International CSR and Sustainability Strategies
Analysis of Dutch Fast-Moving Consumer Goods
Multinationals
Tran Yen-Nhi Nguyen S2658429
International CSR and Sustainability Strategies
Analysis of Dutch Fast-Moving Consumer Goods
Multinationals
University of Groningen
Faculty of Economics and Business
Master Thesis, MSc International Business & Management
FINAL VERSION
Supervisor: dr. V. Iurkov Co-assessor: dr. R.W. De Vries Tran Yen-Nhi Nguyen
S2658429
yennhi11@hotmail.com +31 (0)6 52 31 79 60
ABSTRACT
Nowadays, CSR strategies have become an integral part of business organizations and are considered as a condition for competitive advantage and long-term sustainability. The aim of this research is to explore the influence of CSR on business strategies of Dutch MNE headquarters and subsidiaries in the FMCG industry. Since well-known Dutch MNEs are investing in many different ways in CSR activities in developing countries such as Vietnam, this research will focus on FMCG multinationals headquartered in The Netherlands with subsidiaries in Asia. This study uses content analysis in order to analyze the CSR strategy of four Dutch MNEs. Furthermore, two semi-structured interviews were conducted with CSR managers to explore the influence of formulated CSR strategies on subsidiary autonomy and compliance to global strategies. Findings show that in order to grow their business, Dutch MNEs in the FMCG industry are likely to incorporate their CSR strategies as their core business strategy. Furthermore, their subsidiaries which have high autonomy in their overall activities are more likely to be more engaged in local CSR activities and appear to be predominantly in line with the home country and global integrated CSR strategy.
Keywords: Dutch Multinational enterprises (MNEs), Corporate Social Responsibility (CSR),
TABLE OF CONTENTS
1 INTRODUCTION 7 2 LITERATURE REVIEW 9 2.1 CSR 9 2.2 CSR Strategies in MNEs 12 2.2.1 Managing CSR Strategies 122.2.2 Local Versus Global Framework 14
2.3 Controlling Theories for CSR strategies 15
2.3.1 Stakeholder Management Theory 15
2.3.2 Institutional Theory 16
2.4 CSR Within MNEs Across Countries 16
2.5 CSR literature in Various Sectors 17
3 METHODOLOGY 17 3.1 Research Design 18 3.2 Research Methods 18 3.3 Research Sample 19 4 FINDINGS 21 4.1 CSR Strategies 21 4.1.1 Global Goals 21 4.1.2 Implemented CSR Strategies 23
4.2 Level of Subsidiary Control 24
4.3 Compliance of Global Strategies 25
5 DISCUSSION 26
5.1 Sustainable Business 27
5.2 Level of Subsidiary Control 28
5.3 Compliance of Global Strategies 29
5.4 Contributions, Limitations and Opportunities For Further Research 29
REFERENCES 31
APPENDIX A 36
APPENDIX B 40
APPENDIX C 44
1
INTRODUCTION
Over the past few decades, public awareness for international issues such as labor standards, climate change, and human rights has increased world widely (Levy and Kolk 2002; Dyllick and Hockerts 2002; Muller 2006). Corporate social responsibility (CSR) has been most highly visible among multinational enterprises (MNEs). MNEs have expanded the scope of their reach and influence with the rise of globalization (Jamali 2010). Their approach involves commanding conditions on trade and production, as well as executing CSR related activities. It is common for organizations to have multiple CSR programs and activities running concurrently (Abdulrazak et al. 2016). MNEs must plan, manage and implement their CSR strategy for their whole business. For example, they should not try to impress their stakeholders with sustainable activities on one end, while their production plant is polluting the environment on the other (Pohle and Hittner 2008). Organizations in developing countries have come in focus in global value chain literature, with CSR increasingly represented as necessary for developing country organizations to maintain their license to operate and access to global markets (Lund-Thomsen and Nadvi 2010). Organizations today understand that it is not only important to engage in CSR, but it is also equally important to ensure that information about CSR activities is communicated to stakeholders and customers. MNEs tend to construct a moral identity and communicate this identity to stakeholders to survive and succeed.
discussed by literature yet. Also, CSR strategies in different countries can cause different local challenges due to different institutional context, such as different national environmental policies and requirements (Muller 2006; Barin Cruz and Boehe 2010). Issues of local responsiveness versus global integration are broadly discussed in international business literature. However, Muller (2006), Barin Cruz and Boehe (2010) argue that academic- or practitioner-oriented literature has not sufficiently addressed the issue of how to strategically manage CSR in MNEs.
The level of interest in issues related to CSR has increased considerably (Carnevale et al. 2011). Since CSR has evolved over the years, many researchers have written literature reviews pointing out important and specific issues. Nowadays, CSR strategies have become an integral part of business organizations and are considered as a condition for competitive advantage and long-term sustainability (Porter and Kramer 2006; Halme and Laurila 2009; Brik et al. 2010; Carroll and Shabana 2010; Blomgren 2011; Rodriguez-Melo and Mansouri 2011). The aim of this research is to explore the influence of CSR on business strategies of Dutch MNE headquarters and subsidiaries in the FMCG industry.
Therefore, the main research question of this thesis is defined as follows:
Research question. What is the impact of CSR on business strategies of Dutch multinationals
and how does this influence the subsidiaries in Asian host countries?
question. In order to secure anonymity of the interviewed respondents no names and company names are mentioned in this study.
In the next chapter a review of relevant literature will be provided. Based on the theory hypotheses will be formulated. In chapter three the methodology will be discussed. And chapter four will summarize the main findings as working propositions that can guide further empirical research. Finally, followed by chapter five, the conclusions, limitations, and directions for future research will be given.
2
LITERATURE REVIEW
This section provides an overview of relevant literature. First, a review of international business literature on the headquarter-subsidiary relationship with focus on dimensions of CSR strategies and the global and local responsiveness framework was conducted. Based on the literature review, hypotheses will be formulated.
2.1 CSR
McWilliams and Siegel (2001) CSR refers to an organization’s moral, ethical and social responsibilities outside its own economic activities. Many researchers have attempt to describe the definition of CSR (Dahlsrud 2008), but a commonly accepted definition remains unclear (Gatti et al. 2012). The first definition of CSR was formulated as follows ‘to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society’ (Bowen 1953, p.6). Over time the concept and definition of CSR and CSR activities has become even more broad and complex, which leads to a lack of consensus among academics and practitioners (Dahlsrud 2008; Matten and Moon 2008; Dobers 2009; Carroll and Shabana 2010). However, the most well-known framework and widely accepted is Carroll’s (1979) framework of CSR. According to Carroll’s (1979) pyramid, which is shown in Figure 1, an organization has four types of responsibilities: economic, legal, ethical and philanthropic. The first responsibility implies that organizations are economic in nature and are obligated to being profitable and productive. Secondly, the legal responsibility addresses that organizations should follow the law. Thirdly, organizations are expected to operate in an ethical way. And lastly, the organization’s contribution to the welfare of the society is reflected in the philanthropic responsibility (Carroll 1979; Fatma, Rahman and Khan 2015).
FIGURE 1 Dimensions of CSR
People Social Performance Profit Economic Performance Planet Environmental Performance
According to Sheehy (2012), within organizations the definition of CSR is broad as well. Often organizations claim to be practicing CSR when they donate to charity or expending large sums to reduce environmental impacts (Sheehy 2012). However, McWilliamson and Siegel (2001) describe CSR as engaging in actions that appear to further some social good, beyond the interests of the firm and that which is required by law. Another commonly used framework that elaborates on the idea of CSR being more than investing in social good, is the triple bottom line framework. According to Elkington (1997), organizations should not only strive for one goal, like financial goals. In order to build and to maintain a successful and sustainable business, a modern business model should include three bottom line topics: social, environmental and economic. Also, better known as people, planet and profit. People includes the first part of the triple bottom line framework and ensures the social responsibility of a MNE throughout the organization to all stakeholders. The second part is planet which covers the environmental responsibility. Finally, the third part of the triple bottom line is Profit which is about the financial targets of a company (Elkington 1997; Savitz and Weber 2006; Willard 2002). Figure 2 shows a visualization of the three Ps.
FIGURE 2 Triple Bottom Line
Since the triple bottom line shows how broad CSR is, and includes different aspects which are important for MNEs, this study defines CSR as follows: CSR refers to organizations taking responsibility for their impact on society. CSR activities creates value socially,
environmentally and economically. This is referred to as the three Ps: People, Planet and Profit. The balance which is realized between the triple bottom line values is called sustainability.
2.2 CSR Strategies in MNEs
According to Bartlett and Ghoshal (1989), a MNE is defined as a company that operates in more than two countries. The company has a headquarter in the home country and manages its subsidiaries which are operating in host countries. Due to their strategic posture and organizational capability, MNEs are able to be responsive to national differences. The ability of local responsiveness allows MNEs to adapt their organizational strategies on national levels, which leads to subsidiaries operating independently from their parent companies (Arthaud-Day 2005; Bartlett and Ghoshal 1989). In a decentralized organizational structure subsidiaries typically have autonomy in terms of formulating their own strategies (Hah and Freeman 2014). For MNEs local responsive subsidiaries, which adapt to national and local needs and represent their parent company, play an important role in host countries (AmbaRao 1993). There are various motivations for an organization to incorporate CSR in their business strategies. Many researchers have been trying to understand the relationship between CSR and competitive advantage (Porter and Kramer 2006; Schadewitz and Niskala 2010). Studies that have shown that conducting CSR activities can influence the long-term activity of an organization (Klassen and McLaughlin 1996; Clarkson et al. 2006). In practice, MNEs consider various topics and activities as CSR related, such as social performance, social responsiveness, ethical business activities, stakeholder management, helping communities or other good cause activities. This is in line with theory, since many researchers agree that the concept of CSR consists of competing, complementary and overlapping activities (Matten and Crane 2005; Dahlsrud 2008; Carroll and Shabana 2010).
2.2.1 Managing CSR Strategies
to increase self-regulation on improving these international issues (Chirstmann 2004; Kolk and van Tulder 2002).
The increased attention for international issues resulted in MNEs shifting from seeing CSR as a cost risk reduction effort to noticing the importance of CSR as a strategic goal that increases business growth (Pohle and Hittner 2008). CSR strategies have become an integral part of business organizations and are considered as a condition for competitive advantage and long-term sustainability (Porter and Kramer 2006; Halme and Laurila 2009; Brik et al. 2010; Carroll and Shabana 2010; Blomgren 2011; Rodriguez-Melo and Mansouri 2011). As Figure 3 shows, organizations shift from left to right on the value curve, greater returns are realized as CSR becomes more integrated into core business strategies (Pohle and Hittner 2008). As Pohle and Hittner (2008) describe in their report, MNEs just started to broadening their CSR activities since the past decade. Their findings showed that business leaders claim that they are focusing their CSR activities to develop capabilities in various areas across the CSR Value Curve.
FIGURE 3 CSR Value Curve
(Source: Pohle and Hittner 2008)
Commitment to CSR can improve MNE subsidiaries legitimacy (Campbell et al. 2012; Hah and Freeman 2014), since MNEs are often criticized for outsourcing or relocating their productions to developing countries where CSR issues such as human rights, health and safety issues, environmental awareness, corporate governance, and employee welfare standards are minimal or non-existent (Prout 2006). As MNEs tend to have more public exposure than local
Legal and compliance Strategic philanthropy Value-based self regulation Efficiency Growth platform Adherence to law in the countries of production, operation and distribution Alignment of charitable activities with social issues that support business objectives
organizations, the importance of a proactive CSR strategy for MNEs is more emphasized in literature. Furthermore, besides creating a license to operate, CSR activities can bring mutual benefits for both the MNEs and residents of the host country (Jain and Vachani 2006; Porter and Kramer 2006).
2.2.2 Local Versus Global Framework
Issues of local responsiveness versus global integration are extensively examined in literature. Bartlett and Ghoshal’s (1989) global integration versus local responsiveness framework mainly relates to organizational strategic responses to product markets. However, researchers recognized that issues of local responsiveness versus global integration have not received sufficient attention in CSR related context (Muller 2006; Jamali 2010; Barin Cruz and Boehe 2010). Husted and Allen (2006) also applied this framework to CSR strategies. They address the increasing need for MNEs to be socially responsible towards various host countries. However, researchers and managers differ on whether MNEs should centralize their CSR strategies or whether they should localize their activities in consultation with their stakeholders (Muller 2006; Jamali 2010). Jamali (2010) addresses the advantages and disadvantages of the global and local strategies using input of Husted and Allen (2006) and Muller (2006) shown in Table 1.
TABLE 1
Global versus Local CSR in MNEs
Advantages Disadvantages
Global CSR Upward harmonization of CSR standards internationally
Globally integrated and standardized strategy policies, processes, and structures consistent across cultures
Insensitivity to local needs
Reduced ownership and legitimacy
Compliance based strategies that are tailored to end of pipe controls
Approaches that live up to minimum host requirements
Local CSR Nationally responsive and adapted to local context
Tailored to local cultural differences and preferences
Fragmented inconsistent and reactive strategies Lack of clear responsibility and internal tensions Approaches that live up to minimum global requirements
High coordination and control necessary
(Source: Jamali 2010)
subsidiaries with high autonomy in their overall activities tend to be more proactively involved in CSR. Even though, global strategies can result in positive social spin offs, it remains an enormous challenge to monitor and control irresponsible behavior (Jamali 2010). Moreover, localized CSR strategies is difficult to monitor and control due to physical and cultural distance.
2.3 Controlling Theories for CSR strategies
Jamali (2010) argues that the search of MNEs for local legitimacy and their subsidiaries in host countries can be explained by two controlling theories: the stakeholder theory (Freeman 1984; Yang and Rivers 2009) and the institutional theory (Alford and Friedland 1985; DiMaggio and Powell 1983; Kostova and Zaheer 1999; Tan and Wang 2011).
2.3.1 Stakeholder Management Theory
2.3.2 Institutional Theory
Social activities and strategies across countries are different among countries. In order to explain these differences, the institutional theory can be used which is another widely discussed framework (Aguilera and Jackson 2003, Jamali 2010). The institutional theory is broadly discussed in social sciences literature (Scott 2001), and has provided a useful structure for understanding the effects of institutions on CSR behaviors of organizations (Aguilera and Jackson 2003; Campbell 2006; Muthuri and Gilbert 2011). The institutional theory takes into account institutions concerned with social, cultural and regulatory influences that address the continuity and legitimacy of an organization rather than arguing on efficiency-seeking behavior (Roy 1997). There are three pillars of institutional forces which can help this research to explain how regulations influence the CSR strategy of organizations. The first institutional pillar examines the regulative institutions which rely on governmental legislation, industrial agreements and standards such as rule-setting and monitoring. The second institutional pillar emphasizes normative institutions which are composed of values and norms. These types of rules carry a more social preference aspect (Scott 2007). Finally, the cultural-cognitive pillar is based on behavior that is influenced by human existence, for example cultural values, shared beliefs and cognitive frameworks (Carroll 1964; Scott 2007). Since these three pillars are different across countries, it is expected that CSR strategies within MNEs differ on home and host country level.
2.4 CSR Within MNEs Across Countries
findings show that local autonomous subsidiaries with proactive CSR strategies appear to be influenced by the home country and international policies.
2.5 CSR literature in Various Sectors
Literature has extensively discussed different motivations for MNEs to incorporate CSR in their business strategies. It has been recognized by researchers that the CSR literature is very fragmented. Such as on level of analysis. Recent published literature has been discussing CSR of MNEs in various sectors in different countries. For instance, Connor, Parcha and Tulibaski (2017) researched CSR communication of MNEs within the petroleum industry, Sulemena (2017) conducted a cross-country analysis of CSR activities within the telecommunications companies, Fatma, Rahman and Khan (2015) analyzed the influence of CSR activities of financial institutions, Muller (2006) explored CSR activities and subsidiary autonomy in the Mexican automotive industry and Panwar et al. (2014) analyzed how MNEs gain legitimacy via CSR activities of publicly traded companies versus family-owned companies but does not take sectors in consideration. Hence, Jamali (2010), often used as reference on this topic by other, focuses on CSR of MNE subsidiaries in developing countries. Jamali (2010) uses the global and local framework to acquire more understanding how CSR strategy develops within various MNEs in Lebanon. Their study includes, as one of the few, a sample of 10 MNE subsidiaries with different core competences. However, a distinction between sectors is not clearly analyzed in their findings.
As mentioned in the introduction section, this thesis aims to explore the impact of CSR on business strategies of Dutch multinationals in the FMCG industry. As described in CSR literature, findings show that subsidiaries with high autonomy in their overall activities tend to be proactively engaged in CSR activities. Therefore, this study will investigate whether the level of subsidiary control is influencing the compliance of global CSR strategies.
3
METHODOLOGY
3.1 Research Design
The purpose of this study is to examine the headquarter-subsidiary relationship and the influence on CSR strategies and activities in developing countries. Existing research mainly address CSR strategies in context of European countries and North America (Jamali 2007; Abugre 2014). This exploratory study makes various contributions to existing literature since empirical studies about CSR strategies and headquarter-subsidiary relationship of Dutch MNEs in developing countries are scarce. In a decentralized organizational structure subsidiaries typically have autonomy in terms of formulating their own CSR activities. As described in CSR literature, Muller (2006) found that the more autonomous the subsidiary is in their overall activities the more it tends to be proactively engaged in CSR. However, since other researchers also found contradicting evidence, this study explores whether the level of subsidiary control is influencing the compliance of global CSR strategies. This thesis expects that autonomous subsidiaries are more likely to be inspired by global CSR directives. It is also expected that CSR strategies are mainly implemented on a global level and CSR activities are carried out on local level.
Several frameworks were introduced in the literature review, this thesis aims to extend its theoretical framework based on the global versus local theory applied on CSR strategies. To be able to answer the research question, information of Dutch MNEs on CSR should be derived from existing annual reports and CSR disclosures. However, a mixed method research was necessary, since more information was needed in order to investigate the impact of CSR on business strategies of Dutch MNEs, especially in Asian host countries.
3.2 Research Methods
autonomy and their compliance to global strategies. An advantage of this research method is that interviews allow an open research process and the researcher is able to collect in-depth information on CSR related topics (Ritchie and Lewis 2003; Hennink et al. 2011). However, there are also limitations that need to be taken into consideration. Firstly, the answers of respondents can differ from a real scenario when they know that they are being recorded. Secondly, a common issue during conducting explorative studies is the over-involvement of the researcher, this should be avoided or decreased as much as possible (Seidman et al. 2004). 3.3 Research Sample
This study focuses on a specific sector, MNEs operating in the FMCG industry are experienced to engage in a relative high degree of CSR practices compared to other industries. Core products of MNEs in the FMCG industry are tangible and have a more complex global value chain than intangible products due to various aspects such as sourcing, processing, packaging, and distributing. The complexity of the global value chain in the FMCG industry increases the importance of the role of CSR. The Dutch government claims that Dutch MNEs are playing a major role in laying groundwork for CSR related activities in Asian countries (Ministry of Foreign Affairs NL 2015). Well-known Dutch MNEs are investing in CSR activities in developing countries such as Vietnam in many various ways, this research will focus on FMCG multinationals headquartered in The Netherlands with subsidiaries in Asia. The research sample was selected based on two criteria:
1. Organization must be a Dutch MNE with at least one operation in Asian countries. 2. Organization must be operating in FMCG industry.
TABLE 2 Research Sample
Industry - Core Business CSR disclosure # of employees
(2017)
FMCG – Food Retailer Yes 370.000
FMCG – Dairy products Yes 22.000
FMCG – Brewer Yes 73.525
FMCG – Consumer Goods Yes 169.000
Lastly, the requirement for selecting respondents was that the respondent must to be a manager with CSR related job activities in the FMCG industry. Only, two managers of the research sample were available for interviews during the research period. Therefore, findings and conclusions of this study are based on secondary data of four MNEs which are mentioned in Table 2. And primary data of two respondents in the FMCG industry. A short overview of the interviewed respondents is shown in Table 3.
TABLE 3
Research Sample - Interviews
Industry - Core Business Job Title
Respondent A FMCG – Dairy products Manager Corporate Environmental affairs &
Sustainability
Respondent B FMCG – Consumer Goods Global Sustainable Business Manager
4
FINDINGS
In this part, key results will be discussed which are emerged from the qualitative content analysis and the interviews. In order to answer the research question, findings of the CSR strategies of FMCG multinationals will be explained.
4.1 CSR Strategies
After analyzing the CSR content in annual reports, specified CSR reports, and on the corporate website, almost all FMCG multinationals included various sustainability goals and communications in their reports and on their corporate website. It is notable that only one MNE does not have a separate CSR report. Instead, the organization introduced a joint annual and sustainability report for the first time in 2017. An overview of the availability of CSR data for each FMCG multinational is shown in Table 4.
TABLE 4 Disclosure of CSR data
Industry - Core Business Annual report with
CSR section
Specified CSR report
Website with CSR section
FMCG – Food Retailer Yes Yes Yes
FMCG – Dairy products Yes Yes Yes
FMCG – Brewer Yes No Yes
FMCG – Consumer Goods Yes Yes Yes
4.1.1 Global Goals
4.1.2 Implemented CSR Strategies
Based on the availability of CSR content in the annual and the specified CSR reports in the last decades, MNEs started to pay more attention to CSR related activities. Currently, at all examined MNEs CSR is part of the corporate strategy and applied to their entire value chain. One of the examined MNEs even shifted the organizational focus from short-term quarterly profits to strategic sustainable value creation. It was the first Dutch FMCG multinational that changed their core business strategy into a CSR business strategy and therefore they became a benchmark for all other FMCG organizations.
Respondent A ‘In our company we started to pay attention to sustainability in 2010.
After the merger. In 2006 we started to make our milking parlor more sustainable. It was a topic which we had to deal with at that time. In 2010 due to the merger, sustainability became part of the company’s strategy. And in 2015 the strategy was further elaborated and detailed.’
Respondent B ‘In this company, everyone has been injected by the company
sustainable living plan thinking. Seven years ago.’
Based on the important topics defined as the 17 Global Goals, all FMCG multinationals formulated their own corporate CSR program. In the analyzed reports and on the corporate website it is clear that each FMCG multinational takes CSR into consideration. However, different definitions and terminology are used among the MNEs. For example, some MNEs refer more to ‘sustainability’ than to ‘corporate social responsibility’. When analyzing the reports and the corporate website the term ‘sustainability’ is used by all MNEs and the term ‘CSR’ or ‘corporate social responsibility’ is only used by one MNE.
Respondent B ‘At the end of the day we are a business. We try to do good things while we make our business grow. Which is called ‘sustainable business’. So it is not called CSR. When you only say sustainability that is like hugging trees. We are not tree huggers here, we are trying to grow the company because we are trying to basically use the company’s sustainable living plan, or our brand purpose to drive business growth.’
4.2 Level of Subsidiary Control
The degree of autonomy of subsidiaries differs per examined MNE. When exploring the organizational structures of the MNEs, 75% of the organizations has a regional headquarter in Asia which directly supports Asian subsidiaries in Asian host countries. The two respondents state that the Asian subsidiaries of their company are highly autonomous, since they are responsible for local operations.
TABLE 6 Organizational structure
Food Retailer Dairy Products Brewer Consumer Goods
Headquarter (NL) X X X X
Global Team (NL) X X X
Regional Office X X X
Local Subsidiary X X X X
For all MNEs holds that the core CSR and sustainable business strategies are formulated on global level. Thus, Dutch FMCG multinationals develop their whole CSR strategy at the headquarter and they make sure it is in line with the Dutch and European rules and regulations.
Respondent A ‘We have a very small ‘sustainability’ office here because we believe
that the responsibility should be borne in the business. We mainly have a coordinating function within the organization.'
Respondent B ‘We have global teams. So in Holland we have the global office but
And we have markets. So all over the world we have operating companies, like in Asia. Or in Benelux. This is where the rubber meets the road. This is where we implement the plans. They are very operational. So what the global team does, is the direction and also planning for the future, and also supporting local countries to achieve their goals. But at the same time the local countries are the ones that are doing the ‘now’. Meaning, translating the plans into growth.’
Once the CSR or sustainability strategy is developed on global level, the whole corporate CSR and sustainability plan must be implemented in the business. Most of the MNEs have their CSR integrated in their core business strategy, which means subsidiaries are responsible for the operational CSR activities and projects must be in line with the global CSR and sustainable business strategy.
Respondent A ‘As long as it is a local issue, the subsidiary knows how to solve their
own problems. If Thailand suddenly needs to deal with sugar tax or carbon tax, they try to handle the issue locally. They need to negotiate that our dairy products are not part of that kind of tax issues because it is a healthy dairy product. Once negotiated, they report back to us.'
Respondent B ‘So we have a specific framework. The corporate purpose is clear to
everyone, the sustainable living strategy.’
‘The local subsidiaries are responsible for their own activities and business, yes. But the global team creates a community of practice […]. We are global, so we work with countries that are independent, but we help them with sponsors.’
4.3 Compliance of Global Strategies
subsidiaries are more focused on issues in the specific host country. Another notable finding is that some subsidiaries even have their own country specific sustainability report.
Respondent A as well as respondent B claims that subsidiaries are highly autonomous when it comes to operational activities and projects. The MNEs are motivating their subsidiaries to strive for sustainable business and try to incorporate CSR and sustainable business as a core strategy.
Respondent A ‘Developing and setting up sustainability activities in Asia are the
responsibility of the Marketing department in that specific country. However, it needs to be in line with the overall strategy. Subsidiaries need to follow the strategy which is formulated in The Netherlands.’
Respondent B ‘There is a framework we established in terms of thinking. First things
first: does it drive business, the program you are doing, is it driving business. If you are the implementer of that activity how does this drive our business growth. If you cannot, stop doing it […]. Are you looking at trends in the market. Is it relevant to your market. You need to think in this range. You have to adapt to the market, you need to know the global trends, market trends […]. So you need to be relevant to your market. This is important for doing the sustainable business program.’ These findings will be used as input in order to answer whether the level of subsidiary control is influencing the compliance of global CSR strategies. In the final section the impact of CSR on business strategies of Dutch multinationals and subsidiaries will be discussed.
5 DISCUSSION
5.1 Sustainable Business
As mentioned in the literature review CSR is a definition which is broadly discussed in literature. In order to build and to maintain a successful and sustainable business, a MNEs should include three bottom line issues: social, environmental and economic. Better known as people, planet and profit (Elkington 1997; Savitz and Weber 2006; Willard 2002). Throughout the years the concept and definition of CSR and CSR activities has changed and become even more broad and complex, which led to a lack of consensus among academics and practitioners. However, this study confirms that the definition of Elkington (1997) is similar to how CSR is defined in practice. Findings of this study support this change of definition, since CSR is not a commonly used term anymore in developing business strategies. Nowadays, MNEs refer more to ‘sustainability’ or ‘doing sustainable business’.
‘At the end of the day we are a business. What we try to do is we are using our business as a force for good. We try to do good things while we make our business grow. Which is called
sustainable business. So it is not called CSR.’ – Respondent B
Based on the important topics defined as the Global Goals all FMCG multinationals has formulated corporate CSR program. The social responsibility matrix in Table 5 shows that most MNEs do not contribute to all defined Global Goals. In an ideal case all MNEs should contribute to all 17 Global Goals. However, three important goals were integrated in all MNEs which are shown in Table 7.
TABLE 7 Common Global Goals
Global Goals
Goal 2: Zero Hunger
Goal 8: Decent Work and Economic Growth Goal 12: Responsible Consumption and Production
defined Global Goals. Findings show that this particular MNE is used as a benchmark for doing sustainable business in its industry. This MNE shows a progressive attitude and agreed to lead their business with a triple bottom line mindset. Furthermore, the urge to ‘drive sustainable business’ seems to become more important in the future. As their strategies improve, more MNEs aim to fully integrate sustainability into their core strategy.
As discussed in literature, the increased attention for global issues resulted in MNEs shifting from seeing CSR as a cost risk reduction effort or a financial investment to acknowledging the importance of CSR as a strategic goal that increases business growth (Pohle and Hittner 2008). Based on findings of the large amount of CSR disclosure on websites and based on data derived from interviews, this study concludes that CSR has become more integrated into core business strategies. Therefore, the first proposition is formulated as follows:
Proposition 1. In order to grow their business Dutch MNEs in the FMCG industry are likely
to incorporate their CSR strategies as their core business strategy.
5.2 Level of Subsidiary Control
5.3 Compliance of Global Strategies
All FMCG multinationals developed a CSR or sustainability strategy on global level. Each MNE has their own sustainability vision which is translated in a program. Literature mentioned that global CSR in MNEs will have a negative influence on compliance based strategies. On the other hand, local CSR can result in approaches that live up to global requirements (Husted and Allen 2006; Muller 2006; Jamali 2010). However, since most MNEs have integrated CSR related goals in their core business strategy, subsidiaries are likely to comply to these global goals. Subsidiaries are fully responsible for operational CSR activities and projects, and as long it is in line with the global CSR and sustainable business strategy, headquarters do not intervene. Based on this knowledge, it can be concluded that autonomous subsidiaries do have a positive influence on compliance of global activities. Based on the previous discussed findings the following proposition can be formulated:
Proposition 2. Subsidiaries with high autonomy in their overall activities are more likely to
be more engaged in local CSR activities and appear to be predominantly in line with the home country and global integrated CSR strategy.
5.4 Contributions, Limitations and Opportunities For Further Research
This study has made a few contributions. First, this report provides insight into the development and implementation of CSR business strategies of Dutch FMCG multinationals. It emphasizes the importance of a CSR strategy as a core business strategy. Secondly, this research has attempted to provide a better understanding of the impact of CSR on business strategies of Dutch multinationals. And how Asian subsidiaries host are influenced by the global CSR strategy of their headquarter
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APPENDIX A
Interview Questions - Dutch Version
Het doel van dit onderzoek is het ontdekken hoe multinationals hun internationale CSR strategieën in opkomende markten ontwikkelen, neerzetten en nastreven op lokaal niveau. Dit onderzoek richt zich voornamelijk op Nederlandse multinationals met dochterondernemingen in Vietnam.
Dit interview wordt afgenomen in het kader van mijn scriptie-onderzoek voor de master International Business & Management, Rijksuniversiteit Groningen. Het interview zal ongeveer 40-60 minuten duren. Alles wat wordt besproken tijdens dit gesprek wordt geanonimiseerd en als vertrouwelijk behandeld.
Respondent # Naam:
Functie:
Aantal jaren in dienst:
• Kunt u uzelf kort introduceren, wie bent u, wat houdt uw functie in?
• U bent al X aantal jaar in dienst bij de organisatie, is er veel veranderd door de jaren heen?
• Wat waren voor u de grootste uitdagingen?
• Op welke ontwikkeling(en) bent u (persoonlijk) het meest trots? 1. CSR Strategie in de organisatie
Kunt u mij meer vertellen over CSR in uw organisatie in Nederland? • Wat betekent CSR en hoe belangrijk het voor de organisatie? • Draagvlak door de hele organisatie?
2. CSR beweegredenen van de organisatie
CSR is steeds belangrijker geworden door de jaren heen. Wanneer werd CSR echt belangrijk voor de organisatie en werden er ook daadwerkelijk stappen in gemaakt?
• Wat is nu de belangrijkste motivatie voor uw organisatie om te investeren in CSR? • Kunt u de belangrijkste stakeholders/doelgroepen benoemen?
• Hoe zijn de stakeholders/belangrijke doelgroepen betrokken?
• Wat zijn de grootste voordelen voor de organisatie die voortkomen uit de CSR activiteiten?
3. Organisatierelatie & verhouding – Nederland vs. Azië (Vietnam) Kunt u mij meer vertellen over de organisatie in Azië (Vietnam)?
• Wat is de relatie tussen het HQ Nederland en de dochteronderneming in Azië (Vietnam)?
• Zou u de de dochterondernemingen als internationaal gericht of lokaal gericht omschrijven? (Global vs Local)
• Hoe onafhankelijk zijn de dochterondernemingen in Azië (Vietnam)?
• In welke zaken zijn de dochterondernemingn in Azië (Vietnam) (on)afhankelijk? 4. Internationale CSR strategie
Kunt u mij meer vertellen over de CSR strategie in uw organisatie op internationaal niveau in Azië (Vietnam)?
• Hoe is de CSR strategie gewaarborgd in de organisatie op internationaal niveau? (HQ Nederland/Regionaal/Landelijk)
• Zijn de dochterondernemingen in Azië (Vietnam) onafhankelijk in het naleven van de CSR strategie? In hoeverre is dit verplicht?
• Hoe wordt dit overgedragen en doorgezet (structuur)? (Afdeling/managers/functies/personen)
5. CSR activiteiten
Kunt u mij meer vertellen over de CSR activiteiten in Azië (Vietnam)?
• Hoe worden de CSR activiteiten op internationaal niveau opgezet/bedacht? (HQ Nederland/Regionaal/Landelijk)
• Zijn de dochterondernemingen in Azië (Vietnam) onafhankelijk in het bepalen van de activiteiten?
• Hoe wordt dit beoordeeld en gemonitord?
• Wat voor soort activiteiten zijn belangrijk voor uw organisatie? • Sociale impact / milieu en omgeving impact / economische impact 6. CSR - overheid, wetgeving en officiële instanties
Wat voor rol speelt de Nederlandse overheid, wetgeving en officiële instanties bij het bepalen en uitoefenen van de CSR activiteiten in Azië (Vietnam)?
• Impact van de OESO-richtlijnen / Nederlandse overheid?
Wat voor rol speelt de lokale overheid, wetgeving en officiële instanties bij het bepalen en uitoefenen van de CSR activiteiten in Azië (Vietnam)?
• Wat is de impact van deze instanties op de overkoepelende CSR strategie?
• Zijn er nog meer standaarden of andere belangrijke regels waar uw organisatie mee te maken heeft bij het bepalen van het CSR beleid (lokaal)?
• In hoeverre belemmert de lokale overheid, wetgeving en officiële instanties het doorzetten van de globale CSR strategie op lokaal niveau?
Tot slot
De OESO-richtlijnen bieden handvatten voor bedrijven om met kwesties om te gaan zoals ketenverantwoordelijkheid, mensenrechten, kinderarbeid, milieu en corruptie. Hiermee vormen de OESO-richtlijnen het uitgangspunt voor het Nederlandse internationaal MVO-beleid.
De Richtlijnen (topics)
Hoofdstuk 1 & 2 (Begrippen en uitgangspunten en Algemene beginselen voor bedrijfsbeleid) Hoofdstuk 3 (Informatieverstrekking)
Hoofdstuk 4 (Mensenrechten)
Hoofdstuk 5 (Werkgelegenheid en arbeidsverhoudingen) Hoofdstuk 6 (Milieu)
Hoofdstuk 7 (Bestrijding van corruptie, omkopingsverzoeken, en afpersing) Hoofdstuk 8 (Consumentenbelangen)
Hoofdstuk 9 (Wetenschap en technologie) Hoofdstuk 10 (Mededinging)
APPENDIX B
Interview Questions - English Version
The purpose of this study is to explore how globally defined CSR strategies in developed countries are influencing local CSR activities of subsidiaries in developing countries. This research will mainly focus on Dutch MNEs with at least one subsidiary in Vietnam.
This interview is being conducted in the context of my thesis research for the master in International Business & Management at the University of Groningen. The interview will last about 40-60 minutes. Everything that is discussed during this interview is anonymised and treated as confidential.
Respondent # Name:
Job Title:
Years of Employment:
• Please introduce yourself and tell me more about your career and position in your organization.
• You have been working at this organization for X years already. Can you explain the changes throughout the years? Especially in context of sustainability and CSR?
• Can you name some great challenges you faced during your career?
• Are there any great (sustainable) developments that you and the organization realised which you are proud of?
1. CSR Strategy of the Organization
Can you tell me more about sustainability / CSR in your organization? • How important is CSR for the organization?
• Is CSR supported and lived by throughout the organization (in practice)? • How is CSR embedded in the organization structure?
(Department/Managers/Positions)
2. CSR Motives of the Organization
CSR has become more and more important throughout the years. When/how did the organization realized that CSR was really important and real action was needed?
• What is the main motivation for the organization to invest in CSR? • Which stakeholders are involved?
• How are the stakeholders involved? And which one(s) plays the most important role? • What are the main benefits that your company gets from CSR activities?
3. Headquarter & Subsidiary Relationship – The Netherlands vs Asia (Vietnam) Can you tell me more about the organization in Asia (Vietnam)?
• Can you explain the relationship between the headquarter and the subsidiary in Asia? • Would you describe your company as globally or locally focused?
• How would you describe the subsidiary autonomy of your company?
• Do you have some examples of cases in which subsidiarie in Asia (Vietnam) are (in)dependent?
4. International CSR Strategy
Can you tell me more about the organization’s CSR strategy on international level in Asia (Vietnam)?
Multinationals are required to have explicit CSR strategies not only at the headquarters level, but also at the subsidiary level.
• How are CSR strategies secured in the organization at international level controlled and monitored?
• Can subsidiaries decide autonomously whether they follow HQ strategy or are they required to comply to the corporate CSR strategy?
• How does the organization transfer / translate the corporate CSR strategy to subsidiaries?
• How would you describe the link between CSR activities of the subsidiary and the CSR strategy of the organization?
• Differences among countries / continents? - Analysis worldwide? 5. CSR Activities
Can you tell me more about the CSR activities in Asia (Vietnam)? • How are CSR activities of subsidiaries set up?
(Via HQ/Regionally/Country specific)
• Are subsidiaries autonomous when it comes to setting up or conceiving CSR activities?
• How are these activities in Asia controlled and monitored?
• What kind of CSR activities are important for your organization? • How are CSR practices realized in your organization?
• Social impact / environmental / economical 6. CSR and the Institutional Environment
What is the role of Dutch government, laws and other official institutions when determining and implementing CSR activities in Asia (Vietnam)?
• Impact of OESO-guidelines / Dutch government?
What is the role of local government, laws and other official institutions when determining and implementing CSR activities in Asia (Vietnam)?
• What is the role of the government regarding your organization’s CSR strategy? • Are there any other norms or standards in your CSR programs your organization needs
to follow when setting up local activities?
• To what extent do you think that institutions determine the CSR strategy of your organization on global level?
Finally
APPENDIX C
Transcript Interview Respondent A
Industry: Fast-moving consumer goods (FMCG)
Job Title: Manager Corporate Environmental affairs & Sustainability Years of Employment: 14-15 years
Kunt iets over uzelf vertellen?
Ik ben verantwoordelijk voor het duurzaamheidsbeleid binnen de organisatie. We hebben hier een heel kleine office omdat we vinden dat de verantwoordelijkheid in de business gedragen moet worden. Dus wij hebben vooral een coördinerende functie. Eén kant van het werk is de implementatie van het duurzaamheidsbeleid dat we in 2010 hebben ontwikkeld en dat we tot 2020 gaan implementeren. En de tweede stap is dat ik probeer ook internationaal een standaard voor duurzame zuivel van de grond te krijgen. Dat we internationaal ook aan onze klanten kunnen laten zien wat het begrip duurzame zuivel is en dat we het proces van continu verbeteren aan kunnen geven. Dat is eigenlijk de externe taak. Daarnaast doe ik ook veel belangenbehartiging. Bij X ben ik voorzitter van het platform grondstoffen en bij X zit ik een duurzaamheidscommissie. Bij X ben ik voorzitter van de werkgroep energie en er zijn nog wel wat nevenactiviteiten. Maar de belangrijkste taak is de implementatie van het duurzaamheidsbeleid.
U zit al 15 jaar in deze organisatie, wat is er in al die jaren veranderd op het gebied van duurzaamheid?
naar binnen gekomen. De ontwikkelingen is dat we van buiten naar binnen zijn gaan kijken en veel meer moeten laten zien dat we een rol hebben in de maatschappij en dat we ons af moeten vragen hoe we die in moeten vullen. Dat is na 2006 gekomen. Toen met de fusie werd ik verantwoordelijk voor duurzaamheid van de hele onderneming.
Was er dan wel draagvlak binnen de organisatie voor duurzaamheid?
Nee eigenlijk helemaal niet. Iedereen had het gevoel dat het een beetje een parallel spoortje was. Ieder jaar gaven we wel een jaarverslag uit en sommige klanten vroegen ernaar en andere vroegen er helemaal nooit naar. Maar het is wel steeds belangrijker geworden en ze zien nu allemaal dat we als onderneming, omdat we er al zoveel jaar aan werken, gewoon een voorsprong hebben op de rest van de concurrenten en op de rest van Nederland. Er zijn een aantal bedrijven die het al wat langer doen, maar die praten er vooral over. Ik denk omdat wij echt met een coöperatie zitten met boeren, dat we het echt vooral ook uitvoeren.
Hebben die boeren in de coöperatie daar ook een zeggenschap in?
Ja, ze zijn de baas van de onderneming. Dus als wij wat willen, als we bijvoorbeeld zeggen dat we aan broeikasgasreductie willen werken of dat we aan biodiversiteit willen werken, dan moet het altijd via de boeren. Daarom duurt het vaak wat langer, maar daardoor moeten die boeren echt zelf aan de slag om bijvoorbeeld de voetprint te verminderen of dierenwelzijn vergroten door de koeien in de wij zetten.
Hebben de boeren ook zeggenschap in het beleid vanuit de organisatie?
Je hebt het beleid van de onderneming X als zuivelbedrijf. Daarin bepalen we zelf waarin we investeren. Dus als wij vinden dat we moeten investeren in energie-efficiënte apparaten, kunnen we dat zelf besluiten. Als we tegen de boeren zeggen dat ze de koeien meer buiten moeten laten, dan moeten we dat echt met de boeren zelf overleggen. Want het is hun bedrijf. We kunnen niet zomaar tegen een boer zeggen wat ze wel of niet kunnen doen. Boeren zijn ook eigenaar van de onderneming, maar ze gaan niet tot in detail over welke investering we mogen doen. Als wij zeggen dat we in Vietnam gaan bouwen, dan wordt zo’n investeringsbesluit wel aan een soort overkoepelende raad gepresenteerd, maar hoe we dat doen bepalen we zelf.
betalingssysteem. We belonen de boeren als ze het beter zijn gaan doen. Op een gegeven moment als het slechter is geworden, dan worden ze daar ook op aangepakt.
Valt duurzaamheid vanuit de organisatie onder één afdeling?
Ik heb vanuit mijn functie vooral een coördinerende functie. Maar er is ook een afdeling die doet bijvoorbeeld de investering bij alle fabrieken. Zij moeten zorgen dat ze energie-efficiënte apparaten aanschaffen. We hebben ook een afdeling die eigenlijk alleen contact heeft met de boeren en daar de regelingen voor maakt. Zij doen ook de betaling van melkgeld. Die moeten zorgen dat ze met de boeren op de juiste lijn zitten. Ik kan niet zomaar voor een boer gaan staan. Dan gaan ze aan mij vragen wie ik ben en wat ik daar kom doen. Dit wordt echt per afdeling en per verantwoordelijkheid gescheiden. En waar de verantwoordelijkheid ligt, die moeten ook het werk doen en het belang van duurzaamheid in het oog houden.
Het bedenken hoe duurzaamheid echt wordt toegepast binnen het bedrijf, gebeurt dat wel door het management?
Ja, dat is echt onderdeel van beleid dat we neerzetten. We hebben een duurzaamheidsbeleid en we vinden dat we klimaatneutraal moeten groeien als voorbeeld. Dat wordt dan als beleid neergelegd en aan ons dan de taak dat dit vertaald wordt naar concrete acties. Dan wordt gekeken welke afdeling een bepaald percentage broeikasgasreductie moet behalen. Op een gegeven moment ligt de taak niet meer bij mij maar verder in het bedrijf. Zij kunnen concreet kijken hoe deze doelen behaald kunnen worden en hoe dit bijvoorbeeld samen met de boeren wordt aangepakt. Dit kan door een beloningssysteem te maken. Maar dat ligt helemaal aan hun. Het doel moeten we formulieren maar we schieten niet de middelen voor. Dat moeten ze zelf doen.
