A Demand for Genuine Csr

NORGES HANDELSHØYSKOLE Bergen, June 2010 Master thesis within the major profile of International Business Thesis supervisor: Professor Knut Johannessen Ims A DEMAND FOR GENUINE CSR A CASE STUDY OF TWO SCANDINAVIAN COMPANIES By Malin Austrheim Dahle “This thesis was written as a part of the Master of Science in Economics and Business Administration at NHH. Neither the institution, the advisor, nor the sensors are - through the approval of this thesis - responsible for neither the theories and methods used, nor results and conclusions drawn in this work." 1 Abstract This study aims to shed new light on Corporate Social Responsibility (CSR) by developing tools and concepts that can be fruitful in analysing a company‟s CSR practice by distinguishing between different dimensions of CSR. Of particular interest is the distinction between instrumental and genuine CSR. Four dichotomous concepts, or dimensions, will be identified: weak - strong, strategic - genuine, narrow - broad and PR profile - No PR profile. In order to demonstrate the practical relevance of these concepts, they will be applied to two illustrative cases; TrygVesta and Rieber & Søn. The CSR practice of these two cases will be analysed and evaluated in relation to the four dimensions. However, the tools and concepts developed in this study are also applicable on a general level and may be fruitful for other companies that wish to evaluate or improve their CSR practices. 2 Foreword I have always been of the opinion that corporations have a responsibility to behave decently and to care for the environment and community in which they operate. However, a serious interest in CSR was aroused during a Master‟s course at NHH in spring 2009. Already then, I decided to write my Master‟s degree thesis on this important topic. The decision to do a case study on two Scandinavian companies was taken partly based on a suggestion from a friend who works in one of the companies and partly in cooperation with my supervisor. I would therefore like to thank my friend Ann-Sophie Daryapeyma for helping me to establish contact with TrygVesta. I also wish to thank the two case companies in particular, TrygVesta and Rieber & Søn, for their valuable time and cooperation. Without their assistance this study would not have been possible. Last but not least, I would like to thank my supervisor, Knut Johannessen Ims, for his constructive advice, support and encouragement during the process. Thanks also to Elisabeth Fossum for her assistance in proofreading my work. It has been of great help. Bergen, 8 June 2010 Malin Austrheim Dahle 3 TABLE OF CONTENTS 1. INTRODUCTION ........................................................................................... 7 1.1 Research question ............................................................................................................. 9 1.2 Limitations ...................................................................................................................... 10 2. LITERATURE REVIEW ............................................................................. 11 2.1 Definition of CSR ........................................................................................................... 11 2.2 Historical background ..................................................................................................... 12 2.3 The content of CSR ........................................................................................................ 13 2.3.1 The components of CSR .......................................................................................... 13 2.3.2 Types of CSR activities ........................................................................................... 14 2.3.3 CSR versus business ethics ...................................................................................... 14 2.3.4 Genuine versus instrumental ethics ......................................................................... 15 2.4 Arguments for CSR ........................................................................................................ 15 2.4.1 The moral status of the corporation ......................................................................... 16 2.4.2 The moral argument for CSR ................................................................................... 17 2.4.3 The business argument for CSR .............................................................................. 19 2.5 Arguments against CSR .................................................................................................. 21 2.5.1 The shareholder argument ........................................................................................ 21 2.5.2 CSR and socio-economic development ................................................................... 22 2.6 Stakeholder theory .......................................................................................................... 22 2.7 Social reporting ............................................................................................................... 24 2.8 Ethical theories ............................................................................................................... 25 2.8.1 Aristotle and the ethics of virtue .............................................................................. 25 2.8.2 Kant and deontological ethics .................................................................................. 26 2.8.3 Consequentialism/Utilitarianism .............................................................................. 27 2.8.4 Løgstrup and the ethics of proximity ....................................................................... 28 2.8.5 Ethics and the environment ...................................................................................... 28 2.8.6 Ethics, sustainability and distributive justice ........................................................... 29 2.9 Criticism ......................................................................................................................... 30 3. FRAME OF REFERENCE .......................................................................... 31 3.1 The responsibilities of the corporation ........................................................................... 31 3.2 A strategic approach to CSR .......................................................................................... 32 4 3.3 An ethical perspective on strategic CSR ........................................................................ 33 3.4 The paradox of ethics management ................................................................................ 34 3.5 A framework for analysing CSR .................................................................................... 36 3.5.1 Weak versus Strong CSR ......................................................................................... 37 3.5.2 Strategic versus Genuine CSR ................................................................................. 38 3.5.3 Narrow versus broad CSR ....................................................................................... 39 3.5.4 PR profile versus No PR profile .............................................................................. 40 4. METHOD ....................................................................................................... 41 4.1 The case study as a research strategy ............................................................................. 41 4.2 Methodological choice ................................................................................................... 43 4.3. Choice of cases .............................................................................................................. 43 4.4 Sources of evidence ........................................................................................................ 45 5. PRESENTATION OF CASES ..................................................................... 47 5.1 TrygVesta ....................................................................................................................... 47 5.2 Corporate Social Responsibility in TrygVesta ............................................................... 48 5.2.1 Definition ................................................................................................................. 48 5.2.2 Why CSR? ............................................................................................................... 49 5.2.3 Organisation ............................................................................................................. 49 5.2.4 Scope ........................................................................................................................ 50 5.2.5 Benefits of CSR ....................................................................................................... 56 5.2.6 Challenges and success factors ................................................................................ 56 5.3 Rieber & Søn .................................................................................................................. 57 5.4 Corporate Social Responsibility in Rieber & Søn .......................................................... 58 5.4.1 Definition ................................................................................................................. 59 5.4.2 Why CSR? ............................................................................................................... 59 5.4.3 Organisation

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