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Journal of Business Ethics (2009) 87:153–168  Springer 2008

DOI 10.1007/s10551-008-9876-z

CSR Practices and Corporate Strategy: Lucio Lamberti


Evidence from a Longitudinal Case Study Emanuele Lettieri

ABSTRACT. This paper aims to contribute to the decisions towards products and services in today’s
present debate about business ethics and Corporate Social global society (Brenkert, 2002). This uncertainty
Responsibility (CSR) that the Journal of Business Ethics is addresses new fundamental questions regarding the
hosting. Numerous contributions argued theoretical trust between consumers and organisations (Choi
frameworks and taxonomies of CSR practices. The et al., 2007).
authors want to ground in this knowledge and provide
Giddens (1990) defined ‘‘trust’’ as the faith in the
further evidence about how companies adopt CSR
practices to address stakeholders’ claims and consolidate
practices or behaviours of which one possesses only
their trust. Evidence was provided by a longitudinal case limited knowledge. In this view, the company’s rep-
study about an Italian food company that is one of the utation plays a relevant role. As consumers become
largest producers of baby food. This company reshaped its aware of the ethical implications of the companies’
corporate strategy along three decades through the behaviour, they develop a trust in the belief that the
adoption of CSR practices in order to win stakeholders’ company will maintain certain quality standards in
trust about food safety and supply chain behaviour. The order to maintain, or improve, their reputation
empirical exercise was informed by a literature review of (Kostova and Zaheer, 1999). Consequently, beyond
the relevant contributions in terms of CSR business ethical considerations, consumers’ perceptions con-
practices and levels of efforts to adopt them. In light of cerning CSR deficiencies can be extremely detri-
this review, the authors adopted for the research frame- mental to corporate profitability and market share
work the taxonomy of business practices proposed by
(Enderle and Tavis, 1998).
Spiller (2000, ‘‘Ethical Business and Investment: A Model
for Business and Society’’, Journal of Business Ethics 27,
Food industry can be taken as a reference example
149–160) and the levels of commitment towards CSR in understanding the role of CSR in achieving com-
proposed by Stahl and Grigsby (1997, Strategic Manage- petitive advantage (Maloni and Brown, 2006).
ment; Total Quality & Global Competition (Blackwell, Today’s consumers are more and more uncertain
Oxford)). The main findings are discussed in order to about how food companies really behave and how
argue theoretical implications and identify further areas of much are they socially responsible (Deblonde et al.,
research and debate. 2007); the progressive globalisation of the food supply
chain has generated uncertainty on safety and security
KEY WORDS: business ethics, CSR business practices, practices; the consumption of mass food has addressed
corporate strategy, food industry, stakeholders’ claims concerns about pandemic diseases (e.g. mad cow
disease, foot and mouth disease, bird flu); the
increasing awareness about the risks related to obesity
Introduction has generated criticism of marketing and distribution
practices; the use of genetically modified ingredients
Consumers and governmental organisations are has raised the debate about how trustworthy is product
focusing their attention more and more on Business labelling (MacDonald and Whellams, 2007) etc.
Ethics and Corporate Social Responsibility (CSR) Food companies, both multinational – e.g. Nestlé,
(Konrad et al., 2006). Moreover, consumers are Kraft Food International, Danone, Heinz – and
coping more and more with uncertainty, lack of domestic, are working to reinforce consumers’ trust.
knowledge, imperfect information and complex This issue is urgent, because the claims are legitimated
154 Lucio Lamberti and Emanuele Lettieri

by society as a whole (Maloni and Brown, 2006). Electronic literature search


Consumers and other stakeholders are increasingly
aware that their choices about food (e.g. organic versus The authors carried out an electronic literature
non-organic) affect companies’ behaviour and politi- search from January 1990 onwards covering Ebsco
cians’ decision making, providing a relevant contribu- and Cilea databases to collect the relevant contri-
tion to the formalisation of strategies and actions aimed butions about business ethics and CSR frameworks
at ameliorating the social and environmental conditions for food companies. The references of the selected
in specific areas of the planet (e.g. fair trade products, contributions were also reviewed. In order to be
eco-compatibility). In this view, Business Ethics and included, a contribution had to describe, in whole or
CSR practices become a mean of competitive advan- part, a framework to support or audit CSR strategy
tage for food companies (Deblonde et al., 2007). and practices in a company. The identified contri-
This paper aims at contributing to the present butions were reviewed for relevancy by the authors
debate regarding Business Ethics and CSR that the separately, on the basis of the title and abstract. If at
Journal of Business Ethics (JOBE) is hosting. Numerous least one reviewer identified a contribution as being
contributions argued about theoretical frameworks or potentially relevant, the full paper was obtained. The
taxonomies for CSR practices. The authors want to collected papers were then reviewed and selected if
ground in this knowledge and provide further evi- the authors considered them to meet the selection
dence about how companies adopt CSR practices to criteria. A brief textual description was written for
address stakeholders’ claims and win their trust about framework, in particular concerning relevant stake-
products and behaviour. Evidence will be provided holders and dimensions of analysis. A framework has
by a longitudinal case study about an Italian food been formalised in order to design a questionnaire
company that used CSR to reduce stakeholders’ for semi-structured interviews.
uncertainty about food safety and supply chain
behaviour. Based on the results, the authors forma-
lised a set of theoretical implications and argued some Case study analysis
locus for further research and debate.
The empirical exercise involved a food company,
which is one of the largest producers of baby food in
Research methodology Italy. This company was selected for at least four
reasons. Firstly, it has been widely recognised for
The authors employed a single case study method- being socially responsible towards environment and
ology for the empirical research (Yin, 2003). In par- local community by both the Italian and the inter-
ticular, they decided to carry on a longitudinal case national stakeholders. Secondly, over the last three
study about an Italian food company. The managerial decades, the top management endorsed various
literature has recently recognised that small sample strategies and actions to win stakeholders’ trust
research is appropriate to understand the peculiarities regarding food safety and ethical behaviour. Thirdly,
and the determinants of a phenomenon at an early it is a wholly owned subsidiary of an US multi-
stage of knowledge. In this view, Siggelkow (2007) national food company, which sells low price mass
claimed that a single case study can contribute to food; this gave the opportunity to investigate to
existing knowledge through the deepening or wid- what extent corporate governance and parent’s
ening of the current understanding. reputation affect a subsidiary. Fourthly, the authors
The research design is based on two sequential had the possibility to have access to confidential data
steps. Firstly, the authors carried out a literature over a period of three decades.
review about business ethics and CSR frameworks The analysis was carried out as follows:
that can be suitable for food companies in order to
give information to the next step. Secondly, the • At the beginning, a relationship was estab-
authors selected a case study and carried out an in- lished with the Managing Director. He was
depth longitudinal analysis. In the following, both briefed about the research project and the
steps are described briefly. authors asked to be introduced to the
CSR Practices and Corporate Strategy 155

Marketing Manager, the Human Resources The literature review aimed at formalising a
Manager, the Supply Chain Manager and the research framework that, rooted in the existing
R&D Manager in order to gather a composite knowledge, could support the following case study.
understanding; Two research needs were addressed. Firstly, which
• The authors personally interviewed the are the relevant stakeholders, their claims regarding
selected managers; they undertook a semi- Business Ethics and CSR, and the business practices
structured interview for each respondent that can be adopted by a food company to address
(each interview on average lasted one hour them? Secondly, how can the level of commitment
and half) in order to gather the information that a food company pays to adopt a specific business
required; all of them had many years experi- practice for CSR be measured? In order to satisfy
ence in the food industry and joined this these needs, the authors were looking for generally
company at least 10 years ago; agreed taxonomies that could be applied to investi-
• All interviews were tape-recorded and tran- gate the case study.
scribed; and a telephone follow-up with the In the following, the selected contributions are
respondents was conducted when a few data described briefly.
were missing; The authors decided to select six contributions on
• All available secondary information regarding which are the relevant stakeholders and the business
strategies and practices for food safety and CRS practices to address their needs according to the
over the last 25 years was collected and triangu- inclusion protocol described in the Methodology
lated with data drawn from the direct inter- section.
views in order to enhance research reliability; Spiller (2000), Papasolomou-Doukakis et al. (2005)
• External sources of information were identi- and Maignan et al. (2005) agree that six different
fied to gather other points of view regarding groups of stakeholders affect or are affected by what a
company’s social responsibility and behav- company decides or does, and therefore they address
iour. In particular, two sources of information specific responsibilities. They are: shareholders,
were covered. On the one hand, the reports employees, customers, suppliers, the environment and the
and claims about the Italian babyfood market community. Abreu et al. (2005) identified five groups of
and the company that have been carried out stakeholders (consumers, suppliers, the community, the
by various consumer representatives and by government and the environment) investigating CSR
the official consumer associations press organs practices in Portugal. Longo et al. (2005) identified
were collected by Internet. On the other four groups of stakeholders (employees, suppliers, cus-
hand, the minutes regarding the meetings tomers and the community). Maloni and Brown (2006)
between the company and the union officers identified eight perspectives of CSR that are peculiar
over the last 10 years were collected and for the food supply chain. They are: health and safety,
reviewed with a SA8000 consultant. labour and human rights, procurement, fair trade, commu-
• A first hand summary of the findings was dis- nity, environment, animal welfare and biotechnology.
cussed with the managers who were interviewed Although these perspectives are peculiar, they can be
in order to identify any misunderstanding. easily related to the six groups of stakeholders. For
example, the perspective ‘‘labour and human rights’’
can be referred to the employees, because it is a spe-
Research framework cific business practice to address the claims of this
group of stakeholders.
Even a cursory review of the literature would The previously mentioned contributions identi-
identify that numerous frameworks and metrics for fied a number of business practices that a company
CSR have been developed. Focusing on the Journal can adopt to address stakeholders’ claims regarding
of Business Ethics, the contributions that can be col- Business Ethics and CSR. Spiller (2000), among the
lected are also many. In this view, the authors tried others, proposed a list of sixty business practices that
to make sense of a mass of – and often contradicting largely covered the other contributions (Table I). In
– theories and evidence. a recent contribution to the JOBE, Jamali (2007)
156 Lucio Lamberti and Emanuele Lettieri

TABLE I
Perspectives and key business practices for CSR (Spiller, 2000)

Perspective Key business practices

Community 1. Generous financial donations


2. Innovative giving
3. Support for education and job training programmes
4. Direct involvement in community projects and affairs
5. Community volunteer programmes
6. Support for the local community
7. Campaigning for environmental and social change
8. An employee-led approach to philanthropy
9. Efficient and effective community activity
10. Disclosure of environmental and social performance
Environment 1. Environmental policies, organisation and management
2. Materials policy of reduction, reuse and recycling
3. Monitoring, minimizing and taking responsibility for releases to the environment
4. Waste management
5. Energy conservation
6. Effective emergency response
7. Public dialogue and disclosure
8. Product stewardship
9. Environmental requirements for suppliers
10. Environmental audits
Employees 1. Fair remuneration
2. Effective communication
3. Learning and development opportunities
4. Fulfilling work
5. A healthy and safe work environment
6. Equal employment opportunities
7. Job security
8. Competent leadership
9. Community spirit
10. Social mission integration
Customers 1. Industry-leading quality programmes
2. Value for money
3. Truthful promotion
4. Full product disclosure
5. Leadership in research and development
6. Minimal packaging
7. Rapid and respectful responses to customer comments/concerns
8. Customer dialogue
9. Safe products
10. Environmentally and socially responsible product composition
Suppliers 1. Develop and maintain long-term purchasing relationships
2. Clear expectations
3. Pay fair prices and bills according to terms agreed upon
4. Fair and competent handling of conflicts and disputes
5. Reliable anticipated purchasing requirements
6. Encouragement to provide innovative suggestions
7. Assist suppliers to improve their environmental/social performance
CSR Practices and Corporate Strategy 157

TABLE I
continued

Perspective Key business practices

8. Utilise local suppliers


9. Sourcing from minority-owned suppliers
10. Inclusion of environmental/social criteria in the suppliers’ selection
Shareholders 1. Good rate of long-term return to shareholders
2. Disseminate comprehensive and clear information
3. Encourage staff ownership of shares
4. Develop and build relationships with shareholders
5. Clear dividend policy and payment of appropriate dividends
6. Corporate governance issues are well managed
7. Access to company’s directors and senior managers
8. Annual reports provide a picture of the company’s performance
9. Clear long-term business strategy
10. Open communication with financial community

recognised the taxonomy proposed by Spiller (2000) to the company and they take position far beyond
as one of the most suitable in the literature for the requirements of the law). Enderle and Tavis
investigating the approaches to CSR. The authors (1998) identified three levels of ethical responsibility:
agreed on this choice and selected this framework minimal ethical requirements (this first kind includes the
for the case study. The strengths and weaknesses of basic ethical norms, such as not to kill and not to
this choice will be discussed in the light of the rob), positive obligations beyond the minimum (this
evidence collected in the case study. second kind aims at creating and maintaining trust-
The authors decided to select four contributions worthy relationships with stakeholders, at helping
dealing with the levels of commitment to CSR busi- employees who are in need, at compensating the
ness practices according to the inclusion protocol. community for unintentional damages, at engaging
Brand (1989) identified three main levels of eth- for fair market conditions, etc.) and aspirations for
ics. They are: transaction ethics (this type of ethics ethical ideals (moral actors are characterised by aspir-
illustrates the lowest acceptable policy; a company is ing to ethical ideals, if they are to overcome purely
interested to assure its own rights); recognition ethics reactive behaviour and take a proactive stance).
(this type of ethics shows the balance between rights Finally, Kok et al. (2001) identified four levels of
and obligations a company recognises to assure a social responsibility grounding in the contributions
general well-being); change ethics (this type of ethics by Brand (1989) and Stahl and Grigsby (1997). They
represents the upper limit: the company has an active are: ad hoc policy (managers consider the social issues
participation in the development and innovation of that can generate risks for the company), standard
norms and values aimed at improving society). Stahl social responsibility policy (managers consider the social
and Grigsby (1997) identified three main levels of issues that are compulsory), planned social responsibility
action in companies’ ethical behaviour: minimum policy (managers consider the social issues that can
legal compliance (managers are committed to comply affect business performance) and reviewed social
with the minimum social requirements of the law; responsibility policy (stakeholders are systematically
enlightened self-interested (managers use social respon- involved in corporate strategy formulation). The
sibility programmes as a strategic mean to commu- authors discussed the four levels detailing CSR
nicate to the market that they are better than their implications for both the external environment
competitors to obtain a long-term profitability; pro- (stakeholders, consumers, suppliers, the environment
active change (managers exploit company’s assets to and the community) and the internal environment
improve society independently of the direct benefits (employees).
158 Lucio Lamberti and Emanuele Lettieri

Although each contribution has peculiarities, they intolerance and the first light baby food (low-fat soft
show communalities regarding which are the main cheese). The success of this strategy convinced the
levels of commitment towards Business Ethics and Italian society that Babyfood was an avant-garde in
CSR practices. In this view, the authors decided to food safety and healthy products, creating the pre-
adopt the model proposed by Stahl and Grigsby mises for a still lasting trust.
(1997) to support the case study. The selected con- During the 1970s, a series of disasters involved
tribution was agreed also by Enderle and Tavis chemical and atomic plants in Southern Europe, and a
(1998) and Kok et al. (2001). Thus, the authors wide cloud of dioxin covered that area (Italy in-
argued that the contribution by Stahl and Grigsby cluded). A large number of food products, such as
(1997) can be considered as an accepted framework milk, eggs, meat, could not be consumed for a long
among the Business Ethics scholars. period. As a result, consumers’ trust in food companies
In conclusion, the authors based their research on rapidly decreased. New standards for food safety and
two contributions selected as relevant from the lit- more socially responsible behaviours were required by
erature review. On the one hand, they adopted a the market. Co-temporally, between the late 1970s
stakeholder taxonomy proposed by Spiller (2000), and the early 1980s, some competitors launched a few
and on the other hand, they referred to the levels of aggressive marketing campaigns aimed at eroding
commitment towards CSR business practices that Babyfood’s market share and pressing prices down. In
have been proposed by Stahl and Grigsby (1997). order to avoid a price war, Babyfood decided to
strengthen its brand and differentiate its portfolio of
products. This strategy was aimed at maintaining a
Findings from the case study premium price. A few secondary brands were intro-
duced for covering the low tiers of offering (i.e. the
Introduction: antecedents of the social responsible actions first price segment), while core brands were improved
in terms of quality and customisation. Moreover,
Babyfood is one of the largest Italian manufacturers of numerous CSR initiatives concerning social and
dietetic and baby food (1,400 employees and revenues environment responsibility were undertaken, to win
ca. 450e million in 2007). Since 1963, it has been a customers’ trust that Babyfood was a safety-oriented
wholly owned subsidiary of Snack&Meals, which is a and health-oriented food company. They were suc-
large multinational food group and one among the cessful and today, after some 30 years, Babyfood is still
worldwide leaders in the processed food industry. perceived by different groups of stakeholders as an
Snack&Meals entered the Italian market by leveraging example of an ethics-committed company.
on brand awareness and corporate identity of Babyfood. The CSR business practices that Babyfood has
Babyfood was born in early 1900s as a distributor of undertaken during the last 30 years will be detailed
a nutritional integrator for babies. Over the next according to Spiller’s taxonomy (2000), i.e. recognising
years, the company started producing noodles, cacao six main groups of stakeholders: shareholders, cus-
powder and cookies flavoured with the core-busi- tomers, employees, the supply chain, the community
ness integrator. During the 1920s and 1930s, Baby- and the environment. Moreover, the specific level of
food consolidated its brand through the enlargement commitment to each CSR practice will be discussed
of the portfolio of products, introducing processed according to Stahl and Grigsby’s (1997) model. All the
food (rice cream, corn semolina, etc.). After the end following insights come out of the triangulation of
of WWII, the company increased its capacity and direct interviews and secondary sources of information.
gained the sales leadership in the Italian baby food Evidence is summarised in Table II.
market. The rising performances attracted the
attention of various foreign companies. Snack&Meals
acquired the Italian company and fostered the CSR business practices for each group of stakeholders
enlargement of Babyfood’s portfolio of products,
introducing milk powder and homogenised food. Shareholders
Successively, Babyfood started producing functional Babyfood, being a wholly owned subsidiary of
foods. In particular, they launched products for food Snack&Meals, had to agree to the Ethical Code of the
CSR Practices and Corporate Strategy 159

TABLE II
Reapplication of Spiller’s and Stahl and Grigsby’s framework to Babyfood case study

Perspectives Business practice implemented Similarities to Spiller’s (2000) Predominant


key business practices level
of CSR

Shareholders Ethical code Sh.1. Good rate of long-term return to Enlightened


CSR reporting shareholders self-interested
Sh.2. Disseminate comprehensive and
clear information
Sh.8 Annual report and accounts pro-
vide a comprehensive picture of the
company’s overall performance
Sh.9. Clear long-term business strategy
Suppliers Multi-attribute vendor rating Su.1. Develop and maintain long-term Enlightened
Consultancy purchasing relationships self-interested
Su.2. Clear expectations
Su.3. Pay fair prices and bills according
to terms agreed upon
Su.7. Assist suppliers to improve their
environmental and social performance
Su.8. Utilise local suppliers
Su.10. Inclusion of an environmental
and social element in the selection of
suppliers
Customers Customer care Cu.1. Industry-leading quality Enlightened
Labelling programmes self-interested
Product information disclosure Cu.4. Full product disclosure
Naturally protected programmes Cu.5. Leadership in research and
development
Cu.6. Minimal packaging
Cu.7. Rapid and respectful responses to
customer comments, complaints and
concerns
Cu.8. Customer dialogue
Cu.9. Safe products
Cu.10. Environmentally and socially
responsible production and product
composition
Community Support to depressed rural regions Co.1. Generous financial donations Proactive
Corporate giving Co.2. Innovative giving change
Nutrition education for children Co.3. Support for education and job
training programmes
Co.4. Direct involvement in commu-
nity projects and affairs
Co.6. Support for the local community
Co.9. Efficient and effective commu-
nity activity
Co.10. Disclosure of environmental
and social performance
160 Lucio Lamberti and Emanuele Lettieri

TABLE II
continued

Perspectives Business practice implemented Similarities to Spiller’s (2000) Predominant


key business practices level
of CSR

Environment Recycling En.2. Materials policy of reduction, Proactive


Biodiversity safeguard reuse and recycling change
Requirements for suppliers En.3. Monitoring, minimising and
taking responsibility for releases to the
environment
En.9. Environmental requirements for
suppliers
En.10. Environmental audits
Employees Ethical code Em.1. Fair remuneration Minimum
Training Em.2. Effective communication legal
Em.3. Learning and development compliance
opportunities
Em.4. Fulfilling work
Em.5. A healthy and safe work
environment
Em.6. Equal employment
opportunities
Em.10. Social mission integration

parent company and ensure compliance to Snack&- last 30 years as the group flagship in terms of social
Meals’ standards. The Code remarks the relevance of and environmental responsibility.
food safety, customer-centricity, fair treatment and So, Babyfood applies two CSR business practices
empowerment of employees. Despite that, there are (Table II): it agrees to an Ethical Code and pub-
no issues that are directly related to the baby food lishes its biennial social and environmental perfor-
market. The HR Manager stated that the present mance. The level of commitment to these practices
Code is a means for standardisation in the group and is high, because they have been made compulsory
a limited (although not null) autonomy is left to each for Babyfood by its parent company. This limited
subsidiary. In fact, Babyfood has no dedicated social autonomy must be taken into account to apply
reporting system and its social and environmental Stahl and Grigsby’s taxonomy (1997). In fact,
performance are collected in a biennial CSR Report Babyfood is compliant to what the parent company
that is published by Snack&Meals for the whole requires and, as the HR manager stated, nothing has
group. All activities that are related to social been made to overcome this limitation and define
reporting are managed at the headquarter level, an improved own standard. However, Babyfood
because the subsidiaries are managed as divisions behaves for being perceived as a social and envi-
rather than as autonomous entities. In this view, ronmental responsible company by the group’s
Babyfood has no freedom to develop its own social shareholders and for being recognised as the flagship
and environmental reporting system. However, the of the whole group. In this view, it is possible to
HR manager also stated that Babyfood had never consider the level of commitment as enlightened
protested against the centralisation. All subsidiaries self-interested, because Babyfood exploits the two
are audited every 6 months to ensure conformance CSR business practices as a means to communicate
to Snack&Meals’ Ethical Code and food safety stan- that it is better than its competitors in order to get a
dards. Babyfood has been always recognised over the long-term profitability.
CSR Practices and Corporate Strategy 161

Customers and suppliers Babyfood regained the market share that had been
After the late 1970s scandals, Babyfood top manage- lost during the 1980s because of the aggressive
ment was aware that performance of supply chain campaigns launched by the competitors. This datum
should have been improved in terms of both food becomes more significant when we consider that the
safety and accountability. Customers and suppliers global sales of processed baby food largely decreased
were interested in monitoring how the supply chain in Italy between 1980 and 1987, especially after the
really works and to which extent food companies are Chernobyl disaster in 1985.
ethical. In fact, the supply chain is responsible for The level of commitment to CSR business
ensuring food safety and environment safeguard. practices for suppliers can be considered co-tempo-
Babyfood launched the ‘‘Naturally protected’’ program, rally as proactive change (e.g. the team of specialists for
which formalised the criteria with which suppliers of consultancy activities, the contribution for rural areas
raw materials had to be compliant in order to enter development) and as enlightened self-interested (e.g. the
into a long-term partnership with Babyfood. They large part of the CSR initiatives is broadly adver-
are: abandonment of any potentially dangerous tised and aimed at improving business perfor-
chemical additive, complete traceability of materials mance). Nonetheless, an enlightened self-interested
and activities, acceptance of unexpected quality level of commitment to CSR is predominant. In
inspections by Babyfood or other third parties (e.g. fact, Babyfood resorted to social and environment
hospitals, research centres) and farming far from any responsibility to regain customer trust and market
source of pollution, such as roads, highways, share in order to increase long-term profitability.
chemical plants and big cities. Some of these criteria In the late 1980s, Feedgrowth, which is the first
would have been adopted for organic cultivation in competitor of Babyfood in Italy and the only one
Italy only later on, and others (as the distance from that has a relevant market share excluding private
sources of pollution) are even more restrictive than labels, started advertising the CSR-related policies
the Italian certification for organic farming. Suppliers applied to its supply chain. The effect was that appeal
that are compliant with these criteria are granted of the ‘‘Naturally protected’’ programmes to its cus-
with a 3-year contract and buying prices that are tomers and suppliers progressively diminished. In
higher than the market (generally 10% more). order to maintain its premium-price positioning,
Contracts can be broken in case of any incompliance Babyfood started empowering and promoting the
with the criteria. In order to prevent these situations, CSR dimensions of its business model.
Babyfood provided suppliers with a team of specialists Customer care became a relevant lever to make
to support them in ensuring food safety. customers aware of Babyfood’s efforts to continuously
More recently, in 1990s, Babyfood developed a improve food safety, health and environment safe-
multi-attribute rating system for potential suppliers. guard. To this extent, Babyfood introduced in 1990
Compliance to ‘‘Naturally protected’’ programme is one of the first examples of phone assistance in Italy:
weighted with other attributes, such as the lack of customers were provided with all required infor-
sentences and social and environmental responsibil- mation concerning nourishment and health through
ity (being compliant with ISO14000, SA8000 and the presence of nutritionists and paediatricians. This
AA1100 standard positively contributes to vendor initiative had a great success, but it was too much
rating). Although many thresholds that have been expensive, and after 6 months Babyfood decided to
formalised by Babyfood go beyond international save, providing standardised information through an
standards, Babyfood has never applied for being cer- automatic response system. At present, Internet has
tificated. In particular, the top management has allowed increasing the level of customisation of this
largely invested to make the customer aware that service. In fact, Babyfood launched a new portal for
Babyfood’s approach is distinctive from competitors. its customers; visitors, after being profiled and
The Marketing Manager stated: ‘‘Babyfood does not recorded in a dedicated customer relationship man-
want to be a company compliant to internationally deter- agement system, can make requests to specialists
mined quality, environmental and social standards; we filling in specific forms. Moreover, the portal has
want to set more restrictive standards and communicate been enriched with information about nutrition of
them to the market in order to be perceived as unique’’. babies, recipes for them, products’ ingredients,
162 Lucio Lamberti and Emanuele Lettieri

contraindications, etc. These efforts for transparency fund Universities and research centres were approved
were completed by the adoption of a more restric- in order to sustain the research effort concerning se-
tive labelling policy. In fact, all ingredients, calories, vere child diseases. It is peculiar that Babyfood did not
and nutritional information concerning each product formally publicise its involvement in any of the pre-
had to be reported on the label and must be easily vious initiatives, despite their success and the large
readable by customers. Peculiarities of the ‘‘Naturally echo provided by media, especially at a local level.
protected’’ policy for processing food were also stated. This modus operandi had been deliberate by top man-
These efforts can be recognised as proactive. The agers. In fact, the Managing Director, during one of
labelling standards that were adopted in Babyfood the last interviews, stated: ‘‘the contribution to health
since 1995 are more restrictive than the Italian law research and urban development is not a matter of money or
for food labelling that has been issued in 2006 in market share. It is a matter of what type of social role Bab-
compliance with the EU standards. yfood wants to play. These initiatives cannot be aimed to
A few business practices for customers show a short-term profit! We are interested to obtain accreditation,
proactive change level of commitment (e.g. the trust and consensus. We believe that these outcomes cannot be
restrictive labelling policy). Nonetheless, a large part pushed by advertising. Others (e.g. non-governmental or-
of them can be related to an enlightened self-interested ganisations, local institutions, customers through the word of
level of commitment. In fact, top management mouth) should win trust for us’’. This peculiar choice and
launched the CSR practices after having carried the level of innovativeness of these initiatives are
profit-oriented business cases. Many of them are part examples of a proactive change level of commitment for
of the long-term marketing strategy started with the CSR business practices that concern the community
‘‘Naturally protected’’ project. The performance of and the environment.
each CSR initiative was monitored in terms of
revenue increase and costs; in case of losses, top Employees
management was ready to suspend it (e.g. the Snack&Meals’ Ethical Code recognises that fair treat-
phone-based assistance by specialists). ment of employees, empowerment and lack of any type
of discrimination are unavoidable premises for good
Community and environment management. Babyfood was compliant to these indica-
Babyfood started launching social advertising and tions, but top management believed that more should
communication programs since 1984. The main be done. In 1998, Babyfood developed and launched ad
purpose was to regain customers’ trust towards food hoc training programs for workers to improve perfor-
safety within the supply chain. The development and mance concerning safety of food and workers them-
promotion of the ‘‘Naturally protected’’ programme selves. The HR Manager and the Supply Chain
persuaded customers that Babyfood’s products were Manager minted the slogan ‘‘value through values’’ to
completely free of any nutrition danger. In the 1990s, remark that workers’ performance should be improved
public opinion’s interest moved from food safety is- through ad hoc strategies to boost their commitment
sues to well-being, healthcare and environmental and involvement. The reputation of Babyfood as a so-
sustainability. In this new context, Babyfood started cially and environmentally responsible food company
promoting its new business model based on healthy has been identified as a major lever for increasing
and environmentally sustainable products. Examples employees’ loyalty and motivation. An HR manager,
are the use of recycled materials for the secondary who previously worked for another food company,
packaging, incentives to suppliers for respecting and stated that ‘‘Babyfood’s rate of turnover is 20% lower than
promoting biodiversity and, recently, programs for food industry average, even if job satisfaction does not signifi-
rural development in a few depressed Italian regions. cantly differ from industry standards and salaries are a little bit
Moreover, top management decided to encourage lower than the average’’.
and sustain the modernisation of farming in Southern Considering the attention that other companies
Italy and to facilitate relationships between Babyfood worldwide are paying to standards such as the ILO or
and the community. Seminars and conferences held the SA8000 in order to ameliorate employees’ working
by well-known nutritionists were sponsored for pri- conditions beyond law requirements, the efforts that
mary school students. Corporate-giving initiatives to Babyfood paid to this group of stakeholders are not
CSR Practices and Corporate Strategy 163

particularly original or significant. Babyfood employees’ likely to (or should) undertake in order to be per-
motivation and loyalty ground more into the com- ceived as ‘‘ethical’’. Babyfood case history shows that
pany’s good reputation than in the company’s efforts to top management has selected and implemented only
set ‘‘far beyond the standard’’ working conditions. In a limited set of them (Table II).
this view, the level of commitment for CSR business Is that enough to claim that Babyfood is a limited
practices for employees can be seen as oriented towards ethical company? Since the 1980s, the company has
minimum legal compliance. been pursuing higher and higher levels of corporate
citizenship, customers’ trust, environmental perfor-
Outcomes mances and proactivity towards the law. In this
All managers who have been interviewed agreed that view, Babyfood should be considered at least as a
Babyfood won stakeholders’ trust over the last 30 years company that is moving towards an ethical and social
because of the CSR business practices that had been responsibility. But what should be considered as a
adopted. The practices help in Babyfood being per- threshold between ethical and unethical companies?
ceived as a socially and environmentally responsible Longo et al. (2005) recently affirmed that, in order
food manufacturer and Babyfood’s products being to be considered ‘‘ethical’’, a company should adopt
perceived as safer and healthier than the average in the at least half of the CSR values that literature has
market. The Marketing Manager stated that this dis- proposed for each group of stakeholders. This can be
tinctive positioning enabled a series of formerly a means, but it can be seen, generally speaking, as
unthinkable business opportunities, such as the en- too much ‘‘draconian’’. Moreover, no role is
trance in the pharmacy channel in the 1990s. The assigned to the level of commitment towards CSR,
entrance was a success for the top management for at which has been recognised as critical by numerous
least two reasons: on the one hand, Babyfood was able contributions on business ethics (e.g. Brand, 1989;
to penetrate a market that had been historically pro- Stahl and Grigsby, 1997).
tected by severe entry barriers, and on the other hand, Spiller’s taxonomy is useful to state the CSR
the entrance won stakeholders’ trust about food safety business practices, but it provides a limited support
and supply chain behaviour. to gather a clear understanding of a company’s ethos.
Babyfood case history shows that a company faces
different strategic challenges leveraging on a limited
Discussion set of CSR business practices that are consistent to a
specific CSR goal. The top management is largely
Babyfood case history regarding CSR practices ad- satisfied by the results they accomplished: the various
dresses at least four issues that should be remarked initiatives contributed to increasing the market
and discussed: (i) the relationship between corporate share and winning a distinctive positioning against
goals and the scope of CSR business practices; (ii) the competitors. Snack&Meals proudly states, in the
the different levels of commitment for the different biennial CSR report, that Babyfood is a broadly
CSR business practices; (iii) the impact of business recognised socially and environmentally responsible
acquisitions on CSR business practices that are food manufacturer. But what would have happened
undertaken; and (iv) the longitudinal issues in CSR. if the top management had had different strategic
These issues also suggest areas for further research, goals? On the one hand, it is arguable that different
such as deepening a few limitations that have been goals should be pursued through ad hoc CSR
found in the interpretive models adopted for this business practices, while on the other hand, a holistic
study in order to suggest directions to improve them. and internally coherent behaviour should be adopted
by a company to be claimed as ‘‘ethical’’. The latter
argument is consistent to researchers who state that a
Relationship between corporate goals and the scope company should define a coherent portfolio of CSR
of CSR business practices business practices that covers all groups of stake-
holders (e.g. Jamali, 2007; Longo et al., 2005).
Spiller’s taxonomy (2000) provides a checklist of The choice between the two modus operandi
perspectives and business practices that a company is (holistic versus specific) is largely affected by the
164 Lucio Lamberti and Emanuele Lettieri

reasons due to which a company resorts to CSR and by the different groups of stakeholders. But when
business ethics. Companies that recognise business they were talking about CSR towards the commu-
ethics as a part of their mission will promote holistic nity and the environment, they clarified that the
approaches to CSR because they will want to pay purpose was being socially responsible. This was not a
the same attention to all groups of stakeholders. On word mistake. In fact, purposes were different and
the contrary, companies that recognise business level of commitment was also different. Babyfood case
ethics as a new means to leverage on in order to history is interesting because it clearly emerges that a
improve business performances will be more company can be interested in endorsing the CSR
attracted by self-interested CSR business practices. business practices towards the six main groups of
Babyfood case history is an example of the latter stakeholders according to different levels of com-
approach to CSR. In fact, the company imple- mitment. Babyfood used a minimum legal compliance
mented a set of CSR business practices to achieve commitment towards CSR business practices for
short- and medium-term goals (e.g. the ‘‘Naturally employees and a proactive change commitment to-
protected’’ program, the phone-based customer care wards the community and the environment. In the
service). Main goals were to increase customers’ trust case of Babyfood, the different level of commitment is
and create a competitive advantage. In this view, the explained by a general self-interested approach
company started launching initiatives concerning to CSR that was driven by contingent goals. This
food safety. Suppliers were required to agree to the explains why Babyfood’s actions had been focused on
‘‘Naturally protected’’ programme constraints and both customers and suppliers. Nevertheless, this
adopt socially and environmentally responsible argument clarifies just partially why the company
business models. Babyfood repaid suppliers with implemented a proactive change commitment for CSR
premium prices, long-term relationships, consul- business practices towards the community and the
tancy programs, etc. When the main competitors, environment. In fact, if we assumed that the main
such as Feedgrowth, started imitating the initiatives goal was increasing the profit in the short-term,
regarding supply chain, Babyfood started working on what interviewees stated about the limited return in
customers, launching projects for customer care in terms of profit from initiatives towards the com-
order to maintain its leadership. On the contrary, munity and the environment would seem contra-
satisfaction of employees has never been considered dictory. Moreover, top management decided to not
a critical success factor by the top management. In advertise these initiatives to the market.
fact, Babyfood has implemented a limited number of The authors argue two concurrent explanations.
CSR business practices for this group of stakeholders First, Babyfood started adopting CSR business prac-
and the level of commitment has been also limited. tices when its competitors, such as Feedgrowth, started
These considerations may suggest that companies advertising their initiatives to improve food safety
that leverage on CSR and business ethics to boost within the supply chain. These actions commodi-
business performance (i.e. when an enlightened self- tised market expectations about food companies’
interested approach is pre-eminent) select unbal- behaviours. Babyfood tried to preserve the distinctive
anced portfolios of CSR business practices because positioning through the enlargement of the present
of contingent needs, while companies that recognise extent of its responsibility. In this context, Babyfood
business ethics as part of their mission (i.e. when a differentiated its brand identity moving from food
proactive change approach is pre-eminent) prefer safety to customer care and from this to the com-
more balanced initiatives. munity and the environment, following a path of
continuous improvement in order to meet the
growing expectations by the different groups of
Different levels of commitment for the different CSR stakeholders. The first approach based on reactivity
business practices to stakeholders’ claims was gradually substituted by
proactivity. This argument, when supported by
Babyfood managers who have been interviewed sta- other evidence, suggests that companies that aim at
ted clearly that the top management was interested pursuing competitive advantages through CSR
that the company was perceived as socially responsible business practices are likely to start focusing on a
CSR Practices and Corporate Strategy 165

limited set of perspectives (i.e. groups of stakehold- Babyfood top management has taken to highlight the
ers) and practices in order to maximise benefits and company’s outstanding performance according to an
contain efforts. Later on, they start being proactive in enlightened self-interest approach.
order to preserve their competitive advantage and Babyfood case history suggests two implications.
win stakeholders’ trust. This explanation, however, First, CSR business practices at a subsidiary level can
does not clarify why Babyfood did not promote the be the result of a normative isomorphism. Second,
new CSR initiatives towards the community and the analysing the set of CSR business practices without an
environment. A possible explanation is that we must in-depth understanding of the extent to which a
consider that Babyfood top management has changed company is free to choose can lead to misleading
over the last three decades. Interviewees stated that interpretations of the level of commitment. This
present top management is more committed in terms suggests that Stahl and Grigsby’s taxonomy should be
of CSR and business ethics, because of a new improved in order to cope with the moderating effect
awareness of the market. Last scandals in the food of corporate governance and the degree of freedom of
industry have remarked that food manufacturers a company. To this extent, it could be interesting to
should be socially and environmentally responsible. ground the research in theoretical frameworks that
In this view, Babyfood managers are endorsing a more explicitly consider the degree of freedom, such as the
proactive change approach to CSR. New Institutional Theory (e.g. DiMaggio and Pow-
ell, 1983; Giddens, 1984). For instance, Babyfood case
study shows an interesting mixture between the
Impact of acquisitions on CSR business practices normative isomorphism (because of the forcing action
by Snack&Meals) and the mimetic isomorphism (be-
Babyfood is a wholly owned subsidiary of Snack&- cause of the deliberate choice to not introduce other
Meals, a company whose stocks are listed on the self-developed business practices).
New York Stock Exchange. Babyfood has completely The issue regarding to what extent corporate
agreed to and adopted the business practices that governance can affect the adoption and the
Snack&Meals has developed for managing the rela- deployment of CSR business practices is critical. Let
tionship with shareholders. This modus operandi us think about the acquisition of the food manu-
should be discussed. The interviews that have been facturer Kraft Food International by the tobacco
collected and triangulated stated that this choice was company Philip Morris. Kraft changed its mission
based on two considerations. On the one hand, the and vision in the late 1990s, shifting from ‘‘being the
parent company forced the subsidiary to adopt a largest food manufacturer worldwide’’ to ‘‘helping
common standard for investor relationship (e.g. worldwide people eating and living better’’. What is
external accountability should have been provided the impact in terms of stakeholders’ trust, the
through the parent company’s biennial CSR report) awareness that Kraft is managed by the largest
and the subsidiary had limited capability to over- worldwide cigarette manufacture and that it is facing
come or modify the standards. This suggest that, in numerous litigations for health damages? How can
some way, Stahl and Grigsby’s taxonomy concerning Philip Morris manage without damaging its
the level of commitment for CSR business practices subsidiaries in terms of CRS trustworthy? Coming
should take into account to what extent a company back to Babyfood, what are the advantages or the
can choose its behaviour. On the other hand, we disadvantages of managing CSR in a heterogeneous
must consider that Babyfood provides to Snack&Meals group of companies? Should the parent company
all data it requires to measure its performance in approach business ethics from a top–down or a
terms of social and environmental responsibility. bottom–up point of view?
Babyfood did not have any need to introduce or
develop other manners for managing shareholder
relationships, because the current policy that was Longitudinal issues in CSR practices
adopted by Snack&Meals awarded Babyfood as a top
ethical performer. In this view, the lack of new Babyfood adopted most of its CSR business practices
policies can be seen as a deliberate choice that according to an enlightened self-interested level of
166 Lucio Lamberti and Emanuele Lettieri

commitment. Then, after having achieved satisfying context in which a level of commitment is gener-
results, the company started behaving according to ated. First, as affirmed above, the lack of a corporate
proactive change level of commitment. In the previous governance dimension in evaluating the level of
sections the reasons of this choice have been commitment may lead to misunderstandings in
discussed. Nevertheless, in this section another reviewing a company’s behaviour (e.g. the difficulty
implication can be stated. The adoption of CSR to associate Babyfood CSR business practices towards
business practices can generate a virtuous cycle and shareholders to the theory). Second, the case history
top management can be motivated to endorse new shows that proactivity and self-interest, far from
practices because of the success of the previous ones. being contradictory, may be co-temporally present
The authors believe that the companies that obtain and, in some way, desirable. In fact, CSR business
good performance from CSR initiatives are more practices for customers were deliberately self-inter-
likely to develop a trust in CSR as a means to in- ested: they were publicised and implemented for
crease business profitability (e.g. Owen and Swift, increasing short-term profitability, while the ones
2001). In fact, top managers become more and more for the community were largely proactive and ori-
aware that CSR and business ethics are not only an ented to meet expectations that this group of
alternative means to increase profitability in the short stakeholders have not expressed yet (e.g. supporting
term, but they are the pillars of the company’s sys- underdeveloped rural regions). In conclusions, Stahl
tem of values and mission (van Marrewijk, 2004; and Grigsby’s taxonomy based on discrete levels of
Willard, 2002). commitment should further be discussed in order to
The previous considerations suggest that both assume a continuum spectrum of levels to improve its
Spiller’s and Stahl and Grigby’s models have areas of matching to practice. It would also be useful to
improvement. In fact, they showed a common develop reliable measures, as happened for the
limitation when applied to the Babyfood case history. concept of ‘‘market orientation’’ (e.g. Kohli et al.,
They are designed according to a classificatory 1993), for the concepts of proactivity and self-
approach and they are aimed at identifying distinc- interest levels of commitment in order to facilitate
tive clusters of CSR business practices (Spiller’s the benchmarking of different approaches.
model) or levels of commitment (Stahl and Grigsby’s
model). Although such an approach is helpful and
straightforward, Babyfood case study shows that the Conclusions
borders between different clusters are largely fuzzy
and a clear distinction is hard to make. As far as This paper investigates the role that CSR can play as
Spiller’s model is concerned, the collected evidence a means for reshaping corporate strategy in order to
shows that a CSR initiative can affect many groups manage stakeholders’ uncertainty regarding products
of stakeholders according to a different level of and firms’ behaviour (Brenkert, 2002) and win their
commitment; for instance, the agreement to an trust (Choi et al., 2007). In this view, food industry
Ethical Code is generally associated to employees, is a remarkable setting, because of the growing
but it also affects corporate citizenship, customer uncertainty concerning food safety and internation-
care, supply chain relationships and environmental alisation of supply chain (Maloni and Brown, 2006).
care. In this view, it can be quite arbitrary to identify The empirical exercise has been based on a longi-
only one group of stakeholders who are affected by tudinal case study of an Italian food manufacturer
CSR initiatives. The Stakeholder Theory remarks that launched different CSR business practices for
that overlapping effects should be related to CSR being perceived as socially and environmentally
business practices. Babyfood’s ‘‘Naturally Protected’’ responsible. Findings contribute to the ongoing
programme was aimed at reinforcing customer care debate regarding CSR and the role that it plays in
through an action on the supply chain; it can be business strategy. Three main contributions can be
misleading to limit this initiative to only one group identified. First, this paper provides evidence that
of stakeholders. Stahl and Grigsby’s choice to iden- Spiller’s (2000) and Stahl and Grigsby’s (1997)
tify three main levels of commitment, instead, was taxonomies can be applied to a single case study to
unsatisfying in picturing the complexity of the understand the approach to CSR and business ethics.
CSR Practices and Corporate Strategy 167

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