Highlights del progetto “RESPONSE”

1. Highlights del progetto “RESPONSE” Mario Minoja Università Bocconi e Università di Modena e Reggio Emilia Workshop CSR Manager Network CSR & CDA Milano, ALTIS (Università Cattolica), 16 giugno 2009

2. Index • Research goals and methodology • (Mis)alignment between managers and stakeholders about the concept of CSR • Alignment Matters …. Four cognitive gaps • Explanatory factors of alignment • Recommendations for managers

3. 1. Research goals and methodology

4. The Response research team Maurizio Zollo, INSEAD (now U. Bocconi), Academic Director • Lourdes Casanova, INSEAD • Susan Schneider, HEC U. Geneva/INSEAD • Dirk Le Roy, Sustenuto/INSEAD • Valeria Berchicci, INSEAD • Donal Crilly, INSEAD • Maria Gradillas, INSEAD • Morten Hansen, INSEAD • Joanne Lawrence, INSEAD • Sophie Linguri, INSEAD • Steven White, INSEAD • Pamela Sloan, HEC Montreal/INSEAD • Michael Yaziji, IMD/INSEAD • Wolfgang Hackl, Impact • Shantanu Reinhold, Impact • Peter Neergaard, CBS • Kai Hockerts, CBS • Esben Pedersen, CBS • Adri Tolstrup, CBS • Katrine Goul Dueholm, CBS • Hanne Poulsen, CBS • Antonio Tencati, U. Bocconi • Francesco Perrini, U. Bocconi • Mario Minoja, U. Bocconi • Stefano Pogutz, U. Bocconi • Alessandro Zollo, U. Bocconi • Wojciech Gasparski, LKAEM • Anna Lewicka-Strzalecka, LKAEM

5. Research goals Cognition & Cognitive Alignment External factors Internal factors • Industry • Region • External pressure • Origins • Leadership • Strategic position • Org. structure • CSR motivation • CSR initiative CSR Results • SRA evaluations • Stakeholders 1. Understand how managers and their stakeholders think about the social responsibilities of corporations 2. Measure the degree of cognitive alignment between managers and their stakeholders across a range of CSR questions 3. Understand how alignment is related to social performance 4. Identify the explanatory factors of alignment

6. Research Methodology • Matched pair design • 1 pair or triad per industrial sector • Matched by: product, region, financial performance, size • Variance maximized by: social performance • Data gathering approach • “Fact-finding day”: evolution of CSR practices • Interviews: 25 semi-structured interviews per company (in total, 427 interviews: 208 managers and 219 stakeholders) • 15 stakeholders: inner- and outer-ring • 11 managers: 6 corporate roles + 4 country managers • Web-based survey of randomly selected 1000+ managers • Organization level: replicate interview protocol across levels/contexts • Individual level: bridge individual and organizational levels of analysis

7. 2. (Mis)alignment between managers and stakeholders about the concept of CSR

8. Cognitive Framing of CSR Issues What is the social responsibility of corporations? 17% 11% 63% 42% 7% 6% 13% 41% Frequency of CSR issues in stakeholders’ responses

9. The Issue Gap Prevalent managerial understanding of CSR is doing no harm. Stakeholders are more likely to define CSR in terms of doing good.

10. “Corporations need to position themselves as responsible corporate citizens on the world stage – at the risk of taking positions not widely shared in the business community.” (Stakeholder, natural resources) “Creating programs to help communities in education, health care and environmental protection.” (Stakeholder, pharma) “CSR is doing well in one's own business, having in mind the stakeholders” (Manager, banking) “Fair play in society, towards employees, towards environment. Meet the law.” (Manager, chemicals) Cognitive Framing of the Scope of CSR Narrow, firm-centric scope of responsibility Broader, societal scope of responsibility

11. Scope and Sophistication of CSR Perspectives 41% 20% 12% 4% 11% 26% 23% 15% 8% 28% 4% 8% Frequency of CSR issues in stakeholders’ responses

12. 3. Alignment Matters …. Four cognitive gaps

13. Dimensions of Alignment

14. Alignment Matters for Social Performance! Across all dimensions, the highest social performers have greater cognitive alignment (i.e. smaller gaps) with their stakeholders.

15. Importance of Alignment for Social Performance Even controlling for industry, companies with the highest social performance have the lowest manager-stakeholder gaps.

16. 4. Explanatory factors of alignment

17. Explanatory Factors of Alignment

18. Innovation business case for CSR • Firms that emphasise new market opportunities as motivation for CSR exhibit positive cognitive alignment with their stakeholders. • Companies motivated by new market opportunities seem to have a greater average cognitive alignment across gaps 3 and 4, and/or • cognitive alignment encourages the firm to explore new market opportunities.

19. Differentiation strategies • Differentiation strategies improve the cognitive alignment between managers and stakeholders (narrower cognitive gaps). • Differentiation entails tailoring products to meet complex customer requirements, thus leading to greater sensitivity towards stakeholder interests and more openness in the search for solutions that prioritise their satisfaction.

20. Integration of corporate responsibility into business processes • The greater the cognitive alignment between managers and stakeholders (narrower cognitive gaps), the greater the integration of CSR practices into business processes (except for gap 2). • The achievement of the integration of CR into business processes (e.g. investment criteria, incentive systems, sales practices, etc.) requires and produces an enhanced understanding of stakeholders' interests and priorities.

21. Further explanatory factors of alignment (some evidence) There is some evidence that alignment is associated also with: • external pressures: firms that experience more external pressure have lower sequentiality gap and closer understandings between stakeholders and managers on the issue of how stakeholders impact on the company. This may suggest that, under conditions of high external stakeholder pressure, the stakeholders who exert most impact are especially visible; • market dynamism: the effect related to the sophistication of stakeholders (in Anglo-Saxon countries) is stronger than that of the corporate managers; • industries characterised by high levels of change (like Anglo-Saxons); • regions marked by faster economic change (like Anglo-Saxons); • influential CSR department: the greater influence of CSR departments and executives, the greater cognitive alignment.

22. Factors of alignment with no clear link to alignment (“non-findings”) • Strong industry norms; • stakeholder engagement; • commitment of leadership to CSR; • value-base firm origin (less ability or incentive to learn and to adapt?); • strong organisational values.

23. 5. Recommendations for managers

24. Recommendations for corporate leaders and business managers • Reframing CSR • from “Do No Harm” to “Do Good” • from a Firm-centric to a World-centric view of the role of their organisation (to be conceived as a global citizen). • “broaden out”, expanding the scope of “responsibility” to include all the audiences for which their company has a significant impact. • reframing their thinking about CSR from “what they can do to us” to ”what we can do to them”. • Reframing “Why CSR” through a “business case” based on the value that CSR brings to your company’s innovation and change processes. • Bridging the “gap”, through: • business strategy, towards a competitive posture that prioritises differentiation, innovation and customisation of a firm’s products/services; • integration of CSR principles in Business Processes. All the fundamental processes that make the organisation “work” (resource allocation, people hiring and motivation, procurement of resources, marketing and sales of products, etc.), as well as each functional activity should be adapted to fully embed the consideration of its potential social impact.

25. Recommendations for CSR managers • Reframe the problem: from external engagement to internal change. • CSR managers should refocus their attention and their time/resource commitment away from handling external communication processes (beyond a minimum requirement, of course) and focus on the complexities of championing internal change initiatives aimed at mainstreaming CSR in all relevant business and strategic processes. • Redefine your role. • If CSR specialists are to assume a role of champions (or at least “co-champions”) of internal change, then they will need to obtain a much stronger “voice” and a more central position with respect to the organisational power structure, to have a real chance to succeed. • Rethink the Role of External Audiences: from Counterparts to Partners in Driving Internal Change. • To rethink the role of the external audiences you deal with on a regular basis, as potential partners in the “uphill battle” that the CSR “champions” are fighting to gain internal legitimacy and drive the internal change agenda; • a new type of engagement seems to be in fact necessary with the stakeholders, moving beyond the “listening” and “telling” (production of information) and towards active collaboration in changing the way things are done inside the organisation.