chapter  1
24 Pages

The Interchange of Societal Values and Beliefs, Trust, Competitiveness and Expectations within CSR and Sustainability

Social responsibility within business is a complex circumstance and is not focused solely on increasing profits and enhancing reputation management. “Self-image concerns” may drive how individuals and groups promote social responsibility (Benabou and Tirole, 2010: p. 3). On the other hand, “when everyone behaves in a socially responsible way, no one gets credit for it” (ibid., p. 7). Thus, changing societal expectations require corporations to critically evaluate social trends and social responsibility in a “competitive world” (Uddin, Hassan and Tarique, 2008: p. 2000). Where do societal expectations originate and how do they fuse to become accepted by the corporation? It can be argued it is due to unregulated CSR reporting (Mersereau and Mottis, 2011). Society is socially constructing global social responsibility rules and frameworks for communicating corporations’ social responsibly such as the International Labor

Organization (ILO), UN Global Compact, Global Reporting Initiative (GRI), Dow Jones Sustainability Index (DJSI), Socially Responsible Investing (SRI), Integrated Reporting (IR) and so on. These frameworks seek to institutionalize CSR on a global level through the creation of norms, rules and standardized procedures for CSR thereby creating “isomorphic pressure to institutionalize CSR in business” (Brammer, Jackson and Matten, 2012). Accordingly, if society expects corporations and governments to go beyond compliance then society must follow. Is social responsibility just another formal legal process whereby non-criminal forms of responsibility are socially acceptable in society? Bernabou and Tirole (2010) suggest economic agents may want to promote values that are not shared by lawmakers. Furthermore, “human sociality” highlights the tendencies of individuals to seek social status, to build and maintain social identities, and to cooperate with others under certain conditions (World Bank Development Report, 2015: p. 42). Since social preferences are heterogeneous, it is inevitable that some consumers, investors or workers’ values will not be fully reflected in policy. Clearly, social responsibility encompasses values that must be changed. Values have always played a primary role in shaping society (Wartick and Wood, 1998). Societal norms and values play an integral role in business success. However, corporations have the same citizenship expectations as society (Freeman, 2002). Therefore, it can be argued, business values are simply a reflection of society’s values. Further to this, Porter and Kramer’s “shared value” strategic approach reveals how companies try to meet local communities’ expectations (2006: p. 1). There is further logic in that culture distinguishes corporations from each other (Schein, 1985) just as local community cultures select their preferred culture. Consequently, corporations and local communities have heterogeneous values and preferences that may be shared and diffused. Likewise, “society’s values and current levels of knowledge are reflected in companies’ activities and companies are judged according to current standards” (Van Marrewijk and Were, 2003; Noren, 2004). However, Kumar and Kumar propose the “non-existence of markets for many biological resources imply that the social value of biological resources can’t be derived from simple aggregation of their values to individuals in society, the sum of their private values” (2007: p. 812). Therefore, value judgments are necessary to determine uncertainties, risk and lack of knowledge (Weterings and Opschoor, 1994). In contrast, Swanson’s (1995) research findings on corporations’ value-driven (Maignan and Ralston, 2002) CSR initiatives are not dependent upon external social pressures. Further to this, should corporations integrate society’s values or should corporations limit society’s values and demands as these values may reduce a firm’s capacity to progress and compete?