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Corporate Motivations for
Performing CSR
Bachelor Thesis Accountancy & Control
Gino Balke
10423672
Jort ten Berg
28 juni 2015
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Statement of Originality
This document is written by Student Gino Balke who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Abstract
Previous work done on CSR consists of different theories and methodologies, and each draws its own conclusion regarding the motivations to CSR. Even though the motivation remains vague, corporations spend vast amounts of money on CSR and the question remains why. This article therefore found a general, more widely-applicable motivation to why corporations spend vast amounts of money on CSR. This vast amount of differentiated work is said to hinder a more widely-applicable approach to CSR, and its further theoretical development. By comparing and integrating work on different theories regarding CSR, this article based on a literature review will try to surpass this problem. The theories used in this research are: ‘Stakeholder theory’,
‘Legitimacy Theory’ and ‘Proactive vs Reactive theory’. The conclusion of this research is that corporations are either interested or philanthropic. Corporations were categorized self-interested when the main focus for performing CSR was for economic gains. Oppositely,
corporations were assumed to be philanthropic when they actively tried to improve society, and operated selflessly within the boundaries of the norms and values of the people in it. These findings were supported by each theory. Proactive CSR theory added to this conclusion that corporations may also try to integrate CSR into their strategy. In this way they will both act philanthropic while they expect to also receive economic benefits for their actions. This way of integrating both actions depended on too many variables, and was not theoretically supported enough to add as a motivation for CSR. It is, however, discussed for its relevance and logic.
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Samenvatting
Dit onderzoek is geschreven in reactie op het artikel van Prior et al. (2008). In de conclusie van zijn onderzoek gaf hij aan dat de motivaties die organisaties hebben voor de grote uitgaven aan CSR een gebied was dat verder onderzoek nodig had. Dit artikel heeft motivaties gezocht door een combinatie en integratie te zoeken in drie bestaande CSR theorieën, zijnde: ‘Stakeholder Theory’, ‘Legitimacy Theory’ en ‘Proactive vs Reactive Theory’. Hierna volgt een korte uitleg van elke theorie.
Volgens Stakeholder theory houden bedrijven zich bij het uitvoeren van CSR vooral bezig met de relatie die zij hebben met hun stakeholders. Binnen deze theorie zijn twee stromingen die de relatie met de stakeholder benaderen: de instrumentele benadering en de normatieve benadering. Daarnaast maakt deze theorie ook nog onderscheid tussen eerste- en tweedegraads stakeholders. Eerstegraads stakeholders zijn de groepen waarmee de organisatie een
economische relatie heeft en die dus van belang zijn voor het voortbestaan van de onderneming. Tweedegraads stakeholders zijn alle belanghebbenden in de maatschappij op wie de organisatie invloed heeft. Dit onderzoek geeft vervolgens aan de hand van de twee benaderingen twee motivaties die bedrijven hebben voor het uitvoeren van CSR. Bedrijven die de instrumentele benadering volgen zijn vooral gefocust op het eigen belang. Zij identificeren de eerstegraads stakeholders op basis van hun economische relatie met het bedrijf. Andere interesses die stakeholders hebben, buiten de economische, zijn voor deze bedrijven niet van belang. Deze bedrijven voeren dus alleen CSR uit zolang dit de economische belangen van hun eerstegraads stakeholders behartigd. De normatieve benadering behartigt echter de belangen van alle stakeholders, dus zowel de eerste- als de tweedegraads. Deze bedrijven handelen binnen de normen en waarden van de samenleving omdat zij dit beschouwen als iets dat vanzelfsprekend hoort. CSR van deze bedrijven worden dus uitgevoerd om de belangen van de gehele
samenleving te behartigen.
De legitimacy theory lijkt erg op de bovenstaande stakeholder theory, maar er is een cruciaal verschil. Waar stakeholder theory zich focust op de relatie met haar stakeholders, is deze relatie bij legitimacy achtergesteld bij de acties van het bedrijf. Legitimacy theory gaat er vanuit dat bedrijven haar acties moeten legitimeren bij de samenleving. Zonder dat bedrijven dit doen zouden zij de steun van de samenleving verliezen en hierdoor uiteindelijk opgeheven worden. Er zijn net als bij de vorige theorie weer twee benaderingen om deze steun te verkrijgen en behouden: ‘strategische benadering’ en de ‘institutionele benadering’. De strategische benadering ziet legitimacy als een resource die bedrijven actief moeten verwerven. Bedrijven die
5 deze benadering volgen zijn dus alleen gemotiveerd om CSR toe te passen om de steun van de samenleving te behouden, en zo haar bedrijf voort te kunnen zetten. Deze benadering is dus net als de instrumentele benadering van stakeholder theorie in het eigen belang. De andere
benadering bij legitimacy theory ziet legitimacy niet als een resource maar meer als een handelswijze. Deze bedrijven voeren hun bedrijf binnen de normen en waarden van de
samenleving. Ze handelen zoals hun achten dat ‘juist’ is en krijgen hierdoor automatisch steun van hun omgeving. De motivatie voor CSR binnen deze benadering is dus dat zij in ‘harmonie’ met de samenleving willen opereren.
De laatste theorie die in dit artikel gebruikt wordt is Proactive vs Reactie theory. In deze theorie worden twee conclusies getrokken. De eerste conclusie is de relatie tussen de Proactive of Reactive enerzijds, en de resultaten die met deze projecten worden behaald anderzijds. Uit de literatuur blijkt dat consumenten positief tegenover Proactive CSR staan, dit leidt tot een
toename in verkopen en een betere waardering van consumenten ten opzichte van het bedrijf. Consumenten staan echter negatief tegenover Reactive CSR wat leidt tot minder verkopen en een negatieve waardering van consumenten. De reden die hiervoor gegeven wordt is dat
Proactive CSR wordt gezien als altruïstische vorm van CSR en reactive CSR als behartigen van het eigenbelang. Deze conclusie trekken de onderzoekers uit de manier waarop consumenten de projecten waarnemen en verwerken.
In de verschillende theorieën kwamen telkens twee motivaties terug die bedrijven hadden om CSR uit te voeren. Een bedrijf wordt bij de uitvoering van CSR volgens deze theorieën gemotiveerd door eigen belang, of het heeft altruïstische motieven. Een motivatie voor eigen belang is te herkennen aan de economische doeleinden die bedrijven hebben bij de uitvoering van de projecten. Wanneer een bedrijf gemotiveerd is door altruïstische redenen is de motivatie voor CSR niet gericht op eigen profijt, deze projecten worden door bedrijven gestart om de samenleving te verbeteren. Proactive CSR heeft nog een laatste toevoeging aan dit onderzoek. De theorie beweert dat de twee motivaties voor CSR ook gecombineerd kunnen worden. Bedrijven die dit doen proberen actief de samenleving te verbeteren en maken daarbij duidelijk dat zij ook verwachten hier profijt uit te halen. Hoewel deze conclusie van grote bijdrage kan zijn wordt hij niet voldoende onderbouwd om in de conclusie als definitieve motivatie voor CSR te gebruiken. De bewering is echter wel belangrijk genoeg om genoemd te worden, en wordt in de conclusie aangegeven als gebied waarin verder onderzoek van belang kan zijn.
6 Table of Contents Statement of Originality ... 2 Abstract ... 3 Samenvatting ... 4 Table of Contents ... 6 1. Introduction ... 7 2. Theoretical Framework ... 9 2.1 Defining CSR ... 9 2.1.1 The Development of CSR ... 9 2.1.2 The effects of CSR ... 11 2.2 Theories regarding CSR ... 12 2.2.1 Stakeholder Theory ... 12 2.2.2 Legitimacy Theory ... 16
2.2.3 Proactive vs Reactive theory ... 20
3. Analysis ... 23
4. Conclusion ... 27
5. References ... 29
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1. Introduction
In 2010, an explosion took place on the oil drilling platform ‘The Deepwater Horizon’ owned by BP. During attempts to put out the fire, a drilling rod broke which sunk the entire
platform. This caused oil to start leaking into the ocean with a total value of around 800 million euro. As a consequence, hundreds of kilometers of coastlines got stained and the wildlife was seriously harmed (Couvert, 2012). After the disaster, BP made one of the largest settlements in the history of the US to the affected parties. Besides the settlement, BP included five main points in its Corporate Social Responsibility (CSR from now) report of 2014 of which three can be directly linked to the oil spill which took place in 2010 (BP, 2015). These are the improvement of safety, the environment and the community in which it operates. The other two are general points of improvement: The future of energy and being a corporate citizen.
The point made in the story above is that corporations care, or at least act as if they care, for the environment they operate in. A study by Carroll (1991) indicated that in the 60s corporations began to get resistance from stakeholders other than the shareholders from the company. They argued that maximizing shareholder value wasn’t the only responsibility that corporations had. This led to the development of new legislation in the 70s which
officially recognized employees, the consumer and the environment as official and legitimate stakeholders falling under the responsibility of corporations. Fulfilling the needs of the groups mentioned is called corporate social responsibility or corporate philanthropy.
CSR is a highly debated topic in recent literature and was named in The Economist Intelligence Unit as sharply rising among the priorities of policy makers (Balmer et al., 2011). Companies spent vast amounts of money on CSR to improve their corporate identity. They either spend the money to develop CSR projects in-house or they acquire companies with an already established good corporate image. Some examples of the amounts of money spent by corporations are the billion dollar settlement of BP to save their corporate identity from imploding, or the acquisition of Ben & Jerrys by Ahold and the acquisition of Body shop by L’Oréal. While there is a general acceptance among researchers that companies ultimately benefit from CSR, the motivation behind the high amounts of money which companies spend on CSR is often vague. Lindgreen et al. (2009) argue that this relation became vague as a consequence of the widespread theoretical developments on the subject of CSR. He says that all the different theories hinder the understanding and further theoretical
8 developments of CSR. In light of their argument, this article will attempt to combine already existing literature to find corporate motivations for CSR. Different theories on CSR will be studied and integrated to look for these motivations. The theories used are: stakeholder theory, legitimacy theory and theory on proactive vs. reactive CSR.
The stakeholder theory states that firms will take care of the stakeholder groups that it affects, these stakeholder groups are no longer means to an end but need to be involved in the decision making process of the company. In line of this study, stakeholder theory thus states that the organizational spending on CSR is to satisfy stakeholders and give them ways to influence corporate decision making (Stieb, 2009). Legitimacy theory, in a way, is the same as stakeholder theory because it tries to satisfy the stakeholder. However this theory does not try to reach this by giving them influence in decision making, ‘legitimizing’ their decision towards the stakeholder so that they will not oppose the corporation. When a decision of a company may be considered harmful for a certain stakeholder group, the company will either not give enough information to the stakeholder to retaliate on, or they will give something else which is beneficial for the group in return. In line with legitimacy theory, corporations spend resources on their responsibilities to make sure that they keep support from their stakeholder (Guthrie & Parker, 1989). The last concept discussed to find motives for CSR is ‘Proactive vs Reactive’ CSR, which deals with how consumers perceive CSR. This concept argues that there are two ways of doing CSR. The proactive way means that companies will actively seek ways to improve their image by improving in interest of their stakeholders. Companies will engage in reactive CSR to protect the image of a company after an incident has taken place that is harmful for its corporate brand (Wagner et al., 2009). By combining these three theories this study’s theoretical background is
well-supported because each theory discusses a relevant point of view for CSR. The stakeholders’ view in stakeholder theory, the corporations’ view in legitimacy theory and the consumers’ view in Proactive vs Reactive CSR.
This study will attempt to explain the motivation behind the vast amount of organizational spending on CSR. This was indicated as a point which required further investigation in a study by Prior et al. (2008). As was stated earlier following the research of Lindgreen (2009), the reason for the vague understanding of the motivation for CSR is because of the
widespread use of different theories on CSR. Either of these two arguments gives enough reason to investigate further into the motivation of corporate spending, but adding them
9 together leads to conclude that corporations spend a lot of money on CSR but no one can really know why. To clarify the relation between motivation and spending, this article looks into three commonly used theories. In each of these the motivations for CSR will be
searched after which these can be compared and integrated where possible to find a more all-embracing explanation on the motivation for organizational spending on CSR. The study will attempt to find this relation by answering the research question:
‘What are the motivations that companies have for the vast amount of resources spent on
CSR?’
This study will be done by a literature review and is set up as follows. Chapter 2 contains the theoretical framework of this investigation which will give an explanation on CSR and the different theories used in this thesis. Chapter 3 will provide an analysis on the theoretical framework. In this analysis an attempt will be made to compare and integrate the different theories used to find a more all-embracing approach to find the motivation for CSR.
Chapter 4 will provide a conclusion on this research in which the research question will be answered.
2. Theoretical Framework
The theoretical framework will give an explanation on CSR and the different theories used in this thesis. The development of the concept of CSR and its implications for this research will be discussed first. The theoretical framework then continues to explain the different
theories used for a basic understanding on each of them.
2.1 Defining CSR
2.1.1 The development of CSR
First, the development of the concept of CSR and the accompanying frameworks will be discussed. This is where the first problem arises because, according to Marrewijk (2003), CSR lacks a common basis for action and a general definition accepted by the scientific
community. Lindgreen et al. (2010) argue that the reason for all these different definitions and frameworks is that scientists developed a lot of theories and different methodologies all trying to grasp the concept of CSR, most of which don’t even make it out of their embryonic stage. Even though research on CSR is widespread and lacks a common definition, the
10 development in definitions of social responsibility can be categorized in three stages in which the responsibilities that companies have grown through time.
The first one is Friedman’s (as cited in Carroll, 1991) classical point of view which argued that businesses’ only social responsibility is to increase profits. As was stated in the introduction of this thesis, the 60s was the time in which social accountability started to develop. Davis (1960) was one of the first in this developing concept. According to him CSR was the concept of taking actions and making decisions which were at least partially beyond the firms’ direct economical or technical interest. The first partially developed framework accompanying this concept was that companies were to make a profit (economic responsibility) but do so within the laws and regulations of the society they operated in (legal).
The second stage of social accountability started in the 70s. At this time, corporations began to consider the needs of other groups in society. Davis (1973) stated that firms had to look beyond their narrow economic requirements to gain both social and economic value. Sethi’s (1975) concept of corporate social responsibility requires bringing the norms and values of the corporations up to those prevailing in society. Davis and Blomstrom (as cited in Carroll, 1991) expanded the concept even further, they defined CSR as activities that protect the interest of society as a whole as well as that of the company. One of the earlier frameworks on CSR was based on these evolving concepts. It was used by the Committee for Economic Development and depicted CSR as three concentric circles. The center of the circle described the classical view that companies only had to fulfill their economic role. The middle circle was the vision emerging in the 60s which argued that companies had to fulfill their economic roles with sensitivity to values prevalent in society. The outer circle was a newly still
developing concept which stated that companies had to actively involve themselves in improving the social environment. At this time the concept of CSR had developed and companies were getting more involved in their social surroundings. However, they still only fulfilled economic purpose and met their social role separately on the level which was obligated. The question remained how these roles had to be combined.
Carroll (1991) answered this question in the last and most evolved stage of CSR when companies started to actively engage in corporate action to implement its social role into its strategy. She developed a four step concept which was a framework that addressed the entire spectrum of obligations businesses had to society. This spectrum combined the already existing economical and legal responsibility with two new responsibilities. The first is
11 the ethical responsibility which now required the company to follow the norms and values from the stakeholders and in this way satisfy their social expectations. The second is the discretionary (or philanthropic) responsibility which states that a company should actively seek to improve the stakeholders’ quality of life and the community they operate in. Her framework became widely accepted for its all-embracing view on CSR and is used often in CSR literature for its definition and insights (Riordan & Fairbrass, 2014; Shum & Yam, 2010; Maignan & Ferrel, 2001). The complexity of the last stage’s concept was also well defined by the World Business Council for Sustainable Development ‘‘Corporate Social Responsibility is
the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’’ (Chand, 2006).
What becomes apparent in this first part is that CSR grew as a concept. As time went by, companies gained more and more responsibilities towards society. To grasp this growing concept, researchers developed many different methodologies in an ever growing amount of articles. As the amount of work regarding CSR kept growing, it became clear that a single accepted definition of CSR and relation to economic performance would not be found.
2.1.2 The effects of CSR
The same problem as with the concept of CSR are found in the relation between CSR and economic performance. There is no single accepted relation between CSR and economic performance. Some studies have indicated a negative relation between CSR and economic performance, some displayed a positive relation, and some even showed no relation at all. Davidson & Worrell (1988), for example, found a negative relation between corporate disclosures on irresponsibility and financial performance by looking at investors’ returns. Disclosures of irresponsibility are also part of CSR, as was seen in the case of BP. Aupperle et al. (1985), however, found no significant relation between CSR and financial performance. Their conclusion is that the relation in other studies is caused by a weak methodology. Lindgreen et al. (2009) in turn found a positive relation between CSR and financial
performance which, according to them, is a widely accepted relation. Their findings suggest that CSR offers increased sales and reduced costs. Finally, the findings of McGuire et al. (1988) are discussed. They found that companies may perform CSR for several reasons of which risk reduction and financial performance are just two examples. Their main conclusion
12 is that the results of performing CSR depend on the circumstances which the corporation operates in.
2.2 Different theories regarding CSR
This section will give an explanation on the different theories that this study uses to try to improve the understanding of the relation between CSR and economic performance. The first theory discussed is Stakeholder theory, the second is Legitimacy theory and third and last is the Proactive versus Reactive theory. What should be noticed when going through these theories is that although each theory approaches CSR in its own way with its own motives, the motivation for CSR can always be traced back to being either philanthropic or self-interested.
2.2.1 Stakeholder theory
The first theory discussed is stakeholder theory. Before going into the theory itself, an explanation shall be given of what a ‘stakeholder’ is. As seen earlier when explaining CSR, the use of definitions in stakeholder research area is widespread and everyone interprets it differently. This issue arises here as well because there are a lot of different definitions for stakeholders. The actual identification therefor remains vague, this limits the use of the theory (Dunham et al., 2006; Orts & Strudler, 2009). Mitchell et al. (1997) solved this problem with the fact that every definition on stakeholders shares the roots of the work of Freeman, who is regarded leading contributor to stakeholder theory by many. He defines stakeholders as: “Any group or individual who can affect or is affected by the achievements of the organizations objectives” (Freeman, as cited in Mitchell et al., 1997, p. 854).
Now that the definition of stakeholder set, this article will continue with explaining the theory itself. Stakeholder theory deals with the relation between the management of the firm on the one hand, and stakeholders and shareholders on the other. Management
originally only had a commitment to their shareholders because they owned the company by shares. This commitment was merely economic and meant that managers had to increase firm value for their shareholders. These firm owners had legal rights and privileges which could be enforced in court (Freeman, 2001). This changed during the second half of the 20th century when companies started to answer to the needs of other groups in society.
13 being a good corporate citizen. Besides that, the legal system also started to take the needs of other groups into consideration and protect stakeholders where the companies’ CSR did not. Stakeholder theory deals with this change which Freeman explained as a change of the fact that managers have a relationship to stockholders to that they have an obligation to stakeholders which is every group that has a stake in or claim on the firm. Along with this explanation of stakeholder theory he defined stakeholders as “Stakeholders were no longer ‘means to an end’ but became an end themselves, and therefor gained a say in which direction the firm should be headed in” (Freeman 2001, p. 39). Although well defined by Freeman, the theory is not intended to give a single definition for how stockholders should be treated. Donaldson and Preston (1995, p. 70) argue that “The stakeholder theory can be, and has been, presented and used in a number of ways that are quite distinct and involve very different methodologies, types of evidence, and criteria of appraisal”.
Now that a workable definition is given, this article will continue with explaining the theoretical frameworks in which stakeholder theory is used. Two frameworks will be
investigated further for their ability to make stakeholder theory more concrete. The first is a framework developed by Donaldson and Preston (1995) and gives a basis for stakeholder theory. Their framework looks at stakeholder theory from three different approaches: the
descriptive approach, the normative approach and the instrumental approach. The first
explained is the descriptive approach which “reflects and explains past, present, and future states of affairs of corporations and their stakeholders” (Donaldson & Preston, 1995, p. 71). This approach is explanatory which is desirable in case of exploration of new areas in stakeholder theory. Second is the normative approach which “tempts to interpret the function of, and offer guidance about, the investor-owned corporation on the basis of some underlying moral or philosophical principles” (Donaldson & Preston, 1995, p. 72). This approach tries to find a relation of what ought to be on basis of norms and values. Third and last is the instrumental approach: “Instrumental users of stakeholder theory make a
connection between stakeholder approaches and commonly desired objectives such as profitability” (Donaldson & Preston, 1995, p. 71). This approach tries to give a relationship in what management should do to reach a desired end.
It would be tempting to find a single all-explaining theory which Clarkson (1991), for
example, tried with his stakeholder management model. But the separation in the different concepts is found in the work of several researchers like Freeman’s (2001), and is critical to
14 stakeholder theory according to Donaldson and Preston (1995). They describe the three theories as being nested within each other. The descriptive approach is the outer circle because this is merely an observation. The instrumental approach is the intermediate level because it supports the outer descriptive level with its instrumental and predictive value. The core of the theory is normative however and deals with the fact that the interests of stakeholders are fulfilled because of intrinsic value to the company.
The second framework for stakeholder theory is a concept that makes a distinction between ‘first-grade’ stakeholders and ‘second-grade’ stakeholders, or as Freeman (2001) put it, the narrow definition or the wide definition. First-grade stakeholders are those who are required for the company’s immediate survival and success. Some of these stakeholders in the narrow sense are those also named by Carroll (1991) as being officially recognized by legislation, these were: employees, the environment and the consumers. But Freeman argues that management, owners and suppliers are also groups that are vital for survival and success. The stakeholder in the wide definition is every person or group that is affected by actions of the company. While being named, this group is still not specifically defined (Crane & Ruebottom, 2011). The question Freeman poses after defining the two groups of
stakeholders is “For whose benefit should the firm be managed?” which is also of importance to this thesis. An answer will be given after some more explanation.
Crane & Ruebottom (2011) created an approach for stakeholder theory by combining the two frameworks explained. Their article deals with the identification of stakeholder groups and uses the framework of normative, instrumental and descriptive approaches to give a new approach to stakeholder theory. Crane & Ruebottom start with explaining the
instrumental approach of the framework. According to their article, this approach deals with
first degree stakeholders because it tries to identify stakeholders based on their economical relation with the firm. According to Hill & Jones (1992) the first degree stakeholders have an exchange relation with the firm and, therefor, have a legitimate claim on the firm. By
focusing on the exchange relation, the instrumental view implies that firms gain something from stakeholder management and that there is little room for other interests of
stakeholders themselves. The instrumental view is close to the classical view of management of companies which implied that the main responsibility of corporations was economic; corporations had to create value for their shareholders. The descriptive approach is of less importance for this study, but according to the two researchers, this approach deals with
15 how stakeholders are managed. The distinction this theory makes is that it looks whether corporations actually practice stakeholder management or if they do not. This explanation of the descriptive approach was also given earlier in the concentric framework, the descriptive approach was the outer layer of the circle and mainly provides information for the two inner layers. Key to this article and stakeholder theory itself is the conclusion Crane & Ruebottom (2011) draw on the normative approach. This approach challenges the view that
stakeholders have to be profitable to the organization. The normative approach implies that stakeholders are no longer means to an end, but became an end themselves. Normative arguments are based on cooperation, a community and social interaction. Even though stakeholders are mainly defined on their economic relation with the firm, this approach also deals with stakeholders in the wide definition such as “community” or “activist groups”. The normative approach thus is core to modern stakeholder theory because it deals with how corporations ought to handle to treat their stakeholders as an end themselves (Freeman, 2001; Jurgens et al., 2010; Donaldson & Preston, 1995). With this insight, the question posed by Freeman earlier can be answered, which was: “For whose benefit should the firm be managed”. The answer is that it depends on the approach that a firm follows. If a firm follows an instrumental approach, they will define their stakeholders on their
economical relevance to the firm. These firms follow the classical approach to manage their stakeholders, and thus try to create value for their stockholders. This is called the
‘Shareholder approach’. When a firm follows a normative approach, they care about all their stakeholders or, as it is put by Freeman (2001), the stakeholders in the wide definition. Crane and Ruebottom (2011) add that, even though the main relation to the stakeholders is still economic, second degree stakeholders are now at least named and treated in more generic terms as ‘activist groups’ or ‘community’. The article of Crane and Ruebottom concludes that the normative approach is the basis of the ‘stakeholder theory’, which is also concluded by other researchers (Freeman, 2001; Donaldson and Preston, 1995; Stieb, 2009; Lamertz et al., 2005). The motivation for managerial spending on CSR, which is the key question to this article, is answered by stakeholder theory as: “paying back the stakeholders for the stake they have in the firm which goes beyond the narrow definition which classical shareholder theory has”.
Reflecting back on stakeholder theory, it becomes clear that this theory grasped the changes in CSR through time as a change from dealing with economically interested shareholders to
16 dealing with stakeholder who are interested in every way the company affects them. Three approaches were given in which companies dealt with their stakeholder groups. By
combining these approaches and definitions, corporations were classified as self-interested or philanthropic by looking at which approach it followed and how it defined its
stakeholders. Profit seeking companies followed an instrumental approach and focussed on its first-degree stakeholder only. These corporations defined their stakeholders based on the exchange relationship with the firm. By focussing on this relationship, the instrumental view implies that corporations are motivated to perform CSR by seeking a profit from their stakeholders. These corporations are motivated by self-interested to perform CSR. Opposite to the instrumental view is the normative approach. This approach implies that corporations deal with all of their stakeholders, not for profit reasons but because it is the right thing to do. These corporations do not identify stakeholders as means to an end, they identify stakeholders as every group on which it may have influence and treat them as an end
themselves. Corporations following the normative approach are philanthropically motivated.
2.2.2 Legitimacy theory
The second theory discussed is Legitimacy theory. This theory deals with maintaining the support from stakeholders through CSR so that the company may survive. The idea is that when a company loses this support, stakeholders will turn on the company and in this way the company will eventually fall. The first way in which legitimacy is used is mainly practical and often found in environmental reporting, these corporations actively strive for legitimacy. A study by Guthrie & Parker (1989) described organizational legitimacy as actively using CSR to ‘legitimize’ corporate actions that are or might be considered as negative. They view businesses as operating within society with which the company has a contract to perform the required social actions in return for approval of their objectives, other rewards and the company’s survival. Deegan & Rankin (1996) support this vision on legitimacy by stating that organizational disclosures, at least in part, are driven by the need to create legitimacy for the operations of the company. Corporations use two ways in which they actively strive for legitimacy. The first way is actively managing corporate disclosures so that stakeholders see the positive actions corporations take and don’t see enough of the negative ones (Lehman, 1983). The second way in which corporations actively manage their legitimacy is that in case of a negative event, they actively initiate positive CSR actions to ‘balance out’ their negative
17 actions. An example of such a situation is given by Deegan & Rankin (1996). They state that in time of prosecution for environmental violations, corporate disclosure on positive environmental projects increase to take the attention away from their environmental wrongdoing. Guthrie & Parker (1989) investigated the relation of positive corporate actions in case of negative events by looking at BHP Company. They looked at BHP’s CSR reporting and key socio-economic events. If organizational legitimacy was purely for making sure that stakeholders support was maintained in case of negative events, these two should have had a relation. Although some cohesion was found, the relation was not significant. This does not necessarily mean that the relation does not exist, it means that there might be other
motivations for corporate disclosures in relation to legitimacy.
The second way in which legitimacy used was found in a study by Suchman (1995). His work can be seen as a reaction on the earlier described environmental work and is characterized by the passive way in which corporations gain legitimacy. In his opinion, legitimacy theory should be defined before it is employed, which only few researchers do. His definition of legitimacy is that it “is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574). What Suchman expresses with regard to this definition is that it allows the theory to be used in more dimensions which makes it widely acceptable. He then continues with his vision of how legitimacy theory should be employed. While it is close to the research proposed above, it rejects the fact that legitimacy theory is actively being used to ‘right a company’s wrongs’ or to ‘create approval for a companies actions’ because legitimacy is not dependant on a particular event but on a wide range of historical events. When an organization made a wrong step while it has always performed its actions within the socially acceptable norms and values of the environment, this single event that would damage the firms reputation is seen as a unique event and legitimacy will be retained (Perrow, as cited in Suchman, 1995). In short, Suchman’s idea of how corporations should gain legitimacy is by behaving according to norms and values in society, not ‘righting its wrongs’.
Now that an understanding of legitimacy theory is given, this study will look different approaches on the theory. As shown in the previous part and found in different other articles, legitimacy theory is divided in two camps which are the strategic approach and the
18 which actively manages its legitimacy. Work on this approach is found and supported,
amongst others, in the work of Dowling & Pfeffer (1975) and Maurer (as cited in Suchman, 1995). According to Dowling and Pfeffer, organizations that follow this approach actively look to employ legitimacy as a resource which they take from their cultural environment. Maurer adds that organizations use legitimacy to show to society that they have a right to exist. Criticism on this approach, however, is that organizations need to be careful that they don’t try to legitimise too much (Ashforth & Gibbs, 1990). When this happens, organizations are viewed as manipulative and/or clumsy and they get exactly the opposite of what they are trying to reach: illegitimacy. Another type of criticism is that there is no significant and clear relation between (il)legitimacy and economic success (Dowling and Pfeffer, 1975). This can be seen by the fact that even though it is likely that illegitimacy will result in negative economic sanctions, there are companies who act illegitimate but succeed to have
successful relations with their stakeholders. Corporations that act legitimate, however, may fail to maintain such relations. Suchman explains this as “legitimacy is possessed objectively, yet created subjectively” (1995, p. 574). Stakeholders form their own image of the company which means that companies may diverge from societal norms but maintain their legitimacy because this divergence goes unnoticed.
The other approach to legitimacy is the institutional approach which is found back in the work of Scott (1991) and Robin and Reidenbach (1987). Scott argues that an organization which is legitimate is in harmony with its environment because it assumed the norms, values and culture as constitutive beliefs which the organization adheres to. Robin and Reidenbach add that the institutional norms that the organization assumed act as the unwritten rules of a social contract with society by which the organization acts. This approach regards
legitimacy as a set of constructive beliefs that organizations have instead of a way to ‘create’ a benefit for the organization. Legitimacy isn’t actively taken from the environment; it is gained from the environment because the norms, values and culture of society determine how the organization is build and should act. Suchman even says that “within this tradition, legitimacy and institutionalization are virtually synonymous” (1995, p. 576). Management no longer actively seek for legitimacy, they gain legitimacy because their actions are in line with what is expected by their stakeholders.
Now that legitimacy is defined and the way that it is approached is clear, this article will explain when and why there is a need for legitimacy. Pava and Krausz (1997) created four
19 criteria to evaluate the legitimacy of organizations, these are: Local knowledge, level of
responsibility, shared consensus and relationship to financial performance.
A short explanation of each criterion will be given after which three approaches to different situations will be explained. Local knowledge is the knowledge about a specific social problem in society. When an organization wants to increase its legitimacy by
corporate actions, it has to understand the problems in society and its own ability to solve these problems. Level of responsibility deals with, as can be expected, if the corporation is responsible for a problem or negative event. When there is a cause-and-effect relation between the company’s actions and this problem, the company is expected either to change their actions or to stop with the activity completely. Discussion may arise at this point when the cause-and-effect relation becomes less clear. Stakeholder consensus means the shared agreement amongst the stakeholders that a certain situation needs to be addressed by the corporation, this becomes especially important when the level of responsibility is less clear. For stakeholder consensus to be reached when a cause-and-effect relation is unclear, the CSR action has to be profitable, or in line with corporate strategy, at least. Relation to
financial performance is the last criterion and means that managers should attempt to
measure the short and long run financial effects of CSR projects. This criterion is seen as a somewhat all-in-one criterion for when the relation to other criteria is vague. When this is the case, projects should at least be profitable to be accepted.
Now that every criterion has been explained, three situations will be shown that will link the framework of criteria to the definition and approaches to legitimacy. The first situation is the most desired one, but also the one which will presumable never be met. This is when all of the criteria are satisfied. At this point, the need for the legitimacy is the highest and CSR to gain legitimacy should always be implemented. The second situation is one where an organization has inflicted some form of damage on society, as can be seen in the opening definition of environmental organizations. In this case, the company can be held responsible and there will be a consensus amongst stakeholders that the organization will have to act up. In this case, the level of financial performance is of less importance. This situation applies to the strategic approach in which organizations in case of a negative event will actively seek to improve its legitimacy. The third and last situation is one close to the institutional approach. In this case, no negative event would have to take place for the organization to respond to. Besides, there is not necessarily a consensus amongst
20 stakeholders that the company has to do something. In this situation, financial effects of the CSR activity will become more important. This conclusion by Pava and Krausz (1997) is in sheer contrast with the reasons given earlier by Suchman (1995) who said that the reason for CSR in the institutional approach was altruistic.
Looking back at legitimacy theory, this article found that a corporation will be
classified as self-interested or philanthropic by how it tries to gain legitimacy. The first way is the strategic approach. In this approach, legitimacy is actively managed, almost as a
resource. In this form of legitimacy, corporations are primarily interested in their own economic survival. They will reach this by performing the least amount of CSR necessary to maintain stakeholder support. This first form of CSR to gain legitimacy for corporate actions is clearly motivated by self-interest. The second form of legitimacy is the institutional
approach. This approach mirrors the idea that corporations perform the least amount of CSR possible to maintain support. It instead states that corporations gain legitimacy because their actions are based on the norms, values and culture of its environment. Instead of actively looking for legitimacy, these corporations gain legitimacy because they are in harmony with their environment. Corporations following the institutional approach are philanthropically motivated to perform CSR.
2.2.3 Proactive vs Reactive Theory
This last theoretical section will explain the relation between proactive and reactive CSR on the one hand and corporate results on the other. Different from the theories described before, the definition of proactive and reactive CSR is quite straightforward. In this theory, it is the perception of CSR by consumers that requires explanation.
Proactive CSR means that companies will undertake social programmes to improve their corporate image before a negative event took place (Torugsa, O’Donohue, & Hecker, (2012). This form of CSR is generally regarded as positive by customers because of its altruistic appearance. Becker-olsen et al. (2006) argue that this form of CSR has a positive significant relation to customer attitudes, this can lead to several benefits of which they name purchase intentions and attitude towards the company as an examples. Luo and Bhattacharya (2009) add to this that by being a good corporate citizen firms will get more support from their stakeholders, and will also face less resistance in the form of boycotts by activist groups. Knowing these benefits, many firms started performing Proactive CSR. There
21 are, however, also negative aspects. One of them is explained by Wagner et al. (2009) which he calls corporate hypocrisy. He defines this as “Corporate hypocrisy is the belief that a firm claims to be something that it is not” (Wagner et al., 2009, p. 79). Wagner concluded in his research that subjects began seeing corporations as hypocritical when their CSR information was inconsistent. The consequences of this were that their “CSR beliefs and attitudes
towards the firms were adversely affected” and that this effect was especially high on Proactive CSR compared to Reactive CSR.
The other form discussed here is Reactive CSR which is generally looked upon as negative (Becker-olsen et al., 2006). This form of CSR is performed after a negative event for which the corporation is responsible took place. By performing CSR, the company tries to increase or maintain their corporate image. Knowing this, society automatically links reactive CSR to negativity (Lee et al., 2009). A positive aspect on reactive theory is found in the research by Wagner et al. (2009) on corporate hypocrisy. Since this form of CSR is a response to a negative event, there is less to no inconsistency surrounding these projects. Therefore, corporate hypocrisy will have little to no effect on Reactive CSR projects.
As can be seen in the explanation above, defining Proactive and Reactive CSR is quite straightforward. Proactive CSR is regarded as altruistic and positive, and Reactive CSR as negative because it follows up on a negative event. Now that the relation between the form of the project and the resulting effects are known, what is left to answer is the way in which society interprets the projects and messages that companies send.
One possible approach to how customers respond on CSR is given in an article by Groza et al. (2011). To find this answer they use two frameworks, the attribution framework and the Persuasion Knowledge Model (PKM). The first framework explained is the attribution framework. It suggests that consumers give three attributions to CSR projects in order to explain the corporate motives. The first is value-driven CSR, this is the altruistic form of CSR which is used by companies because they believe it is the right thing to do. Second is
strategic-driven CSR, corporations will engage in strategic CSR when they want to influence
their strategy in order to either increase sales or mitigate harm. Third and last is
Stakeholder-driven CSR, this last form is used by companies that are under pressure by
stakeholders to do something they think is required. These attributions are taken from an article by Ellen et al. (2006). They are proven to significantly influence consumer attitudes and behaviours like buying intention, support intention and recommendation intentions
22 (Vlachos et al., 2009; Walker et al., 2010). By linking the form of CSR (proactive or reactive) to corporate attributions, Groza et al. (2011) will explain how consumers interpret corporate motives. Their research then uses the significant relation between attributions and
corporate outcomes provided by Vlachos et al. (2009) and Walker et al. (2010) to give the required answer on how CSR strategy relates to corporate outcomes. To put it differently, Groza et al. (2011) link CSR strategy to corporate outcomes through corporate attributions which are consumer interpretations.
The second framework used is the persuasion knowledge model. This model states that through corporate actions, corporations try to influence the decisions made by consumers. Consumers are aware of that corporations might attempt to use CSR for persuasion and develop scepticism towards corporate social initiatives (Friestad & Wright, 1994). This framework is then used in relation to the framework of attributions in that it states that consumers will require more information and develop more scepticism when they question the motives (value-, strategic- or stakeholder driven) for which the
corporation initiates CSR. The PKM will try to find this relation by looking at the influence that information source and spatial distance have on the scepticism that consumers have towards the CSR message. Information source deals with the source from which consumers get information on the project. This involves whether corporations developed the message internally or externally. Spatial distance means the location where the CSR action takes place, thus whether it is close or far away from where the consumers are.
The conclusions of the research from Groza et al. (2011) are two sided, the
attributions framework will be explained first. This framework looked into how consumers interpret different CSR programmes through ‘attribution theory’. The conclusion of the framework from Groza et al. (2011) can be divided in three parts. First is Proactive CSR which is philanthropic and thus selflessly motivated. In the attribution theory, this form is called value-driven. Second is also proactive CSR but this time it is strategically-driven. Even though it seems as if this form of CSR is self-interested, the message sent by the corporation is that they purposely try to use CSR in their strategy to reach some goal. While this is indeed self-interested, it is accepted by consumers and therefor falls under Proactive CSR. Third and last is stakeholder-driven CSR which falls under Reactive CSR. This form is looked upon in a negative way because corporations only react to what stakeholders demand in order to not lose their corporate image. Consumers expect corporations to actively seek opportunities for
23 CSR. The second part of the conclusion from Groza et al. (2011) dealt with the Persuasion knowledge model. The conclusion from the second part added that the PKM only had
indirect influence on the attitude towards the company through information source. When a message on CSR was generated internally, consumers were more sceptical, compared to a message generated externally, because this message might be influenced by the company itself. Information source thus had influence on the way consumers interpret the message. This, in turn, decides which attribution they will give to corporate motive. The conclusion made here is that there is an indirect relation between information source and corporate. Spatial distance did not show a significant relation to either attributions given or corporate outcome. This means that there is no relation between were the projects were done and corporate outcome or attributions given by consumers.
The conclusion on Proactive vs Reactive theory itself is that the results from CSR do not entirely depend on which form of CSR a corporation uses, it also depends on the message they send with it and how it is processed by consumers (or stakeholders).
3. Analysis
This section will provide an analysis on the work done in the theoretical framework of this article. The different theories used will be compared and integrated where possible. By integrating these theories, a well-supported and more widely applicable approach to the motivation on CSR will be found.
By analysing the three different theories it becomes clear that even though the research comes from different perspectives, there are similarities in the way that the theories approach CSR. These similarities come down to two motivations that corporations can have for performing CSR, a philanthropic motivation or a self-interested motivation. The two motivations can be traced back to the ‘historical’ development of CSR that was
discussed in section 2.1.1 of this article. The self-interested motivation relates to the ‘Shareholder view’ which was the prevailing way of how companies were managed with regard to their stakeholders until the 60s (Friedman, as cited in Carroll, 1991). At this time, the single interest that corporations had for performing CSR was to create value for their shareholders. The next decade was the period in which corporations started to open up to other interests of their stakeholders, but their goal for CSR remained to be economic benefit. It was at the end of this period that a new motivation for performing CSR emerged.
24 One of the main authors on this motivation was Carroll (1991). She argued that corporations had to act according to society’s ethics and be philanthropically motivated to perform CSR. Philanthropic CSR meant that corporations had to act according to the norms and values of society, and actively search for ways to improve the lives of their stakeholders. The self-interested motivation thus is the classical ‘shareholder view’ on CSR, while the philanthropic motivation to CSR is a newly emerged way of improving the well being of the society that a company operates in. By focussing on either motive, the corporation can send a message of what they find important.
Now that the motivations for CSR have been found, the theories will be integrated by looking at the two possible motivations and finding how the theories approach them. First discussed is how each theory approaches a self-serving motivation that companies have CSR.
Stakeholder theory states that CSR projects are self-interested when the focus is on on
gaining economic benefits from the exchange relation with the stakeholder (Donaldson & Preston, 1995). These stakeholders are identified solely on basis of their economic
relationship with the firm or, in other words, companies are only interested in stakeholder groups from which they have something to gain. Freeman (2001) called these groups the first-degree stakeholders. This theory can be better explained when compared to a trading company. Examples of first-degree stakeholders in such a company might be consumer, suppliers and shipping companies. These stakeholders have a direct economic relationship to the firm. By maintaining them satisfied, the corporation ensures that this economic relation sustains or even improves. Looking at legitimacy theory, the same self-serving approach to CSR is found. Corporations that legitimize their actions, motivated to do so by self-interest, will focus solely on gaining and maintaining the support from first-degree stakeholders. In this theory, these are described as the groups in society whose support is required for the economic survival of the company (Guthrie & Parker, 1989). As indicated in section 2.2.2, corporations aiming for this sort of legitimacy are mainly environmental companies. Looking back to the introduction, BP is an excellent example to explain legitimacy theory by. While BP undoubtedly had relations with several economically
important stakeholder groups, the main focus of the CSR from BP did not regard them. What was important for BP was that, because it operated in the environmental sector, the public opinion did not oppose them and that environmental pressure groups did not bother them too much. By legitimizing their actions, BP could continue to drill for oil which is profitable to
25 them. After the disaster, the public opinion turned and the corporate image got a gigantic blow (Balmer et al., 2011). BP thus lost the legitimacy for their actions, and in order to be profitable again, it had to pay billions to get it back. The conclusion drawn from both theories is that, dependant on the kind of company, CSR can be used in different ways to target different groups. Legitimacy theory focusses on keeping the communities’ support so that they can keep performing profitable corporate actions. Stakeholder theory, however, focusses on the profitable exchange relationship with the community. While the approach to CSR depends on the kind of company involved, the motivation in both theories is the same: getting and maintaining economic benefits. In Proactive vs Reactive theory it is the reactive form of CSR which corresponds to the self-serving. Reactive theory can be integrated with the two other theories for its relevance to both. According to Becker-olsen et al. (2006) Reactive theory is considered self-serving because corporations only perform this form of CSR when a negative event has occurred and the corporate image depends on it. The vision described here is that of legitimacy theory. Groza et al. (2011), however, look at the theory from the consumers’ point of view. They add to this that consumers regard reactive CSR as projects that a corporation is pressured into by its stakeholders, which they regard as negative. The view from Groza et al. (2011) matches to that of the stakeholder theory. Reactive CSR can therefor be integrated on basis of its close resemblance to both theories. What can be learned from reactive CSR theory is that even though corporations may solve the problem that they are addressing, the general opinion on reactive CSR is negative and ultimately will result in reduced buying intentions and worsened consumer attitudes towards the company.
The other motivation that corporations have for performing CSR is philanthropic.
Stakeholder theory explains philanthropically motivated corporate actions as that are taken
to improve the well-being from every stakeholder group in society. The stakeholders are no longer identified based on the economic relation, and thus are no longer seen as means to a profitable end, but as an end themselves (Crane & Ruebottom, 2011). Compared to the argument made in self-serving stakeholder theory, in this case a trading company would look beyond the interests of their first degree stakeholders and also try to improve the
environment for example. Legitimacy theory, again, is similar to stakeholder theory but approaches society in a different way. This theory argues that a corporation should be in harmony with their environment. By adhering to the norms, values and culture of society, a
26 company is seen as having a ‘social contract’ with its environment (Robin & Reidenbach, 1987). By looking at legitimacy theory in this way, the theory is no longer limited to environmental corporations as argues by Suchman (1995). The theory can now be used to describe any company by how it ‘blends in’ into society. Legitimacy theory thus
philanthropically performs CSR by being actively being in harmony with its environment instead of ‘righting wrongs’ and misleading the public. In Proactive vs Reactive theory it is the proactive form of CSR that is considered philanthropic. According to Torugsa et al. (2012) a corporation following a proactive CSR strategy also actively seeks for opportunities to improve the well-being of society, and is therefore regarded as positive. Groza et al. (2011) look at CSR from the consumers’ perspective, they argue that the proactive way of
performing CSR is perceived as value-driven. These are corporate actions that actively improve the well-being of society because it is the right thing to do. What can be seen in philanthropically motivated CSR is that regardless of the theory used, it is always a selfless way in which corporations actively seek to improve society by doing what is right. Another argument regarding proactive CSR was made by Groza et al. (2011) in his attribution framework. He stated that consumers may, under the right circumstances, also perceive Strategic-driven CSR as proactive. This means that corporations integrate Philanthropic CSR into their strategy in order to get the favour of the public, and thereby gain economic benefits. While this has close resemblance to self-interested CSR, consumers accept this form of CSR and therefor enable the company to reap economic benefits with this strategy. When a corporation, however, is found to aim too much for its own gain, then the opinion of the public will turn negative and the corporation is regarded to perform CSR for its own benefits again. This last form of CSR can therefor, under the right circumstances, integrate both motivations for CSR. Logically seen, a for-profit corporation performing philanthropic CSR will always aim for this last form of CSR since these corporations are ultimately driven to make a profit. The literature on CSR, however, clearly separates the motivations and this article therefor followed the literature and retained this separation.
By analysing the theoretical framework three conclusions were drawn. When corporations are philanthropically motivated to perform CSR, there is no real difference in how this form is used. Corporations performing philanthropic CSR improve the well being of society by actively looking at ways in which they can improve the well-being of people in it. When looking at CSR motivated by self-interested, however, the theory does influence how
27 CSR is used. Stakeholder theory looks at the relation that stakeholders have with the
corporation and improves the well-being of those groups that can benefit the company economically. Legitimacy theory looks at corporate actions first and only performs CSR when the support, and the survival with it, is at stake. Corporations following the self-centred motivation for legitimacy will only perform CSR aimed at those groups that can influence the company at times of negative events for which the corporation is responsible. Reactive CSR included both ways of performing self-interested CSR, the conclusion drawn from this theory was that stakeholders generally regard the self-centred view as negative. Even though there are some differences in the way that self-interested companies approach CSR, the ultimate conclusion of the analysis remains the same. Corporations performing CSR are either
motivated by self-interest or are philanthropically motivated. The last conclusion was found in proactive, strategically-driven, CSR. Here it was argued that, under the right
circumstances, corporations could integrate both motivations for CSR. A corporation doing this ‘selflessly’ improves the well-being of the society, and hereby gets the favour of the public which results in economic benefits.
4. Conclusion
This article started with the need to better understand the vast amount of resources that are spent on CSR, which was indicated as an area requiring further investigation in a study by Prior et al. (2008). To give a better understanding of the organizational spending, this research was done to answer the question: ‘What are the motives that companies have for
the vast amount of resources spent on CSR?’ The answer was found by looking at different
corporate motives that organizations might have in three different theories, being: ‘stakeholder theory, legitimacy theory and proactive vs reactive theory’. The motives that corporations had for their spending on CSR in the different theories were compared and integrated in the analysis of this research. Three conclusions on corporate motivations were drawn from this investigation. Corporations are either motivated by self-interested,
philanthropically motivated or they try to integrate these two motivations. Firms acting in
self-interest had different methods for approaching CSR in the different theories.
Corporations requiring the support of pressure groups to continue profitable activities approached CSR through legitimacy theory. Corporations that were able to gain a profit from their relations with stakeholders, however, used stakeholder theory to approach CSR.
28 Reactive theory supported both approaches to CSR, and mainly added that society generally regards the self-interested motivation to CSR as negative. Even though the methods in the self-centered form of CSR are different, the theories can ultimately be integrated by their goal for economic profit. The second motivation for organizations to perform CSR is because they think it is the right thing to do, these organizations are philanthropically motivated. The projects performed with this motivation are identifiable by their goal, which is to actively improve society by harmonizing the organization with its surroundings and improving the well-being of the people in it. Again, stakeholder theory focusses more on the people and legitimacy theory on corporate actions and the environment. The two theories are, however, more related then those in corporations in self-interested companies because the way in which they want to improve society is almost equal. Proactive theory unites the two theories by stating that customers regard this kind of CSR as value-driven. This is defined as a
normative approach in which corporations improve society because they think it is the right thing to do. As this shows, this is roughly the definition of the two other theories combined. The third motivation, which integrates the philanthropic and self-interested motivation, is found in proactive CSR theory. The theory states that the two earlier indicated motives for CSR, being self-interested and philanthropic, can be combined. This means that corporations communicate to society that they purposely use ‘philanthropic’ CSR in their strategy with the motivation to improve customer attitudes and buying intentions. When a corporation
integrates these two forms of CSR in the right way, customers indeed perceive the CSR strategic-driven activities. Strategic-driven CSR falls under proactive theory which was shown to increases buying intentions consumer attitudes towards the company.
Concluding, motivations for CSR throughout different theories are generally stated as being either self-interested or philanthropic. The conclusion that these two motives may be combined, found in proactive vs reactive theory, is an area that requires further
investigation because it builds on a number of assumptions regarding the way in which consumers will perceive CSR. If a clear relation for these assumptions may be found, this conclusion may be a great contribution to CSR theory. For now however, these assumptions are too fragile to use.
29
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