Corporate social responsibility : implementation of CSR in a cooperative Dutch bank

Corporate Social

Responsibility

Implementation of CSR in a

cooperative Dutch bank

Reke Jonk

Student Number: 10119329 24-2-2015

University of Amsterdam Business School Faculty of Economics and Business Executive Programme of Management Studies

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Inhoud

2.1 Corporate Social Responsibility ... 8

2.2 CSR and strategy ... 9

2.3 Integrating CSR into strategy ... 10

2.3.1 CSR practice ... 12

2.3.2 Leadership ... 14

2.3.3 Sense-making processes ... 18

2.4 Leadership for explicit and implicit CSR: an integrative approach ... 19

3. Research design and methodology ... 22

3.1 Data collection ... 23

3.2 data analysis ... 24

4. Analysis and results ... 25

4.1 Hypothesis 1 ... 25

4.2 Hypothesis 2: ... 29

4.3 Hypothesis 3 ... 33

5. Discussion and limitations ... 38

5.1 discussion ... 38

5.2 Theoretical and managerial implications ... 39

5.3 Limitations and recommendations ... 39

6. REFERENCES ... 40

Appendix 1: Sample ... 43

1.1 List of interviewees ... 43

Appendix 2: Interview protocol ... 44

Appendix 3: Coding schemes ... 45

3.1 Explicit CSR ... 45

3.2 Implicit CSR ... 45

3.3 Transformational Leadership style ... 45

Appendix 4: Code matrix ... 46

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Preface

This master thesis provides an understanding about the existence of two different kinds of CSR, explicit and implicit, and the accompanying leadership styles in a leading Dutch cooperative bank. The focus of this thesis is on the (change) process of implementing CSR in daily banking operations and which leadership styles influence this process. The subject of this thesis stems from my personal interest in CSR, my professional background as banking professional and implementation expertise, but also from the turbulent and dynamic environment of the financial sector in the Netherlands in general and especially for the bank in this caswhich asks for a fundamentally rethinking of core values and their place in society. I would thank those who made this thesis possible. In particular those who inspired me in choosing the research topic and all participants in this case study for generously sharing their expertise and experience and in particular their openness about their view on CSR implementation and leadership.

Last but not least a big thank you for my wife and kids for granting me the time for not only writing this thesis but for the total two and a half years of this study.

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Abstract

Corporations increasingly consider Corporate Social Responsibility (CSR) as strategic for its business because of a variety of reasons like adding value to the company (Mackey et al., 2007) or creating a competitive advantage (Maxfield, 2008). Much of the literature on CSR has focused however on economic outcomes of the different CSR activities. The implementation and integration of CSR policy as a practice however is still a considerable black box in academic literature (Linnenluecke et al., 2007). Also Kolk (2011) addressed this issue by stating that “companies can have a great corporate policy but lack the implementation of that policy”. This research is an embedded case study and investigates the existence of explicit and implicit CSR and accompanying leadership styles in a major cooperative bank in the Netherlands. Findings confirm the existence of both CSR systems where explicit CSR and according autocratic leadership style is more dominant. Both CSR systems are necessary to implement CSR successfully. Transformational leadership is however required to manage the change process as well as the sensemaking process in integrating CSR in the daily activities of all employees. The research shows also how the bank has made substantial improvements in integrating CSR but also emphasize that there is still conflict between autocratic and transformational leadership styles. For future research it would be valuable to investigate organizations where CSR is already successfully integrated or follow those organizations over a longer period of time and explore which leadership styles are necessary are most useful in the different stages of the implementation process.

Keywords: Corporate Social Responsibility (CSR), banking, implicit CSR, explicit CSR, leadership, sustainability

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1. Introduction

Historically banks defined their responsibility to society in terms of making profit and maximizing shareholder value by also satisfying the needs of other stakeholders. From the late nineties however, banks acknowledged that stakeholders could affect the overall performance of corporations. This trend is enforced by the recent financial crisis caused by business models which excessively relied on wholesale funding which culminated in the fact that banks ‘can do no right’ in the eyes of consumers. Since the start of the financial crisis, the banking sector is changing radically due to increasing financial requirements and changing markets. In light of these changes banks endeavor more customer focus, more transparency and simpler products to regain trust of their retail customer base.

In most industries and sectors, corporations increasingly ‘do something’ about corporate social responsibility (CSR), merely caused by increased risk of activist attention. The increased corporate attention about such risks does not mean that their response is strategic or even operational but cosmetic (Porter et al., 2006) by launching media campaigns and public relations. However more and more corporations consider CSR as strategic for its business because of a variety of reasons like adding value or creating a competitive advantage. Considering that for consumers banking is a high-involvement service (important to the customer, risky, and infrequently purchased), their buying behavior is complex. In combination with the fact that customers stay loyal to their bank for a long time and that, for most consumers, banks seem all the same, CSR can become part of the decision making process when choosing a bank. CSR could be a possible way for organizations and banks to re-establish ties with their (potential) customers and improve their corporate image. The major banks however risk the cynical opinion of consumers who agree with the Public Relations Watch view that industry’s current infatuation with CSR is simply a response to ‘the worst orgy of corporate irresponsibility in the past half century’ (www.prwatch.org, 2006, (Pomering et al., 2008).

Much of the literature on CSR has focused on economic outcomes of the different CSR activities (Auperle et al. 1985; McWilliams et al., 2000). The implementation and integration of CSR policy as a practice however is still a considerable black box in academic literature (Linnenluecke et al., 2007; Bhattacharya et al., 2009). Also Kolk (2011) addressed this issue by stating that “companies can have a great corporate policy but lack the implementation of that policy”. Although organizations consider CSR more and more as strategic and central to their core business, organizations struggle with this effort (Lindgreen et al., 2009). Also research on how to actually exercise socially responsible behavior is hard to find. According to Cramer et al., 2006, Maon et al., 2008, Angus-Leppan et al., 2009, this is mainly because CSR implementation is a process of change within organizations that emerges through leaders’ sensemaking. However, the dynamic and practical aspects of developing a CSR orientation within an organization have emerged recently in the literature (Jonker and de Witte 2006; Lindgreen et al. 2009).

6 | P a g e According to Lindgreen et al. (2010), implementing a CSR orientation is important for almost any organization with consequences for overall business strategy. Existing guidelines for implementing CSR and the verifiable criteria for its success however still lack theoretical or empirical support, especially from a dynamic perspective. Porter and Kramer (2006) state that existing models and suggestions available to managers are unclear. The fact is, the prevailing approaches to CSR are so fragmented and so disconnected from business and strategy as to obscure many of the greatest opportunities for companies to benefit society. If, instead, corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed, it can be a source of opportunity.

Also studies into developing and implementing a CSR orientation focus on relatively limited aspects and dimensions (Maignan et al. 2006; Matten et al. 2003, Kotler and Lee, 2004). Nevertheless, there is still little guidance as to how companies can implement CSR activity in order to maximize returns to CSR investment. For example, whereas some authors argue that CSR implementation happening through either incremental or transformational organizational change processes (Dunphy et al. 2003), others argue that changes come by radical, transformational approaches (Doppelt 2003), in which ‘managers must fundamentally rethink their prevailing views about strategy, technology and markets’ (Hart and Milstein 1999, p. 32). Such studies illustrate the lack of resolution about CSR integration and development and which approaches will ensure the integration of CSR into the organization’s culture and strategy (‘corporate DNA’).

For studying the implementation process of CSR it is useful to take a look at the literature about the integration and implementation of business strategies in general. Swink et al. (2005) emphasize the importance for an organization to make corporate strategy and practices consistent with the internal and external requirements of the organization. Rapert et al. (2000) argue that strategy deciders consistently has to communicate the corporate strategy to all the members of the organization for implementation. The process of communication and sharing of knowledge through the whole organization (both top-down and bottom-up) will help to find value and non-value added activities and the creating of new knowledge, which in turn can improve the performance of the organization (Grant, 1996; Swink et al., 2005).

The preceding introduction makes clear that organizations need guidance in effectively integrating CSR into their organizations and especially aligning CSR and their core business. The integration of CSR is considered to be a major determinant of the success of an implementation and its components need to be implemented across all departments to become an integral part of the company (Klein and von Hauff, 2009). This research will add to the existing literature about integrating CSR in the core business of banking and especially try to fill the identified research gap which is also confirmed by the financial institution I work for, which stated: “within our organization we see a growth in CSR ambitions and the wish for implementation and integration of corporate CSR policy in line with the developments in society”. Since there is not very much literature on this topic and the fact that society more and more put pressure on banks to act in a responsible and sustainable way, I want to address

7 | P a g e this topic in my research. This provides me the opportunity to investigate how CSR policy can be successfully integrated in a large financial corporation and what the critical factors are in this process. The research question therefore is:

“how can corporate social responsibility be integrated in a financial institution?” To answer the research question the research will first describe the research context. Next, the theoretical framework will be described as well as the research method. The theory will build on existing literature about CSR, especially earlier work about leadership styles and CSR Practice (Angus-Leppan et al, 2009). The according hypotheses will be tested empirically via qualitative research in a leading cooperative bank in the Dutch banking sector. The chapters in which the findings will be analyzed and discussed will lead to a conclusion and an answer to the research questions.

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2. Theoretical Framework

This chapter can be considered as the theoretical basis of this research. While the first part focuses on defining CSR in this particular research context, the second part focuses on CSR integration and hypothesizes which leadership styles occur and influences CSR integration in the research context and which should be in order to integrate CSR into core banking.

2.1 Corporate Social Responsibility

The starting point in literature for the term “Corporate Social Responsibility” according to Carroll (1999) has been the book of Bowen (1953), Social Responsibilities of the Businessman’. Nowadays extensive research on CSR exists. Figure 1 provides an overview of developments in CSR research since the 1950s (Kakabadse et al., 2005). Views and definitions of CSR over time range from narrow perspectives like ‘the only goal of a company is to maximize its profit’ (Friedman, 1971) to broader views which describes CSR as ‘the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract’ (Jones et al., 2002).

A historical overview describes four phases of development in CSR literature. The first phase attempts to conceptually define and clarify CSR with a legitimization of CSR as a separate field of study (Carroll, 1973; Davis, 1976). The second phase handles about how organizations can respond to social demands. CSR in this phase is seen as a process with the emphasis on the operationalization of CSR (Freeman 1984, Epstein 1987) and spin-offs like stakeholder management and corporate social responsiveness. The third phase focusses on the

9 | P a g e ethical implications of CSR and the role of the social context of organizations and the role of leadership. The fourth phase attempts to describe effective CSR practices and creating shared value for the organization and its stakeholders (Porter & Kramer, 2006; Cramer et al. 2006). Nowadays we see a development from the traditional CSR views and definitions to a more broader perspective called sustainability. It is an analogy (Kleine and Von Hauff, 2009), to the Brundtland Commissions’ definition (1987) and defines corporate sustainability as ‘meeting the needs of the direct and indirect stakeholders (such as shareholders, employees, clients, pressure groups, communities etc.) without compromising the ability to meet the needs of future stakeholders as well. Towards this goals, firms have to maintain and grow their economic, social and environmental capital base while actively contributing to sustainability in the political domain (Dyllick and Hockerts, 2002).

2.2 CSR and strategy

Although academic researchers have published extensive literature since Bowen in 1953, it took quite a long time for companies to embrace the concept of CSR. Companies increasingly came aware of their responsibilities, partly due to government rules and regulations in answer to business malpractice and increasing awareness, concern and expectations of society in general and customers in particular. These responsibilities are also explained by Shahin et al. (2007) who explained that corporations have several responsibilities to fulfill. First, the economic responsibility to be profitable. Second the legal responsibility to comply with the law. Third, the ethical responsibility to do what is right and fair and fourth the philanthropic responsibility. Companies use in general four arguments in favor of CSR: the moral obligation to do the right thing, sustainability, license to operate and reputation. The license to operate approach is not only the most pragmatic because it identifies those issues important to stakeholders which facilitates dialogue with those stakeholders but it is essential. The essence today is legitimacy, or ‘the license to operate’, as perceived by customers, top-management and employees (Jarzabowski, 2005; Sharp et al., 2009). According to Suchman (1995) this strategic legitimacy is seen as an organizational resource used by management to promote the desired strategy. Jarzabowski makes the distinction between interpretative legitimacy which enable employees to understand what is considered right in an organization and structural legitimacy which refers to social components as integrated in structural practices such as routines, hierarchies and roles. Acknowledging this importance of legitimacy, corporations increasingly consider CSR as strategic for its business because of a variety of reasons like adding value to the company (Mackey et al., 2007) or creating a competitive advantage (Maxfield, 2008). According to Porter et al. (2006 ) CSR can be a source of opportunity, innovation, and competitive advantage. With strategic CSR companies will make the most significant social impact and reap the greatest business benefits. To accomplish this a substantial portion of its corporate resources and attention has to be assigned to CSR so it can achieve a competitive advantage over its competitors by lowering costs or better serving its customers. Porter and Kramer (2006, 2011) argue that companies do not focus on tension between business and society but on interdependence it can lead to CSR activities which are tied to strategy and operations instead of leading to an uncoordinated mix of activities with CSR label. Porter and Kramer (2006, 2011) introduces the term ‘shared value’ to demonstrate the interdependence of business and society. Both business decisions and social policies

10 | P a g e should benefit both by creating shared value. Every CSR business decision should therefore answer the question if it creates shared value rather than doing good on itself. By creating a social corporate agenda that is not only responsive to stakeholder needs, a substantial portion of corporate resources and attention must migrate to strategic CSR which is much more than just implementing best practices. According to Porter and Kramer strategic CSR addresses those (small) number of initiatives whose social and business benefits are large and distinctive. Strategic CSR includes both inside-out and outside-in dimensions so truly shared value can be accomplished. According to Porter & Kramer there are three ways to create shared value opportunities: by reconceiving products and markets, by redefining productivity in the value chain and by enabling local cluster development. In this way CSR can create future business opportunities by providing new disruptive technologies and business models which can also provide solutions for the problems society is facing today like poverty and pollution. Lindgreen et al. (2008) states that a strategic agenda for CSR must establish the main directions for the organization, the method by and extent to which CSR principles will be integrated in its structures and culture and the plan of actions associated with CSR strategic choices. Sharp et al. (2009) states that the strategic level of CSR activity can be measured by five parameters. First by evaluating the CSR status in the organization, secondly by measuring the number of CSR activity areas covered by the organization. Third, by measuring the level of internal communication and employee awareness concerning CSR, fourth by the existence of mechanisms to control and monitor the implementation of CSR activities and fifth by measuring the change in number of volunteers (an increase supports enhanced strategic position of CSR).

Acknowledging that CSR can be a source of competitive advantage and therefore declaring it as a strategic goal brings us to the question how CSR can be effectively integrated in an organization.

2.3 Integrating CSR into strategy

There is extensive literature about the positive correlation between CSR and financial performance. However little research is done to understand which factors lead to positive correlation between CSR and business performance. Critical success factors are the functions of areas where things must go right to ensure successful competitive performance for an organization. Literature also offer different frameworks for implementing CSR focusing on limited aspects like existing corporate norms and values and the importance of the role of stakeholders, for example the study of Maignan et al. (2005). Maon et al. (2008) provides an overview of existing frameworks about CSR implementation and concludes that the concept of process improvements is consistent in many of those frameworks. Because organizations evolve and act in different contexts they have different reasons to practice CSR activities that fit their culture, business perspective and strategic goals. Their management, on strategic and operational level, have to concretely execute commitment to CSR goals and practices but often those managers lack guidance and advice on various CSR implementation issues including organizational design, repositioning, communication and performance measures.

11 | P a g e Corporate social responsibility strategy development and implementation could be considered an organizational change process (moving from a present to future state, George and Jones, 1996). Its aim is to align the organization with the dynamic demands of the business and social environment by identifying and managing stakeholder expectations (Maon et al., 2008). Some authors argue that CSR implementation happens through either incremental or transformational organizational change processes (Dunphy et al. 2003), others argue that changes come by radical, transformational approaches (Doppelt, 2003). However it is all about organizational change where components like CSR leadership, CSR organization, corporate culture and mission, codes of conduct, internal communication and employee involvement are important factors to be integrated. Also the study of Sangle (2009) focus on identifying internal and external factors critical for successful implementation of CSR. Out of 20 factors, 6 are critical for success: integrating CSR with functional strategies of the organization, top management support, organizational ability to manage stakeholder groups, CSR investment evaluation/benefit realization, internal support and external support. Berger et al. (2007) claim that the key to the viability of the syncretic steward’s approach is the development of an vibrant and robust internal market. Success of integrating CSR in their view is importantly dependent on senior management which has to create significant demand for CSR behavior. In addition to Lindgreen (2008), Sahin and Zairi (2007) studied the role of leadership style for socially responsible organizations and they concluded that leadership style plays an important role in socially responsible organizations. Nelson (1998) and Zairi (2000) argue that companies that have started to make real improvements in CSR tend to share four characteristics. First, they rely on value based transformational leadership (sponsor-headed by the CEO and reflected in mission/vision and value statements). Secondly their commitment to learning, innovation and through networks and (global) partnerships. Third, stakeholder linkages and fourth performance levers. Perhaps the most helpful framework is provided by Maon et al. (2008) who developed, based on a multiple case study, an integrative framework to help guide managers and identify critical success factors for the CSR process. On the basis of three case studies, four stages in the process of developing and implementing CSR in an organization are identified which encompass nine steps. Additionally, they identified those factors that are critical to the successful development and implementation of CSR. These factors span the corporate, organizational, and managerial levels. On corporate level getting key people’s commitment (directors, owners, senior managers) and engaging participation of key stakeholders. On organizational level the fostering of the presence of moral/CSR champions and thinking in terms of long-term engagement rather than quick fix solutions. On managerial level recognizing the critical role of leadership. Porter and Kramer (2006) emphasize that the importance of integrating business and social needs takes more than strong leadership. It also requires adjustments in organizations and a shift from a fragmented to an integrated approach. Therefore value chain and competitive-context investments in CSR need to be incorporated into the performance measures of managers with P&L responsibility. Porter et al. (2011) state that it require leaders and managers to develop new skills and knowledge.

12 | P a g e Most studies about organizational change argue that leadership and top management support is critical for the success of integrating and operationalizing strategy and therefore integration of CSR into strategy as well.

2.3.1 CSR practice

Matten and Moon (2005, 2008) identify two competing approaches of CSR practice in organizations: explicit and implicit. They based this on the different ways CSR has evolved and was implemented in the USA and Europe due to the different institutional environments which addressed social issues and to differences in the social responsibility of business. The environmental systems consists of the political system, the financial system, the educational system and cultural system and differ between countries. These differences are an important factor in influencing the nature of the organization and the way an organization address CSR, explicit as well as implicit.

By explicit CSR is referred to corporate policies as a result of deliberate strategic choices (Porter et al., 2006) made by the organization. This type of CSR normally consist of voluntary, self-interest driven policies, programmes and strategies by corporations addressing issues perceived as being part of their social responsibility by the company and/or its stakeholders.

By Implicit CSR is referred to the entirety of a country’s formal and informal institutions assigning corporations some share of responsibility for society’s interests. It normally consists of values, norms and rules not necessarily of the organization itself but more due to trends in society which result in mostly mandatory requirements for corporations to address issues perceived by its stakeholders as part of their social responsibility. The organization in this kind of CSR is primarily reacting on a changing environment and is it not specifically a strategic choice.

13 | P a g e Table 1 provides an overview over both elements of CSR as defined here.

Matten and Moon explain that implicit CSR is part of the institutional framework of countries and regions and thus differs from country to country. They suggest that institutional theories form a good framework to explain ‘implicit’ and ‘explicit’ CSR in different contexts.

In their view this national business system (NBS) is the source of ‘implicit CSR’ as described earlier. They notice a shift from the implicit to the explicit CSR in Europe because of significant shifts in the institutional frameworks in many European countries as a result from some disjuncture in the wider system of social governance or national business system resulting from government / governance failures (Moon, 2002). On the other hand, new market imperatives or new social demands have led to significant changes in the organizational field of European companies legitimizing CSR as a new management concept in Europe. Similarly, the legitimacy of business became an imperative to prompt corporations to adopt a more explicit CSR to ensure their continuing ‘social licence’ to operate. Another motivation business imperative may concern the perceived threat of new unwelcome regulation. There might well be that part of the explicit CSR activities of companies consist in an active participation in changing and innovating the negotiated legal framework. Most significantly, however, is the role of the government in European CSR. Although by conventional definition, CSR is regarded as incompatible with governmental regulation, in Europe explicit CSR is a key issue for regulators. The general approach seems to facilitate a new trend in business and encourage companies to assume more responsibilities as most welfare states in Europe are increasingly facing limits to their capacities of tackling social issues in the way they traditionally did. Apart from these initiatives as a key actor in promoting explicit CSR in Europe, government still plays a significant role implicitly as they are deeply embedded in economic activities of business.

According to Angus-Leppan et al. (2009) a recent trend in academic literature about CSR is to examine the institutional drivers for CSR where CSR is seen as a product of emergent

14 | P a g e institutional forces (Waddock, 2008). In this specific area it is interesting to investigate the role of corporate leaders in CSR organizational initiatives and how sensemaking of these institutional drivers influence the organizational interpretation of CSR and leadership behaviors while practicing CSR, considering the engagement in CSR initiatives is a strategic choice (Matten and Moon, 2008). They argue that ‘neo-institutional’ drivers in the organizational field are increasingly shifting organizations to what they call ‘explicit’ CSR. In their article they differentiate between four levels of institutional drivers. First, national business systems (political, financial, education, labor and cultural systems), secondly, the organizational field. Third, the organization and fourth, the individual within the organization. The role of corporate leaders, officially appointed or emergent, brings us to the academic literature on leadership.

2.3.2 Leadership

There is a broad scala of literature on both leadership and Corporate Social Responsibility. First I will describe briefly existing literature on leadership and in the second part of this paragraph I will zoom in on leadership related to CSR.

Leadership

The key question in leadership research has always been how certain leaders are able to mobilize followers towards higher levels of motivation and collective goal pursuit. Reviewing literature shows that trends in theory and research focused in the 40s on ‘traits’ of leaders, such as physical features, and traits like dominance and emotional control, up to the 60s on leadership styles and from the 60s to the 80s on contingency where leadership was situation-depending. From 1990 on the focus has been on transformational leadership with keywords as vision, charisma and inspiration. DeRue et al, 2011, integrated trait and behavioral theories of leadership and developed a model where these were integrated in a model of leadership effectiveness. A main conclusion in their research was that leader behaviors, or what leaders actually do, tend to explain leadership effectiveness more than leader traits and that behavior mediate the relationship between leadership traits and leadership effectiveness. Important to note is that this style approach emphasizes that behavior can be learned. In this paragraph I will address some views on leadership behaviors from literature and will focus on three distinct types of leadership: authentic , transactional, and transformational leadership.

Authentic leadership is where leader behaviors keeps its integrity with personal values. This can be the case when something is not in the job description but when they are intrinsically motivated to show leadership in their job roles. Authentic leaders are aware of their own motivations and values which is not specifically the case for transformational leaders (Walumba et al., 2008). Transformational leaders aim to develop followers into leaders, whereas authentic leaders aim to develop followers towards personal authenticity, not necessary a leadership role.

15 | P a g e Burns (1978) and Bass (1985) argue that transactional leadership entails an cost-benefit exchange between leader and follower. The leader determines the strategy and goals including the way to achieve these goals. Followers receive certain valued outcomes (e.g., wages, prestige) when they act according to the leader’s wishes. According to Burns the exchange can be economic, political, or psychological in nature. The effects of transactional leadership are mostly positive and lead to satisfied employees, increased turnover and better performance.

Transformational leadership however goes beyond the cost–benefit exchange of transactional leadership by motivating and inspiring followers to perform beyond expectations (Bass, 1985). Transformational leadership theories predict followers’ emotional attachment to the organization and emotional and motivational arousal of followers as a consequence of the leader’s behavior (House et al., 1988). The effects of this type of leadership are positive such as high motivation and dedication, trust and loyalty in the leader, team spirit and high (financial) performance and productivity of leaders and their units. In general the positive effects of transformational leadership are greater than the effects of transactional leadership, especially in dynamic and changing environments. It works to change the organizational culture by implementing new ideas and promoting creativity and change where transactional leadership works within the existing organizational culture and maintains the status quo. Contrasting transactional and transformational leadership does not mean the models are unrelated. Bass (1985) views these as separate dimensions, which would imply that a leader can be both transactional and transformational. He argues that transformational leadership builds on transactional leadership but not vice versa. Transformational leadership can be viewed as a special case of transactional leadership, in as much as both approaches are linked to the achievement of some goal or objective. The models differ on the process by which the leader motivates subordinates and the types of goals set (Hater & Bass, 1988).

CSR leadership

The question however is in implementing CSR strategies what specific leadership theories and organizational processes can explain effective implementation of CSR. The definition of leadership which will be used is that leadership is “The ability of an individual to influence, motivate and enable others to contribute toward the effectiveness and success of the organizations of which they are members.” (GLOBE, 1997). According to the letter exchange between Waldman and Siegel (2008) there is very little mention of the role of leadership in the academic CSR literature.

Siegel (2008) argues that corporate leaders have an obligation to engage in ‘value-driven’ social responsibility only when such actions complement the firm’s business and corporate-level strategies. This corresponds with the opinion of Friedman who stated that the only obligation of a firm is to make profit. Waldman (2008) agrees but also takes note of the fact that even shareholders nowadays are increasingly demanding that their firms do well by doing good. He also states that seeing CSR as just another investment decision could lead to missing future opportunities to profit maximization. Findings of Waldman et al. (2006) found that

16 | P a g e CEO’s with strong economic values were not valued by followers as highly visionary compared to leaders with strong stakeholder values. Most of all, CEO’s with strong stakeholders values who were viewed as visionary were working in companies with better financial performance. Leaders with strong stakeholder values are also seen as ‘ethical’ leaders (De Hoogh and den Hartog, 2008) which, to a certain degree, has some overlap with transformational and authentic leadership which emphasize integrity (with personal values) and openness in doing ‘the right thing’. Waldman et al. (2006) call specifically for research that ‘‘consider[s] a broader array of leadership components and practices’’ (p. 1721), such as transformational and transactional leadership styles, as drivers of CSR practices and organizational outcomes. In their study they focus on management in general instead of just CEO’s. They extend existing literature by showcasing that transformational and transactional leadership styles both moderate the organizational outcomes of CSR, but in opposite ways. Transactional leadership enhances, whereas transformational leadership diminishes, the positive relationship between CSR and organizational outcomes. This finding accentuates the unique strength of transactional leadership in deriving business benefits from CSR.

Maximiano (2007) proposed a strategic integral approach to institutionalizing CSR. A SIA, particular the setting up of a strong CSR framework and a Value Based Leadership (VBL) can ensure the sustainability of CSR. The study reveals that VBL is the most important component in the integration of CSR into core business and personal values of managers appear to be significantly related to managerial decisions. A second definition of VBL is focused on transformative leadership based personal values, particularly moral values, and therefore nonmaterial values. This is according to Freeman et al. (1998) who opine that values form part of the foundation of strategic management. Maximiano offers a framework of how CSR may be institutionalized. Besides VBL in this framework, other critical success factors for implementing CSR such as having a strong CSR framework, a regulatory approach and public expectations are included.

Swaen et al. (2012) studied the roles of leadership styles in corporate social responsibility and concluded that firms with greater transformational (charisma and intellectual stimulation) leadership are more likely to engage in institutional CSR practices, whereas transactional leadership is not associated with such practices. Furthermore, stakeholder-oriented marketing reinforces the positive link between transformational leadership and institutional (strategic) CSR practices (CSR activities in the community and environment domains, such as giving back to local communities) and societal concerns in business decisions. Swaen et al. try to bridge leadership theories and CSR literature. Their research focus on how leaders, or managers, influence the firm’s strategic processes, such as institutional CSR. In their research, Swaen et al., expect transformational (but not transactional) leadership to inspire more institutional CSR practices, for several reasons. First, transformational leadership is associated with ethics, whereas transactional leadership is associated with utilitarian ethics (use of power, rewards and sanctions). Recent theoretical (Maak and Pless 2006; Pless and Maak 2011) and qualitative (Angus-Leppan et al. 2010) studies also suggest that transformational leaders are likely to exhibit ethical, or responsible, leadership behaviors such as protecting and advancing the interests of secondary stakeholders. In other words,

17 | P a g e transformational leaders’ broader view of the firm should stimulate organizational learning and foster institutional CSR practices that consider the needs and challenges of both primary and secondary stakeholders (Vera and Crossan 2004). Second, transformational leadership is intellectually stimulating and encourages CSR practices. Their broader view of the firm stimulates organizational learning and foster CSR practices that consider the needs of their stakeholders.

Swaen et al. expected that transactional (but not transformational) leadership will amplify the positive impact of CSR on organizational outcomes. First, societal impact, or the value provided to secondary stakeholders, is essential for institutional CSR to generate positive organizational outcomes (Bhattacharya et al. 2008; Du et al. 2008). Second, the effective implementation of institutional CSR requires a firm to capitalize on its core business competence to effect positive change (Kotler and Lee 2005; Porter and Kramer 2006, 2011). Leadership literature suggests that though transformational leadership is better at competence exploration (e.g., acquiring entirely new knowledge and skills), transactional leadership is better at competence exploitation (e.g., refining and extending current knowledge and skills; March 1991; Vera and Crossan 2004). This corresponds with Waldman et al. (2006) who stated that both styles moderate the organizational outcomes of CSR, but in opposite ways. Again, this accentuates that both styles seems to be needed in different phases of CSR implementation.

Their findings show that firms with greater transformational leadership are more likely to engage in institutional CSR practices, but transactional leadership is not associated with these CSR practices. Furthermore, stakeholder-oriented marketing reinforces the positive link between transformational leadership and institutional CSR practices. The findings emphasize the importance of organizational leadership in a firm’s CSR. Despite the well accepted belief that CSR is critical to firms’ ability to meet their stakeholder obligations and obtain sustained growth (Lindgreen and Swaen 2009), many firms struggle to promote socially responsible business practices and maximize the social and business returns to their CSR (Kotler and Lee 2005; Porter and Kramer 2006). Leadership styles play an essential role. Specifically, a transformational leadership style is best suited for initiating and designing socially responsible practices; transactional leadership is best suited for implementing and deriving business benefits from socially responsible practices. Since a ‘‘win–win’’ situation, by satisfying the business motives of the firm while also insuring sustained corporate investment

18 | P a g e in CSR, feeds into a ‘‘circle of virtue,’’ it appears that both transformational and transactional leadership styles are required for successful institutional CSR practices.

Quinn and Dalton focus on leaders in twelve US-based organizations that have formally adopted sustainability principles such as ‘‘The Natural Step’’, and have integrated those principles into their daily operations. They use a framework developed at the Center for Creative Leadership (2003), to discuss how leaders implement and maintain practices, systems and processes that promote sustainability in their organizations. This framework characterizes leadership as comprised of three tasks: setting direction, maintaining alignment, and building commitment (McCauley, 2000; Van Velsor and McCauley, 2004). The focus of their research is not on the skills or traits of effective sustainability leaders, but on understanding what leaders actually do to introduce and maintain sustainability principles and practices in their organizations. Also leadership is required in maintaining quality decisions, communicating goals, values and expectations while also motivating employees (loyalty and commitment).

2.3.3 Sense-making processes

Sense-making takes place when people are not able to use their normal routines and need to create new meaning to cope with reality (Weerd, 2001). Weick’s 2003 sense-making theory starts from the idea that people can only interpret an new phenomenon when they have determined its content. They construct the content in a subjective meaning creating (thinking) process. In organizations different people can interpret the same phenomenon in different ways. People gradually develop a collective frame of reference by sharing meaning with each other. This sharing of meaning takes place through individual and social activity. This sense-making process could offer a starting point to study the company experiences because CSR is usually still a comprehensive concept.

Jarzabowskis model (2005) introduces the distinction between interpretative legitimacy based on Weick’s 1995 study of sensemaking. It refers to ‘frameworks of meaning’ that enables individuals to understand what is considered right in an organizational community. Structural legitimacy refers to the social order displayed in structural practices such as routines hierarchies and roles. According to Jarzabowski, the value-centric nature of CSR requires interpretative legitimacy supported by procedural legitimacy in order for CSR practices to be widely adopted throughout the organizational community. The theory also describes a reciprocal relationship between management and the organizational community, in which the management has the power to shape but is also shaped by the organization. CSR activity was confined to a small group of employees who saw their values as distinct from those of the organizational community as a whole. This is indicative of a low level of interpretative legitimacy. Sharp concludes that there is a lack of resistance that may be attributed to the unique, value-centric nature of CSR activity. This value centric perspective is supported both

19 | P a g e by scholars who promote the ideological moral infrastructure of CSR as well as by the companies themselves that adopt the all-encompassing ethical stand of CSR.

2.4 Leadership for explicit and implicit CSR: an integrative approach

Building on the categorization of two competing approaches, implicit and explicit CSR by Matten & Moon (2005, 2008), Angus-Leppan et al. (2010) questioned if both CSR approaches (implicit and explicit CSR) can be found in a single organization and which leadership styles are linked to the organization’s attempt to make sense of the complex and ambiguous CSR concept. In their research, Angus-Leppan et al. (2010) examined the leadership styles that are most prominent in an organization coping with a dynamic environment in the sustainability space. Overall, they demonstrated the existence of two systems of CSR and leadership that are also in conflict: implicit CSR, values and authentic leadership versus explicit CSR, public relations and autocratic leadership. They found evidence for an explicit CSR, framed as strategy, as well as an implicit CSR, framed in terms of values. They also found evidence for authentic leadership alongside autocratic leadership. In essence their analysis found two opposing systems of CSR. It found implicit CSR as demonstrated through values and explicit CSR as demonstrated through organizational strategy. In addition, these two systems were linked through the concept of conflict, further indicating that conflict interlinked the two systems. Angus-Leppan et al. (2009) concluded that, at least in their case study of an Australian bank, explicit CSR was dominant, although there was also certainly evidence for implicit CSR. A second conclusion was that explicit CSR is not authentic because of the fact that explicit CSR is more related to behavior that is not authentic and, therefore leadership is also not authentic. A third conclusion was that in most cases, sense-making, led to the opinion that CSR is necessarily explicit. It needs to make or justify a business case or be ‘low cost’ to be acceptable at the bank. In general, implicit CSR versus explicit CSR can lead to conflict, confusion and a fear of greenwash as perceived by employees and management.

20 | P a g e Conflicting leadership styles for conflicting CSR systems. The organization in their case study exhibited both implicit and explicit CSR. The explicit CSR system was linked to autocratic leadership and public relations, and the implicit CSR system linked to authentic/emergent leadership and values. The figure above reflects the observations of Angus Leppan et al., that explicit CSR appears to have been operationalized through the strategic communication of CSR actions and that this was linked to an autocratic leadership style. In addition, the figure illustrates that implicit CSR is linked to a discussion of personal values and an authentic and/or emergent leadership style.

In essence, it seems that the bank exhibited two opposing styles of leadership that have been used to promote two different forms of CSR. Explicit CSR, due to its association with public relations, recruitment and processes, was closely linked to autocratic leadership where objectives, reports, targets and public indices were promoted. Implicit CSR, on the other hand, due to its relationship to personal values and action, was closely linked to authentic and emergent leadership where discussion, independent thinking and personal inspiration were encouraged. The authors suggest that transformational leaders may be needed alongside authentic leaders when implementing CSR initiatives, at least in some phases of implementation, for the key reason of their success in encouraging innovation through the questioning of ideas (Shin and Zhou, 2003). They also conclude that finding explicit and implicit CSR co-exist in a single organization is not at all surprising because explicit CSR is certainly a method of developing a business case for CSR. Implicit CSR does encourage staff

21 | P a g e engagement and commitment. Because they produce different organizational outcomes for businesses, it is not surprising that companies would want the best of both worlds.

It certainly seems likely that an explicit CSR system will always promote and come in conflict with an implicit CSR system, as also suggested by Matten and Moon (2005). It also seems likely that in the more hierarchical organization, explicit CSR will be linked with autocratic leadership and implicit CSR with authentic leadership. Therefore, further research should examine whether the combinations of these systems needs to be mediated through some other variable such as another style of leadership. It may very well be that transformational leadership, although not authentic, is an effective means of dealing with the conflict between the two types of CSR. Transformational leadership may be the key to moving conflict forward to debate and innovation, thereby, providing the innovation needed to produce ‘solutions’ and thus more sustainable business. Supposing that explicit as well as implicit CSR exists in this case study, I will investigate if they are necessary for successful CSR implementation, and that the potential conflict of both systems can be resolved by a transformational leadership style.

Hypothesis 1: explicit CSR (company policy, CSR business case) and the corresponding

autocratic leadership style exists in the organization and is necessary for successful CSR

Hypothesis 2: implicit CSR (Personal values and norms of leaders) and the corresponding

emergent authentic leadership style exists in the organization and is necessary for successful CSR implementation

Hypothesis 3: the potential conflict between implicit CSR (authentic leadership style) and

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3. Research design and methodology

As mentioned in the introduction, the aim of the research is to investigate what the critical factors are in the integration of CSR in a large financial corporation. Therefore this single case study will be conducted in a leading cooperative bank with a strong CSR profile in the Netherlands. As a cooperative bank, Bank A has no shareholders but stakeholders (members, employees and customers) and a relative unique governance structure. With over 2 million members and serving 10 million customers in 47 countries of the world, Bank A is nowadays the second largest bank of the Netherlands and ranks 29th of the top 100 World banks. Bank A was possibly the most trusted financial institution in the Netherlands, especially during the financial crisis since 2007. They had a substantial lead over their competitors but the Libor settlement in 2014 had a severe impact on the bank’s reputation, not only in the Netherlands but also worldwide. Various reputation indicators decreased to a significantly lower level. In recent years Bank A however still managed to evade the weak reputation of the financial sector compared to its competitors. Although Bank A lost their triple-A status, it is still one of the safest banks in the sense of financial stability and is even praised by NGO’s for its CSR policy (Global Finance, 2013). The CSR-ambitions of the company are ambitious: “the aim is to achieve a top-3 position in 2020 in the worldwide sustainability rating for financial institutions”. Based on the evaluation of RobecoSAM and compared to the banks listed in the global Dow Jones Sustainability Index, the bank’s score has fallen from 10th place in 2012 to 17th place in 2013. With the implementation of its new sustainability strategy, the bank expects to be able to achieve a higher score in future.

Both the combination of the CSR profile and the fact that it is a co-operative bank makes it a unique research subject on CSR. Besides that there are several practical reasons for choosing this bank as a research topic. First, I am an employee of Bank A which provides me with access to a large amount of primary and secondary data which can be used in the data collection phase. Second, my professional experience with (change)management and my interest in CSR makes this bank the logical company for conducting this research.

In this case study I conducted several interviews which in my opinion is a most suitable way to collect the data and which provides me the opportunity to both getting knowledge about other departments of the bank than in my regular work but also to get more information relevant to the research topic by using specific interview techniques.

This approach fits well to theory because of the nature of this open-ended exploratory study which is appropriate to a qualitative method which is in nature interpretative and inductive, open to unanticipated events, focused on naturally occurring, socially constructed processes and meanings (Gephart, 2004). It is an embedded case study (Yin, 2003) of CSR integration and practice in a leading Dutch bank. An exploratory study is useful when there is not much literature about the research topic, the relative freshness of it and when you are unsure about the nature of the problem (Saunders et al., 2009). Because of the nature of the research question, qualitative research is the most appropriate method. It can be used to explain observations by providing conceptual insights that reveal how theories operate in particular cases (Gephart, 2004). This differs from quantitative research which seeks to identify

23 | P a g e important relationships between variables by testing model based hypotheses. Qualitative research is the most appropriate research method for the topic ‘CSR integration’, because of the relative young field of research and the limited amount of available literature. I will investigate how this bank implements its CSR policy and the critical factors that influences successful integration. It should be mentioned that this methodology, using semi-structured interviews has implications for making generalizations in the sense that generalizing is virtually impossible (Yin, 2003).

3.1 Data collection

According to Yin (2003) each research strategy can be used for exploratory, descriptive and explanatory research. In this research proposal, a case study as strategy will be used. This strategy is appropriate if you wish to gain a rich understanding of the context of the research and the processes being enacted (Morris et al., 1991). A case study can be defined as ‘a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence (Yin, 2003). It is an embedded case study because the research will be conducted in a single organization but within this organization multiple departments will be investigated and therefore more than one unit of analysis (Saunders et al., 2009). They also explain three ways of conducting exploratory qualitative research. First, a search of literature about the topic. Secondly by interviewing experts in the subject and third by conducting focus group interviews. A combination of data collection techniques can be used in case studies like interviews, observation and questionnaires. I will use a combination of semi-structured face-to-face, on-to-one interviews and an investigation of available documents about CSR policy and integration within the organization to reach data triangulation and assuring research validity (Denzin & Lincoln, 1994). Semi-structured interviews, often referred to as qualitative research interviews (King 2004), has been conducted to gather valid and reliable data that are relevant to the research question. The used interview protocol is includes in appendix 3. Semi-structured interviews are helpful to find out ‘what is going on and to seek new insights’ (Robson 2002) and therefore useful in qualitative exploratory research. The interviews took place with a range of officially appointed and ‘emergent’ CSR leaders. The interviewees are directors and managers of local banks who are responsible for defining policy for the particular bank and who have CSR in their portfolio, CSR Team managers, Relationship managers, CSR team managers, marketing managers and Procurement advisors. Also interviews will be held with so-called ‘CSR-coordinators’ who have the operational responsibility for executing CSR activities. It is important to take into account the advantages and limitations of using interviews as data collection method. An advantage is that interviews provide the opportunity to explain their answers so you can get more depth to the obtained data. In this way a rich and detailed set of data can be collected. Limitations of the use of interviews is the risk of subjectivity due to interviewer and or response bias. The interviews will have a length of time of about one hour maximum and will be audio recorded and fully transcribed in the data analysis phase.

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3.2 data analysis

After data collection, the data has to be analyzed. I used the transcription technique to process the audio recorded interviews into text using the actual words. To get familiar with the data and also to assure that the transcription is accurate, I transcribed the interviews myself. A full copy of the transcript has not be send to the interviewee for a final check because in my opinion the risk of adjustments was be too big and could possibly lead to different data. The data is summarized to limit the amount of text (originally over 100 pages), categorized into categories defined during the review, and structured into a data matrix. Identified potential variables during the interviews will be used for structured coding. For a final content analysis, all the transcripts were be reread to be able to identify relevant themes about CSR implementation. This way the different perspectives and arguments of the interviewees can be combined to get insight about themes that go beyond individual meanings, or according to Spiggle (1994), ‘an interpretation of interpretations’. To improve the reliability of the research I will accurately describe the reasons about the research design, research strategy, methods and data so it will be possible for other researchers to reanalyze the data. It should be clear though that a qualitative, non-standardized approach is difficult, if not impossible to replicate (Marshall et al., 1999).

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4. Analysis and results

This chapter is divided in three sections, each paragraph focusses on one hypothesis. The coding scheme that forms the foundation of the analysis can be found in Appendix 3, the code matrix in Appendix 4 and an table of exemplary quotes in Appendix 4.

4.1 Hypothesis 1

Explicit CSR (company policy, CSR business case) and the corresponding autocratic leadership style exists in the organization and is necessary for successful CSR

Explicit CSR

As mentioned in paragraph 2.3.1, by explicit CSR is referred to corporate policies as a result of deliberate strategic choices made by the organization. It consists of voluntary, self-interest driven policies and strategies by corporations addressing issues perceived as being part of their social responsibility by the company and/or its stakeholders.

The data shows existence of explicit CSR in Bank A as described in company strategy, business cases and processes surrounding CSR such as reporting externally and internally on organizational values. Sustainability is one of four core values of the bank as formulated in their mission statement: “contribute to a sustainable development of society in economic, social and ecological sense”. The sustainability strategy states: “This contribution to sustainable development is established by professional employees for whom sustainability is an integral part of customer service. We integrate sustainability in our internal business and communicate transparent about our vision and activities”.

Based on the analysis I state that CSR is explicitly described om strategic, tactical and, in less extent, on operational level. On strategic level because it is described in mission, vision and activities of the organization and on tactical level because different central departments like ICT and the local banks integrate CSR in their strategic and multiannual plans. For example, one interviewee explained:

“CSR is a strategic priority in our strategic plan. It is about formulating Sustainability policy, including embedding sustainability in customer relations and in annual plans for departments and account managers” (Interviewee 2 )

However, just integrating CSR in vision and mission is not sufficient to mainstream CSR in an organization. Based on theory one could expect that integration of CSR is successful when it is incorporated into corporate culture and values as well as in organizational systems and processes. Also it has to be translated into values, activities and kpi’s on employee level. Most interviewees explained that to really integrate CSR in daily business, the company have to make clear choices in the core business of the bank, financing policy, especially in times when capital is scarce. These respondents argue that integration of CSR only can be called successful when it is fully incorporated in products and services but, more important, when the company has the courage to say no to (potential) clients when they do not meet the

26 | P a g e company’s standards and sustainability criteria. According to those interviewees there is still much to improve in making choices in who to finance. One interviewee for example quoted:

“you have to put your money where your mouth is, then you can make a difference and generate impact” (Interviewee 1)

This is also important because more and more clients choose their bank based on their own sustainability criteria. Being a real sustainable bank is therefore becoming more important as a license to operate and possibly for long term survival. The interviewees also mentioned the importance of discussing CSR with clients. The bank can help clients to become more sustainable by strategic dialogues about the current sustainability performance compared with the sector and assessments of opportunities and risks. Helping clients to improve their sustainability possibly lead to new market opportunities but also to business cases to improve their internal processes. According to the participants however, CSR still is not an integral part in every customer contact and is CSR only partially translated to the individual level of employees, at least in the (large) Corporate departments where account managers are obliged to fill in CSR-criteria when assessing a finance proposal of their wholesale clients. In many cases however this is merely an exercise enforced by information- and sales systems and not necessarily by intrinsic motivation. An exemplary quote:

“I have to fill this in BBS (sales system) including the Sustainability paragraph because it is obligatory and because the Audit Committee looks at it” (Interviewee 6) Overall the data demonstrated the integration of non-economic objectives and activities into employee activities is increasing but still needs a lot of further development.

To be honest, in core business I don’t see much of sustainability practices (Interviewee 10)

Organization of CSR

The Sustainability department is a staff department which supports the entire organization in formulating CSR policies and integrating CSR in client processes and operations, as well in the Netherlands as abroad. The department consist of three teams. Business development is responsible for supporting the local banks and the departments that focus on international activities in integrating sustainability knowledge, -networks and product solutions in customer processes. Team Policies, Risk and Reporting is responsible for implementing sustainability, risk management as far concerned with CSR, reporting about sustainability performance and communication. Team Commodity Chains & International Network focusses on the banks role in making food chains more sustainable and on providing access to knowledge and (international) networks.

In the local banks, management is responsible for CSR. They have the competence and authority to take crucial decisions about for example investments and financing decisions. Most local banks also have ‘Sustainability ambassadors’ which is not an specific function but a role. For most local banks this role is part of the department ‘Marketing, Communication

27 | P a g e and Cooperative’. These ambassadors are responsible for integrating CSR in the daily (commercial) activities. Opinions about the effectiveness of those ambassadors or teams of ambassadors differ between interviewees, depending of in which department they work, in the central organization or in a local bank. One interviewee (central department) explained critically that “the majority of those ambassadors were potential redundant and had no affinity with the business, but more with marketing and communication, so in general there are a lot ambassadors, but most of them have the wrong profile”. Most interviewees agreed however, also in the central departments, that having CSR ambassadors have added value in creating CSR awareness among employees and in discussions with Member Councils and clients. A positive quote from a local bank was “we have volunteers from all departments who have affinity with CSR and who want to attribute to CSR and the spreading of it in the organization”. Besides creating awareness there are also ambassadors doing sustainability pitches for (potential) large corporates, in that way helping and training account managers to integrate sustainability in their work.

The local banks still have a considerable amount of autonomy and therefore, within boundaries, are in the position to formulate their own CSR goals, often aimed at their specific role in the local community. This is also the case for formulating and integrating CSR objectives in performance management.

According to theory it is important to have an organizational CSR design, including fostering CSR champions or ‘emergent’ leaders, as a prerequisite for successful integration of CSR. But also then most studies found that managers and employees lack guidance and advice on different CSR implementation issues including organizational design, communication and performance measures. The data of this study show similar issues in Bank A. As one interviewee concluded:

“there is a large gap between staff and business”(Interviewee 1)

“It is still a search for making sustainability concrete and having the right tools for implementing. And that is what I miss”(Interviewee 5)

Leadership style

When looking at existing CSR and leadership literature we would expect that different leadership styles would exist in the different phases of CSR implementation. Swaen et al. (2012) expect for example that transactional leadership will reinforce the positive impact of CSR on organizational outcomes by creating value to stakeholders and the ability of an organization to gain advantages form exploring their core competences. Leadership literature suggests that transactional leadership is better at competence exploitation by extending existing knowledge and skills. This suggests that autocratic leadership is necessary, especially in the last phase of CSR implementation when CSR practices and organizational framework is in place, for deriving business benefits from CSR.

28 | P a g e While analyzing the data obtained from the interviews about prominent leadership styles in the bank, it is striking to ascertain that most interviewees state that the most commonly used leadership style within the bank is the autocratic leadership style. As one of the interviewees mentioned:

“the higher you climb in the tree the more authoritarian it is. And I think it's a big difference between what the organization wants and how the people of executive level behave”

(Interviewee 4)

As already mentioned, based on theory we would expect that this kind of leadership style (or transactional leadership style) would be useful, at least in some extent, to a successful integration of CSR and even in deriving business benefits form CSR. However only one interviewee mentioned that, depending on the situation, this leadership style is appropriate for successful integration of CSR:

“sometimes you have to use a stick and in other situations you have to use a carrot to achieve your objectives” (Interviewee 3)

Moreover interviewees stated:

“the authoritarian side could be by kicking… but that wouldn’t help integration of CSR at all”. (interviewee 4) and

“Because you can define the KPI’s top-down bottom and integrate them into

Performance Management measures for individual employees, that is what the CSR Department once tried, but that does not work”. (Interviewee 8)

Only few interviewees have the opinion that CSR is really successful embedded in vision, policy and activities of the organization. An example of a positive reaction:

“No CSR-policy is developed without active participation, influence and acceptance of our business partners”. (Interviewee 6).

Conclusion hypothesis 1

The data analysis shows existence of explicit CSR in Bank A on strategic level as described in company vision, mission and strategy as well as on tactical level in business cases, processes surrounding CSR and the CSR integration in the organizational design through stimulating ambassadorship for CSR in all central departments and the local banks. So one would expect that, conditions being set on strategic and tactical level, the operationalization of sustainability in the daily operations of the bank in servicing customers would be a relatively small last step. Still there seems to be a discussion going on about integration of sustainability in the daily contacts with customers. In wholesale contacts it is becoming more accepted to mention the topic as well in rating customers based on sustainability kpi’s but it is still not mainstream: “it is not what we are supposed to do on a Friday afternoon, it is something that we have to use