Corporate Social responsibility and Social economy. A Closer Look on Financial Tools into the Italian Context

AutorCarmen Parra Rodríguez

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1 Mapping Corporate Social Responsibility: meanings and boundaries

The development and the range of meanings and implications of Corporate Social Responsibility are strictly linked to the wider range of societal, economic and environmental changes and challenges happening all over the world.

Talking about Corporate Social Responsibility (CSR) requires first of all mention some of the critical factors or phenomena which have been affecting attitudes and actions of individuals, corporates, communities and governments over the last decades.

Generally speaking, the process of globalisation takes place above all the factors as a series of relevant changes linked –for instance– to the decrease in national and geographic boundaries and industries deregulation and privatization. But, most of all as a factor which has contributed to greatly increase the effects of the most devastating financial and economic crisis since the Second World War.

Accordingly, it can be said that globalization has changed the world both geographically and concerning corporates’ structure and shape. Due

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to it «the context in which business operates is changing at an increasingly rapid pace. New stakeholders and different national legislations1are putting new expectations on business and altering how the social, environmental and economic impacts should be optimally balanced in decision making» (Dahlsrud, 2008).

More specifically, five main factors can be identified which are strongly pushed by globalization and lead corporates to CSR implementation.

First of all, due to the progressive exploitation of resources all over the world and to an increasing desire for growth without control connected to the process of globalization, this is often seen and defined as one of the most relevant causes of energy and environmental crises as well (Parmigiani, 2010).

Secondly, market shock and the economic and financial crisis starting in 2008 is pushing the largest developed countries one by one –notably those where the crisis originated– towards a more and more severe period of recession. The situation in developing countries is predicted to become worse and more instable, because of their reliance on developed ones (ILO and International Institute for Labour Studies, 2009).

As a consequence, new concerns about alternative ways of leading countries to recovery and conducting business both locally and abroad in response to ethical requirements emerge.

Thirdly, as far as the corporate world is concerned the shortening of products lifecycle (Sääksvuori and Immonen, 2008) and the over competition on the markets (Perrini and Tencati, 2008) imposes a greater pressure on innovation, which can be seen as a key to economic recovery and employment development as well (Business Europe, 2010) and a way of

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serving new potential clients previously unable to access some types of products or services (Johnson, 2010).

The direct consequence of this phenomenon is the forced re-design of processes, activities and business approaches (as well as the need of new skills for instance) by those companies aiming to build an innovation-oriented culture so to be able to face their competitors and turn their business successfully to new markets, which sometimes can be niches.

Furthermore, innovation is strictly related also to the development of information and communication technology, which is having a great impact on consumers’ behavior and public opinion (Perrini and Tencati, 2008). Since nowadays access to both companies and markets information is easier and more rapid for individuals than in the past, concepts like transparency and coherence in communicating and sharing adopted strategies and activities are required.

Eventually, the last factor to consider is globalization as an evolutionary process of human interaction (Tanahashi, 2010), which increases the range and growth of traditional stakeholders involvement and contributes to the emergence of new ones.

Therefore, traditional rules of finance and business need to be reviewed according to the mounting pressures of individuals involved in and affected by companies’ decisions and activities (Kuepfer and Papula, 2010).

On one hand, shareholder theory used to work as long as finance was the core concept of a flourishing economy in which profit was the merely goal at the expense of society wellbeing.

On the other hand, since 80s within the crisis of American public companies, a new approach regarding companies’ behavior towards community and their reference public replaced the previous shareholder theory2.

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Then, stakeholders satisfaction3considers companies’ value creation as a process involving different actors at the same time with different repercussions: financial actors, investors, customers, suppliers, employees, governments, institutions and associations, mass media, political groups, shareholders and reference community.

According to the wide range of interests that companies need to be aware of, they are expected to implement a value creation process which aims at achieving commercial purposes (by selling goods and services in response to customers’ and market demand), economic and financial (by creating value for shareholders and financial actors through the increase in profit and market shares) and ethical and social objectives in response to the community and stakeholders new expectations.

This concept becomes stronger and more relevant to business relations as different types of crises (such as financial and economic, environmental and energy) occur.

Given these premises, why does CSR impose itself as the most popular and comprehensive response to these five challenges?

Corporate Social Responsibility takes shape as a new way of doing business and pushes companies to rethink about their role within the market but most of all within the community. CSR represents, in such a con-

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text, a new strategy which strengthens the traditional way in which companies conduct their business by combining economic and commercial dimensions of value creation to the ethical, social and environmental one.

In this sense, CSR helps to foster sustainable development4of business and communities5.

Theoretical definitions going to be listed confirm the statement.

As far as the European framework is concerned, CSR is defined by European Commission as a «concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with stakeholders on a voluntary basis» (European Commission, 2001)6.

Furthermore, the ISO26000 new standard contributes to give CSR an international voice by deepening meanings and fundamental issues to

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be addressed by companies in CSR practical implementation. It aims at helping organizations to achieve the benefits of operating in a socially responsible manner more efficiently.

In particular, ISO260007highlights the 7 core subjects to be followed in order to respect the standard: organizational governance, human rights, labour practices, the environment, fair operating practices, consumer issues, community involvement and development8.

Amongst the wide range of the acknowledged CSR definitions it will be reported the ones which describe better the concrete response to concerns and challenges mentioned before: i.e. environmental and energy crises, financial crisis, information and communication technology rapid development, strong and necessary focus on research and innovation, and increasing pressures from stakeholders.

Societal benefit is one the primary goals of a CSR strategy. In particular, the attention to environmental issues ad ecology has increased a lot and can be more connected to the quality of products themselves. Nowadays, whilst the fight against climate change remains at the highest level of societies’ priorities (Business Europe, 2010), the market requires a more secure access to energy through the diversification of sources and efficient consumption. Nuclear power, renewable energies, and other new technologies are essential to meet this challenge (Business Europe, 2010). Natural resources will become increasingly scarce and expensive (Wer-bach, 2009) and it necessarily will imply a more responsible use of them.

In the recent stock market crises, CSR can be a mean to overcome some of the fallout of the financial crisis by creating value for both shareholders and society. Companies are asked to «understand that their responsibility to investors means being accountable to the society and environment in which they operate» (Clinton, 2009). In this dimension, as long as «public scrutiny, governmental regulation and customer expec-

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tations intensify» (Lubin and Esty, 2010) CSR requires transparency and accountability, which can be achieved through the implementation of documents, reports and certifications (e.g. sustainability report and international standards).

Moreover, the investment in community wellbeing can lead a corporate to meet tomorrow customers’ needs.

Obviously, in order to meet these needs more effectively companies are required to be very innovative in products, services and processes design. Innovative approaches to business can strongly involve responsibility and sustainability as new ways of operating: by combining the use of social, environmental and sustainability drivers to create new business models, new products, services, processes and market spaces (European Commission, 2008) organizations will reach superior performance among competitors.

Innovation-oriented culture is part of the Total Responsibility Management Theory (Gorenak and...

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