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The impact of social incidents on CSR transparency and performance

A quantitative study examining companies listed in the European Union

Written by J. Akkermann

Paper category

Bachelor Thesis


Business Administration>General




Bachelor Thesis: The complexity brought about by globalization One reason for the occurrence of events in the social environment can be explained by the complexity of the global supply chain and the excessive number of subcontractors (Stanczyk et al., 2017). For example, the global market size of outsourcing services has doubled in the past 17 years, from approximately US$45 billion in 2000. It was US$90 billion in 2017 (statista, 2018). The globalization of markets and an increasingly interconnected world have resulted in every company being able to manufacture products all over the world. However, global procurement routines have increased with the increase in complexity and certain CSR-related disadvantages (Stanczyk et al., 2017). Even if the goal is to implement CSR standards, controlling such global supply chains is a daunting task for companies (, 2013). In addition, global sourcing has also led to different companies working together in different contexts of CSR legality. There are great differences in the understanding of the legitimacy of legal behavior among different institutions related to the global supply chain. Booth et al. (2016) shows that there is indeed a paradox where both the buyer and the supplier are acting within their own legal scope according to the expectations of the stakeholders. However, due to the difference between the legal contexts, the buyer’s stakeholders regained the legality, which harmed the buyer’s interests. Working conditions in Asia and Europe may be examples of different legalities. Although stakeholders in Asia may accept certain conditions, such as working hours, in the European context, these conditions will be severely opposed. Therefore, the increase in institutional distance in the context of global procurement increases the risk of CSR-related incidents. 1.1.2 The impact of social performance on financial performance In addition, more reasons why companies do not improve their corporate social responsibility strategies can be found in the potential results of corporate social responsibility strategies. Responsible economic benefits (such as the improvement of the company's image and financial performance) will not motivate the company to act in accordance with CSR standards. 2015). Some researchers can't see the relationship at all (Ullmann, 1985; McWilliams and Siegel, 2001), other researchers have determined a positive correlation (Waddok and Graves, 1997; Orlitzky et al., 2003), and other researchers have determined a negative correlation (Brammer et al. , 2006; Becchetti and Ciciretti, 2006; Surroca and Tribó, 2008). 3.1. The definition of corporate social responsibility can be found in several CSR definitions in enterprises and academia (Sheehy, 2014). According to Freeman et al. al (2010), the following concepts are included in the collective term "corporate social responsibility": corporate social performance (Wood, 1991), corporate social responsiveness (Sethi, 1975), corporate citizenship (Waddock, 2004), corporate governance (Sacconi, 2006) ) ), corporate responsibility (Pruzan and Evans, 1997), sustainability and the triple bottom line (Elkington, 1997), and corporate social entrepreneurship (Austin, Stevenson, and Wei-Skillern, 2006). 4 In general, all these concepts attempt to expand the company’s obligation to consider more financial factors in the business model (Freeman et al., 2010). These concepts involve five main aspects (environmental, social, economic, stakeholder, and voluntary), which are restricted by several definitions (Dahlsrud, 2006). Dahlsrud (2006) examined 37 definitions of CSR and investigated the similarities in their statements. In Dahlrud’s research, the European Communities Commission’s CSR definition (2001): “a concept that a company incorporates social and environmental issues into its business operations and interactions with stakeholders on a voluntary basis”; Frequency counting (286) is the most widely defined. This means that this definition is the most widely used definition in reports or websites. Based on the gaps in the research on the impact of the above social events on company performance and the importance of the social dimension, the author will focus on the social dimension defined by CSR. 3.1.1 The concept of social performance is similar to CSR. The concept of social performance has received theoretical and empirical attention (Clarkson, 1988; Hocevar & Bhambri, 1989; Randall, 1989; Reed, Getz, Collins, Oberman and Toy, 1990). Therefore, many attempts have been made to define the concept of social performance (Sethi, 1979; Preston, 1987; Carrol, 1979; Ullman, 1985). According to Semenova and Hassel (2013), social performance appeals to stakeholder management that advocates the interests of major stakeholder groups (such as employees, communities, and suppliers). The main task is to examine whether the company considers human rights conventions and practices. Employee relations represent the consideration of employment policies and practices (such as employee health and safety or job satisfaction) (Bauer et al., 2009; Edmans, 2011). Community participation describes the general services of the community, such as donations or charitable activities. Suppliers represent the consideration of human rights in supplier practice (Semenova and Hassel, 2013). Read Less