New research into firms’ symbolic and substantive CSR practices has shed light on differing expectations of the role of business in society. The extent to which companies meet their CSR promises depends on national attitudes to competition and individualism says Oxford academic Thomas Roulet.
The assumption that corporations say one thing and do another when it comes to Corporate Social Responsibility (CSR) is not far from the truth, but just how much they follow through on their promises depends on cultural interpretations of the principles of liberal economics and the perceived role and strength of the government, says Thomas Roulet, Research Fellow at Saïd Business School, University of Oxford. In a paper for the Journal of Business Ethics, “The Intentions with Which the Road is Paved: Attitudes to Liberalism as Determinants of Greenwashing”, Thomas Roulet and his co-author, Samuel Touboul, IPAG Business School, explored the ambiguities surrounding firms’ commitments to social and environmental initiatives.
They discovered that in countries where people believed strongly in the virtues of competition, firms were more likely to practise “greenwashing” – that is, to make a lot of noise about their CSR but to do very little. In countries where liberalism was interpreted as predominantly about individual responsibility, firms were more likely to focus on concrete actions. “Our research suggested a highly complex relationship between beliefs in particular virtues of economic liberalism and the socially responsible behaviours of organisations,” said Dr Roulet.
“It also raises a number of subtle questions relating to the respective roles of business and the state. When a small state is favoured, for example, it seems more likely that companies will step in to ‘fill the gap’. Indeed, some businesses end up having more power than the state and, through becoming involved in developing infrastructures, even substitute for it. However, the business people we interviewed were keen to make a distinction between socially responsible things that businesses should be doing, such as reducing the harmful emissions that they generate themselves, and activities that they engage in that are not really part of their remit, but may enhance their reputations.”
Even when firms act responsibly, they can be doing so with a certain amount of cynicism.
Using qualitative and quantitative methods, the researchers calculated average country-level beliefs when it came to two central tenets of economic liberalism: a belief in the virtues of competition and a belief in the importance of individual responsibility. They found that developed market economies such as Switzerland, the United States, New Zealand and Canada tended to have higher cultural beliefs in favour of individual responsibility. While those countries also score highly in terms of cultural beliefs in favour of competition, it appears that countries with higher scores on this variable are fast developing countries such as India, China, and Morocco.
Mapping these country-level beliefs against the CSR actions of firms in those countries confirmed that firms are more likely to greenwash when populations’ beliefs in the virtue of competition are predominant, and when their beliefs in individual responsibility are less prominent. Therefore, in a country like Morocco, where beliefs in the virtue of individual responsibility are low, but in the virtue of competition are high, firms are more likely to greenwash. Conversely, in a country like France, where the population believes in the virtue of individual responsibility but prefers an absence of competition, firms are less likely to greenwash as they tend to implement socially and environmentally responsible actions without specifically signalling those actions.
“We tend to assume that firms are inherently selfish and more likely to indulge in symbolic CSR practices that look good, such as getting green accreditation, than actively trying to improve stakeholders’ welfare by, for example, reducing CO₂ emissions,” said Dr Roulet. “In fact, our research has shown that what a firm does in the context of CSR is influenced by the shared cultural expectations in its country of origin, which either unconsciously encourage greenwashing or demand substantive action.
Subtle distinctions between different countries’ interpretations of what a liberal economy is all about can lead to very different attitudes and actions when it comes to how businesses operate in relation to society.”