Do you listen to your stakeholders?
The importance of stakeholders’ influence on
Corporate Social Performance in cooperatives
by
Rianne Riezebosch
Master of Science Business Administration Organizational & Management Control
University of Groningen Faculty of Economics and Business
2 ABSTRACT
Sustainability is becoming a more and more important subject for organizations; however, do organizations listen to their stakeholders? That is the question which will be answered by a single case study research in one of the local Rabobanks in the Netherlands. This is the first research about stakeholders’ influence in a cooperative organization. The results of this thesis show how stakeholder identification, engagement and (conflicting) interests relate to the amount of influence stakeholders can have on a cooperatives’ CSP. The findings derived from 14 interviews and different documents show that the Rabobank indeed listens to their stakeholders. Stakeholders which are highly engaged to the Rabobank also have a lot of influence on the bank. However, the engagement must come from the stakeholder groups themselves, and cannot be fostered by the bank. Besides, it seems that better identified stakeholder groups have more influence, since their opinion is more easily noted. An unexpected result is that the interests of the different stakeholder groups work invigorative. This paper further contributes to the literature by clearly showing the link of CSR to the actions or indicators in a performance management system, and CSP as the outcome of a performance management system.
Keywords: Corporate Social Performance (CSP), Corporate Social Responsibility (CSR),
3 TABLE OF CONTENTS ABSTRACT………. 2 1. INTRODUCTION……….. 5 1.1 Background………... 5 1.2 Problem statement………... 5
1.3 Purpose and significance………... 5
1.4 Structure………. 6
2. THEORY………. 7
2.1 Introduction……….. 7
2.2 CSP and CSR……….. 7
2.2.1 Corporate Social Responsibility defined………..………. 7
2.2.2 Corporate Social Performance defined………..……… 8
2.3 Stakeholders……… 9
2.3.1 Stakeholder theory……… 9
2.3.2 Identifying stakeholders………..………... 9
2.3.3 Stakeholder engagement……….……… 10
2.3.4 (Conflicting) stakeholder interests……… 10
2.4 Cooperatives……….. 11 2.5 Summary…..………... 12 3. METHODOLOGY……… 13 3.1 Introduction………... 13 3.2 Type of research………... 13 3.3 Case selection……… 13 3.4 Data collection……….. 14 3.4.1 Interviews………. 14
3.4.2 Model stakeholder identification in interview………... 14
3.4.3 Documentation……….. 15
3.5 Data analysis……….. 15
3.6 Operationalization Corporate Social Performance……… 16
4. RESULTS………. 17
4.1 Introduction………... 17
4.2 Data gathering……….. 17
4.3 Stakeholder identification………. 18
4.4 Stakeholder engagement……… 19
4.5 (Conflicting) stakeholder interests……….. 21
4.6 Stakeholders’ influence………... 24
4.7 CSR-CSP……… 26
4.8 CSP-Posture - Sustainability Assessment Model………. 28
4.8.1 Social reporting………. 28
4.8.2 Economic category……….. 28
4.8.3 Resource/environmental category……… 29
4.8.4 Social category……….. 29
4 5. CONCLUSION……… 31 5.1 Introduction……….. 31 5.2 Conclusion………... 31 5.3 Discussion……… 31 5.4 Implications……… 32
5.5 Limitations and future research……… 33
REFERENCES………. 34
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INTRODUCTION 1.1 Background
In recent years, sustainability has become a more and more important subject for organizations. Many forces push companies toward greater incorporation of sustainability in their business models and strategies (Begg, van der Woerd & Levy, 2005). Besides it is shown that consumers, employees and investors tend to favour companies that are perceived to be socially and environmentally responsible (Charter, Peattie, Ottman & Polonsky, 2002). Different stakeholder groups are exerting pressure on companies to improve the sustainability of products and processes (Porter & Derry, 2012). For these reasons, more and more firms place a high value on the sustainability of their business models and operations. There are different ways in which sustainability may become an issue for an organization: It may be a priority from the start and incorporated in the company’s mission statement or it may be the result of an unforeseen crisis that targets the company as a polluter or social oppressor (Porter & Derry, 2012:34). The latter might be the result of the exerted pressure of different stakeholder groups.
Stakeholders are becoming more important for organizations and have more and more influence on the choices organizations make. Several authors emphasize the relevance of stakeholder dialogue for the creation of social capital in attempt to avoid negative pressures from stakeholder groups and proactively deal with the stakeholders (Mitchell, Agle & Wood,1997). There are differences between companies in dealing with their stakeholders. A lot of companies are truly putting a lot of effort in implementing real sustainability strategies. Next to that, there are also some companies which show some sustainable concepts in their business, but this is done simply on the basis of a changed rhetoric, of green-washing (Laufer, 2003; Ramus, 2005). At these latter companies, it seems that sustainability issues are pursued more coincidentally than with a clear strategy (Baumgartner & Ebner, 2010).
1.2 Problem statement
There are two main problems in the existing literature on stakeholders and Corporate Social Performance (CSP): First, the literature on stakeholders’ influence on CSP is not consistent. Some researchers show that stakeholders have influence on the CSP of organizations (Moser & Martin, 2012; Barnett & Salamon, 2012), but others state that stakeholders don’t have any influence on companies’ CSP (Peloza, Loock, Cerruti & Muyot, 2012). Therefore, there is not one clear view about the relationship between stakeholders’ influence on CSP, it can either be positive, or there can be no effect. The second problem relates to the type of organization where all the research is conducted. All the existing research is conducted within corporations, where shareholders are the most important stakeholder group. Unfortunately, there are yet no papers which describe the influence of stakeholders on cooperatives. Especially for this type of organization the influence of stakeholders on CSP is interesting, since the participation of the members, a large stakeholder group of a cooperative, is seen as the key to the strategic advantage for this type of organization (Birchall & Simmons, 2004).
1.3 Purpose and significance
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stakeholders influence on CSP in corporations, which will give us a better insight in the similarities and differences between stakeholders’ influence in these two types of organizations. Besides, this research will explore the results of stakeholders’ influence on CSP. On the one hand, it can be true that stakeholders encourage cooperatives to show only some sustainable concepts in their business, which is supported by Goodpaster (1991) who stated that organizations pretend to show some sustainable concepts in their business, because they are afraid of offended stakeholders who might resist or retaliate through political action or oppose any necessary regulatory clearances. On the other hand, stakeholders could encourage cooperatives in doing ingeniously sustainable business, which is supported by the ideas of Durden (2008) and Russo and Perrini (2010) who mention that the objectives of organizations should be based on their stakeholders’ interests. When stakeholders make clear that they place a high value on sustainability, organizations reaction to this may be that they implement a truly sustainable strategy.
The results of this research will give us more insight in the result of stakeholders’ influence on CSP in cooperatives. This is a valuable insight for the management of cooperatives, which can help them in their decisions about stakeholder management. This is of fundamental importance for the company to build and strengthen the organization’s bonds with each respective stakeholder, since stakeholders are valuable for generating contributions and important resources to the company (Mainardes, Alves Raposo, 2012). Therefore, the research question for this study is: ‘How do stakeholders
influence the Corporate Social Performance of cooperatives?’
1.4 Structure
This paper is based on a case study of a cooperative bank in the North of the Netherlands. The remaining of this paper is structured as follows: Section 2 introduces the relevant concepts and proposes the relationships between these concepts. In the third section, the case is introduced and the research methods are described. Section 4 presents the results, which are discussed in section 5. Finally, section 6 concludes the paper.
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2.1 Introduction
In this chapter, the existing literature regarding the concepts in this research will be reviewed. It starts with distinguishing and defining CSP and Corporate Social Responsibility (CSR). After that, stakeholder theory is described, and there are three factors determined which may strengthen of weaken the stakeholders’ influence. After that, cooperatives are described, and the proposed relation between stakeholders’ influence and a cooperatives’ CSP is elaborated. At the end of this chapter, the theoretical concepts and the relations will be visualised in a conceptual model.
2.2 CSP and CSR
Before getting a good understanding between the different concepts, the distinction between CSP and CSR must be known. Although CSP and CSR are often used interchangeably, there is an important difference between these concepts (Barnett, 2007). A firm’s overall social performance at a particular point in time is described by CSP. Managers facing decisions about devoting limited resources to social goals are not directly helped by research in this field, since CSP is not about the incremental steps toward attainment of a certain CSP posture, but only about the achieved CSP position. The investments that firms make and which aggregate into certain CSP postures are CSR (Barnett, 2007). So, CSR is about the incremental steps toward the attainment of a certain CSP posture. Whereas managers cannot directly change a CSP position, they can change their CSR management for achieving a better CSP position eventually.
This can be linked to performance management systems within organizations. Since performance is the output of the underlying actions or drivers of performance, these actions or drivers can be seen as the performance drivers of future performance. In this light, CSR can be seen as an action or indicator to achieve a certain CSP posture. Also important to mention here is that there is thus a certain time lag between CSR and CSP. Since a certain CSR action does not immediately result in a different CSP outcome, there is certainly a difference between CSR and CSP. This indicates that a company has to work on the CSR actions to achieve a higher CSP, since outcome measures without performance drivers do not communicate how the outcomes are achieved.
For this paper, both CSP and CSR are important, since it will look both at stakeholders’ influence on CSR and the effect that this has on the CSP of a cooperative. Therefore, both concepts will be defined below.
2.2.1 Corporate Social Responsibility defined
The World Business Council for Sustainable Development’s (WBCSD) has long worked together with different multinationals around the world in sustainable development and CSR issues. They define CSR as:
“CSR is 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.” (WBCSD, 2000)
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“A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (CEC, 2006).
This definition offered by the EU will be used for this research. Integrating social and environmental concerns in the business is seen as the CSR process for this paper, which in turn will lead to the resulting CSP posture. Next to that, the last part of the definition will be broadened, so that it does not only include interaction with stakeholders, but also the engagement of stakeholders in the investments in CSR.
Like the other definition, this one also shows the importance of a companies’ interaction with stakeholders (Jamali & Mirshak, 2007). These days, companies’ successes are not only based on profits, but also on their stakeholder relationships, which encompass social and environmental issues (Russo & Perrini, 2010). Therefore, organizations are encouraged to consider their responsibilities towards the different stakeholder groups, aiming at the integration of economic, social and environmental concerns into their business. Summarized, the CSR concept is not the result of a certain process, but it is the process itself that must be considered, evaluated and measured in all decision making (Jones, 1980). Since the definition of the EU takes the importance of stakeholders into account, and since it shows the incremental steps of CSR, this definition will be used for this research.
2.2.2 Corporate Social Performance defined
Corporate Social Performance (CSP) has been studied for several decades, which resulted in a vast and diverse field of research. Although this concept has been studied for over 30 years, there is no entirely satisfactory definition of CSP. One of the first definitions came from Carroll (1979), who made a definition which consisted of 3 different dimensions: Economic responsibilities, legal responsibilities and ethical responsibilities.
Some years later, Wartrick and Cochran (1985) created a general model of CSP. They defined their CSP model as the underlying interaction among the principles of social responsibility, the process of social responsiveness, and the policies developed to address social issues (1985: 758). A drawback of this definition is that it addresses interaction instead of actions and outcomes, which do not display CSP, but display the CSR process. Next to that, the final component of the definition “policies to address social issues” is to narrow, because this is only one possible outcome by which a company’s social performance can be judged (Wood, 1991). This would indicate that if a policy would not exist, it would also be the case that social performance could not exist. The previous definition is improved by Wood (1991), who defined CSP as:
“A business organization's configuration of principles of social responsibility, processes of social responsiveness, and policies, programmes, and observable outcomes as they relate to the firm's societal relationships” (Wood, 1991: 693).
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shown in the methodological part of this paper. Since these concepts are static, they can be used very well to determine a certain CSP posture of a cooperative.
2.3 Stakeholders
Since stakeholders are important in CSR, they first need to be defined and identified. While it is clear what kind of entity a stakeholder can be (Mitchell et al., 1997), there are different opinions about the broadness of a definition of stakeholders, however. The widely acknowledged definition of Freeman (1984: 46) is one of the broadest definitions. He defines stakeholders as any group or individual who can affect or is affected by the achievement of the organization’s objectives (Freeman, 1984: 46). On the other hand, researchers with the narrow view try to define relevant groups in terms of their direct relevance to the firm’s core economic interests, whereas the broader views of stakeholders are based on the fact that companies can be affected by, or affect almost anyone (e.g. Clarkson, 1995; Wood, 1991; Mitchell et al., 1997). For this research, we will use the broad definition of Freeman (1984: 46), to minimize the risk of excluding stakeholders before even identifying them, which could be the case in starting from a narrow definition. Further, this definition stresses the interdependent, two-way relationship between an organization and its stakeholders (Foo, Asenova, Bailey & Hood, 2011) which makes it a perfect definition for this research, since the goal is to investigate if stakeholders can have a positive influence on the CSP posture of the cooperative.
2.3.1 Stakeholder theory
Stakeholder theory provides a framework for relevant interest groups, and logics for integrating and prioritizing their interests into the firms’ decision making (Mitchell et al, 1997). The underlying theoretical position of stakeholder theory in this paper is normative, which means that underlying moral or philosophical principles are the basis for an organization to focus on the stakeholders (Donaldson & Preston, 1995). This approach sees stakeholder groups not as a means to a profitable end, but emphasizes the Kantian view1 that stakeholders are an end in themselves (Clarkson, 1994; Evan &
Freeman 1993). The basic assumption here is that a company has relationships with many stakeholder groups both within the company and in the external environment, and that these groups do not only play a vital role in the success of a firm, but that the interests of all these stakeholders have also intrinsic value (Clarkson, 1995; Donaldson & Preston,1995; Freeman, 1984). The firm’s success is not only measured in financial terms, but the successes here equal CSP as the outcome of CSR actions.
This paper addresses three concepts which are often referred to in the stakeholder literature: The identification of stakeholders, stakeholder engagement and (conflicting) interests of stakeholders. It is expected that these three concepts determine the strength of the influence stakeholders have, which will be explained below.
2.3.2 Identifying stakeholders
When firms are able to identify the different stakeholder group, they can better understand the societal values and expectations of their stakeholders, which make the company able to manage their stakeholder relationships (Crane & Ruebottom, 2011). A
1 The Kantian view is based on a moral principle called the categorical imperative, which requires that
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lack of stakeholder identification could result in ignorance of management to the stakeholders, since organizations do simply not see which stakeholders exist and how these stakeholder groups act in relation to the firm. When stakeholders are not properly identified, there might be stakeholder groups which are overlooked, although they might certainly matter to the company and its managers. Therefore, proposition one is:
Proposition 1: The better stakeholder groups are identified, the stronger their influence on the CSR-CSP relation will be.
2.3.3 Stakeholder engagement
Stakeholder engagement is crucial for stakeholder management, because the stakeholders’ expectations will indicate not only what behaviour they require from the company, but also what they consider acceptable from the organization, and the information needed by these stakeholders to enable them to judge the organization’s performance in relation to these expectations (Unerman, Bebbington & O’Dwyer, 2007). There are companies which seek to engage their stakeholders in a learning process for CSR (Berthoin & Sobczak 2004). Stakeholder engagement can be seen as practices that the organisation undertakes to involve stakeholders in a positive manner in organisational activities. Greenwood (2007) suggests that it is important to take the moral aspects into account when accounting for the interests of the stakeholders and to engage the stakeholders, by communication, consultation and dialog, which allow them to have influence (Girard & Sobczak, 2012).
When organizations recognize stakeholder concerns as a strategic issue, they may appreciate the influence that the stakeholders can have on their business. For these companies, neglecting stakeholder concerns may be perceived as a strategic risk (Rasche & Esser, 2006), which does not have a positive influence on the companies’ CSR-CSP relation. Internal stakeholders can be engaged by companies who use their human resource systems for the achievement of a strong commitment and participation from all of the company members towards sustainability. The engagement of external stakeholders provides companies with the opportunity to understand and meet local needs and it gives the stakeholders the opportunity to have influence on the companies’ CSR. Therefore, proposition two is:
Proposition 2: The more stakeholders are engaged, the higher their influence on the CSR-CSP relation will be.
2.3.4 (Conflicting) stakeholder interests
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groups to increase the power of combined interests (Neville & Menguc, 2006). When stakeholder interests conflict with one another, corporate reputation might be damaged by public exposure of these conflicts (Urban, 2005). This could result in some stakeholders losing face, which may drive stakeholders further apart and inhibit agreements about the CSR strategy the company should follow. Therefore, proposition three is:
Proposition 3: The higher the conflicting interests between stakeholders, the smaller their influence on the CSR-CSP relation will be.
2.4 Cooperatives
Since cooperatives are built on stakeholders, they should be the best in enabling stakeholder identification and engagement. The main aspect of cooperatives is already included in the word itself: People work together, i.e. cooperate to achieve something. A cooperative can take many shapes and forms (Ter Woorst, 1989) depending on the origin of the cooperative (e.g. consumers or labourers) and the economic purpose (e.g. purchase, sales or services) of the cooperative. For this reason, there are numerous definitions of cooperatives, in which a general notion is that a cooperative is an association which is voluntarily formed by members with a common economic goal (van Dooren, 1978). This is different from corporations, where the purpose is to maximize shareholder value. We will use the definition of van Diepenbeek (1990) for this research, who defines a cooperative as a form of an economic organization, in which independent economic actors (members), who do not consider each other as competitors, cooperate in the execution of one or more activities, with the aim of improving economic results of the actors involved.
Contrary to the socio-political organizations cooperatives have been in the past, they should now be seen as being formed because people can gain economically from the cooperation (Van Diepenbeek, 1990). The distinguishing characteristic of cooperatives is the focus is on maximizing the services for the members, which is central in the cooperatives’ principles. Member participation is beneficial, since the participation of this stakeholder group can result in an information rich environment and for trust relations to build up (Birchall & Simmons, 2001), which will result in a cooperative advantage that will show up positively in the business results (Russo & Perrini, 2010).
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stakeholder relationships can bring in new investment opportunities and new customers (Fombrun, Gardberg & Barnett 2000; Porter, 1991; Porter & van der Linde, 1995), which may result in a higher CSP. Since there might be a difference in the influence of stakeholders between corporations and cooperatives, and there is already much known about stakeholders’ influence in corporations, this research will strive to get a better understanding of the influence of stakeholders in cooperatives. Therefore, the research is conducted in a cooperative organization.
The members of the cooperative are a special stakeholder group, because they are identified by the notion of the existence of the organization. Hence, their influence is partly determined by the type of organization and therefore the stakeholder group of members has an apart box in the conceptual model.
2.5 Summary
Summarized, it is proposed that stakeholders’ influence can be strengthened or weakened by the identification of stakeholders, the engagement of stakeholders and their conflicting interests. Further, proposed is that the stakeholders’ influence on the cooperatives’ CSR-CSP relation will be positive. These relations are visualized in the conceptual model in figure 2. In the next section, the research methodology will be described.
Figure 1: Conceptual model
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METHODOLOGY 3.1 Introduction
In this part of the paper, the research design and its methodology will be discussed. The type of research will be explained and the sample selection will be described. Next to that, the collection of data is discussed and the way in which the results will be derived from the data is shown. The literature is searched by using Business Source Premier, a business research database from the university, where peer-reviewed articles can be found. These articles are found with the following key-words: cooperative, stakeholder theory, stakeholder identification, stakeholder engagement, stakeholder interests, corporate social performance and corporate social responsibility.
3.2 Type of research
The goal of this study is to discover what the influence of stakeholders is on the CSR-CSP relation in cooperatives. To get an answer on the research question, the first part of this research is a reflection type or research, where the concepts CSP, CSR, stakeholders and cooperatives are discussed. This reflection is an outcome of basic research, where existing theories are re-examined, resulting in the transformation or modification of original ideas (Easterby-Smith, Thorpe & Lowe, 2002). For this paper, literature from different fields is used. The main part of literature is used from the field in accounting, and next to that, articles from the ethical field and sociology are used. This makes this paper an interdisciplinary research, which aims at generating a more comprehensive understanding about the concepts which are discussed
The second part of this research can be defined as qualitative research, since events are observed in their natural setting and reported in a systematic way (Lofland & Lofland, 1984). The way in which this research is conducted is by making use of a case study, where interviews are conducted and archival materials are analysed. This methodology is especially useful here, since it helps to investigate complex and dynamic phenomena, with variables that are not quantifiable (Cooper & Morgan, 2008). The research is exploratory in nature, since the research goal of this paper is to gain knowledge about the influence stakeholders have on the CSR-CSP relation in a cooperative (Cooper & Schindler, 2008). There is not yet a clear idea about this relationship in the literature.
3.3 Case selection
Within case study research, there can be made a distinction between single and multiple case studies (Baarda, de Goede & Teunissen, 2005; Cooper & Schindler, 2008). This research is a single case study research which is conducted within one of the local Rabobanks in The Netherlands. The Rabobank is one of the major banks in The Netherlands which is rated Double A. The bank holds an 87 per cent market share in the food and agri industry. Next to that, the bank is successful in the markets for private mortgages and savings. The most important feature is that the Rabobank is a cooperative organization. It consists of 139 autonomous local member banks which are owned by private members drawn from their local communities. These 139 local banks are the owner of Rabobank Nederland. These local banks all formulate their own strategies and make their own investments.
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the organization and to the local community. Long-term customer relations are important for the Rabobank, and because of the local community, the Rabobank knows their customers very well. For this research, stakeholders groups for this specific local Rabobank are identified and interviewed. Besides, archival data from this local bank is used to find an answer on the research question.
3.4 Data collection
Data can be collected in two ways: by qualitative or quantitative techniques. In this paper, qualitative techniques are used, since these allow the researcher to obtain more in-debt information of a particular situation, which is helpful to find an answer to the stated research question (Cooper & Schindler, 2008). More specifically, semi-structured interviews are conducted and documents are used.
3.4.1. Interviews
Semi-structured interviews give the researcher the ability to determine which relevant topics are discussed, define the structure of the interview, mention the important questions but still keep some openness to ask further on the given answers of the interviewee (Cooper & Schindler, 2008). For this research, two types of interviews will be held. The first type will help to get an understanding about the identification of the different stakeholder groups of the Rabobank, and is further explained in section 3.4.2. After the identification of the stakeholders in the first interview, the other interviews can be held to gain more knowledge about stakeholder engagement, (conflicting) stakeholder interests, stakeholders’ influence and the CSR-CSP relation of the Rabobank. All the interviews are held individually, and the goal of the interviews is to get a better understanding about the relationships between the investigated concepts, to answer the research question.
3.4.2 Model stakeholder identification in interview
In the first interview where the stakeholders from the cooperation will be determined, the model of Vos and Achterkamp (2007) will be used, to help in identifying the stakeholders. This model not only classifies the players involved in a project, but also identifies these parties and designates roles to these parties. They use an identification method to reach an overview of the parties involved. This method consists of four steps, which will be readjusted to be suitable for this research. For identifying the stakeholders, the following roles are determined (table 1).
Role Definition
Client A client is the party which has an account at
the company.
Decision maker A Decision maker sets requirements regarding
the CSR-CSP relation and evaluates whether the requirements are met.
Passively involved; representative A passively involved is affected by CSP
management without being able to influence the CSR-CSP relation.
A representative is a person who has chosen to act on behalf of another, that is the passively involved.
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After determining the stakeholder roles, the identification method of Vos and Achterkamp (2007) will be adjusted to fit with the goal of this research. The four-step identification method for this paper is visualised in figure 2. The steps in this figure are clearly followed during the first interview, to identify the stakeholder groups correctly.
Figure 2: Identifying stakeholders 3.4.3 Documentation
Next to the interviews, another source of evidence for this research is documentation. Different documents from the local bank will be reviewed, to find out which information about CSR and CSP is available within the company. Since different data collection methods are used, triangulation can be used to overcome the weaknesses of single methods, since information from different sources can be checked, compared and complemented with each other (Cooper & Schindler, 2008). This will also increase the construct validity and the reliability of this study (Yin, 2009). The data is collected during 3 months in which the researchers had access to the documents, and talked with the different stakeholders of the bank.
3.5 Data analysis
An issue with qualitative data is how it can be transformed from the context-bound information to a format which tells a story in a way that is convincing the reader (Eastherby-Smith et al., 2002). The collection of the data from the interviews needs to be classified into different categories (Saunders, Lewis & Thornhill, 2003). To analyse the data in the best possible way, four different steps will be used. First, the data will be categorized by using two sources to derive names for the categories: Utilizing terms that emerge from data, and using terms which are used in the existing theory and literature (Saunders et al., 2003). This means that both deductive and inductive approaches are used, which will both give a clear structure of categories from the existing literature and provides some space for categorizing new themes which could be observed during the interviews. The categories which are chosen before the data was gathered are: stakeholder identification, stakeholder engagement, stakeholder interests, stakeholders’ influence and CSR-CSP. The second step is unitizing the data. In this step, relevant parts of the interview will be attached to the appropriate category (Saunders et al., 2003). After that, there will be searched for relationships, and categories will be adjusted for example when too much information in one category shows that this category is too broad. The final step is then to seek if there are revealing patterns which will support the propositions which are defined in the literature part of this research.
Step 1: Defining the goal of the cooperative
regarding Corporate Social Responsibility
Step 2: Individual brainstorm: Identification of
the involved
Intermezzo: Explaining the underlying theory Step 3: Group brainstorm: Determining
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Next to the data from the interviews, we have also collected documents. These documents will be used mainly to investigate the extent to which CSR investments are done, and what the current CSP posture of the organization is. Next to that, they will also be used to check whether the perceived influence by the stakeholders can be derived from these documents.
3.6 Operationalization Corporate Social Performance
To determine the current CSP posture of the bank, the Sustainability Assessment Model (SAM) from Bebbington (2007) will be used. This model measures the impact of four different categories: economic, resource use, environmental and social impact. The economic category measures the total economic benefit which accrues from the investments in CSR (Bebbington, 2007). The resource and environmental categories will be combined, because the Rabobank is a financial services company, which does not use a lot of resources for its service delivery, compared with a production company. This combined resource/environmental category measures the net effect of the use of resources and the environmental damage incurred by the use of this resources. The social category measures three elements which create a positive social benefit: The external impact of employment, how a project contributes more broadly to creating a socially sustainable society and the social impact of the products which arise from the services the Rabobank delivers (Bebbington, 2007). In the next section will be described which documents are used to measure CSP, and how these measures fit in the model of Bebbington (2007).
To measure the economic benefit which accrues from the investments in CSR, there will be looked at the amount of charitable giving, the existence of a corporate charitable foundation and the investments which are directly related to CSR activities within the company. The resource/environmental category will be measured by looking at the energy use of the company, the use of the different resources within the company (e.g. paper, office furniture, etc.) and the way of travelling from employees between work and home, and the way of travelling for work-related visits. Finally, for the social category there will be looked at the projects the Rabobank initiates within the local community. The outcome from the 3 measures will be used to estimate the CSP posture of the Rabobank.
Besides the SAM, there will be looked at the amount of social reporting, and to some 3rd party assessments, so that a better estimation of the current CSP posture of the
17 RESULTS 4.1 Introduction
This chapter presents the findings which are retrieved from the interviews and from the analysis of different documents. The findings are structured by the different concepts derived from the theory: stakeholder identification, stakeholder engagement, (conflicting) stakeholder interests, stakeholders' influence and the CSR-CSP relation (figure 1). The results will be clarified by using quotes from the interviewees (which are adjusted to improve the grammar).
4.2 Data gathering
Before giving the results of the interviews, the way in which the data is gathered will be shortly described. In total, fourteen people were interviewed. An overview of the interviewees is given in table 2. Two of the interviewees were trainees, and one of them worked already one and a half year for the company, before he became trainee. This trainee is quoted as trainee 1, and the regular trainee, who worked less than a year for the organization, is quoted as trainee 2. Further, one member from the member council is interviewed. The member council is a council of the bank with 40 members, who participate in the decision making process of the bank. The members of the member council have different tasks and responsibilities, such as the approval of the annual report and appointing of the members for the supervisory board.
The students will be mentioned as student 1, student 2 and student 3. Student 4 is not only a student, but also a member of a party which is sponsored by the Rabobank. There are 4 students interviewed, since this is an important group of customers within the group of private customers of the bank. Almost 10% of all the private customers is student, which is a large amount compared to the percentage of students from other local Rabobanks. The interviews with residents were arranged, to get an idea about their opinion about the bank. Although the bank is a service company which does not damage the local environment, it is important for the bank to monitor the residents, so that they can proactively manage this group when there are for example complaints about the bank.
Interviewees
1 director business 1 employee department
marketing, communication and cooperative 1 business advisor
1 sales & service advisor 2 trainees
1 member from the member council
1 member from the supervisory council + corporate customer 3 students + private customers
1 student + sponsored party 2 residents
Table 2: Interviewees
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limitation for this research, because not all the stakeholder groups of the Rabobank could be interviewed in the short time-frame in which this research is conducted.
4.3 Stakeholder identification
On the one hand, the company has certain stakeholder groups which are related to the Rabobank as a cooperative. These groups are the member council, the supervisory board, governments and other organizations which cooperate with the Rabobank. Large parties which are sponsored by the Rabobank are also called a partner organization, because there is a lot of cooperation and dialogue with large sponsored parties about how they will organize the sponsoring together. On the other hand, there are different customer groups, which consist of private individuals, private banking, Small and Medium size Enterprises (SMEs), big businesses and international customers. The interviewees’ classification of the stakeholder groups is shown in table 3.
Cooperative Customers Member council Supervisory board Governments Partner organizations Private individuals Private banking Small and Medium size
Enterprises (SMEs) Big businesses
International
Table 3: Stakeholder groups Rabobank
Grouping these stakeholders according to the model of Vos and Achterkamp (2007) would show a classification according to their roles (as described in section 3.4.2), which is shown in table 4. Residents are added here, and were not identified by the bank. Although they were not identified, this is also a stakeholder group of the bank, according to Vos & Achterkamps' model. Only one of the stakeholder groups fits in the passively involved role. This can be explained by the fact that all the other groups are a customer or a member of the bank, which gives them the opportunity to let their voice hear to the bank. Only when people are not a customer or member of the bank, they are passively involved. There are also some double roles, for example for the member council and the supervisory board. These stakeholder groups are both a representative of all the customers of the bank, but also a decision maker, when it comes to approving the annual report for example and appointing new directors for the executive board.
Client Decision maker Passively involved Representative
Private individuals Executive board Residents Member council
Private banking Small and Medium
size Enterprises Big Businesses International Member council Supervisory board Partner organizations Supervisory board Governments
Table 4: Stakeholder groups according to Vos & Achterkamp’s roles
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people, men and women, people from the city Groningen and people from the area outside the city. They also try to make sure that all the different customer groups are represented in the member council, because they want to make sure that the voice of every person is heard.
There are some groups which do not get the same amount of attention from the bank as other groups. Examples are the private individuals. Since this group of customers is very large, and there are big differences within the different people in this group, it is difficult for the bank to pay attention to them all. Sub-groups in this group of private individuals who get less attention, according to some employees, are students, children and customers who have financial problems. For this last group, one of the trainees is doing research on how the bank can give more attention to these people, as she says:
"For the department 'private individuals', I investigate the implementation of a budget coach within the bank. In these economic times, more customers have cash flow problems. We as a bank can deliver extra value for the customer by delivering an extra service, which could be a budget coach, to help people who have payment problems." (Trainee 2).
When talking about different stakeholder groups, it is good to mention that most of the employees only think about the different customer groups first, and that they come up with other stakeholders later. This might indicate that other stakeholder groups like the government or residents are less important for the bank. According to the employees, there are no groups who receive no attention from the bank.
4.4 Stakeholder engagement
There is a difference between the engagement of certain stakeholder groups. All the employees are very engaged to the company, and state that they are proud to be an employee of the Rabobank:
"Throughout the years, I have created a real Rabo heart." (Business advisor).
"...it makes me proud, that the Rabobank is my employer. That makes my engagement also much higher." (Trainee 2).
"...it makes me proud, it is a beautiful organization. It is really unique what we enable in the local community as a bank." (Employee department communication).
All the employees state that they would talk positively about the Rabobank with family and friends, because they know what the Rabobank facilitates for the local community and are enthusiastic about that. Some employees also say that it feels unfair that a lot of people in the Netherlands blame the banks for the crisis, and that the employees want to show the people that this is not true, by sharing their experiences from their work. Besides, two employees are concerned about their customers, when they are running into trouble because of phishing or other types of cybercrime. Two employees have the idea that the older people are more engaged to the Rabobank than the younger people:
"...but when you look at the amount of people, and the characteristics of the people who are becoming member, than a lot of people are from the older generation. Still the older people are the ones who find it the most important to be involved in the decision making of the bank." (Trainee 1).
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the member council is high. There is a lot of dialogue between these parties, since there are 4 meetings with the member council and about 15 with the supervisory board each year. Further, the bank organizes a week for the members, which strengthens the engagement of different members to the bank. The interviewed member from the member council confirms this high engagement, and also mentions that she appreciates the willingness of the bank to take up a vulnerable position by asking the members' opinion about the banks' policies:
"In that sense I feel engaged to the bank, because I know more about them than I would know if I would not be a member of the member council." (Member of the member council).
"There is really a dialogue between the bank and the members, structured by the different agenda items. They could make a sort of pro forma happening of it, but that is absolutely not the case." (Member of the member council).
Further, the member of the supervisory board is also very engaged to the bank. This was already the case before he was a member of the supervisory board. He is not only engaged as a member of the supervisory board, but also as a customer, with his own company, and as an employee of an agricultural organization in the past.
"Before I became mayor, I have worked for an agricultural organization. There, I already had a lot to do with the Rabobank, both on a regional and a national level." (Member supervisory board).
Further, all the employees tell that a long-term relationship with customers is important for the company. This is also seen by the large customer group of students, who think that they are not yet interesting for the company, because of their low financial assets but who also see that the bank wants to keep them as customers, because they might be more interesting for the company when they get more money in the future. The bank tries to engage students in different ways, for example by sponsoring the KEI-week, the introduction week in Groningen, where prospective students are welcomed in the city by all kinds of activities. The sponsoring of the KEI-week was a reason for one of the students to become much more engaged to the Rabobank, because he was a board member of the KEI, and was involved in the cooperation with the Rabobank. Although the fact that the Rabobank is the main sponsor of the KEI-week, the engagement of students and the Rabobank is much lower than the engagement of the employees and the bank.
"As a random student, I feel not really engaged. But since the Rabobank is our main sponsor, I am much better acquainted with the Rabobank, and I am focused a lot more on the bank." (Student 4 + sponsored party).
"I do not feel personal engagement with the Rabobank. I want a service, and they deliver their service in a professional way." (Student 3).
On the one hand, all the students say that they would not switch to another bank. On the other hand, they do not feel engaged to the bank, and also do not have the need to be more engaged to the Rabobank. Students tell that they do not have a need to be engaged to the bank, because they do not (yet) have a lot of financial assets. They expect to be more engaged in the future:
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After asking this same student some weeks later, she mentioned that she would stay at the Rabobank if she would have more money in the future, and that she would most likely be more engaged then.
All the students mention that they like that the Rabobank sponsors sport
associations, student associations or other projects which are related to students. This is one of the reasons that the students are at least partly engaged to the bank. Further, the trust of students in the Rabobank is one of the reasons for their engagement with the Rabobank:
"At first, I did not care about the bank I was a customer of, but when Jos told me about the sponsoring from the Rabobank for his music project, I liked to be customer of the Rabobank, and wanted to stay at the Rabobank." (Student 1). "I hear a lot of stories about other banks and that they have problems, and then I am happy that I am a customer of the Rabobank. I have confidence in them. I find the Rabobank the most reliable bank from the Netherlands in the field of security." (Student 2).
Finally, the residents are not engaged by the bank. This can be illustrated with the renovation of the building of the bank. The bank did not inform any of the residents about the reason for renovation, about how long the renovation would take, and about possible inconvenience for the residents. On the other hand, the residents did not make effort to ask the bank about the renovation, which also indicates a low engagement of the residents.
Summarized, the engagement differs both within and between the different stakeholder groups. Whereas students are not highly engaged with the bank, employees are much more engaged. Further, the member council and supervisory board are also highly engaged to the bank.
4.5 (Conflicting) stakeholder interests
All the employees say that the relationship with the Rabobank as their employer is the most important interest for them. Besides the salary and benefits, all the employees find the culture within the Rabobank an important reason why they choose to work for this company. They also talk about the shared values, which are important for them to work for this company.
"The engagement is high, and I really like to work with my colleagues. You often have congenial colleagues, everyone likes to work hard." (Business advisor).
"The proudness of the employees of the bank is important, you have to keep that. When it would be omitted, the Rabo identity would be lost." (Trainee 2).
"This organization fits me very well. Especially the engagement locally with organizations, associations, foundations, people who approach you for help or support. Those are very nice things, which make it pleasant for me to work for this company." (Employee department communication).
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cooperation between different parties. If the engagement in the local community would disappear, the uniqueness of the organization would be lost, and the organization would be similar to other banks, which is illustrated by the following quote:
“The proudness of employees is something you have to retain. If this would be lost, you lose your Rabo identity, and become similar to many other financial services companies.” (Trainee 2).
As a consequence, the motivation from employees would decline, resulting in a lower customer satisfaction. One of the employees even states that he may leave the company if the Rabobank identity would disappear:
“If the engagement from the Rabobank to the local community would stop, my personal feeling would not lie at the bank anymore. I think that I would leave the bank in that case. When the values of the companies do not match with my own values, it is time to say goodbye.” (Sales & Service Advisor).
Although all the interviewees mentioned that it is important for them that they can share their own values with the values of the company, one of the interviewees also says that she has the idea that this is not important for all of the employees. According to her, there are also employees whose only interest in the Rabobank is the salary and benefits they get from their work for the company:
“There are absolutely people who only work here for the money, and for who the specialness of a cooperative is not important. On the other hand, there are enough people who find it wonderful, and who like to talk about the cooperative, also in their private life.” (Employee department communication).
The member of the supervisory board has a personal interest in the Rabobank as a business, because he has his own company in Groningen. Besides, as a commissioner, he is interested in the bank as a whole, and how the bank performs.
"As a commissioner, I am not there for my own company, that is very important. You act in the interest of the bank." (Member supervisory board).
For students, the most important interest in the Rabobank is that the bank can deliver its basic services to them. Everything has to work properly, and if not, students expect from the bank that they can quickly solve the students’ problems. Students also like it if they can easily visit the bank for arranging things which are related to their bank account:
“As a customer it is nice to have a bank where you can easily step inside, and where the bank arranges certain things for you.” (Student 1).
Next to that, the students all have an interest in the customer-friendliness of the employees of the bank, and one student finds it important that there is some flexibility for students, in the field of overdrawn. One student tells that she will most likely have a higher interest in the Rabobank when she has more financial assets:
“I think that if you have more money, the interest is for example more important for you. At the moment, I have almost no financial assets, so it is not that important for me from which bank I am a customer of.” (Student 2).
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the interests of students. Students do not have a large interest in the bank, and it is ok for them if the basic services are delivered in a proper way. Employees have a much higher interest, because they share the same values with the bank, and find it important to be engaged with the local community.
Both employees and students think that different stakeholder groups have
different interests. Some of the employees think that the interest from all the stakeholder groups is partly the same, because the cooperative identity of the Rabobank attracts certain stakeholder groups. This cooperative identity is also a very important interest for the member of the member council:
“I think that all the stakeholders have partly the same interest in the bank. If you look at private customers, for example; they want to feel confident at the bank. The more we tell them about the things the Rabobank does, the more they think ‘I find that a good bank.’ ” (Sales & Service Advisor).
"My personal interest is the organizational type of the Rabobank. I think that a cooperative is a very good organizational type, especially for banks." (Member of the member council).
Only one of the interviewees has the idea that it is more difficult to determine together where they should go in the future.
“I think that there is a big difference. The internal stakeholders will respond different, they have other needs than the external stakeholder. So it will be more difficult to determine together where you should go in the future.” (Employee department communication).
One of the employees thinks that the different stakeholder interests can work invigorative, but only when this is encouraged by the bank. Most of the interviewees think that it works positive when stakeholders have different interests:
“Everyone has his own strengths, also within a bank. So the different groups; the supervisory board, the member council and the works council, everyone has his own strengths and input and these strengthen each other definitely.” (Business advisor). “I think that it works invigorative when the bank has a broad public. With a broad public you will get more done.” (Student 3).
“I think that it strengthens, if every group let his voice hear and show their wishes. As an example, there is a bookkeeping programme from the Rabobank which is probably a result of the influence of entrepreneurs. I, as a student, can profit from this, because I use it a lot.” (Student 2).
The residents do not have an interest in the bank, which means that they do not attach priority and importance to the banks’ policies. What residents like about the bank is that they can easily walk to the ATM when they need money. They have no further interest in the bank. One of the residents mentions that she does not like the behaviour of some the customers:
“They only thing which annoys me a lot is that customers walk through the hedges to walk to the ATM.” (Resident 1).
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In the next paragraph about stakeholders’ influence, there will be looked if the three different factors positively, or negatively relate to stakeholders’ influence.
4.6 Stakeholders’ influence
Employees are involved in some parts of the decision making within the bank. An example of this is that employees have the opportunity to talk about the new strategy of the bank, and that they can think along with the executive board for the coming strategy:
“Employees are regarded as an important stakeholder group. They do certainly have a voice in the decision making. For example 2 years ago, all the employees had the opportunity to help determine the new strategy for 2012-2014.” (Employee department communication).
Besides, there are held different employee satisfaction surveys, which are afterwards discussed with the executive board and several employees. Further, employees also tell that they have the idea that the Rabobank asks more for the opinion of their employees in the last years. One employee mentions:
“Since half a year, we have more and more influence on the things they do above (above is in the executive board). Of course they take the final decision, but my experience is that the bank let us know very well that our voice is heard.” (Sales & Service Advisor).
The employees say that, the more people are engaged to the Rabobank, the more influence they can have on the decision making. People who are more active, and have a clear opinion about certain policies have more influence than people who are passive, and do not share their opinion:
“… but the bank also says that if you want to accomplish something, it is not enough to share your opinion just once.” (Sales & Service Advisor).
“I think that, if you divide the stakeholders in passive and active, that the active group brings more advantages to the bank, and within the private banking group, you see this active members.” (Trainee 2).
“There are always people who have more to say than others. Unwittingly, these people will get probably more attention, but only because they ‘shout’ louder.” (Trainee 1).
Some employees have the idea that the member council has not that much influence in comparison with a corporation. They say that the member council has some influence, but that this is mostly advisory:
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On the other hand, 3 employees state that the supervisory board and the member council do have a large influence on the bank. One of the trainees illustrates this with an example:
“That is really the Rabo, that you have the member council which has a lot of influence. For example, if they want to merge two local banks, the member council has to approve this. If the member council does not approve, the bank cannot take the decision to merge two local banks, so the member council has a large influence.” (Trainee 2).
The member from the supervisory board underpins this, and besides says that the customers from the markets where the Rabobank has a large market share have more influence than the customers from smaller markets. He says there is a certain reciprocity: When the Rabobank has a large market share in the agricultural sector for example, these customers will have more influence, which leads to a strategy of the bank which is also more focused on these groups. In this way, the opinion of the customer is indirectly translated into the strategy of the bank.
This is also mentioned by the business director, who states that, since the
cooperative identity is an important part of the strategic direction, the influence from the different stakeholder groups comes indirectly back in this strategic direction. The director business mentions that they do their best to base their strategy on the opinion of the different stakeholder groups:
"We do it A by participating in a lot of different networks, and B by listening to the customers. For example we organize customer panels, last Tuesday I had a customer panel with different farmers from the neighbourhood." (Director business).
During these customer panels, the customers can give feedback to the bank in what the bank is doing well, and where the bank can improve its service delivery for the customers.
Next to employee satisfaction surveys, there are also customer satisfaction surveys. The employees say that all the information from these surveys is used by the bank to improve the service for its customers. Most of the employees tell that the voice of customers is internally translated, and thus has an indirect influence on the decisions which are made by the executive board:
“The employees here, my colleagues, base their information for the executive board largely on what they hear from their customers. If you ask for example an employee of the Rabobank in Siddeburen to think along with the strategy of the bank, this person will base his opinion on the things he heard from the customers in the local community. I think that it plays quite a big role.” (Trainee 1).
Students also have the idea that, if they have problems with the bank and they communicate this to the bank, their voice is heard.
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Students do not have the idea that they have a large influence on the bank. The reasons for this are that they think they are not interesting for the bank, because of their low amount of financial assets. Next to that, the engagement of the students to the bank is quite low, which also results in a low influence they have on the bank. Students do not feel a need to be engaged to the bank, so that they can have more influence. One of the student knows that it is possible to have more influence, which is illustrated in the following quote:
“I know you can have influence as a student, I know that there participates one student in the member council. It is possible, but you have to do some work for it, but I think that it is possible” (Student 4).
Although students do not think they have a lot of influence, all the students say that they could have influence on the bank if they would organize this as a group. Individually, students do not have the idea that they have a lot of influence, but this might change if they would let their voice hear as the total group of students:
“When you would organize it collective and simultaneous, I think that the Rabobank is open for this” (Student 3).
“I think that the Rabobank will make money from students in the future, so if you would go with all the students against some policy or something, that the bank has its back against the wall” (Student 2).
Finally, all the students think that other stakeholder groups have more influence, because they have more financial assets, or are more engaged to the Rabobank. They expect to have more influence in the future. The residents play no role in the daily and strategic operations of the bank.
Grouping the stakeholders according to Vos and Achterkamps' model (2007), the group of decision makers (table 4) has certainly the most influence on the CSR-CSP relation of the bank, since they have the final responsibility for the bank. The engagement of this group is also very strong, compared with the other groups. Further, the engagement of the representatives (table 4) is also high, which results in an influence of this group which is quite large. There is no clear evidence to indicate that better identified stakeholder groups have more influence, however it can be indicated that not all the employees within the company are aware of all the different groups. The most mentioned groups are the different customer groups, and for this reason the employees of the bank are also open for the opinion of these groups. None of the employees mentions for example the government or residents as a stakeholder, which could mean that they are not directly open for the opinion of these groups, because they simply do not recognize these groups. A notable result is the fact that most stakeholder groups have the idea that the different interests from different groups work invigorative. This is contradicting with the proposition about stakeholder groups, which will be elaborated in the discussion.
4.7 CSR-CSP
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and a green savings account for customers. The Rabobank also plans to make use of solar energy in the near future, different departments make use of iPads to minimize the use of paper, and the procurement policy is aimed at what is really used, and not what is most easy in purchasing. Further, each employee can participate in an employee volunteering programme:
“We also do voluntary community work. Once in a while we go to an old people’s home to organize a bingo evening, take a walk or help in the kitchen. You can register for that at work, and you will get paid by the bank.” (Sales & Service advisor).
“Every employee gets 4 hours from the organization to do some voluntary community work. With 350 people, that is quite a lot.” (Employee department communication).
When the bank has business conversations with customers about the financing of a company or projects within a company, Corporate Social Responsibility is an important theme which is discussed during the conversation. For conversations with business customers, there is a list with 24 themes which is discussed during the conversation, and 10-12 themes are related to Corporate Social Responsibility. Another example is the option to buy solar panels for a reduced price.
“With the whole financing part, the system with which we work even has a whole part of Corporate Social Responsibility in it. We think that it matches to our company, it has a certain added value which makes the risk of a failing business lower for us.” (Business advisor).
“We have had a promotion that people who bought their mortgage at the Rabobank, could invest in solar panels in a financially advantageous way.” (Sales & Service advisor).
Further, there are a lot of projects for the local community. Examples are the ‘Stimuleringsfonds’ and the ‘Coöperatiefonds’. These funds are funds for the associations and foundations which can get money from the bank to realize certain projects. These organizations, which were 83 in total last year, can bring in their idea, and the members from the bank can vote which project has to win. Afterwards, about 20 projects get an amount of money from the bank, to realize their project. Besides, the Rabobank sponsors a lot in the local community, and is partner in sustainable projects. Rabobank is for example partner in ‘Grunniger Power’, a cooperative which strives for self-sufficiency in delivering sustainable gas and energy. In this type of projects, the Rabobank participates not only financially:
“It is not the intention to be the only party who invests in such a project, you have to do this jointly. You can achieve more by cooperating with other parties” (Employee department communication).
Another example of Corporate Social Responsibility of the Rabobank is that one of the trainees is doing a research in the field of debt counselling. She tries to find out if the bank could introduce a budget coach, to help the people who are in trouble with their financial assets. This is an example of a project which is targeted at the people, in Elkingtons (1999) triple bottom line.
