiderȱcollaborationȱineffective.ȱBothȱfindingsȱ pointȱ toȱ severalȱ potentialȱ barriersȱ withinȱ theȱ companiesȱ surveyed,ȱ whichȱ areȱ alsoȱ foundȱinȱtheȱqualitativeȱdata:ȱ -

Generalȱmanagersȱhaveȱreactiveȱmindsetsȱandȱareȱunderȱconstantȱtimeȱpressure.ȱ Henceȱtheyȱareȱunwillingȱandȱunableȱtoȱdealȱwithȱsustainabilityȱofficers.ȱ

-

Inȱ someȱ casesȱ environmentalȱ orȱ sustainabilityȱ infrastructureȱ appearȱ toȱ lackȱ reȬ sourcesȱ(personnel,ȱtraining).ȱInȱotherȱcasesȱcorporateȱstructureȱasȱsuchȱ(bureauȬ cratic,ȱhierarchical)ȱisȱlikelyȱtoȱpreventȱorganizationalȱalignment.ȱ

-

Generalȱmanagersȱandȱsustainabilityȱofficersȱlackȱaȱcommonȱlanguage.ȱ

Furthermore,ȱtheȱlowȱlevelȱofȱcollaborationȱindicatesȱthatȱcrossȬdisciplinaryȱteamsȱareȱ (1)ȱstillȱrareȱandȱ(2)ȱonlyȱbringȱtogetherȱaȱsmallȱcircleȱofȱmanagers.ȱTheȱdataȱadditionȬ allyȱsuggestȱthatȱOGȱcompaniesȱareȱlessȱstronglyȱaffectedȱbyȱtheȱinternalȱbarriersȱreȬ ferredȱ toȱ above.ȱ Thisȱ resultȱ isȱ inȱ lineȱ withȱ findingsȱ fromȱ theȱ previousȱ sectionsȱ thatȱ pointȱtoȱaȱmoreȱadvancedȱapproachȱtoȱCSMȱinȱtheȱOGȱsector,ȱi.e.ȱalsoȱtoȱhigherȱlevelsȱ ofȱimplementation.ȱ 8.4.4.2.2 Advancedȱstatisticsȱ 8.4.4.2.2.1 Correlationsȱ Figureȱ 8Ȭ32ȱ andȱ Figureȱ 8Ȭ33ȱ displayȱ allȱ correlationsȱ betweenȱ otherȱ variablesȱ andȱ crossȬdisciplinaryȱcollaborationȱandȱpotential,ȱrespectively.ȱȱ

8.4ȱCompaniesȱ

245ȱ

Issues

Socialȱissues Environmentalȱissues

Managers

Companies

UT,ȱT OG,ȱUT,ȱT

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

T UT,ȱT

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

UT,ȱT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

UT,ȱT

SDȱfamiliarity

Strategic SDȱimportance Strategic disposition OG,ȱT

Externalȱstakeholders Capitalȱmarkets

FutureȱSDȱrole

OG,ȱT OG,ȱUT,ȱT

T

disposition

CSMȱINTENT

Importanceȱofȱlegitimacy UT

Damageȱtoȱlegitimacy

Legitimacy UT

Consumers Governments CurrentȱSDȱrole

UT,ȱT OG

Structure UT,ȱT OG,ȱT

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry

UT,ȱT

NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.32:ȱCorrelationsȱ–ȱCrossȬdisciplinaryȱcollaborationȱ

Theyȱ willȱ beȱ discussedȱ inȱ theȱ textȱ thatȱ follows.ȱ Forȱ thisȱ purpose,ȱ bothȱ crossȬ disciplinaryȱ collaborationȱ andȱ crossȬdisciplinaryȱ potentialȱ willȱ beȱ –ȱ inȱ someȱ casesȱ –ȱ groupedȱtogetherȱasȱ“crossȬdisciplinaryȱstructure.”ȱ Issuesȱ AȱmoreȱeffectiveȱcrossȬdisciplinaryȱstructureȱpositivelyȱcorrelatesȱwithȱgreaterȱissueȱ significance.ȱThisȱindicatesȱthatȱ(1)ȱgreaterȱissueȱsignificanceȱcallsȱforȱmoreȱeffectiveȱ crossȬdisciplinaryȱstructures,ȱandȱ(2)ȱmoreȱeffectiveȱcrossȬdisciplinaryȱstructuresȱleadȱ toȱ greaterȱ issueȱ awarenessȱ amongȱ managersȱ (seeȱ sectionȱ 8.1ȱ Issuesȱ forȱ aȱ moreȱ deȬ tailedȱdiscussion).ȱ Managers’ȱattitudesȱ Aȱ moreȱ effectiveȱ crossȬdisciplinaryȱ structureȱ positivelyȱ correlatesȱ withȱ moreȱ proacȬ tiveȱattitudes.ȱThisȱsuggestsȱthatȱ(1)ȱmoreȱeffectiveȱstructuresȱchangeȱmanagers’ȱattiȬ tudes,ȱandȱ(2)ȱproactiveȱmanagersȱareȱmoreȱinclinedȱtoȱcollaborateȱandȱperceiveȱcolȬ laborationȱasȱmoreȱworthwhileȱ(seeȱsectionȱ8.3ȱManagers).ȱ

ȱ

246ȱ

8ȱEmpiricalȱevidenceȱ

Issues

Managers

Socialȱissues

T

Environmentalȱissues

T

Companies

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness

WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

T,ȱOG

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

T,ȱUT

Externalȱstakeholders FutureȱSDȱrole

Capitalȱmarkets

T,ȱOG

SDȱfamiliarity

Strategic SDȱimportance disposition

Strategic disposition

CSMȱINTENT

Importanceȱofȱlegitimacy Legitimacy

Damageȱtoȱlegitimacy

T UT,ȱT

CurrentȱSDȱrole

Consumers

UT

Governments

UT

Structure

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential CSMȱSUCCESS

PPPs Industry NGOs

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.33:ȱCorrelationsȱ–ȱCrossȬdisciplinaryȱpotentialȱ

Externalȱstakeholdersȱandȱlegitimacyȱ MoreȱeffectiveȱcrossȬdisciplinaryȱstructuresȱareȱassociatedȱwithȱtheȱfollowing:ȱ -

TheȱperceptionȱofȱgenerallyȱlowerȱcurrentȱdemandȱforȱCSMȱfromȱexternalȱstakeȬ holders.ȱ Thisȱ indicatesȱ thatȱ leadingȱ companiesȱ (withȱ moreȱ elaborateȱ structures)ȱ feelȱlessȱstronglyȱdrivenȱbyȱexternalȱpressureȱ(seeȱsectionȱ8.2.3ȱCustomersȱandȱsecȬ tionȱ8.2.1ȱGovernmentsȱandȱregulators).ȱTheȱpositiveȱcorrelationȱdetectedȱbetweenȱ crossȬdisciplinaryȱcollaborationȱandȱgovernments’ȱSDȱroleȱinȱtheȱOGȱsampleȱdoesȱ notȱnecessarilyȱcontradictȱthisȱfinding,ȱsinceȱgovernmentalȱpressureȱonȱOGȱcomȬ paniesȱisȱgenerallyȱlow.ȱThusȱtheȱpositiveȱlinkȱcouldȱindicateȱaȱheightenedȱawareȬ nessȱ ofȱ futureȱ proactiveȱ governmentȱ initiativesȱ (e.g.ȱ risingȱ environmentalȱ stanȬ dardsȱinȱdevelopingȱcountries).ȱ

-

Greaterȱ awarenessȱ ofȱ aȱ futureȱ moreȱ proactiveȱ SDȱ roleȱ ofȱ capitalȱ markets,ȱ whichȱ suggestsȱ thatȱ moreȱ effectiveȱ crossȬdisciplinaryȱ structuresȱ increaseȱ awarenessȱ ofȱ futureȱ demandsȱ fromȱ externalȱ stakeholdersȱ (seeȱ sectionȱ 8.2.4ȱ Financialȱ commuȬ nity).ȱ

-

Greaterȱ sensitivityȱ toȱ theȱ importanceȱ ofȱ retainingȱ legitimacyȱ (seeȱ sectionȱ 8.2.6.1ȱ Theȱroleȱofȱlegitimacy)ȱ

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247ȱ

Furthermore,ȱ moreȱ effectiveȱ crossȬdisciplinaryȱ structuresȱ positivelyȱ correlatesȱ withȱ theȱSDȱroleȱofȱindustry,ȱwhichȱsuggestsȱthatȱcrossȬdisciplinaryȱcollaborationȱincreasesȱ respondents’ȱ awarenessȱ ofȱ corporateȱ activitiesȱ andȱ thusȱ positivelyȱ influencesȱ theirȱ viewȱonȱtheȱoverallȱperformanceȱofȱindustryȱ(seeȱsectionȱ8.2.5ȱIndustryȱandȱpartnerȬ ships).ȱ Strategicȱdispositionȱ CrossȬdisciplinaryȱ collaborationȱ positivelyȱ correlatesȱ withȱ strategicȱ dispositionȱ (SDȱ familiarity,ȱ SDȱ importanceȱ andȱ CSMȱ intent).ȱ Thisȱ suggestsȱ thatȱ aȱ moreȱ distinctȱ andȱ strategicȱ approachȱ toȱ CSMȱ isȱ characterizedȱ byȱ moreȱ elaborateȱ crossȬdisciplinaryȱ structures.ȱ Inȱ contrastȱ crossȬdisciplinaryȱ potentialȱ isȱ unrelatedȱ toȱ strategicȱ disposition.ȱ Asȱ sugȬ gestedȱabove,ȱthisȱmissingȱlinkȱisȱprobablyȱcausedȱthroughȱdifferentȱmindsets,ȱcorpoȬ rateȱ culturesȱ andȱ obviouslyȱ structuresȱ thatȱ mostȱ likelyȱ subdueȱ theȱ associationsȱ (seeȱ sectionȱ8.4.2ȱStrategicȱdisposition).ȱ Structureȱ CrossȬdisciplinaryȱcollaborationȱandȱpotentialȱpositivelyȱcorrelate.ȱThisȱisȱinȱlineȱwithȱ conclusionsȱ inȱ theȱ previousȱ section:ȱ Theȱ moreȱ closelyȱ respondentsȱ workȱ withȱ enviȬ ronmentalȱorȱsustainabilityȱfunctionsȱinȱtheirȱcompany,ȱtheȱgreaterȱtheyȱconsiderȱtheȱ unexploitedȱpotentialȱofȱcrossȬdisciplinaryȱcollaboration.ȱ Henceȱgreaterȱpotentialȱindicatesȱ(1)ȱrespondents’ȱgreaterȱawarenessȱofȱtheȱcomplexȬ ityȱofȱissuesȱandȱtheȱneedȱtoȱengageȱseveralȱbusinessȱfunctionsȱandȱunitsȱtoȱresolveȱ them,ȱandȱ(2)ȱmoreȱeffectiveȱcrossȬdisciplinaryȱstructures.ȱ Itȱshouldȱbeȱnotedȱthatȱtheȱcorrelationȱisȱpositiveȱbutȱnotȱstatisticallyȱsignificantȱinȱtheȱ OGȱsector,ȱwhichȱsuggestsȱthatȱ theȱlinkȱexistsȱbutȱisȱsubjectȱtoȱgreaterȱvariation.ȱAsȱ alreadyȱ arguedȱ above,ȱ thisȱ pointsȱ toȱ severalȱ factorsȱ thatȱ moderateȱ thisȱ relationshipȱ moreȱstronglyȱinȱtheȱOGȱthanȱinȱtheȱUTȱsector,ȱsinceȱcompaniesȱareȱlargerȱandȱthusȱ moreȱcomplexȱandȱdiverse.ȱTheseȱfactorsȱincludeȱcorporateȱcultureȱandȱstructure,ȱi.e.ȱ theȱ currentȱ levelȱ ofȱ crossȬdisciplinaryȱ collaboration:ȱ Itȱ isȱ alsoȱ possibleȱ thatȱ someȱ reȬ spondentsȱ fromȱ leadingȱ OGȱ companiesȱ thatȱ alreadyȱ exhibitȱ intensiveȱ crossȬ disciplinaryȱstructuresȱmayȱconsiderȱtheȱstillȱunexploitedȱcrossȬdisciplinaryȱpotentialȱ relativelyȱsmall.ȱȱ CSMȱsuccessȱ CrossȬdisciplinaryȱcollaborationȱisȱpositivelyȱrelatedȱtoȱCSMȱsuccess,ȱwhichȱsuggestsȱ thatȱ itȱ significantlyȱ influencesȱ theȱ effectivenessȱ ofȱ CSM,ȱ sinceȱ obviously,ȱ asȱ theȱ reȬ mainingȱ correlationsȱ alsoȱ suggest,ȱ itȱ increasesȱ managers’ȱ awarenessȱ ofȱ issuesȱ andȱ thusȱchangesȱattitudes,ȱfacilitatesȱcrossȬfertilizationȱandȱconsensusȬbuildingȱthroughȱ individualȱandȱgroupȱcollaborationȱ(e.g.ȱbusinessȱteams,ȱcoordinationȱcommittees).ȱ ȱ

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ItȱshouldȱbeȱnotedȱthatȱtheȱlinkȱbetweenȱCSMȱsuccessȱandȱcrossȬdisciplinaryȱcollaboȬ rationȱ isȱ weakȱ andȱ statisticallyȱ notȱ significantȱ inȱ theȱ UTȱ sample.ȱ Againȱ thisȱ findingȱ matchesȱevidenceȱpresentedȱinȱpreviousȱsectionsȱofȱaȱlessȱadvancedȱapproachȱtoȱCSMȱ inȱ UTȱ companies.ȱ Apparentlyȱ theȱ structuresȱ andȱ processesȱ neededȱ toȱ resolveȱ enviȬ ronmentalȱandȱsocialȱissuesȱareȱlessȱevolvedȱorȱsimplyȱlacking.ȱ Unlikeȱ crossȬdisciplinaryȱ collaboration,ȱ crossȬdisciplinaryȱ potentialȱ isȱ notȱ relatedȱ toȱ CSMȱ success:ȱ Correlationȱ coefficientsȱ areȱ closeȱ toȱ zeroȱ andȱ notȱ statisticallyȱ signifiȬ cant.ȱ Thisȱ isȱ plausible,ȱ sinceȱ theȱ assessmentȱ ofȱ potentialȱ isȱ –ȱ alongsideȱ crossȬ disciplinaryȱcollaboration,ȱwithȱwhichȱitȱpositivelyȱcorrelatesȱ–ȱalsoȱinfluencedȱbyȱfacȬ torsȱsuchȱasȱe.g.ȱmanagers’ȱmindsetȱandȱcorporateȱculture,ȱandȱisȱsubjectȱtoȱsocialȱdeȬ sirabilityȱbias.ȱ Theseȱinfluencesȱ couldȱ subdueȱanȱ (expected)ȱ positiveȱlinkȱ withȱCSMȱ success,ȱ whichȱ wouldȱ haveȱ shownȱ thatȱ moreȱ effectiveȱ crossȬdisciplinaryȱ structuresȱ increaseȱtheȱsuccessȱofȱcorporateȱenvironmentalȱandȱsocialȱinitiatives.ȱ Conclusionȱ Correlationsȱ presentedȱ aboveȱ pointȱ toȱ recursiveȱ relationshipsȱ betweenȱ crossȬ disciplinaryȱstructuresȱandȱseveralȱconceptsȱofȱCSM,ȱi.e.ȱcrossȬdisciplinaryȱstructuresȱ affectȱthemȱandȱareȱaffectedȱbyȱthem.ȱConcretely,ȱresultsȱsuggestȱthatȱ 1. Moreȱ effectiveȱ crossȬdisciplinaryȱ structuresȱ increaseȱ issueȱ awarenessȱ andȱ areȱ esȬ tablishedȱasȱaȱreactionȱtoȱgreaterȱissueȱsignificance.ȱ 2. TheyȱleadȱtoȱmoreȱproactiveȱattitudesȱamongȱmanagersȱdueȱtoȱincreasedȱawareȬ ness,ȱandȱtheyȱareȱusedȱmoreȱfrequentlyȱandȱeffectivelyȱbyȱproactiveȱmanagers.ȱ 3. Theyȱleadȱtoȱgreaterȱawarenessȱofȱexternalȱstakeholders’ȱdemands,ȱandȱareȱestabȬ lishedȱasȱaȱreactionȱtoȱgreaterȱdemandsȱfromȱthem.ȱ Furthermore,ȱcorrelationsȱshowȱthatȱmoreȱeffectiveȱstructuresȱtendȱtoȱbeȱestablishedȱ asȱ aȱ consequenceȱ ofȱ companies’ȱ greaterȱ strategicȱ dispositionȱ toȱ CSMȱ andȱ leadȱ toȱ moreȱeffectiveȱCSM.ȱ LinksȱbetweenȱcrossȬdisciplinaryȱcollaborationȱandȱpotentialȱwithȱtheȱotherȱvariablesȱ areȱ largelyȱ congruent,ȱ butȱ divergeȱ inȱ someȱ cases,ȱ e.g.ȱ crossȬdisciplinaryȱ potentialȱ –ȱ unlikeȱcrossȬdisciplinaryȱcollaborationȱ–ȱisȱnotȱrelatedȱtoȱindustry’sȱSDȱroleȱ(seeȱsecȬ tionȱ8.2.5ȱIndustryȱandȱpartnerships),ȱstrategicȱdispositionȱ(seeȱsectionȱ8.4.2ȱStrategicȱ disposition)ȱorȱCSMȱsuccess.ȱThisȱpointsȱtoȱaȱsignificantȱdifferenceȱinȱtheȱassessmentȱ ofȱ theȱ twoȱ concepts.ȱ CrossȬdisciplinaryȱ collaboration,ȱ i.e.ȱ theȱ intensityȱ ofȱ collaboraȬ tion,ȱisȱassessedȱveryȱstraightforwardlyȱ(noȱcollaboration,ȱadȱhocȱorȱdaily).ȱ Inȱcontrast,ȱcrossȬdisciplinaryȱpotential,ȱi.e.ȱtheȱeffectivenessȱofȱcrossȬdisciplinaryȱcolȬ laboration,ȱisȱsubjectȱtoȱseveralȱ“hidden”ȱinfluencesȱthatȱapparentlyȱcomprise:ȱ -

Managers’ȱmindset:ȱSomeȱrespondentsȱmayȱpreferȱteamwork,ȱothersȱnot.ȱ

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249ȱ

-

Corporateȱculture:ȱDoesȱtheȱcorporateȱcultureȱfosterȱorȱpromoteȱcollaboration?ȱ

-

Corporateȱ structure:ȱ Howȱ isȱ crossȬdisciplinaryȱ collaborationȱ organized,ȱ howȱ inȬ tensiveȱisȱitȱandȱhowȱgreatȱisȱtheȱpotentialȱtoȱimproveȱit?ȱ

ThisȱconclusionȱcouldȱalsoȱexplainȱwhyȱtheȱlinksȱbetweenȱcrossȬdisciplinaryȱpotentialȱ andȱotherȱvariablesȱareȱmoreȱfrequentȱinȱtheȱUTȱthanȱinȱtheȱOGȱsector:ȱOGȱcompaȬ niesȱareȱlargerȱandȱmoreȱcomplexȱorganizations,ȱthusȱtheȱhiddenȱinfluencesȱreferredȱ toȱ aboveȱ couldȱ haveȱ aȱ greaterȱ impactȱ andȱ thusȱ subdueȱ expectedȱ relationships.ȱ Forȱ example,ȱcrossȬdisciplinaryȱcollaborationȱwasȱfoundȱtoȱbeȱsignificantlyȱhigherȱinȱtheȱ OGȱ thanȱ inȱ theȱ UTȱ sector.ȱ Thusȱ OGȱ respondentsȱ whoȱ workȱ relativelyȱ closelyȱ withȱ theirȱcompany’sȱsustainabilityȱexpertsȱcouldȱconsiderȱtheȱcrossȬdisciplinaryȱpotentialȱ smallȱsinceȱitȱisȱlargelyȱexploited.ȱ 8.4.4.2.2.2 Regressionsȱ RegressionȱTableȱ8Ȭ15ȱshowsȱtheȱeffectsȱofȱcrossȬdisciplinaryȱcollaborationȱandȱpotenȬ tialȱonȱCSMȱsuccess:ȱ T model 152 1.90 0.0637 0.0963 0.0457 .7502

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Cross-disciplinary collaboration Cross-disciplinary potential

-.0278079

UT sector

-.4232727

Nordic North Am Latin Europe Deve econ Other reg

-.2982675 -.4765598 -.4069706

Constant

.1793314

OG model 109 2.48 0.0214 0.1469 0.0878 .75357 Coeff .2570444 -.0026728

-.4413747

UT model 43 0.34 0.9291 0.0639 0.1233 .73476 -.2031973 .1329407

-.2300761

-.6588283 -.4990745 -.5988299 -.3644252

-.0656289 .5008414 -.1971673 -.298766 -.298766

3.52993

3.42043

3.306339

-.4744258

RegressionȱTableȱ8Ȭ15:ȱCSMȱsuccessȱ–Structuresȱ(Expandedȱsubmodels)ȱ

TheȱtotalȱandȱOGȱmodelȱshowȱaȱpositiveȱeffectȱofȱcrossȬdisciplinaryȱcollaborationȱonȱ CSMȱsuccess.ȱTheȱUTȱmodel’sȱparametersȱshowȱthatȱtheȱindependentȱvariablesȱchoȬ senȱareȱnotȱableȱtoȱadequatelyȱexplainȱvariationȱinȱCSMȱsuccess,ȱpossibleȱreasonsȱbeȬ ingȱ constraintsȱ inȱ theȱ degreesȱ ofȱ freedomȱ andȱ largelyȱ missingȱ orȱ ineffectiveȱ crossȬ disciplinaryȱstructuresȱinȱtheȱUTȱsector.ȱ InȱcontrastȱtoȱtheȱlevelȱofȱcrossȬdisciplinaryȱcollaboration,ȱcrossȬdisciplinaryȱpotentialȱ hasȱnoȱstatisticallyȱsignificantȱeffectȱonȱCSMȱsuccess,ȱwhichȱisȱinȱlineȱwithȱtheȱconcluȬ sionȱpresentedȱabove:ȱTheȱassessmentȱofȱpotential,ȱwhichȱshouldȱbeȱseenȱasȱaȱproxyȱ measureȱforȱtheȱeffectivenessȱofȱcrossȬdisciplinaryȱcollaboration,ȱisȱinfluencedȱbyȱinȬ ternalȱ factorsȱ (e.g.ȱ mindset,ȱ corporateȱ cultureȱ andȱ structure)ȱ thatȱ confoundȱ anȱ exȬ pectedȱeffectȱofȱeffectivenessȱofȱcrossȬdisciplinaryȱstructuresȱonȱCSMȱsuccess.ȱ ȱ

250ȱ

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Theȱ authorȱ concludesȱ thatȱ aȱ corporateȱ structureȱ thatȱ allowsȱ forȱ intensiveȱ crossȬ disciplinaryȱcollaborationȱisȱaȱsignificantȱdeterminantȱofȱCSMȱsuccess.ȱFurthermore,ȱ corporateȱstructuresȱinȱtheȱOGȱsectorȱappearȱtoȱbeȱsuperiorȱtoȱthoseȱofȱtheȱUTȱsector,ȱ whichȱisȱinȱparallelȱwithȱfindingsȱinȱpreviousȱsectionsȱthatȱrevealedȱlessȱcloseȱcrossȬ disciplinaryȱcollaborationȱinȱUTȱcompanies.ȱ TheȱsectorȱandȱregionȱeffectsȱinȱtheȱTȱandȱOGȱmodelȱareȱinȱlineȱwithȱthoseȱofȱpreviȬ ousȱregressionȱmodels.ȱTheyȱmostȱlikelyȱreflectȱdifferencesȱinȱexternalȱ(e.g.ȱissueȱsigȬ nificance,ȱdemandsȱfromȱstakeholders)ȱandȱinternalȱ(e.g.ȱcorporateȱcultures,ȱmindset)ȱ determinants.ȱ 8.4.4.2.3 Discussionȱ LackȱofȱcrossȬdisciplinaryȱstructuresȱ Qualitativeȱ andȱ quantitativeȱ dataȱ pointȱ toȱ aȱ surprisinglyȱ lowȱ levelȱ ofȱ crossȬ disciplinaryȱcollaborationȱandȱpotential:ȱSimplyȱput,ȱthisȱmeansȱthatȱgeneralȱmanagȬ ersȱhardlyȱworkȱwithȱsustainabilityȱexpertsȱinȱtheirȱcompanyȱbecauseȱtheyȱdoȱnotȱseeȱ muchȱsenseȱinȱit.ȱThisȱisȱparticularlyȱsoberingȱifȱoneȱtakesȱintoȱaccountȱthatȱtheȱstudyȱ isȱnaturallyȱsubjectȱtoȱanȱupwardȱbias,ȱsinceȱgenerallyȱspeakingȱtheȱleadingȱandȱthusȱ moreȱinterestedȱcompaniesȱparticipated.ȱ Obviouslyȱ theseȱresultsȱpointȱtoȱ aȱsignificantȱbarrierȱ toȱCSM,ȱ sinceȱtheȱcomplexȱ naȬ tureȱ ofȱ someȱ environmentalȱ andȱ socialȱ issuesȱ requiresȱ moreȱ flexibleȱ andȱ egalitarianȱ structuresȱ (Taponȱ etȱ al.,ȱ 1995,ȱ p.ȱ 312),ȱ groupȬlearningȱ situationsȱ andȱ organizationalȱ networksȱ(Lober,ȱ1996,ȱp.ȱ189;ȱSwinthȱetȱal.,ȱ1995)ȱsuchȱasȱboardȱlevelȱcommitteesȱandȱ taskȱ forcesȱ composedȱ ofȱ managersȱ fromȱ lineȱ andȱ staffȱ unitsȱ (Sharmaȱ etȱ al.,ȱ 1999,ȱ p.ȱ 93).ȱ Suchȱ structuresȱ areȱ particularlyȱ meaningful,ȱ sinceȱ theyȱ facilitateȱ effectiveȱ deciȬ sionȬmakingȱinȱsituationsȱinȱwhichȱstrategiesȱareȱnotȱadequatelyȱformulatedȱandȱinȬ stitutionalizedȱ(Fredrickson,ȱ1986,ȱp.ȱ295),ȱasȱisȱtheȱcaseȱwithȱCSM.ȱAsȱsectionsȱ8.4.2ȱ Strategicȱ dispositionȱ andȱ 8.4.3ȱ Economicȱ rationaleȱ haveȱ shown,ȱ CSMȱ lacksȱ integraȬ tionȱ intoȱ corporateȱ visionsȱ andȱ strategiesȱ asȱ wellȱ asȱ anȱ obviousȱ andȱ universallyȱ strongȱeconomicȱrationale.ȱ TheȱlowȱlevelsȱofȱcrossȬdisciplinaryȱcollaborationȱandȱpotentialȱclearlyȱcorrespondȱtoȱ generalȱ managers’ȱ lackȱ ofȱ knowledgeȱ andȱ expertise,ȱ asȱ wellȱ asȱ theirȱ mindset.ȱ SusȬ tainabilityȱofficersȱconsiderȱtheseȱtoȱbeȱtwoȱofȱtheȱmostȱimportantȱinternalȱbarriersȱtoȱ CSM.ȱ DeterminantsȱandȱeffectsȱofȱcrossȬdisciplinaryȱstructuresȱ CrossȬdisciplinaryȱ structuresȱ areȱ relatedȱ toȱ severalȱ variablesȱ includingȱ issueȱ signifiȬ cance,ȱ demandsȱ fromȱ externalȱ stakeholdersȱ andȱ damageȱ toȱ legitimacy,ȱ mostȱ likelyȱ “via”ȱcompanies’ȱlevelȱofȱstrategicȱdisposition.ȱStrategicȱdispositionȱappearsȱtoȱtrigȬ gerȱ theȱ creationȱ ofȱ crossȬdisciplinaryȱ structures.ȱ Thisȱ isȱ plausible,ȱ sinceȱ aȱ strongerȱ

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251ȱ

willingnessȱ toȱ integrateȱ issuesȱ intoȱ strategiesȱ andȱ operationsȱ isȱ often,ȱ asȱ theȱ interȬ viewsȱindicated,ȱaccompaniedȱbyȱtheȱcreationȱofȱnewȱstructures,ȱsuchȱasȱissueȱteams,ȱ coordinationȱcommitteesȱatȱexecutiveȱlevel,ȱetc.ȱ Conversely,ȱ crossȬdisciplinaryȱ structuresȱ influenceȱ managers’ȱ attitudesȱ andȱ conseȬ quentlyȱ theirȱ perceptionsȱ ofȱ issues,ȱ externalȱ stakeholders’ȱ demandsȱ andȱ legitimacy.ȱ Mostȱimportantlyȱtheyȱimpactȱonȱtheȱsuccessȱofȱcorporateȱenvironmentalȱandȱsocialȱ initiatives.ȱ Contingencyȱapproachȱ CrossȬdisciplinaryȱ structuresȱ areȱ moreȱ evolvedȱ inȱ theȱ OGȱ sector.ȱ Thisȱ isȱ plausible,ȱ sinceȱ itȱ reflectsȱ OGȱ companies’ȱ greaterȱ strategicȱ disposition,ȱ andȱ accordinglyȱ theȱ greaterȱ significanceȱ ofȱ outsideȱ pressureȱ (e.g.ȱ greaterȱ issueȱ significanceȱ andȱ imporȬ tanceȱofȱtheȱinformalȱlicenseȱtoȱoperate)ȱandȱtheȱhigherȱlevelȱofȱimplementationȱ(theȱ useȱofȱmanagementȱtools),ȱwhichȱwereȱdiagnosedȱinȱtheȱpreviousȱsections.ȱ Furthermore,ȱ theȱ regionȱ effectsȱ detectedȱ areȱ alsoȱ inȱ lineȱ withȱ findingsȱ presentedȱ above,ȱandȱareȱobviouslyȱcausedȱthroughȱseveralȱmoderatingȱfactorsȱsuchȱasȱexternalȱ driversȱ (e.g.ȱ regulatoryȱ orȱ societalȱ pressure)ȱ andȱ companyȬspecificȱ characteristicsȱ suchȱasȱcorporateȱcultureȱandȱstructuresȱ(Kolkȱetȱal.,ȱ2001,ȱp.ȱ506).ȱȱ 8.4.4.3 Initiativesȱ 8.4.4.3.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Corporateȱenvironmentalȱandȱsocialȱinitiativesȱobviouslyȱconstituteȱanȱessentialȱpartȱ ofȱ implementingȱ CSM,ȱ sinceȱ theyȱ largelyȱ determineȱ howȱ managersȱ andȱ externalȱ stakeholdersȱseeȱtheȱroleȱcompaniesȱareȱplayingȱinȱresolvingȱtheirȱissues.ȱInȱtheȱfolȬ lowingȱ paragraphsȱ theȱ authorȱ willȱ elaborateȱ onȱ theȱ portfoliosȱ ofȱ initiativesȱ asȱ indiȬ catedȱbyȱtheȱrespondents.ȱ Itȱ shouldȱ beȱ clearlyȱ notedȱ thatȱ levelsȱ ofȱ awarenessȱ andȱ consequentlyȱ alsoȱ activities,ȱ whichȱreflectȱtheȱintegrationȱofȱenvironmentalȱandȱsocialȱissuesȱintoȱoperations,ȱdifȬ ferȱsignificantlyȱacrossȱbusinessȱunitsȱandȱregions.ȱ Inȱ theȱ upstreamȱ business,ȱ peopleȱ haveȱ toȱ dealȱ withȱ changingȱ environmentsȱ andȱ technicalȱ challenges.ȱ Inȱ contrast,ȱ downstreamȱ peopleȱ areȱ “settled”ȱ inȱ theirȱ busiȬ ness,ȱinȱtheirȱmindsetȱ(OG4,ȱSO).ȱ Thusȱtheȱportfoliosȱofȱtoolsȱdisplayedȱbelowȱshowȱaȱ“corporateȱaverage”ȱwhichȱmayȱ deviateȱsubstantiallyȱfromȱthoseȱofȱe.g.ȱaȱparticularȱbusinessȱunit.ȱ

ȱ

252ȱ

8ȱEmpiricalȱevidenceȱ

Policies and other management tools 9% NR 44%

Policies and other management tools 7%

Product changes 3%

Changes in operations and processes 20%

Other 11%

NR 62%

Product changes 0% Changes in operations and processes 7% External activities (Lobbying or campaigning or community involvement) Other 7% 17%

External activities (Lobbying or campaigning or community involvement) 13%

Chartȱ8Ȭ37:ȱResponsesȱtoȱenvironmentalȱandȱ socialȱissuesȱ(Generalȱmanagersȱ–ȱOG)ȱ

Chartȱ8Ȭ38:ȱResponsesȱtoȱenvironmentalȱandȱ socialȱissuesȱ(Generalȱmanagersȱ–ȱUT)ȱ

Generalȱmanagersȱwereȱaskedȱtoȱdescribeȱtheirȱcompanies’ȱresponsesȱtoȱtheȱmostȱimȬ portantȱ environmentalȱ orȱ socialȱ issues.ȱ Mostȱ strikingȱ isȱ theȱ highȱ shareȱ ofȱ noȬ responsesȱinȱbothȱsectors,ȱwhichȱstronglyȱsuggestsȱthatȱgeneralȱmanagersȱareȱmainlyȱ concernedȱ aboutȱ “nonȬsustainabilityȱ issues”ȱ (seeȱ Chartȱ 8Ȭ37ȱ andȱ Chartȱ 8Ȭ38).ȱ FurȬ thermore,ȱtheyȱmayȱnotȱbeȱfullyȱawareȱofȱtheȱentireȱrangeȱofȱactivitiesȱdueȱtoȱtheȱimȬ menseȱscopeȱofȱlargeȱmultinationalȱorganizations.ȱ Thereȱareȱaȱlotȱofȱactivitiesȱrelatingȱtoȱsustainableȱdevelopment,ȱbutȱourȱcompanyȱ isȱ big,ȱ soȱ theyȱ [generalȱ managers]ȱ doȱ notȱ necessarilyȱ knowȱ aboutȱ themȱ (OG2,ȱ SO).ȱ DataȱclearlyȱpointȱtoȱanȱincrementalȱapproachȱtoȱCSMȱinȱbothȱsectors,ȱwhichȱcorreȬ spondsȱ toȱ theirȱ currentȱ strategicȱ dispositionȱ whichȱ wasȱ foundȱ toȱ beȱ ratherȱ lowȱ (seeȱ sectionȱ8.4.2).ȱCorporateȱenvironmentalȱandȱsocialȱperformanceȱ“onȱtheȱground”ȱexȬ hibitsȱ–ȱasȱtheȱintervieweesȱreportedȱ–ȱlittleȱvariationȱinȱtheȱtwoȱsectors.ȱStrategiesȱareȱ notȱonlyȱveryȱsimilar,ȱbutȱareȱalsoȱimplementedȱthroughȱveryȱsimilarȱmodificationsȱ ofȱoperationsȱandȱprocesses.ȱȱ -

Productȱ changesȱ takeȱ aȱ minuteȱ 3%ȱ andȱ 0%ȱ shareȱ inȱ theȱ OGȱ andȱ UTȱ sectors,ȱ reȬ spectively.ȱ Thisȱ correspondsȱ toȱ aȱ weakȱ businessȱ caseȱ forȱ aȱ moreȱ radicalȱ innovaȬ tionȱ ofȱ commoditiesȱ asȱ producedȱ byȱ bothȱ sectors,ȱ andȱ toȱ theȱ deterrentȱ roleȱ ofȱ largelyȱenvironmentallyȱignorantȱandȱhighlyȱpriceȬsensitiveȱcustomers.ȱ

-

OGȱ generalȱ managersȱ mostȱ frequentlyȱ reportȱ modificationsȱ inȱ operationsȱ andȱ processesȱ Asȱ interviewsȱ alsoȱ revealed,ȱ theseȱ modificationsȱ compriseȱ emissionsȱ reductionȱ schemesȱ andȱ efficiencyȱ improvementsȱ acrossȱ theȱ entireȱ valueȱ chainȱ

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253ȱ

suchȱ asȱ reducedȱ flaring,ȱ investmentsȱ inȱ communityȱ infrastructures,ȱ comprehenȬ siveȱenvironmentalȱandȱsocialȱassessmentsȱtoȱensureȱthatȱprojectsȱharmonizeȱwithȱ localȱandȱregionalȱinfrastructuresȱandȱenvironments,ȱandȱincreasedȱtransparency.ȱ BPȱ tookȱ theȱ leadȱ inȱ “open”ȱ revenueȱ sharingȱ (seeȱ alsoȱ sectionȱ 8.1.1.1ȱ Socialȱ andȱ ethicalȱissues)ȱwhenȱitȱannouncedȱinȱ2001ȱthatȱitȱwouldȱpublishȱallȱtheȱpaymentsȱ madeȱ toȱ Angolaȱ (theȱ governmentȱ promptlyȱ threatenedȱ toȱ cancelȱ BP’sȱ contract)ȱ (Fritz,ȱ2003).ȱStatoilȱbecameȱinvolvedȱinȱtheȱtrainingȱofȱVenezuelanȱjudgesȱonȱhuȬ manȱ rightsȱ (Murray,ȱ 2002).ȱ Otherȱ bestȱ practicesȱ includeȱ fullȱ impactȱ assessmentȱ andȱcommunityȱparticipationȱinȱtheȱprojectȱplanningȱ(Bamber,ȱ2002;ȱGavin,ȱ2003).ȱ Overall,ȱ UTȱ dataȱ pointȱ toȱ evenȱ lowerȱ levelsȱ ofȱ awarenessȱ andȱ aȱ lessȱ advancedȱ apȬ proachȱtoȱCSM:ȱTheȱshareȱofȱnoȬresponsesȱisȱevenȱhigher.ȱFurthermore,ȱrespondentsȱ reportȱlessȱchangesȱinȱoperationsȱandȱprocessesȱ(largelyȱlimitedȱtoȱenergyȱefficiencyȱ schemesȱtoȱreduceȱemissions)ȱthanȱtheȱOGȱsector.ȱThisȱcrossȬsectorȱdifferenceȱisȱstaȬ tisticallyȱsignificant.ȱ Initiativesȱ aimedȱ toȱ moreȱ orȱ lessȱ radicallyȱ innovateȱ existingȱ businessȱ modelsȱ inȱ theȱ longȱtermȱexistȱbutȱplayȱaȱratherȱmarginalȱroleȱdueȱtoȱtheirȱweakȱbusinessȱcaseȱcomȬ paredȱ toȱ traditionalȱ activities.ȱ Theyȱ compriseȱ theȱ developmentȱ ofȱ cleanerȱ fuelsȱ andȱ newȱ energyȱ technologiesȱ suchȱ asȱ photovoltaics,ȱ windȱ power,ȱ biomassȱ (Jones,ȱ 2001;ȱ Ristau,ȱ2004),ȱandȱinitiativesȱonȱruralȱelectrificationȱinȱdevelopingȱcountriesȱthroughȱ solarȱhomeȱsystemsȱ(e.g.ȱShellȱandȱEskomȱinȱSouthȱAfrica).ȱFurthermore,ȱUTȱcompaȬ niesȱ inȱ particularȱ undertakeȱ minorȱ effortsȱ inȱ combinedȱ heatȱ andȱ power,ȱ distributedȱ generationȱ (Biedenkopf,ȱ 2003),ȱ andȱ energyȱ servicesȱ andȱ contractingȱ (Joppȱ &ȱ FreisȬ berg,ȱ2003).ȱ TheȱproportionsȱinȱChartȱ8Ȭ37ȱChartȱ8Ȭ38ȱaboveȱsomewhatȱrelativizeȱtheȱportfoliosȱofȱ initiativesȱdisplayedȱinȱChartȱ8Ȭ39ȱandȱChartȱ8Ȭ40.ȱHenceȱitȱisȱlikelyȱthatȱparticularlyȱ responsesȱfromȱtheȱUTȱsectorȱareȱbiased.ȱTheȱonlyȱnotableȱdifferenceȱinȱtheȱproporȬ tionsȱofȱtheȱchartsȱliesȱinȱaȱhigherȱshareȱofȱinitiativesȱthatȱimproveȱsocialȱconditionsȱinȱ theȱ supplyȱ chainȱ inȱ theȱ OGȱ sector,ȱ whereasȱ UTȱ companiesȱ appearȱ toȱ focusȱ moreȱ stronglyȱonȱenvironmentalȱconditionsȱinȱtheȱsupplyȱchain.ȱThisȱisȱplausibleȱsinceȱsoȬ cialȱissuesȱareȱmoreȱsignificantȱinȱdevelopingȱcountries,ȱinȱwhichȱanȱincreasingȱshareȱ ofȱextractionȱandȱproductionȱactivitiesȱofȱOGȱcompaniesȱtakeȱplace.ȱ Aȱ closerȱ lookȱ atȱ theȱ absoluteȱ frequenciesȱ ofȱ individualȱ initiativesȱ beingȱ carriedȱ outȱ (ratherȱthanȱtheȱrelativeȱproportions)ȱrevealsȱthreeȱstatisticallyȱsignificantȱcrossȬsectorȱ differences.ȱOGȱgeneralȱmanagersȱreportȱmoreȱȱ -

ȱ

initiativesȱonȱbusinessȱethics.ȱOneȱmayȱhaveȱexpectedȱaȱlessȱsignificantȱdifferenceȱ dueȱ toȱ renewedȱ interestȱ inȱ theȱ corporateȱ governanceȱ ofȱ UTȱ companiesȱ afterȱ EnȬ ron.ȱ Severalȱ intervieweesȱ actuallyȱ confirmedȱ increasingȱ pressureȱ inȱ thisȱ area.ȱ However,ȱoverallȱaȱgreaterȱinterestȱinȱbusinessȱethicsȱinȱtheȱOGȱsectorȱisȱnotȱimȬ

254ȱ

8ȱEmpiricalȱevidenceȱ

plausible,ȱ sinceȱ corruptionȱ isȱ anȱ ongoingȱ issueȱ inȱ theȱ developingȱ worldȱ andȱ stronglyȱ scrutinizedȱ byȱ NGOsȱ (Anonymous,ȱ 2003c,ȱ 2004b;ȱ Beattie,ȱ 2002;ȱ Schmittȱ etȱal.,ȱ2004).ȱȱ -

initiativesȱimprovingȱsocialȱconditionsȱinȱtheȱsupplyȱchainȱ

-

communityȱinvolvement.ȱ

Other 2% Community Involvement 20% Improved environmental conditions in the entire supply chain 16% Improved social conditions in the entire supply chain 12%

There are no initiatives whatsoever 0% Better environmental practices 25%

Other 1% Community Involvement 16%

There are no initiatives whatsoever 1% Better environmental practices 29%

Improved environmental conditions in the entire supply chain 20%

Business ethics 25%

Chartȱ8Ȭ39:ȱCorporateȱinitiativesȱ(GeneralȱmanȬ agersȱ–ȱOG)ȱ

Improved social conditions in the entire supply chain 7%

Business ethics 26%

Chartȱ8Ȭ40:ȱCorporateȱinitiativesȱ(GeneralȱmanȬ agersȱ–ȱUT)ȱ

AllȱthreeȱdifferencesȱcorrespondȱtoȱOGȱcompanies’ȱgreaterȱinvolvementȱinȱdevelopȬ ingȱcountries.ȱInȱconclusionȱqualitativeȱandȱquantitativeȱdataȱrevealȱgeneralȱmanagȬ ers’ȱsurprisinglyȱlowȱawarenessȱofȱexistingȱcorporateȱenvironmentalȱandȱsocialȱinitiaȬ tives.ȱThisȱcanȱbeȱattributedȱtoȱaȱnarrowȱmindsetȱthatȱlargelyȱfocusesȱonȱissuesȱotherȱ thanȱsocialȱorȱenvironmentalȱones,ȱasȱwellȱasȱtoȱtheȱcomplexityȱandȱscopeȱofȱmultinaȬ tionalȱorganizationsȱsuchȱasȱmajorȱOGȱcompaniesȱinȱparticular,ȱwhoseȱactivitiesȱdifȬ ferȱacrossȱbusinessȱunitsȱandȱregionsȱandȱareȱdifficultȱtoȱkeepȱtrackȱof.ȱTheyȱalsoȱreȬ flectȱcompanies’ȱincrementalȱapproachȱtoȱCSMȱ(asȱdiagnosedȱinȱsectionȱ8.4.2ȱStrategicȱ disposition,ȱwhichȱisȱevenȱmoreȱincrementalȱinȱtheȱUTȱsectorȱthanȱinȱtheȱOGȱsector.ȱ Furthermore,ȱ theȱ portfoliosȱ ofȱinitiativesȱreportedȱ showȱ variationsȱbetweenȱ theȱ twoȱ sectors.ȱ Theseȱ variationsȱ reflectȱ crossȬsectorȱ differencesȱ inȱ issuesȱ andȱ regionsȱ ofȱ opȬ erations:ȱ OGȱ companies’ȱ activitiesȱ compriseȱ significantlyȱ moreȱ initiativesȱ toȱ resolveȱ socialȱandȱethicalȱissuesȱinȱdevelopingȱcountries.ȱ

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255ȱ

8.4.4.3.2 Advancedȱstatisticsȱ TheȱregressionȱmodelsȱpresentedȱinȱRegressionȱTableȱ8Ȭ16ȱshowȱhowȱtheȱportfoliosȱofȱ environmentalȱandȱsocialȱinitiativesȱcarriedȱoutȱbyȱcompaniesȱaffectȱCSMȱsuccess:ȱ

Indep var

T model 172 11.15 0.0000 0.1660 0.1512 .70603 Coeff

Env perf

.6588786

Env supply Other init

Num of obs F Prob > F R-squared Adj R-squared Root MSE

Constant

Indep var

OG model 112 7.83 0.0000 0.2264 0.1974 .70119 Coeff

Indep var

UT model 55 5.31 0.0080 0.1695 0.1376 .66086 Coeff

Env perf

.8897349

Comm involv

.3854271

.326536

Soc supply

.3809096

.9115763

Other init

.7365061

North Am

-.2731517 Marketing Constant

-.6482412

2.598637

Constant

2.553522

3.186432

RegressionȱTableȱ8Ȭ16:ȱCSMȱsuccessȱ–ȱInitiativesȱ(Reducedȱsubmodels)ȱ

Theȱ Tȱ modelȱ showsȱ aȱ positiveȱ influenceȱ onȱ CSMȱ successȱ ofȱ initiativesȱ thatȱ (1)ȱ imȬ proveȱenvironmentalȱperformanceȱandȱ(2)ȱaddressȱenvironmentalȱissuesȱinȱtheȱsupȬ plyȱchain.ȱThisȱsuggestsȱthat,ȱoverall,ȱcompaniesȱinȱtheȱenergyȱindustryȱareȱmostȱsucȬ cessfulȱinȱtheȱenvironmentalȱdimensionȱofȱCSM,ȱpresumablyȱthroughȱeffectiveȱmeasȬ uresȱtoȱimproveȱefficiencyȱandȱreduceȱemissionsȱandȱtheȱriskȱofȱenvironmentalȱinciȬ dents.ȱ Theȱ significantȱ positiveȱ effectȱ ofȱ “otherȱ initiatives”ȱ (whichȱ isȱ alsoȱ foundȱ inȱ theȱ OGȱ sample)ȱ mostȱ likelyȱ indicatesȱ thatȱ respondentsȱ withȱ higherȱ levelsȱ ofȱ awarenessȱ andȱ expertiseȱ–ȱwhoȱwereȱthusȱableȱandȱwillingȱtoȱ“extend”ȱtheȱlistȱofȱitemsȱprovidedȱinȱ theȱmultipleȱchoiceȱquestionȱ–ȱtendȱtoȱreportȱgreaterȱCSMȱsuccess.ȱ TheȱOGȱandȱUTȱmodelsȱrevealȱsomeȱnotableȱcrossȬsectorȱdifferences:ȱ -

InȱtheȱOGȱsector,ȱcorporateȱactivitiesȱtoȱresolveȱsocialȱissuesȱinȱtheȱsupplyȱchainȱ haveȱ aȱ positiveȱ effectȱ onȱ CSMȱ success,ȱ alongsideȱ initiativesȱ thatȱ improveȱ enviȬ ronmentalȱperformanceȱofȱcorporateȱactivities.ȱThisȱresultȱisȱinȱparallelȱwithȱbothȱ qualitativeȱandȱquantitativeȱevidenceȱpresentedȱearlierȱ(seeȱsectionsȱ8.1.1.1ȱSocialȱ andȱ ethicalȱ issuesȱ andȱ 8.4.2ȱ Strategicȱ disposition)ȱ insofarȱ asȱ theyȱ reflectȱ theȱ sigȬ nificanceȱ ofȱ socialȱ issuesȱ inȱ developingȱ countriesȱ andȱ aȱ clearȱ economicȱ rationaleȱ forȱresolvingȱthem.ȱ

-

InȱtheȱUTȱsector,ȱnoneȱofȱtheȱenvironmentalȱinitiativesȱhasȱaȱsignificantȱeffectȱonȱ CSMȱsuccess,ȱalthoughȱqualitativeȱanalysisȱpointedȱtoȱsignificantȱandȱeffectiveȱinȬ vestmentsȱ inȱ moreȱ efficientȱ processesȱ ofȱ powerȱ generationȱ (tagesschau.de,ȱ 2003;ȱ WBCSD,ȱ2002,ȱp.ȱ20).ȱSinceȱconstraintsȱinȱtheȱdegreesȱofȱfreedomȱareȱunlikelyȱtoȱ beȱtheȱcause,ȱtheȱresultsȱareȱindeedȱpuzzling.ȱTheyȱcouldȱpointȱtoȱaȱmoreȱheteroȬ

ȱ

256ȱ

8ȱEmpiricalȱevidenceȱ

geneousȱperceptionȱofȱCSMȱsuccessȱinȱtheȱUTȱsector:ȱCompanyȬspecificȱcharacterȬ isticsȱ mayȱ haveȱ subduedȱ theȱ expectedȱ relationship,ȱ reflectingȱ differencesȱ inȱ fuelȱ mixȱandȱinȱtheȱcurrentȱlevelsȱofȱmarketȱliberalization.ȱTheȱstatisticallyȱsignificantȱ andȱpositiveȱeffectȱofȱcommunityȱinvolvementȱcouldȱindicateȱthatȱgoodȱrelationȬ shipsȱ withȱ residentsȱ aroundȱ powerȱ plantsȱ andȱ extractionȱ sitesȱ constituteȱ aȱ keyȱ dimensionȱofȱsuccessfulȱcorporateȱinitiativesȱsinceȱtheyȱimproveȱtheȱlicenseȱtoȱopȬ erateȱ(andȱgrow).ȱ Overall,ȱ evidenceȱ presentedȱ indicatesȱ thatȱ theȱ undertakingȱ ofȱ certainȱ initiativesȱ deȬ terminesȱtheȱsuccessȱofȱCSM.ȱItȱisȱnotȱsurprisingȱthatȱtheȱenvironmentalȱinitiativesȱareȱ associatedȱ withȱ greaterȱ success,ȱ sinceȱ companiesȱ areȱ muchȱ moreȱ experiencedȱ withȱ programsȱthatȱimproveȱefficiency,ȱreduceȱwasteȱorȱavoidȱenvironmentalȱincidentsȱ Regressionsȱ alsoȱ reveal,ȱ onceȱ again,ȱ theȱ contingent,ȱ issueȬȱ andȱ henceȱ sectorȬspecificȱ natureȱ ofȱ CSM:ȱ Inȱ theȱ OGȱ sectorȱ initiativesȱ thatȱ resolveȱ socialȱ issuesȱ inȱ companies’ȱ supplyȱchainȱandȱinitiativesȱthatȱimproveȱenvironmentalȱperformanceȱareȱpositivelyȱ linkedȱ withȱ CSMȱ success.ȱ Thisȱ resultȱ showsȱ thatȱ companiesȱ (successfully)ȱ focusȱ onȱ initiativesȱundertakenȱtoȱaddressȱtheȱmostȱimportantȱissues.ȱItȱisȱalsoȱaȱclearȱsignȱofȱ theȱsampleȱbiasȱtowardȱleadingȱcompanies.ȱObviouslyȱtheyȱnotȱonlyȱ–ȱinȱcontrastȱtoȱ laggardsȱ –ȱ considerȱ socialȱ issuesȱ relevantȱ toȱ theirȱ licenseȱ toȱ operateȱ butȱ haveȱ alsoȱ learnedȱtoȱcarryȱoutȱinitiativesȱtoȱresolveȱthemȱeffectively.ȱ 8.4.4.3.3 Discussionȱ Initiativesȱandȱawarenessȱ Theȱrevealedȱlackȱofȱrespondents’ȱawarenessȱofȱexistingȱenvironmentalȱandȱsocialȱiniȬ tiativesȱ ȱ isȱ somewhatȱ sobering,ȱ particularlyȱ ifȱ oneȱ takesȱ intoȱ accountȱ thatȱ onlyȱ theȱ moreȱinterested,ȱandȱhenceȱmoreȱlikelyȱtoȱbeȱleadingȱcompaniesȱinȱtheȱsectorȱparticiȬ patedȱ inȱ theȱ survey.ȱ Itȱ clearlyȱ illustratesȱ howȱ “preoccupiedȱ withȱ theȱ dailyȱ grindȱ ofȱ businessȱandȱmaximizingȱshareholderȱvalue”ȱmanagersȱare,ȱandȱhowȱchallengingȱitȱ isȱforȱsustainabilityȱofficersȱtoȱpromoteȱenvironmentalȱandȱsocialȱinitiativesȱinȱaȱlargeȱ multinationalȱorganizationȱ(Steger,ȱ2004,ȱp.ȱ72).ȱ Itȱalsoȱreflectsȱcompanies’ȱlargelyȱincrementalȱapproachȱtoȱCSM,ȱwhichȱisȱprimarilyȱ characterizedȱ throughȱ aȱ moreȱ responsibleȱ interpretationȱ ofȱ businessȬasȬusual,ȱ andȱ correspondsȱ toȱ aȱ businessȱ caseȱ thatȱ isȱ largelyȱ basedȱ onȱ theȱ managementȱ ofȱ operaȬ tionalȱrisks.ȱThisȱfindingȱpointsȱtoȱtwoȱrequirements:ȱ 1. Issuesȱ needȱ toȱ beȱ moreȱ stronglyȱ integratedȱ intoȱ companies’ȱ strategiesȱ andȱ businessȱ models.ȱ However,ȱ severalȱ challengesȱ remainȱ includingȱ anȱ elusiveȱ businessȱcase,ȱmanagers’ȱmindsetȱandȱotherȱinternalȱbarriersȱdescribedȱinȱtheȱ presentȱstudy.ȱ

8.4ȱCompaniesȱ

257ȱ

2. Itȱ isȱ importantȱ toȱ celebrateȱ successfulȱ initiatives,ȱ featureȱ themȱ onȱ theȱ comȬ pany’sȱintranet,ȱinȱcompanyȱdocuments,ȱwithinȱandȱacrossȱbusinessȱunits.ȱ TheȱincrementalȱapproachȱtoȱCSMȱisȱalsoȱreflectedȱinȱtheȱportfoliosȱofȱinitiativesȱdeȬ scribedȱbyȱrespondents.ȱTheyȱareȱlargelyȱlimitedȱtoȱincrementalȱinnovationsȱtoȱprocȬ essesȱandȱoperationsȱandȱthusȱpointȱtoȱfewȱdifferencesȱinȱtheȱoverallȱcorporateȱenviȬ ronmentalȱ andȱ socialȱ performanceȱ betweenȱ companiesȱ inȱ theirȱ sectorȱ (Friedl,ȱ 2003;ȱ Hoyosȱetȱal.,ȱ2003;ȱKuhnt,ȱ2003).ȱ Focusȱandȱeffectsȱ QuantitativeȱmethodsȱalsoȱshowȱaȱgeneralȱenvironmentalȱfocusȱinȱtheȱinitiativesȱchoȬ sen.ȱ Thisȱ isȱ plausible,ȱ sinceȱ environmentalȱ issuesȱ areȱ –ȱ asȱ outlinedȱ inȱ sectionȱ 8.1ȱ IsȬ suesȱ–ȱasȱlongȱasȱtheyȱareȱofȱlocalȱorȱregionalȱnature,ȱeasierȱtoȱassessȱandȱaddress.ȱSoȬ cialȱissuesȱhaveȱonlyȱmoreȱrecentlyȱcomeȱintoȱfocus,ȱparticularlyȱtheȱthroughȱactiviȬ tiesȱ ofȱ humanȱ rightsȱ organizationsȱ andȱ otherȱ NGOs,ȱ andȱ theirȱ useȱ ofȱ internetȱ andȱ otherȱmedia.ȱTheyȱareȱmoreȱdifficultȱtoȱassessȱandȱhandle,ȱasȱtheyȱgoȱbeyondȱcompaȬ nies’ȱtraditionalȱfocusȱonȱtheirȱownȱfacilitiesȱ(e.g.ȱcommunityȱinvolvement,ȱfairȱalloȬ cationȱofȱrevenues).ȱ Furthermore,ȱtheȱportfoliosȱofȱinitiativesȱfeatureȱaȱcertainȱcontingencyȱonȱissues.ȱObȬ viouslyȱ thisȱ impliesȱ thatȱ theyȱ areȱ sectorȬspecific.ȱ Aȱ focusȱ onȱ theȱ importantȱ issuesȱ isȱ highlyȱplausibleȱifȱoneȱassumesȱthatȱcompaniesȱmakeȱaȱrationalȱchoiceȱwhenȱattemptȬ ingȱ toȱ addressȱ thoseȱ issuesȱ thatȱ mostȱ significantlyȱ threatenȱ theirȱ licenseȱ toȱ operate.ȱ Resultsȱ ofȱ theȱ regressionȱ analysisȱ alsoȱ suggestȱ thatȱ thisȱ strategyȱ isȱ successful,ȱ theyȱ showȱ thatȱ OGȱ companiesȱ thatȱ undertakeȱ initiativesȱ toȱ addressȱ socialȱ andȱ environȬ mentalȱissuesȱreportȱhigherȱlevelsȱofȱCSMȱsuccess.ȱHowever,ȱthereȱareȱobviouslyȱsevȬ eralȱpossibleȱmoderatingȱfactors,ȱsuchȱasȱcorporateȱcultureȱandȱstructures,ȱwhichȱareȱ unaccountedȱ forȱ inȱ theȱ regressionȱ models.ȱ Theyȱ willȱ beȱ includedȱ inȱ theȱ regressionȱ modelsȱfeaturedȱinȱtheȱnextȱsectionȱtoȱfacilitateȱaȱmoreȱdifferentiatedȱanalysisȱofȱtheȱ determinantsȱofȱCSMȱsuccess.ȱ Contingencyȱperspectiveȱonȱcorporateȱenvironmentalȱandȱsocialȱinitiativesȱ TheȱpresentȱstudyȱshowsȱthatȱcompaniesȱundertakeȱinitiativesȱtoȱfocusȱonȱtheirȱpriȬ maryȱ issues.ȱ Thisȱ impliesȱ thatȱ theirȱ portfolioȱ ofȱ initiativesȱ areȱ notȱ onlyȱ sectorȬȱ butȱ alsoȱregionȬspecific:ȱOGȱcompaniesȱfocusȱtheirȱsocialȱandȱethicalȱissuesȱinȱdevelopingȱ countriesȱ(e.g.ȱlackȱofȱcommunityȱinfrastructures,ȱhumanȱrightsȱandȱcorruption),ȱUTȱ companiesȱ moreȱ onȱ environmentalȱ problems,ȱ suchȱ asȱ climateȱ change,ȱ thatȱ presentȱ theȱprevalentȱissuesȱinȱdevelopedȱcountries,ȱtheirȱmainȱregionsȱofȱoperations.ȱ

ȱ

258ȱ

8.4.5

8ȱEmpiricalȱevidenceȱ

Outcomeȱ

8.4.5.1 Qualitativeȱanalysisȱandȱbasicȱstatisticsȱ Generalȱmanagers’ȱratingsȱofȱtheȱsuccessȱofȱtheirȱcompanies’ȱenvironmentalȱandȱsoȬ cialȱinitiativesȱareȱ–ȱlikeȱthoseȱofȱtheȱintensityȱandȱeffectivenessȱofȱcrossȬdisciplinaryȱ structuresȱ(seeȱsectionȱ8.4.4.2ȱStructure)ȱ–ȱrelativelyȱlow.ȱTheȱmeansȱdisplayedȱinȱTaȬ bleȱ 8Ȭ10ȱbelowȱ indicateȱ thatȱ theȱ successȱ ofȱ initiativesȱ isȱ onȱ averageȱ ratedȱ betweenȱ 3ȱ (“moreȱorȱless”)ȱandȱ4ȱ(“much”).ȱ OGȱ generalȱ managersȱ considerȱ environmentalȱ andȱ socialȱ initiativesȱ inȱ theirȱ compaȬ niesȱ moreȱ successfulȱ thanȱ UTȱ generalȱ managersȱ do.ȱ Thisȱ differenceȱ isȱ statisticallyȱ significantȱatȱaȱ10%ȱlevelȱandȱinȱlineȱwithȱfindingsȱfromȱtheȱpreviousȱsectionsȱwhichȱ revealedȱlowerȱoutsideȱpressure,ȱlessȱstrategicȱdisposition,ȱasȱwellȱasȱaȱrelativeȱlackȱofȱ implementationȱcomparedȱtoȱtheȱOGȱsectorȱ(lessȱmanagement,ȱlessȱcrossȬdisciplinaryȱ structures).ȱ Howȱsuccessfulȱwereȱcorporateȱenvironmentalȱandȱsocialȱinitiatives?ȱ(1ȱ=ȱ“Notȱatȱall”ȱtoȱ5ȱ=ȱ“Veryȱmuch”)ȱ Generalȱmanagersȱ Sectorȱ

Obsȱ

Meanȱ

Std.ȱErr.ȱ

Std.ȱDev.ȱ

95%ȱConf.ȱIntervalȱ

UTȱ OGȱ

55ȱ 117ȱ

3.290909ȱ 3.512821ȱ

.0959543ȱ .0724456ȱ

.711616ȱ .7836188ȱ

3.098532ȱȱȱȱ3.483286ȱ 3.369333ȱȱȱȱ3.656308ȱ

Tableȱ8Ȭ10:ȱSummaryȱstatisticsȱ–ȱCSMȱsuccessȱ

Whenȱaskedȱtoȱbenchmarkȱtheirȱcompanies’ȱandȱsectors’ȱprogressȱinȱadoptingȱmoreȱ sustainableȱ businessȱ practicesȱ withȱ otherȱ sectorsȱ andȱ peers,ȱ respondentsȱ fromȱ bothȱ sectorsȱindicatedȱthatȱbothȱtheirȱsectorsȱasȱaȱwholeȱandȱtheirȱcompaniesȱachievedȱanȱ aboveȱaverageȱlevelȱofȱperformance.ȱ Overallȱ aȱ moreȱ thanȱ averageȱ sectorȱ performanceȱ seemsȱ moreȱ reasonableȱ inȱ theȱ OGȱ thanȱinȱtheȱUTȱsector,ȱbecauseȱtheȱformerȱhasȱbeenȱmoreȱstronglyȱpromptedȱtoȱadoptȱ moreȱsustainableȱbusinessȱpractices,ȱand,ȱimplementedȱCSMȱmoreȱcomprehensivelyȱ (asȱshownȱinȱpreviousȱsections).ȱ Althoughȱ itȱ remainsȱ unclearȱ onȱ whichȱ referenceȱ pointsȱ andȱ criteriaȱ ofȱ comparisonȱ responsesȱ areȱ based,ȱ greaterȱ corporateȱ performanceȱ comparedȱ toȱ peersȱ appearsȱ reaȬ sonableȱinȱbothȱsectors,ȱsinceȱtheȱsamplesȱareȱcertainlyȱbiasedȱtowardȱtheȱsectorȱleadȬ ersȱ (seeȱ Chartȱ 8Ȭ41).ȱ Theȱ typicalȱ laggardsȱ suchȱ asȱ nationalȱ oilȱ companiesȱ andȱ stateȬ ownedȱenergyȱutilitiesȱinȱdevelopingȱcountriesȱwereȱnotȱtargetedȱinȱthisȱsurveyȱandȱ wereȱmostȱunlikelyȱtoȱparticipateȱdueȱtoȱlackȱofȱinterest.ȱ TheȱlowȱratingsȱofȱCSMȱsuccessȱpresentedȱaboveȱareȱparticularlyȱsurprisingȱandȱtellȬ ingȱifȱoneȱtakesȱintoȱaccountȱthatȱ(1)ȱtheȱsurveyȱisȱbiasedȱtowardȱleadingȱcompaniesȱ inȱtheirȱsectors,ȱandȱ(2)ȱresponsesȱareȱadditionallyȱsubjectȱtoȱsocialȱdesirabilityȱbias.ȱ Theyȱpointȱtoȱseveralȱsignificantȱinternalȱbarriersȱdiscussedȱinȱtheȱpreviousȱsection.ȱ

8.4ȱCompaniesȱ

259ȱ

3

Performance compared to other industries and peers (1 = "Underperformer" to 3 = "Outperformer")

UT sustainability officers OG sustainability officers

2

1

0

Other industries

Peers

ȱ

Chartȱ8Ȭ41:ȱProgressȱinȱadoptingȱmoreȱsustainableȱbusinessȱpracticesȱ

Theȱ sustainabilityȱ officersȱ interviewed,ȱ inȱ particular,ȱ attributedȱ theȱ lackȱ ofȱ successȱ andȱ inconsistenciesȱ inȱ practicesȱ toȱ internalȱ deficitsȱ suchȱ asȱ lackȱ ofȱ knowlȬ edge/expertiseȱandȱaȱpredominantlyȱreactiveȱmindsetȱofȱtheȱworkforce,ȱwhichȱpointsȱ toȱ aȱ lackȱ ofȱ organizationalȱ alignmentȱ asȱ oneȱ ofȱ theȱ mostȱ significantȱ challengesȱ ofȱ CSM.ȱ Outsideȱ factorsȱ suchȱ asȱ lackȱ ofȱ interestȱ fromȱ customers,ȱ investorsȱ orȱ otherȱ stakeholdersȱareȱunlikelyȱtoȱplayȱaȱsignificantȱdeterrentȱrole,ȱsince,ȱasȱalreadyȱstatedȱ inȱ severalȱ sectionsȱ above,ȱ companies’ȱ approachȱ toȱ CSMȱ isȱ largelyȱ incrementalȱ andȱ thusȱ doesȱ notȱ stronglyȱ relyȱ onȱ buyȬinȱ fromȱ externalȱ stakeholdersȱ (seeȱ e.g.ȱ sectionȱ 8.4.1ȱCompanyȬspecificȱdeterminants).ȱ 8.4.5.2 Advancedȱstatisticsȱ Inȱ theȱ presentȱ section,ȱ possibleȱ determinantsȱ ofȱ CSMȱ successȱ areȱ assessedȱ throughȱ bothȱcorrelationȱandȱregressionȱanalysis.ȱ 8.4.5.2.1 Correlationsȱ Figureȱ8Ȭ34ȱdisplaysȱallȱcorrelationsȱbetweenȱCSMȱsuccessȱandȱtheȱotherȱvariablesȱacȬ countedȱforȱinȱtheȱcorrelationȱanalysis.ȱTheyȱhaveȱallȱalreadyȱbeenȱdiscussedȱinȱdetailȱ inȱtheȱpreviousȱsections,ȱandȱthusȱwillȱonlyȱbeȱsummarizedȱinȱaȱtableȱbelow.ȱ

ȱ

260ȱ

8ȱEmpiricalȱevidenceȱ

Issues

Companies

Socialȱissues Environmentalȱissues

Managers

BBB:ȱBusinessȱofȱbusinessȱisȱbusiness WW:ȱCSMȱonlyȱinȱwinȬwinȱsituations CA:ȱCSMȱtoȱgainȱcompetitiveȱadv.

OG,ȱT OG,ȱUT,ȱT

UCA:ȱCSMȱdespiteȱunprovenȱcomp.ȱadv.

Externalȱstakeholders FutureȱSDȱrole

Strategic disposition OG,ȱUT,ȱT CSMȱINTENT disposition

Capitalȱmarkets Importanceȱofȱlegitimacy

Legitimacy

OG,ȱUT,ȱT

Damageȱtoȱlegitimacy OG,ȱT

Structure

Consumers

CSMȱSUCCESS

PPPs

OG,ȱT

Industry

OG,ȱT

NGOs

CrossȬdisc.ȱcollabor. CrossȬdisc.ȱpotential

Governments CurrentȱSDȱrole

SDȱfamiliarity

OG,ȱTStrategic SDȱimportance

Positiveȱcorrelation Negativeȱcorrelation

ȱ Figureȱ8.34:ȱCorrelationsȱ–ȱCSMȱsuccessȱ

DataȱshowȱlinksȱbetweenȱCSMȱsuccessȱandȱallȱfourȱdeterminantsȱofȱCSMȱincludedȱinȱ theȱ study’sȱ conceptualȱ framework:ȱ issuesȱ (publicȱ responsibility),ȱ stakeholdersȱ (leȬ gitimacy),ȱ managers’ȱ attitudesȱ (managerialȱ discretion)ȱ andȱ companyȬspecificȱ deterȬ minantsȱ(strategicȱdispositionȱandȱstructure).ȱ Basedȱonȱtheȱstudy’sȱmodelȱofȱcorporateȱsustainabilityȱperformanceȱ(seeȱFigureȱ4Ȭ1),ȱ theȱoutcomeȱofȱCSMȱisȱdeterminedȱbyȱcompanies’ȱstrategicȱdispositionȱto,ȱeconomicȱ rationaleȱforȱandȱimplementationȱofȱit.ȱCorrelationȱresultsȱclearlyȱsupportȱtheȱmodelȱ insofarȱasȱtheyȱshowȱaȱclearȱlinkȱbetweenȱCSMȱsuccessȱonȱtheȱoneȱhandȱandȱstrategicȱ dispositionȱandȱstructureȱ(asȱoneȱelementȱofȱimplementation)ȱonȱtheȱother.ȱ Thisȱ alsoȱ meansȱ thatȱ correlationsȱ betweenȱ CSMȱ successȱ andȱ bothȱ issueȱ significanceȱ andȱ theȱ importanceȱ ofȱ legitimacyȱ areȱ mostȱ likelyȱ causedȱ throughȱ theȱ correlationȱ ofȱ CSMȱsuccessȱwithȱCSMȱintentȱ(mostȱlikelyȱanyȱvariableȱthatȱoperationalizesȱcompaȬ nies’ȱlevelȱofȱstrategicȱdisposition),ȱwhichȱwasȱfoundȱtoȱbeȱdeterminedȱbyȱbothȱvariȬ ables.ȱ

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261ȱ

TestedȱvariȬ ablesȱ

Detectedȱlinkȱ

Briefȱinterpretationȱ

ReferenceȱtoȱsecȬ torȬspecificȱinterȬ pretationȱ

IssueȱsignifiȬ canceȱ

Positiveȱ(10%ȱ significanceȱ level)ȱ

Greaterȱissueȱsignificanceȱleadsȱtoȱgreaterȱ strategicȱdispositionȱtoȱandȱimplementationȱ ofȱCSMȱandȱthusȱtoȱgreaterȱsuccessȱ

Sectionȱ8.1ȱIssuesȱȱ

Managers’ȱattiȬ tudesȱ

Positiveȱ(forȱ proactiveȱattiȬ tudes)ȱ

Moreȱproactiveȱmanagersȱreportȱgreaterȱ CSMȱsuccessȱbecauseȱtheyȱimplementȱinitiaȬ tivesȱmoreȱeffectivelyȱand/orȱtheyȱconsiderȱ themȱmoreȱsuccessfulȱ(asȱaȱwayȱofȱ“doingȱ good”)ȱ

Sectionȱ8.3ȱManagȬ ersȱȱ

Importanceȱofȱ legitimacyȱ

Positiveȱ

Greaterȱimportanceȱofȱtheȱinformalȱlicenseȱ toȱoperateȱdrivesȱCSMȱsuccessȱthroughȱ greaterȱstrategicȱdispositionȱandȱconseȬ quentlyȱmoreȱeffectiveȱimplementationȱofȱ CSMȱ

Sectionȱ8.2.6.1ȱTheȱ roleȱofȱlegitimacyȱ

Industry’sȱcurȬ rentȱSDȱroleȱ

Positiveȱ

Respondentsȱwhoȱconsiderȱtheirȱcompany’sȱ environmentalȱandȱsocialȱinitiativesȱmoreȱ successfulȱhaveȱaȱmoreȱpositiveȱperceptionȱ ofȱtheȱentireȱsector’sȱperformanceȱ

Sectionȱ8.2.5ȱIndusȬ tryȱandȱpartnerȬ shipsȱ

PublicȬprivateȱ partnerships’ȱ currentȱSDȱroleȱ

Positiveȱ

CSMȱsuccessȱandȱaȱpositiveȱroleȱofȱPPPsȱareȱ linkedȱbecauseȱ(1)ȱpartnershipsȱsubstanȬ tiallyȱcontributeȱtoȱtheȱsuccessȱofȱcorporateȱ initiatives,ȱorȱ(2)ȱCSMȱsuccessȱisȱgreaterȱinȱ leadingȱcompanies,ȱwhichȱareȱalsoȱmoreȱ awareȱofȱtheȱneedȱtoȱengageȱinȱPPPsȱ

Sectionȱ8.2.5ȱIndusȬ tryȱandȱpartnerȬ shipsȱȱ

StrategicȱdispoȬ sitionȱ

Positiveȱ

Greaterȱstrategicȱdispositionȱleadsȱtoȱ strongerȱimplementationȱofȱCSMȱ(tools,ȱ structures)ȱandȱthusȱincreasesȱCSMȱsuccessȱ

Sectionȱ8.4.2ȱStraȬ tegicȱdispositionȱȱ

CrossȬ disciplinaryȱ collaborationȱ

Positiveȱ

MoreȱintensiveȱcrossȬdisciplinaryȱcollaboraȬ tionȱincreasesȱCSMȱsuccessȱthroughȱcrossȬ fertilizationȱ

Sectionȱ8.4.4.2ȱ Structureȱ

Tableȱ8Ȭ11:ȱCorrelationsȱwithȱCSMȱsuccessȱ

Theȱlimitedȱimportanceȱofȱexternalȱfactorsȱ(e.g.ȱSDȱrolesȱofȱgovernments,ȱcustomers,ȱ publicȱpressureȱgroups)ȱtoȱCSMȱsuccessȱisȱhighlyȱplausibleȱifȱoneȱtakesȱintoȱaccountȱ evidenceȱ presentedȱ aboveȱ (inȱ sectionȱ 8.4.1ȱ inȱ particular):ȱ Companies’ȱ approachȱ toȱ CSMȱfeaturesȱsuchȱincrementalȱmodificationsȱtoȱbusinessȱmodelsȱandȱproductsȱthatȱ theirȱ successȱ isȱ primarilyȱ determinedȱ byȱ internalȱ driversȱ andȱ barriersȱ ratherȱ thanȱ largelyȱignorantȱexternalȱstakeholders.ȱ 8.4.5.2.2 Regressionsȱ Inȱ theȱ followingȱ paragraphs,ȱ regressionȱ modelsȱ areȱ employedȱ toȱ assessȱ theȱ jointȱ efȬ fectȱofȱtwoȱdifferentȱsetsȱofȱindependentȱvariablesȱonȱCSMȱsuccess:ȱ(1)ȱCorporateȱdisȬ

ȱ

262ȱ

8ȱEmpiricalȱevidenceȱ

cretionaryȱ determinantsȱ andȱ (2)ȱ Corporateȱ andȱ managerialȱ discretionaryȱ factorsȱ asȱ wellȱasȱexternalȱbarriers.ȱ CorporateȱdiscretionaryȱdeterminantsȱofȱCSMȱsuccessȱȱ Theȱ reducedȱ modelsȱ displayedȱ inȱ Regressionȱ Tableȱ 8Ȭ17ȱ showȱ severalȱ statisticallyȱ significantȱeffectsȱofȱhypothesizedȱcorporateȱdiscretionaryȱdeterminantsȱofȱCSMȱsucȬ cess:ȱ

Indep var Env perf

T model 71 9.15 0.0000 0.2906 0.2588 .65605 Coeff .6509395

Incent tools

.6724412

Corp cult

-.557211

Constant

2.650915

Num of obs F Prob > F R-squared Adj R-squared Root MSE

Indep var Soc supply

OG model 113 7.60 0.0000 0.2197 0.1908 .7124 Coeff .2 2935317

Indep var

UT model 49 4.21 0.0209 0.1548 0.1181 .61235 Coeff

Strat tools Incent tools Coord commit

.2794148 .3234996 .3105709

Bus teams

.4606742

Constant

Age > 50

.5200642

2.993478

Constant

3.128411

RegressionȱTableȱ8Ȭ17:ȱCSMȱsuccessȱ–ȱAllȱcorporateȱdiscretionaryȱfactorsȱ(Reducedȱclusterȱmodel)ȱ

TheȱTȱmodelȱfeaturesȱstatisticallyȱsignificantȱeffectsȱofȱinitiativesȱthatȱimproveȱenviȬ ronmentalȱ performance,ȱ asȱ wellȱ asȱ incentiveȱ toolsȱ andȱ corporateȱ culture.ȱ Allȱ threeȱ independentȱ variablesȱ haveȱ alreadyȱ beenȱ foundȱ toȱ determineȱ CSMȱ successȱ inȱ theirȱ individualȱsubmodelsȱabove.ȱTheȱfactȱthatȱtheirȱeffectsȱremainȱstatisticallyȱsignificantȱ inȱtheȱsummaryȱmodelȱrevealsȱthemȱasȱparticularlyȱclearȱdeterminantsȱofȱCSMȱsucȬ cess.ȱ Theȱthreeȱdetectedȱeffectȱareȱhighlyȱplausible,ȱandȱhaveȱalreadyȱbeenȱinterpretedȱinȱ detailȱinȱtheirȱrespectiveȱsectionsȱabove:ȱ -

Theȱpositiveȱeffectȱofȱinitiativesȱimprovingȱenvironmentalȱperformanceȱindicatesȱ thatȱcompaniesȱareȱmoreȱsuccessfulȱatȱenvironmentalȱinitiatives,ȱpresumablyȱbeȬ causeȱtheyȱareȱeasierȱtoȱevaluateȱandȱaddress.ȱ

-

Theȱ positiveȱ effectȱ ofȱ incentiveȱ toolsȱ pointsȱ toȱ theȱ importanceȱ ofȱ softȱ managers’ȱ managementȱ tools.ȱ Thisȱ effectȱ isȱ veryȱ plausibleȱ asȱ incentiveȱ toolsȱ areȱ usedȱ inȱ aȱ moreȱ advancedȱ stageȱ ofȱ companies’ȱ strategicȱ redirection.ȱ Theyȱ allowȱ companiesȱ toȱ effectivelyȱ shapeȱ managers’ȱ perceptionsȱ andȱ expectationsȱ andȱ thusȱ influenceȱ theȱ “soft”ȱ capabilitiesȱ neededȱ toȱ dealȱ withȱ theȱ complexityȱ ofȱ CSMȱ (Dozȱ etȱ al.,ȱ 1988;ȱSharmaȱetȱal.,ȱ1999).ȱ

-

Theȱnegativeȱeffectȱofȱorganizationalȱculturesȱreflectsȱtheȱimportanceȱofȱ“soft”ȱinȬ ternalȱbarriers,ȱwhichȱcanȱbeȱmainlyȱattributedȱtoȱtheȱcomplexityȱofȱissuesȱandȱexȬ

8.4ȱCompaniesȱ

263ȱ

ternalȱ demands,ȱ whichȱ isȱ likelyȱ toȱ overwhelmȱ companies’ȱ “hardware,”ȱ i.e.ȱ theirȱ toolsȱandȱsystems.ȱ ResultsȱofȱtheȱtwoȱsectorȬspecificȱmodelsȱareȱalsoȱinsightfulȱinȱseveralȱways.ȱ Theȱ OGȱ modelȱ showsȱ positiveȱ effectsȱ ofȱ supplyȱ chainȱ initiativesȱ thatȱ resolveȱ socialȱ issues,ȱandȱthreeȱmanagementȱtools,ȱnamelyȱstrategyȱtools,ȱincentiveȱtoolsȱandȱcoorȬ dinationȱcommittees.ȱTheseȱresultsȱareȱinȱparallelȱwithȱfindingsȱpresentedȱabove,ȱasȱ theyȱsupportȱtheȱconclusionȱthatȱleadingȱOGȱcompaniesȱ(1)ȱhaveȱrecognizedȱtheȱimȬ portanceȱofȱresolvingȱsocialȱissuesȱinȱdevelopingȱcompaniesȱandȱlearnedȱtoȱcarryȱoutȱ correspondingȱinitiativesȱeffectively,ȱandȱ(2)ȱhaveȱmoreȱfrequentȱandȱeffectiveȱuseȱofȱ managementȱ tools.ȱ Itȱ isȱ alsoȱ meaningfulȱ toȱ noteȱ thatȱ allȱ threeȱ toolȱ categoriesȱ –ȱ dataȱ management,ȱmanagers’ȱmanagementȱandȱconflictȱresolutionȱ(Dozȱetȱal.,ȱ1988,ȱp.ȱ76)ȱ –ȱfeatureȱinȱtheȱmodel.ȱThisȱsuggestȱthatȱallȱthreeȱcategoriesȱofȱmanagementȱtoolsȱareȱ meaningfulȱdeterminantsȱofȱCSMȱsuccessȱandȱeffectivelyȱcomplementȱeachȱother.ȱ Theȱ UTȱ modelȱ onlyȱ featuresȱ oneȱ statisticallyȱ significantȱ coefficientȱ forȱ aȱ nonȬ demographicȱvariable,ȱnamelyȱbusinessȱteams.ȱOtherȱmanagementȱtoolsȱhaveȱnoȱefȬ fect,ȱbecauseȱtheyȱareȱlackingȱorȱineffective.ȱ Althoughȱ theȱ resultsȱ couldȱ alsoȱ beȱ affectedȱ byȱ theȱ smallerȱ sampleȱ size,ȱ theȱ relativeȱ lackȱ ofȱ statisticallyȱ significantȱ independentȱ variablesȱ stronglyȱ pointsȱ toȱ aȱ lessȱ adȬ vancedȱapproachȱtoȱCSM.ȱThisȱfindingȱisȱalsoȱsupportedȱbyȱtheȱfactȱthatȱ–ȱunlikeȱinȱ theȱOGȱsampleȱ–ȱbusinessȱteamsȱratherȱthanȱcoordinationȱcommitteesȱpositivelyȱinȬ fluenceȱCSMȱsuccess.ȱObviouslyȱCSMȱisȱstillȱpursuedȱonȱaȱlessȱstrategicȱlevelȱinȱtheȱ UTȱsectorȱ(asȱalsoȱindicatedȱbyȱlessȱstrategicȱdispositionȱdiagnosedȱinȱsectionȱ8.4.2).ȱ Thisȱisȱwhyȱbusinessȱteamsȱsufficeȱtoȱresolveȱconflictsȱthatȱtendȱtoȱtakeȱplaceȱatȱtheȱ operationalȱlevel.ȱ OGȱcompanies,ȱbyȱcontrast,ȱrelyȱonȱcoordinationȱcommitteesȱbecauseȱtheirȱapproachȱ isȱmoreȱstrategicȱandȱrequiresȱconsensusȱbuildingȱatȱtheȱstrategicȱorȱcorporateȱlevel.ȱ TheȱfactȱthatȱtheȱUTȱmodelȱfeaturesȱaȱstatisticallyȱsignificantȱeffectȱofȱonlyȱoneȱvariȬ able,ȱ namelyȱ businessȱ teams,ȱ asȱ aȱ conflictȱ resolutionȱ tool,ȱ suggestsȱ thatȱ theȱ internalȱ conflictsȱaboutȱtheȱneedȱforȱCSMȱareȱgreaterȱthanȱinȱtheȱOGȱsector.ȱ Corporateȱdiscretionary,ȱmanagerialȱdiscretionaryȱandȱexternalȱdeterminantsȱ Theȱ summaryȱ modelsȱ providedȱ inȱ Regressionȱ Tableȱ 8Ȭ18ȱ showȱ theȱ effectsȱ ofȱ corpoȬ rateȱdiscretionaryȱfactors,ȱmanagers’ȱattitudesȱandȱexternalȱbarriersȱonȱCSMȱsuccess.ȱ TheyȱwereȱobtainedȱbyȱexpandingȱtheȱscopeȱofȱtheȱmodelsȱaboveȱonȱcorporateȱdiscreȬ tionaryȱ determinantsȱ onlyȱ (Regressionȱ Tableȱ 8Ȭ17)ȱ onȱ includeȱ externalȱ barriersȱ andȱ managerialȱdiscretionaryȱfactors.ȱ

ȱ

264ȱ

Num of obs F Prob > F R-squared Adj R-squared Root MSE ȱ

8ȱEmpiricalȱevidenceȱ

Indep var Env. perf

T model 71 8.24 0.0000 0.3332 0.2928 .64084 Coeff .6317153

Incent tools

.6890313

Corp cult

-.5648222

Regulation

.4045182

Constant

2.595106

Indep var Soc supply

OG model 113 7.60 0.0000 0.2197 0.1908 .7124 Coeff .2935317

Strat tools Incent tools Coord commit

.2794148 .3234996 .3105709

Constant

2.993478

Indep var

UT model 49 4.21 0.0209 0.1548 0.1181 .61235 Coeff

Bus teams

.4606742

Age > 50

.5200642

Constant

3.128411

RegressionȱTableȱ8Ȭ18:ȱSummaryȱmodelsȱȬȱCSMȱsuccessȱ

Resultsȱ illustrateȱ thatȱ onlyȱ regulationsȱ (e.g.ȱ subsidiesȱ andȱ lowȱ socialȱ andȱ environȬ mentalȱstandards)ȱattainȱtheȱrequiredȱsignificanceȱlevel,ȱnamelyȱinȱtheȱTȱmodel.ȱTheȱ positiveȱ signȱ ofȱ theȱ coefficientȱ suggestsȱ thatȱ onlyȱ leadingȱ companiesȱ whichȱ reportȱ greaterȱCSMȱsuccessȱperceiveȱinadequateȱregulationsȱasȱaȱbarrier.ȱThisȱisȱmostȱlikelyȱ toȱbeȱtheȱcaseȱinȱdevelopingȱcountriesȱinȱwhichȱsustainabilityȱ leadersȱfeelȱatȱaȱcomȬ petitiveȱdisadvantageȱcomparedȱtoȱlaggardsȱ(e.g.ȱnoȬbribeȱpolicies),ȱbutȱisȱalsoȱvalidȱ forȱtheȱsubsidizationȱofȱfossilȱfuelsȱwhichȱaffectsȱtheȱcostȱcompetitivenessȱofȱrenewȬ ableȱenergyȱtechnologies.ȱ InȱtheȱtwoȱsectorȬspecificȱmodelsȱnoneȱofȱtheȱvariablesȱtestedȱinȱadditionȱhadȱaȱstatisȬ ticallyȱ significantȱ effect.ȱ Thisȱ pointsȱ toȱ theȱ keyȱ importanceȱ ofȱ companyȬspecificȱ deȬ terminantsȱratherȱthanȱexternalȱbarriersȱorȱmanagerialȱdiscretionaryȱfactorsȱatȱdeterȬ miningȱCSMȱsuccess.ȱ Theȱeffectȱofȱmanagerialȱattitudesȱfoundȱthroughȱtheȱcorrelationsȱpresentedȱaboveȱisȱ notȱsignificantȱinȱtheȱregressionȱmodels,ȱpresumablyȱbecauseȱitȱisȱpickedȱupȱbyȱvariȬ ablesȱthatȱremainȱinȱtheȱmodelȱsuchȱasȱincentiveȱsystems.ȱTheȱfactȱthatȱotherȱexternalȱ barriersȱsuchȱasȱtheȱlackȱofȱinterestȱorȱoppositionȱfromȱinvestorsȱorȱcustomersȱdoȱnotȱ haveȱ aȱ statisticallyȱ significantȱ effectȱ pointsȱ toȱ theȱ largelyȱ incrementalȱ approachȱ ofȱ bothȱsectorsȱtoȱCSM,ȱwhichȱisȱhardlyȱcontingentȱuponȱtheȱlevelȱofȱexternalȱbuyȬinȱorȱ opposition.ȱThusȱtheȱresultsȱareȱalsoȱinȱlineȱwithȱthoseȱobtainedȱforȱtheȱmainȱbarriersȱ toȱCSMȱintent,ȱwhichȱisȱlargelyȱhinderedȱbyȱinternalȱfactors.ȱ Althoughȱitȱremainsȱdifficultȱtoȱreachȱaȱdefiniteȱconclusionȱaboutȱtheȱroleȱofȱtoolsȱandȱ initiativesȱ asȱ wellȱ asȱ otherȱ possibleȱ internalȱ determinantsȱ inȱ theȱ UTȱ sector,ȱ becauseȱ variablesȱmayȱnotȱbecomeȱstatisticallyȱsignificantȱdueȱtoȱconstraintsȱinȱtheȱdegreesȱofȱ freedom,ȱ oneȱ canȱ reasonablyȱ inferȱ fromȱ theȱ comparisonȱ ofȱ theȱ twoȱ sectorȬspecificȱ modelsȱandȱtheȱbasicȱstatisticsȱpresentedȱinȱtheȱpreviousȱsections,ȱthatȱOGȱcompaniesȱ

8.4ȱCompaniesȱ

265ȱ

featureȱ aȱ moreȱ resourcefulȱ andȱ advancedȱ approachȱ toȱ CSM.ȱ Thisȱ alsoȱ includesȱ aȱ moreȱeffectiveȱuseȱofȱtoolsȱtoȱshapeȱmanagers’ȱperceptionsȱandȱexpectations.ȱ Conclusionȱ Regressionȱ analysisȱ pointsȱ toȱ severalȱ significantȱ companyȬspecificȱ determinantsȱ ofȱ CSMȱsuccess,ȱnamelyȱcorporateȱinitiatives,ȱmanagementȱtoolsȱandȱcorporateȱculture.ȱ Corporateȱ cultureȱ andȱ incentiveȱ systemsȱ areȱ determinantsȱ thatȱ influenceȱ “soft”ȱ facȬ torsȱwithinȱtheȱorganizationȱ(e.g.ȱmanagers’ȱperceptionsȱandȱexpectations).ȱTheyȱareȱ complementedȱ withȱ “hard”ȱ technicalȱ andȱ structuralȱ factorsȱ suchȱ asȱ dataȱ manageȬ mentȱtoolsȱ(strategyȱtools)ȱandȱtoolsȱforȱconflictȱresolutionȱ(coordinationȱcommitteesȱ andȱbusinessȱteams).ȱ TheȱTȱmodelȱonlyȱfeaturesȱ–ȱalongsideȱcorporateȱenvironmentalȱinitiativesȱ–ȱdetermiȬ nantsȱ thatȱ areȱ linkedȱ toȱ companies’ȱ softȱ factors.ȱ Thisȱ couldȱ –ȱ inȱ lineȱ withȱ previousȱ findingsȱ–ȱsuggestȱthatȱsoftȱfactorsȱcontributeȱmoreȱtoȱCSMȱsuccessȱdueȱtoȱtheȱcomȬ plexityȱ ofȱ socialȱ andȱ environmentalȱ issuesȱ whichȱ overwhelmsȱ companies’ȱ hardȱ facȬ torsȱ(e.g.ȱdataȱmanagementȱandȱstructures).ȱ FurthermoreȱregressionsȱshowȱthatȱexternalȱbarriersȱhaveȱaȱminorȱtoȱinsignificantȱinȬ fluenceȱonȱCSMȱsuccess.ȱThisȱresultȱisȱinȱlineȱwithȱbothȱquantitativeȱandȱqualitativeȱ dataȱpresentedȱinȱseveralȱpreviousȱsectionsȱthatȱpointȱtoȱanȱincrementalȱapproachȱofȱ companiesȱtoȱCSM.ȱȱ 8.4.5.3 Discussionȱ LowȱlevelsȱofȱCSMȱsuccessȱ TheȱpresentȱstudyȱrevealsȱaȱveryȱskepticalȱviewȱamongȱgeneralȱmanagersȱofȱtheȱeffecȬ tivenessȱ ofȱ environmentalȱ andȱ socialȱ initiativesȱ inȱ theirȱ companiesȱ –ȱ surprisinglyȱ skepticalȱ ifȱ oneȱ takesȱ intoȱ accountȱ thatȱ theȱ sampleȱ isȱ biasedȱ towardȱ moreȱ proactiveȱ respondents.ȱResultsȱmostȱlikelyȱreflectȱtheirȱlackȱofȱawarenessȱofȱtheȱinitiatives,ȱandȱ negativeȱbiasȱthroughȱaȱreactiveȱmindsetȱbutȱtheyȱalsoȱclearlyȱshowȱtheȱexistenceȱofȱ otherȱstrongȱbarriersȱmentionedȱbelow.ȱ Oneȱ couldȱ argueȱ thatȱ initiativesȱ mayȱ beȱ moreȱ effectiveȱ inȱ someȱ businessȱ unitsȱ thanȱ others:ȱE.g.ȱintervieweesȱnotedȱthatȱupstreamȱunitsȱareȱmoreȱeffectiveȱatȱsuchȱinitiaȬ tivesȱ thanȱ downstreamȱ units,ȱ sinceȱ operationsȱ areȱ lessȱ standardized,ȱ moreȱ diverseȱ andȱmanagersȱareȱlessȱpressuredȱtoȱ“sweatȱtheirȱassets.”ȱThisȱcouldȱpartlyȱrelativizeȱ theȱ soberingȱ evidence.ȱ Theȱ presentȱ studyȱ wasȱ designedȱ toȱ assessȱ corporateȱsustainȬ abilityȱ managementȱ andȱ itsȱ determinantsȱ acrossȱ differentȱ sectorsȱ andȱ notȱ businessȱ units,ȱandȱthusȱleavesȱroomȱforȱfurtherȱempiricalȱquantitativeȱresearchȱinȱthisȱarea.ȱ DeterminantsȱofȱCSMȱsuccessȱ Overȱtheȱcourseȱofȱthisȱstudy,ȱtheȱauthorȱhasȱidentifiedȱseveralȱsignificantȱfactorsȱthatȱ determineȱtheȱimplementationȱandȱthusȱtheȱoutcomeȱofȱCSMȱsuccess.ȱ ȱ

266ȱ

8ȱEmpiricalȱevidenceȱ

Asȱshownȱinȱsectionȱ8.4.2ȱStrategicȱdisposition,ȱcompaniesȱhaveȱaȱclearlyȱincrementalȱ andȱprocessȬdrivenȱapproachȱtoȱCSM.ȱTheirȱstrategicȱdispositionȱisȱlargelyȱlimitedȱtoȱ aȱ “moreȱ responsibleȱ interpretationȱ ofȱ businessȬasȬusual.”ȱ Henceȱ theȱ reasonȱ forȱ theȱ lackȱofȱsuccessȱofȱcorporateȱinitiativesȱcannotȱbeȱfoundȱinȱoverambitiousȱstrategicȱobȬ jectives.ȱItȱisȱtoȱbeȱfoundȱatȱtheȱimplementationalȱlevelȱofȱCSMȱ(Nicholson,ȱ2002ȱp.ȱ3;ȱ Simms,ȱ2002)ȱ–ȱseeȱFigureȱ8Ȭ35:ȱDeterminantsȱofȱCSMȱsuccess.ȱ Submodels

Clusterȱmodels

Internalȱbarriers • Corporateȱcultureȱ (bothȱsectors) • Managers’ȱmindsetȱ (UT) Managementȱtools • Strategyȱtoolsȱ(bothȱ sectors) • Incentiveȱtoolsȱ(bothȱ sectors,ȱprimarilyȱOG) • Managementȱ developmentȱ(OG) • Coordinationȱ committeesȱȱ(OG) • Businessȱteamsȱ(bothȱ sectors,ȱprimarilyȱUT)

CSM success

Initiatives • Env.ȱperformanceȱ (both,ȱprimarilyȱOG) • Supplyȱchainȱ– socialȱ (OG) • Supplyȱchainȱ– env.ȱ (both) • Communityȱ(UT) • Otherȱinitiativesȱ(both,ȱ primarilyȱOG)

• Oppositionȱfromȱ investorsȱ(OG) • Regulationȱ(bothȱ sectors)

CSM success

•Externalȱ stakeholders • Regulationȱ(bothȱ sectors)

•Initiatives • Env.ȱPerformanceȱ (bothȱsectors)

Managers’ȱattitudes CSM success

• CAȱattitudeȱ(bothȱ sectors,ȱprimarilyȱOG)

CSM success

• Supplyȱchainȱ– socialȱ(OG)

•Tools • Incentiveȱsystemsȱ (bothȱsectors,ȱ primarilyȱOG)

Companies

Structure • CrossȬdisciplinaryȱ collaborationȱ(bothȱ sectors,ȱprimarilyȱOG)

Summaryȱmodel

Externalȱstakeholdersȱ– externalȱ barriers

CSM success

CSM success

• Env.ȱperformanceȱ (bothȱsectors) • Supplyȱchainȱ– socialȱ (OG) • Incentiveȱtoolsȱ(bothȱ sectors,ȱprimarilyȱOG) • Strategyȱtoolsȱ(OG) • Coordinationȱ committeesȱ(OG) • Businessȱteamsȱ(UT) • Corporateȱcultureȱ (bothȱsectors

CSM success

• Strategyȱtoolsȱ(OG) • Coordinationȱ committeesȱ(OG) CSM success

• Businessȱteamsȱ (UT)

•Internalȱbarriers • Corporateȱcultureȱ (bothȱsectors)

ȱ

Figureȱ8.35:ȱDeterminantsȱofȱCSMȱsuccessȱ

Theȱchallengeȱisȱclearlyȱoneȱofȱorganizationalȱalignmentȱandȱrevealsȱitselfȱinȱvariousȱ ways:ȱ -

“Soft”ȱ internalȱ barriersȱ suchȱ asȱ managers’ȱ reactiveȱ mindsetȱ andȱ inadequateȱ corȬ porateȱculturesȱareȱstrong.ȱTheirȱeffectȱisȱparticularlyȱsignificant,ȱasȱtheȱsubstanceȱ ofȱ CSMȱ isȱ veryȱ complex,ȱ becauseȱ ofȱ theȱ varietyȱ ofȱ issuesȱ andȱ stakeholders,ȱ andȱ thusȱdifficultȱtoȱcapture.ȱ

-

Theȱ businessȱ caseȱ forȱ sustainabilityȱ becomesȱ moreȱ elusive,ȱ theȱ moreȱ itȱ goesȱ beȬ yondȱaȱmereȱcostȱreductionȱfocusȱ(e.g.ȱecoȬefficiency,ȱhealthȱandȱsafetyȱimproveȬ ment).ȱ Itȱ isȱ particularlyȱ elusiveȱ forȱ thoseȱ managersȱ thatȱ lackȱ knowledgeȱ andȱ exȬ pertise.ȱ Dueȱ toȱ managers’ȱ mindsetȱ andȱ theȱ elusiveȱ natureȱ ofȱ theȱ businessȱ case,ȱ sustainabilityȱ officersȱ areȱ oftenȱ forcedȱ toȱ focusȱ onȱ riskȱ managementȱ arguments.ȱ Asȱaȱresult,ȱanyȱexistingȱupsideȱpotentialȱcouldȱbeȱignored.ȱ

8.4ȱCompaniesȱ

267ȱ

-

Althoughȱ crossȬdisciplinaryȱ structuresȱ doȱ notȱ featureȱ inȱ theȱ summaryȱ modelsȱ presentedȱinȱthisȱsection,ȱtheȱeffectȱofȱtheirȱabsenceȱshouldȱnotȱbeȱunderestimated.ȱ ItȱisȱimportantȱtoȱestablishȱcrossȬdisciplinaryȱstructuresȱtoȱfacilitateȱsharedȱlearnȬ ingȱthroughȱcrossȬimpactȱanalysisȱandȱconsensusȬbuildingȱatȱtheȱstrategicȱandȱopȬ erationalȱ levelsȱ throughȱ businessȱ teamsȱ andȱ coordinationȱ committees,ȱ respecȬ tively.ȱ Thisȱ appliesȱ inȱ particularȱ toȱ largeȱ globalȱ andȱ multinationalȱ organizationsȱ thatȱfaceȱaȱplethoraȱofȱdifferentȱissuesȱinȱdifferentȱcountries.ȱ

-

Theȱ positiveȱ contributionȱ ofȱ allȱ threeȱ toolȱ categoriesȱ (dataȱ management,ȱ managȬ ers’ȱmanagementȱandȱconflictȱresolutionȱtools)ȱpointsȱtoȱtheȱimportanceȱofȱintroȬ ducingȱandȱeffectivelyȱapplyingȱmanagementȱtools.ȱTheȱauthorȱsuggestsȱthatȱesȬ peciallyȱ managers’ȱ managementȱ tools,ȱ moreȱ specificallyȱ managementȱ developȬ mentȱ andȱ incentiveȱtools,ȱ areȱ neededȱ toȱeffectivelyȱ shapeȱ managers’ȱ perceptionsȱ andȱattitudesȱandȱthusȱgraduallyȱremoveȱexistingȱsoftȱinternalȱbarriers.ȱ

Byȱ designȱ theȱ studyȱ isȱ unableȱ toȱ assessȱ theȱ relativeȱ importanceȱ ofȱ theȱ factorsȱ menȬ tionedȱabove.ȱHowever,ȱmoreȱdetailedȱknowledgeȱaboutȱtheȱstrengthȱofȱtheirȱeffectsȱ andȱ possibleȱ interactionsȱ betweenȱ themȱ isȱ clearlyȱ neededȱ toȱ moreȱ comprehensivelyȱ assessȱtheȱcausesȱofȱtheȱlowȱlevelsȱofȱCSMȱsuccess.ȱ ContingencyȱperspectiveȱonȱCSMȱsuccessȱ Thisȱsectionȱofȱtheȱ studyȱidentifiesȱhigherȱ levelsȱ ofȱCSMȱ successȱinȱ theȱ OGȱ sectorȱ –ȱ whichȱ isȱ inȱ lineȱ withȱ resultsȱ presentedȱ inȱ theȱ previousȱ sectionsȱ –ȱ andȱ canȱ beȱ exȬ plainedȱ throughȱ aȱ varietyȱ ofȱfactorsȱthatȱ haveȱbeenȱ discussedȱinȱ moreȱ detailȱ above.ȱ Allȱinȱall,ȱthisȱclearlyȱpointsȱtoȱaȱrelativeȱlackȱofȱimplementation,ȱi.e.ȱstrongerȱinternalȱ barriers,ȱinȱtheȱUTȱsector.ȱ Regionȱeffectsȱareȱnotȱvisibleȱinȱtheȱregressionȱmodelsȱpresentedȱabove.ȱThisȱisȱhighlyȱ plausible,ȱ sinceȱ theȱ implementationȱ ofȱ CSMȱ followsȱ anȱ incrementalȱ approach.ȱ Thusȱ CSMȱ successȱ isȱ clearlyȱ internallyȱ determinedȱ throughȱ corporateȱ cultures,ȱ structuresȱ andȱtools.ȱ

ȱ

9.1ȱFindingsȱ

9

269ȱ

Synopsisȱ

TheȱpresentȱstudyȱsetȱoutȱtoȱempiricallyȱexamineȱtheȱmainȱexternalȱandȱinternalȱdeȬ terminantsȱ(i.e.ȱdriversȱorȱbarriers)ȱofȱCSM,ȱcompanies’ȱapproachesȱtoȱCSMȱinȱtermsȱ ofȱ bothȱ strategicȱ disposition,ȱ theȱ economicȱ rationale,ȱ implementationȱ ofȱ theirȱ apȬ proaches,ȱandȱtheȱoutcome.ȱTheȱauthorȱemployed:ȱ -

aȱ mixedȱ methodȱ designȱ featuringȱ bothȱ qualitativeȱ andȱ quantitativeȱ meansȱ ofȱ dataȱcollectionȱandȱanalysisȱ

-

aȱdescriptiveȱcontingencyȱapproachȱbasedȱonȱdataȱcollectedȱfromȱtwoȱgroupsȱofȱ managers,ȱnamelyȱsustainabilityȱofficersȱandȱgeneralȱmanagers,ȱinȱtwoȱdifferentȱ industryȱ sectorsȱ (integratedȱ oilȱ andȱ gasȱ vs.ȱ electricȱ utilitiesȱ sector)ȱ andȱ severalȱ geographicalȱregionsȱofȱoperations.ȱ

Inȱtheȱfollowing,ȱheȱwillȱelaborateȱonȱtheȱstudy’sȱkeyȱfindings,ȱsignificanceȱandȱlimiȬ tations,ȱandȱmakeȱsuggestionsȱforȱfurtherȱresearch.ȱ 9.1

Findingsȱ

Theȱevidenceȱ presentedȱ inȱthisȱ studyȱ shedsȱsignificantȱ lightȱonȱ theȱresearchȱfieldȱofȱ CSMȱandȱtheȱcurrentȱsituationȱinȱbothȱindustryȱsectors.ȱInȱtheȱfollowingȱparagraphs,ȱ theȱauthorȱwillȱbrieflyȱsummarizeȱhisȱfindingsȱandȱrelateȱthemȱtoȱtheȱresearchȱquesȬ tionsȱlistedȱinȱsectionȱ4.ȱMoreȱdetailedȱpresentationsȱofȱtheseȱfindingsȱandȱtheirȱdisȬ cussionȱcanȱbeȱfoundȱinȱtheȱrespectiveȱdiscussionȱsectionsȱabove.ȱ ItȱshouldȱbeȱnotedȱthatȱresultsȱareȱbasedȱonȱtheȱanalysisȱofȱqualitativeȱandȱquantitaȬ tiveȱ dataȱ obtainedȱ fromȱ GMsȱ andȱ SOsȱ inȱ twoȱ specificȱ sectorsȱ –ȱ OGȱ andȱ UT.ȱ ObviȬ ouslyȱoneȱshouldȱavoidȱ–ȱunderȱanyȱcircumstancesȱ–ȱcarelesslyȱprojectingȱitsȱresultsȱ onȱ otherȱsectors,ȱparticularlyȱ dueȱtoȱtheȱ issueȬspecificȱnatureȱofȱ CSM.ȱ Nevertheless,ȱ someȱofȱtheȱstudy’sȱkeyȱfindingsȱfacilitateȱsomeȱconclusionsȱaboutȱsectorsȱwithȱveryȱ similarȱorȱveryȱdifferentȱcharacteristics.ȱTheȱauthorȱwillȱelaborateȱonȱtheseȱinȱtheȱfolȬ lowingȱ paragraphs.ȱ Itȱ isȱ worthȱ notingȱ thatȱ theȱ OGȱ sectorȱ mostȱ likelyȱ representsȱ aȱ ratherȱ highȱ benchmarkȱ forȱ otherȱ industriesȱ inȱ termsȱ ofȱ bothȱ strategicȱ dispositionȱ toȱ CSMȱandȱitsȱimplementationȱdueȱtoȱtheȱrelativelyȱhighȱvisibilityȱofȱissuesȱandȱcomȬ panies,ȱwhichȱleadsȱtoȱaȱcomparativelyȱstrongȱexternalȱdemandȱforȱCSM.ȱȱ MostȱimportantȱissuesȱandȱtheirȱeffectȱonȱCSMȱȱ TheȱstudyȱidentifiedȱaȱsubstantialȱnumberȱofȱindividualȱenvironmentalȱandȱsocialȱisȬ suesȱthatȱaffectȱcompaniesȱinȱtheȱenergyȱindustry.ȱOnlyȱaȱfewȱofȱthemȱcanȱbeȱconsidȬ eredȱkeyȱissuesȱthatȱinfluenceȱCSMȱdueȱtoȱtheȱfinancialȱrisksȱandȱopportunitiesȱassoȬ ciatedȱwithȱthem,ȱwhichȱareȱinȱparticularȱclimateȱchangeȱinȱtheȱUTȱsectorȱandȱaȱcomȬ plexȱ ofȱ localȱ orȱ regionalȱ socialȱ andȱ environmentalȱ issuesȱ (e.g.ȱ fairȱ allocationȱ ofȱ oilȱ revenues,ȱlackȱofȱinfrastructureȱinȱcommunities,ȱbiodiversity)ȱinȱtheȱOGȱsector.ȱ ȱ

270ȱ

9ȱSynopsisȱ

Theȱimportanceȱofȱissuesȱtoȱcompaniesȱisȱessentiallyȱdeterminedȱbyȱtheȱdemandȱfromȱ stakeholders:ȱTheyȱsanctionȱaȱcorporateȱactivityȱassociatedȱwithȱaȱparticularȱsocialȱorȱ environmentalȱ issue,ȱ andȱ rewardȱ aȱ corporateȱ responseȱ addressingȱ it.ȱ Thisȱ outsideȱ pressureȱisȱdeterminedȱbyȱtheȱvisibilityȱofȱtheȱissue,ȱtheȱvisibilityȱofȱtheȱcompanyȱ(orȬ ganizationalȱ visibility)ȱ andȱ theȱ limitsȱ ofȱ legitimacy,ȱ whichȱ canȱ beȱ definedȱ globally,ȱ regionallyȱorȱlocallyȱdependingȱonȱtheȱissue.ȱ Althoughȱenvironmentalȱissuesȱwereȱconsideredȱmoreȱimportantȱthanȱsocialȱissuesȱinȱ bothȱsectors,ȱitȱwasȱsurprisingȱtoȱnoteȱthatȱtheȱsignificanceȱofȱsocialȱratherȱthanȱenviȬ ronmentalȱissuesȱaffectedȱtheirȱcompanies’ȱintentionȱtoȱintegrateȱenvironmentalȱandȱ socialȱcriteriaȱintoȱbusinessȱstrategiesȱandȱ operations.ȱThisȱpointsȱtoȱanȱincreasinglyȱ comprehensiveȱapproachȱtoȱCSMȱthatȱgoesȱbeyondȱaȱmereȱenvironmentalȱfocus.ȱOneȱ canȱ reasonablyȱ expectȱ thatȱ sustainabilityȱ leadersȱ inȱ otherȱ industriesȱ exhibitȱ aȱ simiȬ larlyȱ broadenedȱ viewȱ ofȱ CSM,ȱ i.e.ȱ theyȱ willȱ lookȱ beyondȱ theirȱ typicallyȱ dominantȱ (environmentalȱ orȱ social)ȱ issueȱ dimensionȱ (Salzmann,ȱ Steger,ȱ &ȱ IonescuȬSomers,ȱ forthcoming).ȱ Aȱ separateȱ considerationȱ ofȱ bothȱ sectorsȱ revealedȱ thatȱ theȱ OGȱ sectorȱ isȱ primarilyȱ drivenȱbyȱsocialȱissues,ȱtheȱUTȱsectorȱbyȱenvironmentalȱones.ȱTheȱinfluenceȱofȱsocialȱ ratherȱthanȱenvironmentalȱissuesȱonȱstrategicȱdispositionȱtoȱCSMȱinȱtheȱOGȱsectorȱisȱ somewhatȱcounterintuitiveȱdueȱtoȱtheȱwideȱpublicȱattentionȱgivenȱtoȱtheȱissueȱofȱcliȬ mateȱchangeȱinȱrelationȱtoȱcurrentȱcorporateȱactivities.ȱItȱcanȱbeȱexplainedȱasȱfollows:ȱ AsȱinȱtheȱUTȱsector,ȱfinancialȱriskȱandȱopportunitiesȱassociatedȱwithȱclimateȱchangeȱ canȱ beȱ mitigatedȱ andȱ exploitedȱ throughȱ incrementalȱ changesȱ toȱ currentȱ businessȱ models.ȱHenceȱtheȱfocusȱofȱtheȱtwoȱsectorsȱonȱdifferentȱregionsȱofȱoperationsȱappearsȱ toȱ beȱ theȱ dividingȱ factor:ȱ OGȱ companies’ȱ approachȱ isȱ global,ȱ andȱ increasinglyȱ foȬ cusedȱ onȱ developingȱ countries.ȱ Theȱ dataȱ showȱ thatȱ socialȱ issuesȱ inȱ thoseȱ regionsȱ moreȱstronglyȱ threatenȱ companies’ȱinformalȱlicenseȱtoȱ operateȱ thanȱ climateȱ change,ȱ whichȱisȱlikelyȱtoȱdevelopȱincreasingȱmomentumȱonlyȱinȱtheȱmidȱtoȱlongȬtermȱ(Shellȱ Internationalȱ Ltd,ȱ 2001).ȱ Inȱ contrast,ȱ theȱ UTȱ sector’sȱ approachȱ isȱ moreȱ regionalȱ andȱ concentrates,ȱ inȱ theȱ caseȱ ofȱ theȱ companiesȱ surveyed,ȱ onȱ Europe,ȱ whereȱ environȬ mentalȱ issuesȱ clearlyȱ dominateȱ socialȱ issuesȱ (alsoȱ dueȱ toȱ e.g.ȱ strongerȱ regulatoryȱ pressureȱinȱtermsȱofȱclimateȱchange).ȱTheȱsectorȬspecificȱdominantȱissueȱdimensionsȱ areȱalsoȱreflectedȱinȱeachȱsector’sȱportfolioȱofȱcorporateȱinitiatives:ȱTheȱOGȱsectorȱfeaȬ turesȱmoreȱsocial,ȱtheȱUTȱsectorȱmoreȱenvironmentalȱactivities.ȱ Theȱroleȱofȱexternalȱstakeholdersȱandȱlegitimacyȱ TheȱdemandȱofȱexternalȱstakeholdersȱforȱCSMȱisȱcontingentȱuponȱissueȱvisibility,ȱorȬ ganizationalȱvisibilityȱandȱtheȱlevelȱofȱlegitimacy,ȱwhichȱisȱdeterminedȱbyȱregulationȱ andȱdominantȱsocioȬculturalȱparadigms.ȱHenceȱitȱvariesȱacrossȱsectorsȱandȱregionsȱofȱ operations.ȱ Customer,ȱ shareholderȱ andȱ regulatoryȱ demandȱ forȱ CSMȱ isȱ marginal.ȱ Inȱ

9.1ȱFindingsȱ

271ȱ

someȱcases,ȱNGOȱactivitiesȱhaveȱtriggeredȱselective,ȱisolatedȱandȱshortȬtermȱactionsȱ byȱtheseȱtransactionalȱstakeholders.ȱHowever,ȱoverallȱexternalȱdemandȱisȱsoȱlimitedȱ thatȱitȱcanȱeasilyȱbeȱsatisfiedȱthroughȱcompanies’ȱ“watery”ȱapproachȱtoȱCSM,ȱwhichȱ isȱessentiallyȱaȱmoreȱresponsibleȱinterpretationȱofȱ“businessȬasȬusual.”ȱ Externalȱ stakeholderȱ areȱ ableȱ toȱ amendȱ orȱ revokeȱ twoȱ kindsȱ ofȱ licensesȱ toȱ operate:ȱ Governmentsȱandȱregulatorsȱtargetȱcompanies’ȱformalȱlicenseȱtoȱoperateȱthroughȱrisȬ ingȱregulatoryȱstandards.ȱTheȱremainingȱstakeholdersȱhaveȱtheȱpowerȱtoȱaffectȱcomȬ panies’ȱ informalȱ licenseȱ toȱ operateȱ throughȱ boycotts,ȱ campaignsȱ andȱ shareholderȱ resolutions.ȱTheȱvulnerabilityȱofȱbothȱkindsȱofȱlicensesȱareȱdependentȱonȱseveralȱfacȬ torsȱincludingȱtheȱ locationȱofȱ theȱ keyȱ socialȱ orȱ environmentalȱintakeȱ geographicallyȱ orȱ withinȱ theȱ lifeȱ cycleȱ phaseȱ ofȱ theȱ productȱ (productionȱ orȱ use);ȱ theȱ certaintyȱ andȱ transparencyȱofȱtheȱresultingȱissue;ȱtheȱbargainingȱpowerȱofȱgovernmentsȱandȱreguȬ lators;ȱ andȱ theȱ vulnerabilityȱ ofȱ brandsȱ andȱ reputation.ȱ Thisȱ degreeȱ ofȱ vulnerabilityȱ alsoȱdeterminesȱtheȱamountȱofȱoutsideȱpressureȱonȱcompanies.ȱItȱisȱobviousȱthatȱtheseȱ findingsȱapplyȱtoȱanyȱsectorȱorȱcompany:ȱE.g.ȱtheȱfinancialȱpremiumȱassociatedȱwithȱ theȱinformalȱlicenseȱtoȱoperateȱisȱhigherȱforȱlargeȱcompaniesȱthatȱexhibitȱstrongȱconȬ sumerȱ recognitionȱ andȱ areȱ closerȱ toȱ theȱ endȱ consumerȱ (evenȱ ifȱ retailersȱ areȱ inȱ beȬ tweenȱasȱgatekeepersȱ–ȱasȱisȱtheȱcaseȱinȱtheȱfoodȱandȱbeverageȱindustry).ȱItȱshouldȱbeȱ addedȱthatȱaȱlackȱofȱregulatoryȱpressureȱonȱcorporateȱactivitiesȱinȱdevelopingȱcounȬ triesȱ mayȱ alsoȱ beȱ compensatedȱ forȱ byȱ aȱ civilȱ societyȱ inȱ developedȱ countries,ȱ whichȱ increasinglyȱscrutinizesȱthoseȱveryȱactivitiesȱ(Bowen,ȱ2000;ȱSteger,ȱ2003).ȱ Theȱindividualȱrolesȱofȱexternalȱstakeholdersȱdifferȱacrossȱbothȱsectorsȱasȱfollows:ȱ -

GovernmentsȱplayȱaȱmoreȱimportantȱroleȱinȱtheȱUTȱsectorȱsinceȱitȱisȱstronglyȱreguȬ latedȱonȱitsȱmajorȱenvironmentalȱimpactȱ(emissionsȱtoȱair)ȱinȱEurope,ȱwhereȱmostȱ ofȱtheȱUTȱrespondentsȱwereȱfrom.ȱInȱcontrast,ȱmostȱemissionsȱassociatedȱwithȱtheȱ OGȱsectorȱcomeȱfromȱtheȱuseȱphaseȱofȱfossilȱfuelsȱ(primarilyȱinȱtheȱtransportȱsecȬ tor)ȱ ratherȱ thanȱ theȱ productionȱ phase.ȱ Furthermore,ȱ extractiveȱ activitiesȱ willȱ inȬ creasinglyȱconcentrateȱonȱregionsȱthatȱfeatureȱrelativelyȱlowȱregulatoryȱstandardsȱ comparedȱtoȱcompanies’ȱhomeȱcountries.ȱ

-

ThisȱlackȱofȱregulatoryȱpressureȱonȱtheȱOGȱsectorȱisȱovercompensatedȱbyȱstrongerȱ scrutinyȱ fromȱ publicȱ pressureȱ groups.ȱ Dueȱ toȱ higherȱ issueȱ andȱ organizationalȱ visibility,ȱOGȱcompaniesȱtendȱtoȱbeȱbetterȱtargetsȱthanȱtheȱonȱaverageȱsmallerȱUTȱ companies,ȱwithȱfewerȱresourcesȱatȱtheirȱdisposal.ȱ

-

OGȱcompaniesȱexpectȱcapitalȱmarketsȱtoȱtakeȱaȱmoreȱproactiveȱroleȱinȱtheȱfutureȱ thanȱUTȱcompanies,ȱwhichȱalsoȱappearsȱtoȱincreaseȱOGȱcompanies’ȱgreaterȱintenȬ tionȱtoȱintegrateȱenvironmentalȱandȱsocialȱcriteriaȱintoȱbusinessȱstrategiesȱandȱopȬ erations.ȱ Thisȱ isȱ alsoȱ likelyȱ toȱ reflectȱ capitalȱ markets’ȱ greaterȱ interestȱ inȱ theȱ OGȱ

ȱ

272ȱ

9ȱSynopsisȱ

sectorȱinȱgeneralȱbutȱalsoȱinȱcompanies’ȱpositionȱonȱclimateȱchange,ȱasȱtheȱgrowȬ ingȱnumberȱof,ȱandȱsupportȱfor,ȱshareholderȱresolutionsȱshows.ȱ -

Theȱpotentialȱofȱcustomersȱtoȱplayȱaȱmoreȱproactiveȱroleȱisȱslightlyȱgreaterȱinȱtheȱ UTȱsector.ȱ Thisȱ outcomeȱ wasȱratherȱ unexpected,ȱsinceȱ customersȱinȱ bothȱsectorsȱ usuallyȱexhibitȱaȱclearȱpreferenceȱforȱcheapȱandȱconvenientȱenergy.ȱItȱcould,ȱhowȬ ever,ȱbeȱattributedȱtoȱpolicyȱmeasuresȱinȱsomeȱEuropeanȱcountriesȱthatȱpromoteȱ greenȱelectricityȱproductionȱandȱcustomersȱcorrespondingȱgrowingȱawarenessȱofȱ thisȱalternativeȱinȱliberalizedȱmarkets.ȱ

Externalȱ stakeholdersȱ playȱ aȱ clearlyȱ deterrentȱ role.ȱ However,ȱ ifȱ oneȱ comparesȱ theirȱ demandsȱforȱCSM,ȱresultsȱshowȱthatȱnonȬregulatoryȱstakeholdersȱsuchȱasȱcustomersȱ (throughȱboycottsȱandȱ“green”ȱconsumerism),ȱcapitalȱmarketsȱandȱinvestorsȱ(throughȱ shareholderȱresolutionsȱandȱincreasingȱscrutinyȱofȱcorporateȱriskȱmanagement),ȱandȱ NGOsȱasȱcatalystsȱexertȱmoreȱoutsideȱpressureȱonȱcompaniesȱthanȱgovernmentsȱandȱ regulators.ȱThisȱmeansȱthatȱchallengesȱtoȱcompanies’ȱinformalȱratherȱthanȱformalȱliȬ censeȱ toȱ operateȱ representȱ aȱ significantȱ drivingȱ forceȱ forȱ CSM,ȱ alsoȱ becauseȱ theȱ inȬ formalȱkindȱcanȱbeȱrevokedȱmoreȱswiftly.ȱ Roleȱofȱmanagersȱandȱtheȱeffectȱofȱtheirȱattitudes,ȱknowledgeȱandȱmindsetȱonȱCSMȱ Managers’ȱ attitudes,ȱ knowledgeȱ andȱ expertiseȱ wereȱ identifiedȱ asȱ majorȱ internalȱ deȬ terminantsȱofȱ CSM.ȱTheyȱareȱ particularlyȱ relevant,ȱsinceȱ currentȱsystemsȱandȱ strucȬ turesȱfailȱtoȱprovideȱtheȱnecessaryȱguidanceȱforȱmanagersȱonȱhowȱtoȱassessȱandȱreactȱ toȱtheȱissuesȱtheyȱface.ȱ Evenȱifȱcompaniesȱimproveȱcurrentȱsystemsȱandȱstructures,ȱtheȱcomplexityȱinherentȱ inȱ CSMȱ isȱ likelyȱ toȱ “overstrain”ȱ theirȱ capabilities.ȱ Thisȱ meansȱ thatȱ knowledgeȱ andȱ mindsetȱwillȱalwaysȱremainȱkeyȱfactorsȱinfluencingȱmanagerialȱdiscretion,ȱsinceȱtheyȱ determineȱ managers’ȱ perceptionsȱ andȱ expectations.ȱ Thisȱ isȱ clearlyȱ reflectedȱ inȱ theȱ findingȱthatȱmanagers’ȱproactiveȱattitudesȱareȱassociatedȱwithȱaȱstrongerȱperceptionȱ ofȱtheȱsignificanceȱofȱissues.ȱ OverallȱUTȱmanagersȱhaveȱlessȱproactiveȱattitudesȱthanȱtheirȱcounterpartsȱinȱtheȱOGȱ sector,ȱwhichȱcorrespondsȱtoȱUTȱcompanies’ȱlowerȱissueȱandȱorganizationalȱvisibilityȱ andȱlessȱproactiveȱcorporateȱcultures.ȱItȱisȱalsoȱmostȱlikelyȱaȱlegacyȱfromȱtheirȱpastȱasȱ naturalȱmonopolistsȱandȱstateȬownedȱcompanies.ȱ CompaniesȱandȱtheirȱapproachȱtoȱCSMȱ CorporateȱdiscretionaryȱdeterminantsȱofȱCSMȱandȱtheirȱeffectsȱ Resultsȱonȱtheȱimportanceȱofȱinternal,ȱandȱinȱparticularȱcorporateȱdiscretionary,ȱbarȬ riers,ȱ clearlyȱ hintȱ atȱ companies’ȱ incrementalȱ approachȱ toȱ CSM,ȱ whichȱ isȱ enoughȱ toȱ satisfyȱtheȱmarginalȱexternalȱdemand:ȱChangesȱtoȱbusinessȱmodelsȱandȱcorporateȱacȬ tivitiesȱareȱsoȱminorȱthatȱtheȱlackȱofȱinterestȱfromȱcustomers,ȱshareholdersȱandȱreguȬ

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273ȱ

latorsȱ doesȱ notȱ significantlyȱ deterȱ them.ȱ Itȱ isȱ ratherȱ theȱ internalȱ deficitsȱ thatȱ negaȬ tivelyȱ affectȱ CSM.ȱ Henceȱ theȱ studyȱ pointsȱ toȱ aȱ significantȱ unexploitedȱ potentialȱ ofȱ bothȱmanagerialȱandȱcorporateȱdiscretion:ȱ Managers’ȱ mindset,ȱ lackȱ ofȱ knowledgeȱ andȱ expertiseȱ asȱ wellȱ asȱ corporateȱ culturesȱ andȱ lackȱ ofȱ processesȱ andȱ toolsȱ preventȱ aȱ strongerȱ andȱ moreȱ effectiveȱ approachȱ toȱ CSM.ȱ Softȱ factorsȱ (managers’ȱ mindsetȱ and,ȱ aboveȱ all,ȱ corporateȱ culture,ȱ ratherȱ thanȱ hardȱ onesȱ (lackȱ ofȱ appropriateȱ processes,ȱ toolsȱ andȱ structures)ȱ areȱ theȱ keyȱ internalȱ barriersȱ toȱ CSM,ȱ mostȱ likelyȱ dueȱ toȱ theȱ complexȱ natureȱ ofȱ issues,ȱ whichȱ overstrainȱ companies’ȱ“hard”ȱinstruments,ȱstructuresȱandȱprocesses.ȱ CompanyȬspecificȱbarriersȱappearȱtoȱbeȱmoreȱsignificantȱthanȱbarriersȱsetȱbyȱtheȱinȬ dividualȱmanagers’ȱmindsetȱandȱ(lackȱof)ȱknowledge.ȱThisȱisȱobviouslyȱbecauseȱtheȱ formerȱdetermineȱtoȱwhatȱextentȱmanagersȱareȱableȱ(e.g.ȱthroughȱmanagementȱeduȬ cation,ȱavailabilityȱofȱrelevantȱinformationȱthroughȱadequateȱdataȱmanagement)ȱandȱ willingȱ(e.g.ȱcorporateȱculture,ȱincentive)ȱtoȱexerciseȱtheirȱdiscretion.ȱ OverallȱcorporateȱdiscretionaryȱdimensionsȱofȱCSMȱareȱlessȱdevelopedȱinȱtheȱUTȱsecȬ tor:ȱCompaniesȱfeatureȱgreaterȱinternalȱdeficitsȱdueȱtoȱweakerȱoutsideȱpressureȱandȱ theȱlegacyȱofȱformerȱorȱcurrentȱstateȱownership.ȱ Strategicȱdisposition,ȱitsȱdeterminantsȱandȱeffectsȱ Companies’ȱ approachesȱ toȱ corporateȱ sustainabilityȱ areȱ stillȱ clearlyȱ operationalȱ andȱ processȬdrivenȱratherȱthanȱstrategicȱandȱmarketȬdriven.ȱLeadersȱinȱbothȱsectorsȱhaveȱ recognizedȱcurrentȱandȱemergingȱissues,ȱandȱareȱattemptingȱtoȱimproveȱtheirȱflexibilȬ ityȱ toȱ respondȱ toȱ futureȱ developmentsȱ (e.g.ȱ emissionsȱ trading,ȱ pilotȱ projectsȱ andȱ nicheȱmarketsȱtoȱdevelopȱrenewableȱenergies).ȱLongȬtermȱstrategiesȱareȱmainlyȱconȬ cernedȱwithȱfutureȱcarbonȱpricing,ȱandȱinȱtheȱOGȱsectorȱadditionallyȱwithȱgeopoliticsȱ andȱresourceȱdepletion.ȱDistinctȱchangesȱinȱbusinessȱmodelsȱareȱmainlyȱdiscussedȱinȱ theȱOGȱsectorȱbutȱdecadesȱawayȱfromȱadoption.ȱȱ Greaterȱ strategicȱ dispositionȱ wasȱ foundȱ toȱ beȱ drivenȱ throughȱ greaterȱ issueȱ signifiȬ cance;ȱmoreȱproactiveȱattitudesȱofȱmanagers;ȱcompanyȬspecificȱfactorsȱsuchȱasȱmoreȱ adequateȱ corporateȱ cultures;ȱ aȱ moreȱ proactiveȱ roleȱ ofȱ publicȱ pressureȱ groups;ȱ conȬ flictsȱ withȱ authorities;ȱ andȱ theȱ importanceȱ ofȱ theȱ informalȱ licenseȱ toȱ operate.ȱ Theseȱ identifiedȱ determinantsȱ areȱ ableȱ toȱ conclusivelyȱ explainȱ theȱ lowerȱ strategicȱ disposiȬ tionȱinȱtheȱUTȱcomparedȱtoȱtheȱOGȱsector.ȱ Finally,ȱ greaterȱ strategicȱ dispositionȱ isȱ alsoȱ reflectedȱ inȱ aȱ moreȱ sophisticatedȱ impleȬ mentationȱ ofȱ CSM,ȱ moreȱ specificallyȱ inȱ structuresȱ thatȱ allowȱ forȱ closerȱ crossȬ disciplinaryȱcollaborationȱandȱmoreȱsuccessfulȱenvironmentalȱandȱsocialȱinitiatives.ȱ

ȱ

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9ȱSynopsisȱ

EconomicȱrationaleȱforȱCSMȱandȱprocessesȱofȱissueȱintegrationȱ Theȱbusinessȱcaseȱforȱsustainabilityȱisȱclearlyȱcontingentȱinȱnatureȱandȱbearsȱaȱclearȱ dilemma:ȱ Itȱ canȱ beȱ “logicallyȱ built”ȱ andȱ ratherȱ easilyȱ quantifiedȱ forȱ incrementalȱ inȬ novationsȱ(toȱ improveȱecoȬefficiency,ȱ asȱ wellȱ asȱ healthȱ andȱ safety)ȱthatȱhaveȱ noȱ poȬ tentialȱtoȱaddressȱtheȱmajorȱstrategicȱissues.ȱ Overallȱ itȱ isȱ ratherȱ marginal.ȱ Itȱ cannotȱ beȱ seriouslyȱ builtȱ forȱ radicalȱ innovationsȱ toȱ addressȱ theȱ strategicȱ issuesȱ suchȱ asȱ climateȱ changeȱ andȱ theȱ NorthȬSouthȱ energyȱ diȬ vide.ȱThisȱisȱdueȱtoȱexternalȱstakeholders’ȱdisinterestȱandȱopposition:ȱe.g.ȱshareholdȬ ers’ȱfocusȱonȱshortȬtermȱprofits,ȱconsumers’ȱpreferenceȱforȱcheapȱandȱconvenientȱenȬ ergyȱ products.ȱ Theȱ currentȱ businessȱ environmentȱ clearlyȱ providesȱ theȱ strongestȱ businessȱ caseȱ forȱ efficientȱ andȱ environmentally/sociallyȱ responsibleȱ extraction,ȱ proȬ ductionȱandȱuseȱofȱfossilȱfuels.ȱNewȱbusinessȱmodelsȱ(e.g.ȱhydrogen,ȱrenewableȱenȬ ergyȱ technology)ȱ areȱ hardȱ toȱ introduce.ȱ Thisȱ appliesȱ toȱ theȱ OGȱ sectorȱ inȱ particular,ȱ becauseȱitȱisȱstronglyȱlockedȱinȱaȱtechnologicalȱtrajectoryȱtogetherȱwithȱtheȱmobilityȱ sector.ȱSeveralȱpilotȱbusinessȱunitsȱthatȱproduceȱandȱmarketȱrenewableȱenergyȱtechȬ nologiesȱ haveȱ beenȱ established.ȱ However,ȱ thereȱ isȱ significantȱ disagreementȱ withinȱ andȱacrossȱcompaniesȱwhetherȱtheȱmoneyȱonȱtheseȱpilotȱprojectsȱisȱwellȱspent:ȱSomeȱ companiesȱhaveȱadoptedȱaȱ“waitȱandȱsee”ȱattitudeȱandȱrelyȱonȱbeingȱableȱtoȱacquireȱ renewableȱ energyȱ companiesȱ laterȱ “whenȱ thereȱ isȱ realȱ moneyȱ inȱ it”;ȱ othersȱ haveȱ optedȱforȱtheȱcreationȱofȱrenewableȱenergyȱsubsidiariesȱtoȱ“learnȱasȱtheyȱgo.”ȱ Processesȱ ofȱ issueȱ integrationȱ mirrorȱ companies’ȱ narrowȱ focusȱ onȱ theȱ minimizationȱ ofȱrisks,ȱwhichȱtendsȱtoȱleadȱtoȱlateȱandȱratherȱweakȱresponses.ȱManagersȱobviouslyȱ preferȱanȱexȱanteȱquantifiedȱbusinessȱcaseȱoverȱanȱunquantifiedȱorȱexȱpostȱquantifiedȱ one,ȱ butȱ aȱ certainȱ lackȱ ofȱ quantificationȱ isȱ systemicȱ dueȱ toȱ theȱ complexityȱ ofȱ socialȱ andȱenvironmentalȱeffectsȱandȱtheȱmarginalityȱofȱtheȱbusinessȱcaseȱforȱsustainability.ȱ OverallȱtheȱscopeȱofȱtheȱbusinessȱcaseȱisȱdeterminedȱbyȱbothȱsystemicȱandȱorganizaȬ tionalȱfactorsȱ(toolsȱandȱsystems,ȱmanagers,ȱstructures,ȱsoftȱfactors,ȱcausalȱmodelingȱ andȱvalidation).ȱAȱ“presumptuous”ȱfocusȱonȱbusinessȱlogicȱonlyȱ(i.e.ȱwithoutȱquantiȬ fication)ȱisȱcareless,ȱasȱitȱpreventsȱvalidationȱofȱexpectedȱcausalȱlinksȱbetweenȱinitiaȬ tivesȱ andȱ financialȱ performanceȱ throughȱ measurement,ȱ i.e.ȱ quantification,ȱ andȱ thusȱ leadsȱ toȱ decisionȬmakingȱ basedȱ onȱ (possiblyȱ wrong)ȱ preconceptions.ȱ Furthermore,ȱ companies’ȱ claimsȱ thatȱ strongȱ softȱ factorsȱ makeȱ aȱ quantifiedȱ businessȱ caseȱ obsoleteȱ shouldȱnotȱbeȱtakenȱatȱfaceȱvalue,ȱsinceȱitȱoftenȱassociatedȱwithȱaȱlackȱofȱdataȱmanȬ agementȱandȱaȱconsequentȱtendencyȱtoȱblameȱexternalȱfactorsȱforȱaȱlackȱofȱquantificaȬ tion.ȱ Inȱconclusion,ȱtheȱuncertaintyȱisȱsubstantialȱamongȱdecisionȬmakersȱandȱinherentȱinȱ bothȱ theȱ businessȱ caseȱ forȱ sustainabilityȱ andȱ mostȱ managerialȱ decisions.ȱ AdditionȬ ally,ȱconsideringȱcompanies’ȱinternalȱdeficits,ȱitȱisȱveryȱlikelyȱthatȱevenȱtheȱrelativelyȱ

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275ȱ

robustȱbusinessȱcaseȱforȱtheȱmanagementȱofȱoperationalȱrisksȱandȱopportunitiesȱisȱnotȱ fullyȱexploited,ȱparticularlyȱnotȱinȱlaggardȱcompanies.ȱ ImplementationȱofȱCSMȱ AlthoughȱtoolsȱareȱaȱlessȱimportantȱdeterminantȱofȱCSMȱthanȱsoftȱcompanyȬspecificȱ factorsȱ(e.g.ȱcorporateȱculture),ȱtheyȱstillȱplayȱaȱmeaningfulȱrole:ȱInȱparticularȱincenȬ tiveȱ systems,ȱ strategicȱ planningȱ andȱ accountingȱ procedures,ȱ managementȱ developȬ ment,ȱ andȱ conflictȱ resolutionȱ toolsȱ (usedȱ atȱ theȱ strategicȱ andȱ operationalȱ level)ȱ deȬ termineȱ CSMȱ success.ȱ Thisȱ suggestsȱ thatȱ dataȱ managementȱ tools,ȱ toolsȱ thatȱ shapeȱ managers’ȱperceptionsȱandȱexpectationsȱandȱconflictȱresolutionȱtoolsȱareȱnecessaryȱtoȱ effectivelyȱ implementȱ CSM.ȱ Inȱ bothȱ sectors,ȱ theȱ portfoliosȱ ofȱ toolsȱ usedȱ areȱ domiȬ natedȱ byȱ dataȱ managementȱ toolsȱ andȱ corporateȱ values,ȱ whichȱ confirmsȱ companies’ȱ ratherȱearlyȱstageȱinȱaȱpotentialȱprocessȱofȱstrategicȱredirectionȱtoȱcorporateȱsustainȬ ability.ȱ Overallȱ companiesȱ exhibitȱ clearȱ deficitsȱ inȱ termsȱ ofȱ theirȱ structures:ȱ CrossȬ disciplinaryȱ collaborationȱ isȱ ineffectiveȱ orȱ completelyȱ lacking.ȱ Itȱ isȱ determinedȱ throughȱcorporateȱstrategicȱdispositionȱtoȱCSM.ȱTheȱimportanceȱofȱcrossȬdisciplinaryȱ structuresȱshouldȱnotȱ beȱunderestimated,ȱ sinceȱ theyȱ influenceȱ managers’ȱ awarenessȱ ofȱissuesȱandȱoutsideȱpressureȱfromȱstakeholdersȱand,ȱalongsideȱotherȱvariables,ȱdeȬ termineȱheȱsuccessȱofȱCSM.ȱ Companies’ȱportfoliosȱofȱinitiativesȱclearlyȱpointȱtoȱanȱincrementalȱapproachȱtoȱCSM.ȱ Managers’ȱawarenessȱofȱongoingȱinitiativesȱisȱlow,ȱandȱinitiativesȱareȱlargelyȱlimitedȱ toȱminorȱmodificationsȱ toȱprocessȱ andȱ operations.ȱ Theȱportfoliosȱ alsoȱ exhibitȱaȱconȬ tingencyȱonȱtheȱmostȱimportantȱissuesȱeachȱsectorȱfaces.ȱOGȱcompaniesȱhaveȱincreasȬ inglyȱ attemptedȱ toȱ takeȱ onȱ importantȱ socialȱ issuesȱ associatedȱ withȱ theirȱ extractionȱ andȱ productionȱ activitiesȱ inȱ developingȱ countries;ȱ UTȱ companiesȱ areȱ moreȱ focusedȱ onȱenvironmentalȱinitiatives.ȱ OverallȱtheȱUTȱsectorȱexhibitsȱaȱlowerȱlevelȱofȱimplementationȱofȱCSM:ȱInterȱaliaȱUTȱ companiesȱ moreȱ clearlyȱ lackȱ managementȱ tools,ȱ effectiveȱ crossȬdisciplinaryȱ strucȬ tures,ȱandȱcorporateȱsocialȱandȱenvironmentalȱinitiatives.ȱ OutcomeȱofȱCSMȱandȱitsȱkeyȱdeterminantsȱ Overallȱ evidenceȱ onȱ generalȱ managers’ȱ perceptionsȱ ofȱ theȱ predominantlyȱ littleȱ sucȬ cessȱofȱCSMȱisȱquiteȱsoberingȱandȱreflectsȱsignificantȱskepticismȱandȱaȱlackȱofȱcorpoȬ rateȱ andȱ managerialȱ capabilities:ȱ Theȱ studyȱ revealedȱ severalȱ keyȱ determinantsȱ ofȱ CSMȱ successȱ thatȱ compriseȱ corporateȱ cultures,ȱ managers’ȱ mindset,ȱ managementȱ toolsȱandȱtheȱinitiativesȱcarriedȱout.ȱ InternalȱratherȱthanȱexternalȱfactorsȱsuchȱasȱlackȱofȱinterestȱorȱoppositionȱfromȱcusȬ tomersȱorȱinvestorsȱdetermineȱCSMȱsuccess.ȱAsȱdiscussedȱabove,ȱthisȱpointsȱtoȱanȱinȬ ȱ

276ȱ

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crementalȱ approachȱ toȱ CSM:ȱ Corporateȱ socialȱ andȱ environmentalȱ initiativesȱ areȱ soȱ marginalȱinȱscopeȱthatȱtheyȱareȱnotȱaffectedȱbyȱexternalȱstakeholders’ȱindifferenceȱorȱ evenȱopposition.ȱȱ PrimarilyȱsinceȱUTȱcompaniesȱfaceȱstrongerȱinternalȱbarriers,ȱitȱisȱcoherentȱthatȱCSMȱ successȱisȱlowerȱinȱtheȱUTȱsector.ȱ Contingencyȱperspectiveȱ Theȱ contingencyȱ approachȱ takenȱ inȱ theȱ presentȱ studyȱ hasȱ provedȱ veryȱ effective.ȱ Itȱ enabledȱaȱveryȱdifferentiatedȱanalysisȱofȱtheȱcompanies’ȱapproachesȱtoȱCSM,ȱitsȱdeȬ terminantsȱ andȱ theȱ outcomeȱ acrossȱ twoȱ industryȱ sectors,ȱ twoȱ managementȱ disciȬ plinesȱandȱvariousȱregionsȱofȱoperations.ȱ Sectorsȱ TheȱkeyȱcrossȬsectorȱfindingsȱonȱcorporateȱsustainabilityȱperformanceȱ(referredȱtoȱasȱ aȱ company’sȱ configurationȱ ofȱ externalȱ andȱ internalȱ determinantsȱ ofȱ CSM,ȱ strategicȱ dispositionȱto,ȱeconomicȱrationaleȱforȱand,ȱimplementationȱofȱCSM,ȱandȱitsȱoutcome)ȱ

as business organization’s configuration of

Corporate sustainability performance

Determinants of corporate sustainability management Issues

Stakeholders

Managers

Public Responsibility OG sector •more aware of issues in general •more strongly affected by social issues than UT sector

Legitimacy OG sector •Greater importance of brand and reputation •More often subject of incidents •More often targeted by NGOs •More proactive capital markets and PPPs •Less proactive governments and consumers than UT sector

Managerial discretion OG sector •More proactive attitudes of managers than UT sector

Company-specific drivers Corporate discretion OG sector •More aware of lack of managers’ knowledge and expertise Than UT sector

Corporate sustainability management: Strategic disposition and economic rationale (what to do?) OG sector: • greater SD familiarity • greater CSM intent than UT sector

OG sector: • brand value and reputation less important as value driver than UT sector

Implementation (how to do it?) Tools

Initiatives

Structure

OG sector •More tools (corporate values, incentive tools, management development, coordination committees, and business teams) than UT sector

OG sector •More tools (business ethics, community involvement and social activities in the supply chain) than UT sector

OG sector •More cross-disciplinary collaboration and potential than UT sector

Outcome OG sector: Greater CSM success

ȱ

Figureȱ9.1:ȱCrossȬsectorȱdifferencesȱ

haveȱ alreadyȱ beenȱ presentedȱ inȱ detailȱ inȱ theȱ previousȱ paragraphs.ȱ Theyȱ willȱ notȱ beȱ repeatedȱbutȱtheȱauthorȱprovidesȱanȱoverviewȱofȱtheȱcrossȬsectorȱdifferencesȱinȱFigȬ

9.1ȱFindingsȱ

277ȱ

ureȱ 9Ȭ1.ȱ Theyȱ clearlyȱ illustrateȱ aȱ lessȱ advancedȱ approachȱ ofȱ UTȱ companiesȱ toȱ CSMȱ comparedȱwithȱOGȱcompanies.ȱ Managementȱdisciplinesȱ Theȱ studyȱ revealedȱ severalȱ crossȬdisciplinaryȱ differences,ȱ summarizedȱ inȱ Tableȱ 9Ȭ1,ȱ whichȱ showȱ thatȱ theȱ twoȱ groupsȱ haveȱ specificȱ perceptionsȱ ofȱ determinantsȱ ofȱ CSMȱ (issueȱ significance)ȱ andȱ ofȱ CSMȱ asȱ such,ȱ moreȱ specificallyȱ theirȱ companies’ȱ SDȱ faȬ miliarity,ȱinternalȱbarriersȱandȱmanagementȱtoolsȱasȱwellȱasȱtheȱroleȱofȱtheirȱsectorȱinȱ contributingȱtoȱsustainableȱdevelopment.ȱ Conceptȱ

DescriptionȱofȱcrossȬdisciplinaryȱdifferencesȱ

Sectorȱ

IssueȱsignifiȬ canceȱ

Sustainabilityȱofficersȱconsiderȱsocialȱandȱenvironmentalȱissuesȱ moreȱsignificantȱthanȱgeneralȱmanagersȱ

OG,ȱUTȱ

BarriersȱtoȱCSMȱ

Sustainabilityȱofficersȱmoreȱfrequentlyȱconsiderȱmanagers’ȱmindsetȱ anȱimportantȱbarrierȱtoȱCSMȱ

UTȱ

SDȱfamiliarityȱ

Sustainabilityȱofficersȱconsiderȱtheirȱcompanies’ȱSDȱfamiliarityȱ higherȱthanȱgeneralȱmanagersȱ

OG,ȱUTȱ

SDȱroleȱofȱindusȬ tryȱ

Sustainabilityȱofficerȱconsiderȱtheirȱindustry’sȱroleȱmoreȱproactiveȱ thanȱgeneralȱmanagersȱ

OGȱ

Managementȱ toolsȱ

Sustainabilityȱofficersȱlessȱfrequentlyȱreportȱtheȱuseȱofȱtoolsȱthatȱ measureȱresourceȱallocationȱ SustainabilityȱofficersȱmoreȱfrequentlyȱreportȱtheȱuseȱofȱmanageȬ mentȱdevelopmentȱtools.ȱ

OGȱ

Tableȱ9Ȭ1:ȱCrossȬdisciplinaryȱdifferencesȱ

Thusȱ theȱ sampleȱ ofȱsustainabilityȱ officersȱ confirmsȱ theirȱ greaterȱ knowledgeȱ andȱ exȬ pertiseȱinȱtheȱareaȱofȱCSM,ȱwhichȱwasȱexpectedȱdueȱtoȱtheirȱroleȱasȱadvisorsȱandȱcataȬ lystsȱinȱtheirȱcompanies.ȱTheyȱareȱmoreȱawareȱofȱsocialȱandȱenvironmentalȱissuesȱandȱ internalȱbarriers,ȱmoreȱspecificallyȱmanagers’ȱmindset.ȱHenceȱtheyȱseeȱaȱclearȱneedȱtoȱ increaseȱ generalȱ managers’ȱ awarenessȱ throughȱ managementȱ development.ȱ Inȱ conȬ trast,ȱgeneralȱmanagersȱareȱmoreȱstronglyȱconcernedȱwithȱresourceȱallocation,ȱwhichȱ likelyȱreflectsȱtheirȱperceptionȱofȱCSMȱasȱaȱcostȱdriver.ȱ Finally,ȱsustainabilityȱofficersȱhaveȱaȱmoreȱpositiveȱselfȬperceptionȱ(ofȱtheirȱcompanyȱ andȱ industry),ȱ mostȱ likelyȱ becauseȱ theyȱ areȱ (1)ȱ calculatedlyȱ optimisticȱ asȱ catalysts,ȱ andȱ (2)ȱ haveȱ aȱ broaderȱ andȱ moreȱ strategicȱ perspectiveȱ onȱ CSMȱ (e.g.ȱ greaterȱ awareȬ nessȱofȱbestȱpractices)ȱandȱthusȱtendȱtoȱoverestimateȱorganizationalȱalignment.ȱ Regionsȱ Theȱ studyȱ pointedȱ toȱ severalȱ differencesȱ acrossȱ regionsȱ ofȱ operations:ȱ Theȱ signifiȬ canceȱ ofȱ someȱ issuesȱ dependsȱ onȱ localȱ socialȱ andȱ biophysicalȱ conditions.ȱ FurtherȬ more,ȱoutsideȱpressureȱfromȱstakeholdersȱisȱmoderatedȱthroughȱlimitsȱofȱlegitimacy,ȱ whichȱdifferȱacrossȱregionsȱofȱoperations.ȱE.g.ȱdevelopingȱcountriesȱhaveȱlowerȱenviȬ ronmentalȱandȱsocialȱstandardsȱthanȱdevelopedȱcountries.ȱFurthermore,ȱpublicȱpresȬ ȱ

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9ȱSynopsisȱ

sureȱonȱtheȱsameȱissueȱsuchȱasȱnuclearȱpowerȱ(e.g.ȱFranceȱvs.ȱGermany)ȱandȱclimateȱ changeȱ (Europeȱ vs.ȱ US)ȱ differsȱ acrossȱ countries.ȱ Thereȱ isȱ someȱ evidenceȱ thatȱ theseȱ countryȬspecificȱ differencesȱ areȱ alsoȱ reflectedȱ inȱ managers’ȱ attitudesȱ andȱ corporateȱ cultures.ȱ 9.2 9.2.1

Significanceȱofȱtheȱstudyȱ Implicationsȱforȱtheoryȱ

Theȱ presentȱstudyȱ isȱ bothȱexploratoryȱandȱ explanatoryȱinȱnature.ȱItȱ reliesȱ onȱ aȱconȬ ceptualȱ frameworkȱ derivedȱ fromȱ thoseȱ ofȱ Hustedȱ (2000)ȱ Greeningȱ andȱ Grayȱ (1994)ȱ andȱ mainlyȱ Woodȱ (1991).ȱ Theȱ resultingȱ modelȱ ofȱ corporateȱ sustainabilityȱ performȬ anceȱ wasȱ testedȱ throughȱ bothȱ qualitativeȱ andȱ quantitativeȱ methods.ȱ Empiricalȱ eviȬ denceȱrevealsȱthatȱtheȱframeworkȱdevelopedȱisȱvalid.ȱTheȱfollowingȱimplicationsȱforȱ theoryȱareȱsignificant:ȱ Jointȱconsiderationȱofȱsocialȱandȱenvironmentalȱdimensionȱ Theȱmostȱsignificantȱmodelsȱofȱcorporateȱsocialȱperformanceȱ(Cochranȱ&ȱWood,ȱ1984;ȱ Greeningȱetȱal.,ȱ1994;ȱHusted,ȱ2000;ȱWood,ȱ1991)ȱdoȱnotȱdifferentiateȱbetweenȱsocialȱ andȱenvironmentalȱissuesȱandȱcorporateȱactivitiesȱundertakenȱtoȱaddressȱthem.ȱ Theȱpresentȱstudyȱhasȱ shownȱ thatȱaȱ separateȱ butȱsimultaneousȱ considerationȱ ofȱtheȱ socialȱ andȱ environmentalȱ dimensionȱ isȱ worthwhile,ȱ sinceȱ itȱ takesȱ intoȱ accountȱ theȱ contingencyȱ characterȱ ofȱ CSM:ȱ Bothȱ theȱ socialȱ andȱ environmentalȱ dimensionsȱ ofȱ CSMȱcanȱdifferȱinȱtermsȱofȱsignificanceȱbetweenȱindustryȱsectorsȱandȱregionsȱofȱopȬ erations.ȱ Thusȱ theȱ studyȱ hintsȱ atȱ evenȱ finerȱ differentiations,ȱ whichȱ wouldȱ takeȱ intoȱ accountȱparametersȱsuchȱasȱissueȱtransparency,ȱcertaintyȱandȱurgency.ȱ Economicȱrationaleȱ Inȱ contrastȱ toȱ previousȱ models,ȱ theȱ study’sȱ modelȱ ofȱ corporateȱ sustainabilityȱ perȬ formanceȱexplicitlyȱincorporatesȱtheȱeconomicȱrationaleȱforȱCSM.ȱItȱdefinesȱCSMȱasȱaȱ profitȬdrivenȱ corporateȱ responseȱ toȱ socialȱ andȱ environmentalȱ issues.ȱ Givenȱ thatȱ theȱ economicȱrationaleȱforȱCSMȱwasȱaȱvirtuallyȱuntouchedȱareaȱofȱdescriptiveȱresearch,ȱ theȱ studyȱ tookȱ aȱ moreȱ exploratoryȱ qualitativeȱ approachȱ toȱ shedȱ moreȱ lightȱ onȱ theȱ importanceȱandȱcharacteristicsȱofȱthisȱconcept.ȱ Theȱevidenceȱgainedȱpointsȱtoȱtheȱfactȱthatȱtheȱbusinessȱcaseȱforȱsustainabilityȱplaysȱaȱ keyȱroleȱinȱfosteringȱCSM,ȱandȱthusȱjustifiesȱtheȱinclusionȱofȱtheȱbusinessȱcaseȱinȱtheȱ study’sȱconceptualȱframework.ȱItȱalsoȱprovidedȱtheȱbasisȱforȱanȱempiricalȱfollowȬupȱ studyȱthatȱcollectedȱtheȱfirstȱeverȱavailableȱquantitativeȱdataȱonȱcompanies’ȱactivitiesȱ toȱquantifyȱtheȱeconomicȱeffectsȱofȱtheirȱsocialȱandȱenvironmentalȱinitiativesȱasȱwellȱ asȱonȱtheȱimportanceȱandȱdriversȱofȱquantification.ȱ

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BasedȱonȱhisȱstudyȱandȱfollowȱupȱempiricalȱresearchȱconductedȱatȱIMDȱ(Salzmannȱetȱ al.,ȱ2005b),ȱtheȱauthorȱdevelopedȱaȱframeworkȱthatȱincludesȱallȱrelevantȱdeterminantsȱ ofȱtheȱbusinessȱcaseȱforȱcorporateȱsustainability,ȱi.e.ȱsystemicȱfactorsȱ(marginalityȱandȱ complexity),ȱandȱorganizationalȱfactorsȱ(systemȱandȱtools,ȱstructures,ȱmanagers,ȱsoftȱ organizationalȱfactors,ȱcausalȱmodelingȱandȱvalidation).ȱ Processȱorientationȱandȱcorrespondingȱsystemizationȱofȱsubconceptsȱ NoneȱofȱtheȱpreviousȱconceptualȱframeworksȱallowedȱforȱanȱexaminationȱofȱtheȱrelaȬ tionshipȱ betweenȱ possibleȱ determinantsȱ ofȱ CSM,ȱ companies’ȱ strategicȱ dispositionȱ andȱapproachesȱtoȱimplementingȱitȱandȱtheȱoutcome.ȱ Theȱ corporateȱ sustainabilityȱ performanceȱ modelȱ presentedȱ inȱ thisȱ studyȱ facilitatesȱ thisȱ sequentialȱ perspective.ȱ Dataȱ supportȱ theȱ validityȱ ofȱ theȱ frameworkȱ andȱ showȱ that:ȱ 1. Strategicȱ dispositionȱ toȱ CSMȱ isȱ drivenȱ byȱ fourȱ (externalȱ andȱ internal)ȱ deterȬ minantsȱ 2. ȱStrategicȱdispositionȱtoȱCSMȱdeterminesȱhowȱitȱisȱimplementedȱ 3. ApproachesȱtoȱimplementationȱdetermineȱtheȱoutcomeȱofȱCSM.ȱ FourȱdeterminantsȱofȱCSMȱ Toȱ dateȱ theȱ mostȱ comprehensiveȱ modelsȱ ofȱ corporateȱ socialȱ performanceȱ byȱ Woodȱ (1991)ȱandȱGreeningȱandȱGrayȱ(1994)ȱhaveȱfeaturedȱonlyȱsomeȱsubsetsȱofȱtheȱmotivatȬ ingȱ factorsȱ accountedȱ forȱ inȱ theȱ presentȱ study,ȱ namelyȱ publicȱ responsibility,ȱ legitiȬ macyȱ andȱ managerialȱ discretionȱ (Wood,ȱ 1991),ȱ andȱ resourceȱ dependencies,ȱ instituȬ tionalȱpressuresȱandȱmanagerialȱdiscretionȱ(Greeningȱetȱal.,ȱ1994).ȱ Theȱ presentȱ studyȱ hasȱ shownȱ theȱ meaningfulnessȱ overallȱ ofȱ fourȱ determinantsȱ ofȱ CSM:ȱ legitimacyȱ (stakeholders),ȱ managerialȱ discretionȱ (managers’ȱ attitudes,ȱ knowlȬ edge),ȱ corporateȱ discretionȱ (resourceȱ dependencies)ȱ andȱ publicȱ responsibilityȱ (isȬ sues).ȱ 9.2.2 Implicationsȱforȱpracticeȱ Issuesȱ Theȱ studyȱ clearlyȱ revealsȱ thatȱ mostȱ issuesȱ inȱ bothȱ sectorsȱ canȱ beȱ momentarilyȱ adȬ dressedȱ throughȱ incrementalȱ modificationsȱ toȱ operationsȱ andȱ processes.ȱ Theȱ curȬ rentlyȱlimitedȱrelevanceȱofȱenvironmentalȱandȱsocialȱissuesȱtoȱcompanies’ȱcoreȱbusiȬ nessȱ clearlyȱ putsȱ thingsȱ intoȱ perspective:ȱ Itȱ isȱ fairlyȱ easyȱ forȱ generalȱ managersȱ toȱ dismissȱCSMȱasȱ“baloney.”ȱItȱisȱobviousȱthatȱtwoȱfactorsȱwillȱsignificantlyȱaffectȱtheȱ importanceȱofȱCSMȱinȱtheȱfuture:ȱ 1. Issueȱvisibility:ȱSomeȱissuesȱareȱlikelyȱtoȱbecomeȱmoreȱandȱmoreȱvisible.ȱEffectsȱofȱ climateȱchangeȱareȱlikelyȱtoȱshowȱmoreȱclearly,ȱe.g.ȱhigherȱseaȱlevels,ȱinterferenceȱ ȱ

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withȱ atmosphericȱ andȱ waterȱ circulationȱ andȱ weatherȱ variability.ȱ Furthermore,ȱ environmentalȱ (e.g.ȱ biodiversityȱ loss,ȱ environmentalȱ deterioration)ȱ andȱ socialȱ pressuresȱ(e.g.ȱincomeȱdisparities,ȱpoverty)ȱareȱlikelyȱtoȱincreaseȱ(OECD,ȱ2001,ȱp.ȱ 14).ȱThoseȱdevelopmentsȱofȱissueȱvisibilityȱmayȱbeȱgradualȱorȱdramatic.ȱ 2. Societalȱreaction:ȱItȱremainsȱtoȱbeȱseenȱhowȱsocietiesȱwillȱrespondȱtoȱthisȱincreasȬ ingȱ issueȱ visibility,ȱ andȱ whetherȱ theȱ associatedȱ risksȱ canȱ beȱ –ȱ dependingȱ onȱ theȱ futureȱ stateȱ ofȱ local,ȱ regionalȱ orȱ globalȱ ecologicalȱ andȱ socialȱ systemsȱ –ȱ avoided,ȱ mitigatedȱorȱ onlyȱ managedȱ (e.g.ȱbuildingȱ higherȱdamsȱ againstȱ risingȱseaȱlevels).ȱ Dependingȱonȱfutureȱtrendsȱandȱcountertrendsȱ(corporateȱsocialȱresponsibilityȱvs.ȱ radicalȱ capitalism;ȱ nationalȱ protectionismȱ vs.ȱ globalization;ȱ multiȬȱ vs.ȱ unilateralȬ ism),ȱsocietiesȱmayȱorȱmayȱnotȱdecideȱtoȱinternalizeȱissues.ȱ Inȱtheȱcaseȱofȱclimateȱchange,ȱforȱexample,ȱdirectȱtaxes,ȱtradableȱpermits,ȱreluctanceȱ ofȱshareholdersȱandȱinstitutionalȱinvestorsȱ(e.g.ȱTheȱCarbonȱDisclosureȱProject),ȱlitiȬ gationȱ andȱ changesȱ inȱ reȬinsuranceȱ policiesȱ couldȱ haveȱ aȱ significantȱ impactȱ onȱ curȬ rentȱbusinessȱmodels,ȱwhichȱareȱlargelyȱbasedȱonȱtheȱproductionȱandȱuseȱofȱfossilȱfuȬ elsȱ(OECD,ȱ2001,ȱp.ȱ350;ȱTheȱWordȱEconomicȱForum,ȱ2002,ȱp.ȱ2ȱ).ȱ Providedȱ thatȱ societyȱ isȱ willingȱ andȱ ableȱ toȱ internalizeȱ increasinglyȱ visibleȱ issues,ȱ companies’ȱfinancialȱthreatsȱandȱopportunitiesȱwillȱincrease.ȱTheȱstakesȱwillȱalsoȱriseȱ throughȱanȱincreaseȱinȱcomplexityȱandȱdynamicsȱthroughȱgeopoliticsȱ(e.g.ȱterrorism)ȱ andȱ theȱ growingȱ bargainingȱ powerȱ ofȱ countriesȱ thatȱ ownȱ nonȬrenewableȱ energyȱ sources.ȱ Furthermore,ȱ theȱ situationȱ isȱ complicatedȱ byȱ severalȱ systemicȱ parametersȱ drivingȱtheȱglobalȱenergyȱsystem:ȱSuchȱfactorsȱ(e.g.ȱdomesticȱenergyȱpolicies,ȱtechnoȬ logicalȱlockȬinȱthroughȱlongȱlifeȬspansȱforȱenergyȬrelatedȱcapitalȱstocks)ȱcanȱonlyȱbeȱ influencedȱbyȱenergyȱcompaniesȱtoȱaȱlimitedȱextent.ȱInȱtheȱUTȱsector,ȱongoingȱliberȬ alizationȱandȱprivatizationȱcouldȱadditionallyȱincreaseȱcompetition.ȱ Theseȱtrendsȱclearlyȱcallȱforȱaȱmoreȱsystematicȱapproach,ȱwithȱmoreȱresources,ȱtoȱcorȬ rectlyȱ evaluateȱ emergingȱ issues,ȱ detectȱ theȱ mostȱ importantȱ ones,ȱ andȱ eventuallyȱ launchȱactivitiesȱtoȱaddressȱthem.ȱTheȱtimingȱandȱtheȱtypeȱ(e.g.ȱwhichȱtechnology?)ȱ ofȱ suchȱ activitiesȱ isȱ largelyȱ uncertain,ȱ butȱ theyȱ willȱ certainlyȱ becomeȱ necessaryȱ andȱ leadȱtoȱaȱtransitionȱofȱenergyȱmarketsȱinȱtheȱfutureȱ(ShellȱInternationalȱLtd,ȱ2001,ȱp.ȱ 58).ȱTheȱkeyȱimportanceȱofȱthisȱtransitionȱbecomesȱobviousȱifȱoneȱtakesȱintoȱaccountȱ theȱ strategicȱ importanceȱ ofȱ energyȱ asȱ aȱ commodityȱ thatȱ facilitatesȱ mobilityȱ andȱ theȱ productionȱofȱgoodsȱandȱservices.ȱ Stakeholdersȱandȱlegitimacyȱ Theȱ studyȱ revealedȱ thatȱ companiesȱ faceȱ littleȱ outsideȱ pressureȱ fromȱ stakeholders,ȱ apartȱ fromȱ NGOȱ campaigns.ȱ Inȱ particular,ȱ theȱ lackȱ ofȱ strategicȱ guidanceȱ fromȱ govȬ ernmentsȱandȱregulatorsȱinȱindustrializedȱcountriesȱhasȱbecomeȱapparentȱandȱcanȱbeȱ attributedȱtoȱtheȱlimitedȱvisibilityȱofȱissuesȱ(e.g.ȱclimateȱchangeȱisȱaȱglobalȱlongȬtermȱ

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281ȱ

issue),ȱwhichȱdecreasesȱtheȱpoliticalȱacceptanceȱofȱpossiblyȱmoreȱdrasticȱmeasures.ȱAsȱ notedȱ above,ȱ theseȱ issuesȱ willȱ tendȱ toȱ becomeȱ moreȱ visibleȱ overȱ theȱ nextȱ decades,ȱ thusȱ facilitatingȱ moreȱ demandingȱ policyȱ mixesȱ targetingȱ bothȱ energyȱ producersȱ (companies)ȱandȱusersȱ(householdsȱandȱindustries).ȱOnȱtheȱotherȱhand,ȱglobalizationȱ willȱdecreaseȱnationalȱgovernments’ȱpowerȱtoȱamendȱcompanies’ȱlicensesȱtoȱoperate.ȱ TheȱslowȱKyotoȱprocessȱsuggestsȱthatȱeffectiveȱtransnationalȱlegislationȱisȱstillȱyearsȱifȱ notȱdecadesȱawayȱfromȱbeingȱintroducedȱ(WBCSD,ȱ1999,ȱp.ȱ2).ȱ Thisȱ pointsȱ toȱ anȱ increasingȱ roleȱ ofȱ civilȱ societyȱ andȱ otherȱ nonȬregulatoryȱ stakeȬ holdersȱ inȱ amendingȱ companies’ȱ informalȱ licenseȱ toȱ operate.ȱ Withȱ increasingȱ issueȱ visibility,ȱcustomersȱ(i.e.ȱprivateȱandȱcorporateȱcustomers)ȱandȱtheȱfinancialȱcommuȬ nityȱareȱmoreȱlikelyȱtoȱmoveȱbeyondȱtheirȱadȱhocȱresponsesȱtoȱNGOȱcampaignsȱandȱ moreȱconsistentlyȱexertȱgreaterȱpressureȱonȱcompanies.ȱTwoȱfurtherȱmotivatingȱfacȬ torsȱshouldȱbeȱtakenȱintoȱaccount:ȱ -

Withȱ ongoingȱ globalization,ȱ theȱ organizationalȱ visibilityȱ (e.g.ȱ brandȱ recognition)ȱ ofȱtheȱmajorȱoilȱandȱgasȱcompaniesȱinȱparticularȱwillȱincrease.ȱ

-

Withȱongoingȱeconomicȱdevelopment,ȱlimitsȱofȱlegitimacyȱwillȱshift,ȱi.e.ȱexternalȱ stakeholdersȱwillȱbecomeȱmoreȱdemandingȱinȱtermsȱofȱhowȱissuesȱshouldȱbeȱadȬ dressed.ȱ

Theȱincreasingȱcomplexityȱandȱpressureȱcompaniesȱwillȱfaceȱpointsȱtoȱtheȱimportanceȱ ofȱformingȱpartnershipsȱwithȱstakeholders,ȱtoȱdevelopȱtechnologiesȱinȱjointȱpilotȱproȬ jectsȱ orȱ safeȱ nicheȱ marketsȱ (e.g.ȱ theȱ hydrogenȱ projectȱ ofȱ Norskȱ Hydro,ȱ Shellȱ andȱ DaimlerChryslerȱ inȱ Iceland,ȱ ruralȱ electrificationȱ projectȱ undertakenȱ byȱ Shellȱ andȱ Eskom)ȱandȱtoȱresolveȱlocalȱsocialȱandȱenvironmentalȱissuesȱinȱdevelopingȱcountriesȱ (e.g.ȱhumanȱrights,ȱallocationȱofȱoilȱrevenues).ȱ Managersȱ Sinceȱ companies’ȱ “hardware”ȱ ofȱ toolsȱ andȱ systemsȱ canȱ inevitablyȱ notȱ captureȱ theȱ complexityȱofȱCSMȱfullyȱ–ȱevenȱifȱgapsȱandȱfailuresȱdiagnosedȱwereȱremovedȱ–ȱmanȬ agersȱplayȱaȱparticularlyȱimportantȱrole.ȱTheȱassessmentȱofȱissuesȱandȱtheirȱintegraȬ tionȱintoȱbusinessȱstrategiesȱandȱoperationsȱ(e.g.ȱframingȱanȱissuesȱasȱanȱopportunity)ȱ providesȱ themȱ withȱ significantȱ potentialȱ toȱ exerciseȱ theirȱ discretionaryȱ power.ȱ Thisȱ involvesȱpersonalȱjudgmentȱthatȱisȱbasedȱonȱtheȱdecisionȬmakers’ȱknowledgeȱ(cogniȬ tiveȱ maps)ȱ andȱ personalȱ attitudes.ȱ Itȱ shouldȱ beȱ notedȱ thatȱ judgmentȱ isȱ particularlyȱ difficultȱ inȱ theȱ energyȱ industryȱ comparedȱ toȱ othersȱ since,ȱ asȱ outlinedȱ above,ȱ theȱ globalȱenergyȱsystemȱisȱsoȱcomplexȱandȱdynamic.ȱ Managementȱdevelopmentȱisȱstronglyȱneeded,ȱparticularlyȱinȱlaggardȱcompanies,ȱtoȱ encourageȱmanagersȱtoȱexploitȱtheirȱdiscretionaryȱpowerȱinȱtheȱbestȱpossibleȱway.ȱInȱ theȱcurrentȱsituation,ȱinȱwhichȱissuesȱcanȱstillȱbeȱaddressedȱthroughȱincrementalȱinȬ ȱ

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novations,ȱ moreȱ experiencedȱ andȱ knowledgeableȱ managersȱ areȱ moreȱ likelyȱ toȱ acȬ knowledgeȱ andȱ strengthenȱ existingȱ linksȱ betweenȱ socialȱ andȱ environmentalȱ issuesȱ andȱ theirȱ companies’ȱ coreȱ business,ȱ andȱ thusȱ moreȱ stronglyȱ promoteȱ CSMȱ withinȱ theirȱ organization.ȱ Forȱ thisȱ reason,ȱ theȱ authorȱ hasȱ developedȱ anȱ interactiveȱ webȬ basedȱ toolsetȱ toȱ helpȱ managersȱ buildȱ theirȱ businessȱ caseȱ forȱ sustainability,ȱ benchȬ markȱtheirȱcompany’sȱcurrentȱapproachȱtoȱCSMȱandȱidentifyȱareasȱofȱimprovementsȱ andȱpotentialȱpitfalls.59ȱ Itȱ appearsȱ thatȱ youngerȱ managersȱ alreadyȱ exhibitȱ greaterȱ awarenessȱ ofȱ issuesȱ thanȱ theirȱ olderȱ colleagues,ȱ presumablyȱ dueȱ toȱ theirȱ educationȱ (e.g.ȱ greaterȱ useȱ ofȱ theȱ internet)ȱ andȱ heightenedȱ awarenessȱ ofȱ NGOȱ campaigns.ȱ Henceȱ oneȱ canȱ expectȱ thatȱ futureȱmanagersȱwillȱmoreȱeasilyȱsenseȱaȱbusinessȱlogicȱtoȱintegratingȱissues.ȱGreaterȱ visibilityȱofȱsomeȱissuesȱsuchȱasȱclimateȱchangeȱwillȱadditionallyȱhelpȱthemȱtoȱbuildȱaȱ businessȱcaseȱforȱCSM.ȱ Companiesȱ Inȱ theȱ longȱ term,ȱ financialȱ threatsȱ andȱ opportunitiesȱ associatedȱ withȱ environmentalȱ andȱsocialȱissuesȱwillȱbecomeȱmoreȱsignificantȱtoȱcompanies’ȱcoreȱbusiness.ȱTheȱbusiȬ nessȱcaseȱwillȱbecomeȱclearerȱandȱeasierȱtoȱbuild.ȱThusȱcompanies’ȱstrategicȱdisposiȬ tionȱtoȱCSMȱwillȱincreaseȱbeyondȱincrementalȱimprovementsȱofȱoperationsȱandȱprocȬ esses.ȱ Howeverȱtheȱstudyȱidentifiedȱ–ȱalongsideȱmanagers’ȱattitudesȱ–ȱseveralȱotherȱinternalȱ factorsȱ thatȱ significantlyȱ affectȱ companies’ȱ strategicȱ dispositionȱ toȱ andȱ implementaȬ tionȱofȱCSM.ȱThisȱmeansȱthatȱaȱmoreȱoptimalȱconfigurationȱofȱthoseȱinternalȱfactorsȱ leadsȱtoȱaȱgreaterȱwillingnessȱandȱabilityȱtoȱintegrateȱissuesȱintoȱstrategiesȱandȱoperaȬ tions.ȱ Theȱpotentialȱforȱcorporateȱdiscretionȱatȱtheȱstrategicȱlevelȱisȱratherȱlimitedȱunderȱtheȱ currentȱmarketȱregimes.ȱHowever,ȱitȱisȱlikelyȱtoȱgrowȱinȱtheȱfutureȱandȱmayȱthusȱleadȱ toȱ aȱ gradualȱ removalȱ ofȱ internalȱ barriers:ȱ CSMȱ willȱ becomeȱ increasinglyȱ difficultȱ toȱ dismissȱbecauseȱitsȱrelevanceȱtoȱcompanies’ȱcoreȱbusinessȱwillȱincrease.ȱ Theȱ potentialȱ forȱ corporateȱ discretionȱ atȱ theȱ implementationalȱ levelȱ isȱ significantȱ inȱ allȱ companiesȱ today,ȱ particularlyȱ amongȱ laggards.ȱ Howȱ canȱ thisȱ potentialȱ beȱ exȬ ploited?ȱTheȱstudyȱpointsȱtoȱtheȱneedȱforȱaȱtwoȬprongedȱapproach:ȱFirst,ȱcompaniesȱ needȱtoȱworkȱonȱtheirȱ“soft”ȱcapabilities:ȱOpenȱproactiveȱcorporateȱculturesȱthatȱcanȱ beȱ mostȱ effectivelyȱ fosteredȱ throughȱ credibleȱ signalsȱ fromȱ topȱ management,ȱ manȬ agementȱdevelopmentȱandȱincentiveȱsystemsȱareȱnecessaryȱtoȱcreateȱaȱworkingȱenviȬ ronmentȱinȱwhichȱmanagersȱfeelȱempoweredȱandȱencouragedȱtoȱexerciseȱtheirȱindiȬ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 59

ȱTheȱtoolsetȱisȱavailableȱatȱtheȱfollowingȱwebȱaddress:ȱwww02.imd.ch/research/project/bcs.ȱ

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283ȱ

vidualȱ discretionaryȱ power.ȱ Companiesȱ featuringȱ suchȱ corporateȱ culturesȱ haveȱ lessȱ needȱ ofȱaȱ hardȱ quantifiedȱ businessȱcaseȱandȱ haveȱaȱbetterȱ“feel”ȱforȱ theȱunderlyingȱ businessȱlogic.ȱTheyȱmayȱevenȱalsoȱengageȱinȱcorporateȱenvironmentalȱandȱsocialȱacȬ tivitiesȱonȱaȱnormativeȱcase,ȱbutȱonlyȱasȱlongȱasȱfinancialȱpressureȱisȱmoderate.ȱSecȬ ond,ȱ“hard”ȱinternalȱcapabilitiesȱareȱtoȱbeȱimproved.ȱTheyȱcompriseȱinterȱalia:ȱ -

CorporateȱstructuresȱthatȱfosterȱeffectiveȱcollaborationȱbetweenȱsustainabilityȱexȬ pertsȱandȱgeneralȱmanagers,ȱbetweenȱbusinessȱfunctionsȱandȱbusinessȱunits.ȱThisȱ poolingȱ ofȱ resourcesȱ isȱ necessaryȱ toȱ copeȱ withȱ theȱ complexityȱ thatȱ comesȱ withȱ CSMȱandȱcallsȱforȱcrossȬimpactȱanalysis,ȱcrossȬfunctionalȱandȱcrossȬbusinessȱconȬ sensusȬbuildingȱ andȱ decisionȬmakingȱ (throughȱ businessȱ teamsȱ andȱ coordinationȱ committeesȱatȱtheȱoperationalȱandȱstrategicȱlevels,ȱrespectively)ȱ

-

Managementȱtoolsȱthatȱprovideȱmanagersȱwithȱrelevantȱdataȱ(e.g.ȱcarbonȱcostȱacȬ counting,ȱscenarioȱbuilding)ȱthatȱareȱnecessaryȱtoȱestablishȱaȱsoundȱbusinessȱlogicȱ forȱCSMȱorȱevenȱaȱhardȱquantifiedȱbusinessȱcase.ȱ

Economicȱrationaleȱ ItȱisȱessentialȱforȱcompaniesȱtoȱestablishȱaȱsoundȱeconomicȱrationaleȱforȱCSM,ȱbutȱitȱisȱ alsoȱnotȱeasy.ȱSystemicȱfactorsȱsuchȱasȱtheȱcomplexityȱassociatedȱwithȱsocialȱandȱenȬ vironmentalȱissuesȱasȱwellȱasȱtheȱlimitedȱscopeȱofȱtheȱbusinessȱcaseȱforȱsustainabilityȱ (particularlyȱ forȱ aȱ radical,ȱ “breakthrough”ȱ innovation)ȱ makeȱ itȱ difficultȱ andȱ lessȱ worthwhileȱtoȱestablishȱbusinessȱlogicȱforȱsocialȱandȱenvironmentalȱinitiativesȱandȱtoȱ quantifyȱit.ȱ However,ȱ withȱ theȱ currentȱ stateȱ ofȱ CSMȱ andȱ itsȱ businessȱ case,ȱ itȱ isȱ shortȬsightedȱ toȱ blameȱoutsideȱandȱsystemicȱfactorsȱwhenȱtryingȱtoȱbuildȱaȱsoundȱbusinessȱcase.ȱTheȱ actualȱbottlenecksȱareȱofȱratherȱbasicȱandȱinternalȱorganizationalȱnature:ȱ 1. Companiesȱtendȱtoȱlackȱcapacitiesȱforȱdataȱmanagement,ȱinȱparticularȱthoseȱnecȬ essaryȱtoȱcollectȱdataȱonȱtheirȱinitiativesȱandȱtheirȱeffects.ȱ 2. Companies,ȱparticularlyȱthoseȱexhibitingȱgreaterȱinternalȱdeficits,ȱtendȱtoȱoveresȬ timateȱtheȱpositiveȱeffectȱofȱsoftȱorganizationalȱfactorsȱsuchȱasȱcorporateȱculture,ȱ managementȱ educationȱ andȱ topȱ managementȱ commitment.ȱ Furthermore,ȱ busiȬ nessȱlogicȱ(withoutȱquantification)ȱisȱnotȱestablishedȱasȱoftenȱasȱclaimed.ȱ OverallȱresultsȱprovideȱaȱclearȱrecommendationȱforȱmanagersȱtoȱsystematicallyȱestabȬ lishȱbusinessȱlogicȱforȱsocialȱandȱenvironmentalȱinitiatives,ȱandȱtoȱconfirmȱorȱdisconȬ firmȱ thisȱ logicȱ byȱ quantificationȱ toȱ avoidȱ flawedȱ decisionȬmakingȱ basedȱ onȱ halfȬ bakedȱ assumptions.ȱ Inȱ mostȱ casesȱ thisȱ willȱ haveȱ toȱ goȱ handȱ inȱ handȱ withȱ buildingȱ organizationalȱcapacitiesȱinȱtheȱformȱof:ȱ ȱ

toolsȱandȱsystemsȱtoȱcollectȱandȱprocessȱrelevantȱdataȱ

284ȱ

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9ȱSynopsisȱ

-

crossȬdisciplinaryȱ structuresȱ (acrossȱ businessȱ units,ȱ businessȱ functions,ȱ reȬ gions,ȱetc.)ȱtoȱensureȱconsistentȱflowȱofȱinformation,ȱfacilitateȱdecisionȬmakingȱ andȱstrengthenȱorganizationalȱalignmentȱ

-

managementȱeducation,ȱandȱ

-

moreȱopenȱandȱproactiveȱcorporateȱcultures.ȱ Limitationsȱandȱsuggestionsȱforȱfurtherȱresearchȱ

Apartȱ fromȱ itsȱ analysisȱ ofȱ determinantsȱ ofȱ strategicȱ dispositionȱ toȱ CSMȱ whichȱ hasȱ beenȱ undertakenȱ inȱ earlierȱ studiesȱ (evenȱ ifȱ notȱ inȱ suchȱ aȱ differentiatedȱ way),ȱ theȱ studyȱhasȱlargelyȱtouchedȱnewȱareasȱofȱempiricalȱresearch.ȱTheȱauthorȱhasȱintendedȱ toȱcaptureȱtheȱvastȱscopeȱofȱthisȱnewȱresearchȱfieldȱthroughȱaȱbroadȱexploratoryȱandȱ explanatoryȱapproach.ȱTheȱbreadthȱandȱpioneeringȱcharacterȱofȱtheȱstudyȱareȱinherȬ entlyȱ linkedȱ toȱ someȱ limitationsȱ thatȱ pointȱ toȱ severalȱ opportunitiesȱ forȱ furtherȱ reȬ search.ȱTheȱauthorȱhasȱidentifiedȱthreeȱkeyȱdirectionsȱofȱfutureȱresearch:ȱ(1)ȱresearchȱ focusȱandȱoperationalization,ȱ(2)ȱrefiningȱtheȱframework,ȱ(3)ȱissueȱintegrationȱandȱtheȱ businessȱ caseȱ forȱ sustainability,ȱ andȱ (4)ȱ methodologyȱ andȱ data.ȱ Obviouslyȱ allȱ threeȱ directionsȱ shouldȱ respectȱ theȱ contingencyȱ characterȱ ofȱ CSMȱ whenȱ drawingȱ multiȬ industryȱsamples.ȱ Researchȱfocusȱandȱoperationalizationȱ Sectionsȱ 8.1ȱ Issues,ȱ 8.2ȱ Externalȱ stakeholders,ȱ industryȱ andȱ partnerships,ȱ andȱ 8.4ȱ Companies,ȱ inȱ particular,ȱ featureȱ severalȱ opportunitiesȱ toȱ focusȱ onȱ individualȱ reȬ searchȱareasȱthatȱhaveȱalreadyȱbeenȱmentionedȱinȱtheȱvariousȱdiscussionsȱofȱtheȱreȬ searchȱresultsȱabove.ȱNaturallyȱeveryȱfocusȱhasȱtoȱgoȱhandȱinȱhandȱwithȱaȱmoreȱaccuȬ rateȱoperationalizationȱofȱconcepts.ȱTheȱfollowingȱtwoȱdirectionsȱappearȱparticularlyȱ compelling:ȱ -

Bothȱqualitativeȱandȱquantitativeȱmethodsȱemployedȱinȱtheȱstudyȱrevealedȱthatȱaȱ differentiationȱ betweenȱ theȱ socialȱ andȱ environmentalȱ issueȱ dimensionsȱ isȱ meanȬ ingful.ȱFutureȱresearchȱcanȱallowȱforȱaȱmuchȱfinerȱdistinctionȱofȱissuesȱorȱevenȱaȱ focusȱ onȱ theȱ keyȱ issuesȱ identifiedȱ throughȱ qualitativeȱ methodsȱ inȱ thisȱ study.ȱ Asȱ depictedȱ inȱ Figureȱ 8Ȭ6ȱ studiesȱ canȱ alsoȱ incorporateȱ variousȱ parametersȱ suchȱ asȱ certainty,ȱ transparencyȱ (Bansalȱ etȱ al.,ȱ 2000),ȱ local,ȱ regionalȱ orȱ globalȱ biophysicalȱ conditionsȱ toȱ moreȱ comprehensivelyȱ explainȱ variationsȱ inȱ theȱ visibilityȱ ofȱ indiȬ vidualȱissues.ȱ Theyȱcanȱ additionallyȱ includeȱtheȱ moderatingȱ factorsȱofȱorganizaȬ tionalȱvisibilityȱ(Bowen,ȱ2000)ȱandȱlimitsȱofȱlegitimacyȱtoȱassessȱoutsideȱpressureȱ associatedȱwithȱanȱissueȱandȱtheȱcorrespondingȱfinancialȱthreatȱandȱopportunityȱ asȱperceivedȱbyȱmanagers.ȱThusȱresultsȱcanȱalsoȱcontributeȱtoȱaȱmoreȱconclusiveȱ predictionȱofȱcompanies’ȱstrategicȱdispositionȱtoȱCSM.ȱ

9.3ȱLimitationsȱandȱsuggestionsȱforȱfurtherȱresearchȱ

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285ȱ

Quantitativeȱ methodsȱ linkedȱ severalȱ stakeholders’ȱ demandsȱ forȱ CSMȱ toȱ compaȬ nies’ȱ strategicȱ disposition.ȱ Furthermore,ȱ demandȱ forȱ CSMȱ wasȱmeasuredȱ forȱ theȱ individualȱissueȱbutȱatȱanȱoverallȱlevel.ȱAsȱqualitativeȱmethodsȱrevealed,ȱtheȱdeȬ mandȱlevelȱisȱonlyȱoneȱofȱseveralȱdeterminantsȱofȱoutsideȱpressureȱfromȱaȱparticuȬ larȱstakeholderȱandȱitȱisȱissueȬspecific.ȱFutureȱstudiesȱcanȱassessȱtheȱimportanceȱofȱ theȱ principleȱ ofȱ legitimacyȱ moreȱ accuratelyȱ byȱ incorporatingȱ additionalȱ factorsȱ featuredȱFigureȱ8Ȭ15,ȱsuchȱasȱtheȱpowerȱofȱtheȱindividualȱstakeholderȱrelativeȱtoȱ theȱ company.ȱ Theyȱ mayȱ concentrateȱ onȱ singleȱ stakeholdersȱ only,ȱ orȱ oneȱ issueȱ only,ȱ andȱ assessȱ theȱ correspondingȱ outsideȱ pressureȱ andȱ theȱ financialȱ threatȱ orȱ opportunityȱfacedȱbyȱtheȱcompany.ȱ

Refiningȱtheȱconceptualȱframeworkȱ Theȱ presentȱ studyȱ wasȱ basedȱ onȱ aȱ conceptualȱ frameworkȱ depictedȱ inȱ Figureȱ 4Ȭ1,ȱ whichȱ featuredȱ fourȱ determinantsȱ ofȱ CSMȱ comprisingȱ theȱ principlesȱ ofȱ publicȱ reȬ sponsibilityȱ(relatingȱtoȱissues),ȱlegitimacyȱ(relatingȱtoȱstakeholders),ȱmanagerialȱdisȬ cretionȱ (relatingȱ toȱ managers’ȱ attitudes)ȱ andȱ corporateȱ discretionȱ (relatingȱ toȱ comȬ panyȬspecificȱdeterminants).ȱȱ Corporateȱactivity (e.g.ȱproductionȱandȱuseȱofȱfossilȱfuelsȱlikelyȱtoȱbeȱassociated withȱclimateȱchange) Currentȱandȱfuture

Outsideȱpressure toȱminimizeȱtheȱeffect

ScrutinyȱofȱCO2ȱintensity byȱfinancialȱsector EcoȬtaxes

Costs

Consumerȱprotestsȱandȱboycotts NGOȱcampaigns Shareholderȱresolutions

Brandȱvalueȱandȱreputation Employeeȱsatisfaction Accessȱtoȱcapital etc.

Theȱbusinessȱcase: Financialȱthreatȱorȱopportunity

Increasedȱdemandȱfor renewableȱenergy

Revenues

Managers’ȱmindset,ȱknowledge (e.g.ȱcognitiveȱmaps)

asȱperceivedȱbyȱtheȱmanagers:

Corporateȱcultureȱandȱtools

Issueȱsignificance Figureȱ9.2:ȱIntegrationȱofȱtheȱbusinessȱcaseȱintoȱtheȱconceptualȱframeworkȱ

ȱ

ȱ

286ȱ

9ȱSynopsisȱ

Theȱbusinessȱcase,ȱi.e.ȱtheȱeconomicȱrationaleȱforȱCSM,ȱwasȱintegratedȱwithȱtheȱstraȬ tegicȱdimensionȱofȱCSMȱnextȱtoȱcompanies’ȱstrategicȱdisposition.ȱTheȱcentralȱroleȱofȱ theȱbusinessȱcaseȱforȱCSMȱrevealedȱinȱthisȱstudyȱcalls,ȱhowever,ȱforȱanȱenhancementȱ ofȱtheȱconceptualȱframework,ȱmoreȱspecificallyȱaȱrefinementȱtoȱtakeȱintoȱaccountȱitsȱ relationshipȱwithȱ theȱ motivatingȱprinciplesȱfeaturedȱinȱtheȱoriginalȱframework.ȱFigȬ ureȱ9Ȭ2ȱconstitutesȱaȱpropositionȱforȱsuchȱaȱrefinedȱframework.ȱItȱfeaturesȱallȱconceptsȱ ofȱthisȱstudy,ȱwhichȱwereȱfoundȱtoȱbeȱdirectlyȱrelevant.ȱTheyȱcompriseȱtheȱcorporateȱ activityȱ thatȱ leadsȱ toȱ aȱ socialȱ orȱ environmentalȱ intakeȱ (notȱ shown,ȱ seeȱ Figureȱ 8Ȭ6).ȱ Thisȱintakeȱleadsȱtoȱanȱissueȱwhoseȱqualityȱdependsȱonȱlocal,ȱregionalȱorȱglobalȱbioȬ physicalȱorȱsocialȱconditions.ȱTheȱqualityȱofȱtheȱissueȱmayȱadditionallyȱbeȱvisibleȱtoȱaȱ varyingȱextentȱdependingȱonȱitsȱtransparencyȱandȱcertaintyȱ(notȱshown,ȱseeȱalsoȱFigȬ ureȱ8Ȭ6).ȱ Theȱ visibleȱ issueȱ thenȱ triggersȱ outsideȱ pressureȱ fromȱ stakeholdersȱ whichȱ isȱ continȬ gentȱonȱtheȱorganizationalȱvisibilityȱofȱtheȱcompanyȱandȱtheȱlimitȱofȱlegitimacy.ȱThisȱ outsideȱpressureȱcanȱtakeȱdifferentȱforms,ȱdependingȱonȱtheȱindividualȱstakeholder,ȱ andȱitȱaffectsȱcosts,ȱrevenuesȱorȱintangiblesȱtoȱaȱvaryingȱextent.ȱTheȱresultingȱfinanȬ cialȱ opportunityȱ orȱ threatȱ isȱ thenȱ evaluatedȱ byȱ aȱ managerȱ orȱ aȱ groupȱ ofȱ managers.ȱ Theirȱ mindset,ȱ levelȱ ofȱ knowledgeȱ andȱ expertiseȱ asȱ wellȱ asȱ corporateȱ cultureȱ andȱ toolsȱdeterminesȱtheȱoutcomeȱofȱthisȱevaluation,ȱwhichȱisȱtheȱperceivedȱissueȱsignifiȬ cance.ȱTheȱissueȱsignificanceȱthenȱdeterminesȱ–ȱalongsideȱotherȱfactorsȱ–ȱtheȱwillingȬ nessȱtoȱaddressȱtheȱissue,ȱi.e.ȱtheȱstrategicȱdisposition.ȱ Theȱ refinedȱ frameworkȱ presentedȱ stillȱ reflectsȱ aȱ ratherȱ exploratoryȱ stageȱ ofȱ thisȱ reȬ searchȱfield.ȱFutureȱstudiesȱcanȱtestȱandȱrefineȱitȱtoȱmoveȱfromȱtheȱdescriptiveȱendȱofȱ theȱcontinuumȱmoreȱtowardȱaȱnormativeȱandȱpredictiveȱstageȱinȱthisȱresearchȱfield.ȱ Issueȱintegrationȱandȱtheȱbusinessȱcaseȱforȱsustainabilityȱ Theȱauthorȱdevelopedȱaȱframeworkȱdepictingȱtheȱmajorȱdeterminantsȱofȱtheȱbusinessȱ caseȱforȱcorporateȱsustainabilityȱ–ȱlargelyȱbasedȱonȱqualitativeȱevidenceȱcollectedȱinȱ theȱcourseȱofȱthisȱstudyȱandȱonȱempiricalȱfollowȬupȱresearchȱ(seeȱFigureȱ9.3).ȱ Itȱisȱsuggestedȱthatȱfurtherȱempiricalȱstudiesȱcouldȱtestȱandȱrefineȱthisȱframework,ȱinȱ particularȱ ifȱ theyȱ takeȱ intoȱ accountȱ theȱ contingentȱ naturesȱ ofȱ CSMȱ andȱ itsȱ businessȱ case.ȱThisȱmeansȱtheȱauthorȱrecommendsȱaȱresearchȱdesignȱthatȱallowsȱtheȱresearcherȱ toȱ controlȱforȱ industryȱandȱcompanyȱ effectsȱ asȱ wellȱ asȱvaryingȱ characteristicsȱofȱ diȬ verseȱsocialȱandȱenvironmentalȱinitiatives.ȱ Furthermore,ȱ theȱ authorȱ foundȱ aȱ certainȱ congruenceȱ inȱ companies’ȱ challengesȱ toȱ quantifyȱ theirȱ businessȱ caseȱ forȱ sustainabilityȱ andȱ measureȱ theirȱ nonȬfinancialȱ perȬ formance.ȱHeȱsuggestsȱthatȱaȱstudyȱreviewingȱresearchȱinȱbothȱdomainsȱcouldȱfaciliȬ tateȱ aȱ significantȱ amountȱ ofȱ learningȱ acrossȱ theȱ researchȱ disciplines.ȱ Furthermore,ȱ thereȱisȱsignificantȱroomȱforȱfurtherȱempiricalȱstudiesȱexaminingȱcommonalitiesȱandȱ

9.3ȱLimitationsȱandȱsuggestionsȱforȱfurtherȱresearchȱ

287ȱ

differencesȱbetweenȱbothȱdomainsȱmoreȱcloselyȱinȱtermsȱofȱactivities,ȱtools,ȱbarriersȱ andȱtrends.ȱ Systemic factors

Marginality • Regulatory and market framework • Technology (lock-in)

Organizational factors Tools/Systems • Impact assessment • Early awareness system • etc.

Structures • Cross-functional • Cross-business

Issues

Financial opportunities and threats

Validation Causal modeling

Business case

Managers

Complexity • Time • Scope (corporate vs. plant level, single vs. multiple issues)

• Knowledge • Awareness • Availability

Soft org. factors • Corporate culture • Top management commitment

ȱ Figureȱ9.3:ȱDevelopedȱframeworkȱ–ȱTheȱbusinessȱcaseȱforȱsustainabilityȱandȱitsȱdeterminantsȱ

Finallyȱ theȱ presentȱ studyȱ featuredȱ aȱ largelyȱ qualitativeȱ analysisȱ ofȱ corporateȱ apȬ proachesȱ toȱ issueȱ integrationȱ toȱ exploreȱ aȱ virtuallyȱ untouchedȱ researchȱ terrain.ȱ ReȬ sultsȱrevealȱoneȱparticularȱcompellingȱresearchȱopportunity.ȱAȱmoreȱinȬdepthȱanalyȬ sisȱ(e.g.ȱfewerȱcompaniesȱbutȱmoreȱintensiveȱinȬcompanyȱresearch,ȱcomparedȱtoȱthisȱ study)ȱ couldȱ shedȱ moreȱ lightȱ onȱ howȱ companiesȱ takeȱ theirȱ decisionsȱ toȱ (orȱ notȱ to)ȱ addressȱanȱissueȱandȱhow:ȱOnȱwhatȱdataȱexactlyȱdoȱtheyȱbaseȱtheirȱdecisions?ȱWhoȱ takesȱtheȱdecision,ȱbasedȱonȱwhatȱrationale,ȱetc.?ȱ Methodologyȱandȱdataȱ Theȱthirdȱenhancementȱsuggestedȱconcernsȱ(1)ȱmethodologyȱandȱ(2)ȱdata.ȱTheȱformerȱ appliesȱtoȱtheȱquantitativeȱmethodsȱused.ȱTheyȱenabledȱtheȱauthorȱtoȱdistinguishȱsigȬ nificantȱfromȱinsignificantȱdeterminantsȱofȱCSMȱonȱtheȱbasisȱofȱwhetherȱtheyȱwouldȱ featureȱ aȱ statisticallyȱ significantȱ coefficientȱ inȱ theȱ regressionȱ modelsȱ (andȱ correlaȬ tions)ȱ orȱ not.ȱ However,ȱ dueȱ toȱ differentȱ operationalizationsȱ ofȱ theȱ variablesȱ (someȱ ordinal,ȱsomeȱnominal)ȱandȱtheȱperȬfiatȱmeasurementȱthroughȱunnumberedȱequidisȬ tantȱLikertȬtypeȱscales,ȱaȱcomparisonȱofȱtheȱstrengthsȱofȱtheȱeffectsȱdetectedȱinȱregresȬ sionȱmodelsȱonȱtheȱbasisȱofȱtheȱvaluesȱofȱtheȱcoefficientȱwouldȱhaveȱbeenȱinadequate.ȱ ȱ

288ȱ

9ȱSynopsisȱ

Furthermore,ȱ anȱ interpretationȱ ofȱ theȱ relativeȱ effectsȱ wouldȱ haveȱ beenȱ difficultȱ inȱ someȱ cases,ȱ sinceȱ –ȱ dueȱ toȱ theȱ broadȱ scopeȱ ofȱ theȱ studyȱ –ȱ theȱ authorȱ wouldȱ haveȱ lackedȱ theȱ necessaryȱ qualitativeȱ data:ȱ Theȱ objectiveȱ wasȱ toȱ identifyȱ significantȱ variȬ ablesȱratherȱthanȱassessȱtheirȱrelativeȱimportance.ȱWithȱregardȱtoȱdata,ȱtheȱstudyȱfolȬ lowedȱ aȱ strictȱ contingencyȱ perspective,ȱ whichȱ allowedȱ forȱ aȱ differentiatedȱ analysisȱ acrossȱ twoȱ industryȱ sectors,ȱ twoȱ managementȱ disciplinesȱ andȱ twoȱ mainȱ regionsȱ ofȱ operationsȱ(NorthȱAmerica,ȱEurope).ȱAȱsimilarȱapproachȱcouldȱbeȱchosenȱforȱvariousȱ otherȱpopulationsȱ(sectors,ȱmanagementȱfunctionsȱandȱlevels,ȱetc.),ȱofȱwhichȱtheȱfolȬ lowingȱwouldȱappearȱtoȱbeȱtheȱmostȱcompelling:ȱ -

Obviouslyȱ anyȱ otherȱ individualȱ industryȱ sectorȱ couldȱbeȱ selectedȱ andȱ comparedȱ withȱaȱsecondȱone.ȱForȱaȱcrossȬsectorȱcomparison,ȱtheȱselectionȱcouldȱbeȱbasedȱonȱ aȱspecificȱfactorȱthatȱisȱexpectedȱtoȱmoderateȱtheȱsectors’ȱapproachesȱtoȱCSM,ȱi.e.ȱ theȱproductȱ(e.g.ȱspecialtyȱvs.ȱcommodity),ȱtheȱcustomerȱ(consumerȱelectronicsȱvs.ȱ industrialȱequipment),ȱorȱmaterialȱandȱenergyȱintensityȱ(e.g.ȱminingȱorȱaluminumȱ vs.ȱservice).ȱ

-

Theȱ studyȱ alsoȱ leavesȱ severalȱ regionsȱ largelyȱ untouched.ȱ Aboveȱ all,ȱ developingȱ countriesȱ andȱ Asiaȱ offerȱ themselvesȱ asȱ compellingȱ researchȱ objects,ȱ sinceȱ thatȱ isȱ whereȱtheȱ greatestȱpotentialȱ forȱfutureȱ growthȱ–ȱinȱtheȱ energyȱ sectorsȱ asȱ wellȱasȱ manyȱotherȱsectorsȱ–ȱlies.ȱ

-

ItȱwouldȱbeȱequallyȱworthwhileȱtoȱanalyzeȱsmallȱandȱmediumȬsizedȱenterprises’ȱ approachȱ toȱ CSMȱ andȱ itsȱ determinants.ȱ Aȱ comparisonȱ withȱ largeȱ corporationsȱ mayȱ beȱ meaningfulȱ toȱ assessȱ whichȱ groupȱ isȱ moreȱ advancedȱ inȱ termsȱ ofȱ CSMȱ –ȱ thisȱquestionȱisȱstillȱunansweredȱ(Mathieu,ȱ2002,ȱp.ȱ83)ȱ–ȱandȱwhy.ȱ

-

Theȱapproachȱtakenȱinȱthisȱstudyȱcouldȱbeȱtakenȱfurtherȱdownȱtoȱtheȱbusinessȱunitȱ orȱ plantȱ levelȱ (Lankoski,ȱ 2000,ȱ p.ȱ 152),ȱ andȱ thusȱ attemptȱ toȱ identifyȱ andȱ explainȱ possibleȱvariationsȱinȱtheirȱapproachȱtoȱCSM,ȱtheȱreasonsȱandȱtheȱeffects,ȱwithinȱ theȱsameȱcompany.ȱ

-

TheȱsamplesȱofȱthisȱstudyȱareȱbiasedȱtowardȱtheȱsustainabilityȱleadersȱofȱtheirȱsecȬ tors.ȱ Obviouslyȱ anyȱ empiricalȱ studyȱ targetingȱ theȱ laggardsȱ wouldȱ produceȱ aȱ meaningfulȱbenchmarkȱforȱtheȱresearchȱresultsȱpresented.ȱ

Theȱ moreȱ advancedȱ methodsȱ ofȱ dataȱ analysisȱ wereȱ onlyȱ appliedȱ toȱ dataȱ obtainedȱ fromȱgeneralȱmanagers,ȱsinceȱtheȱsampleȱsizeȱforȱsustainabilityȱofficersȱwasȱtooȱsmall.ȱ Thisȱhadȱbeenȱexpected,ȱsinceȱtheȱunderlyingȱpopulationȱisȱsoȱmuchȱsmallerȱthanȱthatȱ ofȱ generalȱ managers.ȱ Asȱ challengingȱ asȱ dataȱ collectionȱ mayȱ be,ȱ aȱ descriptiveȱ studyȱ thatȱcanȱfacilitateȱaȱcomprehensiveȱcomparisonȱofȱgeneralȱmanagers’ȱandȱsustainabilȬ ityȱofficers’ȱperceptionsȱofȱCSMȱthroughȱmeasuresȱofȱassociationsȱ(e.g.ȱregressionȱasȱ inȱtheȱpresentȱstudy)ȱcouldȱbeȱveryȱinsightful.ȱ

9.4ȱConclusionȱ

9.4

289ȱ

Conclusionȱ

ElementsȱofȱCSMȱwereȱmainlyȱexaminedȱunderȱ“kindred”ȱconceptsȱsuchȱasȱcorporateȱ socialȱ responsibility,ȱ corporateȱ socialȱ performanceȱ orȱ environmentalȱ management.ȱ Empiricalȱresearchȱlargelyȱfocusedȱonȱstudiesȱaimingȱtoȱconfirmȱorȱdisconfirmȱaȱlinkȱ betweenȱ corporateȱ social/environmentalȱ andȱ financialȱ performanceȱ orȱ testȱ differentȱ conceptsȱ ofȱ corporateȱ socialȱ responsibility.ȱ Descriptiveȱ studiesȱ onȱ CSMȱ orȱ relatedȱ conceptsȱ wereȱ inȱ theȱ minorityȱ andȱ limitedȱ inȱ theirȱ scope.ȱ Mostȱ importantlyȱ theyȱ largelyȱignoredȱtheȱcontingentȱnatureȱofȱCSMȱandȱleftȱitsȱbusinessȱcaseȱasȱaȱresearchȱ areaȱuntouched.ȱ Theȱ presentȱ studyȱ representsȱ aȱ meaningfulȱ effortȱ toȱ fillȱ theseȱ researchȱ gaps.ȱ Itȱ feaȬ turesȱaȱconceptualȱframeworkȱthatȱaccountsȱforȱtheȱclearlyȱcontingentȱnatureȱofȱCSM.ȱ Itsȱ scopeȱ isȱ substantial,ȱ asȱ itȱ comprehensivelyȱ examinesȱ companies’ȱ approachesȱ toȱ CSM,ȱ theȱ determinantsȱ andȱ theȱ outcomeȱ acrossȱ twoȱ industryȱ sectors,ȱ twoȱ manageȬ mentȱ groupsȱ andȱ mainlyȱ twoȱ regionsȱ ofȱ operations,ȱ namelyȱ Northȱ Americaȱ andȱ Europe.ȱ Furthermore,ȱ itȱ providesȱ uniqueȱ insightsȱ intoȱ howȱ companiesȱ perceiveȱ theirȱ ecoȬ nomicȱrationaleȱforȱorȱagainstȱCSM.ȱThusȱitȱclearlyȱcutsȱthroughȱtheȱusualȱrhetoricȱofȱ corporateȱ communicationsȱ andȱ consultants.ȱ Itsȱ resultsȱ pointȱ toȱ theȱ followingȱ keyȱ conclusionsȱonȱCSM:ȱ -

Althoughȱ CSMȱ hasȱ clearlyȱ movedȱ beyondȱ theȱ statusȱ ofȱ aȱ “petȱ project”ȱ ofȱ someȱ “activist”ȱcompaniesȱorȱCEOs,ȱitȱhasȱclearlyȱlimitedȱrelevanceȱtoȱtheȱcoreȱbusinessȱ ofȱtheȱcompaniesȱinȱtheȱenergyȱ(andȱalmostȱeveryȱotherȱindustry)ȱsector.ȱ

-

Theȱbusinessȱenvironmentȱofȱcompanies,ȱwhichȱisȱlargelyȱcharacterizedȱbyȱignoȬ ranceȱ ofȱ orȱ evenȱ oppositionȱ fromȱ shareholdersȱ andȱ customers,ȱ onlyȱ allowsȱ forȱ aȱ moreȱresponsibleȱinterpretationȱofȱ“businessȬasȬusual.”ȱ

-

Internalȱ barriersȱ identifiedȱ showȱ thatȱ laggardȱ companiesȱ inȱ particularȱ haveȱ sigȬ nificantȱ potentialȱ toȱ useȱ thisȱ scopeȱ ofȱ discretionȱ moreȱ effectively,ȱ i.e.ȱ theȱ mainȬ streamȱtransactionalȱstakeholders’ȱ“allowance”ȱforȱaȱmoreȱresponsibleȱ“businessȬ asȬusual”ȱisȱnotȱfullyȱexploited.ȱ

Itȱ remainsȱ toȱ beȱ seenȱ whether,ȱ whenȱ andȱ howȱ societalȱ regimesȱ willȱ demandȱ moreȱ significantȱchangesȱtoȱexistingȱbusinessȱmodels,ȱandȱwhatȱtheirȱeffectȱwithȱregardȱtoȱ theȱmajorȱstrategicȱissuesȱofȱclimateȱchangeȱandȱtheȱNorthȬSouthȱenergyȱdivideȱwillȱ be.ȱPreciselyȱbecauseȱofȱtheseȱopenȱquestions,ȱCSMȱwillȱcontinueȱtoȱmatterȱ–ȱtoȱbothȱ practitionersȱandȱresearchers.ȱ

ȱ

Appendices ȱ

ȱ

291ȱ

Appendicesȱ AppendixȱAȱ–ȱInterviewȱsamples.................................................................................... 292ȱ OGȱsector ...................................................................................................................... 292ȱ UTȱsector....................................................................................................................... 294ȱ Externalȱstakeholders.................................................................................................. 295ȱ AppendixȱBȱ–ȱKeyȱfinancialsȱofȱsectorȱsamples ........................................................... 296ȱ AppendixȱCȱ–ȱHypothesesȱandȱobjectivesȱofȱIMDȱresearchȱproject ........................ 297ȱ 1.ȱHypotheses............................................................................................................... 297ȱ 2.ȱObjectives.................................................................................................................. 298ȱ AppendixȱDȱ–ȱOperationalizationȱofȱkeyȱconcepts ..................................................... 299ȱ AppendixȱEȱ–ȱPairwiseȱcorrelationȱanalysis.................................................................. 304ȱ Pairwiseȱcorrelationȱ–ȱTotalȱsample.......................................................................... 304ȱ Pairwiseȱcorrelationȱ–ȱOGȱsample............................................................................. 305ȱ Pairwiseȱcorrelationȱ–ȱUTȱsample ............................................................................. 306ȱ AppendixȱFȱ–ȱRegressionȱmodels.................................................................................... 307ȱ AppendixȱGȱ–ȱRegressionȱdiagnostics ........................................................................... 312ȱ AppendixȱHȱ–ȱInterviewȱguidelines ............................................................................... 313ȱ AppendixȱIȱ–ȱQuestionnaires ........................................................................................... 322ȱ Questionnaireȱ–ȱGMȱVersion ..................................................................................... 322ȱ Questionnaireȱ–ȱSOȱVersion....................................................................................... 327ȱ AppendixȱJȱ–ȱAbbreviationsȱinȱregressionȱtables ........................................................ 332ȱ ȱ ȱ

ȱ

292ȱ

Appendicesȱ

AppendixȱAȱ–ȱInterviewȱsamplesȱ Theȱ authorȱ stressesȱ thatȱ theȱ numberingȱ ofȱ theȱ participatingȱ companiesȱ andȱ stakeȬ holdersȱ listedȱ inȱ theȱ tablesȱ doesȱ NOTȱ matchȱ theȱ companyȱ andȱ stakeholderȱ codesȱ usedȱinȱtheȱtextȱtoȱidentifyȱindividualȱinterviewȱquotes.ȱ

- OilȱandȱgasȱexȬ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ(mainlyȱ gas)ȱ

UKȱ

1ȱ

2ȱ

B. ConocoPhilipsȱ - OilȱandȱgasȱexȬ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ C. ExxonȱMobilȱ - OilȱandȱgasȱexȬ Corporationȱ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ

USȱ

1ȱ

ȱ

USȱ

2ȱ

2ȱ

D. FortumȱCorȬ porationȱ

Finla ndȱ

1ȱ

1ȱ

A. BGȱGroupȱ

- OilȱandȱgasȱexȬ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ - PowerȱgeneraȬ tionȱ

Intervieweesȱ

#ȱofȱgeneralȱmanagersȱ interviewedȱ

#ȱofȱsustainabilityȱofȬ ficersȱinterviewedȱ

LocationȱofȱheadquarȬ tersȱ

Activity/Detailsȱ

Companyȱ

OGȱsectorȱ

- MargaretȱMogfordȱ (HeadȱofȱEnvironment)ȱ - DerekȱN.ȱ (E&PȱNorthȱSea)ȱ - AndrewȱK.ȱ (HeadȱofȱContractsȱandȱProcureȬ ment)ȱ - JeanȱDavisȱ (Manager,ȱSustainableȱDevelopment

- RayȱA.ȱMentzerȱ (SHEȱManagerȱ–ȱSafety,ȱHealthȱandȱ Environment)ȱ - MichaelȱJ.ȱLaneȱ (Downstreamȱ&ȱChemicalsȱSH&Eȱ Managersȱ–ȱEurope,ȱAfricaȱ&ȱMidȬ dleȱEast)ȱ - PeterȱFȱFrancisȱ (PublicȱAffairsȱManager,ȱEuropeȱ andȱAfrica)ȱ - RichardȱLaingȱ (PlanningȱAdvisorȱ–ȱSafety,ȱHealthȱ andȱEnvironment)ȱ - ArjaȱKoskiȱ (CorporateȱSeniorȱViceȱPresidentȱ–ȱ Environment,ȱHealthȱandȱSafety)ȱ - JuhaȱLaaksonenȱ (ChiefȱFinancialȱOfficer)ȱ

AppendixȱAȱ–ȱInterviewȱsamplesȱ

293ȱ

E. GazȱdeȱFranceȱ - Gasȱextractionȱ andȱdistributionȱ

Franc 1ȱ eȱ

1ȱ

F. NorskȱHydroȱ ASAȱ

Nor wayȱ

1ȱ

1ȱ

Franc eȱ

4ȱ

5ȱ

UKȱ

2ȱ

ȱ

G. Totalȱȱ

H. Royalȱ Dutch/Shellȱ Groupȱ

ȱ

- Diversified:ȱ lightȱmetals,ȱoilȱ andȱenergy,ȱferȬ tilizerȱandȱ chemicalsȱ - Oilȱandȱenergy:ȱ E&P,ȱrefiningȱ (30%ȱofȱsales)ȱ - OilȱandȱgasȱexȬ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ

- OilȱandȱgasȱexȬ tractionȱandȱ production,ȱreȬ finingȱandȱmarȬ ketingȱ

- MarcȱBussierasȱ (DéléguéȱRelationsȱCollectivitésȱ LocalesȱEtȱEnvironment)ȱ - MichelȱDuhenȱ (DéléguéȱAȱL’Environment)ȱ - AlexandraȱBechȱ (ExecutiveȱViceȱPresident,ȱChiefȱSus tainabilityȱOfficer)ȱ - SvenȱOmbudstvedtȱ (SeniorȱViceȱPresident,ȱHeadȱofȱCorȬ porateȱStrategy)ȱ

- GeorgesȱDupontȬRocȱ (SustainableȱDevelopmentȱ&ȱEnviȬ ronmentȱ–ȱViceȱPresidentȱSustainȬ ableȱDevelopment)ȱ - JeanȬPhilippeȱRaynaudȱ (Strategyȱ&ȱRiskȱAssessmentȱDiviȬ sionȱ–ȱSustainableȱȱDevelopmentȱ ProgramManager,ȱCorporate)ȱ - LauretteȱGattoniȱ (Refiningȱ&ȱMarketingȱ–ȱSustainȬ ableȱDevelopmentȱProjectȱManȬ ager)ȱ - JeanȬRenéȱMarabelleȱ (SustainableȱDevelopmentȱ&ȱEnviȬ ronmentȱ–ȱIntergovernmentalȱOrȬ ganizations)ȱ - PhilippeȱSchultzȱ (RefiningȱandȱMarketingȱȬȱFuelȱCellȱ TaskȱForce)ȱȱ - HélèneȱleȱPoezatȱ (Gasȱ&ȱPowerȱ–ȱManagersȱStrategy) - ClaudeȱJabonȱ (Strategyȱ&ȱRiskȱAssessmentȱDiviȬ sionȱ–ȱSeniorȱViceȱPresidentȱScienȬ tificȱDevelopment)ȱ - DominiqueȱChauvinȱ (SustainableȱDevelopmentȱ&ȱEnviȬ ronment,ȱJohannesburgȱCoordinator - PhilippeȱCostergȱ (RenewablesȱDivision,ȱSolarȱEnergyȱ ProjectȱManager)ȱ - MarcȱWeintraubȱ (GroupȱEnvironmentalȱAdvisor)ȱ - MarcȱWadeȱ (SustainableȱDevelopmentȱGroup)ȱ

294ȱ

Appendicesȱ

A. EONȱ

- Electricȱandȱgasȱ utilityȱ - PowerȱgeneraȬ tionȱ(45%ȱnuȬ clear,ȱ34%ȱhardȱ coal)ȱ

Ger man yȱ

2ȱ

1ȱ

B. RAGȱ

- HardȱcoalȱminȬ ingȱ

Ger man yȱ

1ȱ

1ȱ

Ger man yȱ

1ȱ

1ȱ

UKȱ

1ȱ

ȱ

Franc eȱ ȱ

2ȱ ȱ

1ȱ ȱ

C. RWEȱ

- MultiȬutility:ȱ energyȱ(electricȬ ity,ȱgas),ȱwater,ȱ wasteȱ - ElectricityȱgenȬ erationȱ(46.6%ȱ lignite)ȱ D. ScottishȱPowerȱ - Electricȱandȱgasȱ utilityȱ E. Suezȱ - MultiȬutility:ȱ water,ȱenergy,ȱ wasteȱ - Energyȱ(TracteȬ bel):ȱelectricȱandȱ gasȱutilityȱ

Intervieweesȱ

#ȱofȱgeneralȱmanagersȱinȬ terviewedȱ

#ȱofȱsustainabilityȱoffiȬ cersȱinterviewedȱ

Locationȱofȱheadquartersȱ

Activity/Detailsȱ

Companyȱ

UTȱsectorȱ

- GertȱVonȱderȱGroebenȱ (ExecutiveȱViceȱPresidentȱȬ EconomicȱandȱPublicȱAffairs)ȱ - GuidoȱPasternackȱ (BereichȱWirtschaftspolitik,ȱAbteiȬ lungȱEnergieȱundȱUmwelt)ȱ - KiranȱBohjaniȱ (ExecutiveȱViceȱPresidentȱȬInvestorȱ Relations)ȱ - MichaelȱSiemersȱ (ReferentȱWirtschaftsȬȱundȱEnergieȬ politik)ȱ - StephanȱNahrathȱ (Stellv.ȱZentralbereichsleiterȱKonȬ zernȬControlling)ȱ - MaritaȱHilgenstockȱ (CorporateȱDevelopment)ȱ - HansȬPeterȱMeurerȱ (PoliticalȱAffairs)ȱ

- FredȱDinningȱ (CorporateȱEnvironmentalȱDirector) - JeanȬClaudeȱSteffensȱ (Directorȱ– DepartmentȱInternationa PublicȱAffairs)ȱ - WernerȱBraemscheuteȱ (CorporateȱExecutiveȱDevelopmentȱ Managers)ȱ - SophieȱMertensȱ (SustainableȱDevelopmentȱCoordina tor,ȱDepartmentȱofȱInternationalȱ PublicȱAffairs)ȱ

AppendixȱAȱ–ȱInterviewȱsamplesȱ

295ȱ

A. Internationalȱ Energyȱ Agencyȱ

2ȱ RenewableȱEnȬ ergy,ȱEnergyȱandȱ Environmentȱ

B. Greenpeaceȱ

Energyȱ

2ȱ

C. Europeanȱ Commissionȱ

DirectorateȬ GeneralȱforȱEnȬ ergyȱandȱTransȬ portȱ Energyȱ

1ȱ

D. UNEPȱ

E. WorldȱBusiȬ nessȱCouncilȱ forȱSustainableȱ Developmentȱ (WBCSD)ȱ F. WorldȱEcoȬ nomicȱForumȱ G. Friendsȱofȱtheȱ Earthȱ

ȱ

ȱ

1ȱ

Intervieweesȱ

#ȱofȱintervieweesȱ

Departmentȱorȱ functionȱ

Organizationȱ

Externalȱstakeholdersȱ

- JonathanȱPershingȱ (HeadȱofȱDivisionȱ–EnergyȱandȱEnvironment)ȱ - RickȱSellersȱ (Head,ȱRenewableȱEnergyȱUnitȱ–ȱEnergyȱTechnologyȱ CollaborationȱDivision)ȱ - GabrielaȱvonȱGoerneȱ (Energiebereich)ȱ - SvenȱTeskeȱ (EnergyȱUnit)ȱ - PirjoȬLiisaȱKoskimäkiȱ (HeadȱofȱUnitȱ–ȱSustainableȱDevelopment,ȱDirectorateȬ GeneralȱforȱEnergyȱandȱTransportȱ ȱ - EricȱUsherȱ (ProjectȱOfficer,ȱUNEPȱDivisionȱofȱTechnology,ȱIndustry andȱEconomics,ȱEnergyȱ&ȱOzonActionȱUnit)ȱ - SusanneȱHaefeliȱ (ProgramȱAssistant)ȱ

Climateȱandȱ Energyȱ

1ȱ

Communityȱ Management,ȱ Energyȱ Climateȱandȱ Transportȱ

1ȱ

- ChristophȱFreiȱ (SeniorȱCommunityȱManager,ȱEnergy)ȱ

1ȱ

- RogerȱHigmanȱ (SeniorȱCampaigner,ȱClimateȱandȱTransport)ȱ

296ȱ

Appendicesȱ

AppendixȱBȱ–ȱKeyȱfinancialsȱofȱsectorȱsamplesȱ Companyȱ

Totalȱassetsȱ(MilȬ lionsȱUS$)ȱinȱ2002ȱ

Salesȱ(Millionsȱ Netȱcashȱflowȱfromȱoperatingȱ US$)ȱinȱ2002ȱ activitiesȱ(MillionsȱUS$)ȱinȱ 2002ȱ

Oilȱ&ȱgasȱ

BGȱGroupȱ

10,881.31ȱ

4,201.84ȱ

1,312.07ȱ

ConocoPhillipsȱ

76,795.00ȱ

50,512.00ȱ

4,969.00ȱ

152,644.00ȱ

178,909.00ȱ

21,268.00ȱ

GazȱdeȱFranceȱ

29,943.76ȱ

15,263.60ȱ

3,023.13ȱ

NorskȱHydro*ȱ

29,648.06ȱ

20,725.46ȱ

3,486.88ȱ

RoyalȱDutchȱ

92,968.39ȱ

107,658.38ȱ

9,835.98ȱ

Shellȱ

61,076.55ȱ

71,772.19ȱ

6,545.98ȱ

Totalȱ

87,836.12ȱ

97,460.17ȱ

10,460.76ȱ

ȱ

ȱ

ȱ

ExxonȱMobilȱ

ȱ Electricȱutilitiesȱ

E.ONȱ

115,450.74ȱ

37,908.20ȱ

3,872.04ȱ

Fortumȱȱ

18,847.07ȱ

11,697.96ȱ

1,417.65ȱ

RAG**ȱ

19,967.75ȱ

13,667.56ȱ

NAȱ

RWEȱ

97,252.17ȱ

45,632.34ȱ

6,225.69ȱ

ScottishȱPowerȱ

23,131.74ȱ

7,864.47ȱ

1,130.66ȱ

Suez*ȱ

88,392.11ȱ

43,806.51ȱ

4,587.40ȱ

ȱȱ*ȱFiguresȱincludeȱnonȬenergyȱbusinessȱunitsȱȱ **ȱRWEȱandȱE.ONȱareȱbothȱparentȱcompaniesȱ

ȱ

AppendixȱCȱ–ȱHypothesesȱandȱobjectivesȱofȱIMDȱresearchȱprojectȱ

297ȱ

AppendixȱCȱ–ȱHypothesesȱandȱobjectivesȱofȱIMDȱresearchȱprojectȱ (Excerptȱfromȱoriginalȱresearchȱproposal)ȱ 1.ȱHypothesesȱ 1.1 Inȱmostȱglobalȱcompanies,ȱthereȱisȱpotentialȱforȱtheȱestablishmentȱofȱaȱreadilyȱ identifiableȱ robustȱ businessȱ caseȱ forȱ sustainabilityȱ underȱ currentȱ socioȬ economicȱ conditions,ȱ whichȱ canȱ beȱ identified.ȱ Capitalȱ marketsȱ willȱ reactȱ faȬ vorableȱtoȱlowerȱrisksȱandȱhigherȱgrowthȱopportunitiesȱinȱtheȱlongȱrun.ȱȱȱ 1.2 TheȱrobustȱbusinessȱcaseȱforȱsustainabilityȱisȱprimarilyȱsectorȱspecificȱandȱsecȬ ondarilyȱ dependsȱ onȱ theȱ (national)ȱ businessȱ environmentȱ (regulation,ȱ socialȱ andȱpoliticalȱconditions,ȱculture).ȱ 1.3 Corporateȱ acceptanceȱ andȱ implementationȱ ofȱ aȱ robustȱ businessȱ caseȱ forȱ susȬ tainabilityȱisȱimpededȱbyȱtheȱfollowing:ȱȱ x

x

x

x x

x

x

Theȱmindȱsetȱofȱmanagersȱ Knowledgeȱgapsȱ Regulatoryȱbarriersȱ Theȱ coordinationȱ ofȱ conflictingȱ interestsȱ inȱ theȱ supplyȱ chainȱ (customersȱandȱsuppliers)ȱ Absenceȱofȱappropriateȱtoolsȱandȱprocessesȱ Internalȱorganizationalȱbehaviorȱ Investorȱbehaviorȱ

1.4 Acceptanceȱandȱimplementationȱofȱtheȱrobustȱbusinessȱcaseȱforȱsustainabilityȱ isȱpromotedȱby:ȱ x

x

x

x

x

x

x

x

x ȱ

Publicȱorȱmarketȱpressureȱ Detectableȱnewȱbusinessȱopportunitiesȱ Processȱandȱproductȱinnovationsȱ Progressiveȱinteractionsȱwithȱstakeholdersȱ Topȱmanagementȱleadershipȱandȱcommitmentȱ(powerȱpromoter)ȱ Autonomyȱandȱinternalȱscopeȱofȱimplementingȱofficerȱ Openȱorganizationalȱcultureȱ Corporateȱidentityȱ Demandsȱofȱindividualȱshareholdersȱandȱinstitutionalȱinvestorsȱ

ȱ

298ȱ

Appendicesȱ

2.ȱObjectivesȱ Aȱ jointȱ researchȱ projectȱ byȱ CSM/IMDȱ andȱ WWF,ȱ theȱ conservationȱ organization,ȱ isȱ proposed.ȱTheȱprojectȱwill:ȱ -

examineȱ theȱ mismatchȱ ofȱ perceptions,ȱ attitudesȱ andȱ correspondingȱ behaviorȱ patternsȱbetweenȱsustainabilityȱofficersȱandȱotherȱ“policyȱmakers”ȱinȱtheȱcomȬ pany;ȱȱ

-

detectȱ externalȱ barriersȱ forȱ sustainabilityȱ andȱ detectȱ externalȱ promotersȱ (orȱ supportingȱframeworks)ȱofȱunsustainableȱbehaviorȱ

-

detectȱ possibleȱ countryȱ andȱ industryȬspecificȱ differencesȱ inȱ values,ȱ restricȬ tions,ȱetc.,ȱandȱonȱtheȱbasisȱofȱthis;ȱȱ

-

examineȱ theȱ pressuresȱ undergoneȱ byȱ companiesȱ toȱ respondȱ toȱ internalȱ deȬ mands,ȱ suchȱ asȱ changeȱ managementȱ andȱ externalȱ demands,ȱ suchȱ asȱ theȱ botȬ tomȱlineȱexpectationsȱofȱshareholders;ȱ

-

examineȱ whetherȱ companiesȱ useȱ earlyȱ warningȱ systemsȱ orȱ otherȱ diagnosticȱ toolsȱforȱmeetingȱsocietalȱandȱenvironmentalȱexpectations;ȱ

-

developȱaȱstrategicȱtoolȱsetȱallowingȱcompaniesȱtoȱstrategicallyȱbuildȱtheirȱinȬ dividualȱsustainableȱbusinessȱcase.ȱ

Sinceȱstudiesȱhaveȱoftenȱbeenȱcriticizedȱforȱpotentialȱresearchȱbias,ȱaȱCSM/IMDȱpartȬ nershipȱwithȱaȱstrongȱNGOȱsuchȱasȱWWFȱpresentsȱanȱopportunityȱtoȱdeliverȱobjecȬ tiveȱ resultsȱ that,ȱ asȱ aȱ resultȱ ofȱ theȱ collaboration,ȱ wouldȱ gainȱ inȱ termsȱ ofȱ credibilityȱ andȱ leadȱ toȱ someȱ valuableȱ andȱ relevantȱ outputȱ toȱ beȱ usedȱ byȱ managers.ȱ ȱ Theȱ CSMȱ membershipȱwillȱplayȱaȱstrongȱsupportȱroleȱinȱtermsȱofȱreviewȱandȱapprovalȱofȱproȬ jectȱoutputs.ȱȱ ȱ

AppendixȱDȱ–ȱOperationalizationȱofȱkeyȱconceptsȱ

299ȱ

AppendixȱDȱ–ȱOperationalizationȱofȱkeyȱconceptsȱ Keyȱconceptsȱ inȱconceptualȱ frameworkȱ

Subconceptsȱ Questionnaireȱversionȱ andȱtermsȱ (GM/SO)ȱandȱoperationalizaȬ usedȱinȱ tionȱ studyȱ

Typeȱofȱ questionȱ orȱscaleȱ

Interpretationsȱandȱ hypothesesȱ

Issuesȱ–ȱpublicȱ responsibilityȱ

IssueȱsignifiȬ canceȱ

GM,ȱSO:ȱRespondents’ȱperceptionȱ ofȱtheȱsignificanceȱofȱsocialȱandȱ environmentalȱissues,ȱe.g.ȱhumanȱ rights,ȱclimateȱchangeȱ(“Notȱatȱall”ȱ toȱ“Veryȱmuch”)ȱ

LikertȬ typeȱscaleȱ

IssueȱawareȬ nessȱ

GM:ȱRespondents’ȱabilityȱtoȱnameȱ andȱdescribeȱtheȱmostȱimportantȱ environmentalȱorȱsocialȱissuesȱ

OpenȬ endedȱȬȱ codedȱ

- Higherȱratingȱ=ȱ greaterȱissueȱsignifiȬ canceȱ - Theȱgreaterȱtheȱissueȱ significance,ȱtheȱgreaterȱ theȱstrategicȱdispositionȱ - GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱissueȱ significanceȱ

IssueȱawareȬ nessȱ

SO:ȱRespondents’ȱabilityȱtoȱnameȱ andȱrankȱtheȱthreeȱmostȱimportantȱ sustainabilityȱissuesȱ

OpenȬ endedȱȬȱ codedȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱissueȱ significanceȱ

ȱ

ȱ

300ȱ

Appendicesȱ

Keyȱconceptsȱ inȱconceptualȱ frameworkȱ

Subconceptsȱ Questionnaireȱversionȱ andȱtermsȱ (GM/SO)ȱandȱoperationalizaȬ usedȱinȱ tionȱ studyȱ

Typeȱofȱ questionȱ orȱscaleȱ

Interpretationsȱandȱ hypothesesȱ

ExternalȱstakeȬ holders,ȱindustryȱ andȱpartnershipsȱ Ȭȱlegitimacyȱ

Importanceȱofȱ legitimacyȱ

GM:ȱRespondents’ȱperceptionȱofȱ theȱimportanceȱofȱbrandȱvalueȱandȱ reputationȱ(fromȱ“Notȱatȱall”ȱtoȱ “Veryȱmuch”).ȱ

LikertȬ typeȱscaleȱ

Damageȱtoȱ legitimacyȱ

GM:ȱRespondents’ȱperceptionȱofȱ theȱlevelȱofȱdamageȱcompanies’ȱ brandȱvalueȱandȱreputationȱinȬ curredȱdueȱtoȱincidentsȱ(e.g.ȱconȬ flictsȱwithȱauthorities,ȱconsumerȱ boycotts)ȱoverȱtheȱpastȱthreeȱyearsȱ (“Noȱimpactȱatȱall”ȱtoȱ“Severe”).ȱ

Ordinalȱ

- Higherȱratingȱ=ȱ greaterȱimportanceȱofȱ legitimacyȱ - TheȱgreaterȱtheȱimporȬ tanceȱofȱlegitimacy,ȱtheȱ greaterȱtheȱstrategicȱdisȬ positionȱ - Higherȱratingȱ=ȱ greaterȱdamageȱtoȱleȬ gitimacyȱ - Theȱgreaterȱtheȱdamageȱ toȱlegitimacy,ȱtheȱ greaterȱtheȱstrategicȱdisȬ positionȱȱ

FutureȱSDȱ roleȱofȱcapitalȱ marketsȱ

GM,ȱSO:ȱRespondents’ȱexpectationȱ aboutȱtheȱfutureȱreactionȱofȱcapitalȱ marketsȱtoȱimprovedȱsocialȱandȱ environmentalȱperformanceȱ (“Muchȱmoreȱnegatively”ȱtoȱ “Muchȱmoreȱpositively”).ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ greaterȱfutureȱdeȬ mandȱforȱCSMȱ - Theȱgreaterȱtheȱdemand,ȱ theȱgreaterȱtheȱstrategicȱ dispositionȱ

Incidentsȱ damagingȱ legitimacyȱ

GM:ȱRespondents’ȱperceptionsȱofȱ theȱincidentsȱthatȱcausedȱdamageȱ toȱbrandȱvalueȱandȱreputationȱoverȱ theȱlastȱthreeȱyears,ȱwhetherȱtheyȱ wereȱtriggeredȱbyȱaȱmediaȱcamȬ paign,ȱNGOȱcampaign,ȱconflictsȱ withȱauthorities,ȱconsumerȱboyȬ cotts,ȱshareholderȱoppositionȱorȱ othersȱ

Multipleȱ choiceȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ stakeholderȱ - IncidentsȱwithȱrespecȬ tiveȱstakeholdersȱdriveȱ strategicȱdispositionȱ

ExternalȱproȬ motingȱfactorsȱ

SO:ȱRespondents’ȱperceptionsȱofȱ theȱimportanceȱofȱexternalȱpromotȬ ingȱfactorsȱofȱCSMȱsuchȱasȱpublicȱ pressure,ȱincreasedȱcompetitionȱonȱ issues,ȱnewȱbusinessȱopportunitiesȱ

Multipleȱ choiceȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ externalȱpromotingȱ factorȱ

CurrentȱSDȱ roleȱofȱotherȱ externalȱ stakeholdersȱ

GM,ȱSO:ȱRespondents’ȱperceptionȱ ofȱtheȱcurrentȱ(proactiveȱorȱreacȬ tive)ȱroleȱofȱconsumers,ȱgovernȬ ments,ȱpublicȱpressureȱgroupsȱatȱ contributingȱtoȱsustainableȱdevelȬ opmentȱ(“Leastȱproactive”ȱtoȱ “Mostȱproactive”)ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ greaterȱdemandȱforȱ CSMȱfromȱrespectiveȱ stakeholderȱ - Theȱgreaterȱtheȱdemand,ȱ theȱgreaterȱtheȱstrategicȱ dispositionȱ

AppendixȱDȱ–ȱOperationalizationȱofȱkeyȱconceptsȱ

301ȱ

Keyȱconceptsȱ inȱconceptualȱ frameworkȱ

Subconceptsȱ Questionnaireȱversionȱ andȱtermsȱ (GM/SO)ȱandȱoperationalizaȬ usedȱinȱ tionȱ studyȱ

Typeȱofȱ questionȱ orȱscaleȱ

Interpretationsȱandȱ hypothesesȱ

Managersȱ–ȱ managerialȱdisȬ cretionȱ

ȱ

GM:ȱRespondents’ȱpersonalȱlevelȱ ofȱagreementȱwithȱtheȱfollowingȱ fourȱdifferentȱstatementsȱ

ȱ

ȱ

BBBȱattitudeȱ

“TheȱbusinessȱofȱbusinessȱisȱbusiȬ ness.ȱSoȱcompaniesȱshouldȱcomplyȱ withȱtheȱlaw,ȱbutȱgoingȱbeyondȱtheȱ lawȱwouldȱonlyȱsacrificeȱprofits.”ȱ

LikertȬ typeȱscaleȱ

WWȱattitudeȱ

“ProfitȱalwaysȱcomesȱfirstȱforȱcomȬ panies.ȱThereȱareȱwinȬwinȱsituaȬ tionsȱinȱwhichȱcompaniesȱcanȱ achieveȱfinancial,ȱenvironmentalȱ andȱsocialȱgoalsȱatȱtheȱsameȱtime.ȱ Inȱtheseȱsituations,ȱitȱmakesȱsenseȱ forȱcompaniesȱtoȱgoȱbeyondȱwhatȱ theȱlawȱrequires.”ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ strongerȱattitudeȱ - TheȱstrongerȱtheȱattiȬ tude,ȱtheȱlowerȱtheȱstraȬ tegicȱdispositionȱ - Higherȱratingȱ=ȱ strongerȱattitudeȱ - TheȱstrongerȱtheȱattiȬ tude,ȱtheȱgreaterȱtheȱ strategicȱdispositionȱ

CAȱattitudeȱ

Companiesȱshouldȱconsiderȱsocialȱ andȱenvironmentalȱisȬ sues/expectations,ȱandȱtryȱtoȱacȬ tivelyȱintegrateȱthemȱintoȱtheirȱ strategiesȱbecause,ȱbyȱdoingȱso,ȱ theyȱgainȱlongȬtermȱcompetitiveȱ advantage.ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ strongerȱattitudeȱ - TheȱstrongerȱtheȱattiȬ tude,ȱtheȱgreaterȱtheȱ strategicȱdispositionȱ

UCAȱattitudeȱ

ȱ“Asȱpartȱofȱtheirȱroleȱinȱtheȱ“globalȱ LikertȬ society,”ȱcompaniesȱshouldȱengageȱ typeȱscaleȱ inȱsocialȱandȱenvironmentalȱinitiaȬ tives,ȱevenȱifȱlongȬtermȱcompetitiveȱ advantageȱcannotȱbeȱproven.”ȱ

- Higherȱratingȱ=ȱ strongerȱattitudeȱ - TheȱstrongerȱtheȱattiȬ tude,ȱtheȱgreaterȱtheȱ strategicȱdispositionȱ

InternalȱmanȬ agerȬrelatedȱ barriersȱ

GM,ȱSO:ȱRespondents’ȱperceptionsȱ ofȱtheȱrelativeȱimportanceȱofȱinterȬ nalȱmanagerȬrelatedȱbarriersȱtoȱ CSMȱ(managers’ȱmindsetsȱandȱ managers’ȱlackȱofȱknowledgeȱandȱ expertise)ȱareȱaȱproxyȱmeasureȱforȱ strengthȱofȱdiscretionaryȱpotentialȱ ofȱmanagers.ȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ internalȱmanagerȬ relatedȱbarrierȱ - InternalȱmanagerȬ relatedȱbarriersȱaffectȱ strategicȱdispositionȱ

ȱ

Multipleȱ choiceȱ

ȱ

302ȱ

Appendicesȱ

Keyȱconceptsȱ inȱconceptualȱ frameworkȱ

Subconceptsȱ Questionnaireȱversionȱ andȱtermsȱ (GM/SO)ȱandȱoperationalizaȬ usedȱinȱ tionȱ studyȱ

Typeȱofȱ questionȱ orȱscaleȱ

CompanyȬ specificȱfactorsȱ–ȱ corporateȱdiscreȬ tionȱ

InternalȱcomȬ panyȬspecificȱ barriersȱ

GM:ȱRespondents’ȱperceptionsȱofȱ theȱrelativeȱimportanceȱtheȱmainȱ internalȱcompanyȬȱratherȱthanȱ managerȬrelatedȱbarriersȱtoȱCSMȱ (comparedȱtoȱotherȱbarriers):ȱAbȬ senceȱofȱappropriateȱtoolsȱandȱ processesȱandȱcorporateȱcultureȱȱ

Multipleȱ choiceȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ barrierȱ - InternalȱcompanyȬ specificȱbarriersȱaffectȱ strategicȱdispositionȱ

InternalȱcomȬ panyȬspecificȱ promotingȱ factorsȱ

SO:ȱRespondents’ȱperceptionsȱofȱ theȱrelativeȱimportanceȱtheȱmainȱ internalȱcompanyȬȱratherȱthanȱ managerȬrelatedȱpromotingȱfactorsȱ ofȱCSMȱ(comparedȱtoȱotherȱproȬ motingȱfactors):ȱcorporateȱvalues,ȱ openȱorganizationalȱculture,ȱ autonomyȱandȱinternalȱscopeȱofȱ sustainabilityȱofficer,ȱtopȱmanageȬ mentȱcommitmentȱandȱleadershipȱ

Multipleȱ choiceȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ promotingȱfactorȱ

SDȱfamiliarityȱ

GM,ȱSO:ȱRespondents’ȱperceptionsȱ LikertȬ ofȱtheirȱcompanies’ȱfamiliarityȱwithȱ typeȱscaleȱ theȱconceptȱofȱsustainableȱdevelȬ opmentȱ(“Notȱatȱall”ȱtoȱ“Veryȱ much”)ȱ

- Higherȱratingȱ=ȱ greaterȱSDȱfamiliarityȱ

SDȱimporȬ tanceȱ

GM,ȱSO:ȱRespondents’ȱperceptionsȱ ofȱtheȱfutureȱimportanceȱofȱsusȬ tainableȱdevelopmentȱtoȱtheirȱ companyȱ(“Decreasing”ȱtoȱ“InȬ creasing”)ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ greaterȱSDȱimportanceȱ

CSMȱintentȱ

GM,ȱSO:ȱRespondents’ȱperceptionsȱ ofȱtheirȱcompanies‘ȱintentionȱtoȱ integrateȱenvironmentalȱandȱsocialȱ issuesȱintoȱbusinessȱstrategiesȱandȱ operationsȱ(“Notȱatȱall”ȱtoȱ“Veryȱ much”)ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ greaterȱSDȱfamiliarityȱ

Valueȱdriversȱ

SO:ȱRespondents’ȱperceptionȱofȱtheȱ bestȱpossibleȱargumentsȱwhenȱ promotingȱȱtheȱconceptsȱofȱsusȬ tainableȱdevelopmentȱinȱtheirȱ companyȱ

Multipleȱ choiceȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱtheȱreȬ spectiveȱvalueȱdriverȱ

StrategicȱdisposiȬ tionȱ

Businessȱcaseȱforȱ sustainabilityȱ

Interpretationsȱandȱ hypothesesȱ

AppendixȱDȱ–ȱOperationalizationȱofȱkeyȱconceptsȱ Keyȱconceptsȱ inȱconceptualȱ frameworkȱ Toolsȱ

Structureȱ

Initiativesȱ

Outcomeȱ

ȱ

Subconceptsȱ Questionnaireȱversionȱ andȱtermsȱ (GM/SO)ȱandȱoperationalizaȬ usedȱinȱ tionȱ studyȱ Îȱ

303ȱ Typeȱofȱ questionȱ orȱscaleȱ

GM,ȱSO:ȱRespondents’ȱawarenessȱ ofȱtheȱavailabilityȱandȱuseȱofȱtoolsȱ suchȱasȱcorporateȱvalues,ȱcoordinaȬ tionȱcommittees,ȱstrategicȱplanningȱ toolsȱinȱtheirȱcompanyȱ

Multipleȱ choiceȱ

CrossȬ disciplinaryȱ collaborationȱ

GM:ȱRespondents’ȱperceptionsȱofȱ theȱlevelȱofȱcollaborationȱbetweenȱ sustainabilityȱofficersȱandȱgeneralȱ managersȱ(“No,ȱweȱdoȱnotȱworkȱ together”ȱtoȱ“Yes,ȱonȱaȱdayȬtoȬdayȱ basis”)ȱ

Ordinalȱ

CrossȬ disciplinaryȱ potentialȱ

GM:ȱRespondents’ȱperceptionsȱofȱ LikertȬ theȱextent,ȱtoȱwhichȱmoreȱextensiveȱ typeȱscaleȱ collaborationȱwouldȱcontributeȱtoȱ moreȱsustainableȱbusinessȱpracȬ tices,ȱinȱtheȱfollowingȱreferredȱtoȱasȱ SOȬGMȱpotentialȱ(“Noȱatȱall”ȱtoȱ “Veryȱmuch”)ȱ

Îȱ

GM:ȱRespondents’ȱawarenessȱofȱ existingȱcorporateȱsocialȱandȱenviȬ ronmentalȱinitiativesȱ

Multipleȱ choiceȱ

Interpretationsȱandȱ hypothesesȱ

- GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ toolȱ - Theȱuseȱofȱmanagementȱ toolsȱdrivesȱtheȱoutcomeȱ ofȱCSMȱ - MoreȱextensiveȱcolȬ laborationȱ=ȱmoreȱ elaboratedȱstructureȱ - TheȱgreaterȱtheȱcrossȬ disciplinaryȱcollaboraȬ tion,ȱtheȱmoreȱpositiveȱ theȱoutcomeȱofȱCSMȱ - Greaterȱpotentialȱȱ=ȱ moreȱelaboratedȱ structureȱandȱgreaterȱ awarenessȱofȱresponȬ dentsȱ - TheȱgreaterȱtheȱcrossȬ disciplinaryȱpotential,ȱ theȱmoreȱpositiveȱtheȱ outcomeȱofȱCSMȱ - GreaterȱrelativeȱfreȬ quencyȱ=ȱgreaterȱsigȬ nificanceȱofȱrespectiveȱ initiativeȱ - Initiativesȱdetermineȱ theȱoutcomeȱofȱCSMȱ - Higherȱratingȱȱ=ȱ greaterȱCSMȱprogress,ȱ e.g.ȱ“outperformer”ȱ=ȱ greaterȱthanȱaverageȱ CSMȱsuccessȱ

CSMȱprogressȱ comparedȱtoȱ peersȱ

SO:ȱRespondents’ȱperceptionsȱofȱ LikertȬ theȱprogressȱtheirȱcompanyȱhasȱ typeȱscaleȱ madeȱinȱadoptingȱmoreȱsustainableȱ businessȱpracticesȱȬȱinȱcomparisonȱ toȱotherȱcompaniesȱinȱtheȱsameȱ industryȱ

CSMȱprogressȱ comparedȱtoȱ otherȱsectorsȱ

SO:ȱRespondents’ȱperceptionsȱofȱ theȱprogressȱtheirȱsectorȱhasȱmadeȱ inȱadoptingȱmoreȱsustainableȱbusiȬ nessȱpracticesȱȬȱinȱcomparisonȱtoȱ otherȱsectorsȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱȱ=ȱ greaterȱCSMȱprogress,ȱ e.g.ȱ“outperformer”ȱ=ȱ greaterȱthanȱaverageȱ CSMȱsuccessȱ

CSMȱsuccessȱ

GM:ȱRespondent’sȱperceptionsȱofȱ howȱsuccessfulȱcorporateȱenviȬ ronmentalȱandȱsocialȱinitiativesȱ undertakenȱwereȱ(“Notȱatȱall”ȱtoȱ “Veryȱmuch”).ȱ

LikertȬ typeȱscaleȱ

- Higherȱratingȱ=ȱ greaterȱCSMȱsuccessȱ

ȱ

1.0000

0.2524 0.0009

0.1721 0.0244

0.0575 0.4548

-0.0688 0.3729

0.0372 0.6279

0.1723 0.0238

0.1629 0.0328

0.2331 0.0022

0.1724 0.0242

0.2245 0.0179

0.2421 0.0015

0.2179 0.0049

0.1136 0.1526

0.0462 0.5609

0.1932 0.0132

0.2933 0.0002

0.1815 0.0197

0.0610 0.4432

0.0693 0.3666

0.6063 0.0000

0.2861 0.0001

0.2409 0.0015

-0.1598 0.0368

0.1147 0.1328

0.3134 0.0000

0.0179 0.8154

0.1195 0.1196

0.3960 0.0000

0.0871 0.3610

0.4134 0.0000

0.2618 0.0007

0.0564 0.4769

-0.0579 0.4646

-0.1310 0.0936

0.1662 0.0381

0.1945 0.0120

0.1567 0.0471

SD importance

CSM intent

Social issues

Environmental issues

BBB attitude

WW attitude

CA attitude

UCA attitude

SD role Cap.markets

Importance legitimacy

Damage to legitimacy

CSM success

Cross-disc. collaboration

Cross-disc. potential

SD role Consumers

SD role Governments

SD role PPPs

SD role Industry

SD role NGOs

SDimp

1.0000

SDfam

SD familiarity

0.2097 0.0078

0.2602 0.0007

0.2539 0.0014

0.0035 0.9642

0.0054 0.9462

0.0321 0.6881

0.1786 0.0217

0.4787 0.0000

0.1511 0.1135

0.3830 0.0000

0.2596 0.0006

0.1868 0.0142

0.3830 0.0000

0.0833 0.2771

-0.0553 0.4734

0.1214 0.1136

0.2957 0.0001

1.0000

CSMint

0.0895 0.2587

0.1122 0.1499

0.1360 0.0906

-0.0316 0.6869

0.0156 0.8433

0.2192 0.0054

0.2552 0.0009

0.1437 0.0615

0.2657 0.0048

0.2024 0.0078

0.2682 0.0004

0.1795 0.0181

0.2489 0.0010

0.0461 0.5467

-0.1096 0.1535

0.3307 0.0000

1.0000

Social

0.0224 0.7777

-0.0110 0.8883

0.0718 0.3728

-0.0446 0.5697

-0.1188 0.1323

0.1590 0.0447

0.3580 0.0000

0.0773 0.3163

0.0992 0.2979

0.0194 0.8003

0.0706 0.3590

0.1961 0.0097

0.2293 0.0024

0.0626 0.4131

-0.2161 0.0045

1.0000

Environ.

-0.0243 0.7594

0.0212 0.7868

-0.0768 0.3409

0.0889 0.2578

0.1270 0.1084

-0.0917 0.2505

-0.1664 0.0327

0.0358 0.6438

0.0180 0.8522

-0.0471 0.5406

-0.1541 0.0448

-0.1823 0.0167

-0.3049 0.0000

-0.0246 0.7491

1.0000

BBB

0.0757 0.3381

-0.0306 0.6945

0.0497 0.5362

-0.0722 0.3552

-0.0834 0.2898

0.0184 0.8171

0.1908 0.0135

0.0494 0.5212

0.1061 0.2657

0.2140 0.0047

0.0190 0.8051

0.0482 0.5277

0.1522 0.0450

1.0000

WW

0.1449 0.0658

0.1267 0.1028

0.2889 0.0002

-0.0696 0.3731

-0.0138 0.8615

0.3089 0.0001

0.2326 0.0025

0.2212 0.0036

0.1889 0.0461

0.2714 0.0003

0.5132 0.0000

0.4391 0.0000

1.0000

CA

0.0817 0.3014

0.0517 0.5070

0.2129 0.0074

-0.0189 0.8092

-0.0079 0.9207

0.2196 0.0051

0.1546 0.0461

0.1216 0.1131

0.1468 0.1224

0.0699 0.3610

0.3007 0.0001

1.0000

UCA

0.1076 0.1756

0.0767 0.3275

0.2137 0.0072

-0.0950 0.2265

0.0877 0.2687

0.2452 0.0018

0.1799 0.0207

0.1027 0.1840

0.2761 0.0032

0.2181 0.0042

1.0000

0.1662 0.0346

0.1662 0.0319

0.1123 0.1613

0.0056 0.9425

0.0175 0.8244

0.0560 0.4806

0.0944 0.2249

0.4171 0.0000

0.0587 0.5370

1.0000

Capital Imp.leg

-0.0228 0.8176

0.1550 0.1093

0.1143 0.2480

-0.1097 0.2608

0.2311 0.0166

0.2069 0.0293

0.0296 0.7574

0.0558 0.5624

1.0000

0.0337 0.6713

0.3967 0.0000

0.2203 0.0057

0.0243 0.7566

0.0468 0.5538

0.0240 0.7640

0.1599 0.0402

1.0000

Dam.leg. CSMsuc

0.0566 0.4817

0.1832 0.0196

0.1409 0.0824

-0.0018 0.9819

-0.1663 0.0362

0.2804 0.0003

1.0000

-0.0553 0.5001

0.0530 0.5122

0.1298 0.1158

-0.1500 0.0633

-0.1078 0.1848

1.0000

Collab. Potential

0.1597 0.0436

0.1072 0.1730

0.0799 0.3214

0.1020 0.1979

1.0000

Cons

0.0903 0.2533

0.0089 0.9090

0.1048 0.1928

1.0000

Govt

0.1423 0.0774

0.3359 0.0000

11.0000

PPPs

0.0458 0.5613

1.0000

Ind

1.0000

NGOs

304ȱ ȱ Appendicesȱ

AppendixȱEȱ–ȱPairwiseȱcorrelationȱanalysisȱ

Pairwiseȱcorrelationȱ–ȱTotalȱsampleȱ

ȱ

ȱ

ȱ

0.0336 0.7205

0.2741 0.0028

0.0815 0.4697

0.3671 0.0001

0.2039 0.0268

SD role Cap.markets

Importance legitimacy

Damage to legitimacy

CSM success

Cross-disc. collaboration

0.1366 0.1568

0.1843 0.0487

0.1309 0.1669

SD role PPPs

SD role Industry

SD role NGOs

-0.0041 0.9658

0.0413 0.6568

UCA attitude

SD role Governments

0.1965 0.0337

0.3272 0.0003

CA attitude

-0.0307 0.7466

0.1683 0.0697

0.0504 0.5879

WW attitude

SD role Consumers

-0.0994 0.2884

-0.1476 0.1123

BBB attitude

-0.0744 0.4273

0.0272 0.7717

0.1969 0.0334

Environmental issues

Cross-disc. potential

0.1488 0.1109

0.2271 0.0138

Social issues

0.0282 0.7678

0.1161 0.2186

0.2208 0.0216

0.2333 0.0129

0.0677 0.4780

0.1076 0.2523

0.1949 0.0352

0.2851 0.0021

0.2294 0.0406

0.1789 0.0546

0.2265 0.0149

-0.0093 0.9211

0.3127 0.0006

0.5541 0.0000

1.0000

0.1295 0.1641

CSM intent

SDimp

SD importance

SDfam

1.0000

SD familiarity

0.1138 0.2299

0.3329 0.0003

0.2160 0.0241

0.0842 0.3728

-0.0021 0.9820

0.0209 0.8243

0.2064 0.0249

0.5038 0.0000

0.2168 0.0519

0.3695 0.0000

0.3298 0.0003

0.2618 0.0042

0.4310 0.0000

0.0691 0.4571

-0.0396 0.6720

0.0382 0.6829

0.3164 0.0005

1.0000

CSMint

0.0495 0.6030

0.0545 0.5633

0.0371 0.7015

0.0429 0.6503

0.1236 0.1902

0.1820 0.0516

0.1591 0.0853

0.1264 0.1784

0.1445 0.2011

0.0769 0.4100

0.2440 0.0083

0.1443 0.1190

0.2564 0.0051

0.0249 0.7888

-0.0538 0.5647

0.3351 0.0002

1.0000

Social

0.0042 0.9649

-0.0666 0.4796

0.0361 0.7091

0.1051 0.2657

0.0187 0.8442

0.0866 0.3574

0.3573 0.0001

0.0425 0.6520

0.1069 0.3423

-0.0234 0.8026

0.0451 0.6307

0.1716 0.0631

0.1814 0.0493

0.0611 0.5113

-0.1796 0.0527

1.0000

Environ.

-0.0760 0.4239

0.0298 0.7518

-0.0465 0.6312

0.0442 0.6405

0.1279 0.1772

-0.0874 0.3532

-0.1295 0.1623

0.0503 0.5936

-0.0072 0.9493

0.0410 0.6606

-0.1771 0.0573

-0.1926 0.0367

-0.2968 0.0011

-0.0362 0.6972

1.0000

BBB

0.1477 0.1168

-0.0344 0.7137

0.0123 0.8986

-0.0046 0.9607

0.0163 0.8637

-0.0600 0.5221

0.1290 0.1621

-0.0192 0.8379

0.0777 0.4907

0.1886 0.0408

-0.0346 0.7113

0.0645 0.4861

0.1200 0.1938

1.0000

WW

0.1692 0.0772

0.2420 0.0109

0.0667 0.4808

0.0193 0.8381

0.0222 0.8136

0.1572 0.0949

0.0905 0.3383

0.0136 0.8854

0.0256 0.7848

0.1588 0.0887

0.2834 0.0020

0.1588 0.0886

0.0469 0.6128

0.0951 0.3101

0.1525 0.1740

0.0839 0.3667

0.3863 0.0000

1.0000

UCA

0.1389 0.1318

0.2171 0.0192

0.1657 0.1393

0.2260 0.0138

0.5669 0.0000

0.4057 0.0000

1.0000

CA

0.1058 0.2667

0.0362 0.7021

0.1428 0.1367

-0.0048 0.9596

0.2790 0.0029

0.2112 0.0235

0.0945 0.3109

0.0780 0.4096

0.3065 0.0054

0.1863 0.0452

1.0000

Capital

0.0627 0.5830 -0.1176 0.2929 0.1824 0.1031 0.2582 0.0234 -0.0637 0.5796 0.0196 0.8663 0.1115 0.3281 -0.0490 0.6722

0.4509 0.0000 0.0391 0.6726 0.0137 0.8836 -0.0193 0.8383 0.0196 0.8355 0.0563 0.5592 0.2397 0.0095 0.1393 0.1395

1.0000

-0.0290 0.7605

0.4547 0.0000

0.2096 0.0287

0.1163 0.2178

0.1021 0.2818

-0.0335 0.7231

0.1901 0.0401

1.0000

Dam.leg. CSMsuc

0.0476 0.6709

1.0000

Imp.leg

0.0899 0.3392

0.1048 0.2606

0.0945 0.3236

0.2452 0.0080

-0.0029 0.9755

0.1088 0.2430

1.0000

Collab.

-0.0313 0.7432

-0.0440 0.6421

0.0857 0.3735

-0.0022 0.9819

0.0578 0.5450

1.0000 1.0000

Cons

0.1257 0.1847

0.1442 0.1241

0.0282 0.7699

-0.0133 0.8891

Potential

0.0047 0.9602

0.1311 0.1625

0.2457 0.0100

1.0000

Govt

0.0958 0.3218

0.2095 0.0273

1.0000

PPPs

0.0834 0.3754

1.0000

Ind

1.0000

NGOs

AppendixȱEȱ–ȱPairwiseȱcorrelationȱanalysisȱ 305ȱ

Pairwiseȱcorrelationȱ–ȱOGȱsampleȱ

ȱ

ȱ

ȱ

0.2705 0.0458 0.1619 0.2375 -0.0261 0.8512 0.1952 0.1533 0.2939 0.0294 0.1260 0.3594 0.3219 0.0166 0.2388 0.0791 0.2128 0.2504 0.1825 0.1824 0.3170 0.0282 0.2003 0.1871 -0.0244 0.8678 0.0315 0.8266 0.5132 0.0002 0.3809 0.0058 0.1484 0.3142

0.6510 0.0000

0.3126 0.0201

0.2586 0.0566

-0.1064 0.4440

0.1642 0.2309

0.0985 0.4744

-0.1418 0.3016

0.1037 0.4512

0.4560 0.0005

0.1240 0.5063

0.4506 0.0006

0.2679 0.0656

0.1412 0.3550

0.0489 0.7389

-0.1431 0.3165

0.1158 0.4382

0.1903 0.1811

0.2249 0.1244

Social issues

Environmental issues

BBB attitude

WW attitude

CA attitude

UCA attitude

SD role Cap.markets

Importance legitimacy

Damage to legitimacy

CSM success

Cross-disc. collaboration

Cross-disc. potential

SD role Consumers

SD role PPPs

SD role Industry

SD role NGOs

SD role Governments

1.0000 0.1691 0.2215

0.0263 0.8489

CSM intent

SDimp

SD importance

SDfam

1.0000

SD familiarity

0.4418 0.0019

0.0898 0.5350

0.2784 0.0610

-0.0013 0.9928

0.1113 0.4516

-0.0985 0.5245

0.0266 0.8589

0.3769 0.0050

-0.0165 0.9312

0.3360 0.0130

0.0466 0.7379

-0.0294 0.8330

0.1699 0.2194

0.0720 0.6050

-0.0374 0.7906

0.2469 0.0719

0.2109 0.1258

1.0000

0.2958 0.0283

1.0000

Social

0.1785 0.2249

0.2086 0.1418

0.2587 0.0791

-0.0528 0.7131

-0.0946 0.5181

0.2499 0.0978

0.4016 0.0047

0.1314 0.3388

0.5550 0.0012

0.3211 0.0168

0.2541 0.0612

0.2023 0.1385

0.1536 0.2628

0.0498 0.7182

-0.1733 0.2103

CSMint

0.0654 0.6588

0.0794 0.5799

0.0780 0.6022

-0.2321 0.1012

-0.2851 0.0471

0.2740 0.0686

0.3131 0.0302

0.1086 0.4302

0.0835 0.6551

0.0180 0.8962

0.0513 0.7101

0.2091 0.1255

0.2651 0.0505

0.0347 0.8017

-0.2602 0.0574

1.0000

0.0324 0.8161

1.0000

BBB

0.0887 0.5489

0.0246 0.8651

-0.0953 0.5242

0.0791 0.5852

0.0715 0.6291

-0.0474 0.7598

-0.2182 0.1407

0.0579 0.6777

0.0810 0.6703

-0.1216 0.3809

-0.0597 0.6680

-0.1256 0.3656

-0.2677 0.0503

Environ.

-0.1134 0.4428

-0.0372 0.7957

0.0905 0.5452

-0.1720 0.2275

-0.2274 0.1161

0.1124 0.4621

0.2850 0.0496

0.1725 0.2079

0.1974 0.2871

0.2201 0.1064

0.0699 0.6122

-0.0307 0.8239

0.1552 0.2579

1.0000

WW

0.3318 0.0260 -0.1091 0.4555

0.3526 0.0140 0.1727 0.2566 0.1369 0.3482

0.1498 0.3096

0.0171 0.9053 0.1237 0.4023

0.0863 0.5472

0.2631 0.0740

0.3410 0.0177

0.1232 0.3701

0.2960 0.0433

0.1276 0.3531

0.3060 0.0941

0.0426 0.7667

0.1376 0.4605

0.2068 0.1299

0.0208 0.8847

0.0872 0.5269 -0.0347 0.8016

0.3243 0.0157

1.0000

UCA

0.4585 0.0004

1.0000

CA

0.1290 0.3821

0.1286 0.3686

0.2735 0.0628

-0.1097 0.4436

-0.1155 0.4292

0.1924 0.2055

0.2584 0.0762

0.0743 0.5897

0.2518 0.1719

0.1595 0.2447

1.0000

Capital

0.3112 0.0941 0.1753 0.3542 -0.2904 0.1265 0.3327 0.0837 0.2984 0.1159 0.0537 0.7860

0.1962 0.1765 0.1683 0.2377 0.1307 0.3810 0.0170 0.9058 0.2385 0.1026

0.4099 0.0272

0.0475 0.7996

1.0000

0.2217 0.1299

0.2343 0.0980

0.2178 0.1414

-0.0790 0.5817

0.0153 0.9171

0.0544 0.7227

0.0179 0.9036

1.0000

Dam.leg. CSMsuc

0.0052 0.9729

0.1061 0.4728

0.3253 0.0154

0.1056 0.5720

1.0000

Imp.leg

-0.0357 0.8225

0.3502 0.0183

0.1655 0.2948

-0.4448 0.0022

-0.3916 0.0086

0.6611 0.0000

1.0000

Collab.

-0.1236 0.4535

0.2912 0.0647

0.1424 0.3936

-0.3569 0.0220

-0.3847 0.0130

1.0000

Potential

0.2369 0.1089

0.0688 0.6422

0.2678 0.0719

0.1717 0.2433

1.0000

Cons

0.2885 0.0467

-0.2208 0.1195

-0.0367 0.8067

1.0000

Govt

0.2372 0.1124

0.5975 0.0000

1.0000

PPPs

-0.0461 0.7555

1.0000

Ind

1.0000

NGOs

306ȱ ȱ Appendicesȱ

Pairwiseȱcorrelationȱ–ȱUTȱsampleȱ

AppendixȱFȱ–ȱRegressionȱmodelsȱ

307ȱ

AppendixȱFȱ–ȱRegressionȱmodelsȱ Inȱ mostȱ cases,ȱ theȱ authorȱ hasȱ onlyȱ includedȱ eitherȱ theȱ expandedȱ orȱ theȱ reducedȱ modelȱinȱtheȱtext.ȱTheȱfollowingȱmodelsȱareȱthoseȱomittedȱfromȱtheȱtext.ȱ T model 89 4.30 0.0000 0.4046 0.3105 .66794

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var

OG model 63 3.45 0.0012 0.4266 0.3029 .67328

UT model 26 1.75 0.1576 0.5390 0.2317 .71456

.2420246 .3594095

.4354169 .108471

.2735957 .516038 .1549398 -.7896195

.3853546 .5771047 -.3351642

Coeff

Importance of issues: .2743835

Soc issues Env issues

.1942652

Issue descriptions: .3423784

Emissions Other environmental issues Social issues Other issues

.5006003 .2947298 -.5022126

.8133893

Demographic variables: UT sector

-.2987733

Nordic North Am Latin Europe Dev econ Other reg

.3206802 -.8503959 -.2162916 -.3660865 -.174633

.1727388 -.8708278 -.3165841 -.2188992 -.0293234

.8137145 -1.334768 -.4057731 (dropped) -.8915736

Constant

1.956014

1.410591

1.217057

RegressionȱTableȱAȱ1:ȱCSMȱintentȱȬȱpublicȱresponsibilityȱ(Expandedȱclusterȱmodels)ȱ T model 167 14.68 0.0000 0.2127 0.1982 .74818

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Imp leg

Coeff .3057015

OG model 113 15.54 0.0000 0.2203 0.2061 .72554 Indep var Imp leg

Coeff .3396076

UT model 54 7.26 0.0017 0.2217 0.1912 .75574 Indep var Imp leg

Coeff .2776573

UT sector

-.3252365

North Am

-.4183765

North Am

-.4248034

Nordic

.7382502

Constant

2.685355

Constant

2.538074

Constant

2.323933

RegressionȱTableȱAȱ2:ȱCSMȱintentȱ–ȱimportanceȱofȱandȱdamageȱtoȱlegitimacyȱ(Reducedȱsubmodels)ȱ T model 155 9.64 0.0000 0.1607 0.1441 .77046

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var NGOs

OG model Not valid

Coeff .2460667

UT sector

-.4951742

North Am

-.5813939

Constant

3.295591

UT model 47 8.72 0.0006 0.2838 0.2513 .73643 Indep var NGOs

Coeff .3648695

Female

.6549641

Constant

2.222045

RegressionȱTableȱAȱ3:ȱCSMȱintentȱ–ȱSDȱrolesȱofȱexternalȱstakeholdersȱ(Reducedȱsubmodels)ȱ T model 101 7.43 0.0000 0.2364 0.2046 .75571

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Confl auth

Coeff -.4147974

OG model 75 9.06 0.0000 0.2769 0.2463 .73239 Indep var Confl auth

Coeff -.4460305

UT sector

-.3717977

North Am Dev econ

-.7516513 -.6691486

North Am Dev Econ

-.7632538 -.6844179

Constant

4.339258

Constant

4.351679

UT model Not valid

RegressionȱTableȱAȱ4:ȱCSMȱintentȱ–ȱincidentsȱthatȱdamagedȱlegitimacyȱ(Reducedȱsubmodels)ȱ

ȱ

ȱ

308ȱ

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Regulations Investors Customers

T model 76 1.68 0.1105 0.1868 0.0759 .80449

Appendicesȱ

OG model 53 1.88 0.0884 0.2543 0.1187 .80727

UT model 23 1.28 0.3237 0.3740 0.0819 .7572

-.4290876

-.1586722 -.3637946

.4469775

.5783517

.2185629 -.4041916 .497006

Coeff .022634

UT sector

-.4917317

Nordic North Am Latin Europe Dev econ Other reg

.2451415 -.4573492 .0840425 -.1368735 -.0665877

-.6878643 -1.167655 -.7675564 -.711177 -.6957057

.9326347 .4356287 -.0673653 (dropped)

Constant

3.806457

4.431734

3.067365

.8562874

RegressionȱTableȱAȱ5:ȱCSMȱintentȱ–ȱexternalȱbarriersȱ(Expandedȱmodels)ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 75 0.83 0.5939 0.1027 0.0215 .76457

OG model 52 1.31 0.2633 0.1962 0.0467 .7741

UT model 23 1.85 0.1496 0.4637 0.2135 .59793

Indep var Regulations Investors Customers

.3180829 -.2056704 .0803348

.3162592 .0187094

.9 9311377 .757485 .5648703

UT sector

-.2226435

Nordic North Am Latin Europe Dev econ Other reg

-.0322007 -.2019767 .1521281 -.0826459 .5257799

-.3573823 -.5347458 .0630246 -.4150853 .2211288

-.2195609 1.626248 .0613772 .6262475 (dropped)

Constant

3.176033

3.561247

2.373752

Coeff

-.4644715

RegressionȱTableȱAȱ6:ȱCSMȱsuccessȱ–ȱexternalȱbarriersȱ(Expandedȱmodels)ȱ T model 167 16.38 0.0000 0.2316 0.2175 .73914

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var CA attitude

Coeff .3715439

UT sector

-.3290938

North Am

-.544326

Constant

2.472119

OG model 101 14.76 0.0000 0.3808 0.3550 .64754 Indep var CA attitude

UT model Not valid

Coeff .4278361

North Am

-.5435188

Female Board member

-.3105834 -1.101162

Constant

2.317653

RegressionȱTableȱAȱ7:ȱCSMȱintentȱȬȱpersonalȱattitudesȱ(Reducedȱmodels)ȱ T model 151 8.54 0.0003 0.1035 0.0914 .68538

Num of obs F Prob > F R-squared Adj R-squared Root MSE

OG model 102 8.99 0.0003 0.1537 0.1366 .68782

Indep var CA attitude

Coeff .2421037

Indep var CA attitude

Coeff .228936

North Am nat

-.2960012

North Am nat

-.4397059

Constant

2.532599

Constant

2.70406

RegressionȱTableȱAȱ8:ȱCSMȱsuccessȱ–ȱPersonalȱattitudesȱ(Reducedȱmodels)ȱ

UT model Not valid

AppendixȱFȱ–ȱRegressionȱmodelsȱ

309ȱ T model 76 1.68 0.1105 0.1868 0.0759 .80449

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Regulations Investors Customers

OG model 53 1.88 0.0884 0.2543 0.1187 .80727

UT model 23 1.28 0.3237 0.3740 0.0819 .7572

-.4290876

-.1586722 -.3637946

.4469775

.5783517

.2185629 -.4041916 .497006

Coeff .022634

UT sector

-.4917317

Nordic North Am Latin Europe Dev econ Other reg

.2451415 -.4573492 .0840425 -.1368735 -.0665877

-.6878643 -1.167655 -.7675564 -.711177 -.6957057

.9326347 .4356287 -.0673653 (dropped)

Constant

3.806457

4.431734

3.067365

.8562874

RegressionȱTableȱAȱ9:ȱCSMȱintentȱ–ȱexternalȱbarriersȱ(Expandedȱmodels)ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 75 0.83 0.5939 0.1027 0.0215 .76457

OG model 52 1.31 0.2633 0.1962 0.0467 .7741

UT model 23 1.85 0.1496 0.4637 0.2135 .59793

Indep var Regulations Investors Customers

.3180829 -.2056704 .0803348

.3162592 .0187094

.9 9311377 .757485 .5648703

UT sector

-.2226435

Nordic North Am Latin Europe Dev econ Other reg

-.0322007 -.2019767 .1521281 -.0826459 .5257799

-.3573823 -.5347458 .0630246 -.4150853 .2211288

-.2195609 1.626248 .0613772 .6262475 (dropped)

Constant

3.176033

3.561247

2.373752

Coeff

-.4644715

RegressionȱTableȱAȱ10:ȱCSMȱsuccessȱ–ȱexternalȱbarriersȱ(Expandedȱmodels)ȱ T model 76 2.14 0.0337 0.2473 0.1315 .77989

Num of obs F Prob > F R-squared Adj R-squared Root MSE

OG model 53 2.06 0.0547 0.3017 0.1556 .79022

UT model 23 0.98 0.4872 0.3599 0.0059 .7926

-.440347

.1415929 -.1961652 -.1165192 -.4306785

Indep var Mindset Knowledge Tools Corp cult

.1834763

.2154108

-.3856986

Coeff

-.4232323

.0336815 -.51891

-.0322264

UT sector

-.4377725

Nordic North Am Latin Europe Dev econ Other reg

.3338803 -.3247583 .1638789 -.1110231 .0394202

-.4479784 -.9028092 -.4407292 -.6202876 -.4557966

.5560472 .5560472 -.0132743 (dropped)

Constant

4.075292

4.587511

3.443953

1.014749

RegressionȱTableȱAȱ11:ȱCSMȱintentȱȬȱInternalȱbarriersȱ(Expandedȱmodels)ȱ T model 76 11.14 0.0013 0.1308 0.1190 .78548

Num of obs F Prob > F R-squared Adj R-squared Root MSE Indep var Corp cult

Coeff -.6015246

Constant

3.871795

OG model 50 6.91 0.0023 0.2271 0.1942 .75735 Indep var Corp cult

Coeff. -.641666

Board member

-2.04166

Constant

4.041667

RegressionȱTableȱAȱ12:ȱCSMȱintentȱȬȱInternalȱbarriersȱ(Reducedȱmodels)ȱ

ȱ

UT model 23 4.98 0.0176 0.3324 0.2656 .57777 Indep var Corp cult Mindset

Coeff -.519607 -.588235

Constant

3.382353

ȱ

310ȱ

Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 75 1.30 0.2472 0.1694 0.0396 .74136

Indep var Mindset Knowledge Tools Corp cult

-.1340692 -.0411513 -.0360151 -.4780865

UT sector

-.3336729

Nordic North Am Latin Europe Dev econ Other reg Constant

Appendicesȱ

OG model 52 1.09 0.3874 0.1900 0.0164 .78631

UT model 23 1.22 0.3537 0.4116 0.0753 .64831

.0476532 .0394141 -.0458647

-.5973451 .0619469 .2780236

-.4809406

-.5789086

-.1679742 -.2088076 -.1779417 -.1551937 .3120247

-.6241748 -.6920358 -.44874 -.6127487 -.1021595

-.2809735 .6489676 -.3510324 .2278761 (dropped)

3.630882

3.942387

3.351032

Coeff

RegressionȱTableȱAȱ13:ȱCSMȱsuccessȱ–ȱInternalȱbarriersȱ(Expandedȱmodels)ȱ T model 75 9.47 0.0029 0.1148 0.1027 .71658

Num of obs F Prob > F R-squared Adj R-squared Root MSE

OG model 52 6.56 0.0135 0.1159 0.0982 .75289

UT model 23 4.98 0.0176 0.3324 0.2656 .57777

Índep var Corp cult

Coeff -.5092461

Índep var Corp cult

Coeff. -.5382309

Índep var Corp culte Mindset

Coeff. -.519607 -.588235

Constant

3.351351

Constant

3.434783

Constant

3.382353

RegressionȱTableȱAȱ14:ȱCSMȱsuccessȱȬȱInternalȱbarriersȱ(Reducedȱmodels)ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 75 1.30 0.2329 0.2331 0.0542 .73569

Indep var Mindset Knowledge Regulations Tools Corp cult Investors Customers Other barriers

-.0766302 -.0106792 .3494807 -.0795091 -.5119903 -.2361729 -.013196 .265377

OG model 52 1.40 0.2041 0.3239 0.0926 .75522

UT model 23 1.99 0.1414 0.7053 0.3516 .54291

.1788755 .1226461 .4303468 -.0801113 -.5882333

-.6091319

Coeff

-.1007492 .3977338

.3391206 .9641488 .2980834 -.402593 .600451 .7485908 .7128523

-.4775634

UT sector

-.3612436

Nordic North Ama Latin Europe Developing eco Other reg

-.1147584 -.1978884 -.0677895 -.2306275 .2989777

-.381054 -.4543134 .193295 -.553067 .0621333

-.5651635 .7299887 -1.018602 .845434 (dropped)

Constant

3.601036

3.755241

2.557159

RegressionȱTableȱAȱ15:ȱCSMȱsuccessȱȬȱbarriersȱ(Expandedȱsubmodels)ȱ

ȱ

AppendixȱFȱ–ȱRegressionȱmodelsȱ

311ȱ

Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 158 3.05 0.0002 0.2572 0.1729 .69081

OG model 108 2.93 0.0008 0.3235 0.2132 .70187

UT model 50 1.02 0.4551 0.2902 0.0063 .66916

Indep var Measurement tools Measuring resource allocation Strategy tools Corporate values, policies etc. Incentive tools Management development Coordination committees Business teams Other tools No tools

-.1836714 .0728151 .244487 .1421064 .3524279 .1540999 .0966535 .2014607 .1530652 -.7148249

-.1654276 .2073922 .186642 .0466116 .3099458

-.0735758 -.1485129 .2767213 .0810583 .2378114 -.3596692 -.2345262 .62677 .2601984 -.6955312

UT sector

-.1340911

Nordic North Am Latin Europe Dev econ Other regs

-.1027964 -.2632053 -.1093713

-.2746653

-.488928

-.6007137

-.0359933

-.0319361

-.0166835 .2817376 .2740777 (dropped) -.0870755

Constant

3.225287

3.315814

3.195531

Coeff

.3285385 .1677234 .1040036 -.1820014 -.9370597

-.3787544 -.185012

RegressionȱTableȱAȱ16:ȱCSMȱsuccessȱȬȱCSMȱtoolsȱ(Expandedȱmodels)ȱ T model 153 6.07 0.0006 0.1089 0.0910 .79443

Num of obs F Prob > F R-squared Adj R-squared Root MSE

OG model 113 7.63 0.0001 0.1736 0.1508 .75039

Indep var Cross-func. collaboration

Coeff .2400167

Indep var Cross-func. collaboration

Coeff .2221265

North Am

.3835473

North Am Dev Econ

-.6365673 -.4636461

Board member

-1.223879

Constant

3.410513

Constant

3.711701

UT model Not valid

RegressionȱTableȱAȱ17:ȱCSMȱsuccessȱ–ȱCorporateȱstructureȱ(Reducedȱsubmodels)ȱ Num of obs F Prob > F R-squared Adj R-squared Root MSE

T model 167 2.99 0.0006 0.2026 0.1348 .71088

OG model 112 3.18 0.0010 0.2591 0.1776 .70979

UT model 55 1.40 0.2031 0.2860 0.0821 .6818

.8556031 .2727292 .361927 .0861273 -.1934527 .7005664 (dropped)

.5224154 .2213208 -.5557422 .5131595 .3565067 .0328329 .7606556

-.0793318 -.0889663 -.1471273

-.2032899 -.4511378 -.2503948 -.2370496 -.2451746

.1571956 .6275798 .2005494 .4041489 -.2970045

2.653774

2.609425

2.239344

Indep var Env performance Business ethics Soc supply Env supply Community involvement Other initiatives No initiatives

.0840969 .8258627 .5506696

UT sector

-.2044439

Nordic North Am Latin Europe Developing econ Other reg Constant

Coeff .5959727 .1755042 .0336241

.2588343

-.0553935

-.2945164

RegressionȱTableȱAȱ18:ȱCSMȱsuccessȱȬȱCSMȱinitiativesȱ(Expandedȱmodels) ȱ

ȱ

ȱ

312ȱ

Appendicesȱ

AppendixȱGȱ–ȱRegressionȱdiagnosticsȱ Modelsȱ

RamseyȱRESETȱ testȱ(Probȱ>ȱF)ȱ

BreuschȬPaganȱ/ȱ CookȱWeisbergȱ testȱ (Probȱ>ȱchi2)ȱ

MeanȱVIFȱ

Meanȱresidualsȱ

Skewness/Kurtosisȱ testsȱforȱnormalityȱ (Probȱ>ȱchi2)ȱ

0.2952ȱ 0.6632ȱ 0.7715ȱ

0.8937ȱ 0.4518ȱ 0.5794ȱ

1.13ȱ 1.19ȱ 1.11ȱ

Ȭ4.90eȬ10ȱ .0291694ȱ .1044572ȱ

0.9923ȱ 0.2971ȱ 0.8029ȱ

CSMȱintentȱ Tȱ OGȱ UTȱ CSMȱsuccessȱ Tȱ 0.4577ȱ 0.5818ȱ 1.02ȱ Ȭ4.46eȬ10ȱ 0.9716ȱ OGȱ 0.1900ȱ 0.4784ȱ 1.08ȱ Ȭ.0011659ȱ 0.5130ȱ UTȱ 0.8417ȱ 0.1568ȱ 1.01ȱ .0241774ȱ 0.3403ȱ AllȱmeanȱVIFsȱareȱgreaterȱthanȱ1,ȱwhichȱindicatesȱtheȱpresenceȱofȱmulticollinearityȱ(Hamilton,ȱ2003,ȱp.ȱ167).ȱThisȱisȱnotȱsurprisȬ ingȱinȱtheȱpresentȱstudy,ȱsinceȱvariablesȱareȱlikelyȱtoȱbeȱrelated,ȱe.g.ȱsocialȱissuesȱandȱbrandȱandȱreputation.ȱ ȱ

AppendixȱHȱ–ȱInterviewȱguidelinesȱ

313ȱ

AppendixȱHȱ–ȱInterviewȱguidelinesȱ InterviewȱGuidelinesȱ

I.ȱIntroductionȱ A.ȱIntroductionȱtoȱtheȱprojectȱ Thisȱprojectȱconcernsȱtheȱbusinessȱcaseȱforȱsustainabilityȱ(BCS),ȱwhichȱweȱdefineȱ asȱaȱstrategyȱenablingȱaȱcompanyȱtoȱcreateȱeconomicȱvalueȱbyȱmeansȱofȱimprovingȱ environmentalȱ performanceȱ (e.g.ȱ increaseȱ ecoȬefficiency,ȱ reducingȱ pollution)ȱ andȱ socialȱperformanceȱ(e.g.ȱengageȱinȱcommunityȱdevelopment)ȱbeyondȱcompliance.ȱ AȱrobustȱBCSȱis:ȱ - clearlyȱreflectedȱbyȱcompanies’ȱstrategiesȱandȱoperationalȱactivitiesȱ - openȱtoȱassessment,ȱreportingȱandȱmonitoringȱ Theȱ mainȱ objectiveȱ ofȱ theȱ projectȱ isȱ toȱ developȱ aȱ diagnosticȱ toolȱ forȱ identifyingȱ companyȬspecificȱpotentialsȱandȱbarriersȱforȱcorporateȱsustainability.ȱSinceȱtheȱtoolȱ hasȱtoȱbeȱbasedȱonȱempiricalȱevidence,ȱitȱisȱnecessaryȱtoȱinterviewȱexecutivesȱinȱdifȬ ferentȱ functionsȱ fromȱ differentȱ industriesȱ inȱ differentȱ countries.ȱ Weȱ areȱ particularlyȱ interestedȱinȱindustryȬȱandȱcountryȬspecificȱfactorsȱsuchȱasȱregulationȱandȱtheȱmindȬ setȱofȱmanagersȱthatȱimpactȱonȱtheȱcorporateȱacceptanceȱandȱimplementationȱofȱtheȱ BCS.ȱ B.ȱConfidentialityȱandȱanonymityȱ Strictȱ confidentialityȱ willȱ beȱ accordedȱ toȱ allȱ informationȱ receivedȱ duringȱ theȱ interȬ views.ȱ C.ȱInterviewȱroadȱmapȱ TheȱinterviewȱguidelinesȱhaveȱbeenȱthoroughlyȱpreȬtestedȱinȱseveralȱreferenceȱcomȬ panies.ȱTheyȱareȱseparatedȱintoȱ5ȱsections:ȱ

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SectionȱAȱȬȱBuildingȱtheȱBCSȱ(WhyȱbotherȱwithȱtheȱBCS?):ȱExternalȱpresȬ suresȱandȱvalueȱdriversȱ

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SectionȱBȱȬȱImplementingȱtheȱBCSȱ(Howȱtoȱalignȱtheȱorganization?)ȱ

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Sectionȱ C:ȱ BCSȬrelatedȱ toolsȱ (ONLYȱ TOȱ BEȱ USEDȱ FORȱ INTERVIEWSȱ WITHȱSUSTAINABILITYȱOFFICERS)ȱ

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SectionȱD:ȱFunctionȬspecificȱmodulesȱ

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SectionȱE:ȱWrapȱupȱ(obligatory)ȱ

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II.ȱInterviewȱ Opener:ȱȱBrieflyȱoutlineȱ–ȱlet’sȱsayȱinȱ5ȱminutesȱmax.ȱȬȱtheȱdevelopmentȱofȱtheȱBCSȱandȱmajorȱ milestoneȱ focusing,ȱ inȱ particular,ȱ onȱ yourȱ personalȱ experienceȱ and,ȱ possibly,ȱ informationȱ Iȱ mayȱnotȱhaveȱcomeȱacrossȱinȱmyȱpreliminaryȱresearch.ȱ

A.ȱ Buildingȱ theȱ businessȱ case:ȱ Detectingȱ externalȱ pressuresȱ andȱ valueȱ driversȱ forȱ buildingȱtheȱBCSȱ

Îȱ Identifyȱ externalȱ pressuresȱ andȱ valueȱ driversȱ toȱ collectȱ evidenceȱ forȱ theȱ BCSȱ (Ȉwhyȱ botherȈ)ȱ A1.ȱ Whatȱ areȱ mainȱ actualȱ andȱ emergingȱ sustainabilityȱ issuesȱ inȱ yourȱ companyȱ andȱ 3ȱ howȱwouldȱyouȱrankȱthemȱaccordingȱtoȱtheirȱsignificanceȱwhenȱbuildingȱaȱBCS?ȱ DoȱonlyȱuseȱtheȱfollowingȱpromptsȱifȱquestionsȱA2.1Ȭ4ȱareȱskipped:ȱcustomers,ȱNGOs,ȱ competitors,ȱregulatorsȱ A2.ȱElaborateȱonȱtheȱsignificanceȱofȱstakeholdersȱinȱtransmittingȱtheȱsustainabilityȱisȬ 4ȱ suesȱmentionedȱabove?ȱ x

x

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NGOs,ȱcustomerȱreaction(publicȱpressure)ȱ Regulatorsȱ Competitorsȱ

A2.1ȱ Pleaseȱ elaborateȱ onȱ theȱ significanceȱ ofȱ regulatoryȱ pressureȱ whenȱ buildingȱ theȱ ȱ BCS.ȱ A2.2ȱ Pleaseȱ elaborateȱ onȱ theȱ significanceȱ ofȱ publicȱ pressureȱ fromȱ customers,ȱ NGOsȱ ȱ etc.ȱwhenȱbuildingȱtheȱSBC.ȱ A2.3ȱWhatȱroleȱdoesȱtheȱmediaȱplay?ȱ A2.4ȱPleaseȱelaborateȱonȱtheȱsignificanceȱofȱpressureȱfromȱcompetitorsȱwhenȱbuildingȱ ȱ theȱBCS?ȱ A3.ȱNameȱtheȱvalueȱdriversȱforȱtheȱBCSȱinȱyourȱcompanyȱandȱrankȱthemȱaccordingȱtoȱ 10ȱ theirȱimportance.ȱElaborateȱonȱtheȱrationaleȱbehindȱandȱevidenceȱforȱyourȱchoice.ȱ x

x

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x

x

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Costȱsavingsȱ processȱinnovationsȱ productȱinnovationsȱȱ brandȱvalueȱandȱreputationȱenhancementȱȱ attractionȱofȱhumanȱandȱintellectualȱcapitalȱ enhancementȱofȱriskȱprofileȱ othersȱ

AppendixȱHȱ–ȱInterviewȱguidelinesȱ

A3.1ȱWhatȱdifficultiesȱdoȱyouȱseeȱinȱdetectingȱvalueȱdriversȱthatȱsupportȱtheȱBCS?ȱ

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A3.2ȱAreȱvalueȱdriversȱlikelyȱtoȱchangeȱinȱtheȱfuture?ȱElaborateȱonȱhowȱandȱwhyȱtheyȱ ȱ mayȱchange.ȱ A4.ȱWhatȱareȱyourȱcompany’sȱstrengthsȱandȱweaknessesȱinȱtermsȱofȱtheȱsustainabilityȱ 9ȱ issuesȱandȱvalueȱdriversȱidentifiedȱ(Îauditȱtoolȱforȱassessingȱstrategicȱfit)?ȱ A5.ȱ Whatȱ isȱ yourȱ company’sȱ strategyȱ forȱ dealingȱ withȱ theȱ sustainabilityȱ issuesȱ andȱ 8ȱ valueȱdriversȱidentifiedȱ(ÎȱstrategyȬbuildingȱtool)?ȱ A6.ȱBrieflyȱgeneralizeȱsustainabilityȱissues,ȱvalueȱdriversȱandȱstrategiesȱtoȱprovideȱanȱ 5ȱ industryȱoverview.ȱ A7.ȱWhoȱinȱyourȱcompanyȱ(e.g.ȱtheȱsustainabilityȱofficer,ȱaȱcommittee,ȱworkingȱgroupȱ 5ȱ etc.)ȱbuiltȱtheȱBCSȱ(issuesÎvalueȱdriversÎstrategy)?ȱBrieflyȱdescribeȱtheȱprocessȱandȱ evaluateȱitsȱeffectiveness.ȱ

B.ȱImplementingȱtheȱBCS:ȱAligningȱtheȱorganizationȱ

Îȱ Identifyȱ organizationalȱ approachesȱ usedȱ toȱ overcomeȱ internalȱ barriersȱ toȱ implementingȱ theȱBCSȱȱ B8.ȱWhatȱinternalȱfactorsȱareȱsignificantȱinȱtermsȱofȱaligningȱorganizationalȱbehaviorȱ 8ȱ toȱimplementingȱtheȱBCS?ȱ Doȱ useȱ theȱ followingȱ promptsȱ ifȱ relyingȱ exclusivelyȱ onȱ questionȱ B8:ȱ knowledge,ȱ orȬ ganizationalȱcultureȱandȱstructureȱetc.ȱ

B8.1ȱ Whatȱ areȱ theȱ mainȱ organizationalȱ factorsȱ promotingȱ theȱ implementationȱ ofȱ theȱ ȱ BCSȱinternally?ȱ B8.2ȱ Whatȱ areȱ theȱ mainȱ organizationalȱ factorsȱ impedingȱ theȱ implementationȱ ofȱ theȱ ȱ BCSȱinternally?ȱ B8.3ȱ Whyȱ doesȱ yourȱ particularȱ organizationalȱ cultureȱ promoteȱ orȱ hinderȱ theȱ impleȬ ȱ mentationȱofȱtheȱBCS?ȱ B8.4ȱDidȱyouȱorȱdoȱyouȱseeȱaȱneedȱforȱimprovingȱknowledgeȱandȱskillsȱinȱyourȱcomȬ ȱ panyȱtoȱdriveȱtheȱBCSȱsuccessfullyȱthroughȱyourȱorganization?ȱ B9.ȱWhoȱdoȱyouȱseeȱasȱtheȱmainȱleaderȱinȱpromotingȱtheȱBCSȱinternally?ȱ

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B9.1ȱInȱwhatȱwayȱdidȱyourȱcompany’sȱdelegationȱofȱresponsibilityȱimpactȱtheȱimpleȬ ȱ mentationȱofȱtheȱBCS?ȱPleaseȱdescribeȱpositiveȱandȱnegativeȱexperiences.ȱ B9.2ȱInȱwhatȱwayȱdoesȱtheȱBCSȱinfluenceȱmanagerialȱandȱtechnicalȱprocessesȱ(investȬ ȱ ment,ȱaccounting,ȱresearchȱ&ȱdevelopmentȱetc.)?ȱ B9.3ȱ Whatȱ managerialȱ andȱ technicalȱ processesȱ playȱ theȱ mostȱ importantȱ role?ȱ Pleaseȱ ȱ elaborateȱonȱanyȱpotentialȱforȱimprovements.ȱ B9.4ȱHowȱdidȱyourȱtopȱmanagementȱandȱlineȬmanagersȱsupportȱtheȱimplementationȱ ȱ

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processȱandȱwhatȱwasȱtheirȱgeneralȱattitude?ȱ B.9.5ȱInȱwhatȱwayȱdidȱtheȱlevelȱofȱawarenessȱofȱtheȱBCSȱchangeȱoverȱtime?ȱ

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B10.ȱ Howȱ muchȱ doesȱ theȱ wayȱ theȱ BCSȱ isȱ implementedȱ inȱ yourȱ companyȱ andȱ yourȱ 3ȱ functionȱdependȱonȱindustryȱtrends?ȱ

C.ȱBCSȬrelatedȱToolsȱ

ÎȱExamineȱtoolsȱandȱprocessesȱusedȱforȱdetectingȱ(EAS),ȱdrivingȱ(EMS,ȱrewardȱsystem)ȱandȱ evaluatingȱ(accounting)ȱtheȱBCSȱ–essentiallyȱmarketȱresearchȱforȱourȱfinalȱproduct.ȱ ONLYȱ TOȱ BEȱ USEDȱ FORȱ SUSTAINABILITYȱ OFFERS.ȱ FORȱ FUNCTIONALȱ MANAGERS,ȱ DIRECTLYȱPROCEEDȱTOȱSECTIONȱD.ȱ C11.ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱdetectingȱtheȱ 5ȱ actualȱandȱemergingȱsustainabilityȱissues?ȱ C11.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C11.2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

C12.ȱ Describeȱ theȱ specificȱ managerialȱ toolsȱ andȱ systemsȱ thatȱ areȱ usedȱ inȱ identifyingȱ 5ȱ theȱvalueȱdriversȱforȱtheȱBCS?ȱ C12.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C12.2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ C13.ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱensuringȱstraȬ 5ȱ tegicȱfitȱwithȱsustainabilityȱissuesȱandȱvalueȱdriversȱ(auditȱtool)?ȱ C13.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C13.2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ C14.ȱ Describeȱ theȱ toolsȱ usedȱ inȱ yourȱ companyȱ toȱ formulateȱ aȱ beyondȬcomplianceȱ 5ȱ strategyȱbasedȱonȱbusinessȱlogic?ȱ C14.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C14.2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ C15.ȱ Describeȱ theȱ toolsȱ usedȱ inȱ yourȱ companyȱ toȱ (qualitativelyȱ orȱ quantitatively)ȱ 5ȱ evaluateȱtheȱeconomicȱbenefitȱfromȱdrivingȱtheȱBCSȱthroughȱtheȱorganization?ȱ C15.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C15.2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ C16.ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱdriveȱtheȱBCSȱthroughȱtheȱorganizaȬ 5ȱ tion?ȱ C16.1ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C16.ȱ2ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

AppendixȱHȱ–ȱInterviewȱguidelinesȱ

USEȱONLYȱIFȱYOUȱCOULDȱNOTȱUSEȱPROMPTSȱINȱC10,11,12ȱ

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C17.ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ C18.ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

D.ȱFunctionȬspecificȱmodulesȱ D19.ȱCommunicationȱ D19.1ȱInȱwhatȱwayȱdoȱconflictingȱorȱsharedȱinterestsȱwithȱotherȱexternalȱstakeholdersȱsuchȱasȱ x Suppliersȱ

x Customersȱ(consumersȱvs.ȱbusinesses)ȱ

x NGOsȱ(WWFȱvs.ȱGreenpeace)ȱ

x Regulatorsȱandȱenforcementȱagenciesȱ x Othersȱ

influenceȱtheȱimplementationȱofȱtheȱBCS?ȱ D19.2ȱWhichȱmanagerialȱtoolsȱdoȱyouȱuseȱtoȱdetectȱandȱresolveȱaȱpotentialȱconflictȱbetweenȱ yourȱcompanyȱandȱexternalȱstakeholders?ȱ D19.3ȱHowȱdoȱindustryȬspecificȱinitiatives/industryȱassociationsȱimpactȱtheȱbuildingȱofȱyourȱ BCS?ȱ D19.4ȱ Howȱ doȱ industryȬspecificȱ initiatives/industryȱ associationsȱ impactȱ theȱ implementationȱ ofȱyourȱBCS?ȱ D19.5ȱHowȱdoȱindustryȬȱandȱexternallyȬdrivenȱinitiativesȱ(e.g.ȱvoluntaryȱagreements,ȱregulaȬ tionsȱonȱproductȱtakeȬback)?ȱ D19.6ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱbuildingȱtheȱBCS,ȱ i.e.ȱdetectingȱtheȱvalueȱdrivers?ȱ D19.7ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D19.8ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D19.9ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱcommunicateȱtheȱBCSȱinternally?ȱ D19.10ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D19.11ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D19.12ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱcommunicateȱtheȱBCSȱexternally?ȱ D19.13ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D19.14ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ USEȱONLYȱIFȱYOUȱCOULDȱNOTȱUSEȱPROMPTSȱBETWEENȱD14.6ȱANDȱ14.12:ȱ D19.15ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ

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D19.16ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

D20.ȱCorporateȱStrategyȱandȱDevelopmentȱȱ D20.1ȱHowȱisȱyourȱcompanyȱpositionedȱinȱtheȱbuildingȱofȱitsȱBCSȱrelativeȱtoȱitsȱcompetitors?ȱ Elaborateȱonȱyourȱcompany’sȱstrengthsȱandȱweaknesses.ȱ D20.2ȱHowȱisȱyourȱcompanyȱpositionedȱinȱtheȱimplementationȱofȱitsȱBCSȱrelativeȱtoȱitsȱcomȬ petitors?ȱElaborateȱonȱyourȱcompany’sȱstrengthsȱandȱweaknesses.ȱ D20.3ȱInȱwhatȱwaysȱdoesȱyourȱcorporateȱidentityȱinfluenceȱtheȱbuildingȱofȱtheȱBCS?ȱ D20.4ȱInȱwhatȱwaysȱdoesȱyourȱcorporateȱidentityȱinfluenceȱtheȱimplementationȱofȱtheȱBCS?ȱ D20.5ȱInȱwhatȱwayȱcouldȱaȱchangeȱinȱcorporateȱidentityȱvaluesȱhaveȱaȱpositiveȱinfluenceȱonȱ theȱbuildingȱofȱtheȱBCS?ȱ D20.6ȱInȱwhatȱwayȱcouldȱaȱchangeȱinȱcorporateȱidentityȱvaluesȱhaveȱaȱpositiveȱinfluenceȱonȱ theȱimplementationȱofȱtheȱBCS?ȱ D20.7ȱWhatȱproductȱandȱserviceȱinnovationsȱhaveȱresultedȱfromȱimplementingȱtheȱBCS?ȱ D20.8ȱIsȱthereȱanyȱevidenceȱtoȱproveȱthatȱtheseȱinnovationsȱpromotedȱtheȱimplementationȱofȱ theȱBCS?ȱ D20.9ȱ Howȱ explicitlyȱ doȱ yourȱ company’sȱ strategyȱ andȱ businessȱ modelsȱ accountȱ forȱ theȱ buildingȱ ofȱ theȱ BCS,ȱ i.e.ȱ forȱ generatingȱ economicȱ valueȱ byȱ meansȱ ofȱ improvingȱ environȬ mentalȱandȱsocialȱperformance?ȱ D20.10ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱbuildingȱtheȱBCS,ȱ i.e.ȱdetectingȱtheȱvalueȱdrivers?ȱ D20.11ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D20.12ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D20.13ȱHowȱexplicitlyȱdoȱyourȱcompany’sȱstrategyȱandȱbusinessȱmodelsȱaccountȱforȱtheȱimȬ plementationȱ ofȱ theȱ BCS,ȱ i.e.ȱ forȱ generatingȱ economicȱ valueȱ byȱ meansȱ ofȱ improvingȱ enviȬ ronmentalȱandȱsocialȱperformance?ȱ D20.14ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱdriveȱtheȱBCSȱthroughȱtheȱorganization?ȱ D20.15ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D20.16ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D20.17ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱ(qualitativelyȱorȱquantitatively)ȱevaluateȱ theȱeconomicȱbenefitȱfromȱdrivingȱtheȱBCSȱthroughȱtheȱorganization?ȱ D20.18ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D20.19ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ USEȱONLYȱIFȱYOUȱCOULDȱNOTȱUSEȱPROMPTSȱbetweenȱD15.101ȱandȱD15.19:ȱ

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D20.20ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D20.21ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

D21ȱInvestorȱRelationsȱandȱFinanceȱ D21.1ȱ Howȱ doȱ capitalȱ marketsȱ andȱ shareholdersȱ influenceȱ yourȱ companyȇsȱ approachȱ toȱ buildingȱtheȱBCS?ȱ D21.2ȱHowȱdoȱcapitalȱmarketsȱandȱshareholdersȱinfluenceȱyourȱcompanyȇsȱapproachȱtoȱimȬ plementingȱtheȱBCS?ȱ D21.3ȱWhichȱcapitalȱmarketȱparticipants,ȱinȱparticularȱareȱinterestedȱinȱtheȱbuildingȱandȱtheȱ implementationȱofȱtheȱBCS?ȱ D21.4ȱ Ifȱ thereȱ areȱ any,ȱ whatȱ areȱ theȱ demandsȱ fromȱ thoseȱ capitalȱ marketȱ participantsȱ youȱ mentionedȱabove?ȱ D21.5ȱHowȱawareȱofȱtheseȱdemandsȱfromȱthoseȱcapitalȱmarketȱparticipantsȱareȱtheȱdifferentȱ decisionȬmakersȱinȱyourȱcompanyȱ(e.g.ȱCFO,ȱCEO,ȱimplementingȱofficers,ȱetc.)?ȱ D21.6ȱInȱwhatȱwayȱdoesȱtheȱlevelȱofȱawarenessȱofȱthoseȱdecisionȬmakersȱimpactȱtheirȱactualȱ decisionȬmakingȱinȱtheirȱrespectiveȱfunction?ȱ D21.7ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱbuildingȱtheȱBCS,ȱ i.e.ȱdetectingȱtheȱvalueȱdrivers?ȱ D21.8ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D21.9ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D21.10ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱdriveȱtheȱBCSȱthroughȱtheȱorganization?ȱ D21.11ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D21.12ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D21.13ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱ(qualitativelyȱorȱquantitatively)ȱevaluateȱ theȱeconomicȱbenefitȱfromȱdrivingȱtheȱBCSȱthroughȱtheȱorganization?ȱ D21.14ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D21.15ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ USEȱONLYȱIFȱYOUȱCOULDȱNOTȱUSEȱPROMPTSȱbetweenȱD16.7ȱandȱD16.15:ȱ D21.16ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D21.17ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ

D22.ȱHumanȱResourcesȱ(HR)ȱ D22.1ȱInȱwhatȱwayȱdoȱyouȱthinkȱbuyȬinȱbyȱmanagersȱisȱimportantȱforȱtheȱimplementationȱofȱ theȱBCS?ȱPleaseȱelaborateȱonȱsignificanceȱofȱ x

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Appendicesȱ

Topȱmanagementȱ Middleȱmanagementȱȱ BlueȬcollarȱworkersȱ

D22.2ȱ whatȱ wayȱ doesȱ internalȱ organizationalȱ cultureȱ (topȱ down,ȱ commandȱ andȱ controlȱ vs.ȱ open,ȱconsensusȬorientedȱapproaches)ȱinfluenceȱtheȱbuildingȱofȱtheȱBCS?ȱ D22.3ȱInȱwhatȱwayȱdoesȱinternalȱorganizationalȱcultureȱ(topȱdown,ȱcommandȱandȱcontrolȱvs.ȱ open,ȱconsensusȬorientedȱapproaches)ȱinfluenceȱtheȱimplementationȱofȱtheȱBCS?ȱ D22.4ȱ Whatȱ kindȱ ofȱ organizationalȱ cultureȱ isȱ bestȱ suitedȱ toȱ theȱ implementationȱ ofȱ aȱ BCS?ȱ Elaborate.ȱ D22.5ȱInȱwhatȱwayȱdoesȱtheȱmindsetȱofȱmanagersȱinfluenceȱtheȱbuildingȱtheȱBCS?ȱ D22.6ȱInȱwhatȱwayȱdoesȱtheȱmindsetȱofȱmanagersȱinfluenceȱtheȱimplementationȱofȱtheȱBCS?ȱ D22.7ȱWhatȱareȱtheȱdifferencesȱinȱtheȱmindsetȱatȱdifferentȱlevelsȱofȱmanagementȱandȱinȱdifȬ ferentȱfunctions?ȱ D22.8ȱDescribeȱtheȱspecificȱmanagerialȱtoolsȱandȱsystemsȱthatȱareȱusedȱinȱbuildingȱtheȱBCS,ȱ i.e.ȱdetectingȱtheȱvalueȱdrivers?ȱ D22.9ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D22.10ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D22.11ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱreduceȱresistanceȱtoȱtheȱBCSȱthroughȱtheȱ organization?ȱ D22.12ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D22.13ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D22.14ȱWhichȱfunctionsȱareȱmostȱinȱneedȱtoȱbeȱconvincedȱandȱwhy?ȱ D22.15ȱDescribeȱtheȱtoolsȱusedȱinȱyourȱcompanyȱtoȱ(qualitativelyȱorȱquantitatively)ȱevaluateȱ theȱeconomicȱbenefitȱfromȱdrivingȱtheȱBCSȱthroughȱtheȱorganization?ȱ D22.16ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D22.17ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ USEȱONLYȱIFȱYOUȱCOULDȱNOTȱUSEȱPROMPTSȱbetweenȱD17.8ȱandȱD17.17?ȱ D22.18ȱWhatȱtoolsȱwereȱeffectiveȱandȱwhy?ȱ D22.19ȱWhatȱtoolsȱwereȱunworkableȱandȱwhy?ȱ D22.20ȱWhatȱtrainingȱtoolsȱareȱcurrentlyȱinȱplaceȱtoȱbringȱstaffȱonȱboardȱwithȱtheȱBCS?ȱ D22.21ȱWhereȱdoȱyouȱseeȱneedȱtoȱexpandȱonȱBCSȱtrainingȱtoolsȱinȱtheȱfutureȱandȱwhy?ȱ

AppendixȱHȱ–ȱInterviewȱguidelinesȱ

321ȱ

E.ȱWrapȱupȱ E23.ȱ Ifȱ youȱ buildȱ yourȱ businessȱ caseȱ asȱ aȱ globalȱ company,ȱ areȱ thereȱ significantȱ naȬ 5ȱ tionalȱdifferencesȱinȱtheȱBCSȱandȱifȱso,ȱwhatȱareȱthey?ȱ E24.ȱ Ifȱ youȱimplementȱyourȱ businessȱ caseȱ asȱ aȱglobalȱ company,ȱareȱ thereȱ significantȱ 5ȱ nationalȱdifferencesȱinȱtheȱBCSȱandȱifȱso,ȱwhatȱareȱthey?ȱ E24.1ȱ Whatȱ isȱ moreȱ importantȱ forȱ theȱ developmentȱ ofȱ theȱ BCS,ȱ theȱ industryȬȱ orȱ theȱ ȱ countryȬspecificȱbusinessȱenvironment?ȱPleaseȱexplainȱwhy.ȱ E24.2ȱWhereȱdoȱyouȱseeȱpotentialȱforȱimprovementȱinȱbuildingȱtheȱBCSȱinȱyourȱcomȬ ȱ panyȱandȱyourȱbusinessȱfunction?ȱ E24.3ȱHowȱshouldȱtheȱpotentialȱforȱimprovementȱinȱbuildingȱtheȱBCSȱbeȱexploited?ȱ

ȱ

E24.4ȱIsȱthereȱaȱpotentialȱforȱestablishingȱaȱconvincingȱBCSȱinȱeveryȱcompanyȱofȱyourȱ ȱ industry,ȱ underȱ anyȱ givenȱ economicȱ conditions,ȱ whichȱ canȱ beȱ identifiedȱ andȱ evaluȬ ated?ȱ E24.5ȱHowȱdoȱyouȱthinkȱcorporateȱfinancialȱperformanceȱinfluenceȱsustainableȱdevelȬ ȱ opmentȱactivitiesȱinȱyourȱcompanyȱinȱgeneral?ȱ Examplesȱofȱsustainabilityȱcriteriaȱdominatedȱbyȱeconomicȱcriteria.ȱ Examplesȱofȱeconomicȱcriteriaȱdominatedȱbyȱsustainabilityȱcriteria.ȱ E25.ȱIfȱyouȱhadȱtoȱnameȱonlyȱoneȱissue,ȱwhichȱoneȱwouldȱyouȱconsiderȱmostȱimporȬ 2ȱ tantȱtoȱdriveȱtheȱBCSȱthroughȱyourȱindustryȱandȱwhy?ȱ

ȱ

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322ȱ

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Appendicesȱ

AppendixȱIȱ–ȱQuestionnairesȱ Questionnaireȱ–ȱGMȱVersionȱ

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AppendixȱIȱȬȱQuestionnairesȱ

323ȱ

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ȱ

324ȱ

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Appendicesȱ

ȱ

AppendixȱIȱȬȱQuestionnairesȱ

325ȱ

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326ȱ

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Appendicesȱ

ȱ

AppendixȱIȱȬȱQuestionnairesȱ

327ȱ

Questionnaireȱ–ȱSOȱVersionȱ

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328ȱ

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Appendicesȱ

ȱ

AppendixȱIȱȬȱQuestionnairesȱ

329ȱ

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330ȱ

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Appendicesȱ

ȱ

AppendixȱIȱȬȱQuestionnairesȱ

331ȱ

ȱ ȱ

ȱ

332ȱ

ȱ

AppendixȱJȱ–ȱAbbreviationsȱinȱregressionȱtablesȱ

AppendixȱJȱ–ȱAbbreviationsȱinȱregressionȱtablesȱ Abbreviationȱ

Independentȱvariableȱ

Busȱteamsȱ

CSMȱtools:ȱBusinessȱteamsȱ

Capȱmarketsȱ

SDȱrolesȱofȱexternalȱstakeholders:ȱCapitalȱmarketsȱ

Commȱinvolvȱ

Initiatives:ȱCommunityȱinvolvementȱ

Conflȱauthȱ

Incidentsȱthatȱdamagedȱlegitimacy:ȱConflictsȱwithȱ authoritiesȱ

Coordȱcommitȱ

CSMȱtools:ȱCoordinationȱcommitteesȱ

Corpȱcultȱ

Barrier:ȱCorporateȱcultureȱ

Crossȱfunctȱcollaborationȱ

Structures:ȱCrossȬfunctionalȱcollaborationȱ

Devȱeconȱ

Regionȱofȱoperation:ȱDevelopingȱeconomiesȱ

Envȱissueȱ

Issues:ȱEnvironmentalȱissueȱsignificanceȱ

Envȱperfȱ

Initiatives:ȱImprovementȱenvironmentalȱperformȬ anceȱ

Envȱsupplyȱ

Initiatives:ȱImprovementȱofȱenvironmentalȱcondiȬ tionsȱinȱtheȱentireȱsupplyȱchainȱ

Impȱlegȱ

Legitimacy:ȱImportanceȱofȱlegitimacyȱ

Incentȱtoolsȱ

CSMȱtools:ȱIncentiveȱtoolsȱ

Managȱdevelopȱ

CSMȱtools:ȱManagementȱdevelopmentȱ

NorthȱAmȱ

Regionȱofȱoperation:ȱNorthȱAmericaȱ

NorthȱAmȱnatȱ

Nationality:ȱNorthȱAmericaȱ

Otherȱinitȱ

Initiatives:ȱOtherȱinitiativesȱ

Otherȱregȱ

Regionȱofȱoperation:ȱOtherȱregionsȱ

Socȱissueȱ

Issues:ȱSocialȱissueȱsignificanceȱ

Socȱsupplyȱ

Initiatives:ȱImprovementȱofȱsocialȱconditionsȱinȱtheȱ entireȱsupplyȱchainȱ

Stratȱtoolsȱ

CSMȱtools:ȱStrategyȱtoolsȱ

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