Maintaining legitimacy: differences in the way MNEs manage legitimacy
through CSR in developed versus emerging countries.
Viktoriia Osadchenko 10827072 Supervisor: FrancescaCiulli Second reader: MichelleWestermann-Behaylo Universiteit van Amsterdam, Amsterdam Business School Faculty of Economics and Business MSc Business Studies: International Management
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Statement of Originality
This document is written by Student ViktoriiaOsadchenko who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of Contents
Abstract ... 4
1. Introduction ... 5
2. Literature Review ... 8
2.1. MNEs and institutions in developed and developing countries ... 8
2.2. Legitimacy and CSR: the challenges of the controversial sectors ... 12
2.3. CSR in developing vs developed countries ... 14
2.4. Conclusion ... 18 3. Method ... 20 3.1. Research design ... 20 3.2. Case selection ... 21 3.3. Data collection... 22 3.4. Data analysis ... 23 4. Results ... 25 4.1. Economic responsibility ... 25 4.2. Legal responsibility ... 27
4.3. Ethical responsibility (Environment and safety products) ... 31
4.4. Philanthropic responsibility ... 36
5. Discussion ... 39
6. Managerial Implications ... 42
7. Limitations and future research ... 42
8. Conclusion ... 43
4 Abstract
Companies of tobacco industry try to behave as good citizens and get legitimacy through engaging in CSRactivities. Tobacco sector is considered as controversial one; that is why it is quite challenging for MNEs to become „good‟ and legitimate. Companies concentrate on their actions towards being responsible across four main CSR dimensions introduced by (Carroll, 1991): economic, legal, ethical and philanthropic. It can be interesting to see if there are any differences in the way tobacco companies apply CSR activities between emerging and developed countries as Russia and United Kingdom.
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1. Introduction
Governments across developed and developing countries agree on the fact that firms as members of society have a responsibility to make positive contributions to improve social conditions. Suchman (1995, p. 574) defines legitimacy “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions”. Legitimation differs across firms and is related to a process of social endorsement (Dacin, Oliver, & Roy, 2007).
For some companies it is less easy to be legitimate.This can bemainly related to differences in institutions‟ development acrossthe multiplecountries in which firms may operate in as well as to differences in industries and products themselves. As regards institutional heterogeneity, a key challenge companies operating in multiple countries face consistin the differences between developed anddeveloping countries. Indeed, in developing countries governments have fewer investments for improvement of society‟s conditions and companies face more instability and issues such as corruption or underdeveloped institutions, which threaten their legitimacy. When formal institutional environment is underdeveloped, companies rely more on informal institutions (Aidis, Estrin, & Mickiewicz, 2008).
Also, belonging to specific sectors, which have been called „controversial‟ sectors, makes maintaining legitimacy particularly challenging(Palazzo & Richter, 2005). The tobacco industry is considered a controversial sector for two reasons: harmful tobacco products and past behavior of industry representatives related to denying this risk (Palazzo and Richter, 2005).With the aim of improving their legitimacy, tobacco companies have started to position themselves as good corporate actors (Palazzo & Richter, 2005). Yet, legitimationof firms operating in such controversial industry hasbeen repeatedly questioned by their stakeholders and by the wider society(Palazzo & Richter, 2005).Indeed, the tobacco industry it at the lowest level of society acceptance and the lower level of legitimacy of a
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corporation the more skeptically its legitimation attempts are likely to be observed by its compliant society (Ashforth & Gibbs, 1990).Taking into account the negative attitude of society regardingtobacco products, illegal trade and other problems related to this specific industry, it can be concluded that tobacco firms have to react properly to all the demands and requirements of formal and informal institutions in the countries in which they operate.
Yet, tobacco firms operating internationally face multiple and diverse institutional environments and it can be particularly difficult for these companies to respond to heterogeneous institutions in order to maintain legitimacy in different countries. Extant literature on legitimacy, in particular of controversial sectors, has mainly focused on firms operating only in one country. The international business (IB)researchhas given scant attention to the study ofthe differencesinthe strategies adopted by controversial sectors‟multinationals (MNEs) to maintain legitimacy in developed versus developing countries. More specifically, firms in controversial sectors often use CSR practices for legitimation, it is particularly interesting to explore whether and how the CSR practices adopted by controversial sectors‟ MNEs‟ in developed countries differ from the ones in developing countries.
To answer this research question, this study will investigate whether there are differences inthe CSR practices adopted by MNEs in the controversial tobacco industry ina developed versusa developing country.
This study will adopt a multiple longitudinal case study design and has selected as cases three tobacco MNEs: Philip Morris International (PMI), British American Tobacco (BAT) and Japan Tobacco International (JTI). This research will explore the CSR practices adopted by these companies in the UK (developed country) and in Russia (developing country) and it will ascertain differences and similarities. The data will be collected from the
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documentation released by the firms in each country, and the focus is on the period from 2012 to 2014.
The study aims to provide the following contributions to the literature.This paper provides and develops insights on legitimacy maintenance through CSR activities by three MNEs operating in controversial tobacco sectorin Russia versus UK.The differences and similarities in the way companies engage in CSR activities across two countries is evaluated and analyzed.
In the next section the literature on institutions in developed and developing countries will be reviewed, the legitimacy challenges for firms in controversial sectors will be discussed together with possible differences in applying CSR between developed and developing countries. Based on the literature review a set of propositions will be formulated. Next, the method will be illustrated, followed by the presentation and discussion of the findings and by a conclusion.
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2. Literature Review
In this section firstly, theimportance of institutions for MNEs operating in multiple countries will be highlighted. Secondly, the maintenance of legitimation through CSR will be discussed. Thirdly, the interactions between MNEs and different actors in host countries and influence of these interactions on companies‟ legitimation andCSR activities will be illustrated. Finally, this section will conclude with the development of propositions.
2.1. MNEs and institutions in developed and developing countries
Institutions are commonly known as the “rules of the game” (North, 1990) and have been defined, more in particular, as the “humanly devised constraints that structure human interaction”(North, 1990). Scott, (1995)identified three types of institutions, regulative, normative, and cognitive, and argued that they represent structures and activities that provide stability and meaning to social behavior. Generally, institutions reduce uncertainty for various actors by conditioning the ruling norms of behaviors and defining the boundaries of what is legitimate (Scott, 1995). Actors try to rationally pursue their interests and make choices within a given institutional framework (Lee, Peng, & Barney, 2007).
In the IB literature, Peng, Sun, Pinkham, & Chen, (2009)identified, beside the industry-based and resource-based views, the emergence of the institution-based view as a third leading perspective. The institution-based view of strategy focuses on the interaction between institutions and organizations and on strategic choices, considering them as the outcome of this interaction (Peng et al., 2009). Strategic choices are driven both by formal and informal constraints of a specific institutional framework in which organizations operate (Peng et al., 2009). Peng et al. (2009) contend that institutions reduce uncertainty for different actors by introducing the ruling norms of behaviors and characterizing the boundaries of what is legitimate. Peng et al. (2009) argue that actors should follow their interests and make
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decisions within a given institutional framework.Yet, extant literature has shown that institutions can differ across countries;this is particularly challenging for MNEs which, by operating in multiple countries, face then multiple institutional environments. As argued by Peng et al. (2009, p. 923) there are “profound differences in institutionalframeworks between emerging economies anddeveloped economies”. Peng et al. (2009) state that firms operating within one institutional environment seem to act similarly, but they differ if operating in different institutional frameworks. Especially this can be proved by looking at emerging economies. The institution-based view states that the more strong formal institutions are in developing economies, the more reduced reliance on informal network-based strategies and increased reliance market-based strategies are expected (Peng et al., 2009).
Gelbuda, Meyer, & Delios, (2008) argue that institutional theory prospects underline the importance of the “formal rules” in regulation or influence on organizational decisions in the international context. Affiliates of MNEs can get external legitimacy by adapting to formal rules of the political institutions in host country. Across nations, institutions vary in the level of support to business corporations (Gelbuda et al., 2008). The difference in the development and force of institutions is important for several reasons. Gelbuda et al. (2008) argue that strong institutions can provide legitimacy and social facilitation. Weak institutions do not provide such support for business operations, but still can provide legitimacy and social facilitation, provided that firms adaptto local norms, values and rules(Gelbuda et al., 2008). In environments with weak institutions the laws and rules can be inconsistent with the efficiency needs of an organization, such as the protection of property rights and liberation from corruption (Gelbuda et al., 2008). Compared with other IB topics, research on politics, corruption and corporate social responsibility - 'three lenses' on the MNE – are in an initial stage of research, with unresolved issues considering frameworks, measurement, theory and possible methods (Rodriguez, Siegel, Hillman, & Eden, 2006). Each of these given topics
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provides a unique lens which helps to understand how MNEs influence and react to factors of their global economic and political environments (Rodriguez et al., 2006). The performance of foreign subsidiaries is influenced by the institutional context of the host countries in which these subsidiaries are embedded, because host country institutions influence the way companies engage in host countries‟ business activities and strategic choice making(Chan, Isobe, & Makino, 2008). Evidence shows that the performance of foreign affiliates differs in institutionally underdeveloped countries (Chan et al., 2008). The authors argue that there are two reasons for this differentiation(Chan et al., 2008). First, a lack of information on legitimate ways of doing business leads to foreign subsidiaries‟ engagement in a wider range of actions with uncertain performance results. Second, foreign affiliates differ in the capability to manage institutional peculiarities, which is important to generate rents in institutionally underdeveloped countries (Chan et al., 2008). On the contrary, in countries with better-developed institutions, there is less performance differentiation among foreign subsidiaries because better-developed institutions compel the range of legitimate actions, and the results of these actions are more fixed(Chan et al., 2008).
This paper focuses on two countries, developing and developed, Russia and UKrespectively. By the late 1990s in Russia firms were operating in an institutional vacuum and were controlled by a weak state (Hellman, 1998). That time was associated with corruption, non-payment of taxes, organized crime, weak institutions and the control by so-called “oligarchs” (Hellman, 1998). These oligarchs were governing the Russian Federation together with ruling elites affecting the regulation by following their own interests and determining legislatures (Hellman, 1998). In 2000 Vladimir Putin was elected as president of Russia and made numerous attempts to strengthen the rule of law and institutions, also to open Russia‟s markets to global trade. Putin tightened the regulatory framework and strengthened institutions(Hellman, 1998). Indeed, Transparency International states that
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developing countries generally have higher levels of corruption in comparison to developed western countries, and, more specifically,the highest level of corruption can be seen in the former Soviet region (Aidis et al., 2008).In an environment of underdeveloped formal institutions and high corruption, business interactions are mainly based on trust and informal institutions (Aidis et al., 2008).In Russia since 2000, Putin has attempted to control the press, both federal and regional legislatures(Crotty, 2014). At the same time Putin also aimed to manage or control Russia‟s civil society development (Crotty, 2014). Thus attempts by third sector organizations and NGOs to strengthen Russia‟s civil sector have been unsuccessful (Crotty, 2014). Most NGOs in Russia failed to develop and reach out to the wider public because of lack of resources and total control by the government (Crotty, 2014). Furthermore Putin introduced a law in 2006 that prohibited domestic NGOs from getting foreign investments and introduced complex additional registration requirements for all groups (Crotty, 2014). As a result, many NGOs have lost their independence by taking government money to ensure their existence (Crotty, 2014).
Given the importance of institutions for companies operating in different environments it is particularly interesting to analyze CSR activities across countries, especially engagement in CSR by MNEs of controversial tobacco sector. Peng et al. (2009) argues that the institution-based view of strategy also has the potential to broaden the boundaries of the emerging literature on the CSR.Existent CSR literature states that the relationship between basic economic conditions and corporate responsibility is influenced by institutional constraints (Peng et al., 2009).There are examples of how certain firms face the threat of losing their legitimacy and even their business if they neglect their basic CSR activities (Peng et al., 2009). Therefore CSR can be improved by integrating with the institution-based view of strategy(Peng et al., 2009).
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2.2. Legitimacy and CSR: the challenges of the controversial sectors
Suchman, (1995) defines legitimacy as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions”. Legitimacy is one of the key concept at the institutional level of analysis and is about the powerful reaction of different actors ondebatable undertakings by various companies (Joutsenvirta & Vaara, 2009).CSR is a socially constructed value, and legitimacy is a basis both for defining CSR and for determining the success of CSR activities (Grunig, 1979).CSR must involve actions that appear to further some social good, beyond the interests of the company and that are required by law. In this paper CSR-related legitimacy by tobacco companies is considered(McWilliams & Siegel, 2001).
Carroll (1991) identifies four main CSR dimensions: economic, legal, ethical and philanthropic responsibilities. Economic responsibility is related to making a profit for the shareholders, providing products for consumers and providing jobs for employees (Carroll, 1991). Legal responsibility is about obeying the law (Carroll, 1991). The ethical dimension refers to doing no harm and also includes issues related to corruption and environment for example (Carroll, 1991). The last dimension of Carroll‟s hierarchy is philanthropic responsibilityregarding any type of contribution to society as donations, sponsorship and volunteering (Carroll, 1991). Within these categories, economic and legal responsibilities are considered as mandatory, ethical responsibility as socially necessary and philanthropic responsibility as socially desirable (Carroll, 1991). Failure by the company to engage with mentioned responsibilities can cause the loss of legitimacy and, vice versa, by acting as a good “corporate citizen,” the firm can ensure its legitimacy (Carroll, 1991).
Palazzo & Richter (2005) argue that CSR commonly aims at legitimizing corporation's activities and increasing companies‟ acceptance by society. Being part of
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society, organizations have to consider the common good and try to improve societal welfare (Palazzo & Richter, 2005). It is the societal acceptance value of CSR that composes the main differences between the mainstream approach and the particular position in controversial sectors and, in particular in the tobacco industry (Palazzo & Richter, 2005). The tobacco industry is one of the most controversial sectors;Palazzo & Richter (2005) assume that due to the fatal character of smoking and the behavior of tobacco MNEs, some key activities of CSR simply do not work on the regular and normal basis for tobacco firms.Therefore, although tobacco companies have started to position themselves as good corporate organizations, they face significant challenges (Palazzo & Richter, 2015). Indeed, the effort to engage in CSR by the big tobacco companies is not only highly criticized by anti-tobacco NGOs. Some organizations such as the World Health Organization (WHO) have even questioned the opportunity of social responsibility in the tobacco industry (Palazzo & Richter, 2005). The negative attitude towards tobacco companies is linked to the fatal character of their products and the ambiguous behavior of their customers in recent decades(Palazzo & Richter, 2005). Palazzo & Richter (2005) demonstrate that mainstream CSR efforts will unlikely contribute to legitimize tobacco companies. Key aspects of CSR theory and practice such as corporate philanthropy, stakeholder cooperation and CSR reporting, are revealed to be not efficient and rather negative in the tobacco industry in some cases(Palazzo & Richter, 2005). It is thus not surprising that the first CSR reports of tobacco industry‟s companies caused comparable reactions of antitobacco NGOs. While CSR activities normally help companies to get public respect, good reputation and loyalty, tobacco companies have to accept that they are fighting on a different level to gain legitimacy (Palazzo & Richter, 2005). The tobacco industry isat the lowest level of public acceptance, therefore tobacco firmsneed to fight for the right to exist (Palazzo & Richter, 2005).Several studies have focused on health risk such as lung cancer or even mortality caused by smoking and numerous scientific articles acknowledge
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major risk of nicotine for public health(Palazzo & Richter, 2015). Such health damages also have an impact on national economy, therefore governments, in particular in developed countries, in the last years have intervened with stricter regulations on smoking (Palazzo & Richter, 2005). Companies were accused of targeting mostly at teenagers as biggest target market and governments started to regulate tax, advertising and design of tobacco packs. Palazzo & Richter (2005) argue that tobacco companies have been accused oftaking no measures or even of involvement in smuggling because of tax increases. The authors agree that companies have been lobbying against tax increases and advertisements bans both in developed and developing countries (Palazzo & Richter, 2005). Indeed, tobaccofirmsalways argued that tax increase cause the increase of illegal trade, but does not reduce smoking. Companies are always engaged in youth smoking programs as well as other anti-smoking initiatives, which in some cases improvetheir image and reputation (Palazzo & Richter, 2005). Considering numerous challenges and issues that tobacco companies face, CSR practices can help them to ensure and show how they behave and respond to these issues.
2.3. CSR in developing vs developed countries
Governments across developed and developing countries agree on the fact that corporations as members of society have a responsibility to make positive contributions to better social conditions (Zhao, 2012). Zhao (2012) suggests a concept of CSR-based legitimation strategy. It refers to the strategic action that a company takes to get, maintain or increase the appropriateness and desirability perceived by the state through CSR activities, based on which the company expects to access different forms of resources (Zhao, 2012). Wiig & Kolstad, (2010) argue that it is a well-known fact that institutions are important for economic development; however the interaction between multinational corporations applying CSR and host country institutions is not well understood (Wiig & Kolstad, 2010). Firms' success depends on their relationships with different internal and external actors (Reimann,
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Ehrgott, Kaufmann, & Carter, 2012). The authors argue that social pressure from government shows how strongly local governments in the emerging economy push for the improvement of firms' social efforts, such as good working conditions or engagement for the local community(Reimann, Ehrgott, Kaufmann, & Carter, 2012). Historically, social regulations in many emerging regions were relatively weak compared to the standards common among Western MNEs, with some emerging countries suffering from ineffective control and enforcement mechanisms(Reimann et al., 2012). More recently, however, governments in emerging economies have started to emphasize CSR as part of their development objectives and to actively engage MNEs in this strategy(Reimann et al., 2012). It seems plausible that governments in emerging economies pressure MNEs' subsidiaries to engage in increased CSR efforts(Gifford & Kestler, 2008). The provision of quality workplaces and the improvement of local living conditions by MNEs may, in fact, help local governments to secure their own authority and credibility with the local population (Gifford &Kestler, 2008). The support a firm receives from local authorities reflects the degree to which firms collaborate with local governmentsand other actors (Gifford &Kestler, 2008). Such support might include quick responses to the companies' requests, the elimination of bureaucratic issues and fostering of a cooperative relationship by local decision makers (Gifford &Kestler, 2008). Thus reflecting the legitimacy that the firm has acquired with local authorities and how engaged the governing actors are in fostering the firm's local presence(Gifford &Kestler, 2008). CSR allows MNEs to show that they are not just exploiting local resources, but that the host country benefits from their presence both in terms of the quality of social life and of economic conditions(Gifford &Kestler, 2008).Thuslocal authorities in emerging countriesshould have a strong interest in encouragingMNEs to contribute to society through CSR(Gifford &Kestler, 2008).Reimann et al., (2012) suggest that in spite of increased impact of MNEs in emerging economies, the role of CSR in MNEs' emerging economy operations
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has only recently began to attract the interest of international management scholars. Reimann et al. (2012) argue that the local governments can help firms to push for better standards in their working conditions and to engage in development of local society.Crotty (2014) asserts that if the state and institutions are weak, the companies more contribute to the society. In many emerging economies MNEs are often found to be a substitute for the government, supporting services that would traditionally be provided by local authorities(Crotty, 2014).
According to Zhao, (2012) the research in both CSR and legitimacy has not yet provided proper insights on how companies applyCSR to maintain legitimacy in emerging markets. The reason for this can be a lack of attention to CSR in emerging markets in general (Visser, 2008). Recent studies show that the CSR research is focused mainly on the US and European countries. However,as argued by Zhao (2012), considering the governments‟ efforts to push CSR in developing countries like China and Russia, it is important to understand the political implications of maintaining CSR. Political legitimation is a useful tool that integrates the politically embedded and the strategic view of CSR and thus provides a concept to analyze CSR as part of a MNEs‟ daily political strategy. The government in Russia controls crucial resources for the business, used to intervene in the companies‟ operation and maintain a regulatory system full of uncertainty. In contrast to OECD (Organization for Economic Co-operation and Development) countries, Russia ranks among the top 10 countries with the highest level of political hazards for companies(Zhao, 2012). In contrast, UK as one of OECD countries, is committed to the idea of market economy and political democracy and mark a high level of policy constancy. Different political contexts characterize different forms of relations between companies and state and thus provide different opportunities for companies to manage the relationship with the state through CSR(Zhao, 2012). Zhao (2012) argues that the regulation implementation and enforcement can be a problem for transitional economies as Russia. In developing countries the regulation
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enforcement is problematic, the capacity of civil society organizations is weak but growing, and the non-regulatory influence of the government on companies is crucial (Zhao, 2012). Therefore,in such contexts, the non-regulatory processes such as companies‟ resource control, administrative issues or normative influence can play a more important role in determining the form of CSR than the role of regulations which is more significant in the developed countries (Zhao, 2012). Strategies to respond to and manage these non-regulatory forces affect the survival and growth of companies (Zhao, 2012).
The CSR pursued in developed countries, and, in particular, in the UK as the country this study focuses on, presents differences from the CSR adopted in emerging countries. Moon (2004) argues that from the beginning to the middle of the twentieth century in the UK the level of state provision in areas of corporate and other forms of philanthropy has increased. This was relatedto employment, insurance systems, tax payer funded educational provision, tax payer funded health provision and to the provision of basic utilities such as water, energy and communications systems(Moon, 2004). As a result the scope for a direct involvement of companies in responsibility for society appeared to be limited to philanthropy(Moon, 2004). The government has therefore been one of the drivers of the developed and institutionalised CSR in the UK. UK government may have an interest in companiesto be involved in improvingbroader social and economic fields (Moon, 2004).It is argued by Moon (2004) that in the UK CSR was part of a broader re-orientation of governance roles whereby companies were involved more not only in operating in their market but also in a network with government and non-government organizations in which the inter-dependencies of actors depend neither on authorities nor market relations (Moon, 2004). Instead reciprocity is based on the evaluation and maintaining of shared interests and values. This is illustrated by the increased number of cross-section partnerships in which firms engage (Moon, 2004). Nowadays UK government attracts companies to participate in
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the development of community action with non-profit organizations and of public policy with state authorities (Moon, 2004).In order to develop many of its policies government has collaborated with companies dedicated to CSR and government initiatives demand a positive MNEs‟ response to be effective. Furthermore government agree that business has social responsibilities and it develops this perception among NGOs (Moon, 2004). This is also caused by the reason that the state also fears being punished for the irresponsibility of companies and, more broadly, for governance failures (Moon, 2004).
To conclude, the context within which companies operate determine the scope and nature of CSR activities, leading to continued differences across various countries (Crotty, 2014). In countries where institutions are weak, CSR may not be absent but instead it may be given a different “twist” than in strong institutional environment (Crotty, 2014).As a result, understanding CSR in non-Western countries has begun to gain some interest within the literature (Crotty, 2014). However, despite increasing research on CSR in developing countries, research on CSR in transition economies,such as Russia, has been lacking (Crotty, 2014).
Therefore, this study aims to investigate the way companies apply CSR-activitiesin pursuing legitimacy in developed versus developing countries.
2.4. Conclusion
Countries and institutions vary in the level of influence on companies‟ CSR activities.In particular, there are differences in the way weak versus strong institutions provide support and legitimation for organizations. Given the different institutional environments, MNEs should behave and interact differently in developed vs. developing countries in order to maintain its legitimacy through engagement in CSR. In this paper the difference in the ways of how tobacco MNEs maintain CSR-related legitimation in developed versus developing countriesis explored. As argued previously tobacco industry is a
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controversial sector. That is why it is particularly challenging for tobacco companies to maintain legitimation through CSR.In developing countries the company often makes more contributions to the society than in developed countries (Crotty, 2014). Furthermore social pressure from government shows how strongly local governments in the emerging countries push for the improvement of firms' social efforts, such as good working conditions or engagement for the local community (Reimann et al., 2012). Therefore it can be interesting to see whether philanthropic CSR dimensionis more developed in Russia as developing country than in UK as developed one. Furthermore different political contexts characterize different forms of relations between companies and stakeholders, thus provide different opportunities for companies to manage the relationship with the state through CSR (Zhao, 2012). It can be analyzed if there are any differences in the way companies build their relationships with various stakeholders between Russia and UK.
The research question this study aims to answer is the following: Do the CSR practices adopted by controversial sector‟s MNEs to maintain legitimacy in developed and developing countries differ? If yes, how?
Proposition 1: CSR practices adopted by MNEsin a controversial sector to maintain
legitimacy differ between developed countries versus emerging economies.
Proposition 2: In emerging economies as Russia MNEs are paying more attention for
philanthropic dimensions of CSR.
Proposition 3:The way companies interact with various stakeholders in terms of CSRdiffers
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To investigate these propositions, the next section will be expanded with the methods of this research.
3. Method
In this chapter the methods adopted inthis study are discussed, starting with the research design, followed by the explanation of the case selection, data collection and concluding with an explanation of the data analysis strategy.
3.1. Research design
This paper adopts a qualitative research method.(Yin, 2013) argues that qualitative research answers “how” and “why” research questions. Qualitative research in this case can provide with analysis of how companies apply CSR-practices and why there could be differences in maintaining CSR-related legitimacy between two countries.
Case study design, specifically multiple embedded case studywill be used in this thesis. The unit of analysis arethree tobacco MNEs embedded in two countries, a developing and a developed one. This design is the right approach since the goal of this study is to understand the differences of practices betweeninstitutional environments and to establish causal relationships (Saunders & Lewis, 2012). One of the rationale for conducting a multiple case study is theoretical replication (Yin, 2013). Theoretical replication is about finding differences caused by specificreasons. Based on the literature reviewed which highlights differences in institutional environments and, as a consequence, in CSR practices, between developed and developing countries, this study aims to investigate whether and how tobacco MNEs‟ CSR practices differ between developed a developing countries.
This is a longitudinal study focusing on the period from 2012until 2014. This period of time can cover right number of reports and press releases in order to establish if there are
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any differences in CSR practices applied by three MNEs between developing and developed countries.
3.2. Case selection
The units of analysis of this study are three MNEs globally operating inthe tobacco industry: Philip Morris International (PMI), British American Tobacco (BAT) and Japan Tobacco International (JTI) in Russia and UK. Case 1 evaluates BAT, PMI and JTI divisions in Russia and Case 2 studies same three tobacco companies in the UK.
BAT was founded back in 1902 and is a leader in more than 60 countries. Company has contributed approximately 30 billion poundsto governments where it operates in taxes in 2014.The revenuesof the group after deducting duty and taxes paid total in13,971 million pounds in 2014. 57,262 employees. In 2013 Annual Report it is shown that Western Europe region including UK operations had 24% of Group revenue with increase of profit in UK particularly. Eastern Europe, Middle East and Africa Region includes Russia and shows 27% of total group revenue with strong performance in Russia itself. BAT Russia has started operating in 1991 and is counting nowadays approximately 3000 employees.
PMI employs more than 82,000 employees and has in total 50 factories worldwide. International and local brands of PMI are sold in more than 180 markets. In 2014 company had a 19,331 million dollars of gross profit.PMI enteredthe Russian market in 1975 and now employs over 4500 people and has two factories.Philip Morris Limited was first incorporated in 1950 but only recently it opened first affiliate offices in the UK with approximately 60 employees.
JTI was formed in 1999 when Japan Tobacco Inc. acquired international operations of R.J. Reynolds. Today JTI has over 26,000 employees, and operations in 120 countries.In 2013 the company had 11,911 million dollars in core revenues. Russia is home to the JTI‟s largest global manufacturing center, which consists of four modern factories. JTI Russia
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counts over 4,700 employees and the Petro factory in Saint Petersburg is the biggest cigarette manufacturer in Russia and the largest of all JTI factories around the globe.JTI is the second-largest tobacco company in the UK.UK is one of company‟s top five markets and JTI employs more than 1,800 people.The market share is flat or increased in most key markets as the UK. In Russia, the share of value and share of market continue to grow.
As already discussed there are differences in acquiring legitimacy through CSR between developing and developed countries. Thus I will analyze and compare CSR activities of these MNEs in both UK and Russia. Legitimacy is particularly challenging for MNEs which operate in controversial sectors as the tobacco industry. This sector is controversial for the nature of the product itself which is not socially responsible from the very beginning. It is well-known fact and it is already accepted by tobacco companies that tobacco products have harmful and even lethal character. However companies pay taxes to government, employ people and try to act responsibly by engaging in all 4 main CSR dimension introduced by Carroll (1991). It would be interesting to see if there are any differences in CSR-engagement in previously described MNEs between operating in UK and in Russia.
3.3. Data collection
The data collected for this studyconsists only ofsecondary data. The sources are documentation on CSR released by three MNEs in each of the two countries. CSR reporting and press releases can be viewed as corporate image management, a strategic activity which helps a company to maintain legitimacy. MNEs use the reports to deliver information about their social–environmental activities so as to build up and maintain legitimacy with various stakeholders.If a stakeholder is important for a firm, the firm will possibly use the report to show what it has done in relation to this stakeholder. Therefore, the CSR documentation released by the MNEs would be a proper base to identify possible differences in
CSR-23
engagement by MNEs and maintaining legitimation through CSR practices between Russia and UK.
The particular interest of this study stands in evaluatingCSR practices adopted by each of three tobacco MNEsto gain legitimacy. This information is best gathered through the analysis of documents prepared for public consumption as CSR reports in UK and Russia. Such documents represent information about actions and negotiations, which I suppose is an excellent source of information about maintaining CSR-legitimation. In this paper I rely on publicly accessible press releases and reports generated by MNEsfor several reasons. First, many of documents over the time period show the prevalence of written, public accessible interactions in the tobacco industry, and these documents provide information and insights into process of engagement in CSR practices by given MNEs. Second, the documentsbeing carefully prepared and insightful, especially CSR reports, can provide a very rich data source about CSR-engagement. And third, these documents are records of a prime method of communication between key stakeholders in the tobacco industry since almost all stakeholders publish information about events that aredirected not only to their own group but also to others in the field.
3.4. Data analysis
To investigate the propositions thematic analysis will be used by evaluating Carroll‟s (1991) CSR dimensionsapplied by tobacco companies operating in developed versus developing countries.
CSR practices applied by MNEs in the tobacco sector show how companies respond and act in order to maintain legitimacy in Russia and UK.As already mentioned four CSR dimensions will be considered: economic, legal, ethical and philanthropic.Finally the negotiations with various actors and stakeholders will be reviewed. The relationship between MNEs and different stakeholders in Russia and UKalong with CSR activities will be
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examined to evaluate whether there are differences in maintaining legitimation and CSR between these two countries.
Nvivo software will be used for thematic coding. The themes for coding have been evaluated from previously mentioned literature on CSR. So themes are identified through a deductive approach and are listed in Table 1 below. The act of classifying relevant data by allocating them to themes is called coding. This will help me to compare companies‟ responses. The use of Nvivo will simplify the process of data analysis.
# Country MNE
CSRdimensions and sub-dimensions
1 Russia BAT Economical
2 UK JTI Legal 3 PMI Ethical: -product responsibility -environment 4 Philanthropic: -charity -sponsorships -volunteering Table 1.
After coding the data, a case study database is created with the coded data. Since this study is longitudinal, a chronological list of events was created in separate file. This allows to seethe full overview of the actions undertaken over time by the tobacco companies and the possible differences in CSR-engagementbetween Russia and UK.
25 4. Results
To investigate the propositionscase studies wereconducted and the results will be discussed next accordingly. In every section for each dimension I start with describing the results for affiliates of the companies operating in Russia and then continue with results for affiliates in UK. The results per each company in terms of specific CSR dimension can also be found in the tables 2-5 in the end of each section.All the results are based on the reporting and all the data available on companies‟ official web-sites.
In recent years companies have been confronted with rising expectations from societies and governments. Corporations can get and maintain legitimacy through engaging in CSR-activities. Considering the fact that companies operate all over the world, some issues addressed by government and society to companies could be solved and handled in similar way in different countries. However there could be also differences in way companies apply strategies to get and maintain legitimacy through CSR-activities between developed and developing countries. According to Carroll (1991) as already mentioned there are four main CSR dimensions: economic, legal, ethical and philanthropic.The same Carroll‟s (1991) pyramid with these four CSR dimensions can play a different role in Russia than in UK. Considering the fact that companies operate worldwide it is interesting to see if they pay attention differently to the same aspectsof CSR in Russia versus UK.
4.1. Economicresponsibility
In both countries companies face tax increase issue. In Russia the excise tax has increased once again as of January 2015. Because of sanctions and current crisis in Russia tobacco companies have to increase prices not only because of this tax increase, but also because of the global situation in Russian market. The total amount invested by JTI into the Russian economy has exceeded $1.8 billion dollars. BAT-Saint-Petersburg is one of the city‟s biggest taxpayers. In 2013, it contributed approximately 56.8 billion rubles in tax receipts to the
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federal budget of the Russian Federation and over 900 million rubles to the municipal budget of St. Petersburg. Company‟s representatives also argue that in Russia as well in other countries one of the principal drivers of the illegal trade are economic factors. Significant increase in excise results in higher prices, leading accordingly to increase in illegal trade. Because of increase in excise taxes and falling incomes tobacco companies have to reduce the volume of production. Both BAT and PMI in Russia argued of decline in production, however Russian market began to increase in value which indicates high purchase power of customers even when prices become higher. As of June 1st 2014 in Russia it was prohibited to smoke in public places due to law “On protection of public health from the effects of tobacco use”. Cigarettes and other tobacco products are forbidden to sell in kiosks and stalls. Sale is allowed only in stores which area exceeds 50 square meters. Tobacco companies argue that it causes problems not only to their business, customers, but also to small and medium-sized businesses. Furthermore representatives of MNEs and experts argue that this measures will not decrease the number of smokers anyway. It is also argued that shadow market will grow because of this prohibition. As noted in the statement on the website BAT, a sharp increase in the price of tobacco products only comforts and helps smugglers.
Concerning UK BAT reporting, company states only about the total contributions to governments and employees.JTI states in their reporting that tobacco sector in the UK contributes billions of pounds a year to the budget.
It can be concluded that in both countries companies state they are one of the biggest tax payers. All companies state in their reports and on web-site that increase of excise tax leads to increase of illegal trade, but not decrease in smoking. However it can be seen that BAT and JTI pay more attention to economic CSR dimension in Russia by showing more specific figures and information than in UK.
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CSR dimension Russia UK
Economic
BAT:
Company states about investments inmore than 1.1 billion dollarsinto the Russian economy in 2014 and around 315 billion rubles in tax payments to budgets in total over the last 10 years
Company states that in Saint-Petersburg it is one of the city‟s biggest taxpayers. In 2013, it contributed approximately 56.8 billion rubles in taxes to the budget of the Russia and around 900 million rubles to the municipal budget of St. Petersburg
BAT:
Around £30 billion paid to governments each year in excise and other taxes
Over £2.3 billion paid to employees each year in wages and benefits
PMI:
Argues in decline of production because of tax increase
Tax payer to budget
PMI:
JTI:
JTI argues to invest into the Russian economy above $1.8 billion in total In 2014 JTI got the Bronze Level of Investors in People – a respected international standard for efficient people management and development. (for new professional and career opportunities for its employees)
JTI:
Company states that tobacco sector in the UK contributes billions of pounds a year to thebudget
Table 2. Economic responsibility
4.2. Legal responsibility
Marketing of PM Russia targets only on people aged 18 and over. PM Russia believes the public health conclusions on secondhand smoke are sufficient to support smoking restrictions in public places.JTI Russia also has experience of working to fight against the illegal trade and cooperates with government and legal agencies in dealing with the issue. Company is a co-founder of the Digital Coding & Tracking Association (DCTA), which has developed an open standard technology, Codentify that helps to protect the integrity of
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international supply chains and immediately distinguish between real and counterfeit tobacco products.BAT has always publicly supported the development of a WHO Protocol to eliminate illicit trade in tobacco products. Since 2012 BAT Russia sets up annual meetings on discussing illegal trade issues. BAT Russia strives, wherever possible, to prevent expansion of the illegal market and towards this end, develops proposals designed to foster effective and appropriate law-enforcement practice, offering them for discussion by interested stakeholders. BAT Russia advocates for the harsher punishment of individuals and organizations involved in the illegal trade in tobacco products. In particular, the Company is in favor of reducing the level of damages needed to hold offenders criminally responsible and increasing the overall severity of punitive sanctions. The Company views the confiscation of equipment used for illicit production purposes as an effective measure in the fight against counterfeit products. BAT Russia boasts the experience and resources necessary to conduct the expert analysis of tobacco products. The Company is prepared to assist its partners in the detection and positive identification of illegal product specimens. The Company also stands ready to cooperate with state authorities and market participants in the field of information sharing, as well as to provide international and Russian experts for participation in working groups, roundtables, and conferences convened to address the matter of combatting illegal trade in tobacco products. Company argues that one of the main reasons for illicit trade is gradient increase in tax, so people seek for more cheap thus illegal products. BAT Russia sets up several roundtables for government officials and seminars for members of the retail community in those regions in which alarming indicators of illegal trade have been noticed. BAT Russia‟s Trade Marketing Representatives who are now involved in monitoring, report on the discovery of illegal products. The hotline is now in work, so that anyone encountering trade in illicit products can call.
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The UK Government has chosen to adopt plain packaging. BAT will launch legal challenge over plain packaging in the UK. Jerome Abelman, Corporate & Regulatory Affairs Director in BAT, said: “This legislation is a case of the UK Government taking property from a UK business without paying for it. That is illegal under both UK and European law. As of June 2013 according to law on packages there should be images of warning that smoking is unhealthy and even mortal. All tobacco companies use now 12 warning inscriptions as well as images of consequences of smoking. In UK JTI is working with the government and retailers to solve the problem of illicit trade of tobacco products. JTI is working with law enforcement agencies and retailers in the UK to fight the trade of illicit tobacco, protect its brands and decline the profits made by criminal organizations. Company has a 15-year agreement with the European Anti-Fraud Office (OLAF) and has committed to working with the UK government and other European states. JTI UK also shares information with HM Revenue & Customs (HMRC) and Trading Standards. On the operational level company has incorporated implicit security characteristics on all brands so that HMRC can check the authenticity of products in the network of retailers.JTI has not only strict controls on monitoring its products and trade consumers, but company also works to increase awareness about the illicit trade among our retailers and customers. As a partner of HMRC in the government‟s Tackling Tobacco Smuggling strategy, company is involved in different initiatives including: improving our collective understanding of the illicit market in the UK; assessing emerging threats to the UK market and finding the way how to educate customers about the illicit trade.
Companies fight against illicit trade both in UK and Russia by involving in interaction with various stakeholders. It is prohibited to advertise tobacco products and all considered MNEs follow rules concerning this issue. As for legal responsibilities there are no specific
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differences across these two countries for BAT and JTI. Only PMI does not report on specific issues in terms of legal CSR dimension in UK.
CSR dimension Russia UK
Legal
BAT:
Since 2012 BAT Russia sets up annual meetings on discussing illegal trade issues; interacts with stakeholders to discuss how to prevent illegal trade
Company develops proposals for effective and appropriate law-enforcement practice
BAT:
BAT states to launch legal challenge over plain packaging in the UK.
Company talks about e-cigarette regulation and advertisement
PMI:
Marketing of the company is aimed only on adults
PMI argues to support regulation of tobacco products to reduce harm of tobacco products
Company states that tobacco regulatory policy should be applied to all tobacco products, and should consider views of all stakeholders such as public health authorities, government, manufacturers, and other actors involved
PMI:
JTI:
Company argues that current restriction on sales in Russiado not decrease the number of smokers Company collaborates with different actors to combat illegal trade
JTI:
Company states that it complies with current laws and requirements in such as U.K. Bribery Act
JTI is working with the UK government and retailers to tackle the illicit trade in tobacco products
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4.3. Ethical responsibility (Environment and safety products)
BATis dealing with under-age smoking and considers this issue as crucial one. In Russia the MNE has introduced the programforsales representatives who explain to all retailers the matter in details. BAT along with other tobacco companies produce brochures with statements about under-age smoking prohibition for sellers. Finally, since 2004 in Russia‟s big cities BATis organizingtrainings in order to establish common awareness of how to prevent under-age smoking. Furthermore open display of cigarettes is banned and customers should always ask for the price and the availability of specific tobacco product. BAT argues that instead of display bans, it is better to see stronger enforcement of minimum age laws, harsher penalties for retailers caught selling tobacco products to underage smokers and legislation that makes it illegal for adults to buy cigarettes for children. BAT representatives are of the opinion that exposure to environmental tobacco smoke (ETS) is not an established risk factor for diseases such as lung cancer and heart disease. Yet, the company recognizes that smoking may be annoying for people and that ETS is a contemporary problem in society. BAT smoking policy aims to accommodate the needs of smokers and nonsmokers, through negotiation and cooperation regarding workplace and smoking etiquette in the office. Therefore it has been determined to conduct a research within BAT Russia employees to identify whether smoking at workplaces is a real problem. Company plans to manage factory‟s environmental investment projects in addition to the established legal requirements. Company also states about the factory‟s plans to reduce pollutant discharge. Key indicators of the environmental impact of BAT-Saint-Petersburg: consumption of energy (electricity, gas, fuel), consumption of water, waste recycling coefficient, waste to landfill, CO2 emissions. PMI in Russia also pays a lot of attention to the same issues as other tobacco MNEs as reduction/prevention of smoking by collaborating with different stakeholders and supporting all acts related to tobacco products. PMI developed a special program in Russia which has
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started in 1999 to prevent under-age smoking. This program includes the following topics: development of steps to prevent access of children to tobacco products, support and interaction with NGOs fighting against under-age smoking and support of the program for parents. With its retailers the company shares booklets and other materials in order to inform them about latest the law, acts and measures to prevent under-age smoking. PMI supports the work of various NGOs which are trying to prevent anti-age smoking and increase the level of execution of law against smoking in general. Representatives of the company attend seminars dedicated to discussing issues related to sale of tobacco products with many stakeholders from different state authorities and organizations. Since 2000 PMI in Russia shares with parents brochures with advices of how to prevent children smoking. Many doctors, teachers, psychologists are involved in developments of these special materials which are published in special edition journal „Health‟.
The JT Group believes everyone should be appropriately informed about the health risks of smoking. Tobacco companiesstate their opinion and position on harmful character of smoking and problems with health through their websites.Proof-of-age campaigns, supported by JTI, aim tohelp to reduce underage smoking in the UK. It is believed in the company that tobacco products should only be consumed by adults who are fully aware of the risks related with smoking. That is why JTI actively supports schemes with the information on how to prevent anyone under 18 buying cigarettes. These include the UK‟s number one proof-of-age card, CitizenCard, and the No ID No Sale campaign. This campaign, which JTI helps to fund through the Tobacco Manufacturers‟ Association, helps retailers to prevent underage sales by asking young consumers to show valid identification when buying tobacco and other age-restricted products. Company has also set up a Tobacco Retailing website that offers retailers several advices on regulation and legislation, and provides related training on how to handle cases such as refusing a sale.Sales force of JTI distributes the No ID No Sale packs to all
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retailers they work with. These packs include the tobacco age note, posters, window stickers and CitizenCard application forms. There is also a special method to record everyone who is not producing valid ID when asked, which shows enforcement agencies like Trading Standards that the retailer has a proof-of-age policy. JTI also supports the use of shelving units in retail outlets that display the No ID No Sale message at the top. Over a quarter of a million No ID No Sale packs have been distributed to retailers around the country since the beginning of the campaign and more than two million CitizenCards have been issued since its launch in 1999. In Scotland where adults try to buy tobacco for children, is now £200 fine for anyone who buys or attempts to buy tobacco products for under-age smokers. In the meantime, JTI will continue to support retailers and work with Trading Standards, other tobacco manufacturers and separate bodies to stop under-age tobacco sales. In UK in 2014 UK JTI has spent 400 000 ponds on pilot program to check if ID was being requested. This program will now be extended across all country which will help further to fight against under-age smoking.Tobacco companies started to look for alternatives of cigarettes since governments‟ restrictions on advertising and smoking in public places and increase of excise. BAT announced about acquiring of British company CN Creative which has been developing e-cigarettes. In 2011 alternative tobacco products already totaled in about 15 billion pounds and the aim of BAT is to bring this number to 40 % in future. In 2014 company launched new elaboration of nicotine inhaler. In 2013, BAT launched Vype e-cigarettes in the UK. Alternative tobacco products are not entirely without risk, but they are considered to offer reductions in risk of 95% or more in comparison to original cigarettes. The main issue as stated before is to ensure various stakeholders in safety of alternative products brought to mass-market. Thus BAT is focusing on transparent and world-class science, high standards and openly published results. Becoming the first tobacco company to have a nicotine product licensed as a medicine – its innovative new nicotine inhaler, Voke, will be launched in the
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UK by the end of 2015. Vype continued to deliver excellent organic growth in the UK e-cigarette market.BAT argues that e-e-cigarettes are considered to be significantly less risky for health than smoking original cigarettes. In 2015 PMI acquired Blue Cig, e-cigarettes seller, promising to invest 280 million dollars in future.
It can be concluded that in both countries companies pay a lot of attention to prevention of under-age smoking and issues related with tobacco products. Since companies operate worldwide in controversial sector it is very important that in each country they make sure that products are sold to the right audience. To get legitimation MNEs show they understand all the problems related to their harmful products and collaborate with as many as possible actors involved about health issues as well.However in UK companies spend more money on program related to under-age smoking while in Russia less investments are made.Main innovations and researches by companies are conducted in UK. So it can be concluded that ethical responsibility plays more important role in UK than in Russia for considered tobacco MNEs.
CSR dimension Russia UK
Ethical
BAT:
Environment:
Company states on reduction of water, energy consumption, reduction in waste and on plans to use Led bulbs
Investments indevelopment of modern installations for the treatment of waste and sewage water
Product responsibility:
BAT is dealing with under-age smoking, has introduced a special program and organizes trainings across country on this issue
Investments in e-cigarette and other less-damaging products
BAT:
Environment:
Plans for reduction of harm are in line with UK Government targets.
Product responsibility:
Company deals with youth smoking Launch of Vype e-cigarette and innovative new nicotine inhaler, Voke Company states about willingness to develop and launch new less harmful products in markets beyond the UK
35 Stakeholder relations
State to collaborate with universities Constant dialogues with various stakeholders (government, NGOs, local authorities)
Stakeholder relations:
Engagement with a variousstakeholders on the possible benefits to public health and on the development of product quality standards
PMI: Environment
Company states to reduce negative impact on environment (such as reduce in water and energy consumption)
Product responsibility
There is a special program in Russia to prevent under-age smoking since 1990
PMI states about collaboration with NGOs and other stakeholders to prevent under-age smoking Company talks about relation on smoking and public health and agrees on harm, addiction and diseases by secondhand smoking caused by tobacco products
PMI supports smoking restrictions in public places
Stakeholder relations Collaboration with various stakeholders
PMI:
26 June 2014, PMI announced that it had acquired UK-based Nicocigs
In 2015 PMI acquired Blue Cig
JTI: JTI:
Product responsibility
Supporting proof of age (CitizenCard) Our sales force distribute the No ID No Sale packs to retailers (packs with posters and brochures)
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Collaboration with various stakeholders Table 4. Ethical responsibility
4.4. Philanthropic responsibility
In Russia BAT expands the cooperation with universities to enhance the professional level of graduate students, including in the field of environmental protection. Also since 1999, BAT-Saint-Petersburg has partnered with the Administration of Primorsky District in St. Petersburg to implement a long-term program aimed at its greening, landscaping and beautification. This action, undertaken voluntarily, is designed to improve the lives of the people living in the vicinity of the enterprise. Investments totaled some 1.5 million rubles. Company lead 18 different voluntary projects in 2012 in Russia. JTI is investing in communities and it is an important part of company‟s approach of doing business. JTI states that it strives to improve the lives of people in the communities where it operates. In Russia, JTI supports veterans, old and disabled people, and participates in many cultural heritage preservation programs as well as the development and promotion of modern art. Such programs cover not only Moscow and Saint Petersburg, but also other regions. Priority of JTI is to support long-term programs to ensure company will have significant and measurable results. In partnership with leading non-profit organizations, JTI is involved in initiatives that improve the lives of adults. Company puts special accent on the social integration of the old people and the disabled. Computer classes have been available to seniors in Moscow and Saint Petersburg for several years, and creative workshops are held to allow veterans to live more interesting lives. The Company also supports retirees in need, giving them the help they need. JTI also supports art and cultural programs as company believes they enrich people‟s lives. MNE has interacted with some of Russia‟s leading theaters and museums for several years and has been closely involved in large-scale restoration projects as well as in the developing and staging of new exhibitions.In Russia PM collaborates with local NGOs,
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Charities Aid Foundation on a project entitled, „Status: Online‟. The program provides computer courses for elderly people and adults and plays an important role since state has not enough resources to deal with such issues. In 2013 2500 people in several regions of the country participated in the program, getting new computer skills and becoming familiar with social media development and online payment processes.In 2012 year PM Russia donated 60 million rubles in total.PM Russia has donated in total around 1 154 936 dollars into education programs and around 876 443 in programs dealing with hunger in country.
In UK JTI is a long-term supporter of the Crisis Learning Zone – an education and training center based in Crisis‟ East London head office. Funding has allowed this center to expand its weekly timetable of IT, numeracy and literacy classes by extending its opening hours to weekends and evenings, and hiring new teachers. Since JTI‟s support began, Crisis attendees have achieved more than 600 accredited qualifications between them, and over 200 participants have found regular job while other 500 participants have progressed into further education. The tobacco industry in the UK contributes billions of pounds a year to the UK government. Furthermore JTI‟s cultural and charitable partners have united their efforts to bring the arts and music to people who may not be able to access it without this help. The Cross-Partner project began in 2011 when JTI brought together cultural partners, the London Philharmonic Orchestra and the Royal Academy of Arts and charitable partners, Leonard Cheshire Disability and homeless charity Crisis, to discuss ways in which they could collaborate. The outcome was the following: several interactive music and art workshops and exhibitions, the exploration and creation of music which took place throughout 2012. Forty-three interactive sessions were organized, attended by more than 140 people. Within charity list of PMI UK was not stated so it can be concluded that company simply does not donate money there.BAT also does not state any concrete figures and action taken specifically in UK market.
