Social capital and its use within CSR – Moving away from the target

A segment of a social network

Ever since Pierre Bourdieu cornered the term social capital it has been used and misused to a degree that even the inventor would have a hard time recognising the concept. In order to understand what capital in a Bordiuedian contact one needs to understand that it is centred on class and how people position themselves within society and organisations. He identifies three different sources that capital can come from Economics (e.g. money or what we would call monetary resources), Culture (e.g. art, beauty, etc.) and Social capital. In his understating social capital is centred around an emphasis on conflicts and the power function like the social relations that increase the ability of a subject or actor to advance their interests. Social positions and the division of economic, cultural and social resources (which is legitimized with the help of Symbolic capital which is the combination of capital that is most valuable in the specific field) in general is determined by the capital resources which a person is able to gather within the field were he or she wants to be active. The field is understood as a network or a configuration of objective relations between position that gain their position depending on the capital that is valid in the field. Or “’the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition’ (Bourdieu, P. 1986. ‘The Forms of Capital.’ Pp. 241-58 in Handbook of theory and research for the sociology of education, edited by John G Richardson. New York: Greenwood Press.).

This means (at least in my mind) that one could never look at social capital in isolation from other forms of capital, but it should rather be seen in combination with other forms in order to understand how power was distributed within a given field. So much for theory…

Within the CSR movement there have been a tendency to see social capital as a way to measure and justify sustainability issues (e.g. capital in isolation). This is mainly because it is seen as a relative easy concept to comprehend and within the definition there seem to be real quantitative measurements to be made. For example one would ask; how many personal connection does a person have?, How much do they socialize?, Where do they put their trust? What is their impact on the local community? etc. All of these examples of things that one can go out in the field and investigate and come back with measurement. In theory (at least in this one) it would be possible to find out whom in a given field have the most social capital and thereby identifying who and about what a socially responsible company should communicate around what issues. Or at least this is the idea.

However, this will in my mind be a step in the wrong direction as it dilute both the concept of social capital as it was intended by Bourdieu and will make Corporate Social Responsibility impact a matter of how much or little capital impact one is able to produce. I have come up with five arguments why the two should not be mixed.

First it presents a theoretical challenge. As I have blogged about before is CSR not a concept with one specific definition it is more or less up to the use or organisation to define what it means to them and then take it from there. So if on uses the concept of CSR and proclaims that the operationalized form of is to be called Social Capital which is also an ambiguous concept the whole thing seems to be diluted into something that nobody understands or agree upon. This would not only leave the organisations that adopt the concept not much better of than when they started but might even lead to more bewilderment.

Second is that fields or networks are under constant change especially within the world of NGOs, CSOs, municipalities and governments were companies need to operate with their CSR efforts. CSR is very much a political battleground and requires constant negotiations with stakeholders on what is important and what is not. The capital that is valuable in one instance might have much to say in another and as companies need to operate efficiently in many social contexts it would not make sense to just to stick to one understanding of what social capital is. Just think of BP and how there was a sudden but decisive shift in public opinion despite the fact that they were ( or at least they themselves) considered the “green Oil Company”.

Which leads to the third subject that field analysis is retrospective it will not give you a indication about what will be important next, what is the future issue we need to be aware of. In this sense it is more analysis that will lead to the status quo rather than give organisations an idea what will come next. What is the challenge that management need to deal with in the future what will come that will force this field to change it understating of what capital is valuable.

My fourth objection to the use of social capital comes from the idea that every human action and understanding should somehow be capitalised. Why is it that in order to understand something we will need to measure it in terms of money? In my mind moral and ethics in the centre of CSR that is about doing good and doing well at the same time. If one is only willing or able to talk about something if we can measure it in terms of value there is something fundamentally wrong with us. CSR can be a effective approach to handle social complexity so why not use it as such instead of reverting back to an economic mindset that will just make it an useless activity.

Fifth is what Ben Fine call the issue of BBI or “Bringing Back In”. It seems like that as the concept of Social capital is so undefined and it would that each time the so-called “real” economists does not understand something it must be Social capital. This means that the whole concept have become some form of Freudian garbage bin where we put stuff because it has something to do with the unconscious or the things we can’t measure and therefore not understand. This has meant that we have seen race, gender, crime, security, rules and norms being included into our understanding of Social capital. And even as time have progressed and it has become even less transparent we have started to bring Bourdieu back in as we have wondered so far of the centre that it doe not resemble the original idea.

Does this means that Social capital cant be used for analysis? No it does not. It can be very valuable as a strategic tool and understanding of environments and social contexts which otherwise would be too abstract or complex to comprehend.But it should be done so as it was originally intended not as a concept which have morphed into something which have stretched it much too far. In social science it tell us something about the dynamic of the field we are trying to understand. But as one can see from the list of definitions below there is more than one that wants to stretch the concept further than it can take. CSR is a concept by which organisation takes a critical look upon itself and its actions and evaluate if the consequences of these are to the benefit or harm of its stakeholders. It does so using normative standards that are issued by institutions like the EU, OECD, UN or local governments.

CSR is a reactive concept that gives organisation an idea what is expected of them now and what they might expect of them in the future. The use of social capital will only lead to a degeneration of both concepts and take out the benefits that a open understanding of the role of business in society, which CSR brings with it into a realm where it no longer will be effective.

I can just hear the executive manager talk about how much impact their company have on social capital and proclaim, “that while our internal stakeholders are still underpay and discriminated against they are at least rich on social capital”.

Definitions of Social Capital from Social Capital Research

External versus Internal Authors Definitions of Social Capital
Baker ‘a resource that actors derive from specific social structures and then use to pursue their interests; it is created by changes in the relationship among actors’; (Baker 1990, p. 619).
Belliveau, O’Reilly, Wade ‘an individual’s personal network and elite institutional affiliations’ (Belliveau et al. 1996, p. 1572).
Bourdieu ‘the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition’ (Bourdieu 1986, p. 248).’made up of social obligations (‘connections’), which is convertible, in certain conditions, into economic capital and may be institutionalized in the form of a title of nobility’ (Bourdieu 1986, p. 243).
Bourdieu Wacquant ‘the sum of the resources, actual or virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition’ (Bourdieu and Wacquant 1992, p. 119).
Boxman, De Graai. Flap ‘the number of people who can be expected to provide support and the resources those people have at their disposal’ (Boxman et al. 1991, p. 52).
Burt ‘friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capital’ (Burt 1992, p. 9).’the brokerage opportunities in a network’ (Burt 1997, p. 355).
Knoke ‘the process by which social actors create and mobilize their network connections within and between organizations to gain access to other social actors’ resources’ (Knoke 1999, p. 18).
Portes ‘the ability of actors to secure benefits by virtue of membership in social networks or other social structures’ (Portes 1998, p. 6).
Internal/ Bonding/ Linking Brehm Rahn ‘the web of cooperative relationships between citizens that facilitate resolution of collective action problems’ (Brehm and Rahn 1997, p. 999).
Coleman ‘Social capital is defined by its function. It is not a single entity, but a variety of different entities having two characteristics in common: They all consist of some aspect of social structure, and they facilitate certain actions of individuals who are within the structure’ (Coleman 1990, p. 302).
Fukuyama ‘the ability of people to work together for common purposes in groups and organizations’ (Fukuyama 1995, p. 10).’Social capital can be defined simply as the existence of a certain set of informal values or norms shared among members of a group that permit cooperation among them’ (Fukuyama 1997).
Inglehart ‘a culture of trust and tolerance, in which extensive networks of voluntary associations emerge’ (Inglehart 1997, p. 188).
Portes Sensenbrenner ‘those expectations for action within a collectivity that affect the economic goals and goal’ seeking behavior of its members, even if these expectations are not oriented toward the economic sphere’ (Portes and Sensenbrenner 1993, p. 1323).
Putnam ‘features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit’ (Putnam 1995, p. 67).
Thomas ‘those voluntary means and processes developed within civil society which promote development for the collective whole’ (Thomas 1996, p. 11).
Both types Loury ‘naturally occurring social relationships among persons which promote or assist the acquisition of skills and traits valued in the marketplace. . . an asset which may be as significant as financial bequests in accounting for the maintenance of inequality in our society’ (Loury 1992, p. 100).
Nahapiet Ghoshal ‘the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network’ (Nahapiet and Ghoshal 1998, p. 243).
Pennar ‘the web of social relationships that influences individual behavior and thereby affects economic growth’ (Pennar 1997, p. 154).
Schiff ‘the set of elements of the social structure that affects relations among people and are inputs or arguments of the production and/or utility function’ (Schiff 1992, p. 160)
Woolcock ‘the information, trust, and norms of reciprocity inhering in one’s social networks’ (Woolcock 1998, p. 153).

Storytelling at the core of corporate CSR branding

Miami Beach, Florida Hand made sign advocating...

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The story corporate story should be at the core of any CSR effort. It is what I would call the cement that holds everything together inside the organisation and makes it possible to communicate with a degree of persuasion with its audience.

If one looks at storytelling as elements of branding one can distinguish three elements Culture, Identity and Image.

Culture being the stories that employees tell each other from the old t the new guy or among the old-timers or is the ones told in the employee magazine as examples of good cultural behaviour. It is also the informal stories that circulate among employees or close associates about how we saved the day by some act of heroism or how we beat the people from accounting at the annual summer go-card trip.  All these stories being told everyday at all levels of the organisations is building, reshaping and reinforcing corporate culture.

The Identity is what employees belie to be unique to being in just this organisation. One can call the corporate identity the reflection of the stories that is being told. One could say that they are the collective way of interpreting the stories we call our own which outsiders might not understand the fine details of. One cannot totally distinguish culture and identity from each other, as they are interlinked and always evolving. However, one can project or at least try to project ones identity on the surroundings as explicit examples of corporate culture.

This leads to Image, which are the pictures outsiders get of the organisation when it hears the corporate story being told. Stakeholders listen to the stories being told but are also taking part in its reproduction creating a mirror of the corporate image that the organisations identity can use as tool for affirming or renegotiating its culture and its feeling of being one.

In order to analyse and understand corporate storytelling one can use the actantial model developed by Greimas, which basically breaks down the story into six different but essential components.

The axis of desire, which refers to the subject or hero (who can be both good or bad) and the object, which is the thing he/she/it, desires. The axis of power that can be broken down into a helper or the person or thing that helps our hero and the opponent that is the person/thing trying to stop our hero from achieving his goal. The helper assists in achieving the desired junction between the subject and object; the opponent hinders the same.

Finally we have the axis of knowledge that is composed of the sender and the receiver. The sender is the person or thing that is requesting the establishment of the junction between our hero and the object he desires. The receiver is the element for which the quest is being undertaken.

Using this framework of understanding one could for example look at the most prominent CSR stories of 2010 the BP oil spill or the Google battle for free speech.

BP‘s oil spill in the Gulf of Mexico

Deepwater Horizon was one of the world’s largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP’s once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn’t cover itself in glory by failing to come up with a realistic remedy until far too late – and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an ‘externality’ of business.

Here the CSR policy of BP could be seen as a helper in telling the story that the company was trying to communicate. However, the hero or BP executive management was not able to use the help they were getting and ultimately failed to keep the BP CSR brand intact. That the power to decide if BP was allowed to win or fail in the efforts was given to the local fishermen by a combination the statements in the CSR policy and the medias efforts to find a compelling case to write about.

Google’s battle for free speech

Google’s withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues.

In the Google example we have a case were the CSR policy was used successful even though the case did not come out as a commercial success for the company. When the company was challenged on its policy it stood by its values and identity and ultimately was able to prevail as a ethical brand taking a decision to withdraw from china rather than compromise its ethical standpoint. The winner becomes the Google identity and brand which is viewed its stakeholders as a company who puts people before profit.

These stories and many more show that CSR is an essential part of the corporate brand and that it is central in the story that we tell. Also that the policy is not something that corporate executive should take lightly but that it is actually a document which quite literally can help or break a company brand.

Micheal Porter and Mark Kramer on the concept of Shared Value and why the argument does not hold

Michael Porter

Image via Wikipedia

A revisit to one of my older posts. Here I have tried to give some interplay to the dogma that everything about business is about the strategic advantage and very little has to do with ethics and the ability for business to operate. I think that it does give food for thought that business role in society is much more important than business would like to think and that it goes beyond profit and individual strategic advantages which one can gain in the short run.

Porter and Kramer have published another article on Corporate Social Responsibility called “The Big Idea: Creating Shared Value” in Harvard Business Review. They proposed a revised CSR that redefines some of the key notions we have about capitalism and businesses relationship in society. The concept is called Corporate Shared Value (CSV), as opposed to philanthropy or social enterprise which, according to them, does not take into account business place and role in society.

“Shared value, then, is not about personal values. Nor is it about “sharing” the value already created by firms—a redistribution approach. Instead, it is about expanding the total pool of economic and social value.”

Porter and Kramer’s view on business is again limited to the impact on business on the local community and how they directly impact the possibilities for the community to develop.

“A community needs successful businesses to provide jobs and wealth creation opportunities for its citizens. This interdependence means that public policies that undermine the productivity and competitiveness of businesses are self-defeating, especially in a global economy where facilities and jobs can easily move elsewhere. NGOs and governments have not always appreciated this connection.”

“The best companies once took on a broad range of roles in meeting the needs of workers, communities, and supporting businesses. As other social institutions appeared on the scene, however, these roles fell away or were delegated. Shortening investor time horizons began to narrow thinking about appropriate investments.”

There is no doubt in my mind that companies have to create shared value. But, and yes there is A But, has it not always been the truth about business that if it was not able to create shared value it could not claim legitimacy in the society it was operating? As we have seen a number of companies outsource their production to places like India and China they have lost their traditional role in society. Because of this lack of local association, businesses have turned to other ways to legitimise their operation, strongly encourage by governments, media and critical stakeholders.

CSR is, in my opinion, more a manifestation that Business to a large degree has lost it local foundation. Just look at who are engaging themselves in CSR related activities. Global companies like Wal-Mart, Maersk and BP have all too some extent had to engage in stakeholder engagement activities in order to emulate local connection. Wal-Mart in the US on placement of new retail stores, Maersk in relation to works rights in China and BP had to talk to the local fishermen in the Gulf of Mexico. Common for all is that they have lost the local footing because of their global reach, but have forced to engage with the communities were they are active.

The article continues to argue that;

“We need a more sophisticated form of capitalism, one imbued with a social purpose. But that purpose should arise not out of charity but out of a deeper understanding of competition and economic value creation. This next evolution in the capitalist model recognizes new and better ways to develop products, serve markets, and build productive enterprises.”

My argument would be that we need a less sophisticated form of capitalism that returns the system to its basic concepts. We have since the 1980ties seen a explosive raise in legislation and international trade agreements which have created numerous loopholes and possibilities for companies with the right resources to find ways to cheat the system. For example is the IFRS guidelines some one thousands pages or the Sarbanes-Oxley act in the United States that have done nothing to prevent a global financial meltdown. The systems have rather made us disregard some of the most obvious attempts at fraud because we were all lulled into a false sense of security. We all thought that the ‘systems’ would protect us from any harm while it in fact made us even more vulnerable  to people that wanted to do evil. Even though sentences for fraud were increased  of up to 20 years in prison did not help us in any way.

So when Porter and Kramer looks for shared value as something that “should supersede corporate social responsibility (CSR) in guiding the investments of companies in their communities.” It is more a cry for help because everything else seems to have failed. If we can’t legislate and control capitalism, we might ask if capitalism would be so kind not to steamroll us by creating the image that it is in the interest of the economic system to create something called shared value.

According to the two distinguished gentlemen is “CSR programs focus mostly on reputation and have only a limited connection to the business, making them hard to justify and maintain over the long run. In contrast, CSV is integral to a company’s profitability and competitive position. It leverages the unique resources and expertise of the company to create economic value by creating social value.” I think the quote in very real terms shows that they have not understood what CSR is and how it is used in today’s world (and according the KPMG) is CSR not merely a PR exercise but foremost a system of business ethics and economic common sense. By economics I mean that business need to have a positive relation to its surroundings in order to be given ‘license to operate’ and CSR can provide organisations with a management and communicative framework which will do just that.

So to summarise there is some merit to Porter and Kramer’s argument that companies should create shared value within the communities that they are active in. However, according to them the concept requires an adjustment of our current economic system and that business should embrace CSV as something more that their current CSR activities. Even though they are already engaged in the activities that CSV prescribes. In my view is the new concept of shared value outdated from its outset. It prescribes medicine for a disease that does not exist for patients who are not interested.

You can judge for yourself by reading the article here:

The article can be found at “The Big Idea: Creating Shared Value” by Michael E. Porter and Mark R. Kramer HBR January–February 2011

A shark by any other name…The Corporation

The Corporation

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I begin my lesson in organizational communication by asking. Now that you are going to be experts in organizational communication and guide business managers in how to effectively communicate you will have no problem in answering this simple question. What is a Corporation?




One hand appear. It is an economic entity (according to Wikipedia). Another says it is a more of a legal thing like a person (I think they got deeper into the googeling)

Being a teacher at a relative big business school I sometimes wonder if we really know the answer to this very obvious and straight forward question.

But when does a business then become a corporation well according to Joal Bakan, and others might agree, it is when it loses it soul. One can say that a business has lost it soul when decision are being taken not because they are right or wrong but when they are based on rational and logical explanations. This might sound weird but it does make sense when you see what corporate managers are doing out there in the “real” world.

The corporation is an externalizing machine, in the same way a shark is a killing machine … There isn’t any question of malevolence or of will; the enterprise has within it, and the shark has within it, those characteristics that enable it to do that for which it was designed.” (Bakan, 2004:70). So basically the corporation is a feeling less “monster” we let loose and of which we have been convinced it is the best of possible solutions to our need for prospering and happy society. (les affairs capitalism and Milton Friedman and Freidrich Hayek ring a bell)

But as people have found out that just letting the monster go did have some side effect they put pressure on companies to change their behavior. Just think of BP, Wall-mart, Nike, Apple, A.P. Moller-Maersk. When looking up Sweatshops, Nike even have their own entry on the web being synonymous with the concept.

So corporations invented Corporate Social Responsibility (CSR) in order to counter some of these attacks on their ability to make a profit. Some would say that it is against the nature of the beast or even unethical to have the corporation imitating human feelings in this way. But the result has been that companies have implemented systems that enable them to immolate to a certain degree human feelings. Corporation basically show that they care by donating their hard earned money to different causes or venture into different “feel good” programs like the UN Global Compact (UN GC) or UN principles for Responsible Investments (UN PRI) tapping into the goodness discourse. One company (Novo Nordisk) even had to explicitly say that they were a business and not a NGO-of-sort as their communication was so effective that some people had come to confuse the two when they debated intellectual property rights.

If CSR is a way for companies to emulate human feelings on a grand scale how come that they continue to make the same mistakes. If one goes back to the quote above it is because even though the corporation is painted in a different “color” it remains the shark it was from the starting point and that, I think, is the lesson to be learned.

Effective communication in a world of imperfect systems

So what is the difference between systems and communication? Well, the problem with systems is that they are unable to predict or function in situations where the organization is faced with a situation it does not know about. For most people it is hard to understand why BP could let a simple pressure valve determine the future image of the corporation. When one look at the situation that BP was faced with it was not the failure of the system that was the problem but it was the inability to understand the communicative risk that was involved.

BP or Transocean as the drilling company is called, knew from the systems that when they decided to cut costs and not maintain this simple safety feature that there was a certain chance that if a accident would happened they would be unable to shut down the flow of oil. Because Transocean did not understand the communicative aspect of such an incident happening there cost-benefit analysis did not take into account that the risk was not only to the rig and surrounding environment, but also to the reputation and image of themselves and their biggest client BP. This failure of comprehension was the biggest mistake that the company made when they decided to rely on only there systems to give information about the processes.

To me it is the combination systems and effective organizational communication that will enable companies to identify and counter future events. The systems will tell you what you already know while organizational communication collects new knowledge and ensures that it is effectively spread to the people who needs to know and can act. Of cause this requires the right type of managers and leaders but I’m convinced that leaders who are unable to work and comprehend these two aspects will cease to exist thorough a Darwinian process that have been in progress for the past ten years and that will continue for the next ten to come.