F I N A L T H E S I S R E P O R T
The Self-Presentation of Corporate Social Performance
A Comparative Study on how American and Dutch Multinationals Present Their Social Performance.
ERIK BOCKWEG
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The Self-Presentation of Corporate Social Performance; A Comparative Study on how American and Dutch Multinationals Present Their Social Performance.
Erik Bockweg 1301691
Final thesis report International Business Faculty of Management and Organization University of Groningen, the Netherlands
Supervisors:
Dr. J.F.J. Vos
Dr. H.C. van der Blonk
Leerdam, the Netherlands, August 2004
‘The author bares full responsibility for the content of the thesis report; the copyright of the thesis report rests with the author’
‘De auteur is verantwoordelijk voor de inhoud van het afstudeerverslag; het auteursrecht van het afstudeerverslag berust bij de auteur’
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P REFACE
Unlike most of my colleague students in International Business at the Rijksuniversiteit Groningen (University of Groningen), I have chosen not to engage in problem solving research and accordingly, I choose not to do an internship. I have done several internships before, and I thought it would be a challenge to explore the more academic side of Business science. Furthermore, I had a strong desire to build further on my international experience, and I really wanted to return to Florida, where I studied before for one semester. With that in my mind and some ideas for interesting research subjects, I sought contact with the University of Florida with the question if it was possible to do a research project at that university. With the great help of Ms. Mindy Kraft and Dr. John Hall, I got into contact with Professor Wei Shen. Professor Shen was interested in my plans and was willing to supervise me. The university helped to get the visa arranged, and I was ready to go to Florida to take this challenge!
I have resided in Florida for more than seven months and it has been a great experience.
Although sometimes I found it difficult to work completely individually, I have worked on it with great interest and enthusiasm. The subject of corporate social performance is incredibly diverse and interesting and I hope the reader of this report will share that opinion with me once finished reading.
Rests me to direct a word of thanks to the people that helped me and supported me in the effort to do this research and write this thesis. In the first place, I want to thank Professor Wei Shen from the University of Florida for his willingness to supervise me and for his refreshing insights when I was completely stuck. Then, I want to thank Ms. Mindy Kraft and Dr. John Hall, also from the University of Florida, for showing interest in my project and making the whole venture possible.
Furthermore, I want to thank Dr. Janita Vos and Dr. Heico van der Blonk from the University of Groningen for being my supervisors and providing me with their good and explicit remarks. I want to thank my mother and my father for having trust in me and for providing me with the will and opportunity to study. I owe a special gratitude to Paula, for being a great girl and a great support and friend, and Wouter for being my ‘partner in crime’ and friend for the last 10 years.
Erik Bockweg August 2004
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A BSTRACT
This research analyses the differences in self-presentations of Corporate Social Performance (CSP) issues between American and Dutch companies. The research question is:
What is the difference in the self-presentation of corporate social performance between American and Dutch companies?
The idea behind this research is that CSP is partially dependent on how a company approaches stakeholder management. A company’s approach to stakeholder management is, at least partially, defined by the values and believes that are present in the company. These values and believes are conform the values and believes of the society (country) in which the company resides in. Based on that argument, I expect to find differences in how American and Dutch companies present CSP.
The approach to stakeholder management is analyzed based on information provided by the companies themselves, on their websites and in other publications like annual reports. I analyzed the mission statements and statements of purpose, and other statements relevant for CSP. I have chosen eight companies, divided over four industries for qualitative analysis. In every industry, one American and one Dutch company were selected based on comparability in size. Size was assessed based on turnover and number of employees. The companies analyzed in this research, by industry were: Shell and Exxon Mobil in the oil industry, Wolters Kluwer and McGraw-Hill in the publishing industry, Heineken and Anheuser Busch in the brewing industry, and Unilever and Proctor and Gamble in the Food products industry.
Two Dutch companies, Shell and Unilever, and one American, P&G, are characterized by a normative approach to stakeholder management. The two remaining Dutch companies, Heineken and Wolters Kluwer, and one American company, Exxon Mobil, are characterized by an instrumental approach. American McGraw-Hill showed signs of both approaches and therefore is considered neutral.
The results show that the approach to stakeholder management is not significantly different between the investigated American and Dutch companies. This is not the outcome I expected.
Possible reasons for these results are that with the chosen approach I did not find significant differences, but there are differences. Or the investigated companies indeed are equal in their approach to CSP, which I think is unlikely. Anyhow, self-presentations of companies seem not very useful for the analysis of real CSP. The approach of this research could however be used to analyze self-presentations of companies from other countries and to compare the outcomes with actual social performance.
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T ABLE OF C ONTENTS
PREFACE...3
ABSTRACT...4
TABLE OF CONTENTS...5
1.INTRODUCTION...7
1.1.Background ...8
1.2.Motivation...9
1.3.Problem Definition ... 11
1.4.Reading Guide... 12
2.LITERATURE REVIEW... 14
2.1.Corporate Social Performance... 14
2.2.Corporate Social Responsibility ... 15
2.3.Stakeholder Management... 18
2.4.Society and Culture... 23
2.5.Conceptual framework... 24
3.METHOD... 27
3.1.Research Characterization... 27
3.2.Sample Selection ... 28
3.3.Data Collection and Analysis ... 29
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4.RESULTS... 32
4.1.Major Oil Companies... 36
4.2.Publishing... 40
4.3.Distillers and Brewers... 44
4.4.Food Products... 49
4.5.Comparing the American And the Dutch Companies ... 53
5.DISCUSSION... 55
5.1.Conclusions ... 55
5.2.Reflection on The Results ... 56
5.3.Recommendations for Further Research... 58
5.4.Considerations ... 59
5.5.Looking Back ... 61
BIBLIOGRAPHY... 63
ONLINE RESOURCES... 67
TABLES AND FIGURES... 68
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1. I NTRODUCTION
Although it is not very commonly done by business students at the University of Groningen, I have chosen to write my final thesis on a research project which I initiated myself. Most of my colleague students perform research assignments within an organization, and these research assignments are commonly characterized as problem solving. In general, the organization has a problem and the student is given the assignment to solve the problem or to give recommendations on how to solve the problem. Off course the measures or recommendations have to be justified, i.e.
academically well-substantiated. I have several reasons not to pursue such an effort and to engage in my own research, more characterized as exploratory and academic. For one, I already have done several internships and I can say I have some working experience. An internship is a good way to gain working experience, but I wanted to explore my feeling for the more academic type of research. Secondly, I wanted to take the opportunity I was given to stay and work for several months in the United States. I was given the opportunity by the University of Florida to get visa arranged and to do my research project at that university. I wanted to build further on my international experience, and this was a great opportunity.
At the University of Florida, I was given access to the resources available through the university, a workspace with computer and access to all library resources. I was supervised by Dr.
Wei Shen, who is assistant professor at the department of management. Although Dr. Shen helped me a great deal in reviewing my work and providing me with useful tips, the responsibility for the research was exclusively mine and the University had no direct interest in the project.
In my effort to do this research project, I was severely restricted by many aspects, which has been of great influence on the results. Actually, the initial idea of the research has been altered severely in the process as a result of these restrictions. Where I first wanted to compare actual social performance of American and Dutch companies, I chose to compare the self-presentation of CSP of companies. The first and major restriction was that I had no access to financial resources and therefore, I was limited enormously. I had no opportunities to visit companies, or to call them up. A second important restriction has to do with the restriction the University of Florida puts on using people for gathering empirical data. It is Florida State law that researchers turn in a detailed plan of their survey which will then be considered by a commission. For the type of research I was planning to do this was not easily done and I decided not to get into these difficult procedures. I chose not to use persons and thus I could not just approach people or companies to ask them questions.
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The situation in which I executed this thesis project was rather unique, and as can be expected, the situation and the restrictions were of great influence on the chosen approach, and obviously on the results. The most important notion that has to be stressed is that in this research I consider corporate social performance based on the self-presentation of companies. That means that all data is gathered from what the companies themselves communicate, and that the results are drawn based upon these data! The reason for using this approach is that the information needed is available at no cost and without asking questions, online at the corporate websites of the subject companies. The fact that the results are based on what companies express themselves has to be kept in mind when reading this report.
In this first introductory chapter, I set the foundation for the further presentation of my research in this thesis report. The sections 1.1 and 1.2 respectively, are a brief background and motivation behind the research question at hand. In the background, I explain how I got the idea to do this research and how the subject is embedded in recent developments in the corporate world. In the motivation section, I explain why I think this research is of interest, to whom and why. Then, section 1.3 is the problem definition, formally stating the research objective, research question, sub-questions and the limitations applicable to this research. This section forms the basis for the rest of the research paper. Finally, in section 1.4 I will describe how this thesis report is organized and what can be expected in which chapters.
1.1. BACKGROUND
Corporate social responsibility, corporate citizenship, corporate giving and community involvement are issues that are frequently addressed in the corporate websites of today. Many firms created codes of conduct and business principles, they engage in social auditing and publish social, environmental and sustainability reports. There is a clear desire among companies to show in a variety of ways that their behavior is responsible to society.
Fast and extensive communication increased the accessibility of information all over the world.
The new technologies like internet and E-mail made it possible to relatively cheaply distribute information around the world. This increased consumer awareness which resulted in consumers demanding responsible behavior from companies. Because consumers’ behavior is influenced by the knowledge they have about the companies they deal with, the companies want to make sure that consumers have a positive opinion about them. A negative image can have disastrous consequences for the company’s performance. But corporate social responsibility (CSR) encompasses more than image building alone. It is about all the responsibilities a company has to society. What these responsibilities are is partially regulated in laws and regulations, but for a great deal depends on the
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opinion, the values and believes of the society the firm resides in. In different countries, different rules apply, different laws are instituted and people have different opinions on what is desirable and what is not.
Consequently, companies in different countries will behave differently and will have different ideas of what is desirable and what is not. On the other hand, in increasingly global markets and continuously globalizing companies, it is also arguable that values and believes, and consequently behavior becomes more equal across countries. In a way, corporate social responsibility has also become a more global issue. Some international regulations have been instituted and certain values and believes are generally accepted across the world. Social responsibility is a strategic but also a normative matter. It is strategic because it can strongly influence the public opinion, and normative because it is about doing what is accepted within the applicable values and believes. How companies deal with social responsibility is important to the success of the firm but also, it tells us something about how the company perceives its responsibilities and to whom.
1.2. MOTIVATION
In this research, I investigate the self-presentation of corporate social performance of companies from two countries, the United States of America and the Netherlands. I intend to investigate how these companies approach their social responsibilities and their stakeholders, and ultimately the issue of corporate social performance. My research objective is to:
Evaluate the differences of self-presentations of corporate social performance between American and Dutch companies.
Corporate social performance (CSP) has increasingly been under investigation in management literature. The discussion often focuses on what the real responsibilities of companies are. This is the debate on the stakeholder versus the shareholder view of the firm (Smith; 1776, Friedman;
1962, Freeman; 1986, Alkhafaji; 1989, Ackoff; 1994, Blair; 1995, Post et al.; 2002). On the other hand, scholars explore ways to measure social performance. As Waddock and Graves justly note, the problem is that “CSP is a multidimensional construct, with behaviors ranging across a wide variety of inputs (e.g., investments in pollution control equipment or other environmental strategies), internal behaviors or processes (e.g., treatment of women and minorities, nature of products produced, relationships with customers), and outputs (e.g., community relations and philanthropic programs)” (Waddock and Graves, 1997: 304). Because of the multi-facetted nature of corporate social performance, it is hard to measure this performance. There are examples of
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databases that assess social performance of companies like the Fortune reputation survey and the KLD index. The problem is that these indexes impossibly can be really objective and all inclusive.
The reason is that not all aspects of social performance can possibly be included and not all opinions of entities with an interest can be rated. Furthermore, different organizations experience different aspects as their responsibilities. The problem of measuring corporate social performance still is an unsolved issue in management literature.
As several authors rightly note, CSP is concerned with the outcomes, or results of corporate policies (Preston, 1988; Wood, 1991; Clarkson, 1995). In this research, however, I do not consider the outcomes of corporate policies; I intend to look at how companies themselves approach the issue of CSP, or at least, how the companies express to approach the issue of CSP. The fundamental idea behind this is that corporate social performance depends on a company’s commitment to the interests of its stakeholders (As will become apparent in the chapter 2, stakeholders are the entities a company has responsibility to). What the responsibilities of companies are, to whom and how to deal with these responsibilities is thought of differently among companies and is based on a construct of values and believes that is present in the company. The company will base its policies on what it believes are its responsibilities, and the social performance of the company is an outcome of the company’s policies. The policies are at least partially a result of the company’s commitment to stakeholders.
Figure 1: Internal focus; commitment drives policies
Figure 1 shows the relationship between a company’s commitment to stakeholders and the ultimate outcome of their policies, defining the company’s corporate social performance.
In this research, I look at the self-presentation of CSP of American and Dutch companies. The analysis of self-presentation is interesting because it provides insight in the way companies think about CSP and if there is a difference in this aspect between American and Dutch companies.
Furthermore, it provides insights in the issues that are perceived important by the companies themselves, their commitment to stakeholders, and what motivation the companies have for their CSP policies. The results of this research are interesting in several ways. In the first place, it
EXTERNAL INTERNAL
Commitment to Stakeholders
Corporate Policies CSP; Outcomes of Policies
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contributes to the literature on CSP and stakeholder management because the self-presentation of CSP by companies is hardly dealt with in the existing literature. Secondly, this research can form a good basis to make a comparison between the self-presentation of companies and actual performance. The framework used in this research to analyze self-presentation could be used in such a research.
Now that it is clear what the background for this research is and why it is worth investigating, it is time to present the formal problem definition. In the problem definition, I will formally state the research objective and question. Furthermore, I will state the sub-questions as derived from the research question, and the applicable limitations and restrictions. After the problem definition, I will present a reading guide in which I explain the structure and content of the remainder of this research report.
1.3. PROBLEM DEFINITION
This section provides for a full statement of my research objectives and research questions.
This includes the sub-questions and the restrictions as applicable to this research.
Objective
The objective of my research, as I already mentioned in section 1.2 is to:
Evaluate the differences of self-presentations of corporate social performance between American and Dutch companies.
Research Question
Based on the objective, I formulated the following research question:
What is the difference in the self-presentation of corporate social performance between American and Dutch companies?
Sub-Questions
The sub-questions are derived from the central research question and correspond with the items in the conceptual framework, which will be discussed in chapter 2.5. The answers to these sub- questions ultimately will have to lead to an answer to the central research question. I formulated three sub-questions:
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1. Which stakeholders and/or stakeholder interests are mentioned in the firm’s mission and vision?
2. How can the firm’s approach to stakeholder management as apparent in the firm’s mission statement and vision, be characterized?
3. Based on the preceding aspects, what is the difference in the presentation of corporate social performance between Dutch and American firms?
Restrictions and Limitations
I already introduced the restrictions in the introduction in this chapter because the restrictions have been of great influence for the chosen approach and the results. For the sake of completeness, I shortly note them here:
• I do not have access to financial resources
• I will primarily use the internet to collect data
• I limit the investigation to publicly traded companies
The result of the first restriction is that all my data is collected from sources that are readily available, at no cost. Therefore, I choose to primarily use corporate websites to collect my data, which is the second restriction. Since I look at social performance from the perspective of self- presentation of companies, the internet is the right source to use. On the corporate websites, companies also make their annual reports available, and often other reports, like social reports, environmental reports, et cetera. Publicly traded companies are committed to communicate with their shareholders, the public. The internet offers a good and relatively cheap solution to provide information to the public. Furthermore, the internet is a good way to communicate with other stakeholders, other than shareholders, like customers, suppliers and the community. The third restriction therefore is a logical one, since publicly traded companies are likely to have comprehensive information available online.
1.4. READING GUIDE
In this chapter, I enlarged upon the ideas behind this research and the question at hand. The remainder of this report is devoted to providing a satisfying answer to this question. The report has a simple structure of chapters in which I will deal with all issues necessary for a solid research project. In chapter 2, I will provide a thorough analysis of the existing literature. The purpose is
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two-fold. In the first place, the literature review provides an overview of existing research and knowledge about the subject at hand. Secondly, it forms the basis for a conceptualization of the research question. A conceptual framework is presented at the end of this chapter. The framework is employed to structurally answer the research question. The sub-questions as stated in section 1.3 correspond with the aspects as depicted in the conceptual framework.
Chapter 3 is a detailed description of the methods employed to answer the research question.
The choices I made concerning the used methods are explained, and the used methods for data selection and analysis are further described. The results of this research can be found in chapter 4.
In this chapter I mean to present the factual results of the data collection and analysis. In chapter 5, I will present the conclusions drawn from the results. After drawing the conclusions, I will reflect on the results in connection with the chosen research approach and discuss possible reasons for the outcomes of this research. I will give some recommendations for further research, and I will give my own thoughts on the findings of this research. Finally, I will shortly look back at this research project and how I experienced working on it. But now first, I will start off with a thorough review of the existing literature about the issues at hand in this research.
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2. L ITERATURE R EVIEW
The purpose of this literature review is to explore the extensive literature on corporate social performance, corporate social responsibility and Stakeholder Management. In chapter 2.5, a framework will be developed based on the literature which will be helpful in answering the posed research question. In this literature review, I will start with an analysis of the literature on corporate social performance and the therewith connected issue of corporate social responsibility. Then, I will address the issue of stakeholder management and establish a link between corporate social responsibility and stakeholder management.
2.1. CORPORATE SOCIAL PERFORMANCE
Although much has been written on corporate social performance of companies, the extensive literature on the subject does not provide a clear definition. Many authors write about corporate social performance (CSP) and corporate social responsibility (CSR) but do not clearly distinguish the terms or give clear definitions for both. As the term corporate social performance itself reveals, it has to do with the performance of companies on the social level rather than purely economic.
What the complex concept exactly entails is in debate and several authors provide ideas. Preston notes that: “corporate social performance was intended to suggest a broad concern with the impact of business behavior on society. The concern is with ultimate outcomes or results, not simply with policies or intentions; moreover there is some implication that these outcomes are to be evaluated, not simply described” (1988, cited in Clarkson 1995). Wood defines corporate social performance as “the configuration of the principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships”
(1991). According to Sonnenfeld (nd1), social performance of business is made up by the economic factors of performance and the social side-effects of business’ operations. He notes that social performance of the firm is ultimately assessed by society rather than by corporate executives.
Without giving a clear definition of social performance, Carroll (1979) developed a conceptual model of corporate performance in which he suggests three distinct aspects of corporate social performance that must somehow be articulated and interrelated, a basic definition of social responsibility, an enumeration of the issues for which a social responsibility exists, and a specification of the philosophy of response. Carroll’s model suggests that the performance in the
1 The date of this publication is unknown.
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social sphere depends on the actual responsibilities of companies, on the issues for which these responsibilities exist, and how companies respond to these responsibilities.
As becomes apparent, corporate social performance is performance on another level than purely economic. The concept deals with the relationships companies have with society, how well the companies perform to have a positive impact. The social performance is the sum of the positive impacts discounted with the negative impacts. The problem is that these impacts are not all easily measurable and can very often not be expressed in monetary terms. Therefore, it is very hard to
‘measure’ or analyze corporate social performance. Furthermore, it is clear that corporate social performance has to do with the responsibilities companies have towards society and that it should be evaluated by the public. What the responsibilities of companies exactly are is subject to different views of groups and people within society. The expectations of different stakeholder groups will not be similar, and neither will the company see all these expectations as its responsibilities.
Therefore, what is perceived as the responsibilities of a company is thought of differently by all groups involved, including the company itself and its managers and employees.
2.2. CORPORATE SOCIAL RESPONSIBILITY
Corporate social responsibility is the normative aspect of social performance. The responsibilities tell us something about what is expected from the company, what it should and should not do. According to Carroll (1979) there are four categories of business performance:
economic, legal, ethical and discretionary responsibilities.
The first and foremost responsibility is economic. The basis for the company as institution is its capacity to create wealth. This ability provides the business institution with its right to exist in the first place. Post et al. (2002) refer in this context to the company’s ‘license to operate’ granted by society. The company has the right to exist because, organized the way it is, the company is able to efficiently create certain goods. Doing that, the company creates wealth in the form of value for its customers and a return on assets for their investors, employees and suppliers. Therefore, the company’s first responsibility is to produce goods and services that society wants and to create income for employees and shareholders. When the business organization fails to produce goods or services that society demands, or when it fails to create income for employees and shareholders while doing so, the corporation will cease to exist.
The legal responsibilities of the corporation comprises of the responsibility to operate within the laws and regulations as opposed by society. The corporation has to fulfill its economic obligations, but has to do this within a regulatory framework that limits the freedom of companies.
When society granted the business organization the productive role in the economic system, it also
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set some strict boundaries within which the corporation is supposed to fulfill its role. The rules and regulations are a product of society and reflect what this society perceives as desirable and acceptable and what it perceives as undesirable and is formalized in laws and regulations.
Ethical responsibilities also reflect the expectations of society; however, these expectations are not codified in laws and regulations. When the company does not comply with these responsibilities, it will not be acting conform society’s expectations, which will result in some form of resistance from society. Where not obeying the law results in some formal form of punishment, not acting according ethical expectations will lead to other forms of corrective behavior from society. What is perceived as ethical or unethical behavior is not always clearly stated and is not a straightforward matter. Ethical responsibilities are subjective in the sense that different persons and groups of people will have different opinions. Consequently, different societies will also diverge in opinion on these ethical issues.
The last category of business performance is the category of the discretionary responsibilities.
These responsibilities are at the business’s discretion and are open to individual judgment. In a sense, they reflect desires from society rather than ethical claims. A firm voluntarily engages in this type of social activities, for example making philanthropic contributions. Society does not explicitly demand from business that they engage in these activities and therefore, not dealing accordingly is not directly perceived as unethical.
Each of these categories of business performance is part of the total social responsibility of business based on the expectations of society. Carroll (1979) states the definition for corporate social responsibility as follows: “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point of time”. I want to make two important notions about this definition: the notion of time and the fact that the responsibility of business is based on the expectations of society.
The notion of time is important because responsibilities can shift between the legal, ethical and discretionary categories over time. The shift occurs when society alters its expectations based on extended knowledge and alterations in values and beliefs.
The second notion has to do with the fact that the responsibilities of business are based on expectations of society. The economic responsibilities of business within the society; the task to create wealth in the form of goods, services and disposable income for society’s members, is valid in virtually every society. Whether a society is characterized as communist or capitalist, as a democratic nation or as a dictatorship, business is institutionalized to perform the economic task.
The legal, ethical and discretionary responsibilities however, are dramatically different among societies and thus countries.
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Different societies have diverse perceptions of what companies ‘should and should not do’.
Countries have different laws and regulations based on these perceptions, different ideas of what is ethical and what is not and different discretionary expectations. This notion is critical in this research and forms the basis for my assumption that differences in corporate social performance are based on different characteristics of society among countries. These different characteristics of society are referred to as “culture”.
Not only the responsibilities of business, but also the philosophy of responsiveness, or what is often referred to as corporate social responsiveness (CSR2) (Frederick, 1978; Clarkson, 1995;
Swanson, 1998) is an important aspect of CSP. This aspect of performance addresses the strategic approach to the responsibilities and issues of responsibility and refers to “the capacity of a corporation to respond to social pressures” (Frederick, 1978; cited by Carroll, 1979). Corporate social responsiveness “looks forward to pick the best possible means, innovations, and practices for achieving desired results” (Swanson, 1999). Assumed that business does have a social responsibility, the response to this responsibility can be put on a scale from doing nothing to doing much, or from no response to a proactive response. The mode of responsiveness is strategic by definition because it is concerned with the managerial processes of response in the social sphere.
As Frederick (1978; cited in Carroll, 1979) puts it, the difference between corporate social responsibility (CSR1) and corporate social responsiveness (CSR2), is that the first “has ethical threads running through it and, hence, is problematical. In contrast, CSR2 has no moral or ethical connotations but is concerned only with the managerial processes of response.”
As becomes apparent, the performance of a company in the social sphere, CSP, is dependent on what the responsibilities of the company are, and on the responsiveness of the company. On the question to whom companies have responsibilities, a straightforward answer would be: “to society”. Since business fulfills the economic function of society, this answer is true. The problem however is that society is a very broad term, it can include the whole world, and for the purposes of defining the constituencies companies have responsibilities to, not very useful. Both academics and managers have a need to identify more specifically the entities that companies have responsibilities to. This difficulty is overcome by recognizing a connection with stakeholder management (Clarkson, 1995; Maignan and Ralston, 2002; Wood and Jones, 1995), arguing that companies do not have responsibilities towards society in general but to its stakeholders. Maignan and Ralston propose that “a firm committed to CSR has principles and processes in place to minimize its negative impacts and maximize its positive impacts on selected stakeholder issues” (2002).
Managing its relationships with stakeholders, a company now gives form to how it deals with its responsibilities. How well the company succeeds in managing these relationships in a way that is
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satisfactory for the stakeholders will define the company’s social performance. Thus, stakeholder management is an essential issue when discussing CSP.
2.3. STAKEHOLDER MANAGEMENT
For decades, it has been under debate what exactly the goal of a firm should be. The discussion really got underway when Friedman published his now classical work ‘Capitalism and Freedom’
(1963), in which he wrote that the only responsibility of a firm should be to make as much money for its shareholders as possible. He argued that what is good for shareholders is ultimately good for society in general. This view, what we know as the shareholder perspective, was not new.
Friedman’s approach was based on the work of Adam Smith who, as early as 1776 published his book ‘The Wealth of Nations’. Smith argues that individuals only pursue their own interests. And by doing that, the interests of society as a whole are served most effectively, often more effectively than when he intends to pursue the interests of society (Smith, 1776). This “invisible hand” is what Friedman based his argument on as well. Both Smith and Friedman promote a “laissez-faire”
economic policy, which means that the State should not intervene in economic activities because this intervention would be inefficient. The market is the ultimate regulating force and will regulate in the most efficient way. The shareholder perspective, disseminating the only responsibility of firms to be maximizing profits for shareholders is based on these assumptions.
Stakeholder management theorists oppose the shareholder view arguing that a corporation should not be managed only to maximize profits for shareholders, but rather to maximize the benefits of all stakeholders. The word ‘company’ means, as its etymology suggests, ‘a community of interest, a mutually beneficial partnership of employers, employees, and investors’ (Albert, 1993). This is the notion that forms the basis for the stakeholder perspective of what a corporation is and for what purposes it exists. According to Post et al. (2002), the corporation is an organization engaged in mobilizing resources for productive uses in order to create wealth and other benefits for its stakeholders. This reflects the ‘mutual beneficial partnership’ and adequately describes the very essence of the purpose of the firm to create wealth for its stakeholders, or to fulfill its economic function in society. Society grants the firm a ‘license to operate’ based on the function it fulfills for society (Post et al., 2002). A firm looses this license to operate, when the costs for society become greater than the benefits from the firm’s operations, and the firm will cease to exist.
The view that companies perform a task for society is a relatively recent view in management literature. In the literature, the view of the company has developed through different phases.
Initially, companies were seen as machines. In this view, the company exists only to perform a certain task serving its owners’ purposes. This mechanistic view which was prevailing during the
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early industrial revolution is the basis for the shareholder perspective of the firm, as described earlier in this section. Making profits for the owner of the company was the only legitimate goal.
Other organizational members, workers mainly, were seen as easily disposable and replaceable parts of the machine.
In the late nineteenth century and the beginning of the twentieth century, the organic view emerged. The firm came to be considered as having a purpose of its own; survival, which was reached through growth. Because the mechanization continued and work became more complex, skilled workers were for the first time seen as valuable assets. Therefore, workers were treated more like difficult replaceable organs than as easily replaceable machine parts. Workers gained a little negotiating power and unions were created. Because companies were in need of more capital, they issued stock which resulted in a decline of power of the initial owner and an emergence of powerful managers.
After the Second World War, the view of the company as a social system started to arise.
Companies were no longer seen as a machine or as an organism with a goal to make profits for its owner or to grow, but as a system of people and sub-systems with their own interests. Companies became considered as social systems, which according to Ackoff are “systems that have purposes of their own, are made up of parts that have purposes of their own, and are parts of larger systems that also have purposes of their own, and these larger containing systems include other systems that have purposes of their own” (Ackoff, 1994:16). In the systems view of the firm, the fact that different entities have different goals and interests is acknowledged and therefore their interests have to be managed by the company. The company’s right to exist is based on the purpose it fulfills for its members, which is subsequent to the stakeholder view of the firm.
Stakeholder management emphasizes that corporations have responsibilities to other constituencies than only its shareholders. But who are these other stakeholders? As the word implies, stakeholders are constituencies that have a ‘stake’, or interest, in the organization, but also the organization has stakes in its stakeholders. Stakeholders differ from organization to organization and can be virtually anyone (Mitchell et al., 1997). Therefore it is hard to define the term without the risk to be illegitimately exclusive. Theorists have made efforts to somehow classify stakeholders based on different properties. The existing literature provides for a broad and a narrow definition of stakeholders, depending on a difference of opinion about ‘who or what really counts’ (Freeman and Reed, 1983; cited in Mitchell et al. 1997). Furthermore, a distinction can be made based on whether a stakeholder is voluntarily or involuntarily involved.
In the broadest sense, “a stakeholder in an organization is (by definition) any group or individual who can affect or is affected by the achievement of the organization’s objectives”
(Freeman, 1984:46). This definition implies that pretty much anyone possibly is a stakeholder to an
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organization. As Mitchell et al. (1997:853) realistically note; “this definition leaves the notion of stake and the field of possible stakeholders unambiguously open to include virtually anyone”. The only people excluded in this definition are people that do not have any power to affect the organization and are not affected by it. In the broad view of stakeholders, the validity of a stakeholder to the firm is approached outside-in and is based on the empirical reality that the firm can affect or can be affected by virtually anyone (Mitchell et al., 1997). For managers, this is not a very helpful definition.
The narrow view can be described as a more inside-out approach, assessing stakeholders based on their direct relevance for the firm’s objectives. For example, stakeholders are defined in terms of their necessity for the firm’s survival (Bowie, 1988; Freeman & Reed, 1983; Nasi, 1995); as those who have put something at risk in relationship with the firm (Clarkson, 1995); or as contractors or participants in exchange relationships (Freeman and Evan, 1990; Hill and Jones, 1992; Cornell and Shapiro, 1987). But there are also some authors that present a narrow view based on the moral claims that constituencies have on the firm, claiming that the firm has a moral duty to stakeholders.
In any case, “searching for a ‘normative core’ of legitimacy” (Mitchell et al., 1997) for defining legitimate stakeholders is characteristic for the narrow view.
Post et al. state that “the stakeholders in a corporation are the individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and are therefore its potential beneficiaries and/or risk bearers” (2002:19). The notion of voluntarily and involuntarily involved in this definition is important for a better understanding of stakeholders.
The voluntarily involved according to Post et al., deliberately associate themselves with the corporation in pursuit of their own interests. The relationship between the firm and these stakeholders implies a mutual beneficiary one and as long as the stakeholders can reach their goals, they will support the organization. The involuntarily involved on the other hand, are stakeholders whose well-being is in some way negatively influenced by the firm, i.e. they undergo harm by the firm’s activities. The managerial implications for these stakeholders are avoidance of harm, reduction of risks and creation of offsetting benefits (Post et al., 2002). This distinction is in line with the distinction between the involved and the affected as described by Vos (2003), which is based on a systems approach of the firm. Vos distinguishes a group of involved beneficiaries of organizational activities which is not identical with the affected non-beneficiaries. According to Ulrich (1983; cited in Vos, 2003), from a systems approach of the firm, anyone can claim to belong to the system based on two reasons: because he is actually or potentially affected by the outcome of the system, and because he has some kind of resource to contribute to the system, i.e. because he is involved. In this distinction, the affected are not involved, but the involved can be, and probably are, affected. Typically, the involuntarily involved, or the affected, do not have the power to
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directly influence the organization’s activities but do have something that is valuable to them at risk, i.e., their welfare is influenced.
Kochan and Rubenstein (2000; cited in Post et al., 2002) suggest three criteria for identifying significant stakeholders: they supply resources that are critical to the success of the enterprise, they place something of value at risk, their welfare is directly affected by the fate of the enterprise, and they have sufficient power to affect the performance of the enterprise. These three criteria are consistent with a narrow view of stakeholders. Post et al. argue however that resources provided by stakeholders can include acceptance and the “license to operate”. The risks include any impact on a person’s or group’s welfare, and the ability to influence may arise from the ability to mobilize social and political forces. In this interpretation, the range of stakeholders is still open for many constituencies, voluntarily or involuntarily involved.
As becomes clear, based on the broad view, virtually anyone can be considered a stakeholder to a company. Following the narrow view however, certain groups will be excluded from the discussion. Although in every case different groups can be considered stakeholders, a number of constituencies are in almost any case stakeholders to a company. These groups include customers, employees, investors, suppliers, and members of the community where the firm operates. Other writers have included some more entities or distinguished entities differently. For example, Maignan and Ralston (2002) include the government. So does Ackoff (1994), who also includes debtors and distinguishes investors and creditors. Others include labor unions, environmental movements, and social movements. The main stakeholders as described above; customers, employees, investors, suppliers, and members of the community where the firm operates, are stakeholders that exist for any company. They are based on a narrow view and the first four groups are voluntarily involved. The community is partly voluntarily and most likely partially involuntarily involved.
Besides the question ‘who the stakeholders are’, the question arises how the interests of the stakeholders should be managed. This question addresses stakeholder management in a pragmatic manner, i.e., it addresses the stakeholder management processes. How stakeholders should be managed depends on the underlying motivation to be concerned about stakeholder management in the first place. The motivation in its turn results from the view organizational members have on the purpose of a company as institution, creating a strong link with the preceding section. Based on the literature, two approaches to stakeholder management can be distinguished, a normative approach and an instrumental approach. Which approach is characteristic for a company depends on the company’s view of purpose.
When a firm manages its stakeholders purely instrumental, stakeholder management is perceived as the means to reach an end, in which the end consists of the, typically economic,
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objectives of the firm. In this case, stakeholder management is the way to maximize shareholder’s profits. Mitchell et al. (1997) speak in this case of stakeholder management practices being firm centered and call it the “public affairs approach”. Berman et al. (1999) call the instrumental approach ‘strategic stakeholder management’ and refer to the firm’s interest in stakeholder relationships as instrumental and contingent on the value of those relationships to corporate financial success. Furthermore, they note that “stakeholder management is part of a company’s strategy but in no way drives that strategy” (Berman et al., 1999:492).
A normative approach on the other hand, means that the firm has made it its mission to serve the interest of its stakeholders. Stakeholder management is a result of the values and believes incorporated in the firm. Mitchell et al. (1997) call this the “social responsibility approach”, which is system centered. A normative approach to stakeholder management does not mean that the firm does not have economic objectives or that these are subsequent to the social objectives. Moreover, the economic objective of the firm is part of the objectives since shareholders are also stakeholders and their interests have to be served accordingly. This intrinsic stakeholder commitment means that the strategic decision-making is based on certain moral obligations to the firm’s stakeholders (Berman et al., 1999).
According to Swanson, the approach to stakeholder management is a result of a company’s motivation to be committed to its stakeholders. Swanson (1995) describes three motivations to be committed to CSR and stakeholder management which correspond with the normative and instrumental approach described in the preceding paragraph. She identifies: the utilitarian approach, the negative duty approach and the positive duty approach. The first two are instrumental to the economic objectives of the firm. The utilitarian approach sees CSR purely as an instrument to achieve the company’s financial objectives. CSR policies are adopted to influence the stakeholders’ perceptions about the company rather then complying with their norms. In case of the negative duty approach, the firm adopts social responsibility initiatives in order to conform to stakeholder norms concerning appropriate behavior. This means that the firm complies with the norms because it experiences this as a necessity to reach its financial objectives. In case of the positive duty approach however, CSR principles are a part of a corporate identity and express values considered by its organizational members. The most important notion in the distinction of these three motivations is that a firm committed to CSR as a positive duty, approaches responsible behavior as an end in itself, as a corporate goal. The former two motivations are in the first place instrumental. Firms approaching CSR according to these motivations adopt CSR strategies as the means to an end, which is profit maximization.
Firms having a utilitarian or negative duty motivation for their commitment to CSR does not automatically mean that these firms do not behave socially responsible. However, their behavior in
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the social sphere will be driven by other ideas than when a firm has a positive duty approach motivation. When a firm is characterized by a positive duty approach, this does not mean that the firm does not make a profit nor does it not intend to make a profit. These firms as well have an objective to make a profit because profit is necessary to secure the firm’s survival and continuity.
Clearly, a positive duty approach and profits for shareholders are complementary, and not contradictory.
In the preceding paragraphs, I used the term ‘stakeholder management’ in two different ways.
First, I used the term referring to the ideology that the purpose of companies is to create wealth in the broadest sense for its stakeholders. Secondly, the term refers to the management process of managing stakeholder relationships and the therewith connected approach to stakeholder management. In both meanings, stakeholder management is important in the discussion about CSP.
First, the idea of purpose a company has, will be of great influence on how is thought about stakeholders and CSP within the company. Secondly, stakeholder management in the sense of managing stakeholder relationships is strongly connected with the company’s strategic decision making. A company’s strategy could be seen equal to managing stakeholders because the decisions made will directly influence the stakeholders. Furthermore, strategies are mostly plans to influence stakeholder perceptions. Since the outcomes of corporate policies are the determinants of CSP, the strategic aspect of stakeholder management is critical for a company’s CSP.
2.4. SOCIETY AND CULTURE
How a company thinks about stakeholder management and CSP depends on the opinion of the people, and especially the managers, inside the company. The opinion of these managers and other organizational members2 can depend on many factors, like cultural background, social class, and level of education. In any case, the company will develop its own opinions on this subject, which in certain extend will be shared by the organizational members. Fundamentally, a company is a little society, where the word ‘society’ is explained as a group of people “broadly distinguished from other groups by mutual interests, participation in characteristic relationships, shared institutions, and a common culture” (American Heritage; Dictionary of the English Language, 2000).
Societies typically consist of several smaller societies and are part of a bigger society.
Companies as such, are part of a bigger society, like the industry, community, and country they are part of. They also consist of smaller societies, like departments, branches and locations. The culture of a sub-society as part of a larger society will fit in the common culture of the larger entity. This
2 In the remaining part of this section, I speak only of managers because managers formulate policies and strategies and therefore
have the greatest influence on corporate expressions and behavior. Nevertheless, also other organizational members can be of influence.
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way, the culture within a company has to fit within the common culture of the country the company resides in. Culture is defined by Hofstede as: “the collective programming of the mind which distinguishes the members of one human group from another” (1980:25). A few sentences further he also notes that: “Culture, in this sense, includes systems of values; and values are among the building blocks of culture.” Following this definition, the values of the people within an organization in a particular country will be in line with the common values of the greater society, the country. Hofstede mentions this in his book as well. He says: “Most subcultures within a society (country) still share common traits with other subcultures, which make their members recognizable to foreigners as belonging to that society” (1980:26).
The values and believes of a society, are partially institutionalized through laws and regulations, but also consist for a big part of unwritten rules. The total of written and unwritten rules will decide how members of a society will deal with issues. Countries, for example, have values, which are shared values of the society, written down in laws. Companies also have written values, like business principles and codes of conduct. These institutionalized values, together with unwritten values, determine how people behave, what they can and can not do, what is and what is not desirable and what is right and wrong. When a company forms its policies, these policies will be within the set values and believes persisting in the company. Therefore, the outcomes of the policies, which define a company’s CSP, are strongly influenced by the corporate culture and also the culture of the society the company resides in.
2.5. CONCEPTUAL FRAMEWORK
As becomes apparent in this chapter, the three concepts at hand, corporate social performance, corporate social responsibility and stakeholder management, are very intertwined with one another.
Corporate social performance is the performance of companies in the social sphere, and entails all the positive effects discounted with the negative effects the company’s activities have on society.
Corporate social performance depends on how well a company meets its responsibilities towards different constituencies in society, stakeholders. What the responsibilities of a company towards society are is subject to different ideologies, the shareholder and the stakeholder perspective. In the shareholder perspective, the only responsibility of a company is to make as much money for its shareholders as possible. In the stakeholder perspective, the performance of a company is measured in terms of total wealth created for society, rather than in terms of wealth created for shareholders.
Who stakeholders are, depends on the definition of stakeholders, and can be narrow or broad. In most cases however, based on a narrow definition, stakeholders to companies are customers, employees, investors, suppliers, and members of the community where the firm operates. How
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stakeholders are managed depends on a company’s approach to stakeholder management. The two approaches, the instrumental and normative approach, relate to the different ideologies of what the responsibilities towards society entails. Since every company manages its stakeholders, either deliberately or not, the motivation to engage in stakeholder management is important. The motivation relates with the underlying ideology and drives the approach a company adopts. Hence, corporate social performance, which is a company’s performance to fulfill its responsibilities towards its stakeholders, is partially dependent on a company’s approach to stakeholder management. The culture, the norms and values of the society the company is a part of, plays an important role in how the organization and its members deal with stakeholder management.
The conceptual model presented below, is a graphical depiction of the concepts at hand in this research, and their relations. The model does not intend to show all possible influences to the aspects in the model, but only the aspects that are considered in this research. For example, I do not claim that the society and culture of the country of origin is the only aspect that is of influence for the company’s perception of corporate purpose. This is however, the aspect that is considered in this particular research.
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Figure 2: Conceptual framework
The model nicely illustrates that corporate social performance is essentially external; it is the performance of the company to satisfy the interests of its stakeholders. In this research, however, the focus is internal and the internal aspects of performance lead to actual social performance. The internal aspects in the conceptual model correspond with the sub-questions in section 1.3. The conceptual model is intended as a tool to get to an answer to the sub-questions and ultimately, the research question.
In the next chapter, I will set out how I intend to get an answer to the questions, the method. I will typify this research, and describe where and how I get the data needed to provide an answer to the research question.
EXTERNAL INFLUENCE
INTERNAL ASPECTS OF PERFORMANCE
Corporate Purpose (Mission and Vision)
Instrumental
Corporate Social Performance Normative
Stakeholder Management Approach
Country of origin;
Society and Culture
EXTERNAL PERFORMANCE
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3. M ETHOD
In this chapter, I present the method I have used to answer my research question. In section 3.1, this research is characterized, which forms a basis for the choices described throughout this chapter. I used the book “Research Methods for Business Students” by Saunders, Lewis and Thornhill (2000) as a guideline in describing the methods and the choices I made. In section 3.2, I clarify how I selected the research population and I will introduce the industries and companies that I have chosen for analysis. Finally, in section 3.3 I will deal with the data collection and analysis method.
3.1. RESEARCH CHARACTERIZATION
This research has a primarily inductive character. This implies that I am seeking to find a possible relationship between the nationality of a company being Dutch or American, and its approach to stakeholder management. Furthermore, I intend to gain better understanding of these possible differences and the underlying causes. In contrast with the deductive approach, where a theory is formed and tested using empirical data, I choose to create a theory based on empirical data. That theory will be a theory on the differences in the self-presentation of corporate social performance between the United States and the Netherlands. I will find out what the differences are and furthermore, try to find reasons of why these differences exist. The conceptual framework I use, which is a product of existing theories, implies a deductive characteristic as well. Therefore, it is valid to say that this research is hybrid in the approach. Based on the objectives, the approach is inductive, while the use of existing theories and the construction of a conceptual framework are essentially deductive. Because I have made use of existing theory to formulate my research question and objectives, the conceptual framework is necessary to structure and to give understanding to the findings (Saunders et al., 2000; Yin, 1994). Besides the use of the conceptual framework, I approach this research inductively.
The research at hand aims to describe and understand social performance of companies in a two-country comparison. Clearly, there is a social situation at hand, which is complex and difficult to understand. It is my intention to discover a relationship between two aspects of the social reality and to understand the reality working behind this relationship (Saunders et al., 2000).
Based on the inductive approach, I choose to adopt an exploratory research strategy.
Exploratory studies are particular useful for gaining insights in phenomena and to find out what is really happening (Saunders et al., 2000). This strategy is very flexible and open for changes during
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the process. The ability to generalize is of less importance; the focus is on a better understanding of the problems at hand. As the phenomenological school stresses, reality is complex and changing constantly. Therefore, social situations are unique and not easy to generalize.
3.2. SAMPLE SELECTION
Based on the inductive and exploratory nature of the research and the need for qualitative data, I have chosen to use a purposive non-probability method of sampling. A non-probability sampling method is used when statistical analysis is not needed; the selection depends on the subjective judgment of the researcher (Saunders et al., 2000). Purposive sampling is used to select cases that are best suitable for answering the research question at hand. Purposive sampling can be further sub-divided in five strategies, dependent on the research question and objectives. In this research, the strategy is heterogeneous. This means that the companies under investigation are selected based on the fact that they are not alike. The strength of this strategy is that patterns found across the population are likely to be of particular interest. Patton suggests identifying diverse characteristics before actual sampling (1990, in Saunders et al., 2000). Based on industry, the population in this research is heterogeneous. Within the industries, however, I intended to select companies that were comparable, which implies homogeneousness.
Besides purposive sampling, convenience sampling also plays a role. After the selection procedure, companies could still be rejected from the population because no sufficient information was available, which made a thorough analysis impossible. The availability of adequate data, comparability and heterogeneousness were particularly important criteria in the sample selection.
Throughout the selection process, these criteria constantly played a role for accepting or rejecting a company as a sample. The selection was a continuous process, where the sample was narrowed down constantly.
The goal of the sample selection was to get a population that is both comparable and heterogeneous. I wanted the cases to be heterogeneous in their type, i.e. the industry the companies are in. Comparability was an important issue between the American and Dutch firms within the industry. The first choice I have made was to include only publicly traded and multinational companies. I had two reasons for that. First, multinational companies can be expected more similar across countries than local companies, what makes a comparison more exciting and makes companies more comparable. Secondly, publicly traded companies have vast amounts of data concerning CSP readily available on their websites, which is a requirement for the purpose of this research. The companies also have to be operative in both the United States and the Netherlands, which, for many multinationals is the case. I selected a number of industries, based on the existence
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of Dutch multinational companies. I searched several databases and stock exchanges to form a list of Dutch multinationals, organized in industries. The classification of industries can be confusing since different sources use different classifications. In this research, I use the classification as used by the New York Stock Exchange, as can be found online (http://www.nyse.com). Then, I tried to match the Dutch companies with American companies that were comparable in size. I defined size for these purposes in terms of turnover and number of employees. For some Dutch firms, I could not find a comparable American counterpart. If that was the case, the company was excluded.
Furthermore, several companies had to be excluded because of a lack of information availability.
Examples of companies that were excluded from this research for these reasons are KLM, Ahold and ABN AMRO. Finally, I ended up with eight companies, four American and four Dutch, divided over four industries with one American and one Dutch in every industry.
3.3. DATA COLLECTION AND ANALYSIS
The data collected in this research is qualitative rather than quantitative. The inductive approach and exploratory strategy logically fit well with qualitative data collection and analysis. A qualitative method of collection and analysis of data means that the researcher collects a limited amount of data and analyses this data thoroughly. The goal is to find relations rather than to proof relations. This is unlike a quantitative method, where data is collected in order to proof the validity of relationships through statistical analysis. The data collected in this research is all qualified as secondary data. Secondary data is data already collected by others for other purposes than the research at hand. The advantage of using secondary data is that not many resources are required to collect the data, in this case simply a computer and an internet connection. Furthermore, secondary, qualitative data is useful for qualitative comparable analysis. A clear disadvantage however, is that the data is not fully comparable. In the case of this research, not all companies publish mission statements on their websites. That complicates the analysis and jeopardizes the comparability.
The objective already states that, in this research, the self-presentation of social performance of companies is assessed. Furthermore, in the restrictions, in section 1.3, I limit myself to using the internet as source of data. The internet is easily accessible and provides a good source for information of companies’ self-presentations. Companies have extensive information available on their corporate websites concerning mission and vision and stakeholder issues. Furthermore, companies virtually always make their annual and other reports available as PDF file on their websites. Annual reports and corporate websites are channels through which companies communicate collective goals and opinions that are considered to be shared by the whole organization. Therefore, these are good sources to analyze companies’ self-presentations. To derive
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to a method to get answers to my research question, I translated the sub-questions into methodic questions (De Leeuw, 2001). The answers to these methodic questions are useful support for finding ways to collect and analyze the data. I translated my sub-questions into methodic questions and I provided answers to the methodic questions. First, I restate the sub-question. Than, printed italic, I formulated the methodic question, followed by an answer to the methodic question, printed regularly.
1. Which stakeholders and/or stakeholder interests are mentioned in the firm’s mission and vision?
How do I find out which stakeholders and/or stakeholder interests are mentioned in the firm’s mission and/or vision?
Taken into account the limitations to this research, I will explore the selected firm’s website for expressions of mission, vision and stakeholder issues.
2. How can the firm’s approach to stakeholder management as apparent in the firm’s mission statement and vision, be characterized?
How do I assess whether the approach to stakeholder management is instrumental or normative?
By looking at the stakeholders mentioned and the order in which they are mentioned in the firm’s mission and vision expressions.
3. Based on the preceding aspects, what is the difference in corporate social performance between Dutch and American firms?
How do I compare these aspects in order to assess the difference in corporate social performance between American and Dutch firms?
By assessing if there is a clear difference, based on the normative versus instrumental distinction, between American and Dutch firms.
I used the methodic answers as a guideline to gather and analyze the data in a structural manner. The three answers can be seen as the three steps of collection and analysis that I will follow throughout the process.
In order to collect the data, I analyzed the websites and the annual reports of the companies under investigation. The annual reports and other reports I used were of 2002 or before. At the start of this research, the year 2003 had not ended yet and thus, 2002 was the latest full calendar year. I
