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Redefining Corporate Social Responsibility

From an overarching concept to an industry specific management function

Stephen Labib – 5656451

Faculty of Social and Behavioural Sciences Master Corporate Communication

Master’s Thesis

Semester 2, 2013-2014

L.A. van Oortmerssen Wednesday June 4, 2014

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2 Abstract

There is a lack of consensus on the definition of corporate social responsibility (CSR). Existing definitions are too general and broad to be relevant to organizations. Few academic studies to date have attempted to address the reporting of CSR at the industry level. By the means of a semantic network analysis, this study identifies the most relevant elements in CSR communication of multinationals in six different industries across three major economic regions. Subsequently, the concept of CSR is redefined for each specific sector to highlight the most important issues. This study makes clear that it is time to move away from an overarching concept of CSR. Industry specific definitions are practically relevant and more useful for corporate implementation. The redefined concepts of CSR can serve as corporate guidelines for appraisal criteria, managerial responsibility, and prevent inappropriate actions and strategies that do not align with important issues and the needs of stakeholders.

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3 “There is nothing worse than a sharp image of a fuzzy concept.” – Ansel Adams

Introduction

The 1950s mark the beginning of the modern era of corporate social responsibility (CSR). Since then, it can be viewed as an evolving corporate management paradigm resulting in the proliferation of definitions of this broad and dialectical concept (Carroll, 1999; Wilson, 2003). Despite numerous definitions, interpretations, and themes, at its core, CSR addresses and captures the most important concerns of the public regarding business and society

relationships (Carroll, 1999). CSR continues to grow in importance and significance and represents a prominent place on the global corporate agenda in today’s socially conscious market environment (Du, Bhattacharya & Sen, 2010). The idea that organizations have responsibilities towards society beyond that of making profits for the shareholders has surged in importance since the 1960s (Carroll & Shabana, 2010) and now it is one of the most widely accepted business concepts (Córdoba & Campbell, 2008). Furthermore, there is increasing attention to the global impact of large corporations, which includes economic, environmental, and social elements (Beltratti, 2005). This interest in CSR is accelerating rapidly. The public behavior of companies has become an increasingly important aspect in business and the social reportage of companies has gained much interest from the media and scientists (Hooghiemstra, 2000). As a result, organizations are increasingly involved in CSR. Therefore, conducting research in this field is an important opportunity (Aguinis & Glavas, 2012).

A clear and unbiased definition and concept is needed to lay a strong foundation for the steps to be followed in the development process of CSR. An overarching concept of CSR has to be broadly defined and is therefore too vague to be useful or relevant in corporate implementation (Van Marrewijk, 2003). Moreover, companies deal with industry specific

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4 CSR issues (Runhaar & Lafferty, 2009) and, hence, focus on different aspects and

communicate differently about CSR overall. CSR definitions are describing a phenomenon, but fail to present any guidance on how to manage the challenges within this phenomenon. CSR is socially constructed in a specific context. Consequently, a more industry specific CSR definition can provide guidance on how to manage CSR challenges for businesses. More importantly, companies can take this into account when business strategies are developed (Dahlsrud, 2008).

Therefore, the research question this article addresses is: Why should and how could CSR be redefined into separate industry specific CSR definitions and, subsequently, serve as a basis for useful business strategies and corporate implementation? Few academic studies to date have attempted to address the reporting of CSR at the industry level (Guthrie, Cuganesan & Ward, 2008). The aim of this study is to examine the focus of CSR dimensions among different organizations throughout different industries. These focus areas are highlighted in sector specific CSR definitions. Subsequently, it is discussed how a deeper understanding of industry specific issues helps organizations to implement CSR strategies more effectively.

Theoretical Framework

With changing perceptions of the role of businesses towards society, the interpretation of CSR of enterprises evolves over time (De Herdt, 2013). In general, CSR has three pillars, the so-called three P’s: people, planet and profit, the bottom line (Cramer, Van der Heijden & Jonker, 2006; Fisk, 2010). CSR has moved from ideology to reality, and many consider it necessary for organizations to define their role in society and apply social and ethical standards to their businesses (Lindgreen & Swaen, 2010). Therefore, companies are experiencing a growing societal pressure to take ecological quality and the wellbeing of people in and outside the organization into account while they make a profit (Cramer et al.,

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5 2006). Organizations are increasingly devoting resources to various social initiatives. These can differ from community outreach and environmental protection to socially responsible business practices (Du, Bhattacharya & Sen, 2010). Organizations not only practice CSR to some extent with internal and/or external stakeholders, but they also indirectly or directly communicate CSR to these stakeholders. Managing these interactions is the foundation for building a fitting corporate CSR identity. Therefore, it is also important for the company to design a strategy that aligns the company’s needs with that of its stakeholders (Nielsen & Thomsen, 2009).

Du, Bhattacharya & Sen (2010) argue that there is a strong need for companies to communicate CSR more effectively to stakeholders. An effective communication strategy depends on several crucial factors. For instance, (1) a company’s commitment and

involvement towards CSR initiatives (When & Respond, 2004), (2) motives to engage in CSR, (3) how it fits and aligns with a company’s overall strategy and image, (4) the

positioning of CSR within the company (Du, Bhattacharya & Sen, 2010), and (5) the business culture, size and success level of the firm, and its approach to stakeholders (O’Riodran & Fairbrass, 2008). An appropriate definition and an understanding of the communication context help to overcome intrinsic problems encountered in achieving effective and

transparent CSR communication (Birth, Illia, Lurati & Zamparini, 2008). However, there is no consensus on the definition of CSR (Pedersen, 2006) Intensive debates and rigorous research resulted in many definitions of a more humane, more ethical and more transparent way of doing business (Van Marrewijk, 2003). Surely, this leads to some theoretical and practical issues, but it also provides opportunities to revise the concept of CSR for

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6 Defining CSR: problems and possibilities

Demands and pressures to devote resources to CSR emerge from customers, employees, suppliers, community groups, governments, and some stockholders. With so many conflicting goals and objectives, the definition of CSR is not always clear (McWilliams & Siegel, 2001). CSR is an umbrella term overlapping with some, and being synonymous with other, notions of business-society relations (Matten & Moon, 2008). Numerous definitions of CSR have been proposed and often no clear definition is given, making theoretical development and measurement difficult (McWilliams, Siegel & Wright, 2006). CSR may mean different things in different places to different people and at different times, because it encompasses several issues and dimensions (Campbell, 2007). As a result, much debate remains about the exact nature of this intricate concept (Maignan & Ralston, 2002) and its meaning or value (Cai, Jo & Pan, 2012). However, this is not a new problem. Votaw (1972) wrote: “it means

something, but not always the same thing, to everybody” (p. 25). Therefore, how the concept is used and defined also differs. To date, local meanings have not yet congealed in an

internationally or commonly accepted definition (Campbell, 2007). Dahlsrud (2008) identifies 37 definitions of CSR. This figure even underestimates the true number, because many academically derived definitional constructs are not included (Carroll & Shabana, 2010). The existing definitions are perhaps too general and far from theory (Beltratti, 2005). Moreover, Banerjee (2001) states that CSR is “too broad in its scope to be relevant to organizations” (p. 42). The clash over different local definitions of CSR can have serious practical consequences in the real world (Campbell, 2007). A wide variety of CSR definitions is accompanied by a large array of synonyms like sustainability or ethical business. There is a subtle difference between the latter two synonyms for CSR. Sustainability mainly focuses on the cross point of environment and economy. Ethical business, on the other hand, addresses mostly social aspects (Wouters et al., 2006). Social issues management, public, stakeholder

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7 management, corporate accountability, corporate citizenship, and corporate sustainability are just some of the alternative terms and concepts used to describe the phenomena related to CSR (Garriga & Melé, 2004).

The lack of consistency in the use of the term CSR makes it difficult to understand the implications of CSR activity. McWilliams, Siegel and Wright (2006) suggest that a good definition could aid in modeling the type and level of CSR activity within firms. Conversely, an analysis of the type of CSR activities and the areas of impact could aid in modeling a definition that fits the corporate culture of businesses. Van Marrewijk (2003) argues that the “one solution fits all”-definition for CSR should be abandoned. The key is to accept various, but more specific, definitions matching the development, awareness and ambition levels of organizations. More specific definitions, however, diverge according to national,

geographical, and industrial contexts because different societal expectations are placed upon corporations within specific social contexts (Wanderley et al., 2008).There is a significant difference between how organizations in different industries report on CSR (Sweeney & Coughlan, 2008). In addition, organizations from different countries have diverse

perspectives on the importance of CSR (Maignan & Ralston, 2002). Therefore, it is important to examine the influence of regional differences and the type of industry in which

organizations operate.

CSR differentials: country and type of industry

There are important disparities in how CSR is implemented by companies in different industries and countries. Country, type of industry and size of industry all have an impact on reporting about CSR initiatives (Golob & Bartlett, 2007). Generally, if a country is more developed, companies implement more CSR policies (Welford, 2005). Moreover, there is plenty of cross-national evidence that CSR varies in terms of its underlying meanings and the

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issues it addresses (Matten & Moon, 2008). In addition, the country of origin of the

corporation exercises an influence over CSR communication on the web (Wanderley et al., 2008). For instance, companies in the United States discuss their involvement in society more explicit than some European countries. In the United States, 53 percent of U.S.-based

companies mention CSR explicitly on their websites. This is only the case for 29 percent of French and 25 percent of Dutch companies (Maignan & Ralston, 2002). Many CSR policies are linked to local issues and cultural traditions at a country level. For example, within Asia there are considerable differences in priorities between different countries because norms, values and economic development differ greatly in this region. Asian companies often reflect what is important among stakeholders in their own countries and this can also be influenced by local culture (Welford, 2005). Multinationals, however, form an exception as they address global markets and place similar importance on global CSR issues (Husted & Allen, 2008)

Social expectations vary in different world regions (Golob & Bartlett) but also in different industries to comply with industry requirements and codes of conduct (Deegan, 2002). Different industries potentially have relatively unique CSR issues (Maloni & Brown, 2006). Moreover, social and environmental impacts vary greatly from industry to industry (Guthrie, Cuganesan & Ward, 2008). Therefore, how companies view, emphasize, and manage CSR affects how they communicate and report about their CSR policies. Besides common CSR issues, relevant to all sectors, there are quite a few issues that are industry specific (Fox, Ward & Howard, 2002) and companies report more on industry-specific issues than general CSR issues (Guthrie et al., 2008).

The banking industry, for instance, increasingly involves in financing economic

activity aimed at sustainable development. Despite differences per country or individual bank, codes of conduct with respect to, for example, transparency about CSR activities have

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America (Scholtens, 2009). CSR-related issues in the international food industry, however, pertain to very different classifications. General supply chain CSR issues include animal welfare, biotechnology, environment, fair trade, health and food safety, the community, litter, and labor and human rights such as union activity (Maloni & Brown, 2006; Royle, 2005). In another sector, the telecommunications industry, companies implement strategies with similar industry specific objectives that are more substantively relevant within the areas of human rights, labor conditions, environment, and anticorruption (Runhaar & Lafferty, 2009).

Concerns of CSR-related issues are especially important for organizations in

controversial industries such as alcohol, tobacco, gambling, weapon manufacturing, and oil (Cai, Jo & Pan, 2012). For example, it seems paradoxical for a tobacco company to engage in CSR while it is simultaneously viewed as a negative force in the realm of public health (Hirschhorn, 2004). The World Health Organization (2004) described CSR in the tobacco industry as an “inherent contradiction”. Therefore, the question arises if a tobacco company can be judged along the same standards of business ethics as organizations in

non-controversial sectors (Hirschhorn). Palazzo and Richter (2005) argue that CSR in the tobacco industry must be conceptualized differently. The trustworthiness of tobacco companies is lower and the negative expectations are higher than companies in other industries. In addition, they note that CSR efforts by tobacco companies are exposed to a much greater scrutiny and CSR initiatives for firms in the tobacco industry need a stronger focus on the corporation’s integrity, transparency, and fair behavior. With regard to another industry which has dealt with numerous accounts of negative publicity, CSR activities in the international oil industry encompass many elements, such as: employment issues, environmental issues and local community issues. Triggered by pressure group campaigns, multinational firms have embarked upon efforts to reduce their environmental impact and engage more with local communities. This is demonstrated by the growth in corporate codes of conduct, renewable

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energy, community development schemes, combating carbon dioxide emissions, and social reporting (Frynas, 2005).

In summary, CSR issues that companies deal with are industry specific (Runhaar & Lafferty, 2009) and different industries discuss differing numbers of CSR processes and issues (Silberhorn & Warren, 2007). Hence, the focus on any of the three pillars of CSR will, most likely, differ from one industry to another as organizations deal with some general but overall very different issues. That is why this study examines CSR communication by multinationals across different industries to identify the most relevant dimensions per sector and, subsequently, redefine CSR to a more meaningful concept for each industry addressed in this article.

Methodology

Organizations increasingly use CSR activities to position themselves as responsible corporate citizens, such as through their annual reports and websites (Lindgreen & Swaen, 2010). The internet has become one of the main tools for CSR information disclosure, allowing

companies to publicize more information less expensively and faster than ever before (Wanderley et al., 2008). In this study a content analysis of the CSR communication of multinationals across different industries is conducted. A content analysis is the most

common research method used to assess organizations' social and environmental disclosures (Milne & Adler, 1999).

Semantic network analysis

This study focused on the frames embedded within the texts. A semantic network analysis (semantic mapping) was used to generate textual frames of certain words used by companies in a CSR context. This method analyzes specific key words and their relations (Vlieger &

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11 Leyersdorff, 2011) to form a representation of information in text messages connected by a similar theme. This connected representation of a coherent central issue is based on linking related pieces of textual information that occur throughout the text (Foltz, Kintsch, & Landauer, 1998). Words co-occur in text documents at several levels and form implicit frames. They may co-occur within sentences and paragraphs in a document, but words can also co-occur across various documents, and sets of documents. The co-occurrence of words form implicit frames embedded in the communication. These implicit frames can be indicated by using a semantic network analysis (Hellsten, Dawson & Leydesdorff, 2010). These frames of words reveal the latent dimensions of CSR communication by organizations in different industries and served as the basis for revising the concept of CSR; from a broad definition to a more sector specific concept.

Selection industries and organizations

This study incorporated only multinationals. Global guidelines seem to be especially suitable for multinational companies which operate in many markets. Other companies are more bound to national and local expectations (Golob & Bartlett, 2007) and economic development (Welford, 2005). Additionally, multinationals transcend national borders and communicate to a worldwide public. Organizations from Europe, Asia, and North America are included for each industry in order to construct relevant definitions for each sector that serve as guidelines to firms across these three economic powerful and industry rich regions. Some of the biggest multinationals, which have widely adopted CSR activities and communicate about it through their websites, are rooted in these regions. For each industry, at least five multinationals are examined, including at least one company headquartered in each region (See Table I). The organizations are chosen based on at least one of three criteria: (1) it is a top ten company in their specific industry and region, (2) negative publicity (in the past) fostered more

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12 Six industries were selected for this study. First, the banking sector is selected, since it plays an important role in economic development. Especially since the economic crisis, socially responsible banking is becoming a well-established notion in the financial services industry (Scholtens, 2009). For this industry, JPMorgan Chase & Co., Bank of America, HSBC, ING Group, Bank of China, and Mizuho Financial Group are examined due to their global as well as regional impact. Second, the oil industry is an important sector to analyze. The oil and gas sector has been among the leading industries in championing CSR. Oil companies attach great importance to their social and environmental impact and they engage more with local communities than they used to in the past (Frynas, 2005). In this sector, the CSR data of ExxonMobil, Chevron, Royal Dutch Shell, Total, CNPC, and Petronas are bundled to study their communication messages. Third, the automotive industry is relevant in this context for several reasons: (1) a relatively high degree of technology intensity, (2) a direct link with global warming, and (3) high potentials for economies of scale in CSR

policies and implementation due to vertical integration (Muller, 2006). General Motors, Ford, Volkswagen, Volvo, Honda, and Nissan are included for this sector. Fourth, sweatshop

scandals in the 1990s in the apparel industry generated various forms of regulations of labor conditions, codes of conduct, and initiatives to certify socially responsible companies. Moreover, external monitors assess compliance in factories in the U.S. and around the world (Bartley, 2005). The entire apparel industry now takes a more diligent approach to supply chain CSR with extensive supplier labor codes (Emmelhainz & Adams, 1999). Nike, GAP, H&M, Adidas and Uniqlo/Fast Retailing Co., Ltd. are examined for the apparel industry. Fifth, CSR gains importance in the food supply chain due to (1) the nature of the product and (2) the complex and labor intensive nature of food supply chains (Maloni & Brown, 2006). In this sector, Kraft Foods Group, General Mills, Nestlé, Danone, Kikkoman, and Ajinomoto Group are selected to study their CSR communication. Finally, controversy is inherent in

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13 CSR activities and communication in the tobacco industry. Therefore, this a particularly interesting sector to examine. The CSR messages from Altria Group, Inc., Phillip Morris International (PMI), Reynolds American, British American Tobacco, Swedish Match and Japan Tobacco International possibly provide an interesting contrast compared to the other industries included in this study. A total of 35 organizations are included in this research (13 U.S.-based, 12 EU-based, and 10 Asian-based companies).

Table I: Industries and multinationals included in study and the total amount of messages per sector.

Type of industry North America Europe Asia Total amount of

messages/words Financial/Banking - JPMorgan

Chase & Co. - Bank of America - HSBC - ING Group - Bank of China - Mizuho Bank 85 / 228.318 Oil/Energy - ExxonMobil - Chevron - Royal Dutch Shell - Total - CNPC - Petronas 98 / 233.647 Automobile - GM - Ford - Volkswagen - Volvo - Honda - Nissan 84 / 613.155 Sporting goods/Apparel - Nike - GAP - H&M - Adidas - Uniqlo/Fast Retailing 86 / 419.892 Food and Beverages - Kraft Foods

Group, Inc. - General Mills - Nestlé - Danone - Kikkoman - Ajinomoto Group 90 / 489.379

Tobacco - Altria Group

- PMI - Reynolds American - British American Tobacco - Swedish Match - Japan Tobacco International 91 / 217.720 13 12 10 Data collection

In order to collect relevant data, Wanderley et al. (2008) suggest to examine several indicators of CSR communication on corporate websites. Depending on the available information, these include but are not limited to: (1) availability of a Code of Ethics and or Conduct; (2) details of CSR Projects; (3) information on CSR Project Results; (4) CSR Partnerships with companies, NGOs and/or governments; (5) Social Reports; and (6)

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14 Corporate Values and Commitments retrieved from the official corporate websites. This provides sufficient insight and unmediated data about each company’s CSR messages and focus points for each industry. All messages from all the companies, included in this study, are combined to form the ‘total’ CSR communication of a particular sector.

At least ten different messages and a maximum of twenty messages from any organization are included. At least one of those messages is, when present, a recent CSR (summary) report. In this case, a company from a particular region or industry with only a few messages is not completely outnumbered by another organization’s wide variety of messages and an equitable balance is maintained. This means that a minimum of 50 messages have been included per sector. Occasionally, several CSR messages were grouped together as one message when this seemed logical or when they appeared on a website as separate

messages, but within the same section. These combined messages pertain to the same subject and are counted as one message of the total of communication messages. For example, Shell has a special section on their methods to lessen their impact on biodiversity in areas where they operate. This section is made up of several messages with their own page and with biodiversity as their coherent theme. Across the six different industries, a total of 534 CSR-related messages are analyzed.

Data analysis

By reviewing CSR communication messages retrieved from official corporate websites and analyzed by the means of semantic mapping, this study revealed implicit frames about the most salient CSR concerns for each type of industry. Implicit framing is established by the coincidence of several words into a new meaning (Hellsten, Dawson & Leydesdorff, 2010). In this design, each message is viewed as a textual unit. The textual units of analysis are considered as the cases, and the words in these messages, after proper filtering of the irrelevant words (stopwords), are considered variables. First, Frequency List, a program that

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15 produces a word frequency list, is needed to assess which words are included in the final analysis. Second, FullTex, a program that uses approximately the first 75-80 words from the frequency list to produce data files, served as input for SPSS (Vlieger & Leydesdorff, 2011).

The next step was analyzing the data by means of a factor analysis with SPSS in order to calculate the coherence between the components. The most relevant is the Rotated

Component Matrix. This matrix shows the number of components (factors) and the loading of the different words on the components. In addition, a reliability analysis is conducted, by calculating Cronbach’s Alpha (α) for each frame (component). This measure indicates, after the factor analysis, whether the frames form a reliable scale (Vlieger & Leydesdorff, 2011). Only scales higher than α = .65 are considered reliable and were taken into account. The component with the highest proportion of variance explained is the main frame. The other frames are sub frames, which provided additional, detailed insight into coherent frames of words used in CSR communication for a specific industry.

Redefining process

Once the main and sub frames were established, the most salient and coherent words were used to redefine the concept of CSR for each specific industry. The first word frames (main frame plus sub frame(s)) that accounted for at least fifty percent of the total variance, were used to redefine the concept of CSR for each specific industry. These frames illustrated the most important dimensions and provide the basis to be as specific and correct as possible in analyzing the focus of the companies’ CSR communication messages. A total of 14 implicit word frames (see Table 2 and Appendix I) are used as the foundation to redefine the concept of CSR for each sector.

Results

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16 whether the word frames formed a reliable scale. If that was the case, these words were used to revise the concept of CSR for each sector. For the financial industry, the factor analysis identified seven separate frames of which the first two frames account for a total of 56,9 percent of the variance explained. The main frame consists of 40 words and the sub frame constitutes of 17 words. For both frames, all items appear to be worthy of retention. The internal consistency for both frames is excellent,       A factor analysis executed with the 80 most frequently used words in the CSR

communication of multinationals in the oil industry, distinguished nine frames. The first three implicit frames account for 56,9 percent of the total variance explained. The main frame comprises a scale of 31 words. The internal reliability of this frame is excellent, and explains 27,5 percent of the variance. The first sub frame is composed of 13 relevant words. The internal reliability of this frame is excellent, and explains 14,9 percent of the variance. The internal reliability of the second sub frame, which is made up of 12 words, is also excellent The greatest increase in alpha would come from deleting item 46 (“Local”, see Appendix I), but removal of this item would only increase alpha by .005. This frame explains 14,5 percent of the variance in the CSR communication of the oil sector.

The factor analysis conducted with the 80 words most relevant to the automobile industry, illustrated nine separate latent frames. The first three implicit frames explain for approximately 59 percent of the total variance. The main frame consists of 32 words and the internal reliability of this scale is excellent,All items are worthy of retention. The greatest increase in alpha comes from deleting item number 5 (“Vehicle, see Appendix I), but the scale would increase only by .010. The proportion of variance explained is 28,94 percent. The first and second sub frames are both highly reliable with and  and the proportion of variance explained is 17,4 and 12,6 percent respectively.

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17 divided into seven frames. The proportion of variance explained of the first two frames do not differ greatly and are 32,44 and 32,37 percent respectively. The main frame and first sub frame account for 64,8 percent of the total variance explained. The main frame comprises 29 words and the sub frame 31 words. Each frame has an excellent internal reliability,

for the main frame and  for the sub frame.

For the food and beverages industry, the factor analysis identified seven frames. The main frame consists of 45 out of 80 words with excellent internal consistency,  and the proportion of variance explained is 42,5 percent. The sub frame is formed by 15 words with an excellent internal reliability,  and the proportion of variance explained is 18,4 percent.

For the tobacco industry, 81 words are examined. The factor analysis revealed a total of six frames. However, the first two word frames accounted for 75 percent of the total variance explained. This indicated that the industry is highly focused on communicating about issues related to two dimensions of CSR. The main frame (N = 45) forms a highly reliable scale,  and the proportion of variance explained is 44,8 percent. The sub frame consists of 25 words and the proportion of variance explained is 30,2 percent. The greatest increase in alpha comes from deleting item 67, which ironically is the word “Tobacco” (see Appendix I), with .023 but alpha is already high, . The eigenvalues of all the frames vary between 59,72 and 4,34.

Table 2. Implicit frames CSR messages corporate websites per industry

Financial/Banking Eigenvalues R2   1. Main frame 58,21 34,79 .98 40 2. Sub frame 6,36 22,07 .98 17 Total: 56,86 Oil/Energy Eigenvalues R2  

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18 3. Main frame 46,89 27,52 .98 31 4. Sub frame 1 8,24 14,88 .94 13 5. Sub frame 2 4,34 14,51 .95 12 Total: 56,90 Automobile Eigenvalues R2   6. Main frame 50,22 28,94 .97 32 7. Sub frame 1 8,26 17,40 .97 17 8. Sub frame 2 5,09 12,62 .94 9 Total: 58,96

Sporting goods/Apparel Eigenvalues R2  

9. Main frame 55,52 32,44 .98 29

10. Sub frame 6,39 32,37 .99 31

Total:

64,80

Food and Beverages Eigenvalues R2  

11. Main frame 59,72 42,50 .99 45 12. Sub frame 6,16 18,42 .97 15 Total: 60,92 Tobacco Eigenvalues R2   13. Main frame 57,81 44,81 .98 45 14. Sub frame 10,17 30,21 .95 25 Total: 75,02

N = number of words of which the frame consists.

As an example, the frames of the oil industry are visualized in Figure 1 with the help of Pajek, a network visualization program. It is important to stress out that visualization is not an

analytical technique. The implicit frames were made more visible by slightly extracting the frames apart from each other and providing each frame with a specific color.

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Figure 1. Visualization semantic network CSR messages oil industry

Note: The vertices correspond with the frames in Appendix I. A total of 80 words have been examined. The main frame is yellow, sub frame 1 is green, sub frame 2 is red. The remaining colored word frames are those with less relevance in the CSR communication of multinationals in the oil industry. The purple node (“Principle”) does not belong to a specific component.

Redefining CSR per industry

After examining the most relevant words, the word frames that account for at least fifty percent of the total variance and that proved to be reliable scales, it was possible to analyze the focus area of each industry and redefine the concept of CSR. In analyzing the word frames, it became clear that there are two important categories of words: descriptive and substantive. Descriptive words like ‘help’ or ‘improve’ somewhat provide the context and help to tell the story for substantive words such as ‘climate’ or ‘community.’ Substantive words are the most relevant points of distinctiveness and essential elements in CSR

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each sector and reading through an abundance of individual messages, the context in which the words are used as well as the relation between the most important topics throughout the text messages became clear. Subsequently, it was possible to extract the essence and focus points to redefine CSR for each industry. First, the most important words in the word frames are discussed for each sector. Second, these words were placed into context and were used to construct a new definition.

Financial industry

The two most dominant frames put forward 57 words that indicate on which elements of CSR the industry is focused most. Two main themes emerge when analyzing the words used by companies in the financial sector. First, a social theme, illustrated by substantive words such as: children, society, social, human, people, employees, training, education, communities,

diversity, and individual. Second, an economic theme, exemplified by words such as:

performance, product, investment, financing, financial, customer, economic, market, billion, million, and capital. In addition, there are descriptive words which somewhat provide the

context of the purpose and meaning of these words, such as: risk, policy, information, help,

issue, impact, commitment, value, responsibility, global, world, provide, and program. These

words indicate the CSR communication focus areas of the financial industry and will

therefore serve as the basis to redefine the concept of CSR for the financial industry. CSR for the banking industry is defined as follows:

‘Organizations in the financial industry are committed to focus on social issues, providing financial information and implementing financing policies with little risk for its customers and society at large as companies recognize the impact of their overall performance on a

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The aforementioned social issues include, for instance, providing adequate training to employees, valuing a diverse workforce, the implementation of education programs to help local communities, and respect for the role of each individual stakeholder in its business operations. Less risky financing policies are, for example, illustrated by more solid capital investments.

Oil/energy industry

Topics related to the CSR communication in the oil and energy industry are varied given the nine frames revealed by the factor analysis. However, three issues contextualized by 56 words dominate the CSR messages. First, the industry’s business operations was evident by words such as: system, management, improve, development, service, production,

organization(s), project, operation, standard, and businesses. Second, a very clear legal

frame has priority. This is illustrated by words as: code, conduct, law, integrity, policy,

control, government, and values. Third, words that have a social character are dominant in the

messages, such as: support, local, people, help, partner, communities, social, program,

employees, health, training, and, public. These results provide the following definition:

‘Companies in the oil sector focus on developments to improve and standardize production,

services, and operation systems. Codes of conduct embed values related to laws, integrity, and the health and safety of employees into corporate culture. Moreover, businesses seek partnerships aimed to help and support local communities in the countries in which they

operate.’

To comply with federal law, continuous communication with and control by government is part of global management systems that also foster more transparent information. To ensure the health and safety for employees, more adequate training is provided by companies operating in the oil and energy sector.

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22

Automobile industry

The three most salient implicit frames of the automobile industry mainly revolve around two major issues. First, environmental concerns fuel the major bulk of CSR communication messages. For example, words as: climate, change, emission, reduce, energy, sustainable,

environment, world, and water are present in the main frame. Second, sub frame 1 and sub

frame 2 relate to more logistics and production related matters, illustrated by words as:

electric, vehicle, fuel, technology, engine, material, efficiency, model, driver, operation, site, system, approach, motor, quality, transport, service, and development. Using a wide selection

of the 58 words present in the most dominant frames, resulted in the following definition:

‘CSR activities in the automobile industry focus on reducing energy consumption,

promoting clean energy and limiting carbon emissions. Organizations take actions to tackle climate change for a more sustainable environment. Furthermore, companies develop technologies to improve operation systems, manufacturing sites, quality of materials, and motor efficiency of (electric) vehicles to boost sales on a competitive global market.’

Sporting goods/apparel industry

Sixty words comprise the two most important communicational frames of the apparel industry. Most words related to two important CSR topics. First, a social frame was clearly present. For instance, words as: human, communities, labor, employee, social, child, help,

safety, stakeholder(s), program, support, factories, and team imply a social dimension.

Second, continuous initiatives to reduce the organizations’ ecological footprint throughout their supply chain is apparent. This is demonstrated by a selection of words such as:

environment, waste, sustainable, energy, impact, water, world, change, goals, initiatives, practice, supply, chain, material, manufacturing, system, standard, performance, global,

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23 resources, improve, strategy, audit, and development. By reviewing the context in which

these words are used, it was possible to construct the definition for the apparel industry:

‘Organizations in the apparel industry focus CSR efforts on social programs to help and

support local communities, guarantee the health and safety of factory employees, and prohibit child labor. Furthermore, companies strive to reduce energy, material and water consumption, improve and maintain high standards of manufacturing systems, and

perform audits across the supply chain for further strategic improvements and developments

and, ultimately, reducing their overall environmental impact.’

Foods and beverages industry

The two most dominant frames, consisting of 60 words, for the food industry pertain to two CSR related issues. The first dimension is related to efforts to improve the organizations’ environmental impact. This frame is underpinned by words as: resources, raw, service,

material, standard, ensure, food, initiatives, provide, production, environment, environmental, effort, product, emission, improve, reduce, sustainable, packaging, world, waste, risk,

performance, impact, and energy. The second issue pertains to social aspects, shaped by

words like: customer, education, training, safety, society, people, support, local, help,

employees, children, social, project, nutrition, policies, and consumer. These findings lead to

the forthcoming definition:

‘CSR initiatives in the food and beverage industry aim to diminish environmental impacts during food production. This is reflected in improved efforts to reduce the use of raw

materials, limit waste, smarter packaging, decrease emissions, and lower energy consumption. In addition, companies help and support people in local communities,

institute policies regarding worker safety, and labeling systems to display vital nutrition

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24

To help and support local communities, organizations, for instance, set up education projects for children in their society and install training programs to educate employees worldwide.

Tobacco industry

The data derived from the CSR messages in the tobacco industry offer interesting results. Seventy out of eighty words belong to the first two frames and relate to three topics that are important to multinationals in this sector. First, an economic dimension surfaces in words such as: total, percent, performance, level, operating, sales, operation, risk, global, market,

marketing, stakeholders, consumers, companies, trade, million, and, business. Second, social

elements are apparent in the most frequently used words such as: community, employees,

health, adult, child, grower, help, communities, labor, management, support, project, program, training, and development. Third, a legal frame emerges in the contextual word

frames through words as: reporting, quality, requirement, policy, regulation, compliance, law, and practice. These findings are grouped in the next definition:

‘CSR efforts in the tobacco industry focus on risk management, responsible marketing, and

combating illicit trade to protect stakeholders, consumers, and the overall performance of

related businesses. Organizations support communities through local projects and labor management provides training and development programs to safeguard workplace health

and safety. Best practices ensures compliance with laws and regulations, resulting in transparent CSR reporting, high product quality, and a zero tolerance policy with regards to child labor’

Responsible marketing means that advertisements and promotions of tobacco products is not directed at people under the age of 18 and inform tobacco retailers in order to prevent the underage sale of tobacco.

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25 Discussion

This study answers why it is important to focus on the industry level in defining CSR and identifies the focus areas for CSR communication of multinationals different industries. By the means of a semantic network analysis, the specific words organizations use most

frequently are filtered out of an abundance of CSR messages with the purpose of redefining CSR for each specific industry. This article yields several important findings. First, the most important find is that this study highlights what organizations consider as the most relevant CSR issues in their own industry. Moreover, the most relevant elements in CSR

communication of multinationals in six different industries across three major economic regions are identified. By uncovering the variations between organizations in particular sectors, this study argues it is time to move away from an overarching concept of CSR and use sector specific communication about issues to define CSR more accurately for each industry. Various, but more specific, definitions are more useful for corporate implementation (Van Marrewijk, 2003). It helps companies understand which CSR-related issues are most important for their industry. In that way, businesses can focus CSR efforts, resources, and communication in a more practical, efficient, and meaningful manner.

Second, even though this study adds definitions to the already large number of definitions regarding CSR, these are not derived from theory but from the actual CSR communication messages found on companies’ websites. Corporations are increasingly concerned with communicating ethically and responsibly to the diversity of stakeholders through the worldwide web. Corporate websites provide an official perspective regarding CSR from the corporation towards all its stakeholders (Wanderley et al., 2008). Furthermore,

websites are dynamic and can be constantly updated to communicate about current business activities and industry-related issues. Therefore, the provided definitions illustrate the most relevant focus areas multinationals currently communicate about. It is possible to debate the

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26

wording or formulation of the definitions in this study, however, they do highlight the distinctive focus areas in CSR communication for different industries. Organizations deal with and focus on different CSR-related issues. Issues are at the center of corporate communication (Luoma-aho & Vos, 2010) and as these issues vary, communication with regards to CSR varies accordingly. The definitions clearly demonstrate that the concept of CSR differs per industry and should therefore be approached differently as well.

Third, the reliability of all the word frames was excellent (>.9). This is probably due to: (1) the extensive range of data used to analyze CSR messages in each category and (2), as this study indicates, that organizations within the same industry communicate in a similar matter on similar CSR issues.

Finally, companies obviously do address other aspects of CSR related matters and it is not at all suggested to discard those elements. For instance, it might be expected that

organizations in the oil industry would address environmental issues extensively. However, operational, legal, and, in accordance with Frynas (2005) who stated that spending on community development by oil companies increased, social issues are more dominant elements in the sector’s CSR communication. As Figure 1 shows, the environmental frame

(blue nodes) is, interestingly enough, not one of the three most dominant frames in the oil industry’s CSR communication. Words such as: water, reduce, impact, energy, environment,

fuel, and plants belong to the fourth frame (third sub frame) and are therefore not taken into

account in defining the most dominant aspects of CSR for the oil industry. A possible explanation that companies communicate less about environmental aspects could be related to the negative publicity that organizations frequently deal with. Despite various CSR initiatives, communities in the Niger Delta, for instance, continue to face the negative consequences of environmental externalities that arises from crude oil extraction in the area (Idemudia, 2010). Moreover, occurrences of oil spills and environmental pollution makes it

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27 harder to convince stakeholders and pressure groups that companies are doing the best they can to harness a sustainable environment. Mitnick (2000) observes that companies that have a negative impact on one area of CSR (for example, the environment) will not communicate this to a great extent, but instead will report on other areas where they do have a positive impact (for example, social contributions). The tobacco industry as well does not

communicate extensively about negative aspects such as health issues (cancer),

environmental issues, political lobbying, or their position on tax increases (Palazzo & Richter, 2005). However, this observation is in contrast with the findings of the automobile industry in which the focus rests on the impact of environmental performance caused by organizations in the industry. Organizations recognize their negative impact but assume their responsibilities to communicate about how they are enhancing their products and carrying out research to design the transport system more effectively (Sweeney & Coughlan, 2008).

In the case of the international financial industry, both in theory and in practice financial and social conduct outweigh environmental responsibility in importance and focus. The number and the type of responsible financial products as well as the internal and external social commitment of banks has increased considerably (Scholtens, 2009). The analysis of current CSR communication of multinationals in the banking sectors reveals the same findings. Financial and social elements are more dominantly present in the word frames than environmental references. The provided definition for the banking industry underwrites these results. Compared to companies in, for instance, the automobile, food or apparel industry, the environmental impact of banks is limited because their products and services do not demand the extensive usage of specific natural resources. In general, CSR theories for a specific industry corresponds with findings in the actual communication of firms in those sectors.

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28 Theoretical and practical implications

In recent times, regulators and other industry associations have already recognized the strategic importance of considering the industry setting when determining CSR policies and reporting requirements (Guthrie et al., 2008). This article identifies the focus areas for

organizations in different industries. By using a semantic network analysis, it is demonstrated how similar multinationals communicate about CSR within the same industry and how much it differs with other industries. There probably never will be consensus on the definition of CSR if it is used as an umbrella term to cover multiple industries and a multiplicity of related concepts (Pedersen, 2006). This study, however, shows a high degree of consensus on issues and topics in the CSR communication by firms in the same sector.The use of a semantic network analysis is relatively new and not yet widely adopted. Nonetheless, for this article it contributes to analyze CSR issues very specifically and complements CSR theory with actual data of CSR communication content from multiple official corporate websites.

The focus areas of CSR for different industries is highlighted in sector specific definitions. However, the challenge for businesses is not so much to define CSR, as it is to understand how CSR is socially constructed in a specific context and how to take this into account when business strategies are developed (Dahlsrud, 2008). An industry specific

definition is more valuable if it includes elements that are meaningful and practically relevant. For instance, the redefined concepts of CSR can serve as guidelines and appraisal criteria for managerial responsibility in the context of each specific sector (Pedersen, 2006). Moreover, an effective socially responsible corporate guide may prevent inappropriate actions and strategies that do not align proportionally with important issues and the needs of their stakeholders (Dahlsrud, 2008).

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29 Limitations

More research is needed into the method applied in this study. First, the process to acquire the final results requires a lot of interim adjustments and reconsiderations. For instance, several words that frequently occur in the messages were removed, as they do not seem valuable. For example, descriptive words like the company’s names have been deleted or words such as page, report, CSR, or names of months/days are left out. Another researcher might choose to keep these words in place, thus slightly altering the frames found in a semantic network analysis. However, keeping these particular words in place does not have a major effect on the eventual outcome and conclusions which are drawn from it. Second, it is difficult to repeat this research in exactly the same way. It is likely that companies update their websites on several occasions, adding and removing CSR-related messages. Third, this study does not include other factors that potentially have influence on CSR initiatives and communication as well. For instance, the risk and or need to involve in CSR, the financial performance of the firm, preferences of societal stakeholders (Brammer & Millington, 2003), competitors, the primary target group(s), business objectives, organizational structure, size of the firm, and available resources are factors that are beyond the scope of this paper. Nonetheless, this study clearly shows that the type of industry plays a very important role. The results demonstrate significant differences in CSR communication between different sectors.

Further research

At this time, little scientific research is conducted in the field of corporate communication by the means of a semantic network analysis. Repetition of the methodology results in higher reliability of this particular method and fills a gap in science for the field of semantics as well as communication science on numerous topics. The method can also be applied outside the corporate communication perspective. For example, a wide range of viewpoints on politicians

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30 and political positions by different actors in multiple issue arenas can be analyzed to compare how actors in the debate communicate about those topics. With respect to CSR

communication, further research could include media reports, blogger comments, and consumer posts about companies’ behavior and communication. This might reveal a less positive image of how CSR activities are portrayed than by the organizations themselves. Furthermore, CSR communication by multinationals in emerging industries and different regions like South America or Africa are interesting to study. In addition, there are still many more interesting sectors to analyze such as the pharmaceutical, telecommunications, alcohol, aviation, and agriculture industry.

Concluding remarks

CSR is a dynamic phenomenon (Matten & Moon, 2008) and conceptions of CSR are

constantly evolving through interactions with internal and external influences (Silberhorn & Warren, 2007). A definition should, therefore, not be institutionalized but merely serve as a guideline for the areas with the highest priority. It is important to closely monitor industry specific issues and adapt CSR activities and communication to turbulent marketplaces, changing needs of stakeholders, and relate more to the current zeitgeist.

When organizations take responsibility in doing good, that ultimately leads to doing better (Lindgreen & Swaen, 2010). However, to successfully establish a comprehensive and effective CSR program within a company requires the investment of time and energy (Lewis, 2003). Knowledge about what issues are most relevant and an understanding of where

companies have the most impact takes away a lot of unnecessary wasted time, energy, and money. Like Benjamin Franklin once said: “An investment in knowledge pays the best interest.”

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Appendix I: Word frames per industry

Financial Oil/Energy Automobile Apparel Food Tobacco

Main frame Main frame Main frame Main frame Main frame Main frame

1. Sustainability 2. Children 3. Principle 4. Policy 5. Performance 6. Countries 7. Sector 8. Carbon 9. Risk 10. Change 11. Standard 12. Stakeholder 13. Investment 14. Business 15. Total 16. Issue 17. Programme 18. Product 19. Client 20. Policies 21. Environment 22. Society 23. International 24. Social 25. Human 26. Financing 27. Financial 28. Based 29. Customer 30. Information 31. People 32. Employees 33. Values 34. Company 35. Economic 36. Training 37. Education 38. Operation 39. Energy 40. Market 1. National 2. System 3. Management 4. Social 5. Million 6. Improve 7. Development 8. Responsibility 9. Employees 10. Corporate 11. Training 12. Services 13. Gas 14. Effort 15. Natural 16. International 17. Oil 18. Product 19. Plan 20. Including 21. Production 22. Organization 23. Project 24. Public 25. Operation 26. Standard 27. Ensure 28. Emission 29. Report 30. Risk 31. Health 1. Electric 2. Fuel 3. Climate 4. Change 5. Vehicle 6. Focus 7. Technology 8. Percent 9. Engine 10. Technologies 11. Material 12. Efficiency 13. Emission 14. Model 15. Reduce 16. Data 17. Standard 18. Energy 19. Driver 20. Plan 21. Provide 22. Operation 23. Help 24. Sustainable 25. Sites 26. Performance 27. Policy 28. System 29. Environment 30. Approach 31. World 32. Water 1. Human 2. Communities 3. Labor 4. Employees 5. Social 6. Child 7. Conduct 8. Organization 9. Help 10. Company 11. Safety 12. Stakeholder 13. Effort 14. Provide 15. Program 16. Code 17. Goal 18. Support 19. Supply 20. Practice 21. Initiative 22. Key 23. Factories 24. Chain 25. Values 26. Team 27. Time 28. Environment 29. Continue 1. Activities 2. Customer 3. Conduct 4. Fiscal 5. Education 6. Companies 7. Business 8. Management 9. Training 10. Plans 11. Quality 12. Information 13. Resources 14. Raw 15. Services 16. Materials 17. Issues 18. Standards 19. Life 20. Ensure 21. Food 22. Initiatives 23. Systems 24. Provide 25. Production 26. Environment 27. Safety 28. Efforts 29. Society 30. Environmental 31. Products 32. People 33. Support 34. Local 35. Emissions 36. Help 37. Employees 38. Improve 39. Reduce 40. Sustainable 41. World 42. Packaging 43. Waste 44. Children 45. Risk 1. Total 2. Percent 3. Production 4. Energy 5. Waste 6. Reporting 7. Sustainability 8. Stakeholder 9. Water 10. Materials 11. Company 12. Performance 13. Levels 14. Products 15. Environmental 16. Project 17. Quality 18. Requirement 19. Community 20. Operating 21. Sales 22. Impact 23. Standards 24. Issue 25. Operation 26. Activities 27. Employees 28. Policy 29. Ensure 30. Consumers 31. Chain 32. Regulation 33. Management 34. Responsibility 35. Risk 36. Organization 37. Health 38. Market 39. Global 40. Local 41. Supply 42. Child 43. Supplier 44. Marketing 45. Principle

Sub frame Sub frame 1 Sub frame 1 Sub frame Sub frame Sub frame

41. Program 42. Billion 43. Communities 44. Diversity 45. Individual 46. Impact 47. Help 48. Million 49. Including 50. Commitment 51. Global 52. Organization 53. Provide 54. Capital 55. Businesses 32. Conduct 33. Code 34. Law 35. Information 36. Values 37. Business 38. Integrity 39. Policy 40. Activities 41. Company 42. Control 43 Companies 44. Government 33. Motor 34. Quality 35. Companies 36. Corporate 37. Activities 38. Sales 39. Global 40. Information 41. Risk 42. Effort 43. Support 44. Cars 45. Market 45. Manufacturing 47. Management 30. Manufacturing 31. Material 32. Approach 33. Waste 34. Product 35. Sustainable 36. Energy 37. Industry 38. Corporate 39. Business 40. Changes 41. Brand 42. Impact 43. System 44. Apparel 46. Performance 47. Social 48. Project 49. Action 50. Report 51. Practices 52. Results 53. Countries 54. Impact 55. Nutrition 56. Policies 57. Organization 58. Energy 59. International 60. Consumer 46. Companies 47. Grower 48. Help 49. Programs 50. Support 51. Training 52. Including 53. Development 54. Services 55. Compliance 56. Communities 57. Practices 58. Cigarettes 59. Provide 60. Adult

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36 56. Responsibility 57. World 48. Program 49. Customer 45. Include 46. Water 47. World 48. Standard 49. Performance 50. Information 51. Global 52. Worker 53. Responsibility 54. Issue 55. Training 56. Resources 57. Improve 58. Audit 59. Strategy 60. Development 61. Trade 62. Million 63. Key 64. Law 65. Resources 66. Approach 67. Tobacco 68. Effort 69. Business 70. Labor

Sub frame 2 Sub frame 2

45. Support 46. Local 47. Help 48. People 49. Partner 50. Program 51. Provide 52. Businesses 53. Communities 54. Countries 55. Economic 56. Commitment 50. Transport 51. Report 52. Values 53. Development 54. Business 55. Future 56. Employees 57. Level 58. Service

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