Amsterdam Business School
The association between Corporate Social
Responsibility and Corporate Financial
Performance
A Multiple-Case Study on Euronext Amsterdam listed
Food and Beverage producers
Student: Andel Jorien van Horssen Student ID: 10681051
Supervisor: Prof. Dr. D.M. Swagerman Word count: 31693
MSc Thesis: Accountancy and Control
Track: Control
Date of submission: 22 June 2015
Statement of Originality
This document is written by student Andel Jorien van Horssen who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Acknowledgement
The author would like to gratefully acknowledge her family: Arjen van der Veen, Tineke van Horssen and Frans & Marianne Woortmeijer for all their support and understanding moments. Moreover the author wishes to acknowledge her supervisor Prof. Dr. D.M. Swagerman for his feedback and directions.
Abstract
Purpose – This research paper presents an in-depth multiple-case study among the listed Euronext Amsterdam Food and Beverage companies: Heineken N.V., Unilever N.V. and Royal Wessanen N.V. to analyze the mutual association between Corporate Social Responsibility (CSR) activities and Corporate Financial Performance (CFP).
Design/methodology – The research methodology of this paper is a multiple-case study. The paper uses Schwartz and Carroll’s (2003) Three-Domain CSR Framework, Key Stakeholder Groups and Maloni and Brown’s (2006) CSR Food Specific Categories to categorize CSR activities retrieved from sustainability reports. Based upon in which CSR category the activities were placed, several conclusions and explanations could be detected. Furthermore, the number of CSR activities was compared against the CFP data (revenue, EBIT, profit/loss and year end stock price) retrieved from annual reports. The theories used were Stakeholder, Legitimacy and Agency theory. The timeframe of this study spanned the years 2006 to 2014. Findings – In the last decade, CSR has become an integral part of business strategy for food and beverage companies, because of society’s changed perceptions. All three cases analyzed here incorporated CSR into their company strategy. A significant increase of CSR activities (77%) was detected from 2006 to 2014. There was evidence that economic recession, CEO change, company size and the companies’ impact on environment and society affected the number of CSR activities the companies engaged in. The predominating Three-Domain CSR Subcategories were: Economic/Ethical and Economic/Legal/Ethical, which indicates that listed food and beverage firms engage in CSR activities that enhance reputation, reduce costs in the long-term and eventually enhance CFP (mutually beneficial situations for company and society). This study found evidence for a mutual association between CSR activities and CFP.
Originality/value – Research in the food and beverage industry has been scarce and previous research about the relationship between CSR and CFP presented inconclusive results. This indicated the need for further exploration of the CSR and CFP relationship in the food and beverage industry.
Keywords – Corporate Social Responsibility, Corporate Financial Performance, Food and Beverage Industry, Stakeholder Theory, Legitimacy Theory, Agency Theory, The Three-Domain CSR Framework
TABLE OF CONTENTS
1 INTRODUCTION ... 6
1.1 RESEARCH TOPIC ... 6
1.2 RESEARCH OBJECTIVE ... 6
1.3 WHY THE FOOD INDUSTRY? ... 7
1.4 WHY THE SELECTION OF EURONEXT AMSTERDAM LISTED FOOD AND BEVERAGE FIRMS? ... 8
1.5 WHY CASE STUDY RESEARCH? ... 9
1.6 RELEVANCE AND ADDED VALUE ... 10
1.7 OUTLINE OF THE PAPER ... 11
2 BACKGROUND ... 12
2.1 CORPORATE SOCIAL RESPONSIBILITY ... 12
2.1.1 How can Corporate Social Responsibility be defined? ... 12
2.1.2 The motivation of companies to engage in CSR activities ... 12
2.2 CSR IN THE FOOD AND BEVERAGE INDUSTRY ... 13
3 THEORY ... 15 3.1 STAKEHOLDER THEORY ... 15 3.2 LEGITIMACY THEORY ... 17 3.3 AGENCY THEORY ... 18 3.4 THEORETICAL CONCLUSIONS ... 19 4 LITERATURE REVIEW ... 20
4.1 THE CONNECTION BETWEEN CSR AND FIRM PERFORMANCE ... 20
4.2 CSR AND STRATEGY ... 21
4.3 THE THREE-DOMAIN CSRFRAMEWORK ... 22
4.4 THEORETICAL PROPOSITIONS ... 25
5 RESEARCH METHODOLOGY ... 27
5.1 GENERAL RESEARCH DESIGN ... 27
5.2 RESEARCH QUALITY ... 28
5.3 CASE SELECTION ... 29
5.4 DATA GATHERING PROTOCOL ... 30
5.5 DATA ANALYSIS ... 32
6 RESEARCH FINDINGS ... 34
6.1 GENERAL CASE INFORMATION ... 34
6.1.1 Heineken N.V. ... 34
6.1.2 Unilever N.V. ... 35
6.1.3 Royal Wessanen N.V. ... 37
6.2 SINGLE CASE ANALYSIS ... 39
6.2.1 Single Case Analysis Heineken N.V. ... 39
6.2.2 Single Case Analysis Unilever N.V. ... 43
6.2.3 Single Case Analysis Royal Wessanen N.V. ... 47
6.3 CROSS-CASE ANALYSIS AND PATTERNS ... 50
6.3.1 Cross-Case Pattern Matching ... 50
6.3.2 Theoretical Propositions and Empirical Findings ... 55
7 DISCUSSION AND CONCLUSION ... 60
7.1 MULTIPLE-CASE DISCUSSION ... 60
7.2 CONCLUSION ... 61
7.3 LIMITATIONS OF RESEARCH &INDICATIONS FOR FUTURE RESEARCH ... 63
BIBLIOGRAPHY ... 64
1 Introduction
1.1 Research Topic
More and more companies are reporting about their social performance and the activities they engage in, using several Corporate Social Responsibility (CSR) reports like ‘Sustainability Reports’, ‘Environmental Reports’ or ‘GRI Reports’. These reports are usually standalone reports or, in other cases, integrated into the annual reports of a corporation. A KPMG International survey from 2013 came to the conclusion that 93% of the largest 250 companies in the world are issuing such reports (KPMG, 2013). CSR reports are still voluntary, and therefore stakeholders have certain doubts about their quality and the motivation for companies to provide them. There can be reasonable doubt as to whether companies are merely aiming to legitimize themselves in the eyes of their stakeholders. Some of these stakeholders are worried about the impact an organization has on society and environment, while other stakeholders, like investors and shareholders, are mainly interested in enhancing the companies’ profit. These different requirements have forced companies to integrate CSR into their daily business to meet expectations of several stakeholders, which is where this thesis responds. The research topic of this thesis is the mutual association between CSR activities reported in CSR reports and Corporate Financial Performance (CFP).
1.2 Research Objective
It is well known that the voluntary disclosure of CSR reports is costly, but there is evidence that CSR activities can add value to a company under certain conditions (Servaes and Tamayo, 2013). Still, research about the relation between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) provides mixed results (Mishra and Suar, 2010). According to Servaes and Tamayo (2013) this is due to the direct link researchers want to make between reporting about CSR and a firm’s financial performance. By adding the variable ‘customer awareness’ – measured by advertising intensity – next to ‘firm value’ into their study, they noted a positive relationship.
Suggestions for future research have indicated that it would be interesting to investigate CSR in specific industries (Mishra and Suar, 2010). Hartmann (2011) argues that one of the industries with the strongest impact on the economy, environment and society is the food industry and that as of yet there has been little academic attention paid to the food sector. For these reasons, this study aims to investigate the association between CSP and CFP
Previous research about these topics was mostly conducted using quantitative research methods. Instead of focusing on statistical quantitative data, this study entails a more in-depth analysis by carrying out a multiple-case study among Euronext Amsterdam listed food and beverage producers. By performing a multiple-case study the analysis of the association between CSR activities and CFP will go further than trying to find a direct link or causal relationship between a dependent and independent variable. It addresses questions like: Why do listed food and beverage firms report about CSR? Which kinds of stakeholder groups do they attempt to reach the most? How do companies implement CSR activities into their strategy? Does economic recession have an effect on the amount of CSR activities? How do food and beverage producers use CSR activities to enhance their reputation? What happens if a company’s CEO changes? How does the number of CSR activities evolve over time in relation to financial performance? What kind of CSR profile exists in the food and beverage industry? And finally this in-depth multiple-case study will give an answer to the following main research question:
How do Euronext listed Food and Beverage Producers engage in Corporate Social Responsibility Activities to enhance the Corporate’s Financial Performance?
1.3 Why the Food Industry?
The reason for choosing the food industry lies in the high public presence and role that food and beverage companies play; their high-value consumer brands are prime targets for such public concerns as obesity, alcohol abuse, food and product safety and packaging material management (Cuganesan, 2010; Maloni and Brown, 2010). Furthermore, as Wiese and Toporowski (2013) elaborate, the food industry faces a lot of CSR related challenges, which can be defined by those areas about which the industry needs to report: Animal Welfare, Biotechnology, Environment, Fair Trade, Health and Safety, Labor and Human Rights, Procurement and Community. For all of these areas, food companies risk public criticism. Moreover, the food industry must face significant numbers of critical stakeholder groups and suffers from huge supply chain failures (Wiese and Toporowski, 2013) that can be prevented by the use of more supply chain CSR. Examples of these failures are mass chicken slaughters when a disease is detected. Furthermore, consumers increasingly demand to know more about the origin of all ingredients, which cannot always be detected because of supply chain obscurities. The afore-mentioned issues affect all the companies selected for this
multiple-case study. For example, Royal Wessanen N.V. (2015b, p.6) mentions in their 2014 Annual Report “The global food challenges we have to address: over one billion people are obese; palm oil sourcing has extreme consequences for the rainforest; too many chemicals like pesticides and synthetic fertilisers are used in processed foods; people become increasingly antibiotic-resistant because antibiotics are added to animal feed; more people are allergic to food; crops fail because of weather conditions and global warming; Genetically Modified Organisms (GMOs) endanger the environment; and, finally, food sources are running out because of the predicted expansion of the
human population to nine billion people in 2050.”
On the other hand, the KPMG (2013) survey indicated an increase of 25% of the food companies engaging in CSR compared to 2008. Other interesting numbers come from the Global Reporting Initiative (GRI) database of CSR reporting. GRI is an organization that
provides guidelines for CSR reporting. Figure 1 provides an overview of the increasing trend of CSR reporting in the food and beverage industry from 2008 until 2012.
Finally, according to Hartmann (2011), research in the food industry has been very scarce and possible future research will be of great value due to the increasing relevance of
CSR practices for food businesses.
1.4 Why the selection of Euronext Amsterdam listed food and beverage firms? Most Dutch companies report according to GRI reporting standards. GRI investigated sector reporting by region, which indicated that CSR in the food and beverage industry is most common in Europe, when compared to other economic regions of the world (see Figure 2).
ConQuaestor and KPMG also reported statistics about CSR reporting in the Netherlands. ConQuaestor (2011) investigated sustainability engagement among the 100 biggest companies in the Netherlands. Results indicated that 92% of the Amsterdam
Exchange (AEX, previous name of Euronext) listed firms report about sustainability, compared to 29% in 2002. The results from the KPMG (2013) survey also showed an increase in CSR disclosures among the largest 100 companies in the Netherlands since 2005. KPMG reported that in 2005, 29% of the top 100 companies in the Netherlands issued CSR reports integrated into their annual reports or as standalone reports. In 2008 this percentage climbed up to 63% and in 2011 to 82%, which has remained stable in 2013.
As can be derived from above statistical data analysis, CSR reporting in the European food and beverage industry is very common. Furthermore, according to the KPMG (2013) survey, CSR in Dutch firms has increased tremendously over the past few years. Lastly, listed Euronext food and beverage firms are selected for two reasons being: (1) data in form of Annual and CSR reports is publicly available and (2) listed firms risk more public criticism so are likely to notice the influence from CSR on CFP.
1.5 Why case study research?
According to Yin (2014), case study research is very suitable for an in-depth investigation of a complex contemporary phenomenon in an industry or organization in a real-life situation. The case study’s essence is to answer mainly ‘how’ and ‘why’ questions, as the questions presented in Section 1.2.
As mentioned by Yin (2014), a case study can be of explanatory nature, with the eventual goal to explain causal links and relations of a phenomenon and events over time, which cannot be explained clearly enough by other types of research. Case studies can be used to clarify previous research, if it has been inconclusive for instance. As already mentioned, previous research findings about the association between CSR and CFP were mostly performed using quantitative research methods and had inconclusive outcomes. Researchers struggled to find a direct causal relationship between CSR and CFP using data usually gathered from the Kinder Lydenberg and Domini (KLD) or GRI database. Although KLD and GRI use certain classification criteria and CSR ranking systems, a case study can provide a much more in-depth investigation of CSR data. With a case study CSR data can be gathered and ranked in much more detail with the use of a framework - in this study Schwartz and Carroll’s (2003) Three-Domain CSR Framework. Furthermore, when multiple sources of evidence are consulted, clear conclusions can be drawn regarding the existence and direction of a causal relationship.
The chosen research method for this thesis is an explanatory multiple-case study. Based upon previous academic literature and theories about the topics some theoretical propositions are formulated. Multiple sources of evidence (annual reports, sustainability reports, newspaper articles and public available interviews with CEOs) will be gathered to address the research question and in order to meet triangulation. For analysing the cases several techniques will be used, such as pattern matching, explanation building and cross-case analysis made possible by replication technology amongst the cases. The aim of this case study is to extend theory about the research topics to be able to reach analytical generalization.
1.6 Relevance and added value
The rational underlying this study was to address the queries raised by previous research and to deepen knowledge about the link between CSR and CFP. The advantages of a multiple-case study examining the mutual relationship between CSR and CFP in the food and beverage industry are fourfold.
1. The relation between CSR & CFP in specificindustries: After years of research related to the topics, it can still not conclusively stated whether investing in CSR is economically beneficial (Barnett, 2007). Answering the research question as to whether CSR activities are conducted to have certain influence of CFP is the primary aim. This responds to several articles about CSR and CFP, and the need for more future research (Mishra and Suar, 2010; Saeidi et al., 2015; Servaes and Tamayo, 2013). Mishra and Suar (2010) especially pointed out the need for investigation of the relationship between CSP and CFP in specific industries. 2. The need for more research in the food and beverage industry: According to Hartmann (2011) research in the food industry has been very scarce and possible future research can be of great value because of the increasing relevance for food businesses to engage in multiple CSR activities.
3. The need for using and exploring the Three-Domain CSR Framework: Schwartz and Carroll (2003) build a Framework to conceptualize CSR activities: the Three-Domain CSR Framework. As an indication for further research they state that developing a research instrument for measuring CSR and building a CSR portrait for an industry based on their framework would help to use and explore it. They also state that their model could help to answer future research questions related to the association between CSR and CFP and to build explanations.
4. The need for a multiple case-study analysis: The use of another research method like a multiple-case study gives an embedded and real-world perspective of the topics researched and has the ability to investigate topics in more depth than, for example, database research (Yin, 2014).
1.7 Outline of the paper
As mentioned above, this research proposal focuses on two main topics in one industry: CSR (activities) and CFP in the Food and Beverage Industry. All topics will be discussed in Chapter 2. In Chapter 3, stakeholder, legitimacy and agency theory will be explained, to provide a theoretical basis for the research findings. Chapter 4 contains a literature review, including an explanation of Schwartz & Carroll’s (2003) Three-Domain CSR Framework. Chapter 4 ends with the formulation of several theoretical propositions, based upon the literature review and theories. Following on, Chapter 5 contains information about the methodology, including the selection of the cases for this multiple-case study. In Chapter 6 the research findings will be presented in form of single case analysis and a cross-case analysis. The final chapter begins with a discussion of the multiple-case study, followed by the conclusions drawn from the empirical research findings, and ends with the research limitations and indications for future research.
2 Background
In this chapter background information based upon prior literature is presented about the main topics of this thesis: Corporate Social Responsibility (CSR) and Performance (CSP), Corporate Financial Performance (CFP) and CSR in the Food and Beverage Industry.
2.1 Corporate Social Responsibility
2.1.1 How can Corporate Social Responsibility be defined?
Companies and their stakeholders are increasing their focus on CSR practices, and therefore CSR has become an integrated part of business practice for a lot of companies. KPMG (2013) performed a survey of 4.100 companies worldwide, covering the largest 100 companies of 41 countries. In total, 71% of these 4.100 companies report about CSR, which is an increase of 7% compared to the KPMG 2011 survey. CSR can be defined as the commitment of companies to integrate social and environmental concerns in their business activities and to contribute to a sustainable economic development, to improve the quality of life for their employees, investors, the local community and the society at large (Servaes and Tamayo, 2013; Wiese and Toporowski, 2013). Some recurring topics in CSR definitions are: community, environment, society, economy, stakeholders, human rights and the treatment of employees and the phenomenon that CSR engagement is voluntary. Important is that CSR is commonly used to fulfill the requirements of the company’s stakeholders. According to Servaes and Tamayo (2013), a stakeholder is anyone who has an engagement with a firm and who can affect or is affected by the firm’s actions either in a positive or negative way.
2.1.2 The motivation of companies to engage in CSR activities
CSR engagement and disclosure is still voluntary and there can be several reasons for a company to provide more transparency and openness about the social and environmental consequences of their business activities. For example, Hartmann (2011) cites the requirements for more transparency and openness from society and media. Furthermore Mahoney et al. (2013) investigated the motivation for companies to engage in voluntary and costly CSR activities by using two explanations: signaling or greenwashing. Signaling refers to “good” corporate citizens who voluntary engage in CSR activities, because they honestly want their stakeholders to know about their social and environmental records. “Bad” corporate citizens use greenwashing to only report on good behavior to legitimize their bad behavior and to influence stakeholder perceptions. Thus they are not being completely honest
and the information they provide is misleading. This has some overlap with the four reasons Porter and Kramer (2006) provide for a company to engage in CSR: sustainability, moral obligations, license to operate and reputation. The notion of sustainability deals with meeting the needs of the present without jeopardizing the needs of the future generation. Next, the concept of moral obligation deals with companies being “good” corporate citizens and wanting to do the right thing, where successes of the company do not interfere with ethical values of people and respect for the community, society and natural environment. The concept of a license to operate addresses permissions, which will be granted by government, community and stakeholders, based upon the company’s CSR activities. Lastly, reputation is the company’s CSR engagement used to improve the company’s image, strengthen brands and eventually raise the value of stock.
2.2 CSR in the Food and Beverage Industry
Customers and other stakeholders have become more sensitive to negative trends in a company’s social performance. This is especially the case in industries facing a lot of social and environmental challenges, like the food and beverage industry (Wiese and Toporowski, 2013). Maloni and Brown (2006) define the areas about which the food and beverage industry has to report as: Animal Welfare, Biotechnology, Environment, Fair Trade, Health and Safety, Labor and Human Rights, Procurement and Community. Depending on what they produce, food and beverage companies risk public criticism in the above-mentioned areas. Another complexity arises from dealing with a large number of supply chains in the food and beverage industry. If one part of the supply chain fails to behave responsibly or sustainably, it will have an impact on the complete supply chain (Wiese and Toporowski, 2013). For example, when one of the members of the supply chain (in this case the supplier) is accused of animal mistreatment, this can eventually lead to fewer customers for these animal products, due to negative publicity. Another important example is the increasing use of GMOs in processed food, which is not always traceable within the food and beverage supply chain.
Hartmann (2011) investigated CSR in the food industry and states that CSR is of high relevance for food and beverage companies. The reason for this relevance is the strong impact the sector has on economy, society and the environment and all the resources attached to the environment. Moreover, customer opinion in favor of transparency and sustainability of the supply chain has increased over the past few years. Therefore CSR has been prioritized
as the number one focus for managers in the fast moving consumer goods sector, in particular in companies with high-value consumer brands.
Hartmann (2011) and Mahoney and Brown (2006) all identify a lack of scientific discussion and explanation about CSR in the food and beverage sector and the value such scientific studies could add for this sector. Large companies (for example Nestlé or Unilever) have always been targets for CSR issues; now, however, it is also important for small and medium enterprises (SMEs) to have more insight into how CSR can add value to companies in the food and beverage industry. Another interesting point for more research in the food and beverage industry is the above-mentioned impact on supply chain management (managing the flow of goods) and high-value consumer brands. Supply chain management is not only common in the food industry, but also among other industries dealing with the flow of goods. The explanatory nature of this thesis, and the results from the case analysis, aim to allow for analytic generalizations also amongst other companies dealing with supply chain management and high-value consumer brands.
3 Theory
Commonly used theories for investigating CSR are Stakeholder and Legitimacy Theory. Agency Theory is a more mainstream theory, but relevant for explaining the relation between managers, shareholders and CSR. This chapter starts with some background information about stakeholder theory, followed by a discussion of legitimacy theory and agency theory.
3.1 Stakeholder Theory
Previously written research papers about the influence of CSP on CFP often start with explaining stakeholder theory, which is a logical approach, because stakeholders are the most important forces increasing or decreasing a firm’s financial performance (Mishra and Suar, 2010). The context in which a company operates is important for achieving its main goals and objectives in most businesses increase profitability. Hence companies must focus on their relationship with crucial stakeholder groups (Perrini and Tencati, 2006), especially since stakeholder groups have certain power over a company’s reputation. As previously mentioned, a stakeholder is anyone who has an engagement with a firm and who can affect or is affected by the firm’s actions either in a positive or a negative way (Servaes and Tamayo, 2013). This definition is in line with Freeman’s (1984) first definition about stakeholders, holding that a stakeholder refers to a group who can have a legitimate claim on the firm, because of the existence of an exchange relationship. The theory behind managing stakeholder groups is stakeholder theory.
Stakeholder theory can help predict organizational behavior and to describe organizational operation. Figure 3 presents Donaldson and Preston’s (1995, p. 69) stakeholder model, which provides a model of how stakeholder groups and a corporation are related and in what form the previously mentioned exchange relationships exist.
According to Donaldson and Preston (1995) the concept of stakeholder theory is used in a lot of different ways. They present three different ways to use stakeholder theory: descriptive/empirical, instrumental and normative. A descriptive or empirical framework deals with the
way the theory is used to describe the firm’s nature and the way the firm is managed. The instrumental approach is commonly used in combination with empirical data research and helps to identify connections between the achievement of the company’s goals and the management of stakeholder groups. Finally, the normative approach of stakeholder theory helps to explain the function of the corporation and moral or philosophical guidelines the corporation and its management follow.
Previous literature related to CSP and CFP has mostly employed the instrumental approach (finding relationships and managing key stakeholders) of stakeholder theory. For example, Mishra and Suar (2010) investigate the relationship between CSR and firm performance in Indian firms, using this theory divided into three sub-theories: consumer inference making theory (when customers know a firm acts responsibly, they encourage other customers to buy the firm’s products), signaling theory (customers search for signals, such as warrantees, to distinguish higher product quality and good corporate citizens) and social identity theory (the customers, employees or shareholders want to identify themselves with the company). In their study they point out the importance of primary/key stakeholders, which are employees, customers, shareholders, suppliers, communities and the environment. When a company focuses on the needs of key stakeholders, it can reduce conflicts with this group, and reduce the costs related to these conflicts.
Some overlapping theories, as resource dependence theory and prospect decision theory, were explored in a study carried out by Van der Laan et al. (2008). Their aim is to extend stakeholder theory by explaining the importance of a company’s reputation; because, according to them, the company’s social performance enhances firm performance. In their study they focus on two stakeholder groups, primary and secondary and the need for tailor-made stakeholder relationships and adjusted strategy. This need for tailor-tailor-made relationships and adjusted strategy is explained by resource dependence theory. To improve CFP the company’s strategy must be adjusted to its stakeholders. The other theory used is prospect decision theory, which refers to the risk-averse nature of (in this case) stakeholders and companies. The findings of Van der Laan et al. (2008) indicate that the effect of a good reputation and good CSP is smaller than the impact of bad CSP, especially by primary stakeholders. In other words, using resource dependency theory, it seems most suitable to focus on the needs of primary stakeholders, who as a rule are more likely to do business with good corporate citizens.
3.2 Legitimacy Theory
There are several reasons for a company to engage in CSR related activities such as sustainability, moral obligations, license to operate and reputation (Porter and Kramer, 2006). Legitimacy theory covers and explains some of these reasons. Lindblom (1994, p.2) has defined legitimacy from an organization’s perspective as: “A condition or status which exists when an entity’s value system is congruent with the value system of the larger social system of which the entity is a part. When a disparity, actual or potential, exists between the two value systems, there is a threat to the entity’s legitimacy.” According to Unerman et al. (2007), legitimacy is necessary for a company’s survival; that is, maintaining a social license to operate. Society needs to perceive that a company meets its expectations. This emphasizes that a company has a ‘Social Contract’ with society. Unerman et al. (2007) further mention that it is important for an organization that its actions are perceived as legitimate by the outside world, otherwise facing social sanctions.
Managers often seek legitimacy because it is necessary for a company’s survival. In this way, legitimacy becomes a strategic tool to ensure continuity of business (Unerman et al., 2007) and it can explain why managers ensure that their company engages in social activities. Legitimacy is mainly based on influencing perceptions of the social environment of an organization’s actions. This means that the organization can act or behave as if they are legitimate, while they are only focusing on changing perceptions. In this case, a gap exists between the desired behavior by society and the actual behavior of an organization, because the organization can use perceived behavior to influence the perception of society (Deegan, 2006). This gap is called the ‘Legitimacy gap’. A legitimacy gap can also develop when the perception of society changes. For example, in earlier days people didn’t know much about the consequences of alcohol, tobacco, or chemical additions to food. Nowadays, consumers know that alcohol is addictive, tobacco can cause lung damage and chemical additions to food are not natural and can result in several diseases. This means that the perception of society changes over time and that it is important for a company to keep track of these changes in order to stay legitimate. An additional risk of a legitimacy gap emerges when information becomes public, without the company’s knowing (Unerman et al., 2007). This risk is related to media revelations about for example child labor, GMOs and animal mistreatment.
Several tactics and strategies can be adopted to repair, maintain or gain legitimacy. For example, a company can change their mission and vision, change their strategic focus, use
symbols (certificates) to show they are legitimate, or start partnership with important NGOs. CSR reports (sustainability reports) or other public disclosures are tools a company can use to show that their actions are legitimate (Cuganesan et al., 2010). According to Cuganesan et al. (2010), companies or even industries with a high environmental or social impact also disclose more CSR related activities or reports.
3.3 Agency Theory
An agency relationship exists when a manager (the agent) of a company acts as a decision-making unit (partly) in line with the interest of the shareholders or owners (the principal) of that company (Jensen and Meckling, 1976). Agency theory explains the existence of conflicts of interest between the agent and the principal. The principal is not always able to fully control what the agent is doing, which can eventually lead to agency costs. This can also be the case with CSR related activities. McWillems and Siegel (2001) state that engaging in CSR can be inconsistent with the need of the company’s most important stakeholders: the shareholders. Investments in CSR are very costly and can therefore interfere with the shareholders’ goal of maximizing profits. According to Barnett (2007), this interference of CSR can be considered as an agency loss.
It can occur that managers engage in CSR because of their own political agenda. In this scenario, managers pursue CSR for personal gains and not for the shareholders’ benefit (Barnett, 2007). Social projects are sometimes pet projects for managers to improve their self-image. Barnett (2007) argues that a firm should not engage in CSR when it is not favorable for the shareholders of the company.
This discussion of agency theory only points out the negative side of the theory related to CSP and CFP, nevertheless, there is also a positive side. For example, investors only want to do business with good corporate citizens, because they are naturally risk averse and want to see the value of their shares rising. Good corporate citizens engage in CSR, so it can be assumed the shareholders are fine with CSR related costs. Managers can turn firms into good corporate citizens by making the right CSR decisions. Further, Ness and Mirza (1991) have found evidence that social information is only disclosed in order to increase the welfare of shareholders. In other words, the costs for social disclosure are lower than the benefits related to disclosure, and that is the reason for managers to engage in CSR.
corporate success can work hand in hand with social welfare, when strategy and CSR are aligned. As a result, companies who accomplish this alignment, gain competitive advantage compared to other companies. Again, this starts with the management of the company and its willingness to act in line with the interest of the company’s shareholders.
3.4 Theoretical Conclusions
As can be derived from prior literature, it is very important for a company to maintain a good relationship with their key stakeholders and to listen to their needs. Public firms are especially sensitive to the opinion of their stakeholders. Important stakeholders can make or break a firm’s reputation, giving them considerable influence on a firm’s performance. Previous research indicates that good corporate citizens who report about CSR have better financial performance. On the other hand, the firm’s stakeholders will punish bad corporate citizens if they face negative publicity because of lacking CSR engagement.
Legitimacy can account for most of the reasons of why companies engage in CSR activities, such as a sense of moral obligation, license to operate and preserving a good reputation. In order to survive and stay legitimate, a company must focus on the perception the society has of it. Expectations from society must be met to maintain the social contract. Companies should avoid legitimacy gaps, to avoid social sanctions and financial losses. Legitimacy gaps arise from bad corporate decision, changes in perception of society and unknown media revelations.
According to agency theory it can be concluded that either shareholders face agency costs from CSR, because the management of the company engages in CSR because of their own political agenda. On the other hand, managers act in line with shareholders interest because they need more investors and thus make the right strategic CSR choice.
4 Literature Review
4.1 The connection between CSR and Firm Performance
As Porter and Kramer (2006) argue, CSR relates to a company’s ‘triple bottom P-line’ of People, Planet, Profit, where economic, social and environmental performance comes together. The economic wellbeing of a company can enhance firm performance and firm performance can in turn enhance a company’s willingness to perform better on a social level. Even though multiple studies have investigated the relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP), results have been inconclusive (Fauzi, 2009; Mishra and Suar, 2010; Servaes and Tamayo, 2013; Van der Laan et al. 2008). Van der Laan et al. (2008) and Fauzi (2009) state that reasons for the inconclusive results about the relation between CSP and CFP are related to the different mechanistic researchers used to measure this relation, arguing that CSP, for instance, is harder to measure than CFP. Servaes and Tamayo (2013) support this statement and relate this to the fact that researchers commonly search for a direct correlation between CSP and CFP, which other research (Saeidi et al. 2015) holds to be impossible.
Fauzi (2009) tried to establish a positive relation between CSP and CFP referencing Slack Resource theory (good financial performance is needed to contribute to good CSP) and Good Managers theory (good relationships with stakeholders need to be built before building on financial performance), but was not able to find significant support for the relation.
Van der Laan et al. (2008) also investigated the relationship between CSP and CFP by distinguishing primary (customers, suppliers, employees, investors and suppliers) and secondary (NGOs, union groups, and others) stakeholders and examined the effect of good and bad CSP on CFP. Eventually, Van der Laan et al. (2008) found evidence that the effect of good CSP is smaller than the effect of bad CSP. An illustrative example of this would be the case of Nike being accused of using child labor, resulting in the company losing customers.
Another study mainly focusing on primary stakeholders, CSP and CFP, was conducted by Mishra and Suar (2010). The authors rely on stakeholder theory for their hypotheses, as stakeholders can accelerate and decelerate firm performance. As an example, when a company is not performing well, stakeholders lose faith in the company. Shareholders sell their stocks, environmental advocates sue the company, customers stop buying products and employees do not perform well. Accordingly, it is of the utmost importance for a company to provide honest and reliable CSR reports and act as a good corporate citizen. This
significant support for the idea that responsible business behavior – in this case, of Indian firms – towards primary stakeholders was profitable and beneficial for those firms.
Furthermore, Servaes and Tamayo (2013) support the idea that CSP can add value to CFP under certain conditions. One of these conditions is that CSP influences the key stakeholders (like customers) of the firm. These findings are in line with Saeidi et al.’s research (2015), which holds that mediating factors such as competitive advantage, reputation and customer’s satisfaction are needed to measure the relationship between CSP and CFP. This paper mentions that stakeholders’ expectations must be met in order to increase customer satisfaction, which leads to better firm reputation, a growth in sales, more competitive advantage and eventually higher financial performance.
Some older studies have investigated the results of prior research about CSP and CFP. In their contribution to the debate about CSP and CFP, Griffin and Mahon (1997) meta-analyzed 51 articles related to this topic. Out of 51 studies, 33 recorded a positive relation between CSP and CFP, 21 recorded negative results, whereas 9 had no conclusion (some studies had more than one finding). In 2003, Margolis and Walsh examined a similar study taking into account 127 published studies, where 70 studies reported positive relations, 7 negative, 28 inconclusive and 24 found support for both directions. Based upon both studies and studies from Fauzi (2009), Mishra and Suar (2010), Servaes and Tamayo (2013), Saeidi et al. (2015) and Van der Laan et al. (2008), it can be concluded that mostly positive results have been found for the relation between CSP and CFP. Yet due to an abundance of contradictory findings, future research on these topics remains relevant (Mishra and Suar, 2010).
4.2 CSR and Strategy
In the past decades, business managers have noticed and were surprised that they were being held responsible for social and environmental issues. For example Nike and the negative publicity arising from abusive labor practices caused a customer boycott in the early 1990s. Similarly, several fast food and packaged food companies are being held responsible these days for obesity, diabetes and poor nutrition. Although CSR is voluntary, this indicates the power from stakeholder groups to pressure companies to act responsibly otherwise potentially facing financial risks. Thus, following the theories discussed in Chapter 3, managers need to start thinking more about how win-win situations can be created, in order to enhance CSP and CFP or shareholder value. A good example of one of the companies scoring
more than 90 out of 100 on CSR reporting quality is Nestlé, worldwide the biggest food company (KPMG, 2013). Nestlé tried to align CSR and strategy by working directly with small farmers in developing countries. They created a win-win situation for themselves by investing in local infrastructure and transfer of world-class knowledge, which resulted in social advantages for the farmers and purchase price advantages for Nestlé. So they acted ethically, whilst at the same time enhancing their economic performance. According to Porter and Kramer (2006) more food companies are focusing on the alignment of CSR and strategy, for example by trading with local family farmers, focusing on how they can reduce costs whilst also having a better impact on society and the environment. Another example according to Porter and Kramer (2006) is one of the Fortune 500 companies, Whole Food Market, which acts completely socially responsible, even relying entirely on renewable energy sources.
4.3 The Three-Domain CSR Framework
How do companies find the balance between their social and their economic behavior and responsibilities? As illustrated above, CSR can be used as a tool to maximize profits – a leading corporate goal – while also focusing on the needs from other stakeholders like society, communities and the environment. In order to be able to explain how corporations use their CSR activities to maximize profits, Schwartz and Carroll’s (2003) ‘Three-Domain CSR Framework’ will be used in this thesis.
Schwartz and Carroll (2003) have improved Carroll’s (1991) Pyramid of CSR by deleting one domain, ‘Philanthropic’,
leaving them with three domains: ‘Economic’, ‘Legal’ and ‘Ethical’. Schwartz and Carroll (2003) divided these domains into seven overlapping subdomains or subcategories, to expand the previous CSR Pyramid with more useful categories. Besides expanding the categories, their aim was also to create another form than a pyramid, because a pyramid seems to prioritize the top layer
appears as a Venn diagram (Figure 4). Their new framework, the Three-Domain CSR Framework, can be used for conceptualizing the CSR activities a corporation engages in, and will be used with CSR data gathering in this thesis. The seven subdomains or subcategories that can be distinguished are summed up and explained in Table 1 below.
Table 1: The Three-Domain CSR Subcategories
Sub-Categories Explanation Activities Example Activities
Purely Economic
Activities are in the best interest of the company’s financial performance and have a direct or indirect economic benefit, without especially acting in compliance with law, and are usually not moral or ethical.
Selling alcohol, tobacco or other (defect) products, which cause damage for health and environment. Operating in third world countries because of lower costs.
Purely Legal
Activities in which a company is obliged to engage in because the law enforces it. These are usually not ethical and do not cause direct or indirect economic benefits.
Warning on alcohol, tobacco products or just product labeling in food, beverage and chemical industries.
Reducing certain
ingredients in order to be compliant with the law (salt, sugar, fat).
Purely Ethical Activities based on moral principles, that are not particularly legal and don’t cause direct or indirect economic benefits.
Philanthropic/ Charity activities.
Purely ethical decisions such as helping developing countries or recalling products by placing safety of consumers first.
Ethical/Charity partnerships with NGO’s.
Economic/Ethical
Activities, which are ethical, while also generating direct or indirect economic benefits. ‘Doing well by doing good’. These activities are usually also passively in compliance with the law.
Charity activities with both ethical and economic purpose.
Waste programs, water programs, selling of ‘green’ products.
Health benefits for employees, or training opportunities.
Social marketing:
supporting the community while selling (or giving away) your product. Partnerships with NGOs for ethical and economic reasons.
Continued Table 1: The Three-Domain CSR Subcategories
Sub-Categories Explanation Activities Example Activities
Economic/Legal
Activities, which are in an
opportunistically way (searching for administrative and legislative loopholes) in compliance with the law, without being ethical.
Using bankruptcy protection. Operating in third world countries, because of lower
environmental, employee and product safety standards.
Responsible Alcohol commercials.
Legal/Ethical
Activities, which are ethical and legal and might have indirect economic benefits in the long run but usually do not.
Anti-pollution programs, because the law requires them and they are ethical, like recycling.
HIV/Aids drugs provided below costs for Third World countries, and on the other hand avoiding patent infringement.
Adding safety features to guns to avoid unnecessary accidents.
Employee diversity, like gender diversity or heritage diversity.
Whistle blower protection.
Economic/Legal/Ethical
Activities that are simultaneously motivated by all three categories. Moral management: being profitable, obey with or anticipate the law and incorporate ethical standards.
Not selling cigarettes, alcohol or other products causing health and environmental damage. Following hygienic or safety standard for employees and society. Gathering important certificates.
Good supply chain management (supplier codes).
Code of Business Conduct. Partnerships with NGOs for economic, legal and ethical purpose.
Source: Schwartz and Carroll, 2003, pp. 513-519
According to Schwartz and Carroll (2003) it is in a company’s best economical interest to invest in CSR activities which fall in the categories: ‘Economic/Legal/Ethical’ or ‘Economic/Ethical’. From this point of view it is proposed that the selected cases (food and
beverage companies), which will be explored in this thesis, will fall particularly well within these CSR categories.
After categorizing all CSR activities it is possible to create a CSR Portrait for the Food and Beverage industry and separate cases as shown in Figure 5.
4.4 Theoretical Propositions
Based on the theoretical and literature review, theoretical propositions or patterns can be formulated, which can be compared to the empirical findings of this thesis. Propositions are assertions or statements based on current literature. They can help to answer the sub questions of this thesis in order to eventually answer the main question (Yin, 2014). Propositions can be true or false with the aim to extend theory about the subjects of this thesis and to strengthen the analytic generalization. The following propositions are investigated:
Proposition 1: Public listed food and beverage firms are mainly acting as good corporate citizens in order to maintain a good reputation with their key stakeholders.
Proposition 2: Public listed food and beverage firms mainly focus on CSR activities for key stakeholders like employees, consumers, shareholders, suppliers, society and the environment.
Proposition 3: Public listed food and beverage firms have tremendously increased their focus on CSR activities over the last few years.
Proposition 4: It has become a trend that publicly listed food and beverage firms integrate or align CSR activities with their strategy to enhance their good reputation.
Proposition 5: Publicly listed food and beverage firms mainly focus on CSR activities in the Three-Domain CSR categories: Economic/Ethical/Legal and Economic/Ethical, in order to enhance CFP.
Proposition 6: In order to create value for the ‘Triple Bottom P-Line’ food and beverage companies have an Ethically/Economically or Balance Orientated CSR portrait.
Above propositions will be discussed and compared to the empirical findings of this thesis in Section 6.3.
5 Research Methodology
5.1 General Research Design
This multiple-case study aims to find an answer to the following research question by investigating the financial performance and CSR activities of three Euronext Amsterdam listed food and/or beverage companies:
How do Euronext listed Food and Beverage Producers engage in Corporate Social Responsibility Activities to enhance the Corporate’s Financial Performance?
CSR activities will be categorized based on seven subcategories underlying Schwartz and Carroll’s (2003) Three-Domain CSR Framework (see Table 1) to find out which CSR subcategories predominate within the selected firm or industry. Aside from the Three-Domain CSR categorization, the activities will also be categorized into stakeholder groups (Table 2), and Maloni and Brown’s (2006) CSR Food Specific Categories (Table 3). Furthermore, in order to ascertain whether a relationship exists, CFP is compared to the amount of CSR activities companies reported about between the years 2006 and 2014.
Table 2: Stakeholder Groups Table 3: CSR Food Specific Category
Stakeholder CSR Food Specific Category
Consumers Animal Welfare
Customers Biotechnology
Employees Community
Environment Environment
Government Fair Trade
NGO's Health and Safety
Shareholders Labor and Human Rights
Society Procurement
Suppliers Source: Maloni and Brown, 2006, pp. 46-47
The research period of the years between 2006 and 2014 is selected for three reasons. Firstly, the results from the KPMG (2013) survey indicate an increase of 53% of the top 100 companies in the Netherlands issuing CSR reports during the period between 2005 and 2013. Secondly, this time frame is selected instead of the years 2005 to 2013 because of the availability of data on the websites of the selected food and beverage companies. Thirdly, in order to find out if there are different behaviours in CSR activity reporting during times of
crisis, the years of economic recession following the financial crisis of 2008 are also included.
In this multiple-case study, data of both quantitative and qualitative nature is explored. The companies’ quantitative financial data (CFP), such as revenue, earnings before income and tax (EBIT), profit/loss and year end stock price will be gathered from annual reports. The companies’ qualitative CSR data is gathered either from the annual reports, standalone sustainability reports, or the companies’ website. Qualitative data will also be gathered from newspaper articles and public available interviews with CEOs.
5.2 Research Quality
According to Yin (2014), it is important for the value and quality of the case study to create construct validity, internal validity, external validity and reliability. Below the four tests of quality will be explained:
Construct validity will be achieved by verifying the research findings with multiple sources of evidence. The multiple sources of evidence are annual reports, sustainability reports, newspaper articles and publicly available interviews with the CEOs. This will also lead to triangulation. Furthermore, explaining every step taken in the data gathering procedure and referring to the sources of evidence will reflect a chain of evidence.
Internal validity will be reached by using several analytical technics like:
1. Pattern matching: the formulated and predicted propositions (Section 4.4) from the theory form a frame of reference that will be matched to the empirical findings of this thesis. If these patterns match, the causal relationship between the dependent and independent variable (CSR activities & CFP) can be confirmed (Yin, 2014).
2. Explanation building: during the single and cross-case analysis it can be explained why and how some situations occurred and why and how the findings can be explained.
3. Time-series analysis: this analysis focuses on what happened over time. For example did the company get a new CEO? Did the strategy change over time? Which trends can be detected?
4. Explain logical models: this is about how causes have an effect on a particular situation. For example: How did CSR activities cause a reaction to the CFP or the other way around?
5. Cross-case analysis: pattern matching between cases to eventually being able to link the multiple-case findings to the propositions. Here all findings from the single cases will be explained to formulate the general case conclusions.
External validity will be achieved by replication technology of the research method for three separate cases, otherwise mentioned as performing a multiple-case study.
Reliability will be attained by the creation of a case study protocol and maintaining a database with all research data. The database will be made available by the author upon request.
5.3 Case Selection
Data about firms listed to Euronext Amsterdam was gathered from the AEX website1. The following filter was applied: Consumer Products à Food Industry à Food & Beverages. The initial sample contained seven food and beverage producers, but after looking closer to the cases it became impossible or unnecessary to include them in the final sample. Table 4 shows the excluded companies and the reason for excluding them.
Table 4: Excluded Food and Beverage Companies
Company Reason for exclusion
Amsterdam Commodities N.V. (Acomo) Is a trade organization instead of a producer.
Corbion N.V. In the past produced sugar under name CSM N.V., but started a new business in biochemicals since 2012.
Lucas Bols N.V. Is listed on Euronext Amsterdam since
March 2015. No data available.
Refresco Gerber N.V.
Produces non-alcoholic beverages. Annual reports were available from 2009 till 2014. The annual reports from 2006 till 2008 were requested from Refresco, but paper copies of the 2008 reports were no longer available.
The final sample includes three Euronext Amsterdam listed Food and Beverage producers: Heineken N.V., Unilever N.V. and Royal Wessanen N.V. (Table 5).
The selected food and beverage companies all vary in what the companies produce, in company size (based on number of employees) and in revenue. Table 6 shows the profile of the companies, including the risk and harmfulness the companies pose for society, health and the environment; the consumer visibility the companies have; the level of political risk and
the intense competition the companies face (based on the industry specific profile provided by Cuganestan et al., 2010).
Table 5: Included Food and Beverage Companies
Company Name
Year
Founded Current CEO
Number of Employees
Revenue 2014 in EUR mln
Which products are produced? Heineken N.V. 1863 Mr. Jean-Francois van Boxmeer 76.136 € 19.257 Alcoholics (brewers), Soft Drinks Unilever N.V. 1880 Mr. Paul Polman 172.000 € 48.436 Agricultural Products, Chemicals, Packaged Food, Personal Care, Soft Drinks Royal Wessanen N.V. 1765 Mr. Christophe Barnouin 822 € 434 Agricultural Products, Packaged Food, Soft Drinks
Source: Annual Reports Heineken, Unilever, Wessanen 2014
Table 6: Company Profiles
Company Name Harmfulness for Health and Environment Consumer Visibility Level of Political Risk Concentrated Intense Competition Heineken
N.V. High High High High
Unilever N.V. Medium High Medium High
Royal Wessanen
N.V. Medium High Medium High
Based on Source: Cuganesan et al., 2010, p. 173
As can be derived from the company profile table, the selected cases all have a high consumer visibility by selling high-value consumer brands and are facing intense competition from industry competitors. The overall harmfulness for health and environment is medium/high, thus similar to the level of political risk.
5.4 Data Gathering Protocol
Both quantitative and qualitative data was gathered for the case analysis. Financial quantitative data from continuing business activities, such as revenue, earnings before income tax (EBIT), profit/loss and year end stock price was gathered from the companies’ annual reports from 2006 till 2014. Upon release of new data, this supersedes that of the previous
year. Reasons for large fluctuations in financial data will be clearly explained in the single case analysis.
The gathering of CSR qualitative data was more complex, because for example Wessanen made a switch over the years from integrated reporting to standalone reporting and sometimes reversed the switch again. Furthermore some CSR data was only available in the annual report or on the companies’ websites, while the relevant company also produced a standalone report, varying significantly in size. Therefore a substantial amount of data needed to be explored in order to make sure no CSR activities were missed.
Another important note about the sustainability reports is that Heineken started to produce separate standalone reports per country in 2008. For Heineken only the company’s ‘total’ sustainability reports were taken into account for data gathering, because of the sharp time cap of finishing this thesis. The total sustainability reports also contained several projects and activities from the underlying countries.
Other qualitative data such as newspaper articles and published interviews with the CEOs, were only selected from 2013 till 2015, as the purpose of this data was merely to create a form of triangulation by using multiple sources of evidence and to confirm the findings from the CSR activity analysis.
All data was gathered and maintained in Excel files with several drop-down menus, set up functions and tables in order to gather similar information from multiple cases. Per year the first step was to gather data from the companies’ annual reports. This included the collection of the financial data, reading the CEOs statement to find out what special events happened during the year and to get insights into the companies’ strategy with special emphasis on sustainability. The next step consisted of gathering CSR data from the annual report, the standalone Sustainability Report or the companies’ corporate website. Every single CSR activity the company engaged in was first named and then coded within one of the seven subcategories following Schwartz and Carroll’s (2003) Three-Domain CSR Framework. Equally, the stakeholder group (see Table 2) purposed to reach with the activity was selected, which led to information about the companies’ key stakeholders. Another drop-down menu was used for the selection of the CSR Food Specific Category the activity related to (see Table 3, from Maloni and Brown, 2006). If there was no possibility to include the activity in one of the categories, it was not taken into account. It was for example very difficult to include ‘winning an award’ into any of the categories as it is not really an activity done by the company, so therefore awards were not included as an activity. At times it was
enters into a partnership with a NGO, this could fall into several different categories: Economic/Ethical, Purely Ethical or Economic/Legal/Ethical. In those cases, the most fitting category was selected, based upon the criteria mentioned in Table 1. A further complication was that a large amount of the activities lasted for longer than just one year, for example partnerships, receiving certificates for Fair Trade or Sustainable Palm Oil, or reducing environmental impact from packaging, waste, water or energy use.
It is not yet mandatory for companies to engage in CSR activities. According to the European Commission (Renzenbrink, 2014), reporting about CSR activities will be mandatory for listed companies with more than 500 employees as per 2017. This means that some activities, for example related to greenhouse gas emission activities, water reducing activities and other environmental activities are now mostly placed into the Economic/Ethical category, but in the future (after 2017, when CSR reporting will be mandatory), these activities will be placed into the Economic/Legal/Ethical category.
Unilever N.V. is the only company of the selected companies producing other products than food or beverages. The company also produces chemicals for cleaning purposes and personal care items such as soap, shampoo and toothpaste. As it was not possible to separate the food and beverage sector from the company’s chemicals and personal care sector, the full company data (all CSR activities and all CFP data) was included in the data gathering procedure.
By every step taken the source of data was directly included in the same line where the activity was placed in the Excel sheet. At the end of the data gathering procedure for all cases, the data was checked one more time to ensure consistency across the cases.
5.5 Data Analysis
The compilation of the data into graphs, diagrams and tables allowed each activity to be allocated to one of the subcategories of the Three-Domain CSR Framework (Schwartz and Carroll, 2003). Moreover, it could be concluded which stakeholder groups were targeted by CSR activities, highlighting who the companies’ key stakeholders are. At the same time, the main CSR Food Specific Categories the company engaged in over the years could be detected, as well as a trend between engagement in CSR activities and CFP, and vice versa. Finally, allocating points for the categories the activities fall in created the companies’ CSR portrait. For example, the categories Legal, Economic and Ethical all received a point when
an activity fell into that category. Or, the categories Legal and Economic were both allocated a point when an activity fell into the category Economic/Legal.
Chapter 6 firstly analyzes the data separately and afterwards, a cross-case analysis will be undertaken to see if there are any similarities/patterns or differences between the selected cases.
6 Research Findings
This chapter contains the research analysis of the three cases analyzed and then undertakes a cross-case analysis. First, some general background to the food and beverage companies is presented.
6.1 General Case information
This section introduces the three case studies; it looks at the heritage of the companies, the brands they sell, their strategy and where they operate. This information partly answers the following sub questions of this thesis: How do food and beverage organizations implement CSR activities into their strategy? Why do listed food and beverage firms report about CSR? 6.1.1 Heineken N.V.
Heineken N.V. is one of the largest brewers in the world, producing, marketing, packaging and selling alcoholic and non-alcoholic beverages (mainly beers and ciders). Next to the Heineken brand, the company owns over 170 international, regional, local and special brands like Amstel, Tiger, Murphy’s, Star, Radler, Sol, Desperados and several ciders (Heineken N.V., 2015a). Since the year 2005, Heineken is led by CEO Jean-François van Boxmeer.
Heineken’s heritage2 goes back to February 15, 1864 when Gerard Adriaan Heineken bought the Haystack brewery in Amsterdam. In 1900, Heineken exported its first beer into Africa; in 1932, Malayan Breweries (co-founded by Heineken) started to brew the brand Tiger; in 1933, the Heineken brand is one of the first ‘legal’ beer brands in America and in 1939 Heineken becomes listed on the Dutch stock exchange. Through acquisitions in the following years, Heineken slowly became one of the largest breweries in the world. Their largest acquisitions include: Amstel (1968), Dreher Group (1974), Brau Union (2003), Krūsovice Brewery (2007), Scottish & Newcastle (2008), FEMSA (2010) and Asia Pacific Breweries (2012).
Today, Heineken operates as an independent global brewer in over 70 countries with around 80.000 employees (Heineken N.V., 2015a). Consumers in over 178 countries in the world have access to the Heineken brand or any of the founded co-brands. Heineken is proud of having the heritage of being a family company. The company is the largest brewer in Europe by volume and has ambitions to become the largest in the world. Heineken’s strategic
