Exploring the Link Between Corporate Openness and Corporate Social Responsibility
Exploring the link between corporate openness and corporate social responsibility
Applying a combination of corporate social responsibility (CSR) political and communication theories, this paper explores the link between corporate openness and corporate social responsibility through the use of CSR reporting tools. This study is motivated by the following contradiction: we are told that CSR reporting has grown every year since 2011 and yet, trust in business has decreased in the last five years, thus potentially questioning the purpose of these reports. Do CSR reports lead then to corporate openness? This is considered to be an important issue since it challenges the underlying assumption that more reporting means responsible behaviour.
This paper contributes to both political and communication theories of CSR and questions the use of reporting tools as a valid measure to assess openness. It responds to work asking for detailed examination of the conditions under which openness is produced by highlighting the role of other stakeholders, such as consumers, NGOs and the media, in influencing corporate behaviour. Finally, it identifies an important distinction between passive reporting and dynamic engaging when defining corporate openness. This division not only leads to the development of a more accurate and meaningful assessment of corporate openness but it also reveals significant variations in defining the purpose of openness for both corporations and other stakeholders, reflecting individual and collective perceptions of responsible behaviour.
The paper uses a combination of political and communication theories of CSR. While the political theories focus on the increasing power of corporations and the need to use it responsibly in the political arena, the communication theories argue that CSR gives voice to other stakeholders, besides corporations, potentially balancing the power relations between the two groups. Combining and contrasting these two theories helps gaining a better understanding of the conditions under which corporate openness is implemented. Within this theoretical background, the paper addresses the following research questions:
To what extent is business transparency justified by users’ perceptions?
Under what conditions, can users dictate the terms of corporate openness?
Throughout its relatively short history, CSR has been defined in various ways. Broadly, CSR refers to the role of corporations in, and impact upon, the economy, society and environment within which they operate. Hence, the idea of interaction and communication with other parties is crucial to understand the potential role of CSR in transforming relations between businesses and society.
Corporate openness is somewhat a more elusive concept. Although, largely associated with responsible behaviour, two separate but linked definition streams can be distinguished. On the one hand, it is strongly connected with questions of public disclosure and accountability. Corporate Openness is generally defined as a social value that stimulates a general quest for information and access with attendant requirements and measures. On the other hand, corporate openness refers to the extent to which companies are open to engage with stakeholders. It is important to highlight these two variations since this distinction has implications for how openness is measured and perceived.
Corporate openness tends to be evaluated using public disclosure scores in CSR indexes. However, this paper argues that this is an insufficient measure to evaluate the true extent of corporate openness. Therefore, incorporating the views of users and readers of CSR reports and indexes adds a further dimension to determine whether and under what conditions corporate openness takes place.
A CSR communications theory allows researchers to reframe the relationship between corporations and their stakeholders by focusing on the interaction processes between the two. It provides a different perspective from which to explore the way in which organisations constitute themselves and are understood by the outside world.
Two epistemological orientations in understanding CSR communications can be distinguished. One is concerned with influencing and to some extent manipulating stakeholders’ behaviour. This may be achieved by actively reporting positive information on how companies address or intend to tackle social and environmental issues. The other approach embraces an alternative understanding of communication and views CSR as a “communicative challenge”. This approach highlights the dominion of negotiation and dialogue over the power of manipulation. While the former is associated with a pragmatic and instrumental approach to communicating, the latter, based on the idea of communicative action, focuses on the dynamic and interactive nature of CSR where the corporation actively works towards reaching a shared understanding of how to address key CSR challenges in collaboration with its stakeholders.
This alternative CSR communication reinforces the feedback loop by adapting the means of engagement to establish a two-way dialogue with the audience and actively seeking feedback that potentially changes the original message and ultimately impacts on the behaviour of the organization. This framing presents a more accurate means to evaluate corporate openness. The type of CSR information that is reported is contextualised within the business model and seeks to produce a holistic representation of how the company makes its money and intends to spend it.
Reflecting back on the research questions posed at the beginning of the paper, the notion of openness represented in the second framing relies on audiences that are both interested and reasonably well educated to be able to read through and understand complex CSR and annual reports and, therefore, be able to ask relevant questions to the reporting organizations. More literate audiences demand more and better information from organizations, with the ability to hold them accountable for their actions, therefore balancing power relations between organizations and consumers. Knowledgeable audiences may also be able to influence organizations to the extent of being sought after for their innovative ideas; in which case, is corporate openness now linked with responsible behaviour or simply opportunistic behaviour? Is the distribution of power still shared equally amongst the relevant parties? Corporate openness is indeed not a precise end state, but a relentless search for information and access that may potentially be never satisfied.