What’s crucial in rebuilding local communities in the wake of a disaster? Dr Maki Dan and Dr-Professor Masayuki Kohiyama, Keio University, explore how companies can oil the wheels for a timely and effective recovery.
By CoBS Editor Megha Sureshkar. With thanks to Mr. Hiroshi Takagi, Keio Business School. Related research: Contribution of corporate social responsibility to post-disaster life recovery of employees, Journal of Disaster Research 12(4):811-821
It has become all too grim in recent years. The brunt of Mother Nature’s ire.
Fierce, complicated, and unpredictable, natural catastrophes — hurricanes, tsunamis, earthquakes, wildfires — are happening more frequently and causing more destruction. The unexpected news of such disasters disrupt the communities that businesses serve and where their employees work and live in. In 2019 alone, there were 820 events worldwide that occurred and wreaked havoc on communities, causing losses of over $52 billion. So, how can companies rise above these challenges and contribute to the early recovery of local communities — one of their most important stakeholders? The answer lies in impactful corporate social responsibility (CSR) initiatives.
But CSR in the context of disaster management focuses particularly on business continuity planning (BCP). Of course, BCP is important for companies, but at the same time, there are many other CSR activities with the potential to positively contribute to the recovery of local communities. As such, Profs. Dan and Kohiyama seek to find out what they are. But before getting into the details, it is important to draw wisdom from the exciting evolution of CSR.
The indispensable stakeholder
In the past, the major recognized responsibility of a company was earning profits. But this viewpoint changed after the introduction of Ed Freeman’s stakeholder theory. In stakeholder theory, companies are held responsible for the utility of their stakeholders, such as employees and communities.
The 1970s saw CSR associated with corporate philanthropy and mainly implemented through volunteering and donations. Later, the role of CSR shifted to risk management, focusing on compliance. In recent years, CSR has been discussed in terms of value creation. The creating shared value approach first invoked by Harvard’s Michael Porter – and known as Corporate Shared value, or CSV – sparked a global movement to redefine the role of business in society around a simple but powerful idea: a company’s success and social progress are interdependent. As such, CSV is a business strategy that attempts to increase profits while creating shared value with stakeholders. In this concept, social contributions are viewed not as philanthropic activities, but as strategic business activities.
Spending minimum resources vs. going the extra mile
We now know that CSR involves a range of corporate activities that benefit both businesses and their stakeholders. Taking things one step further, the researchers introduce us to one of many classifications of CSR activities — Reactive CSRs and Proactive CSRs. So, how do the two categories size up against each other?
The first type, reactive CSR, comprises activities that support compliance, business ethics, and other actions that profit the company itself. Reactive CSR activities are usually motivated by social demands. They are generally episodic and are short-term or one-time operations. The second type, proactive CSR, consist of activities that profit stakeholders and society, such as CSV, work–life balance, local community activities, volunteering, and donations. Proactive CSR activities create value for stakeholders and society, delivering indirect (rather than direct) profit to the company. Although proactive CSR activities might not directly improve the life recovery of local communities, they positively affect the lives of employees and indirectly contribute to the life recovery of the local community.
To explore the ways in which the CSR activities of companies positively impact the life recovery of their employees, Profs. Dan and Kohiyama transport us to the Tohoku region of Japan, home to unspoiled rural landscapes, historical treasures, and incredible festivals.
The triple disaster
March 11, 2011. 2:46 PM. An unforgiving 9-magnitude earthquake mercilessly struck the quaint Tohoku. Soon enough, giant waves set off by the quake cut a path of devastation as they rolled inland along the north-east coast. And the lives of people in the region changed forever.
Japan’s most powerful earthquake took more than 15,000 lives and forced many to evacuate their homes after dangerous levels of radiation were emitted from the Fukushima Daiichi Nuclear Power Plant. The disaster also greatly affected Tohoku’s economy and society. The nuclear power plant accident caused extensive destruction, harming agricultural, forestry, and fishery products. The direct financial damage resulting from the disaster was estimated at approximately 17 trillion yen, and many companies were forced to suspend work or permanently close their businesses. Local communities also suffered great losses.
From data acquired from 134 employed local residents in four areas of Iwaki City (Taira, Onahama, Nakoso, and Joban), the researchers determined the structure of the life recovery and the effects of CSR activities. And there were some interesting findings uncovered.
Doing things right
Companies in the Taira area conducted more CSR activities (especially reactive activities) than companies in the other areas, because Taira is a major commercial area with many large corporations that focus on those activities. On the other hand, the Joban area consists of many small companies in the tourism industry, such as Japanese-style hot spring hotels. These companies invest fewer resources in reactive CSR, but are traditionally more engaged in proactive CSR. Overall, it was evident that companies in Iwaki City were well engaged in local community activities, volunteering, and donations, and they invested small resources in business ethics, work–life balance, and CSV.
Rising from the ashes
Women and youngsters tended to be more affected by the disaster than men and the elderly. In addition, people inhabiting mountainous regions and other regions distant from urban areas were found to be inclined to value their private lives over their jobs. People with higher incomes and those who owned their homes were more active participants in their local communities than low-income earners and renters. Finally, people in weak positions, such as contract and dispatched employees, tended to receive lower incomes, be less engaged in local community activities, and be less able to achieve life recovery.
In a nutshell, we can characterize the victims who have made a strong recovery after the earthquake as: (1) male, (2) higher age, (3) living in urban areas, (4) owning their homes, and (5) holding high social status.
Facing the unexpected
The researchers observed that good health and strong relationships with family, friends, and community can improve life recovery.
Regarding CSR activities, reactive CSRs tend to increase business volume at the expense of employees’ private lives as time with family is especially compromised. Conversely, proactive CSRs enhance private lifestyles and human relationships. As such, to improve the life recovery in local areas, companies can implement proactive CSR activities that:
- Improve the work-life balance of employees
- Are related to CSV, and
- Involve participation in local community activities, volunteering, and donations
Giving back is not just a kind gesture. It is a business imperative. Businesses have always been a driving force at the epicentre of local communities everywhere. Now more than ever, employees expect businesses to play a role in creating better communities, including helping them to recover during times of natural disasters. And there is ample opportunity for companies to lead the way in increasing community resilience after calamities to strategically support the communities upon which their success lies.
- Browse Maki Dan and Masayuki Kohiyama‘s research and publications.
- Visit the Keio University website
- Study an MBA or EMBA at Keio Business School.
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