1
The influence of non-governmental organizations on the corporate social responsibility strategy and sustainable supply chain management of European multinational enterprises in
the apparel industry
A multiple-case study of five MNEs in the apparel industry
Master’s thesis Huisman, Anne LM.
Student number: 10546073
MSc. Business administration - International management
29th of January, 2015
First supervisor: Drs. Daniel van den Buuse Second supervisor: Dr. Johan Lindeque
2 Abstract
Corporate Social Responsibility (CSR) is playing an increasingly important role in management decisions. A key characteristic of CSR topic is that it involves the economic, social, and
environmental responsibility of corporations towards society (Trapp, 2014). Due to the increased attention to CSR, and the influence of various stakeholder groups, corporations are wrestling nowadays to balance the commitments they have to their shareholders with the commitments to a more broader group of stakeholders who claim legal and ethical rights (Carroll, 1991).
Multinational enterprises (MNEs) are under increased pressure to provide a high level of social responsibility throughout their value chain and the globe (Vachani, Doh & Teegen, 2009). As a result, MNEs are promoting specific CSR programs in order to show their commitment towards society because without recognizing their responsibility, a corporation cannot fulfill their economic and social role successfully (Arrigo, 2013). Due to the high complexity of the global supply chains in the apparel industry, it is a compelling challenge for corporations within this industry to ensure good CSR practices throughout the whole supply chain (Perry & Towers, 2009). Therefore, in this research a qualitative, multiple-case study of five MNEs in the apparel industry was conducted. The aim of the research was to determine to what extent non-governmental organizations (NGOs) influence the CSR strategies and the sustainable supply chain management (SSCM) of the MNEs on the basis of their publications in their annual- and CSR reports. The results of the study found that NGOs do influence the CSR strategy MNEs adopt, but influence to a lesser extent the way MNEs manage their supply chain in a sustainable way. The findings showed that NGOs do play a role in the design of a CSR strategy, whereas less evidence is found that NGOs influence the supply chain practices MNEs adopt and therewith the SSCM of these corporations.
3 Acknowledgements
I would like to thank everybody who supported me in my process of writing this thesis; I would sincerely thank my supervisor, Daniel van den Buuse for his input, guidance and support throughout the progress of writing this thesis. His support and guidance throughout the last few months has helped me to conduct this thesis. Furthermore, I would like to thank my family who supported me throughout the whole progress of completing my study and finishing my thesis.
Statement of originality
This document is written by Anne Huisman 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.
4
Table of content
1. Introduction………..…………...6
2. Theoretical framework………...10
2.1. Introduction……….……..…...10
2.2. Corporate social responsibility ………...10
2.2.1. The concept of CSR………...10
2.2.2. CSR in corporate strategy ………...12
2.3. Sustainable supply chain management………...14
2.4. Stakeholder theory ………...16
2.4.1. Stakeholder salience …….. ……….…………..………...17
2.5. NGO influence on the CSR strategy ………...19
2.6. NGO influence on the SSCM………...21
2.7. Concluding remarks..………...23
3. Working propositions………...25
3.1. Theme 1: NGOs influence on the CSR strategy………...26
3.2. Theme 2: NGOs influence on the SSCM………..………..27
4. Methodology………..…...29
4.1. Introduction………...29
4.2. Research philosophy...………...29
4.3 Research method and relevance...………...30
4.4. Case selection……….………...31
4.5. Data collection………...35
4.6. Data analysis………...36
5. Results and analysis..……… ………...38
5.1. Introduction………...38
5.2. Within-case analysis ...38
5.2.1. Zara….………...39
5.2.1.1. Introduction to Zara’s CSR strategy & SSCM………...39
5.2.1.2. The NGOs influence on Zara’s CSR strategy………….... …...41
5.2.1.3. The NGOs influence on Zara’s SSCM………...44
5.2.2. H&M..……… …47
5.2.2.1. Introduction to H&M’s CSR strategy & SSCM…………...……...47
5.2.2.2. The NGOs influence on H&M’s CSR strategy……….…...49
5.2.2.3. The NGOs influence on H&M’s SSCM……….…...52
5.2.3. C&A……….…...54
5.2.3.1. Introduction to C&A’s CSR strategy & SSCM………..……54
5.2.3.2. The NGOs influence on C&A’s CSR strategy………....56
5.2.3.3. The NGOs influence on C&A’s SSCM………...59
5.2.4. Primark………...……...61
5.2.4.1. Introduction to Primark’s CSR strategy & SSCM………….…...61
5.2.4.2. The NGOs influence on Primark’s CSR strategy………...63
5.2.4.3. The NGOs influence on Primark’s SSCM………...66
5.2.5. Hugo Boss……….……….….68
5.2.5.1. Introduction to Hugo Boss’s CSR strategy & SSCM………….…....68
5.2.5.2. The NGOs influence on Hugo Boss’s CSR strategy……….……...70
5.2.5.3. The NGOs influence on Hugo Boss’s SSCM…………...73
6. Cross-case analysis………...75
6.1. Introduction………...75
6.2. Commonalities & differences CSR strategy……….…...75
6.3. Commonalities & differences SSCM………...80
7. Discussion………...82
8. Conclusion………...87
5 Index of Tables and Figures
Table 1. Working propositions………..………..…..…..28
Table 2. Selected cases in the apparel industry………...…..33
Table 3. CSR mission & values of selected cases………...34
Table 4. Company data sources available ………..…....35,36 Table 5. Within-case results: CSR strategy Zara ………..…..….…..40
Table 6. Within-case results: SSCM Zara………...43
Table 7. Within-case results: CSR strategy H&M………....…...48
Table 8. Within-case results: SSCM H&M ………..…...51
Table 9. Within-case results: CSR strategy C&A………...55
Table 10. Within-case results: SSCM C&A ……….….…...58
Table 11. Within-case results: CSR strategy Primark……….…....….62
Table 12. Within-case results: SSCM Primark ………..….65
Table 13. Within-case results: CSR strategy Hugo Boss……….….69
Table 14. Within-case results: SSCM Hugo Boss ………...72
Table 15. Cross-case analysis: NGOs influence on the CSR strategy ……….…76
Table 16. Cross-case analysis: NGOs influence on the SSCM……….…79
Figure 1. Three attributes contributing to stakeholder salience ………...18
Abbreviations
CSR: corporate social responsibility CFP: corporate financial performance CSP: corporate social performance GRI: global reporting initiative IB: international Business
ILO: international labor organization MNE: multinational enterprise NGO: non-governmental organization SSCM: sustainable supply chain management SCM: supply chain management
6 1. Introduction
Over the years, there has been increased attention towards the topic of CSR in the international business (IB) literature as a result of the increased business practices around the world. While the environmental and social impacts of IB is not new in the literature, the current focus is upon how MNEs respond to this since they engage in activities that meet stakeholders and institutional contexts in both home and host countries (Kolk & van Tulder, 2010).
Therefore, debates about CSR have been moved towards the corporate boardrooms (Gupta & Sharma, 2009; Porter & Kramer, 2006). The challenges managers are facing today is that they are confronted with demands from various stakeholder groups such as customers, employees, suppliers, NGO and governments which result into conflicting goals and objectives within a corporation (McWilliams & Siegel, 2001). As a result of this increased globalization, and the continuously outsourcing practices in various industries, corporations are functioning and competing on their supply chain or related demand network’s level (Seuring, Sarkis, Müller & Rao, 2008).
MNEs are often challenged and under increased pressure due to the global reach of their supply chains and the possible irresponsible practices related to these supply chains, which force them to ensure a high level of social responsibility in their value chain and around the globe (Amaeshi, Osuji & Nnodim, 2008; Vachani et al., 2009). Criticizers of globalization have argued that MNEs are setting up in countries in which they can gain a competitive advantage through making use of questionable local conditions such as tax environmental legislation, abusive use of child labor and corruption of public authorities as a result of increased attention towards earning profits (Arrigo, 2013). Along with the increased demands on a strong economic performance of the supply chains, the MNE’s responsibility nowadays extends towards the environmental and social performance of their suppliers and partners too (Seuring et al., 2008). Especially in the North, NGOs have increased their amount and aggressiveness of their campaigns since the 1990’s in order to attack MNEs due to their labor standard records (Hasmath & Hsu, 2007). The
7 increased pressures from external stakeholders such as NGOs force corporations to incorporate triple-bottom line of social-, environmental- and economic responsibility into their operations and SCM strategies. As a result, great attention from practitioners and scholars arose towards the SCM of corporations (Ageron, Gunasekaran & Spalanzani, 2012).
This increased amount of stakeholders demands clearly demonstrate that these stakeholders are trying to hold corporations liable for the social issues in the world (Gupta & Sharma, 2009; Porter & Kramer, 2006). The challenges of the increased attention towards their supply chain has led to various supply chain management initiatives executed by MNEs. Previous research has shown that external pressures by governments, stakeholders and customers can act as triggers to implement SSCM, instead of reconsidering the internal resources and capabilities of the organizations (Gold, Seuring & Beske, 2010). According to Cetinkaya (2011), it is a great challenge for corporations to implement a strategy in which they satisfy on one hand the
shareholders and on the other hand stakeholders, especially in sustainability where interest groups like NGOs are becoming more powerful. Spar & LaMure (2003) suggest that activist pressures by NGOs can lead to different reactions of corporations whereby different CSR strategies are
adopted. Due to the increased regulation, government laws, stronger corporate governance and stakeholder influence, corporations are nowadays prompt to adopt CSR strategies and engage in sustainable supply chain management in order to survive.
This research will contribute to this focal point by concentrating upon to what extent NGOs pressure MNEs from different home countries. In the CSR literature, the supply chain management research and practices has been the recent focus (Perry & Towers, 2009). Even though the intersection of supply chain management and sustainability is still a rather young research field, it is a flourishing topic recently (Gold et al., 2010b; Seuring & Müller, 2008b).
Considering this new research field, this research will explore the CSR strategies and SSCM of MNEs coming from different European home countries. Since prior research has focused upon CSR and the SCM in different industries and geographic regions (Tate, Ellram &
8 Kirchoff, 2010), this research will address a gap within the literature by focusing upon the CSR strategies and SSCM in one industry and in one specific geographic region. Since a MNE cannot be more sustainable than their supply chain, the supply chain perspective is the key to address the sustainability of MNEs (Krause, Vachon & Klassen, 2009). Since traditionally stakeholders like NGOs were not considered in supply chain decisions while they are a sudden involved now (Wu & Pagell, 2011), this research will build upon these focal points by focusing upon the NGOs pressures on the SSCM.
Therefore, the following research question is examined in this research; To what extent do non-governmental organizations influence the corporate social responsibility strategy and the sustainable supply chain management of European multinational enterprises?
In this research, a qualitative approach through a multiple-case study is chosen in order to gain a better understanding of how NGO pressures influence the CSR strategies and the SSCM of MNEs. Since MNEs in the apparel industry have to cope with a complex global supply chains, they are facing big challenges to ensure good CSR practices within their supply chains (Perry & Towers, 2009). Hence, this industry is especially interesting in this field of research and is
therefore used in this study. In this research, a within-case analysis of different cases will be made in order to determine what kind of CSR strategies European MNEs select as a response to NGO pressures and how they manage their supply chain in order to be sustainable in the end. Secondly, a cross-analysis between the cases is performed in order to see whether there are similarities or deviations in their approach. This research will have academic – and managerial relevance since it contributes on one hand to the knowledge about NGOs and their influence on MNE’s SSCM, while on the other hand it sheds light on how MNEs are responding to these pressures in respect of their CSR strategy.
In the next section, a theoretical overview of the key concepts CSR, SSCM and
stakeholders is given. In the third section, the working propositions are formed based upon this theoretical overview. This is further followed by a within-case analysis of each single case in the
9 fourth section of this research. In the fifth section, a cross-case analysis is made between the five cases, whereas in the sixth section the literature and the empirical results are compared to each other in the discussion part. Lastly, the conclusion, the limitations and suggestions for future research are given.
10 2. Theoretical framework
2.1. Introduction
In this section, the theoretical background of this research is given by first of all defining the CSR concept. Secondly, the discussion will turn to CSR in corporate strategies; what is the
intertwinement between CSR and a corporate strategy. Thirdly, the concept of sustainable supply chain management is explained. Fourthly, the stakeholder theory and the stakeholder salience are described. Lastly, all three concepts come together by assessing the relationship between NGOs, the CSR strategies and SSCM of MNEs which will form basis for the working propositions stated later in this research.
2.2. Corporate social responsibility
2.2.1. The concept of corporate social responsibility
CSR has become an increasingly important topic for businesses. Recently, the topic has gained more attention due to the increased business practices of MNEs around the world. The concept of CSR has been discussed over the past fifty years (Amaeshi et al., 2008; Fifka, 2009). Over the past decade, CSR has become an essential phenomenon in the IB literature while identifying and defining this topic is still open to debate. Many scholars have tried over the years to define this concept which resulted into multiple definitions of CSR (Fifka, 2009; Freeman & Hasnaoui, 2011; McWilliams & Siegel, 2001; Okoye, 2009). According to Carroll (1979, p. 500), “the social responsibility of a business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.” In addition, Frederick (1986) defines CSR as the obligations that business corporations have to work for social
betterment (cited in Wood, 1991), whereby he re-defined CSR from about the 1970’s towards the capacity corporations have to react upon social pressures (Idowu & Papasolomou, 2007). Another well-known definition of CSR is from McWilliams & Siegel (2001) who defines CSR as the activities that corporations accomplish for some social good which is beyond the interest of the corporations as well as the laws they need to comply with. Hence, CSR can be explained as a
11 phenomenon or an idea whereby corporations are taking a proactive stance through e.g. active involvement in their corporate community with their stakeholders whereby the corporation goes beyond their moral responsibility and promote the collective self-interest of the society as a whole (Idowu & Papasolomou, 2007). The key characteristic in defining the concept of CSR is that it includes the concerns business organizations have regarding their role in, and responsibilities to, society (Trapp, 2014).
Over the years, several scholars have tried to understand the drivers and the reasons of corporations to engage in CSR as we know it today in the twenty-first century. According to these scholars, five key reasons can be classified under the agency theory, legitimacy theory, accounting theory, stakeholder theory, self-justification and the advancement of corporate interest theory, whereby all perspectives are able to explain the interest corporations have in CSR (Idowu & Papasolomou, 2007). According to Weber (2008), engaging in CSR can lead to various business benefits such as an increased company image and reputation, a higher employee motivation, increased revenue through higher sales and market share and cost saving, this which can act as drivers for corporations to adopt CSR policies. Other scholars have argued that CSR can improve the overall competiveness of a corporation (Weber, 2008). As proponents of CSR have claimed, moral obligations, sustainability, licenses to operate and reputations are prevailing justifications for corporations to engage in CSR (Porter & Kramer, 2006). According to Arrigo (2013), the output of the corporate responsibility management is an enhanced relationship with stakeholders in order to avoid a bad image, loss of consumers & stakeholders trust and difficulty with attracting capable employees. In addition, as Porter & Kramer (2006) argued, engaging in CSR can be seen as a source of opportunity, innovation and competitive advantage for corporations.
Recently, many theoretical and empirical studies have been conducted regarding the relationship between corporate social performance (CSP) and corporate financial performance (CFP). The majority of the researchers in these studies claim that a positive relationship between these two concepts exists (Margolis, Elfenbein & Walsh, 2009; Orlitzky, Schmidt & Rynes, 2003;
12 Waddock & Graves, 1997; Weber, 2008). In accordance, Porter & Kramer (2002) refer to a win-win situation through CSR engagement since this leads to economic- and social outcomes, the so-called “strategic philanthropy” (cited in Werther & Chandler, 2005). Some researchers have found a mixed relationship between CSP and CFP whereas other researchers found a negative
relationship (Barnett & Salomon, 2012). Due to the growing attention towards the integration of strategy, brand management and the social responsibility, CSR has shifted from being a minimal commitment towards being strategically important to corporations that can lead to substantial business-related benefits to corporations (Burke & Logsdon, 1996; Werther & Chandler, 2005).
2.2.2. CSR in corporate strategy
Aforementioned, CSR can be strategically important to corporations in order for them to obtain business-related benefits (Burke & Logsdon, 1996). Most of the times, CSR is integrated into a business in an ad-hoc and non-integrated way, since most CSR initiatives are coming from different parts of the organization which are often not directly linked with what the corporations actually know, do and are familiar with (McElhaney, 2009). According to Husted & Allen (2006), the failure of not managing CSR strategically can lead to economic consequences for corporations. According to these scholars, effective strategic management of the CSR initiatives can result into significant benefits and risk reduction for corporations.
Empirical evidence suggests that corporations should act strategically with regard to CSR activities and use the same frameworks that guide their core business choices in order to make CSR a source of competitive advantage for the corporation (Porter & Kramer, 2006; Sharp & Zaidman, 2010). According to Porter & Kramer (2006), most of the school of thoughts in the CSR literature have one weakness; they focus on the tension between business and society rather than the interdependence between these two concepts. According to these scholars, this can result into uncoordinated CSR activities which have no meaningful social impact or strengthen the
competitiveness of corporations. Therefore, corporations should use the same frameworks to analyze the prospects of CSR as they do for their core business choices, which will show that CSR
13 can be much more than just a cost or constraint and that it can be used as an opportunity,
innovation or can lead to a competitive advantage (Porter & Kramer, 2006). When managers become aware of the benefits to both the corporation and its stakeholders, managers can make better choices which CSR strategy to undertake (Burke & Logsdon, 1996).
According to Muller (2006), different CSR strategy perspectives exist within MNEs namely; a global CSR perspective which is characterized by a centrally coordinated strategy or a more local perspective whereby its CSR practices are more fragmented towards the CSR
standards of the host countries they are involved in. Furthermore, according to Bartlett & Ghoshal’s (1989) typology of the organizational strategy, corporations should respond to pressures of global integration and local responsiveness in their product markets by either adopting a multi-domestic-, global- or transnational strategy dependent upon the global- or local demands. Some scholars claim that MNEs should respond in the same way with respect to CSR issues which would mean that in a multi-domestic strategy high responsiveness and low
integration is strived for. A global CSR strategy is seen as a high responsiveness and a low integration whereas a transnational CSR strategy is characterized as both having a high responsiveness and high integration (cited in Husted & Allen, 2006). According to Muller’s typology, a global strategy is seen as a centralized approach of corporations in which efficient transfers of (proactive) CSR practices are carried out throughout the corporation worldwide. A local strategy concerns a more fragmented approach whereby the corporation alter their CSR responsiveness to the host country context in which they are embedded (Muller, 2006). Thus, the local CSR perspective can be seen as the firm’s obligations towards the local community while the global perspective can be seen as the global standards adopted to all countries the MNE is active in (Husted & Allen, 2006). Also, Muller (2006) claims that in the first approach host-country stakeholders are driving the corporation’s CSR strategies whereas the latter approach is formed by the home country - or international CSR practices which result into a company-wide strategy.
14 According to Basu & Palazzo (2008), the analysis of the process and the interpretation of CSR by corporations leads to a deeper understanding of CSR rather than just a strict focus on the content of a CSR program (cited in Sharp & Zaidman, 2010). According to Jarzabkowski (2003), a corporate strategy should be interpreted as “a pattern in a stream of goal directed activity over time” (cited in Sharp & Zaidman, 2010, p. 53). Since CSR can be seen as goal directed activity of MNEs in order to meet the demands of various stakeholders in a stream of actions, this can be interpreted as an integration of CSR in the corporate strategy. Aforementioned, MNEs can integrate CSR in their strategy by either adopting a global CSR approach or a more local fragmented approach. At the same time, the success of a CSR program depends on the
organization community internalization and acceptance of CSR (Sharp & Zaidman, 2010). As Prahalad & Hart (2002) suggested, it is not just philanthropy but a CSR strategy that makes economic sense and which can lead to competitive advantages for corporations (cited in Kolk & van Tulder, 2006).
Hence, CSR has become increasingly important for MNEs and in order to have
meaningful and integrated CSR throughout the corporation, managers should integrate CSR into their corporate strategy. Recently, CSR in the supply chain has become an important topic in the literature. Since the supply chain management research and practices have been the recent focus (Seuring et al., 2008), Section 2.3. elaborates on this by describing how MNEs act upon this responsibility in regard of how they manage their supply chain in a strategic way.
2.3. Sustainable supply chain management
In today’s world, supply chain management (SCM) has become strategically important for corporations due to the increased global competition, the outsourcing activities to low cost countries and the overall increasing time pressures in all layers of the supply chain (Andersen & Skjoett-Larsen, 2009). Within the academic literature, various explanations of SCM exist. According to Mentzer, DeWitt, Keebler, Min, Nix, Smith, et al. (2001), SCM by corporations should be seen as the system and strategic coordination of the business function and the tactics
15 across these functions within a corporation across other businesses within the supply chain, this in order to improve the performance in the long run and the supply chain as a whole. Other research claims that SCM is an integrative philosophy in order to manage the total flow from the suppliers to the end users in the supply chain (Cooper & Ellram, 1993). Cooper & Ellram (1993) claim that the SCM activities are different from other channel relationships when the following
characteristics emerge; coordination across firms and management levels, sharing and monitoring of information and joint planning. Other scholars argue that the triple-bottom line approach of the economic, social and environmental responsibility should be used in order to evaluate the
sustainability efforts by corporations in their supply chain context (Winter & Knemeyer, 2013). According to Pagell & Wu (2009), a sustainable supply chain is a supply chain which contains the three triple bottom line elements whereby the SSCM is the actions corporations take in order to have a more sustainable supply chain in the end. Perry & Towers (2009) claim that through improved supply chain relationships, a sustainable competitive advantage can be obtained for corporations. According to these scholars, the aim is to achieve improved performance over the whole supply chain rather than for themselves at the cost of the supply chain partners involved. In order to achieve this, long-term cooperative trading relationships should be built between the partnering firms within the supply chain (Perry & Towers, 2009).
Previous research was mostly focused upon the individual processes within the supply chain, whereas nowadays there is increased attention towards the supply chain as a whole
(Beamon, 1998). According to Linton, Klassen & Jayaraman (2007), the focus of the optimization of the operations have moved from one specific facility or organization to the concern of the whole supply chain whereas a shift has taken place from local optimization of environmental factors towards the consideration of the whole supply chain – from production to the disposition of products. In the SSCM literature, the term reverse supply chain or close-loped supply chain is a relative new term, which emphasizes that the management of the whole supply chain should be
16 the main focus instead of focusing upon one entity within the supply chain (Andersen & Skjoett-Larsen, 2009).
Moreover, past literature has shown that supply chain initiatives such as supply chain integration and supply base rationalization are forms of initiatives which are directly linked to CSR (Perry & Towers, 2009). According to Perry & Towers (2009), supply chain integration will lower the cost of CSR implementation due to closer trading relationships that reduce the need of exaggerated monitoring of the activities within the supply chain. In addition, rationalization of the supply chain can lead to better visibility and management of the CSR initiatives since this process removes the unnecessary layers of suppliers within the supply chain (Perry & Towers, 2009). As Ageron et al. (2012) argued, SSCM asks for more cooperation among partnering companies in order to make the supply chain operational and create sustainable performance.
2.4. Stakeholder theory
The stakeholder theory has gained increased attention as a result of its descriptive accuracy, instrumental power and normative validity (Donaldson & Preston, 1995). Since Freeman (1984) first defined the concept of stakeholders, the term ‘stakeholder’ has been broadly used in the management scholarship and in managers’ thinking (Frooman, 1999; Mitchell, Angle & Wood, 1997). According to Freeman (1984, p. 46), a stakeholder is “any group or individual that can affect or is affected by the achievement of an organization’s purpose”, in which the stakeholder theory aims to explain the relationship between organizations and those persons with a “stake” in the operations and outcomes of a business activity (cited in Mitchell et al., 1997). According to Donaldson & Preston (1995), the stakeholder theory is general and comprehensive in which it goes beyond the description that corporations have stakeholders. Even though there are still debates in the academic literature about the definition, most researchers have used a variation of Freeman’s definition of stakeholders (Rowley, 1997). Recently, the stakeholder theory developed a deeper focus on the importance of stakeholders in the long-term value creation for corporations (Morsing & Schultz, 2006).
17 Previous stakeholder- oriented theories have looked upon the influences of particular stakeholder groups on the corporate behavior (Mitchell et al., 1997 cited in Lee, 2011). As the stakeholder theory claims, corporations can change their social behavior in a response to the pressure of salient stakeholder groups whereas these pressures can have an influence on the decisions managers make (Lee, 2011). Academic literature has shown that being a stakeholder does not necessarily mean that you have a certain influence on corporations since various degrees of interaction, engagement and collaboration exists between corporations and their stakeholders, in which the most common approach regarding the stakeholder influence is a combination of the stakeholder theory and resource dependence theory (Lee, 2011). Lee (2011) claims that the influence stakeholders have on the corporation’s social behavior is based upon the relationships they have with its stakeholders and the degree of resource dependence between them.
Werther & Chandler (2010, p. 7) claim that CSR can be seen as “a vehicle for discussing the obligations a business has to its immediate society”, simply said; CSR points out the
relationships corporations have with its stakeholders. In the next section, the degree of importance and interaction with the stakeholders is further explained based upon the so-called stakeholder salience.
2.4.1. Stakeholder salience
As what Freeman (1984) earlier defined as stakeholders, Mitchell et al. (1997) argue that the degree of which managers give priority to stakeholder claims is based upon the stakeholder salience of the stakeholders (Angle, Mitchell & Sonnenfeld, 1999; Mitchell et al., 1997). According to these scholars, the way stakeholder demands can create priority to corporations is based upon the power, legitimacy and urgency these stakeholders have on corporations (Mitchell et al., 1997), whereby the salience is positively related to the cumulative amount of the three attributes (Angle et al., 1999). In Figure 1, the three attributes contributing to the stakeholder salience are illustrated.
18 Figure 1: Three attributes contributing to the stakeholder salience
Source: Mitchell et al. (1997)
Some scholars suggest that the power of a stakeholder is determined by the level of influence the stakeholder has in the corporate decision making, ranking from non-participation towards power to decide (Spitzeck & Hansen, 2010). According to Weber (1947), the power of a stakeholder is "the probability that one actor within a social relationship would be in a position to carry out his own will despite resistance" (cited in Mitchell et al., 1997, p. 865). According to Mitchell et al. (1997), the legitimacy of stakeholders can be seen as the degree to which their claims towards corporations are desirable, proper or appropriate whereas Philips (2003) claims that legitimacy is a socially accepted and expected structures of behaviors. Another attribute that determines the salience of stakeholders is the urgency of their claims which is the degree to which a specific stakeholder claim asks for direct action by a corporation (Mitchell et al., 1997). In addition to Mitchell’s attributes, Spitzeck & Hansen (2010) classified the power of stakeholders in the corporate decision making in two poles, on one hand non-participation whereby stakeholders have no voice in corporate decisions whereas in the other hand, stakeholders have power to decide.
One stakeholder group has received increased attention within corporations, the so-called non-governmental organizations (NGOs) (Kourula & Halme, 2008). Due to the rise of corporate scandals, a rise of this stakeholder group has taken place in which NGOs are seen as the voice of society in which they criticize the formation and implementation of the business- or government policies (Schepers, 2006). Recently, NGOs also known as “private, not-for-profit organizations
19 that aim to serve particular societal interest by focusing advocacy and/or operational efforts on social, political and economic goals including equity, education, health, environmental protection and human right” (Teegen, Doh & Vachani, 2004, p. 466), are becoming key players in the global governance alongside governments (Kourula & Halme, 2008). According to Doh & Teegen (2003), NGOs have become a vast statute in the political and economic landscape, whereby their role has been moved from a single stakeholder relationship with corporations and governments towards a more complex web of relationships between corporations, governments and
non-governments. As argued by Teegen (2003), international NGOs are playing an essential role in the protection of public and collective goods since these goods are not protected well enough by the governments and/or are exploited by MNEs (cited in Schepers, 2006). Previous study has shown that NGOs can have different functions and roles such as direct aid, advocacy and empowerment in which NGOs can be provider and an advocate (Schepers, 2006). Since the NGOs have grown in number and in power over the years, this NGO activism has led to several changes in the
corporate behavior and governance (Doh & Guay, 2006). According to Carroll (1991), these activist groups have become legitimate stakeholders of MNEs.
Since various degrees of power, urgency and legitimacy of stakeholders exist, the
following sections will provide deeper inside into the salience of NGOs on the CSR strategies and SSCM of MNEs.
2.5. NGO influence on the CSR strategy
Activist organizations of all kinds have become more aggressive and effective in bringing public pressure towards corporations (Porter & Kramer, 2006). Corporations are nowadays forced by various stakeholder groups such as NGOs, consumers and bankers to reduce their environmental impact on the environment (Ambec & Lanoie, 2008). Due to the increasing attention towards stakeholder interest, large corporations have noticed a shift in the public awareness and take action by developing CSR strategies in order to demonstrate their commitment (Burchell & Cook, 2013). As a result, MNEs have begun to use strategies in order to counter the pressures by issuing
20 various types of CSR reports (Schepers, 2006). According to Lee (2011), the impact of
stakeholders can shape how corporations construct their CSR strategy. In accordance, Munilla & Miles (2005) claim NGOs can force corporation to take a certain position towards their social responsibility. Therefore, the CSR strategy-making in corporations unavoidably includes an evaluation of what stakeholders require, expect or desire of them (Carroll, 1991). This notion of CSR has caused various domination positions in the academic literature. According to Friedman (1970), the only social responsibility of corporations is to increase its profits, the so-called stockholder theory. In contrast, other scholars claim that corporations should take both economic and social responsibilities since stakeholders have an interest in the corporate development, as previously explained by the stakeholder theory (Arrigo, 2013). According to Freeman’s definition of the stakeholder theory, managers cannot solely focus on the needs of the stockholders or the owners inter alia the shareholders of the corporation, since the engagement in CSR activities that non-financial stakeholders find important, can be lead to benefits to the corporations (McWilliams, Siegel & Wright, 2006).
Within the academic literature, different models exist to define what kind of CSR behavior corporations adopt as a result of this responsibility. According to Porter & Kramer (2006), two types of CSR responses of corporations can be observed, namely responsive CSR whereby corporations are acting as good citizens as a result of the growing social concerns of stakeholders in which they mitigate the existing negative effects from their business practices; and strategic CSR where corporations move beyond the fact of being a good corporate citizen and mitigate the harmful value chain impacts. In the latter case, corporations can earn clear benefits for engaging in CSR (Husted & de Jesus Salazar, 2006).
According to Kourula & Halme (2008), philanthropic activities, CR integration and CR innovation can be detected within corporations. In case of philanthropic activities, MNEs are putting emphasis on charities, sponsorship and voluntary activities whereby their main driver is to manage their reputation (Kourula & Halme, 2008). In addition, Godfrey (2005) claims that
21 corporations can follow strategic philanthropic activities whereby intangible moral capital is created by social welfare spending in order to protect themselves towards future stakeholder claims (cited in Sasse & Trahan, 2007). Corporations can also decide to integrate their CSR activities whereby they combine their responsibility aspects with their core business operations as result of external stakeholder pressures and the internal call for efficiency (Kourula & Halme, 2008). Moreover, corporations can also develop new business models which are beyond their core business in order to counter the environmental- and social problems (Kourula & Halme, 2008).
Furthermore, relationships and partnerships with the NGOs (ILO, Clean Clothes Campaign, Redress) can be built by MNEs as a response towards the claims of NGOs. In this respect, MNEs can obtain certain benefits such as improved brand image and - reputation, risk management by preventing negative public confrontations and avoiding regulation (Kourula & Halme, 2008). According to Nijhof & de Bruijn (2008), the involvement of NGOs in stakeholder dialogue and joint partnerships is crucial for corporations in order to control the risk of negative publicity, boycotts, court procedures and more. Furthermore, Kourula (2006) claims that various engagement forms with NGOs can be observed, such as sponsorships to which financial support is provided to NGOs, systematic dialogue with NGOs or strategic partnerships through agreements to achieve common goals in the future (cited in Kourula & Halme, 2008). Additionally, MNEs can also decide to adopt a mix of strategic CSR initiatives to alter its portfolio such as through environmental or social audits, whereby its success depends upon the credibility of these reports (Schepers, 2006).
2.6. NGO influence on the SSCM
Aforementioned, SSCM has gained increased attention from scholars and practitioners. Increased pressures from various stakeholder groups such as governments, NGOs, employees, society has led to a growing demand for environmentally friendly practices (Vachon & Klassen, 2006). Recent studies have shown that various stakeholder groups can trigger corporations to incorporate sustainability into their SCM whereas these pressures can only lead to sustainable supply and
22 production when both the corporation and the supply chain have the necessary resources which are essential to implement SSCM processes (Ageron et al., 2012; Gold et al., 2010).
Previous study has shown that MNEs respond to these pressures by implementing & defining systems and procedures to which the suppliers within the supply chain should comply with (Andersen & Skjoett-Larsen, 2009). Within the literature, certification and collaboration are seen as the best practices which received the most attention in sustainability practices (Pagell & Wu, 2009). According to Pagell & Wu (2009), supplier certification and collaboration with suppliers and consumers are seen as components to create an environmental sustainable supply chain. Most studies argue that most notable element in the CSR approach of MNEs regarding their supply chain is the exercise of corporate Codes of Conduct whereas the Code of Conduct is seen as a document which portrays the number of environmental- and social standards the suppliers should comply with (Andersen & Skjoett-Larsen, 2009). According to Kolk, Van Tulder &
Welters (1999, p. 151), Code of Conduct “encompass guidelines, recommendations or rules issued by entities within society (adopting body or actor) with the intent to affect the behavior of
(international) business entities (target) within society in order to enhance corporate
responsibility”. According to these scholars, Codes of Conduct are implemented in order to anticipate or prevent regulation. In addition, other scholars claim that corporations implement the Codes of Conduct to reveal their CSR activities and use it as way to avoid pressures from
different stakeholder groups (Andersen & Skjoett-Larsen, 2009).
According to Pagell & Wu (2009), corporations can also decide to collaborate with
suppliers and customers in order to create a sustainable supply chain. Both, Van Tulder and others recognize the importance of dialogue with suppliers and working towards partnerships since this has a positive influence on the development of social responsibility in the supply chain (Spence & Bourlakis, 2009). According to Spekman, Kamauff & Myhr (1998), the collaboration among partners has become an important feature in the SCM sourcing strategies whereas the
23 collaborative behavior includes the partners in joint planning and processes which are beyond the less intensive trading relationships within the supply chain.
Ageron et al. (2012) claims that the selection of suppliers also play a major role in SSCM whereas the importance of suppliers is determined by selection criteria such as the price, quality, reliability, flexibility, suppliers certification, location and the length of relationship with suppliers.
Furthermore, according to Pagell & Wu (2009) and Ageron et al. (2012), MNEs can have different managerial orientations towards sustainability by either adopting an active approach in which corporations need to have a high alertness whereby they keep up with the new
sustainability techniques in which a strategic plan is required or a more reactive approach where no strategic plan is involved. A proactive stance is mostly adopted by large corporations in comparison with smaller companies which is seen as essential to supply management (Ageron et al., 2012). MNEs can also follow a more collaborative stance, which is based upon collaborative decisions between the corporations and its partnering companies or suppliers within the supply chain. In contrast, MNEs can also decide to follow an individualistic approach however it is not a long-term perspective and there is no support from suppliers (Ageron et al., 2012).
2.7. Concluding remarks
Since MNEs in the apparel industry are known for their complex global supply chains with many manufactured suppliers, they need to cope with challenges of how to monitor the working
conditions in their supply chain (Arrigo, 2013). As a result, these MNEs are pressured by various stakeholder groups to incorporate the triple-bottom line of social , environmental and economic responsibility into their operations and their supply chain (Tate et al., 2010). Previous literature suggests that MNEs respond towards this by adopting CSR strategies in order to demonstrate their commitment towards society (Burchell & Cook, 2013). In addition, previous literature also has shown that NGOs can trigger MNEs to incorporate sustainable practices within their supply chain management (Ageron et al., 2012; Gold et al., 2010).
24 In this respect, the challenges for MNEs in the apparel industry are regarding responsible sourcing and the management of the overall systems and processes. Since a key area of CSR is the extent to which corporations manage their supply chain responsibly (European Commission 2014), this research combines the theoretical constructs of both the CSR and the SCM where the aim is to explore whether NGOs influence the CSR strategies MNEs follow and how they manage their supply chain in a sustainable way. Since the CSR hype initially started in the apparel industry, this research will contribute to the existing knowledge by investigating to what extent the pressures issued by the new salient stakeholder group influence MNEs in this specific industry and what kind of effect it has on the CSR strategies and the SSCM of corporations.
Building on the insights from the theoretical constructs above, the next section will define the working propositions of this research derived from the literature described above.
25 3. The working propositions
Building upon the key blocks discussed in theoretical framework, this section will discuss the working propositions (WP) of this research. Aforementioned, both CSR and SSCM have become major topics within the IB literature. According to the literature, various degrees of CSR
engagement of corporations exist. MNEs can either decide to adopt a responsive- or strategic CSR approach, whereas in the latter case MNEs are moving beyond being a good corporate citizen and mitigate harmful supply chain effects (Porter & Kramer, 2006). Regarding the CSR strategy, MNEs can either choose to adopt a global CSR strategy that applies to all the countries they are active in or take a more fragmented approach in which they adapt to the local demands of each host country (Muller, 2006). Other CR actions noticed in the CSR literature, are philanthropic activities. Through this way, MNEs are engaged in voluntary actions, donating or social welfare spending. Additionally, MNEs can also decide to integrate the CSR activities in the normal course of the business whereas through CSR innovation MNEs are creating new business models to comply with their CSR responsibility (Kourula & Halme, 2008). Furthermore, MNEs can also engage into relationships with stakeholders groups or implementing environmental and social audits to respond to stakeholder pressures.
Moreover, recent studies showed that stakeholder groups can trigger MNEs to incorporate sustainability in their supply chain in order to achieve a sustainable supply chain. Within the academic literature, different approaches of MNEs exist to manage their supply chain ,whereas the most commonly used approaches are through collaboration with suppliers and supplier certification. MNEs can choose to engage in partnerships or adopt Codes of Conducts, environmental standards, procedures or guidelines as a certification method to maintain a sustainable supply chain. Furthermore, the selection procedure of suppliers within the supply chain also play an important role in the SSCM. Within SSCM, different managerial orientations are recognized where MNEs can either decide to take an active-, reactive-, proactive-,
26 The aim of this research is to investigate the extent to which NGO influence the CSR strategies and the SSCM of MNEs. The working propositions in this research are based upon the two main themes discussed in the theoretical framework; the CSR strategy and the SSCM.
Theme 1 : NGO’s influence on the CSR strategy
Aforementioned, the increased NGO activism and power has led to several changes in the corporate behavior around the world (Doh & Guay, 2006). As a result of this, MNEs are taking action by developing CSR strategies in order to demonstrate their commitment towards the society (Burchell & Cook, 2013). In this respect, Carroll (1991) claim that corporations should unavoidably include an evaluation of what stakeholders require, expect or desire in their CSR strategy- making. Building upon these findings, the first working proposition in this research will be;
WP 1: MNEs take NGOs into account in their CSR strategy.
Foreseen in Muller’s study (2006), MNEs can decide to either adopt a global CSR strategy where the corporation implements a strategy which is applicable to all countries they are active in or choose to take a more fragmented approach by adapting to the local demands of each host country through a local CSR strategy. Previous scholars claimed that MNEs should use the same typology of integration and responsiveness strategies of Bartlett & Ghoshal with respect to the CSR issues in host countries (Husted & Allen, 2006). In addition, according to Muller (2006), pressures from host-country stakeholders to corporations leads to the adoption of local CSR strategies. Hence, the second working proposition in this research will be;
WP 2: NGO pressures in a host country leads to local CSR adaption;
Previous literature has shown that MNEs are building relationships and partnerships with NGOs such as the international labor organization (ILO). Scholars have claimed that MNEs engage with NGOs in order to retain their brand image or brand reputation, to control their risks and prevent regulation (Kourula & Halme, 2008). In addition, according to Nijhof & De Bruijn (2008), MNEs are able to control their risk of negative publicity, boycotts and procedures through constant
27 dialogues with NGOs and joint partnerships. Building upon these findings, the third working proposition will be;
WP 3: MNEs collaborate with NGOs as a result of NGO pressures.
Theme 2: NGO’s influence on the SSCM
As previously discussed, MNEs can follow different approaches to manage their supply chain in a sustainable way as a result of NGO pressures on their supply chain practices. Foreseen in the academic literature, certification has received the most attention in the sustainability practices executed by MNEs. According to Andersen & Skjoett-Larsen (2009), the most notable element within the CSR approach of MNEs is the excise of corporate Codes of Conduct. According to these scholars, Codes of Conduct are used by MNEs in order to portray the CSR activities and use it as a way to avoid pressures from different stakeholder groups. Furthermore, Kolk et al. (1999) claim that most of the time Codes of Conduct are implemented in order to anticipate or prevent further regulation. Hence, the fourth working proposition will be;
WP 4: NGO pressures leads to the adoption of Codes of Conduct by MNEs to manage their supply chain.
As empirical evidence has shown, MNEs are collaborating with suppliers and customers within their supply chain in order to create and maintain a sustainable supply chain (Pagell & Wu, 2009). As Spekman et al. (1998) claimed, collaboration among suppliers has become an important feature in the SCM sourcing strategies. According to these scholars, collaboration among
suppliers includes partnerships in joint planning and processes which are beyond the less intensive trading relationships within the supply chain. As previous literature suggests, working towards partnerships with suppliers can have a positive influence on the development of social
responsibility in the supply chain (Spence & Bourlakis, 2009). Hence, the following working proposition is;
WP 5: MNEs are collaborating through partnerships with suppliers as a result of NGO pressures on their supply chain practices.
28 Previous scholars suggested that MNEs can have different managerial orientations towards their responsibility of their supply chain (Ageron et al., 2012; Pagell & Wu, 2009). According to these scholars, MNEs can choose to decide to take an active-, reactive-, proactive-,
individualistic- or collaborative approach towards their SSCM. Since the literature suggests that mostly large corporations hold a proactive stance towards their supply chain responsibility whereby they actively engage in new sustainability techniques and have a high alertness towards new sustainability issues, the following working proposition is proposed in order to see whether this is supported in a real-life case;
WP 6: MNEs are taking a (pro)active managerial orientation towards SSCM as a result of NGO pressures.
Table 1: Working propositions in this research
Theme 1 NGO’s influence on the CSR strategy
WP 1 MNEs take NGOs into account in their CSR strategy
WP 2 NGO pressures in a host country leads to local CSR adaption
WP 3 MNEs collaborate with NGOs as a result of NGO pressures
Theme 2 NGO’s influence on the SSCM
WP 4 NGO pressures leads to the adoption of Codes of Conduct by MNEs to manage
their supply chain
WP 5 MNEs are collaborating through partnerships with suppliers as a result of NGO pressures on their supply chain practices
WP 6 MNEs are taking a (pro)active managerial orientation towards SSCM as a result of NGO pressures
29 4. Methodology
4.1. Introduction
In this section, the methodology of this research is discussed. First of all, the research philosophy is described. Secondly, the research method through multiple case studies and the relevance of this method is explained. Thirdly, the case selection is described which is followed by Table (2 & 3) with key information of the selected cases. Lastly, the data collection method and the data analysis procedure are outlined.
4.2. Research philosophy
Within the process of conducting a research, the academic researcher can choose from a range of methodologies. Methodological distinctions are mostly focused upon the distinction of qualitative and quantitative research, whereas most of the time the type of research approach depends upon the context of the research and the nature of the questions asked. Through the choice of a specific research method, specific philosophical assumptions are underlined. According to Crossan (2003), positivist and the post-positivist assumptions determine the philosophic level of the research method. According to this scholar, the nature of the positivist philosophy is that an objective reality exist which is independent from the human behavior and therefore is not considered as a creation of the human mind (Crossan, 2003). Myers (2013, p. 38) claim that under the positivist philosophy “reality is objectively given and can be described by measurable properties”. Under the post-positivist philosophy, the reality is seen as multiple, subjective and mentally designed by individuals (Crossan, 2003). Most of the time, the choice for a specific research philosophy is mostly based upon the researcher’s assumptions about how they see the world, whereas the assumptions support the strategy and the methods used in the scientific research.
Ontology and epistemology are two important concepts that determine the research philosophy. According to Saunders, Lewis & Thornhill (2007), ontology appoints the nature of reality whereas it questions the assumptions researchers have about how the world operates and their commitment to certain views. Epistemology could be defined as the “theory of knowledge,
30 especially concerning the methods, validity and scope” whereas the positivist, interpretivist and critical are the underlying epistemologies that determine the qualitative research (Myers, 2013, p. 36).
In this research, a post-positivist approach is followed since the belief exists that the information published by the cases is subjective and mentally designed by individuals, whereas the information observed is influenced by the knowledge and values of the researcher.
4.3. Research method and relevance
The research method used in this research is through multiple-case studies. According to Yin (2014, p. 18), a case study can be defined as an “empirical inquiry that investigates a
contemporary phenomenon within its real- life context using multiple sources of evidence”. A case study is a qualitative data method where an in-depth analysis is made of a number of cases in order to investigate a research phenomenon. In this research, a qualitative approach is used whereby the case study is considered as the strategy of the research. By choosing for this methodology, multiple evidences can be used which results into a more holistic view of the research phenomenon (Fisher 2007; Yin 2014). Through the use of a qualitative research method, multiple data sources such as articles, press releases and reports could be used to overcome biases (Eisenhardt, 1989).
One of the reasons for choosing for this research method is because the case study data that is collected is fixed and publicly available. Furthermore, case study data is stable and specific while interview data can lead to response bias and unreliable results due to poor memory (Yin, 2014). As Miles & Huberman (1984) claim, through the use of qualitative data chronological flows, explanations and causalities can be detected within the different cases. Through this type of research, the researcher is helped to make interrelationships between the different factors (Fisher, 2007). Therefore, a multiple-case study design is chosen in this research since the case study data is fixed and stable and chronological flows, explanations and causalities can be observed within the cases. Moreover, through case studies it is possible to study a research phenomenon over a
31 certain time span. Since this research will collect data in a time span of five years, this research instrument is the most appropriate for this research in comparison to interviews since in case of interviews, the data collection would take years.
Within the process of conducting the research, multiple tests can be performed in order to evaluate the quality of the case study design based upon its validity and reliability. By performing these tests throughout the research, the quality of the case study can increase (Yin, 2014). The first test is performed in order to check whether the correct operational measures are used, the so-called construct validity (Yin, 2014). In this research, multiple data sources such as reports and newspapers are used in order to increase the construct validity. The second test is to test the internal validity, which concerns the causal relations and how certain conditions leads to other conditions. As Yin (2014) mentions, this is more easily concerned in causal– or explanatory studies. In this research, internal validity is ensured by pattern-matching of the single cases whereby the working propositions are tested based upon the characteristics of each case. The third test is regarding the external validity, which concerns the scope to which the findings can be generalized in this research. Here, the external validity is guaranteed by the theoretical replication logic of using multiple cases from different countries (Yin, 2014). Furthermore, the transferability of the findings are tested by the use of a cross-analysis (Riege, 2003). The last test is about the reliability of the research in which the repetition of the study will lead to the same outcomes. In a case-study research, the reliability can be guaranteed by following case study protocol. Here, the reliability is safeguarded by using the same data collection procedure for each single case, so the data can be analyzed in a consistent matter.
4.4. Case selection
In this research, a sample size of five single cases is used. According to Eisenhardt (1989), the case selection is an important aspect in order to build theory from the case studies since in these kind of studies, they rely on theoretical sampling where the goal is to select cases which are likely
32 to replicate or extent the theory. Therefore, the case selection process should be done carefully (Yin, 2014).
In this research, the Best Global Brand, 2013 Interbrand ranking list is used to define the Best brands within the apparel industry. The Interbrand’s best global brands is a complete list of the world’s most valuable brands (Interbrand, 2014). Two out of the five cases are coming from this list, this in order to check whether the size and brand image awareness of the different cases lead to different outcomes. Therefore, multiple cases with different company sizes are used based upon their international presence. Each single case represents a MNE in the apparel industry with multiple stores in different countries around the world with their home country in Europe.
Through the selection of these cases, different market segments within the apparel industry are represented; from low-end to high-end clothing. Moreover, another reason is because each single case has published a CSR and/or sustainability section on their corporate website whereas they all engage in the Global reporting initiative (GRI) of sustainability reporting. This GRI means that the MNE follows a world-wide reporting system that provides methods to measure and report sustainability-related impacts and performance (GRI, 2014). Through the use of a research sample with different company sizes and home countries but similar CSR initiatives, an interesting cross-analysis can be performed in order to see whether commonalities or differences exist between them.
In the Table (2) below, a company description of the selected cases is given. In Table (3), the CSR mission and vision of each single case is illustrated.
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Table 2: Selected cases in the apparel industry
MNE Zara H&M C&A Primark Hugo Boss MNE origin Spain Sweden Netherlands Ireland Germany
Company size 88 markets, 2000 stores, 133400 employees
55 markets, 3500 stores, 11600 employees
1575 stores in Europe, growing impact in Brazil, Mexico & China, 3500 employees
8 markets, 250 stores, 48,000 employees
1010 stores, 12,496 employees
Interbrand* Yes Yes No No No
Description of the company
ZARA is a major international clothing retailer who opened their first store in 1975 in A Coruña in Spain (Inditex 2014; Tokatli, 2008). ZARA is part of Industria de Diseno Textil (Inditex), a fashion retailer, that started in 1963 with making fashion for women. Inditex has now more than 6460 stores over the world (Inditex 2014; Tokatli, 2008). Todays, ZARA has more than 2000 stores in 88 countries in the world in which it tries to meet the needs of the customers while at the same time Inditex helps them to bring out their own ideas, trends and tastes (Inditex, 2014).
H&M, started with one single women’s shop in Västerås, Sweden, whereas it has now six different brands and 3,500 stores worldwide (H&M, 2014). Nowadays, H&M Hennes & Mauritz AB consists of six stand-alone brands such as; H&M, COS, Monki, Weekday, Cheap Monday and & Other Stories (H&M, 2014). Currently, H&M is represented in 55 markets all around the world, whereby they offer services in online shopping in 13 countries (H&M, 2014).
C&A was founded by Clemens and August (C&A Brenninkmeijer) in Sneek in 1841 (C&A, 2014). Since its start, C&A played an important role in the fashion industry by offering the latest fashion which is affordable and accessible to everybody. C&A’s aim is to offer products which are better and more sustainable for the customers and the communities in which they do business. Nowadays, C&A can be found in 1575 general and specialty stores throughout Europe (C&A, 2014). Since C&A is a privately-owned company, they strive towards long term perspectives. According to C&A , “The basis of our business practices are sustainability, fairness and trust,” (Press release, 2010).
The first store Primark opened was in Dublin in 1969 under the name Penneys. Nowadays, Primark has 250 stores in 8 countries in Europe (Primark, 2014). Primark is being part of the
Associated Britisch Food (ABF) group, which is a diversified international food, ingredients and retail group which has a sale of £13.3bn annually. Furthermore, ABF occupies more than 113,000 employees in 47 countries (ABF, 2014). ABF’s business model consist of five segments ; Sugar; Agriculture; Retail; Grocery; and Ingredients., in which Primark falls under their Retail segment.
One of the primary companies in the premium and luxury segment in the apparel industry, is HUGO BOSS. The HUGO BOSS Group focused on the premium segment of the apparel market for both men and women. The company is found in Metzingen, Germany whereby the Group now generates a net sale of EUR 2.4 billion based upon the fiscal year 2013, whereby HUGO BOSS occupies 12,496 employees worldwide (annual report, 2013, HUGO BOSS, 2014).
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Table 3: CSR mission & visions of the selected cases
MNE Zara H&M C&A Primark Hugo Boss
GRI* Yes Yes Yes Yes Yes
Description of CSR strategy (Mission & Vision)
Sustainability forms the basis of Inditex decisions. According to Inditex, sustainability is always present in their processes whereby they are inspired by their own commitment to sell ethical, safe and community- and environmentally-friendly products. Right to wear is seen as Inditex’s philosophy which is integrated in everything what they do. This Right to wear approach shows the quality seal they strive for. This quality seal is seen as an ambition and an everyday reality for Inditex. The aim of Right to wear is to guarantee the quality and the sustainability of their products and their value chain (Inditex, 2014)
The sustainability vision of H&M is to run their business operations in an economically, socially and environmentally sustainable way. According to H&M, in order to be sustainable, the needs of the present and future generations should be met. H&Ms aim is to continuously improve their CSR work. According to them, their responsibility is towards everybody who contributes to H&Ms success. This means that also people are included who are not employed by H&M. In order to achieve this, H&M works closely with suppliers to develop Code of Conducts and environmental- and social standards for the factories that produce H&Ms products. (H&M, 2014)
According to C&A, their strategy seeks to gain and preserve the trust of their stakeholders by taking responsibility for the customer safe products, of good quality which is of good value for money. Secondly they promote the sustainable development of the working conditions in their supply chain. Thirdly, C&A find themselves responsible for the communities in which they are active in. Additionally, C&A encourage to build awareness for the sustainability issues. Furthermore, C&A contribute towards the protection of the environment (C&A, 2014). Since Primark is one of largest clothing retailers in Europe, they are relying on partners like NGOs, trade unions, and other stakeholders to support and advise them to put their principles into actions worldwide. Primark strives to give mutual benefits to all who work with them and together with them. (Primark, 2014).
HUGO BOSS sustainability strategy contains the upstream processes. Besides, the strategy defines the initiatives and goals for internal processes and structures e.g. the reduction of the ecological footprint, a fair treatment of employees and the development of environmentally-friendly products through the use of natural raw materials. Their sustainability strategy consist of six fields of action whereby they are focused mostly upon the expectations of the stakeholders in these six fields. Their CSR strategy defines five fields of action; environment, employees, partners, product and society. The aim in all of the fields is to reduce the negative impacts HUGO BOSS can cause to the social and ecological environment as a result of their business activity (HUGO BOSS, 2014).
