Developing a Framework to Analyze Corporate Essay Example

the advancement of data collection, analysis, and evaluation methodologies. These stages are as follows: (a) 1983-1985, which consisted of 30 field studies; (b) 1986-1988, which involved 28 tidies; and (c) 1989-1993, which comprised of 20 studies.

In both the United States and Canada, there has been a lack of actual empirical research to test the various definitions, propositions, concepts, and theories that have been put forward (Puerperal, Carroll, ; Hatfield, 1985). In 1975, researchers in Canada utilized the corporate social response matrix created by Preston (1977) to establish a methodology for studying Corporate Social Performance in Canada. Preston's matrix or framework primarily focuses on how corporations manage social issues.

It was assumed that managers adhered to stages of a process known as corporate social involvement, as defined by Preston. These stages consisted of awareness or recognition of an issue, analysis and planning, response through policy development, and implementation. To implement this framework, survey instruments and guidelines developed by Kelly and McGrath in 1979 were utilized. This methodology was developed for use in 1983 based on the aforementioned materials.

The initial selection of nine companies for study consisted of those that had been previously studied seven years ago, allowing for the observation of changes and trends in performance. More information can be found in Clarion (1988). However, Proton's (1975) framework did not provide a clear definition of what constitutes a social issue. It also failed to offer guidance to managers or researchers in determining if a social issue is significant enough for the company to address and get involved in.

During the inception of the research program in 1983, various human resource concerns were recognized

as significant enough for corporations to consider managing them. These issues include employee communication, training and development, career planning, retirement and termination counseling, layoffs, redundancies and plant closings, stress and mental health, absenteeism and turnover, health and safety, employment equity and discrimination, women in management, performance appraisal, and day care (Clarion, 1988: 52). It was assumed that since these are all issues, they are also social issues.

As a result, it was assumed that corporations and their managers should prioritize and address social issues in order to be considered socially responsible. In our research, we unintentionally introduced a set of assumptions about the expected behavior of corporations and how their performance should be assessed. During Stage 2 (1986-1988), Carol's (1979) model expanded upon Proton's (1975) framework and presented a fresh understanding of SSP.

The main goal of Carroll's model was to reconcile corporate social and economic objectives, as well as to harmonize ISRC with CARS, ultimately focusing on the key element, SSP. This model was comprehensive and integrative, and its lasting influence and that of its successors showcase its strength. Carroll's model defined ISRC through principles or categories and CARS through processes or strategies, addressing both social responsibilities and social issues. Social issues, such as consumerism, the environment, coordination, etc., were used as substitutes for measuring actual performance.

The expectation for corporations to address social issues was plausible, but the reasons behind this expectation and the specific actions they were expected to take were not easily explained. Carol's model, represented as a three-dimensional cube, was intricate and challenging to verify. It was not conducive to creating a practical methodology for collecting, organizing, and assessing corporate

data in the field. Warwick and Cochran (1985) expanded on Carol's holistic approach to managing social issues and viewed them as separate corporate concerns.

Their model, which built upon Carol's model, acknowledged and integrated economic performance as the primary dimension of social responsibility. This inclusion did not disregard the other responsibilities outlined by Carroll, namely legal, ethical, and discretionary. Their model, resembling Carol's model once again, aimed to demonstrate the interconnected and ongoing relationship between the principles of social responsibility, the processes of social responsiveness, and the policies and initiatives devised to tackle social concerns. Models and frameworks play a valuable role in elucidating theories and conceptual ideas.

In order for a model or framework to be practical, it must be applicable to the conditions it aims to describe, analyze, or predict. Testing a model empirically is crucial for establishing its validity. Proton's corporate social response matrix specifically focused on policies and programs that deal with social issues. On the other hand, the Warwick and Cochran model, which was based on the Carroll construct, incorporated both the dimensions of corporate social responsibility and the processes of corporate social responsiveness. By the end of three years of field research, 30 studies had been conducted using the initial methodology derived from Proton's matrix.

Modifying the methodology is a serious decision as it requires reorganizing previously obtained data to make it useful. However, the Warwick and Cochran model seemed appropriate for field testing and aligned with Proton's approach to social issue management. Therefore, the decision was made to revise the methodology and incorporate the new model starting in 1986. Further information on the methodology developed for using and

testing the model can be found elsewhere (Clarion, 1988). The second section of this text discusses only the major conceptual challenges and issues.

The Warwick and Cochran model defines the principles of social responsibility as four dimensions: economic, legal, ethical, and discretionary. Carol's original classification forms the basis for these dimensions. A methodology was developed for conducting field studies to gather data on each dimension. Obtaining economic data was easy since annual reports and industry profitability information were readily available.

The text discusses the criteria for assessing a company's fulfillment of its responsibilities. It states that maintaining profitability over five consecutive years is seen as an indicator of economic responsibility. Information on legal issues or allegations of illegal behavior was gathered from financial press databases. Additionally, government departments, unions, and municipalities in towns where the company operates were consulted for data on environmental or safety concerns. If no evidence was found, it was assumed that the company met its legal obligations, which was a straightforward test to pass. However, defining and evaluating ethical responsibilities proved to be more difficult.

There are no universally recognized ethical principles, similar to accounting principles, that can be referenced or enforced. The presence of a corporate code of conduct, practice, or ethics does indicate that a company acknowledges certain responsibilities, but it does not provide information on how the code is being put into action or if it is merely superficial. Numerous company codes primarily focus on defensive measures, such as safeguarding the company and its assets from employees. The codes may only address the extent of the corporation's charitable activities and its involvement in local communities.

According to

Carroll (1979), the discretionary responsibilities of business are voluntary and philanthropic in nature, making them difficult to determine and assess. The corporate studies have found limited empirical evidence to prove that a company is not socially responsible unless it has a history of unprofitability and is associated with illegal or unethical corporate conduct.

The model did not provide a sufficient way to test the concept of social responsibility using readily available corporate data. The criticism from Votary (1973) about the term corporate social responsibility remains valid. The term is brilliant and meaningful, but its interpretation varies among individuals. Some understand it as legal responsibility or liability, while others associate it with ethical behavior. Some interpret it as being "responsible for" something in a causal manner, while many simply see it as synonymous with charitable contributions.

According to Wood (1991 : 703), various organizational responses to social pressure do not qualify as processes. As a result, the research question for the field studies focused on identifying behaviors that could be reliable indicators or substitutes for different portrayals of corporate postures or strategies in relation to social responsiveness and social issues.

To describe a corporation's social responsiveness and analyze its elements, a methodology was developed in 1986. This methodology included gathering data on a corporation's statement of mission or purpose, code of conduct or ethics, and the structure of processes for managing issues such as environmental scanning and analysis, integration of social issues into policy and planning, internal linkages for integrating strategic decisions about social issues into operations, and public policy involvement. However, when questions arose regarding the inclusion of statements about corporate mission or purpose and

evidence of public policy involvement under social responsiveness instead of under the management of social issues, it became clear that there was no logical explanation.

The inclusion of policies, programs, and performance data related to codes of ethics, conduct, or practice in the categories of ethical responsibilities or management of social issues was not clearly defined. The main issue was the lack of a clear definition of social responsiveness, which hindered the collection, organization, and analysis of corporate data. Despite numerous attempts to explain the term, social responsiveness remained a vague concept without logic or rigor, limiting its usefulness for empirical research. However, the model's terminology describing a corporation's strategy or approach to issue management was helpful in the field, despite the confusion surrounding the categories.

The presence or absence of policies and programs can demonstrate strategies, posture, and behavior that are reactive, defensive, accommodative, or proactive. This can be observed through the implementation performance and relevant issues of a company, as shown in a field study conducted in 1986 on Canada's second largest bank. Interviews with the Bank's representatives revealed their attitude towards social responsiveness. The Manager of Media Relations stated that the Bank does not set social policy and instead relies on the government for it. A Vice President of Human Resources mentioned that the government is heavily involved in their business operations. These statements indicate that the company's social orientation, evaluated using the READ scale, is primarily accommodative. Measurement of performance and nonperformance is based on concrete data. The READ scale incorporates the terms reactive, defensive, accommodative, and proactive to evaluate corporate performance. The second section discusses this scale in detail. Between

1986 and 1988, researchers gathered case study data on 28 companies using this new methodology, leading to the development of a new framework in Stage 3.

Data from over 50 corporations has been gathered regarding policies, programs, and various aspects related to the social and physical environments, government relations, community relations, charitable donations, employee relations, human resource management, as well as customer and shareholder relations. In essence, these data can be categorized based on how a corporation manages relationships with its stakeholder groups. However, in order to fit into the Warwick and Cochran model, the data needed to be organized according to the principles of corporate social responsibility, processes of corporate social responsiveness, and management of social issues. Unfortunately, these distinctions, although appealing in theory, proved impractical in practice.

Attempts were made to align the data with the methodology, but it became clear that the model's categories were not applicable to the gathered data and its classifications were not based on real corporate practices. As the volume of data and studies increased, it became more challenging to ensure consistency in collecting and classifying the data according to the methodology. The model and methodology did not match how corporations truly manage their relationships with employees, customers, shareholders, suppliers, governments, and communities.

Although stakeholder management was not specifically referred to as such, there were groups or constituencies that can be considered as stakeholder groups. The relationships with these groups were either being managed or not managed, with varying degrees of effectiveness. Whether these groups were classified as internal or external stakeholders was not important, and it was also irrelevant for the companies themselves to label these groups

as stakeholders. What mattered in the research program was that the collected and analyzed data aligned with the concepts and models of stakeholder management (Freeman, 1984), rather than with the concepts and models of corporate social responsibilities, responsiveness, and performance.

The data suggests that corporate managers typically do not consider corporate social responsibilities, social issues, or social performance in their everyday business operations. The statement from Corporate Social Performance in Canada emphasizes this and introduces the term "stakeholder issues". It should be noted that public affairs departments were originally established not specifically for handling social responsibility matters, but for addressing various stakeholder issues such as employee relations, media interactions, and government relations. The concepts of ISRC and CARS were created outside the business realm and possess normative connotations without clear specificity. They are often perceived as jargon and raise legitimate questions regarding who businesses should be socially responsible to, what they should be socially responsive about, and how social performance should be judged. As a result, managers have been hesitant to take responsibility for social issues that they do not view as directly related to their corporate or business concerns. Their expertise lies in managing production, marketing, finance, accounting, and human resources processes.

Managers have a clear understanding of responsibility and accountability within their functional disciplines. They are aware of their obligations and responsibilities towards customers, shareholders, employees, and other important groups. Most companies define these obligations and the corresponding accountabilities. Therefore, there is data available on how managers handle relationships with these constituencies or stakeholder groups. Managers find it easy to comprehend the concepts and models of stakeholder management. They acknowledge that concerns raised by

stakeholder groups can also be classified as social issues.

Occupational health and safety, employment equity and discrimination, product safety, and truth in advertising are all societal concerns that have resulted in legislation and regulation. However, these issues are also important for corporations as they affect relationships with employee stakeholder groups, government, customers, and the environment. Additionally, environmental pollution is a social issue that affects government operations, employees, and customers.

The research design and data collection for this study were influenced by various factors since its inception in 1983. MBA students at the University of Torso's Faculty of Management played a significant role in conducting the necessary research. They worked in groups of two or three, studying individual companies and writing case studies as part of a second-year elective course on corporate social responsibilities (Clarion, 1988, 1991). To accurately describe and evaluate a company's performance, the researchers needed to gain the trust of relevant managers in order to ask pertinent questions and obtain written materials regarding policies and programs.

Both researchers and managers require a framework and guide for facilitating the provision, analysis, and evaluation of data. It is crucial for this framework and guide to be expressed in terms that can be understood in both corporate and educational settings. The conclusion was reached that a "stakeholder management" model would serve as the most suitable organizing principle. From the data gathered in field studies, an inventory of noteworthy stakeholder issues was created. This inventory, presented in Table 1, comprises approximately 50 issues. It is referred to as "representative" because it includes the most frequently identified issues in the studies. While reasonably comprehensive, it is not exhaustive.