If companies are not engaging with their stakeholders, they can incur a number of costs or risks. Compare these to the benefits and opportunities, and you have a clear formula for business value. The reason is twofold. First, companies have not communicated about what they do in a relevant and clear way. In addition, they are doing many programs which are not relevant to their stakeholders.
In short, stakeholder engagement is a source of value creation or destruction in and of itself. Companies today need to have their antennae up for more types of risks and opportunities than ever before to maintain a competitive advantage. Over the past few years, a plethora of new communication technologies have come onto the market to reach stakeholders where they are: online.
Managed online stakeholder communities, a simple and sophisticated solution not yet widely adopted, are a great way to reach broader sets of stakeholders more frequently, proactively and relatively inexpensively. Where it differs is in its ability to be an invitation-only private conversation. Online communities are, arguably, the most attractive solution for proactive stakeholder engagement to expand the base of stakeholders, build trust and reputation capital, increase accessibility and responsiveness to emerging issues while providing an interactive brand experience.
An online stakeholder community can provide near-instant feedback on any number of issues. However, the real value of an online stakeholder community is the ability to have a two-way dialogue with those stakeholders. Interactions can take many forms across a full spectrum of engagement levels, including:. For example,. So after that, there has never been any doubt that this is important to customers and therefore we need to take it very seriously and live up to what we promise.
Numerous international NGOs have an interest in protecting human and environmental health from hazardous chemicals. Some of these NGOs have launched public campaigns against certain chemicals or the companies using them, while others have developed lists of chemicals they deem hazardous to raise awareness and stimulate action toward chemical restrictions.
And they could attack retailers simply because we [had hundreds of stores] and they could walk around campaigning outside. Interviewees from all nine companies described ways in which they kept abreast of NGO concerns and collaborated with them. I should admit that whatever NGOs are doing and whatever governments are looking at we take into account when we update the RSL. Others commented that NGOs were a particularly good source of chemicals information when regulations were lacking. A common approach to eliminating possibly hazardous chemicals well in advance of regulations involved following government activities worldwide to keep abreast of both proposed legislation and chemical-related investigations performed by government authorities; interviewees saw such actions as indications that new regulations could be imminent.
His preference was to restrict all chemicals of concern prior to designing new products, rather than having to continually redesign his products as legislators gradually introduced new restrictions. Other interviewees expressed a concern that there were not enough regulations covering the chemicals used in their products.
Regulations are a very slow process. Even after chemists and biologists say that a chemical is dangerous, it takes much, much too long before regulations come. Here the industry is proactive. We can implement this process immediately. Media i. Interviewees from 11 companies discussed how media influenced their chemicals management strategies. Although no company made chemicals management decisions exclusively based on media reports, media provided one route for them to learn about emerging chemical concerns and avoid potential publicity problems.
How do we engage stakeholders?
It is of course important to follow the media. Some interviewees admitted that fear of negative publicity was another reason to stay abreast and ahead of the latest news on chemicals. For instance,. We are a producer of outdoor equipment for outdoor people. Dangerous substances like fluorocarbons, for example, I learned about myself. What if my customers learned about them too?
And one day there will be a big television program speaking about fluorocarbons and this awareness will jump up very fast. I would feel terrible. Others described how their companies suffered from negative publicity in the past, and how this experience increased their efforts to minimize hazardous chemicals in their products. Negative publicity—that has happened in the past and caused harm.
And we know that these substances are not legislated in [those] products. But we do restrict [them] anyway. And then we would be on the black list. Some interviewees said that interactions with peer companies and industry organizations helped them learn about chemical-related issues of concern. Interviewees from five companies described challenges related primarily to standardization of chemical restrictions and supplier reporting tools.
These were particular challenges when many suppliers were shared among brand owner companies. Proactive companies were inclined to increase the number of chemical restrictions, but knew that it was difficult for suppliers to satisfactorily meet different requirements for many different brand owners. However, it was difficult to convince competitors to add voluntary chemical restrictions because they feared it would lead to stricter regulations.
An electronics interviewee elucidated the challenge of creating robust, common standards in an industry:. Our wish would be to get a common standard for material declarations. But we would wish [the standard] to be quite extensive. Not just matching the regulations, but longer, [including] information to cover future needs. I think one issue is the fear that if we start asking our suppliers openly about certain substances, then [those substances] will also be included in the legislation.
Influences from shareholders in this domain were rare.
Only two companies, both of which were publicly owned, mentioned shareholder influences on their chemicals policies. In both cases, protecting public and environmental health from possibly hazardous chemicals was requested by a group of shareholders. Interviewees from 15 companies said that their chemicals management strategies were developed, at least in part, because of the values held by upper-level management, and successful implementation of these strategies was possible because of strong support from the top.
You could say based on the policies from management that our products should be safe and healthy. The decisions to go beyond legal demands [in banning certain chemicals from our products]—top management has been involved. For instance, when we decided to move away from PVC, that came from top management.
Some interviewees discussed ways that upper management supported them in making decisions to ban chemicals, even when those decisions would be financially detrimental to the company. Interviewees from three companies emphasized that successful chemicals management depended on the values of individual employees at all levels.
For instance, an interviewee from a flooring company said,. I think people who work for the company, they have a certain pride. And I think they are very motivated as a result of that. I think that the good feeling that comes from that extends down throughout the whole depth of the company. Interviewees from eight companies felt that ethics and product safety were a part of their brand images. Restricting possibly hazardous chemicals from their products was a logical part of their approach. And with the environment, you can also link it to safety. Companies were evenly split among these three reasons, with some interviewees citing multiple reasons.
Many companies had come to realize, through various means, that certain chemicals could be dangerous in certain product applications and felt obligated to minimize use of possibly hazardous ingredients in their products. After the fad ended,. The company took all of this information that they had gathered and just applied it to every product. Another apparel interviewee described the numerous reasons, based on scientific data and company experience, that he and his colleagues were working to rid their products of PVC:.
The other piece against it would be some of the metals sometimes that are blended in order to color it—cadmium or lead are some examples of metals that can be used in pigments that might be in there. Now, none of these have to be in there, but originally they used to be. Other companies realized that they were large players with the power to have a huge impact on human and environmental health, as well as their supply chains, based on their chemical choices.
A retailer described his perspective:. We are [one of the] biggest retailer[s] in the world, so this gives us a huge responsibility. And that is the main reason. He further explained that because his company was so large, it had the opportunity to influence the rest of the supply chain with its chemicals management strategy.
This position of influence caused his company to weigh chemicals decisions very carefully. Interviewees from several companies saw their companies as leaders in various aspects of chemicals management. They exhibited pride in the fact that their companies led the way on numerous chemicals-related issues, such as being first in their industry with a code of conduct or a chemicals management policy based on the precautionary principle. Table 2 summarizes the reasons that consumer product companies provided for trying to minimize potentially hazardous chemicals in their products, along with a tally of how many companies gave each reason.
Based on the number of companies mentioning each category of reason—39, 52, and 36 for competitive advantage, stakeholder influences, and company values and ethics, respectively—it appears that stakeholder influences are the most important motivators for the companies involved in this research. While the companies participating in this research adopted proactive, voluntary strategies to manage hazardous chemicals beyond what was required by law, they typically did not advertise details about these strategies.
Interviewees from 13 companies chose to discuss their thoughts regarding the pros and cons of advertising their chemicals management efforts. Companies did not design their advertising to exploit consumer ignorance. We did some research. And [what] it says is. And the reason they were concerned about chemicals is. But they trust us to manage the chemicals for them. Another interviewee explained that apprising customers of the latest chemicals to be phased out of the newest product models is tricky because it can raise fears about the safety of older models:.
For most [of these possibly hazardous] substances, we think that in general the public is not aware that these things are in the [product]. When they [use the product], they take for granted that they are not exposed to anything hazardous. We had lead in our [product]?! Interviewees from two companies, which each had a section of their websites dedicated to their environmental-related projects and accomplishments, discussed the danger of bragging about their chemicals management successes.
In only three situations did a few companies believe that some chemicals-related advertising was prudent: when companies were pressured to do so by the public, when their competitors were doing it, or to differentiate their products. To cater to the small percentage of the public that expressed concern about chemicals in consumer products, interviewees stressed that they tried to be as transparent as possible about their chemicals strategies.
The founders of the two small apparel companies felt a need to differentiate their products to gain market share. Both incorporated the non-toxic attributes of their products into their branding and provided some details about product contents and the benefits of non-toxic products on their websites. He explained,. We can be a bit ahead of our competitors, but we need to move the consumers forward so that they make the right choices in order for us to move forward as well.
So we work on two fronts: we do the research to improve our products, and we try to educate the consumers so that they are willing to pay the price, because there is a price for a more environmentally friendly product. The preceding analysis of qualitative data gleaned from companies with proactive chemicals management policies makes a contribution to the literature and has implications for future research and practice.
Concentrating on companies that were acknowledged to be relatively exemplary by knowledgeable observers allowed for a focus on what is being done well rather than poorly. Our interviewees cited numerous ways in which their proactive chemicals management strategies gave them an advantage over competitors, for instance, by staying ahead of regulations, engendering trust with stakeholders, avoiding negative publicity, and providing an opportunity to differentiate their products. For the businesses involved in this study, managerial values played a role in deciding to take on the costs of voluntary chemicals management, apart from more strategic considerations such as building trust and managing risk; such actions can be said to have moral worth Vesilind et al.
Even though our sample was identified based on exemplary characteristics defined by industry observers and not selected randomly, the fact that the interviewees discussed values as being important supports the broader observation that managerial values make a difference with regard to social responsibility. Indeed, these findings confirm the relevance of managerial values in a variety of social responsibility domains.
In accordance with research on maintaining legitimacy with key stakeholders Suchman, , our analysis illustrates the importance of anticipatory thinking. The findings suggest that leading-edge companies should proactively reach out to certain critical stakeholder groups, such as NGOs, and alleviate their concerns rather than wait for these stakeholders to raise issues.
Once a stakeholder group has identified a concern with a particular company, the task of building or rebuilding trust is much harder than if the company had anticipated the issue and responded affirmatively and proactively. For example, improving relations with stakeholder groups such as NGOs required a strategy of disclosure and consultation as these stakeholders possessed the expertise to deal with technical issues in an informed way.
In line with the stakeholder literature on consultation e. The authors note, however, that more stakeholder engagement is not necessarily better or more responsible. Following Greenwood , stakeholder engagement on its own can be understood as morally neutral; for it to lead to more responsible behavior, stakeholder engagement must move beyond reporting as important as that is or simple strategic concerns to encompass respect for the interests and agency of stakeholders.
Here, while organizations do need to be conscious of stakeholder risk—consistent with externally oriented stakeholder engagement—the organizations represented in our sample seemed to be able to combine this concern with inward-focused engagement that engendered real dialogue and collaboration with key stakeholder groups whose concerns about chemicals were salient.
While companies worked to build trust with informed stakeholders here, governments and NGOs , they handled relationships with their customers differently; surprising and novel findings from this research thus relate to advertising and consumer relationships. Companies chose not to advertise their chemicals management strategies instead of using advertising to gain a potential competitive advantage. As previously mentioned, other researchers have reported company decisions not to advertise their CSR efforts because it does not improve sales and attracts attention from media and NGOs.
In the case of chemicals, the reasons appear to be more complex. While the companies involved in this research perceived that their chemicals management strategies helped them build or maintain trust with their customers, the interview results suggest that they were also avoiding distrust with this stakeholder group. The safety of chemicals in consumer products is a taken-for-granted issue; consumers assume that products are safe based on cognitive legitimacy, and companies do not want to disrupt this taken-for-grantedness and awaken scrutiny about product safety by advertising their strategies Suchman, Companies also wanted to avoid alarming customers about older model products that contained chemicals that were eliminated from newer models.
Analysis of these differentiated strategies for managing relationships with informed stakeholders and consumers suggests that the informed stakeholders act as de facto arbiters of trust between the consumer product companies and the public. This approach also puts the informed stakeholders in a position of power and allows them defend their interests better than otherwise would be the case—thus respecting their agency Greenwood, Often, trade-offs must be made in obtaining rich qualitative data. Such trade-offs may be especially prominent in situations where the information desired is non-public and sensitive and can only be obtained from busy, high-level business people.
The authors acknowledge a number of limitations to this study. A first set of possibly problematic issues related to the interviews. Often, this person was recruited as an interviewee. Sometimes, however, the authors ended up with two interviewees. Any of the above scenarios could pose problems. An interview with only one person per company provides only a single perspective on company operations. Furthermore, it was impossible to know if any interviewee was lying, exaggerating, or withholding information. A study like this one has not been performed before, and company information on chemicals in consumer products is considered sensitive; the researcher was grateful to the companies for granting these interviews and did not feel in a position to put conditions on the number of people participating per interview.
Even though the characteristics of the interviews were not ideal, the situation did not allow for changes, and the resulting data were rich and unique. Another possibly problematic issue related to the sampling method. As the participating companies knew that they had been recommended for the study by government agencies and NGOs, they may have been inclined to paint a particularly rosy picture of their companies. In addition, it is likely that there are other companies unknown to our government agency and NGO contacts that were also being proactive on chemicals management. Had the researcher contacted one of these companies without an introduction, and a representative agreed to be interviewed, it is impossible to know if or how the results would have been different.
Research based on grounded theory offers many opportunities for future scholarly work, and this study is no exception. Case studies could be used to try to understand how consultation could help companies resolve challenging problems such as chemicals management; for instance, a company might pursue a strategy of eliminating a possibly problematic chemical substance from its products by collaborating with a NGO or government agency. Such information might be gleaned through a large survey of consumers. This additional information could advance understanding of the trust—distrust relationship between consumer product companies and their customers.
Furthermore, characteristics related to the case of chemicals management, such as where risks to stakeholders are either unknown or poorly understood, are extendable to other areas of stakeholder management. One of the interviewees from this study said that she thought chemicals in consumer products would be an issue much more in the public eye by about As public awareness about chemicals in consumer products increases, information about company actions will likely be more publicly available, and this has the potential to significantly change the way consumer products are made and advertised.
Any of these suggested studies could be enhanced by use of mixed qualitative and quantitative methods.
Corporate Social Strategy : Stakeholder Engagement and Competitive Advantage - tyruvyvizo.cf
The authors thank Leonard Ortolano, Megan Schwarzman, Michael Wilson, and Donald Kennedy for playing instrumental roles in design of this research; in addition to these scholars, we thank Raymond Levitt, Shawn Berman, Michelle Westermann-Behaylo, and three anonymous reviewers for reviewing drafts of this manuscript. The authors are also grateful to the numerous individuals who gave their time to participate in this research or helped to identify appropriate participants.
Caroline E. Her current research and teaching are in the areas of chemicals and society, water quantity and quality, environmental policy, and sustainable development. Harry J. His current research interests include social capital theory, human rights obligations of multinational corporations, organizational bullying, human trafficking in global supply chains, and organizational compassion.
The companies included in this research had already established trust with certain government agencies and non-governmental organizations NGOs , and they believed the researcher to be vetted by the agency or NGO as trustworthy. This sampling approach resulted in interviews with key, knowledgeable employees. More than 20 companies were invited to participate in this research, and some declined to participate.
Because the information discussed in the interviews was considered to be sensitive, it was not a topic that some companies wanted to discuss with a researcher. Building on government agency and NGO experiences and relationships led to collection of a richer data set. It should be noted that there are likely other companies that practice proactive chemicals management, but the research was limited to those companies to which the authors had access and that agreed to participate in this study. Codes that related to fewer than two companies were not retained in the analysis.
A RSL is a restricted substance list. The authors note that the companies interviewed were nominated by government agencies and NGOs, so, as noted previously, the sample was not random.
Beyond corporate social responsibility: Integrated external engagement
The article was accepted during the editorship of Duane Windsor. The EPA has not officially endorsed this publication and the views expressed herein may not reflect the views of the EPA. The Morris K. Udall and Stewart L.
- Corporate social strategy : stakeholder engagement and competitive advantage.
- High Skills: Globalization, Competitiveness, and Skill Formation: Globalization, Competitiveness and Skill.
- Beyond corporate social responsibility: Integrated external engagement;
Landreth Fellowship provided additional support. National Center for Biotechnology Information , U. Business and Society. Bus Soc. Published online Jun Scruggs 1 and Harry J. Van Buren, III 2. Van Buren, III. Author information Copyright and License information Disclaimer. Email: ude. Abstract Scholars have studied the various pressures that companies face related to socially responsible behavior when stakeholders know the particular social issues under consideration.
Keywords: chemicals, consumer products, corporate social responsibility, trust, stakeholders, competitive advantage, business ethics. Motivations and Pressures for Corporate Responsibility The legitimacy of corporate social responsibility CSR , including domains such as environmental responsibility, has long been contested by economists and other observers. External stakeholder pressures Companies face pressures from a variety of external stakeholders to behave in a socially responsible manner.
Participant Selection 2 In-depth, semi-structured interviews were conducted on condition of anonymity with representatives from 20 multinational consumer product companies. Companies The participating companies were selected from a range of industry sectors to see whether common themes emerged regarding reasons for adopting voluntary chemicals management strategies. Table 1. Participating Company Descriptors. Telecommunications company based in Sweden.
IT company based in the United States. Apparel Apparel retailer with headquarters in the United States. Designer and retailer of clothing based in the EU. Clothing retailer based in the EU. Apparel company based in the United States. Small outdoors clothing and equipment company based in Sweden. Engage in dialogue with employees about CSR programs.
Engage in dialogue with activists about CSR programs. Conduct workshops or town-hall meetings to build consensus for addressing CSR issues. Make changes to your CSR programs based on activists' comments. Make changes to your CSR programs based on employees' comments. Incorporate the interests of the communities where you operate. Mitigate negative publicity. Anticipate social concerns.
Anticipate social pressure. Respond to social pressure. Take a stance on issues. Respond to threats. Transform business portfolio to align with customer demand. Principal Axis Factoring with Varimax rotation. Primary loadings on each factor are in bold type. CSR related goal achievement: Following the CSR communication strategy assessment, respondents were also asked to self-assess the degree to which their CSR program has had a positive impact on each goal on a 5-point scale from 1 not at all to 5 a great deal.
The items for CSR goal achievement were drawn from theoretical and empirical research e. Results 4. The initial 19 items of CSR communication strategies were analyzed with EFA to identify the underlying factor structure in the item pool and to drop unrelated or cross-loading items on each core factor structure. Principal axis factoring PAF method was chosen because we assumed the two factors to be independent and to be equally loaded on each latent structure.
The rotated factor loadings are presented in Table 1. Each factor has an eigenvalue of more than one CSR engagement, 8. An exploratory factor analysis using MLFA was performed with promax rotation to investigate the factors of the measuring instrument. It is notable that employee-related CSR goals were separated from other business goals. It is notable that improving relationships with key stakeholders and enhancing corporate reputation were loaded on economic goal achievement.
Items Factor 1: Business goal Factor 2: Community goal Factor 3: Employee goal achievement achievement achievement Increasing competitive advantage 0. CSR expectations 0. MLFA with promax rotation. We also entered several widely used communication channels as another block of independent variables. The hierarchical regression analyses shown in Table 3 were based on the standardized factor scores created through factor analysis for CSR goal achievement and CSR Communication strategies, respectively.
However, other communication channel variables i. Perhaps, the lack of correlation of these variables with the dependent variable in M1c is due to the multicollinearity problem. Discussion 5. We also examined the roles of functional i. In RQ2, we posed a question of what goals the large U. Although we assumed two-factor CSR goals, corporate executives who participated in the current study distinguished community and employee related CSR goals from general business-oriented goals.
First, the large U. The factor analysis found that relationship and reputation goal achievement items loaded pre- dominantly on the business factor. Second, when it comes to non-economic goals, managers and executives of big U. Greenwood Public Relations Review 43 — are perceived separately from traditional business goal achievements. We also found that CSR responsiveness strategy was positively associated with business and community goal achievement but not with employee goal achievement.
It is noteworthy that the more engagement-based strategic communication tasks are performed, the higher employee-related goals are reportedly achieved. Managerial implications We believe that the stakeholder engagement strategy carries some implications for ethics and accountability in CSR commu- nication. Addressing a special challenge corporations face in communication CSR, Coombs and Holladay warned that the company might get backlash if stakeholders viewed it as overly self-promotional. A limitation of the current study comes from the inventory of our CSR goals.
To some extent, we relied on industry reporting mechanisms, and ISO in particular, to serve as a surrogate for social goals. In retrospect, this should be addressed directly in future questionnaire development. Future research will need to delve into these social goals, along with business, employee, and community goals. While we have not considered stakeholder information strategy as a distinctive strategic choice for the big U.
Greenwood Public Relations Review 43 — Regarding the impact from communication channels, we did not consider earned media such as publicity in print and electronic media. As reported in the answer to RQ3, only print ads among all measured paid and owned media had a positive impact on the business related goal achievement. We call for future research that includes measures for earn media along with paid and owned media.
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We believe this study has provided a previously unseen glimpse into the minds of CSR managers in the U. Al- though this study focuses more on the impact of stakeholder engagement strategy, executives of large U. However, the stakeholder engagement strategy turned out to be the sole contributor to achieve employee related goals. On the other hand, the results imply that corporate executives tend to believe that enacting employee engagement in CSR communication will be stronger strategy to attract and retain talented employees than using CSR as issues management tool.
References Aguilera, R. Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, 32 3 , — Aksak, E. Public Relations Review, 42 1 , 79— Carroll, A. The business case for corporate social responsibility: A review of concepts, research and practice.
International Journal of Management Reviews, 12 1 , 85— Clark, C. Public Relations Review, 26 3 , —