CSR as Supply Chain management

One area where CSR stakeholder engagement/management has been very effective is in managing corporate supply chains. For most businesses but especially for retail, the supply chain can be very comprehensive and might include several tiers before arriving at the primary supplier (Halldorson et al, 2007:286). In a CSR context the supply chain represent a unique set of challenges as it stretches the moral responsibility of the corporation outside its direct sphere of influence. It has been proven time and time again that even though the company might not have direct management control they are still held accountable for the decisions made in their supply chain both up and downstream (Austin & Reavis, 2004, Baron et al, 2004).

Effective supply chain management encompasses much more than just CSR issues but the idea of sustainable supplier relationships are becoming increasingly important. Where time, quality and price used to be the drivers for the logistics chains more and more companies are finding out that the “how” of production and transportation is on the “radar”. The question of how goods are produced and transported becomes most salient when companies start to source into areas where different management cultures, labour laws or governance practices are in place. Issues that companies in one part of the world take for granted is something that people need to fight for in other places. The challenge then becomes how to manage this diversity over a string of different supplier and customer relationships. A common approach adopted to manage supply chain is using Code of Conduct to gain some form of control over the suppliers (Vogel, 2008). Even though it is far from a foolproof system it does present a platform from which the company can get an overview and thereby a possibility to manage its organisational risks in its supply chain. For retail businesses a systematic system of information gathering, risk analysis and auditing is essential and will always have to be a cornerstone of CSR efforts.

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CSR as (Social) Risk Management

Some thoughts on CSR and Risk management

Effective risk management has almost from the start of CSR been part of the reasons for engagement with stakeholders (Bebbington et al, 2007). Many companies have had NGO raise problems which companies did not even know existed or had any plan for how to tackle. In other cases the companies where attacked for business practices, which where part of their core business such as when City bank was under attack for lending money to project that lead to deforestation in Latin-America (Baron et al, 2004). Here stakeholder engagement becomes essential in order to keep the brand name undamaged and most important in keeping the trust that customers has put into the company intact. There are no single success formula on how to communicate effectively with stakeholder or which ones that should be heard or which can be ignored. What is important is that companies and organisations take a stand on how to make this communication work in practice; otherwise the risks can remain unseen for long periods until the day where it becomes unmanageable for the company and turns into a real crisis. As I have described have companies like Nike implemented systems that enable them to get a feeling for what is happening in the world and how there brand is perceived, and hopefully this system will give them some warning on cases soon to emerge.

Adopting a strategy of transparency have over time proven the best assurance for companies to manage their CSR risks and more and more companies are trying to create systems so that their stakeholders can see what they are doing. By looking at the growing number of members of GC it is clear that transnational companies from around the world are using transparency or at least what appears as transparent to manage social risk issues.

A shark by any other name…The Corporation

The Corporation

Image via Wikipedia

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?

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Silence

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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.