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Highlights del progetto “RESPONSE”

Mario MinojaUniversità Bocconi e Università di Modena e Reggio Emilia

Workshop CSR Manager NetworkCSR & CDA

Milano, ALTIS (Università Cattolica), 16 giugno 2009

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Index

1. Research goals and methodology2. (Mis)alignment between managers and

stakeholders about the concept of CSR3. Alignment Matters …. Four cognitive gaps4. Explanatory factors of alignment5. Recommendations for managers

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1. Research goals and methodology

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The Response research team

• 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

Maurizio Zollo, INSEAD (now U. Bocconi), Academic Director

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Research goals

Cognition & Cognitive Alignment

Internal factors

Externalfactors

• Industry

• Region

• External pressure

• Origins

• Leadership

• Strategic position

•Org. structure

• CSR motivation

•CSR initiative

CSR Results

• SRA evaluations

• Stakeholders

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 performance4. Identify the explanatory factors of alignment

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Research Methodology

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

Data gathering approach1. “Fact-finding day”: evolution of CSR practices2. 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

3. 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

  Product focus Process focus

‘Do no harm’

Product impact Ethical value of product Impact on user’s well-being Consequences of incorrect

use

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

‘Do good’ Product access For survival (food) Health (medicine) Poverty (banking) Education (ICT)

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

What is the social responsibility of corporations?

17% 63%

7% 13%

11% 42%

6% 41%

Frequency of CSR issues in managers’ responses

Frequency of CSR issues in stakeholders’ responses

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The Issue Gap

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

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.

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Narrow, firm-centric scope of

responsibility

Broader, societal scope of

responsibility

“Fair play in society, towards employees,

towards environment. Meet the law.” (Manager,

chemicals)

“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)

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

stakeholders” (Manager, banking)

Cognitive Framing of the Scope of CSR

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Scope and Sophistication of CSR Perspectives

Firm View Stakeholder View World View

Narrow Compliance and risk management (reputation)

Shareholders, employees, customers

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

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

41%

23%

12%

8%

11%

4%

20% 4%

28%

26%

8%15%

Frequency of CSR issues in managers’ responsesFrequency 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 Measurement Meaning

Gap 1: Stakeholder identification

Order in which interviewees mention stakeholders

Salience of stakeholders

Gap 2: Risk ranking

Ranking of stakeholders based on their perceived impact on the company

Perceived ‘risk’ posed by stakeholders

Gap 3: Responsibility ranking

Ranking of stakeholders based on the perceived impact the company has on them

Perceived responsibility toward stakeholders

Gap 4: Perceptions of Corporate Social Performance (CSP)

Level of social performance as judged by interviewees

Perceptions of CSP

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Alignment Matters for Social Performance!

Across all dimensions, the highest social performers have greater cognitive

alignment (i.e. smaller gaps) with their stakeholders.

Manager-stakeholder average gaps

0%5%

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

Companies w ith low er social performance

Companies w ith higher social performance

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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 Stakeholder Identification

Risk Responsibility Performance

High Tech

Pharma

Chemicals

Food

Energy

Natural Resources

Banking

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4. Explanatory factors of alignment

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Explanatory Factors of Alignment

Factors Strong evidenceSome evidence

No clear link

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      

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Innovation business case for CSR

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

– 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 opportunities.

0%

20%

40%

HIGHER NMO 25% 28% 25% 1%

LOWER NMO 26% 30% 34% 6%

Gap 1 Gap 2 Gap 3 Gap 4

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Differentiation strategies

• 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.

0%

20%

40%

Differentiation 25% 26% 27% 3%

Cost efficiency 25% 33% 32% 9%

Gap 1 Gap 2 Gap 3 Gap 4

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Integration of corporate responsibility into business processes

• 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.

0%

20%

40%

HIGHER IBP 25% 28% 25% 1%

LOWER IBP 26% 20% 34% 6%

Gap 1 Gap 2 Gap 3 Gap 4

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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 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 visible;

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

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

• 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 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

we can do to them”.• Reframing “Why CSR” through a “business case” based on the value

that CSR brings to your company’s innovation and change processes.• Bridging the “gap”, through:

– business strategy, towards a competitive posture that prioritises differentiation, innovation and customisation of a firm’s products/services;

– integration of CSR principles in Business Processes. All the fundamental processes that make the organisation “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.– 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 stronger “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 “listening” and “telling” (production of information) and towards active collaboration in changing the way things are done inside the organisation.