Focusing on Value: Reconciling Corporate Social Responsibility,Sustainability and a Stakeholder Approach in a Network World

Drucker, P. , ‘The New Meaning of Corporate Social Responsibility’, California Management Review, 26, 1982, pp. 53–63.

See, for example, the Environics Global Public Opinion research on public attitudes to globalization prepared for the World Economic Forum in January 2002 (available from www.environicsinternational.com). Conducted in 25 countries, more than 6 out of 10 people thought globalization was on balance a positive influence for them, but more than half disagreed globalization was good for developing countries. G7 countries varied 1.1:1 (France) to 3.9:1 (Germany) favourable: unfavourable on globalization.

See Prahalad, C.K. and Hart S. L. , ‘The Fortune at the bottom of the Pyramid’, Strategy + Business, 26, 2001, pp. 2–14, and Mintzberg H. , Simons R. and Basu K.K. , ‘Beyond selfishness: Working Draft Paper’, Available from http://www.henrymintzburg.com (accessed 19 July 2002).

See Jones T. , ‘Instrumental Stakeholder Theory: A Synthesis of Ethics and Economies’, Academy of Management Review, 20, 1995, pp. 92–117; Donaldson T. and Preston L.E. , ‘The Stakeholder Theory of the Corporation: Concepts, Evidence, Implications’ Academy of Management Review, 20, No. 1, 1995, pp. 65–91; Donaldson T. , ‘Making Stakeholder Theory Whole’, Academy of Management Review, 24, No. 2, 1999, pp. 237–241; Berman S.L. , Wicks A.C. , Kotha S. , and Jones T.M. , ‘Does Stakeholder Orientation Matter? The Relationship Between Stakeholder Management Models and Firm Financial Performance’, Academy of Management Journal, 42, No. 5, 1999, pp. 488–506; Freeman, R. E. ‘Divergent Stakeholder Theory (A response to Jones and Wicks 1999)’, Academy of Management Review, 24, No. 2, 1999, pp. 233–236; Freeman, R. Edward . ‘Five Arguments in Stakeholder Thinking’, paper presented at the Academy of Management, Washington, D. C. 2001.

Freeman R. E. , ‘Business Ethics at the Millennium’, Business Ethics Quarterly, 10, No. 1, 2000, pp. 169–180.

The literature on intangible value is well developed and includes references to intellectual capital, human capital, social capital and so on; equally well developed is the literature on how CSR, Corporate Social Performance and environmental performance correlate with economic value; we return to this literature later in the article. But according to McWilliams and Siegel (2001), CSR investments have seldom been considered in the context of cost-benefit analysis or market-based decision making. See McWilliams, A. and Siegel, D. ‘Corporate Social Responsibility: A Theory of the Firm Perspective’, Academy of Management Review, 26, No.1, 2001, pp. 117–127.

Fukuyama, F. , The Great Disruption: Human Nature and the Reconstitution of Social Order, New York: The Free Press, 1995; Friedman, T.L. The Lexus and the Olive Tree, New York: Random House, 2000; Reich, R.B. The Future of Success, New York: Knopf, 2001.

Tsai, W. , ‘Knowledge Transfer in Intraorganizational Networks: Effects of Network Position and Absorptive Capacity on Business Unit Innovation and Performance’, Academy of Management Journal, 44, No. 5, 2001, pp. 996–1004; Mulgan, G. , Connexity: Responsibility, Freedom, Business and Power in the New Century, London: Vintage, 1998; Castells, M. , The rise of the Network Society, Maiden: Blackwell Publishers, 2000; Kanter, R.M. , Evolve! Succeeding in the Digital Culture of Tomorrow, Boston, MA: Harvard Business School Press, 2001.

Evans, P. and Wurster T. S. , Blown to Bits: How the New Economics of Information Transforms Strategy, Boston, MA: Harvard Business School Press, 1999; Tapscott, D. , Ticoll D. and Lowy A. , Digital Capital. Harnessing the Power of Business Webs, Boston, MA: Harvard Business School Press, 2000; Sawhney, M. and Zabin J. , The Seven Steps to Nirvana. Strategic Insights into E-Business Transformation, New York: McGraw-Hill, 2001.

Post J. E. , ‘Moving from Geographic to Virtual Communities: Global Corporate Citizenship in a Dot.Com World’, Business and Society Review, 105, No. 1, 2000, pp. 27–46.

Many would argue this is merely a rediscovery of a timeless truth predating the capitalist project altogether and already well understood in non-Anglophone markets.

Putnam R.D. , ‘The Prosperous Community: Social Capital and Public Life’, The American Prospect, 13, 1993, pp. 35–42; Putnam, R. , ‘Bowling Alone: American's Declining Social Capital’, Journal of Democracy, 6, No. 1, 1995, pp. 65–78; Putnam, R. , Bowling Alone: The Collapse and Revival of American Community, New York: Simon & Schuster, 2000.

Reich , 2001, op. cit.

Tapscott et al, 2000; Sawhney and Zabin, 2001, op cit.

Freeman R. E. , Strategic Management: A Stakeholder Approach, Englewood Cliffs, NJ: Prentice-Hall, 1984; Freeman, R.E. and McVea J. , ‘A Stakeholder Approach to Strategic Management’, in Handbook of Strategic Management, edited by Hitt M.A. , Freeman R.E. and Harrison J.S. , pp. 189–207, Oxford: Blackwell Business, 2001. 2001, op cit; Tsai, W. and Ghoshal, S. , ‘Social Capital and Value Creation: The Role of Intrafirm Networks’, Academy of Management Review, 41, No. 4, 1998, pp. 464–476; Tsai, W. , ‘Social Capital, Strategic Relatedness and the Formation of Intraorganizational Linkages’, Strategic Management Journal, 21, 2000, pp. 925–939; Wheeler, D. and Sillanpaa M. , The Stakeholder Corporation: A Blueprint for Maximising Stakeholder Value, London: Pitman, 1997; Wheeler, D. and Sillanpaa M. , ‘Including the Stakeholders: The Business Case’, Long Range Planning. 31, No. 2, 1998, pp. 201–210; Nahapiet, J. and Ghoshal S. , ‘Social Capital, Intellectual Capital and the Organizational Advantage’, Academy of Management Review, 23, No. 2, 1998, pp. 242–266; Cohen, D. and Prusak L. , In Good Company: How Social Capital Makes Organizations Work, Boston, MA.: Harvard Business School Press, 2001; Adler, P.S. and Kwon S-W , ‘Social Capital: Prospects for a New Concept’, Academy of Management Review, 27, No. 1, 2002, pp. 17–40.

Moore, J. , The Death of Competition, New York: HarperCollins, 1995.

Sawhney M. , Gulati R. , and Paoni A. , Tech-Venture. New Rules on Value and Profit from Silicon Valley, New York: John Wiley, 2001; Reichheld, F. , The Loyalty Effect, Boston, MA: Harvard University Press, 1996.

Kanter , 2001, op. cit.

Bloomberg , http://quote.bloomberg.com, 2002 (cited January 2, 2002 and July 28, 2002).

BBC, The AOL Time Warner Merger, (http://news.bbc.co.uk/hi/english/business/newsid_597000/59782.stm) 2000 (cited January 2, 2002).

Bloomberg , 2002, op. cit.

White, E. and Wingfield N. , ‘Web Provides Silver Lining in Retailing's Dark Cloud: Growth in Christmas Season On-Line Sales Surprisingly Brisk, Surveys and Stores Say’, Wall Street Journal, January 3, 2002. N.B. In a fascinating post-script to the AOL story for 2001, in early January 2002 the firm-was forced to absorb a non-cash charge of up to $60 billion to reflect changes in accounting rules for intangible assets. Between January 1^st and March 1^st, this historic writedown hardly affected AOL's stock price which continued to oscillate between approximately $23 and $28. Tuck, S., 2002. AOL to take massive charge. The Globe and Mail, January 8, B1. Later in the year, however, share price did decline to under $11 by July. Bloomberg, http://quote.bloomberg.com 2002 (cited July 28, 2002).

AOL.com. http://www.corp.aol.com (Corporate Website). America On-Line, 2002 (cited January 2, 2002).

Govindarajan, J. and Gupta A. K. , The Quest For Global Dominance. Transforming Global Presence Into Global Competitive Advantage, San Francisco, CA: Jossey-Bass, 2001.

http://pages.ebay.com (cited April 18, 2002). Bloomberg, http://quote.bloomberg.com 2002 (cited July 28, 2002).

Bloomberg , http://quote.bloomberg.com 2002 (cited January 2, 2002 and July 28, 2002).

Smith, G. , ‘A Bad Year for Prognosticators. Nortel goes Kaplooie’, The Globe and Mail, December 31, 2001, A3.

Rather poignantly, four years before the significant Cisco layoffs in 2001, CEO John Chambers was quoted in O'Reilly, C.A and Pfeffer's J. Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People, Boston, MA: Harvard Business School Press, 2000, as saying that having done major layoffs at Wang he ‘would never do that again to employees or shareholders’.

Quoted in Smith , op. cit.

Ebner, D. , ‘Investors’ Optimism Failed Them in 2001’, The Globe and Mail, January 2, 2002, B2.

Quoted in Milner, B. , ‘Firms Must Sort Fact from Fiction’, The Globe and Mail, December 19, 2001, BIO.

Clearly it is insufficient even to say that multiple interests are only interdependent in the long term, as some have argued; for as the dot.com bubble showed, without real short-term interdependence — economic as well as social — the long-term never arrives.

Rifkin, J. , The Biotech Century: Harnessing the Gene and Remaking the World, New York: Penguin/Putnam, 1998.

Magretta, J. ‘Growth Through Global Sustainability’, in Harvard Business Review on Business and the Environment, pp. 59–84, Boston, MA: Harvard Business Review, 2000.

Simanis, E. and Hart S.L. , ‘The Monsanto Company: Quest for Sustainability (A) - Case Study’, wri.com: World Resources Institute, Washington, 2001.

Pierson, R. and Seltzer J. , ‘Pharmacia Plans to Spin off Monsanto’, The Globe and Mail, November 29, 2001, B11. Bloomberg, http://quote.bloomberg.com 2002 (cited July 28, 2002).

Verfaillie H.A. , ‘Securing our Commitments to Agriculture’, paper presented at the Address to the Farm Journal Conference, Washington D.C., November 27th, 2001.

Monsanto , Corporate web-site, (http://www.monsanto.com/monsanto/about-us) 2002 (cited January 2, 2002).

Novo , Corporate web-sites (http://www.novo.dk and http://www.novonordisk.com) 2002 (cited January 2, 2002).

Wheeler, D. and Elkington J. , ‘The End of the Corporate Environmental Report? Or, The Advent of Cybernetic Sustainability Reporting’, Business Strategy and the Environment, 10, 2001, pp. 1–14.

Hays, K. , ‘New Enron Could Rise from the Ashes of the Old’, The Globe and Mail, December 5, 2001, B12.

Hays , 2001, op cit.

Wheeler, D. , Fabig H. and Boele R. , ‘Paradoxes and Dilemmas For Aspiring Stakeholder Responsive Firms In The Extractive Sector - Lessons From The Case Of Shell And The Ogoni’, Journal of Business Ethics, 39, No. 3, pp. 297–318.; Wheeler, D. , Rechtman R. , Fabig H. , and Boele R. , ‘Shell, Nigeria and the Ogoni: A Study in Unsustainable Development. III - Analysis and Implications of Royal Dutch/Shell Group Strategy’, Sustainable Development, 9, No. 4, pp. 177–196.

McKague, K. , van der Veldt D. and Wheeler D. , ‘Growing a Sustainable Energy Company: Suncor's Venture into Alternative and Renewable Energy’, Schulich School of Business Case, Toronto: York University, 2001.

Carroll A.B. , ‘Corporate Social Responsibility: Evolution of a deFinitional Construct’, Business and Society, 38, No. 3, 1999, pp. 268–295.

Committee for Economic Development, ‘Social Responsibilities of Business Corporations’, New York: CED, 1971, cited in Carroll 1999, op. cit.

Sethi S. P. , ‘Dimensions of Corporate Social. Performance: An Analytic Framework’, California Management Review, 17, 1975, pp. 58–64.

See Martin R.L. , ‘The Virtue Matrix: Calculating the Return on Corporate Responsibility’, Harvard Business Review, March 2002.

Wheeler has further developed issues of sustainability and organizational capability in a manuscript for the forthcoming Blackwell title, Leading in Turbulent Times, to be edited by Burke, R. and Cooper C. .

Here we use the definition of Schein, E. , Organization, Culture and Leadership, San Francisco: Jossey-Bass, 1985, i.e. that corporate culture comprises an amalgam of the values, beliefs and assumptions of the organization.

A similar point has been made recently by Jawahar I.M. and McLaughlin G.L. in relating the dynamic nature of stakeholder relationships to the life cycle of the firm in their article, ‘Toward a Descriptive Stakeholder Theory: An Organizational Life Cycle Approach’, Academy of Management Review, 26, No. 3, pp. 397–414.

Berle A. A. and Means G. , Private Property and the Modern Corporation, New York: MacMillan, 1932; Berle A. A. , Power Without Property: A New Development in American Political Economy, New York: Harcourt Brace, 1959; Clark, J. M. , ‘The Changing Basis of Economic Responsibility’, The Journal of Political Economy, 24, No. 3, 1916, pp. 209–229; Dodd E. M. Jr. , ‘For Whom are Corporate Managers Trustees?’ Harvard Law Review, 45, 1932, pp. 1145–1163; Margaret M. Blair , ‘In Whose Interests Should Corporations Serve?’, in, Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century, pp. 202–234, Washington, D. C: Brookings Institution, 1995.

McIntosh, M. , Leipziger D. , Jones K. and Coleman J. , Corporate Citizenship: Successful Strategies for Responsible Companies, London: Pitman, 1998.

For example a recent article in California Management Review made a strong case for linking ‘corporate social initiatives’ to key drivers and core competencies of the firm but made little or no reference to the potential economic, social or environmental value add of the products and services of the firm; see Hess, D. , Rogovsky N. and Dunfee T.W. , ‘The Next Wave of Corporate Community Involvement: Corporate Social Initiatives’, California Management Review, 44, No.2, 2002, pp. 110–125.

For overviews see Carroll A.B. , Business and Society: Ethics and Stakeholder Management, Cincinnati, OH: South-Western, 1989; Carroll, A. , Business and Society: Ethics and Stakeholder Management, (2nd ed.), Cincinnati: South-Western Publishing, 1993; Carroll, Archie B. , ‘Ethical Challenges for Business in the New Millennium: Corporate Social Responsibility and Models of Management Morality’, Business Ethics Quarterly, 10, No. 1, 2000, pp. 33–42; Wood, D., ‘Social Issues in Management: Theory and Research in Corporate Social Performance’, Journal of Management, 17, 1991, pp. 383–406; Wood, D., ‘Corporate Social Performance Revisited’, Academy of Management, 16, 1991, pp. 691–718.

Clarkson, M. B. E. , ‘Defining, Evaluating, and Managing Corporate Social Performance: A Stakeholder Management Model’, in Research in Corporate Social Performance and Policy, edited by Post J. E. , pp. 331 358, Greenwich, CT: JAI Press, 1991; Clarkson, M. B. E. , ‘A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance’, Academy of Management Review, 20, No. 1, 1995, pp. 92–108.

Carroll A. B. , ‘Understanding Stakeholder Thinking: Themes from a Finnish Conference’, in The Corporation and its Stakeholders: Classic and Contemporary Readings, edited by Clarkson M. B. E. , pp. 71–80, Toronto: University of Toronto Press, 1997.

Freeman , 2001, op. cit., Hillman and Keim, op. cit.

Freeman , 2000, op. cit.

WCED, World Commission on Environment and Development, Our Common Future, Oxford, England: Oxford University Press, 1987.

Watts, P. and Holme R. , Meeting Changing Expectations. Corporate Social Responsibility, Geneva: WBCSD. Available from www.wbcsd.org/publications/csrpub.htm, 1999 (cited March 18, 2001); see also World Business Council on Sustainable Development (http://www.wbcsd.ch/aboutus/) WBCSD Web site, 2002 (cited January 3, 2002).

Elkington, J. , Cannibals with Forks, Cabriola Island, B.C.: New Society, 1998.

To borrow terminology from the learning organization concept of Senge, P. , Kleiner A. , C Roberts, Ross R. , Roth G. and Smith B. , The Dance of Change, New York: Doubleday Currency, 1999.

Cohen and Prusak , op. cit.; Adler and Kwon, op. cit.; Svendsen, A.C. , Boutilier, R.G , Abbott, R. and Wheeler, D. , ‘Measuring the Business Value of Stakeholder Relationships, Report to the Canadian Institute of Chartered Accountants — Available at www.cica.ca.’, Vancouver, BC: Centre for Innovation in Management, Simon Fraser University, 2001.

Hawken, P. , Lovins A. and Lovins L.H. , Natural Capitalism. Creating the Next Industrial Revolution, Boston, MA: Little Brown and Company, 1999; Lovins, A.B. , Lovins L.H. and Hawken P. , ‘A Road Map for Natural Capitalism’, Harvard Business Review, May-June 1999, pp. 145–158.

Ehrenfeld, J. , ‘Being and Havingness’, Forum for Applied Research and Public Policy, Winter 2000, pp. 35–39.

Jennings, P. Devereaux , and Zandbergen Paul A. , ‘Ecologically Sustainable Organizations: An Institutional Approach’, The Academy of Management Review, 20, No. 4, 1995, p. 1015.

Hart, S. , ‘A Natural-Resource-Based View of the Firm’, Academy of Management Journal 20, No. 4, 1995, pp. 986–1014; Hart. S.L., ‘Beyond Greening: Strategies for a Sustainable World’, Harvard Business Review, 75, No. 1, 1997, pp. 66–76; Hart, S.L. and Milstein M.B. , ‘Global Sustainability and the Creative Destruction of Industries’, Sloan Management Review, 41, No. 1, 1999, pp. 23–33.

Ehrenfeld , op. cit., p. 36–7.

Kotter, J. and Heskett J. , Corporate Culture and Performance, New York: Free Press, 1992; Collins, J. and Porras J. , Built to Last, New York: HarperCollins, 1994.

Waddock, S.A. and Graves S. B. , ‘The Corporate Social Performance - Financial Link’, Strategic Management Journal, 18, 1997, pp. 303–319; Roman, R.S. , Hayibor S. and Agle B. , ‘The Relationship between Social and Financial Performance’, Business and Society, 38, No. 1, 1999, pp. 109–125.

Feltmate, B.W. , Schofield B.A. and Yachnin R.W. , Sustainable Development, Value Creation and the Capital Markets, Ottawa: Conference Board of Canada, 2001.

Hillman, Amy J. and Gerald D. Keim , ‘Shareholder Value, Stakeholder Management, and Social Issues: What's the Bottom Line?’, Strategic Management Journal, 22, 2001, pp. 125–139.

Fombrun, C. , Reputation: Realizing Value from the Corporate Image, Boston, MA: Harvard Business School Press, 1996; Fombrun, C.J. , ‘Corporate Reputations as Strategic Assets’, in Handbook of Strategic Management, edited by Hitt M.A. , Freeman R.E. and Harrison J.S. , pp. 289–312, Oxford: Blackwell Business, 2001; Rindova, V. and Fombrun, C. , ‘The Eye of the Beholder: The Role of Corporate Reputation in Defining Organizational Identity’, in Identity in Organizations: Building Theory Through Conversations, edited by Whetten D.A. and Godfrey P.A. , pp. 62–66, Thousand Oaks, CA: Sage, 1998.

Kochan, N. (ed.), The World's Greatest Brands, New York: New York University Press, 1997; Aaker, D.A. and Joachimsthaler, E. , Brand Leadership, New York: The Free Press, 2000; Tomkins, R. , ‘Coca Cola Loses its Fizz’, Financial Times, July 18, 2000; Pringle, H. , and Gordon W. ., Brand Manners. How to Create the Self Confident Organization to Live the Brand, Chichester, UK: John Wiley, 2001; Pringle, H. and Thompson M. , Brand Spirit, How Cause-Related Marketing Builds Brands, Chichester, UK: John Wiley, 2001; see also ‘The Best Global Brands’, Business Week, August 6th, 2001, pp. 50–64.

Reichheld , op. cit.

Coleman, J. , ‘Social Capital in the Creation of Human Capital’, American Journal of Sociology, 94, 1988, S95–S121; Barney, Jay B. , ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17, No. 1, 1991, pp. 99–120; Barney, Jay B. and Wright Patrick M. , ‘On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage’, Human Resource Management, 37, No. 1, 1998, pp. 31–46; O'Reilly and Pfeffer, op. cit.; Snell, S.A. , Shadur M.A. and Wright P.M. ., ‘Human Resources Strategy: The Era of Our Ways’, in Handbook of Strategic Management, edited by Hitt M.A. , Freeman R.E. and Harrison J.S. , pp. 627–649, Oxford: Blackwell Business, 2001.

Freeman , 1984, op. cit., Freeman 2001, op. cit.; Hamel G. and Prahalad C.K. , ‘Strategy as Stretch and Leverage’, Harvard Business Review, March/April 1993, pp. 75–84; Hamel, G. and Prahalad C.K. , Competing for the Future, Boston, MA: Harvard Business School Press, 1994; Harrison, J. S. and John C. H. St. , ‘Managing and Partnering with External Stakeholders’, Academy of Management Executive, 10, No. 2, 1996, pp. 46–55; Wheeler and Sillanpää, 1998, op. cit.; A. Svendsen, The Stakeholder Strategy: Profiting from Collaborative Business Relationships, San Francisco: Berrett-Koehler, 1998.

For a discussion on the balanced scorecard, see Kaplan, R.S. and Norton D. P. , The Balanced Scorecard: Translating Strategy into Action, Boston, MA: Harvard Business School Press, 1996; Kaplan, R.S. and Norton D.P. , The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, Boston, MA: Harvard Business School Press, 2001. The EFQM ‘business excellence model’ is described in Wheeler and Sillanpää, 1997, op. cit.

Wheeler and Sillanpää , 1998, op. cit.