ESADE, Universidad Ramón Llull

The Rhetoric of Corporate Social

Responsibility: Strategies of Legitimization
among Asian Firms

Itziar Castelló-Molina, ESADE, Ramon Llull

University & Copenhagen Business
School
Roberto Galang, IESE - Navarra University
& ASIAN Institute of Management

This paper has been accepted for publication in the

Best Papers Proceeding of the 2010 Academy of
Management Annual Conference.

In R&R in Business in Society.

1 The paper has been modified from the original article

according to the reviewer’s suggestions.

Moment of enlightment… and questions?

In Europe…
“After all, financial institutions
have a significant influence on
ho relevant
how rele ant social issues
iss es are
tackled, whether it by extending
micro-credits in the fight against
poverty or by financing the
generation of renewal energy”
( Hans ten Cate, Member of the Executive
Board, CSR Portfolio holder, & Bert
Heemskerk, Chairman of the Executive Board
both at Rabobank Group, Annual Sustainability
Report 2007).
2
At a global level?
“The Tata group's beliefs on sustainability have led to
a corporate policy that emphasises environment
preservation. Tata companies work on projects that
include repairing green cover, reducing effluents and
emissions, maintaining local ecologies and improving
long term corporate sustainability.” Tata Group, India.
“Hitachi GST Shenzhenzhen is committed
to its development and growth in
Shenzhen, China. While ramping up its
manufacturing capability, Hitachi GST
Shenzhen has always placed environment
conservation as its priority”, 2006 project.
“Mahindra
Mahindra Satyam uses all core competencies of
Mahindra Satyam—Technology, Innovation and
Leadership—as change agents, enabling
transformation for the deprived, wherever
required. Volunteering, creating enabling
platforms, creating alliances, partnerships are
our other strengths to focus and create
maximum impact for Social Transformation.”
Mahindra Satyam, CSR presentation.

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Research question

1. What type of discourse corporations use in describing

their CSR activities?
2. Which type of legitimacy they search for?
3. How is this rhetoric evolving? How different type of
discourse relate to firm characteristics?

Baseline assumptions:

The language of CSR is populating the corporate discourse and re-defining corporate
legitimacy. CSR reports are becoming one of the corporate communication channels and
legitimization (Waddock & Bodwell, 2002)

Daily communicative actions are manifestations of deeper structures of signification,

domination and legitimation (Giddens 1984: 36).
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Literature gaps and contributions

In the literature… Contribution…

 In globalized societies firms are expected
to engage in socially beneficial activities
to gain and maintain legitimacy
 Theoretical work (Couplan, 2005; Deegan,
Empirical
 Empirical work on how different companies
face legitimacy challenges
 Different discourses to gain and
maintaining legitimacy

2002; Matten and Crane, 2005; Palazzo and Scherer,

2006)  Differences by type of firm
 Empirical very managerial approach  Evolution in time
evaluation and efficiency of projects:
Pava & Krausz, 1997; Berrone, et al. 2009)

 Complementary theories in order to explain

 Two major theoretical perspectives to how companies gain pragmatic, cognitive
describe the management of
Theory approach
h

and
d morall llegitimacy:
iti
organizational legitimacy:
 Institutional (actors, institutional
 Institutional Theory and influences)
 Strategic Theory (Suchman, 1995;  strategic (goals)
(Trullen and Stevenson 2006; Berrone, Gelabert
et al. 2009)  political perspective ((Palazzo and Scherer
2006) (ideologiesand power relations)
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 Further development of moral legitimacy.
Asia as laboratory for analyszing the evolution of CSR

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Theoretical approach and gap

Theoretical approach in literature

 Strategic approach (Ashforth and Gibbs, 1990; Dowling and Pfeffer, 1975).
 View of legitimacy associated to the debate of instrumental approach to CSR (CSP) (Orlitzky, 2003;
Waddock, 1997). CSR
related to management tools and profit maximization.
 Group specific impact (Suchman, 1995).
 BUT….Can not explain what managers beliefs are and what normative frameworks, hopes and
expectations they support.

 Institutional approach (DiMaggio and Powell, 1983; Meyer and Rowan, 1977; Powell and Di Maggio, 1991; Zucker, 1991)
 Describes organizational legitimacy as continuous and often unconscious adaptation process in
which organizations reacts to external expectations (Palazzo et al., 2006). Its potential to explain how
to “manage” is limited.
 Mainly takes cognitive legitimacy as point of reference.
 But devaluated due to the pluralization of modern societies due to the erosion of normative taken
for grantedness (Palazzo & Scherer, 2006).

GAP: This debate does not reflect the conditions of globalized societies (post-national,
individualism, non taken for grantness norms) (Palazzo & Scherer 2006).
• There is a need to further understand the responsibilities inherent to organizations
living in the broader ethical context.
• We introduce a third ethico-political approach to the study of corporate legitimacy.

Three approaches to understand legitimacy

Institutional approach:
- Unconscious adaptation process in which organizations reacts to external expectations .
- Communicative activities in which they try to persuade others to join their collective actions.
- CSR projects to overcome legitimacy challenges.
- Cognitive legitimacy & isomorphism.

Political approach:
- Organizations are conscious of some aspects of their social condition along with the
communicative activities in which they try to persuade others to join collective actions
(Palazzo and Scherer, 2006; Maten and Crane, 2005).

- Moral legitimacy is gained through public deliberation and engagement (Palazzo and Scherer,
2006:73).

- Firms express beliefs, normative frameworks, hopes and expectations they support
(Suchman, 1995).

- Post positivistic understanding of CSR (mutual understanding and agreement (Asforth and
Gibbs, 1990) instead of profit maximization.

Strategic approach:
- Corporations to persuade their stakeholders about the
benefits of their products, procedures and outputs.
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Empirical case: Rhetoric analysis of ASIAN Awards

Sample characteristics
Limitations
 Largest and most important CSR award in Asia
 786 projects analyzed  All reports in English
 22 countries  Discourse for specific projects (awards)
but verification of same language as
 6 years: 2003 -2008 corporate reports (50 projects)
 4 researches coding with Nvivo

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Rhetoric analysis often used to analyze legitimacy strategies (Giddens, 1984; Heracleous, 2006;
Cheney et al., 2004) + Thematic analysis (Boyatzis, 1998).

Findings: 9 Themes

Theme Name Theme Explanation Example

Management Any mention to the way in which business uses systems, processes and Nestlé also conducted demonstrations and
structure including the development of new capabilities in their projects. training on post-harvest control to
Includes mention of capacity building, managerial skills. achieve high quality raw produce

Accountability Any mention to a process in which the firm is hold into account by The Community Relations Department of
stakeholders. Include also voluntary actions from the firm to increase its the Philex- Padcal Operation is in charge
transparency and level of accountability as: footprint measures, lobbying of the overall implementation and
measures. Include formal mechanisms of accountability as external monitoring and evaluation of this
committees. Any mentions of standards, accountability, audit, review. initiative

Strategic Link Any mention to the relation between CSR or sustainability activities and Telkom’s CSR evolved to a new approach,
the strategy of the firm. Any explicit mention to strategy, business model. aligned with TELKOM’s business
strategy

Innovation Any mention to a process leading to new products or process resulting E4T is becoming a model for CSR
from CSR policies or stakeholder engagement. Includes mention of Program in
innovation or entrepreneurs leading to social innovation.

Management, Accountability, Strategic link, Innovation, Social Contribution,

Stakeholder dialogue, Sustainability, CSR, Partnership

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Type of rhetoric: Strategic rhetoric

Strategic rhetoric
Themes:
 “management” the dominant one as it - Management
appears in almost 90% of the projects - Innovation
analyzed - Strategic link
 Rational of the communication: show
increase the effectiveness and efficiency
of the processes of the firm
 Pragmatic legitimacy

“Fondly called, “Sitel Footprints”, it is quite a solution, addressing both the need to strengthen
community relations
relations, and the need for a steady pool of qualified applicants for the growing
business.”

“TELKOM CSR evolved to a new approach, aligned to TELKOM’s business strategy: ’To
Increase Profitable Growth through Managing Stakeholders’”

Institutional rhetoric

Institutional rhetoric
Themes:
 “social
social contribution”
contribution is mentioned in - Social contribution
more than 80% of the reports analyzed - Sustainability
- CSR
 Positivistic approach to CSR
 Cognitive legitimacy

“PT Astra International Tbk is one such company who implements its corporate social
responsibility
p y ((CSR)) seriously…Having
y g a low internet p
penetration rate,, which is a basic of ICT,,
PT Telekomunikasi Indonesia, Tbk (TELKOM) grabs this opportunity to provide something
towards the community as a form of Corporate Social Responsibility (CSR).”

“Philanthropy and Corporate Social Responsibility (CSR) is serious business as UnionBank

commits 1% of annual net income for CSR.”

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Political rhetoric

Political rhetoric
Themes:
 Less used (65% used partnership) - Partnership
- Accountability
 Effort by firms to relate with their -Stakeholder Dialog
stakeholders on the basis of dialog and
public justification of the firms societal
contribution.
 Post- Positivistic approach to CSR
 Moral legitimacy

E. g. Of Accountability: any mention to International Labour Organization (ILO), the Global

Reporting Initiative (GRI), the Extractive Industries Transparency Initiative (EITI), the SA 8000,
among others.

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Trends in themes: evolution in time, local/global; medium &

small/large
Management Accountability Strategic Link Innovation Philanthropy Social Stakeholder Dialogue Sustainability CSR Partnershi
Contribution p

Local -0.406 (0.336) 0.190 0.426* (0.191) 0.207 (0.217) -0.306 -0.271 (0.242) 0.050 0.119 0.357* -0.276
(0.189) (0.194) (0.207) (0.198) (0.196) (0.198)

Small 0.518 (0.620) 0.289 -0.213 (0.379) 0.131 (0.402) -0.511 (0.356) -0.374 (0.429) 0.415 -0.006 0.095 -0.650†
(0.363) (0.403) (0.374) (0.365) (0.351)

Medium -0.799* -0.116 -0.315 (0.252) -0.055 (0.288) -0.322 (0.254) -0.145 (0.314) -.035 -0.411 -0.025 -1.004*
(0.381) (0.248) (0.281) (0.267) (0.251) (0.251)

Y2004 -1.022 (0.648) 1.224** (0.399) 0.689† (0.402) 0.080 (0.460) 0.419 (0.387) 0.167 (0.467) 0.972* (0.425) 0.926* (0.410) 1.349** 0.452
(0.431) (0.382)

Y2005 -0.441 (1.077) 2.846** (0.603) 1.681** (0.596) 1.093 (0.698) 1.005† (0.600) 0.455 (0.751) 2.266** 1.327** 2.610** 0.981†
(0.667) (0.621) (0.643) (0.597)

Y2006 -0.699 (1.486) 4.278** (0.845) 2.160** (0.824) 1.018 (0.978) 1.230 (0.839) 1.345 (1.061) 2.591** 1.184 (0.871) 3.080** 1.450†
(0.933) (0.888) (0.840)

Y2007 -0.884 (2.003) 5.223** (1.128) 2.678* (1.098) 1.448 (1.313) 1.236 (1.131) 0.826 (1.431) 3.235** (1.259) 1.386 (1.174) 3.543** 1.406
(1.185) (1.122)

Y2008 -1.537 (2.377) 6.101** (1.370) 2.514† (1.322) 1.539 (1.601) 1.288 (1.377) 0.483 (1.752) 2.702* (1.529) 1.253 (1.427) 4.538** 2.441†
(1.432) (1.378)

Observat 756 771 767 769 771 762 764 771 765 771

Pseudo 0.163 0.127 0.104 0.232 0.115 0.117 0.237 0.2085 0.054 0.111
R2
12

Logistic regression to detect general trends

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Second contribution: Evolution in time of themes

Themes with statistically significant increase over 2003 -2008

Theme/Rhetoric type Explanation

 Isomorphism in use of terms: global trend from risk

Strategic rhetoric managementt to
t strategic
t t i managementt (Googings et al. 2007; Porter &
Cramer, 2008; Zadeck, 2004)
 Strategic link
 Evolution of CSR in Asia follows CSR mainstream. Idea
supported by (Welford, 2004; Ramasamy & Woan-Ting, 2004)

 Isomorphism in use of terms

Institutional rhetoric
 CSR  Enthymemes that provides cognitive legitimacy (Attarça and
Jaquot, 2005; Castelló & Lozano, 2010)

Political rhetoric  Pragmatic and cognitive legitimacy seem to be not

 Accountability
 Stakeholder Dialog
 Partnership
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enough for gaining legitimacy.
 Firms looking for a new form of legitimacy: Moral
through the political rhetoric.
 Major transformations in Asia & growing complexity
for globalized society requires building relations with
stakeholders.

Second contribution: Country, Industry and firm type

 Developed countries
 Strategic Rhetoric  Low risk and established industries
 Local firms

 Developing countries, Politically stable and well

governed Countries
 Institutional Rhetoric
 High risk and new industries

 Developing countries
 P liti l Rhetoric
Political Rh t i  Hi h risk
High i k and
d new industries
i d ti
 Large firms, multinationals (liability of foreignness and
newness (Aldrich and Fiol, 1994; Ashforth and Gibbs, 1990)

Variation in CSR rhetoric is predicted significantly by the context that each firm
finds itself in.
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Conclusions and contributions

For the academy:

1. Broad legitimacy understanding through joint analysis from Institutional, Strategic and Ethico-
political perspectives.

2. Co- existence of three CSR discourse that reproduce different legitimacy strategies

3. Legitimacy strategies related to country and firm characteristics

4. Increase importance of the political rhetoric

- A sign of an increasing understanding of the political role of the firm?

- Increase of pressure from stakeholders to multinationals in risky industries?

For managers and practitioners:

1. Better understanding how firms are managing legitimacy challenges depending

on their characteristics

2. Understanding of the future trends of CSR

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Thanks for your feedback

Itziar Castelló Molina

Itziar.castello@esade.edu

Member of the Institute for Social Innovation at

Esade

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