CSR for Sale? Unexpected outcomes of imposing CSR communication on the supply chain

The impact and risks involved for small firms when communicating on their CSR

Laura Spence, Professor of Business Ethics in the School of Management, Royal Holloway, University of London, and Mette Morsing, Professor in Sustainable Markets at Misum, Stockholm School of Economics, look at the impact and risks involved for small firms when communicating on their CSR.

With kind acknowledgements to Misum. Originally written for and published by the Mistra Center for Sustainable Markets (Misum) at Stockholm School of Economics, 19 Feb, 2019 on the Misum blog

Is it all good news when companies are being pushed to be more vocal and explicit when telling the world about their Corporate Social Responsibility priorities and activities? Perhaps so, for the large firm which has the communication muscle to produce the documentation and reports and to engage in the competition for responsible brand recognition. But the small firm with fewer resources and a preference for an implicit CSR communication strategy, may experience some unhelpful unexpected consequences when pushed into the arena of explicit CSR communication. We argue that CSR communication is not ‘just’ communication. It impacts on organizations in multiple complex ways. And not always for the good, writes Mette Morsing, Professor in Sustainable Markets at Misum, Stockholm School of Economics, and Laura Spence, Professor of Business Ethics in the School of Management, Royal Holloway, University of London in this blogpost based on a recently published paper.

Small firms function differently

The impact and risks involved for small firms when communicating on their CSR

It comes as no surprise to small and medium sized enterprise (SME) suppliers that they have to fit into their large firm customers’ requirements and needs with little chance to negotiate, whether that be in relation to design or product specifications, quality standards, environmental management processes, or CSR. But there is something quite different about social responsibility for SMEs. In contrast to large firm corporate social responsibility, small business social responsibility is much more closely entwined with the very identity and core values of the firm, its owner managers’ integrity, the workers, their families and the community in which they operate. Whereas large firm CSR is driven by communications of their formal and explicitly defined socially responsible initiatives, small firm social responsibility is much more implicitly related to the firm’s way of working. In other words, large firm CSR focuses on talking about CSR. Small firms are much more about being socially responsible. Drawing on earlier work by Dirk Matten and Jeremy Moon[i], we refer to this as respectively explicit CSR communication and implicit CSR communication in the research article Corporate social responsibility (CSR) communication and small and medium sized enterprises: The governmentality dilemma of explicit and implicit CSR communication, published in Jan, 2019, in Human Relations.

Our research has found that looking at CSR from the SME supplier perspective reveals a series of dilemmas which result from large firm CSR communication expectations on their suppliers. At the extreme, rather than raising standards across the supply chain, myopic transfer of large firm expectations to small firm settings could have the opposite effect. We have found that SMEs have to navigate three resulting dilemmas relating to their authenticity, values and identity.

Imposed communication as sale out for values

The impact and risks involved for small firms when communicating on their CSR

First, asking them to formally communicate their CSR requires them to effectively ‘sell’ their values, CSR and ethics (we call this ‘authenticity commercialization’). This implies that SME managers experience a tension when they have to employ their implicit core values for external branding purposes. Second, rather than look to their own values as guidance, SMEs are required to prioritize and adopt those of their customers. We call this ‘values control’ which makes SME owner-managers feel that externally defined requests for certain elements in their CSR reporting are imposed upon their own internally held values. Third, rather than looking to their local reputation and community identity as the foundation of their business, SMEs are being asked to identify with the global supply chain standards defined by others with no knowledge of the SME identity and distinctiveness. We call this ‘identity disruption’ which means that the SME’s identity becomes caught between local and global value orientations. In the current quest for improved and increased demonstration of CSR activities, investments and impact, the negative implications for small firms in making their implicit social responsibilities explicit has received little attention.  While these tensions may be resolved in some SMEs, our point is that the pursuit of more (in both quantity and quality) explicit CSR communication represents an illustrative example of how large firms – and also often regulators – impose a large firm metric on small firms without considering the implied pain, costs and dilemmas.

So. What should a large firm with noble intentions to improve supply chain social responsibility do, if it wants to avoid the worst case scenario of undermining the values, authenticity and identity of its SME suppliers? Companies need to establish a strategy for working with their suppliers to understand their social responsibility perspectives. This won’t be a quick, easy tick-box exercise and will require that procurement professionals understand and work to the wider social responsibility agenda not just one driven by their own price, delivery and quality targets. In the ideal world, opening up the dialogue with suppliers might just might have other benefits too; such as building mutual trust and an advantage of speed in other types of communications. Ultimately, the social responsibility of the whole chain can be enhanced.

Authentic communication

The impact and risks involved for small firms when communicating on their CSR

What do we learn from the research on which our arguments are based? The first big lesson is that CSR communication is important to drive CSR practices – and not always only in a good sense. If not carefully negotiated, contextualized and embraced, CSR communication may endanger the CSR impact itself. The second big lesson is that no organizational size or shape has a monopoly on social responsibility and ethical practice. Working with partner organizations, trying to understand their challenges and concerns, rather than unconsciously assuming what they are, is likely to be labour intensive in the short-term. But taking the long view, it can be an engaging and productive way forward and as such a more effective strategy than imposing yet another standardized CSR report on small firms.

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Laura Spence and Mette Morsing
Profs Laura Spence and Mette Morsing

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