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CSR practices in New Zealand

In document Empirical evidence from Sri Lanka (Page 62-68)

Literature Review

2.5. A review of extant literature on CSR practices

2.5.3. CSR practices in New Zealand

A review of extant literature on CSR practices


and is expressed in how corporations view their responsibilities toward employees and communities” (White, 2008, p. 4). However, there is only limited literature to explain or justify these arguments with empirical evidence or with real life examples; also these situations are “difficult to document, and much more difficult to quantify” (White, 2008, p. 4). As a part of this thesis, the researcher tries to document, using empirical evidence, how Sri Lankan culture impacts on the CSR decisions of corporate managers.

A review of extant literature on CSR practices

47 Introduction to CSR in New Zealand

According to Roper (2004), before the late 1990s very little was known about CSR practices related to the context of New Zealand. Hackston and Milnes’ (1996) study of CSR determinants, Davey’s (1982), and Ng’s (1985) studies of CSR disclosure are definite examples for New Zealand CSR studies in the 1990s and in the 1980s.

According to Eweje and Bently (2006), the CSR phenomenon was not prominent as a management concept in the early 2000s, but they emphasised the importance and the growing momentum of the CSR concept. Even now, “despite a great deal of rhetoric surrounding CSR practices, little evidence is available about the extent of practices” (Lawrence, Collins, Roper, Haar, & Botes, 2012, p. 1).

Perhaps, because of this, in late 2003, the Sustainability Business Network (SBN) sponsored a study to investigate CSR practices in small, medium, and large companies in New Zealand (Collins & Lawrence, 2005; Eweje & Bentley, 2006). As mentioned earlier, after this study another two connected studies were conducted in 2006 (Collins et al., 2007) and in 2010 (Collins et al., 2010). Griffiths, Lindesay, and Field (2006), in collaboration with the URS New Zealand, conducted another New Zealand CSR research study for the Parliamentary Commissioner for the Environment. This study provided an update of Triple Bottom Line (TBL) reporting in New Zealand between 2002 and 2006, and emphasised that, in 2002, CSR reporting in New Zealand was in its early stages. The study further highlighted a series of initiatives introduced during this period to encourage uptake of CSR reporting in the business community in the country (Griffiths et al., 2006).

Another study by Lawrence, Collins, Pavlovich, & Arunachalam (2006), which was related to sustainability practices of SMEs in New Zealand, discussed the possibilities of linking individual firms’ activities to sustainability using the communitarian model of accountability. Furthermore, Dobbs and Staden (2011), in a recent study, investigates corporate motivations for CSR reporting in New

A review of extant literature on CSR practices


Zealand and concludes that a member of the senior management of the companies is the main driving force for the sustainability agenda and “community concerns and shareholder rights are the most important factors that influence the companies’

decision to report” (p. 1).

In addition to these CSR studies, some scholars investigated other aspects of CSR in New Zealand such as language usage in CSR reports (Milne, Walton, & Tregidga, 2009), the relationship between the text and context (Tregidga & Milne, 2006), and paradigm shifts and sustainable business practices (Bather, Foo, Kelly, McCourt,

& Singh-Ladhar, 2012).

However, it was hard to find comparative CSR studies between New Zealand and any other context, either with a developed country or developing country.

Nevertheless, some other CSR comparative studies for different country contexts do exist (for examples: Chapple & Moon, 2005; Golob & Bartlett, 2007; Mathis, 2004), but the relative dearth of such literature is quite apparent. Furthermore, Blasco and Zølner (2010) said, “Scholarship on corporate social responsibility (CSR) shows both that the concept itself is interpreted in a multitude of different ways and that significant cross-cultural differences exist in the way that business approaches the question of social responsibility and ethics. Little comparative work, however, has yet been carried out that investigates the reasons behind such differences” (p. 216). Thus, Chapter Seven makes an attempt to address this gap in the literature by comparing and contrasting CSR practices in developed and developing country contexts, drawing mainly on the findings from two surveys of New Zealand and Sri Lanka which used almost similar questionnaire instruments.

The next part of this section discusses the findings of the study by Collins et al.

(2010). In this survey, environmental practices and social practices are analysed separately. In addition to these practices, internal and external pressures to make environmental and social improvement, and barriers and drivers to adopting CSR activities, are also examined.

A review of extant literature on CSR practices

49 Environmental practices

According to the results of the study, the most common environmental practice is recycling (nearly 80 per cent), followed by considering environmental impacts of their products, and establishing an environmental policy statement. The research shows that there was an increase in commonly adopted environmental practices between 2003 and 2006 (Collins et al., 2007), but in 2010 the results show a twofold story: one is supportive of the business case and the other is not.

Despite the economic downturn, the surveyed companies, which are members of the Sustainable Business Network (SBN), increased the adoption of environmental practices, suggesting that they may rely on gaining competitive advantage and may have embedded sustainability into their overall corporate strategy.

The negative aspect of the story is that the non-SBN member survey respondents reduced most environmental practices, suggesting that for this group environmental activities are the first to be reduced during an economic downturn. This bias can be determined by looking at CSR practices of New Zealand businesses with no affiliation to SBN, as these respondents are more representative of New Zealand businesses generally. The survey (Collins et al., 2010) shows that, when compared to the 2003 and 2006 survey results, the unaffiliated businesses significantly decreased most of their environmental practices during the economic downturn.

Apart from SBN affiliation, firm size is another criterion for segmenting companies moving in the opposite direction with regard to environmental practices. This is called the sustainability divide, and it refers to “the difference between those taking advantage of the latest global trend, sustainability, and those who are falling behind” (Collins et al., 2010, p. 9). During the recession, small companies decreased their environmental practices more, compared to those of large companies. This move will be detrimental for a country like New Zealand where 99 per cent of the businesses are small or medium-sized, and will prevent the achievement of national environmental objectives.

A review of extant literature on CSR practices

50 Social practices

Collins et al. (2010) reveal that New Zealand companies are more engaged in social practices than in environmental sustainability practices. Providing time and money for charity (64 per cent) is the most common social practice within respondents’

businesses, followed by maintaining family-friendly policies, undertaking local community projects, and providing job training for their employees. The respondents prioritised programmes that benefited young people when selecting their community projects.

In formulating social sustainability strategies, the managing director (67 per cent) plays a dominant role, followed by the human resources manager (12 per cent). In large firms, the marketing manager (21 per cent) comes into play, in addition to the managing director (47 per cent) and the human resources manager (38 per cent). As Collins et al. (2010) contend, “policies regarding employees are a logical fit with human resources and a marketing department can help ensure that companies get the most brand value from their charitable giving” (p. 10).

When it comes to social practices in New Zealand companies by firm size, the study showed that large firms are more likely to engage in social activities compared to small and medium-sized firms. This comparison is statistically significant when comparing large with small-sized firms. Also, 10 per cent of small-sized firms do not engage in any social activities, compared to 2 per cent of medium-sized and large-sized firms.

Another important result was found in Collins et al.’s (Collins et al., 2010) New Zealand study in comparison of their previous study (Collins et al., 2007), i.e., although both SBN-affiliated firms and non-SBN firms decreased their engagement in social (as well as environmental) activities, the drop was much higher for non-SBN firms (20 per cent) than for non-SBN-affiliated firms (5 per cent), suggesting

A review of extant literature on CSR practices


that firms with affiliations are much more likely to have embedded their CSR practices than are nonaffiliated firms even in the bad times such as an economic recession, because by being affiliated, the firms tend to be institutionalised within their member firms. There could be an isomorphic pressure within the affiliated firms. By referring to DiMaggio and Powell (1983), Hambrick, Finkelstein, Cho, and Jackson (2004) indicated that “organizations, in their quest for legitimacy, are subjected to isomorphic pressures which produce increasing similarity among peer organizations over time” (p. 307). The affiliated firms are more established fields than nonaffiliated firms; therefore, there could be an inexorable push toward homogenisation. Drivers, barriers, and pressures for CSR reporting

Collins et al. (2010) reveal that the “values and beliefs of senior management” (44 per cent) is the most cited internal pressure to adopt CSR practices, while 53 per cent of firms indicated that they have no external pressure to adopt CSR practices.

It is a surprise to see how the recession impacted on the values and beliefs of senior management, with this driver dropping to 44 per cent in 2010 from 52 per cent in 2006. Collins et al. (2010) surmise, “it seems when managers are fighting for the survival of their business the values shift from treating their workers and community well, to trying to keep the business afloat” (p. 18).

Overall, the respondents indicate the fact that the pressure to adopt CSR practices decreased during the economic downturn may be due to a shift in management expectations. However, firms with affiliations to sustainability networks are more likely to feel internal and external pressure, compared to nonaffiliated firms.

Reputation and brand (57 per cent) was reported as the most common driver for adopting CSR practice in their firms, while the cost implications (56 per cent) are reported as the most common barrier to adopting CSR practice. However, 30 per cent of firms indicated that cost reduction is also a driver for adopting CSR practice.

A review of extant literature on CSR practices


Despite the fact that the firms which are not affiliated with SBN, NZBCSD or CIMA are reducing their uptake of CSR practices, it was observed that the number of companies marketing themselves by claiming to be part of “clean green New Zealand” continuously increased from 17 per cent in 2003 to 30 per cent in 2010.

Collins et al. (2010) warned that this practice could damage New Zealand’s national branding and current competitive edge. A very few companies (7 per cent) modified their accounting system to integrate the cost and savings from social and environmental initiatives, suggesting that most of the corporate accountants and managers are not concerned about setting up an accounting information system that provides vital information for CSR reporting.

In document Empirical evidence from Sri Lanka (Page 62-68)