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Highlights del progetto “RESPONSE”

Mario Minoja Università Bocconi e Università di Modena e Reggio Emilia Workshop CSR Manager Network CSR & CDA Milano, ALTIS (Università Cattolica), 16 giugno 2009

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Index

1.

2.

3.

4.

5.

Research goals and methodology (Mis)alignment between managers and stakeholders about the concept of CSR Alignment Matters …. Four cognitive gaps Explanatory factors of alignment Recommendations for managers

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1. Research goals and methodology

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The Response research team

Maurizio Zollo, INSEAD (now U. Bocconi), Academic Director • • • • • • • • • • • • • • Lourdes Casanova, INSEAD Susan Schneider, HEC U. Geneva/INSEAD Dirk Le Roy, Sustenuto/INSEAD Valeria Berchicci, INSEAD Donal Crilly, INSEAD Maria Gradillas, INSEAD Morten Hansen, INSEAD Joanne Lawrence, INSEAD Sophie Linguri, INSEAD Steven White, INSEAD Pamela Sloan, HEC Montreal/INSEAD Michael Yaziji, IMD/INSEAD Wolfgang Hackl, Impact Shantanu Reinhold, Impact • • • • • • • • • • • • • Peter Neergaard, CBS Kai Hockerts, CBS Esben Pedersen, CBS Adri Tolstrup, CBS Katrine Goul Dueholm, CBS Hanne Poulsen, CBS Antonio Tencati, U. Bocconi Francesco Perrini, U. Bocconi Mario Minoja, U. Bocconi Stefano Pogutz, U. Bocconi Alessandro Zollo, U. Bocconi Wojciech Gasparski, LKAEM Anna Lewicka-Strzalecka, LKAEM

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Research goals

External factors

•

Industry

•

Region

•

External pressure Cognition & Cognitive Alignment CSR Results

•

SRA evaluations

•

Stakeholders Internal factors

•

Origins

•

Leadership

•

Strategic position

•

Org. structure

•

CSR motivation

•

CSR initiative

1. Understand how managers and their stakeholders think about the social responsibilities of corporations 2. Measure the degree of cognitive alignment between managers and their stakeholders across a range of CSR questions 3. Understand how alignment is related to social performance 4. Identify the explanatory factors of alignment

Research Methodology

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Matched pair design

   1 pair or triad per industrial sector Matched by: product, region, financial performance, size Variance maximized by:

social

performance 

Data gathering approach

1.

“Fact-finding day”: evolution of CSR practices 2.

3.

Interviews: 25 semi-structured interviews per company (in total, 427 interviews: 208 managers and 219 stakeholders)   15 stakeholders: inner- and outer-ring 11 managers: 6 corporate roles + 4 country managers Web-based survey of randomly selected 1000+ managers   Organization level: replicate interview protocol across levels/contexts Individual level: bridge individual and organizational levels of analysis

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2. (Mis)alignment between managers and stakeholders about the concept of CSR

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Cognitive Framing of CSR Issues

What is the social responsibility of corporations?

Product focus Process focus

‘Do no harm’ Product impact  Ethical value of product  Impact on user’s well-being  Consequences of incorrect use ‘Do good’

17%

Product access  For survival (food)  Health (medicine)  Poverty (banking)  Education (ICT)

7% 11% 6%

  Process impact  Environment  Supply chain  HR/human rights abuses Lobbying, bribing, tax elusion Anti-competitive behaviour

63% 42%

Process engagement  Advancement of human rights  Community support  Regional development  Human development

13% 41% Frequency of CSR issues in managers’ responses Frequency of CSR issues in stakeholders’ responses

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100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% St ak eh ol de rs M an ag er s

The Issue Gap

Do no harm Do good Prevalent managerial understanding of CSR is doing no harm.

Stakeholders are more likely to define CSR in terms of doing good.

Cognitive Framing of the Scope of CSR

“Fair play in society, towards employees, towards environment. Meet the law.”

(Manager, chemicals)

“CSR is doing well in one's own business, having in mind the stakeholders”

(Manager, banking )

“Creating programs to help communities in education, health care and environmental protection.”

(Stakeholder, pharma)

“Corporations need to position themselves as responsible corporate citizens on the world stage – at the risk of taking positions not widely shared in the business community.”

(Stakeholder, natural resources)

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Narrow, firm centric scope of responsibility Broader, societal scope of responsibility

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Scope and Sophistication of CSR Perspectives

Firm View Stakeholder View World View Narrow

Compliance and risk management (reputation)

41% 20%

Shareholders, employees, customers

12% 4%

Industry-specific global issues (e.g. health for pharma)

11% 26% Broad

Moral duty (give back to society), ethical boundaries Suppliers, partners, government, communities, NGOs, unions, SRAs, media MDGs, climate change, hunger, health, poverty, education, human rights

23% 15% 8% 28% 4% 8% Frequency of CSR issues in managers’ responses Frequency of CSR issues in stakeholders’ responses

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3. Alignment Matters …. Four cognitive gaps

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Dimensions of Alignment

Cognitive gap type

Gap 1: Stakeholder identification Gap 2: Risk ranking

Measurement

Order in which interviewees mention stakeholders

Meaning

Salience of stakeholders Ranking of stakeholders based on their perceived impact on the company Perceived ‘risk’ posed by stakeholders Gap 3: Responsibility ranking Gap 4: Perceptions of Corporate Social Performance (CSP) Ranking of stakeholders based on the perceived impact the company has on them Level of social performance as judged by interviewees Perceived responsibility toward stakeholders Perceptions of CSP

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Alignment Matters for Social Performance!

Manager-stakeholder average gaps

40% 35% 30% 25% 20% 15% 10% 5% 0%

St ak eh ol de r i de nt ifi ca tio n R is k R es po ns ib ilit y Pe rfo rm an ce Companies w ith low er social performance Companies w ith higher social performance Across all dimensions, the highest social performers have greater cognitive alignment (i.e. smaller gaps) with their stakeholders.

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Importance of Alignment for Social Performance

Even controlling for industry, companies with the highest social performance have the lowest manager-stakeholder gaps.

Industry High Tech Stakeholder Identification



Risk



Responsibility



Performance



Pharma Chemicals Food Energy Natural Resources

                

Banking

 

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4. Explanatory factors of alignment

Explanatory Factors of Alignment

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Factors Innovation business case Differentiation strategy Integration of corporate responsibility External pressure Market dynamism Influential CSR department Strong industry norms Stakeholder engagement Leadership commitment Strong organisational values Value-based firm origins Strong evidence Some evidence No clear link

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Innovation business case for CSR

40% 20% 0%

HIGHER NMO LOWER NMO Gap 1 25% 26% Gap 2 28% 30% Gap 3 25% 34% Gap 4 1% 6%

•

Firms that emphasise new market opportunities as motivation for CSR exhibit positive cognitive alignment with their stakeholders

opportunities.

.

– Companies motivated by new market opportunities seem to have a greater average cognitive alignment across gaps 3 and 4, and/or – cognitive alignment encourages the firm to explore new market

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Differentiation strategies

40% 20% 0%

Differentiation Cost efficiency Gap 1 25% 25% Gap 2 26% 33% Gap 3 27% 32% Gap 4 3% 9%

•

Differentiation strategies improve the cognitive alignment between managers and stakeholders (narrower cognitive gaps).

– Differentiation entails tailoring products to meet complex customer requirements, thus leading to greater sensitivity towards stakeholder interests and more openness in the search for solutions that prioritise their satisfaction.

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Integration of corporate responsibility into business processes

40% 20% 0%

HIGHER IBP LOWER IBP Gap 1 25% 26% Gap 2 28% 20% Gap 3 25% 34% Gap 4 1% 6%

•

The greater the cognitive alignment between managers and stakeholders (narrower cognitive gaps), the greater the integration of CSR practices into business processes (except for gap 2) .

– The achievement of the integration of CR into business processes (e.g.

investment criteria, incentive systems, sales practices, etc.) requires and produces an enhanced understanding of stakeholders' interests and priorities.

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Further explanatory factors of alignment (some evidence)

There is some evidence that alignment is associated also with:

• • • • •

external pressures:

firms that experience more external pressure visible; have lower sequentiality gap and closer understandings between stakeholders and managers on the issue of how stakeholders impact on the company. This may suggest that, under conditions of high external stakeholder pressure, the stakeholders who exert most impact are especially

market dynamism:

the effect related to the sophistication of stakeholders (in Anglo-Saxon countries) is stronger than that of the corporate managers;

industries

Saxons); characterised by high levels of change (like Anglo-

regions

marked by faster economic change (like Anglo-Saxons);

influential CSR department

: the greater influence of CSR departments and executives, the greater cognitive alignment.

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Factors of alignment with no clear link to alignment (“non-findings”)

• Strong industry norms; • stakeholder engagement; • commitment of leadership to CSR; • value-base firm origin (less ability or incentive to learn and to adapt?); • strong organisational values.

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5. Recommendations for managers

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Recommendations for corporate leaders and business managers

• • •

Reframing CSR

– from “Do No Harm” to “Do Good” – from a Firm-centric to a World-centric view of the role of their organisation (to be conceived as a we can do to them”.

global citizen

).

– “broaden out”, expanding the scope of “responsibility” to include all the audiences for which their company has a significant impact.

– reframing their thinking about CSR from “what they can do to us” to ”what

Reframing “Why CSR”

that CSR brings to your through a “business case” based on the value company’s innovation and change processes.

Bridging the “gap”

, through

:

– business strategy, towards a competitive posture that prioritises differentiation, innovation and customisation of a – integration of CSR principles in Business Processes. All the fundamental processes that make the organisation firm’s products/services; “work” (resource allocation, people hiring and motivation, procurement of resources, marketing and sales of products, etc.), as well as each functional activity should be adapted to fully embed the consideration of its potential social impact.

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Recommendations for CSR managers

• • •

Reframe the problem: from external engagement to internal change.

– CSR managers should refocus their attention and their time/resource commitment away from handling external communication processes (beyond a minimum requirement, of course) and focus on the complexities of championing internal change initiatives aimed at mainstreaming CSR in all relevant business and strategic processes.

Redefine your role

stronger .

– If CSR specialists are to assume a role of champions (or at least “co champions”) of internal change, then they will need to obtain a much “voice” and a more central position with respect to the organisational power structure, to have a real chance to succeed.

Rethink the Role of External Audiences: from Counterparts to Partners in Driving Internal Change.

– To rethink the role of the external audiences you deal with on a regular basis, as potential partners in the “uphill battle” that the CSR “champions” are fighting to gain internal legitimacy and drive the internal change agenda; – a new type of engagement seems to be in fact necessary with the stakeholders, moving beyond the done inside the organisation.

“listening” and “telling” (production of information) and towards active collaboration in changing the way things are