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Corporate Social Contract: an Analysis of Corporate Perspectives on the Concept

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Corporate Social Contract: an Analysis of Corporate Perspectives on the Concept Corporate Social Contract: An Analysis of Corporate Perspectives on the Concept Authors: Ganna Vlyalko Rummenigge Wilson Supervisor: Ulrica Nylén Student Umeå School of Business and Economics Autumn semester 2012 Master thesis, 30 hp Acknowledgement First, and foremost, we would like to thank God for His powerful hand in our lives and for the wonderful gift of friendship that He has blessed us both with. We would like to thank our respective parents, both alive and deceased, for their dedication and encouragement throughout our lives. We would like to thank our elder siblings for their consistently raising the bar and leading through example thus assisting our parents in instilling in us the culture of hard work and pronounced ambition from a very young age. We are grateful to our respondents and the organizations that permitted interviews and so we would like to express our appreciation to them and wish them all the very best for the future. We would also like to take this opportunity to thank our supervisor, Ulrica Nylèn, without whose guidance, input, and direction the quality of our thesis may have been compromised. We are truly proud of the product of our learning experience and we wish future students similar ones here at Umeå University. Ganna Vlyalko & Rummenigge Wilson 7th of November, 2012. Abstract The purpose of our thesis was to comprehend how organizations approach the Corporate Social Contract that exists between them and society. The empirical data was gathered to reflect a comprehension of the Corporate Social Contract as a whole and as the product of its components, i.e.: Corporate Social Responsibility and Reciprocity. Other concepts interconnected with our main topic were also used in order to better comprehend the concept of Corporate Social Contract as well as our interpretations of the collected empirical data. These interconnected concepts were Corporate Sustainability, Corporate Citizenship, Shared Value, and Willingness to Pay. The research work was approached from the qualitative standpoint. Considering that the perspective of our thesis was an organizational one, we approached 5 organizations within which to conduct interviews on the stated topic. Our aim was merely to understand the organizational perspective and approach to the concept of Corporate Social Contract, not to compare these perspectives and approaches. Each of the chosen organizations met certain basic criteria mentioned in our work that permitted us to include them in our sample. The thesis‘ conclusion reflected various organizational approaches towards Corporate Social Contract from the angle of Corporate Social Responsibility as well as varying perspectives on, and expectations of, society‘s reciprocity. The study has shown that our view of the equal importance of the concepts of CSR and Reciprocity, within the framework of CSC fulfillment, is an under investigated area in both academics and in the practical business world. This has also been supported by our interviewees‘ view on expectations, placed on society, as an implicit area in their organizations‘ policies. Through our study we have uncovered practical reasons as to why CSC cannot be fulfilled all the time, how expectations between both organizations and society differ from project to project, and the importance of societal reciprocity in the aim of CSC fulfillment. And thus, through our study, we endeavor to comprehend how organizations fulfill the CSC and how they view society‘s attempts to fulfill its end of the contract. As a result of our work, future students and researchers stand to gain insights into the mentalities of organizations that hail from different industries and are based in different parts of the world. Future students and researchers could also derive their own interpretations of our respondents words based on the culture prevalent in the country in which the respondents are based. Apart from this, one can note that the respondents were also from a range of departments and their professionally skewed perspective on our topic makes for an interesting contribution to those seeking insights into our topic and those interlinked. Key Words: Corporate Social Contract, Corporate Social Responsibility, Reciprocity, Corporate Sustainability, Corporate Citizenship, Shared Value, and Willingness to Pay. TABLE OF CONTENT 1. INTRODUCTION .................................................................................................................. 1 1.1. Background ................................................................................................................................. 1 1.2. Problem discussion and research question ................................................................................... 2 1.3. Thesis purpose ............................................................................................................................ 3 1.4. Area of contribution .................................................................................................................... 4 1.5. Theoretical framework ................................................................................................................ 4 1.6. Limitations .................................................................................................................................. 6 1.6.1. No Focus on any particular industry or desire to compare CSCs ..................................................... 6 1.6.2. No stakeholder grouping ................................................................................................................. 7 1.6.3. Organizational perspective .............................................................................................................. 8 1.7. Thesis disposition ........................................................................................................................ 8 2. LITERATURE REVIEW .................................................................................................... 10 2.1. Corporate social contract ............................................................................................................ 10 2.1.1. Application of ‘social contract’ to business context ...................................................................... 10 2.1.2. CSC development in business ethics domain ................................................................................ 10 2.1.3. CSC discussion ................................................................................................................................ 13 2.1.4. Our understanding of CSC ............................................................................................................. 15 2.1.5. Summary of CSC............................................................................................................................. 17 2.2. Corporate Social Responsibility ................................................................................................... 17 2.2.1. Historical development of CSR (the pre-conceptualization period) .............................................. 17 2.2.2. CSR definitions ............................................................................................................................... 20 2.2.3. CSR and companies’ engagements ................................................................................................ 26 2.2.4. CSR motives: Profit, Ethics, Shared Value ...................................................................................... 27 2.3 ‘Reciprocity’ ................................................................................................................................ 31 2.3.1. Willingness to Pay and the concept of Distributional Fairness ...................................................... 32 2.3.2. Accountability in Reciprocity ......................................................................................................... 35 2.4. Other relevant concepts that affect Reciprocity, CSR, and thereby CSC ........................................ 36 2.4.1. Corporate Sustainability ................................................................................................................ 36 2.4.2. Corporate Citizenship .................................................................................................................... 37 2.5 Summary ..................................................................................................................................... 38 3. METHODOLOGY ............................................................................................................... 40 3.1 Research philosophy .................................................................................................................... 40 II 3.2. Research approach ..................................................................................................................... 40 3.3. Research strategy ....................................................................................................................... 41 3.4. Sampling .................................................................................................................................... 42 3.4.1. Choice of countries ........................................................................................................................ 43 3.4.2. Choice of industries ......................................................................................................................
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