Understanding the Gaps
between Managers’ and
Stakeholders’ Perceptions
of Corporate Responsibility
Results and Insights from
Project RESPONSE
Maurizio Zollo
POLITEIA – 5th Annual Conference
22 May 2008
RESPONSE in Numbers

1.1 M euros EU funding over 3 years + 320K euros private

20 multinationals from Europe and US

430 interviews (213 senior managers, 217 stakeholders)

1,100 managers surveyed in 9 companies

93 managers in 4 CSR learning experiments

21 academics, 5 Ph.D. students and 5 RAs in 5 European
and 4 US schools (incl. Advisory Board)
A Collaborative Effort
Academic
Advisory Board
• Henri-Claude de
Bettignies – INSEAD
• Tom Dunfee – Wharton
• Ed Freeman – U. of
Virginia
• Bruce Kogut – INSEAD
• Eric Orts – Wharton
• Peter Pruzan – CBS
• David Vogel - Berkeley
• Jim Walsh – U. of
Michigan
Academic
Members
Business
Advisory Board
• Zollo, Berchicci,
Casanova, Crilly,
Hansen, Schneider,
Sloan- INSEAD
• IBM
• Neergaard, Hockerts
Pedersen - Copenhagen
Bus. School (CBS)
• Microsoft
• Perrini, Minoja, Tencati,
Pogutz – Bocconi Univ.
• Gasparski, Lewicka Leon Kozminski
Academy
• Johnson &
Johnson
• Shell
• Unilever
• European
Academy of
Business In
Society (EABIS)
• Hackl, Reinhold -Impact
Funded with a generous grant by the European Commission’s
6th Framework Program
Research Questions
•
What do managers understand as their
company’s responsibilities towards society?
•
How does that differ from stakeholders’ beliefs?
•
What factors explain the difference?
•
What factors explain socially responsible
behavior in managers?
•
How effective are different training approaches?
The Research Model
Environmental
Conditions
CSR Process
CSR
Commitment
Firm
Factors
Cognitive
gaps
Individual
Traits
Motivation
CSR
Structure
CSR Mgt
Initiatives
CSR
Results
(CSP)
Research Methodologies
Case comparison study Learning Experiments
19 large multinationals In
matched pairs/triads
8 sectors, 3 regions
For each company:


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
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
“Fact finding” field work
11 managers interviewed
12 stakeholders





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Web-survey of random global
sample of 400+ managers
Part 1: structured interview
Part 2: test SRB model
35% response rate


Standard CSR exec ed vs.
Introspective coaching w/o
CSR context
4 randomized trials
2 types of control groups

In selected companies:

Test effectiveness of:
Passive (waiting list)
Active (yoga training)
Pre-post training survey

Like Part 2 of web-survey
Decision scenarios (SRB)

Cognition, emotions, values

Research Questions
•
What do managers understand as their
company’s responsibilities towards society?
•
How does that differ from stakeholders’ beliefs?
•
What factors explain the difference?
•
What factors explain socially responsible
behavior in managers?
•
How effective are different training approaches?
Cognitive Framing of CSR Issues
What is the social responsibility of company X?
Product focus
‘Do no
harm’
Product impact
Process impact

Ethical value of product

Environment

Impact on user’s well-being 
Supply chain

Consequences of incorrect

HR/human rights abuses
use

Lobbying, bribing, tax elusion

Anti-competitive behaviour
17%
‘Do good’
TOTAL
Process focus
11%
Product access

For survival (food)

Health (medicine)

Poverty (banking)

Education (ICT)
7%
63%
42%
Process engagement

Advancement of human rights

Community support

Regional development

Human development
6%
13%
41%
Frequency of CSR issues in managers’ responses
Frequency of CSR issues in stakeholders’ responses
Managers
80%
Stakeh.
53%
Managers
20%
Stakeh.
47%
Scope and Depth of Cognitive
Representations of CR
Firm View
Shallow
Compliance
Risk management
Reputation
Stakeholder View
Shareholders
Employees
Customers
World View
Industry-specific global
issues (e.g. health for
pharma)
64%
49%
Deep
Moral duty
Give back to soc.
Ethical boundaries
64%
35%
Suppliers
Partners
Government
Communities
20%
Non-industry specific:
climate change,
hunger, health,
poverty, education,
human rights
32%
15%
Source: 210 Managers interviews, 217 Stakeholders interviews
Question: what is the social responsibility of company X?
34%
35%
51%
100%
100%
Research Questions
•
What do managers understand as their
company’s responsibilities towards society?
•
How does that differ from stakeholders’ beliefs?
•
What factors explain the difference?
•
What factors explain socially responsible
behavior in managers?
•
How effective are different training approaches?
Measuring Cognitive Gaps
1.
2.
3.
4.
Sequence of Response. Difference in the sequential
order of “stakeholder types” mentioned by managers and
stakeholders. Question: who are the main stakeholders of
company X?
Risk Ranking. Difference in the ranking of stakeholders
related to their impact on the company’s interests
Responsibility Ranking. Difference in the ranking of
stakeholders related to the company’s impact on their
interests
Social Performance. Difference in the average rating
given by managers and stakeholders to the company’s
perceived impact on society
Alignment Matters for Social Performance
Manager-stakeholder average gaps
es
po
ns
ib
il it
y
Pe
rfo
rm
an
ce
R
is
k
R
St
ak
eh
ol
de
rS
eq
u
en
ce
40%
35%
30%
25%
20%
15%
10%
5%
0%
Companies w ith low er social performance
Companies w ith higher social performance
The best social
performers have
greater cognitive
alignment (i.e. smaller
gaps) with their
stakeholders across
all the 4 measures
What Explains Cross-Firm Variation in
Cognitive Alignment w/Stakeholders?
Factors
YES
NO
External Factors
Industry dynamism (+)
Regional dynamism (+)
External pressure (+)
Institutional motivation
Internal Factors
(unrelated to CSR)
Competitive strategy:
 differentiation (+)
 cost leadership (-)
Firm origin
Leadership commitment
Structure (centralization)
Knowledge management
Internal Factors
(CSR-related)
CSR Integration in
business processes (+)
Motivation: innovation (+)
Stakeholder
engagement
Motivation: values
Explaining Social Performance
What factors characterize the best social
performers across the 8 pairs/triads studied?
STRONG EVIDENCE
SOME EVIDENCE
NO CLEAR LINK
COGNITIVE ALIGNMENT
Differentiation STRATEGY
INTEGRATION of CSR in
strategy processes
INTEGRATION of CSR in
business processes
LEADERSHIP commitment
CSR dept INFLUENCE
INTERNAL CHANGE
INNOVATION based
business case
Organisational VALUES
HISTORY: CR at Founding
Statements of social
COMMITMENTS
INTEGRATION in HR
perf. evaluation
CSR REPORTING
Individual VALUES
Good GOVERNANCE
Age of CSR group
External
COMMUNICATION
CSR TRAINING
CSR performance
METRICS
INTEGRATION in
investments (rare)
External PRESSURE
External INITIATIVES
(philanthropy)
Business CASE on
risk, efficiency or
sales growth.
Implications for Research

Content of future research needs to focus on:
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Cognition, not just motivation, of CSR
CSR Integration and internal change
Individual responsibility and inner change
Learning processes related to CSR activities and
cognitive/emotional antecedents
Process-wise, lessons learned:

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Need to enter deeply inside organizations
Assess impact via field experimental designs
Leverage managers’ wisdom throughout the
research process (not just in data collection)
Implications for Business Managers

Redefine the notion of CSR
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Reframe “Why” CSR
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Balance “Do No Harm” and “Do Good”
Expand from “Firm-centric” to “World-centric”
From “their impact on us” to “our impact on them”
From risk/reputation to innovation
Rethink the CSR challenge:
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What: from external engagement to internal change
Who: the CSR group as champion of internal change
With whom: the stakeholder groups as co-drivers
Implications for Stakeholders
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Social Rating Agencies should:
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NGOs might need to:
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assess CSR integration
evaluate the gap in mindsets
Learn about the companies’ operations
Be skeptical about “engaging” companies
“Inner ring” stakeholders: from counterparts
to partners with CSR group to drive:
1.
2.
the internal change process to mainstream CSR
At a later stage, the external initiatives to enhance
social welfare
A Big Next Step:
A Multi-stakeholder Alignment and Corporate
Responsibility Observatory (MACRO)
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Build on the RESPONSE tools and insights
Build a global network of business schools, companies,
stakeholders and institutions engaged on a stable basis
Collective bid for EU research funds (FP7, ERC, ESF)
An ongoing research and outreach program:
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collecting periodic structured data from companies and
stakeholderss
leveraging on members’ expertise to design and execute
collaborative multi-stakeholder research
feeding back to members confidential insights from analysis of
their data (longitudinal benchmarking)
coordinating dissemination and outreach initiatives
Influencing the evolution of management practice, stakeholder
behavior and public policy
To know more…
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About RESPONSE:

Project website:
http://www.eabis.org/research-projects/response-3.html

Academic Conference: 25-26 June (Bocconi)
http://www.eabis.org/blog/response-academicconference-2.html
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Managerial Conference: 27 June (Bocconi)
About MACRO:
[email protected]