Creating Shared Value : an assessment of social issue areas, governance options and communications strategies for CSR at TomTom

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Creating Shared Value: an assessment of social issue areas, governance

options and communications strategies for CSR at TomTom

Submitted by: Cielo Tatiana Llinas

Supervisor: Professor Jean Lynne Johnson

Contact Details:

Email: cielollinasb@gmail.com

Mobile: +31 (06) 426-49-185

Date of Submission: September 20, 2015

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Executive Summary

Stakeholders of listed companies, especially of those with recognized consumer brands, increasingly expect CSR engagement. In fact, 87% of people globally state that they believe companies should place at least equal weight on society’s interests and their own business interests (Edelman Goodpurpose Study (2012)). Moreover, a survey by Havas Worldwide indicates that two thirds of people think that businesses have as much of a responsibility as governments for driving positive societal change (2013). However, research has shown that for CSR engagement to be truly beneficial for both the company and for society, a firm investing in CSR needs to act in a strategic manner (Husted and Salazar ((2006)).

The primary aim of the paper is to analyze and evaluate the different issues that need to be addressed in order to create a CSR program that benefits both business and society at a European technology company with TomTom as the case of the study. The paper will review some of the academic literature about corporate approaches to social responsibility, CSR organizational structures and both internal and external CSR communication strategies.

In this report I will address the questions of what social issue TomTom should focus on in its CSR program; what type of CSR governance structure TomTom should use to manage it; and how TomTom can use its communications to leverage its CSR activities.

Through the use of Porter and Kramer’s shared value framework(2002) as well as data from the company, an analysis of the external social influences on TomTom’s competitiveness is performed and an assessment of TomTom’s value chain social impacts is conducted. This

examination is then used to recommend possible areas for CSR activities. In addition, a

governance structure is suggested and several recommendations are given about TomTom’s CSR communications.

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I. Introduction:

In today’s global business environment a company’s approach to corporate social responsibility (CSR) is viewed as increasingly important to its competitiveness. Although reporting on specific CSR-related initiatives is not yet mandatory in all countries, multinational corporations are under pressure to account for the social consequences of their activities. Since 2008, when KPMG started tracking the percentage of corporations that report on CSR, the landscape on CSR worldwide has changed significantly. While in 2008 only 74% of US companies reported on their initiatives (KPMG (2008)), today over 86% of US companies do (KPMG (2015)).

But why are the other 14% of US companies not undertaking CSR activities or at least not reporting on them? Companies are still not sure as to how CSR can affect their financial performance. When firms engage in CSR as a response to “a coercive political and social

environment” instead of out of a strategic understanding of the competitive landscape they stand to lose (Husted and Salazar 2006 p. 75). Furthermore, poorly planned CSR initiatives can affect profits negatively (Hillman & Keim (2001)) and research has shown that “low awareness of and unfavorable attributions towards companies’ CSR activities” (Du, Bhattacharya and Sen 2010 p. 8) can reduce the business benefits a company can attain from engaging in CSR.

The creation of a CSR program can have a deleterious effect on a company’s

competitiveness mainly due to a disconnect between the company’s strategy and its CSR efforts, but also because of an unsuitable organizational structure or a deficient communication plan. In this paper I will discuss these factors and explore how a European technology company,

TomTom, can establish a CSR program without harming its financial performance.

II. Framing

Because the creation and implementation of a CSR initiative affects nearly every aspect of a business, there is a considerable amount of topics across the business spectrum theory that can be relevant to this particular case. However, I will mostly limit the theory review to the

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concepts and frameworks that I believe could be the most useful in charting a future direction for CSR at the organization. While the authors of each of the following theories address different aspects of CSR execution and do not all use the same terminology, their frameworks are rooted in a similar understanding of the purpose of CSR. More specifically, they all understand CSR as an opportunity to create value for both the business itself and for society at large. Since the type of organizational structure used to manage CSR efforts and the type of internal and external communications strategies used to communicate them depends on the type of CSR activities chosen, I will begin with an overview of Porter and Kramer’s CSR strategic framework. Having done this I will review Husted’s CSR governance structures, and conclude by discussing Du et al’s CSR communication strategies.

A. Porter & Kramer’s Shared Value

Following the European Commission’s 2001 report on the subject, Professor Arno

Kourula defined corporate social responsibility as a concept whereby “companies integrate social and environmental concerns in their businesses and in their interaction with their stakeholders on a voluntary basis and in a context specific way” (2015). Although in recent years many

companies have incorporated this type of thinking into their businesses, Porter and Kramer argue that their efforts are often unproductive because companies use generic approaches to CSR instead of using the “most appropriate” approach to “each firm’s strategy” (2006 p.78). To address this issue and thus create “shared value”, Porter and Kramer introduce a framework that allows companies to identify the effects they have on society and determine which social issues they should try to tackle. In the following pages I will briefly explain each of the three steps in the CSR framework proposed by the authors.

i. Identifying Linkages

The first step of the process involves an analysis of the points of intersection between a company and society. Since external social conditions can affect corporations and a corporation's activities can affect society, the authors argue that a proper mapping of social opportunities

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should involve the examination of both outside-in and inside-out linkages through the use of diamond framework (see figure 1) and value chain analysis (see figure 2) respectively.

Figure 1. The CSR Diamond Framework- the Outside in Dimernsion. It shows how the local environment affects a company’s ability to implement its strategy (Porter and Kramer (2006)).

Understanding the outside-in dimension (figure 1) involves having a firm grasp of the social dimensions that affect the company's ability to pursue its strategy in its particular

competitive context. According to the authors, this outer dimension can be split into four areas; quantity and quality of inputs, rules and incentives that govern competition, size and

sophistication of global demand and the local availability of supporting industries (Porter and Kramer (2006)).

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Figure 2. CSR activity value chain- The Inside-Out Dimension. Primary activities are the ones that you can see horizontally and relate directly to the physical creation, sale, maintenance and support of a product or service. The secondary activities are shown vertically and show the support activities that the firm must undertake in some form (Porter and Kramer (2006)).

On the other hand, comprehending inside-out linkages (Figure 2) requires that companies go through their whole value chain including both primary and secondary activities and

determine the positive and negative social impacts of each of them. These linkages could range from financial reporting practices to the utilization of natural resources.

ii. Classifying Social Issues

While a myriad of social issues could potentially be identified in the preceding stage, Porter and Kramer state that a company should only pursue CSR initiatives for those issues that

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present an opportunity to create shared value. Opportunities that create shared value generate a meaningful benefit for society and are valuable for the business (Porter and Kramer (2006)). In their framework the authors suggest that social issues that have an impact on a company should be classified into distinct categories depending upon the extent to which the issue is both important to society and strategic to the company.

Generic social issues could be important for society but are not seriously affected by the company’s operations and do not significantly affect its competitiveness. Value chain social impacts are those issues that the company significantly affects while doing business. Social dimensions of competitive context are issues in the company’s environment that impact the company’s competitiveness (Porter and Kramer (2006)).

iii. Choosing Social Issues to Address: Responsive vs Strategic CSR

Once the company sorts its different linkages into the previously mentioned categories it should create a CSR agenda that leads to both social and economic benefits in addition to meeting external stakeholder expectations. The idea is for companies to go beyond simply mitigating the harm they do (responsive CSR) and attempt to reinforce their competitive strategy through improving social conditions (strategic CSR) .

The first of these two approaches, Responsive CSR, consists of both acting as a good corporate citizen and mitigating the harmful effects of business activities. Although companies often do quite well in regards to corporate citizenship this approach usually results in suboptimal effects since these programs are generally incidental to the business. The part of responsive CSR that relates to harm mitigation is in essence a fairly standard exercise in supply chain

optimization (Porter and Kramer (2006)). In fact, most companies that pursue a responsive CSR approach have recently opted to use standardized social and environmental risk checklists such as the one developed by the Global Reporting Initiative. While implementing Responsive CSR could give companies an advantage in the marketplace, the authors note that this advantage “is likely to be temporary” (Porter and Kramer 2006 p.88)

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Strategic CSR, the second approach, takes CSR a step further by utilizing both inside-out

and outside-in linkages to create shared value. According to Porter and Kramer, a company that wishes to engage in strategic CSR has to choose a unique value proposition that can result in “large and distinctive” social and business benefits (Porter and Kramer 2006 p.88). Strategic CSR is therefore about having both the outside-in and the inside-out dimensions “working in tandem” (Porter and Kramer 2006 p.88). One way that companies can achieve this is via innovations in product offerings and in the value chain. More specifically, companies can create shared value by producing creative products that can generate a competitive advantage for them while simultaneously producing environmental and/or societal benefits. Another way firms can create shared value is through investment in those social aspects of its environment that can improve its competitive position. The idea behind this is that a sort of “mutually beneficial” relationship develops between the company and society since the success of the company and the success of the community become mutually reinforcing (Porter and Kramer (2006)). It should be noted that the authors argue that “the more closely tied a social issue is to the company’s

business, the greater the opportunity to leverage the firm’s resources and capabilities, and benefit society” (Porter and Kramer 2006 p.88).

In the results section, I will explore possible areas of strategic CSR for TomTom.

B. Husted’s Governance Choices

While thinking about the integration of business and social needs is primordial, it is only the first step in establishing a strategic CSR program. In addition to strategic thinking, CSR program implementation requires a careful examination of the different forms of governance that the company can potentially use to manage its CSR activities. Governance in this context, refers to how a company “chooses to organize a particular activity in order to realize mutual gains for itself and its partners” (Husted 2003 p. 482). In Governance Choices for Corporate Social

responsibility: to Contribute, Collaborate, or Internalize? Bryan Husted argues that governance

choices for CSR should also be a strategic with “the purpose of increasing competitive advantage and greater return on investment” (2003 p.493). According to the author, companies can choose between Charitable Contribution, Collaboration, In House Projects governance structures

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depending upon the levels of centrality and specificity they are able to achieve and the type of costs they are willing to incur (Husted (2003)). That is, assuming that the company has a

strategic rather than an altruistic purpose in mind when engaging in CSR. If CSR is not strategic, if it is not intended to increase the competitive advantage of the firm, cost considerations do not play an important role in CSR governance decisions. If this is the case, then the economic logic of Husted’s framework does not readily apply.

i. The Decision Matrix

In order to better understand the variables involved in the choice of CSR governance models, Husted introduces what he dubs the “CSR decision matrix” (see figure 3). This tool, developed in 2003, has two dimensions; centrality and specificity.

Figure 3. Husted’s Decision Matrix. Centrality is on the horizontal axis from low to high and specificity is on the vertical axis from high to low (Husted (2003)).

Centrality is defined by the author as the “closeness of fit between the firm’s CSR

activities and its mission and objectives” (Husted 2003 p.489). It is considered an important factor in the organization decision due to the fact that centrality affects motivation costs. When the CSR activity that the firm engages in is closely related to its core businesses, centrality is considered to be high, and when the two are only loosely related centrality is considered to be low. Usually CSR activities that have a high centrality are internalized since the firm has the resources and know-how available in house to evaluate the “decisions and activities of

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recipients” and they can therefore avoid the issue of keeping external receipts motivated1

(Husted 2003 p.491). According to Husted (2003), the less central a CSR initiative is to the firm’s mission and objectives, the harder it is for a firm to use its administrative control systems to reward or punish the types of behaviors that are consistent or inconsistent with its goals. When this is the case it is better for the firm to externalize the CSR activity it seeks to support and link financial incentives to measureable goals that the recipient organization needs to meet.

Specificity on the other hand refers to “the extent to which the firm is able to capture a

share of the profit stream generated by its investment in CSR” (Husted 2003 p.490). This particular dimension is important to the CSR organizational form because the firm can achieve different levels of “benefit capturing” depending upon the organizational form it chooses to adopt. A CSR activity has high specificity if it is hard for competitors to imitate and competitors cannot easily gain a benefit from it (Husted (2003)). Specificity is low when competitors can easily copy the activity and when external parties can easily share in the benefits of the activity since the benefits it generates are a public good. Generally, when specificity is high it is practical for the firm to incorporate the CSR organization and thus “capture all the benefits produced by a given CSR activity” (Husted 2003 p.492). Yet, this decision should not be taken lightly since incorporating an external recipient usually involves substantial coordination costs that arise from managing tasks inside the firm.

Depending upon where a company’s CSR activities fall in regards to the two dimensions four quadrants can be determined:

First Quadrant: In this quadrant both centrality and specificity are low. Since centrality is low

the firm does not have the expertise necessary to monitor the recipient organization's activities. Furthermore, because the specificity is also low the firm cannot itself accrue all the benefits of doing the CSR activity. When this is the case Husted recommends that the company govern its CSR activities via a charitable contribution (Husted (2003)). The most widely used of the three

1_{Using evaluation systems that incorporate CSR goal achievements makes it possible to easily motivate internal}

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CSR governance models described by Husted, the charitable contribution model involves the transfer of financial resources from the company to the Non-Governmental Organization (NGO), the latter being the one in charge of organizing and developing the “charitable, social,

educational, community, scientific” activity (Husted 2003 p. 483).

Second Quadrant: Here the CSR activity has a high centrality but is low on specificity. Because

the firm is knowledgeable about the area in which it will perform the activity it is able to manage it. However, because the activity can also benefit competitors it is of low specificity. For

activities that fall in this quadrant Husted recommends that the firm employ the collaborative CSR governance model. Under this form of governance, the firm and an NGO work in

partnership and the firm “transfers resources to the nonprofit partner in order to carry out CSR activities jointly” (Husted 2003 p. 484). More specifically, with this model the firm is able to contribute its know-how to the NGO and yet it does not have to absorb the full costs of internalization.

Third Quadrant: Activities in this quadrant are high in specificity but low in centrality. Although

the firm can accrue a sizeable portion of the benefits that result from engaging in the CSR activity, they do not have enough knowledge in the area to be able to evaluate the activities. Husted argues that activities with this high specificity low centrality profile should also be managed using a collaborative model.

Fourth Quadrant: The Fourth Quadrant in Husted’s matrix is characterized by both high

centrality and specificity. Since the CSR activity is highly related to the core mission of the firm, the company has the expertise necessary to effectively monitor the CSR activity. Due to this and because of the fact that the company is able to capture most of the benefits of engaging in the activity for itself, Husted proposes that companies in this quadrant use the In-House form of governance. This form of governance requires “extensive corporate participation in the planning, execution and evaluation of” the CSR initiative (Husted 2003 p. 484). The main benefit of this governance model is that the company can be very strategic in their resource allocation

depending upon both the firm’s goals and the target community's needs (Husted (2003)). That said, the costs of using this model can be much higher than the costs of the other two models.

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Based on this approach I will propose a governance structure for TomTom’s CSR activities.

C. Du et al’s CSR Communication Strategies

In Maximizing Business Returns to Corporate Social Responsibility: The Role of CSR

Communication Du, Bhattacharya and Sen (2010) state that CSR activities can generate

favorable stakeholder attitudes, build a good corporate image and strengthen

stakeholder-company relationships if they are effectively communicated. More specifically, the authors argue that while companies can benefit image wise from engaging in CSR, low awareness and

unfavorable attributions2 of companies’ CSR initiatives are important obstacles (Du et al. (2010)). In order to overcome them, Du et al. suggest that a better understanding of key issues such as what to communicate, and where to communicate it, as well as a better grasp of certain moderating factors (company and stakeholder specific factors) is necessary (see figure 4).

Figure 4. Du et al’s framework of CSR communication (Du et al (2010)).

2_{Stakeholders attributions to a company’s CSR motives are usually considered either extrinsic (profit-driven) or} intrinsic (driven by genuine concern). Recent research has found that stakeholders can give mixed attributions to CSR initiatives and that their reactions to CSR were more positive when they assign mixed attributions than when “ attributions were purely intrinsic or extrinsic” (Due et al 2010 p.10).

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i. Message Content

A firm’s CSR communications can be either mostly about the social cause that it is supporting or about how the company is supporting it. When companies choose to emphasize the social cause itself in its communications, consumers are likely to be skeptical of the company’s motives (Du et al. (2010)). According to the authors, in such cases the company “should emphasize the importance of the social issue and communicate a lack of vested self-interest by choosing issues that are not logically related to the company’s businesses” in order both to assuage consumers’ skepticism and to increase campaign credibility (Du et al. 2010 p. 10).

When companies decide to emphasize their involvement in the social cause instead of the cause itself, there are a variety of issues that the company can and should highlight. Namely, companies can choose to communicate its commitment to the cause, its impact on the cause, its motives to engage in the cause and the fit between the cause and the company’s business.

Commitment: This can be conveyed by communicating the amount of resources given by the

company to the cause, the consistency of the company’s donations, and/or how long the company has worked on a cause. Predictably, longer-term commitments are viewed more favorably than shorter-term commitments since consumers attribute longer-term commitment to a genuine concern for the cause whereas they see shorter-term commitments as profit driven cause exploitation (Du et al. (2010)).

Impact: Rather than focus on its donations to a cause a firm can decide to emphasize the social

benefits that have resulted from its CSR activities. Focusing on impact is an effective

communication strategy due to the fact that it serves as a “diagnostic” cue “with regard to its underlying CSR motives” (Du et al. 2010 p. 12). More specifically, the authors have found “positive associations” between social impact and intrinsic consumer attributions.

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Motives: Appropriately conveying information about the company’s motives for engaging in

CSR is key since stakeholder skepticism is one of the main obstacles for CSR communication. While some companies choose to stress purely intrinsic motives others highlight the business case for CSR. Research has shown (Foreh and Grier ((2003)) that recognizing extrinsic motives in CSR messaging increases the credibility of a firm’s CSR communication and reduces

stakeholder skepticism. Thus, companies should “emphasize the convergence of social and business interests, and frankly acknowledge that its CSR endeavors are beneficial to both society and itself” (Du et al. 2010 p.12).

Fit: Defined as the “congruence between a social issue and the company’s business,” fit is also

an important factor to communicate since it affects stakeholder attribution (Du et al. 2010 p.12). According to the two-stage model of attribution proposed by Gilbert (1989) consumers will first classify CSR motives as either intrinsic or extrinsic and then modify this initial classification if they pay close attention to the communication and consider additional contextual factors. If fit is low, consumers pay more attention to the communication because they do not consider the connection between the company and the cause to be logical. When this happens, consumers become more cognizant of the extrinsic motivations involved and thus their positive perception of the company’s CSR activities decreases (Du et al. (2010)). In general the authors suggest that companies should emphasize the CSR fit if it is high and try to explain the connection between itself and the cause when fit is low in order to increase perceived fit.

ii. Message Channels

Companies wishing to communicate their CSR activities have a wide variety of channels through which they can share their initiatives. While some channels, such as annual corporate responsibility reports and company websites, are both official and company-controlled others like consumer forums are external to the company and thereby generally harder to influence. Usually those channels that are less controllable by the company have more credibility with stakeholders and vice versa (Du et al. (2010)). In line with this, research has shown that consumers react more positively to a company’s CSR initiatives when they learn about them from a “neutral source (e.g. an independent organization that provides unbiased evaluations of

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corporate activities) than from a corporate source” (Du et al. 2010 p.13). Because of this, companies should try to obtain as much positive media coverage as they can from external sources that are considered independent and unbiased and encourage informal but credible communication such as stakeholder word-of-mouth. More specifically, the authors recommend that companies work to improve their internal CSR communication strategy in order to capitalize on employee’s tendency to recommend their company to others based upon their company’s responsibility (2010). Additionally, companies should attempt to engage with consumers directly about their CSR efforts since this powerful group’s word of mouth capabilities have grown considerably with the rise of blogs and social media.

iii. Moderating Factors

Although having a better grasp of the type of content and the type of channel that is most effective in communicating CSR activities is crucial in getting a return from CSR, companies must also be keenly aware of how context-specific factors can positively or negatively affect their efforts. In their paper Du et al address these moderating factors and categorize them as pertaining either to the company or to the stakeholder.

Company Specific Factors: The two company specific factors that are most relevant for CSR

communication are reputation3 and CSR positioning. Although these have an effect regardless of the communication channel, they have a greater moderating impact on company-controlled communications than on third party issued communications since the former are “more likely to trigger these company-specific knowledge structures” (Du et al. 2010 p.14). Corporate reputation functions as a moderator for CSR communication because individuals use their previous

knowledge of a company to help them understand “ambiguous” information about the company (Du et al. (2010)). Thus, when information like CSR activity engagement is communicated, those companies that have a good reputation and therefore a high source credibility benefit more than those with poor reputations. In fact, communication about an ill reputed company’s

engagement in CSR is likely to lead to negative consequences (Du et al (2010)). CSR

3_{Corporate Reputation defined by Gardberg and Fombrun as a “collective representation of a firm’s past}

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positioning4, the second company- specific factor, moderates the outcomes of CSR

communications due to the fact that companies who have positioned themselves as CSR- driven have more credibility and thus receive more attention to their message (Du et al (2010)).

Stakeholder-specific factors: Although the authors identify three stakeholder specific moderating

factors (stakeholder type, issue support and social value orientation), in this paper I will only discuss the first two due their more concrete application to developing a CSR communication strategy5_{. Stakeholder type is especially important because different types of stakeholders have}

divergent information needs and consume their information from distinct channels. Business press, investors and NGO proactively look for a company’s CSR report and usually rely on the CSR report to have a better understanding of the company’s CSR record (Du et al (2010)). Companies seeking credibility with NGOs should issue their report following leading global reporting standards and concentrate on providing benchmarks and targets. If the company also wants to target investors at large, it should emphasize the business case for CSR. As per the general public, they often do not look at these reports and often rely on the press, work of mouth and cause marketing campaigns for information on a company’s CSR activities (Du et al (2010)). In order to reach them companies are advised to use “a variety of communication channels.” (Du et al. 2010 p. 16).

The second factor, issue support, affects communication effectiveness because

individuals pay more attention to communication they find relevant to them. Since awareness of a social issue has been found to increase support for that issue, companies should try to convey information about the importance of an issue in their communications (Du et al (2010)). In addition to this, companies should try to get an understanding of their key stakeholders’ support for various issues before launching an initiative. Due to the fact that areas for shared value creation are not necessarily “hot” issues in the mind of stakeholders, I will not rely on issue support in my recommendations.

4_{CSR positioning is defined as “the extent to which a company relies on its CSR activities to position itself relative}

to the competition, in the minds of consumers’ (Du et al 2010 p.15).

5_{Although social value orientation has a moderating factor on the benefits of CSR communication, companies}

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Using Du et al’s conceptual framework, I will study how TomTom can use both its internal and external channels to communicate its CSR activities.

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III. Case Description: TomTom

A. Organizational overview

TomTom is a Dutch technology company best known for its navigation and mapping products. With 56 offices in over 37 different countries, TomTom is the leader in the European personal navigation device market (PND) and holds 17% of the North American market share (TomTom (2014a)). In addition to PNDs, TomTom also creates GPS sports watches, smartphone navigation applications, and recently entered the action camera market with the 2013 purchase of the German startup company GoBandit Gmbit. Besides its consumer business, TomTom has three other business to business centered organizational units; Automotive, which provides modular components to car manufacturers and Tier 1 head unit vendors; Licensing, that sells map, traffic and navigation software; and Telematics, which offers fleet management solutions for commercial fleets. The company’s global headquarters are in Amsterdam.

Company information for this analysis has been obtained through the use of internal documents, company surveys, TomTom archives, semi-structured and open-ended interviews with managers from the human resources, marketing, corporate communications, and corporate social responsibility departments of TomTom. In addition to interviews, annual statements of compliance with environmental legislation, the company’s intranet website, its corporate website as well as documents pertaining to the electronic Industry Citizenship Coalition were scanned.

Countries and regions around the world are increasingly making social corporate social responsibility a mandate for those corporations that operate or wish to operate within their borders. In fact, some emerging markets have legislation in place specifying the level of corporate social investment that companies must make (McPherson (2014)). “Report (on CSR) or explain (why you do not report)” has increasingly become the norm (GRI (2015)). Moreover, fifty five percent of global online consumers across 60 countries say they are willing to pay more to purchase products and/or services by companies with a commitment to CSR (Nielsen (2014)). TomTom is aware of this trend and wants to engage in CSR in a manner that is both benefitial for the company itself and for society at large. It is because of this that the company has decided to evaluate its corporate giving policies and re-examine the possibilities for CSR at TomTom.

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B. Kicking off CSR at TomTom— An initial Strategy to CSR

According to Aaron Williams, Internal Communications & CSR specialist at TomTom, prior 2011, TomTom’s CSR efforts were largely conducted on an ad-hoc basis with each office implementing its own program with little to no central oversight and no underlying set of objectives, mission, or vision (personal communication, July 15, 2015).

In order to mitigate this, the company hired a dedicated Corporate Social Responsibility Program Director in 2011. Under her guidance, the company set its first global strategy for CSR with the stated mission of “minimizing TomTom’s negative impacts (social and environmental) and enhancing its positive impacts (social and environmental)” (TomTom 2011 p.1). Using this mission as a guiding principle, the company’s CSR approach was set on three core themes: environmental impact, supply chain, and community giving.

As reported in the firm’s 2013 internal CSR strategy document, the main focus of the environmental impact theme was to combat climate change via the reduction of CO2 emissions. This particular aim was to be operationalized mainly through “maximizing the positive effects of driving with TomTom Products” and by minimizing the effects of the company’s business activities and operations (TomTom 2013b p. 12). In addition to emphasizing greenhouse gases, the company also sought to curtail its negative impacts on the environment via careful

management of chemical substances and materials use.

The second theme, supply chain, centered about minimizing unethical practices at the supplier level and ensuring that the company behaved in a socially responsible way towards consumers and business customers. The goal here was for the company to abide by the Ethical Trading Code of Practice (ETCOP) as well as the Electronics Industry Citizenship Coalition (EICC) code of conduct which provide guidelines for labor conditions, human rights, health, safety and the environment (TomTom 2013b p. 13).

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Community Giving, the third and last theme of the ones outlined in the company’s CSR strategy focused mostly on donating products to charitable organizations that worked on issues related to emergency and disaster relief, charitable care, road safety and disadvantaged youth (TomTom (2013b)). In addition to donating products, the company also supported employee driven initiatives in the form of in-kind donations for this part of its CSR theme.

C. Implementation of Strategy

Company data shows that TomTom did attempt to follow through with its initial CSR strategy in the years following its introduction of its first CSR mission.

In the field of environmental impact, the firm took several steps in order to deliver on its net positive mission. In 2011 the company calculated its total greenhouse gas emission inventory as well as the CO2 footprint resulting from its day-to-day operations (TomTom (2013b)). It also determined the CO2 reduced on the customer side through the use of its products. Research conducted by the company showed that the positive environmental impact of driving with a TomTom PND is nearly twenty times greater than the carbon cost of making and shipping the product and the company’s office operations (TomTom (2013b)).

In terms of the ethical management of the company’s supply chain, TomTom

implemented a high level review of supplier quality and achieved EICC membership. To this end the company established a process of supplier documentation to assess compliance with the EICC code of conduct (Daniela Bonder, personal communication, August 28, 2015).

Furthermore, the company integrated the EICC code of conduct into both its procurement and new vendor selection process (Daniela Bonder, personal communication, August 28, 2015).

The community giving part of the strategy was the last part of the CSR program to develop. After the issuance the 2011 CSR mission statement the head of TomTom’s CSR department formulated an in-depth policy for deciding what charities to support and how to support them. In 2012 the company started a pilot program of donating products that would have otherwise been destroyed to charitable organizations relying on vehicles in the United Kingdom

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and the United States (TomTom (2012a)). By 2013 the company had also kicked off its employee giving initiatives in 11 countries covering approximately 43% of the TomTom workforce (TomTom (2013b)).

D. 2014-Now: The Present State of CSR at TomTom

2013 was a hard year for TomTom. Following years of decline in its core business as portable navigation devices got replaced with mapping applications on smartphones, the

company posted a whopping 9% decline in revenue (TomTom (2013a)). Although TomTom had already gone through a series of cost-cutting measures, including a 10% reduction in its

workforce in 2011, at the end of 2013 the executive board placed a renewed emphasis on putting tight controls on operating expenses (TomTom (2013a)). This belt-tightening coincided with the departure of the head of TomTom’s CSR department in the start of 2014 and the reallocation of CSR program duties to the internal communications department (Aaron Williams, personal communication, July 15, 2015).

Although the company more or less continued its supply chain efforts to earn full membership in the EICC, its environmental and community giving program fell largely by the wayside. In 2014 TomTom completed the facility risk assessment of all of its tier 1 suppliers using EICC developed tools (Daniela Bonder, personal communication, August 28, 2015). While this was a step in the right direction, it fell short of the goals developed for further transparency set forth by the CSR department the previous year (TomTom (2013b)). According to Daniela Bonder, compliance and social responsibility manager at TomTom, senior management at this time also failed to move forward with the environmental impact tracking commenced in 2011 (personal communication, August 28, 2015). In fact, in the corporate social responsibility section of the company’s 2014 annual report the environmental theme of the TomTom’s CSR strategy is completely omitted (TomTom (2014a)). As per the community-giving program, this was also severely curtailed following the departure of the head of CSR. Whereas the company donated over two thousand PNDs in 2013, it only donated about 1000 the following year (TomTom (2014b)). Furthermore, the company practically abandoned its employee driven initiatives; records indicate that TomTom did not allocate a budget to employee initiatives in the 2014 fiscal

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year apart from a one off 10,000 euro contribution to the Serbian Red Cross (Lindsay Mandeville, personal communication, August 10, 2015).

Perhaps sensing a lack of enthusiasm for the company’s chosen charity focus areas TomTom decided to move away from emergency and disaster relief, charitable care, road safety and disadvantaged youth at the end of 2014 and move towards a more sports-centric approach. The new initiative titled “Be Active” aims to support local organizations “that help to get kids moving and active in their communities” through funding of specific activity or program, involving employees, and donating money based on the usage of company products (TomTom 2015a para. 6).

Although this program has already been activated in the both the UK and in the

Netherlands, conversations with Caroline Fisher, VP of Communications at TomTom indicate that the firm is once again re-evaluating its choice of charities as well as its CSR program as a whole (personal communication, May 20, 2015).

E. Case question:

The main question to be dealt with in this research is:

 What social issues should TomTom seek to address in its CSR programming? Sub-questions of the project include:

 Which organizational structure should TomTom use for its CSR efforts? That is, should it seek to contribute, collaborate, or integrate?

 How can TomTom use communications to leverage its CSR activities?

The decision about what social issue TomTom should address in its CSR programming is crucial to the firm and it should be taken quickly since financial planning for 2016 is currently underway. Securing executive board member commitment to social responsibility has been difficult for the Internal Communications department, and assuaging their skepticism will require that the department attend to concerns over how a new CSR program can affect TomTom’s

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financial performance. In order to overcome this obstacle, the Internal Communications team at TomTom needs to carefully examine the possibilities for shared value creation, emphasizing the business case for social responsibility to the executive management board. TomTom also needs to decide what governance structure to use for the program it chooses to embark upon since poorly chosen CSR organizational forms can lead to high program costs. In addition, the company should establish a communications strategy with an eye to maximizing the business returns from its program— not an easy task given that CSR communications often generates unfavorable stakeholder attributions.

I will use the theoretical frameworks described in the previous section in order to make suggestions to TomTom.

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IV. Results

Since decisions regarding a company’s CSR organizational structure and its CSR

communication strategy hinge on the type of CSR activities the company engages in, I will begin by determining the social issues that TomTom should address in its CSR programming. In order to do this, I will examine TomTom using Porter and Kramer’s diamond framework and then complement this analysis by applying the authors’ value chain framework to the company. Based on the outcome of this process, I will propose an organizational structure for TomTom’s CSR activities using the Husted Matrix. The results section of this paper will conclude with a general outline for TomTom’s CSR communication.

A. CSR Selection

i. Diamond Framework

Context for firm strategy and rivalry: According to Porter the rules and incentives that govern

competition such as fair and open local competition, intellectual property protection, transparency, rule of law and meritocratic incentive systems, affect a company’s ability to improve its productivity and implement its strategy. As a multinational company with offices in over 34 countries, TomTom is very aware of how these factors can affect its bottom line. Thus, the company makes a large effort in constantly monitoring the regulatory framework in which it operates.

While most of its employees are based in and a majority of its revenues come from within the European union, a growing portion of the company’s business and all of its production is in Asia and Africa (TomTom (2014a)). Hence, although the company by and large benefits from Europe’s and North America’s moderately high levels of intellectual property protection, freedom from corruption, and trade freedom, TomTom’s competitive context will increasingly be one marked by Asia’s and Africa’s lower levels of these so called Economic Freedoms6_.

6_{This is based on the Heritage Foundation’s rankings on Economic freedom. According to the Foundation’s 100} point system North America has an overall economic freedom score of 73.9,and Europe has a score of 67. In comparison, Asia & the Pacific has a score of 58.8 and Africa one of 54.9 (Heritage Foundation (2015)).

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Although the company could try to improve the most salient factors of its context for firm strategy and rivalry such an effort would require a considerable involvement in the political affairs of sovereign countries and a substantial amount of nation-building –a task that as the American led efforts in the Middle East have proven is easier said than done. Moreover, since TomTom does not have leverageable capabilities to address this issue, it not an area for Strategic CSR.

Local demand conditions: Another factor that influences TomTom’s strategy implementation is

the nature and sophistication of its customers’ needs as well as the regulatory standards of the markets where TomTom operates. Since about 76% of TomTom’s revenue is generated in Europe and an additional 16% is generated in North America (TomTom (2014a)), for this analysis I will mostly focus on these two regions.

As stated by the European Union’s Commission on the Environment, 26% of EU citizens often buy environmentally friendly products, and 54% of them sometimes do (European

Commission (2015a)). Moreover, environmental impacts are the third most important factor for EU consumers after quality and price (European Commission (2015a)). The numbers for North America are not significantly different. This means that there is indeed a market for TomTom products that are designed with consideration for environmental and sustainability-related issues. Furthermore, TomTom can play a role in improving demand conditions by helping customers obtain the most environmentally friendly, up to date and reliable navigation services as well as health related gadgets. By doing this, TomTom can improve the sophistication of its users and therefore increase consumers’ interest in even greener, more innovative products.

As for regulatory standards, these too affect the company’s operations. Because the EU has some of the world’s highest environmental standards (European Commission (2015a)), and CSR experts foresee a further strengthening of legislation in Europe and in most other regions, this issue is important for TomTom’s strategy implementation.

Related and Supporting Industries: The local availability of supporting industries is a small issue

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Euronext listed technology company based in Amsterdam, TomTom often struggles with getting access to firms in related fields and suffers from a lack of technology related clusters. While this is problematic due to the fact that a lack of clusters makes it harder to exchange ideas and inhibits the formation of new businesses, this area is not as much of an issue for TomTom since the company can and does outsource production from distant suppliers in a cost-efficient manner (Daniela Bonder, personal communication, August 28, 2015). Overall, this is not an area that significantly affects TomTom and is therefore not a strong contender for strategic CSR.

Factor Input Conditions: This last element of TomTom’s competitive context is perhaps the

most critical for the continued success of the business. Luckily, it is also, arguably, the most readily influenceable. In their article on Corporate Philanthropy, Porter and Kramer argue that achieving a “high levels of productivity depends on the presence of trained workers, high-quality scientific and technological institutions, adequate physical infrastructure, transparent and

efficient administrative processes, and available natural resources” (2002 p. 9).

Although all of TomTom’s Tier 1 markets have suitable infrastructures, high quality educational institutions and well-working administrative frameworks, the lack of STEM trained workers in these markets has proven to be a difficult obstacle for the company to overcome. As I write this, the company has over 203 open positions that it needs to fill, of which only 35 are outside of Europe (TomTom (2015b)). While this might seem surprising given the 10.9% unemployment rate in the region, it reveals the dearth of STEM trained individuals in the old continent (Eurostat (2015)). According to data compiled by the European Committee on Employment and Social Affairs “a large majority of Member States have experienced recent recruitment difficulties in relation to STEM skilled labour” (Caprile et al 2015 p. 9). What's more the European Commission estimates that the continent will face a shortage of up to one million ICT employees by 2020 (European Commission (2015b)). This is logical since more than half of the European Union countries have below average PISA scores in math and science and the number of science enrollments and graduates in Europe has declined the past decade from 24.3% in 2002 to 22.6% in 2011 (InGenious (2015)).

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The resulting lack of suitable candidates for tech job openings is a major issue that TomTom can help ameliorate through investments in STEM education and training. If TomTom decides to invest in improving this area of its competitive context and it does so in an effective manner, the social benefits that could accrue would be a better educational system and better job opportunities for local youth. In doing so, the company would of course also benefit from having a greater pool of available talent to fill its job openings.

ii. Value chain analysis

Firm infrastructure: According to Porter and Kramer there are four main areas under firm

infrastructure: financial reporting practices, governance, transparency, and use of lobbying. TomTom’s financial reporting practices are in compliance with the requirements of companies listed in the NYSE Euronext Amsterdam exchange (TomTom (2015a)). Although these do not have a negative social impact, they also do not have a positive societal impact. As per the

company’s governance and transparency policies, these too are in compliance with all applicable laws. More specifically, TomTom’s overall governance and transparency practices are in line with the Dutch Corporate Governance Code (TomTom (2015a)). I was also not able to determine either a positive or negative social impact from these. An examination of the firm’s lobbying activities revealed that TomTom did not engage in lobbying activities in North America in the past 5 years (Opensecrets (2015)). Information on expenditures on European lobbying was not readily available.

After analyzing TomTom’s overall infrastructure, I looked more explicitly at the

company’s CSR related infrastructure. Unlike many other companies engaged in CSR, TomTom does not issue a detailed annual CSR report like the GRI. This lack of reporting makes it hard for stakeholders to hold the organization accountable for its CSR practices and as such the

company’s reporting practices could be considered negative for society. Nonetheless,

investments in optimizing the company’s reporting practices are not likely to create substantial shared value due to the high imitability of such efforts. Moreover, this a generic social issue and an area for responsive CSR at TomTom since it does not involve a salient aspect of the firm’s outside-in dimension.

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CSR governance at TomTom is yet another area that needs work. According to the Dutch Sustainable Growth Coalition integration of CSR in a company’s strategy requires the

incorporation of each of the following eight corporate governance dimensions; tone at the top and executive board commitment, non-executive director oversight, code of conduct and company values, long-term incentives, accountability and trust, strategic risk and opportunity assessment, integrated thinking and embedding of ownership and scope of value chain

governance.

At this point in time, TomTom is only at the earliest of stages (stage 1 of 3 stages, 3 being the most advanced) for the majority of these dimensions (See table I). While efforts to move to more advanced CSR governance stages could result in a positive impact for society, the current model does not result in a negative impact. As with CSR reporting, this is a generic social issue for TomTom and investment in it is not likely to create substantial shared value or result in strategic CSR due to a lack of overlap with outside-in linkages.

Human resource management: For the human resources support activity professional training,

working conditions, diversity and discrimination, health insurance, bonus policies, and layoff procedures are all considered to be possible areas of “inside out linkages.”

Professional training at TomTom is somewhat of a mixed bag. Although the company does offer learning and development opportunities to its employees, 73% of these are in the form of online self-help tools that are not very popular among employees (Aga Nizinska, personal communication, June 12, 2015). In addition to intranet tools, a small number of TomTom

employees are also eligible to take part in company-wide professional summits that take place on a yearly basis. It should be noted however, that participation in these is by and large limited to senior level employees.

While formal professional training is limited, Aga Nizinska a HR Coaching and Support Specialist at TomTom, indicates that individual managers sometimes make efforts to offer development opportunities to their subordinates by paying for inscription fees to specific

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conferences (personal communication, June 12, 2015). Unfortunately, the company does not track the number of employees who benefit from this.

Despite the rather lackluster depth of learning and development opportunities for regular employees, TomTom does have a very robust program for both interns and recent graduates. Due to severe cost cutting in 2013 TomTom significantly reduced its staff and implemented a hiring freeze in several of its departments (Aaron Williams, personal communication, July 15, 2015). Because not all of the roles could be reassigned to existing employees, the company made extensive use of interns to help run its day-to-day operations. An interesting result of this is that interns at TomTom were given a high level of on the job training—a positive inside out linkage that the company continues to provide in the communities where it operates. In fact, just in the first half of 2015 TomTom has employed over 122 interns (Ivan Radkov, personal

communication, July 2, 2015). While the graduate program is not nearly as large as the intern program, it is nonetheless a great example positive inside out linkage. This one-year intensive program, allows individuals with limited professional training the opportunity to gain valuable skills through job rotations and mentorship (TomTom (2015b)). Because these two programs actually increase the skill level of the talent pool available to TomTom and result in a wage savings whilst providing the community’s youth with valuable training, they indicate an area for shared value and strategic CSR.

Working conditions at the company are also an interesting inside out linkage. While one of the executive board members is a great champion of flexible working locations and employees indicate that this contributes to their overall life satisfaction, TomTom employees often complain about their heavy workload (AnalytiQs (2014)). Interviews with several employees revealed that it is very typical for TomTom managers to assign responsibilities meant for two to three different people to only one individual. This might help explain why “burnouts7_{” are a common}

occurrence at TomTom. Despite of this, TomTom employees, especially younger ones, often extol how easy it is for them to advance within the company (AnalytiQs (2014)). Overall, this is an area where TomTom’s inside out linkage verges on the negative. While the company could

7_{Burnout is an established medical diagnosis that refers to a “state of exhaustion in which one is cynical about the} value of one’s occupation and doubt about one’s capacity to perform” (Shaufeli et al 2009 p. 206)

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certainly benefit from investing in this area, such an effort would not significantly affect any salient area of the company’s competitive context and as such would not constitute strategic CSR.

TomTom’s societal impact in terms of diversity and discrimination is hard to gauge. As opposed to United States based technology companies, TomTom does not have a formal program to increase workplace diversity. In fact, the company does not keep track of minority hires and unlike other tech companies TomTom does not have a program in place to champion female workers (Ivan Radkov, personal communication, July 2, 2015). Because TomTom does keep statistics pertaining to the racial and ethnic backgrounds of its employees I was not able to determine whether the company’s workforce diversity was in line with that of other technology companies. However, I did find out that women held 14.09% of engineering positions (Ivan Radkov, personal communication, July 2, 2015): just as a measure of comparison, about 17% of Google’s engineers are women (Goldman (2014)). Although an analysis of TomTom’s overall social impact in terms of diversity is not possible given the limited amount of information provided to me, TomTom’s impact on gender diversity in engineering is slightly negative.

That said, gender diversity is a strategic CSR area for TomTom. As mentioned in the diamond analysis, the lack of technically skilled workers is an important outside in linkage for TomTom. What was not mentioned was that women are chronically underrepresented in STEM8, and that increasing the number of women in STEM is critical in order to appropriately address the STEM shortage (Adkins (2012)). By investing in a program aimed at increasing the number of women in STEM TomTom would marry the inside out and inside in dimensions in a manner that is beneficial for both society and itself. Thus, this too is a possible area for strategic CSR.

Inside out linkages resulting from TomTom’s health insurance, bonus and layoff policies are difficult to determine since these vary according to the legislation of the countries in which TomTom operates. Conversations with Ivan Radkov, HR Technical Program Manager at

8_{Women represent only 16% of university graduates in engineering, manufacturing and construction, and 19% in}

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TomTom, indicate that these are in line with industry standards and are perceived by employees to be neither positive nor negative (2 July, 2015).

Tech development: At TomTom technology development is an area that creates a positive, but

small, inside out linkage. While the company does not stand out in terms of its ethical practices and the safety of its products, it merely complies with applicable legislation, it does place some effort in developing research relationships with universities. As a matter of fact, just last month the company unveiled a partnership with the University of Minnesota that allows the university to use TomTom data for “policy development, local transportation system evaluation,

performance management, planning and research efforts” (TomTom (2015c para. 2)). Albeit small at the moment, this sort of collaboration points to a possible area in which TomTom can have a larger positive social impact. However, because there is no significant overlap with one of TomTom’s outside-in dimensions this area does not present an opportunity for strategic CSR.

An interview with Walter Hermsen, vice president of Product Management for Sports at TomTom, revealed that TomTom has no top-line agenda for research into conservation of raw materials and recycling (July 16, 2015).

Procurement: Since TomTom outsources the assembly of all of its products, the company has a

sizeable impact on society through its procurement processes. As part of its EICC obligations, all suppliers involved or seeking to be involved in the “ manufacturing of TomTom products,

subassemblies, and materials and packaging or that provide services to or on behalf of TomTom” are contractually obligated to comply with the Electronic Industry Citizenship Coalition code of conduct (TomTom (2015a)). This document outlines standards for labor, health and safety, environment, business ethics and system management. Even though the adoption of this code certainly creates the possibility of positive inside out linkages, adherence to the code is hard to ensure since EICC does not require that companies audit its suppliers. Instead, suppliers are asked to conduct their own self-assessments using the EICC self-assessment questionnaire (EICC (2015)). Only if the results of the self-assessment indicate that the facility is of high risk does the EICC member have to conduct an audit—that is, if it happens to fall in the 25% of high risk facilities that the member must audit (EICC (2015)). As it stands, none of TomTom’s

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suppliers report to be of high-risk (Daniela Bonder, personal communication, August 28, 2015). While the company could do more to benefit society by requiring stricter supplier certifications, this would be an exercise in supply chain optimization and would therefore not constitute strategic CSR.

Even though the company does not require it from its vendors, the two main

manufacturers producing TomTom devices are certified in both ISO 14001 and OHSAS 18001 (Daniela Bonder, personal communication, August 28, 2015). It should also be noted that all company employees are obliged to abide by TomTom’s Bribery and Corruption code of conduct.

Inbound & Outbound Logistics: While transportation impacts of inbound and outbound logistics

are likely to have negative effects on society regardless of the company in question, as a

navigation specialist TomTom is in a unique position to limit these effects. According to a study conducted for the Environmental Resources Management of Vodafone CO2 emissions can be lowered by about 28% through the use of TomTom webfleet solutions (Cadman & Bontinck (2012)). Moreover, independent research has shown that the use of TomTom PNDs can reduce the journey times for individuals by up to 15% (TomTom (2012b)). Despite the fact that the company can indeed provide these solutions, there is currently no mechanism to ensure that the purveyors of TomTom inbound and outbound logistics use TomTom PNDs . Although an effort to invest in this would decrease TomTom’s negative impact on the environment, such an

investment would merely be responsive CSR since it would be a harm mitigation effort.

Operations: As previously stated, TomTom itself does not directly engage in the manufacturing

of products. Instead the company outsources all of its production. Because of this operational impacts are somewhat limited and are mostly those associated with the running of its offices. Here TomTom’s focus is on ameliorating its negative societal impact through the use of environmentally friendly services. In order to reduce its use of raw materials and consumables such as water, paper towels and soap, the company recently introduced the use of Ecoilet (TomTom (2015d)). In addition to this, TomTom offices use smart lighting services in all of its facilities (Guus Koersvelt, personal communication, July 7, 2015). Further reductions in

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TomTom’s negative operational footprint would likely require LEED certification (Leadership in Energy and Environmental design) like initiatives and would be responsive in nature.

Marketing and Sales: TomTom’s marketing and advertising practices are subject to strict

legislation that includes the prohibition of misleading advertising and unfair commercial practices. In line with this, the company has published a set of Do’s and Don'ts with regards to Competition Law Compliance as well as a policy for Product Reviews (TomTom (2015a)). Because TomTom does depend on user location data to provide its services, the company has a thorough privacy policy that outlines the company’s use of consumer generated location based data and map reports (TomTom (2015a)). Generally speaking, all of TomTom’s Marketing and Sales related activities are conducted in a manner that is consistent with the law and do not result in significant positive or negative societal impacts. Nonetheless, this could be an area for

strategic CSR if TomTom were to use its marketing and sales expertise to capitalize on the European and American consumers’ appetite for green products. More specifically, by using advertising to educate the consumer on the green benefits of using its products TomTom could bring together both inside out and outside in dimensions.

After Sales Service: Tomtom’s policies for the disposal of obsolete products are geared towards

reducing the company’s negative impact on society. As part of the Waste Electrical and

Electronic Directive of the European Union, TomTom is obliged to financially contribute to the collection and recycling of end-of-life TomTom products, batteries and packaging (TomTom (2015a)). Moreover, TomTom is part of waste take-back schemes in the countries where it has a presence. While the particulars vary by country, TomTom usually reports on the weight and quantities of products, batteries and packaging it sells and uses this information to calculate the amount it has to pay for recycling (TomTom (2015a)). Due to the fact that this is an

“ameliorating harm” initiative and it does not overlap with any important outside in dimensions, TomTom’s investment in this area would be responsive CSR.

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iii. Classifying & Choosing Social Issues

As predicted by Porter and Kramer, the above analysis of TomTom’s inside out and outside in linkages reveals a myriad of social issues that TomTom can potentially try to effect. Following Porter and Kramer’s recommendation I have sorted each of them into three distinct categories, and classified them as either strategic or responsive CSR. As table II indicates the vast majority of these issues do not constitute strategic CSR since TomTom’s involvement would not “transform value-chain activities to benefit society while reinforcing strategy” or leverage TomTom’s capabilities “to improve salient areas of competitive context” (Porter and Kramer 2006 p.89). Finally, I have ranked each of the Strategic CSR issues in order of potential for shared value creation (see table III).

Of all of the value chain and competitive context linkages the one with the highest potential for the creation of shared value is STEM training. My evaluation of TomTom’s value chain and its competitive context indicates that TomTom can gain a considerable business benefit from investing in STEM training in Tier 1 markets since doing so would increase the number of suitable candidates for its engineering positions in the long run (something it is currently struggling with). Moreover an investment in this area would also benefit the communities were TomTom operates, since youth in these communities would be better qualified to take advantage of technology job opportunities.

A second, connected area for strategic CSR at TomTom is gender diversity in STEM. By investing in this issue TomTom can increase the talent pool for its engineering positions as well as help address the lack of well-paying job opportunities for women in Europe. Furthermore, by tackling this issue the company can also help alleviate the STEM shortage facing Europe. I have ranked this issue as second in order of potential for shared value creation since this effort can be incorporated into an overarching STEM training program.

The third and last issue I have identified as strategic CSR for TomTom is sophistication of demand/marketing and sales. Since consumers in TomTom’s top Tier markets take CSR related matters into account when making purchasing decisions and the use of TomTom’s PNDs

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helps reduce drivers’ environmental footprint, focusing on this issue can lead to the creation of shared value. Because addressing demand sophistication is not at vital to the company as is the shortage in STEM trained individuals, I have ranked this issue as third in terms of potential for shared value creation.

Although my research does indicate that TomTom should focus on STEM Training for youth, a more detailed description of the sort of program it should develop is beyond the scope of this paper. For the remainder of this analysis, I will assume that TomTom will choose to focus on STEM for its CSR initiative.

B. Husted’s matrix

Assuming that TomTom decides to focus on STEM training as the social issue it would like to address through its CSR activities, the company will need to set-up a structure to manage its efforts. Using the previous analysis of the company’s value chain as a departure point, I will now use Husted concepts of centrality and specificity to determine the governance form that TomTom should use. The application of Husted’s matrix in this sense is very fitting, since its underlying assumption is that companies are strategic rather than altruistic in their motives for CSR, the same understanding that is behind Porter and Kramer’s shared value approach to CSR.

As a tech company with a strong engineering ethos and a long-standing commitment to simplifying cutting edge technology for the masses, TomTom has always depended and will continue to depend on STEM-educated individuals. Although the company is not an expert per se in educating people in STEM, science, technology, engineering and math are very much central to the company’s mission and objectives. In fact, as the previous analysis of TomTom’s HR activities indicates the company already does a significant amount of STEM training. Stated more explicitly, through its internship and graduate programs TomTom already engages in instilling practical knowledge of STEM skill application to young adults. Because STEM

training is thus closely related to TomTom’s mission and objectives, a CSR program that focuses on this would thus be of medium to high centrality.

Creating Shared Value : an assessment of social issue areas, governance options and communications strategies for CSR at TomTom