Description
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state.
ABSTRACT
Title:
Environmental Stewardship in the Private Sector: Arriving at a Green Hands Theory Halley Aelion, Ph.D. Candidate, 2013 Dr. Nathan Hultman, Maryland School of Public Policy
Directed By:
Views on the intent and outcomes of corporate social responsibility (CSR) range from laudatory to skeptical. Regardless of the mixed reception and questions raised about the meaning of CSR, it is clear that the private sector’s increasing power in the 21st century requires a correspondingly well-defined range of responsibilities. This dissertation investigates why and how firms choose to engage in CSR. It does so through three essays that explore the private sector’s approach to environmental stewardship CSR (ESCSR) with particular emphasis on the role of employees in ESCSR. The first essay engages in an empirical study that asks broad questions about private sector employees’ opinions towards CSR. It asks how employees understand CSR; how they prioritize environmental goals under the CSR umbrella; and whether or not their CSR- and ESCSR-related activities impact their feelings of personal well-being and career fulfillment. The results of this essay’s original survey suggest that the private sector’s approach to ESCSR should leverage employees’ interest in and enthusiasm for CSR and ESCSR to achieve environmental stewardship and CSR goals. The second essay investigates the actual extent to which private sector leadership engages with employees on matters related to CSR and ESCSR through both a statistical and case study. The statistical study asks what variables make firms
more likely to afford employees a substantial role in CSR activities, resulting in the discovery that a more diverse and larger leadership body is a significant indicator of a firm’s willingness to engage employees. The case study then pushes the statistical findings into more detail by illuminating three firms’ rationales behind their ESCSR approaches. The final, ethics-focused essay builds on the findings of the first and second essays to propose an original theory that builds on the legal theory of clean hands to arrive at ‘green hands.’ This green hands theory outlines a specific and normatively robust framework firms can adopt to achieve goals related both to employee and environmental stewardship. I conclude by discussing implications for policy recommendations and areas for future research.
ENVIRONMENTAL STEWARDSHIP IN THE PRIVATE SECTOR: ARRIVING AT A GREEN HANDS THEORY
By Halley Mallama Aelion
Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park, in partial fulfillment of the requirements for the degree of Doctor of Philosophy 2013
Advisory Committee: Professor Nathan Hultman, Chair Professor Carol Graham Professor David Crocker Professor Elisabeth Gilmore Professor Leigh Anenson
© Copyright 2013 by Halley Mallama Aelion
Acknowledgements
The value of this dissertation was made possible by my wonderful committee members. I owe a debt of extraordinary gratitude to my adviser, Nathan Hultman, as well as to Leigh Anenson, David Crocker, Elisabeth Gilmore, and Carol Graham. All flaws and mistakes are my own. My research and writing was also improved by faculty, students, and readers too numerous to list. I tremendously appreciate their patience, good humor, thoughtfulness, praise and criticism all in equal measure. This dissertation was also made possible by my family, who will tell me I can do anything no matter the reality.
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Contents
List of Figures ............................................................................................................................................... v List of Tables ............................................................................................................................................... vi I. A. B. C. D. E. 1. 2. 3. II. A. B. C. D. E. F. G. H. I. III. A. B. i. ii. iii. C. i. D. i. Introduction: CSR Origins and Recent ESCSR Theories ............................................................. 1 Identifying the Background and Scope of CSR Research ............................................................ 1 Defining CSR Activity and Investment ........................................................................................ 4 Situating This Thesis: ESCSR Drivers and Actors....................................................................... 7 Understanding the Link Between CSR and ESCSR ................................................................... 10 Expanding the Field of ESCSR Knowledge ............................................................................... 14 First Essay: Do Employees Want Firms to Serve as Environmental Stewards? ........................ 16 Second Essay: ESCSR Approaches: Green Screen or Green Scene? ......................................... 18 Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands .............................. 20 First Essay: Do Employees Want Firms to Serve as Environmental Stewards? ........................ 22 Abstract ....................................................................................................................................... 22 Introduction ................................................................................................................................. 22 Essay Motivation ........................................................................................................................ 29 Survey Content and Goals........................................................................................................... 31 Target Audience .......................................................................................................................... 32 Mode of Collection ..................................................................................................................... 37 Respondents Profile .................................................................................................................... 42 Results and Discussion ............................................................................................................... 50 Conclusion .................................................................................................................................. 58 Second Essay: ESCSR Approaches: Green Screen or Green Scene? ......................................... 63 Abstract....................................................................................................................................... 63 Introduction ................................................................................................................................ 63 EMG Programs as the Dependent Variable ................................................................................ 64 Organizational Strategy Literature: Corporate CSR Approaches ............................................... 67 Organizational Strategy Literature: Organizational Citizenship Behavior (OCB) ...................... 71 Statistical Study .......................................................................................................................... 73 Results and Discussion ............................................................................................................... 77 Case Study .................................................................................................................................. 84 Green Screen or Green Scene ..................................................................................................... 87 iii
ii. iii. iv. E. F. IV. A. B. i. ii. iii. C. i. ii. iii. iv. D. V. A. B. C. D.
DTE Energy ................................................................................................................................ 92 FMC Corporation ........................................................................................................................ 99 International Business Machines (IBM) ................................................................................... 105 Analysis and Discussion ........................................................................................................... 109 Next Steps and Conclusion ....................................................................................................... 114 Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands ............................ 117 Abstract..................................................................................................................................... 117 Introduction .............................................................................................................................. 117 Ethics in Private Sector Management ....................................................................................... 121 Ethics in Environmental Stewardship Responsibilities............................................................. 130 Ethics in the Process: Deliberative Democracy ........................................................................ 132 Green Hands: Practice and Theory ........................................................................................... 135 Planting ..................................................................................................................................... 136 Nurturing ................................................................................................................................... 138 Cultivating................................................................................................................................. 139 Measuring ................................................................................................................................. 141 Conclusion ................................................................................................................................ 145 Conclusion ................................................................................................................................ 149 Theoretical Overview ............................................................................................................... 149 Discussion................................................................................................................................. 149 Policy Recommendations ......................................................................................................... 153 Areas of Future Research.......................................................................................................... 160
Appendix A: Private Sector Opinions on CSR Survey ............................................................................. 163 Bibliography ............................................................................................................................................. 167
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List of Figures
Figure 1. Top Five U.S. Industries’ Contribution to GDP .......................................................................... 36 Figure 2. CSR’s Impact on Professional Satisfaction. ................................................................................ 51 Figure 3. Importance of Environmental Stewardship. ................................................................................ 52 Figure 4. Role of Volunteering and Environmental Protection Programs.. ................................................ 54 Figure 5. Outsourcing CSR. ........................................................................................................................ 55 Figure 6. Personal Satisfaction.................................................................................................................... 56 Figure 7: Green Screen versus Green Scene.. ............................................................................................. 91 Figure 8: DTE Energy: Green Screen.. ....................................................................................................... 98 Figure 9: FMC Corporation: Green Scene.. .............................................................................................. 104 Figure 10: IBM: Elitist Decisionmaking But Committed.. ....................................................................... 108 Figure 11: Compiled Results: Green Screen versus Green Scene.. .......................................................... 111 Figure 12: Case Study Results: The Need for Guided Flexibility in CSR Programs................................ 136 Figure 13: Green Hands Measurement Tool.. ........................................................................................... 144
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List of Tables
Table 1: U.S. Economy by Sector.. ............................................................................................................. 34 Table 2. Characteristics of Umbrella Contacts. .......................................................................................... 37 Table 3. Comparison of Sample to U.S. Private Sector.. ............................................................................ 45 Table 4. Free-Form Feedback.. ................................................................................................................... 58 Table 5: Dependent and Independent Variables in Statistical Study.. ........................................................ 78 Table 6: Results of Select Logit Models Used in Statistical Study.. ........................................................... 79 Table 7: Results of Odds Ratio for Final Model.. ....................................................................................... 80 Table 8: Final Case Study Selection.. ......................................................................................................... 86
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I.
Introduction: CSR Origins and Recent ESCSR Theories A. Identifying the Background and Scope of CSR Research Since Howard R. Bowen’s 1953 landmark book Social Responsibilities of the
Businessman, corporate social responsibility (CSR) has been a noteworthy and increasingly important concept and research agenda item. CSR is a term that brings together corporations (private sector actors) with social responsibility (public sector well-being); two concepts not often seen as going hand-in-hand and oftentimes more aptly described at odds. Although firms have been traditionally understood as profit-oriented entities, their growing power and presence in the 21st global community have spurred intense debate over the corresponding responsibilities that come with their privileged access to resources encompassing monetary, human, and natural assets. The foci and conclusions of these CSR discussions are far-ranging. At one extreme, certain strong lines of argument advocate for the limitation of firms to their traditional roles as financial engines, essentially echoing the words of economist Milton Friedman, who famously stated “the business of business is business” (Mullerat, 2010; Mirowski, 2009; Banerjee, 2007). Contrary assertions articulate compelling cases for corporations to essentially take over the role of governments in using their resources to provide employees and stakeholders with the security of benefits ranging from medical to educational needs (Urip, 2010; Mallin, 2009; Idowu, 2009; Zu, 2009). When one considers the range of perspectives investigated, topics covered, and puzzles solved within these arguments and under the CSR-research label, this growing interest and scrutiny is easy to understand, as it is a concept that promises insight into the dynamic relationship between the resource-rich private sector and the well-being of the global community.
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Given the enormity of the questions contained and puzzles housed under this broad umbrella, there are several emerging and increasingly well-defined CSR research agendas being developed and pursued. Currently, such studies aim to understand the private sector’s motivations for engaging in CSR, illuminate the role of external organizations in CSR, and evaluate the effects of CSR on a range of financial, social, and environmental issues. For example, a large number of CSR studies look to understand the concept from the firms’ perspective, investigating why corporations voluntarily engage in behavior deemed ‘good’ by the public even though they may not directly increase profit margins. Some such studies demonstrate how corporations can leverage CSR to recruit talented workforces and promote employee morale by instilling a sense of pride about corporate results, both financial and nonfinancial in the workforce (Ihlen, 2011; Zu, 2009). Other reports argue for a corporation’s interest in gaining political support for their operations through CSR activities which prove to local elected officials and their constituents their good intent and effects on community wealth and well-being (Barth, 2009; Boeger, 2008). Within this debate on firms’ motivations, it is important to explicitly acknowledge the perverse incentives that may drive the private sector to invest in CSR. Research has suggested that certain firms adopt CSR behavior to divert attention from other serious financial or operational misdoings, engage in political manipulation that will benefit them through more lax regulation at a later date, and mislead potential shareholders into making what seems to be a socially responsible investment (Audi, 2008; Boeger, 2008; Banerjee, 2007; Beauchamp, 2007). Although the concern about the perverse incentives driving CSR is valid and deserves the attention it receives, it is important to contextualize it. These Machiavellian calculations that may lead certain firms and actors within firms to explore the opportunities presented by CSR and engage in them are important, but it would be overly limited
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to cite these concerns as reason to disregard the value of CSR altogether. Even the harshest of CSR critics recognize the value of corporations’ attention to financial, social, and environmental concerns as publicly responsible actors and drivers of positive change in the global community, be it through more conventional fiduciary duties or more progressive environmental actions (Gould, 2008; Gill, 1998; Friedman, 1975). Still other investigations focus on the CSR viewpoints of external shareholders and stakeholders with a goal of understanding the demand for CSR and the perception of its value amongst those outside the private sector. These lines of inquiry ask questions related to the effects of CSR on attracting or discouraging financial investors (Du Plessis, 2010; Horrigan, 2010; Zhou, 2007) and gaining community support and trust with an aim to understanding the different roles of non-profit organizations, civic groups, unions, and other actors in CSR strategies and outcomes (Cornelissen, 2011; Visser, 2010; Werther, 2010; Cramer, 2006). CSR research also contributes to an understanding of topics such as financial responsibility, social equity and environmental integrity. Research on these topics, to-date, is still fragmented, with multiple lines of questions and, often, contradictory results being produced by different investigative strategies. For example, some reports point to the positive effects of CSR on financial responsibility, with evidence that its focus on transparent accounting makes firm leadership more aware of and responsive to fiduciary duties (Sun, 2011; Crowther, 2004) while other studies blame CSR’s immeasurable outcomes as a way for firms to distract from and gloss over real and important financial regulation with sexy but unsubstantial public relations reports (Lee, 2012; Cheney, 2010; Parsons, 2008). Likewise, inquiries into CSR’s effect on social equity have returned mixed results. Although there is a growing consensus around firms’ power and responsibility to enhance social justice both by their fair treatment of employees and
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local stakeholders (Detomasi, 2008; Utting, 2007; Grosser, 2005), different investigations recommend diverse ways to achieving these goals. In regard to corporations’ relationships with stakeholders, for example, some reports advocate for corporations’ active role in social causes (Basu, 2008; Lantos, 2001) while others advise corporations to limit their support to financial resources while allowing local stakeholders to take ownership of such initiatives (Johnston, 2011; Pederson, 2006). Closely linked to investigations on social justice (which often cover issues related to access to natural resources) are CSR studies on firms’ roles as environmental stewards. The actual size, scope, and effects of the private sector’s “carbon footprint” remains a contested issue, but the overwhelming consensus is that corporations’ operations are a major contributor to today’s environmental degradation and climate change problems (Kolk, 2010; Newell, 2007; Lemos, 2006). More specifically, CSR studies have focused on firms’ roles in causing and, consequently, addressing environmental impacts ranging from loss of biodiversity (Ng, 2012; Norton, 2005) to increased pollution (Underwood, 2012; Cutting, 2010; Zurita, 2006) to global warming (Newell, 2007; Frynas, 2005). The concept of CSR exists to structure the exploration of all these concerns that link the globe’s dominant financial power, corporate actors, to social and environmental outcomes. The more these links are understood, the better off the global community will be. My research will inquire into the link between a specific private sector perspective on CSR, that of employees, a particular CSR outcome, that of environmental stewardship. B. Defining CSR Activity and Investment With so many diverse, important, and intersecting lines of inquiry joined together under the CSR heading, it is helpful to choose one definition to anchor this particular research. Since
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Bowen’s text, the International Organization for Standardization (ISO) coined arguably the most widely accepted definition of CSR, when, in September 2010, it published ISO 26000. This document, contributed to by 500 experts from 99 countries (including the U.S.), conceived of CSR as an expansion of private sector organizations’ duties from strictly financial obligations to society and environment. Specifically, the Standard states that Corporate Social Responsibility is the: Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that: 1) contributes to sustainable development, including health and the welfare of society; 2) takes into account the expectations of stakeholders; and 3) is in compliance with applicable law and consistent with international norms of behavior; and is integrated throughout the organization and practiced in its relationships. This extension specifically encompassed seven core issues, many of which were referenced in the examples of CSR questions above: organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development. These many moving parts fall in no concrete order of prioritization. Indeed, the disputes around their relative importance (and non-importance), along with the motivations of corporations to acknowledge and act on them, have triggered more questions than they have answered. The controversy spurred by the standard is, arguably, an indication of its failure to contribute meaningfully and specifically to CSR inquiry. However, the standard’s achievement of grouping and articulating key aspects of CSR in a cohesive and easily accessible way, as evidenced in the clearly defined lines of inquiry outlined previously, makes it a useful point of entry into related research. Overall, although the utility of this standard has been debated without clear consensus on its applicability as a management tool or accuracy as a definition of CSR, regardless of disagreement on its value, it remains the most visible and all-encompassing authority on the subject (Fasterling, 2012; Morali, 2011).
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Although the motivations behind and activities involved in CSR have remained controversial despite six decades of research and international standardization attempts, the human and monetary resource investments committed to CSR-conscious business operations and investing are clear. Consider, for example, a selection of CSR statistics from a survey of 184 companies representing the spectrum of international industries in 2010 (CECP, 2011). In the first place, the sum of corporate philanthropy contributions across all survey respondents totaled $15.5 billion in cash and product donations. Of that giving, the median total donated by corporate foundations was $22.1 million. More than 28 surveyed companies reported total corporate giving of over $100 million and the total giving per employee averaged $628. CSR investment also flows from non-private sector sources. For instance, in 2007, socially-conscious mutual funds had assets under management exceeding $2.5 trillion in the United States, a strong indication of the demand for robust CSR programs among domestic investors (Ioannou, 2010). Given the enthusiasm for and attention to CSR that has become apparent in the past few years, companies’ evolving CSR focus, strategies, and investments are well-worth the rigorous and ongoing investigation. My dissertation will explore an underdeveloped field of study in the CSR literature: assessing the internal, nonelite and nonfinancial motivations behind firms’ decisions to (or no to) invest in CSR with a particular emphasis on environmental stewardship CSR (ESCSR) initiatives. In sum, CSR emerges as a useful concept that bridges public and private sector interests and provides a framework for many complex and dynamic investigations. As referenced above, these investigations aim to organize perspectives on its meaning, intent and value; critique its motivation; analyze its priorities and outcomes; and identify its drivers and actors. In addition, more recent and emerging work focuses on managing its associated programs and behavior and
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predicting its future trends and outcomes (Ng, 2012; Sancho, 2008; Crane, 2008; Kakabadse, 2005; Terris, 2005; Burke, 1999). Within this quickly growing and evolving field of investigation, my research most closely relates to the theme of identifying CSR drivers and actors by exploring the link between private sector employees and corporate ESCSR goals. C. Situating This Thesis: ESCSR Drivers and Actors Research on this particular aspect of CSR has not yet been directly addressed or developed, although different scholars have identified the issue in a partial way in a variety of studies. For example, Simone Pulver explored the relationship between firms’ leadership and ESCSR performance with her case studies on the important role scientific communities play on oil and gas companies’ antagonistic or friendly stance towards environmental policies (Pulver, 2007). In another vein, Gugler and Shi have headed a growing body of work on corporate elites’ relationships with local politicians that shed light on leadership’s sensitivity to and receptivity of politicians’ guidance, as they are seen as being in touch with public sentiment, and by extension, consumers and investors (Gugler and Shi, 2009; Porter and Kramer, 2006). In general, this approach to understanding ESCSR drivers through the lens of corporate leadership emphasizes the competitive advantage (both technical and political) that firms enjoyed when they are viewed as ‘good corporate neighbors’ by external stakeholders including subject matter experts and regulators, as they are able to use this good reputation with scientific and political leadership to earn informal licenses to operate among local civic groups, as well as formal permits to operate from policy-makers. Thus, leadership-oriented research paints CSR front-runners as motivated because they enjoy a financial advantage over firms seen as irresponsible or uncaring about social responsibility (Wang, 2011; Murillo and Lozano, 2006; Zedek, 2002). An evaluation of the ultimate ethical and practical value of this type of profit-
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oriented CSR behavior does generate debate, with certain studies highlighting a propensity among firm leaders driven by these considerations to raise expectations among shareholders and elected officials in a misleading and false way that ultimately harms both the corporate image and the feeling of trust and security the corporation solicits in its community (Bakan, 2004; Burke, 1999; Arora, 1996; Cloninger, 1995). Kitchin advances another way to think about the competitive advantage enjoyed by firms who take CSR to be a priority by framing his arguments not within a profit-focused framework but instead a brand management framework. His studies, and the work in his field, highlight the fact that CSR-oriented firms bolster their competitiveness by creating a socially-conscious brand that appeals to socially responsible investors and consumers (Adams, 2008; Hockerts, 2006; Kitchin, 2003). Finally, in his related studies on the financial benefits of CSR activity, M. Mehra has demonstrated that firms with leadership that make an effort to excel in CSR are much less likely to fall out of compliance with legally binding regulations, thus avoiding punishments and fines that could harm profitability and brand recognition (Mehra, 2006). Studies that do not focus on leadership’s concern with finances and competitiveness as a primary CSR motivator often cite external stakeholders as the main impetus for such activity. For example, Ruggie and Rowley have led the way in linking the strength of local external interest groups, such as environmental non-profit organizations, on firm leadership’s decisions to opt-in to socially responsible behavior (Arenas et al, 2009; Utting, 2005; Bendell, 2004; Ruggie, 2004; Rowley, 1997). In general, these theses argue for the importance of external engagement in CSR decisionmaking, due to the fact that these outside institutions make up the target audience, the ‘society,’ that CSR is aiming to benefit. These types of arguments have been very
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influential, culminating in a theory of integrated external engagement (IEE) that has been picked up by leading consulting firms and advisory groups (Browne, 2013). In another line of inquiry related to my own, researchers have taken up the question of employees’ role in corporate decisionmaking and the consequent impact on workplace morale, including protecting gender equality, promoting workforce diversity, and achieving laudable mental and physical health metrics. For example, Walter Borman investigated private sector employees’ role in corporate decisionmaking, linking employee agency to higher workplace morale and, thus, an achievement of CSR social goals, but with little to no attention on the ESCSR angle (Borman, 2004). In a similar vein, L. Burke has published valuable insights on the positive impact employee ownership of and participation in CSR programs can have on productivity and retention (Burke, 1999). Overall, these existing works draws attention to the relationships between elite firm leadership and ESCSR, as well as employee morale and CSR, but leave unanswered the question of whether there is a meaningful link between private sector employees and ESCSR approaches and outcomes. My research focuses on and answers this question by illuminating the actual and desired role of employees in motivating ESCSR action and evaluating how the quality of their participation impacts ESCSR outcomes. Specifically, in three essays, this paper will analyze the impact of employees on firms’ environmental stewardship initiatives, explore the influence of corporate leadership on these programs, and inquire into the normative framework that applies to private sector actors’ environmental responsibilities. In doing so, this work contributes original insights that illuminate the significant power of non-financial drivers and internal stakeholders influencing corporate ESCSR strategies. It also suggests ways to democratize ESCSR approaches that will
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enhance organizational citizenship and beneficial environmental impact on immediate and global communities affected by their operations. D. Understanding the Link Between CSR and ESCSR To better understand the contribution of my thesis, it is important to review the narrative that explains the evolution and expansion of the concept of CSR to ESCSR, while reviewing the two current schools of thought on the role of the private sector as an environmental steward and menace. When the concept of CSR first became a central research focus in the 1950s, legal and regulatory concerns and compliance constituted the primary focus of its scope (as opposed to recent attention to social and environmental causes). Although today, it seems reasonable to consider environmental sustainability as inextricably intertwined with regulatory compliance, the CSR discussion of the 1950s-1970s concentrated more on issues including equitable hiring practices, just compensation, and transparent accounting protocols which were more salient in that political and social time and environment. As a result, between 1950 and 1970, business scholars coined the term CSR in order to frame a debate primarily about the extent of a firm’s ethical obligation to align business goals with the socio-economic objectives of the public as codified in law and public policy (Davis, 1967; Davis, 1960; Heald, 1957; Eells, 1956; Bowen, 1953). As interest in CSR grew over the decades, scrutiny of a firm’s CSR decisions and actions expanded, as noted earlier, beyond compliance with explicit regulation. A corporation’s voluntary and pro-active responses to a range of concerns - including community welfare, international development, and environmental sustainability - became fair-game for inquiry (Dalton 1982; Carroll, 1979; Brown, 1979; McKie 1974; Arrow, 1973). When matters of resource scarcity, loss of biodiversity, climate change, and so forth, became global policy issues in the 1980s, scholars put businesses’ environmental sustainability practices in the public
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spotlight. In-line with these intensified debates, awareness and interest grew on capitalism’s effects on the environment. From these debates, several different theories of environmental sociology were born, including the ‘treadmill of production’ and, opposing it, ‘ecological modernization.’ To be clear, other, related theories in environmental sociology on the interaction between capitalism and the environment also emerged, including green growth, green capitalism, green socialism, greenwashing, and human exemptionalism (indicating humans’ exemption from environmental ethical duties). These schools of thought are relevant and valuable to other inquiries into CSR, but in this paper I focus on only treadmill of production and ecological modernization theories as they most directly ask and answer the question of whether a capitalist system can be environmentally sustainable. The treadmill of production concept was first introduced around 1980 to argue for the reality of a globalized, capitalist economy. In essence, these scholars used the metaphor of a never-ending treadmill to describe the problems induced by technology: technology leads to a mechanization and acceleration of production. This, in turn, creates a process by which the state, the private sector, and society become dependent on economic growth to solve problems, such as unemployment, which, ironically and cyclically, exacerbates and is exacerbated by, more advances in technology. This unsustainable dynamic leads to increased consumption and competition among multi-national corporations (MNC) for resources in order to keep production high. This competition creates a constantly expanding capitalist machine with ever-increasing and detrimental environmental effects that will prove unsustainable in the long-run (Buttel, 2004; Foster, 1999; O’Connor, 1994; O’Connor, 1989; Schnaiberg, 1980). Where does the private sector fit in to this viewpoint? From a treadmill of production perspective, firms are viewed as entities that allocate all available resources to production in the
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hopes of eliminating competition and capturing as much market-space as possible. Engaged in this relentless pursuit of profit, firms’ technologies are seen as the main agents of environmental degradation and the exhaustion of natural resources, not as a possible solution (Gould, 2008; Bakan, 2004). Although treadmill of production theorists were, arguably, the first to take the stage, their position engendered reaction from scholars who labeled themselves as ecological modernization proponents. Overall, ecological modernization scholars champion technology as the necessary and sufficient solution to the environmental degradation caused since the Industrial Revolution (Frankhauser, 2011; Mol, 2000; Huber, 2000; Mol, 1995). They posit that the only solution to environmental degradation caused by industrialization and technology is more and better industrialization and technology. As such, the private sector emerges as the primary agent equipped to redress the environmental destruction caused by capitalism with no intent to eliminate capitalism. Although ecological modernization is a large and rapidly expanding field, leading scholars have endorsed a two-step view of the process that is helpful to my inquiry. In the first step, firms recognize environmental sustainability issues as a concern that stands alone from economic issues. In the second step, firms “institutionalize ecology in production and consumption processes, and thus… redirect these basic economic practices into more ecologically sound ones (Mol, 1995).” Overall, then, ecological modernization answers treadmill of production scholars by offering a brighter picture of capitalism as a sustainable (as opposed to unsustainable and constantly expanding) system that will solve its industrial problems with future industrial actions. It is important to note that the use of the word ‘solve’ in this context glosses over an important normative debate. Instead of delivering a judgment on whether enabling and prolonging an industrialized way of life is a ‘good’ or ‘bad’ ability, these scholars
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are instead using the word ‘solve’ to apply to the question of simply sustaining such a way of life. In other words, they are indicating that it is through advances in industrial efficiency that an industrial way of life will prove a sustainable manner of existing (regardless of whether this sustainability is a morally good or bad solution). Political organizations and policy-makers have recently accepted ecological modernization’s principles and endorse the idea that businesses can, and should, be run in an environmentally sustainable fashion. Non-profit and political organizations, think tanks, universities, and private businesses have put forth various sustainability guidelines, reporting templates, metrics, certifications, and principles aimed to increase awareness and adherence to environmentally-friendly business practices.1 The public has also become more sensitive to the issue of a corporation’s carbon footprint. Many CSR-conscious investors even utilize sustainability indices developed by financial leaders such as Dow Jones and FTSE. The $15.5 billion in private sector funds allocated to CSR activities across only 184 of the world’s companies, the decades of inquiry devoted to CSR and the private sector’s role in environmental stewardship, and the recent proliferation of policy-making about corporate citizenship and excellence, provides strong evidence that the elites and the public making up the global community consider business ethics and sustainable operations to be a serious matter.2 Although considerable attention is being devoted to the role of capitalism’s ethics and effects on the environment, there is still significant debate on the motivations driving CSR activities and
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Leaders in this area include non-profit organizations such as AccountAbility (http://www.accountability.org/) and World Economic Forum (http://www.weforum.org) ; political organizations such as the United Nations (http://www.unglobalcompact.org/) ; think tanks such as the World Business Council for Sustainability Development (http://www.wbcsd.org/home.aspx) ; universities such as the Boston College Center for Corporate Citizenship (http://www.bcccc.net/) ; and private consulting practices such as Booz & Co. (http://www.booz.com/). 2 While there are a multitude of sources to support this position, please see Chouinard et al. “The Sustainable Economy.” Harvard Business Review. Oct. (2011): p. 52 -62. This article puts forth one of the most compelling arguments for why and how corporations should incorporate eco-impact considerations into value chain analyses.
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the best methods corporations can adopt to achieve excellence in sustainable business practices. This area of inquiry constitutes the focus of this dissertation’s three interconnected essays. As discussed, existing CSR studies provide a complex and fragmented theoretical framework that explains private sector environmental stewardship largely through a lens focused on business leaders’ concerns with financial and political goals and their interaction with external actors. These investigations highlight the important role non-profit organizations, politicians, unions, community/civic organizations, scientific communities, and other interest groups play in influencing CSR decisions at elite, leadership levels. To-date, the role of employees in CSR is largely left unexplored, with the majority of attention focusing on their role in corporate decisionmaking related to conventional operations and the consequent impact on employee well-being and morale. E. Expanding the Field of ESCSR Knowledge Thus, these studies so far have succeeded in highlighting legitimate and significant CSR drivers and actors that center around profit, firm leadership, and the importance of IEE. However, they neglect important analysis around the role of non-financial drivers and internal, nonelite stakeholders. Omitting these factors creates an incomplete understanding of why and how firms choose to engage in CSR and ESCSR and the importance of internal buy-in to achieving related goals. Although scholarly analysis has been applied to non-profit-oriented business motivations (summarized in the business ethics literature review in this thesis’ third essay) and the role of firm’s internal stakeholders in corporate decisionmaking and action (explained in the organizational strategy literature review in this thesis’ second essay), m y research connects the two areas of study. This synthesis fills the existing gap in CSR
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investigation and further develops this emerging body of research. My work both challenges and complements existing studies through three essays. The first essay introduces the as-yet unexplored area of internal motivations driving private sector CSR approaches. It sheds light on firms’ stakeholders that drive business decisions and actions by surveying all levels of leadership and employees on their interest and participation in ESCSR approaches. The second essay evaluates the receptivity of corporate leadership to employees’ input to CSR and ESCSR approaches through both macro-level statistics and in-depth case studies. The final essay draws on the conclusions of the empirical, statistical, and case study investigations to offer a green hands framework that defines best practices in ESCSR approaches and offers metrics for evaluating private sector CSR performance.
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1. First Essay: Do Employees Want Firms to Serve as Environmental Stewards?3 In the first essay, an empirical inquiry is used to address the as-yet unanswered question of whether private sector employees find CSR to be a worthwhile and interesting social cause. I will focus specifically on employee judgments on the value of employees participating in and contributing to environmental stewardship initiatives both on a professional and personal level. Much attention has been paid to firm leadership’s attitudes toward CSR, as well as the public perception of firms as ‘corporate citizens.’ Nevertheless, the role and attitude of companies’ internal stakeholders – namely employees – has been largely overlooked by CSR scholars. To help address this issue in the literature, my instrument of analysis in this paper is a questionnaire with content largely modeled on past surveys and studies that assess the nonincome related factors that influence private sector employees’ assessment of career and personal satisfaction. My survey asks private sector employees in a variety of industries about their personal assessment of the importance and value of CSR behavior and, in particular, whether they have a sense of obligation to advance environmental stewardship goals. The survey further inquires into employees’ translation (or lack thereof) of their personal moral code to the workplace in their pursuit of fulfilling careers and meaningful lives. To answer the questions posed in this essay, the survey probes respondents on a variety of subjects. For example, it includes questions that collect respondents’ understanding of how environmental stewardship duties play into the broader definition of CSR, identify the relationship between firms’ CSR-
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“Do Employees Want Firms to Serve as Environmental Stewards?” This essay was presented at a Booz Allen Hamilton-sponsored monthly business and academic conference on environmental sustainability in December 2011.
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performance and respondents’ professional satisfaction; and gauge how (or if) respondents translate feelings of career fulfillment into personal well-being.4 By cross-referencing respondents’ answers to the various questions with demographic and industry data collected at the same time, the survey’s results highlight strong trends that serve as empirical evidence for the power of private sector employees’ personal commitment to environmental integrity in their activity in the corporate sphere. Put briefly, the main finding is that employees not only want their employers to serve as environmental stewards but also want to take an active role in CSR initiatives themselves. However, this essay leaves unanswered the question of whether their input influences corporate leadership’s ESCSR approach.
4
The survey’s questions can be found in Word-document form in Appendix A.
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2. Second Essay: ESCSR Approaches: Green Screen or Green Scene? 5 The second essay picks up the line of investigation left open by the first by testing, through both a statistical regression and a three-firm case study, what role (if any) employee input and preference plays in environmentally conscious-firms’ ESCSR activities. In the statistics-based portion of this essay, the paper asks: What variables make environmentally-conscious firms likely to sponsor employee-matching gift (EMG) programs? EMGs are used as the dependent variable because they provide the closest concrete indicator of a firm’s willingness to incorporate employee input into philanthropic ventures. The universe of inquiry (environmentally-conscious firms) is defined as the 72 publicly listed firms that opted into the Chicago Climate Exchange (CCX). The results of the study identify statistically significant and positive relationships between firms that have diverse corporate boards and large numbers of senior managers and those who adopt EMG programs. These findings tell us that corporations whose leadership bodies are large and diverse, and thus are obligated to engage in decisionmaking that includes a greater number and diversity of stakeholders, are also more willing (than those who do not) to include employees in ESCSR decisionmaking and implementation. To add nuance to this general, quantitative inquiry, this essay also includes an in-depth case study of three CCX firms who host EMG programs. The aim is to identify which companies have ESCSR approaches that are a green screen (firms with disinterested leadership and/or employees who limit CSR activities to superficial or public relations initiatives) or green scene (firms with engaged leadership and employees who interpret CSR activities as holistic and pro-active initiatives). This portion of the paper highlights certain challenges to environmental
5
“Corporate Decisionmaking: Green Screen or Green Scene?” This essay was presented at the 11th Annual Hawaii International Conference on Arts and Humanities in January 2013.
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stewardship and deliberative decisionmaking in the corporate sphere, including adopting flexible yet disciplined environmental stewardship approaches and finding a balance between ‘passive’ check-writing initiatives versus ‘active’ employee-focused environmental stewardship programs. This investigation reveals previously unexplored statistically significant relationships between the size and composition of senior corporate leadership and inclusive ESCSR approaches. It also offers insight into what makes a corporate culture ‘green screen’ as opposed to ‘green scene’ in regards to ESCSR.
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3. Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands 6 The dissertation ends with a normative investigation of whether firm leadership has an ethical obligation to foster deliberative decisionmaking (or a deliberative ‘green scene’ corporate culture) in matters related to environmental stewardship. The paper reviews ethical and economic thought dating back to Adam Smith to demonstrate that free market capitalism is based on a precept of cooperation to ensure all stakeholders arrive at a mutually beneficial situation. Smith’s work is complemented by more recent work in business ethics that elaborates on corporate leadership’s obligation to serve as employees’ advocates and stewards for both ethical and business purposes. My research then goes on to link this market-focused ethical analysis to the more recent capability approach of Amartya Sen and others. Proponents of this approach argue that those who are better off in society should shoulder more of a burden to ensure social and environmental well-being than should those who lack the adequate resources to enhance general utility. The paper concludes by leveraging work done on the value of deliberative democracy to argue for a theory of ‘green hands’ which demonstrates that the most just way for firms to reach ESCSR goals is via a deliberative, effective, and sincere employee stewardship. In this dissertation’s three essays, I develop a new model of synergy between employee interest in CSR and leverage on real outcomes of firm decisions. Each inquiry culminates in specific conclusions. The first uncovers the strong link between CSR’s impact on professional and personal well-being; the second identifies firm-level indicators of robust ESCSR performance; and the third defines an ethical framework to guide best practices in linking expressed employee enthusiasm for ESCSR to top-level leadership that may or may not already be inclined to include nonelite input into ESCSR decisionmaking.
6
Overall, these findings
Portions of research in this essay were used to inform the Climate Change Adaptation Capstone Workshop Concept Paper “The Niger Delta” published by Columbia University’s School of Internatiional and Public Affairs in Spring 2012.
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identify a novel theoretical approach to understanding CSR that focuses on non-financial drivers and nonelite actors. These findings are encapsulated in policy recommendations and areas of further study at the conclusion of the entire thesis piece.
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II.
First Essay: Do Employees Want Firms to Serve as Environmental Stewards? A. Abstract
What motivates an employee to come to work every day? Although it is easy to offer an obvious answer, the paycheck, this would do a disservice to the multiple and interconnected professional, personal, and social benefits a healthy corporate culture can offer its constituents. Experts in fields as varied as economists, philosophers, and anthropologists have all offered theories on the value of professional satisfaction on individual well-being and behavior, and this essay is motivated by that theoretical quest. In order to contribute to this theoretical debate, my investigation asks an empirical question: it asks private sector employees whether they want their firms to engage in CSR and in voluntary environmental stewardship initiatives more specifically. The findings of a survey administered to answer this question demonstrate that a majority of private sector employees support corporate decisions to invest in and commit to ESCSR. In exploring and explaining these results, I support a hypothesis that corporate leadership’s willingness to engage employees in ESCSR decisionmaking and implementation is a promising and productive way forward in pursuing excellence in environmentally-sustainable business practices. By doing so, this essay adds value to current elite-focused CSR literature by exposing the importance of all levels of internal corporate stakeholders. It also lays the groundwork for future study into the actual state of corporate-level ESCSR decisionmaking and implementation practices and analysis of employees’ roles in those activities. This investigation further serves to justify future, more in-depth exploration of the ethical duties of corporate management to offer and employees to avail themselves of deliberative and democratic processes when defining a corporation’s social goals and mission. B. Introduction “Any environmental virtue ethics worthy of the name must… include a desire to put economic life in its proper place – that is, as a support for comfortable and decent human lives.” –Philip Carafo and Ronald Sandler, Environmental Virtue Ethics (p. 37) Cafaro and Sandler’s first tenet of an environmental virtue ethics emerges as clearly intellectually logical and humanely altruistic. However, whether the desire to “put economic life in its proper place” actually exists in the spirit of the American public is far less obvious. This essay aims to test the viability of the hypothesis to a critical U.S. demographic, namely those in the private sector. It asks why those individuals adopt environmental stewardship roles. In attempting to answer that question, this investigation will contribute new knowledge to CSR studies by analyzing employee-level CSR motivations and activities. The essay will also shed light on the willingness of a resource-rich demographic, those employed by private industry, to
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engage in voluntary measures to enhance environmental integrity. The next section outlines CSR conventional wisdom of mercatocracy and shareholder wealth maximization (SWM) followed by an explanation of my contribution concentrating on the role of employees in CSR. i. CSR Conventional Wisdom: Two Versions of Elite-Focused Discussion A. Claire Cutler, leading scholar in private authority in international-social affairs, offers the most well-developed definition of mercatocracy in her 2003 text, Private Power and Global Authority: Transnational Merchant Law in the Global Political Economy when she states that mercatocracy is a “complex mix of public and private authority [that] blurs the distinction between public and private commercial actors, activities, and law. It exercises near hegemonic influence through its material links to transnational capital and through its monopoly of expert knowledge, thought, and institutional structures (Cutler, 2003: p. 5).” Cutler develops this
definition throughout her text by arguing that the creation of CSR-related laws and regulations typically falls into the hands of the very corporate leaders it is intended to control. As a result, the regulations are far from effective in disciplining their authors who are looking to protect their own interests first and foremost. Furthermore, Cutler criticizes those scholars who “discount the political significance of such corporations… thus limiting our understanding of the nature of the global political economy by obscuring the nature and significance of private, corporate power and authority (Cutler, 2003: p.5).” Cutler asserts that this political significance is synonymous with business-oriented interests that marginalize social objectives such as environmental integrity and human welfare. It is important to note that Cutler is one of many scholars who endorse the idea that corporations may wield political power for their own benefit and to the detriment of society (Hall, 2002; Strange, 1996; Turner; 1978; De Cecco, 1976). Earlier research focused more
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narrowly on the power corporate interests have in crafting ‘merchant law,’ which prioritize business goals in issues related to access to seas, military aims, and political relations. Nonetheless, Cutler and other scholars have recently expanded their argument to CSR by investigating expansive social and environmental arenas. For example, Cutler is joined by Stephen Gill who asserts that the power of the mercatocracy “confers privileged rights of citizenship and representation on corporate capital, while constraining the democratisation (sic) process that has involved struggles for representation for hundreds of years (Gill, 1998).” Similar to mercatocratists, SWM theorists believe that corporate leadership is the dominant power in making business and CSR decisions. Both schools also find that financial success is favored at the expense of social and environmental aims. The difference between mercatorists and SWM theorists is more a matter of focus than content: mercatocratists devote their energies to profiling the actors and relationships that make up the elite network, whereas SWM theorists choose to focus more on the influence of corporate goals that drive the private sector elite to engage with their public sector counterparts. In other words, where mercatocratists analyze the public and private sector relationships that make the mercatocracy work, SWM theorists look at the private sector drivers that inform the ways in which the corporate mercatocracy chooses to engage with policy-makers and politicians. SWM itself is not a new theory, it has been used to explain business ethics largely and CSR more specifically for several decades. In fact, according to scholar John Dobson, SWM is “backed by 2,500 years of moral philosophy (Dobson, 1999: p. 70).” To offer a high-level overview of the theory, proponents of SWM see corporate behavior as solely fueled by its mission to deliver the maximum possible return on investment to legal shareholders. Perhaps due to its longevity, very distinct camps of thought have emerged as different scholars in
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different eras pontificate about the nexus of business and morality under the SWM heading. The conventional wisdom among most established business schools is to teach SWM as an amoral approach to doing business (Chambers, 1996; Jensen and Meckling; 1976). These institutions assert that, in expert Donald Chambers’ view, “SWM serves as a conduit of ethics, rather than a net determinant of ethical behavior… market values can price ethics just as they price anything else (Chambers, 1996: p. 93).” However, this neutral, or solely instrumental, stance has been challenged by other researchers who endorse the ‘invisible hand theory’ to justify its morality. These scholars argue that SWM will generate benefits for companies’ shareholders, as well as to society (Cloninger, 1995; Smith, 1992; Aggarwal, 1990). The debate, however, does not end there. Another contingent of scholars argues that SWM, both its precepts and its consequences, are actually immoral. Their argument has a direct connection to CSR, as they suggest this immoral and irresponsible pursuit of profit inevitably results in poor-quality or non-existent CSR actions. SWM scholars who view the theory as immoral suggest that environmentally or socially-minded CSR is a figment of ‘idealistic’ imagination with no actual place in real corporate goals and consequent behavior. Instead, they accuse firms of manipulating the “CSR” label to merely reinforce standard business practice related to pre-established fiduciary duty and due diligence standards (McGuire, 2003; Zajac, 1994; Fama, 1980). Legal and corporate governance expert Paddy Ireland most explicitly emphasizes the injustice done to environmental and social welfare by SWM strategy when she states that “shareholder primacy is in reality the primacy of a small privileged elite (Ireland, 2005: p. 52).” Ireland’s work, along with her colleagues, suggests that SWM is not only the most accurate theoretical framework to explain corporate behavior, but that it explicitly promotes corporate social irresponsibility and a
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disregard for other stakeholders’ well-being. As a result, Ireland accepts SWM as a description of reality but emerges as a vociferous critic of its immoral goals (which aim to protect and further enrich a small, privileged elite) and consequences (which result in environmental and social degradation at the expense of maximum financial profit). ii. Employees’ Role in CSR: An Original Contribution
Whereas the conventional literature concerning mercatocracy and SWM discussed above largely argues for the force of elite- and business-minded decisionmakers, both moral and immoral, in the reasons explaining CSR activities, my research contributes a new aspect to the conversation by suggesting that employees may also serve as a driving force in the specific field of ESCSR due to professional and personal motivations. My contribution adds to the conversation by examining whether employees are interested in ESCSR at the decisionmaking and implementation level. Specifically, this essay’s hypothesis, that private sector employees are willing to advocate for and participate in environmentally-friendly corporate practices, illuminates the extent of power that employee drivers do, can, and should have to influence firmlevel ESCSR choices and consequent action. My particular contribution is founded on past work, primarily ethical anlaysis, that highlights motivations for eco-friendly behavior among rational individuals in society. The literature on this topic is expansive and it is helpful to summarize the work to-date along three types of motivators: individual, community, and global. In the first place, scholars identify personal (some would argue, selfish) reasons for an individual to be concerned about and interested in engaging in environmental stewardship practices. For example, access to clean air and water on a daily basis is imperative to sustaining human life. To be sure, the very basic desire for good health is one of the first and most universally recognized drivers of eco-friendly
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practices (Arrow, 2012; Pojman, 2008; Routley, 1982 and 1973). Environmental stewardship also fulfills certain obligations morally upright people feel towards their fellow community members (Welchman, 2012; McShane, 2007; Phillips, 1996). Scholars note this moral lesson is especially prominent in religious literature. Holy leaders remind their congregations that “the world had not been given to humanity outright but was properly the possession of its creator, to whom human beings stood in the role of stewards (Welchman, 2012: p. 305).” Thus, individuals view the environment as free from (or, at the very least, as more than a matter of) individual ownership. Instead, the natural world is seen as a resource given in equal parts to a community to use in a way that benefits its members. Lastly, other scholars investigate individuals’ motivations to be environmental stewards through a global lens (Norton, 2005; Worrel, 2000; Wasserman, 1998). These scholars emphasize the interconnectedness of the global community in terms of politics, economics, and environment. Their works focuses on the carbon footprint of MNCs who run operations that impact stakeholders in all hemispheres. The absence of borders with respect to ozone depletion, air pollution, and the degradation of forests, water, and other key supporters of human life and biodiversity all play key roles in this literature that stresses the importance of protecting global resources for both today’s and tomorrow’s generations. Whereas literature explaining individuals’ motivations to protect the environment generally concurs on altruistic intentions, it is also important to consider the more calculated reasons employees’ engage in CSR more generally. For example, CSR’s growing visibility as an important aspect of corporate performance makes related programs an opportunity for employees seeking career advancement to win leadership’s attention as exemplary volunteers or community leaders. Additionally, the peer pressure surrounding CSR involvement that may come from coworkers may also spur employees to participate unwillingly in related activities in order to ‘fit
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in’ to corporate culture and be treated well at work. Doubts such as these on the true altruistic value of employees’ attention to CSR are legitimate. However, similar to larger concerns about CSR’s motivations writ-large, they do not merit a complete dismissal of the value of understanding employees’ many motivations for opting into CSR activities. Assuming any decision can be explained by one factor is an overly-limited way of considering human behavior. This is especially true when considering motivations for action and attitudes, such as those related to CSR, that bridge multiple spheres of life (professional, personal, social). As a result, while keeping the possibility that employees may be intent on manipulating CSR actions for their ultimate benefit only in a professional sense (be it through a promotion, an increase in salary, or better intra-personal connections) is valid, the reality that they will be receiving, enjoying, and cognizant of benefits outside the professional sphere is equally important to acknowledge and consider as a driving force in their ultimate opinion on and engagement in CSR. Due to the importance of striking a balance between allowing the private sector’s use of natural resources in a profitable and sustainable way while motivating these same businesses to protect the environment, it was important to test the viability of leveraging employees’ interest in environmental stewardship to achieve this goal through active questioning techniques. This type of survey exercise has not been administered in previous studies, most of which focused on case studies, focus groups with firm leadership, or statistical-based investigations. In order to fill this gap, my study is based on a CSR and ESCSR survey and includes a profile of survey respondents and discusses potential bias from the socio-demographic characteristics of the respondents’ pool. The combination of survey responses and demographics analysis sheds light on the potential role of internal corporate stakeholders on firm-level ESCSR decisionmaking and implementation.
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These findings ultimately provide an entry point for further inquiry into the actual role of employees and leadership in ESCSR approaches. C. Essay Motivation The motivation behind my inquiry is to advance the fields of CSR literature by expanding what is now an elite- and financially-focused conversation to a discussion that encompasses employee input at both the decisionmaking and implementation phases. My hypothesis is that employees are critical determinants in shaping and giving legitimacy to corporate culture and, likewise, active participants in corporate decisions when they are allowed to give voice to opinions in an office setting.7 In other words, CSR scholars have done a disservice to individual employees by treating firms as virtual ‘black boxes’ that act of one mind and spirit in-line with executive leadership. In pursuing this novel hypothesis in CSR literature, my work challenges past CSR research as summarized by the review of fiscally-focused mercatocracy and SWM theories. My investigation into the role of internal stakeholders in a firm’s ESCSR strategy not only expands the current CSR conversation, but also further develops organizational strategy studies into employee citizenship. Employee citizenship is a term used to encompass a variety of factors, including employee loyalty to a firm; strength of a cohesive corporate culture; and alignment of leadership and employee goals. Regarding employee citizenship, scholars explain that the emergence of strong organizational citizenship behavior (OCB) is primarily a result of a firm’s procedural (i.e. decisionmaking) mechanisms and of a firm’s demonstration of its commitment to employee well-being (Manville, 2003; Eisenberger, 1990; Shore, 1995; Wayne, 1997; Kickul, 2001; Blakely 2005). Existing literature largely frames studies in terms of traditional business
7
This issue, of when, how and why employees are and/or should be included in deliberative decisionmaking in the office, is picked up on and elaborated in this dissertation’s later essays.
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practices, including investigating the relationship between soliciting employees’ opinions on decisions related to core operations and personnel training programs and consequent levels of technological innovation and employee loyalty (Moorman, 1991). Although these studies have demonstrated a positive relationship between employee engagement in decisionmaking and robust OCB, these studies have not, to-date, seriously considered employees’ role in ESCSR decisionmaking. Existing scholarly work investigating the connection between employee engagement and CSR activities primarily focuses on the post-decisionmaking phase (i.e. employees’ willingness to participate in CSR activities pre-defined by the corporation). Furthermore, these inquiries often take the form of case studies analyzing CSR programs motivated by corporate leadership’s personal interests and/or CSR programs deployed in the geographic areas critical to corporate core operations (see bibliographic citations for Chong and Murillo). These articles are very different from my inquiry into employee desire to engage in the CSR decisionmaking process for general and globally-oriented environmentally-focused programs in several, variously-sized firms.8 Given the existing work already accomplished on employees’ engagement in operationsfocused decisionmaking and CSR implementation, this essay offers new research by shedding light on employees’ interest in environmental stewardship in the professional and personal sphere.9 In demonstrating this interest, these results successfully question and challenge conventional CSR wisdom which limits analysis of firm motivations to financial drivers. It also serves to justify further study into the potentially fruitful and critical role of employees in
8
Organizational strategy literature and OCB theory will be revisited in more detail in this dissertation’s subsequent essay, but deserves mention here to help contextualize this first essay’s survey content. 9 This essay’s focus on employees’ desire to become involved in decision-making serves to justify the further investigation of employees’ actual opportunities to engage in environmental CSR decision -making, which will be explored in this dissertation’s second and third essays.
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shaping and implementing corporate-level ESCSR decisionmaking from public policy, business and ethical perspectives. D. Survey Content and Goals With these purposes in mind, I created a survey with the goal of exploring employees’ opinions on CSR in general and corporate environmental stewardship roles in particular. The survey asks private sector employees in a variety of industries about their personal assessment of the importance and value of CSR activities with a special focus on their sense of personal obligation to environmental stewardship goals. The questionnaire generated empirical evidence that sheds light on actual individuals’ CSR and ESCSR decisionmaking processes and consequent actions. It inquires: To what extent do private sector employees translate personal feelings of environmental stewardship obligations to the workplace? As discussed previously, the rationale for posing this question is to demonstrate that individual employees consider environmental stewardship decisionmaking and behavior seriously; and that they translate that priority to the office-place. If this link can be demonstrated, there is a strong political and normative argument for the further exploration of continued, or enhanced, employees’ inclusion in corporate-level CSR decisionmaking and implementation. My instrument of analysis is a questionnaire with content largely modeled on past surveys and studies that probe the non-income related factors that enhance individuals’ assessment of quality of life.10 A copy of the survey is included in Appendix A. The survey further inquires into employees’ translation (or lack thereof) of their personal moral code to the
10
For more on this topic, please see Richard Easterlin’s 2003 article “Explaining Happiness” in Proceedings of the National Academy of Sciences of the United States of America and Carol Graham’s Happiness Around the World: the Paradox of Happy Peasants and Miserable Millionaires, 2010.
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workplace in their pursuit of fulfilling careers and meaningful lives.11 The survey is structured in three-parts: The first page of questions seeks to collect respondents’ understanding of how environmental stewardship duties play into the broader definition of CSR; The second page of questions seeks to gauge how respondents define their firms’ CSR performance within self-defined peer groups; and The third page of questions seeks to identify the relationship between CSRperformance and respondents’ satisfaction measured in terms of career fulfillment and personal well-being.12 By cross-referencing respondents’ answers to the various questions with demographic and industry data collected at the same time, these results help identify trends that can serve as empirical evidence to illuminate the extent of and reasons behind private sector employees’ personal interest in and commitment to environmental stewardship roles as well as the types of staff most and least interested in the CSR cause. E. Target Audience Ideally, the respondents’ pool for this survey would be a representative sampling of employees in the U.S. private sector (including variously-sized, -aged, -located, and -profitable firms in diverse industries) in order to most accurately capture and analyze the diverse opinions of those engaged in the corporate world. Because capturing the countless types of U.S. companies is a venture outside the scope of this essay, a sample of convenience was constructed to come as close to the ideal goal as possible.13 Specifically, in defining the target audience of
11
It is important to note the influence of ‘economy of well -being’ literature on this survey. While ‘well-being’ and ‘satisfaction’ can have many different and nuanced meanings among scholars in this area, this paper treats the two concepts as identical. 12 The survey’s questions can be found in Word-document form in Appendix A. 13 While this sample of convenience prohibits me from conducting formal tests for statistical differences in this sample, it allows me to make descriptive and strong empirical arguments for the relationship between individual employee’s interest in and commitment to environmental stewardship roles and activities and their personal fulfillment/personal and professional contentment. A demonstration of a strong connection will justify further,
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my “Corporate Social Responsibility: Business Professionals’ Opinions” (CSR Survey) before its administration in the summer of 2010, I first attempted to construct an accurate representation of the key industries in the American private sector. The identification of ‘key’ industries was based on the power of each sector, using calculations of contribution to annual gross domestic product (GDP) as my main metric. These calculations were informed by the U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 2003-2010 press release.14
quantitative-based study into the corporate decision-making process around CSR as it has interesting implications for business, political, and ethical scholars. 14 This press release was released on Tuesday, December 13 2011 and can be accessed via the www.bea.gov website.
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Table 1: U.S. Economy by Sector. This table illustrates the value added by industry group as percentage of total U.S. 2010 GDP and guided my identification of the top five most powerful sectors. Source: U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 2003-2010 press release Using Table 1, found in the Department of Commerce’s full report, the top five industries were identified by looking at the percentages each contributed in 2010 next to the main headings under private sector industries. For example, five lines down from ‘Private Sector,’ ’Manufacturing’ (which includes durable and nondurable goods) accounts for 11.7% of the 2010
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GDP. Following this pattern, this publication listed the top five largest industries, contributing a total of 59.6% to the U.S. GDP in 2010, as: 1) 2) 3) 4) 5) finance/insurance/real estate/rental/leasing (20.7% contribution); professional and business services (12.3% contribution); manufacturing (11.7% contribution); educational services/health care/social assistance (8.8% contribution); and retail trade (6.1% contribution).15
After creating this schematic of the nation’s economy, I put together, based on personal connections as well as connections I formed through academic and professional advisers, a list of ‘umbrella’ contacts that worked in each of the top five industries. These umbrella contacts were, in a way, gatekeepers. They were individuals holding corporate positions that allowed them access to the appropriate number of private sector employees in the respective top-five industries. Overall, the on-line survey was intended to reach 500 respondents. To ensure inclusion of a representative number of employees in each of the afore-mentioned sectors, I calculated the share of the U.S. economy each contributed when only the top-five industries were considered, as demonstrated in the break-down in Figure 1.16 This meant that approximately: 1) 170 respondents should come from industries related to finance/insurance/real estate/rental/leasing ; 2) 105 respondents should come from industries related to professional and business services; 3) 100 respondents should come from industries related to manufacturing; 4) 75 respondents should come from industries related to educational services/health care/social assistance; and
15
In 2010, government activity contributed a little under 14% to the national GDP, with various industries including agriculture, entertainment, and food services making up the remainder of the total $14.82 trillion amount. While, ideally, my survey would have included all industries to paint a more accurate picture of opinions in the U.S. private sector, I chose to limit my target audience to the top five in order to keep my research efforts in a reasonable scope (i.e. in terms of contacts, respondent numbers, and results analysis). In addition, many of the industries that fell outside the top five were in sectors that do not rely on the Internet to the same extent as the those in the top five (for example, agriculture), and therefore most likely would not have yielded comparable response rates to my on-line survey as those listed in the top five tier. 16 For example, the five-top industries contributed 59.6%, or $8.83 trillion, to the $14.82 trillion total GDP amount. This means the retail trade contributed approximately $904 million. Within the top five industries, this places the retail sector at an approximately 10% contribution, meaning I would ideally survey 50 of my 500 respondents from this industry.
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5) 50 respondents should come from the retail trade.
10% 35%
Finance etc Professional/Business Services Manufacturing Educational etc
15%
19% Retail 21%
Figure 1. Top Five U.S. Industries’ Contribution to GDP. This figure illustrates the normalized contribution of the top five U.S. industries to total U.S. 2010 GDP and guided my quota for survey respondents by sector. Source: Calculations informed by the U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 20032010 press release My typical strategy was to e-mail, call, or meet one of these umbrella contacts, explain my survey (both its design and intent), and ask them to distribute it to a group of employees and/or coworkers. While I created rough estimates of how many survey respondents each umbrella contact could solicit, I was also able to ask that question in my conversations with them to make sure my ideas were in-line with reality. Once the umbrella contacts confirmed that they were able and willing to contact a certain number of respondents, they were given the link to the survey along with explanatory language about its content and goals. I also offered to reach out to their respondent pool myself if they preferred to send me the appropriate distribution list. Beyond targeting a quota of respondents from each industry, I also intended my survey to reach a diverse array of internal corporate stakeholders. For that reason, I identified umbrella contacts at many levels of responsibility and power, including individuals in chief executive
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positions as well as mid-level managers spanning both operational and administrative oversight duties. I further made sure that at least 30% of each umbrella-contact group came from a company headquartered in a unique U.S. state, n order to achieve the desired geographical diversity (although many of the umbrella contacts sent the survey to employees located in multiple states). The full range of my umbrella contacts’ characteristics are captured in Table 2.
Industry
Number of Umbrella Contacts 11 18 7
Firm Size (Number of Employees) 100 – 45,000 12 – 25,000
Firm Age (Years) >1 – 160 2 – 98
Number of HQ States
Finance, etc Professional/Business Services Manufacturing
4 6
2010 Net Profit Margin in 2010 (%) -15 – 60 4 – 27
1,800 – 20 – 99 4 13 – 44 164,000 Educational, etc 10 5 – 250 >1 – 47 3 5 – 22 Retail 5 2,000 – 25 – 122 3 15 – 34 90,000 Table 2. Characteristics of Umbrella Contacts. This table illustrates the diverse characteristics of the umbrella contacts identified to aid in the administration of the original survey. By following this logic and these calculations, my survey was successfully sent to approximately 500 respondents spanning the top five industries either personally or through my umbrella contact. In the end, 170 responses were received, a 34% response rate. In the next section, the choice of mode of collection is explained, followed by a discussion of the profile of the actual respondents who participated in the survey. F. Mode of Collection Survey administration necessarily includes several methodological choices. A major challenge in this instance was selecting the best mode of questionnaire distribution and collection of results. In order to make the choice that would yield the highest response, the most exact responses (i.e. allow respondents to cognitively understand and response appropriately to
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questions), and the most accurately analyzed data, I made a series of strategic decisions. The first decision regarded the unit of analysis. I decided to opt for individuals as the unit of analysis in my survey (as opposed to groups of employees). This seemed the best decision, as it generated the maximum amount of data points as possible. It furthermore avoided any ‘groupthink’ or social pressure that may have biased answers. This latter concern was especially salient in this exercise, as work-places often create close-knit communities and social pressure where coworkers may feel inclined to agree with office or cubicle-mates who they know they will see on a daily basis. The next challenge was evaluating the typical modes of survey distribution, including mail, telephonic, in-person and online. The first three options were ultimately dismissed for the reasons listed below.17 i. Mail
The relationship between my umbrella contacts and my target audience. Given the professional nature of the relationship between my umbrella contacts and their employees and/or coworkers, it seemed like it might be uncomfortable for the umbrella contacts to ask potential respondents to give their personal household address, as opposed to their work email, to receive the survey. Cost. Mailing surveys can become expensive due to fees associated with postage, stationary, and envelopes. Results collection and analysis. Receiving survey results by mail would require me to manually consolidate and code all answers. This would be both time-consuming and it would create a non-negligible opportunity for human error.
17
My decision-making was largely guided by what I learned about survey research in Floyd Fowler’s Survey Research Methods. Sage Publications: 2008; all facts and statistics in this section are sourced from this text.
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Response rate. Scholars have reported that mailing a questionnaire often produces very low response rates, often averaging around 5%. It is important to note that the major advantage of mailing surveys is that it ensures that those without access to telephones and Internet can be included in the respondent pool. However, considering that my target audience was private sector employees, it seemed reasonable to dismiss this concern as most employees are given office phone numbers and computers. ii. Telephone
Nature of target audience. Private sector employees were the target audience in my questionnaire; a demographic for whom time is money. As such, telephone conversations, which require an appointment on a calendar and time away from daily business, were not the ideal mode of data collection. Cost. Calling hundreds of potential respondents requires substantial costs, including paying survey administrators for time spent on the phone and covering long-distance fees for employees located in remote offices. Results collection and analysis. Capturing survey responses over the phone may result in inaccurate data collection. If telephone conversations were not taped, the survey administrators would need to rely on memory and notes to reconstitute answers; both types of recollection are prone to human error. The second step of coding would also prove time intensive as those notes would need to be transcribed into a standardized form. Response rate. As studies have shown time and again, Americans are becoming more and more adverse to phone conversations, as the use of non-voice data services, such as texting and instant messaging using smartphones, rises at an incredible pace (CTIA,
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2012)). This aversion to engaging in phone conversations, as well as the fact that some employees may not have access to a desk or mobile phone during the day, made me wary of using telephones as the mode of collection. iii. In-Person
Confidentiality concerns. The protection of respondents’ identity and responses in any survey exercise is a prime concern. However, when the identity of employers is also at stake, confidentiality of responses becomes even more important, as proprietary information and career-security can be put in jeopardy. For this reason, in-person interviews seemed overly-risky to both the umbrella contacts and their employees. These types of concerns are largely mitigated by more impersonal means of data collection, such as that experienced through an on-line questionnaire. Cost. Administering the survey in person to the targeted pool of approximately 500 private sector employees would have required financial resources outside my grasp. First, I did not have access to the adequate human resources: I could not recruit or compensate enough staff to complete the administration in a time-efficient manner. Further, there was a lack of funds to plan and execute training sessions for such a staff. Finally, there were no means to organize the travel or lodging accommodations necessary to allow myself or other survey administrators to reach the employees working for the diverse companies in their respective geographic locations. Results collection and analysis. Collecting survey results from in-person conversations is both taxing on human (either requiring two administrators to participate – one as vocal lead and one as scribe) and time (often requiring transcribing hand-written notes and/or tape recorded interviews into type-written form) resources. Coding results is often also
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onerous, as survey administrators need to pinpoint relevant information for inclusion in official results analysis – a task that may be challenging as conversations may wander into peripheral subjects. Response Rate. Similar to telephonic interviews, in-person interviews were avoided because they are often viewed as time-intensive and cumbersome from the perspective of potential respondents. Scheduling a convenient time and location is often difficult, especially when the target audience is explicitly employees – a demographic who is busy, generally, during business hours and who may not look agreeably on giving up their after-work or leisure time to answer questions coming from an unknown administrator. iv. Online
Although finding the weaknesses in other survey methodologies is instructive in eliminating some options, it is also necessary to prove the worth of the methodology that is ultimately chosen. In my case, an online survey was the best choice for several reasons. In the first place, it was the most cost-efficient option. The questionnaire was created on SurveyMonkey, a popular website that offers survey creation capabilities at no cost. I chose to establish a more expensive “Select” account to enhance certain aesthetic and content-related aspects of my questionnaire. This type of account also facilitated results collection and analysis, as it enabled me to cross-reference demographic information with certain replies to search for and identify interesting trends within certain types of respondents. In addition, as the online format allowed respondents to respond directly to most questions using multiple choice or ranking mechanisms, this type of survey eliminated a lot of coding work that would need to be done as a result of conversation-based survey administration.
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In the second place, using an online mode of survey administration allowed me to cater to my target audience: busy employees with demanding jobs. Internet surveys allow respondents the flexibility to respond to the questionnaire whenever was most convenient for them. At the same time, this type of survey also alleviated concerns related to confidentiality. Respondents never had to meet face-to-face or speak personally with survey staff; and the online questionnaire never requested personal identification. Respondents were only asked to provide generic data related to certain personal demographic characteristics (i.e. age, income, political participation) and firm-related industry information. Finally, the online format made communications with survey respondents painless and inexpensive. Respondents were provided with highly-specific and original survey instructions via email, and issue follow-up reminders via email as well. This took relatively little time and coordination and could be done at no cost. It is important to note that recent survey-focused research has shown Internet-based questionnaires yield a typical response rate of between 20 and 30%. (Kaplowitz, 2004). This response rate is roughly comparable with other modes of accepted survey administration, and thus not a compelling reason to avoid online surveys. In the end, opting for the online method of survey administration and collection did indeed yield the best response rate and most accurate results. According to my own email records and those of my umbrella contacts, the survey link was sent out to approximately 476 potential respondents. Of those 476, approximately 229 responded to the survey. Of those 229, approximately 170 completed the survey. I took the answers from the 170 employees who answered all the survey questions to be my ultimate respondent pool. Their characteristics are analyzed below. G. Respondents Profile
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When analyzing my respondents’ profile, it became clear that there were a variety of factors that could have skewed the results but one of the most troubling was the potential bias related to respondent self-selection. In particular, the need for a way to account for the possibility that those employees who took my survey primarily did so because they were interested enough in CSR to answer questions related to the topic (as opposed to taking the survey because they were requested to do so by leadership, are familiar and like answering questionnaires, or had free time at work, among other feasible motivations) was quickly evident. If this possibility proved true, the majority of the respondents would express unrepresentative sympathy towards and support for CSR-related activities and goals. In order to give this potential bias due consideration, I analyzed the traits of those who responded to see how representative they were of the American private sector as a whole as it is depicted by 2010 U.S. census data. These traits included not only the respondents’ industry association, but also personal demographic characteristics. Perhaps one of the most important considerations associated with the representativeness of my actual sample relates back to an issue raised in the “Target Audience” section of this paper. In that section, the process for calculating approximate quotas of respondents that should be drawn from each of the top five U.S. industries was explained (35% of respondents from industries finance/insurance/real estate/rental/leasing; 21% respondents from professional and business services; 19% respondents from manufacturing; 15% respondents from educational services/health care/social assistance; and 10% respondents from the retail trade). In actuality, the respondent break-down was the following: 47% (or 79 respondents) from professional and business services; 30% (or 51 respondents) from finance/insurance/real estate/rental/leasing; 12% (or 21 respondents) from manufacturing; 6% (or 10 respondents) from educational
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services/health care/social assistance; and 5% (or 9 respondents) from retail. While these percentages do differ significantly from my ideal targets from each of the top five industries, my survey still achieved a wide diversity of employees in each of the leading business sectors. For this reason, and due to the fact that the vast majority of my ideal and actual target audience are both drawn from the service-oriented tertiary sector of the U.S. economy makes me confident my respondents’ industrial profile would not compromise my results in an irremediable fashion.18 The fact that the percentage of my respondents from the manufacturing sector is slightly lower than the target of 19% may introduce some bias, however. One possible outcome of this discrepancy between my target audience and my actual respondents’ pool may be a slightly uncharacteristic sympathy for environmentally-friendly CSR activities. As manufacturing companies usually employ workers to perform tasks that are, by definition, transforming raw materials into finished goods on a large scale, these employees are likely to be far more aware of the environmental impact (including the exhaustion of natural resources, the expenditure of energy/fuel to successfully complete core operations, and the waste produced by the manufacturing process) of their day-to-day work. Given this daily exposure to their corporation’s carbon footprint, such employees may be more likely than those in the ‘softer’ and cleaner service sector to support CSR activities they deem to be in-line with environmental stewardship. However, an opposite argument may be employed to defend the contrary possibility; namely that manufacturing employees may be more likely to oppose environmentally friendly CSR activities than others. In this scenario, employees whose livelihoods depend on the daily use and disposal of natural resources may shy away from supporting eco-friendly practices that
18
Please note, a much more in-depth discussion of potential bias introduced by my actual sample is contained later in this section.
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may threaten their careers. Due to these mixed considerations, it is difficult to argue convincingly for or against one type of bias introduced by the paucity of manufacturing respondents in my survey. Beyond industrial-level characteristics, my survey also probed respondents for information related to personal demographics. Although some of the demographic questions asked were too specialized to be reflected in the U.S. Department of Commerce’s Census Bureau’s information pool, many key characteristics were captured, including age, ethnicity, and employee tenure. The table below juxtaposes the profile of the survey respondents to the U.S. private sector. The last column of the table also demonstrates, via the calculation of a chisquared statistic, whether or not the difference between my survey respondents and the U.S. private sector as a whole is significant. For the purposes of this paper, I have set the alpha level of significance at 0.05; this means any p-value smaller than this threshold represents a rejection of the null hypothesis of equal distributions. Characteristic Survey Respondents Private Sector Two-tailed P Value of Difference 0.08 0.23
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state.
ABSTRACT
Title:
Environmental Stewardship in the Private Sector: Arriving at a Green Hands Theory Halley Aelion, Ph.D. Candidate, 2013 Dr. Nathan Hultman, Maryland School of Public Policy
Directed By:
Views on the intent and outcomes of corporate social responsibility (CSR) range from laudatory to skeptical. Regardless of the mixed reception and questions raised about the meaning of CSR, it is clear that the private sector’s increasing power in the 21st century requires a correspondingly well-defined range of responsibilities. This dissertation investigates why and how firms choose to engage in CSR. It does so through three essays that explore the private sector’s approach to environmental stewardship CSR (ESCSR) with particular emphasis on the role of employees in ESCSR. The first essay engages in an empirical study that asks broad questions about private sector employees’ opinions towards CSR. It asks how employees understand CSR; how they prioritize environmental goals under the CSR umbrella; and whether or not their CSR- and ESCSR-related activities impact their feelings of personal well-being and career fulfillment. The results of this essay’s original survey suggest that the private sector’s approach to ESCSR should leverage employees’ interest in and enthusiasm for CSR and ESCSR to achieve environmental stewardship and CSR goals. The second essay investigates the actual extent to which private sector leadership engages with employees on matters related to CSR and ESCSR through both a statistical and case study. The statistical study asks what variables make firms
more likely to afford employees a substantial role in CSR activities, resulting in the discovery that a more diverse and larger leadership body is a significant indicator of a firm’s willingness to engage employees. The case study then pushes the statistical findings into more detail by illuminating three firms’ rationales behind their ESCSR approaches. The final, ethics-focused essay builds on the findings of the first and second essays to propose an original theory that builds on the legal theory of clean hands to arrive at ‘green hands.’ This green hands theory outlines a specific and normatively robust framework firms can adopt to achieve goals related both to employee and environmental stewardship. I conclude by discussing implications for policy recommendations and areas for future research.
ENVIRONMENTAL STEWARDSHIP IN THE PRIVATE SECTOR: ARRIVING AT A GREEN HANDS THEORY
By Halley Mallama Aelion
Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park, in partial fulfillment of the requirements for the degree of Doctor of Philosophy 2013
Advisory Committee: Professor Nathan Hultman, Chair Professor Carol Graham Professor David Crocker Professor Elisabeth Gilmore Professor Leigh Anenson
© Copyright 2013 by Halley Mallama Aelion
Acknowledgements
The value of this dissertation was made possible by my wonderful committee members. I owe a debt of extraordinary gratitude to my adviser, Nathan Hultman, as well as to Leigh Anenson, David Crocker, Elisabeth Gilmore, and Carol Graham. All flaws and mistakes are my own. My research and writing was also improved by faculty, students, and readers too numerous to list. I tremendously appreciate their patience, good humor, thoughtfulness, praise and criticism all in equal measure. This dissertation was also made possible by my family, who will tell me I can do anything no matter the reality.
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Contents
List of Figures ............................................................................................................................................... v List of Tables ............................................................................................................................................... vi I. A. B. C. D. E. 1. 2. 3. II. A. B. C. D. E. F. G. H. I. III. A. B. i. ii. iii. C. i. D. i. Introduction: CSR Origins and Recent ESCSR Theories ............................................................. 1 Identifying the Background and Scope of CSR Research ............................................................ 1 Defining CSR Activity and Investment ........................................................................................ 4 Situating This Thesis: ESCSR Drivers and Actors....................................................................... 7 Understanding the Link Between CSR and ESCSR ................................................................... 10 Expanding the Field of ESCSR Knowledge ............................................................................... 14 First Essay: Do Employees Want Firms to Serve as Environmental Stewards? ........................ 16 Second Essay: ESCSR Approaches: Green Screen or Green Scene? ......................................... 18 Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands .............................. 20 First Essay: Do Employees Want Firms to Serve as Environmental Stewards? ........................ 22 Abstract ....................................................................................................................................... 22 Introduction ................................................................................................................................. 22 Essay Motivation ........................................................................................................................ 29 Survey Content and Goals........................................................................................................... 31 Target Audience .......................................................................................................................... 32 Mode of Collection ..................................................................................................................... 37 Respondents Profile .................................................................................................................... 42 Results and Discussion ............................................................................................................... 50 Conclusion .................................................................................................................................. 58 Second Essay: ESCSR Approaches: Green Screen or Green Scene? ......................................... 63 Abstract....................................................................................................................................... 63 Introduction ................................................................................................................................ 63 EMG Programs as the Dependent Variable ................................................................................ 64 Organizational Strategy Literature: Corporate CSR Approaches ............................................... 67 Organizational Strategy Literature: Organizational Citizenship Behavior (OCB) ...................... 71 Statistical Study .......................................................................................................................... 73 Results and Discussion ............................................................................................................... 77 Case Study .................................................................................................................................. 84 Green Screen or Green Scene ..................................................................................................... 87 iii
ii. iii. iv. E. F. IV. A. B. i. ii. iii. C. i. ii. iii. iv. D. V. A. B. C. D.
DTE Energy ................................................................................................................................ 92 FMC Corporation ........................................................................................................................ 99 International Business Machines (IBM) ................................................................................... 105 Analysis and Discussion ........................................................................................................... 109 Next Steps and Conclusion ....................................................................................................... 114 Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands ............................ 117 Abstract..................................................................................................................................... 117 Introduction .............................................................................................................................. 117 Ethics in Private Sector Management ....................................................................................... 121 Ethics in Environmental Stewardship Responsibilities............................................................. 130 Ethics in the Process: Deliberative Democracy ........................................................................ 132 Green Hands: Practice and Theory ........................................................................................... 135 Planting ..................................................................................................................................... 136 Nurturing ................................................................................................................................... 138 Cultivating................................................................................................................................. 139 Measuring ................................................................................................................................. 141 Conclusion ................................................................................................................................ 145 Conclusion ................................................................................................................................ 149 Theoretical Overview ............................................................................................................... 149 Discussion................................................................................................................................. 149 Policy Recommendations ......................................................................................................... 153 Areas of Future Research.......................................................................................................... 160
Appendix A: Private Sector Opinions on CSR Survey ............................................................................. 163 Bibliography ............................................................................................................................................. 167
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List of Figures
Figure 1. Top Five U.S. Industries’ Contribution to GDP .......................................................................... 36 Figure 2. CSR’s Impact on Professional Satisfaction. ................................................................................ 51 Figure 3. Importance of Environmental Stewardship. ................................................................................ 52 Figure 4. Role of Volunteering and Environmental Protection Programs.. ................................................ 54 Figure 5. Outsourcing CSR. ........................................................................................................................ 55 Figure 6. Personal Satisfaction.................................................................................................................... 56 Figure 7: Green Screen versus Green Scene.. ............................................................................................. 91 Figure 8: DTE Energy: Green Screen.. ....................................................................................................... 98 Figure 9: FMC Corporation: Green Scene.. .............................................................................................. 104 Figure 10: IBM: Elitist Decisionmaking But Committed.. ....................................................................... 108 Figure 11: Compiled Results: Green Screen versus Green Scene.. .......................................................... 111 Figure 12: Case Study Results: The Need for Guided Flexibility in CSR Programs................................ 136 Figure 13: Green Hands Measurement Tool.. ........................................................................................... 144
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List of Tables
Table 1: U.S. Economy by Sector.. ............................................................................................................. 34 Table 2. Characteristics of Umbrella Contacts. .......................................................................................... 37 Table 3. Comparison of Sample to U.S. Private Sector.. ............................................................................ 45 Table 4. Free-Form Feedback.. ................................................................................................................... 58 Table 5: Dependent and Independent Variables in Statistical Study.. ........................................................ 78 Table 6: Results of Select Logit Models Used in Statistical Study.. ........................................................... 79 Table 7: Results of Odds Ratio for Final Model.. ....................................................................................... 80 Table 8: Final Case Study Selection.. ......................................................................................................... 86
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I.
Introduction: CSR Origins and Recent ESCSR Theories A. Identifying the Background and Scope of CSR Research Since Howard R. Bowen’s 1953 landmark book Social Responsibilities of the
Businessman, corporate social responsibility (CSR) has been a noteworthy and increasingly important concept and research agenda item. CSR is a term that brings together corporations (private sector actors) with social responsibility (public sector well-being); two concepts not often seen as going hand-in-hand and oftentimes more aptly described at odds. Although firms have been traditionally understood as profit-oriented entities, their growing power and presence in the 21st global community have spurred intense debate over the corresponding responsibilities that come with their privileged access to resources encompassing monetary, human, and natural assets. The foci and conclusions of these CSR discussions are far-ranging. At one extreme, certain strong lines of argument advocate for the limitation of firms to their traditional roles as financial engines, essentially echoing the words of economist Milton Friedman, who famously stated “the business of business is business” (Mullerat, 2010; Mirowski, 2009; Banerjee, 2007). Contrary assertions articulate compelling cases for corporations to essentially take over the role of governments in using their resources to provide employees and stakeholders with the security of benefits ranging from medical to educational needs (Urip, 2010; Mallin, 2009; Idowu, 2009; Zu, 2009). When one considers the range of perspectives investigated, topics covered, and puzzles solved within these arguments and under the CSR-research label, this growing interest and scrutiny is easy to understand, as it is a concept that promises insight into the dynamic relationship between the resource-rich private sector and the well-being of the global community.
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Given the enormity of the questions contained and puzzles housed under this broad umbrella, there are several emerging and increasingly well-defined CSR research agendas being developed and pursued. Currently, such studies aim to understand the private sector’s motivations for engaging in CSR, illuminate the role of external organizations in CSR, and evaluate the effects of CSR on a range of financial, social, and environmental issues. For example, a large number of CSR studies look to understand the concept from the firms’ perspective, investigating why corporations voluntarily engage in behavior deemed ‘good’ by the public even though they may not directly increase profit margins. Some such studies demonstrate how corporations can leverage CSR to recruit talented workforces and promote employee morale by instilling a sense of pride about corporate results, both financial and nonfinancial in the workforce (Ihlen, 2011; Zu, 2009). Other reports argue for a corporation’s interest in gaining political support for their operations through CSR activities which prove to local elected officials and their constituents their good intent and effects on community wealth and well-being (Barth, 2009; Boeger, 2008). Within this debate on firms’ motivations, it is important to explicitly acknowledge the perverse incentives that may drive the private sector to invest in CSR. Research has suggested that certain firms adopt CSR behavior to divert attention from other serious financial or operational misdoings, engage in political manipulation that will benefit them through more lax regulation at a later date, and mislead potential shareholders into making what seems to be a socially responsible investment (Audi, 2008; Boeger, 2008; Banerjee, 2007; Beauchamp, 2007). Although the concern about the perverse incentives driving CSR is valid and deserves the attention it receives, it is important to contextualize it. These Machiavellian calculations that may lead certain firms and actors within firms to explore the opportunities presented by CSR and engage in them are important, but it would be overly limited
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to cite these concerns as reason to disregard the value of CSR altogether. Even the harshest of CSR critics recognize the value of corporations’ attention to financial, social, and environmental concerns as publicly responsible actors and drivers of positive change in the global community, be it through more conventional fiduciary duties or more progressive environmental actions (Gould, 2008; Gill, 1998; Friedman, 1975). Still other investigations focus on the CSR viewpoints of external shareholders and stakeholders with a goal of understanding the demand for CSR and the perception of its value amongst those outside the private sector. These lines of inquiry ask questions related to the effects of CSR on attracting or discouraging financial investors (Du Plessis, 2010; Horrigan, 2010; Zhou, 2007) and gaining community support and trust with an aim to understanding the different roles of non-profit organizations, civic groups, unions, and other actors in CSR strategies and outcomes (Cornelissen, 2011; Visser, 2010; Werther, 2010; Cramer, 2006). CSR research also contributes to an understanding of topics such as financial responsibility, social equity and environmental integrity. Research on these topics, to-date, is still fragmented, with multiple lines of questions and, often, contradictory results being produced by different investigative strategies. For example, some reports point to the positive effects of CSR on financial responsibility, with evidence that its focus on transparent accounting makes firm leadership more aware of and responsive to fiduciary duties (Sun, 2011; Crowther, 2004) while other studies blame CSR’s immeasurable outcomes as a way for firms to distract from and gloss over real and important financial regulation with sexy but unsubstantial public relations reports (Lee, 2012; Cheney, 2010; Parsons, 2008). Likewise, inquiries into CSR’s effect on social equity have returned mixed results. Although there is a growing consensus around firms’ power and responsibility to enhance social justice both by their fair treatment of employees and
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local stakeholders (Detomasi, 2008; Utting, 2007; Grosser, 2005), different investigations recommend diverse ways to achieving these goals. In regard to corporations’ relationships with stakeholders, for example, some reports advocate for corporations’ active role in social causes (Basu, 2008; Lantos, 2001) while others advise corporations to limit their support to financial resources while allowing local stakeholders to take ownership of such initiatives (Johnston, 2011; Pederson, 2006). Closely linked to investigations on social justice (which often cover issues related to access to natural resources) are CSR studies on firms’ roles as environmental stewards. The actual size, scope, and effects of the private sector’s “carbon footprint” remains a contested issue, but the overwhelming consensus is that corporations’ operations are a major contributor to today’s environmental degradation and climate change problems (Kolk, 2010; Newell, 2007; Lemos, 2006). More specifically, CSR studies have focused on firms’ roles in causing and, consequently, addressing environmental impacts ranging from loss of biodiversity (Ng, 2012; Norton, 2005) to increased pollution (Underwood, 2012; Cutting, 2010; Zurita, 2006) to global warming (Newell, 2007; Frynas, 2005). The concept of CSR exists to structure the exploration of all these concerns that link the globe’s dominant financial power, corporate actors, to social and environmental outcomes. The more these links are understood, the better off the global community will be. My research will inquire into the link between a specific private sector perspective on CSR, that of employees, a particular CSR outcome, that of environmental stewardship. B. Defining CSR Activity and Investment With so many diverse, important, and intersecting lines of inquiry joined together under the CSR heading, it is helpful to choose one definition to anchor this particular research. Since
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Bowen’s text, the International Organization for Standardization (ISO) coined arguably the most widely accepted definition of CSR, when, in September 2010, it published ISO 26000. This document, contributed to by 500 experts from 99 countries (including the U.S.), conceived of CSR as an expansion of private sector organizations’ duties from strictly financial obligations to society and environment. Specifically, the Standard states that Corporate Social Responsibility is the: Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behavior that: 1) contributes to sustainable development, including health and the welfare of society; 2) takes into account the expectations of stakeholders; and 3) is in compliance with applicable law and consistent with international norms of behavior; and is integrated throughout the organization and practiced in its relationships. This extension specifically encompassed seven core issues, many of which were referenced in the examples of CSR questions above: organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development. These many moving parts fall in no concrete order of prioritization. Indeed, the disputes around their relative importance (and non-importance), along with the motivations of corporations to acknowledge and act on them, have triggered more questions than they have answered. The controversy spurred by the standard is, arguably, an indication of its failure to contribute meaningfully and specifically to CSR inquiry. However, the standard’s achievement of grouping and articulating key aspects of CSR in a cohesive and easily accessible way, as evidenced in the clearly defined lines of inquiry outlined previously, makes it a useful point of entry into related research. Overall, although the utility of this standard has been debated without clear consensus on its applicability as a management tool or accuracy as a definition of CSR, regardless of disagreement on its value, it remains the most visible and all-encompassing authority on the subject (Fasterling, 2012; Morali, 2011).
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Although the motivations behind and activities involved in CSR have remained controversial despite six decades of research and international standardization attempts, the human and monetary resource investments committed to CSR-conscious business operations and investing are clear. Consider, for example, a selection of CSR statistics from a survey of 184 companies representing the spectrum of international industries in 2010 (CECP, 2011). In the first place, the sum of corporate philanthropy contributions across all survey respondents totaled $15.5 billion in cash and product donations. Of that giving, the median total donated by corporate foundations was $22.1 million. More than 28 surveyed companies reported total corporate giving of over $100 million and the total giving per employee averaged $628. CSR investment also flows from non-private sector sources. For instance, in 2007, socially-conscious mutual funds had assets under management exceeding $2.5 trillion in the United States, a strong indication of the demand for robust CSR programs among domestic investors (Ioannou, 2010). Given the enthusiasm for and attention to CSR that has become apparent in the past few years, companies’ evolving CSR focus, strategies, and investments are well-worth the rigorous and ongoing investigation. My dissertation will explore an underdeveloped field of study in the CSR literature: assessing the internal, nonelite and nonfinancial motivations behind firms’ decisions to (or no to) invest in CSR with a particular emphasis on environmental stewardship CSR (ESCSR) initiatives. In sum, CSR emerges as a useful concept that bridges public and private sector interests and provides a framework for many complex and dynamic investigations. As referenced above, these investigations aim to organize perspectives on its meaning, intent and value; critique its motivation; analyze its priorities and outcomes; and identify its drivers and actors. In addition, more recent and emerging work focuses on managing its associated programs and behavior and
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predicting its future trends and outcomes (Ng, 2012; Sancho, 2008; Crane, 2008; Kakabadse, 2005; Terris, 2005; Burke, 1999). Within this quickly growing and evolving field of investigation, my research most closely relates to the theme of identifying CSR drivers and actors by exploring the link between private sector employees and corporate ESCSR goals. C. Situating This Thesis: ESCSR Drivers and Actors Research on this particular aspect of CSR has not yet been directly addressed or developed, although different scholars have identified the issue in a partial way in a variety of studies. For example, Simone Pulver explored the relationship between firms’ leadership and ESCSR performance with her case studies on the important role scientific communities play on oil and gas companies’ antagonistic or friendly stance towards environmental policies (Pulver, 2007). In another vein, Gugler and Shi have headed a growing body of work on corporate elites’ relationships with local politicians that shed light on leadership’s sensitivity to and receptivity of politicians’ guidance, as they are seen as being in touch with public sentiment, and by extension, consumers and investors (Gugler and Shi, 2009; Porter and Kramer, 2006). In general, this approach to understanding ESCSR drivers through the lens of corporate leadership emphasizes the competitive advantage (both technical and political) that firms enjoyed when they are viewed as ‘good corporate neighbors’ by external stakeholders including subject matter experts and regulators, as they are able to use this good reputation with scientific and political leadership to earn informal licenses to operate among local civic groups, as well as formal permits to operate from policy-makers. Thus, leadership-oriented research paints CSR front-runners as motivated because they enjoy a financial advantage over firms seen as irresponsible or uncaring about social responsibility (Wang, 2011; Murillo and Lozano, 2006; Zedek, 2002). An evaluation of the ultimate ethical and practical value of this type of profit-
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oriented CSR behavior does generate debate, with certain studies highlighting a propensity among firm leaders driven by these considerations to raise expectations among shareholders and elected officials in a misleading and false way that ultimately harms both the corporate image and the feeling of trust and security the corporation solicits in its community (Bakan, 2004; Burke, 1999; Arora, 1996; Cloninger, 1995). Kitchin advances another way to think about the competitive advantage enjoyed by firms who take CSR to be a priority by framing his arguments not within a profit-focused framework but instead a brand management framework. His studies, and the work in his field, highlight the fact that CSR-oriented firms bolster their competitiveness by creating a socially-conscious brand that appeals to socially responsible investors and consumers (Adams, 2008; Hockerts, 2006; Kitchin, 2003). Finally, in his related studies on the financial benefits of CSR activity, M. Mehra has demonstrated that firms with leadership that make an effort to excel in CSR are much less likely to fall out of compliance with legally binding regulations, thus avoiding punishments and fines that could harm profitability and brand recognition (Mehra, 2006). Studies that do not focus on leadership’s concern with finances and competitiveness as a primary CSR motivator often cite external stakeholders as the main impetus for such activity. For example, Ruggie and Rowley have led the way in linking the strength of local external interest groups, such as environmental non-profit organizations, on firm leadership’s decisions to opt-in to socially responsible behavior (Arenas et al, 2009; Utting, 2005; Bendell, 2004; Ruggie, 2004; Rowley, 1997). In general, these theses argue for the importance of external engagement in CSR decisionmaking, due to the fact that these outside institutions make up the target audience, the ‘society,’ that CSR is aiming to benefit. These types of arguments have been very
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influential, culminating in a theory of integrated external engagement (IEE) that has been picked up by leading consulting firms and advisory groups (Browne, 2013). In another line of inquiry related to my own, researchers have taken up the question of employees’ role in corporate decisionmaking and the consequent impact on workplace morale, including protecting gender equality, promoting workforce diversity, and achieving laudable mental and physical health metrics. For example, Walter Borman investigated private sector employees’ role in corporate decisionmaking, linking employee agency to higher workplace morale and, thus, an achievement of CSR social goals, but with little to no attention on the ESCSR angle (Borman, 2004). In a similar vein, L. Burke has published valuable insights on the positive impact employee ownership of and participation in CSR programs can have on productivity and retention (Burke, 1999). Overall, these existing works draws attention to the relationships between elite firm leadership and ESCSR, as well as employee morale and CSR, but leave unanswered the question of whether there is a meaningful link between private sector employees and ESCSR approaches and outcomes. My research focuses on and answers this question by illuminating the actual and desired role of employees in motivating ESCSR action and evaluating how the quality of their participation impacts ESCSR outcomes. Specifically, in three essays, this paper will analyze the impact of employees on firms’ environmental stewardship initiatives, explore the influence of corporate leadership on these programs, and inquire into the normative framework that applies to private sector actors’ environmental responsibilities. In doing so, this work contributes original insights that illuminate the significant power of non-financial drivers and internal stakeholders influencing corporate ESCSR strategies. It also suggests ways to democratize ESCSR approaches that will
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enhance organizational citizenship and beneficial environmental impact on immediate and global communities affected by their operations. D. Understanding the Link Between CSR and ESCSR To better understand the contribution of my thesis, it is important to review the narrative that explains the evolution and expansion of the concept of CSR to ESCSR, while reviewing the two current schools of thought on the role of the private sector as an environmental steward and menace. When the concept of CSR first became a central research focus in the 1950s, legal and regulatory concerns and compliance constituted the primary focus of its scope (as opposed to recent attention to social and environmental causes). Although today, it seems reasonable to consider environmental sustainability as inextricably intertwined with regulatory compliance, the CSR discussion of the 1950s-1970s concentrated more on issues including equitable hiring practices, just compensation, and transparent accounting protocols which were more salient in that political and social time and environment. As a result, between 1950 and 1970, business scholars coined the term CSR in order to frame a debate primarily about the extent of a firm’s ethical obligation to align business goals with the socio-economic objectives of the public as codified in law and public policy (Davis, 1967; Davis, 1960; Heald, 1957; Eells, 1956; Bowen, 1953). As interest in CSR grew over the decades, scrutiny of a firm’s CSR decisions and actions expanded, as noted earlier, beyond compliance with explicit regulation. A corporation’s voluntary and pro-active responses to a range of concerns - including community welfare, international development, and environmental sustainability - became fair-game for inquiry (Dalton 1982; Carroll, 1979; Brown, 1979; McKie 1974; Arrow, 1973). When matters of resource scarcity, loss of biodiversity, climate change, and so forth, became global policy issues in the 1980s, scholars put businesses’ environmental sustainability practices in the public
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spotlight. In-line with these intensified debates, awareness and interest grew on capitalism’s effects on the environment. From these debates, several different theories of environmental sociology were born, including the ‘treadmill of production’ and, opposing it, ‘ecological modernization.’ To be clear, other, related theories in environmental sociology on the interaction between capitalism and the environment also emerged, including green growth, green capitalism, green socialism, greenwashing, and human exemptionalism (indicating humans’ exemption from environmental ethical duties). These schools of thought are relevant and valuable to other inquiries into CSR, but in this paper I focus on only treadmill of production and ecological modernization theories as they most directly ask and answer the question of whether a capitalist system can be environmentally sustainable. The treadmill of production concept was first introduced around 1980 to argue for the reality of a globalized, capitalist economy. In essence, these scholars used the metaphor of a never-ending treadmill to describe the problems induced by technology: technology leads to a mechanization and acceleration of production. This, in turn, creates a process by which the state, the private sector, and society become dependent on economic growth to solve problems, such as unemployment, which, ironically and cyclically, exacerbates and is exacerbated by, more advances in technology. This unsustainable dynamic leads to increased consumption and competition among multi-national corporations (MNC) for resources in order to keep production high. This competition creates a constantly expanding capitalist machine with ever-increasing and detrimental environmental effects that will prove unsustainable in the long-run (Buttel, 2004; Foster, 1999; O’Connor, 1994; O’Connor, 1989; Schnaiberg, 1980). Where does the private sector fit in to this viewpoint? From a treadmill of production perspective, firms are viewed as entities that allocate all available resources to production in the
11
hopes of eliminating competition and capturing as much market-space as possible. Engaged in this relentless pursuit of profit, firms’ technologies are seen as the main agents of environmental degradation and the exhaustion of natural resources, not as a possible solution (Gould, 2008; Bakan, 2004). Although treadmill of production theorists were, arguably, the first to take the stage, their position engendered reaction from scholars who labeled themselves as ecological modernization proponents. Overall, ecological modernization scholars champion technology as the necessary and sufficient solution to the environmental degradation caused since the Industrial Revolution (Frankhauser, 2011; Mol, 2000; Huber, 2000; Mol, 1995). They posit that the only solution to environmental degradation caused by industrialization and technology is more and better industrialization and technology. As such, the private sector emerges as the primary agent equipped to redress the environmental destruction caused by capitalism with no intent to eliminate capitalism. Although ecological modernization is a large and rapidly expanding field, leading scholars have endorsed a two-step view of the process that is helpful to my inquiry. In the first step, firms recognize environmental sustainability issues as a concern that stands alone from economic issues. In the second step, firms “institutionalize ecology in production and consumption processes, and thus… redirect these basic economic practices into more ecologically sound ones (Mol, 1995).” Overall, then, ecological modernization answers treadmill of production scholars by offering a brighter picture of capitalism as a sustainable (as opposed to unsustainable and constantly expanding) system that will solve its industrial problems with future industrial actions. It is important to note that the use of the word ‘solve’ in this context glosses over an important normative debate. Instead of delivering a judgment on whether enabling and prolonging an industrialized way of life is a ‘good’ or ‘bad’ ability, these scholars
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are instead using the word ‘solve’ to apply to the question of simply sustaining such a way of life. In other words, they are indicating that it is through advances in industrial efficiency that an industrial way of life will prove a sustainable manner of existing (regardless of whether this sustainability is a morally good or bad solution). Political organizations and policy-makers have recently accepted ecological modernization’s principles and endorse the idea that businesses can, and should, be run in an environmentally sustainable fashion. Non-profit and political organizations, think tanks, universities, and private businesses have put forth various sustainability guidelines, reporting templates, metrics, certifications, and principles aimed to increase awareness and adherence to environmentally-friendly business practices.1 The public has also become more sensitive to the issue of a corporation’s carbon footprint. Many CSR-conscious investors even utilize sustainability indices developed by financial leaders such as Dow Jones and FTSE. The $15.5 billion in private sector funds allocated to CSR activities across only 184 of the world’s companies, the decades of inquiry devoted to CSR and the private sector’s role in environmental stewardship, and the recent proliferation of policy-making about corporate citizenship and excellence, provides strong evidence that the elites and the public making up the global community consider business ethics and sustainable operations to be a serious matter.2 Although considerable attention is being devoted to the role of capitalism’s ethics and effects on the environment, there is still significant debate on the motivations driving CSR activities and
1
Leaders in this area include non-profit organizations such as AccountAbility (http://www.accountability.org/) and World Economic Forum (http://www.weforum.org) ; political organizations such as the United Nations (http://www.unglobalcompact.org/) ; think tanks such as the World Business Council for Sustainability Development (http://www.wbcsd.org/home.aspx) ; universities such as the Boston College Center for Corporate Citizenship (http://www.bcccc.net/) ; and private consulting practices such as Booz & Co. (http://www.booz.com/). 2 While there are a multitude of sources to support this position, please see Chouinard et al. “The Sustainable Economy.” Harvard Business Review. Oct. (2011): p. 52 -62. This article puts forth one of the most compelling arguments for why and how corporations should incorporate eco-impact considerations into value chain analyses.
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the best methods corporations can adopt to achieve excellence in sustainable business practices. This area of inquiry constitutes the focus of this dissertation’s three interconnected essays. As discussed, existing CSR studies provide a complex and fragmented theoretical framework that explains private sector environmental stewardship largely through a lens focused on business leaders’ concerns with financial and political goals and their interaction with external actors. These investigations highlight the important role non-profit organizations, politicians, unions, community/civic organizations, scientific communities, and other interest groups play in influencing CSR decisions at elite, leadership levels. To-date, the role of employees in CSR is largely left unexplored, with the majority of attention focusing on their role in corporate decisionmaking related to conventional operations and the consequent impact on employee well-being and morale. E. Expanding the Field of ESCSR Knowledge Thus, these studies so far have succeeded in highlighting legitimate and significant CSR drivers and actors that center around profit, firm leadership, and the importance of IEE. However, they neglect important analysis around the role of non-financial drivers and internal, nonelite stakeholders. Omitting these factors creates an incomplete understanding of why and how firms choose to engage in CSR and ESCSR and the importance of internal buy-in to achieving related goals. Although scholarly analysis has been applied to non-profit-oriented business motivations (summarized in the business ethics literature review in this thesis’ third essay) and the role of firm’s internal stakeholders in corporate decisionmaking and action (explained in the organizational strategy literature review in this thesis’ second essay), m y research connects the two areas of study. This synthesis fills the existing gap in CSR
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investigation and further develops this emerging body of research. My work both challenges and complements existing studies through three essays. The first essay introduces the as-yet unexplored area of internal motivations driving private sector CSR approaches. It sheds light on firms’ stakeholders that drive business decisions and actions by surveying all levels of leadership and employees on their interest and participation in ESCSR approaches. The second essay evaluates the receptivity of corporate leadership to employees’ input to CSR and ESCSR approaches through both macro-level statistics and in-depth case studies. The final essay draws on the conclusions of the empirical, statistical, and case study investigations to offer a green hands framework that defines best practices in ESCSR approaches and offers metrics for evaluating private sector CSR performance.
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1. First Essay: Do Employees Want Firms to Serve as Environmental Stewards?3 In the first essay, an empirical inquiry is used to address the as-yet unanswered question of whether private sector employees find CSR to be a worthwhile and interesting social cause. I will focus specifically on employee judgments on the value of employees participating in and contributing to environmental stewardship initiatives both on a professional and personal level. Much attention has been paid to firm leadership’s attitudes toward CSR, as well as the public perception of firms as ‘corporate citizens.’ Nevertheless, the role and attitude of companies’ internal stakeholders – namely employees – has been largely overlooked by CSR scholars. To help address this issue in the literature, my instrument of analysis in this paper is a questionnaire with content largely modeled on past surveys and studies that assess the nonincome related factors that influence private sector employees’ assessment of career and personal satisfaction. My survey asks private sector employees in a variety of industries about their personal assessment of the importance and value of CSR behavior and, in particular, whether they have a sense of obligation to advance environmental stewardship goals. The survey further inquires into employees’ translation (or lack thereof) of their personal moral code to the workplace in their pursuit of fulfilling careers and meaningful lives. To answer the questions posed in this essay, the survey probes respondents on a variety of subjects. For example, it includes questions that collect respondents’ understanding of how environmental stewardship duties play into the broader definition of CSR, identify the relationship between firms’ CSR-
3
“Do Employees Want Firms to Serve as Environmental Stewards?” This essay was presented at a Booz Allen Hamilton-sponsored monthly business and academic conference on environmental sustainability in December 2011.
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performance and respondents’ professional satisfaction; and gauge how (or if) respondents translate feelings of career fulfillment into personal well-being.4 By cross-referencing respondents’ answers to the various questions with demographic and industry data collected at the same time, the survey’s results highlight strong trends that serve as empirical evidence for the power of private sector employees’ personal commitment to environmental integrity in their activity in the corporate sphere. Put briefly, the main finding is that employees not only want their employers to serve as environmental stewards but also want to take an active role in CSR initiatives themselves. However, this essay leaves unanswered the question of whether their input influences corporate leadership’s ESCSR approach.
4
The survey’s questions can be found in Word-document form in Appendix A.
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2. Second Essay: ESCSR Approaches: Green Screen or Green Scene? 5 The second essay picks up the line of investigation left open by the first by testing, through both a statistical regression and a three-firm case study, what role (if any) employee input and preference plays in environmentally conscious-firms’ ESCSR activities. In the statistics-based portion of this essay, the paper asks: What variables make environmentally-conscious firms likely to sponsor employee-matching gift (EMG) programs? EMGs are used as the dependent variable because they provide the closest concrete indicator of a firm’s willingness to incorporate employee input into philanthropic ventures. The universe of inquiry (environmentally-conscious firms) is defined as the 72 publicly listed firms that opted into the Chicago Climate Exchange (CCX). The results of the study identify statistically significant and positive relationships between firms that have diverse corporate boards and large numbers of senior managers and those who adopt EMG programs. These findings tell us that corporations whose leadership bodies are large and diverse, and thus are obligated to engage in decisionmaking that includes a greater number and diversity of stakeholders, are also more willing (than those who do not) to include employees in ESCSR decisionmaking and implementation. To add nuance to this general, quantitative inquiry, this essay also includes an in-depth case study of three CCX firms who host EMG programs. The aim is to identify which companies have ESCSR approaches that are a green screen (firms with disinterested leadership and/or employees who limit CSR activities to superficial or public relations initiatives) or green scene (firms with engaged leadership and employees who interpret CSR activities as holistic and pro-active initiatives). This portion of the paper highlights certain challenges to environmental
5
“Corporate Decisionmaking: Green Screen or Green Scene?” This essay was presented at the 11th Annual Hawaii International Conference on Arts and Humanities in January 2013.
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stewardship and deliberative decisionmaking in the corporate sphere, including adopting flexible yet disciplined environmental stewardship approaches and finding a balance between ‘passive’ check-writing initiatives versus ‘active’ employee-focused environmental stewardship programs. This investigation reveals previously unexplored statistically significant relationships between the size and composition of senior corporate leadership and inclusive ESCSR approaches. It also offers insight into what makes a corporate culture ‘green screen’ as opposed to ‘green scene’ in regards to ESCSR.
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3. Third Essay: ESCSR Best Practices: Arriving at a Theory of Green Hands 6 The dissertation ends with a normative investigation of whether firm leadership has an ethical obligation to foster deliberative decisionmaking (or a deliberative ‘green scene’ corporate culture) in matters related to environmental stewardship. The paper reviews ethical and economic thought dating back to Adam Smith to demonstrate that free market capitalism is based on a precept of cooperation to ensure all stakeholders arrive at a mutually beneficial situation. Smith’s work is complemented by more recent work in business ethics that elaborates on corporate leadership’s obligation to serve as employees’ advocates and stewards for both ethical and business purposes. My research then goes on to link this market-focused ethical analysis to the more recent capability approach of Amartya Sen and others. Proponents of this approach argue that those who are better off in society should shoulder more of a burden to ensure social and environmental well-being than should those who lack the adequate resources to enhance general utility. The paper concludes by leveraging work done on the value of deliberative democracy to argue for a theory of ‘green hands’ which demonstrates that the most just way for firms to reach ESCSR goals is via a deliberative, effective, and sincere employee stewardship. In this dissertation’s three essays, I develop a new model of synergy between employee interest in CSR and leverage on real outcomes of firm decisions. Each inquiry culminates in specific conclusions. The first uncovers the strong link between CSR’s impact on professional and personal well-being; the second identifies firm-level indicators of robust ESCSR performance; and the third defines an ethical framework to guide best practices in linking expressed employee enthusiasm for ESCSR to top-level leadership that may or may not already be inclined to include nonelite input into ESCSR decisionmaking.
6
Overall, these findings
Portions of research in this essay were used to inform the Climate Change Adaptation Capstone Workshop Concept Paper “The Niger Delta” published by Columbia University’s School of Internatiional and Public Affairs in Spring 2012.
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identify a novel theoretical approach to understanding CSR that focuses on non-financial drivers and nonelite actors. These findings are encapsulated in policy recommendations and areas of further study at the conclusion of the entire thesis piece.
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II.
First Essay: Do Employees Want Firms to Serve as Environmental Stewards? A. Abstract
What motivates an employee to come to work every day? Although it is easy to offer an obvious answer, the paycheck, this would do a disservice to the multiple and interconnected professional, personal, and social benefits a healthy corporate culture can offer its constituents. Experts in fields as varied as economists, philosophers, and anthropologists have all offered theories on the value of professional satisfaction on individual well-being and behavior, and this essay is motivated by that theoretical quest. In order to contribute to this theoretical debate, my investigation asks an empirical question: it asks private sector employees whether they want their firms to engage in CSR and in voluntary environmental stewardship initiatives more specifically. The findings of a survey administered to answer this question demonstrate that a majority of private sector employees support corporate decisions to invest in and commit to ESCSR. In exploring and explaining these results, I support a hypothesis that corporate leadership’s willingness to engage employees in ESCSR decisionmaking and implementation is a promising and productive way forward in pursuing excellence in environmentally-sustainable business practices. By doing so, this essay adds value to current elite-focused CSR literature by exposing the importance of all levels of internal corporate stakeholders. It also lays the groundwork for future study into the actual state of corporate-level ESCSR decisionmaking and implementation practices and analysis of employees’ roles in those activities. This investigation further serves to justify future, more in-depth exploration of the ethical duties of corporate management to offer and employees to avail themselves of deliberative and democratic processes when defining a corporation’s social goals and mission. B. Introduction “Any environmental virtue ethics worthy of the name must… include a desire to put economic life in its proper place – that is, as a support for comfortable and decent human lives.” –Philip Carafo and Ronald Sandler, Environmental Virtue Ethics (p. 37) Cafaro and Sandler’s first tenet of an environmental virtue ethics emerges as clearly intellectually logical and humanely altruistic. However, whether the desire to “put economic life in its proper place” actually exists in the spirit of the American public is far less obvious. This essay aims to test the viability of the hypothesis to a critical U.S. demographic, namely those in the private sector. It asks why those individuals adopt environmental stewardship roles. In attempting to answer that question, this investigation will contribute new knowledge to CSR studies by analyzing employee-level CSR motivations and activities. The essay will also shed light on the willingness of a resource-rich demographic, those employed by private industry, to
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engage in voluntary measures to enhance environmental integrity. The next section outlines CSR conventional wisdom of mercatocracy and shareholder wealth maximization (SWM) followed by an explanation of my contribution concentrating on the role of employees in CSR. i. CSR Conventional Wisdom: Two Versions of Elite-Focused Discussion A. Claire Cutler, leading scholar in private authority in international-social affairs, offers the most well-developed definition of mercatocracy in her 2003 text, Private Power and Global Authority: Transnational Merchant Law in the Global Political Economy when she states that mercatocracy is a “complex mix of public and private authority [that] blurs the distinction between public and private commercial actors, activities, and law. It exercises near hegemonic influence through its material links to transnational capital and through its monopoly of expert knowledge, thought, and institutional structures (Cutler, 2003: p. 5).” Cutler develops this
definition throughout her text by arguing that the creation of CSR-related laws and regulations typically falls into the hands of the very corporate leaders it is intended to control. As a result, the regulations are far from effective in disciplining their authors who are looking to protect their own interests first and foremost. Furthermore, Cutler criticizes those scholars who “discount the political significance of such corporations… thus limiting our understanding of the nature of the global political economy by obscuring the nature and significance of private, corporate power and authority (Cutler, 2003: p.5).” Cutler asserts that this political significance is synonymous with business-oriented interests that marginalize social objectives such as environmental integrity and human welfare. It is important to note that Cutler is one of many scholars who endorse the idea that corporations may wield political power for their own benefit and to the detriment of society (Hall, 2002; Strange, 1996; Turner; 1978; De Cecco, 1976). Earlier research focused more
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narrowly on the power corporate interests have in crafting ‘merchant law,’ which prioritize business goals in issues related to access to seas, military aims, and political relations. Nonetheless, Cutler and other scholars have recently expanded their argument to CSR by investigating expansive social and environmental arenas. For example, Cutler is joined by Stephen Gill who asserts that the power of the mercatocracy “confers privileged rights of citizenship and representation on corporate capital, while constraining the democratisation (sic) process that has involved struggles for representation for hundreds of years (Gill, 1998).” Similar to mercatocratists, SWM theorists believe that corporate leadership is the dominant power in making business and CSR decisions. Both schools also find that financial success is favored at the expense of social and environmental aims. The difference between mercatorists and SWM theorists is more a matter of focus than content: mercatocratists devote their energies to profiling the actors and relationships that make up the elite network, whereas SWM theorists choose to focus more on the influence of corporate goals that drive the private sector elite to engage with their public sector counterparts. In other words, where mercatocratists analyze the public and private sector relationships that make the mercatocracy work, SWM theorists look at the private sector drivers that inform the ways in which the corporate mercatocracy chooses to engage with policy-makers and politicians. SWM itself is not a new theory, it has been used to explain business ethics largely and CSR more specifically for several decades. In fact, according to scholar John Dobson, SWM is “backed by 2,500 years of moral philosophy (Dobson, 1999: p. 70).” To offer a high-level overview of the theory, proponents of SWM see corporate behavior as solely fueled by its mission to deliver the maximum possible return on investment to legal shareholders. Perhaps due to its longevity, very distinct camps of thought have emerged as different scholars in
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different eras pontificate about the nexus of business and morality under the SWM heading. The conventional wisdom among most established business schools is to teach SWM as an amoral approach to doing business (Chambers, 1996; Jensen and Meckling; 1976). These institutions assert that, in expert Donald Chambers’ view, “SWM serves as a conduit of ethics, rather than a net determinant of ethical behavior… market values can price ethics just as they price anything else (Chambers, 1996: p. 93).” However, this neutral, or solely instrumental, stance has been challenged by other researchers who endorse the ‘invisible hand theory’ to justify its morality. These scholars argue that SWM will generate benefits for companies’ shareholders, as well as to society (Cloninger, 1995; Smith, 1992; Aggarwal, 1990). The debate, however, does not end there. Another contingent of scholars argues that SWM, both its precepts and its consequences, are actually immoral. Their argument has a direct connection to CSR, as they suggest this immoral and irresponsible pursuit of profit inevitably results in poor-quality or non-existent CSR actions. SWM scholars who view the theory as immoral suggest that environmentally or socially-minded CSR is a figment of ‘idealistic’ imagination with no actual place in real corporate goals and consequent behavior. Instead, they accuse firms of manipulating the “CSR” label to merely reinforce standard business practice related to pre-established fiduciary duty and due diligence standards (McGuire, 2003; Zajac, 1994; Fama, 1980). Legal and corporate governance expert Paddy Ireland most explicitly emphasizes the injustice done to environmental and social welfare by SWM strategy when she states that “shareholder primacy is in reality the primacy of a small privileged elite (Ireland, 2005: p. 52).” Ireland’s work, along with her colleagues, suggests that SWM is not only the most accurate theoretical framework to explain corporate behavior, but that it explicitly promotes corporate social irresponsibility and a
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disregard for other stakeholders’ well-being. As a result, Ireland accepts SWM as a description of reality but emerges as a vociferous critic of its immoral goals (which aim to protect and further enrich a small, privileged elite) and consequences (which result in environmental and social degradation at the expense of maximum financial profit). ii. Employees’ Role in CSR: An Original Contribution
Whereas the conventional literature concerning mercatocracy and SWM discussed above largely argues for the force of elite- and business-minded decisionmakers, both moral and immoral, in the reasons explaining CSR activities, my research contributes a new aspect to the conversation by suggesting that employees may also serve as a driving force in the specific field of ESCSR due to professional and personal motivations. My contribution adds to the conversation by examining whether employees are interested in ESCSR at the decisionmaking and implementation level. Specifically, this essay’s hypothesis, that private sector employees are willing to advocate for and participate in environmentally-friendly corporate practices, illuminates the extent of power that employee drivers do, can, and should have to influence firmlevel ESCSR choices and consequent action. My particular contribution is founded on past work, primarily ethical anlaysis, that highlights motivations for eco-friendly behavior among rational individuals in society. The literature on this topic is expansive and it is helpful to summarize the work to-date along three types of motivators: individual, community, and global. In the first place, scholars identify personal (some would argue, selfish) reasons for an individual to be concerned about and interested in engaging in environmental stewardship practices. For example, access to clean air and water on a daily basis is imperative to sustaining human life. To be sure, the very basic desire for good health is one of the first and most universally recognized drivers of eco-friendly
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practices (Arrow, 2012; Pojman, 2008; Routley, 1982 and 1973). Environmental stewardship also fulfills certain obligations morally upright people feel towards their fellow community members (Welchman, 2012; McShane, 2007; Phillips, 1996). Scholars note this moral lesson is especially prominent in religious literature. Holy leaders remind their congregations that “the world had not been given to humanity outright but was properly the possession of its creator, to whom human beings stood in the role of stewards (Welchman, 2012: p. 305).” Thus, individuals view the environment as free from (or, at the very least, as more than a matter of) individual ownership. Instead, the natural world is seen as a resource given in equal parts to a community to use in a way that benefits its members. Lastly, other scholars investigate individuals’ motivations to be environmental stewards through a global lens (Norton, 2005; Worrel, 2000; Wasserman, 1998). These scholars emphasize the interconnectedness of the global community in terms of politics, economics, and environment. Their works focuses on the carbon footprint of MNCs who run operations that impact stakeholders in all hemispheres. The absence of borders with respect to ozone depletion, air pollution, and the degradation of forests, water, and other key supporters of human life and biodiversity all play key roles in this literature that stresses the importance of protecting global resources for both today’s and tomorrow’s generations. Whereas literature explaining individuals’ motivations to protect the environment generally concurs on altruistic intentions, it is also important to consider the more calculated reasons employees’ engage in CSR more generally. For example, CSR’s growing visibility as an important aspect of corporate performance makes related programs an opportunity for employees seeking career advancement to win leadership’s attention as exemplary volunteers or community leaders. Additionally, the peer pressure surrounding CSR involvement that may come from coworkers may also spur employees to participate unwillingly in related activities in order to ‘fit
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in’ to corporate culture and be treated well at work. Doubts such as these on the true altruistic value of employees’ attention to CSR are legitimate. However, similar to larger concerns about CSR’s motivations writ-large, they do not merit a complete dismissal of the value of understanding employees’ many motivations for opting into CSR activities. Assuming any decision can be explained by one factor is an overly-limited way of considering human behavior. This is especially true when considering motivations for action and attitudes, such as those related to CSR, that bridge multiple spheres of life (professional, personal, social). As a result, while keeping the possibility that employees may be intent on manipulating CSR actions for their ultimate benefit only in a professional sense (be it through a promotion, an increase in salary, or better intra-personal connections) is valid, the reality that they will be receiving, enjoying, and cognizant of benefits outside the professional sphere is equally important to acknowledge and consider as a driving force in their ultimate opinion on and engagement in CSR. Due to the importance of striking a balance between allowing the private sector’s use of natural resources in a profitable and sustainable way while motivating these same businesses to protect the environment, it was important to test the viability of leveraging employees’ interest in environmental stewardship to achieve this goal through active questioning techniques. This type of survey exercise has not been administered in previous studies, most of which focused on case studies, focus groups with firm leadership, or statistical-based investigations. In order to fill this gap, my study is based on a CSR and ESCSR survey and includes a profile of survey respondents and discusses potential bias from the socio-demographic characteristics of the respondents’ pool. The combination of survey responses and demographics analysis sheds light on the potential role of internal corporate stakeholders on firm-level ESCSR decisionmaking and implementation.
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These findings ultimately provide an entry point for further inquiry into the actual role of employees and leadership in ESCSR approaches. C. Essay Motivation The motivation behind my inquiry is to advance the fields of CSR literature by expanding what is now an elite- and financially-focused conversation to a discussion that encompasses employee input at both the decisionmaking and implementation phases. My hypothesis is that employees are critical determinants in shaping and giving legitimacy to corporate culture and, likewise, active participants in corporate decisions when they are allowed to give voice to opinions in an office setting.7 In other words, CSR scholars have done a disservice to individual employees by treating firms as virtual ‘black boxes’ that act of one mind and spirit in-line with executive leadership. In pursuing this novel hypothesis in CSR literature, my work challenges past CSR research as summarized by the review of fiscally-focused mercatocracy and SWM theories. My investigation into the role of internal stakeholders in a firm’s ESCSR strategy not only expands the current CSR conversation, but also further develops organizational strategy studies into employee citizenship. Employee citizenship is a term used to encompass a variety of factors, including employee loyalty to a firm; strength of a cohesive corporate culture; and alignment of leadership and employee goals. Regarding employee citizenship, scholars explain that the emergence of strong organizational citizenship behavior (OCB) is primarily a result of a firm’s procedural (i.e. decisionmaking) mechanisms and of a firm’s demonstration of its commitment to employee well-being (Manville, 2003; Eisenberger, 1990; Shore, 1995; Wayne, 1997; Kickul, 2001; Blakely 2005). Existing literature largely frames studies in terms of traditional business
7
This issue, of when, how and why employees are and/or should be included in deliberative decisionmaking in the office, is picked up on and elaborated in this dissertation’s later essays.
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practices, including investigating the relationship between soliciting employees’ opinions on decisions related to core operations and personnel training programs and consequent levels of technological innovation and employee loyalty (Moorman, 1991). Although these studies have demonstrated a positive relationship between employee engagement in decisionmaking and robust OCB, these studies have not, to-date, seriously considered employees’ role in ESCSR decisionmaking. Existing scholarly work investigating the connection between employee engagement and CSR activities primarily focuses on the post-decisionmaking phase (i.e. employees’ willingness to participate in CSR activities pre-defined by the corporation). Furthermore, these inquiries often take the form of case studies analyzing CSR programs motivated by corporate leadership’s personal interests and/or CSR programs deployed in the geographic areas critical to corporate core operations (see bibliographic citations for Chong and Murillo). These articles are very different from my inquiry into employee desire to engage in the CSR decisionmaking process for general and globally-oriented environmentally-focused programs in several, variously-sized firms.8 Given the existing work already accomplished on employees’ engagement in operationsfocused decisionmaking and CSR implementation, this essay offers new research by shedding light on employees’ interest in environmental stewardship in the professional and personal sphere.9 In demonstrating this interest, these results successfully question and challenge conventional CSR wisdom which limits analysis of firm motivations to financial drivers. It also serves to justify further study into the potentially fruitful and critical role of employees in
8
Organizational strategy literature and OCB theory will be revisited in more detail in this dissertation’s subsequent essay, but deserves mention here to help contextualize this first essay’s survey content. 9 This essay’s focus on employees’ desire to become involved in decision-making serves to justify the further investigation of employees’ actual opportunities to engage in environmental CSR decision -making, which will be explored in this dissertation’s second and third essays.
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shaping and implementing corporate-level ESCSR decisionmaking from public policy, business and ethical perspectives. D. Survey Content and Goals With these purposes in mind, I created a survey with the goal of exploring employees’ opinions on CSR in general and corporate environmental stewardship roles in particular. The survey asks private sector employees in a variety of industries about their personal assessment of the importance and value of CSR activities with a special focus on their sense of personal obligation to environmental stewardship goals. The questionnaire generated empirical evidence that sheds light on actual individuals’ CSR and ESCSR decisionmaking processes and consequent actions. It inquires: To what extent do private sector employees translate personal feelings of environmental stewardship obligations to the workplace? As discussed previously, the rationale for posing this question is to demonstrate that individual employees consider environmental stewardship decisionmaking and behavior seriously; and that they translate that priority to the office-place. If this link can be demonstrated, there is a strong political and normative argument for the further exploration of continued, or enhanced, employees’ inclusion in corporate-level CSR decisionmaking and implementation. My instrument of analysis is a questionnaire with content largely modeled on past surveys and studies that probe the non-income related factors that enhance individuals’ assessment of quality of life.10 A copy of the survey is included in Appendix A. The survey further inquires into employees’ translation (or lack thereof) of their personal moral code to the
10
For more on this topic, please see Richard Easterlin’s 2003 article “Explaining Happiness” in Proceedings of the National Academy of Sciences of the United States of America and Carol Graham’s Happiness Around the World: the Paradox of Happy Peasants and Miserable Millionaires, 2010.
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workplace in their pursuit of fulfilling careers and meaningful lives.11 The survey is structured in three-parts: The first page of questions seeks to collect respondents’ understanding of how environmental stewardship duties play into the broader definition of CSR; The second page of questions seeks to gauge how respondents define their firms’ CSR performance within self-defined peer groups; and The third page of questions seeks to identify the relationship between CSRperformance and respondents’ satisfaction measured in terms of career fulfillment and personal well-being.12 By cross-referencing respondents’ answers to the various questions with demographic and industry data collected at the same time, these results help identify trends that can serve as empirical evidence to illuminate the extent of and reasons behind private sector employees’ personal interest in and commitment to environmental stewardship roles as well as the types of staff most and least interested in the CSR cause. E. Target Audience Ideally, the respondents’ pool for this survey would be a representative sampling of employees in the U.S. private sector (including variously-sized, -aged, -located, and -profitable firms in diverse industries) in order to most accurately capture and analyze the diverse opinions of those engaged in the corporate world. Because capturing the countless types of U.S. companies is a venture outside the scope of this essay, a sample of convenience was constructed to come as close to the ideal goal as possible.13 Specifically, in defining the target audience of
11
It is important to note the influence of ‘economy of well -being’ literature on this survey. While ‘well-being’ and ‘satisfaction’ can have many different and nuanced meanings among scholars in this area, this paper treats the two concepts as identical. 12 The survey’s questions can be found in Word-document form in Appendix A. 13 While this sample of convenience prohibits me from conducting formal tests for statistical differences in this sample, it allows me to make descriptive and strong empirical arguments for the relationship between individual employee’s interest in and commitment to environmental stewardship roles and activities and their personal fulfillment/personal and professional contentment. A demonstration of a strong connection will justify further,
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my “Corporate Social Responsibility: Business Professionals’ Opinions” (CSR Survey) before its administration in the summer of 2010, I first attempted to construct an accurate representation of the key industries in the American private sector. The identification of ‘key’ industries was based on the power of each sector, using calculations of contribution to annual gross domestic product (GDP) as my main metric. These calculations were informed by the U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 2003-2010 press release.14
quantitative-based study into the corporate decision-making process around CSR as it has interesting implications for business, political, and ethical scholars. 14 This press release was released on Tuesday, December 13 2011 and can be accessed via the www.bea.gov website.
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Table 1: U.S. Economy by Sector. This table illustrates the value added by industry group as percentage of total U.S. 2010 GDP and guided my identification of the top five most powerful sectors. Source: U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 2003-2010 press release Using Table 1, found in the Department of Commerce’s full report, the top five industries were identified by looking at the percentages each contributed in 2010 next to the main headings under private sector industries. For example, five lines down from ‘Private Sector,’ ’Manufacturing’ (which includes durable and nondurable goods) accounts for 11.7% of the 2010
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GDP. Following this pattern, this publication listed the top five largest industries, contributing a total of 59.6% to the U.S. GDP in 2010, as: 1) 2) 3) 4) 5) finance/insurance/real estate/rental/leasing (20.7% contribution); professional and business services (12.3% contribution); manufacturing (11.7% contribution); educational services/health care/social assistance (8.8% contribution); and retail trade (6.1% contribution).15
After creating this schematic of the nation’s economy, I put together, based on personal connections as well as connections I formed through academic and professional advisers, a list of ‘umbrella’ contacts that worked in each of the top five industries. These umbrella contacts were, in a way, gatekeepers. They were individuals holding corporate positions that allowed them access to the appropriate number of private sector employees in the respective top-five industries. Overall, the on-line survey was intended to reach 500 respondents. To ensure inclusion of a representative number of employees in each of the afore-mentioned sectors, I calculated the share of the U.S. economy each contributed when only the top-five industries were considered, as demonstrated in the break-down in Figure 1.16 This meant that approximately: 1) 170 respondents should come from industries related to finance/insurance/real estate/rental/leasing ; 2) 105 respondents should come from industries related to professional and business services; 3) 100 respondents should come from industries related to manufacturing; 4) 75 respondents should come from industries related to educational services/health care/social assistance; and
15
In 2010, government activity contributed a little under 14% to the national GDP, with various industries including agriculture, entertainment, and food services making up the remainder of the total $14.82 trillion amount. While, ideally, my survey would have included all industries to paint a more accurate picture of opinions in the U.S. private sector, I chose to limit my target audience to the top five in order to keep my research efforts in a reasonable scope (i.e. in terms of contacts, respondent numbers, and results analysis). In addition, many of the industries that fell outside the top five were in sectors that do not rely on the Internet to the same extent as the those in the top five (for example, agriculture), and therefore most likely would not have yielded comparable response rates to my on-line survey as those listed in the top five tier. 16 For example, the five-top industries contributed 59.6%, or $8.83 trillion, to the $14.82 trillion total GDP amount. This means the retail trade contributed approximately $904 million. Within the top five industries, this places the retail sector at an approximately 10% contribution, meaning I would ideally survey 50 of my 500 respondents from this industry.
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5) 50 respondents should come from the retail trade.
10% 35%
Finance etc Professional/Business Services Manufacturing Educational etc
15%
19% Retail 21%
Figure 1. Top Five U.S. Industries’ Contribution to GDP. This figure illustrates the normalized contribution of the top five U.S. industries to total U.S. 2010 GDP and guided my quota for survey respondents by sector. Source: Calculations informed by the U.S. Department of Commerce’s Bureau of Economic Analysis 2010 Revised Statistics of GDP by Industry for 20032010 press release My typical strategy was to e-mail, call, or meet one of these umbrella contacts, explain my survey (both its design and intent), and ask them to distribute it to a group of employees and/or coworkers. While I created rough estimates of how many survey respondents each umbrella contact could solicit, I was also able to ask that question in my conversations with them to make sure my ideas were in-line with reality. Once the umbrella contacts confirmed that they were able and willing to contact a certain number of respondents, they were given the link to the survey along with explanatory language about its content and goals. I also offered to reach out to their respondent pool myself if they preferred to send me the appropriate distribution list. Beyond targeting a quota of respondents from each industry, I also intended my survey to reach a diverse array of internal corporate stakeholders. For that reason, I identified umbrella contacts at many levels of responsibility and power, including individuals in chief executive
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positions as well as mid-level managers spanning both operational and administrative oversight duties. I further made sure that at least 30% of each umbrella-contact group came from a company headquartered in a unique U.S. state, n order to achieve the desired geographical diversity (although many of the umbrella contacts sent the survey to employees located in multiple states). The full range of my umbrella contacts’ characteristics are captured in Table 2.
Industry
Number of Umbrella Contacts 11 18 7
Firm Size (Number of Employees) 100 – 45,000 12 – 25,000
Firm Age (Years) >1 – 160 2 – 98
Number of HQ States
Finance, etc Professional/Business Services Manufacturing
4 6
2010 Net Profit Margin in 2010 (%) -15 – 60 4 – 27
1,800 – 20 – 99 4 13 – 44 164,000 Educational, etc 10 5 – 250 >1 – 47 3 5 – 22 Retail 5 2,000 – 25 – 122 3 15 – 34 90,000 Table 2. Characteristics of Umbrella Contacts. This table illustrates the diverse characteristics of the umbrella contacts identified to aid in the administration of the original survey. By following this logic and these calculations, my survey was successfully sent to approximately 500 respondents spanning the top five industries either personally or through my umbrella contact. In the end, 170 responses were received, a 34% response rate. In the next section, the choice of mode of collection is explained, followed by a discussion of the profile of the actual respondents who participated in the survey. F. Mode of Collection Survey administration necessarily includes several methodological choices. A major challenge in this instance was selecting the best mode of questionnaire distribution and collection of results. In order to make the choice that would yield the highest response, the most exact responses (i.e. allow respondents to cognitively understand and response appropriately to
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questions), and the most accurately analyzed data, I made a series of strategic decisions. The first decision regarded the unit of analysis. I decided to opt for individuals as the unit of analysis in my survey (as opposed to groups of employees). This seemed the best decision, as it generated the maximum amount of data points as possible. It furthermore avoided any ‘groupthink’ or social pressure that may have biased answers. This latter concern was especially salient in this exercise, as work-places often create close-knit communities and social pressure where coworkers may feel inclined to agree with office or cubicle-mates who they know they will see on a daily basis. The next challenge was evaluating the typical modes of survey distribution, including mail, telephonic, in-person and online. The first three options were ultimately dismissed for the reasons listed below.17 i. Mail
The relationship between my umbrella contacts and my target audience. Given the professional nature of the relationship between my umbrella contacts and their employees and/or coworkers, it seemed like it might be uncomfortable for the umbrella contacts to ask potential respondents to give their personal household address, as opposed to their work email, to receive the survey. Cost. Mailing surveys can become expensive due to fees associated with postage, stationary, and envelopes. Results collection and analysis. Receiving survey results by mail would require me to manually consolidate and code all answers. This would be both time-consuming and it would create a non-negligible opportunity for human error.
17
My decision-making was largely guided by what I learned about survey research in Floyd Fowler’s Survey Research Methods. Sage Publications: 2008; all facts and statistics in this section are sourced from this text.
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Response rate. Scholars have reported that mailing a questionnaire often produces very low response rates, often averaging around 5%. It is important to note that the major advantage of mailing surveys is that it ensures that those without access to telephones and Internet can be included in the respondent pool. However, considering that my target audience was private sector employees, it seemed reasonable to dismiss this concern as most employees are given office phone numbers and computers. ii. Telephone
Nature of target audience. Private sector employees were the target audience in my questionnaire; a demographic for whom time is money. As such, telephone conversations, which require an appointment on a calendar and time away from daily business, were not the ideal mode of data collection. Cost. Calling hundreds of potential respondents requires substantial costs, including paying survey administrators for time spent on the phone and covering long-distance fees for employees located in remote offices. Results collection and analysis. Capturing survey responses over the phone may result in inaccurate data collection. If telephone conversations were not taped, the survey administrators would need to rely on memory and notes to reconstitute answers; both types of recollection are prone to human error. The second step of coding would also prove time intensive as those notes would need to be transcribed into a standardized form. Response rate. As studies have shown time and again, Americans are becoming more and more adverse to phone conversations, as the use of non-voice data services, such as texting and instant messaging using smartphones, rises at an incredible pace (CTIA,
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2012)). This aversion to engaging in phone conversations, as well as the fact that some employees may not have access to a desk or mobile phone during the day, made me wary of using telephones as the mode of collection. iii. In-Person
Confidentiality concerns. The protection of respondents’ identity and responses in any survey exercise is a prime concern. However, when the identity of employers is also at stake, confidentiality of responses becomes even more important, as proprietary information and career-security can be put in jeopardy. For this reason, in-person interviews seemed overly-risky to both the umbrella contacts and their employees. These types of concerns are largely mitigated by more impersonal means of data collection, such as that experienced through an on-line questionnaire. Cost. Administering the survey in person to the targeted pool of approximately 500 private sector employees would have required financial resources outside my grasp. First, I did not have access to the adequate human resources: I could not recruit or compensate enough staff to complete the administration in a time-efficient manner. Further, there was a lack of funds to plan and execute training sessions for such a staff. Finally, there were no means to organize the travel or lodging accommodations necessary to allow myself or other survey administrators to reach the employees working for the diverse companies in their respective geographic locations. Results collection and analysis. Collecting survey results from in-person conversations is both taxing on human (either requiring two administrators to participate – one as vocal lead and one as scribe) and time (often requiring transcribing hand-written notes and/or tape recorded interviews into type-written form) resources. Coding results is often also
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onerous, as survey administrators need to pinpoint relevant information for inclusion in official results analysis – a task that may be challenging as conversations may wander into peripheral subjects. Response Rate. Similar to telephonic interviews, in-person interviews were avoided because they are often viewed as time-intensive and cumbersome from the perspective of potential respondents. Scheduling a convenient time and location is often difficult, especially when the target audience is explicitly employees – a demographic who is busy, generally, during business hours and who may not look agreeably on giving up their after-work or leisure time to answer questions coming from an unknown administrator. iv. Online
Although finding the weaknesses in other survey methodologies is instructive in eliminating some options, it is also necessary to prove the worth of the methodology that is ultimately chosen. In my case, an online survey was the best choice for several reasons. In the first place, it was the most cost-efficient option. The questionnaire was created on SurveyMonkey, a popular website that offers survey creation capabilities at no cost. I chose to establish a more expensive “Select” account to enhance certain aesthetic and content-related aspects of my questionnaire. This type of account also facilitated results collection and analysis, as it enabled me to cross-reference demographic information with certain replies to search for and identify interesting trends within certain types of respondents. In addition, as the online format allowed respondents to respond directly to most questions using multiple choice or ranking mechanisms, this type of survey eliminated a lot of coding work that would need to be done as a result of conversation-based survey administration.
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In the second place, using an online mode of survey administration allowed me to cater to my target audience: busy employees with demanding jobs. Internet surveys allow respondents the flexibility to respond to the questionnaire whenever was most convenient for them. At the same time, this type of survey also alleviated concerns related to confidentiality. Respondents never had to meet face-to-face or speak personally with survey staff; and the online questionnaire never requested personal identification. Respondents were only asked to provide generic data related to certain personal demographic characteristics (i.e. age, income, political participation) and firm-related industry information. Finally, the online format made communications with survey respondents painless and inexpensive. Respondents were provided with highly-specific and original survey instructions via email, and issue follow-up reminders via email as well. This took relatively little time and coordination and could be done at no cost. It is important to note that recent survey-focused research has shown Internet-based questionnaires yield a typical response rate of between 20 and 30%. (Kaplowitz, 2004). This response rate is roughly comparable with other modes of accepted survey administration, and thus not a compelling reason to avoid online surveys. In the end, opting for the online method of survey administration and collection did indeed yield the best response rate and most accurate results. According to my own email records and those of my umbrella contacts, the survey link was sent out to approximately 476 potential respondents. Of those 476, approximately 229 responded to the survey. Of those 229, approximately 170 completed the survey. I took the answers from the 170 employees who answered all the survey questions to be my ultimate respondent pool. Their characteristics are analyzed below. G. Respondents Profile
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When analyzing my respondents’ profile, it became clear that there were a variety of factors that could have skewed the results but one of the most troubling was the potential bias related to respondent self-selection. In particular, the need for a way to account for the possibility that those employees who took my survey primarily did so because they were interested enough in CSR to answer questions related to the topic (as opposed to taking the survey because they were requested to do so by leadership, are familiar and like answering questionnaires, or had free time at work, among other feasible motivations) was quickly evident. If this possibility proved true, the majority of the respondents would express unrepresentative sympathy towards and support for CSR-related activities and goals. In order to give this potential bias due consideration, I analyzed the traits of those who responded to see how representative they were of the American private sector as a whole as it is depicted by 2010 U.S. census data. These traits included not only the respondents’ industry association, but also personal demographic characteristics. Perhaps one of the most important considerations associated with the representativeness of my actual sample relates back to an issue raised in the “Target Audience” section of this paper. In that section, the process for calculating approximate quotas of respondents that should be drawn from each of the top five U.S. industries was explained (35% of respondents from industries finance/insurance/real estate/rental/leasing; 21% respondents from professional and business services; 19% respondents from manufacturing; 15% respondents from educational services/health care/social assistance; and 10% respondents from the retail trade). In actuality, the respondent break-down was the following: 47% (or 79 respondents) from professional and business services; 30% (or 51 respondents) from finance/insurance/real estate/rental/leasing; 12% (or 21 respondents) from manufacturing; 6% (or 10 respondents) from educational
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services/health care/social assistance; and 5% (or 9 respondents) from retail. While these percentages do differ significantly from my ideal targets from each of the top five industries, my survey still achieved a wide diversity of employees in each of the leading business sectors. For this reason, and due to the fact that the vast majority of my ideal and actual target audience are both drawn from the service-oriented tertiary sector of the U.S. economy makes me confident my respondents’ industrial profile would not compromise my results in an irremediable fashion.18 The fact that the percentage of my respondents from the manufacturing sector is slightly lower than the target of 19% may introduce some bias, however. One possible outcome of this discrepancy between my target audience and my actual respondents’ pool may be a slightly uncharacteristic sympathy for environmentally-friendly CSR activities. As manufacturing companies usually employ workers to perform tasks that are, by definition, transforming raw materials into finished goods on a large scale, these employees are likely to be far more aware of the environmental impact (including the exhaustion of natural resources, the expenditure of energy/fuel to successfully complete core operations, and the waste produced by the manufacturing process) of their day-to-day work. Given this daily exposure to their corporation’s carbon footprint, such employees may be more likely than those in the ‘softer’ and cleaner service sector to support CSR activities they deem to be in-line with environmental stewardship. However, an opposite argument may be employed to defend the contrary possibility; namely that manufacturing employees may be more likely to oppose environmentally friendly CSR activities than others. In this scenario, employees whose livelihoods depend on the daily use and disposal of natural resources may shy away from supporting eco-friendly practices that
18
Please note, a much more in-depth discussion of potential bias introduced by my actual sample is contained later in this section.
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may threaten their careers. Due to these mixed considerations, it is difficult to argue convincingly for or against one type of bias introduced by the paucity of manufacturing respondents in my survey. Beyond industrial-level characteristics, my survey also probed respondents for information related to personal demographics. Although some of the demographic questions asked were too specialized to be reflected in the U.S. Department of Commerce’s Census Bureau’s information pool, many key characteristics were captured, including age, ethnicity, and employee tenure. The table below juxtaposes the profile of the survey respondents to the U.S. private sector. The last column of the table also demonstrates, via the calculation of a chisquared statistic, whether or not the difference between my survey respondents and the U.S. private sector as a whole is significant. For the purposes of this paper, I have set the alpha level of significance at 0.05; this means any p-value smaller than this threshold represents a rejection of the null hypothesis of equal distributions. Characteristic Survey Respondents Private Sector Two-tailed P Value of Difference 0.08 0.23