Stakeholder involvement in CSR decision-making : an in-depth case study within a multinational apparel company to assess the quality of stakeholder management in practice

Stakeholder Involvement in CSR Decision-making.

An In-depth Case Study within a Multinational Apparel Company to

Assess the Quality of Stakeholder Management in Practice.

Name: Zhenqi Wang Student number: 10827269

Study: MSc Business Administration - Marketing

Institution: Amsterdam Business School / University of Amsterdam Course: Master’s Thesis

Abstract

This study puts deep insights into stakeholder definition, stakeholder salience and stakeholder management in CSR field within an apparel company. It first looks into company’s CSR initiatives (Bhattacharya, 2004) and maps key stakeholders based on stakeholder theories (Mitchell et al, 1997). Then Friedman & Miles’s (2006) ladder is applied to assess the quality of stakeholder management in reality. Researcher classifies key stakeholder groups to the company and further investigates the relationship between each group and the company. The aim of this study is to show how different stakeholders are involved in company’s CSR decision-making and try to assess the quality of stakeholder management in practice. In order to achieve these objectives, this study conducts case study and qualitative method to analyze the rich data source. There are several contributions of this study: a) Stakeholder theories are applied to practical case and the results of this research provide empirical support for the academic theories. b) This paper classifies specific stakeholder groups and discusses each group respectively in regards to stakeholder salience and engagement, providing a comprehensive understanding and assessment of stakeholder management quality. c) Based on the results, researcher found that both CSR initiatives and stakeholder salience drive the way of stakeholder engagement. Company actively engages salient and influential stakeholders who are highly related to the outcome of certain initiative and able to provide advisory.

With respect to company’s wish, researcher would keep the company name anonymous in this paper.

Abstract

2.1 Corporate Social Responsibility (CSR) ... 9

2.1.1 CSR definition ... 9 2.1.2 Role of CSR in organizations ... 10 2.2 Stakeholder Theory ... 12 2.2.1 Stakeholder Definition ... 12 2.2.2 Stakeholder Salience ... 13 2.3 Stakeholder Management ... 15

2.3.1 Stakeholder Dialogue and Engagement ... 15

2.4 Quality of Stakeholder Management ... 17

2.5 Conceptual Model ... 22

3. Methodology ... 24

3.1 Research design ... 24

3.1.1 Qualitative research ... 24

3.1.2 Case Study and Selection ... 25

3.1.3 Interview ... 27

3.2 Data Collection ... 28

3.3 Data Analysis ... 29

4. Empirical Findings ... 32

4.1 Role of CSR in the company ... 32

4.2 Stakeholder Definition and Salience ... 34

4.3 Stakeholder Management ... 37

4.4 Assessment of Stakeholder Management Quality ... 40

5. Discussion ... 45

5.1 Discussion of results ... 45

5.1.1 Stakeholder definition and Salience ... 45

5.1.2 Moderation role of CSR initiatives ... 46

5.2 Limitation ... 50

6. Conclusion ... 52

8. Appendix ... 57

Appendix 1: Interview ... 57

Appendix 2: Nvivo - Word Frequency Query ... 58

Appendix 3: Nvivo – Coding process ... 59

Appendix 4: Nvivo - Coding Results ... 60

Appendix 5: Internal Communication - CSR Survey ... 66

Appendix 6: Internal Communication - Internal Online platform... 67

Appendix 7: Internal Communication - Sustainable Evolution Highlight Report ... 68

1. Introduction

Decades ago, it is universally accepted that the success of business is determined by how much profit it can make (Fredrick, 1960; Friedman, 1970; Freeman, 1984). Originally, Friedman (1970) pointed out that the only social responsibility of a company is to maximize its business profit. Many scholars agreed on the primary role of profitability and prior this role above as a fundamental believe in their studies. Later on, scholars criticized this idea and argued with new concept of business sustainability. Public’s constant controversies on pollutions, human rights, wasting resources and environmental issues reshape companies’ social responsibilities. Thus, the trend of business sustainability leads to a new evolution of Corporate Social Responsibility (CSR). CSR is an emerging concept in business stem from US and has widely spread worldwide since then. CSR establishes economic, legal and sustainable goals for the development of a company (Elkington, 1998). With great concerns on ethics and sustainability, companies nowadays not only focus on the profit of business, but also the sustainability and benefits it can bring to the society and environment. Many companies consider CSR as part of their core value and launch various CSR activities to improve their CSR performance. The major stimuli to these activities can be seen into several initiatives, such as employee-based and environmental-related and community support initiatives (Bhattacharya’s, 2004).

Along with the development of CSR, the general definition of stakeholders remains consensus among different studies. Stakeholders refer to who affect and are affected

by companies’ decisions (Freeman, 1984), and can be divided into internal and external groups. In order to define key stakeholders, managers sort them into different groups depending on their attributes and salience (Mitchell et al, 1997). On the basis of stakeholder groups, managers communicate and engage with them through various approaches to further understand their concerns and wishes. The management of stakeholders is a complicated process that involves multiple styles of dialogues to listen to stakeholders’ voices. An effective management of stakeholders indeed helps managers understand their prior concerns, so that to make decisions to benefit both sides (Unerman & Bennett, 2004; Pedersen, 2006). Due to the complexity of stakeholder management, scholars put great efforts in assessing the practice and quality of stakeholder management in order to find an effective way of engaging different stakeholders (Greenwood, 2007; Friedman & Miles, 2006). Since different stakeholder groups exert different levels of effects on companies’ decision-making process, it is important to manage each group appropriately with proper methods of engagement.

1.1 Academic Relevance

Based on the theoretical development of CSR and stakeholders as mentioned, this paper contributes to the academic findings in three main ways. Firstly, it applies CSR initiatives (Bhattacharya’s, 2004) and stakeholder theories (Mitchell et al, 1997) into an empirical case. In this way, it helps identify CSR initiatives and values, and

perceive key stakeholder groups to the company. Secondly, this study identifies a research gap among stakeholder theories (Mitchell et al, 1997; Goodpaster, 1991), although stakeholders play an important role in companies, they are not necessarily involved in company’s decision-making process. It is found that CSR initiative is an important fact that influences stakeholder involvement, which moderates the relationship between companies and stakeholders. Company in fact combines public concerns with its own interests, and then decides they way of managing stakeholders. Thirdly, after identifying CSR initiatives and stakeholder management, this paper applies Friedman and Miles’s (2006) assessment ladder to evaluate the quality of stakeholder management in practice. The ladder helps to indicate the differences of stakeholder engagement and assess the quality of stakeholder management in real life case.

1.2 Practical Relevance

This paper also benefits managerial insights of stakeholder mapping and stakeholder management within different CSR initiatives. Firstly, it evaluates key stakeholders in a general way and provides a full understanding of stakeholder definition and salience according to an empirical case. Secondly, the study shows a moderate role of CSR initiatives in company’s stakeholder management. It helps CSR managers to perceive key stakeholders and suggests the way of engaging them into decision-making within different initiatives.

1.3 Research Question

Although it is clear that stakeholders play an important role in company’s CSR, not all of them are necessarily engaged in the decision-making process. As a matter of fact, managers identify key stakeholders and listen to their voices, then integrate stakeholders’ concerns with company interests to come up with CSR strategies that can benefit both sides. Thus, it shows a conflict that the engagement of stakeholders in fact differs among specific groups within different CSR initiatives. Previous studies only discuss the role of stakeholders generally rather than within CSR initiatives and fail to show the significance of them in specific situation. Due to the complexity of stakeholders, it is necessary to explore the practice of stakeholder management within a real life case to see the differences. The knowledge of the stakeholder management quality in previous studies also lacks practical application, especially when it comes to real-life cases.

In order to tell a full story of the relationship between stakeholders and the company, there are three main objectives of this research paper. Firstly, it tends to discover company CSR initiatives and identify stakeholder salience in general. Secondly, it narrows insights into specific stakeholder groups, and explore how stakeholder management differs among stakeholders within different initiatives. Thirdly, this study tries to assess the quality of stakeholder management, specifically the significance of each stakeholder in company’s CSR decision-making. To achieve these objectives, the following questions would be raised for this research paper: How different stakeholder groups are involved in company’s CSR decision-making?

a) Who are considered as stakeholders to a company? b) How are the key stakeholders evaluated?

c) How managers engage and communicate with different stakeholder groups? d) How is the quality of stakeholder management in practice?

In order to answer the questions, this paper conducts an in-depth case study as well as qualitative method to put deep insights into a practical case. Following the methodology part, the main findings of this empirical case will be explained. The findings and limitations of this study will be discussed in the later part together with a conclusion in the end.

2. Literature Review

2.1 Corporate Social Responsibility (CSR) 2.1.1 CSR definition

The concept of Corporate Social Responsibility has been developed constantly since it came up. It is originally defined in an economic level and then developed constantly to a moral level (Fedrick, 1960; Friedman, 1970; Carroll, 1979). Friedman (1970) argues that the social responsibility of enterprises is to maximize the profit of business. Government should be responsible for other social and environmental responsibilities rather than enterprises (Friedman, 1970). In later studies, many scholars agreed on this point of view and further suggested other responsibilities in the field of CSR. In addition to economic responsibilities, Carroll (1991) suggested philanthropic and moral responsibilities to further complete previous studies on CSR. The author presented a CSR pyramid, which prioritizes moral responsibilities rather than legal and economic ones of business. The Triple Bottom Line theory (Elkington, 1998) also represented the importance of ethical responsibilities by identifying three key evaluation of business, namely financial, environmental and social performance. “People, Planet and Profit” (3P) (Elkington, 1994) are regarded as the three main concerns in order to make sustainable business, meaning that profitability should not be made at the cost of natural resources for future generations. This argument about business ethics criticizes the original CSR definition by Friedman (1970). Rather than profitability, organizations should also be responsible for environment and human to

achieve ethical achievements in business. Upon to this fundamental theory, the key value of CSR started to shift from profits to ethics. Similarly, Waddock (2008) build an institutional infrastructure for CSR in terms of different initiatives. ‘Stakeholders, Society and Sustainability’ are identified as the core values in business, which set a higher standard of corporate responsibility. It asks companies to be trustworthy to stakeholders and satisfy their expectations, thus build good reputation and bring benefits the society in both ways.

2.1.2 Role of CSR in organizations

The performance of CSR is important and influential to both internal and external stakeholders. Bhattacharya (2004) points out the positive influence of CSR on stakeholders by raising six main domains of CSR initiatives, both internally (diversity, employee support, products) and externally (community support, environment, operations). The study highlights the importance of communication with stakeholders and finds out the positive reaction to these initiatives. Lately, Aguinis (2012) discusses the role of CSR in a multi-level from individual, institutional and organizational perspectives. The study points out a CSR-outcome relationship, specifically the outcomes of company’s CSR strategy are divided into internal and external categories based on whether it influences internal or external stakeholders. Internal outcomes refer to the benefits to employees, diverse employment and sustainable products. External outcomes refer to good reputation of the firm and the

benefits to environment and society by doing business in a sustainable way. The reason why CSR leads to these two outcomes is due to the relationship with different stakeholders, and the evaluation and principles held by stakeholders. Similarly, Isa (2012) also provides an overview of 10 major CSR categories, including both internal and external aspects in details (Figure 1). As can be seen in the table, each category is followed by several specific goals to improve company’s CSR performance.

Figure 1: CSR initiatives - Goal & Value

2.2 Stakeholder Theory 2.2.1 Stakeholder Definition

Along with the evolution of CSR concepts, stakeholders arouse increasingly attention from managers in long-term. According to a broad definition by Freeman (1984), stakeholders in CSR refer to ‘individuals and groups who affect or are affected by organizational objectives’. The author divides stakeholders into two categories, internal and external stakeholders. Internal stakeholders refer to those who are involved within a company, for example shareholders, board members and employees. External stakeholders refer to those who affect or are affected externally, for example supply chain society, government and communities. By having a good relationship with both stakeholder groups, companies are able to lower the risks and threats to profitability (Freeman, 1984). Schwartz & Carroll (1992) defines that a stake refers to interest, right and/or ownership, showing that a stakeholder could have one or more characteristics of these three. The study shows the legal rights of stakeholders who have a right to participate in company’s strategy making process. Later on, Rowley (1997) identifies stakeholders as ‘individuals or groups with a legal, economic, moral and/or self-perceived opportunity to claim ownership, rights or interests in a firm and its past, present or future activities.’ The author points out three main characteristics of legal, economic and moral attributes, which is also in line with the Triple Bottom Line theory in CSR (Elkington, 1998) and the definition of a stake by Schwartz & Carroll (1992) as mentioned. Overall, the general definition of stakeholders reached a

2.2.2 Stakeholder Salience

Based on Freeman’s (1984) understanding of stakeholders, researchers continue to narrow and classify different stakeholder groups in later studies. Mitchell et al. (1997) study on the attributes and salience of stakeholders and try to categorize groups of stakeholders in terms of their degree of influences. The authors classify stakeholders according to three attributes, namely power, legitimacy and urgency. The three attributes combine and integrate with each other, thus lead to the salience of stakeholders (Mitchell et al, 1997). Power refers to the rights of stakeholders who are powerful enough to force companies to bring out desired outcomes (Pfeffer, 1981). Legitimacy is described 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’ (Suchman, 1995; Weber 1947). Legitimacy shows the proper and legal relationship between stakeholders and companies. For example, it could be combined with power and result in authority, in other words legality, to deal with practical reality issues. Urgency is an attribute that moderates the dynamic relationship of power and legitimacy attributes. As the word suggests, urgency arouse immediate attention from companies on the stakeholders’ voices. Due to the findings of stakeholders, latent, expectant and definitive stakeholders are concluded as the three main categories in stakeholder groups (Figure 2). Definitive stakeholders, having attributes of power, legitimacy and urgency, is the most salient stakeholder group. They interact with the company dynamically and are influential to the outcome. Expectant stakeholders are moderately salient groups including

dominant, dangerous and dependent stakeholders. Each group has only two of the three attributes, therefore shows different characteristics and exerts moderate influence to the company. Latent stakeholders are in the low salience consisting of dormant, demanding and discretionary stakeholders. Each group has only one attribute of the three therefore has lower impacts on companies than the other two. Additionally, researchers further sort and prioritize stakeholder groups based on the fundamental stakeholder theories (Carroll 1992; Rowley 1997; Mitchell et al, 1997). Madsen and Ulhoi (2000) specify stakeholders in terms of their salience and divide them into primary and secondary stakeholders. Primary stakeholders refer to those who directly affect or are affected by the decisions of companies, for example employees, shareholders, customers, suppliers etc. Secondary stakeholders refer to those who affect or are affected indirectly without the engagement with companies, for example society, government and communities. The classification of primary and secondary stakeholders helps managers to prioritize stakeholders based on the degree of influence on companies’ CSR.

Source: Mitchell et al, 1997

2.3 Stakeholder Management

2.3.1 Stakeholder Dialogue and Engagement

Stakeholder management refers to a dynamic relationship between stakeholders and companies rather than a single way of management from companies to stakeholders (Idowu & Filho, 2009). Bhattacharya (2004) also encourages organizations to consider CSR from a stakeholder perspective, thus strengths the relationship with them. By communicating and engaging with stakeholders, managers are able to learn and further understand different stakeholder perspectives on social issues (Unerman & Bennett, 2004). The communication process between companies and stakeholders is defined as ‘stakeholder dialogue’ (Burchell and Cook, 2008). Stakeholder voices

can reflect useful information, for example the major public concerns and customer interests. It shows the commitment and accountability of a company to customers by involving them into a dialogue (Noland & Philips, 2010). Such engagement of stakeholders with company is regarded as an action of corporate responsibility. Greenwood (2007) presents a stakeholder engagement model, showing the moral treatment of different stakeholder groups. The engagement involves different topics including high commitment human resource management (HRM), social reporting, fair treatment of stakeholders, etc. Therefore, an effective communication with stakeholders helps managers to learn these topics thus make a decision that can benefits both sides at the same time. However, it is a difficult job to manage stakeholders due to the complexity of multiple groups and opinions with different motivations. Although stakeholders play an important role in companies, sometimes they are not always necessarily involved in the decision-making process (Goodpaster, 1991). The author suggests that companies should not only identify and map stakeholders, but also further combine stakeholder voices with company’s interests, in order to decide whether to include or exclude stakeholders. Similarly, according to Pedersen’s (2006) study, there are three main steps to engage stakeholders into a dialogue. Managers first select core stakeholders to participate in the dialogue, and listen to their opinions of a certain topic that company is interested in. Secondly, stakeholders are involved in interpretation process to make sure their voices are understood in the right way. Thirdly, managers would filter the response and make decisions depending on the selected stakeholder voices and company interests.

2.4 Quality of Stakeholder Management

Arnstein (1969) raised a public involvement ladder with eight levels in terms of citizen power, degree of tokenism and level of participation of citizens in order to assess the quality of public engagement in social issues. Later on, Friedman and Miles (2006) provide a more comprehensive stakeholder management ladder based on previous ladder. The vertical categories of the ladder involve levels of participation, degree tokenism, involvement and power, showing the degree of stakeholder engagement. Rather than advocating a particular level, the ladder explains how company can adopt different levels of engagement in terms of different stakeholder groups. Level 1 to Level 3 shows no participation of stakeholders because they receive information from companies passively, without being engaged in decision-making process. Level 4 to Level 7 imply the tokenism that stakeholders are able to speak out their voices on the concerned issues, but not necessarily influence the final decision. Level 8 to level 12 indicates a highly involvement and empowerment of stakeholders in the decision making process based on the trust on stakeholders. The ladder also includes horizontal categories of engagement intention, level of stakeholder influence, and the styles of dialogues with stakeholders. Engagement intention reflects company’s objectives of engaging stakeholders, and indicates the way of involving stakeholders in different levels. Level of influence shows stakeholders’ different degree of participation in company’s CSR strategy and activities. Styles of dialogues

mainly consist of three kinds of dialogues, single-way, two-way and multiple-ways dialogues, which imply how company communicate with their stakeholders and reflect the concerns from stakeholders. Each dialogue is followed by several examples illustrating various approaches. These information presented in the ladder explain the differences of stakeholder management in different levels, and gives a full understanding of stakeholder management practice. To make it clear, the ladder can be seen as three main levels of engagement:

Low-level: Non-participation (lv.1 – lv.3)

Level 1 Manipulation & Level 2 Therapy: In these two levels, stakeholders are under the control of companies. They are engaged in a single way communication such as newsletter, reports to be merely informed about the company’s information through a one-way dialogue, such as newsletter, CSR reports, or publications. In therapy level, stakeholder’s opinions are easily ignored or being brainwashed by companies. Stakeholders who are managed in these levels do not have the actual power on the decision-making process.

Level 3 Informing: Similar to the last two levels, stakeholders also receive information from company in a one-way dialogue in this level. They still have very limit power on company’s decision-making process. The slight difference between this level and the last two is that manipulation on stakeholders is exclusive.

Middle Level: Tokenism (lv.4-lv.7)

Level 4 Explaining: From this level, stakeholders are engaged in a two-way dialogue, meaning that stakeholders are able to speak out their opinions. However, the power of

stakeholder voices on company’s final decisions are still very limit. In this lowest tokenism level, stakeholders are informed of company’s decisions, which have already been made, before publications release the news. From stakeholder perspective, this would lead to unproductive behaviors when they realize they have little power to influence the decisions.

Level 5 Placation: In this level, stakeholders are engaged before the decision is made, which implies a possibility that stakeholders could influence decisions to some extent. Stakeholders are able to tell their concerns, opinions and ideas, and accordingly, companies can collect and generate stakeholder voices. However, companies are still empowered in the decision-making process rather than stakeholders.

Level 6 Consultation: Stakeholders have relatively greater impact on the decisions as two-way communication is involved in this level. Stakeholder voices can be achieved by surveys and interviews, and they can suggest on and participate in the decisions. The relationship between stakeholders and companies is more dynamic than in previous levels.

Level 7 Negotiation: This level refers to a bargaining of power between stakeholders and companies, which only occurs before stakeholders and companies agree on a final outcome. The divergence is that companies expect stakeholders constantly provide valid support, but this kind of support is conditional. When conditions are not met, there is no support from stakeholders anymore and therefore negotiation happens. It occurs in both direct and indirect ways when either side of stakeholders or companies have superior advantages of the fact issues. Companies are still more empowered than

stakeholders if the value is on the company side. Stakeholders would have more power on the decisions in an opposite case.

High Level: Involvement & Power (lv.8 – lv.12)

Level 8 Involvement: In this level stakeholders are involved in the decision-making process through multi-dialogues, such as focus group and roundtable as level 7. The difference between these two levels is that there is less emphasis on the balance of power, but on a more serious level with the consideration of credibility and legitimacy. It comes more serious for stakeholders and companies are carefully considering and identifying pros and cons of those voices, therefore leads to a higher level of two-side communication and engagement.

Level 9 Collaboration: In this level, stakeholders and companies work for the mutual goals together that benefit both sides, which can be regarded as ‘strategic alliance’. It is widely arranged in various fields where stakeholder power can be endorsed. Collaboration usually brings benefits to both stakeholders and companies when they reach the same agreement on outcomes.

Level 10 Partnership: Partnership refers to ‘joint ventures, social partnership and joint committees’ between companies and stakeholders. This level involves more stakeholder groups both internally and externally, including clients, suppliers, society, etc. The difference between collaboration and partnership is the degree of focus on joint outcomes and joint process. This level involves company’s high trust on stakeholder groups and therefore result in the empowerment on stakeholders.

levels because they have the superior advantages of issued facts. In this level, the involvement comes to legal filed of equal rights for stakeholders and companies in decision-making.

Level 12 Stakeholder control: Level 12 is an ideal level for the relationship between stakeholders and companies. In this level, stakeholders have the majority representation of the decisions company made, meaning that they have the strongest power on the decision-making process than any level in previous. Different stakeholder groups have equal power to influence the decisions. Thus, it is defined as an ideal level of rather than a practical one that is not happen frequently in real life cases.

Source: Friedman & Miles (2006)

2.5 Conceptual Model

According to previous literature on CSR initiative, stakeholder theories and stakeholder management, there addresses a research gap that the ways of stakeholder

management depends on not only stakeholder salience or attributes, but also companies own interests. CSR initiatives are considered as a moderator that determines who to involve and influences the relationship between stakeholders and the company. A conceptual model is developed to clarify relationship among the three variables, namely stakeholders, CSR initiatives and stakeholder management. Friedman & Miles’s (2006) ladder will be applied in the last place to assess the quality of stakeholder management based on different initiatives.

Figure 4: Conceptual Model

3. Methodology

3.1 Research design

This chapter will give an overview of the research method, data collection and analysis of this study. This paper aims to investigate stakeholder involvement in company’s CSR decision-making process. In order to answer the main and sub research questions, this paper follows an empirical case study and qualitative analysis to put deep insights into the relationship between stakeholders and the company. According to Gill & Johnson (2010), research method is determined by the research question, therefore an in-depth real-life case of an apparel company would be conducted to benefits the insight. Then a qualitative analysis is followed to further analyze the contextual data to reach out the empirical results. Respecting the company wish, researcher would keep the company name anonymous in this paper.

3.1.1 Qualitative research

The research design follows Eisenhardt’s (1989) steps of process for case study method. The author suggests a logic development of a case study method, which is suitable for this research as well. Getting started. The research question is defined based on the theories of CSR, stakeholders and stakeholder management (Freeman, 1984; Mitchell et al, 1997; Friedman & Miles, 2006). Thus, researcher addresses a 'how' question to investigate the significance of specific stakeholder groups in company's decision-making process. Selecting cases. Since previous studies

mainly focus on the influence of general stakeholders, this research aims to narrow the insights into specific groups. Due to the complexity of stakeholder groups, it will further investigate how CSR managers sort stakeholders into groups, and how the various engagements with stakeholders differ among groups. Crafting instruments and protocols. In order to gain knowledge of the quality of stakeholder management in practice, this research conducts a practical case within a multinational apparel company. Researcher collects company’s CSR reports and interviews CSR manager of the company. Other internal communication materials are also collected for information. Then Nvivo is applied to code the interview, company’s CSR reports and internal documents based on a qualitative analysis. With such input of various sources for data triangulation, researcher is able to look deep into the stakeholder dialogues and levels of stakeholder participation in the company (Eisenhardt, 1989). Additionally, Tellis (1997) also suggests that multiple sources help to explain the complexities and increase the reliability of this research.

3.1.2 Case Study and Selection

According to Edmondson & McManus (2007), case study method is effective to address and explore ‘How’ and ‘Why’ questions in terms of the rich data of the source. Additionally, case study puts a deep insight into contextual details and helps to provide further understanding of the nature phenomenon (Yin, 2009). Clearly for this research, case study method is a suitable tool to analyze rich contexts of reports,

interviews to explore stakeholder management practice. According to Eisenhardt & Graebner (2007), a multiple case study is reliable and effective to the research since it provides a comprehensive base for theory building. The variety and richness of the data in multiple cases enhance the validity of the study (Eisenhardt, 1989). Therefore, a multiple case study with exploratory and snapshot design would be conducted for research objectives. Although this research takes a look back to the stakeholder management of the company from past couple years, the timeframe is still very crucial regarding to a multiple case study. In this chapter, researcher would explain why the company and the sources are chosen as a case study for this paper.

The selection of cases is also necessarily to follow a line of logical reasoning (Yin, 1984). The selected case is theoretically relevant to the research as it is in line with the literatures, namely stakeholder theories and stakeholder management (Freeman, 1984; Mitchell et al, 1997; Friedman & Miles, 2006). Researcher first looks into the clothing industry because it has a wide industry chain including textile, production, manufacturing etc., and has a close relationship with both people and society. The wide range of business makes it necessary to connect with different people and create potentials for the companies to do more in sustainability. Each aspects of the business challenge companies to be both profitable and sustainable for long-term development. The chosen company is a large-scale multinational company in apparel industry, who has its global business from production to selling among different countries. It is not only a leading company in apparel industry, but also an industrial leader in CSR field. It has an active relationship with its defined stakeholders and involves them into the

decision-making process in CSR (CSR report, 2009-2014). The company has launched its CSR programs since late 90s within each aspects of its business, including production, supply chain, people management, environmental protection etc. It has already achieved a great level of success in CSR filed, having partnership with third parties and also being a member of different social associations of sustainability (CSR report, 2009-2014). Researcher believes the great experience and success of the company would be a good sample to understand the role and significance of company’s stakeholders in CSR filed. Another important fact is that the company has its headquarter office in Amsterdam, where the data source is reachable to the researcher. The connections that researcher has with the company helps provide useful and valuable input to this study. Therefore, researcher decides to conduct an in-depth case study within this apparel company.

3.1.3 Interview

This research conducts a case study methodology, along with a qualitative analysis to investigate the relationship between a global company and its stakeholders. As part of the qualitative research, a semi-structured interview would be one of the most effective methods to generate rich data (Kvale, 1983). Interview is able to describe a ‘life-world’, which shows interviewee’s natural experience, feelings and actions of specific situations (King, 1994). Researcher would interview the CSR manager of this company to go through the questions regarding to stakeholder definition, stakeholder

mapping and stakeholder management. The manager has great passion in sustainability and has launched many sustainable programs within the company regarding to supply chain, production textile, different people in industry and third parties etc., both internally and externally. She has close relationship with third parties, including NGOs, local communities and other associations, which makes her able to provide professional knowledge about stakeholders from managerial perspective. During the interview, the CSR manager would first be asked to define and map company’s stakeholders and explain the mapping with reasons, for example the attributes and evaluation of different stakeholders. Based on the definition and mapping that interviewee answered in the first part, researcher would ask further about the way of dialogues and engagement with these different stakeholder groups. Specifically how the company engages and communicates with different stakeholders groups (Appendix 1).

3.2 Data Collection

As mentioned above, researcher collects data through company’s CSR sustainability reports, the interview with CSR manager, as well as the internal communication sources. The CSR sustainability reports are chosen as they indicate the ways of engaging stakeholders through various approaches. There are 6 CSR reports collected from 2009 to 2014, along with the company CSR statement and commitment. The reports are published officially within Global Reporting Initiative (GRI) guidelines,

which can increase the reliability of the data source. The GRI guideline standardizes and quantifies the company’s influence of CSR inside and outside the company. It enables audience to assess the impact of company’s CSR activities, such as environmental protection, stakeholder relationship, benefits to society, community programs etc. (GRI, 2014). The guideline also ensures the validity and reliability of the in formation in the reports. Companies disclose its CSR activities, strategies and impacts in the report and make it transparent to public. Besides the reports, internal communication materials, which are published and communicated only within internal stakeholders, are also collected for data triangulation (Eisenhardt, 1989; Ravenswood, 2013). The interviewee provides these internal communication documents for this study confidentially. The documents indicate the information about how company communicate with their internal stakeholders (Appendix 5, 6) and show the achievement of company in sustainability. (Appendix 7). The triangulation of data strengthens the analysis and therefore contributes to the findings. The internal communications include emails, surveys, newsletters, and highlight reports, reflecting the practice of the relationship between company and internal stakeholders. Additionally, it provides useful and trustworthy information about the activities and achievements within the company.

3.3 Data Analysis

and explore new possibilities based on the theories (Pope et al, 2000). The purpose of using inductive analysis is to summarize and categorize the raw data, as well as to link the research objectives with findings. In order to answer the research questions, inductive approach enables a different perspective to look back the previous phenomenon of a specific case. To deal with the large volume of data, Nvivo would be applied to sort and code the reports, interviews and internal communication documents. Nvivo is a useful tool in qualitative research, which is designed to help researcher organize and explore the relationship among rich contextual data. It is able to code various sources including audio, video, documents, captures etc. (Richards, 1999; Welsh, 2002). In total, 6 CSR reports, 1 interview, 2 shared commitments files and 3 internal communication documents are imported in Nvivo for further coding and analyzing. 6 CSR reports from 2009 to 2014, along with company commitments and internal communication documents are first imported in Nvivo. Additionally, The record of interview with company’s CSR manager is imported and transcribed as well. Before creating nodes, researcher run both word frequency and tree map query of all these sources to quickly generate the core ideas in the sources and broaden the views, thus lower the bias. Based on that, researcher creates several nodes, such as stakeholder definition, styles of dialogues and quality of stakeholder management for the further coding process (Appendix 3). After continuously reading the sources, researcher further specifies couple child nodes, such as internal / external engagement, attributes, evaluation etc. under the main parent nodes to differentiate the information. Overall, 23 nodes are created to classify and sort the contextual data into categories.

The segments of nodes helps to narrow the insights into a specific group and situation, therefore gives a clear overview to serve the empirical findings. Accordingly, researcher gathers the evidence by comparing and contrasting the information in multiple sources. Numbers of example quotes are assigned to each power node to enrich the explanation and description of the situation, thus contribute to the results.

4. Empirical Findings

This chapter contains the main case study findings in terms of the coding results (Appendix 4), it aims to discover the effects of CSR initiatives on stakeholder involvement and assess the quality of stakeholder management after all. The findings are based on three major theoretical studies, namely CSR, stakeholder theories and stakeholder management (Bhattacharya, 2004; Mitchell et al, 1997; Friedman and Miles, 2006). It first provides an overview of company’s CSR initiatives, showing the goals and value as well as the performance of CSR within the company. Secondly, it illustrates the definition and mapping of stakeholders to the company and points out key stakeholder groups specifically. Thirdly, researcher looks further into the way of engagement with stakeholders and differentiates the engagement in terms of the three initiatives. Lastly, by combining and contrasting the results, researcher tries to assess the quality of stakeholder management of the company. It provides a comprehensive understanding of how company define stakeholders, the way company engages them as well as the quality and outcome of stakeholder management.

4.1 Role of CSR in the company

The selected company is one of the world’s largest apparel companies, which is founded in 1881, and starts its CSR journey soon in late 90s. Standing at a leading position in the industry, the company reaches over $8 billion revenues in 2015

to the society. As indicated in the reports and interview, CSR is the core value within the company and follows a ‘top-down, bottom-up’ strategy, meaning that CSR is embedded in the company from the top management level of board directors to the bottom manufacturing level of labors (Interviewee, 2016). Looking into the goal and value, researcher finds that company’s CSR strategy mainly covers three aspects, namely people empowerment, community support and environment protection (CSR report, 2013-2014). In order to achieve these three main objectives, the company has launched various programs both internally and externally for a long period (Table 1). All these CSR activities reflect three CSR initiatives of the company, namely employee-based, environmental-related and community support initiatives, which also follows Bhattacharya (2004) findings.

Regarding to the employee-based initiative, company aims to provide not only a safe work place, but also a better life for all employees and workers. It has launched Leadership Development program for them to develop their career, as well as the wellness and benefits program for them to improve life qualify. In terms of environmental-related programs, the company integrates environmental issues into its own business, particularly in supply chain. It looks into ethical sourcing by promoting sustainable cotton, as well as emissions reduction by using energy saving facilities in offices, changing from sourcing to store throughout the whole business chain. With great respect to human rights, company also put great attention on working labors in supply chain, as well as the community where it operates business. Company joins various community associations and provides community with supporting programs

such as factory training for working labors, partnership with NOGs. All these activities exert positive impacts on both the people and environment, showing the company value of ‘paying back’.

Table 1: Company’s CSR initiative themes

4.2 Stakeholder Definition and Salience

The company involves groups of stakeholders in order to reach an agreement on the decision to complementing all these programs for certain initiatives. In order to lower the bias, researcher run the word frequency query in Nvivo for all the imported sources. The result of query indicates the most frequent words and implies the significance of the certain words (Appendix 3). By running the query, researcher finds

that associates, environment, supply chain and community are ranked as the four most frequent words within stakeholder theme.

Table 2 represents a general overview of stakeholder groups and categorizes stakeholder groups based on Mitchel et al (1998) stakeholder salience theory. The stakeholders are identified into different groups based on their attributes and characteristics in the company. The word associates, include all employees who work both par-time and full-time in offices and company warehouses (CSR Report, 2010), showing up 714 times referring to all sources. Therefore this group is considered as the most salient stakeholders among all. It can be regarded as a definitive stakeholder group since the company evaluates this group as a top priority and involve them actively in communications. Community, supply chain and environment show up around 346, 338 and 246 times respectively in the data sources. The reason they are considered as dependent stakeholder groups with moderate priority is because there are close connections and relationship among these groups. Each group does not show their salience independently but always collaborate with another groups, thus lead to a greater impact and significance on the company’s decisions. For example, the environmental and community issues are embedded in company’s supply chain. As a result, the company makes great efforts on fair labor for workers and ethical sourcing in supply chain, so that to lower the negative impacts on the environment and enhance the positive impact on the local community. Accordingly, industrial peers and NGOs, which are also considered as dependent group showing up their salience together with environmental and community issues as well. NOGs arouse company’s attention on a

certain environmental or community topic, and exert pressure on company’s reaction to the issues. Such cooperation has a great pressure and forces the industrial peers to influence each other positively in the industry. Surprisingly, the two other groups namely investors/shareholders and consumers/retailers show a relatively low impact and priority on the company. The company faces challenges to engage investors since they are not as desired as other groups on CSR issues (CSR Report, 2012). Investors are more interested in profitability and business performance rather than sustainability in the position. Consumers/retailers are in low priority because the ‘benefits to them result in a cost to the environment and community where they are sourced’ (CSR Report, 2014). The desired outcome of consumers/retailers could possibly leads to the threats to nature resources and wildlife. Therefore, the company put these two groups, which are defined as dormant and demanding stakeholders in a low priority.

4.3 Stakeholder Management

After looking into the CSR initiatives, stakeholder definition and salience, researcher further investigates how each group is managed by the company. By talking with the CSR manager of the company and coding all the sources, researcher realizes both company goals and stakeholder attributes determine the way of stakeholder management (Interviewee, 2016). The results will be discussed in terms of the initiatives internally (employee-based) and externally (environmental-related & community support), providing an overview of the stakeholder management (Table 3).

Employee-based initiatives

Referring to all sources, researcher surprisingly finds that only associates are engaged in multi-way of dialogues to make further decisions within employee-based initiative. Being regarded as the definitive stakeholder group, associates are empowered in the decision-making of employee-based benefits. They are actively involved in as they are influential and highly relevant to the outcome of this initiative. Associates can advice on the benefits to themselves, thus company is able to respond in order to satisfy their needs. For example, company provides speaker series to create chance for associates to talk with managers. In this way, associates are able to speak out their desire directly to their leaders and receive respond from them as well. Also, the

company also sends survey to associates regularly, asking associates about the experience of company’s CSR events (Appendix 5). Hence, it helps company to better understand the practice and opportunities of future development. Investors and other stakeholder groups are in low level of engagement as they are only been reported the outcomes and responded to their concerns on certain topic. The evidence shows that they are not necessarily involved in the decision-making process of employee-based outcomes.

Table 3: Stakeholder management – Employee-based initiative

Environmental-related & Community support initiative

As suggested in Table 4, it presents how defined stakeholders are engaged in the decision-making process of environmental-related and community support initiatives. Community, environment, industrial peers, NGOs and supply chain show a high level of engagement jointly. Specifically, environment and community raise public issues and arouse immediate attention from company and NGOs on the issues. Company

work on that lead to collaboration and partnership between the company and NGOs. Company seeks professional suggestions and advices from NOGs, having trust on their visions and beliefs therefore empower them in the decision making process. Additionally, company communicates with industrial peers directly to understand the concerns in the industry. Since they have a shared value with each other, such as ethical labor and sourcing, they are able to learn and influence each other through the communications. It can possibly lead to alliance among peers in the same industry. These stakeholder groups have a greater influence and pressure on company when they are shown up jointly. Supply chain also shows a high level of engagement as company actively communicates with them for advisory in order to improve the performance of sustainability. It leads supply chain a positive mediator to influence the society and environment as company embeds the environmental and community concerns into it. Associates show a moderately engagement as company involves them to provide support for the community. In this way, associates have a direct connection with the community, therefore implies a high level of involvement and influence in the process. By participating in activities themselves, associates are able to tell the truth and their concerns, thus help company to find the opportunity in community support. Additionally, the company actively communicates the results of achievement in environment and sustainability with associates via internal reports (Appendix 7). Thus, associates are not only been involved but also been reported in the decision-making of environmental and community initiatives. Investors and consumers are in low involvement as sometimes their wishes are against the benefits

to the environment and community. These two groups are only be reported and informed about the decisions of these two initiatives.

Table 4: Stakeholder management: Environmental-related & Community support initiative

4.4 Assessment of Stakeholder Management Quality

After stakeholder salience and management, researcher further evaluates the quality of stakeholder management within the case. The assessment is based on the stakeholder management quality ladder presented by Friedman & Miles (2006). The results provide an overview of stakeholder salience, level of engagement as well as

the perceived quality, indicating how each specific stakeholder group are managed in terms of different initiatives. Friedman & Miles’s (2006) ladder is applied to explain the differences and clarify different levels of stakeholder management quality.

Employee-based initiatives

Table 5 provides an assessment of stakeholder management quality regarding to employee-based initiative. As can be seen in the table, associates who are the most salient stakeholders are highly engaged. It leads to high level of quality - Level 11 Delegated Power on company’s decision-making process. In regards to this level, associates have equal rights to the company in decision-making. They are empowered as they have superior advantages of issued facts of employee benefits. The inputs from associates are valuable since it helps company shape the CSR strategy and activities. The outcome of employee-based initiative is most relevant to associates, thus company empower them in order to reach an agreement on the decisions. As a result, company achieves several goals and receives positive feedback from associates. “95% of our associates agree with the statements ‘I am proud to tell people I work for the company’ and ‘Overall, the company is a good place to work’.” (CSR Report, 2014).

Other stakeholder groups indicate low participation in the decision of this initiative. Investors and shareholders, who show more interests in profitability and performance, are regarded in Level 4 Explaining. They are informed about the decisions and able to speak out their opinions, however, there is no assurance that their voices would be taken into consideration. Consumers are only informed about the decisions in a

one-way dialogue, such as reports, newsletters etc. without direct participation. They are considered in Level 3 Informing since their unethical wishes, which are opposite to the benefits to employees, have been ignored.

Table 5: Quality Assessment – Employ-based initiative

Environmental-related & Community support initiative

Table 6 represents the result of stakeholder management quality within environment and community initiatives. Specifically, the dependent stakeholder groups, namely community, environment, industrial peers, NGOs and supply chain show greater impact in a collaborative way. The quality of managing these groups is evaluated as Level 9 Collaboration & Level 10 Partnership since they have joint power in the decision-making of specific environmental and community projects. They are highly involved based on the trust from the company, resulting in the empowerment of decisions. Company uses multi-ways of dialogues to communicate with them, such as

The definitive group, associates, however indicates a low level of engagement within the initiatives. Although they provide support for community by joining voluntary work, they are not necessarily engaged in the decision-making process. According to the interview (2016), company now focusing on sustainable strategy from business perspective to benefit environment and community. Due to associates’ lack of knowledge and awareness of sustainability, company sets strict goals and rules for them to follow rather than involve them in decision-making. As a result, associates are only informed about the decision and explained what to do to execute the decision. They are constantly educated the importance of sustainability, and are highly involved in the environmental and community support activities. Similarly, investors, shareholders and consumers are also in low level of engagement within these two initiatives. Investors and shareholders are in Level 3-4 under the educating, explaining and informing level, being informed about the efforts that company made on the environmental and social issues. In order to educate them the importance of sustainability, company tries to link sustainability to its payback in business. Company actively responds to their concerns and queries and shows the return of investment in environment and community. It leads to a better understanding for investors to see the pros and cons of the investment in sustainability. Consumers are ranked in Level 2 Therapy & Level 3 Informing, as they do not have direct participation within these two initiatives but only be informed about the decisions via reports, news, etc. indirectly.

Table 6: Quality Assessment – Environmental-related & Community support initiative

5. Discussion

This chapter will review the findings of the empirical case to discuss stakeholder involvement in company’s CSR decision-making. There are three main CSR initiatives of the selected company, namely employee-based, environmental-related and community support. Based on the three initiatives, researcher further discovers how the initiatives influence the ways of engaging each stakeholder group and aims to assess the quality of stakeholder management.

5.1 Discussion of results

5.1.1 Stakeholder definition and Salience

In general, the way company defining and mapping stakeholders is in line with the theoretical findings of stakeholder theories (Freeman 1984; Mitchel et al, 1998). According to all the 6 reports, the defined stakeholders remain same during the development of the company from 2009 to 2014. Overall, the company considers associates and investors as internal stakeholders, and environment, industrial peers, NGOs, community, supply chain, consumers and retailers as external stakeholders to their company.

The salience of stakeholders is evaluated based on Mitchel et al (1998)’s findings. Considering the three attributes, namely power, legitimacy and urgency, it is found that associates are highly prioritized to any other groups by the company. They have

great influence in the decision-making and arouse great attention from company to their voices. Hence, they are regarded as definitive stakeholder group who have dynamic relationship with the company. Community, environment, industrial peers, NGOs, supply chain are considered as dependent stakeholder group who have moderate effects on the company’s CSR decisions. They show less power respectively, but exert greater impact when they collaborate or partnership with each other. Thus they are categorized into dependent group who are able to affect the company in a collaborative way. Investors, shareholders, consumers and retailers are in a relatively low priority. Investors and shareholders, who are identified as dormant stakeholder group, have power to influence the decisions. However, they are not interested in CSR but the profitability that CSR can bring. Therefore, the company faces challenges engaging with them into constructive dialogues. Consumers and retailers are regarded as demanding stakeholders in a low priority as the benefits to them could possibly lead to costs to environment and community.

5.1.2 Moderation role of CSR initiatives

The CSR initiatives of the company follow Bhattacharya’s (2004) domains of CSR initiatives. The selected company has employee-based initiative internally, environmental-related and community support initiatives externally. As indicated in the results, stakeholders with high salience do not necessarily lead to high involvement in the decision-making. Specifically, the way of engaging stakeholder

differs depending on different CSR initiatives. Company is more willing to empower those who are relevant to the certain initiative and able to provide advisory. Company shares the same CSR goal with empowered groups and communicates with them through various approaches. Hence, it results in different levels of stakeholder management quality in company’s decision-making process. The results are in line with Goodpaster’s (1991) finding that companies not necessarily involve all stakeholders, but combine its own interests to decide whom to engage in decision-making. In this case, CSR initiatives are considered as company’s interests that affect the relationship between stakeholders and the company.

Influence of employee-based initiative in stakeholder management Model 1: Employee-based initiative

Employee-based initiative is one of the key values to achieve in order to benefit its internal employees and associates. It is found that only associates, who are most relevant to the outcome of such initiative, show a significant relationship with the company within this initiative. Associates are engaged through various approaches such as surveys, workshops and meetings etc. The company communicates with them regularly and asks them for advisory of their desired outcome. Thus, it leads to a great level of stakeholder management quality (Level 11 Delegate power) since they are highly involved through multiple dialogues and have equal rights to the company in decision-making. Rather than associates, investors, community, environment, supply chain and consumers are in low involvement within employee-based initiative. There is less evidence showing the participation of those groups, who are only be informed about the decisions and outcomes. Therefore, it leads to a low level of quality (Level 2-4, Therapy, Informing, Explaining) that they are only communicated through a one-way or two-way dialogue to be informed about decisions.

Influence of environmental-related & community support initiative in stakeholder management

Regarding to environmental-related and community support initiatives, more external stakeholders are engaged and their significances are shown in a joint way. Specifically, there is a dynamic relationship among community, environment, NGOs, and supply chain. They collaborate with each other, as well as the company itself, which result in greater power on specific environmental and community issues. The company communicates with them through multi-ways of dialogues in order to listen to their advises and satisfy environmental and social needs together with them. Company is willing to empower them as they are able to provide advisory on the certain initiative, and the outcomes of such initiative are influential to them directly. Therefore, it leads to good level of quality (Level 9-10, Collaboration and Partnership) indicating a joint power of these groups on the decisions. Conversely, associates, investors, shareholders, consumers and retailers are in a relatively low engagement

environmental activities by joining volunteer work, however they have less power on the decisions. Additionally some voices from consumers, which are against CSR values, have been even ignored as their wishes can possibly lead to costs of environment and community. Thus, it shows a low level engaging quality of these groups (Level 2 – 4, Therapy, Informing, Explaining) that they are be informed about the decisions but not actively involved in decision-making process.

5.2 Limitation

Lastly, there are several limitations of this study, along with suggestions for future study to put deeper insights into stakeholder management. The main limitation of this study is that the data sources are mainly from organizational perspective. It only focuses on the selected case and evaluate the quality of stakeholder management based on limit sources. Due to the limit connection with the company, researcher is not able to reach more CSR related departments, as well as stakeholders to generate their ideas. It is helpful to provide a full story to discuss the quality of stakeholder management from both organizational and stakeholder perspectives. Regarding to the research design, only qualitative method with case study and interview is used in this paper. Researcher would suggest conducting observation method as well to look deeper into the practice of stakeholder engagement and management within the company. Additionally, only the key stakeholders to the company in this case are inclusive for the study. Other stakeholders such as government, media are exclusive

in this paper. Researcher would suggest including more stakeholders in order to provide a full story of stakeholder management both internally and externally.

6. Conclusion

This paper aims to investigate the practice of stakeholder involvement in company’s CSR decision-making. It clarifies how different CSR initiatives influence the relationship between stakeholders and the company and assesses the quality of stakeholder management in reality. In order to answer the research questions, this study conducts qualitative research and in-depth case study to discover the stakeholder management practice in a multinational apparel company. The study provides empirical support for stakeholder theories, evaluating the salience of stakeholders and assessing the quality of stakeholder management. It is found that other than stakeholder salience, CSR initiatives also drive the way of stakeholder involvement, thus leads to different levels of quality. Within employee-based initiative, only associates are highly involved and show a significant relationship with the company. It leads to equal rights in decision-making between company and associates, thus indicating a great level of engagement quality. Within environmental-related and community support initiatives, NGOs, environment, community and supply chain are highly involved through collaboration and partnership with each other. They exert power on specific CSR projects jointly and result in a high level of engaging quality in decision-making.